The URL can be used to link to this page

2020 CAFR City of Fridley, Minnesota Comprehensive Annual Financial Report For year end December 31, 2020 FridleyMN.gov/233/City-Financials - This page intentionally left blank - Prepared by: Finance Department Daniel Tienter Finance Director CITY OF FRIDLEY, MINNESOTA Comprehensive Annual Financial Report For Year End December 31, 2020 This page intentionally left blank EXHIBIT PAGE Letter of Transmittal 3 Certificate of Achievement 11 Elected and Appointed Officials 13 City Administrative Organizational Structure 2018 14 Independent Auditor's Report 19 Management's Discussion and Analysis 23 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position A-1 37 Statement of Activities A-2 38 Fund Financial Statements: Balance Sheet - Governmental Funds A-3 40 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds A-4 42 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities A-5 45 Statement of Net Position - Proprietary Funds A-6 46 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds A-7 48 Statement of Cash Flows - Proprietary Funds A-8 50 Statement of Fiduciary Net Position - Fiducary Funds A-9 52 Statement of Changes in Fiducary Net Position - Fiduciary Funds A-10 53 Notes to Financial Statements 55 Required Supplementary Information: Budgetary Comparison Schedule - General Fund B-1 100 Schedule of Changes in the Total OPEB Liability and Related Ratios B-2 104 Schedule of Proportionate Share of Net Pension Liability - General Employees Retirement Fund B-3 105 Schedule of Pension Contributions - General Employees Retirement Fund B-4 106 Schedule of Proportionate Share of Net Pension Liability - Public Employees Police and Fire Fund B-5 107 Schedule of Pension Contributions - Public Employees Police and Fire Fund B-6 108 Notes to RSI 109 I. INTRODUCTORY SECTION II. FINANCIAL SECTION CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2020 TABLE OF CONTENTS EXHIBIT PAGE CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2020 TABLE OF CONTENTS Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds C-1 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds C-2 117 Subcombining Balance Sheet - Nonmajor Special Revenue Funds C-3 122 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds C-4 124 Subcombining Balance Sheet - Nonmajor Capital Project Funds C-5 128 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds C-6 129 Special Revenue Funds: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Cable TV Fund D-1 132 Solid Waste Abatement Fund D-2 133 Police Activity Fund D-3 134 Springbrook Nature Center Fund D-4 135 Internal Service Funds: Combining Statement of Net Position E-1 138 Combining Statement of Revenues, Expenses and Changes in Net Position E-2 139 Combining Statement of Cash Flows E-3 140 Housing and Redevelopment Authority (Component Unit): Balance Sheet - Governmental Funds F-1 142 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds F-2 144 Subcombining Balance Sheet - Nonmajor Capital Project Funds F-3 146 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds F-4 148 Custodial Funds: Combining Statement of Net Position - Fiduciary Funds G-1 152 Combining Statement of Changes in Fiduciary Net Position - Fiduciary Funds G-2 154 EXHIBIT PAGE CITY OF FRIDLEY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2020 TABLE OF CONTENTS Financial Trends: Net Position by Component Table 1 158 Changes in Net Position Table 2 160 Fund Balances - Governmental Funds Table 3 164 Changes in Fund Balances - Governmental Funds Table 4 166 Revenue Capacity: Tax Capacity Value and Estimated Market Value of Taxable Property Table 5 168 Direct and Overlapping Property Tax Capacity Rates Table 6 170 Principal Property Taxpayers Table 7 172 Property Tax Levies and Collections Table 8 173 Debt Capacity: Ratios of Outstanding Debt by Type Table 9 174 Direct and Overlapping Govermental Activities Debt Table 10 175 Legal Debt Margin Information Table 11 177 Pledged Revenue Coverage Table 12 178 Demographic and Economic: Demographic and Economic Statistics Table 13 180 Principal Employers Table 14 181 Full-Time Equivalent City Government Employees by Function/Program Table 15 182 Operating Information: Operating Indicators by Function/Program Table 16 184 Capital Asset Statistics by Function/Program Table 17 186 III. STATISTICAL SECTION (Unaudited) This page intentionally left blank I. INTRODUCTORY SECTION 1 This page intentionally left blank 2 May 12, 2021 To the Citizens of the City of Fridley, Mayor and Council Members The Comprehensive Annual Financial Report (AFR) of the City of Fridley, Minnesota (City), for the fiscal year ended December 31, 2020, is submitted herewith: Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. The City believes that the data, as presented, is accurate in all material aspects. The data is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial activity have been included. Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A may be found immediately following the report of the independent auditors. All City funds, departments, commissions and other organizations for which the City is financially accountable are presented within the AFR. The City provides a full range of services to its citizens, including police and fire protection; water and sanitary sewer utilities; the construction and maintenance of streets and sidewalks; recreational facilities; commercial and residential real estate development coordination; and general administrative services. The Housing and Redevelopment Authority (HRA) is included in the reporting entity as a component unit of the City as the governing board is appointed by the City Council and because of the City’s financial relationship with the HRA. The organization, form and contents of this report were prepared in accordance with the standards prescribed by the Governmental Accounting Standards Board (GASB), the Government Finance Officers Association of the United States and Canada (GFOA), the American Institute of Certified Public Accountants, the Minnesota Office of the State Auditor, the City Charter, the Fridley City Code and other applicable actions of the City Council. Fridley Civic Campus 7071 University Ave N.E. Fridley, MN 55432 763-571-3450 | FAX: 763-571-1287 | FridleyMN.gov 3 CITY OF FRIDLEY, MINNESOTA PROFILE OF THE CITY The City is a first–ring suburban community with an estimated 2020 population of 29,374. The City is located 10 minutes north of downtown Minneapolis and 25 minutes northwest of downtown St. Paul. Incorporated in July of 1949, the City covers about 11 square miles and is home to some of the most important industries in the world. An “industrial spine” around the rail corridor has served the City well and has provided the community with nearly as many jobs as the number of residents. The City is home to the largest number of employees in Anoka County. LOCAL ECONOMY The local economy continues to grow through an increase in new construction, redevelopment, and renovation. However, the outbreak of Novel Coronavirus Disease 2019 (COVID-19) pandemic had a significant effect on unemployment. Unemployment in Minnesota peaked in May of 2020 at a seasonally adjusted 11.3% and remained elevated in December of 2020 at 4.7%. In 2020, unemployment remained below the national average, consistent with the historic trend for the State of Minnesota (State). In July of 2020, the City received $2,171,608 from the Coronavirus Relief Fund as authorized by the Coronavirus Aid, Relief and Economic Security (CARES) Act (Public Law 116–136). Generally, the monies were used to support necessary expenditures related to the public health emergency created by the outbreak of COVID–19, including business assistance grants, remote work technologies and sanitation equipment. Fridley Liquor, the municipal liquor operation owned and operated by the City, had another record-breaking year of sales, primarily due to the closure or limited capacity of certain businesses. Although both Fridley Liquor locations were closed due in part to the pandemic and civil unrest related to the death of George Floyd, gross sales totaled about $6,800,000, an increase of about 9.75% compared to 2019. Once again, the taxable market value of the City increased significantly in 2020, growing by about $215,821,000, or 7.9%, compared to 2019. The number of residential home sales also increased by about 20% over the same time period, largely due to additional development adjacent to the Fridley Civic Campus. Additionally, the City experienced another strong year of real estate development, adding about $99,300,000 of new market value to the community. While the estimated market value for all properties in the City increased by about 2.6% in 2020 (unaudited), the average sale price of a residential homestead increased by more than 7% compared to the previous year. These increases in valuation are consistent with other cities located in the Minneapolis–St. Paul Metropolitan Statistical Area. As of May 21, 2021, the City, much like many other municipalities, continues to experience the impacts of the outbreak of COVID–19. While the City received significant aids to 4 CITY OF FRIDLEY, MINNESOTA defray certain costs, the effects of the pandemic on the community, and its economy, may not be fully understood for some time. LONG-TERM FINANCIAL PLANNING As a fully-developed community, the City continues to experience certain financial challenges. In order to maintain affordable housing and the corresponding tax base, the City must help protect its aging housing stock. The City also works diligently, through the budget process, to develop financial plans that emphasize reasonable tax rates, consistent service delivery, infrastructure investments, and good standing within the broader financial and local government community. The City continues to focus on quality-of-life improvements throughout the community. These initiatives include revitalizing parks and public areas, maintaining and improving current City services, and increasing the communication between City representatives and the public. For example, the City recently undertook a major public engagement effort related to the development of a Park System Master Plan. The City also continues to work closely with every level of government and other interested parties to improve transportation throughout the community, including major investment in area highways, roads and streets. Funding for these improvements comes largely from the State and certain federal agencies with additional monies levied through special assessment against benefiting properties and other applicable funds controlled by the City. Annually, the City develops a five-year financial plan for all budgeted funds. The plans help the organization better understand the effects of certain public policy decision and allow the City to make more proactive decisions regarding its financial position. MAJOR INITIATIVES In 2020, the City continued a number of projects in partnership with various public and private entities related to several infrastructure and redevelopment project. The following non-exhaustive list outlines many of the more significant projects. 1. The City completed rehabilitation of the Locke Park Water Treatment Plant, further enhancing the quality of water and the water treatment process for the community. 2. Adjacent to the Fridley Civic Campus, a developer completed both Phase II and Phase III of a housing development planned in partnership with the City. In total, the project added another 72 units of housing for the community. 3. Through a Cooperative Agreement with the Minnesota Department of Transportation (Mn/DOT), the City replaced fencing and other barriers, modified lighting, and provided safer pedestrian access in and around on University Avenue. 5 CITY OF FRIDLEY, MINNESOTA 4. The City completed three major street rehabilitation projects, including: a reclamation of various street segments on 69th Avenue; rehabilitation on East University Frontage road from 69th Avenue to 73rd Avenue; and the rehabilitation of various street segments in the Western Melody Manor and Springbrook neighborhoods. 5. The City continued with the development of a Park System Master Plan, which includes a series of community listening sessions and feedback to identify possible capital improvements to the parks and trails located throughout the City. 6. A regional developer began construction on 270 units of housing in two separate buildings adjacent to the Northstar Transit Station as part of the Fridley Station Village Project. The development began initially in 2019. 7. The City completed construction of a new pavilion at the Springbrook Nature Center. The new structure, funded in part by a grant the Minnesota Department of Nature Resources and the Springbrook Nature Center Foundation, includes a large outdoor shelter and indoor classroom space. 8. The City, on behalf of and for the HRA, issued $4,540,000 in General Obligation Tax Increment Bonds, Series 2020A, which was consolidated with a similar bond issue from 2019, to refinance a $15,775,000 tax increment revenue note for developer assistance provided through Tax Increment Financing District No. 20 Moving into 2021, the City continues its effort to enhance and expand various programs and services while ensuring a fiscally responsible organization sensitive to the needs of the community. The 2021 Budget reflects these goals while also responding to various cost pressures and guidance from the City Council. While the 2021 Budget does not include any new initiatives or services, it does provide additional budget authority to support the anticipated outcome of an ongoing compensation plan update. In 2021, construction and development began quite strongly. As of April 26, 2021, the value of new construction totaled about $69.5M compared to $8.7M at the same time last year, or an increase of nearly $61M. The City has several large projects anticipated for 2021, including, but not limited to the following: 1. As mentioned above, a regional developer began the third and final phase of the Fridley Station Village Project. The third building will provide 71 units of affordable housing for the community. 2. Metropolitan Council Environmental Services (MCES) plans to build a new lift station at 6900 East River Road to replace the existing lift station currently located in the City of Brooklyn Park. 6 CITY OF FRIDLEY, MINNESOTA 3. A regional developer began construction of a 135 unit of senior housing located on the site of the “old city hall.” The building will provide a mix of independent, assisted and memory-care living situations. 4. In 2020, the City created TIF District No. 25 to support the redevelopment of the Holly Center, a mixed-use shopping center. A regional developer recently broke ground on the construction of 261 units of workforce housing and 10,000 square feet of commercial space. The building will begin leasing in 2022. 5. The City plans to complete three street projects in 2021. The first will provide for the rehabilitation of streets and applicable utilities in three neighborhoods. The second will construct a multi-use trail along 7ths street. The third will provide for geometric changes for University Avenue Service Road and the construction of a corresponding multi-use trail. RELEVANT FINANCIAL POLICIES In developing and improving the accounting system of the City, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived from the same. The evaluation of costs and benefits are based on the reasonable estimates and judgments of City management. All internal control evaluations occur within the above framework. The internal accounting controls of the City adequately safeguard assets and provide reasonable assurance of the proper recording of financial transactions. Budgets for the General, Special Revenue and Capital Projects Funds are adopted on an annual basis. Budgetary control is maintained in compliance with the City Charter. The City Charter provides that it is the duty of the City Manager to strictly enforce the provisions of the budget. The management policy of the City is such that the existence of a particular item or appropriation in the approved budget does not mean that it will or must be expended. Budget adjustments between City departments are made upon the approval of a resolution by the City Council. The City Charter provides that the City Council shall not have power to increase the total amount of the budget, whether by insertion of new items or otherwise, beyond the estimated revenue unless the actual revenue exceeds such revenue estimates, and in that event not beyond such actual revenue. There is a monthly process to review actual revenues and expenditures. The City Council also adopts a revised budget annually to reflect any material changes, consistent with the City Charter. 7 CITY OF FRIDLEY, MINNESOTA Expenditures are not approved until it has been determined that the expenditure 1) meets a public purpose, 2) is necessary, 3) adequate funds have been appropriated; 4) funds are available; and 5) the authorization of the appropriation expenditure by the appropriate parties. As required by the City Charter, budgetary control is maintained within each department at the department level per the annually adopted budget resolution. This is the level of control at which expenditures may not legally exceed appropriations. The purpose of the Fund Balance Policy is to establish appropriate fund balance levels for each fund that is primarily supported by property tax revenues or user fees. These policies will ensure that adequate resources are available to meet cash flow needs for carrying out the regular operations of the City. The funds addressed in this policy include the General Fund, Solid Waste Abatement Fund, Springbrook Nature Center Fund, Cable Television Fund, and all Enterprise Funds. In 2020, all the funds addressed by this policy met their fund balance guidelines. The purpose of the Investment Policy is to develop an overall program and philosophy for cash investments, designed and managed with a high degree of professionalism and worthy of the public trust. It establishes that elected and appointed officials as well as certain employees are custodians of a portfolio. It also establishes cash investment objectives, delegation of authority, standards of prudence, internal controls, authorized investments, selection process for investments and broker representations. Section 7.13 of the City Charter requires an annual audit to be made of the books of account, financial records and transactions of all administrative departments of the City by a certified public accountant or the Office of the State Auditor. The accounting firm of Redpath and Company was engaged by the City to render an opinion on the financial statements of the City. The auditor’s report on the basic financial statements and combining and individual fund statements and schedules is included in the Financial Section of this report. AWARDS AND ACKNOWLEDGEMENTS The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its AFR for the fiscal year ended December 31, 2019. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City continues to strive to meet the requirements of the Certificate of Achievement Program and will continue submitting it to the GFOA to determine the eligibility for future certificates. The preparation of this report could not have been accomplished without the dedicated services of all members of the Finance Department, with special recognition to Korrie Johnson, Assistant Finance Director, and the staff of the Accounting Division. Staff are 8 CITY OF FRIDLEY, MINNESOTA also grateful for the professional guidance from the City auditors, Redpath and Company. Staff would also like to express appreciation to the Mayor and City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and thoughtful manner. Respectfully submitted, Walter T. Wysopal Daniel Tienter City Manager Director of Finance/City Treasurer/City Clerk 9 This page intentionally left blank 10 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Fridley Minnesota For its Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2019 Executive Director/CEO 11 This page intentionally left blank 12 CITY OF FRIDLEY, MINNESOTA ELECTED AND APPOINTED OFFICIALS ELECTED OFFICIALS Term of Office Expires December Mayor Scott J.Lund 2020 Councilmember At Large David Ostwald 2020 Councilmember, Ward I Thomas Tillberry 2022 Councilmember, Ward II Stephen Eggert 2022 Councilmember, Ward III Ann R. Bolkcom 2022 APPOINTED OFFICIALS City Manager Walter T. Wysopal City Attorney Andrew M. Biggerstaff Prosecuting Attorney City of Coon Rapids City Clerk Daniel J. Tienter Department Heads: Director of Finance/Treasurer Daniel J. Tienter Director of Public Safety Brian T. Weierke Director of Public Works James P. Kosluchar Director of Community Development Scott J. Hickok Director of Community Services & Employee Resources Deborah K. Dahl December 31, 2020 13 ϮϬϮϭŝƚǇŽĨ&ƌŝĚůĞǇKƌŐĂŶŝǌĂƚŝŽŶĂůŚĂƌƚ'ĞŶĞƌĂůŽŶĐĞƉƚƵĂůĞƐŝŐŶKŶůǇ &ĞďƌƵĂƌǇϮϬϮϭEKd͗ZĞƉŽƌƚŝŶŐƌĞůĂƚŝŽŶƐŚŝƉƐĂŶĚƚŝƚůĞƐŵĂǇŶŽƚďĞĂĐĐƵƌĂƚĞůǇƌĞĨůĞĐƚĞĚ͘ŽŵŵƵŶŝƚǇĞǀĞůŽƉŵĞŶƚ͕WƵďůŝĐtŽƌŬƐ͕ĂŶĚŽŵŵƵŶŝƚǇ^ĞƌǀŝĐĞƐΘŵƉůŽǇĞĞZĞƐŽƵƌĐĞƐĞƉĂƌƚŵĞŶƚƐĂƌĞŽŶƚŚĞŶĞǆƚϮƉĂŐĞƐ͘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ϮϬϮϭŝƚǇŽĨ&ƌŝĚůĞǇKƌŐĂŶŝǌĂƚŝŽŶĂůŚĂƌƚWĂŐĞϮ 'ĞŶĞƌĂůŽŶĐĞƉƚƵĂůĞƐŝŐŶKŶůǇ &ĞďƌƵĂƌǇϮϬϮϭEKd͗ZĞƉŽƌƚŝŶŐƌĞůĂƚŝŽŶƐŚŝƉƐĂŶĚƚŝƚůĞƐŵĂǇŶŽƚďĞĂĐĐƵƌĂƚĞůǇƌĞĨůĞĐƚĞĚ͘ŝƚǇDĂŶĂŐĞƌ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ϮϬϮϭŝƚǇŽĨ&ƌŝĚůĞǇKƌŐĂŶŝǌĂƚŝŽŶĂůŚĂƌƚWĂŐĞϯ 'ĞŶĞƌĂůŽŶĐĞƉƚƵĂůĞƐŝŐŶKŶůǇ &ĞďƌƵĂƌǇϮϬϮϭEKd͗ZĞƉŽƌƚŝŶŐƌĞůĂƚŝŽŶƐŚŝƉƐĂŶĚƚŝƚůĞƐŵĂǇŶŽƚďĞĂĐĐƵƌĂƚĞůǇƌĞĨůĞĐƚĞĚ͘371DWXUDOLVWV3URJUDP&RRUGLQDWRU6HDVRQDOV37$GPLQ %OGJ0DLQW373URJUDP6XSHUYLVRU6SULQJEURRN1DWXUH&WU'LU$VVW'LU&RPP6HUYLFHV5HF3URJUDP&RRUGLQDWRU)75HF6SHFLDOLVWV)76HDVRQDOV&XVWRPHU6HUYLFH5HS5HFUHDWLRQ0DQDJHU6HDVRQDOVsŽůƵŶƚĞĞƌƐ(QJDJHPHQW6SHFLDOLVW&DEOH$GPLQLVWUDWRU'LJLWDO(QJDJHPHQW6SHFLDOLVW,QWHUQ0DUNHWLQJ &RPPXQLFDWLRQV0JU$GP$VVLVW(PSOR\HH5HVRXUFHV0DQDJHU&RPPXQLW\6HUYLFHV (PSOR\HH5HVRXUFHV'LUHFWRU&RPPXQLW\6HUYLFHV (PSOR\HH5HVRXUFHV&LW\0DQDJHU16 II. FINANCIAL SECTION 17 This page intentionally left blank 18 55 5th Street East, Suite 1400, St. Paul, MN, 55101 www.redpathcpas.com INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Fridley, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Fridley, Minnesota, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City of Fridley, Minnesota’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 19 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Fridley, Minnesota, as of December 31, 2020, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the City of Fridley, Minnesota’s 2019 financial statements, and we expressed an unmodified audit opinion on the respective financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information in our report dated May 8, 2020. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2019 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison schedule, the schedule of changes in total OPEB liability and related ratios, the schedules of pension contributions, and the schedules of proportionate share of net pension liability, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 20 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Fridley, Minnesota’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 12, 2021, on our consideration of the City of Fridley, Minnesota’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Fridley, Minnesota’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Fridley, Minnesota’s internal control over financial reporting and compliance. REDPATH AND COMPANY, LTD. St. Paul, Minnesota May 12, 2021 This page intentionally left blank 22 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Fridley (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2020. The City encourages readers to consider the information presented here in conjunction with additional information that we have furnished in the letter of transmittal, which can be found on pages 3 through 9 of this report. Financial Highlights The City’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $72,708,984 (net position). Of this amount, $16,835,931 (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 negatively impacted in the current year by $14,962,612 due to the payment to the Housing and Redevelopment Authority for the pay-off of the Northern Stacks TIF Note. During 2020, the City’s total net position decreased by $3,698,691. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $35,172,600. Of this total amount, $3,591,226, or 10% is restricted through legal restrictions or third–party agreements. At the end of the current fiscal year, the General Fund balance of $13,693,825 included $65,779 in non–spendable, $24,513 in restricted, and $13,603,533 in unassigned fund balance. The City’s total debt increased by $2,270,000 during the current fiscal year. Total debt outstanding at December 31, 2020 is $65,590,000. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise of three components: 1) government–wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government–wide financial statements. The government–wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. The statement of net 23 Management’s Discussion and Analysis position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resource, with the remainder reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes, and earned but unused vacation leave). Both of the government–wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (i.e., governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (i.e., business–type activities). The governmental activities of the City include general government, public safety, public works, community development, and recreation. The business– type activities of the City include Municipal Liquor, Water, Sanitary 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into 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 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 24 Management’s Discussion and Analysis expenditures, and change in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains five 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, Street Improvement, TIF 20 Note Payoff Fund, and Community Investment 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 adopts an annual appropriated budget for its General Fund, the Cable Television (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 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 uses enterprise funds to account for its Municipal Liquor, Water, Sanitary Sewer, and Storm Water operations. The City 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, Sanitary Sewer, Storm Water and Municipal Liquor operations, all of which are considered to be major funds of the City. 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. The basic proprietary fund financial statements can be found on pages 46 through 51 of this report. 25 Management’s Discussion and Analysis 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’s own programs. 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 55 through 99 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 129 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, assets exceeded liabilities by $72,708,984 at the close of the most recent fiscal year. A significant portion of the City's net position ($52,210,917, or 72%) 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 uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 26 Management’s Discussion and Analysis City of Fridley’s Net Position 2020 2019 2020 2019 2020 2019 Current and other assets $41,217,118 $45,946,260 $13,633,597 $14,197,658 $54,850,715 $60,143,918 Capital assets 78,497,282 76,374,938 26,710,575 24,528,890 105,207,857 100,903,828 Total assets $119,714,400 $122,321,198 $40,344,172 $38,726,548 $160,058,572 $161,047,746 Total deferred outflows of resources 4,169,839 6,173,918 14,276 6,193 4,184,115 6,180,111 Long-term liabilities outstanding $73,308,202 $68,726,424 $4,872,659 $5,612,525 $78,180,861 $74,338,949 Other liabilities 5,487,217 4,607,548 3,296,268 3,070,124 8,783,485 7,677,672 Total liabilities $78,795,419 $73,333,972 $8,168,927 $8,682,649 $86,964,346 $82,016,621 Total deferred inflows of resources 4,567,860 8,802,597 1,497 964 4,569,357 8,803,561 Net position: Net investment in capital assets $31,075,685 $27,349,945 $21,135,232 $18,211,710 $52,210,917 $45,561,655 Restricted 3,662,136 3,047,005 - - 3,662,136 3,047,005 Unrestricted 5,783,139 15,961,597 11,052,792 11,837,418 16,835,931 27,799,015 Total net position $40,520,960 $46,358,547 $32,188,024 $30,049,128 $72,708,984 $76,407,675 Governmental Activities Business-Type Totals The City adopted accounting guidance, Governmental Account Standards Board (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 $11,801,381 at December 31, 2020 due to pension–related amounts included in the above schedule related to the standard are as follows: Deferred outflows of resources $3,723,095 Deferred inflows of resources (4,523,667) Noncurrent liabilities (11,000,809) Total ($11,801,381) A portion of the City’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of $16,835,931 in unrestricted net position may be used to meet the City’s ongoing obligations to citizens and creditors. 27 Management’s Discussion and Analysis At the end of the current fiscal year, the City 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. Governmental Activities Governmental activities decreased the City’s net position by $5,837,587. Capital grants and contributions increased by $4,762,436. This increase is a result of assessments for the street rehabilitation project and MSA construction allotments. Operating grants and contributions decreased by $242,108. This decrease is the result of an overall decrease in donations for 2020 coupled with a SNC in 2019 that was one year only. In addition, property taxes increased $857,900 with a 3.97% levy increase. Other general revenues increased $987,879. In 2019, the City had a one- time receipt of $1,645,020 representing the remaining balance of the North Suburban Hospital District which dissolved in 2020. In 2020, the City received $2,171,608 of federal Coronavirus Relief Fund monies. 2020 expenses increased by $15,210,802. The increase is largely due to the payment of $14,962,612 to the Housing and Redevelopment Authority for the pay-off of the Northern Stacks TIF Note. City of Fridley’s Changes in Net Position 2020 2019 2020 2019 2020 2019 Revenues: Program revenues: Charges for services $5,495,120 $4,647,081 $18,312,149 $17,561,270 $23,807,269 $22,208,351 Operating grants and contributions 1,603,520 1,845,628 118,410 251,666 1,721,930 2,097,294 Capital grants and contributions 6,096,584 1,334,148 163,816 - 6,260,400 1,334,148 General revenues: Property taxes 16,225,057 15,387,457 - - 16,225,057 15,387,457 Grants and contributions not restricted to specific programs 3,948,112 1,670,719 - 8,957 3,948,112 1,679,676 Unrestricted investment earnings 980,709 811,009 262,616 257,520 1,243,325 1,068,529 Gain (loss) on sale of property 21,429 (249,165) - 3,772 21,429 (245,393) Other 298,544 2,028,352 1,657 1,038 300,201 2,029,390 Total revenues 34,669,075 27,475,229 18,858,648 18,084,223 53,527,723 45,559,452 Expenses: General government 6,003,817 5,504,858 - - 6,003,817 5,504,858 Public safety 9,946,434 10,035,219 - - 9,946,434 10,035,219 Public works 5,304,937 5,677,069 - - 5,304,937 5,677,069 Community development 16,037,288 973,708 - - 16,037,288 973,708 Recreation and naturalist 1,459,005 1,565,950 - - 1,459,005 1,565,950 Interest on long-term debt 2,012,685 1,795,560 - - 2,012,685 1,795,560 Liquor - - 6,115,659 5,698,502 6,115,659 5,698,502 Water - - 3,192,159 2,811,051 3,192,159 2,811,051 Sewer - - 5,911,370 5,722,230 5,911,370 5,722,230 Storm water - - 1,243,060 1,208,564 1,243,060 1,208,564 Total expenses 40,764,166 25,552,364 16,462,248 15,440,347 57,226,414 40,992,711 Increase (decrease) in net position before transfers (6,095,091)1,922,865 2,396,400 2,643,876 (3,698,691) 4,566,741 Transfers 257,504 338,500 (257,504) (338,500) - - Increase in net position (5,837,587) 2,261,365 2,138,896 2,305,376 (3,698,691) 4,566,741 Net position - January 1 46,358,547 44,097,182 30,049,128 27,743,752 76,407,675 71,840,934 Net position - December 31 $40,520,960 $46,358,547 $32,188,024 $30,049,128 $72,708,984 $76,407,675 Business-Type Activities TotalsGovernmental Activities 28 Management’s Discussion and Analysis Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: 29 Management’s Discussion and Analysis Business–Type Activities Business–type activities increased net position by $288,995. This increase is primarily due to an increase in customer billings in the utility funds. Business–Type of Activities – Program Revenues vs Operating Expenses 30 Management’s Discussion and Analysis Financial Analysis of the Government's Funds Governmental funds. The focus of the City’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’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’s governmental funds reported a combined ending fund balance of $35,172,600. The General Fund’s fund balance increased by $3,431,364 in 2020. This was greater than the $2,045,000 anticipated fund balance change with the 2020 revised budget. Investment income came in $225,584 over budget, Permit revenue came in $271,784 over budget and the City received $286,623 in additional intergovernmental revenues. The City was also $335,910 below budget in Parks & Recreation largely due to the pandemic. The Debt Service Fund increased by $622,455 in 2020. This was largely due to a payment from the HRA for debt service on the TIF bonds due on February 1, 2021. The Street Improvements Fund has an assigned fund balance of $2,255,127 and is identified as a major fund. The fund balance increased by $553,834 in 2020. The Community Investment Fund has a committed fund balance of $9,074,953 and is identified as a major fund. The fund balance increased $416,363. This fund provided an interfund loan to the Water fund in the amount of $3,285,970 to finance the Locke Parke Water Treatment Plant project. The TIF 20 Note Payoff Fund has a restricted fund balance of $8,748 and is identified as a major fund. This note was issued to help refinance an outstanding tax increment revenue note for Tax increment financing district No. 20 (Northern Stacks). Non–major special revenue funds decreased by $47,256 in 2020. Non–major capital project funds decreased by $331,296 in 2020. This was mainly due to completing capital projects at the City’s Civic Campus and park improvements. 31 Management’s Discussion and Analysis Proprietary funds. The City’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: Municipal Liquor, $1,312,053; Water, $2,903,686; Sanitary Sewer, $4,501,824; and Storm Water, $2,433,583. The Municipal Liquor, Water, Sanitary Sewer, and Storm Water funds increased in net position of $332,495, $1,011,856, $110,742 and $597,498, respectively. Budgetary Highlights General Fund The original revenue and expenditure budgets were amended, however these amendments did not change the fund balance. Operating expenditures in total were less than the final budgetary estimates by $718,037. The City Management Department was under budget by $45,300, primarily due to legal expenditures coming in lower than budget. Public Safety was under budget by $192,237 primarily due to savings in personal services resulting from staff turnover in addition to lower fuel costs. Emergency reserves was over budget by $392,640 due to additional expenditures that were encountered due to the Coronavirus. Public Works was under budget by $164,727. Most of these savings were in supplies and contractual services. Community Development was under budget by $142,867 primarily due delays in filling open positions in the midst of the pandemic. Total revenues were more than the final budgetary estimates by $651,027. Investment income was over budget by $225,584 due to higher than expected investment return rates. Federal grants came in $143,318 higher than budget and building inspection revenues exceeded budget estimates by $335,555. Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business type activities as of December 31, 2020, amounts to $105,207,857 (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 Management’s Discussion and Analysis City of Fridley’s Capital Assets (Net of Depreciation) 2020 2019 2020 2019 2020 2019 Land $5,502,104 $5,365,204 $699,047 $535,231 $6,201,151 $5,900,435 Buildings and structures 47,604,554 48,962,084 5,157,816 1,706,475 52,762,370 50,668,559 Improvements other than buildings 3,672,407 3,059,187 - - 3,672,407 3,059,187 Machinery and equipment 5,834,664 5,546,470 1,070,811 1,259,616 6,905,475 6,806,086 Infrastructure 15,840,082 12,732,565 19,493,115 17,789,623 35,333,197 30,522,188 Construction in progress 43,471 709,428 289,786 3,237,945 333,257 3,947,373 Total Capital Assets $78,497,282 $76,374,938 $26,710,575 $24,528,890 $105,207,857 $100,903,828 Governmental Activities Business-Type Activities Totals Additional information on the City’s capital assets can be found in Note 5. Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $65,590,000. This is an increase of $2,270,000 from 2020. $45,790,000 of this is for General Obligation Improvement Debt, which is supported by special assessments and property tax levies. $14,050,000 is General Obligation Tax Increment Debt which is support by tax increments. An additional $295,000 is for General Obligation Equipment Certificate Debt, which finances the City’s capital equipment purchases. $5,455,000 is General Obligation Utility Revenue Debt, which is financed by the respective Utility Fund. In addition, there is long–term debt in the amount of $1,115,436 for compensated absences. Additional information on the City’s long–term debt can be found in Note 6. City of Fridley’s Outstanding Debt The City of Fridley has an Aa2 rating. General Obligation Improvement Bonds, General Obligation Equipment Certificates, General Obligation Revenue Bonds, the related premiums or discounts, and Compensated Absences are as follows: 2020 2019 2020 2019 2020 2019 General Obligation Improvement Bonds $45,790,000 $47,115,000 $ - $ - $45,790,000 $47,115,000 General Obligation Tax Increment Bonds 14,050,000 9,510,000 - - 14,050,000 9,510,000 General Obligation Revenue Bonds - - 5,455,000 6,185,000 5,455,000 6,185,000 General Obligation Equipment Certificates 295,000 510,000 - - 295,000 510,000 Compensated Absences 1,115,436 1,107,220 - - 1,115,436 1,107,220 Bond issuance premium/discount 2,335,572 1,904,830 120,343 132,180 2,455,915 2,037,010 Total $63,586,008 $60,147,050 $5,575,343 $6,317,180 $69,161,351 $66,464,230 Governmental Activities Business-Type Activities Totals 33 Management’s 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 is $92,204,535. Only $60,070,000 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’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, 7071 University Avenue NE, Fridley, Minnesota 55432. 34 BASIC FINANCIAL STATEMENTS 35 This page intentionally left blank 36 Exhibit A-1 Governmental Business-Type Activities Activities 2020 2019 2020 2019 Assets: Cash and investments $32,401,417 $12,187,858 $44,589,275 $41,960,134 $12,075,562 $9,314,933 Restricted cash - - - 9,861,382 - - Receivables: Accounts 177,315 3,432,983 3,610,298 3,601,506 72,288 104,431 Taxes 560,345 - 560,345 335,760 350,453 19,760 Special assessments 1,469,195 24,037 1,493,232 1,170,613 - - Mortgage - - - - 1,389,674 1,468,594 Notes - - - - 1,000,000 - Interest 106,792 - 106,792 95,222 18,773 21,897 Due from component unit 531,116 - 531,116 817,877 - - Due from other governments 2,520,835 136,289 2,657,124 936,201 - 5,122 Internal balances 3,384,324 (3,384,324) - - - - Prepaid items - 380,452 380,452 397,180 - 655 Inventories - at cost 65,779 856,302 922,081 968,043 - - Land held for resale - - - - 293,130 759,595 Capital assets (net of accumulated depreciation): Land 5,502,104 699,047 6,201,151 5,900,435 1,011,755 1,011,755 Buildings and structures 47,604,554 5,157,816 52,762,370 50,668,559 - - Improvements other than buildings 3,672,407 - 3,672,407 3,059,187 - - Machinery and equipment 5,834,664 1,070,811 6,905,475 6,806,086 - - Infrastructure 15,840,082 19,493,115 35,333,197 30,522,188 - - Construction in progress 43,471 289,786 333,257 3,947,373 - - Total assets 119,714,400 40,344,172 160,058,572 161,047,746 16,211,635 12,706,742 Deferred outflows of resources: Related to other post employment benefits 446,744 14,276 461,020 366,227 770 689 Related to pensions 3,723,095 - 3,723,095 5,813,884 - - Total deferred outflows of resources 4,169,839 14,276 4,184,115 6,180,111 770 689 Liabilities: Due to primary government - - - - 530,597 817,877 Accounts payable 565,989 800,997 1,366,986 1,113,238 444,644 436,263 Deposits payable 168,801 50,000 218,801 187,585 - - Contracts payable 299,973 111,278 411,251 1,062,009 - 11,302 Due to other governments 109,293 1,400,942 1,510,235 945,434 23,463 9,234 Salaries payable 633,130 85,836 718,966 549,966 - - Accrued interest payable 888,449 52,745 941,194 768,047 - - Compensated absences payable: Due within one year 751,582 - 751,582 751,582 - - Due in more than one year 363,854 - 363,854 355,638 - - Other post employment benefits payable: Due in more than one year 1,542,967 52,316 1,595,283 1,400,456 2,821 2,821 Unearned revenue - 39,470 39,470 29,811 - - Bonds payable: Due within one year 2,070,000 755,000 2,825,000 2,270,000 - - Due in more than one year 60,400,572 4,820,343 65,220,915 63,087,010 - - Net pension liability: Due in more than one year 11,000,809 - 11,000,809 9,495,845 - - Total liabilities 78,795,419 8,168,927 86,964,346 82,016,621 1,001,525 1,277,497 Deferred inflows of resources: Related to other post employment benefits 44,193 1,497 45,690 53,293 81 107 Related to pensions 4,523,667 - 4,523,667 8,750,268 - - Total deferred outflows of resources 4,567,860 1,497 4,569,357 8,803,561 81 107 Net position: Net investment in capital assets 31,075,685 21,135,232 52,210,917 45,561,655 1,011,755 1,011,755 Restricted for: Debt service 3,497,500 - 3,497,500 2,889,966 - - Tax increment purposes - - - - 2,352,805 1,789,857 Police forfeitures 83,703 - 83,703 50,491 - - Cable television equipment 54,202 - 54,202 62,150 - - Donations 26,731 - 26,731 44,398 - - Unrestricted 5,783,139 11,052,792 16,835,931 27,799,015 11,846,239 8,628,215 Total net position $40,520,960 $32,188,024 $72,708,984 $76,407,675 $15,210,799 $11,429,827 Total Primary Government Housing & Redevelopment Authority Component Unit CITY OF FRIDLEY, MINNESOTA STATEMENT OF NET POSITION December 31, 2020 With Comparative Totals For December 31, 2019 The accompanying notes are an integral part of these financial statements. 37 Operating Capital Charges For Grants and Grants and Expenses Services Contributions Contributions Functions/Programs Primary government: Governmental activities: General government $6,003,817 $1,490,036 $222,111 $ - Public safety 9,946,434 2,181,463 816,816 - Public works 5,304,937 792,658 465,559 6,096,584 Community development 16,037,288 971,674 99,034 - Parks and recreation 1,459,005 59,289 - - Interest on long-term debt 2,012,685 - - - Total governmental activities 40,764,166 5,495,120 1,603,520 6,096,584 Business-type activities: Liquor 6,115,659 6,708,539 - - Water 3,192,159 4,143,249 - - Sewer 5,911,370 5,937,276 - 22,800 Storm water 1,243,060 1,523,085 118,410 141,016 Total business-type activities 16,462,248 18,312,149 118,410 163,816 Total primary government $57,226,414 $23,807,269 $1,721,930 $6,260,400 Component unit: Housing and Redevelopment Authority $18,899,785 $307,151 $14,769 $14,962,612 Total component unit $18,899,785 $307,151 $14,769 $14,962,612 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 Other reimbursements Other Transfers Total general revenues and transfers Change in net position Net position - January 1 Net position - December 31 CITY OF FRIDLEY, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2020 With Comparative Totals For The Year Ended December 31, 2019 Program Revenues The accompanying notes are an integral part of these financial statements. 38 Exhibit A-2 Governmental Business-Type Activities Activities 2020 2019 2020 2019 ($4,291,670) $ - ($4,291,670) ($3,133,702) $ - $ - (6,948,155) - (6,948,155) (8,544,356) - - 2,049,864 - 2,049,864 (4,003,262) - - (14,966,580) - (14,966,580)528,881 - - (1,399,716) - (1,399,716) (1,026,673) - - (2,012,685) - (2,012,685) (1,795,560) - - (27,568,942) - (27,568,942) (17,974,672) - - - 592,880 592,880 497,295 - - - 951,090 951,090 987,330 - - - 48,706 48,706 605,276 - - - 539,451 539,451 282,688 - - - 2,132,127 2,132,127 2,372,589 - - (27,568,942)2,132,127 (25,436,815) (15,602,083) $ - $ - ($3,615,253) ($4,927,089) (3,615,253) (4,927,089) 16,225,057 - 16,225,057 15,387,457 529,319 468,866 - - - - 4,257,538 3,771,380 3,948,112 - 3,948,112 1,679,676 - - 699,059 191,782 890,841 767,450 64,480 117,634 281,650 70,834 352,484 301,079 36,323 43,509 21,429 - 21,429 3,772 2,108,063 635,100 - - - 47,415 - - 298,544 1,657 300,201 1,981,975 400,502 380,059 257,504 (257,504) - - - - 21,731,355 6,769 21,738,124 20,168,824 7,396,225 5,416,548 (5,837,587)2,138,896 (3,698,691) 4,566,741 3,780,972 489,459 46,358,547 30,049,128 76,407,675 71,840,934 11,429,827 10,940,368 $40,520,960 $32,188,024 $72,708,984 $76,407,675 $15,210,799 $11,429,827 Total Redevelopment Authority Housing & Component UnitNet (Expense) Revenue and Changes in Net Position Primary Government The accompanying notes are an integral part of these financial statements. 39 General Debt Service Cash and investments $14,039,444 $3,377,227 Restricted Cash - - Receivables: Accounts 17,319 - Taxes 433,073 109,578 Special assessments 202,291 10,694 Interest 106,792 - Due from component unit 2,207 - Due from other governments 106,360 - Due from other funds 25,334 - Prepaid items - - Inventories, at cost 65,779 - Total assets $14,998,599 $3,497,499 Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities: Accounts payable $210,828 $ - Deposits payable 124,365 - Contracts payable - - Due to other governments 65,632 - Due to other funds - - Salaries payable 491,791 - Total liabilities 892,616 - Deferred inflows of resources Unavailable revenue 412,158 62,901 Fund balance: Nonspendable 65,779 - Restricted 24,513 3,434,598 Committed - - Assigned - - Unassigned 13,603,533 - Total fund balance 13,693,825 3,434,598 Total liabilities, deferred inflows of resources, and fund balance $14,998,599 $3,497,499 Assets CITY OF FRIDLEY, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2020 With Comparative Totals For December 31, 2019 The accompanying notes are an integral part of these financial statements. 