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2013 CAFRCITY OF NEW HOPE NEW HOPE, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2013 THIS PAGE IS LEFT BLANK INTENTIONALLY CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2013 KIRK MCDONALD - CITY MANAGER PREPARED BY: DEPARTMENT OF FINANCE Member GFOA of U.S. and Canada THIS PAGE IS LEFT BLANK INTENTIONALLY CITY OF NEW HOPE, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2013 INTRODUCTORY SECTION Page No. Letter of Transmittal from City Manager 5 Certificate of Achievement for Excellence in Financial Reporting 10 Organizational Chart 11 Elected and Appointed Officials 12 FINANCIAL SECTION Independent Auditor's Report 15 Management's Discussion and Analysis 19 Basic Financial Statements Government -wide Financial Statements Statement of Net Position 31 Statement of Activities 32 Fund Financial Statements Governmental Funds 100 Balance Sheet 36 Reconciliation of the Balance Sheet to the Statement of Net Position 39 Statement of Revenues, Expenditures and Changes in Fund Balances 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 42 General Fund 105 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 43 Economic Development Authority Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 45 Proprietary Funds Statements of Net Position 46 Statements of Revenues, Expenses and Changes in Net Position 54 Statements of Cash Flows 58 Fiduciary Funds Statement of Fiduciary Net Position 66 Notes to the Financial Statements 67 Required Supplementary Information Schedule of Funding Progress for the Postemployment Benefit Plan 94 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 96 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 97 Nonmajor Special Revenue Funds Subcombining Balance Sheet 100 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 101 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Solid Waste Management Fund 102 Nonmajor Debt Service Funds Subcombining Balance Sheet 104 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 105 -1- CITY OF NEW HOPE, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2013 Page No. Combining and Individual Fund Financial Statements and Schedules - Continued Nonmajor Capital Projects Funds Subcombining Balance Sheet 108 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 109 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 111 Internal Service Funds Combining Statements of Net Position 118 Combining Statements of Revenues, Expenses and Changes in Net Position 120 Combining Statements of Cash Flows 122 Agency Fund Statement of Changes in Assets and Liabilities 124 STATISTICAL SECTION (UNAUDITED) Financial Trends Summary Financial Report Revenues and Expenditures for General Operations - Governmental Funds 129 Net Position by Component 130 Changes in Net Position 132 Governmental Activities Tax Revenues by Source 137 Fund Balances of Governmental Funds 138 Changes in Fund Balances of Governmental Funds 140 General Government Tax Revenues by Source 143 Revenue Capacity Tax Capacity, Market Value and Estimated Actual Value of Taxable Property 144 Property Tax Capacity Rates - Direct and Overlapping Governments 146 Principal Property Taxpayers 148 Property Tax Levies and Collections 151 Debt Capacity Ratios of Outstanding Debt by Type 152 Ratios of General Bonded Debt Outstanding 154 Computation of Direct and Overlapping Debt 155 Legal Debt Margin Information 156 Pledged Revenue Coverage 158 Demographic and Economic Information Demographic and Economic Statistics 159 Principal Employers 160 Operating Information Full -Time Equivalent City Government Employees by Function 162 Operating Indicators by Function 165 Capital Asset Statistics by Function 166 -2- INTRODUCTORY SECTION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -3- THIS PAGE IS LEFT BLANK INTENTIONALLY -4- May 7, 2014 Honorable Mayor and City Council City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 -4898 The Comprehensive Annual Financial Report (CAFR) of the City of New Hope, Minnesota (the City), for the fiscal year ended December 31, 2013, 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 20,764. The City is 5.6 square miles in area and is substantially developed with the exception of just under 12 acres of property which consists primarily of residential zoned property. The City was incorporated in 1953 and enjoys a diverse commercial and residential tax base. 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. CITY OF 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 -5- 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 and fiduciary 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, and 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 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 Economic Development Authority (EDA) is reported as special revenue fund of 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. There are approximately 440 commercial /industrial /service businesses in the City, and the major employers are listed as follows: Major Employers Products /Services Employees Independent School District No. 281 Education 2,200 Minnesota Masonic Home/North Ridge Care Center Skilled nursing care facility 789 St. Therese Home of New Hope Skilled nursing care facility 650 Perrigo Company Pharmaceutical and medicine manufacturing 413 Navarre Corporation Ecommerce services 280 Cobom's Delivers Direct selling establishments 240 Liberty Diversified International Stationery supplies 200 Dakota Growers Pasta Company Macaroni and spaghetti 200 Waymouth Farms, Inc. Salted and roasted nuts and seeds 137 Parker - Hannifin Oildyne Division Fluid power cylinders and actuators 135 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. -6- 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: 11 retaining existing businesses, 21 assisting with expansions, 31 attracting new businesses to vacant available buildings, 41 attracting new construction to a limited number of available vacant sites, and 51 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, a monthly business forum was established to share information and improve communications between businesses and the City and the forum continued through 2013. The City is also a long time member of the TwinWest Chamber of Commerce. In 2013, $17,069,450 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. PLANNING AND DEVELOPMENT The following planning and development activities occurred in 2013: Midland Center /Arc Value Village The owners of Midland Center proceeded with a major face lift to their center. At the same time they completed a major addition, 8,695 square feet for their largest tenant, Arc Value Village. Auto Zone A new Auto Zone sought planning approval for the Bass Lake Road area. This will be a 7,360 square foot facility and during redevelopment an abandoned gas station will be removed and environmental cleanup of the site will take place. The Claws The owners /redevelopers sought planning case approval for the redevelopment of an old Taco Bell into The Claws Restaurant (Seafood). The Gates of New Hope The owners of the property sought approval of a rezoning and a Comprehensive Plan Amendment for a possible future apartment project on this site off of Medicine Lake Road. Domino's Planning case approval for the redevelopment of a building was sought by Domino's. They would upon completion of the redevelopment relocate from Midland Center to this sight on Winnetka Avenue North. The facility when completely redeveloped would have space for two additional tenants. -7- Housing The City's commitment to maintaining its housing stock is supported through a variety of cooperative projects and programs. Approximately $3,453,112 was reinvested in the City's housing stock in 2013 for private home 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 2013 continued the expenditure of previously allocated CDBG funds. ii. The city continued to operate their scattered site housing program with the redevelopment one site by Habitat for Humanity and the city solicited bids and redeveloped another site. b. Northwest Suburban Remodeling Fair - annual remodeling fair sponsored by the City and the cities of Brooklyn Center, Brooklyn Park, Crystal, Maple Grove, Plymouth, Robbinsdale and Osseo. 2. Housing maintenance programs: a. Code compliance inspections - 309 inspections completed in 2013. 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 459 single family rental units were registered with the City. iii. A total of 3,582 multi - family rental units were registered with the City. c. Multifamily Property Manager's Association - quarterly meetings. 3. Metropolitan Council Livable Communities Act - annually renewed by the City. PARKS AND RECREATION The City provides the residents with a vast array of park amenities and recreation opportunities at an affordable cost. The city maintains 18 parks, two additional school district parks (summer only), an outdoor swimming pool, two sheets of indoor ice at the ice arena, a par 3 nine -hole golf course, outdoor theatre and skate park. The outdoor facilities continued to maintain strong attendance numbers although numbers were lower than 2012 due to the cold, wet spring. In 2013, the oldest playground area in the system, located at Little Acre Park, was replaced and path work upgraded. Court repair work was completed at Begin Park tennis courts and Buckthorn removal was done in several parks. The outdoor swimming pool continues to be rented by local swim teams for practices during non public swim time. In 2013, the heater was replaced for the kiddie pool and repairs were made to the wood sun shelters. The ice arena continues with year -round use of ice time for youth, adult recreational, league hockey and skating lessons. The facility also rents ice time to local tournament groups such as Elite and Showcase. In 2013, both the energy project and interior improvement projects were finalized. Other improvements included replacement of the exterior building sign, upgrades to the fire alarm and security systems, two new sound systems and the start of a dryland training area. The go if course continues to offer leagues, lessons, tournaments and open golf for all age groups. During the non -golf season, the clubhouse is rented to outside groups. PROPERTY TAX PROCESS Preliminary tax levies have to be sent to the county auditor by September 15th 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. -8- OTHER PERTINENT INFORMATION Independent Audit - As required by Minnesota statute, 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 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 a long -term plan to City Council in 2013 that will highlight the tax effect of major capital and operating decisions. This will also be an important document when preparing future budgets. AWARDS AND ACKNOWLEDGEMENTS The Certificate of Achievement for Excellence in Financial Reporting - The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended December 31, 2012. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. 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, Eick and Meyers, LLP (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 -9- The Government Finance Officers Association of the United States and Canada presents this AWARD OF FINANCIAL REPORTING ACHIEVEMENT to ILI 0 Finance Department City of New Hope, Minnesota ;'�i�t��E QFfi i'L Ot OFTH£ , , NIWB SWES , Z j�U u, i A D CAM £� d COR'NF AT10N A The award of Financial Reporting Achievement is presented by the Government Finance Officers Association to the individuals) designated as instrumental in their government unit achieving a Certificate of Achievement for Excellence in Financial Reporting. A Certificate of Achievement is presented to those government units whose annual financial reports are judged to adhere to program standards and represents the highest award in government financial reporting. Executive Director Date November 19, 2013 e 4� 2 Residents City of New Hope ----------- - - - - -, City Council r —i Planning Commission I I Policy I `------------ - - - - -- I FDA Board I ------------------- I 1111A Board I i Citizen Advisory i I I — —' Commission I i I I -- - - - - - - - - - - - - - - - - I ; I I I City Manager —i Human Rights Commission ' I I i I Chiet Administrator `------------- - - - - -` I GovemmentRelations I Budget I ,------------- - - - - -, I Council Relations I r — i Personnel Board I EmiergencyManagement I Fire Board EDA Executive Director HRA Executive Director i ---------------- - - - - - I Audit I I West Metro Fire- Rescue District i I I HRG Representative I i Fire Suppression i AEMContract I — Fire Prevention i — — — — — — — Emergency Mgmt. Coord. i — �- City Clerk/Treasurer Council Relations Rescue Elections Explorers Licensing `---------------- - - - - -' Insurance - - - -- - - - - - -- City Hall Facility Human Resources / Administrative Services Human Resources Safety Into Technology Communications Risk Mgmt/Insurance Finance/Accounting Payroll Community Development Inspections Permits Housing Econom c Developmt Planning/Zoning City of New Hope March 2014 ------------- - - - - -, City Attorney -------- - - - - -- i - - i Steve Sondrall i I `------------- - - - - -' ------- - - - - -- I i City Engineer i �1 Stantec I ----------------- Fiscal Advisors AEM I i Dorsey and Whitney I Ehlers I I ------------------- L� City Planner Alan Brixius `------------- - - - - -+ Parks & Recreation Recreation Parks Recreation Facilities Forestry Police Patrol Investigation Community Services Animal Control Crime Prevention School Liaison Reserves Explorers Public Works Utility Billing Utilities Central Garage Streets Parks Maintenance CITY OF NEW HOPE ELECTED AND APPOINTED OFFICIALS FOR THE YEAR ENDED DECEMBER 31, 2013 ELECTED Name Title Kathi Hemken Mayor John Elder Council Member Andrew Hoffe Council Member Eric Lammle Council Member Daniel Stauner Council Member I:\UZ171\YYD111 Name Title Kirk McDonald City Manager Bob Paschke Director of Public Works Curtis Jacobsen Director of Community Development Susan Rader Director of Parks and Recreation Tim Fournier Director of Police Rich Johnson Director of Human Resources and Administrative Services Valerie Leone City Clerk Term Expires 12/31/16 12/31/14 12/31/16 12/31/16 12/31/14 -12- FINANCIAL SECTION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -13- THIS PAGE IS LEFT BLANK INTENTIONALLY -14- MMKR CERTIFIED PUBLIC A C C O U N . I . A N T S INDEPENDENT AUDITOR'S REPORT To the City Council and Management City of New Hope, Minnesota REPORT ON THE FINANCIAL STATEMENTS PRINCIPALS Thomas M. Montague, CPA Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichren, CPA Aaron J Nielsen, CPA Victoria L. Holinka, CPA 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 of New Hope, Minnesota (the City) as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR'S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. -15- (continued) Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 7353 Wayzata BuLdcvard • Suitt 410 • Minneapohs, MN 55416 • Tc1cphonc: 952- 545 -0424 - Tdcfaa: 952- 545 -0569 . ww.,mnAr,com OPINIONS In our opinion, the financial statements referred to on the previous page 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 as of December 31, 2013, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund and major special revenue funds for the year then ended, in accordance with accounting principles generally accepted in the United States of America. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Funding Progress for the Postemployment Benefit Plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other 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 introductory section, combining and individual fund statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Prior Year Comparative Information We have previously audited the City's 2012 financial statements, and we expressed unmodified audit opinions on the respective financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information in our report dated May 16, 2013. In our opinion, the partial comparative information presented herein as of and for the year ended December 31, 2012 is consistent, in all material respects, with the audited financial statements from which it has been derived. (continued) -16- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 14, 2014 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 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 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 14, 2014 -17- THIS PAGE IS LEFT BLANK INTENTIONALLY -18- Management Discussion & Analysis As management of the City of New Hope, Minnesota, (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2013. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which starts on page 5 of this report. Financial Highlights • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $72,771,643 (net position). Of this amount, $26,200,600 (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 $5,883,830. This was primarily a result of the following factors: of the $4,463,113 of intergovernmental revenue, roughly $3,892,000 was for street infrastructure used for street projects. Total net revenues from operation of the business -type activities of $884,021. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $23,849,647, an increase of $1,397,244 in comparison with the prior year. Approximately 23.3 percent of this total amount ($5,567,933) 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 $5,567,933 (53.1 percent) of total General fund 2013 expenditures and transfers out. • The City's total noncurrent liabilities increased by $388,232 (2.5 percent) during the current fiscal year. The key factor in this increase was the issuance of a MN Public Facilities Note during 2013. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. 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. -19- Figure A -1 shows how the various parts of this annual report are arranged and related to one another. Figure A -1 Annual Report Format --------------- - - - - -, , 7 e"tWr Basic Required r ) & daddem Financial Supplementary aid Statements Information rfvcaQcyQi¢ -- - - - - - - - - - - - - - - - - - - , Government -Wide Fund Financial Financial to f4c Statements Statements 76xacaciae .5t1&Me"xte Summary Detail Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private - sector business. The statement of net position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time increases or decreases in net position may serve as a useful indicator of whether the financial position of the City 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 cashflows. Thus, revenues and expenses are reported in the statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City 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. The government -wide financial statements start on page 31 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. -20- Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term 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 fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this 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, Temporary Financing, 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 non -major 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 several special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with the adopted budgets. The basic governmental fund financial statements start on page 36 of this report. Proprietary fund 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. All internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements start on page 46 of this report. Fiduciary funds. These funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements start on page 66 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements start on page 67 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide other postemployment benefits to its employees. Required supplementary information can be found on page 94 of this report. The combining statements referred to earlier, in connection with non -major governmental funds and internal service funds are presented immediately following the required supplementary information. Combining and individual fund financial statements and schedules start on page 96 of this report. -21- Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $72,771,643 at the close of the most recent fiscal year. A portion of the City's net position (61.4 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; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of New Hope's Summary of Net Position Governmental Activities Assets Current and other assets Capital assets, net of depreciation Increase 2013 2012 (Decrease) Business -type Activities Increase 2013 2012 (Decrease) $ 34,631,491 $ 34,133,305 $ 498,186 $ 3,355,468 $ 3,454,689 $ (99,221) 31,510,102 27,925,630 3,584,472 20,370,904 18,386,014 1,984,890 Total assets Liabilities Other liabilities Noncurrent liabilities Total liabilities Net position Net investment in capital assets Restricted Unrestricted Total net position 66,141,593 62,058,935 4,082,658 23,726,372 21,840,703 1,885,669 607,993 894,662 (286,669) 534,117 551,183 (17,066) 9,700,241 10,005,228 (304,987) 6,253,971 5,560,752 693,219 10,308,234 10,899,890 (591,656) 6,788,088 6,111,935 676,153 30,509,373 26,793,142 3,716,231 14,142,276 12,843,624 1,298,652 1,619,394 1,619,696 (302) 300,000 150,000 150,000 23,704,592 22,746,207 958,385 2,496,008 2,735,144 (239,136) $ 55,833,359 $ 51,159,045 $ 4,674,314 $ 16,938,284 $ 15,728,768 $ 1,209,516 An additional portion of the City's net