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051820 Work Session Meeting Packet CITY COUNCIL WORK SESSION MEETING New Hope City Hall, 4401 Xylon Avenue North Civic Center Room – Virtual Meeting City Hall will be open to the public for this meeting; however due to the current COVID -19 pandemic, the city will be making its council meeting available via Webex. The public may participate in this meeting by phone by calling 415-655-0001 and entering meeting/access code 289 762 374 followed by the # sign. When prompted for a password, simply press #. Anyone wishing to speak at Open Forum is encouraged to call the city clerk at 763-531-5117 in advance for instructions. Monday, May 18, 2020 6:30 p.m. Mayor Kathi Hemken Council Member John Elder Council Member Cedrick Frazier Council Member Andy Hoffe Council Member Jonathan London 1. CALL TO ORDER – May 18, 2020 2. ROLL CALL 11. UNFINISHED & ORGANIZATIONAL BUSINESS 11.1 Update from West Metro Fire-Rescue District 11.2 Discuss professional community wide survey in 2020 with Morris Leatherman Company 11.3 Discuss Potential Changes to Tobacco Regulations 11.4 Discuss Change Order No. 1 for G.F. Jedlicki Inc. Contract for 2020 Winnetka Watermain Replacement Project (Improvement Project No. 1027) 11.5 Update on Pool/Civic Center Park/City Hall Landscaping projects by Stantec Engineering (Improvement Project Nos. 995/941/994) 11.6 Review 2019 Audit and Comprehensive Annual Report with AEM 11.7 Discuss transfer from Park Infrastructure Fund to Ice Arena Operating Fund 11.8 Discussion regarding the city’s capital improvement program (CIP) for parks and recreation and public works departments for 2020 -2029 12. OTHER BUSINESS 13. ADJOURNMENT I:\RFA\City Manager\2020\WMFRD\05.18.2020 WS\Q - West Metro Fire-Rescue District Update 05.18.20.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: City Manager By: Kirk McDonald, City Manager Agenda Title Update from West Metro-Fire Rescue District Requested Action Staff requests the City Council receive an update from Chief Larson on West Metro Fire-Rescue District operations. The chief will be presenting updates to both the New Hope and Crystal city councils in the month of May. Council Member Elder serves as the New Hope council representative on the board, and Daniel Gates serves as the New Hope citizen representative on the board. The city manager also serves on the board. Police/Past Practice West Metro Fire-Rescue District was formed in 1998 as a joint powers agreement between the cities of New Hope and Crystal. The agreement was updated and approved by both city councils in 2011 and updated in 2017 and 2019. One of the items in the board’s work plan and in the chief’s goals is for the chief to provide periodic updates to the city councils to keep the lines of communication open between the fire district and the two cities. The last update was provided at the January work session. Background Chief Larson will be discussing two items with the City Council: Duty crew staffing that has been implemented due to the pandemic and the preliminary 2021 West Metro Fire -Rescue District budget. Both issues were discussed with the West Metro Fire-Rescue District Board of Directors at the April 22 board meeting. 1. Duty Crew Staffing In response to the COVID-19 pandemic, Chief Larson has implemented a duty crew staffing model to maintain a functioning fire department and limit the number of firefighters responding to the station and within the community to provide clear separation during an exposure, outbreak, or quarantine situation. Please refer to the details in the attached fact sheet prepared by the chief. Implementation of the duty crew model does have an impact on the 2020 fire budget and calculations are provided based on various scenarios. It is estimated that the majority of additional costs can be covered with a combination of reductions from other areas of the budget and with fund balance, dependent upon the length of time the duty crew staffing model is in place. The additional costs will also be submitted for potential 75% reimbursement by FEMA under the public assistance grants and 25% reimbursement by the state. 2. Preliminary West Metro Fire-Rescue District Budget The fire board reviewed the preliminary budget at their April meeting and have not recommended any changes to date. Prior to the board meeting, the city managers reviewed the budget in detail with the chief and several minor adjustments were made. The total 2021 budget is $2,674,050, which is a $99,800 increase of 3.88% over the 2020 budget of $2,574,250. Agenda Section Work Session Item Number 11.1 Request for Action, Page 2 The general operating budget increase is $89,800 or 4.42%, based on increases in salaries, PERA, workers comp insurance, motor fuels, equipment repairs, communications and financial services. There is a $20,000 increase to the capital plan to offset a future deficit and there is a $10,000 decrease to the special revenue insurance fund. The costs of the budget are split between the two cities based on a cost sharing formula that includes average number of calls over a five-year period, population, and taxable market value. Based on the 2021 preliminary budget, New Hope’s increase is $54,673.33 or 4.2%. New Hope’s share of the total budget is $1,352,363 or 50.5736%. Crystal’s share of the total budget is $1,321,686 or 49.4264%. The fire board has rescheduled the work session originally scheduled for May 13 to June 10 to again discuss the budget and consider the status of the pandemic at that time. The Joint Powers Agreement requires the board to approve the budget at their annual meeting scheduled for July 8. Both city councils are required to act on the budget by August 31, either accepting the budget or making recommendations for changes. Attachments:  Duty Crew Staffing  Preliminary 2021 West Metro Fire-Rescue District Budget I:\RFA\COMM DEV\2020\Work Sessions\Morris Leatherman May Work Session\Morris Leatherman Survey RFA May 2020 WS.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: City Manager By: Brandon Bell, CD Assistant and Kirk McDonald, City Manager Agenda Title Discuss professional community wide survey in 2020 with Morris Leatherman Company Requested Action Staff requests to continue to discuss conducting a professional community wide survey in 2020 utilizing the services of the Morris Leatherman Company. Policy/Past Practice In the past years the city has conducted a professional community wide survey every ten years since 1995, with the most recent survey being conducted in 2015. In 2015 the City Council concluded that it would be advantageous for the city to start conducting the professional community wide survey once every five years instead of ten. The cities of Golden Valley and Crystal have completed surveys in the last several years utilizing the services of this firm. Background At the February 2020 work session staff discussed a potential professional survey being conducted by Morris Leatherman. Staff presented recommended changes to a potential 2020 survey, as compared to the 2015 professional survey. Peter Leatherman from the Morris Leatherman company answered Council Members questions and took their comments regarding what they would like to see in the 2020 survey. Peter Leatherman submitted a preliminary survey to be reviewed subsequent to the February work session. The new additions to the survey for 2020 are highlighted in ye llow in the attachment. It should be noted that during the original work session, not much was known about how the COVID-19 virus would affect New Hope, let alone the United States. Since that time the societal landscape has changed in the city with social distancing protocols and the state’s Shelter In Place Order. Some of the questions in survey may now be difficult for a survey to gain any perspective on or may be irrelevant due to the closure of some city programs, like specific Parks and Recreation pr ograms and facilities. This matter should be considered in the approval of any professional survey, if a survey is approved at all for 2020. Recommendation Staff recommends that the Council review the preliminary survey submitted by Morris Leatherman and decide if they would like to see changes to the preliminary survey, or if they would like to delay the professional survey to a year that is not affected by the COVID-19 outbreak. Attachments  2020 Preliminary Survey Agenda Section Work Session Item Number 11.2 I:\RFA\COMM DEV\2020\Work Sessions\Proposed Tobacco Ordinance Amendment\Q- Tobacco Use Prevention Ordinance Amendment - May WS.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: Community Development By: Brandon Bell, Community Development Assistant & Kirk McDonald, City Manager Agenda Title Discuss Potential Changes to Tobacco Regulations Requested Action At the February 2020 work session staff presented the recommendations that the Citizen Advisory Commission (CAC) had given regarding changes to the city’s tobacco regulations. The City Council then provided input regarding which potential changes they would like to see in any ordinance amendment; and staff worked with the Mitchell Hamline Public Health Law Center to draft a preliminary ordinance amendment. Staff requests that Council review the proposed changes and determine if the amendment can be place on the agenda for a City Council meeting for formal consideration. Policy/Past Practice It is the past practice of the city to provide regulations to govern general and various activities and situations which actually or may occur or exist in the city, and which will or may affect the general welfare and safety of residents of the city; with the intention of promoting and protecting the health, safety and welfare of the citizens of the city. Background At the February 2020 staff presented recommendations to city’s tobacco ordinances that were made by the CAC at their February 2020 meeting. Based on those recommendations, Council then told staff which options they would like to consider. Staff worked with Mitchell Hamline Public Health Law Center to draft a preliminary ordinance that contains all of the potential changes. Mitchell Hamline conducts this service for free and has done so for many of the cities in Hennepin County that have changed their tobacco ordinances recently. Below are the changes that are within the newly proposed tobacco ordinance amendment : 1. Many definitions have either been revised or added to provide or more modern verbiage. 2. Mirrored the newest federal regulations including raising the legal age required to purchase tobacco products, from 18 years of age to 21 years old. Also includes the ban on all flavored cartridge -based e- cigarettes (except for tobacco flavored). 3. Raised the age of those legally allowed to sell tobacco products as a clerk at a licensed retailer to 18. 4. Banned the sales of all flavored tobacco products except for mint, menthol and wintergreen. 5. Possession, use, and purchase laws have been removed that would punish people under the age of 21 who attempted to buy tobacco. 6. Wrote in verbiage to potentially put a cap on the number of tobacco licenses in the city. The current amount is 21. 7. Wrote in verbiage to potentially ban the sales of tobacco in any facility that contains an on-site pharmacy. Agenda Section Work Session Item Number 11.3 Request for Action, Page 2 At the February work session Council inquired how a ban on pharmacy sales would affect the three licenses that Hy-Vee holds. Staff and the City Attorney spoke and it looks like only one of Hy-Vee’s licenses (grocery store license) would be affected since the other two (liquor store and gas station) are in other facilities that do not have direct access to a pharmacy. Walgreens at 4200 Winnetka Ave, would also be impacted by this amendment. The other store that will be greatly impacted by these new regulations is the E-Cig Vape Lounge at 9430 36th Ave N. It is anticipated that any new tobacco regulations would greatly affect their business, as tobacco and nicotine products are their main source of revenue. Staff has sent notices to the tobacco license address listed on file, and has yet to hear back from them. Staff has notified members of Hennepin County Public Health that they have been working with as well as Mitchell Hamline Public Health Law Center in regards to the time and date of the work session in case they would like to attend. Staff has also sent out notices to all of the tobacco license holder s in the city to inform them of the meeting as well. Recommendation Staff finds all of these proposed changes to be reasonable and to align with many of the changes that other cities in the area have made to their tobacco ordinances. Many of the businesses that attended the CAC meeting in February also seemed to find these changes acceptable. Staff would also ask Council to discuss the potential license limit. Staff would recommend that if a license cap is included in the amendment that it remain at the current limit or brought down to 19 if a ban on pharmacies is approved. Banning the sales on pharmacies would mean that current license holders with a pharmacy on site would hold their license until the end of the current year, and then would not be able to renew the license thereafter. Staff recommends that the City Council direct staff on how to proceed with the issue of tobacco prevention ordinances and have the City Attorney make the appropriate changes which could be brought forward to a future Council meeting for approval. Attachment  Correspondence with city attorney  Proposed tobacco ordinance amendment  Proposed tobacco ordinance with notes  List of 2019 tobacco licenses  Letter sent to tobacco license holders  Tobacco PUP Law Handout Writer’s Direct Dial No.: (763) 201-0265 e-mail saw@jspwlaw.com May 11, 2020 Kirk McDonald City Manager City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Via E-mail Re: Code §8-7 Ordinance 20-08 Our File No.: 99.82008 Dear Kirk: This letter is regarding the Draft Ordinance 20-08 which amends the City’s existing Tobacco sales provisions . The proposed draft is by Mitchell Hamline Public Health Law Center but has been reviewed and revised by myself and Brandon Bell. The purpose of this proposed Ordinance is to modernize the tobacco provisions in the City Code to reflect the change in the federal law increasing the age for legal sale of tobacco products to 21. On December 20, 2019, the President signed legislation amending the Federal Food, Drug, and Cosmetic Act, and raising the federal minimum age for sale of tobacco products from 18 to 21 years. This federal legislation (known as “Tobacco 21” or “T21”) is effective immediately, and it is now illegal for a retailer to sell any tobacco product—including cigarettes, cigars, and e-cigarettes—to anyone under 21. The new federal minimum age of sale applies to all retail establishments and persons with no exceptions. Other notable provisions of the proposed Ordinance include:  A definition for “Electronic delivery device” has been added to include e- cigarettes.  The definition of “Tobacco” has been revised to include any product containing tobacco.  The minimum age of a clerk who is allowed to sell tobacco products has been increased to 18.  Setting a cap on number of licenses that can be issued (understand this is Page 2 something the Council will be discussing)  Prohibiting sale of tobacco products at pharmacies (again, this is something the Council will be discussing)  Prohibiting the sale of most of the flavored tobacco products that tend to appeal to young people, with the exception of some flavors such as menthol, mint and wintergreen.  Removing the Purchase, Use and Possession (“PUP”) language, provisions and penalties. The rationale is that youth purchase, use or possession laws are not an effective approach to reducing youth tobacco use and inappropriately shift he blame for underage tobacco use form the tobacco industry and retailers, to young people. PUP laws also present enforcement challenges. See the attached handout from the Campaign for Tobacco-Free Kids, September 20, 2018, which takes this position.  The proposed Ordinance keeps the provision that use of false identification is still a prohibited act but that the penalty would be a non-criminal, non-monetary civil penalty such as tobacco-related education classes, diversion programs, community services, or another penalty that the city determines to be appropriate. The feedback from Chief Fournier would be helpful on this provision.  Providing that compliance monitoring may be done either once or twice a year. This is something regarding which we need Chief Fournier’s opinion. Current state law requires compliance checks at least once a year using minors over the age of 15 but under the age of 18. The police could have the option to perform a second compliance check using a person between the age of 18 and 20, which is not yet required by State law. Please call me if you have any questions. Sincerely, /s/ Stacy A. Woods, Assistant City Attorney, City of New Hope Attachment cc: Steven A. Sondrall, City Attorney Chief Tim Fournier P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-82008 Tobacco Ordinance\Letter to Kirk McDonald re tobacco ordinance - 5-11- 20.docx AN ORDINANCE REGULATING THE SALE OF TOBACCO AND RELATED DEVICES AND PRODUCTS WITHIN THE CITY OF NEW HOPE, MINNESOTA Sec. 8-7. - Tobacco and related products. (a) Definitions and interpretations. (1) Child-resistant packaging. Packaging that meets the definition set forth in Code of Federal Regulations, title 16, section 1700.15(b), as in effect on January 1, 2015, and was tested in accordance with the method described in Code of Federal Regulations, title 16, section 1700.20, as in effect on January 1, 2015. (2) Cigar. Any roll of tobacco that is wrapped in tobacco leaf or in any other substance containing tobacco, with or without a tip or mouthpiece, which is not a cigarette as defined in Minn. Stat. § 297F.01, subd. 3, as may be amended from time to time. (3) Compliance checks. The system the city uses to investigate and ensure that those authorized to sell licensed products are following and complying with the requirements of this ordinance. Compliance checks involve the use of persons under the age of 21 who purchase or attempt to purchase licensed products. Compliance checks may also be conducted by the city or other units of government for educational, research, and training purposes or for investigating or enforcing federal, state, or local laws and regulations relating to licensed products. (4) Electronic delivery devices. Any product containing or delivering nicotine, lobelia, or any other substance, whether natural or synthetic, intended for human consumption through the inhalation of aerosol or vapor from the product. Electronic delivery device includes, but is not limited to, devices manufactured, marketed, or sold as e-cigarettes, e-cigars, e-pipes, vape pens, mods, tank systems, or under any other product name or descriptor. Electronic delivery device includes any component part of a product, whether or not marketed or sold separately. Electronic delivery device does not include any product that has been approved or certified by the U.S. Food and Drug Administration for sale as a tobacco-cessation product, as a tobacco- dependence product, or for other medical purposes, and is marketed and sold for such an approved purpose. (5) Flavored product. Any licensed product that contains a taste or smell, other than the taste or smell of tobacco, that is distinguishable by an ordinary consumer either prior to or during the consumption of the product, including, but not limited to, any taste or smell relating to chocolate, cocoa, vanilla, honey, fruit, or any candy, dessert, alcoholic beverage, herb, or spice. A public statement or claim, whether express or implied, made or disseminated by the manufacturer of a licensed product, or by any person authorized or permitted by the manufacturer to make or disseminate public statements concerning such products, that a product has or produces a taste or smell other than a taste or smell of tobacco will constitute presumptive evidence that the product is a flavored product. (6) Indoor area. All space between a floor and a ceiling that is bounded by walls, doorways, or windows, whether open or closed, covering more than 50 percent of the combined surface area of the vertical planes constituting the perimeter of the area. A wall includes any retractable divider, garage door, or other physical barrier, whether temporary or permanent. (7) Licensed products. The term that collectively refers to any tobacco, tobacco-related device, electronic delivery device, or nicotine or lobelia delivery product. (8) Loosies. The common term used to refer to single cigarettes, cigars, and any other licensed product that have been removed from their original retail packaging and offered for sale. Loosies does not include premium cigars that are hand-constructed, have a wrapper made entirely from whole tobacco leaf, and have a filler and binder made entirely of tobacco, except for adhesives or other materials used to maintain size, texture, or flavor. (9) Moveable place of business. Any form of business that is operated out of a kiosk, truck, van, automobile or other type of vehicle or transportable shelter and not a fixed address store front or other permanent type of structure authorized for sales transactions. (10) Nicotine or lobelia delivery product. Any product containing or delivering nicotine or lobelia intended for human consumption, or any part of such a product, that is not a tobacco or an electronic delivery device as defined in this section. NICOTINE OR LOBELIA DELIVERY PRODUCT does not include any product that has been approved or otherwise certified for legal sale by the U.S. Food and Drug Administration as a tobacco-cessation product, a tobacco-dependence product, or for other medical purposes, and is being marketed and sold solely for that approved purpose. (11) Pharmacy. A place of business at which prescription drugs are prepared, compounded, or dispensed by or under the supervision of a pharmacist and from which related clinical pharmacy services are delivered. (12) Retail establishment. Any place of business where licensed products are available for sale to the general public. The phrase includes but is not limited to grocery stores, tobacco products shops, convenience stores, gasoline service stations, bars, and restaurants. (13) Sale. Any transfer of goods for money, trade, barter or other consideration. (14) Self-service display. The open display of licensed products in any manner where any person has access to the licensed products without the assistance or intervention of the licensee or the licensee’s employee. The assistance or intervention shall entail the actual physical exchange of the licensed product between the customer and the licensee or employee. (15) Smoking. Inhaling, exhaling, burning, or carrying any lighted or heated cigar, cigarette, or pipe, or any other lighted or heated product containing, made, or derived from nicotine, tobacco, marijuana, or other plant, whether natural or synthetic, that is intended for inhalation. Smoking also includes carrying or using an activated electronic delivery device. (16) Tobacco. Any product containing, made, or derived from tobacco that is intended for human consumption, whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, or any component, part, or accessory of a tobacco product including but not limited to cigarettes; cigars; cheroots; stogies; perique; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug and twist tobacco; fine cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings and sweepings of tobacco; and other kinds and forms of tobacco. Tobacco does not include any product that has been approved by the U.S. Food and Drug Administration for sale as a tobacco- cessation product, as a tobacco-dependence product, or for other medical purposes, and is being marketed and sold solely for such an approved purpose. (17) Tobacco-related device. Any rolling papers, wraps, pipes, or other device intentionally designed or intended to be used with tobacco products. Tobacco-related device includes components of tobacco-related devices or tobacco products, which may be marketed or sold separately. Tobacco-related devices may or may not contain tobacco. (18) Vending machine. Any mechanical, electric or electronic, or other type of device that dispenses licensed products upon the insertion of money, tokens, or other form of payment directly into the machine by the person seeking to purchase the licensed product. (ca) License required. (1) License required. No person shall sell or offer to sell any licensed product without first having obtained a license to do so from the city pursuant to this ordinance. (2) Application. An application for a license to sell licensed products must be made on a form provided by the city. The application must contain the full name of the applicant, the applicant’s residential and business addresses and telephone numbers, the name of the business for which the license is sought, and any additional information the city deems necessary. Upon receipt of a completed application, the City Clerk will forward the application to the City Council for action at its next regularly scheduled meeting. If the City Clerk determines that an application is incomplete, it will be returned to the applicant with notice of the information necessary to make the application complete. directly, by coin machine, or otherwise, keep for retail sale, sell at retail, or otherwise dispose of, any cigarettes, cigarette wrapper, t obacco, or tobacco products at any place in the city unless he shall have obtained a license therefor as provided in section 8 -2 of this Code. (3) Action. The City Council may approve or deny the application for a license, or it may delay action for a reasonable period of time to complete any investigation of the application or the applicant deemed necessary. If the City Council approves the application, the City Clerk will issue the license to the applicant. If the City Council denies the application, notice of the denial will be given to the applicant along with notice of the applicant’s right to appeal the decision. (4) Term. All licenses issued are valid for one calendar year from the date of issue. (5) Revocation or suspension. Any license issued may be suspended or revoked following the procedures set forth in subsection (k). (6) Transfers. All licenses issued are valid only on the premises for which the license was issued and only for the person to whom the license was issued. The transfer of any license to another location or person is prohibited. (7) Display. All licenses must be posted and displayed at all times in plain view of the general public on the licensed premises. (8) Renewals. The renewal of a license issued under this ordinance will be handled in the same manner as the original application. The request for a renewal must be made at least 30 days, but no more than 60 days, before the expiration of the current license. (9) Issuance as privilege and not a right. The issuance of a license is a privilege and does not entitle the license holder to an automatic renewal of the license. (10) Minimum clerk age. Individuals employed by a licensed retail establishment under this ordinance must be at least 18 years of age to sell licensed products. (11) Maximum number of licenses. The maximum number of licenses issued by the city at any time is limited to [ insert number ]. When the maximum number of licenses has been issued, the city may place persons seeking licensure on a waiting list and allow them to apply on a first -come, first- served basis, as licenses are not renewed or are revoked. A new applicant who has purchased a business location holding a valid city license will be entitled to first priority, provided the new applicant meets all other application requirements in accordance with this ordinance. (12) Pharmacies ineligible for licensure. No existing license will be eligible for renewal to any pharmacy, including any retail establishment that operates or contains an on -site pharmacy, and no pharmacy or any retail establishment that operates an on-site pharmacy will be granted a new license. (13) Smoking prohibited. Smoking, including smoking for the purpose of the sampling of licensed products, is prohibited within the indoor area of any retail establishment licensed under this ordinance. (14) Samples prohibited. No person shall distribute samples of any licensed product free of charge or at a nominal cost. (d) License fee. No license will be issued under this ordinance until the appropriate license fees are pai d in full. The annual fee for such tobacco license shall be as set forth in the city's fee schedule and may be amended from time to time. (e) Basis for denial of license. (1) Grounds for denying the issuance or renewal of a license include, but are not limited to, the following: a. The applicant is under 21 years of age. b. The applicant has been convicted within the past five years of any violation of a federal, state, or local law, ordinance provision, or other regulation relating to licensed products. c. The applicant has had a license to sell licensed products suspended or revoked within the preceding 12 months of the date of application. d. The applicant fails to provide any of the information required on the licensing application, or provides false or misleading information. e. The retail establishment for which the license is requested is a moveable place of business. Only fixed-location businesses are eligible to be licensed. f. The applicant is prohibited by federal, state, or other local law, ordinance , or other regulation from holding a license. (2) Except as may otherwise be provided by law, the existence of any particular ground for denial does not compel the city to deny the license. (3) If a license is mistakenly issued or renewed to a person, it will be revoked upon the discovery that the person was ineligible for the license under this ordinance. The city will provide the license holder with notice of the revocation, along with information on the ri ght to appeal. (fb) Prohibited ActsRestrictions. (1) (1) In general. No person shall sell or offer to sell any licensed product: a. By means of any type of vending machine. b. By means of loosies as defined. c. Containing opium, morphine, jimson weed, bella donna, strychnos, cocaine, marijuana, or other deleterious, hallucinogenic, toxic, or controlled substances except nicotine and other substances found naturally in tobacco or added as part of an otherwise lawful manufacturing process. It is not the intention of this provision to b an the sale of lawfully manufactured cigarettes or other products subject to this ordinance. d. By any other means, to any other person, or in any other manner or form prohibited by federal, state, or other local law, ordinance provision, or other regulation. (2) Legal age. No person shall sell any licensed product to any person under the age of 21. a. Age verification. Licensees must verify by means of government-issued photographic identification that the purchaser is at least 21 years of age. Verification is not r equired for a person over the age of 30. That the person appeared to be 30 years of age or older does not constitute a defense to a violation of this subsection. b. Signage. Notice of the legal sales age and age verification requirement must be posted prominently and in plain view at all times at each location where licensed products are offered for sale. The required signage, which will be provided to the licensee by the city, must be posted in a manner that is clearly visible to anyone who is or is consideri ng making a purchase. (1) Minors. No person shall sell, give away, or otherwise furnish any cigarette, cigarette paper, tobacco, or tobacco product to any person under the age of 18 years. (2) Narcotic drugs. No person shall keep for sale, sell, or dispose of any cigarette, or other tobacco product containing opium, morphine, jimson weed, belladonna, strychnia, cocaine, marijuana, or any other deleterious or poisonous drug, except nicotine. (3) Vending machine. No person shall sell or dispense any tobacco product through the use of a vending machine unless the vending machine is in a nonpublic area with no minor access as verified by a premises survey conducted by the police department. (34) Self-service merchandising. No person shall allow the sale of licensed products offer for sale or dispense any tobacco product by means of self-service displaymerchandising. All licensed products must be stored behind the sales counter, in a locked case, in a storage unit, or in another area not freely accessible to the general public. Any retailer selling licensed products at the time this ordinance is adopted must comply with this section within 90 days of the effective date of this ordinance.This section shall not apply to retail stores which derive at least 90 percent of their revenue from tobacco and tobacco -related products and which cannot be entered at any time by persons younger than 18 years of age. Prior to offering for sale any tobacco product b y self-service merchandising, a licensee must file with the city clerk a statement from a certified public accountant that shows both total gross sales and total sales from tobacco or related products. Said statement must also be filed with the city clerk yearly on or before the renewal date of the license. (4) Flavored products. No person shall sell or offer for sale any flavored products. (5) Liquid Packaging. No person shall sell or offer to sell any liquid, whether or not such liquid contains nicotine, which is intended for human consumption and use in an electronic delivery service, in packaging that is not child-resistant. Upon request by the city, a licensee must provide a copy of the certificate of compliance or full laboratory testing report for the packaging used. (g) (5) ResponsibilityEmployee violations. Every licensee shall be responsible for the conduct of its employees in while on the licensed premises and regard to the any sale, offer to sell, and furnishing of licensed products on the licensed premises. The sale, offer to sell, or furnishing of any licensed product or other disposition of tobacco products by an employee to a person under 18 years of age shall be considered an act of the licensee for purposes of imposing an administrative fine, license suspension or revocation. Nothing in this section shall be construed as prohibiting the city from also subjecting the employee to any civil penalties that the city deems to be appropriate under this ordinance, state or federal law, or other applicable law or regulat ion. (6) Federal regulations. The Code of Federal Regulations, title 21, part 897.16(c) is incorporated by reference into this Code. Notwithstanding these regulations, all sales of tobacco products by vending machines and self-service merchandising must be in compliance with subsections (c) and (d) herein if said New Hope Code sections are inconsistent with the federal regulations. (c) License fee . The annual fee for such tobacco license shall be as set forth in the city's fee schedule. (d) Display of license. Every such license shall be openly displayed in the place of business for which it is issued. (he) Compliance monitoring. The police department shall conduct unannounced compliance checks at least once each calendar year at each location where tobacco products licensed products are sold within the city. All licensed premises must be open to inspection by law enforcement officials during regular business hours. In accordance with state law, the city will conduct at least one compliance check that involves the participation of one person between the ages of 15 and 17 to enter licensed premises to attempt to purchase licensed products. Prior written consent is required for any person under the age of 18 to participate in a compliance check. Persons used for the purpose of compliance checks will be supervised by law enforcement or other designated personnel. Licensees and applicants shall be informed of this policy at the time of license application and renewal. Violators of these regulations will be subject to more frequent compliance monitoring than non- violating licensees. The police department shall make an annual report to the city council on the compliance checks conducted pursuant to this section. (i) Other prohibited acts. (1) Prohibited furnishing or procurement. It is a violation of this ordinance for any person 21 years of age or older to purchase or otherwise obtain any licensed product on behalf of a person under the age of 21. It is also a violation for any person 21 years of age and older to co erce or attempt to coerce a person under the age of 21 to illegally purchase or attempt to purchase any licensed product. (2) Use of false identification. It is a violation of this ordinance for any person to use any form of false identification, whether the identification is that of another person or has been modified or tampered with to represent an age older than the actual age of the person using that identification. (j) Exceptions and defenses. (1) Religious, spiritual, or cultural ceremonies or practices. Nothing in this ordinance prevents the provision of tobacco or tobacco-related devices to any person as part of an indigenous practice or a lawfully recognized religious, spiritual, or cultural ceremony or practice. (2) Reasonable reliance. It is an affirmative defense to a violation of this ordinance for a person to have reasonably relied on proof of age as described by state law. (kf) Violations and penalties. In addition to being guilty of a misdemeanor, any person violating subsection (b) of this section shall be subject to the following penalties: (1) (1) Violations a. Notice. A person violating this ordinance may be issued, either personally or by mail, a citation from the city that sets forth the alleged violation and that informs the alleged violator of his or her right to a hearing on the matter and how and where a hearing may be requested, including a contact address and phone number b. Hearings. 1. Upon issuance of a citation, a person accused of violating this ordinance may request in writing a hearing on the matter. Hearing requests must be made within 10 business days of the issuance of the citation and delivered to the City Clerk or other designated city officer. Failure to properly request a hearing within 10 business days of the issuance of the citation will terminate the person’s right to a hearing. 2. The City Clerk or other designated city officer will set the time and place for the hearing. Written notice of the hearing time and place will be mailed or delivered to the accused violator at least 10 business days prior to the hearing. c. Hearing officer. The City Council will designate a hearing officer. The hearing officer will be an impartial employee of the city or an impartial person retained by the city to conduct the hearing. d. Decision. A decision will be issued by the hearing officer within 10 business days of the hearing. If the hearing officer determines that a violation of this ordinance did occur, that decision, along with the hearing officer’s reasons for finding a violation and the penalty to be imposed, will be recorded in writing, a copy of which will be provided to the city and the accused violator by in-person delivery or mail as soon as practicable. If the hearing officer finds that no violation occurred or finds grounds for not imposing any p enalty, those findings will be recorded and a copy will be provided to the city and the acquitted accused violator by in-person delivery or mail as soon as practicable. The decision of the hearing officer is final, subject to an appeal as described in subsection (k)(1)(f) of this section. e. Costs. If the citation is upheld by the hearing officer, the city’s actual expenses in holding the hearing up to a maximum of [ $1,000 ] must be paid by the person requesting the hearing. f. Appeals. Appeals of any decision made by the hearing officer must be filed in Hennepin County district court within 10 business days of the date of the decision. g. Continued violation. Each violation, and every day in which a violation occurs or continues, shall constitute a separate offense. h. Revocation. The city council has the authority to revoke any license as set out in section 8 -2 of this Code notwithstanding the provisions of this section regarding violations. (2) Administrative civil penalties.: a. individuals. Any person who sells any tobacco product to a person under the age of 18 years is subject to an administrative penalty; and any person under the age of 18 years who attempts to purchase a tobacco product is subject to an administrative penalty. The city council may impose administrative penalties as follows: a. First violation. The city council shall impose a civil fine of at least $50.00 but not to exceed $500.00. b. Second violation. The city council shall impose a civil fine of at least $75.00 but not to exceed $750.00 for a second violation within 24 months of the initial violation. c. Third violation. The city council shall impose a civil fine of at least $100.00 but not to exceed $1,000.00 for a third violation within 24 months of the initial violation. d. Hearing required. No civil penalty shall take effect until the individual has received notice served personally or by mail, of the alleged violation and is given an opportunity for a hearing before a person authorized by the city council to conduct the hearing. A decision that a violation has occurred and a civil penalty is warranted must be in writing. In the event the individual is found to have violated the regulations of this Code, the cost of any hearing, including the hearing examiner's fees and the city's reasonable attorney's fees, shall be assessed against the individual in addition to the civil penalty. a. (2) Administrative civil penalties: Llicensees. If a licensee or an employee of a licensee is found to have sold tobacco to a person under the age of 18 years, violated this ordinance, the licensee shall be subject to the administrative sanctions described in the following matrix. In all cases the council shall select which days a suspension will be served. Other mandatory requirements may be imposed on the licensee, including, but not limited to, meetings with the police department to present a plan of action to assure that problems will not continue, mandatory education sessions involving all employees and employers with the police department or other actions that the city council deems appropriate. On a first and second violation, the licensee may elect training in proper identification procedures in lieu of the license suspension. The license suspension and training requirements shall be governed by and are subject to the conditions set out in subsection (kf)(2)(a)b. of this section. Fine and License Suspension 1st Violation 2nd Violation (within 24 months of prior violation) 3rd Violation (within 24 months of two prior violations) 4th Violation (within 24 months of three prior violations) $250.00 plus 3 days suspension $750.00 plus 15 days suspension $1,500.00 plus 30 days suspension Revocation a. Hearing required. No civil penalty shall take effect until the licensee has received notice, served personally or by regular mail, of the alleged violation and is given an opportunity for a hearing before a person authorized by the city council to conduct the hearing. A decision that a violation has occurred and a civil penalty is warranted must be in writing. In the event the licensee is found to have violated the regulations of this Code, the cost of any hearing, including the hearing examiner's fees and the city's reasonable attorney's fees, shall be assessed against the licensee in addition to the civil penalty. 