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061322 City Council Meeting Packet    NEW HOPE CITY COUNCIL  MEETING AGENDA  June 13, 2022  7:00 p.m.  City Hall – Council Chambers  4401 Xylon Avenue North    Mayor Kathi Hemken  Council Member John Elder  Council Member Andy Hoffe  Council Member Michael Isenberg  Council Member Jonathan London    The City Council wants and encourages citizen participation at Council Meetings. Your input and  opinions count and are valuable. You are encouraged to bring forth your comments and issues at  the appropriate point on the agenda.     A 15‐minute maximum Open Forum is held at the beginning of each Council Meeting. At this time  any person may address the Council on any subject pertaining to City business not listed on this  agenda or scheduled as a future agenda item. The Council requests that you limit your presentation  to 3 minutes. Anyone wishing to address the City Council on a particular item should raise their  hand and be recognized by the Mayor. Approach the podium and speak into the microphone by  first stating your name and address. Also, please record your name on the roster at the table near  the door so that your name will be spelled correctly in the minutes.    Individuals should not expect the Mayor or Council to respond to their comments tonight; Council  may refer the matter to staff for handling or for consideration at a future meeting. You are welcome  to contact the city clerk at 763‐531‐5117 after the council meeting.    COUNCIL MEETING BROADCASTS AND STREAMING  Government Access channel 16 programming includes live/taped meeting replays  Live on‐line meetings and past meetings on‐demand are available through www.nwsccc.org.    www.newhopemn.gov New Hope Values and Vision City Mission Strong local government that is proactive in responding to the community needs and issues by delivering quality public service to all city residents, businesses, property owners, and organizations in a prudent and e cient manner. Values Excellence and Quality in the Delivery of Services We believe that service to the public is our reason for being and strive to deliver quality services in a highly professional and cost-e ective manner. Fiscal Responsibility We believe that fi scal responsibility and the prudent stewardship of public funds and city assets is essential if residents are to have confi dence in government. Ethics, Integrity and Professionalism We believe that ethics, integrity, and professionalism are the foundation blocks of public trust and confi dence and that all meaningful relationships are built on these values. Respect for the Individual We believe in the uniqueness of every individual, and welcome, appreciate, and respect diversity and the di ering of opinions. Open, Honest, and Respectful Communication We believe that open, honest, and respectful communication is essential for an informed and involved citizenry and to foster a positive environment for those interacting with our city. Cooperation and Teamwork We believe that the public is best served when all work cooperatively. Visionary Leadership and Planning We believe that the very essence of leadership is to be responsive to current goals and needs, and visionary in planning for the future. Vision e city is a great place to grow as a family, individual, or business. All within our city are safe and secure. Essential services will be those that promote a safe and healthy environment for all residents. Essential services and programs will be enhanced and streamlined, and will be provided in an economical manner and with measurable results. e city views residents as its greatest asset and seeks their input and participation. e city will meet the communication needs of citizens, elected o cials, and city sta . Strategic Goals e city will maintain and improve its infrastructure (water distribution, storm water, sewer, roads, parks, lighting, and city facilities). e city will use frugal spending and resourceful fi nancial management to maintain its fi scal health. e city will encourage maintenance, redevelopment, and reinvestment of existing properties to improve or enhance its tax base. e city will provide core services with a professional sta who are equipped with the necessary tools and equipment and given necessary direction. e city will facilitate and improve communications to promote e ective intergovernmental cooperation between sta , citizens, and Council. Adopted by the New Hope City Council, August 2006 Reaffirmed by the New Hope City Council, February 2022 CITY COUNCIL MEETING City Hall, 4401 Xylon Avenue North Monday, June 13, 2022 7:00 p.m. 1. CALL TO ORDER AND PLEDGE OF ALLEGIANCE – June 13, 2022 2. ROLL CALL 3. APPROVAL OF MINUTES: • Work Session Minutes – May 16, 2022 • Executive Session Minutes – May 16, 2022 • Regular Meeting Minutes – May 23, 2022 4. OPEN FORUM 5. PRESENTATIONS 5.1 Motion to accept the 2021 annual comprehensive financial report (ACFR) 6. CONSENT BUSINESS 6.1 Approval of business licenses 6.2 Approval of financial claims through June 13, 2022 6.4 Motion accepting certificate of achievement for excellence in financial reporting 6.5 Motion to accept a $50 donation for recreation scholarships 7. PUBLIC HEARING 8. DEVELOPMENT AND PLANNING 9. PETITIONS AND REQUESTS 10. ORDINANCES AND RESOLUTIONS 11. UNFINISHED AND ORGANIZATIONAL BUSINESS 12. OTHER BUSINESS 12.1 Exchange of communication between members of the city council 13. ADJOURNMENT Memorandum To: New Hope City Council From: Tim W. Hoyt, Acting City Manager Date: June 9, 2022 Subject: Agenda Items for Monday, June 13, 2022 Open Forum Staff is not aware of anyone planning to address the Council for the Open Forum. Item 5.1 At the May 16 work session the Council reviewed the 2021 Comprehensive Annual Financial Report with Vicki Holthaus, the city’s financial consultant. The Council is being asked to formally accept the 2021 annual financial report. Mr. Bill Lauer of Malloy, Montague, Karnowski, Radosevich & Co. will summarize the audit and their findings. A copy of the PowerPoint is provided with the RFA, and the audit documents will be furnished at the Council Meeting. After the audit is accepted it will be filed with the state auditor’s office and posted on the city’s website. An application will also be submitted for the 2021 excellence in achievement for financial reporting certificate. Mr. Lauer will also explain the comments noted in the report from GFOA for the 2020 excellence in achievement for financial reporting (item 6.4 on the agenda). Items 6.1, 6.2, and 6.3 Item 6.1 – two business license applications were recently submitted. The first is for “42nd Tobacco Shop” at 7700 42nd Avenue North. The tobacco license issued for this location on May 9 was terminated as the applicant did not enter into a lease at the property. The second license is for “The Laundry Room” self- service laundromat at 7231 42nd Avenue North which had a change of ownership. Item 6.2 - involves routine financial claims. Item 6.3 – there are no new liability claims to report. Item 6.4 The city received the Certificate of achievement for Excellence in Financial Reporting for the Comprehensive Annual Financial Report for the year ending December 31, 2020. This is the highest form of recognition in governmental accounting and financial reporting and its attainment represents a significant accomplishment. A plaque is on display in the lobby showing the years that the city has achieved the award. Staff requests Council to formally acknowledge receipt of this award. The city manager extends appreciation to the City Council, Abdo and city staff for assisting the city in accomplishing this goal. ⚫ Page 2 Item 6.5 This item accepts a $50 donation from Marlene Holmquist earmarked for scholarships in memory of Dan Super who was a youth baseball coach. Staff will send a thank you letter to Ms. Holmquist and notify Dan’s widow of the memorial. Director Rader and I recommend acceptance of the donation. Item 12.1 Mayor Hemken will review the list of upcoming events/meetings. If you have any questions regarding items in the agenda packet, please contact me prior to the meeting so that staff can research any issues and be prepared to respond at the meeting. City Council Work Session May 16, 2022  Page 1   City of New Hope  4401 Xylon Avenue North  New Hope, Minnesota 55428    City Council Minutes  Work Session Meeting  May 16, 2022 Northwood Conference Room     CALL TO ORDER The New Hope City Council met in work session pursuant to due call and notice thereof; Mayor Hemken called the meeting to order at 6:30 p.m.    ROLL CALL Council present:    Kathi Hemken, Mayor  John Elder, Council Member  Andy Hoffe, Council Member  Michael Isenberg, Council Member  Jonathan London, Council Member     Staff present:    Kirk McDonald, City Manager  Dan Boyum, City Engineer  Vicki Holthaus, Abdo  Tim Hoyt, Director of Police  Rich Johnson, Director of HR/Admin. Services  Sarah Larson, WMFR District Chief  Valerie Leone, City Clerk  Susan Rader, Director of Parks & Recreation  Jeff Sargent, Director of Community Development  Bernie Weber, Director of Public Works  Stacy Woods, City Attorney    WMFR DISTRICT   UPDATE  Item 11.1    Mayor Hemken introduced for discussion item 11.1, Update from West Metro Fire‐ Rescue District.    Ms. Sarah Larson, chief of West Metro Fire‐Rescue District, was recognized. She  reviewed the activities within the district for the first quarter of 2022 (food drive, clean  audit, staffing changes due to resignation of the assistant chief of operations).  Chief  Larson also reported the preliminary 2023 budget is $3,031,190 which is $1,479,373 for  Crystal and $1,551,817 for New Hope. She stated the increase for New Hope is  $133,594.     Council Member London expressed concern regarding the increase of more than 9%.  Discussion ensued regarding the district’s staffing needs and calls for service.    Mr. Kirk McDonald, city manager noted the typical annual increase of New Hope’s  share is $70,000, but the anticipated increase was $140,000 due to the $70,000 lease for  a new fire engine. He also noted there is approximately $800,000 in the city’s fire capital  replacement fund, and the city can transfer money from the capital fund to the general  fund to offset the budget increase. Mr. McDonald stated both city councils must  approve the fire budget by the end of August.    City Council Work Session May 16, 2022  Page 2   Mr. McDonald asked if the Council desires to hold a joint meeting with the city of  Crystal on August 10. It was noted a decision must be made by the July fire board  meeting. The Council postponed a decision on the meeting until a response is made by  the city of Crystal.    Council thanked the fire chief for the update.    EMERALD ASH  BORER PROGRAM   Item 11.2    Mayor Hemken introduced for discussion item 11.2, Discussion of New Hope’s  Emerald Ash Borer program funding.    Mr. Bernie Weber, director of public works, stated $200,000 was funded in the 2022  budget for tree removal and replacement with a primary focus on public Ash trees. He  shared that there has been a substantial increase in Emerald Ash Borer infestations  throughout the city. He stated the average cost of tree and stump removal is $1,200 and  planting a new tree is $500. He recommended a transfer of $400,000 from the Street  Infrastructure Fund to the Streets Operating Fund.    Ms. Susan Rader, director of parks and recreation, reported on the Ash trees located in  parks, golf course and ice arena. She stated the parks budget contains $35,000 for tree  removal in 2022, and she recommended a transfer of $100,000 from the Parks  Infrastructure Fund to fund tree removal and replacement expenses.    Ms. Vicki Holthaus, Abdo, reported there is sufficient funds to support the transfers.  Council supported the fund transfers and directed staff to place the item on the May  23, 2022, agenda.    Discussion ensued regarding the Emerald Ash Tree Removal Program that started in  2010. It was noted that the trees are evaluated annually. Council recommended that  staff develop a long‐term plan. Council also requested information on past grant  requests and potential future grants.    LEASED  VEHICLES  Item 11.3    Mayor Hemken introduced for discussion item 11.3, Discuss the leasing of seven city  vehicles through Enterprise Fleet Management.    Mr. Jeff Sargent, director of community development, asked Council to consider the  leasing of seven vehicles through Enterprise Fleet Management instead of purchasing  new vehicles. He stated last June Council approved the lease of 14 police vehicles. He  reported the vehicles that would be replaced include four community development  inspector vehicles and three public works vehicles. He stated a cost analysis indicates  the city would save $114,400 over a four‐year period by leasing rather than purchasing  the vehicles or $39,400 if the resale value of the vehicles is excluded. He stated the city  attorney has confirmed that the financing of leased vehicles falls under the  ”cooperative purchasing” exception of the Uniform Municipal Contracting Law state  statute.     It was noted the key factors in making the leasing recommendation are the  maintenance savings and quick turnaround on maintenance, vehicle reliability, and  budget stability. In addition, the city has the option to end the lease at any time if  leasing proves to be cost prohibitive.    City Council Work Session May 16, 2022  Page 3     Mr. Wong Nystrom of Enterprise was recognized. He stated Enterprise is a large client  which enables them to obtain vehicles from manufacturers much sooner than other  customers. He stated Enterprise acts as the city’s fleet manager. He also noted if the  market on resale crashes, the city can retain vehicles longer than planned. Mr. Wong  also stated that by leasing vehicles, the city does not have a large cash outlay as it  would by purchasing vehicles.    Mr. Tim Hoyt, police chief, commented on the operational side of the police  department’s leased vehicles. He stated there is minimal down time with vehicle  maintenance. He noted the vehicles owned by the city are still serviced at the public  works facility. He indicated the relationship with Enterprise has been smooth;  however, it is too early to determine the actual cost‐savings.    Council Member Elder expressed support of the lease program.    Council Member London inquired of the maintenance tracking.    Ms. Vicki Holthaus, Abdo, indicated staff is working internally on maintenance  records to gauge the successfulness of the lease program.    Council directed staff to proceed with the lease of seven vehicles.     PARK & POOL  PROJECT UPDATES  Item 11.4    Mayor Hemken introduced for discussion item 11.4, Update on Pool/Civic Center  Park/City Hall Landscaping projects by Stantec Engineering (Improvement Project  Nos. 995/941/994).    Ms. Susan Rader, director of parks and recreation, updated Council on the status of the  projects and stated construction of the theater, picnic shelter, and skate park are  complete. She stated the aquatic park is complete and the closeout will be placed on  the May 23, 2022, agenda. She explained there have been some challenges with the  contract awarded to Sunram Construction for park amenities, parking lots and  landscaping for the city hall and park, and staff and the city engineer recently met with  the contractor and the punchlist items should be resolved by the end of June.    Ms. Rader recommended approving Addendum #4 with Stantec Engineering to cover  extra costs required for project management since May of 2020. She stated it is  estimated that $45,000 will cover the engineering construction management services  for the projects.     Mr. Dan Boyum, city engineer, reviewed the punchlist items (plantings, pavement  patch, fiber optics, flagpole, and turf restoration). Discussion ensued regarding the  obstacles the city would face to seek liquidated damages against Sunram Construction  as well as extra engineering and legal expenses. Ms. Rader noted the project  documentation and photographs captured by Stantec are invaluable.     Council directed staff to present Addendum #4 for project management by Stantec  Engineering on a future agenda for approval.     City Council Work Session May 16, 2022  Page 4      2021 ANNUAL  COMPREHENSIVE  FINANCIAL REPORT  Item 11.5    Mayor Hemken introduced for discussion item 11.5, Review 2021 Annual Financial  Report with Abdo.    Mr. Kirk McDonald, city manager, explained that Vicki Holthaus of Abdo is present to  review the audit with Council and that Bill Lauer of MMKR will attend a future  Council Meeting when Council is asked to accept the report. Mr. McDonald noted the  audit went well and there were no findings or deficiencies.     Ms. Vicki Holthaus, Abdo, provided financial highlights of the 2021 audit:      The assets of the city exceeded its liabilities by $96,073,515 at the close of the  year, of which $29,882,377 (unrestricted net position) may be used to meet the  city’s ongoing obligations to citizens and creditors.    Combined ending fund balances were $30,054,786, an increase of $2,599,535   compared to prior year. Approximately 22.1 percent of this total amount is  available for spending at the city’s discretion.    Unassigned fund balance of the General Fund was $8,624,063 or 51 percent of  total General Fund 2021 expenditures and transfers out. The city’s policy is to  maintain a 42 percent reserve.   The city’s total bonded debt decreased by $4,925,562 (9.1 percent) during the  current fiscal year. The key factor of the decrease was the scheduled principal  and interest payments.    Ms. Holthaus reported on fund balances and the American Rescue Plan Act (ARPA)  funding. She stated total general fund expenses were under budget by $773,618  primarily due to personnel changes in the police department and lower than  anticipated operating costs at the pool. She reviewed the fund balances of the street  and park infrastructure funds. She also reported on the enterprise fund balances and  noted the total net position of the funds (sewer, water, storm water, street lighting, golf  course, ice arena) increased by $2,840,485.     Ms. Holthaus stated the audit will be presented at a council meeting in June for formal  acceptance.    Council thanked Ms. Holthaus for the presentation.    ARPA FUND  TRANSFERS  Item 11.6    Mayor Hemken introduced for discussion item 11.6, Discuss American Rescue Plan  Act (ARPA) fund transfers.    Mr. Kirk McDonald, city manager, stated 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. He stated since the audit is complete, Abdo and staff  recommends the funds be transferred out of the general fund balance by transferring  $100,000 to the Economic Development Authority Fund for the Curbside Appeal  Program; $200,000 to the Information Technology Fund for a new police department  records management system; and the remaining $842,382 to the Public Works Facility  Fund for future facility improvements.    City Council Work Session May 16, 2022  Page 5   Mr. McDonald stated it is anticipated that the city will be receiving a second ARPA  distribution of $1,106,158 in 2022, and it is recommended that those funds be  transferred to the Public Works Facility Fund upon receipt of the funds.    Council supported the recommendation and directed staff to place a resolution on the  May 23 Council Meeting agenda for approval.    PARK  INFRASTRUCTURE  FUND TRANSFER TO  ICE ARENA  OPERATING FUND  Item 11.7  Mayor Hemken introduced for discussion item 11.7, Discuss transfer from Park  Infrastructure Fund to Ice Arena Operating Fund.    Mr. Kirk McDonald, city manager, explained that staff is recommending Council  approve a $500,000 transfer from the park infrastructure fund to the ice arena fund for  ice arena debt service and capital improvements.     Ms. Vicki Holthaus, Abdo, stated the 2011A bonds will be paid off in 2028 at which  time it is assumed the transfer amount to the ice arena operating fund can be decreased.    Ms. Susan Rader, director of parks and recreation, indicated staff is trying to fully  implement a long‐term financing plan for all parks and recreation facilities/equipment.    Council supported the transfer and directed staff to place a resolution on the May 23  agenda for approval.    LABOR  NEGOTIATIONS  Item 11.8  Mayor Hemken introduced for discussion item 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.    RESOLUTION 2022‐61  Item 11.8  Council Member Elder introduced the following resolution and moved its adoption:  “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.” The motion for the adoption  of the foregoing resolution was seconded by Council Member Isenberg, and upon vote  being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe,  Isenberg, London; and the following voted against the same: None; Abstained: None;  Absent: None; whereupon the resolution was declared duly passed and adopted,  signed by the mayor which was attested to by the city clerk.    ADJOURNMENT The meeting was adjourned at 8:21 p.m. as there was no further business to come  before the Council at its work session.    Respectfully submitted,     Valerie Leone, City Clerk    City Council Executive Session May 16, 2022  Page 1   City of New Hope  4401 Xylon Avenue North  New Hope, Minnesota 55428    City Council Minutes  Executive Session   May 16, 2022 Northwood Room     CALL TO ORDER The New Hope City Council met in executive session pursuant to due call and notice thereof; Mayor Hemken called the meeting to order at 8:23 p.m.     ROLL CALL Council present:          Kathi Hemken, Mayor  John Elder, Council Member  Andy Hoffe, Council Member  Michael Isenberg, Council Member  Jonathan London, Council Member     Staff present:      Kirk McDonald, City Manager  Tim Hoyt, Director of Police  Rich Johnson, Director of HR/Administrative Services  Valerie Leone, City Clerk  Walker MacBeath, HR Specialist/IT Coordinator  Susan Rader, Director of Parks and Recreation  Bernie Weber, Director of Public Works    LABOR  NEGOTIATIONS    Mayor Hemken introduced Item 11.1, Discussion regarding labor negotiations.    Director Rich Johnson reported on the status of labor negotiations with IUOE Local  #49, the police officers (LELS #77) and police supervisors (LELS #273) for union  contracts.    ADJOURNMENT The meeting was adjourned at 9:08 p.m. as there was no further business to come  before the Council at its executive session.    Respectfully submitted,     Valerie Leone, City Clerk    New Hope City Council  May 23, 2022  Page 1   City of New Hope  4401 Xylon Avenue North  New Hope, Minnesota 55428    City Council Minutes May 23, 2022  Regular Meeting City Hall, 7:00 p.m.      CALL TO ORDER The New Hope City Council met in regular session pursuant to due call and notice  thereof; Mayor Hemken called the meeting to order at 7:00 p.m.    PLEDGE OF  ALLEGIANCE    The City Council and all present stood for the Pledge of Allegiance.  ROLL CALL Council present:            Staff present:       Kathi Hemken, Mayor  John Elder, Council Member  Andy Hoffe, Council Member  Michael Isenberg, Council Member  Jonathan London, Council Member    Kirk McDonald, City Manager  Dan Boyum, City Engineer  Tim Hoyt, Director of Police  Rich Johnson, Director of HR/Admin. Services  Valerie Leone, City Clerk  Susan Rader, Director of Parks & Recreation  Bernie Weber, Director of Public Works  Stacy Woods, City Attorney    APPROVAL OF  MINUTES  Motion was made by Council Member Hoffe, seconded by Council Member  Isenberg, to approve the regular meeting minutes of May 9, 2022. Voted in favor  thereof: Hemken, Elder, Hoffe, Isenberg, London; and the following voted against  the same: None; Abstained: None; Absent: None. Motion carried.    OPEN FORUM    There was no one present desirous of addressing the council.  PRESENTATIONS:  OATH OF OFFICE  Item 5.1  Mayor Hemken introduced for discussion Item 5.1, Oath of Office for Police Officer  Tom Lesnikowski.    Police Chief Tim Hoyt shared Officer Lesnikowski’s background and City Clerk  Valerie Leone administered the oath of office. Council extended their  congratulations and thanked the department and family members for attending  the ceremony in a show of support.    ROTATING VOTES    Please note that votes taken on each agenda item are called by the secretary on a  rotating basis; however, the written minutes always list the mayor’s name first  followed by the council members’ in alphabetical order.    CONSENT AGENDA Mayor Hemken introduced the consent items as listed for consideration and stated  that all items will be enacted by one motion unless requested that an item be  New Hope City Council  May 23, 2022  Page 2   removed for discussion. Mr. Kirk McDonald, city manager, reviewed the consent  items.    BUSINESS LICENSES  Item 6.1    Approval of business licenses.  FINANCIAL CLAIMS  Item 6.2    Approval of financial claims through May 23, 2022.  RESOLUTION 2022‐62  Item 6.4    Resolution appointing Tim Hoyt as director to the HRG Board for a term expiring  December 31, 2022.  RESOLUTION 2022‐63  Item 6.5    Resolution appointing Tim Hoyt as New Hope’s representative on the “Golden  Valley/Crystal/New Hope Joint Water Commission” for a term ending December  31, 2022.    RESOLUTION 2022‐64  Item 6.6    Resolution appointing Tim Hoyt to the West Metro Fire‐Rescue District’s Board of  Directors.  RESOLUTION 2022‐65  Item 6.7    Resolution appointing Tim Hoyt to the North Metro Mayors Association’s Board  of Directors effective June 2, 2022.  RESOLUTION 2022‐66  Item 6.8    Resolution appointing Beth Kramer as New Hope’s representative on the  Northwest Suburbs Cable Communications Commission and CCX Media Board of  Directors.    MOTION  Item 6.9    Motion to accept a $40 donation for recreation scholarships.  RESOLUTION 2022‐67  Item 6.10    Resolution approving Addendum #4 to the engineering services agreement with  Stantec Consulting Services Inc. for the additional construction management  services for the Civic Center Park improvements (Improvement Project No. 941)  and pool (Improvement Project No. 995).    RESOLUTION 2022‐68  Item 6.11    Resolution approving $500,000 transfer from park infrastructure fund to ice arena  operating fund for debt service and capital improvements.  RESOLUTION 2022‐69  Item 6.12    Resolution authorizing the purchase and appropriation of funds in the amount of  $13,475 for the crack repair of the basketball court at Liberty Park and tennis courts  at Begin Park, and crack repair and surface repainting of the basketball court at  Lions Park by Tennis Court Doctor.    RESOLUTION 2022‐70  Item 6.13    Resolution approving final payment to Donlar Construction Company in the  amount of $18,482.70 for the construction of the New Hope Aquatic Park facility  (Improvement Project No. 995).    RESOLUTION 2022‐71  Item 6.14    Resolution approving final payment request to Becker Arena Products for the  replacement of the dasher boards and glass in the north rink at the New Hope Ice  Arena (Improvement Project No. 1079).    New Hope City Council  May 23, 2022  Page 3   MOTION  Consent Items  Motion was made by Council Member Elder, seconded by Council Member Hoffe,  to approve the Consent items. All present voted in favor. Motion carried.    AWARD CONTRACTS  2022 CRACK REPAIR  AND SEAL COAT  PROJECT  (IMPROVEMENT  PROJECT NO. 1084)  Item 8.1  Mayor Hemken introduced for discussion Item 8.1, Resolution awarding contracts  to Allied Blacktop Company and Fahrner Asphalt Sealers for the 2022 Crack Repair  and Seal Coat project (Improvement Project No. 1084).    Mr. Dan Boyum, city engineer, explained that crack repair and seal coating is  performed annually to extend the life of pavement. He illustrated the project area.  Bids were sought and only one bid was received for the crack repair/seal coat and  one bid received for the mastic work. He noted typical other bidders did not  submit a bid this year due to lack of available subcontractors or scheduling  conflicts.     Mr. Boyum stated the base bid on the project includes crack repair, seal coat, and  fog seal on Boone Avenue between 42nd Avenue and 49th Avenue, and crack repair  with mastic between 49th Avenue and Bass Lake Road. In addition, streets in the  Sunnyside and Begin Park neighborhoods are recommended to have varying  degrees of crack repair, seal coat, and fog seal (alternates 1 and 2). The base bid  was $212,916.90; Alternate 1 was $51,126.20; and Alternate 2 was $74,262.50. He  recommended awarding a contract to Allied Blacktop Company for $338,305.60 for  the 2022 crack repair and seal coat project; and a contract to Fahrner Asphalt  Sealers for $46,200 for the mastic work. He stated the total of the two contracts is  $384,505.60 which is below the CIP budgeted amount of $458,622.77.      Council discussed the crackfill that is lifting on Boone Avenue. Mr. Boyum stated  the project includes placing mastic crack repair over the joints to prevent lifting.  He noted a mill and overlay will eventually be undertaken for the roadway. He  stated the work caries a two‐year warranty.     RESOLUTION 2022‐72  Item 8.1  Council Member Isenberg introduced the following resolution and moved its  adoption: “RESOLUTION AWARDING CONTRACTS TO ALLIED  BLACKTOP COMPANY AND FAHRNER ASPHALT SEALERS FOR THE 2022  CRACK REPAIR AND SEAL COAT PROJECT (IMPROVEMENT PROJECT  NO. 1084).” The motion for the adoption of the foregoing resolution was seconded  by Council Member Elder, and upon vote being taken thereon, the following voted  in favor thereof: Hemken, Elder, Hoffe, Isenberg, London; and the following voted  against the same: None; Abstained: None; Absent: None; whereupon the  resolution was declared duly passed and adopted, signed by the mayor which was  attested to by the city clerk.    PLANS AND  SPECIFICATIONS  (IMPROVEMENT  PROJECT NOS.  1016 & 1029)  Item 8.2  Mayor Hemken introduced for discussion Item 8.2, Resolution authorizing  preparation of plans and specifications for the 42nd Avenue signal, trail, and utility  improvements (Improvement Project No. 1016 & 1029).    Mr. Dan Boyum, city engineer, explained the resolution authorizes preparation of  plans and specifications for the 42nd Avenue signal, trail, and utility improvements.  He stated the city has been coordinating with Hennepin County on scheduling and  coordinating the signal project and other improvements along 42nd Avenue  including burying overhead power, installing additional lighting, paving a trail  New Hope City Council  May 23, 2022  Page 4   from Boone Avenue to Gettysburg Avenue, watermain improvements, and  construction of a city monument sign. In recent discussions with county staff, they  also would like to have the city include Americans with Disabilities Act (ADA)  and mill and overlay improvements to 42nd Avenue North with the city project.  The county would fund the mill and overlay and ADA associated costs. Mr.  Boyum reviewed project cost estimates. He stated the city’s costs would be funded  by the street infrastructure fund, utility and street lighting funds, and state aid  funds. The plans and specifications may be presented to Council as early as June,  2022, for approval; and construction would occur in spring/summer of 2023.    Council Member Elder inquired whether the traffic semaphores would have  audible sounds for visually impaired persons. Mr. Boyum responded that the  signals at Boone/42nd and Winnetka/42nd Avenues would both have the sounds for  crosswalk safety.    Council Member London pointed out the need for a full reconstruction of 42nd  Avenue. Mr. Boyum commented that Hennepin County tried to secure funding for  reconstruction of 42nd Avenue but was unsuccessful. The county plans to mill and  overlay 42nd Avenue from Gettysburg to east of Winnetka Avenue in lieu of  reconstruction. He stated spot repair will be undertaken on curbing.    RESOLUTION 2022‐73  Item 8.2  Council Member Elder introduced the following resolution and moved its  adoption: “RESOLUTION AUTHORIZING PREPARATION OF PLANS AND  SPECIFICATIONS FOR THE 42ND AVENUE SIGNAL, TRAIL, AND UTILITY  IMPROVEMENTS (IMPROVEMENT PROJECT NO. 1016 & 1029).” The motion  for the adoption of the foregoing resolution was seconded by Council Member  Hoffe, and upon vote being taken thereon, the following voted in favor thereof:  Hemken, Elder, Hoffe, Isenberg; and the following voted against the same:  London; Abstained: None; Absent: None; whereupon the resolution was declared  duly passed and adopted, signed by the mayor which was attested to by the city  clerk.    ORDINANCE  AMENDMENT  RELATED TO  GARBAGE  Item 10.1  Mayor Hemken introduced for discussion Item 10.1, Ordinance No. 2022‐04, An  ordinance amending section 9‐11(b) of the New Hope City Code related to  garbage.    Mr. Kirk McDonald, city manager, stated this is a housekeeping ordinance to add  language back into code that was inadvertently deleted when the organics  recycling ordinance amendment was passed in 2021. The ordinance amendment  outlines the garbage collection days and zones (collection day for properties on  42nd Avenue and south of 42nd is Tuesday; collection day for properties north of  42nd Avenue is Wednesday). Haulers were recently reminded of the collection  days.    ORDINANCE NO.  22‐04  Item 10.1  Council Member Isenberg introduced the following ordinance and moved its  adoption: “ORDINANCE NO. 2022‐04, AN ORDINANCE AMENDING  SECTION 9‐11(B) OF THE NEW HOPE CITY CODE RELATED TO  GARBAGE.” The motion for the adoption of the foregoing ordinance was  seconded by Council Member Elder, and upon vote being taken thereon, the  following voted in favor thereof: Hemken, Elder, Hoffe, Isenberg, London; and the  New Hope City Council  May 23, 2022  Page 5   following voted against the same: None; Abstained: None; Absent: None;  whereupon the ordinance was declared duly passed and adopted, signed by the  mayor which was attested to by the city clerk.    2023‐2025 I.U.O.E.  LOCAL 49 LABOR  AGREEMENT  Item 10.2  Mayor Hemken introduced for discussion Item 10.2, Resolution ratifying the 2023‐ 2025 Labor Agreement with I.U.O.E. Local 49.    Mr. Kirk McDonald, city manager, state the resolution ratifies the 2023‐2025 labor  agreement with I.U.O.E. Local 49. He noted staff reviewed the tentative agreement  at a closed meeting on May 16. The agreement includes a 2% market adjustment  and a 3% across the board wage increase effective January 2, 2023; a 3% across the  board wage increase effective January 1, 2024; and a 3% across the board wage  increase effective January 13, 2025. It also increases standby pay by approximately  5%. He stated funds will be included in the 2023 budget.    RESOLUTION 2022‐74  Item 10.2  Council Member Hoffe introduced the following resolution and moved its  adoption: “RESOLUTION RATIFYING THE 2023‐2025 LABOR AGREEMENT  WITH I.U.O.E. LOCAL 49.” The motion for the adoption of the foregoing  resolution was seconded by Council Member Elder, and upon vote being taken  thereon, the following voted in favor thereof: Hemken, Elder, Hoffe, Isenberg,  London; and the following voted against the same: None; Abstained: None;  Absent: None; whereupon the resolution was declared duly passed and adopted,  signed by the mayor which was attested to by the city clerk.    ARPA FUND  TRANSFERS  Item 10.3  Mayor Hemken introduced for discussion Item 10.3, Resolution approving  American Rescue Plan Act (ARPA) Fund transfers.    Mr. Kirk McDonald, city manager, stated the resolution approves fund transfers  of the American Rescue Plan Act (ARPA) funds. The 2021 Federal single audit is  complete and an unmodified opinion was issued. Abdo and staff are  recommending the ARPA funds totaling $1,142,382 be transferred from the  General Fund as follows: $100,000 to the EDA for the Curbside Appeal Program,  $200,000 to the IT Fund for the police department’s new records management  system and $842,382 to the Public Works Facility Fund for future facility  improvements. He stated staff discussed this action with Council at the May 16  work session, and Council was in agreement.    