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HomeMy WebLinkAbout05-11-2022 Regular MeetingCITY OF FALCON HEIGHTS Regular Meeting of the City Council City Hall 2077 West Larpenteur Avenue AGENDA May 11, 2022 at 7:00 P.M. A. CALL TO ORDER: B.ROLL CALL: ANDREWS ___ GUSTAFSON____ LEEHY___ MEYER ___ WEHYEE___ STAFF PRESENT: LINEHAN____ C.APPROVAL OF AGENDA D.PRESENTATION1.2021 Year-End Annual Audit Report E.APPROVAL OF MINUTES: 1.May 4, 2022 City Council Workshop Meeting Minutes2.April 27, 2022 City Council Regular Meeting Minutes F.PUBLIC HEARINGS: G.CONSENT AGENDA:1.General Disbursements through: 5/4/22 $118,579.58Payroll through: 4/30/22 $17,492.77Wire Payments through: 5/4/22 $11,912.64 2.Approval of City License(s) 3.Designated Signor of City Funds for Newly Appointed City Administrator/City Clerk4.Support for No Mow May H: POLICY ITEMS: I.INFORMATION/ANNOUNCEMENTS: J.COMMUNITY FORUM:Please limit comments to 3 minutes per person. Items brought before the Council will be referred for consideration. Council may ask questions for clarification, but no council action or discussion will be held on these items. K.ADJOURNMENT: BLANK PAGE  CITY OF FALCON HEIGHTS Regular Meeting of the City Council City Hall 2077 West Larpenteur Avenue AGENDA April 27, 2022 at 7:00 P.M. A. CALL TO ORDER: 7:00 PM B.ROLL CALL: ANDREWS ___ GUSTAFSON__X__ LEEHY__X_ MEYER ___ WEHYEE_X__ STAFF PRESENT: PITTMAN__X__ OLSON__X__ C.APPROVAL OF AGENDA: D.PRESENTATION: E.APPROVAL OF MINUTES:1.April 13, 2022 City Council Regular Meeting MinutesMotion by Council Member Wehyee to approve the meeting minutes; Approved, 3-0. F.PUBLIC HEARINGS: G.CONSENT AGENDA:1. General Disbursements through: 4/22/22 $519,012.64 Payroll through: 4/15/22 $14,603.82 Wire Payments through: 4/15/22 $10,385.742. Appointment of Brennan Sorensen to the position of Administrative &Communications Coordinator3.American Recovery Plan Act (ARPA) 4. Approve the 2022 Fee Schedule 5.Approve Charitable Gambling License6. Accept Fair Housing Proclamation7. Renew Support for Beyond the Yellow Ribbon Motion by Council Member Leehy to approve the Consent Agenda; Approved, 3-0. Council Member Leehy was pleased to see the City renewing support for Beyond the Yellow Ribbon. Council Member Wehyee wanted to clarify that the City was only accepting funds for the ARPA. Mayor Gustafson responded that there will be further discussion about how the City will spend the ARPA funding at future City Council meetings. Interim City Administrator Pittman commended Finance Director Olson for his hard work on the ARPA. Brennan Sorensen introduced himself to the City Council as the new Administrative and Communications Coordinator. The City Council welcomed and congratulated him on the appointment. H: POLICY ITEMS: I.INFORMATION/ANNOUNCEMENTS: Council Member Wehyee reported that the Planning Commission met on April 26th to discuss a sketch proposal and the rezoning of Gibbs Farm. The sketch proposal was for a townhome development at 1407 Larpenteur Avenue W. The Commission was mostlysupportive of the preliminary proposal. Regarding Gibbs Farm, it had recently come tothe City’s attention that this land was not affiliated with Ramsey County and thereforewould need to be rezoned. Historically, it was thought that this land was owned by a public institution and therefore it was zoned accordingly as P-1. Now the new zoning for this land would ultimately be determined by the City Council unless Ramsey Countydecided to purchase it. Council Member Leehy reminded residents to be aware of signage near the U of M fields because they had started putting down treatments. She also reminded residents to be mindful of raking their lawns so as not to disrupt pollinators. Mayor Gustafson reported that the Community Engagement Commission met on April18th to discuss final plans for the Spring Together event. The event would be held on Saturday, June 4th, from 4 p.m. – 6 p.m. at Curtiss Field and offer free ice cream, activities/games, the opportunity to meet new staff/city officials, and more. The focus ofthe event was getting out in the community and building relationships. He also advertisedsummer programming registration and openings on city commissions. Interim City Administrator Pittman reported that there had been no applications submitted for the Summer Programming Coordinator. So far roughly ten children haveregistered for summer programming. Public Works had swept City streets once andwould sweep again next week. J.COMMUNITY FORUM: Please limit comments to 3 minutes per person. Items brought before the Council will be referred for consideration. Council may ask questions for clarification, but no councilaction or discussion will be held on these items. K.ADJOURNMENT: 7:21 p.m. _______________________________ Randall C. Gustafson, Mayor Dated this 11th day of May, 2022 _________________________________ Jack Linehan, City Administrator BLANK PAGE  CITY OF FALCON HEIGHTS City Council Workshop City Hall 2077 West Larpenteur Avenue MINUTES May 4, 2022 6:30 P.M. A.CALL TO ORDER: 6:33 p.m. B. ROLL CALL: ANDREWS _X__ GUSTAFSON__X__ LEEHY_X__ MEYER _X___ WEHYEE__X___ STAFF PRESENT: LINEHAN__X___ SORENSEN__X__ C.PRESENTATIONS: D.POLICY ITEMS: 1.Introduction of New City Administrator Jack's Introduction: Jack introduced himself and Brennan Sorensen, the new administrative and communications coordinator. Jack plans to attend each commission to meet everyone and see how the commission works. Jack was born in Minneapolis. He grew up in Taylor Falls and went to Chisago Lakes High School. He graduated from Winona State with a degree in public administration and then went to Northern Illinois University, where he got his Masters in Public Administration. His mother grew up in Falcon Heights. So, he has a fond memory of Falcon Heights. He has been reaching out and getting settled in. Jack is learning the history and the streets of Falcon Heights. He is enjoying the process of being the City Administrator for Falcon Heights. 2.Meet and Greet with Council and Commission Chairs Parks and Rec Commission: Jack Linehan City Administrator: One of Jack's top priorities is the Community Park building. The City is financially in a good place and has been saving for the past few years. Mike Bradberry Parks & Rec Commission Chair: Preparing for spring ahead with the Community Engagement Commission. The Parks and Rec Commission is focusing on the Community Park building and expanding the Community Garden. We have toured various Roseville buildings to see what would best fit the City's needs. The Commission is leaning toward using the Lexington Park building in Roseville as the model for the community park building. Mayor Gustafson: Talks with the University of Minnesota have slowed down on buying the land where the community park building is. However, if The University of Minnesota were to sell the land, they would want to keep it as parkland. Council Member Leehy: At Spring Ahead, we should have table focused on the community park building for citizens to give ideas and feedback. Environmental Commission: Patrick Mathwig Environmental Commission Chair: recycling contract has to be finished soon. Climate emergency declaration meeting tomorrow to finalize and send it to the City Council. Finishing up the Climate Action Plan and recommends getting concrete goals. Keeping continued support for the home energy audit rebates was popular with citizens. Falcon Heights won for the most reimbursements per capita through Xcel. Recommends the City should look into using the partners and energy workshops. The workshops are free and a great way for citizens to see their utility usage. The workshops allow for Xcel to gather aggregate data to see the utility usage of homes and businesses in a particular area, then makes bring that information to the workshops and make recommendations for citizens. He wants to make sure the City can do the Xcel workshops. The Commission is working on electric vehicles, charging stations, native landscaping, and beekeeping ordinances. The Commission is also looking into No Mow May. There should be a survey to give people a chance to express their opposition. Jack Linehan City Administrator: The City staff has been looking into No Mow May because of interest from citizens. A draft is being proposed to the City Council to stay the current ordinance for grass growth to 6 inches through May. This would be a test run for this year. Citizens would have to register with the City. The City is a little late to implement this stay, and if the resolution passed, it would be May 11. Another option is having a survey for next year for citizens’ feedback on No Mow May. Council Member Leehy: It is good to give people a chance to express their ideas and concerns with the survey. Mayor Gustafson: This resolution would not force citizens to let their grass grow. This would be a volunteer action, and there would not be a penalty for not cutting your grass. The City should see how it works this year as a test run. Council Member Wehyee: This resolution would only be temporary. I would like to see the draft before the next City Council meeting to go over it. Council Member Andrews: She supports implementing No Mow May as soon as possible. Scott Wilson Planning Commission Chair: We could make signs that explains No Mow May and spread awareness to the community. Planning Commission: Scott Wilson Planning Commission Chair: The Planning Commission is currently working on the vacant property ordinance. There have been issues on California St. where the City could not find the contact information for a vacant property. The Commission wants to make sure there is the contact information for vacant houses. The Commission is working on having a public forum in the spring for this ordinance. Some specifics of the ordinance include that if your house is vacant for more than six months, there will be a fine. The Commission is also looking into a development project. Developers have proposed a new property development where the old Shell gas station used to be. In addition, the developers are proposing building townhouses. The Commission also found out that