051622 Work Session Meeting Packet
CITY COUNCIL
WORK SESSION MEETING
New Hope City Hall, 4401 Xylon Avenue North
Northwood Conference Room
Monday, May 16, 2022
6:00 p.m. - dinner
6:30 p.m. - meeting
Mayor Kathi Hemken
Council Member John Elder
Council Member Andy Hoffe
Council Member Michael Isenberg
Council Member Jonathan London
1. CALL TO ORDER – May 16, 2022
2. ROLL CALL
11. UNFINISHED & ORGANIZATIONAL BUSINESS
11.1 Update from West Metro Fire-Rescue District
11.2 Discussion of New Hope’s Emerald Ash Borer program funding
11.3 Discuss the leasing of seven city vehicles through Enterprise Fleet Management
11.4 Update on Pool/Civic Center Park/City Hall Landscaping projects by Stantec
Engineering (Improvement Project Nos. 995/941/994)
11.5 Review 2021 Audit and Comprehensive Annual Report with Abdo
11.6 Discuss American Rescue Plan Act (ARPA) fund transfers
11.7 Discuss transfer from Park Infrastructure Fund to Ice Arena Operating Fund
11.8 Resolution calling for a closed meeting of the New Hope City Council authorized
by Minn. Stat §13D.03 to discuss and consider labor negotiations strategy
12. OTHER BUSINESS
13. ADJOURNMENT
I:\RFA\City Manager\2022\WMFRD\WS 051622\11.1 Q ‐ West Metro Fire‐Rescue District Update 05.16.22.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Update from West Metro Fire‐Rescue District
Requested Action
Staff requests the City Council receive an update from Chief Larson on West Metro Fire‐Rescue District
operations. The chief will be presenting updates to both the New Hope and Crystal city councils in the month
of May. Council Member Elder serves as the New Hope council representative on the board, and Marc Berris
serves as the New Hope citizen representative on the board. The city manager also serves on the board.
Policy/Past Practice
West Metro Fire‐Rescue District was formed in 1998 as a joint powers agreement between the cities of New
Hope and Crystal. The agreement was updated and approved by both city councils in 2011 and updated in
2017 and 2019. One of the items in the board’s work plan and in the chief’s goals is for the chief to provide
periodic updates to the city councils to keep the lines of communication open between the fire district and the
two cities. The last update was provided at the February work session.
Background
Chief Larson will be discussing routine items with the City Council along with a review of the preliminary
2023 West Metro Fire‐Rescue District budget. The Fire Board also requested that the city managers ask their
respective city councils if they feel a joint work session with the Board in August is necessary. Information on
discussion items is attached.
1. Routine Items
Calls for Service Report through March 31
Food Drive
2021 Audit
Reorganization
Significant Fire
2. Preliminary 2023 West Metro Fire‐Rescue District Budget
The fire board reviewed the preliminary 2023 budget at their April meeting and have not recommended any
changes to date. Prior to the board meeting, the city managers reviewed the budget in detail with the chief
and a number of adjustments were made.
The total proposed 2023 budget is $3,031,190, which is an increase of $249,090 or 9% over the 2022 budget of
$2,782,100. The general operating budget increase is $249,090 or 11.3%, based on one additional full‐time staff
person, salaries, PERA, workers compensation insurance, health insurance, medical exams, financial services
and communications. There is a $20,000 decrease to the special revenue pension fund contribution. The
Agenda Section
Work Session
Item Number
11.1
Request for Action, Page 2
contributions to the budget include a $103,600 lease payment for the aerial truck (tower) and a new $70,000
lease payment for the new engines.
The costs of the budget are split between the two cities based on a cost sharing formula that includes average
number of calls over a five‐year period, population and taxable market value. Based on the 2023 preliminary
budget, New Hope’s increase is $133,594 or 9.4% (the increase for 2022 was $65,859 or 4.9%). New Hope’s
share of the total budget is $1,551,817 or 51.1950%. Crystal’s share of the budget is $1,479,373 or 48.8050%.
The average number of calls for service were greater in New Hope, which is the main factor contributing to
the higher percentage paid for the budget.
Market Values in Millions
2022 Budget 2023 Budget Change
New Hope 2,257 2,382 +125
Crystal 2,214 2,402 +188
Average Calls Over 5 Years
2022 Budget 2023 Budget Change
New Hope 965 1040 +75
Crystal 803 842 +39
The Fire Board is requesting that the city councils advise the city managers if there are any concerns with
the budget, so the city managers can report back to the Board.
The Joint Powers Agreement requires the board to approve the budget at their annual meeting scheduled for
July 8. Both city councils are required to act on the budget by August 31, either accepting the budget or
making recommendations for changes. The cost for New Hope’s portion of the Joint Powers Agreement is
included in the Fire and Emergency Management budget in the General Fund budget.
3. Discuss August 10 Tentative Joint Council/Board Work Session
There is currently a tentative joint council/board work session scheduled for August 10. During the city
council work sessions in 2012 to discuss the future of the West Metro Fire‐Rescue District (WMFRD), it was
agreed the two city councils should meet with the WMFRD Board annually to keep the lines of
communication open. Due to lack of agenda items, low attendance at these meetings and improved
communication with the Chief’s quarterly updates, this work session has been cancelled in recent years.
When the 2022 meeting schedule was approved at the December, 2021, Fire Board meeting the city managers
had recommended that the tentative work session not be scheduled, however the Crystal Council requested
that it be added back to the schedule. At the April Fire Board meeting the Board requested that the city
managers inquire whether their respective city councils feel that a joint council/board work session is
necessary and bring that information back to a future Board meeting.
Attachments:
New Hope Council Update
Preliminary 2023 West Metro Fire‐Rescue District Budget
2022 Fire Board Meeting Schedule
I:\RFA\PUBWORKS\2022\Work Session\5‐16 EAB Discussion\11.2 Q‐ EAB Budget Discussion.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: Public Works
By: Shawn Markham, Contract Manager/Forester;
Bernie Weber, Public Works Director;
Susan Rader, Parks & Recreation Director; and
Kirk McDonald, City Manager
Agenda Title
Discussion of New Hope’s Emerald Ash Borer program funding
Requested Action
Staff would like to provide the City Council an update on the Emerald Ash Borer program, specifically
related to budget needs and determine other possible funding sources for the continued need for Ash tree
removal/replacement in 2022.
Policy/Past Practice
The city of New Hope has continually sought opportunities to better the community at large, as well as make
the community a safer and better place. In the past the city of New Hope developed programs to help
manage invasive species in our community.
Background
Emerald Ash Borer:
In 2010, the New Hope City Council approved the creation and implementation of a city Emerald Ash Borer
(EAB) program. The creation of the program included increased funding to fulfill goals related to control of
the Emerald Ash Borer. Since 2010, the city’s primary focus has been the removal of boulevard ash trees and
replacement of removed Ash trees with trees of greater diversity to avoid problems associated with planting
species monocultures.
Streets Operating Budget
In 2016, the City Council increased the trees removal/replacement budget from $125,000 to $150,000 in the
2017 budget and has been continued through 2021. In 2022, a budget increase of $50,000 was approved by the
City Council, for a total of $200,000 dedicated to tree removal and replacement with a primary focus on
public Ash trees.
In 2022, staff have reported a significant increase in Emerald Ash Borer infestations throughout the city. Tree
removals and replacement cost estimates will far exceed the $200,000 budget dedicated for tree removal in
2022. Tree removal, stumping and restoration averages about $1,200/tree. Planting a tree costs $500.
As of May 1, 2022, approximately 20 infested trees have been removed this year ($24,000). The city’s
contracted tree service is currently working on approximately 55 infested, tagged trees ($66,000). In the Street
Infrastructure Project area approximately 95 infested trees are currently being removed that are outside of the
scope of the improvement project area ($114,000). 25 infested Ash trees on Boone Avenue are slated to be
Agenda Section
Work Session
Item Number
11.2
Request for Action, Page 2
removed shortly ($30,000). Approximately 145 boulevard trees are scheduled to be planted that were not
planted in 2020‐21 due to budget, COVID‐19, drought, and labor shortages ($72,500). 45 infested trees that
have been tagged, south of 36th Avenue, that have not sent been to a contractor for removal. ($54,000).
Based upon estimates, by the end of June 2022, expenditures will be upwards of $360,500 for tree removal
and replacement of Ash trees.
The city did receive $50,000 in grants for removing and replacing trees in 2022.
Staff estimates, at a minimum, there are 200‐300 Boulevard trees with severe infestations, that should/need to
be removed this year. ($240,000‐$360,000). The planting of trees, outside of the delayed 2020‐21 planting list,
has not been factored in additional needed funding.
