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10.1. SR 06-05-2017City of Elk — River Request for Action To Item Number Mayor and City Council 10.1 Agenda Section Meeting Date Prepared by Work SessionJune 5, 2017 Lori Ziemer, Finance Director Item Description Reviewed by 2016 Comprehensive Annual Financial Report Cal Portner, City Administrator Reviewed by Review Action Requested None Background/Discussion In 2016, the city contracted with CliftonLarsonAllen (CLA) to perform the annual independent audit of its financial statements for fiscal year 2016. Chris Knopick, Public Sector Principal, and Michelle Hoffman, Public Sector Manager, both with CIA offered to conduct a Work Session with the Council to provide for a more in-depth review of the audit results and allow for questions of the 2016 Comprehensive Annual Financial Report. The 2016 Comprehensive Annual Financial Report will be presented at the June 19, 2017, council meeting. Financial Impact N/A Attachments ■ Draft 2016 Comprehensive Annual Financial Report P a w E A E U s r NaA f RE] CITY OF ELK RIVER, MINNESOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2016 PREPARED BY THE FINANCE DEPARTMENT MEMBER OF GOVERNMENTAL FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA CITY OF ELK RIVER TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2016 INTRODUCTORY SECTION LETTER OF TRANSMITTAL 1 ELECTED AND APPOINTED OFFICIALS 5 ORGANIZATIONAL CHART 6 CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING 7 FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 8 MANAGEMENT'S DISCUSSION AND ANALYSIS 11 BASIC FINANCIAL STATEMENTS 21 STATEMENT OF NET POSITION 21 STATEMENT OF ACTIVITIES 22 BALANCE SHEET - GOVERNMENTAL FUNDS 23 RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION - GOVERNMENTAL ACTIVITIES 24 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS 25 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES 26 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GENERAL FUND - BUDGET TO ACTUAL (GAAP BASIS) 27 STATEMENT OF NET POSITION - PROPRIETARY FUNDS 28 STATEMENT OF REVENUES. EXPENSES, AND CHANGES IN NET POSITION - PROPRIETARY FUNDS 30 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS 32 STATEMENT OF FIDUCIARY NET POSITION -AGENCY FUNDS 36 NOTES TO BASIC FINANCIAL STATEMENTS 37 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFIT PLAN 74 PERA SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 75 PERA SCHEDULE OF CITY CONTRIBUTIONS 76 SCHEDULE OF CITY CONTRIBUTIONS - ELK RIVER FIRE RELIEF 77 CITY OF ELK RIVER TABLE OF CONTENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2016 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET 78 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 79 NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET 81 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 83 LIBRARY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL 85 ICE ARENA SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL 86 LANDFILL SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL 87 ECONOMIC DEVELOPMENT AUTHORITY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL 88 NONMAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET .o] COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 91 NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET 93 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 95 AGENCYFUNDS STATEMENT OF CHANGES IN ASSETS AND LIABILITIES 98 COMPONENT UNIT FINANCIAL STATEMENTS HOUSING AND REDEVELOPMENT AUTHORITY BALANCE SHEET 100 RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET POSITION 101 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND CITY OF ELK RIVER TABLE OF CONTENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2016 BALANCES 102 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 103 STATISTICAL SECTION (UNAUDITED) NET POSITION BY COMPONENT - LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 105 CHANGES IN NET POSITION - LAST TEN FISCAL YEARS 106 FUND BALANCES, GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS 108 CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS - LAST TEN FISCAL YEARS 109 ELECTRIC SALES - LAST TEN FISCAL YEARS 110 PRINCIPAL ELECTRIC CUSTOMERS - CURRENT YEAR AND NINE YEARS AGO 111 TAX CAPACITY, MARKET VALUE, AND ESTIMATED VALUE OF TAXABLE PROPERTY - LAST TEN FISCAL YEARS 112 PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS - LAST TEN FISCAL YEARS 114 PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS - LAST TEN FISCAL YEARS , w 115 PROPERTY TAX LEVIES AND COLLECTIONS - LAST TEN FISCAL YEARS 116 RATIOS OF OUTSTANDING DEBT BY TYPE - LAST TEN FISCAL YEARS 117 RATIOS OF GENERAL BONDED DEBT OUTSTANDING - LAST TEN FISCAL YEARS 119 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 120 LEGAL DEBT MARGIN INFORMATION - LAST TEN FISCAL YEARS 121 PLEDGED -REVENUE COVERAGE - LAST TEN FISCAL YEARS 123 DEMOGRAPHIC AND ECONOMIC STATISTICS - LAST TEN FISCAL YEARS 124 PRINCIPAL EMPLOYERS - CURRENT YEAR AND NINE YEARS AGO 125 FULL-TIME EQUIVALENT BY FUNCTION - LAST TEN FISCAL YEARS 126 OPERATING INDICATORS BY FUNCTION - LAST TEN FISCAL YEARS 127 CAPITAL ASSET STATISTICS BY FUNCTION - LAST TEN FISCAL YEARS 128 INTRODUCTORY SECTION REPORT DATE 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, 2016, is hereby submitted. Minnesota State Statutes and the City's ordinance require an annual audit of the City's accounts by the State Auditor or by independent certified public accountants. The firm of CliftonLarsonAllen, LLP was selected to perform the City's audit and their unmodified opinion has been included in this report. The independent auditors' 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 complement 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 24,200. Urban services are available to about one-third of the land area in the City. (1) 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 28 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 $51,368,317 being issued in 2016. Additions and remodels accounted for $21,700,085 of new value and $29,668,232 in new construction makes up the balance. The number of new housing units remained steady from 74 in 2015 to 75 in 2016. Single family homes accounted for 73 units and 2 twin homes accounted for the new housing units in 2016. The average value of a new home increased to $216,557. Many of Elk River's largest employers reported stable or growing employment levels between 2016 and 2017. 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. In 2016, several businesses completed expansions and renovations to their facilities and several senior projects were approved with construction expected to be completed in 2017. The outlook in this region looks promising with commercial industrial activity and the recent increase in housing projects that have made their way through the review process for construction in 2017. (2) 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, 2016 is 45%. 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 2016 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 The city completed the long-term strategic plan of the Gravel Mining Area Study to shape the future of this highly developable 2,600 -acre segment along US Highway 169 that runs through the city. In 2016, the city also completed the master planning process for the William H. Houlton Conservation Area and Bailey Point Nature Preserve, and formed a task force to evaluate and plan for future needs of the city's aging facilities. 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, 2015. This was the 27th 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. (3) 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, 2016. It was the 8t" 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 market changes. Respectfully submitted, Lori Ziemer Finance Director (4) CITY COUNCIL John Dietz Barbara Burandt Jerry Olsen Matthew Westgaard Jennifer Wagner APPOINTED PERSONNEL Calvin Portner Lori Ziemer Ron Nierenhausen T. John Cunningham Michael Hecker Justin Femrite Suzanne Fischer CITY OF ELK RIVER ELECTED AND APPOINTED OFFICIALS YEAR ENDED DECEMBER 31, 2016 Term Expires December 31, Mayor 2018 Council member 2016 Council member 2018 Council member 2016 Council member 2018 City Administrator Finance Director Police Chief�e Fire Chief Parks & Recreation Director City Engineer Community Operations & Development Director O� (5) Administration - City Clerk - Human Resources - Cable TV Finance - Finance - Payroll - Information Tech - Building Maint. - Liquor CITY OF ELK RIVER ORGANIZATIONAL CHART YEAR ENDED DECEMBER 31, 2016 Boards & Commissions Legal Community Operations and Development - Planning - Environmental - Economic Develop - Engineering - Streets - Equip. Services - Sewer Mayor City Council City Administrator Police - Police Admin. - Patrol - Investigations - Support Services - Reserves N Fire - Fire - Emergency Mgmt. - Building Safety - Code Enforcement Parks & I I Municipal Recreation Utilities - Recreation - Electric - Park Maintenance - Water - Sr. Center - Ice Arena - Golf Course - Library CITY OF ELK RIVER CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING DECEMBER 31, 2016 -1'1 fiate of Achievement for Excellence in Financial Reporting Fscntca w City of Elk River Minnesota For its Conipmhensi ve. A nnuo1 Financial ancial Ri-,porl for the Fiscal Year Ended December er 1# 201 (7) FINANCIAL SECTION CliftonLarsonAllen LLP CLAconnect.com Clifton LarsonAllen INDEPENDENT AUDITORS' REPORT Honorable Mayor and the 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 aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City of Elk River'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. Auditors' Responsibility > N%o Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' 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 entity'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 entity'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. Amember of Nexia (8) International Honorable Mayor and the City Council City of Elk River, Minnesota 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 aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Elk River as of December 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, schedule of funding progress for other postemployment benefits, schedule of the City's proportionate share of net pension liability, schedule of the City's pension contributions, and the schedule of changes in net pension liability and related ratios, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information 40V Al Vk -- - Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Elk River's basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 21 Honorable Mayor and the City Council City of Elk River, Minnesota Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated REPORT DATE, on our consideration of the City of Elk River's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Elk River's internal control over financial reporting and compliance. CliftonLarsonAllen LLP Minneapolis, Minnesota REPORT DATE (10) CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 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, 2016. 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 4 - 7 of this report. Financial Highlights The assets and deferred outflows of resources of the City of Elk River exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $201,389,885 (net position). Of this amount, $50,223,827 (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 $770,899, attributable to revenues in excess of expenses of $2.4 million in the Electric fund due to increased usage impacted by the additional territory acquisition. As of the close of the current fiscal year, the City of Elk River's governmental funds reported combined ending fund balances of $38,334,630. - g Ending BUSINESS -TYPE ACTIVITIES Balance e y Balance ,384 Special 1,410,000 Capital - General Revenue Debt Service Projects Total Nonspendable $ 20,964 $ 108,176 $ - $ $ 129,140 Restricted - 1,405,144 10,840,535 - 12,245,679 Committed - 5,438,226 - 3,811,788 9,250,014 Assigned 266,832 1,338,446 11,294,502 12,899,780 Unassigned 6,470,281 - - (2,660,264) 3,810,017 Total Net Position $ 6,758,077 $ 8,289,992 $ 10,840,535 $ 12,446,026 $ 38,334,630 19 The City of Elk River's total long-term liabilities increased $3,469,298 during the current fiscal year, from $54,009,054 to $57,478,352. Beginning Endin GOVERNMENTAL ACTIVITIES Balance Additions Reductions Balanc Bonds Payable $ 33,714,456 $ - $(3,741,072) $ 29,973 Beginning g Ending BUSINESS -TYPE ACTIVITIES Balance e y Balance ,384 Contracts for Deeds 1,410,000 - (1,410,000) - Compensated Absences 1,466,238 587,837 (559,646) 1,494,429 Total 36,590,694 587,837 (5,710,718) 31,467,813 Beginning Ending BUSINESS -TYPE ACTIVITIES Balance Additions Reductions Balance Bonds Payable $ 15,585,234 $ 11,630,525 $ (2,894,428) $ 24,321,331 Notes Payable 1,408,368 - (194,292) 1,214,076 Compensated Absences 424,758 194,008 (143,634) 475,132 Total 17,418,360 11,824,533 (3,232,354) 26,010,539 CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 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, storm water, 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 starting on page 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. (12) CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact 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. The City of Elk River maintains four 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, TIF Districts, and Pavement Management funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor funds is provided in the form of combining statements elsewhere in this report. N/ The City of Elk River adopts an annual 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 starting on page 23 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, storm water, water, and electric operations. The basic proprietary fund financial statements can be found starting on page 28 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 36 of this report (13) CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 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 starting on page 37 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 share of net pension liabilities (assets) for defined benefits plans, schedules of contributions, and progress in funding its obligation to provide pension and other postemployment benefits to its employees. Required supplementary information can be found starting on page 74 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 starting on page 78 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 and deferred inflows of resources by $201,389,885 at the close of the most recent fiscal year. By far, the largest portion of the City of Elk River's net position (75 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. An additional portion of the City of Elk River's net position (12.4 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($16,766,563) may be used to meet the City of Elk River's ongoing obligations to citizens and creditors. (14) Governmental Activities Business -Type Activities Total 2016 2015 2016 2015 2016 2015 Current and Other Assets $ 41,740,557 $ 46,019,412 $ 33,038,957 $ 34,093,281 $ 74,779,514 $ 80,112,693 Capital Assets 97,910,819 100,211,719 107,714,850 93,681,707 205,625,669 193,893,426 Total Assets 139,651,376 146,231,131 140,753,807 127,774,988 280,405,183 274,006,119 Deferred Outflows of Resources 11,703,328 1,974,440 2,118,984 454,331 13,822,312 2,428,771 Noncurrent Liabilities Outstanding 39,193,949 44,557,234 29,692,408 20,816,200 68,886,357 65,373,434 Other Liabilities 13,189,478 2,338,153 7,862,145 4,980,591 21,051,623 7,318,744 Total Liabilities 52,383,427 46,895,387 37,554,553 25,796,791 89,937,980 72,692,178 Deferred Inflows of Resources 2,276,632 2,433,266 622,998 690,460 2,899,630 3,123,726 Net Position: Net Investment in Capital Assets 67,937,435 75,030,579 82,230,963 76,747,269 150,168,398 151,777,848 Restricted 11,990,647 3,675,588 997,660 490,500 12,988,307 4,166,088 Unrestricted 16,766,563 20,170,751 21,466,617 24,504,299 38,233,180 44,675,050 Total Net Position $ 96,694,645 $ 98,876,918 $ 104,695,240 $ 101 .742,068 $ 201,389.885 $ 200,618,986 An additional portion of the City of Elk River's net position (12.4 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($16,766,563) may be used to meet the City of Elk River's ongoing obligations to citizens and creditors. (14) CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 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. Governmental activities. Governmental activities account for 48 percent of the City of Elk River's net position. Governmental activities decreased the City's net position by $2,182,273. Key elements of the relevant changes are as follows: • In 2016 the City accepted a donation of police equipment valued at over $660,000. • The increase in public safety reflects the adjustment to the pension liability. (15) Governmental Activities Business -Type Activities Total 2016 2015 2016 2015 2016 2015 REVENUES Program Revenues: Charges for Services $ 2,883,489 $ 2,827,043 $ 47,867,360 $ 45,680,611 $ 50,750,849 $ 48,507,654 Operating Grants and Contributions 1,664,977 1,033,338 - - 1,664,977 1,033,338 Capital Grants and Contributions 1,333,057 3,574,036 1,685,129 2,708,564 3,018,186 6,282,600 General Revenues: - - Property Taxes 11,136,310 10,931,945 - - 11,136,310 10,931,945 Other Taxes 1,552,499 1,513,621 - - 1,513,621 Unrestricted Investment Earnings 311,469 512,193 167,849 259,494 479,318 771,687 Miscellaneous Revenue 1,820,248 1,642,098 - - 1,642,098 Gain on Sale of Capital Assets 29,695 2,796,041 1,050 8,899 30,745 2,804,940 Capital Contributions - - (26,551) - (26,551) - Total Revenues 20,731,744 24,830,315 49,694,837 48,657,568 67,053,834 (4,098,571) EXPENSES General Government 3,996,317 3,619,293 - - 3,996,317 3,619,293 Public Safety 9,203,952 6,720,283 - 9,203,952 6,720,283 Public Works 5,439,492 5,351,630 40001115,439,492 5,351,630 Culture and Recreation 4,014,737 3,970,704 4,014,737 3,970,704 Economic Development 954,723 959,414 S" - 954,723 959,414 Interest on Long -Term Debt 996,933 1,084,902 - 996,933 1,084,902 Municipal Liquor Sewer- - - - 6,063,922 2,473,139 5,945,126 2,318,709 6,063,922 2,473,139 5,945,126 2,318,709 Garbage - - 1,475,027 1,382,890 1,475,027 1,382,890 Storm Water - - 645,596 736,411 645,596 736,411 Electric - 32,190,114 30,012,830 32,190,114 30,012,830 Water - 2,532,653 2,478,904 2,532,653 2,478,904 Total Expenses 24,606,154 21,706,226 45,380,451 42,874,870 69,986,605 2,899,928 CHANGE IN NET POSITION BEFORE SPECIAL ITEM AND TRANSFERES (3,874,410) 3,124,089 4,314,386 5,782,698 (2,932,771) 8,906,787 Special Item - 330,923 - 330,923 - Transfers 1,692,137 (10,891,333) (1,692,137) 10,891,333 ,%'(2,182,273) CHANGE IN NET POSITION (7,767,244) 2,953,172 16,674,031 770,899 8,906,787 Net Position - Beginning of Year 98,876,918 106,644,162 101,742,068 85,068,037 200,618,986 191,712,199 NET POSITION - END OF YEAR $ 96,694,645 $ 98,876,918 $ 104,695,240 $ 101,742,068 $ 201,389,885 $ 200,618,986 Governmental activities. Governmental activities account for 48 percent of the City of Elk River's net position. Governmental activities decreased the City's net position by $2,182,273. Key elements of the relevant changes are as follows: • In 2016 the City accepted a donation of police equipment valued at over $660,000. • The increase in public safety reflects the adjustment to the pension liability. (15) CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 Expenses and Program Revenues -Governmental Activities $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 $1,000,0$0 0■1 11 , ®. General Public Safety Public Works Culture and Economic Government Recreation Development ■ Revenues ■ Expenses Revenues by Source -Governmental Activities Unrestricted Inves Earnings, 1.501. Oth e r Taxe s, 7.49% Pr Micrallananim Ravaniia Gain on Sale of Capital Interest and Fiscal Charges (16) services, Yo atingGrants and ributions, 8.03% )ital Grants and Abutions, 6.43% CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 Business -type activities. Business -type activities increased the City of Elk River's net position by $2,953,172. Key elements of this increase are as follows: • Charges for services for business -type activities increased $1,708,347 due largely to an increase in electric usage. The electric utility accounts for 73% of the total charges for services. • In 2016, the Electric fund sold its security division for a gain on the sale of $330,293. 