7.1. SR 06-01-2015Request for Action
ver
To
Item Number
Mayor and City Council
7.1
Agenda Section
Meeting Date
Prepared by
Presentations, Awards,
June 1, 2015
Tim Simon, Finance Director
& Recognition
Item Description
Reviewed by
Comprehensive Annual Financial Report for the
Cal Portner, City Administrator
Reviewed by
Year Ended December 31, 2014
Action Requested
The City Council is asked to approve, by motion, the Comprehensive Annual Financial Report for the
City of Elk River for the year ended December 31, 2014.
Background /Discussion
Annually, the city is required to have an independent audit of its financial statements in which the audit
firm issues an opinion on the financial statements.
Andrew Berg, Governmental Services Partner with Abdo, Eick, & Meyers will present a PowerPoint
presentation of the city's 2014 Comprehensive Annual Financial Report (CAFR) and audit results. The
presentation on the CAFR will review the general fund activity, some of the special revenue funds, and all
the enterprise funds. Much of this information is summarized in the City of Elk River Management
Letter.
The Fire Relief report will be briefly discussed as a formal presentation was made at the quarterly board
meeting on June 1st.
The CAFR will be available on the city's website shortly after this Council meeting.
Financial Impact
N/A
Attachments
• City of Elk River Management Letter
• Comprehensive Annual Financial Report for the year ended December 31, 2014
• Other Required Reports (Legal compliance)
• Elk River Fire Department Relief Management Letter
• Elk River Fire Department Relief Association Financial Statements and Supplementary
Information
P0WIeEa 0
Template Updated 4/14 INAWRE1
ABDO
W SICK &
�J
M EYER.S LLP
Gnified Public Accountants & Consultants
People
+Process®
Going
Z2�
ABDO
IV. SICK &
�.a r
4 f ME 1 E W LLP
Certified Public Accountants & Consultants May 7, 2015
Management, Honorable Mayor and City Council
City of Elk River, Minnesota
We have audited the financial statements of the governmental activities, the business -type activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota (the City) for the
year ended December 31, 2014. Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards as well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our letter to you dated November 7, 2014. Professional standards also require that we provide to
you the following information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether the
financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with
accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are
free of material misstatement. As part of our audit, we considered the internal control of the City. Such considerations were solely for
the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are responsible
for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in
overseeing the financial reporting process. However, we are not required to design procedures specifically to identify such matters.
Significant Audit Findings
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 entity'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.
5201 Eden Avenue, Suite 250
Edina, MN 55436 _
952.835.9090 1 Fax 952.835.3261 -1
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests
of compliance with certain provisions of Minnesota statutes. 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. While our audit provides a reasonable basis for our
opinion, it does not provide a legal determination on the City's compliance with those requirements. We noted no instances of
noncompliance with Minnesota statues.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to you.
Qualitative Aspects of Accounting Practices
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 to the financial statements. No new accounting procedures were adopted and the application of
existing policies was not changed during the year ended December 31, 2014. 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 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 include depreciation
on capital assets, allocation of payroll and compensated absences, and the liability for other postemployment benefits.
• Management's estimate of depreciation is based on estimated useful lives of the assets. Depreciation is calculated using the
straight -line method.
• Allocations of gross wages and payroll benefits are approved by City Council within the City's budget and are derived from
each employee's estimated time to be spent servicing the respective functions of the City. These allocations are also used in
allocating accrued compensated absences payable.
• Management's estimate of its OPEB liability is based on several factors including, but not limited to, anticipated retirement
age for active employees, life expectancy, turnover, and healthcare cost trend rate.
We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is reasonable in
relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that
are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as 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 representations
letter dated May 7, 2015. People
+Process®
-2-
(;Om, g
Beyondthe
Numbers
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 Matters
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting
principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and
the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the
supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements
themselves.
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.
Financial Position and Results of Operations
Our principal observations and recommendations are summarized on the following pages. These recommendations resulted from our
observations made in connection with our audit of the City's financial statements for the year ended December 31, 2014.
General Fund
The General fund is used to account for resources traditionally associated with government, which are not required legally or by
sound principal management to be accounted for in another fund. The General fund balance increased $109,312 from 2013. The
fund balance of $6,163,602 is 46.3 percent of the 2015 budgeted expenditures. The total fund balance and percent of the 2014
budgeted expenditures is split between nonspendable $22,725 (0.2 percent), committed $317,929 (2.4 percent) and unassigned
$5,822,948 (43.7 percent). In addition, the City's fund balance policy for the General fund identified a target minimum
unassigned fund balance of 40 -45 percent of the following year's budgeted expenditures and transfers out. The City has
maintained this target level as illustrated on the following page. More information can be found starting on page 54 of the
comprehensive annual financial report.
Some of the purposes and benefits of a fund balance are as follows:
• Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not
received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the
General fund expenditures until these revenue sources are received.
• Expenditures not anticipated at the time the annual budget was adopted may need immediate City Council action. These
would include capital outlay replacement, lawsuits, tax court refunds, and other items. An adequate fund balance will
provide the financing needed for such expenditures.
• A strong fund balance will assist the City in obtaining, maintaining or improving its bond rating. The result will be
better interest rates in future bond issues or refunding opportunities.
-3-
People
+Process®
Going
Beyondthe
Numbers
A table summarizing the General fund balance in relation to the following years' original budget follows:
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Fund Balance as a Percent of Next Year's Budget
$13,312,800
$12,836,950 $12,870,500
Percent of
Percent of
0.1% 0.2%
1.9% 2.4%
Total
Unassigned
General
Total
Unassigned
Fund Balance
Fund Balance
Budget
Fund
Fund Balance
Fund Balance
Year
December 31
December 31
Year
Budget
to Budget
to Budget
2012
$ 6,205,314
$ 5,776,627
2013
$ 12,836,950
48.3 %
45.0 %
2013
6,054,290
5,791,725
2014
12,870,500
47.0
45.0
2014
6,163,602
5,822,948
2015
13,312,800
46.3
43.7
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Fund Balance as a Percent of Next Year's Budget
2012 2013 2014 2015
Unassigned Fund Balance � Assigned Fund Balance Committed Fund Balance
�Nonspendable Fund Balance (Budget
People
Be dthe
-4- Nurribers
$13,312,800
$12,836,950 $12,870,500
0.2%
1.6%
0.1% 0.2%
1.9% 2.4%
1.6%
45.0%
0 43.7%
45.0 /o
2012 2013 2014 2015
Unassigned Fund Balance � Assigned Fund Balance Committed Fund Balance
�Nonspendable Fund Balance (Budget
People
Be dthe
-4- Nurribers
The 2014 General fund operations are summarized as follows:
Revenues
Expenditures
Deficiency of revenues under expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, January 1
Fund balances, December 31
Final
Budgeted
Amounts
Actual
Amounts
Variance with
Final Budget
$ 11,298,350 $ 11,358,546 $ 60,196
12,621,850 12,574,565 47,285
(1,323,500) (1,216,019) 107,481
1,625,550 1,625,550 -
(302,050) (300,219) 1,831
1,323,500 1,325,331 1,831
- 109,312 109,312
6,054,290 6,054,290 -
$ 6,054,290 $ 6,163,602 $ 109,312
The City amended the General fund budget during the year. The amendment resulted in an increase of revenues ($53,400) and
expenditures ($53,400). The final budget called for a net zero change in fund balance. Actual change in fund balance was an
increase of $109,312. Overall actual results were very close to final budgeted amounts with both revenues and expenditures have
a total variance of less than 1 percent.
Some of the line items with significant variances are highlighted below:
• The largest expenditure variances were within public safety and public works. Public safety was under budget by
$111,228 and public works was over budget by $90,910.
511
People
� F 7� i"'n!'PQQ
"O
Beyondthe
Numbers
A comparison between 2012, 2013 and 2014 revenues and transfers is presented below:
A graphical presentation of 2012, 2013, and 2014 revenues and transfers follows:
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
2012 2013 2014
■ Taxes ■ Intergovernmental ■ Charges for services ■ Other
• The increase for transfers in over the past three years is the result of increased amounts transferred from the Liquor and
Electric enterprise funds.
People
Be dthe
-6- Nurribers
Percent of
Source
2012
2013
2014
Total
Per Capita
Taxes
$ 9,309,881
$ 9,264,268
$ 9,391,373
74.4 %
$ 397
Licenses and permits
408,232
513,779
559,286
4.0
24
Intergovernmental
542,790
557,990
286,851
4.3
12
Charges for services
636,300
740,756
816,556
5.7
35
Fines and forfeitures
121,047
122,985
128,131
0.9
5
Interest
56,346
84,214
48,957
0.6
2
Miscellaneous
87,809
87,482
127,392
0.7
5
Transfers in
1,024,500
1,216,000
1,625,550
9.4
69
Total revenues and transfers
$ 12,186,905
$ 12,587,474
$ 12,984,096
100.0 %
$ 549
A graphical presentation of 2012, 2013, and 2014 revenues and transfers follows:
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
2012 2013 2014
■ Taxes ■ Intergovernmental ■ Charges for services ■ Other
• The increase for transfers in over the past three years is the result of increased amounts transferred from the Liquor and
Electric enterprise funds.
People
Be dthe
-6- Nurribers
A comparison between 2012, 2013 and 2014 expenditures and transfers is presented below:
Program
General government
Public safety
Public works
Culture and recreation
Capital outlay
Transfers out
Percent of
2012 2013 2014 Total
$ 2,490,127
$ 2,846,579
$ 3,033,392
5,304,063
5,468,765
5,790,772
2,039,644
2,279,059
1,929,210
1,739,797
1,619,679
1,810,291
100,786
101,573
10,900
604,786
422,843
300,219
23.4 %
45.1
15.0
14.1
0.1
2.3
Per
Capita
$ 128
245
82
77
Total expenditures
and transfers $ 12,279,203 $ 12,738,498 $ 12,874,784 100.0 % $ 545
A graphical presentation of 2012, 2013 and 2014 expenditures and transfers follows:
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
2012 2013 2014
■ General government ■ Public safety ■ Public works ■ Other
People
Be O tithe
-7- Numbers
Special Revenue Funds
Special revenue funds receive revenue from specific sources and expenditures are for specific purposes. The following funds,
with fund balances included, comprise the special revenue fund type:
Fund
Nonmaj or
Library
Ice Arena
Pinewood Golf Course
Landfill
Revolving Loan
Federal DEED
State DEED
Development Fund
Insurance Reserve
Drug Forfeiture Reserve
YMCA Grant
Economic Development Authority
Total
The above fund balance classification in total is as follows:
Fund balances - nonmajor special revenue funds
Nonspendable
Restricted
Committed
Assigned
Fund Balances
December 31,
Increase
2013
2014
(Decrease)
$ 448,680 $
425,469
$ (23,211)
245,124
315,839
70,715
1,315,177
1,312,523
(2,654)
1,168,209
1,216,698
48,489
311,155
198,272
(112,883)
385,837
409,891
24,054
1,491,350
1,371,113
(120,237)
317,991
268,013
(49,978)
46,663
28,208
(18,455)
630,360
384,140
(246,220)
1,222,806
683,774
(539,032)
$ 7,583,352 $
6,613,940
$ (969,412)
$ 101,910
2,130,444
3,498,482
883,104
Total $ 6,613,940
People
+Process®
Going
Beyondthe
-8- Nurribers
Debt Service Funds
Debt Service funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and
principal on debt (other than enterprise fund debt). Debt Service funds may have one or a combination of the following revenue
sources pledged to retire debt as follows:
• Prope . taxes - Primarily for general City benefit projects such as parks and municipal buildings. Property taxes may
also be used to fund special assessment bonds which are not fully assessed.
• Tax increments - Pledged exclusively for tax increment /economic development districts.
• Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax
increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference
considered in the form of capitalized interest.
• Special assessments - Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows:
• Residual project proceeds from the related capital projects fund
• Investment earnings
• State or federal grants
• Transfers from other funds
All Debt Service funds with the total assets and debt remaining to be paid are shown below:
Debt Service Fund
Improvement Bonds
2012B G.O. Improvement Refunding Bonds
Government Building Bonds
2006C G.O. Capital Improvement Bonds
2010A G.O. Capital Improvement Bonds
2012A G.O. Capital Improvement Bonds
YMCA Bonds
2007D EDA G.O. Bonds
2008A EDA G.O. Bonds
2013A EDA G.O. Refunding Bonds
Total Debt Service Funds
Cash and
Temporary Total
Investments Assets
$ 232,550 $ 615,806
737,164
10,006,245
Final
Bonds Maturity
Outstanding Date
$ 1,210,000
02/01/18
753,296
2,400,000
02/01/27
4,415,000
02/01/23
6,685,000
02/01/33
10,017,040
10,000,000
330,000
9,685,000
$ 10,975,959 $ 11,386,142 $ 34,725,000
02/01/17
02/01/15
02/01/33
As a result of the 2013A Refunding Bonds issued within the YMCA Bonds fund, $9,580,144 of cash is held in escrow which will
be used to pay principal and interest on a portion of the debt until $9,225,000 is called on the 2007D Bonds in 2017.
-9-
People
+Process.
Doing
Beyondthe
Numbers
The annual debt service requirements for the next 10 years for the debt detailed on the previous page are as follows:
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
■ Principal ■ Interest ■ P &I Paid by Escrow
Capital Projects Funds
The fund balances of all capital projects funds are summarized below:
Capital Projects Fund
Major
Tax Increment Financing Districts
Nonmaj or
Capital Reserve
Equipment Replacement
Park Dedication
Park Improvements
Government Buildings
GRE Reserve
Pavement Management
Street Improvements
Improvement Projects
Total nonmajor
Total
Fund Balances
December 31, Increase
2013 2014 (Decrease)
$ (1,039,866) $ (1,250,359) $ (210,493)
1,526,857
1,300,402
(226,455)
836,471
743,405
(93,066)
(839,659)
(476,669)
362,990
177,157
140,656
(36,501)
3,864,325
3,857,503
(6,822)
2,110,729
2,547,602
436,873
1,207,543
2,330,519
1,122,976
1,794,744
1,959,985
165,241
4,276,522
4,450,622
174,100
14,954,689
16,854,025
1,899,336
$ 13,914,823
$ 15,603,666
$ 1,688,843
The City has multiple individual projects that make up the funds presented above. The City should continue to monitor each
individual project. The Tax Increment Financing Districts fund and Park Dedication fund have deficit fund balances at the end of
the year. The deficits will be eliminated by future tax increment revenues and park dedication fees. City Council should continue
to review planned project sources for these funds and consider whether they will be available within a sufficient timeframe to
cover current activity.
-10-
People
- F 7� i"'n!'PQQ
"O
Beyondthe
Numbers
Enterprise Funds
The activities of the Enterprise funds include the municipal liquor, garbage, sewer, water and electric. The electric and water
operations, under the direction of the Utilities Commission, are included in the financial statements since City Council has the ultimate
oversight responsibility for their operations.
Municipal Liquor Fund
The following is a summary of operations in the Municipal Liquor fund for the past three years:
2012 2013 2014
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
S-
Municipal Liquor Fund Cash Balance
2012 2013 2014
� Unrestricted (Minimum target balance (one year of operating expenses)
The 2014 change in net position increased due to an increase in sales and increase in interest income.
Cash continues to remain strong in relation to operations. The increase in cash for 2014 was a result of net cash
provided by operations of $1,178,678 and cash provided by investing activities of $106,310 exceeding transfers
out of $685,060. People
Be o Uthe
-11- Nurribers
Total
Percent
Total
Percent
Total
Percent
Sales
$ 6,516,386
100.0 %
$ 6,753,521
100.0 %
$ 6,823,719
100.0 %
Cost of sales
(4,638,550)
(71.2)
(4,705,979)
(69.7)
(4,750,195)
(69.6)
Gross profit
1,877,836
28.8
2,047,542
30.3
2,073,524
30.4
Operating revenues
8,848
0.1
3,060
-
1,623
-
Operating expenses
(970,330)
14.9
(1,000,781)
(14.8)
(1,026,678)
(15.0)
Operating income
916,354
14.0
1,049,821
15.5
1,048,469
15.4
Nonoperating
revenues (expenses)
(68,740)
(1.1)
(87,003)
(1.3)
105,639
1.5
Transfers out
(468,667)
(7.2)
(672,289)
(10.0)
(685,060)
(10.0)
Change in net position
$ 378,947
5.7 %
$ 290,529
4.2 %
$ 469,048
6.9 %
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
S-
Municipal Liquor Fund Cash Balance
2012 2013 2014
� Unrestricted (Minimum target balance (one year of operating expenses)
The 2014 change in net position increased due to an increase in sales and increase in interest income.
Cash continues to remain strong in relation to operations. The increase in cash for 2014 was a result of net cash
provided by operations of $1,178,678 and cash provided by investing activities of $106,310 exceeding transfers
out of $685,060. People
Be o Uthe
-11- Nurribers
The Office of the State Auditor annually publishes a report analyzing the operation of municipal liquor stores in the State. The
most recent year of published information is for the year ended December 31, 2013. The statewide averages for all operations are
summarized below.
Sales
Cost of sales
2011
Percent
of Sales
100.0 %
Off Sale
2012
Percent
of Sales
100.0 %
2013
Percent
of Sales
100.0 %
Gross profit 25.4 25.8 26.0
Operating expenses 17.1 16.5 16.9
Operating income 8.3 9.3 9.1
Nonoperating revenue (expense) 0.1 (0.2) (0.3)
Income before transfers 8.4 % 9.1 % 8.8 %
Source: Analysis of Municipal Liquor Store Operations, for the year ended December 31, 2013.
Published by the Minnesota Office of the State Auditor
$ 8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
Municipal Liquor Fund Operations Summary
Sales, $6,516,386 Sales, $6,753,521 Sales, $6,823,719
I
GP 28.8% GP 30.3% GP 30.4%
12.9% 14.2% 16.9%
2012
2013
2014
Gross profit Cost of sales ♦ Sales (Operating expenses -I- Income before transfers
Sales, gross profit and operating income increased consecutively the past three years. The gross profit percent of the City for the
last three years of 28.8 - 30.4 percent remains above the state -wide average. Also, the City's percentage of income before
transfers of 12.9, 14.2, and 16.9 for 2012, 2013, and 2014, respectively, is significantly above the statewide averages.
People
Be dthe
-12- Numbers
The results of the operations within the remaining enterprise funds in terms of cash flow and the breakdown of the cash balances
for the past four years are as follows:
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$(200,000)
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Garbage Fund Cash Flow
2011 2011 Receipts 2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts
Disbursements Disbursements Disbursements Disbursements
■ Operating costs ■ Other (interfund) ■ Operating receipts ■ Other (interfund, interest)
Garbage Fund Cash Balance
$540,516 $591,503 $606,857 $606,357
2011 2012 2013 2014
Unrestricted (Minimum target balance (6 months of operating expenses)
The expenses of this fund are mainly contracted services that are generally fixed in amount and relate to the number of users. As
a result, it is not necessary to carry a large cash reserve. Some of the items with significant changes are highlighted below:
• Operating receipts (blue) were sufficient to cover operating costs (grey) in each of the four years presented.
People
Be dthe
-13- Numbers
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Sewer Fund Cash Flow
2011 2011 Receipts 2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts
Disbursements Disbursements Disbursements Disbursements
■ Operating costs ■ Debt payments (including related transfers) ■ Other (capital, interfund)
■ Operating receipts ■ Other (connection fees, interest, bond proceeds)
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Sewer Fund Cash Balance
2011 2012 2013 2014
Unrestricted —dr- Minimum target balance (following year debt service plus 6 months of operating expenses)
2011 2012 2013 2014
Bonds payable $ 905,000 $ 735,000 $ 560,000 $ 10,000,000
Some of the items with significant changes are highlighted below:
• Except for 2013, operating receipts (blue) have been sufficient to cover operating costs (grey) and debt payments (green) for
each of the years shown above.
• Operating revenues (full accrual) increased $120,865 in 2014 compared to 2013.
• Within other operating receipts, connection fees decreased approximately $68,000 from 2013 to 2014, however, still
came in at $560,581. These fees ultimately provide for current debt service and future expansion of the system. In
addition there was a significant market value adjustment on investments.
• The City issued $10,000,000 of 2014B G.O. Sewer Revenue Bonds to finance the construction of
a new Wastewater Treatment Plant. The cash balance of $14,348,133 includes unspent bond People
proceeds. +WoCeSS®
We recommend that the rates be reviewed annually to ensure that they are sufficient to cover operating costs, qo
annual scheduled debt payments, and planned project costs. Beyq dtne
-14- NuifiberS
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
s-
Water Fund Cash Flow
2011 2011 Receipts 2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts
Disbursements Disbursements Disbursements Disbursements
■ Operating costs ■ Debt payments ■ Other (capital, interfund, etc.) ■ Operating receipts ■ Other (interest connection fees, etc.)
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Water Fund Cash Balance
2010 2011 2012 2013
Unrestricted (Unrestricted designated reserve*
* Unrestricted Designated Reserve: This reserve is established to address the short-term financial variability inherent in operating
a Water Utility. Potential sources of this variability include but are not limited to: risks associated with natural disasters, reduction
in overall customer usage, changes in total system usage resulting from the actions of large customers, failure to achieve budgeted
levels of net income, changes in interest income, and general operational exposures.
The target level for this reserve, included as the red line in the chart above, is 6 months operating expenditures less depreciation
plus the sum of next year's total principal and interest payments. The balance above this target level shall be unrestricted.
For more information, see separately issued Elk River Municipal Utilities report.
-15-
People
+Prowls.
Doing
Beyondthe
Numbers
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
Electric Fund Cash Flow
2010 2010 Receipts 2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts
Disbursements Disbursements Disbursements Disbursements
■ Operating costs ■ Debt payments ■ Other (capital, interfund, etc.) ■ Operating receipts ■ Other (interest, interfund, etc.)
$14,000,000
$12,000,000
$10,000,000
$ 8,000,000
$6,000,000
$4,000,000
$2,000,000
Electric Fund Cash Balance
2010 2012 2013 2014
Unrestricted � Restricted for debt service (bond covenents) (Unrestricted designated reserve*
* Unrestricted designated reserve: established to address the short-term financial variability inherent in operations. Potential
sources of this variability include risks associated with natural disasters, reduction in overall customer usage, changes in total
system usage resulting from the actions of large customers, failure to achieve budgeted levels of net income, changes in interest
income, and general operational exposures.
The target level for this reserve, included as the red line in the chart above, is the sum of six months operating expenditures less
depreciation and less purchase power costs, plus the sum of next year's total principal and interest payments, plus one month
budgeted average purchase power cost. The balance above this target level shall be unrestricted.
For more information, see separately issued Elk River Municipal Utilities report. People
+Process®
-16-
Gom, g
Beyondthe
Numbers
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future
City financial statements: (1)
GASB Statement No. 68 - The Accounting and Financial Reporting of Pensions - an Amendment of GASB Statement No. 27
The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for
pensions. It also improves information provided by state and local governmental employers about financial support for pensions
that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of
accounting and financial reporting for pensions with regard to providing decision - useful information, supporting assessments of
accountability and interperiod equity, and creating additional transparency.
This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental
Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided
through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain
criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this
Statement.
This Statement is effective for fiscal years beginning after June 15, 2014. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve the decision - usefulness of information in employer and governmental
nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by
requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Decision -
usefulness and accountability also will be enhanced through new note disclosures and required supplementary information.
GASB Statement No. 71 - Pension Transition for Contributions Made Subsequent to the Measure Date - an Amendment of
GASB Statement No. 68
Summary
The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68,
Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a
state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement
date of the government's beginning net pension liability.
Statement No. 68 requires a state or local government employer (or nonemployer contributing entity in a special funding
situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior
fiscal year. If a state or local government employer or nonemployer contributing entity makes a contribution to a defined benefit
pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period,
Statement No. 68 requires that the government recognize its contribution as a deferred outflow of resources. In addition,
Statement No. 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net
pension liability of a state or local government employer or nonemployer contributing entity that arise from other types of events.
At transition to Statement No. 68, if it is not practical for an employer or nonemployer contributing entity to determine the
amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, paragraph 137 of Statement
No. 68 required that beginning balances for deferred outflows of resources and deferred inflows of resources not be reported.
Consequently, if it is not practical to determine the amounts of all deferred outflows of resources and deferred inflows of
resources related to pensions, contributions made after the measurement date of the beginning net pension liability could not have
been reported as deferred outflows of resources at transition. This could have resulted in a significant understatement of an
employer or nonemployer contributing entity's beginning net position and expense in the initial period of implementation.
This Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning
deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the
beginning net
pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred
outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is
practical to determine all such amounts.
People
+Process®
The provisions of this Statement are required to be applied simultaneously with the provisions of Statement
68.
C0
No.
Beyo dthe
-17-
Nuifibers
Future Accounting Standard Changes - Continued
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will eliminate the source of a potential significant understatement of restated beginning net
position and expense in the first year of implementation of Statement No. 68 in the accrual -basis financial statements of
employers and nonemployer contributing entities. This benefit will be achieved without the imposition of significant additional
costs.
GASB Statement No. 72 -Fair Value Measurement and Application
Summary
This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial
reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to
all fair value measurements.
Fair Value Measurement
Fair value is described as an exit price. Fair value measurements assume a transaction takes place in a government's principal
market, or a government's most advantageous market in the absence of a principal market. The fair value also should be measured
assuming that general market participants would act in their economic best interest. Fair value should not be adjusted for
transaction costs.
To determine a fair value measurement, a government should consider the unit of account of the asset or liability. The unit of
account refers to the level at which an asset or a liability is aggregated or disaggregated for measurement, recognition, or
disclosure purposes as provided by the accounting standards. For example, the unit of account for investments held in a brokerage
account is each individual security, whereas the unit of account for an investment in a mutual fund is each share in the mutual
fund held by a government.
This Statement requires a government to use valuation techniques that are appropriate under the circumstances and for which
sufficient data are available to measure fair value. The techniques should be consistent with one or more of the following
approaches: the market approach, the cost approach, or the income approach. The market approach uses prices and other relevant
information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets and
liabilities. The cost approach reflects the amount that would be required to replace the present service capacity of an asset. The
income approach converts future amounts (such as cash flows or income and expenses) to a single current (discounted) amount.
Valuation techniques should be applied consistently, though a change may be appropriate in certain circumstances. Valuation
techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
This Statement establishes a hierarchy of inputs to valuation techniques used to measure fair value. That hierarchy has three
levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs —
other than quoted prices — included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Finally, Level 3 inputs are unobservable inputs, such as management's assumption of the default rate among underlying
mortgages of a mortgage- backed security.
A fair value measurement takes into account the highest and best use for a nonfinancial asset. A fair value measurement of a
liability assumes that the liability would be transferred to a market participant and not settled with the counterparty. In the absence
of a quoted price for the transfer of an identical or similar liability and if another party holds an identical item as an asset, a
government should be able to use the fair value of that asset to measure the fair value of the liability.
This Statement requires additional analysis of fair value if the volume or level of activity for an asset or liability has significantly
decreased. It also requires identification of transactions that are not orderly. Quoted prices provided by third parties are permitted,
as long as a government determines that those quoted prices are developed in accordance with the provisions of this Statement.
-18-
People
+Process®
Going
Beyondthe
Numbers
Future Accounting Standard Changes - Continued
Fair Value Application
This Statement generally requires investments to be measured at fair value. An investment is defined as a security or other asset
that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its
ability to generate cash or to be sold to generate cash. Investments not measured at fair value continue to include, for example,
money market investments, 2a7 -like external investment pools, investments in life insurance contracts, common stock meeting
the criteria for applying the equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts. A
government is permitted in certain circumstances to establish the fair value of an investment that does not have a readily
determinable fair value by using the net asset value per share (or its equivalent) of the investment.
This Statement requires measurement at acquisition value (an entry price) for donated capital assets, donated works of art,
historical treasures, and similar assets and capital assets received in a service concession arrangement. These assets were
previously required to be measured at fair value.
Fair Value Disclosures
This Statement requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation
techniques. Governments should organize these disclosures by type of asset or liability reported at fair value. It also requires
additional disclosures regarding investments in certain entities that calculate net asset value per share (or its equivalent).
The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will enhance comparability of financial statements among governments by requiring
measurement of certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and accepted
valuation techniques. This Statement also will enhance fair value application guidance and related disclosures in order to provide
information to financial statement users about the impact of fair value measurements on a government's financial position.
a) Note. From GASB Pronouncements Summaries. Copyright 2014 by the Financial Accounting Foundation, 401 Merritt 7, Norwalk,
CT 06856, USA, and is reproduced with permission.
This communication is intended solely for the information and use of City Council, management, and the Minnesota Office of the
State Auditor and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records
and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this
context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience.
We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended to us by your staff.
&k,or
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 7, 2015
-19-
People
+Process®
Going
Beyondthe
Numbers
Elk
River Minnesota
Comprehensive Annual
Financial Report
For the year Ended
December 3 I, 2014
F4 Aftp 4400'
40,
000000
a.. �
i
�AM
At
lop
ala
4
4 h� py
se
'sue*, �_ �'.' _ i ft. , � K."� � A„`,u +�� • �''� �" .Z, a•,�.- ;,-��.
Y
1� �1
!�, �! i i •
.'1 � ..�' � .r '•... �� wit � ..
CITY OF ELK RIVER, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended December 31, 2014
PREPARED BY THE FINANCE DEPARTMENT
Member of Government Finance Officers Association
of the United States and Canada
CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31. 2014
Pape No.
I. INTRODUCTORY SECTION
Letter of Transmittal .......................................................... ............................... 1
Certificate of Achievement ................................................... ............................... 4
Organizational Chart .......................................................... ............................... 5
Elected and Appointed Officials ............................................ ............................... 6
II. FINANCIAL SECTION
Independent Auditor's Report ............................................... ...............................
7
Management's Discussion and Analysis ................................... ...............................
9
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Position .............................................. ...............................
19
Statementof Activities .................................................. ...............................
20
Fund Financial Statements:
Balance Sheet - Governmental Funds ................................ ...............................
22
Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Position ....................................... ...............................
23
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds ............................. ...............................
24
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ............................................... ...............................
25
Statement of Revenues, Expenditures, and Changes in
Fund Balance - Budget and Actual - General Fund .............. ...............................
26
Statement of Net Position - Proprietary Funds ....................... ...............................
27
Statement of Revenues, Expenses, and Changes in
Net Position - Proprietary Funds ..................................... ...............................
29
Statement of Cash Flows - Proprietary Funds ........................ ...............................
31
Statement of Fiduciary Net Position - Developer
Escrow Agency Fund ................................................. ...............................
35
Notes to Financial Statements ............................................ ...............................
36
Required Supplementary Information
Schedule of Funding Progress - Elk River Fire Relief Pension Plan ............................... 63
Schedule of Funding Progress - Other Postemployment Benefits ... ............................... 63
Combining and Individual Fund Statements and Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet - Nomnajor Governmental Funds ..... ............................... 64
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances - Nonmajor Governmental Funds ............. ............................... 65
Nonmajor Special Revenue Funds
Subcombm' mg Balance Sheet - Nonmajor Special Revenue Funds ............................. 66
Subcombining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Special Revenue Funds .............. ............................... 68
Special Revenue Funds:
Schedules of Revenues, Expenditures, and Changes in
Fund Balance - Budget and Actual:
Library................................................................. .............................70
CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2014
III. STATISTICAL SECTION (UNAUDITED)
Net Position by Component ................................................ ...............................
Paee No.
Special Revenue Funds:
88
Schedules of Revenues, Expenditures, and Changes in
92
Fund Balance - Budget and Actual:
94
IceArena ............................................................ ...............................
71
Pinewood Golf Course ............................................ ...............................
72
Landfill.............................................................. ...............................
73
Economic Development Authority .............................. ...............................
74
Nonmajor Debt Service Funds:
101
Subcombining Balance Sheet - Nonmajor Debt Service Funds ... ...............................
75
Subcombining Statement of Revenues, Expenditures, and Changes in
103
Fund Balances - Nonmajor Debt Service Funds ................. ...............................
76
Nonmajor Capital Projects Funds:
106
Subcombining Balance Sheet — Nonmajor Capital Projects Funds ..............................
77
Subcombining Statement of Revenues, Expenditures, and Changes in
109
Fund Balances — Nonmajor Capital Projects Funds ............. ...............................
79
Statement of Changes in Assets and Liabilities -
112
Developer Escrow Agency Fund ...................................... ...............................
81
Component Unit Financial Statements:
114
Housing and Redevelopment Authority:
115
Fund Financial Statements:
BalanceSheet ...................................................... ...............................
82
Reconciliation of the Governmental Fund Balance Sheet
to the Statement of Net Position ............................... ...............................
83
Statement of Revenues, Expenditures, and Change in Fund Balance .....................
84
Reconciliation of the Statement of Revenues, Expenditures,
and Change in Fund Balance of Governmental Fund to the
Statement of Activities .......................................... ...............................
85
III. STATISTICAL SECTION (UNAUDITED)
Net Position by Component ................................................ ...............................
86
Changesin Net Position ..................................................... ...............................
88
Fund Balances of Governmental Funds ................................... ...............................
92
Changes in Fund Balances of Governmental Funds ..................... ...............................
94
ElectricSales ................................................................. ...............................
96
Principal Electric Customers ............................................... ...............................
97
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property ...................
98
PropertyTax Rates .......................................................... ...............................
