051721 Work Session Meeting Packet
CITY COUNCIL
WORK SESSION MEETING
New Hope City Hall, 4401 Xylon Avenue North
Civic Center Conference Room
Monday, May 17, 2021
6:30 p.m.
Mayor Kathi Hemken
Council Member John Elder
Council Member Andy Hoffe
Council Member Michael Isenberg
Council Member Jonathan London
Governor Walz has declared a peacetime emergency (Emergency Executive Order 20‐01). City Hall
will be open to the public for this meeting; however due to the current COVID‐19 pandemic, the
city is also conducting the meeting by electronic means in accordance with Minnesota Statutes
section 13D.021. The public may participate in this meeting by phone by calling 415‐655‐0001 and
entering meeting/access code 177 704 7287 followed by the # sign. When prompted for a password,
simply press #. If you have comments about a matter on the agenda, please submit an email to
cityhall@newhopemn.gov or call the city clerk at 763‐531‐5117.
1. CALL TO ORDER – May 17, 2021
2. ROLL CALL
11. UNFINISHED & ORGANIZATIONAL BUSINESS
11.1 Review 2020 Audit and Comprehensive Annual Report with AEM
11.2 Discuss transfer of a portion of the 2020 Audit General Fund Balance to
Temporary Financing Fund
11.3 Discuss transfer from Park Infrastructure Fund to Ice Arena Operating Fund
11.4 Discussion on potential 2021 city events
11.5 Resolution calling for a closed meeting of the New Hope City Council authorized
by Minn. Stat §13D.05, Subd. 3(d) to discuss security reports and issues
12. OTHER BUSINESS
13. ADJOURNMENT
I:\RFA\City Manager\2021\Audit\11.1 Q ‐ Review 2020 Audit with AEM 051721.docx
Request for Action
May 17, 2021
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Review 2020 Audit and Comprehensive Annual Financial Report with AEM
Requested Action
Staff requests to review the 2020 audit and Comprehensive Annual Financial Report with the City Council.
Representatives from AEM will be present and facilitate the review. The audit will then be officially
presented by Bill Lauer of MMKR to the Council at the May 24, 2021 council meeting. Once the audit is
accepted by the Council, it will be forwarded to the State of Minnesota to comply with all applicable state
requirements.
Policy/Past Practice
The policy and past practice over the past several years has been to present the preliminary audit documents
to the City Council at a work session for review and discussion before the audit is formally presented at a
City Council meeting.
Background
Included in your packet, please find:
Corrective Action Plan (no findings)
• Management report
• Special purpose audit report
• Preliminary comprehensive annual financial report (CAFR) for the fiscal year ending December 31, 2020.
2020 was a very unusual year with the COVID‐19 pandemic, but overall I feel that staff, along with support
from the Council, handled the financial aspects of the situation very well. The audit is a very positive report
and AEM, finance staff and others have done a great job preparing the information for the comprehensive
financial report, which is necessary to complete the audit management and special purpose reports.
Total general fund expenses were under budget by $1,279,561, primarily due to the pool not opening and
vacancies/new hires in the police department. Total general fund revenues were over budget by $506,822,
primarily due to the Federal CARES funding received. The overall fund balance for the 2020 audit was
$1,786,383 ($1,279,561 + $506,822). The city received $1,676,159 in CARES funding and if that is subtracted
from the fund balance (1,786,383 ‐ $1,676,159 = $110,224) the city would have still ended up with a positive
fund balance. The department heads, AEM, and all employees deserve credit for helping to hold down
expense and continue city operations under very unusual circumstances.
As noted in the Management Report, MMKR issued an unmodified opinion and reported no deficiencies in
internal control that they consider material weaknesses, no instances of noncompliance and they reported no
findings. They reported they encountered no significant difficulties in dealing with management in
performing and completing the audit. They noted one item regarding electronic fund transfers and credit
Agenda Section
Work Session
Item Number
11.1
Request for Action, Page 2
card purchases being included in the listing of disbursements approved by the Council and that change has
been implemented. Staff will be coordinating with AEM to submit an application for the 2020 Excellence in
Achievement for Financial Reporting Certificate similar to the award recently received for the 2019 report.
Staff is recommending the Council officially accept the audit at the May 24 council meeting.
The following attachments are being sent electronically and hard copies will be available at the work session.
Attachments
Management Report
Special Purpose Audit Report
Comprehensive Annual Financial Report
DRAFT
Management Report
for
City of New Hope, Minnesota
December 31, 2020
DRAFT
To the City Council and Management
City of New Hope, Minnesota
We have prepared this management report in conjunction with our audit of the City of New Hope,
Minnesota’s (the City) financial statements for the year ended December 31, 2020. We have organized
this report into the following sections:
Audit Summary
Governmental Funds Overview
Enterprise Funds Overview
Government-Wide Financial Statements
Legislative Updates
Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
INSERT DATE
-1-
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA, GOVERNMENT AUDITING STANDARDS, AND TITLE 2 U.S. CODE OF FEDERAL
REGULATIONS (CFR) PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE)
We have audited the financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2020. Professional standards require that we provide you with information about our
responsibilities under auditing standards generally accepted in the United States of America, Government
Auditing Standards, the Uniform Guidance, as well as certain information related to the planned scope
and timing of our audit. We have communicated such information to you verbally and in our audit
engagement letter. Professional standards also require that we communicate the following information
related to our audit.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINION AND FINDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2020:
We issued an unmodified opinion on the City’s basic financial statements.
We reported no deficiencies in the City’s internal control over financial reporting that we
considered to be material weaknesses.
The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
We reported that the Schedule of Expenditures of Federal Awards is fairly stated, in all material
respects, in relation to the basic financial statements.
The results of our tests indicate that the City has complied, in all material respects, with the types
of compliance requirements that could have a direct and material effect on each of its major
federal programs.
We reported no deficiencies in the City’s internal controls over compliance that we considered to
be material weaknesses with the types of compliance requirements that could have a direct and
material effect on each of its major federal programs.
We reported no findings based on our testing of the City’s compliance with Minnesota laws and
regulations.
-2-
OTHER OBSERVATIONS AND RECOMMENDATIONS
Council Approval of Claims
During our audit, we noted that the itemized details of disbursements, including electronic funds transfers
and credit cards purchases, are not being included in the council packet for council members to review to
ensure each claim is appropriate based on state statutes and internal City policies prior to approval. We
recommend that the itemized detail of all claims to be approved be included in the council packet or
otherwise made available to Council members for review prior to approval.
Uniform Guidance Written Controls and Micro-Purchase Threshold
Federal Uniform Guidance (UG) requires that nonfederal entities must have and use documented
procurement procedures consistent with 2CFR § 200.317-320 for the acquisition of property or services
required under a federal award or sub-award. Effective August 31, 2020, the federal micro-purchase
threshold, which is the threshold that allows for procurements without soliciting competitive price or rate
quotations given certain conditions, was increased from $3,500 to $10,000 in the Federal Acquisition
Regulations (FAR).
Effective November 12, 2020, the UG was also revised to allow nonfederal entities to establish a
micro-purchase threshold higher than the $10,000 threshold established in the FAR under certain
circumstances. The nonfederal entity may self-certify a micro-purchase threshold up to $50,000 if the
requirements in 2CFR § 200.320(a)(1)(iv) are followed. Requirements include an annual self-
certification and clear documentation of the justification to support the increase in the threshold.
Acceptable reasons for justification must meet one of the following criteria:
A qualification as a low-risk auditee, in accordance with the criteria in §200.520 for the most
recent audit,
An annual internal institutional risk assessment to identify, mitigate, and manage financial risks,
or,
A higher threshold consistent with state law.
This flexibility would allow Minnesota local governments to increase and align their federal procurement
procedures, specifically the micro-purchase threshold, with state law, which allows for procurements
below $25,000 to be made without competitive price or rate quotations.
We recommend that the City review its current federal procurement policy. If the micro-purchase
threshold in your currently adopted policy is below the allowable FAR limit of $10,000, you would need
to make a one-time amendment to the policy to adopt the $10,000 FAR limit before using it. If you prefer
to increase your federal micro-purchase threshold to $25,000 to align it with state law, in addition to
amending your federal procurement policy, you would need to annually certify the higher threshold and
the justification for using the higher threshold.