40 Exhibit A-3 Street Improvements Community Investment TIF 20 Note Payoff Other Governmental Funds Intra-Activity Eliminations 2020 2019 $230,640 $5,735,355 $8,478 $6,516,490 $ - $29,907,634 $29,833,187 - - - - - - 9,861,382 - - - 148,407 - 165,726 158,095 68 1,113 - 16,513 - 560,345 335,760 1,135,256 40,963 - 79,991 - 1,469,195 1,156,570 - - - - - 106,792 95,222 - 53,401 - 475,508 - 531,116 817,877 2,207,563 - - 206,912 - 2,520,835 931,843 - 3,285,970 - - (25,334) 3,285,970 - - - - - - - 4,428 - - - - - 65,779 48,906 $3,573,527 $9,116,802 $8,478 $7,443,821 ($25,334)$38,613,392 $43,243,270 $6,396 $33 $ - $337,698 $ - $554,955 $620,723 11,300 - - 33,136 - 168,801 137,585 167,656 - - 132,317 - 299,973 77,918 - - - 43,661 - 109,293 279,568 - - - 25,334 (25,334) - - - - - 29,145 - 520,936 379,758 185,352 33 - 601,291 (25,334)1,653,958 1,495,552 1,133,048 41,816 - 136,911 - 1,786,834 1,367,678 - - - - - 65,779 53,334 - - 8,478 123,637 - 3,591,226 12,817,403 - 9,074,953 - 2,475,478 - 11,550,431 11,165,161 2,255,127 - - 4,107,071 - 6,362,198 6,177,195 - - - (567) - 13,602,966 10,166,947 2,255,127 9,074,953 8,478 6,705,619 - 35,172,600 40,380,040 $3,573,527 $9,116,802 $8,478 $7,443,821 ($25,334)$38,613,392 $43,243,270 Fund balance reported above $35,172,600 $40,380,040 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.78,497,282 76,374,938 Other long-term assets are not available to pay for current-period expenditures and, therefore, are reported as unavailable revenue in the funds.1,786,834 1,367,678 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds.(63,359,021) (59,748,257) Other post employment benefits are not due and payable in the current period and, therefore, are not reported in the funds.(1,140,416) (1,067,406) 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.(10,436,319) (10,948,446) Net position of governmental activities $40,520,960 $46,358,547 Totals Governmental Funds The accompanying notes are an integral part of these financial statements. 41 General Debt Service Revenues: Taxes $12,476,885 $3,186,645 Special assessments 33,263 25,154 Licenses and permits 1,301,971 - Intergovernmental revenue 2,048,823 - Charges for services 2,037,951 - Fines and forfeits 116,184 - Investment income: Interest and dividends 214,873 34,844 Net change in the fair value of investments 85,211 14,942 Contributions and donations 9,862 - Payment from component unit - 863,674 Interest on loan - - Miscellaneous: Other 102,214 - Total revenues 18,427,237 4,125,259 Expenditures: Current: General government 4,066,096 - Public safety 8,540,667 - Public works 3,083,805 - Community development 1,036,415 - Parks and recreation 517,890 - Debt service - 3,502,804 Capital outlay - - Total expenditures 17,244,873 3,502,804 Excess (deficiency) of revenues over (under) expenditures 1,182,364 622,455 Other financing sources (uses): Proceeds from sale of capital assets - - Issuance of bonds - - Premium on bond issuance - - Transfers in 2,249,000 - Transfers out - - Total other financing sources (uses)2,249,000 - Net change in fund balance 3,431,364 622,455 Fund balance - January 1 10,262,461 2,812,143 Fund balance - December 31 $13,693,825 $3,434,598 CITY OF FRIDLEY, MINNESOTA GOVERNMENTAL FUNDS For The Year Ended December 31, 2020 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES With Comparative Totals For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 42 Exhibit A-4 Street Improvements Community Investment TIF 20 Note Payoff Other Governmental Funds Intra-Activity Eliminations 2020 2019 $ - $33 $ - $470,174 $ - $16,133,737 $15,337,464 690,723 21,992 - 48,215 - 819,347 467,953 - - - 257,032 - 1,559,003 1,501,526 2,735,930 - - 3,326,829 - 8,111,582 4,446,430 - - - 757,336 - 2,795,287 2,958,748 - - - 52,972 - 169,156 186,807 27,338 198,912 5,548 158,427 - 639,942 582,702 9,473 83,319 3,277 62,183 - 258,405 228,307 - - - 75,891 - 85,753 185,022 - - - - - 863,674 - - 108,000 - - - 108,000 - - 116,826 - 64,264 - 283,304 1,993,592 3,463,464 529,082 8,825 5,273,323 - 31,827,190 27,888,551 - 12,719 - 1,099,018 - 5,177,833 4,677,076 - - - 383,706 - 8,924,373 8,831,505 138,818 - - - - 3,222,623 3,535,263 - - 14,962,612 - - 15,999,027 982,166 - - - 657,380 - 1,175,270 1,244,351 - - 58,776 - - 3,561,580 3,371,526 2,672,612 - - 1,739,904 - 4,412,516 2,721,649 2,811,430 12,719 15,021,388 3,880,008 - 42,473,222 25,363,536 652,034 516,363 (15,012,563) 1,393,315 - (10,646,032) 2,525,015 - - - 21,429 - 21,429 14,724 - - 4,540,000 - - 4,540,000 9,510,000 - - 619,659 - - 619,659 504,837 - - - 378,312 (2,288,812)338,500 338,500 (98,200)(100,000) - (2,171,608) 2,288,812 (80,996) - (98,200)(100,000) 5,159,659 (1,771,867) - 5,438,592 10,368,061 553,834 416,363 (9,852,904)(378,552) - (5,207,440) 12,893,076 1,701,293 8,658,590 9,861,382 7,084,171 - 40,380,040 27,486,964 $2,255,127 $9,074,953 $8,478 $6,705,619 $ - $35,172,600 $40,380,040 Totals Governmental Funds The accompanying notes are an integral part of these financial statements. 43 This page intentionally left blank 44 Exhibit A-5 2020 2019 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)($5,207,440) $12,893,076 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.(106,368) (2,168,037) Contributed capital assets recorded as revenue in the statement of 2,228,712 44,500 activities that do not provide current financial resources are not reported as revenues in the funds. Deferred revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.419,156 (276,473) 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.(3,430,742) (8,456,441) 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.512,127 261,534 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.(73,010) (54,364) 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.(180,022) 17,570 Change in net position of governmental activities (Exhibit A-2)($5,837,587) $2,261,365 RECONCILIATION OF THE STATEMENT OF REVENUES, CITY OF FRIDLEY, MINNESOTA With Comparative Totals For The Year Ended December 31, 2019 For The Year Ended December 31, 2020 TO THE STATEMENT OF ACTIVITIES GOVERNMENTAL FUNDS EXPENDITURES AND CHANGES IN FUND BALANCES OF The accompanying notes are an integral part of these financial statements. 45 Assets:Liquor Water Current assets: Cash and investments $1,193,574 $5,136,749 Accounts receivable - 1,461,103 Special assessments receivable - 16,674 Due from other governments - 84,387 Prepaid items - - Inventories - at cost 763,207 93,095 1,956,781 6,792,008 Noncurrent assets: Capital assets: Land 151,946 147,485 Buildings and structures 536,891 8,066,509 Machinery and equipment 234,185 2,813,579 Infrastructure - 22,282,908 Construction in process - 142,749 Total capital assets 923,022 33,453,230 Less: Allowance for depreciation (483,877) (18,669,751) Net capital assets 439,145 14,783,479 Total noncurrent assets 439,145 14,783,479 Total assets 2,395,926 21,575,487 Deferred outflows of resources: Related to pensions - - Related to other post employment benefits 3,533 5,064 Total deferred outflows of resources 3,533 5,064 Liabilities: Current liabilities: Accounts payable 499,354 183,314 Deposits payable - - Accrued interest payable - 46,896 Contracts payable - 108,828 Due to other governments 70,619 223,659 Due to other funds - 3,285,970 Salaries payable 25,502 25,630 Payroll deductions payable - - Compensated absences payable - - Bonds payable - current - 690,000 Unearned revenue 39,470 - Total current liabilities 634,945 4,564,297 Noncurrent liabilities: Other post employment benefits 12,946 18,558 Compensated absences - noncurrent - - Bonds payable - noncurrent - 4,455,343 Net pension liability - - Total noncurrent liabilities 12,946 4,473,901 Total liabilities 647,891 9,038,198 Deferred inflows of resources: Related to pensions - - Related to other post employment benefits 370 531 Total deferred outflows of resources 370 531 Net position: Net investment in capital assets 439,145 9,638,136 Unrestricted 1,312,053 2,903,686 Total net position $1,751,198 $12,541,822 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) Business-Type Activities - Enterprise Funds CITY OF FRIDLEY, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2020 With Comparative Totals For Enterprise Funds For December 31, 2019 The accompanying notes are an integral part of these financial statements. 46 Exhibit A-6 Governmental Activities - Sewer Storm Water 2020 2019 Internal Service Funds $3,719,792 $2,137,743 $12,187,858 $9,608,616 $2,493,783 1,556,091 415,789 3,432,983 3,443,411 11,589 - 7,363 24,037 14,043 - 4,275 47,627 136,289 4,358 - 380,452 - 380,452 392,752 - - - 856,302 919,137 - 5,660,610 2,608,522 17,017,921 14,382,317 2,505,372 22,800 376,816 699,047 535,231 - 123,384 - 8,726,784 5,014,280 - 1,272,336 423,635 4,743,735 4,678,852 - 10,836,051 13,332,973 46,451,932 43,724,108 - 108,988 38,049 289,786 3,237,944 - 12,363,559 14,171,473 60,911,284 57,190,415 - (8,467,361) (6,579,720) (34,200,709) (32,661,525) - 3,896,198 7,591,753 26,710,575 24,528,890 - 3,896,198 7,591,753 26,710,575 24,528,890 - 9,556,808 10,200,275 43,728,496 38,911,207 2,505,372 - - - - 3,723,095 2,408 3,271 14,276 6,193 - 2,408 3,271 14,276 6,193 3,723,095 24,583 93,746 800,997 488,468 11,034 - 50,000 50,000 50,000 - 3,333 2,516 52,745 59,620 - 2,450 - 111,278 984,091 - 1,106,664 - 1,400,942 665,866 - - - 3,285,970 - - 15,086 19,618 85,836 62,268 - - - - - 112,194 - - - - 751,582 35,000 30,000 755,000 730,000 - - - 39,470 29,811 - 1,187,116 195,880 6,582,238 3,070,124 874,810 8,825 11,987 52,316 25,345 - - - - - 363,854 210,000 155,000 4,820,343 5,587,180 - - - - - 11,000,809 218,825 166,987 4,872,659 5,612,525 11,364,663 1,405,941 362,867 11,454,897 8,682,649 12,239,473 - - - - 4,523,667 253 343 1,497 964 - 253 343 1,497 964 4,523,667 3,651,198 7,406,753 21,135,232 18,211,710 - 4,501,824 2,433,583 11,151,146 12,022,077 (10,534,673) $8,153,022 $9,840,336 $32,286,378 $30,233,787 ($10,534,673) $32,286,378 $30,233,787 (98,354)(184,659) $32,188,024 $30,049,128 TotalsBusiness-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 47 Liquor Water Sales $6,708,539 $ - Cost of sales (4,906,841) - Gross profit 1,801,698 - Operating revenues: Customer billings - 4,140,690 Charges for services - - Other revenues - 2,559 Total operating revenues - 4,143,249 Total gross profit and operating revenues 1,801,698 4,143,249 Operating expenses: Personal services 660,524 732,361 Supplies and other charges: Disposal charges - - Other 537,825 1,342,102 Depreciation 34,823 890,608 Total operating expenses 1,233,172 2,965,071 Operating income (loss)568,526 1,178,178 Nonoperating revenues (expenses): Intergovernmental revenue - - Investment income: Interest and dividends 14,529 66,601 Net change in the fair value of investments 6,784 21,165 Insurance reimbursement - - Interest and fiscal charges - (254,088) Gain (loss) on sale of capital assets - - Other 160 - Total nonoperating revenues (expenses)21,473 (166,322) Income (loss) before transfers and capital contributions 589,999 1,011,856 Transfers and capital contributions: Transfers in 80,996 - Transfers out (338,500) - Capital contributions - - Total contributions and transfers (257,504) - Change in net position 332,495 1,011,856 Net position - January 1 1,418,703 11,529,966 Net position - December 31 $1,751,198 $12,541,822 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) For The Year Ended December 31, 2020 Business-Type Activities - Enterprise Funds CITY OF FRIDLEY, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS With Comparative Totals For The Enterprise Funds For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 48 Exhibit A-7 Governmental Activities - Sewer Storm Water Internal Service Funds 2020 2019 $ - $ - $6,708,539 $6,195,797 $ - - - (4,906,841)(4,539,028) - - - 1,801,698 1,656,769 - 5,937,276 1,522,958 11,600,924 11,364,221 - - - - - 1,664,440 - 127 2,686 1,252 - 5,937,276 1,523,085 11,603,610 11,365,473 1,664,440 5,937,276 1,523,085 13,405,308 13,022,242 1,664,440 386,824 541,850 2,321,559 2,166,413 801,135 4,729,563 - 4,729,563 4,645,017 - 515,987 365,387 2,761,301 2,425,701 458,660 285,623 349,959 1,561,013 1,530,412 - 5,917,997 1,257,196 11,373,436 10,767,543 1,259,795 19,279 265,889 2,031,872 2,254,699 404,645 - 118,410 118,410 260,623 90,228 55,935 54,717 191,782 254,995 59,117 20,816 22,069 70,834 2,525 23,245 - - - - 21,197 (8,088)(6,100)(268,276)(133,394) - - - - 3,772 - - 1,497 1,657 1,038 - 68,663 190,593 114,407 389,559 193,787 87,942 456,482 2,146,279 2,644,258 598,432 - - 80,996 - - - - (338,500)(338,500) - 22,800 141,016 163,816 - - 22,800 141,016 (93,688)(338,500) - 110,742 597,498 2,052,591 2,305,758 598,432 8,042,280 9,242,838 30,233,787 27,928,029 (11,133,105) $8,153,022 $9,840,336 $32,286,378 $30,233,787 ($10,534,673) $2,052,591 $2,305,758 86,305 (382) $2,138,896 $2,305,376 Totals Business-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 49 Liquor Water Cash flows from operating activities: Receipts from customers and users $6,718,198 $4,027,707 Receipts from interfund services provided - - Payment to suppliers (5,320,924)(1,430,757) Payment to employees (649,925)(718,560) Operating contribution 160 - Net cash flows from operating activities 747,509 1,878,390 Cash flows from noncapital financing activities: Intergovernmental revenue - - Transfers in 80,996 - Transfers out (338,500) - Net cash flows from noncapital financing activities (257,504) - Cash flows from capital and related financing activities: Acquisition of capital assets (88,017)(2,488,464) Proceeds from sale of capital assets - - Proceeds from issuance of interfund loan - 3,285,970 Capital grants and contributions - - Principal received on special assessments - - Insurance reimbursement - - Principal paid on revenue bonds - (670,000) Interest and paying agent fees on revenue bonds - (272,050) Net cash flows from capital and related financing activities (88,017)(144,544) Cash flows from investing activities: Investment income 21,313 87,766 Net increase (decrease) in cash and cash equivalents 423,301 1,821,612 Cash and cash equivalents - January 1 770,273 3,315,137 Cash and cash equivalents - December 31 $1,193,574 $5,136,749 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $568,526 $1,178,178 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 34,823 890,608 Operating contribution 160 - Changes in assets and liabilities: Decrease (increase) in receivables - (115,542) Decrease (increase) in prepaid items - - Decrease (increase) in inventories (24,842)87,677 Decrease (increase) in deferred outflows of resources (1,926)(2,725) Increase (decrease) in payables 160,989 (159,973) Increase (decrease) in unearned revenue 9,659 - Increase (decrease) in deferred inflows of resources 120 167 Total adjustments 178,983 700,212 Net cash provided by operating activities $747,509 $1,878,390 Noncash investing and financing activities Capital contributions $ - $ - Business-Type Activities - Enterprise Funds CITY OF FRIDLEY, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2020 With Comparative Totals For The Enterprise Funds For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 50 Exhibit A-8 Governmental Activities - Sewer Storm Water Internal Service Funds 2020 2019 $5,987,952 $1,456,454 $18,190,311 $17,797,550 $ - - - - - 1,652,851 (5,110,670) (285,427) (12,147,778) (10,655,855) (451,673) (378,459) (531,626) (2,278,570) (2,181,690) (1,419,513) - - 160 310 - 498,823 639,401 3,764,123 4,960,315 (218,335) - 118,410 118,410 260,623 90,228 - - 80,996 - - - - (338,500) (338,500) - - 118,410 (139,094) (77,877) 90,228 (174,753) (991,464) (3,742,698) (3,866,006) - - - - 3,772 - - - 3,285,970 - 22,800 141,016 163,816 - - - 1,497 1,497 728 - - - - - 21,197 (35,000) (25,000) (730,000) (945,000) - (8,526) (6,412) (286,988) (155,763) - (195,479) (880,363) (1,308,403) (4,962,269) 21,197 76,751 76,786 262,616 257,520 82,362 380,095 (45,766) 2,579,242 177,689 (24,548) 3,339,697 2,183,509 9,608,616 9,430,927 2,518,331 $3,719,792 $2,137,743 $12,187,858 $9,608,616 $2,493,783 $19,279 $265,889 $2,031,872 $2,254,699 $404,645 285,623 349,959 1,561,013 1,530,412 - - - 160 310 - 50,676 (66,631) (131,497) 238,356 (11,589) 12,300 - 12,300 (7,301) - - - 62,835 77,528 - (1,442) (1,990) (8,083) (1,845) 2,090,789 132,285 92,030 225,331 869,268 1,524,421 - - 9,659 (2,076) - 102 144 533 964 (4,226,601) 479,544 373,512 1,732,251 2,705,616 (622,980) $498,823 $639,401 $3,764,123 $4,960,315 ($218,335) $22,800 $141,016 $163,816 $0 $ - Totals Business-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 51 Exhibit A-9 2020 Assets: Accounts receivables $4,285 Liabilities: Accounts payable 4,285 Net Position: Restricted $ - CITY OF FRIDLEY, MINNESOTA STATEMENT OF FIDUCIARY NET POSITION - FIDUCIARY FUNDS December 31, 2020 The accompanying notes are an integral part of these financial statements. 52 Exhibit A-10 2020 Additions: Tax collections from other government $78,114 Total additions 78,114 Deductions: Payments of tax to other governments Administrative fee 78,114 Total deductions 78,114 Net increase in fiduciary net position - Net position - beginning - Net position - ending $ - CITY OF FRIDLEY, MINNESOTA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - FIDUCIARY FUNDS For The Year Ended December 31, 2020 The accompanying notes are an integral part of these financial statements. 53 This page intentionally left blank 54 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. 55 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements and the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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. The Debt 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. The TIF 20 Note Payoff Fund services debt on a Tax Increment Financing District created by the Housing and Redevelopment Authority to support the eligible costs associated with the redevelopment of the area known as Northern Stacks. The Street Improvements Fund is used to account for repairs and replacements of city streets and street related equipment such as signs and street lights. 56 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 The Community Investment Fund is used to account for capital costs associated with the parks and public utilities maintained by the City. The government reports the following major proprietary funds: The Liquor Fund accounts for operations of the municipal liquor stores. The Water Fund accounts for the water service charges which are used to finance the water system operating expenses. The Sewer Fund accounts for the sewer service charges which are used to finance the sanitary sewer system operating expenses. The Storm 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. Fiduciary Funds - Custodial 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 operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the 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. 57 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 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. 58 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. The following is a listing of funds whose expenditures exceeded budgeted appropriations: Final Amount Over Budget Actual Budget Nonmajor Funds: Solid Waste Abatement Fund $497,700 $503,809 $6,109 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 “due from/to other funds.” All short-term interfund receivables and payables at December 31, 2020 are planned to be eliminated in 2021. 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 59 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 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. 60 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. 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. 61 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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: Land $1 Building and building improvements $25,000 Land improvements $25,000 Vehicles and equipment $10,000 Infrastructure $50,000 Capitalization Threshold 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. 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. 62 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. 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. 63 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 will not be recognized as an outflow of resources (expense/expenditure) until then. The government has two items that qualify for reporting in this category. They are the pension and OPEB 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 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. Defined Benefit Pension Plans For purposes of measuring the net pension liability, deferred outflows and inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to and deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA, except that 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. 64 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 ($63,359,021) difference are as follows: Bonds payable $60,135,000 Premium on bonds payable 2,335,572 Accrued interest payable 888,449 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $63,359,021 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 ($106,368) difference are as follows: Net book value of capital asset disposals $ - Capital outlay 4,412,516 Depreciation expense (4,518,884) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities ($106,368) 65 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 $419,156 difference are as follows: Unavailable revenue - general property taxes: At December 31, 2019 ($180,023) At December 31, 2020 271,343 Unavailable revenue - special assessments: At December 31, 2019 (1,152,895) At December 31, 2020 1,465,491 Unavailable revenue - miscellaneous At December 31, 2019 (34,760) At December 31, 2020 50,000 Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $419,156 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 ($3,430,742) difference are as follows: Principal repayments: G.O. improvement bonds $1,540,000 Amortization of premium on bonds issuance 188,917 Bond Premium (619,659) Bond issuance (4,540,000) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities ($3,430,742) 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 66 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 information should be read in conjunction with the City’s financial statements for the year ended December 31, 2019, 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. Minnesota Statute 118.A.03 identifies allowable forms of collateral. 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. At times, deposits may be in excess of collateral pledged. B. Investments Subject to rating, yield, maturity and issuer requirements as prescribed by statue, Minnesota Statutes 118A.04 and 118A.05 authorized the City to invest in United States securities, state and local securities, commercial paper, time deposits, high-risk mortgage-backed securities, temporary general obligation bonds, repurchase agreements, Minnesota joint powers investment trust and guaranteed investment contracts. 