1. b. Training in lieu of suspension. After the first and second violation within a 24-month period, a licensee may request training from the New Hope Police Department in proper identification procedures. Said training shall be at the expense of the licensee, shall be in lieu of the entire three-day license suspension for a first violation and ten of the 15-day license suspension for the second violation required by subsection (kf)(2)(a) of this section, and shall be conducted per the following conditions: i. 1. Training for all employees of a licensee must be completed within two training sessions at the discretion of the New Hope Police Department. ii. 2. If more than one licensee is requesting the training, the New Hope Police Department retains control in deciding how many training sessions are necessary to accommodate the number of employees taking the training. iii. 3. It shall be the responsibility of the licensee to make certain that all employees successfully complete the required training. Failure to do so means the licensee has failed to meet the "training in lieu of suspension" requirement of the administrative penalty and will be subject to the entire license suspension. iv. 4. The licensee shall pay for all of the following costs for the t raining: supplies and materials, any facility costs, the personnel expenses for the trainer, all administrative costs of the training and any other costs staff deems necessary to conduct the training. Payment for the training must be made to the city clerk prior to the commencement of the training. Failure to make the payment will result in the cancellation of the training and the immediate imposition of the appropriate license suspension. (2) Other individuals. Individuals, other than persons under the age of 21 regulated by subsection (k)(3) of this section, who are found to be in violation of this ordinance will be subject to an administrative penalty of $50.00. (3) Persons under the age of 21. Persons under the age of 21 who use a false identification to purchase or attempt to purchase licensed products may only be subject to non -criminal, non- monetary civil penalties such as tobacco-related education classes, diversion programs, community services, or another penalty that the city determines to be ap propriate. The City Council will consult with court personnel, educators, parents, children and other interested parties to determine an appropriate penalty for persons under the age of 21 in the city. The penalty may be established by ordinance and amended from time to time. (4) Misdemeanor prosecution. Nothing in this section prohibits the city from seeking prosecution as a misdemeanor for any alleged violation of this ordinance by a person 21 years of age or older. (l) Severability. If any section or provision of this ordinance is held invalid, such invalidity will not affect other sections or provisions that can be given force and effect without the invalidated section or provision. (m) Effective date. This ordinance becomes effective on the date of its publication, or upon the publication of a summary of the ordinance as provided by Minn. Stat. § 412.191, subd. 4, as it may be amended from time to time, which meets the requirements of Minn. Stat. § 331A.01, subd. 10, as it may be amended from time to time. (3) Defense. It is a defense to the charge of selling tobacco to a person under the age of 18 years that the licensee or individual, in making the sale reasonably and in good faith relied upon representation of proof of age described in Minn. Stat. § 340A.503, subd. 6, par. (a). (4) Exemption. Only persons ages 16 or 17 years old may be enlisted to assist in the te sts of compliance provided that written consent from the person's parent or guardian has been obtained and that the person shall at all times act only under the direct supervision of a law enforcement officer or an employee of the licensing department or i n conjunction with an in- house program that has been preapproved by the police department. A person who purchases or attempts to purchase tobacco-related products while in this capacity is exempt from the penalties imposed by this section. (5) Revocation. The city council has the authority to revoke any license as set out in section 8 -2 of this Code notwithstanding the provisions of this section regarding violations. (Ord. No. 15-01, §§ 1, 2, 2-9-2015; Ord. No. 17-07, § 5, 7-24-2017) AN ORDINANCE REGULATING THE SALE OF TOBACCO AND RELATED DEVICES AND PRODUCTS WITHIN THE CITY OF NEW HOPE, MINNESOTA Sec. 8-7. - Tobacco and related products. (a) Definitions and interpretations. (1) Child-resistant packaging. Packaging that meets the definition set forth in Code of Federal Regulations, title 16, section 1700.15(b), as in effect on January 1, 2015, and was tested in accordance with the method described in Code of Federal Regulations, title 16, section 1700.20, as in effect on January 1, 2015. (2) Cigar. Any roll of tobacco that is wrapped in tobacco leaf or in any other substance containing tobacco, with or without a tip or mouthpiece, which is not a cigarette as defined in Minn. Stat. § 297F.01, subd. 3, as may be amended from time to time. (3) Compliance checks. The system the city uses to investigate and ensure that those authorized to sell licensed products are following and complying with the requirements of this ordinance. Compliance checks involve the use of persons under the age of 21 who purchase or attempt to purchase licensed products. Compliance checks may also be conducted by the city or other units of government for educational, research, and training purposes or for investigating or enforcing federal, state, or local laws and regulations relating to licensed products. (4) Electronic delivery devices. Any product containing or delivering nicotine, lobelia, or any other substance, whether natural or synthetic, intended for human consumption through the inhalation of aerosol or vapor from the product. Electronic delivery device includes, but is not limited to, devices manufactured, marketed, or sold as e-cigarettes, e-cigars, e-pipes, vape pens, mods, tank systems, or under any other product name or descriptor. Electronic delivery device includes any component part of a product, whether or not marketed or sold separately. Electronic delivery device does not include any product that has been approved or certified by the U.S. Food and Drug Administration for sale as a tobacco-cessation product, as a tobacco- dependence product, or for other medical purposes, and is marketed and sold for such an approved purpose. (5) Flavored product. Any licensed product that contains a taste or smell, other than the taste or smell of tobacco, that is distinguishable by an ordinary consumer either prior to or during the consumption of the product, including, but not limited to, any taste or smell relating to chocolate, cocoa, vanilla, honey, fruit, or any candy, dessert, alcoholic beverage, herb, or spice. A public statement or claim, whether express or implied, made or disseminated by the manufacturer of a licensed product, or by any person authorized or permitted by the manufacturer to make or disseminate public statements concerning such products, that a product has or produces a taste or smell other than a taste or smell of tobacco will constitute presumptive evidence that the product is a flavored product. (6) Indoor area. All space between a floor and a ceiling that is bounded by walls, doorways, or windows, whether open or closed, covering more than 50 percent of the combined surface area Commented [PHLC1]: As requested by the city, we have included this definitions section, which contains comprehensive definitions for key terms employed in the code, including the products required to be licensed under state law, e.g., electronic delivery devices & nicotine or lobelia delivery product. of the vertical planes constituting the perimeter of the area. A wall includes any retractable divider, garage door, or other physical barrier, whether temporary or permanent. (7) Licensed products. The term that collectively refers to any tobacco, tobacco-related device, electronic delivery device, or nicotine or lobelia delivery product. (8) Loosies. The common term used to refer to single cigarettes, cigars, and any other licensed product that have been removed from their original retail packaging and offered for sale. Loosies does not include premium cigars that are hand-constructed, have a wrapper made entirely from whole tobacco leaf, and have a filler and binder made entirely of tobacco, except for adhesives or other materials used to maintain size, texture, or flavor. (9) Moveable place of business. Any form of business that is operated out of a kiosk, truck, van, automobile or other type of vehicle or transportable shelter and not a fixed address store front or other permanent type of structure authorized for sales transactions. (10) Nicotine or lobelia delivery product. Any product containing or delivering nicotine or lobelia intended for human consumption, or any part of such a product, that is not a tobacco or an electronic delivery device as defined in this section. NICOTINE OR LOBELIA DELIVERY PRODUCT does not include any product that has been approved or otherwise certified for legal sale by the U.S. Food and Drug Administration as a tobacco-cessation product, a tobacco-dependence product, or for other medical purposes, and is being marketed and sold solely for that approved purpose. (11) Pharmacy. A place of business at which prescription drugs are prepared, compounded, or dispensed by or under the supervision of a pharmacist and from which related clinical pharmacy services are delivered. (12) Retail establishment. Any place of business where licensed products are available for sale to the general public. The phrase includes but is not limited to grocery stores, tobacco products shops, convenience stores, gasoline service stations, bars, and restaurants. (13) Sale. Any transfer of goods for money, trade, barter or other consideration. (14) Self-service display. The open display of licensed products in any manner where any person has access to the licensed products without the assistance or intervention of the licensee or the licensee’s employee. The assistance or intervention shall entail the actual physical exchange of the licensed product between the customer and the licensee or employee. (15) Smoking. Inhaling, exhaling, burning, or carrying any lighted or heated cigar, cigarette, or pipe, or any other lighted or heated product containing, made, or derived from nicotine, tobacco, marijuana, or other plant, whether natural or synthetic, that is intended for inhalation. Smoking also includes carrying or using an activated electronic delivery device. (16) Tobacco. Any product containing, made, or derived from tobacco that is intended for human consumption, whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, or any component, part, or accessory of a tobacco product including but not limited to cigarettes; cigars; cheroots; stogies; perique; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug and twist tobacco; fine cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings and sweepings of tobacco; and other kinds and forms of tobacco. Tobacco does not include any product that has been approved by the U.S. Food and Drug Administration for sale as a tobacco- cessation product, as a tobacco-dependence product, or for other medical purposes, and is being marketed and sold solely for such an approved purpose. (17) Tobacco-related device. Any rolling papers, wraps, pipes, or other device intentionally designed or intended to be used with tobacco products. Tobacco-related device includes components of tobacco-related devices or tobacco products, which may be marketed or sold separately. Tobacco-related devices may or may not contain tobacco. (18) Vending machine. Any mechanical, electric or electronic, or other type of device that dispenses licensed products upon the insertion of money, tokens, or other form of payment directly into the machine by the person seeking to purchase the licensed product. (c) License. (1) License required. No person shall sell or offer to sell any licensed product without first having obtained a license to do so from the city pursuant to this ordinance. (2) Application. An application for a license to sell licensed products must be made on a form provided by the city. The application must contain the full name of the applicant, the applicant’s residential and business addresses and telephone numbers, the name of the business for which the license is sought, and any additi onal information the city deems necessary. Upon receipt of a completed application, the City Clerk will forward the application to the City Council for action at its next regularly scheduled meeting. If the City Clerk determines that an application is incomplete, it will be returned to the applicant with notice of the information necessary to make the application complete. (3) Action. The City Council may approve or deny the application for a license, or it may delay action for a reasonable period of time to complete any investigation of the application or the applicant deemed necessary. If the City Council approves the application, the City Clerk will issue the license to the applicant. If the City Council denies the application, notice of the denial w ill be given to the applicant along with notice of the applicant’s right to appeal the decision. (4) Term. All licenses issued are valid for one calendar year from the date of issue. (5) Revocation or suspension. Any license issued may be suspended or revoked following the procedures set forth in subsection (k). (6) Transfers. All licenses issued are valid only on the premises for w hich the license was issued and only for the person to whom the license was issued. The transfer of any license to another location or person is prohibited. (7) Display. All licenses must be posted and displayed at all times in plain view of the general public on the licensed premises. (8) Renewals. The renewal of a license issued under this ordinance will be handled in the same manner as the original application. The request for a renewal must be made at least 30 days, but no more than 60 days, before the expiration o f the current license. (9) Issuance as privilege and not a right. The issuance of a license is a privilege and does not entitle the license holder to an automatic renewal of the license. (10) Minimum clerk age. Individuals employed by a licensed retail establishment under this ordinance must be at least [18] years of age to sell licensed products. (11) Maximum number of licenses. The maximum number of licenses issued by the city at any time is limited to [ insert number ]. When the maximum number of licenses has been issued, the city may place persons seeking licensure on a waiting list and allow them to apply on a first -come, first- served basis, as licenses are not renewed or are revoked. A new applicant who has purchased a business location holding a valid city license will be entitled to first priority, provided the new applicant meets all other application requirements in accordance with this ordinance. (12) Pharmacies ineligible for licensure. No existing license will be eligible for renewal to any pharmacy, including any retail establishment that operates or contains an on -site pharmacy, and no pharmacy or any retail establishment that operates an on-site pharmacy will be granted a new license. (13) Smoking prohibited. Smoking, including smoking for the purpose of the sampling of licensed products, is prohibited within the indoor area of any retail establishment licensed under this ordinance. (14) Samples prohibited. No person shall distribute samples of any licensed product free of charge or at a nominal cost. (d) License fee. No license will be issued under this ordinance until the appropriate license fees are pain in full. The annual fee for such tobacco license shall be as set forth in the city's fee schedule and may be amended from time to time. (e) Basis for denial of license. (1) Grounds for denying the issuance or renewal of a license include, but are not limited to, the following: a. The applicant is under 21 years of age. b. The applicant has been convicted within the past five years of any violation of a federal, state, or local law, ordinance provision, or other regulation relating to licensed products. c. The applicant has had a license to sell licensed products suspended or revoked within the preceding 12 months of the date of application. d. The applicant fails to provide any of the information required on the licensing application, or provides false or misleading information. e. The retail establishment for which the license is requested is a moveable place of business. Only fixed-location businesses are eligible to be licensed. f. The applicant is prohibited by federal, state, or other local law, ordinance, or other regulation from holding a license. (2) Except as may otherwise be provided by law, the existence of any particular ground for denial does not compel the city to deny the license. (3) If a license is mistakenly issued or renewed to a person, it will be revoked upon the discovery that the person was ineligible for the license under this ordinance. The city will provide the license holder with notice of the revocation, along with information on the ri ght to appeal. (f) Prohibited Acts. (1) In general. No person shall sell or offer to sell any licensed product: a. By means of any type of vending machine. Commented [PHLC2]: Jurisdictions may be interested in establishing a minimum age for employees that work for licensed tobacco retailers. Doing so ensures that employees are of or above the minimum legal sales age for commercial tobacco sales. If a ci ty chooses to raise the minimum legal sales age to 21, but leave the minimum clerk age at 18, clerks between the ages of 18 and 20 can legally sell licensed products within the purview of their employment, but would be unable to purchase them. Commented [PHLC3]: Fees provide revenue for the administration and enforcement of the ordinance and for retailer and community education. Periodic review and adjustment of licensing fees will ensure that they are sufficient to cover all administration, implementation, and enforcement costs, including compliance checks. Our publication, Retail License Fees, provides more information about retail licensing fees and a license fee checklist. b. By means of loosies as defined. c. Containing opium, morphine, jimson weed, bella donna, strychnos, cocaine, marijuana, or other deleterious, hallucinogenic, toxic, or controlled substances except nicotine and other substances found naturally in tobacco or added as part of an otherwise lawful manufacturing process. It is not the intention of this provision to ban the sale of la wfully manufactured cigarettes or other products subject to this ordinance. d. By any other means, to any other person, or in any other manner or form prohibited by federal, state, or other local law, ordinance provision, or other regulation. (2) Legal age. No person shall sell any licensed product to any person under the age of 21. a. Age verification. Licensees must verify by means of government -issued photographic identification that the purchaser is at least 21 years of age. Verification is not required for a person over the age of 30. That the person appeared to be 30 years of age or older does not constitute a defense to a violation of this subsection. b. Signage. Notice of the legal sales age and age verification requirement must be posted prominently and in plain view at all times at each location where licensed products are offered for sale. The required signage, which will be provided to the licensee by the city, must be posted in a manner that is clearly visible to anyone who is or is considering making a purchase. (3) Self-service merchandising. No person shall allow the sale of licensed products by means of self-service display. All licensed products must be stored behind the sales counter, in a locked case, in a storage unit, or in another area not freely ac cessible to the general public. Any retailer selling licensed products at the time this ordinance is adopted must comply with this section within 90 days of the effective date of this ordinance. (4) Flavored products. No person shall sell or offer for sale any flavored products. (5) Liquid Packaging. No person shall sell or offer to sell any liquid, whether or not such liquid contains nicotine, which is intended for human consumption and use in an electronic delivery service, in packaging that is not child-resistant. Upon request by the city, a licensee must provide a copy of the certificate of compliance or full laboratory testing report for the packaging used. (g) Responsibility. Every licensee shall be responsible for the conduct of its employees in regard to the sale, offer to sell, and furnishing of licensed products on the licensed premises. The sale, offer to sell, or furnishing of any licensed product by an employee shall be considered an act of the licensee for purposes of imposing an administr ative fine, license suspension or revocation. Nothing in this section shall be construed as prohibiting the city from also subjecting the employee to any civil penalties that the city deems to be appropriate under this ordinance, state or federal law, or o ther applicable law or regulation. (h) Compliance monitoring. The police department shall conduct unannounced compliance checks at least [twice/once] each calendar year at each location where licensed products are sold within the city. All licensed premises must be open to inspection by law enforcement officials during regular business hours. In accordance with state law, the city will conduct [at least one compliance check that involves the participation of two persons: one person between the ages of 15 and 17 and one person between the ages of 18 and 20] [at least one compliance check that involves the participation of a person between the ages of 15 and 17 and at least one compliance check that involves the participation of a person between the ages of 18 and 20] to enter licensed premises to attempt to purchase licensed products. Prior written consent is required for any person under the age of 18 to participate in a compliance check. Persons used for the purpose of compliance checks will be supervised by law enforcement or other designat ed personnel. Licensees and applicants shall be informed of this policy at the time of license application and renewal. Violators of these regulations will be subject to more frequent compliance monitoring than non -violating licensees. The police department shall make an annual report to the city council on the compliance checks conducted pursuant to this section. Commented [PHLC4]: This provision prohibits the sale of all flavored products as defined above. This reflects best public health practices. Passing a comprehensive flavor ban as suggested in this ordinance is the best way to address the harms that flavors present to youth. However, some jurisdictions have allowed flavored product sales in 21+ tobacco shops. Th e additional language below would provide for such an exception and is narrowly configured to minimize the addition of tobacco shops within an existing retail location by requiring them to be separate entities: “This prohibition does not apply to retail establishments that: A.Prohibit persons under 21 from entering at all times; B.Derive at least 90 percent of their gross revenues from the sale of licensed products; and C.Meet all of the following building or structural criteria: 1.Shares no wall with, and has no part of their structure adjoined to any other business or retailer, unless the wall is permanent, completely opaque, and without doors, win dows, and pass- throughs to the other business or retailer; 2.Shares no walls with, and has no part of their structure directly adjoined to, another licensed tobacco retailer; and 3.Is accessible by the public only by an exterior door. Any retail establishment that sells flavored products must provide financial records ... Commented [PHLC5]: State law requires every local licensing authority to conduct at least one compliance check each year. This state-mandated compliance check “must involve minors over the age of 15, but under the age of 18.” It appears that cities with T21 laws can conduct this annual compliance check to both satisfy state law and to enforce its local T21 policy. To do so, a municipality could either conduct at least one compliance check with a person between the ages of 15 and 17 and a person between the ages of 18 and 20, or conduct more than one compliance check—at least one check with a person between the ages of 15 and 17 and at least one additional check with a person between the ages of 18 and 20. The bracketed language included here identifies two options that the city could choose and only one option should be retained in a final licensing ordinance. I defer to the city attorney, law enforcement, public health and other players to determine which option works best for New Hope. (i) Other prohibited acts. (1) Prohibited furnishing or procurement. It is a violation of this ordinance for any person 21 years of age or older to purchase or otherwise obtain any licensed product on behalf of a person under the age of 21. It is also a violation for any person 21 years of age and older to coerce or attempt to coerce a person under the age of 21 to illegally purchase or attempt to purchas e any licensed product. (2) Use of false identification. It is a violation of this ordinance for any person to use any form of false identification, whether the identification is that of another person or has been modified or tampered with to represent an age older than the actual age of the person using that identification. (j) Exceptions and defenses. (1) Religious, spiritual, or cultural ceremonies or practices. Nothing in this ordinance prevents the provision of tobacco or tobacco-related devices to any person as part of an indigenous practice or a lawfully recognized religious, spiritual, or cultural ceremony or practice. (2) Reasonable reliance. It is an affirmative defense to a violation of this ordinance for a person to have reasonably relied on proof of age as described by state law. (k) Violations and penalties. (1) Violations a. Notice. A person violating this ordinance may be issued, either personally or by mail, a citation from the city that sets forth the alleged violation and that informs the alleged violator of his or her right to a hearing on the matter and how and where a hearing may be requested, including a contact address and phone number b. Hearings. 1. Upon issuance of a citation, a person accused of violating this ordinance may request in writing a hearing on the matter. Hearing r equests must be made within 10 business days of the issuance of the citation and delivered to the City Clerk or other designated city officer. Failure to properly request a hearing within 10 business days of the issuance of the citation will terminate the person’s right to a hearing. 2. The City Clerk or other designated city officer will set the time and place for the hearing. Written notice of the hearing time and place will be mailed or delivered to the accused violator at least 10 business days prior to t he hearing. c. Hearing officer. The City Council will designate a hearing officer. The hearing officer will be an impartial employee of the city or an impartial person retained by the city to conduct the hearing. d. Decision. A decision will be issued by the hearing officer within 10 business days of the hearing. If the hearing officer determines that a violation of this ordinance did occur, that decision, along with the hearing officer’s reasons for finding a violation and the penalty to be imposed, will be recorded in writing, a copy of which will be provided to the city and the accused violator by in-person delivery or mail as soon as practicable. If the hearing officer finds that no violation occurred or finds grounds for not imposing any penalty, those findin gs will be recorded and a copy will be provided to the city and the acquitted accused violator by Commented [PHLC6]: Consider consolidating the administrative/due process procedures regarding violations as suggested here. These procedures would apply to all violations of the code, whether by licensees or other individuals. I’ve also removed PUP provisions and penalties. in-person delivery or mail as soon as practicable. The decision of the hearing officer is final, subject to an appeal as described in subsection (k)(1)(f) of this section. e. Costs. If the citation is upheld by the hearing officer, the city’s actual expenses in holding the hearing up to a maximum of [ $1,000 ] must be paid by the person requesting the hearing. f. Appeals. Appeals of any decision made by the hearing officer must be filed in Hennepin County district court within 10 business days of the date of the decision. g. Continued violation. Each violation, and every day in which a violation occurs or continues, shall constitute a separate offense. h. Revocation. The city council has the authority to revoke any license as set out in section 8 -2 of this Code notwithstanding the provisions of this section regarding violations. (2) Administrative civil penalties. a. Licensees. If a licensee or an employee of a licensee is found to have violated this ordinance, the licensee shall be subject to the administrative sanctions described in the following matrix. In all cases the council shall select which days a suspension will be served. Other mandatory requirements may be imposed on the licensee, including, but not limited to, meetings with the police department to present a plan of action to assure that problems will not continue, mandatory education sessions involving all employees and employers with the police department or other actions that the city council deems appropriate. On a first and second violation, the licensee may elect training in proper identification procedures in lieu of the license suspension. The license suspension and training requirements shall be governe d by and are subject to the conditions set out in subsection (k)(2)(a) of this section. Fine and License Suspension 1st Violation 2nd Violation (within 24 months of prior violation) 3rd Violation (within 24 months of two prior violations) 4th Violation (within 24 months of three prior violations) $250.00 plus 3 days suspension $750.00 plus 15 days suspension $1,500.00 plus 30 days suspension Revocation 1. Training in lieu of suspension. After the first and second violation within a 24-month period, a licensee may request training from the New Hope Police Department in proper identification procedures. Said training shall be at the expense of the licensee, shall be in lieu of the entire three-day license suspension for a first violation and ten of the 15-day license suspension for the second violation required by subsection (k)(2)(a) of this section, and shall be conducted per the following conditions: i. Training for all employees of a licensee must be completed within two training sessions at the discretion of the New Hope Police Department. ii. If more than one licensee is requesting the training, the New Hope Police Department retains control in deciding how many training sessions are necessary to accommodate the number of employees taking the training. iii. It shall be the responsibility of the licensee to make certain that all employees successfully complete the required training. Failure to do so means the licensee has failed to meet the "training in lieu of suspension" requirement of th e administrative penalty and will be subject to the entire license suspension. iv. The licensee shall pay for all of the following costs for the training: supplies and materials, any facility costs, the personnel expenses for the trainer, all administrati ve costs of the training and any other costs staff deems necessary to conduct the training. Payment for the training must be made to the city clerk prior to the commencement of the training. Failure to make the payment will result in the cancellation of the training and the immediate imposition of the appropriate license suspension. (2) Other individuals. Individuals, other than persons under the age of 21 regulated by subsection (k)(3) of this section, who are found to be in violation of this ordinance will be subject to an administrative penalty of $50.00. (3) Persons under the age of 21. Persons under the age of 21 who use a false identification to purchase or attempt to purchase licensed products may only be subject to non -criminal, non- monetary civil penalties such as tobacco-related education classes, diversion programs, community services, or another penalty that the city determines to be appropriate. The City Council will consult with court personnel, educators, parents, children and other inter ested parties to determine an appropriate penalty for persons under the age of 21 in the city. The penalty may be established by ordinance and amended from time to time. (4) Misdemeanor prosecution. Nothing in this section prohibits the city from seeking p rosecution as a misdemeanor for any alleged violation of this ordinance by a person 21 years of age or older. (l) Severability. If any section or provision of this ordinance is held invalid, such invalidity will not affect other sections or provisions that can be given force and effect without the invalidated section or provision. (m) Effective date. This ordinance becomes effective on the date of its publication, or upon the publication of a summary of the ordinance as provided by Minn. Stat. § 412.191, subd. 4, as it may be amended from time to time, which meets the requirements of Minn. Stat. § 331A.01, subd. 10, as it may be amended from time to time. (3) Defense. It is a defense to the charge of selling tobacco to a person under the age of 18 years that the licensee or individual, in making the sale reasonably and in good faith relied upon representation of proof of age described in Minn. Stat. § 340A.503, subd. 6, par. (a). (4) Exemption. Only persons ages 16 or 17 years old may be enlisted to assist in the tests of compliance provided that written consent from the person's parent or guardian has been obtained and that the person shall at all times act only under the direct supervision of a law enforcement officer or an employee of the licensing department or in conjunction with an in - house program that has been preapproved by the police department. A person who purchases or attempts to purchase tobacco-related products while in this capacity is exempt from the penalties imposed by this section. (5) Revocation. The city council has the authority to revoke any license as set out in section 8 -2 of this Code notwithstanding the provisions of this section regarding violations. (Ord. No. 15-01, §§ 1, 2, 2-9-2015; Ord. No. 17-07, § 5, 7-24-2017) Commented [PHLC7]: The city may reformat these subsections as desired. Commented [PHLC8]: This language institutes alternative penalties for persons under the age of 21 who use false identification and is consistent with the goals of not including PUP penalties in the licensing ordinance. Commented [PHLC9]: A severability clause is important because it ensures that if for any reason one provision of the ordinance wer e to be challenged in court and struck down the remainder of the ordinance would remain in effect. Commented [PHLC10]: Including an effective date ensures that state law notice requirements are met and provides clarity for when the new or amended sections will go into effect . Commented [PHLC11]: This provision has been addressed above under “Exceptions and defenses” and so may be eliminated. Commented [PHLC12]: This language is no longer necessary since PUP penalties have been removed from the ordinance. Re p o r t N a m e : B u s i n e s s S e a r c h Printed: 10/22/2019 Page: 1 Bu s i n e s s S e a r c h Ci t y o f N e w H o p e Ad d r e s s Complex Li c e n s e # ID Council Li c e n s e T y p e Co m p a n y St a t u s Is s u e d Ex p i r e s DB A Ta p d a E n t e r p r i s e s To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 1 94 0 0 4 9 t h A v e N New Hope Fuel & Wash 14 9 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ne w H o p e F u e l & W a s h (S h e l l ) Wa l g r e e n C o m p a n y To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 1 5 42 0 0 W i n n e t k a A v e N Walgreens #05882 15 4 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Wa l g r e e n s # 0 5 8 8 2 Ja d e I n c To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 2 79 0 0 B a s s L a k e R d Winnetka Shell 17 7 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Wi n n e t k a S h e l l No r t h e r n T i e r R e t a i l L L C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 3 61 4 4 W e s t B r o a d w a y Speedway #4375 19 1 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Sp e e d w a y # 4 3 7 5 Br o o k l y n C e n t e r S e r v i c e , I n c . To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 4 94 0 0 3 6 t h A v e N Brooklyn Center Service 21 7 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Br o o k l y n C e n t e r S e r v i c e (S u p e r A m e r i c a ) Ne d d a T o b a c c o To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 5 27 6 7 W i n n e t k a A v e N New Hope Smoke Shop 82 3 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ne w H o p e S m o k e S h o p AM R I T L L C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 3 8 1 79 1 0 B a s s L a k e R d New Hope Liquor 12 7 5 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ne w H o p e L i q u o r JB K E n t e r p r i s e s To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 0 7 78 0 0 2 7 t h A v e N New Hope BP 18 4 7 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Bi g B ' s B P BC D H O L D I N G S L L C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 1 0 71 8 0 4 2 n d A v e N Holiday Stationstore #3586 18 9 5 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ho l i d a y S t a t i o n s t o r e # 3 5 8 6 Ho l i d a y S t a t i o n s t o r e s , L L C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 1 8 94 5 6 2 7 t h A v e N Holiday Stationstores, Inc. 19 6 2 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ho l i d a y S t a t i o n s t o r e LM Q H o l d i n g s L L C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 1 2 71 4 1 4 2 n d A v e N V i k i n g L i q u o r W i n e & Tobacco 19 6 6 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Vi k i n g L i q u o r W i n e & To b a c c o M & M G r o c e r y C o r p o r a t i o n To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 2 2 79 1 4 B a s s L a k e R d LaPicante Market & Meat 20 6 8 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 La P i c a n t e M a r k e t & M e a t Fa m i l y D o l l a r I n c To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 2 3 27 3 3 W i n n e t k a A v e N Family Dollar #27676 21 3 0 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Fa m i l y D o l l a r # 2 7 6 7 6 / 29 3 0 6 Fa m i l y D o l l a r I n c To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 2 8 80 0 1 B a s s L a k e R d Family Dollar #29306 21 3 0 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Fa m i l y D o l l a r # 2 7 6 7 6 / 29 3 0 6 E- C I G V A P E L O U N G E L L P To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 2 7 94 3 0 3 6 t h A v e N E-Cig Vape Lounge 22 0 6 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 E- C i g V a p e L o u n g e Hy - V e e , I n c . To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 3 5 83 0 0 4 2 n d A v e N Hy-Vee Gas 23 9 1 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Hy - V e e Hy - V e e , I n c . To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 3 6 82 0 2 4 2 n d A v e N Hy-Vee Wine & Spirits 23 9 1 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Hy - V e e Hy - V e e , I n c . To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 3 7 82 0 0 4 2 n d A v e N Hy-Vee Grocery 23 9 1 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Hy - V e e Ne w H o p e P u m p & M u n c h To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 4 5 6 35 3 5 W i n n e t k a A v e N New Hope Pump & Munch 24 8 7 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 Ne w H o p e P u m p & M u n c h 72 0 1 B a s s L a k e I N C To b a c c o Pr o d u c t s 12/10/2018 00 0 1 2 7 4 7 72 0 1 B a s s L a k e R d Now Mart 25 8 2 A 1 2 / 1 1 / 2 0 1 8 1 2 / 3 1 / 2 0 1 9 No w M a r t GN S E n t e r p r i s e , L L C To b a c c o Pr o d u c t s 04/08/2019 00 0 1 2 7 6 9 35 4 4 W i n n e t k a A v e N Winnetka Liquor 25 9 6 A 0 4 / 1 1 / 2 0 1 9 1 2 / 3 1 / 2 0 1 9 Wi n n e t k a L i q u o r May 13, 2020 To Whom It May Concern, This letter is to inform you that the New Hope City Council will be discussing potential changes to New Hope’s tobacco ordinances at the City Council work session meeting on May 18, 2020 at 6:30 p.m. A preliminary draft tobacco ordinance amendment will be presented to the City Council by staff at this meeting. The changes in this ordinance amendment include: 1. Many definitions have either been revised or added to provide or more modern verbiage. 2. Mirroring the newest federal regulations including raising the legal age required for customers to be to sell to them, from 18 years of age to 21 years old. Also includes the ban on all flavored cartridge-based e-cigarettes (except for tobacco flavored). 3. Raising the age of those legally allowed to sell tobacco products as a clerk at a licensed retailer to 18. 4. Banning the sales of all flavored tobacco products except for mint, menthol and wintergreen. 5. Possession, use, and purchase laws have been removed that would punish people under the age of 21 who attempted to buy tobacco. 6. Wrote in verbiage to potentially put a cap on the number of tobacco licenses in the city. The current amount is 21. 7. Wrote in verbiage to potentially ban the sales of tobacco in any facility that contains an on-site pharmacy. These meetings do not contain an open forum, so it is advised that it you would like to speak to the Council Members regarding this matter that you do so through written correspondence or via telephone beforehand. This meeting will be available to be viewed live online via WebX. The link will be on in the May 18 City Council Work Session tab on the right side of the front page of the website on the day of the meeting. CITY OF NEW HOPE 4401 Xylon Avenue North  New Hope, Minnesota 55428-4898  www.ci.new-hope.mn.us City Hall: 763-531-5100  Police (non-emergency): 763-531-5170  Public Works: 763-592-6777 City Hall Fax: 763-531-5136  Police Fax: 763-531-5174  Public Works Fax: 763-592-6776 If you have any questions regarding this letter or would like more details on the meeting, please feel free to contact me at 763-531-5114. Sincerely, Brandon Bell Community Development Assistant 763-531-5114 bbell@newhopemn.gov CC: Kirk McDonald, City Manager Jeff Sargent, Director of Community Development Valerie Leone, City Clerk CITY OF NEW HOPE 4401 Xylon Avenue North  New Hope, Minnesota 55428-4898  www.ci.new-hope.mn.us City Hall: 763-531-5100  Police (non-emergency): 763-531-5170  Public Works: 763-592-6777 City Hall Fax: 763-531-5136  Police Fax: 763-531-5174  Public Works Fax: 763-592-6776 I:\RFA\PUBWORKS\2020\Work Session\5-18 Winnetka Water Main Change Order Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: Public Works By: Bernie Weber, Director Agenda Title Discuss Change Order No. 1 for G.F. Jedlicki Inc. Contract for 2020 Winnetka Watermain Replacement Project (Improvement Project No. 1027) Requested Action Staff requests to discuss change order no. 1 for the Winnetka Watermain Replacement Project. Policy/Past Practice The City Council routinely considers public infrastructure improvement projects to extend the useful life of the infrastructure and/or improve the level of service. Background The replacement of the watermain on Winnetka Avenue between 27th and 29th avenues was identified on the city’s 2020 CIP. The existing watermain was pipe bursted, a process that involved demolishing the pipe in place by boring through the pipe. A new eight-inch plastic water main was bored in the same place as the demolished watermain. Public works and engineering staff reviewed the status of quantities on this project in late April and identified an increase of removal and restoration quantities related to curb and gutter, sidewalk, and street patching as compared to the estimated quantities in the original bid documents. The review of the increase in removal and restoration quantities is resulting in a $62,879.75 estimated overage in costs from the original bid. There are some watermain costs that will be reimbursed by the neighboring cities of Crystal and Golden Valley. Also, the city will be experiencing additional costs associated with COVID-19 and county permitting. These additional costs are estimated at $15,600 and would be addressed in change order no. 1. Some of these costs will be reimbursed by CenterPoint Energy. The attached correspondence from the city engineer describes the specific details regarding the project overages. Per the attached memo from AEM, the water fund has adequate cash flow to cover the additional expense. Attachments  Memorandum by City Engineer  Review of Overages and Additional Construction Costs Agenda Section Work Session Item Number 11.4 I:\RFA\P&R\Pool and Civic Center Pk Projects\2020\WS Updates\May WS\Q- May Landscaping, Pool and Park Update.