-3-
Uniform Guidance Written Controls on Subrecipient Monitoring
Federal Uniform Guidance requires nonfederal entities to have and use documented subrecipient
monitoring and management procedures consistent with 2CFR § 200.331-333 for disbursements of
federal funds determined to be a federal subaward. A subaward is an agreement between the City and an
outside party for the purpose of carrying out a portion of a federal award, which creates a federal
assistance relationship with the subrecipient. The Uniform Guidance requirements for pass-through
entities include, but are not limited to:
Providing the subrecipient with the best information available to describe the key identifiers and
terms of the federal award and subaward;
A written risk assessment evaluating each subrecipient’s risk of noncompliance with federal
statutes, regulations, and the terms and conditions of the subaward for purposes of determining
the appropriate subrecipient monitoring;
Written documentation of monitoring activities of the subrecipient as necessary to ensure that the
subaward is used for authorized purposes, in compliance with federal statutes, regulations, and
the terms and conditions of the subaward, and that the subaward performance goals are achieved;
and
Written procedures verifying that every subrecipient is audited as required by the Uniform
Guidance Subpart F when it is expected that the subrecipient’s federal awards expended during
the respective fiscal year equaled or exceeded the threshold set forth in 2CFR § 200.501.
During our audit, we noted that the City had developed and adopted written federal grant procedures;
however, these did not fully address procedures specific to subrecipient monitoring as it relates to federal
awards. We recommend that the City review its current federal grant procedures to ensure they include
and are consistent with the subrecipient requirements specified in 2CFR § 200.332.
Electronic Funds Transfers Fraud
As the use of electronic funds transfers and payment methods has become more prevalent, we have seen
increases in both the incidences of fraud related to these transactions and the dollar amounts involved.
Operational changes related to the COVID-19 pandemic, including greater reliance on technology and
more employees working remotely, have tended to increase risk in this area. We urge cities to carefully
review controls over these transactions, and consider best practices to address these risks, such as:
Ensuring segregation of duties over these transactions by involving more than one employee in
the process.
Requiring multi-factor authentication of requests for electronic payments from new vendors or for
changes in wiring instructions for existing vendors. It is recommended that changes for existing
vendors be verified through trusted contact information used previously for that vendor, not as
provided in the change request, to verify the accuracy of the change.
Educate employees on the controls in place to protect the organization’s financial assets and
ensure management is supportive and accepting of the processes in place. Attempted fraudulent
transactions are often initiated using the profile of a supervisor. Employees must be comfortable
questioning unusual transactions or requests, and instructed not to circumvent internal control
procedures regardless of whom they believe initiated the transaction.
Recommended cyber security measures, such as limiting network access and requiring robust
passwords that are changed regularly, should be implemented and followed by all city employees,
not just those directly involved with financial transactions.
Review insurance policies to understand the coverage provided for financial losses due to
cybersecurity risks and evaluate whether they provide adequate coverage based on management’s
assessment of these risks.
-4-
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No
new accounting policies were adopted and the application of existing policies was not changed during the
year ended December 31, 2020.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Depreciation – Management’s estimates of depreciation expense are based on the estimated
useful lives of the assets.
Compensated Absences – Management’s estimate is based on current rates of pay; vacation,
wellness, personal, and sick leave balances; and the likelihood that accrued sick leave will
ultimately be paid at termination.
Pension and Other Post-Employment Benefit (OPEB) Liabilities – The City has recorded
liabilities and activity for pension benefits and other post-employment benefits (OPEB). These
obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68
and 75. These actuarial calculations include significant assumptions, including projected changes,
healthcare insurance costs, investment returns, retirement ages, proportionate share, and
employee turnover.
We evaluated the key factors and assumptions used by management in the areas discussed above in
determining that they are reasonable in relation to the basic financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. The disclosures included in the notes to the basic financial statements related to OPEB
and pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and
complex estimates involved in determining the disclosures.
The financial statement disclosures are neutral, consistent, and clear.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. There were no misstatements detected as a result of audit procedures that were material,
either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
-5-
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated INSERT DATE.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City’s auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER MATTERS
We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the
pension and OPEB-related required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on
the RSI.
We were engaged to report on the supplemental information accompanying the financial statements, and
the separately issued Schedule of Expenditures of Federal Awards, which are not RSI. With respect to this
supplemental information, we made certain inquiries of management and evaluated the form, content, and
methods of preparing the information to determine that the information complies with accounting
principles generally accepted in the United States of America, the method of preparing it has not changed
from the prior period, and the information is appropriate and complete in relation to our audit of the
financial statements. We compared and reconciled the supplemental information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory and statistical sections, which accompany the financial
statements, but are not RSI. Such information has 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 it.
-6-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds.
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2019 fiscal year, local ad valorem property tax levies provided 40.8 percent of the total
governmental fund revenues for cities over 2,500 in population, and 37.6 percent for cities under 2,500 in
population. Total property taxes levied by all Minnesota cities for taxes payable in 2020 increased
6.1 percent from the prior year.
The total tax capacity value of property in Minnesota cities increased about 6.5 percent for the 2020 levy
year. The tax capacity values used for levying property taxes are based on the assessed market values for
the previous fiscal year (e.g., tax capacity values for taxes levied in 2020 were based on assessed market
values as of January 1, 2019), so the trend of change in these tax capacity values lags somewhat behind
the housing market and economy in general.
The City’s taxable market value increased 7.9 percent for taxes payable in 2019 and 10.4 percent for taxes
payable in 2020. The following graph shows the City’s changes in taxable market value over the past
10 years:
$–
$300,000,000
$600,000,000
$900,000,000
$1,200,000,000
$1,500,000,000
$1,800,000,000
$2,100,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Taxable Market Value
-7-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value. Each property classification, such as
commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of its tax base that is in each property classification from year-to-year, as well as legislative
changes to tax rates. The City’s tax capacity increased 6.4 percent for taxes payable in 2019 and
11.0 percent for taxes payable in 2020.
The following graph shows the City’s change in tax capacities over the past 10 years:
$–
$3,000,000
$6,000,000
$9,000,000
$12,000,000
$15,000,000
$18,000,000
$21,000,000
$24,000,000
$27,000,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Local Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years:
2018 2019 2020
Average tax rate
City 58.6 68.0 66.1
County 42.8 41.8 41.1
School 32.0 29.9 26.4
Special taxing 9.0 8.9 8.4
Total 142.4 148.6 142.0
Rates Expressed as a Percentage of Net Tax Capacity
City of New Hope
Both the City portion of the tax rate and the overall tax rate on New Hope residents declined for the 2020
levy year, due to the increasing taxable market value of property within the City. The City’s portion of the
tax rate increased in 2019 due to new debt levies related to the bonds issued by the City to finance its
police station/City Hall facility and community pool improvement projects.
-8-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2020, presented both by fund balance classification and by major fund.
2020 2019 Change
Fund balances of governmental funds
Total by classification
Nonspendable 24,499$ 22,980$ 1,519$
Restricted 9,016,306 13,304,922 (4,288,616)
Committed 4,639,390 5,033,555 (394,165)
Assigned 6,993,400 6,248,128 745,272
Unassigned 6,781,656 4,641,403 2,140,253
Total governmental funds 27,455,251$ 29,250,988$ (1,795,737)$
Total by fund
General 8,926,086$ 7,139,703$ 1,786,383$
Economic Development Authority Special Revenue 4,320,456 4,721,758 (401,302)
HRA Construction Capital Projects 5,379,088 4,655,140 723,948
City Hall CIP Capital Projects 1,217,360 1,794,294 (576,934)
Street Infrastructure Capital Projects 250,697 15,854 234,843
Park/Pool Improvement Capital Projects 650,336 5,316,815 (4,666,479)
HRA Bonds Debt Service (2,119,802) (2,244,096) 124,294
Nonmajor funds 8,831,030 7,851,520 979,510
Total governmental funds 27,455,251$ 29,250,988$ (1,795,737)$
as of December 31,
Governmental Funds Change in Fund Balance
Fund Balance
In total, the fund balances of the City’s governmental funds decreased by $1,795,737 during the year
ended December 31, 2020.
The decrease was primarily in restricted fund balances, which reflects the spend down of bond proceeds
in the Park/Pool Improvement Capital Projects Fund for work completed on the Civic Center Park
improvements and new outdoor pool at the previous City Hall location.
The increase in unassigned fund balances is primarily attributable to the improvement in the financial
position of the City’s General Fund in 2020.
-9-
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past
three years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as a
city’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year-to-year, due to the effect of inflation and
changes in its operation. Also, certain data on these tables may be classified differently than how they
appear in the City’s financial statements in order to be more comparable to the state-wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of the City. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in
presenting per capita information is the accuracy of the population count, which for most years is based
on estimates.