Parks Operating Budget
Similar to Boulevard trees, staff have reported a significant increase in EAB infestations throughout the parks
and facilities. An inventory of all Ash trees located in parks, golf course and ice arena totals 860 trees that are
3” or larger. Using the above estimates for removal and replacement, along with the other minor tree (non‐
Ash) work identified for this year ($20,000), the costs will far exceed the $35,000 budget ($25,000 parks and
$10,000 golf) dedicated for tree removal in 2022.
To help stretch the budget, staff worked this winter to remove 41 trees, which resulted in an estimated
savings of $49,000. The stump removals will take place as staff time allows and tree replacements still need to
take place ($18,000). In addition to the in‐house removals, a tree contractor removed several trees at Hidden
Valley this winter ($12,127), and the replanting will take place later this year ($4,000).
Staff estimates that there are 54 Ash trees that still need to be removed in 2022 ($64,800), with 42 of those
being in natural areas such as Dorothy Mary Park and the east side of Northwood Park. Currently, tree
replacements are estimated at a 1:1 replacement for the majority of the non‐natural area trees ($6,000). No
new trees are currently scheduled for the natural areas, however as more trees are removed staff will look at
adding some seedlings at a later time.
Based upon estimates, an additional $100,000 is necessary for tree removal and replacement of Ash trees this
year.
Funding
Staff and Abdo are recommending $400,000 be transferred from the Streets Infrastructure Fund to the Streets
Operating budget. Project costs are adjusted on an annual basis, and it is anticipated that the deficit caused by
the transfer will be absorbed with future project adjustments.
Staff and Abdo are also recommending a $100,000 transfer from the Parks Infrastructure Fund to cover the
expenses for the identified 2022 removals and replacements in the parks, golf course and ice arena. Staff will
also plan to budget additional removal and replacement dollars in the Park Infrastructure budget over the
next several years. Each winter, staff will continue to remove some trees in‐house and each spring the
remaining Ash trees will be evaluated to determine the removals needed for the year. Similar to the Streets
Infrastructure Fund, future Parks Infrastructure projects may be adjusted to allow for the additional tree
removal and replacement expenses.
Request for Action, Page 3
If the Council is supportive of these recommendations, resolutions will be placed on the May 23, 2022 council
agenda authorizing the transfers.
Attachments
May 4, 2022, Abdo Memorandum re: Street Infrastructure Fund Transfer
May 11, 2022, Abdo Memorandum re: Parks Infrastructure Fund Transfer
April 28, 2022, correspondence to City Council re: funding and photos
I:\RFA\COMM DEV\2022\Work Session\04‐18‐22 Enterprise Vehicle Leasing\Q ‐ WS Enterprise Vehicle Leasing 05‐16‐22.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Jeff Sargent, Director of Community Development;
Tim Hoyt, Director of Police;
Bernie Weber, Director of Public Works
Agenda Title
Discuss the leasing of seven city vehicles through Enterprise Fleet Management
Requested Action
Staff requests that the City Council consider the leasing of seven vehicles through Enterprise Fleet
Management instead of purchasing new vehicles.
Policy/Past Practice
The council frequently supports the implementation of new programs within departments, especially if the
implementation improves efficiency and saves money within the department’s budget. The City Council has
recently approved leasing 14 police vehicles through Enterprise Fleet Management.
Background
On June 28, 2021, the City Council approved a resolution approving an agreement with Enterprise Fleet
Management for the lease of 14 police vehicles. Rationale for leasing the vehicles included that the city would
be able to optimize fleet management by improving average replacement time, thereby keeping the fleet up
to date with current technology. Further, the lease program would provide for budget stability with more
consistent cash outlay. Last, establishing a proactive replacement plan would maximize potential equity at
time of resale, which would reduce operational expenses.
At this time, staff requests that the City Council consider adding seven vehicles to the leased fleet of vehicles,
managed by Enterprise Fleet Management. The vehicles that will be replaced include all four community
development inspector vehicles and three public works vehicles:
Make/Model Year Mileage Department
Ford Fusion 2011 37,200 Community Development
Ford Fusion 2011 44,934 Community Development
Ford Fusion 2012 33,385 Community Development
Ford Fusion 2018 8,937 Community Development
Ford F150 2008 104,331 Public Works
Ford F350 with plow 2012 35,113 Public Works
Ford F150 2012 43,101 Public Works
The Community Development Department would like to replace the current inspection vehicles with four
Chevy Traverses. These are larger SUVs that provide more room for the inspectors and will handle better in
the snow with their 4X4 capability. They also have optimal resale value.
Agenda Section
Work Session
Item Number
11.3
Request for Action, Page 2
Public Works would replace the current Ford F350 with a plow with a new Ford F350 with a plow. The two
current Ford F150s would be replaced with new Ford F150s.
Enterprise has advised that it is imperative to order new vehicles before the end of March due to the
compounding of supply chain problems. If vehicles are not ordered within this timeframe, vehicles would
probably not be available for at least 18 months. Staff explained that we need to discuss and receive approval
from the council before moving forward. Being that the May work session would potentially prove too late to
order the new vehicles, City Manager Kirk McDonald authorized the Public Works Director to place the order
for the leasing of the seven new vehicles. Enterprise has provided a written letter stating that they understand
council approval is necessary and that if the council is not in agreement and does not approve, the city would
not be responsible for any vehicles ordered and the order would be cancelled (attached letter).
SAVINGS
Using very conservative estimates, Enterprise put together a cost analysis that indicates that the city would
save $114,400 over a 4‐year time frame if the city chose to lease the seven vehicles in question rather than
purchasing new vehicles. This estimate includes maintenance costs, fuel costs, resale values of the current
vehicles and estimated purchase prices for new vehicles. A chart generated by Enterprise has been attached
to further break down this cost savings. A representative from Enterprise will also be in attendance to answer
questions of the council regarding the program.
Vicki Holthaus from Abdo analyzed the cost savings numbers as well and provided the attached memo
outlining various aspects of the program and how it effects the city financially. In summary, Abdo believes
that the resale value of the vehicles should be excluded and a true cost savings over a 4‐year period (using
Enterprise’s numbers) is $39,400. Abdo also evaluated the cash flow analysis provided by Enterprise and
noted modifications that may be made for city management and Council to more precisely evaluate the
performance that may be expected from the proposed leases. Further, Abdo highlighted components of the
contract that are of particular importance and should be understood and managed through the practices
outlined in the memo. At this time, Abdo cannot conclude that the program will yield savings to the city as
elements of the program and assumptions have not been experienced. Abdo suggests that program
performance should be evaluated for units within a department, and different departments may experience
varying levels of performance based on the nature of the vehicles, wear, and tear. With that said, Abdo
recommends that the city should proceed with the leasing of the vehicles, as the information available at this
time indicates that the city will save $39,400 on the transaction.
Pertaining to the question of whether the city can lease vehicles without obtaining multiple bids, the city
attorney has confirmed that Enterprise and the financing of leased vehicles falls under the “cooperative
purchasing” exception of the Uniform Municipal Contracting Law state statute. In June, 2021 the City Council
approved the leasing arrangement for 14 police vehicles and Chief Hoyt feels the program is working well.
Recommendation
Although Abdo cannot conclude at this time that the city will see financial savings by leasing the vehicles over
the life of the program, staff has had multiple conversations and recommends that the city lease the seven
vehicles in question. Abdo also recommends that the city should proceed, as the initial numbers indicate that
the city will save $39,400 on the transaction. The key factors in making this recommendation are the
maintenance savings and quick turnaround on vehicles being maintained, the reliability that new vehicles
Request for Action, Page 3
will give the drivers and the open‐ended nature of the contract lease agreement. At any time, should the city
realize that leasing vehicles is not cost effective, the city would have the option to end the lease and purchase
vehicles on its own.
Next Steps
If the City Council is supportive of leasing the seven vehicles in question, the lease agreement will be placed
on a future agenda. If the Council does not want to pursue the leasing option at this time, staff will contact
Enterprise and cancel the current order.