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 $0 Municipal Liquor Sewer Garbage Storm Water ■ Revenues ■ Expenses i :. ■ ■ ■ Electric Water Capit Contri CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 Revenues by Source - Business -Type Activities Unrestricted Investment Earnines.0.34% CnnitA Cnntrihiitinnc - Financial Analysis of the Government's Funds AW 1W '46 Financial Analysis of the Government's Funds Services, 96.32% Governmental funds. The focus of the City's governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $38,334,630. Approximately 10 percent of this total amount ($3,810,017) constitutes unassigned fund balance. The remainder of fund balance ($34,524,613) is not available for new spending because it is either 1) non -spendable ($129,140), 2) restricted ($12,245,679), 3) committed ($9,250,014) or 4) assigned ($12,899,780) 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 $193,279 during the current year, resulting primarily from budgeted transfers in. The YMCA Bonds fund decreased $118,476 due to the debt service payments on the crossover advance refunding debt issued in 2013. In CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 The Pavement Management fund increased $1,040,854 due to the collection of franchise fees and intergovernmental revenues in excess of current year expenditures. 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 - $3,487,225, Sewer - $3,267,800, Garbage - $391,463, Storm Water - $389,724, Electric - $9,829,270, and Water - $4,101,135. The Garbage fund net position decreased $145,575 due to an increase in garbage disposal fees and the Storm Water fund net position decreased $329,516 due mainly to transfers out and capital contributions to other funds. 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. Key factors are as follows: • Total revenue collections were 103% of budget. Other tax collections were $32,873 over budget, intergovernmental revenue collections were $228,827 over budget and fines and forfeits were $28,966 over budget. • Expenditures were under budget by $60,962 due mainly to lower than anticipated fuel costs and sound fiscal control by City departments. Capital Asset and Debt Administration **... N Capital Assets. The City of Elk River's investment in capital assets for its governmental and business type activities as of December 31, 2016, amounts to $205,625,669 (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 $11,732,243 or 6 percent. Major capital asset events during the current fiscal year included the following: • $900,000 in public safety equipment. • Completion of the $4.9 million 2015 street project. • Construction of $437,000 for the River's Edge Park expansion. • Construction continued on the wastewater treatment facility improvements incurring over $4.7 million in 2016 and placing in service $15.4 million. • The electric system made a $9.4 million down payment on their buy -in to the power contract with Minnesota Municipal Power Agency. Governmental Activities Business -Type Activities Total 2016 2015 2016 2015 2016 2015 Land Intangible Assets Construction in Progress Buildings Other Improvements Infrastructure Equipment Total Capital Assets $ 40,876,833 $ 40,876,833 $ 1,609,491 $ 1,526,407 $ 42,486,324 $ 42,403,240 - - 9,804,951 - 9,804,951 - 437,501 3,602,680 3,714,934 13,745,714 4,152,435 17,348,394 45,048,097 45,048,097 24,363,780 19,525,901 69,411,877 64,573,998 5,438,466 5,393,304 - - 5,438,466 5,393,304 66,110,684 62,627,885 122,107,290 117,851,862 188,217,974 180,479,747 12,764,099 11,989,388 10,665,822 4,408,461 23,429,921 16,397,849 170,675,680 169,538,187 172,266,268 157,058,345 342,941,948 326,596,532 Less: Accumulated Depreciation (72,764,861) (69,326,468) (64,551,418) (63,376,638) (137,316,279) (132,703,106) Total Capital Assets, Net S 97,910,819 S 100.211,719 S 107,714,850 S 93,681,707 $ 205,625,669 S 193,893,426 CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS ENDED DECEMBER 31, 2016 Long-term debt. At the end of the current fiscal year, the City had total long-term debt outstanding of $81,906,740, an increase of $16,533,306 from 2015. General obligation improvement bonds ($29,530,000) were issued to finance the construction of a library, a recreation facility, a public safety/city hall facility, a public works facility, and improvement projects within the City. General obligation revenue bonds ($11,830,000) were used to finance sewer and water systems. Revenue bonds ($11,955,000) were used to finance electric system improvements. Additional long-term debt in the amount of $1,214,076 is for notes payable, $1,969,561 is for compensated absences, $23,862,985 is for net pension liability, and $565,403 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 $59,362,917. $15,146,053 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 7 starting on page 55 of this report. 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 2017 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. (20) Governmental Activities Business -Type Activities Total 2016 2015 2016 2015 2016 2015 General Obligation Bonds $ 29,530,000 $ 33,220,000 $ - $ - $ 29,530,000 $ 33,220,000 General Obligation Revenue Bonds - - 11,830,000 12,535,000 11,830,000 12,535,000 Revenue Bonds - - 11,955,000 2,985,000 11,955,000 2,985,000 Issuance Premium 443,384 494,456 536,331 65,234 979,715 559,690 Total Bonds Payable, Net 29,973,384 33,714,456 24,321,331 15,585,234 54,294,715 49,299,690 Contracts for Deed - 1,410,000 - - - 1,410,000 Notes Payable - - 1,214,076 1,408,368 1,214,076 1,408,368 Compensated Absences 1,494,429 1,466,238 475,132 424,758 1,969,561 1,890,996 Net Pension Liability 18,541,369 7,589,597 5,321,616 3,277,492 23,862,985 10,867,089 Other Postemployment Benefits 426,720 376,943 138,683 120,348 565,403 497,291 Total Outstanding Debt $ 50,435,902 $ 44,557,234 $ 31,470,838 $ 20,816,200 $ 81,906,740 $ 65,373,434 Additional long-term debt in the amount of $1,214,076 is for notes payable, $1,969,561 is for compensated absences, $23,862,985 is for net pension liability, and $565,403 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 $59,362,917. $15,146,053 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 7 starting on page 55 of this report. 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 2017 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. (20) BASIC FINANCIAL STATEMENTS CITY OF ELK RIVER STATEMENT OF NET POSITION DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (21) Primary Government Governmental Business -Type Component Activities Activities Total Unit HRA ASSETS Cash and Investments $ 26,987,033 $ 26,260,342 $ 53,247,375 $ 1,289,705 Restricted Cash and Investments - 997,660 997,660 - Cash and Investments Held by Trustee 9,284,303 - 9,284,303 - Receivables: Accrued Interest 112,174 42,635 154,809 16,482 Taxes 631,259 - 631,259 - Special Assessments 955,579 - 955,579 Other Accounts Receivable 521,553 3,325,974 3,847,527 - Notes Receivable, Net 2,186,175 - 2,186,175 531,802 Due from Other Governments 401,578 19,163 420,741 - Due from Primary Government - - - 215,494 Due from Component Unit 8,202 - 8,202 - Internal Balances (144,417) 144,417 - Prepaid Items 129,140 225,420 354,560 Inventories - 2,023,346 2,023,346 Land Held for Resale 187,060 - 187,060 Pension Asset 480,918 - 480,918 - Capital Assets - Non -Depreciable: Land 40,876,833 1,609,491 42,486,324 257,100 Intangible Assets - 9,804,951 9,804,951 - Construction in Progress 437,501 3,714,934 4,152,435 Depreciable: Buildings and Building Improvements 45,048,097 24,363,780 69,411,877 - Improvements Other than Buildings 5,438,466 - 51438,466 174,290 Infrastructure 66,110,684 - 66,110,684 - Distribution/Collection Systems - 122,107,290 122,107,290 Equipment and Furniture 12,764,099 10,665,822 23,429,921 Total Capital Assets 170,675,680 172,266,268 342,941,948 431,390 Less: Accumulated Depreciation (72,764,861) (64,551,418) (137,316,279) (47,445) Total Capital Assets, Net 97,910,819 107,714,850 205,625,669 383,945 Total Assets `x•139,651,376 140,753,807 280,405,183 2,437,428 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows - Pensions 11,481,277 2,067,464 13,548,741 24,941 Deferred Charge on Debt Refunding 222,051 51,520 273,571 11,703,328 2,118,984 13,822,312 24,941 LIABILITIES Accounts and Contracts Payable 85,070 5,374,407 5,959,477 22,469 Accrued Salaries Payable 196,892 140,076 336,968 1,296 Due to Governmental Activities . 4,602 185,974 190,576 - Due to Primary Government - - - 8,202 Due to Component Unit 215,494 215,494 Unearned Revenue 568,062 91,854 659,916 Accrued Interest Payable 377,405 291,404 668,809 Compensated Absence - Due Within Ye 566,953 228,214 795,167 Notes Payable - Due Within One Year - 195,216 195,216 Bonds Payable - Due Within One Year 10,675,000 1,355,000 12,030,000 Noncurrent Liabilities: Other Postemployment Benefits 426,720 138,683 565,403 - Net Pension Liability 18,541,369 5,321,616 23,862,985 68,816 Compensated Absences - Due in More Than One Year 927,476 246,918 1,174,394 - Notes Payable - Due in More Than One Year - 1,018,860 1,018,860 Bonds Payable - Due in More Than One Year 19,298,384 22,966,331 42,264,715 Total Liabilities 52,383,427 37,554,553 89,937,980 100,783 DEFERRED INFLOWS OF RESOURCES Deferred Inflows - Pensions 2,276,632 622,998 2,899,630 9,539 NET POSITION Net Investment in Capital Assets 67,937,435 82,230,963 150,168,398 383,945 Restricted for: Debt Service 10,582,630 997,660 11,580,290 - Landfill Mitigation 351,577 - 351,577 Economic Development 1,046,584 1,046,584 Law Enforcement 9,856 9,856 - Housing and Redevelopment - - - 1,968,102 Unrestricted 16,766,563 21,466,617 38,233,180 Total Net Position $ 96,694,645 $ 104,695,240 $ 201,389,885 $ 2,352,047 See accompanying Notes to Basic Financial Statements. (21) CITY OF ELK RIVER STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (22) Program Revenues Net (Expense) Revenue and Changes in Net Position Primary Government Component Unit Charges for Operating Grants Capital Grants Governmental Business -Type Functions/Programs Expenses Services and Contributions and Contributions Activities Activities Total HRA Primary Government: Governmental Activities: General Government $ 3,996,317 $ 678,679 $ - $ - $ (3,317,638) $ $ (3,317,638) $ Public Safety 9,203,952 1,041,141 528,107 663,516 (6,971,188) (6,971,188) Public Works 5,439,492 199,034 388,667 542,267 (4,309,524) (4,309,524) Culture and Recreation 4,014,737 931,674 702,694 127,274 (2,253,095) (2,253,095) Economic Development 954,723 32,961 45,509 - (876,253) (876,253) Interest and Fiscal Charges 996,933 - - - (996,933) (996,933) Total Governmental Activities 24,606,154 2,883,489 1,664,977 1,333,057 8,724,631) (18,724,631) Business -Type Activities: Municipal Liquor 6,063,922 7,009,574 - 945,652 945,652 Sewer 2,473,139 1,921,190 1,326,4 774,496 774,496 Garbage 1,475,027 1,342,900 (132,127) (132,127) Storm Water 645,596 477,377 (168,219) (168,219) Electric 32,190,114 34,746,098 40# 2,555,984 2,555,984 Water 2,532,653 2,370,221 358,684 196,252 196,252 Total Business -Type Activities 45,380,451 47,867,360 1,685,129 4,172,038 4,172,038 Total Primary Government $ 69,986,605 $ 50,750,849 $ 1,664,977 $ 3,018,186 (18,724,631) 4,172,038 (14,552,593) Component Unit: Housing and Redevelopment Authority $ 215,866 $ 2,000 $ 163 (213,703) General Revenues: Property Taxes 11,136,310 - 11,136,310 286,664 Other Taxes ,,,, 1,552,499 1,552,499 - Unrestricted Investment Earnings 311,469 167,849 479,318 8,081 Miscellaneous Revenue 1,820,248 - 1,820,248 - Capital Contributions - (26,551) (26,551) Gain on Sale of Capital Assets 29,695 1,050 30,745 Special Item - 330,923 330,923 Transfers 1,692,137 (1,692,137) - - Total General Revenues, Special Items, and Transfers 16,542,358 (1,218,866) 15,323,492 294,745 Change in Net Position (2,182,273) 2,953,172 770,899 81,042 Net Position - Beginning of Year 98,876,918 101,742,068 200,618,986 2,271,005 Net Position - End of Year $ 96,694,645 $ 104,695,240 $ 201,389,885 $ 2,352,047 See accompanying Notes to Basic Financial Statements. (22) CITY OF ELK RIVER BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (23) Other General Pavement Governmental ASSETS Fund YMCA Bonds Management Funds Totals Cash and Investments $ 6,453,058 $ 476,729 $ 3,458,873 $ 16,598,373 $ 26,987,033 Cash and Investments Held by Trustee - 9,284,303 - - 9,284,303 Receivables: Accrued Interest 27,718 - 15,261 69,195 112,174 Delinquent Taxes 559,427 18,242 - 53,590 631,259 Special Assessments - - - 955,579 955,579 Other Accounts Receivable 11,958 144,785 364,810 521,553 Notes Receivable, Net - - 2,186,175 2,186,175 Due from Other Governments 61,696 334,183 5,699 401,578 Due from Other Funds 209,809 266,738 1,541,748 2,018,295 Due from Component Unit 8,202 - - 8,202 Prepaids 20,964 108,176 129,140 Land Held for Resale - - - 187,060 187,060 Total Assets $ 7,352,832 $ 9,779,274 $ 4,219,840 $ 22,070,405 $ 43,422,351 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts and Contracts Payable 315,239 71,697 $ 198,134 $ 585,070 Accrued Salaries Payable 187,463 - 9,429 196,892 Due to Other Governments 3,116 - 1,486 4,602 Due to Other Funds 6,219 2,172 2,154,321 2,162,712 Due to Component Unit - - 215,494 215,494 Unearned Revenue - - 568,062 568,062 Total Liabilities 512,037 73,869 3,146,926 3,732,832 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue- Taxes 82,7 492 - 8,924 95,134 Unavailable Revenue - Special Assessments - 925,572 925,572 Unavailable Revenue - Other 334,183 - 334,183 Total Deferred Inflows of Resources $2,718 3,492 334,183 934,496 1,354,889 FUND BALANCE Nonspendable 20,964 - 108,176 129,140 Restricted 9,775,782 - 2,469,897 12,245,679 Committed: - - 3,811,788 5,438,226 9,250,014 Assigned: 266,832 - 12,632,948 12,899,780 Unassigned 6,470,281 - - (2,660,264) 3,810,017 Total Fund Balance 6,758,077 9,775,782 3,811,788 17,988,983 38,334,630 Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 7,352,832 $ 9,779,274 $ 4,219,840 $ 22,070,405 $ 43,422,351 See accompanying Notes to Basic Financial Statements. (23) CITY OF ELK RIVER RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES DECEMBER 31, 2016 Total Fund Balances for Governmental Funds Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of: Land Construction in Progress Buildings Other Improvements Streets and Infrastructure Equipment and Furniture Total Capital Assets Less: Accumulated Depreciation 40,876,833 437,501 45,048,097 5,438,466 66,110, 684 12, 764, 099 170,675,680 (72, 764, 861) Long-term assets for pensions reported in governmental activities are not financial resources and therefore are not reported as assets in the funds. Some of the City's receivables (including property taxes, special assessments and other { long-term receivables) will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as deferred inflows of resources in the governmental funds. The City's net pension liability and related deferred inflows and deferred outflows are recorded only on the statement of net position. Balances at year end are: Net Pension Liability (18,541,369) Deferred Inflows of Resources - Pensions (2,276,632) Deferred Outflows of Resources - Pensions' 11,481,277 Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and, therefore, are not reported as fund liabilities. All liabilities - both current and long term - are reported in the statement of net position. Bonds Payable (29,530,000) Unamortized Premiums (443,384) Deferred Charge on Refunding 222,051 Accrued Interest Payable (377,405) Compensated Absence Payable (1,494,429) Other Postemployment Benefits (426,720) Total Net Position of Governmental Activities See accompanying Notes to Basic Financial Statements. (24 ) 38,334,630 97,910,819 480,918 1,354,889 (9,336,724) (32,049,887) $ 96,694,645 CITY OF ELK RIVER STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2016 General Fund YMCA Bonds Pavement Management Other Governmental Funds Totals REVENUE Property Taxes $ 9,585,347 $ 405,407 $ - $ 1,180,742 $ 11,171,496 Other Taxes 159,873 - 1,392,626 - 1,552,499 Special Assessments - - 456,666 456,666 Licenses and Permits 655,607 - - 655,607 Intergovernmental Revenue 517,177 668,072 496,417 1,681,666 Charges for Services 922,478 - 928,930 1,851,408 Fines and Forfeitures 155,966 11,560 167,526 Other Revenue: Landfill Expansion Fee - - - 1,220,232 1,220,232 Investment Earnings 95,458 86,962 2,004 127,045 311,469 Refunds and Reimbursements 120,158 - - 600,971 721,129 Contributions 16,000 261,059 355,008 632,067 Miscellaneous Revenue 19,303 - - 55,516 74,819 Total Revenue 12,247,367 753,428 2,062,702 5,433,087 20,496,584 EXPENDITURES Current: General Government 3,253,212 - - 348,256 3,601,468 Public Safety 6,657,717 173,882 6,831,599 Public Works 1,775,150 86,101 1,861,251 Culture and Recreation 1,862,109 1,010,172 2,872,281 Economic Development - 949,205 949,205 Capital Outlay General Government - 37,982 37,982 Public Safety 266,490 266,490 Public Works 1,021,848 831,402 1,853,250 Culture and Recreation - 524,636 524,636 Debt Service: Principal Retirement 380,000 4,720,000 5,100,000 Interest and Fiscal Charges 629,691 - 518,844 1,148,535 Total Expenditures " 13,548,188 1,009,691 1,021,848 9,466,970 25,046,697 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (1,300,821) (256,263) 1,040,854 (4,033,883) (4,550,113) OTHER FINANCE SOURCES (USES) Transfers In Transfers Out 1,769,750 (275,650) 137,787 - - 4,617,000 (4,556,750) 6,524,537 (4,832,400) Proceed from Sale of Capital Assets - 80,587 80,587 Total Other Finance Sources (Uses) 1,494,100 137,787 140,837 1,772,724 NET CHANGE IN FUND BALANCES 193,279 (118,476) 1,040,854 (3,893,046) (2,777,389) FUND BALANCES Beginning of Year 6,564,798 9,894,258 2,770,934 21,882,029 41,112,019 End of Year $ 6,758,077 $ 9,775,782 $ 3,811,788 $ 17,988,983 $ 38,334,630 See accompanying Notes to Basic Financial Statements. (25) CITY OF ELK RIVER RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES YEAR ENDED DECEMBER 31, 2016 Net Change in Fund Balances -Total Governmental Funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures and proceeds from the sale of capital assets as revenues. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Capital Outlays - Improvement Costs (Net of Proceeds) Gain on Disposal of Capital Assets Proceeds from the Sale of Capital Assets Capital Contributions Depreciation Expense The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: Repayment of Principal on Long -Term Debt Amortization of Bond Premium Amortization of Deferred Charge on Refunding Change in Accrued Interest Payable Delinquent and certain other property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as deferred inflows of resources and excluded from revenues in the governmental funds. 