position, $1,919,394, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted netposition, $26,200,600, 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, both for the City as a whole, as well as for its separate governmental and business -type activities. -22- The following table indicates the changes in net position for the City's governmental and business -type activities: City of New Hope's Changes in Net Position Expenses Governmental Activities Business -type Activities General government Increase 1,931,318 (94,124) Increase 2013 2012 (Decrease) 2013 2012 (Decrease) Revenues Public works 1,790,669 2,126,043 (335,374) - Program revenues Culture and recreation 1,946,243 1,928,591 17,652 - Charges for services $ 1,977,435 $ 1,949,404 $ 28,031 $ 7,985,325 $ 8,021,311 $ (35,986) Operating grants and contributions 828,276 2,162,263 (1,333,987) 306,520 22,340 284,180 Capital grants and contributions 3,929,565 245,290 3,684,275 225,300 106,291 119,009 General revenues 90,166 Water utility - - - 3,215,714 Taxes (466,888) Golf course - - 262,894 Property taxes 9,554,629 9,129,247 425,382 - - - Tax increments 511,924 1,343,248 (831,324) - - - Franchise taxes 438,834 440,149 (1,315) - - - Grants and contributions not 12,797 Total expenses 12,533,226 13,218,260 (685,034) 7,633,124 restricted to specific programs 49,005 47,662 1,343 - - - Unrestricted investment earnings 198,658 429,595 (230,937) 7,508 57,384 (49,876) Gain on sale of capital assets 37,201 69,321 (32,120) - - - Total revenues 17,525,527 15,816,179 1,709,348 8,524,653 8,207,326 317,327 Expenses General government 1,837,194 1,931,318 (94,124) Public safety 6,238,779 6,062,362 176,417 Public works 1,790,669 2,126,043 (335,374) - - Culture and recreation 1,946,243 1,928,591 17,652 - - - Economic development 431,332 762,202 (330,870) - - - Interest on long -term debt 289,009 407,744 (118,735) - - - Sewer utility - - - 2,310,604 2,220,438 90,166 Water utility - - - 3,215,714 3,682,602 (466,888) Golf course - - 262,894 298,555 (35,661) Ice arena - - - 957,784 771,628 186,156 Storm water - - - 768,610 425,112 343,498 Street lighting - - - 117,518 104,721 12,797 Total expenses 12,533,226 13,218,260 (685,034) 7,633,124 7,503,056 130,068 Changes in net position before transfers 4,992,301 2,597,919 2,394,382 891,529 704,270 187,259 Transfers - capital assets - (23,679) 23,679 - 23,679 (23,679) Transfers - internal activities (317,987) 92,650 (410,637) 317,987 (92,650) 410,637 Change in net position 4,674,314 2,666,890 2,007,424 1,209,516 635,299 574,217 Net position (restated), January 1 51,159,045 48,492,155 2,666,890 15,728,768 15,093,469 635,299 Net position, December 31 $ 55,833,359 $ 51,159,045 $ 4,674,314 $ 16,938,284 $ 15,728,768 $ 1 -23- Governmental activities. Governmental activities increased the City's net position by $4,674,314, thereby accounting for 79.4 percent of the total growth in net position of the City. Expenses - The following chart illustrates the City's expenses and program revenues for its governmental activities: Expenses and Program Revenues - Governmental Activities $7,000,000 $6,500,000 $6,000,000 $5,500,000 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 ■ Expenses ■ Program revenues + Revenues - The following chart illustrates the City's revenue by source for its governmental activities: Revenues by Source - Governmental Activities Property taxes 54.5% Capital grants and contributions 22.4% Tax increments Franchise taxes ?.5% Grants and ; ontributions unrestricted 0.3% ed mings pital -24- General Public safety Public works Culture and Economic Interest on long - government recreation development term debt UVIMIUMMUN Charges for services 0.2% 4.7% 11.4% Business -type activities. The net position of business -type activities increased by $1,209,516, thereby accounting for 20.6 percent of the total growth in net position of the City. This increase was primarily the result of total net revenues from the programs of $886,021, particularly with storm water operations of $406,673. Below are the graphs showing the business -type activities revenue and expense comparisons. Expense and Program Revenues - Business -type Activities $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Sewer utility Water utility Golf course Ice arena Storm water Street lighting ■Expenses ■ Program revenues Revenue Sources - Business -type Activities Operating € and contribi 3.6% for services 93.7% -25- Capital grants and contributions Unrestricted Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. 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 $23,849,647, an increase of $1,397,244 in comparison with the prior year. Approximately 23.3 percent of this total amount, $5,567,933, 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 ($15,484), 2) restricted ($5,550,819), 3) committed ($4,511,073), or 4) assigned ($8,204,338). For further classification refer to Note 3F on page 85 of this report. Activity in the City's major funds is discussed below: Fund Balance December 31, Increase Major Funds 2013 2012 (Decrease) General $ 5,583,417 $ 5,095,737 $ 487,680 The General fund is the chief operating fund of the City. As a measure of the General fund's liquidity, it may be useful to compare fund balance to total fund expenditures and transfers out. Unassigned fund balance represents 53.1 percent of total 2013 expenditures and transfers out. Economic Development Authority $ 4,326,022 $ 4,989,473 $ (663,451) The increase in fund balance is primarily due to capital outlay and special programming expenditures over budgeted amounts. HRA Construction $ 1,443,302 $ 1,319,423 $ 123,879 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. The increase in fund balance is primarily a result of tax increments received in excess of payments. Street Infrastructure $ 3,908,890 $ 2,158,764 $ 1,750,126 This fund accounts for capital outlay expenditures related to street infrastructure. The increase is a result of revenues in excess of expenditures. Temporary Financing $ 3,130,125 $ 3,082,536 $ 47,589 The Temporary financing fund is used for general capital improvements. In 2013, the fund receipted special assessment revenue in excess of expenditures. HRA Bonds $ 3,815,654 $ 4,073,402 $ (257,748) At year -end, this fund has $3,813,745 of cash held with fiscal agent, representing bond proceeds to be used to call refunded bonds at a later date. The decrease in fund balance is a result of debt service expenditures in excess of tax increments collected. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. At the end of the year, unrestricted net position of the enterprise funds amounted to $3,397,270. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business -type activities. General Fund Budgetary Highlights The City's General fund budget was not amended during the year. The budget called for no change in fund balance. Revenues provided positive budget variances and expenditures provided positive budget variances. Actual revenues were over budget by $227,886, and expenditures were under budget by $461,691. In addition the General fund transfers in were $39,671 less than budget due to more favorable results from the pool operations that required less subsidy from the Park Infrastructure fund. The transfers out of $183,686 related to the City Council approved transfer to the City Hall capital fund. This opportunity was not contemplated in the final budget for 2013. -26- Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for its governmental and business type activities as of December 31, 2013, was $51,881,006 (net of accumulated depreciation). This investment in capital assets includes land, buildings and system improvements, vehicles and equipment, park facilities, roads, highways, and bridges. The total increase in the City's investment in capital assets for the current fiscal year was 12.0 percent. Major capital asset events during the current fiscal year consisted of- 0 Multiple vehicle and equipment purchases totaling $1,103,565. • Completion of the Civic Center Improvements, Interior Improvements to the Ice Arena, Golf Course Rain Garden, Highway 169 Water Main Improvements, 2012 Sanitary Sewer Relining, Centerpoint/Winnetka Utilities Improvements, 2013 Sanitary Sewer Lining, and Bass Lake Road Water Main Improvements. The projects completed during 2013 had total projects costs of approximately $3.9 million. City of New Hope's Capital Assets (net of depreciation) Additional information on the City's capital assets can be found in Note 3C starting on page 78 of this report. Long -term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $15,295,118. Of this amount $1,000,729 will be paid from general property taxes and $8,065,761 from redevelopment district tax increments. The remaining $6,228,628 of outstanding bonds at year end were lease revenue bonds and G.O. revenue bonds, for which the City has pledged revenue streams from the ice arena, sewer utility, water utility, and storm water for all principal and interest payments due on these bonds. The Debt Service funds have total fund balance of $3,976,435, all of which is restricted for the payment of debt service. The City has intentionally shifted the philosophy for financing major street improvements away from debt financing to the pay -as- you -go philosophy. The City established the Street and Park Infrastructure capital projects funds in 2001 with dedicated portions of the property tax levy, thereby eliminating this type of debt issuance. City of New Hope's Outstanding Debt Governmental Activities Business -type Activities Business -type Activities Increase Increase Increase Increase 2012 2013 2012 (Decrease) 2013 2012 (Decrease) Land $ 994,268 $ 994,268 $ - $ 485,042 $ 485,042 $ - Buildings and structures 3,883,592 4,134,925 (251,333) 7,107,643 7,310,949 (203,306) Vehicles and equipment 2,868,597 2,561,133 307,464 527,433 586,639 (59,206) Improvements other than - - - - 3,605 (3,605) Compensated absences buildings 14,493,949 12,824,882 1,669,067 10,068,349 8,810,580 1,257,769 Construction in progress 9,269,696 7,410,422 1,859,274 2,182,437 1,192,804 989,633 Total $ 31.510.102 $ 27.925.630 S 3,584.472 $ 20.370.904 S 18,386.014 S 1.984.890 Additional information on the City's capital assets can be found in Note 3C starting on page 78 of this report. Long -term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $15,295,118. Of this amount $1,000,729 will be paid from general property taxes and $8,065,761 from redevelopment district tax increments. The remaining $6,228,628 of outstanding bonds at year end were lease revenue bonds and G.O. revenue bonds, for which the City has pledged revenue streams from the ice arena, sewer utility, water utility, and storm water for all principal and interest payments due on these bonds. The Debt Service funds have total fund balance of $3,976,435, all of which is restricted for the payment of debt service. The City has intentionally shifted the philosophy for financing major street improvements away from debt financing to the pay -as- you -go philosophy. The City established the Street and Park Infrastructure capital projects funds in 2001 with dedicated portions of the property tax levy, thereby eliminating this type of debt issuance. City of New Hope's Outstanding Debt Governmental Activities Business -type Activities Increase Increase 2013 2012 (Decrease) 2013 2012 (Decrease) G.O. bonds and certificates S 1,000,729 $ 1,132,488 $ (131,759) $ - $ - $ - G.O.taxincrementbonds 8,065,761 8,279,884 (214,123) - - - Lease revenue bonds - - - 3,505,000 3,505,000 - G.O. revenue bonds and notes 2,723,628 2,033,785 689,843 Capital leases payable - - - - 3,605 (3,605) Compensated absences 476,352 480,222 (3,870) - - - Other postemployment benefits 157,399 112,634 44,765 25,343 18,362 6,981 Total $ 9,700,241 $ 10,005,228 $ (304,987) S 6,253,971 $ 5,560,752 $ 693,219 The City achieved an "AA" rating from Standard and Poor's. Additional information on the City's long -term debt can be found in Note 3E starting on page 81 of this report. -27- Economic Factors and Next Year's Budgets and Rates ECONOMIC OUTLOOK • User charges have been increased to account for various utility improvements scheduled for 2013 and beyond. • The overall tax levy had a 1.54 percent increase in 2014. The increase was intended to capture the tax capacity from a major retired TIF district. • Management provided a long -term plan to City Council in 2013 that will highlight the tax effect of major capital and operating decisions. This will also be an important document when preparing future budgets. 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 finance department, City of New Hope, 4401 Xylon Avenue North, New Hope, Minnesota 55428. -28- GOVERNMENT -WIDE FINANCIAL STATEMENTS CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -29- THIS PAGE IS LEFT BLANK INTENTIONALLY -30- CITY OF NEW HOPE, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2013 ASSETS Cash and temporary investments Cash held with fiscal agent Restricted cash Receivables Taxes Accrued interest Accounts Loans Special assessments Internal balances Due from other governments Inventories Prepaid items Land held for resale Investment in joint ventures Capital assets Land and construction in progress Depreciable assets (net of accumulated deprecation) Governmental Activities Business -type Activities Total TOTAL ASSETS LIABILITIES Accrued salaries payable Accounts and contracts payable Due to other governments Accrued interest payable Deposits payable Unearned revenue Noncurrent liabilities Due within one year Due in more than one year TOTAL LIABILITIES NET POSITION Net investment in capital assets Restricted for Economic development Debt service Public safety police expenditures Ice arena Unrestricted $ 21,788,129 $ 1,396,698 $ 23,184,827 3,813,745 - 3,813,745 - 300,000 300,000 165,082 - 165,082 93,142 - 93,142 142,701 1,021,888 1,164,589 404,045 - 404,045 264,653 191,249 455,902 901,262 (901,262) - 227,555 1,135,298 1,362,853 74,425 43,088 117,513 15,484 - 15,484 4,186,958 - 4,186,958 2,554,310 168,509 2,722,819 10,263,964 2,667,479 12,931,443 21,246,138 17,703,425 38,949,563 66,141,593 23,726,372 89,867,965 269,241 47,863 317,104 124,840 346,134 470,974 81,946 115,184 197,130 117,680 24,936 142,616 14,036 - 14,036 250 - 250 4,558,717 371,000 4,929,717 5,141,524 5,882,971 11,024,495 10,308,234 6,788,088 17,096,322 30,509,373 14,142,276 44,651,649 1,443,302 - 1,443,302 45,010 300,000 345,010 117,459 - 117,459 13,623 - 13,623 23,704,592 2,496,008 26,200,600 TOTAL NET POSITION The notes to the financial statements are an integral part of this statement. $ 55,833,359 $ 16,938,284 $ 72,771,643 -31- CITY OF NEW HOPE, MINNESOTA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2013 Functions /Programs Expenses Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 198,297 $ 321,960 $ - 880,843 252,496 - 226,228 167,431 3,928,065 672,067 24,655 1,500 - 61,734 - Governmental activities General government Public safety Public works Culture and recreation Economic development Interest on long -term debt Total governmental activities Business -type activities Sewer utility Water utility Golf course Ice arena Storm water Street lighting Total business -type activities Total $ 1,837,194 6,238,779 1,790,669 1,946,243 431,332 289,009 12,533,226 1,977,435 828,276 3,929,565 2,310,604 2,443,202 - - 3,215,714 3,460,008 22,775 13,184 262,894 268,133 1,771 - 957,784 725,211 281,974 - 768,610 963,167 - 212,116 117,518 125,604 - - 7,633,124 7,985,325 306,520 225,300 $ 20,166,350 $ 9,962,760 $ 1,134.796 $ 4,154,865 General revenues Taxes Property taxes Tax increments Franchise taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Transfers - internal activities Total general revenues and transfers Change in net position Net position, January 1 Net position, December 31 The notes to the financial statements are an integral part of this statement. -32- Net (Expenses) Revenues and Changes in Net Position Governmental Business -type 132,598 Activities Activities Total $ (1,316,937) $ - $ (1,316,937) (5,105,440) - (5,105,440) 2,531,055 - 2,531,055 (1,248,021) - (1,248,021) (369,598) - (369,598) (289,009) - (289,009) 5,79( 7,950) - (5,797,950) - 132,598 132,598 - 280,253 280,253 - 7,010 7,010 - 49,401 49,401 - 406,673 406,673 - 8,086 8,086 - 884,021 884,021 (5,797,950) 884,021 (4,913,929) 9,554,629 - 9,554,629 511,924 - 511,924 438,834 - 438,834 49,005 - 49,005 198,658 7,508 206,166 37,201 - 37,201 (317,987) 317,987 - 10,472,264 325,495 10,797,759 4,674,314 1,209,516 5,883,830 51,159,045 15,728,768 66,887,813 $ 55,833,359 $ 16,938,284 $ 72,771,643 -33- THIS PAGE IS LEFT BLANK INTENTIONALLY -34- FUND FINANCIAL STATEMENTS CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -35- CITY OF NEW HOPE, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2013 ASSETS Cash and temporary investments Cash held with fiscal agent Receivables Taxes Accrued interest Accounts Loans Special assessments Due from other governments Prepaid items Due from other funds Advances to other funds Land held for resale TOTAL ASSETS LIABILITIES Accrued salaries payable Accounts and contracts payable Due to other governments Deposits payable Due to other funds Advances from other funds Unearned revenue TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Unavailable revenue - taxes Unavailable revenue - special assessments Unavailable revenue - loans TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES The notes to the financial statements are an integral part of this statement. -36- 9001 9015/9501 9213 -9220 Economic Development HRA General Authority Construction $ 5,505,946 $ 564,232 $ 1,000,263 162,201 - 972 93,142 - - 114,211 4,662 - - 404,045 - 15,295 34,591 - 136,671 - - 15,484 - - - 99,413 - - 1,891,182 - - 1,753,796 2,433,162 $ 6,042,950 $ 4,751,921 $ 3,434,397 $ 240,261 $ 9,159 $ - 49,590 13,916 - 17,188 1,182 - 9,159 4,377 500 - - 99,413 - - 1,891,182 250 - - 316,448 28,634 1,991,095 127,790 - - 15,295 34,591 - - 362,674 - 143,085 397,265 - 15,484 - - - - 1,443,302 - 4,326,022 - 5,567,933 - - 5,583,417 4,326,022 1,443,302 $ 6,042,950 $ 4,751,921 $ 3,434,397 -36- 9203 9242 9117 -9119 Other Total Street Temporary Governmental Governmental Infrastructure Financing HRA Bonds Funds Funds $ 3,973,021 $ 3,128,321 $ - $ 1,600,553 $ 15,772,336 - - 3,813,745 - 3,813,745 - - 1,909 - 165,082 - - - - 93,142 - - - 23,828 142,701 - - - - 404,045 62,010 144,228 - 8,529 264,653 - - - 10,000 146,671 - - - - 15,484 - - - - 99,413 - - - - 1,891,182 - - - - 4,186,958 $ 4,035,031 $ 3,272,549 $ 3,815,654 $ 1,642,910 $ 26,995,412 $ - $ - $ - $ - $ 249,420 25,384 - - - 88,890 38,747 - - 673 57,790 - - - - 14,036 - - - - 99,413 - - - - 1,891,182 - - - - 250 64,131 - - 673 2,400,981 - - - - 127,790 62,010 142,424 - - 254,320 - - - - 362,674 62,010 142,424 - - 744,784 - - - - 15,484 - - 3,815,654 291,863 5,550,819 - - - 185,051 4,511,073 3,908,890 3,130,125 - 1,165,323 8,204,338 - - - - 5,567,933 3,908,890 3,130,125 3,815,654 1,642,237 23,849,647 $ 4,035,031 $ 3,272,549 $ 3,815,654 $ 1,642,910 $ 26,995,412 -37- THIS PAGE IS LEFT BLANK INTENTIONALLY -38- CITY OF NEW HOPE, MINNESOTA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION GOVERNMENTAL FUNDS DECEMBER 31, 2013 Total fund balances - governmental funds Amounts reported for the governmental activities in the statement of net position are different because Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Cost of capital assets Less: accumulated depreciation 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 Bond principal payable Plus: unamortized bond premium 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. Internal service fund net position included in governmental activities Internal balances for internal services used by business -type activities 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. Taxes Special assessments Loans Governmental funds do not report a liability for accrued interest until due and payable. 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. Total net position - governmental activities The notes to the financial statements are an integral part of this statement. $ 23,849,647 38,596,749 (11,029,716) (9,010,000) (56,490) 9,400,493 901,262 127,790 254,320 362,674 (117,680) 2,554,310 $ 55,833,359 -39- CITY OF NEW HOPE, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2013 TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Sale of capital assets Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 10,306,354 9001 9015/9501 9213 -9220 Economic (633,451) 123,879 Development HRA 257,902 General Authority Construction REVENUES - (183,686) (30,000) Taxes 75,676 (30,000) - Property taxes $ 7,803,838 $ 85,000 $ - Tax increments - - 283,929 Franchise taxes 438,834 - - Licenses and permits 273,117 - - Intergovernmental 526,909 34,169 - Charges for services 1,336,037 - - Fines and forfeitures 223,851 - - Special assessments 9,716 3,271 - Investment earnings 34,214 93,985 6,316 Miscellaneous 71,842 27,565 - TOTAL REVENUES 10,718,358 243,990 290,245 EXPENDITURES Current General government 1,571,701 - - Public safety 5,967,451 - - Public works 1,038,187 - - Culture and recreation 1,605,757 - - Economic development - 582,621 - Capital outlay General government 38,417 - - Public safety 84,841 - - Public works - - - Culture and recreation - - - Economic development - 294,820 166,366 Debt service Principal - - - Interest - - - TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Sale of capital assets Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 10,306,354 877,441 166,366 412,004 (633,451) 123,879 257,902 - - 1,460 - - (183,686) (30,000) - 75,676 (30,000) - 487,680 (663,451) 123,879 5,095,737 4,989,473 1,319,423 $ 5,583,417 $ 4,326,022 $ 1,443,302 The notes to the financial statements are an integral part of this statement. -40- 9203 9242 9117 -9119 Other Total Street Temporary Governmental Governmental Infrastructure Financing HRA Bonds Funds Funds $ 1,182,500 $ - $ - $ 460,325 $ 9,531,663 - - 227,995 - 511,924 - - - - 438,834 - - - - 273,117 3,892,035 - - 10,000 4,463,113 - - - 249,927 1,585,964 - - - 15,350 239,201 86,787 78,561 - - 178,335 18,342 12,114 7,633 5,613 178,217 - - - 12,036 111,443 5,179,664 90,675 235,628 753,251 17,511,811 1,571,701 148 5,967,599 216,014 1,254,201 7,761 1,613,518 - 582,621 38,417 - 43,086 - - 127,927 3,429,538 - - - 3,429,538 - - - 182,870 182,870 - - - - 461,186 - - 210,000 130,000 340,000 - - 283,376 23,086 306,462 3,429,538 43,086 493,376 559,879 15,876,040 1,750,126 47,589 (257,748) 193,372 1,635,771 - - - 102,525 360,427 - - - - 1,460 - - - (386,728) (600,414) - - - (284,203) (238,527) 1,750,126 47,589 (257,748) (90,831) 1,397,244 2,158,764 3,082,536 4,073,402 1,733,068 22,452,403 $ 3,908,890 $ 3,130,125 $ 3,815,654 $ 1,642,237 $ 23,849,647 -41- CITY OF NEW HOPE, MINNESOTA 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, 2013 Total net change in fund balances - governmental funds Amounts reported for governmental activities in the statement of activities are different because 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. Capital outlays Depreciation expense 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. Contributions to joint venture 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. Principal repayments Amortization of bond premium 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. 