Attachments
Enterprise cost analysis
Enterprise Cancel Letter
Abdo Memo
7 36-48 5000 $4,450.00 $53,400.00 $75,000.00 $98,000.00 Year 1 Lease payment total $53,400.00$75,000.00Year 2 Total Lease Payments$53,400.00Year 3 Total Lease Payments$53,400.00Year 4 Total Lease Payments$53,400.00Estimated Equity on Leased Units$98,000.00Total Spend on 7 vehicles$40,600.00-$21,600.00225,000.00$ 7 1 ton, half ton, Suv $ 70,000.00 $225,000.00$70,000.00$155,000.00 $155,000.00Net Cash Outlay on Leasing vehicles$40,600.00$114,400.00*lease length of terms subject to change to maximize resale value on Leased units*Payments and vehicle pricing are estimatedCity of New Hope: Lease Vs. Purchase AnalysisNet Cash Savings of Leasing vs. PurchaseResale Value on owned unitsBudget Needed for 2022 to LeaseTotal Cash Outlay Net Cash Outlay owning vehiclesCash OutLay neededResale Value on owned unitsCash PurchaseEnterprise Equity LeasesTerm (Months)Estimated Annual MileageMonthly Cost (Lease Rate) for quantity*Annual CostResale Estimate for Owned VehiclesAME not includedLeased Equity Vehicle at termQuantityPaying Cash Amount Quantity Type Equity in Resale
MEMO
TO: KIRK MCDONALD
FROM: VICKI HOLTHAUS, ABDO FINANCIAL SOLUTIONS
SUBJECT: ENTERPRISE LEASE PROGRAM UPDATE
DATE: MAY 10, 2022
BACKGROUND
In 2021, the city received a proposal from Enterprise to lease patrol vehicles. The City elected to move forward with the
program, leasing the eight (8) vehicles ordered for 2021, and including the six vehicles that were scheduled for 2022
replacement (due to supply chain issues).
The city also opted to move the units to the maintenance program offered through Enterprise. To date, the Police
Department has experienced excellent customer service and expedited turnaround time on repair and maintenance for
their units.
Initial positive response to the program has encouraged Management to evaluate additional lease options with Enterprise.
Management requested a quote for the lease of four Chevy Traverse vehicles for Community Development. Enterprise
responded with a 10-year cash flow analysis for the replacement of the four community development units, as well as
three public works vehicles.
The analysis prepared by Enterprise indicates a $114,400 savings will be realized by moving seven units into the program.
The analysis includes $75,000 of estimated resale on the units that are being replaced. The city has implemented a
practice of retaining the resale on existing units when turning them over to leases. Removing the resale on the existing
units from the analysis also provides a closer look at the cash flow performance for the acquisition and sale of the leased
units. For that reason, we would exclude the estimated resale from the evaluation, netting a net cash savings for the
lease of seven vehicles at $39,400.
Cash flow savings is inherent when switching from pay-as-you-go cash acquisition to financing. For this reason, we will
explore other elements of the lease program, with guidance on practices the city may wish to implement to ensure
continued success with the program.
Before exploring these elements, it may be helpful to explain the contract documents that are referenced in this memo.
The Master Lease Agreement was executed in June of 2021 and provides the over-arching program terms, including
amounts due to or from the city at lease termination. Each time the city enters into a new lease, an Open-End (Equity)
Lease Schedule is signed, and provides the lease term, delivery price and other fees.
(Low Cost) Acquisition
At the June 21, 2021, meeting a representative from Enterprise was present to review their lease program and the cash
flow analysis completed for the City of New Hope. One of the primary value points explained by the representative was
Enterprise’s volume purchasing power and the lower acquisition cost they deliver to customers. With each unit procured
through the lease program, New Hope will receive a quote. The city received a quote of $30,000 for each 2023 Chevrolet
Traverse to be leased for Community Development. This quote is higher than the state bid for these units; however, it was
noted that the 2023 pricing is not available and Enterprise will revise the pricing upon availability. A subsequent Lease
Schedule will be provided for each unit, detailing the delivered price.
Recommended procedure: evaluate each Open-End (Equity) Lease Rate Quote and Open-End (Equity) Lease Schedule to
ensure the delivery price meets or beats the price through cooperative purchasing.
(Low Interest) Financing
Another commonly expressed point of value from leasing programs is low-cost financing, yet New Hope has traditionally
paid cash for vehicle acquisitions. Lease schedules executed to-date (for patrol vehicles) carry an interest rate per month
of 0.354 to 0.427. These financing costs are incorporated into the cash flow analysis provided by Enterprise. It is
noteworthy that the finance costs associated with the lease agreements for the city’s fleet must be evaluated within the
larger mechanics of the program (acquisition, resale, and maintenance savings) and the city does not yet have experience
with all aspects of value within this program, due to the short period of time under lease.
Recommended procedure: evaluate each Open-End (Equity) Lease Schedule to confirm the interest rate and other fees
(sales tax, delivery fees, other) for reasonableness and accuracy.
Vehicle Resale (Performance, Investment Management)
Enterprise uses market data to determine when it is advantageous to replace fleet vehicles. Some customers may
experience shorter replacement timelines by moving to a lease program and this may help to ensure that more repair
costs over the life of a vehicle are covered under warranty.
The Master Equity Lease Agreement (MLA) provides the overarching contract terms between the city and Enterprise. City
Management should seek to familiarize themselves with several provisions of this agreement. One component of the
contract that is noteworthy is section 3c. of the Rent and Other Charges which spells out the reconciliation that is required
between the city and Enterprise upon termination of the lease. The proceedings at termination are further explained by
Enterprise as follows:
“There are two scenarios that take place when we sell a vehicle on behalf of the city.
Scenario 1 is when the wholesale value is greater than the book value causing a gain on sale. In this scenario, the
lessor is to pay the lessee the difference aka the gain.
Scenario 2 is when the wholesale value is less than the book value causing a loss on the sale. In this case, the
lessee is to pay the lessor the difference aka the loss.
We take a conservative approach in structuring the leases and your account team will monitor the wholesale
value compared to the book value on an annual basis to ensure that the leases trend toward scenario 1.”
Further illustrated:
*Illustration provided by Enterprise
The ten-year cash flow analysis provided is assumed to take this conservative approach in projecting the resale value of
the seven units proposed for lease.
For the three (patrol) units acquired in 2021, the Lease Schedule details a ($400) Service Charge and Reduced Book Value
at Lease Termination (ranging from $5,037 - $6,316). These are costs due at lease termination, which may be offset by
sale proceeds as illustrated in Scenario 1 above.
Recommended procedure: evaluate the resale offering at the end of each Open-End (Equity) Lease Schedule to confirm
performance. Analyze the total costs for the lease program compared to resale profits to the city.
Maintenance Program
As indicated earlier, the city has moved several patrol units into the Enterprise Fleet Maintenance program and has
experienced positive, qualitative aspects. Customer service has been excellent and vehicle repair turnaround time
improved.
At this time, we are unable to provide a quantitative analysis on the maintenance program’s performance due to the
limited period of time the units have been managed by Enterprise.
Recommended procedure: evaluate the life-cycle maintenance costs for the unit and compare to historic averages for
maintenance costs per unit under central garage management.
SUMMARY
We have evaluated the cash flow analysis provided by Enterprise and noted modifications that may be made for
Management and Council to more precisely evaluate the performance that may expected from the proposed leases.
Further, we have highlighted components of the contract that are of particular importance and should be understood and
managed through the practices outlined above. At this time, we cannot conclude that the program will yield savings to
the city as elements of the program and assumptions have not been experienced. Program performance should be
evaluated for units within a department, and different departments may experience varying levels of performance based
on the nature of the vehicles, wear, and tear. We are happy to answer additional questions that you may have and assist
in ongoing evaluation of the program and the value it can provide for the city.
I:\RFA\P&R\Pool and Civic Center Pk Projects\2022\Stantec Addendum\May WS\11.4 Q ‐ May Landscaping, Pool and Park Update.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: Parks & Recreation
By: Susan Rader, Director
Agenda Title
Update on Pool/Civic Center Park/City Hall Landscaping projects by Stantec Engineering (Improvement
Project Nos. 995/941/994)
Requested Action
Staff requests that the City Council receive an update on the pool, Civic Center Park and city hall landscaping
construction projects. City engineer, Dan Boyum will be in attendance.
Policy/Past Practice
Past policy and practice has been to provide the Council with updates on projects and receive input and
feedback.
Background
The city began discussing plans for the pool, Civic Center Park and city hall landscaping in January 2017
when the City Council approved the new police station/city hall being located on the former pool site. In June
2018, an agreement was approved with Stantec to provide engineering and planning services for the pool,
Civic Center Park and city hall landscaping projects.
On December 10, 2018, the City Council approved plans and specifications and authorized advertisement for
bids. All five contracts were approved on March 25, 2019, and several of the contracts are complete:
Demolition of theater, shelter building, hockey rink and city hall (complete)
Theater and picnic shelter (complete)
Skatepark (complete)
Aquatic Park (complete – closeout will be placed on May 23, 2022 agenda)
Park amenities, parking lots and landscaping for the city hall and park
Update
Donlar Contract (Aquatic Park)
Change Order #11 and all remaining punchlist items have been completed. A resolution approving the final
payment to Donlar Construction Company will be on the May 23, 2022 Council agenda.
