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2017 CAFR City of Fridley, Minnesota - This page intentionally left blank - This page intentionally left blank CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2017 TABLE OF CONTENTS EXHIBITPAGE I. INTRODUCTORY SECTION Letter of Transmittal3 Certificate of Achievement 11 Elected and Appointed Officials13 City Administrative Organizational Structure 201714 II. FINANCIAL SECTION Independent Auditor's Report19 Management's Discussion and Analysis23 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net PositionA-137 Statement of ActivitiesA-238 Fund Financial Statements: Balance Sheet - Governmental Funds A-340 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental FundsA-442 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesA-545 Statement of Net Position - Proprietary Funds A-646 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary FundsA-748 Statement of Cash Flows - Proprietary Funds A-850 Statement of Fiduciary Net Position A-952 Notes to Financial Statements53 Required Supplementary Information: Budgetary Comparison Schedule - General Fund B-196 Schedule of Funding Progress - Retiree Health Plan B-2100 Schedule of Proportionate Share of Net Pension Liability - General Employees Retirement FundB-3101 Schedule of Pension Contributions - General Employees Retirement Fund B-4102 Schedule of Proportionate Share of Net Pension Liability - Public Employees Police and Fire FundB-5103 Schedule of Pension Contributions - Public Employees Police and Fire Fund B-6104 Notes to RSI105 CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2017 TABLE OF CONTENTS EXHIBITPAGE Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds C-1110 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds C-2111 Subcombining Balance Sheet - Nonmajor Special Revenue Funds C-3116 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds C-4118 Subcombining Balance Sheet - Nonmajor Capital Project Funds C-5122 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds C-6123 Special Revenue Funds: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: D-1126 Cable TV Fund Springbrook Nature Center Fund D-2127 Solid Waste Abatement Fund D-3128 Police Activity FundD-4129 Internal Service Funds: Combining Statement of Net Position E-1132 Combining Statement of Revenues, Expenses and Changes in Net Position E-2133 Combining Statement of Cash Flows E-3134 Housing and Redevelopment Authority (Component Unit): Balance Sheet - Governmental Funds F-1136 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds F-2138 Subcombining Balance Sheet - Nonmajor Capital Project Funds F-3140 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds F-4142 Agency Funds: Combining Statement of Assets and Liabilities G-1146 Statement of Changes in Assets and Liabilities G-2147 CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2017 TABLE OF CONTENTS EXHIBITPAGE III. STATISTICAL SECTION (Unaudited) Financial Trends: Net Position by ComponentTable 1152 Changes in Net PositionTable 2154 Fund Balances - Governmental Funds Table 3158 Changes in Fund Balances - Governmental Funds Table 4160 Revenue Capacity: Tax Capacity Value and Estimated Market Value of Taxable Property Table 5162 Direct and Overlapping Property Tax Capacity Rates Table 6164 Principal Property Taxpayers Table 7166 Property Tax Levies and Collections Table 8167 Debt Capacity: Ratios of Outstanding Debt by Type Table 9168 Direct and Overlapping Govermental Activities Debt Table 10169 Legal Debt Margin Information Table 11171 Pledged Revenue Coverage Table 12172 Demographic and Economic: Demographic and Economic Statistics Table 13174 Principal EmployersTable 14175 Full-Time Equivalent City Government Employees by Function/Program Table 15176 Operating Information: Operating Indicators by Function/Program Table 16178 Capital Asset Statistics by Function/Program Table 17180 This page intentionally left blank 1 This page intentionally left blank 2 3 4 5 6 7 8 9 This page intentionally left blank 10 11 This page intentionally left blank 12 13 14 15 This page intentionally left blank 16 17 This page intentionally left blank 18 Management’s Responsibility for the Financial Statements Auditor’s Responsibility Government Auditing Standards 5921!Xijuf!Cfbs!Qbslxbz-!Tu/!Qbvm-!NO-!66221!!!!!!762/537/8111!!!!!!xxx/sfeqbuidqbt/dpn 19 Opinions Other Matters Required Supplementary Information Other Information 20 Government Auditing Standards Government Auditing Standards Government Auditing Standards 21 This page intentionally left blank 22 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Fridley, we offer readers of the City of Fridley’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2017. 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 9 of this report. Financial Highlights The assets of the City of Fridley exceeded its liabilities at the close of the most recent fiscal year by $67,610,967 (net position). Of this amount, $19,967,123 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. Net position of the government-wide financial statements was positively impacted in the current year by $481,970 due to investment earnings. This is more fully described on page 28. During 2017, the City’s total net position increased by $4,816,720. As of the close of the current fiscal year, the City of Fridley’s governmental funds reported combined ending fund balances of $55,573,961. Of this total amount, $34,836,321, or 62% is restricted through legal restrictions or third-party agreements. At the end of the current fiscal year the general fund balance of $9,593,086 included $55,777 in non-spendable, $14,466 in restricted, and $9,522,843 in unassigned fund balance. The City’s total debt increased by $44,800,000 during the current fiscal year. Total debt outstanding at December 31, 2017 is $58,555,000. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City of Fridley’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 23 Managements Discussion and Analysis ’ Government-wide financial statements . The government-wide financial statements are designed to provide readers with a broad overview of the City of Fridley’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of Fridley’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 Fridley is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year.All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Fridley 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 Fridley include general government, public safety, public works, community development, and recreation and naturalist. The business-type activities of the City of Fridley include liquor, water, sewer and storm water. The government-wide financial statements can be found on pages 37 through 39 of this report. Fund financial statements . A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Fridley, 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 Fridley 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 financial 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 24 Managements Discussion and Analysis ’ the government-wide financial statement. By doing so, readers may better understand the long-term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Fridley maintains four individual major 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, debt service fund and street improvement capital projects fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Fridley adopts an annual appropriated budget for its General Fund, the Cable TV, Solid Waste Abatement, Springbrook Nature Center, and Police Activity special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 40 through 43 of this report. Proprietary funds . The City of Fridley maintains four enterprise funds and two internal service funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Fridley uses enterprise funds to account for its liquor, water, sewer, and storm water operations. The City of Fridley uses internal service funds to account for its employee benefits and self-insurance. Because these services predominately benefit governmental rather than business- type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water, sewer, storm water and liquor operations, all of which are considered to be major funds of the City of Fridley. Conversely, 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. 25 Managements Discussion and Analysis ’ The basic proprietary fund financial statements can be found on pages 46 through 51 of 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 Fridley’s own program. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statement can be found on page 52 of this report. Notes to the financial statements . The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements.The notes to the financial statements can be found on pages 53 through 94 of this report. Other information. The combining statements referred to earlier in connection with the non-major governmental funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 107 through 134 of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Fridley, assets exceeded liabilities by $67,610,967 at the close of the most recent fiscal year. A significant portion of the City of Fridley's net position ($44,904,269 or sixty-six 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 Fridley uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Fridley’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. 26 Managements Discussion and Analysis ’ City of Fridley’s Net Position Governmental ActivitiesBusiness-TypeTotals 201720162017201620172016 Current and other assets$64,610,616$31,007,912$14,027,008$15,959,324$78,637,624$46,967,236 Capital assets49,549,42827,042,58620,834,32619,825,53270,383,75446,868,118 Total assets$114,160,044$58,050,498$34,861,334$35,784,856$149,021,378$93,835,354 Total deferred outflows of resources8,719,00015,318,307 - - 8,719,00015,318,307 Long-term liabilities outstanding$62,772,922$29,327,109$7,373,027$10,896,725$70,145,949$40,223,834 Other liabilities7,178,4761,882,5972,512,8161,407,4079,691,2923,290,004 Total liabilities$69,951,398$31,209,706$9,885,843$12,304,132$79,837,241$43,513,838 Total deferred inflows of resources10,292,1702,845,576 - - 10,292,1702,845,576 Net position: Net investment in capital assets$31,006,344$23,932,586$13,897,925$13,913,434$44,904,269$37,846,020 Restricted2,739,5752,204,983 - - 2,739,5752,204,983 Unrestricted8,889,55713,175,95411,077,5669,567,29019,967,12322,743,244 Total net position$42,635,476$39,313,523$24,975,491$23,480,724$67,610,967$62,794,247 The City adopted accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an Amendment of GASB Statement No. 27 in 2016. Essentially, the standard required the unfunded portion of defined benefit pension plans to be reported by all participating employers. Recording the net pension liability and the pension related deferred outflows and inflows of resources do not change the City’s future funding requirements or obligations under the plans, which are determined by Minnesota statutes. Net position was negatively impacted by $12,831,982 at December 31, 2017 due to the assumption changes and investment earnings projections from the Public Employees Retirement Association’s (PERA) own actuarial study. Pension-related amounts included in the above schedule related to the standard are as follows: Deferred outflows of resources$8,719,000 Deferred inflows of resources(10,292,170) Noncurrent liabilities(11,258,812) Total($12,831,982) A portion of the of the City of Fridley’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of $19,967,123 in unrestricted net position may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Fridley is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. 27 Managements Discussion and Analysis ’ Governmental Activities Governmental activities increased the City of Fridley’s net position by $3,321,953. Capital grants and contributions decreased by $963,052 due to a large parks capital grant that was essentially complete in 2016. Non-restricted grants decreased $1,106,068 and property taxes increased $1,661,838 with the levy of a 2017 tax- supported bond issuance. 2017 expenditures reflect the increased interest on long- term debt related to that new debt issuance. Public Safety expenditures decreased by $1,184,052 primarily due to the pension expense. For 2016, GASB 68 related public safety expense was $2,934,169 in comparison to $1,223,833 in 2017. This large decrease correlates with the large decrease in the Net Pension Liability as a result of assumption changes made by PERA. City of Fridley’s Changes in Net Position Governmental ActivitiesBusiness-Type ActivitiesTotals 201720162017201620172016 Revenues: Program revenues: Charges for services$4,101,573$4,248,195$16,025,640$15,393,228$20,127,213$19,641,423 Operating grants and contributions1,847,3801,077,55961,47667,5511,908,8561,145,110 Capital grants and contributions5,333,4806,296,532713,655186,7916,047,1356,483,323 General revenues: Property taxes13,884,77512,222,937 - - 13,884,77512,222,937 Grants and contributions not restricted to specific programs657,5461,763,614 - - 657,5461,763,614 Unrestricted investment earnings413,165254,37968,80595,713481,970350,092 Gain (loss) on sale of property - 11,00516,000 - 16,00011,005 Other280,085354,57215,8961,858295,981356,430 Total revenues26,518,00426,228,79316,901,47215,745,14143,419,47641,973,934 Expenses: General government4,298,1494,398,370 - - 4,298,1494,398,370 Public safety9,129,11110,313,163 - - 9,129,11110,313,163 Public works5,112,0904,975,340 - - 5,112,0904,975,340 Community development981,4331,126,835 - - 981,4331,126,835 Recreation and naturalist1,720,8111,440,232 - - 1,720,8111,440,232 Interest on long-term debt2,292,95797,684 - - 2,292,95797,684 Liquor - - 5,110,7145,043,7035,110,7145,043,703 Water - - 3,531,6493,076,4933,531,6493,076,493 Sewer - - 5,340,0625,068,1465,340,0625,068,146 Storm water - - 1,085,7801,030,4671,085,7801,030,467 Total expenses 23,534,55122,351,62415,068,20514,218,80938,602,75636,570,433 Increase (decrease) in net position before transfers2,983,4533,877,1691,833,2671,526,3324,816,7205,403,501 Transfers338,500338,500(338,500)(338,500) - - Increase in net position3,321,9534,215,6691,494,7671,187,8324,816,7205,403,501 Net position - January 139,313,52335,097,85423,480,72422,292,89262,794,24757,390,746 Net position - December 31$42,635,476$39,313,523$24,975,491$23,480,724$67,610,967$62,794,247 28 Managements Discussion and Analysis ’ Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: 29 Managements Discussion and Analysis ’ Business-Type Activities Business-type activities increased net position by $1,494,767. This increase is primarily due to an increase in storm water grants. Business-Type of Activities – Program Revenues vs Operating Expenses 30 Managements Discussion and Analysis ’ Financial Analysis of the Government's Funds Governmental funds . The focus of the City of Fridley’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 Fridley’s financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Fridley’s governmental funds reported combined ending fund balances of $55,573,961. The General Fund’s fund balance increased by $421,650 in 2017. This was much better than the increase of $0 anticipated with the 2017 revised budget. Public safety was under budget by $141,221 due to vacancies in staffing. A contingency for emergencies was budgeted in the amount of $120,000 for which no expenditures were incurred during 2017. Public works was under budget by $102,427 primarily due to a reduction in supplies and contractual services. The Debt Service Fund increased by $381,878 in 2017. The excess of revenues over expenditures was not enough to cover the monthly operating transfers. The Street Improvements Fund has an assigned fund balance of $1,667,018 and is identified as a major fund. The fund balance decreased by $1,129,783 in 2017 with the use of reserves to support the funding of a pedestrian bridge. The Building Improvements Fund has a restricted fund balance of $32,248,155 and is identified as a major fund. The fund balance increased $31,575,320 with the proceeds from capital bonding received in 2017 for a new civic campus. Non-major special revenue funds increased by $69,272 in 2017. This was primarily due to an increase in franchise fees and reimbursements for franchise costs incurred. Non-major capital project funds increased by $85,282 in 2017. This was primarily due to proceeds from the sale of capital assets of $69,784 and the delay of projects scheduled in the park capital fund. Proprietary funds . The City of Fridley’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The unrestricted net position in the respective proprietary funds are liquor $587,140, water $4,092,586, sewer $3,683,511 and storm water $2,897,997. The liquor, water, sewer and storm water funds had an increase in net position of $93,345, $21,138, $345,766 and $1,090,552, respectively. 31 Managements Discussion and Analysis ’ Budgetary Highlights General Fund The original revenue and expenditure budgets were amended ($82,900) primarily to account for salaries and supplies coming in slightly under budget. Operating expenditures in total were less than the final budgetary estimates by $516,971. The City management department was under budget by $47,846 primarily due to a reduction in legal expenses and professional services in the human resources division. Public safety was under budget by $141,221 due to vacancies and staffing. Public works was under budget by $91,927 primarily due to a reduction in supplies and fuel costs. Community Development was under budget by $76,326 due to staffing vacancies during the year. A contingency for emergencies was budgeted in the amount of $120,000 for which no expenditures were incurred during 2017. Total revenues were less than the final budgetary estimates by $95,321. Intergovernmental revenues were over budget by $93,485 due to an increase in both state and federal grants along with receiving more police state aid than projected. Current and delinquent property taxes were under budget by $84,101 and $103,052 respectively due to tax petitions resulting in reduced current and prior year taxes for several commercial properties. The anticipated insurance reimbursement for 2017 was only half of what had been anticipated resulting in a budget shortage of $44,359. Capital Asset and Debt Administration Capital assets . The City of Fridley’s, investment in capital assets for its governmental and business type activities as of December 31, 2017, amounts to $70,383,754 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, improvements other than buildings, machinery and equipment, infrastructure and construction in progress. 32 Managements Discussion and Analysis ’ City of Fridley’s Capital Assets (Net of Depreciation ) Governmental ActivitiesBusiness-Type ActivitiesTotals 201620172016201720162017 Land$2,814,016$5,380,199$306,477$306,477$3,120,493$5,686,676 Buildings and structures 6,165,729 6,096,4141,525,550 1,854,145 7,691,2797,950,559 Improvements other than buildings1,673,375 528,4825,663,575 7,336,950- 528,482 Machinery and equipment 3,275,578 3,148,785 823,160 1,299,198 4,098,7384,447,983 Infrastructure 11,275,938 11,223,63111,490,779 16,459,57522,766,71727,683,206 Construction in progress 1,837,950 23,171,917 15,991 914,931 1,853,94124,086,848 Total Capital Assets$27,042,586$49,549,428$19,493,592$20,834,326$46,868,118$70,383,754 Additional information on the City of Fridley’s capital assets can be found in Note 5. Long-term debt . At the end of the current fiscal year, the City of Fridley had total bonded debt outstanding of $58,555,000, an increase of $44,800,000 from 2016. $49,585,000 of this is for general obligation improvement debt which is supported by special assessments and a property tax levy, an additional $925,000 is for general obligation equipment certificate debt which financed the City’s capital equipment purchases, and $8,045,000 is general obligation utility revenue bonds which is financed utility improvements. In addition, there is long-term debt in the amount of $1,023,134 for compensated absences. Additional information on the City of Fridley’s long-term debt can be found in Note 6. City of Fridley’s Outstanding Debt General Obligation Improvement Bonds, General Obligation Equipment Certificates, General Obligation Revenue Bonds, the related Premiums/discounts, and Compensated Absences are as follows: Governmental ActivitiesBusiness-Type ActivitiesTotals 201620172016201720162017 General Obligation Improvement Bonds$1,980,000$49,585,000$ - $ - $1,980,000$49,585,000 General Obligation Revenue Bonds - - 10,645,000 8,045,000 10,645,000 8,045,000 General Obligation Equipment Certificates1,130,000925,000 - - 1,130,000 925,000 Compensated Absences 1,028,656 1,023,134 - - 1,028,656 1,023,134 Bond issuance premium/discount 1,526,785- 166,935155,461166,935 1,682,246 Total$4,138,656$53,059,919$10,811,935$8,200,461$14,950,591$61,260,380 The City of Fridley has an Aa2 rating, which was downgraded by Moody’s Investors Service in January of 2017. 