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. Property taxes Special assessments Loan principal repayments 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. Change in net position of the internal service funds Plus: the change in internal balances for internal services used by business -type activities Change in net position - governmental activities The notes to the financial statements are an integral part of this statement. $ 1,397,244 4,461,697 (1,139,881) (64,364) 340,000 5,882 11,571 22,966 (142,305) (18,855) (305,118) 105,477 $ 4,674,314 -42- CITY OF NEW HOPE, MINNESOTA GENERALFUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Taxes Property taxes Franchise taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Investment earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current General government Public safety Public works Culture and recreation Capital outlay General government Public safety Culture and recreation TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Sale of capital assets Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 Budgeted Amounts Original Final Variance with Final Budget $ 7,842,983 $ 7,842,983 $ 7,803,838 $ (39,145) 464,000 464,000 438,834 (25,166) 261,130 261,130 273,117 11,987 394,600 394,600 526,909 132,309 1,174,953 1,174,953 1,336,037 161,084 280,000 280,000 223,851 (56,149) - - 9,716 9,716 52,699 52,699 34,214 (18,485) 20,107 20,107 71,842 51,735 10,490,472 10,490,472 10,718,358 227,886 1,577,450 1,577,450 1,571,701 5,749 6,309,124 6,309,124 5,967,451 341,673 1,011,731 1,011,731 1,038,187 (26,456) 1,749,240 1,749,240 1,605,757 143,483 29,000 29,000 38,417 (9,417) 88,000 88,000 84,841 3,159 3,500 3,500 - 3,500 10,768,045 10,768,045 10,306,354 461,691 (277,573) (277,573) 412,004 689,577 297,573 297,573 257,902 (39,671) - - 1,460 1,460 (20,000) (20,000) (183,686) (163,686) 277,573 277,573 75,676 (201,897) 487,680 487,680 5,095,737 5,095,737 5,095,737 - $ 5,095,737 $ 5,095,737 $ 5,583,417 $ 487,680 The notes to the financial statements are an integral part of this statement. Actual Amounts -43- THIS PAGE IS LEFT BLANK INTENTIONALLY -44- CITY OF NEW HOPE, MINNESOTA ECONOMIC DEVELOPMENT AUTHORITY FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Taxes Property taxes Intergovernmental Special assessments Investment income Miscellaneous TOTAL REVENUES EXPENDITURES Economic development Current Personnel services Supplies Other services and charges Capital outlay TOTAL EXPENDITURES DEFICIENCY OF REVENUES UNDER EXPENDITURES OTHER FINANCING USES Transfers out NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 Budgeted Amounts Original Final Variance with Final Budget $ 85,000 $ 85,000 $ 85,000 $ - - - 34,169 34,169 - - 3,271 3,271 120,614 120,614 93,985 (26,629) - - 27,565 27,565 205,614 205,614 243,990 38,376 152,763 152,763 162,150 (9,387) 150 150 64 86 199,231 199,231 420,407 (221,176) - - 294,820 (294,820) 352,144 352,144 877,441 (525,297) (146,530) (146,530) (633,451) (486,921) (30,000) (30,000) (30,000) (176,530) (176,530) (663,451) (486,921) 4,989,473 4,989,473 4,989,473 - $ 4,812,943 $ 4,812,943 $ 4,326,022 $ (486,921) The notes to the financial statements are an integral part of this statement. Actual Amounts -45- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF NET POSITION - CONTINUED ON THE FOLLOWING PAGES PROPRIETARY FUNDS DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds ASSETS CURRENT ASSETS Cash and temporary investments Receivables Accounts Special assessments Due from other governments Inventories TOTAL CURRENT ASSETS NONCURRENT ASSETS Restricted cash Investment in joint ventures Capital assets Land Buildings and structures Improvements other than buildings Vehicles and equipment Construction in progress Less: accumulated depreciation Total capital assets (net of accumulated depreciation) TOTAL NONCURRENT ASSETS TOTAL ASSETS 9300 3,503,144 9301 4,998,780 Sewer Utility 293,139 Water Utility 1,392,767 2013 2012 2013 2012 $ 118,212 $ 281,571 $ 169,992 $ 185,070 251,361 251,710 624,463 605,777 52,809 62,220 109,211 109,544 - - 1,087,624 50,919 - - 31,254 29,530 422,382 595,501 2,022,544 980,840 - - 168,509 168,509 3,866,181 3,503,144 5,810,656 4,998,780 293,139 293,139 1,392,767 1,392,767 195,175 152,275 1,242,271 736,703 (2,044,803) (1,974,807) (2,252,080) (2,099,815) 2,309,692 1,973,751 6,193,614 5,028,435 2,309,692 1,973,751 6,362,123 5,196,944 2,732,074 2,569,252 8,384,667 6,177,784 The notes to the financial statements are an integral part of this statement. -46- Business -type Activities - Enterprise Funds 9302 9303 Golf Course Ice Arena 2013 2012 2013 2012 $ 61,354 $ 17,093 $ 151,415 $ (22,340) - - 45,507 170,893 - - 47,674 63,483 11,834 11,228 - - 73,188 28,321 244,596 212,036 - - 300,000 150,000 250,625 250,625 - - 973,145 973,145 9,641,166 9,641,166 130,373 130,373 - - 149,758 149,758 237,331 196,363 (857,608) (823,900) (3,099,873) (2,922,036) 646,293 680,001 6,778,624 6,915,493 646,293 680,001 7,078,624 7,065,493 719,481 708,322 7,323,220 7,277,529 -47- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF NET POSITION - CONTINUED PROPRIETARY FUNDS DECEMBER 31, 2013 AND 2012 The notes to the financial statements are an integral part of this statement. -48- Business -type Activities - Enterprise Funds 9304 9305 Storm Water Street Lighting 2013 2012 2013 2012 ASSETS CURRENT ASSETS Cash and temporary investments $ 686,542 $ 2,094,675 $ 209,183 $ 201,191 Receivables Accounts 93,665 96,040 6,892 5,388 Special assessments 26,437 29,746 2,792 3,227 Due from other governments - - - - Inventories - - - - TOTAL CURRENT ASSETS 806,644 2,220,461 218,867 209,806 NONCURRENT ASSETS Restricted cash - - - - Investment in joint ventures - - - - Capital assets Land 234,417 234,417 - - Buildings and structures - - - - Improvements other than buildings 4,083,804 3,794,727 - - Vehicles and equipment - - - - Construction in progress 744,991 303,826 - - Less: accumulated depreciation (620,531) (544,636) - - Total capital assets (net of accumulated depreciation) 4,442,681 3,788,334 - - TOTAL NONCURRENT ASSETS 4,442,681 3,788,334 - - TOTAL ASSETS 5,249,325 6,008,795 218,867 209,806 The notes to the financial statements are an integral part of this statement. -48- Business -type Activities - Enterprise Funds Totals 2013 2012 Governmental Activities - Internal Service Funds 2013 2012 $ 1,396,698 $ 2,757,260 $ 6,015,793 $ 6,609,668 1,021,888 1,129,808 - - 191,249 204,737 - - 1,135,298 114,402 80,884 57,960 43,088 40,758 74,425 72,925 3,788,221 4,246,965 6,171,102 6,740,553 300,000 150,000 - - 168,509 168,509 - - 485,042 485,042 85,647 85,647 10,614,311 10,614,311 3,052,918 3,052,918 13,891,014 12,427,024 - - 2,072,995 2,032,027 7,659,828 7,326,724 2,182,437 1,192,804 - - (8,874,895) (8,365,194) (6,855,324) (6,784,876) 20,370,904 18,386,014 3,943,069 3,680,413 20,839,413 18,704,523 3,943,069 3,680,413 24,627,634 22,951,488 10,114,171 10,420,966 -49- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF NET POSITION - CONTINUED PROPRIETARY FUNDS DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds LIABILITIES CURRENT LIABILITIES Accrued salaries payable Accounts and contracts payable Due to other governments Accrued interest payable Due to other funds Compensated absences payable, current portion Lease payable, current portion Bonds and notes payable, current portion TOTAL CURRENT LIABILITIES 9300 9301 Sewer Utility - Water Utility - 2013 2012 2013 2012 $ 11,531 $ 27,753 $ 20,758 $ 16,874 260,576 126,612 37,227 109,046 - - 96,338 90,253 592 1,218 14,070 11,241 71,094 72,872 197,050 166,872 343,793 228,455 365,443 394,286 NONCURRENT LIABILITIES Advances from other funds - - - - Other postemployment benefits payable 7,000 4,779 7,892 5,864 Compensated absences payable - - - - Bonds and notes payable - 71,536 1,893,289 1,055,815 TOTAL NONCURRENT LIABILITIES 7,000 76,315 1,901,181 1,061,679 TOTAL LIABILITIES 350,793 304,770 2,266,624 1,455,965 NET POSITION Net investment in capital assets 2,238,598 1,829,343 4,103,275 3,805,748 Restricted for debt service - - - - Unrestricted 142,683 435,139 2,014,768 916,071 TOTAL NET POSITION $ 2,381,281 $ 2,264,482 $ 6,118,043 $ 4,721,819 The notes to the financial statements are an integral part of this statement. -50- Business -type Activities - Enterprise Funds 9302 9303 Golf Course Ice Arena 2013 2012 2013 2012 $ 794 $ 1,587 $ 14,780 $ 13,206 1,970 1,750 23,110 32,857 211 172 18,577 15,836 - - 4,790 4,790 - 30,000 - - - - - 3,605 2,975 33,509 61,257 70,294 - 285,000 - - 2,111 1,865 5,689 4,333 - - 3,505,000 3,505,000 2,111 286,865 3,510,689 3,509,333 5,086 320,374 3,571,946 3,579,627 646,293 680,001 3,273,624 3,406,888 - - 300,000 150,000 68,102 (292,053) 177,650 141,014 $ 714,395 $ 387,948 $ 3,751,274 $ 3,697,902 -51- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF NET POSITION - CONTINUED PROPRIETARY FUNDS DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds LIABILITIES CURRENT LIABILITIES Accrued salaries payable Accounts and contracts payable Due to other governments Accrued interest payable Due to other funds Compensated absences payable, current portion Lease payable, current portion Bonds and notes payable, current portion TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Advances from other funds Other postemployment benefits payable Compensated absences payable Bonds and notes payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES NET POSITION Net investment in capital assets Restricted for debt service Unrestricted TOTAL NET POSITION Total net position - enterprise funds 9304 9305 Storm Water Street Lighting 2013 2012 2013 2012 $ - $ 1,703 $ - $ - 14,050 80,956 9,201 9,014 23 - 35 - 5,484 6,315 - - 102,856 104,256 - - 122,413 193,230 9,236 9,014 2,651 1,521 - - 459,339 562,434 - - 461,990 563,955 - - 584,403 757,185 9,236 9,014 3,880,486 3,121,644 - - 784,436 2,129,966 209,631 200,792 $ 4,664,922 $ 5,251,610 $ 209,631 $ 200,792 Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds Net position - business -type activities The notes to the financial statements are an integral part of this statement. -52- Business -type Activities - Enterprise Funds Totals 2013 2012 Governmental Activities - Internal Service Funds 2013 2012 $ 47,863 $ 61,123 $ 19,821 $ 55,850 346,134 360,235 35,950 46,733 115,184 106,261 24,156 19,916 24,936 23,564 - - - 30,000 - - - - 428,717 432,200 - 3,605 - - 371,000 344,000 - - 905,117 928,788 508,644 554,699 - 285,000 - - 25,343 18,362 15 7,3 99 112,634 - - 47,635 48,022 5,857,628 5,194,785 - - 5,882,971 5,498,147 205,034 160,656 6,788,088 6,426,935 713,678 715,355 14,142,276 12,843,624 3,943,069 3,680,413 300,000 150,000 - - 3,397,270 3,530,929 5,457,424 6,025,198 $ 17,839,546 $ 16,524,553 $ 9,400,493 $ 9,705,611 $ 17,839,546 $ 16,524,553 (901,262) (795,785) $ 16,938,284 $ 15,728,768 -53- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 OPERATING REVENUES Charges for services Billings to departments Other TOTAL OPERATING REVENUES OPERATING EXPENSES Cost of goods sold Personnel services Supplies Utilities Other services and charges Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment earnings Miscellaneous revenues Gain on sale of capital assets Interest expense TOTAL NONOPERATING REVENUES (EXPENSES) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS FROM OTHER FUNDS CAPITAL CONTRIBUTIONS TRANSFERS IN TRANSFERS OUT CHANGE IN NET POSITION NET POSITION, JANUARY 1 NET POSITION, DECEMBER 31 Business -type Activities - Enterprise Funds 9300 9301 Sewer Utility Water Utility 2013 2012 2013 2012 $ 2,443,094 $ 2,376,021 $ 3,460,008 $ 3,581,225 2,443,094 2,376,021 3,460,008 3,581,225 1,369,686 1,521,650 2,205,600 2,388,139 295,892 306,794 250,425 342,965 6,203 8,911 80,101 322,788 10,488 9,266 969 879 526,890 273,819 449,978 403,500 69,996 66,764 152,265 128,070 2,279,155 2,187,204 3,139,338 3,586,341 163,939 188,817 320,670 (5,116) 632 5,102 192 6,789 108 - 22,775 19,840 (1,080) (2,871) (29,208) (27,401) (340) 2,231 (6,241) (772) 163,599 191,048 314,429 (5,888) - - 13,184 13,053 - - 1,115,411 - (46,800) (45,204) (46,800) (45,204) 116,799 145,844 1,396,224 (38,039) 2,264,482 2,118,638 4,721,819 4,759,858 $ 2,381,281 $ 2,264,482 $ 6,118,043 $ 4,721,819 The notes to the financial statements are an integral part of this statement. -54- Business -type Activities - Enterprise Funds 9302 9303 Golf Course Ice Arena 2013 259,221 $ 2012 2013 2012 289,448 $ 725,211 $ 694,702 259,221 289,448 725,211 694,702 21,338 24,935 - - 113,526 141,244 266,809 310,928 32,281 33,072 22,470 29,180 23,031 22,360 236,918 211,650 35,811 34,325 195,663 59,648 33,708 32,521 177,837 101,614 259,695 288,457 899,697 713,020 (474) 991 (174,486) (18,318) 1,237 695 1,392 6,797 10,683 6,868 281,974 - (1,575) (6,900) (55,508) (57,933) 10,345 663 227,858 (51,136) 9,871 1,654 53,372 (69,454) - 23,679 - - - - - 76,674 348,301 - - - (31,725) - - - 326,447 25,333 53,372 7,220 387,948 362,615 3,697,902 3,690,682 $ 714,395 $ 387,948 $ 3,751,274 $ 3,697,902 -55- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - CONTINUED PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 OPERATING REVENUES Charges for services Billings to departments Other TOTAL OPERATING REVENUES OPERATING EXPENSES Cost of goods sold Personnel services Supplies Utilities Other services and charges Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment earnings Miscellaneous revenues Gain on sale of capital assets Interest expense TOTAL NONOPERATING REVENUES (EXPENSES) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS FROM OTHER FUNDS CAPITAL CONTRIBUTIONS TRANSFERS IN TRANSFERS OUT CHANGE IN NET POSITION NET POSITION, JANUARY 1 NET POSITION, DECEMBER 31 Business -type Activities - Enterprise Funds 9304 9305 Storm Water Street Lighting 2013 2012 2013 2012 $ 963,167 $ 948,650 $ 125,604 $ 124,397 963,167 948,650 125,604 124,397 61,666 70,095 304 216 4,255 8,607 - - 762 685 115,547 103,463 589,157 224,361 1,667 1,042 75,895 72,241 - - 731,735 375,989 117,518 104,721 231,432 572,661 8,086 19,676 3,302 34,567 753 3,434 - 2,500 - - (13,138) (15,285) - - (9,836) 21,782 753 3,434 221,596 594,443 8,839 23,110 212,116 16,564 - - (1,020,400) (2,242) - - (586,688) 608,765 8,839 23,110 5,251,610 4,642,845 200,792 177,682 $ 4,664,922 $ 5,251,610 $ 209,631 $ 200,792 Change in net position - enterprise funds Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds. Change in net position - business -type activities The notes to the financial statements are an integral part of this statement. -56- Business -type Activities - Enterprise Funds Governmental Activities - Totals Internal Service Funds 2013 2012 2013 2012 $ 7,976,305 $ 8,014,443 - - - 2,594,616 2,350,144 - - 94,268 108,234 7,976,305 8,014,443 2,688,884 2,458,378 3,596,624 3,934,724 - - 988,622 1,172,242 962,498 969,395 145,310 402,558 359,495 338,332 387,715 348,303 88,981 75,539 1,799,166 996,695 890,700 749,092 509,701 401,210 670,510 586,291 7,427,138 7,255,732 2,972,184 2,718,649 549,167 758,711 (283,300) (260,271) 7,508 57,384 20,441 122,563 315,540 29,208 - 57,960 - - 35,741 69,321 (100,509) (110,390) - - 222,539 (23,798) 56,182 249,844 771,706 734,913 (227,118) (10,427) - 23,679 - - 225,300 106,291 - - 1,463,712 - - - (1,145,725) (92,650) (78,000) (72,900) 1,314,993 772,233 (305,118) (83,327) 16,524,553 15,752,320 9,705,611 9,788,938 $ 17,839,546 $ 16,524,553 $ 9,400,493 $ 9,705,611 $ 1,314,993 $ 772,233 (105,477) (136,934) $ 1,209,516 $ 635,299 -57- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF CASH FLOWS - CONTINUED ON THE FOLLOWING PAGES PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Receipts from interfund services provided Other operating receipts Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers out Payments on interfund balances NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Proceeds from sale of assets Capital contributions Intergovernmental receipts Proceeds from bonds and notes issued (net) Principal paid on long -term debt Interest paid on long -term debt NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, JANUARY 1 CASH AND CASH EQUIVALENTS, DECEMBER 31 RECONCILIATION TO THE PROPRIETARY FUNDS STATEMENT OF NET POSITION Cash and temporary investments Restricted cash TOTAL CASH AND CASH EQUIVALENTS The notes to the financial statements are an integral part of this statement. 9300 9301 Sewer Utility Water Utility Restated Restated ImI) lmz $ 2,452,854 $ 2,375,626 $ 3,439,950 $ 3,278,430 108 - 22,775 19,840 (1,779,303) (1,704,546) (2,805,106) (3,041,111) (309,893) (287,744) (244,513) (334,859) 363,766 383,336 413,106 (77,700) - - 1,115,411 - (46,800) (45,204) (46,800) (45,204) (46,800) (45,204) 1,068,611 (45,204) (405,937) (399,045) (1,316,444) (474,883) - - 13,184 13,053 - - - 241,162 - - - 6,905 (72,872) (72,872) (166,871) (161,871) (2,148) (3,731) (26,856) (29,798) (480,957) (475,648) (1,496,987) (405,432) 632 5,102 192 6,789 (163,359) (132,414) (15,078) (521,547) 281,571 413,985 185,070 706,617 $ 118,212 $ 281,571 $ 169,992 $ 185,070 $ 118,212 $ 281,571 $ 169,992 $ 185,070 $ 118,212 $ 281,571 $ 169,992 $ 185,070 -58- Business -type Activities - Enterprise Funds 9302 9303 Golf Course Ice Arena Restated $ 259,221 $ 289,448 $ 866,406 $ 562,946 10,683 6,868 281,974 - (112,808) (114,100) (462,057) (884,471) (114,073) (140,071) (263,879) (307,336) 43,023 42,145 422,444 (628,861) 348,301 - - - (31,725) - - - (315,000) (30,000) - - 1,576 (30,000) - - - - (40,968) (2,192,420) - - - 76,674 - - (3,605) (7,633) (1,575) (6,900) (55,508) (57,933) (1,575) (6,900) (100,081) (2,181,312) 1,237 695 1,392 6,797 44,261 5,940 323,755 (2,803,376) 17,093 11,153 127,660 2,931,036 $ 61,354 $ 17,093 $ 451,415 $ 127,660 $ 61,354 $ 17,093 $ 151,415 $ (22,340) - - 300,000 150,000 $ 61,354 $ 17,093 $ 451,415 $ 127,660 -59- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF CASH FLOWS - CONTINUED PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Receipts from interfund services provided Other operating receipts Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers out Payments on interfund balances NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Proceeds from sale of assets Capital contributions Intergovernmental receipts Proceeds from bonds and notes issued (net) Principal paid on long -term debt Interest paid on long -term debt NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, JANUARY 1 CASH AND CASH EQUIVALENTS, DECEMBER 31 RECONCILIATION TO THE PROPRIETARY FUNDS STATEMENT OF NET POSITION Cash and temporary investments Restricted cash TOTAL CASH AND CASH EQUIVALENTS The notes to the financial statements are an integral part of this statement. Business -type Activities - Enterprise Funds 9304 9305 Storm Water Street Lighting Restated Restated $ 968,851 $ 948,269 $ 124,535 $ 127,799 - 2,500 - - (664,175) (224,918) (116,992) (105,038) (62,239) (68,778) (304) (216) 242,437 657,073 7,239 22,545 (1,020,400) (2,242) - - (1,020,400) (2,242) - - (727,124) (216,777) - - 212,116 69,472 - - (104,257) (99,257) - - (14,207) (16,237) - - (633,472) (262,799) 3,302 34,567 753 3,434 (1,408,133) 426,599 7,992 25,979 2,094,675 1,668,076 201,191 175,212 $ 686,542 $ 2,094,675 $ 209,183 $ 201,191 $ 686,542 $ 2,094,675 $ 209,183 $ 201,191 $ 686,542 $ 2,094,675 $ 209,183 $ 201,191 -60- Business -type Activities - Enterprise Funds Governmental Activities - Totals Internal Service Funds Restated 2013 2012 2013 2012 $ 8,111,817 $ 7,582,518 $ - $ - - - 2,652,576 2,350,144 315,540 29,208 13,384 108,234 (5,940,441) (6,074,184) (1,347,219) (1,188,369) (994,901) (1,139,004) (957,632) (940,334) 1,492,015 398,538 361,109 329,675 1,463,712 - - - (1,145,725) (92,650) (78,000) (72,900) (315,000) (30,000) - - 2,987 (122,650) (78,000) (72,900) (2,490,473) (3,283,125) (933,166) (1,001,141) - - 35,741 69,321 13,184 89,727 - - 212,116 310,634 - - - 6,905 - - (347,605) (341,633) - - (100,294) (114,599) - - (2,713,072) (3,332,091) (897,425) (931,820) 7,508 57,384 20,441 122,563 (1,210,562) (2,998,819) (593,875) (552,482) 2,907,260 5,906,079 6,609,668 7,162,150 $ 1,696,698 $ 2,907,260 $ 6,015,793 $ 6,609,668 $ 1,396,698 $ 2,757,260 $ 6,015,793 $ 6,609,668 300,000 150,000 - - $ 1,696,698 $ 2,907,260 $ 6,015,793 $ 6,609,668 -61- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF CASH FLOWS - CONTINUED PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Other income related to operations (Increase) decrease in assets Receivables Accounts Special assessments Due from other governments Inventory Increase (decrease) in liabilities Accounts and contracts payable Accrued salaries payable Due to other governments Compensated absences payable Other postemployment benefits payable NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES SCHEDULE OF NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES PFA note issued but not received Amortization of bond discount Amortization of bond premium Capital assets contributed from other funds Capital assets purchased on account Loss on sale or disposal of capital assets The notes to the financial statements are an integral part of this statement. 