Sunram Contract (Park amenities, parking lots and landscaping for the city hall and park)
Staff and the city engineer met with Ryan Sunram and several of his sub‐contractors on May 4 to discuss
outstanding punchlist items and a timeline for completion. Punchlist items included the parking lot ponding
issue in front of the police department entrance, minor concrete repair, replacement of some plantings,
flagpole electrical issue, camera fiber for the skatepark cameras and park turf restoration. The sub‐contractors
indicated that they would check their schedules and communicate with Sunram on when they would be able
to be on site to finish the necessary work items.
Agenda Section
Work Session
Item Number
11.4
Request for Action, Page 2
Since the May 4 meeting, the bituminous contractor has tentatively scheduled the parking lot patch for the
week of May 16, the concrete sawcut and seal repairs were completed last week, the plantings under
warranty have been replaced, and the flagpole and fiber issues are expected to be taken care of in the next
few weeks.
The turf restoration continues to be the most challenging work remaining. After taking some additional soil
tests this spring and comparing them with previous soil tests, Sunram will be developing a plan for seed
planting to take place before the middle of June.
Additional Engineering Costs (Addendum #4):
As we are nearing the completion of the projects, staff would also like to discuss an additional addendum for
Stantec. When Addendum #3 was approved in May 2020, it was felt that the time identified to finish the
projects was adequate. However, since May 2020, several unforeseen issues have caused the completion of a
couple of the projects to be delayed, and Stantec staff reached the maximum for their budget mid‐summer
last year. Since then, they have not been charging the city.
Since Stantec staff did not have any control over the project delays, staff feels that an additional addendum
should be approved to cover the extra time that they have worked. The completion (or almost completion) of
all of the projects wouldn’t have been possible without the engineering and project management that they
have provided.
Due to Covid‐19, the opening of the aquatic park was delayed from June 2020 until June 2021. As the facility
was not used until 2021, there were several items that were addressed during and after the season in addition
to several punchlist items.
The extra effort continued in 2021 and 2021 related to coordination with contractors working in the park,
meeting with contractors as they updated their schedules, dealing with some of the weather issues last year
that delayed grass growth, and continuing to work with the contractor on ongoing project items and
punchlist items.
A Scope of Services was approved on June 25, 2018 with Stantec that included engineering services for the
design and construction of the contracts for the demolition of the park buildings and current city hall, city
hall landscaping, city hall and pool parking lots, Civic Center Park amenities, pool, outdoor theater and
skatepark. The services included preliminary survey/field investigation, schematic design, design –
construction documents, bidding, construction survey, construction management and administration,
construction materials testing, record plan/base map and Infraseek update, and necessary progress meetings.
At that time, the schedule identified construction starting spring of 2019, with an anticipated completion in
the late summer of 2020.
On December 10, 2018, the City Council approved Addendum #1 for the additional services required for
design of the pool due to the soil corrections, the expanded theatre costs and the park alternates, including
the picnic shelter, trail lighting, the northwest loop of trail with lighting, and dressing room space. The
addendum was approved with the understanding that an additional addendum addressing the construction
management services would need to be completed once the project alternates had been decided once bids
were received.
Request for Action, Page 3
Following the selection of the alternates and the award of contracts, Addendum #2 was approved on May 13,
2019, to cover the construction management services for the additional items that were identified in
December 2018.
Addendum #3 was approved May 26, 2020 for additional engineering services necessary on the projects
including restaking for the park/parking lot contractor, coordination with and field staking for Xcel, deck
pour analysis, delay claim/winter construction analysis/CenterPoint permit items, and the design and
construction administration for the storm water chamber. Some of these additional services were reimbursed
by contractors (restaking and deck pour analysis).
Date of Agreement Amount
June 25, 2018 Scope of Services $1,737,839.23
December 10, 2018 Addendum #1 $180,991.97
May 13, 2019 Addendum #2 $179,067.13
May 26, 2020 Addendum #3
Reimbursed by Contractors
$214,774.03
($46,126.50)
Total to date $2,266,545.86
May 2022 Addendum #4 $44,935.08
TOTAL $2,311,480.94
If Council is supportive of an additional addendum, a resolution will be placed on the May 23, 2020 council
agenda.
Project Costs
Previously, staff had estimated a shortfall of almost $300,000 between all five of the project contracts (pool,
park and city hall landscaping, performance center, skate park and city hall demolition) primarily due to the
additional $270,000 that was spent on the removal of poor soils and importing of sand for the pool area. Staff
is still projecting a shortfall, but due to the additional interest received and not paying several of the
incentives, it will be much less than the estimated $300,000.
In November 2019, Vicki Holthaus provided a memo outlining various funding options for project overages.
At the time, her recommendation was to record a one‐time transfer from the Temporary Financing Fund to
cover any overage on the projects. But she advised that the project overage should be recalculated once all of
the projects were final and the transfer recorded at that time. The recommendation has remained unchanged.
The projected balance:
Fund Balance as of 12/31/21 $605,760.00
2022 costs to date ($27,329.36)
Funds reserved for debt services ($400,338.63)
Donlar remaining (CO #11 and retainage) ($18,482.70)
Sunram remaining (60% outstanding work and
retainage)
($140,417.78)
City purchase items remaining ($26,289.67)
Stantec Addendum #4 ($44,935.08)
Projected Balance ($52,033.22)
Request for Action, Page 4
The City Council will be kept updated on the progress of the remaining project.
Attachments
Stantec Letter re: Addendum #4
Stantec Consulting Services Inc.
733 Marquette Avenue, Suite 1000
Minneapolis, MN 55402
May 10, 2022
File:193804335,193804336,193804337,193804338,193804646
Attention: Kirk McDonald
City Manager
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
Reference: Addendum #4 – Additional Engineering Construction Management Services for City
Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park
Improvements
Dear Kirk,
The construction management and administration on the pool, Civic Center Park, and city hall
landscaping projects have continued beyond the time frame for completion anticipated in
Addendum #3 that was processed in May 2020. At that time, we were anticipating completion of
work in 2020. Work on the above referenced projects lingered into 2021 and is nearing
completion and closeout in 2022.
Additional Costs to Date
The additional costs as of May 6, 2022 that went beyond those costs identified in Addendum #3
are related to construction management and administration services that include construction
survey, construction observation, construction administration, and record plan/base map work.
The total of these costs for the projects are shown below:
Table 1 – Additional Costs to Date
Project Amount
193804335 – City Hall Landscaping,
Streetscaping, Parking Lots, and Civic Center
Park Improvements
$21,300.58
193804337 – Outdoor Pool $15,134.50
Total Additional Costs to Date $36,435.08
Estimated Remaining Costs for Closeout
The pool project is planned to be closed out in May 2022. The landscaping, streetscaping, parking
lots, and Civic Center Park Improvements is working toward closeout this summer, with remaining
punch list work being scheduled at this time and anticipated to be completed in June. We have
estimated our remaining costs for closeout of the two projects as follows:
May 10, 2022
Mr. Kirk McDonald
Page 2 of 2
Reference: Addendum #4 – Additional Engineering Construction Management Services for City Hall
Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements
Table 2 – Estimated Remaining Costs
Project Amount
193804335 – City Hall Landscaping,
Streetscaping, Parking Lots, and Civic Center
Park Improvements
$7,000.00
193804337 – Outdoor Pool $1,500.00
Total Estimated Remaining Costs $8,500.00
Addendum #4
Addendum #4 is a summary of Table 1 and Table 2 as shown below:
Table 3 – Addendum #4
Project Amount
193804335 – City Hall Landscaping,
Streetscaping, Parking Lots, and Civic Center
Park Improvements
$28,300.58
193804337 – Outdoor Pool $16,634.50
Total – Addendum #4 $44,935.08
If you have any questions or require further information, please call me at (612) 712-2021.
Sincerely,
STANTEC CONSULTING SERVICES INC.
Dan D. Boyum, P.E.
The undersigned hereby consents to the Addendum #4 Contract as noted above and attached
to Stantec Consulting Services Inc.
City of New Hope
CC: Jeff Sargent, Susan Rader, Bernie Weber, Valorie Leone – New Hope; Stacy Woods – City
Attorney.
I:\RFA\City Manager\2022\Audit\WS 051622\Q ‐ Review 2021 Audit with Abdo 051622.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Review 2021 Audit and Comprehensive Annual Financial Report with Abdo
Requested Action
Staff requests to review the 2021 audit and Comprehensive Annual Financial Report with the City Council.
Representatives from Abdo 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 23, 2022 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:
• Management report
• Special purpose audit report
• Preliminary comprehensive annual financial report (CAFR) for the fiscal year ending December 31, 2021.