100
PrincipalTaxpayers ......................................................... ...............................
101
Property Tax Levies and Collections ..................................... ...............................
102
Ratios of Outstanding Debt by Type ...................................... ...............................
103
Ratios of General Bonded Debt Outstanding ............................ ...............................
105
Direct and Overlapping Governmental Activities Debt ................ ...............................
106
Legal Debt Margin Information ........................................... ...............................
107
Pledged- Revenue Coverage ................................................ ...............................
109
Demographic and Economic Statistics ................................... ...............................
111
PrincipalEmployers ........................................................ ...............................
112
Full -Time Equivalent Employees by Function .......................... ...............................
113
Operating Indicators by Function ......................................... ...............................
114
Capital Asset Statistics by Function ...................................... ...............................
115
INTRODUCTORY SECTION
June 1, 2015
Honorable Mayor, Members of the City Council,
and Citizens of Elk River:
The Comprehensive Annual Financial Report (CAFR) for the City of Elk River for the fiscal year ended December 31,
2014, is hereby submitted. Minnesota State Statutes and the City's ordinance require an annual audit of the City's
accounts by the State Auditor's Office or by independent certified public accountants. The firm of Abdo, Fick, and
Meyers was selected to perform the City's audit and their unmodified opinion has been included in this report. The
independent auditor's report is included in the financial section of this report.
This report was prepared by the City's Finance Department and responsibility for both the completeness and accuracy
of this data, as well as the fairness of this presentation including all enclosures, rests with the City. To the best of my
knowledge and belief, the enclosed data are accurate in all material respects and are recorded in a manner designed to
present fairly the financial position and the results of operations of the various funds of the City. To provide a
reasonable basis for making these representations, management of the City has established a comprehensive internal
control framework that is designed to both protect the City's assets from loss, theft, or misuse, and to compile
sufficient reliable information for the preparation of these financial statements in accordance with generally accepted
accounting principles (GAAP). Internal accounting controls are designed to provide reasonable but not absolute
assurance regarding the safeguarding of the City's assets against loss, theft, or misuse, and ensuring that adequate
financial records are maintained for preparing financial statements, and maintaining accountability for assets. The
development of an appropriate internal control system requires estimates and judgments by management to ensure that
the costs do not exceed the benefits of the system. The City of Elk River's internal control structure is designed so that
the estimated costs of control do not exceed the benefits.
Generally accepted accounting principles require that management provide a narrative introduction, overview and
analysis to accompany the basic financial statements in the form of a Management's Discussion and Analysis
(MD &A). This letter of transmittal is designed to compliment the MD &A and should be read in conjunction with it.
The City of Elk River's MD &A immediately follows the independent auditor's report and provides a narrative
introduction, overview, and analysis of the basic financial statements.
Profile of the Government
The City of Elk River was originally incorporated in 1880 and consolidated with Elk River Township in 1978 to form
a city of 44 square miles. The City of Elk River is located in Sherburne County and serves as the county seat. Elk
River is located approximately halfway between the metropolitan areas of Minneapolis /St. Paul and Saint Cloud along
the Mississippi River. The City of Elk River has been growing and will not reach full development in the near future.
The current population is approximately 23,656. Urban services are available to about one -third of the land area in the
City.
The City of Elk River operates under a statutory form of government consisting of a four member City Council and a
Mayor who is also a voting member. Council members are elected by ward to a four -year term with two Council seats
up for election each even year. The Mayor is also elected to a four -year term. The City Council is responsible for
adopting the City's budget and tax levy, passing resolutions and ordinances, all hiring and firing decisions, policy
making, development and growth planning, and overall direction of the City.
In addition to providing general government services, the City of Elk River provides a full range of other services
including police and fire protection, building and other safety inspections, planning and zoning, economic
development, environmental services, parks and recreation, library, street, snow removal, infrastructure maintenance
and repair, and others. The City also provides municipal water, sewer, garbage, and electric services and operates two
off -sale liquor stores.
The annual budget serves as the foundation for the City of Elk River's financial planning and control. Budget requests
are submitted by all departments to the Finance Department each May. The Finance Department compiles these
requests into a proposed budget. The Finance Department and city administrator review the information and present a
draft budget to the Council in July for consideration. Following Council discussion and public input, the final tax levy
and budget are approved in December. The City's Financial Management Policies allow department heads to make
administrative budget amendments (excluding personal service and capital outlay) throughout the year as long as the
total department budget does not change and the amendment is approved by the city administrator and finance director.
The Council approves additional budget amendments in December of each year. Budget to actual comparisons are
provided in this report for each individual governmental fund for which an appropriated annual budget has been
adopted. For the general fund this comparison is presented on page 26 as part of the basic financial statements for the
governmental funds. For other governmental funds with appropriated annual budgets this comparison is presented in
the governmental fund subsection of this report.
Local economy
The local economy has continued to grow by the increase in building permits with a construction value of $47,037,206
being issued in 2014. This is a 22 percent increase from 2013. New additions and remodels accounted for
$26,195,801 of new value, and an additional $20,841,405 in residential construction with miscellaneous permits
making up the balance. The number of new housing units remained steady from 82 in 2013 to 72 in 2014. Single
family homes accounted for 68 units, 4 multi - family units, and 1 -52 unit apartment building accounted for the new
housing units in 2014. The average value of new homes increased to $202,836.
Many of Elk River's largest employers reported stable or growing employment levels between 2014 and 2015. This is
largely due to the upward trend in manufacturing activity in the region. Many larger Elk River employers are
experiencing modest growth. There has been continual interest in both affordable and market rate multi- family
housing projects.
Several Elk River companies made significant new improvements including Preferred Powder Coating with the
construction of a new 100,000 sq. ft. facility; Sportech expanded their manufacturing facility, while several other
businesses completed expansions and upgraded their facilities. The outlook in this region looks promising with
anticipation of several commercial industrial projects working through the review process, with construction expected
the last half of 2015.
Long -term financial planning
As part of a yearly budget process, the City Council reviews the updated Financial Management Plan. The Financial
Management Plan provides a long -range forecast that brings together future expenditures, revenues, and development
of the City. The Council has been diligent in maintaining a level tax rate. This plan provides the information needed to
develop in a manner that will sustain or expand City services while keeping the property taxes stable. Department
heads take part in this process to estimate staff additions, service levels, and capital needs for the next ten years.
In addition, the City Council continually reviews cash flow analysis and long -term planning as part of the
comprehensive Capital Improvement Plan (CIP) process. The CIP is a 5 -year planning tool that forecasts the City's
capital needs based on the City's long -range plans, goals, and policies.
Relevant Financial Policies
The City Council has adopted several Financial Management Policies and continually monitors and updates the
policies. The Financial Management Policies include: revenues, property taxes, investments, purchasing, financial
reporting, reserves, fund balance, capital investment, and debt policies. The City's policy on fund balance states that
the City will maintain an unassigned fund balance of not less than 40 -45% of budgeted general fund operating
expenditures. The percentage of unassigned fund balance at December 31, 2014 is 44 %. Since property tax payments
are received by the City in two installments in July and December, the City needs adequate cash reserves for cash flow
in order to avoid short-term borrowing to finance operations.
Changes in state law over the past several years have resulted in funding changes for both schools and local
governments. Replacements of Market Value Homestead Credits (MVHC) with the Market Value Exclusion (MVE)
program and Local Government Aids (LGA) program have resulted in revenue losses to the City. Due to the
uncertainty in receiving the aid from the state, the LGA and MVHC revenues are not included in the 2015 General
Fund budget. The City does not expect in the short-term to see LGA and MVHC amounts restored to previous year's
levels.
Major Initiatives
In 2014, the city continued execution of the 171" Avenue Focus Area Study, with the construction of Natures Edge
Business Park Phase II. The project involved extending municipal streets and utilities to serve a new 36 -acre business
park. The city completed an update to our comprehensive plan and started working on a parks master plan update,
these strategic initiatives will provide direction about future growth and land use of the city. The city also studied and
determined the long -term funding plan to address our growing storm water management requirements. In addition, Elk
River's Northstar Station continues to have the largest ridership numbers along the rail line that runs from Minneapolis
to Big Lake.
Awards and Acknowledgements
The Government Finance Officers Association of the United Stated and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the City of Elk River for its Comprehensive Annual Financial
Report for the fiscal year ended December 31, 2013. This was the 25th consecutive year that the City has received 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 the GFOA to determine its eligibility for another certificate.
The City received the GFOA Award for the Distinguished Budget Presentation for the City budget for the fiscal year
beginning January 1, 2014. It was the 6`" consecutive year the City received the award for the document.
The preparation of this report is made possible by the efficient and dedicated services of the entire staff of the city
administrator's office and Finance Department. The Mayor and City Council are to be commended for their diligence
and resolve in keeping the City in sound and stable financial condition. The City Council's commitment to continually
plan for the City's future and dedication to maintain high financial standards has helped the City maintain its strong
financial condition during a long period of growth and subsequent slowdown.
Respectfully submitted,
Timothy Simon
Finance Director
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Presented to
City of Elk River
Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2013
11
CITE' OF ELK RIVER
ORGANIZATIONAL CHART
- City Clerk
- Human Resources
- Cable TV
Finance
Payroll
Information Tech.
Building Maint.
Liquor
- Planning
- Environmental
- Economic Develop.
- Engineering
- Streets
- Equip. Services
- Sewer
Police Admin.
Patrol
Investigations
Support Services
Reserves
Fire
Emergency Mgmt.
Building Safety.
Code Enforcement
- Recreation
- Park Maintenance
- Sr. Center
-Ice Arena
- Golf Course
- Library
Electric
Water
CITY OF ELK RIVER, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2014
CITY COUNCIL
John Dietz
Barbara Burandt
Paul Motin
Matthew Westgaard
Stewart Wilson
APPOINTED PERSONNEL
Calvin Portner
Timothy Simon
Bradley Rolfe
T. John Cunningham
Michael Hecker
Justin Femrite
Suzanne Fischer
Term Expires
December 31.
Mayor
2014
Council member
2016
Council member
2014
Council member
2016
Council member
2014
City Administrator
Finance Director
Police Chief
Fire Chief
Parks & Recreation Director
City Engineer
Community Operations & Development Director
FINANCIAL SECTION
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and City Council
City of Elk River, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota (the
City), as of and for the year ended December 31, 2014, 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. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of 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.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate
remaining fund information of the City as of December 31, 2014, and the respective changes in financial position and, where
applicable, cash flows thereof and the respective budgetary comparison for the General fund for the year then ended in accordance
with accounting principles generally accepted in the United States of America.
5201 Eden Avenue. Suite 250
Edina, MN 55436
952.835.9090 1 Fax 952.835 3261 7
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis
starting on page 9 and the Schedule of Funding Progress on page 63 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management's responses to our inquiries,
the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic
financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical
section are presented for the purpose of additional analysis and are not a required part 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 combining and individual fund financial statements
and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section and statistical section 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.
&k 4", Ly
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 7, 2015
People
+process
ioiitg
Beyondn,,,
Nud ibels
Management's Discussion and Analysis
As management of the City of Elk River, 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, 2014. We encourage readers to
consider the information presented here in conjunction with the additional information that we have furnished in our letter
of transmittal, which can be found on pages 1 - 3 of this report.
Financial Highlights
The assets and deferred outflows of resources of the City of Elk River exceeded its liabilities at the close of the most recent
fiscal year by $202,618,756 (net position). Of this amount, $49,715,186 (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 $3,298,594, attributable to a capital contribution of $3.1 million in culture and
recreation for the donation of park land and the increase in investment earnings due to market value adjustments.
As of the close of the current fiscal year, the City of Elk River's governmental funds reported combined ending fund
balances of $39,375,862.
The City of Elk River's total long -term liabilities increased $6,465,910 during the current fiscal year, from $50,652,269 to
$57,118,179.
Governmental activities:
Bonds payable
Contracts for deeds
Compensated absences
Net OPEB obligation
Total governmental activities
Business -type activities:
Bonds payable
Notes payable
Compensated absences
Net OPEB obligation
Total business -type activities
Total City long -term liabilities
Beginning
Special
Debt
Capital
Additions
Reductions
General
Revenue
Service
Projects
Total
Nonspendable
$ 22,725
$ 101,910
$
$ -
$ 1245635
Restricted
-
25130,444
105994,654
800,585
13,9255683
Committed
317,929
35498,482
317,929
2,3301519
6,1469930
Assigned
-
883,104
391957,533
15,000,175
15,8835279
Unassigned
55822,948
(2,527,613)
3,295,335
(3,9441090)
$ 691639602
$ 616139940
$ 10,9945654
$ 15,603,666
$ 395375,862
The City of Elk River's total long -term liabilities increased $6,465,910 during the current fiscal year, from $50,652,269 to
$57,118,179.
Governmental activities:
Bonds payable
Contracts for deeds
Compensated absences
Net OPEB obligation
Total governmental activities
Business -type activities:
Bonds payable
Notes payable
Compensated absences
Net OPEB obligation
Total business -type activities
Total City long -term liabilities
Beginning
Ending
Balance
Additions
Reductions
Balance
$ 3658565600
$
$ (1,586,072)
$ 355270,528
154109000
-
-
11410,000
154429996
6505309
(5889619)
1,504,686
247,937
109,026
(39,034)
317,929
391957,533
759,335
(212132725)
38,5035143
853675478
1250795845
(3,9441090)
165503,233
19789,224
-
(189,348)
19599,876
457,668
1629494
(209,348)
410,814
805366
215312
(565)
101,113
10694,736
12,263,651
(41343,351)
18,615,036
$ 50 652 269
$ 13,022,986
$ (6,557,076)
$ 57,118,179
9
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Elk River's basic financial statements.
The city's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund
financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in
addition to the basic financial statements themselves.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the City of Elk
River's finances, in a manner similar to a private- sector business.
The statement of position presents information on all of the City of Elk River's assets and deferred outflows of resources,
and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Elk
River is improving or deteriorating.
The statement of activities presents information showing how the city's net position changed during the most recent fiscal
year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless
of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City of Elk River 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 of Elk River 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 of Elk River
include municipal liquor, garbage, sewer, water, and electric.
The government -wide financial statements include not only the City of Elk River itself (known as the primary
government), but also a legally separate Housing & Redevelopment Authority (HRA) for which the City of Elk River is
financially accountable. Financial information for the HRA is reported separately from the financial information presented
for the primary government itself. The Elk River Municipal Utilities, although also legally separate, functions for all
practical purposes as a department of the City of Elk River, and therefore has been included as an integral part of the
primary government.
The government -wide financial statements can be found on pages 19 - 21 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 of Elk River, 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 of Elk River can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
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 -tern 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 by 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.
10
The City of Elk River maintains three individual major governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund
balances for the General, YMCA Bonds, and TIF Districts funds. Data from the other governmental funds are combined
into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in
the form of combining statements elsewhere in this report.
The City of Elk River adopts an annual appropriated budget for its General fund and some special revenue funds. A
budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget.
• The basic governmental fund financial statements can be found on pages 22 - 26 of this report
Proprietary funds. When the City of Elk River charges customers for the services it provides - whether to outside
customers or to other departments of the city - these services are generally reported in proprietary funds. Proprietary funds
are reported in the same way that all activities are reported in the statement of net position and the statement of revenues,
expenses, and changes in net position. The enterprise funds are the same as the business -type activities reported in the
government -wide statements but provide more detail and additional information, such as cash flows, for proprietary funds.
The City of Elk River uses enterprise funds to account for its municipal liquor, garbage, sewer, water, and electric
operations.
The basic proprietary fund financial statements can be found on pages 27 - 34 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not
available to support the City of Elk River's own program. The accounting used for fiduciary funds is much like that used
for proprietary funds.
The basic fiduciary fund financial statements can be found on page 35 of this report.
Notes to 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 can be found on
pages 36 - 62 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 of Elk River's progress in funding its obligation to provide
pension and other postemployment benefits to its employees. Required supplementary information can be found on
page 63 of this report.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately
following the required supplementary information. Combining and individual fund statements and schedules can be found
on pages 64 - 85 of this report.
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 of Elk River, assets and deferred outflows of resources exceeded liabilities by $202,618,756 at the close of the
most recent fiscal year.
By far, the largest portion of the City of Elk River's net position (73 percent) reflects its investment in capital assets (e.g.,
land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The
City of Elk River uses these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the City of Elk River'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.
11
City of Elk River Net Position
Net investment
in capital assets
Governmental
Business -type
63,392,972
62,035,437
148,314,622
Activities
Restricted
Activities
5,256,724
Total
647,000
4,683,356
2014
2013
2014
2013
2014
2013
Current and other assets
$43,319,151
$43,006,847
$39,001,534
$28,382,679
$82,320,685
$71,389,526
Capital assets
111,622,597
112,604,539
73,546,983
72,116,614
185,169,580
184,721,153
Total assets
154,941,748
155,611,386
112,548,517
100,499,293
267,490,265
256,110,679
Total deferred outflows
of resources
294,581
330,846
67,284
75,525
361,865
406,371
Long -term liabilities
outstanding
38,503,143
39,957,533
18,615,036
10,694,736
57,118,179
50,652,269
Other liabilities
2,716,293
2,304,480
5,398,902
4,240,139
8,115,195
6,544,619
Total liabilities
41,219,436
42,262,013
24,013,938
14,934,875
65,233,374
57,196,888
Net investment
in capital assets
84,921,650
84,353,785
63,392,972
62,035,437
148,314,622
146,389,222
Restricted
4,192,856
5,256,724
490,500
647,000
4,683,356
5,903,724
Unrestricted
24 902,387
24,069,710
24,718,391
22,957,506
49,620,778
47,027,216
Total net position
$114,016,893
$113,680,219
$88,601,863
$85,639,943
$202,618,756
$199,320,162
An additional portion of the City of Elk River's net position (2 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net position ($49,620,778) may be used to
meet the City of Elk River's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City of Elk River is able to report positive balances in all three categories of net
position, both for the city as a whole, as well as for its separate governmental and business -type activities.
12
City of Elk River Changes in Net Position
Governmental activities. Governmental activities account for 56% of the City of Elk River's net position.
Governmental activities increased the city's net position by $336,674. Key elements of the relevant changes are as
follows:
• In 2014 the city accepted a donation of park property valued at over $3.1 million.
• The franchise tax for street maintenance and repairs was implemented in mid -2013; no longer utilizing special
assessments and property taxes.
• The increase in investment earnings reflects the market value adjustment of the city's investment portfolio.
13
Governmental
Business -type
Activities
Activities
Total
2014
2013
2014
2013
2014
2013
Revenues:
Program revenues:
Charges for services
$ 2,666,277 $
2,856,556
$ 43,751,274 $
43,065,945
$ 46,417,551 $
45,922,501
Operating grants and contributions
1,049,744
954,164
-
-
1,049,744
954,164
Capital grants and contributions
4,020,851
807,208
935,909
924,641
4,956,760
1,731,849
General revenues:
Property taxes
10,509,231
10,830,218
-
-
10,509,231
10,830,218
Other taxes
1,441,259
829,112
-
-
1,441,259
829,112
Grants and contributions not
restricted to specific programs
1,749,886
1,436,135
-
-
1,749,886
1,436,135
Unrestricted investment earnings (loss)
1,137,024
(663,762)
557,659
(243,047)
1,694,683
(906,809)
Gain on disposal of capital assets
29,593
629,177
29,525
1,572
59,118
630,749
Total revenues
22,603,865
17,678,808
45,274,367
43,749,111
67 878,232
61,4270919
Expenses:
General government
3,554,136
3,344,317
-
-
3,554,136
3,344,317
Public safety
6,615,593
6,173,244
-
-
6,615,593
6,173,244
Public works
6,860,673
6,535,616
-
-
6,860,673
6,535,616
Culture and recreation
4,088,992
3,914,000
-
-
4,088,992
3,914,000
Economic development
1,091,125
2,088,064
-
-
1,091,125
2,088,064
Interest on long -term debt
1,075,408
1,288,020
-
-
1,075,408
1,288,020
Municipal liquor
-
-
5,776,873
5,706,760
5,776,873
5,706,760
Garbage
-
-
1,303,943
1,251,420
1,303,943
1,251,420
Sewer
-
-
2,156,329
2,320,743
2,156,329
2,320,743
Water
-
-
2,459,319
2,332,680
2,459,319
2,332,680
Electric
29,597,247
28,422,759
29,597,247
28,422,759
Total expenses
23,285,927
23,343,261
41,293,711
40,034,362
64,579,638
63,377,623
Increase (decrease) in net
position before transfers
(682,062)
(5,664,453)
3,980,656
3,714,749
3,298,594
(1,949,704)
Transfer of capital assets
(313,287)
(121,172)
313,287
121,172
-
Transfers
1,332 023
1,565,206
(1,332,023)
(1,565,206)
Charge in net position
336,674
(4,220,419)
2,961,920
2,270,715
3,298,594
(1,949,704)
Net position - beginning
113,680,219
117,900,638
85,639,943
83,369,228
199,320,162
201,269,866
Net position - ending
$ 114,016,893 $
113,680,219
$ 88,601,863 $
85 639,943
$ 202,618,756 $
199,320,162
Governmental activities. Governmental activities account for 56% of the City of Elk River's net position.
Governmental activities increased the city's net position by $336,674. Key elements of the relevant changes are as
follows:
• In 2014 the city accepted a donation of park property valued at over $3.1 million.
• The franchise tax for street maintenance and repairs was implemented in mid -2013; no longer utilizing special
assessments and property taxes.
• The increase in investment earnings reflects the market value adjustment of the city's investment portfolio.
13
Revenues by Source - Governmental Activities
Other Net transfers
Unrestricted 0.1% 4.3% Charges for services
investment earnings� 11.3% 'Op(
Other taxes
6.1%
Property taxes
44.5%
14
;rating grants and
contributions
4.5%
pital grunts and
contributions
17.0%
Grants and
unrestricted
7.4%
Expenses and Program Revenues - Governmental Activities
$8,000,000
--
$7,000,000
—
--- -- - - - -- - - - - - --
$6,000,000
-- -- .__.-' —'-- —
'- --' -
$5,000,000
- ----- --
-- --- -
-_— °-----.._- --' - -- --
$4,000,000
- ° --
- -------------°- --
$3,000,000
- -- - - --- - - - - --
$2,000,000
---- - -- -- -- -- --
-- --- -.._..��_
$1,000,000
$-
-- -
- -- - --
- * - -�-
General Public safety Public works
Culture and Economic Interest on long-
government
recreation development term debt
■ Revenue
■ Expense
Revenues by Source - Governmental Activities
Other Net transfers
Unrestricted 0.1% 4.3% Charges for services
investment earnings� 11.3% 'Op(
Other taxes
6.1%
Property taxes
44.5%
14
;rating grants and
contributions
4.5%
pital grunts and
contributions
17.0%
Grants and
unrestricted
7.4%
Business -type activities. Business -type activities increased the City of Elk River's net position by $2,961,920. Key
elements of this increase are as follows:
• Charges for services for business -type activities increased $685,329 due largely to an increase in electric usage.
The electric utility accounts for 72% of the total charges for services.
• The increase in investment earnings reflects the market value adjustment of the city's investment portfolio.
Expenses and Program Revenues - Business -type Activities
$35,000,000
$30,000,000 - - - - - --
$25,000,000 - - - - - -
$20,000,000 - - - - -- -
$15,000,000 - - -
$10,000,000
$5,000,000 - - --- ---
Municipal liquor Garbage Sewer Water Electric
■ Revenue • Expense
Revenues by Source - Business -type Activities
Unrestricted
96.6%
15
Financial Analysis of the Government's Funds
Governmental funds. The focus of the city's governmental funds is to provide information on near -tern 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 reported combined ending fund balances of
$39,375,862. Approximately 8% of this total amount ($3,295,335) constitutes unassigned fund balance. The remainder of
fund balance ($36,080,527) is not available for new spending because it is either 1) nonspendable ($124,635) , 2) restricted
($13,9255683), 3) committed ($6,146,930) or 4) assigned ($15,883,279) for other purposes.
The General fund is the chief operating fund of the City of Elk River. The total fund balance of the General fund increased
$109,312 during the current year, resulting primarily from budgeted transfers in.
The YMCA Bonds fund decreased $117,205 due to the debt service payments on the crossover advance refunding debt
issued in 2013.
The TIF Districts fund decreased $210,493 due to TIF development expenses that will be reimbursed with future TIF
revenues.
Proprietary funds. The City of Elk River's proprietary funds provide the same type of information found in the
government -wide statements, but in more detail.
Unrestricted net position in the respective proprietary funds are Municipal Liquor - $3,129,636, Garbage - $613,708,
Sewer - $5,628,161, Water - $3,744,773, and Electric - $11,602,113. The Garbage fund net position decreased $1,767 due
mainly to the transfers out to the General Fund for administrative services. All other proprietary funds had increases in net
position.
General Fund Budgetary Highlights
There was no difference between the original budget and the final budget for the General fund. The revenue budgets were
amended to reflect the increase in building and construction related charges for services. The expenditure budgets were
amended to reflect the increase in expenditures related to snow removal and engineering services. Key factors are as
follows:
• Total revenue collections were 101% of budget. Property tax collections were $83,308 over budget due to
delinquent tax collections and licenses and permits were $23,386 over due to increased building activity.
• Expenditures were under budget by $47,285 due mainly to personnel vacancies in the fire and building safety
departments and sound fiscal control by city departments.
Capital Asset and Debt Administration
Capital Assets. The City of Elk River's investment in capital assets for its governmental and business type activities as of
December 31, 2014, amounts to $185,169,580 (net of accumulated depreciation). This investment in capital assets includes
land, buildings, improvements, equipment and infrastructure. The total increase in the City of Elk River's investment in
capital assets for the current year was $448,427 or less than 1 percent (a .8 percent decrease for governmental activities and
a 2 percent increase for business -type activities).
Major capital asset events during the current fiscal year included the following
• $137,500 in general government equipment, $307,000 in public safety equipment, $393,000 in public works
equipment and $254,000 in parks equipment/improvements.
• Park property valued at $3,105,000 was donated to the city.
• Construction totaling $749,673 was started on Natures Edge Business Center Phase II.
• Construction began on the wastewater treatment facility improvements totaling over $2.6 million.
• Upgraded several electric feeders and began work on the installation of a new feeder.
• Two water main projects were completed in 2014.
16
City of Elk River Capital Assets
(Net of Depreciation)
Additional information on the city's capital assets can be found in Note 3C on pages 48 - 49 of this report.
Long -term debt. At the end of the current fiscal year, the city had total long -term debt outstanding of $57,118,179, an
increase of $6,465,910 from 2013. General obligation improvement bonds ($33,515,000) were issued to finance the
construction of a library, a recreation facility, a public safety /city hall facility and a public works facility. General
obligation revenue bonds ($12,835,000) were used to finance sewer and water systems. Revenue bonds ($3,585,000) were
used to finance electric system improvements. Special assessment bonds ($1,210,000) financed improvement projects
within the city and are assessed to the benefiting properties.
City of Elk River Outstanding Debt
Governmental
Business -type
Activities
Activities
Total
2014
2013
2014
2013
2014
2013
Bonds payable:
Land
$ 409911,871
$ 37,806,871
$ 1,526,359 $
1,526,008
$ 42,438,230
$ 39,332,879
Construction in progress
749,673
-
3,602,803
2,2651169
49352,476
2,265,169
Buildings
29,413,979
31,023,746
9,981,099
10,644,146
399395,078
41,667,892
Other improvements
2,246,132
2,412,772
-
-
2,246,132
21412,772
Equipment
3,717,618
3,660,988
2,094,310
11402,605
5,811,928
51063,593
Infrastructure
34,583,324
37,700,162
569342,412
56,278,686
90,925,736
93,9789848
35,270,528
36,856,600
16,503,233
8,367,478
51,773,761
Total
$ 111,622,597
$1121604,539
$ 73,546,983 $
72,116,614
$ 185,169,580
$184,721,153
1,410,000
Notes payable
-
-
1,599,876
1,789,224
1,599,876
1,789,224
Additional information on the city's capital assets can be found in Note 3C on pages 48 - 49 of this report.
Long -term debt. At the end of the current fiscal year, the city had total long -term debt outstanding of $57,118,179, an
increase of $6,465,910 from 2013. General obligation improvement bonds ($33,515,000) were issued to finance the
construction of a library, a recreation facility, a public safety /city hall facility and a public works facility. General
obligation revenue bonds ($12,835,000) were used to finance sewer and water systems. Revenue bonds ($3,585,000) were
used to finance electric system improvements. Special assessment bonds ($1,210,000) financed improvement projects
within the city and are assessed to the benefiting properties.
City of Elk River Outstanding Debt
Additional long -term debt in the amount of $1,410,000 is for a contract for deed, $1,599,876 is for notes payable,
$1,915,500 is for compensated absences, and $419,042 is for other postemployment benefits obligations.
The city maintains a bond rating of AA+ from Standard & Poor's for general obligation debt.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable
Market Value. The current debt limitation for the City of Elk River is $53,892,054. $19,328,258 of the City's net
outstanding debt is counted within the statutory limitation.
Additional information on the City of Elk River's long -term debt can be found in Note 3E on pages 51 - 54 of this report
17
Governmental
Business -type
Activities
Activities
Total
2014
2013
2014
2013
2014
2013
Bonds payable:
G.O. bonds
$ 33,515,000
$ 34,675,000
$ - $
-
$ 33,515,000 $
34,675,000
G.O. revenue bonds
-
-
12,835,000
3,990,000
12,835,000
3,990,000
Revenue bonds
-
-
3,585,000
4,340,000
3,585,000
4,340,000
Special assessment bonds
11210,000
1,585,000
-
-
11210,000
11585,000
Issuance premium
545,528
596,600
83,233
37,478
628,761
634,078
Total bonds payable, net
35,270,528
36,856,600
16,503,233
8,367,478
51,773,761
45,224,078
Contracts for deeds
11410,000
1,410,000
-
-
11410,000
1,410,000
Notes payable
-
-
1,599,876
1,789,224
1,599,876
1,789,224
Compensated absences
1,504,686
1,442,996
410,814
457,668
1,915,500
1,900,664
Net OPEB obligation
317,929
247,937
1011113
80,366
419,042
328,303
Total
$ 38,503,143
$ 39,957533
$ 18,615,036 $
10,694,736
$ 57,118,179 $
50,652,269
Additional long -term debt in the amount of $1,410,000 is for a contract for deed, $1,599,876 is for notes payable,
$1,915,500 is for compensated absences, and $419,042 is for other postemployment benefits obligations.
The city maintains a bond rating of AA+ from Standard & Poor's for general obligation debt.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable
Market Value. The current debt limitation for the City of Elk River is $53,892,054. $19,328,258 of the City's net
outstanding debt is counted within the statutory limitation.
Additional information on the City of Elk River's long -term debt can be found in Note 3E on pages 51 - 54 of this report
17
Economic Factors and Next Year's Budget
The City of Elk River estimates that the demand for city services will begin to grow at increased levels as compared to the
prior years due to the improved economy and recent building activity. This was taken into consideration in preparation of
the city's 2015 budget. The property tax levy is set annually and is adjusted as necessary to fund the cost of providing
services to our citizens and customers. Charges for services are evaluated each year and adjusted if warranted. The city
expects to keep the tax levy consistent in upcoming years.
Requests for Information
This financial report is designed to provide a general overview of the City of Elk River'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 City of Elk River, Attn: Finance Director, 13065 Orono Pkwy, Elk River,
Minnesota 55330 or by calling (763) 635 -1000.
1E
BASIC FINANCIAL STATEMENTS
ASSETS
Cash and investments
Restricted cash and investments
Cash with fiscal agent
Receivables:
Interest
Taxes
Accounts
Special assessments
Notes, net
Due from other governments
Due from primary government
Internal balances
Inventories
Prepaid items
Property held for resale
Capital assets:
Nondepreciable
Depreciable (net)
Total assets
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2014
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding 294,581 679284 361,865
LIABILITIES
Accounts payable
Salaries payable
Due to other governments
Due to component unit
Accrued interest payable
Unearned revenue
Non - current liabilities:
Due within one year
Due in more than one year
Total liabilities
NET POSITION
Net investment in capital assets
Restricted for:
Debt service
Landfill mitigation
Economic development
Law enforcement
Park improvements
Housing and redevelopment
Unrestricted
971,636
Primary Government
51691,545
11,925
Governmental
Business -type
668,574
Component
Activities
Activities
Total
Unit - IIRA
227,666
-
227,666
-
$ 30,6395963
$ 32,8345889
$ 63,474,852
$ 1,176,709
535,872
490,500
4905500
-
9,5805144
-
95580144
-
76,879
23,431
1005310
-
410,707
-
410,707
9,235
420,840
31067,214
3,488,054
19612,442
-
1,6125442
3985354
-
398,354
400,000
48,308
25,832
745140
-
-
-
-
227,666
(254,521)
2545521
-
-
2,101,105
231015105
-
124,635
204,042
328,677
-
261,400
-
2613400
-
417661,544
511295162
46,790706
257,100
69,961,053
68,417,821
138,378,874
150,083
154,941,748
112,548,517
267,4901265
2,2201793
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding 294,581 679284 361,865
LIABILITIES
Accounts payable
Salaries payable
Due to other governments
Due to component unit
Accrued interest payable
Unearned revenue
Non - current liabilities:
Due within one year
Due in more than one year
Total liabilities
NET POSITION
Net investment in capital assets
Restricted for:
Debt service
Landfill mitigation
Economic development
Law enforcement
Park improvements
Housing and redevelopment
Unrestricted
971,636
4,719,909
51691,545
11,925
452,665
215,909
668,574
15369
5745574 -
199,601
1997601
-
227,666
-
227,666
-
528,454
187,687
716,141
-
535,872
75,796
611,668
-
3,519,370
1,221,954
4,7411324
-
34,983,773
175393,082
52,376,855
-
41,219,436
243013,938
65,233,374
13,294
84,921,650
635392,972
148,314,622 407,183
11599,852
490,500
25090,352 -
574,574
-
5745574 -
1,625,159
-
116255159 -
26,911
-
263911 -
366,360
-
366,360 -
-
- 1,800,316
24,9021387
24,7181391
49,620,778
Total net position $ 114,016,893 $ 88,601,863 $ 2025618,756 $ 2,207,499
The notes to the financial statements are an integral part of this statement.