9300 9301 Sewer Utility Water Utility Restated Restated 2013 2012 2013 2012 $ 163,939 $ 188,817 $ 320,670 $ (5,116) 69,996 66,764 152,265 128,070 108 - 22,775 19,840 349 2,838 (18,686) (83,510) 9,411 (3,233) 333 (10,397) - - (1,705) (208,888) - - (1,724) (1,221) 133,964 109,100 (72,819) 95,749 (16,222) 17,392 3,884 6,177 - - 6,085 (20,333) 2,221 1,658 2,028 1,929 $ 363,766 $ 383,336 $ 413,106 $ (77,700) $ $ 673 $ 1,115 $ $ $ 673 $ 1,116 $ $ 1,035,000 $ 672 $ 1,149 $ 1,000 $ $ 672 $ 1,149 $ -62- Business -type Activities - Enterprise Funds 9302 9303 Golf Course Ice Arena Restated 2013 2012 2013 2012 $ (474) $ 991 $ (174,486) $ (18,318) 33,708 32,521 177,837 101,614 10,683 6,868 281,974 - - - 125,386 (93,194) - - 15,809 (38,562) (606) 225 - - 220 195 (9,747) (598,269) (793) 727 1,574 2,127 39 172 2,741 14,276 246 446 1,356 1,465 $ 43,023 $ 42,145 $ 422,444 $ (628,861) $ - $ 23,679 -63- CITY OF NEW HOPE, MINNESOTA STATEMENTS OF CASH FLOWS - CONTINUED PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 Business -type Activities - Enterprise Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Other income related to operations (Increase) decrease in assets Receivables Accounts Special assessments Due from other governments Inventory Increase (decrease) in liabilities Accounts and contracts payable Accrued salaries payable Due to other governments Compensated absences payable Other postemployment benefits payable NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES SCHEDULE OF NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES PFA note issued but not received Amortization of bond discount Amortization of bond premium Capital assets contributed from other funds Capital assets purchased on account Loss on sale or disposal of capital assets The notes to the financial statements are an integral part of this statement. 9304 9305 Storm Water Street Lighting Restated 2013 2012 2013 2012 $ 231,432 $ 572,661 $ 8,086 $ 19,676 75,895 72,241 - - - 2,500 - - 2,375 (1,339) (1,504) 3,703 3,309 958 435 (301) (70,024) 8,735 187 (533) (1,703) 900 - - 23 - 35 - 1,130 417 - - $ 242,437 $ 657,073 $ 7,239 $ 22,545 $ 1,148 $ 1,386 $ 3,118 $ 1,147 $ 1,386 $ $ $ - $ $ -64- Business -type Activities - Enterprise Funds Governmental Activities - Totals Internal Service Funds Restated 2013 2012 2013 2012 $ 549,167 $ 758,711 $ (283,300) $ (260,271) -65- 509,701 401,210 670,510 586,291 315,540 29,208 - - 107,920 (171,502) - - 13,488 (12,973) - - 14,1 04 (247,450) (22,924) - (2,330) (996) (1,500) (44,007) (18,219) (385,023) (10,783) (9,211) (13,260) 27,323 (36,029) 4,318 8,923 (5,885) 4,240 733 - - (3,870) 10,070 6,981 5,915 44,765 41,752 $ 1,492,015 $ 398,538 $ 361,109 $ 329,675 $ 1,035,000 $ $ $ $ 2,493 $ 2,492 $ - $ - $ 3,650 $ 3,651 $ $ $ - $ 23,679 $ - $ - $ 4,118 $ $ $ $ - $ - $ - $ 1,502 -65- CITY OF NEW HOPE, MINNESOTA STATEMENT OF FIDUCIARY NET POSITION AGENCY FUND DECEMBER 31, 2013 ASSETS Cash and temporary investments LIABILITIES Deposits payable The notes to the financial statements are an integral part of this statement. 9503 Pass - Through Grant Fund $ 16,374 $ 16,374 .. CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Financial reporting entity The City of New Hope (the City) operates under "Optional Plan B" as defined in Minnesota statutes. Optional Plan B is known as the City 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 proper administration of all affairs relating to the City." The City Council is composed of five members including the mayor. The City Council appoints the City manager. The City has considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. Blended component units are, in substance, part of the government's operations and so are reported as if they were part of the primary government. The City has identified the following component units using the above criteria: 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 New Hope EDA and HRA boards, and funding for New Hope 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 funds. The City participates in various joint ventures and jointly controlled organizations which are described later in these notes. B. Government -wide and fund financial statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non - fiduciary activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, service, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among programs revenue are reported instead as general revenues. Separate fund financial statements are provided for governmental, proprietary, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor funds are reported in single columns in the respective fund financial statements. Aggregated information for the internal service funds is presented in a single column in the proprietary fund financial statements. Because the principal users of the internal services are the City's governmental activities, the financial statements of the internal service funds are consolidated into the governmental activities column when presented in the government -wide financial statements. The cost of these services is reported in the appropriate fimctional activity. -67- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED C. Measurement focus, basis of accounting, and financial statement presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. The fiduciary fund financial statements has no measurement focus but utilizes 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 are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, other postemployment benefits, and claims and judgments, are recorded only when payment is due. Property taxes, tax increments, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are measurable and become available. Non - exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non - exchange transactions must also be available before it can be recognized. Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The City reports the following major governmental funds: The General fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Economic Development Authority Special Revenue fund accounts for the activities of the authority which controls and operates the housing and redevelopment projects and tax increment districts in the City. The HRA Construction Capital Projects fund is used to account for redevelopment costs for tax increment districts, which are primarily funded by tax increment bonds and tax increment revenues. The Street Infrastructure Capital Projects fund is used to account for various street projects within the City. -68- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Temporary Financing Capital Projects fund is used to account for various capital projects and capital outlay purchases until permanent financing is acquired. The HRA Bonds Debt Service fund accounts 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: The Sewer Utility 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. The Water Utility 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. The Golf Course fund is used to account for the operations of the City's public golf course. The Ice Arena fund is used to account for the operation of the City's indoor ice arena. The Storm Water fund accounts for the general operation and maintenance of the City's storm water system. The Street Lighting fund is used to account for the operation of the City's streetlight system. Additionally, the City reports the following fund types: Internal service funds are used to account for the City's vehicle and equipment rental operation, 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. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. The agency fund is custodial in nature and does not present results of operations or have a measurement focus. This fund was established to account for pass - through grant funds held by the City as the agent for others. As a general rule the effect of interfund activity has been eliminated from government -wide financial statements. Exceptions to this general rule are charges between the City's enterprise fund functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non- operating 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 enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non - operating revenues and expenses. -69- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED D. Assets, liabilities, deferred inflows of resources, and net position /fund balance Deposits and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. The proprietary funds' portion in the government -wide cash and temporary investments pool is considered to be cash and cash equivalent for purposes of the Statements of Cash Flows. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit, U.S. government obligations, and other authorized investments. Investments are stated at their estimated fair value. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. For cash held with fiscal agent, interest earned on those investments is allocated directly to that fund. The City may also invest idle funds as authorized by Minnesota statutes, as follows: 1. Direct obligations or obligations guaranteed by the United States or its agencies. 2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less. 3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations rated "AA" or better. 4. General obligations of the Minnesota Housing Finance Agency rated "A" or better. 5. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. 6. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less. 7. Repurchase or reverse repurchase 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, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker - dealers. 8. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency. Restricted cash In accordance with the 2011A Taxable Lease Revenue Bonds covenant, on or before December 1, 2012 and annually thereafter, the City shall set aside scheduled amounts sufficient to pay the principal due on December 1, 2028. As of December 31, 2013, the balance reported as restricted for this purpose is $300,000. Property taxes The City Council annually adopts a tax levy in December and certifies it to the County for collection in the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County Treasurer and tax settlements are made to the City during January, July, and December each year. Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a deferred inflow of resources for taxes not received within 60 days after year end in the fund financial statements. -70- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Accounts receivable Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund receivables are also included for services provided in 2013. The City annually certifies delinquent water, sewer, storm water, and street lighting accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts established for the delinquent water and sewer accounts. 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 without 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, 2013, the total delinquent special assessment receivable balance was $77,3 80. 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. Interfund receivables and payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to /from other funds (i.e., the current portion of interfund loans) or "advances to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Inventory and prepaid items Inventory is valued at cost using the first - in/first -out (FIFO) 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. Investment in joint ventures Included in the assets of the government -wide statements and proprietary funds are amounts representing the City's investment in two joint ventures described later in these notes. -71- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, an similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life of two years or more. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets would be recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. Land and Construction in Process are non - depreciable assets. Property, plant, and equipment of the City are depreciated using the straight line method over the following estimated useful lives: Assets Buildings and structures Improvements other than buildings Vehicles and equipment Deferred inflows of resources Years 15 -50 15 -50 3-20 In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an Mow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: taxes, special assessments, and loans. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 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. Other postemployment benefits (OPEB) Under Minnesota statute 471.6 1, subdivision 2b, public employers must allow retirees and their dependents to continue coverage indefinitely in an employer- sponsored health care 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 GASB Statement No. 45, at January 1, 2011. The Insurance Reserve Internal service fund is typically used to liquidate governmental other postemployment benefits payable. -72- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Long -term obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. 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 recognized 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. Fund balance In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These classifications are defined as follows: Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items. Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council, which is the City's highest level of decision - making authority. Committed amounts cannot be used for any other purpose unless the City Council modifies or rescinds the commitment by resolution. Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established by the City Council 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 and also negative residual amounts in other funds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General fund. The City's policy is to maintain a minimum unassigned fund balance of 40 - 50 percent of the next year's budgeted expenditures. -73- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Net position Net position represents the difference between assets and liabilities. Net position is displayed in three components: a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b. Restricted net position - Consist of net position balances restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. Unrestricted net position - All other net position that do not meet the definition of "restricted" or "net investment in capital assets ". When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Comparative data/reclassifications Comparative total data for the prior year have been presented only for individual enterprise funds in the fund financial statements in order to provide an understanding of the changes in the financial position and operations of these funds. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary information Budgets are legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are legally adopted for the General and certain special revenue funds. Budgeted amounts are reported as originally adopted, or as amended by the City Council. The budget was not amended during the current year. Budgeted expenditure appropriations lapse the year end. The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. When adopted through passage of a resolution, the budget becomes the formal appropriation budget. 4. The legal level of budget control is at the fund level. Total fund expenditures may not legally exceed budgeted fund appropriations. Budget appropriations lapse at year -end. 5. The City Manager may make transfers of appropriations within funds, or departments within funds, but cannot adjust the total budget of a fund. 6. Adjustments to budgets at the fund level must be authorized by the City Council. 7. Monitoring of budgets is maintained at the expenditure category level (personnel services, supplies, other services and charges, or capital outlay) within each activity and fund. 8. Legally adopted budgets are adopted for the following funds: a. General fund b. Special revenue funds i. Solid Waste Management ii. Economic Development Authority 9. Formal budgetary integration is employed as a management control device during the year for the General fund and special revenue funds. Budgets are not prepared for the Police Forfeitures or Ice Arena Endowment special revenue funds. -74- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED B. Excess of expenditures over appropriations For the year ended December 31, 2013, expenditures exceeded appropriations in the Economic Development Authority fund by $525,297. This excess was partially funded by revenues received more than anticipated and fund balance reserves. Note 3: DETAILED NOTES ON ALL FUNDS A. Deposits and investments Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and investments may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds. Authorized collateral in lieu of a corporate surety bond includes: • United States government Treasury bills, Treasury notes, Treasury bonds; • Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; • General obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; • General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; • Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's Corporation; and • Time deposits that are fully insured by any federal agency. Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a 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 selection should be approved by the City. At year -end, the carrying amount of the City's deposits was $1,428,201 and the bank balance was $1,824,146. At December 31, 2013, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City's agent in the City's name. -75- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Investments The investments of the City are subject to the following risks: • Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota statutes limit the City's investments to the list on page 70 of the notes. The City's investment policy does not address this risk any further. • Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City's investment policy does not address custodial credit risk but the City typically limits its exposure by purchasing insured or registered investments. • Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City's investment policy does not limit the concentration of investments. As of December 31, 2013, the City had invested 5 percent or more of its total investment portfolio in the following issuers: New York City Transitional Finance Authority - 10.56 percent, and Federal National Mortgage Association - 11.40 percent. • 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 period for which an interest rate is fixed, the greater the risk). The City's investment policy does not limit the duration of investments. As of December 31, 2013, the City had the following investments that are insured or registered, or securities held by the City or its agent in the City's name: Total investments $ 25,883,795 (1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk (2) Interest rate risk is disclosed using the segmented time distribution method. N/A Indicated not applicable or available. -76- Credit Segmented Fair Value Quality/ Time and Carrying Types of Investments Ratings (1) Distribution (2) Amount Pooled investments Broker Money Market Funds N/A Less than 6 months $ 3,605,238 Non - pooled investments Negotiable Certificates of Deposit N/A 6 months to 1 year 490,158 Negotiable Certificates of Deposit N/A 1 to 3 years 4,150,979 Negotiable Certificates of Deposit N/A More than 3 years 2,834,942 U.S. Government Agency Securities N/A Less than 6 months 2,610,425 U-S. Government Agency Securities AA+ Less than 6 months 1,205,261 U-S. Government Agency Securities AA+ 1 to 3 years 500,591 U-S. Government Agency Securities AA+ More than 3 years 2,449,107 State and Local Government Securities A- 6 months to 1 year 507,950 State and Local Government Securities AAA 6 months to 1 year 2,609,265 State and Local Government Securities AAA 1 to 3 years 3,927,494 State and Local Government Securities AAA More than 3 years 992,385 Total investments $ 25,883,795 (1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk (2) Interest rate risk is disclosed using the segmented time distribution method. N/A Indicated not applicable or available. -76- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED A reconciliation of cash and temporary investments as reported on the statement of net position follows: Carrying amount of deposits $ 1,428,201 Investments 25, 883,795 Petty cash 2,950 Total $ 27,314,946 Statement of Net Position Cash and temporary investments $ 23,184,827 Cash held with fiscal agent 3,813,745 Restricted cash 300,000 Statement of Fiduciary Net Assets Cash and temporary investments 16,374 Total $ 27,314,946 B. Receivables Loans receivable 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 fund at December 31, 2013 totaled $404,045. A portion of the loans receivable, $362,674, has been offset by a deferred inflow of resources in the fund financial statements, while the remaining has been committed to economic development. -77- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED C. Capital assets Capital asset activity for the year ended December 31, 2013 was as follows: Governmental activities Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated Buildings and structures Vehicles and equipment Improvements other than buildings Total capital assets being depreciated Less accumulated depreciation for Buildings and structures Vehicles and equipment Improvements other than buildings Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Ending Balance Increases Decreases Balance $ 994,268 $ - $ - $ 994,268 7,410,422 4,324,819 (2,465,545) 9,269,696 8,404,690 4,324,819 (2,465,545) 10,263,964 9,262,477 - - 9,262,477 8,493,701 1,062,598 (729,494) 8,826,805 18,439,721 2,604,669 (2,494) 21,041,896 36,195,899 3,667,267 (731,988) 39,131,178 (5,127,552) (251,333) (5,378,885) (5,932,568) (625,950) 600,310 (5,958,208) (5,614,839) (933,108) - (6,547,947) (16,674,959) (1,810,391) 600,310 (17,885,040) 19,520,940 1,856,876 (131,678) 21,246,138 $ 27,925,630 $ 6,181,695 $ (2,597,223) $ 31,510,102 -78- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Business -type activities Sewer utility Beginning Water utility Ending Golf course Balance Increases Decreases Balance Business -type Activities 75,895 Total depreciation expense - business -type activities $ 509,701 Capital assets not being depreciated Land $ 485,042 $ - $ - $ 485,042 Construction in progress 1,192,804 2,453,624 (1,463,991) 2,182,437 Total capital assets not being depreciated 1,677,846 - - 2,667,479 Capital assets being depreciated Buildings and structures 10,614,311 - - 10,614,311 Vehicles and equipment 2,032,027 40,968 - 2,072,995 Improvements other than buildings 12,427,024 1,463,990 - 13,891,014 Total capital assets being depreciated 25,073,362 1,504,958 - 26,578,320 Less accumulated depreciation for Buildings and structures (3,303,362) (203,306) - (3,506,668) Vehicles and equipment (1,445,388) (100,174) - (1,545,562) Improvements other than buildings (3,616,444) (206,221) - (3,822,665) Total accumulated depreciation (8,365,194) (509,701) - (8,874,895) Total capital assets being depreciated, net 16,708,168 995,257 - 17,703,425 Business -type activities capital assets, net $ 18,386,014 $ 995,257 $ - $ 20,370,904 Depreciation expense was charged to functions /programs of the City as follows: Governmental activities General government $ 98,525 Public safety 58,473 Public works 678,855 Culture and recreation 304,028 Internal service 670,510 Total depreciation expense - governmental activities $ 1,810,391 Business -type activities Sewer utility $ 69,996 Water utility 152,265 Golf course 33,708 Ice arena 177,837 Storm water 75,895 Total depreciation expense - business -type activities $ 509,701 -79- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Construction commitments The City has active construction projects as of December 31, 2013. At year -end, the City's commitments with the contractors are as follows: Spent Remaining Project to date Commitment 2011 Street Infrastructure 2013 Street Infrastructure Winnetka Learning Center 4200/4300 Xylon Acquisition 2013 Crack Repair /Seal Coat Bass Creek Restoration 18" Valve Replacement Project / 54th Terra Linda Playground Equipment Total D. Interfund receivables, payables, and transfers The composition of internal balances as of December 31, 2013 is as follows: Receivable Fund Due from/to other funds Governmental Economic Development Authority Advances to /from other funds Governmental Economic Development Authority $ 61,234 4,330,397 99,656 196,456 90,072 62,350 43,737 80,191 $ 22,931 1,666,271 6,842 2,359 5,894 2,331 5,618 7,142 $ 4,964,093 $ 1,719,388 Payable Fund Purpose Governmental HRA Construction Governmental HRA Construction Finance capital purchase Finance capital purchase Interfund activity eliminated from government -wide statements Internal service fund activities related to the enterprise funds Total internal balances - government -wide statements Amnnnt $ 99,413 $ 1,891,182 (1,990,595) 901,262 $ 901,262 The Economic Development Authority fund loaned $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 four percent. As of December 31, 2013, the balance outstanding was $1,990,595. -80- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Interfund transfers at December 31, 2013 are as follows: Total transfers $ 257,902 $ 102,525 $ 1,115,411 $ 348,301 $ 1,824,139 • The General fund transferred $100,000 to the nnmajor governmental funds to fund the City Hall CIP fund. • Transfers were made out of the Economic Development Authority fund, Sewer Utility enterprise fund, Water Utility enterprise fund, Storm Water enterprise fund, and Internal Service fund for $30,000, $46,800, $46,800, $20,400, and $78,000, respectively, to the General fund to cover administrative charges paid for by the General fund. • Nonmajor governmental funds transferred $35,902 to the General fund to close the remaining resources of a fund no longer required. • Nonmajor governmental funds transferred $2,525 for Park Infrastructure • Nonmajor governmental funds transferred $348,301to the Golf Course enterprise fund to close the remaining resources of a fund no longer used • The General fund transferred $83,686 to the Water Utility enterprise fund for operations • The Golf Course enterprise fund transferred $31,725 to the Water Utility enterprise fund for operations • The Storm Water enterprise fund transferred $1,000,000 to the Water Utility enterprise fund for infrastructure improvements E. Long -term debt 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. In addition, G.O. bonds have been issued to refund G.O. tax increment bonds and G.O. revenue bonds. The following G.O. bonds will be repaid from future tax levies. Authorized Interest Issue Maturity Balance at Description and Issued Rate Date Date Year End 2010B G.O. Certificates of Indebtedness $ 1,245,000 2.00-2.60% 11/23/10 02/01/20 $ 990,000 -81- Transfer in Nonmajor Water Golf General Governmental Utility Course Fund Fund Funds Enterprise Enterprise Total Transfer out General $ - $ 100,000 $ 83,686 $ - $ 183,686 Economic Development Authority 30,000 - - - 30,000 Nonmajor governmental 35,902 2,525 - 348,301 386,728 Sewer Utility enterprise 46,800 - - - 46,800 Water Utility enterprise 46,800 - - - 46,800 Golf Course enterprise - - 31,725 - 31,725 Storm Water enterprise 20,400 - 1,000,000 - 1,020,400 Internal Service 78,000 - - - 78,000 Total transfers $ 257,902 $ 102,525 $ 1,115,411 $ 348,301 $ 1,824,139 • The General fund transferred $100,000 to the nnmajor governmental funds to fund the City Hall CIP fund. • Transfers were made out of the Economic Development Authority fund, Sewer Utility enterprise fund, Water Utility enterprise fund, Storm Water enterprise fund, and Internal Service fund for $30,000, $46,800, $46,800, $20,400, and $78,000, respectively, to the General fund to cover administrative charges paid for by the General fund. • Nonmajor governmental funds transferred $35,902 to the General fund to close the remaining resources of a fund no longer required. • Nonmajor governmental funds transferred $2,525 for Park Infrastructure • Nonmajor governmental funds transferred $348,301to the Golf Course enterprise fund to close the remaining resources of a fund no longer used • The General fund transferred $83,686 to the Water Utility enterprise fund for operations • The Golf Course enterprise fund transferred $31,725 to the Water Utility enterprise fund for operations • The Storm Water enterprise fund transferred $1,000,000 to the Water Utility enterprise fund for infrastructure improvements E. Long -term debt 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. In addition, G.O. bonds have been issued to refund G.O. tax increment bonds and G.O. revenue bonds. The following G.O. bonds will be repaid from future tax levies. Authorized Interest Issue Maturity Balance at Description and Issued Rate Date Date Year End 2010B G.O. Certificates of Indebtedness $ 1,245,000 2.00-2.60% 11/23/10 02/01/20 $ 990,000 -81- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED The annual debt service to maturity for G.O. bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest Total 2014 $ 135,000 $ 20,148 $ 155,148 2015 135,000 17,447 152,447 2016 140,000 14,698 154,698 2017 140,000 11,897 151,897 2018 145,000 8,939 153,939 2019 -2020 295,000 7,590 302,590 Total $ 990,000 $ 80,719 $ 1,070,719 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 $492,476 and $227,995, respectively. Description G-O. Tax Increment Bonds of 2004 G.O. Tax Increment Bonds of 2005 G.O. Tax Increment Refunding Bonds, Series, 2012A G.O. Taxable Tax Increment Refunding Bonds, Series, 2012B Total G.O. tax increment bonds Authorized Interest Issue Maturity Balance at and Issued Rate Date Date Year End $ 4,080,000 3.10-3-25 % 04/01/04 02/01/14 $ 2,770,000 1,370,000 5.60 03/01/05 02/01/14 2,695,000 2.00-2.45 1,330,000 1.35-4-65 01/11/12 02/01/25 1,225,000 2,695,000 01/11/12 02/01/31 1,330,000 $ 8,020,000 The annual debt service to maturity for G.O. tax increment bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest Total 2014 $ 3,995,000 $ 190,531 $ 4,185,531 2015 270,000 99,696 369,696 2016 275,000 94,588 369,588 2017 275,000 89,288 364,288 2018 290,000 83,716 373,716 2019 -2023 1,595,000 321,068 1,916,068 2024 -2028 1,025,000 130,955 1,155,955 2029 -2031 295,000 20,244 315,244 Total $ 8,020,000 $ 1,030,086 $ 9,050,086 -82- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Lease revenue bonds The following bonds were issued to fmance the Energy Conservation project and will be repaid primarily with energy savings and revenues pledged from the Ice Arena fund. Annual principal and interest payments on the bonds are expected to require less than 8 percent of revenues from the Ice Arena fund. Principal and interest paid for the current year and total customer revenues for the Ice Arena fund were $57,482 and $669,167, respectively. Authorized Interest Issue Maturity Balance at Description and Issued Rate Date Date Year End 2011A Taxable Lease Revenue Bonds $ 3,505,000 5.00 % 12/01/11 12/01/28 $ 3,505,000 The annual debt service to maturity for all lease revenue bonds are as follows: Year Ending December 31, Business -type Activities Principal Interest Total 2014 - 57,482 57,482 2015 - 57,482 57,482 2016 - 57,482 57,482 2017 - 57,482 57,482 2018 - 57,482 57,482 2019-2023 - 287,410 287,410 2024-2028 3,505,000 287,410 3,792,410 Total $ 3,505,000 $ 862,230 $ 4,367,230 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 customer revenues for the Sewer Utility fund were $75,020 and $2,443,094, respectively. Principal and interest paid for the current year and total customer revenues for the Water Utility fund were $193,727 and $3,460,008, respectively. Principal and interest paid for the current year and total customer revenues for the Storm Water fund were $118,464 and $963,167, respectively. Total G.O_ revenue bonds and notes $ 2,724,000 -83- Authorized Interest Issue Maturity Balance at Description and Issued Rate Date Date Year End 2010A G_O_ Utility Revenue Bonds $ 1,200,000 2.00-3.25 % 05/06/10 02/01/21 $ 825,000 2010B G-O. Water Revenue Refunding Bonds 605,000 2.00-3.00 11/23/10 02/01/22 510,000 2011 G.O. Public Facilities Authority Note 411,738 1.70 02/23/11 08/20/29 354,000 2013 G.O_ Public Facilities Authority Note 1,035,000 1.00 07/24/13 08/20/32 1,035,000 Total G.O_ revenue bonds and notes $ 2,724,000 -83- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED The annual debt service to maturity for G.O. revenue bonds are as follows: Year Ending December 31, 2014 2015 2016 2017 2018 2019 -2023 2024-2028 2029-2032 Total Changes in long -term liabilities Business -type Activities Principal Interest Total $ 371,000 $ 47,084 $ 418,084 201,000 41,193 242,193 202,000 37,601 239,601 202,000 33,766 235,766 209,000 29,579 238,579 871,000 78,810 949,810 404,000 28,854 432,854 264,000 6,436 270,436 S 2,724,000 $ 303,323 $ 3,027,323 Long -term liability activity for the year ended December 31, 2013, was as follows: Governmental activities Bonds payable G_O_ bonds and certificates G_O. tax increment bonds Add: premiums on bonds Total bonds payable, net Compensated absences payable Other postemployment benefits payable Governmental activity long -term liabilities Business -type activities Bonds payable G.O. revenue bonds Lease revenue bonds Add: premiums on bonds Less: bond discount Total bonds payable, net Capital leases payable Other postemployment benefits payable Business -type activity long -term liabilities Beginning - Ending Due Within Balance Increases Decreases Balance One Year (5,427) - 5,538,785 1,035,000 (345,157) $ 1,120,000 $ - $ (130,000) $ 990,000 $ 135,000 8,230,000 - (210,000) 8,020,000 3,995,000 62,372 - (5,882) 56,490 - 9,412,372 - (345,882) 9,066,490 4,130,000 480,222 18,740 (22,610) 476,352 428,717 112,634 85,489 (40,724) 157,399 - $ 10,005,228 $ 104,229 $ (409,216) $ 9,700,241 $ 4,558,717 $ 2,033,000 $ 1,035,000 $ (344,000) $ 2,724,000 $ 371,000 3,505,000 - - 3,505,000 - 8,705 - (3,650) 5,055 - (7,920) - 2,493 (5,427) - 5,538,785 1,035,000 (345,157) 6,228,628 371,000 3,605 - (3,605) - - 18,362 13,765 (6,784) 25,343 - $ 5,560,752 $ 1,048,765 $ (355,546) $ 6,253,971 $ 371,000 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. -84- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED F. Components of fund balance At December 31, 2013, portions of the City's fund balance are not available for appropriation due to not being in spendable form (Nonspendable), legal restrictions (Restricted), City Council action (Committed), policy and/or intent (Assigned). The following is a summary of the components of fund balance: Economic Other Development BRA Street Temporary BRA Governmental Purpose General Authority Construction Infrastructure Financing Bonds Funds Total Nonspendable Prepaid items $ 15,484 $ $ $ $ $ - $ $ 15,484 Restricted for Economic development $ $ $1,443,302 $ $ $ $ $1,443,302 Debt service 3,815,654 160,781 3,976,435 Public safety Police expenditures - 117,459 117,459 Ice arena - - 13,623 13,623 Total restricted $ $ $1,443,302 $ $ $3 15 654 $ 291,863 $5 50819 Committed to Operations $ $ $ $ $ $ $ 185,051 $ 185,051 Economic development 4,326,022 - 4,326,022 Total committed $ $4,326,022 $ $ $ $ $ 185,051 $4,511,073 Assigned to Street improvements $ $ $ $3,908,890 $ $ $ - $3,908,890 General improvements 3,130,125 - 3,130,125 City hall improvements - 201,597 201,597 Park improvements - 963,726 963,726 Total assigned $ $ $ $3,908,890 $3,130,125 $ $1,165,323 $8,204,338 Note 4: OTHER INFORMATION A. Defined benefit pension plan - public employees retirement association (PERA) - statewide 1. Plan description All full -time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost sharing, multiple - employer retirement plans. These plans are established and administered in accordance with Minnesota statutes, chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, fire- fighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after five years of credited service. The defined retirement 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. -85- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of the step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. GERF members hired prior to Julyl, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hire on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree - no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the Internet at www.nmpera.org, by writing to PERA, 60 Empire Street, Suite #200, St. Paul, Minnesota 55103 -1855 or by calling (651) 296 -7460 or (800) 652 -9026. 2. Funding policy Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State legislature. The City makes annual contributions to the pension plans equal to the amount required by Minnesota statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute 9.10 percent and 6.25 percent, respectively, of their annual covered salary in 2013. PEPFF members were required to contribute 9.60 percent of their annual covered salary in 2013. The City is required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan GERF members, 7.25 percent for Coordinated Plan GERF members, and 14.40 percent for PEPFF members. The City's contributions to GERF for the years ending December 31, 2013, 2012 and 2011 were $251,438, $254,832, and $250,873, respectively. The City's contributions to PEPFF for the years ending December 31, 2013, 2012 and 2011 were $339,138, $320,482, and $314,461, respectively. The City's contributions were equal to the contractually required contributions for each year as set by Minnesota statute. 3. Defined contribution plan Elected officials of the City of New Hope are covered by the Public Employees Defined Contribution Plan ( PEDCP), a multiple - employer deferred compensation plan administered by the Public Employees Retirement Association of Minnesota (PERA). The PEDCP is a tax qualified plan under section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota statutes, chapter 353D.03, specify the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and twenty -five hundredths of one percent of the assets in each member's account annually. The City's contributions to the PEDCP for the years ended December 31, 2013, 2012 were $2,197 and $2,087, respectively. The City's contributions were equal to the contractually required contributions for each year as set by Minnesota statutes. -86- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED B. Postemployment benefits other than pensions 1. Plan description The City administers a single - employer defined benefit healthcare plan ( "the Retiree Health Plain. 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. There are 67 active participants and 9 retired participants. 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. 2. 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 2013, the City contributed $47,508 to the plan. 3. Annual other postemployment benefit cost and net other postemployment benefit obligation The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The City has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement No. 45 for employers in plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Annual required contribution $ 99,799 Interest on net OPEB obligation 4,585 Adjustment to annual required contribution (5,130) Annual OPEB cost (expense) 99,254 Contributions made (47,508) Increase in net OPEB obligation 51,746 Net OPEB obligation - January 1, 2013 130,996 Net OPEB obligation - December 31, 2013 $ 182,742 -87- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2013 and the preceding two fiscal years are as follows: Three Year Trend Information Percentage Year Annual Annual OPEB Net OPEB Ending OPEB Cost Contributed Obligation 12/31/13 $ 99,254 47.9 % $ 182,742 12/31/12 99,453 52.1 130,996 12/31/11 99,608 62.5 83,329 4. Funded status and funding progress As of January 1, 2011, the actuarial accrued liability for benefits was $1,001,568, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $4,266,321, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 23.5 percent. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 5. Methods and assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. The following simplifying assumptions were made: Retirement age for active employees - Based on the historical average age of retirement and expectations of management, the retirement age for active plan members was determined on an individual level. In addition, spouses of retired employees were assumed to discontinue coverage on the plan when the retired employee reaches Medicare age. Marital status - Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality - Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2007 United States Life Tables for Males and for Females were used. Turnover - Non - group- specific age -based turnover data from GASB Statement No. 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. -88- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums was based on actual rate changes for 2011 and 2012 along with projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate increase of 5.2 percent initially in 2011, followed by a 6.4 percent decrease in 2012, to an ultimate average rate increase of 5.2 percent after six years, was used. Health insurance premiums - 2010, 2011, and 2012 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation rate - The expected long -term inflation assumption of 2.4 percent was based on average changes over the past ten years in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI -W) in The 2010 Annual Report of the Board of Trustees of the Federal Old -Age and Survivors Insurance and Disability Insurance Trust Funds for an intermediate growth scenario. Payroll growth rate - The expected long -term payroll growth rate was assumed to equal the rate of inflation. Based on the historical and expected returns of the City's short-term investment portfolio, a discount rate of 3.5 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2013 was thirty years. C. Contingencies Tax increment districts The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increment could become a liability of an applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial statements. Contingent liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City's counsel the resolution of these matters will not have a material adverse effect on the financial condition of the City. -89- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED D. Risk management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust ( LMCIT), which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self - sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage in any of the past three fiscal years. Liabilities are reported when it is probably that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. 