2021 was a somewhat unique year for the city budget due to the Federal funding received in both 2020 and
2021. In 2021 the city received $1,142,381 in American Rescue Plan Act (ARPA) funding, which is noted under
Intergovernmental Revenue for 2021. In 2020 the city received $1,641,664 in CARES funding, which was
transferred out of the 2021 budget for capital improvements at the public works facility, resulting in a
$252,343 decrease in the overall fund balance.
Total general fund expenses were under budget by $773,618 due primarily to personnel changes in the police
department and lower costs at the swimming pool due to a shortage of lifeguards and pool operating costs
being lower than anticipated. Total general fund revenues were over budget by $649,775 primarily due to the
ARPA funding that was received. The overall increase to fund balance before transfers out was $773,618 +
$649,775 = $1,383,393 (including ARPA). When the CARES funding from 2020 is transferred out in the
amount of $1,642,533, the fund balance decreased by $252,343.
The total net position of the city’s enterprise funds (sewer/water/storm water/street lighting/golf course/ice
arena) increased by $2,840,485, with the increase spread across all funds.
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
Agenda Section
Work Session
Item Number
11.5
Request for Action, Page 2
findings. They reported they encountered no significant difficulties in dealing with management in
performing and completing the audit. Staff will be coordinating with Abdo to submit an application for the
2021 Excellence in Achievement for Financial Reporting Certificate.
Staff is recommending the Council officially accept the audit at the May 23 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
Management Report
for
City of New Hope, Minnesota
December 31, 2021
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, 2021. 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, 2021. 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, in our audit engagement letter, and
in a separate letter dated May 5, 2022. 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, 2021:
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-
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, 2021.
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 OPEB. These obligations are calculated using
actuarial methodologies described in Governmental Accounting Standards Board 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 to develop these accounting estimates
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.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
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.
-3-
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
supplementary 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 supplementary 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.
-4-
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 2020 fiscal year, local ad valorem property tax levies provided 40.9 percent of the total governmental
fund revenues for cities over 2,500 in population, and 36.5 percent for cities under 2,500 in population.
Total property taxes levied by all Minnesota cities for taxes payable in 2021 increased 4.0 percent compared
to the prior year, and 5.9 percent for taxes payable in 2022.
The total tax capacity value of property in Minnesota cities increased about 6.3 percent for the 2021 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 2021 were based on assessed market
values as of January 1, 2020), 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 10.4 percent for taxes payable in 2020 and 7.7 percent for taxes
payable in 2021. 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
$2,400,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Taxable Market Value
-5-
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 11.0 percent for taxes payable in 2020 and
8.1 percent for taxes payable in 2021.
The following graph shows the City’s change in tax capacities over the past 10 years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Local Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years:
2019 2020 2021
Average tax rate
City 68.0 66.1 62.6
County 41.8 41.1 38.2
School 29.9 26.4 25.5
Special taxing 8.9 8.4 10.0
Total 148.6 142.0 136.3
Rates Expressed as a Percentage of Net Tax Capacity
City of New Hope
Both the City portion of the tax rate and the overall tax rate on New Hope residents declined for the 2021
levy year, due to the increasing taxable market value of property within the City.
-6-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2021, presented both by fund balance classification and by major fund.
2021 2020 Change
Fund balances of governmental funds
Total by classification
Nonspendable 49,680$ 24,499$ 25,181$
Restricted 9,779,064 9,016,306 762,758
Committed 4,520,972 4,639,390 (118,418)
Assigned 9,059,040 6,993,400 2,065,640
Unassigned 6,646,030 6,781,656 (135,626)
Total governmental funds 30,054,786$ 27,455,251$ 2,599,535$
Total by fund
General 8,673,743$ 8,926,086$ (252,343)$
Economic Development Authority Special Revenue 4,212,479 4,320,456 (107,977)
HRA Construction Capital Projects 5,955,136 5,379,088 576,048
Street Infrastructure Capital Projects 1,156,367 250,697 905,670
HRA Bonds Debt Service (1,978,033) (2,119,802) 141,769
Nonmajor funds 12,035,094 10,698,726 1,336,368
Total governmental funds 30,054,786$ 27,455,251$ 2,599,535$
as of December 31,
Governmental Funds Change in Fund Balance
Fund Balance
In total, the fund balances of the City’s governmental funds increased by $2,599,535 during the year ended
December 31, 2021.
The increase in restricted fund balances is primarily attributable to the improvement in the financial position
of the City’s HRA Construction Funds in 2021.
Increases in resources accumulated for street improvements in the Street Improvement Capital Projects
Fund and for improvement of the City’s public works facility in the (nonmajor) Public Works Facility CIP
Capital Projects Fund contributed to the increase in assigned fund balances.
-7-
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 in 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 2019 2020 2021
Population 10,000–20,000 20,000–100,000 22,376 21,986 21,986
Property taxes 517$ 537$ 680$ 762$ 794$
Tax increments 33 44 59 87 96
Franchise and other taxes 60 46 43 44 44
Special assessments 39 54 9 11 6
Licenses and permits 39 46 14 18 18
Intergovernmental revenues 367 273 176 195 148
Charges for services 89 91 62 45 81
Other 69 69 70 35 18
Total revenue 1,213$ 1,160$ 1,113$ 1,197$ 1,205$
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
City of New HopeState-Wide
December 31, 2020
In total, the City’s governmental fund revenues for 2021 were $26,512,462, an increase of $201,422
(0.8 percent) from the prior year, or $8 more per capita than the prior year. Property tax revenue was $32 per
capita higher than last year, due to an increase in the City’s levy. Intergovernmental revenue was $47 per
capita lower than last year, mainly due to a decrease of about $511,000 in federal award revenue related to
coronavirus relief recognized in the 2021 compared to the prior year, and a one-time youth-sports grant of
$250,000 received from Hennepin County in 2020 for the aquatic park facility. Charges for services were
$36 per capital higher than the prior year, primarily due to an increase of about $678,000 in park and
recreation rental and program fees, due to the opening of the aquatic park in 2021 and the resumption of
recreation programs that were cancelled or greatly reduced in 2020 because of the pandemic. Revenue from
“other” sources, as presented above, were $17 per capita lower than the prior year, mainly due to a decrease
in investment earnings from a decline in market performance and available interest rates.
-8-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
Current – These are typically the general operating type expenditures occurring on an annual basis,
and are primarily funded by general sources, such as taxes and intergovernmental revenues.
Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the expenditure,
such as special assessment improvement projects.
Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources, such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
comparative state-wide averages, are presented in the following table:
Year 2019 2020 2021
Population 10,000–20,000 20,000–100,000 22,376 21,986 21,986
Current
140$ 118$ 85$ 94$ 98$
288 320 377 380 391
122 112 80 84 86
112 95 91 93 120
108 104 23 59 61
Total current 770 749 656 710 756
Capital outlay
and construction 429 331 1,009 394 210
Debt service
149 91 43 87 116
42 33 61 81 78
Total debt service 191 124 104 168 194
Total expenditures 1,390$ 1,204$ 1,769$ 1,272$ 1,160$
Principal
Interest and fiscal
General government
Public safety
Public works
Culture and recreation
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
City of New Hope
All other
State-Wide
December 31, 2020
The City’s total governmental funds expenditures were $25,483,895 for 2021, a decrease of $2,474,7581
(8.9 percent) from the prior year, or $112 per capita. Current expenditures increased $46 per capita, mainly
in police (public safety) supplies and services, and culture and recreation expenditures due to the opening
of the aquatic center and resumption of recreation programs in 2021 as previously discussed. Capital outlay
expenditures decreased $184 per capita, due to less street improvement construction and completion of the
majority of the new park/pool project in 2020. Debt service expenditures increased $26 per capita, due to
new debt issued in recent years to finance the city hall and aquatic park improvement projects.
-9-
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 operating transfers out to reflect the change in the
size of the General Fund operation over the same period.
2017 2018 2019 2020 2021
Fund Balance $6,888,655 $7,180,951 $7,139,703 $8,926,086 $8,673,743
Cash Balance (Net)$6,750,104 $6,992,743 $7,187,781 $8,819,883 $8,578,067
Exp & Trans Out $13,290,729 $13,652,053 $14,337,748 $14,130,989 $16,845,891
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
General Fund Financial Position
Year Ended December 31,
The total fund balance of the City’s General Fund decreased $252,343 in 2021, as compared to a breakeven
budget. Unassigned fund balance was $8,624,063 at the end of fiscal year 2021, which represents
approximately 51.2 percent of annual expenditures and transfers out based on 2021 levels.
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.
Maintaining an adequate fund balance has become increasingly important given the fluctuations in state
funding for cities in recent years.