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: Parks & Recreation By: Susan Rader, Director Agenda Title Update on Pool/Civic Center Park/City Hall Landscaping projects by Stantec Engineering (Improvement Project Nos. 995/941/994) Requested Action Staff requests that the City Council receive an update on the pool, Civic Center Park and city hall landscaping construction projects. City engineer, Dan Boyum will be in attendance. A written update was provided on April 15, 2020 via email. The last discussion update was provided at the March 16, 2020 work session. Policy/Past Practice Past policy and practice has been to provide the Council with updates on projects and receive input and feedback. Background The city began discussing plans for the pool, Civic Center Park and city hall landscaping in January 2017 when the City Council approved the new police station/city hall being located on the former pool site. In June 2018, an agreement was approved with Stantec to provide engineering and planning services for the pool, Civic Center Park and city hall landscaping projects. As was recommended, a staff committee and the Mayor worked with the engineers regarding the final design plans for each of these projects. On December 10, 2018, the City Council approved plans and specifications and authorized advertisement for bids. Bids were reviewed with the Council at the March work session and on March 25, 2019 all five contracts were approved:  Demolition of theater, shelter building, hockey rink and city hall  Pool  Park amenities, parking lots and landscaping for the city hall and park  Theater and picnic shelter  Skatepark Update Sunram, the contractor for the green contract, has installed curb and gutter and sidewalk around the pool parking lot and the monument sign since the last update. Paving of the pool parking lot was scheduled to take place the week of May 11 and paving of the trails is planned for May 20, weather permitting. Sunram’s electrical subcontractor continues to work on light poles, bollards, and wiring throughout the park areas. They plan to finish topsoil placement and then start blow mulch, plantings around City Hall and the park areas, various amenities, and final irrigation work the week of May 18. Once the pool contractor backfills the vortex pool on or around May 20, Sunram will start on final storm sewer, sidewalk, and restoration between the City Hall parking lot and the pool. Agenda Section Work Session Item Number 11.5 Request for Action, Page 2 On the performance center and picnic shelter project, the contractor has finished stonework and is preparing final areas for sidewalk placement. Topsoil was spread the week of May 11, and seeding, sodding, and irrigation work will be started the week of May 18. They plan to finish lighting and other miscellaneous items the week of May 25. At the 50-meter pool, and after passing the leak test, the pool contractor is working on grout and tile work. In the bathhouse, a punchlist walkthrough was done on May 11, so remaining work will be focused on what is identified on the punchlist. The mechanical building is also close to being completed, and they are fine-tuning controls prior to start-up of equipment. Paving of the parking lot by the mechanical building should be completed by May 18. The vortex pool floor was poured the week of May 11 and walls were scheduled to be poured, and backfilling should be completed by May 20. Fencing foundations and posts have been worked on over the last month. All slides and most features have been installed at the recreational pool. The pool contractor is continuing work on other concrete placement and additional exterior site improvements. Updates will continue to be provided in the Friday Updates. Construction meetings are held on a weekly basis via a WebEx meeting and will continue through spring. Change Orders There are a few pool related changes that will be brought forward to the May 26, 2020 City Council meeting for formal approval. Power to Condensers: The contractor indicated that a power source was not shown on the plans but is needed for the two exterior condensing units off of the bathhouse. Underground wiring and an exterior GFCI outlet for both condensing units needed power run to them. Due to the time limitations, the city manager approved this change order and directed it to be placed on the May 26, 2020 City Council agenda for formal approval. Cost: $3,172. Stanchions and Rope Additions: In reviewing the plans, the Building Official requested the addition of barriers at select areas by the water slides where the equipment extends over a walking surface at a height greater than 27 inches and less than 80 inches. Once the slides and stairs were installed, these areas were reviewed and recommendations made on the exact locations needed. Cost: $9,431. Ice and Snow Guard (Credit): The bathhouse and mechanical buildings are seasonal and not used for the winter. It was determined that two rows of ice and snow guards could be eliminated due to the seasonal nature of the two buildings. Cost: -$9,000. Fire Sprinkler System (Credit): A dry system was specified for the mechanical building. The sprinkler system contractor reviewed with the deputy fire marshal and a wet system was installed. Cost: -$1,918. Performance Center/Picnic Shelter Irrigation and Time Extension: The performance center/picnic shelter contractor is requesting to install an irrigation system and sod, at no cost, in lieu of a 1-year plan establishment period for watering and establishing turf. Also, on November 25, Request for Action, Page 3 2019, the City issued a no-cost time extension to the contractor with Change Order No. 2. That extension extended the substantial completion date to May 15, 2020 and final completion date to June 15, 2020. They are requesting a second, no-cost time extension for substantial to June 15, 2020 and final completion date to July 15, 2020. Cost: $0. Additional Engineering Costs (Addendum #3): As discussed at several previous work sessions, there are additional engineering services necessary on the projects including restaking for the park/parking lot contractor, coordination with and field staking for Xcel, deck pour analysis, delay claim/winter construction analysis/CenterPoint permit items. Some of these additional services will be reimbursed by contractors (restaking and deck pour analysis). Engineering staff reviewed the effects of project delays, completion dates, additional testing, and actual construction administration and observations of the various project contractors as it relates to the overall engineering budget. Also as noted in previous discussions, an addendum still needs to be processed for design and construction administration for the storm water chamber. Funding for that work will come from the Shingle Creek Watershed and the City Storm Water Fund. The other costs discussed above will be included in the addendum. A more detailed breakdown is provided in the attached Addendum #3 letter from the City Engineer. Cost: $214,774.03 There are other identified change orders that will be coming forward in the next couple of months for formal approval. Many of these items have been previously discussed with Council. Donlar extension: On March 23, 2020, the Council approved Pool change order no. 7 for the Rainfall and Delay costs of $34,814.86 and the CenterPoint Utility Delay costs of $18,620.63. The Winter Shelter/Inefficiency costs of $14,000 will be a line item overage instead of a change order. At the time of negotiations, it was decided to wait until mid- to late-May to further discuss the Extended General Conditions costs and time extension. The total cost would not exceed $44,000. Hose Bibs: The plans showed a hose bib in the men’s and women’s shower. The type of hose bib was not labelled, and the contractor assumed a standard hose bib when bidding the project. The intent was to place a hot and cold hose bib in that location, and the contractor wants to be paid for the difference in price between the standard hose bib and hot and cold hose bib. The architect and contractor are continuing discussions on this item. Unknown Foundation: When Donlar Construction was working on the soil corrections near the bathhouse, they uncovered unknown foundation along the west side of the current city hall. Since it did not affect their work at the time, it was determined to have it removed as part of the Phase 2 of the demolition contract with Veit. However, due to the location of the old city hall transformer, it was determined to have Donlar remove the foundation. As construction has continued, it has been determined that the unknown foundation will not have any impact to the project and can stay in its current location. It will be identified on the plans. Request for Action, Page 4 Soil Correction Additions: At the January work session, the city engineer updated the Council on the overages for soil c orrections on the pool project that could be close to $260,000. To date, an additional $226,000 has been spent on removal of poor soils and importing of needed sand. This will be a line item overage instead of a change order. Donlar Letter (May 5, 2020): Donlar received a letter from their subcontractor related to extra costs for trench stabilization on piping placed this spring. They continue their discussions with their subcontractor on this item. They do not consider their letter a claim at this time, but they are forwarding and retaining their rights to submit a claim at a later date. And as mentioned previously, additional charges may be seen from Sunram for the park amenities, landscaping, and parking lots contract because of their delay at the new city hall site due to restricted access from the city hall contractor. Project Costs Since the projects were awarded in March 2019, additional costs have been incurred including Stantec’s Addendum #2, change orders, and line item overages (including $257,000 for pour soils). Upcoming items that have been identified include Stantec’s Addendum #3, change order #8, as well as the other possible change orders that are still being discussed. Cost Summary City Hall Improvements - City Hall Fund* $1,520.444.22 Civic Center Park Improvements - Park & Pool Fund* $2,131,172.73 Pool Improvements - Park & Pool Fund** $13,110,628.41 Theater Improvements - Park & Pool Fund* $1,669,668.28 Skatepark Improvements - Park & Pool Fund $278,379.82 Stantec Addendum #2 $179,067.13 Stantec Addendum #3 $214,774.03 Identified Contract Line Item Overages (including helicals, soils, rock burial, winter work) $290,865.50 Change Order #8 $1,685.00 Possible Change Orders Remaining $60,598.00 Project Totals $19,457,283.22 *These amounts include the incentive payments for the projects. **This amount includes the incentive payments for the project and the $150,000 identified for equipment purchased by owner. Additional revenue has included funding from the Storm Water CIP Fund, Shingle Creek Watershed, and interest on investments. Reimbursement from contractors will total $41,872.00 Request for Action, Page 5 Funding City Hall Bonds (received) $1,494,540.76 City Hall Contingency Used $25,903.46 State Funding ($1.9 rec'd Feb 2020) $2,000,000.00 Hennepin Youth Sports Grant $250,000.00 MN Swimming Grant (received) $40,000.00 December 2018 Bonds (received) $9,447,969.76 July 2019 Bonds (received) $5,501,483.69 Memorials (received) $1,500.00 Storm Water CIP Fund (added 6/24/19) $50,000.00 Shingle Creek Watershed (added 6/24/19) $50,000.00 Interest through March 2020 (received) $293,343.18 Reimbursement from contractors $41,872.00 Total Funding $19,196,612.85 Staff estimates that we will have a shortfall of approximately $260,670.37 (project totals of $19,457,283.22 minus total funding of $19,196,612.85). In preparation for the discussion regarding winter costs, in November 2019, Vicki Holthaus provided a memo outlining various funding options for project overages. A copy of the memo is attached. At the time, her recommendation was to record a one-time transfer from the Temporary Financing Fund to cover any overage on the projects. But she advised that the project overage should be recalculated at the end of the project and the transfer recorded at that time, due to the construction fund continuing to earn interest during the term of construction and the ability to use any remaining project contingency dollars. The recommendation from November remains unchanged. 2020 Pool Season Discussion Over the last several months, staff have been making plans for a June 6 opening of the 50-m pool and an early July opening of the rest of the facility. Like everyone, we were hopeful that the COVID-19 situation would have improved by the beginning of May, so for the last 7 weeks, staff have been optimistic that the phased opening could still be our plan. However, with the Stay at Home order extended until May 18, with no clear direction on when aquatic facilities will be able to open and the inability to train lifeguards, staff has determined that a June 6 opening is not feasible. Over the last couple of weeks, staff have been discussing various options, and have settled on two possible scenarios. The first being delaying the opening until July 6 and the second being not opening for the 2020 season. A number of metro area cities have closed their aquatics facilities for the summer, and several others are still trying to make a decision. A listing is attached. Several key factors to consider (additional details are attached):  Uncertainty of when/if the CDC and MDH will allow aquatic facilities to open and what social distancing guidelines will be required  Staffing Request for Action, Page 6  Budget  Pool users Staff would like to further discuss the 2020 season with the City Council. Schedule Key dates include: May-June Pool work: finalize vortex and current channel, add irrigation, sod and plantings, work on bathhouse punchlist items Performance Center and picnic shelter: seal wood and stone, add irrigation and sod, finish lighting Park and city hall: pave trails, add trail and parking lot lighting, final grading, plantings Purchasing of miscellaneous pool equipment The City Council will be kept updated on the progress of the projects and after this update, the next update is scheduled for the June work session. Attachments  Change Order Information  Stantec Letter re: Addendum #3  AEM 11/2019 Funding Memo  2020 Pool Season  Further Considerations  MN Pools  Pool schedule as of 5/12/20 (Donlar)  Performance Center/Picnic Shelter schedule as of 5/12/20 (American Liberty)  City Hall Landscaping/Park schedule as of 5/12/20 (Sunram) Change Order Information Stantec Letter re: Addendum #3 Stantec Consulting Services Inc. 733 Marquette Avenue, Suite 1000 Minneapolis, MN 55402 April 27, 2020 File: 193804335, 193804336, 193804337, 193804338, 193804646 Attention: Kirk McDonald City Manager City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Reference: Addendum #3 – Additional Engineering Construction Management Services for City Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements Dear Kirk, As discussed with city staff and referenced in past City Council Work Session updates, there have been additional engineering construction management and administration services on the above referenced projects. These additional services were not included in the original scope of services proposal dated June 20, 2018, Stantec Addendum #1 for the additional design services dated December 5, 2018, or Stantec Addendum #2 for additional construction management and administration services dated May 7, 2019. Contracts required to complete all the Work associated with the remaining City Hall and Civic Park Improvements were identified in the original scope of services. These contracts were identified in color to better understand and organize the separate project scopes , costs, and schedule of Work. Additional Services The additional services to provide engineering construction management services for the improvements awarded at the March 25, 2019 Council Meeting are identified below and correspond in color to the specific project contracts they are incorporated into. Construction management services include construction survey, construction management and administration, materials testing, and record plan/base map and Infraseek updates.  Pool Improvements: o The rain in 2019 slowed work progress. However, work still continued on site requiring construction observations and administration. This slower progress resulted in additional construction management, administration, and testing services to date than originally anticipated. ($5,196.97) o Additional construction management and administration services were required to address larger claims submitted by the Contractor in October 2019 and January 2020 as well as coordinating the permit processing with CenterPoint Energy and getting gas lines installed to the two pool buildings . Also, there was additional time spent when discussing and reviewing options associated with winter construction in order to get the project completed by the specified completion date. ($26,220.00) April 27, 2020 Mr. Kirk McDonald Page 2 of 5 Reference: Addendum #3 – Additional Engineering Construction Management Services for City Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements o Donlar requested engineering feedback and review of deck repairs around the 50 - meter pool. Those additional construction management and administration services will be reimbursed to the City by Donlar. ($5,000.00) o The Contractor is anticipating work will continue past the original completion date. More construction management and administration time than originally anticipated will be needed to complete the project with an extended construction schedule. The estimated additional time from date to end of project is ($54,854.00). o Additional materials testing. ($5,800.25) o Donlar will be reimbursing the City for testing services that are required to be paid by the contractor under the contract. This amount totals $25,400.00.  Outdoor Theater: o The rain in 2019 slowed work progress, and the contractor requested a contract extension to their completion date with Change Order 2 in November 2019 as follows:  Revise the substantial completion date from October 18, 2019 to May 15, 2020.  Revise the final completion date from November 19, 2019 to June 12, 2020. However, work still continued on site requiring construction observations and administration. This slower progress resulted in additional construction management, administration, and testing services to date than originally anticipated. ($2,654.57) o More construction management and administration time than originally anticipated will be needed to complete the project with an extended construction schedule. The estimated additional time from date to end of project is ($13,261.00).  Civic Center Park – Park Amenities, Parking Lot, and Landscaping o The rain in 2019 slowed work progress. However, work still continued on site requiring construction observations and administration. This slower progress resulted in additional construction management, administration, and testing services than originally anticipated. Also, some projects require more construction observation and administration time based on the General Contractor and Subcontractors working on the project. This project is one of those situations . ($20,579.49) o Zealand Avenue will be reconstructed after 2030 and will need to treat stormwater runoff. Placing an underground stormwater chamber at this time when the park is being disturbed avoids future disturbance and costs. An underground stormwater chamber was added to the project in Change Order No. 1, and the additional design, surveying, and construction management and administration services was not included in past engineering services. Costs for these services ($8,509.00) are split on a 50/50 basis with the Shingle Creek Watershed. o The Contractor is anticipating work will continue past the original completion date. More construction management and administration time than origin ally anticipated April 27, 2020 Mr. Kirk McDonald Page 3 of 5 Reference: Addendum #3 – Additional Engineering Construction Management Services for City Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements will be needed to complete the project with an extended construction schedule. The estimated additional time from date to end of project is ($54,120.00). o Xcel Coordination and Staking – Xcel had several project managers change throughout this project. Currently the City is on the 4th project manager. Working with changing Xcel project managers in coordinating transformer locations and power to the various projects took more construction management and administration than anticipated. Also, Xcel required the city to stake the location of the power line in order to get it installed and completed this winter to serve the various projects. That staking was not part of anticipated services. ($5,642.00) o Restaking – Restaking is done at times on projects; however, this project has resulted in more restaking than typical. Those restaking costs will be reimbursed by the Contractor to the City. ($11,472) o Additional materials testing. ($1,464.75) Stantec Engineering and American Engineering and Testing Fees The total proposed fee to provide the additional construction management services and testing at the not-to-exceed amount of $214,774.03. This fee is based upon the scope described above in this Addendum #3. The fee adjustment is around 1.33% of the estimated construction costs of $16,097,984.89 as shown in the tables below. Estimated Construction Budgets Project Project No. Construction Budget (As of 4/17/2020) City Hall Demolition 193804336 $258,100.35 Skatepark 193804646 $249,213.25 Theater/Picnic Shelter 193804338 $1,479,780.90 Parking Lot, Trails, Park Amenities 193804335 $2,897,034.90 Pool 193804337 $11,471,955.84 Totals $16,097,984.89 Percentage of Construction Item Engineering & Testing Budgets/Costs Percentage of Construction Costs Original Contract $1,737,839.23 10.80% Addendum #1 $180,991.97 1.12% Addendum #2 $179,067.13 1.11% Subtotal - Approved Budget to date $2,097,898.33 13.03% Addendum #3 $214,774.03 1.33% Total - Proposed Budget to Date $2,312,672.36 14.36% April 27, 2020 Mr. Kirk McDonald Page 4 of 5 Reference: Addendum #3 – Additional Engineering Construction Management Services for City Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements The original approved engineering and testing budget including Addendums #1 and #2 is 13.03% of the estimated construction costs. Adding Addendum #3 to these previous numbers, the total engineering and testing fees would result in a fee of 14.36% of the estimated construction costs. Attached is the summary of the additional services and estimated budget shortfall. Addendum #3 is highlighted in yellow. Since some additional costs will be reimbursed by contractors or the watershed, we have included those reimbursements in the bottom part of the table. We estimate approximately 60 hours of staff time per week for construction management and administration services on remaining Civic Center Projects. Each week, we will review that number with City Staff to see if any adjustments are needed in our services. Civic Center Projects – Additional Services and Budget Shortfall Item Budgets/Costs Additional Construction Services due to Delays to Date - Pool $5,196.97 Additional Construction Services due to Claims, CenterPoint Energy, and Winter Construction Options - Pool $26,220.00 Donlar Deck Repairs - Pool $5,000.00 Estimated Construction Services from Date to End of Extended Completion Date $54,854.00 Additional Materials Testing - Pool $5,800.25 Additional Construction Services due to Delays to Date - Theater $2,654.57 Estimated Construction Services from Date to End of Extended Completion Date - Theater $13,261.00 Additional Construction Services due to Delays to Date - Civic Park $20,579.49 Underground Storage Tank Services - Civic Center Park $8,509.00 Estimated Construction Services from Date to End of Extended Completion Date - Civic Center Park $54,120.00 Xcel Coordination and Staking $5,642.00 Restaking - Civic Center Park $11,472.00 Additional Materials Testing – Civic Center Park $1,464.75 Subtotal - Budget Shortfall to Complete - Addendum #3 $214,774.03 Minus Donlar Reimbursement (AET Testing) -$25,400.00 Minus Donlar Reimbursement (Deck Repair) -$5,000.00 Minus Sunram Reimbursement (Restake) -$11,472.00 Minus Shingle Creek Reimbursement for Underground Chamber (50%) -$4,254.50 Total Additional Funding $168,647.53 April 27, 2020 Mr. Kirk McDonald Page 5 of 5 Reference: Addendum #3 – Additional Engineering Construction Management Services for City Hall Landscaping, Streetscaping, Parking Lots, Pool, and the Civic Center Park Improvements If you have any questions or require further information, please call me at (612) 712-2021. Sincerely, STANTEC CONSULTING SERVICES INC. Dan D. Boyum, P.E. The undersigned hereby consents to the Addendum No. 3 Contract as noted above and attached to Stantec Consulting Services Inc. City of New Hope CC: Jeff Sargent, Susan Rader, Bernie Weber, Valorie Leone – New Hope; Stacy Woods – City Attorney; Dave Ahrens, Todd Wichman, Jim Maland, Jeff Ehleringer, Bruce Paulson, Ann Dienhart, Lucas Miller – Stantec. AEM 11/2019 Funding Memo Pool Information • 2020 Pool Season • Further Considerations • MN Pools 2020 Pool Season CDC/MDH and Guidelines:  It is unsure at this time when/if the CDC/MDH will allow water parks to open. Staff could proceed with plans to open (hire, train, order supplies, etc) and then be told we can’t open. Or if allowed to open, the social distancing guidelines required could be more than staff can handle.  Further social distancing considerations are attached. Staffing:  A minimum of approximately 65 staff are needed for the full facility. Under the current circumstances, recruitment has slowed rapidly. o Total Applications to date – 23 o Total interviews given to date – 19 o Job offers given to date - 19 o Of those, one person declined the position.  Most staff are new and therefore uncertified. Red Cross certification courses for new lifeguards and WSIs have been cancelled. According to Red Cross officials, lifeguard courses cannot be completed until social distancing has been lifted. They have ways of teaching most of the class virtually, however, there is no way to fully complete the class. There are several potential employees who are counting on that class to either become a lifeguard or recertify as one. Budget:  The 2020 Pool budget includes $743,206 in expenses and $723,500 in revenue.  $280,000 is identified for season passes. To date, $1500 in passes have been sold.  $48,000 is identified for program fees (swim lessons, etc.). To date, $1,082 in registrations have been collected. Pool Users:  The public has been anxiously awaiting the opening of the new facility.  The swim teams are depending on the facility for practices. Additionally, two small swim meets and one large championship meet have been schedule. With not opening in June, the two small meets would need to be cancelled. It is unsure if the large meet would be able to take place. Options: Scenario 1: Delay Opening until July 6, with social distancing in place  Several Minnesota pools are looking at an early July opening and/or waiting for the CDC/MDH mandates (See attached pool listing)  Pros: o Mindful of public health. o Allows for a partial season. o Can allow for swim team practice, if appropriate social distancing plans are in place .  Cons: o Unsure at this time if the CDC/MDH will allow water parks to open. Could hire, train and then be told we can’t open. Or social distancing guidelines could be more than staff can handle . 2020 Pool Season o Recruitment would continue to be difficult due to the fact that most employees would have limited hours and a short season. o Life-saving staff cannot be trained until social distancing measures are lifted. Even if they are already trained, this is a new facility and hands on EAP training would be crucial to being prepared for emergencies. o Additional staff hours would be needed for expanded cleanings. o If staff get sick, it could affect operations or force a closure. Seasonal staff would be covered by the two week COVID-19 leave. o Uncertainty could lead to unrealistic expectations from those purchasing passes. o People may not come to the pool because they are afraid of getting sick, resulting in less revenue. o Depending on staffing levels and CDC/MDH requirements, some amenities may not be able to be used. o Limiting attendance could result in complaints. o Expenses would be somewhat reduced due to the shorter season, but not at the same rate of reduced revenue. Daily averages would need to be around 950 people paying the full $10 admission to hit projection goals, which would make social distancing nearly impossible. Staff estimates the impact to the general fund would be $400,000-$450,000. Scenario 2: Do not open for the 2020 season  This would be following suit with many pools. (See attached pool listing)  Pros: o Mindful of public health. o Wouldn’t have to worry about having adequate staff and getting them trained. o Unsure at this time if the CDC/MDH will allow water parks to open, or opening guidelines could be more than staff could handle. o Impact to the general fund would be less than if open for a partial season. o Would allow time for staff to get the facility set up and ready for the 2021 season. o Could look forward to a big 2021 – marketing, ribbon cutting, etc.  Cons: o Public disappointment because the pool is closed for another season. o Unable to accommodate swim teams. o Some budget expense without any revenue. Staff estimates the impact to general fund would be around $200,000. This includes fulltime staff, payroll expenses, utilities, IT, some supplies (for starting to set up facility), and some training costs. o New facility sits empty for a year. Further considerations if open this summer 4 Points made by the CDC for thinking about summer season plans 1. Maintain social distance 2. Facemasks and PPE for staff and possibly for patrons 3. Use disinfectant on all touchpoints 4. Lifeguard duties can’t change (can’t include social distance enforcement) Additional thoughts:  Capacity will need to change to account for social distancing and guidelines for the number of patrons allowed – currently this number is 10 o CDC still recommends 6ft distance between isolation groups (families) o Cuts down number of daily visitors substantially which could lead to people being turned away at the gate (would be difficult for season pass holders). (New Hope full facility bather load is 1233) o Could be a risk if pool needs to be evacuated and everyone has to crowd on the deck o Social distancing is very hard to maintain in big populations, could be a strain on staff  Lifeguarding and other staff o Staff can be as young as 15 and their lifesaving duties could put them at risk o Lifeguards cannot be distracted from their main duties to police social distancing o All other staff have risk coming in to work and interacting with the public o All staff would need PPE, which might be hard to get in large quantities  Cleaning o There are hundreds of touchpoints at the Aquatics Facility that would need to be constantly cleaned and sanitized. Slide rails, ladders, diving boards, pool walls, gutters, and chairs all need a way to be sanitized between uses or very frequently. o Bathrooms need to be cleaned very frequently. o Wibbit would be very difficult to use this season.  Concessions o Poses a risk with money and food transfers o Safest option would be prepackaged items only  Expense o With cut capacity comes cut revenues while still being required to fully staff the facility with lifeguards and other staff  Swim Lessons o Classes would need to be altered to include having an adult or guardian in the pool with anyone 5 and under o Total participants would be greatly reduced, which would substantially reduce the revenue o Instructors would not be able to touch any of the participants o Red Cross currently unable to train instructors  Swim Teams o Practices could work if social distancing is enforced by captains and coaches; teams are working to put plans in place o Bathroom use and cleanings before and after the team practices are a concern o Meets are a concern as they bring in a lot of swimmers, coaches, officials and spectators  Lap Swim or Water Walking o Would need to be a limited program to eliminate having too many people in the pool Rumored CDC guidelines coming out mid-May:  25% capacity  1 person per lane line  swim meets possibly ok, but no spectators  bathrooms must be cleaned after each use  max 4 people per locker room City/County/Facility as of 5/12 Anoka Waiting for CDC Guidelines. Recommendations to Park Board 5/19 then to Council on 5/26. Apple Valley Making decision on 5/14 Bloomington Closed Brooklyn Center Waiting on CDC Guidelines & running economics to figure out what is best for the city Bunker Beach Closed Crystal Targeting July 6 open Dakota County Likely Closed-finalizing Eagan Closed Eden Prairie Indoor Closed until 7/6. Beaches plan to open 6/13 if no more stay at home orders are issued Edina Closed Fairbault Closed Maple Grove Indoor pools currently closed, waiting on CDC guidelines for indoor & outdoor pools and beach Medalia Closed Mendota Heights Decision pending Minneapolis Closed, beaches and pools Minnetonka Beach closed New Ulm Splash pad/Wading pools will likely remain closed for the summer. North Mankato Waiting on CDC Guidelines Owatonna Decision pending Ramsey County Closed Water Park. Undecided on beaches Red Wing Closed Redwood Falls Waiting on CDC Guidelines Rochester Closed Shakopee Making decision by 5/15 Shoreview Making plans on phased opening with lap swim only and swimming lessons starting on June 22. Have purchased HEPA filters, all staff get their own CPR masks, gowns, safety goggles. So. St. Paul Closed St. Louis Park Targeting July 1 open with limited amentities and concessions Waseca Closed Washington County Closed swim pond. Beaches closed until at least 6/15 Contractor Schedules • Donlar • American Liberty • Sunram Up d a t e : 5 / 1 1 / 2 0 PR O J E C T : N e w H o p e O u t d o o r P o o l LO C A T I O N : 4 4 0 1 X y l o n A v e n u e N o r t h , N e w H o p e , M N 5 5 4 2 8 DA T E R A N G E : 5 / 1 1 / 2 0 t o 5 / 3 1 / 2 0 CO N T R A C T O R 1 1 - M a y 1 2 - M a y 1 3 - M a y 1 4 - M a y 1 5 - M a y 1 6 - M a y 1 7 - M a y 1 8 - M a y 1 9 - M a y 2 0 - M a y 2 1 - M a y 2 2 - M a y 2 3 - M a y 2 4 - M a y 2 5 - M a y 2 6 - M a y 2 7 - M a y 2 8 - M a y 29-May 30-May 31-May 1-Jun 2-Jun 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun MT W R F S S M T W R F S S M T W R F S S M T W R F S S Si t e w o r k Cl a s s 5 P a r k i n g L o t O m a n n x As p h a l t p a r k i n g l o t O m a n n x Ea s t / S o u t h E a s t 5 0 m F i n a l g r a d e a n d t o p s o i l Q u a d e Vo r t e x c o n c r e t e f l o o r G l o b a l xx x Vo r t e x W a l l s G l o b a l xx x x Ba c k f i l l C u r r e n t C h a n n e l / V o r t e x Q u a d e xx x Po u r P o o l D e c k o f f Z e r o E n t r y D o n l a r xx Ir r i g a t i o n I n s t a l l 5 0 M Up a n d r u n n i n g Ma r g o l i s xx x x x Re t a i n i n g w a l l t o p s o i l a n d P l a n t i n g s M a r g o l i s x So d 5 0 M M a r g o l i s xx x x x x x Re c / Z e r o e n t r y s i d e w a l k / D e c k f o r m a n d p o u r D o n l a r xx x We s t z e r o e n t r y s i d e w a l k p o u r D o n l a r xx x x x x x x Re t a i n i n g w a l l C h a i n l i n k F e nc e i n s t a l l A c t i o n F e n c e xx x x x Po s t a n d r o p e A c t i o n F e n c e xx x x x Ri p r a p a t s l i d e s t r u c t u r e M a r g o l i s xx x Wo o d P o s t i n s t a l l W e s t v o r t e x a n d Z e r o e n t r y S i d e Ac t i o n F e n c e xx x Vo r t e x s i d e w a l k s E a s t D o n l a r G l o b a l xx x x x Ba t h h o u s e Ba t h h o u s e / M e c h . B l d g . A r c h . P u n c h l i s t S t a n t e c / D o n l a r / C i t y x Pu n c h L i s t I t e m s A l l T r a d e s xx x x x x x x Ca m e r a I n s t a l l K l e i n Sn o w a n d I c e G u a r d s D o n l a r x x x x 50 M e t e r P o o l Sh a d e S t r u c t u r e I n s t a l l V o r t e x Gl o b a l xx Gr o u t a n d t i l e G l o b a l xx x Ne w H o p e O u t d o o r P o o l Pl a s t e r a n d f i l l G l o b a l xx x x x x Po o l M e c h . P u m p h o u s e B l d g . In t e r i o r P o o l e q u i p m e n t S t a r t u p G l o b a l / M E P Ro o f f i n i s h e s D o n l a r Pl u m b i n g s t a r t u p N A C Pu n c h L i s t I t e m s A l l T r a d e s I:\RFA\City Manager\2020\Audit\WS 051820\Q-Review 2019 Audit with AEM 051820.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: City Manager By: Kirk McDonald, City Manager Agenda Title Review 2019 Audit and Comprehensive Annual Financial Report with AEM Requested Action Staff requests to review the 2019 audit and Comprehensive Annual Financial Report with the City Council. Representatives from AEM will be present and facilitate the review. The audit will then be officially presented by Bill Lauer of MMKR to the Council at the May 26, 2020 council meeting. Once the audit is accepted by the Council, it will be forwarded to the State of Minnesota to comply with all applicable state requirements. Policy/Past Practice The policy and past practice over the past several years has been to present the preliminary audit documents to the City Council at a work session for review and discussion before the audit is formally presented at a City Council meeting. Background Included in your packet, please find: • Management report, prepared by MMKR • Special purpose audit report, prepared by MMKR • Preliminary comprehensive annual financial report (CAFR) for the fiscal year ending December 31, 2018, prepared by AEM Overall, I feel the audit is a very positive report and AEM and city staff have done a great job preparing the information for the comprehensive annual financial report, which is necessary for the auditor to complete the audit. Total general fund expenditures were under budget by $240,364 primarily in public safety and parks and recreation. Total general fund revenues were over budget by $72,388 due to investment earnings, intergovernmental revenue and franchise fees. The overall fund balance before transfers out approved by the Council was $312,752 ($240,364 + $72,388). The department heads, AEM, and all employees deserve credit for helping to hold down expenses and bring in additional revenue. The Council approved two transfers out during the year: 1) $150,000 transfer to the fire capital projects fund (from the 2018 audit fund balance) and 2) $204,000 transfer to the city hall CIP fund for cable operating equipment in the new council chambers (funds that had been saved for that purpose.) According to accounting standards, those transfers need to be deducted from the fund balance of the 2019 budget, therefore the final fund balance after the transfers out is $312,752 (fund balance) - $354,000 (transfers out) = -$41,248. MMKR reports that the total unassigned fund balance of the general fund at the end of the 2019 fiscal year was $7,116,723, which represents approximately 49.6%. Agenda Section Work Session Item Number 11.6 Request for Action, Page 2 As noted in the Management Report, MMKR did not identify any deficiencies in internal controls that they consider to be material weaknesses, no instances of non-compliance, they reported no findings, and they encountered no significant difficulties in dealing with management in performing and completing the audit. Staff will be coordinating with AEM to submit an application for the 2019 Excellence in Achievement for Financial Reporting Certificate similar to the award recently received for the 2018 report. The following attachments are being sent electronically and hard copies delivered to Council members. Attachments  Management Report  Special Purpose Audit Report  Independent Auditor’s Report  Comprehensive Annual Financial Report Management Report for City of New Hope, Minnesota December 31, 2019 DR A F T To the City Council and Management City of New Hope, Minnesota We have prepared this management report in conjunction with our audit of the City of New Hope, Minnesota’s (the City) financial statements for the year ended December 31, 2019. We have organized this report into the following sections:  Audit Summary  Governmental Funds Overview  Enterprise Funds Overview  Government-Wide Financial Statements  Legislative Updates  Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota INSERT DATE DR A F T -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2019. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2019:  We issued an unmodified opinion on the City’s basic financial statements.  We reported no deficiencies in the City’s internal control over financial reporting that we considered to be material weaknesses.  The results of our testing disclosed no instances of noncompliance required to be reported under Government Auditing Standards.  We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. OTHER OBSERVATIONS AND RECOMMENDATIONS – COVID-19 Shortly after the end of the 2019 fiscal year, the onset of the novel coronavirus (COVID-19) pandemic caused substantial volatility in economic conditions and tremendous disruption in the way governments, businesses, and individuals function. Minnesota cities may experience the impact of this pandemic in a myriad of financial areas, such as: declines in investment rates of return, cash flow issues, increased utility billing and property tax delinquencies, significant increases in the number and frequency of employees working remotely, challenges in processing general and payroll disbursements, disruption of prescribed internal control procedures, delays in internal and external financial reporting, and new compliance requirements attached to potential federal relief subsidies. As your city adapts to the new normal of municipal operations in a post-COVID-19 world, the assessment of and responses to new risks that may accompany operational changes will be critical to the safeguarding of city resources and sound financial stewardship. We encourage management and governance to include a robust financial risk assessment process when planning responses to these challenges, and to reassess and adapt internal controls over financial transactions and reporting to align with significant changes made to daily operations, even those intended to be temporary. DR A F T -2- SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2019; however, the City implemented the following governmental accounting standards during the fiscal year:  GASB Statement No. 84, Fiduciary Activities, which established new criteria for identifying and reporting fiduciary activities.  GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, which improved and clarified the information to be disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:  Value of Land Held for Resale – These assets are stated at the lower of cost or acquisition value based on management’s estimates.  Depreciation – Management’s estimates of depreciation expense are based on the estimated useful lives of the assets.  Compensated Absences – Management’s estimate is based on current rates of pay; vacation, wellness, personal, and sick leave balances; and the likelihood that accrued sick leave will ultimately be paid at termination.  Pension and Other Post-Employment Benefit (OPEB) Liabilities – The City has recorded liabilities and activity for pension benefits and OPEB. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. We evaluated the key factors and assumptions used by management in the areas discussed on the previous page in determining that they are reasonable in relation to the basic financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures included in the notes to the basic financial statements related to OPEB and pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and complex estimates involved in determining the disclosures. The financial statement disclosures are neutral, consistent, and clear. DR A F T -3- CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. There were no misstatements detected as a result of audit procedures that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated INSERT DATE. MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OTHER AUDIT FINDINGS OR ISSUES We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. DR A F T -4- OTHER MATTERS We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual fund financial statements and schedules accompanying the financial statements, which are not RSI. With respect to this supplemental information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplemental information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements, but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. DR A F T -5- GOVERNMENTAL FUNDS OVERVIEW This section of the report provides you with an overview of the financial trends and activities of the City’s governmental funds, which includes the General, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City’s financial statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2018 fiscal year, local ad valorem property tax levies provided 41.5 percent of the total governmental fund revenues for cities over 2,500 in population, and 36.7 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for taxes payable in 2019 increased 5.6 percent from the prior year. The total tax capacity value of property in Minnesota cities increased about 7.1 percent for the 2019 levy year. The tax capacity values used for levying property taxes are based on the assessed market values for the previous fiscal year (e.g., tax capacity values for taxes levied in 2019 were based on assessed market values as of January 1, 2018), so the trend of change in these tax capacity values lags somewhat behind the housing market and economy in general. The City’s taxable market value increased 10.6 percent for taxes payable in 2018 and 7.9 percent for taxes payable in 2019. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $300,000,000 $600,000,000 $900,000,000 $1,200,000,000 $1,500,000,000 $1,800,000,000 $2,100,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Taxable Market Value DR A F T -6- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year-to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 10.1 percent for taxes payable in 2018 and 6.4 percent for taxes payable in 2019. The following graph shows the City’s change in tax capacities over the past 10 years: $– $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Local Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2017 2018 2019 Average tax rate City 59.9 58.6 68.0 County 44.1 42.8 41.8 School 31.6 32.0 29.9 Special taxing 10.2 9.0 8.9 Total 145.8 142.4 148.6 Rates Expressed as a Percentage of Net Tax Capacity City of New Hope The City’s portion of the tax rate has increased in the current year, mainly due to new debt levies related to the bonds issued by the City to finance its police station/City Hall facility and community pool improvement projects. DR A F T -7- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2019, presented both by fund balance classification and by fund. The fund balances presented in the table below as of December 31, 2018 have been restated for the effect of a prior period adjustment made by the City in 2019 that reduced beginning fund balances by $1,775,342. 2019 2018 (Restated)Change Fund balances of governmental funds Total by classification Nonspendable 22,980$ 18,763$ 4,217$ Restricted 13,304,922 22,590,743 (9,285,821) Committed 5,033,555 5,695,475 (661,920) Assigned 6,248,128 5,695,269 552,859 Unassigned 4,641,403 3,713,980 927,423 Total – governmental funds 29,250,988$ 37,714,230$ (8,463,242)$ Total by fund General 7,139,703$ 7,180,951$ (41,248)$ Economic Development Authority Special Revenue 4,721,758 5,390,021 (668,263) HRA Construction Capital Projects 4,655,140 3,177,772 1,477,368 City Hall CIP Capital Projects 1,794,294 9,527,103 (7,732,809) Street Infrastructure Capital Projects 15,854 (948,474) 964,328 Park/Pool Improvement Capital Projects 5,316,815 9,492,781 (4,175,966) HRA Bonds Debt Service (2,244,096) (2,286,122) 42,026 Nonmajor funds 7,851,520 6,180,198 1,671,322 Total – governmental funds 29,250,988$ 37,714,230$ (8,463,242)$ as of December 31, Governmental Funds Change in Fund Balance Fund Balance In total, the fund balances of the City’s governmental funds decreased by $8,463,242 during the year ended December 31, 2019. The decrease was primarily in restricted fund balances, which reflects the spend down of bond proceeds in the City Hall CIP Capital Projects Fund for completion of the new police station/City Hall facility, and in the Park/Pool Improvement Capital Projects Fund for the start of construction of a new pool at the previous City Hall location. DR A F T -8- GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the Office of the State Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as a city’s stage of development, location, size and density of its population, property values, services it provides, and other attributes. It will also differ from year-to-year due to the effect of inflation and changes in its operation. Also, certain data on these tables may be classified differently than how they appear in the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of the City. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year 2017 2018 2019 Population 10,000–20,000 20,000-100,000 21,545 21,790 21,790 Property taxes 472$ 493$ 555 $ 592 $ 699$ Tax increments 27 43 39 51 60 Franchise and other taxes 48 50 42 43 44 Special assessments 40 57 4 13 9 Licenses and permits 35 47 30 17 15 Intergovernmental revenues 271 157 86 101 181 Charges for services 102 112 80 64 63 Other 78 49 39 42 72 Total revenue 1,073$ 1,008$ 875$ 923 $ 1,143$ Governmental Funds Revenue per Capita With State-Wide Averages by Population Class City of New HopeState-Wide December 31, 2018 In total, the City’s governmental fund revenues for 2019 were $24,907,410, an increase of $4,775,609 (23.7 percent) from the prior year, or $220 more per capita than the prior year. Property tax revenue was $107 per capita higher than last year, due to an increase in the City’s levy. Revenue from tax increments was $9 per capita higher than last year, as it was the second year the City collected tax increments from its new Centra Homes and Industrial Equities TIF Districts. Revenue from intergovernmental revenue was $80 per capita higher than last year, due to utilizing about $1.9 million of a $2.0 million grant for construction of the new outdoor pool. Revenue from “other” sources, as presented above, were $30 per capita higher than the prior year, mainly due to improved investment revenue. DR A F T -9- The expenditures of governmental funds will also vary from state-wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows:  Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.  Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented, and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects.  Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor. Some debt may be repaid through specific sources, such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with state-wide averages, are presented in the following table: Year 2017 2018 2019 Population 10,000–20,000 20,000-100,000 21,545 21,790 21,790 Current 121$ 104$ 122$ 82 $ 87$ 272 294 359 367 387 125 106 78 79 82 115 104 96 93 93 74 78 81 37 24 707 686 736 658 673 Capital outlay and construction 351 307 242 595 1,036 Debt service 153 109 24 37 44 39 29 33 42 63 192 138 57 79 107 Total expenditures 1,250$ 1,131$ 1,035$ 1,332$ 1,816$ Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class City of New Hope All other State-Wide December 31, 2018 Principal Interest and fiscal General government Public safety Public works Culture and recreation The City’s total governmental funds expenditures were $39,571,937 for 2019, an increase of $10,564,096 (36.4 percent) from the prior year, or $484 per capita. Capital outlay expenditures increased $441 per capita, due to the construction of the new police station/City Hall facility and the new pool. Debt service expenditures also increased $28 per capita, due to the debt issued in recent years to finance those improvement projects. DR A F T -10- GENERAL FUND The City’s General Fund accounts for the financial activity of the basic services provided to the community. The primary services included within this fund are the administration of the municipal operation, police and fire protection, building inspection, streets and highway maintenance, and parks and recreation. The graph below illustrates the change in the General Fund financial position over the last five years. We have also included a line representing annual expenditures and transfers out to reflect the change in the size of the General Fund operation over the same period. 2015 2016 2017 2018 2019 Fund Balance $6,080,412 $6,273,678 $6,888,655 $7,180,951 $7,139,703 Cash Balance (Net)$5,919,870 $6,090,997 $6,750,104 $6,992,743 $7,187,781 Exp & Trans Out $11,879,622 $12,624,250 $13,290,729 $13,652,053 $14,337,748 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 General Fund Financial Position Year Ended December 31, The total fund balance of the City’s General Fund decreased $41,248 in 2019, as compared to a breakeven budget. Unassigned fund balance was $7,116,723 at the end of 2019 fiscal year, which represents approximately 49.6 percent of annual expenditures and transfers out based on 2019 levels. As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels as the volume of financial activity has grown. This is an important factor because a government, like any organization, requires a certain amount of equity to operate. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining the City’s bond rating and resulting interest costs. A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Property taxes comprise about 74 percent of the fund’s total annual revenue. Approximately half of these revenues are received by the City in June/July and the rest in November/December. Consequently, the City needs to have adequate cash reserves to finance its everyday operations between these payments. DR A F T -11- The following graph reflects the City’s General Fund revenue sources for 2019 compared to budget: $– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 Property Taxes Franchise Taxes Licenses and Permits Intergovernmental Charges for Services Fines Other Millions General Fund Revenue Budget to Actual Budget Actual Total General Fund revenue for 2019 was $13,964,225, which was $72,388 (0.5 percent) higher than the final budget. Franchise taxes were $60,856 higher than budget, due mainly to the City’s allocation of these revenues between various funds. Intergovernmental revenue exceeded budget by $89,471, due to a number of small state and local grants. Other revenues were $111,393 over budget, mainly in investment earnings due to better market performance. The following graph presents the City’s General Fund revenues by source for the last five years. The graph reflects the City’s reliance on property taxes and other local sources of revenue. Property Taxes Intergovernmental Other 2015 $8,308,447 $1,133,965 $2,472,328 2016 $8,954,626 $1,170,180 $2,457,510 2017 $9,541,667 $1,177,400 $2,867,879 2018 $9,971,064 $1,332,638 $2,315,213 2019 $10,297,018 $1,342,543 $2,324,664 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 General Fund Revenue by Source Year Ended December 31, Total General Fund revenue for 2019 was $345,310 (2.5 percent) higher than the prior year. The majority of the increase was in property tax revenue, which increased $325,310 from last year due to an increase in the adopted levy. DR A F T -12- The following graph illustrates the components of General Fund spending for 2019 compared to budget: $ – $ 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8 $ 9 General Government Public Safety Public Works Culture and Recreation Millions General Fund Expenditures Budget to Actual Budget Actual Total General Fund expenditures for 2019 were $13,983,748, which was $240,364 (1.7 percent) under budget, with the variance spread across all categories shown above. Public safety expenditures were $144,951 under budget, primarily in police personal services. Culture and recreation expenditures were $76,332 under budget, mainly in parks department personnel and other service costs. The following graph illustrates the City’s General Fund expenditures by function over the last five years: General Government Public Safety Public Works Culture and Recreation 2015 $1,686,151 $6,975,382 $1,112,092 $1,855,997 2016 $1,750,414 $7,301,852 $1,389,553 $1,932,431 2017 $1,767,879 $7,868,754 $1,435,256 $2,068,840 2018 $1,788,108 $8,107,759 $1,491,045 $2,015,141 2019 $1,904,447 $8,482,568 $1,564,148 $2,032,585 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 General Fund Expenditures by Function Year Ended December 31, Total General Fund expenditures were $581,695 (4.3 percent) higher than the previous year. Public safety expenditures increased $374,809, mainly in police department costs. General government expenditures were $116,339 higher than the prior year, mainly in personnel costs for planning and zoning. DR A F T -13- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which includes the Sewer Utility, Water Utility, Golf Course, Ice Arena, Storm Water, and Street Lighting funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2019, presented both by classification and by fund: 2019 2018 Change Net position of enterprise funds Total by classification Net investment in capital assets 19,315,353$ 18,783,898$ 531,455$ Restricted 1,358,401 1,160,680 197,721 Unrestricted 3,511,168 2,386,606 1,124,562 Total – enterprise funds 24,184,922$ 22,331,184$ 1,853,738$ Total by fund Sewer Utility 4,395,720$ 3,908,698$ 487,022$ Water Utility 7,456,222 6,575,624 880,598 Golf Course 525,574 563,433 (37,859) Ice Arena 3,669,781 3,471,669 198,112 Storm Water 7,726,231 7,442,703 283,528 Street Lighting 411,394 369,057 42,337 Total – enterprise funds 24,184,922$ 22,331,184$ 1,853,738$ Enterprise Funds Change in Financial Position Net Position as of December 31, In total, the net position of the City’s enterprise funds increased by $1,853,738 during the year ended December 31, 2019. The net investment in enterprise capital assets increased $531,455. The $1,358,401 of restricted net position represents cash held in an escrow account in the Ice Arena Fund for the future payment of the City’s energy conservation lease revenue bonds. Unrestricted net position increased by $1,124,562, mainly due to positive operating results in the Sewer Utility, Water Utility, and Storm Water Funds. DR A F T -14- SEWER UTILITY FUND The following graph presents five years of operating results for the City’s Sewer Utility Fund: 2015 2016 2017 2018 2019 Op. Rev.$2,468,638 $2,627,875 $2,899,257 $3,154,709 $3,380,075 Op. Exp.$2,447,426 $2,175,482 $2,420,994 $2,684,030 $2,843,056 Op. Inc. (Loss)$21,212 $452,393 $478,263 $470,679 $537,019 $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 Sewer Utility Operating Results Year Ended December 31, The Sewer Utility Fund ended 2019 with a total net position of $4,395,720, of which $3,515,667 represents the net investment in sewer collection system capital assets, leaving an unrestricted balance of $880,053. Net position increased $487,022 in the current year. Operating revenue in the Sewer Utility Fund for 2019 increased $225,366 (7.1 percent) from the previous year, which primarily reflects a 7.5 percent rate increase implemented for the year. Operating costs for 2019 were $159,026 (5.9 percent) more than last year, mainly due to an increase of about $76,000 in disposal charges paid to Metropolitan Council Environmental Services, and higher maintenance costs. DR A F T -15- WATER UTILITY FUND The following graph presents five years of operating results for the City’s Water Utility Fund: 2015 2016 2017 2018 2019 Op. Rev.$3,576,643 $3,835,031 $3,994,122 $4,391,025 $4,387,321 Op. Exp.$4,522,667 $3,519,233 $3,462,858 $4,029,601 $3,720,072 Op. Inc. (Loss)$(946,024) $315,798 $531,264 $361,424 $667,249 $(1,000,000) $(500,000) $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 Water Utility Operating Results Year Ended December 31, The Water Utility Fund ended 2019 with a total net position of $7,456,222, of which $5,179,047 represents the net investment in water distribution system capital assets, leaving an unrestricted balance of $2,277,175. Water Utility Fund net position increased $880,598 in 2019. Operating revenue in the Water Utility Fund for 2019 decreased $3,704 (0.1 percent) from the prior year, as a 5.0 percent rate increase implemented for 2019 was offset by a decrease in consumption. Operating costs for 2019 were $309,529 (7.7 percent) less than the prior year, mainly due to decrease in maintenance costs and allocated central garage charges. DR A F T -16- GOLF COURSE FUND The following graph presents five years of operating results for the City’s Golf Course Fund: 2015 2016 2017 2018 2019 Op. Rev.$272,314 $299,856 $273,247 $274,735 $282,323 Op. Exp.$290,507 $338,940 $335,983 $309,757 $327,422 Op. Inc. (Loss)$(18,193) $(39,084) $(62,736) $(35,022) $(45,099) $(100,000) $(50,000) $– $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 Golf Course Fund Year Ended December 31, The Golf Course Fund ended 2019 with a total net position of $525,574, a decrease of $37,859. Of this, $486,183 represents the net investment in golf course capital assets, leaving $39,391 in unrestricted net position. Golf Course Fund operating revenue for 2019 increased $7,588 (2.8 percent) from the prior year. Operating expenses were $17,665 (5.7 percent) higher than the prior year, primarily in personnel services (seasonal wages and pension expense) and allocated information technology charges. DR A F T -17- ICE ARENA FUND The following graph presents five years of operating results for the City’s Ice Arena Fund: 2015 2016 2017 2018 2019 Op. Rev.$748,886 $713,649 $811,661 $825,531 $852,765 Op. Exp.$821,786 $890,144 $951,444 $942,466 $953,352 Op. Inc. (Loss)$(72,900) $(176,495) $(139,783) $(116,935) $(100,587) $(200,000) $(100,000) $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 Ice Arena Fund Year Ended December 31, The Ice Arena Fund ended 2019 with a total net position of $3,669,781, an increase of $198,112. Of this, $2,620,582 represents the net investment in ice arena capital assets, and $1,358,401 is restricted for debt service, leaving an unrestricted deficit balance of $309,202. Ice Arena Fund operating revenue for 2019 increased $27,234 (3.3 percent) from the prior year. Operating expenses were $10,886 (1.2 percent) higher than the prior year, as increase in personnel costs were partially offset by decreases in depreciation and utility expenses. DR A F T -18- STORM WATER FUND The following graph presents five years of operating results for the City’s Storm Water Fund: 2015 2016 2017 2018 2019 Op. Rev.$981,723 $1,037,429 $1,082,348 $1,139,007 $1,190,058 Op. Exp.$690,536 $797,604 $834,963 $738,307 $874,407 Op. Inc. (Loss)$291,187 $239,825 $247,385 $400,700 $315,651 $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 $1,100,000 $1,200,000 Storm Water Fund Year Ended December 31, The Storm Water Fund ended 2019 with a total net position of $7,726,231, an increase of $283,528. Of this, $7,124,169 represents the net investment in storm water collection system capital assets, leaving an unrestricted net position of $602,062. Storm Water Fund operating revenues for 2019 increased $51,051 (4.5 percent) from the previous year, mainly due to a 5.0 percent rate increase implemented in 2019. Operating expenses were $136,100 (18.4 percent) higher than last year, mainly due to increases in personnel service costs and depreciation expenses. DR A F T -19- STREET LIGHTING FUND The following graph presents five years of operating results for the City’s Street Lighting Fund: 2015 2016 2017 2018 2019 Op. Rev.$128,890 $137,525 $137,491 $144,582 $152,975 Op. Exp.$105,471 $102,912 $101,625 $119,198 $116,612 Op. Inc. (Loss)$23,419 $34,613 $35,866 $25,384 $36,363 $– $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 Street Lighting Fund Year Ended December 31, The Street Lighting Fund ended 2019 with a total net position of $411,394, an increase of $42,337. Of this, $389,705 represents the net investment in street lighting capital assets, leaving an unrestricted net position of $21,689. Street Lighting Fund operating revenue for 2019 increased $8,393 (5.8 percent) from the previous year, which reflects a 5.0 percent rate increase implemented this year. Operating expenses were $2,586 (2.2 percent) lower than the previous year. DR A F T -20- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, net position is divided into three components: net investment in capital assets, restricted, and unrestricted. The following table presents the components of the City’s net position as of December 31, 2019 and 2018 for governmental activities and business-type activities. The net position presented in the table below as of December 31, 2018 has been restated for the effect of a prior period adjustment made by the City in 2019 that reduced beginning net position by $1,775,342. 2019 2018 (Restated)Change Net position Governmental activities Net investment in capital assets 30,139,510$ 27,888,417$ 2,251,093$ Restricted 6,628,138 3,944,766 2,683,372 Unrestricted 16,702,142 14,664,992 2,037,150 Total governmental activities 53,469,790 46,498,175 6,971,615 Business-type activities Net investment in capital assets 19,315,353 18,783,898 531,455 Restricted 1,358,401 1,160,680 197,721 Unrestricted 3,054,187 1,783,306 1,270,881 Total business-type activities 23,727,941 21,727,884 2,000,057 Total net position 77,197,731$ 68,226,059$ 8,971,672$ As of December 31, The City’s total net position at December 31, 2019 increased $8,971,672 from the previous year-end. Governmental activities net position increased by $6,971,615 overall. The increase in net investment in capital assets is mainly due to construction of the new police station/City Hall facility and the new pool, a portion of which was financed with a grant. The increase in restricted net position was mainly due to resources transferred into the HRA Construction Capital Projects Fund restricted for economic development, and an increase in resources restricted for future debt service. A number of factors contributed to the increase in unrestricted net position, including: the elimination of the fund balance deficit in the Street Infrastructure Capital Project Fund; reductions in the City’s net PERA pension plan liability and deferrals; and improvement in the net position of the Central Garage Internal Service Fund. Business-type activities net position increased $2,000,057, as outlined in the discussion of enterprise fund operations earlier in this report. DR A F T -21- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in net position of the City for the years ended December 31, 2019 and 2018: 2018 Program Expenses Revenues Net Change Net Change Governmental activities General government 1,850,242$ 355,361$ (1,494,881)$ (1,608,502)$ Public safety 8,540,198 1,292,530 (7,247,668) (6,233,275) Public works 3,816,417 1,248,506 (2,567,911) (2,277,617) Culture and recreation 2,145,988 2,609,916 463,928 (1,651,848) Economic development 749,651 – (749,651) (1,083,358) Interest on long-term debt 1,412,763 – (1,412,763) (1,074,469) Business-type activities Sewer utility 2,834,973 3,380,479 545,506 524,546 Water utility 3,762,099 4,698,951 936,852 974,041 Golf course 319,871 296,635 (23,236) (209) Ice arena 1,003,048 894,129 (108,919) (102,889) Storm water 888,156 1,207,847 319,691 405,833 Street lighting 116,732 152,975 36,243 25,332 Total net (expense) revenue 27,440,138$ 16,137,329$ (11,302,809) (12,102,415) General revenues Property taxes and tax increments 16,583,231 14,054,673 Franchise taxes 957,448 945,244 Unrestricted grants and contributions 803,035 697,895 Unrestricted investment earnings 1,561,604 871,088 Gain on sale of capital assets 369,163 70,400 Total general revenues 20,274,481 16,639,300 Change in net position 8,971,672$ 4,536,885$ 2019 Net (expense) revenue One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City’s governmental and business-type operations are financed. The table clearly illustrates the dependence of the City’s governmental operations on general revenues, such as property taxes. It also shows that, for the most part, the City’s business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. The difference in the net change in public safety from year-to-year was mainly due to an increased allocation of Police and Fire pension expense. The difference in net change in culture and recreation was primarily due to the capital grant received for the pool improvement project. DR A F T -22- LEGISLATIVE UPDATES The 2019 legislative session began with a projected state general fund surplus of $1.052 billion. The legislative agenda was primarily focused on setting an operating budget for the state’s fiscal 2020-2021 biennium. At the end of the regular session, only a higher education budget bill had been completed. However, after a special session, the Legislature was able to address the 11 remaining budget bills, as well as pass an omnibus tax bill and small pension bill. The following is a brief summary of specific legislative changes from the 2019 session or previous legislative sessions potentially impacting Minnesota cities. Local Government Aid (LGA) – An additional $26 million was added to the appropriation for the city LGA formula beginning in fiscal 2020, bringing the total state-wide appropriation to $560.4 million. An additional $4 million was added to the appropriation beginning in fiscal 2021. The LGA distribution formula for 2020 was altered to provide that a city’s 2020 LGA may not be less than its 2019 aid, and the cap on maximum aid losses in any year thereafter was modified. Bonding Bill – The 2019 bonding bill provided financing for approximately $102 million of projects and funding authorized by the 2018 omnibus bonding bill, which had been legally challenged due to their reliance on the use of the Environment and Natural Resources Trust Fund to generate appropriation bonds. The 2019 Legislature changed the funding source for these projects to general obligation bonds, clearing the way for the projects to go forward. Included in this was $59 million earmarked for city water and wastewater projects through the state Public Facilities Authority. Local Option Sales Tax Process – Effective May 1, 2019, the process for cities to enact a local option sales tax have been modified, requiring special legislation prior to a local referendum vote. Cities must now adopt a resolution specifying the proposed sales tax rate and time frame for the sales tax. The resolution must also include a detailed description of the project or projects (up to five) to be funded by the sales tax, the amount to be raised for each project, and documentation of the regional significance of each project. The resolution must be submitted to the House and Senate tax committee chairs by January 31st to be considered for special legislation by the State Legislature. If special legislation is approved, voter approval must be obtained by referendum at a general election within two years of legislative approval. Wage Theft – The Legislature enacted a number of changes in employment law aimed at reducing wage theft by employers. The changes require employers to provide written notice to new employees of specific wage information including rate of pay, allowances, paid leave, deductions, days in a pay period, and the employer’s legal name, address, and phone number. Employers must also provide an earnings statement that includes similar information. The changes also create new requirements for employer recordkeeping for hours worked each day and each workweek, and imposes penalties for failure to do so and for refusal to make the records available for inspection by the Department of Labor. Written Estimates of Consulting Fees – Effective August 1, 2019, upon request by applicants for a permit, license, or other approval relating to real estate development or construction, cities are required to provide a written, nonbinding estimate of consulting fees to be charged to the applicant based on information available at that time. The related application will not be considered complete until the city has provided the estimate, received the required application fees, and received the applicant’s signed acceptance of the fee estimate along with a signed statement that the applicant has not relied on the fee estimate in its decision to proceed with the application. Contract Retainage – Effective for contracts entered into August 1, 2019 or later, contract retainage must be released no later than 60 days after the related construction project reaches substantial completion as defined by statute. After substantial completion, cities can still withhold amounts equal to, 1) 250 percent of the cost to correct or complete work known at the time of substantial completion, and 2) the greater of $500 or 1 percent of the value of the contract pending the completion of “final paperwork,” including documents required to fulfill contractual obligations such as operating manuals, payroll documents for projects subject to prevailing wage requirements, and contractor payroll tax withholding affidavits. Any resulting reduction in retainage must be passed from the contractor to all subcontractors at the same rate. DR A F T -23- Driver and Vehicle Registration System (VTRS) – The Legislature selected VTRS, a third party vendor system, to replace the failed Minnesota Licensing and Registration System (MNLARS). Fees from driver’s licenses, license plates, and filing fees were increased and a technology surcharge imposed on vehicle registration renewals to pay for the implementation of VTRS, the decommissioning of MNLARS, and to temporarily increase the capacity of Driver and Vehicle Services to meet public service needs. Included in this is $13 million appropriated in 2019 for reimbursement grants to deputy registrars for costs related to MNLARS. The grants, which would be determined by formula, would require the deputy registrar accepting the grant to release the state from any further liability or claims related to MNLARS. Vaping Ordinance Authority – Effective July 1, 2019, cities are allowed to enact and enforce ordinances with more stringent measures than the Minnesota Clean Indoor Air Act to protect individuals from involuntary exposure to aerosol or vapor from electronic delivery devices. Water Connection Fees – Effective January 1, 2020, the annual water connection fees cities are required to collect on behalf of the Minnesota Department of Health for water testing and support has been increased from $6.36 to $9.72. Military Exception to Open Meeting Law – Effective August 1, 2019, members of a public body that are in the military will be allowed to participate in public meetings via interactive television when they are at a required drill, deployed, or on active duty. The member may participate under this exception up to three times a year. Pension Plan Changes – The 2019 pension bill included several changes to the various pension plans throughout the state:  Changes to plans administered by the Public Employees Retirement Association (PERA) included: o The rights of PERA General Employees Retirement Fund (GERF) plan and Public Employees Police and Fire Fund (PEPFF) plan members to purchase service credit for periods of military leave were expanded. This gives plan members the right to purchase up to five years of service credit for military service leave that is not federally protected because the service occurred prior to public employment or the member did not meet the payment deadlines applicable to federally protected leave service credit purchases. o The Phased Retirement Option (PRO) program, which gives cities an opportunity to retain potentially retiring employees that are GERF plan members aged 62 or over, was altered and made permanent. Under a PRO arrangement, an employee would begin collecting a retirement annuity, but could continue working for their current employer for up to five years if they agree to a work schedule that represents a reduction of at least 25 percent each pay period from their current schedule, up to a maximum of 1,044 hours per year. Employees would not be allowed to contribute to a pension benefit plan or accrue additional service time while working under a PRO. o A process was established for municipalities and joint powers entities to terminate participation in the PERA Statewide Volunteer Firefighter (SVF) plan if, 1) the entity has either eliminated its fire department or ceased using the services of all departing firefighters and any other noncareer or volunteer firefighters, and 2) the entity’s account has assets sufficient to cover all liabilities including the fully vested liabilities for all departing firefighters and administrative expenses. DR A F T -24-  Changes impacting volunteer firefighter relief associations (VRFAs) included: o Effective January 1, 2020, vesting schedules for defined contribution plans cannot require that a member have more than 20 years of active service to become 100 percent vested in the member’s account, or provide for a larger vesting percentage with respect to the completed years of service than as provided in the statutory schedule. o Effective January 1, 2020, the permitted graded vesting schedule for defined benefit pension plans is reduced from 20 years to 10 years for full vesting. Also, plans cannot require that a member have more than 20 years of active service to become 100 percent vested in the member’s accrued service pension, or provide for a larger vesting percentage with respect to the completed years of service than as provided in the statutory schedule. o Effective January 1, 2020, supplemental benefits are allowed to be paid to designated beneficiaries or estates when plan members have no surviving spouse or children. DR A F T -25- ACCOUNTING AND AUDITING UPDATES The following is a summary of GASB standards expected to be implemented in the next few years. However, due to the COVID-19 outbreak, the GASB is currently considering a proposal to delay the original implementation dates of these and other standards by a year. At this point, the implementation dates for the standards listed below are tentative and may be subject to change. GASB STATEMENT NO. 87, LEASES A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this statement. Governments enter into leases for many types of assets. Under the previous guidance, leases were classified as either capital or operating depending on whether the lease met any of the four tests. In many cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease financing transactions. The goal of this statement is to better meet the information needs of users by improving accounting and financial reporting for leases by governments. It establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. This statement increases the usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Under this statement, a lessee is required to recognize a lease liability and an intangible right to use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. To reduce the cost of implementation, this statement includes an exception for short-term leases, defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. GASB STATEMENT NO. 91, CONDUIT DEBT OBLIGATIONS The primary objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. DR A F T -26- A conduit debt obligation is defined as a debt instrument having all of the following characteristics:  There are at least three parties involved: (1) an issuer, (2) a third party obligor, and (3) a debt holder or a debt trustee.  The issuer and the third party obligor are not within the same financial reporting entity.  The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer.  The third party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt issuance.  The third party obligor, not the issuer, is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments). This statement also addresses arrangements, often characterized as leases, that are associated with conduit debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third party obligors in the course of their activities. This statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers’ conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose information about the amount recognized and how the liabilities changed during the reporting period. The requirements of this statement are effective for reporting periods beginning after December 15, 2020. Earlier application is encouraged. DR A F T CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2019 DR A F T Page Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 1–2 Independent Auditor’s Report on Minnesota Legal Compliance 3 CITY OF NEW HOPE Table of Contents Special Purpose Audit Reports Year Ended December 31, 2019 DR A F T -1- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of New Hope, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated INSERT DATE. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. (continued) DR A F T -2- COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota INSERT DATE DR A F T -3- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of New Hope, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated INSERT DATE. MINNESOTA LEGAL COMPLIANCE In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions, insofar as they relate to accounting matters. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota INSERT DATE DR A F T DR A F T INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of New Hope, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City) as of and for the year ended December 31, 2019, 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 control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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. (continued) DR A F T 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, 2019, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparisons for the General Fund and Economic Development Authority Special Revenue Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. 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 required supplementary information (RSI), 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 RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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 financial 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 financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is 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. (continued) DR A F T OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated INSERT DATE on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota INSERT DATE CITY OF NEW HOPE NEW HOPE, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2019 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY Draft CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2019 KIRK MCDONALD - CITY MANAGER PREPARED BY: DEPARTMENT OF FINANCE Member GFOA of U.S. and Canada Draft THIS PAGE IS LEFT BLANK INTENTIONALLY Draft ACCOUNTANT'S COMPILATION REPORT Honorable Mayor and City Council City of New Hope, Minnesota Management is responsible for the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of New Hope, Minnesota (the City), as of December 31, 2019, and related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Schedules of Employer’s Shares of the Net Pension Liability and the Schedule of Employer’s Contributions for the defined benefit plan, and the Schedules of Funding Progress 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. This information is the representation of management. This information was subject to our compilation engagement, however, we have not audited or reviewed the required supplementary information and, accordingly, do not express an opinion, a conclusion, nor provide any form of assurance on such information. We are not independent with respect to the City of New Hope, Minnesota. Sincerely AEM Financial Solutions, LLC. Draft THIS PAGE IS LEFT BLANK INTENTIONALLY Draft City of New Hope, Minnesota Comprehensive Annual Financial Report Table of Contents For the Year Ended December 31, 2019 Page No. Introductory Section Letter of Transmittal from City Manager 8 Certificate of Achievement for Excellence in Financial Reporting 14 Organizational Chart 15 Elected and Appointed Officials 16 Financial Section Independent Auditor’s Report 19 Management’s Discussion and Analysis 23 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 35 Statement of Activities 36 Fund Financial Statements Governmental Funds Balance Sheet 40 Reconciliation of the Balance Sheet to the Statement of Net Position 43 Statement of Revenues, Expenditures and Changes in Fund Balances 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 46 General Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 47 Economic Development Authority Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 49 Proprietary Funds Statement of Net Position 50 Statement of Revenues, Expenses and Changes in Net Position 54 Statement of Cash Flows 56 Notes to the Financial Statements 61 Required Supplementary Information Schedule of Employer’s and Non-Employer Contributing Entity’s Share of Public Employees Retirement Association Net Pension Liability - General Employees Retirement Fund 100 Schedule of Employer’s Public Employees Retirement Association Contributions - General Employees Retirement Fund 100 Notes to the Required Supplementary Information - General Employees Retirement Fund 101 Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability - Public Employees Police and Fire Fund 102 Schedule of Employer’s Public Employees Retirement Association Contributions - Public Employees Police and Fire Fund 102 Notes to the Required Supplementary Information - Public Employees Police and Fire Fund 102 Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 104 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 107 Nonmajor Special Revenue Funds Subcombining Balance Sheet 110 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 111 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Solid Waste Management Fund 112 5 Draft City of New Hope, Minnesota Comprehensive Annual Financial Report Table of Contents (Continued) For the Year Ended December 31, 2019 Page No. Combining and Individual Fund Financial Statements and Schedules (Continued) Nonmajor Capital Projects Funds Subcombining Balance Sheet 114 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 115 Nonmajor Debt Service Funds Subcombining Balance Sheet 118 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances 120 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 123 Internal Service Funds Combining Statement of Net Position 130 Combining Statement of Revenues, Expenses and Changes in Net Position 131 Combining Statement of Cash Flows 132 Statistical Section (Unaudited) Financial Trends Summary Financial Report Revenues and Expenditures for General Operations - Governmental Funds 137 Net Position by Component 138 Changes in Net Position 140 Governmental Activities Tax Revenues by Source 145 Fund Balances of Governmental Funds 146 Changes in Fund Balances of Governmental Funds 148 General Government Tax Revenues by Source 151 Revenue Capacity Tax Capacity, Market Value and Estimated Actual Value of Taxable Property 152 Property Tax Capacity Rates - Direct and Overlapping Governments 154 Principal Property Taxpayers 156 Property Tax Levies and Collections 159 Debt Capacity Ratios of Outstanding Debt by Type 160 Ratios of General Bonded Debt Outstanding 162 Computation of Direct and Overlapping Debt 163 Legal Debt Margin Information 164 Pledged Revenue Coverage 166 Demographic and Economic Information Demographic and Economic Statistics 167 Principal Employers 168 Operating Information Full-Time Equivalent City Government Employees by Function 170 Operating Indicators by Function 172 Capital Asset Statistics by Function 174 6 Draft INTRODUCTORY SECTION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 7 Draft May 15, 2020 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, 2019, is submitted herewith. As required by state law, this report is published annually, prior to June 30, and submitted to the Office of the State Auditor. The form and contents of this report and the accompanying financial statements and statistical tables are designed to meet the needs of a broad spectrum of financial statement readers, and were prepared in conformance with standards set forth by: 1. The Governmental Accounting Standards Board (GASB) 2. The American Institute of Certified Public Accountants 3. The United States Office of Management and Budget 4. The State Auditor, State of Minnesota 5. The Government Finance Officers' Association (GFOA) of the United States and Canada The financial data presented in this report was prepared by the City's finance department staff. The responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data as presented is accurate in all material respects and is presented in a manner designed to fairly set forth the financial activity of the various funds, and that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The City is a residential suburb of the City of Minneapolis with a population of 21,545. 