19
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2014
Functions/Programs
Primary Government:
Governmental Activities:
General government
Public safety
Public works
Culture and recreation
Economic development
Interest on long -term debt
Total governmental activities
Business -type Activities:
Municipal liquor
Garbage
Sewer
Water
Electric
Total business -type activities
Total primary government
Component Unit:
Housing and Redevelopment Authority
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
$ 3,554,136
$ 385,238
$ 2,056
$
6,6151593
13063,725
288,219
-
6,860,673
233,593
321,380
355,373
410885992
906,291
380,023
31483,604
11091,125
77,430
585066
1815874
11075,408
-
-
-
23,285,927
216661277
150491744
4,020,851
5,776,873
61825,342
-
-
1,303,943
1,304,750
-
-
2,156,329
15734,141
-
560,580
21459,319
2,290,824
-
375,329
291597,247
31,596,217
-
-
41,293,711
43,751,274
9355909
$ 64,579,638
$ 46,417,551
$ 1,049,744
$ 4,9565760
$ 126,752 $ $ $
General revenues:
Property taxes:
Levies for general purposes
Levies for debt service
Tax increments
Other taxes
Grants and contributions not restricted
Unrestricted investment earnings
Gain on disposal of capital assets
Transfers of capital assets
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Net position - ending
The notes to the financial statements are an integral part of this statement.
20
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental Business -Type Component
Activities Activities Total Unit - HRA
$ (35166,842)
$
$ (3,166,842) $
(55263,649)
624,921
(5,263,649)
(55950,327)
-
(5,950,327)
680,926
1305325
680,926
(773,755)
-
(773,755)
(15075,408)
1,749,886
(15075,408)
(15,549,055)
86
(155549,055)
557,659
1,694,683
4,788
-
1,0483469
15048,469
-
807
807
-
138,392
1385392
-
2065834
206,834
-
11998,970
1,998,970
235,734
3,393,472
3,393,472
3365674
(15,549,055)
35393,472
(12,155,583)
(126,752)
9,753,985
-
937535985
230,860
624,921
-
6245921
-
130,325
-
1305325
1,4415259
-
1,4415259
-
1,749,886
-
1,749,886
86
111375024
557,659
1,694,683
4,788
29,593
29,525
59,118
-
(313,287)
313,287
-
1,332,023
(1,332,023)
15,885,729
(431,552)
15,454,177
235,734
3365674
25961,920
3,298,594
108,982
113,680,219
85,639,943
199,320,162
2,0985517
$ 114,0165893
$ 88,601,863
$ 202,618,756
$ 2,207,499
21
ASSETS
Cash and investments
Cash with fiscal agent
Receivables:
Interest
Taxes
Accounts
Special assessments
Notes, net
Due from other governments
Due from other funds
Due from component unit
Prepaid items
Property held for resale
Total assets
LIABILITIES
Accounts payable
Salaries payable
Due to other funds
Due to component unit
Unearned revenue
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
Unavailable revenue - special assessments
Total deferred inflows of resources
FUND BALANCES
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
CITY OF ELK RIVER, MINNESOTA
GOVERNMENTAL FUNDS
BALANCE SHEET
DECEMBER 31, 2014
$ 308,781
$ - S 11262
S 661,593
Other
Total
General
YMCA
452,665
Governmental
Governmental
Fund
Bonds
TIF Districts
Funds
Funds
230,122
20
535,852
535,872
S 61485,923
$ 426,101
$ 368,548
$ 23,359,391
$ 30,639,963
-
9,580,144
-
-
9,580,144
16,073
-
945
59,861
76,879
357,264
10,795
1,328
41,320
410,707
14,705
-
-
406,135
420,840
-
-
-
1,612,442
1,612,442
-
-
64,732
333,622
398,354
46,978
-
-
1,330
48,308
93,293
-
-
1,442,767
1,536,060
2,456
-
-
-
2,456
22,725
-
-
101,910
124,635
261,400
261,400
$ 7,039,417
$ ]0.017,040
$ 435553
S 27,620,178
$ 45,112,188
$ 308,781
$ - S 11262
S 661,593
$ 971,636
429,314
- -
23,351
452,665
-
- 1,454,528
336,053
1,790,581
-
- 230,122
-
230,122
20
535,852
535,872
738,115
1,685,912
1,556,849
3,980,876
137,700
5,620
-
17,487
160,807
1,594,643
11594,643
137,700
5,620
1,612,130
1,755,450
22,725
-
-
101,910
124,635
-
10,011,420
434,225
3,480,038
13,925,683
317,929
-
-
5,829,001
6,146,930
-
-
-
15,883,279
15,883,279
5,822,948
(1,684,584)
(843,029)
31295,335
61163,602
10,011,420
(1,250,359)
24,451,199
39,375 862
$ 7,039,417 $ 10,017,040 $ 435 553 $ 27,620,178 $ 45,112,188
The notes to the financial statements are an integral part of this statement.
22
CITY OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2014
FUND BALANCE - TOTAL GOVERNMENTAL FUNDS
Amounts reported for governmental activities in the statement of net position
are different because:
1. Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the governmental funds:
$ 395375,862
Governmental capital assets $1825984,052
Less accumulated depreciation (71,361,455) 111,622,597
2. Unavailable revenue in governmental funds is susceptible to full accrual
on the government -wide statements. 1,755,450
3. Long -term liabilities are not due and payable in the current period and,
therefore, are not reported in the governmental funds:
Bonds payable
(3457255000)
Deferred charge on refunding
294,581
Issuance premium
(545,528)
Contracts for deeds
(1,410,000)
Accrued interest payable
(528,454)
Compensated absences
(155049686)
Net OPEB obligation
(317,929) (389737,016)
NET POSITION OF GOVERNMENTAL ACTIVITIES $114,016,893
The notes to the financial statements are an integral part of this statement.
23
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
EXPENDITURES
Current:
General government
3,033,392
-
-
Other
Total
Public safety
General
YMCA
-
Governmental
Governmental
Public works
Fund
Bonds
TIF Districts
Funds
Funds
REVENUES
11810,291
-
-
1,071,694
21881,985
Taxes:
-
-
345,591
749,944
1,095,535
Property taxes
$ 9,264,608
$ 264,472
$ 130,324
$ 980,847
$ 10,640,251
Othertaxes
126,765
-
-
1,314,494
11441,259
Licenses and permits
559,286
-
-
-
559,286
Intergovernmental revenue
286,851
-
-
551,722
838,573
Charges for services
816,556
-
-
1,274,551
2,091,107
Fines and forfeits
128,131
-
-
32,167
160,298
Special assessments
-
-
-
881,271
881,271
Interest income
48,957
92,953
4,774
999,778
1,146,462
Miscellaneous:
12,574,565
971,914
345,591
7,068,460
20,960,530
Landfill expansion fee
-
-
-
757,960
757,960
Refunds and reimbursements
92,614
-
-
117,207
209,821
Contributions
26,919
247,284
-
1,052,704
1,326,907
Other
7,859
56,162
64,021
Total revenues
11,358 546
604,709
135,098
8,018,863
20,117,216
EXPENDITURES
Current:
General government
3,033,392
-
-
148,155
3,181,547
Public safety
5,790,772
-
-
118,881
5,909,653
Public works
1,929,210
-
-
1,045,009
2,974,219
Culture and recreation
11810,291
-
-
1,071,694
21881,985
Economic development
-
-
345,591
749,944
1,095,535
Debt service:
Principal
-
315,000
-
1,220,000
1,535,000
Interest and service charges
-
656,914
-
448,200
1,105,114
Capital outlay:
General government
10,900
-
-
212,587
223,487
Public safety
-
-
-
310,166
310,166
Public works
-
-
-
1,436,684
1,436,684
Culture and recreation
307,140
307,140
Total expenditures
12,574,565
971,914
345,591
7,068,460
20,960,530
Excess (deficiency) of revenues
over expenditures
(1,216,019)
(367,205)
(210,493)
950,403
(843,314)
OTHER FINANCING SOURCES (USES)
Transfers in
1,625,550
250,000
-
2,961,466
4,837,016
Transfers out
(300,219)
-
-
(3,204,774)
(3,504,993)
Sale of capital assets
44,827
44,827
Total other financing sources (uses)
1,325,331
250,000
(198,481)
1,376,850
Net change in fund balances
109,312
(117,205)
(210,493)
751,922
533,536
Fund balances - January 1
61054,290
10,128,625
(1,039,866)
23,336,622
38,479,671
Prior period adjustment
362,655
-23699,277
362,655
Fund balances, restated - January 1
6,054,290
10,128 625
(1,039,866)
38,842,326
Fund balances - December 31
$ 6,163,602
$ 10,011,420
S (1,250,359)
$ 24,451,199
$ 39,375,862
The notes to the financial statements are an integral part of this statement.
24
CITY OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2014
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
Amounts reported for governmental activities in the statement of activities
are different because:
1. Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of these assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by
which depreciation expense exceeded capital outlays in the current period.
$ 533,536
Capital outlay $ 2,2029494
Depreciation expense (5,9603915) (31758,421)
2. The net effect of various miscellaneous transactions involving capital assets
including transfers and disposals, which decrease net position.
Donations 39105,000
Transfers of capital assets (3135287)
Disposals (429,632)
Depreciation on disposals 414,398 2,7761479
3. Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
Property taxes (131,020)
Special assessments (516,924) (647,944)
4. The issuance of long -term debt provides current financial resources to
governmental funds, while the repayment of the 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.
Repayment of principal of long -term debt 15535,000
Some expenses reported in the statement of activities do not require use of
current financial resources and, therefore, are not reported as expenditures
in governmental funds.
Accrued interest payable
14,899
Amortization of issuance premium
51,072
Amortization of deferred charge from refunding
(36,265)
Compensated absences
(61,690)
Net OPEB obligation
(69,992) (101,976)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES
$ 336,674
The notes to the financial statements are an integral part of this statement.
25
CITY OF ELK RIVER, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Taxes:
Property taxes
Other taxes
Licenses and permits
Intergovernmental revenue
Charges for services
Fines and forfeits
Interest income
Miscellaneous revenue:
Refunds and reimbursements
Contributions
Other
Total revenues
EXPENDITURES
Current:
General government
Public safety
Public works
Culture and recreation
Capital outlay:
General government
Total expenditures
Deficiency of revenues under expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance - January 1
Fund balance - December 31
Budget Variance with
Original Final Actual Final Budget
$ 9,181,300
$ 9,181,300
$ 9,264,608
$ 83,308
125,000
125,000
126,765
1,765
5755900
535,900
559,286
23,386
277,900
277,900
286,851
8,951
755,650
8365550
816,556
(19,994)
1225200
122,200
128,131
5,931
85,000
85,000
48,957
(36,043)
101,000
101,000
159000
27,500
61000
6,000
11,244,950
11,298,350
92,614
(8,386)
26,919
(581)
7,859
1,859
11,358,546
60,196
3,075,250
3,057,750
3,033,392
24,358
519025000
5,902,000
51790,772
111,228
1,778,300
11838,300
11929,210
(905910)
11812,900
1,812,900
11810,291
21609
-
10,900
10,900
12,568,450
12,621,850
123574,565
47,285
(1,323,500)
(,323,500)
(1,216,019)
107,481
1,625,550 1,6251550 1,625,550 -
(302,050) (302,050) (300,219) 1,831
1,323,500 1,323,500 1,325,331 1,831
109,312 109,312
6,054,290 6,054,290 65054,290 -
$ 65054,290 $ 6,054,290 $ 6,163,602 $ 109,312
The notes to the financial statements are an integral part of this statement.
26
giver
This page has been left blank intentionally
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2014
ASSETS
Current assets:
Cash and investments
Restricted cash and investments
Receivables (net):
Interest
Accounts
Due from other governments
Due from other funds
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets:
Nondepreciable
Depreciable
Accumulated depreciation
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding
LIABILITIES
Current liabilities:
Accounts payable
Salaries payable
Due to other governments
Due to other funds
Unearned revenue
Accrued interest
Compensated absences payable - current
Notes payable - current
Bonds payable - current
Total current liabilities
Noncurrent liabilities:
Compensated absences payable
Net other postemployment benefits obligation
Notes payable
Bonds payable
Total noncurrent liabilities
Total liabilities
Municipal
Liquor Garbage Sewer Water
$ 2,592,308
$ 606,357
$ 149348,133
$ 3,6815481
6,720
1,549
145708
91
-
16,110
234,053
217,387
-
98,423
319,060
440,828
1,105,495
-
-
16,481
35,891
-
10,654
28,355
3,704,523
722,439
14,915,954
4,384,623
494,057
108,731
753,961
- 3,198,188
706,661
3,041,138
- 37,335,092
33,754,157
(1,678,352)
(17,357,072)
(13,034,835)
21116,747
23,176,208
21,425,983
5,821,270
7229439 38,092,162
25,810,606
13,457
363,050
1075672
1,252,700
421,372
25,348
1,059
15,808
22,780
67,603
-
-
2,700
2,165
-
-
73,631
-
-
99,483
29,337
35,891
-
10,654
24,985
228,000
494,057
108,731
1,378,645
802,805
58,520
- 3,463
65,045
229310
- 23,871
-
10,000,000
1,869,677
80,830
10,027,334
1,934,722
574,887
1085731 11,405,979
2,7379527
NET POSITION
Net investment in capital assets 21116,747 - 219058,022 19,341,763
Restricted for debt service - - - -
Unrestricted 3,129,636 613,708 5,628,161 3,744,773
Total net position $ 5,246,383 $ 613,708 $ 26,686,183 $ 23,086,536
The notes to the financial statements are an integral part of this statement.
27
Electric Total
$ 119606,610 $ 32,834,889
490,500 490,500
363
2,599,664
25,832
979,129
175,687
15,877,785
23,431
3,067,214
25,832
858,311
2,101,105
204,042
39,605,324
470,352
5,129,162
46,3959743
120,526,130
(2%038,050)
(52,108,309)
26,828,045
73,5461983
42,705,830 113,152,307
53,827 67,284
2,575,115
4,719,909
1505914
2159909
129,298
199,601
603,790
603,790
-
75,796
58,867
187,687
58,906
13 %436
1915518
191,518
6725000
900,000
4,440,408
7,2241646
1539350
280,378
54,932
1019113
1,408,358
1,408,358
3,733,556
15,603,233
5,3505196
17,393,082
9,790,604 24,617,728
2 %876,440
631392,972
490,500
49 %500
11,6025113
24,718,391
$ 32,969,053 $ 88,601,863
PH
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
Sales and cost of sales:
Sales
Cost of sales
Gross profit
Operating revenues:
User charges
Delinquency collections
Other
Total operating revenues
Operating expenses:
Personal services
Supplies
Purchased power
Other service charges
Depreciation
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Interest income
Miscellaneous revenue
Interest expense
Bond issuance costs
Gain (loss) on disposal of capital assets
Total nonoperating revenues (expenses)
Income (loss) before contributions and transfers
Municipal
Liquor Garbage Sewer
$ 658239719 $ - $
(4,750,195) -
2,0735524 -
- 112905451
11689,080
21103,508
- 115422
21651
219557
1,623 2,877
42,410
23,262
1,623 1,3045750
11734,141
21148,327
634,571
20,388
57,604
39080
209,746
1,280,475
124,757
- (102,093)
19026,678
1,303,943
- (15,375)
-
11048,469
807
464,622 471,983
1365169 275,029
460,139
520,007
9779931
1,083,770
2,038,861
2,3505789
-
- (102,093)
(304,720)
(202,462)
105,639
32,394 297,200
23,984
-
- -
142,497
-
- (102,093)
(729646)
-
- (15,375)
-
-
- -
(35,884)
105,639
325394 179,732
57,951
1,1545108
33,201 (124,988)
(144,511)
Contributions - connection fees - - 5605580 375,329
Capital contributions from other funds - - 138,196 175,091
Transfers in - 8,182 - 3295490
Transfers out (685,060) (43,150) (118,650) (25,000)
Change in net position 469,048 (1,767) 455,138 7105399
Net position - beginning
Net position - ending
4,777,335
615,475
26,231,045
22,376,137
$ 51246,383
$ 6135708
$ 2656863183
$ 23,086,536
The notes to the financial statements are an integral part of this statement.
29
Electric Total
$ - $ 6,8235719
- (4,7507195)
2,073,524
31,756,165
369839,204
244,857
2809487
(634,337)
(564,165)
31,366,685
36,555,526
2,0511979
3,643,543
172,354
6445236
21,9949652
21,994,652
35259,076
5,729,443
1,914,062
4,1005520
29,392,123
36,112,394
1,974,562
2,516,656
98,442
557,659
229,532
372,029
(160,274)
(335,013)
(44,850)
(609225)
29,525
(6,359)
152,375
528,091
2,1261937
310445747
935,909
313,287
337,672
(797,835)
(1,669,695)
1,329,102
2,961,920
31,639,951 85,639,943
$ 32,9695053 $ 885601,863
Ltil'
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users
Other operating cash receipts
Payments to suppliers
Payments to employees
Net cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from other funds
Transfers to other funds
Increase (decrease) in due to other funds
Net cash provided (used) by
noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets
Proceeds from sale of capital assets
Connection fees received
Principal paid on capital debt
Proceeds of bonds issued, net of issuance costs
and premium on bonds
Interest paid on capital debt
Principal paid on promissory note
Net cash provided (used) by capital
and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, January 1
Cash and cash equivalents, December 31
Reconciliation of cash and cash equivalents
to the statement of net position:
Cash and investments
Restricted cash and investments
Total cash and cash equivalents
Municipal
Liquor
Garbage
$ 6,823,772
$ 1,292,815
1,623
21877
(5,007,187)
(1,274,947)
(639530)
(19329)
1,178,678
1,4]6
$ 1,668,977 $ 2,142,119
42,410
121,231
(572,279)
(847,666)
(465,596)
(403,343)
673,512
11012,341
8,182 - 329,490
(685,060) (43,150) (118,650) (25,000)
- (555,225)
(685,060) (34,968) (118,650) (250,735)
(1,929,636) (274,940)
- 7,254
560,580 375,329
(560,000) (527,000)
9,984,625 -
(I1,659) (78,846)
8,043,910 (4989203)
1069310
33,052
3025689
27,199
599,928
(500)
819019461
2909602
1,992,380
606,857
5,446,672
3,3901879
$ 2,5925308
$ 606,357
$ 14,348,133
$ 39681,481
$ 29592,308 $ 606,357 $ 14,348,133 $ 3,681,481
$ 2,592,308 $ 606,357 $ 14,348,133 $ 3,681,481
The notes to the financial statements are an integral part of this statement.
31
Electric
Total
$ 319288,755
$ 43,216,438
192,433
360,574
(25,686,149)
(33,388,228)
(1,748,714)
(3,2769512)
4,046,325
6,912,272
(29219,085) (4,423,661)
33,000 40,254
- 935,909
(2,853,000) (3,940,000)
29046,586
337,672
(797,835)
(1,669,695)
53,574
(501,651)
(744,261)
(1,833,674)
(29219,085) (4,423,661)
33,000 40,254
- 935,909
(2,853,000) (3,940,000)
29046,586
12,031,211
(191,704)
(282,209)
(189,348)
(189,348)
(3,373,551)
41172,156
111,304 580,554
39,817 9,831,308
12,057,293 23,494,081
$ 12,097,110 $ 33,325,389
$ 11,606,610 $ 32,834,889
490,500 490,500
$ 12,097,110 $ 33,325,389
32
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Other revenue related to operations
Depreciation expense
(Increase) decrease in assets:
Accounts receivable
Due from other funds
Due from other goverments
Inventories
Prepaid items
Increase (decrease) in:
Accounts payable
Salaries payable
Due to other governments
Unearned revenue
OPEB liability
Compensated absences payable
Net cash provided by operating activities
Noncash capital and related financing activities:
Amortization of bond premium
Amortization of deferred charges on refunding
Contribution of capital assets from other funds
Capital assets purchased on account
Loss on disposal of capital assets
Municipal
Liquor Garbage Sewer Water
$ 1,048,469 $
807
$ (304,720)
$ (202,462)
-
-
-
1429497
124,757
-
977,931
1,083,770
-
(21797)
(71079)
(56,769)
-
(6,261)
(15,675)
-
(21,143)
-
-
(1,476)
-
-
-
12,063
29,462
8,608
24,029
(4,587)
1,028
1,059
(1,418)
5,470
2,039
-
-
2,598
53
-
-
30,440
4,679
-
61178
-
(10,666)
-
(5,734)
797
$ 19178,678 $
1,416
$ 673,512
$ 1,012,341
$ 818
1,649
-
-
138,196
175,091
-
-
1,162,615
349,698
-
43,138
The notes to the financial statements are an integral part of this statement.
33
Electric Total
$ 1,974,562 $ 2,516,656
229,532 372,029
11914,062 4,100,520
(1115092)
(177,737)
-
(21,936)
(13,623)
(13,623)
(15,521)
(389140)
2,341
14,404
(585393)
(881)
16,520
22,659
129,298
133,935
-
30,493
9,890
205747
(31,251)
(469854)
$ 4,046,325 $ 6,912,272
14,863 $ 15,681
6,592 89241
- 313,287
- 1,512,313
3,475 46,613
gm
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION
DEVELOPER ESCROW AGENCY FUND
DECEMBER 31, 2014
ASSETS
Cash
Accounts receivable
Total assets
LIABILITIES
Refundable deposits payable
Agency
Fund
$ 91,132
266
$ 91,398
$ 91,398
The notes to the financial statements are an integral part of this statement.
35
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of Government -Wide 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 nonfiduciary activities of the primary government and its component units. All fiduciary
activities are reported only in the fund financial statements. 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 to external customers for support. Likewise, the primary government is reported separately
from certain legally separate component units for which the primary government is financially accountable.
B. Reporting Entity
The City of Elk River operates under the "Optional Plan A" form of government as defined in the State of Minnesota
Statutes. Under this plan, the government of the city is directed by a Council composed of an elected Mayor and four
elected Council Members. The Council exercises legislative authority and determines all matters of policy. The Council
appoints personnel responsible for the proper administration of all affairs relating to the city. As required by generally
accepted accounting principles, the financial statements of the reporting entity include those of the City of Elk River (the
primary government) and its component units. The Elk River Municipal Utilities is considered to be part of the primary
government.
The Elk River Municipal Utilities was established and statutory authority is provided in accordance with Chapter
412.321 of the Minnesota Statutes and is considered to be part of the city. The Utilities Commission has three council
approved members who serve overlapping three year terms. The statutes provide the City Council all the discretionary
authority necessary to operate the utilities, except as its powers have been delegated to the Commission. The Utility
funds are included with the enterprise funds of this report. Separate financial statements for the Utilities may be obtained
at the Elk River Municipal Utilities, 13069 Orono Pkwy, Elk River.
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 govemment 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. Based upon the application of these criteria, the city has the following component units:
Blended Component Unit
The Economic Development Authority (EDA) was created to carry out economic and industrial development and
redevelopment within the city in accordance with policies established by the City Council. The seven member board
consists of three Council Members, the Mayor and three other council approved members. The EDA may not exercise
any of its authorized powers without prior approval of the City Council. The city has operational responsibility and that
it is this criterion that results in the EDA being reported as a blended component unit. The EDA is reported as a special
revenue fund and does not issue separate financial statements.
Discretely Presented Component Unit
The Housing and Redevelopment Authority (HRA) is a legally separate entity created to cant' out community
development consistent with policies established by the City Council. The HRA is governed by five council appointed
members, one of which is a Council Member; however, the city does not have a financial benefit or burden relationship
and does not have operational responsibility. The criterion that results in the HRA being reported as a discretely
presented component unit include 1) the five council appointed member board and 2) the ability of the city to impose its
will on the BRA by significantly influencing the programs, projects, activities or level of service performed by the BRA
by approving the HRA's budget. The BRA does not issue separate financial statements and are included in the financial
section of this report.
Im
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
C. Basis of Presentation — Government -Wide Financial Statements
While separate government -wide and fund financial statements are presented, they are interrelated. The governmental
activities column incorporates data from governmental funds, while business -type activities incorporate data from the
city's enterprise funds. Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government -wide financial statements.
As discussed earlier, the city has one discretely presented component unit. While the HRA is not considered to be a
major component unit, it is nevertheless shown in a separate column in the government -wide financial statements.
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 sewer, water and electric functions and various other
functions of the city. Elimination of these charges would distort the direct costs and program revenues reported for the
various functions concerned.
D. Basis of Presentation —Fund Financial Statements
The fund financial statements provide information about the city's funds, including its fiduciary funds and blended
component units. Separate statements for each fund category — governmental, proprietary, and fiduciary — are presented.
The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate
column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major
individual governmental and enterprise funds are reported as separate columns in the fund financial statements.
The government 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 YMCA bonds debt service fund is used to account for the accumulation of resources and payment of principal
and interest on bonds used to finance the construction of a recreation facility which is leased to the YMCA.
The TIF districts capital projects fund is used to account for administrative and development costs associated with
the various tax increment financing projects.
The government reports the following major enterprise funds:
The Municipal Liquor fund accounts for the operations of the city's off -sale liquor stores.
The Garbage fund accounts for the activities of the garbage and recycling collection programs.
The Sewer fund accounts for the activities of the sanitary sewer treatment system.
The Water fund accounts for the activities of the water distribution system.
The Electric fund accounts for the activities of the electric distribution system
Additionally, the government reports the following fund types:
The Developer Escrow agency fund is used to account for resources received from developers for the payment of
expenses incurred by the city for private development projects.
During the course of operations the government has activity between funds for various purposes. Any residual balances
outstanding at year end are reported as due from/to other funds. While these balances are reported in fund financial
statements, certain eliminations are made in the preparation of the government -wide financial statements. Balances
37
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
between the funds included in governmental activities (i.e., the governmental funds) are eliminated so that only the net
amount is included as internal balances in the governmental activities column. Similarly, balances between the funds
included in business -type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as
internal balances in the business -type activities column.
Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial
statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements,
certain eliminations are made in the preparation of the government -wide financial statements. Transfers between the
funds included in governmental activities are eliminated so that only the net amount is included as transfers in
governmental activities column. Similarly, balances between the funds included in business -type activities are
eliminated so that only the net amount is included as transfers in the business -type activities column.
E. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of
accounting. Measurement focus indicates the type of resources being measured such as current financial resources or
economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the
financial statements.
The government -wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Property taxes 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 fined 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 government considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences, other postemployment benefits, and claims and judgments, are recorded only when payment is
due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long -term debt
and acquisitions under capital leases are reported as other financing sources
Property taxes, 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. Entitlements are recorded as
revenues when all eligibility requirements are met, including any time requirements, and the amount is received during
the period or within the availability period for this revenue source (within 60 days of yearend). Expenditure- driven
grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility
requirements have been met, and the amount is received during the period or within the availability period for this
revenue source (within 60 days of yearend). 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 government.
The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting.
The agency fund has no measurement focus but utilizes the accrual basis of accounting for reporting its assets and
liabilities.
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.
IN
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
F. Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated
budgets are legally adopted for the General fund and the Library, Ice Arena, Pinewood Golf Course, Landfill and
Economic Development Authority special revenue funds. Project - length financial plans are adopted for all capital
projects funds. All annual appropriations lapse at fiscal yearend.
On or before July 1 of each year, all departments and agencies of the city submit requests for appropriation to the city's
administrator so that a budget may be prepared. Before September 30, the proposed budget is presented to the City
Council for review and approval. The City Council holds public hearings and may add to, subtract from, or change
appropriations. Any changes in the budget must be within the revenue and reserves estimated as available or the revenue
estimates must be changed by an affirmative vote by a majority of the City Council.
The budget is prepared by fund, function, and activity and includes information on the past year, current year estimates,
and requested appropriations for the next fiscal year. Expenditures may not legally exceed budgeted appropriations at
the fund level without Council approval. Spending control is established by the amount of expenditures budgeted for the
fund, but management control is exercised at the department level. Reported budget amounts are as originally adopted or
as amended by Council approved supplemental appropriations and budget transfers.
G. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance
1. Cash 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 the date of acquisition.
Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings
from such investments are allocated to the respective funds on the basis of applicable cash balance participation of
each fund. Investments are reported at fair value, based upon quoted market prices. The Minnesota Municipal
Money Market fund operates in accordance with appropriate State of Minnesota laws and regulations. The reported
value of the pool is the same as the fair value of the pool shares.
2. Receivables
Property Taxes
The City Council annually adopts a tax levy and certifies it to the county in December each year for collection the
following year. The county is responsible for collecting all property taxes for the city. Property tax levies are based
on property values assessed on January 2 of the preceding year. The county spreads all levies over all taxable
property. These taxes attach an enforceable lien on taxable property as of January 1 and are payable by the property
owner in May and October each year. The taxes are collected by the County Treasurer and tax settlements are made
to the city three times a year, in January, July and December.
In the fund financial statements, taxes that remain unpaid at December 31 are classified as delinquent taxes and are
offset by a deferred inflow of resources for delinquent taxes not received within 60 days after year end. Deferred
inflow of resources for taxes in governmental activities is susceptible to full accrual on the government -wide
statements.
39
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Accounts Receivable
Accounts receivable include amounts billed for services provided before year end. It is the city's policy to charge
uncollectibles directly to operations as accounts become worthless. The Utilities has established a reserve for
uncollectible accounts which is adjusted annually based on the receivable activity. No substantial losses from present
receivable balances are anticipated. A summary of the Utilities' uncollectible account balances at December 31,
2014 is as follows:
2014
Electric $ 109,845
Water 262250
Total $ 136.095
Special Assessments
Special assessments receivable include the following components:
• Delinquent - includes amounts billed to property owners but not paid.
• Unavailable - includes assessment installments that will be billed to property owners in future
years.
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the county. In governmental fund financial statements,
special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All
governmental special assessments receivable not received within 60 days after year end are offset by a deferred
inflow of resources in the governmental fund financial statements. At December 31, 2014, the total delinquent
special assessment receivable balance was $71,219.
Notes Receivable
Notes receivable consist primarily of loans made by the city to area businesses for development purposes. The terns
and interest rates of the individual loans vary.
3. Inventories and Prepaid Items
For the proprietary funds, inventories are valued at cost, which approximates market, using the first -in, first -out
(FIFO) method. Inventories are recorded as an expense when sold or consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in
both government -wide and fund financial statements. The cost of prepaid items is recorded as expenditures /expenses
when consumed rather than when purchased.
4. Property Held for Resale
These assets are recorded at the lower of original cost or current net realizable value in the governmental fund which
purchased them.
5. Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond
issues. They will be used for future debt service.
:DI
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. 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 government as assets with an initial, individual cost of
more than $10,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. 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. Donated capital assets are recorded at
estimated fair market value at the date of donation.
With the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities), the city
chose to include all such items regardless of their acquisition date. The city was able to obtain historical costs for the
initial reporting of these assets through public works project records. Major expenditures for improvements or capital
asset projects 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, net of interest
earned on the invested proceeds over the same period.
Property, plant, and equipment of the city, as well as the component units, are depreciated using the straight line
method over the following estimated useful lives:
Assets
Years
Buildings and improvements
10-40
Other park improvements
10-20
Machinery and equipment
3-20
Public domain infrastructure
15-50
System infrastructure
4-50
7. Deferred Outflows /Inflows of Resources
In addition to assets, the statement of financial 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 only has one item that qualifies for reporting in this category. It is the
deferred charge on refunding reported in the government -wide and proprietary funds statement of net position. A
deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition
price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as
an inflow of resources (revenue) until that time. The city has only one type of item, which arises only under a
modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable
revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable
revenues from 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.
8. Unearned Revenue
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. At
December 31, 2014, the balance reported in the governmental fund financial statements consists of $533,695 from
unearned park dedication credits and $2,177 from other unearned miscellaneous fees and contributions.
41
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
9. 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
amortized over the life of the bonds using the straight -line method. Bonds payable are reported net of the applicable
bond premium or discount. Bond issuance costs are reported as an expense in the period incurred.
In the fund financial statements, governmental fund types recognize bond premiums 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.
10. Compensated Absences
It is the city's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Unused
vacation can be accrued by the employees up to a maximum of 200 hours, the limit of which is determined by years
of service. All vacation pay is accrued when incurred in the government -wide and proprietary fund financial
statements. A liability for these amounts is reported in governmental funds only if they have matured, for example,
as a result of employee resignations and retirements. In the event a liability is recorded in the governmental funds,
the General fund would be used to liquidate the compensated absences payable.