33 Managements Discussion and Analysis ’ State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City of Fridley is $72,490,155. Only $50,055,000 of the City’s outstanding debt is counted within the statutory limitation because all other debt is either wholly or partially repaid by revenues other than general property tax levies. Requests for information. This financial report is designed to provide a general overview of the City of Fridley’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 Finance Director, 6431 University Avenue NE, Fridley, Minnesota 55432. 34 35 This page intentionally left blank 36 Exhibit A-1 CITY OF FRIDLEY, MINNESOTA STATEMENT OF NET POSITION December 31, 2017 With comparative totals for December 31, 2016 Primary GovernmentComponent Unit GovernmentalBusiness-TypeTotalHousing & Redevelopment Authority ActivitiesActivities2017201620172016 Assets: Cash and investment$59,530,71$7,857,785$67,388,500$33,765,276$8,320,018$7,912,241 s5 Restricted cash - 1,264,0601,264,060 - - - Cash with escrow agen - - - 1,717,714 - - t Receivables: Accounts161,3053,331,9423,493,2473,707,284512,01955,263 Taxes192,255 - 192,255246,03110,30913,659 Special assessments1,900,65422,4711,923,1252,212,218 - - Mortgage - - - - 1,148,0361,003,227 Interest112,206 - 112,20688,14837,70643,713 Due from component unit1,705,301 - 1,705,3011,613,599 - - Due from other governments768,735377,1201,145,8552,165,482 - - Internal balances183,668(183,668) - - - - Prepaid items6,174352,859359,033350,341 - 530 Inventories - at cost49,6031,004,4391,054,0421,101,143 - - Land held for resale - - - - 1,941,8764,509,369 Capital assets (net of accumulated depreciation): Land5,380,199306,4775,686,6763,120,4932,023,5112,023,511 Buildings and structures6,096,4141,854,1457,950,5597,691,279 - - Improvements other than buildings528,482 - 528,4827,336,950 - - Machinery and equipment3,148,7851,299,1984,447,9834,098,738 - - Infrastructure11,223,63116,459,57527,683,20622,766,717 - - Construction in progress23,171,917914,93124,086,8481,853,941 - - Total assets114,160,04434,861,334149,021,37893,835,35413,993,47515,561,513 Deferred outflows of resources: Related to pensions8,719,000 - 8,719,00015,318,307 - - Liabilities: Due to primary government - - - - 1,705,4491,613,906 Accounts payable983,318634,8041,618,1221,324,209686,862479,872 Deposits payable 103,286 - 103,28685,186 - - Contracts payable2,694,5649,8912,704,455467,991 - - Due to other governments56,545801,906858,451817,7089,8529,510 Salaries payable356,51439,763396,277409,805 - - Accrued interest payable742,20580,391822,596175,973 - - Compensated absences payable: Due within one year843,577 - 843,577822,678 - - Due in more than one year179,556 - 179,556205,978 - - Other post employment benefits payable: Due in more than one year687,76987,566775,335754,233 - - Unearned revenue8,46731,06139,5289,132 - - Bonds payable: Due within one year1,390,000915,0002,305,0004,330,000 - - Due in more than one year50,646,7857,285,46157,932,2469,591,935 - - Net pension liability Due in more than one year11,258,812 - 11,258,81224,519,010 - - Total liabilities69,951,3989,885,84379,837,24143,513,8382,402,1632,103,288 Deferred inflows of resources: Related to pensions10,292,170 - 10,292,1702,845,576 - - Net position: Net investment in capital assets31,006,34413,897,92544,904,26937,846,0202,023,5112,023,511 Restricted for: Debt service2,648,889 - 2,648,8892,092,036 - - Tax increment purposes - - - - 1,101,510805,929 Police forfeitures7,109 - 7,1094,404 - - Cable television equipment66,893 - 66,89372,640 - - Donations16,684 - 16,68435,903 - - Unrestricted8,889,55711,077,56619,967,12322,743,2448,466,29110,628,785 Total net position$42,635,476$24,975,491$67,610,967$62,794,247$11,591,312$13,458,225 The accompanying notes are an integral part of these financial statements. 37 CITY OF FRIDLEY, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Program Revenues OperatingCapital Charges ForGrants andGrants and ExpensesServicesContributionsContributions Functions/Programs Primary government: Governmental activities: General government$4,298,149$2,021,012$882,117$2,681,550 Public safety9,129,111798,510555,570 - Public works5,112,09034,681404,6932,124,603 Community development981,433895,125 - - Parks and recreation1,720,811352,2455,000527,327 Interest on long-term debt2,292,957 - - - Total governmental activities23,534,5514,101,5731,847,3805,333,480 Business-type activities: Liquor5,110,7145,520,161 - - Water3,531,6493,486,965 - - Sewer5,340,0625,640,419 - - Storm water1,085,7801,378,09561,476713,655 Total business-type activities15,068,20516,025,64061,476713,655 Total primary government$38,602,756$20,127,213$1,908,856$6,047,135 Component unit: Housing and Redevelopment Authority$8,416,587$282,383$2,806,679$ - Total component unit$8,416,587$282,383$2,806,679$ - General revenues: Property taxes Tax increment collections Grants and contributions not restricted to specific programs Unrestricted investment earnings Net change in the fair market value of investments Gain on sale of property Insurance and other reimbursements Other Transfers Total general revenues and transfers Change in net position Net position - January 1 Net position - December 31 The accompanying notes are an integral part of these financial statements. 38 Exhibit A-2 Net (Expense) Revenue and Changes in Net PositionComponent Unit Primary GovernmentHousing & GovernmentalBusiness-TypeTotalRedevelopment Authority ActivitiesActivities2017201620172016 $1,286,530$ - $1,286,530($2,175,468)$ - $ - (7,775,031) - (7,775,031)(9,010,650) - - (2,548,113) - (2,548,113)(1,759,410) - - (86,308) - (86,308)(18,658) - - (836,239) - (836,239)2,332,532 - - (2,292,957) - (2,292,957)(97,684) - - (12,252,118) - (12,252,118)(10,729,338) - - - 409,447409,447395,720 - - - (44,684)(44,684)253,857 - - - 300,357300,357295,493 - - - 1,067,4461,067,446483,691 - - - 1,732,5661,732,5661,428,761 - - (12,252,118)1,732,566(10,519,552)(9,300,577)$ - $ - ($5,327,525)($1,638,005) (5,327,525)(1,638,005) 13,884,775 - 13,884,77512,222,937397,840394,500 - - - - 2,332,9201,640,532 657,546 -657,5461,763,614 - - 513,54775,642589,189268,38570,098111,596 (100,382)(6,837)(107,219)81,707 -(45,772) -16,00016,00011,005452,928 - 2,9942,4255,419 - - - 277,09113,471290,562356,430206,826148,383 338,500(338,500) - - - - 15,574,071(237,799)15,336,27214,704,0783,460,6122,249,239 3,321,9531,494,7674,816,7205,403,501(1,866,913)611,234 39,313,52323,480,72462,794,24757,390,74613,458,22512,846,991 $42,635,476$24,975,491$67,610,967$62,794,247$11,591,312$13,458,225 The accompanying notes are an integral part of these financial statements. 39 CITY OF FRIDLEY, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2017 With comparative totals for December 31, 2016 GeneralDebt Service Assets Cash and investments$9,891,449$5,875,439 Receivables: Accounts23,213 - Taxes151,71134,255 Special assessments45,095495,726 Interest112,206 - Due from component unit37,3741,667,927 Due from other governments74,023 - Due from other funds22,660 - Prepaid items6,174 - Inventories, at cost49,603 - $10,413,508$8,073,347 Total assets Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities: Accounts payable$289,609$ - Deposits payable70,350 - Contracts payable - - Due to other governments56,008 - Due to other funds - - Salaries payable243,201 - Unearned revenue - - Total liabilities659,168 - Deferred inflows of resources: Unavailable revenue161,254687,437 Fund balance: Nonspendable55,777 - Restricted14,4662,504,589 Committed - - Assigned -4,881,321 Unassigned9,522,843 - Total fund balance9,593,0867,385,910 $10,413,508$8,073,347 Total liabilities, deferred inflows of resources, and fund balance The accompanying notes are an integral part of these financial statements. 40 Exhibit A-3 Other StreetBuildingGovernmentalIntra-Activity ImprovementsImprovementsFundsEliminationsTotals Governmental Funds 20172016 $1,095,135$35,502,938$4,625,053$ - $56,990,014$21,611,701 17,370 - 120,722 - 161,305525,609 166 - 6,123 - 192,255246,031 1,244,296 - 115,537 - 1,900,6542,173,374 - - - - 112,20688,148 - - - - 1,705,3011,613,599 599,559 - 95,153 - 768,7351,882,779 - - - (22,660) - - - - - - 6,1742,250 - - - - 49,60351,305 $2,956,526$35,502,938$4,962,588($22,660)$61,886,247$28,194,796 $6,221$599,878$85,481$ - $981,189$670,803 - - 32,936 - 103,28685,186 39,6592,654,905 - - 2,694,564398,445 380 - 157 - 56,545180,148 - - 22,660(22,660) - - - - 12,776 - 255,977261,611 - - 8,467 - 8,4678,467 46,2603,254,783162,477(22,660)4,100,0281,604,660 1,243,248 - 120,319 - 2,212,2582,419,794 - - - - 55,77751,305 - 32,248,15569,111 - 34,836,3211,933,446 - - 2,658,339 - 2,658,3392,555,650 1,667,018 - 1,961,795 - 8,510,13410,573,287 - - (9,453) - 9,513,3909,056,654 1,667,01832,248,1554,679,792 - 55,573,96124,170,342 $2,956,526$35,502,938$4,962,588($22,660)$61,886,247$28,194,796 Fund balance reported above$55,573,961$24,170,342 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.49,549,42827,042,586 Other long-term assets are not available to pay for current-period expenditures and, therefore, are reported as unavailable revenue in the funds.2,212,2582,419,794 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds.(53,466,759)(3,817,566) Internal service funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net position.(11,233,412)(10,501,633) $42,635,476$39,313,523 Net position of governmental activities The accompanying notes are an integral part of these financial statements. 41 CITY OF FRIDLEY, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Debt Service General Revenues: Taxes$10,355,480$3,128,169 Special assessments17,933151,422 Licenses and permits975,520 - Intergovernmental revenue1,742,085 - Charges for services1,981,946 - Fines and forfeits168,818 - Investment income: Interest and dividends65,10539,710 Net change in the fair value of investments(4,465)(2,496) Contributions and donations - - Miscellaneous: Other160,357 - Total revenues15,462,7793,316,805 Expenditures: Current: General government2,818,578 - Public safety7,799,479 - Public works3,024,373 - Community development934,074 - Parks and recreation917,225 - Debt service - 2,665,227 Capital outlay - - Total expenditures15,493,7292,665,227 Excess (deficiency) of revenues over (under) expenditures(30,950)651,578 Other financing sources (uses): Proceeds from sale of capital assets - - Proceeds from bond issuance - - Premium on bond issuance - - Transfers in452,600622,208 Transfers out - (891,908) Total other financing sources (uses)452,600(269,700) Net change in fund balance421,650381,878 Fund balance - January 19,171,4367,004,032 Fund balance - December 31$9,593,086$7,385,910 The accompanying notes are an integral part of these financial statements. 42 Exhibit A- 4 Other StreetBuildingGovernmentalIntra-Activity ImprovementsImprovementsFundsEliminations Totals Governmental Funds 20172016 $5$ - $394,550$ - $13,878,204$12,244,211 431,178 - 21,088 - 621,621865,722 - - 297,233 - 1,272,7531,442,895 1,773,492 - 712,132 - 4,227,7097,330,338 - - 578,885 - 2,560,8312,592,665 - - 99,171 - 267,989212,635 13,346362,87231,932 - 512,965186,378 (1,164)(87,943)(3,732) - (99,800)68,001 - - 476,027 - 476,027491,656 (4,830)2,500132,005 - 290,032396,022 2,212,027277,4292,739,291 - 24,008,33125,830,523 - 12,4701,121,977 - 3,953,0253,924,877 - - 201,553 - 8,001,0327,537,051 443,729 - - - 3,468,1022,824,319 - - - - 934,074942,768 - - 500,386 - 1,417,6111,341,444 - 711,761 - - 3,376,9881,345,121 2,795,63818,692,7761,088,648 - 22,577,0628,618,369 3,239,36719,417,0072,912,564 - 43,727,89426,533,949 (1,027,340)(19,139,578)(173,273) - (19,719,563)(703,426) - - 69,784 - 69,78443,673 - 49,130,000 - - 49,130,000 - - 1,584,898 - - 1,584,898 - - - 286,381(1,022,689)338,500138,500 (102,443) - (28,338)1,022,689 - - (102,443)50,714,898327,827 - 51,123,182182,173 (1,129,783)31,575,320154,554 - 31,403,619(521,253) 2,796,801672,8354,525,238 - 24,170,34224,691,595 $1,667,018$32,248,155$4,679,792$ - $55,573,961$24,170,342 The accompanying notes are an integral part of these financial statements. 43 This page intentionally left blank 44 Exhibit A-5 CITY OF FRIDLEY, MINNESOTA 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, 2017 With comparative amounts for the year ended December 31, 2016 20172016 Amounts reported for governmental activities in the statement of activities (Exhibit A-2) are different because: Net changes in fund balances - total governmental funds (Exhibit A-4)$31,403,619($521,253) Governmental funds report capital outlays as expenditures. However, in the statement 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 capital outlays exceeded depreciation in the current period.22,506,8425,890,743 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(207,536)318,636 The issuance of long-term debt (e.g., bonds, leases) provides current resources to governmental funds, while the repayment of the principal of financial long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences in the treatment of long-term debt and related items.(48,926,785)1,230,000 Internal service funds are used by management to charge the cost of certain activities to individual funds. This amount is net expenditures attributable to governmental activities.(731,779)(2,682,882) Other post employment benefits in the statement of activities does not require the use of current financial resources and, therefore, is not reported as expenditures in governmental funds.(18,326)(37,012) Accrued interest reported in the statement of activities does not require the use of current financial resources and, therefore, is not reported as expenditures in governmental funds.(704,082)17,437 Change in net position of governmental activities (Exhibit A-2)$3,321,953$4,215,669 The accompanying notes are an integral part of these financial statements. 45 CITY OF FRIDLEY, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2017 With comparative totals for Enterprise Funds for December 31, 2016 Business-Type Activities - Enterprise Funds Assets:LiquorWater Current assets: Cash and investments$365,673$2,949,031 Restricted cash -1,264,060 Cash with escrow agent - - Accounts receivable -1,359,365 Special assessments receivable -5,557 Due from other governments - - Prepaid items - - Inventories - at cost762,247242,192 Total current assets1,127,920 5,820,205 Noncurrent assets: Capital assets: Land151,946154,531 Buildings and structures1,019,1584,137,528 Improvements other than buildings - - Machinery and equipment245,9552,850,889 Infrastructure -20,885,795 Construction in process -19,763 Total capital assets1,417,059 28,048,506 Less: Allowance for depreciation(904,142)(16,313,135) Net capital assets512,91711,735,371 Total noncurrent assets512,91711,735,371 Total assets1,640,83717,555,576 Deferred outflows of resources: Related to pensions - - Liabilities: Current liabilities: Accounts payable438,64595,746 Accrued interest payable -72,292 Contracts payable -7,575 Due to other governments55,661237,726 Salaries payable10,27314,308 Payroll deductions payable - - Compensated absences payable - - Bonds payable - current -855,000 Unearned revenue13,146 - Total current liabilities517,725 1,282,647 Noncurrent liabilities: Other post employment benefits23,05535,912 Compensated absences - noncurrent - - Bonds payable - noncurrent -6,735,461 Net pension liability - - Total noncurrent liabilities23,055 6,771,373 Total liabilities540,7808,054,020 Deferred inflows of resources: Related to pensions - - Net position: Net investment in capital assets512,9175,408,970 Unrestricted587,1404,092,586 Total net position$1,100,057$9,501,556 Net position reported above Adjustment to report the cumulative internal balance for the net effect activity between the internal service fund and the enterprise funds over time Net position of business-type activities (Exhibit A-1) The accompanying notes are an integral part of these financial statements. 46 Exhibit A-6 Governmental Activities - Business-Type Activities - Enterprise FundsTotals Internal Service Funds SewerStorm Water20172016 $2,286,944$2,256,137$7,857,785$9,493,320$2,540,701 - - 1,264,060 - - - - - 1,717,714 - 1,597,286375,2913,331,9423,161,448 - - 16,91422,47138,844 - 4,477372,643377,120282,703 - 352,859 - 352,859343,091 - - - 1,004,4391,049,838 - 4,241,566 3,020,985 14,210,676 16,086,958 2,540,701 - - 306,477306,477 - 138,373 - 5,295,0593,634,254 - - - - 15,524,876 - 1,171,267378,9214,647,0323,594,519 - 9,690,90510,518,54041,095,24027,370,208 - - 895,168914,93115,991 - 11,000,545 11,792,629 52,258,739 50,446,325 - (7,747,071)(6,460,065)(31,424,413)(30,620,793) - 3,253,4745,332,56420,834,32619,825,532 - 3,253,4745,332,56420,834,32619,825,532 - 7,495,0408,353,54935,045,00235,912,4902,540,701 - - - - 8,719,000 25,05175,362634,804522,0152,129 4,6463,45380,391137,850 - - 2,3169,89169,546 - 497,01911,500801,906637,560 - 6,3368,84639,76339,771 - - - - - 100,537 - - - - 843,577 35,00025,000915,0002,600,000 - - 17,91531,061665 - 568,052 144,392 2,512,816 4,007,407 946,243 25,0033,59687,56684,790 - - - - - 179,556 315,000235,0007,285,4618,211,935 - - - - - 11,258,812 340,003 238,596 7,373,027 8,296,725 11,438,368 908,055382,9889,885,84312,304,13212,384,611 - - - - 10,292,170 2,903,4745,072,56413,897,92513,913,434 - 3,683,5112,897,99711,261,2349,694,924(11,417,080) $6,586,985$7,970,561$25,159,159$23,608,358($11,417,080) $25,159,159$23,608,358 (183,668)(127,634) $24,975,491 $23,480,724 The accompanying notes are an integral part of these financial statements. 47 CITY OF FRIDLEY, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Business-Type Activities - Enterprise Funds LiquorWater Sales$5,520,161$ - Cost of sales(4,046,642) - Gross profit1,473,519 - Operating revenues: Customer billings -3,480,716 Charges for services -6,249 Other revenues -8,871 Total operating revenues -3,495,836 Total gross profit and operating revenues1,473,5193,495,836 Operating expenses: Personal services534,326758,030 Supplies and other charges: Disposal charges - - Other422,0211,817,297 Depreciation87,626851,532 Total operating expenses1,043,9733,426,859 Operating income (loss)429,546 68,977 Nonoperating revenues (expenses): Intergovernmental revenue - - Investment income: Interest and dividends -42,732 Net change in the fair value of investments(231)(3,771) Insurance reimbursement2,425 - Interest expense -(86,800) Gain (loss) on sale of capital assets - - Bond issuance costs - - Other105 - Total nonoperating revenues (expenses)2,299(47,839) Income (loss) before transfers, capital contributions and special items431,84521,138 Transfers, capital contributions and special items: Transfers in - - Transfers out(338,500) - Capital contributions - - Total contributions and transfers(338,500) - Change in net position93,345 21,138 Net position - January 11,006,7129,480,418 Net position - December 31$1,100,057$9,501,556 Changes in net position reported above Adjustment to report the cumulative internal balance for the net effect of activity between the internal service funds and the enterprise funds over time. Changes in net position of business-type activities (Exhibit A-2) The accompanying notes are an integral part of these financial statements. 48 Exhibit A-7 Business-Type Activities - Enterprise FundsGovernmental Activities SewerStorm WaterInternal Service FundTotalss 20172016 $ -$ -$5,520,161$5,439,423$ - - -(4,046,642)(3,976,342) - - -1,473,5191,463,081 - 5,640,4191,378,09510,499,2309,938,517 - - -6,249501,390,008 - -8,87115,238 - 5,640,419 1,378,095 10,514,350 9,953,805 1,390,008 5,640,419 1,378,095 11,987,869 11,416,886 1,390,008 336,779463,2072,092,3421,917,0081,947,842 4,135,302 -4,135,3023,957,102 - 534,756329,0903,103,1642,451,624286,317 304,055285,1331,528,3461,481,702 - 5,310,892 1,077,430 10,859,154 9,807,436 2,234,159 329,527 300,665 1,128,715 1,609,450 (844,151) -61,47661,476254,34235,659 12,49320,41775,64282,00722,155 (1,029)(1,806)(6,837)13,706(1,476) - -2,425 - - (11,225)(8,350)(106,375)(233,630) - 16,000 -16,000 - - - - -(94,336) - -4,4954,6001,858 - 16,239 76,232 46,931 23,947 56,338 345,766 376,897 1,175,646 1,633,397 (787,813) - - - - - - -(338,500)(338,500) - -713,655713,655 - - -713,655375,155(338,500) - 345,766 1,090,552 1,550,801 1,294,897 (787,813) 6,241,2196,880,00923,608,35822,313,461(10,629,267) $6,586,985$7,970,561$25,159,159$23,608,358($11,417,080) $1,550,801$1,294,897 (56,034)(107,065) $1,494,767 $1,187,832 The accompanying notes are an integral part of these financial statements. 49 CITY OF FRIDLEY, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2017 With comparative totals for Enterprise Funds for the year ended December 31, 2016 Business-Type Activities - Enterprise Funds LiquorWater Cash flows from operating activities: Receipts from customers and users$5,532,642$3,454,918 Receipts from interfund services provided - - Payment to suppliers(4,465,574)(1,805,386) Payment to employees(534,263)(755,978) Operating contribution105 - Net cash flows from operating activities532,910893,554 Cash flows from noncapital financing activities: Operating grants - - Intergovernmental revenue - - Transfers in - - Transfers out(338,500) - Net cash flows from noncapital financing activities(338,500) - Cash flows from capital and related financing activities: Acquisition of capital assets -(1,359,785) Proceeds from sale of capital assets - - Capital grants and contributions - - Principal received on special assessments - - Insurance reimbursement2,425 - Proceeds from sale of bonds, net of issue costs - - Principal paid on revenue bonds -(2,545,000) Interest and paying agent fees on revenue bonds -(155,043) Net cash flows from capital and related financing activities2,425(4,059,828) Cash flows from investing activities: Investment income(231)38,961 Net increase (decrease) in cash and cash equivalents196,604(3,127,313) Cash and cash equivalents - January 1169,0697,340,404 Cash and cash equivalents - December 31$365,673$4,213,091 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $429,546$68,977 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation87,626851,532 Operating contribution105 - Intergovernmental revenue - - Changes in assets and liabilities: Decrease (increase) in receivables -(40,918) Decrease (increase) in prepaid items - - Decrease (increase) in inventories(99,667)145,065 Decrease (increase) in deferred outflows of resources - - Increase (decrease) in payables102,819(131,102) Increase (decrease) in unearned revenue12,481 - Increase (decrease) in deferred inflows of resources - - Total adjustments103,364824,577 Net cash provided by operating activities$532,910$893,554 The accompanying notes are an integral part of these financial statements. 