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 O F NEW HOPE 4401 Xylon Avenue North • New Hope, Minnesota 55428-4898 • www.ci.new-hope.rrm.us City Hall: 763-531-5100 • Police (non-emergency): 763-531-5170 • Public Works: 763-592-6777 • TDD: 763-531-5109 City Hall Fax: 763-531-5136 • Police Fax: 763-531-5174 • Public Works Fax: 763-592-6776 8 Draft 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 and the Housing and Redevelopment Authority (HRA) reports a debt service fund and a capital projects fund within the primary government. The City provides a full range of municipal services, including: police and fire protection, culture and recreation, public improvements, street maintenance, sanitary and storm sewer collection, water distribution, planning, zoning and building inspection services, and general administrative services. ECONOMIC OUTLOOK The City is a nearly fully developed community with little vacant land available for development. The City has a good mix of single/multi-family residential housing stock, parks and open space, and a strong commercial/industrial tax base. There are approximately 480 commercial/industrial/service businesses in the City, and the major employers are listed as follows: Major Employers Products/Services New Hope Based Employees (Total Employees) Independent School District 281 Education 791 (1,852) Hy-Vee Grocery & convenience store 632 Minnesota Masonic Home/ North Ridge Care Center Skilled nursing care facility 560 St. Therese Home of New Hope Skilled nursing care facility 544 (1,117) Horwitz Mechanical contractor 345 Perrigo Company Pharmaceutical & medicine manufacturing 323 Intermediate District 287 Education 266 (943) City of New Hope Government agency 262 (including seasonal staff) YMCA Health club 228 Liberty Diversified International Stationery supplies 200 The City has four major industrial park areas including Science Industry Park, 49th and Quebec avenues, Winnetka Avenue area between 32nd and 36th avenues, and north of Medicine Lake Road on Nevada Avenue. The major shopping centers/areas in the City include: Midland Shopping Center, Winnetka Commons Shopping Center, New Hope Mall, Winnetka Center, Post Haste Square, and the 42nd Avenue Redevelopment District. 9 Draft Business Assistance Programs Local commercial/industrial businesses are extremely important to the City. The City Council has undertaken programs and initiatives to address both commercial and industrial properties. These programs focus on: 1} retaining existing businesses, 2} assisting with expansions, 3} attracting new businesses to vacant available buildings, 4} attracting new construction to a limited number of available vacant sites, and 5} improving communication with businesses and responding more effectively to business concerns and inquiries. The City Council has continued the Outstanding Business Award Program initiated in 2006, to recognize the City's businesses' contributions to the local community. In 2009, the Business Networking Group forum was established to share information and improve communications between businesses and the City and the forum continued through 2019. The City is also a long time member of the TwinWest Chamber of Commerce. The city has also partnered with Hennepin County and Open to Business, a company that provides free business advice and also provides gap financing. In 2019, $38,064,766 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 2019: Police Department & City Hall A new police department and city hall for the city of New Hope opened in July of 2019. The City Council approved a bid from Terra General Contractors for $14.78 million in December of 2017 for the new building. The sale of $18.435 million in general obligation capital improvement plan bonds at the interest rate of 2.6339% was also approved to pay for project. A ground breaking for the building took place on January 5, 2018, and the building was completed in July of 2019. The pool that was previously located where the new police department and city hall was constructed was demolished and is being reconstructed in the area of the current city hall. In June 2018, the City Council voted on a preferred pool concept and entered into an agreement with Stantec Engineering to provide the final planning and design. The preferred pool concept included a current channel, two body slides, a shallow water area, and a 50-meter, 8-lane pool with diving boards. The original concept had a 25-yard pool; however, during the 2018 legislative session the city received $2 million in order to expand the 25-yard pool concept to 50 meters. Construction on the pool began in August of 2019. It is scheduled to open in June of 2020. IronWood Alatus, LLC constructed a four-story, 182-unit luxury apartment building on the site previously owned by the city, adjacent to the New Hope Village Golf Course. The city completed a market feasibility study in the spring of 2015 to determine what type of redevelopment was best suited for the site and concluded that luxury apartments were the most viable option. The final plat and vacation of easements for the project were approved in February 2017, and construction of the $43 million building began in the summer of 2017. Residents began moving into the building in January 2019. Windsor Ridge SVK is constructing 32 new single-family homes on an 8.7-acre undeveloped site that was owned by the city for many years. In the fall of 2018, the city received six proposals from four developers for the site. After careful consideration, SVK was selected as the preferred developer for the site. SVK is in the process of developing 32 new single-family homes on 65-foot wide lots. The estimated sales prices for the homes range from the mid-$300,000’s to the low $400,000’s. At the beginning of 2020, eight homes were under construction or completed. SVK anticipates that the project will be complete sometime in 2021. Automotive Concepts In September of 2019, the New Hope City Council approved a Tax Increment Financing (TIF) contract for Automotive Concepts, located at 2919 Nevada Avenue North, to facilitate the construction of a 22,500 square foot building. Automotive Concepts specializes in vehicles customization, and the new building will serve as their “clean” facility, focusing on body work, and installation of tires and wheels, etc. The owner of the business anticipates the building will add about 35 new jobs. The TIF agreement would pay the developer $150,000 over the next nine years at an interest rate of 4.45%. 10 Draft Holy Trinity Church Holy Trinity Church received approval in October 2018 to expand their school and daycare center at 4240 Gettysburg Avenue North by approximately 11,123 square feet with a second floor addition over the existing school area. The $1.85 million project also included a 1,140 square foot expansion of the main floor entryway. The project was completed in the fall of 2019. Hy-Vee Aisles Online A 960-square foot drive-through kiosk with three drive-through grocery pick-up lanes was approved for construction in the Hy-Vee parking lot at 8200 42nd Avenue North in July 2019. The structure includes an overhead canopy and new curbing and landscaping around the building. The $550,000 addition is intended to reduce congestion and streamline the pick-up process for customers who purchase groceries online. Now Mart A 5,060-square foot gas station and convenience store opened in December 2018 at 7201 Bass Lake Road. Construction of 3,780- square foot car wash on the same site was completed in the summer of 2019. The $8.471 million project replaced a previously underutilized retail building. The development includes several environmentally conscious improvements, including a stormwater collection system that retains all rainwater onsite and re-uses it for the car wash. A filtration system will recycle and reuse water that is used by the car wash. Housing The City's commitment to maintaining its housing stock is supported through a variety of cooperative projects and programs. Approximately $6,030,138 was reinvested in the City's housing stock in 2019 for private home construction, additions, and/or remodeling projects. 1. Housing rehabilitation programs: a. Community Development Block Grant (CDBG) Housing Rehabilitation Program - administered by Hennepin County: i. CDBG funded activity in 2019 continued the expenditure of previously allocated CDBG funds. ii. The city continued to operate their scattered site housing program by acquiring multiple properties for demolition and new construction. Since 2014, the Economic Development Authority has acquired 14 properties, resulting in the creation of 18 lots. The lots purchased by the city are located at 7215, 7303, 7311, and 9121 62nd Avenue North, 4511 Boone Avenue North, 3751 and 6065 Louisiana Avenue North, 3856 Maryland Avenue North, 4415 Nevada Avenue North, 5355 Oregon Avenue North, 5212 Pennsylvania Avenue North, 5431 Virginia Avenue North, 6059 West Broadway, and 5400 Yukon Avenue North. Four of the lots were large enough to split into two buildable lots and were sold to developers for the construction of two new single-family, owner-occupied homes. The city acquired another single-family home for demolition in early 2020 and has two other properties under contract. b. Rehabilitation Re-sell: i. The city has purchased two distressed properties for rehabilitation in the last four years. The city chose to rehabilitate the home at 3984 Zealand Avenue North as it was too valuable to demolish. It sold for $295,000. The city also acquired the property at 3924 Utah Avenue North in 2018 and is coordinating an $180,000 rehabilitation that will serve as a demonstration project for the neighborhood. The city has a goal of breaking even on such projects and will invest all available resources into the home to create the highest valued product possible. 2. Housing maintenance programs a. Code compliance inspections – 1,419 inspections completed in 2019 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 504 single-family rental units are registered with the City. iii. A total of 3,776 multi-family rental units are registered with the City. c. Multifamily Property Manager’s Association – quarterly meetings. d. Partnership with Center for Energy and Environment and Hennepin County for fix-up loans and grants. 3. Metropolitan Council Livable Communities Act - annually renewed by the City. 11 Draft PARKS AND RECREATION The City provides the residents with a vast array of park amenities and recreation opportunities at an affordable cost. In 2019, the city maintained 18 parks, four additional school district parks (summer only), two sheets of indoor ice at the ice arena, and a par 3 nine- hole golf course. In addition, the city programs the New Hope Community Gyms during non-school time. During 2019, several park projects took place including the replacement of the playground at Jaycee Park; court resurfacing of the basketball court at Civic Center Park, tennis courts at Begin Park and the multi-surface court at Terra Linda Park; and the lighting was retrofitted to LED at Civic Center Park for the basketball/volleyball courts and tennis courts. Buckthorn removal was continued in several parks and new signage was installed at Jaycee Park. During the 2018-2019 winter season, parks staff also continued to plow a section of trail at Hidden Valley, Northwood and Lions parks. In early 2019, staff worked significantly with Stantec engineers on the final bid documents for the Pool and Park projects. The full project was broken down into five smaller projects: Pool, Outdoor Theater, Skatepark, Demolition (city hall, theater, shelter), and Park Improvements/City Hall Bid Pack 2. Bids were received in February and March. The City Council awarded the five contracts at the March 25 Council Meeting. Pre-construction meetings were held and the projects started in April. Substantial completion for all of the projects is expected in the summer of 2020. The outdoor theatre and skate park were demolished in the spring as part of the Civic Center Park and Pool projects. Most activities typically held at these facilities were located at alternate locations. The popular Movies in the Park shows were held at Northwood Park, and the theater classes and parent/child story time were held at the Crystal Community Center. The Off Broadway Musical Theater board did not want to move to an alternative location, so they cancelled performances for 2019. The ice arena offered year-round use of ice time for youth, adult recreational, league hockey and skating lessons. In addition, two facility water heaters were replaced and new exterior doors for the front entrance were ordered. The advertising agreement and concession stand agreement continued with the Armstrong Cooper Youth Hockey Association. The dryland training agreement continued with Charleston Overspeed. The golf course continued to offer leagues, lessons, tournaments, open golf and picnic rentals. During the non-golf season, the clubhouse continued to be rented to outside groups. In 2019, the tables in the clubhouse were replaced, a new 5-year lease for golf carts started and a Groundsmaster mower was purchased. With the assistance of public works staff, a new patio area was built to the west of the clubhouse and outdoor tables and chairs were purchased for the patio. A short term parking agreement started with Ironwood Apartments for the use of 16 spaces during the off-season. PROPERTY TAX PROCESS Preliminary tax levies have to be sent to the county auditor by September 30th. This levy can be lowered at a later date, but cannot be increased. The county sends out notices to all property owners informing them of proposed property taxes and the dates of public hearings by the various taxing districts. The final budget is adopted by the City in December at a City Council meeting after the public hearing. OTHER PERTINENT INFORMATION Independent Audit - As required by Minnesota 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 2019 that will highlight the tax effect of major capital and operating decisions. This will also be an important document when preparing future budgets. 12 Draft AWARDS AND ACKNOWLEDGEMENTS The Certificate of Achievement for Excellence in Financial Reporting - The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended December 31, 2018. This was the 11th consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Department of Finance, AEM Financial Solutions, LLC (the City’s contracted finance director) other City departments, and the staff of MMKR. We wish to express our appreciation to all the contributors for their efforts to complete this report. Respectfully submitted, Kirk McDonald City Manager 13 Draft 14 Draft Ci t y  of  New  Hope August  2018 Pa r k s  & Re c r e a t i o n Re c r e a t i o n Pa r k s Re c r e a t i o n  Fa c i l i t i e s Fo r e s t r y Po l i c e        Pa t r o l      In v e s t i g a t i o n      Co m m u n i t y  Se r v i c e s      An i m a l  Co n t r o l      Cr i m e  Pr e v e n t i o n      Sc h o o l  Li a i s o n      Re s e r v e s      Ex p l o r e r s Public  Works Utility  Billing Utilities Central  Garage Streets Parks  Maintenance Hu m a n  Re s o u r c e s  /  Ad m i n i s t r a t i v e  Se r v i c e s Hu m a n  Re s o u r c e s Sa f e t y In f o  Te c h n o l o g y Co m m u n i c a t i o n s Ri s k  Mg m t / I n s u r a n c e Fi n a n c e / A c c o u n t i n g Pa y r o l l Co m m u n i t y  De v e l o p m e n t In s p e c t i o n s Pe r m i t s Ho u s i n g Ec o n o m i c  De v e l o p m e n t Pl a n n i n g / Z o n i n g Pl a n n i n g  Co m m i s s i o n Ci t i z e n  Ad v i s o r y   Co m m i s s i o n Hu m a n  Ri g h t s  Co m m i s s i o n Pe r s o n n e l  Bo a r d City  Attorney Steve  Sondrall City  Engineer Stantec Fiscal  Advisors AEM Dorsey  and  Whitney Ehlers We s t  Me t r o  Fi r e ‐Re s c u e  Di s t r i c t Fi r e  Su p p r e s s i o n Fi r e  Pr e v e n t i o n Em e r g e n c y  Mg m t .  Co o r d . Re s c u e Ex p l o r e r s Ci t y  Co u n c i l Po l i c y ED A  Bo a r d HR A  Bo a r d Ci t y  Ma n a g e r Ch i e f  Ad m i n i s t r a t o r Go v e r n m e n t  Re l a t i o n s Bu d g e t Co u n c i l  Re l a t i o n s Em e r g e n c y  Ma n a g e m e n t Fi r e  Bo a r d ED A  Ex e c u t i v e  Di r e c t o r HR A  Ex e c u t i v e  Di r e c t o r Au d i t JW C  Co m m i s s i o n HR G  Re p r e s e n t a t i v e AE M  Co n t r a c t Ci t y  Cl e r k / T r e a s u r e r Co u n c i l  Re l a t i o n s El e c t i o n s Li c e n s i n g In s u r a n c e Ci t y  Ha l l  Fa c i l i t y Re s i d e n t s City  Planner Alan  Brixius 15 15 Dr a f t City of New Hope, Minnesota Elected and Appointed Officials For the Year Ended December 31, 2019 Name Title Term Expires Kathi Hemken Mayor 12/31/20 John Elder Council Member 12/31/22 Andrew Hoffe Council Member 12/31/20 Cedrick Frazier Council Member 12/31/20 Jonathan London Council Member 12/31/22 Name Title Kirk McDonald City Manager Bernie Weber Director of Public Works Jeff Sargent Director of Community Development Susan Rader Director of Parks and Recreation Tim Fournier Chief of Police Rich Johnson Director of Human Resources and Administrative Services Valerie Leone City Clerk/Treasurer ELECTED APPOINTED 16 Draft FINANCIAL SECTION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 17 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 18 Draft Independent auditors report (page 1 of 3) 19 Draft Independent auditor’s report (page 2 of 3) 20 Draft Independent auditor’s report (page 3 of 3) 21 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 22 Draft 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, 2019. 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 8 of this report. Financial Highlights • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $77,197,731 (net position). Of this amount, $19,880,871 (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 $8,971,672. This was a result of governmental activities and business type activities increasing net position by $6,958,218 and $2,013,454, respectively. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $29,250,988, a decrease of $8,463,242 in comparison with the prior year. Approximately 15.9 percent of this total amount ($4,657,257) 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 $7,116,723 or 49.6 percent of total General fund 2019 expenditures and transfers out. • The City’s total bonded debt decreased by $4,026,557 (7.6 percent) during the current fiscal year. The key factor of this decrease was the scheduled principal and interest payments. 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. 23 Draft 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 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 deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the four reported as net position. Over time increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in 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 35 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. 24 Draft 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, City Hall CIP, Street Infrastructure, Park/Pool Improvement Project, 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 the Economic Development Authority and Solid Waste Management special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with the adopted budgets. The basic governmental fund financial statements start on page 40 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 50 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 60 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 61 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 pension and other postemployment benefits to its employees. Required supplementary information can be found starting on page 100 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 106 of this report. The statistical section starting on page 135 of this report presents information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. The information in the statistical section is not audited. 25 Draft 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 and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $77,197,731 at the close of the most recent fiscal year. A portion of the City’s net position (64.1 percent) reflects its investment in capital assets (e.g., land, buildings, vehicles and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of New Hope’s Summary of Net Position Increase Increase 2019 2018 (Decrease)2019 2018 (Decrease) Assets Current and other assets 46,544,620$ 55,738,883$ (9,194,263)$ 5,946,278$ 4,361,994$ 1,584,284$ Capital assets, net of depreciation 68,293,237 49,203,864 19,089,373 29,058,223 29,051,346 6,877 Total Assets 114,837,857 104,942,747 9,895,110 35,004,501 33,413,340 1,591,161 Deferred Outflows of Resources Deferred pension resources 4,422,526 5,073,986 (651,460) 73,354 136,143 (62,789) Deferred other postemployment benefit resources 119,013 - 119,013 24,733 - 24,733 4,541,539 5,073,986 (532,447) 98,087 136,143 (38,056) Liabilities Other liabilities 3,763,982 2,639,091 1,124,891 568,736 495,207 73,529 Noncurrent liabilities 54,561,626 49,598,029 4,963,597 10,650,831 11,125,254 (474,423) Total Liabilities 58,325,608 52,237,120 6,088,488 11,219,567 11,620,461 (400,894) Deferred Inflows of Resources Deferred pension resources 5,499,493 6,764,590 (1,265,097) 134,165 194,380 (60,215) Deferred other postemployment benefit resources 36,169 41,781 (5,612) 7,518 6,758 760 Resources received in advance 2,061,733 2,699,725 (637,992) - - - Total Deferred Inflows of Resources 7,597,395 9,506,096 (1,908,701) 141,683 201,138 (59,455) Net Position Net investment in capital assets 30,141,723 27,888,417 2,253,306 19,315,353 18,783,898 531,455 Restricted 6,501,383 6,000,843 500,540 1,358,401 1,160,680 197,721 Unrestricted 16,813,287 14,384,257 2,429,030 3,067,584 1,783,306 1,284,278 Total Net Position 53,456,393$ 48,273,517$ 5,182,876$ 23,741,338$ 21,727,884$ 2,013,454$ Governmental Activities Business-type Activities An additional portion of the City’s net position, $7,859,784, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $19,880,871, may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report a positive balance in all three categories of net position for both the governmental activities and the business-type activities. 26 Draft The following table indicates the changes in net position for the City’s governmental and business-type activities: City of New Hope’s Changes in Net Position Increase Increase 2019 2018 (Decrease)2019 2018 (Decrease) Revenues Program Revenues Charges for services 1,860,001$ 1,984,494$ (124,493)$ 10,587,884$ 10,298,118$ 289,766$ Operating grants and contributions 826,489 967,499 (141,010) 14,308 327,335 (313,027) Capital grants and contributions 2,819,823 941,212 1,878,611 28,824 14,203 14,621 General Revenues Taxes Property taxes 15,308,309 12,941,920 2,366,389 - - - Tax increments 1,274,922 1,112,753 162,169 - - - Franchise taxes 957,448 945,244 12,204 - - - Grants and contributions not restricted to specific programs 803,035 697,895 105,140 - - - Unrestricted investment earnings 1,412,308 798,557 613,751 149,296 72,531 76,765 Gain on sale of capital assets 369,163 70,400 298,763 - - - Total Revenues 25,631,498 20,459,974 5,171,524 10,780,312 10,712,187 68,125 Expenses General government 1,901,812 1,983,179 (81,367) - - - Public safety 8,512,798 7,578,150 934,648 - - - Public works 3,812,617 3,661,766 150,851 - - - Culture and recreation 2,140,152 2,280,418 (140,266) - - - Economic development 748,514 1,244,292 (495,778) - - - Interest on long-term debt 1,412,763 1,074,469 338,294 - - - Sewer utility - - - 2,831,836 2,631,598 200,238 Water utility - - - 3,759,653 4,038,859 (279,206) Golf course - 319,218 299,217 20,001 Ice arena - - - 1,001,043 987,912 13,131 Storm water - - - 883,052 736,166 146,886 Street lighting - - - 116,680 119,250 (2,570) Total Expenses 18,528,656 17,822,274 706,382 8,911,482 8,813,002 98,480 Changes in Net Position Before Transfers 7,102,842 2,637,700 4,465,142 1,868,830 1,899,185 (30,355) Transfers - Internal Activities (144,624) (48,413) (96,211) 144,624 48,413 96,211 Change in Net Position 6,958,218 2,589,287 4,368,931 2,013,454 1,947,598 65,856 Prior Period Adjustment (1,775,342) - (1,775,342) - - - Net Position, January 1 48,273,517 45,684,230 2,589,287 21,727,884 19,780,286 1,947,598 Net Position, December 31 53,456,393$ 48,273,517$ 5,182,876$ 23,741,338$ 21,727,884$ 2,013,454$ Governmental Activities Business-type Activities The decreases in general government, public safety, culture and recreation and economic development expenses were a result of a decrease in pension liability and recognition of pension expense. The increase in public works expenses was due to capital activity in the current year. The increase in property taxes were a result of an increase in the debt service and capital levies, which will be used to fund current and future bond payments and street projects. 27 Draft Governmental Activities. Governmental activities increased the City’s net position by $6,958,218. Expenses - The following chart illustrates the City’s expenses and program revenues for its governmental activities: Expenses and Program Revenues - Governmental Activities $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 $7,500,000 $8,000,000 $8,500,000 $9,000,000 General Government Public Safety Public Works Culture and Recreation Economic Development Interest on Long-term Debt Expenses Program Revenues Revenues - The following chart illustrates the City’s revenue by source for its governmental activities: Revenues by Source - Governmental Activities Charges for Services 7.4% Operating Grants and Contributions 3.2% Capital Grants and Contributions 11.0% Property Taxes 59.7% Tax Increments 5.0% Franchise Taxes 3.7% Grants and Contributions Unrestricted 3.1% Unrestricted Investment Earnings 5.5% Gain on Sale of Capital Assets 1.4% 28 Draft Business-type Activities. The net position of business-type activities increased by $2,013,454. This increase was primarily the result of operating net income in the Sewer, Water and Storm Water Utility funds of $537,019, $667,249 and $315,651, respectively. Below are the graphs showing the business-type activities revenue and expense comparisons. Expense and Program Revenues - Business-type Activities $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 Sewer Utility Water Utility Golf Course Ice Arena Storm Water Street Lighting Expenses Program Revenues Revenue Sources - Business-type Activities Charges for Services 98.2% Operating Grants and Contributions 0.1% Capital Grants and Contributions 0.3% Unrestricted Investment Earnings 1.4% 29 Draft 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 $29,250,988, a decrease of $8,463,242 in comparison with the prior year. Approximately 15.9 percent of this total amount, $4,657,257, 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 ($22,980), 2) restricted ($13,304,922), 3) committed ($5,033,555), or 4) assigned ($6,232,274). For further classification refer to Note 3F on page 84 of this report. Activity in the City’s major funds is discussed below: Increase 2019 2018 (Decrease) General 7,139,703$ 7,180,951$ (41,248)$ Economic Development Authority 4,818,171$ 5,390,021$ (571,850)$ HRA Construction 4,655,140$ 3,177,772$ 1,477,368$ City Hall CIP 1,794,294$ 9,527,103$ (7,732,809)$ Street Infrastructure 15,854$ (948,474)$ 964,328$ Park/Pool Improvement Project 5,316,815$ 9,492,781 (4,175,966)$ The decrease in fund balance is due to project expenses in 2019. HRA Bonds (2,244,096)$ (2,286,122)$ 42,026$ The increase in fund balance is primarily related to tax increment revenues exceeding debt service requirements and other expenditures in the fund. Fund Balance December 31, Major Funds 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 49.6 percent of total 2019 expenditures and transfers out. The decrease in fund balance was a result of approving an unbudgeted transfer out of $354,000. 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 transfers in of $999,500. This fund accounts for capital outlay expenditures related to street infrastructure. The increase was a result of revenues exceeding current year project costs. The decrease in fund balance is primarily due to approved unbudgeted transfers out of $928,457. The decrease in fund balance is due to project expenditures in 2019. 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 $3,511,168. Other factors concerning the finances of these funds have already been addressed in the discussion of the City’s business-type activities. 30 Draft General Fund Budgetary Highlights The City’s General fund budget was not amended during the year. Revenues and expenditures provided positive budget variances. Actual revenues were over budget by $72,388 and expenditures were under budget by $240,364. Revenue line items with significant budget variances include the following: •Investment earnings were over budget by $71,033. •Intergovernmental revenue was over budget by $89,471, mostly due to more state and local grants and state police aid than expected. •Franchise tax revenue was over budgeted amounts by $60,856 and license and permits were under budget by $60,872. Expenditure line items with significant budget variances include the following: •Public safety expenditures were under budget by $127,032, mostly due to personnel services for the police department coming in under budget by $139,047 . •Culture and recreation expenditures were under budget by $76,332. In addition, the General fund transfers out were $354,000 more than budget. The transfers out related to the City Council approved transfers to the Fire capital fund and City Hall CIP fund. 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, 2019, was $97,351,460 (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 24.4 percent. Major capital asset events during the current fiscal year consisted of: •Multiple vehicle and equipment purchases were made for a total of $347,999. •Construction in progress increase in 2019 by $22,862,123 relating to the new City Hall building and police station not being completed. This amount also includes the City’s new Outdoor Pool and Civic Center Park Improvements. City of New Hope’s Capital Assets (Net of Depreciation) Increase Increase 2019 2018 (Decrease)2019 2018 (Decrease) Land 994,268$ 994,268$ -$ 485,042$ 485,042$ -$ Buildings and Structures 2,398,188 2,663,755 (265,567) 6,149,377 6,361,559 (212,182) Vehicles and Equipment 2,325,393 2,603,664 (278,271) 399,978 500,309 (100,331) Improvements other than Buildings 30,515,845 32,420,271 (1,904,426) 21,224,875 21,249,254 (24,379) Construction in Progress 32,059,543 10,521,906 21,537,637 798,951 455,182 343,769 Total 68,293,237$ 49,203,864$ 19,089,373$ 29,058,223$ 29,051,346$ 6,877$ Business-type ActivitiesGovernmental Activities Additional information on the City’s capital assets can be found in Note 3C starting on page 74 of this report. 31 Draft Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $56,758,267. Of this amount $40,433,000 will be paid from general property taxes and $6,582,397 from redevelopment district tax increments. The remaining amount 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 a combined fund balance deficit of $168,067, of which $2,296,665 is restricted for the payment of debt service and a deficit of $2,464,732 is unassigned. The City made efforts to shift the philosophy for financing major street improvements away from debt financing to the pay-as-you-go philosophy. The City established the Street and Park Infrastructure capital projects funds in 2001 with dedicated portions of the property tax levy, thereby reducing the need for this type of debt issuance. City of New Hope’s Outstanding Debt Increase Increase 2019 2018 (Decrease)2019 2018 (Decrease) G.O. Bonds and Certificates 40,433,000$ 35,323,386$ 5,109,614$ 3,509,802$ 3,727,852$ (218,050)$ G.O. Tax Increment Bonds 6,582,397 7,140,876 (558,479) 1,401,536 1,494,575 (93,039) Lease Revenue Bonds - - - 3,505,000 3,505,000 - G.O. Revenue Bonds and Notes - - - 1,326,532 1,540,021 (213,489) Total 47,015,397$ 42,464,262$ 4,551,135$ 9,742,870$ 10,267,448$ (524,578)$ Governmental Activities Business-type Activities 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 79 of this report. Economic Factors and Next Year’s Budgets and Rates Economic Outlook •User charges have been increased to account for various utility improvements scheduled for 2018 and beyond. •The overall tax levy had an 18.5 percent increase in 2019. •Management provided a long-term plan to City Council in 2018 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. 32 Draft GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 33 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 34 Draft City of New Hope, Minnesota Statement of Net Position December 31, 2019 Governmental Business-type Activities Activities Total Assets Cash and temporary investments 38,998,183$ 4,716,443$ 43,714,626$ Cash held with fiscal agent - 1,358,401 1,358,401 Receivables Taxes 149,429 - 149,429 Accrued interest 67,902 - 67,902 Accounts 420,284 1,397,843 1,818,127 Loans 611,753 - 611,753 Special assessments 722,497 199,201 921,698 Internal balances 1,993,473 (1,993,473) - Due from other governments 2,100,592 56,347 2,156,939 Inventories 62,575 43,007 105,582 Prepaid items 22,980 - 22,980 Land held for resale 582,763 - 582,763 Investment in joint ventures 812,189 168,509 980,698 Capital assets Land and construction in progress 33,053,811 1,283,993 34,337,804 Depreciable assets (net of accumulated deprecation)35,239,426 27,774,230 63,013,656 Total Assets 114,837,857 35,004,501 149,842,358 Deferred Outflows of Resources Deferred pension resources 4,422,526 73,354 4,495,880 Deferred other postemployment benefit resources 119,013 24,733 143,746 Total Deferred Outflow of Resources 4,541,539 98,087 4,639,626 Liabilities Accrued salaries payable 346,226 36,296 382,522 Accounts and contracts payable 2,652,280 203,795 2,856,075 Due to other governments 73,774 255,037 328,811 Accrued interest payable 659,516 73,608 733,124 Deposits payable 18,386 - 18,386 Unearned revenue 13,800 - 13,800 Noncurrent liabilities Due within one year 1,981,278 525,110 2,506,388 Due in more than one year 45,788,000 9,217,760 55,005,760 Net pension liability 5,859,500 714,103 6,573,603 Other postemployment benefits liability 932,848 193,858 1,126,706 Total Liabilities 58,325,608 11,219,567 69,545,175 Deferred Inflows of Resources Deferred pension resources 5,499,493 134,165 5,633,658 Deferred other postemployment benefit resources 36,169 7,518 43,687 Resources received in advance 2,061,733 - 2,061,733 Total Deferred Inflows of Resources 7,597,395 141,683 7,739,078 Net Position Net investment in capital assets 30,141,723 19,315,353 49,457,076 Restricted for Economic development 4,655,140 - 4,655,140 Debt service 1,708,123 1,358,401 3,066,524 Public safety police expenses 132,730 - 132,730 Ice arena 5,390 - 5,390 Unrestricted 16,813,287 3,067,584 19,880,871 Total Net Position 53,456,393$ 23,741,338$ 77,197,731$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 35 Draft City of New Hope, Minnesota Statement of Activities For the Year Ended December 31, 2019 Operating Grants and Contributions Capital Charges for Services Grants and Grants and Expenses Services Contributions Contributions Governmental Activities General government 1,901,812$ 223,379$ 131,982$ -$ Public safety 8,512,798 880,634 411,896 - Public works 3,812,617 226,249 212,664 809,593 Culture and recreation 2,140,152 529,739 69,947 2,010,230 Economic development 748,514 - - - Interest on long-term debt 1,412,763 - - - Total Governmental Activities 18,528,656 1,860,001 826,489 2,819,823 Business-type Activities Sewer utility 2,831,836 3,380,075 404 - Water utility 3,759,653 4,675,498 12,129 11,324 Golf course 319,218 296,538 97 - Ice arena 1,001,043 892,740 1,389 - Storm water 883,052 1,190,058 289 17,500 Street lighting 116,680 152,975 - - Total Business-type Activities 8,911,482 10,587,884 14,308 28,824 Total 27,440,138$ 12,447,885$ 840,797$ 2,848,647$ 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 Prior period adjustment (Note 7) Net Position, December 31 Functions/Programs Program Revenues The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 36 Draft Governmental Activities Business-type Activities Activities Activities Total (1,546,451)$ -$ (1,546,451)$ (7,220,268) - (7,220,268) (2,564,111) - (2,564,111) 469,764 - 469,764 (748,514) - (748,514) (1,412,763) - (1,412,763) (13,022,343) - (13,022,343) - 548,643 548,643 - 939,298 939,298 - (22,583) (22,583) - (106,914) (106,914) - 324,795 324,795 - 36,295 36,295 - 1,719,534 1,719,534 (13,022,343) 1,719,534 (11,302,809) 15,308,309 - 15,308,309 1,274,922 - 1,274,922 957,448 - 957,448 803,035 - 803,035 1,412,308 149,296 1,561,604 369,163 - 369,163 (144,624) 144,624 - 19,980,561 293,920 20,274,481 6,958,218 2,013,454 8,971,672 48,273,517 21,727,884 70,001,401 (1,775,342) - (1,775,342) 53,456,393$ 23,741,338$ 77,197,731$ Net (Expenses) Revenues and Changes in Net Position The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 37 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 38 Draft FUND FINANCIAL STATEMENTS CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 39 Draft City of New Hope, Minnesota Balance Sheet Governmental Funds December 31, 2019 9001 9015/9018/9501 9213-9228 9202 Economic Development HRA City Hall General Authority Construction CIP Assets Cash and temporary investments 6,852,266$ 1,356,562$ 4,466,336$ 2,687,163$ Receivables Taxes 149,429 - - - Accrued interest 46,250 9,173 - - Accounts 248,102 93,762 49,616 - Loans - 611,753 - - Special assessments 104,673 11,963 - - Due from other governments 100,592 - - - Prepaid items 22,980 - - - Due from other funds 335,515 65,025 - - Advances to other funds - 2,153,877 2,008,544 - Land held for resale - 582,763 - - Total Assets 7,859,807$ 4,884,878$ 6,524,496$ 2,687,163$ Liabilities Accrued salaries payable 194,313$ 7,388$ -$ -$ Accounts and contracts payable 187,765 43,839 - 892,869 Due to other governments 65,003 3,187 2,482 - Deposits payable 18,056 330 - - Due to other funds - - 65,025 - Advances from other funds - - 1,801,849 - Unearned revenue - - - - Total Liabilities 465,137 54,744 1,869,356 892,869 Deferred Inflows of Resources Unavailable revenue - taxes 150,294 - - - Unavailable revenue - special assessments 104,673 11,963 - - Resources received in advance - - - - Total Deferred Inflows of Resources 254,967 11,963 - - Fund Balances Nonspendable 22,980 - - - Restricted - - 4,655,140 898,182 Committed - 4,818,171 - - Assigned - - - 896,112 Unassigned 7,116,723 - - - Total Fund Balances 7,139,703 4,818,171 4,655,140 1,794,294 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 7,859,807$ 4,884,878$ 6,524,496$ 2,687,163$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 40 Draft 9203 9234 9117-9121 Park/Pool Other Total Street Improvement Governmental Governmental Infrastructure Project HRA Bonds Funds Funds 2,738,612$ 4,642,697$ 118,998$ 6,003,923$ 28,866,557$ - - - - 149,429 - 7,347 - 5,132 67,902 - - - 24,329 415,809 - - - - 611,753 539,257 - - 66,604 722,497 - 2,000,000 - - 2,100,592 - - - - 22,980 - - - 310,725 711,265 - - - 1,659,873 5,822,294 - - - - 582,763 3,277,869$ 6,650,044$ 118,998$ 8,070,586$ 40,073,841$ -$ -$ -$ -$ 201,701$ 136,025 1,244,459 - 11,658 2,516,615 - - 2,522 - 73,194 - - - - 18,386 75,000 - - 231,224 371,249 450,000 - 2,360,572 - 4,612,421 - - - 13,800 13,800 661,025 1,244,459 2,363,094 256,682 7,807,366 - - - - 150,294 539,257 - - 58,797 714,690 2,061,733 88,770 - - 2,150,503 2,600,990 88,770 - 58,797 3,015,487 - - - - 22,980 - 5,316,815 - 2,434,785 13,304,922 - - - 215,384 5,033,555 - - - 5,336,162 6,232,274 15,854 - (2,244,096) (231,224) 4,657,257 15,854 5,316,815 (2,244,096) 7,755,107 29,250,988 3,277,869$ 6,650,044$ 118,998$ 8,070,586$ 40,073,841$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 41 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 42 Draft City of New Hope, Minnesota Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31, 2019 Total Fund Balances - Governmental Funds 29,250,988$ 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 86,674,563 Less: accumulated depreciation (21,299,110) 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 (44,252,170) Plus: unamortized bond premium (2,763,227) Pension liability (5,673,280) 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 10,987,946 Internal balances for internal services used by business-type activities 443,584 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 150,294 Special assessments 714,690 State aids 88,770 Governmental funds do not report long-term amounts related to pensions Deferred outflows of pension resources 4,403,397 Deferred inflows of pension resources (5,422,725) Governmental funds do not report a liability for accrued interest until due and payable.(659,516) 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.812,189 Total Net Position - Governmental Activities 53,456,393$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 43 Draft City of New Hope, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2019 9001 9015/9018/9501 9213-9228 9202 Economic Development HRA City Hall General Authority Construction CIP Revenues Taxes Property taxes 10,297,018$ 300,000$ 42,881$ -$ Tax increments - - 588,474 - Franchise taxes 533,213 - - - Licenses and permits 320,438 - - - Intergovernmental 1,342,543 - - - Charges for services 1,064,277 - - - Fines and forfeitures 227,343 - - - Special assessments 50,034 1,636 - - Investment earnings (charges)106,033 94,972 173,273 237,508 Miscellaneous 23,326 - - 49,853 Total Revenues 13,964,225 396,608 804,628 287,361 Expenditures Current General government 1,900,480 - - - Public safety 8,427,487 - - - Public works 1,564,148 - - - Culture and recreation 2,032,585 - - - Economic development - 432,636 81,810 - Capital outlay General government 3,967 - - 8,458,695 Public safety 55,081 - - - Public works - - - - Culture and recreation - - - - Economic development - - 208,016 - Debt service Principal - - - - Interest - - - - Bond issuance costs - - - 475 Total Expenditures 13,983,748 432,636 289,826 8,459,170 Excess (Deficiency) of Revenues Over (Under) Expenditures (19,523) (36,028) 514,802 (8,171,809) Other Financing Sources (Uses) Transfers in 332,275 96,086 999,500 439,000 Bonds issued - - - - Premium on bonds issued - - - - Sale of capital assets - 331,299 - - Transfers out (354,000) (963,207) (36,934) - Total Other Financing Sources (Uses)(21,725) (535,822) 962,566 439,000 Net Change in Fund Balances (41,248) (571,850) 1,477,368 (7,732,809) Fund Balances, January 1 7,180,951 5,109,286 5,233,849 9,527,103 Prior Period Adjustment (Note 7)- 280,735 (2,056,077) - Fund Balances, December 31 7,139,703$ 4,818,171$ 4,655,140$ 1,794,294$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 44 Draft 9203 9234 9117-9121 Park/Pool Other Total Street Improvement Governmental Governmental Infrastructure Project HRA Bonds Funds Funds 1,397,460$ -$ -$ 3,229,202$ 15,266,561$ - - 686,448 - 1,274,922 424,235 - - - 957,448 - - - - 320,438 693,266 1,911,230 - - 3,947,039 - 41,500 - 270,399 1,376,176 - - - - 227,343 136,660 - - 9,236 197,566 70,191 269,224 (1,317) 216,354 1,166,238 - - - 100,500 173,679 2,721,812 2,221,954 685,131 3,825,691 24,907,410 - - - - 1,900,480 - - - 452 8,427,939 - - - 226,567 1,790,715 - - - - 2,032,585 - - - - 514,446 - - - - 8,462,662 - - - - 55,081 1,540,517 11,898,929 - 492 13,439,938 - - - 323,193 323,193 - - 84,460 - 292,476 - - 404,165 564,509 968,674 - 90,921 120,371 1,139,981 1,351,273 12,000 - - - 12,475 1,552,517 11,989,850 608,996 2,255,194 39,571,937 1,169,295 (9,767,896) 76,135 1,570,497 (14,664,527) - - 36,934 354,967 2,258,762 - 5,137,669 - 97,331 5,235,000 - 454,261 - - 454,261 - - - - 331,299 (204,967) - (71,043) (447,886) (2,078,037) (204,967) 5,591,930 (34,109) 4,412 6,201,285 964,328 (4,175,966) 42,026 1,574,909 (8,463,242) (948,474) 9,492,781 (2,286,122) 6,180,198 39,489,572 - - - - (1,775,342) 15,854$ 5,316,815$ (2,244,096)$ 7,755,107$ 29,250,988$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 45 Draft 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, 2019 Net Change in Fund Balances - Governmental Funds (8,463,242)$ 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 21,830,632 Depreciation expense (2,414,924) 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. Change in investment in joint venture (148,560) 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 968,674 Bond issued (5,235,000) Premium on bonds issued (454,261) Amortization of bond premium 169,452 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.