Employees can also accrue an unlimited amount of unused sick leave. Employees with two or more years of service
are entitled to receive severance pay equal to 50 percent of unused sick leave, up to a maximum of 480 hours. The
liability for severance pay is accounted for the same as accrued vacation pay.
11. 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 governmental funds.
These classifications are as follows:
Nonspendable - consists of amounts that cannot be spent because it is not in spendable form, such as prepaid
items.
Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or
contributors; or constraints imposed by state statutory provisions.
Committed - consists of amounts that are constrained for specific purposes that are internally imposed by formal
action (resolution) of the City Council. Those committed amounts cannot be used for any other purpose unless
City Council removes or changes the specified use by taking the same type of action it employed to previously
commit those amounts.
Assigned - consists of amounts intended to be used by the city for specific purposes but do not meet the criteria
to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund
balance represents the remaining amount that is not restricted or committed. In the general fund, assigned
amounts represent intended uses established by the governing body itself or by an official to which the governing
body delegates the authority. Pursuant to City Council Resolution, the city's Finance Director and/or City
Administrator is authorized to establish assignments of fund balance.
Unassigned - is the residual classification for the general fund and also reflects negative residual amounts in
other funds.
42
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
The city uses 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 Council has formally adopted a fund balance policy for the General Fund. The city's policy is to maintain
a minimum unassigned fund balance of 4045% of budgeted operating expenditures for cash -flow timing needs.
12. Net Position
Net position represents the difference between assets and deferred outflows and liabilities. Net position is displayed
in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquire capital assets.
b. Restricted net position - Consist of net position balances restricted when there are limitations imposed on
their use through external restrictions imposed by creditors, grantors, laws or regulations of other
governments.
c. Unrestricted net position - All other net position balances that does 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.
13. Revenues and Expenditures /Expenses
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special
assessments. Internally dedicated resources are reported as general revenues rather than as program revenues.
Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are
charges to customers for sales and services. Operating expenses for enterprise 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 nonoperating revenues and expenses.
Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Excess of Expenditures Over Appropriations
For the year ended December 31, 2014, expenditures exceeded appropriations in the Library fund by $23,492, which was
funded by available fund balance.
31
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY — CONTINUED
B. Deficit Fund Equity
The following funds had deficit fund balances at December 31, 2014:
Primary Government:
TIF Districts - major capital projects fund $ 1,2505359
Park Dedication - capital projects fund $ 476,669
The City plans to eliminate these deficits through future park dedication and tax increment fund revenues.
Note 3: DETAILED NOTES ON ALL FUNDS
A. Deposits and Investments
Deposits
Custodial credit risk for deposits is the risk that in the event of a bank failure, the city's deposits 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, the city maintains deposits at the depository banks authorized by the City Council, all of which are
members of the Federal Reserve System. Minnesota Statutes require that all city deposits be protected by insurance,
surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by
insurance or bonds. Authorized collateral includes the legal investments as prescribed by Minnesota statutes, as well as
certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that
securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that
furnishing the collateral.
At year end, the city's carrying amount of deposits was $13,851,336 and the bank balance was $13,890,613. The bank
balance was covered by federal depository insurance totaling $1,250,898 and the remaining balance was covered by
securities held by the pledging financial institution's agent in the city's name.
The carrying amount of deposits for the HRA, a discretely presented component unit, was $1,176,709 and the bank
balance was $1,176,709. The bank balance was covered by federal depository insurance and securities held by the
pledging financial institution's agent in the HRA's name.
Investments
Minnesota Statutes and the
city's
investment policy authorize the city to
invest in the following
a. Direct obligations or obligations guaranteed by the United States or its agencies.
b. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only
investments are in securities described in (a) above.
c. General obligations of the State of Minnesota or any of its municipalities.
d. Bankers acceptances of United States Banks eligible for purchase by the Federal Reserve System.
e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and
maturing in 270 days or less.
MA
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
The city's
investment policy follows Minnesota State Statutes
which reduces the
city's exposure to credit, custodial
credit and
interest rate risks. Specific risk information for the
city is as follows:
• Custodial credit risk - For investments, custodial credit risk is the risk that in the event of a failure of the
counterparty, the government would not be able to recover the value of its investment or collateral securities
that are in the possession of an outside party. As of December 31, 2014 all investments were insured or
registered, or securities were held by the city or its agent in the city's name.
• Credit risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. State law limits investments in commercial paper that is rated in the highest quality category by at
least two nationally recognized rating agencies. The city's investment policy does not further limit the ratings
of their investments.
• Concentration risk - Concentration risk is the risk of loss that may be caused by the city's investment in a single
issuer. The city does not have a formal policy that limits the amount of investments in a single issuer. As of
December 31, 2014, more than 5% of the city's investments were held in the following U.S. Agencies: Federal
National Mortgage Association (36 %), Federal Home Loan Bank (17 %), and Federal Farm Credit Bank (7 %).
• Interest rate risk - In accordance with its investment policy, the city diversifies its investment portfolio to
eliminate the risk of loss resulting from the over - concentration of assets in a specific maturity. The maturities
selected shall provide for stability of income and reasonable liquidity.
The Minnesota Municipal Money Market Fund (4M Fund) is an external investment pool allowable under Minnesota
Statutes and regulated by the Board of Directors of the League of Minnesota Cities. The 4M Fund is a customized cash
management and investment program for Minnesota public funds designed to address the daily and long term investment
needs of Minnesota cities and other municipal entities. The 4M Fund is an unrated 20-like pool and the fair value of the
position in the pool is the same as the value of pool shares. Financial statements of the 4M Fund can be obtained by
contacting RBC Global Asset Management at 100 South Fifth Street Suite 2300, Minneapolis, MN 55402 -1240.
45
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
As of December 31, 2014, 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
Quality/
Types of Investments Ratings (1)
Pooled investments:
Minnesota Municipal Money Market Fund
Broker Money Markets
Total pooled investments
Non- pooled investments:
U.S. Government Securities
Total U.S. Government Securities
U.S. Treasury Securities
Total U.S. Treasury Securities
Municipal Securities
Total Municipal Securities
Negotiable CD's
Total negotiable CD's
Total non - pooled investments
Total investments
Deposits
Cash on hand
Total cash and investments
Segmented
Time
Distribution (2)
N/A
Less than 6 months
N/A
Less than 6 months
AA
I to 5 years
AA
More than 5 years
AAA
Less than 6 months
AAA
1 to 5 years
N/A
Less than 6 months
6 to 12 months
I to 5 years
More than 5 years
1 to 5 years
More than 5 years
Less than 6 months
6 to 12 months
1 to 5 years
More than 5 years
Fair Value
and
Carrying
Amount
$ 1490695696
1,413,722
15,483,418
5,548,573
21,219,642
26,768,215
109,027
133,232
242,259
380,437
250,630
1,153,999
1,544,755
1,709,026
1,046,697
6,085,544
1,026,289
1,406,855
8,298,123
469.934
11,201,201
44,297,219
59,780,637
13,851,336
4,655
$ 73,636,628
(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 Indicates not applicable.
46
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
Cash and investments are presented in the financial statements as follows:
B. Notes Receivable
The city has made several business subsidy loans to local businesses, some of which were funded with grant proceeds
received from the state and federal governments. The terms of repayment vary with each loan and will be repaid over a
period of ten years. Under the terms of the grant agreement, the city retains the grant repayments. Notes receivable of
$64,732 in the TIE Districts fund and $333,622 in the Revolving Loan fund are outstanding at December 31, 2014.
The Federal DEED fund loaned $511,155 to several businesses through the Forgivable Loan Program targeting
manufacturing, industrial, and high -tech businesses to stimulate private sector investment. The notes are deferred until
the businesses have complied with the note agreements for a minimum of one year, at which time the note is then
forgiven.
In 2006, the HRA issued a loan to a developer to assist in the financing of a housing development for the benefit of low
and moderate income residents which was funded with state grant proceeds. Repayment of the loan is deferred for 30
years, payable in one lump sum at an interest rate of one percent. Notes receivable of $400,000 in the HRA is
outstanding at December 31, 2014.
47
Primary
Component
Government
Unit - HRA
Statement of Net Position
Cash and investments
$ 635474,852
$ 1,176,709
Restricted cash and investments
4905500
-
Cash with fiscal agent
9,5805144
Statement of Fiduciary Net Assets
Cash and investments
91,132
-
Total
$ 73,636,628
$ 1,176,709
B. Notes Receivable
The city has made several business subsidy loans to local businesses, some of which were funded with grant proceeds
received from the state and federal governments. The terms of repayment vary with each loan and will be repaid over a
period of ten years. Under the terms of the grant agreement, the city retains the grant repayments. Notes receivable of
$64,732 in the TIE Districts fund and $333,622 in the Revolving Loan fund are outstanding at December 31, 2014.
The Federal DEED fund loaned $511,155 to several businesses through the Forgivable Loan Program targeting
manufacturing, industrial, and high -tech businesses to stimulate private sector investment. The notes are deferred until
the businesses have complied with the note agreements for a minimum of one year, at which time the note is then
forgiven.
In 2006, the HRA issued a loan to a developer to assist in the financing of a housing development for the benefit of low
and moderate income residents which was funded with state grant proceeds. Repayment of the loan is deferred for 30
years, payable in one lump sum at an interest rate of one percent. Notes receivable of $400,000 in the HRA is
outstanding at December 31, 2014.
47
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
C. Capital Assets
In accordance with GASB Statement No. 34, the city has reported all capital assets including infrastructure in the
government -wide statement of net position. Capital asset activity for the year ended December 31, 2014 was as follows:
Beginning Ending
Primary Government Balance Additions Deletions Balance
Governmental activities:
Capital assets not being depreciated:
Land
$
37,8061871
$ 3,105,000
$ -
$
40,9111871
Construction in progress
749,673
749,673
Total capital assets
not being depreciated
37,806,871
3,854,673
41,661,544
Capital assets being depreciated:
Buildings
44,988,434
52,790
-
45,041,224
Other improvements
5,246,833
146,471
-
5,393,304
Equipment
11,225,485
945,538
(632,688)
11,538,335
Infrastructure
79,308,955
40,690
79,349,645
Total capital assets
being depreciated
140,769,707
1,185,489
(632,688)
141,322,508
Less accumulated depreciation for:
Buildings
13,964,688
1,662,557
-
15,627,245
Other improvements
2,834,061
313,111
-
3,147,172
Equipment
7,5645497
827,719
(571,499)
7,820,717
Infrastructure
41,608,793
3,157,528
44,766,321
Total accumulated depreciation
65,972,039
5,960,915
(571,499)
71,361,455
Total capital assets
being depreciated, net
74,797,668
(4,775,426)
(61,189)
69,961,053
Governmental activities
capital assets, net
_$ 112,604.539
$ (920,753)
$ (61189)
$
111,622,597
Business -type activities:
Capital assets not being depreciated:
Land
$
1,526,008
$ 351
$ -
$
1,526,359
Construction in progress
2,265,169
4,630,770
(3,293,136)
3,602,803
Total capital assets
not being depreciated
3,791,177
4,631,121
(3,293,136)
5,129,162
Capital assets being depreciated:
Buildings
19,630603
-
(130,489)
19,500,114
Equipment
5,570,449
946,381
(2,371,820)
4,145,010
Collection and distribution
103,133,383
3,293 136
(9,545,513)
96,881,006
Total capital assets
being depreciated
128,334,435
4,239517
(12,047,822)
120,526,130
Less accumulated depreciation for:
Buildings
8,986,457
656,314
(123,756)
9,5191015
Equipment
4,167,844
252,617
(2,369,761)
2,050,700
Collection and distribution
46,854,697
3,191,589
(9,507,692)
40,538,594
Total accumulated depreciation
60 008,998
4,100,520
(12,001,209)
52,108,309
Total capital assets
being depreciated, net
68,325,437
138,997
(46,613)
68,417,821
Business -type activities
capital assets, net
$
72.1 16,614
$ 4,770,118
$ (3,339,749)
$
73,546,983
M,
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
►I`GSM-cA]aL"1113I17 Well IUiiR7
Capital asset activity for the HRA component unit for the year ended December 31, 2014 was as follows:
Beginning Ending
Component Unit Balance Additions Deletions Balance
Capital assets not being depreciated:
Land $ 257,100 $ $ $ 257,100
Capital assets being depreciated:
Other improvements 174,290 174,290
Less accumulated depreciation for:
Other improvements 12,587 11,620 24,207
Total capital assets
being depreciated, net
Component unit
capital assets, net
161,703 (11,620) 150,083
$ 418 803 $ (11.6201 $ $ 407.183
Depreciation expense was charged to functions /programs of the primary government as follows:
Governmental activities
General government
$ 2653530
Public safety
650,866
Public works
3,845,855
Culture and recreation
1,198,664
Total depreciation expense - governmental activities
$ 5,960.915
Business -type activities:
Municipal liquor
$ 124,757
Sewer
977,931
Water
1,083,770
Electric
1,914,062
Total depreciation expense - business -type activities
$ 4,100.520
Construction commitments
The city has the following construction commitments at December 31, 2014:
Spent Remaining
Project to date Commitment
Natures Edge Business Center II $ 9655515 $ 345,713
Wastewater Treatment Facility Improvements 1,888,147 14,637,053
Total $ 25853,662 $ 14,9829766
The commitment for Natures Edge Business Center II is being financed by a state DEED grant and transfers from the
Development fund, EDA fund and Improvement Projects fund. The commitment for the wastewater treatment facility
improvements is being funded by bond proceeds which will be repaid by revenues from the Sewer fund.
me
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
D. Interfund Receivables, Payables, and Transfers
The composition of interfund balances as of December 31, 2014 is as follows:
Due to /from other funds:
Receivable Fund
General
General
Garbage
Sewer
Sewer
Water
Water
Nonmajor governmental funds
N onmajor governmental funds
Nonmajor governmental funds
Total
Payable
Fund
Amount
Electric
$ 879645
Nonmajor governmental funds
5,648
Electric
98,423
Electric
147,260
TIF Districts
171,800
TIF Districts
128,850
Nonmajor governmental funds
311,978
TIF Districts
191535878
Electric
270,462
Nonmajor governmental funds
189427
$ 2,394,371
The interfund receivable /payable balances result from the distribution of utility collections and the lending/borrowing
arrangements between funds for operating or capital purposes.
Due to /from component unit:
Receivable Entity Payable Entity Amount
Primary government - General Fund Component unit - HRA $ 2,456
Component unit - HRA Primary government - TIF Districts 230,122
The outstanding balance between the primary government and the component unit represents the transfer for
administrative services and the lending/borrowing arrangement to finance construction costs. The $230,122 payable to
the HRA will be paid with the collection of tax increment revenue and will not be repaid within one year.
Interfund transfers:
Governmental funds:
Major funds -
General
YMCA bonds
Nonmajor funds
Total governmental funds
Proprietary funds:
Municipal liquor
Garbage
Sewer
Water
Electric
Total proprietary funds
Total
Transfer In Transfer Out
$ 15625,550 $ 300,219
250,000 -
2,961,466 39204,774
4,837,016 3,504,993
8,182
329,490
337,672
$ 5,174,688
50
685,060
43,150
118,650
25,000
797,835
1,669,695
$ 5.174,688
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
Interfund transfers are used to allocate financial resources to the funds that receive benefit from services provided by
another fund, to provide additional capital funding, or to move revenues from the fund with collection authorization to
debt service funds as principal and interest payments come due. In addition, interfund transfers are occasionally
authorized to allow redistribution of resources between funds for the most efficient use of funds.
E. Long -term Debt
Long -term debt obligations outstanding at year end are summarized as follows:
BUSINESS -TYPE ACTIVITIES:
General Obligation Revenue Bonds
2008A G.O.Water Revenue Refunding Bonds
Issue
Maturity
Interest
Authorized
Payable
PRIMARY GOVERNMENT
Date
Date
Rate
and Issued
12131/14
GOVERNMENTAL ACTIVITIES:
8/21/2014
2/1/2035
2.00 - 3.50%
10,000,000
1Q000,000
General Obligation Bonds:
14,350,000
12,835,000
2006C G.O. Capital Improvement Bonds
12/14/2006
2/1/2027
3.80 - 4.0500/
$ 3,220,000
S 2,400,000
2007D EDA G.O. Bonds
11/8/2007
2/1/2017
3.80%
10,000,000
105000,000
2008A EDA C.O. Bonds
2/20/2008
2/1/2015
3.38%
2,000,000
330,000
2010A G.O. Capital Improvement Bonds
4/2112010
2/112023
2.00 -4.00%
6,105,000
4,415,000
2012A G.O. Capital Improvement Bonds
3/15/2012
2/l/2033
1.00 -2.50%
6,975,000
6,685,000
2013A EDA G.O. Refunding Bonds
2/12/2013
2/1/2033
2.00 -3.00%
9,685.000
9,685,000
Total general obligation bonds
37,985,000
33,515,000
Special Assessment Bonds:
2012B G.O. Improvement Refunding Bonds
3/15/2012
2/1/2018
2.00%
1,525,000
1,2109000
Total bonded indebtedness
39,5101000
34,725,000
Contracts for deeds
4/12/2008
4/62013
5.00 -6.00%
1,800,000
11410,000
Compensated absences payable
-
1,504,686
Net OPEB obligation
-
317,929
Total governmental activities indebtedness
$ 41,310,000
$ 37,957,615
BUSINESS -TYPE ACTIVITIES:
General Obligation Revenue Bonds
2008A G.O.Water Revenue Refunding Bonds
2/20/2008
2/1/2022
2.50 -3.65%
$ 3,085,000
$ 1,905,000
2010A G.O. Capital Improvement Bonds
4/21/2010
8/1/2023
2.00 - 4.00%
1,265,000
930,000
2014B G.O. Sewer Revenue Bonds
8/21/2014
2/1/2035
2.00 - 3.50%
10,000,000
1Q000,000
Total general obligation revenue bonds
14,350,000
12,835,000
Revenue Bonds:
2007A Electric Revenue Bonds
3/28/2007
2/1/2022
4.00%
2,875,000
1,960,000
2014A Electric Revenue Refunding Bonds
3/13/2014
8/1/2018
2.00 -4.00%
2,030,000
1,625,000
Total revenue bonds
4,905,000
31585,000
Total bonded indebtedness
Promissory note
Compensated absences payable
Net OPEB obligation
Total business -type activities indebtedness
Total City indebtedness
3/19/2002 12/31/2022
51
19,255,000 16,420,000
-% 3,521,000 19599,876
- 410,814
101,113
S 22,776,000 $ 18,5371803
S 64,086,000 $ 56,489,418
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Annual debt service requirements to maturity for long -term obligations are as follows:
52
Primary Government -
Governmental Activities
G.O.
Bonds
Special Assessment Bonds
Contract for deed
Notes Payable
Principal
Interest
Principal
Interest
Principal Interest
2015
$ 19195,000
$ 1,027,045
$ 310,000
$ 21,100
$ 11410,000 $ 84,600
2016
1,275,000
995,159
305,000
145950
- -
2017
10,530,000
766,552
300,000
8,900
- -
2018
1,4405000
535,338
295,000
25950
- -
2019
11485,000
493,575
-
-
-
2020-2024
75515,000
1,801,396
-
-
-
2025-2029
5,615,000
948,304
-
-
- -
2030 -2033
41460,000
2529319
619,692 -
2025 -2029
- -
Total
$ 33,515,000
$ 6,819,688
$ 1,210,000
$ 47,900
1,410,000 84,600
52
Primary Government -
Business-Type Activities
G.O. Revenue Bonds
Revenue Bonds
Notes Payable
Principal
Interest
Principal
Interest
Principal Interest
2015
$ 3005000
$ 353,889
$ 600,000
$ 110,600
$
191,508 $ -
2016
7059000
356,738
620,000
1315160
194,292 -
2017
725,000
339,205
635,000
1135053
195,216 -
2018
750,000
320,103
660,000
93,815
198,252 -
2019
760,000
299,795
250,000
37,800
200,916 -
2020 -2024
35475,000
1,183,645
820,000
50,200
619,692 -
2025 -2029
2,520,000
801,013
-
-
- -
2030- 2034
2,9459000
371,338
-
-
- -
2035
655,000
119462
-
-
- -
Total
$ 12,835,000
$ 4,037,188
$ 3,585,000
$ 536,628
$
1,599,876 $
52
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
Long -term liability activity for the year ended December 31, 2014 was as follows:
GOVERNMENTAL ACTIVITIES:
Bonds payable:
General obligation bonds
Special assessment bonds
Issuance premium
Total bonds payable
Contracts for deeds
Compensated absences
Net OPEB obligation
Governmental activity
long -term liabilites
BUSINESS -TYPE ACTIVITIES:
Bonds payable
G.O. revenue bonds
Revenue bonds
Issuance premium
Total bonds payable
Notes payable
Compensated absences
Net OPEB obligation
Business -type activity
long -term liabilities
Beginning
$ -
Ending
Due Within
Balance
Additions Reductions
Balance
One Year
$ 34,6755000
$ -
$ (1,160,000)
$ 33,515,000 $
1,195,000
1,585,000
-
(375,000)
1,210,000
3109000
596,600
(51,072)
545,528
36,856,600
-
(1,586,072)
35,270,528
1,505,000
1,410,000
-
-
1,410,000
1,410,000
1,442,996
650,309
(588,619)
11504,686
604,370
247,937
109,026
(39,034)
317,929
39,957,533
759,335
(29213,725)
38,503,143
3,519,370
3,990,000 10,000,000
4,340,000 2,030,000
37,478 61,436
8,367,478 12,091,436
1,789,224 -
457,668 162,494
80,366 213312
(1,155,000) 12,8355000 3005000
(21785,000) 39585,000 600,000
(15,681) 83,233
(31955,681) 16,503,233 900,000
(189,348) 1,599,876 191,518
(209,348) 410,814 130,436
(565) 101,113
10,694,736 12,275,242 (4,354,942) 18,615,036 1221,954
Total primary government
long -term liabilities
$ 50,652,269
$ 13,034.577
$ (6,568,667)
$ 57,118,179 $ 4,741,324
For the governmental activities, bonds payable can be summarized in the following categories:
The general obligation bonds were used to construct a library, a recreation facility, a public safety facility, a public
works facility and finance a street improvement project. The recreation facility is leased to the YMCA, which has
pledged to pay one -third of the $10,330,000 bonds outstanding. The bonds are general obligations of the city and
are backed by its full faith and credit.
The special assessment bonds are used to finance assessable improvements within the city. The bonds are payable
primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds
are general obligations of the city and are backed by its full faith and credit.
For the governmental activities, the city also entered into a contract for deed to finance the acquisition of park
property. Compensated absences and other postemployment benefits are generally liquidated through the General
fund.
For the business -type activities, the general obligation revenue bonds were issued to finance capital improvements. The
bonds are payable from future revenues pledged from the Sewer and Water funds and are backed by the full faith and
credit of the city. Annual principal and interest payments on the bonds are expected to require about 33 and 28 percent
of revenues from the Sewer and Water funds, respectively. For 2014, principal and interest paid and total operating
revenues for the Sewer fund were $571,659 and $1,734,141, respectively. For 2014, principal and interest paid and total
operating revenues for the Water fund were $605,846 and $2,148,327, respectively.
53
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
The revenue bonds were issued to finance the acquisition and construction of major capital facilities and are to be repaid
from future revenues pledged from the Electric fund. Annual principal and interest payment on the bonds required about
3 percent of revenues from the Electric fund. For 2014, principal and interest paid and total customer revenues for the
Electric fund were $864,704 and $31,366,685, respectively.
The city also issued a promissory note to provide for the construction of a landfill gas generator. The note is to be paid
from revenue of the system and is secured by the facility.
In 2013 the EDA issued $9,685,000 G.O. Refunding Bonds, Series 2013A. The bonds bear an average coupon rate of
2.2 percent and will be used to call $9,225,000 of the outstanding principal of the EDA G.O. Bonds, Series 2007D on
February 1, 2017. As a result of the refunding issue, the EDA will save $1,001,112 in debt service payments and achieve
an economic gain (the present value of the difference between the old and the new debt service) of $795,866.
On March 13, 2014 the city issued $2,030,000 Electric Revenue Refunding Bonds, Series 2014A. The bonds bear an
average coupon rate of 2.17 percent and were used to call $2,180,000 of the outstanding principal of the Electric
Revenue Bonds, Series 2006. As a result of the refunding issue, the city will achieve a net cash flow savings of
$239,104 and an economic gain (the present value of the difference between the old and the new debt service) of
$221,930.
F. Fund Balance Classification
At December 31, 2014, a summary of the governmental fund balance classifications are as follows:
Committed to:
Library operations
Ice arena
Economic development
Insurance reserve
Street improvements
OPEB obligation
Total committed
Assigned to
- $ - $ - $ 425,469
- - - 315,839
2,591,071
166,103
2,330,519
317,929
$ 3179929 $ $ $ 5,8299001
$ 425,469
315,839
2,591,071
166,103
2,330,519
317,929
$ 6,146,930
Landfill mitigation
$ - $ - $ - $ 737,949
$ 7379949
Other
- - - 1,297
1,297
General YMCA
- - - 41,576
Governmental
Economic development
- - - 102,282
Fund Bonds
TIF Districts
Funds
Total
Nonspendable:
- - - 3,857,503
31857,503
Street improvements
- - - 1,959,985
Prepaid items
$ 22,725 $
$
$ 101,910
$ 124,635
Restricted for:
140,656
Total assigned
$ - $ $ $ 15,883,279
$ 15,883,279
Debt service
$ - $ 10,011,420
$ -
$ 11325,798
$ 11,337,218
Landfill mitigation
- -
-
574,574
574,574
Economic development
- -
434,225
1,186,395
1,620,620
Law enforcement
- -
-
269911
26,911
Park improvements
366,360
366,360
Total restricted
$ $ 10,011,420
$ 434,225
$ 314809038
$ 13,925,683
Committed to:
Library operations
Ice arena
Economic development
Insurance reserve
Street improvements
OPEB obligation
Total committed
Assigned to
- $ - $ - $ 425,469
- - - 315,839
2,591,071
166,103
2,330,519
317,929
$ 3179929 $ $ $ 5,8299001
$ 425,469
315,839
2,591,071
166,103
2,330,519
317,929
$ 6,146,930
Landfill mitigation
$ - $ - $ - $ 737,949
$ 7379949
Law enforcement
- - - 1,297
1,297
Debt service
- - - 41,576
41,576
Economic development
- - - 102,282
1029282
Capital equipment
- - - 2,0439807
2,043,807
Building construction/improvements
- - - 3,857,503
31857,503
Street improvements
- - - 1,959,985
11959,985
Other improvement projects
- - - 6,9989224
6,998,224
Park improvements
- 140,656
140,656
Total assigned
$ - $ $ $ 15,883,279
$ 15,883,279
FYI
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION
A. Risk Management
The city is exposed to various risks of loss related to torts; theft of damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the city carries insurance. The city obtains insurance
through participation in the League of Minnesota Cities Insurance Trust ( LMCIT) which is a risk sharing pool with
approximately 800 other governmental units. The city pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self - sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the city's coverage
in any of the past three fiscal years.
Liabilities are reported when it is probable 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.
B. 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 government expects such amounts, if any, to be immaterial.
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 increments could become a liability of the applicable fund. The city's management is
not aware of any instances of noncompliance which would have a material effect on the financial statements.
C. Territorial Acquisition Agreement
In, 1991, the Utilities entered into a 20 year agreement to transfer ownership of electric plant and electric service to
customers in certain areas currently receiving electric service from Connexus Energy. In 2010 the Utilities completed
the final purchase under this agreement.
The agreed cost of property purchased from Connexus Energy is net book value. The Utilities also pays Connexus
Energy for loss of revenue for each area acquired based on a formula outlined in the agreement.
In addition, the Utilities will compensate Connexus Energy for the loss of revenue from the future sale of electricity to
electric customers in the areas acquired from Connexus Energy for a period of ten years from the date of sale of each
individual area.
The Utilities paid $634 in 2014 for loss of revenues under this agreement. All amounts paid are included in property and
equipment.
D. Pension Plans
1. Public Employees Retirement Association
a. Plan Description
All full -time and certain part-time employees of the City of Elk River are covered by defined benefit pension
plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers
the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF)
which are cost - sharing, multiple- employer retirement plans. These plans are established and administered in
accordance with Minnesota Statutes, Chapters 353 and 356.
55
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION – CONTINUED
GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are
covered by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are
covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon
death of eligible members. Benefits are established by state statute, and vest after three years of credited
service. The defined retirement benefits are based on a member's highest average salary for any five successive
years of allowable service, age, and years of credit at termination of service.
Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring
member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula
(Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary
for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a
Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each
remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan
members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the
annuity accrual rate is 3.0 percent for each year of service. For all PEPFF and GERF members hired prior to
July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of
service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members
hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at
66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to
eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime
annuity that ceases upon the death of the retiree —no survivor annuity is payable. There are also various types
of joint and survivor annuity options available which will be payable over joint lives. Members may also leave
their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at
retirement age. Refunds of contributions are available at any time to members who leave public service, but
before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to
active plan participants
PERA issues a publicly available financial report that includes financial statements and required supplementary
information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.ore, by writing
to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651) 296 -7460 or 1- 800 -652-
9026.
b. Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are
established and amended by the state legislature. The city makes annual contributions to the pension plans
equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members are
required to contribute 9.1% and 6.25 %, respectively, of their annual covered salary in 2014. PEPFF members
were required to contribute 10.2% of their annual covered salary in 2014. In 2014, the City of Elk River was
required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members,
7.25% for Coordinated Plan members, and 15.3% for PEPFF members. The city's contributions to the General
Employees Retirement Fund for the years ending December 31, 2014, 2013 and 2012 were $615,331, $584,075
and $553,395, respectively. The city's contributions to the Public Employees Police & Fire Fund for the years
ending December 31, 2014, 2013 and 2012 were $418,280, $383,545 and $369,421, respectively. The city's
contributions were equal to the contractually required contributions for each year as set by state statute.
Contribution rates will increase on January 1, 2015 in the Coordinated Plan (6.5% for members and 7.5% for
employers) and the Police and Fire Fund (10.8% for members and 16.2% for employers).
56
CITY OF ELK RIVER MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION — CONTINUED
c. Defined Contribution Plan
Two council members of the City of Elk River are covered by the Public Employees Defined Contribution Plan
( PEDCP), a multiple- employer deferred compensation plan administered by the Public Employees Retirement
Association of Minnesota (PERA). The PEDCP is a tax qualified plan under Section 401(a) of the Internal
Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative
expenses. Minnesota Statutes, Chapter 353D.03, 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.
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 one percent of the assets in
each member's account annually.
Total contributions made by the City of Elk River during fiscal year 2014 were:
Contribution Amount
Percentage of Covered Payroll
Required
Employee
Employer
Employee
Employer
Rates
$940
$940
5.0%
5.0%
5.0%
2. Volunteer Fire Department Relief Association
a. Plan Description
The Elk River Fire Relief Association is the administrator of a single employer public employee defined benefit
retirement system (PERS) established to provide benefits for members of the Elk River Fire Department.
The Fire Relief Association maintains a separate Special fund to accumulate assets to fund the retirement
benefits earned by the Fire Department's membership. Funding for the relief association is derived primarily
from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing
Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980).
The Fire Relief Association issues a publicly available financial report that includes financial statements and
required supplementary information. The report may be obtained by writing to the Elk River Fire Department
Relief Association, 13073 Orono Parkway, Elk River, MN 55330.
b. Funding Policy
The financial requirements of the Special fund are determined in accordance with Section 69.772 of the
Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual
installments. The Association is comprised of volunteers and therefore members have no contribution
requirements. During the year, the City recognized as revenue and as expenditure on- behalf payments of
$164,825 made by the State of Minnesota for the Fire Relief Association.
57
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION — CONTINUED
The following summarizes the City's annual pension cost and other related information for the current year:
Annual Pension Cost $194,825
Contributions Made:
City $309000
State Aid $164,825
Actuarial Valuation Date 12/31/14
Actuarial Cost Method Entry age normal
Amortization Method Level dollar closed
Remaining Amortization Period:
Normal cost 20 years
Prior service cost 5 years
Asset valuation method Market
Actuarial Assumptions
Investment rate of return 5%
Projected salary increases N/A
Inflation rate N/A
Cost of living adjustments None
The City's annual pension cost, the percentage of annual pension cost contributed, and the net pension
obligation for the Relief Association for the year ended December 31, 2014 and the preceding fiscal years was
as follows:
Three Year Trend Information
c. Funded Status and Funding Progress
As of December 31, 2014, the actuarial accrued liability was $2,235,966. The schedule of funding progress,
presented as required supplementary information following the notes to the financial statements, presents multi-
year trend information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
Annual
Percentage
Year
Pension
of APC Net Pension
Ending
Cost (APC)
Contributed
Obligation
12/31/12
$ 1485465
100% $
12/31/13
1975103
100%
12/31/14
194,825
100%
c. Funded Status and Funding Progress
As of December 31, 2014, the actuarial accrued liability was $2,235,966. The schedule of funding progress,
presented as required supplementary information following the notes to the financial statements, presents multi-
year trend information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
58
Assets in
Excess of
Actuarial
Actuarial
Actuarial
(Unfunded)
Valuation
Value of
Accrued
Accrued
Percentage
Date
Assets
Liability
Liability
Funded
12/31/14
$ 3,190,879
$ 25235,966
$ 9545913
142.7%
58
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION - CONTINUED
E. Other Postemployment Benefits (OPEB)
1. City of Elk River
a. Plan Description
The city provides other postemployment health insurance benefits for retired employees through two defined
benefit plans: Municipal Retirees Health Plan (MRHP), a single - employer plan, and Utilities Retirees Health
Plan (URHP), a multi - employer plan. Each plan provides benefits for eligible retirees and their dependents
through the City's group health insurance plans, which cover both active and retired members. Since the
premium is a blended rate determined on the active and retiree population, the retirees are receiving an implicit
rate subsidy. The MRHP and URHP do not issue publicly available financial reports.
b. Funding Policy
Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for
MRHP are established and amended by the City. The Utilities has been delegated authority to establish and
amend benefit provisions for URHP. Eligible retirees receiving benefits are required to pay 100% of the total
premium.
c. Annual OPEB Cost and Net OPEB Obligation
The city's annual OPEB cost for each plan is calculated based on the annual required contribution (ARC) of the
employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The
ARC represents the level of funding that, if paid on an ongoing basis, is projected to cover normal cost each
year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The URHP has elected to calculate the ARC and related information using the alternative measurement method
permitted for employers in plans with fewer than one hundred total plan members.