67 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 As of December 31, 2020 the City had the following investments and maturities: Fair Less Over Investment Type Rating Value Than 1 1-5 6-10 10 Years Federal Home Loan Bank AAA $1,980,543 $200,000 $1,780,543 $ - $ - Federal National Mortgage Association AAA 13,970,900 1,679,220 12,163,835 127,845 - Federal Home Loan Mortgage Corporation AAA 8,769,669 350,718 8,418,951 - - Local government bonds Aaa-A1 4,192,563 - 4,192,563 - - US Treasury Note N/A 12,551,563 8,930,078 3,621,485 - - Brokered CDs N/R 748,126 495,064 253,062 - - Money market N/R 1,137,612 1,137,612 - - - Total $43,350,976 $12,792,692 $30,430,439 $127,845 $ - Total investments $43,350,976 Deposits 1,233,299 Petty cash 5,000 Total cash and investments $44,589,275 Investment Maturities (in Years) As of December 31, 2020 the HRA had the following investments and maturities: Fair Less Over Investment Type Rating Value Than 1 1-5 6-10 10 Years Federal National Mortgage Association AAA $600,851 $600,851 $ - $ - $ - Federal Farm Credit Bank AAA 1,304,905 1,304,905 - - - Federal Home Loan Bank AAA 200,368 200,368 - - - Local government bonds Aaa - AAA3 2,105,009 2,105,009 - - - US Treasury Note N/A 4,757,948 4,757,948 - - - Money market N/R 1,072,220 1,072,220 - - - Total $10,041,301 $10,041,301 $0 $ - $ - Total investments $10,041,301 Deposits 2,034,261 Total cash and investments $12,075,562 Investment Maturities (in Years) 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. 68 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 The City has the following recurring fair value measurements as of December 31, 2020: Investment Type 12/31/2020 Level 1 Level 2 Level 3 Investments at fair value: Federal Home Loan Bank $1,980,543 $ - $1,980,543 $ - Federal National Mortgage Association 13,970,900 - 13,970,900 - Federal Home Loan Mortgage Corporation 8,769,669 - 8,769,669 - Local government bonds 4,192,563 - 4,192,563 - US Treasury 12,551,563 - 12,551,563 - Brokered CDs 748,126 - 748,126 - Total/Subtotal 42,213,364 $ - $42,213,364 $ - Investments not categorized: External investment pool - US Bank Fund 1,038,573 External investment pool - PFM Bank Fund 70,675 External investment pool - PMA Bank Fund 28,364 Total $43,350,976 Fair Value Measurement Using The HRA has the following recurring fair value measurements as of December 31, 2020: Investment Type 12/31/2020 Level 1 Level 2 Level 3 Investments at fair value: Federal National Mortgage Association $600,851 $ - $600,851 $ - Local government bonds 2,105,009 - 2,105,009 - US Treasury Notes 4,757,948 - 4,757,948 - Federal Farm Credit Bank 1,304,905 - 1,304,905 - Federal Home Loan Bank 200,368 - 200,368 - Total/Subtotal 8,969,081 $ - $8,969,081 $ - Investments not categorized: Money market 1,072,220 Total $10,041,301 Fair Value Measurement Using The City’s external investment pool 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. The City’s external investment pool investment is with the 4M fund which is regulated by Minnesota Statures and the Board of Directors of the League of Minnesota Cities. The 4M fund is an unrated pool and the fair 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 investment in accordance with Government Accounting Standards Board Statements No. 79, at amortized cost. The 4M Liquid Asset Fund has no redemption requirement. The 4M Plus Fund requires funds to be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period are subject to a penalty equal to 7 days interest on the amount withdrawn. 69 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 Corporation 20.23% US Treasury Note 28.95% Federal National Mortgage Association 32.23% 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 National Mortgage Association 6.03% Federal Farm Credit Bank 13.09% Various Local Gov't Bonds 21.11% US Treasury Note 47.71% 70 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 3. Receivables Significant receivables balances not expected to be collected within one year of December 31, 2020 are as follows: Street Community Nonmajor General Debt Service Improvements Investment Funds Total Special assessments receivable $158,740 $7,879 $891,339 $32,046 $62,931 $1,152,935 Delinquent property taxes 172,376 44,014 - - 6,510 222,900 $331,116 $51,893 $891,339 $32,046 $69,441 $1,375,835 Primary Government Major Funds General Revolving Fund Loan Total Mortgage receivable $ - $1,389,674 $1,389,674 Allowance for uncollectible accounts - - - Delinquent tax increment 6,476 - 6,476 $6,476 $1,389,674 $1,396,150 HRA Component Unit Major Funds 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: Property Special Taxes Assessments Miscellaneous Total Major funds: General $230,384 $201,774 $ - $432,158 Debt Service 52,886 10,015 - 62,901 Street Improvements 68 1,132,980 - 1,133,048 Community Investment 1,083 40,733 - 41,816 Nonmajor 7,222 79,991 49,998 137,211 Total unavailable revenue $291,643 $1,465,493 $49,998 $1,807,134 71 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 5. Capital Assets Capital asset activity for the year ended December 31, 2020 was as follows: Beginning Ending Primary Government Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land $5,365,204 $136,900 $ - $5,502,104 Construction in progress 709,428 7,608 (673,565) 43,471 Total capital assets, not being depreciated 6,074,632 144,508 (673,565) 5,545,575 Capital assets, being depreciated: Buildings and structures 52,902,773 714,729 (40,325) 53,577,177 Machinery and equipment 13,241,923 1,434,816 (247,699) 14,429,040 Improvements 4,495,467 835,441 - 5,330,908 Infrastructure 32,271,227 4,185,299 (355,264) 36,101,262 Total capital assets, being depreciated 102,911,390 7,170,285 (643,288) 109,438,387 Less accumulated depreciation for: Buildings and structures 3,940,689 2,072,259 (40,325) 5,972,623 Machinery and equipment 7,695,453 1,146,622 (247,699) 8,594,376 Improvements 1,436,280 222,221 - 1,658,501 Infrastructure 19,538,662 1,077,782 (355,264) 20,261,180 Total accumulated depreciation 32,611,084 4,518,884 (643,288) 36,486,680 Total capital assets being depreciated - net 70,300,306 2,651,401 0 72,951,707 Governmental activities capital assets - net $76,374,938 $2,795,909 ($673,565) $78,497,282 Beginning Ending Primary Government Balance Increases Decreases Balance Business-type activities: Capital assets, not being depreciated: Land $535,231 $163,816 $ - $699,047 Construction in progress 3,237,945 245,525 (3,193,684) 289,786 Total capital assets, not being depreciated 3,773,176 409,341 (3,193,684) 988,833 Capital assets, being depreciated: Buildings and structures 5,014,280 3,712,504 - 8,726,784 Machinery and equipment 4,678,849 64,886 - 4,743,735 Infrastructure 43,724,110 2,749,651 (21,829) 46,451,932 Total capital assets, being depreciated 53,417,239 6,527,041 (21,829) 59,922,451 Less accumulated depreciation for: Buildings and structures 3,307,805 261,163 - 3,568,968 Machinery and equipment 3,419,233 253,688 - 3,672,921 Infrastructure 25,934,487 1,046,162 (21,829) 26,958,820 Total accumulated depreciation 32,661,525 1,561,013 (21,829) 34,200,709 Total capital assets being depreciated - net 20,755,714 4,966,028 - 25,721,742 Business-type activities capital assets - net $24,528,890 $5,375,369 ($3,193,684) $26,710,575 Component Unit Capital assets, not being depreciated: Land $1,011,755 $ - $ - $1,011,755 72 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $893,326 Public safety 1,188,426 Public works, including depreciation of general infrastructure assets 2,122,327 Community development 11,353 Parks and recreation 303,452 Total depreciation expense - governmental activities $4,518,884 Business-type activities: Liquor $34,823 Water 890,608 Sewer 285,623 Storm water 349,959 Total depreciation expense - business-type activities $1,561,013 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. 73 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 As of December 31, 2020, 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 $65,000 installments of $55,000 - $135,000 through February 1, 2021; 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%295,000 $49,130,000 General Obligation Improvement Bonds, Series 2017A due in varying annual installments of $1,060,000 - $2,925,000 through February 1, 2042; interest at 3.00% - 5.00%45,725,000 $9,510,000 General Obligation Tax Increment Bonds, Series 2019A due in varying annual installments of $930,000- $1,150,000 beginning February 1, 2027 through February 1, 2035; interest at 2.125% - 5.00%9,510,000 $4,540,000 General Obligation Tax Increment Bonds, Series 2020A due in varying annual installments of $630,000- $860,000 beginning February 1, 2021 through February 1, 2026; interest at 5.00%4,540,000 Unamortized premium 2,335,572 Subtotal governmental activities $62,470,572 Business-Type Activities: $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%1,320,000 $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%4,135,000 Unamortized premium 120,343 Subtotal business-type activities 5,575,343 Total primary government $68,045,915 74 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Annual debt service requirements to maturity for general obligation bonds and loans are as follows: Year Ending December 31, Principal Interest Principal Interest Principal Interest Principal Interest 2021 $1,295,000 $1,638,637 $630,000 $460,038 $145,000 $3,526 $755,000 $118,038 2022 1,250,000 1,594,112 705,000 426,663 150,000 1,238 770,000 100,763 2023 1,465,000 1,526,238 745,000 390,413 - - 790,000 82,794 2024 1,535,000 1,451,238 780,000 352,288 - - 510,000 67,044 2025 1,615,000 1,372,488 820,000 312,288 - - 525,000 53,525 2026 1,695,000 1,289,738 860,000 270,288 - - 535,000 39,363 2027 1,780,000 1,211,763 930,000 225,538 - - 300,000 29,213 2028 1,850,000 1,139,163 975,000 177,912 - - 310,000 23,113 2029 1,925,000 1,073,288 1,025,000 143,287 - - 315,000 16,862 2030 1,985,000 1,014,637 1,045,000 122,587 - - 320,000 10,513 2031 2,040,000 954,263 1,065,000 101,487 - - 325,000 3,656 2032 2,105,000 890,771 1,085,000 79,987 - - - - 2033 2,170,000 822,619 1,105,000 58,087 - - - - 2034 2,240,000 750,956 1,130,000 35,737 - - - - 2035 2,315,000 676,937 1,150,000 12,219 - - - - 2036 2,390,000 600,481 - - - - - - 2037 2,465,000 520,047 - - - - - - 2038 2,550,000 433,825 - - - - - - 2039 2,640,000 343,000 - - - - - - 2040 2,730,000 249,025 - - - - - - 2041 2,825,000 151,812 - - - - - - 2042 2,925,000 51,188 - - - - - - Total $45,790,000 $19,756,226 $14,050,000 $3,168,819 $295,000 $4,764 $5,455,000 $544,884 Primary Government Governmental Activities Business-Type Activities G.O. Improvement G.O. Equipment Certificates Revenue BondsG.O. Tax Increment Long-term liability activity for the year ended December 31, 2020, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: G.O. improvement bonds $56,625,000 $4,540,000 ($1,325,000) $59,840,000 $1,925,000 G.O. equipment certificates 510,000 - (215,000) 295,000 145,000 Total bonds payable 57,135,000 4,540,000 (1,540,000)60,135,000 2,070,000 Bond issuance premium/discount 1,904,830 619,659 (188,917) 2,335,572 - Compensated absences 1,107,220 948,311 (940,095) 1,115,436 751,582 Total governmental activities long-term debt $60,147,050 $6,107,970 ($2,669,012) $63,586,008 $2,821,582 Business-type activities: Bonds payable: G.O. revenue bonds $6,185,000 $ - ($730,000)$5,455,000 $755,000 Bond issuance premium/discount 132,180 - (11,837) 120,343 - Total business-type activities long-term debt $6,317,180 $ - ($741,837) $5,575,343 $755,000 75 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Compensated absences are generally liquidated by the Employee Benefits Fund. All long-term bonded indebtedness outstanding at December 31, 2020 is backed by the full faith and credit of the City, including improvement and revenue bond issues. Delinquent assessments receivable at December 31, 2020 totaled $47,371. Revenues Pledged Percent of Debt service Principal Pledged Use of total as a % of Term of Remaining and Interest Revenue Bond Issue Proceeds Type debt service net revenues Pledge Principal paid received 2020A Housing Redevelopment Tax Increment 100%2020- $4,540,000 $131,786 $ - 2026 2019A Housing Redevelopment Tax Increment 100%2020- 9,510,000 148,581 - 2035 2017A Building Improvements Property Taxes 100%2017- 45,725,000 2,857,812 3,028,765 2042 2012A Capital Equipment Property Taxes 100%2013- 295,000 150,520 107,210 2022 2010B Capital Equipment Property Taxes 100%2011- - 71,050 50,607 2020 2010C Street Improvements Property Taxes and 100%2011- 65,000 138,975 25,217 Special Assessments 2021 2016A Water Revenue Bonds Infrastructure Improvements Water Customer 100% 15.18% 2016- 4,135,000 628,912 4,143,249 Net Revenue 2031 Water, Sewer and 2010A Utility Revenue Bonds Infrastructure Improvements Storm Customer 100% 2.03% 2011- 1,320,000 235,925 11,603,610 Net Revenue 2026 Revenue Pledged Current Year 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 the Coordinated Plan. Coordinated Plan members are covered by Social Security. 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 local relief associations that elected to merge with and transfer assets and administration to PERA. 76 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. 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 members. Members hired prior to July 1, 1989 receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2% of average salary for each of the first ten years of service and 1.7% of average salary for each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7% of average salary for all years 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. Benefit increases are provided to benefit recipients each January. Beginning in 2019, the postretirement increase is equal to 50% of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 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. Benefit increases are provided to benefit recipients each January. Beginning in 2019, the postretirement increase will be fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. June 30 before the effective date of the increase will receive a reduced prorated increase. 77 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 Coordinated Plan members were required to contribute 6.5% of their annual covered salary in fiscal year 2020 and the City was required to contribute 7.5% for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2020 were $525,081. The City’s contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Police and Fire member’s contribution rates increased from 11.3% of pay to 11.8% and employer rates increased from 16.95% to 17.70% on January 1, 2020. The City’s contributions to the PEPFF for the year ended December 31, 2020 were $807,829. 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, 2020, the City reported a liability of $5,671,702 for its proportionate share of GERF’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million. 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 $174,864. The net pension liability was measured as of June 30, 2020, 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, 2019 through June 30, 2020, relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.0946% at the end of the measurement period and 0.0919% for the beginning of the period. City's proportionate share of the net pension liability $5,671,702 State of Minnesota’s proportionate share of the net pension liability associated with the City 174,864 Total $5,846,566 For the year ended December 31, 2020, the City recognized pension expense of $151,294 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $15,219 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the GERF. 78 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 At December 31, 2020, 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 Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $51,741 $21,459 Changes in actuarial assumptions - 211,157 Net collective difference between projected and actual investment earnings 93,731 - Changes in proportion 111,467 179,213 Contributions paid to PERA subsequent to the measurement date 263,172 - Total $520,111 $411,829 The $263,172 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, 2021. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Pension December 31, Expense 2021 ($385,238) 2022 (51,670) 2023 144,988 2024 137,030 Thereafter - ($154,890) 2. PEPFF Pension Costs At December 31, 2020, the City reported a liability of $5,329,107 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2020 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 proportionate share 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, 2019 through June 30, 2020, relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.4043% at the end of the measurement period and 0.4147% for the beginning of the period. The State of Minnesota also contributed $13.5 million to PEPFF during the plan fiscal year ended June 30, 2020. The contribution consisted of $4.5 million in direct state aid that does meet the definition of a special funding situation and $9.0 million in fire state aid that does not 79 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Police and Fire Fund until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in fire state aid will continue until the fund is 90 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent funded, whichever occurs later. As a result, the State of Minnesota is included as a non-employer contributing entity in the PEPFF Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $4.5 million in direct state aid. PEPFF employers need to recognize their proportionate share of the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2020, the City recognized pension expense of $587,156 for its proportionate share of the Police and Fire Plan’s pension expense. In addition, the City recognized an additional $38,622 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $4.5 million to the PEPFF. The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in fire state aid. The City also recognized $38,622 for the year ended December 31, 2020 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 Police and Fire Fund. At December 31, 2020, 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 Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $234,028 $249,157 Changes in actuarial assumptions 1,178,250 3,262,573 Net collective difference between projected and actual investment earnings 177,546 - Changes in proportion 637,000 600,107 Contributions paid to PERA subsequent to the measurement date 395,978 Total $2,622,802 $4,111,837 80 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 The $395,978 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, 2021. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as outflows: Year Ended Pension December 31, Expense 2021 ($423,728) 2022 (1,479,743) 2023 412,797 2024 200,381 2025 (14,539) Thereafter - ($1,304,832) The net pension liability will be liquidated by the general, sewer funds, storm and liquor. E. Actuarial Assumptions The total pension liability in the June 30, 2020 actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50 percent per year Active Member Payroll Growth 3.25 percent per year Investment Rate of Return 7.50 percent Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25% per year for GERF and 1.0% per year for PEPFF. Actuarial assumptions used in the June 30, 2020 valuation were based on the results of actuarial experience studies. The most recent four-year experience study for GERF was completed in 2019. The assumption changes were adopted by the Board and become effective with the July 1, 2020 actuarial valuation. The most recent four-year experience study for PEPFF was completed in 2020. The following changes in actuarial assumptions and plan provisions occurred in 2020: General Employees Fund Changes in Actuarial Assumptions:  The price inflation assumption was decreased from 2.50% to 2.25%.  The payroll growth assumption was decreased from 3.25% to 3.00%.  As recommended in the June 30, 2019 experience study, assumed salary increase rates were decreased 0.25% and assumed rates of retirement were changed resulting in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination and disability were also changed.  The base mortality tables were changed from RP-2014 tables to Pub-2010 tables, with adjustments. 81 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020  The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.  The assumed spouse age difference was changed from two years older for females to one year older.  The assumed number of married male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. Changes in Plan Provisions:  Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020. Police and Fire Fund Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2018 to MP-2019. 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: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic Stock 35.5% 5.10% Internal Stock 17.5% 5.30% Bonds (Fixed Income) 20.0% 0.75% Alernative Assets (Private Markets) 25.0% 5.90% Cash 2.0% 0.00% Total 100% F. Discount Rate The discount rate used to measure the total pension liability in 2020 was 7.5%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at the rate set in Minnesota statutes. Based on that assumption, the fiduciary net position of the GERF and the PEPFF 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. 82 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 in 1% Increase in Discount Rate (6.5%) Discount Rate (7.5%) Discount Rate (8.5%) City's Proportionate share of the GERF net pension liability $9,089,772 $5,671,702 $2,852,070 City's Proportionate share of the PEPFF net pension liability $10,621,677 $5,329,107 $950,432 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 at www.mnpera.org. I. Pension Expense Pension expense recognized by the City for the year ended December 31, 2020 is as follows GERF $151,294 PEPFF 587,156 Total $738,450 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 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 83 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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 2020 were: Required Employer Employee (Pension Expense) Employee Employer Rate $2,138 $2,138 5% 5% 5% Contribution Amount Percentage of Covered Payroll 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 $176,560 and $166,649 in State Aid to the Association for December 31, 2020 and 2019, respectively. This transaction is recorded as revenue and expenditures in the City’s financial statements. During December 31, 2020 and as of December 31, 2020, the Association held no securities issued by the City or other related parties. 10. Post-Employment Benefits Other Than Pensions (OPEB) A. Plan Description In addition to providing the pension benefits described in Note 7, 8 and 9, the City provides post employment health care benefits, as defined in paragraph B, through its group health insurance plan (the plan). The plan is a single-employer defined benefit OPEB plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a and 299A.465. The 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. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. 84 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 B. Benefits Provided 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. The City provides health coverage for peace officers or firefighters disabled or killed in the line of duty in accordance with Minnesota Statute 299A.465. The amount of coverage provided is equal to the employer portion of health insurance premiums that would have otherwise been paid if the officer or firefighter was an active employee. During 2020, benefits were provided to three officers disabled in the line of duty. 