Gibbs farm needs to be zoned for the City of Falcon Heights; it was previously thought that Ramsey County had zoned the farm. However, since the farm is operated by a non-profit, it does not fall under their jurisdiction but the City of Falcon Heights. Three properties in Gibbs Farm would have to be rezoned. Gibbs Farm wants to become a year-round operation. An organization has expressed interest in doing a study on Larpenteur. Also, there are two candidates for the Planning Commission. Council Member Leehey: Some citizens have expressed interest in a bridge across Larpenteur. Patrick Mathwig Environmental Commission Chair: Environmental Commission is interested in working with the Planning Commission. Community Engagement Commission: Julie Ebbesen Community Engagement Commission Chair: Julie has been on the Commission for a year and a half. The Commission has been focusing on how to identify to better communicate with under-served citizens—also working with the Parks and Rec Commission for Spring Ahead and Human Rights Day. In addition, starting to work on showcasing for the Snowstravaganza. The Commission's primary goal is to improve the City's communication with citizens after Spring Ahead is the Ice cream social and resource fair. The resource will help identify resources for underserved members of the community. The Commission enjoys working with other Commissions; it is a great way to build connections. Scott Wilson Planning Commission Chair: Amber union will be an excellent opportunity for the City to improve its communications and outreach. The City should consider bringing back the 5k and use the fairgrounds, and the theme could be in memory of Philando Castile. Jack Linehan City Administrator: This is an excellent opportunity for the City to enhance communication using the Nextdoor app. Staff cannot see chatter in the neighborhood on the app, which creates privacy for the citizens. Patrick Mathwig Environmental Commission Chair: Having one dedicated seat for a college or high school student would improve inclusivity and communication. Council Member Leehy: Advertise Commission seats in high schools would be a good way to get the word out to students. E.INFORMATION/ANNOUNCEMENTS: F.ADJOURNMENT: 8:06 p.m. _______________________________ Randall C. Gustafson, Mayor Dated this 11th day of May, 2022 _________________________________ Jack Linehan, City Administrator BLANK PAGE  REQUEST FOR COUNCIL ACTION City of Falcon Heights, Minnesota __________________________ Item Year-End 2021 Annual Audit Report Description Matt Mayer of BerganKDV will present the Annual Comprehensive Financial Report for the Year Ended December 31, 2021. The Financial Report is a complex document that includes evaluation and analysis of the financial stability of the City as it relates to the General Fund, Special Revenue Funds, Debt Service funds, Capital Funds, and Proprietary Funds. Mr. Mayer will provide a high-level overview of the financial stability of the City for year-end 2021. Budget Impact N/A Attachment(s) •Communications Letter •Legal Compliance Report •Annual Comprehensive Financial Report (2021) Action(s) Requested Motion to accept and approve the Year End 2021 Annual Audit Report. Meeting Date May 11, 2022 Agenda Item Presentation D1 Attachment N/A Submitted By Jack Linehan, City Administrator City of Falcon Heights Ramsey County, Minnesota Communications Letter December 31, 2021 2 City of Falcon Heights Table of Contents Report on Matters Identified as a Result of the Audit of the Basic Financial Statements 1 Significant Deficiency 3 Required Communication 5 Financial Analysis 9 Emerging Issue 18 1 Report on Matters Identified as a Result of the Audit of the Basic Financial Statements Honorable Mayor, Members of the City Council and Management Sack Thongvanh, City Administrator Roland Olson, Finance Director City of Falcon Heights Falcon Heights, Minnesota In planning and performing our audit of the basic financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Falcon Heights, Minnesota, as of and for the year ended December 31, 2021, 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, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that have not been identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error, or fraud may occur and not be detected by such controls. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the City's basic financial statements will not be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the likelihood of an event occurring is either reasonably possible or probable as defined as follows:  Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely.  Probable. The future event or events are likely to occur. We did not identify any deficiencies in internal control that we consider to be material weaknesses. 