The following table shows the components of the City's annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the City's net OPEB obligation:
Annual required contribution (ARC)
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB cost
Contributions made
Increase in net OPEB obligation
Net OPEB obligation - beginning of year
Net OPEB obligation - end of year
'.Y9
Municipal
Utility
Retiree
Retiree
Health Plan
Health Plan
$ 125,720
$ 1093
11,330
1,802
(16,602)
(2,605)
120,448
9,890
(39,599)
-
80,849
9,890
283,261
45,042
$ 364,110 $ 54,932
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION - CONTINUED
The city's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB
obligation for the last three years are as follows:
Percentage of
Annual Employer Annual OPEB Net Pension
Fiscal Year Ended OPEB Cost Contribution Cost Contributed Obligation
MRHP:
Utility
Retiree
Retiree
12/31/2012
$ 97,719
$ 36,810
38% $ 235,545
12/31/2013
96,519
48,803
51% 283,261
12/31/2014
120,448
39,599
33% 364,110
URHP:
12/31/2012 $ 4,601 $ - -% $ 40,360
12/31/2013 69073 19391 23% 45,042
12/31/2014 95890 - -% 54,932
d. Funded Status and Funding Progress
As of January 1, 2014, the most recent actuarial valuation date, the funded status of the plan was as follows:
Actuarial accrued liability (a)
Actuarial value of plan assets (b)
Unfunded actuarial accrued liability (a -b)
Funded ratio (b /a)
Covered payroll (c)
Unfunded actuarial accrued liability as a
percentage of covered payroll ((a - b) / c)
Municipal
Utility
Retiree
Retiree
Health Plan
Health Plan
$ 9965344
$ 683948
$ 996,344
$ 68,948
0.00%
0.00%
$ 7442,216 $ 2,8109413
13.39% 2.45%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about fixture
employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan
and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information, following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for benefits.
e. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood
by the employer and plan members) and include the types of benefits provided at the time of each valuation and
the historical pattern of sharing of benefit costs between the employer and plan members to that point. The
methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the
calculations.
.1
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION — CONTINUED
For the MRHP, in the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was
used. The actuarial assumptions included a 4% investment rate of return and an annual healthcare cost trend
rate of 7.5% initially, reduced incrementally to an ultimate rate of 5% after ten years. The actuarial value of
assets was not determined as the city has not advance - funded its obligation. The plan's unfunded actuarial
accrued liability was amortized as a level dollar amount over a closed basis. The remaining amortization period
at December 31, 2014 was thirty years.
For the URHP, the following simplifying assumptions were made:
Retirement age for active employees — Based on the historical average retirement age for the covered group,
active plan members were assumed to retire at age 60, or at the first subsequent year in which the member
would qualify for benefits.
Participation Rate — It is assumed that 10% of active participants continue coverage until age 65. Participants
are assumed to continue in their current coverage type (single or family). It is assumed that 100% of retirees
will continue their current coverage until age 65.
Life Expectancy — Life expectancies were based on mortality tables from the National Center for Health
Statistics. The 2000 United States Life Tables for Males and for Females were used.
Turnover— Non - group - specific age -based turnover data from GASB Statement 45 were used as the basis for
assigning active member a probability of remaining employed until the assumed retirement age and for
developing an expected future working lifetime assumption for purposes of allocating to periods the present
value of total benefits to be paid.
Healthcare cost trend rate —The expected rate of increase in healthcare insurance premiums was based on
projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 7.5%
initially, reduced to an ultimate rate of 5% after eight years, was used.
Health insurance premiums — 2014 health insurance premiums for retirees were used per the valuation report.
Withdrawal — The probability that an employee will remain employed until the assumed retirement age was
determined using non -group specific age -based turnover data provided in Table 1 in Paragraph 35b of GASB
45.
Actuarial Method — Projected Unit Credit with 30 -year amortization of the unfunded liability.
For the URHP, a discount rate of 4% was used based on the historical and expected returns of the Utilities'
short-term investment portfolio. In addition, a simplified version of the entry age actuarial cost method was
used. The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open basis.
The remaining amortization period at December 31, 2014 was thirty years.
F. Segment Information
The city maintains five enterprise funds that account for the municipal liquor operations, garbage collections, and sewer,
water and electric utilities. The city considers each of its enterprise funds to be a segment. Since the required segment
information is already included in the city's proprietary funds' balance sheet and statement of revenues, expenses, and
changes in net position balance, this information has not been repeated in the notes to the basic financial statements.
61
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: OTHER INFORMATION — CONTINUED
G. Conduit Debt Obligations
From time to time, the city has issued revenue bonds to provide financial assistance to private - sector entities for the
acquisition and construction of industrial and commercial, multi - family and educational facilities deemed to be in the
public interest. The bonds are secured by the property financed and are payable solely from payment received from the
benefited entity. Neither the city, the state, nor any political subdivision thereof is 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, 2014, there were four series of revenue bonds outstanding, with an aggregate principal payable
amount of $9,669,828.
H. Commitments
The Utilities has received notice from their power supplier regarding the existing all requirements power contract
exercising their right to give ten years notice to cancel the contract. The cancellation date would be effective September
30, 2018. On May 14, 2013 the Utilities signed a new agreement with Minnesota Municipal Power Agency (MMPA).
The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency ( CMMPA) to acquire
an interest in the CAPX Initiative Brookings Project, a power transmission line in Minnesota. The project is a 250 mile,
345kV AC transmission line with a rating of 2,300 MW, between Brookings, South Dakota, and the Twin Cities. In
2011 there was increased opportunity for investment, and subsequent agreements provide the Utilities with an ownership
share of $5.6 million or 18.9 %. The return on this investment through CMMPA is designed to provide approximately
$124,000 annually over the 40 year project life. The first transmission payment under the agreement of $75,453 was
receivable at December 31, 2014.
I. Joint Ventures
The city has agreements with govemment and other entities which provide reduced costs, better service and additional
benefits to the participants. In 2007, the city and neighboring municipalities formed the Sherbume/Wright Cable
Communications Commission (the "Commission'). The purpose of the organization is to monitor the operation and
activities of cable communications of the member municipalities. The Commission also provides coordination,
administration and enforcement of the franchises for the cable communication system. Financial statements for the
Commission can be obtained by writing to: Sherbume /Wright Cable Communications Commission at 444 Cedar St,
Suite 950, St. Paul, MN 55101.
J. Prior Period Adjustment
An adjustment is required for the December 31, 2013 carry forward fund balances of the governmental funds to adjust
for the reclassification of the deferred inflow of resources for notes receivable. The following schedule reconciles the
December 31, 2013 fund balances as restated:
Fund balances - December 31, 2013 $ 38147%671
Prior period adjustment - reclass deferred inflow of resources -notes receivable 362,655
Fund balances, as restated - January 1 , 2014 $ 38,842,326
K. Subsequent Event
In March 2015, the Utilities entered into a 5 year agreement to transfer ownership of the electric plant and electric
service to customers in the remaining areas of Elk River receiving electric service from Connexus — a Territorial
Acquisition Agreement.
The terms of the agreement were based on the provisions outlined in Minnesota Statutes 21613.37 — 21613.47. These
provisions include compensation for plant and property at net book value, loss of revenue which is indexed and runs for
a ten year period from the transfer date specific to each area, and integration costs identified through a jointly prepared
integration study.
62
CITY OF ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2014
Elk River Fire Relief Pension Plan
Schedule of Funding Progress
Actuarial
Actuarial
Actuarial
Valuation
Value of
Accrued
Date
Assets
Liability
12/31/12
$ 2,4561311
$ 215515430
12/31/13
2,880,579
215925356
12/31/14
31190,879
2,235,966
Assets in
Excess of
Pension
(Unfunded)
Actuarial
Benefit
Accrued
Percentage
Per Year
Liability
Funded
of Service
$ (95,119)
96.3%
$ 5,091
288,223
111.1%
5,091
954,913
142.7%
5,167
Other Postemployment Benefits
Schedules of Funding Progress
Municipal Retiree Health Plan
Utilities Retiree Health Plan
Unfunded
UAAL as a
Actuarial
Actuarial
Actuarial
Actuarial
Annual
Percentage
Valuation
Value of
Accrued
Accrued
Funded
Covered
of Covered
Date
Assets (a)
Liability (b)
Liability (b -a)
Rate
Payroll (c)
Payroll ((b -a) /c)
01/01/08
$
$ 88,718
$ 88,718
0.00%
$ 45095,000
2.17%
01 /01 /11
9085610
9089610
0.00%
659015671
13.17%
01/01/14
996,344
996,344
0.00%
7,442,216
13.39%
Utilities Retiree Health Plan
63
Unfunded
UAAL as a
Actuarial
Actuarial
Actuarial
Actuarial
Annual
Percentage
Valuation
Value of
Accrued
Accrued
Funded
Covered
of Covered
Date
Assets (a)
Liability (b)
Liability (b -a)
Rate
Payroll (c)
Payroll ((b -a) /c)
01/01/08
$
$ 56,892
$ 56,892
0.00%
$ 2,300,000
2.47%
01 /01 /11
42,681
42,681
0.00%
2,2865547
1.87%
01/01/14
68,948
68,948
0.00%
21810,413
2.45%
63
NonMajor Governmental Funds
Special Revenue
Special revenue funds are used to account for the proceeds of proceeds of specific revenue sources that are
legally restricted to expenditures for specified purposes. They are usually required by statute or local
ordinance to finance particular functions or activities of government.
Debt Service
Debt service funds account for the accumulation of resources for, and the payment of, general long -term
debt principal, interest and other related costs.
Capital Projects
Capital projects funds are used to account for the acquisition and construction of major capital facilities
other than those financed by proprietary funds.
CITY OF ELK RIVER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2014
LIABILITIES
Accounts payable
Special
Debt
Capital
Total Nonmajor
Salaries payable
Revenue
Service
Projects
Govemmental
Due to other funds
Funds
Funds
Funds
Funds
ASSETS
2,157
5339695
535,852
Cash and investments
$ 45738,993
$ 969,714
$ 17,650,684
$ 23,359,391
Receivables:
Interest
11,625
2,485
455751
59,861
Taxes
22,413
15,818
3,089
41,320
Accounts
109,602
-
296,533
406,135
Special assessments
-
3815085
1,2319357
1,6125442
Notes, net
333,622
-
-
3335622
Due from other governments
130
-
15200
1,330
Due from other funds
19153,878
-
288,889
194429767
Prepaid items
101,910
-
101,910
Property held for resale
261,400
-
-
261,400
Total assets
$ 6,733,573
$ 1,369,102
$ 191517,503
$ 27,6201178
LIABILITIES
Accounts payable
$ 79,503
$
$ 5829090
$ 6615593
Salaries payable
22,972
379
23,351
Due to other funds
5,718
330,335
336,053
Unearned revenue
2,157
5339695
535,852
Total liabilities
110,350
1,446,499
15556,849
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
9,283
65765
1,439
17,487
Unavailable revenue - special assessments
-
379,103
1,2159540
1,594,643
Total deferred inflows of resources
9,283
385,868
1,2165979
1,612,130
FUND BALANCES
Nonspendable
101,910
-
-
1015910
Restricted
29130,444
983,234
366,360
35480,038
Committed
3,498,482
-
2,330,519
5,8291001
Assigned
8835104
1590005175
15,883,279
Unassigned
-
-
(843,029)
(843,029)
Total fund balances
6,613,940
983,234
16,8547025
24,451,199
Total liabilities, deferred inflows
of resources, and fund balances
$ 6,733,573
$ 19369,102
$ 19,517,503
$ 27,620,178
G±1
CITY OF ELK RIVER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Taxes:
Property taxes
Franchise tax
Intergovernmentalrevenue
Charges for services
Fines and forfeits
Special assessments
Interest income
Miscellaneous revenue:
Landfill expansion fee
Refunds and reimbursements
Contributions
Other
Total revenues
EXPENDITURES
Current:
General government
Public safety
Public works
Culture and recreation
Economic development
Debt service:
Principal
Interest and service charges
Capital outlay:
General government
Public safety
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of
revenues over expenditures
Special
Debt
Capital
Total Nonmajor
Revenue
Service
Projects
Governmental
Funds
Funds
Funds
Funds
$ 553,243 $ 3709599
$ 57,005
$ 980,847
- -
1,314,494
1,3145494
25560 -
549,162
5515722
812,712 -
461,839
192745551
325167 -
-
32,167
- 182,191
6999080
881,271
196,228 45683
7985867
999,778
117,207
217,137
29,494 -
1,960,748 557,473
7579960
757,960
-
117,207
835,567
1,052,704
26,668
565162
5,5005642
8,018,863
98,996
-
49,159
148,155
23,621
-
955260
118,881
26,545
-
1,018,464
1,045,009
818,496
-
253,198
1,071,694
749,944
-
-
749,944
-
1,220,000
-
152205000
-
432,440
15,760
448,200
-
-
212,587
2125587
279306
-
282,860
310166
-
-
1,436,684
1,436,684
525789
-
254,351
307,140
1,797,697
1,652,440
31618,323
7,0681460
1639051 (190949967)
OTHER FINANCING SOURCES (USES)
Transfers in 589269 916,965
Transfers out (1,190732) -
Sale of capital assets - -
Total other financing sources (uses)
Net change in fund balances
Fund balances - January 1
Prior period adjustment
Fund balances, restated - January 1
Fund balances - December 31
(1,1325463) 916,965
(969,412) (178,002)
7,2205697 1,161,236
362,655
� coy zc� i i<i �zc
$ 6,613,940 $ 983,234
MI
1,882,319 950,403
1,986,232
(21014,042)
44,827
17,017
1,899,336
14,954,689
14,954,689
2,961,466
(31204,774)
44,827
(198,481)
751,922
23,336,622
362,655
23,699,277
$ 16,854,025 $ 2494519199
This page has been left blank intentionally
NONMAJOR SPECIAL REVENUE FUNDS
Library - This fund accounts for any library maintenance costs which are not paid by the Great River
Regional Library System.
Ice Arena - This fund accounts for the operation and maintenance of the ice arena which is funded by user
fees.
Pinewood Golf Course - This fund was established to account for the operation and maintenance of the
municipal -owned nine -hole golf course which is funded by user fees.
Landfill - This fund was established to segregate solid waste surcharge revenues to be used for landfill
abatement and other environmental issues.
Revolvine Loan - This fund was established to account for the City's portion of state economic
development grant repayments which are used to fund other economic development projects.
Federal DEED - This fund was established to account for the federal share of Department of Employment
and Economic Development grant repayments which are used to fund economic development projects.
State DEED — This fund was established to account for the state share of Department of Employment and
Economic Development grant repayments which are used to fund economic development projects.
Development Fund - This fund was established to attract businesses to develop within the City's business
park.
Insurance Reserve - This fund was opened to account for insurance deductibles and litigation costs not
covered by insurance. The major source of revenue is from insurance premium refunds.
Drue Forfeiture Reserve - This fund was established to account for revenues received as a result of drug
related crimes. These funds must be used for drug education and prevention.
YMCA Grant - This fund was established to account for grant revenues received from the County for the
YMCA building.
Economic Development Authori ty - This fund was established to account for a special tax levy authorized
to help encourage development in the City.
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2014
L"Mr3111YYIV
Accounts payable $
15808
$ 42,580
Pinewood
$ 4,116 $
Revolving
Salaries payable
Library
Ice Arena
Golf Course
Landfill
Loan
ASSETS
70
-
-
-
_
Cash and investments
$ 424,843
$ 2669262
$ 9,492
$ 1,312,993
$ 880,793
Receivables:
1,878
56,198
9,492
49388
Interest
15089
683
-
35424
2,283
Taxes
21348
-
-
_
_
Accounts
-
105,092
-
364
-
Notes, net
-
-
-
-
333,622
Due from other governments
-
-
-
130
-
Due from other funds
-
-
_
-
_
Prepaid items
_
_
_
425,469
3153839
Property held for resale
-
_
_
-
-
Total assets
$ 428,280
$ 372,037
$ 9,492
$ 1,316,911
$ 11216,698
L"Mr3111YYIV
Accounts payable $
15808
$ 42,580
$ 307
$ 4,116 $
-
Salaries payable
-
12,328
8,318
272
-
Due to other funds
70
-
-
-
_
Unearned revenue
-
11290
867
-
Total liabilities
1,878
56,198
9,492
49388
-
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
933
-
-
FUND BALANCES
Nonspendable
Restricted
-
-
-
574,574
-
Committed
425,469
3153839
-
-
11216,698
Assigned
-
-
-
737,949
-
Total fund balances
425,469
3159839
-
153129523
19216,698
Total liabilities, deferred inflows
of resources, and fund balances $
428,280
$ 372,037
$ 9,492
$ 1,316,911 $
1,216,698
..
3,811 - - - 4,539 9,283
-
-
-
101,910
Drug
-
Economic
Total Nonmajor
Federal
State
Development
Insurance
Forfeiture
YMCA
Development
Special Revenue
DEED
DEED
Fund
Reserve
Reserve
Grant
Authority
Funds
-
-
-
1,297
41,576
1025282
8835104
$ 1979759
$ 408,831
$ 2195646
$ 165,120
$ 29,256
$ 383,158
$ 440,840
$ 4,7385993
513
1,060
11088
428
75
982
-
11,625
-
-
89714
-
-
-
11,351
22,413
-
-
-
41146
-
-
-
109,602
'
-
-
-
-
-
-
333,622
"
-
-
-
-
-
130
-
-
111539878
-
-
-
-
1,153,878
-
-
-
101,910
-
-
-
101,910
-
-
-
-
-
-
2615400
261,400
$ 198,272
$ 409,891
$ 11383,326
$ 271,604
$ 29,331
$ 384,140
$ 713,591
$ 61733,573
$ -
$ -
$ 85402
$ 3,591
$ 1,123
$ -
$ 17,576
$ 79,503
-
-
-
-
-
2,054
225972
"
-
-
-
-
5,648
55718
'
-
-
-
-
-
-
2,157
-
-
8,402
3,591
1,123
-
25,278
110,350
3,811 - - - 4,539 9,283
-
-
-
101,910
-
-
-
101,910
198,272
406,631
-
-
26,911
3425564
581,492
251305444
-
3,260
11371,113
1665103
-
-
-
3,498,482
-
-
-
1,297
41,576
1025282
8835104
198,272
409,891
153715113
268,013
289208
3849140
683,774
69613,940
$ 198,272
$ 409,891
$ 1,383,326
$ 2715604
$ 29,331
$ 384,140
$ 713,591
$ 6,7335573
G51
CITY OF ELK RIVER, MINNESOTA
LINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
EXPENDITURES
Current
General government
-
-
Pinewood
Revolving
-
Library
Ice Arena
Golf Course Landfill
Loan
REVENUES
-
Public works
-
-
Property taxes
$ 63,375
$ -
$ - $ -
$
Intergovernmental revenue
-
-
- 2,450
-
Charges for services
-
7339773
- 10,952
-
Fines and forfeits
-
-
- -
-
Interestincome(loss)
31895
2,770
- 71,821
48,783
Miscellaneous revenue:
-
Culture and recreation
-
52,789
Refunds and reimbursements
-
-
- -
-
Contribufions
29,511
5,752
- -
-
Other
-
29,494
- -
-
Total revenues
96,781
771,789
- 85,223
48,783
EXPENDITURES
Current
General government
-
-
-
-
-
Public safety
-
-
-
-
-
Public works
-
-
-
26,545
-
Culture and recreation
119,992
6489285
50,219
-
-
Economic development
-
-
-
-
294
Capital outlay:
Public safety
-
-
-
-
-
Culture and recreation
-
52,789
-
-
-
Total expenditures
119,992
701,074
50,219
26,545
294
Excess (deficiency) of
revenues over expenditures
(23,211)
70,715
(50,219)
58,678
48,489
OTHER FINANCING SOURCES (USES)
Transfers in
-
-
589269
-
-
Tmnsfers out
-
-
(8,050)
(61,332)
-
Total other financing sources (uses)
-
-
50,219
(61,332)
-
Net change in fund balances
Fund balances - January 1
Prior period adjustment
Fund balances, restated - January I
Fund balances - December 31
111'1111 -rn -rlvc
448,680 245,124
448,680 2459124
$ 4259469 $ 315,839
M
- (2,654)
48,489
- 1,315,177
805,554
-
362,655
1,315,177
1,168,209
$ - $ 19312,523
$ 1,216,698
- - - 98,996 - - - 989996
- - - 23,621 - - 23,621
- - - - - - 26,545
- - - - - - - 8189496
111,155 - 211,280 - - - 427,215 749,944
- - 27,306 - - 27,306
- - - - - - - 52,789
111,155 - 211,280 98,996 50,927 - 427,215 7797,697
(112,883) 24,054 128,363 (27,128) (18,455) 3,780 60,868 1639051
-
-
-
-
Drug
-
Economic
Total Nonmajor
Federal
State
Development
Insurance
Forfeiture
YMCA
Development
Special Revenue
DEED
DEED
Fund
Reserve
Reserve
Grant
Authority
Funds
$ 190,676
$ -
$ -
$ -
$ 299,192
$ 553,243
-
-
-
-
-
-
110
2,560
-
3,260
61,043
-
-
-
3,684
812,712
-
-
-
-
32,167
-
-
32,167
(1,728)
20,794
29,858
12,727
305
3,780
3,223
196,228
-
-
58,066
59,141
-
-
-
1179207
-
-
-
-
-
-
181,874
217,137
-
-
-
-
-
-
-
29,494
(1,728)
24,054
339,643
71,868
32,472
3,780
488,083
119609748
- - - 98,996 - - - 989996
- - - 23,621 - - 23,621
- - - - - - 26,545
- - - - - - - 8189496
111,155 - 211,280 - - - 427,215 749,944
- - 27,306 - - 27,306
- - - - - - - 52,789
111,155 - 211,280 98,996 50,927 - 427,215 7797,697
(112,883) 24,054 128,363 (27,128) (18,455) 3,780 60,868 1639051
-
-
-
-
-
-
-
58,269
-
-
(248,600)
(22,850)
-
(250,000)
(599,900)
(1,190,732)
-
-
(2481600)
(229850)
-
(250 000)
5 900)
(1,132,463)
(112,883)
24,054
(120,237)
(49,978)
(18,455)
(246,220)
(539,032)
(969,412)
311,155
3855837
1,491,350
317,991
46,663
630,360
1,2225806
7,220,697
-
-
-
-
-
-
-
362,655
311,155
385837
11491,350
317,991
46,663
630,360
1,222,806
79583,352
$ 198,272
$ 409,891
$ 11371,113
$ 268,013
$ 28,208
$ 384,140
$ 683,774
$ 69613,940
m'
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - LIBRARY MAINTENANCE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
EXPENDITURES
Culture and recreation:
Current
Net change in fund balance
Fund balance - January 1
Fund balance - December 31
96,500 965500 1195992 (23,492)
$ - $ - (23,211) $ (23,211)
70
448,680
$ 425,469
Budget
Variance with
Original
Final
Actual
Final Budget
REVENUES
Property taxes
$ 635100 $
63,100
$ 63,375
$ 275
Interest income
6,400
61400
31895
(23505)
Miscellaneous revenue:
Contributions
27,000
27,000
29,511
2,511
Total revenues
965500
96,500
965781
281
EXPENDITURES
Culture and recreation:
Current
Net change in fund balance
Fund balance - January 1
Fund balance - December 31
96,500 965500 1195992 (23,492)
$ - $ - (23,211) $ (23,211)
70
448,680
$ 425,469
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - ICE ARENA FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Charges for services
Interest income
Miscellaneous revenue:
Vending machines
Contributions
Other
Total revenues
EXPENDITURES
Culture and recreation:
Current
Capital outlay
Total expenditures
Net change in fund balance
Fund balance - January 1
Fund balance - December 31
Budget
Variance with
Original
Final
Actual
Final Budget
$ 755,400 $
7553400
$ 7335773
$ (215627)
-
-
2,770
2,770
14,000
145000
14,980
980
7,800
7,800
51752
(23048)
45050
4,050
14,514
10,464
781,250
781,250
7713789
(9,461)
660,600 660,600
52,800 52,800
7131400 7133400
$ 675850 $ 67,850
71
648,285 12,315
70,715 $ 21865
245,124
$ 315,839
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - PINEWOOD GOLF COURSE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
Fund balance - January I
Fund balance - December 31
72
Budget
Variance with
Original
Final
Actual
Final Budget
REVENUES
Charges for services
$ 1895800 $
189,800
$ -
$ (189,800)
EXPENDITURES
Culture and recreation:
Current
241,850
2419850
505219
1915631
Deficiency of revenues over expenditures
(523050)
(52,050)
(505219)
1,831
OTHER FINANCING SOURCES (USES)
Transfers in
605100
605100
58,269
(15831)
Transfers out
(89050)
(81050)
(8,050)
-
Total other financing sources (uses)
525050
52,050
50,219
(1,831)
Net change in fund balance
$ $
$
Fund balance - January I
Fund balance - December 31
72
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - LANDFILL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
Fund balance - January 1 133153177
Fund balance - December 31 $ 19312,523
73
Budget
Variance with
Original
Final
Actual
Final Budget
REVENUES
Intergovernmental revenue
$ 11,000
$ 11,000
$ 23450
$ (8,550)
Charges for services
16,000
16,000
109952
(55048)
Interest income
9,000
95000
71,821
62,821
Total revenues
365000
36,000
855223
49,223
EXPENDITURES
Public works:
Current
43,200
435200
26,545
165655
Excess (deficiency) of
revenues over expenditures
(77200)
(73200)
58,678
65,878
OTHER FINANCING USES
Transfers out
(78,150)
(78,150)
(61,332)
165818
Net change in fund balance
$ (853350)
$ (85,350)
(21654)
$ 82,696
Fund balance - January 1 133153177
Fund balance - December 31 $ 19312,523
73
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Property taxes
Intergovernmental revenue
Charges for services
Interest income
Miscellaneous revenue:
Contributions
Total revenues
EXPENDITURES
Economic development:
Current
Capital outlay
Total expenditures
Excess (deficiency) of
revenues over expenditures
OTHER FINANCING USES
Transfers out
Net change in fund balance
Fund balance - January I
Fund balance - December 31
Budget
Variance with
Original
Final
Actual
Final Budget
$ 299,100 $
299,100
$ 2995192
$ 92
-
-
110
110
35500
31500
35684
184
7,500
71500
3,223
(45277)
-
-
1815874
1815874
3105100
310,100
488,083
1777983
269,450 477,750 427,215 50,535
- 835000 - 83,000
269,450 560,750 427,215 133,535
40,650 (250,650) 60,868 311,518
(315900) (599,900) (5995900)
$ 8,750 $ (850,550) (539,032) $ 311,518
74
1,222,806
$ 683,774
NONMAJOR DEBT SERVICE FUNDS
Improvement Bonds - This fund is used to account for the accumulation of resources and payment of
principal and interest on long -term general obligation special assessment debt used to finance various
street, water, sewer and storm sewer improvements.
Government Building Bonds - This fund is used to account for the accumulation of resources and payment
of principal and interest to finance the construction of city facilities.
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR DEBT SERVICE FUNDS
DECEMBER 31, 2014
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
Unavailable revenue - special assessments
Total deferred inflows of resources
FUND BALANCES
Restricted
Total deferred inflows of resources
and fund balances
$ 11053 $ 5,712 $ 61765
379,103 - 379,103
380056 51712 385,868
235,650 7479584 9833234
$ 615,806 $ 753,296 $ 15369,102
75
Government
Total Nonmajor
Improvement
Building
Debt Service
Bonds
Bonds
Funds
ASSETS
Cash and investments
$ 232,550
$ 737,164
$ 969,714
Receivables:
Interest
596
1,889
2,485
Taxes
1,575
14,243
15,818
Special assessments
381,085
-
381,085
Total assets
$ 6155806
$ 753,296
$ 153695102
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
Unavailable revenue - special assessments
Total deferred inflows of resources
FUND BALANCES
Restricted
Total deferred inflows of resources
and fund balances
$ 11053 $ 5,712 $ 61765
379,103 - 379,103
380056 51712 385,868
235,650 7479584 9833234
$ 615,806 $ 753,296 $ 15369,102
75
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR DEBT SERVICE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Property taxes
Special assessments
Interest income
Total revenues
Debt service:
Principal
Interest and service charges
Total expenditures
Deficiency of revenues over expenditures
OTHER FINANCING SOURCES
Transfers in
Net change in fund balances
Fund balances - January 1
Fund balances - December 31
375,000
Government
Total Nonmajor
Improvement
Building
Debt Service
Bonds
Bonds
Funds
(219,011)
(875,956)
(1,094,967)
$ 2,188
$ 3685411
$ 3703599
182,191
-
182,191
610
4,073
45683
184,989
372,484
5575473
375,000
845,000
11220,000
29,000
403,440
432,440
404,000
1,248,440
1,652,440
(219,011)
(875,956)
(1,094,967)
916,965 9165965
(219,011) 41,009 (1785002)
454,661 706,575 1,161,236
$ 235,650 $ 747,584 $ 9835234
76
This page has been left blank intentionally
NONMAJOR CAPITAL PROJECTS FUNDS
Capital Reserve - This fund was established to help build reserves for the purchase of capital equipment.
Equipment Replacement - This fund is used to account for the purchase of capital equipment.
Park Dedication - This fund accounts for park dedication fees from developers and expenditures for park
land acquisitions and park capital improvements.
Park Improvements - This fund was established to account for the replacement and maintenance of park
equipment and for the beautification of city parks.
Government Buildings - This fund is used to account for resources and expenditures related to city facilities
projects. The major source of revenue is from landfill expansion fees.
GRE Reserve - This fund was established to account for revenues received from the license agreement
between the City and Great River Energy.
Pavement Management - This fund was established to account for franchise taxes collected to fund
expenditures for the ongoing maintenance and repair of the city streets.
Street Improvements - This fund is used to account for the construction of street improvement projects
throughout the city.
Improvement Projects — This fund is used to account for the construction of various improvements within
the city.