1%,'0011111WIP, Deferred Inflows of Resources - December 31, 2015 Deferred Inflows of Resources - December 31, 2016 _ In the statement of activities, compensated absences and other postemployment benefits are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During fiscal year 2016, compensated absence payable and other post employment benefits payable changed. Pension expenses in the governmental funds are measured by current year employee contributions. Pension expenses on the statement of activities are measured by the change in net pension liability and the related deferred inflows and outflows of resources. Change in Net Position of Governmental Activities See accompanying Notes to Basic Financial Statements. (26) $ 2,270,879 29,695 (80,587) 663,516 (5,184, 403) 5,100,000 51,072 (36,265) 136,795 $ (2,777,389) (2,300,900) 5,251,602 1,812,940 1,354,889 (458, 051) (77, 968) (1,819,567) $ (2,182,273) CITY OF ELK RIVER STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GENERAL FUND - BUDGET TO ACTUAL (GAAP BASIS) YEAR ENDED DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (27) Budgeted Amounts Over (Under) Original Final Actual Final Budget REVENUE Taxes Property Taxes $ 9,596,850 $ 9,596,850 $ 9,585,347 $ (11,503) Other Taxes 127,000 127,000 159,873 32,873 Licenses and Permits 646,550 646,550 655,607 9,057 Intergovernmental Revenue 288,350 288,350 517,177 228,827 Charges for Services 915,800 915,800 922,478 6,678 Fines and Forfeits 127,000 127,000 155,966 28,966 Other Revenue: Investment Earnings 85,000 85,000 95,458 10,458 Refunds and Reimbursements 101,000 101,000 120,158 19,158 Contributions 20,000 20,000 16,000 (4,000) Miscellaneous Revenue 7,500 7,500 19,303 11,803 Total Revenue 11,915,050 11,915,050 12,247,367 332,317 EXPENDITURES General Government 3,257,600 3,257,600 3,253,212 (4,388) Public Safety 6,514,600 6,514,600 6,657,717 143,117 Public Works 1,893,300 1,893,300 1,775,150 (118,150) Culture and Recreation 1,943,650 1,943,650 1,862,109 (81,541) Total Expenditures 13,609,150 13,609,150 13,548,188 (60,962) EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (1,694,100 (1,694,100) (1,300,821) 393,279 OTHER FINANCE SOURCES (USES) - - Transfers In 1,969,750'a 1,969,750 1,769,750 (200,000) Transfers Out (275,650) (275,650) (275,650) Total Other Finance Sources (Uses) 1,694,100 1,694,100 1,494,100 (200,000) NET CHANGE IN FUND BALANCES' $ - 193,279 $ 193,279 FUND BALANCES Beginning of Year 6,564,798 End of Year $ 6,758,077 See accompanying Notes to Basic Financial Statements. (27) ASSETS AND DEFERRED OUTFLOWS OF RESOURCES CURRENTASSETS Cash and Cash Equivalents Cash and Investments Held by Trustee Receivables: Accounts Receivable (Net) Accrued Interest Due from Other Governments Due from Other Funds Inventory Prepaid Items Total Current Assets NONCURRENT ASSETS Capital Assets Nondepreciable Depreciable Total Less: Accumulated Depreciation Net Capital Assets DEFERRED OUTFLOWS OF RESOURCES Pension Related Deferred Charge on Debt Refunding Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION CURRENT LIABILITIES Accounts and Contracts Payable Accrued Salaries Payable Due to Other Governments Due to Other Funds Unearned Revenue Accrued Interest Payable Compensated Absences Payable Notes Payable Bonds Payable Total Current Liabilities NONCURRENT LIABILITIES Compensated Absences Payable Other Postemployment Benefits Net Pension Liability Notes Payable Bonds Payable Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred Inflows - Pensions NET POSITION Net Investment in Capital Assets Restricted Unrestricted Total Net Position Total Liabilities, Deferred Inflows of Resources, and Net Position CITY OF ELK RIVER STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2016 Municipal Liquor Sewer Garbage Storm Water Electric 3,402,317 4,102,071 402,142 414,817 $ 13,683,031 - - - - 997,660 - 397,711 10,567 2,995 2,733,204 15,013 18,215 1,652 2,067 4,550 - 19,163 - - 12,535 - 337,293 111,086 37,932 10,416 1,216,962 - - - 793,380 - - - - 197,439 4,634,292 4,874,453 525,447 457,811 18,419,680 753,961 2,907,679 - - 10,173,274 3,040,025 49,500,208 - 18,001,807 51,422,779 3,793,986 52,407,887 - 18,001,807 61,596,053 (1,897,380) (16,087,084) 9,959 (7,655,146) (23,639,805) 1,896,606 36,320,803 1,756 10,346,661 37,956,248 227,315 172,969 7,985 25,534 1,485,023 - - - - 41,216 227,315 172,969 7,985 25,534 1,526,239 $ 6,758,213 $ 41,368,225 $ 533,432 $ 10,830,006 $ 57,902,167 444,319` 1,059,181 115,409 5,551 $ 3,407,185 12,535 9,676 416 1,322 100,644 70,771 - - - 113,078 - 509 1,060 895 755,539 1,233 - 875 32,098 ' 111,835 13,834 - 2,191 155,971 156,874 - - 195,216 -- 405,000 - - 706,000 560,956 1,600,035 116,885 9,959 5,591,382 66,862 7,192 - 1,756 152,133 32,444 34,005 - 1,689 70,545 627,186 477,240 22,030 70,452 3,749,423 - - - - 1,018,860 - 9,195,000 - - 12,380,218 726,492 9,713,437 22,030 73,897 17,371,179 1,287,448 11,313,472 138,915 83,856 22,962,561 86,934 66,150 3,054 9,765 415,506 1,896,606 26,720,803 10,346,661 23,697,170 - - - 997,660 3,487,225 3,267,800 391,463 389,724 9,829,270 5,383,831 29,988,603 391,463 10,736,385 34,524,100 $ 6,758,213 $ 41,368,225 $ 533,432 $ 10,830,006 $ 57,902,167 See accompanying Notes to Basic Financial Statements. (28) Water Totals $ 4,255,964 $ 26,260,342 - 997,660 181,497 3,325,974 1,138 42,635 - 19,163 429,289 926,016 13,004 2,023,346 27,981 225,420 4,908,873 33,820,556 1,294,462 15,129, 376 35,172,073 157,136,892 36,466, 535 172,266,268 (15,272,003) (64,551,418) 21,194, 532 107,714,850 148,638 2,067,464 10,304 51,520 158,942 2,118,984 $ 26,262,347 $ 143,654,390 $ 342,762 $ 5,374,407 15,483 140,076 2,125 185,974 23,596 781,599 89,746 91,854 23,598 291,404 23,217 228,214 - 195,216 244,000 1,355,000 764,527 8,643,744 18,975 246,918 - 138,683 375,285 5,321,616 - 1,018,860 1,391,113 22,966,331 1,785,373 29,692,408 2,549,900 38,336,152 41,589 622,998 19,569,723 82,230,963 - 997,660 4,101,135 21,466,617 23,670,858 104,695,240 $ 26,262,347 $ 143,654,390 CITY OF ELK RIVER STATEMENT OF NET POSITION (CONTINUED) PROPRIETARY FUNDS DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (29) CITY OF ELK RIVER STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 See accompanying Notes to Basic Financial Statements. (30) Municipal Liquor Sewer Garbage Storm Water Electric SALES AND COST OF SALES Sales $ 7,007,627 $ $ $ $ Cost of Sales (4,997,934) Gross Profit 2,009,693 OPERATING REVENUE User Charges $ - 1,917,991 1,332,910 475,046 $ 34,746,670 Delinquent Collections - 1,474 8,517 2,331 253,137 Other 1,947 1,725 1,473 - (535,411) Total Operating Revenue 1,947 1,921,190 1,342,900 477,377 34,464,396 OPERATING EXPENSES Personnel Services 670,303 581,334 18,356 85,917 2,853,048 Supplies 21,161 114,855 2,046 6,193 110,343 Purchased Power - - - - 23,991,069 Other Service Charges 253,424 532,855 1,454,625 102,017 2,867,046 Depreciation 121,100 983,689 - 447,535 2,005,093 Total Operating Expenses 1,065,988 2,212,733 1,475,027 641,662 31,826,599 OPERATING INCOME (LOSS) 945,652 (291,543) (132,127) (164,285) 2,637,797 NONOPERATING REVENUE (EXPENSES) 100� -N Connection and Other Fees -'587' 300 - - Investment Earnings 287- 48,005 3,836 90,804 Interest Expense - - - (198,194) Gain (Loss) on Disposal of Capital Asset - (260,406) (3,934) (80,126) Miscellaneous Revenue _ 102,993 - 281,702 Bond Issuance Costs - - - 0.00 (85,195) Total Nonoperating Revenue (Expenses) 287 477,892 3,836 (3,934) 8,991 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 945,939 186,349 (128,291) (168,219) 2,646,788 Capital Grants and Contributions - 636,152 - Capital Contributions from Other Funds (99,553) Transfers In 27,716 Transfers Out (704,567) (119,255) (45,000) (61,744) (1,089,287) Total Contributions and Trasnfers (704,567) 516,897 (17,284) (161,297) (1,089,287) CHANGE IN NET POSITION BEFORE SPECIAL ITEM 241,372 703,246 (145,575) (329,516) 1,557,501 Special Item - - 330,923 CHANGE IN NET POSITION 241,372 703,246 (145,575) (329,516) 1,888,424 NET POSITION Beginning of Year 5,142,459 29,285,357 537,038 11,065,901 32,635,676 End of Year $ 5,383,831 $ 29,988,603 $ 391,463 $ 10,736,385 $ 34,524,100 See accompanying Notes to Basic Financial Statements. (30) CITY OF ELK RIVER STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION (CONTINUED) PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 Water Totals $ $ 7,007,627 (4,997,934) 2,009,693 $ 2,121,380 $ 40,593,997 17,142 282,601 34,999 (495,267) 2,173, 521 40, 381, 331 589,338 4,798,296 230,396 484,994 - 23,991,069 506,623 5,716,590 1,148,310 4,705,727 2,474,667 39,696,676 (301,146) 2,694,348 - 587,300 24,917 167,849 (57,986) (256,180) 1,050 (343,416) 196,700 581,395 (85,195) 164,681 651,753 (136,465) 3,346,101 358,684 994,836 73,002 (26,551) 300,000 327,716 - (2,019,853) 731,686 (723,852) 595,221 2,622,249 - 330,923 595,221 2,953,172 23,075,637 101,742,068 $ 23,670,858 $ 104,695,240 See accompanying Notes to Basic Financial Statements. (31) CITY OF ELK RIVER STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Cash Receipts from Customers Cash Paid to Suppliers Cash Paid to Employees Other Receipts Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Connection Fees Received Grants Received Proceeds from Issuance of Bonds Principal Payments on Bonds Interest Payments on Bonds Principal Payments on Promissory Note Acquisition of Capital Assets Proceeds from Sale of Capital Assets Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest Received on Investments Liquor Sewer Garbage Storm Water $ 7,009,388 $ 1,996,517 $ 1,346,101 $ 474,994 (5,061,531) (619,623) (1,459,207) (103,673) (655,626) (527,311) (22,643) (79,804) 1,292,231 849,583 (135,749) 291,517 - 587,300 - 560,363 (400, 000) (3,334) (4,735,877) 36,501 (3,955,047) - (5,987) 52,009 3,782 (1,486) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Other Revenue 102,993 - jV Transfers In - 27,716 Transfers Out (704,567) (119,255) (45,000) (61,744) Repayment of Advances from Other Funds Repayment of Advances to Other Funds Sale of Business Line Net Cash Provided (Used) by Non -Capita Financing Activities (704,567) (16,262) (17,284) (61,744) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 581,677 (3,069,717) (149,251) 228,287 Cash and Cash Equivalents at Beginning of the Year CASH AND CASH EQUIVALENTS AT END OF THE YEAR See accompanying Notes to Basic Financial Statements. (32) 2,820,640 7,171,788 551,393 186,530 $ 3,402,317 $ 4,102,071 $ 402,142 $ 414,817 CITY OF ELK RIVER STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 Electric Water Total $ 34,621,945 $ 2,213,416 $ 47,662,361 (27,213,605) (798,435) (35,256,074) (2,243,498) (487,884) (4,016,766) 288,497 191,150 479,647 5,453,339 1,118,247 8,869,168 358,684 945,984 11,545,329 - 11,545,329 (2,227,000) (233,000) (2,860,000) (119,657) (60,193) (183,184) (194,292) (662,654) (194,292) (12,422,917) (1,415,644) (18,574,438) 44,218 1,050 81,769 (3,374,319) (1,349,103) (9,238,832) 88,699 24,390 161,407 102,993 327,716 (2,019,853) (205,693) 96,668 330,923 (1.367.246)" 1,505,065 (111,201) (1,015,140) 13,175,626 4,367,165 28,273,142 $ 14,680,691 $ 4,255,964 $ 27,258,002 See accompanying Notes to Basic Financial Statements. (33) 300,000 (1,089,287) - (396) (205,297) 96,106 562 330,923 - (662,654) 95,265 161,407 102,993 327,716 (2,019,853) (205,693) 96,668 330,923 (1.367.246)" 1,505,065 (111,201) (1,015,140) 13,175,626 4,367,165 28,273,142 $ 14,680,691 $ 4,255,964 $ 27,258,002 See accompanying Notes to Basic Financial Statements. (33) CITY OF ELK RIVER STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Operating Income (Loss): Other Revenue Related to Operations Non -Cash Expenses Included in Net Income: Depreciation Change in Assets, Deferred Outflows, Liabilities, and Deferred Inflows: (Increase) Decrease in: Municipal Liquor Sewer Garbage Storm Water $ 945,652 $ (291,543) $ (132,127) $ (164,285) 121,100 983,689 447,535 Accounts Receivable (39,194) 3,955 (1,322) Prepaid Items - Inventory (26, 905) - Due from Other Funds (15,604) (754) (1,061) Due from Other Governmental Units 114,521 - Deferred Outflows Related to Pensions (176,136) (138,236) (5,716) (19,987) Increase (Decrease)in: Accounts Payable 234,459 44,185 (1,787) 5,404 Accrued Salaries Payable 4,080 3,538 145 457 Due to Other Funds - (494) (749) (867) Due to Other Governmental Units 3,434 - - - Deposits Payable - - Unearned Revenue (186) - - Compensated Absences Payable 4,355 4,588 2,771 Other Postemployment Benefits 4,999 4,999 - 833 Net Pension Liability 190,221 180,696 2,654 23,089 Deferred Inflows Related to Pensions (12,842) (1,562) (1,370) (1,050) Net Cash Provided (Used) by Operating Activities $ 1,292,231 $ 849,583 $ (135,749) $ 291,517 See accompanying Notes to Basic Financial Statements. (34) CITY OF ELK RIVER STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2016 Electric Water Total $ 2,637,797 $ (301,146) $ 2,694,348 283,665 196,700 480,365 2,005,093 1,148,310 4,705,727 (71,825) 10,257 (98,129) (18,660) 1,044 (17,616) 198,183 1,011 172,289 - - (17,419) 114,521 (1,212,074) (120,148) (1,672,297) (95,736) 9,205 195,730 22,614 1,836 32,670 - (2,110) (26,936) (851) (24,353) 235,294 20,633 255,927 875 3,455 4,144 25,477 13,183 50,374 7,504 - 18,335 1,506,308 141,156 2,044,124 (44,240) (6,398) (67,462) $ 5,453,339 $ 1,118,247 See accompanying Notes to Basic Financial Statements. (35) CITY OF ELK RIVER STATEMENT OF FIDUCIARY NET POSITION AGENCYFUND YEAR ENDED DECEMBER 31, 2016 ASSETS Cash Accounts Receivable Prepaid Items Total Assets LIABILITIES Refundable Deposits Payable Accounts Payable See accompanying Notes to Basic Financial Statements. (36) Developers Escrow $ 194,795 17,248 660 FSA Plans $ 212,703 $ 11,174 $ 212,703 $ - - 11,174 $ 212,703 $ 11,174 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Elk River, Minnesota (the City) operates under the "Optional Plan A" form of government as defined in Minnesota Statutes. Under this plan, the City Council, composed of an elected mayor and four elected Council Members. The Council appoints personnel responsible for the proper administration of all affairs relating to the City. The financial statements and the accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. B. Reporting Entity 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 government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. 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 criteria that result in the EDA being reported as a blended component unit include the fact that the EDA may not exercise any of its authorized powers without prior approval of the City Council and the City having operational responsibility. The EDA is reported as a special revenue fund and does not issue separate financial statements. (37) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Reporting Entity (Continued) Discretely Presented Component Unit The Housing and Redevelopment Authority (HRA) is a legally separate entity created to carry 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 criteria 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 HRA by significantly influencing the programs, projects, activities or level of service performed by the HRA by approving the HRA's budget. The HRA does not issue separate financial statements and are included in the financial section of this report. C. Government -Wide Financial Statements The government -wide financial statements (statement of net position and statement of activities) display information about the reporting government as a whole. These statements include all of the financial activities of the City, except fiduciary funds. Since, by definition, fiduciary fund assets are held for the benefit of a third party and cannot be used for activities or obligations of the City, these funds are excluded from the government -wide 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 sales, fees, and charges for support. Aff 11 1k The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported as general revenues. The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. (38) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Government -Wide Financial Statements (Continued) As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. However, charges between the City's enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. The City applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. Depreciation expense can be specifically identified by function (see Note 5). Interest on long-term debt is considered an indirect expense and is reported separately on the statement of activities. D. Fund Financial Statement Presentation The fund financial statements provide information about the City's funds, including 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 Pavement Management fund is used to account for franchise taxes collected to fund expenditures for the ongoing maintenance and repair of the City streets. 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 Sewer fund accounts for the activities of the sanitary sewer treatment system. The Garbage fund accounts for the activities of the garbage and recycling collection programs. The Storm Water fund accounts for the activities of the storm water collection system. The Electric fund accounts for the activities of the electric distribution system. The Water fund accounts for the activities of the water 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. The FSA Plans agency fund is used to account for resources received from employees for the City's self-administered medical and dependent care FSA plans. (39) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Fund Financial Statement Presentation (Continued) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government -wide financial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are charges to customers for sales and services. The operating expenses for the 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. Fiduciary fund financial statements use the accrual basis of accounting. Agency funds, the City's only fiduciary type, are custodial in nature (assets equal liabilities) and do not have a measurement focus. E. 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, 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. (40) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. 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 generally reported at fair value. The Minnesota Municipal Money Market (4M) Fund is an external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Commission (SEC), but follows the same regulatory rules of the SEC under Rule 2a7. The City's investment in this fund is measured based on the amortized cost method that approximates fair value. Cash and investments held by trustee reflect balances held in segregated accounts for specific purposes. Interest earned on these investments is allocated directly to those accounts. G. 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, 2016 is as follows: 2016 Electric $ 109,845 Water 26,250 To $ 136,095 H. 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. (41) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. 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, 2016, the total delinquent special assessment receivable balance was $80,261. J. Notes Receivable Notes receivable consist primarily of loans made by the City to area businesses for development purposes. The terms and interest rates of the individual loans vary. K. 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. L. 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. M. 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. (42) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. 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: Asset 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 O. 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 has two items that qualify for reporting in this category. A deferred charge on refunding reported in the government -wide 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. Deferred pension resources are reported only in the statements of net position. This item results from actuarial calculations and current year pension contributions made subsequent to the measurement date. (43) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Deferred Outflows/Inflows of Resources (Continued) 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 two types of items, which arise under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the items, state aid received for subsequent years and unavailable revenue, are reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: property taxes, special assessments and other. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The state aid received for subsequent years also qualifies and is presented as a deferred inflow of resources on the statement of net position. Furthermore, the City has one additional item which qualifies for reporting in this category on the statements of net position. The item, deferred pension resources, is reported only in the statements of net position and results from actuarial calculations involving net differences between projected and actuarial earnings on plan investments and changes in proportions. P. Pensions <Ne For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the defined benefit plan administered by Elk River Fire Relief Association and additions to and deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. Investments are reported at fair value. Q. 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, 2016, the balance reported in the governmental fund financial statements consists of $568,062 from unearned park dedication credits. (44 ) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Long -Term Liabilities In the government -wide and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, if material, are amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed as incurred. In the governmental fund financial statements, long-term debt and other long-term obligations are not reported as liabilities. The face amount of debt issued is reported as other financing sources. Premiums or discounts on debt issuances are reported as other financing sources or uses, respectively. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. S. 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. $R' 1% N T. 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. (45) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Fund Balance (Continued) Unassigned - is the residual classification for the General fund and also reflects negative residual amounts in other funds. 