RESOLUTION 2022‐75  Item 10.3  Council Member Elder introduced the following resolution and moved its  adoption: “RESOLUTION APPROVING AMERICAN RESCUE PLAN ACT  (ARPA) FUND TRANSFERS.” The motion for the adoption of the foregoing  resolution was seconded by Council Member Isenberg, and upon vote being taken  thereon, the following voted in favor thereof: Hemken, Elder, Hoffe, Isenberg,  London; and the following voted against the same: None; Abstained: None;  Absent: None; whereupon the resolution was declared duly passed and adopted,  signed by the mayor which was attested to by the city clerk.    FUNDING  TRANSFERS FOR  EMERALD ASH  BORER PROGRAM  Mayor Hemken introduced for discussion Item 10.4, Resolution approving  transfers from Street and Park Infrastructure Funds to General Fund for Emerald  Ash Borer Program.    New Hope City Council  May 23, 2022  Page 6   Item 10.4 Mr. Kirk McDonald, city manager, stated at the May 16 work session, staff also  discussed the need for additional funding for the Emerald Ash Borer program due  to the increase in EAB infestations. Council supported a fund transfer of $400,000  from the Street Infrastructure Fund and $100,000 transfer from the Park  Infrastructure Fund into the General Fund for the Emerald Ash Borer program.    RESOLUTION 2022‐76  Item 10.4  Council Member Isenberg introduced the following resolution and moved its  adoption: “RESOLUTION APPROVING TRANSFERS FROM STREET AND  PARK INFRASTRUCTURE FUNDS TO GENERAL FUND FOR EMERALD  ASH BORER PROGRAM.” The motion for the adoption of the foregoing  resolution was seconded by Council Member Elder, and upon vote being taken  thereon, the following voted in favor thereof: Hemken, Elder, Hoffe, Isenberg,  London; and the following voted against the same: None; Abstained: None;  Absent: None; whereupon the resolution was declared duly passed and adopted,  signed by the mayor which was attested to by the city clerk.    EXCHANGE OF   COMMUNICATION  Item 12.1  Mayor Hemken introduced for discussion Item 12.1, Exchange of communication  between members of the City Council.    Mayor Hemken and council members extended their congratulations to Mr.  McDonald on his retirement effective June 1, 2022. They expressed gratitude for  his 32 years of service with the city and his leadership as city manager.    Mayor Hemken reported on upcoming events.    ADJOURNMENT    Motion was made by Council Member Isenberg, seconded by Council Member  Elder, to adjourn the meeting, as there was no further business to come before  the Council. All present voted in favor. Motion carried. The New Hope City  Council adjourned at 7:52 p.m.  Respectfully submitted,    Valerie Leone, City Clerk    I:\RFA\City Manager\2022\CAFR\Q ‐ Accept 2021 Annual Financial Report.docx    Request for Action  June 13, 2022    Approved by: Tim W. Hoyt, Acting City Manager  Originating Department: City Manager  By: Valerie Leone, City Clerk‐Treasurer    Agenda Title  Motion to accept the 2021 annual comprehensive financial report (ACFR)  Requested Action  Staff requests Council pass a motion to accept the 2021 Annual Financial Report. Bill Lauer from MMKR will  be in attendance for the presentation. Upon acceptance, the report will be filed with the Office of the State  Auditor, and a summary report will be published in the official newspaper as required by State Statute. The  report will also be posted on the city website. The City Council reviewed the audit with the city’s financial  consultant, Abdo, at the May 16 Council work session. Final copies of the Special Purpose Audit Report,  Management Report and Annual Comprehensive Financial Report are attached in electronic format and will  also be available at the council meeting. MMKR has prepared a presentation, which is attached.  Policy/Past Practice  In previous years, it has been the policy to review the audit with the financial consultant at the May work  session and to formally accept the audit at the following council meeting, after a presentation is made by the  auditor.  Background  Included in your packet, please find:  • Management report  • Special purpose audit report  • Annual comprehensive financial report (ACFR) 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 $2,840,485, with the increase spread across all funds.   Agenda Section Presentations Item Number  5.1    Request for Action, Page 2    As noted in the Management Report, MMKR issued an unmodified opinion and reported no deficiencies in  internal control that they consider material weaknesses, no instances of noncompliance and they reported no  findings. They reported they encountered no significant difficulties in dealing with management in  performing and completing the audit. Staff will be coordinating with Abdo to submit an application for the  2021 Excellence in Achievement for Financial Reporting Certificate.     Staff is recommending the Council officially accept the audit.  Attachments   MMKR PowerPoint Presentation   Management Report   Special Purpose Audit Report   Annual Comprehensive Financial Report    City of New HopeAudit Report Year Ended December 31, 2021Malloy Montague, Karnowski,Radosevich, & Co., P.A. Auditor’s RoleOpinion on Basic Financial Statements“Single Audit” of Federal AwardsTest Internal Controls and Compliance–Financial Statement Audit–Federal Single Audit–Minnesota Laws and Regulations Audit Results – Financial Statement AuditBasic Financial Statements–Unmodified “Clean” OpinionInternal Control over Financial Reporting–No Findings for 2021 Compliance – Financial Statement Audit–No Findings for 2021Minnesota Legal Compliance –No Findings for 2021 Audit Results – Federal Single AuditClean Opinion on Schedule of Federal Awards–Fairly stated in relation to basic financial statements–Coronavirus State And Local Recovery Funds (provided through ARPA) audited as major program Internal Control over Federal Compliance –No Findings for 2021 Compliance – Federal Program Requirements –No Findings for 2021 Governmental Funds Change in Fund Balances2021 2020 ChangeFund balances of governmental fundsTotal by classification Nonspendable 49,680$ 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 fundGeneral 8,673,743$ 8,926,086$ (252,343)$ EDA 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$ Fund Balances as of December 31, General Fund Financial Position2017 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 $18,000,000General Fund Financial PositionYear Ended December 31, General Fund Revenues –Budget and Actual $– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11Property TaxesFranchise TaxesLicenses and PermitsIntergovernmentalCharges for ServicesFines and ForfeituresOtherMillions Budget Actual General Fund Expenditures – Budget and Actual $– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 General Government Public Safety Public Works Culture and RecreationMillions Budget Actual Enterprise Funds –Change in Net Position2021 2020 ChangeNet position of enterprise fundsTotal by classification Net investment in capital assets 22,607,046$ 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 fundSewer 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$ Net Position as of December 31, Sewer Utility Operation2017 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 $4,000,000Sewer Utility Operating ResultsYear Ended December 31, Water Utility Operation2017 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 $6,000,000Water Utility Operating ResultsYear Ended December 31, Storm Water Fund2017 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 $1,400,000Storm Water FundYear Ended December 31, Street Lighting Fund2017 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 $180,000Street Lighting FundYear Ended December 31, Golf Course Fund2017 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 $500,000Golf Course FundYear Ended December 31, Ice Arena Fund2017 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 $1,100,000Ice Arena FundYear Ended December 31, Government–Wide Change in Net Position2021 2020 ChangeNet position Governmental activitiesNet investment in capital assets 34,985,781$ 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 activitiesNet 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, Management Report for City of New Hope, Minnesota December 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK 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 May 31, 2022 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK -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, and 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 t o 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 May 31, 2022. 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. THIS PAGE INTENTIONALLY LEFT BLANK -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 $30,000,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Local Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2019 2020 2021 Average tax rate City 68.0 66.1 62.6 County 41.8 41.1 38.2 School 29.9 26.4 25.5 Special taxing 8.9 8.4 10.0 Total 148.6 142.0 136.3 Rates Expressed as a Percentage of Net Tax Capacity City of New Hope Both the City portion of the tax rate and the overall tax rate for New Hope residents declined for the 2021 levy year, due to the increasing taxable market value of property within the City. -6- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2021, presented both by fund balance classification and by major fund. 2021 2020 Change Fund balances of governmental funds Total by classification Nonspendable 49,680$ 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 and Street Infrastructure Funds in 2021. An increase 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 $2,474,751 (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 $558,280 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 personnel 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 $593,795 higher than the prior year, mainly in salaries and services related to the aquatic center opening and an increase in recreation programs. -12- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which include the Sewer Utility, Water Utility, Golf Course, Ice Arena, Storm Water, and Street Lighting funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2021, presented both by classification and by fund: 2021 2020 Change Net position of enterprise funds Total by classification Net investment in capital assets 22,607,046$ 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 in 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 $323,652 (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-19 restrictions in 2021. Operating expenses were $92,948 (9.6 percent) higher than the prior year, mainly due to legal and financial services 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 $474,445, 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 $2,953 (2.2 percent) higher than the previous year, mainly due to an increase in utilities expense. THIS PAGE INTENTIONALLY LEFT BLANK -19- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, net position is divided into three components: net investment in capital assets, restricted, and unrestricted. The following table presents the components of the City’s net position as of December 31, 2021 and 2020, for governmental activities and business-type activities: 2021 2020 Change Net position Governmental activities Net investment in capital assets 34,985,781$ 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 t o 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 pr oceeds 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. -25- 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. CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK Page Schedule of Expenditures of Federal Awards 1 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 2–3 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 4–6 Independent Auditor’s Report on Minnesota Legal Compliance 7 Schedule of Findings and Questioned Costs 8–9 CITY OF NEW HOPE Table of Contents Special Purpose Audit Reports Year Ended December 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK Assistance Listing Number Bulletproof Vest Partnership Program 16.607 1,275$ U.S. Department of Transportation Passed through City of Minneapolis Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 14,160 U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds 21.027 2,284,764 Total federal awards 2,300,199$ Note 2: Note 3: Direct Unless noted in the table above,the pass-through entities use the same assistance listing numbers as the federal grantors to identify these grants, and have not assigned any additional identifying numbers. The City did not elect to use the 10 percent de minimis indirect cost rate. Direct The Schedule of Expenditures of Federal Awards is prepared on the accrual basis of accounting.The information in this schedule is presented in accordance with the U.S.Office of Management and Budget’s Uniform Administrative Requirements,Cost Principles,and Audit Requirements for Federal Awards.Therefore,some amounts presented in this schedule may differ from the amounts presented in,or used in the preparation of,the City’s basic financial statements. Note 1: U.S. Department of Justice CITY OF NEW HOPE Schedule of Expenditures of Federal Awards Year Ended December 31, 2021 Federal Grantor/Pass-Through Grantor/Program Title Federal Expenditures -1- THIS PAGE INTENTIONALLY LEFT BLANK -2- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of New Hope, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 31, 2022. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -3- REPORT ON COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 31, 2022 -4- INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the City Council and Management City of New Hope, Minnesota REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM We have audited the City of New Hope, Minnesota’s (the City) compliance with the types of compliance requirements identified as subject to audit in the U.S. Office of Management and Budget Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2021. The City’s major federal programs are identified in the Summary of Audit Results section of the accompanying Schedule of Findings and Questioned Costs. OPINION ON EACH MAJOR FEDERAL PROGRAM In our opinion, the City complied, in all material respects, with the compliance requirements referred to above, that could have a direct and material effect on each of its major programs for the year ended December 31, 2021. BASIS FOR OPINION ON EACH MAJOR FEDERAL PROGRAM We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance requirements referred to above. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -5- RESPONSIBILITIES OF MANAGEMENT FOR COMPLIANCE Management is responsible for compliance with the requirements referred to on the previous page and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF COMPLIANCE Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance objectives referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance , but is not absolute assurance and, is therefore, not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above , is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we consider necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. (continued) -6- REPORT ON INTERNAL CONTROL OVER COMPLIANCE A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section on the previous page and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not been identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE We have audited the financial statements of the City as of and for the year ended December 31, 2021, and have issued our report thereon dated May 31, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Minneapolis, Minnesota May 31, 2022 THIS PAGE INTENTIONALLY LEFT BLANK -7- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of New Hope, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, t he financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 31, 2022. MINNESOTA LEGAL COMPLIANCE In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting – bid laws, depositories of public funds and public investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions, insofar as they relate to accounting matters. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota May 31, 2022 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF NEW HOPE Schedule of Findings and Questioned Costs Year Ended December 31, 2021 -8- A. SUMMARY OF AUDIT RESULTS This summary is formatted to provide federal granting agencies and pass -through agencies answers to specific questions regarding the audit of federal awards. Financial Statements What type of auditor’s report is issued? X Internal control over financial reporting: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X Noncompliance material to the financial statements noted?Yes X No Federal Awards Internal controls over major federal award programs: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified?Yes X Type of auditor’s report issued on compliance for major programs? U.S. Department of Treasury – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?Yes X No Programs tested as major programs: Program or Cluster(s) U.S. Department of the Treasury – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds 21.027 Threshold for distinguishing between type A and B programs. 750,000$ Does the auditee qualify as a low-risk auditee?Yes X No Assistance Listing Number Unmodified Qualified Adverse Disclaimer None reported None reported CITY OF NEW HOPE Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2021 -9- B. FINANCIAL STATEMENT FINDINGS None. C. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. D. MINNESOTA LEGAL COMPLIANCE FINDINGS None. CITY OF NEW HOPE NEW HOPE, MINNESOTA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2021 CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2021 KIRK MCDONALD - CITY MANAGER PREPARED BY: DEPARTMENT OF FINANCE Member GFOA of U.S. and Canada THIS PAGE INTENTIONALLY LEFT BLANK Page INTRODUCTORY SECTION LETTER OF TRANSMITTAL FROM CITY MANAGER i–vii GFOA CERTIFICATE OF ACHIEVEMENT viii ORGANIZATIONAL CHART ix CITY COUNCIL AND OTHER OFFICIALS x FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1–3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4–14 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 15 Statement of Activities 16–17 Fund Financial Statements Governmental Funds Balance Sheet 18–19 Reconciliation of the Balance Sheet to the Statement of Net Position 20 Statement of Revenue, Expenditures, and Changes in Fund Balances 21–22 Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities 23 Statement of Revenue, Expenditures, and Changes in Fund Balances – General Fund – Budget and Actual 24 Statement of Revenue, Expenditures, and Changes in Fund Balances – Economic Development Authority Fund – Budget and Actual 25 Proprietary Funds Statement of Net Position 26–29 Statement of Revenue, Expenses, and Changes in Net Position 30–31 Statement of Cash Flows 32–35 Notes to Basic Financial Statements 36–69 REQUIRED SUPPLEMENTARY INFORMATION PERA – General Employees Retirement Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 70 Schedule of City Contributions 70 PERA – Public Employees Police and Fire Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 71 Schedule of City Contributions 71 Other Post-Employment Benefits Plan Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 72 Notes to Required Supplementary Information 73–78 CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Table of Contents Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Combining Balance Sheet 79 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 80 Nonmajor Special Revenue Funds Subcombining Balance Sheet 81 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances 82 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Solid Waste Management Fund – Budget and Actual 83 Nonmajor Capital Projects Funds Subcombining Balance Sheet 84–85 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances 86–87 Nonmajor Debt Service Funds Subcombining Balance Sheet 88–89 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances 90–91 General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual 92–95 Internal Service Funds Combining Statement of Net Position 96 Combining Statement of Revenues, Expenses, and Changes in Net Position 97 Combining Statement of Cash Flows 98 STATISTICAL SECTION (UNAUDITED) Financial Trends Net Position by Component 99–100 Changes in Net Position 101–104 Governmental Activities Tax Revenues by Source 105 Fund Balances of Governmental Funds 106–107 Changes in Fund Balances of Governmental Funds 108–109 General Government Tax Revenues by Source 110 Revenue Capacity Tax Capacity, Market Value, and Estimated Actual Value of Taxable Property 111–112 Property Tax Rates – Direct and Overlapping Governments 113 Principal Property Taxpayers 114 Property Tax Levies and Collections 115 Debt Capacity Ratios of Outstanding Debt by Type 116–117 Ratios of General Bonded Debt Outstanding 118 Direct and Overlapping Governmental Activities Debt 119 Legal Debt Margin Information 120–121 Pledged Revenue Coverage 122 Demographic and Economic Information Demographic and Economic Statistics 123 Principal Employers 124 Operating Information Full-Time Equivalent City Government Employees by Function 125–126 Operating Indicators by Function 127–128 Capital Asset Statistics by Function 129–130 CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Table of Contents (continued) INTRODUCTORY SECTION CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK -i- CITY O F NEW HOPE 4401 Xylon Avenue North • New Hope, Minnesota 55428-4898 • www.ci.new-hope.rrm.us City Hall: 763-531-5100 • Police (non-emergency): 763-531-5170 • Public Works: 763-592-6777 • TDD: 763-531-5109 City Hall Fax: 763-531-5136 • Police Fax: 763-531-5174 • Public Works Fax: 763-592-6776 May 31, 2022 Honorable Mayor and City Council City of New Hope 4401 Xylon Avenue North New Hope, MN 55428-4898 The Annual Comprehensive Financial Report (ACFR) of the City of New Hope, Minnesota (the City), for the fiscal year ended December 31, 2021, is submitted herewith. As required by state law, this report is published annually, prior to June 30, and submitted to the Office of the State Auditor. The form and contents of this report and the accompanying financial statements and statistical tables are designed to meet the needs of a broad spectrum of financial statement readers, and were prepared in conformance with standards set forth by: 1.The Governmental Accounting Standards Board (GASB) 2.The American Institute of Certified Public Accountants 3.The United States Office of Management and Budget 4.The State Auditor, State of Minnesota 5.The Government Finance Officers’ Association (GFOA) of the United States and Canada The financial data presented in this report was prepared by the City’s finance department staff. The responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data as presented is accurate, in all material respects, and is presented in a manner designed to fairly set forth the financial activity of the various funds, and that all disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial activity have been included. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The City is a residential suburb of the City of Minneapolis with a population of 21,986. The City is 5.6 square miles in area and is fully developed. The City was incorporated in 1953 and enjoys a diverse commercial and residential tax base. -ii- The City operates under the “Optional Plan B” government structure as defined in Minnesota Statutes. Optional Plan B is known as the council-manager plan. Under this plan, as specified in the statutes, “The City Council shall exercise the legislative power of the City and determine all matters of policy. The city manager shall be the head of the administrative branch of the city government and shall be responsible to the City Council for the proper administration of all affairs relating to the City.” The City Council is composed of five members, including the mayor. The city manager is appointed by the City Council. The City’s accounting system is organized and operated on a “fund basis.” Each fund is a distinct self-balancing accounting entity. The City’s accounting records for governmental fund types are maintained on the modified accrual basis and the accrual basis is utilized by proprietary funds, as defined in the notes to basic financial statements. The City maintains a system of internal control that provides a reasonable assurance of accounting data reliability, and the safeguarding of assets against loss from unauthorized use or disposition. The concept of reasonable assurance recognizes the cost of control should not exceed the benefits likely to be derived, a nd the evaluation of costs and benefits requires estimates and judgments by management. Budgets are maintained for the General Fund and certain special revenue funds (as noted in the notes to basic financial statements). The city manager is directed to submit an annual budget to the City Council. Upon adoption of the annual budget resolution by the City Council, it becomes the formal budget for city operations. Any changes to the original budget have to be authorized by City Council action, but must maintain a balanced budget by either recognizing additional receipts, or utilizing fund balances. Budget controls are maintained through a system of purchase orders and monthly financial statements which compare actual performance with the budget. The City has reviewed its reporting entity definition in light of the GASB’s pronouncements. The entities included in the City’s report are those for which the City has financial accountability. Blended component units, although legally separate entities, are, in substance, part of the primary government’s operations and are included as part of the primary government. Accordingly, the New Hope Economic Development Authority (EDA) is reported as special revenue fund of the primary government and the Housing and Redevelopment Authority reports a debt service fund and a capital projects fund within the primary government. The City provides a full range of municipal services, including: police and fire protection, culture and recreation, public improvements, street maintenance, sanitary and storm sewer collection, water distribution, planning, zoning and building inspection services, and general administrative services. ECONOMIC OUTLOOK The City is a nearly fully developed community with little vacant land available for development. The City has a good mix of single/multi-family residential housing stock, parks and open space, and a strong commercial/industrial tax base. -iii- There are approximately 480 commercial/industrial/service businesses in the City, and the major employers are listed as follows: Major Employers Products/Services New Hope Based Employees (Total Employees) Independent School District 281 Education 791 (1,852) Hy-Vee Grocery and convenience store 632 Minnesota Masonic Home/ North Ridge Care Center Skilled nursing care facility 560 St. Therese Home of New Hope Skilled nursing care facility 544 (1,117) Horwitz Mechanical contractor 345 Perrigo Company Pharmaceutical and medicine manufacturing 323 Intermediate District 287 Education 266 (943) City of New Hope Government agency 262 (including seasonal staff) YMCA Health club 228 Liberty Diversified International Stationery supplies 200 The City has four major industrial park areas, including Science Industry Park, 49th and Quebec Avenues, Winnetka Avenue area between 32nd and 36th Avenues, and north of Medicine Lake Road on Nevada Avenue. The major shopping centers/areas in the City include: Midland Shopping Center, Winnetka Commons Shopping Center, New Hope Mall, Winnetka Center, Post Haste Square, and the 42nd Avenue Redevelopment District. Business Assistance Programs Local commercial/industrial businesses are extremely important to the City. The City Council has undertaken programs and initiatives to address both commercial and industrial properties. These programs focus on: 1} retaining existing businesses, 2} assisting with expansions, 3} attr acting new businesses to vacant available buildings, 4} attracting new construction to a limited number of available vacant sites, and 5} improving communication with businesses and responding more effectively to business concerns and inquiries. The City Council has continued the Outstanding Business Award Program initiated in 2006, to recognize the City’s businesses’ contributions to the local community. In 2009, the Business Networking Group forum was established to share information and improve communications between businesses and the City and the forum continued through 2021. The City is also a long-time member of the TwinWest Chamber of Commerce. The City has also partnered with Hennepin County and Open to Business, a company that provides free business advice and also provides gap financing. In 2021, $28,894,527 of reinvestment was approved in the City in construction permits. The City will work to increase the momentum to continually expand the tax base while continuing to provide the high level of services delivered to the residents, businesses, and property owners of the City. -iv- PLANNING AND DEVELOPMENT The following planning and development activities occurred in 2021: New Hope Aquatic Center A new police department and City Hall for the City of New Hope opened in July of 2019. The pool that was previously located where the new police department and city hall were constructed was demolished and was reconstructed in the area of the former City Hall. In June 2018, the City Council voted on a preferred pool concept and entered into an agreement with Stantec Engineering to provide the final planning and design. The preferred pool concept included a current channel, two body slides, a shallow water a rea, and a 50-meter, 8-lane pool with diving boards. The original concept had a 25-yard pool; however, during the 2018 legislative session, the City received $2 million in order to expand the 25-yard pool concept to 50 meters. Construction on the pool began in April 2019 and was completed in 2020. A 2020 opening was planned, but postponed until June 2021, due to the COVID-19 pandemic. The open swim attendance for ages two and older was approximately 46,863, compared to 18,761 at the old facility in 2017. Ot her improvements within the park area where the pool is located included a new outdoor performance center with terraced seating, a picnic pavilion, skate park, trails, trail lighting, and an additional parking lot. Windsor Ridge SVK Development constructed 32 new single-family homes on an 8.7-acre undeveloped site that was owned by the City for many years. In the fall of 2018, the City received six proposals from four developers for the site. After careful consideration, SVK Development was selected as the preferred developer for the site. SVK Development is in the process of developing 32 new single-family homes on 65-foot-wide lots. The estimated sales prices for the homes range from the mid $300,000’s to the low $400,000’s. As of early 2022, all 32 homes within the development had sold for an average price of $430,000, bringing $13.76 million in new value to the City. Pocket Square Cocktail Lounge A. Davis Distillery received a conditional use permit in January 2020 to open a microdistillery and cocktail room at 7530 Quebec Avenue North. Due to the COVID-19 pandemic, Pocket Square Cocktail Lounge did not open until the spring of 2021. The distillery serves hand-crafted cocktails and small 750 ml. bottles of handmade liquor that are produced on-site. Patrons can enjoy beverages in their lounge or on their outside patio. Hamernick’s Flooring Superstore Hamernick’s Flooring Superstore opened a location at 9449 Science Center Drive in New Hope in the spring of 2021. Hamernick’s started in Saint Paul 75 years ago as a small carpet and paint store. The New Hope Hamernick’s specializes in luxury vinyl tile and luxury vinyl plank flooring, which is one of the most popular trends currently in floor design. Hamernick’s moved into the space that was previously occupied by Superior Decks and Railings. Hy-Vee Aisles Online In 2021, the City Council approved an amendment to Hy-Vee’s Planned Unit Development for the construction of a 1,200 square-foot drive-through kiosk on the west side of the grocery store at 8200 42nd Avenue North. This includes four drive-through grocery pick-up lanes with an overhead canopy, new curbing, and landscaping around the building. Customers purchase their groceries online and drive to the kiosk to pick them up. The groceries are delivered directly to the kiosk from the main Hy -Vee store. The drive-through kiosk was completed in the spring of 2022 and opened shortly thereafter. -v- Escuela Exitos In April of 2021, the City Council approved a Conditional Use Permit for Escuela Exitos to open a Spanish immersion school at 4741 Zealand Avenue North. This property was previously owned by a church. The charter school is a Kindergarten through Grade 8, two-way dual language Spanish/English immersion school. It was estimated that the school would serve 165 students during the 2021–2022 school year, with enrollment increasing and capping out at 390 students by the 2023–2024 school year. According to the operator, the school model meets a growing demand of families in New Hope and surrounding communities that currently sit on long waitlists for immersion school options. Housing The City’s commitment to maintaining its housing stock is supported through a variety of cooperative projects and programs. Approximately $8,557,000 was reinvested in the City’s housing stock in 2021 for private home construction, additions, and/or remodeling projects. 1. Housing rehabilitation programs: a. Community Development Block Grant (CDBG) Housing Rehabilitation Program – administered by Hennepin County: i. CDBG funded activity in 2021 continued the expenditure of previously allocated CDBG funds. The City contributed $76,250 in funds towards the acquisition of 8720 47th Avenue North by Habitat for Humanity. The home was rehabilitated in 2021. ii. The City continued to operate its scattered site housing program by acquiring multiple properties for demolition and new construction. Since 2014, the EDA has acquired 19 properties, resulting in the creation of 23 vacant lots. The lots purchased by the City are located at 7215, 7303, 7311, and 9121 62nd Avenue North, 4637 Aquila Avenue North, 4511 Boone Avenue North, 3751, 4215, and 6065 Louisiana Avenue North, 3856 Maryland Avenue North, 4415 Nevada Avenue North, 5201 and 5355 Oregon Avenue North, 5213 Pennsylvania Avenue North, 5306 Rhode Island Avenue North, 5431 Virginia Avenue North, 6027 and 6059 West Broadway, and 5400 Yukon Avenue North. Four of the lots were large enough to split into two buildable lots and were sold to developers for the construction of two new single-family, owner-occupied homes. The City has two other properties under contract for purchase. b. Rehabilitation Re-Sell: i. The City has purchased two distressed properties for rehabilitation in the last five years. The City chose to rehabilitate the home at 3984 Zealand Avenue North as it was too valuable to demolish. It sold for $295,000. The City also acquired the property at 3924 Utah Avenue North in 2018 and coordinated a rehabilitation project valued at more than $180,000. The home sold for $375,000 in 2020. The City has a goal of breaking even on such projects and will invest all available resources into the home to create the highest valued product possible. 2. Housing maintenance programs: a. Code compliance inspections – 804 inspections completed in 2021. b. Rental housing program and inspections: i. A rental registration permit program, which requires the registration and inspection of all rental units in the City, was implemented in 2006 for single-family and 2007 for multi-family units. ii. A total of 545 single-family rental units are registered with the City. iii. A total of 3,776 multi-family rental units are registered with the City. c. Multifamily Property Manager’s Association – quarterly meetings. d. Partnership with Center for Energy and Environment and Hennepin County for fix-up loans and grants. 