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, 2013, 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, 2013 is undetermined. F. Joint ventures and governed organizations Joint ventures Joint Water Commission The City is a party to a joint powers agreement through which the Golden Valley, Crystal, and New Hope Joint Water Commission (JWC) is formed. The agreement provides for the operation and ownership of a water supply, distribution, and support system in and for the cities of Golden Valley, Crystal, and New Hope. Each member city is entitled to appoint one member to the JWC board. The City purchases water used by its residents from the JWC and shares in the JWC's operation, maintenance, repair, and replacement costs based on its water usage. As provided for in the joint powers agreement, in the event of termination, all real and personal property and cash held by the JWC would be divided among the members by unanimous consent. Such division would be based on refunded monetary contributions made to the JWC 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 enterprise fund has not recorded any subsequent amounts as an equity investment or contributed capital related to the JWC. The following financial information is taken from the JWC's audited financial statements for the year ended December 31, 2013: Total assets $4,724,449 Total liabilities $646,504 Total net position $4,077,945 Total revenue $8,116,279 Total expenses $7,395,649 -90- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED Of the total revenues, $7,958,464 represented assessments paid by member cities. The City's share of JWC's total member assessments for the year ended December 31, 2013 was $2,313,345 or 29.07 percent. JWC financial statements are available from the City of Golden Valley, attention: Finance Department, 7800 Golden Valley Road, Golden Valley, Minnesota, 55427 -4508. 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, 2012, the most recent information available at the date of this report: Total assets $5,737,969 Total liabilities $525,092 Total net position $5,212,877 Total revenue $2,093,865 Total expenses $2,225,221 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, 2013, the amount reported as investment in joint venture was $2,554,310. According to a formula in the agreement, the City's share of the District's budget is 49.7 percent. Payments to the District in 2013 totaled $952,009. The District's financial statements for the period ended December 31, 2013 are available at the District office located at: 4251 Xylon Avenue North, New Hope, Minnesota 55428. Jointly controlled organizations 1. 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, 2013 was $25,273, representing 7.9 percent of members' contributions for the year. 2. 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 $14,115 for these services in 2013. -91- CITY OF NEW HOPE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Note 4: OTHER INFORMATION - CONTINUED 3. Hennepin Recycling Group (HRG) The City is parry 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 residents. In 2013, total charges of $215,334 were incurred for these services. 4. Basset 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 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 2013 contribution to the BCWMC for its fiscal year ended December 31, 2013 was $27,648, representing 5.4 percent of member's contributions for the year. 5. Local Governmental Information Systems (LOGIS) The City is one of over 30 local government units in Minnesota making up a consortium that have joined together to provide one another with a full service data processing solution. Fees paid to the consortium are based on the level of service required and the applications utilized. In 2013, the City incurred charges of $410,200 for application support, systems development, Internet access, and network support services. -92- REQUIRED SUPPLEMENTARY INFORMATION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -93- CITY OF NEW HOPE, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION DECEMBER 31, 2013 Schedule of funding progress for the postemployment benefit plan Unfunded -94- Actuarial UAAL as a Actuarial Actuarial Actuarial Accrued Percentage Valuation Value of Accrued Liability Funded Covered of Covered Date Assets Liability (UAAL) Ratio Payroll Payroll O1 /01 /11 $ - $ 1,001,568 $ 1,001,568 - % $ 4,266,321 23.5 % 12/31/08 - 187,037 187,037 - 6,256,409 3.0 -94- COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -95- CITY OF NEW HOPE, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2013 -96- Total Nonmaj or Special Debt Capital Governmental Revenue Service Projects Funds ASSETS Cash and temporary investments $ 283,776 $ 160,781 $ 1,155,996 $ 1,600,553 Receivables Accounts 23,828 - - 23,828 Special assessments 8,529 - - 8,529 Due from other governments - - 10,000 10,000 TOTAL ASSETS $ 316,133 $ 160,781 $ 1,165,996 $ 1,642,910 LIABILITIES Due to other governments $ - $ - $ 673 $ 673 FUND BALANCES Restricted for Debt service - 160,781 - 160,781 Public safety police expenditures 117,459 - - 117,459 Ice arena 13,623 - - 13,623 Committed to operations 185,051 - - 185,051 Assigned to City hall improvements - - 201,597 201,597 Park improvements - - 963,726 963,726 TOTAL FUND BALANCES 316,133 160,781 1,165,323 1,642,237 TOTAL LIABILITIES AND FUND BALANCES $ 316,133 $ 160,781 $ 1,165,996 $ 1,642,910 -96- CITY OF NEW HOPE, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2013 -97- Total Nonmaj or Special Debt Capital Governmental Revenue Service Projects Funds REVENUES Taxes Property taxes $ - $ 164,325 $ 296,000 $ 460,325 Intergovernmental - - 10,000 10,000 Charges for services 224,850 - 25,077 249,927 Fines and forfeitures 15,350 - - 15,350 Investment earnings 923 450 4,240 5,613 Miscellaneous 5,000 - 7,036 12,036 TOTAL REVENUES 246,123 164,775 342,353 753,251 EXPENDITURES Current Public safety 148 - - 148 Public works 216,014 - - 216,014 Culture and recreation 7,761 - - 7,761 Capital outlay Culture and recreation - - 182,870 182,870 Debt service Principal - 130,000 - 130,000 Interest - 23,086 - 23,086 TOTAL EXPENDITURES 223,923 153,086 182,870 559,879 EXCESS OF REVENUES OVER EXPENDITURES 22,200 11,689 159,483 193,372 OTHER FINANCING SOURCES (USES) Transfers in 2,525 - 100,000 102,525 Transfers out - (35,902) (350,826) (386,728) TOTAL OTHER FINANCING SOURCES (USES) 2,525 (35,902) (250,826) (284,203) NET CHANGE IN FUND BALANCES 24,725 (24,213) (91,343) (90,831) FUND BALANCES, JANUARY 1 291,408 184,994 1,256,666 1,733,068 FUND BALANCES, DECEMBER 31 $ 316,133 $ 160,781 $ 1,165,323 $ 1,642,237 -97- THIS PAGE IS LEFT BLANK INTENTIONALLY -98- CITY OF NEW HOPE, MINNESOTA 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. -99- CITY OF NEW HOPE, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS SUBCOMBINING BALANCE SHEET DECEMBER 31, 2013 -100- 9021 9016 9017 Police Solid Waste Ice Arena Forfeitures Management Endowment Total ASSETS Cash and temporary investments $ 117,459 $ 152,694 $ 13,623 $ 283,776 Receivables Accounts - 23,828 - 23,828 Special assessments - 8,529 - 8,529 TOTAL ASSETS $ 117,459 $ 185,051 $ 13,623 $ 316,133 FUND BALANCES Restricted for Public safety police expenditures $ 117,459 $ - $ - $ 117,459 Ice arena - - 13,623 13,623 Committed to operations - 185,051 - 185,051 TOTAL FUND BALANCES $ 117,459 $ 185,051 $ 13,623 $ 316,133 -100- CITY OF NEW HOPE, MINNESOTA NONMAJOR SPECIAL REVENUE FUNDS SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2013 9021 9016 9017 Police Solid Waste Ice Arena Forfeitures Management Endowment Total REVENUES Charges for services $ - $ 224,850 $ - $ 224,850 Fines and forfeitures 15,350 - - 15,350 Investment earnings 379 496 48 923 Miscellaneous - - 5,000 5,000 TOTAL REVENUES 15,729 225,346 5,048 246,123 EXPENDITURES Current Public safety Supplies Public works Other services and charges Culture and recreation Supplies TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES Transfers in NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 148 - - 148 - 216,014 - 216,014 - - 7,761 7,761 148 216,014 7,761 223,923 15,581 9,332 (2,713) 22,200 - - 2,525 2,525 15,581 9,332 (188) 24,725 101,878 175,719 13,811 291,408 $ 117,459 $ 185,051 $ 13,623 $ 316,133 -101- CITY OF NEW HOPE, MINNESOTA SPECIAL REVENUE FUND - SOLID WASTE MANAGEMENT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2013 EXPENDITURES Current Public works Other services and charges 253,735 253,735 216,014 37,721 NET CHANGE IN FUND BALANCES 928 928 9,332 8,404 FUND BALANCES, JANUARY 1 Budgeted Amounts Actual Variance with FUND BALANCES, DECEMBER 31 Original Final Amounts Final Budget REVENUES Charges for services $ 253,300 $ 253,300 $ 224,850 $ (28,450) Investment earnings 1,363 1,363 496 (867) TOTAL REVENUES 254,663 254,663 225,346 (29,317) EXPENDITURES Current Public works Other services and charges 253,735 253,735 216,014 37,721 NET CHANGE IN FUND BALANCES 928 928 9,332 8,404 FUND BALANCES, JANUARY 1 175,719 175,719 175,719 - FUND BALANCES, DECEMBER 31 $ 176,647 $ 176,647 $ 185,051 $ 8,404 -102- CITY OF NEW HOPE, MINNESOTA 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. General Obligation Taxable Fund - This fund accounts for excess revenues from property tax, interest income, and transfers collected to pay for the principal and interest on the General Obligation Taxable Bonds sold by the City in 1996. 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. -103- CITY OF NEW HOPE, MINNESOTA NONMAJOR DEBT SERVICE FUNDS SUBCOMBINING BALANCE SHEET DECEMBER 31, 2013 ASSETS Cash and temporary investments FUND BALANCES Restricted for debt service 9140 General Obligation Taxable 9145 2010B G.O. Equipment Bonds Total $ - $ 160,781 $ 160,781 $ - $ 160,781 $ 160,781 -104- CITY OF NEW HOPE, MINNESOTA 130,000 NONMAJOR DEBT SERVICE FUNDS 23,086 SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 153,086 FOR THE YEAR ENDED DECEMBER 31, 2013 9140 9145 General 2010B Obligation G.O. Equipment Taxable Bonds REVENUES Taxes Property taxes Investment earnings TOTAL REVENUES EXPENDITURES Debt service Principal Interest TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING USES Transfers out NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 $ - $ 164,325 $ 164,325 450 450 164,775 164,775 - 130,000 130,000 23,086 23,086 153,086 153,086 11,689 11,689 (35,902) - (35,902) (35,902) 11,689 (24,213) 35,902 149,092 184,994 $ - $ 160,781 $ 160,781 -105- THIS PAGE IS LEFT BLANK INTENTIONALLY -106- CITY OF NEW HOPE, MINNESOTA 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. City Hall CIP Fund - This fund accounts for the accumulation of reserves for City Hall projects. Park Infrastructure Fund - This fund is used to account for park improvement projects. -107- CITY OF NEW HOPE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS SUBCOMBINING BALANCE SHEET DECEMBER 31, 2013 -108- 9010 9202 9233 Fire City Hall Park Capital Projects CIP Infrastructure Total ASSETS Cash and temporary investments $ - $ 201,597 $ 954,399 $ 1,155,996 Due from other governments - - 10,000 10,000 TOTAL ASSETS $ - $ 201,597 $ 964,399 $ 1,165,996 LIABILITIES Due to other governments $ - $ - $ 673 $ 673 FUND BALANCES Assigned to City hall improvements - 201,597 - 201,597 Park improvements - - 963,726 963,726 TOTAL FUND BALANCES - 201,597 963,726 1,165,323 TOTAL LIABILIES AND FUND BALANCES $ - $ 201,597 $ 964,399 $ 1,165,996 -108- CITY OF NEW HOPE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2013 9010 9202 9233 Fire City Hall Park Capital Projects CIP Infrastructure Total REVENUES Taxes Property taxes Intergovernmental County Charges for services Investment earnings Miscellaneous TOTAL REVENUES EXPENDITURES Capital outlay Culture and recreation EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 -109- $ 296,000 $ 296,000 - - 10,000 10,000 - - 25,077 25,077 - 850 3,390 4,240 - - 7,036 7,036 - 850 341,503 342,353 - - 182,870 182,870 - 850 158,633 159,483 - 100,000 - 100,000 (348,301) - (2,525) (350,826) (348,301) 100,000 (2,525) (250,826) (348,301) 100,850 156,108 (91,343) 348,301 100,747 807,618 1,256,666 $ - $ 201,597 $ 963,726 $ 1,165,323 -109- THIS PAGE IS LEFT BLANK INTENTIONALLY CITY OF NEW HOPE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES FOR THE YEAR ENDED DECEMBER 31, 2013 (With comparative actual amounts for the year ended December 31, 2012) -111- 2013 2012 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts REVENUES Taxes Property taxes $ 7,842,983 $ 7,842,983 $ 7,803,838 $ (39,145) $ 7,423,273 Franchise taxes 464,000 464,000 438,834 (25,166) 440,149 Total taxes 8,306,983 8,306,983 8,242,672 (64,311) 7,863,422 Licenses and permits Business regulatory licenses 56,980 56,980 68,497 11,517 68,614 Non - business licenses and permits 204,150 204,150 204,620 470 170,329 Total licenses and permits 261,130 261,130 273,117 11,987 238,943 Intergovernmental Local government aid - - 41,945 41,945 41,968 Highway maintenance aid 165,000 165,000 167,431 2,431 169,103 Other federal, state, and local grants 29,600 29,600 105,809 76,209 92,603 State insurance premium tax 200,000 200,000 211,724 11,724 196,873 Total intergovernmental 394,600 394,600 526,909 132,309 500,547 Charges for services General government 209,475 209,475 247,403 37,928 223,210 Public safety 395,283 395,283 437,022 41,739 351,163 Public works 4,100 4,100 4,576 476 4,542 Culture and recreation 566,095 566,095 647,036 80,941 641,400 Total charges for services 1,174,953 1,174,953 1,336,037 161,084 1,220,315 Fines and forfeitures 280,000 280,000 223,851 (56,149) 262,733 Special assessments - - 9,716 9,716 8,351 Investment earnings 52,699 52,699 34,214 (18,485) 65,453 Miscellaneous 20,107 20,107 71,842 51,735 54,993 TOTAL REVENUES 10,490,472 10,490,472 10,718,358 227,886 10,214,757 -111- CITY OF NEW HOPE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2013 (With comparative actual amounts for the year ended December 31, 2012) City manager Personnel services 307,201 2013 305,920 1,281 2012 Supplies Budgeted Amounts Actual Variance with Actual 1,752 Original Final Amounts Final Budget Amounts EXPENDITURES Total 328,894 328,894 330,153 (1,259) Current Elections General government Personnel services - - - - Mayor and City Council Supplies - - 957 (957) Personnel services $ 47,538 $ 47,538 $ 48,461 $ (923) $ 46,188 Supplies 1,500 1,500 1,968 (468) 1,949 Other services and charges 29,798 29,798 31,360 (1,562) 29,098 Total 78,836 78,836 81,789 (2,953) 77,235 City hall Supplies 1,500 1,500 1,734 (234) Supplies 27,000 27,000 24,005 2,995 12,328 Other services and charges 213,998 213,998 221,102 (7,104) 230,871 Total 240,998 240,998 245,107 (4,109) 243,199 City manager Personnel services 307,201 307,201 305,920 1,281 306,257 Supplies 1,500 1,500 1,300 200 1,752 Other services and charges 20,193 20,193 22,933 (2,740) 20,335 Total 328,894 328,894 330,153 (1,259) 328,344 Elections Personnel services - - - - 26,845 Supplies - - 957 (957) 1,008 Other services and charges 3,600 3,600 923 2,677 4,638 Total 3,600 3,600 1,880 1,720 32,491 Finance Personnel services 138,251 138,251 144,012 (5,761) 90,167 Supplies 1,500 1,500 1,734 (234) 1,767 Other services and charges 124,380 124,380 122,305 2,075 144,087 Total 264,131 264,131 268,051 (3,920) 236,021 Auditing Other services and charges 25,450 25,450 19,050 6,400 21,625 Assessing Other services and charges 104,000 104,000 106,686 (2,686) 104,636 Legal Other services and charges 30,000 30,000 19,349 10,651 20,199 -112- CITY OF NEW HOPE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2013 (With comparative actual amounts for the year ended December 31, 2012) 2013 2012 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts EXPENDITURES - CONTINUED Current - continued General government - continued Human resources Personnel services $ 197,124 $ 197,124 $ 199,531 $ (2,407) $ 197,279 Supplies 1,000 1,000 420 580 1,117 Other services and charges 21,477 21,477 28,171 (6,694) 40,879 Total 219,601 219,601 228,122 (8,521) 239,275 Planning and zoning Personnel services 100,499 100,499 95,170 5,329 76,901 Supplies 300 300 142 158 4 Other services and charges 41,797 41,797 37,202 4,595 54,092 Total 142,596 142,596 132,514 10,082 130,997 Communication Personnel services 89,940 89,940 90,443 (503) 89,741 Supplies 2,125 2,125 1,659 466 1,784 Other services and charges 47,279 47,279 46,898 381 41,754 Total 139,344 139,344 139,000 344 133,279 Total general government 1,577,450 1,577,450 1,571,701 5,749 1,567,301 Public safety Police Personnel services 3,749,239 3,749,239 3,461,539 287,700 3,507,118 Supplies 66,900 66,900 91,254 (24,354) 67,848 Other services and charges 859,713 859,713 846,165 13,548 793,973 Total 4,675,852 4,675,852 4,398,958 276,894 4,368,939 Police reserves Personnel services 16,360 16,360 14,961 1,399 11,926 Supplies 4,655 4,655 4,168 487 4,824 Other services and charges 19,543 19,543 19,390 153 15,438 Total 40,558 40,558 38,519 2,039 32,188 Fire and safety Supplies 5,000 5,000 210 4,790 4,714 Other services and charges 1,029,867 1,029,867 997,235 32,632 986,141 Total 1,034,867 1,034,867 997,445 37,422 990,855 Animal control Personnel services 86,654 86,654 74,254 12,400 79,954 Supplies 1,020 1,020 286 734 617 Other services and charges 30,347 30,347 29,407 940 25,832 Total 118,021 118,021 103,947 14,074 106,403 -113- CITY OF NEW HOPE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2013 (With comparative actual amounts for the year ended December 31, 2012) Swimming pool Personnel services 113,544 2013 91,571 21,973 2012 Supplies Budgeted Amounts Actual Variance with Actual 35,191 Original Final Amounts Final Budget Amounts EXPENDITURES - CONTINUED Total 199,629 199,629 162,083 37,546 Current - continued Total culture and recreation 1,749,240 1,749,240 1,605,757 143,483 Public safety - continued Total current expenditures 10,647,545 10,647,545 10,183,096 464,449 Protective inspection Personnel services $ 349,961 $ 349,961 $ 331,892 $ 18,069 $ 353,269 Supplies 1,850 1,850 2,586 (736) 1,590 Other services and charges 88,015 88,015 94,104 (6,089) 86,951 Total 439,826 439,826 428,582 11,244 441,810 Total public safety 6,309,124 6,309,124 5,967,451 341,673 5,940,195 Public works Street maintenance Personnel services 497,084 497,084 525,984 (28,900) 471,567 Supplies 83,375 83,375 84,051 (676) 125,641 Other services and charges 416,272 416,272 408,522 7,750 321,704 Total 996,731 996,731 1,018,557 (21,826) 918,912 Engineering Other services and charges 15,000 15,000 19,630 (4,630) 7,144 Total public works 1,011,731 1,011,731 1,038,187 (26,456) 926,056 Culture and recreation Recreation Personnel services 470,026 470,026 490,048 (20,022) 475,863 Supplies 89,805 89,805 64,515 25,290 76,026 Other services and charges 184,090 184,090 186,081 (1,991) 177,760 Total 743,921 743,921 740,644 3,277 729,649 Parks Personnel services 515,490 515,490 450,451 65,039 465,076 Supplies 33,075 33,075 29,678 3,397 35,259 Other services and charges 257,125 257,125 222,901 34,224 205,665 Total 805,690 805,690 703,030 102,660 706,000 Swimming pool Personnel services 113,544 113,544 91,571 21,973 94,715 Supplies 42,940 42,940 35,166 7,774 35,191 Other services and charges 43,145 43,145 35,346 7,799 33,170 Total 199,629 199,629 162,083 37,546 163,076 Total culture and recreation 1,749,240 1,749,240 1,605,757 143,483 1,598,725 Total current expenditures 10,647,545 10,647,545 10,183,096 464,449 10,032,277 -114- CITY OF NEW HOPE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2013 (With comparative actual amounts for the year ended December 31, 2012) EXCESS (DEFICIENCY) OF REVENUES OVER (TINDER) EXPENDITURES (277,573) (277,573) 412,004 689,577 31,561 OTHER FINANCING SOURCES (USES) Transfers in 297,573 297,573 257,902 (39,671) 228,964 Sale of capital assets - - 1,460 1,460 - Transfers out (20,000) (20,000) (183,686) (163,686) (100,000) TOTAL OTHER FINANCING SOURCES (USES) 277,573 277,573 75,676 (201,897) 128,964 NET CHANGE IN FUND BALANCES - - 487,680 487,680 160,525 FUND BALANCES, JANUARY 1 5,095,737 5,095,737 5,095,737 - 4,935,212 FUND BALANCES, DECEMBER 31 $ 5,095,737 $ 5,095,737 $ 5,583,417 $ 487,680 $ 5,095,737 -115- 2013 2012 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts EXPENDITURES - CONTINUED Capital outlay General government $ 29,000 $ 29,000 $ 38,417 $ (9,417) $ 45,357 Public safety 88,000 88,000 84,841 3,159 104,927 Culture and recreation 3,500 3,500 - 3,500 635 Total capital outlay 120,500 120,500 123,258 (2,758) 150,919 TOTAL EXPENDITURES 10,768,045 10,768,045 10,306,354 461,691 10,183,196 EXCESS (DEFICIENCY) OF REVENUES OVER (TINDER) EXPENDITURES (277,573) (277,573) 412,004 689,577 31,561 OTHER FINANCING SOURCES (USES) Transfers in 297,573 297,573 257,902 (39,671) 228,964 Sale of capital assets - - 1,460 1,460 - Transfers out (20,000) (20,000) (183,686) (163,686) (100,000) TOTAL OTHER FINANCING SOURCES (USES) 277,573 