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. Taxes comprise about
67.6 percent of the fund’s total annual revenue. Approximately half of these revenues are received by the
City in July and the rest in December. Consequently, the City needs to have adequate cash reserves to
finance its everyday operations between these payments.
-10-
The following graph reflects the City’s General Fund revenue sources for 2021 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 and Forfeitures
Other
Millions
General Fund Revenue
Budget to Actual
Budget Actual
Total General Fund revenue for 2021 was $16,136,076, which was $649,775 (4.2 percent) higher than the
final budget. Intergovernmental revenue exceeded budget by $1,113,189, due to the City not amending its
budget for the federal American Recovery Program Act award recognized in the current year. Charges for
services were $325,558 under budget, mainly due to revenues from the first year of operations of the new
aquatic center not reaching projections.
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
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
2021 $10,914,572 $2,603,365 $2,618,139
$–
$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 2021 was $557,992 (3.6 percent) higher than the prior year. Property tax
revenue increased $491,749 due to a levy increase and reduced delinquencies. Intergovernmental revenues
were $556,280 less than 2020, primarily due to less federal award revenue recognized in 2021 compared to
2020. Revenue from other sources increased $624,523 from last year, mainly in charges for services as
noted above.
-11-
The following graph illustrates the components of General Fund spending for 2021 compared to budget:
$– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10
General Government
Public Safety
Public Works
Culture and Recreation
Millions
General Fund Expenditures
Budget to Actual
Budget Actual
Total General Fund expenditures for 2021 were $15,203,358, which was $773,618 (4.6 percent) under
budget. Public safety expenditures were $529,627 under budget, primarily in police personal services, as
several positions were vacant during the year. Culture and recreation expenditures were $288,598 under
budget, mainly in swimming pool personnel and other service costs due to a shortage of lifeguards and pool
operational costs being lower than 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
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
2021 $2,148,125 $8,772,777 $1,653,003 $2,629,453
$–
$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 $1,072,369 (7.6 percent) higher than the previous year. Public safety
expenditures increased $362.899, mainly due to new body cameras purchased in 2021 and increases in other
police supplies and charges. Culture and recreation expenditures were $593,795 higher than the prior year,
mainly in salaries and services related to the aquatic center opening and increase in recreation programs.
-12-
ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which include the Sewer
Utility, Water Utility, Golf Course, Ice Arena, Storm Water, and Street Lighting funds.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2021, presented both by classification and by fund:
2021 2020 Change
Net position of enterprise funds
Total by classification
Net investment in capital assets 22,607,046$ 20,127,288$ 2,479,758$
Restricted – 1,560,053 (1,560,053)
Unrestricted 6,953,260 4,792,042 2,161,218
Total enterprise funds 29,560,306$ 26,479,383$ 3,080,923$
Total by fund
Sewer Utility 5,977,582$ 5,030,413$ 947,169$
Water Utility 9,767,495 8,678,102 1,089,393
Golf Course 716,948 615,689 101,259
Ice Arena 4,087,498 3,663,197 424,301
Storm Water 8,536,338 8,051,028 485,310
Street Lighting 474,445 440,954 33,491
Total enterprise funds 29,560,306$ 26,479,383$ 3,080,923$
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 $3,080,923 during the year ended
December 31, 2021, with the increase spread across all funds. The net investment in enterprise capital assets
increased $2,479,758, mainly due to the relationship between the repayment of outstanding capital-related
debt and depreciation recognized on the related capital assets. The $1,560,053 decrease of restricted net
position represents the use of cash previously held in an escrow account in the Ice Arena Fund to finance a
portion of the early retirement of the City’s energy conservation lease revenue bonds, the remainder of
which were refunded with the proceeds of the City’s 2021A Tax Abatement Bonds in the current year.
Unrestricted net position increased by $2,161,218, mainly due to positive operating results in the Sewer
Utility, Water Utility, and Storm Water funds.
-13-
SEWER UTILITY FUND
The following graph presents five years of operating results for the City’s Sewer Utility Fund:
2017 2018 2019 2020 2021
Oper Rev $2,899,257 $3,154,709 $3,380,075 $3,712,613 $3,906,809
Oper Exp $2,420,994 $2,684,030 $2,843,056 $3,119,273 $2,868,543
Oper Inc (Loss)$478,263 $470,679 $537,019 $593,340 $1,038,266
$–
$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 2021 with a total net position of $5,977,582, of which $3,959,576 represents
the net investment in sewer collection system capital assets, leaving an unrestricted balance of $2,018,006.
Net position increased $947,169 in the current year.
Operating revenue in the Sewer Utility Fund for 2021 increased $194,196 (5.2 percent) from the previous
year, which primarily reflects a 5.0 percent rate increase implemented for the year.
Operating costs for 2021 were $250,730 (8.0 percent) less than last year, mainly in personnel services (full-
time salaries and benefits).
-14-
WATER UTILITY FUND
The following graph presents five years of operating results for the City’s Water Utility Fund:
2017 2018 2019 2020 2021
Oper Rev $3,994,122 $4,391,025 $4,387,321 $5,139,616 $5,545,731
Oper Exp $3,462,858 $4,029,601 $3,720,072 $4,178,233 $4,677,022
Oper Inc (Loss)$531,264 $361,424 $667,249 $961,383 $868,709
$–
$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
$6,000,000
Water Utility Operating Results
Year Ended December 31,
The Water Utility Fund ended 2021 with a total net position of $9,767,495 of which $6,105,544 represents
the net investment in water distribution system capital assets, leaving an unrestricted balance of $3,661,951.
The Water Utility Fund net position increased $1,089,393 in 2021.
Operating revenue in the Water Utility Fund for 2021 increased $406,115 (7.9 percent) from the prior year,
which reflects a 5.0 percent rate increase implemented for the year, along with an increase in consumption
due in part to higher irrigation usage.
Operating costs for 2021 were $498,789 (11.9 percent) more than the prior year, mainly due to increases in
water purchased due to higher consumption and personnel services (full-time salaries and benefits).
-15-
GOLF COURSE FUND
The following graph presents five years of operating results for the City’s Golf Course Fund:
2017 2018 2019 2020 2021
Oper Rev $273,247 $274,735 $282,323 $401,666 $450,307
Oper Exp $335,983 $309,757 $327,422 $324,994 $358,282
Oper Inc (Loss)$(62,736) $(35,022) $(45,099) $76,672 $92,025
$(100,000)
$(50,000)
$–
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Golf Course Fund
Year Ended December 31,
The Golf Course Fund ended 2021 with a total net position of $716,948, an increase of $101,259. Of this,
$423,730 represents the net investment in golf course capital assets, leaving $293,218 in unrestricted net
position.
Golf Course Fund operating revenue for 2021 increased $48,641 (12.1 percent) from the prior year, mainly
due to an increase in rounds played.
Operating expenses were $33,288 (10.2 percent) higher than the prior year due to the increased activity.
-16-
ICE ARENA FUND
The following graph presents five years of operating results for the City’s Ice Arena Fund:
2017 2018 2019 2020 2021
Oper Rev $811,661 $825,531 $852,765 $560,316 $883,968
Oper Exp $951,444 $942,466 $953,352 $966,868 $1,059,816
Oper Inc (Loss)$(139,783) $(116,935) $(100,587) $(406,552) $(175,848)
$(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 2021 with a total net position of $4,087,498, an increase of $424,301. Of this,
$4,469,909 represents the net investment in ice arena capital assets, leaving an unrestricted deficit net
position of $382,411.
Ice Arena Fund operating revenue for 2021 increased $323,625 (57.8 percent) from the prior year, primarily
from an increase in ice rental fees and event ticket sales, due to the relaxation of COVID restrictions in
2021.
Operating expenses were $92,948 (9.6 percent) higher than the prior year, mainly due to legal and financial
services for related to the debt issuance and refunding discussed previously.
-17-
STORM WATER FUND
The following graph presents five years of operating results for the City’s Storm Water Fund:
2017 2018 2019 2020 2021
Oper Rev $1,082,348 $1,139,007 $1,190,058 $1,259,707 $1,321,518
Oper Exp $834,963 $738,307 $874,407 $886,021 $890,301
Oper Inc (Loss)$247,385 $400,700 $315,651 $373,686 $431,217
$–
$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
$1,400,000
Storm Water Fund
Year Ended December 31,
The Storm Water Fund ended 2021 with a total net position of $8,536,338, an increase of $485,310. Of this,
$7,297,553 represents the net investment in storm water collection system capital assets, leaving an
unrestricted net position of $1,238,785.
Storm Water Fund operating revenues for 2021 increased $61,811 (4.9 percent) from the previous year,
mainly due to a 5.0 percent rate increase implemented in 2021.