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 40-45% of budgeted operating expenditures for cash-flow timing needs. 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. 1641 U. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is displayed in three components: Air 11 Ilk Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. Restricted net position - Consists of net position balances restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. Unrestricted net position - All other net position 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. V. Interfund Receivables and Payables Activity between funds that is representative of lending or borrowing arrangements is reported as either "due to/from other funds" (current portion) or "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." (46) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) W. 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 NOTE 2 STEWARDSHIP AND ACCOUNTABILITY ,4#0 X A. Expenditures in Excess of Appropriations 140?w All expenditures in excess of appropriations in 2016 were funded by available fund balance. For the year ended December 31, 2016, expenditures exceeded appropriations in the following funds: Funn— Budget Expenditures Excess Special Revenue Funds: Landfill - $ 31,050 $ 34,243 $ 3,193 Economic Development Authority 255,850 323,070 67,220 B. Deficit Fund Balance The following funds had deficit fund balances at December 31, 2016: Fund Capital Projects Funds: Park Dedication TIF Districts (47) Fund Balance $ (1,181,389) (1,478,875) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 3 DEPOSITS AND INVESTMENTS A. Components of Cash and Investments Cash and investments are presented in the financial statements as follows: Statement of Net Position Cash and Investments Restricted Cash and Investments Cash and Investments Held by Trustee Cash and Investments - Discrete CU Statement of Fiduciary Net Position Cash and Investments - Agency Funds B. Deposits Primary Component Total Primary Government Unit - HRA Gov and CU $ 53,247,375 $ $ 53,247,375 997,660 997,660 9,284,303 9,284,303 - 1,289,705 1,289,705 205,969 - 205,969 $ 63,735,307 $ 1,289,705 $ 65,025,012 In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits: Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The fair value of collateral pledged must equal 110% of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated "A" or better; revenue obligations rated "AX or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The City has an investment policy in place to address custodial credit risk for deposits, stating all deposits and investments must be in compliance with Minnesota Statutes 118A, with collateralization levels of 110% of the market value of the principal and accrued interest. At year-end, the carrying amount of the City's deposits was $17,491,619 while the balance on the bank records was $17,643,205. At December 31, 2016, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City's agent in the City's name. At year-end, the carrying amount of deposits for the HRA, a discretely presented component unit, was $1,289,705 and the bank balance was $1,289,705. At December 31, 2016, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City's agent in the City's name. (48) NOTE 3 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 DEPOSITS AND INVESTMENTS (CONTINUED) C. 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. The City has the following investments at year end: �t Investments Measured at Fair Value U.S. Treasuries with Maturities at Purchase of Greater Than 1 Year Negotiable Certificates of Deposit with Maturities at Purchase of Greater Than 1 Year Federal National Mortgage Association Federal Farm Credit Bank Bond Municipal Bonds Total Investments Measured at Fair Value Investments Measured at Amortized Cost UBS Select Prime Institutional Money Market Minnesota Municipal Money Market (4M Fund) Other Money Market Funds Total Investments Measured at Amortized Cost Primary r,nvarnmant Fair Value $ 20,951 10, 243, 800 12,864,776 500,630 17, 804, 343 41,434,500 Amortized Cost $ 994,781 3,781,083 33,324 4,809,188 Interest Rate Risk — This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City's investment policy uses diversification of maturity dates as a means of managing exposure to fair value by stating that no more than 30% of the City's investments may extend beyond a five-year maturity. Credit Risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City's investments in certain types of investments. The City's investment policy does not further limit the ratings of their investments. (49) NOTE 3 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 DEPOSITS AND INVESTMENTS (CONTINUED) C. Investments (Continued) A schedule of the maturities and ratings of the City's investments as of December 31, 2016 is as follows: Maturity and Rating Breakdown of Investments: Maturity Duration in Years Investment Type Total Less Than 1 1 to 5 More Than 5 No Maturity Rating U.S. Treasury Notes $ 20,951 $ 20,951 $ - $ - $ - Negotiable Certificates of Deposit 10,243,800 3,487,814 6,755,986 - - Not Rated Federal National Mortgage Association 12,864,776 9,263,352 2,600,914 1,000,510 - AA+/Aaa Federal Farm Credit Bank Bond 500,630 500,630 - - - AA+/Aaa Municipal Bonds 17,804,343 502,065 6,152,550 11,149,728 - AA-toAAA UBS Select Prime Institutional Money Market 994,781 - - - 994,781 Not Rated Minnesota Municipal Money Market (41M Fund) 3,781,083 - - - 3,781,083 Not Rated Other Money Market Funds 33,324 33,324 Total Investments �, ,-, 77�,8i'f —7—TTTM=, —7-7$�15, , Custodial Credit Risk — For an investment, the custodial credit risk is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker- dealer) the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. As of December 31, 2016 all investments were insured or registered, or securities were held by the City or its agent in the City's name. Concentration Risk — This is the risk associated with investing a significant portion of the City's investment (considered 5% or more) in the securities of a single issuer and no more than 50% of the City's total investment portfolio may be invested in certificates of deposit or commercial paper. At December 31, 2016, the following is a list of investments which individually comprise more than 5% of the City's total investments: 4k AKMqwv Percent of Total Fair Value Federal National Mortgage Association $ 12,864,776 27.82% Minnesota Municipal Money Market (4M Fund) 3,781,083 8.18% Fair Value Measurements The City uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The City follows an accounting standard which defines fair value, establishes framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements. In accordance with this standard, the City has categorized its investments, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quotes and prices in active markets for identical assets and liabilities (Level1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. (50) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 Financial assets and liabilities recorded on the combined statements of financial position are categorized based on the inputs to the valuation techniques as follows: Level 1 — Financial assets and liabilities are valued using inputs that are unadjusted quoted prices in active markets accessible at the measurement date of identical financial assets and liabilities. NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED) D. Investments (Continued) Level 2 — Financial assets and liabilities are valued based on quoted prices for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 3 — Financial assets and liabilities are valued using pricing inputs which are unobservable for the asset, inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset. Investment Type Level Level Level Total U.S. Treasuries with Maturities at Purchase of Greater Than 1 Year $ 20,951 $ - $ $ 20,951 Negotiable Certificates of Deposit with Maturities at Purchase of Greater Than 1 Year 10,243,800 10,243,800 Federal National Mortgage Association 12,864,776 - 12,864,776 Federal Farm Credit Bank Bond 500,630 500,630 Municipal Bonds 17,804,343 17,804,343 Total Investments Measured at Fair Value 13,386,357 24,507,666 $ 41,434,500 Investments Measured at Amortized Cost 4,809,188 Total Investments 46, 243, 688 NOTE 4 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 $596,074 in the Revolving Loan fund and $301,512 in the State DEED fund are outstanding at December 31, 2016. In 2015, the City issued a $1,288,589 long-term note receivable related to the sale of property to a developer under an abatement agreement. The note shall be payable in semiannual installments as tax abatement revenues are received, commencing on August 1, 2017, and maturing February 1, 2037. A note receivable of $1,288,589 in the Development Fund is outstanding at December 31, 2016. 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, 2016. (51) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 In 2015, the HRA issued loans to applicants under the rehabilitation loan program. The terms of each loan vary and are payable over 5-15 years with rates from 1.25-3.25 percent. Notes receivable of $131,802 in the HRA are outstanding at December 31, 2016. NOTE 5 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2016 was as follows: Beginning Ending PRIMARY GOVERNMENT Balance Additions Deletions Transfers Balance Governmental Activities: Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets, Not Being Depreciated Capital Assets, Being Depreciated: Buildings Other Improvements Equipment Infrastructure Total Capital Assets, Being Depreciated Accumulated Depreciation for: Buildings Other Improvements Equipment Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities Capital Assets, Net $ 40,876,833 $ - $ - $ $ 40,876,833 3,602,680 1,748,140 (4,913,319) 437,501 44,479,513 1,748,140 (4,913,319) 41,314,334 45,048,097 - (425,631) 45,048,097 5,393,304 45,162 $ 83,084 5,438,466 11,989,388 1,141,093 (390,632) 24,250 12,764,099 62,627,885 4,913,319 (1,430,520) - 66,110,684 125,058,674 6,099,574 (1,821,152) 24,250 129,361,346 (17,196,857) (1,646,735) (3,456,239) (305,786) (8,284,603) (838,248) (40,388,769) (2,393,634) (69,326,468) (5,184,403) 55,732,206 915,171 $ 100,211,719 $ 2,663,311 356,517 1,413,743 1,770,260 (50,892) _L_(4,964,21 1) Accumulated Depreciation for: Buildings Equipment Collection and Distribution Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Ne' Business -Type Activities Capital Assets, Net COMPONENT UNIT Capital Assets, Not Being Depreciated: Land Capital Assets, Being Depreciated: Other Improvements (10,156,734) Beginning 3,246,667 (2,138,248) PRIMARY GOVERNMENT Balance Increases Decreases Business -Type Activities: (63,376,638) (4,705,727) 3,506,697 Capital Assets, Not Being Depreciated: 14,601,519 (425,631) $ 93,681,707 Land 1,526,407 $ 83,084 $ Intangible Assets - 9,804,951 Decreases Construction in Progress 13,745,714 3,841,023 (13,871,803) Total Capital Assets, Not Being Depreciated 15,272,121 13,729,058 (13,871,803) Capital Assets, Being Depreciated: . Buildings 19,525,901 8,381,453 (3,543,574) Equipment 4,408,461 6,458,744 (177,133) Collection and Distribution 117,851,862 4,467,049 (211,621) Total Capital Assets, Being Depreciated 141,786,224 19,307,246 (3,932,328) Accumulated Depreciation for: Buildings Equipment Collection and Distribution Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Ne' Business -Type Activities Capital Assets, Net COMPONENT UNIT Capital Assets, Not Being Depreciated: Land Capital Assets, Being Depreciated: Other Improvements (10,156,734) (609,368) 3,246,667 (2,138,248) (341,511) 155,309 (51,081,656) (3,754,848) 104,721 (63,376,638) (4,705,727) 3,506,697 78,409,586 14,601,519 (425,631) $ 93,681,707 $ 28,330,577 _L 14,297,434) Beginning Balance Increases Decreases $ 257,100 $ - $ 174,290 (18,843,592) (3,762,025) (24,250) (8,790,584) - (41,368,660) (24,250) (72,764,861) 56,596,485 $ $ 97,910,819 Ending Transfers Balance $ $ 1,609,491 9,804,951 3,714,934 15,129,376 - 24,363,780 (24,250) 10,665,822 122,107,290 (24,250) 157,136,892 (7,519,435) 24,250 (2,300,200) - (54,731,783) 24,250 (64,551,418) - 92,585,474 $ $ 107,714,850 Ending Transfers Balance $ - $ 257,100 174,290 Accumulated Depreciation for: Other Improvements (35,826) (11,619) (47,445) Total Capital Assets, Being Depreciated, Net 138,464 11,619 126,845 Component Unit Capital Assets, Net (52) NOTE 5 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to functions/programs of the primary government and component unit as follows: Governmental Activities: General Government $ 293,322 Public Safety 722,243 Public Works 3,021,695 Culture and Recreation 1,147,143 Total Depreciation Expense, Governmental Activities $ 5,184,403 Business -Type Activities: Electric $ 2,005,093 Water 1,148, 310 Sewer 983,689 Storm Water 447,535 Liquor 121,100 Total Depreciation Expense, Business -Type Activities $ 4,705,727 Component Unit Housing and Redevelopment Authority $ 11,619 NOTE 6 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The composition of interfund balances as of December 31, 2016 is as follows: Due to/from other funds Receivable Fund General General General Pavement ManagemoFunds Nonmajor Governm Sewer Sewer Garbage Storm Water Electric Electric Electric Electric Electric Water Water Pavable Fund Nonmajor Governmental Funds Electric Water Electric Nonmajor Governmental Funds Nonmajor Governmental Funds Electric Electric Electric General Pavement Management Sewer Garbage Storm Water General Nonmajor Governmental Funds Amount $ 11,923 174,290 23,596 266,738 1,541,748 171,800 165,493 111,086 37,932 5,780 2,172 509 1,060 895 439 428,850 $ 2,944,311 The interfund receivable/payable balances result from the distribution of utility collections and the lending/borrowing between funds for operating or capital purposes. (53) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 6 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED) Due to/from Component Unit Receivable Entity Payable Entity Amount Primary Government - General Fund Component Unit - HRA $ 8,202 Component Unit - HRA Nonmajor Governmental Funds 215,494 $ 223,696 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 $215,494 payable to the HRA will be paid with the collection of tax increment revenue and will not be repaid within one year. Interfund Transfers Fund Governmental Funds General Fund YMCA Bonds Nonmajor Governmental Funds Proprietary funds Municipal Liquor Sewer Garbage Storm Water Electric Water ddm Transfer In Transfer Out $ 1,769,750 $ 275,650 137,787 - 4,617,000 4,556,750 $ 6,524,537 $ 4,832,400 $ - $ 704,567 - 119,255 27,71645,000 - 61,744 - 1,089,287 300,000 - $ 327,716 $ 2,019,853 Interfund transfers are used 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. (54) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 7 LONG-TERM DEBT A. Components of Long -Term Debt The City had the following long-term liabilities outstanding at December 31, 2016: Description Issue Date PRIMARY GOVERNMENT 02/01/23 Governmental Activities: 2.00-4.00% General Obligation Bonds Payable: 6,975,000 EDA G.O. Bonds 2007D 11/08/07 G.O. Capital Improvement Bonds 2010A 04/21/10 G.O. Capital Improvement Bonds 2012A 03/15/12 EDA G.O. Refunding Bonds 2013A 02/12/13 G.O. Improvement Refunding Bonds 2012B 03/15/12 Total General Obligation Bonds 525,000 Unamortized Bond Premiums 02/01/35 Compensated Absences 2.00-3.00% Total Governmental Activities Business -Type Activities: General Obligation Revenue Bonds: G.O. Water Revenue Refunding Bonds 2008A 02/20/08 G.O. Capital Improvement Bonds 2010A 04/21/10 G.O. Sewer Revenue Bonds 2014B 08/21/14 Total General Obligation Revenue Bonds Revenue Bonds Final Maturity Balance - Date Original Issue Interest Rate End of Year 02/01/17 10,000,000 3.80% 02/01/23 6,105,000 2.00-4.00% 02/01/33 6,975,000 1.00-2.50% 02/01/33 9,685,000 2.00-3.00% 02/01/18 1,525,000 2.00% 02/01/22 $ 780,000 0.50-2.80% 08/01/23 525,000 3.00% 02/01/35 2,620,000 2.00-3.00% Electric Revenue Refunding Bonds 2014A 03/13/14 08/01/18 2,030,000 2.00-4.00% Electric Revenue Bonds 2016A 07/14/16 02/01/36 9,755,000 2.00-4.00% Electric Revenue Refunding Bonds 2016B -07/14/16 02/01/22 1,370,000 2.00-4.00% Total Revenue Bonds Total Bonds Unamortized Bond Premiums Notes Payable Compensated Absences Total Business -Type Activities $ 9,620,000 3,540,000 6,090,000 9,685,000 595,000 29,530,000 443,384 1.494.429 $ 31,467,813 $ 1,480,000 750,000 9,600,000 11,830,000 830,000 9,755,000 1,370,000 11,955,000 23,785,000 536,331 1,214,076 475,132 $ 26,010,539 For the governmental activities, bonds payable can be summarized in the following categories: The general obligation bonds were used to construct 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 bonds outstanding. The bonds are general obligations of the City and are backed by its full faith and credit. 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. 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 21 and 13 percent of revenues from the Sewer and Water funds, respectively. (55) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 7 LONG-TERM DEBT (CONTINUED) A. Components of Long -Term Debt (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 7 percent of revenues from the Electric fund. 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. B. Changes in Long -Term Debt Long-term liability activity for the year ended December 31, 2016 was as follows: Beginning PRIMARY GOVERNMENT of Year GOVERNMENTAL ACTIVITIES: General Obligation Bonds $ 32,320,000 General Obligation Special Assessment Bonds 900,000 Unamortized Bond Premiums 494,456 Total Bonds Payable 33,714,456 Contract for Deed 1,410,000 Compensated Absences 1,466,238 Total Governmental Activities 36,590,694 Business -Type Activities: 388,863 General Obligation Revenue Bonds;12,535,000 443,384 Revenue Bonds 2,985,000 Unamortized Bond Premiums <' 65,234 Total Bonds Payable 15,585,234 Notes Payable 1,408,368 Compensated Absences' r,,; 424,758 Total Business -Type Activities, ctivities 17,418,360 Total Primary Government $ 54,009,054 C. Future Minimum Debt Payments Annual debt service requirements to maturity for long-term obligations are as follows: Year Endina December 31. 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2033 Totals (56) Primary Government - Governmental Activities G.O. Bonds End of Due Within Additions Retirements Year One Year $ $ (3,385,000) $ 28,935,000 $ 10,375,000 1,315,000 (305,000) 595,000 300,000 388,863 (51,072) 443,384 - (3,741,072) 29,973,384 10,675,000 5,195,000 (1,410,000) - - 587,837 (559,646) 1,494,429 566,953 587,837 (5,710,718) 31,467,813 11,241,953 - (705,000) 11,830,000 725,000 11,125,000 (2,155,000) 11,955,000 630,000 505,525 (34,428) 536,331 - 11,630,525 (2,894,428) 24,321,331 1,355,000 (194,292) 1,214,076 195,216 194,008 (143,634) 475,132 228,214 11,824,533 (3,232,354) 26,010,539 1,778,430 $ 12,412,370 $ (8,943,072) $ 57,478,352 $ 13,020,383 Annual debt service requirements to maturity for long-term obligations are as follows: Year Endina December 31. 