2 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. The significant deficiency identified is stated within this letter. The accompanying memorandum also includes financial analysis provided as a basis for discussion. The matters discussed herein were considered by us during our audit and they do not modify the opinion expressed in our Independent Auditor's Report dated April 13, 2022, on such statements. This communication, which is an integral part of our audit, is intended solely for the information and use of management, the City Council, and others within the City and state oversight agencies and is not intended to be, and should not be, used by anyone other than these specified parties. Minneapolis, Minnesota April 13, 2022 3 City of Falcon Heights Significant Deficiency Lack of Segregation of Accounting Duties The City continued to evaluate and improve the segregation of accounting duties among City staff during 2021. Because of a limited number of office personnel, some areas of internal control still remain without proper segregation of accounting duties; however, we can report on the following processes. The lack of adequate segregation of accounting duties could adversely affect the City's ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. Revenue Cycle The four areas of segregation in the revenue cycle include mailroom custody, treasurer custody, accounts receivable, and accounting. We noted some overlap in the mailroom and treasurer custody, with one employee having job responsibilities in both areas. We also noted overlapping duties between accounts receivable and accounting, in that the person responsible for accounts receivable also is responsible for bank reconciliations. Purchasing Cycle The five areas of segregation in the purchasing cycle include purchasing authorization, receiving authorization, accounts payable, treasurer responsibilities, and accounting. We noted proper segregation between the responsibility of purchasing goods and services, the individual responsible for preparing the purchase order, and the person responsible for approving the purchase order. However, we noted overlapping duties with the approval of purchase orders, input of invoices, and preparing of disbursements being performed by one individual. Payroll Cycle The five areas of segregation in the payroll cycle include human resources authorization, immediate supervisor authorization, payroll recording, paymaster custody, and accounting. In addition to having responsibilities in payroll recording, paymaster custody, and accounting cycles noted above, the Finance Director has full general ledger access and the ability to write and post journal entries. While we believe this access is necessary to efficiently perform the financial duties required, this access has the ability to override many of the controls and segregation listed above. Journal Entries The three areas of segregation in journal entries include an employee to write the journal entry, another to post the entry, and finally another employee to review the entry. We noted some journal entries were not approved by someone other than the person writing the entry. We recommend a second review/approval to ensure accuracy. 4 City of Falcon Heights Significant Deficiency Lack of Segregation of Accounting Duties (Continued) Bank Reconciliation Process The two areas of segregation include an employee to prepare the cash reconciliation and another employee to review the reconciliation; ideally, the individual preparing the reconciliation has limited involvement in the revenue and purchasing cycles. We noted the Finance Director has primary responsibility for bank reconciliations. These are generally delegated to other staff, however, still completed by the Finance Director to ensure accuracy. We recommend each reconciliation be reviewed to help ensure accuracy. 5 City of Falcon Heights Required Communication We have audited the basic financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2021. Professional standards require that we advise you of the following matters related to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express opinions about whether the basic financial statements prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the basic financial statements does not relieve you or management of its respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the basic financial statements are free of material misstatement. An audit of the basic financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgement, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Generally accepted accounting principles provide for certain Required Supplementary Information (RSI) to supplement the basic financial statements. Our responsibility with respect to the RSI, which supplements the basic financial statements, is to apply certain limited procedures in accordance with generally accepted auditing standards. However, the RSI was not audited and, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance, we do not express an opinion or provide any assurance on the RSI. Our responsibility for the supplementary information accompanying the basic financial statements, as described by professional standards, is to evaluate the presentation of the supplementary information in relation to the basic financial statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. 