Year 2018 2019 2020
Population 10,000–20,000 20,000–100,000 21,790 22,376 22,376
Property taxes 489$ 512$ 592$ 680$ 749$
Tax increments 28 44 51 59 86
Franchise and other taxes 50 50 43 43 43
Special assessments 38 53 13 9 10
Licenses and permits 35 51 17 14 18
Intergovernmental revenues 297 201 101 176 192
Charges for services 108 115 64 62 44
Other 78 79 42 70 35
Total revenue 1,123$ 1,105$ 923$ 1,113$ 1,177$
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
City of New HopeState-Wide
December 31, 2019
In total, the City’s governmental fund revenues for 2020 were $26,311,040, an increase of $1,403,630
(5.6 percent) from the prior year, or $64 more per capita than the prior year. Property tax revenue was $69
per capita higher than last year, due to an increase in the City’s levy. Revenue from tax increments was
$27 per capita higher than last year, as it was the second year the City collected tax increments from its
new BLR Apartments TIF District. Revenue from intergovernmental revenue was $16 per capita higher
than last year, due to the City receiving a $1.64 million federal Coronavirus Relief Funds (CRF) grant
entitlement in 2020. Charges for services were $18 per capital lower than the prior year, with less charges
for services in park and recreation rental and program fees, due to the impact of the COVID-19 pandemic.
Revenue from “other” sources, as presented above, were $35 per capita lower than the prior year, mainly
due to decrease in investment earnings of $558,748 from decline market performance.
-10-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources, such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Year 2018 2019 2020
Population 10,000–20,000 20,000–100,000 21,790 22,376 22,376
Current
128$ 107$ 82$ 85$ 92$
282 306 367 377 374
149 119 79 80 83
124 106 93 91 91
75 97 37 23 58
758 735 658 656 698
Capital outlay
and construction 376 355 595 1,009 387
Debt service
182 88 37 43 85
41 28 42 61 79
223 116 79 104 164
Total expenditures 1,357$ 1,206$ 1,332$ 1,769$ 1,249$
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
City of New Hope
All other
State-Wide
December 31, 2019
Principal
Interest and fiscal
General government
Public safety
Public works
Culture and recreation
The City’s total governmental funds expenditures were $27,958,646 for 2020, a decrease of $11,613,291
(29.3 percent) from the prior year, or $520 per capita. Current expenditures increased $42 per capita,
mainly due to a loss on the sale of land held for resale in the Economic Development Authority (EDA)
Special Revenue Fund. Capital outlay expenditures decreased $622 per capita, due to prior year
construction of the new police station/City Hall facility and the new outdoor pool. Debt service
expenditures also increased $60 per capita, due to the debt issued in recent years to finance those
improvement projects.
-11-
GENERAL FUND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and parks and
recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual expenditures and transfers out to reflect the
change in the size of the General Fund operation over the same period.
2016 2017 2018 2019 2020
Fund Balance $6,273,678 $6,888,655 $7,180,951 $7,139,703 $8,926,086
Cash Balance (Net)$6,090,997 $6,750,104 $6,992,743 $7,187,781 $8,819,883
Exp & Trans Out $12,624,250 $13,290,729 $13,652,053 $14,337,748 $14,130,989
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
General Fund Financial Position
Year Ended December 31,
The total fund balance of the City’s General Fund increased $1,786,383 in 2020, as compared to a
breakeven budget. Unassigned fund balance was $8,901,587 at the end of 2020 fiscal year, which
represents approximately 63.0 percent of annual expenditures and transfers out based on 2020 levels.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has grown. This is an important factor because a government, like any
organization, requires a certain amount of equity to operate. A healthy financial position allows the City
to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
the City’s bond rating and resulting interest costs.
A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are
made fairly evenly during the year other than the impact of seasonal services, such as snowplowing, street
maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Property
taxes comprise about 67 percent of the fund’s total annual revenue. Approximately half of these revenues
are received by the City in June/July and the rest in November/December. Consequently, the City needs
to have adequate cash reserves to finance its everyday operations between these payments.
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The following graph reflects the City’s General Fund revenue sources for 2020 compared to budget:
$– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11
Property Taxes
Franchise Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines
Other
Millions
General Fund Revenue
Budget to Actual
Budget Actual
Total General Fund revenue for 2020 was $15,578,084, which was $506,822 (3.4 percent) higher than the
final budget. Intergovernmental revenue exceeded budget by $1,144,980, due to the City not amending its
budget for the federal CRF entitlement awarded and recognized in the current year. Charges for services
were $1,144,980 under budget, mainly due to the City budgeting for revenues from swimming pool
operations, which did not open as scheduled in 2020 due to the COVID-19 pandemic.
The following graph presents the City’s General Fund revenues by source for the last five years. The
graph reflects the City’s reliance on property taxes and other local sources of revenue.
Property Taxes Intergovernmental Other
2016 $8,954,626 $1,170,180 $2,457,510
2017 $9,541,667 $1,177,400 $2,867,879
2018 $9,971,064 $1,332,638 $2,315,213
2019 $10,297,018 $1,342,543 $2,324,664
2020 $10,422,823 $3,161,645 $1,993,616
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
General Fund Revenue by Source
Year Ended December 31,
Total General Fund revenue for 2020 was $1,613,859 (11.6 percent) higher than the prior year. The
majority of the increase was in intergovernmental revenue which increased $1,819,102 from last year,
mainly due to the CRF entitlement discussed above. The remaining revenue sources of the General Fund
were $331,048 less than 2020, primarily due to less charges for services in the current year.
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The following graph illustrates the components of General Fund spending for 2020 compared to budget:
$– $1 $2 $3 $4 $5 $6 $7 $8 $9
General Government
Public Safety
Public Works
Culture and Recreation
Millions
General Fund Expenditures
Budget to Actual
Budget Actual
Total General Fund expenditures for 2020 were $14,130,989, which was $1,279,561 (8.3 percent) under
budget. Public safety expenditures were $459,421 under budget, primarily in police personal services, as
several positions were vacant during the year. Culture and recreation expenditures were $846,975 under
budget, mainly in swimming pool personnel and other service costs due to the pool not opening in the
current year as anticipated.
The following graph illustrates the City’s General Fund expenditures by function over the last five years:
General Government Public Safety Public Works
Culture and
Recreation
2016 $1,750,414 $7,301,852 $1,389,553 $1,932,431
2017 $1,767,879 $7,868,754 $1,435,256 $2,068,840
2018 $1,788,108 $8,107,759 $1,491,045 $2,015,141
2019 $1,904,447 $8,482,568 $1,564,148 $2,032,585
2020 $2,063,407 $8,409,878 $1,622,046 $2,035,658
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
General Fund Expenditures by Function
Year Ended December 31,
Total General Fund expenditures were $147,241 (1.1 percent) higher than the previous year. General
government expenditures were $158,960 higher than the prior year, mainly in other services and charges
for the newly opened city hall, and personnel service costs for elections.
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ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which includes the Sewer
Utility, Water Utility, Golf Course, Ice Arena, Storm Water, and Street Lighting funds.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2020, presented both by classification and by fund:
2020 2019 Change
Net position of enterprise funds
Total by classification
Net investment in capital assets 20,127,288$ 19,315,353$ 811,935$
Restricted 1,560,053 1,358,401 201,652
Unrestricted 4,792,042 3,511,168 1,280,874
Total enterprise funds 26,479,383$ 24,184,922$ 2,294,461$
Total by fund
Sewer Utility 5,030,413$ 4,395,720$ 634,693$
Water Utility 8,678,102 7,456,222 1,221,880
Golf Course 615,689 525,574 90,115
Ice Arena 3,663,197 3,669,781 (6,584)
Storm Water 8,051,028 7,726,231 324,797
Street Lighting 440,954 411,394 29,560
Total enterprise funds 26,479,383$ 24,184,922$ 2,294,461$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
In total, the net position of the City’s enterprise funds increased by $2,291,461 during the year ended
December 31, 2020. The net investment in enterprise capital assets increased $811,935, mainly due to
current year infrastructure improvements. The $1,560,053 of restricted net position represents cash held in
an escrow account in the Ice Arena Fund for the future payment of the City’s energy conservation lease
revenue bonds. Unrestricted net position increased by $1,280,874, mainly due to positive operating results
in the Sewer Utility, Water Utility, and Storm Water funds.
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SEWER UTILITY FUND
The following graph presents five years of operating results for the City’s Sewer Utility Fund:
2016 2017 2018 2019 2020
Op. Rev.$2,627,875 $2,899,257 $3,154,709 $3,380,075 $3,712,613
Op. Exp.$2,175,482 $2,420,994 $2,684,030 $2,843,056 $3,119,273
Op. Inc. (Loss)$452,393 $478,263 $470,679 $537,019 $593,340
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Sewer Utility Operating Results
Year Ended December 31,
The Sewer Utility Fund ended 2020 with a total net position of $5,030,413, of which $3,825,806
represents the net investment in sewer collection system capital assets, leaving an unrestricted balance of
$1,204,607. Net position increased $634,693 in the current year.