ASSETS
Cash and investments
Receivables:
Interest
Taxes
Accounts
Special assessments
Due from other governments
Due from other funds
Total assets
LIABILITIES
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2014
Capital
Equipment
Park
Park
Government
Reserve
Replacement
Dedication
Improvements
Buildings
-
Assigned
1,3005402
743,405
$ 11358,710
$ 923,753
$ 56,880
$ 151,270
$ 3,7451300
41040
21395
146
388
9,708
-
25
-
-
-
6,471
-
-
-
113,195
129989
-
-
-
-
1,200
-
-
59,872
-
-
-
1,3839410
986,045
57,026
7 151,658
3,8689203
Accounts payable $ 70,045 $ 242,640 $ - $ 1%157
Salaries payable - - - -
Due to other funds - - - 845
Unearned revenue - - 533,695 -
Total liabilities 70,045 242,640 533,695 11,002
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes - - - -
Unavailable revenue - special assessments 12,963 - - -
Total deferred inflows of resources 12,963 - - -
FUND BALANCES
$ 10,700
i n inn
Restricted
-
-
366,360
-
-
Committed
-
-
-
-
Assigned
1,3005402
743,405
-
1405656
3,857,503
Unassigned
-
-
(8435029)
-
-
Total fund balances
1,300,402
743,405
(4765669)
14%656
358575503
Total liabilities, deferred inflows
of resources, and fund balances
$ 1,3831410
$ 9865045
$ 57,026
$ 151,658
$ 35868,203
77
$ - $ 71,434 $ 829937 $ 94,177 $ 5825090
- - 379 379
- - 329,490 3305335
- - - 533,695
71,434 82,937 424,046 194465499
717 722 15439
539,395 6635182 11215,540
5405112 6635904 15216,979
- - - 366,360
- 2,3305519 - - 29330,519
2,5475602 - 1,959,985 41450,622 1590005175
- - - (843,029)
21547,602 2,330,519 1,959,985 4,4505622 16,854,025
$ 2,547,602 $ 2,401,953 $ 21583,034 $ 5,538,572 $ 19,517,503
78
Total Nonmajor
Pavement
Street
Improvement
Capital Projects
GRE Reserve
Management
Improvements
Projects
Funds
$ 25541,015
$ 119909908
$ 21031,735
$ 4,851,113
$ 17,6509684
6,587
5,161
3,936
13,390
459751
-
-
1,211
11853
31089
176,867
-
-
296,533
-
-
546,152
6729216
15231,357
-
-
1,200
229,017
-
-
288,889
2,54702
2,401,953
2758 9034
595389572
191517,503
$ - $ 71,434 $ 829937 $ 94,177 $ 5825090
- - 379 379
- - 329,490 3305335
- - - 533,695
71,434 82,937 424,046 194465499
717 722 15439
539,395 6635182 11215,540
5405112 6635904 15216,979
- - - 366,360
- 2,3305519 - - 29330,519
2,5475602 - 1,959,985 41450,622 1590005175
- - - (843,029)
21547,602 2,330,519 1,959,985 4,4505622 16,854,025
$ 2,547,602 $ 2,401,953 $ 21583,034 $ 5,538,572 $ 19,517,503
78
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
EXPENDITURES
Current:
General government
Capital
Equipment
Park
Park
Government
Public safety
Reserve
Replacement
Dedication
Improvements
Buildings
REVENUES
32,840
-
-
-
30,597
Taxes:
-
-
-
253,198
-
Property taxes
$ -
$ 155
$ -
$ -
$ -
Franchise tax
-
-
-
-
-
Intergovemmental revenue
21,317
225,894
-
-
-
Charges for services
-
-
378,604
7,515
-
Special assessments
81973
-
-
-
-
Interest income
83,726
44,260
146
25576
205,756
Miscellaneous revenue:
-
1075880
-
146,471
-
Landfill expansion fee
-
-
-
-
757,960
Contributions
174,422
-
-
70,558
-
Other
26,462
-
-
-
-
Total revenues
314,900
270,309
378,750
80,649
963,716
EXPENDITURES
Current:
General government
34,159
-
-
-
15,000
Public safety
785284
95000
-
-
7,976
Public works
32,840
-
-
-
30,597
Culture and recreation
-
-
-
253,198
-
Debt service:
Interest and service charges
-
-
15,760
-
-
Capital outlay:
General government
212,587
-
-
-
-
Public safety
30,326
252,534
-
-
-
Public works
-
354,573
-
-
-
Culture and recreation
-
1075880
-
146,471
-
Total expenditures
388,196
723,987
15,760
399,669
53,573
Excess (deficiency) of
revenues over expenditures
(735296)
(453,678)
362,990
(319,020)
910,143
OTHER FINANCING SOURCES (USES)
Transfers in
40,691
321,935
-
2825519
-
Transfers out
(200,000)
-
-
-
(916,965)
Sale of capital assets
6,150
38,677
-
-
-
Total other financing sources (uses)
(1535159)
360,612
-
282,519
(916,965)
Net change in fund balances
(226,455)
(93,066)
362,990
(36,501)
(6,822)
Fund balances - January 1
1,5265857
836,471
(839,659)
177,157
3,864,325
Fund balances - December 31
$ 1,300,402
$ 743,405
$ (476,669)
$ 140,656 $
3,8571503
79
Total Nonmajor
Pavement Street Improvement Capital Projects
GRE Reserve Management Improvements Projects Funds
$ -
$ -
$ 6,684
$ 50,166
$ 57,005
-
1,314,494
-
-
1,3149494
-
301,951
-
-
549,162
-
11750
-
739970
4619839
-
-
204,787
485,320
699,080
100,586
27,696
1085421
2259700
798,867
-
-
-
-
757,960
590,587
-
-
-
835,567
-
50
156
-
26,668
691,173
1,6455941
320,048
835,156
5,500,642
49,159
- - - 95,260
511,209 165,739 278,079 1,018,464
- - - 253,198
15,760
- 212,587
- - - 2829860
11,756 15070,355 - 1,436,684
- - - 254,351
522,965 1,236,094 278,079 3,618,323
691,173
11122,976
(916,046)
557,077
118825319
-
-
1,0819287
259,800
1,9869232
(2545300)
-
-
(642,777)
(2,0145042)
-
-
-
-
44,827
(254,300)
-
1,081,287
(382,977)
17,017
4365873
11122,976
1655241
174,100
11899,336
$ 2,547,602 $ 213305519 $ 1,959,985 $ 4,450,622 $ 16,854,025
m
AGENCY FUNDS
Agency Funds are used to account for assets held by the City as an agent for individuals, private
organizations and/or other governmental units. The City of Elk River had the following Agency Fund
during the year:
Developer Fee Escrow - This fund is used to account for the collection and distribution of funds relating to
private development projects.
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
DEVELOPER ESCROW AGENCY FUND
FOR THE YEAR ENDED DECEMBER 31, 2014
LIABILITIES
Refundable deposits payable $ 445115 $ 935451 $ 46,168 $ 91,398
81
Beginning
Ending
Balance
Additions
Deductions
Balance
ASSETS
Cash
$ 41,738
$ 88,534
$ 395140
$ 91,132
Accounts receivable
2,377
3,566
5,677
266
Total assets
$ 44,115
$ 925100
$ 44,817
$ 915398
LIABILITIES
Refundable deposits payable $ 445115 $ 935451 $ 46,168 $ 91,398
81
COMPONENT UNIT FINANCIAL STATEMENTS
The Housing and Redevelopment Authority of Elk River is a component unit of the City. Its operations are
presented as a separate column on the combined financial statements.
Governmental Fund
Housine and Redevelopment Authority Fund - This fund is used to account for housing and
redevelopment activities. Revenues are derived from the HRA property tax levy.
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
BALANCESHEET
GOVERNMENTAL FUND
DECEMBER 31, 2014
ASSETS
Cash and investments
Receivables:
Taxes
Notes
Due from primary government
Total assets
LIABILITIES
Accounts payable
Salaries payable
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - taxes
FUND BALANCES
Nonspendable
Restricted
Total fund balances
Total liabilities, deferred inflows of resources and fund balances
1
$ 1,1765709
9,235
400,000
227,666
$ 15813,610
$ 11,925
1,369
13,294
3,796
400,000
1,396,520
1,796,520
$ 1,813,610
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUND
BALANCE SHEET TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2014
FUND BALANCE - HOUSING AND REDEVELOPMENT AUTHORITY $ 1,796,520
Amounts reported for governmental activities in the statement of net position
are different because:
1. Capital assets used in governmental activities are not current financial
resources and therefore are not reported in the governmental funds:
Governmental capital assets 4315390
Less accumulated depreciation (24,207) 407,183
2. Unavailable revenue in governmental funds is susceptible to full accrual
on the government -wide statements. 3,796
NET POSITION OF HOUSING AND REDEVELOPMENT AUTHORITY $ 27207,499
31
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCE
GOVERNMENTALFUND
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Property taxes
Intergovernmental revenue
Interest income
Total revenues
EXPENDITURES
Economic development:
Current
Net change in fund balance
Fund balance - January I
Fund balance - December 31
m
$ 234,515
86
4,788
239,389
115,132
124,257
1,672,263
S 1,796,520
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGE IN FUND BALANCE OF GOVERNMENTAL FUND
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2014
NET CHANGE IN FUND BALANCES - HOUSING AND REDEVELOPMENT AUTHORITY $ 124,257
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
depreciation expense exceeded capital outlays in the current period.
Depreciation expense (11,620)
2. Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
Property taxes (35655)
CHANGE IN NET POSITION OF HOUSING AND REDEVELOPMENT AUTHORITY $ 108,982
M
STATISTICAL SECTION
(UNAUDITED)
This part of the City of Elk River'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 government's overall
financial health.
Contents Page
Financial Trends 86
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 96
These schedules contain information to help the reader assess the city's most
significant local revenue sources; electric sales and property taxes.
Debt Capacity 103
These schedules present information to help the reader assess the affordability of
the city's current levels of outstanding debt and the city's ability to issue
additional debt in the future.
Demographic and Economic Information 111
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 113
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.
Governmental activities
Net investment in capital assets
Restricted
Unrestricted
Total governmental activities net position
Business -type activities
Net investment in capital assets
Restricted
Unrestricted
Total business -type activities net position
Primary government
Net investment in capital assets
Restricted
Unrestricted
Total primary government net position
CITY OF ELK RIVER, MINNESOTA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2005
2006
2007
2008
$ 739150,041
$ 82,663,610
$ 85,293,459
$ 85,390,968
12,410,832
4,802,808
6,189,063
55569,773
21,267,772
27,998,543
25,641,836
27,6289733
$ 10698285645
$ 1155464,961
$ 117,124,358
$ 118,5895474
$ 54,577,074
2,256,419
11,810,416
$ 6836433909
$ 12797279115
14,667,251
33,078,188
$ 17554725554
$ 5994109729
445,900
13,839,859
$ 73,6969488
$ 142,0741339
5,248,708
41,838,402
$ 189,161,449
$ 595942,345
733,400
17,028,349
$ 77,704,094
$ 145,235,804
6,922,463
42,670,185
$ 194,8285452
Note: The City implemented GASB Statement No. 63 and GASB Statement No. 65 in fiscal year 2012. Net position
information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated.
[f;1
$ 60,750,900
724,500
17,696,135
$ 795171,535
$ 1465141,868
6,294,273
45,324,868
$ 197,7615009
Fiscal Year
2009
2010
2011
2012
2013
2014
$ 861149,417
$ 845629,091
$ 84,7415957
$ 84,060,768
$ 84,3531785
$ 84,921,650
4,723,030
7,341,554
69283,346
6,391,182
51256,724
491925856
28,5885304
26,702,252
299282,251
27,448,688
24,069,710
24,9021387
$ 119,4609751
$ 118,6721897
$ 120,307,554
$ 1175900,638
$ 1131680,219
$ 114,0169893
$ 595601,861
724,500
19,793,756
$ 80120117
$ 145,7511278
5,447,530
48,382,060
$ 199,5803868
$ 60,972,838
724,500
19,907,416
$ 81,604,754
$ 14556015929
8,066,054
46,609,668
$ 2005277,651
$ 60,5251218
724,500
19,421,085
$ 80,670,803
$ 145,2679175
7,007,846
48,703,336
$ 2009789357
$ 60,2685219
724,500
22,376,508
$ 83,3695227
$ 1449328,987
7,115,682
49,825,196
$ 201,2 6%865
14M
$ 62,035,437
647,000
22,957,506
$ 859639,943
$ 146,3895222
5,903,724
47,027,216
$ 199,3209162
$ 635392,972
490,500
24,718,391
$ 88,601,863
$ 1481314,622
4,683,356
49,620,778
$ 2021618,756
CITY OF ELK RIVER, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Expenses
Governmental activities:
General government
Public safety
Public works
Culture and recreation
Economic development
Interest on long -term debt
Total governmental activities expenses
Business -type activities:
Municipal Liquor
Garbage
Sewer
Water
Electric
Total business -type activities expenses
Total primary government expenses
Program Revenues
Governmental activities:
Charges for services:
General government
Public safety
Public works
Culture and recreation
Economic development
Operating grants and contributions
Capital grants and contributions
Total governmental activities program revenues
Business -type activities:
Charges for services:
Municipal Liquor
Garbage
Sewer
Water
Electric
Operating grants and contributions
Capital grants and contributions
Total business -type activities program revenues
Total primary government program revenues
Fiscal Year
2005
2006
2007
2008
1,047,479
1,094,788
1,114,133
1,166,709
$ 2,503,826
$ 2,560,213
$ 2,732,697
$ 31286,350
5,255,974
5,606,438
51924,093
6,715,607
4,2811725
6,169,030
6,527,565
5,8751992
2,535,955
21859,058
31598,695
3,549,637
938,164
631,437
19001,829
1,893,707
881,001
764,725
952,082
1,315,275
16,396,645
185590,901
$ 40,5735858
20,736,961
22,636,568
4,348,673
5,202,087
5,301,597
51464,819
1,047,479
1,094,788
1,114,133
1,166,709
1,6339276
1,721,522
1,786,266
19849,031
2,091,723
29104,827
21413,942
2,506,510
14,8771986
16,588,510
18,718,636
22,0369471
23999,137
26,711,734
29,334,574
33,023,540
$ 40,395,782
$ 457302,635
$ 507071,535
$ 559660,108
$ 288,032
$ 246,541
$ 283,003
$ 371,911
2,050,437
2,403,601
1,533,699
962,275
2807583
617,099
769117
1599664
877,789
1,065,218
1,083,081
110849067
379,002
178,217
92,486
65,999
480,649
387,584
3625313
977,411
79573,752
81117,032
4,1745427
45302,760
111930,244
13,015,292
7,605,126
7,924,087
4,806,061
5,9069768
61043,088
6,213,657
19055,753
1,106,268
1,139,763
1,160,774
1,261,853
193529647
19454,219
1,5111165
1,365,136
1,770,819
2,144,622
2,139,046
15,9559440
17,143,485
19,895,323
22,941,903
91255
504,168
295,081
149,327
3,6541383
4,297,666
1,996,636
888,925
28107,881
321081,821
32,968,732
35,004,797
$ 40,038,125
$ 45,097,113
$ 40,5735858
$ 42,9289884
Net (expense) /revenue
Governmental activities
$ (45466,401)
$ (51575,609) $ (13,131,835)
$ (141712,481)
Business -type activities
4,108,744
5,370,087 39634,158
1,981,257
Total primary government net
$ (357,657)
$ (205,522) $ (9,4979677)
$ (12,731,224)
Note: The City implemented GASH Statement No. 63 and GASH Statement No. 65 in fiscal year 2012. Net position
information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated.
M
Fiscal Year
2009 2010 2011 2012 2013 2014
$ 21777,568
$ 3,028,102
$ 3,495,458
$ 21994,342
$ 3,344,317
$ 3,5549136
69106,181
6,011,477
6,238,611
611879246
6,1731244
6,615,593
5,397,058
5,447,282
59720,759
6,037,000
6,535,616
6,8601673
3,767,312
31702,671
35851,181
490139098
3,914,000
4,088,992
1,569,432
19438,742
1,451,109
190595058
2,0882064
1,091,125
1,252,493
1,138,414
15045,905
1,163,352
1,2881020
1,075,408
20,870,044
209766,688
21,803,023
219454,096
235343,261
23,285,927
5,374,453
59267,041
5,3667557
55622,305
5,706,760
59776,873
1,256,177
1,331,514
11304,238
1,276,887
112519420
11303,943
1,781,804
1,962,431
21130,287
2,239,914
21320,743
29156,329
2,334,388
2,089,889
2,108,499
2,264,814
21332,680
2,459,319
23,258,383
25,452,567
26,726,349
27,586,573
281422,759
2995979247
34,005,205
36,103,442
37,635,930
38,990,493
40,034,362
41,293,711
$ 54,8759249
$ 56,870,130
$ 59,438,953
$ 60,444,589
$ 63,377,623
$ 64,579,638
$ 334,100
$ 301,509
$ 425,954
$ 369,794
$ 338,469
$ 385,238
634,242
722,073
787,884
789,728
961,072
1,063,725
47,860
61,605
7%073
82,173
206,606
233,593
1,074,266
19089,058
111029630
1,128,070
1,0759576
906,291
609335
1259759
70,976
89244
274,833
77,430
758,958
763,551
9549831
1,018,519
954,164
1,049,744
2,599,593
1,318,660
1,750,824
170079794
807,208
4,0201851
5,509,354
4,382,215
5,172,172
4,404,322
4,617,928
7,736,872
61094,058
5,9539626
6,145,692
69525,234
6,756,581
6,825,342
1,194,937
19282,013
1,3101014
1,302,920
1,285,138
1,304,750
1,504,785
1,483,120
11491,460
1,533,851
1,613,276
1,734,141
2,218,816
1,961,760
1,9179384
2,343,881
2,3811651
2,290,824
24,258,120
26,840,983
28,657,698
30,403,469
31,029,299
31,5969217
92,957
103,324
38,550
23,440
-
-
267,233
3979989
482,319
490,916
924,641
9359909
35963%906
38,022;815
40,043,117
42,623,711
43,990,586
44,6879183
$ 41,140>0
$ 42,405,030
$ 459215,289
$ 47,028,033
$ 485608,514
$ 52,4249055
$ (15,360,690)
$ (16,384,473)
$ (165630,851)
$ (17,04%774)
$ (18,725,333)
$ (15,5499055)
1,6255701
11919,373
2,407,187
3,633,218
3,9561224
3,393,472
$ (13,734,989)
$ (14,4651100)
.1.(I±,223,664
$ (13,416,556)
$ (14,769,109)
$ (12,155,583)
m
Fiscal Year
2005 2006 2007 2008
General Revenues and Other Changes in Net Position
Governmental activities:
Property taxes
$ 7,569,131
$ 8,754,923
$
9,744,930
$ 11,095,407
Tax increment
768,397
7909882
894,595
1,041,300
Other taxes
-
-
_
-
Unrestricted grants and contributions
2,427,605
21577,700
2,395,665
117755536
Investment earnings
758,612
1,151,144
1,465,401
1,215,053
Miscellaneous
326,853
28,450
23,213
-
Transfers of capital assets
-
-
(511,412)
-
Transfers
677,516
908,826
778,840
15050,301
Total governmental activities
12,528,114
149211,925
14,791,232
16,177,597
Business -type activities:
Investment earnings
305,923
5895210
640,876
534,485
Miscellaneous
-
2,108
-
2,000
Transfers of capital assets
-
-
5119412
-
Transfers
(677,516)
(908,826)
(778,840)
(110509301)
Total business -type activities
(3719593)
(317,508)
373,448
(513,816)
Total primary government
$ 12,156,521
$ 13,8945417
$
15,164,680
$ 15,663,781
Change in Net Position
Governmental activities
$ 8,061,713
$ 8,636,316
$
1,659,397
$ 1,465,116
Business -type activities
3,737,151
59052,579
4,007,606
1,467,441
Total primary government
$ 11,798,864
$ 13,688,895
$
51667,003
$ 2,932,557
Note: The City implemented GASB Statement No. 63 and GASB Statement No. 65 in fiscal year 2012. Net position
information has been restated for 2011 for this accounting change. Years prior to 2011 have not been restated.
so]
Fiscal Year
2009 2010 2011 2012 2013 2014
$ 11,440,991
$ 11,254,752
$ 11,398,819
$ 10,8549241
$ 10,742,370
$ 10,3785906
1,0809142
1,071,099
947,486
830,204
87,848
130,325
156,894
1939466
83,748
125,623
829,112
1,441,259
1,940,274
2,000,923
1,702,334
1,307,662
11436,135
1,749,886
548,651
3599733
499,034
319,654
(663,762)
1,137,024
20,013
61,308
239233
49,470
6299177
29,593
-
(303,051)
-
(348,259)
(121,172)
(313,287)
1,045,002
958,389
3,6109854
1,504,263
1,565,206
1,332,023
16,231,967
15,596,619
18,265,508
14,642,858
14,5049914
151885,729
367,883
220,602
269,716
2199950
(243,047)
557,659
-
-
-
1,260
1,572
29,525
-
303,051
-
348,259
121,172
313,287
(1,045,002)
(958,389)
(3,610,854)
(1,504,263)
(11565,206)
(1,3329023)
(677,119)
(434,736)
(3,341,138)
(934,794)
(1,685,509)
(431,552)
$ 15,554,848
$ 15,161,883
$ 145924,370
$ 13 708,064
$ 12,819,405
$ 15,454,177
$ 871,277
$ (7879854)
$ 1,634,657
$ (2,406,916)
$ (4,220,419)
$ 336,674
948,582
1,484,637
(933,951)
21698,424
2,270,715
2,961,920
$ 1,819,859
$ 696,783
$ 700706
$ 291,508
$ p,949,704)
$ 3,298,590.
91
CITY OF ELK RIVER, MINNESOTA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
General fund
Reserved
Unreserved
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total General fund
All other governmental funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental funds
Fiscal Year
2005 2006 2007 2008
$ 210,298 $ - $ 5,938 $
4,391,083 4,816,386 5,346,066 551905662
$ 45601,381 $ 4,8167386 $ 5,3521004 $ 59190,662
$ 11,475,837 $ 95979,026 $ 14,453,663 $ 659535630
5,4531061 55070,764 3,849,815 7,7519286
8,382,625 8,091,573 9,179,236 9,574,268
$ 25,3111523 $ 239141,363 $ 27,482,714 $ 24,279,184
Note: The City implemented GASB 54 in fiscal year 2010, resulting in significant reclassification
of the components of fund balance. Years prior to 2010 have not been restated.
92
Fiscal Year
2009 2010 2011 2012 2013 2014
5,699,575
- 20,390
915502 156,323
727,443 859,508
- 5,1871520 5,2619391
$ 5,6999575 $ 6,006,465 $ 6,297,612
20,201
208,486
200,000
5,776,627
$ 61205,314
14,628
247,937
5,791,725
$ 6,054,290
22,725
317,929
5,822,948
$ 6,163,602
$ 6,5351205
$
$
$
$
$
7,844,537
10,101,066
-
93,080
57,870
1015812
995703
101,910
-
6,936,113
59942,368
7,608,842
14,800,868
13,925,683
-
25506,814
25712,645
25456,185
49393,689
5,829,001
-
16,984,061
19,736,795
19,219,810
155455,671
15,883,279
-
(1,011,820)
(1,059,647)
(11384,984)
(2,324,550)
(2,527,613)
$ 24,4801808
$ 25,5087248
$ 27,390,031
$ 28,001,665
$ 321425,381
$ 33,212,260
93
CITY OF ELK RIVER, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Revenues
Property taxes
Other taxes
Licenses and permits
Intergovernmental revenue
Charges for services
Fines and forfeits
Special assessments
Interest
Miscellaneous
Total revenues
Expenditures
General government
Public safety
Public works
Culture and recreation
Economic development
Capital outlay
Debt service
Principal
Interest and service charges
Bond issuance costs
Total expenditures
Excess (deficiency) of revenues
over(under)expenditures
Other financing sources (uses)
Transfers in
Transfers out
Proceeds of long -term debt
Premium on long -term debt issued
Discount on long -term debt issued
Payment to refunded bond escrow agent
Principal paid on refunded bonds
Capital leases issued
Sale of capital assets
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage of
noncapitalexpenditures'
Fiscal Year
2005
2006
2007
2008
$ 8,2839983
$ 9,5299773
$ 10,571,695
$ 12,037,076
2,1929336
25538,658
4,170,119
3,246,436
11240,336
1,207,368
9879708
460,108
1,9795405
451425937
2,9731505
4,134,779
2,571,767
2,485,464
15786,094
15849,307
190,062
175,155
156,407
1505086
3,414,090
15566,880
1,9097595
1,7125551
758,612
1,151,144
11465,401
1,215,053
2,004,286
29555,842
1,545,181
1,628,567
20,442,541
22,814,563
21,395,586
239187,527
212045626
2,251,111
21450,722
2,4809208
4,649,010
4,9415706
51109,371
5565,474
2,1929336
25538,658
4,170,119
3,246,436
25088,505
2,6051861
35386,681
25890,683
785,584
627,467
5735446
2,216,617
411915817
10,729,882
12,803,023
10,381,359
251745266
7,051,836
1,767,617
2,022,616
881,305
909,904
902,415
15198,174
191167,449
31,656,425
31,163,394
30,001,567
19275,092 (8,8413862) (9,767,808) (6,814,040)
2,888,975
559235474
4,785,257
(252119459)
(5,0149648)
(4,006,417)
1,715,000
3,6579000
13,390,500
(8,560)
(29,252)
(50,477)
-
213325694
325,000
718,166
17,439
200,914
31102,122
6,886,707
14,644,777
$ 4,377,214
21.0%
94
3,868,359
(2,8185058)
2,277,946
36,542
84,379
3,449,168
$ (1,955,155) $ 4,8765969 $ (31364,872)
37.1% 15.1% 16.9%
Fiscal Year
2009
2010
2011
2012
2013
2014
$ 12,3295194
$ 129355,953
$ 12,4619403
$ 113720,311
$ 10,930,129
$ 101640,251
156,894
193,466
83,748
125,623
8295112
1,441,259
322,338
4025076
432,875
408,232
513,779
559,286
3,117,997
15135,060
1,6785555
1,436,613
1,161,458
838,573
14659898
19727,276
1,573,367
1,659,986
1,926,906
2,091,107
1419629
161,074
1499102
137,819
163,481
160,298
15464,348
9999633
9895101
845,112
7645006
881,271
548,651
3595731
499,034
319,654
(663,763)
1,146,462
1,853,966
2,587,771
2,5687159
1,980,207
2,193,571
2,3589709
21,400,915
19,922,040
201435,344
185633,557
17,818,679
205117,216
2,458,879
2,6295731
3,157,307
2,615,582
21956,500
3,1815547
5,377,208
5,266,803
5,291,617
5,3529249
51497,493
51909,653
21656,097
2,291,196
217525469
2,931,726
2,8005012
2,974,219
2,666,146
25569,464
2,663,806
29839,466
2,652,817
2,881,985
155895464
15512,138
1,4795140
15087,467
1,656,922
1,095,535
4,627,322
1,879,604
2,874,212
10,264,274
5,2431189
2,277,477
3,162,117
2,411,062
2,6181146
2,127,000
2,1949000
1,535,000
1,289,087
15126,789
1,059,804
996,454
11129,572
1,105,114
-
56,204
-
68,900
153,795
-
23,826,320
19,742,991
219896,501
28,283,118
24,284,300
20,960,530
(2,425,405) 179,049 (1,461,157) (9,649,561) (6,465,621) (843,314)
258879624
21682,562
5,9785905
4,7929943
6,4579233
4,837,016
(1,842,622)
(1,724,173)
(29368,051)
(3,288,680)
(4,8929027)
(3,504,993)
2,0741311
6,184,243
815005000
91685,000
255,238
115,164
341,700
(65303,897)
(19540,000)
16,629
61,308
23,233
49,470
686,407
44,827
3,135,942
1,155,281
356349087
10,168,897
10,738,313
15376,850
$ 710,537
$ 17334,330
$ 2,1723930
$ 519,336
$ 4,27202
$ 533,536
23.7% 19.8% 19.6% 17.1% 16.9% 14.1%
95
CITY OF ELK RIVER, MINNESOTA
ELECTRIC SALES
LAST TEN FISCAL YEARS
Fiscal
Number of
Total
Year
Customers
KWh's Sold
Billings
2005
8,306
182,515,644
$ 14,219,289
2006
81562
194,975,530
15,494,068
2007
85945
211,298,886
17,704,210
2008
9,203
224,2265048
22,303,994
2009
9,170
232,7725722
23,591,485
2010
9,207
250,7115834
26,060,301
2011
9,227
261,2355297
27,8945341
2012
9,285
2739455,846
30,070,045
2013
9,358
2735945,354
30,9831220
2014
9,449
2745546,059
315517,888
Source: Elk River Municipal Utilities
01
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL ELECTRIC CUSTOMERS
CURRENT YEAR AND NINE YEARS AGO
Source: Elk River Municipal Utilities
Minnesota Statute 13.685 considers data on customers of municipal electric utilities as private data
and will no longer be disclosing customer names.
M
2014
2005
Percentage
Percentage
Total KWh
Total
of Total
Total KWh
Total
of Total
Customer
Sold
Billings
Billings
Sold
Billings
Billings
Customer 1
535179,200
$ 4,367,314
14.64%
$
Customer 2
23,289,600
2,0045845
6.72%
-
-
-
Customer 3
51130,400
4545836
1.52%
4,728,000
294,913
2.07%
Customer
5,175,000
4475280
1.50%
3,778,185
229,776
1.62%
Customer
4,587,600
4409566
1.48%
5,900,000
368,017
2.59%
Customers
4,714,680
400,272
1.34%
4,984,200
260,384
1.83%
Customer?
3,340,950
307,784
1.03%
2,9571490
2057306
1.44%
Customer
3,387,500
302,564
1.01%
-
-
-
Customer 9
2,8095400
242,663
0.81%
35306,400
209,682
1.47%
Customer 10
252415000
226,381
0.76%
2,727,760
200,647
1.41%
Customer 11
-
-
-
2,417,301
157,186
1.11%
Customer 12
1,682,784
131,001
0.92%
TOTAL
107,855,330
$ 9,1941505
30.81%
325482,120
$ 2,056,912
14.46%
Source: Elk River Municipal Utilities
Minnesota Statute 13.685 considers data on customers of municipal electric utilities as private data
and will no longer be disclosing customer names.
M
CITY OF ELK RIVER, MINNESOTA
TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Tax capacity
Real property
Personal property
Total tax capacity
Tax increment
Taxable net tax capacity
Total tax capacity rate
Taxable market value
Real property
Personal property
Taxable market value
Estimated actual market value
of taxable property
Taxable market value as a percentage
of estimated actual market value
2005 2006 2007
$ 1758385528
237,262
18,075,790
(654,325)
$ 173421,465
43.763%
$ 20,514,092
246,741
20,760,833
(675,049)
$ 20,085,784
43.929%
$ 2351665911
281,606
23,448,517
(786,795)
$ 22,661,722
43.056%
rii
$ 25,790,055
279,154
26,069,209
(744,597)
$ 25,324,612
42.494%
$ 1,528,254,150
$ 1,773,917,600
$ 1,998,598,900
$ 2,186,5955580
12,020,800
12,4945300
149318,500
141221,560
$ 1,540,274,950
$ 1,786,411,900
$ 2,012,917,400
$ 2,2009817,140
$ 1,805,774,228 $ 21109,366,764 $ 2,2621479,345 $ 2,457,3619368
85.30% 84.69% 88.97% 89.56%
Source: Sherburne County Assessor
Note: Property in the county is reassessed annually. The county assessor's market value of property is approximately 93 percent
of actual value for all types of real and personal property.
M
2009
2010
2011
2012
$ 1,599,5139500
2013
2014
15,764,700
17,758,600
1734125900
18,0555900
18,736,600
$ 292509901,900
$ 265550,210
$ 25,611,065
$ 24,736,999
$ 21,946,865
$ 197969,977
$ 20,0479632
302,166
3109180
350,946
3445032
3539390
367,641
265852,376
25,921,245
25,087,945
22,290,897
20,323,367
20,415,273
(8997835)
(8885285)
(784,101)
(698,130)
(122,648)
(116,513)
$ 25,9529541
$ 25,0325960
$ 243303,844
$ 21,592,767
$ 20,200,719
$ 20,298,760
43.280%
44.560%
45.723%
47.588%
50.373%
48.544%
$ 25235,538,000
$ 2,121,774,900
$ 2,03515435052
$ 1,775,334,600
$ 1,599,5139500
$ 1,62296245100
15,363,900
15,764,700
17,758,600
1734125900
18,0555900
18,736,600
$ 292509901,900
$ 2,137,5399600
$ 2,053,301,652
$ 1,792,747,500
$ 1,617,569,400
$ 1,641,360,700
$ 2,429,5631505 $ 2,1919955,185 $ 2,403,906,238 $ 119075992,306 $ 11758,4285600 $ 11796,401,800
92.65% 97.52% 85.42% 93.96% 91.99% 91.37%
go
CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX RATES
DIRECT AND OVERLAPPING' GOVERNMENTS
LAST TEN FISCAL YEARS
Source: Sherburne County Auditor /Treasurer
Overlapping rates are those of local and county governments that apply to property owners within the City of Elk River.
Not all overlapping rates apply to all City of Elk River property owners (e.g., the rates for special districts apply only to the
proportion of the city's property owners whose property is located within the geographic boundaries of the special district.
100
City
of Elk River
Overlapping
Rates
Total
School District
Direct &
Fiscal
Debt
Referendum
Special
Overlapping
Year
Operating
Service
Total
County
Operating
Mkt. Value
Districts
Rates
2005
36.713
7.050
43.763
42.028
32.848
0.148
5.349
124.136
2006
37.179
6.750
43.929
41.555
35.950
0.155
4.056
125.645
2007
37.743
5.313
43.056
40.720
33.208
0.144
3.905
121.033
2008
37.249
5.245
42.494
40.675
32.344
0.161
3.988
119.662
2009
38.319
4.961
43.280
41.999
36.215
0.164
4.040
125.698
2010
40.940
3.620
44.560
44.519
40.050
0.183
4.703
134.015
2011
42.449
3.274
45.723
46.342
43.489
0.188
4.956
140.698
2012
44.925
2.663
47.588
52.014
45.548
0.187
5.296
150.633
2013
47.222
3.151
50.373
54.420
50.058
0.190
5.260
160.301
2014
46.740
1.804
48.544
54.861
51.286
0.156
4.987
159.834
Source: Sherburne County Auditor /Treasurer
Overlapping rates are those of local and county governments that apply to property owners within the City of Elk River.
Not all overlapping rates apply to all City of Elk River property owners (e.g., the rates for special districts apply only to the
proportion of the city's property owners whose property is located within the geographic boundaries of the special district.
100
Taxpaver
Great River Energy
JPM Capital Corporation
BRE Retail Residual Owner, LLC
Walmart Stores
Target Corp.