50 Exhibit A-8 Business-Type Activities - Enterprise FundsGovernmental Activities - Totals SewerStorm WaterInternal Service Funds 20172016 $5,544,300$1,657,152$16,189,012$15,095,486$ - - - - -1,410,235 (4,516,910)(244,128)(11,031,998)(10,942,726)(410,579) (336,477)(462,856)(2,089,574)(1,900,757)(1,139,889) - -105405 - 690,913950,1683,067,5452,252,408(140,233) - - -67,551 - -61,47661,476 - - - - - - - - -(338,500)(338,500) - -61,476(277,024)(270,949) - (66,919)(1,110,437)(2,537,141)(1,817,637) - 16,000 -16,000 - - -341,012341,012 - - -4,4954,4951,453 - - -2,425 - - - - -6,072,714 - (30,000)(25,000)(2,600,000)(610,000) - (11,600)(8,663)(175,306)(176,055) - (92,519)(798,593)(4,948,515)3,470,475 - 11,46418,61168,80595,71320,679 609,858231,662(2,089,189)5,547,647(119,554) 1,677,0862,024,47511,211,0345,663,3872,660,255 $2,286,944$2,256,137$9,121,845 $11,211,034 $2,540,701 $329,527$300,665$1,128,715$1,609,450($844,151) 304,055285,1331,528,3461,481,702 - - -105405 - - - - -35,659 (96,119)261,142124,105(298,049)20,227 (9,768) -(9,768)(343,091)5,000 - -45,398(247,730) - - - - -6,599,307 163,21885,313220,24849,414(13,402,869) -17,91530,396307 - - - - -7,446,594 361,386 649,503 1,938,830 642,958 703,918 $690,913$950,168$3,067,545$2,252,408($140,233) The accompanying notes are an integral part of these financial statements. 51 Exhibit A-9 CITY OF FRIDLEY, MINNESOTA STATEMENT OF FIDUCIARY NET POSITION December 31, 2017 With comparative amounts for December 31, 2016 20172016 Assets: Cash and investments$15,629$7,294 Receivables: Accounts7,2423,816 Total assets$22,871$11,110 Liabilities: Accounts payable$8,163$7,294 Due to other governments14,7083,816 Total liabilities$22,871$11,110 The accompanying notes are an integral part of these financial statements. 52 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 1. Summary of Significant Accounting Policies The City of Fridley, Minnesota was incorporated July 1, 1949, under Chapter 410.03 of the Statutes of the State of Minnesota providing for a council-manager form of government under the “Home Rule Charter City” concept. The City provides the following services as authorized by its charter: general administrative services, public safety (police and fire), public improvements, planning and zoning, and culture and recreation. The financial statements of the City of Fridley, Minnesota have been prepared in conformity with generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. Financial Reporting Entity As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Fridley, Minnesota (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Component Units In conformity with generally accepted accounting principles, the financial statements of the component units have been included in the financial reporting entity as discretely presented component units. Discretely Presented Component Unit - The Fridley Housing and Redevelopment Authority (HRA) is governed by commissioners appointed by the Fridley City Council. The HRA is responsible for providing housing and redevelopment assistance to the City and its residents. Funding for the various programs administered by the HRA is provided through the issuance of tax increment revenue bonds and general obligation tax increment bonds guaranteed by the City. Separate financial statements are not prepared for the HRA. 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. 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 53 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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 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. 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 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. TheDebt Service Fund services debt on the general obligation improvement bonds that were issued to finance construction of public improvements. Special assessment improvements are paid for completely or in part by property owners deemed to have benefited from such improvements. TheBuilding Improvements Fund is used to account for repairs and replacement of major buildings or building related improvements. TheStreet Improvements Fund is used to account for repairs and replacements of city streets and street related equipment such as signs and street lights. The government reports the following major proprietary funds: TheLiquor Fund accounts for operations of the municipal liquor stores. 54 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 TheWater Fund accounts for the water service charges which are used to finance the water system operating expenses. TheSewer Fund accounts for the sewer service charges which are used to finance the sanitary sewer system operating expenses. TheStorm Water Fund accounts for storm sewer charges which are used to finance the storm sewer operating expenses. Additionally, the government reports the following fund types: Internal Service Funds are used to account for employee fringe benefits, pension benefits, and insurance deductibles that are provided on a cost reimbursement or fee basis to departments or agencies within the City. These funds are essential for segregating costs for determining the total cost of providing a service and for assuring that the goods and services provided are properly utilized. Agency Funds are used to account for monies on behalf of the North Metro Convention and Tourism Bureau. 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 Fridley. 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 operatingrevenues 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 liquor, water, sewer and storm water enterprise funds are charges to customers for sales and services.Operating expenses for enterprise 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 The City Charter grants the City Council full authority over the financial affairs of the City. The City Manager is charged with the responsibility of preparing the estimates of the annual budget and the enforcement of the provisions of the budget as specified in the City Charter. Upon 55 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 adoption of the annual budget resolution by the Council, it becomes the formal appropriation budget for City operations. All budget adjustments must be approved by the Council. Budgets for the General, Special Revenue and Capital Improvement Capital Projects Funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Budgeted expenditure appropriations lapse at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is, at present, not considered necessary to assure effective budgetary control or to facilitate effective cash management. E. Legal Compliance Budgets The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution. 4. The City Council may authorize transfer of budgeted amounts between departments within any fund. 5. Reported budget amounts are as originally adopted or as amended by Council approved transfers. The City Charter limits appropriations to the total estimated revenues and fund balances. If actual revenues exceed the original estimates, appropriations may be increased by the Council up to the amount of revenue increases. 6. All budget amounts lapse at the end of the year to the extent they have not been expended or encumbered. Encumbrances are reappropriated into the following year’s budget. 7. Annual budgets are legally adopted for the General Fund and for the following Special Revenue Funds: Cable TV Fund, Solid Waste Abatement Fund, Springbrook Nature Fund, and the Police Activity Fund. Formal budgeting integration is employed as a management control device during the year for each of these funds. Formal budgetary integration is not employed for Debt Service Funds because effective budgetary control is achieved through the bond indenture provisions. Budgetary control for other Capital Projects Funds is accomplished through the use of project controls. 8. As required by the City Charter, budgetary control is maintained within department at the departmental level. This is the level of control at which expenditures may not legally exceed appropriations. 9. The General Fund budget includes prior year encumbrances which were reappropriated to the current year. Expenditures for the items encumbered are included in the current year’s expenditures. 56 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 F. Cash and Investments Cash balances from all funds are combined and invested to the extent available in certificates of deposit, U.S. government securities and other securities authorized by State Statute. Investment income is 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 as of the balance sheet date. Investment income is accrued at the balance sheet date. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund balances are eliminated on the government-wide financial statements. For purposes of the statement of cash flows the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. Therefore the entire balance in the Proprietary Funds is considered cash equivalents. Restricted cash balances relate to unspent bond proceeds. Investments are stated at fair value, except for investments in external investment pools that meet GASB 79 requirements, which are stated at amortized cost. Investment income is accrued at the balance sheet date. G. Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “interfund receivables/payables.” All short-term interfund receivables and payables at December 31, 2017 are planned to be eliminated in 2018. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Uncollectible property taxes and special assessments are not material and therefore have not been reported. 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 7 and December 2 of the same year. Delinquent collections for November and December are received the following January. The City has no 57 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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 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. I. Special Assessment Revenue Recognition Special assessments are levied against the benefited properties for the assessable costs of special assessment improvement projects in accordance with State Statutes. The City usually adopts the assessment rolls when the individual projects are complete or substantially complete. The assessments are collectible over a term of years generally consistent with the term of years of the related bond issue. Collection of annual installments is handled by the County in the same manner as property taxes. Property owners are allowed to 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 remitted to the City in payment of delinquent special assessments. 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) are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred inflows of resources. 58 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 J. Inventories Governmental Funds Inventories of the general fund are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. The primary government does not maintain material amounts of inventory within the other governmental funds. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Proprietary Funds Liquor fund inventories are valued on the average cost basis. Other proprietary funds inventory items are expensed at the time they are sold or used (consumption method). 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. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. L. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible assets such as easements are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an estimated useful life in excess of two years and an initial cost of more than the following: Capitalization Threshold Land$1 Building and building improvements$25,000 Land improvements$25,000 Vehicles and equipment$10,000 Infrastructure$50,000 Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the government chose to include all such items regardless of their acquisition date or amount. The City was able to estimate the historical cost for the initial reporting of these assets through back-trending (i.e. estimating the current replacement cost of the infrastructure to be capitalized and using an appropriate price-level index to deflate the cost of the infrastructure to be capitalized to the acquisition year or estimated acquisition year). 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. 59 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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, 2017, $86,561 of interest was capitalized in connection with construction in progress. Property, plant and equipment of the primary government, and the component units, are depreciated using the straight line method over the following estimated useful lives: Assets Improvements other than building 10 – 20 years Buildings and structures 10 – 40 years Machinery and equipment 3 – 25 years Infrastructure 15 – 50 years M. Compensated Absences All liabilities for compensated absences, both current and long-term, for annual leave, severance and separation pay are accounted for in the Employee Benefit Fund, an Internal Service Fund. Each year compensated absence expenditures and expenses are recorded in the Governmental and Proprietary Funds respectively, equivalent to the full amount accrued by fund employees during the year. These charges are offset by a corresponding transfer of assets from the home department funds to the Employee Benefit Fund to fund the liability. This liability represents the maximum possible dilution of Employee Benefit Fund assets by retirements or extended leaves by employees. The personnel ordinance limits the annual accumulation of benefits that can be accumulated from year-to-year. N. 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 assets. Bond premiums and discounts are generally immaterial and are expensed in the year of bond issuance. Material premiums and discounts are deferred and amortized over the life of the bonds. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. O. Fund Balance Classifications In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable- consists of amounts that are not in spendable form, such as prepaid items. 60 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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. These constraints are established by Resolution of the City Council. Assigned- consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City’s intended use. Pursuant to City Council Resolution, the City Manager and/or the Finance Director are authorized to establish assignments of fund balance. Unassigned - is the residual classification for the general fund and 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. P. 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. Q. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. R. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so willnot be recognized as an outflow of resources (expense/expenditure) until then. The government has one item that qualifies for reporting in this category. It is the pension related deferred outflows of resources reported in the government-wide Statement of Net Position and the proprietary funds Statement of Net Position. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The 61 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 government has pension related deferred inflows of resources reported in the government-wide Statement of Net Position and the proprietary funds Statement of Net Position. The City also has a type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental fund balance sheet. The governmental funds report unavailable revenues from the following sources: property taxes and special assessments. S. Pension Plans Cost Sharing Multiple – Employer Plans Pensions. For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA except PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. T. Reconciliation of Government-Wide and Fund Financial Statements 1. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds”. The details of this ($53,466,759) difference are as follows: Bonds payable($50,510,000) Premium on bonds payable(1,526,785) Accrued interest payable(742,205) Other post employment benefits payable(687,769) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities($53,466,759) 62 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 2. Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense”. The details of this $22,506,842 difference are as follows: Net book value of capital asset disposals($170,869) Capital outlay22,577,062 Capital outlay not capitalized(15,092) Capital contributions2,688,394 Depreciation expense(2,572,653) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities$22,506,842 Another element of that reconciliation states that “revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds”. The details of this ($207,536) difference are as follows: Unavailable revenue - general property taxes: At December 31, 2016($141,879) At December 31, 2017148,450 Unavailable revenue - special assessments: At December 31, 2016(2,166,391) At December 31, 20171,895,881 Unavailable revenue - interest on loan to HRA: At December 31, 2016(111,524) At December 31, 2017167,927 Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities($207,536) 63 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Another element of that reconciliation states that “the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal on long-term debt consumes the current financial resources of governmental funds”. Neither transaction, however, has any effect on net position. The details of this ($48,926,785) difference are as follows: Principal repayments: G.O. improvement bonds$1,730,000 Bond issuance(49,130,000) Premium on bonds issuance(1,526,785) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities($48,926,785) U. Reclassifications Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation. V. Comparative Totals The basic financial statements, required supplementary information, combining and individual fund financial statements and schedules, and supplementary financial information include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the City’s financial statements for the year ended December 31, 2016, from which the summarized information was derived. 2. Deposits and Investments A.Deposits In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; 64 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 c) General obligation securities of any state or local government with taxing powers which is rated “A” or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; d) Unrated general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; and f) Time deposits that are fully insured by any Federal agency. Custodial Credit Risk – Deposits: Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. State Statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. As of December 31, 2017, the bank balance of the City’s deposits was covered by federal depository insurance or covered by perfected collateral pledged and held in the City’s name. B. Investments Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. 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, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c) Obligations of the State of Minnesota or any of its municipalities as follows: 1) any security which is a general obligation of any state or local government with taxing powers which is rated “A” or better by a national bond rating service; 2) any security which is a revenue obligation of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; and 3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the State of Minnesota and is rated “A” or better by a national bond rating agency. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or 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 to the Federal Reserve Bank of New York; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. 