Operating revenue in the Sewer Utility Fund for 2020 increased $332,538 (9.8 percent) from the previous
year, which primarily reflects a 5.0 percent rate increase implemented for the year and an increase in
consumption.
Operating costs for 2020 were $276,217 (9.7 percent) more than last year, mainly in personnel services
(full-time salaries and benefits).
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WATER UTILITY FUND
The following graph presents five years of operating results for the City’s Water Utility Fund:
2016 2017 2018 2019 2020
Op. Rev.$3,835,031 $3,994,122 $4,391,025 $4,387,321 $5,139,616
Op. Exp.$3,519,233 $3,462,858 $4,029,601 $3,720,072 $4,178,233
Op. Inc. (Loss)$315,798 $531,264 $361,424 $667,249 $961,383
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
Water Utility Operating Results
Year Ended December 31,
The Water Utility Fund ended 2020 with a total net position of $8,678,102, of which $5,925,381
represents the net investment in water distribution system capital assets, leaving an unrestricted balance of
$2,725,721. Water Utility Fund net position increased $1,221,880 in 2020.
Operating revenue in the Water Utility Fund for 2020 increased $752,295 (17.1 percent) from the prior
year, which primarily reflects a 5.0 percent rate increase implemented for the year, along with an increase
in consumption due in part to higher irrigation usage caused.
Operating costs for 2020 were $458,161 (12.3 percent) more than the prior year, mainly due to an
increase in water purchased due to higher consumption.
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GOLF COURSE FUND
The following graph presents five years of operating results for the City’s Golf Course Fund:
2016 2017 2018 2019 2020
Op. Rev.$299,856 $273,247 $274,735 $282,323 $401,666
Op. Exp.$338,940 $335,983 $309,757 $327,422 $324,994
Op. Inc. (Loss)$(39,084) $(62,736) $(35,022) $(45,099) $76,672
$(100,000)
$(50,000)
$–
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Golf Course Fund
Year Ended December 31,
The Golf Course Fund ended 2020 with a total net position of $615,689, an increase of $90,115. Of this,
$449,680 represents the net investment in golf course capital assets, leaving $166,009 in unrestricted net
position.
Golf Course Fund operating revenue for 2020 increased $119,343 (42.3 percent) from the prior year,
mainly due to an increase in rounds played. The golf course benefitted from favorable weather conditions
and an increased demand for outdoor activities during the COVID-19 pandemic.
Operating expenses were $2,428 (0.7 percent) lower than the prior year.
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ICE ARENA FUND
The following graph presents five years of operating results for the City’s Ice Arena Fund:
2016 2017 2018 2019 2020
Op. Rev.$713,649 $811,661 $825,531 $852,765 $560,316
Op. Exp.$890,144 $951,444 $942,466 $953,352 $966,868
Op. Inc. (Loss)$(176,495) $(139,783) $(116,935) $(100,587) $(406,552)
$(500,000)
$(300,000)
$(100,000)
$100,000
$300,000
$500,000
$700,000
$900,000
$1,100,000
Ice Arena Fund
Year Ended December 31,
The Ice Arena Fund ended 2020 with a total net position of $3,663,197, a decrease of $6,584. Of this,
$2,457,637 represents the net investment in ice arena capital assets, and $1,560,053 is restricted for debt
service, leaving an unrestricted deficit balance of $354,493.
Ice Arena Fund operating revenue for 2020 decreased $292,449 (34.3 percent) from the prior year,
primarily from decreases in ice rental fees and ticket sales due to the impact of COVID-19 restrictions.
Operating expenses were $13,516 (1.4 percent) higher than the prior year, as increases in personnel costs
were partially offset by decreases in utilities and other services and charges.
-19-
STORM WATER FUND
The following graph presents five years of operating results for the City’s Storm Water Fund:
2016 2017 2018 2019 2020
Op. Rev.$1,037,429 $1,082,348 $1,139,007 $1,190,058 $1,259,707
Op. Exp.$797,604 $834,963 $738,307 $874,407 $886,021
Op. Inc. (Loss)$239,825 $247,385 $400,700 $315,651 $373,686
$–
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
Storm Water Fund
Year Ended December 31,
The Storm Water Fund ended 2020 with a total net position of $8,051,028, an increase of $324,797 Of
this, $7,098,564 represents the net investment in storm water collection system capital assets, leaving an
unrestricted net position of $952,464.
Storm Water Fund operating revenues for 2020 increased $69,649 (5.9 percent) from the previous year,
mainly due to a 5.0 percent rate increase implemented in 2020.
Operating expenses were $11,614 (1.3 percent) higher than last year, mainly due to an increase in other
services and charges, partially offset by lower personnel services costs.
-20-
STREET LIGHTING FUND
The following graph presents five years of operating results for the City’s Street Lighting Fund:
2016 2017 2018 2019 2020
Op. Rev.$137,525 $137,491 $144,582 $152,975 $161,866
Op. Exp.$102,912 $101,625 $119,198 $116,612 $133,159
Op. Inc. (Loss)$34,613 $35,866 $25,384 $36,363 $28,707
$–
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Street Lighting Fund
Year Ended December 31,
The Street Lighting Fund ended 2020 with a total net position of $440,954 an increase of $29,560. Of
this, $370,220 represents the net investment in street lighting capital assets, leaving an unrestricted net
position of $70,734.
Street Lighting Fund operating revenue for 2020 increased $8,891 (5.8 percent) from the previous year,
which reflects a 5.0 percent rate increase implemented this year.
Operating expenses were $16,547 (14.2 percent) higher than the previous year, mainly due to increase in
depreciation expense.
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of the City’s net position as of December 31, 2020 and 2019
for governmental activities and business-type activities.
2020 2019 Change
Net position
Governmental activities
Net investment in capital assets 31,359,813$ 30,139,510$ 1,220,303$
Restricted 7,740,859 6,628,138 1,112,721
Unrestricted 19,716,696 16,702,142 3,014,554
Total governmental activities 58,817,368 53,469,790 5,347,578
Business-type activities
Net investment in capital assets 20,127,288 19,315,353 811,935
Restricted 1,560,053 1,358,401 201,652
Unrestricted 4,534,420 3,054,187 1,480,233
Total business-type activities 26,221,761 23,727,941 2,493,820
Total net position 85,039,129$ 77,197,731$ 7,841,398$
As of December 31,
The City’s total net position at December 31, 2020 increased $7,841,398 from the previous year-end.
Governmental activities net position increased by $5,347,578 overall. The increase in net investment in
capital assets is mainly due to construction of the new pool facility and Civic Center Park. The increase in
restricted net position was mainly due to increase in tax increment revenues in the HRA Construction
Capital Projects Fund which are restricted for economic development, and an increase in resources
restricted for future debt service. The increase in unrestricted net position was mainly due to improvement
in the fund balance of the General Fund, as well as in the net position of the Central Garage and
Employee Leave Internal Service Funds.
Business-type activities net position increased $2,493,820, as outlined in the discussion of enterprise fund
operations earlier in this report.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net position. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the City’s government-wide net position for the years ended
December 31, 2020 and 2019:
2019
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 2,945,625$ 320,269$ (2,625,356)$ (1,494,881)$
Public safety 8,968,009 1,174,193 (7,793,816) (7,247,668)
Public works 3,725,075 1,246,728 (2,478,347) (2,567,911)
Culture and recreation 2,270,751 602,299 (1,668,452) 463,928
Economic development 1,350,348 76,250 (1,274,098) (749,651)
Interest on long-term debt 1,570,807 – (1,570,807) (1,412,763)
Business-type activities
Sewer utility 3,096,526 3,805,948 709,422 545,506
Water utility 4,195,981 5,497,390 1,301,409 936,852
Golf course 316,173 423,895 107,722 (23,236)
Ice arena 1,016,296 601,876 (414,420) (108,919)
Storm water 877,244 1,260,128 382,884 319,691
Street lighting 133,270 161,866 28,596 36,243
Total net (expense) revenue 30,466,105$ 15,170,842$ (15,295,263) (11,302,809)
General revenues
Property taxes and tax increments 18,740,097 16,583,231
Franchise taxes 958,162 957,448
Unrestricted grants and contributions 2,497,630 803,035
Unrestricted investment earnings 918,772 1,561,604
Gain on sale of capital assets 22,000 369,163
Total general revenues 23,136,661 20,274,481
Change in net position 7,841,398$ 8,971,672$
2020
Net (expense) revenue
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such as property taxes. It also
shows that, for the most part, the City’s business-type activities are generating sufficient program
revenues (service charges and program-specific grants) to cover expenses.