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 age 65, Medicare becomes the primary insurer. C. Participants As of the January 1, 2019 actuarial valuation date, participants of the plan consisted of: Active employees 138 Inactive employees or beneficiaries currently receiving benefits 6 Total 144 85 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 D. Total OPEB Liability and Changes in Total OPEB Liability The City’s total OPEB liability of $1,598,105 was measured as of January 1, 2020 and was determined by an actuarial valuation as of January 1, 2019. Changes in the total OPEB liability during 2020 were: Balance - beginning of year $1,403,278 Changes for the year: Service cost 29,976 Interest cost 53,743 Changes of benefit terms - Differences between expected and actual experience - Changes in assumptions 149,391 Benefit payments (38,283) Net changes 194,827 Balance - end of year $1,598,105 There were no plan changes since the measurement date of January 1, 2019. E. Actuarial Assumptions and Other Inputs The total OPEB liability in the January 1, 2019 actuarial valuation, as updated to the measurement date of January 1, 2020 was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 2.50% Salary increases 3.00% Discount rate 2.90% 20-year muncipal bond yield 3.80% Healthcare cost trend rates 6.5% in 2019 decreasing to 5.00% over 6 years. Retirees' share of benefit-related costs 100% Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return was based on published rate information for 20-year high quality, tax exempt, general obligation municipal bonds as of the measurement date. Mortality rates were based on the RP-2014 Mortality tables (Blue Collar for Public Safety, White Collar for others) with MP-2018 generational improvement scale. The actuarial assumptions (retirement withdrawal) used in the January 1, 2019 valuation are similar to those used to value pension liabilities for Minnesota public employees. The state pension plans base their assumptions on periodic experience studies. 86 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 There were no changes in assumptions and other inputs since the prior measurements date are as follows: Changes since prior valuation:  The health care trend rates were changed to better anticipate short term and long term medical increases.  The mortality tables were updated from the RP-2014 White Collar Mortality Tables with MP- 2016 Generational Improvement Scale (with Blue Collar adjustment for Police and Fire Personnel) to the RP-2014 White Collar Mortality Tables with MP-2018 Generational Improvement Scale (with Blue Collar adjustment for Police and Fire Personnel).  The retirement and withdrawal tables for Police and Fire Personnel were updated.  The discount rate was changed from 3.80% to 2.90%. F. Sensitivity of the Total OPEB Liability to Changes in The Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1% lower (1.90%) or 1% higher (3.90%) than the current discount rate: 1% Decrease Discount Rate 1% Increase (1.90%) (2.90%) (3.90%) Total OPEB liability $1,795,973 $1,598,105 $1,428,276 G. Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (5.25% decreasing to 4.00% over 6 years) or 1% higher (7.25% decreasing to 6.00% over 6 years) than the current healthcare cost trend rates: Healthcare Cost 1% Decrease Trend Rates 1% Increase (5.25% decreasing to 4.00%) (6.25% decreasing to 5.00%) (7.25% decreasing to 6.00%) Total OPEB liability $1,407,669 $1,598,105 $1,820,987 87 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 H. OPEB Expense and Deferred Outflows and Inflows of Resources Related To OPEB For the year ended December 31, 2020, the City recognized $137,917 of OPEB expense. At December 31, 2020, the City reported deferred outflows and inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual experience $258,916 $ - Changes in actuarial assumptions 130,717 45,771 Contributions subsequent to the measurement date 46,423 - Total $436,056 $45,771 $46,423 reported as deferred outflows of resources related to OPEB resulting from City contributions after the measurement date will be recognized as a reduction of the OPEB liability in the year ended December 31, 2020. Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended OPEB December 31, Expense 2021 $54,198 2022 54,198 2023 54,198 2024 54,198 2025 54,198 Thereafter 72,872 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: Interfund Interfund Receivables Payables Due From/Due To: Major Funds: General Fund $25,334 $ - Community Investment (1)3,285,970 Water (1) - 3,285,970 Nonmajor Governmental Funds: Police Activity - 25,334 Total $3,311,304 $3,311,304 (1) Interfund loan from Community Investment Fund to Water Fund to support capital costs related to the Locke Park Water Treatment Improvement Project 88 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Interfund receivables and payables of the HRA component unit at December 31, 2020 are as follows: Interfund Interfund Receivables Payables Due From/Due To: General Fund $8,822,785 $ - Capital Projects Funds: Lake Pointe - - Gateway East - 241,653 Gateway West - 270,109 Gateway Northeast - 3,270,928 BAE Hazardous Sub District - 2,839,093 Northern Stacks VIII - 32,187 Holly Center - 2,961 Locke Point Park - 2,165,854 Total $8,822,785 $8,822,785 The above balances are not expected to be eliminated within one year of December 31, 2020. Interfund Transfers: Transfer In Transfer Out Governmental Funds: Major Funds: General Fund (1) (2) $2,249,000 $ - Street Improvements (2) - 98,200 Community Investment (3) - 100,000 Nonmajor Funds (4) (5) 378,312 2,171,608 Total governmental funds 2,627,312 2,369,808 Proprietary Funds: Liquor 80,996 338,500 Total proprietary funds 80,996 338,500 Total $2,708,308 $2,708,308 (1) Transfer in of $2,062,300 of Coronavirus Relief monies; $88,500 from Liquor fund to finance General fun (2) Transfer of $98,200 to finance General Fund (3) Transfer of $100,000 from Community Investment to finance park improvements (4) Transfer of from Liquor fund to Capital Equipment ($175,000) and Park Improvement ($75,000) (5) Transfers out of $2,171,608 Coronavirus Relief monies 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. 89 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 12. Fund Balance A. CLASSIFICATIONS At December 31, 2020, a summary of the governmental fund balance classifications are as follows: Debt Street Community TIF 20 Note Other Total Component General Fund Service Improvements Investment Payoff Governmental City Unit Nonspendable: Inventory $65,779 $ - $ - $ - $ - $ - $65,779 $ - Mortgage loan receivable - - - - - - - 1,389,674 Total nonspendable 65,779 - - - - - 65,779 1,389,674 Restricted for: Donations 24,513 - - - - 2,218 26,731 - Debt service - 3,434,598 - - 8,478 - 3,443,076 - Tax increment - - - - - - - 2,352,805 Police forfeitures - - - - - 67,217 67,217 - Cable television equipment - - - - - 54,202 54,202 - Unspent bond proceeds - - - - - - - - Total restricted 24,513 3,434,598 - - 8,478 123,637 3,591,226 2,352,805 Committed to: Cable television programming - - - - - 1,176,556 1,176,556 - Recycling programs - - - - - 89,289 89,289 - Nature Center activities - - - - - 200,143 200,143 - Community investment - - - 9,074,953 - - 9,074,953 - Police activity - - - - - 16,485 16,485 - Capital equipment - - - - - 977,377 977,377 - Emergency reserves - - - - - 15,628 15,628 - Housing loan program - - - - - - - 1,771,854 Total committed - - - 9,074,953 - 2,475,478 11,550,431 1,771,854 Assigned to: Capital improvements - - 2,255,127 - - 4,107,071 6,362,198 - Total assigned - - 2,255,127 - - 4,107,071 6,362,198 - Unassigned 13,603,533 - - - - (567) 13,602,966 7,978,296 Total $13,693,825 $3,434,598 $2,255,127 $9,074,953 $8,478 $6,705,619 $35,172,600 $13,492,629 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, 2020, the unassigned fund balance of the General Fund was $13,603,533, compared to its targeted unassigned fund balance of between $6,497,502 and $9,282,145. 90 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 13. Tax Increment Districts The HRA is the administering authority for the following Tax Increment Districts: Fiscal Retained Year Disparity By Established District District Name Current Original Captured Adjustments Authority 1985 6 Lake Pointe $851,966 $326,940 $525,026 $ - $525,026 1992 12 McGlynn's - - - - - 1995 13 Satellite Lane Apartments 44,792 1,403 43,389 - 43,389 2000 17 Gateway East 46,334 3,291 43,043 - 43,043 2007 18 Gateway West 44,261 4,693 39,568 - 39,568 2007 19 Main Street 215,236 45,628 169,608 - 169,608 2013 20 TIF 20 HSS 20A 2,244,603 - 2,244,603 - 2,244,603 2009 21 Gateway Northeast 418,027 28,419 389,608 - 389,608 2013 22 Northstar Transit Station 818,512 483,950 334,562 - 334,562 2017 23 Locke Point Park 25,571 13,808 11,763 - 11,763 2018 24 Northern Stacks VIII 110,032 115,566 - - - 1995 HR1/S5 Housing Replacement - - - - - 1995 HR1/T7 Housing Replacement 2,592 384 2,208 - 2,208 2017 HR1/V5 Housing Replacement 2,222 208 2,014 - 2,014 1995 HR1/V6 Housing Replacement 5,074 316 4,758 - 4,758 1995 HR1/V9 Housing Replacement 2,421 286 2,135 - 2,135 1995 HR1/W1 Housing Replacement 2,105 357 1,748 - 1,748 1995 HR1/W2 Housing Replacement 2,026 286 1,740 - 1,740 1995 HR1/W6 Housing Replacement 7,698 516 7,182 - 7,182 1995 HR1/W7 Housing Replacement 2,865 170 2,695 - 2,695 1995 HR1/X8 Housing Replacement 5,660 637 5,023 - 5,023 2017 HR1/X9 Housing Replacement 2,978 164 2,814 - 2,814 1995 HR1/Y1 Housing Replacement 2,599 335 2,264 - 2,264 1995 HR1/Y2 Housing Replacement 2,602 302 2,300 - 2,300 2017 HR1/Y5 Housing Replacement 2,826 251 2,575 - 2,575 2015 HR1/Y4 Housing Replacement 2,776 328 3,104 - 3,104 2020 HR1/AA5 Housing Replacement 1,735 491 2,226 - 2,226 2020 HR1/AA7 Housing Replacement 1,856 498 2,354 - 2,354 Totals $4,869,369 $1,029,227 $3,848,310 $ - $3,848,310 Tax Capacity Values 14. Commitments and Contingencies A. Risk Managements 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 $25,000 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 91 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. 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, 2020, the Self Insurance Fund has accumulated equity in the amount of $953,380 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, 2020. 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 92 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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. The City has four 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 $506,815. At December 31, 2020, the principal amount outstanding on the note was $20,000,000. TIF District #19, Main Street: 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 $131,558 At December 31, 2020, the principal amount outstanding on the note was $1,500,000. TIF District #20, BAE Northern Stacks: Originally issued in 2016, and reissued in 2018 in the principal sum of $15,775,000 with an interest rate of 4.69% per annum. Principal and interest shall be paid on August 1, 2019 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 $1,603,873. At December 31, 2020, the principal amount outstanding on the note was $15,775,000. The outstanding balance was paid in 2020. 93 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 TIF District #24, Northern Stacks Phase VIII: Issued in 2018 in the principal sum of $660,000 with an interest rate of 5.75% per annum. Principal and interest shall be paid on August 1, 2019 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. There were no current year abatement (TIF note payments). At December 31, 2020, the principal amount outstanding on the note was $653,172. F. Construction Commitments At December 31, 2020, the City had construction project contracts in progress. The commitments related to the remaining contract balances amounted to $1,005,190. 15. Leases A. Lease Expense The City leases space for one of its liquor stores. Total costs for this lease was $238,421 for the year ended December 31, 2020. The future minimum lease payments for this lease are as follows: Year Ending December 31, Amount 2021 145,841$ 2022 145,841 2023 121,534 94 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 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, 2020, totaled $413,771. Terms of each lease are as follows: Next (passive) Annual Lease Renewal Renewal Term Final Lease Lessee / Location Adjustment Factor* Date Duration Date Clearwire - Commons Tower #1 Greater of 4% or CPI-U 2/22/2025 5 Years 2/22/2035 AT&T - Marion Hills Greater of 5% or CPI-U 7/1/2025 5 Years 7/1/2025 T-Mobile - Commons Tower #1 Greater of 2% or CPI-U up to 5% 3/27/2025 5 Years 3/28/2030 Verizon - Commons Tower #1 3% 6/6/2023 5 Years 6/6/2038 Clearwire - Marion Hills Greater of 4% or CPI-U 2/22/2025 5 Years 2/22/2035 Clearwire - TH65 Tower #2 Greater of 4% or CPI-U 2/22/2025 5 Years 2/22/2035 T-Mobile - Marion Hills Greater of 2% or CPI-U up to 5% 9/30/2025 5 Years 9/30/2021 Sprint - TH65 Tower #2 Greater of 5% or CPI-U 10/1/2025 5 Years 10/1/2025 Crown Castle - Well #13 Greater of 5% or CPI-U 11/6/2023 5 Years 11/6/2023 AT&T - Public Works Garage Greater of 5% or CPI-U 11/30/2023 5 Years 11/30/2028 *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 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, 2020, there are four series outstanding issued after July 1, 1995 with an aggregate principal amount payable of $45,167,365. There were twenty-two series issued prior to July 1, 1995. The aggregate principal amount payable for the twenty-two series could not be determined; however, their original issue amounts totaled $65.2 million. 95 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 17. Deficit Fund Balances At December 31, 2020, individual funds with a deficit fund balance are as follows: Primary government: Internal Service Fund: Employee Benefits (11,488,053)$ Capital Project Fund: Special Assessment Construction (567) Component unit: Gateway NorthEast (3,238,375)$ BAE Hazardous Sub District (2,836,443) Locke Point Park (2,184,495) Gateway East (203,794) Lake Pointe (241,254) Gateway West (259,079) Main Street (2,541) Northern Stacks VIII (32,187) Holly Center (6,815) 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, 2020 is $3,251,184. 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. 19. Recently Issued Accounting Standards The Governmental Accounting Standards Board (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 87 Leases. The provisions of this Statement are effective for reporting periods beginning after June 15, 2021. Statement No. 89 Accounting for Interest Cost Incurred before the End of a Construction Period. The provisions of this Statement are effective for reporting periods beginning after December 15, 2020. Statement No. 91 Conduit Debt Obligations. The provisions of this Statement are effective for reporting periods beginning after December 15, 2021. Statement No. 92 Omnibus 2020. The provisions of this Statement are effective for reporting periods beginning after June 15, 2021. 96 CITY OF FRIDLEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Statement No. 93 Replacement of Interbank Offered Rates. The provisions of this Statement contain multiple effective dates, the first being for reporting periods beginning after June 15, 2020. Statement No. 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2022. Statement No. 96 Subscription – Based Information Technology Arrangements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2022. The effect these standards may have on future financial statements is not determinable at this time, but it is expected that Statement No. 87 may have a material impact. 20. Subsequent Events and Uncertainties Subsequent events have been evaluated for recognition or disclosure through May 12, 2021 the date the financial statements were available to be issued. Subsequent to year-end, the HRA entered into two TIF Notes of Fridley Market Rate Apartments at Northstar in the amount of $2,845,250 dated March 3, 2021 and Fridley Senior Apartments at Northstar in the amount of $3,204,650 dated May 7, 2021. Additionally, the City anticipates receiving funding from the Fiscal Recovery Fund, American Rescue Plan, of approximately $3,100,000 over the next two years. The total amount of funds is not final and restrictions on use is not available at this time. 97 This page intentionally left blank 98 REQUIRED SUPPLEMENTARY INFORMATION 99 Exhibit B-1 Page 1 of 4 Variance with Final Budget - 2019 Actual Positive Actual Original Final Amounts (Negative) Amounts Revenues: Taxes and special assessments: Current ad valorem taxes $12,458,025 $12,458,025 $12,396,841 ($61,184) $11,679,314 Delinquent ad valorem taxes-net of abatements (31,600) (31,600) 77,318 108,918 (6,214) Penalties and interest 12,700 12,700 2,726 (9,974)9,793 Special assessments 19,100 19,100 33,263 14,163 16,357 Total taxes and special assessments 12,458,225 12,458,225 12,510,148 51,923 11,699,250 Licenses and permits: Licenses: Rental 165,000 165,000 172,044 7,044 167,214 Business 84,200 84,200 64,208 (19,992) 80,160 All other 31,700 31,700 38,535 6,835 37,510 Permits 755,400 755,400 1,027,184 271,784 952,848 Total licenses and permits 1,036,300 1,036,300 1,301,971 265,671 1,237,732 Intergovernmental revenue: Federal grants 40,000 40,000 183,318 143,318 102,586 State maintenance aid 387,600 387,600 455,586 67,986 419,704 Local grants 805,700 805,700 795,186 (10,514) 986,097 Other state grants 4,900 4,900 7,858 2,958 24,086 Police and fire pension 524,000 524,000 606,875 82,875 618,629 Total intergovernmental revenue 1,762,200 1,762,200 2,048,823 286,623 2,151,102 Charges for services: General government 1,137,800 1,137,800 1,136,776 (1,024) 1,043,742 Public safety 402,800 402,800 404,873 2,073 438,357 Public works 366,200 366,200 415,207 49,007 376,397 Community development 54,000 54,000 58,998 4,998 73,249 Recreation 176,400 176,400 22,097 (154,303) 152,751 Total charges for services 2,137,200 2,137,200 2,037,951 (99,249) 2,084,496 Fines and forfeits 166,800 166,800 116,184 (50,616) 152,274 Investment income: Interest and dividends 74,500 74,500 214,873 140,373 169,126 Net change in the fair market value of investments - - 85,211 85,211 84,085 Total investment income 74,500 74,500 300,084 225,584 253,211 Miscellaneous revenue: Insurance and other reimbursements 54,185 54,185 58,659 4,474 73,339 Gambling tax 52,000 52,000 30,645 (21,355) 66,391 Donations 16,200 16,200 9,862 (6,338) 22,578 Miscellaneous 18,600 18,600 12,910 (5,690) 54,199 Total miscellaneous revenue 140,985 140,985 112,076 (28,909) 216,507 Total revenues 17,776,210 17,776,210 18,427,237 651,027 17,794,572 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2020 With Comparative Actual Amounts For The Year Ended December 31, 2019 2020 Budgeted Amounts The accompanying notes are an integral part of these financial statements. 100 Exhibit B-1 Page 2 of 4 Variance with Final Budget - 2019 Actual Positive Actual Original Final Amounts (Negative) Amounts Expenditures: General government: City management: Mayor and council: Current: Personal services $105,400 $105,400 $92,240 $13,160 $93,126 Supplies and other charges 54,590 54,590 49,985 4,605 37,424 Total mayor and council 159,990 159,990 142,225 17,765 130,550 City manager: Current: Personal services 323,350 323,350 315,153 8,197 287,516 Supplies and other charges 33,870 33,870 27,696 6,174 63,081 Total city manager 357,220 357,220 342,849 14,371 350,597 Legal: Current: Supplies and other charges 405,600 405,600 374,672 30,928 355,163 Total city management 922,810 922,810 859,746 63,064 836,310 Finance: Accounting: Current: Personal services 599,050 599,050 614,709 (15,659) 577,529 Supplies and other charges 93,900 93,900 85,959 7,941 67,711 Total accounting 692,950 692,950 700,668 (7,718) 645,240 Assessing: Current: Personal services 235,200 235,200 234,093 1,107 227,501 Supplies and other charges 17,680 17,680 5,737 11,943 14,714 Total assessing 252,880 252,880 239,830 13,050 242,215 ITS: Current: Personal services 342,900 342,900 341,714 1,186 334,602 Supplies and other charges 242,650 242,650 220,432 22,218 205,293 Total ITS 585,550 585,550 562,146 23,404 539,895 Elections: Current: Personal services 83,500 83,500 67,715 15,785 - Supplies and other charges 12,250 12,250 11,732 518 7,385 Total elections 95,750 95,750 79,447 16,303 7,385 City clerk/records: Personal services 100,950 100,950 101,649 (699) 100,515 Supplies and other charges 7,400 7,400 11,207 (3,807) 2,368 Total city clerk/records 108,350 108,350 112,856 (4,506) 102,883 Total finance 1,735,480 1,735,480 1,694,947 40,533 1,537,618 Emergency reserves: Current: Supplies and other charges 89,250 89,250 392,640 (303,390) - Nondepartmental: Current: Personal services 35,000 35,000 - 35,000 - Supplies and other charges 23,090 23,090 32,600 (9,510) 52,507 Total nondepartmental 58,090 58,090 32,600 25,490 52,507 With Comparative Actual Amounts For The Year Ended December 31, 2019 2020 Budgeted Amounts CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2020 The accompanying notes are an integral part of these financial statements. 101 Exhibit B-1 Page 3 of 4 Variance with Final Budget - 2019 Actual Positive Actual Original Final Amounts (Negative) Amounts Expenditures: (continued) General government: (continued) Facilities management: Current: Personal services $219,000 $219,000 $222,713 ($3,713) $198,662 Supplies and other charges 287,700 287,700 349,906 (62,206) 278,629 Total facilities management 506,700 506,700 572,619 (65,919) 477,291 Marketing and communication: Current: Personal services 97,300 97,300 98,840 (1,540) 91,195 Supplies and other charges 47,200 47,200 36,519 10,681 - Total marketing and communication 144,500 144,500 135,359 9,141 91,195 Employee resources: Current: Personal services 371,900 371,900 361,914 9,986 348,543 Supplies and other charges 53,750 53,750 16,271 37,479 14,031 Total employee resources 425,650 425,650 378,185 47,465 362,574 Total general government 3,882,480 3,882,480 4,066,096 (183,616) 3,357,495 Public safety: Police: Police protection: Current: Personal services 6,390,600 6,390,600 6,327,635 62,965 6,052,360 Supplies and other charges 660,960 660,960 580,511 80,449 592,525 Total police protection 7,051,560 7,051,560 6,908,146 143,414 6,644,885 Emergency management: Current: Supplies and other charges 18,100 18,100 10,723 7,377 15,346 Total police 7,069,660 7,069,660 6,918,869 150,791 6,660,231 Fire: Fire protection: Current: Personal services 1,110,500 1,110,500 1,044,021 66,479 1,036,650 Supplies and other charges 388,200 388,200 413,235 (25,035) 392,361 Total fire protection 1,498,700 1,498,700 1,457,256 41,444 1,429,011 Rental inspections: Current: Personal services 216,700 216,700 160,564 56,136 221,178 Supplies and other charges 10,680 10,680 3,978 6,702 7,142 Total rental inspections 227,380 227,380 164,542 62,838 228,320 Total public safety 8,795,740 8,795,740 8,540,667 255,073 8,317,562 Public works: Engineering: Current: Personal services 237,000 237,000 283,299 (46,299) 252,946 Supplies and other charges 118,000 118,000 120,258 (2,258) 126,864 Total engineering 355,000 355,000 403,557 (48,557) 379,810 Lighting: Current: Personal services 28,000 28,000 27,444 556 27,102 Supplies and other charges 230,600 230,600 193,241 37,359 198,363 Total lighting 258,600 258,600 220,685 37,915 225,465 CITY OF FRIDLEY, MINNESOTA With Comparative Actual Amounts For The Year Ended December 31, 2019 2020 Budgeted Amounts REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2020 The accompanying notes are an integral part of these financial statements. 