Menards, Inc
Envision Company LLC
Home Depot
Minnegasco
ARHC ERELKMNOI LLC
Resource Recovery Technology
Bradley Operating LP
Phoenix Enterprises
B & G Realty, Inc
TOTAL
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
WE
$ 3,084,380
Source: Sherburne County Assessor
101
15.24%
11:
Percentage
Net Tax of Total Net
Capacity Rank Tax Capacity
$ 5575372 1 3.08%
Percentage
Net Tax
3
of Total Net
Capacity
Rank
Tax Capacity
$ 111599164
1
5.71%
383,250
2
1.89
277,088
3
1.37
274,298
4
1.35
270,230
5
1.33
181,316
6
0.89
1515068
7
0.74
138,084
8
0.68
137,404
9
0.68
112,478
10
0.55
$ 3,084,380
Source: Sherburne County Assessor
101
15.24%
11:
Percentage
Net Tax of Total Net
Capacity Rank Tax Capacity
$ 5575372 1 3.08%
2049493
3
1.13
1069430
10
0.59
1275874
6
0.71
1255408
7
0.69
1105970
8
0.61
270,900
2
1.50
164,599
4
0.91
129,677
5
0.72
107,104
9
0.59
$ 19904,827
10.98%
CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
102
Collected within the
Fiscal Year
of the Levy
Collections in
Total Collections to Date
Fiscal
Total
Year's
Percentage
Subsequent
Percentage
Year
Tax Levy
Amount
of Levy
Years
Amount
of Levy
2005
$ 714825681
$ 75338,126
98.07%
$ 143,484
$ 7,481,610
99.99%
2006
81730,932
85551,757
97.95
1785432
8,7305189
99.99
2007
916945925
9,475,220
97.73
217,629
9,692,849
99.98
2008
115033,630
10,750,281
97.43
2815895
111032,176
99.99
2009
11,4335704
11,074,590
96.86
352,773
11,427,363
99.94
2010
11,164,258
10,9209348
97.82
228,672
11,149,020
99.86
2011
11,164,581
11,0529081
98.99
90,851
11,142,932
99.81
2012
10,701,225
10,5925493
98.98
80,100
10,672,593
99.73
2013
1096859603
10,5745080
98.96
63,760
109637,840
99.55
2014
10,3835452
1053005688
99.20
-
105300,688
99.20
102
ver
This page has been left blank intentionally
CITY OF ELK RIVER, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Permanent
Improvement
Revolving
$ 935,000
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
' See the Schedule of Demographic and Economic Statistics for personal income and population data.
103
Tax
$ 972,500
827,500
675,000
505,000
440,000
375,000
305,000
Governmental Activities
General
Fiscal
General
Obligation
Lease
Special
Year
Obligation
Revenue
Revenue
Assessment
2005
$ -
$ 1,645,000
$ 8,785,000
$ 6,605,000
2006
3,220,000
1,4309000
8,265,000
21130,000
2007
13,2201000
192009000
7,730,000
41825,000
2008
15,412,946
955,000
7,170,000
4,480,000
2009
16,677,757
700,000
6,1755000
3,970,000
2010
22,0029000
540,000
-
3,460,000
2011
20,897,939
-
-
21955,000
2012
26,579,666
-
-
41035,306
2013
35,2239141
-
-
1,633,459
2014
34,023,916
-
-
1,246,612
Permanent
Improvement
Revolving
$ 935,000
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
' See the Schedule of Demographic and Economic Statistics for personal income and population data.
103
Tax
$ 972,500
827,500
675,000
505,000
440,000
375,000
305,000
Governmental Activities
Activities
104
General
Total
Percentage
Certificates of
Obligation
Revenue
Certificates of
Notes
Primary
of Personal
Per
Indebtedness
Other
Revenue
Bonds
Indebtedness
Payable
Government
Income'
Capita'
$ 1,035,201
$ -
$ 9,160,000
$ 397259000
$ 250,000
$ 2,538,226
$ 35,650,927
6.00%
$ 1,654
1,134,334
1,908,725
7,015,000
7,185,000
125,000
3,066,820
36,307,379
5.74%
1,610
1,090,350
2,123,092
6,465,000
95690,000
-
2,879,054
49,897,496
7.29%
2,152
756,033
1,839,792
85630,000
992809000
-
2,701,994
51,730,765
6.97%
2,166
421,716
1,6469492
8,070,000
8,840,000
-
21524,646
49,465,611
7.14%
21093
879400
1,499,746
6,180,000
699409000
-
2,3459318
43,429,464
6.32%
1,890
-
7,410,000
5,5209656
6,310,000
-
2,162,882
3955619477
5.81%
1,713
-
1,410,000
4,791,567
5,085,000
-
11975,812
43,877,351
6.30%
1,890
-
1,410,000
4,027,478
4,340,000
-
1,789,224
48,423,302
7.00%
2,072
-
1,410,000
12,868,388
3,634,845
-
1,599,876
54,7835637
na
2,316
104
CITY OF ELK RIVER, MINNESOTA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
Note: Details regarding the city's outstanding debt can be found in the notes to the financial
statements.
Only includes debt supported by tax levy.
2 See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable
Property for property value data.
3 Population data can be found in the Schedule of Demographic and Economic Statistics.
4 Excludes $9,685,000 refunding debt payable through cash with fiscal agent.
105
Less
Amounts
Percentage
Net
General
Restricted
Net
of Net Bonded
Bonded
Fiscal
Bonded
for Debt
Bonded
Debt to Tax
Debt per
Year
Debt'
Service
Debt
Capacityz
Capita'
2005
$ 8,4551201
$ 813,832
$ 75641,369
43.86%
$ 354.62
2006
11,474,334
2,842,412
8,631,922
42.98%
382.79
2007
175792,017
4,253,142
13,538,875
59.74%
583.90
2008
181391,033
3,7129036
14,678,997
57.96%
614.49
2009
17,471,716
3,027,915
145443,801
55.65%
611.17
2010
18,040,733
3,787,324
14,253,409
56.94%
620.41
2011
17,120,000
3,234,939
13,8851061
57.13%
601.06
2012
23,286,667
390445599
20,2421068
93.74%
871.75
2013
22,456,667 4
2,3295723
20,126,944
99.63%
861.23
2014
17,873,333 4
1,5991852
165273,481
80.17%
687.92
Note: Details regarding the city's outstanding debt can be found in the notes to the financial
statements.
Only includes debt supported by tax levy.
2 See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable
Property for property value data.
3 Population data can be found in the Schedule of Demographic and Economic Statistics.
4 Excludes $9,685,000 refunding debt payable through cash with fiscal agent.
105
CITY OF ELK RIVER, MINNESOTA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
DECEMBER 31, 2014
Debt Ratios:
Ratio of debt per capita (23,656 population)
Ratios of debt to taxable market value of $1,641,360,700
Source: Sherburne County and School District #728
' 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 and school
district's taxable market value that is within the city's boundaries and dividing it by the county s
and school district's total taxable market value.
2 Excludes debt payable from 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 home by the residents and business of the City of Elk River.
This process recognizes that, when considering the city's ability to issue and repay
long -term debt, the entire debt burden home 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.
106
$3,939
5.68%
Percent
of Debt
City's
Outstanding
Applicable
Share
Debt
to City'
of Debt
Direct Debt:
City of Elk RiverZ
$ 36,680,528
100.00%
$ 36,6809528
Overlapping Debt:
Sherburne County
161155,000
26.90
4,3451695
School District #728
153,830,000
33.90
52,148,370
Total overlapping debt
169,985,000
569494,065
Total direct and overlapping debt
$ 206,6659528
$ 93,1743593
Debt Ratios:
Ratio of debt per capita (23,656 population)
Ratios of debt to taxable market value of $1,641,360,700
Source: Sherburne County and School District #728
' 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 and school
district's taxable market value that is within the city's boundaries and dividing it by the county s
and school district's total taxable market value.
2 Excludes debt payable from 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 home by the residents and business of the City of Elk River.
This process recognizes that, when considering the city's ability to issue and repay
long -term debt, the entire debt burden home 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.
106
$3,939
5.68%
Debt limit
Bonds
Reserves
Total net debt applicable to limit
Legal debt margin
Total net debt applicable to the
limit as a percentage of debt limit
CITY OF ELK RIVER, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
2005
2006
2007
2008
$ 30,805,499
$ 35,728,238
$ 40,2587348
$ 66,024,514
105040,201
13,1245334
17,792,017
18,391,033
950,793
1,0033315
8615726
1,318,186
9,089,408
12,121,019
1659307291
17,072,847
$ 211716,091
$ 23,6079219
$ 23,328,057
$ 48,951,667
29.51% 33.93% 42.05% 25.86%
Note: Under state law, the City of Elk River'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.
Only 2/3 of the $10,000,000 GO EDA Bonds, Series 2007 and the $330,000 GO EDA Bonds, Series 2008A
are subject to the debt limit. The Remaining 1/3 will be paid by the YMCA.
107
2009
2010
2011
2012
2013
2014
$ 67,527,057
$ 64,1265188
$ 61,5999050
$ 58,316,472
$ 525752,858
$ 53,8929054
17,471,716
18,040,733
17,120,000
23,286,667
32,141,667
30,071,667
1,418,700
1,1649060
1,030,418
1,2029093
10,8195006
10,743,409
169053,016
16,8761673
16,089,582
22,084,574
21,322,661
19,328,258
$ 51,474,041
$ 47,249,515
$ 45,5095468
$ 369231,898
$ 31,430,197
$ 345563,796
23.77% 26.32% 26.12% 37.87%
Legal Debt Margin Calculation for Fiscal Year 2014
Estimated taxable market value
Debt limit (3% of market value)
Debt applicable to limit:
G.O. capital improvement bonds
G.O. EDA bonds'
Less: Cash and investments in related
debt service funds
Total net debt applicable to limit
Legal debt margin
I®.
40.42% 35.86%
$ 1,79654019800
$ 53,8929054
13,500,000
16,571,667
(10,743,409)
19,328,258
$ 34,563,796
CITY OF ELK RIVER, MINNESOTA
PLEDGED - REVENUE COVERAGE
LAST TEN FISCAL YEARS
Note: Details regarding the government's outstanding debt can be found in the notes to the financial statements.
Includes Liquor, Sewer, Water and Electric revenue bonds
Gross revenue excludes interest income, connection fees and miscellaneous revenues
' Expenses exclude depreciation, interest on bonds and miscellaneous expenses
Excludes $1,540,000 refunded principal paid through cash with fiscal agent.
109
Revenue Bonds
Net
Fiscal
Gross
Operating
Revenue
Debt Service
Year
Revenue 2
Expenses'
Available
Principal
Interest
Coverage
2005
$ 19,7917626
$ 15,615,453
$ 45176,173
$ 1,150,000
$ 485,777
2.55
2006
21,940,299
16,970,625
4,9699674
2,405,000
5735345
1.67
2007
255212,616
19,212,200
6,000,416
1,045,000
5959642
3.66
2008
289380,372
22,562,437
5,817,935
030,000
669,406
2.91
2009
291665,332
23,654,659
6,0105673
1,000,000
6815124
3.58
2010
311869,940
25,8495033
6,020,907
3,7851000
5645105
1.38
2011
335672,393
27,326,836
6,345,557
1,3351000
458,888
3.54
2012
35,944,367
28,4441321
7,5001046
1,950,000
410,320
3.18
2013
34,737,779
28,629,356
65108,423
15505,000
341,419
3.31
2014
35,249,153
29,806,010
59443,143
35940,000
282,209
1.29
Note: Details regarding the government's outstanding debt can be found in the notes to the financial statements.
Includes Liquor, Sewer, Water and Electric revenue bonds
Gross revenue excludes interest income, connection fees and miscellaneous revenues
' Expenses exclude depreciation, interest on bonds and miscellaneous expenses
Excludes $1,540,000 refunded principal paid through cash with fiscal agent.
109
Coverage
0.94
0.21
0.50
1.14
0.62
0.56
0.52
0.46
0.22
0.45
110
Special Assessment Bonds
Special
Assessment
Debt Service
Collections
Principal
Interest
$ 1,123,407
$ 925,000
$ 264,999
999,232
4,475,000
198,650
2315839
395,000
645339
6115290
345,000
1925553
421,724
510,000
168,335
368,936
510,000
148,276
327,975
505,000
124,185
287,759
505,000
122,209
202457
850,000 4
87,268
182,191
375,000
29,000
Coverage
0.94
0.21
0.50
1.14
0.62
0.56
0.52
0.46
0.22
0.45
110
CITY OF ELK RIVER, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Data Sources:
' State Demographer
' Bureau of Economic Analysis
3 US Census Bureau
" School District
' Minnesota Department of Employment and Economic Development
na - not available
111
Personal
Fiscal
Income
Per Capita
Median
School
Unemployment
Year
Population'
(in thousands)
Income'
Age'
Enrollment'
Rate'
2005
21,548
$ 5935906
$ 27,562
32
12,259
4.7%
2006
22,550
632,911
28,067
32
12,735
4.4%
2007
23,187
684,689
295529
32
133058
5.6%
2008
235888
742,439
31,080
33
13,031
8.2%
2009
23,633
692,376
29,297
33
13,073
9.0%
2010
22,974 3
6875129
29,909
33
13,036
8.1%
2011
23,101
681,179
29,487
34
13,117
7.3%
2012
23,147
696,794
30,103
34
13,255
6.4%
2013
23,370
691,962
295609
35
13,367
5.5%
2014
235656 '
na
na
36
13,627
4.1%
Data Sources:
' State Demographer
' Bureau of Economic Analysis
3 US Census Bureau
" School District
' Minnesota Department of Employment and Economic Development
na - not available
111
Employer
Independent School District 728 1
Sherburne County
Guardian Angels of Elk River
Walmart
City of Elk River
Great River Energy
Sportech, Inc.
Menards
Tescom Corporation
Cornerstone Auto Resource
Cub Foods
Cobotn's
Total
Total Employment 2
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2014
3,855 30.61%
12,599
' Total District
2 Minnesota Department of Employment and Economic Development
112
r il',
Percentage
of Total City
Employees
Rank
Employment
1,421
1
11.28%
616
2
4.89%
374
3
2.97%
354
4
2.81%
214
5
1.70%
210
6
1.67%
185
7
1.47%
173
8
1.37%
170
9
1.35%
138
10
1.10%
172
10
1.65%
3,855 30.61%
12,599
' Total District
2 Minnesota Department of Employment and Economic Development
112
r il',
3,881 37.20%
10,436
Percentage
of Total City
Employees
Rank
Employment
1,350
1
12.94%
525
2
5.03%
319
5
3.06%
406
3
3.89%
194
7
1.86%
351
4
3.36%
179
9
1.72%
185
8
1.77%
200
6
1.92%
172
10
1.65%
3,881 37.20%
10,436
w
Function
General government
Public safety:
Police
Officers
Civilians
Fire
Fire administration
Paid on -call volunteers
Other public safety
Public works
Culture and recreation
Economic development
Municipal liquor
Sewer
Water
Electric
Total
CITY OF ELK RIVER, MINNESOTA
FULL -TIME EQUIVALENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
26.0
26.5
25.8
25.3
24.8
24.8
24.8
25.8
26.9
28.3
29.0
29.0
30.0
31.0
31.0
31.0
30.0
31.0
31.0
31.0
8.0
9.0
9.0
9.0
8.0
8.0
8.0
8.0
9.0
9.0
3.0
3.0
3.5
3.5
3.5
3.7
3.7
1.7
1.7
2.7
38.0
39.0
39.0
39.0
39.0
38.0
40.0
40.0
40.0
40.0
11.5
11.5
11.5
10.5
7.6
7.6
7.6
8.4
8.6
9.0
13.5
13.5
15.0
15.0
13.1
14.0
14.5
15.5
15.0
15.0
15.8
19.3
19.3
19.9
19.4
19.4
19.4
18.5
18.5
18.5
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
8.0
11.5
11.0
11.5
12.0
14.0
12.5
13.0
13.0
13.0
5.0
5.0
6.0
6.0
6.0
6.0
6.0
6.0
6.0
6.0
5.0
5.0
6.0
5.0
5.0
5.0
5.0
8.0
8.0
8.0
29.0
29.0
30.0
29.0
28.5
29.0
29.0
30.0
31.0
31.0
193.8 203.3 208.1 206.7 199.9 202.5 202.5 207.9 210.7 213.5
Source: City of Elk River Finance Department
A
CITY OF ELK RIVER, MINNESOTA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Sources: Various city departments
Note: The golf course was purchased in 2006 and was not open during 2014.
Fiscal
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Function
Planning
Land use applications
142
104
85
88
64
43
54
56
71
85
Police
Police calls
19,431
18,494
19,277
21,997
22,231
21,751
20,707
20,451
20,676
21,585
Arrests
990
955
682
969
940
957
866
847
694
572
Fire
Fire calls
486
451
436
453
364
443
469
355
446
411
Building/environmental
Permits issued
3,845
4,388
2,382
2,021
1,369
2,105
1,841
1,683
1,866
1,956
Valuation of permits
$147,413
$ 95,844
S 67,309
$ 41,006
$ 14,265
$ 22,312
$ 20,719
$ 25,585
$38,440
$47,037
(thousands of dollars)
Public works
Street sweeping (hours)
1,144
1,192
627
1,085
11287
1,063
1,494
1,811
1,652
1,888
Snowplowing (hours)
2,640
1,648
4,380
2,737
2,305
3,425
2,964
1,675
4,263
5,872
Equipment repair (hours)
5,700
5,660
6,440
5,038
6,482
5,378
5,711
5,051
5,125
5,210
Culture and recreation
Recreation participants
10,537
10,633
14,104
20,631
26,124
26,061
26,934
26,803
27,065
27,330
lee arena wage (hours)
4,187
4,266
4,193
4,386
4,684
4,624
4,740
4,752
4,736
4,568
Golf rounds
-
10,000
10,971
11,533
11,079
10,707
9,150
11,480
9,743
-
Sewer
Average daily treatment flow
1,180
1,163
1,190
1,230
1,300
1,200
1,245
11200
1,203
1,200
(thousands of gallons)
Water
Number of customers
4,074
4,317
4,413
4,508
4,467
4,511
4,515
4,542
4,613
4,676
Average daily consumption
1,934
2,226
2,394
1,992
1,941
1,718
1,786
2,321
21152
2,143
(thousands of gallons)
Electric
Number of customers
8,306
8,562
8,945
9,203
9,170
9,207
9,227
9,285
9,358
9,449
Average daily consumption
500
534
579
614
638
687
716
749
795
790
(thousands of KWh's)
Sources: Various city departments
Note: The golf course was purchased in 2006 and was not open during 2014.
in
Function
Public safety
Police:
Stations
Patrol units
Fire Stations
Public works
Streets (miles)
Culture and recreation
Parks
Parks acreage
Sewer
Sanitary sewers (miles)
Lift stations
Maximum daily treatment capacity
(thousands of gallons)
Water
Maximum daily capacity
(thousands of gallons)
Electric
Generating facilities
CITY OF ELK RIVER, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
2006 2007 2008 2009 2010 2011 2012 2013
1
1
1
1
1
1
1
I
I
1
I1
I1
11
12
12
12
12
12
12
12
2
2
2
2
2
2
2
2
2
2
150
151
151
151
151
151
151
151
151
151
40
44
44
44
44
44
44
45
45
46
898
927
964
964
964
964
964
988
988
1,324
70
73
75
78
79
79
80
80
80
80
20
21
21
21
21
21
21
21
21
21
2,200
2,200
25200
2,200
2,200
2,200
29200
29200
2,200
2,200
6,900 8,100 8,100 8,100 8,100 8,100 8,100 109000 105000 10,000
5 6 6 6 6 6 6 6 6 6
Sources: Various city departments
Note: No capital asset indicators are available for the general government function.
ABDO
W SICK &
�J
M EYER.S LLP
Gnified Public Accountants & Consultants
People
+Process®
Going
Z2�
CITY OF ELK RIVER, MINNESOTA
OTHER REQUIRED REPORTS
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2014
OTHER REQUIRED REPORTS
Independent Auditor's Report on Minnesota Legal Compliance
-1-
Page
ABDO
IV. SICK &
�.a r
4 f ME 1 E W LLP
Certified Public Accountants & Consultants
INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Elk River, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of
the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate
remaining fund information of the City of Elk River, Minnesota (the City), as of and for the year ended December 31, 2014, and the
related notes to the financial statements, and have issued our report thereon dated May 7, 2015.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota
Statute §6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of
interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered
all of the listed categories.
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 Minnesota Legal Compliance Audit Guide for Political Subdivisions. 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.
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 communication is not suitable for any other purpose.
of
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 7, 2015
5201 Eden Avenue, Suite 250
Edina, MN 55436 _
952.835.9090 1 Fax 952.835.3261 -2
Elk River Fire Relief Association
Elk River, Minnesota
For the Year Ended
December 31, 2014
ABDO
EICK &
k, MLAE S LLP
Uriffiel Public Accouuuraras & (At sulturas
People
+Process M
Uaui
Bewrid t.hc
\ul ilb 'rs
ABDO
EIC K
J ! NILRS LLP
Cergfwd Public Accounlants & Comultanis
Board of Trustees and Plan Participants
Elk River Fire Department Relief Association
Elk River, Minnesota
May 8, 2015
We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund
information of the Elk River Fire Department Relief Association (the Association) for the year ended December 31, 2014 and have
issued our report thereon dated May 8, 2015. Professional standards require that we provide you with the following information
related to our audit.
Our Responsibility under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about whether
the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with
accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
Our responsibility is to plan and perform the audits to obtain reasonable, but not absolute, assurance that the financial statements are
free of material misstatement. As part of our audits, we considered the internal control of the Association. Such considerations were
solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.
Significant Audit Findings
In planning and performing our audits of the financial statements of the Association for the year ended December 31, 2014, in
accordance with auditing standards generally accepted in the United States of America, we consider the Association's internal control
over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Association's internal control.
Accordingly, we do not express an opinion on the effectiveness of the Association's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily
identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be no
assurance that all such deficiencies have been identified. We did not identify any deficiencies in internal control that we consider to be
significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management, 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 combination of deficiencies, in internal control such that there is a reasonable possibility that material misstatement of
the Association's financial statements will not be prevented, or detected and corrected on a timely basis. We did not identify any
deficiencies in internal control that we consider to be material weaknesses.
A significant deficiency is a deficiency, or 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. We did not identify any deficiencies in internal control
over financial reporting that we consider to be material weaknesses, as defined above.
Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests
of compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our tests was not to provide
an opinion on compliance with such provisions. We noted no instances of noncompliance with Minnesota statutes.
5201 Eden Avenue, Suite 256
Edina, MN 55436
952.835.91796 1 Fax 952.835.3261 _ 1 _
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing.
Qualitative Aspects of Accounting Practices
Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our
engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant
accounting policies used by the fire relief are described in Note 2 to the financial statements. The requirement of GASB Statement No.
67 was adopted for the year ended December 31, 2014. We noted no transactions entered into by the Association during the year that
were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for
which there is a lack of authoritative guidance or consensus.
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 estimate affecting the financial statements was the actuarial
accrued liability. This is based on the funding formula prescribed by the State of Minnesota. We evaluated the key factors and
assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that
are trivial, and communicate them to the appropriate level of management. There were no misstatements noted during the audit
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated
May 8, 2015.
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 Association'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 Association's auditors. However, these discussions occurred in the normal course of our
professional relationship and our responses were not a condition to our retention.
People
+ Process.
-2- Vi [71 F lel :ti
Other Matters
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting
principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and
the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the
supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements
themselves.
Financial Position and Results of Operations
Our principal observations and recommendations are summarized below. These recommendations resulted from our observations
made in connection with our audit of the Association's financial statements for the year ended December 31, 2014.
Investment Return
A summary of the investment rate of return is summarized below:
20.00%
15.00%
10.00% 0
5.00%
(5.00 %)
(10.00 %)
2010
Interest
Investment
Year
and Dividends
Fees
2010
$ 51,384
$ 16,484
2011
72,988
23,094
2012
76,041
21,688
2013
84,687
27,198
2014
108,891
31,479
20.00%
15.00%
10.00% 0
5.00%
(5.00 %)
(10.00 %)
2010
Investment Rates of Return
9%
2011
9.0%
2012
Assets
Total
Restricted for
Investment
Appreciation
Income
(Depreciation)
(loss)
$ 142,240
$ 177,140
(91,141)
(41,247)
158,702
213,055
304,699
362,188
46,697
124,109
Investment Rates of Return
9%
2011
9.0%
2012
Assets
Restricted for
Investment
Pension
Rate of
Benefits
Return
$ 2,189,448
8.0 %
2,260,830
(1.9)
2,456,311
9.0
2,880,579
13.6
3,190,879
4.1
13.6%
2013
4.1%
2014
Peo ple
L.Jl3_II 11�
13 €'� ( ?I x I t I
-3- 1t1Iilk-I :ti
Peer Group Comparisons
The following are two comparisons of statistics that will provide information on how your organization compares with other fire relief
associations around the State. We used averages from approximately 60 fire relief associations with under $200,000 in assets to
several million in assets. These averages include a 5 -year trend of the rate of return and a 5 -year trend of funding percentage as
compared to averages of the other 60 relief associations.
Averages Calculation 2010 2011 2012 2013 2014
Average rate of returns Net investment income/ 8.0% (1.9 %) 9.0% 13.6% 4.1%
average assets 8.5% (1.3%) 8.8% 13.7% N/A
Percentage funded Assets /accrued liability 91.3% 89.0% 96.3% 111.1% 113.0%
99.5% 98.2% 104.7% 117.1% N/A
Elk River Fire Relief Association
Peer Group
Rate of Return
The rate of return is calculated by taking the net investment income and dividing it by the beginning assets. This will show a trend of
your returns over a 5 -year period and show your performance related to other relief associations.
30.0%
25.0%
20.0%
13.7%
15.0%
10.0% 8.5% 9.0% 13.6%
8.0% 8.8% 4.1%
5.0%
(5.0 %)
(10.0 %)
(1.3 %)
9%
2010 2011 2012 2013
-*--Association rate (Peer group average
2014
Peo ple
i I) - -- - - --
i €'1' ()I I( { thr
-4- ,LI [i1 F )('l :ti
Funding Percentage
The funding percentage is calculated by taking the Special fund assets and dividing it by the accrued pension liability, as calculated on
the OSA's Schedule Form for Lump -Sum Pension Plans and these liability calculations vary from Actuarial determined liability
calculations. This graph will show your funding percentage for a 5 -year period and compare your percentage to other relief
associations.
120.0%
115.0%
110.0%
105.0%
100.0%
95.0%
90.0%
85.0%
80.0%
117.1%
113.0 %
104.7%
111.1%
99.5% 98.2%
91.3% 96.3%
89.0%
2010 2011 2012 2013 2014
Association percent (Peer group average
This report is intended solely for the information and use of the Board of Trustees, members and the Minnesota Office of the State
Auditor and is not intended to be and should not be used by anyone other than these specified parties.
The comments and recommendations in the report are purely constructive in nature, and should be read in this context. Our audit
would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and
related data.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience.
We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by your staff.
, r.-a. , ,
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 8, 2015
Irbil
People
+ Process.
(;girl;
1rI[11F1('l
ELK RIVER FIRE DEPARTMENT
RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
FINANCIAL STATEMENTS AND
REQUIRED SUPPLEMENTARY INFORMATION
YEAR ENDED
DECEMBER 31, 2014
THIS PAGE IS LEFT BLANK
INTENTIONALLY
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2014
INTRODUCTORY SECTION
Organization
Page No.
FINANCIAL SECTION
Independent Auditor's Report
9
Management's Discussion and Analysis
11
Basic Financial Statements
Governmental Fund - General Fund
Balance Sheet /Statement of Net Position
16
Statement of Revenues, Expenditures and Changes in Fund Balance /Statement of Activities
17
Fiduciary Funds - Special Pension Trust Fund
Statement of Fiduciary Net Position
18
Statement of Changes in Fiduciary Net Position
19
Notes to the Financial Statements
21
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Association's Net Pension Liability and Related Ratios (Last Fiscal Year) 34
Schedule of Contributions (Last Fiscal Year) 35
Schedule of Investment Returns (Last Fiscal Year) 35
COMPLIANCE SECTION
Independent Auditor's Report on Minnesota Legal Compliance
-1-
39
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-2-
INTRODUCTORY SECTION
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2014
-3-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-4-
Name
Scott Schmitt
Dave King
Tristan Nicka
Joe Libor
Rich Czech
Keith Thorson
Name
John Dietz
Tim Simon
T. John Cunningham
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
ORGANIZATION
YEAR ENDED DECEMBER 31, 2014
Board of Trustees
Ex- Officio Trustees
Irbil
President
Vice President
Secretary
Treasurer
Trustee
Trustee
Title
Title
Mayor
Finance Director
Fire Chief
THIS PAGE IS LEFT BLANK
INTENTIONALLY
IM
FINANCIAL SECTION
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2014
11re
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-8-
ABDO
EIC K
J ! NILRS LLP
Cergfwd Public Accounlants tY. Comultanis
INDEPENDENT AUDITOR'S REPORT
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining
fund information of the Elk River Fire Relief Association (the Association) as of and for the year ended December 31, 2014, and the
related notes to the financial statements, which collectively comprise the Association'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 the financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of 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
Association'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 Association's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
significant accounting estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
governmental activities, each major fund and the aggregate remaining fund information of the Association as of December 31, 2014,
and the results of its operations for the years then ended in conformity with accounting principles generally accepted in the United
States of America.
5201 Eden Avenue, Suite 250
Edina, MN 55436 -9-
952.835.9090 1 Fax 952.835.3261
Other Matters
Change in Accounting Standards
As described in Note 8 to the basic financial statements, the Association adopted the provisions of Governmental Accounting Standard
Board (GASB) Statement No. 67, Financial Reporting for Pension Plans — an Amendment to GASB Statement No. 25, for the year
ended December 31, 2014.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis
starting on page 11 and the Required Supplementary Information on page 30 be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America which, consisted of inquiries of
management about the methods of preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide
us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Association's
basic financial statements as a whole. The introductory section listed in the table of contents is presented for the purposes of additional
analysis and is not a required part of the basic financial statements. The introductory section has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any assurance on
it.
C.-cy. & , to
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 8, 2015
-10-
People
+Process=
G
Vi [71 F 1('l :ti
Management's Discussion and Analysis
The discussion and analysis of the Elk River Fire Relief Association's (the Association) financial performance provides an overview
of the financial activities and funding conditions for the fiscal years ended December 31, 2014 and 2013.
Using the Annual Report
The financial statements, which reflect the activities of the Special Pension Trust (the Plan), are reported in the Statements of
Fiduciary Net Position (see page 18) and the Statements of Changes in Fiduciary Net Position (see page 19). These statements are
presented on a full accrual basis and reflect all trust activities as incurred. The financial statements also include activities of the
General fund, which is primarily used to account for the fund raising activities of the Association.
Financial Highlights
• The Plan's net position increased by $310,300 (or 10.8 percent) as a result of the fiscal year's activities.
• The contributions from the State and the City decreased $2,278. This decrease is due to a decrease in state aid of $278 and a
decrease in supplemental benefit reimbursement of $2,000.
• Net investment income decreased $238,079 (or 65.7 percent).
• Accrued pension liability increased, per actuarial, $282,152 (or 14.4 percent). This increase was due to normal costs and by
an increase in the benefit level from $5,091 in 2013 to $5,167 in 2014.
• The Governmental fund balance increased $1,545. The fund balance of the Governmental fund is $1,808 at year end.
Plan Highlights
The plan's funding level decrease from 147.6 percent to 142.7 percent
Plan Net Position
Cash and cash equivalents
Investments
Receivables
Net position restricted for pension benefits
December 31
2014 2013
$ 169,282 $ 1,091
3,021,389 2,877,283
208
Change
168,191
144,106
2,205 (1,997)
$ 3,190,879 $ 2,880,579 $ 310,300
For the current fiscal year 2014 there is a net increase of $310,300 from the previous fiscal year 2013. The previous fiscal year 2013
had a net increase of $424,268 from fiscal year 2012.
-11-
Changes in Plan Net Position
The following comparative summary of the changes in net assets reflects the activities of the Plan:
Net position restricted for pensions
Beginning of year 2,880,579 2,456,311 424,268
End of year $ 3,190,879 $ 2,880,579 $ 310,300
The Association's funding policy provided for contributions from the State of Minnesota (the State) and the City of Elk River in
amounts sufficient to accumulate assets to pay benefits when due. The annual contributions are the sum of the normal cost, the State
contribution payment and the provision for administrative expenses.
Plan Membership
The following table reflects the Association's Plan membership as of the beginning and ending of the year:
December 31 Increase
2014 2013 (Decrease)
Active participants
Vested
Fully
Partially
Non - vested (less than 5 years of service)
Deferred Members
Total Membership
-12-
11
December 31
1
18
2014
2013
Change
Revenues
7
5
3
Contributions
$ 194,825
$ 197,103
$ (2,278)
Net investment earnings
155,588
389,386
(233,798)
Less investment fees
(31,479)
(27,198)
(4,281)
Total revenues
318,934
559,291
(240,357)
Expenditures
8,634
135,023
(126,389)
Net increase in net position
310,300
424,268
(113,968)
Net position restricted for pensions
Beginning of year 2,880,579 2,456,311 424,268
End of year $ 3,190,879 $ 2,880,579 $ 310,300
The Association's funding policy provided for contributions from the State of Minnesota (the State) and the City of Elk River in
amounts sufficient to accumulate assets to pay benefits when due. The annual contributions are the sum of the normal cost, the State
contribution payment and the provision for administrative expenses.