The difference in the net change in general government was mainly due a loss on disposal of capital assets
in 2020 related to the old city hall buildings and improvements. The difference in net change in culture
and recreation was primarily due to the capital grant received for the pool improvement project in the
prior year. The difference in the net change in economic development was mainly due to a loss on the sale
of land held for resale by the City’s EDA.
-23-
LEGISLATIVE UPDATES
The 2020 legislative session, coming in the second half of the state’s fiscal biennium, was expected to be
a typical short session focused primarily on making relatively minor modifications to the biennial budget.
Given a projected budget surplus of $1.5 billion going into the session, consideration of a substantial
capital investment and bonding bill was also a potential focus.
The start of the legislative session in February was followed by a series of significant events that changed
the course of the session, including a world-wide health pandemic, the death of George Floyd while in
police custody and the ensuing protests and unrest, and a hotly contested national election. On March 13,
2020, the Governor issued an executive order declaring a peacetime emergency, giving his administration
the ability to quickly impose restrictions and measures aimed at mitigating the COVID-19 outbreak. By
early May, the state’s budget outlook had changed from a robust surplus to a projected deficit of
$2.4 billion. The legislative session ultimately encompassed an unprecedented seven special sessions,
more than double the previous state record of three, with the final special session in mid-December.
In the end, a $1.87 billion omnibus bonding bill was passed that included $1.36 billion in general
obligation state bonding for capital improvements, $31.0 million in supplemental General Fund budget
spending, and provisions for tax relief and economic assistance. The session also yielded a new Police
Accountability Act, and a $217.0 million economic relief package to help businesses negatively impacted
by the pandemic. The following is a brief summary of legislative changes from the 2020 session or
previous legislative sessions potentially impacting Minnesota cities.
Coronavirus Aid, Relief, and Economic Security (CARES) Act – The CARES Act provided federal
economic relief to protect the American people from the public health and economic impacts of
COVID-19. Minnesota received approximately $2.2 billion in funding under the CARES Act.
When the first legislative special session ended without an agreement on the distribution of approximately
$841.5 million of federal Coronavirus Relief Fund (CRF) funding earmarked for Minnesota local
governments, the Governor distributed the funds by executive order based on the framework of the
legislative agreement debated during the first special session. This resulted in $350.4 million being
distributed directly to Minnesota cities with populations equal to or greater than 200. The funds were
authorized for use for unbudgeted costs related to the COVID-19 pandemic, but not to replace lost
revenues. In accordance with CARES Act provisions, the CRF funding was available to cover costs that;
1) were necessary expenditures incurred due to the public health emergency related to COVID-19;
2) were not accounted for in the entity’s budget most recently approved as of March 27, 2020; and
3) were incurred during the period from March 1, 2020 through December 31, 2020 (the availability
period end date was revised by the state to November 15, 2020 for Minnesota cities).
Emergency Small Business Assistance Program – The Legislature created a program to appropriate
$60.0 million of federal CRF funding to make grants available through the Minnesota Department of
Employment and Economic Development for eligible small businesses impacted by COVID-19. Small
businesses employing up to 50 full-time employees are eligible to receive grants of up to $10,000. The
allocation is split between the metro area and greater Minnesota, with specific allocations for businesses
owned by minorities, veterans, and women. $18.0 million of the allocation is earmarked for businesses
with 6 or less employees.
Workers’ Compensation Claims – COVID-19 Presumption – The Legislature adopted several new
provisions to state unemployment statutes related to COVID-19, including a presumption that an
employee who contracts COVID-19 has an “occupational disease” arising out of, and in the course of,
employment if the employee works in one of the specified occupations and has a confirmed case of
COVID-19. Covered occupations include nurses, healthcare workers, and workers required to provide
childcare for first responders and healthcare workers under Executive Orders 20-02 and 20-19. The
COVID-19 presumption provision sunsets on May 1, 2021.
-24-
Bonding Bill – The 2020 bonding bill provided financing for approximately $1.36 billion of projects.
Some of the more significant appropriations for local infrastructure included: $105 million in
undesignated grants for local road improvement and bridge replacement; $100 million for water
infrastructure and point source implementation grants; $25 million for state match of federal grants for
public facilities improvements, $20 million for natural resource asset preservation, $17 million for flood
control mitigation, $15 million for the Local Government Roads Wetlands Replacement Program; $5
million for Metropolitan Council inflow and infiltration grants; and $5 million for metropolitan regional
parks and trails. The bill also included funding for a number of state initiatives, including: $300 million in
trunk highway bonds for the improvement of the state trunk highway system; $145 million in
appropriation bonds to fund the infrastructure and capital needs of the Minnesota Housing Finance
Agency, Minnesota Pollution Control Agency, and Minnesota Public Television; $30 million for state
agency projects aimed at promoting racial equity, $29.5 million for the state Emergency Operations
Center; and $16 million for the Minnesota Housing Finance Agency.
The bill provides authority for eligible local governments to own and operate childcare facilities, and
permits local governments to enter into management agreements with licensed childcare providers to
operate in publicly-owned facilities. It also makes cities, counties, school districts, and joint powers
boards located outside of the seven-county metro area eligible to apply for grants through the Greater
Minnesota Childcare Facility Capital Grant Program.
The bill also included a provision extending the equal pay certificate of compliance requirement to
contracts by any public entity, including political subdivisions, using state general obligation bond
proceeds for all or part of a capital project. Local governments will be responsible for requiring that bids
include proper certification on applicable projects, which applies to projects for goods or services valued
at more than $1 million utilizing appropriated bond proceeds on or after January 1, 2022.
Elections – A number of measures were passed to help ensure the safe and secure conduct of the 2020
state primary and general elections, including; allowing for the processing of absentee ballots to begin
14 days prior to the date of the election, extending the period during which absentee ballots could be
processed for 2 days following the election, accepting electronic filings for affidavits of candidacy or
nominating petitions, and specifying that municipalities were to use schools as polling places only when
no other public or private location was reasonably available. Funds from the federal Help America Vote
Act were made available for modernizing, securing, and improving election facilities, a portion of which
was made available for grants to local governments to fund activities prescribed by this program.
Minors Operating Lawn Care Equipment – Effective May 28, 2020, Minnesota Statutes lowered the
employment age for operating lawn care equipment to age 16. Minors aged 16 and 17 must be trained in
the safe operation of the equipment and wear appropriate personal protective equipment when operating
the lawn care equipment. The exception under this statute applies only to minors directly employed by
golf courses, resorts, rental property owners, or municipalities to perform lawn care on golf courses,
resort grounds, rental property, or municipal grounds,
Open Meeting Law Exception – The interactive television provision of the Minnesota Open Meeting
Law was amended to allow for participation in meetings by interactive electronic means, such as Skype or
Zoom, without requiring that an elected official be advised to do so by a healthcare professional for
personal or family medical reasons. This allowance is available only when a national security or
peacetime emergency has been declared and may be used up to 60 days after the emergency declaration
has been lifted. Whenever public meetings are held via interactive electronic means of this type, votes
must be conducted by roll call and be recorded in the minutes.
Expanded Authority for Electronic Signatures During COVID-19 – Effective May 17, 2020, cities
are allowed to accept certain documents, signatures, or filings electronically, by mail, or facsimile during
the COVID-19 pandemic, including; planning and zoning applications and permits; land use documents;
documents requiring the signature of licensed architects, engineers, land surveyors, geoscientists, or
interior designers; applications for birth or death certificates; or recording notary commissions. This
accommodation expires January 16, 2021, or 60 days following the termination of the peacetime public
health emergency.
-25-
Solid Waste Recycling Exemption – The requirement that not more than 15 percent of mixed municipal
solid waste received by recycling or composting facilities be disposed of, rather than recycled or
composted, is suspended as long as the need for the exception is triggered by operational changes
implemented to address the COVID-19 pandemic.
Pension Changes – Effective January 1, 2021, the maximum lump-sum pension amount for volunteer
firefighters is increased from $10,000 to $15,000 per year of service. Municipalities are permitted to split
state fire aid received between its career firefighters and its affiliated volunteer firefighters, but only if the
amount allocated to the career firefighters is approved by the membership of the volunteer firefighter
relief association. Any aid allocated to career firefighters must be used to pay the Public Employees
Retirement Association (PERA) employer contributions on their behalf within 18 months of the transfer
or be returned to the relief association.