3. Metropolitan Council Livable Communities Act – annually renewed by the City. -vi- PARKS AND RECREATION The City continues to provide the residents with a vast array of park amenities and recreation opportunities at an affordable cost. In 2021, staff continued to maintain 18 parks, 4 additional school district parks (summer only), 2 sheets of indoor ice at the ice arena, and a par 3 nine-hole golf course. In addition, the City programs the New Hope Community Gyms during nonschool time. Although Covid-19 continued to have a big impact on department programs, activities, and facilities, it was less than in 2020 and got better as the year progressed. The number of program registrations increased 31 percent over 2020 (6,497), and special events also had greater participation numbers (10,300). Use of the new performance center was expanded to include the return of the Off-Broadway Musical Theatre summer musicals and a new Music in the Park series. During 2021, several park projects took place, including the replacement of the playground at Corner Park, court resurfacing of the basketball court at Corner Park, crack filling of the pickleball courts at Meadow Lake School Park and the tennis courts at Civic Center Park, replacement of the basketball court at Little Acre Park, reclaim and overlay of the trails at Liberty Park, residing of the maintenance garages at Lighted Field and Victory Park, retro-fit of the tennis court lights at both Begin and Hidden Valley parks, and added additional drain tile to the Civic Center Park playground. In addition, engineered wood fiber was added to several playgrounds. Buckthorn removal was continued in several parks and new signage was installed at Corner and Civic Center parks. During the 2020–2021 winter season, parks staff continued to plow a section of trail at Hidden Valley, Northwood and Lions parks, with Meadow Lake Park being added. Outdoor skating areas at Hidden Valley, Lions and Liberty parks were maintained. The inaugural aquatic park season was extremely successful. The aquatic park opened June 5 for a 10-week season. Open swim hours were available during the week from 12–8 p.m. and on the weekends from 11 a.m.–7 p.m. The overall general swim attendance in 2021 was 46,863 (not including ages under 2). In the mornings, programming such as swim lessons and lap swimming took place. Weekday mornings were also when the 50-meter pool was utilized by various swim teams. The NHCP swim club along with other local clubs used the 50-meter pool for practices and swim meets. Over the summer, the NHCP swim club held three separate meets including a 3-day all-day regional meet in the middle of July. Staffing was one of the biggest challenges of the season with a national lifeguard shortage and the hiring of more than 70 brand new staff. The ice arena was back to offering year-round use of ice time for youth, adult recreational, league hockey and skating lessons, with COVID-19 restrictions lessening as the year went on. Facility use was strong and program participation numbers were significantly better than 2020. Rented ice hours were 4,416, which was an increase of 38 percent from 2020 (due in part from the hockey season extended into April), high school admissions increased 93 percent (4,601), open skating increased by 43 percent (1,641), and skate lesson registrations also increased. CIP projects included the replacement of the desiccant unit and replacement of the roof and skylight for the south ice arena. The advertising agreement and concession stand agreement were both renewed for an additional three years with the Armstrong Cooper Youth Hockey Association. The dryland training agreement continued with Charleston Overspeed. The golf course continued to offer leagues, lessons, tournaments, open golf , and picnic rentals. It was another extremely busy year for the golf course, with the course opening on March 13. Several highs were realized, including the highest number of rounds played since 2003 (27,654), all time high for the amount of revenue ($470,491), most rounds recorded in October (2,378), and the second year in a row for rounds played in December. League participation and equipment rentals numbers were good, and the merchandise and concession sales were strong; with all exceeding budgeted amounts. The number of clubhouse rentals and tournaments also increased from 2020. During the nongolf season, the clubhouse continued to be rented to outside groups, although use was below average, due to ongoing COVID-19 restrictions and concerns. In 2021, the HVAC in the clubhouse was replaced, some changes were made to concession equipment in the clubhouse – a new 1-keg dispenser was added, the 3-keg dispenser was replaced with a 4-keg dispenser, and the ice machine and drinking fountain were both replaced. A golf course utility cart was purchased, and the golf cart lease continued. The parking agreement with Ironwood Apartments was renewed for another year. -vii- PROPERTY TAX PROCESS Preliminary tax levies have to be sent to the county auditor by September 30th. This levy can be lowered at a later date, but cannot be increased. The county sends out notices to all property owners informing them of proposed property taxes and the dates of public hearings by the various taxing districts. The final budget is adopted by the City in December at a City Council meeting after the public hearing. OTHER PERTINENT INFORMATION Independent Audit – As required by Minnesota Statutes, City policy requires an annual audit of all city accounts to be made by independent certified public accountants selected by the City Council. This requirement has been complied with and the opinion of Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) is included with this report. Claims and Litigation – The City had the usual and customary types of miscellaneous claims pending at year-end, mostly of a minor nature and entirely covered by insurance carried for that purpose. Long-Term Financial Planning – Management provided an updated long-term plan to the City Council in 2021 that highlights the tax effect of major capital and operating decisions. This is an important document when preparing future budgets. AWARDS AND ACKNOWLEDGEMENTS The Certificate of Achievement for Excellence in Financial Reporting – The GFOA of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the fiscal year ended December 31, 2020. This was the 13th consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized ACFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA of the United States and Canada to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Department of Finance, Abdo Financial Solutions, LLC (the City’s contracted finance director) other city departments, and the staff of MMKR. We wish to express our appreciation to all the contributors for their efforts to complete this report. Respectfully submitted, Kirk McDonald City Manager Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of New Hope Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2020 Executive Director/CEO -viii- -ix- -x- Term Expires Kathi Hemken Mayor 12/31/2024 John Elder Councilmember 12/31/2022 Andrew Hoffe Councilmember 12/31/2024 Michael Isenberg Councilmember 12/31/2024 Jonathan London Councilmember 12/31/2022 Kirk McDonald City Manager Appointed Rich Johnson Director of Human Resources and Administrative Services Appointed Jeff Sargent Director of Community Development Appointed Susan Rader Director of Parks and Recreation Appointed Tim Hoyt Chief of Police Appointed Bernie Weber Director of Public Works Appointed Valerie Leone City Clerk Appointed CITY COUNCIL CITY OFFICIALS CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA City Council and Other Officials Year Ended December 31, 2021 FINANCIAL SECTION CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK -1- INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of New Hope, Minnesota OPINIONS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City at December 31, 2021, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparisons for the General Fund and Economic Development Authority Special Revenue Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. BASIS FOR OPINIONS We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern within 12 months beyond the financial statements date, including any currently known information that may raise substantial doubt shortly thereafter. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -2- AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. (continued) -3- Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules, as listed in the table of contents, are presented for purpose of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prep are the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 31, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City ’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota May 31, 2022 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF NEW HOPE Management’s Discussion and Analysis Year Ended December 31, 2021 -4- As management of the City of New Hope, Minnesota (the City), we have provided readers of the City’s financial statements with this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, located earlier in this report. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $96,073,515 (net position). Of this amount, $29,882,377 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors. • The City’s total net position increased by $11,034,386. This was a result of governmental activities and business type activities increasing net position by $8,193,901 and $2,840,485, respectively. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $30,054,786, an increase of $2,599,535 in comparison with the prior year. Approximately 22.1 percent of this total amount, $6,646,030, is available for spending at the City’s discretion (unassigned fund balance). • At the end of the current fiscal year, unassigned fund balance for the General Fund was $8,624,063, or 51.2 percent, of total General Fund 2021 expenditures and transfers out. • The City’s total bonded debt decreased by $4,925,562 (9.1 percent) during the current fiscal year. OVERVIEW OF THE FINANCIAL STATEMENTS The management’s discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements. The financial statements include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of combining and individual fund financial statements and schedules, which further explain and support the information in the financial statements. -5- Figure A shows how the various parts of this annual report are arranged and related to one another. Management’s Discussion and Analysis Basic Financial Statements Required Supplementary Information Government-Wide Financial Statements Fund Financial Statements Notes to Basic Financial Statements Summary Detail Figure A Required Components of the City’s Annual Comprehensive Financial Report Government-Wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to private sector businesses. The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, public works, culture and recreation, economic development, and interest on long-term debt. The business-type activities of the City include sewer utility, water utility, golf course, ice arena, storm water, and street lighting. Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control over resources segregated for specific activities or objectives. The City, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. -6- Governmental Funds – Governmental funds account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, and the balances of spendable resources available at the fiscal year-end. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General, Economic Development Authority, HRA Construction, Street Infrastructure, and HRA Bonds funds, all of which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules elsewhere in this report. The City adopts annual appropriated budgets for its General Fund and the Economic Development Authority and Solid Waste Management Special Revenue Funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with the adopted budgets. Proprietary Funds – The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its sewer utility, water utility, golf course, ice arena, storm water, and street lighting operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for distribution of vehicle and equipment costs, government -wide costs of insurance coverage and employee leave, and information technology cost allocation. Because all of these services predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the governmental-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for each of the enterprise funds, all of which are considered to be major funds of the City. Internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to Basic Financial Statements – The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information – Required supplementary information (RSI) on the City’s other post-employment benefit and pension plans is presented following the notes to basic financial statements. Combining and individual fund statements and schedules for nonmajor funds, along with other city information, are presented as supplemental information immediately following the RSI. Statistical tables are presented as the last section in this report. The statistical section presents information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. The information in the statistical section is not audited. -7- GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, changes in net position may serve over time as a useful indicator of the City’s financial condition. The City’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $96,073,515 at the end of the 2021 fiscal year. A portion of the City’s net position (59.9 percent) reflects its investment in capital assets (e.g., land, buildings, vehicles and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequent ly, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following is a summary of the City’s net position at the end of the last two fiscal years: 2021 2020 2021 2020 2021 2020 Current and other assets 45,444,088$ 42,638,781$ 8,282,332$ 8,102,748$ 53,726,420$ 50,741,529$ Capital assets, net of depreciation 74,711,410 73,333,910 29,605,378 29,336,500 104,316,788 102,670,410 Total assets 120,155,498 115,972,691 37,887,710 37,439,248 158,043,208 153,411,939 Deferred outflows of resources Deferred pension resources 5,190,055 2,315,482 492,108 99,031 5,682,163 2,414,513 Deferred other postemployment benefit resources – 167,973 – 28,471 – 196,444 Total deferred outflows of resources 5,190,055 2,483,455 492,108 127,502 5,682,163 2,610,957 Long-term liabilities (including current portion)48,059,912 53,540,307 7,773,573 10,321,457 55,833,485 63,861,764 Other liabilities 2,123,349 1,762,636 927,287 980,838 3,050,636 2,743,474 Total liabilities 50,183,261 55,302,943 8,700,860 11,302,295 58,884,121 66,605,238 Deferred inflows of resources Deferred pension resources 7,372,502 2,882,251 616,712 37,066 7,989,214 2,919,317 Deferred other postemployment benefit resources – 33,203 – 5,628 – 38,831 Resources received in advance 778,521 1,420,381 – –778,521 1,420,381 Total deferred inflows of resources 8,151,023 4,335,835 616,712 42,694 8,767,735 4,378,529 Net position Net investment in capital assets 34,985,781 31,359,813 22,607,046 20,127,288 57,592,827 51,487,101 Restricted 8,598,311 7,740,859 – 1,560,053 8,598,311 9,300,912 Unrestricted 23,427,177 19,716,696 6,455,200 4,534,420 29,882,377 24,251,116 Total net position 67,011,269$ 58,817,368$ 29,062,246$ 26,221,761$ 96,073,515$ 85,039,129$ Governmental Activities Business-Type Activities Total An additional portion of the City’s net position, $8,598,311, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $29,882,377, may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report a positive balance in all three categories of net position for both the governmental activities and the business-type activities. This was also the case at the previous year-end. -8- The following table indicates the changes in net position for the City’s governmental and business-type activities: 2021 2020 2021 2020 2021 2020 Revenues Program revenues Charges for services 2,335,380$ 1,504,128$ 12,681,193$ 11,627,850$ 15,016,573$ 13,131,978$ Operating grants and contributions 1,093,760 866,861 146,755 110,331 1,240,515 977,192 Capital grants and contributions 720,699 1,048,750 13,475 12,922 734,174 1,061,672 General revenues Property taxes 17,357,910 16,821,240 – – 17,357,910 16,821,240 Tax increments 2,118,199 1,918,857 – – 2,118,199 1,918,857 Franchise taxes 962,395 958,162 – – 962,395 958,162 Grants and contributions not restricted to specific programs 3,155,397 2,497,630 – – 3,155,397 2,497,630 Unrestricted investment earnings (charges)(22,179) 781,304 39,829 137,468 17,650 918,772 Gain on sale of capital assets 70,300 22,000 – – 70,300 22,000 Total revenues 27,791,861 26,418,932 12,881,252 11,888,571 40,673,113 38,307,503 Expenses General government 1,152,633 2,945,625 – – 1,152,633 2,945,625 Public safety 7,764,051 8,968,009 – – 7,764,051 8,968,009 Public works 4,295,427 3,725,075 – – 4,295,427 3,725,075 Culture and recreation 3,095,760 2,270,751 – – 3,095,760 2,270,751 Economic development 1,434,986 1,350,348 – – 1,434,986 1,350,348 Interest on long-term debt 1,518,351 1,570,807 – – 1,518,351 1,570,807 Sewer utility – – 2,973,301 3,096,526 2,973,301 3,096,526 Water utility – – 4,813,286 4,195,981 4,813,286 4,195,981 Golf course – – 368,659 316,173 368,659 316,173 Ice arena – – 1,095,343 1,016,296 1,095,343 1,016,296 Storm water – – 991,031 877,244 991,031 877,244 Street lighting – – 135,899 133,270 135,899 133,270 Total expenses 19,261,208 20,830,615 10,377,519 9,635,490 29,638,727 30,466,105 Change in net position before transfers 8,530,653 5,588,317 2,503,733 2,253,081 11,034,386 7,841,398 Transfers – internal activities (336,752) (240,739) 336,752 240,739 – – Change in net position 8,193,901 5,347,578 2,840,485 2,493,820 11,034,386 7,841,398 Net position Beginning 58,817,368 53,469,790 26,221,761 23,727,941 85,039,129 77,197,731 Ending 67,011,269$ 58,817,368$ 29,062,246$ 26,221,761$ 96,073,515$ 85,039,129$ TotalGovernmental Activities Business-Type Activities Governmental activities increased the City’s net position by $8,193,901 in 2021, while business-type activities increased net position by $2,840,485. Charges for services increased in 2021, due to the opening of the new swimming pool and return to programs that were cancelled, due to the COVID-19 pandemic in 2020. These increases in revenue from pool and recreation program revenue were offset by reciprocal increases in culture and recreation expense. In addition, the City increased general property taxes. General government expenses had increased in the 2020, primarily as a result of a loss on the disposal of the old City Hall building and improvements. In 2021, a change in the City’s pension liability resulted in decreased public safety expense. -9- Governmental Activities – Governmental activities net position increased by $8,193,901. The following graphs illustrate the City’s revenues and expenses for its governmental activities: Expenses and Program Revenues – Governmental Activities $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 General Government Public Safety Public Works Culture and Recreation Economic Development Interest and Fiscal Charges Expenses Program Revenues Revenue by Source – Governmental Activities -10- Business-Type Activities – The net position of business-type activities increased by $2,840,485. This increase was primarily the result of operating net income in the Sewer Utility, Water Utility, and Storm Water Funds of $1,038,266, $868,709, and $431,217, respectively. Below are the graphs showing the business-type activities revenue and expense comparisons: Expenses and Program Revenues – Business-Type Activities $– $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 Sewer Utility Water Utility Golf Course Ice Arena Storm Water Street Lighting Expenses Program Revenues Revenue by Source – Business-Type Activities -11- FINANCIAL ANALYSIS OF THE CITY’S FUNDS Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds had combined ending fund balances of $30,054,786, an increase of $2,599,535 in comparison with the prior year. Approximately 22.1 percent of this total amount, $6,646,030, constitutes unassigned fund balance, which is available for spending at the City’s discretion. The remainder of fund balance is either not available for new spending, or available for new spending, but limited in use, because it is either 1) nonspendable ($49,680), 2) restricted ($9,779,064), 3) committed ($4,520,972), or 4) assigned ($9,059,040). General Fund – The fund balance of the General Fund decreased by $252,343 to $8,673,743 at December 31, 2021. Unassigned fund balance represents 51.2 percent of total 2021 expenditures. The decrease in fund balance was due to transferring out $1,641,664 of excess fund balance accumulated in the prior year to provide internal financing for planned capital improvements. Fund balance was also influenced by the opening of the aquatic facility, with resulting increases in both service charge revenue and operating expenditures. Changes in post-employment benefit liability costs for the police department, as well as position vacancies, resulted in a decrease in expenditures. Economic Development Authority – Fund balance decreased by $107,977 in 2021, due to economic development expenditures exceeding revenues in the current year. The year-end fund balance of $4,212,479 is committed for economic development projects. HRA Construction – This fund accounts for the activity within the City’s Tax Increment Financing (TIF) Districts, less resources accumulated elsewhere for TIF-related long-term obligations. Fund balance increased by $576,048, which is primarily result of increased in tax increment revenues from improvements. Street Infrastructure – This fund accounts for capital outlay expenditures related to street infrastructure. Fund balance increased $905,670 from the prior year. The increase was a result of revenues exceeding current year project costs. HRA Bonds – The increase in fund balance of $141,769 is primarily related to tax increment revenues exceeding debt service requirements and other expenditures in the fund. The year-end fund balance deficit of $1,978,033 is expected to be eliminated through future tax increment revenues. Proprietary Funds – The City’s proprietary funds provide the same information for the business-type activities found in the government-wide financial statements, but in more detail. The City’s enterprise funds had a total net position of $29,560,306 at year-end, of which $6,953,260 was unrestricted. The total net position of these funds improved by $3,080,923 during 2021. The primary factors concerning the finances of these funds have already been addressed in the discussion of the City’s business-type activities. -12- General Fund Budgetary Highlights The City’s General Fund budget was not amended during the year. Revenues and expenditures both provided positive budget variances. Actual revenues were over budget by $649,775 and expenditures were under budget by $733,618. Revenue line items with significant budget variances include the following: •Intergovernmental revenue was over budget by $1,113,189, due to federal funding allocated to the City through the American Recovery Plan Act (ARPA) that was utilized in the current year. •Charges for services revenue was under budget by $325,558, mainly due the City’s new outdoor pool facility, which generated less revenue than projected in its first year of operation. •Investment earnings were $143,405 under budget, due to market conditions and available interest rates not performing up to expectations. Expenditure line items with significant budget variances include the following: •Public safety expenditures were under budget by $529,627, mostly in personnel services for the police department, due to vacant positions. •Culture and recreation expenditures were under budget by $288,598, primarily in the swimming pool area, which contributed $202,869 of the variance, due to lower than anticipated first year operating costs. -13- CAPITAL ASSETS AND LONG-TERM LIABILITIES Capital Assets – The City’s investment in capital assets (net of accumulated depreciation) for its governmental and business-type activities as of December 31, 2021 was $104,316,788, an increase of $1,646,378 from the prior year. The City’s capital assets for the last two years are as follows: 2021 2020 2021 2020 2021 2020 Land 994,268$ 994,268$ 485,042$ 485,042$ 1,479,310$ 1,479,310$ Buildings and structures 25,408,669 25,408,669 10,797,364 10,797,364 36,206,033 36,206,033 Vehicles and equipment 11,383,148 10,531,390 3,065,892 2,505,156 14,449,040 13,036,546 Improvements other than buildings 47,294,718 47,227,137 28,992,200 28,522,699 76,286,918 75,749,836 Construction in progress 23,726,228 19,939,298 1,598,507 1,370,824 25,324,735 21,310,122 Less accumulated depreciation (34,095,621) (30,766,852) (15,333,627) (14,344,585) (49,429,248) (45,111,437) Net total 74,711,410$ 73,333,910$ 29,605,378$ 29,336,500$ 104,316,788$ 102,670,410$ Governmental Activities Business-Type Activities Total The majority of the increase in capital assets was in construction in progress, with significant projects including 2021 street infrastructure improvements and an addition to the City’s public works facility. Additional details of the City’s capital asset activity for the year can be found in Note 5 of the notes to basic financial statements. Long-Term Liabilities – The debt service funds account for the accumulation of resources to finance all of the City’s governmental activity general obligation debt. The revenue sources for these funds include annual tax levies, tax increments, franchise taxes, and special assessments. At year-end, there was $3,093,625 of fund balance restricted for debt service in the governmental funds. The G.O. revenue bonds will be paid from the designated business activity from Ice Arena, Sewer Utility, Water Utility, and Storm Water Funds. The following table presents the City’s bonded debt as of the last two year-ends: 2021 2020 2021 2020 2021 2020 G.O. bonds and certificates 36,866,522$ 38,930,476$ 4,897,991$ 3,285,833$ 41,764,513$ 42,216,309$ G.O. tax increment bonds 5,354,862 6,005,590 1,210,406 1,307,253 6,565,268 7,312,843 Lease revenue bonds – – – 3,505,000 – 3,505,000 G.O. revenue bonds and notes – – 889,935 1,111,126 889,935 1,111,126 Total 42,221,384$ 44,936,066$ 6,998,332$ 9,209,212$ 49,219,716$ 54,145,278$ TotalGovernmental Activities Business-Type Activities The City also acquired three police vehicles valued at $114,728, through a capital lease agreement during the year. The outstanding lease payable balance was $112,376 at year-end. The City maintained an “AA” rating on its debt from Standard & Poor’s. Additional details of long-term liabilities activity for the year can be found in Note 6 of the notes to basic financial statements. -14- ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES Economic factors affect the preparation of annual budgets. The following factors were considered in preparing the 2022 budget: •User charges have been increased to account for various utility improvements scheduled for 2022 and beyond. •The tax levy increased by 4.67 percent for 2022. This includes a new Housing and Redevelopment Authority (HRA) levy of $417,000 and a reduction in the Economic Development Authority (EDA) levy to $153,000 (down from $365,000 in 2021). •Management provided a long-term plan to City Council in November that highlighted the tax effect of major capital and operating decisions. This will be an important document when preparing future budgets. •In 2021, the City received $1,142,382 of American Rescue Plan Act (ARPA) funds to help address expenses related to the COVID-19 pandemic. The City will receive the second allotment of ARPA funds in 2022 and continues to respond to the pandemic in a measured and forward-thinking manner, balancing increased costs and lost revenue with reductions in spending on programming. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Department of Finance, City of New Hope, 4401 Xylon Avenue North, New Hope, Minnesota 55428. THIS PAGE INTENTIONALLY LEFT BLANK GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK Governmental Business-Type Activities Activities Total Assets Cash and temporary investments 41,032,970$ 6,935,751$ 47,968,721$ Receivables Taxes 254,365 – 254,365 Accrued interest 16,031 – 16,031 Accounts 327,373 1,450,130 1,777,503 Loans 255,534 – 255,534 Special assessments 498,649 178,253 676,902 Internal balances 692,123 (692,123) – Due from other governments 1,278,535 206,415 1,484,950 Inventories 64,202 35,397 99,599 Prepaid items 49,680 – 49,680 Investment in joint ventures 974,626 168,509 1,143,135 Capital assets Land and construction in progress 24,720,496 2,083,549 26,804,045 Depreciable assets (net of accumulated deprecation)49,990,914 27,521,829 77,512,743 Total assets 120,155,498 37,887,710 158,043,208 Deferred outflows of resources Deferred pension resources 5,190,055 492,108 5,682,163 Liabilities Accrued salaries payable 469,730 60,583 530,313 Accounts and contracts payable 1,016,734 421,204 1,437,938 Due to other governments 26,202 386,430 412,632 Accrued interest payable 590,365 56,864 647,229 Deposits payable 6,518 2,206 8,724 Unearned revenue 13,800 – 13,800 Noncurrent liabilities Due within one year 2,757,716 715,475 3,473,191 Due in more than one year 40,451,133 6,282,857 46,733,990 Net pension liability – due in more than one year 4,051,787 670,982 4,722,769 OPEB liability – due in more than one year 799,276 104,259 903,535 Total liabilities 50,183,261 8,700,860 58,884,121 Deferred inflows of resources Deferred pension resources 7,372,502 616,712 7,989,214 Resources received in advance 778,521 – 778,521 Total deferred inflows of resources 8,151,023 616,712 8,767,735 Net position Net investment in capital assets 34,985,781 22,607,046 57,592,827 Restricted for Economic development 5,955,136 – 5,955,136 Debt service 2,503,260 – 2,503,260 Public safety police expenses 134,455 – 134,455 Ice arena 5,460 – 5,460 Unrestricted 23,427,177 6,455,200 29,882,377 Total net position 67,011,269$ 29,062,246$ 96,073,515$ December 31, 2021 CITY OF NEW HOPE Statement of Net Position See notes to basic financial statements -15- Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions Governmental activities General government 1,152,633$ 270,287$ 460,284$ 2,326$ Public safety 7,764,051 832,767 390,343 – Public works 4,295,427 235,879 213,954 710,249 Culture and recreation 3,095,760 996,447 29,179 8,124 Economic development 1,434,986 – – – Interest on long-term debt 1,518,351 – – – Total governmental activities 19,261,208 2,335,380 1,093,760 720,699 Business-type activities Sewer utility 2,973,301 3,906,809 475 – Water utility 4,813,286 5,882,735 16,966 13,475 Golf course 368,659 473,508 89 – Ice arena 1,095,343 925,967 4,721 – Storm water 991,031 1,321,518 124,504 – Street lighting 135,899 170,656 – – Total business-type activities 10,377,519 12,681,193 146,755 13,475 Total 29,638,727$ 15,016,573$ 1,240,515$ 734,174$ General revenues Taxes Property taxes Tax increments Franchise taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings (charges) Gain on sale of capital assets Transfers – internal activities Total general revenues and transfer Change in net position Net position, January 1 Net position, December 31 Functions/Programs Program Revenues CITY OF NEW HOPE Statement of Activities Year Ended December 31, 2021 See notes to basic financial statements -16- Governmental Business-Type Activities Activities Total (419,736)$ –$ (419,736)$ (6,540,941) – (6,540,941) (3,135,345) – (3,135,345) (2,062,010) – (2,062,010) (1,434,986) – (1,434,986) (1,518,351) – (1,518,351) (15,111,369) – (15,111,369) – 933,983 933,983 – 1,099,890 1,099,890 – 104,938 104,938 – (164,655) (164,655) – 454,991 454,991 – 34,757 34,757 – 2,463,904 2,463,904 (15,111,369) 2,463,904 (12,647,465) 17,357,910 – 17,357,910 2,118,199 – 2,118,199 962,395 – 962,395 3,155,397 – 3,155,397 (22,179) 39,829 17,650 70,300 – 70,300 (336,752) 336,752 – 23,305,270 376,581 23,681,851 8,193,901 2,840,485 11,034,386 58,817,368 26,221,761 85,039,129 67,011,269$ 29,062,246$ 96,073,515$ Net (Expenses) Revenues and Changes in Net Position -17- THIS PAGE INTENTIONALLY LEFT BLANK FUND FINANCIAL STATEMENTS CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 9001 9015/9501 9213-9228 9203 Economic Development HRA Street General Authority Construction Infrastructure Assets Cash and temporary investments 8,384,004$ 2,187,136$ 5,373,618$ 2,607,963$ Receivables Taxes 246,519 – 3,190 – Accrued interest 16,031 – – – Accounts 286,468 7,112 – – Loans – 237,500 – – Special assessments 47,291 1,538 – 394,805 Due from other governments 1,224,691 – – 53,844 Prepaid items 49,680 – – – Due from other funds 194,063 2,626 – – Advances to other funds – 1,791,920 2,019,009 – Total assets 10,448,747$ 4,227,832$ 7,395,817$ 3,056,612$ Liabilities Accrued salaries payable 305,579$ 10,761$ –$ –$ Accounts and contracts payable 127,538 2,593 – 351,920 Due to other governments 25,068 461 – – Deposits payable 6,518 – – – Due to other funds – – 2,626 75,000 Advances from other funds – – 1,438,055 300,000 Unearned revenue – – – – Total liabilities 464,703 13,815 1,440,681 726,920 Deferred inflows of resources Unavailable revenue – taxes 120,628 – – – Unavailable revenue – special assessments 47,291 1,538 – 394,804 Unavailable revenue – long-term receivables 1,142,382 – – – Resources received in advance – – – 778,521 Total deferred inflows of resources 1,310,301 1,538 – 1,173,325 Fund balances (deficit) Nonspendable 49,680 – – – Restricted – – 5,955,136 – Committed – 4,212,479 – – Assigned – –– 1,156,367 Unassigned 8,624,063 – – – Total fund balances (deficit)8,673,743 4,212,479 5,955,136 1,156,367 Total liabilities, deferred inflows of resources, and fund balances 10,448,747$ 4,227,832$ 7,395,817$ 3,056,612$ CITY OF NEW HOPE Balance Sheet Governmental Funds December 31, 2021 See notes to basic financial statements -18- 9117-9121 Other Total Governmental Governmental HRA Bonds Funds Funds 390,185$ 12,088,576$ 31,031,482$ 4,656 – 254,365 – – 16,031 – 24,000 317,580 – 18,034 255,534 – 55,015 498,649 – –1,278,535 – –49,680 – 75,000 271,689 – 300,000 4,110,929 394,841$ 12,560,625$ 38,084,474$ –$ –$ 316,340$ – 463,286 945,337 – –25,529 – –6,518 – –77,626 2,372,874 – 4,110,929 – 13,800 13,800 2,372,874 477,086 5,496,079 – – 120,628 – 48,445 492,078 – –1,142,382 – –778,521 – 48,445 2,533,609 – – 49,680 – 3,823,928 9,779,064 – 308,493 4,520,972 – 7,902,673 9,059,040 (1,978,033) – 6,646,030 (1,978,033) 12,035,094 30,054,786 394,841$ 12,560,625$ 38,084,474$ -19- THIS PAGE INTENTIONALLY LEFT BLANK Total fund balances – governmental funds 30,054,786$ Amounts reported for the governmental activities in the statement of net position are different because: Cost of capital assets 94,940,235 Less accumulated depreciation (23,493,313) Bonds payable (39,797,395) Plus unamortized bond premiums (2,423,989) Net pension liability (3,892,030) Internal service fund net position included in governmental activities 11,138,346 Internal balances for internal services used by business-type activities 498,060 Taxes 120,628 Special assessments 492,078 Long-term receivables 1,142,382 Deferred outflows of pension resources 5,072,886 Deferred inflows of pension resources (7,225,666) (590,365) 974,626 Total net position – governmental activities 67,011,269$ CITY OF NEW HOPE Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31, 2021 Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. Internal service funds are used by management to charge certain costs of services to individual funds. The assets and liabilities are included in the statement of net position. The City’s investment in a joint venture is not a current financial resource and, therefore,is not reported as an asset in the governmental funds, but is included in the Statement of Net Position. Governmental funds do not report long-term amounts related to pensions. Governmental funds do not report a liability for accrued interest until due and payable. Some receivables are not available soon enough to pay for the current period’s expenditures and, therefore, are reported as unavailable revenue in the funds. Noncurrent liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Noncurrent liabilities at year-end consist of: See notes to basic financial statements -20- 9001 9015/9501 9213-9228 9203 Economic Development HRA Street General Authority Construction Infrastructure Revenues Taxes Property taxes 10,914,572$ 365,000$ –$ 1,540,700$ Tax increments – – 1,357,465 – Franchise taxes 522,395 – – 440,000 Licenses and permits 399,087 – – – Intergovernmental 2,603,365 – – 641,860 Charges for services 1,491,327 – – – Fines and forfeitures 185,603 – – – Special assessments 32,210 1,636 – 100,285 Investment earnings (charges)(93,405) 60,675 162,114 (17,879) Miscellaneous 80,922 100,392 – – Total revenues 16,136,076 527,703 1,519,579 2,704,966 Expenditures Current General government 2,148,125 – – – Public safety 8,591,161 – – – Public works 1,653,003 – – – Culture and recreation 2,629,453 – – – Economic development – 599,176 669,437 66,352 Capital outlay General government – – – – Public safety 181,616 – – – Public works – – – 1,722,264 Culture and recreation – – – – Economic development – – 120,948 – Debt service Principal – – – – Interest and fiscal charges – – 153,146 10,680 Total expenditures 15,203,358 599,176 943,531 1,799,296 Excess (deficiency) of revenues over expenditures 932,718 (71,473) 576,048 905,670 Other financing sources (uses) Sale of capital assets 6,800 – – – Transfers in 450,672 – – – Transfers out (1,642,533) (36,504) – – Total other financing sources (uses)(1,185,061) (36,504) – – Net change in fund balances (252,343) (107,977) 576,048 905,670 Fund balances (deficit), January 1 8,926,086 4,320,456 5,379,088 250,697 Fund balances (deficit), December 31 8,673,743$ 4,212,479$ 5,955,136$ 1,156,367$ CITY OF NEW HOPE For the Year Ended December 31, 2021 Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances See notes to basic financial statements -21- 9117-9121 Other Total Governmental Governmental HRA Bonds Funds Funds –$ 4,632,436$ 17,452,708$ 760,734 – 2,118,199 – – 962,395 – – 399,087 – 8,124 3,253,349 – 286,853 1,778,180 – –185,603 – 8,282 142,413 – (76,541) 34,964 – 4,250 185,564 760,734 4,863,404 26,512,462 – – 2,148,125 – – 8,591,161 – 244,267 1,897,270 – –2,629,453 2,560 – 1,337,525 – 212,151 212,151 – –181,616 – 1,936,426 3,658,690 – 439,210 439,210 – –120,948 428,843 2,120,042 2,548,885 187,562 1,367,473 1,718,861 618,965 6,319,569 25,483,895 141,769 (1,456,165) 1,028,567 – – 6,800 – 5,334,197 5,784,869 – (2,541,664) (4,220,701) – 2,792,533 1,570,968 141,769 1,336,368 2,599,535 (2,119,802) 10,698,726 27,455,251 (1,978,033)$ 12,035,094$ 30,054,786$ -22- THIS PAGE INTENTIONALLY LEFT BLANK Net change in fund balances – governmental funds 2,599,535$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays 3,846,952 Depreciation expense (2,890,736) Change in investment in joint venture 338,025 Principal repayments 2,548,885 Amortization of bond premium 165,797 34,746 Property taxes (94,798) Special assessments (74,024) Long-term receivables 1,142,382 Pension expense 921,533 Direct aid contributions 43,810 Change in net position of the internal service funds (628,644) Less the change in internal balances for internal services used by business-type activities 240,438 Change in net position – governmental activities 8,193,901$ CITY OF NEW HOPE Internal service funds are used by management to charge the costs for equipment, information system, equipment replacement, employee benefits and major losses incurred by individual funds. The activities of internal service funds is reported in the government-wide financial statements. Capital outlays are reported in governmental funds as expenditures. However,in the statement of activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Governmental Funds For the Year Ended December 31, 2021 The City’s investment in a joint venture is not a current financial resource and, therefore,is not reported as an asset in the governmental funds, but is included in the Statement of Net Position. Long-term pension activity is not reported in governmental funds. Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources.In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The amounts below are the effects of these differences in the treatment of long-term debt and related items. Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting, certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. See notes to basic financial statements -23- Actual Over (Under) Original Final Amounts Budget Revenues Taxes Property taxes 10,880,965$ 10,880,965$ 10,914,572$ 33,607$ Franchise taxes 535,000 535,000 522,395 (12,605) Licenses and permits 450,575 450,575 399,087 (51,488) Intergovernmental 1,490,176 1,490,176 2,603,365 1,113,189 Charges for services 1,816,885 1,816,885 1,491,327 (325,558) Fines and forfeitures 220,000 220,000 185,603 (34,397) Special assessments 40,000 40,000 32,210 (7,790) Investment earnings (charges)50,000 50,000 (93,405) (143,405) Miscellaneous 2,700 2,700 80,922 78,222 Total revenues 15,486,301 15,486,301 16,136,076 649,775 Expenditures Current General government 2,056,129 2,056,129 2,148,125 91,996 Public safety 9,138,404 9,138,404 8,591,161 (547,243) Public works 1,655,392 1,655,392 1,653,003 (2,389) Culture and recreation 2,915,551 2,915,551 2,629,453 (286,098) Capital outlay General government 5,000 5,000 – (5,000) Public safety 164,000 164,000 181,616 17,616 Culture and recreation 2,500 2,500 – (2,500) Total expenditures 15,936,976 15,936,976 15,203,358 (733,618) Excess (deficiency) of revenues over expenditures (450,675) (450,675) 932,718 1,383,393 Other financing sources (uses) Sale of capital assets – – 6,800 6,800 Transfers in 450,675 450,675 450,672 (3) Transfers out – – (1,642,533) (1,642,533) Total other financing sources (uses)450,675 450,675 (1,185,061) (1,635,736) Net change in fund balances – – (252,343) (252,343) Fund balances, January 1 8,926,086 8,926,086 8,926,086 – Fund balances, December 31 8,926,086$ 8,926,086$ 8,673,743$ (252,343)$ Budgeted Amounts Statement of Revenues, Expenditures, and Changes in Fund Balances – CITY OF NEW HOPE General Fund Budget and Actual For the Year Ended December 31, 2021 See notes to basic financial statements -24- Actual Over (Under) Original Final Amounts Budget Revenues Taxes Property taxes 365,000$ 365,000$ 365,000$ –$ Intergovernmental 107,000 107,000 – (107,000) Special assessments 1,600 1,600 1,636 36 Investment earnings 76,000 76,000 60,675 (15,325) Miscellaneous – – 100,392 100,392 Total revenues 549,600 549,600 527,703 (21,897) Expenditures Current Economic development Personnel services 342,338 342,338 344,901 2,563 Supplies 300 300 369 69 Other services and charges 398,570 398,570 253,906 (144,664) Total expenditures 741,208 741,208 599,176 (142,032) Excess (deficiency) of revenues over expenditures (191,608) (191,608) (71,473) 120,135 Other financing sources (uses) Transfers out (36,509) (36,509) (36,504) 5 Net change in fund balances (228,117) (228,117) (107,977) 120,140 Fund balances, January 1 4,320,456 4,320,456 4,320,456 – Fund balances, December 31 4,092,339$ 4,092,339$ 4,212,479$ 120,140$ Budgeted Amounts CITY OF NEW HOPE Economic Development Authority Fund Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual For the Year Ended December 31, 2021 See notes to basic financial statements -25- 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Assets Current assets Cash and temporary investments 2,070,556$ 3,154,081$ 341,554$ –$ Receivables Accounts 374,800 909,065 2,923 20,883 Special assessments 49,907 112,423 – – Due from other governments – 75,361 – 84,351 Inventories – 28,511 6,886 – Total current assets 2,495,263 4,279,441 351,363 105,234 Noncurrent assets Investment in joint ventures – 168,509 – – Capital assets Land – – 250,625 – Buildings and structures – – 973,145 9,824,219 Vehicles and equipment 607,475 1,392,767 133,696 931,954 Improvements other than buildings 6,628,754 11,792,638 140,620 – Construction in progress 710,107 474,234 – – Less accumulated depreciation (3,229,105) (4,520,096) (1,074,356) (4,446,281) Total capital assets (net of accumulated depreciation)4,717,231 9,139,543 423,730 6,309,892 Total noncurrent assets 4,717,231 9,308,052 423,730 6,309,892 Total assets 7,212,494 13,587,493 775,093 6,415,126 Deferred outflows of resources Deferred pension resources 141,410 133,734 26,463 119,190 Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Net Position Proprietary Funds December 31, 2021 See notes to basic financial statements -26- Governmental Activities – 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Assets Current assets Cash and temporary investments 1,240,598$ 128,962$ 6,935,751$ 10,001,488$ Receivables Accounts 134,809 7,650 1,450,130 9,793 Special assessments 13,854 2,069 178,253 – Due from other governments 46,703 – 206,415 – Inventories – – 35,397 64,202 Total current assets 1,435,964 138,681 8,805,946 10,075,483 Noncurrent assets Investment in joint ventures – – 168,509 – Capital assets Land 234,417 – 485,042 85,647 Buildings and structures – – 10,797,364 3,158,296 Vehicles and equipment – – 3,065,892 10,615,294 Improvements other than buildings 10,040,483 389,705 28,992,200 – Construction in progress 414,166 – 1,598,507 7,559 Less accumulated depreciation (2,024,818) (38,971) (15,333,627) (10,602,308) Total capital assets (net of accumulated depreciation)8,664,248 350,734 29,605,378 3,264,488 Total noncurrent assets 8,664,248 350,734 29,773,887 3,264,488 Total assets 10,100,212 489,415 38,579,833 13,339,971 Deferred outflows of resources Deferred pension resources 71,311 – 492,108 117,169 Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Net Position (continued) Proprietary Funds December 31, 2021 -27-(continued) 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Liabilities Current liabilities Accrued salaries payable 13,753$ 22,186$ 2,383$ 16,827$ Accounts and contracts payable 215,699 85,189 9,160 44,845 Due to other governments 287 372,968 164 12,732 Accrued interest payable 8,318 28,487 – 4,500 Due to other funds – – – 194,063 Deposits payable – 2,206 – – Compensated absences payable, current portion – –– – Leases payable, current portion – –– – Bonds and notes payable, current portion 59,207 248,118 – 245,000 Total current liabilities 297,264 759,154 11,707 517,967 Noncurrent liabilities OPEB payable 10,583 58,757 3,654 21,988 Pension liability 192,811 182,344 36,083 162,512 Compensated absences payable – – – – Leases payable – – – – Bonds and notes payable 680,641 2,714,013 – 1,555,000 Unamortized premium 17,807 71,868 – 39,983 Total noncurrent liabilities 901,842 3,026,982 39,737 1,779,483 Total liabilities 1,199,106 3,786,136 51,444 2,297,450 Deferred inflows of resources Deferred pension resources 177,216 167,596 33,164 149,368 Net position Net investment in capital assets 3,959,576 6,105,544 423,730 4,469,909 Unrestricted 2,018,006 3,661,951 293,218 (382,411) Total net position 5,977,582$ 9,767,495$ 716,948$ 4,087,498$ Proprietary Funds December 31, 2021 Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Net Position (continued) See notes to basic financial statements -28- Governmental Activities – 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Liabilities Current liabilities Accrued salaries payable 5,434$ –$ 60,583$ 153,390$ Accounts and contracts payable 51,341 14,970 421,204 71,397 Due to other governments 279 – 386,430 673 Accrued interest payable 15,559 – 56,864 – Due to other funds – – 194,063 – Deposits payable – – 2,206 – Compensated absences payable, current portion – – – 87,509 Leases payable, current portion – – – 28,682 Bonds and notes payable, current portion 163,150 – 715,475 – Total current liabilities 235,763 14,970 1,836,825 341,651 Noncurrent liabilities OPEB payable 9,277 – 104,259 799,276 Pension liability 97,232 – 670,982 159,757 Compensated absences payable – – – 787,580 Leases payable – – – 83,694 Bonds and notes payable 1,165,476 – 6,115,130 – Unamortized premium 38,069 – 167,727 – Total noncurrent liabilities 1,310,054 – 7,058,098 1,830,307 Total liabilities 1,545,817 14,970 8,894,923 2,171,958 Deferred inflows of resources Deferred pension resources 89,368 – 616,712 146,836 Net position Net investment in capital assets 7,297,553 350,734 22,607,046 3,152,112 Unrestricted 1,238,785 123,711 6,953,260 7,986,234 Total net position 8,536,338$ 474,445$ 29,560,306$ 11,138,346$ Total net position – enterprise funds 29,560,306$ Adjustment to reflect the consolidation of internal service fund (498,060) Net position – business-type activities 29,062,246$ Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Net Position (continued) Proprietary Funds December 31, 2021 -29- 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Operating revenues Charges for services 3,906,809$ 5,545,731$ 450,307$ 883,968$ Billings to departments – – – – Other – – – – Total operating revenues 3,906,809 5,545,731 450,307 883,968 Operating expenses Cost of goods sold 1,967,078 3,308,537 31,227 – Personnel services 270,338 516,709 140,385 387,404 Supplies 15,785 106,563 31,346 26,647 Utilities 13,612 689 29,834 239,209 Other services and charges 414,762 447,363 88,192 204,423 Depreciation 186,968 297,161 37,298 202,133 Total operating expenses 2,868,543 4,677,022 358,282 1,059,816 Operating income (loss)1,038,266 868,709 92,025 (175,848) Nonoperating revenues (expenses) Investment earnings (charges)(15,737) (21,295) (3,016) 91,194 Miscellaneous revenues 475 353,970 23,290 46,720 Intergovernmental – – – – Gain on sale of capital assets – – – – Interest expense (18,883) (66,078) – (26,725) Total nonoperating revenues (expenses)(34,145) 266,597 20,274 111,189 Income (loss) before contributions and transfers 1,004,121 1,135,306 112,299 (64,659) Capital contributions – 13,475 – – Transfers in – –– 500,000 Transfers out (56,952) (59,388) (11,040) (11,040) Change in net position 947,169 1,089,393 101,259 424,301 Net position, January 1 5,030,413 8,678,102 615,689 3,663,197 Net position, December 31 5,977,582$ 9,767,495$ 716,948$ 4,087,498$ Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2021 See notes to basic financial statements -30- CITY OF NEW HOPE Governmental Activities – 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Operating revenues Charges for services 1,321,518$ 170,656$ 12,278,989$ –$ Billings to departments – – – 3,921,506 Other – – – 248,872 Total operating revenues 1,321,518 170,656 12,278,989 4,170,378 Operating expenses Cost of goods sold – – 5,306,842 – Personnel services 157,325 – 1,472,161 866,377 Supplies 7,235 – 187,576 269,728 Utilities – 108,935 392,279 121,831 Other services and charges 479,745 7,691 1,642,176 1,074,676 Depreciation 245,996 19,486 989,042 571,814 Total operating expenses 890,301 136,112 9,990,076 2,904,426 Operating income (loss)431,217 34,544 2,288,913 1,265,952 Nonoperating revenues (expenses) Investment earnings (10,264) (1,053) 39,829 (57,143) Miscellaneous revenues 240 – 424,695 – Intergovernmental 124,264 – 124,264 – Gain (loss) on sale of capital assets – – – 63,500 Interest expense (35,319) – (147,005) (33) Total nonoperating revenues (expenses)78,921 (1,053) 441,783 6,324 Income (loss) before contributions and transfers 510,138 33,491 2,730,696 1,272,276 Capital contributions – – 13,475 – Transfers in – – 500,000 – Transfers out (24,828) – (163,248) (1,900,920) Change in net position 485,310 33,491 3,080,923 (628,644) Net position, January 1 8,051,028 440,954 26,479,383 11,766,990 Net position, December 31 8,536,338$ 474,445$ 29,560,306$ 11,138,346$ Change in net position – enterprise funds 3,080,923$ Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds.(240,438) Change in net position – business-type activities 2,840,485$ Business-Type Activities - Enterprise Funds Statement of Revenues, Expenses and Changes in Net Position (continued) Proprietary Funds For the Year Ended December 31, 2021 -31- 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Cash flows from operating activities Receipts from customers and users 3,877,375$ 5,498,736$ 451,739$ 877,114$ Receipts from interfund services provided – – – – Other operating receipts 475 353,970 23,290 46,720 Payments to suppliers (2,378,571) (4,007,497) (178,354) (455,824) Payments to employees (416,232) (422,494) (144,262) (404,975) Net cash from operating activities 1,083,047 1,422,715 152,413 63,035 Cash flows from noncapital financing activities Receipts on interfund balances – – – 194,063 Payments on interfund balances – – – (156,685) Transfers in – – – 500,000 Transfers out (56,952) (59,388) (11,040) (11,040) Net cash from noncapital financing activities (56,952) (59,388) (11,040) 526,338 Cash flows from capital and related financing activities Acquisition of capital assets (262,040) (147,614) (11,348) (549,388) Proceeds from sale of assets – – – – Capital contributions – 13,475 – – Proceeds from issuance of long-term debt – –– 2,064,747 Principal paid on long-term debt (57,500) (324,781) – (3,725,000) Interest paid on long-term debt (20,665) (74,401) – (31,779) Net cash from capital and related financing activities (340,205) (533,321) (11,348) (2,241,420) Cash flows from investing activities Investment earnings (charges)(15,737) (21,295) (3,016) 91,194 Net increase (decrease) in cash and cash equivalents 670,153 808,711 127,009 (1,560,853) Cash and cash equivalents, January 1 1,400,403 2,345,370 214,545 1,560,853 Cash and cash equivalents, December 31 2,070,556$ 3,154,081$ 341,554$ –$ Business-Type Activities – Enterprise Funds For the Year Ended December 31, 2021 Proprietary Funds Statement of Cash Flows CITY OF NEW HOPE See notes to basic financial statements -32- Governmental Activities – 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Cash flows from operating activities Receipts from customers and users 1,258,467$ 170,126$ 12,133,557$ –$ Receipts from interfund services provided – – – 3,919,154 Other operating receipts 124,504 – 548,959 248,872 Payments to suppliers (447,908) (111,065) (7,579,219) (1,517,901) Payments to employees (201,833) – (1,589,796) (1,038,153) Net cash from operating activities 733,230 59,061 3,513,501 1,611,972 Cash flows from noncapital financing activities Receipts on interfund balances – – 194,063 – Payments on interfund balances – – (156,685) – Transfers in – – 500,000 – Transfers out (24,828) – (163,248) (1,900,920) Net cash from noncapital financing activities (24,828) – 374,130 (1,900,920) Cash flows from capital and related financing activities Acquisition of capital assets (287,530) – (1,257,920) (878,370) Proceeds from sale of assets – – – 63,500 Capital contributions – – 13,475 – Proceeds from issuance of long-term debt – – 2,064,747 – Principal paid on long-term debt (154,834) – (4,262,115) (2,352) Interest paid on long-term debt (39,739) – (166,584) (33) Net cash from capital and related financing activities (482,103) – (3,608,397) (817,255) Cash flows from investing activities Investment earnings (10,264) (1,053) 39,829 (57,143) Net increase (decrease) in cash and cash equivalents 216,035 58,008 319,063 (1,163,346) Cash and cash equivalents, January 1 1,024,563 70,954 6,616,688 11,164,834 Cash and cash equivalents, December 31 1,240,598$ 128,962$ 6,935,751$ 10,001,488$ Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Cash Flows (continued) Proprietary Funds For the Year Ended December 31, 2021 -33-(continued) 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Reconciliation of operating income (loss) to net cash from operating activities Operating income (loss)1,038,266$ 868,709$ 92,025$ (175,848)$ Adjustments to reconcile operating income (loss) to net cash from operating activities Depreciation 186,968 297,161 37,298 202,133 Other income related to operations 475 353,970 23,290 46,720 (Increase) decrease in assets Receivables Accounts (33,138) 19,847 1,432 17,413 Special assessments 3,704 8,519 – – Due from other governments – (75,361) – (24,267) Inventories – 9,465 (2,370) – (Increase) decrease in deferred outflows of resources Deferred pension resources (105,048) (115,837) (21,026) (93,904) Deferred OPEB resources 11,851 4,941 699 4,048 Increase (decrease) in liabilities Accounts and contracts payable 32,379 7,028 4,638 5,706 Accrued salaries payable 275 2,124 240 5,824 Due to other governments 287 (160,838) (23) 8,749 Compensated absences payable – – – – OPEB payable (67,761) 22,385 (2,876) (17,435) Pension liability (146,474) 20,583 (11,957) (55,546) Increase (decrease) in deferred inflows of resources Deferred pension resources 163,606 161,521 31,256 140,672 Deferred other postemployment benefit resources (2,343) (1,502) (213) (1,230) Net cash from operating activities 1,083,047$ 1,422,715$ 152,413$ 63,035$ Schedule of noncash capital and related financing activities Amortization of bond premium 1,198$ 4,929$ –$ 4,764$ Capital assets acquired through leases payable –$ –$ –$ –$ Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Cash Flows (continued) Proprietary Funds For the Year Ended December 31, 2021 See notes to basic financial statements -34- Governmental Activities – 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Reconciliation of operating income (loss) to net cash from operating activities Operating income (loss)431,217$ 34,544$ 2,288,913$ 1,265,952$ Adjustments to reconcile operating income (loss) to net cash from operating activities Depreciation 245,996 19,486 989,042 571,814 Other income related to operations 124,504 – 548,959 – (Increase) decrease in assets Receivables Accounts (17,849) (763) (13,058) (2,352) Special assessments 1,501 233 13,957 – Due from other governments (46,703) – (146,331) – Inventories – – 7,095 3,833 (Increase) decrease in deferred outflows of resources Deferred pension resources (59,265) – (395,080) (93,397) Deferred OPEB resources 8,935 – 30,474 167,973 Increase (decrease) in liabilities Accounts and contracts payable 38,793 5,561 94,105 (55,541) Accrued salaries payable 1,494 – 9,957 (9,478) Due to other governments 279 – (151,546) 42 Compensated absences payable – – – 31,633 OPEB payable (18,273) – (83,960) (311,187) Pension liability (59,650) – (253,044) (62,055) Increase (decrease) in deferred inflows of resources Deferred pension resources 84,967 – 582,022 137,938 Deferred OPEB resources (2,716) – (8,004) (33,203) Net cash from operating activities 733,230$ 59,061$ 3,513,501$ 1,611,972$ Schedule of noncash capital and related financing activities Amortization of bond premium 2,621$ –$ 9,351$ –$ Capital assets contributed to governmental activities –$ –$ –$ 114,728$ Business-Type Activities – Enterprise Funds CITY OF NEW HOPE Statement of Cash Flows (continued) Proprietary Funds For the Year Ended December 31, 2021 -35- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF NEW HOPE Notes to Basic Financial Statements December 31, 2021 -36- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES A.Organization The City of New Hope, Minnesota (the City) operates under “Optional Plan B” as defined in Minnesota Statutes, Chapter 412. Under this plan, the government of the City is run by a council composed of an elected mayor and four councilmembers. The City Council exercises legislative authority and determines all matters of policy. The city manager, who is appointed by the City Council, is responsible for the proper administration of all affairs relating to the City. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. B.Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading . The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. As a result of applying these criteria, certain organizations have been included or disclosed in this report as follows: 1.Blended Component Unit – The New Hope Economic Development Authority (EDA) and Housing and Redevelopment Authority (HRA) are fiscally dependent upon the City, and were developed to control and operate the housing and redevelopment and tax increment districts within the City. Since the City Council makes up the EDA and HRA boards, and funding for EDA and HRA activities are provided by the City, both entities are considered to be blended component units of the City, and are reported as special revenue, debt service, and capital projects funds. 2.Joint Ventures and Jointly Controlled Organization – The City participates in various joint ventures and jointly controlled organizations, which are described later in these notes. C.Government-Wide Financial Statements The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which significantly rely upon sales, fees, and charges for support. -37- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Statement of Activities demonstrates the degree to which the direct expenses o f a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided b y a given function or segment; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported as general revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. However, charges between the City’s enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D.Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner: 1.Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are coll ected within 60 days after year-end. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue . Such revenue is recorded only when received because it is not measurable until collected. 2.Recording of Expenditures – Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-term debt and other long-term liabilities, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. -38- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sales and services. The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses that do not meet this definition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the proprietary fund financial statements. Because the principal user of the internal services is the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Description of Funds The City reports the following major governmental funds: General Fund – This is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Economic Development Authority Special Revenue Fund – This fund accounts for the activities of the EDA, which controls and operates the housing and redevelopment projects and tax increment districts in the City. Its activities are funded through property tax levies and federal and state aids and grants. HRA Construction Capital Projects Fund – This fund is used to account for redevelopment costs for tax increment districts, which are primarily funded by tax increment bonds and tax increment revenues. Street Infrastructure Capital Projects Fund – This fund is used to account for various street projects within the City. HRA Bonds Debt Service Fund – This fund is used to account for revenue from tax increments and interest income to pay for the principal and interest on the City’s tax increment bond issues. The City reports the following major enterprise funds: Sewer Utility Fund – This fund accounts for the provisions of sewer services to residents of the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, billing and collection. Water Utility Fund – This fund is used to account for the provisions of water services to residents of the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, billing and collection. Golf Course Fund – This fund is used to account for the operations of the City’s public golf course. Ice Arena Fund – This fund is used to account for the operation of the City’s indoor ice arena. Storm Water Fund – This fund is used to account for the general operation and maintenance of the City’s storm water system. Street Lighting Fund – This fund is used to account for the operation of the City’s streetlight system. -39- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The City also reports the following fund type: Internal Service Funds – These funds are used to account for the City’s vehicle and equipment rental, employee leave benefits, insurance, and information technology operations. Internal service funds operate in a manner similar to enterprise funds; however, they provide services primarily to other departments within the City. E.Budgets and Budgetary Accounting Each fall, following a truth in taxation public hearing, the City Council adopts an operating budget for the following fiscal year beginning January 1. The City legally adopts budgets for the General Fund and certain special revenue funds (Economic Development Authority and Solid Waste Management Funds), on a modified accrual basis of accounting. The legal level of budgetary control is at the fund level. The city manager may transfer appropriations within funds, or departments within funds, but needs City Council approval to adjust the total budget of a fund. Appropriations lapse at year-end; however, the City Council may approve the carryover of specific amounts. In 2021, expenditures exceeded budget in the (nonmajor) Solid Waste Management Special Revenue Fund by $12. F.Cash, Cash Equivalents, and Investments Cash balances from all funds are combined and invested to the extent available in short-term investments. Earnings from the pooled investments are allocated to the individual funds based on the average monthly cash and investment balances of the respective funds. Certain bond proceeds may be held separately for capital projects. Earnings on these accounts are allocated directly to the respective funds. For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an original maturity from the time of purchase of three months or less to be cash equivalents. The proprietary funds’ portion of the government-wide cash and investment pool is considered to be cash equivalent, including the cash held with fiscal agent. The City generally reports investments at fair value other than for certain investment pools that are valued at amortized cost. The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities ’ relationship to benchmark quoted prices. See Note 2 for the City’s recurring fair value measurements as of the current year-end. G.Receivables Accounts receivable include amounts billed for services provided before year-end. Unbilled utility enterprise fund receivables are also included for services provided in the year. The City annually certifies delinquent utility accounts to the county for collection in the following year; therefore, no allowance for doubtful accounts has been established for the delinquent utility receivables. -40- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H.Property Taxes Property tax levies are set by the City Council in December of each year and are certified to Hennepin County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. The county provides tax settlements to cities and other taxing districts three times a year; in July, December, and January. Property taxes are recognized as revenue in the year levied in the government -wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, taxes are recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable and are offset by a deferred inflow of resources in the governmental fund financial statements. I.Special Assessments Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with Minnesota Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments withou t interest or prepayment penalties. In governmental fund financial statements, revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the county and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All special assessments receivable in governmental funds are completely offset by a deferred inflow of resources for assessments not received within 60 days after year-end. In government-wide financial statements, special assessments are recognized as revenues in the year for which they are certified. At December 31, 2021, the total delinquent special assessment receivable balance was $43,145. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made, or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to Minnesota Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural, or seasonal recreational land in which event, the property is subject to such sale after five years. J.Interfund Balances and Transfers In the fund financial statements, balances between funds that are representative of lending or borrowing arrangements are reported as either “due to/from other funds” (current portion) or “advances to/from other funds.” All other outstanding balances between funds are reported as “due to/from other funds.” Interfund balances and transfers reported in the fund financial statements are eliminated to the extent possible in the government-wide financial statements. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” -41- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K.Inventory and Prepaid Items Inventory is valued at cost using the first-in/first-out method. Inventory consists mainly of expendable supplies held for consumption. Certain cash payment to vendors reflects costs applicable to future accounting periods are recorded as prepaid items in both government-wide and fund financial statements. Inventory and prepaid items of the governmental funds are recorded as expenditures when consumed rather than when purchased. L.Capital Assets Capital assets, which include property, buildings, improvements, equipment, and infrastructure assets (roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are capitalized at historical cost or estimated historical cost for assets where actual historical cost is not available . Donated assets are recorded as capital assets at their estimated acquisition value on the date of donation. The City defines capital assets as those with an initial, individual cost of more than $5,000 with an estimated useful life in excess of two years or more. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the government-wide and proprietary fund financial statements but are not reported in the governmental fund financial statements. Capital assets are depreciated using the straight-line method over their estimated useful lives. Land and construction in progress are not depreciated. Useful lives vary from 15 to 50 years for buildings and structures, 15 to 50 years for improvements other than buildings, and 3 to 20 years for vehicles and equipment. M.Deferred Outflows/Inflows of Resources In addition to assets and liabilities, statements of net position or balance sheets will sometimes report deferred outflows or inflows of resources. These separate financial statement elements represent a consumption or acquisition of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) or an inflow of financial resources (revenue) until then. Deferred outflows and inflows of resources related to pensions or other post-employment benefits (OPEB) are reported in the government-wide and proprietary fund Statements of Net Position. These deferred outflows and inflows of resources result from differences between expected and actual experience, changes in proportion, assumption changes, differences between projected and actual earnings on plan investments, and contributions to the plan subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under pension or OPEB standards. Deferred inflows of resources from unavailable revenue arises only under a modified accrual basis of accounting and, therefore, is only reported in governmental fund financial statements. The governmental funds report unavailable revenues from three sources: property taxes, special assessments, and long-term receivables. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City also reports deferred inflows or resources for resources received in advance, which is reported in both the governmental fund financial statements and the government -wide financial statements. This item represents amounts received before the applicable time requirements are met, but after all other eligibility requirements have been met. -42- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N.Long-Term Liabilities In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. The recognition of bond premiums and discounts are delayed and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as an expense in the period incurred. In the fund financial statements, governmental fund types recognize bond premium and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. O.Compensated Absences A liability is recognized for unpaid vacation, sick leave, wellness days, and personal leave earned by employees at the Balance Sheet date if it is probable the benefit will be paid as time off or at separation of service. The City implemented a personal leave plan in 1994 in which all new employees, other than police officers, participate. Employees who have had five or more years of service at the time of implementation were allowed to choose between the personal leave plan or the vacation/sick leave plan. Under the vacation/sick leave plan, employees are entitled to compensation for unpaid vacation time up to 160 hours and one-third of their accumulated sick leave, to a maximum of 320 hours. Under personal leave, employees are entitled to 200 hours of accumulated leave time. The Employee Leave Internal Service Fund is typically used to liquidate governmental compensated absences payable. P.Other Post-Employment Benefits (OPEB) Under Minnesota Statutes Chapter 471.61, Subd. 2b, public employers must allow retirees and their dependents to continue coverage indefinitely in an employer-sponsored healthcare plan, under the following conditions: 1) retirees must be receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) coverage must continue in a group plan until age 65, and retirees must pay no more than the group premium, and 3) retirees are able to add dependent coverage during open enrollment period or qualifying life event prior to retirement. All premiums are funded on a pay -as-you-go basis. The liability was determined, in accordance with Governmental Accounting Standards Board (GASB) Statement No. 75, at December 31, 2021. The Insurance Reserve Internal Service Fund is typically used to liquidate governmental OPEB payable. Q.State-Wide Pension Plans For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from the PERA’s fiduciary net position have been determined on the same basis as they are reported by the PERA. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. -43- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R.Risk Management The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers ’ compensation, and other miscellaneous insurance coverage. The LMCIT operates as a common risk management and insurance program for a large number of cities in Minnesota. The City pays an annual premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self-sustaining through member premiums and will reinsure through commercial companies for claims in excess of certain limits. The City also carries commercial insurance for certain other risks of loss. Settled claims resulting from these risks did not exceed insurance coverage in any of the last three fiscal years. There were no significant reductions in insurance coverage in the current year. S.Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported at the date of the financial statements during the reporting period. Actual results could differ from those estimates. T.Fund Balance Classifications In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: •Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets. •Restricted – Consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions. •Committed – Consists of internally imposed constraints established by resolution of the City Council, which cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action employed to previously commit those amounts. •Assigned – Consists of internally imposed constraints representing amounts intended to be used by the City for specific purposes that do not meet the criteria to be classified as restricted or committed. Assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. The City Council has adopted a fund balance policy, which delegates the authority to assign amounts for specific purposes to the finance manager or city manager. •Unassigned – The residual classification for the General Fund, which also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, and then use unrestricted resources as needed. When committed, assigned, or unassigned resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. The City’s fund balance policy includes a fund balance goal in the General Fund of maintaining an unassigned fund balance of 42 percent of the next year’s budgeted General Fund expenditures. -44- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) U.Net Position In the government-wide and proprietary fund financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position is displayed in three components: •Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets. •Restricted Net Position – Consists of net position restricted when there are limitations imposed on its use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. •Unrestricted Net Position – All other elements of net position that do not meet the definition of “restricted” or “net investment in capital assets.” The City applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. Net investment in capital assets at year-end is calculated as follows: Governmental Business-Type Activities Activities Total Capital assets, net of depreciation 74,711,410$ 29,605,378$ 104,316,788$ Less applicable Bonds payable (37,802,395) (6,830,605) (44,633,000) Unamortized bond premiums (2,401,246) (167,727) (2,568,973) Leases payable (112,376) – (112,376) Add applicable Unspent bond proceeds 590,388 – 590,388 Net investment in capital assets 34,985,781$ 22,607,046$ 57,592,827$ V.Deficit Fund Equity The following funds had fund balance or net position deficits at December 31, 2021: Fund Amount HRA Bonds Debt Service Fund 1,978,033$ Internal service funds Insurance Reserve 334,426$ The City plans to fund these deficits with future property taxes, tax increments, or transfers. -45- NOTE 2 – CASH AND INVESTMENTS A.Components of Cash and Investments Cash and investments at year-end consist of the following: Deposits 10,797,806$ Investments 37,168,415 Petty cash 2,500 Total 47,968,721$ B.Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits: Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The City has no additional deposit policies addressing custodial credit risk. At year-end, the carrying amount of the City’s deposits was $10,797,806, while the balance on the bank records was $10,982,903. All deposits at year-end were fully covered by federal deposit insurance or collateral held by the City’s agent in the City’s name. C.Investments The City has the following investments at year-end: Fair Value Measurements Investment Type Rating Agency Using No Maturity Less Than 1 1 to 5 Greater Than 5 Total U.S. treasury securities AAA Moody’s Level 2 –$ –$ 11,380,105$ 1,242,471$ 12,622,576$ U.S. agency securities AA S&P Level 2 – 8,346,858 394,164 – 8,741,022 State and local bonds AA S&P Level 2 – 503,377 693,942 – 1,197,319 State and local bonds AA Moody’s Level 2 – –544,789 – 544,789 Negotiable certificates of deposit Level 2 – 5,019,603 2,526,685 – 7,546,288 4M Fund investment pool Not Applicable 5,311,990 – – – 5,311,990 Mutual funds AAA S&P Level 1 1,204,431 – – – 1,204,431 Total investments 6,516,421$ 13,869,838$ 15,539,685$ 1,242,471$ 37,168,415$ Not Rated Credit Risk Not Rated Interest Risk – Maturity Duration in Years The Minnesota Municipal Money Market (4M) Fund is external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Commission (SEC), but follows the regulatory rules of the SEC. The City’s investment in this fund is measured at the value per share provided by the pool, which is based on an amortized cost method that approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Fund. -46- NOTE 2 – CASH AND INVESTMENTS (CONTINUED) Investments are subject to various risks, the following of which are considered the most significant: Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality i n one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City’s investment policies do not further address credit risk. Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have a formal investment policy addressing this risk, but typically limits its exposure by purchasing insured or registered investments, or by control of who holds the securities. Concentration Risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5.0 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s investment policies do not limit the concentration of investments. As of December 31, 2021, the City had 11.9 percent invested in securities issued by the Federal Farm Credit Bank. Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City does not have an investment policy limiting the duration of investments. NOTE 3 – LOAN RECEIVABLES The City has made several business subsidy loans to local businesses, some of which were funded with grant proceeds received from Hennepin County. The terms and periods of repayment vary with each loan. Loans receivable in the Economic Development Authority Special Revenue Fund at December 31, 2021 totaled $237,500. Loans receivable in nonmajor governmental funds totaled $18,034. -47- NOTE 4 – INTERFUND BALANCES AND TRANSFERS The composition of internal balances as of December 31, 2021 is as follows: Receivable Fund Payable Fund Amount Due from/to other funds Governmental Business-type General Fund Ice Arena 194,063$ Governmental Governmental EDA HRA Construction 2,626 Governmental Governmental Nonmajor governmental Street Infrastructure 75,000 Total due from/to other funds 271,689 Advances to/from other funds Governmental Governmental Economic Development Authority HRA Construction 1,438,055 Economic Development Authority HRA Bonds 353,865 HRA Construction HRA Bonds 2,019,009 Nonmajor governmental Street Infrastructure 300,000 Total advances from/to other funds 4,110,929 Interfund activity eliminated from government-wide statements (4,188,555) Internal service fund activities related to the enterprise funds 498,060 Total internal balances – government-wide statements 692,123$ In 2021, the General Fund loaned the Ice Arena Fund $194,063 for cash flow purposes, the balance is expected to be paid back in 2022. In 2021, the Economic Development Authority Fund loaned the HRA Construction Fund $2,626 for cash flow purposes, the balance is expected to be paid back in 2022. The Economic Development Authority Special Revenue Fund loaned the HRA Construction Capital Projects Fund $2,433,162 in 2008, for the purchase of land at Bass Lake Road. The interfund loan matures in 2028 and carries an interest rate of 4.00 percent. As of December 31, 2021, the balance outstanding was $1,438,055. In 2015, the Economic Development Authority Fund and the HRA Construction Fund loaned the HRA Bonds Debt Service Fund $322,016 and $1,837,286, respectively, for the purchase of the Hy-Vee property. The interfund loan matures in 2042 and carries an interest rate of 4.00 percent. As of December 31, 2021, the balances outstanding, including accrued interest, were $353,865 and $2,019,009, respectively. In 2016, the Temporary Financing Fund loaned the Street Infrastructure Capital Projects Fund $750,000 to fund future capital purchases. The loan will be paid back over a 10-year period with a 2.00 percent interest rate. As of December 31, 2021, the balance outstanding was $375,000. -48- NOTE 4 – INTERFUND BALANCES AND TRANSFERS (CONTINUED) Interfund transfers during the year ended December 31, 2021 were as follows: Nonmajor Ice Arena General Governmental Enterprise Total Transfer Out General –$ 1,642,533$ (3)–$ 1,642,533$ Economic Development Authority 36,504 (1)– – 36,504 Nonmajor governmental – 2,041,664 (4)500,000 (5)2,541,664 Sewer Utility Enterprise 56,952 (2)– – 56,952 Water Utility Enterprise 59,388 (2)– – 59,388 Golf Course Enterprise 11,040 (2)– – 11,040 Ice Arena Enterprise 11,040 (2)– – 11,040 Storm Water Enterprise 24,828 (2)– – 24,828 Internal Service 250,920 (2)1,650,000 (6)– 1,900,920 Total 450,672$ 5,334,197$ 500,000$ 6,284,869$ (1)Transfer to reimburse the General Fund for the aerial lease payment to West Metro Fire-Rescue District. (2)Transfers to cover administrative charges paid for by the General Fund. (3) (4) (5) (6)Transfer from Internal Service Central Garage Fund to nonmajor governmental Public Works Facility CIP Fund for public works facility capital improvements. Transfers In Funds Transfers from General Fund to close out the nonmajor 2010B G.O. Equipment Bonds Fund and transfer excess fund balance to the nonmajor governmental Temporary Financing Fund. Transfers from nonmajor governmental City Hall CIP Fund and Temporary Financing Fund to nonmajor governmental Public Works Facility CIP Fund for public works facility capital improvements. Transfer from nonmajor governmental Park Infrastructure Capital Projects Fund to Ice Arena Enterprise Fund for debt service and capital improvements. -49- NOTE 5 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2021 was as follows: A.Changes in Capital Assets Used in Governmental Activities Beginning of Year Additions Deletions End of Year Capital assets, not depreciated Land 994,268$ –$ –$ 994,268$ Construction in progress 19,939,298 3,854,511 (67,581) 23,726,228 Total capital assets, not depreciated 20,933,566 3,854,511 (67,581) 24,720,496 Capital assets, depreciated Buildings and structures 25,408,669 – – 25,408,669 Vehicles and equipment 10,531,390 985,539 (133,781) 11,383,148 Improvements other than buildings 47,227,137 67,581 – 47,294,718 Total capital assets, depreciated 83,167,196 1,053,120 (133,781) 84,086,535 Less accumulated depreciation on Buildings and structures (5,273,368) (646,723) – (5,920,091) Vehicles and equipment (8,185,930) (512,764) 133,781 (8,564,913) Improvements other than buildings (17,307,554) (2,303,063) – (19,610,617) Total accumulated depreciation (30,766,852) (3,462,550) 133,781 (34,095,621) Net capital assets, depreciated 52,400,344 (2,409,430) – 49,990,914 Total capital assets, net 73,333,910$ 1,445,081$ (67,581)$ 74,711,410$ B.Changes in Capital Assets Used in Business-Type Activities Beginning of Year Additions Deletions End of Year Capital assets, not depreciated Land 485,042$ –$ –$ 485,042$ Construction in progress 1,370,824 1,246,572 (1,018,889) 1,598,507 Total capital assets, not depreciated 1,855,866 1,246,572 (1,018,889) 2,083,549 Capital assets, depreciated Buildings and structures 10,797,364 – – 10,797,364 Vehicles and equipment 2,505,156 560,736 – 3,065,892 Improvements other than buildings 28,522,699 469,501 – 28,992,200 Total capital assets, depreciated 41,825,219 1,030,237 – 42,855,456 Less accumulated depreciation on Buildings and structures (4,860,168) (212,182) – (5,072,350) Vehicles and equipment (2,137,662) (56,987) – (2,194,649) Improvements other than buildings (7,346,755) (719,873) – (8,066,628) Total accumulated depreciation (14,344,585) (989,042) – (15,333,627) Net capital assets, depreciated 27,480,634 41,195 – 27,521,829 Total capital assets, net 29,336,500$ 1,287,767$ (1,018,889)$ 29,605,378$ -50- NOTE 5 – CAPITAL ASSETS (CONTINUED) C.Depreciation Expense by Function Depreciation expense for the year ended December 31, 2021 was charged to the following functions: Governmental activities General government 479,517$ Public safety 65,305 Public works 2,006,106 Culture and recreation 339,808 Internal service 571,814 Total depreciation expense – governmental activities 3,462,550$ Business-type activities Sewer utility 186,968$ Water utility 297,161 Golf course 37,298 Ice arena 202,133 Storm water 245,996 Street lighting 19,486 Total depreciation expense – business-type activities 989,042$ -51- NOTE 6 – LONG-TERM LIABILITIES A.General Obligation (G.O.) Bonds The City issues G.O. bonds to provide funds for the acquisition and construction of major capital facilities. G.O. bonds have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. The following G.O. bonds will be repaid from future tax levies or abatements: Final Balance – Description Original Issue Interest Rate Issue Date Maturity Date End of Year G.O. Street Reconstruction Bonds, Series 2015B 3,825,000$ 2.25–3.00%12/30/2015 02/01/2031 2,740,000$ G.O. Street Reconstruction Bonds, Series 2016A 4,855,000$ 2.25–3.00%12/29/2016 02/01/2033 4,050,000 G.O. Street Reconstruction Bonds, Series 2017A 18,435,000$ 3.00–5.00%12/28/2017 02/01/2034 16,580,000 G.O. Street Reconstruction Bonds, Series 2018A 9,520,000$ 3.25–5.00%12/20/2018 02/01/2035 9,055,000 G.O. Street Reconstruction Bonds, Series 2019A 5,235,000$ 3.00–4.00%07/18/2019 02/01/2035 4,970,000 G.O. Tax Abatement Bonds, Series, 2021A 2,020,000$ 1.00%03/11/2021 12/01/2028 1,800,000 Total General Obligation Bonds 39,195,000$ The annual debt service to maturity for G.O. bonds are as follows: Year Ending December 31,Principal Interest Principal Interest Principal Interest 2022 2,038,688$ 1,221,372$ 476,312$ 99,847$ 2,515,000$ 1,321,219$ 2023 2,132,218 1,125,983 497,782 90,360 2,630,000 1,216,343 2024 2,233,460 1,028,748 516,540 80,496 2,750,000 1,109,244 2025 2,324,080 938,824 535,920 70,788 2,860,000 1,009,612 2026 2,407,610 842,662 552,390 61,231 2,960,000 903,893 2027–2031 13,552,456 2,736,499 1,842,544 160,607 15,395,000 2,897,106 2032–2035 9,758,713 553,677 326,287 9,851 10,085,000 563,528 34,447,225$ 8,447,765$ 4,747,775$ 573,180$ 39,195,000$ 9,020,945$ Governmental Activities Business-Type Activities Total The proceeds of the G.O. Tax Abatement Bonds, Series 2021A, along with available city resources, were used to call the outstanding principal of the City’s 2011A Taxable Lease Revenue Bonds totaling $3,505,000, in advance of their stated maturities on April 1, 2021. This current refunding reduced future debt service payments by $174,358, and resulted in a present value savings of $128,182. -52- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) B. G.O. Tax Increment Bonds The following bonds were issued for development purposes. The additional tax increment resulting from the increased tax capacity of the redeveloped properties has been pledged to retire the related debt. Tax increment revenues are projected to produce over 55 percent of the debt service requirements over the life of the bonds. For the current year, principal and interest paid and total related tax increment revenues were $863,677 and $760,734, respectively. Final Balance – Description Original Issue Interest Rate Issue Date Maturity Date End of Year G.O. Tax Increment Refunding Bonds, Series, 2012A 2,695,000$ 2.00–2.45%01/11/2012 02/01/2025 1,055,000$ G.O. Tax Increment Refunding Bonds, Series, 2012B 1,330,000$ 1.35–4.65%01/11/2012 02/01/2031 940,000 G.O. Tax Increment Refunding Bonds, Series, 2015A 5,960,000$ 2.00–3.00%06/17/2015 02/01/2032 4,550,000 Total G.O. Tax Increment Bonds 6,545,000$ The annual debt service to maturity for G.O. bonds are as follows: Year Ending December 31,Principal Interest Principal Interest Principal Interest 2022 602,837$ 139,876$ 97,163$ 29,302$ 700,000$ 169,178$ 2023 621,558 126,424 98,442 27,346 720,000 153,770 2024 638,933 111,914 101,067 25,351 740,000 137,265 2025 657,620 96,307 102,380 23,291 760,000 119,598 2026 389,995 82,645 105,005 20,929 495,000 103,574 2027–2031 2,092,974 225,891 567,026 60,552 2,660,000 286,443 2032 346,253 5,199 123,747 1,851 470,000 7,050 5,350,170$ 788,256$ 1,194,830$ 188,622$ 6,545,000$ 976,878$ Business-Type ActivitiesGovernmental Activities Total -53- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) C.G.O. Revenue Bonds and Notes The following bonds and notes were issued to finance capital improvements in the enterprise funds. They will be repaid from future revenues pledged from the Sewer Utility, Water Utility, and Storm Water Funds and are backed by the taxing power of the City. Annual principal and interest payments on the bonds are expected to require less than 3, 6, and 12 percent of revenues from the Sewer Utility, Water Utility, and Storm Water Funds, respectively. Principal and interest paid for the current year and total c ustomer revenues for the Sewer Utility Fund were $78,165 and $3,906,809, respectively. Principal and interest paid for the current year and total customer revenues for the Water Utility Fund were $399,182 and $5,545,731, respectively. Principal and interest paid for the current year and total customer revenues for the Storm Water Fund were $194,573 and $1,321,518, respectively. Final Balance – Description Original Issue Interest Rate Issue Date Maturity Date End of Year 2010B G.O. Water Revenue Refunding Bonds 605,000$ 2.00–3.00%11/23/2010 02/01/2022 65,000$ 2011 G.O. Public Facilities Authority Note 411,738$ 1.70%02/23/2011 08/20/2029 189,000 2013 G.O. Public Facilities Authority Note 1,035,000$ 1.00%07/24/2013 08/20/2032 634,000 Total G.O. Revenue Bonds and Notes 888,000$ The annual debt service to maturity for G.O. revenue bonds are as follows: Year Ending December 31,Principal Interest 2022 142,000$ 10,534$ 2023 78,000 8,634 2024 79,000 7,692 2025 79,000 6,741 2026 81,000 5,789 2027–2031 368,000 14,457 2032 61,000 610 888,000$ 54,457$ Business-Type Activities D.Leases Payable In 2021, the City entered lease agreements to purchase three police vehicles capitalized at a total value of $114,728. Accumulated depreciation on the vehicles was $3,315 at year-end. The leases are secured by the vehicles, bear interest rates ranging from 1.36 to 1.92 percent, and require 48 monthly payments with a final maturity date of December 27, 2025. Minimum future lease payments are as follows: 29,136$ 29,136 29,136 25,957 113,365 (991) 112,374$ Year Ending December 31, Amount representing interest Lease principal 2022 2023 2024 2025 Total payments -54- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) E.Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2021, was as follows: Beginning Due Within of Year Additions Deletions End of Year One Year Governmental activities Bonds payable G.O. bonds 36,411,960$ –$ 1,964,735$ 34,447,225$ 2,038,688$ G.O. tax increment bonds 5,934,320 – 584,150 5,350,170 602,837 Add – premiums on bonds 2,589,786 – 165,797 2,423,989 – Total bonds payable, net 44,936,066 – 2,714,682 42,221,384 2,641,525 Leases payable – 114,728 2,352 112,376 28,682 Compensated absences 843,456 821,295 789,662 875,089 87,509 Total governmental activities 45,779,522 936,023 3,506,696 43,208,849 2,757,716 Business-type activities Bonds payable G.O. bonds 3,168,040 2,020,000 440,265 4,747,775 476,312 G.O. tax increment bonds 1,290,680 – 95,850 1,194,830 97,163 Lease revenue bonds 3,505,000 – 3,505,000 – – G.O. revenue bonds and notes 1,109,000 – 221,000 888,000 142,000 Add – premiums on bonds 136,492 44,747 13,512 167,727 – Total business-type activities 9,209,212 2,064,747 4,275,627 6,998,332 715,475 Total government-wide 54,988,734$ 3,000,770$ 7,782,323$ 50,207,181$ 3,473,191$ Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for internal service funds are included as part of the above totals for governmental activities. -55- NOTE 7 – COMPONENTS OF FUND BALANCE At December 31, 2021, the City had the following fund balances: Economic Development HRA Street General Authority Construction Infrastructure Nonspendable 49,680$ –$ –$ –$ Restricted Economic development – – 5,955,136 – Capital improvements – – – – Debt service – – – – Public safety – police expenditures – – – – Ice arena – – – – Total restricted – – 5,955,136 – Committed Economic development –4,212,479 – – Solid waste operations ––– – Total committed –4,212,479 – – Assigned City Hall improvements – – – – Public works facility improvements – – – – Street improvements – – – 1,156,367 General improvements – – – – Capital equipment – – – – Park improvements – – – – Total assigned – – – 1,156,367 Unassigned 8,624,063 – – – Total 8,673,743$ 4,212,479$ 5,955,136$ 1,156,367$ Other Governmental HRA Bonds Funds Total Nonspendable –$ –$ 49,680$ Restricted Economic development – – 5,955,136 Capital improvements –590,388 590,388 Debt service –3,093,625 3,093,625 Public safety – police expenditures –134,455 134,455 Ice arena –5,460 5,460 Total restricted –3,823,928 9,779,064 Committed Economic development –85,051 4,297,530 Solid waste operations –223,442 223,442 Total committed –308,493 4,520,972 Assigned City Hall improvements –595,273 595,273 Public works facility improvements –1,740,002 1,740,002 Street improvements ––1,156,367 General improvements –3,237,914 3,237,914 Capital equipment –817,044 817,044 Park improvements –1,512,440 1,512,440 Total assigned –7,902,673 9,059,040 Unassigned (1,978,033) – 6,646,030 Total (1,978,033)$ 12,035,094$ 30,054,786$ -56- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE A.Plan Descriptions The City participates in the following cost-sharing, multiple-employer defined benefit pension plans administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code (IRC). 1.General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the GERF. The GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2.Public Employees Police and Fire Fund (PEPFF) The Public Employees Police and Fire Fund (PEPFF), originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police off icers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to the PERA. B.Benefits Provided The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statutes and can only be modified by the State Legislature. Vested, terminated employees who are entitled to benefits, but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. 1.GERF Benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan members is 1.2 percent for each of the first 10 years of service, and 1.7 percent for each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7 percent for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90, and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at age 66. -57- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Benefit increases are provided to benefit recipients each January. The post-retirement increase is equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security Administration, with a minimum increase of at least 1.0 percen t and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least one month, but less than a full year as of the June 30 before the effective date of the increase, will receive a reduced prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 2.PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a prorated basis from 50.0 percent after five years, up to 100.0 percent after 10 years of credited service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis from 50.0 percent after 10 years, up to 100.0 percent after 20 years of credited service. The annuity accrual rate is 3.0 percent of average salary for each year of service. For Police and Fire Plan members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The post-retirement increase is fixed at 1.0 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months, but less than 36 months as of the June 30 before the effective date of the increase, will receive a reduced prorated increase. C.Contributions Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature. 1.GERF Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2021, and the City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2021, were $352,307. The City’s contributions were equal to the required contributions as set by state statutes. 2.PEPFF Contributions Police and Fire Plan members were required to contribute 11.80 percent of their annual covered salary in fiscal year 2021, and the City was required to contribute 17.70 percent for Police and Fire Plan members. The City’s contributions to the PEPFF for the year ended December 31, 2021, were $552,048. The City’s contributions were equal to the required contributions as set by state statutes. -58- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) D.Pension Costs 1.GERF Pension Costs At December 31, 2021, the City reported a liability of $2,754,439 for its proportionate share of the GERF’s net pension liability. The City’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer contributing entity and the state’s contribution meets the definition of a special funding situation. The state of Minnesota’s proportionate share of the net pension liability associated with the City totaled $84,153. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2020 through June 30, 2021, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.0645 percent at the end of the measurement period and 0.0626 percent for the beginning of the period. The amount recognized by the City as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 2,754,439$ State’s proportionate share of the net pension liability associated with the City 84,153$ For the year ended December 31, 2021, the City recognized pension expense of $117,043 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $6,790 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16.0 million to the GERF. At December 31, 2021, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual economic experience 15,978$ 84,006$ Changes in actuarial assumptions 1,681,803 58,624 Net collective difference between projected and actual investment earnings – 2,389,032 Changes in proportion 146,299 – Contributions paid to the PERA subsequent to the measurement date 176,067 – Total 2,020,147$ 2,531,662$ -59- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) A total of $176,067 reported as deferred outflows of resources related to pensions resulting from city contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2022. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2022 (49,509)$ 2023 8,296$ 2024 4,271$ 2025 (650,640)$ 2.PEPFF Pension Costs At December 31, 2021, the City reported a liability of $1,968,330 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2020 through June 30, 2021, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.2550 percent at the end of the measurement period and 0.2899 percent for the beginning of the period. The state of Minnesota contributed $18.0 million to the PEPFF in the plan fiscal year ended June 30, 2021. The contribution consisted of $9.0 million in direct state aid that does meet the definition of a special funding situation and $9.0 million in supplemental state aid that does not meet the definition of a special funding situation. The $9.0 million direct state aid was paid on October 1, 2020. Thereafter, by October 1 of each year, the state will pay $9.0 million to the PEPFF until full funding is reached or July 1, 2048, whichever is earlier. The $9.0 million in supplemental state aid will continue until the fund is 90.0 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90.0 percent funded, whichever occurs later. Strong asset returns for the fiscal year ended 2021 will accelerate the phasing out of these state contributions, although we do not anticipate them to be phased out during the fiscal year ending 2022. The state of Minnesota is included as a nonemployer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9.0 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the state of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2021, the City recognized negative pension expense of $236,511 for its proportionate share of the Police and Fire Plan’s pension expense. The City recognized $16,118 as grant revenue for its proportionate share of the state of Minnesota’s pension expense for the contribution of $9.0 million to the PEPFF. -60- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The amount recognized by the City as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 1,968,330$ State’s proportionate share of the net pension liability associated with the City 88,503$ The state of Minnesota is not included as a nonemployer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9.0 million in supplemental state aid. The City recognized $22,950 for the year ended December 31, 2021 as revenue and an offsetting reduction of net pension liability for its proportionate share of the state of Minnesota ’s on-behalf contributions to the PEPFF. At December 31, 2021, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual economic experience 392,574$ –$ Changes in actuarial assumptions 2,892,930 1,200,170 Net collective difference between projected and actual investment earnings – 3,713,471 Changes in proportion 96,688 543,911 Contributions paid to the PERA subsequent to the measurement date 279,824 – Total 3,662,016$ 5,457,552$ A total of $279,824 reported as deferred outflows of resources related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2022. Other amounts rep orted as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2022 $ (1,561,135) 2023 $ (284,876) 2024 $ (300,607) 2025 $ (485,391) 2026 $ 556,649 -61- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) E.Long-Term Expected Return on Investments The Minnesota State Board of Investment, which manages the investments of the PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best-estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic equity 33.50 %5.10 % International equity 16.50 5.30 % Fixed income 25.00 0.75 % Private markets 25.00 5.90 % Total 100.00 % Allocation Target Real Rate of Return Long-Term Expected F.Actuarial Assumptions The total pension liability in the June 30, 2021, actuarial valuation was determined using an individual entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.50 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.50 percent was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan. The Police and Fire Plan benefit increase is fixed at 1.00 percent per year and that increase was used in the valuation. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.00 percent after 29 years of service, and 6.00 percent per year thereafter. In the Police and Fire Plan, salary growth assumptions range from 11.75 percent after one year of service to 3.00 percent after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit the PERA’s experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2019. The assumption changes were adopted by the Board and became effective with the July 1, 2020 actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was completed in 2020, adopted by the Board, and became effective with the July 1, 2021 actuarial valuation. -62- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The following changes in actuarial assumptions occurred in 2021: 1.GERF CHANGES IN ACTUARIAL ASSUMPTIONS •The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. •The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2.PEPFF CHANGES IN ACTUARIAL ASSUMPTIONS •The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. •The inflation assumption was changed from 2.50 percent to 2.25 percent. •The payroll growth assumption was changed from 3.25 percent to 3.00 percent. •The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety Mortality table. The mortality improvement scale was changed from MP-2019 to MP-2020. •The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to Scale MP -2019) to the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to Scale MP-2020). •Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall impact is a decrease in gross salary increase rates. •Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. •Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes result in more assumed terminations. •Assumed rates of disability were increased for ages 25–44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. •Assumed percent married for active female members was changed from 60.00 percent to 70.00 percent. Minor changes to form of payment assumptions were applied. G.Discount Rate The discount rate used to measure the total pension liability in 2021 was 6.50 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net positions of the GERF and the PEPFF were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. -63- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) H.Pension Liability Sensitivity The following table presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: City’s proportionate share of the GERF net pension liability City’s proportionate share of the PEPFF net pension liability 5.50%6.50%7.50% 405,000$ 6,249,114$ (1,540,853)$ 5,617,649$ 1,968,330$ 2,754,439$ 1% Decrease in Discount Rate 1% Increase in Discount RateDiscount Rate I.Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the internet at www.mnpera.org. J.PERA Defined Benefit Pension Plan Totals Total net pension liabilities, deferred outflows and inflows of resources, and pension expense reported for PERA defined benefit pension plans as of and for the fiscal year ended December 31, 2021, are as follows: Deferred Deferred Net Pension Outflows of Inflows of Pension PERA Pension Plan Liability Resources Resources Expense GERF 2,754,439$ 2,020,147$ 2,531,662$ 123,833$ PEPFF 1,968,330 3,662,016 5,457,552 (220,393) Total – all plans 4,722,769$ 5,682,163$ 7,989,214$ (96,560)$ -64- NOTE 9 – DEFINED CONTRIBUTION PENSION PLAN Councilmembers of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by the PERA. The PEDCP is a tax qualified plan under Section 401(a) of the IRC, and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5.00 percent of their salary, which is matched by the elected official’s employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employees, contributions must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, the PERA receives 2.00 percent of employer contributions and 25 hundredths of 1.00 percent (0.25 percent) of the assets in each member’s account annually. Total contributions made by the City during fiscal year 2021 were: Required Rate for Employees Employee Employer Employee Employer and Employers 2,744$ 2,744$ 5.00%5.00%5.00% Contribution Amount Percentage of Covered Payroll NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A.Plan Description The City administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides healthcare insurance for eligible retirees and their eligible dependents through the City’s group health insurance plan, which covers both active and retired members. Benefit provisions are discussed and proposed by an insurance committee made up of employees from all employee groups (both represented and nonunion), with the final approval of the plan being given by the city manager. The benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City. The Retiree Health Plan does not issue a publicly available financial report. At December 31, 2020, the following employees were covered by the benefit terms: Retirees and beneficiaries receiving benefits 3 Active plan members 91 Total members 94 -65- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) B.Funding Policy All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees. Consequently, participating retirees are considered to receive a secondary benefit know as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. Contribution requirements are set by the City annually on a pay-as-you-go basis. The City contributes none of the cost of current year premiums for eligible retired plan members and their dependents, except for the implicit rate subsidy described above. For fiscal year 2021, the City’s contributed $27,550 to the Retiree Health Plan. C.Actuarial Methods and Assumptions The City’s total OPEB liability of $903,535 was measured as of December 31, 2021, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of December 31, 2020, using the entry-age normal cost method. Liability gains or losses and plan changes are recognized immediately in accordance with GASB Statement No. 75 alternative measurement method requirements. The total OPEB liability in the December 31, 2020 valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount rate 2.06% Expected long-term investment return 2.06% 20-year municipal bond yield 2.06% Inflation rate 2.50% Healthcare cost trend rate 6.50% in 2021, grading to 3.90% Withdrawal, mortality, and salary scale assumptions were based on those used to value pension liabilities for Minnesota city employees participating in the PERA GERF and PEPFF plans. The PERA pension plans base their assumptions on periodic experience studies as detailed earlier in these notes. Economic assumptions are based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information , as well as for consistency with the other economic assumptions. Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond yield rate of 2.06 percent, which was set by considering published rate information for 20-year high quality, tax-exempt, general obligation municipal bonds as of the measurement date. The discount rate used in the prior measurement date was 2.12 percent. Future retirees electing coverage is assumed to be 55 percent when a pre-age 65 subsidy is available, and 100 percent of all disabled in the line of duty members are assumed to elect coverage at retirement. Actual spouse elections are used for current and future retirees. All retirees are assumed to become Medicare eligible at age 65. -66- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) The following actuarial assumptions changed since the previous valuation: •The discount rate was changed from 2.12 percent to 2.06 percent. •Healthcare cost trend rates and per capita medical claims were updated based on published trend models and recent experience to better reflect future anticipated experience. •Withdrawal, mortality, and salary scale assumptions were updated to those used in the most recently published PERA GERF and PEPFF valuations. D.Changes in the Total OPEB Liability Total OPEB Liability Beginning balance – January 1, 2021 1,298,682$ Changes for the year Service cost 102,913 Interest 29,424 Difference between expected and actual experience (479,230) Changes of assumptions (20,704) Benefit payments (27,550) Total net changes (395,147) Ending balance – December 31, 2021 903,535$ E.Sensitivity of the Total OPEB Liability The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount rate: Discount rate Total OPEB liability 982,313$ 831,201$ 1.06% 3.06% 1% Decrease in 1% Increase in Discount Rate Discount RateDiscount Rate 903,535$ 2.06% The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rate: Healthcare cost trend rate Total OPEB liability 7.50%, decreasing to 4.90% 796,939$ 1,029,868$ 903,535$ 1% Decrease in 1% Increase in Trend Rate Trend Rate Healthcare Cost Trend Rate Healthcare Cost Healthcare Cost 5.50%, decreasing to 2.90% 6.50%, decreasing to 3.90% -67- NOTE 11 – JOINT POWERS AGREEMENT AND JOINTLY CONTROLLED ORGANIZATION A.Joint Water Commission (JWC) The City is a member of a joint powers agreement, together with the cities of Crystal and New Hope, which established a JWC. The JWC was created in 1963 to provide for the creation and maintenance of a joint water supply, storage, and distribution system through which water purchased from the City of Minneapolis can be supplied to the population of the member cities. Each member city is entitled to appoint one member to the JWC. Original construction costs were allocated to the member cities based on percentages agreed upon in the joint powers agreement. All subsequent operating and maintenance costs are apportioned to and paid by each member city on the basis of water usage. Under the terms of the joint powers agreement, upon termination the accumulated assets of the JWC shall be divided amongst the member cities in a manner to be determined and unanimously approved by the member cities. Over the years, the costs of construction have been allocated among the member cities, generally on the basis of water purchased. These costs were expensed as incurred by the City in the cost of water purchased. The asset recorded in the Water Fund as an investment in the JWC for $168,509 represents the original contributions for working capital; however, the City’s share of subsequent construction costs are not determinable. Therefore, the City’s Water Fund has not recorded any subsequent amounts as an equity investment or contributed capital related to the JWC. The following financial information is from the JWC’s audited financial statements for the year ended December 31, 2020, the most recent information available at the date of this report, which are available at Golden Valley City Hall: Total assets 20,370,791$ Total liabilities 940,445$ Net position 19,430,346$ Total revenue 9,851,904$ Total expenses 8,851,973$ Of the total revenues, $8,987,718 represented assessments paid by member cities. Of the total member assessments, $3,090,099, or 34.38 percent, was paid by the City. B.West Metro Fire-Rescue District By a resolution dated August 25, 1997, the City Council approved entering into an agreement by which a joint powers fire department would be established by merging the fire departments of New Hope and Crystal. A joint and cooperative agreement created the joint powers fire department effective January 2, 1998, and operation began in July 1998, under the name West Metro Fire-Rescue District (the District). The District is governed by a seven-member Board of Directors that includes one City Council member from each city. As required by the agreement, the City transferred fire department equipment to the District, while retaining its rights to these assets in the event of the District’s dissolution. The equipment had a net book value of $374,558. The following financial information is taken from the District’s audited financial statements for the year ended December 31, 2021: Total assets 6,596,515$ Total deferred outflows of resources 933,833$ Total liabilities 4,334,321$ Total deferred inflows of resources 1,268,747$ Net position 1,927,280$ Total revenue 3,559,285$ Total expenses 2,894,852$ -68- NOTE 11 – JOINT POWERS AGREEMENT AND JOINTLY CONTROLLED ORGANIZATION (CONTINUED) The City’s equity interest and its share of the net income (loss) of the District are added to the value of the “Investment in Joint Venture” in the government-wide financial statement under governmental activities. As of December 31, 2021, the amount reported as investment in joint venture was $974,626. According to a formula in the agreement, the City’s share of the District’s budget is 50.6 percent for 2021, and city payments to the District totaled $1,352,363. The District’s financial statements are available at the District office located at: 4251 Xylon Avenue North, New Hope, Minnesota 55428. C.Shingle Creek Watershed Management Commission (SCWMC) The City is one of nine member cities of the SCWMC, a joint powers organization formed to assist its members’ preservation and use of natural water storage and retention systems. The City ’s contribution to the SCWMC for its fiscal year ended December 31, 2021 was $29,533, representing 8.0 percent of members’ contributions for the year. D.Pets Under Police Security (PUPS) The City has entered into a joint and cooperative agreement with five other cities to create an organization, which provides efficient and economical impoundment of animals in a jointly owned and operated facility. The City incurred charges of $13,463 for these services in 2021. E.Hennepin Recycling Group (HRG) The City is party to a joint powers agreement with two other cities to create an organization to collect, recycle, and dispose of solid waste in compliance with the Minnesota Waste Management Act. HRG contracts for collection and recycling activities and the City is billed for services provided to its re sidents. In 2021, total charges of $230,614 were incurred for these services. F.Bassett Creek Watershed Management Commission (BCWMC) The City is one of nine member cities of the BCWMC, a joint powers organization formed to assist its members’ preservation and use of natural water storage and retention systems. Each member city is entitled to appoint one representative to the BCWMC Board. The nine-member Board develops a budget for the year each July 1. Each member city contributes funds to cover the budgeted costs of operations based half on the assessed valuation of all taxable property, and half on the total area each member city has within the boundaries of the watershed. Any capital costs incurred by the BCWMC are apportioned to the members based half on the real property valuation of each member city within the watershed, and half on the total area each member city has within the boundaries of the watershed. The City’s 2020 contribution to the BCWMC for its fiscal year ended January 31, 2021 was $28,987, representing 5.3 percent of member’s contributions for the year. -69- NOTE 12 – COMMITMENTS AND CONTINGENCIES A.Legal Claims The City generally follows the practice of recording liabilities resulting from claims and legal actions only when they become fixed or determinable in amount. Management does not anticipate any significant losses that would not be covered by insurance. B.Federal and State Receivables Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. C.Tax Increment Districts The City’s tax increment districts are subject to review by the Office of the State Auditor. Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that it is not aware of any instances of noncompliance, which would have a material effect on the financial statements. D.Construction Commitments At December 31, 2021, the City is committed to various construction contracts for the improvement of city property. The City’s remaining commitment under these contracts is approximately $1,352,000 at year-end. E.Conduit Debt Obligations At times, the City has issued industrial revenue bonds to provide financial assistance to private sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance. The City is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2021, there were five series of industrial revenue bonds outstanding. The original issue amounts totaled $12,910,000 and have been reduced through annual payments and partial call prepayments. The outstanding balance as of December 31, 2021 is undetermined. NOTE 13 – SUBSEQUENT EVENTS A.New Accounting Standards A new standard has been issued by the GASB that will result in significant changes in the reporting of lease transactions once it becomes effective for governmental entities. This standard will be adopted by the City beginning in 2022, and will require the restatement of certain balances reported as of December 31, 2021. The effects of this change have not yet been determined and are not reflected in these financial statements. B.COVID-19 The COVID-19 pandemic has had significant financial and operational impacts on the City for the last two fiscal years. Any potential impact it may have on the City’s future operations and finances cannot be determined at this time and has not been reflected in these financial statements. REQUIRED SUPPLEMENTARY INFORMATION CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 Proportionate Share of the City’s Net Pension Proportionate Liability and City’s Share of the the City’s Proportionate Plan Fiduciary State of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as a PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total (Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension Date)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.0617% 3,197,614$ –$ 3,197,614$ 3,627,658$ 88.15% 78.20% 06/30/2016 0.0608% 4,936,658$ 64,481$ 5,001,139$ 3,643,308$ 135.50% 68.90% 06/30/2017 0.0588% 3,753,753$ 47,225$ 3,800,978$ 3,931,388$ 95.48% 75.90% 06/30/2018 0.0599% 3,323,006$ 109,063$ 3,432,069$ 3,998,415$ 83.11% 79.50% 06/30/2019 0.0609% 3,367,025$ 104,662$ 3,471,687$ 4,282,511$ 78.62% 80.20% 06/30/2020 0.0626% 3,753,156$ 115,680$ 3,868,836$ 4,463,850$ 84.08% 79.10% 06/30/2021 0.0645% 2,754,439$ 84,153$ 2,838,592$ 4,646,514$ 59.28% 87.00% Contributions Contributions in Relation to as a Statutorily the Statutorily Contribution Percentage Required Required Deficiency Covered of Covered Contributions Contributions (Excess)Payroll Payroll 284,367$ 284,367$ –$ 3,791,560$ 7.50% 280,102$ 280,102$ –$ 3,734,693$ 7.50% 286,170$ 286,170$ –$ 3,815,600$ 7.50% 310,638$ 310,638$ –$ 4,141,835$ 7.50% 328,429$ 328,429$ –$ 4,379,059$ 7.50% 344,227$ 344,227$ –$ 4,589,689$ 7.50% 352,307$ 352,307$ –$ 4,697,399$ 7.50% Note: City Fiscal 12/31/2018 12/31/2016 12/31/2017 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30, 2015 measurement date). This schedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2018 12/31/2020 12/31/2020 12/31/2019 12/31/2019 Year-End Date 12/31/2015 12/31/2021 12/31/2021 CITY OF NEW HOPE PERA – General Employees Retirement Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability Year Ended December 31, 2021 Year Ended December 31, 2021 PERA – General Employees Retirement Fund Schedule of City Contributions City Fiscal Year-End Date 12/31/2015 12/31/2016 12/31/2017 -70- Proportionate Share of the City’s Net Pension Proportionate Liability and City’s Share of the the City’s Proportionate Plan Fiduciary State of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as a PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total (Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension Date)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.2820% 3,204,180$ –$ 3,204,180$ 2,579,768$ 124.20% 86.60% 06/30/2016 0.2940% 11,798,732$ –$ 11,798,732$ 2,732,301$ 431.82% 63.90% 06/30/2017 0.2820% 3,807,336$ –$ 3,807,336$ 2,992,514$ 127.23% 85.40% 06/30/2018 0.2888% 3,078,311$ –$ 3,078,311$ 3,043,700$ 101.14% 88.80% 06/30/2019 0.3012% 3,206,578$ –$ 3,206,578$ 3,176,028$ 100.96% 89.30% 06/30/2020 0.2899% 3,821,192$ 90,012$ 3,911,204$ 3,271,692$ 116.80% 87.20% 06/30/2021 0.2550% 1,968,330$ 88,503$ 2,056,833$ 3,014,250$ 65.30% 93.70% Contributions Contributions in Relation to as a Statutorily the Statutorily Contribution Percentage Required Required Deficiency Covered of Covered Contributions Contributions (Excess)Payroll Payroll 448,029$ 448,029$ –$ 2,765,611$ 16.20% 444,511$ 444,511$ –$ 2,743,893$ 16.20% 489,202$ 489,202$ –$ 3,019,768$ 16.20% 502,203$ 502,203$ –$ 3,100,017$ 16.20% 550,665$ 550,665$ –$ 3,248,759$ 16.95% 550,681$ 550,681$ –$ 3,111,189$ 17.70% 552,048$ 552,048$ –$ 3,118,916$ 17.70% Note: 12/31/2021 12/31/2020 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30, 2015 measurement date). This schedule is intended to present 10-year trend information. Additional years will be added as they become available. City Fiscal Year-End Date 12/31/2015 12/31/2016 12/31/2017 City Fiscal Year-End Date 12/31/2015 12/31/2016 Year Ended December 31, 2021 Schedule of City Contributions PERA – Public Employees Police and Fire Fund 12/31/2017 12/31/2019 12/31/2018 12/31/2018 12/31/2019 12/31/2020 CITY OF NEW HOPE PERA – Public Employees Police and Fire Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability Year Ended December 31, 2021 12/31/2021 -71- 2018 2019 2020 2021 Total OPEB liability Service cost 64,269$ 72,745$ 89,655$ 102,913$ Interest 31,335 38,452 33,026 29,424 Differences between expected and actual experience – 81,871 27 (479,230) Changes in assumptions (53,393) 74,709 71,306 (20,704) Benefit payments (25,947) (16,942) (22,038) (27,550) Net change in total OPEB liability 16,264 250,835 171,976 (395,147) Total OPEB liability – beginning of year 859,607 875,871 1,126,706 1,298,682 Total OPEB liability – end of year 875,871$ 1,126,706$ 1,298,682$ 903,535$ Covered payroll 6,400,000$ 7,100,000$ 7,400,000$ 9,400,000$ Total OPEB liability as a percentage of covered payroll 13.69%15.87%17.55%9.61% Note 1: Note 2: CITY OF NEW HOPE The City implemented GASB Statement No. 75 in fiscal 2018. This schedule is intended to present 10-year trend information. Additional years will be added as they become available. Fiscal Year Ended December 31, Year Ended December 31, 2021 OPEB Liability and Related Ratios Schedule of Changes in the City’s Total Other Post-Employment Benefits Plan There are no plan assets accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 to pay these benefits. -72- CITY OF NEW HOPE Notes to Required Supplementary Information December 31, 2021 -73- PERA – GENERAL EMPLOYEES RETIREMENT FUND 2021 CHANGES IN ACTUARIAL ASSUMPTIONS •The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. •The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS •The price inflation assumption was decreased from 2.50 percent to 2.25 percent. •The payroll growth assumption was decreased from 3.25 percent to 3.00 percent. •Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25 percent less than previous rates. •Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. •Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years two through five, and slightly higher thereafter. •Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. •The base mortality table for healthy annuitants and employees was changed from the RP-2014 Table to the Pub-2010 General Mortality Table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-2014 Disabled Annuitant Mortality Table to the Pub-2010 General/Teacher Disabled Annuitant Mortality Table, with adjustments. •The mortality improvement scale was changed from MP-2018 to MP-2019. •The assumed spouse age difference was changed from two years older for females to one year older. •The assumed number of married male new retirees electing the 100.00 percent joint and survivor option changed from 35.00 percent to 45.00 percent. The assumed number of married female new retirees electing the 100.00 percent joint and survivor option changed from 15.00 percent to 30.00 percent. The corresponding number of married new retirees electing the life annuity option was adjusted accordingly. 2020 CHANGES IN PLAN PROVISIONS •Augmentation for current privatized members was reduced to 2.00 percent for the period July 1, 2020 through December 31, 2023, and zero percent thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020. CITY OF NEW HOPE Notes to Required Supplementary Information (continued) December 31, 2021 -74- PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED) 2019 CHANGES IN ACTUARIAL ASSUMPTIONS •The mortality projection scale was changed from MP-2017 to MP-2018. 2019 CHANGES IN PLAN PROVISIONS •The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 CHANGES IN ACTUARIAL ASSUMPTIONS •The mortality projection scale was changed from MP-2015 to MP-2017. •The assumed benefit increase was changed from 1.00 percent per year through 2044, and 2.50 percent per year thereafter, to 1.25 percent per year. 2018 CHANGES IN PLAN PROVISIONS •The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. •Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. •Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. •Contribution stabilizer provisions were repealed. •Post-retirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. •For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. •Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. CITY OF NEW HOPE Notes to Required Supplementary Information (continued) December 31, 2021 -75- PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED) 2017 CHANGES IN ACTUARIAL ASSUMPTIONS •The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent for vested and nonvested deferred members. The revised CSA loads are now zero percent for active member liability, 15.00 percent for vested deferred member liability, and 3.00 percent for nonvested deferred member liability. •The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter. 2017 CHANGES IN PLAN PROVISIONS •The state’s contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018, and $6.0 million thereafter. •The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21.0 million to $31.0 million in calendar years 2019 to 2031. The state’s contribution changed from $16.0 million to $6.0 million in calendar years 2019 to 2031. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS •The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2035, and 2.50 percent per year thereafter, to 1.00 percent per year for all years. •The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 7.50 percent. •Other assumptions were changed pursuant to the experience study June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS •The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2035, and 2.50 percent per year thereafter. 2015 CHANGES IN PLAN PROVISIONS •On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892.0 million. Upon consolidation, state and employer contributions were revised; the state’s contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. CITY OF NEW HOPE Notes to Required Supplementary Information (continued) December 31, 2021 -76- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND 2021 CHANGES IN ACTUARIAL ASSUMPTIONS •The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. •The inflation assumption was changed from 2.50 percent to 2.25 percent. •The payroll growth assumption was changed from 3.25 percent to 3.00 percent. •The base mortality table for healthy annuitants and employees was changed from the RP-2014 Table to the Pub-2010 Public Safety Mortality Table. The mortality improvement scale was changed from MP-2019 to MP-2020. •The base mortality table for disabled annuitants was changed from the RP-2014 Healthy Annuitant Mortality Table (with future mortality improvement according to Scale MP-2019) to the Pub-2010 Public Safety Disabled Annuitant Mortality Table (with future mortality improvement according to Scale MP-2020). •Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall impact is a decrease in gross salary increase rates. •Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. •Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes result in more assumed terminations. •Assumed rates of disability were increased for ages 25–44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. •Assumed percent married for active female members was changed from 60 percent to 70 percent. Minor changes to form of payment assumptions were applied. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS •The mortality projection scale was changed from MP-2018 to MP-2019. 2019 CHANGES IN ACTUARIAL ASSUMPTIONS •The mortality projection scale was changed from MP-2017 to MP-2018. CITY OF NEW HOPE Notes to Required Supplementary Information (continued) December 31, 2021 -77- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2018 CHANGES IN ACTUARIAL ASSUMPTIONS •The mortality projection scale was changed from MP-2016 to MP-2017. 2018 CHANGES IN PLAN PROVISIONS •Post-retirement benefit increases were changed to 1.00 percent for all years, with no trigger. •An end date of July 1, 2048 was added to the existing $9.0 million state contribution. •New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter, until the plan reaches 100.00 percent funding, or July 1, 2048, if earlier. •Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019, and 11.80 percent of pay, effective January 1, 2020. •Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019, and 17.70 percent of pay, effective January 1, 2020. •Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. •Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. •Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS •Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. •Assumed rates of retirement were changed, resulting in fewer retirements. •The CSA load was 30.00 percent for vested and nonvested deferred members. The CSA has been changed to 33.00 percent for vested members, and 2.00 percent for nonvested members. •The base mortality table for healthy annuitants was changed from the RP-2000 Fully Generational Table to the RP-2014 Fully Generational Table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 Disabled Mortality Table to the mortality tables assumed for healthy retirees. •Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. •Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. •Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. •The assumed percentage of female members electing joint and survivor annuities was increased. •The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years, to 1.00 percent per year through 2064, and 2.50 percent thereafter. •The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum. CITY OF NEW HOPE Notes to Required Supplementary Information (continued) December 31, 2021 -78- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2016 CHANGES IN ACTUARIAL ASSUMPTIONS •The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2037, and 2.50 percent per year thereafter, to 1.00 percent per year for all future years. •The assumed investment return was changed from 7.90 percent to 7.50 percent. •The single discount rate changed from 7.90 percent to 5.60 percent. •The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS •The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2037, and 2.50 percent per year thereafter. 2015 CHANGES IN PLAN PROVISIONS •The post-retirement benefit increase to be paid after attainment of the 90.00 percent funding threshold was changed from inflation up to 2.50 percent, to a fixed rate of 2.50 percent. OTHER POST-EMPLOYMENT BENEFITS PLAN 2021 CHANGES IN ACTUARIAL ASSUMPTIONS •The discount rate was changed from 2.12 percent to 2.06 percent. •Healthcare cost trend rates and per capita medical claims were updated based on published trend models and recent experience to better reflect future anticipated experience. •Withdrawal, mortality, and salary scale assumptions were updated to those used in the most recently published PERA, GERF, and PEPFF valuations. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS •The discount rate was changed from 2.74 percent to 2.12 percent. •The payroll growth rate was changed from 3.50 percent to 3.25 percent. 2019 CHANGES IN ACTUARIAL ASSUMPTIONS •The discount rate was changed from 4.09 percent to 2.74 percent. 2018 CHANGES IN ACTUARIAL ASSUMPTIONS •The discount rate was changed from 3.44 percent to 4.09 percent. SUPPLEMENTAL INFORMATION CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK NONMAJOR SPECIAL REVENUE FUNDS Police Forfeitures Fund – This fund accounts for revenue received mainly from police fines and forfeitures, and is used for special police, fire, and parks/recreation projects. Solid Waste Management Fund – This fund accounts for grants and fees to be used to cover the cost of operations of the City’s solid waste management program. Ice Arena Endowment Fund – This fund is used to account for contributions and other receipts to be used for future capital needs and budget requirements of the New Hope Ice Arena. CEE Revolving Loan Fund – This fund is used account for Center for Energy and Environment revolving loans. Nonmajor Governmental Funds Total Nonmajor Special Capital Debt Governmental Revenue Projects Service Funds Assets Cash and temporary investments 399,804$ 8,595,147$ 3,093,625$ 12,088,576$ Receivables Accounts 24,000 – – 24,000 Loans 18,034 – – 18,034 Special assessments 6,570 48,445 – 55,015 Due from other funds – 75,000 – 75,000 Advances to other funds – 300,000 – 300,000 Total assets 448,408$ 9,018,592$ 3,093,625$ 12,560,625$ Liabilities Accounts and contracts payable –$ 463,286$ –$ 463,286$ Unearned revenue – 13,800 – 13,800 Total liabilities – 477,086 – 477,086 Deferred inflows of resources Unavailable revenue – special assessments – 48,445 – 48,445 Fund balances Restricted for Public safety police expenditures 134,455 – – 134,455 Ice arena 5,460 – – 5,460 Capital improvements – 590,388 – 590,388 Debt service – –3,093,625 3,093,625 Committed for Solid waste operations 223,442 – – 223,442 Economic development 85,051 – – 85,051 Assigned for City Hall improvements – 595,273 – 595,273 Public works facility improvements – 1,740,002 – 1,740,002 General improvements – 3,237,914 – 3,237,914 Capital equipment – 817,044 – 817,044 Park improvements – 1,512,440 – 1,512,440 Total fund balances 448,408 8,493,061 3,093,625 12,035,094 Total liabilities, deferred inflows of resources, and fund balances 448,408$ 9,018,592$ 3,093,625$ 12,560,625$ December 31, 2021 Combining Balance Sheet CITY OF NEW HOPE -79- Total Nonmajor Special Capital Debt Governmental Revenue Projects Service Funds Revenues Taxes Property taxes –$ 885,655$ 3,746,781$ 4,632,436$ Intergovernmental – 8,124 – 8,124 Charges for services 234,953 51,900 – 286,853 Special assessments – 8,282 – 8,282 Investment earnings (charges)(2,288) (61,116) (13,137) (76,541) Miscellaneous – 4,250 – 4,250 Total revenues 232,665 897,095 3,733,644 4,863,404 Expenditures Current Public works 244,267 – – 244,267 Capital outlay General government – 212,151 – 212,151 Public works – 1,936,426 – 1,936,426 Culture and recreation – 439,210 – 439,210 Debt service Principal – – 2,120,042 2,120,042 Interest – 950 1,366,523 1,367,473 Total expenditures 244,267 2,588,737 3,486,565 6,319,569 Excess (deficiency) of revenues over expenditures (11,602) (1,691,642) 247,079 (1,456,165) Other financing sources (uses) Transfers in – 5,333,328 869 5,334,197 Transfers out – (2,541,664) – (2,541,664) Total other financing sources (uses)– 2,791,664 869 2,792,533 Net change in fund balances (11,602) 1,100,022 247,948 1,336,368 Fund balances, January 1 460,010 7,393,039 2,845,677 10,698,726 Fund balances, December 31 448,408$ 8,493,061$ 3,093,625$ 12,035,094$ CITY OF NEW HOPE Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2021 -80- CITY OF NEW HOPE Nonmajor Special Revenue Funds Subcombining Balance Sheet December 31, 2021 9021 9016 9017 9018 Police Solid Waste Ice Arena CEE Revolving Forfeitures Management Endowment Loan Fund Total Assets Cash and temporary investments 134,455$ 192,733$ 5,460$ 67,156$ 399,804$ Receivables Accounts – 24,139 – (139) 24,000 Loans – –– 18,034 18,034 Special assessments – 6,570 – –6,570 Total assets 134,455$ 223,442$ 5,460$ 85,051$ 448,408$ Fund balances Restricted for Public safety police expenditures 134,455$ –$ –$ –$ 134,455$ Ice arena – – 5,460 – 5,460 Committed for Solid waste operations – 223,442 – – 223,442 Economic development – –– 85,051 85,051 Total fund balances 134,455$ 223,442$ 5,460$ 85,051$ 448,408$ -81- CITY OF NEW HOPE Nonmajor Special Revenue Funds Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2021 9021 9016 9017 9018 Police Solid Waste Ice Arena CEE Revolving Forfeitures Management Endowment Loan Fund Total Revenues Charges for services –$ 234,953$ –$ –$ 234,953$ Investment earnings (charges)(1,116) (1,654) (45) 527 (2,288) Total revenues (1,116) 233,299 (45) 527 232,665 Expenditures Current Public works Other services and charges – 231,524 – 12,743 244,267 Net change in fund balances (1,116) 1,775 (45) (12,216) (11,602) Fund balances, January 1 135,571 221,667 5,505 97,267 460,010 Fund balances, December 31 134,455$ 223,442$ 5,460$ 85,051$ 448,408$ -82- Actual Over (Under) Original Final Amounts Budget Revenues Charges for services 232,000$ 232,000$ 234,953$ 2,953$ Investment earnings (charges) 1,500 1,500 (1,654) (3,154) Total revenues 233,500 233,500 233,299 (201) Expenditures Current Public works Other services and charges 231,512 231,512 231,524 12 Net change in fund balances 1,988 1,988 1,775 (213) Fund balances, January 1 221,667 221,667 221,667 – Fund balances, December 31 223,655$ 223,655$ 223,442$ (213)$ Budgeted Amounts For the Year Ended December 31, 2021 Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances – CITY OF NEW HOPE Special Revenue Fund – Solid Waste Management Fund -83- NONMAJOR CAPITAL PROJECT FUNDS Capital Projects Funds account for proceeds from the sale of bonds and other revenue to be used for the purchase or construction of equipment and capital improvement facilities. Fire Capital Projects Fund – This fund accounts for the purchases of fire capital equipment. City Hall CIP Fund – This fund is used to account for the accumulation of resources for City Hall improvement projects. Park Infrastructure Fund – This fund is used to account for park improvement projects. Park/Pool Improvement Project Fund – This fund is used to account for improvements to the City’s pool and water park facility. Public Works Facility CIP Fund – This fund is used to account for improvements to the City’s public works facility. Temporary Financing Fund – is used to account for various capital project and capital outlay purchases until permanent financing is acquired. 