Operating expenses were $4,280 (0.5 percent) higher than last year.
-18-
STREET LIGHTING FUND
The following graph presents five years of operating results for the City’s Street Lighting Fund:
2017 2018 2019 2020 2021
Oper Rev $137,491 $144,582 $152,975 $161,866 $170,656
Oper Exp $101,625 $119,198 $116,612 $133,159 $136,112
Oper Inc (Loss)$35,866 $25,384 $36,363 $28,707 $34,544
$–
$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 2021 with a total net position of $475,445, an increase of $33,491. Of this,
$350,734 represents the net investment in street lighting capital assets, leaving an unrestricted net position
of $123,711.
Street Lighting Fund operating revenue for 2021 increased $8,790 (5.4 percent) from the previous year,
which reflects a 5.0 percent rate increase implemented this year.
Operating expenses were $2,953 (2.2 percent) higher than the previous year, mainly due to an increase in
utilities expense.
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of the City’s net position as of December 31, 2021 and 2020,
for governmental activities and business-type activities:
2021 2020 Change
Net position
Governmental activities
Net investment in capital assets 34,985,781$ 31,359,813$ 3,625,968$
Restricted 8,598,311 7,740,859 857,452
Unrestricted 23,427,177 19,716,696 3,710,481
Total governmental activities 67,011,269 58,817,368 8,193,901
Business-type activities
Net investment in capital assets 22,607,046 20,127,288 2,479,758
Restricted – 1,560,053 (1,560,053)
Unrestricted 6,455,200 4,534,420 1,920,780
Total business-type activities 29,062,246 26,221,761 2,840,485
Total net position 96,073,515$ 85,039,129$ 11,034,386$
As of December 31,
The City’s total net position at December 31, 2021 increased $11,034,386 from the previous year-end.
Governmental activities net position increased by $8,193,901 overall. The increase in net investment in
capital assets is mainly due to current year capital asset additions, which were purchased or constructed for
without the issuance of new bonds. The increase in restricted net position was mainly due to an 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 the fund balance increases in governmental funds discussed earlier in this report.
Business-type activities net position increased $2,840,485, as outlined in the discussion of enterprise fund
operations.
-20-
STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions
that increase or reduce total net position. These amounts represent the full cost of providing services. The
Statement of Activities provides a more comprehensive measure than just the amount of cash that changed
hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used,
depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2021 and 2020:
2020
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 1,152,633$ 732,897$ (419,736)$ (2,625,356)$
Public safety 7,764,051 1,223,110 (6,540,941) (7,793,816)
Public works 4,295,427 1,160,082 (3,135,345) (2,478,347)
Culture and recreation 3,095,760 1,033,750 (2,062,010) (1,668,452)
Economic development 1,434,986 – (1,434,986) (1,274,098)
Interest on long-term debt 1,518,351 – (1,518,351) (1,570,807)
Business-type activities
Sewer utility 2,973,301 3,907,284 933,983 709,422
Water utility 4,813,286 5,913,176 1,099,890 1,301,409
Golf course 368,659 473,597 104,938 107,722
Ice arena 1,095,343 930,688 (164,655) (414,420)
Storm water 991,031 1,446,022 454,991 382,884
Street lighting 135,899 170,656 34,757 28,596
Total net (expense) revenue 29,638,727$ 16,991,262$ (12,647,465) (15,295,263)
General revenues
Property taxes and tax increments 19,476,109 18,740,097
Franchise taxes 962,395 958,162
Unrestricted grants and contributions 3,155,397 2,497,630
Unrestricted investment earnings 17,650 918,772
Gain on sale of capital assets 70,300 22,000
Total general revenues 23,681,851 23,136,661
Change in net position 11,034,386$ 7,841,398$
2021
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 and
unrestricted grants. 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 building and improvements. The difference in the net change in public
safety was primarily due to an improvement in the funding level of the statewide PERA Public Employees
Police and Firefighter pension plan recognized in 2021.
-21-
LEGISLATIVE UPDATES
As the first year of the fiscal biennium, the primary focus of the 2021 Minnesota legislative session would
typically have been the development of the state’s fiscal year (FY) 2022–2023 biennial budget. Positive
news on the state’s budget forecast entering the session, with projections for the end of the FY 2020–2021
biennium improving from a $2.4 billion shortfall predicted in a May 2020 special pandemic budget
projection to a $940.0 million surplus predicted in the February 2021 budget and economic forecast, was
expected to ease the budget process and relieve the pressure to make budget cuts during an already uncertain
time. However, given the significant events of the preceding year, including the COVID-19 pandemic and
death of George Floyd, the focus of the regular session shifted to legislation responding to the pressing
issues that resulted from those events. The business of setting a biennial budget was ultimately not
addressed until a June special session that ended in the early morning hours of July 1st.
The following is a brief summary of legislative changes from the 2021 session or previous legislative
sessions potentially impacting Minnesota cities.
American Rescue Plan (ARP) Act – The federal ARP Act, signed into law in March 2021, provided
federal economic recovery funding for federal, state, and local government responses to the
COVID-19 pandemic. Minnesota local governments received approximately $2.1 billion in funding under
the ARP Act, including $644.0 million awarded to 21 large cities (over 50,000 population) and
$377.0 million awarded to cities and towns with a population below 50,000, with half distributed in
FY 2021 and half in FY 2022. Local governments can use ARP Act funding in four broad
categories: responding to public health and economic impacts; providing premium pay to essential workers;
providing general government services to the extent of revenue loss; or investments in water, sewer, and
broadband infrastructure.
Potential State Aid Enhancements – The 2021 Legislature increased state general fund base spending by
approximately $1.3 billion. Included are funding increases for several programs potentially of benefit to
Minnesota cities, including:
A one-time appropriation of $5.5 million for supplemental aid to cities for FY 2022, to offset losses
of local government aid (LGA) for 96 cities under the current formula. It is expected the Legislature
will review and consider updating the LGA formula during the 2022 session.
Annual appropriations of $1.8 million for the Greater Minnesota Business Development Public
Infrastructure Grant Program, intended to bolster local economic growth by providing grant
assistance to cities for public infrastructure needed to create and retain jobs.
Annual appropriations of $2.5 million for local community childcare grants, intended to assist local
communities to increase the number of childcare providers to support economic development.
Allocating a total of $70.0 million from the state’s ARP Act funds over the biennium ($35.0 million
per year) to fund the Border-to-Border Broadband Grant Program, which provides grants to local
governments for enhancing broadband availability.
Annual allocations of $4.5 million for reimbursements to local governments for firefighter training
and education costs.
Annual allocations of $2.9 million for reimbursement to local governments for peace officer
training costs.
A one-time appropriation of $18.0 million for FY 2022 to the small cities assistance account to
provide additional road repair funding for cities under 5,000 population.
Truth-in-Taxation Changes – Effective for property taxes payable in 2023 and thereafter, county auditors
will be required to prepare a new statement for inclusion in its parcel-specific truth-in-taxation notices that
contains summary budget information for the county, cities, and school districts for which they spread and
collect tax levies. Cities with a population greater than 500 will be required to compile and provide current
and proposed summary budget information to the county auditor, based on the summary budget information
cities are required to submit each year to the Minnesota state auditor.
-22-
Tax Base Change for Low-Income Rental Property – Effective for assessment years 2022 and 2023, the
first-tier limit for class 4d low-income rental property is reduced from $174,000 to $100,000, with class
rates remaining at 0.75 percent on the first $100,000 and 0.25 percent on the remaining balance. The tier
limit will once again be adjusted annually after assessment year 2023.
Local Sales Tax Projects Defined – Minnesota cities are authorized to include up to five capital projects
in proposals for local sales taxes. The definition of a capital project for this purpose was updated to
include: a single building or structure, including associated infrastructure; improvements within a
single park or recreation area, or; a contiguous trail.
Tax Increment Financing (TIF) Flexibility – The Legislature enacted several measures that provide
additional flexibility for TIF spending, including:
Allowing unobligated TIF to be used to provide loans, interest rate subsidies, or other assistance
to private developers for the construction or substantial rehabilitation of buildings and ancillary
facilities, if doing so will create jobs. Transfer authority expires on December 31, 2022, and all
transferred increment must be spent by December 31, 2025, or returned to the TIF district.
Allowing TIF districts that have elected to increase pooling by 10 percent to use the increment for
owner-occupied housing that meets the requirements of a housing TIF district, in addition to
current low-income rental housing.
Providing three-year extensions of the five-year and six-year rules for redevelopment districts
created after December 31, 2017, but before June 30, 2020, thereby extending their duration.
Creating a three-city pilot program, giving temporary authority to transfer unobligated housing
TIF district increment to the cities affordable housing trust funds.