102 Exhibit B-1 Page 4 of 4 Variance with Final Budget - 2019 Actual Positive Actual Original Final Amounts (Negative) Amounts Expenditures: (continued) Park maintenance: Current: Personal services 722,200 722,200 649,114 73,086 660,839 Supplies and other charges 240,400 240,400 185,006 55,394 232,878 Total park maintenance 962,600 962,600 834,120 128,480 893,717 Street: Current: Personal services 817,800 817,800 840,534 (22,734) 800,075 Supplies and other charges 323,600 323,600 299,585 24,015 365,749 Capital outlay - - - 25,659 Total street 1,141,400 1,141,400 1,140,119 1,281 1,191,483 Fleet services: Current: Personal services 398,050 398,050 390,569 7,481 370,124 Supplies and other charges 121,900 121,900 32,369 89,531 101,047 Total garage 519,950 519,950 422,938 97,012 471,171 Forestry Current: Supplies and other charges 76,900 76,900 62,386 14,514 67,522 Total forestry 76,900 76,900 62,386 14,514 67,522 Total public works 3,314,450 3,314,450 3,083,805 230,645 3,229,168 Community development: Building inspection: Current: Personal services $330,800 $330,800 $311,549 $19,251 $299,363 Supplies and other charges 120,120 120,120 91,584 28,536 84,747 Total building inspection 450,920 450,920 403,133 47,787 384,110 Planning: Current: Personal services 508,700 508,700 432,745 75,955 469,045 Supplies and other charges 156,820 156,820 200,537 (43,717) 154,670 Total planning 665,520 665,520 633,282 32,238 623,715 Total community development 1,116,440 1,116,440 1,036,415 80,025 1,007,825 Parks and recreation: Current: Personal services 562,700 562,700 447,756 114,944 404,507 Supplies and other charges 291,100 291,100 70,134 220,966 213,328 Total parks and recreation 853,800 853,800 517,890 335,910 617,835 Total expenditures 17,962,910 17,962,910 17,244,873 718,037 16,529,885 Excess (deficiency) of revenues over (under) expenditures (186,700) (186,700) 1,182,364 1,369,064 1,264,687 Other financing sources (uses): Transfers in 186,700 2,231,700 2,249,000 17,300 186,700 Transfers out - - - - (2,333,040) Total other financing sources 186,700 2,231,700 2,249,000 17,300 (2,146,340) Net change in fund balance $ - $2,045,000 3,431,364 $1,386,364 (881,653) Fund balance - January 1 10,262,461 11,144,114 Fund balance - December 31 $13,693,825 $10,262,461 2020 Budgeted Amounts CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For The Year Ended December 31, 2020 With Comparative Actual Amounts For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 103 Exhibit B-2 2020 2019 2018 Total OPEB Liabilty: Service cost 29,976$ 24,817$ 30,073$ Interest cost 53,743 36,281 14,035 Addition of disabled police offcers - - 659,344 Changes in benefit terms - - - Differences between expected and actual experience - 345,222 - Changes in assumptions 149,391 (61,029) - Benefit payments (38,283) (32,982) (15,301) Net change in total OPEB liability 194,827 312,309 688,151 Total OPEB liability - beginning 1,403,278 1,090,969 402,818 Total OPEB liability - ending 1,598,105$ 1,403,278$ 1,090,969$ Covered payroll $10,759,599 $10,446,213 $10,037,870 Total OPEB liabilty as a percentage of covered payroll 14.9% 13.4%10.9% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2018 and is intended to show a ten year trend. Additional years will be added as they become available. CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS For The Year Ended December 31, 2020 104 Exhibit B-3 City's State's Proportionate City's Proportionate Share of the Net Proportionate City's City's Share (Amount) Pension Liability and Share of the Proportionate Proportionate of the Net the State's Proportionate Net Pension Plan Fiduciary Share Share (Amount) Pension Share of the Net Liability as a Net Position as Measurement Fiscal Year (Percentage) of of the Net Liability Pension Liability Percentage of its a Percentage Date Ending the Net Pension Pension Associated with Associated with Covered Covered of the Total June 30 December 31 Liability Liability (a) City (b) City (a+b) Payroll (c) Payroll ((a+b)/c) Pension Liability 2015 2015 0.1004% $5,203,249 $ - $5,203,249 $5,903,611 88.1% 78.2% 2016 2016 0.1018% 8,265,655 107,922 8,373,577 6,281,307 133.3% 68.9% 2017 2017 0.0979% 6,249,871 78,569 6,328,440 6,269,774 100.9% 75.9% 2018 2018 0.0976% 5,414,448 177,601 5,592,049 6,461,494 86.5% 79.5% 2019 2019 0.0919% 5,080,945 157,993 5,238,938 6,505,506 80.5% 80.2% 2020 2020 0.0946% 5,671,702 174,864 5,846,566 6,747,539 86.6% 79.1% * The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY* - GENERAL EMPLOYEES RETIREMENT FUND For The Year Ended December 31, 2020 See accompanying notes to the required supplementary information. 105 Exhibit B-4 Statutorily Contributions in Contribution Contributions as a Required Relation to the Deficiency Covered Percentage of Fiscal Year Contribution Statutorily Required (Excess) Payroll Covered Ending (a) Contribution (b) (a-b) (c) Payroll (b/c) December 31, 2015 $466,069 $466,069 $ - $6,214,253 7.5% December 31, 2016 458,639 458,639 - 6,115,187 7.5% December 31, 2017 479,410 479,410 - 6,392,134 7.5% December 31, 2018 480,597 480,597 - 6,407,960 7.5% December 31, 2019 495,872 495,872 - 6,611,626 7.5% December 31, 2020 525,081 525,081 - 7,001,082 7.5% * The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS* - GENERAL EMPLOYEES RETIREMENT FUND For The Year Ended December 31, 2020 See accompanying notes to the required supplementary information. 106 Exhibit B-5 Proportionate Share Proportionate of the Net Pension Plan Fiduciary Proportion Share (Amount) Liability as a Net Position as Measurement Fiscal Year (Percentage) of of the Net Percentage of its a Percentage Date Ending the Net Pension Pension Covered Covered of the Total June 30 December 31 Liability Liability (a) Payroll (b) Payroll (a/b) Pension Liability 2015 2015 0.4170% $4,738,096 $3,821,428 124.0%86.6% 2016 2016 0.4050% 16,253,355 3,898,494 416.9%63.9% 2017 2017 0.3710% 5,008,941 3,812,191 131.4%85.4% 2018 2018 0.4185% 4,460,779 4,265,364 104.6%88.8% 2019 2019 0.4147% 4,414,900 4,373,847 100.9%89.3% 2020 2020 0.4043% 5,329,107 4,560,658 116.8%87.2% * The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY* - PUBLIC EMPLOYEES POLICE AND FIRE FUND For The Year Ended December 31, 2020 See accompanying notes to the required supplementary information. 107 Exhibit B-6 Statutorily Contributions in Contribution Contributions as a Required Relation to the Deficiency Covered Percentage of Fiscal Year Contribution Statutorily Required (Excess) Payroll Covered Ending (a) Contribution (b) (a-b) (c) Payroll (b/c) December 31, 2015 $644,283 $644,283 $ - $3,977,056 16.20% December 31, 2016 606,767 606,767 - 3,745,475 16.20% December 31, 2017 653,014 653,014 - 4,030,951 16.20% December 31, 2018 700,029 700,029 - 4,321,166 16.20% December 31, 2019 751,753 751,753 - 4,435,121 16.95% December 31, 2020 807,829 807,829 - 4,564,003 17.70% * The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS* - PUBLIC EMPLOYEES POLICE AND FIRE FUND For The Year Ended December 31, 2020 See accompanying notes to the required supplementary information. 108 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2020 A. LEGAL COMPLIANCE – BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the expenditure category level. B. OPEB INFORMATION No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 to pay related benefits. Changes since prior valuation: - No benefit changes. - The discount rate was changed from 3.80% to 2.90%. C. PENSION INFORMATION PERA – General Employees Retirement Fund 2020 Changes Changes in Actuarial Assumptions: - The price inflation assumption was decreased from 2.50% to 2.25%. - The payroll growth assumption was decreased from 3.25% to 3.00%. - As recommended in the June 30, 2019 experience study, assumed salary increase rates were decreased 0.25% and assumed rates of retirement were changed resulting in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination and disability were also changed. - The base mortality tables were changed from RP-2014 tables to Pub-2010 tables, with adjustments. - The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. - The assumed spouse age difference was changed from two years older for females to one year older. - The assumed number of married male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. Changes in Plan Provisions: - Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 Changes Changes in Actuarial Assumptions - The mortality projection scale was changed from MP-2017 to MP-2018 109 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2020 Changes in the Plan Provisions - The employer supplemental contribution was changed prospectively, decreasing from $31 million to $21 million per year. The State’s special funding contribution was changed prospectively, requiring $16 million due per year through 2031. 2018 Changes Changes in Actuarial Assumptions: - The mortality projection scale was changed from MP-2015 to MP-2017. - The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 Changes Changes in Actuarial Assumptions: - 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. 2016 Changes Changes in Actuarial Assumptions: - The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years. - The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%. - Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. PERA – Public Employees Police and Fire Fund 2020 Changes Changes in Actuarial Assumptions: - The mortality projection scale was changed from MP-2018 to MP-2019. 2019 Changes Changes in Actuarial Assumptions - The mortality projection scale was changed from MP-2017 to MP-2018 Changes in the Plan Provisions - There have been no changes since the prior valuation. 2018 Changes Changes in Actuarial Assumptions:  The mortality projection scale was changed from MP-2016 to MP-2017. 110 CITY OF FRIDLEY, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2020 2017 Changes Changes in Actuarial Assumptions:  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.  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. 2016 Changes Changes in Actuarial Assumptions: - The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% thereafter to 1.0% per year for all future years. - The assumed investment return was changed from 7.9% to 7.5%. The single discount rate changed from 7.9% to 5.6%. - The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. 111 This page intentionally left blank 112 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 113 This page intentionally left blank 114 SPECIAL REVENUE FUNDS A Special Revenue Fund accounts for revenues derived from specific taxes or other earmarked revenue sources. They are usually required by statute or local ordinance and/or resolution to finance particular functions, activities or governments. CAPITAL PROJECT FUNDS The Capital Project Funds are used to account for the resources expended to acquire permanent or long-term assets. 115 Exhibit C-1 Special Revenue Capital Project 2020 2019 Cash and investments $1,467,796 $5,048,694 $6,516,490 $6,392,060 Receivables: Accounts 148,407 - 148,407 132,324 Taxes 16,131 382 16,513 8,663 Special assessments - 79,991 79,991 73,441 Due from other governments 200,229 6,683 206,912 545,350 Due from component unit - 475,508 475,508 487,994 Total assets $1,832,563 $5,611,258 $7,443,821 $7,639,832 Liabilities: Accounts payable $55,698 $282,000 $337,698 $235,871 Deposits payable 200 32,936 33,136 33,938 Contracts payable - 132,317 132,317 77,918 Due to other governments 43,661 - 43,661 38,659 Due to other funds 25,334 - 25,334 33,722 Salaries payable 29,145 - 29,145 21,473 Total liabilities 154,038 447,253 601,291 441,581 Deferred inflows of resources: Unavailable revenue 56,787 80,124 136,911 114,080 Fund balance: Restricted 123,637 - 123,637 101,698 Committed 1,498,101 977,377 2,475,478 2,506,571 Assigned - 4,107,071 4,107,071 4,475,902 Unassigned - (567) (567) - Total fund balance 1,621,738 5,083,881 6,705,619 7,084,171 Total liabilities, deferred inflows of resources, and fund balance $1,832,563 $5,611,258 $7,443,821 $7,639,832 Assets Liabilities, Deferred Inflows of Resources, and Fund Balance Total Nonmajor Governmental Funds CITY OF FRIDLEY, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2020 With Comparative Totals For December 31, 2019 The accompanying notes are an integral part of these financial statements. 116 Exhibit C-2 Special Capital Revenue Project 2020 2019 Revenues: Taxes $411,474 $58,700 $470,174 $443,507 Special assessments - 48,215 48,215 53,735 Licenses and permits 257,032 - 257,032 263,794 Intergovernmental revenue 2,323,873 1,002,956 3,326,829 1,093,668 Charges for services 754,786 2,550 757,336 874,252 Fines and forfeits 52,972 - 52,972 34,533 Investment income: Interest and dividends 42,930 115,497 158,427 131,490 Net change in the fair value of investments 18,140 44,043 62,183 133,890 Contributions and donations 20,579 55,312 75,891 162,444 Miscellaneous 3,528 60,736 64,264 154,643 Total revenues 3,885,314 1,388,009 5,273,323 3,345,956 Expenditures: Current: General government 837,664 261,354 1,099,018 1,318,632 Public safety 370,358 13,348 383,706 513,943 Parks and recreation 557,105 100,275 657,380 626,516 Capital outlay - 1,739,904 1,739,904 1,620,577 Total expenditures 1,765,127 2,114,881 3,880,008 4,079,668 Excess (deficiency) of revenues over (under) expenditures 2,120,187 (726,872) 1,393,315 (733,712) Other financing sources (uses): Proceeds from sale of capital assets - 21,429 21,429 14,724 Transfers in 4,165 374,147 378,312 300,000 Transfers out (2,171,608) - (2,171,608) (50,000) Total other financing sources (uses)(2,167,443) 395,576 (1,771,867) 264,724 Net change in fund balance (47,256) (331,296) (378,552) (468,988) Fund balance - January 1 1,668,994 5,415,177 7,084,171 7,553,159 Fund balance - December 31 $1,621,738 $5,083,881 $6,705,619 $7,084,171 Total Nonmajor Governmental Funds For The Year Ended December 31, 2020 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS With Comparative Totals For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 117 This page intentionally left blank 118 NONMAJOR GOVERNMENTAL FUNDS 119 This page intentionally left blank 120 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. Coronavirus Relief Fund - This fund accounts for the federal Coronavirus Relief Fund. 121 Assets Cable TV Solid Waste Abatement Cash and investments $1,174,945 $980 Receivables: Accounts 114,698 33,709 Taxes - - Due from other governments - 88,057 Total assets $1,289,643 $122,746 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $1,866 $31,458 Deposits payable - - Due to other governments - - Due to other funds - - Salaries payable 7,021 1,999 Total liabilities 8,887 33,457 Deferred inflows of resources: Unavailable revenue 49,998 - Fund balance: Restricted 54,202 - Committed 1,176,556 89,289 Unassigned - - Total fund balance 1,230,758 89,289 Total liabilities, deferred inflows of resources, and fund balance $1,289,643 $122,746 With Comparative Totals For December 31, 2019 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2020 The accompanying notes are an integral part of these financial statements. 122 Exhibit C-3 Drug and Gambling Forfeiture Police Activity Springbrook Nature Center Coronavirus Relief Fund 2020 2019 $67,731 $ - $208,512 $15,628 $1,467,796 $1,540,943 - - - - 148,407 132,324 - - 16,131 - 16,131 8,530 - 90,191 21,981 - 200,229 176,308 $67,731 $90,191 $246,624 $15,628 $1,832,563 $1,858,105 $514 $247 $21,613 $ - $55,698 $56,085 - - 200 - 200 1,002 - 43,089 572 - 43,661 36,323 - 25,334 - - 25,334 33,722 - 5,036 15,089 - 29,145 21,473 514 73,706 37,474 0 154,038 148,605 - - 6,789 - 56,787 40,506 67,217 - 2,218 - 123,637 101,698 - 16,485 200,143 15,628 1,498,101 1,567,296 - - - - - - 67,217 16,485 202,361 15,628 1,621,738 1,668,994 $67,731 $90,191 $246,624 $15,628 $1,832,563 $1,858,105 Totals Nonmajor Special Revenue Funds The accompanying notes are an integral part of these financial statements. 123 Cable TV Solid Waste Abatement Revenues: Taxes $ - $ - Licenses and permits 257,032 - Intergovernmental revenue - 131,884 Charges for services - 366,996 Fines and forfeits - - Investment income: Interest and dividends 28,386 770 Net change in the fair value of investments 10,614 290 Contributions and donations - - Miscellaneous - 1,783 Total revenues 296,032 501,723 Expenditures: Current: General government 333,855 503,809 Public safety - - Parks and recreation - - Total expenditures 333,855 503,809 Excess (deficiency) of revenues over (under) expenditures (37,823)(2,086) Other financing sources (uses): Transfers in - - Transfers out - - Total other financing sources (uses) - - Net change in fund balance (37,823)(2,086) Fund balance - January 1 1,268,581 91,375 Fund balance - December 31 $1,230,758 $89,289 For The Year Ended December 31, 2020 With Comparative Totals For The Year Ended December 31, 2019 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS The accompanying notes are an integral part of these financial statements. 124 Exhibit C-4 Drug and Gambling Forfeiture Police Activity Springbrook Nature Center Coronavirus Relief Fund 2020 2019 $ - $ - $411,474 $ - $411,474 $387,594 - - - - 257,032 263,794 - - 20,381 2,171,608 2,323,873 146,282 - 350,598 37,192 - 754,786 871,752 52,972 - - - 52,972 34,533 - - 3,950 9,824 42,930 29,597 - - 1,432 5,804 18,140 15,347 - - 20,579 - 20,579 87,444 - - 1,745 - 3,528 3,368 52,972 350,598 496,753 2,187,236 3,885,314 1,839,711 - - - - 837,664 1,041,073 23,085 347,273 - - 370,358 179,463 - - 557,105 - 557,105 574,390 23,085 347,273 557,105 0 1,765,127 1,794,926 29,887 3,325 (60,352)2,187,236 2,120,187 44,785 - - 4,165 - 4,165 - - - - (2,171,608)(2,171,608)(50,000) - - 4,165 (2,171,608)(2,167,443)(50,000) 29,887 3,325 (56,187)15,628 (47,256)(5,215) 37,330 13,160 258,548 - 1,668,994 1,674,209 - $67,217 $16,485 $202,361 $15,628 $1,621,738 $1,668,994 Totals Nonmajor Special Revenue Funds The accompanying notes are an integral part of these financial statements. 125 This page intentionally left blank 126 NONMAJOR CAPITAL PROJECT FUNDS The Special Assessment Construction Capital Projects Fund - is established to account for the construction of public improvements, such as residential streets, sidewalks, and storm sewers or for the provision of services that are to be paid primarily by the benefited property owner. Building Improvements Fund - is used to account for capital improvements and purchases. Park Improvements Fund - is used to account for repairs and replacements of city park equipment or park related improvements. Information System Improvement Fund- is established to account for the purchase of new equipment and replacement equipment such as computers, local area and wide area network equipment, printers, peripheral devices, telecommunications improvements, copiers and software. The Capital Equipment Fund - is used to account for the purchase and repair of major capital equipment. 127 Exhibit C-5 Assets Special Assessment Construction Capital Projects Building Improvements Park Improvements Information System Improvement Capital Equipment 2020 2019 Cash and investments $4,825 $1,596,551 $1,940,266 $315,237 $1,191,815 $5,048,694 $4,851,117 Receivables: Taxes 249 - 133 - - 382 133 Special assessments 79,991 - - - - 79,991 73,441 Due from other governments - - - - 6,683 6,683 369,042 Due from component unit - 475,508 - - - 475,508 487,994 Total assets $85,065 $2,072,059 $1,940,399 $315,237 $1,198,498 $5,611,258 $5,781,727 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $5,641 $35,878 $19,360 $ - $221,121 $282,000 $179,786 Deposits payable - - 32,936 - - 32,936 32,936 Contracts payable - - 132,317 - - 132,317 77,918 Due to other governments - - - - - - 2,336 Total liabilities 5,641 35,878 184,613 0 221,121 447,253 292,976 Deferred inflows of resources: Unavailable revenue 79,991 - 133 - - 80,124 73,574 Fund balance: Committed - - - - 977,377 977,377 939,275 Assigned - 2,036,181 1,755,653 315,237 - 4,107,071 4,475,902 Unassigned (567) - - - - (567) - Total fund balance (567) 2,036,181 1,755,653 315,237 977,377 5,083,881 5,415,177 Total liabilities, deferred inflows of resources, and fund balance $85,065 $2,072,059 $1,940,399 $315,237 $1,198,498 $5,611,258 $5,781,727 CITY OF FRIDLEY, MINNESOTA Totals Nonmajor Capital Project Funds With Comparative Totals For December 31, 2019 December 31, 2020 NONMAJOR CAPITAL PROJECT FUNDS SUBCOMBINING BALANCE SHEET The accompanying notes are an integral part of these financial statements. 128 Exhibit C-6 Special Assessment Construction Capital Projects Building Improvements Park Improvements Information System Improvement Capital Equipment 2020 2019 Revenues: Taxes $ - $ - $ - $58,700 $ - $58,700 $55,913 Special assessments 48,215 - - - - 48,215 53,735 Intergovernmental revenue - 20,000 - 200,000 782,956 1,002,956 947,386 Charges for services - - - 2,550 - 2,550 2,500 Investment income: Interest and dividends - 38,106 50,355 4,048 22,988 115,497 101,893 Net change in the fair value of investments (12) 12,962 20,636 652 9,805 44,043 118,543 Contributions and donations - - 55,312 - - 55,312 75,000 Miscellaneous - 19,520 36,479 - 4,737 60,736 151,275 Total revenues 48,203 90,588 162,782 265,950 820,486 1,388,009 1,506,245 Expenditures: Current: General government 59,095 2,383 - 198,439 1,437 261,354 277,559 Public safety - - - - 13,348 13,348 334,480 Parks and recreation - - 83,919 - 16,356 100,275 52,126 Capital outlay - 211,910 515,034 75,613 937,347 1,739,904 1,620,577 Total expenditures 59,095 214,293 598,953 274,052 968,488 2,114,881 2,284,742 Excess (deficiency) of revenues over (under) expenditures (10,892) (123,705) (436,171) (8,102) (148,002) (726,872) (778,497) Other financing sources (uses): Proceeds from sale of capital assets - - - - 21,429 21,429 14,724 Transfers in - - 175,000 24,147 175,000 374,147 300,000 Total other financing sources (uses) - - 175,000 24,147 196,429 395,576 314,724 Net change in fund balance (10,892) (123,705) (261,171) 16,045 48,427 (331,296) (463,773) Fund balance - January 1 10,325 2,159,886 2,016,824 299,192 928,950 5,415,177 5,878,950 Fund balance - December 31 ($567)$2,036,181 $1,755,653 $315,237 $977,377 $5,083,881 $5,415,177 Totals Nonmajor Capital Project Funds CITY OF FRIDLEY, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2020 With Comparative Totals For The Year Ended December 31, 2019 The accompanying notes are an integral part of these financial statements. 