6 City of Falcon Heights Required Communication Significant Risks Identified We have identified the following significant risks of material misstatement:  Improper Revenue Recognition  Misappropriation of Assets Qualitative Aspects of the City's Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in the notes to basic financial statements. There have been no initial selection of accounting policies and no changes to significant accounting policies or their application during 2021. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the basic financial statements prepared by management and are based on management's current judgements. Those judgements are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the basic financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgements. The most sensitive estimates affecting the basic financial statements relate to: Depreciation – The City is currently depreciating its capital assets over their estimated useful lives, as determined by management, using the straight-line method. Expense Allocation – Certain expenses are allocated to programs based on an estimate of the benefit to that particular program. Examples are salaries, benefits, and supplies. Net Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows of Resources Related to Pensions – These balances are based on an allocation by the pension plans using estimates based on contributions. We evaluated the key factors and assumptions used to develop the accounting estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Financial Statement Disclosures Certain basic financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The basic financial statement disclosures are neutral, consistent, and clear. 7 City of Falcon Heights Required Communication Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For the purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effects of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the basic financial statements taken as a whole and each applicable opinion unit. Management did not identify and we did not notify them of any uncorrected financial statement misstatements. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City's basic financial statements or the auditor's report. No such disagreements arose during the course of our audit. Representations Requested from Management We have requested certain written representations from management, which are included in the management representation letter. Management's Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management has informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the City, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City's auditor. Other Information Included in Annual Reports Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the City's annual reports, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. 8 City of Falcon Heights Required Communication Other Information Included in Annual Reports (Continued) We applied certain limited procedures to the RSI that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the basic financial statements or to the basic financial statements themselves. 9 City of Falcon Heights Financial Analysis The following pages provide graphic representation of select data pertaining to the financial position and operations of the City for the past five years. Our analysis of each graph is presented to provide a basis of discussion of past performance and how implementing certain changes may enhance future performance. General Fund Balance At December 31, 2021, the General Fund balance was $3,245,298 which is an increase of $3,525 from 2020. Based on current expenditure levels, the fund balance represents over a year of expenditures. $37,201 $40,800 $17,737 $53,084 $1,828,155 $2,007,462 $2,515,136 $3,188,689 $3,245,298 $- $300,000 $600,000 $900,000 $1,200,000 $1,500,000 $1,800,000 $2,100,000 $2,400,000 $2,700,000 $3,000,000 $3,300,000 $3,600,000 2017 2018 2019 2020 2021 General Fund Balance Nonspendable Unassigned 10 City of Falcon Heights Financial Analysis General Fund $2,053,181 $2,494,181 $2,952,007 $3,337,438 $3,183,568 $1,893,584 $2,263,275 $2,389,396 $2,470,538 $2,654,043 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 $2,400,000 $2,600,000 $2,800,000 $3,000,000 $3,200,000 $3,400,000 2017 2018 2019 2020 2021 General Fund Total Revenues Total Expenditures General Fund revenues decreased by $153,870, or 4.6%, in 2021. Expenditures in the General Fund increased by $183,505, or 7.4%, and resulted in total revenues exceeding expenditures by $529,525. Further detailed explanations regarding variances will follow in subsequent charts. 