Sales and Use Tax Refund Process – Effective for purchases made after June 30, 2021, cities and other
local governments are allowed to utilize a streamlined process to secure a sales tax refund on construction
materials purchased by a contractor on behalf of the city for construction, remodeling, expansion, or
improvement of public safety facilities owned by local governments, such as police and fire stations. The
process also applies to materials used in related facilities, such as access roads, lighting, sidewalks, and
utility components. Under the process, local governments would continue to initially pay sales tax on these
materials, but would then be allowed to file for a refund of the sales tax paid. Contractors would be required
to provide the local government with the information necessary to file for the refund.
Fire Protection Special Taxing District Authority – Effective for property tax levies payable in 2023 and
thereafter, the current law giving emergency medical districts taxing authority is expanded to include fire
protection districts. Two or more local units of government are now permitted to establish a special taxing
district to provide fire protection, emergency medical services, or both. The special taxing district will have
authority to levy property taxes to finance district operations, spread either across the entire district at a set
rate, or allocated to each participating jurisdiction based on factors, such as population or service calls.
Districts will also have authority to issue debt related to the function of the district. The property tax and
debt issuance authority also apply to existing districts established prior to June 30, 2021.
Open Meeting Law – The Legislature made several pandemic-related changes to the Open Meeting Law,
including removing the statutory cap of three times per year for elected officials to utilize a medical
exception for attending meetings remotely between January 1, 2021, and July 1, 2021, and removing the
requirement for elected officials participating in public meetings remotely, due to military service or
medical exceptions, to disclose their remote locations. The law changes also updated the definition of
“interactive technology” to replace “interactive television” throughout the text of the Open Meeting Laws,
and added requirements for public bodies meeting remotely to enable remote participation by the public
free of charge and enable public comment from remote locations, when practical.
-23-
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.
-24-
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.
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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.
-26-
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.
GASB Statement No. 98, The Annual Comprehensive Financial Report
This statement establishes the term annual comprehensive financial report and its acronym ACFR. That
new term and acronym replace instances of comprehensive annual financial report and its acronym in
generally accepted accounting principles for state and local governments. This statement was developed in
response to concerns raised by stakeholders that the common pronunciation of the acronym for
comprehensive annual financial report sounds like a profoundly objectionable racial slur. This statement’s
introduction of the new term is founded on a commitment to promoting inclusiveness. The requirements of
this statement are effective for fiscal years ending after December 15, 2021. Earlier application is
encouraged.
Preliminary Draft
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I:\RFA\City Manager\2022\ARPA\WS 051622\11.6 Q ‐ Discuss ARPA Fund Transfers.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager
Agenda Title
Discuss American Rescue Plan Act (ARPA) Fund Transfers
Requested Action
Staff recommends that the City Council have a discussion regarding the use of the American Rescue Plan Act
(ARPA) funding received in 2021 and to be received in 2022.
Policy/Past Practice
It is the policy and past practice for staff to discuss financial transfers with and receive approval from the City
Council before transfers are completed.
Background
Per the attached memorandum from Abdo, the city completed the Federal single audit process in May, 2022,
and an unmodified opinion was issued. In 2021, the city received $1,142,382 in ARPA funding. Now that the
Federal audit is completed, staff and Abdo are recommending that the funds be transferred out of the general
fund balance as follows:
1. Transfer $100,000 to the Economic Development Authority Fund for the Curbside Appeal Program
(program and funding discussed at previous work sessions and at May 9 EDA meeting).
2. Transfer $200,000 to the Information Technology Fund for new police department records
management system (to be implemented in 2022/23 in conjunction with other cities).
3. Transfer remaining $842,382 to the Public Works Facility Fund for future facility improvements
(discussed at previous work sessions and included in long‐term financial plan so bonding is not
necessary).
It is anticipated that the city will be receiving the second ARPA distribution in an estimated amount of
$1,106,158 in 2022, and staff and Abdo are recommending that those funds be transferred to the Public Works
Facility Fund upon receipt of the funds.
If the City Council is in agreement with these recommendations, a resolution transferring the funds will be
placed on the May 23 council agenda for consideration.
Attachments
May 4, 2022 Abdo Memo
November 30, 2021 Abdo Memo
Agenda Section
Work Session
Item Number
11.6
I:\RFA\P&R\ARENA\2022\Fund Transfer\WS Discuss\11.7 Q ‐ Transfer from Park Infrastructure Fund to Ice Arena Operating Fund.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: City Manager
By: Kirk McDonald, City Manager and
Susan Rader, Parks & Recreation Director
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 2022 tax levy and budget.
If the Council is supportive, a resolution authorizing the transfer would be presented at the May 23 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 Abdo 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 2021 included annual transfers from the park infrastructure
fund to the ice arena fund to provide funding for the outstanding debt at the facility. The 2022 budget and tax
levy approved by the Council in December 2021 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 Abdo 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.
Agenda Section
Work Session
Item Number
11.7
Request for Action, Page 2
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
service. With the 2022 budget, there is no additional increase in the park infrastructure fund for ice arena debt
service and capital needs, as the final increase was implemented in 2021.
Attachments
2022 Budget Excerpts
2021 Excerpt Long‐Term Financial Plan
February 22, 2021 Bond Refinancing RFA
May 17, 2021 Excerpt Work Session Minutes
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\HR & Admin Svcs\Human Resources\2022\2022 Worksessions\Closed Meeting of 05162022 to Discuss Labor Negotiations.docx
Request for Action
May 16, 2022
Approved by: Kirk McDonald, City Manager
Originating Department: HR & Admin Services
By: Rich Johnson, Director
Agenda Title
Resolution calling for a closed meeting of the New Hope City Council authorized by Minn. Stat §13D.03 to
discuss and consider labor negotiations strategy
Requested Action
Staff requests the opportunity to discuss labor negotiations strategy with the City Council. The city has
collective bargaining agreements with each of the following: police officers (LELS #77), police supervisors
(LELS #273), and the International Union of Operating Engineers (Local #49). Each of these agreements expire
December 31, 2022. Staff has held meetings with each of these groups to negotiate successor agreements and
would like to discuss these negotiations with the City Council.
Policy/Past Practice
As per Minnesota State Statute 13D.03 Subd. 1(b), the city is authorized to hold a closed meeting to consider
labor negotiation strategies or developments or discuss and review labor negotiation proposals conducted
pursuant to the Public Employment Labor Relations Act set out in Minnesota State Statutes 179A.01 through
179A.25. It is staff’s intention to share information with Council as well as request their input which will be
helpful in upcoming negotiations. Please remember that this is confidential information and not for public
disclosure.
Attachment
Resolution
Agenda Section
Work Session
Item Number
11.8
City of New Hope
Resolution No. 2022‐
Resolution calling for a closed meeting of the New Hope City Council authorized
by Minn. Stat §13D.03 to discuss and consider labor negotiations strategy
WHEREAS, Minn. Stat § 1313.03 Subd. 1(b) authorizes and permits the New Hope City Council, by a majority
vote taken in a public meeting, to hold a closed meeting to consider labor negotiation strategies or
developments or discussion and review of labor negotiation proposals conducted pursuant to the
Public Employment Labor Relations Act set out in Minn. Stat §§ 1.79A.01 through 179A.25, and
WHEREAS, the city of New Hope is currently in the process of developing new labor strategies and reviewing
its current labor strategies and policies to negotiate new labor contracts with the following city
employee groups:
1. LELS #77 ‐ Police Officers
2. LELS #273 ‐ Police Supervisors
3. IUOE #49 – Ice Arena Maintenance Operator, Maintenance Workers, Mechanic
WHEREAS, a closed meeting of the New Hope City Council is necessary to consider new labor strategies or
developments and to consider, discuss and review existing labor contracts and new labor contract
proposals from the city employee groups referenced above, and
WHEREAS, a closed meeting is also necessary in that public disclosure of the information to be discussed at the
closed meeting would damage the cityʹs position in the labor negotiation process.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the city of New Hope as follows:
1. That a closed meeting of the New Hope City Council shall be held on May 16, 2022, during an adjournment
of the regularly scheduled work session of the New Hope City Council, in the Northwood conference room.
2. That the purpose of the meeting shall be the discussion of labor contract negotiations for employment
contracts for 2023 and beyond.
3. That said meeting shall not be open to the public.
4. That the New Hope City Clerk is hereby directed to tape record the meeting at the cityʹs expense and
preserve the tape recording for a minimum period of three (3) years. Further, the City Clerk shall make the
tape recording available to the public after all labor contracts are signed by the city.
5. That the New Hope City Clerk shall prepare a written roll of the City Council members 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 16th day of May, 2022.
Mayor
Attest:
City Clerk