129 This page intentionally left blank 130 INDIVIDUAL BUDGET TO ACTUAL STATEMENTS SPECIAL REVENUE FUNDS 131 Exhibit D-1 2019 Actual Actual Original Final Amounts Amounts Revenues: Licenses - franchise fee $264,000 $264,000 $257,032 $263,794 Investment income: Interest and dividends 14,700 14,700 28,386 24,934 Net change in the fair value of investments - - 10,614 13,639 Miscellaneous 700 700 - - Total revenues 279,400 279,400 296,032 302,367 Expenditures: Current: General government: Personal services 193,100 193,100 195,193 184,556 Supplies and other charges 167,680 167,680 138,662 154,433 Total expenditures 360,780 360,780 333,855 338,989 Excess (deficiency) of revenues over (under) expenditures ($81,380) ($81,380) (37,823) (36,622) Fund balance - January 1 1,268,581 1,305,203 Fund balance - December 31 $1,230,758 $1,268,581 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - CABLE TV FUND SCHEDULE OF REVENUES, EXPENDITURES AND For The Year Ended December 31, 2020 2020 Budgeted Amounts CHANGES IN FUND BALANCE - BUDGET AND ACTUAL With Comparative Actual Amounts The Year Ended December 31, 2019 132 Exhibit D-2 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - SOLID WASTE ABATEMENT FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 2019 Actual Actual Original Final Amounts Amounts Revenues: Intergovernmental revenue: State $126,970 $126,970 $131,884 $131,787 Charges for services 369,400 369,400 366,996 340,802 Investment income: Interest and dividends - - 770 1,012 Net change in the fair value of investments - - 290 - Miscellaneous 3,500 3,500 1,783 721 Total revenues 499,870 499,870 501,723 474,322 Expenditures: Current: General government: Personal services 54,700 54,700 49,310 48,550 Supplies and other charges 443,000 443,000 454,499 424,752 Total expenditures 497,700 497,700 503,809 473,302 Excess (deficiency) of revenues over (under) expenditures $2,170 $2,170 (2,086) 1,020 Fund balance - January 1 91,375 90,355 Fund balance - December 31 $89,289 $91,375 2020 Budgeted Amounts For The Year Ended December 31, 2020 With Comparative Actual Amounts The Year Ended December 31, 2019 133 Exhibit D-3 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - POLICE ACTIVITY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 2019 Actual Actual Original Final Amounts Amounts Revenues: Charges for services $481,500 $481,500 $350,598 $366,613 Expenditures: Public safety: Personal services 140,100 140,100 140,928 134,342 Supplies and other charges 342,200 342,200 206,345 228,782 Total expenditures 482,300 482,300 347,273 363,124 Excess (deficiency) of revenues over (under) expenditures ($800) ($800) $3,325 $3,489 Fund balance - January 1 13,160 9,671 Fund balance - December 31 $16,485 $13,160 2020 Budgeted Amounts For The Year Ended December 31, 2020 With Comparative Actual Amounts The Year Ended December 31, 2019 134 Exhibit D-4 CITY OF FRIDLEY, MINNESOTA SPECIAL REVENUE FUND - SPRINGBROOK NATURE CENTER FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 2019 Actual Actual Original Final Amounts Amounts Revenues: Taxes $412,107 $412,107 $411,474 $387,594 Intergovernmental revenue - - 20,381 14,495 Charges for service 151,400 151,400 37,192 164,337 Investment income: Interest and dividends 1,000 1,000 3,950 3,651 Net change in the fair value of investments - - 1,432 1,708 Contributions and donations 65,000 65,000 20,579 87,444 Miscellaneous 3,500 3,500 1,745 2,647 Total revenues 633,007 633,007 496,753 661,876 Expenditures: Current: Parks, recreation and naturalist Personal services 468,100 468,100 432,422 438,615 Supplies and other charges 152,720 152,720 124,683 135,775 Total expenditures 620,820 620,820 557,105 574,390 Excess (deficiency) of revenues over (under) expenditures 12,187 12,187 (60,352) 87,486 Other financing sources: Transfers in - - 4,165 - Transfers out - - - (50,000) Total other financing sources (uses) - - 4,165 (50,000) Net change in fund balance $12,187 $12,187 (56,187) 37,486 Fund balance - January 1 258,548 221,062 Fund balance - December 31 $202,361 $258,548 2020 Budgeted Amounts For The Year Ended December 31, 2020 With Comparative Actual Amounts The Year Ended December 31, 2019 135 This page intentionally left blank 136 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for goods and services 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. These funds are accounted for on a capital maintenance measurement focus and use the accrual basis of accounting. Employee Benefits Fund – This fund is used to account for the expenses associated with providing fringe and pension benefits for employees. Self-Insurance Fund – This fund is used to account for all revenues and expenses associated with the $50,000 deductible in the City’s general liability policy. 137 Exhibit E-1 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2020 Employee Benefits Self Insurance Totals Assets: Cash and investments $1,541,461 $952,322 $2,493,783 Accounts receivable - 11,589 11,589 Total assets $1,541,461 $963,911 $2,505,372 Deferred outflows of resources: Pension related 3,723,095 - 3,723,095 Liabilities: Current liabilities: Accounts payable 503 10,531 11,034 Payroll deductions payable 112,194 - 112,194 Compensated absences payable - current portion 751,582 - 751,582 Total current liabilities 864,279 10,531 874,810 Noncurrent liabilities: Compensated absences payable - long-term portion 363,854 - 363,854 Net pension liability 11,000,809 - 11,000,809 Total liabilities 12,228,942 10,531 12,239,473 Deferred inflows of resources: Pension related 4,523,667 - 4,523,667 Net position: Unrestricted (11,488,053) 953,380 (10,534,673) Total net position ($11,488,053) $953,380 ($10,534,673) 138 Exhibit E-2 Employee Benefits Self Insurance Totals Operating revenues: Charges for services $1,346,060 $318,380 $1,664,440 Operating expenses: Personal services 801,135 - 801,135 Supplies and other charges 4,142 454,518 458,660 Total operating expenses 805,277 454,518 1,259,795 Operating income (loss)540,783 (136,138) 404,645 Nonoperating revenues: Investment income: Interest and dividends 35,142 23,975 59,117 Net change in the fair value of investments 13,987 9,258 23,245 Intergovernmental 90,228 - 90,228 Insurance reimbursement - 21,197 21,197 Total nonoperating revenues 139,357 54,430 193,787 Change in net position 680,140 (81,708) 598,432 Net position - January 1 (12,168,193) 1,035,088 (11,133,105) Net position - December 31 ($11,488,053) $953,380 ($10,534,673) For The Year Ended December 31, 2020 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS 139 Exhibit E-3 CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS Employee Benefits Self Insurance Totals Cash flows from operating activities: Receipts from interfund services provided $1,346,060 $306,791 $1,652,851 Payment to suppliers (4,049) (447,624) (451,673) Payment to employees (1,419,513) - (1,419,513) Net cash flows from operating activities (77,502) (140,833) (218,335) Cash flows from noncapital financing activities: Intergovernmental revenue 90,228 - 90,228 Cash flows from capital and related financing activities: Insurance reimbursement - 21,197 21,197 Cash flows from investing activities: Investment income 49,129 33,233 82,362 Net increase (decrease) in cash and cash equivalents 61,855 (86,403) (24,548) Cash and cash equivalents - January 1 1,479,606 1,038,725 2,518,331 Cash and cash equivalents - December 31 $1,541,461 $952,322 $2,493,783 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $540,783 ($136,138) $404,645 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: Decrease (increase) in receivables - (11,589) (11,589) Decrease (increase) in deferred outflows of resources 2,090,789 - 2,090,789 Increase (decrease) in payables 1,517,527 6,894 1,524,421 Increase (decrease) in deferred inflows of resources (4,226,601) - (4,226,601) Total adjustments (618,285) (4,695) (622,980) Net cash provided by operating activities ($77,502) ($140,833) ($218,335) For The Year Ended December 31, 2020 140 HOUSING AND REDEVELOPMENT AUTHORITY COMPONENT UNIT 141 General Housing Loan Gateway Northeast Assets Cash and investments $8,036,089 $1,790,889 $32,553 Receivables: Accounts 56,307 - - Note 1,000,000 - - Taxes 18,275 - - Mortgage: Deferred - 1,389,674 - Allowance for uncollectible accounts - - - Interest 18,773 - - Due from other governments - - - Due from other funds 8,822,785 - - Prepaid items - - - Land held for resale 214,470 - - Total assets $18,166,699 $3,180,563 $32,553 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $29,472 $19,035 $ - Contracts payable - - - Due to primary government 530,597 - - Due to other governments - - - Due to other funds - - 3,270,928 Total liabilities 560,069 19,035 3,270,928 Deferred inflows of resources: Unavailable revenue 623,440 - - Fund balance (deficit): Nonspendable - 1,389,674 - Restricted - - - Committed - 1,771,854 - Unassigned 16,983,190 - (3,238,375) Total fund balance (deficit)16,983,190 3,161,528 (3,238,375) Total liabilities, deferred inflows of resources, and fund balance $18,166,699 $3,180,563 $32,553 CITY OF FRIDLEY, MINNESOTA BALANCE SHEET - GOVERNMENTAL FUNDS HOUSING AND REDEVELOPMENT AUTHORITY December 31, 2020 With Comparative Totals For December 31, 2019 142 Exhibit F-1 BAE Northern Stacks BAE Hazardous Sub District Locke Point Park Other Governmental Funds Intra - Activity Eliminations 2020 2019 $480,007 $26,113 $ - $1,709,911 $ - $12,075,562 $9,314,933 - - 15,981 - - 72,288 104,431 - - - - 1,000,000 - 329,799 - 118 2,261 - 350,453 19,760 - - - - - 1,389,674 1,473,007 - - - - - - (4,413) - - - - - 18,773 21,897 - - - - - - 5,122 - - - - (8,822,785) - - - - - - - - 655 - - - 78,660 - 293,130 759,595 $809,806 $26,113 $16,099 $1,790,832 ($8,822,785)$15,199,880 $11,694,987 $ - $ - $34,651 $361,486 $ - $444,644 $435,487 - - - - - - 11,302 - - - - - 530,597 818,653 - 23,463 - - - 23,463 9,234 - 2,839,093 2,165,854 546,910 (8,822,785) - - 0 2,862,556 2,200,505 908,396 (8,822,785) 998,704 1,274,676 5,317 - - 79,790 - 708,547 775,029 - - - - - 1,389,674 1,469,249 804,489 - - 1,548,316 - 2,352,805 1,789,857 - - - - - 1,771,854 1,659,352 - (2,836,443) (2,184,406)(745,670) - 7,978,296 4,726,824 804,489 (2,836,443) (2,184,406)802,646 - 13,492,629 9,645,282 $809,806 $26,113 $16,099 $1,790,832 ($8,822,785)$15,199,880 $11,694,987 Fund balance reported above $13,492,629 $9,645,282 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 1,011,755 1,011,755 Other long-term assets are not available to pay for current-period expenditures and, therefore, are reported as unavailable revenue 708,547 775,029 Other post employment benefits are not due and payable in the current period and, therefore, are not reported in the funds.(2,132)(2,239) Net position of governmental activities $15,210,799 $11,429,827 Totals Governmental Funds 143 General Housing Loan Gateway Northeast Revenues: Tax increment $ - $ - $508,333 Property taxes 527,366 - - Investment income: Interest and dividends 41,309 12,744 1,183 Net change in the fair value of investments 22,722 7,469 699 Mortgage interest earnings - 40,057 - Interfund loan interest earnings 267,094 - - Rental - - - Intergovernmental 14,769 - - Payments from primary government - - - Sale of real estate 2,174,528 - - Miscellaneous 400,502 - - Total revenues 3,448,290 60,270 510,215 Expenditures: Personal services 172,512 - - Supplies and other charges 449,752 26,688 52,687 Developer assistance 14,769 - - Interest expense 19,520 - 143,113 Payments to primary government - - - Capital outlay - - - Total expenditures 656,553 26,688 195,800 Net change in fund balance 2,791,737 33,582 314,415 Fund balance (deficit) - January 1 14,191,453 3,127,946 (3,552,790) Fund balance (deficit) - December 31 $16,983,190 $3,161,528 ($3,238,375) STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CITY OF FRIDLEY, MINNESOTA With Comparative Totals For The Year Ended December 31, 2019 For The Year Ended December 31, 2020 HOUSING AND REDEVELOPMENT AUTHORITY GOVERNMENTAL FUNDS 144 Exhibit F-2 BAE Northern Stacks BAE Hazardous Sub District Locke Point Park Other Governmental Funds Intra-Activity Eliminations 2020 2019 $2,114,091 $301,019 $9,184 $1,326,881 $ - $4,259,508 $3,770,334 - - - - - 527,366 466,305 - 557 - 8,687 - 64,480 117,634 - 333 - 5,100 - 36,323 43,509 - - - - - 40,057 49,336 - - - - - 267,094 276,734 - - - - - - 4,000 - - - - - 14,769 844,272 14,962,612 - - - - 14,962,612 - - - - - - 2,174,528 1,684,070 - - - - - 400,502 380,059 17,076,703 301,909 9,184 1,340,668 - 22,747,239 7,636,253 - - - - - 172,512 162,070 204,279 30,798 63,743 162,405 - 990,352 2,728,692 15,765,892 19,864 - 786,214 - 16,586,739 2,724,630 - 104,462 19,520 - - 286,615 296,734 863,674 - - - - 863,674 - - - - - - - 187,066 16,833,845 155,124 83,263 948,619 - 18,899,892 6,099,192 242,858 146,785 (74,079) 392,049 - 3,847,347 1,537,061 561,631 (2,983,228) (2,110,327) 410,597 - 9,645,282 8,108,221 $804,489 ($2,836,443) ($2,184,406) $802,646 $0 $13,492,629 $9,645,282 Amounts reported for governmental activities in the statement of activities (Exhibit A-2) are different because: Net changes in fund balances - total above $3,847,347 $1,537,061 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.107 (2,239) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (66,482) (1,045,363) Changes in net position of governmental activities (Exhibit A-2)$3,780,972 $489,459 Totals Governmental Funds 145 Gateway East Lake Pointe Gateway West Housing Replacement Assets Cash and investments $37,859 $12,154 $10,987 $103,366 Taxes receivable 540 - 43 - Land held for resale - - 2,610 76,050 Total assets $38,399 $12,154 $13,640 $179,416 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $ - $253,408 $ - $696 Due to primary government - - - - Due to other governments - - - - Due to other funds 241,653 - 270,109 - Total liabilities 241,653 253,408 270,109 696 Deferred inflows of resources: Unavailable revenue 540 - 2,610 76,050 Fund balance (deficit): Restricted - - - 102,670 Unassigned (203,794) (241,254) (259,079) - Total fund balance (deficit)(203,794) (241,254) (259,079) 102,670 Total liabilities, deferred inflows of resources, and fund balance $38,399 $12,154 $13,640 $179,416 CITY OF FRIDLEY, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS HOUSING AND REDEVELOPMENT AUTHORITY December 31, 2020 With Comparative Totals For December 31, 2019 146 Exhibit F-3 McGlynn Bakeries Satellite Lane Apts. Main Street Northstar Transit Station Northern Stacks VIII Holly Center 2020 2019 $255,962 $351,263 $63,238 $875,082 $ - $ - $1,709,911 $1,938,237 - 1,678 - - - - 2,261 4,112 - - - - - - 78,660 116,910 $255,962 $352,941 $63,238 $875,082 $0 $0 $1,790,832 $2,059,259 $17,701 $ - $65,779 $20,048 $ - $3,854 $361,486 $332,101 - - - - - - - 323,224 - - - - - - - 6,262 - - - - 32,187 2,961 546,910 867,065 17,701 0 65,779 20,048 32,187 6,815 908,396 1,528,652 - 590 - - - - 79,790 120,010 238,261 352,351 - 855,034 - - 1,548,316 1,228,226 - - (2,541) - (32,187) (6,815) (745,670) (817,629) 238,261 352,351 (2,541) 855,034 (32,187) (6,815) 802,646 410,597 $255,962 $352,941 $63,238 $875,082 $0 $0 $1,790,832 $2,059,259 Total Nonmajor Capital Project Funds 147 Gateway East Lake Pointe Gateway West Housing Replacement University / Osborne Revenues: Tax increment $41,566 $565,163 $36,772 $46,513 $ - Investment income: Interest and dividends 290 673 115 560 - Net change in the fair value of investments 171 394 68 328 - Intergovernmental - - - - - Sale of real estate - - - - - Total revenues 42,027 566,230 36,955 47,401 0 Expenditures: Supplies and other charges 183 30,324 156 10,419 - Developer assistance - 506,816 - - 87,952 Capital outlay - - - - - Total expenditures 183 537,140 156 10,419 87,952 Net change in fund balance 41,844 29,090 36,799 36,982 (87,952) Fund balance (deficit) - January 1 (245,638) (270,344) (295,878) 65,688 87,952 Fund balance (deficit) - December 31 ($203,794) ($241,254) ($259,079) $102,670 $0 AND CHANGES IN FUND BALANCE SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES CITY OF FRIDLEY, MINNESOTA With Comparative Totals For December 31, 2019 For The Year Ended December 31, 2020 HOUSING AND REDEVELOPMENT AUTHORITY NONMAJOR CAPITAL PROJECT FUNDS 148 Exhibit F-4 McGlynn Bakeries Satellite Lane Apts.Main Street Northstar Transit Station Northern Stacks VIII Holly Center 2020 2019 $ - $53,647 $146,704 $436,516 $ - $ - $1,326,881 $1,350,271 - 2,358 69 4,622 - - 8,687 17,078 - 1,389 (1) 2,751 - - 5,100 4,650 - - - - - - - - - - - - - - - 98,118 0 57,394 146,772 443,889 0 0 1,340,668 1,470,117 (611)3,598 11,986 79,121 20,414 6,815 162,405 294,474 41,936 - 131,558 - 17,952 - 786,214 978,943 - - - - - - - 187,066 41,325 3,598 143,544 79,121 38,366 6,815 948,619 1,460,483 (41,325) 53,796 3,228 364,768 (38,366) (6,815) 392,049 9,634 279,586 298,555 (5,769) 490,266 6,179 - 410,597 400,963 $238,261 $352,351 ($2,541) $855,034 ($32,187) ($6,815) $802,646 $410,597 Totals Nonmajor Capital Project Funds 149 This page intentionally left blank 150 CUSTODIAL FUNDS Custodial Funds account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. 151 Exhibit G-1 Hotel/Motel Tax Assets: Accounts receivables $4,285 Liabilities: Accounts payable 4,285 Net Position: Restricted $ - CITY OF FRIDLEY, MINNESOTA COMBINING STATEMENT OF NET POSITION CUSTODIAL FUND December 31, 2020 152 Exhibit G-2 Hotel/Motel Tax Additions: Tax collections from other government $78,114 Total additions 78,114 Deductions: Payments of tax to other goverments Administrative fee 78,114 Total deductions 78,114 Net increase (decrease) in Fiduciary net position - Net position - beginning - Net position - ending $ - CITY OF FRIDLEY, MINNESOTA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION CUSTODIAL FUND For The Year Ended December 31, 2020 153 This page intentionally left blank 154 III. STATISTICAL SECTION (UNAUDITED) 155 This page intentionally left blank 156 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. Contents Page Financial Trends 158 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity 168 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property tax. Debt Capacity 174 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information 180 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 Information 184 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. 157 2011 2012 2013 2014 Governmental activities: Net investment in capital assets $14,554,639 $14,139,656 $13,842,497 $14,186,359 Restricted 3,392,382 3,294,952 3,050,204 2,673,982 Unrestricted 23,020,467 24,238,798 24,551,730 25,321,659 Total governmental activities net position $40,967,488 $41,673,406 $41,444,431 $42,182,000 Business-type activities: Net investment in capital assets $14,342,934 $13,560,980 $12,910,117 $13,053,816 Restricted - - - - Unrestricted 7,387,634 8,235,948 8,417,085 8,727,382 Total business-type activities net position $21,730,568 $21,796,928 $21,327,202 $21,781,198 Primary government: Net investment in capital assets $28,897,573 $27,700,636 $26,752,614 $27,240,175 Restricted 3,392,382 3,294,952 3,050,204 2,673,982 Unrestricted 30,408,101 32,474,746 32,968,815 34,049,041 Total primary government net position $62,698,056 $63,470,334 $62,771,633 $63,963,198 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. CITY OF FRIDLEY, MINNESOTA NET POSITION BY COMPONENT Last ten fiscal years (Accrual Basis of Accounting) 158 Table 1 2015 2016 2017 2018 2019 2020 $16,811,842 $23,932,586 $31,006,344 $30,070,173 $27,349,945 $31,075,685 2,233,179 2,204,983 2,739,575 2,977,454 3,047,005 3,662,136 16,052,833 13,175,954 8,889,557 11,049,555 15,961,597 5,783,139 $35,097,854 $39,313,523 $42,635,476 $44,097,182 $46,358,547 $40,520,960 $14,234,711 $13,913,434 $13,897,925 $15,068,876 $18,211,710 $21,135,232 - - - - - - 8,058,181 9,567,290 11,077,566 12,674,876 11,837,418 11,052,792 $22,292,892 $23,480,724 $24,975,491 $27,743,752 $30,049,128 $32,188,024 $31,046,553 $37,846,020 $44,904,269 $45,139,049 $45,561,655 $52,210,917 2,233,179 2,204,983 2,739,575 2,977,454 3,047,005 3,662,136 24,111,014 22,743,244 19,967,123 23,724,431 27,799,015 16,835,931 $57,390,746 $62,794,247 $67,610,967 $71,840,934 $76,407,675 $72,708,984 159 2011 2012 2013 2014 Expenses Governmental activities: General government $3,321,402 $3,155,983 $3,434,479 $4,092,123 Public safety 6,720,641 6,999,554 7,101,331 7,570,322 Public works 5,023,080 5,420,271 5,928,331 5,959,595 Community development 973,198 880,414 935,716 898,455 Parks and recreation 1,387,133 1,355,571 1,456,841 1,513,135 Interest on long-term debt 263,075 232,318 218,610 179,420 Total governmental activities expenses 17,688,529 18,044,111 19,075,308 20,213,050 Business-type activities: Liquor 4,568,282 4,354,909 4,148,447 4,596,316 Water 2,688,846 2,647,176 2,815,588 2,902,419 Sanitary sewer 4,750,467 4,653,434 4,974,525 4,988,587 Storm water 785,861 602,923 587,036 597,915 Total business-type activities expenses 12,793,456 12,258,442 12,525,596 13,085,237 Total primary government expenses $30,481,985 $30,302,553 $31,600,904 $33,298,287 Program revenues Governmental activities: Charges for services: General government $1,886,783 $1,979,737 $2,025,108 $2,079,719 Public safety 796,308 862,584 864,435 683,418 Public works 378,142 28,144 99,289 27,312 Community development 570,685 554,129 582,280 798,392 Parks and recreation 325,682 369,899 326,067 327,508 Operating grants and contributions 1,148,315 1,030,887 1,095,724 1,837,860 Capital grants and contributions 1,374,651 1,564,146 1,747,303 1,220,903 Total governmental activities program revenues 6,480,566 6,389,526 6,740,206 6,975,112 Business-type activities: Charges for services: Liquor 4,893,436 4,705,523 4,308,791 4,786,987 Water 2,418,226 2,773,101 2,788,146 2,913,717 Sanitary sewer 4,245,654 4,549,254 4,572,798 4,754,492 Storm water 457,083 571,707 613,818 732,961 Operating grants and contributions - - 50,000 - Capital grants and contributions - - - 440,627 Total business-type activities program revenues 12,014,399 12,599,585 12,333,553 13,628,784 Total primary government program revenues $18,494,965 $18,989,111 $19,073,759 $20,603,896 CITY OF FRIDLEY, MINNESOTA CHANGES IN NET POSITION Last ten fiscal years (Accrual basis of accounting) 160 Table 2 Page 1 of 2 2015 2016 2017 2018 2019 2020 $4,156,904 $4,398,370 $4,298,149 $3,697,097 $5,504,858 $6,003,817 8,048,655 10,313,163 9,129,111 9,274,465 10,035,219 9,946,434 5,127,667 4,975,340 5,112,090 4,699,946 5,677,069 5,304,937 1,107,348 1,126,835 981,433 946,173 973,708 16,037,288 1,353,320 1,440,232 1,720,811 1,835,082 1,565,950 1,459,005 144,064 97,684 2,292,957 1,685,039 1,795,560 2,012,685 19,937,958 22,351,624 23,534,551 22,137,802 25,552,364 40,764,166 4,914,786 5,043,703 5,110,714 5,544,091 5,698,502 6,115,659 3,101,356 3,076,493 3,531,649 3,047,417 2,811,051 3,192,159 5,040,861 5,068,146 5,340,062 5,347,742 5,722,230 5,911,370 785,626 1,030,467 1,085,780 1,071,446 1,208,564 1,243,060 13,842,629 14,218,809 15,068,205 15,010,696 15,440,347 16,462,248 $33,780,587 $36,570,433 $38,602,756 $37,148,498 $40,992,711 $57,226,414 $1,905,021 $2,031,207 $2,021,012 $2,244,912 $2,236,868 $1,490,036 619,630 742,523 798,510 840,976 558,695 2,181,463 53,589 32,522 34,681 53,360 31,841 792,658 1,194,534 1,108,177 895,125 1,206,364 1,502,589 971,674 336,847 333,766 352,245 319,998 317,088 59,289 1,139,385 1,077,559 1,847,380 1,185,939 1,845,628 1,603,520 2,370,009 6,296,532 5,333,480 520,201 1,334,148 6,096,584 7,619,015 11,622,286 11,282,433 6,371,750 7,826,857 13,195,224 5,256,840 5,439,423 5,520,161 6,029,627 6,195,797 6,708,539 2,907,123 3,330,350 3,486,965 3,912,727 3,798,381 4,143,249 4,809,679 5,298,995 5,640,419 6,095,556 6,075,840 5,937,276 1,225,153 1,324,460 1,378,095 1,433,935 1,491,252 1,523,085 - 67,551 61,476 - 251,666 118,410 421,990 186,791 713,655 499,800 - 163,816 14,620,785 15,647,570 16,800,771 17,971,645 17,812,936 18,594,375 $22,239,800 $27,269,856 $28,083,204 $24,343,395 $25,639,793 $31,789,599 161 2011 2012 2013 2014 Net (expense) revenue: Governmental activities ($11,207,963) ($11,654,585) ($12,335,102) ($13,237,938) Business-type activities (779,057) 341,143 (192,043) 543,547 Total primary government net (expense) revenue ($11,987,020) ($11,313,442) ($12,527,145) ($12,694,391) General revenues and other changes in