11 City of Falcon Heights Financial Analysis General Fund Revenues 2017 2018 2019 2020 2021 Miscellaneous $40,063 $110,083 $69,705 $73,470 $20,031 Fines and Forfeitures 45,806 35,719 28,191 15,109 19,511 Charges for Services 73,723 65,213 108,901 58,138 101,149 Intergovernmental Revenue 654,024 706,270 825,387 1,177,761 759,424 Licenses and Permits 93,344 72,340 159,031 76,325 252,408 General Property Taxes 1,146,221 1,504,556 1,760,792 1,936,635 2,031,045 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 $2,400,000 $2,600,000 $2,800,000 $3,000,000 $3,200,000 $3,400,000 $3,600,000 General Fund Revenues Intergovernmental revenues decreased $418,337 as a result of receiving CARES funding in 2020 and not spending the American Rescue Plan grant in the current year. Licenses and permit revenues increased $176,083 due to an increase in building permits as a result of the Amber Union project. Property taxes increased $94,410, or 5%, from 2020 due to an increase in the total amount levied in the fund in 2021. Miscellaneous revenues decreased $53,439 from the prior year, due to reduced investment income. Charges for services increased by $43,011 due in part to a increase in plan check fees for the Amber Union project. The other remaining General Fund revenues in 2021 stayed relatively consistent with the prior year. 12 City of Falcon Heights Financial Analysis General Fund Revenues (Continued) The following charts depict the components of the General Fund revenues by percentages. General Property Taxes 64%Licenses and Permits 8% Intergovernmental Revenue 24% Charges for Services 3% Fines and Forfeitures 0% Miscellaneous 1% General Fund Revenues 2021 ` General Property Taxes 58% Licenses and Permits 2% Intergovernmental Revenue 35% Charges for Services 2% Fines and Forfeitures 1% Miscellaneous 2% General Fund Revenues 2020 General Fund sources of revenue remained consistent in 2021 compared to 2020. 13 City of Falcon Heights Financial Analysis General Fund Expenditures 2017 2018 2019 2020 2021 Parks and Recreation $88,231 $76,675 $85,174 $71,992 $71,896 Public Works 188,602 221,418 208,414 222,964 309,582 Public Safety 956,548 1,305,759 1,424,994 1,505,502 1,525,779 General Government 660,203 659,423 670,814 670,080 746,786 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 General Fund Expenditures In 2021, expenditures increased $183,505, or 7.4%, from 2020. Public works expenditures increased $86,618, or 38.9% in 2021. This was related to an increase in tree maintenance in 2021. General government expenditures increased $76,706 as a result of allocating more technical support expenditures here rather than to the fire department as they disbanded in January 2021. Other expenditures stayed relatively consistent with the prior year. 14 City of Falcon Heights Financial Analysis General Fund Expenditures (Continued) General Government 28% Public Safety 57% Public Works 12% Parks and Recreation 3% General Fund Expenditures 2021 General Government 27% Public Safety 61% Public Works 9% Parks and Recreation 3% General Fund Expenditures 2020 15 City of Falcon Heights Financial Analysis General Fund Budget Actual Amounts Revenues Taxes 2,037,731$ 2,031,045$ (6,686)$ Licenses and permits 75,008 252,408 177,400 Intergovernmental 683,532 759,424 75,892 Charges for services 19,300 101,149 81,849 Fines and forfeitures 20,000 19,511 (489) Miscellaneous 54,650 20,031 (34,619) Total revenues 2,890,221 3,183,568 293,347 Expenditures General government 764,803 746,786 (18,017) Public safety 1,610,733 1,525,779 (84,954) Public works 297,595 309,582 11,987 Parks and recreation 91,090 71,896 (19,194) Total expenditures 2,764,221 2,654,043 (110,178) Excess of receipts over disbursements 126,000 529,525 403,525 Other Financing Uses Transfers out (126,000) (526,000) (400,000) Net change in fund balance -$ 3,525$ 3,525$ Original and Final Budget Variance with Final Budget - Over (Under) Overall, General Fund revenues were over budget by 10.2%, or $293,347. The largest budget variance was in licenses and permit revenue, which exceeded budget amounts by $177,400. This variance is a result of more building permits than anticipated. Charges for services was over budget $81,849 due to more plan check fees than anticipated as a result of the Amber Union project. Miscellaneous revenues was under budget $34,619 as a result of poor investment market conditions. Other categories were relatively on budget. Expenditures were under budget by $110,178, or 4.0%. The largest variance was in public safety, which was $84,954 under budget. This variance was due to the fire department disbanding in January 2021. Other categories were relatively on budget. 16 City of Falcon Heights Financial Analysis Sanitary Sewer Fund The graphs below and on the next page illustrate the current operations of the Sanitary Sewer and the Storm Drainage Funds. 2017 2018 2019 2020 2021 Sewer Charges $879,391 $945,893 $1,070,459 $852,185 $1,153,186 Total Operating Expenses 723,236 708,321 901,784 867,393 960,715 Depreciation 12,013 12,620 13,281 12,272 15,333 Operating Income with Depreciation 156,155 237,572 168,675 (15,208) 192,471 Operating Income without Depreciation 168,168 250,192 181,956 (2,936) 207,804 $(200,000) $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Sanitary Sewer Fund The Sanitary Sewer Fund realized operating income of $192,471 during 2021. Sewer charges in 2021 increased by $301,001 from 2020. A combination of SAC Fees, rate increases and usage from the State Fair and University accounted for the increase. With an operating income of $192,471, $957 in nonoperating revenue and capital contributions of $50,246, the change in the Sanitary Sewer Fund net position was an increase of $243,674. Total net position increased to $2,805,819 in 2021. 