Police Accountability Act – The Legislature passed the Police Accountability Act, which enacted a
number of changes to laws governing police conduct, training, and oversight. Among the more significant
changes adopted were:
Defined and authorized “public safety peer counseling” and “critical incident stress
management,” and classifies information shared in these settings as private data.
Established an Independent Use of Force Investigations Unit within the Bureau of Criminal
Apprehension to investigate all officer-involved deaths in the state, as well as criminal sexual
assault allegations against peace officers, effective August 1, 2020.
Authorized statutory or home rule charter cities to offer incentives to encourage a person hired as
a peace officer to be a resident of the city.
Limited the use of certain restraint methods by peace officer unless the use of deadly force is
authorized in a given situation.
Established and modified provisions related to law enforcement use of deadly force.
Defined and prohibited “warrior-style” training for peace officers.
Established a 15-member “Ensuring Police Excellence and Improving Community Relations
Advisory Council” under the Police Officer Standards and Training (POST) Board, to assist the
POST Board in maintaining policies and regulating peace officers in a manner that ensures the
protection of civil and human rights.
Established a duty for peace officers to intercede when another officer is using excessive force
and report incidents of excessive force to supervisors.
-26-
ACCOUNTING AND AUDITING UPDATES
The following is a summary of Governmental Accounting Standards Board (GASB) standards expected
to be implemented in the next few years. Due to the COVID-19 pandemic, the GASB has delayed the
original implementation dates of these and other standards as described below.
GASB Statement No. 87, Leases
A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as
specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of
nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this
definition should be accounted for under the leases guidance, unless specifically excluded in this
statement.
Governments enter into leases for many types of assets. Under the previous guidance, leases were
classified as either capital or operating depending on whether the lease met any of the four tests. In many
cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease
financing transactions.
The goal of this statement is to better meet the information needs of users by improving accounting and
financial reporting for leases by governments. It establishes a single model for lease accounting based on
the principle that leases are financings of the right to use an underlying asset. This statement increases the
usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases
that previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on the payment provisions of the contract.
Under this statement, a lessee is required to recognize a lease liability and an intangible right to use lease
asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments’ leasing activities.
To reduce the cost of implementation, this statement includes an exception for short-term leases, defined
as a lease that, at the commencement of the lease term, has a maximum possible term under the lease
contract of 12 months (or less), including any options to extend, regardless of their probability of being
exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or
inflows of resources, respectively, based on the payment provisions of the lease contract. The
requirements of this statement are effective for reporting periods beginning after June 15, 2021.
-27-
GASB Statement No. 91, Conduit Debt Obligations
The primary objectives of this statement are to provide a single method of reporting conduit debt
obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by
issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This
statement achieves those objectives by clarifying the existing definition of a conduit debt obligation;
establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for
accounting and financial reporting of additional commitments and voluntary commitments extended by
issuers and arrangements associated with conduit debt obligations; and improving required note
disclosures.
A conduit debt obligation is defined as a debt instrument having all of the following characteristics:
There are at least three parties involved: (1) an issuer, (2) a third party obligor, and (3) a debt
holder or a debt trustee.
The issuer and the third party obligor are not within the same financial reporting entity.
The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt
of the issuer.
The third party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt
issuance.
The third party obligor, not the issuer, is primarily obligated for the payment of all amounts
associated with the debt obligation (debt service payments).
This statement also addresses arrangements, often characterized as leases, that are associated with conduit
debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a
conduit debt obligation and used by third party obligors in the course of their activities.
This statement requires issuers to disclose general information about their conduit debt obligations,
organized by type of commitment, including the aggregate outstanding principal amount of the issuers’
conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities
related to supporting the debt service of conduit debt obligations also should disclose information about
the amount recognized and how the liabilities changed during the reporting period.
The requirements of this statement are effective for reporting periods beginning after December 15, 2021.
Earlier application is encouraged.
-28-
GASB Statement No. 92, Omnibus 2020
The objectives of this statement are to enhance comparability in accounting and financial reporting and to
improve the consistency of authoritative literature by addressing practice issues that have been identified
during implementation and application of certain GASB Statements. This statement addresses a variety of
topics and includes specific provisions about the following:
The effective date of Statement No. 87, Leases, and Implementation Guide No. 2019-3, Leases,
for interim financial reports
Reporting of intra-entity transfers of assets between a primary government employer and a
component unit defined benefit pension plan or defined benefit other post-employment benefit
(OPEB) plan
The applicability of Statements No. 73, Accounting and Financial Reporting for Pensions and
Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain
Provisions of GASB Statements 67 and 68, as amended, and No. 74, Financial Reporting for
Postemployment Benefit Plans Other Than Pension Plans, as amended, to reporting assets
accumulated for post-employment benefits
The applicability of certain requirements of Statement No. 84, Fiduciary Activities, to
post-employment benefit arrangements
Measurement of liabilities (and assets, if any) related to asset retirement obligations in a
government acquisition
Reporting by public entity risk pools for amounts that are recoverable from reinsurers or excess
insurers
Reference to nonrecurring fair value measurements of assets or liabilities in authoritative
literature
Terminology used to refer to derivative instruments
The requirements of this statement are effective for fiscal years beginning after June 15, 2021. Earlier
application is encouraged.
GASB Statement No. 96, Subscription-Based Information Technology Arrangements
This statement provides guidance on the accounting and financial reporting for subscription-based
information technology arrangements (SBITAs) for government end users (governments). This statement
(1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an
intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for
outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires
note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the
standards established in Statement No. 87, Leases, as amended.
An SBITA is defined as a contract that conveys control of the right to use another party’s (an SBITA
vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the
underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like
transaction. Under this statement, a government generally should recognize a right-to-use subscription
asset—an intangible asset—and a corresponding subscription liability.
This statement provides an exception for short-term SBITAs with a maximum possible term under the
SBITA contract of 12 months, including any options to extend, regardless of their probability of being
exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources.
This statement requires a government to disclose descriptive information about its SBITAs other than
short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other
payments not included in the measurement of a subscription liability, principal and interest requirements
for the subscription liability, and other essential information.
The requirements of this statement are effective for fiscal years beginning after June 15, 2022, and all
reporting periods thereafter.
-29-
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and
Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation
Plans—an Amendment of GASB Statement No. 14 and No. 84, and a Supersession of GASB
Statement No. 32
The primary objectives of this statement are to (1) increase consistency and comparability related to the
reporting of fiduciary component units in circumstances in which a potential component unit does not
have a governing board and the primary government performs the duties that a governing board typically
would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension
plans, defined contribution OPEB plans, and employee benefit plans other than pension plans or OPEB
plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements;
and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting
for Internal Revenue Code Section 457 deferred compensation plans (Section 457 plans) that meet the
definition of a pension plan and for benefits provided through those plans.
The requirements of this statement that (1) exempt primary governments that perform the duties that a
government board typically performs from treating the absence of a governing board the same as the
appointment of a voting majority of a governing board in determining whether they are financially
accountable for defined contribution pension plans, defined contribution OPEB plans, or other employee
benefit plans, and (2) limit the applicability of the financial burden criterion in paragraph 7 of
Statement 84 to defined benefit pension plans and defined benefit OPEB plans that are administered
through trusts that meet the criteria in paragraph 3 of Statement 67 or paragraph 3 of Statement 74,
respectively, are effective immediately.
The requirements of this statement that are related to the accounting and financial reporting for
Section 457 plans are effective for fiscal years beginning after June 15, 2021. For purposes of determining
whether a primary government is financially accountable for a potential component unit, the requirements
of this statement that provide that for all other arrangements, the absence of a governing board be treated
the same as the appointment of a voting majority of a governing board if the primary government
performs the duties that a governing board typically would perform, are effective for reporting periods
beginning after June 15, 2021. Earlier application of those requirements is encouraged and permitted by
requirement as specified within this statement.