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2033 Totals (56) Primary Government - Governmental Activities G.O. Bonds G.O. Special Assessment Bonds Principal Interest Principal Interest $ 10,375,000 $ 686,092 $ 300,000 $ 8,900 1,280,000 460,863 295,000 2,950 1,315,000 425,412 - - 1,350,000 388,863 1,390,000 351,162 5,735,000 1,255,163 5,195,000 665,481 2,295,000 65,150 $ 28,935,000 $ 4,298,186 $ 595,000 $ 11,850 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 7 LONG-TERM DEBT (CONTINUED) C. Future Minimum Debt Payments (Continued) Year Ending December 31, 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2035 Totals NOTE 8 FUND BALANCES Primary Government - Business -Type Activities G.O. Revenue Bonds Revenue Bonds Notes Payable Principal Interest Principal Interest Principal Interest $ 725,000 $ 339,205 $ 630,000 $ 334,457 $ 195,216 $ - 750,000 320,103 640,000 307,425 198,252 - 760,000 299,795 635,000 286,375 200,916 - 785,000 278,803 665,000 264,925 203,952 - 810,000 256,875 680,000 242,675 206,616 - 2,850,000 1,011,640 2,720,000 934,750 209,124 - 2,670,000 645,298 2,810,000 618,056 - - 2,480,000 174,842 3,175,000 240,169 - - $ 11,830,000 $ 3,326,561 $ 11,955,000 $ 3,228,832 $ 1,214,076 $ - At December 31, 2016, a summary of the governmental fund balance classifications is as follows: Assigned for Landfill Mitigation 784,017 Other 1,956 Economic Development - - Pavement Governmental 1,802,898 Building Construction/Improvements - General Fund YMCA Bonds Management Funds Total Nonspendable 5,941,024 Park Improvements - 418,801 Prepaid Items $ 20,964 $: $ $ 108,176 $ 129,140 Restricted for: 11,111ii Debt Service 9,775,782 1,064,753 10,840,535 Landfill Mitigation - 351,577 351,577 Economic Development - 1,043,711 1,043,711 Law Enforcement - - 9,856 9,856 Total Restricted $ $ 9,775,782 $ $ 2,469,897 $ 12,245,679 Commited for: Library Operations - 428,065 428,065 Ice Arena 475,875 475,875 Economic DevelopmentJ 4,405,478 4,405,478 Insurance Reserve - 128,808 128,808 Street Improvements 3,811,788 - 3,811,788 Total Committed $ $ 3,811,788 $ 5,438,226 $ 9,250,014 Assigned for Landfill Mitigation 784,017 Law Enforcement 1,956 Economic Development - 552,473 Capital Equipment 266,832 1,802,898 Building Construction/Improvements - 1,966,631 Street Improvements 1,165,148 Other Improvement Projects 5,941,024 Park Improvements - 418,801 Total Assigned $ 266,832 $ $ $ 12,632,948 (57) 784,017 1,956 552,473 2,069,730 1,966,631 1,165,148 5,941,024 418,801 $ 12,899,780 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE A. Plan Description The City of Elk River participates in the following cost-sharing multiple -employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA's defined -benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined -benefit pension plans are tax qualified plans under Section 401 (a) of the Internal Revenue Code. 1. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). 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. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. 2. Public Employees Police and Fire Fund (PEPFF) The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided J^ W PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are given 1 % increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. (58) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE (CONTINUED) 1. GERF Benefits Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for 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% of average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability benefits are available for vested members and are based upon years of service and average high -five salary. 2. PEPFF Benefits AOF X Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after 10 years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after 10 years up to 100% after 20 years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For PEPFF who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. C. Contributions '40�x Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions Basic Plan members and Coordinated Plan members were required to contribute 9.1 % and 6.50%, respectively, of their annual covered salary in calendar year 2016. The City was required to contribute 11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2016. The City contributions to the GERF for the year ended December 31, 2016, were $690.811. The City contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2016. The City was required to contribute 16.20% of pay for PEPFF members in calendar year 2016. The City contributions to the PEPFF for the year ended December 31, 2016, were $495,478. The City contributions were equal to the required contributions as set by state statute. (59) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE (CONTINUED) D. Pension Costs 1. GERF Pension Costs At December 31, 2016, the City reported a liability of $11,651,488 for its proportionate share of the GERF's net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2015, through June 30, 2016, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2016, the City's proportion was .01435% For the year ended December 31, 2016, the City recognized pension expense of $1,270,976 for its proportionate share of the GERF's pension expense. At December 31, 2016, the City reported its proportionate share of the GERF's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: A total of $373,868 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter .E Pension Expense Amount $ 603,987 343,492 1,119, 042 420,866 Deferred Outflows Deferred Inflows Description of Resources of Resources Differences Between Expected and Actual Economic Experience $ 35,686 $ 960,323 Changes in Actuarial Assumptions 2,513,596 - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,313,966 - Changes in Proportion and Differences Between City Contributions and Proportionate Share of Contributions 124,523 540,061 City Contributions Subsequent to the Measurement Date 373,868 - Total $ 4,361,639 $ 1,500,384 A total of $373,868 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter .E Pension Expense Amount $ 603,987 343,492 1,119, 042 420,866 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE (CONTINUED) D. Pension Costs (Continued) 2. PEPFF Pension Costs At December 31, 2016, the City reported a liability of $12,280,312 for its proportionate share of the PEPFF's net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2015, through June 30, 2016, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2016, the City's proportion was .3060%. For the year ended December 31, 2016, the City recognized pension expense of $1,900,792 for its proportionate share of the PEPFF's pension expense. The City also recognized $27,540 for the year ended December 31, 2016, as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's on -behalf contributions to the PEPFF. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. < 1W At December 31, 2016, the City reported its proportionate share of the PEPFF's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Differences Between Expected and Actual Economic Experience Changes in Actuarial Assumptions Net Difference Between Projected and Actual Earnings on Pension Plan Investments Changes in Proportion and Differences Between City Contributions and Proportionate Share of Contributions City Contributions Subsequent to the Measurement Date Total Deferred Outflows Deferred Inflows of Resources of Resources 35,686 2,513,596 1,313,966 124,523 373,868 $ 41361,639 960,323 540,061 $ 1,500,384 A total of $284,459 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter W Pension Expense Amount $ 1,327,720 1,327,720 1,735,411 1,417,827 1,164,485 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE (CONTINUED) E. Actuarial Assumptions The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.70% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service -related table. Mortality rates for active members, retirees, survivors, and disabilitants were based on RP -2014 tables for males or females, as appropriate, with slight adjustments. Benefit increases for retirees are assumed to be 1 % per year for all future years for the General Employees Plan. Actuarial assumptions used in the June 30, 2016, valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the General Employees Plan was completed in 2015. The following changes in actuarial assumptions occurred in 2016 for the General Employees Fund: • The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter, to 1.0% per year for all future years. The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%. Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. The long-term expected rate of return on pension plan investments is 7.5%. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized below: Long -Term Target Expected Real Asset Class Allocation Rate of Return Domestic Equity 45% 5.50% International Equity 15% 6.00% Bonds 18% 1.45% Alternative Assets 20% 6.40% Cash 2% 0.50% Totals 100% (62) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 9 DEFINED BENEFIT PENSION PLANS —STATE-WIDE (CONTINUED) F. Discount Rate The discount rate used to measure the total pension liability was 7.5%, a reduction from the 7.9% used in 2015. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified in statute. Based on that assumption, each of the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: GERF PENSION LIABILITY 1% Decrease in 1% Increase in Discount Rate Current Discount Discount Rate Description (6.50%) Rate (7.50%) (8.50%) City's Proportionate Share of the GERF Net Pension Liability '....$ 13,135,065 $ 11,651,488 $ 6,046,327 PEPFF PENSION LIABILITY De City's Proportionate Share of the PEPFF Net Pension Liability H. Pension Plan Fiduciary Net Position 1 % Decrease in Discount Rate (4.60%) 17,190,808 Current Discount Rate (5.60°/x) 12,280,312 1% Increase in Discount Rate (6.60%) $ 8,268,065 Detailed information about each pension plan's fiduciary net position is available in a separately -issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org; by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling (651) 296-7460 or 1-800-652-9026. NOTE 10 DEFINED CONTRIBUTION PLAN Three 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. (63) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 10 DEFINED CONTRIBUTION PLAN (CONTINUED) 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 2016 were: Contribution Amount Percentage of Covered Payroll Required Employee Employer Employee Employer Rates $1,405 $1,405 5.0% 5.0% 5.0% NOTE 11 DEFINED BENEFIT PENSION PLANS— FIRE RELIEF ASSOCIATION A. Plan Description All members of the Elk River Fire Department (the Department) are covered by a defined benefit plan administered by the Elk River Fire Department Relief Association (the Association). As of December 31, 2014, the plan covered 40 active fire fighters and 5 vested terminated firefighters whose pension benefits are deferred. The plan is a single employer retirement plan and is established and administered in accordance with Minnesota statute, chapter 69. The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the Department's membership. Funding for the Association is derived from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (chapter261 as amended by chapter509 of Minnesota statutes 1980). Funds are also derived from investment income. B. Benefits Provided A fire fighter who completes at least 20 years as an active member of the Department is entitled, after age 50, to a full service pension upon retirement. The bylaws of the Association also provide for an early vested service pension for a retiring member who has completed fewer than 20 years of service. The reduced pension, available to members with a minimum of 5 years of service, shall be equal to 40 percent of the pension as prescribed by the bylaws. This percentage increases 4 percent per year so that at 20 years of service, the full amount prescribed is paid. Members who retire with less than 20 years of service and have reached the age of 50 years and have completed at least 5 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. (64) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 11 DEFINED BENEFIT PENSION PLANS— FIRE RELIEF ASSOCIATION (CONTINUED) C. Contributions Minnesota statutes, chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes and voluntary City contributions (if applicable).The State of Minnesota contributed $179,192 in fire state aid to the plan on behalf of the City Fire Department for the year ended December 31, 2016, which was recorded as a revenue. Required employer contributions are calculated annually based on statutory provisions. The City's statutorily -required contribution to the plan for the year ended December 31, 2016 was $0 but the City voluntarily contributed $30,000. D. Pension Costs At December 31, 2016, the City reported a net pension asset of $480,918 for the plan. The net pension liability (asset) was measured as of December 31, 2015. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB 68 was determined by Van Iwaarden Associates applying an actuarial formula to specific census data certified by the Department as of December 31, 2015. For the year ended December 31, 2016, the City recognized pension expense of $176,635. At December 31, 2016, the City reported deferred outflows of resources, including its contributions subsequent to the measurement date, related to pension from the following sources: Description Changes in Actuarial Assumptions Net Difference Between Projected and Actual Earnings on Pension Plan Investments City Contributions Subsequent to the Measurement Date Total Deferred Outflows Deferred Inflows of Resources of Resources $ 258,790 $ - 286,845 - 204,826 - $ 750,461 $ - Deferred outflows of resources totaling $204,826 related to pensions resulting from the City's contributions to the plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized in pension expense as follows: Year Endinq December 31, 2017 2018 2019 2020 2021 Thereafter (65) Pension Expense Amount $ 113,343 113,343 113,343 102,480 38,916 64,210 CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 11 DEFINED BENEFIT PENSION PLANS— FIRE RELIEF ASSOCIATION (CONTINUED) E. Actuarial Assumptions The total pension liability at December 31, 2015 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Retirement Eligibility Age 50 or After 20 Years of Service If both Age 50 and Minimum 5 Year of Service but not 20 Years, Pension Reduced 4% for Each Year Less Than 20 Years Inflation 2.75% per year Active Member Payroll Growth 2.75% per year Investment Rate of Return 6.00% 20 -Year Municipal Bond Yield 3.57% The 6.0 percent long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimates for expected future real rates of return (expected returns, net of inflation) were developed for each asset class using the plan's target investment allocation along with long-term return expectations by asset class. Inflation expectations were applied to derive the nominal rate of return for the portfolio. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: F. Discount Rate The discount rate used to measure the total pension liability was 6.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Allocation at Long -Term _ Measurement Expected Real Asset Class Date Rate of Return Domestic Equity 42.44% 5.52% International Equity 15.88% 5.78% Fixed Income ff 25.80% 2.12% Real Estate and Alternatives'. 1.68% 4.12% Cash and Equivalents 14.20% 0.82% Totals 100% F. Discount Rate The discount rate used to measure the total pension liability was 6.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 11 DEFINED BENEFIT PENSION PLANS— FIRE RELIEF ASSOCIATION (CONTINUED) G. Pension Liability Sensitivity The following presents the City's net pension liability (asset) for the plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's net pension liability (asset) would be if it were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate: 1% Decrease in 1% Increase in Discount Rate Current Discount Discount Rate Description (5.00%) Rate (6.00%) (7.00%) Defined Benefit Plan H. Pension Plan Fiduciary Net Position (440,925) $ (480,918) $ (519,843) The Association issues a publicly available financial report. The report may be obtained by writing to the Elk River Fire Department Relief Association, 13073 Orono Parkway, Elk River, MN 55330. Joe NOTE 12 POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS A. Plan Description 1W_ Ar __. 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 the 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. (67) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 12 POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) C. Annual OPEB Cost and Net OPEB Obligation (Continued) 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: Municipal Utility Retiree Retiree Health Plan Health Plan Annual Required Contribution $ 125,720 $ 11,682 Interest on Net OPEB Obligation 17,370 2,522 Adjustment to Annual Required Contribution (25,899) (3,645) Annual OPEB Cost (Expense) 117,191 10,559 Contributions Made (56,583) (3,055) Increase in Net OPEB Obligation 60,608 7,504 Net OPEB Obligation - Beginning of Year 434,250 63,041 Net OPEB Obligation - End of Year $ 494,858 $ 70,545 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 Annual of Annual Net OPEB OPEB Cost OPEB Fiscal Year Ended Cost Contributed Obligation MRHP December 31, 2016 December 31, 2015 December 31, 2014 URHP December 31, 2016 December 31, 2015 December 31, 2014 117,191 48.3% 118,780 41.0% 120,448 33.0% 10,559 28.9% 10,260 21.0% 9,890 0.0% 494,858 434,250 364,110 70,545 63,041 54,932 D. 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. 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. in CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 12 POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) D. Actuarial Methods and Assumptions (Continued) The remaining amortization period at December 31, 2015 was over no more than 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, 2015 was thirty years. BE CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 13 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 receiving electric service from Anoka Electric Cooperative, Inc. (AEC). In 2010 the Utility completed the final purchase under this agreement. The agreed cost of property purchased from AEC is net book value. The Utilities also pays AEC for loss of revenue for each area acquired based on a formula outlined in the agreement. In addition, the Utilities will compensate AEC for the loss of revenue from the future sale of electricity to electric customers in the areas acquired from AEC for a period of ten years from the date of sale of each individual area. The Utilities paid $214 in 2016 for loss of revenues under this agreement. All amounts paid are included in property and equipment. (70) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 13 OTHER INFORMATION (CONTINUED) D. Territorial Acquisition Agreement (Continued) In 2015, the Utilities entered into a 10 year agreement to transfer ownership of electric plant and electric service to customers in eight designated areas receiving service from Connexus Energy. Specific payment terms have been negotiated for 5 years, and if any of the eight areas are not acquired within this timeframe, the payment terms may be renegotiated. The agreed cost of property purchased from Connexus Energy is net book value, integration expenses, and a loss of revenue payment. The loss of revenue payment for each area acquired is based on a formula outlined in the agreement, payable for the subsequent ten years after initial purchase. The Utilities acquired the first of the designated service areas 1 and 2 in 2015 and 2016, respectively, for $877,807 and $663,583. The first loss of revenue payment will be made in 2017 for $411,157. All amounts paid are included in property and equipment. E. 