17 City of Falcon Heights Financial Analysis Storm Drainage Fund 2017 2018 2019 2020 2021 Storm Drainage Charges $169,957 $169,172 $174,608 $179,662 $188,125 Total Operating Expenses 142,494 156,170 155,634 145,903 158,873 Depreciation 46,866 50,677 50,836 49,301 53,237 Operating Income with Depreciation 27,463 13,002 18,974 33,759 29,252 Operating Income without Depreciation 74,329 63,679 69,810 83,060 82,489 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 Storm Drainage Fund Storm sewer charges for services stayed relatively consistent with the prior year, increasing $8,463. Operating expenses increased in 2021 by $12,970. The Storm Drainage Fund had operating income of $29,252 in 2021. With $1,919 in investment income and $78,993 in capital contributions, the Storm Drainage Fund had a total increase in net position of $110,164. Ending net position at December 31, 2021, was $1,719,478. 18 City of Falcon Heights Emerging Issue Executive Summary The following is an executive summary of financial and business related updates to assist you in staying current on emerging issues in accounting and finance. This summary will give you a preview of the new standards that have been recently issued and what is on the horizon for the near future. The most recent and significant updates include:  Accounting Standard Update – GASB Statement No. 87 – Leases – GASB has issued GASB Statement No. 87 relating to accounting and financial reporting for leases. This new statement establishes a single model for lease accounting based on the principle that leases are financing of the right to use an underlying asset. The following is an extensive summary of the current update. As your continued business partner, we are committed to keeping you informed of new and emerging issues. We are happy to discuss this issue with you further and its applicability to your City. Accounting Standard Update – GASB Statement No. 87 – Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments' basic financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. A lease is defined as a contract that conveys control of the right to use another entity's nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this Statement. A short-term lease is defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. 19 City of Falcon Heights Emerging Issue Accounting Standard Update – GASB Statement No. 87 – Leases (Continued) A lessee should recognize a lease liability and a lease asset at the commencement of the lease term, unless the lease is a short-term lease or it transfers ownership of the underlying asset. The lease liability should be measured at the present value of payments expected to be made during the lease term (less any lease incentives). The lease asset should be measured at the amount of the initial measurement of the lease liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs. A lessee should reduce the lease liability as payments are made and recognize an outflow of resources (for example, expense) for interest on the liability. The lessee should amortize the lease asset in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset. The notes to basic financial statements should include a description of leasing arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be made. A lessor should recognize a lease receivable and a deferred inflow of resources at the commencement of the lease term, with certain exceptions for leases of assets held as investments, certain regulated leases, short-term leases, and leases that transfer ownership of the underlying asset. A lessor should not derecognize the asset underlying the lease. The lease receivable should be measured at the present value of lease payments expected to be received during the lease term. The deferred inflow of resources should be measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods. A lessor should recognize interest revenue on the lease receivable and an inflow of resources (for example, revenue) from the deferred inflows of resources in a systematic and rational manner over the term of the lease. The notes to basic financial statements should include a description of leasing arrangements and the total amount of inflows of resources recognized from leases. GASB Statement No. 87 is effective for reporting periods beginning after June 15, 2021. Information provided above was obtained from www.gasb.org. City of Falcon Heights Ramsey County, Minnesota Independent Auditor's Report on Legal Compliance December 31, 2021 1 Report on Legal Compliance Independent Auditor's Report Honorable Mayor and Members of the City Council City of Falcon Heights Falcon Heights, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Falcon Heights, Minnesota as of and for the year ended December 