DRAFTCITY OF NEW HOPE
HENNEPIN COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2020
DRAFT
Page
Schedule of Expenditures of Federal Awards 1
Independent Auditor’s Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards 2–3
Independent Auditor’s Report on Compliance for Each Major Federal
Program; Report on Internal Control Over Compliance; and Report on the
Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 4–6
Independent Auditor’s Report on Minnesota Legal Compliance 7
Schedule of Findings and Questioned Costs 8–9
CITY OF NEW HOPE
Table of Contents
Special Purpose Audit Reports
Year Ended December 31, 2020
DRAFTPass-Through
Entity
Federal Identification
CFDA No.Number
Community Development Block Grants/Entitlement Grants 14.218 76,250$
Bulletproof Vest Partnership Program 16.607 2,193
U.S. Department of Transportation
Passed through City of Minneapolis
Minimum Penalties for Repeat Offenders
for Driving While Intoxicated 20.608 17,124
U.S. Department of Treasury
Equitable Sharing 21.016 10,428
Passed through Hennepin County
COVID-19 – Coronavirus Relief Fund 21.019 11,729$
Passed through Three Rivers Park District
COVID-19 – Coronavirus Relief Fund 21.019 22,766
Passed through the Minnesota Department
of Management and Budget
COVID-19 – Coronavirus Relief Fund 21.019 SLT0016 1,641,664
Total COVID-19 – Coronavirus Relief Fund 1,676,159
Total federal awards 1,782,154$
Note 1:
Note 2:
Note 3:
Note 4:
Passed through Hennepin County
U.S. Department of Justice
CITY OF NEW HOPE
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2020
Federal Grantor/Pass-Through Grantor/Program Title
U.S. Department of Housing and Urban Development
Federal Expenditures
Direct
The Schedule of Expenditures of Federal Awards is prepared on the accrual basis of accounting. The information in this
schedule is presented in accordance with the OMB’s Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards.Therefore, some amounts presented in this schedule may differ from the amounts
presented in, or used in the preparation of, the City’s basic financial statements.
Unless noted in the table above, the pass-through entities use the same CFDA numbers as the federal grantors to identify
these grants, and have not assigned any additional identifying numbers.
The City did not elect to use the 10 percent de minimis indirect cost rate.
Unaudited Disclosure – The City received donated personal protective equipment (PPE) with an estimated value of less
than $1,000. The City was unable to determine whether federal dollars were used to purchase the donated PPE.
Direct
-1-
DRAFT
-2-
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of New Hope, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2020, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated INSERT DATE.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
(continued)
DRAFT
-3-
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
financial statements. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
INSERT DATE
DRAFT
-4-
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL
OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES
OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
To the City Council and Management
City of New Hope, Minnesota
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
We have audited the City of New Hope, Minnesota’s (the City) compliance with the types of compliance
requirements described in the U.S. Office of Management and Budget Compliance Supplement that could
have a direct and material effect on each of the City’s major federal programs for the year ended
December 31, 2020. The City’s major federal programs are identified in the Summary of Audit Results
section of the accompanying Schedule of Findings and Questioned Costs.
MANAGEMENT’S RESPONSIBILITY
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions
of its federal awards applicable to its federal programs.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs
based on our audit of the types of compliance requirements referred to above. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan
and perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major federal
program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the City’s compliance.
(continued)
DRAFT
-5-
OPINION ON EACH MAJOR FEDERAL PROGRAM
In our opinion, the City complied, in all material respects, with the types of compliance requirements
referred to on the previous page that could have a direct and material effect on each of its major federal
programs for the year ended December 31, 2020.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to on the previous page. In planning and
performing our audit of compliance, we considered the City’s internal control over compliance with the
types of requirements that could have a direct and material effect on each major federal program to
determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing
an opinion on compliance for each major federal program, and to test and report on internal control over
compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion
on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance..
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
PURPOSE OF THIS REPORT
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
(continued)
DRAFT
-6-
REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM
GUIDANCE
We have audited the financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2020, and the related notes to the financial statements, which collectively comprise the
City’s basic financial statements. We issued our report thereon dated INSERT DATE which contained
unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming
opinions on the financial statements that collectively comprise the basic financial statements. The
accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional
analysis as required by the Uniform Guidance and is not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The information
has been subjected to the auditing procedures applied in the audit of the financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the 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 Schedule of Expenditures of Federal Awards
is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Minneapolis, Minnesota
INSERT DATE
DRAFT
-7-
INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of New Hope, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America, and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2020, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated INSERT DATE.
MINNESOTA LEGAL COMPLIANCE
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest,
public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing
sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor
pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. However, our audit
was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we
performed additional procedures, other matters may have come to our attention regarding the City’s
noncompliance with the above referenced provisions, insofar as they relate to accounting matters.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
Minneapolis, Minnesota
INSERT DATE
DRAFTCITY OF NEW HOPE
Schedule of Findings and Questioned Costs
Year Ended December 31, 2020
-8-
A. SUMMRY OF AUDIT RESULTS
This summary is formatted to provide federal granting agencies and pass-through agencies answers to
specific questions regarding the audit of federal awards.
Financial Statements
What type of auditor’s report is issued? X
Internal control over financial reporting:
Material weakness(es) identified?Yes X No
Significant deficiency(ies) identified?Yes X
Noncompliance material to the financial statements noted?Yes X No
Federal Awards
Internal controls over major federal award programs:
Material weakness(es) identified?Yes X No
Significant deficiency(ies) identified?Yes X
Type of auditor’s report issued on compliance for major programs?
U.S. Department of Treasury – COVID-19 – Coronavirus Relief FundUnmodified
Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)?Yes X No
Programs tested as major programs:
Program or Cluster(s)CFDA No.
U.S. Department of Treasury – COVID-19 – Coronavirus Relief Fund 21.019
Threshold for distinguishing between type A and B programs. 750,000$
Does the auditee qualify as a low-risk auditee?Yes X No
Unmodified
Qualified
Adverse
Disclaimer
None reported
None reported
DRAFTCITY OF NEW HOPE
Schedule of Findings and Questioned Costs
Year Ended December 31, 2020
-9-
B. FINANCIAL STATEMENT FINDINGS
None.
C. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
None.
D. MINNESOTA LEGAL COMPLIANCE FINDINGS
None.
Corrective Action Plans and
Summary Schedule of Prior Audit Findings
Year Ended December 31, 2020
A. FINANCIAL STATEMENT FINDINGS
None.
B. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
None.
C. MINNESOTA LEGAL COMPLIANCE FINDINGS
None.
D. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
No audit findings were reported for the year ended December 31, 2019. The City did not
require a Single Audit of federal awards expenditures for the year ended December 31, 2019.
I:\RFA\City Manager\2021\Fund Transfers\WS 051721\11.2\11.2 Q ‐ General Fund Transfer 051721.docx
Request for Action
May 17, 2021
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Discuss transfer of a portion of the 2020 Audit General Fund Balance to Temporary Financing Fund
Requested Action
Staff and AEM request to briefly discuss the general fund balance from the 2020 audit and the
recommendations to transfer the majority of the balance to the temporary financing fund for future capital
projects.
Policy/Past Practice
The City Council approves transfers from funds to plan for long‐term capital improvements and purchases in
the city. In May 2015, the City Council adopted an updated fund balance policy to address the specific use of
unassigned general fund balance. A section was added stating, “the city manager will report the calculation
of the unassigned fund balance and make recommendations to transfer funds to assist with capital needs.
The final decisions are up to the City Council.” The Council has previously approved transfers from a
positive fund balance to the city hall CIP fund and the fire capital projects fund.
Background
Following completion of the 2020 audit, the city has a fund balance in the General Fund in the amount of
$1,786,383. This amount added to the current fund balance totals $8,926,086, which represents 63% of total
2020 expenditures. The city’s fund balance policy requires 42%. The majority of the 2020 fund balance is due
to the receipt of $1,676,159 from the Federal Coronavirus Relief Fund. It is unusual to have such a large fund
balance and provides the city with an opportunity to set aside that funding for future capital project needs to
be determined by the Council at a later date.
Now that the Federal Single Audit is completed, AEM and staff are recommending that the COVID‐19
funding in the amount of $1,676,159 be transferred from the General Fund to the Temporary Financing Fund
for future capital project needs. Future capital projects needs include, but are not limited to, city hall/police
department CIP, fire capital projects CIP, pool CIP, public works building expansion, etc.
If the Council is supportive of the recommendation a resolution authorizing the transfer will be placed on the
May 24 council agenda.
Attachments
AEM Correspondence
2020 Audit Excerpts
Fund Balance Policy Excerpts
Agenda Section
Work Session
Item Number
11.2
I:\RFA\City Manager\2021\Fund Transfers\WS 051721\11.3\11.3 Q ‐ Transfer from Park Infrastructure Fund to Ice Arena Operating Fund 051721.docx
Request for Action
May 17, 2021
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Discuss Transfer from Park Infrastructure Fund to Ice Arena Operating Fund
Requested Action
Staff requests to briefly discuss the annual transfer from the park infrastructure fund to the ice arena
operating fund for debt service purposes. The transfer is included in the approved 2021 tax levy and budget.
If the Council is supportive, a resolution authorizing the transfer would be presented at the May 24 council
meeting.