65 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 As of December 31, 2017 the City had the following investments and maturities: Investment Maturities (in Years) FairLessOver Investment TypeRatingValueThan 11-56-1010 Years Federal Farm Credit Bank$494,970$ - $494,970$ - $ - AAA Federal Home Loan BankAAA2,355,4631,859,108496,355 - - Federal National Mortgage AssociationAAA13,209,5696,524,2026,685,367 - - Federal Home Loan Mortgage CorporationAAA3,239,200497,4452,741,755 - - Local government bondsAaa-A15,124,6632,620,6942,503,969 - - US Treasury NoteAAA8,486,2736,258,5422,227,731 - - Brokered CDsN/R16,094,70211,480,5114,614,191 - - Money marketN/R11,067,40111,067,401 - - - Total$60,072,241$40,307,903$19,764,338$ - $ - Total investments$60,072,241 Deposits8,590,898 Petty cash5,050 Total cash and investments$68,668,189 Following is a reconciliation to the City’s cash and investment balances as of December 31, 2017: Cash and investments - primary government: Cash and investments (statement A-1)$67,388,500 Restricted cash (statement A-1)1,264,060 Fiduciary (statement A-9)15,629 $68,668,189 As of December 31, 2017 the HRA had the following investments and maturities: Investment Maturities (in Years) FairLessOver Investment TypeRatingValueThan 11-56-1010 Years Federal Home Loan BankAAA479,198479,198 - - - Federal National Mortgage AssociationAAA$1,048,069$747,645$300,424$ - $ - Aaa - A Local government bonds3,338,467538,8892,799,578 - - 1 US Treasury NoteAAA1,934,649868,0301,066,619 - - Money marketN/R222,786222,786 - - - Total$7,023,169$2,856,548$4,166,621$ - $ - Total investments$7,023,169 Deposits1,296,849 Total cash and investments$8,320,018 The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy has three levels. Level 1 investments are valued using inputs that are based on quoted prices in active markets for identical assets. Level 2 investments are valued using inputs other than quoted prices included in Level 1 that are observable either directly or indirectly.Inputs for Level 2 include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets, inputs other that quoted prices that are observable for the asset, or inputs derived principally from or corroborated by observable market data by correlation or other means. Level 3 investments are valued using inputs that are unobservable. 66 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The City has the following recurring fair value measurements as of December 31, 2017: Fair Value Measurement Using Investment Type12/31/2017Level 1Level 2Level 3 Investments at fair value: Federal Farm Credit Bank$494,970$ - $494,970$ - Federal Home Loan Bank2,355,463 - 2,355,463 - Federal National Mortgage Association13,209,569 - 13,209,569 - Federal Home Loan Mortgage Corporation3,239,200 - 3,239,200 - Local government bonds5,124,663 - 5,124,663 - US Treasury8,486,273 - 8,486,273 - Brokered CDs16,094,702 - 16,094,702 - Total/Subtotal49,004,840$ - $49,004,840$ - Investments not categorized: External investment pool - US Bank Fund 41,767 External investment pool - PFM Bank Fund11,025,634 Total$60,072,241 The HRA has the following recurring fair value measurements as of December 31, 2017: Fair Value Measurement Using Investment Type12/31/2017Level 1Level 2Level 3 Investments at fair value: Federal Home Loan Bank$479,198$ - $479,198$ - Federal National Mortgage Association 1,048,069 - 1,048,069 - Local government bonds 3,338,467 - 3,338,467 - US Treasury Notes 1,934,649 - 1,934,649 - Total/Subtotal6,800,383$ - $6,800,383$ - Investments not categorized: External investment pool - US Bank Fund 6,887 External investment pool - PFM Bank Fund215,899 Total$7,023,169 The City’s external investment pool investment PFM Fund is rated AAAm by Standard and Poor’s and the fair value of the position in the pool is the same as the value of pool shares. The pool is managed to maintain a portfolio weighted average maturity of no greater than 60 days and seeks to maintain a constant net asset value (NAV) per share of $1. The pool measures their investments in accordance with Government Accounting Standards Board Statement No. 79, at amortized cost. The PFM Fund has no redemption requirements. 67 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 C. Investment Risks Custodial credit risk – investments – For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City policy is to limit its exposure by holding investments in securities with a major bank’s corporate trust department. Investments are delivered to the City’s trust account and then payment is released to the broker-dealer. Interest rate risk – Interest rate risk is the risk that changes in interest rates of debt investments could adversely affect the fair value of an investment. The City’s investment policy requires the City to diversify its investment portfolio to eliminate the risk of loss resulting from over concentration of assets in a specific maturity. The policy also states the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. Credit risk– Credit risk is the risk that an issuer or other counterparty to an investment will be unable to fulfill its obligation to the holder of the investment. State law limits investments to commercial paper to those rated in the highest quality category by at least two nationally recognized rating agencies; in any security of the State of Minnesota or any of its municipalities which is rated “A” or better by a national bond rating service for general obligation and rated “AA” or better for a revenue obligation; a general obligation of the Minnesota Housing Finance Agency to those rated “A” or better by a national bond rating agency; mutual funds or money market funds whose investments are restricted to securities described in MS 118A.04. The City’s investment policy does not place further restrictions on investment options. Concentration of credit risk (City) – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government’s investment in a single issuer. The City places no limit on the amount the City may invest in any one issuer. Investments in a single issuer exceeding 5% of the City’s overall investment portfolio are in various holdings as follows: Federal Home Loan Mortgage Corporation5.39% US Treasury Note14.13% Federal National Mortgage Association21.99% Concentration of credit risk (HRA) – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government’s investment in a single issuer. The HRA places no limit on the amount the HRA may invest in any one issuer. Investments in a single issuer exceeding 5% of the HRA’s overall investment portfolio are in various holdings as follows: Federal Home Loan Bank6.82% Federal National Mortgage Association14.92% US Treasury Note27.55% 68 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 3. Receivables Significant receivables balances not expected to be collected within one year of December 31, 2017 are as follows: Primary Government Major Funds StreetNonmajor GeneralDebt ServiceImprovementsFundsTotal Special assessments receivable$33,548$392,449$985,661$ - $1,411,658 Delinquent property taxes97,76629,538 - 3,718131,022 $131,314$421,987$985,661$3,718$1,542,680 HRA Component Unit Major Funds RevolvingGeneral LoanFundTotal Mortgage receivable$1,156,350$ - $1,156,350 Allowance for uncollectible accounts(8,314) - (8,314) Delinquent tax increment - 4,2994,299 $1,148,036$4,299$1,152,335 4. Unavailable Revenues Governmental funds report deferred inflows of resources in connection with receivables that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of unavailable revenue reported in the governmental funds were as follows: PropertySpecial Interest on TaxesAssessmentsLoan to HRATotal Major funds: General$118,944$42,310$ - $161,254 Debt Service 24,564494,946167,927687,437 Street Improvements 1,243,090 - 1,243,250160 Nonmajo 115,537 - 120,3194,782 r Total unavailable revenue$148,450$1,895,883$167,927$2,212,260 69 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 5. Capital Assets Capital asset activity for the year ended December 31, 2017 was as follows: BeginningEnding Primary GovernmentBalanceIncreasesDecreasesTransfersBalance Governmental activities: Capital assets, not being depreciated: Land$2,814,016$2,681,550($115,367)$ - $5,380,199 Construction in progress1,837,95021,372,963(38,996) - 23,171,917 Total capital assets, not being depreciated4,651,96624,054,513(154,363) - 28,552,116 Capital assets, being depreciated: Buildings and structures13,569,23452,228(604,158)1,148,67214,165,976 Machinery and equipment10,363,423611,046(808,572)1,033,58911,199,486 Improvements7,173,90854,686(1,096,420)(4,230,296)1,901,878 Infrastructure28,138,204516,886(23,511)2,016,16630,647,745 Total capital assets, being depreciated59,244,7691,234,846(2,532,661)(31,869)57,915,085 Less accumulated depreciation for: Buildings and structures7,403,505553,501(555,190)667,7468,069,562 Machinery and equipment7,087,845864,362(802,039)900,5338,050,701 Improvements5,500,53370,731(1,096,420)(3,101,448)1,373,396 Infrastructure16,862,2661,084,059(23,511)1,501,30019,424,114 Total accumulated depreciation36,854,1492,572,653(2,477,160)(31,869)36,917,773 Total capital assets being depreciated - net22,390,620(1,337,807)(55,501) - 20,997,312 Governmental activities capital assets - net$27,042,586$22,716,706($209,864)$ - $49,549,428 BeginningEnding Primary GovernmentBalanceIncreasesDecreasesTransfersBalance Business-type activities: Capital assets, not being depreciated: Land$306,477$ - $ - $ - $306,477 Construction in progress15,991913,120(14,180) - 914,931 Total capital assets, not being depreciated322,468913,120(14,180) - 1,221,408 Capital assets, being depreciated: Buildings and structures3,634,25416,684(103,147)1,747,2685,295,059 Improvements other than buildings15,524,876 - (271,106)(15,253,770) - Machinery and equipment3,594,519297,166(271,707)1,027,0544,647,032 Infrastructure27,370,2081,324,350(110,635)12,511,31741,095,240 Total capital assets, being depreciated50,123,8571,638,200(756,595)31,86951,037,331 Less accumulated depreciation for: Buildings and structures2,108,705255,849(103,147)1,179,5073,440,914 Improvements other than buildings9,861,303 - (271,106)(9,590,197) - Machinery and equipment2,771,359266,345(271,707)581,8373,347,834 Infrastructure15,879,4261,006,152(110,635)7,860,72224,635,665 Total accumulated depreciation30,620,7931,528,346(756,595)31,86931,424,413 Total capital assets being depreciated - net19,503,064109,854 - - 19,612,918 Business-type activities capital assets - net$19,825,532$1,022,974($14,180)$ - $20,834,326 Component Unit Capital assets, not being depreciated: Land$2,023,511$ - $ - $ - $2,023,511 70 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government$168,905 Public safety591,045 Public works, including depreciation of general infrastructure assets1,551,324 Community Development7,092 Park and recreation254,287 Total depreciation expense - governmental activities$2,572,653 Business-type activities: Liquor$87,626 Water851,532 Sewer304,055 Storm water285,133 Total increases in accumulated depreciation$1,528,346 71 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 6. Long-Term Debt The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. As of December 31, 2017, the governmental long-term bonded debt and loans of the financial reporting entity consisted of the following: Governmental Activities: $1,215,000 General Obligation Improvement Bonds, Series 2010C due in varying annual$455,000 installments of $55,000 - $135,000 through February 1, 2021; interest at 2.00% - 3.00%. $550,000 General Obligation Equipment Certificates, Series 2010B due in varying annual200,000 installments of $50,000 - $70,000 through February 1, 2020; interest at 2.00% - 3.00% $1,280,000 General Obligation Equipment Certificates, Series 2012A due in varying annual installments of $135,000 - $150,000 through February 1, 2022; interest at 1.00% - 1.65%725,000 $49,130,000 General Obligation Improvement Bonds, Series 2017A due in varying annual installmetn of $1,060,000 - $2,925,000 through February 1, 2042'; interest at 3.00% - 5.00%49,130,000 Unamortized premium1,526,785 Subtotal governmental activities$52,036,785 Business-Type Activities: $1,790,000 General Obligation Water Revenue Bonds of 2004 due in varying annual installments of $50,000 - $230,000 through February 1, 2019; interest at 2.50% - 4.00%.$450,000 $2,810,000 General Obligation Utility Revenue Bonds of 2010A due in varying annual installments of $160,000 - $265,000 through February 1, 2026; interest at 2.50% - 3.50% 1,875,000 $5,995,000 General Obligation Water Revenue Bonds of 2016A due in varying annual installments of $275,000 - $575,000 through February 1, 2031; interest at 2.00% - 2.25% 5,720,000 Unamortized premium155,461 Subtotal business-type activities8,200,461 Total primary government$60,237,246 72 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Annual debt service requirements to maturity for general obligation bonds and loans are as follows: Primary Government Governmental ActivitiesBusiness-Type Activities Year EndingG.O. ImprovementG.O. Equipment CertificatesRevenue Bonds December 31,PrincipalInterestPrincipalInterestPrincipalInterest 2018$1,185,000$1,747,987$205,000$13,855$915,000$180,688 20191,285,000 1,710,937 210,000 10,371 945,000 155,763 20201,325,000 1,671,787 215,000 6,570 730,000 134,838 20211,295,000 1,638,637 145,0003,526755,000 118,038 20221,250,0001,594,112150,0001,238770,000 100,763 20231,465,0001,526,238 - - 790,000 82,794 20241,535,0001,451,238 - - 510,000 67,044 20251,615,0001,372,488 - - 525,000 53,525 20261,695,0001,289,738 - - 535,000 39,363 20271,780,0001,211,763 - - 300,000 29,213 20281,850,0001,139,163 - - 310,000 23,113 20291,925,0001,073,288 - - 315,000 16,862 20301,985,0001,014,637 - - 320,000 10,513 20312,040,000954,263 - - 325,000 3,656 20322,105,000890,771 - - - - 20332,170,000822,619 - - - - 20342,240,000750,956 - - - - 20352,315,000676,937 - - - - 20362,390,000600,481 - - - - 20372,465,000520,047 - - - - 20382,550,000433,825 - - - - 20392,640,000343,000 - - - - 20402,730,000249,025 - - - - 20412,825,000151,812 - - - - 20422,925,00051,188 - - - - Total$49,585,000$24,886,937$925,000$35,560$8,045,000$1,016,173 73 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Long-term liability activity for the year ended December 31, 2017, was as follows: BeginningEndingDue Within BalanceAdditionsReductionsBalanceOne Year Governmental activities: Bonds payable: G.O. improvement bonds$1,980,000$49,130,000($1,525,000)$49,585,000$1,185,000 G.O. equipment certificates1,130,000 - (205,000)925,000205,000 Total bonds payable3,110,00049,130,000(1,730,000)50,510,0001,390,000 Bond issuance premium/discount 1,584,898(58,113)1,526,785- - Compensated absences1,028,656889,616(895,138)1,023,134843,577 Total governmental activities long-term debt$4,138,656$51,604,514($2,683,251)$53,059,919$2,233,577 Business-type activities: Bonds payable: G.O. revenue bonds10,645,000 - (2,600,000)8,045,000915,000 Bond issuance premium/discount166,935 - (11,474)155,461 - Total business-type activities long-term debt$10,811,935$ - ($2,611,474)$8,200,461$915,000 Compensated absences are generally liquidated by the Employee Benefits Fund. All long-term bonded indebtedness outstanding at December 31, 2017 is backed by the full faith and credit of the City, including improvement and revenue bond issues. Delinquent assessments receivable at December 31, 2017 totaled $1,895,883. Crossover Refunding Series 2016A Bonds On June 2, 2016, the City issued $5,995,000 in General Obligation Water Revenue Bonds, Series 2016A with an average interest rate of 2.02%. $1,680,000 of the proceeds will be used to advance refund $1,700,000 of outstanding 2008B Series Bonds with an average interest rate of 3.73%. The net proceeds were used to purchase U.S. government securities in the amount of $1,717,714.Those securities were deposited in an irrevocable trust with an escrow agent to provide for the interest on the refunding bonds through the crossover date and called principal on the refunded bonds on February 1, 2017. The City advance refunded the 2008B General Obligation Water Revenue Bonds to reduce its total debt service payments during the years 2017 through 2023 by $156,890 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $147,595. The City is responsible for the debt service of the refunded bonds through the crossover date (February 1, 2017) and the debt service of the refunding bonds after the crossover date. The debt service of the refunding bonds before the crossover date is payable from the escrow account. Assets held in the escrow agent total $1,717,714 at December 31, 2016. 74 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The refunding portion of the 2016A bonds are crossover refunding bonds whereby the City and the escrow agent are responsible for the debt service payments as follows: Debt Service Commitment Year EndingRefunded RefundingEscrow December 31,Bonds TotalBonds TotalAccountCity 2017$1,984,949$22,307$1,722,307$284,949 2018 - 298,600 - 298,600 2019 - 298,300 - 298,300 2020 - 297,900 - 297,900 2021 - 302,400 - 302,400 2022 - 301,700 - 301,700 2023 - 300,900 - 300,900 Total$1,984,949$1,822,107$1,722,307$2,084,749 Revenues Pledged Revenue PledgedCurrent Year Percent ofDebt servicePrincipalPledged Use oftotalas a % ofTerm ofRemainingand InterestRevenue Bond IssueProceedsTypedebt servicenet revenuesPledgePrincipalpaidreceived 2017ABuilding ImprovementsProperty Taxes100%2017-$49,130,000$871,189$2,911,156 2042 2012ACapital EquipmentProperty Taxes100%2013-725,000150,230153,987 2022 2010BCapital EquipmentProperty Taxes100%2011-200,00071,97571,975 2020 2010CStreet ImprovementsProperty Taxes and100%2011-455,000140,52560,954 Special Assessments2021 2008AStreet ImprovementsProperty Taxes and100%2008- - 657,90030,749 Special Assessments2017 2007AStreet ImprovementsProperty Taxes and100%2007- - 458,60810,456 Special Assessments2017 2006AStreet ImprovementsProperty Taxes and100%2007- - 311,100(1,620) Special Assessments2017 2016A Water Revenue BondsInfrastructure ImprovementsWater Customer100%11.68%2016-5,720,000412,7463,534,797 Net Revenue2031 Water, Sewer and 2010A Utility Revenue BondsInfrastructure ImprovementsStorm Customer100%2.24%2011-1,875,000237,35010,583,386 Net Revenue2026 2008B Water Revenue BondsInfrastructure ImprovementsWater Customer100%56.15%2008- - 1,984,9493,534,797 Net Revenue2017 2004 Water Revenue BondsInfrastructure ImprovementsWater Customer100%6.42%2004-450,000226,8443,534,797 Net Revenue2019 75 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 7. Defined Benefit Pension Plans A. Plan Description The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401 (a) of the Internal Revenue Code. 1. General Employees Retirement Fund (GERF) All full-time (with the exception of employees covered by PEPFF) and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. 2. Public Employees Police and Fire Fund (PEPFF) The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are given 1% increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 1. GERF Benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for 76 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 each of the first ten years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For PEPFF members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.50%, respectively, of their annual covered salary in calendar year 2017. The City was required to contribute 11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2017. The City’s contributions to the GERF for the year ended December 31, 2017, were $479,410. The City’s contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2017. The City was required to contribute 16.20% of pay for PEPFF members in calendar year 2017. The City’s contributions to the PEPFF for the year ended December 31, 2017, were $653,014. The City’s contributions were equal to the required contributions as set by state statute. D. Pension Costs 1. GERF Pension Costs At December 31, 2017, the City reported a liability of $6,249,871 for its proportionate share of the GERF’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $6 million to the fund in 2017. The State of Minnesota is considered a non-employer contributing entity and the state’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $78,569. The net pension 77 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2016, through June 30, 2017, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2017 the City’s proportion was .0979% which was a decrease of .0039% from its proportion measured as of June 30, 2016. For the year ended December 31, 2017, the City recognized pension expense of $800,023 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $2,269 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $6 million to the General Employees Fund. At December 31, 2017, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred OutflowsDeferred Inflows of Resourcesof Resources Differences between expected and actual economic experience$205,977$400,372 Changes in actuarial assumptions1,037,614626,550 Difference between projected and actual investment earnings37,177 - Changes in proportion 40,635269,524 Contributions paid to PERA subsequent to the measurement date240,212 - Total$1,561,615$1,296,446 $240,212 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year EndedExpense December 31,Amount 2018$141,673 2019323,892 2020(175,313) 2021(265,295) 2022 - Thereafter - 2. PEPFF Pension Costs At December 31, 2017, the City reported a liability of $5,008,941 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined 78 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2016, through June 30, 2017, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2017, the City’s proportion was .3710% which was a decrease of .0340% from its proportion measured as of June 30, 2016. The City also recognized $33,390 for the year ended December 31, 2017, as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the PEPFF. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. For the year ended December 31, 2017, the City recognized pension expense of $1,151,494 for its proportionate share of the PEPFF’s pension expense. At December 31, 2017, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred OutflowsDeferred Inflows of Resourcesof Resources Differences between expected and actual economic experience$115,296$1,329,687 Changes in actuarial assumptions6,555,1997,111,454 Difference between projected and actual investment earnings57,575 - Changes in proportion 86,403554,583 Contributions paid to PERA subsequent to the measurement date342,912 - Total$7,157,385$8,995,724 $342,912 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year EndedExpense December 31,Amount 2018($1,690) 2019(1,690) 2020(179,699) 2021(505,239) 2022(1,492,933) Thereafter - 79 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 E. Actuarial Assumptions The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP-2014 tables for both plans for males or females, as appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases for retirees are assumed to be one percent per year for the General Employees Plan through 2044 and Police and Fire Plan through 2064 and then 2.5% thereafter. Actuarial assumptions used in the June 30, 2017 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the General Employees Plan was completed in 2015. The most recent five-year experience study for the Police and Fire Plan was completed in 2016. The following changes in actuarial assumptions occurred in 2017: General Employees Fund The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non-vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for non-vested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter. Police and Fire Fund The single discount rate was changed from 5.6% to 7.5%. Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent for non-vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.0 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65 percent to 60 percent. 80 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing Joint and Survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00 perfect for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The long-term expected rate of return on pension plan investments is 7.5%. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: TargetLong-Term Expected Asset ClassAllocationReal Rate of Return Domestic Stocks39%5.10% International Stocks19%5.30% Bonds20%0.75% Alternative Assets20%5.90% Cash2%0.00% Total100% F. Discount Rate The discount rate used to measure the total pension liability in 2017 was 7.50%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund and the Police and Fire Fund was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. At June 30, 2016, the Police and Fire Fund projected benefit payments to exceed the funds projected fiduciary net position after June 30, 2056 and therefore used a single discount rate of 5.6%, which as stated above, increased to 7.5% at June 30, 2017. 81 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 G. Pension Liability Sensitivity The following presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1% Decrease in1% Increase in Discount Rate (6.5%)Discount Rate (7.5%)Discount Rate (8.5%) City's proportionate share of the GERF net pension liability$9,694,015$6,249,871$3,430,214 City's proportionate share of the PEPFF net pension liability$9,433,298$5,008,941$1,356,391 The net pension liability is generally liquidated by the Employee Benefits Internal Service Fund. H. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately- issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. I. Pension Expense Pension expense recognized by the City for the fiscal year ended December 31, 2017 is as follows: GERF$802,292 PEPFF1,151,494 Total$1,953,786 8. Defined Contribution Plan Five Council members of the City of Fridley are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5% of salary which is matched by the elected official's employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employees must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for 82 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2% of employer contributions and twenty-five hundredths of 1% (.0025) of the assets in each member's account annually. Total contributions made by the City during fiscal year 2017 were: Contribution AmountPercentage of Covered PayrollRequired Employer Employee(Pension Expense)EmployeeEmployerRate $2,138$2,1385%5%5% 9. Defined Contribution Pension Plan - Fridley Volunteer Firefighters Relief Association Plan Description The Fridley Volunteer Firefighters Relief Association (Association), is a single employer public employee retirement system that acts as a common investment administrator for all of the City’s firefighters. Pursuant to a 1987 amendment to its by-laws, the pension plan is a defined contribution plan, prior to 1987 the pension plan was a defined benefit pension plan. Benefits and contribution requirements are established by the Association’s by-laws and can be amended by the Association’s Board of Trustees with approval from the City of Fridley, Minnesota. All provisions are within limitations established by Minnesota Statutes. Type of Benefit The exclusive pension provided by the Association is a “Defined Contribution Lump Sum Service Pension,” as defined in Minnesota Statutes §424A.02, Subdivision 4. Contribution Made The City collected and remitted $151,398 and $148,297 in State Aid to the Association for 2017 and 2016, respectively. This transaction is recorded as revenue and expenditures in the City’s financial statements. During 2017 and as of December 31, 2017, the Association held no securities issued by the City or other related parties. 10. Other Post-Employment Benefits A. Plan Description In addition to providing the pension benefits described in Note 7, the City provides post- employment health care benefits (as defined in paragraph B) for retired employees and police and firefighters disabled in the line of duty, through a single-employer defined benefit plan. The termPlan refers to the City’s requirement by State Statute to provide retirees with access to health insurance. The OPEB plan is administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a, and 299A.465. The 83 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the Plan. The Plan does not issue a separate report. B. Benefits Provided Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Covered spouses may continue coverage after the retiree’s death. The surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching 65 years of age, Medicare becomes the primary insurer. The monthly retiree premiums effective January 1, 2017 were: SingleMarried Regular$796$2,293 HRA6041,739 HSA5701,642 C. Participants As of the actuarial valuation dated January 1, 2017, participants consisted of: Retired participants and beneficiaries currently receiving benefits2 Active employees138 Total140 Participating employers1 D. Funding Policy The additional cost of using a blended rate for actives and retirees is currently funded on a pay- as-you-go basis. The City Council may change the funding policy at any time. 84 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 E. Annual OPEB Costs and Net OPEB Obligation The City’s annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of December 31, 2017, was calculated as follows: Annual required contribution (ARC)$50,314 Interest on net OPEB obligation26,398 Adjustment to ARC(40,309) Annual OPEB cost36,403 Contributions made during the year(15,301) Increase in net OPEB obligation21,102 Net OPEB obligation - beginning of year754,233 Net OPEB obligation - end of year$775,335 For the governmental activities, other post-employment benefits are generally liquidated through the General Fund. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan and the net OPEB obligation for 2015 to 2017 was as follows: Percentage of Fiscal YearAnnual OPEBEmployer Annual OPEB CostNet OPEB EndedCostContributionsContributedObligation December 31, 2015$54,383$7,70714.2%$711,775 December 31, 201656,36513,90724.7%754,233 December 31, 201736,40315,30142.0%775,335 For the governmental activities, other post-employment benefits are general liquidated through the General Fund. F. Funded Status and Funding Progress The City currently has no assets that have been irrevocably deposited in a trust for future health benefits; therefore, the actuarial value of assets is zero. The funded status of the Plan was as follows: Unfunded ActuarialActuarialUAAL as a ActuarialActuarialAccruedAccruedFundedCoveredPercentage of ValuationValue of AssetsLiability (AAL)*Liability (UAAL)RatioPayrollCovered Payrol Date(a)(b)(b-a)(a/b)(c) ( (b-a) / c) anuary 1, 2017$ - $396,304$396,3040.0%$9,745,5054.1% J *Using the projected unit credit actuarial cost method. 85 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 G. Actuarial Methods and Assumptions Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions (ARC) of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and 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 effect 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, 2017 actuarial valuation, the Projected Unit Credit Actuarial cost method was used. The actuarial assumptions included a 3.5% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of 6.5% reduced by 0.25% each year to arrive at an ultimate health care cost trend rate of 5.0%, which includes a 2.5% inflation assumption. The actuarial value of assets was $0. The plan’s unfunded actuarial accrued liability is being amortized as a level dollar amount over a 30-year open period. The remaining amortization period at December 31, 2017, was 30 years. 11. Interfund Receivables, Payables and Transfers Interfund payables and receivables are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Interfund receivables and payables of the City are as follows: InterfundInterfund ReceivablesPayables Due From/Due To: Major Funds: General Fund$22,660$ - Nonmajor Governmental Funds: Special Revenue Funds: Police Activity Fund - 22,660 $22,660$22,660 86 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Interfund receivables and payables of the HRA component unit at December 31, 2017 are as follows: InterfundInterfund ReceivablesPayables Due From/Due To: General Fund$7,641,361$ - Capital Projects Funds: Lake Pointe - 325,303 Gateway East - 331,653 Gateway West - 360,109 Gateway Northeast - 3,843,025 BAE Hazardous Sub District - 2,728,471 Locke Point Park - 52,800 $7,641,361$7,641,361 The above balances are not expected to be eliminated within one year of December 31, 2017. Interfund Transfers: Transfer InTransfer Out Governmental Funds: Major Funds: General Fund (1) (2) (3) $452,600$ - Debt Service (4)622,208891,908 Street Improvements (1) (4) - 102,443 Building Improvements - - Nonmajor Funds (3) (4) (5) 286,38128,338 Total governmental funds1,361,1891,022,689 Proprietary Funds: Liquor (3) - 338,500 Total proprietary funds - 338,500 Total$1,361,189$1,361,189 (1) Transfer of $269,700 to finance General Fund (2) Transfer of $94,400 to finance street projects (3) Transfer to finance General Fund and Capital Project (4) Transfer to close out fund (5) Transfer to allocate cash balance by fund Interfund transfers allow the City and HRA to allocate financial resources to the funds that receive benefit from services provided by another fund. Most of the interfund transfers fall under that category. 87 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 12. Fund Balance A. CLASSIFICATIONS At December 31, 2017, a summary of the governmental fund balance classifications are as follows: DebtStreetBuildingsOtherTotalComponent General FundServiceImprovementsImprovementsGovernmentalCityUnit Nonspendable: Inventory$55,777$ - $ - $ - $ - $55,777$ - Mortgage loan receivable - - - - - - 1,148,036 Total nonspendable55,777 - - - - 55,7771,148,036 Restricted for: Donations14,466 - - - 2,21816,684 - Debt service - 2,504,589 - - - 2,504,589 - Tax increment - - - - - - 1,101,510 Cable television equipment - - - - 66,89366,893 - Unspent bond proceeds - - - 32,248,155 - 32,248,155 - Total restricted14,4662,504,589 - 32,248,15569,11134,836,3211,101,510 Committed to: Cable television programming - - - - 1,512,0461,512,046 - Recycling programs - - - - 90,07290,072 - Nature Center activities - - - - 199,642199,642 - Public improvements - - - - - - - Police activity - - - - 7,1087,108 - Capital equipment - - - - 849,471849,471 - Housing loan program - - - - - - 1,888,953 Total committed - - - - 2,658,3392,658,3391,888,953 Assigned to: Capital improvements - 4,881,3211,667,018 - 1,961,7958,510,134 - Total assigned - 4,881,3211,667,018 - 1,961,7958,510,134 - Unassigned9,522,843 - - - (9,453)9,513,3903,025,634 Total$9,593,086$7,385,910$1,667,018$32,248,155$4,679,792$55,573,961$7,164,133 B. MINIMUM UNASSIGNED FUND BALANCE POLICY The City Council has formally adopted a policy regarding the minimum unassigned fund balance for the General Fund. The most significant revenue source of the General Fund is property taxes. This revenue source is received in two installments during the year – June and December. As such, it is the City’s goal to begin each fiscal year with sufficient working capital to fund operations between each semi-annual receipt of property taxes. The City’s policy for unassigned funds in the General Fund is equal to 35% - 50% of the following year General Fund expenditures. At December 31, 2017, the unassigned fund balance of the General Fund was $9,522,843, compared to its targeted unassigned fund balance of between $5,828,445 and $8,326,350. 88 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 13. Tax Increment Districts The HRA is the administering authority for the following Tax Increment Districts: FiscalRetained YearTax Capacity ValuesDisparityBy EstablishedDistrictDistrict NameCurrentOriginalCapturedAdjustmentsAuthority 19856 Lake Pointe$822,272$326,940$495,332$ - $495,332 199211 University/Osborne78,172 26,478 51,694 - 51,694 199212 McGlynn's85,408 41,254 44,154 - 44,154 199513 Satellite Lane Apartments37,255 1,403 35,852 - 35,852 200017 Gateway East37,876 3,365 34,511 - 34,511 200718 Gateway West35,830 4,693 31,137 - 31,137 200719 Main Street183,748 45,628 138,120 - 138,120 201320 TIF 20 HSS 20A874,434 - 874,434 - 874,434 1995HR1/Q3Housing Replacement1,914 236 1,678 - 1,678 1995HR1/S3Housing Replacement2,268 310 1,958 - 1,958 1995HR1/S4Housing Replacement2,316 338 1,978 - 1,978 1995HR1/S5Housing Replacement1,629 225 1,404 - 1,404 1995HR1/S6Housing Replacement1,735 266 1,469 - 1,469 2017HR1/V5Housing Replacement1,621 208 1,413 - 1,413 1995HR1/V6Housing Replacement3,910 316 3,594 - 3,594 1995HR1/T7Housing Replacement1,971 384 1,587 - 1,587 1995HR1/V9Housing Replacement1,994 286 1,708 - 1,708 1995HR1/W1Housing Replacement1,562 357 1,205 - 1,205 1995HR1/W2Housing Replacement1,480 286 1,194 - 1,194 1995HR1/W6Housing Replacement5,742 516 5,226 - 5,226 1995HR1/W7Housing Replacement2,091 170 1,921 - 1,921 1995HR1/X2Housing Replacement139,741 32,040 107,701 - 107,701 1995HR1/X8Housing Replacement4,405 637 3,768 - 3,768 2017HR1/X9Housing Replacement 450 343 - 107107 1995HR1/Y2Housing Replacement 1,896 302 1,594 - 1,594 1995HR1/Y1Housing Replacement 2,040 335 1,705 - 1,705 2017HR1/Y5Housing Replacement 2,130 251 - - - 1995HR1/X2Northstar Transit Station1,354,054 1,221,288 132,766 - 132,766 Totals$3,689,944$1,708,855$1,979,210$ - $1,979,210 14. Commitments and Contingencies A. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During 1987, the City established the Self Insurance Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. Workers compensation coverage is provided through a pooled self-insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is subject to a $2,500 deductible. Property and casualty insurance coverage is provided through a pooled self-insurance program through LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. For property (other than vehicles for which the City is self-insured) and casualty coverage, the City has a $75,000 deductible per occurrence with a $150,000 annual maximum. This deductible gets paid out of the Self-Insurance Fund as necessary. 89 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The City continues to carry commercial insurance for all other risks of loss, including employee health and disability insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. In 1990, the General Fund contributed $1,000,000 to the Self Insurance Fund in lieu of the Self Insurance Fund charging losses back to each fund. There is no recorded liability for unpaid claims because the amount of such claims, if any, is considered to be immaterial. As of December 31, 2017, the Self Insurance Fund has accumulated equity in the amount of $1,209,257 to cover future claims and losses. B. Litigation The City attorney and management has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney and management, remotely recoverable by plaintiffs. C. Federal and State Funds The City receives 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, 2017. D. Tax Increment Districts The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial statements. E. Tax Abatements – Pay-As-You-Go Tax Increment The City provides tax abatements pursuant to Minnesota Statutes 469.174 to 469.1794 (Tax Increment Financing) through a pay-as-you-go note program. Tax increment financing (TIF) can be used to encourage private development, redevelopment, renovation and renewal, growth in low-to-moderate-income housing, and economic development within the City. TIF captures the increase in tax capacity and property taxes from development or redevelopment to provide funding for the related project. 90 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The City has three tax increment pay-as-you-go agreements. The agreements are not a general obligation of the City and are payable solely from available tax increment. Accordingly, these agreements are not reflected in the financial statements of the City. Details of the pay-as-you-go notes are as follows: TIF District #6, Lake Pointe (Medtronic): Issued in 2001 in the principal sum of $20,000,000 with an interest rate of 6.75% per annum. Principal and interest shall be paid on August 1, 2001 and each February 1 and August 1 thereafter to and including March 1, 2026. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City.The pay-as- you-go note provides for payment to the developer equal to 90% of all tax increment received in the prior six months. The payment reimburses the developer for public improvements. The City shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final payment on March 1, 2026. The current year abatement (TIF note payments) amounted to $532,225. At December 31, 2017, the principal amount outstanding on the note was $20,000,000. TIF District #19, Mainstreet: Issued in 2008 in the principal sum of $1,500,000 with an interest rate of 7.00% per annum. Principal and interest shall be paid on August 1, 2009 and each February 1 and August 1 thereafter to and including February 1, 2025. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City. The pay-as- you-go note provides for payment to the developer equal to 90% of all tax increment received in the prior six months. The payment reimburses the developer for certain public redevelopment costs. The current year abatement (TIF note payments) amounted to $107,054. At December 31, 2017, the principal amount outstanding on the note was $1,500,000. TIF District #20, BAE Hazardous Substance: Issued in 2016 in the principal sum of $8,842,565 with an interest rate of 5.75% per annum. Principal and interest shall be paid on August 1, 2016 and each February 1 and August 1 thereafter to and including February 1, 2042. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City.The pay-as- you-go note provides for payment to the developer equal to 90% of all tax increment received in the prior six months. The payment reimburses the developer for street, utilities, right-of-way, land acquisition, and other public improvements.The City shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final payment on February 1, 2042. The current year abatement (TIF note payments) amounted to $638,728. At December 31, 2017, the principal amount outstanding on the note was $8,603,291. F. Construction Commitments At December 31, 2017, the City had construction project contracts in progress. The commitments related to the remaining contract balances amounted to $22,483,637. 