277,573 75,676 (201,897) 128,964 NET CHANGE IN FUND BALANCES - - 487,680 487,680 160,525 FUND BALANCES, JANUARY 1 5,095,737 5,095,737 5,095,737 - 4,935,212 FUND BALANCES, DECEMBER 31 $ 5,095,737 $ 5,095,737 $ 5,583,417 $ 487,680 $ 5,095,737 -115- THIS PAGE IS LEFT BLANK INTENTIONALLY -116- CITY OF NEW HOPE, MINNESOTA 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. -117- CITY OF NEW HOPE, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF NET POSITION DECEMBER 31, 2013 AND 2012 ASSETS CURRENT ASSETS Cash and temporary investments Due from other governments Inventories TOTAL CURRENT ASSETS NONCURRENT ASSETS Capital assets Land Buildings and structures Vehicles and equipment Less: accumulated depreciation Total capital assets (net of accumulated depreciation) TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accrued salaries payable Accounts and contracts payable Due to other governments Compensated absences payable, current portion TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Other postemployment benefits payable Compensated absences payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES NET POSITION Net investment in capital assets Unrestricted TOTAL NET POSITION 9402 9408 Central Garage Employee Leave nni� nnin nni� nnin $ 4,802,227 $ 5,329,235 $ 608,658 $ 620,433 74,425 72,925 - - 4,876,652 5,402,160 608,658 620,433 85,647 85,647 - - 3,052,918 3,052,918 - - 7,345,218 7,012,114 - - (6,666,917) (6,631,909) - - 3,816,866 3,518,770 - - 8,693,518 8,920,930 608,658 620,433 15,426 15,455 - 36,622 28,734 33,909 - - 1,163 - - - - - 428,717 432,200 45,323 49,364 428,717 468,822 47,635 48,022 47,635 48,022 45,323 49,364 476,352 516,844 3,816,866 3,518,770 - - 4,831,329 5,352,796 132,306 103,589 $ 8,648,195 $ 8,871,566 $ 132,306 $ 103,589 -118- 9407 9410 Insurance Reserve Information Technology Totals 2013 2012 2013 2012 2013 2012 $ 446,209 $ 507,917 $ 158,699 $ 152,083 $ 6,015,793 $ 6,609,668 80,884 - - 57,960 80,884 57,960 - - - - 74,425 72,925 527,093 507,917 158,699 210,043 6,171,102 6,740,553 - - - - 85,647 85,647 - - - - 3,052,918 3,052,918 - - 314,610 314,610 7,659,828 7,326,724 - - (188,407) (152,967) (6,855,324) (6,784,876) - - 126,203 161,643 3,943,069 3,680,413 527,093 507,917 284,902 371,686 10,114,171 10,420,966 - - 4,395 3,773 19,821 55,850 2,241 - 4,975 12,824 35,950 46,733 - - 22,993 19,916 24,156 19,916 - - - - 428,717 432,200 2,241 - 32,363 36,513 508,644 554,699 157,399 112,634 - - 157,399 112,634 - - - - 47,635 48,022 157,399 112,634 - - 205,034 160,656 159,640 112,634 32,363 36,513 713,678 715,355 - - 126,203 161,643 3,943,069 3,680,413 367,453 395,283 126,336 173,530 5,457,424 6,025,198 $ 367,453 $ 395,283 $ 252,539 $ 335,173 $ 9,400,493 $ 9,705,611 -119- CITY OF NEW HOPE, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 OPERATING REVENUES Billings to departments Other TOTAL OPERATING REVENUES OPERATING EXPENSES Personnel services Supplies Utilities Other services and charges Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES Investment earnings Miscellaneous revenues Gain on sale of capital assets TOTAL NONOPERATING REVENUES INCOME (LOSS) BEFORE TRANSFERS TRANSFERS OUT CHANGE IN NET POSITION NET POSITION, JANUARY 1 NET POSITION, DECEMBER 31 9402 9408 Central Garage Employee Leave 2013 2012 2013 2012 $ 1,453,735 $ 1,047,576 $ 481,060 $ 558,092 1,453,735 1,047,576 481,060 558,092 353,806 364,911 454,587 451,269 334,947 270,303 - - 49,042 39,613 - - 326,078 265,224 - - 635,070 566,929 - - 1,698,943 1,506,980 454,587 451,269 (245,208) (459,404) 26,473 106,823 16,096 101,174 2,244 10,125 35,741 69,321 - - 51,837 170,495 2,244 10,125 (193,371) (288,909) 28,717 116,948 (30,000) (25,200) - - (223,371) (314,109) 28,717 116,948 8,871,566 9,185,675 103,589 (13,359) $ 8,648,195 $ 8,871,566 $ 132,306 $ 103,589 -120- 9407 Insurance Reserve 2013 2012 9410 Information Technology 2013 2012 Totals 2013 2012 $ 61,071 $ 90,032 $ 598,750 $ 654,444 $ 2,594,616 $ 2,350,144 94,268 108,234 - - 94,268 108 155,339 198,266 598,750 654,444 2,688,884 2,458,378 44,765 41,752 109,340 111,463 962,498 969,395 - - 24,548 68,029 359,495 338,332 - - 39,939 35,926 88,981 75,539 139,905 159,946 424,717 323,922 890,700 749,092 - - 35,440 19,362 670,510 586,291 184,670 201,698 633,984 558,702 2,972,184 2,718,649 (29,331) (3,432) (35,234) 95,742 (283,300) (260,271) 1,501 8,466 600 2,798 20,441 122,563 - - - 57,960 - 57,960 - - - - 35,741 69,321 1,501 8,466 600 60,758 56,182 249,844 (27,830) 5,034 (34,634) 156,500 (227,118) (10,427) - - (48,000) (47,700) (78,000) (72,900) (27,830) 5,034 (82,634) 108,800 (305,118) (83,327) 395,283 390,249 335,173 226,373 9,705,611 9,788,938 $ 367,453 $ 395,283 $ 252,539 $ 335,173 $ 9,400,493 $ 9,705,611 -121- CITY OF NEW HOPE, MINNESOTA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 9402 9408 Central Garage Employee Leave CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided Other operating receipts Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers out CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from sale of assets $ 1,453,735 $ 1,047,576 $ 481,060 $ 558,092 (715,579) (629,663) - - (353,835) (362,818) (495,079) (439,497) (897,425) 384,321 55,095 (14,019) 118,595 - (30,000) (25,200) - - (933,166) (904,675) - - 35,741 69,321 - - NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (897,425) (835,354) - - CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 16,096 101,174 2,244 10,125 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (527,008) (704,285) (11,775) 128,720 CASH AND CASH EQUIVALENTS, JANUARY 1 5,329,235 6,033,520 620,433 491,713 CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 4,802,227 $ 5,329,235 $ 608,658 $ 62 0,43 3 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) $ (245,208) $ (459,404) $ 26,473 $ 106,823 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 635,070 566,929 - - (Increase) decrease in assets Due from other governments - - - - Inventories (1,500) (44,007) - - Increase (decrease) in liabilities Accounts and contracts payable (5,175) (10,516) - - Accrued salaries payable (29) 2,093 (36,622) 1,702 Due to other governments 1,163 - - - Compensated absences payable - - (3,870) 10,070 Other postemployment benefits payable - - - - NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 384,321 $ 55,095 $ (14,019) $ 118,595 SCHEDULE OF NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Loss on sale or disposal of capital assets $ $ 1,502 $ $ -122- 9407 Insurance Reserve 2013 2012 9410 Information Technology 2013 2012 Totals 2013 2012 $ 61,071 $ 90,032 $ 656,710 $ 654,444 $ 2,652,576 $ 2,350,144 13,384 108,234 - - 13,384 108,234 (137,664) (133,088) (493,976) (425,618) (1,347,219) (1,188,369) - (27,079) (108,718) (110,940) (957,632) (940,334) (63,209) 38,099 54,016 117,886 361,109 329,675 - - (48,000) (47,700) (78,000) (72,900) - - - (96,466) (933,166) (1,001,141) - - - - 35,741 69,321 - (96,466) (897,425) (931,820) 1,501 8,466 600 2,798 20,441 122,563 (61,708) 46,565 6,616 (23,482) (593,875) (552,482) 507,917 461,352 152,083 175,565 6,609,668 7,162,150 $ 446,209 $ 507,917 $ 158,699 $ 152,083 $ 6,015,793 $ 6,609,668 $ (29,331) $ (3,432) $ (35,234) $ 95,742 $ (283,300) $ (260,271) - - 35,440 19,362 670,510 586,291 (80,884) - 57,960 - (22,924) - - - - - (1,500) (44,007) 2,241 (221) (7,849) 1,526 (10,783) (9,211) - - 622 523 (36,029) 4,318 - - 3,077 733 4,240 733 - - - - (3,870) 10,070 44,765 41,752 - - 44,765 41,752 $ (63,209) $ 38,099 $ 54,016 $ 117,886 $ 361,109 $ 329,675 $ $ $ $ $ $ 1,502 -123- CITY OF NEW HOPE, MINNESOTA AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED DECEMBER 31, 2013 PASS - THROUGH GRANT FUND ASSETS Cash and temporary investments Balance January 1 Additions Balance Deductions December 31 LIABILITIES Deposits payable $ 46,081 $ 218 $ (29,925) $ 16,374 $ 46,081 $ 218 $ (29,925) $ 16,374 -124- STATISTICAL SECTION (UNAUDITED) CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 -125- THIS PAGE IS LEFT BLANK INTENTIONALLY -126- STATISTICAL SECTION (Unaudited) This part of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the City s financial performance and well -being have changed over time. Revenue Capacity These schedules contain information to help the reader assessthe City's most significant local revenue source; property taxes. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 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 Cityprovides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. -127- THIS PAGE IS LEFT BLANK INTENTIONALLY -128- CITY OF NEW HOPE, MINNESOTA SUMMARY FINANCIAL REPORT REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS GOVERNMENTAL FUNDS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 REVENUES Taxes Property taxes Tax increments Franchise taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Investment earnings Miscellaneous TOTAL REVENUES Per capita EXPENDITURES Current General government Public safety Public works Culture and recreation Economic development Capital outlay Debt service Principal Interest Bond issuance costs TOTAL EXPENDITURES Per capita Total Long -term indebtedness Per capita General Fund Balance - December 31 Per capita $ 1,571,701 Percent Total 0.28 % Increase 2013 2012 (Decrease) 0.36 $ 9,531,663 $ 9,199,381 3.61 % 511,924 1,343,248 (61.89) 438,834 440,149 (0.30) 273,117 238,943 14.30 4,463,113 858,816 419.68 1,585,964 1,557,898 1.80 239,201 283,233 (15.55) 178,335 305,818 (41.69) 178,217 307,032 (41.95) 111,443 80,073 39.18 $ 17,511,811 $ 14,614,591 19.82 % $ 843 $ 704 19.82 % $ 1,571,701 $ 1,567,301 0.28 % 5,967,599 5,946,209 0.36 1,254,201 1,192,760 5.15 1,613,518 1,599,041 0.91 582,621 304,064 91.61 4,239,938 7,685,819 (44.83) 340,000 330,000 3.03 306,462 270,613 13.25 - 104,351 (100.00) $ 15,876,040 $ 19,000,158 (16.44) % $ 765 $ 915 (16.44) % $ 9,010,000 $ 9,350,000 (3.64) % 434 450 (3.64) $ 5,583,417 $ 5,095,737 9.57 % 269 245 9.57 The purpose of this report is to provide a summary of financial information concerning the City of New Hope to interested citizens. The complete financial statements may be examined at City Hall, 4401 Xylon Avenue North, New Hope, Minnesota 55428. Questions about this report should be directed to Kirk McDonald, City Manager at (763) 531 -5112. -129- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business -type activities Net investment in capital assets Restricted Unrestricted Total business -type activities net position Total primary government Net investment in capital assets Restricted Unrestricted Total primary government Note: The City implemented GASB Statement No. 63 and GASB Statement No. 65 in fiscal 2012. Net position information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated. -130- 2004 2005 2006 2007 $ 10,248,795 $ 11,770,767 $ 13,366,539 $ 14,572,777 15,756,949 18,186,452 17,056,531 18,030,936 4,106,700 4,677,467 6,049,538 7,399,637 $ 30,112,444 $ 34,634,686 $ 36,472,608 $ 40,003,350 $ 6,935,624 $ 7,277,094 $ 7,817,568 $ 8,018,286 1,565,366 1,704,470 1,379,488 1,625,562 $ 8,500,990 $ 8,981,564 $ 9,197,056 $ 9,643,848 $ 17,184,419 $ 19,047,861 $ 21,184,107 $ 22,591,063 15,756, 949 18,186,452 17,056, 531 18,030,936 5,672,066 6,381,937 7,429,026 9,025,199 $ 38,613,434 $ 43,616,250 $ 45,669,664 $ 49,647,198 Note: The City implemented GASB Statement No. 63 and GASB Statement No. 65 in fiscal 2012. Net position information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated. -130- Fiscal Year 2008 2009 2010 2011 (Restated) 2012 2013 $ 16,099,860 $ 16,411,454 $ 16,495,175 $ 20,628,143 $ 26,793,142 $ 30,509,373 17,857,296 19,454,696 9,279,142 6,018,734 1,619,696 1,619,394 8,643,991 9,151,912 21,971,477 21,845,278 22,746,207 23,704,592 $ 42,601,147 $ 45,018,062 $ 47,745,794 $ 48,492,155 $ 51,159,045 $ 55,833,359 $ 9,008,538 $ 9,395,068 $ 9,989,405 $ 11,114,666 $ 12,843,624 $ 14,142,276 - - - - 150,000 300,000 1,423,111 1,650,590 2,541,156 3,978,803 2,735,144 2,496,008 $ 10,431,649 $ 11,045,658 $ 12,530,561 $ 15,093,469 $ 15,728,768 $ 16,938,284 $ 25,108,398 $ 25,806,522 $ 26,484,580 $ 31,742,809 $ 39,636,766 $ 44,651,649 17,857,296 19,454,696 9,279,142 6,018,734 1,769,696 1,919,394 10,067,102 10,802,502 24,512,633 25,824,081 25,481,351 26,200,600 $ 53,032,796 $ 56,063,720 $ 60,276,355 $ 63,585,624 $ 66,887,813 $ 72,771,643 -131- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Expenses Governmental activities General government Public safety Public works Culture and recreation Economic development Interest on long -term debt Total governmental activities expenses Business -type activities Sewer Water Golf course Ice arena Storm water Street lighting Total business -type activities expenses Total expenses Program revenues Governmental activities Charges for services General government Public safety Public works Culture and recreation Economic development Operating grants and contributions Capital grants and contributions 2004 2005 2006 2007 $ 9,987,297 $ 3,253,971 $ 3,683,505 $ 3,547,855 4,697,791 4,650,531 4,739,744 5,291,323 1,065,869 1,346,334 1,514,119 650,686 1,603,052 1,701,120 1,897,571 1,868,403 296,934 582,402 395,308 369,508 17,650,943 11,534,358 12,230,247 11,727,775 163,419 124,235 142,197 251,622 4,253,600 4,083,803 4,680,584 4,955,642 428,575 457,175 420,223 440,666 757,160 677,911 724,020 723,264 395,156 689,622 607,298 387,889 98,786 109,960 106,052 126,966 5,933,277 6,018,471 6,538,177 6,634,427 $ 23,584,220 $ 17,552,829 $ 18,768,424 $ 18,362,202 $ 1,484,651 $ 1,183,365 $ 1,084,659 $ 1,314,007 163,419 124,235 142,197 251,622 - - 4,843 - 423,831 476,484 452,889 503,648 289,368 331,591 263,548 270,403 486,182 497,096 151,934 392,468 Total governmental activities program revenues 2,847,451 2,612,771 2,100,070 2,732,148 Business -type activities Charges for services Sewer - - - - Water 4,473,274 4,284,906 4,491,025 4,870,737 Golf course 341,707 337,730 345,828 337,712 Ice arena 658,786 591,555 622,428 610,145 Storm water 823,123 856,761 881,682 922,850 Street lighting 111,237 111,551 115,162 116,940 Operating grants and contributions 273 16,968 108,371 152,038 Capital grants and contributions 173,176 55,391 138,886 21,381 Total business -type activities program revenues 6,581,576 6,254,862 6,703,382 7,031,803 Total program revenues $ 9,429,027 $ 8,867,633 $ 8,803,452 $ 9,763,951 -132- Fiscal Year 2008 2009 2010 2011 (Restated) 2012 2013 $ 2,492,386 $ 2,244,977 $ 2,552,425 $ 1,841,145 $ 1,931,318 $ 1,837,194 5,988,010 6,218,996 5,864,775 6,129,860 6,062,362 6,238,779 1,381,386 1,291,983 1,625,959 1,795,189 2,126,043 1,790,669 1,967,129 2,053,788 1,899,105 1,882,279 1,928,591 1,946,243 - - 192,431 536,433 762,202 431,332 340,081 275,532 252,224 236,827 407,744 289,009 12,168,992 12,085,276 12,386,919 12,421,733 13,218,260 12,533,226 2,347,381 2,414,360 4,014,022 3,942,781 4,356,957 6,735,276 - - 1,928,845 2,068,282 2,220,438 2,310,604 4,915,929 5,265,147 2,915,757 3,530,521 3,682,602 3,215,714 383,521 369,579 346,345 322,679 298,555 262,894 780,816 694,039 712,153 844,828 771,628 957,784 361,542 393,118 430,899 485,943 425,112 768,610 121,912 126,983 104,099 113,753 104,721 117,518 6,563,720 6,848,866 6,438,098 7,366,006 7,503,056 7,633,124 $ 18,732,712 $ 18,934,142 $ 18,825,017 $ 19,787,739 $ 20,721,316 $ 20,166,350 $ 1,164,394 $ 1,048,549 $ 984,855 $ 220,629 $ 177,174 $ 198,297 151,180 134,680 218,732 877,159 804,725 880,843 - - - 219,353 219,548 226,228 579,694 527,079 562,383 637,077 653,293 672,067 - - 104,713 98,139 94,664 - 388,166 586,508 1,356,292 783,382 2,162,263 828,276 63,947 117,544 787,047 1,107,042 245,290 3,929,565 2,347,381 2,414,360 4,014,022 3,942,781 4,356,957 6,735,276 - - 2,292,300 2,352,635 2,376,021 2,443,202 5,175,878 5,141,131 3,082,771 3,169,859 3,581,225 3,460,008 330,782 345,550 313,941 278,788 296,316 268,133 659,377 723,975 741,266 752,671 694,702 725,211 951,699 933,828 943,883 947,031 948,650 963,167 133,634 149,339 121,647 122,742 124,397 125,604 16,250 66,609 470,183 24,031 22,340 306,520 16,353 75,209 30,739 114,826 106,291 22 5,3 00 7,283,973 7,435,641 7,996,730 7,762,583 8,149,942 8,517,145 $ 9,631,354 $ 9,850,001 $ 12,010,752 $ 11,705,364 $ 12,506,899 $ 15,252,421 -133- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN NET POSITION - CONTINUED LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year Net revenues (expenses) Governmental activities Business -type activities Total primary government revenues (expenses) General Revenues and Other Changes in Net Position General Revenues Governmental activities Taxes Property taxes Tax increments Franchise taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Miscellaneous Transfers Total governmental activities general revenues Business -type activities Grants and contributions not restricted to specific programs Unrestricted investment earnings Transfers Total business -type activities general revenues Total primary government Change in Net Position Governmental activities Business -type activities Total primary government 2004 2005 2006 2007 $ (14,803,492) $ (8,921,587) $ (10,130,177) $ (8,995,627) 648,299 236,391 165,205 397,376 $ (14,155,193) $ (8,685,196) $ (9,964,972) $ (8,598,251) $ 7,312,104 $ 7,047,478 $ 7,097,895 $ 7,756,543 1,131,601 991,476 1,195,726 1,673,394 428,266 435,875 433,806 444,898 1,178,413 2,098,594 1,497,688 600,221 521,643 607,253 1,155,967 1,698,749 380,254 886,549 599,337 352,564 (28,000) (23,396) (12,320) - 10, 924,281 12,043, 829 11, 968,099 12, 526, 369 - 197,458 5,089 - 39,609 23,329 32,878 49,416 28,000 23,396 12,320 - 67,609 244,183 50,287 49,416 $ 10,991,890 $ 12,288,012 $ 12,018,386 $ 12,575,785 $ (3,879,211) $ 3,122,242 $ 1,837,922 $ 3,530,742 715,908 480,574 215,492 446,792 $ (3,163,303) $ 3,602,816 $ 2,053,414 $ 3,977,534 Note: The City implemented GASB Statement No. 63 and GASB Statement No. 65 in fiscal 2012. Net position information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated. -134- Fiscal Year $ 8,416,466 $ 8,760,482 $ 8,730,979 2011 $ 9,129,247 $ 9,554,629 2008 2009 2010 (Restated) 2012 2013 $ (9,821,611) $ (9,670,916) $ (8,372,897) $ (8,478,952) $ (8,861,303) $ (5,797,950) 720,253 586,775 1,558,632 396,577 646,886 884,021 $ (9,101,358) $ (9,084,141) $ (6,814,265) $ (8,082,375) $ (8,214,417) $ (4,913,929) $ 8,416,466 $ 8,760,482 $ 8,730,979 $ 8,784,948 $ 9,129,247 $ 9,554,629 1,835,749 1,262,598 1,408,256 1,400,163 1,343,248 511,924 441,133 438,744 430,494 439,795 440,149 438,834 666,543 755,762 79,529 87,206 47,662 49,005 992,673 723,565 337,312 745,484 429,595 198,658 - - 22,930 13,568 69,321 37,201 96,911 146,680 - - - - (30,067) - 91,129 (2,163,781) 68,971 (317,987) 12,419,408 12,087,831 11,100,629 9,307,383 11,528,193 10,472,264 37,481 27,234 17,400 71,089 57,384 7,508 30,067 - (91,129) 2,163,781 (68,971) 317,987 67,548 27,234 (73,729) 2,234,870 (11,587) 325,495 $ 12,486,956 $ 12,115,065 $ 11,026,900 $ 11,542,253 $ 11,516,606 $ 10,797,759 $ 2,597,797 $ 2,416,915 $ 2,727,732 $ 828,431 $ 2,666,890 $ 4,674,314 787,801 614,009 1,484,903 2,631,447 635,299 1,209,516 $ 3,385,598 $ 3,030,924 $ 4,212,635 $ 3,459,878 $ 3,302,189 $ 5,883,830 -135- THIS PAGE IS LEFT BLANK INTENTIONALLY -136- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Property Tax Franchise Year tax increments tax Total 2004 $ 7,312,104 $ 1,131,601 $ 428,266 $ 8,871,971 2005 7,047,478 991,476 435,875 8,474,829 2006 7,097,895 1,195,726 433,806 8,727,427 2007 7,756,543 1,673,394 444,898 9,874,835 2008 8,416,466 1,835,749 441,133 10,693,348 2009 8,760,482 1,262,598 438,744 10,461,824 2010 8,730,979 1,408,256 430,494 10,569,729 2011 8,784,948 1,400,163 439,795 10,624,906 2012 9,129,247 1,343,248 440,149 10,912,644 2013 9,554,629 511,924 438,834 10,505,387 -137- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year Note: The City implemented GASB 54 in fiscal year 2011, resulting in significant reclassification of the components of fund balance. Years prior to 2011 have not been restated. -138- 2004 2005 2006 2007 General fund Reserved $ - $ - $ - $ - Unreserved 3,939,420 3,975,418 4,227,954 4,249,604 Nonspendable - - - - Unassigned - - - - Total general fund $ 3,939,420 $ 3,975,418 $ 4,227,954 $ 4,249,604 All other governmental funds Reserved $ - $ - $ - $ - Unreserved, reported in Special Revenue funds 2,247,767 3,844,116 4,385,348 4,748,023 Debt Service funds 7,886,432 6,383,506 6,294,149 5,992,108 Capital Project funds 4,040,937 6,877,231 5,458,640 6,569,745 Restricted - - - - Committed - - - - Assigned - - - - Total all other governmental funds $ 14,175,136 $ 17,104,853 $ 16,138,137 $ 17,309,876 Total all governmental funds $ 18,114,556 $ 21,080,271 $ 20,366,091 $ 21,559,480 Note: The City implemented GASB 54 in fiscal year 2011, resulting in significant reclassification of the components of fund balance. Years prior to 2011 have not been restated. -138- Fiscal Year $ 2,433,162 2011 $ 9,043,337 $ - 2008 2009 2010 (Restated) 2012 2013 $ - $ - $ 63,753 $ - $ - $ - 3,952,477 4,354,351 4,527,847 - - - - - - 14,366 14,925 15,484 - - - 4,920,846 5,080,812 5,567,933 $ 3,952,477 $ 4,354,351 4,591,600 $ 4,935,212 $ 5,095,737 $ 5,583,417 $ 2,433,162 $ 4,699,636 $ 9,043,337 $ - $ - $ - 2,993,986 3,266,399 3,129,062 - - - 6,571,884 6,450,295 - - - - 5,962,599 5,317,588 9,771,932 - - - - - - 6,114,114 5,657,606 5,550,819 - - - 4,666,447 5,165,192 4,511,073 - - - 6,877,641 6,533,868 8,204,338 $ 17,961,631 $ 19,733,918 $ 21,944,331 $ 17,658,202 $ 17,356,666 $ 18,266,230 $ 21,914,108 $ 24,088,269 $ 26,535,931 $ 22,593,414 $ 22,452,403 $ 23,849,647 -139- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year Revenues Property taxes Tax increments Franchise taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Investment earnings Miscellaneous Total revenues Expenditures General government