9010 9202 9233 9234 Park/Pool Fire City Hall Park Improvement Capital Projects CIP Infrastructure Project Assets Cash and temporary investments 817,044$ 739,497$ 1,536,671$ 605,760$ Receivables Special assessments – – – – Due from other funds – – – – Advances to other funds – – – – Total assets 817,044$ 739,497$ 1,536,671$ 605,760$ Liabilities Accounts and contracts payable –$ 144,224$ 10,431$ 15,372$ Unearned revenue – – 13,800 – Total liabilities – 144,224 24,231 15,372 Deferred inflows of resources Unavailable revenue – special assessments – – – – Fund balances Restricted for Capital improvements – – – 590,388 Assigned for City Hall improvements – 595,273 – – Public works facility improvements – –– – General improvements – –– – Capital equipment 817,044 – – – Park improvements – – 1,512,440 – Total fund balances 817,044 595,273 1,512,440 590,388 Total liabilities, deferred inflows of resources, and fund balances 817,044$ 739,497$ 1,536,671$ 605,760$ CITY OF NEW HOPE Nonmajor Capital Projects Funds Subcombining Balance Sheet December 31, 2021 -84- 9240 9242 Public Works Facility Temporary CIP Financing Total 2,033,261$ 2,862,914$ 8,595,147$ – 48,445 48,445 – 75,000 75,000 – 300,000 300,000 2,033,261$ 3,286,359$ 9,018,592$ 293,259$ –$ 463,286$ – – 13,800 293,259 – 477,086 – 48,445 48,445 – – 590,388 – – 595,273 1,740,002 – 1,740,002 – 3,237,914 3,237,914 – –817,044 – –1,512,440 1,740,002 3,237,914 8,493,061 2,033,261$ 3,286,359$ 9,018,592$ -85- 9010 9202 9233 9234 Park/Pool Fire City Hall Park Improvement Capital Projects CIP Infrastructure Project Revenues Taxes Property taxes –$ –$ 885,655$ –$ Intergovernmental County – – 3,400 4,724 Charges for services – – 51,900 – Special assessments – – – – Investment earnings (charges)(6,765) (9,461) (9,665) 188 Miscellaneous – – 250 4,000 Total revenues (6,765) (9,461) 931,540 8,912 Expenditures Capital outlay General government – 212,151 – – Public works – –– – Culture and recreation – –370,825 68,385 Debt Service Interest – 475 – 475 Total expenditures – 212,626 370,825 68,860 Excess (deficiency) of revenues over expenditures (6,765) (222,087) 560,715 (59,948) Other financing sources (uses) Transfers in – – – – Transfers out – (400,000) (500,000) – Total other financing sources (uses)– (400,000) (500,000) – Net change in fund balances (6,765) (622,087) 60,715 (59,948) Fund balances, January 1 823,809 1,217,360 1,451,725 650,336 Fund balances, December 31 817,044$ 595,273$ 1,512,440$ 590,388$ CITY OF NEW HOPE Nonmajor Capital Projects Funds Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2021 -86- 9240 9242 Public Works Facility Temporary CIP Financing Total –$ –$ 885,655$ – – 8,124 – – 51,900 – 8,282 8,282 (15,236) (20,177) (61,116) – – 4,250 (15,236) (11,895) 897,095 – – 212,151 1,936,426 – 1,936,426 – – 439,210 – – 950 1,936,426 – 2,588,737 (1,951,662) (11,895) (1,691,642) 3,691,664 1,641,664 5,333,328 – (1,641,664) (2,541,664) 3,691,664 – 2,791,664 1,740,002 (11,895) 1,100,022 – 3,249,809 7,393,039 1,740,002$ 3,237,914$ 8,493,061$ -87- THIS PAGE INTENTIONALLY LEFT BLANK NONMAJOR DEBT SERVICE FUNDS The Debt Service Funds are used to account for the payment of principal and interest on the City’s general obligation bonds. Revenues for this purpose include ad valorem property taxes, special assessments, investment income, and other revenue. 2015A G.O. Tax Increment Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2015A G.O. Tax Increment Bonds. 2010B G.O. Equipment Bonds Fund – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2010B G.O. Equipment Bonds. 2016A G.O. Improvement Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2016A G.O. Improvement Bonds. 2015B G.O. Improvement Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2015B G.O. Improvement Bonds. 2017A G.O. Improvement Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2017A G.O. Improvement Bonds. 2018A G.O. Improvement Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2018A G.O. Improvement Bonds. 2019A G.O. Improvement Bonds – This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2019A G.O. Improvement Bonds. 9144 9145 9148 9149 2015A 2010B 2016A 2015B G.O.G.O.G.O.G.O. Tax Increment Equipment Improvement Improvement Bonds Bonds Bonds Bonds Assets Cash and temporary investments 305,881$ –$ 299,349$ 201,691$ Fund balances Restricted for debt service 305,881$ –$ 299,349$ 201,691$ December 31, 2021 Subcombining Balance Sheet Nonmajor Debt Service Funds CITY OF NEW HOPE -88- 9150 9151 9152 2017A 2018A 2019A G.O.G.O.G.O. Improvement Improvement Improvement Bonds Bonds Bonds Total 1,546,896$ 338,039$ 401,769$ 3,093,625$ 1,546,896$ 338,039$ 401,769$ 3,093,625$ -89- 9144 9145 9148 9149 2015A 2010B 2016A 2015B G.O.G.O.G.O.G.O. Tax Increment Equipment Improvement Improvement Bonds Bonds Bonds Bonds Revenues Property taxes 237,747$ –$ 260,979$ 206,828$ Investment earnings (charges)(1,696) – (1,558) (946) Total revenues 236,051 – 259,421 205,882 Expenditures Debt service Principal 155,308 – 159,963 124,771 Interest and fiscal charges 51,736 740 74,189 43,883 Total expenditures 207,044 740 234,152 168,654 Excess (deficiency) of revenues over expenditures 29,007 (740) 25,269 37,228 Other financing sources Transfers in – 869 – – Net change in fund balances 29,007 129 25,269 37,228 Fund balances (deficit), January 1 276,874 (129) 274,080 164,463 Fund balances, December 31 305,881$ –$ 299,349$ 201,691$ CITY OF NEW HOPE Nonmajor Debt Service Funds Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2021 -90- 9150 9151 9152 2017A 2018A 2019A G.O.G.O.G.O. Improvement Improvement Improvement Bonds Bonds Bonds Total 1,705,515$ 867,464$ 468,248$ 3,746,781$ (6,759) (512) (1,666) (13,137) 1,698,756 866,952 466,582 3,733,644 950,000 465,000 265,000 2,120,042 670,190 348,421 177,364 1,366,523 1,620,190 813,421 442,364 3,486,565 78,566 53,531 24,218 247,079 – – – 869 78,566 53,531 24,218 247,948 1,468,330 284,508 377,551 2,845,677 1,546,896$ 338,039$ 401,769$ 3,093,625$ -91- 2020 Actual Over (Under)Actual Original Final Amounts Budget Amounts Revenues Taxes Property taxes 10,880,965$ 10,880,965$ 10,914,572$ 33,607$ 10,422,823$ Franchise taxes 535,000 535,000 522,395 (12,605) 518,162 Total taxes 11,415,965 11,415,965 11,436,967 21,002 10,940,985 Licenses and permits Business regulatory licenses 74,725 74,725 78,111 3,386 64,760 Nonbusiness licenses and permits 375,850 375,850 320,976 (54,874) 329,151 Total licenses and permits 450,575 450,575 399,087 (51,488) 393,911 Intergovernmental Local government aid 865,307 865,307 861,726 (3,581) 815,623 Highway maintenance aid 210,000 210,000 213,954 3,954 231,733 Other federal, state, and local grants 114,869 114,869 1,241,183 1,126,314 1,792,954 State insurance premium tax 300,000 300,000 286,502 (13,498) 321,335 Total intergovernmental 1,490,176 1,490,176 2,603,365 1,113,189 3,161,645 Charges for services General government 179,450 179,450 194,542 15,092 150,967 Public safety 370,750 370,750 333,245 (37,505) 267,931 Public works 5,760 5,760 3,860 (1,900) 3,596 Culture and recreation 1,260,925 1,260,925 959,680 (301,245) 281,826 Total charges for services 1,816,885 1,816,885 1,491,327 (325,558) 704,320 Fines and forfeitures 220,000 220,000 185,603 (34,397) 138,922 Special assessments 40,000 40,000 32,210 (7,790) 110,670 Investment earnings 50,000 50,000 (93,405) (143,405) 113,447 Miscellaneous 2,700 2,700 80,922 78,222 13,184 Total revenues 15,486,301 15,486,301 16,136,076 649,775 15,577,084 Expenditures Current General government Mayor and City Council Personnel services 59,911 59,911 61,068 1,157 57,043 Supplies 2,700 2,700 2,386 (314) 678 Other services and charges 41,075 41,075 42,413 1,338 36,940 Total Mayor and City Council 103,686 103,686 105,867 2,181 94,661 City Hall Supplies 20,000 20,000 19,403 (597) 20,232 Other services and charges 361,862 361,862 435,443 73,581 392,964 Total City Hall 381,862 381,862 454,846 72,984 413,196 2021 Schedule of Revenues, Expenditures and CITY OF NEW HOPE General Fund Budgeted Amounts Changes in Fund Balances – Budget and Actual For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) -92-(continued) Changes in Fund Balances – Budget and Actual (continued) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) 2020 Actual Over (Under)Actual Original Final Amounts Budget Amounts Expenditures (continued) Current (continued) General government (continued) City manager Personnel services 405,852 405,852 430,602 24,750 407,779 Supplies 1,600 1,600 593 (1,007) 1,233 Other services and charges 26,149 26,149 22,591 (3,558) 22,602 Total city manager 433,601 433,601 453,786 20,185 431,614 Elections Personnel services – – – – 42,105 Supplies – – – – 6,738 Other services and charges 4,312 4,312 10,326 6,014 6,873 Total elections 4,312 4,312 10,326 6,014 55,716 Finance Personnel services 181,334 181,334 174,759 (6,575) 190,816 Supplies 1,350 1,350 710 (640) 1,852 Other services and charges 75,984 75,984 103,071 27,087 92,648 Total finance 258,668 258,668 278,540 19,872 285,316 Auditing Other services and charges 29,336 29,336 33,356 4,020 24,771 Assessing Other services and charges 165,000 165,000 165,000 – 160,000 Legal Other services and charges 22,000 22,000 16,901 (5,099) 29,429 Human resources Personnel services 286,422 286,422 293,314 6,892 274,087 Supplies 450 450 570 120 228 Other services and charges 40,955 40,955 31,542 (9,413) 25,512 Total human resources 327,827 327,827 325,426 (2,401) 299,827 Planning and zoning Personnel services 127,971 127,971 130,932 2,961 118,603 Supplies 300 300 414 114 478 Other services and charges 35,489 35,489 28,482 (7,007) 33,942 Total planning and zoning 163,760 163,760 159,828 (3,932) 153,023 Communication Personnel services 106,121 106,121 104,241 (1,880) 89,320 Supplies 6,540 6,540 6,095 (445) 4,673 Other services and charges 53,416 53,416 33,913 (19,503) 20,187 Total communication 166,077 166,077 144,249 (21,828) 114,180 Total general government 2,056,129 2,056,129 2,148,125 91,996 2,061,733 Budgeted Amounts 2021 CITY OF NEW HOPE General Fund Schedule of Revenues, Expenditures and -93-(continued) Changes in Fund Balances – Budget and Actual (continued) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) 2020 Actual Over (Under)Actual Original Final Amounts Budget Amounts Expenditures (continued) Current (continued) Public safety Police Personnel services 5,668,240 5,668,240 5,025,038 (643,202) 4,997,575 Supplies 77,100 77,100 196,742 119,642 134,467 Other services and charges 1,188,131 1,188,131 1,233,360 45,229 1,091,335 Total police 6,933,471 6,933,471 6,455,140 (478,331) 6,223,377 Police reserves Supplies 2,100 2,100 1,097 (1,003) 1,221 Other services and charges 14,315 14,315 8,612 (5,703) 22,267 Total police reserves 16,415 16,415 9,709 (6,706) 23,488 Fire and safety Supplies 300 300 – (300) – Other services and charges 1,440,491 1,440,491 1,418,843 (21,648) 1,423,808 Total fire and safety 1,440,791 1,440,791 1,418,843 (21,948) 1,423,808 Animal control Personnel services 86,881 86,881 84,731 (2,150) 84,846 Supplies 475 475 262 (213) 99 Other services and charges 23,176 23,176 19,568 (3,608) 18,887 Total animal control 110,532 110,532 104,561 (5,971) 103,832 Protective inspection Personnel services 540,271 540,271 512,720 (27,551) 506,212 Supplies 1,950 1,950 1,447 (503) 1,615 Other services and charges 94,974 94,974 88,741 (6,233) 87,970 Total protective inspection 637,195 637,195 602,908 (34,287) 595,797 Total public safety 9,138,404 9,138,404 8,591,161 (547,243) 8,370,302 Public works Street maintenance Personnel services 603,491 603,491 592,485 (11,006) 605,084 Supplies 142,350 142,350 99,238 (43,112) 116,525 Other services and charges 874,551 874,551 917,788 43,237 859,595 Total street maintenance 1,620,392 1,620,392 1,609,511 (10,881) 1,581,204 Engineering Other services and charges 35,000 35,000 43,492 8,492 40,842 Total public works 1,655,392 1,655,392 1,653,003 (2,389) 1,622,046 CITY OF NEW HOPE General Fund Schedule of Revenues, Expenditures and 2021 Budgeted Amounts -94-(continued) Changes in Fund Balances – Budget and Actual (continued) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) 2020 Actual Over (Under)Actual Original Final Amounts Budget Amounts Expenditures (continued) Current (continued) Culture and recreation Recreation Personnel services 686,333 686,333 643,523 (42,810) 611,920 Supplies 117,350 117,350 84,108 (33,242) 90,638 Other services and charges 222,609 222,609 220,919 (1,690) 156,342 Total recreation 1,026,292 1,026,292 948,550 (77,742) 858,900 For the Year Ended December 31, 2021 Parks Personnel services 669,313 669,313 647,953 (21,360) 595,900 Supplies 38,350 38,350 33,376 (4,974) 33,625 Other services and charges 425,397 425,397 446,244 20,847 401,333 Total parks 1,133,060 1,133,060 1,127,573 (5,487) 1,030,858 Swimming pool Personnel services 497,247 497,247 331,813 (165,434) 115,135 Supplies 73,000 73,000 55,812 (17,188) 14,886 Other services and charges 185,952 185,952 165,705 (20,247) 15,879 Total swimming pool 756,199 756,199 553,330 (202,869) 145,900 Total culture and recreation 2,915,551 2,915,551 2,629,453 (286,098) 2,035,658 Total current expenditures 15,765,476 15,765,476 15,021,742 (743,734) 14,089,739 Capital outlay General government 5,000 5,000 – (5,000) 674 Public safety 164,000 164,000 181,616 17,616 39,576 Culture and recreation 2,500 2,500 – (2,500) – Total capital outlay 171,500 171,500 181,616 10,116 40,250 Total expenditures 15,936,976 15,936,976 15,203,358 (733,618) 14,129,989 Excess (deficiency) of revenues over expenditures (450,675) (450,675) 932,718 1,383,393 1,447,095 Other financing sources (uses) Transfers inSale of capital assets – – 6,800 6,800 – Transfers in 450,675 450,675 450,672 (3) 339,288 Transfers out – – (1,642,533) (1,642,533) – Total other financing sources (uses)450,675 450,675 (1,185,061) (1,635,736) 339,288 Net change in fund balances – – (252,343) (252,343) 1,786,383 Fund balances, January 1 8,926,086 8,926,086 8,926,086 – 7,139,703 Fund balances, December 31 8,926,086$ 8,926,086$ 8,673,743$ (252,343)$ 8,926,086$ CITY OF NEW HOPE General Fund Schedule of Revenues, Expenditures and 2021 Budgeted Amounts -95- THIS PAGE INTENTIONALLY LEFT BLANK INTERNAL SERVICE FUNDS Internal Service Funds are used to account for activities and services performed for other organizational units within the City. Charges to other city agencies are made to support these activities. Central Garage Fund – This fund is used to account for the rental of motor vehicles and other equipment to other departments. Employee Leave Fund – This fund accounts for the cost of providing leave time benefits to employees, which includes vacation, holiday, sick time, and personal leave. Funding is based on chargebacks to department, based on a percentage of wages. Insurance Reserve Fund – This fund accounts for all insurance costs for the City. Funding is provided by chargebacks to departments by percentage of wages for health, dental, life, and disability insurance. Funding for general liability and property insurance is provided by chargebacks to departments based on activities and the use of property. Information Technology Fund – This fund accounts for the City’s investment in, and operations of, computer networks, application and system software, internet access, data storage, and related activities. CITY OF NEW HOPE Internal Service Funds Combining Statement of Net Position December 31, 2021 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Assets Current assets Cash and temporary investments 7,012,636$ 1,912,109$ 561,751$ 514,992$ 10,001,488$ Receivables Accounts – – 9,793 – 9,793 Inventories 64,202 – – – 64,202 Total current assets 7,076,838 1,912,109 571,544 514,992 10,075,483 Noncurrent assets Capital assets Land 85,647 – – – 85,647 Buildings and structures 3,158,296 – – – 3,158,296 Vehicles and equipment 10,166,942 – – 448,352 10,615,294 Construction in progress 7,559 – – – 7,559 Less accumulated depreciation (10,266,614) – – (335,694) (10,602,308) Total capital assets (net of accumulated depreciation)3,151,830 – – 112,658 3,264,488 Total assets 10,228,668 1,912,109 571,544 627,650 13,339,971 Deferred outflows of resources Deferred pension resources 117,169 – – – 117,169 Liabilities Current liabilities Accrued salaries payable 14,609 40,150 97,777 854 153,390 Accounts and contracts payable 38,704 – 8,917 23,776 71,397 Due to other governments 673 – – – 673 Compensated absences payable, current portion – 87,509 – – 87,509 Leases payable, current portion 28,682 – – – 28,682 Total current liabilities 82,668 127,659 106,694 24,630 341,651 Noncurrent liabilities OPEB payable – – 799,276 – 799,276 Pension liability 159,757 – – – 159,757 Compensated absences payable – 787,580 – – 787,580 Leases payable 83,694 – – – 83,694 Total noncurrent liabilities 243,451 787,580 799,276 – 1,830,307 Total liabilities 326,119 915,239 905,970 24,630 2,171,958 Deferred inflows of resources Deferred pension resources 146,836 – – – 146,836 Net position Net investment in capital assets 3,039,454 – – 112,658 3,152,112 Unrestricted 6,833,428 996,870 (334,426) 490,362 7,986,234 Total net position 9,872,882$ 996,870$ (334,426)$ 603,020$ 11,138,346$ -96- 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Operating revenues Billings to departments 2,255,832$ 726,101$ 54,801$ 884,772$ 3,921,506$ Other 63,376 – 185,496 – 248,872 Total operating revenues 2,319,208 726,101 240,297 884,772 4,170,378 Operating expenses Personnel services 339,882 525,388 – 1,107 866,377 Supplies 241,981 – – 27,747 269,728 Utilities 70,126 – – 51,705 121,831 Other services and charges 391,933 – 56,348 626,395 1,074,676 Depreciation 556,424 – – 15,390 571,814 Total operating expenses 1,600,346 525,388 56,348 722,344 2,904,426 Operating income (loss)718,862 200,713 183,949 162,428 1,265,952 Nonoperating revenues (expenses) Investment earnings (charges)(55,491) – – (1,652) (57,143) Gain on sale of capital assets 63,500 – – – 63,500 Interest expense (33) – – – (33) Total nonoperating revenues (expenses)7,976 – – (1,652) 6,324 Income before transfers 726,838 200,713 183,949 160,776 1,272,276 Transfers out (1,686,504) – – (214,416) (1,900,920) Change in net position (959,666) 200,713 183,949 (53,640) (628,644) Net position, January 1 10,832,548 796,157 (518,375) 656,660 11,766,990 Net position, December 31 9,872,882$ 996,870$ (334,426)$ 603,020$ 11,138,346$ For the Year Ended December 31, 2021 Changes in Net Position Combining Statement of Revenues, Expenses and Internal Service Funds CITY OF NEW HOPE -97- 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Cash flows from operating activities Receipts from interfund services provided 2,255,832$ 726,101$ 52,449$ 884,772$ 3,919,154$ Other operating receipts 63,376 – 185,496 – 248,872 Payments to suppliers (721,090) – (105,745) (691,066) (1,517,901) Payments to employees (354,261) (487,350) (196,289) (253) (1,038,153) Net cash from operating activities 1,243,857 238,751 (64,089) 193,453 1,611,972 Cash flows from noncapital financing activities Transfers out (1,686,504) – – (214,416) (1,900,920) Cash flows from capital and related financing activities Acquisition capital assets (832,437) – – (45,933) (878,370) Proceeds from sale of assets 63,500 – – – 63,500 Principal paid on long-term debt (2,352) – – – (2,352) Interest paid on long-term debt (33) – – – (33) Net cash from capital and related financing activities (771,322) – – (45,933) (817,255) Investment earnings (charges)(55,491) – – (1,652) (57,143) Net increase in cash and cash equivalents (1,269,460) 238,751 (64,089) (68,548) (1,163,346) Cash and cash equivalents, January 1 8,282,096 1,673,358 625,840 583,540 11,164,834 Cash and cash equivalents, December 31 7,012,636$ 1,912,109$ 561,751$ 514,992$ 10,001,488$ Reconciliation of operating income to net cash from operating activities Operating income 718,862$ 200,713$ 183,949$ 162,428$ 1,265,952$ Adjustments to reconcile operating income to net cash from operating activities Depreciation 556,424 – – 15,390 571,814 (Increase) decrease in assets Accounts receivable – – (2,352) – (2,352) Inventories 3,833 – – – 3,833 (Increase) decrease in deferred outflows of resources Deferred pension resources (93,397) – – – (93,397) Deferred OPEB resources – – 167,973 – 167,973 Increase (decrease) in liabilities Accounts and contracts payable (20,925) – (49,397) 14,781 (55,541) Accrued salaries payable 3,135 6,405 (19,872) 854 (9,478) Due to other governments 42 – – – 42 Compensated absences payable – 31,633 – – 31,633 OPEB payable – – (311,187) – (311,187) Pension liability (62,055) – – – (62,055) Increase (decrease) in deferred inflows of resources Deferred pension resources 137,938 – – – 137,938 Deferred OPEB resources – – (33,203) – (33,203) Net cash from operating activities 1,243,857$ 238,751$ (64,089)$ 193,453$ 1,611,972$ Schedule of noncash capital and related financing activities Capital assets acquired through leases payable 114,728$ –$ –$ –$ 114,728$ CITY OF NEW HOPE Cash flows from investing activities For the Year Ended December 31, 2021 Combining Statement of Cash Flows Internal Service Funds -98- STATISTICAL SECTION (UNAUDITED) CITY OF NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 THIS PAGE INTENTIONALLY LEFT BLANK Contents: Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Indicators Source: Unless otherwise noted, the information in these schedules is derived from the ACFR for the relevant year. STATISTICAL SECTION (UNAUDITED) This part of the City of New Hope,Minnesota’s (the City) Annual Comprehensive Financial Report (ACFR) presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. These schedules contain information to help the reader assess the City’s most significant revenue source, including the property tax and utility revenue. These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides, and the activities it performs. Fiscal Year 2012 2013 2014 2015 Governmental activities Net investment in capital assets 26,793,142$ 30,509,373$ 26,305,906$ 27,549,276$ Restricted 1,619,696 1,619,394 5,680,117 5,917,848 Unrestricted 22,746,207 23,704,592 23,130,558 14,623,043 Total governmental activities net position 51,159,045$ 55,833,359$ 55,116,581$ 48,090,167$ Business-type activities Net investment in capital assets 12,843,624$ 14,142,276$ 14,757,333$ 16,087,559$ Restricted 150,000 300,000 455,000 627,939 Unrestricted 2,735,144 2,496,008 1,798,707 (825,297) Total business-type activities net position 15,728,768$ 16,938,284$ 17,011,040$ 15,890,201$ Primary government Net investment in capital assets 39,636,766$ 44,651,649$ 41,063,239$ 43,636,835$ Restricted 1,769,696 1,919,394 6,135,117 6,545,787 Unrestricted 25,481,351 26,200,600 24,929,265 13,797,746 Total primary government net position 66,887,813$ 72,771,643$ 72,127,621$ 63,980,368$ Note 1: Note 2: The City implemented GASB Statement No.68 in 2015,resulting in a restatement of beginning net position for the effects of implementing this standard. Net position for previous years has not been restated. The City implemented GASB Statement No.75 in 2018,resulting in a restatement of beginning net position for the effects of implementing this standard. Net position for previous years has not been restated. CITY OF NEW HOPE Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) -99- 2016 2017 2018 2019 2020 2021 29,951,754$ 27,747,845$ 27,888,417$ 30,139,510$ 31,359,813$ 34,985,781$ 4,893,801 6,207,578 6,000,843 6,628,138 7,740,859 8,598,311 11,081,824 11,728,807 14,384,257 16,720,142 19,716,696 23,427,177 45,927,379$ 45,684,230$ 48,273,517$ 53,487,790$ 58,817,368$ 67,011,269$ 19,286,134$ 18,663,872$ 18,783,898$ 19,315,353$ 20,127,288$ 22,607,046$ 868,853 1,031,673 1,160,680 1,358,401 1,560,053 (1,839,376) 84,741 1,783,306 3,054,187 4,534,420 6,455,200 18,315,611$ 19,780,286$ 21,727,884$ 23,727,941$ 26,221,761$ 29,062,246$ 49,237,888$ 46,411,717$ 46,672,315$ 49,454,863$ 51,487,101$ 57,592,827$ 5,762,654 7,239,251 7,161,523 7,986,539 9,300,912 8,598,311 9,242,448 11,813,548 16,167,563 19,756,329 24,251,116 29,882,377 64,242,990$ 65,464,516$ 70,001,401$ 77,197,731$ 85,039,129$ 96,073,515$ -100- Fiscal Year 2012 2013 2014 2015 Expenses Governmental activities General government 1,931,318$ 1,837,194$ 1,976,377$ 1,700,133$ Public safety 6,062,362 6,238,779 6,795,836 7,258,504 Public works 2,126,043 1,790,669 2,467,618 4,229,077 Culture and recreation 1,928,591 1,946,243 2,145,224 2,223,152 Economic development 762,202 431,332 1,704,010 655,093 Interest and fiscal charges 407,744 289,009 140,321 269,284 Total governmental activities expenses 13,218,260 12,533,226 15,229,386 16,335,243 Business-type activities Sewer 2,220,438 2,310,604 1,976,864 2,458,724 Water 3,682,602 3,215,714 4,635,686 4,584,929 Golf course 298,555 262,894 304,059 291,695 Ice arena 771,628 957,784 877,826 880,581 Storm water 425,112 768,610 558,160 713,218 Street lighting 104,721 117,518 99,560 105,452 Total business-type activities expenses 7,503,056 7,633,124 8,452,155 9,034,599 Total primary government expenses 20,721,316$ 20,166,350$ 23,681,541$ 25,369,842$ Program revenues Governmental activities Charges for services General government 177,174$ 198,297$ 234,440$ 254,333$ Public safety 804,725 880,843 1,047,721 1,073,079 Public works 219,548 226,228 224,790 219,634 Culture and recreation 653,293 672,067 617,459 668,480 Economic development 94,664 – – – Operating grants and contributions 2,162,263 828,276 1,013,058 845,517 Capital grants and contributions 245,290 3,929,565 47,917 460,537 Total governmental activities program revenues 4,356,957 6,735,276 3,185,385 3,521,580 Business-type activities Charges for services Sewer utility 2,376,021 2,443,202 2,414,482 2,468,638 Water utility 3,581,225 3,460,008 3,634,873 3,777,108 Golf course 296,316 268,133 254,508 287,056 Ice arena 694,702 725,211 775,784 745,886 Storm water 948,650 963,167 948,537 981,723 Street lighting 124,397 125,604 123,060 128,890 Operating grants and contributions 22,340 306,520 444,484 33,032 Capital grants and contributions 106,291 225,300 11,469 194,590 Total business-type activities program revenues 8,149,942 8,517,145 8,607,197 8,616,923 Total primary government program revenues 12,506,899$ 15,252,421$ 11,792,582$ 12,138,503$ CITY OF NEW HOPE Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) -101- 2016 2017 2018 2019 2020 2021 1,871,736$ 2,666,781$ 1,983,179$ 1,850,242$ 2,945,625$ 1,152,633$ 9,463,124 8,257,709 7,578,150 8,540,198 8,968,009 7,764,051 3,143,421 2,975,007 3,661,766 3,816,417 3,725,075 4,295,427 2,405,905 2,485,417 2,280,418 2,145,988 2,270,751 3,095,760 732,106 2,163,967 1,244,292 749,651 1,350,348 1,434,986 323,326 725,982 1,074,469 1,412,763 1,570,807 1,518,351 17,939,618 19,274,863 17,822,274 18,515,259 20,830,615 19,261,208 2,187,006 2,399,248 2,631,598 2,834,973 3,096,526 2,973,301 3,633,022 3,504,722 4,038,859 3,762,099 4,195,981 4,813,286 341,776 322,278 299,217 319,871 316,173 368,659 949,438 996,056 987,912 1,003,048 1,016,296 1,095,343 830,108 834,688 736,166 888,156 877,244 991,031 102,894 101,668 119,250 116,732 133,270 135,899 8,044,244 8,158,660 8,813,002 8,924,879 9,635,490 10,377,519 25,983,862$ 27,433,523$ 26,635,276$ 27,440,138$ 30,466,105$ 29,638,727$ 267,970$ 340,421$ 250,575$ 223,379$ 217,183$ 270,287$ 1,035,725 1,302,551 935,116 880,634 736,004 832,767 220,208 234,564 228,660 226,249 234,121 235,879 699,613 686,335 570,143 529,739 316,820 996,447 20,000 41,112 – – – – 1,002,681 777,368 967,499 826,489 866,861 1,093,760 711,527 1,150,840 941,212 2,819,823 1,048,750 720,699 3,957,724 4,533,191 3,893,205 5,506,313 3,419,739 4,149,839 2,627,875 2,899,257 3,154,709 3,380,075 3,712,613 3,906,809 4,124,346 4,289,255 4,696,593 4,675,498 5,468,607 5,882,735 315,162 283,375 298,696 296,538 423,766 473,508 749,689 849,701 864,531 892,740 601,291 925,967 1,037,429 1,082,348 1,139,007 1,190,058 1,259,707 1,321,518 137,525 137,491 144,582 152,975 161,866 170,656 159,898 27,568 327,335 14,308 110,331 146,755 1,394,822 58,237 14,203 28,824 12,922 13,475 10,546,746 9,627,232 10,639,656 10,631,016 11,751,103 12,841,423 14,504,470$ 14,160,423$ 14,532,861$ 16,137,329$ 15,170,842$ 16,991,262$ -102-(continued) Fiscal Year 2012 2013 2014 2015 Net (expense) revenue Governmental activities (8,861,303)$ (5,797,950)$ (12,044,001)$ (12,813,663)$ Business-type activities 646,886 884,021 155,042 (417,676) Total primary government net expense (8,214,417)$ (4,913,929)$ (11,888,959)$ (13,231,339)$ General revenues and other changes in net position Governmental activities Property taxes 9,129,247$ 9,554,629$ 9,732,776$ 10,131,759$ Tax increments 1,343,248 511,924 537,871 430,879 Franchise taxes 440,149 438,834 438,541 442,556 Grants and contributions not restricted to specific programs 47,662 49,005 179,537 600,030 Unrestricted investment earnings (charges)429,595 198,658 324,498 331,417 Gain on sale of capital assets 69,321 37,201 – – Transfers 68,971 (317,987) 114,000 68,204 Total governmental activities 11,528,193 10,472,264 11,327,223 12,004,845 Business-type activities Unrestricted investment earnings 57,384 7,508 31,714 35,700 Transfers (68,971) 317,987 (114,000) (68,204) Total business-type activities (11,587) 325,495 (82,286) (32,504) Total primary government 11,516,606$ 10,797,759$ 11,244,937$ 11,972,341$ Changes in net position Governmental activities 2,666,890$ 4,674,314$ (716,778)$ (808,818)$ Business-type activities 635,299 1,209,516 72,756 (450,180) Total primary government 3,302,189$ 5,883,830$ (644,022)$ (1,258,998)$ Note:The City implemented GASB Statement Nos.67 and 68 in fiscal 2015.The City implemented GASB Statement No.75 in fiscal 2018. Information has not been restated for prior years. Last Ten Fiscal Years (Accrual Basis of Accounting) CITY OF NEW HOPE Changes in Net Position (continued) -103- 2016 2017 2018 2019 2020 2021 (13,981,894)$ (14,741,672)$ (13,929,069)$ (13,008,946)$ (17,410,876)$ (15,111,369)$ 2,502,502 1,468,572 1,826,654 1,706,137 2,115,613 2,463,904 (11,479,392)$ (13,273,100)$ (12,102,415)$ (11,302,809)$ (15,295,263)$ (12,647,465)$ 10,843,702$ 11,929,597$ 12,941,920$ 15,265,428$ 16,821,240$ 17,357,910$ 492,584 841,098 1,112,753 1,317,803 1,918,857 2,118,199 447,248 912,357 945,244 957,448 958,162 962,395 633,056 628,119 697,895 803,035 2,497,630 3,155,397 377,960 531,240 798,557 1,412,308 781,304 (22,179) – 50,456 70,400 369,163 22,000 70,300 121,800 (19,110) (48,413) (144,624) (240,739) (336,752) 12,916,350 14,873,757 16,518,356 19,980,561 22,758,454 23,305,270 44,708 36,811 72,531 149,296 137,468 39,829 (121,800) 19,110 48,413 144,624 240,739 336,752 (77,092) 55,921 120,944 293,920 378,207 376,581 12,839,258$ 14,929,678$ 16,639,300$ 20,274,481$ 23,136,661$ 23,681,851$ (1,065,544)$ 132,085$ 2,589,287$ 6,971,615$ 5,347,578$ 8,193,901$ 2,425,410 1,524,493 1,947,598 2,000,057 2,493,820 2,840,485 1,359,866$ 1,656,578$ 4,536,885$ 8,971,672$ 7,841,398$ 11,034,386$ -104- THIS PAGE INTENTIONALLY LEFT BLANK Ad Valorem Property Taxes Tax Increments Franchise Taxes Total 9,129,247$ 1,343,248$ 440,149$ 10,912,644$ 9,554,629 511,924 438,834 10,505,387 9,732,776 537,871 438,541 10,709,188 10,131,759 430,879 442,556 11,005,194 10,843,702 492,584 447,248 11,783,534 11,929,597 841,098 912,357 13,683,052 12,941,920 1,112,753 945,244 14,999,917 15,265,428 1,317,803 957,448 17,540,679 16,821,240 1,918,857 958,162 19,698,259 17,357,910 2,118,199 962,395 20,438,504 CITY OF NEW HOPE Governmental Activities Tax Revenues by Source Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year 2016 2012 2013 2014 2015 2017 2018 2019 2020 2021 -105- Fiscal Year 2012 2013 2014 2015 General Fund Nonspendable 14,925$ 15,484$ 16,005$ 16,765$ Unassigned 5,080,812 5,567,933 5,805,259 6,063,647 Total General Fund 5,095,737$ 5,583,417$ 5,821,264$ 6,080,412$ All other governmental funds Restricted –$ –$ 5,687,949$ 8,069,238$ Committed 5,657,606 5,550,819 4,771,304 5,431,288 Assigned 5,165,192 4,511,073 7,839,792 5,496,484 Unassigned 6,533,868 8,204,338 (134,792) (226,356) Total all other governmental funds 17,356,666$ 18,266,230$ 18,164,253$ 18,770,654$ Total all governmental funds 22,452,403$ 23,849,647$ 23,985,517$ 24,851,066$ CITY OF NEW HOPE Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) -106- `` 2016 2017 2018 2019 2020 2021 18,242$ 17,617$ 18,763$ 22,980$ 24,499$ 49,680$ 6,255,436 6,871,038 7,162,188 7,116,723 8,901,587 8,624,063 6,273,678$ 6,888,655$ 7,180,951$ 7,139,703$ 8,926,086$ 8,673,743$ 7,772,782$ 24,605,109$ 24,646,820$ 13,304,922$ 9,016,306$ 9,779,064$ 5,397,075 5,837,809 5,414,740 5,033,555 4,639,390 4,520,972 4,958,094 5,176,318 5,695,269 6,248,128 6,993,400 9,059,040 (3,015,315) (4,178,684) (3,448,208) (2,475,320) (2,119,931) (1,978,033) 15,112,636$ 31,440,552$ 32,308,621$ 22,111,285$ 18,529,165$ 21,381,043$ 21,386,314$ 38,329,207$ 39,489,572$ 29,250,988$ 27,455,251$ 30,054,786$ -107- Fiscal Year 2012 2013 2014 2015 Revenues Property taxes 9,199,381$ 9,531,663$ 9,718,800$ 10,145,204$ Tax increments 1,343,248 511,924 537,871 430,879 Franchise taxes 440,149 438,834 438,541 442,556 Licenses and permits 238,943 273,117 353,973 389,957 Intergovernmental 858,816 4,463,113 818,825 1,359,511 Charges for services 1,557,898 1,585,964 1,663,153 1,601,081 Fines and forfeits 283,233 239,201 215,585 237,591 Special assessments 305,818 178,335 98,617 38,417 Investment income 307,032 178,217 248,013 274,116 Miscellaneous 80,073 111,443 129,980 202,057 Total revenues 14,614,591 17,511,811 14,223,358 15,121,369 Expenditures General government 1,567,301 1,571,701 1,668,474 1,688,752 Public safety 5,946,209 5,967,599 6,397,860 6,866,105 Public works 1,192,760 1,254,201 1,225,551 1,328,371 Culture and recreation 1,599,041 1,613,518 1,761,961 1,853,741 Economic development 304,064 582,621 298,825 498,479 Capital outlay 7,685,819 4,239,938 3,000,518 8,204,694 Debt service Principal retirement 330,000 340,000 350,000 405,000 Interest 270,613 306,462 212,025 131,530 Bond issuance 104,351 – 2,200 114,607 Total expenditures 19,000,158 15,876,040 14,917,414 21,091,279 Excess of revenues over (under) expenditures (4,385,567) 1,635,771 (694,056) (5,969,910) Other financing sources (uses) Transfers in 936,188 360,427 669,461 3,209,226 Sale of capital assets – 1,460 4,055,382 – Bonds issued – – – – Premiums on debt issues 54,006 – – 171,339 Refunding bonds issued 4,025,000 – – 6,470,000 Payments to refunded bond escrow agent – – (3,780,000) – Transfers (out)(770,638) (600,414) (477,461) (3,015,226) Total other financing sources (uses)4,244,556 (238,527) 467,382 6,835,339 Net change in fund balances (141,011)$ 1,397,244$ (226,674)$ 865,429$ Debt service as a percentage of noncapital expenditures 4.1% 5.6% 4.5% 3.5% CITY OF NEW HOPE Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) -108- 2016 2017 2018 2019 2020 2021 10,868,985$ 11,961,711$ 12,904,297$ 15,223,680$ 16,756,108$ 17,452,708$ 492,584 841,098 1,112,753 1,317,803 1,918,857 2,118,199 447,248 912,357 945,244 957,448 958,162 962,395 466,548 641,870 367,931 320,438 393,911 399,087 2,063,546 1,844,648 2,195,761 3,947,039 4,289,738 3,253,349 1,571,798 1,727,615 1,399,998 1,376,176 986,887 1,778,180 191,960 208,909 230,657 227,343 138,922 185,603 173,158 92,458 282,589 197,566 234,265 142,413 304,252 486,746 658,606 1,166,238 607,490 34,964 42,103 137,591 33,966 173,679 26,700 185,564 16,622,182 18,855,003 20,131,802 24,907,410 26,311,040 26,512,462 1,872,436 2,622,277 1,787,553 1,900,480 2,062,733 2,148,125 7,168,102 7,724,950 7,997,311 8,427,939 8,361,209 8,591,161 1,606,369 1,671,593 1,717,815 1,790,715 1,853,395 1,897,270 1,938,131 2,066,692 2,015,729 2,032,585 2,035,658 2,629,453 588,167 1,737,947 815,352 513,946 1,291,350 1,337,525 8,220,964 5,217,461 12,956,485 22,573,850 8,669,758 4,612,615 415,000 523,497 799,734 968,674 1,905,890 2,548,885 257,661 455,539 769,497 1,273,302 1,778,653 1,455,861 58,188 251,648 148,365 90,446 – 263,000 22,125,018 22,271,604 29,007,841 39,571,937 27,958,646 25,483,895 (5,502,836) (3,416,601) (8,876,039) (14,664,527) (1,647,606) 1,028,567 1,630,270 4,305,261 788,458 2,162,676 418,661 5,784,869 – – – 331,299 – 6,800 2,824,075 18,435,000 9,520,000 5,235,000 – – 107,553 1,857,609 476,673 454,261 – – – – – – – – – – – – – – (1,426,570) (4,238,376) (748,726) (1,981,951) (566,792) (4,220,701) 3,135,328 20,359,494 10,036,405 6,201,285 (148,131) 1,570,968 (2,367,508)$ 16,942,893$ 1,160,366$ (8,463,242)$ (1,795,737)$ 2,599,535$ 4.6% 5.4% 9.2% 12.6% 18.7% 18.5% -109- THIS PAGE INTENTIONALLY LEFT BLANK Ad Valorem Property Tax Tax Increments Franchise Tax Total 9,199,381$ 1,343,248$ 440,149$ 10,982,778$ 9,531,663 511,924 438,834 10,482,421 9,781,800 537,871 438,541 10,758,212 10,145,204 430,879 442,556 11,018,639 10,868,985 492,584 447,248 11,808,817 11,961,711 841,098 912,357 13,715,166 12,904,297 1,112,753 945,244 14,962,294 15,223,680 1,317,803 957,448 17,498,931 16,756,108 1,918,857 958,162 19,633,127 17,452,708 2,118,199 962,395 20,533,302 CITY OF NEW HOPE General Governmental Tax Revenues by Source Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2016 2012 2013 2014 2015 2017 2018 2019 2020 2021 -110- Contributions Less Distributions Real Personal Total To Fiscal Tax From Fiscal Property Property Tax Capacity Disparities Increments Disparities 16,686,171$ 165,812$ 16,851,983$ (2,380,423)$ (944,560)$ 3,605,075$ 15,476,014 188,654 15,664,668 (2,255,476) (366,752) 3,448,346 15,454,712 211,746 15,666,458 (2,154,731) (377,138) 3,437,911 16,638,481 221,628 16,860,109 (2,144,256) (338,715) 3,505,922 17,898,058 226,510 18,124,568 (2,277,639) (362,633) 3,437,652 19,196,854 242,052 19,438,906 (2,464,382) (604,222) 3,757,080 21,143,125 260,678 21,403,803 (2,655,561) (810,429) 4,010,408 22,506,796 275,032 22,781,828 (2,870,420) (948,691) 4,111,736 25,019,326 276,748 25,296,074 (2,941,213) (1,378,781) 4,385,923 27,035,066 303,741 27,338,807 (3,317,874) (1,565,751) 4,630,371 Note: Source: CITY OF NEW HOPE Tax Capacity, Market Value, and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Tax Capacity Fiscal Year Levy Collective in Property in the county is reassessed annually. Hennepin County Auditor/Treasure Department 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -111- Total Direct Estimated Net Tax Capacity Taxable Actual Tax Capacity Rate Market Value Market Value 17,132,075$ 57.326 1,329,979,513$ 1,438,796,300$ 92.44 % 16,490,786 58.812 1,223,862,183 1,336,539,900 91.57 16,572,500 58.599 1,235,267,314 1,346,449,200 91.74 17,883,060 55.978 1,334,517,728 1,440,652,000 92.63 18,921,948 57.405 1,430,939,117 1,534,397,300 93.26 20,127,382 59.931 1,535,054,114 1,636,865,900 93.78 21,948,221 58.589 1,697,092,365 1,792,927,900 94.65 23,074,453 67.990 1,831,436,951 1,921,182,700 95.33 25,362,003 66.089 2,021,382,123 2,106,273,300 95.97 27,085,553 63.940 2,177,389,934 2,257,016,100 96.47 Value as a Taxable Market Tax Capacity Actual Value Estimated Percentage of -112- Total Direct Sewer and General Debt District City Hennepin ISD No. 281 Special Overlapping Levy Levy Levy Total County Robbinsdale Districts Rates 53.842 3.097 0.387 57.326 48.231 32.534 10.422 148.513 57.802 1.010 – 58.812 49.461 32.347 10.933 151.553 57.622 0.977 – 58.599 49.959 34.777 11.307 154.642 55.073 0.905 – 55.978 46.398 33.226 10.561 146.163 56.364 1.041 – 57.405 45.356 33.833 10.432 147.026 56.906 3.025 – 59.931 44.087 31.612 10.214 145.844 54.643 3.946 – 58.589 42.808 31.957 9.052 142.406 56.539 11.451 – 67.990 41.861 29.909 8.885 148.645 51.374 14.715 – 66.089 41.084 26.447 8.376 141.996 50.186 13.754 – 63.940 38.210 25.529 8.597 136.276 Note: Source:Hennepin County 2012 2017 CITY OF NEW HOPE Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Year Overlapping RatesDirect Rates – City of New Hope Overlapping rates are those of local and county governments that apply to property owners within the City.Not all overlapping rates apply to all city property owners (e.g.,the rates for special districts apply only to the proportion of the government’s property owners whose property is located within the geographic boundaries of the special district). 