(218,467) 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 41,748 Special assessments (81,239) State aids 88,770 Long-term pension activity is not reported in governmental funds Pension expense 448,155 Direct aid contributions 46,404 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, net of capital assets transferred 539,792 Less: the change in internal balances for internal services used by business-type activities (159,716) Change in Net Position - Governmental Activities 6,958,218$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 46 Draft City of New Hope, Minnesota General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended December 31, 2019 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes Property taxes 10,382,448$ 10,382,448$ 10,297,018$ (85,430)$ Franchise taxes 472,357 472,357 533,213 60,856 Licenses and permits 381,310 381,310 320,438 (60,872) Intergovernmental 1,253,072 1,253,072 1,342,543 89,471 Charges for services 1,084,650 1,084,650 1,064,277 (20,373) Fines and forfeitures 250,000 250,000 227,343 (22,657) Special assessments 30,000 30,000 50,034 20,034 Investment earnings 35,000 35,000 106,033 71,033 Miscellaneous 3,000 3,000 23,326 20,326 Total Revenues 13,891,837 13,891,837 13,964,225 72,388 Expenditures Current General government 1,914,638 1,914,638 1,900,480 14,158 Public safety 8,554,519 8,554,519 8,427,487 127,032 Public works 1,563,038 1,563,038 1,564,148 (1,110) Culture and recreation 2,108,917 2,108,917 2,032,585 76,332 Capital outlay General government 10,000 10,000 3,967 6,033 Public safety 73,000 73,000 55,081 17,919 Total Expenditures 14,224,112 14,224,112 13,983,748 240,364 Excess (Deficiency) of Revenues Over (Under) Expenditures (332,275) (332,275) (19,523) 312,752 Other Financing Sources (Uses) Transfers in 332,275 332,275 332,275 - Transfers out - - (354,000) (354,000) Total Other Financing Sources (Uses)332,275 332,275 (21,725) (354,000) Net Change in Fund Balances - - (41,248) (41,248) Fund Balances, January 1 7,180,951 7,180,951 7,180,951 - Fund Balances, December 31 7,180,951$ 7,180,951$ 7,139,703$ (41,248)$ The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 47 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 48 Draft 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, 2019 Actual Variance with Original Final Amounts Final Budget Revenues Taxes Property taxes 300,000$ 300,000$ 300,000$ -$ Intergovernmental 85,000 85,000 - (85,000) Special assessments 1,600 1,600 1,636 36 Investment earnings 57,500 57,500 94,972 37,472 Miscellaneous - - - - Total Revenues 444,100 444,100 396,608 (47,492) Expenditures Economic development Current Personnel services 344,100 344,100 300,794 43,306 Supplies 300 300 375 (75) Other services and charges 367,378 367,378 131,467 235,911 Total Expenditures 711,778 711,778 432,636 279,142 Deficiency of Revenues Under Expenditures (267,678) (267,678) (36,028) 231,650 Other Financing Sources (Uses) Transfers in - - 96,086 96,086 Sale of capital assets - - 331,299 331,299 Transfers out (34,750) (34,750) (963,207) (928,457) Total Other Financing Sources (Uses)(34,750) (34,750) (535,822) (501,072) Net Change in Fund Balances (302,428) (302,428) (571,850) (269,422) Fund Balances, January 1 5,205,372 5,205,372 5,109,286 (96,086) Prior Period Adjustment (Note 7)- - 280,735 280,735 Fund Balances, December 31 4,902,944$ 4,902,944$ 4,818,171$ (84,773)$ Budgeted Amounts The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 49 Draft City of New Hope, Minnesota Statement of Net Position (Continued on the Following Pages) Proprietary Funds December 31, 2019 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Assets Current Assets Cash and temporary investments 1,645,152$ 2,253,701$ 89,136$ 800$ Cash held with fiscal agent - - - 1,358,401 Receivables Accounts 331,671 867,643 1,720 68,820 Special assessments 53,644 126,501 - - Due from other governments - 5,589 - 50,758 Inventories - 37,275 5,732 - Total Current Assets 2,030,467 3,290,709 96,588 1,478,779 Noncurrent Assets Investment in joint ventures - 168,509 - - Capital assets Land - - 250,625 - Buildings and structures - - 973,145 9,939,063 Improvements other than buildings 6,484,838 11,037,801 130,373 - Vehicles and equipment 607,475 1,392,767 168,678 466,287 Construction in progress 155,147 336,207 10,247 19,026 Less: accumulated depreciation (2,858,046) (3,897,489) (1,046,885) (4,298,794) Total Capital Assets (Net of Accumulated Depreciation)4,389,414 8,869,286 486,183 6,125,582 Total Noncurrent Assets 4,389,414 9,037,795 486,183 6,125,582 Total Assets 6,419,881 12,328,504 582,771 7,604,361 Deferred Outflows of Resources Deferred pension resources 17,816 20,288 4,308 18,199 Deferred other postemployment benefit resources 6,110 4,941 699 4,048 Total Deferred Outflows of Resources 23,926 25,229 5,007 22,247 Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 50 Draft City of New Hope, Minnesota Statement of Net Position (Continued) Proprietary Funds December 31, 2019 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Liabilities Current Liabilities Accrued salaries payable 8,327$ 13,218$ 1,647$ 10,727$ Accounts and contracts payable 24,703 71,300 4,850 72,845 Due to other governments 1,066 236,948 197 15,772 Accrued interest payable 9,471 40,366 - 4,790 Due to other funds 125,000 110,725 - 104,291 Compensated absences payable, current portion - - - - Bonds and notes payable, current portion 56,115 321,261 - - Total Current Liabilities 224,682 793,818 6,694 208,425 Noncurrent Liabilities Advances from other funds 750,000 459,873 - - Other postemployment benefits payable 47,890 38,728 5,476 31,726 Pension liability 173,440 197,505 41,941 177,161 Compensated absences payable - - - - Bonds and notes payable 817,632 3,368,978 - 3,505,000 Total Noncurrent Liabilities 1,788,962 4,065,084 47,417 3,713,887 Total Liabilities 2,013,644 4,858,902 54,111 3,922,312 Deferred Inflows of Resources Deferred pension resources 32,586 37,107 7,880 33,285 Deferred other postemployment benefit resources 1,857 1,502 213 1,230 Total Deferred Inflows of Resources 34,443 38,609 8,093 34,515 Net Position Net investment in capital assets 3,515,667 5,179,047 486,183 2,620,582 Restricted for debt service - - - 1,358,401 Unrestricted 880,053 2,277,175 39,391 (309,202) Total Net Position 4,395,720$ 7,456,222$ 525,574$ 3,669,781$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 51 Draft City of New Hope, Minnesota Statement of Net Position (Continued) Proprietary Funds December 31, 2019 Governmental Activities - 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Assets Current Assets Cash and temporary investments 707,844$ 19,810$ 4,716,443$ 10,131,626$ Cash held with fiscal agent - - 1,358,401 - Receivables Accounts 119,530 8,459 1,397,843 4,475 Special assessments 16,566 2,490 199,201 - Due from other governments - - 56,347 - Inventories - - 43,007 62,575 Total Current Assets 843,940 30,759 7,771,242 10,198,676 Noncurrent Assets Investment in joint ventures - - 168,509 - Capital assets Land 234,417 - 485,042 85,647 Buildings and structures - - 10,912,208 3,158,296 Improvements other than buildings 9,822,498 389,705 27,865,215 - Vehicles and equipment - - 2,635,207 9,453,933 Construction in progress 278,324 - 798,951 22,997 Less: accumulated depreciation (1,537,186) - (13,638,400) (9,803,089) Total Capital Assets (Net of Accumulated Depreciation)8,798,053 389,705 29,058,223 2,917,784 Total Noncurrent Assets 8,798,053 389,705 29,226,732 2,917,784 Total Assets 9,641,993 420,464 36,997,974 13,116,460 Deferred Outflows of Resources Deferred pension resources 12,743 - 73,354 19,129 Deferred other postemployment benefit resources 8,935 - 24,733 119,013 Total Deferred Outflows of Resources 21,678 - 98,087 138,142 Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 52 Draft City of New Hope, Minnesota Statement of Net Position (Continued) Proprietary Funds December 31, 2019 Governmental Activities - 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Liabilities Current Liabilities Accrued salaries payable 2,377$ -$ 36,296$ 144,525$ Accounts and contracts payable 21,027 9,070 203,795 135,665 Due to other governments 1,054 - 255,037 580 Accrued interest payable 18,981 - 73,608 - Due to other funds - - 340,016 - Compensated absences payable, current portion - - - 75,388 Bonds and notes payable, current portion 147,734 - 525,110 - Total Current Liabilities 191,173 9,070 1,433,862 356,158 Noncurrent Liabilities Advances from other funds - - 1,209,873 - Other postemployment benefits payable 70,038 - 193,858 932,848 Pension liability 124,056 - 714,103 186,220 Compensated absences payable - - - 678,493 Bonds and notes payable 1,526,150 - 9,217,760 - Total Noncurrent Liabilities 1,720,244 - 11,335,594 1,797,561 Total Liabilities 1,911,417 9,070 12,769,456 2,153,719 Deferred Inflows of Resources Deferred pension resources 23,307 - 134,165 34,987 Deferred other postemployment benefit resources 2,716 - 7,518 77,950 Total Deferred Inflows of Resources 26,023 - 141,683 112,937 Net Position Net investment in capital assets 7,124,169 389,705 19,315,353 2,917,784 Restricted for debt service - - 1,358,401 - Unrestricted 602,062 21,689 3,511,168 8,070,162 Total Net Position 7,726,231$ 411,394$ 24,184,922$ 10,987,946$ Total Net Position - Enterprise Funds 24,184,922$ Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds (443,584) Net Position - Business-type Activities 23,741,338$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 53 Draft City of New Hope, Minnesota Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2019 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Operating Revenues Charges for services 3,380,075$ 4,387,321$ 282,323$ 852,765$ Billings to departments - - - - Other - - - - Total Operating Revenues 3,380,075 4,387,321 282,323 852,765 Operating Expenses Cost of goods sold 1,841,838 2,558,681 25,534 - Personnel services 361,191 338,422 135,027 376,422 Supplies 14,601 80,015 26,839 24,557 Utilities 12,074 707 25,649 234,613 Other services and charges 429,262 385,328 77,871 120,413 Depreciation 184,090 356,919 36,502 197,347 Total Operating Expenses 2,843,056 3,720,072 327,422 953,352 Operating Income (Loss)537,019 667,249 (45,099) (100,587) Nonoperating Revenues (Expenses) Investment earnings 45,289 50,767 3,434 26,023 Miscellaneous revenues 404 300,306 14,312 41,364 Gain on sale of capital assets - - - - Interest expense (41,481) (92,522) - (58,182) Total Nonoperating Revenues (Expenses)4,212 258,551 17,746 9,205 Income (Loss) Before Contributions and Transfers 541,231 925,800 (27,353) (91,382) Capital Contributions - 11,324 - - Transfers In - - - 300,000 Transfers Out (54,209) (56,526) (10,506) (10,506) Change in Net Position 487,022 880,598 (37,859) 198,112 Net Position, January 1 3,908,698 6,575,624 563,433 3,471,669 Net Position, December 31 4,395,720$ 7,456,222$ 525,574$ 3,669,781$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 54 Draft City of New Hope, Minnesota Statement of Revenues, Expenses and Changes in Net Position (Continued) Proprietary Funds For the Year Ended December 31, 2019 Governmental Activities - 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Operating Revenues Charges for services 1,190,058$ 152,975$ 10,245,517$ -$ Billings to departments - - - 3,740,890 Other - - - 13,172 Total Operating Revenues 1,190,058 152,975 10,245,517 3,754,062 Operating Expenses Cost of goods sold - - 4,426,053 - Personnel services 260,129 - 1,471,191 1,065,264 Supplies 6,295 478 152,785 343,108 Utilities - 104,987 378,030 92,663 Other services and charges 363,988 11,147 1,388,009 994,058 Depreciation 243,995 - 1,018,853 677,762 Total Operating Expenses 874,407 116,612 8,834,921 3,172,855 Operating Income (Loss)315,651 36,363 1,410,596 581,207 Nonoperating Revenues (Expenses) Investment earnings 17,809 5,974 149,296 246,070 Miscellaneous revenues 289 - 356,675 - Gain on sale of capital assets - - - 37,864 Interest expense (44,092) - (236,277) - Total Nonoperating Revenues (Expenses)(25,994) 5,974 269,694 283,934 Income (Loss) Before Contributions and Transfers 289,657 42,337 1,680,290 865,141 Capital Contributions 17,500 - 28,824 - Transfers In - - 300,000 - Transfers Out (23,629) - (155,376) (325,349) Change in Net Position 283,528 42,337 1,853,738 539,792 Net Position, January 1 7,442,703 369,057 22,331,184 10,448,154 Net Position, December 31 7,726,231$ 411,394$ 24,184,922$ 10,987,946$ Change in Net Position - Enterprise Funds 1,853,738$ Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds.159,716 Change in Net Position - Business-type Activities 2,013,454$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 55 Draft City of New Hope, Minnesota Statement of Cash Flows (Continued on the Following Pages) Proprietary Funds For the Year Ended December 31, 2019 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Cash Flows from Operating Activities Receipts from customers and users 3,370,462$ 4,380,302$ 280,812$ 960,469$ Receipts from interfund services provided - - - - Other operating receipts - 299,846 14,215 40,951 Payments to suppliers (2,222,978) (2,978,034) (155,557) (347,746) Payments to employees (363,134) (332,612) (133,038) (364,533) Net Cash Provided (Used) by Operating Activities 784,350 1,369,502 6,432 289,141 Cash Flows From Noncapital Financing Activities Receipts on interfund balances - - - 104,291 Payments on interfund balances - - - (433,656) Transfers in - - - 300,000 Transfers out (54,209) (56,526) (10,506) (10,506) Net Cash Provided (Used) by Noncapital Financing Activities (54,209) (56,526) (10,506) (39,871) Cash Flows from Capital and Related Financing Activities Acquisition of capital assets (101,743) (375,814) (10,246) (19,390) Proceeds from sale of assets - - - - Payment of advance from other funds (125,000) (109,077) - - Capital contributions - 11,324 - - Principal paid on long-term debt (54,932) (310,061) - - Interest paid on long-term debt (43,403) (102,139) - (58,182) Net Cash Provided (Used) by Capital and Related Financing Activities (325,078) (885,767) (10,246) (77,572) Cash Flows from Investing Activities Investment earnings 45,289 50,767 3,434 26,023 Net Increase (Decrease) in Cash and Cash Equivalents 450,352 477,976 (10,886) 197,721 Cash and Cash Equivalents, January 1 1,194,800 1,775,725 100,022 1,161,480 Cash and Cash Equivalents, December 31 1,645,152$ 2,253,701$ 89,136$ 1,359,201$ Reconciliation to the Proprietary Funds Statement of Net Position Cash and temporary investments 1,645,152$ 2,253,701$ 89,136$ 800$ Cash held with fiscal agent - - - 1,358,401 Total Cash and Cash Equivalents 1,645,152$ 2,253,701$ 89,136$ 1,359,201$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 56 Draft City of New Hope, Minnesota Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended December 31, 2019 9300 9301 9302 9303 Sewer Utility Water Utility Golf Course Ice Arena Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss)537,019$ 667,249$ (45,099)$ (100,587)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 184,090 356,919 36,502 197,347 Other income related to operations 404 300,306 14,312 41,364 (Increase) decrease in assets Receivables Accounts (7,501) (80,576) (1,511) 110,968 Special assessments (2,112) (4,690) - - Due from other governments - 78,247 - (3,264) Inventories - 4,801 (502) - Prepaid items - 340 - - (Increase) decrease in deferred outflows of resources Deferred pension resources 16,881 17,608 3,235 13,827 Deferred other postemployment benefit resources (6,110) (4,941) (699) (4,048) Increase (decrease) in liabilities Accounts and contracts payable 80,017 (10,350) 1,501 32,853 Accrued salaries payable 623 3,692 489 1,425 Due to other governments 1,066 57,027 133 3,305 Compensated absences payable - - - - Other postemployment benefits payable 11,203 8,372 (111) 4,609 Pension liability (14,100) (7,324) 1,169 4,056 Increase (decrease) in deferred inflows of resources Deferred pension resources (16,954) (16,998) (2,890) (12,441) Deferred other postemployment benefit resources (176) (180) (97) (273) Net Cash Provided (Used) by Operating Activities 784,350$ 1,369,502$ 6,432$ 289,141$ Schedule of Noncash Capital and Related Financing Activities Amortization of bond discount -$ -$ -$ -$ Amortization of bond premium 1,363$ 5,631$ -$ -$ Capital assets purchased on account -$ 21,783$ -$ 19,206$ Gain on sale of capital assets -$ -$ -$ -$ Capital assets contributed to governmental activities -$ -$ -$ -$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 57 Draft City of New Hope, Minnesota Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended December 31, 2019 Governmental Activities - 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Cash Flows from Operating Activities Receipts from customers and users 1,176,896$ 153,313$ 10,322,254$ -$ Receipts from interfund services provided - - - 3,741,273 Other operating receipts - - 355,012 12,738 Payments to suppliers (338,151) (115,766) (6,158,232) (1,396,697) Payments to employees (217,483) - (1,410,800) (881,539) Net Cash Provided (Used) by Operating Activities 621,262 37,547 3,108,234 1,475,775 Cash Flows from Noncapital Financing Activities Receipts on interfund balances - - 104,291 - Payments on interfund balances - - (433,656) - Transfers in - - 300,000 - Transfers out (23,629) - (155,376) (325,349) Net Cash Provided (Used) by Noncapital Financing Activities (23,629) - (184,741) (325,349) Cash Flows from Capital and Related Financing Activities Acquisition of capital assets (313,071) (337,771) (1,158,035) (351,427) Proceeds from sale of assets - - - 37,864 Payment of advance from other funds - - (234,077) - Capital contributions 17,500 - 28,824 - Principal paid on long-term debt (150,333) - (515,326) - Interest paid on long-term debt (47,949) - (251,673) - Net Cash Provided (Used) by Capital and Related Financing Activities (493,853) (337,771) (2,130,287) (313,563) Cash Flows from Investing Activities Investment earnings 17,809 5,974 149,296 246,070 Net Increase (Decrease) in Cash and Cash Equivalents 121,589 (294,250) 942,502 1,082,933 Cash and Cash Equivalents, January 1 586,255 314,060 5,132,342 9,048,693 Cash and Cash Equivalents, December 31 707,844$ 19,810$ 6,074,844$ 10,131,626$ Reconciliation to the Proprietary Funds Statement of Net Position Cash and temporary investments 707,844$ 19,810$ 4,716,443$ 10,131,626$ Cash held with fiscal agent - - 1,358,401 - Total Cash and Cash Equivalents 707,844$ 19,810$ 6,074,844$ 10,131,626$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 58 Draft City of New Hope, Minnesota Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended December 31, 2019 Governmental Activities - 9304 9305 Internal Storm Water Street Lighting Totals Service Funds Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss)315,651$ 36,363$ 1,410,596$ 581,207$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 243,995 - 1,018,853 677,762 Other income related to operations 289 - 356,675 - (Increase) decrease in assets Receivables Accounts (11,789) 532 10,123 383 Special assessments (1,373) (194) (8,369) - Due from other governments - - 74,983 - Inventories - - 4,299 7,570 Prepaid items - - 340 - (Increase) Decrease in deferred outflows of resources Deferred pension resources 11,238 - 62,789 9,825 Deferred other postemployment benefit resources (8,935) - (24,733) (119,013) Increase (decrease) in liabilities Accounts and contracts payable 38,527 846 143,394 60,158 Accrued salaries payable (230) - 5,999 28,409 Due to other governments 1,054 - 62,585 (48,474) Compensated absences payable - - - 39,496 Other postemployment benefits payable 47,847 - 71,920 178,915 Pension liability (5,566) - (21,765) 29,720 Increase (decrease) in deferred inflows of resources Deferred pension resources (10,932) - (60,215) (6,352) Deferred other postemployment benefit resources 1,486 - 760 36,169 Net Cash Provided (Used) by Operating Activities 621,262$ 37,547$ 3,108,234$ 1,475,775$ Schedule of Noncash Capital and Related Financing Activities Amortization of bond discount 740$ -$ 740$ -$ Amortization of bond premium 2,998$ -$ 9,992$ -$ Capital assets purchased on account -$ -$ 40,989$ -$ Gain on sale of capital assets -$ -$ -$ -$ Capital assets contributed to governmental activities -$ -$ -$ -$ Business-type Activities - Enterprise Funds The notes to the financial statements are an integral part of this statement. See Accountant's Compilation Report. 59 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 60 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 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, debt service, and capital projects 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 functional activity. 61 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 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 funds. The fiduciary fund financial statements have no measurement focus but utilize 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, pensions, 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. Activities in the fund are funded through property tax levies and Federal and state aids and grants. 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 City Hall CIP Capital Projects fund is used to account for the accumulation of reserves for City Hall projects. 62 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) The Street Infrastructure Capital Projects fund is used to account for various street projects within the City. The Park/Pool Improvement Project Capital Projects fund is used to account for park and pool improvements. 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 type: 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. 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. 63 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 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 of 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. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55. 6. Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System. 7. 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. 8. 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. 9. 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. 64 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the shares. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. See Note 3A on page 72 for the City’s recurring fair value measurements. The City has the following recurring fair value measurements as of December 31, 2019: • U.S. Government Agency Securities of $4,710,990 are valued using a matrix pricing model (Level 2 inputs). • State and local government securities of $1,013,960 are valued using a matrix pricing model (Level 2 inputs). • Negotiable certificates of deposit of $5,095,879 are valued using a matrix pricing model (Level 2 inputs) 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. 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 2019. 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, 2019, the total delinquent special assessment receivable balance was $92,689. 65 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) 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 “advances to/from other funds”. 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. Land Held for Resale Land held for resale is valued at the lower of the cost or acquisition of the property. The fair value of the property was determined based on quoted market prices. 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. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and 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 acquisition 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 Years Buildings and Structures 15 - 50 Improvements other than Buildings 15 - 50 Vehicles and Equipment 3 - 20 66 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) Deferred Outflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. Accordingly, the items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year pension contributions and OPEB contributions made subsequent to the measurement dates. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The General fund is typically used to liquidate the governmental net pension liability. The total pension expense for the GERP, PEPFP, and PEDCP is as follows: Public Employees Retirement Association of Minnesota (PERA)Total All GERP PEPFP PEDCP Plans Pension Expense 419,081$ 943,538$ 2,606$ 1,365,225$ Deferred Inflows of Resources In addition to liabilities, the statement of net 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 inflow of resources (revenue) until that time. The City has four types of items, unavailable revenue, resources received in advance, deferred pension resources, and deferred other postemployment benefit resources. • Unavailable revenue arises only under a modified accrual basis of accounting that qualifies as needing to be reported in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. • Resources received in advance is reported in both the governmental fund financial statements and within the government- wide financial statements. This item is reported for amounts that have been received before time requirements are met, but after all other eligibility requirements have been met. • Deferred pension resources is reported only in the statements of net position and results from actuarial calculations. • Deferred other postemployment benefit resources is reported only in the statements of net position and results from actuarial calculations involving net differences between projected and actual earnings on plan investments and changes in proportions. 67 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) 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 471.61, 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.75, at December 31, 2019. The Insurance Reserve Internal service fund is typically used to liquidate governmental other postemployment benefits payable. 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. 68 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 1: Summary of Significant Accounting Policies (Continued) 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 will maintain an unassigned fund balance in the General fund of an amount not less than 42% of the next year’s budgeted expenditures of the General fund. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. 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 - Consists 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. c. 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. 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. 69 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 2: Stewardship, Compliance and Accountability (Continued) 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, Ice Arena Endowment, or CEE Revolving Loan special revenue funds. B. Excess of expenditures Over Appropriations For the year ended December 31, 2019, expenditures exceeded appropriations in the following funds. The excess spending was funded by revenues received in excess of budget and available fund balance. Excess of Expenditures Final Over Budget Actual Appropriations Nonmajor Governmental Solid Waste Management 224,735$ 225,116$ 381$ Fund C. Deficit Fund Equity The following funds had fund balance or net position deficits at December 31, 2019: Amount Major Governmental HRA Bonds 2,244,096$ Nonmajor Governmental 2016 Street Improvement Project 10,588 2018A G.O. Improvement Bonds 220,636 Internal Service Insurance Reserve 442,878 Fund The City plans to fund these deficits with future tax increment receipts, transfers, tax levy receipts and special assessment collections. 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. 70 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The fair value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, with the exception of irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral pledged equal to 100 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 $12,077,260 and the bank balance was $12,141,357. At December 31, 2019, 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. 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 64 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. • 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. 71 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) As of December 31, 2019, 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: Credit Segmented Quality/Time Ratings (1)Distribution (2)Amount Level 1 Level 2 Level 3 Pooled Investments at Net Asset Value Broker Money Market Funds AAA Less than 1 year 17,173,632$ Broker Money Market Funds N/A Less than 1 year 3,640,310 Total Money Market Funds 20,813,942 Non-pooled Investments at Fair Value Negotiable Certificates of Deposit N/A Less than 1 year 1,333,362 -$ 1,333,362$ -$ Negotiable Certificates of Deposit N/A 1 to 5 years 3,762,517 - 3,762,517 - U.S. Government Agency Securities AA+Less than 1 year 1,002,699 - 1,002,699 - U.S. Government Agency Securities AA+1 to 5 years 3,706,614 - 3,706,614 - U.S. Government Agency Securities AA+More than 5 years 1,677 - 1,677 - State and Local Government Securities A+Less than 1 year 500,910 - 500,910 - State and Local Government Securities AA+1 to 5 years 513,050 - 513,050 - Government Securities A More than 5 years 1,358,401 - -- Total Investments 32,993,172$ -$ 10,820,829$ -$ Types of Investments Fair Value Measurement (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. 72 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) The following table discloses the nature and risk of investments for which fair value has been estimated using the net asset value per share (NAV) of the investments as a practical expedient as of December 31, 2019: Unfunded Redemption Redemption Fair Value Commitments Frequency Notice Period Broker Money Market Funds UBS Select Prime Institutional Fund (1)3,155,023$ -$ Daily None Required Invesco Government and Agency Fund (2)14,018,609 - Daily None Required Minnesota Municipal Money Market Fund (3)3,640,310 - Daily None Required 20,813,942$ -$ Description (1) This fund includes investments primarily in short-term, high-credit-quality money market instruments. hedge funds that invest domestically and globally in both long and short common stocks across all market capitalizations. The fund aims to preserve capital, maintain liquidity and produce a competitive yield. This is an external investment pool that operates in conformity with the Securities and Exchange Commission’s rules. There are no withdrawal restrictions related to the fund. (2) This fund seeks maximum current income consistent with liquidity and the preservation of capital. The Fund invests in a diversified portfolio of high-quality money market instruments of governmental and private issuers. (3) The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the regulatory rules of the SEC. In accordance with GASB Statement No. 79, the City’s investment in this pool is valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402-1240. A reconciliation of cash and temporary investments as reported on the statement of net position follows: Carrying Amount of Deposits 12,077,260$ Investments 32,993,172 Petty Cash 2,595 Total 45,073,027$ Statement of Net Position Cash and temporary investments 43,714,626$ Cash held with fiscal agent 1,358,401 Total 45,073,027$ 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, 2019 totaled $611,753. 73 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) C.Capital Assets Capital asset activity for the year ended December 31, 2019 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities Capital Assets not being Depreciated Land 994,268$ -$ -$ 994,268$ Construction in progress 10,521,906 21,853,628 (315,991) 32,059,543 Total Capital Assets not being Depreciated 11,516,174 21,853,628 (315,991) 33,053,811 Capital Assets, being Depreciated Buildings and structures 9,367,855 - - 9,367,855 Vehicles and equipment 10,734,356 330,764 (225,289) 10,839,831 Improvements other than buildings 45,817,948 315,991 - 46,133,939 Total Capital Assets being Depreciated 65,920,159 646,755 (225,289) 66,341,625 Less Accumulated Depreciation for Buildings and structures (6,704,100) (265,567) - (6,969,667) Vehicles and equipment (8,130,692) (606,702) 222,956 (8,514,438) Improvements other than buildings (13,397,677) (2,220,417) - (15,618,094) Total Accumulated Depreciation (28,232,469) (3,092,686) 222,956 (31,102,199) Total Capital Assets being Depreciated, Net 37,687,690 (2,445,931) (2,333) 35,239,426 Governmental Activities Capital Assets, Net 49,203,864$ 19,407,697$ (318,324)$ 68,293,237$ 74 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Beginning Ending Balance Increases Decreases Balance Business-type Activities Capital Assets not being Depreciated Land 485,042$ -$ -$ 485,042$ Construction in progress 455,182 1,006,160 (662,391) 798,951 Total Capital Assets not being Depreciated 940,224 1,006,160 (662,391) 1,283,993 Capital Assets being Depreciated Buildings and structures 10,912,208 - - 10,912,208 Improvements other than buildings 27,202,824 662,391 - 27,865,215 Vehicles and equipment 2,615,637 19,570 - 2,635,207 Total Capital Assets being Depreciated 40,730,669 681,961 - 41,412,630 Less Accumulated Depreciation for Buildings and structures (4,550,649) (212,182) - (4,762,831) Improvements other than buildings (5,953,570) (686,770) - (6,640,340) Vehicles and equipment (2,115,328) (119,901) - (2,235,229) Total Accumulated Depreciation (12,619,547) (1,018,853) - (13,638,400) Total Capital Assets being Depreciated, Net 28,111,122 (336,892) - 27,774,230 Business-type Activities Capital Assets, Net 29,051,346$ 669,268$ (662,391)$ 29,058,223$ 75 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Depreciation expense was charged to functions/programs of the City as follows: Governmental Activities General government 85,668$ Public safety 63,825 Public works 1,946,364 Culture and recreation 319,067 Internal service 677,762 Total Depreciation Expense - Governmental Activities 3,092,686$ Business-type Activities Sewer utility 184,090$ Water utility 356,919 Golf course 36,502 Ice arena 197,347 Storm water 243,995 Total Depreciation Expense - Business-type Activities 1,018,853$ Construction Commitments The City has active construction projects as of December 31, 2019. At year-end, the City’s commitments with the contractors are as follows: Spent Remaining to Date Commitment 2011 Street Infrastructure 61,234$ 22,931$ North Water Tower Paint 435,650 28,350 Police Station & City Hall 16,279,229 1,688,052 Watermain replacement 219,210 20,470 Park projects 1,796,180 468,358 Master Pool 8,090,201 3,322,821 Winpark Drive infrastructure improvements 1,440,252 224,651 Total 28,321,956$ 5,775,633$ Project 76 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) D. Interfund Receivables, Payables, and Transfers The composition of internal balances as of December 31, 2019 is as follows: Purpose Amount Due from/to other funds Governmental Governmental General fund Nonmajor governmental Cash deficit coverage 231,224$ Economic Development Authority HRA Construction Finance capital purchase 65,025 Nonmajor governmental Street Infrastructure Finance capital purchase 75,000 Governmental Business-type General fund Ice Arena Cash flow 104,291 Nonmajor governmental Sewer Utility Construction financing 125,000 Nonmajor governmental Water Utility Construction financing 110,725 Total Due From/To Other Funds 711,265$ Advances to/from other funds Governmental Governmental Economic Development Authority HRA Construction Finance capital purchase 1,801,849$ Economic Development Authority HRA Bonds Finance capital purchase 352,032 HRA Construction HRA Bonds Finance capital purchase 2,008,540 Nonmajor governmental Street Infrastructure Finance capital purchase 450,000 Governmental Business-type Nonmajor governmental Sewer Utility Construction financing 750,000 Nonmajor governmental Water Utility Construction financing 459,873 Total Advances To/From Other Funds 5,822,294 Interfund Activity Eliminated From Government-wide Statements (4,983,670) Internal Service Fund Activities Related to the Enterprise Funds 443,584 Total Internal Balances - Government-wide Statements 1,993,473$ Payable FundReceivable Fund The Economic Development Authority fund loaned the HRA Construction fund $2,433,162 in 2008 for the purchase of land at Bass Lake Road. The interfund loan matures in 2028 and carries an interest rate of four percent. As of December 31, 2019, the balance outstanding was $1,801,849. In 2014, the Temporary Financing fund loaned the Water Utility fund $1,100,000 to finance the emergency water supply system project. The loan will be paid back over a 10-year period with a 1.51 percent interest rate. As of December 31, 2019, the balance outstanding was $459,873. In 2016, the Temporary Financing fund loaned the Sewer Utility fund $1,250,000 to fund the 2016 capital improvement plan. The loan will be paid back over a 10-year period with a 2.00 percent interest rate. As of December 31, 2019, the balance outstanding was $750,000. In 2016, the Temporary Financing fund loaned the Street Infrastructure fund $750,000 to fund future capital purchases. The loan will be paid back over a 10-year period with a 2.00 percent interest rate. As of December 31, 2019, the balance outstanding was $450,000. In 2017, the General fund loaned the Ice Arena fund $433,656 for cash flow purposes, the balance on the loan is $104,291 and will be paid back in 2020. The Economic Development Authority fund and the HRA Construction fund loaned the HRA Bonds fund $352,032 and $2,008,540 respectively for the purchase of the Hy-Vee property. The interfund loan matures in 2042 and carries an interest rate of 4.00 percent. 77 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Interfund transfers at December 31, 2019 are as follows: Transfer In Economic Ice Development HRA City Hall HRA Nonmajor Arena General Authority Construction CIP Bonds Governmental Enterprise Total Transfer Out General -$ -$ -$ 204,000$ -$ 150,000$ -$ 354,000$ Economic Development Authority 34,750 - 928,457 - - - - 963,207 HRA Construction - - - - 36,934 - - 36,934 Street Infrastructure - - - - - 204,967 - 204,967 HRA Bonds - - 71,043 - - - - 71,043 Nonmajor Governmental 51,800 96,086 - - - - 300,000 447,886 Sewer Utility Enterprise 54,209 - - - - - - 54,209 Water Utility Enterprise 56,526 - - - - - - 56,526 Golf Course Enterprise 10,506 - - - - - - 10,506 Ice Arena Enterprise 10,506 - - - - - - 10,506 Storm Water Enterprise 23,629 - - - - - - 23,629 Internal Service 90,349 - - 235,000 - - - 325,349 Total Transfers 332,275$ 96,086$ 999,500$ 439,000$ 36,934$ 354,967$ 300,000$ 2,558,762$ Fund • The General fund transferred $150,000 to the Nonmajor Governmental funds to fund the Fire Capital Projects fund. The General fund also transferred $204,000 to the City Hall CIP Fund for project expenditures • Transfers were made out of the Economic Development Authority fund, Nonmajor Governmental Fire Capital Projects fund, Sewer Utility Enterprise fund, Water Utility Enterprise fund, Golf Course Enterprise fund, Ice Arena Enterprise fund, Storm Water enterprise fund, and Internal Service fund for $34,750, $51,800, $54,209, $56,526, $10,506, $10,506, $23,629, and $90,349, respectively, to the General fund to cover administrative charges paid for by the General fund. • The HRA Construction fund transferred $36,934 to the HRA Bonds fund to reimburse the fund for tax increment project costs. • The Economic Development Authority fund transferred $928,457 to the HRA Construction fund for tax increment interest charges and reimburse tax increment districts. • The HRA Construction fund transferred $36,934 to the HRA Bonds fund to cover reimburse expenditures. • The HRA Bonds fund transferred $71,043 to the HRA Construction fund to reimburse the funds for tax increment project costs. • The Nonmajor Governmental Park Infrastructure fund transferred $300,000 to the Ice Arena Enterprise fund to reimburse costs and $96,086 to the Economic Development Authority fund for to close a fund. 78 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) E. Long-term D ebt General Obligation (G.O.) Bonds The City issues G.O. bonds to provide funds for the acquisition and construction of major capital facilities. G.O. bonds have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. The following G.O. bonds will be repaid from future tax levies. Authorized Issue Maturity Balance at and Issued Date Date Year End 2010B G.O. Certificates of Indebtedness 1,245,000$ 2.00 - 2.60 %11/23/10 02/01/20 150,000$ G.O. Street Reconstruction Bonds, Series 2015B 3,825,000 2.25 - 3.00 12/30/15 02/01/31 3,195,000 G.O. Street Reconstruction Bonds, Series 2016A 4,855,000 2.25 - 3.00 12/29/16 02/01/33 4,595,000 G.O. Capital Improvement Bonds, Series 2017A 18,435,000 3.00 - 5.00 12/28/17 02/01/34 18,435,000 G.O. Tax Abatement Bonds, Series 2018A 9,520,000 3.25 - 5.00 12/20/18 02/01/35 9,520,000 G.O. Tax Abatement Bonds, Series 2019A 5,235,000 3.00 - 4.00 07/18/19 02/01/35 5,235,000 Total General Obligation Bonds 41,130,000$ Interest RateDescription The annual debt service to maturity for G.O. bonds are as follows: Year Ending December 31,Principal Interest Total Principal Interest Total 2020 1,334,113$ 1,374,187$ 2,708,300$ 215,887$ 95,163$ 311,050$ 2021 1,964,734 1,303,423 3,268,157 220,266 88,620 308,886 2022 2,038,688 1,221,372 3,260,060 231,312 81,847 313,159 2023 2,132,218 1,125,983 3,258,201 237,782 74,810 312,592 2024 2,233,459 1,028,748 3,262,207 246,541 67,546 314,087 2025 - 2029 12,596,118 3,694,897 16,291,015 1,323,882 231,978 1,555,860 2030 - 2034 14,211,742 1,333,541 15,545,283 908,258 47,050 955,308 2035 1,235,000 19,525 1,254,525 - - - Total 37,746,072$ 11,101,676$ 48,847,748$ 3,383,928$ 687,014$ 4,070,942$ Governmental Activities Business-type Activities 79 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) 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 -$524,536 and $686,448, respectively. Authorized Issue Maturity Balance at and Issued Date Date Year End 2010A G.O. Utility Revenue Bonds 1,200,000$ 2.00 - 3.25 %05/06/10 02/01/21 170,000$ 2010B G.O. Water Revenue Refunding Bonds 605,000 2.00 - 3.00 11/23/10 02/01/22 180,000 2011 G.O. Public Facilities Authority Note 411,738 1.70 02/23/11 08/20/29 233,000 2013 G.O. Public Facilities Authority Note 1,035,000 1.00 07/24/13 08/20/32 742,000 Total G.O. Revenue Bonds and Notes 1,325,000$ Rate Interest Description The annual debt service to maturity for G.O. tax increment bonds are as follows: Year Ending December 31,Principal Interest Total Principal Interest Total 2020 571,777$ 164,470$ 736,247$ 93,223$ 33,132$ 126,355$ 2021 584,151 152,436 736,587 95,849 31,242 127,091 2022 602,838 139,866 742,704 97,162 29,311 126,473 2023 621,525 126,415 747,940 98,475 27,355 125,830 2024 638,899 111,906 750,805 101,101 25,359 126,460 2025 - 2029 2,281,670 355,041 2,636,711 538,330 90,271 628,601 2030 - 2032 1,205,238 54,965 1,260,203 359,762 16,387 376,149 Total 6,506,098$ 1,105,099$ 7,611,197$ 1,383,902$ 253,057$ 1,636,959$ Business-type ActivitiesGovernmental Activities 80 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Lease Revenue Bonds The following bonds were issued to finance 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 $58,182 and $852,765, respectively. Authorized Issue Maturity Balance at and Issued Date Date Year End 2011A Taxable Lease Revenue Bonds 3,505,000$ 5.00 %12/01/11 12/01/28 3,505,000$ Interest RateDescription The annual debt service to maturity for all lease revenue bonds are as follows: Year Ending December 31,Principal Interest Total 2020 -$ 57,482$ 57,482$ 2021 - 57,482 57,482 2022 - 57,482 57,482 2023 - 57,482 57,482 2024 - 57,482 57,482 2025 - 2028 3,505,000 229,928 3,734,928 Total 3,505,000$ 517,338$ 4,022,338$ Business-type Activities 81 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) 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 $98,335 and $3,380,075, respectively. Principal and interest paid for the current year and total customer revenues for the Water Utility fund were $412,200 and $4,387,321, respectively. Principal and interest paid for the current year and total customer revenues for the Storm Water fund were $198,282 and $1,190,058, respectively. Authorized Issue Maturity Balance at and Issued Date Date Year End 2010A G.O. Utility Revenue Bonds 1,200,000$ 2.00 - 3.25 %05/06/10 02/01/21 170,000$ 2010B G.O. Water Revenue Refunding Bonds 605,000 2.00 - 3.00 11/23/10 02/01/22 180,000 2011 G.O. Public Facilities Authority Note 411,738 1.70 02/23/11 08/20/29 233,000 2013 G.O. Public Facilities Authority Note 1,035,000 1.00 07/24/13 08/20/32 742,000 Total G.O. Revenue Bonds and Notes 1,325,000$ Rate Interest Description The annual debt service to maturity for G.O. revenue bonds are as follows: Year Ending December 31,Principal Interest Total 2020 216,000$ 19,997$ 235,997$ 2021 221,000 14,705 235,705 2022 142,000 10,534 152,534 2023 78,000 8,634 86,634 2024 79,000 7,692 86,692 2025 - 2029 409,000 23,977 432,977 2030 - 2032 180,000 3,619 183,619 Total 1,325,000$ 89,158$ 1,414,158$ Business-type Activities 82 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Changes in Long-term Liabilities Long-term liability activity for the year ended December 31, 2019, was as follows: Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental Activities Bonds Payable G.O. bonds and certificates 32,926,656$ 5,235,000$ (415,584)$ 37,746,072$ 1,334,113$ G.O. tax increment bonds 7,059,188 - (553,090) 6,506,098 571,777 Add: premiums on bonds 2,478,418 454,261 (169,452) 2,763,227 - Total Bonds Payable, Net 42,464,262 5,689,261 (1,138,126) 47,015,397 1,905,890 Compensated Absences Payable 714,385 1,270,439 (1,230,943) 753,881 75,388 Governmental Activity Long-term Liabilities 43,178,647$ 6,959,700$ (2,369,069)$ 47,769,278$ 1,981,278$ Business-type Activities Bonds Payable G.O. bonds 3,593,344$ -$ (209,416)$ 3,383,928$ 215,887$ G.O. tax increment bonds 1,475,812 - (91,910) 1,383,902 93,223 Lease revenue bonds 3,505,000 - - 3,505,000 - G.O. revenue bonds and notes 1,539,000 - (214,000) 1,325,000 216,000 Add: premiums on bonds 155,835 - (9,992) 145,843 - Less: bond discount (1,543) - 740 (803) - Total Bonds Payable, Net 10,267,448 - (524,578) 9,742,870 525,110 Business-type Activity Long-term Liabilities 10,267,448$ -$ (524,578)$ 9,742,870$ 525,110$ 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. 