net position Governmental activities: General property taxes $10,126,395 $10,654,542 $11,003,455 $11,521,196 Grants not restricted to programs 1,095,470 1,030,123 1,033,814 1,476,664 Investment earnings 347,184 269,240 (216,821) 634,411 Gain (loss) on sale of property 14,937 56,598 35,680 - Other - - - 93,236 Transfers 350,000 350,000 250,000 250,000 Total governmental activities 11,933,986 12,360,503 12,106,128 13,975,507 Business-type activities: Grants not restricted to programs - - - - Investment earnings 106,274 65,537 (52,346) 148,248 Gain (loss) on sale of property - 9,680 - - Other - - 24,663 12,201 Transfers (350,000) (350,000) (250,000) (250,000) Total business-type activities (243,726) (274,783) (277,683) (89,551) Total primary government $11,690,260 $12,085,720 $11,828,445 $13,885,956 Change in net position: Governmental activities $726,023 $705,918 ($228,974) $737,569 Business-type activities (1,022,783) 66,360 (469,726) 453,996 Total primary government ($296,760) $772,278 ($698,700) $1,191,565 Note: GASB 68 was implemented in 2015. Pension expense for years prior to 2015 was not restated. CITY OF FRIDLEY, MINNESOTA CHANGES IN NET POSITION Last ten fiscal years (Accrual basis of accounting) 162 Table 2 Page 2 of 2 2015 2016 2017 2018 2019 2020 ($12,318,943) ($10,729,338) ($12,252,118) ($15,766,052) ($17,725,507) ($27,568,942) 778,156 1,428,761 1,732,566 2,960,949 2,372,589 2,132,127 ($11,540,787) ($9,300,577) ($10,519,552) ($12,805,103) ($15,352,918) ($25,436,815) $11,795,707 $12,222,937 $13,884,775 $14,839,034 $15,387,457 $16,225,057 1,325,388 1,763,614 657,546 1,613,020 1,670,719 3,948,112 157,281 254,379 413,165 651,609 811,009 980,709 67,581 11,005 - (335,183) (249,165) 21,429 418,640 354,572 280,085 120,778 2,028,352 298,544 338,600 338,500 338,500 338,500 338,500 257,504 14,103,197 14,945,007 15,574,071 17,227,758 19,986,872 21,731,355 2,413 - - 8,957 8,957 - 42,722 95,713 68,805 142,716 257,520 262,616 10,672 - 16,000 (7,046) 3,772 - 16,331 1,858 15,896 1,185 1,038 1,657 (338,600) (338,500) (338,500) (338,500) (338,500) (257,504) (266,462) (240,929) (237,799) (192,688) (67,213) 6,769 $13,836,735 $14,704,078 $15,336,272 $17,035,070 $19,919,659 $21,738,124 $1,784,254 $4,215,669 $3,321,953 $1,461,706 $2,261,365 ($5,837,587) 511,694 1,187,832 1,494,767 2,768,261 2,305,376 2,138,896 $2,295,948 $5,403,501 $4,816,720 $4,229,967 $4,566,741 ($3,698,691) 163 2011 2012 2013 2014 General Fund: Nonspendable $65,271 $66,152 $50,366 $60,123 Restricted - 20,810 40,012 15,176 Unassigned 6,708,284 7,582,360 7,997,036 8,242,331 Total general fund $6,773,555 $7,669,322 $8,087,414 $8,317,630 All other governmental funds: Restricted $2,529,873 $3,093,302 $2,233,664 $2,071,259 Committed 2,209,067 2,328,583 2,124,944 2,566,101 Assigned 11,108,003 11,783,596 11,618,835 11,949,555 Unassigned (98,164)(97,712)(98,566)(97,712) Total all other governmental funds $15,748,779 $17,107,769 $15,878,877 $16,489,203 CITY OF FRIDLEY, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (Modified accrual basis of accounting) 164 Table 3 2015 2016 2017 2018 2019 2020 $66,265 $51,305 $55,777 $77,801 $53,334 $65,779 19,376 35,903 14,466 20,335 42,180 24,513 8,858,309 9,084,228 9,522,843 11,045,978 10,166,947 13,603,533 $8,943,950 $9,171,436 $9,593,086 $11,144,114 $10,262,461 $13,693,825 $1,808,572 $1,903,290 $34,821,855 $5,009,553 $12,775,223 $3,566,713 2,709,638 2,549,903 2,658,339 6,765,928 11,165,161 11,550,431 11,272,588 10,573,287 8,510,134 4,567,369 6,177,195 6,362,198 (43,153)(27,574)(9,453) - - (567) $15,747,645 $14,998,906 $45,980,875 $16,342,850 $30,117,579 $21,478,775 165 2011 2012 2013 2014 Revenues: General property taxes $10,113,120 $10,732,129 $11,024,785 $11,554,557 Special assessments 672,929 763,920 834,120 938,290 Licenses and permits 1,085,100 1,104,504 1,123,635 1,171,365 Intergovernmental 2,853,171 2,649,207 2,643,728 3,208,442 Charges for services 2,206,764 2,353,888 2,545,908 2,518,062 Fines and forfeits 258,372 255,622 218,194 226,922 Earnings on investments 297,290 236,226 (185,473) 565,245 Interest on loan - - - - Other 325,284 322,354 295,409 314,416 Total revenues 17,812,030 18,417,850 18,500,306 20,497,299 Expenditures: Current: General government 3,165,111 3,503,326 3,279,657 3,732,056 Public safety 6,284,658 6,422,646 6,794,524 7,165,678 Public works 3,061,100 3,047,300 3,530,939 4,635,752 Community development 979,042 772,070 817,895 894,785 Parks and recreation 1,195,410 1,252,089 1,305,158 1,422,405 Debt service: Principal 800,000 940,000 980,000 1,150,000 Interest 271,969 232,318 227,326 190,890 Bond issuance costs 2,799 47,016 - 3,150 Capital outlay 964,410 1,639,773 2,536,286 1,290,008 Total expenditures 16,724,499 17,856,538 19,471,785 20,484,724 Revenues over (under) expenditures 1,087,531 561,312 (971,479) 12,575 Other financing sources (uses): Refunding bond issues - - - - Bonds issued - 1,280,000 - - Premium/(discount) on bonds issue - - - - Proceeds from sale of capital assets 15,096 63,445 35,679 36,836 Insurance and other reimbursements - - - - Transfers in 380,000 350,000 250,000 8,253,616 Transfers out - - (125,000) (7,462,485) Total other financing sources (uses)395,096 1,693,445 160,679 827,967 Net change in fund balance $1,482,627 $2,254,757 ($810,800) $840,542 Debt service as a percentage of noncapital expenditures 6.8%7.2%6.8%7.0% Debt service as percentage of total expenditures 6.4%6.8%6.2%6.6% CITY OF FRIDLEY, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years 166 Table 4 2015 2016 2017 2018 2019 2020 $11,805,580 $12,244,211 $13,878,204 $14,857,454 $15,337,464 $16,133,737 542,248 865,722 621,621 501,045 467,953 819,347 1,549,785 1,442,895 1,272,753 1,538,758 1,501,526 1,559,003 4,375,972 7,330,338 4,227,709 3,035,084 4,446,430 8,111,582 2,374,896 2,592,665 2,560,831 2,863,220 2,958,748 2,795,287 184,940 212,635 267,989 263,632 186,807 169,156 157,281 254,379 413,165 651,609 811,009 898,347 - - - - - 108,000 429,713 887,678 766,059 374,415 2,178,614 1,232,731 21,420,415 25,830,523 24,008,331 24,085,217 27,888,551 31,827,190 3,777,688 3,924,877 3,953,025 3,659,534 4,677,076 5,177,833 7,319,564 7,537,051 8,001,032 8,317,478 8,831,505 8,924,373 3,575,252 2,824,319 3,468,102 3,316,912 3,535,263 3,222,623 1,081,549 942,768 934,074 909,481 982,166 15,999,027 1,288,684 1,341,444 1,417,611 1,557,052 1,244,351 1,175,270 1,190,000 1,230,000 1,730,000 1,390,000 1,495,000 1,540,000 152,894 112,421 931,527 1,761,843 1,721,308 1,958,725 7,462 2,700 715,461 2,800 155,218 62,855 3,645,425 8,618,369 22,577,062 31,660,699 2,721,649 4,412,516 22,038,518 26,533,949 43,727,894 52,575,799 25,363,536 42,473,222 (618,103) (703,426) (19,719,563) (28,490,582) 2,525,015 (10,646,032) - - - - - - - - 49,130,000 - 9,510,000 4,540,000 - - 1,584,898 - 504,837 619,659 93,670 43,673 69,784 65,085 14,724 21,429 - - - - - - 1,065,410 2,047,849 1,361,189 7,795,728 2,819,740 338,500 (726,810) (1,909,349) (1,022,689) (7,457,228) (2,481,240)(80,996) 432,270 182,173 51,123,182 403,585 10,368,061 5,438,592 ($185,833) ($521,253) $31,403,619 ($28,086,997) $12,893,076 ($5,207,440) 7.3%7.5%13.0%15.1%14.3%9.2% 6.1%5.1%6.1%6.0%12.7%8.2% 167 Commercial/ Fiscal Residential Industrial Public All Year Property Property Utility Other 2011 $12,175,452 $15,182,227 $41,236 $4,396,579 2012 1 10,246,614 14,710,926 40,330 4,271,859 2013 1 8,713,053 13,207,351 45,306 4,286,829 2014 1 7,885,298 12,520,981 44,648 4,362,496 2015 1 9,538,484 12,771,829 49,868 4,737,031 2016 1 9,488,686 13,688,867 58,699 4,958,693 2017 1 10,488,279 15,061,056 59,759 5,564,751 2018 1 11,639,971 15,097,292 62,282 5,961,619 2019 1 18,645,518 16,935,599 69,652 1,189,818 2020 1 20,305,713 18,228,064 52,061 1,200,626 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. CITY OF FRIDLEY, MINNESOTA TAX CAPACITY VALUE AND ESTIMATED MARKET VALUE OF TAXABLE PROPERTY Last ten fiscal years 2 Property values are determined on January 2 of the preceeding year. 168 Table 5 Add: Less: Total for Area-wide Fiscal Adjusted Total Estimated Tax Capacity Tax Values and Disparity Tax Capacity Direct Tax Market as a Percent Capacity Increment Contribution Value Rate Value 2 of EMV $29,269,729 $2,505,517 $6,212,406 $25,562,840 40.420% 2,352,567,900$ 114.50% 26,252,539 2,851,459 5,629,374 23,474,624 39.615% 2,278,659,000 111.83% 24,813,423 2,844,689 5,373,202 22,284,910 47.362% 2,057,500,500 111.35% 27,097,212 2,799,171 4,509,587 25,386,796 48.577% 1,948,580,100 106.74% 28,194,945 2,934,045 4,358,570 26,770,420 43.508% 2,146,063,300 105.32% 28,194,945 2,986,838 4,681,350 26,500,433 44.960% 2,207,363,400 106.39% 31,173,845 2,946,266 5,225,764 28,894,347 48.218% 2,416,338,500 107.89% 32,761,164 2,918,699 5,571,692 30,108,171 47.907% 2,557,662,900 108.81% 36,840,587 3,230,754 5,830,355 34,240,986 45.380% 2,854,939,900 107.59% 39,786,464 3,841,599 6,520,022 37,108,041 45.253% 3,073,484,500 107.22% 169 School School School Fiscal District District District Year City No. 11 No. 13 No. 14 2011 40.420%24.023%18.596%40.631% 2012 39.615%23.325%24.024%43.862% 2013 47.362%26.801%27.449%50.112% 2014 48.577%28.265%24.824%49.552% 2015 43.508%22.482%32.562%48.422% 2016 44.960%20.885%29.442%54.252% 2017 48.218%18.590%27.633%49.408% 2018 47.907%18.392%27.900%51.006% 2019 45.380%16.330%33.148%49.055% 2020 45.253%16.948%23.385%46.213% 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. CITY OF FRIDLEY, MINNESOTA DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Last ten fiscal years 170 Table 6 Special Special School Districts Districts School School School School District with with District District District District No. 16(1)County Coon Creek Rice Creek No. 11(1)No. 13(2)No. 14(2)No. 16(2) 33.959% 39.884% 10.533% N/A 113.226% 109.392% 131.427% 124.755% 39.443% 41.146% 10.176% N/A 111.953% 114.961% 134.799% 130.380% 44.440% 44.411% 9.448% N/A 128.022% 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% 139.132% 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% 39.617% 37.792% 6.892% 7.282% 110.983% 120.881% 143.987% 132.598% 37.632% 34.473% 6.265% 6.699% 102.448% 119.700% 135.607% 124.184% 35.452% 33.440% 6.120% 6.642% 101.761% 108.720% 131.548% 120.787% Total Tax Capacity Rates By School Districts 171 Table 7 2020 Percentage Percentage Taxable of Total City Taxable of Total City Capacity Capacity Capacity Capacity Taxpayer Value Rank Value Value Rank Value Medtronic, Inc.$1,876,818 1 5.00% $1,896,202 1 5.96% Hyde Development 1,661,386 2 4.18% N/A Onan Corp (Cummins Power)712,310 3 1.79% 393,100 4 1.24% Industrial Equities Group 703,848 4 1.77% N/A Target Corporation 696,658 5 1.75% 770,120 2 2.42% BNSF Railraod 629,760 6 1.58% N/A Fridley Medical Clinic 523,962 7 1.32% N/A Shamrock Investments 455,450 8 1.14% 599,366 3 1.89% Cielo Partners LLC 418,025 9 1.05% N/A Wal-Mart/Sam's Club 386,908 10 0.97% 374,722 5 1.18% Springbrook Apartments N/A 0.00% 252,805 8 0.80% Georgetown Apartments N/A 0.00% 259,648 7 0.82% GPT Fridley / BAE N/A 0.00% 315,310 6 0.99% River Pointe Apartments N/A 0.00% 199,002 9 0.63% ZCOF (Fridley Market)N/A 0.00% N/A Lifetime Fitness N/A 0.00% 139,250 10 0.44% Total $8,065,125 20.55% $5,199,525 16.37% Total All Property $39,786,464 $31,795,494 Source: City Assessor CITY OF FRIDLEY, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Current year and nine years ago 2011 172 Table 8 Fiscal Taxes Collections Year Levied in Ended For The Percentage Subsequent Percentage Dec. 31 Fiscal Year Amount of Levy Years1 Amount of Levy 2011 $10,014,071 $9,897,610 98.84% $116,461 $10,014,071 100.00% 2012 10,703,739 10,699,025 99.96% 1,243 10,700,268 99.97% 2013 11,252,481 11,247,943 99.96% 378 11,248,321 99.96% 2014 11,511,288 11,372,812 98.80% 135,335 11,508,147 99.97% 2015 11,734,607 11,657,855 99.35% 73,686 11,731,541 99.97% 2016 12,200,835 12,172,555 99.77% 22,708 12,195,263 99.95% 2017 14,122,251 13,990,154 99.06% 121,782 14,111,936 99.93% 2018 14,807,913 14,804,501 99.98% (16,131) 14,804,501 99.98% 2019 15,494,419 15,339,721 99.00% 154,698 15,339,721 99.00% 2020 16,109,557 16,030,087 99.51% N/A 16,030,087 99.51% 1Includes repayment of property taxes abatements Source: City Finance Department CITY OF FRIDLEY, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Last ten fiscal years Collected Within The Fiscal Year of the Levy Total Collections to Date 173 Table 9 CITY OF FRIDLEY, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten fiscal years Business Type Activities Total Percentage Fiscal Improvement Tax Increment Equipment Revenue Primary of Personal Per Year Bonds 2 Bonds 2 Certificates 2 Total Bonds 2 Government Income1 Capita1 2011 $6,770,000 $ - $550,000 $7,320,000 $7,625,000 $14,945,000 2.00% 266 2012 5,880,000 - 1,780,000 7,660,000 7,070,000 14,730,000 1.96% 278 2013 4,955,000 - 1,725,000 6,680,000 6,413,154 13,093,154 1.69% 240 2014 4,000,000 - 1,530,000 5,530,000 5,845,000 11,375,000 1.58% 198 2015 3,010,000 - 1,330,000 4,340,000 5,260,000 9,600,000 1.31% 152 2016 1,980,000 - 1,130,000 3,110,000 10,811,935 13,921,935 1.67% 109 2017 51,111,785 - 925,000 52,036,785 8,200,461 60,237,246 7.05% 1,815 2018 49,863,389 - 720,000 50,583,389 7,273,987 57,857,376 6.74% 1,762 2019 49,019,830 9,510,000 510,000 59,039,830 6,317,180 65,357,010 7.28% 2,037 2020 45,790,000 14,050,000 295,000 60,135,000 5,455,000 65,590,000 6.75% 2,010 1Demographic information can be found on Table 13 2 Presented as gross amount of debt, not adjusted for original issuance premiums and discounts Governmental Activities 174 Table 10 Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable1 Debt Debt repaid with property taxes: Independent School District No. 11 $288,591,152 1.60% $4,617,458 Independent School District No. 13 22,918,058 31.46% 7,210,021 Independent School District No. 14 53,080,000 100.00% 53,080,000 Independent School District No. 16 112,735,000 36.80% 41,486,480 Metro Council 1,688,626 1.19% 20,095 Anoka County 61,405,000 18.04% 11,077,462 Vocational/Technical District No. 916 75,365,000 2.21% 1,665,567 Subtotal - overlapping debt 119,157,083 City of Fridley - Direct debt 60,135,000 Total direct and overlapping debt $60,135,000 100.00% $179,292,083 Sources: Continuing Disclosure Document 1Overlapping 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. CITY OF FRIDLEY, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2020 175 This page intentionally left blank 176 Table 11 Market Value $3,073,484,500 Debt Limit 3% of Market Value $92,204,535 Amount of Debt Applicable to Debt Limit: Total Debt $65,590,000 Deductions: Improvement Bonds 65,000 Revenue Bonds 5,455,000 5,520,000 Total Amount of Debt Applicable to Debt Limit 60,070,000 Legal Debt Margin $32,134,535 Legal Debt Margin Calculation for the last 10 Fiscal Years Net Debt Legal Amount of Debt Fiscal Debt Applicable to Debt Applicable to Year Limit Limit Margin Debt Limit 2011 $70,577,037 $550,000 $70,027,037 0.78% 2012 68,359,770 1,780,000 66,579,770 2.60% 2013 61,725,015 1,725,000 60,000,015 2.79% 2014 58,457,403 1,530,000 56,927,403 2.62% 2015 64,381,899 1,330,000 63,051,899 2.07% 2016 66,220,902 1,130,000 65,090,902 1.71% 2017 72,490,155 50,055,000 22,435,155 69.05% 2018 76,729,887 48,790,000 27,939,887 63.59% 2019 85,648,197 56,935,000 28,713,197 66.48% 2020 92,204,535 60,070,000 32,134,535 65.15% CITY OF FRIDLEY, MINNESOTA LEGAL DEBT MARGIN INFORMATION Last ten fiscal years 177 Special Property Fiscal Assessment Tax Year Collections Principal Interest Coverage Collections Principal Interest Coverage 2011 $504,053 $800,000 $258,135 0.48 $69,881 $0 $13,834 5 2012 659,666 890,000 229,503 0.59 70,668 50,000 13,450 1.11 2013 376,026 925,000 198,413 0.33 233,749 55,000 25,763 2.89 2014 932,078 955,000 166,235 0.83 234,357 195,000 25,653 1.06 2015 188,303 990,000 129,815 0.17 231,310 200,000 23,080 1.04 2016 166,895 1,030,000 92,090 0.15 234,359 200,000 20,330 1.06 2017 105,827 1,525,000 914,322 0.04 225,962 205,000 17,205 1.02 2018 52,979 1,185,000 1,747,988 0.02 232,848 205,000 13,855 1.06 2019 48,680 1,285,000 1,710,938 0.02 231,149 210,000 10,371 1.05 2020 25,154 1,325,000 1,671,788 0.01 157,817 215,000 6,570 0.71 Last ten fiscal years PLEDGED-REVENUE COVERAGE CITY OF FRIDLEY, MINNESOTA Debt Service Debt Service Improvement Bonds Equipment Certificates 178 Table 12 Utility Less Net Tax Service Operating Available Increment Revenues Expenses Revenue Principal Interest Coverage Collections Principal Interest Coverage $7,118,154 $7,952,911 ($834,757) $535,000 $272,264 -1.03 $69,881 $0 $13,834 5.05 7,864,406 6,341,544 1,522,862 555,000 255,054 1.88 - - - - 7,961,738 6,839,852 1,121,886 655,000 235,474 1.26 - - - - 8,363,415 6,987,095 1,376,320 570,000 223,459 1.73 - - - - 8,936,287 7,405,596 1,530,691 585,000 203,060 1.94 - - - - 9,938,517 7,381,382 2,557,135 610,000 181,610 3.23 - - - - 10,499,230 8,374,461 2,124,769 2,600,000 261,888 0.74 - - - - 11,442,218 9,307,210 2,135,008 915,000 180,688 1.95 - - - - 11,365,473 9,608,209 1,757,264 945,000 155,763 1.60 - - - - 11,603,610 9,812,423 1,791,187 730,000 134,838 2.07 - - 280,368 - Tax Increment Bonds Debt Service Debt Service Utility Revenue Bonds 179 Table 13 Total Per Capita Fiscal Unemployment Personal Personal Year Population Rate Income Income 2011 27,515 5.5%745,518,925 27,095 2012 27,591 5.6%749,702,652 27,172 2013 27,785 4.4%774,145,670 27,862 2014 27,952 4.2%720,406,896 25,773 2015 28,547 3.9%747,503,195 26,185 2016 28,631 3.9%810,142,776 28,296 2017 28,715 3.8%831,012,100 28,940 2018 28,703 3.1%858,765,057 29,919 2019 28,981 3.3%897,599,532 30,972 2020 29,924 7.5%971,033,800 32,450 Sources: Metropolitan Council (population), Continuing Disclosure Document (unemployment rate) CITY OF FRIDLEY, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Last ten fiscal years 180 Table 14 2020 2011 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Medtronic, Inc.2,800 1 11.26% 3,003 1 18.50% Unity Medical Center 1,400 2 5.63% 1,037 3 6.39% Target 1,227 3 4.93% 842 4 5.18% Cummins Power (Onan)1,200 4 4.82% 1,700 2 10.47% BAE Systems 650 5 2.61% 637 5 3.92% Minco Products 592 6 2.38% 517 6 3.18% ISD #14 (Fridley Schools)467 7 1.87% N/A N/A Kurt Manufacturing 300 8 1.20% 233 8 1.43% Wal-Mart 250 9 1.00% 294 7 1.81% Taylor Communications 250 10 1.00% N/A N/A Park Construction N/A N/A 175 10 1.07% Lofthouse Bakery N/A N/A 215 9 N/A Parsons Electric N/A N/A N/A N/A Total 9,136 36.70% 8,653 51.95% Total City Employment 24,860 16,225 Source: Fridley Community Development Dept, MN Department of Employment and Economic Development CITY OF FRIDLEY, MINNESOTA PRINCIPAL EMPLOYERS Current year and nine years ago 181 Function/Program 2011 2012 2013 1 2014 1 General government: City administration 3.0 3.0 4.0 4.7 Finance 19.0 20.0 18.0 16.0 Human resource 2.0 2.0 2.0 2.0 Community development 7.0 7.0 8.2 9.8 Customer Relations - - - - Public safety: Police department 43.0 44.0 50.6 51.6 Fire department 8.0 8.0 7.8 7.6 Public works: Administration 2.0 2.0 1.2 0.6 Engineering 3.0 3.0 5.0 5.0 Mechanic 3.0 3.0 4.5 4.0 Streets 9.0 9.0 9.0 8.5 Water 5.0 5.0 7.0 7.0 Sewer 5.0 5.0 5.0 5.0 Parks 7.0 7.0 7.0 6.5 Storm Water - - - - Parks and recreation: Parks and recreation 8.0 8.0 8.0 9.6 Total 124.0 126.0 137.3 137.9 Source: City Finance Department 1Prior 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. 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, 182 Table 15 2015 1 2016 1 2017 1 2018 1 2019 1 2020 4.7 5.0 5.0 5.0 5.0 4.0 16.0 15.0 15.0 16.1 16.9 3.0 2.0 2.0 2.0 2.8 3.0 - 9.6 10.0 10.0 10.0 10.0 17.9 - - - 0.7 1.0 10.0 52.6 52.4 52.4 52.1 54.1 54.9 7.0 7.0 7.0 7.0 6.0 4.9 1.5 1.5 1.8 1.8 2.8 2.8 1.8 1.8 2.1 2.1 2.1 2.1 3.8 3.8 3.8 3.8 3.8 5.8 8.5 8.5 8.8 8.8 8.8 8.9 7.8 7.8 7.9 7.9 7.9 4.0 3.7 3.7 3.7 3.7 3.7 7.9 5.8 5.8 5.8 5.8 5.8 4.6 5.1 5.1 5.1 5.0 5.0 6.7 9.0 9.0 9.8 10.2 9.0 11.7 138.9 138.4 140.0 142.8 144.9 149.1 Full-Time Equivalent Employees as of December 31, 183 Function/Program 2011 2012 2013 2014 Police: Physical arrests 1,145 1,133 1,344 1,256 Parking violations 665 283 562 373 Traffic violations 2,860 2,590 2,826 3,245 Fire: Emergency responses 2,923 2,906 3,003 3,089 Fires occurred 114 121 119 110 Commercial inspections 890 1,016 1,110 1,505 Community development: Rental inspections 783 1,117 1,145 1,428 Refuse collection: Recyclables collected (tons per day)5.70 5.81 6.21 6.22 Recyclables collected (pounds per person)N/A N/A 164.67 164.59 Building inspection: Permits issued: Residential 2,232 1,606 2,191 1,974 Commercial 446 386 440 492 Total permit valuation $39,902,641 $35,763,059 $40,697,477 $47,109,811 Other public works: Street resurfacing (miles)2.2 3.1 3.8 3.3 Recreation Total Program Participant hours N/A 302,500 305,975 310,000 Total Senior Program Participant hours N/A 68,700 69,818 70,000 Nature Center Education Participants 24,231 24,266 23,419 23,860 Nature Center Special Event Participants N/A N/A N/A N/A Nature Center Facility Rental Visitors N/A N/A N/A N/A Water: Connections 8,222 8,227 8,230 8,243 Storage capacity (gallons)6,500,000 6,500,000 6,500,000 6,500,000 Average daily demand (gallons)3,730,000 3,993,285 4,227,975 2,517,808 Peak daily demand (gallons)6,622,000 8,661,000 9,009,000 7,439,000 Sewer: Connections 8,232 8,236 8,239 8,252 Sources: Various City departments. Fiscal Year CITY OF FRIDLEY, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last ten fiscal years 184 Table 16 2015 2016 2017 2018 2019 2020 1,386 752 979 1,043 911 761 278 922 553 612 1,741 671 2,592 2,601 2,250 2,622 1,932 1,883 3,047 3,268 3,439 2,415 2,596 3,342 103 127 126 126 105 123 1,663 789 867 829 1,672 862 1,881 1,559 1,434 1,410 1,643 1,260 6.33 5.99 6.62 6.20 6.37 6.57 165.96 156.54 169.25 158.29 162.28 163.28 4,642 2,227 1,804 2,007 2,093 2,329 642 599 612 514 453 378 $60,598,103 $73,636,057 $103,663,306 $91,601,072 $98,100,786 $99,191,402 2.9 2.2 1.9 0.2 0.6 3.6 311,500 315,000 300,000 321,927 318,000 6,892 62,218 65,500 65,500 21,615 N/A N/A 20,404 15,609 16,339 16,872 15,587 3,785 N/A 4,751 2,670 4,200 3,700 145 N/A N/A 5,364 5,500 4,456 1,059 8,245 8,374 8,259 8,261 8,305 8,343 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 6,500,000 2,968,901 3,560,000 3,390,000 3,233,000 3,056,000 3,370,000 6,803,000 6,392,000 6,379,000 5,900,000 5,720,000 6,458,000 8,254 8,271 8,235 8,239 8,291 8,326 Fiscal Year 185 Table 17 Function/Program 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Police: Stations 1111111111 Squad cars 12 12 12 15 13 13 12 15 15 15 Fire stations 3333333322 Other public works: Streets (miles) 125.3 125.3 125.3 125.3 125.5 125.5 125.5 125.8 126.1 126.1 Highways (miles) 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 Streetlights 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,059 1,093 1,123 Traffic signals 36 36 36 36 36 36 36 36 36 36 Parks and recreation: Acreage 682 682 682 682 682 682 682 665 665 666 Playgrounds 29 29 29 29 29 29 29 28 28 29 Baseball/softball diamonds 22 22 22 22 22 22 21 21 21 21 Soccer/football fields 2222222222 Water: Water mains (miles) 113.0 113.0 113.0 113.0 113.2 113.2 113.2 116.0 117.5 127.0 Fire hydrants 1,013 1,013 1,013 1,013 1,013 1,013 1,013 1,050 1,064 1,040 Storage capacity (million gallons) 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 Wastewater: Sanitary sewers (miles)103.0 103.0 103.0 103.0 103.0 103.0 103.0 106.0 107.5 109.0 Storm sewers (miles)52.0 52.0 52.0 52.0 52.0 52.2 52.2 54.5 57.0 115.5 Sources: Various City departments. CITY OF FRIDLEY, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last ten fiscal years 186