91 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 15. Leases A. Lease Expense The City leases space for one of its liquor stores. Total costs for this lease was $197,859 for the year ended December 31, 2017. The future minimum lease payments for this lease are as follows: Year Ending December 31,Amount 2018$129,955 2019145,841 2020145,841 2021145,841 2022145,841 2023121,534 B. Lease Revenue The City receives revenue from agreements for the lease of space above its water towers to communication companies. The space is used for antennas and other equipment necessary to provide radio communications. For accounting purposes, the leases are considered operating leases. Lease revenue for the year ended December 31, 2017, totaled $361,568. Terms of each lease are as follows: Next (passive) Annual LeaseRenewal Renewal TermFinal Lease Lessee / LocationAdjustment Factor*DateDurationDate TTM - Commons Tower #1Greater of 4% or CPI-U11/17/20195 Years17-Nov-34 TTM - TH65 Tower #2Greater of 4% or CPI-U11/17/20195 Years17-Nov-34 Clearwire - Commons Tower #1Greater of 4% or CPI-U2/22/20205 Years22-Feb-35 AT&T - Marion HillsGreater of 5% or CPI-U7/1/20205 Years1-Jul-25 T-Mobile - Commons Tower #1Greater of 2% or CPI-U up to 5%3/27/20205 Years28-Mar-30 Verizon - Commons Tower #13%6/6/20185 Years6-Jun-38 Clearwire - Marion HillsGreater of 4% or CPI-U2/22/20205 Years22-Feb-35 Clearwire - TH65 Tower #2Greater of 4% or CPI-U2/22/20205 Years22-Feb-35 T-Mobile - Marion HillsGreater of 2% or CPI-U up to 5%9/30/20165 Years30-Sep-21 Sprint - TH65 Tower #2Greater of 5% or CPI-U10/1/20205 Years1-Oct-25 Crown Castle - Well #13Greater of 5% or CPI-U11/6/20185 Years6-Nov-23 AT&T - Public Works GarageGreater of 5% or CPI-U11/30/20185 Years30-Nov-28 *Amounts for future lease receipts are unavailable because they are based on the Consumer Price Index. 16. Conduit Debt Obligation From time to time, the City has issued Industrial 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 92 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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. As of December 31, 2017, there are two series outstanding issued after July 1, 1995 with an aggregate principal amount payable of $15,058,098. There were twenty-two series issued prior to July 1, 1995. Aggregate principal amount payable for the twenty-two series could not be determined; however, their original issue amounts totaled $65.2 million. 17. Deficit Fund Balances At December 31, 2017, individual funds with a deficit fund balance are as follows: Primary government: Nonmajor Special Revenue Fund: Drug and Gambling Forfeiture($9,453) Internal Service Fund: Employee Benefits(12,626,337) Component unit: Lake Pointe(328,369) Gateway East(319,554) Gateway West(359,975) Main Street(5,543) Gateway NorthEast(3,835,204) BAE(99,202) BAE Hazardous Sub District(2,730,110) Locke Point Park(87,920) 18. Contingent Receivable In 1999, the HRA entered into an agreement with Medtronic for the sale of land from the HRA to Medtronic. The original principal amount of the receivable was $5,000,000 and the outstanding balance at December 31, 2017 is $3,542,705. Interest is added quarterly at a rate of 8.25%. Payments on the note receivable are made in an amount equal to 11.11% of tax increment note payments received by Medtronic through 2013, and 22.22% of tax increment note payments receivable from 2013 through 2026. In 2014, the HRA entered into an agreement with Cielo Partners LLC for the sale of land from the HRA to Cielo Partners LLC for the sum of $1.00. Per the agreement Cielo Partners LLC is to complete certain performance obligations to complete the site improvements. If these performance obligations are not met then Cielo Partners LLC will be obligated to pay the HRA for an amount up to $1,700,000. In 2018 it was determined that Cielo Partners LLC did not meet all performance obligations and a receivable of $452,928 is recorded at December 31, 2017. 93 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 19. Recently Issued Accounting Standards The Governmental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 83 Certain Asset Retirement Obligations. The provisions of this Statement are effective for reporting periods beginning after June 15, 2018. Statement No. 84 Fiduciary Activities. The provisions of this Statement are effective for reporting periods beginning after December 15, 2018. Statement No. 85 Omnibus 2017. The provisions of this Statement are effective for reporting periods beginning after June 15, 2017. Statement No. 86 Certain Debt Extinguishment Issues. The provisions of this statement are effective for reporting periods beginning after June 15, 2017. Statement No. 87 Leases.The provisions of this statements are effective for periods beginning after December 15, 2019. Statement No. 88 Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The provisions of this statements are effective for periods beginning after June 15, 2018. The effect these standards may have on future financial statements is not determinable at this time. 20. Subsequent Events Subsequent events have been evaluated for recognition or disclosure through May 3, 2018 the date the financial statements were available to be issued. 94 95 Exhibit B-1 Page 1 of 4 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 2017 Variance with Final Budget - 2016 Budgeted AmountsActualPositiveActual OriginalFinalAmounts(Negative)Amounts Revenues: Taxes and special assessments: Current ad valorem taxes$10,537,800$10,537,800$10,453,699($84,101)$10,537,098 Delinquent ad valorem taxes-net of abatements50,000 - (103,052)(103,052)37,271 Penalties and interest25,000 - 4,8334,83311,248 Special assessments16,50014,80017,9333,13314,513 Total taxes and special assessments10,629,30010,552,60010,373,413(179,187)10,600,130 Licenses and permits: Licenses: Rental162,000162,000165,9873,987170,650 Business77,80079,30086,0926,79284,432 All other27,80027,80031,0503,25028,660 Permits738,400726,500692,391(34,109)867,212 Total licenses and permits1,006,000995,600975,520(20,080)1,150,954 Intergovernmental revenue: Federal grants24,00024,00040,92816,92864,220 State maintenance aid390,000382,400382,391(9)389,834 Local grants760,200764,600764,591(9)250,000 Other state grants - 6,50029,88423,38444,176 Police and fire pension471,100471,100524,29153,191514,202 Total intergovernmental revenue1,645,3001,648,6001,742,08593,4851,262,432 Charges for services: General government952,800952,900954,4191,519953,961 Public safety381,000382,600402,88020,280417,323 Public works417,200365,100364,099(1,001)369,138 Community development39,40038,80037,937(863)58,065 Recreation205,200222,200222,611411231,288 Total charges for services1,995,6001,961,6001,981,94620,3462,029,775 Fines and forfeits180,000180,000168,818(11,182)186,418 Investment income: Interest and dividends59,00059,00065,1056,10580,324 Net change in the fair market value of investments - - (4,465)(4,465)24,648 Total investment income59,00059,00060,6401,640104,972 Miscellaneous revenue: Insurance and other reimbursements85,90093,20048,841(44,359)97,650 Gambling tax58,00058,00062,6394,63962,207 Donations19,5001,70016,55514,85544,221 Miscellaneous11,8007,80032,32224,52222,507 Total miscellaneous revenue175,200160,700160,357(343)226,585 Total revenues15,690,400 15,558,100 15,462,779 (95,321)15,561,266 The accompanying notes are an integral part of these financial statements. 96 Exhibit B-1 Page 2 of 4 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 2017 Variance with Final Budget - 2016 Budgeted AmountsActualPositiveActual OriginalFinalAmounts(Negative)Amounts Expenditures: General government: City management: Mayor and council: Current: Personal services$101,600$100,000$95,848$4,152$96,616 Supplies and other charges37,50039,90037,5952,30535,403 Total mayor and council139,100139,900133,4436,457132,019 City manager: Current: Personal services291,900290,500294,528(4,028)271,973 Supplies and other charges85,90079,70061,80117,89983,647 Total city manager377,800370,200356,32913,871355,620 Human resources: Current: Personal services212,200217,600212,7294,871209,941 Supplies and other charges48,20041,90027,93713,96349,046 Total human resources260,400259,500240,66618,834258,987 Elections: Current: Personal services - 2,4002,28111950,875 Supplies and other charges6,4006,9006,62827210,092 Total elections6,4009,3008,90939160,967 City clerk/records: Personal services97,500108,200112,752(4,552)105,069 Supplies and other charges8,4005,4004,3781,0225,654 Total city clerk/records105,900113,600117,130(3,530)110,723 Legal: Current: Supplies and other charges440,400422,500410,67711,823430,805 Total city management1,330,0001,315,0001,267,15447,8461,349,121 Finance: Accounting: Current: Personal services539,000519,200516,5722,628539,961 Supplies and other charges87,40077,70074,4963,20475,520 Total accounting626,400596,900591,0685,832615,481 Assessing: Current: Personal services279,000278,300274,2744,026270,687 Supplies and other charges16,50013,4006,1747,22616,860 Total assessing295,500291,700280,44811,252287,547 ITS: Current: Personal services237,100233,300230,8352,465232,527 Supplies and other charges89,70093,800105,769(11,969)78,340 Total ITS326,800327,100336,604(9,504)310,867 Total finance1,248,7001,215,7001,208,1207,5801,213,895 Nondepartmental: Current: Personal services60,00025,900 - 25,900 - Supplies and other charges15,00013,00033,738(20,738)20,377 Total nondepartmental75,00038,90033,7385,16220,377 The accompanying notes are an integral part of these financial statements. 97 Exhibit B-1 Page 3 of 4 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 2017 Variance with Final Budget - 2016 Budgeted AmountsActualPositiveActual OriginalFinalAmounts(Negative)Amounts Expenditures: (continued) General government: (continued) Municipal center: Current: Personal services$132,600$135,600$135,872($272)$131,373 Supplies and other charges200,600191,800173,69418,106180,893 Total municipal center333,200327,400309,56617,834312,266 Total general government2,986,9002,897,0002,818,57878,4222,895,659 Public safety: Police: Police protection: Current: Personal services5,667,2005,623,6005,460,021163,5795,208,515 Supplies and other charges592,100603,500629,788(26,288)562,358 Total police protection6,259,3006,227,1006,089,809137,2915,770,873 Civil defense: Current: Supplies and other charges17,40015,30011,1894,11115,641 Capital outlay - - - - - Total civil defense17,40015,30011,1894,11115,641 Total police6,276,7006,242,4006,100,998141,4025,786,514 Fire: Fire protection: Current: Personal services1,161,3001,179,0001,174,0814,9191,087,084 Supplies and other charges334,900333,100337,557(4,457)352,132 Total fire protection1,496,2001,512,1001,511,6384621,439,216 Rental inspections: Current: Personal services171,500171,700181,615(9,915)169,017 Supplies and other charges17,50014,5005,2289,27210,357 Total rental inspections189,000186,200186,843(643)179,374 Total public safety7,961,9007,940,7007,799,479141,2217,405,104 Public works: Engineering: Current: Personal services214,700213,100225,842(12,742)176,324 Supplies and other charges102,000103,500120,696(17,196)94,396 Capital outlay - - - - - Total engineering316,700316,600346,538(29,938)270,720 Public works and parks: Current: Personal services1,806,2001,853,0001,781,01771,9831,753,961 Supplies and other charges920,900893,100848,84444,256799,638 Total public works and parks2,727,1002,746,1002,629,861116,2392,553,599 The accompanying notes are an integral part of these financial statements. 98 Exhibit B-1 Page 4 of 4 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 2017 Variance with Final Budget - 2016 Budgeted AmountsActualPositiveActual OriginalFinalAmounts(Negative)Amounts Expenditures: (continued) Forestry Current: Personal services - - - - - Supplies and other charges53,60053,60047,9745,626 - Total forestry53,60053,60047,9745,626 - Total public works3,097,4003,116,3003,024,37391,9272,824,319 Community development: Building inspection: Current: Personal services$295,700$303,900$308,398($4,498)$296,575 Supplies and other charges140,400115,80097,12718,673129,152 Total building inspection436,100419,700405,52514,175425,727 Planning: Current: Personal services518,600512,200466,70945,491469,532 Supplies and other charges70,50078,50061,84016,66047,509 Total planning589,100590,700528,54962,151517,041 Total community development1,025,2001,010,400934,07476,326942,768 Parks and recreation: Current: Personal services677,900670,700667,7382,962643,168 Supplies and other charges273,700255,600249,4876,113248,562 Total parks and recreation951,600926,300917,2259,075891,730 Contingency: Current: Supplies and other charges120,000120,000 - 120,000 - Total expenditures16,143,00016,010,70015,493,729516,97114,959,580 Excess (deficiency) of revenues over (under) expenditures(452,600)(452,600)(30,950)421,650601,686 Other financing sources (uses): Transfers in452,600452,600452,600 - 532,900 Transfers out - - - - (907,100) Total other financing sources452,600452,600452,600 - (374,200) Net change in fund balance$ - $ - 421,650$421,650227,486 Fund balance - January 19,171,4368,943,950 Fund balance - December 31$9,593,086$9,171,436 The accompanying notes are an integral part of these financial statements. 99 100 101 102 103 104 2017 Changes Changes in Actuarial Assumptions: 2016 Changes 2017 Changes Changes in Actuarial Assumptions: 105 2016 Changes 106 107 This page intentionally left blank 108 109 110 Exhibit C-2 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2017 With comparative amounts for the year ended December 31, 2016 Special CapitalTotal Nonmajor Governmental RevenueProjectFunds 20172016 Revenues: Taxes$344,550$50,000$394,550$400,432 21,08821,08815,454 Special assessments - Licenses and permits297,233 - 297,233291,941 Intergovernmental revenue106,987605,145712,1321,185,114 Charges for services572,3846,501578,885562,890 Fines and forfeits99,171 - 99,17126,217 Investment income: Interest and dividends14,11117,82131,93237,173 Net change in the fair value of investments(940)(2,792)(3,732)9,907 Contributions and donations - 476,027476,027 - Miscellaneous105,88026,125132,00566,533 Total revenues1,539,376 1,199,915 2,739,291 2,595,661 Expenditures: Current: General government728,495393,4821,121,9771,029,218 Public safety201,553 - 201,553131,947 Parks and recreation500,386 - 500,386449,714 Capital outlay39,6701,048,9781,088,6482,017,094 Total expenditures1,470,1041,442,4602,912,5643,627,973 Excess (deficiency) of revenues over (under) expenditures69,272 (242,545)(173,273)(1,032,312) Other financing sources (uses): Proceeds from sale of capital assets - 69,78469,78443,673 Transfers in28,338258,043286,381882,100 Transfers out(28,338) - (28,338)(557,849) Total other financing sources (uses) - 327,827 327,827 367,924 Net change in fund balance69,272 85,282 154,554 (664,388) Fund balance - January 11,799,2542,725,9844,525,2384,392,161 Fund balance - December 31 $1,868,526$2,811,266$4,679,792$3,727,773 Reconciliation of beginning fund balance to prior year ending fund balance: Prior year ending fund balance reported above$3,727,773 Add prior year ending fund balance for funds reported as nonmajor in the prior year and major in the current year: Park Improvements 1,470,300 Less prior year ending fund balance for funds reported as nonmajor in the prior year and major in the current year: Building Improvements (672,835) Current year beginning fund balance$4,525,238 The accompanying notes are an integral part of these financial statements. 111 This page intentionally left blank 112 113 This page intentionally left blank 114 NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for revenues derived from specific taxes or other earmarked revenue sources. They are usually required by statute, charter provision or local ordinance to finance particular governmental functions or activities. Cable TV Fund - This fund receives revenues from the issuance of a franchise agreement with the cable TV provider. These revenues are used for the operation and maintenance of a government access channel. Solid Waste Abatement Fund - This fund receives grants, recycling fees and yard waste fees. These revenues finance the City’s curbside recycling pickup and operation of the yard waste transfer site. Drug and Gambling Forfeiture Fund - This fund receives forfeited property in connection with illegal gambling or drug activity. Pursuant to Minnesota Statutes, the proceeds are disbursed between the investigating agency and the prosecuting agency. Police Activity Fund - This fund is used to track the revenue and expenditures of externally funded police positions. Springbrook Nature Center Fund - This fund was established in 2005 after a $275,000 referendum supporting the Springbrook Nature Center was approved by the voters in November of 2004. The revenues from the annual levy are used for the on-going operation of the nature center and the capital improvement projects required in the park. 115 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2017 With comparative amounts for the year ended December 31, 2016 Solid Waste AssetsCable TVAbatement Cash and investments$1,509,455$31,565 Receivables: Accounts73,50327,539 Taxes - - Due from other governments - 62,171 Prepaid items - - Total assets$1,582,958$121,275 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable$543$30,454 Due to other governments - - Due to other funds - - Salaries payable3,476749 Unearned revenue - - Total liabilities4,01931,203 Deferred inflows of resources: Unavailable revenue - - Total deferred inflows of resources - - Fund balance: Restricted66,893 - Committed1,512,04690,072 Unassigned - - Total fund balance1,578,93990,072 Total liabilities, deferred inflows of resources, and fund balance$1,582,958$121,275 The accompanying notes are an integral part of these financial statements. 116 Exhibit C-3 Drug and Gambling Springbrook Nature ForfeiturePolice ActivityCenter Totals Nonmajor Special Revenue Funds 20172016 $3,349$ - $215,761$1,760,130$1,708,142 201 - - 101,243104,629 - - 5,9905,9907,663 - 32,982 - 95,15389,965 - - - - 2,250 $3,550$32,982$221,751$1,962,516$1,912,649 $4,536$837$8,911$45,281$39,218 - - 157157382 - 22,660 - 22,66048,764 - 2,3776,17412,77611,946 8,467 - - 8,4678,467 13,00325,87415,24289,341108,777 - - 4,6494,6494,618 - - 4,6494,6494,618 - - 2,21869,11166,893 - 7,108199,6421,808,8681,759,935 (9,453) - - (9,453)(27,574) (9,453)7,108201,8601,868,5261,799,254 $3,550$32,982$221,751$1,962,516$1,912,649 The accompanying notes are an integral part of these financial statements. 117 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Solid Waste Cable TVAbatement Revenues: Taxes$ - $ - Licenses and permits297,233 - Intergovernmental revenue - 106,987 Charges for services - 295,979 Fines and forfeits - - Investment income: Interest and dividends12,818 - Net change in the fair value of investments(846) - Miscellaneous27,25716,833 Total revenues336,462419,799 Expenditures: Current: General government285,486419,445 Public safety - - Parks and recreation - - Capital outlay - - Total expenditures285,486419,445 Excess (deficiency) of revenues over (under) expenditures50,976354 Other financing sources (uses): Transfers in - - Transfers out - - Total other financing sources (uses) - - Net change in fund balance50,976354 Fund balance - January 11,527,96389,718 Fund balance - December 31$1,578,939$90,072 The accompanying notes are an integral part of these financial statements. 118 Exhibit C-4 Drug and GamblingSpringbrook ForfeiturePolice ActivityNature Center Totals Nonmajor Special Revenue Funds 20172016 $ - $ - $344,550$344,550$350,432 - - - 297,233291,941 - - - 106,987110,121 - 146,771129,634572,384540,198 99,171 - - 99,17126,217 - - 1,29314,11117,595 - - (94)(940)5,096 - - 61,790105,88045,423 99,171146,771537,1731,539,3761,387,023 - 23,564 - 728,495750,256 81,050120,503 - 201,553131,947 - - 500,386500,386449,714 - - 39,67039,670 - 81,050144,067540,0561,470,1041,331,917 18,1212,704(2,883)69,27255,106 28,338 - - 28,338 - (28,338) - - (28,338) - - - - - - 18,1212,704(2,883)69,27255,106 (27,574)4,404204,7431,799,2541,744,148 ($9,453)$7,108$201,860$1,868,526$1,799,254 The accompanying notes are an integral part of these financial statements. 119 This page intentionally left blank 120 121 Exhibit C-5 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2017 With comparative totals for the year ended December 31, 2016 Special Assessment ConstructionInformation CapitalParkSystemCapital Totals Nonmajor Capital AssetsProjectsImprovementsImprovementEquipment Project Funds 20172016 Cash and investments$25,692$1,556,331$457,383$825,517$2,864,923$2,230,705 Receivables: Accounts - 19,479 - - 19,479 - Taxes - 133 - - 133 - Special assessments115,537 - - - 115,53796,475 Total assets$141,229$1,575,943$457,383$825,517$3,000,072$2,327,180 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable$ - $20,952$17,510$1,738$40,200$110,059 Deposits payable - 32,936 - - 32,936 - Contracts payable - - - - - 189,003 Due to other governments - - - - - 3,123 Total liabilities - 53,88817,5101,73873,136302,185 Deferred inflows of resources: Unavailable revenue115,537133 - - 115,67096,476 Total deferred inflows of resources115,537133 - - 115,67096,476 Fund balance: Committed25,692 - - 823,779849,471795,715 Assigned - 1,521,922439,873 - 1,961,7951,132,804 Total fund balance25,6921,521,922439,873823,7792,811,2661,928,519 Total liabilities, deferred inflows of resources, and fund balance$141,229$1,575,943$457,383$825,517$3,000,072$2,327,180 The accompanying notes are an integral part of these financial statements. 