2013 2014 2015 2016 2020 2021 2018 2019 -113- Net Tax Net Tax Capacity Rank Capacity Rank Alatus New Hope, LLC 469,225$ 1 1.7 %–$ – – % STNL (New Hope), LLC 278,650 2 1.0 – – – Allen Group, LLC 232,650 3 0.9 – – – FLS Properties 232,010 4 0.9 159,250 1 0.9 Padagis US LLC 220,730 5 0.8 – – – Broadway Lanel/Golle/Holmes 216,788 6 0.8 – – – Omega Healthcare Investors 214,388 7 0.8 – – – Saint Therese Home of New Hope 213,268 8 0.8 153,138 2 0.9 Lang Nelson Association 210,850 9 0.8 – – – CI Minn I-A, LLC 209,250 10 0.8 – – – Paddock Properties, Limited Partnership – – – 151,890 3 0.9 Cobalt Industrial Reit – – – 143,850 4 0.8 Geneva Management Services, LLC – – – 143,250 5 0.8 New Hope Distribution Center, LLC – – – 139,250 6 0.8 Long Ridge Industrial Portfolio – – – 135,250 7 0.8 Roland A. Stinski – – – 135,250 7 0.8 Minnesota Masonic Home/ NorthRidge Care Center – – – 133,450 9 0.8 New Hope/US Swim Partnership – – – 131,250 10 0.8 Total 2,497,809$ 9.3 %1,425,828$ 8.3 % Source:Hennepin County/Treasurer Department Applied Tax CapacityTaxpayerCapacity Applied Tax Current Year and Nine Years Ago Principal Property Taxpayers CITY OF NEW HOPE Percentage of 2021 2012 Percentage of -114- THIS PAGE INTENTIONALLY LEFT BLANK Total Tax Collections in Levy for Subsequent Fiscal Year Amount (2)Years (3)Amount 9,228,730$ 9,102,355$ 98.63 %126,375$ 9,228,730$ 100.00 % 9,570,808 9,429,858 98.53 140,950 9,570,808 100.00 9,717,970 9,619,447 98.99 98,523 9,717,970 100.00 10,102,167 10,017,500 99.16 75,797 10,093,297 99.91 10,813,013 10,756,992 99.48 53,622 10,810,614 99.98 11,967,401 11,895,137 99.40 68,290 11,963,427 99.97 12,912,742 12,834,660 99.40 63,168 12,897,828 99.88 15,301,610 15,172,300 99.15 101,587 15,273,887 99.82 16,844,871 16,662,434 98.92 152,040 16,814,474 99.82 17,418,008 17,376,787 99.76 – 17,376,787 99.76 (1) (2) (3) Collected Within the CITY OF NEW HOPE Fiscal Year of Levy Percentage Fiscal Year of the Levy 2019 2018 Total Collections to Date Property Tax Levies and Collections (1) 2017 2015 Last Ten Fiscal Years of Levy Ended 2013 2012 2016 2014 December 31, Percentage 2020 Does not include tax increments levied and collected. Includes current year cancellations, abatements, and state paid tax credits. Includes county adjustments for prior year over collections, cancellations, and abatements. 2021 -115- General G.O. Tax Lease General Obligation Increment Revenue Obligation Bonds Bonds Total Bonds Bonds 1,120,000$ 8,230,000$ 9,350,000$ 3,505,000$ –$ 1,000,729 8,065,761 9,066,490 3,505,000 – 863,620 4,066,223 4,929,843 3,505,000 – 2,898,167 8,250,291 11,148,458 3,505,000 1,831,607 5,682,679 7,968,655 13,651,334 3,505,000 3,934,522 25,713,493 7,687,463 33,400,956 3,505,000 3,833,158 35,323,386 7,140,876 42,464,262 3,505,000 3,757,852 40,433,000 6,582,397 47,015,397 3,505,000 3,509,802 38,930,476 6,005,590 44,936,066 3,505,000 3,285,833 36,026,448 6,194,936 42,221,384 – 4,897,991 (1) Note: CITY OF NEW HOPE Ratios of Outstanding Debt by Type Last Ten Fiscal Years See the Schedule of Demographic and Economic Statistics for personal income and population data. Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. 2017 2012 2013 2014 2015 2016 2018 2019 2020 Governmental Activities Business-Type 2021 Activities Fiscal Year -116- G.O.G.O. Tax Revenue Increment Total Primary Bonds Bonds Total Government Per Capita (1) 2,033,000$ –$ 5,538,000$ 14,888,000$ 1.25 %717$ 2,723,628 – 6,228,628 15,295,118 1.24 732 2,352,553 – 5,857,553 10,787,396 0.86 518 2,151,635 1,587,602 9,075,844 20,224,302 1.49 953 1,950,071 1,586,242 10,975,835 24,627,169 1.75 1,140 1,748,533 1,584,964 10,671,655 44,072,611 3.03 2,046 1,540,021 1,494,575 10,297,448 52,761,710 3.46 2,421 1,326,532 1,401,536 9,742,870 56,758,267 3.57 2,537 1,111,126 1,307,253 9,209,212 54,145,278 3.22 2,463 889,935 1,210,406 6,998,332 49,219,716 2.83 2,239 Ratios of Outstanding Debt by Type Percentage Income (1) of Personal -117- Less Amounts General Restricted for Total Obligation Repaying Net Bonded Bonds Principal Debt Per Capita 11,383,000$ 4,222,494$ 7,160,506$ 0.498 %345$ 11,790,118 345,010 11,445,108 0.856 548 7,282,396 614,161 6,668,235 0.495 320 16,719,302 759,386 15,959,916 1.108 752 21,122,169 1,048,498 20,073,671 1.308 929 40,567,611 2,173,637 38,393,974 2.346 1,782 49,226,710 1,793,587 47,433,123 2.646 2,177 53,253,267 3,193,279 50,059,988 2.606 2,237 50,640,278 3,780,748 46,859,530 2.225 2,131 49,219,716 2,503,260 46,716,456 2.070 2,125 Note 1: Note 2: Note 3: CITY OF NEW HOPE Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Taxable Value Estimated Actual Percentage of Fiscal Year Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. 2012 2016 2017 2013 of Property Population data can be found in the Schedule of Demographic and Economic Statistics. 2014 2018 2019 2020 2015 2021 See the Schedule of Tax Capacity,Market Value,and Estimated Actual Value of Taxable Property for property value data. -118- Estimated Share of Debt Overlapping Outstanding Debt Direct debt City of New Hope*36,026,448$ 100.00 %36,026,448$ Overlapping debt Hennepin County 1,037,033,516 1.09 11,303,665 ISD No. 281, Robbinsdale 182,380,501 19.60 35,746,578 Three Rivers Park District 45,542,541 1.56 710,464 Hennepin Regional RR Authority 89,332,530 1.09 973,725 Metropolitan Council 73,049,600 0.53 387,163 Total overlapping debt 1,427,338,688$ 49,121,595 Total direct and overlapping debt 85,148,043$ * Excludes debt payable from tax increment revenue and enterprise revenue. CITY OF NEW HOPE Direct and Overlapping Governmental Activities Debt as of December 31, 2021 Estimated Percentage Governmental Unit Source: Applicable (1) Note: (1)The percentages of overlapping debt applicable is estimated using taxable market property values.Applicable percentages were estimated by determining the portion of the county’s taxable market value that is within the City’s boundaries and dividing it by the county’s total taxable market value. Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the City.This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City.This process recognizes that,when considering the City’s ability to issue and repay long-term debt,the entire debt burden borne by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident and,therefore,responsible for repaying the debt of each overlapping government. Hennepin County Taxpayer Services -119- Fiscal Year 2012 2013 2014 2015 Debt limit 39,899,385$ 36,715,865$ 37,058,019$ 40,035,532$ Total net debt applicable to the limit 970,908 839,948 696,627 2,719,528 Legal debt margin 38,928,477$ 35,875,917$ 36,361,392$ 37,316,004$ Total net debt applicable to the limit as a percentage of the debt limit 2.43% 2.29% 1.88% 6.79% Note:Under state finance law,the City’s outstanding general obligation debt should not exceed 3 percent of total market property value.By law,the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. CITY OF NEW HOPE Legal Debt Margin Information Last Ten Fiscal Years -120- 2016 2017 2018 2019 2020 2021 42,928,174$ 46,051,623$ 50,912,771$ 54,943,109$ 60,641,464$ 65,321,698$ 5,497,493 25,516,878 34,249,431 38,595,992 36,361,673 33,238,704 37,430,681$ 20,534,745$ 16,663,340$ 16,347,117$ 24,279,791$ 32,082,994$ 12.81% 55.41% 67.27% 70.25% 59.96% 50.88% Market value 2,177,389,934$ Debt limit (3 percent of market value)65,321,698 Debt applicable to limit General obligation bonds 36,026,448 Less amount available in debt service funds (2,787,744) Total net debt applicable to the limit 33,238,704 Legal debt margin 32,082,994$ Legal Debt Margin Calculation for Fiscal Year 2021 -121- (1)(2)Net Gross Operating Available Revenue Expenses Revenue Principal (4)Interest 7,676,193$ 6,493,865$ 1,182,328$ 334,000$ 162,686$ 238.04 % 7,901,855 6,573,932 1,327,923 344,000 98,588 300.04 7,887,948 7,270,310 617,638 371,000 103,685 130.12 8,039,067 7,925,903 113,164 201,000 97,854 037.87 8,738,270 6,629,232 2,109,038 202,000 172,262 563.52 9,181,674 6,850,851 2,330,823 293,503 228,142 446.82 10,247,826 7,479,247 2,768,579 394,266 232,928 441.42 10,292,470 7,408,536 2,883,934 515,326 251,673 376.00 11,287,052 8,203,328 3,083,724 525,110 245,526 400.15 12,227,593 8,563,424 3,664,169 2,197,368 166,584 1.55 (1) (2)Operating expenses exclude depreciation. (3)Revenues and expense include the Storm Water, Water Utility, Sewer Utility, and Ice Arena funds. (4)Excludes principal paid with refunding bond proceeds. Note:Details regarding the City’s outstanding debt can be found in the notes to basic financial statements.Gross revenue includes investment earnings and intergovernmental grants. Operating expenses do not include interest. Gross revenues include interest and other nonoperating revenues. 2017 2016 2015 2021 Last Ten Fiscal Years Pledged Revenue Coverage CITY OF NEW HOPE 2019 2020 2018 Fiscal Year Debt Service Coverage Revenue Bonds (3) 2014 2013 2012 -122- Per Capita Personal Personal Median School Population (1)Income (2)Income (3)Age (4)Enrollment (5) 20,764 57,476$ 1,193,431,664$ 39.4 12,126 4.8 % 20,904 58,898 1,231,203,792 39.4 12,126 4.0 20,812 60,601 1,261,228,012 39.4 12,390 2.9 21,225 63,901 1,356,298,725 39.4 12,313 2.8 21,600 65,231 1,408,989,600 39.4 12,404 2.8 21,545 67,427 1,452,714,715 39.4 12,011 3.5 21,790 70,067 1,526,759,930 39.4 12,304 2.7 22,376 71,067 1,590,195,192 39.4 12,237 2.7 21,986 76,552 1,683,072,272 36.4 12,397 8.6 21,986 79,183 1,740,917,438 36.4 12,319 2.3 (1)Provided by the Metropolitan Council. The most recent year is an estimate. (2) (3) (4) (5) (6) Sources: CITY OF NEW HOPE Rate (6) UnemploymentFiscal Demographic and Economic Statistics Last Ten Fiscal Years Year Provided by the Bureau of Labor Statistics; U.S. Department of Labor. This figure is for all of Hennepin County. 2014 Calculated by multiplying the estimated population by the per capita personal income figure. Provided by Independent School District No. 281, Robbinsdale, Minnesota. U.S. Census Bureau. 2012 2013 2015 2016 Provided by the Bureau of Economic Analysis; U.S. Department of Commerce. This figure is for all of Hennepin County. 2017 2018 2019 2020 2021 -123- THIS PAGE INTENTIONALLY LEFT BLANK Employees Rank Employees Rank ISD No. 281, Robbinsdale 1,852 1 15.7 %2,200 1 24.6 % Hy-Vee, Inc.632 2 5.3 – – – Minnesota Masonic Home/ North Ridge Care Center 560 3 – 789 2 8.8 Saint Therese Home of New Hope 544 4 4.6 650 3 7.3 Horwitz 345 5 2.9 – – – Perrigo Company 323 6 2.7 413 4 4.6 Intermediate District 287 266 7 2.2 – – – City of New Hope 262 8 2.2 – – – YMCA 228 9 1.9 – – – Liberty Diversified International 200 10 1.7 200 7 2.2 Welsh Navarre MN, LLC – – – 280 5 3.1 Coborn’s Delivers – – – 240 6 2.7 Dakota Growers Pasta – – – 200 8 2.2 Waymouth Farms, Inc – – – 137 9 1.5 Parker – Hannifin Oildyne Division – – – 135 10 1.5 5,212 39.2 %5,244 58.6 % Source:Minnesota Department of Employment and Economic Development Employer Employment CITY OF NEW HOPE Employment of Total City Percentage 2012 Percentage Current Year and Nine Years Ago 2021 of Total City Principal Employers -124- Fiscal Year 2012 2013 2014 2015 Function General government 15 16 14 13 Public safety Police Officers 30 31 33 35 Civilians 7 7 7 9 Public works 24 24 24 23 Culture and recreation 6 7 7 7 Total 82 85 85 87 Source: Various city departments CITY OF NEW HOPE Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years -125- `` 2016 2017 2018 2019 2020 2021 13 16 17 17 17 17 33 34 34 34 34 33 9 10 11 10 10 9 24 24 24 24 24 24 8 7 7 7 8 8 87 91 93 92 93 91 -126- Fiscal Year 2012 2013 2014 2015 Function – – – 12 687 600 1,330 2,882 Culture and recreation 5,598 4,565 3,121 2,746 5,323 7,442 5,734 5,815 148,966 144,000 122,478 124,777 Golf course Rounds of golf at the municipal course 19,568 16,782 16,431 18,175 Ice arena Hours of ice time rental 3,558 3,739 3,734 3,683 Water Water main breaks 26 30 27 21 Average daily consumption (thousands of gallons)1,828 1,682 1,571 1,559 Sewer Average daily treatment (thousands of gallons)2,189 1,500 2,200 1,670 Note:Indicators are not available for the general government function. Source:Various city departments CITY OF NEW HOPE Operating Indicators by Function Last Ten Fiscal Years Attendance at sponsored events Street resurfacing (miles) Potholes repaired Program registration – adults Program registration – youth Public works -127- 2016 2017 2018 2019 2020 2021 3 3 3 4 4 3 3,025 2,530 3,000 2,900 2,900 2,900 3,343 3,011 2,603 1,860 1,426 2,305 6,043 5,969 5,413 4,695 3,325 4,785 127,865 127,112 102,659 101,409 69,415 144,455 20,375 18,662 17,800 16,837 26,553 27,654 3,567 4,030 4,151 4,202 2,984 4,416 19 12 23 14 18 28 1,588 1,616 1,616 1,551 1,775 1,845 1,800 1,352 1,405 1,355 1,451 1,473 -128- Fiscal Year 2012 2013 2014 2015 Function Public safety Police stations 1 1 1 1 Fire stations 3 3 3 3 Public works Highways and streets 64.0 64.0 64.0 64.0 City streets (miles)8.5 8.5 8.5 8.5 State and county streets (miles)26.4 26.4 26.4 26.4 Sidewalks (miles)580.0 580.0 580.0 580.0 Streetlights 2.0 2.0 2.0 2.0 Railroad bridges 4.0 4.0 4.0 4.0 Culture and recreation Parks 23 23 23 23 Swimming pools Olympic 1 1 1 1 Recreational 1 1 1 1 Outdoor theatre 1 1 1 1 Tennis courts 17 17 17 17 Water Water main (miles)63 63 63 63 Fire hydrants 690 690 690 690 Maximum daily capacity 21,000,000 21,000,000 21,000,000 21,000,000 Sewer Sanitary sewer main (miles)74 74 74 74 Storm sewer lines (miles)56 56 56 56 Ice arenas 1 1 1 1 Golf courses 1 1 1 1 Source:Various city departments CITY OF NEW HOPE Capital Asset Statistics by Function Last Ten Fiscal Years -129- 2016 2017 2018 2019 2020 2021 1 1 1 1 1 1 3 3 3 3 3 3 64.0 64.0 64.0 64.0 64.8 64.8 8.5 8.5 8.5 8.5 8.5 8.5 26.4 27.0 27.0 27.0 27.3 27.3 619.0 619.0 619.0 630.0 630.0 630.0 2.0 2.0 2.0 2.0 2.0 98.0 4.0 4.0 4.0 4.0 4.0 4.0 23 23 23 23 23 23 1 1 – – – 1 1 1 – – – 1 1 1 1 – – 1 17 17 17 17 17 9 64 64 64 64 65 65 690 690 690 690 716 716 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000 75 75 75 75 75 75 56 56 56 56 57 57 1 1 1 1 1 1 1 1 1 1 1 1 -130- THIS PAGE INTENTIONALLY LEFT BLANK   I:\RFA\City Manager\2022\6.1 Business Licenses\6.1 Q ‐ Business Licenses 061322.docx   Request for Action  June 13, 2022    Approved by: Tim W. Hoyt  Originating Department: City Manager  By: Valerie Leone, City Clerk‐Treasurer    Agenda Title  Approval of business license(s)  Requested Action  In accordance with Chapter 8 of the New Hope Code, all applications for business licenses must be presented  to the City Council for consideration. Staff recommends approval of all listed requests.    Background  All required paperwork and fees have been received for the following businesses:    AM 7th LLC dba 42nd Tobacco Shop 7700 42nd Avenue North Tobacco Sales  Mans Enterprises LLC dba The  Laundry Room  7231 42nd Avenue North Self‐Service/Coin Operated Laundry            Agenda Section Consent Item Number  6.1  G:\City Manager\AGENDA\6.2 R‐Approval of Claims Merge Doc.docx   Request for Action  June 13, 2022    Approved by: Tim W. Hoyt, Acting City Manager  Originating Department: City Manager  By: Tim W. Hoyt, Acting City Manager    Agenda Title  Approval of claims through June 13, 2022  Requested Action  Claims for services and commodities purchased through this period are listed on the Check Disbursement  Report  Attachments   Check Disbursement Report  Agenda Section Consent Item Number  6.2  I:\RFA\City Manager\2022\Cert of Achievement\6.4 Q ‐ Present GFOA Certificate of Achievement.docx    Request for Action  June 13, 2022    Approved by: Tim W. Hoyt, Acting City Manager  Originating Department: City Manager  By: Valerie Leone, City Clerk‐Treasurer    Agenda Title  Motion accepting certificate of achievement for excellence in financial reporting  Requested Action  Staff recommends the City Council approve a motion accepting the Certificate of Achievement for Excellence  in Financial Reporting for the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended  December 31, 2020.  Policy/Past Practice  The city of New Hope has received this award in the past and it has been accepted and acknowledged by the  City Council at a council meeting.  Background  The city was recently notified by the Government Finance Officers Association (GFOA) that the New Hope  ACFR for the fiscal year ended December 31, 2020, qualified for a Certificate of Achievement for Excellence in  Financial Reporting. Recipients who have received the award in the past receive a certificate and a brass  “2020” medallion to be affixed to the current plaque, which is displayed in the city hall lobby. The Certificate  of Achievement is the highest form of recognition in governmental accounting and financial reporting and its  attainment represents a significant accomplishment by a government and its management.     The comments noted in the report will be addressed by the auditor during review of the 2021 Audit Report.      The city manager considers this a significant accomplishment for the city and extends appreciation to Abdo,  city staff and the City Council for the cooperation and teamwork effort in accomplishing this goal.  Attachments   GFOA correspondence   Certificate of Achievement   Summary of grading   Comments/suggestions for improvement         Agenda Section Consent Item Number  6.4  5/17/2022 Shari Rains Accountant City of New Hope, Minnesota Dear Ms. Rains: We are pleased to notify you that your December 31, 2020 fiscal year end annual comprehensive financial report has been awarded GFOA's Certificate of Achievement for Excellence in Financial Reporting. However, our review noted one or more serious deficiencies, which required that the Certificate be issued on a qualified basis. While these deficiencies do not disqualify your report from receiving the Certificate, failure to correct them in your next submission will almost certainly preclude award of the Certificate. If you have any questions, or do not understand precisely what changes are required, we strongly suggest that you contact us promptly in order to have sufficient time to correct the identified deficiencies for your next submission, keeping in mind that additional work by your staff and/or contractors (including possibly actuaries and auditors) may be necessary to do so. The GFOA established the Certificate of Achievement for Excellence in Financial Reporting Program (Certificate Program) in 1945 to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare annual comprehensive financial reports that evidence the spirit of transparency and full disclosure and then to recognize individual governments that succeed in achieving that goal. The Certificate of Achievement is the highest form of recognition in governmental accounting and financial reporting. Congratulations on having satisfied the high program standards. Your electronic award packet contains the following: A "Summary of Grading" form and a confidential list of comments and suggestions for possible improvements. These documents note the specific deficiency or deficiencies that caused the award qualification. We strongly encourage you to implement the recommended improvements in your next report. Certificate of Achievement Program policy requires that written responses to this year’s comments and suggestions for improvement be included when submitting your next report. If a comment is unclear or there appears to be a discrepancy, please contact the Technical Services Center at (312) 977-9700 and ask to speak with a Certificate of Achievement Program in-house reviewer. Certificate of Achievement. A Certificate of Achievement is valid for a period of one year. A current holder of a Certificate of Achievement may reproduce the Certificate in its immediately subsequent annual comprehensive financial report. Please refer to the instructions for reproducing your Certificate in your next report. Award of Financial Reporting Achievement. When GFOA awards a government the Certificate of Achievement for Excellence in Financial Reporting, we also present an Award of Financial Reporting Achievement (AFRA) to the department identified in the application as primarily responsible for achievement of the Certificate. Sample press release. Attaining this award is a significant accomplishment. Attached is a sample news release that you may use to give appropriate publicity to this notable achievement. In addition, award recipients will receive via mail either a plaque (if first-time recipients or if the government has received the Certificate ten times since it received its last plaque) or a brass medallion to affix to the plaque (if the government currently has a plaque with space to affix the medallion). Plaques and medallions will be mailed separately. Thank you for participating in and supporting the Certificate of Achievement Program. If we may be of any further assistance, please contact the Technical Services Center at (312) 977-9700. Sincerely, Michele Mark Levine Director, Technical Services Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of New Hope Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2020 Executive Director/CEO Certificate of Achievement for Excellence in Financial Reporting Summary of Grading City of New Hope, Minnesota Member ID: 141231002 Report #: COA-2020-03989 The Certificate of Achievement Program Special Review Committee (SRC) has completed its review of your annual comprehensive financial report. The grades awarded for each grading category are listed below, followed by comments and suggestions for improvement grouped by category. Any category showing a grade of “Needs Significant Improvement” indicates an area of particular concern to the SRC. On the detailed listing of comments and suggestions for improvement, further notation will indicate which comment or comments gave rise to the areas of concern and the degree of severity of the deficiency noted by those comments. We encourage you to give special attention to these comments in order to be eligible to win the Certificate going forward. Grading Category Grade 101 - Cover, table of contents, and formatting Proficient 102 - Introductory section Proficient 103 - Report of the independent auditor Proficient 104 - Management's discussion and analysis (MD&A)Proficient 105 - Basic financial statements (preliminary considerations)Needs Significant Improvement 106 - Government-wide financial statements Proficient 107 - Fund financial statements (general considerations)Proficient 108 - Governmental fund financial statements Proficient 109 - Proprietary fund financial statements Proficient 110 - Fiduciary fund financial statements Not Applicable 111 - Summary of significant accounting policies (SSAP)Proficient 112 - Note disclosure (other than the SSAP and pension-related disclosures) Proficient 113 - Pension-related note disclosures Proficient 114 - Required supplementary information (RSI)Proficient 115 - Combining and individual fund information and other supplementary information Proficient 118 - Statistical section Proficient 119 - Other considerations Proficient Certificate of Achievement for Excellence in Financial Reporting Detailed Listing of Comments and Suggestions for Improvement City of New Hope, Minnesota Member ID: 141231002 Report #: COA-2020-03989 104 - Management's discussion and analysis (MD&A) Comment Number: 2749 Checklist Question: 4-001-06 Page 11 - Disclose the main reasons why the intergovernmental revenue increased in the General Fund from the previous year. In Management's Discussion and Analysis, the discussion should explain the underlying reasons for the significant changes in fund balances/fund net position rather than focusing solely on the size or composition of the changes (amount or percentage of change). For example, to explain an increase in tax revenue, MD&A might say, "Tax revenues for the year increased primarily due to increased property taxes revenue, which grew as a result of a 2% rate increase on all classes of property, as well as an average increase of approximately 3% in the taxable property values, driven by increased local real estate market values." [GASB Cod. Sec. 2200.109d; GASB-S34: 11d; GAAFR Chapter 31 - An analysis of the balances and transactions of individual funds] 105 - Basic financial statements (preliminary considerations) Comment Number: 1176 Checklist Question: 5-001-09 Specific comment that, if not corrected in the next report, will preclude the entity from receiving the Certificate of Achievement. Pages 16-17 - Refer to page 15. The ending net positions in the Business-type Activities and Total Primary Government. The ending balance of "net position - business-type activities" reported in the government-wide statement of activities should be the same as the amount reported as "net position - business-type activities" in the government-wide statement of net position. [GASB Cod. Sec. 1800.155, .165; Certificate Program requirement] Comment Number: 3004 Checklist Question: 5-001-09 Specific comment that, if not corrected in the next report, will preclude the entity from receiving the Certificate of Achievement. Page 31 - Refer to page 17. The ending amount reported as changes in net position in the reconciliation associated with the proprietary funds statement of revenues, expenses, and changes in fund net position/equity should be the same as the amount reported as "changes in net position - business-type activities" in the government-wide statement of activities. [GASB Cod. Sec. 1800.155, .165; Certificate Program requirement] Comment Number: 3545 Checklist Question: 5-001-02-2 Page 15 - Refer to page 56. Deferred outflows of resources and deferred inflows of resources arising from differences between projected and actual pension/OPEB plan investment earnings in different measurement periods should be aggregated and reported as a net deferred outflow of resources related to pensions/OPEB or as a net deferred inflow of resources related to pensions/OPEB. Note that the notes to the financial statements should disclose the difference between projected and actual earnings on pension/OPEB plan investments that have not yet been recognized in pension expense at a net amount rather than at gross amounts in the employer balances of deferred outflows of resources and deferred inflows of resources for the plan. [GASB Cod Sec. P20.132-.133, .152-.155, .158, .172, .186-.189, .191, .195, .204-.206, .210, .718-3; GASB Cod Sec. P50.139-.140, .159-.163, 167, .185, .200-.205, .207, .212, .221-.225, .229, .718-3; GASB-S68: 33b and 71b; GASB-S75: 43b and 86b; GAAFR Chapter 20 - Accounting and Financial Reporting for Trusted Plans] 106 - Government-wide financial statements Comment Number: 1243 Checklist Question: 6-003-09 Pages 16 and 17 - The transfers. The names of accounts that are not part of general revenue should not be indented under that title (i.e., contributions, special items, extraordinary items, and transfers). [GASB Cod. Sec. 2200.141; GASB-S34: 53-54; GAAFR Chapter 19 - Contributions to principal, Extraordinary and special items, Transfers] 118 - Statistical section Comment Number: 2205 Pages 101 and 17 - The amounts of changes in net position for the business-type activities and total primary government should agree between these pages. The amounts reported in the statistical tables should agree with related amounts reported elsewhere in the annual comprehensive financial report. [Certificate Program requirement] 120 - New Pronouncements Comment Number: 3602 The GASB has issued the following statements and implementation guides: 1. Statement No. 87, "Leases." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2022. 2. Statement No. 89, "Accounting for Interest Cost Incurred before the End of a Construction Period." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends December 31, 2021. 3. Statement No. 91, "Conduit Debt Obligations." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends December 31, 2022. 4. Statement 92, "Omnibus 2020." The requirements of this Statement, The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2022. 5. Statement 93, "Replacement of Interbank Offered Rates." The requirement in paragraph 11b will take effect for reporting periods ending after December 31, 2021. The requirements in paragraphs 13 and 14 will take effect for financial statements starting with the fiscal year that ends June 30, 2022. 6. Statement No. 94, "Public-Private and Public-Public Partnerships and Availability Payment Arrangements." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2023. 7. Statement No. 96, "Subscription-Based Information Technology Arrangements." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2023. 8. 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 Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32." The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2022. 9. Implementation Guide No. 2019-1, "Implementation Guidance Update—2019." The requirements of this Implementation Guide will take effect for financial statements starting with the fiscal year that ends June 30, 2021. 10. Implementation Guide No. 2019-3, "Leases." The requirements of this Implementation Guide will take effect for financial statements starting with the fiscal year that ends June 30, 2022. Earlier application of these statements is encouraged. For the original pronouncements and the implementation guides, please visit the GASB’s website, www.gasb.org. Comment Number: 3603 As per the GFOA policy statement issued on March 9, 2021, the Government Finance Officers Association (GFOA) has asked all industry affiliates to immediately stop using the common four-letter acronym most often associated with the Comprehensive Annual Financial Report. Additional information and a toolkit for making this change is on GFOA’s website at: https://www.gfoa.org/eta. ************ END OF COMMENTS FOR COA-2020-03989 ************ I:\RFA\P&R\MISC\2022\Q ‐ Donation ‐ Holmquist.docx   Request for Action  June 13, 2022    Approved by: Tim W. Hoyt, Acting City Manager  Originating Department: Parks & Recreation  By: Susan Rader, Director    Agenda Title  Motion to accept a $50 donation for recreation scholarships  Requested Action  Staff requests that the City Council approve a motion to accept this generous donation of $50 from Marlene  Holmquist to be used for scholarships in memory of Dan Super.    Policy/Past Practice  It is past practice for the City Council to formally accept donations.  Background  Ms. Holmquist is a resident of New Hope and is making this donation in memory of her neighbor Dan Super,  who recently passed away. She described Dan as a thoughtful neighbor who was truly a gem. Ms. Holmquist  requested the donation be used for the recreation scholarship program.      A thank you letter will be sent to Ms. Holmquist and a note will also be sent to Jeanne Super informing her of  the memorial.        Agenda Section Consent Item Number  6.5  C:\Users\vthompson\Desktop\12.1 Q ‐ Upcoming Events.docx   Request for Action  June 13, 2022    Approved by: Tim W. Hoyt, Acting City Manager  Originating Department: City Manager  By: Tim W. Hoyt, Acting City Manager    Agenda Title  Exchange of communication between members of the city council  Upcoming meetings and events:  June 14  7 p.m. – Citizen Advisory Commission Meeting    June 15  10 a.m. to 11:00 a.m. – Daytime Music in the Park, “The Jolly Pops” at New Hope  Performance Center    11:30 a.m. – North Metro Mayors Operating Committee Meeting at Maple Grove    June 16  8:30 a.m. – Bassett Creek Watershed Management Commission Meeting    9:15 p.m. – 10:30 p.m. – Movie in the Park, “The Lego Movie” at New Hope Performance  Center     June 17  11 a.m. to 2 p.m. – Food Truck Friday at New Hope City Hall    June 17‐18 City‐Wide Garage Sale      June 18  9 a.m. to 1 p.m. – New Hope Community Farmers Market      June 20  6/6:30 p.m. – City Council Work Session    June 22  7 p.m. to 8:30 p.m. – Music in the Park, “Mitchell Hall & The Tennessee Trio” at New  Hope Performance Center    June 24  11 a.m. to 2 p.m. – Food Truck Friday at New Hope City Hall    June 25  9 a.m. to 1 p.m. – New Hope Community Farmers Market     June 27  7 p.m. – City Council Meeting     Agenda Section Other Business Item Number  12.1