83 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) F. Components of Fund Balance At December 31, 2019, 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 Development HRA City Hall General Authority Construction CIP Nonspendable Prepaid items 22,980$ -$ -$ -$ Restricted for Economic development -$ -$ 4,655,140$ -$ Capital improvements - - - 898,182 Total Restricted -$ -$ 4,655,140$ 898,182$ Committed to Economic development -$ 4,818,171$ -$ -$ Assigned to City hall improvements -$ -$ -$ 896,112$ Purpose 84 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 3: Detailed Notes on All Funds (Continued) Park/Pool Other Improvement Governmental Project Funds Total Nonspendable Prepaid items -$ -$ 22,980$ Restricted for Economic development -$ -$ 4,655,140$ Debt service - 2,296,665 2,296,665 Capital improvements 5,316,815 - 6,214,997 Public safety Police expenditures - 132,730 132,730 Ice arena - 5,390 5,390 Total Restricted 5,316,815$ 2,434,785$ 13,304,922$ Committed to Solid waste operations -$ 215,384$ 215,384$ Economic development - - 4,818,171 Total Committed -$ 215,384$ 5,033,555$ Assigned to General improvements -$ 3,177,766$ 3,177,766$ Capital equipment - 790,218 790,218 City hall improvements - - 896,112 Park improvements - 1,368,178 1,368,178 Total Assigned -$ 5,336,162$ 6,232,274$ Purpose 85 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide A. Defined Benefit Pension Plan - Public Employees Retirement Association (PERA) - Statewide 1. Plan Description The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan (GERP) All full-time and certain part-time employees of the City, are covered by the General Employees Retirement Plan (GERP). GERP members belong to the Coordinated Plan. Coordinated Plan members are covered by Social. Public Employees Police and Fire Plan (PEPFP) The PEPFP, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFP also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. 2. Benefits Provided PERA provides retirement, disability and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. GERP Benefits GERP benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989 receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent for average salary for all years of service. For members hired prior to July 1, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989 normal retirement age is the age for unreduced Social Security benefits capped at 66. Annuities, disability benefits and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be equal to 50 percent of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 86 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) PEPFP Benefits Benefits for the PEPFP members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50 percent after five years up to 100 percent after ten years of credited service. Benefits for PEPFP members first hired after June 30, 2014 vest on a prorated basis from 50 percent after ten years up to 100 percent after twenty years of credited service. The annuity accrual rate is 3.0 percent of average salary for each year of service. A full, unreduced pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Annuities, disability benefits and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be fixed at 1 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least 25 one months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. 3. Contributions Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary and the City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the General Employees Fund for the years ending December 31, 2019, 2018 and 2017 were $328,429, $310,638 and $286,170, respectively. The City’s contributions were equal to the required contributions for each year as set by state statute. Police and Fire Fund Contributions Police and Fire member’s contribution rates increased from 10.80 percent of pay to 11.30 percent and employer rates increased from 16.20 percent to 16.95 percent on January 1, 2019. The City’s contributions to the Police and Fire Fund for the years ending December 31, 2019, 2018 and 2017 were $550,665, $502,203, and $489,202, respectively. The City’s contributions were equal to the required contributions for each year as set by state statute. 4. Pension Costs General Employees Fund Pension Costs At December 31, 2019, the City reported a liability of $3,367,025 for its proportionate share of the General Employees Fund’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million to the fund in 2019. The State of Minnesota is considered a non-employer contributing entity and the State’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $104,662. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2018 through June 30, 2019 relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2019, the City’s proportionate share was0.0609 percent which was an increase of 0.001 percent from its proportion measured as of June 30, 2018. 87 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) City's Proportionate Share of the Net Pension Liability 3,367,025$ State of Minnesota's Proportionate Share of the Net Pension Liability Associated with the City 104,662 Total 3,471,687$ For the year ended December 31, 2019, the City recognized pension expense of $411,243 for its proportionate share of GERF’s pension expense. In addition, the City recognized an additional $7,838 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the GERF. At December 31, 2019, the City reported its proportionate share of the General Employees Plan’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between Expected and Actual Economic Experience 93,546$ 13,645$ Changes in Actuarial Assumptions 7,419 265,361 Net Difference between Projected and Actual Earnings on Plan Investments - 323,097 Changes in Proportion 82,094 30,488 Contributions to GERF Subsequent to the Measurement Date 162,811 - Total 345,870$ 632,591$ Deferred outflows of resources totaling $162,811 related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2020 (174,619)$ 2021 (231,017) 2022 (49,322) 2023 5,426 Police and Fire Fund Pension Costs At December 31, 2019, the City reported a liability of $3,206,578 for its proportionate share of the Police and Fire Fund’s net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2018 through June 30, 2019 relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2019, the City’s proportionate share was 0.3012 percent which was an increase of 0.0124 percent from its proportion measured as of June 30, 2018. For the year ended December 31, 2019, the City recognized pension expense of $902,876 for its proportionate share of the Police and Fire Plan’s pension expense. The City also recognized $40,662 for the year ended December 31, 2019, as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the Police and Fire Fund. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year until the plan is 90 percent funded or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent funded, whichever occurs later. In addition, the state will pay $4.5 million on October 1, 2018 and October 1, 2019 in direct state aid. Thereafter, by October 1 of each year, the state will pay $9 million until full funding is reached or July 1, 2048, whichever is earlier. 88 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) At December 31, 2019, the City reported its proportionate share of Police and Fire Plan’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between Expected and Actual Economic Experience 149,177$ 554,606$ Changes in Actuarial Assumptions 2,880,443 3,723,299 Net Difference between Projected nd Actual Earnings on Plan Investments - 617,797 Changes in Proportion 842,959 105,365 Contributions to PEPFF Subsequent to the Measurement Date 277,431 - Total 4,150,010$ 5,001,067$ The $277,431 reported as deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2020 147,643$ 2021 (145,113) 2022 (1,200,829) 2023 37,446 2024 32,365 5. Actuarial Assumptions The total pension liability in the June 30, 2019 actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP-2014 tables for males or females, as appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25 percent per year for General Employees Plan and 1.0 percent per year for Police and Fire Plan. Actuarial assumptions used in the June 30, 2019 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the General Employees Plan was completed in 2019. The most recent four-year experience study for the Police and Fire Plan was completed in 2016. Economic assumptions were updated in 2018 based on a review of inflation and investment return assumptions. 89 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) The following changes in actuarial assumptions and plan provisions occurred in 2019: General Employees Fund Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions • The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Police and Fire Fund Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions • There have been no changes since the prior valuation. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return on a regular basis using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity 35.5 %5.10 % Private Markets 25.0 5.90 Fixed Income 20.0 0.75 International Equity 17.5 5.90 Cash Equivalents 2.0 - Total 100.00 % Target Expected Real Allocation Rate of Return Long-term 6. Discount Rate The discount rate used to measure the total pension liability in 2019 was 7.50 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund and Police and Fire Fund were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 90 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) 7. Pension Liability Sensitivity The following presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1 Percent 1 Percent Decrease (6.50%)Current (7.50%)Increase (8.50%) General Employees Fund 5,535,207$ 3,367,025$ 1,576,759$ Police and Fire Fund 7,008,984 3,206,578 62 City Proportionate Share of NPL 8. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. B. Defined Contribution Plan There are five City Council members of the City are covered by the Defined Contribution Plan (DCP), a multiple-employer deferred compensation plan administered by PERA. The DCP 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, therefore, there is no future liability to the employer. Minnesota statutes, chapter 353d.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employees contributions must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (0.25) of the assets in each member's account annually. Pension expense for the year is equal to contributions made. The City’s contributions to the DCP for the years ended December 31, 2019, 2018 and 2017 were $2,606, $2,525, and $2,497, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by Minnesota statute. Employee Employer Employee Employer Required Rate 2,606$ 2,606$ 5.00%5.00%5.00% Contribution Amount Percentage of Covered Payroll 91 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 5: Postemployment Benefits other than Pensions A. Plan Description The City administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides healthcare insurance for eligible retirees and their eligible dependents through the City’s group health insurance plan, which covers both active and retired members. Benefit provisions are discussed and proposed by an insurance committee made up of employees from all employee groups (both represented and non-union), with the final approval of the plan being given by the City Manager. The benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City. The Retiree Health Plan does not issue a publicly available financial report. At December 31, 2019, the following employees were covered by the benefit terms: Inactive Plan Members or Beneficiaries Currently Receiving Benefit Payments 3 Active Plan Members 91 Total Plan Members 94 B. Funding Policy All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees. Consequently, participating retirees are considered to receive a secondary benefit know as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. Contribution requirements are set by the City annually on a pay-as-you-go basis. The City contributes none of the cost of current year premiums for eligible retired plan members and their dependents except for the implicit rate subsidy described above. For fiscal year 2019, the City’s average contribution rate was 0.2 percent of covered payroll. For the year 2019, the City contributed $16,942 to the Plan. C. Actuarial Methods and Assumptions The City’s total OPEB liability of $1,126,706 was measured as of December 31, 2019, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2019 using the entry age normal method. Roll forward procedures were used to roll forward the total OPEB liability to the measurement date. The total OPEB liability in the January 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount Rate 2.74% Expected Long-Term Investment Return 4.09% 20-Year Municipal Bond Yield 2.74% Inflation Rate 2.75% Salary Increases 3.50% Medical Premium Trend Rate 8.0% in 2019 grading to 5.0% The discount rate used to measure the total OPEB liability was 2.74%. Assets were projected using expected benefit payments and expected asset returns. Expected benefit payments by year were discounted using the expected asset return assumption for years in which the assets were sufficient to pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are discounted at the 20-year municipal bond rate. The equivalent single rate is the discount rate. Mortality rates were based on the RP-2014 with MP 2018 generational improvements. 92 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 5: Postemployment Benefits other than Pensions (Continued) The actuarial assumptions used in the January 1, 2019 valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. D. Changes in the Total OPEB Liability Total OPEB Liability (a) Balances at December 31, 2018 875,871$ Changes for the Year: Service cost 72,745 Interest 38,452 Differences between expected and actual experience 81,871 Changes in assumptions or other inputs 74,709 Benefit payments (16,942) Net Changes 250,835 Balances at December 31, 2019 1,126,706$ Since the prior measurement date, the following assumptions changed: • The withdrawal table for all employees and retirement table for only employees eligible to retire with Rule of 90 also were updated. Since the prior measurement date, there have been no changes in benefit terms. E. Sensitivity of the Total OPEB Liability The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (3.09 percent) or 1-percentage-point higher (5.09 percent) than the current discount rate: 1 Percent 1 Percent Decrease (1.74%) Current (2.74%)Increase (3.74%) 1,030,715$ 1,126,706$ 1,231,659$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a Healthcare Cost Trent Rates that is 1-percentage point lower (7.50 percent decreasing to 4.00 percent) or 1- percentage-point higher (9.50 percent increasing to 6.00 percent) than the current healthcare trend rate: 1 Percent Decrease Healthcare Cost 1 Percent Increase (7.0% Decreasing Trend Rates (9.0% Decreasing to 4.0%)(8.0% Decreasing to 5.0%)to 6.0%) 1,289,047$ 1,126,706$ 989,191$ 93 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 5: Postemployment Benefits other than Pensions (Continued) F. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2019, the City recognized OPEB expense of $90,750. At December 31, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Net Difference between Projected and Actual Earnings on Plan Investments 75,160$ -$ Changes in Proportion 68,586 43,687 Total 143,746$ 43,687$ Deferred inflows of resources totaling $68,586 related to pensions relating to the City’s changes in actuarial assumptions will result in an increase of the OPEB liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OEPB will be recognized in OPEB expense as follows: Year Ended December 31: 2020 7,981$ 2021 7,981 2022 7,981 2023 7,981 2024 7,981 Thereafter 60,154 Note 6: Other Information A. 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. 94 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 6: Other Information (Continued) B. Risk M anagement 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. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. 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. C. 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, 2019, 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, 2019 is undetermined. D. 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 $168,509 represents the original contributions for working capital; however, the City’s share of subsequent construction costs are not determinable. Therefore, the City's Water enterprise fund has not recorded any subsequent amounts as an equity investment or contributed capital related to the JWC. The following financial information is taken from the JWC’s audited financial statements for the year ended December 31, 2019: Total Assets 18,170,639$ Total Liabilities 567,652 Total Net Position 17,602,987 Total Revenue 8,191,350 Total Expenses 7,328,133 95 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 6: Other Information (Continued) Of the total revenues, $7,921,496 represented assessments paid by member cities. The City’s share of JWC’s total member assessments for the year ended December 31, 2019 was $2,558,706 or 32.30 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 $374,558. The following financial information is taken from the District’s audited financial statements for the year ended December 31, 2019, the most recent information available at the date of this report: Total Assets 4,062,733$ Total Deferred Outflows of Resources 776,485 Total Liabilities 2,136,515 Total Deferred Inflows of Resources 1,071,801 Total Net Position 1,630,902 Total Revenue 2,594,027 Total Expenses 2,884,624 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, 2019, the amount reported as investment in joint venture was $812,189. According to a formula in the agreement, the City’s share of the District’s budget is 50.2 percent. Payments to the District in 2019 totaled $1,216,032.The District’s financial statements for the period ended December 31, 2019 are available at the District office located at: 4251 Xylon Avenue North, New Hope, Minnesota 55428. 96 Draft City of New Hope, Minnesota Notes to the Financial Statements December 31, 2019 Note 6: Other Information (Continued) 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, 2019 was $29,059, representing 7.27 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 $17,273 for these services in 2019. 3. Hennepin Recycling Group (HRG) The City is party to a joint powers agreement with two other cities to create an organization to collect, recycle, and dispose of solid waste in compliance with the Minnesota Waste Management Act. HRG contracts for collection and recycling activities and the City is billed for services provided to its residents. In 2019, total charges of $224,381 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 2019 contribution to the BCWMC for its fiscal year ended January 31, 2019 was $27,987, representing 5.19 percent of member’s contributions for the year. Note 7: Prior Period Adjustment A prior period adjustment of $1,775,342 was made to reallocate land held for resale costs and related sale proceeds, write off a portion of the Cities land held for resale and record accrued interest on an existing interfund loan. Between 2013 and 2017, land held for resale costs and related sale proceeds were recorded in the Economic Development fund, the transactions should have been recorded in the HRA Construction fund and funded with an interfund loan from the Economic Development fund. In the Economic Development Fund, the prior period adjustment of $280,736 reflects an increase in fund balance through the allocation of previously recorded costs and sale proceeds and the retroactive recognition of accrued interest. In the HRA Construction fund, the prior period adjustment of $2,056,077 reflects a decrease in fund balance through the allocation of costs and sale proceeds from the Economic Development fund, the write-down of land held for resale sold in prior years and the retroactive recognition of accrued interest. Note 8: Subsequent Event In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the City is unable to determine if it will have a material impact to its operations. 97 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 98 Draft REQUIRED SUPPLEMENTARY INFORMATION CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 99 Draft City of New Hope, Minnesota Required Supplementary Information For the Year Ended December 31, 2019 Schedule of Employer’s and Non-employer Contributing Entity’s Share of PERA Net Pension Liability - General Employees Retirement Plan State's Proportionate City's Share of Proportionate the Net Pension Share of Liability City's Fiscal the Net Pension Associated with Covered Year Liability the City Total Payroll Ending (a)(b)(a+b)(c) 06/30/19 0.0609 %3,367,025$ 104,662$ 3,471,687 $ 4,282,511$ 78.6 %80.2 % 06/30/18 0.0599 3,323,006 109,063 3,432,069 3,998,415 83.1 79.5 06/30/17 0.0588 3,753,753 47,225 3,800,978 3,931,388 95.5 75.9 06/30/16 0.0608 4,936,658 64,481 5,001,139 3,643,308 135.5 68.9 06/30/15 0.0617 3,197,614 - 3,197,614 3,627,658 88.1 78.2 City's Proportionate Share of the Net Pension Plan Fiduciary City's Liability as a Net Position Proportion of Percentage of as a PercentageCovered the Net Pension Payroll of the Total Liability (a/c)Pension Liability Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Employer’s PERA Contributions - General Employees Retirement Fund Contributions in Relation to the Statutorily Statutorily Contribution City's Required Required Deficiency Covered Year Contribution Contribution (Excess)Payroll Ending (a)(b)(a-b)(c) 12/31/19 328,429$ 328,429$ -$ 4,379,059$ 7.5 % 12/31/18 310,638 310,638 - 4,141,835 7.5 12/31/17 286,170 286,170 - 3,815,600 7.5 12/31/16 280,102 280,102 - 3,734,693 7.5 12/31/15 284,367 284,367 - 3,791,560 7.5 (b/c) Contributions as a Percentage of Payroll Covered Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. 100 Draft City of New Hope, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2019 Notes to the Required Supplementary Information - General Employees Fund Changes in Actuarial Assumptions 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non-vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for non-vested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter. 2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter. Changes in Plan Provisions 2019 - The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Contribution stabilizer provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 - The State’s contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The state’s contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. 2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised. 101 Draft City of New Hope, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2019 Schedule of Employer’s Share of PERA Net Pension Liability - Public Employees Police and Fire Fund State's Proportionate City's Share of Proportionate the Net Pension Share of Liability City's Fiscal the Net Pension Associated with Covered Year Liability the City Total Payroll Ending (a)(b)(a+b)(c) 06/30/19 0.3012 %3,206,578$ -$ 3,206,578$ 3,176,028$ 101.0 %89.3 % 06/30/18 0.2888 3,078,311 - 3,078,311 3,043,700 101.1 88.8 06/30/17 0.2820 3,807,336 - 3,807,336 2,992,514 127.2 85.4 06/30/16 0.2940 11,798,732 - 11,798,732 2,732,301 431.8 63.9 06/30/15 0.2820 3,204,180 - 3,204,180 2,579,768 124.2 86.6 City's Proportionate Share of the Net Pension Liability as a Plan Fiduciary City's Percentage of Net Position Liability (a/c)Pension Liability Proportion of Covered as a Percentage the Net Pension Payroll of the Total Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Employer’s PERA Contributions - Public Employees Police and Fire Fund Contributions in Relation to the Statutorily Statutorily Contribution City's Required Required Deficiency Covered Year Contribution Contribution (Excess)Payroll Ending (a)(b)(a-b)(c) 12/31/19 550,665$ 550,665$ -$ 3,248,759$ 16.95 % 12/31/18 502,203 502,203 - 3,100,017 16.20 12/31/17 489,202 489,202 - 3,019,768 16.20 12/31/16 444,511 444,511 - 2,743,893 16.20 12/31/15 448,029 448,029 - 2,765,611 16.20 (b/c) Contributions as a Percentage of Covered Payroll Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Notes to the Required Supplementary Information - Public Employees Police and Fire Fund Changes in actuarial assumptions 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2016 to MP-2017. 102 Draft City of New Hope, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2019 Notes to the Required Supplementary Information - Public Employees Police and Fire Fund (Continued) 2017 - Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent for non-vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.0 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65 percent to 60 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.6 percent to 7.5 percent. 2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2037 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 5.6 percent. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2037 and 2.5 percent per year thereafter. Changes in plan provisions 2018 - As set by statute, the assumed post-retirement benefit increase was changed from 1.0 percent per year through 2064 and 2.5 percent per year, thereafter, to 1.0 percent for all years, with no trigger. An end date of July 1, 2048 was added to the existing $9.0 million state contribution. New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100 percent funding, or July 1, 2048, if earlier. Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019 and 11.80 percent of pay, effective January 1, 2020. Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019 and 17.70 percent of pay, effective January 1, 2020. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017- Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The combined service annuity (CSA) load was 30.00 percent for vested and non-vested, deferred members. The CSA has been changed to 33.00 percent for vested members and 2.00 percent for non-vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed postretirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum. 2015 - The post-retirement benefit increase to be paid after attainment of the 90 percent funding threshold was changed, from inflation up to 2.5 percent, to a fixed rate of 2.5 percent. 103 Draft City of New Hope, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2019 Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 2019 2018 Total OPEB Liability Service cost 72,745$ 64,269$ Interest 38,452 31,335 Differences between expected and actual experience 81,871 - Changes in assumptions 74,709 (53,393) Benefit payments (16,942) (25,947) Net Change in Total OPEB Liability 250,835 16,264 Total OPEB Liability - Beginning 875,871 859,607 Total OPEB Liability - Ending 1,126,706$ 875,871$ Covered payroll 6,400,000$ 6,400,000$ City's total OPEB liability as a percentage of covered payroll 17.60 %13.69 % 2018 changes to plan Assumptions: The discout rate was adjusted from 3.44 percent to 4.09 percent from the prior measurment There were no other changes in Plan provisions, cost allocation procedures, contribution allocation procedures, or methods from the previous measurement. There were no adjustments of prior measurements or use of approximations which would materially impact the results. Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. 104 Draft COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 105 Draft City of New Hope, Minnesota Nonmajor Governmental Funds Combining Balance Sheet December 31, 2019 Total Nonmajor Special Capital Debt Governmental Revenue Projects Service Funds Assets Cash and temporary investments 321,552$ 3,385,706$ 2,296,665$ 6,003,923$ Receivables Accrued interest - 5,132 - 5,132 Accounts 24,329 - - 24,329 Special assessments 7,807 58,797 - 66,604 Due from other funds - 310,725 - 310,725 Advances to other funds - 1,659,873 - 1,659,873 Total Assets 353,688$ 5,420,233$ 2,296,665$ 8,070,586$ Liabilities Accounts and contracts payable 184$ 11,474$ -$ 11,658$ Due to other funds - 10,588 220,636 231,224 Unearned revenue - 13,800 - 13,800 Total Liabilities 184 35,862 220,636 256,682 Deferred Inflows of Resources Unavailable revenue - special assessments - 58,797 - 58,797 Fund Balances Restricted for Debt service - - 2,296,665 2,296,665 Public safety police expenditures 132,730 - - 132,730 Ice arena 5,390 - - 5,390 Committed for Solid waste operations 215,384 - - 215,384 Assigned for General improvements - 3,177,766 - 3,177,766 Capital equipment - 790,218 - 790,218 Park improvements - 1,368,178 - 1,368,178 Unassigned - (10,588) (220,636) (231,224) Total Fund Balances 353,504 5,325,574 2,076,029 7,755,107 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 353,688$ 5,420,233$ 2,296,665$ 8,070,586$ See Accountant's Compilation Report. 106 Draft City of New Hope, Minnesota Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2019 Total Nonmajor Special Capital Debt Governmental Revenue Projects Service Funds Revenues Taxes Property taxes -$ 649,800$ 2,579,402$ 3,229,202$ Charges for services 224,794 45,605 - 270,399 Fines and forfeitures - - - - Special assessments - 9,236 - 9,236 Investment earnings 10,823 175,700 29,831 216,354 Miscellaneous - 100,500 - 100,500 Total Revenues 235,617 980,841 2,609,233 3,825,691 Expenditures Current Public safety 452 - - 452 Public works 225,116 1,451 - 226,567 Capital outlay Public works - 492 - 492 Culture and recreation - 323,193 - 323,193 Debt service Principal - - 564,509 564,509 Interest - - 1,139,981 1,139,981 Total Expenditures 225,568 325,136 1,704,490 2,255,194 Excess of Revenues Over Expenditures 10,049 655,705 904,743 1,570,497 Other Financing Sources (Uses) Transfers in - 354,967 - 354,967 Bonds issued - - 97,331 97,331 Transfers out (96,086) (351,800) - (447,886) Total Other Financing Sources (Uses)(96,086) 3,167 97,331 4,412 Net Change in Fund Balances (86,037) 658,872 1,002,074 1,574,909 Fund Balances, January 1 439,541 4,666,702 1,073,955 6,180,198 Fund Balances, December 31 353,504$ 5,325,574$ 2,076,029$ 7,755,107$ See Accountant's Compilation Report. 107 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 108 Draft 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. CEE Revolving Loan Fund - This fund is used account for Center for Energy and Environment revolving loans. 109 Draft City of New Hope, Minnesota Nonmajor Special Revenue Funds Subcombining Balance Sheet December 31, 2019 9021 9016 9017 9018 Police Solid Waste Ice Arena CEE Revolving Forfeitures Management Endowment Loan Fund Total Assets Cash and temporary investments 132,730$ 183,432$ 5,390$ -$ 321,552$ Receivables Accounts - 24,329 - - 24,329 Special assessments - 7,807 - - 7,807 Total Assets 132,730$ 215,568$ 5,390$ -$ 353,688$ Liabilities Accounts and contracts payable -$ 184$ -$ -$ 184$ Fund Balances Restricted for Public safety police expenditures 132,730 - - - 132,730 Ice arena - - 5,390 - 5,390 Committed for Solid waste operations - 215,384 - - 215,384 Total Fund Balances 132,730 215,384 5,390 - 353,504 Total Liabilities and Fund Balances 132,730$ 215,568$ 5,390$ -$ 353,688$ See Accountant's Compilation Report. 110 Draft 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, 2019 9021 9016 9017 9018 Police Solid Waste Ice Arena CEE Revolving Forfeitures Management Endowment Loan Fund Total Revenues Charges for services -$ 224,794$ -$ - 224,794$ Fines and forfeitures - - - - - Investment earnings 4,310 6,338 175 - 10,823 Total Revenues 4,310 231,132 175 - 235,617 Expenditures Current Public safety Supplies 452 - - - 452 Public works Other services and charges - 225,116 - - 225,116 Total Expenditures 452 225,116 - - 225,568 Excess of Revenues Over Expenditures 3,858 6,016 175 - 10,049 Other Financing Uses Transfers out - - - (96,086) (96,086) Net Change in Fund Balances 3,858 6,016 175 (96,086) (86,037) Fund Balances, January 1 128,872 209,368 5,215 96,086 439,541 Fund Balances, December 31 132,730$ 215,384$ 5,390$ -$ 353,504$ See Accountant's Compilation Report. 111 Draft 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, 2019 Actual Variance with Original Final Amounts Final Budget Revenues Charges for services 225,000$ 225,000$ 224,794$ (206)$ Investment earnings 1,000 1,000 6,338 5,338 Total Revenues 226,000 226,000 231,132 5,132 Expenditures Current Public works Other services and charges 224,735 224,735 225,116 (381) Net Change in Fund Balances 1,265 1,265 6,016 4,751 Fund Balances, January 1 209,368 209,368 209,368 - Fund Balances, December 31 210,633$ 210,633$ 215,384$ 4,751$ Budgeted Amounts See Accountant's Compilation Report. 112 Draft 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 equipment. Xylon Avenue Improvement Fund - This fund accounts for the accumulation of reserves for the Xylon Avenue Improvement project. Park Infrastructure Fund - This fund is used to account for park improvement projects. Temporary Financing Fund - is used to account for various capital project and capital outlay purchases until permanent financing is acquired. 2016 Street Improvement Project Fund - This fund is used to account for the 2016 street improvement project. 2017 Street Improvement Project Fund - This fund is used to account for the 2017 street improvement project. 113 Draft City of New Hope, Minnesota Nonmajor Capital Projects Funds Subcombining Balance Sheet December 31, 2019 9010 9223 9233 9242 9250 9251 2016 Street 2017 Street Fire Xylon Avenue Park Temporary Improvement Improvement Capital Projects Improvements Infrastructure Financing Project Project Total Assets Cash and temporary investments 790,218$ -$ 1,393,452$ 1,202,036$ -$ -$ 3,385,706$ Receivables Accrued interest - - - 5,132 - - 5,132 Special assessments - - - 58,797 - - 58,797 Due from other funds - - - 310,725 - - 310,725 Advances to other funds - - - 1,659,873 - - 1,659,873 Total Assets 790,218$ -$ 1,393,452$ 3,236,563$ -$ -$ 5,420,233$ Liabilities Accounts and contracts payable -$ -$ 11,474$ -$ -$ -$ 11,474$ Due to other funds - - - - 10,588 - 10,588 Unearned revenue - - 13,800 - - - 13,800 Total Liabilities - - 25,274 - 10,588 - 35,862 Deferred Inflows of Resources Unavailable revenue - special assessments - - - 58,797 - - 58,797 Fund Balances Assigned to General improvements - - - 3,177,766 - - 3,177,766 Capital equipment 790,218 - - - - - 790,218 Park improvements - - 1,368,178 - - - 1,368,178 Unassigned - - - - (10,588) - (10,588) Total Fund Balances 790,218 - 1,368,178 3,177,766 (10,588) - 5,325,574 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 790,218$ -$ 1,393,452$ 3,236,563$ -$ -$ 5,420,233$ See Accountant's Compilation Report. 114 Draft 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, 2019 9010 9223 9233 9242 9250 9251 2016 Street 2017 Street Fire Xylon Avenue Park Temporary Improvement Improvement Capital Projects Improvements Infrastructure Financing Project Project Total Revenues Taxes Property taxes -$ -$ 649,800$ -$ -$ -$ 649,800$ Intergovernmental Charges for services - - 45,605 - - - 45,605 Special assessments - - - 9,236 - - 9,236 Investment earnings 23,863 - 83,446 68,391 - - 175,700 Miscellaneous - - 100,500 - - - 100,500 Total Revenues 23,863 - 879,351 77,627 - - 980,841 Expenditures Current Public works - 1,451 - - - - 1,451 Capital outlay Public works - - - - 492 - 492 Culture and recreation - - 323,193 - - - 323,193 Total Expenditures - 1,451 323,193 - 492 - 325,136 Excess (Deficiency) of Revenues Over (Under) Expenditures 23,863 (1,451) 556,158 77,627 (492) - 655,705 Other Financing Sources (Uses) Transfers in 150,000 2,230 - - - 202,737 354,967 Transfers out (51,800) - (300,000) - - - (351,800) Total Other Financing Sources (Uses)98,200 2,230 (300,000) - - 202,737 3,167 Net Change in Fund Balances 122,063 779 256,158 77,627 (492) 202,737 658,872 Fund Balances, January 1 668,155 (779) 1,112,020 3,100,139 (10,096) (202,737) 4,666,702 Fund Balances, December 31 790,218$ -$ 1,368,178$ 3,177,766$ (10,588)$ -$ 5,325,574$ See Accountant's Compilation Report. 115 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 116 Draft 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. 2015A G.O. Tax Increment Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2015A G.O. Tax Increment Bonds. 2010B G.O. Equipment Bonds Fund - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2010B G.O. Equipment Bonds. 2016A G.O. Improvement Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2016A G.O. Improvement Bonds. 2015B G.O. Improvement Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2015B G.O. Improvement Bonds. 2017A G.O. Improvement Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2017A G.O. Improvement Bonds. 2018A G.O. Improvement Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2018A G.O. Improvement Bonds. 2019A G.O. Improvement Bonds - This fund accounts for revenue from property taxes and interest income to be used for the payment of principal and interest on the City’s 2019A G.O. Improvement Bonds. 117 Draft City of New Hope, Minnesota Nonmajor Debt Service Funds Subcombining Balance Sheet December 31, 2019 9144 9145 9148 9149 2015A 2010B 2016A 2015B G.O.G.O.G.O.G.O. Tax Increment Equipment Improvement Improvement Bonds Bonds Bonds Bonds Assets Cash and temporary investments 239,021$ 219,315$ 250,875$ 125,723$ Liabilities Due to other funds -$ -$ -$ -$ Fund Balances Restricted for debt service 239,021 219,315 250,875 125,723 Unassigned - - - - Total Fund Balances 239,021 219,315 250,875 125,723 Total Liabilities and Fund Balances 239,021$ 219,315$ 250,875$ 125,723$ See Accountant's Compilation Report. 118 Draft 9150 9151 9152 2017A 2018A 2019A G.O.G.O.G.O. Improvement Improvement Improvement Bonds Bonds Bonds Total 1,364,400$ -$ 97,331$ 2,296,665$ -$ 220,636$ -$ 220,636 1,364,400 - 97,331 2,296,665 - (220,636) - (220,636) 1,364,400 (220,636) 97,331 2,076,029 1,364,400$ -$ 97,331$ 2,296,665$ See Accountant's Compilation Report. 119 Draft City of New Hope, Minnesota Nonmajor Debt Service Funds Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2019 9144 9145 9148 9149 2015A 2010B 2016A 2015B G.O.G.O.G.O.G.O. Tax Increment Equipment Improvement Improvement Bonds Bonds Bonds Bonds Revenues Property taxes 237,118$ 161,595$ 262,397$ 208,840$ Investment earnings 2,374 4,375 4,793 5,282 Total Revenues 239,492 165,970 267,190 214,122 Expenditures Debt service Principal 148,925 145,000 151,238 119,346 Interest 57,160 5,640 82,929 50,567 Total Expenditures 206,085 150,640 234,167 169,913 Excess (Deficiency) of Revenues Over (Under) Expenditures 33,407 15,330 33,023 44,209 Other Financing Sources Bonds issued - - - - Net Change in Fund Balances 33,407 15,330 33,023 44,209 Fund Balances, January 1 205,614 203,985 217,852 81,514 Fund Balances, December 31 239,021$ 219,315$ 250,875$ 125,723$ See Accountant's Compilation Report. 120 Draft 9150 9151 9152 2017A 2018A 2019A G.O.G.O.G.O. Improvement Improvement Improvement Bonds Bonds Bonds Total 1,709,452$ -$ -$ 2,579,402$ 13,007 - - 29,831 1,722,459 - - 2,609,233 - - - 564,509 723,049 220,636 - 1,139,981 723,049 220,636 - 1,704,490 999,410 (220,636) - 904,743 - - 97,331 97,331 999,410 (220,636) 97,331 1,002,074 364,990 - - 1,073,955 1,364,400$ (220,636)$ 97,331$ 2,076,029$ See Accountant's Compilation Report. 121 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 122 Draft 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, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues Taxes Property taxes 10,382,448$ 10,382,448$ 10,297,018$ (85,430)$ 9,971,064$ Franchise taxes 472,357 472,357 533,213 60,856 440,000 Total Taxes 10,854,805 10,854,805 10,830,231 (24,574) 10,411,064 Licenses and permits Business regulatory licenses 76,380 76,380 70,783 (5,597) 77,504 Non-business licenses and permits 304,930 304,930 249,655 (55,275) 290,427 Total Licenses and permits 381,310 381,310 320,438 (60,872) 367,931 Intergovernmental Local government aid 697,864 697,864 697,864 - 693,117 Highway maintenance aid 191,000 191,000 212,664 21,664 214,477 Other federal, state, and local grants 92,208 92,208 120,591 28,383 118,366 State insurance premium tax 272,000 272,000 311,424 39,424 306,678 Total Intergovernmental 1,253,072 1,253,072 1,342,543 89,471 1,332,638 Charges for services General government 188,850 188,850 152,308 (36,542) 171,986 Public safety 373,500 373,500 403,636 30,136 414,032 Public works 5,450 5,450 4,243 (1,207) 4,473 Culture and recreation 516,850 516,850 504,090 (12,760) 512,730 Total Charges for services 1,084,650 1,084,650 1,064,277 (20,373) 1,103,221 Fines and forfeitures 250,000 250,000 227,343 (22,657) 226,757 Special assessments 30,000 30,000 50,034 20,034 39,569 Investment earnings 35,000 35,000 106,033 71,033 103,969 Miscellaneous 3,000 3,000 23,326 20,326 33,766 Total Revenues 13,891,837 13,891,837 13,964,225 72,388 13,618,915 Budgeted Amounts 2019 See Accountant's Compilation Report. 123 Draft 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, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures Current General government Mayor and City Council Personnel services 56,600$ 56,600$ 52,142$ 4,458$ 53,399$ Supplies 2,000 2,000 1,439 561 2,572 Other services and charges 36,328 36,328 34,231 2,097 35,352 Total Mayor and City Council 94,928 94,928 87,812 7,116 91,323 City hall Supplies 23,500 23,500 22,644 856 18,227 Other services and charges 278,002 278,002 279,395 (1,393) 261,142 Total City hall 301,502 301,502 302,039 (537) 279,369 City Manager Personnel services 380,800 380,800 401,782 (20,982) 378,233 Supplies 5,800 5,800 5,340 460 6,150 Other services and charges 16,735 16,735 14,080 2,655 20,227 Total City Manager 403,335 403,335 421,202 (17,867) 404,610 Elections Personnel services - - - - 26,151 Supplies - - - - 1,487 Other services and charges 4,312 4,312 4,185 127 5,373 Total Elections 4,312 4,312 4,185 127 33,011 Finance Personnel services 179,000 179,000 171,471 7,529 160,303 Supplies 1,500 1,500 1,328 172 1,310 Other services and charges 101,712 101,712 134,364 (32,652) 130,779 Total Finance 282,212 282,212 307,163 (24,951) 292,392 Auditing Other services and charges 25,941 25,941 24,441 1,500 24,928 Assessing Other services and charges 154,000 154,000 154,000 - 147,000 Legal Other services and charges 35,000 35,000 16,097 18,903 16,272 Human resources Personnel services 257,300 257,300 263,755 (6,455) 255,342 Supplies 450 450 451 (1) 247 Other services and charges 35,091 35,091 23,020 12,071 30,319 Total Human resources 292,841 292,841 287,226 5,615 285,908 Budgeted Amounts 2019 See Accountant's Compilation Report. 124 Draft 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, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Actual Variance with Actual Original Final Amounts Final Budget Amounts Budgeted Amounts 2019 Expenditures (Continued) Current (continued) General government (continued) Planning and zoning Personnel services 134,700$ 134,700$ 112,208$ 22,492$ 30,608$ Supplies 700 700 285 415 151 Other services and charges 37,833 37,833 35,825 2,008 35,543 Total Planning and zoning 173,233 173,233 148,318 24,915 66,302 Communication Personnel services 98,100 98,100 99,606 (1,506) 97,021 Supplies 6,140 6,140 5,463 677 12,404 Other services and charges 43,094 43,094 42,928 166 37,013 Total Communication 147,334 147,334 147,997 (663) 146,438 Total General Government 1,914,638 1,914,638 1,900,480 14,158 1,787,553 Public safety Police Personnel services 5,217,600 5,217,600 5,078,553 139,047 4,839,787 Supplies 90,800 90,800 138,034 (47,234) 80,253 Other services and charges 1,187,910 1,187,910 1,169,754 18,156 1,060,868 Total Police 6,496,310 6,496,310 6,386,341 109,969 5,980,908 Police reserves Personnel services - - 266 (266) - Supplies 2,200 2,200 1,903 297 - Other services and charges 27,023 27,023 30,179 (3,156) 21,632 Total Police reserves 29,223 29,223 32,348 (3,125) 21,632 Fire and safety Supplies 2,000 2,000 41 1,959 - Other services and charges 1,250,894 1,250,894 1,244,756 6,138 1,216,012 Total Fire and safety 1,252,894 1,252,894 1,244,797 8,097 1,216,012 Animal control Personnel services 81,900 81,900 81,838 62 76,300 Supplies 475 475 204 271 - Other services and charges 25,133 25,133 24,830 303 39,668 Total Animal control 107,508 107,508 106,872 636 115,968 See Accountant's Compilation Report. 