122 Exhibit C-6 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Special Assessment ConstructionInformation CapitalParkSystemCapitalTotals Nonmajor Capital ProjectsImprovementsImprovementEquipmentProject Funds 20172016 Revenues: Taxes$ - $ - $50,000$ - $50,000$50,000 Special assessments21,088 - - - 21,08815,454 Intergovernmental revenue - 20,00086,000499,145605,1451,074,993 Charges for services - - 6,501 - 6,50122,692 Investment income: Interest and dividends31210,7743,0033,73217,82119,578 Net change in the fair value of investments - (2,167) - (625)(2,792)4,811 Contributions and donations - 476,027 - - 476,027 - Miscellaneous - - 4,09022,03526,12521,110 Total revenues21,400504,634149,594524,2871,199,9151,208,638 Expenditures: Current: General government31,31621,419136,518204,229393,482278,962 Capital outlay - 506,59333,172509,2131,048,9782,017,094 Total expenditures31,316528,012169,690713,4421,442,4602,296,056 Excess (deficiency) of revenues over (under) expenditures(9,916)(23,378)(20,096)(189,155)(242,545)(1,087,418) Other financing sources (uses): Proceeds from sale of capital assets - - - 69,78469,78443,673 Transfers in8,04375,000 - 175,000258,043882,100 Transfers out - - - - - (557,849) Total other financing sources (uses)8,04375,000 - 244,784327,827367,924 Net change in fund balance(1,873)51,622(20,096)55,62985,282(719,494) Fund balance - January 127,5651,470,300459,969768,1502,725,9842,648,013 Fund balance - December 31$25,692$1,521,922$439,873$823,779$2,811,266$1,928,519 Reconciliation of beginning fund balance to prior year ending fund balance: Prior year ending fund balance reported above$1,928,519 Add prior year ending fund balance for funds reported as nonmajor in the prior year and major in the current year: Park Improvements 1,470,300 Less prior year ending fund balance for funds reported as nonmajor in the prior year and major in the current year: Building Improvements (672,835) Current year beginning fund balance$2,725,984 The accompanying notes are an integral part of these financial statements. 123 This page intentionally left blank 124 125 Exhibit D-1 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - CABLE TV FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 2017 2016 Budgeted AmountsActualActual OriginalFinalAmountsAmounts Revenues: Licenses - franchise fee$290,000$290,000$297,233$291,941 Investment income: Interest and dividends10,00010,00012,81816,037 Net change in the fair value of investments - - (846)4,758 Miscellaneous - 27,11527,257 - Total revenues300,000 327,115 336,462 312,736 Expenditures: Current: General government: Personal services299,100300,200176,533258,882 Supplies and other charges35,70031,600108,95354,591 Capital outlay25,000 - - - Total expenditures359,800 331,800 285,486 313,473 Excess (deficiency) of revenues over (under) expenditures(59,800) (4,685) 50,976 (737) Other financing sources: Transfers in30,00030,000 - - Total other financing sources30,00030,000 - - Net change in fund balance(29,800) 25,315 50,976 (737) Fund balance - January 11,527,9631,528,700 Fund balance - December 31$1,578,939$1,527,963 126 127 Exhibit D-3 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - SOLID WASTE ABATEMENT FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 20172016 Budgeted AmountsActualActual OriginalFinalAmountsAmounts Revenues: Intergovernmental revenue: State$102,000$109,000$106,987$95,748 Charges for services296,000296,000295,979296,409 Miscellaneous20,00017,90016,83326,724 Total revenues418,000 422,900 419,799 418,881 Expenditures: Current: General government: Personal services50,40054,50058,42458,598 Supplies and other charges367,100365,000361,021356,453 Total expenditures417,500 419,500 419,445 415,051 Excess (deficiency) of revenues over (under) expenditures$500$3,4003543,830 Fund balance - January 189,71885,888 Fund balance - December 31$90,072$89,718 128 Exhibit D-4 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - POLICE ACTIVITY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2017 With comparative actual amounts for the year ended December 31, 2016 20172016 Budgeted AmountsActualActual OriginalFinalAmountsAmounts Revenues: Charges for services$137,400$154,700$146,771$141,311 Total revenues137,400 154,700 146,771 141,311 Expenditures: Current: General government: Supplies and other charges4,70016,60023,56417,359 Public safety: Personal services128,700127,500120,503121,309 Total expenditures133,400 144,100 144,067 138,668 Excess (deficiency) of revenues over (under) expenditures4,00010,6002,7042,643 Other financing sources: Transfers in - - - - Net change in fund balance$4,000$10,6002,7042,643 Fund balance - January 14,4041,761 Fund balance - December 31$7,108$4,404 129 This page intentionally left blank 130 131 132 133 Exhibit E-3 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For The Year Ended December 31, 2017 Employee BenefitsSelf Insurance Totals 2017 Cash flows from operating activities: Receipts from interfund services provided$1,130,640$279,595$1,410,235 Payment to suppliers(2,074)(408,505)(410,579) Payment to employees(1,139,889) - (1,139,889) Net cash flows from operating activities(11,323)(128,910)(140,233) Cash flows from noncapital financing activities: Intergovernmental revenue - - - Transfers in - - - Net cash flows from noncapital financing activities - - - Cash flows from capital and related financing activities: Insurance reimbursement - - - Cash flows from investing activities: Investment income10,53810,14120,679 Net increase (decrease) in cash and cash equivalents(785)(118,769)(119,554) Cash and cash equivalents - January 11,330,3801,329,8752,660,255 Cash and cash equivalents - December 31$1,329,595 $1,211,106 $2,540,701 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) ($819,340)($24,811)($844,151) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Intergovernmental revenue35,659 - 35,659 Changes in assets and liabilities: Decrease (increase) in accounts receivable -20,22720,227 Decrease (increase) in prepaid items -5,0005,000 Decrease (increase) in deferred outflows of resources6,599,307 - 6,599,307 Increase (decrease) in payables(13,273,543)(129,326)(13,402,869) Increase (decrease) in deferred inflows of resources7,446,594 - 7,446,594 Total adjustments808,017 (104,099)703,918 Net cash provided by operating activities($11,323)($128,910)($140,233) 134 135 CITY OF FRIDLEY, MINNESOTA BALANCE SHEET - GOVERNMENTAL FUNDS HOUSING AND REDEVELOPMENT AUTHORITY December 31, 2017 With comparative totals for December 31, 2016 Gateway GeneralHousing LoanNorthEast Assets Cash and investments$4,728,448$1,932,896$8,256 Receivables: Accounts512,019 - - Taxes5,965 -1,417 Mortgage: Deferred -1,156,350 - Allowance for uncollectible accounts -(8,314) - Interest37,706 - - Due from other funds7,641,361 - - Prepaid expenses - - - Land held for resale1,733,522 - - Total assets$14,659,021$3,080,932$9,673 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable$5,464$43,943$435 Due to primary government1,670,796 - - Due to other governments - - - Due to other funds - - 3,843,025 Total liabilities1,676,26043,9433,843,460 Deferred inflows of resources: Unavailable revenue2,191,250 - 1,417 Total deferred inflows of resources2,191,250 - 1,417 Fund balance (deficit): Nonspendable - 1,148,036 - Restricted - - - Committed - 1,888,953 - Unassigned10,791,511 - (3,835,204) Total fund balance (deficit)10,791,5113,036,989(3,835,204) Total liabilities, deferred inflows of resources, and fund balance$14,659,021$3,080,932$9,673 136 Exhibit F-1 Other BAE Hazardous GovernmentalIntra - Activity BAESub DistrictFundsEliminationsTotals Governmental Funds 20172016 $215,446$9$1,434,963$ - $8,320,018$7,912,241 - - - - 512,01955,263 2641,6291,034 - 10,30913,659 - - - - 1,156,3501,005,294 - - - - (8,314)(2,067) - - - - 37,70643,713 - - - (7,641,361) - - - - - - - 530 - - 208,354 - 1,941,8764,509,369 $215,710$1,638$1,644,351($7,641,361)$11,969,964$13,538,002 $313,466$1,015$322,539$ - $686,862$479,872 - - 34,653 - 1,705,4491,613,906 1,4466337,773 - 9,8529,510 - 2,728,4711,069,865(7,641,361) - - 314,9122,730,1191,434,830(7,641,361)2,402,1632,103,288 - 1,629209,372 - 2,403,6684,516,284 - 1,629209,372 - 2,403,6684,516,284 - - - - 1,148,0361,003,757 - - 1,101,510 - 1,101,510805,929 - - - - 1,888,9532,010,310 (99,202)(2,730,110)(1,101,361) - 3,025,6343,098,434 (99,202)(2,730,110)149 - 7,164,1336,918,430 $215,710$1,638$1,644,351($7,641,361)$11,969,964$13,538,002 Fund balance reported above$7,164,133$6,918,430 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 funds2,023,5112,023,511 Other long-term assets are not available to pay for current-period expenditures and, therefore, are reported as unavailable revenue2,403,6684,516,284 Net position of governmental activities$11,591,312$13,458,225 137 CITY OF FRIDLEY, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS HOUSING AND REDEVELOPMENT AUTHORITY For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 Gateway GeneralHousing LoanNorthEast Revenues: Tax increment$ - $ - $150,982 Property taxes398,330 - - Investment income: Interest and dividends43,03618,696721 Net change in the fair value of investments(362)93864 Mortgage interest earnings232,41140,372 - Rental9,600 - - Intergovernmental2,573,362 - - Sale of real estate118,260 - - Miscellaneous187,01119,815 - Total revenues3,561,64878,976152,567 Expenditures: Personal services148,678 - - Supplies and other charges319,80955,5248,502 Developer assistance2,573,362 - - Interest expense56,403 - 154,347 Total expenditures3,098,25255,524162,849 Net change in fund balance463,39623,452(10,282) Fund balance (deficit) - January 110,328,1153,013,537(3,824,922) Fund balance (deficit) - December 31$10,791,511$3,036,989($3,835,204) 138 Exhibit F-2 Other BAE Hazardous GovernmentalIntra-Activity BAESub DistrictFundsEliminations Totals Governmental Funds 20172016 $710,491$332,122$1,136,886$ - $2,330,481$1,640,277 - - - - 398,330395,955 - - 8,983 -71,436111,596 - - (1,933) - (1,338)(45,772) - - - - 272,783235,913 - - - - 9,6009,600 - - - - 2,573,3622,670,406 - - 1,000 -119,260117,537 - - - - 206,826148,383 710,491332,1221,144,936 - 5,980,7405,283,895 - - - - 148,678142,257 92,18237,315197,640 -710,972614,825 638,728735,204639,279 - 4,586,5734,777,484 -78,064 - - 288,814255,653 730,910850,583836,919 - 5,735,0375,790,219 (20,419)(518,461)308,017 -245,703(506,324) (78,783)(2,211,649)(307,868) - 6,918,4307,424,754 ($99,202)($2,730,110)$149$ - $7,164,133$6,918,430 Amounts reported for governmental activities in the statement of activities (Exhibit A-2) are different because: Net changes in fund balances - total above$245,703($506,324) Expenses in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(2,112,616)1,117,558 Changes in net position of governmental activities (Exhibit A-2)($1,866,913)$611,234 139 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS HOUSING AND REDEVELOPMENT AUTHORITY December 31, 2017 With comparative totals for December 31, 2016 HousingUniversity / Gateway EastLake PointeGateway WestReplacementOsborne Assets Cash and investments$13,167$263,386$880$214,078$359,111 Taxes receivable -15 - - 23 Land held for resale - 38,2502,610167,494 - Total assets$13,167$301,651$3,490$381,572$359,134 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable$ - $265,934$ - $59$ - Due to primary government - - - - - Due to other governments1,068519746535868 Due to other funds331,653325,303360,109 - - Total liabilities332,721 591,756 360,855 594 868 Deferred inflows of resources: Unavailable revenue - 38,2642,610167,49421 Total deferred inflows of resources - 38,2642,610167,49421 Fund balance (deficit): Restricted - - - 213,484358,245 Unassigned(319,554)(328,369)(359,975) - - Total fund balance (deficit)(319,554)(328,369)(359,975)213,484 358,245 Total liabilities, deferred inflows of resources, and fund balance$13,167$301,651$3,490$381,572$359,134 140 Exhibit F-3 McGlynnSatellite Lane NorthstarLocke Point Total Nonmajor Capital Project BakeriesApts.Main StreetTransit StationPark Funds 20172016 $188,985$211,190$47,736$135,396$1,034$1,434,963$683,419 - - 101895 - 1,0341,127 - - - - - 208,354 - $188,985$211,190$47,837$136,291$1,034$1,644,351$684,546 $ - $ - $52,867$3,316$363$322,539$48,336 - - - - 34,65334,653 - 8499924256331,1387,7735,012 - - - - 52,8001,069,865372,211 849 992 53,292 3,949 88,954 1,434,830 425,559 - - 88895 - 209,372150 - - 88 895 - 209,372 150 188,136210,198 - 131,447 - 1,101,510627,400 - - (5,543) - (87,920)(1,101,361)(368,563) 188,136 210,198 (5,543)131,447 (87,920)149 258,837 $188,985$211,190$47,837$136,291$1,034$1,644,351$684,546 141 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR CAPITAL PROJECT FUNDS HOUSING AND REDEVELOPMENT AUTHORITY For The Year Ended December 31, 2017 With comparative totals for the year ended December 31, 2016 HousingUniversity / Gateway EastLake PointeGateway WestReplacementOsborne Revenues: Tax increment$34,144$593,077$28,746$37,398$52,405 Property taxes - - - - - Investment income: Interest and dividends1812541931,7723,048 Net change in the fair value of investments(15)(233)128(312)(538) Sale of real estate - - - 1,000 - Total revenues34,310593,09829,06739,85854,915 Expenditures: Supplies and other charges1,19032,2018494,9036,278 Developer assistance - 532,225 - - - Total expenditures1,190564,4268494,9036,278 Net change in fund balance33,12028,67228,21834,95548,637 Fund balance (deficit) - January 1(352,674)(357,041)(388,193)178,529309,608 Fund balance (deficit) - December 31($319,554)($328,369)($359,975)$213,484$358,245 142 Exhibit F-4 McGlynnSatellite Lane NorthstarLocke Point Totals Nonmajor Capital Project BakeriesApts.Main StreetTransit StationParkFunds 20172016 $46,861$42,214$119,239$182,802$ - $1,136,886$258,921 - - - - - - - 1,4901,72546274 - 8,9838,163 (330)(381) - (252) - (1,933)(3,585) - - - - - 1,000 - 48,02143,558119,285182,824 - 1,144,936263,499 5,6875,35012,73340,52987,920197,64038,995 - - 107,054 - - 639,27997,739 5,6875,350119,78740,52987,920836,919136,734 42,33438,208(502)142,295(87,920)308,017126,765 145,802171,990(5,041)(10,848) - (307,868)132,072 $188,136$210,198($5,543)$131,447($87,920)$149$258,837 innin fund balance to prior ear endin fund balance: Reconciliation of beggyg Prior year ending fund balance reported above$258,837 Add prior year ending fund balance for funds reported as major in prior year and nonmajor in current year: Lake Pointe(357,041) Gateway West(388,193) Housing Replacement178,529 Current year beginning fund balance($307,868) 143 This page intentionally left blank 144 145 146 147 This page intentionally left blank 148 149 This page intentionally left blank 150 Statistical Section (Unaudited) This part of the City of Fridley's statistical 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 City's overall financial health. ContentsPage Financial Trends152 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity162 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property tax. Debt Capacity168 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information174 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. Operating Information178 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented Statement 34 in 2003; the City has chosen to provide information for that year forward. Ultimately, these schedules will contain information for the last ten years. 151 CITY OF FRIDLEY, MINNESOTA NET POSITION BY COMPONENT Last ten fiscal years (Accrual Basis of Accounting) 200820092010 Governmental activities: Net investment in capital assets$17,490,936$16,141,958$15,546,219 Restricted 2,193,410 2,790,220 3,401,776 Unrestricted 18,845,006 20,276,252 21,293,470 Total governmental activities net position$38,529,352$39,208,430$40,241,465 Business-type activities: Net investment in capital assets$16,381,443$15,036,932$15,105,503 Restricted - - - Unrestricted7,869,1858,308,0787,647,848 Total business-type activities net position$24,250,628$23,345,010$22,753,351 Primary government: Net investment in capital assets$33,872,379$31,178,890$30,651,722 Restricted 2,193,410 2,790,220 3,401,776 Unrestricted 26,714,191 28,584,330 28,941,318 Total primary government net position$62,779,980$62,553,440$62,994,816 Note: GASB 68 was implemented in 2015. Net position was restated for 2014 to reflect the reporting of net position liability and pension related deferred outflows of resources. Net position for years prior to 2014 was not restated. 152 Table 1 2011201220132014201520162017 $14,554,639$14,139,656$13,842,497$14,186,359$16,811,842$23,932,586$31,006,344 3,294,9523,392,382 3,050,204 2,673,982 2,233,179 2,204,983 2,739,575 24,238,79823,020,467 24,551,73025,321,65916,052,83313,175,9548,889,557 $40,967,488$41,673,406$41,444,431$42,182,000$35,097,854$39,313,523$42,635,476 $14,342,934$13,560,980$12,910,117$13,053,816$14,234,711$13,913,434$13,897,925 - - - - - - - 7,387,6348,235,9488,417,0858,727,3828,058,1819,567,29011,077,566 $21,730,568$21,796,928$21,327,202$21,781,198$22,292,892$23,480,724$24,975,491 $28,897,573$27,700,636$26,752,614$27,240,175$31,046,553$37,846,020$44,904,269 3,294,9523,392,382 3,050,204 2,673,9822,233,1792,204,9832,739,575 32,474,74630,408,101 32,968,815 34,049,04124,111,01422,743,24419,967,123 $62,698,056$63,470,334$62,771,633$63,963,198$57,390,746$62,794,247$67,610,967 153 CITY OF FRIDLEY, MINNESOTA CHANGES IN NET POSITION Last ten fiscal years (Accrual basis of accounting) 200820092010 Expenses Governmental activities: General government$3,646,436$3,324,698$3,272,470 Public safety6,774,6106,847,5716,756,698 Public works4,771,7485,065,1785,916,776 Community development1,479,4551,036,549966,909 Parks and recreation 1,303,0631,605,3061,521,106 Interest on long-term debt377,884342,555268,892 Total governmental activities expenses18,353,19618,221,85718,702,851 Business-type activities: Liquor4,937,7764,654,8114,542,180 Water2,378,1012,423,1292,438,399 Sanitary sewer4,065,8994,350,5764,617,991 Storm water373,989399,349421,630 Total business-type activities expenses11,755,76511,827,86512,020,200 Total primary government expenses$30,108,961$30,049,722$30,723,051 Program revenues Governmental activities: Charges for services: General government$1,600,769$1,733,160$1,755,123 Public safety759,892690,115717,003 Public works64,04223,03466,938 Community development510,908523,508501,897 Parks and recreation 376,621347,044364,093 Operating grants and contributions818,805930,765939,123 Capital grants and contributions2,078,5721,476,9891,952,934 Total governmental activities program revenues6,209,6095,724,6156,297,111 Business-type activities: Charges for services: Liquor5,275,4674,973,0004,855,880 Water2,110,6212,419,4002,390,836 Sanitary sewer3,873,8063,784,0004,052,800 Storm water404,562457,862421,815 Operating grants and contributions - - - Capital grants and contributions - - - Total business-type activities program revenues11,664,45611,634,26211,721,331 Total primary government program revenues$17,874,065$17,358,877$18,018,442 154 Table 2 Page 1 of 2 2011201220132014201520162017 $3,321,402$3,155,983$3,434,479$4,092,123$4,156,904$4,398,370$4,298,149 6,720,6416,999,5547,101,3317,570,3228,048,65510,313,1639,129,111 5,023,0805,420,2715,928,3315,959,5955,127,6674,975,3405,112,090 973,198880,414935,716898,4551,107,3481,126,835981,433 1,387,1331,355,5711,456,8411,513,1351,353,3201,440,2321,720,811 263,075232,318218,610179,420144,06497,6842,292,957 17,688,52918,044,11119,075,30820,213,05019,937,95822,351,62423,534,551 4,568,2824,354,9094,148,4474,596,3164,914,7865,043,7035,110,714 2,688,8462,647,1762,815,5882,902,4193,101,3563,076,4933,531,649 4,750,4674,653,4344,974,5254,988,5875,040,8615,068,1465,340,062 785,861602,923587,036597,915785,6261,030,4671,085,780 12,793,45612,258,44212,525,59613,085,23713,842,62914,218,80915,068,205 $30,481,985$30,302,553$31,600,904$33,298,287$33,780,587$36,570,433$38,602,756 $1,886,783$1,979,737$2,025,108$2,079,719$1,905,021$2,031,207$2,021,012 796,308862,584864,435683,418619,630742,523798,510 378,14228,14499,28927,31253,58932,52234,681 570,685554,129582,280798,3921,194,5341,108,177895,125 325,682369,899326,067327,508336,847333,766352,245 1,148,3151,030,8871,095,7241,837,8601,139,3851,077,5591,847,380 1,374,6511,564,1461,747,3031,220,9032,370,0096,296,5325,333,480 6,480,5666,389,5266,740,2066,975,1127,619,01511,622,28611,282,433 4,893,4364,705,5234,308,7914,786,9875,256,8405,439,4235,520,161 2,418,2262,773,1012,788,1462,913,7172,907,1233,330,3503,486,965 4,245,6544,549,2544,572,7984,754,4924,809,6795,298,9955,640,419 457,083571,707613,818732,9611,225,1531,324,4601,378,095 - - 50,000 - - 67,55161,476 - - - 440,627421,990186,791713,655 12,014,39912,599,58512,333,55313,628,78414,620,78515,647,57016,800,771 $18,494,965$18,989,111$19,073,759$20,603,896$22,239,800$27,269,856$28,083,204 155 CITY OF FRIDLEY, MINNESOTA CHANGES IN NET POSITION Last ten fiscal years (Accrual basis of accounting) 200820092010 Net (expense) revenue: Governmental activities($12,143,587)($12,497,242)($12,405,740) Business-type activities(91,309)(193,603)(298,869) Total primary government net (expense) revenue($12,234,896)($12,690,845)($12,704,609) General revenues and other changes in net position Governmental activities: General property taxes$9,068,718$9,175,888$10,141,119 Grants not restricted to programs3,240,0813,390,6332,718,979 Investment earnings687,66596,817208,565 Gain on sale of property(24,802)12,98220,112 Other267 - - Transfers500,000500,000350,000 Total governmental activities13,471,92913,176,32013,438,775 Business-type activities: Grants not restricted to programs - - - Investment earnings168,39425,90857,098 Gain on sale of property -(237,923)112 Other - - - Transfers(500,000)(500,000)(350,000) Total business-type activities(331,606)(712,015)(292,790) Total primary governmen$13,140,323$12,464,305$13,145,985 t Change in net position: Governmental activities$1,328,342$679,078$1,033,035 Business-type activities(422,915)(905,618)(591,659) $905,427($226,540)$441,376 Total primary government Note: GASB 68 was implemented in 2015. Pension expense for years prior to 2015 was not restated. 