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, 2016, there were five series of revenue bonds outstanding, with an aggregate principal payable amount of $12,508,407. F. Commitments AONX 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, 345 kV AC transmission line with a rating of 2,300 MW, between Brookings, South Dakota, and the Southeast 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 18.89 percent. The return on this investment through CMMPA is designed to provide approximately $124,000 annually over the 40 year project life. The transmission payments for 2016 were $51,478 of which $7,141 was receivable at December 31, 2016. (71) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 13 OTHER INFORMATION (CONTINUED) G. Joint Ventures The City has agreements with government and other entities which provide reduced costs, better service and additional benefits to the participants. In 2007, the City and neighboring municipalities formed the Sherburne/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: Sherburne/Wright Cable Communications Commission at 444 Cedar St, Suite 950, St. Paul, MN 55101. H. Segment Information The City maintains six enterprise funds that account for the municipal liquor operations, garbage collections, and sewer, storm water, 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. NOTE 14 TAX ABATEMENTS t%�N The City of Elk River has established a tax abatement program pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815. As part of the City's program the City enters into agreements through the use of tax increment financing districts under Minnesota Statutes Section 469.174 to 469.179 (the Tax Increment Act). Under these statutes the City annually abates taxes collected above the district's base tax capacity which is established during adoption of the tax increment district. These agreements are established to foster economic development and redevelopment through creating jobs, removing blight and providing affordable housing. For fiscal year ending December 31, 2016, the City has two agreements established under Minnesota Statutes Section 469.174 to 469.179 which resulted in property taxes totaling $260,375 being abated. Individual abatement payments which constituted more than 1% of the City's 2016 tax levy include: • A pay-as-you-go note resulting in an abatement amount of $139,837, for a financial institution. As part of the City's tax abatement program, the City also enters into agreements with local businesses in the form of business subsidy agreements established under Minnesota Statutes Section 116J.993 through 116J.995. These agreements must meet a public purpose which may include, but may not be limited to, increasing the tax base. (72) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDING DECEMBER 31, 2016 NOTE 14 TAX ABATEMENTS (CONTINUED) In 2016 the City of Elk River had seven business subsidy agreements in place which resulted in property taxes totaling $143,788 being abated. Individual agreements which result in taxes abated in excess of 1% of the City's total tax levy would be disclosed individually. There were no such payments made in 2016 in excess of this amount. (73) REQUIRED SUPPLEMENTARY INFORMATION CITY OF ELK RIVER SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFIT PLAN DECEMBER 31, 2016 Municipal Retiree Health Plan Actuarial Valuation Date 1/1/2014 1/1/2011 1/1/2008 Utilities Retiree Health Plan Actuarial Actuarial UAAL as a UAAL as a Accrued Actuarial Accrued Percentage Value of Percentage Actuarial Value of Liability Unfunded Funded Covered of Covered Valuation Assets (AAL) AAL Ratio Payroll Payroll Date (a) (b) (b -a) (a/b) (c ) ((b-a)/c) 1/1/2014 $ - $ 996,344 $ 996,344 - $ 7,442,216 13.39% 1/1/2011 - 908,610 908,610 - 6,901,671 13.17% 1/1/2008 - 88,718 88,718 - 4,095,000 2.17% Actuarial Valuation Date 1/1/2014 1/1/2011 1/1/2008 Utilities Retiree Health Plan (74) Actuarial UAAL as a Actuarial Accrued Percentage Value of Liability Unfunded Funded Covered of Covered Assets (AAL) AAL Ratio Payroll Payroll (a) (b) (b -a) (a/b) (c ) ((b-a)/c) $ - $ 68,948 $ 68,948 - $ 2,810,413 2.45% - 42,681 42,681 - 2,286,547 1.87% - 56,892 56,892 - 2,300,000 2.47% (74) CITY OF ELK RIVER PERA SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY DECEMBER 31, 2016 GERF Schedule of the City's Proportionate Share of the Net Pension Liability Last Three Fiscal Years" Measurement Measurement Date 6/30/2016 Date 6/30/2015 City's Proportion of the Net Pension Liability 0.1435% City's Proportionate Share of the Net Pension Liability $ 11,651,488 City's Covered -Employee Payroll $ 8,902,000 City's Proportionate Share of the Net Pension Liability as a Percentage of Its Covered -Employee Payroll 130.89% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.90% The Amounts Presented for Each Fiscal Year were Determined as of 6/30. PEPFF Schedule of the City's Proportionate Share of the Net Pension Liability4e "0# N Last Three Fiscal Years" City's Proportion of the Net Pension Liability City's Proportionate Share of the Net Pension Liability City's Covered -Employee Payroll City's Proportionate Share of the Net Pension Liability as a Percentage of Its Covered -Employee Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability The Amounts Presented for Each Fiscal Year were Determined as of 6/30. (75) Measurement Date 6/30/2016 0.3060% $ 12,280,312 $ 2,952,673 415.90% 63.90% 0.1438% 7,452,462 8,712,032 85.54% 78.20% Measurement Date 6/30/2015 0.3040% 3,454,151 2,788,952 123.85% 86.60% Measurement Date 6/30/2014 15.8700% 7,454,930 8,332,262 89.47% 78.70% Measurement Date 6/30/2014 0.2990% 3,229,323 2,440,932 132.30% 87.10% CITY OF ELK RIVER PERA SCHEDULE OF CITY CONTRIBUTIONS DECEMBER 31, 2016 GERF Schedule of City Contributions Last Three Fiscal Years Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contribution Contribution Deficiency (Excess) City's Covered -Employee Payroll Contributions as a Percentage of Covered Employee Payroll * The Amounts Presented for Each Fiscal Year were Determined as of 12/31 PEPFF Schedule of City Contributions Last Three Fiscal Years* Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contributio Contribution Deficiency (Excess) City's Covered -Employee Payroll Contributions as a Percentage of Covered Employee Payroll * The Amounts Presented for Each Fiscal Year were Determined as of 12/31. (76) 2016 2015 2014 $ 690,811 $ 668,633 $ 615,331 (690,811) (668,633) (615,331) $ - $ - $ - $ 9,210,813 7.50% 2016 $ 8,915,107 $ 8,487,324 7.50% 7.25% 2015 2014 $ 495,478 $ 478,192 $ 418,280 (495,478) (478,192) (418,280) $ 3,058,506 $ 2,951,802 $ 2,581,975 16.20% 16.20% 16.20% CITY OF ELK RIVER SCHEDULE OF CITY CONTRIBUTIONS ELK RIVER FIRE RELIEF LAST TEN YEARS DECEMBER 31, 2016 2016 2015 2014 2013 2012 Statutorily Required Contribution $ 179,192 $ 174,826 $ 164,825 $ 167,103 Contributions in Relation to the Statutorily Required Contribution 209,192 204,826 194,825 197,103 Contribution Deficiency (Excess) $ (30,000) $ (30,000) $ (30,000) $ (30,000) $ - Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contribution Contribution Deficiency (Excess) 2011 2010 $ $ - (77) 13nnn 13nn4 13nn-Y COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 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. (77) CITY OF ELK RIVER COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2016 Special Debt Capital Revenue Service Projects Totals ASSETS Cash and Investments $ 4,708,173 $ 1,040,742 $ 10,849,458 $ 16,598,373 Receivables: Accrued Interest 16,329 4,479 48,387 69,195 Delinquent Taxes 31,733 21,396 461 53,590 Special Assessments - 115,444 840,135 955,579 Other Accounts Receivable 184,284 - 180,526 364,810 Notes Receivable, Net 2,186,175 - - 2,186,175 Due from Other Governmental Units 1,794 - 3,905 5,699 Due from Other Funds 971,525 - 570,223 1,541,748 Prepaid Items 108,176 - - 108,176 Land Held for Resale 187,060 - - 187,060 Total Assets $ 8,395,249 $ 1,182,061 $ 12,493,095 $ 22,070,405 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts and Contracts Payable $ 74,129 $ 1,300 $ 122,705 $ 198,134 Accrued Salaries Payable 9,429 - - 9,429 Due to Other Governments 1,486 - - 1,486 Due to Other Funds 15,123 - 2,139,198 2,154,321 Due to Component Unit - - 215,494 215,494 Unearned Revenue - - 568,062 568,062 Total Liabilities 100,167 1,300 3,045,459 3,146,926 DEFERRED INFLOWS OF RESOURCESh Unavailable Revenue - Taxes 5,090 3,603 231 8,924 Unavailable Revenue - Special Assessments - 112,405 813,167 925,572 Total Deferred Inflows of Resources 5,090 116,008 813,398 934,496 111ill 1III -1_11_1ill [a]t Nonspendable 108,176 - - 108,176 Restricted 1,405,144 1,064,753 - 2,469,897 Committed 5,438,226 - - 5,438,226 Assigned 1,338,446 - 11,294,502 12,632,948 Unassigned - - (2,660,264) (2,660,264) Total Fund Balance 8,289,992 1,064,753 8,634,238 17,988,983 Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 8,395,249 $ 1,182,061 $ 12,493,095 $ 22,070,405 (78) CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2016 REVENUE Property Taxes Special Assessments Intergovernmental Revenue Charges for Services Fines and Forfeits Other Revenue: Landfill Expansion Fee Investment Earnings Refunds and Reimbursements Contributions Miscellaneous Revenue Total Revenue EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Economic Development Capital Outlay General Government Public Safety Public Works Culture and Recreation Debt Service Principal Retirement Interest and Fiscal Charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Special Debt Capital Revenue Service Projects Totals $ 545,902 $ 364,466 $ 270,374 $ 1,180,742 - 135,447 321,219 456,666 8,207 - 488,210 496,417 795,975 - 132,955 928,930 11,560 - - 11,560 - - 1,220,232 1,220,232 47,180 10,770 69,095 127,045 190,971 - 410,000 600,971 5,435 - 349,573 355,008 38,960 - 16,556 55,516 1,644,190 510,683 3,278,214 5,433,087 194,496 - 153,760 348,256 13,803 op - 160,079 173,882 34,243 - 51,858 86,101 703,933 - 306,239 1,010,172 750,227 - 198,978 949,205 - 37,982 37,982 - - 266,490 266,490 - - 831,402 831,402 - 524,636 524,636 3,310,000 1,410,000 4,720,000 344,615 174,229 518,844 1,696,702 3,654,615 4,115,653 9,466,970 (52,512) (3,143,932) (837,439) (4,033,883) Transfers In 28,350 3,170,860 1,417,790 4,617,000 Transfers Out (317,903) - (4,238,847) (4,556,750) Proceeds form Sale of Capital Assets 27,600 - 52,987 80,587 Total Other Finance Sources (Uses) (261,953) 3,170,860 (2,768,070) 140,837 NET CHANGE IN FUND BALANCES (314,465) 26,928 (3,605,509) (3,893,046) FUND BALANCES Beginning of Year 8,604,457 1,037,825 12,239,747 21,882,029 End of Year $ 8,289,992 $ 1,064,753 $ 8,634,238 $ 17,988,983 (79) 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. Landfill - This fund was established to segregate solid waste surcharge revenues to be used for landfill abatement and other environmental issues. Revolving 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. 0% V, 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. Drug 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 Authority - This fund was established to account for a special tax levy authorized to help encourage development in the City. HE CITY OF ELK RIVER COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS YEAR ENDED DECEMBER 31, 2016 Revolving Federal Library Ice Arena Landfill Loan DEED Loan ASSETS Cash and Investments $ 427,195 $ 342,748 $ 1,132,052 $ 575,187 $ Receivables Accrued Interest 1,838 1,475 5,117 2,538 Delinquent Taxes 3,407 - - - Other Accounts Receivable - 172,391 - Notes Receivable, Net - 596,074 Due from Other Governments - - Due from Other Funds 3,200 Prepaid Items - Land Held for Resale - - - Total Assets $ 432,440 $ 519,814 $ 1,137,169 $ 1,173,799 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts and Contracts Payable $ 3,840 $ 35,107 $ 1,436 $ $ Accrued Salaries Payable - 7,346 139 Due to Other Governments 1,486 - Due to Other Funds - - - Total Liabiltiies 3,840 43,939 1,575 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Taxes 53 - FUND BALANCE Nonspendable - - Restricted - - 351,577 Committed 428,065 475,875 - 1,173,799 Assigned - 784,017 - Total Fund Balance 428,065 475,875 1,135,594 173,799 Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 432,440 $ 519,814 $ 1,137,169 $ 1,173,799 $ (81) CITY OF ELK RIVER COMBINING BALANCE SHEET (CONTINUED) NONMAJOR SPECIAL REVENUE FUNDS YEAR ENDED DECEMBER 31, 2016 (82) Development Insurance Drug State DEED Fund Reserve Forfeiture YMCA Grant EDA Totals $ 116,940 $ 958,726 $ 127,561 $ 12,043 $ - $ 1,015,721 $ 4,708,173 516 4,230 563 52 - - 16,329 - 8,622 - - - 19,704 31,733 - - 11,176 - - 717 184,284 301,512 1,288,589 - - - - 2,186,175 - - - 76 - 1,718 1,794 - 968,325 - - - - 971,525 - - 108,176 - - - 108,176 - 12,060 - - - 175,000 187,060 $ 418,968 $ 3,240,552 $ 247,476 $ 12,171 $ - $ 1,212,860 $ 8,395,249 $ - $ 7,191 $ 10,492 $ 359 - $ 15,704 $ 74,129 - - - - 1,944 9,429 - - - - - - 1,486 - - - - - 15,123 15,123 - 7,191 10,492 359' - 32,771 100,167 - 1,682 - - 2,873 5,090 - - 108,176 - - - 108,176 418,968 - 9,856 - 624,743 1,405,144 - 3,231,679 128,808 - - - 5,438,226 - - - 1,956 - 552,473 1,338,446 418,968 3,231,679 236,984 11,812 - 1,177,216 8,289,992 $ 418,968 $ 3,240,552 $ 247,476 $ 12,171 $ - $ 1,212,860 $ 8,395,249 (82) CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS YEAR ENDED DECEMBER 31, 2016 (83) Revolving Federal Library Ice Arena Landfill Loan DEED Loan REVENUE Property Taxes $ 59,132 $ $ - $ $ Intergovernmental Revenue - 8,012 Charges for Services 769,720 11,255 3,000 Fines and Forfeits - - - - Other Revenue: Investment Earnings 7,004 6,204 4,765 7,122 Refunds and Reimbursements - - - - Contributions 5,435 - Miscellaneous Revenue - 18,243 - 10,644 Total Revenue 66,136 799,602 24,032 20,766 EXPENDITURES Current General Government - - - - Public Safety - Public Works - - 34,243 Culture and Recreation 82,199 621,734 - - Economic Development - - - 85,120 200,000 Total Expenditures 82,199 621,734 34,243 85,120 200,000 EXCESS (DEFICIENCY) OF REVENUE OVER Or (UNDER) EXPENDITURES (16,063) 177,868 (10,211) (64,354) (200,000) OTHER FINANCE SOURCES (USES) Transfers In 28,350 - Transfers Out - - (82,716) Proceed from Sale of Capital Assets = 27,600 Total Other Finance Sources (Uses) 28,350: 27,600 (82,716) NET CHANGE IN FUND BALANCES 12,287 " 205,468 (92,927) (64,354) (200,000) FUND BALANCES Beginning of Year 415,778 270,407 1,228,521 1,238,153 200,000 End of Year $ 428,065 $ 475,875 $ 1,135,594 $ 1,173,799 $ (83) (84) CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) NONMAJOR SPECIAL REVENUE FUNDS YEAR ENDED DECEMBER 31, 2016 Development Insurance Drug State DEED Fund Reserve Forfeiture YMCA Grant EDA Totals $ - $ 144,196 $ - $ - $ - $ 342,574 $ 545,902 - - - - - 195 8,207 - 12,000 - - - - 795,975 - - - 11,560 - - 11,560 - 16,142 1,773 231 519 3,420 47,180 - 45,509 145,462 - - - 190,971 - - - - - - 5,435 6,240 - - - - 3,833 38,960 6,240 217,847 147,235 11,791 519 350,022 1,644,190 - - 194,496 - - - 194,496 - - - 13,803 - - 13,803 - - - - - - 34,243 - - - - - - 703,933 - 142,037 - - - 323,070 750,227 - 142,037 194,496 13,803 - 323,070 1,696,702 6,240 75,810 (47,261) 012 519 26,952 (52,512) - - - - - - 28,350 - (62,600) - - (137,787) (34,800) (317,903) - - - - - 27,600 - (62,600) - (137,787) (34,800) (261,953) 6,240 13,210 (47,261) (2,012) (137,268) (7,848) (314,465) 412,728 3,218,469 284,245 13,824 137,268 1,185,064 8,604,457 $ 418,968 $ 3,231,679 $ 236,984 $ 11,812 $ - $ 1,177,216 $ 8,289,992 (84) CITY OF ELK RIVER SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - LIBRARY SPECIAL REVENUE FUND YEAR ENDED DECEMBER 31, 2016 Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers In NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year 110,750 110,750 82,199 (28,551) (47,350) (47,350) (16,063) 31,287 28,350 28,350 28,350 S (19.000) $ (19,000) 12,287 415,778 $ 428,065 (85) $ 31,287 Budgeted Amounts Over (Under) Original Final Actual Final Budget REVENUE Property Taxes $ 59,400 $ 59,400 $ 59,132 $ (268) Investment Earnings 4,000 4,000 7,004 3,004 Total Revenue 63,400 63,400 66,136 2,736 EXPENDITURES Current Culture and Recreation: 91,750 91,750 82,199 (9,551) Capital Outlay Culture and Recreation: 19,000 19,000 - (19,000) Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers In NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year 110,750 110,750 82,199 (28,551) (47,350) (47,350) (16,063) 31,287 28,350 28,350 28,350 S (19.000) $ (19,000) 12,287 415,778 $ 428,065 (85) $ 31,287 CITY OF ELK RIVER SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ICE ARENA SPECIAL REVENUE FUND YEAR ENDED DECEMBER 31, 2016 NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year 5 $(163,950) $ (163,950) (86) 205,468 $ 369,418 270,407 $ 475,875 Budgeted Amounts Over (Under) Original Final Actual Final Budget REVENUE Charges for Services $ 762,350 $ 762,350 $ 769,720 $ 7,370 Investment Earnings 2,500 2,500 6,204 3,704 Contributions 6,700 6,700 5,435 (1,265) Miscellaneous Revenue 19,200 19,200 18,243 (957) Total Revenue 790,750 790,750 799,602 8,852 EXPENDITURES Current Culture and Recreation: 698,350 698,350 621,734 (76,616) Capital Outlay Culture and Recreation: 256,350 256,350 - (256,350) Total Expenditures 954,700 954,700 621,734 (332,966) EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (163,95 (163,950) 177,868 341,818 OTHER FINANCE SOURCES (USES) Proceeds from Sale of Capital Assets - 27,600 27,600 NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year 5 $(163,950) $ (163,950) (86) 205,468 $ 369,418 270,407 $ 475,875 CITY OF ELK RIVER SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - LANDFILL SPECIAL REVENUE FUND YEAR ENDED DECEMBER 31, 2016 REVENUE Intergovernmental Revenue Charges for Services Investment Earnings Total Revenue EXPENDITURES Current Public Works EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers Out NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year Budgeted Amounts Over (Under) Original Final Actual Final Budget $ 8,200 $ 8,200 $ 8,012 $ (188) 11,000 11,000 11,255 255 8,500 8,500 4,765 (3,735) 27,700 27,700 24,032 (3,668) 31,050 31,050 34,243 3,193 (3,350) (3,350) (10,211) (6,861) (73,600) (73,600) (82,716) (9,116) $ (76,950) $ (76,950) NZ (87) (92,927) $ (15,977) 1,228,521 $ 1,135,594 CITY OF ELK RIVER SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ECONOMIC DEVELOPMENT AUTHORITY SPECIAL REVENUE FUND YEAR ENDED DECEMBER 31, 2016 REVENUE Property Taxes Intergovernmental Revenue Investment Earnings Miscellaneous Revenue Total Revenue EXPENDITURES Current Economic Development EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers Out NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year Budgeted Amounts Original Final Actual Over (Under) Final Budget $ 360,100 $ 360,100 $ 342,574 $ - - 195 4,500 4,500 3,420 3,500 3,500 3,833 _ 368,100 368,100 350,022 (17,526) 195 (1,080) LIZxW ' A 255,850 255,850 323,070 67,220 112,250 112,250 26,952 (85,298) (34,800) (34,800) (34,800) - $ 77,450 $ 77,450 (88) (7,848) $ (85,298) 1,185, 064 $ 1,177,216 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. EM CITY OF ELK RIVER COMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS YEAR ENDED DECEMBER 31, 2016 ASSETS Cash and Investments Receivables Accrued Interest Delinquent Taxes Special Assessments Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts and Contracts Payable DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Taxes Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources Government Improvement Building Bonds Bonds Totals $ 241,161 $ 799,581 $ 1,040,742 1,038 321 115,444 $ 357,964 $ 44 - 310:1 112,405 112,715 3,441 21,075 $ 824,097 4,479 21,396 115,444 $ 1,182,061 $ 1,300 $ 1,300 3,293 3,603 112,405 3,293 116,008 FUND BALANCE Restricted 245,249 819,504 1,064,753 Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 357,964 $ 824,097 $ 1,182,061 W CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS YEAR ENDED DECEMBER 31, 2016 REVENUE Property Taxes Special Assessments Other Revenue: Investment Earnings Total Revenue EXPENDITURES Debt Service Principal Retirement Interest and Fiscal Charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers In NET CHANGE IN FUND BALANCES Government Improvement Building Bonds Bonds Totals $ 108 $ 364,358 $ 364,466 135,447 - 135,447 2,658 8,112 10,770 138,213 372,470 510,683 305,000 3,005,000 3,310,000 15,400 329,215 344,615 320,400 3,334,215 3,654,615 AM (182,187) (2,961,745) (3,143,932) AV 177,233 2,993,627 3,170,860 (4,954) 31,882 26,928 FUND BALANCES Beginning of Year 250,203 787,622 1,037,825 End of Year $ 245,249 $ 819,504 $ 1,064,753 W NONMAJOR CAPITAL PROJECTS FUNDS Park Dedication - This fund accounts for park dedication fees from developers and expenditures for park land acquisitions and park capital improvements. Capital Reserve - This fund was established to help build reserves for the purchase of capital equipment. 