125 Draft 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, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Actual Variance with Actual Original Final Amounts Final Budget Amounts Budgeted Amounts 2019 Expenditures (Continued) Current (continued) Public safety (continued) Protective inspection Personnel services 495,700$ 495,700$ 490,391$ 5,309$ 493,797$ Supplies 2,400 2,400 1,024 1,376 1,403 Other services and charges 170,484 170,484 165,714 4,770 162,404 Total Protective inspection 668,584 668,584 657,129 11,455 657,604 Total Public Safety 8,554,519 8,554,519 8,427,487 127,032 7,992,124 Public works Street maintenance Personnel services 529,700 529,700 607,772 (78,072) 546,460 Supplies 132,000 132,000 90,691 41,309 87,301 Other services and charges 866,338 866,338 812,459 53,879 824,707 Total Street maintenance 1,528,038 1,528,038 1,510,922 17,116 1,458,468 Engineering Other services and charges 35,000 35,000 53,226 (18,226) 32,577 Total Public Works 1,563,038 1,563,038 1,564,148 (1,110) 1,491,045 Culture and recreation Recreation Personnel services 650,200 650,200 646,135 4,065 615,411 Supplies 114,050 114,050 109,784 4,266 123,751 Other services and charges 255,992 255,992 253,962 2,030 243,554 Total Recreation 1,020,242 1,020,242 1,009,881 10,361 982,716 Parks Personnel services 619,300 619,300 582,433 36,867 552,495 Supplies 37,990 37,990 35,450 2,540 38,682 Other services and charges 384,340 384,340 353,689 30,651 395,919 Total Parks 1,041,630 1,041,630 971,572 70,058 987,096 Swimming pool Personnel services 45,900 45,900 45,933 (33) 43,621 Other services and charges 1,145 1,145 5,199 (4,054) 1,708 Total Swimming pool 47,045 47,045 51,132 (4,087) 45,329 Total Culture and Recreation 2,108,917 2,108,917 2,032,585 76,332 2,015,141 Total Current Expenditures 14,141,112 14,141,112 13,924,700 216,412 13,285,863 See Accountant's Compilation Report. 126 Draft 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, 2019 (With Comparative Actual Amounts for the Year Ended December 31, 2018) 2018 Actual Variance with Actual Original Final Amounts Final Budget Amounts Budgeted Amounts 2019 Expenditures (Continued) Capital outlay General government 10,000$ 10,000$ 3,967$ 6,033$ 555$ Public safety 73,000 73,000 55,081 17,919 115,635 Total Capital outlay 83,000 83,000 59,048 23,952 116,190 Total Expenditures 14,224,112 14,224,112 13,983,748 240,364 13,402,053 Excess (Deficiency) of Revenues Over (Under) Expenditures (332,275) (332,275) (19,523) 312,752 216,862 Other Financing Sources (Uses) Transfers in 332,275 332,275 332,275 - 325,434 Transfers out - - (354,000) (354,000) (250,000) Total Other Financing Sources (Uses)332,275 332,275 (21,725) (354,000) 75,434 Net Change in Fund Balances - - (41,248) (41,248) 292,296 Fund Balances, January 1 7,180,951 7,180,951 7,180,951 - 6,888,655 Fund Balances, December 31 7,180,951$ 7,180,951$ 7,139,703$ (41,248)$ 7,180,951$ See Accountant's Compilation Report. 127 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 128 Draft 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. 129 Draft City of New Hope, Minnesota Internal Service Funds Combining Statement of Net Position December 31, 2019 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Assets Current Assets Cash and temporary investments 7,517,443$ 1,469,865$ 594,661$ 549,657$ 10,131,626$ Receivables Accounts - - 4,475 - 4,475 Inventories 62,575 - - - 62,575 Total Current Assets 7,580,018 1,469,865 599,136 549,657 10,198,676 Noncurrent Assets Capital assets Land 85,647 - - - 85,647 Buildings and structures 3,158,296 - - - 3,158,296 Vehicles and equipment 9,060,913 - - 393,020 9,453,933 Construction in progress - - - 22,997 22,997 Less: accumulated depreciation (9,495,628) - - (307,461) (9,803,089) Total Capital Assets (Net of Accumulated Depreciation)2,809,228 - - 108,556 2,917,784 Total Assets 10,389,246 1,469,865 599,136 658,213 13,116,460 Deferred Outflows of Resources Deferred pension resources 19,129 - - - 19,129 Deferred other postemployment benefit resources - - 119,013 - 119,013 Total Deferred Outflows of Resources 19,129 - 119,013 - 138,142 Liabilities Current Liabilities Accrued salaries payable 8,106 42,974 93,445 - 144,525 Accounts and contracts payable 40,084 - 56,784 38,797 135,665 Due to other governments 580 - - - 580 Compensated absences payable, current portion - 75,388 - - 75,388 Total Current Liabilities 48,770 118,362 150,229 38,797 356,158 Noncurrent Liabilities Other postemployment benefits payable - - 932,848 - 932,848 Pension liability 186,220 - - - 186,220 Compensated absences payable - 678,493 - - 678,493 Total Noncurrent Liabilities 186,220 678,493 932,848 - 1,797,561 Total Liabilities 234,990 796,855 1,083,077 38,797 2,153,719 Deferred Inflows of Resources Deferred pension resources 34,987 - - - 34,987 Deferred other postemployment benefit resources - - 77,950 - 77,950 Total Deferred Inflows of Resources 34,987 - 77,950 - 112,937 Net Position Net investment in capital assets 2,809,228 - - 108,556 2,917,784 Unrestricted 7,329,170 673,010 (442,878) 510,860 8,070,162 Total Net Position 10,138,398$ 673,010$ (442,878)$ 619,416$ 10,987,946$ See Accountant's Compilation Report. 130 Draft City of New Hope, Minnesota Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Position For the Year Ended December 31, 2019 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Operating Revenues Billings to departments 2,262,880$ 710,451$ 10,415$ 757,144$ 3,740,890$ Other 9,279 - 3,893 - 13,172 Total Operating Revenues 2,272,159 710,451 14,308 757,144 3,754,062 Operating Expenses Personnel services 371,019 598,174 96,071 - 1,065,264 Supplies 288,803 - - 54,305 343,108 Utilities 62,318 - - 30,345 92,663 Other services and charges 322,268 - 89,873 581,917 994,058 Depreciation 668,467 - - 9,295 677,762 Total Operating Expenses 1,712,875 598,174 185,944 675,862 3,172,855 Operating Income (Loss)559,284 112,277 (171,636) 81,282 581,207 Nonoperating Revenues Investment earnings 228,495 - - 17,575 246,070 Gain on sale of capital assets 37,864 - - - 37,864 Total Nonoperating Revenues 266,359 - - 17,575 283,934 Income (Loss) Before Contributions and Transfers 825,643 112,277 (171,636) 98,857 865,141 Transfers Out (269,750) - - (55,599) (325,349) Change in Net Position 555,893 112,277 (171,636) 43,258 539,792 Net Position, January 1 9,582,505 560,733 (271,242) 576,158 10,448,154 Net Position, December 31 10,138,398$ 673,010$ (442,878)$ 619,416$ 10,987,946$ See Accountant's Compilation Report. 131 Draft City of New Hope, Minnesota Internal Service Funds Combining Statement of Cash Flows For the Year Ended December 31, 2019 9402 9408 9407 9410 Central Employee Insurance Information Garage Leave Reserve Technology Totals Cash Flows from Operating Activities Receipts from interfund services provided 2,262,880$ 710,451$ 10,798$ 757,144$ 3,741,273$ Other operating receipts 8,845 - 3,893 - 12,738 Payments to suppliers (677,771) - (27,091) (691,835) (1,396,697) Payments to employees (336,268) (545,271) - - (881,539) Net Cash Provided (Used) by Operating Activities 1,257,686 165,180 (12,400) 65,309 1,475,775 Cash Flows from Noncapital Financing Activities Transfers out (269,750) - - (55,599) (325,349) Cash Flows from Capital and Related Financing Activities Acquisition capital assets (279,793) - - (71,634) (351,427) Proceeds from sale of assets 37,864 - - - 37,864 Net Cash Used by Capital and Related Financing Activities (241,929) - - (71,634) (313,563) Investment earnings 228,495 - - 17,575 246,070 Net Increase (Decrease) in Cash and Cash Equivalents 974,502 165,180 (12,400) (44,349) 1,082,933 Cash and Cash Equivalents, January 1 6,542,941 1,304,685 607,061 594,006 9,048,693 Cash and Cash Equivalents, December 31 7,517,443$ 1,469,865$ 594,661$ 549,657$ 10,131,626$ Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities Operating income (loss)559,284$ 112,277$ (171,636)$ 81,282$ 581,207$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation 668,467 - - 9,295 677,762 (Increase) decrease in assets Accounts receivable - - 383 - 383 Inventories 7,570 - - - 7,570 (Increase) decrease in deferred out flows of resources Deferred pension resources 9,825 - - - 9,825 Deferred other postemployment benefit resources - - (119,013) - (119,013) Increase (decrease) in liabilities Accounts and contracts payable (12,024) - 48,904 23,278 60,158 Accrued salaries payable 1,124 13,407 13,878 - 28,409 Due to other governments 72 - - (48,546) (48,474) Compensated absences payable - 39,496 - - 39,496 Other postemployment benefits payable - - 178,915 - 178,915 Pension liability 29,720 - - - 29,720 Increase (decrease) in deferred inflows of resources Deferred pension resources (6,352) - - - (6,352) Deferred other postemployment benefit resources - - 36,169 - 36,169 Net Cash Provided (Used) by Operating Activities 1,257,686$ 165,180$ (12,400)$ 65,309$ 1,475,775$ Cash Flows from Investing Activities See Accountant's Compilation Report. 132 Draft STATISTICAL SECTION (UNAUDITED) CITY OF NEW HOPE NEW HOPE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 133 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 134 Draft 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. De mographic 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 City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 135 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 136 Draft 2019 2018 Revenues Taxes Property taxes 15,266,561$ 12,904,297$ 18.31 % Tax increments 1,274,922 1,112,753 14.57 Franchise taxes 957,448 945,244 1.29 Licenses and permits 320,438 367,931 (12.91) Intergovernmental 3,947,039 2,195,760 79.76 Charges for services 1,376,176 1,399,998 (1.70) Fines and forfeitures 227,343 230,657 (1.44) Special assessments 197,566 282,589 (30.09) Investment earnings 1,166,238 658,606 77.08 Miscellaneous 173,679 33,966 411.33 Total Revenues 24,907,410$ 20,131,801$ 23.72 % Per Capita 1,143$ 934$ 22.33 % Expenditures Current General government 1,900,480$ 1,787,553$ 6.32 % Public safety 8,427,939 7,997,311 5.38 Public works 1,790,715 1,717,815 4.24 Culture and recreation 2,032,585 2,015,729 0.84 Economic development 514,446 815,352 (36.91) Capital outlay 22,573,350 12,956,485 74.22 Debt service Principal 968,674 799,734 21.12 Interest 1,351,273 769,497 75.60 Bond issuance costs 12,475 148,365 (91.59) Total Expenditures 39,571,937$ 29,007,841$ 36.42 % Per Capita 1,816$ 1,346$ 34.92 % Total Long-term Indebtedness (excluding unamortized premiums)44,252,170$ 39,985,844$ 10.67 % Per capita 2,031 1,856 9.43 General Fund Balance - December 31 7,139,703$ 7,180,951$ (0.57) % Per capita 328 333 (1.50) 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. City of New Hope, Minnesota Summary Financial Report Revenues and Expenditures For General Operations Governmental Funds (Decrease) Increase Percent Total For the Year Ended December 31, 2019 See Accountant's Compilation Report. 137 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) 2011 2010 (Restated)2012 2013 Governmental Activities Net investment in capital assets 16,495,175$ 20,628,143$ 26,793,142$ 30,509,373$ Restricted 9,279,142 6,018,734 1,619,696 1,619,394 Unrestricted 21,971,477 21,845,278 22,746,207 23,704,592 Total Governmental Activities Net Position 47,745,794$ 48,492,155$ 51,159,045$ 55,833,359$ Business-type Activities Net investment in capital assets 9,989,405$ 11,114,666$ 12,843,624$ 14,142,276$ Restricted - - 150,000 300,000 Unrestricted 2,541,156 3,978,803 2,735,144 2,496,008 Total Business-type Activities Net Position 12,530,561$ 15,093,469$ 15,728,768$ 16,938,284$ Total Primary Government Net investment in capital assets 26,484,580$ 31,742,809$ 39,636,766$ 44,651,649$ Restricted 9,279,142 6,018,734 1,769,696 1,919,394 Unrestricted 24,512,633 25,824,081 25,481,351 26,200,600 Total Primary Government 60,276,355$ 63,585,624$ 66,887,813$ 72,771,643$ Fiscal Year 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. The City implemented GASB Statement No. 67 and GASB Statement No. 68 in fiscal 2015. Net position information has not been restated for prior years. The City implemented GASB Statement No. 75 in 2017 with retroactive application. The 2017 net position has been restated to reflect the change. See Accountant's Compilation Report. 138 Draft (Restated) 2014 2015 2016 2017 2018 2019 26,305,906$ 27,549,276$ 29,951,754$ 27,747,845$ 27,888,417$ 30,141,723$ 5,680,117 5,917,848 4,893,801 6,207,578 6,000,843 6,501,383 23,130,558 14,623,043 11,081,824 11,728,807 14,384,257 16,813,287 55,116,581$ 48,090,167$ 45,927,379$ 45,684,230$ 48,273,517$ 53,456,393$ 14,757,333$ 16,087,559$ 19,286,134$ 18,663,872$ 18,783,898$ 19,315,353$ 455,000 627,939 868,853 1,031,673 1,160,680 1,358,401 1,798,707 (825,297) (1,839,376) 84,741 1,783,306 3,067,584 17,011,040$ 15,890,201$ 18,315,611$ 19,780,286$ 21,727,884$ 23,741,338$ 41,063,239$ 43,636,835$ 49,237,888$ 46,411,717$ 46,672,315$ 49,457,076$ 6,135,117 6,545,787 5,762,654 7,239,251 7,161,523 7,859,784 24,929,265 13,797,746 9,242,448 11,813,548 16,167,563 19,880,871 72,127,621$ 63,980,368$ 64,242,990$ 65,464,516$ 70,001,401$ 77,197,731$ Fiscal Year See Accountant's Compilation Report. 139 Draft 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) (Restated) 2010 2011 2012 2013 Expenses Governmental Activities General government 2,552,425$ 1,841,145$ 1,931,318$ 1,837,194$ Public safety 5,864,775 6,129,860 6,062,362 6,238,779 Public works 1,625,959 1,795,189 2,126,043 1,790,669 Culture and recreation 1,899,105 1,882,279 1,928,591 1,946,243 Economic development 192,431 536,433 762,202 431,332 Interest on long-term debt 252,224 236,827 407,744 289,009 Total Governmental Activities Expenses 12,386,919 12,421,733 13,218,260 12,533,226 Business-type Activities Sewer utility 1,928,845 2,068,282 2,220,438 2,310,604 Water utility 2,915,757 3,530,521 3,682,602 3,215,714 Golf course 346,345 322,679 298,555 262,894 Ice arena 712,153 844,828 771,628 957,784 Storm water 430,899 485,943 425,112 768,610 Street lighting 104,099 113,753 104,721 117,518 Total Business-type Activities Expenses 6,438,098 7,366,006 7,503,056 7,633,124 Total Expenses 18,825,017$ 19,787,739$ 20,721,316$ 20,166,350$ Program Revenues Governmental Activities Charges for services General government 984,855$ 220,629$ 177,174$ 198,297$ Public safety 218,732 877,159 804,725 880,843 Public works - 219,353 219,548 226,228 Culture and recreation 562,383 637,077 653,293 672,067 Economic development 104,713 98,139 94,664 - Operating grants and contributions 1,356,292 783,382 2,162,263 828,276 Capital grants and contributions 787,047 1,107,042 245,290 3,929,565 Total Governmental Activities Program Revenues 4,014,022 3,942,781 4,356,957 6,735,276 Business-Type Activities Charges for services Sewer utility 2,292,300 2,352,635 2,376,021 2,443,202 Water utility 3,082,771 3,169,859 3,581,225 3,460,008 Golf course 313,941 278,788 296,316 268,133 Ice arena 741,266 752,671 694,702 725,211 Storm water 943,883 947,031 948,650 963,167 Street lighting 121,647 122,742 124,397 125,604 Operating grants and contributions 470,183 24,031 22,340 306,520 Capital grants and contributions 30,739 114,826 106,291 225,300 Total Business-type Activities Program Revenues 7,996,730 7,762,583 8,149,942 8,517,145 Total Program Revenues 12,010,752$ 11,705,364$ 12,506,899$ 15,252,421$ Fiscal Year See Accountant's Compilation Report. 140 Draft (Restated) 2014 2015 2016 2017 2018 2019 1,976,377$ 1,700,133$ 1,871,736$ 2,666,781$ 1,983,179$ 1,901,812$ 6,795,836 7,258,504 9,463,124 8,257,709 7,578,150 8,512,798 2,467,618 4,229,077 3,143,421 2,975,007 3,661,766 3,812,617 2,145,224 2,223,152 2,405,905 2,485,417 2,280,418 2,140,152 1,704,010 655,093 732,106 2,163,967 1,244,292 748,514 140,321 269,284 323,326 725,982 1,074,469 1,412,763 15,229,386 16,335,243 17,939,618 19,274,863 17,822,274 18,528,656 1,976,864 2,458,724 2,187,006 2,399,248 2,631,598 2,831,836 4,635,686 4,584,929 3,633,022 3,504,722 4,038,859 3,759,653 304,059 291,695 341,776 322,278 299,217 319,218 877,826 880,581 949,438 996,056 987,912 1,001,043 558,160 713,218 830,108 834,688 736,166 883,052 99,560 105,452 102,894 101,668 119,250 116,680 8,452,155 9,034,599 8,044,244 8,158,660 8,813,002 8,911,482 23,681,541$ 25,369,842$ 25,983,862$ 27,433,523$ 26,635,276$ 27,440,138$ 234,440$ 254,333$ 267,970$ 340,421$ 250,575$ 223,379$ 1,047,721 1,073,079 1,035,725 1,302,551 935,116 880,634 224,790 219,634 220,208 234,564 228,660 226,249 617,459 668,480 699,613 686,335 570,143 529,739 - - 20,000 41,112 - - 1,013,058 845,517 1,002,681 777,368 967,499 826,489 47,917 460,537 711,527 1,150,840 941,212 2,819,823 3,185,385 3,521,580 3,957,724 4,533,191 3,893,205 5,506,313 2,414,482 2,468,638 2,627,875 2,899,257 3,154,709 3,380,075 3,634,873 3,777,108 4,124,346 4,289,255 4,696,593 4,675,498 254,508 287,056 315,162 283,375 298,696 296,538 775,784 745,886 749,689 849,701 864,531 892,740 948,537 981,723 1,037,429 1,082,348 1,139,007 1,190,058 123,060 128,890 137,525 137,491 144,582 152,975 444,484 33,032 159,898 27,568 327,335 14,308 11,469 194,590 1,394,822 58,237 14,203 28,824 8,607,197 8,616,923 10,546,746 9,627,232 10,639,656 10,631,016 11,792,582$ 12,138,503$ 14,504,470$ 14,160,423$ 14,532,861$ 16,137,329$ Fiscal Year See Accountant's Compilation Report. 141 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Changes in Net Position (Continued) Last Ten Fiscal Years (Accrual Basis of Accounting) (Restated) 2010 2011 2012 2013 Net Revenues (Expenses) Governmental activities (8,372,897)$ (8,478,952)$ (8,861,303)$ (5,797,950)$ Business-type activities 1,558,632 396,577 646,886 884,021 Total Primary Government Revenues (Expenses)(6,814,265)$ (8,082,375)$ (8,214,417)$ (4,913,929)$ General Revenues and Other Changes in Net Position General Revenues Governmental Activities Taxes Property taxes 8,730,979$ 8,784,948$ 9,129,247$ 9,554,629$ Tax increments 1,408,256 1,400,163 1,343,248 511,924 Franchise taxes 430,494 439,795 440,149 438,834 Grants and contributions not restricted to specific programs 79,529 87,206 47,662 49,005 Unrestricted investment earnings 337,312 745,484 429,595 198,658 Gain on sale of capital assets 22,930 13,568 69,321 37,201 Transfers 91,129 (2,163,781) 68,971 (317,987) Total Governmental Activities General Revenues 11,100,629 9,307,383 11,528,193 10,472,264 Business-type Activities Unrestricted investment earnings 17,400 71,089 57,384 7,508 Transfers (91,129) 2,163,781 (68,971) 317,987 Total Business-type Activities General Revenues (73,729) 2,234,870 (11,587) 325,495 Total Primary Government 11,026,900$ 11,542,253$ 11,516,606$ 10,797,759$ Change in Net Position Governmental activities 2,727,732$ 828,431$ 2,666,890$ 4,674,314$ Business-type activities 1,484,903 2,631,447 635,299 1,209,516 Total Primary Government 4,212,635$ 3,459,878$ 3,302,189$ 5,883,830$ Fiscal Year 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. The City implemented GASB Statement No. 67 and GASB Statement No. 68 in fiscal 2015. The City implented GASB Statement No. 75 in fiscal 2018. Net position information has not been restated for prior years. See Accountant's Compilation Report. 142 Draft (Restated) 2014 2015 2016 2017 2018 2019 (12,044,001)$ (12,813,663)$ (13,981,894)$ (14,741,672)$ (13,929,069)$ (13,022,343)$ 155,042 (417,676) 2,502,502 1,468,572 1,826,654 1,719,534 (11,888,959)$ (13,231,339)$ (11,479,392)$ (13,273,100)$ (12,102,415)$ (11,302,809)$ 9,732,776$ 10,131,759$ 10,843,702$ 11,929,597$ 12,941,920$ 15,308,309$ 537,871 430,879 492,584 841,098 1,112,753 1,274,922 438,541 442,556 447,248 912,357 945,244 957,448 179,537 600,030 633,056 628,119 697,895 803,035 324,498 331,417 377,960 531,240 798,557 1,412,308 - - - 50,456 70,400 369,163 114,000 68,204 121,800 (19,110) (48,413) (144,624) 11,327,223 12,004,845 12,916,350 14,873,757 16,518,356 19,980,561 31,714 35,700 44,708 36,811 72,531 149,296 (114,000) (68,204) (121,800) 19,110 48,413 144,624 (82,286) (32,504) (77,092) 55,921 120,944 293,920 11,244,937$ 11,972,341$ 12,839,258$ 14,929,678$ 16,639,300$ 20,274,481$ (716,778)$ (808,818)$ (1,065,544)$ 132,085$ 2,589,287$ 6,958,218$ 72,756 (450,180) 2,425,410 1,524,493 1,947,598 2,013,454 (644,022)$ (1,258,998)$ 1,359,866$ 1,656,578$ 4,536,885$ 8,971,672$ Fiscal Year See Accountant's Compilation Report. 143 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 144 Draft 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 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 2014 9,732,776 537,871 438,541 10,709,188 2015 10,131,759 430,879 442,556 11,005,194 2016 10,843,702 492,584 447,248 11,783,534 2017 11,929,597 841,098 912,357 13,683,052 2018 12,941,920 1,112,753 945,244 14,999,917 2019 15,308,309 1,274,922 957,448 17,540,679 See Accountant's Compilation Report. 145 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Restated) 2010 2011 2012 2013 General Fund Reserved 63,753$ -$ -$ -$ Unreserved 4,527,847 - - - Nonspendable - 14,366 14,925 15,484 Unassigned - 4,920,846 5,080,812 5,567,933 Total General Fund 4,591,600$ 4,935,212$ 5,095,737$ 5,583,417$ All Other Governmental Funds Reserved 9,043,337$ -$ -$ -$ Unreserved, reported in Special Revenue funds 3,129,062 - - - Debt Service funds - - - - Capital Project funds 9,771,932 - - - Restricted - 6,114,114 5,657,606 5,550,819 Committed - 4,666,447 5,165,192 4,511,073 Assigned - 6,877,641 6,533,868 8,204,338 Unassigned - - - - Total All Other Governmental Funds 21,944,331$ 17,658,202$ 17,356,666$ 18,266,230$ Total All Governmental Funds 26,535,931$ 22,593,414$ 22,452,403$ 23,849,647$ 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. Fiscal Year See Accountant's Compilation Report. 146 Draft (Restated) 2014 2015 2016 2017 2018 2019 -$ -$ -$ -$ -$ -$ - - - - - - 16,005 16,765 18,242 17,617 18,763 22,980 5,805,289 6,063,647 6,255,436 6,871,038 7,162,188 7,116,723 5,821,294$ 6,080,412$ 6,273,678$ 6,888,655$ 7,180,951$ 7,139,703$ -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - 5,687,949 8,069,238 7,772,782 24,605,109 24,646,820 13,304,922 4,771,304 5,431,288 5,397,075 5,837,809 5,414,740 5,033,555 7,839,792 5,496,484 4,958,094 5,176,318 5,695,269 6,232,274 (134,792) (226,356) (3,015,315) (4,178,684) (3,448,208) (2,459,466) 18,164,253$ 18,770,654$ 15,112,636$ 31,440,552$ 32,308,621$ 22,111,285$ 23,985,547$ 24,851,066$ 21,386,314$ 38,329,207$ 39,489,572$ 29,250,988$ Fiscal Year See Accountant's Compilation Report. 147 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Restated) 2010 2011 2012 2013 Revenues Property taxes 8,694,245$ 8,767,959$ 9,199,381$ 9,531,663$ Tax increments 1,408,256 1,400,163 1,343,248 511,924 Franchise taxes 430,494 439,795 440,149 438,834 Licenses and permits 236,378 359,530 238,943 273,117 Intergovernmental 1,765,220 1,599,253 858,816 4,463,113 Charges for services 1,369,904 1,544,369 1,557,898 1,585,964 Fines and forfeitures 238,961 255,329 283,233 239,201 Special assessments 258,392 153,835 305,818 178,335 Investment earnings 393,913 548,548 307,032 178,217 Miscellaneous 87,607 115,183 80,073 111,443 Total Revenues 14,883,370 15,183,964 14,614,591 17,511,811 Expenditures General government 1,883,729 1,560,511 1,567,301 1,571,701 Public safety 5,791,511 5,933,201 5,946,209 5,967,599 Public works 989,734 1,079,884 1,192,760 1,254,201 Culture and recreation 1,599,381 1,560,486 1,599,041 1,613,518 Economic development 192,431 289,650 304,064 582,621 Capital outlay 2,605,724 5,263,935 7,685,819 4,239,938 Debt service Principal 515,000 1,005,000 330,000 340,000 Interest 273,054 247,973 270,613 306,462 Bond issuance costs - 93,820 104,351 - Total Expenditures 13,850,564 17,034,460 19,000,158 15,876,040 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,032,806 (1,850,496) (4,385,567) 1,635,771 Other Financing Sources (Uses) Transfers in 2,596,321 2,477,195 936,188 360,427 Sales of capital assets 1,954 - - 1,460 Bonds issued 1,245,000 - - - Premium on bonds issued 16,173 - 54,006 - Refunding bonds issued - - 4,025,000 - Principal payments to refunded bond escrow agent - - - - Transfers out (2,444,592) (4,569,216) (770,638) (600,414) Total Other Financing Sources (Uses)1,414,856 (2,092,021) 4,244,556 (238,527) Net Change in Fund Balances 2,447,662$ (3,942,517)$ (141,011)$ 1,397,244$ Debt Service as a Percentage of Noncapital Expenditures 9.8%6.4%4.1%5.6% Fiscal Year See Accountant's Compilation Report. 148 Draft (Restated) 2014 2015 2016 2017 2018 2019 9,718,800$ 10,145,204$ 10,868,985$ 11,961,711$ 12,904,297$ 15,266,561$ 537,871 430,879 492,584 841,098 1,112,753 1,274,922 438,541 442,556 447,248 912,357 945,244 957,448 353,973 389,957 466,548 641,870 367,931 320,438 818,825 1,359,511 2,063,546 1,844,648 2,195,760 3,947,039 1,663,053 1,601,081 1,571,798 1,727,615 1,399,998 1,376,176 215,585 237,591 191,960 208,909 230,657 227,343 98,617 38,417 173,158 92,458 282,589 197,566 248,013 274,116 304,252 486,746 658,606 1,166,238 129,980 202,057 42,103 137,591 33,966 173,679 14,223,258 15,121,369 16,622,182 18,855,003 20,131,801 24,907,410 1,668,474 1,688,752 1,872,436 2,622,277 1,787,553 1,900,480 6,397,860 6,866,105 7,168,102 7,724,950 7,997,311 8,427,939 1,225,551 1,328,371 1,606,369 1,671,593 1,717,815 1,790,715 1,761,961 1,853,741 1,938,131 2,066,692 2,015,729 2,032,585 298,825 498,479 588,167 1,737,947 815,352 514,446 3,000,518 8,204,694 8,220,964 5,217,461 12,956,485 22,573,350 350,000 405,000 415,000 523,497 799,734 968,674 212,025 131,530 257,661 455,539 769,497 1,351,273 2,200 114,607 58,188 251,648 148,365 12,475 14,917,414 21,091,279 22,125,018 22,271,604 29,007,841 39,571,937 (694,156) (5,969,910) (5,502,836) (3,416,601) (8,876,040) (14,664,527) 669,461 3,209,226 1,630,270 4,305,261 788,458 2,258,762 4,055,382 - - - - 331,299 - - 2,824,075 18,435,000 9,520,000 5,235,000 - 171,339 107,553 1,857,609 476,673 454,261 - 6,470,000 - - - - (3,780,000) - - - - - (477,461) (3,015,226) (1,426,570) (4,238,376) (748,726) (2,078,037) 467,382 6,835,339 3,135,328 20,359,494 10,036,405 6,201,285 (226,774)$ 865,429$ (2,367,508)$ 16,942,893$ 1,160,365$ (8,463,242)$ 4.5%3.5%4.6%5.4%9.2%13.1% Fiscal Year See Accountant's Compilation Report. 149 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 150 Draft City of New Hope, Minnesota 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 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 2014 9,718,800 537,871 438,541 10,695,212 2015 10,145,204 430,879 442,556 11,018,639 2016 10,868,985 492,584 447,248 11,808,817 2017 11,961,711 841,098 912,357 13,715,166 2018 12,904,297 1,112,753 945,244 14,962,294 2019 15,266,561 1,274,922 957,448 17,498,931 See Accountant's Compilation Report. 151 Draft 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) 2010 2011 2012 2013 Taxable Market Value Real property 1,618,178,200$ 1,492,408,000$ 1,321,463,913$ 1,214,204,483$ Personal property 7,624,400 8,162,100 8,515,600 9,657,700 Total Taxable Market Value 1,625,802,600$ 1,500,570,100$ 1,329,979,513$ 1,223,862,183$ Estimated actual value of taxable property 1,629,433,100$ 1,504,929,000$ 1,438,796,300$ 1,336,539,900$ Taxable Market Value as a Percentage of Estimated Actual Value 99.78 99.71 %92.44 %91.57 % Tax Capacity Real property 19,864,103$ 18,462,796$ 16,686,170$ 15,476,014$ Personal property 148,346 159,492 165,812 188,654 Subtotal 20,012,449 18,622,288 16,851,982 15,664,668 Less: Tax Increment (1,181,390) (1,044,830) (944,560) (366,752) Less: Contribution to Fiscal Disparities (2,596,468) (2,466,459) (2,380,423) (2,255,476) Add: Distribution from Fiscal Disparities 3,946,315 3,896,651 3,605,075 3,448,346 Net Tax Capacity 20,180,906$ 19,007,650$ 17,132,074$ 16,490,786$ Tax levies Revenue 9,053,443$ 9,036,625$ 9,066,928$ 9,406,483$ Bonds and interest 39,268 192,105 161,802 164,325 Total 9,092,711$ 9,228,730$ 9,228,730$ 9,570,808$ Tax capacity rate Revenue 45.542 47.916 %53.842 %57.802 % Bonds and interest 0.199 1.025 0.967 1.010 Sewer district 0.273 0.308 0.387 - Total Direct Tax Rate 46.014 %49.249 %55.196 %58.812 % 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. Fiscal Year See Accountant's Compilation Report. 152 Draft 2014 2015 2016 2017 2018 2019 1,224,417,514$ 1,323,173,828$ 1,419,351,117$ 1,522,726,514$ 1,683,833,465$ 1,817,473,851$ 10,849,800 11,343,900 11,588,000 12,327,600 13,258,900 13,963,100 1,235,267,314$ 1,334,517,728$ 1,430,939,117$ 1,535,054,114$ 1,697,092,365$ 1,831,436,951$ 1,346,449,200$ 1,440,652,000$ 1,534,397,300$ 1,636,865,900$ 1,792,927,900$ 1,921,182,700$ 91.74 %92.63 %93.26 %93.78 %94.65 %95.33 % 15,454,712$ 16,638,481$ 17,898,058$ 19,196,854$ 21,143,125$ 22,506,796$ 211,746 221,628 226,510 242,052 260,678 275,032 15,666,458 16,860,109 18,124,568 19,438,906 21,403,803 22,781,828 (377,138) (338,715) (362,633) (604,222) (810,429) (948,691) (2,154,731) (2,144,256) (2,277,639) (2,464,382) (2,655,561) (2,870,420) 3,437,911 3,505,922 3,437,652 3,757,080 4,010,408 4,111,736 16,572,500$ 17,883,060$ 18,921,948$ 20,127,382$ 21,948,221$ 23,074,453$ 9,556,483$ 9,938,265$ 10,617,194$ 11,362,957$ 12,043,578$ 12,722,208$ 161,487 163,902 195,819 604,444 869,164 2,579,402 9,717,970$ 10,102,167$ 10,813,013$ 11,967,401$ 12,912,742$ 15,301,610$ 57.622 %55.073 %56.364 %56.906 %54.643 %56.539 % 0.974 0.905 1.041 3.025 3.946 11.451 - - - - - - 58.596 %55.978 %57.405 %59.931 %58.589 %67.990 % Fiscal Year See Accountant's Compilation Report. 153 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Property Tax Capacity Rates - Direct and Overlapping Governments Last Ten Fiscal Years Year Taxes General Debt Sewer District Payable Levy Levy Total 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 2014 57.622 0.974 - 58.596 2015 55.073 0.905 - 55.978 2016 56.364 1.041 - 57.405 2017 56.906 3.025 - 59.931 2018 54.643 3.946 - 58.589 2019 56.539 11.451 - 67.990 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). Levy Direct Rate - City of New Hope See Accountant's Compilation Report. 154 Draft County No. 281 Other Total 42.640 %28.621 %9.098 %126.373 % 45.840 34.387 10.068 139.544 48.231 32.534 10.422 146.383 49.461 32.347 10.933 151.553 49.959 34.777 11.307 154.639 46.398 33.226 10.561 146.163 45.356 33.833 10.432 147.026 44.087 31.612 10.214 145.844 42.808 31.957 9.052 142.406 41.861 29.909 8.885 148.645 Overlapping Rates School District See Accountant's Compilation Report. 155 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Principal Property Taxpayers Current Year and Nine Years Ago Tax Taxpayer Capacity Rank STNL (New Hope), LLC 231,170$ 1 1.01 % Allen Group, LLC 204,270 2 0.90 FLS Properties 203,710 3 0.89 Hy-Vee, Inc.193,150 4 0.85 Paddock Property Ltd. Partnership 182,650 5 0.80 CI Minn I-A, LLC 182,210 6 0.80 GLP US Management, LLC 181,310 7 0.80 Broadway Lanel/Golle/Holmes 178,500 8 0.78 St. Therese Home, Inc.177,870 9 0.78 Winnetka Mall, LLC 168,490 10 0.74 Geneva Management Service, LLC - - - New Hope / US Swim Partnership - - - Minnesota Masonic Home/North Ridge Care Center - - - New Hope Distribution Center, LLC - - - Welsh Navarre MN, LLC - - - Lang Nelson Association - - - Totals 1,903,330$ 8.35 % Source: Hennepin County Auditor/Treasurer Department Tax Capacity 2018 Percent of Total See Accountant's Compilation Report. 156 Draft Tax Capacity Rank -$ - - % - - - 139,250 9 0.70 - - - 165,250 2 0.83 - - - - - - - - - 154,438 4 0.77 146,970 6 0.73 199,250 1 1.00 159,250 3 0.80 152,275 5 0.76 145,250 7 0.73 139,250 8 0.70 132,188 10 0.66 1,533,371$ 7.68 % Tax Capacity 2009 Percent of Total See Accountant's Compilation Report. 157 Draft THIS PAGE IS LEFT BLANK INTENTIONALLY 158 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Property Tax Levies and Collections Last Ten Fiscal Years (1) Collection Collection Fiscal Total of Current in Subsequent Total Year Levy Year's Levy Years Collections 2010 9,092,711$ 8,983,224$ 98.80 %109,487$ 9,092,711$ 100.00 % 2011 9,228,730 9,063,615 98.21 165,115 9,228,730 100.00 2012 9,228,730 9,102,355 98.63 126,375 9,228,730 100.00 2013 9,570,808 9,429,858 98.53 140,950 9,570,808 100.00 2014 9,717,970 9,619,447 98.99 98,523 9,717,970 100.00 2015 10,102,167 10,017,500 99.16 73,958 10,091,458 99.89 2016 10,813,013 10,756,992 99.48 32,100 10,789,092 99.78 2017 11,967,401 11,895,137 99.40 63,110 11,958,247 99.92 2018 12,912,742 12,834,660 99.40 66,171 12,900,831 99.91 2019 15,301,610 15,172,310 99.15 - 15,172,310 99.15 Source: Hennepin County Auditor/Treasurer Department (1) Includes state paid property tax credits. Collected to Levy Percent Percentage of Total of Levy Collections See Accountant's Compilation Report. 159 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Ratios of Outstanding Debt by Type Last Ten Fiscal Years General Special Tax Fiscal Obligation Assessment Increment Year Bonds Bonds Bonds 2010 1,280,000$ 775,000$ 4,605,000$ 2011 1,245,000 - 4,410,000 2012 1,120,000 - 8,230,000 2013 1,000,729 - 8,065,761 2014 863,620 - 4,066,223 2015 2,898,167 - 8,250,291 2016 5,682,679 - 7,968,655 2017 25,713,493 - 7,687,463 2018 35,323,386 - 7,140,876 2019 40,433,000 - 6,582,397 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 167 for personal income and population data. Governmental Activities See Accountant's Compilation Report. 160 Draft G.O Lease General G.O.Tax Total Revenue Obligation Revenue Increment Primary Per Bonds Bonds Bonds Bonds Government Capita -$ -$ 2,930,000$ -$ 9,590,000$ 0.83 %472$ 3,505,000 - 2,360,095 - 11,520,095 1.04 562 3,505,000 - 2,033,000 - 14,888,000 1.25 717 3,505,000 - 2,723,628 - 15,295,118 1.24 732 3,505,000 - 2,352,553 - 10,787,396 0.86 518 3,505,000 1,831,607 2,151,635 1,587,602 20,224,302 1.49 953 3,505,000 3,934,522 1,950,071 1,586,242 24,627,169 1.75 1,140 3,505,000 3,833,158 1,748,533 1,584,964 44,072,611 3.03 2,046 3,505,000 3,727,852 1,540,021 1,494,575 52,731,710 3.44 2,448 3,505,000 3,509,802 1,326,532 1,401,536 56,758,267 3.67 2,605 Income of Personal Percentage Business-type Activities See Accountant's Compilation Report. 161 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Less Amounts General Available in Net Fiscal Obligation Debt Service Bonded Per Year Bonds Funds Debt Capita 2010 9,590,000$ 4,288,603$ 5,301,397$ 0.325 %261$ 2011 8,015,095 465,243 7,549,852 0.502 369 2012 11,383,000 4,222,494 7,160,506 0.498 345 2013 11,790,118 345,010 11,445,108 0.856 548 2014 7,282,396 614,161 6,668,235 0.495 320 2015 16,719,302 759,386 15,959,916 1.108 752 2016 21,122,169 1,048,498 20,073,671 1.308 929 2017 40,567,611 2,173,637 38,393,974 2.346 1,782 2018 49,226,710 1,793,587 47,433,123 2.646 2,202 2019 53,253,267 3,066,524 50,186,743 2.612 2,303 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 167 for population data. Percentage See Tax Capacity, Market Value and Estimated Actual Value of Taxable Property on page 152 for property value data. of Estimated Actual Value of Taxable Property See Accountant's Compilation Report. 162 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Computation of Direct and Overlapping Debt December 31, 2019 City's Outstanding Share Debt of Debt Direct Debt City of New Hope (1)40,433,000$ 100.00 %40,433,000$ Overlapping Debt Hennepin County 1,225,230,000$ 1.12 %13,722,576$ Independent School District #281, Robbinsdale 193,065,906 19.42 37,493,399 Metropolitan Council 1,549,087,966 0.53 8,210,166 Hennepin Region RR Authority 29,865,000 1.57 468,881 Three Rivers Park District 66,300,000 1.57 1,040,910 Total Overlapping Debt 3,063,548,872$ 1.99 %60,935,932$ Total Direct and Overlapping Debt 3,103,981,872$ 3.27 %101,368,932$ (1) Excludes debt payable from tax increment revenue and enterprise revenue. 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. District * Percentage Applicable to Source : Assessed value data used to estimate applicable percentages and outstanding debt data for overlapping entities was provided by Hennepin County. * 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. See Accountant's Compilation Report. 163 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Legal Debt Margin Information Last Ten Fiscal Years 2010 2011 2012 2013 Debt Limit 48,774,078$ 45,017,103$ 39,899,385$ 36,715,865$ Total Net Debt Applicable to Limit 1,246,878 1,072,678 970,908 839,948 Legal Debt Margin 47,527,200$ 43,944,425$ 38,928,477$ 35,875,917$ Total Net Debt Applicable to the Limit as a Percentage of Debt Limit 2.56%2.38%2.43%2.29% Note: Under state law, the City's outstanding general obligation debt should not exceed 3 percent of the market value of taxable property. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for the extinguishment of those obligations. Fiscal Year See Accountant's Compilation Report. 164 Draft 2014 2015 2016 2017 2018 2019 37,058,019$ 40,035,532$ 42,928,174$ 46,051,623$ 50,912,771$ 54,943,109$ 696,627 2,719,528 5,497,493 25,516,878 34,249,431 38,356,971 36,361,392$ 37,316,004$ 37,430,681$ 20,534,745$ 16,663,340$ 16,586,138$ 1.88%6.79%12.81%55.41%67.27%69.81% Taxable Market Value 1,831,436,951$ Debt Limit (3 Percent of Market Value)54,943,109$ Debt Applicable to Limit General obligation bonds 40,433,000 Less: Amount Available in Debt Service Funds (2,076,029) Total Net Debt Applicable to Limit 38,356,971 Legal Debt Margin 16,586,138$ Fiscal Year Legal Debt Margin Calculation for Fiscal Year 2019 See Accountant's Compilation Report. 165 Draft City of New Hope, Minnesota Statistical Section (Unaudited) Pledged Revenue Coverage Last Ten Fiscal Years (1)(2)Net Fiscal Gross Operating Revenue Year Revenues Expenses Available Principal Interest 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 2014 7,887,948 7,270,310 617,638 371,000 103,685 130.12 2015 8,039,067 7,925,903 113,164 201,000 97,584 37.90 2016 8,738,270 6,629,232 2,109,038 202,000 172,262 563.52 2017 9,181,674 6,850,851 2,330,823 293,503 228,142 446.82 2018 10,247,826 7,479,247 2,768,579 394,266 232,928 441.42 2019 10,292,470 7,408,536 2,883,934 515,326 251,673 376.00 (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. Coverage Revenue Bonds (3) Debt Service See Accountant's Compilation Report. 166 Draft Per Capita Total Fiscal Personal Personal Median School Year Population (1)Income (2)Income (3)Age (4)Enrollment (5) 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 20,904 58,898 1,231,203,792 39.4 12,126 4.0 2014 20,812 60,601 1,261,228,012 39.4 12,390 2.9 2015 21,225 63,901 1,356,298,725 39.4 12,313 2.8 2016 21,600 65,231 1,408,989,600 39.4 12,404 2.8 2017 21,545 67,427 1,452,714,715 39.4 12,011 3.5 2018 21,545 71,067 1,531,138,515 39.4 12,304 2.7 2019 21,790 71,067 1,548,549,930 39.4 12,237 2.7 (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. (1) Provided by the Metropolitan Council. The most recent year is an estimate. City of New Hope, Minnesota Demographic and Economic Statistics Last Ten Fiscal Years Unemployment Rate (6) See Accountant's Compilation Report. 167 Draft City of New Hope, Minnesota Employees Rank Independent School District No. 281 1,852 1 18.09 % Saint Therese Home of New Hope 1,117 2 10.91 Intermediate District No. 287 943 3 9.21 Hy-Vee 632 4 6.17 Minnesota Masonic Home/North Ridge Care Center 560 5 5.47 Horwitz 345 6 3.37 Perrigo Company 323 7 3.16 Coborn's Delivers 240 8 2.34 Liberty Diversified International 200 9 1.95 Parker - Hannifin Oildyne Division 172 10 1.68 Paddock Labratories - - Navarre Corporation - - Dakota Growers Pasta - - Waymouth Farms, Inc.- - InnoFlex Corporation (I-Corp)- - Total Employment for Top 10 Employers 6,384 62.37 % Total City Employment 10,235 Source: Minnesota Department of Employment and Economic Development. Principal Employers Current Year and Nine Years Ago Employer Employment 2019 Percentage of Total City See Accountant's Compilation Report. 168 Draft Employees Rank 2,000 1 19 % 602 3 5.67 - - - - 808 2 7.61 - - - - 240 6 2.26 182 8 1.71 190 7 1.79 557 4 5.24 372 5 3.50 150 9 1.41 140 10 1.32 - 10 - 5,241 49.35 % 10,620 Employment 2010 Percentage of Total City See Accountant's Compilation Report. 169 Draft City of New Hope, Minnesota Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 2010 2011 2012 2013 General Government 15 15 15 16 Public Safety Police Officers 30 31 30 31 Civilians 7 6 7 7 Public Works 22 24 24 24 Culture and Recreation 8 7 6 7 Total 82 83 82 85 Source: Various City departments. Function See Accountant's Compilation Report. 170 Draft 2014 2015 2016 2017 2018 2019 14 13 13 16 17 17 33 35 33 34 34 34 7 9 9 10 11 10 24 23 24 24 24 24 7 7 8 7 7 7 85 87 87 91 93 92 See Accountant's Compilation Report. 171 Draft City of New Hope, Minnesota Operating Indicators by Function Last Ten Fiscal Years 2010 2011 2012 2013 Function Public works Street resurfacing (miles)2 4 - - Potholes repaired 734 648 687 600 Culture and recreation Program registration - adults 3,796 5,271 5,598 4,565 Program registration - youth 5,287 5,323 7,442 5,924 Attendance at sponsored events 137,199 146,305 148,966 144,000 Golf Course Rounds of golf at the Municipal course 21,686 18,788 19,568 16,782 Ice Arena Hours of ice time rental 3,980 3,903 3,558 3,739 Water Water main breaks 19 32 26 30 Average daily consumption (thousands of gallons)1,746 1,712 1,828 1,682 Sewer Average daily treatment (thousands of gallons)1,895 2,253 2,189 1,500 Sources: Various City departments. Note: Indicators are not available for the general government function. Function See Accountant's Compilation Report. 172 Draft 2014 2015 2016 2017 2018 2019 - 12 3 3 3 4 1,330 2,882 3,025 2,530 3,000 2,900 3,121 2,746 3,343 3,011 2,603 1,860 5,734 5,815 6,043 5,969 5,413 4,695 122,478 124,777 127,865 127,112 102,659 101,409 16,431 18,175 20,375 18,662 17,800 16,837 3,734 3,683 3,567 4,030 4,151 4,202 27 21 19 12 23 14 1,571 1,559 1,588 1,616 1,616 1,551 2,200 1,670 1,800 1,352 1,405 1,355 See Accountant's Compilation Report. 173 Draft City of New Hope, Minnesota Capital Asset Statistics by Function Last Ten Fiscal Years 2010 2011 2012 2013 Function Public Safety Police stations 1 1 1 1 Fire stations 3 3 3 3 Public Works City streets (miles)64.0 64.0 64.0 64.0 State and County streets (miles)8.5 8.5 8.5 8.5 Sidewalks (miles)26.4 26.4 26.4 26.4 Street lights 580.0 580.0 580.0 580.0 Railroad bridges 2.0 2.0 2.0 2.0 Pedestrian bridges 4.0 4.0 4.0 4.0 Culture and recreation Parks 23 23 23 23 Swimming pools Olympic 1 1 1 1 Recreational 1 1 1 1 Outdoor theatre 1 1 1 1 Tennis courts 17 17 17 17 Water Water main (miles)63 63 63 63 Fire hydrants 690 690 690 690 Maximum daily capacity (thousands of gallons)21,000,000 21,000,000 21,000,000 21,000,000 Sewer Sanitary sewer main (miles)74 74 74 74 Storm sewer lines (miles)56 56 56 56 Ice Arenas 1 1 1 1 Golf courses 1 1 1 1 Source: Various City departments. Note: No capital asset indicators are available for the general government function. Function See Accountant's Compilation Report. 174 Draft 2014 2015 2016 2017 2018 2019 1 1 1 1 1 1 3 3 3 3 3 3 64.0 64.0 64.5 64.5 64.5 64.75 8.5 8.5 8.5 8.5 8.5 8.5 26.4 26.4 27.0 27.0 27.0 27.25 580.0 580.0 619.0 619.0 619.0 630.0 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 - 17 17 15 15 12 12 63 63 64 64 64 65 690 690 712 712 712 716 21,000,000 21,000,000 21,000,000 21,000,000 21,000,000 - 74 74 75 75 75 75 56 56 56 56 56 57 1 1 1 1 1 1 1 1 1 1 1 1 See Accountant's Compilation Report. 175 Draft I:\RFA\City Manager\2020\Fund Transfers\051820 Work Session\Q - Transfer from Park Infrastructure Fund to Ice Arena Operating Fund 051820.docx Request for Action May 18, 2020 Approved by: Kirk McDonald, City Manager Originating Department: City Manager By: Kirk McDonald, City Manager Agenda Title Discuss Transfer from Park Infrastructure Fund to Ice Arena Operating Fund Requested Action Staff requests to briefly discuss the annual transfer from the park infrastructure fund to the ice arena operating fund for debt service purposes. The transfer is included in the approved 2020 tax levy and budget. If the Council is supportive, a resolution authorizing the transfer would be presented at the May 26 council meeting. Policy/Past Practice In 2017, the City Council reviewed the financial operations of the ice arena and agreed to increase the park infrastructure tax levy to make annual transfers to the ice arena operating fund to provide for the required debt service payments on the 2011A bonds and ongoing capital needs of the facility. Background Staff and AEM are recommending that the Council approve a $400,000 transfer from the park infrastructure fund to the ice arena fund for ice arena debt service and capital improvements. The long-term financial plan that was reviewed with the Council in November 2019 included annual transfers from the park infrastructure fund to the ice arena fund to provide funding for the outstanding debt at the facility. The 2020 budget and tax levy approved by the Council in December 2019 included the usual 5% increase in the park infrastructure tax levy and $400,000 for ice arena debt service. A transfer is recommended so the funds can be transferred to the appropriate fund. At the June 19, 2017 work session, staff and AEM reviewed the financial operations of the ice arena and reported that the current cash generated from ice arena operations is not adequate to provide for the required debt service payments on the 2011A bonds or the ongoing capital outlay needs of the facility. It was noted that many of the ice arenas in neighboring communities receive funding form internal transfer or tax levies (Champlin, Coon Rapids, Maple Grove, Plymouth and Rogers). The recommendations presented included considering increasing the park infrastructure and/or general fund tax levy when the preliminary budget is reviewed so annual transfers can be made and implementing a long-term financing plan for all parks and recreation facilities/equipment. The City Council agreed that the ice arena is an important community asset and a valuable recreational facility, and supported making the needed capital improvements and adopting a plan to make the required debt service payment to ensure the ongoing viability of the operation. Agenda Section Work Session Item Number 11.7 Request for Action, Page 2 Attachments  2020 Budget Excerpts  2019 Excerpt Long-Term Financial Plan  May 20, 2019 Excerpt Work Session Minutes  May 21, 2018 Excerpt Work Session Minutes  June 19, 2017 Excerpt Work Session Minutes