Plan Membership
The following table reflects the Association's Plan membership as of the beginning and ending of the year:
December 31 Increase
2014 2013 (Decrease)
Active participants
Vested
Fully
Partially
Non - vested (less than 5 years of service)
Deferred Members
Total Membership
-12-
11
10
1
18
21
(3)
11
4
7
5
3
2
45 38
7
Funding Status
The amount of the total accrued pension liability is based on a standardized measurement established by the Governmental
Accounting Standards Board (GASB) that, with some exceptions, must be used by the relief associations for financial statement
presentations. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years
as a result of service years performed by the members of the Association. A standardized measure of the accrued pension liability was
adopted by GASB to enable the readers of relief association financial statements to (a) assess the relief association's funding status on
a going - concem basis, (b) assess progress being made in accumulating sufficient assets to pay benefits when due, and (c) make
comparisons among relief associations.
Because the standardized measure is used only for disclosure purposes by the Association, the measurement is independent of an
actuarial computation made to determine contributions to the Association. The following represents the percentage funded trend for
the last two years
Funded Percentage
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$ 2013
• Pension $1,953,814
• Fiduciary $2,884,591
• Funded 147.6
Pension
■ Fiduciary
-13-
Funded
2014
$2,235,966
$3,190,879
142.7
Asset Allocation
The following table and graph indicates the asset allocation for December 31, 2014 and 2013.
Cash
Certificate of Deposit
Broker money market
Stock
Mutual funds
Total cash and investments
Mutual fui
49.6%
Investment Activities
December 31
2014
2013
$ 169,282
5.3 %
$ 1,091
- %
65,840
2.1
65,053
2.3
218,375
6.8
237,117
8.2
1,155,618
36.2
1,395,037
48.5
1,581,556
49.6
1,180,076
41.0
$ 3,190,671
100.0 %
$ 2,878,374
100.0 %
Cash
5.3%
Certificate ofDenosit
money market
6.8%
Stock
36.2%
Investment income is vital to the Plan's current and continued financial stability. Therefore, the Board of Trustees has a fiduciary
responsibility to act prudently and discretely when making Plan investment decisions. To assist the Board of Trustees in this area, an
investment consultant is used and Minnesota investing statutes are followed.
Portfolio performance is reviewed quarterly by the Board of Trustees and its Consultant. Performance is evaluated individually by
money manager style, collectively by investment type and for the aggregate portfolio.
The total fund investment performance for fiscal year 2014 on a relative basis to benchmarks was favorable, and the real positive
return of 4.1% was just below the long -term net 5.0 percent target for the year. These lower returns are viewed, at this time, to be
cyclical and the 5.0 percent assumption is still deemed reasonable in the long -term. However, as with all assumptions, it is monitored
annually.
Economic Factors
The primary function of the pension trust is to (a) appropriately award and pay benefits and (b) manage investments. The opportunity
available considering various investment choices is invaluable in the asset allocation and money manager oversight.
Contacting the Plan's Financial Management
The financial report is designed to provide citizens, taxpayers, plan participants and the marketplace's credit analysis with an
overview of the Plan's finances and the prudent exercise of the Board's oversight. If you have any questions regarding this report
or need additional financial information, please contact the Elk River Fire Relief Association, 416 Jackson Ave,
Elk River, Minnesota 55330.
-14-
BASIC FINANCIAL STATEMENTS
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2014
-15-
ELK RIVER FIRE RELIEF ASSOCIATION, MINNESOTA
ELK RIVER, MINNESOTA
GOVERNMENTAL FUND BALANCE SHEET/
STATEMENT OF NET POSITION
DECEMBER 31, 2014
ASSETS
Cash and cash equivalents
FUND BALANCE/NET POSITION
Unrestricted/unassigned
$ 1,808
$ 1,808
The notes to the financial statements are an integral part of this statement.
-16-
ELK RIVER FIRE RELIEF ASSOCIATION, MINNESOTA
ELK RIVER, MINNESOTA
STATEMENT OF GOVERNMENTAL FUND REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE /STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2014
REVENUES
Donations
EXPENDITURES
Conventions and meetings
Dues
Relief events
Scholarships
Other
106311I:11 0*1149a210111a811
NET CHANGE IN FUND BALANCE/NET POSITION
FUND BALANCE/NET POSITION, JANUARY 1
FUND BALANCE/NET POSITION, DECEMBER 31
$ 9,853
556
337
5,047
2,000
368
8,308
1,545
263
$ 1,808
The notes to the financial statements are an integral part of this statement.
-17-
ELK RIVER FIRE RELIEF ASSOCIATION
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUND - SPECIAL PENSION TRUST FUND
DECEMBER 31, 2014
ASSETS
Cash and cash equivalents
Investments
Interest receivable
NET POSITION
Restricted for pension benefits
169,282
3,021,389
208
$ 3,190,879
The notes to the financial statements are an integral part of this statement.
-18-
ELK RIVER FIRE RELIEF ASSOCIATION
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUND - SPECIAL PENSION TRUST FUND
YEAR ENDED DECEMBER 31, 2014
ADDITIONS
Contributions
State of Minnesota
City of Elk River
Total contributions
Investment earnings
Interest and dividends
Appreciation in investments
Less investment fees
Total investment earnings
TOTAL ADDITIONS
DEDUCTIONS
Administrative expenses
Salaries
Professional fees
Bond
Miscellaneous
TOTAL DEDUCTIONS
NET INCREASE IN NET POSITION
NET POSITION RESTRICTED FOR PENSIONS
BEGINNING OF YEAR
END OF YEAR
$ 164,825
30,000
194,825
108,891
46,697
(31,479)
124,109
318,934
3,308
5,053
248
25
8,634
310,300
2,880,579
$ 3,190,879
The notes to the financial statements are an integral part of this statement.
-19-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-20-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: PLAN DESCRIPTION
A. The financial reporting entity
Firefighters of the City of Elk River (the City) are members of the Elk River Fire Relief Association (the Association).
The Association is the administrator of a single - employer defined benefit pension plan (the Plan) available to
firefighters. The Plan was established in 1922 under the provisions of Minnesota Laws 1965, chapter 446 as amended
and Minnesota statute, chapters 69 and 424. It is governed by a Board of Trustees made up of six members elected by the
members of the Association for three year terms, and the Mayor, Finance Director and Fire Chief, who serve as
Ex- officio voting members of the Board of Trustees.
For financial reporting purposes, the Association's financial statements are not included with the City financial
statements because the Association is not a component unit of the City. The Association does not have any component
units.
B. Membership information
As of December 31, 2014, membership data related to the Association were:
Retirees and beneficiaries currently receiving
benefits and terminated employees entitled to
benefits but not yet receiving them
Active plan participants
Vested
Fully
Partially
Nonvested
Total
-21-
11
18
11
45
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: PLAN DESCRIPTION - CONTINUED
C. Pension benefits
The Association operates under a defined benefit plan. The pension liability is calculated by the number of active service
years multiplied by a set benefit level. The Association's current level is at $5,167 per active year. According to the
bylaws of the Association and pursuant to Minnesota statute 424A.02, subdivisions 2 and 4, members who retire with
less than 20 years of service and have reached the age of 50 years and have completed at least five years of active
membership are entitled to a reduced service pension not to exceed the amount calculated by multiplying the member's
service pension for the completed years of service times the applicable non - forfeitable percentage of pension as follows:
Nonforfeitable
Completed
Percentage
Years
of Pension
of Service
Amount
5
40 %
6
44
7
48
8
52
9
56
10
60
11
64
12
68
13
72
14
76
15
80
16
84
17
88
18
92
19
96
20 and thereafter
100
If a member of the Association shall become totally and permanently disabled, with a service related disability (injured
in the line of duty) to the extent that a physician or surgeon acceptable to the Board shall certify that such disability will
permanently prevent said member from performing said member's duties in the Department, the Association shall pay to
such member the sum of the current pension amount for each year and fractions of a year that the member has served as
an active member of the Department, without regard to minimum or partial vesting requirements. If a member who has
received such a disability pension should subsequently recover and return to active duty in the Department, any amount
paid to said member as a disability pension shall be deducted from said member's service pension.
Upon the death of any member of the Association who is in good standing at the time of said member's death, the
Association shall pay to the surviving spouse, if any, and if there is no surviving spouse, to child or children, if any, and
if no child or children survive, to the estate of such deceased member, the credited sum of said member's pension.
-22-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
A. Measurement focus, basis of accounting and basis of presentation
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. Revenues susceptible to accrual include contributions from the State of
Minnesota and the City of Elk River and investment revenue, including interest on deposits and dividends. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting.
The fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect
the reported amounts of revenue and expense during the reporting period. Actual results could differ from those
estimates.
B. Description of funds
The resources of the Association are accounted for in two funds. Each fund is accounted for as an independent entity.
Descriptions of the funds included in this report are:
Major governmental funds:
The General fund is a governmental fund that accounts for the resources not accounted for in other funds. It is used for
the good and benefit of the Association as determined by Association bylaws. Its resources consist of fundraising
proceeds, investment earnings, and miscellaneous sources.
The Fiduciary fund accounts for assets held by the Association in a trustee capacity for its members.
The Special Pension Trust fund is a special pension trust fund for the accumulation of resources to be used for
retirement, dependency and disability annuity payments of appropriate amounts and at appropriate times in the future.
Resources are contributed by the City at amounts determined by law (taxes), and from the two - percent insurance
premium tax and amortization aid from the State of Minnesota.
Investments
Method used to value investments. Investments are reported at fair value. Securities traded on a national or international
exchange are valued at the last reported sales price at current exchange rates.
-23-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS - CONTINUED
C. Fund balance
In the fund financial statements, fund balance is divided into four classifications based primarily on the extent to which
the fire relief is bound to observe constraints imposed upon the use of resources reported in the governmental funds.
These classifications are defined as follows:
Non - spendable — 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
Board of Directors (the Board), which is the fire relief s highest level of decision - making authority. Committed amounts
cannot be used for any other purpose unless the Board 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 non - spendable and are
neither restricted nor committed. In the General fund, assigned amounts represent intended uses established by the Board
itself or by an official to which the governing body delegates the authority.
Unassigned — The residual classification for the General fund and also negative residual amounts in other funds.
The Association considers restricted amounts to be spent first when both restricted and unrestricted fund balance is
available. Additionally, the fire relief would first use committed, then assigned, and lastly unassigned amounts of
unrestricted fund balance when expenditures are made.
D. Income taxes
The Organization is a nonprofit organization described in Section 501(c) 4 of the Internal Revenue Code and is exempt
from Federal and State income taxes.
The Organization has analyzed filing positions with the Internal Revenue Service and the State of Minnesota. The
Organization is subject to routine audits by these jurisdictions; however, the Organization is currently not under any
audits for any tax periods. The Organization does not anticipate that any of its income tax filing positions would result in
a material adverse effect on the Organization's financial condition, results of operations or cash flow. No liability has
been recorded for uncertain tax positions.
As allowed under accounting principles generally accepted in the United States of America, the Organization would
accrue, if applicable, income tax related interest and penalties in income tax expense in the Organization's statement of
revenues, expenditures and changes in fund balances. During the year ended December 31, 2014, the Organization did
not recognize any interest or penalties. With few exceptions, the Organization is no longer subject to tax examinations by
tax authorities for years before 2011.
-24-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ACCOUNTS
Cash and cash equivalents
The Association's cash and cash equivalents are considered to be demand deposits and short-term investments with original
maturities of three months or less from the date of acquisition.
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Association's deposits and
investments may not be returned or the Association 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 Board, the Association maintains deposits at
those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all Association deposits be protected by insurance, surety bond or collateral. The market value
of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds. Authorized collateral in lieu
of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better by a
national bond rating service, or revenue obligation securities of any state or local government with taxing powers
which is rated "AA" or better by a national bond rating service;
• General obligation securities of a local government with taxing powers may be pledged as collateral against funds
deposited by that same local government entity;
• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written
evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard &
Poor's Corporation; and
• Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the Association.
-25-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ACCOUNTS - CONTINUED
Following is a summary of the deposits covered by FDIC insurance at December 31, 2014:
Fund Book Bank
Governmental
Special Pension Trust
Total
Investments
$ 1,808 $ 1,654
169,282 169,282
$ 171,090 $ 170,936
At year end, the Association had the following investments that are insured or registered, or securities held by the
Association or its agent in the Association's name:
Credit Concentration
Quality/ of
Type of Investment Ratings (1) Credit Risk
Pooled investments
Certificate of deposit
N/A 2%
Broker money market
N/A 7%
Mutual funds
N/A 52%
Total pooled investments
Non - pooled investments
Segmented
Time
Distribution (2)
Fair Value and
Carrying Amount
> than 3 years $ 65,840
less than 6 mo. 218,375
N/A 1,581,556
1,865,771
Domestic stock N/A 35% N/A 1,072,430
International stock N/A 3% N/A 83,188
Total non - pooled investments 1,155,618
Total investments $ 3,021,389
(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 indicates not applicable or available.
-26-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ACCOUNTS - CONTINUED
The Association's investments are subject to the following risks:
• 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, section I IA.24, contains a specific list of asset classes available for investment, including common stocks,
bonds, short term securities, real estate, private equity, and resource funds. The statutes prescribe the maximum
percentage of fund assets that may be invested in various asset classes and contain specific restrictions to ensure the
quality of the investments.
• 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.
• Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a single
issuer.
• Interest rate risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment.
• Rate of return. For the year ended December 31, 2014, the annual money- weighted rate of return on pension plan
investments, net of pension plan investment expense, was 5.1 percent. The money- weighted rate of return expresses
investment performance, net of investment expense, adjusted for the changing amounts actually invested.
Investment policy. The Association has adopted an investment policy with regard to investing the financial assets of the
Association. All assets will be invested in accordance with this policy, Minnesota statutes chapter 69.775 and written
administrative procedures. It shall be the policy of the Association to invest the assets in accordance with the minimum and
maximum range for each asset class as stated below:
Asset Class
Stocks
Bonds
Non - fluctuating share value
Cash
-27-
Minimum Maximum
Percentage Percentage
25%
75%
0%
50%
0%
10%
0%
10%
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: NET PENSION LIABILITY
The components of the net pension liability of the Association at December 31, 2014, were as follows
Total pension liability $ 2,235,966
Plan fiduciary net position 3,190,879
Net pension liability (asset) $ (954,913)
Plan fiduciary net position as a percentage
of the total pension liability 142.7%
Actuarial assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2014,
using the following actuarial assumptions, applied to all periods included in the measurement:
Investment rate of return
6.00%
Salary Increase Rate
N/A
Inflation rate (1)
2.75%
Cost of living adjustments
None
-28-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: NET PENSION LIABILITY - CONTINUED
A variety of significant actuarial assumptions are used to determine the standardized measure of the accrued pension liability
and these assumptions are summarized below:
Actuarial cost method The Entry Age Normal level percent of payroll cost method. Under this method, the service cost for
an individual participant is the level percentage of pay required to accumulate the funds needed
to pay the participant's accrued benefits by their assumed retirement age, beginning on the date
of entry and ending on last age before 100% retirement age. The accrued pension liability is the
accumulated value of these annual service costs on a given date.
Amortization Method
Investment Gains and Losses Straight -line amortization over a closed 5 -year period.
Effects of Assumption Straight -line amortization over a closed period equal to the average of the expected remaining service lives
Changes and Experience of all employees that are provided with pensions through the pension plan.
Gains and Losses
Data Methods The City provided census and financial information for the valuation and we have relied on this data in
preparing the results in this report. The data was reviewed for reasonableness and consistency, but we have
not performed a complete audit.
Asset Method Market value of assets.
Form of payment All future retirees are assumed to elect a lump sum payment.
Mortality Mortality rates were based on the RP -2000 Healthy Annuitant Mortality Table for Males or Females,
as appropriate, with adjustments for mortality improvements based on Scale AA.
Rates used in the July 1, 2014 Minnesota PERA Police & Fire Plan actuarial valuation.
Withdrawal The ultimate rate of withdrawal is .06 at age 20, decreasing uniformly to zero at age 60 with no withdrawal
after that age.
Disability Age - related rates used in the July 1, 2014 Minnesota PERA Police & Fire Plan actuarial valuation.
All incidences are assumed to be duty- related
Vested terminated The later of current age and age 50
Beneficiary information 100% of members are assumed to have a beneficiary who will receive survivor benefits.
Discount rate Per GASB guidance, the single rate that reflects the discounting of expected benefit payments using
(1) the expected long -term rate of return on plan assets during the period when projected assets are
expected to pay future retiree benefits, and (2) the 20 -year municipal bond rate after assets are
projected to be exhausted.
Expected return on Based on blend of expected asset class returns and current asset allocation. See the Long -Term Expected
plan assets Asset Return section of the actuarial report for more details.
Inflation rate Based on historical analysis of inflation rates and forward- looking market expectations.
Municipal bond index rate Publicly - available spot rate which meets the specified GASB 67 criteria.
-29-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: NET PENSION LIABILITY - CONTINUED
INVESTMENT RETURN
GASB 67 requires the development of an assumption regarding the long -term expected rate of
return on plan assets. The process utilized for this actuarial valuation is described below.
The long -term expected rate of return on pension plan investments was determined using a
building -block method in which best - estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class. These asset class estimates are combined to produce the portfolio long -term
expected rate of return by weighting the expected future real rates of return by the current asset
allocation percentage (or target allocation, if available) and by adding expected inflation.
All results are then rounded to the nearest quarter percentage point.
The best - estimates of expected future real rates of return were developed by aggregating data
from several published capital market assumption surveys and deriving a single best - estimate based
on the average survey values. These capital market assumptions reflect both historical market
experience as well as diverse views regarding anticipated future returns. The expected inflation
assumption was developed based on an analysis of historical experience blended with
forward- looking expectations available in market data.
Best - estimates of geometric real and nominal rates of return for each major asset class included
in the pension plan's asset allocation as of December 31, 2014 are summarized in the following table:
-30-
Allocation at
Long -Term Expected
Long -Term Expected
Asset Class
December 31
Real Rate of Return
Nominal Rate of Return
Domestic equity
42.44%
5.00%
7.75%
International equity
4.59%
5.00%
7.75%
Fixed income
24.94%
1.75%
4.50%
Real estate and alternatives
12.83%
4.00%
6.75%
Cash and equivalents
15.20%
0.25%
3.00%
Total (weighted average)
100.00%
3.25%
6.00%
-30-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 4: NET PENSION LIABILITY - CONTINUED
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
GASB 67 requires that the liability discount rate be the single rate that reflects the
following:
A. The long -term expected rate of return on pension plan investments that are
expected to be used to finance the payment of benefits, to the extent that
(1) the pension plan's fiduciary net position is projected to be sufficient to make
projected benefit payments and (2) pension plan assets are expected to be
invested using a strategy to achieve that return: and
B. A yield or index rate for 20 -year, tax - exempt general obligation municipal
bonds with an average rating of AA/Aa or higher (or equivalent quality on another
rating scale), to the extent that the conditions in A. are not met.
The liability discount rate was developed using the alternative method described in
paragraph 43 of GASB 67, which states that "if the evaluations required by paragraph 41
can be made with sufficient reliability without a separate projection of cash flows into
and out of the pension plan, alternative methods may be applied in making the evaluations."
We believe that the plan's current overfunded status, combined with Minnesota statutory
funding requirements, provide sufficient reliability that projected plan assets will be
sufficient to pay future retiree benefits. Therefore, we have used the plan's long -term
expected return on plan assets as the liability discount rate.
The following presents the net pension liability of the Association, calculated using the
discount rate of 6.75 percent, as well as what the Association's net pension liability would
be if it were calculated using a discount rate that is 1 percentage point lower (5.75 percent)
or 1 percentage point higher (7.75 percent) than the current rate:
1% Decrease in Discount Rate (5 %)
Current Discount Rate (6 %)
1 % Increase in Discount Rate (7 %)
-31-
Total
Plan
Net
Pension
Fiduciary
Pension
Liability
Net Position
Liability (Asset)
$ 2,306,002
$ 3,190,879
$ (884,877)
2,235,966
3,190,879
(954,913)
2,167,291
3,190,879
(1,023,588)
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 5: CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE
The Association's funding policy provided for contributions from the State and the City in amounts sufficient to accumulate
sufficient assets to pay benefits when due. The annual contribution is the sum of the normal cost, the State contribution
payment and the provision for administrative expenses.
The Association is comprised of volunteers; therefore, there are no payroll expenditures or covered payroll percentage
calculations.
A required contribution of $164,825 was made by the State in accordance with Minnesota statute for the year ended
December 31, 2014. A required contribution of $26,409 was made by the City for the year ended December 31, 2014. There
was also a voluntary contribution of $3,591 made by the City for the year ended December 31, 2014.
Note 6: RISK MANAGEMENT
The Association is exposed to various risks of loss related to theft of assets for which the Association carried commercial
insurance policies. There were no significant reductions in insurance from the previous year or settlements in excess of
insurance coverage for any part of the past three fiscal years. The Association invests in mutual funds that are subject to
market value fluctuations.
Note 7: EVALUATION OF SUBSEQUENT EVENTS
The Organization has evaluated subsequent events through May 8, 2015, the date which the financial statements were
available to be issued.
Note 8: ACCOUNTING CHANGE
Governmental Accounting Standard Board (GASB) Statement No. 67, Financial Reporting for Pension Plans — an
Amendment to GASB Statement No. 25, will improve financial reporting by state and local governmental pension plans. The
requirements of this Statement will improve financial reporting primarily through enhanced note disclosures and schedules of
required supplementary information that will be presented by the pension plans that are within its scope.
The Association implemented this standard for the fiscal year ended December 31, 2014.
-32-
REQUIRED SUPPLEMENTARY INFORMATION
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2014
-33-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2014
SCHEDULE OF CHANGES IN THE ASSOCIATION'S NET PENSION LIABILITY AND RELATED RATIOS
(Last Fiscal Year)
Fiscal Year
Ending December 31
2014
Total pension liability
Service cost $ 93,312
Interest 126,522
Changes in benefit terms 62,318
Differences between expected and actual experience -
Changes in assumptions -
Benefit payments -
Net change in total pension liability 282,152
Total pension liability - beginning * 1,953,814
Total pension liability - ending $ 2,235,966
Plan fiduciary net position
Contributions - City and State $ 194,825
Contributions - Members -
Net investment income 124,109
Benefit payments -
Administrative expense (8,634)
Net change in plan fiduciary net position 310,300
Plan fiduciary net position - beginning 2,880,579
Plan fiduciary net position - ending $ 3,190,879
Net pension liability (asset) - ending $ (954,913)
Plan fiduciary net position as a percentage of the
total pension liability 142.7%
* The January 1, 2014 results are estimated liabilities for transition purposes only. They do not reflect what was actually
recognized on the FYE2013 statements. The December 31, 2014 results were rolled back to January 1, 2014.
Note: These exhibits are under GASB 67 and will be updated going forward.
-34-
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2014
Schedule of Contributions (Last Fiscal Year)
Actuarially determined contribution *
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
* This information is available on the Association's SC Form
Fiscal Year
Ending December 31
2014
30,000
(30,000)
Note: These exhibits are under GASB 67 and will be updated going forward.
Schedule of Investment Returns (Last Fiscal Year)
Annual money- weighted rate of return,
net of investment expense
Fiscal Year
Ending December 31
2014
5.1%
Note: These exhibits are under GASB 67 and will be updated going forward.
-35-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-36-
COMPLIANCE SECTION
ELK RIVER FIRE RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2014
-37-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-38-
ABDO
EIC K
J ! NILRS LLP
Cergfwd Public Accounlants tY. Comultants
INDEPENDENT AUDITOR'S REPORT
ON MINNESOTA LEGAL COMPLIANCE
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund
information of the Elk River Fire Relief Association (the Association) as of and for the year ended December 31, 2014, and the related
notes to the financial statements, and have issued our report thereon dated, May 8, 2015.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions
of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota
statute 6.65. Accordingly, the audit included such tests of accounting records and such other auditing procedures as we considered
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers three categories of compliance to be tested in audits
of relief associations: deposits and investments, conflicts of interest, and public relief associations. Our study included all of the listed
categories.
The results of our tests indicate that for the items tested, the Association complied with the material terms and conditions of applicable
legal provisions.
This report is intended solely for the information and use of the Board of Trustees, the City of Elk River, members, and the Minnesota
Office of the State Auditor, and is not intended to be and should not be used by anyone other than these specified parties.
L•�k , to
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 8, 2015
5201 Eden Avenue, Suite 250
Edina, MN 55436
952.835.9090 1 Fax 952.$35.3267 -39-
IL
r
pr
2014 Audit Presentation City of Elk River
June 1, 2015
Presented by:
Andy Berg
M M
ABDO
EICK &
11'lE 1 E S LLP
PWole
+ ceSS S.
C-f o
Beyondthe
Certified
sMVA
Public Accountants & Consultants
Ni ifibers
LI
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
2014 Results
Auditor's Responsibility
— Opinion — unqualified (clean opinion)
— No audit findings
— No MN legal compliance finding
From the Minnesota Office of the State Auditor
1. Contracting and bidding
2. Deposits and investments
3. Conflicts of interest
4. Public indebtedness
5. Claims and disbursements
6. Tax increment financing
7. Miscellaneous provisions
ABDO, EICK & MEYERS, LLP
Congratulations — 25 Years
Certificate of Achievement for Excellence in Financial
Reporting
Was received by the City for the 2013 Comprehensive
Annual Financial Report
1
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
ABDO, EICK & MEYERS, LLP
IL
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Elk River
Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2013
Executive Direaor/CEO
ABDO, EICK & MEYERS, LLP
0
People
+ Process®
(�pi
Beyondthe
Nuifibers
Iby.`
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
General Fund Balance
2012
$13,312,800
$12,836,950 $12,870,500
0.2% 0.1% 0.2%
1.6% 1.9 % 2.4%
1.6% 45.0 /o 0 43.7%
45.0%
2013
2014
2015
� Unassigned Fund Balance � Assigned Fund Balance Committed Fund Balance
�Nonspendable Fund Balance (Budget
ABDO, EICK & MEYERS, LLP
r;.
r
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
2014 General Fund Operations
Revenues
EKpenditures
Deficiency of revenues under expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, January 1
Fund balances, December 31
Final
Budgeted
Amounts
Actual
Amounts
Variance with
Final Budget
$ 11,298,350 $ 11,358,546 $ 60,196
12,621,850 12,574,565 47,285
(1,323,500) (1,216,019) 107,481
1,625,550 1,625,550 -
(302,050) (300,219) 1,831
1,323,500 1,325,331 1,831
- 109,312
6,054,290 6,054,290
109,312
$ 6,054,290 $ 6,163,602 $ 109,312
ABDO, EICK & MEYERS, LLP
d
P•
People
+ Process®
(;Oi
Beyondthe
Numbers
Iby.`
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
General Fund Revenues
2012 2013 2014
FmTaxes ■ Intergovernmental ■ Charges for services ■ Other
ABDO, EICK & MEYERS, LLP
l
0
Y
People
+ Process®
(�pi
Beyondthe
Nuifibers
Ihy.`
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
General Fund Expenditures
2012 2013 2014
1 ■ General government ■ Public safety ■ Public works ■ Other
ABDO, EICK & MEYERS, LLP
i
d
Y
�t
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
Special Revenue Funds
Fund
Nonmajor
Library
Ice Arena
Pinewood Golf Course
Landfill
Revolving Loan
Federal DEED
State DEED
Development Fund
Insurance Reserve
Drug Forfeiture Reserve
YMCA Grant
Economic Development Authority
Total
Fund Balances
December 31,
2013
2014
Increase
(Decrease)
$ 448,680
$ 425,469 $
(23,211)
245,124
315,839
70,715
1,315,177
1,312,523
(2,654)
1,168,209
1,216,698
48,489
311,155
198,272
(112,883)
385,837
409,891
24,054
1,491,350
1,371,113
(120,237)
317,991
268,013
(49,978)
46,663
28,208
(18,455)
630,360
384,140
(246,220)
1,222,806
683,774
(539,032)
$ 7,583,352
$ 6,613,940 $
(969,412)
Fund balances - nonmajor special revenue funds
Nonspendable $ 101,910
Restricted 2,130,444
Committed 3,498,482
Assigned 883,104
Total
$ 6,613,940
ABDO, EICK & MEYERS, LLP
W� I
a,
People
+ Process®
(;0ing
Beyondthe
Nuifibers
Ihy.`
Debt Service Funds
Cash and
Temporary Total
Debt Service Fund Investments Assets
Bonds
Outstanding
Total Debt Service Funds pr $ 10,975,959 "$ 11,386,142 ' "$ 34,725,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
■ Principal ■ Interest ■ P &I Paid by Escrow
ABDO, EICK & MEYERS, LLP
Capital Project Funds
Fund Balances
December 31, Increase
Capital Projects Fund 2013 2014 (Decrease)
Major
Tax Increment Financing Districts $ (1,039,866) $ (1,250,359) $ (210,493)
' Nonmajor
Capital Reserve 1,526,857 1,300,402 (226,455)
Equipment Replacement 836,471 743,405 (93,066)
IL Park Dedication (839,659) (476,669) 362,990
Park Improvements 177,157 140,656 (36,501)
Government Buildings 3,864,325 3,857,503 (6,822)
GRE Reserve 2,110,729 2,547,602 436,873
Pavement Management 1,207,543 2,330,519 1,122,976
Street Improvements 1,794,744 1,959,985 165,241
Improvement Projects 4,276,522 4,450,622 174,100
IPA- Total nonmajor 14,954,689 16,854,025 1,899,336
Total $ 13,914,823 $ 15,603,666 $ 1,688,843
People
+ Process
(;01,119
BeywdEhe
ABDO, EICK & MEYERS, LLP
4
l;;
0
ILI'
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Municipal Liquor Cash Balance
2012 2013 2014
Unrestricted (Minimum target balance (one year of operating expenses)
ABDO, EICK & MEYERS, LLP
0
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
Municipal Liquor Fund Operations
Sales, $6,516,386 Sales, $6,753,521 Sales, $6,823,719
4
GP 28.8% GP 30.3% GP 30.4%
0 14.2% 16.9%
12.9/0
2012 2013 2014
Gross profit 1 Cost of sales ♦ Sales f Operating expenses —I--Income before transfers
ABDO, EICK & MEYERS, LLP
0
f�
People
+ Process®
(�pi
Beyondthe
Nuifibers
Ihy.`
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Garbage Fund Cash Balance
$540,516 $591,503 $606,857 $606,357
2011 2012 2013 2014
Unrestricted (Minimum target balance (6 months of operating expenses)
ABDO, EICK & MEYERS, LLP
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
# � $4,000,000
16 $2,000,000
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
Sewer Fund Cash Flow
2011 2011 Receipts 2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts
Disbursements Disbursements Disbursements Disbursements
• Operating costs ■ Debt payments (including related transfers) ■ Other (capital, interfund)
• Operating receipts ■ Other (connection fees, interest, bond proceeds)
ABDO, EICK & MEYERS, LLP
A�
People
+ Process®
(�oi
Beyondthe
Nuifibers
Ihy.`
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Sewer Fund Cash Balance
2011 2012 2013 2014
Unrestricted (Minimum target balance (following year debt service plus 6 months of operating expenses)
ABDO, EICK & MEYERS, LLP
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
People
+ Process®
(�oi
Beyondthe
Nuifibers
Iby.`
Water Fund Cash Balance
2010 2011 2012 2013
� Unrestricted --A--Unrestricted designated reserve*
ABDO, EICK & MEYERS, LLP
4
l;;
0
People
+ Process®
(�pi
Beyondthe
Nuifibers
Ihy.`
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Electric Fund Cash Balance
2010 2012 2013 2014
Unrestricted � Restricted for debt service (bond covenents) — Unrestricted designated reserve*
ABDO, EICK & MEYERS, LLP
Fire Relief Funding Percent -State Statute
4
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Iby.`
117.1%
113.0%
104.7 ° /
111.1%
99.5% 98.2%
91.3% 96.3%
89.0%
2010 2011 2012 2013
—4—Association percent (Peer group average
2014
ABDO, EICK & MEYERS, LLP
120.0%
� /'
115.0%
110.0%
..
105.0%
A,
.
100.0%
�I
95.0%
90.0%
85.0%
80.0%
4
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Iby.`
117.1%
113.0%
104.7 ° /
111.1%
99.5% 98.2%
91.3% 96.3%
89.0%
2010 2011 2012 2013
—4—Association percent (Peer group average
2014
ABDO, EICK & MEYERS, LLP
y.
People
+ Process®
(�pi
Beyondthe
Nuifibers
Ihy.`
Fire Relief Funding Percent - GASB 67
Funded Percentage
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
2013
■Pension Liability $1,953,814
• Fiduciary Net Position $2,884,591
• Funded Percent 147.6
■ Pension Liability ■ Fiduciary Net Position
2014
$2,235,966
$3,190,879
142.7
■ Funded Percent
ABDO, EICK & MEYERS, LLP
Future Accounting Standard Changes
GASB Statement No. 68 - The Accounting and Financial
Reporting of Pensions - an Amendment of GASB
Statement No. 27
Applies to the Public Employees Retirement Association
And Fire Relief Association
Currently — Note Disclosure and Expense
1
New — Recognition of the entire net pension liability and
more comprehensive measure of pension expense. New
znote disclosures and required supplementary
us information.
People
+ Process®
(�Oi
Beyondthe
Nuifibers
Ihy.`
ABDO, EICK & MEYERS, LLP
r
r
rr
M 0
W._
ABDO
EICK &
ME 1 E S LLP
Certified Public Accountants & Consultants
sRVA
People
+ Process.
Going
Beyondthe
Niifibers