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. Street Improvements - This fund is used to account for the construction of street improvement projects throughout the City. 40017 Improvement Projects - This fund is used to account for the construction of various improvements within the City. Equipment Replacement - This fund is used to account for the purchase of capital equipment. Park Improvements - This fund was established to account for the replacement and maintenance of park equipment and for the beautification of City parks. TIF Districts — This fund is used to account for administrative and development costs associated with the various tax increment financing projects. (92) CITY OF ELK RIVER COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS YEAR ENDED DECEMBER 31, 2016 ASSETS Cash and Investments Receivables Accrued Interest Delinquent Taxes Special Assessments Other Accounts Receivable Due from Other Governments Due from Other Funds Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts and Contracts Payable Due to Other Funds Due to Component Unit Unearned Revenue Total Liabiltiies DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Taxes Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources FUND BALANCE Restricted Assigned Unassigned Total Fund Balance -- Total Liabilities, Deferred Inflows of Resources, and Fund Balanc Park Capital Outlay Government GRE Dedication Reserve Buildings Reserve $ 7,307 $ 836,442 $ 1,787,088 $ 1,728,546 - 3,766 7,885 7,865 - 1,806 - - - 310 175,816 - - 3,905 - - - - - 570,223 $ 7,307 $ 846,229 $ 1,970,789 $ 2,306,634 $ 50,411 20,069 $ 4,158 $ - 570,223 - - - 568,062 - - - 1,188,696 20,069 4,158 - 1,329 - - 1,329 - - - 824,831 1,966,631 2,306,634 (1,181,389) - - - (1,181,389) 824,831 1,966,631 2,306,634 $ 7,307 $ 846,229 $ 1,970,789 $ 2,306,634 (93) CITY OF ELK RIVER COMBINING BALANCE SHEET (CONTINUED) NONMAJOR CAPITAL PROJECT FUNDS YEAR ENDED DECEMBER 31, 2016 Street Improvement Equipment Park Improvements Projects Replacement Improvements TIF Districts Totals $ 1,156,574 $ 3,898,347 $ 1,003,158 $ 430,802 $ 1,194 $ 10,849,458 5,406 17,200 4,411 1,854 - 48,387 441 - 20 - - 461 308,243 530,086 - - - 840,135 - - - - 4,400 180,526 - - - - - 3,905 - - - - - 570,223 $ 1,470,664 $ 4,445,633 $ 1,007,589 $ 432,656 $ 5,594 $ 12,493,095 $ 4,690 4,690 300,000 300,000 231 - 300,595 511,243 300,826 511,243 $ 29,522 $ 1 $ - $ 122,705 1,268,975 2,139,198 215,494 215,494 - 568,062 ,855 1,484,469 3,045,459 1,165,148 3,634,390 978,067 418,801 1,165,148 3,634,390 978,067 418,801 $ 1,470,664 $ 4,445,633 $ 1,007,589 $ 432,656 (94) - 231 - 813,167 - 813,398 11,294,502 (1,478,875) (2,660,264) (1,478,875) 8,634,238 $ 5,594 $ 12,493,095 CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL FUNDS YEAR ENDED DECEMBER 31, 2016 REVENUE Property Taxes Special Assessments Intergovernmental Revenue Charges for Services Other Revenue: Landfill Expansion Fee Investment Earnings Refunds and Reimbursements Contributions Miscellaneous Revenue Total Revenue EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Economic Development Capital Outlay General Government Public Safety Public Works Culture and Recreation Debt Service Principal Retirement Interest and Fiscal Charges Park Capital Outlay Government GRE Dedication Reserve Buildings Reserve - 7,113 - - 10,000 42,250 10,000 - 117,274 2,600 - - - - 1,220,232 - 460 3,977 17,198 17,723 410,000 - - - - 136,203 - 203,170 - 1,680 - - 537,734 193,823 1,247,430 220,893 - 135,689 18,071 - 81,668 22,755 28,170 23,688 56 112 - 51,861 - 37,982 - - 28,804 30,333 350,833 - - 1,410,000 - - 158,540 - - Total Expenditures _ 2,015,485 312,313 146,708 - EXCESS (DEFICIENCY) OF REVENUE OVER' (UNDER) EXPENDITURES (1,477,751) (118,490) 1,100,722 220,893 OTHER FINANCE SOURCES (USES) Transfers In 786,036 - - - Transfers Out - (30,050) (2,993,627) (669,261) Proceeds from Sale of Capital Assets - - - - Total Other Finance Sources (Uses) 786,036 (30,050) (2,993,627) (669,261) NET CHANGE IN FUND BALANCE (691,715) (148,540) (1,892,905) (448,368) FUND BALANCES Beginning of Year (489,674) 973,371 3,859,536 2,755,002 End of Year $ (1,181,389) $ 824,831 $ 1,966,631 $ 2,306,634 (95) CITY OF ELK RIVER COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) NONMAJOR CAPITAL FUNDS YEAR ENDED DECEMBER 31, 2016 Street Improvement Equipment Park Improvements Projects Replacement Improvement TIF Districts Totals $ 4,241 $ - $ 131 $ - $ 266,002 $ 270,374 134,601 179,505 - - - 321,219 160,000 - 265,960 - - 488,210 - - - 13,081 - 132,955 - - - - - 1,220,232 14,109 8,467 - 7,161 - 69,095 - - - - - 410,000 - - - 10,200 - 349,573 - - 5,000 - 9,876 16,556 312,957 187,972 271,091 30,442 275,878 3,278,214 - - - - - 153,760 - - 55,656- - 160,079 - - - - - 51,858 - - - 198,2 - 306,239 - - - - 998,978 198,978 - - - - 37,982 - - 207,353 - 266,490 780,607 - 50,795 - - 831,402 - - 88,641 - 524,636 - - - - - 1,410,000 - - - - 15,689 174,229 780,607 - 402,445 243,428 214,667 4,115,653 (467,656) 187,972 (131,354) (212,986) 61,211 (837,439) - - 366,137 265,617 - 1,417,790 (245,909) (300,000) - - - (4,238,847) - - 52,987 - - 52,987 (245,909) (300,000) 419,124 265,617 - (2,768,070) (713,565) (112,028) 287,770 52,631 61,211 (3,605,509) 1,878,713 3,746,418 690,297 366,170 (1,540,086) 12,239,747 $ 1,165,148 $ 3,634,390 $ 978,067 $ 418,801 $ (1,478,875) $ 8,634,238 AGENCYFUNDS 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. FSA Plans — This fund is used to account for the collection of contributions from employees and distributions related to the City's self-administered medical and dependent care FSA plans. (97) CITY OF ELK RIVER STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCYFUNDS YEAR ENDED DECEMBER 31, 2016 ASSETS Cash Accounts Payable Beginning Ending $ 5,650 $ 49,164 $ 43,640 $ 11,174 $ 5,650 $ 49,164 $ 43,640 $ 11,174 (98) Beginning Ending Balance Additions Deductions Balance ASSETS Cash $ 115,073 $ 187,580 $ 107,858 $ 194,795 Accounts Receivable 510 26,043 9,305 17,248 Prepaid Items - 660 - 660 Total Assets $ 115,583 $ 214,283 $ 117,163 $ 212,703 LIABILITIES Refundable Deposits Payable $ 115,583 $ 208,519 $ 111,399 $ 212,703 ASSETS Cash Accounts Payable Beginning Ending $ 5,650 $ 49,164 $ 43,640 $ 11,174 $ 5,650 $ 49,164 $ 43,640 $ 11,174 (98) 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 Housing and Redevelopment Authority Fund - This fund is used to account for housing and redevelopment activities. Revenues are derived from the HRA property tax levy. BE CITY OF ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY BALANCE SHEET GOVERNMENTAL FUND DECEMBER 31, 2016 ASSETS Cash and Investments Receivables: Taxes Notes Due from Primary Government Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts Payable Accrued Salaries Payable Due to Primary Government Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Taxes FUND BALANCE Nonspendable Restricted for Housing and Redevelopm� Total Fund Balance or 14 Total Liabilities, Deferred Inflows of F and Fund Balance M Housing and Redevelopment Authority $ 1,289,705 16,482 531,802 215,494 $ 2,053,483 22,469 1,296 8,202 31,967 2,387 531,802 1,487,327 2,019,129 $ 2,053,483 CITY OF ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2016 Total Fund Balance - Housing and Redevelopment Authority $ 2,019,129 Total net position reported for govermental activities in the statement of net position is different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of Land $ 257,100 Other Improvements 174,290 Total Capital Assets 431,390 Less: Accumulated Depreciation (47,445) 383,945 Some of the receivables (including property taxes and other long-term receivables) will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as deferred inflows of resources in the governmental funds. 2,387 The net pension liability and related deferred inflows and deferred outflows are recorded only on the statement of net position. Balancesat year end are: Net Pension Liability $ (68,816) Deferred Inflows of Resources - Pensions (9,539) Deferred Outflows of Resources - Pensions 24,941 (53,414) Total Net Position - Housing and Redevelopment Authority $ 2,352,047 (101) CITY OF ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY STATEMENT OF REVENUES, EXPENDITIURES, AND CHANGE IN FUND BALANCES GOVERNMENTAL FUND YEAR ENDED DECEMBER 31, 2016 REVENUE Property Taxes Intergovernmental Revenue Other Revenue: Investment Earnings Miscellaneous Revenue Total Revenue EXPENDITURES Current: Economic Development EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES OTHER FINANCE SOURCES (USES) Transfers Out to Primary Government NET CHANGE IN FUND BALANCES FUND BALANCES Beginning of Year End of Year (102) Housing and Redevelopment Authority $ 285,831 163 8,081 2,000 296,075 166,503 129,572 (28,250) 101,322 1,917,807 $ 2,019,129 CITY OF ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITIURES, AND CHANGE IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2016 Net Change in Fund Balances - Housing and Redevelopment Authority Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures and proceeds from the sale of capital assets as revenues. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Depreciation Expense Delinquent and certain other property taxes receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as deferred inflows of resources and excluded from revenues in the governmental funds. Unavailable Revenue - Property Taxes Pension expenses in the governmental funds are measured by current year employee contributions. Pension expenses on the statement of activities are measured by the change in net pension liability and the related deferred inflows and outflows of resources. Change in Net Position - Housing and Redevelopment Authority (103) $ 101,322 (11,619) 833 $ 81,042 This page intentionally left blank. 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 130 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 140 These schedules contain information to help the reader assess the City's most significant local revenue sources; electric sales and property taxes. Debt Capacity 40* 148 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators environment within which the City's financial activities take place. Operating Information 156 to help the reader understand the 158 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. (104) CITY OF ELK RIVER NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Total Business -Type Activities Net Position $ 77,704,094 $ 79,171,535 $ 80,120,117 $ 81,604,754 $ 80,670,803 $ 83,369,227 $ 85,639,943 $ 88,601,863 $ 101,742,068 $ 104,695,240 Primary Government: Net Investment in Capital Assets $ 145,235,804 $ 146,141,868 $ 145,751,278 $ 145,601,929 $ 145,267,175 $ 144,328,987 $ 146,389,222 $ 148,314,622 $ 151,777,848 $ 150,168,398 Restricted 6,922,463 6,294,273 5,447,530 8,066,054 7,007,846 7,115,682 5,903,724 4,683,356 4,166,088 12,988,307 Unrestricted 42,670,185 45,324,868 48,382,060 46,609,668 48,703,336 49,825,196 47,027,216 49,620,778 44,675,050 38,233,180 Total Primary Government Net Position $ 194,828,452 $ 197,761,009 $ 199,580,868 $ 200,277,651 $ 200,978,357 $ 201,269,865 $ 199,320,162 $ 202,618,756 $ 200,618,986 $ 201,389,885 (105) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental Activities: Net Investment in Capital Assets $ 85,293,459 $ 85,390,968 $ 86,149,417 $ 84,629,091 $ 84,741,957 $ 84,060,768 $ 84,353,785 $ 84,921,650 $ 75,030,579 $ 67,937,435 Restricted 6,189,063 5,569,773 4,723,030 7,341,554 6,283,346 6,391,182 5,256,724 4,192,856 3,675,588 11,990,647 Unrestricted 25,641,836 27,628,733 28,588,304 26,702,252 29,282,251 27,448,688 24,069,710 24,902,387 20,170,751 16,766,563 Total Governmental Activities Net Position $ 117,124,358 $ 118,589,474 $ 119,460,751 $ 118,672,897 $ 120,307,554 $ 117,900,638 $ 113,680,219 $ 114,016,893 $ 98,876,918 $ 96,694,645 Business -Type Activities: Net Investment in Capital Assets $ 59,942,345 $ 60,750,900 $ 59,601,861 $ 60,972,838 $ 60,525,218 $ 60,268,219 $ 62,035,437 $ 63,392,972 $ 76,747,269 $ 82,230,963 Restricted 733,400 724,500 724,500 724,500 724,500 724,500 647,000 490,500 490,500 997,660 Unrestricted 17,028,349 17,696,135 19,793,756 19,907,416 19,421,085 22,376,508 22,957,506 24,718,391 24,504,299 21,466,617 Total Business -Type Activities Net Position $ 77,704,094 $ 79,171,535 $ 80,120,117 $ 81,604,754 $ 80,670,803 $ 83,369,227 $ 85,639,943 $ 88,601,863 $ 101,742,068 $ 104,695,240 Primary Government: Net Investment in Capital Assets $ 145,235,804 $ 146,141,868 $ 145,751,278 $ 145,601,929 $ 145,267,175 $ 144,328,987 $ 146,389,222 $ 148,314,622 $ 151,777,848 $ 150,168,398 Restricted 6,922,463 6,294,273 5,447,530 8,066,054 7,007,846 7,115,682 5,903,724 4,683,356 4,166,088 12,988,307 Unrestricted 42,670,185 45,324,868 48,382,060 46,609,668 48,703,336 49,825,196 47,027,216 49,620,778 44,675,050 38,233,180 Total Primary Government Net Position $ 194,828,452 $ 197,761,009 $ 199,580,868 $ 200,277,651 $ 200,978,357 $ 201,269,865 $ 199,320,162 $ 202,618,756 $ 200,618,986 $ 201,389,885 (105) Expenses: Governmental Activities: General Government Public Safety Public Works Culture and Recreation Economic Development Interest and Fiscal Charges Total Governmental Activities Expenses Business -Type Activities: Municipal Liquor Garbage Sewer Stormwater Water Electric Interest and Fiscal Charges 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 Storm Water Water Electric Operating Grants and Contributions Capital Grants and Contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues CITY OF ELK RIVER CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ 2,732,697 $ 3,286,350 $ 2,777,568 $ 3,028,102 $ 3,495,458 $ 2,994,342 $ 3,344,317 $ 3,554,136 $ 3,619,293 $ 3,996,317 5,924,093 6,715,607 6,106,181 6,011,477 6,238,611 6,187,246 6,173,244 6,615,593 6,720,283 9,203,952 6,527,565 5,875,992 5,397,058 5,447,282 5,720,759 6,037,000 6,535,616 6,860,673 5,351,630 5,439,492 3,598,695 3,549,637 3,767,312 3,702,671 3,851,181 4,013,098 3,914,000 4,088,992 3,970,704 4,014,737 1,001,829 1,893,707 1,569,432 1,438,742 1,451,109 1,059,058 2,088,064 1,091,125 959,414 954,723 952,082 1,315,275 1,252,493 1,138,414 1,045,905 1,163,352 1,288,020 1,075,408 1,084,902 996,933 20,736,961 22,636,568 20,870,044 20,766,688 21,803,023 21,454,096 23,343,261 23,285,927 21,706,226 24,606,154 7,434,417 5,881,523 6,043,088 6,213,657 6,094,058 4* 6,145,692 6,525,234 6,756,581 6,825,342 6,974,336 5,301,597 5,464,819 5,374,453 5,267,041 5,366,557 5,622,305 5,706,760 5,776,873 5,945,126 6,063,922 1,114,133 1,166,709 1,256,177 1,331,514 1,304,238 1,276,887 1,251,420 1,303,943 1,382,890 2,473,139 1,786,266 - 1,849,031 - 1,781,804 - 1,962,431 ,%, - 2,130,287_.,. 2,239,914 - - 2,320,743 - 2,156,329 - 2,318,709 736,411 1,475,027 645,596 2,413,942 2,506,510 2,334,388 2,089,889' 2,108,499 2,264,814 2,332,680 2,459,319 2,478,904 32,190,114 18,718,636 22,036,471 23,258,383 25,452,567 26,726,349 ,586,573 28,422,759 29,597,247 30,012,830 2,532,653 29,334,574 33,023,540 34,005,205 36,103,442 37,635,930 38,990,493 40,034,362 41,293,711 42,874,870 45,380,451 $ 50,071,535 $ 55,660,108 $ 54,875,249 $ 56,870,130 $ 59,438,953 $ 60,444,589 $ 63,377,623 $ 64,579,638 $ 64,581,096 $ 69,986,605 its $ 283,003 $ 371,911 $ 334,100 $ 301,509 $ 425,954 $ 369,794 $ 338,469 $ 385,238 $ 439,826 $ 678,679 1,533,699 962,275 > 634,242 722,073 787,884 789,728 961,072 1,063,725 1,194,458 1,041,141 76,117 159,664 47,860 61,605 79,073 82,173 206,606 233,593 174,452 199,034 1,083,081 1,084,067 1,074,266 1,089,058 1,102,630 1,128,070 1,075,576 906,291 925,591 931,674 92,486 65,999 60,335 125,759 70,976 8,244 274,833 77,430 92,716 32,961 362,313 977,411 ;'- 758,958 763,551 954,831 1,018,519 954,164 1,049,744 1,033,338 1,664,977 4,174,427 4,302,760 2,599,593 1,318,660 1,750,824 1,007,794 807,208 4,020,851 3,574,036 1,333,057 7,605,126 7,924' 7 5,509,354 4,382,215 5,172,172 4,404,322 4,617,928 7,736,872 7,434,417 5,881,523 6,043,088 6,213,657 6,094,058 5,953,626 6,145,692 6,525,234 6,756,581 6,825,342 6,974,336 7,009,574 1,139,763 1,160,774 1,194,937 1,282,013 1,310,014 1,302,920 1,285,138 1,304,750 1,321,301 1,921,190 1,454,219 1,511,165 1,504,785 1,483,120 1,491,460 1,533,851 1,613,276 1,734,141 1,818,476 1,342,900 - - - - - - - - 355,454 477,377 2,144,622 2,139,046 2,218,816 1,961,760 1,917,384 2,343,881 2,381,651 2,290,824 2,379,835 34,746,098 19,895,323 22,941,903 24,258,120 26,840,983 28,657,698 30,403,469 31,029,299 31,596,217 32,831,209 2,370,221 295,081 149,327 92,957 103,324 38,550 23,440 - - - - 1,996,636 888,925 267,233 397,989 482,319 490,916 924,641 935,909 2,708,564 1,685,129 32,968,732 35,004,797 35,630,906 38,022,815 40,043,117 42,623,711 43,990,586 44,687,183 48,389,175 49,552,489 $ 40,573,858 $ 42,928,884 $ 41,140,260 $ 42,405,030 $ 45,215,289 $ 47,028,033 $ 48,608,514 $ 52,424,055 $ 55,823,592 $ 55,434,012 (106) Net Revenue (Expense): Governmental Activities Business -Type Activities Total Primary Government Net Expense General Revenues and Other Changes in Net Position: Governmental Activities: Property Taxes Tax Increment Other Taxes Unrestricted Grants and Contributions Investment Earnings Miscellaneous Capital Contribution Gain on Sale of Capital Assets Transfers Total Governmental Activities Business -Type Activities: Investment Earnings Miscellaneous Capital Contribution Gain on Sale of Capital Assets Transfers Special Item Total Business -Type Activities Total Primary Government Change in Net Position: Governmental Activities Business -Type Activities Total Primary Government Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ (13,131,835) $ (14,712,481) $ (15,360,690) $ (16,384,473) $ (16,630,851) $ (17,049,774) $ (18,725,333) $ (15,549,055) $ (14,271,809) $ (18,724,631) 3,634,158 1,981,257 1,625,701 1,919,373 2,407,187 3,633,218 3,956,224 3,393,472 5,514,305 4,172,038 $ (9,497,677) $ (12,731,224) $ (13,734,989) $ (14,465,100) $ (14,223,664) $ (13,416,556) $ (14,769,109) $ (12,155,583) $ (8,757,504) $ (14,552,593) $ 9,744,930 $ 11,095,407 $ 11,440,991 $ 11,254,752 $ 11,398,819 $ 10,854,241 $ 10,742,370 $ 10,378,906 $ 10,667,306 $ 11,136,310 894,595 1,041,300 1,080,142 1,071,099 947,486 830,204 87,848 130,325 264,639 - - - 156,894 193,466 ,+{+8, 748 125,623 829,112 1,441,259 1,513,621 1,552,499 2,395,665 1,775,536 1,940,274 2,000,923 :Wb2,334 1,307,662 1,436,135 1,749,886 1,642,098 - 1,465,401 1,215,053 548,651 359,733 '499,034 319,654 (663,762) 1,137,024 512,193 311,469 23,213 - 20,013 61,308 233 49,470 629,177 29,593 2,796,041 - (511,412) - - (303,0 (348,259) (121,172) (313,287) (11,188,695) - - - - - - - - 29,695 778,840 1,050,301 1,045,002 ,389 3,610,854 1,504,263 1,565,206 1,332,023 297,362 1,692,137 14,791,232 16,177,597 16,231,967 1 ,619 18,265,508 14,642,858 14,504,914 15,885,729 6,504,565 14,722,.110 640,876 534,485 367,88 220,602`= 269,716 219,950 (243,047) 557,659 259,494 167,849 - 2,000 - - - 1,260 1,572 29,525 8,899 - 511,412 - - 303,051, - 348,259 121,172 313,287 11,188,695 (26,551) - - - - - - - - - 1,050 (778,840) (1,050,301) (1,045,002) -`� (958,389) (3,610,854) (1,504,263) (1,565,206) (1,332,023) (297,362) (1,692,137) - - - - - - - - - #REF! 373,448 (513,816) (677,119) (434,736) (3,341,138) (934,794) (1,685,509) (431,552) 11,159,726 #REF1 $ 15,164,680 $ 15,663,781 $ 15,554,848 $ 15,161,883 $ 14,924,370 $ 13,708,064 $ 12,819,405 $ 15,454,177 $ 17,664,291 #REF1 $ 1,659,397 $ 1,465,116 $ 871,277 $ (787,854) $ 1,634,657 $ (2,406,916) $ (4,220,419) $ 336,674 $ (7,767,244) $ (4,002,521) 4,007,606 1,467,441 948,582 1,484,637 (933,951) 2,698,424 2,270,715 2,961,920 16,674,031 #REF1 $ 5,667,003 $ 2,932,557 $ 1,819,859 $ 696,783 $ 700,706 $ 291,508 $ (1,949,704) $ 3,298,594 $ 8,906,787 #REF1 (107) CITY OF ELK RIVER FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year (108) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Fund: Reserved $ 5,938 $ - $ - $ $ $ $ $ $ $ Unreserved 5,346,066 5,190,662 5,699,575 Nonspendable - - - 20,201 14,628 22,725 23,676 20,964 Restricted 20,390 - - - 7,000 Committed 91,502 156,323 208,486 247,937 317,929 376,943 - Assigned 727,443 859,508 200,000 - - - 266,832 Unassigned - - - 5,187,520 5,261,391 5,776,627 5,791,725 5,822,948 6,157,179 6,470,281 Total General Fund $ 5,352,004 $ 5,190,662 $ 5,699,575 $ 6,006,465 $ 6,297,612 $ 6,205,314 $ 6,054,290 $ 6,163,602 $ 6,564,798 $ 6,758,077 All Other Governmental Funds: Reserved $ 14,453,663 $ 6,953,630 $ 6,535,205 $ $ $ $ $ $ $ - Unreserved, Reported in: Special Revenue Funds 3,849,815 7,751,286 7,844,537 Capital Project Funds 9,179,236 9,574,268 10,101,066 - Nonspendable - - - 93,080 57,870 101,812 99,703 101,910 103,295 108,176 Restricted 6,936,113 5,942,368 7,608,842 14,800,868 13,925,683 13,202,500 12,245,679 Committed 2,506,814 2,712,645 2,456,185 4,393,689 5,829,001 8,099,951 9,250,014 Assigned 16, 984, 061 19, 736, 795 19, 219, 810 15, 455, 671 15, 883, 279 15, 579, 524 12, 632, 948 Unassigned (1,011,820) (1,059,647) (1,384,984) (2,324,550) (2,527,613) (2,438,049) (2,660,264) Total All Other Governmental Funds $ 27,482,714 $ 24,279,184 $ 24,480,808 $ 25,508,248 $ 27,390,031 $ 28,001,665 $ 32,425,381 $ 33,212,260 $ 34,547,221 $ 31,576,553 Source: City's financial records. k N Note: The City began to use new categories when it implemented GASB 54 in fiscal year 2011. Prior years were not retroactively reclassified. (108) Revenues: Property Taxes Other Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeits Special Assessments Investment Earnings Miscellaneous Total Revenues Expenditures: General Government Public Safety Public Works Culture and Recreation Economic Development Capital Outlay Debt Service: Principal Interest Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Bondslssued Premiums on Bonds Issued Discounts on Bonds Issued Capital Leases Issued Payment of Refunded Bonds Sales of Capital Assets Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures CITY OF ELK RIVER CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ 10,571,695 $ 12,037,076 $ 12,329,194 $ 12,355,953 $ 12,461,403 $ 11,720,311 $ 10,930,129 $ 10,640,251 $ 10,953,633 $ 11,171,496 - - 156,894 193,466 83,748 125,623 829,112 1,441,259 1,513,621 1,552,499 987,708 460,108 322,338 402,076 432,875 408,232 513,779 559,286 639,791 655,607 2,973,505 4,134,779 3,117,997 1,135,060 1,678,555 1,436,613 1,161,458 838,573 3,913,721 1,681,666 1,786,094 1,849,307 1,465,898 1,727,276 1,573,367 1,659,986 1,926,906 2,091,107 1,761,958 1,851,408 156,407 150,086 141,629 161,074 149,102 137,819 163,481 160,298 169,459 167,526 1,909,595 1,712,551 1,464,348 999,633 989,101 845,112 764,006 881,271 315,259 456,666 1,465,401 1,215,053 548,651 359,731 ... 