156 Table 2 Page 2 of 2 2011201220132014201520162017 ($11,207,963)($11,654,585)($12,335,102)($13,237,938)($12,318,943)($10,729,338)($12,252,118) (779,057)341,143(192,043)543,547778,1561,428,7611,732,566 ($11,987,020)($11,313,442)($12,527,145)($12,694,391)($11,540,787)($9,300,577)($10,519,552) $10,126,395$10,654,542$11,003,455$11,521,196$11,795,707$12,222,937$13,884,775 1,095,4701,030,1231,033,8141,476,6641,325,3881,763,614657,546 347,184269,240(216,821)634,411157,281254,379413,165 14,93756,59835,680 - 67,58111,005 - - - - 93,236418,640354,572280,085 350,000350,000250,000250,000338,600338,500338,500 11,933,98612,360,50312,106,12813,975,50714,103,19714,945,00715,574,071 - - - - 2,413 - - 106,27465,537(52,346)148,24842,72295,71368,805 - 9,680 - - 10,672 - 16,000 - - 24,66312,20116,3311,85815,896 (350,000)(350,000)(250,000)(250,000)(338,600)(338,500)(338,500) (243,726)(274,783)(277,683)(89,551)(266,462)(240,929)(237,799) $11,690,260$12,085,720$11,828,445$13,885,956$13,836,735$14,704,078$15,336,272 $726,023$705,918($228,974)$737,569$1,784,254$4,215,669$3,321,953 (1,022,783)66,360(469,726)453,996511,6941,187,8321,494,767 ($296,760)$772,278($698,700)$1,191,565$2,295,948$5,403,501$4,816,720 157 Table 3 Page 1 of 2 CITY OF FRIDLEY, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS (1) Last ten fiscal years (Modified accrual basis of accounting) 2008200920102011 General Fund: Reserved$48,561$58,928$59,755$ - Unreserved: General fund4,538,2244,600,9885,725,464 - Designated for employee benefits - - - - Designated for contingencies - - - - Undesignated - - - - Nonspendable - - - 65,271 Restricted - - - - Unassigned - - - 6,708,284 Total general fund$4,586,785$4,659,916$5,785,219$6,773,555 All other governmental funds: Reserved for: Long-term receivables$277,560$ - $ - $ - Public safety25,590 - - - Debt service1,564,2171,734,6242,066,732 - Unreserved, reported in: Special revenue funds1,258,9261,329,6471,407,400 - Capital projects funds5,944,5565,056,1485,796,931 - Debt service5,976,5115,801,6865,983,425 - Restricted - - - 2,529,873 Committed - - - 2,209,067 Assigned - - - 11,108,003 Unassigned - - - (98,164) Total all other governmental funds$15,047,360$13,922,105$15,254,488$15,748,779 In 2011, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. 158 Table 3 Page 2 of 2 201220132014201520162017 $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - 66,15250,36660,12366,26551,30555,777 20,81040,01215,17619,37635,90314,466 7,582,3607,997,0368,242,3318,858,3099,084,2289,522,843 $7,669,322$8,087,414$8,317,630$8,943,950$9,171,436$9,593,086 $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,093,3022,233,6642,071,2591,808,5721,903,29034,821,855 2,328,5832,124,9442,566,1012,709,6382,549,9032,658,339 11,783,59611,618,83511,949,55511,272,58810,573,2878,510,134 (97,712)(98,566)(97,712)(43,153)(27,574)(9,453) $17,107,769$15,878,877$16,489,203$15,747,645$14,998,906$45,980,875 159 CITY OF FRIDLEY, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years 200820092010 Revenues: General property taxes$9,052,719$9,072,267$10,178,369 Special assessments589,790665,038622,100 Licenses and permits946,285965,363973,985 Intergovernmental2,742,9813,140,5533,310,631 Charges for services2,015,7962,021,7082,080,349 Fines and forfeits316,646255,014240,880 Earnings on investments560,62974,840176,257 Interest on loan16,5476,939 - Other2,220,2762,043,2521,992,971 Total revenues 18,461,669 18,244,974 19,575,542 Expenditures: Current: General government3,338,2283,086,4413,010,835 Public safety6,323,9106,446,7146,329,354 Public works3,406,4683,376,6413,111,918 Community development1,189,033895,057967,487 Parks and recreation1,366,1541,301,1401,292,783 Debt service: Principal2,075,0002,215,0002,445,000 Interest 379,340366,500287,961 Bond issuance costs9,1391,80145,094 Capital outlay2,684,9382,144,6491,812,087 Total expenditures 20,772,210 19,833,943 19,302,519 Revenues over (under) expenditures (2,310,541) (1,588,969) 273,023 Other financing sources (uses): Refunding bond issues - - - Bonds issued1,915,000 -1,765,000 Premium/(discount) on bonds issue - -53,163 Proceeds from sale of capital assets13,10136,84516,500 Insurance and other reimbursements - - - Transfers in3,926,5632,500,4211,235,467 Transfers out(3,380,023)(2,000,421)(885,467) Total other financing sources (uses) 2,474,641 536,845 2,184,663 Net change in fund balance$164,100($1,052,124)$2,457,686 Debt service as a percentage of noncapital expenditures13.6%14.6%15.9% Debt service as percentage of total expenditures 11.9%13.0%14.4% 160 Table 4 2011201220132014201520162017 $10,113,120$10,732,129$11,024,785$11,554,557$11,805,580$12,244,211$13,878,204 672,929763,920834,120938,290542,248865,722621,621 1,085,1001,104,5041,123,6351,171,3651,549,7851,442,8951,272,753 2,853,1712,649,2072,643,7283,208,4424,375,9727,330,3384,227,709 2,206,7642,353,8882,545,9082,518,0622,374,8962,592,6652,560,831 258,372255,622218,194226,922184,940212,635267,989 297,290236,226(185,473)565,245157,281254,379413,165 - - - - - - - 325,284322,354295,409314,416429,713887,678766,059 18,417,85017,812,030 18,500,306 20,497,299 21,420,415 25,830,523 24,008,331 3,165,1113,503,3263,279,6573,732,0563,777,6883,924,8773,953,025 6,284,6586,422,6466,794,5247,165,6787,319,5647,537,0518,001,032 3,061,1003,047,3003,530,9394,635,7523,575,2522,824,3193,468,102 979,042772,070817,895894,7851,081,549942,768934,074 1,195,4101,252,0891,305,1581,422,4051,288,6841,341,4441,417,611 800,000940,000980,0001,150,0001,190,0001,230,0001,730,000 271,969232,318227,326190,890152,894112,421931,527 2,79947,016 - 3,1507,4622,700715,461 964,4101,639,7732,536,2861,290,0083,645,4258,618,36922,577,062 17,856,53816,724,499 19,471,785 20,484,724 22,038,518 26,533,949 43,727,894 561,3121,087,531 (971,479) 12,575 (618,103) (703,426) (19,719,563) - - - - - - - - 1,280,000 - - - - 49,130,000 - - - - - - 1,584,898 15,09663,44535,67936,83693,67043,67369,784 - - - - - - - 380,000350,000250,0008,253,6161,065,4102,047,8491,361,189 - - (125,000)(7,462,485)(726,810)(1,909,349)(1,022,689) 1,693,445395,096 160,679 827,967 432,270 182,173 51,123,182 $1,482,627$2,254,757($810,800)$840,542($185,833)($521,253)$31,403,619 6.8%7.2%6.8%7.0%7.3%7.5%16.0% 6.4%6.8%6.2%6.6%6.1%5.1%7.7% 161 CITY OF FRIDLEY, MINNESOTA TAX CAPACITY VALUE AND ESTIMATED MARKET VALUE OF TAXABLE PROPERTY Last ten fiscal years Commercial/ FiscalResidentialIndustrialPublicAll YearPropertyPropertyUtilityOther 2008$15,334,126$15,809,594$42,738$4,370,011 200914,716,96716,788,86038,6804,455,969 201013,494,27916,457,27537,3084,523,767 201112,175,45215,182,22741,2364,396,579 1 2012 10,246,61414,710,92640,3304,271,859 1 2013 8,713,05313,207,35145,3064,286,829 1 2014 7,885,29812,520,98144,6484,362,496 1 2015 9,538,48412,771,82949,8684,737,031 1 2016 9,488,68613,688,86758,6994,958,693 1 2017 10,488,27915,061,05659,7595,564,751 Source: Continuing Disclosure Document 1 After 2011, the State implemented the Homestead Market Value Exclusion program for residential properties. Beginning in 2012, the HMVE program excludes a portion of the market value prior to the tax calculation. 2 Property values are determined on January 2 of the preceeding year. 162 Table 5 Add:Less: Totalfor Area-wideFiscalAdjustedTotalEstimatedTax Capacity TaxValues andDisparityTax CapacityDirect TaxMarketas a Percent 2 Value of EMV CapacityIncrementContributionValueRate $36,000,476$ - $5,252,637$30,747,83930.324%$2,701,388,800117.08% 34,512,6291,514,7305,757,07330,270,28628.640%2,698,943,700114.01% 31,795,4942,478,3716,128,31828,145,54732.258%2,561,173,300112.97% 29,269,7292,505,5176,212,40625,562,84036.986%2,352,567,900114.50% 26,252,5392,851,4595,629,37423,474,62439.615%2,278,659,000111.83% 24,813,4232,844,6895,373,20222,284,91047.362%2,057,500,500111.35% 27,097,2122,799,1714,509,58725,386,79648.577%1,948,580,100106.74% 28,194,9452,934,0454,358,57026,770,42043.508%2,146,063,300105.32% 28,194,9452,986,8384,681,35026,500,43344.960%2,207,363,400106.39% 31,173,8452,946,2665,225,76428,894,34748.218%2,416,338,500107.89% 163 CITY OF FRIDLEY, MINNESOTA DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Last ten fiscal years SchoolSchoolSchool FiscalDistrictDistrictDistrict YearCityNo. 11No. 13No. 14 200830.324%16.983%15.942%26.033% 200928.640%18.263%23.411%31.172% 201032.258%19.939%24.398%38.795% 201136.486%24.023%18.596%40.631% 201239.615%23.325%24.024%43.862% 201347.362%26.801%27.449%50.112% 201448.577%28.265%24.824%49.552% 201543.508%22.482%32.562%48.422% 201644.960%20.885%29.442%54.252% 201748.218%18.590%27.633%49.408% Source: Anoka County Property Records and Taxation Department Notes: (1) Coon Creek Watershed District is included with School District No. 11. (2) Rice Creek Watershed District is included with School District No. 13, 14 and 16. 164 Table 6 SpecialSpecialTotal Tax Capacity Rates By School Districts SchoolDistrictsDistrictsSchoolSchoolSchoolSchool DistrictwithwithDistrictDistrictDistrictDistrict (1)(1)(2)(2)(2) No. 16No. 11No. 13No. 14No. 16 CountyCoon CreekRice Creek 26.213%31.078%7.803%N/A86.608%87.135%97.226%97.406% 27.155%32.078%8.783%N/A86.183%92.840%100.601%96.584% 31.654%35.189%9.089%N/A94.964%100.897%115.294%108.153% 33.959%39.884%10.533%N/A113.226%109.392%131.427%124.755% 39.443%41.146%10.176%N/A111.953%114.961%134.799%130.380% 44.440%44.411%14.189%N/A128.022%129.850%152.513%146.841% 44.562%43.239%9.559%10.296%129.640%126.936%151.664%146.674% 40.045%38.123%8.591%9.079%112.704%123.272%139.410%130.755% 39.609%38.894%9.688%9.622%114.427%122.918%147.728%133.085% 40.229%36.841%6.758%7.200%110.407%119.892%141.667%132.488% 165 Table 7 CITY OF FRIDLEY, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Current year and nine years ago 20172008 Percentage Percentage Taxableof Total CityTaxableof Total City CapacityCapacityCapacityCapacity TaxpayerValueRankValueValueRankValue Medtronic, Inc.$1,762,3781 5.65%$1,696,3781 5.01% BAE (Fridley Land/N.Stacks)735,204 2 2.36%343,908 6 1.02% Onan Corp (Cummins Power)671,916 3 2.16%372,390 5 1.10% Target Corporation669,384 4 2.15%738,254 2 2.18% BNSF Railraod579,890 5 1.86%229,045 10 0.68% Fridley Medical Clinic457,216 6 1.47%N/A0.00% Wal-Mart/Sam's353,316 71.13%388,230 4 1.15% Georgetown Apartments310,829 8 1.00%278,674 8 0.82% Springbrook Apartments 310,088 90.99%269,458 9 0.80% River Pointe Apartments241,385 10 0.77%212,332 0.63% Shamrock Investments - 0.00%596,500 31.76% Lifetime Fitness - 0.00%300,394 7 0.89% $6,091,60619.54%$5,425,56316.04% Total All Property$31,173,845$33,857,865 166 Table 8 CITY OF FRIDLEY, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Last ten fiscal years Collected Within The FiscalTaxesCollections Fiscal Year of the LevyTotal Collections to Date YearLeviedin EndedFor ThePercentageSubsequentPercentage 1 Years Dec. 31Fiscal YearAmountof LevyAmountof Levy 2008$9,188,592$8,958,98697.50%$229,606$9,188,59299.97% 20099,110,8478,856,38497.21%254,4639,110,84799.98% 20109,707,0759,503,50997.90%201,2329,704,74199.95% 201110,014,0719,897,61098.84%112,50210,010,11299.96% 201210,703,73910,699,02599.96%(1,435)10,697,59099.94% 201311,252,48111,247,94399.96%(5,061)11,242,88299.88% 201411,511,28811,372,81298.80%129,18911,502,00199.75% 201511,734,60711,657,85599.35%61,95711,719,81299.59% 201612,200,83512,172,55599.77%4,58212,177,13799.77% 201714,122,25113,990,15499.06%N/A13,990,15499.06% 1 Includes repayment of property taxes abatements Source: City Finance Department 167 Table 9 CITY OF FRIDLEY, MINNESOT A RATIOS OF OUTSTANDING DEBT BY TYP E Last Ten fiscal years Business Type Governmental ActivitiesActivities Total Percentage FiscalImprovementTax IncrementEquipmentRevenuePrimaryof PersonalPer 222211 BondsBondsCertificatesBondsIncomeCapita TotalGovernment Year 2008$7,615,000$3,400,000$ - $11,015,000$6,440,000$17,455,0002.46%$416 20097,080,0001,720,000 - 8,800,0005,865,00014,665,0002.13%333 20107,570,000 - 550,0008,120,0008,160,00016,280,0002.19%298 20116,770,000 - 550,0007,320,0007,625,00014,945,0002.00%266 20125,880,000 - 1,780,0007,660,0007,070,00014,730,0001.96%278 20134,955,000 - 1,725,0006,680,0006,413,15413,093,1541.69%240 20144,000,000 - 1,530,0005,530,0005,845,00011,375,0001.58%198 20153,010,000 - 1,330,0004,340,0005,260,0009,600,0001.31%152 20161,980,000 - 1,130,0003,110,00010,645,00013,755,0001.67%109 201749,585,000 - 925,00050,510,0008,045,00058,555,0007.05%1,759 1 Demographic information can be found on Table 13 2 Presented as gross amount of debt, not adjusted for original issuance premiums and discounts 168 Table 10 CITY OF FRIDLEY, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2017 Estimated EstimatedShare of DebtPercentageOverlapping 1 Applicable Governmental UnitOutstanding Debt Debt repaid with property taxes: Independent School District No. 11$61,870,0001.60%$989,920 Independent School District No. 1312,390,000 31.46%3,897,894 Independent School District No. 1456,250,000 100.00%56,250,000 Independent School District No. 16148,275,000 36.80%54,565,200 Metro Council1,484,038,432 1.19%17,660,057 Anoka County110,265,000 18.04%19,891,806 Vocational/Technical District No. 91679,875,000 2.21%1,765,238 Subtotal - overlapping debt155,020,115 City of Fridley - Direct debt50,510,000100.00%50,510,000 Total direct and overlapping debt$205,530,115 Sources: Continuing Disclosure Document 1 Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 169 This page intentionally left blank 170 Table 11 CITY OF FRIDLEY, MINNESOTA LEGAL DEBT MARGIN INFORMATION Last ten fiscal years Market Value$2,416,338,500 Debt Limit 3% of Market Value$72,490,155 Amount of Debt Applicable to Debt Limit: Total Debt58,555,000 Deductions: Improvement Bonds$455,000 Revenue Bonds8,045,0008,500,000 Total Amount of Debt Applicable to Debt Limit50,055,000 Legal Debt Margin$22,435,155 Legal Debt Margin Calculation for the last 10 Fiscal Years Net DebtLegalAmount of Debt FiscalDebtApplicable toDebtApplicable to YearLimitLimitMarginDebt Limit 2008$54,027,776$ - $52,334,5460.00% 200980,968,311 - 54,027,7760.00% 201076,835,199550,00076,285,1990.72% 201170,577,037550,00070,027,0370.78% 201268,359,7701,780,00066,579,7702.60% 201361,725,0151,725,00060,000,0152.79% 201458,457,4031,530,00056,927,4032.62% 201564,381,8991,330,00063,051,8992.07% 201666,220,9021,130,00065,090,9021.71% 201772,490,15550,055,00022,435,15569.05% 171 CITY OF FRIDLEY, MINNESOTA PLEDGED-REVENUE COVERAGE Last ten fiscal years Improvement BondsEquipment Certificates SpecialProperty FiscalAssessmentDebt ServiceTaxDebt Service YearCollectionsPrincipalInterestCoverageCollectionsPrincipalInterestCoverage 2008$561,221$365,000$230,3250.94$ - $ - $ - - 2009658,406535,000270,0050.82 - - - - 2010555,997725,000252,8990.57 - - - - 2011504,053800,000258,1350.4869,881 - 13,8345.05 2012659,666890,000229,5030.5970,66850,00013,4501.11 2013376,026925,000198,4130.33 233,74955,00025,7632.89 2014932,078955,000166,2350.83 234,357195,00025,6531.06 2015188,303990,000129,815 - 231,310200,00023,0801.04 2016166,8951,030,00092,090 - 234,359200,00020,3301.06 2017105,8271,525,000914,322 - 225,962205,00017,2051.02 172 Table 12 Utility Revenue BondsTax Increment Bonds Utility Less Net Tax ServiceOperatingAvailableIncrementDebt ServiceDebt Service RevenuesExpensesRevenuePrincipalInterestCoverageCollectionsPrincipalInterestCoverage $6,379,984$6,631,304($251,320)$300,000$149,481-0.56$3,329,289$1,710,000$149,0151.79 6,611,6116,951,906(340,295)575,000221,449-0.432,016,5801,680,00096,4951.14 6,855,4417,236,513(381,072)515,000241,508-0.501,742,8161,720,00035,0630.99 7,118,1547,952,911(834,757)535,000272,264-1.0369,881 - 13,8345.05 7,864,4066,341,5441,522,862555,000255,0541.88 - - - - 7,961,7386,839,8521,121,886655,000235,4741.26 - - - - 8,363,4156,987,0951,376,320570,000223,4591.73 - - - - 8,936,2877,405,5961,530,691585,000203,0601.94 - - - - 9,938,5177,381,3822,557,135610,000181,6103.23 - - - - 10,499,2308,374,4612,124,7692,600,000261,8880.74 - - - - 173 Table 13 CITY OF FRIDLEY, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Last ten fiscal years Total Per Capita FiscalUnemploymentPersonalPersonal Year PopulationRateIncomeIncome 200826,4595.7%$708,889,528$26,792 200926,4227.9%688,160,99026,045 201027,2087.3%744,138,80027,350 201127,5155.5%745,518,92527,095 201227,5915.6%749,702,65227,172 201327,7854.4%774,145,67027,862 201427,9524.2%720,406,89625,773 201528,5473.9%747,503,19526,185 201628,6313.9%810,142,77628,296 201728,7153.8%831,012,10028,940 Sources: Metropolitan Council (population), Continuing Disclosure Document (unemployment rate) 174 Table 14 CITY OF FRIDLEY, MINNESOTA PRINCIPAL EMPLOYERS Current year and nine years ago 20172008 Percentage Percentage of Total Cityof Total City EmployerEmployeesRankEmploymentEmployeesRankEmployment Medtronic, Inc.3,46414.94%2,50010.58% 1,4666.32%5.92% Unity Medical Center1,400 Cummins Power (Onan)1,2105.22%1,7277.31% Target6953.00%6002.54% ISD #14 (Fridley Schools)6442.78%N/A 6052.61%7.62% BAE Systems1,800 Minco Products5602.42%5002.12% Kurt Manufacturing3421.48%3501.48% Wal-Mart3151.36%2621.11% Lofthouse Bakery2060.89%N/A N/A1.27% Parsons Electric300 Total9,50741.00%9,73939.94% Total City Employment23,18523,635 Source: Fridley Community Development Dept, MN Department of Employment and Economic Development 175 CITY OF FRIDLEY, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last ten fiscal years Full-Time Equivalent Employees as of December 31, Function/Program2008200920102011 General government: City administration3.03.03.03.0 Finance22.019.019.019.0 Human resource2.02.02.02.0 Community development9.07.07.07.0 Public safety: Police department44.045.042.043.0 Fire department8.08.08.08.0 Public works: Administration2.02.02.02.0 Engineering4.04.04.03.0 Mechanic3.03.03.03.0 Streets9.09.09.09.0 Water5.05.05.07.0 Sewer5.05.05.05.0 Parks7.07.07.05.0 Storm Water - - - - Parks and recreation: Parks and recreation8.08.08.08.0 Total131.0127.0124.0124.0 Source: City Finance Department 1 Prior to 2013 positions at 32 hours or more per week were counted as 1 full-time equivalent. As of 2013 these figures represent all permanent staff. 176 Table 15 Full-Time Equivalent Employees as of December 31, 11111 20132014201520162017 2012 3.04.04.74.75.05.0 20.018.016.016.016.015.5 2.02.02.02.02.02.0 7.08.29.89.69.610.2 44.050.651.652.652.452.4 8.07.87.67.07.07.0 2.01.20.61.51.51.8 3.05.05.01.81.82.1 3.04.54.03.83.85.8 9.09.08.58.58.58.8 7.07.06.55.85.83.8 5.07.07.07.87.87.9 5.05.05.03.73.73.7 - - -5.15.15.1 8.08.09.69.09.09.8 126.0137.3137.9138.9139.0140.9 177 CITY OF FRIDLEY, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last ten fiscal years Fiscal Year Function/Program2008200920102011 Police: Physical arrests1,3571,3051,3181,145 Parking violations419382778665 Traffic violations4,9942,9342,9292,860 Fire: Emergency responses2,8272,8642,7722,923 Fires occurred116141116114 Commercial inspections1,2391,021868890 Community development: Rental inspections755888597783 Refuse collection: Recyclables collected (tons per day)6.126.475.895.70 Recyclables collected (pounds per person)N/AN/AN/AN/A Building inspection: Permits issued: Residential1,4441,5991,9052,232 Commercial418386434446 Total permit valuation$39,105,158$45,564,657$30,441,199$39,902,641 Other public works: Street resurfacing (miles)4.14.94.92.2 Recreation Total participation hoursN/AN/AN/AN/A Total senior program participation hoursN/AN/AN/AN/A Springbrook Nature Ctr program participants20,89420,93723,98724,231 Water: Connections8,2338,2318,2268,222 Storage capacity (gallons)6,500,0006,500,0006,500,0006,500,000 Average daily demand (gallons)4,270,0003,458,4823,014,4253,730,000 Peak daily demand (gallons)10,800,00019,350,8928,119,2076,622,000 Sewer: Connections8,2428,2388,2378,232 Sources: Various City departments. 178 Table 16 Fiscal Year 201220132014201520162017 1,1331,3441,2561,386752979 283562373278922553 2,5902,8263,2452,5922,6012,250 2,9063,0033,0893,0473,2683,439 121119110103127126 1,0161,1101,5051,663789867 1,1171,1451,4281,8811,5591,434 5.816.216.226.335.996.62 N/A164.67164.59165.96156.54169.25 1,6062,1911,9744,6422,2271,804 386440492642599612 $35,763,059$40,697,477$47,109,811$60,598,103$73,636,057$103,663,306 3.13.83.32.92.21.9 302,500305,975310,000311,500315,000300,000 68,70069,81870,00062,21865,50065,500 24,26623,41923,86020,40415,60916,339 8,2278,2308,2438,2458,3748,259 6,500,0006,500,0006,500,0006,500,0006,500,0006,500,000 3,993,2854,227,9752,517,8082,968,9013,560,0003,390,000 8,661,0009,009,0007,439,0006,803,0006,392,0006,379,000 8,2368,2398,2528,25488,2718,235 179 Table 17 CITY OF FRIDLEY, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last ten fiscal years Fiscal Year Function/Program2008200920102011201220132014201520162017 Police: Stations1111111111 Squad cars12121212121215131312 Fire stations3333333333 Other public works: Streets (miles)125.3125.3125.3125.3125.3125.3125.3125.5125.5125.5 Highways (miles)10.310.310.310.310.310.310.310.310.310.3 Streetlights1,0591,0591,0591,0591,0591,0591,0591,0591,0591,059 Traffic signals36363636363636363636 Parks and recreation: Acreage682682682682682682682682682682 Playgrounds29292929292929292929 Baseball/softball diamonds22222222222222222221 Soccer/football fields2222222222 Community centers1111111111 Water: Water mains (miles)113.0113.0113.0113.0113.0113.0113.0113.2113.2113.2 Fire hydrants1,0131,0131,0131,0131,0131,0131,0131,0131,0131,013 Storage capacity (million gallons)6.56.56.56.56.56.56.56.56.56.5 Wastewater: Sanitary sewers (miles)103.0103.0103.0103.0103.0103.0103.0103.0103.0103.0 Storm sewers (miles)52.052.052.052.052.052.052.052.052.252.2 Sources: Various City departments. 180