Policy/Past Practice
In 2017, the City Council reviewed the financial operations of the ice arena and agreed to increase the park
infrastructure tax levy to make annual transfers to the ice arena operating fund to provide for the required
debt service payments on the 2011A bonds and ongoing capital needs of the facility. The bonds were
refinanced in February 2021, to achieve a savings in interest costs, with the understanding that the debt
service would continue to be paid with a transfer from the park infrastructure fund to the ice arena operating
fund.
Background
Staff and AEM are recommending that the Council approve a $500,000 transfer from the park infrastructure
fund to the ice arena fund for ice arena debt service and capital improvements. The long‐term financial plan
that was reviewed with the Council in November 2020 included annual transfers from the park infrastructure
fund to the ice arena fund to provide funding for the outstanding debt at the facility. The 2021 budget and tax
levy approved by the Council in December 2020 included the usual 5% increase in the park infrastructure tax
levy and $500,000 for ice arena debt service. A transfer is recommended so the funds can be transferred to the
appropriate fund.
At the June 19, 2017 work session, staff and AEM reviewed the financial operations of the ice arena and
reported that the current cash generated from ice arena operations was not adequate to provide for the
required debt service payments on the 2011A bonds or the ongoing capital outlay needs of the facility. It was
noted that many of the ice arenas in neighboring communities receive funding form internal transfer or tax
levies (Champlin, Coon Rapids, Maple Grove, Plymouth and Rogers). The recommendations presented
included considering increasing the park infrastructure and/or general fund tax levy so annual transfers
could be made and implementing a long‐term financing plan for all parks and recreation facilities/equipment.
The City Council agreed that the ice arena is an important community asset and a valuable recreational
facility, and supported making the needed capital improvements and adopting a plan to make the required
debt service payment to ensure the ongoing viability of the operation.
Beginning with the 2017 budget, the park infrastructure fund tax levy has been increased incrementally over
the last five years by $100,000 to achieve the goal of setting aside $500,000 per year for the required debt
Agenda Section
Work Session
Item Number
11.3
Request for Action, Page 2
service. Beginning with the 2022 budget, a $100,000 increase in the park infrastructure fund for ice arena debt
service will not be necessary.
Attachments
2021 Budget Excerpts
2020 Excerpt Long‐Term Financial Plan
February 22, 2021 Bond Refinancing RFA
May 18, 2020 Excerpt Work Session Minutes
May 20, 2019 Excerpt Work Session Minutes
May 21, 2018 Excerpt Work Session Minutes
June 19, 2017 Excerpt Work Session Minutes
I:\RFA\City Manager\2021\Upcoming City Events 2021\11.4 WS ‐ Upcoming Events 05‐17‐21.docx
Request for Action
May 17, 2021
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Brandon Bell, CD Assistant
& Kirk McDonald, City Manager
Agenda Title
Discussion on potential 2021 city events
Requested Action
Staff is seeking the City Council’s input on possibly scheduling a Commissioner Appreciation Event/Bus
Tour this year (September 14, 2021) and a City Day (October 9, 2021).
Policy/Past Practice
Staff regularly provides updates to the City Council on upcoming events and requests direction on potential
events. The city has pursued activities and events that benefit the overall community in the past. The City
Council and city manager have set a goal of continuing to encourage/improve public participation in city
affairs.
Background
Due to the upcoming pandemic related restrictions scheduled to be lifted, staff is inquiring whether the City
Council would like staff to plan and prepare to host a Commissioner Appreciation Event/Bus Tour to be
held on September 14, 2021 and a City Day event on October 9, 2021.
Commissioner Appreciation Event/Bus Tour
The Commissioner Appreciation Event/Bus Tour was cancelled last year due to the COVID‐19 pandemic.
Staff instead created a city tour packet that would allow Commissioner’s to go on their own private tour of
different projects occurring around the city if they wished. A letter of appreciation from the City Council
was also given to all Commissioners. The 2021 event would take place in‐person as it has in years before
with a Bus Tour given by staff and a meal held at the golf course. The event would take place on September
14, 2021.
City Day
City Day began in 2010 as an effort to provide residents with the opportunity to informally discuss projects,
issues, or concerns with the City Council and staff, increase citizen involvement and public participation,
and build community. The event allows the city to display equipment and vehicles, showcase parks and
recreation activities, discuss development issues, and highlight public safety programs. In the past, City Day
has been held in conjunction with West Metro Fire‐Rescue District’s open house.
The last City Day took place on October 14, 2017 and there has not been a City Day since that date due to
construction that was taking place for the new Aquatic Park and City Hall. The potential for hosting a City
Day last year was also lost due to the COVID‐19 pandemic. If City Council approves a City Day for 2021, it
would take place on October 9, 2021, to coincide with the West Metro Fire Department’s open house.
Agenda Section
Work Session
Item Number
11.4
Request for Action, Page 2
Funding
Funds were allocated in the 2021 budget for the commissioner appreciation event/bus tour.
Recommendation
Staff is recommending City Council discuss the City Day and Commissioner Appreciation Event/Bus Tour
and whether they would like staff to plan and prepare to host both of these events with the assumption that
all COVID‐19 restrictions will be lifted by the planned dates.
I:\RFA\City Manager\2021\closed mtg 5.17.21\11.5 Q ‐ Closed Meeting.docx
Request for Action
May 17, 2021
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Valerie Leone, City Clerk
Agenda Title
Resolution calling for a closed meeting of the New Hope City Council authorized by Minn. Stat §13D.05,
Subd. 3(d) to discuss security reports and issues
Requested Action
Staff requests the opportunity to discuss security measures for city facilities with the city council.
Policy/Past Practice
As per Minnesota State Statute 13D.05 Subd. 3(d), the city is authorized to hold a closed meeting to receive
security briefing and reports, to discuss issues related to security systems, to discuss emergency‐response
procedures and to discuss security deficiencies in or recommendations regarding public services,
infrastructure and facilities, if disclosure of the information would pose a danger to public safety or
compromise security procedures or responses.
The non‐public information for the closed meeting will be emailed to Council under separate cover.
Attachment
Resolution
City Attorney’s Correspondence
Agenda Section
Work Session
Item Number
11.5
1
RESOLUTION NO. 21-__
RESOLUTION CALLING FOR A CLOSED MEETING
OF THE NEW HOPE CITY COUNCIL
AUTHORIZED BY MINN. STAT. §13D.05, SUBD. 3(d) TO DISCUSS
SECURITY REPORTS AND ISSUES
WHEREAS, in light of recent civil unrest including vandalism of government buildings
and other ongoing and pervasive criminal activities in the Twin Cities Metropolitan Area in 2020
and 2021, certain security concerns have arisen regarding the City Hall and Police Department;
WHEREAS, the City Manager and Police Chief have determined it is necessary for the
City Council to meet with City Staff to assess security reports and the City’s security systems, as
well as emergency-response procedures and analysis of any security deficiencies at the City Hall
and Police Department;
WHEREAS, Minn. Stat. §13D.05 Subd. 3(d) authorizes and permits the City Council, by
a majority vote taken in a public meeting, to hold a closed meeting to receive security briefing and
reports, to discuss issues related to security systems, to discuss emergency-response procedures
and to discuss security deficiencies in or recommendations regarding public services,
infrastructure and facilities if disclosure of the information would pose a danger to public safety
or compromise security procedures or responses; and
WHEREAS, a closed meeting is necessary in that public disclosure of the information to
be discussed at the closed meeting could pose a danger to public safety or compromise security
procedures or responses.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of New Hope
as follows:
1. That a closed meeting of the City Council shall be held on 17th day of May, 2021
immediately following the adjournment of the regularly scheduled work session meeting of the
New Hope City Council in the Civic Center Conference Room at the New Hope City Hall.
2. That the purpose of the closed meeting shall be to receive security briefing and
reports from Police Chief Timothy Hoyt, to discuss issues related to security systems, to discuss
emergency-response procedures and to discuss security deficiencies in or recommendations
regarding public services, infrastructure and facilities at the City Hall and Police Department in
light of recent incidents of civil unrest that have led to vandalism and other criminal activities
against governmental buildings;
3. That said meeting shall not be open to the public.
2
4. That the New Hope City Clerk shall be directed to electronically record the
meeting and the recording must be preserved for at least four years, but shall not be made public.
5. That the New Hope City Clerk shall prepare a written roll of the City
Councilmembers and all other persons present at the closed meeting and make said roll available
for public inspection upon adjournment of the closed meeting.
Adopted by the City Council of the City of New Hope, Hennepin County, Minnesota, this
17th day of May, 2021.
____________________________________
Kathi Hemken, Mayor
Attest: _______________________
Valerie Leone, City Clerk
P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-10000 City Mgr\Resolution - City Council closed meeting discussion (13D.05) - security
planning.docx