Public safety Public works Culture and recreation Economic development Capital outlay Debt service Principal Interest Bond issuance costs 2004 2005 2006 2007 $ 8,429,780 $ 8,069,691 $ 8,330,410 $ 9,386,469 428,265 435,875 433,806 444,898 500,141 398,843 289,534 332,351 1,605,507 2,415,857 1,731,191 970,543 1,224,439 1,008,883 1,036,710 1,149,810 268,358 240,273 266,750 247,794 497,664 417,697 310,708 326,909 836,520 837,789 1,031,207 1,747,196 13,790,674 13,824,908 13,430,316 14,605,970 1,370,000 2,102,852 1,857,955 1,771,012 1,959,594 4,403,147 4,594,910 4,739,323 5,281,122 834,167 960,101 825,199 883,268 1,388,814 1,515,255 1,607,849 1,638,354 7,898,496 2,342,117 4,326,095 1,769,589 1,385,000 1,650,000 940,000 1,525,000 431,621 480,746 432,698 357,654 Total expenditures 18,444,097 13,401,084 14,642,176 13,414,581 Excess (deficiency) of revenues over (under) expenditures (4,653,423) 423,824 (1,211,860) 1,191,389 Other financing sources (uses) Transfers in 1,322,034 - - - Sales of capital assets 822,219 85,757 510,000 2,000 Bonds issued 4,080,000 1,370,000 - - Premium on bonds issued - - - - Refunding bonds issued - 1,455,000 - - Bonds refunded - (1,425,000) - - Transfers out (1,350,034) (23,396) (12,320) - Total other financing sources (uses) 4,874,219 1,462,361 497,680 2,000 Net change in fund balances $ 220,796 $ 1,886,185 $ (714,180) $ 1,193,389 Debt service as a percentage of Noncapital expenditures 23.4% 11.1% 17.1% 11.2% -140- Fiscal Year 2011 2008 2009 2010 (Restated) 2012 2013 $ 9,910,002 $ 9,898,968 $ 8,694,245 $ 8,767,959 $ 9,199,381 $ 9,531,663 - - 1,408,256 1,400,163 1,343,248 511,924 441,133 438,744 430,494 439,795 440,149 438,834 415,012 226,303 236,378 359,530 238,943 273,117 1,038,461 1,401,010 1,765,220 1,599,253 858,816 4,463,113 1,125,819 1,166,302 1,369,904 1,544,369 1,557,898 1,585,964 285,255 236,173 238,961 255,329 283,233 239,201 203,199 157,581 258,392 153,835 305,818 178,335 - - 393,913 548,548 307,032 178,217 906,365 791,039 87,607 115,183 80,073 111,443 14,325,246 14,316,120 14,883,370 15,183,964 14,614,591 17,511,811 1,949,002 1,726,566 1,883,729 1,560,511 1,567,301 1,571,701 5,880,729 5,933,364 5,791,511 5,933,201 5,946,209 5,967,599 830,900 740,014 989,734 1,079,884 1,192,760 1,254,201 1,687,171 1,698,807 1,599,381 1,560,486 1,599,041 1,613,518 - - 192,431 289,650 304,064 582,621 2,444,825 1,137,776 2,605,724 5,263,935 7,685,819 4,239,938 820,000 885,000 515,000 1,005,000 330,000 340,000 357,991 273,100 273,054 247,973 270,613 306,462 - - - 93,820 104,351 - 13,970,618 12,394,627 13,850,564 17,034,460 19,000,158 15,876,040 354,628 1,921,493 1,032,806 (1,850,496) (4,385,567) 1,635,771 653,787 1,236,793 2,596,321 2,477,195 936,188 360,427 - - 1,954 - - 1,460 - - 1,245,000 - - - - - 16,173 - 54,006 - - - - - 4,025,000 - (653,787) (984,125) (2,444,592) (4,569,216) (770,638) (600,414) - 252,668 1,414,856 (2,092,021) 4,244,556 (238,527) $ 354,628 $ 2,174,161 $ 2,447,662 $ (3,942,517) $ (141,011) $ 1,397,244 15.1% 9.7% 9.8% 6.4% 4.1% 5.7% -141- THIS PAGE IS LEFT BLANK INTENTIONALLY -142- -143- CITY OF NEW HOPE, NIINNESOTA STATISTICAL SECTION (UNAUDITED) GENERAL GOVERNMENT TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Property Tax Franchise Year tax increments tax Total 2004 $ 7,298,179 $ 1,131,601 $ 428,265 $ 8,858,045 2005 7,078,215 991,476 435,875 8,505,566 2006 7,134,684 1,195,721 433,806 8,764,211 2007 7,713,075 1,673,394 444,898 9,831,367 2008 8,074,253 1,835,749 441,133 10,351,135 2009 8,636,370 1,262,598 438,744 10,337,712 2010 8,694,245 1,408,256 430,494 10,532,995 2011 8,767,959 1,400,163 439,795 10,607,917 2012 9,199,381 1,343,248 440,149 10,982,778 2013 9,531,663 511,924 438,834 10,482,421 -143- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (Shown by year of tax collectability) Tax capacity rate Revenue Bonds and interest Sewer district Total direct tax rate 46.280 % 46.276 % 42.375 % 42.346 % Source: Hennepin County Auditor /Treasurer Department Note: Property in the county is reassessed annually. Note: The City changed the format of this table for 2010, and will be updating on a go- forward basis. -144- Fiscal Year 2004 2005 2006 2007 Taxable market value Real property Personal property Total taxable market value Estimated actual value of taxable property $ 1,307,693,600 $ 1,423,083,200 $ 1,571,305,700 $ 1,692,471,900 Taxable market value as a percentage of estimated actual value Tax capacity Real property $ 16,113,831 $ 17,385,942 $ 18,838,116 $ 20,386,553 Personal property 138,157 144,681 163,526 172,470 Subtotal 16,251,988 17,530,623 19,001,642 20,559,023 Less: tax increment (836,351) (773,458) (1,024,773) (1,471,827) Less: contribution to fiscal disparities (1,950,724) (1,937,115) (1,898,610) (2,035,088) Add: distribution from fiscal disparities 2,419,948 2,506,494 2,647,714 2,806,702 Net tax capacity $ 15,884,861 $ 17,326,544 $ 18,725,973 $ 19,858,810 Tax levies Revenue Bonds and interest Total Tax capacity rate Revenue Bonds and interest Sewer district Total direct tax rate 46.280 % 46.276 % 42.375 % 42.346 % Source: Hennepin County Auditor /Treasurer Department Note: Property in the county is reassessed annually. Note: The City changed the format of this table for 2010, and will be updating on a go- forward basis. -144- Fiscal Year 2008 2009 2010 2011 2012 2013 -145- $ 1,618,178,200 $ 1,492,408,000 $ 1,321,463,913 $ 1,214,204,483 7,624,400 8,162,100 8,515,600 9,657,700 $ 1,625,802,600 $ 1,500,570,100 $ 1,329,979,513 $ 1,223,862,183 $ 1,750,807,800 $ 1,732,235,700 $ 1,629,433,100 $ 1,504,929,000 $ 1,438,796,300 $ 1,336,539,900 99.78 % 99.71 % 9144 % 91.57 % $ 21,248,319 $ 21,095,335 $ 19,864,103 $ 18,462,796 $ 16,686,170 $ 15,476,014 151,679 146,456 148,346 159,492 165,812 188,654 21,399,998 21,241,791 20,012,449 18,622,288 16,851,982 15,664,668 (1,646,615) (1,365,233) (1,181,390) (1,044,830) (944,560) (366,752) (2,292,166) (2,518,620) (2,596,468) (2,466,459) (2,380,423) (2,255,476) 3,398,192 3,821,605 3,946,315 3,896,651 3,605,075 3,448,346 $ 20,859,409 $ 21,179,543 $ 20,180,906 $ 19,007,650 $ 17,132,074 $ 16,490,786 $ 9,053,443 $ 9,036,625 $ 9,066,928 $ 9,406,483 39,268 192,105 161,802 164,325 $ 9,092,711 $ 9,228,730 $ 9,228,730 $ 9,570,808 45.542 % 47.916 % 53.842 % 57.802 % 0.199 1.025 0.967 1.010 0.273 0.308 0.387 - 41.995 % 41.342 % 46.014 % 49.249 % 55.196 % 58.812 % -145- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX CAPACITY RATES - DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Year Taxes Payable Direct Rate - City of New Hope General Debt Sewer District Levy Levy Levy Total 2004 N/A % N/A % N/A % 46.280 % 2005 39.425 6.661 0.190 46.276 2006 37.497 4.601 0.277 42.375 2007 39.782 2.319 0.245 42.346 2008 39.308 2.386 0.301 41.995 2009 39.131 1.931 0.280 41.342 2010 45.542 0.199 0.273 46.014 2011 47.916 1.025 0.308 49.249 2012 53.842 0.967 0.387 55.196 2013 57.802 1.010 - 58.812 Source: Hennepin County Auditor/Treasurer Department 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). -146- Overlapping Rates School District County No. 281 Other Total 44.170 % 29.990 % 7.820 % 128.260 % 44.170 29.990 7.520 127.956 41.020 28.490 7.220 119.105 39.110 28.750 7.360 117.566 38.570 27.240 7.820 115.625 40.410 27.210 7.400 116.362 42.640 28.621 9.098 126.373 45.840 34.387 10.068 139.544 48.231 32.534 10.422 146.383 49.959 34.777 11.307 154.855 -147- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Source: Hennepin County Auditor/Treasurer Department -148- 2013 Percent Tax of Total Taxpayer Capacity Rank Tax Capacity FLS Properties $ 159,250 1 1.02 % St. Therese Home, Inc. 155,900 2 1.00 Paddock Property Ltd. Partnership 151,890 3 0.97 Geneva Management Service, LLC 149,870 4 0.96 Cobalt Industrial Reit 143,850 5 0.92 New Hope Distribution Center, LLC 139,250 6 0.89 New Hope Property LLC 135,888 7 0.87 Lang Nelson Association 125,100 8 0.80 Broadway Lanel/Golle/Hohnes 120,025 9 0.77 AX TC Industrial LLP 119,250 10 0.76 Minn Masonic Home North Ridge - - Hoyt / Winnetka LLC - - New Hope / US Swim Partnership - - Roland A Stinski - - AMB Property LP - - Totals $ 1,400,273 8.96 % Source: Hennepin County Auditor/Treasurer Department -148- 2004 Percent Tax of Total Capacity Rank Tax Capacity $ 122,250 9 0.77 % 138,400 5 0.87 141,250 2 0.89 149,250 1 0.94 124,750 7 0.79 140,925 3 0.89 139,250 4 0.88 130,270 6 0.82 123,450 8 0.78 121,110 10 0.76 $ 1,330,905 8.39 % -149- THIS PAGE IS LEFT BLANK INTENTIONALLY -150- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Percentage of Levy Collected Collection in subsequent years (1) $ 101,090 98.99 Collection Fiscal Total of Current Year Levy Year's Levy 2004 $ 7,430,161 $ 7,329,071 2005 7,660,102 7,582,360 2006 7,706,733 7,623,003 2007 8,093,813 7,984,889 2008 8,452,126 8,343,629 2009 8,457,346 8,382,201 2010 9,092,711 8,983,224 2011 9,228,730 9,063,615 2012 9,228,730 9,102,355 2013 9,570,808 9,429,858 Percentage of Levy Collected Collection in subsequent years 98.64 % $ 101,090 98.99 73,061 98.91 83,730 98.65 107,241 98.72 108,497 99.11 75,145 98.80 109,487 98.21 164,950 98.63 102,529 98.53 - Source: Hennepin County Auditor/Treasurer Department (1) Includes state paid property tax credits. -151- Percent of Total Total Collections Collections to Levy $ 7,430,161 100.00 % 7,655,421 99.94 7,706,733 100.00 8,092,130 99.98 8,452,126 100.00 8,457,346 100.00 9,092,711 100.00 9,228,565 100.00 9,204,884 99.74 9,429,858 98.53 -151- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Special Tax Fiscal Obligation Assessment Increment Year Bonds Bonds Bonds Business -type Activities Lease Revenue Revenue Bonds Bonds 2004 $ 2,135,000 $ 3,540,000 $ 5,755,000 $ - $ 3,935,000 2005 2,160,000 2,290,000 6,905,000 - 3,620,000 2006 1,515,000 2,020,000 6,395,000 - 3,300,000 2007 1,065,000 1,180,000 5,875,000 - 2,965,000 2008 605,000 1,045,000 5,360,000 - 2,620,000 2009 225,000 910,000 4,795,000 - 2,265,000 2010 1,280,000 775,000 4,605,000 - 2,930,000 2011 1,245,000 - 4,410,000 3,505,000 2,360,095 2012 1,120,000 - 8,230,000 3,505,000 2,033,000 2013 1,000,729 - 8,065,761 3,505,000 2,723,628 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Demographic and Economic Statistics on page 159 for personal income and population data. -152- Total Percentage Primary of Personal Government Income Per Capita $ 15,365,000 1.54 % 737 14,975,000 1.45 718 13,230,000 1.20 633 11,085,000 1.01 532 9,630,000 0.87 462 8,195,000 0.79 396 9,590,000 0.83 472 11,520,095 1.04 562 14,888,000 1.25 717 15,295,118 1.25 737 -153- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Percentage Less Actual Value Amounts Per Property General Available in Net Fiscal Obligation Debt Service Bonded Year Bonds Funds Debt 2004 $ 11,430,000 $ 7,886,432 $ 3,543,568 2005 11,355,000 6,383,506 4,971,494 2006 9,930,000 6,294,149 3,635,851 2007 8,120,000 5,992,108 2,127,892 2008 7,010,000 6,571,884 438,116 2009 5,930,000 6,450,295 (520,295) 2010 6,660,000 4,288,603 2,371,397 2011 5,655,000 465,243 5,189,757 2012 9,350,000 4,222,494 5,127,506 2013 9,066,490 345,010 8,721,480 Percentage of Estimated Actual Value of Taxable Per Property Capita 0.271 % 170 0.349 239 0.231 174 0.126 102 0.025 21 (0.030) (25) 0.146 117 0.345 253 0.356 247 0.653 420 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Tax Capacity, Market Value and Estimated Actual Value of Taxable Property on page 144 for property value data. See Demographic and Economic Statistics on page 159 for population data. -154- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) COMPUTATION OF DIRECT AND OVERLAPPING DEBT DECEMBER 31, 2013 Direct debt City of New Hope (1) Overlapping debt Hennepin County Independent School District #281, Robbinsdale Metropolitan Council Hennepin Region RR Authority Three Rivers Park District Total overlapping debt Total direct and overlapping debt (1) Excludes debt payable from tax increment revenue and enterprise revenue. * The percentage 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. Note: 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 recognized that, when considering the government'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. Source : Assessed value data used to estimate applicable percentages and outstanding debt data for overlapping entities was provided by Hennepin County. -155- Percentage City's Outstanding Applicable to Share Debt District * of Debt $ 9,066,490 100.00 % $ 9,066,490 $ 1,107,290,000 1.06 % $ 11,737,274 155,710,000 19.18 29,865,178 1,638,249,257 0.49 8,027,421 37,675,000 1.45 546,288 77,115,000 1.45 1,118,168 $ 3,016,039,257 1.70 % $ 51,294,328 $ 3,025,105,747 2.00 % $ 60,360,818 (1) Excludes debt payable from tax increment revenue and enterprise revenue. * The percentage 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. Note: 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 recognized that, when considering the government'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. Source : Assessed value data used to estimate applicable percentages and outstanding debt data for overlapping entities was provided by Hennepin County. -155- CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2004 2005 2006 2007 Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit $ 26,153,872 $ 28,461,664 $ 31,426,114 $ 33,849,438 588,019 892,849 191,516 108,094 $ 25,565,853 $ 27,568,815 $ 31,234,598 $ 33,741,344 2.25% 3.14% 0.61% 0.32% Note: Under state law, the City's outstanding general obligation debt should not exceed 3 percent of the market value of taxable property. Prior to 2008, state law provided that general obligation debt should not exceed 2 percent. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for the extinguishment of those obligations. -156- Fiscal Year 2008 2009 2010 2011 2012 2013 $ 52,524,234 $ 51,967,071 $ 48,774,078 $ 45,017,103 $ 39,899,385 $ 36,715,865 72,562 37,561 1,246,878 1,072,678 970,908 839,948 $ 52,451,672 $ 51,929,510 $ 47,527,200 $ 43,944,425 $ 38,928,477 $ 35,875,917 0.14% 0.07% 2.56% 2.38% 2.43% 2.29% Legal Debt Margin Calculation for Fiscal Year 2012 Taxable market value $ 1,223,862,183 Debt limit (3 percent of market value) $ 36,715,865 Debt applicable to limit General obligation bonds Less: amount available in debt service funds Total net debt applicable to limit Legal debt margin -157- 1,000,729 (160,781) 839,948 $ 35,875,917 CITY OF NEW HOPE, MINNESOTA STATISTICAL SECTION (UNAUDITED) PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS (1) Gross revenues include interest and other nonoperating revenues. (2) Operating expenses exclude depreciation. (3) Revenues and expenses include the Storm Water, Water Utility, Sewer Utility, and Ice Arena funds. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. -158- Revenue Bonds (3) (1) (2) Net Fiscal Gross Operating Revenue Debt Service Year Revenues Expenses Available Principal Interest Coverage 2004 $ 6,335,891 $ 5,517,433 $ 818,458 $ 320,000 $ 194,823 158.98 2005 5,723,843 4,803,961 919,882 315,000 181,163 185.40 % 2006 5,848,087 5,306,582 541,505 320,000 163,874 111.91 2007 6,317,849 4,867,502 1,450,347 335,000 151,830 297.92 2008 6,520,685 5,153,960 1,366,725 345,000 139,000 282.38 2009 6,524,839 5,535,015 989,824 355,000 121,865 207.57 2010 7,131,115 5,046,701 2,084,414 1,520,000 168,236 123.47 2011 6,646,747 5,527,230 1,119,517 981,643 74,418 106.01 2012 7,676,193 6,493,865 1,182,328 334,000 162,686 238.04 2013 7,901,855 6,573,932 1,327,923 344,000 98,588 300.04 (1) Gross revenues include interest and other nonoperating revenues. (2) Operating expenses exclude depreciation. (3) Revenues and expenses include the Storm Water, Water Utility, Sewer Utility, and Ice Arena funds. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. -158- CITY OF NEW HOPE, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (1) Population was estimated by the City Planning and Development Department for fiscal 2003 -2005. Other fiscal years provided by Metropolitan Council. (2) Provided by the Bureau of Economic Analysis; US Department of Commerce. This figure is for all of Hennepin County. (3) Calculated by multiplying the estimated population by the per capita personal income figure. (4) US Census Bureau (5) Provided by Independent School District #281, Robbinsdale, MN. (6) Provided by the Bureau of Labor Statistics; US Department of Labor. This figure is for all of Hennepin County. -159- Per Capita Total Fiscal Personal Personal Median School Unemployment Year Population (1) Income (2) Income (3) Age (4) Enrollment (5) Rate (6) 2004 20,843 48,021 1,000,901,703 38.3 13,186 3.7 % 2005 20,843 49,566 1,033,104,138 38.3 13,020 3.4 2006 20,904 52,905 1,105,926,120 38.3 13,201 3.5 2007 20,824 52,905 1,101,693,720 38.3 12,901 5.5 2008 20,860 52,905 1,103,598,300 38.3 12,600 6.9 2009 20,718 49,789 1,031,528,502 38.3 12,000 7.2 2010 20,339 56,564 1,150,455,196 39.4 11,839 7.0 2011 20,486 54,008 1,106,407,888 39.4 11,804 5.6 2012 20,764 57,476 1,193,431,664 39.4 12,126 4.8 2013 20,764 58,898 1,222,958,072 39.4 12,126 4.0 (1) Population was estimated by the City Planning and Development Department for fiscal 2003 -2005. Other fiscal years provided by Metropolitan Council. (2) Provided by the Bureau of Economic Analysis; US Department of Commerce. This figure is for all of Hennepin County. (3) Calculated by multiplying the estimated population by the per capita personal income figure. (4) US Census Bureau (5) Provided by Independent School District #281, Robbinsdale, MN. (6) Provided by the Bureau of Labor Statistics; US Department of Labor. This figure is for all of Hennepin County. -159- CITY OF NEW HOPE, MINNESOTA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO (1) Total City employment 11,319 Source: Minnesota Department of Employment and Economic Development. (1) Information for current and nine years ago was not available. 2011 was the last year available and 2006 was the first year available. -160- 2011 Percentage of Total City Employer Employees Rank Employment Independent School District No. 281 2,200 1 19.44 % North Ridge Care Center 789 2 6.97 Saint Therese Home of New Hope 650 3 5.74 Perrigo Company 413 4 3.65 Navarre Corporation 280 5 2.47 Coborn's Delivers 240 6 2.12 Liberty Diversified International 200 7 1.77 Dakota Growers Pasta 200 8 1.77 Waymouth Farms, Inc. 137 9 1.21 Parker - Hannifin Oildyne Division 135 10 1.19 Total employment for top 10 employers 5,244 46.33 % Total City employment 11,319 Source: Minnesota Department of Employment and Economic Development. (1) Information for current and nine years ago was not available. 2011 was the last year available and 2006 was the first year available. -160- 2006 Percentage of Total City Employees Rank Employment 1,930 1 17.37 % 900 2 8.10 539 3 4.85 277 5 2.49 500 4 4.50 250 6 2.25 173 9 1.56 244 7 2.20 184 8 1.66 170 10 1.53 5,167 46.50 % 11,112 -161- CITY OF NEW HOPE, MINNESOTA FULL -TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Function 2004 2005 2006 2007 2008 General government Public safety Police Officers Civilians Public works Culture and recreation Total Source: Various City departments. 19 18 19 21 1x 28 28 27 30 31 5 6 6 7 7 23 21 21 23 23 9 9 9 9 8 84 82 82 90 87 -162- 2009 2010 2011 2012 2013 18 15 15 15 16 31 30 31 30 31 7 7 6 7 7 21 22 24 24 24 8 8 7 6 7 85 82 83 82 85 -163- THIS PAGE IS LEFT BLANK INTENTIONALLY -164- CITY OF NEW HOPE, MINNESOTA OPERATING INDICATORS BY FUNCTION LAST SIX FISCAL YEARS Function 2008 2009 2010 Function Public works Street resurfacing (miles) Potholes repaired Culture and recreation Program registration - adults Program registration - youth Attendance at sponsored events Golf Course Rounds of golf at the Municipal course Ice Arena Hours of ice time rental Water Water main breaks Average daily consumption (thousands of gallons) Sewer Average daily treatment (thousands of gallons) 2011 2012 2013 2 2 2 4 - - 150 349 734 648 687 600 3,874 3,313 3,796 5,271 5,598 4,565 5,747 6,360 5,287 5,323 7,442 5,924 140,600 139,318 137,199 146,305 148,966 144,000 22,900 23,917 21,686 18,788 19,568 16,782 3,905 4,027 3,980 3,903 3,625 4,099 33 37 19 32 26 30 2,003 1,921 1,746 1,712 1,828 1,682 2,360 1,740 1,895 2,253 2,189 1,500 Sources: Various City departments_ Note: Indicators are not available for the general government function. Note: Information not available prior to 2008. This table will be updated on a go- forward basis. -165- CITY OF NEW HOPE, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS Function 2004 2005 2006 2007 Function Public Safety Police stations Fire stations Public Works City streets (miles) State and County streets (miles) Sidewalks (miles) Street lights Railroad bridges Pedestrian bridges Culture and recreation Parks Swimming pools Olympic Recreational Outdoor theatre Tennis courts Water Water main (miles) Fire hydrants Maximum daily capacity (thousands of gallons) Sewer Sanitary sewer main (miles) Storm sewer lines (miles) Ice Arenas Golf courses 1 1 1 1 3 3 3 3 64.0 64.0 64.0 64.0 8.5 8.5 8.5 8.5 26.4 26.4 26.4 26.4 580.0 580.0 580.0 580.0 2.0 2.0 2.0 2.0 4.0 4.0 4.0 4.0 23 23 23 23 1 1 1 1 1 1 1 1 1 1 1 1 17 17 17 17 63 63 63 63 690 690 690 690 21,000,000 21,000,000 21,000,000 21,000,000 74 74 74 74 56 56 56 56 1 1 1 1 1 1 1 1 Source: Various City departments. Note: No capital asset indicators are available for the general government function. -166- 2008 2009 2010 2011 2012 2013 1 1 1 1 1 1 3 3 3 3 3 3 64.0 64.0 64.0 64.0 64.0 64.0 8.5 8.5 8.5 8.5 8.5 8.5 26.4 26.4 26.4 26.4 26.4 26.4 580.0 580.0 580.0 580.0 580.0 580.0 2.0 2.0 2.0 2.0 2.0 2.0 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 1 1 1 1 1 1 1 1 17 17 17 17 17 17 63 63 63 63 63 63 690 690 690 690 690 690 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000 74 74 74 74 74 74 56 56 56 56 56 56 1 1 1 1 1 1 1 1 1 1 1 1 -167-