499,034 319,654 (663,763) 1,146,462 512,193 311,469 1,545,181 1,628,567 1,853,966 2,587,771 2,568,159 1,980,207 2,193,571 2,358,709 2,169,789 1,428,015 21,395,586 23,187,527 21,400,915 19,922,040 20,435,344 18,633,557 17,818,679 20,117,216 21,949,424 19,276,352 2,450,722 2,480,208 2,458,879 2,629,731 3,157,307 2,615,582 2,956,500 3,181,547 3,365,570 3,601,468 5,109,371 5,565,474 5,377,208 5,266,803 5,291,617 5,352,249 5,497,493 5,909,653 6,203,211 6,831,599 4,170,119 3,246,436 2,656,097 2,291,196 2,752,469 2,931,726 2,800,012 2,974,219 2,318,123 1,861,251 3,386,681 2,890,683 2,666,146 2,569,464 2,663,806 2,839,466 2,652,817 2,881,985 2,816,411 2,872,281 573,446 2,216,617 1,589,464 1,512,138 1,479,140 1,087,467 1,656,922 1,095,535 954,673 949,205 12,803,023 10,381,359 4,627,32 1,879,604 2,874,212 10,264,274 5,243,189 2,277,477 5,251,352 2,682,358 1,767,617 2,022,616 3,162,117 2,411,062 2,618,146 2,127,000 2,194,000 1,535,000 1,505,000 5,100,000 902,415 1,198,174 1,289,087 :'. 1,126,789 1,059,804 996,454 1,129,572 1,105,114 1,113,963 1,148,535 - - - 56,204 - 68,900 153,795 - - 31,163,394 30,001,567 23,826,320 19,742,991 21,896,501 28,283,118 24,284,300 20,960,530 23,528,303 25,046,697 (9,767,808) (6,814,040) a (2,425,405) 179,049 (1,461,157) (9,649,561) (6,465,621) (843,314) (1,578,879) (5,770,345) 13,390,500 2,277,946 2,074,311 6,184,243 - 8,500,000 9,685,000 - - - - 36,542 - 255,238 - 115,164 341,700 - - - (50,477) - - - - - - - - 325,000 - - - - - - - - - - - - (6,303,897) - - - - - - 200,914 84,379 16,629 61,308 23,233 49,470 686,407 44,827 3,017,674 80,587 4,785,257 3,868,359 2,887,624 2,682,562 5,978,905 4,792,943 6,457,233 4,837,016 4,703,787 6,524,537 (4,006,417) (2,818,058) (1,842,622) (1,724,173) (2,368,051) (3,288,680) (4,892,027) (3,504,993) (4,406,425) (4,832,400) 14,644,777 3,449,168 3,135,942 1,155,281 3,634,087 10,168,897 12,278,313 1,376,850 3,315,036 1,772,724 $ 4,876,969 $ (3,364,872) $ 710,537 $ 1,334,330 $ 2,172,930 $ 519,336 $ 5,812,692 $ 533,536 $ 1,736,157 $ (3,997,621) 15.1% 16.9% 23.7% 19.8% 19.6% 17.1% 16.9% 14.1% 14.3% 27.4% (109) CITY OF ELK RIVER ELECTRIC SALES LAST TEN FISCAL YEARS Fiscal Year Number of Customers 2007 8,945 2008 9,203 2009 9,170 2010 9,207 2011 9,227 2012 9,285 2013 9,358 2014 9,449 2015 10,499 2016 10,816 Source: Elk River Municipal Utilities Total KWh's Sold Billings 211,298,886 $17,704,210 224,226,048 22,303,994 232,772,722 23,591,485 250, 711, 834 26, 060, 301 261,235,297 27,894,341 273,455,846 30,070,045 273,945,354 30,978,790 274,546,059 31,514,246 282, 265, 268 32, 704, 279 305, 337, 641 34, 569, 098 (110) CITY OF ELK RIVER 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. 2016 2007 Percentage Percentage Total KWh Total of Total Total KWh Total of Total Customer Sold Billings Billings Sold Billings Billings Customer 1 53,275,400 $ 3,895,962 11.27% - $ - - Customer 2 28,116,900 2,502,125 7.24% 8,359,162 769,857 4.35% Customer 3 9,044,243 1,125,850 3.26% - - - Customer 4 6,007,528 681,496 1.97% - - - Customer 5 5,611,628 588,907 1.70% 2,862,880 120,462 0.68% Customer 6 5,539,200 525,539 1.52% - - - Customer 7 5,107,500 463,619 1.34% - - - Customer 8 4,783,680 463,407 1.34% 5,299,600 222,956 1.26% Customer 9 4,476,240 337,335 0.98% 5,123,520 216,190 1.22% Customer 10 3,505,000 327,177 0.95% - - - Customer 12 - - - 3,910,400 164,360 0.93% Customer 13 - - 3,531,800 148,444 0.84% Customer 14 - - - 2,189,160 92,203 0.52% Customer 15 - - 1,992,000 84,109 0.48% Customer 16 - - - 1,791,300 75,558 0.43% Customer 17 - - 1,683,300 71,288 0.40% TOTAL 125,467,319 $ 10,911,418 31.56% 36,743,122 $ 1,965,427 11.11% 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. CITY OF ELK RIVER TAX CAPACITY, MARKET VALUE, AND ESTIMATED 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 2007 $ 23,166,911 281,606 23,448,517 (786,795) 2008 $ 25,790,055 279,154 26,069,209 (744,597) 2009 $ 26,550,210 302,166 26,852,376 (899,835) 2010 $ 25,611,065 310,180 25,921,245 (888,285) $ 22,661,722 $ 25,324,612 $ 25,952,541 $ 25,032,960 43.056% 42.494% 43.280% 44.560% $1,998,598,900 14,318,500 $2,186,595,580 14,221,560 $2,012,917,400 $2,200,817,140 $2,262,479,345 $2,457,361,368 ------------- 88.97% 89.56% $2,235,538,000 15,363,900 $2,121,774,900 15,764,700 $2,250,901,900 $2,137,539,600 $2,429,563,505 $2,191,955,185 92.65% 97.52% Source: Sherburne County Assessor Note: Property in the county is reassessed annually. The county assessor's market value of property is approximately 93 per cent of actual value for all types of real and personal property. (112) 2011 2012 2013 2014 2015 2016 $ 24,736,999 $ 21,946,865 $ 19,969,977 $ 20,047,632 $ 21,060,822 $ 21,850,219 350,946 344,032 353,390 367,641 366,113 385,056 25,087,945 22,290,897 20,323,367 20,415,273 21,426,935 22,235,275 (784,101) (698,130) (122,648) (116,513) (198,997) (204,017) $ 24,303,844 $ 21,592,767 $ 20,200,719 $ 20,298,760 $ 21,227,938 $ 22,031,258 45.723% 47.588% 50.373% 48.544% 47.190% 46.170% $2,035,543,052 $1,775,334,600 $1,599,513,500 $1,622,624,100 $1,735,898,300 $1,826,858,800 17,758,600 17,412,900 18,055,900 18,736,600 18,585,200 19,469,900 $2,053,301,652 $1,792,747,500 $1,617,569,400 $1,641,360,700 $1,754,483,500 $1,846,328,700 47 ur $2,403,906,238 $1,907,992,306 $1,758,428,600 $1,838,493,300 $1,900,894,800 $1,978,763,900 ----------- 4r"NN 85.42% 93.96% 91.99% 89.28% 92.30% 93.31% CITY OF ELK RIVER PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Source: Sherburne County Auditor/Treasurer ' Overlapping rates are those of local and cou 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.. (114) 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 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 2015 45.433 1.757 47.190 51.979 42.483 r 0.209 4.779 146.640 2016 44.507 1.663 46.170 50. 9.268 0.215 4.778 140.909 Source: Sherburne County Auditor/Treasurer ' Overlapping rates are those of local and cou 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.. (114) Taxpayer Great River Energy JPM Capital Corporation Target Corp. Wal mart Stores BRE Retail Residual Owner, L Minngasco Property Accountin Broadstone STI Minnesota LL( Home Depot Menards, Inc ARHC ERELKMN01 LLC Envision Company LLC Resource Recovery Technoloc Bradley Operating LP Phoenix Enterprises B & G Realty, Inc TOTAL CITY OF ELK RIVER PRINCIPAL TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2016 Net Tax Capacity $ 1,029,374 375,608 262,184 251,896 247,548 156,736 133,314 130,066 119,250 104,444 Source: Sherburne County Assessor (115) 2007 Percentage of Total Net of Total Net Net Tax Rank Tax Capacity Capacity 1 4.63 % $ 596,514 2 1.69 - 3 1.18 117,416 4 1.13 281,648 5 1.11 - 6 0.70 - 7 0.60 - 8 0.58138,340 9 0.54 144,050 10 0.47 ` - - - 124,832 - 297,786 - 182,479 - 147,883 - - 118,162 12.63% $ 2,149,110 Source: Sherburne County Assessor (115) 2007 Percentage of Total Net Rank Tax Capacity 1 2.54 10 0.50 3 1.20 7 0.59 6 0.61 8 0.53 2 1.27 4 0.78 5 0.63 9 0.50 9.15% This page intentionally left blank. P O� CITY OF ELK RIVER PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (116) 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 2007 $9,694,925 $ 9,475,220 97.73 $ 217,629 $ 9,692,849 99.98 2008 11,033,630 10,750,281 97.43 281,895 11,032,176 99.99 2009 11,433,704 11,074,590 96.86 354,657 11,429,247 99.96 2010 11,164,259 10,920,348 97.82 236,669 11,157,017 99.94 2011 11,164,571 11,052,081 98.99 101,188 11,153,269 99.90 2012 10,700,738 10,592,493 98.98 96,447 10,688,940 99.89 2013 10,651,225 10,574,080 98.96Y23,261 2,037 10,636,117 99.86 2014 10,315,213 10,300,688 99.205,098 10,305,786 99.91 2015 10,558,789 10,511,527 99.55 10,534,788 99.77 2016 10,887,728 10,843,359 _; 99.59 - 10,843,359 99.59 (116) Fiscal CITY OF ELK RIVER RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General General Obligation Obligation Revenue Governmental Activities Lease Special Tax Certificates of Revenue Assessment Increment Indebtedness Other 2007 ###1####1### $ 1,200,000 $7,730,000 $ 4,825,000 $ 675,000 $ 1,090,350 2008 15,412,946 955,000 7,170,000 4,480,000 505,000 756,033 2009 16,677,757 700,000 6,175,000 3,970,000 440,000 421,716 2010 22,002,000 540,000 - 3,460,000 OA 375,000 87,400 2011 20,897,939 - - 2,955,000 305,000 - 2012 26,579,666 - - 4,035,306 _ ; - - 2013 35,223,141 - - 1,633,459 - - 2014 34,023,916 - - 1,246,612 - - 2015 32,789,690 - 924,765 - - 2016 29 365 466 - - 607 918 - - Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 See the Schedule of Demographic and Economic Statistics for personal income and population data. (117) $2,123,092 1,839,792 1,646,492 1,499,746 1,410,000 1,410,000 1,410,000 1,410,000 1,410,000 Business -Type Activities General Total Percentage Obligation Revenue Notes Primary of Personal Per Revenue Bonds Payable Government Income' Capita' $ 6,465,000 8,630,000 8,070,000 6,180,000 5,520,656 4,791,567 4,027,478 12,868,388 12,564,299 11,858,552 $9,690,000 9,280,000 8,840,000 6,940,000 6,310,000 5,085,000 4,340,000 3,634,845 3,020,935 12,462,779 $2,879,054 $ 49,897,496 2,701,994 51,730,765 2,524,646 49,465,611 2,345,318 43,429,464 2,162,882 39, 561,477 1,975,812 43,877,351 1,789,224 48,423,302 1,599,876 54,783,637 1,408,368 52,118, 057 1,214,076 55,508,791 (118) 7.29 6.97 7.14 6.32 5.81 6.30 7.00 7.14 6.69 na $2,152 2,166 2,093 1,890 1,713 1,890 2,072 2,309 2,183 2,294 CITY OF ELK RIVER RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (119) Percentage of Net Bonded Debt to Tax Capacity2 Net Bonded Debt per Capita Less $583.90 57.96 614.49 55.65 Amounts Less 620.41 57.13 General Restricted Cash with Net Fiscal Bonded for Debt Fiscal Bonded Year Debt' Service Agent Debt 2007 $ 17,792,017 $ 4,253,142 $ - $ 13,538,875 2008 18,391,033 3,712,036 - 14,678,997 2009 17,471,716 3,027,915 - 14,443,801 2010 18,040,733 3,787,324 - 14,253,409 2011 17,120,000 3,234,939 - 13,885,061 2012 23,286,667 3,044,599 - 20,242,068 2013 32,141,667 2,329,723 9,712,875 20,099,069 2014 31,001,667 1,599,852 9,580,144 ' 19,821,671 I 2015 28,986,667 1,154,728 9,423,440 18,408,499 2016 25,728,333 997,660 9,284,304 15,446,369 Note: Details regarding the city's outstandin 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. (119) Percentage of Net Bonded Debt to Tax Capacity2 Net Bonded Debt per Capita 59.74 $583.90 57.96 614.49 55.65 611.17 56.94 620.41 57.13 601.06 93.74 871.75 99.50 860.04 97.65 837.91 86.72 770.88 70.11 638.28 CITY OF ELK RIVER DIRCT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT DECEMBER 31, 2016 Percent of Debt City's Outstanding Applicable Share Debt to City' of Debt Direct Debt: City of Elk River $ 29,973,384 100.00% $ 29,973,384 Overlapping Debt: Sherburne County 11,048,136 24.58 2,715,613 School District#728 274,800,000 29.62 81,394,563 Total overlapping debt 285,848,136 84,110,176 Total direct and overlapping debt $ 315,821,520 $ 114,083,560 Debt Ratios: Ratio of debt per capita (24,200 population) Ratios of debt to taxable market value of $1,846,328,700 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 borne 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 borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. (120) $4,714 6.18% CITY OF ELK RIVER LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 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 2007 2008 2009 2010 $40,258,348 $66,024,514 $67,527,057 $ 64,126,188 17,792,017 18,391,033 17,471,716 18,040,733 861,726 1,318,186 1,418,700 1,164, 060 16,930,291 17,072,847 16,053,016 16,876,673 $23,328,057 $48,951,667 $51,474,041 $ 47,249,515 42.05% 25.86% 23.77% 26.32% (121) ses. CITY OF ELK RIVER LEGAL DEBT MARGIN INFORMATION (CONTINUED) LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 $ 61, 599, 050 $ 58, 316,472 $ 52, 752, 858 $ 53, 892, 054 $ 57, 026, 844 $ 59, 362, 917 17,120,000 23,286,667 32,141,667 30,071,667 28,986,667 25,706,667 1,030,418 1,202,093 10,819,006 10,743,409 10,673,852 10,560,614 16,089,5-82— 22, 084, 574 21, 322, 661 19, 328, 258 18, 312, 815 15,146, 053 $ 45, 509, 468 $ 36, 231, 898 $ 31, 430,197 $ 34, 563, 796 $ 38, 714, 029 $ 44, 216, 864 26.12% 37.87% 40.42% 35.86% 32.11% 25.51% Legal Debt Margin Calculation for Fiscal Year 2016 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 (122) $1,978,763,900 $ 59,362,917 9,630,000 16,076,667 (10,560,614) 15,146,053 $ 44,216,864 CITY OF ELK RIVER PLEDGED -REVENUE COVERAGE LAST TEN FISCAL YEARS Revenue Bonds' (123) Net Fiscal Gross Operating Revenue Debt Service Year Revenue 2 Expenses 3 Available Principal Interest Coverage 2007 $ 25,212,616 $ 19,212,200 $6,000,416 $1,045,000 $ 595,642 3.66 2008 28,380,372 22,562,437 5,817,935 1,330,000 669,406 2.91 2009 29,665,332 23,654,659 6,010,673 1,000,000 681,124 3.58 2010 31,869,940 25,849,033 6,020,907 3,785,000 564,105 1.38 2011 33,672,393 27,326,836 6,345,557 1,335,000 458,888 3.54 2012 35,944,367 28,444,321 7,500,046 1,950,000 410,320 3.18 2013 34,737,779 28,629,356 6,108,423 1,505,000 341,419 3.31 2014 35,249,153 29,806,010 5,443,143 3,940,000 282,209 1.29 2015 36,568,235 30,281,264 6,286,971 900,000 464,938 4.61 2016 38,559,107 32,376,907 6,182,200 2,860,000 183,634 2.03 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 2 Gross revenue excludes interest income, connection fees and miscellaneous revenues 3 Expenses exclude depreciation, interest on bonds and miscellaneous expenses 4 Excludes $1,540,000 refunded principal paid through cash with fiscal agent. Vr (123) CITY OF ELK RIVER DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Personal Fiscal Income Per Capita Median School Unemployment Year Population' (in thousands) Income Age Enrollment4 Rates 2007 23,187 $ 684,689 $ 29,529 32 13,058 5.6 % 2008 23,888 742,439 31,080 33 13,031 8.2 2009 23,633 692,376 29,297 33 13,073 9.0 2010 22,974 3 687,129 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 29,609 35 13,367 5.5 2014 23,730 767,666 32,350 36 13,627 4.1 2015 23,987 782,528 32,623 35 13,751 4.0 2016 24,200 na na 36 14,077 3.4 Data Sources: ' State Demographer 2 Bureau of Economic Analysis 3 US Census Bureau 4 School District 5 Minnesota Department of Employment and Economic Development na - not available (124) CITY OF ELK RIVER PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2016 Employer Employees Rank Independent School District 728 2,000 1 Sherburne County 616 2 Guardian Angels of Elk River 374 3 Walmart 350 4 Sportech, Inc. 230 5 Great River Energy 207 6 Menards 200 7 Emerson Processing Management 3 150 8 City of Elk River 146 9 Cornerstone Auto Resource 138 10 Cub Foods Target 2007 Percentage Percentage of Total City of Total City Employment Employees Rank Employment 15.89 % 633 1 5.84 % 4.89 600 2 5.53 2.97 355 5 3.27 2.78 450 3 4.15 1.83 - - - 1.64 438 4 4.04 1.59 164 10 1.51 1.19 200 8 1.84 1.16 205 7 1.89 1.10 - - - - 250 6 2.31 - 179 9 1.65 Total 4,411 35.05 % 3,474 32.03 % Total Employment 2 12,585 <?� . 10,608 Total District figure includes all full-time, part-time, contract, and substitute teachers as of 2016. Prior year figures included teachers only. z Minnesota Department of Employment and Economic Development 3 Formerly Tescom Corporation. <r (125) 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 Storm Water Water Electric Total CITY OF ELK RIVER FULL-TIME EQUIVALENT BY FUNCTION (CONTINUED) LAST TEN FISCAL YEARS Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 25.8 25.3 24.8 24.8 24.8 25.8 26.9 28.3 29.3 29.3 30.0 31.0 31.0 31.0 30.0 31.0 31.0 31.0 32.0 32.0 9.0 9.0 8.0 8.0 8.0 8.0 9.0 9.0 9.0 9.0 3.5 3.5 3.5 3.7 3: 1.7 1.7 2.7 3.0 3.0 39.0 39.0 39.0 38.0 40.0 40.0 40.0 44.0 44.0 11.5 10.5 7.6 440,0 7.6 7.6 8.4 8.6 9.0 9.0 9.0 15.0 15.0 13.1 14.0 14.5 15.5 15.0 15.0 15.0 15.0 19.3 19.9 19.4 19.4 19.4 18.5 18.5 18.5 17.5 17.5 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 11.0 11.5 12.0 14.0 12.5 13.0 13.0 13.0 13.0 13.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 - - - - - - - - 1.0 1.0 '10 6.0 5.0 5.0 5.0 5.0 8.0 8.0 8.0 8.0 8.0 30.0 29.0 28.5: 9.0 29.0 30.0 31.0 31.0 34.0 34.0 Source: City of Elk River Finance Department (126) CITY OF ELK RIVER 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 2014-2016. (127) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Function Planning Land use applications 85 88 64 43 54 56 71 85 118 138 Police Police calls 19,277 21,997 22,231 21,751 20,707 20,451 20,676 21,585 21,930 24,728 Traffic citations na 2,323 2,620 2,638 2,125 1,840 1,925 1,930 2,778 2,818 Fire Fire calls 436 453 364 443 469 355 446 411 436 442 Building/environmental Permits issued 2,382 2,021 1,369 2,105 1,841 1,683 1,866 1,956 1,722 1,804 Valuation of permits $67,309 $41,006 $14,265 $ 22,312 $ 20,719 $ 25,585 $38,440 $47,037 $57,965 $51,368 (thousands of dollars) Public works Street sweeping (hours) 627 1,085 1,287 1,063 1,494 1,811 1,652 1,888 1,824 1,520 Snowplowing (hours) 4,380 2,737 2,305 3,425 2,964 1,675 4,263 5,872 3,018 3,368 Equipment repair (hours) 6,440 5,038 6,482 5,378 5,711,-- 5,051 5,125 5,210 3,575 3,688 Culture and recreation Recreation participants 14,104 20,631 26,124 26,061 26,934 26,803 27,065 27,330 27,348 27,452 Ice arena usage (hours) 4,193 4,386 4,684 4,624 4,740 4,752 4,736 4,568 4,569 4,583 Golf rounds 10,971 11,533 11,079 10,707 9,150 11,480 9,743 - - - Sewer Average daily treatment flow 1,190 1,230 1,300 1,200 1,245 1,200 1,203 1,200 1,200 1,300 (thousands of gallons) Water Number of customers 4,413 4,508 4,467 4,511 4,515 4,542 4,613 4,676 4,672 4,903 Average daily consumption 2,394 1,992 1,941 1,718 1,786 2,321 2,152 2,143 2,192 2,196 (thousands of gallons) Electric Number of customers 8,945 9,203 9,170 9,207 9,227 9,285 9,358 9,449 10,499 10,816 Average daily consumption 579 614 638 687 716 749 751 752 773 837 (thousands of KWh's) Sources: Various city departments Note: The golf course was purchased in 2006 and was not open during 2014-2016. (127) 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 CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 1 1 1 1 1 1 1 1 1 11 12 12 12 12 12 12 12 13 13 2 2 2 2 2 2 2 2 2 2 151 151 151 151 1 151 151 151 151 155 44 44 44 44 4 45 45 46 46 46 964 964 964 964 964 988 988 1,324 1,324 1,324 75 78 79 79 80 80 80 80 80 80 21 21 ,21 21 21 21 21 21 21 2,200 2,200 ,200 2,200 2,200 2,200 2,200 2,200 2,200 4,500 8,100 8,100 100 8,100 8,100 10,000 10,000 10,000 10,000 10,000 6 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. (128) City of Elk River CliftonLarsonAllen Audit Presentation Agenda June 5, 2017 -Unmodified or "Clean" opinion on the December 31, 2016 financial statements -Internal Control Letter • Material Weakness — NONE • Significant Deficiencies — NONE -Management Letter • Documentation of review procedures • Capital asset inventory process • Liquor store cash counts and variance reports • Utility revenue reports -Report on Minnesota Legal Compliance Guide — NONE -Required Communication to Governance Letter • No significant new accounting policies were adopted in 2016. • Two new disclosure only Standards were adopted o Fair value disclosures o Tax abatements/TIF • Accounting Estimates — depreciable lives of capital assets, net pension liability, net pension asset, collectability of receivables -Other Information • Unassigned fund balance as a percentage of General Fund expenditures o 48% for 2016 o 48% for 2015 • General Fund Budget to Actual o Revenues — $332,317 (2.8%) over budget ■ Intergovernmental (Fire Aid — not budgeted for) o Expenditures — $60,962 (0.5%) under budget ■ Public Safety over budget (unbudgeted for Fire Aid) ■ Public works under budget • Library Fund Budget to Actual o Revenues over budget $2,736 o Expenditures under budget $28,551 • Ice Arena Budget to Actual o Revenues over budget $8,852 o Expenditures under budget $332,966 • Landfill Fund Budget to Actual o Revenues under budget $3,668 o Expenditures over budget $3,193 Ci!y of Elk River CliftonLarsonAllen Audit Presentation Agenda June 5, 2017 • EDA Fund Budget to Actual o Revenues under budget $18,078 o Expenditures over budget $67,220 • Municipal Liquor o Gross Profit Percentage = 28.7% o Transferred $704,567 • Sewer Fund o Positive cash flow from operations of $848,583 o Positive net income $703,246 • Garbage Fund o Negative cash flow from Operations $135,749 o Net loss during 2016 $145,575 • Storm Water Fund o Positive cash flow from operations $291,517 o Net loss during 2016 of $329,516 • PERA Pension Liability o Coordinated = $11.65 million o Police and Fire = $12.28 million • Outstanding debt = $55.51 million -Questions?