31, 2021, and the related notes to financial statements, and have issued our report thereon dated April 13, 2022. In connection with our audit, nothing came to our attention that caused us to believe that the City of Falcon Heights failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions, insofar as they relate to accounting matters. This report is intended solely for the information and use of those charged with governance and management of the City and the State Auditor and is not intended to be, and should not be, used by anyone other than these specified parties. Minneapolis, Minnesota April 13, 2022 ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY OF FALCON HEIGHTS, MINNESOTA For the Year Ended December 31, 2021 Prepared by THE DEPARTMENT OF FINANCE AND ADMINISTRATION Sack Thongvanh, City Administrator Roland Olson, Finance Director CITY OF FALCON HEIGHTS 2077 W. Larpenteur Avenue Falcon Heights, Minnesota 55113 (THIS PAGE LEFT BLANK INTENTIONALLY) City of Falcon Heights Table of Contents Page Introductory Section Elected Officials and Administration 1 Organization Chart 2 City Map 3 Letter of Transmittal 5 Certificate of Achievement for Excellence in Financial Reporting 10 Financial Section Independent Auditor's Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 30 Statement of Activities 31 Fund Financial Statements Balance Sheet – Governmental Funds 32 Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds 35 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 34 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities – Governmental Funds 36 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 38 Statement of Net Position – Proprietary Funds 40 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds 41 Statement of Cash Flows – Proprietary Funds 42 Notes to Basic Financial Statements 43 Required Supplementary Information Schedule of City's Proportionate Share of Net Pension Liability General Employees Retirement Fund 68 Schedule of City Contributions General Employees Retirement Fund 68 Required Supplementary Information and Notes to Required Supplementary Information 69 Notes to Required Supplementary Information 70 Combining and Individual Fund Statements and Schedules Combining Balance Sheet – Nonmajor Governmental Funds 74 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 78 Schedules of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual General Fund – Detailed 82 Park Programs Fund – Special Revenue Fund 86 City of Falcon Heights Table of Contents Table Page Financial Section (Continued) Combining and Individual Fund Statements and Schedules (Continued) Schedules of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual (Continued) Water Fund – Special Revenue Fund 87 Solid Waste Fund – Special Revenue Fund 88 Community Development Fund – Special Revenue Fund 89 Street Lighting Fund – Special Revenue Fund 90 Community Garden Fund – Special Revenue Fund 91 Community Inclusion – Special Revenue Fund 92 G.O. Improvement Bonds, Series 2017A – Debt Service Fund 93 G.O. Improvement Bonds, Series 2013A – Debt Service Fund 94 G.O. Equipment Certificates, Series 2013B – Debt Service Fund 95 2021 Street Project – Capital Projects Fund 96 Future Improvements – Capital Projects Fund 97 General Capital Improvements – Capital Projects Fund 98 Parks/PW and Facilities Capital Improvements – Capital Projects Fund 99 Tax Increment No. 1-3 – Capital Projects Fund 100 Public Safety Capital Improvements – Capital Projects Fund 101 Statistical Section Net Position by Component 1 106 Changes in Net Position 2 108 Governmental Activities Tax Revenues by Source 3 113 Fund Balances of Governmental Funds 4 114 Changes in Fund Balances of Governmental Funds 5 116 General Governmental Tax Revenues by Source 6 118 Assessed Value and Estimated Actual Value of Taxable Property 7 119 Property Tax Rates – Direct and Overlapping Governments 8 120 Principal Property Taxpayers 9 121 Property Tax Levies and Collections 10 122 Ratios of Outstanding Debt by Type 11 123 Ratios of General Bonded Debt Outstanding 12 125 Direct and Overlapping Governmental Activities Debt 13 126 Legal Debt Margin Information 14 128 Pledged-Revenue Coverage 15 130 Demographic and Economic Statistics 16 131 Principal Employers 17 132 Full-Time Equivalent City Government Employees by Function 18 133 Operating Indicators by Function 19 134 Capital Asset Statistics by Function 20 135 1 City of Falcon Heights Elected Officials and Administration December 31, 2021 Elected Officials Position Term Expires Randy Gustafson Mayor December 31, 2023 Kay Andrews Council Member December 31, 2023 Melanie Leehy Council Member December 31, 2025 Mark Miazga Council Member December 31, 2021 Yakasah Wehyee Council Member December 31, 2023 Administration Sack Thongvanh City Administrator Roland Olson Finance Director Tim Pittman Park and Public Works Director Mayor & Council City Administrator AttorneyEngineer Planning Commission Community Engagement Commission Fire Inspector CITY OF FALCON HEIGHTS 2021 ORGANIZATIONAL CHART Summer Recreation Coordinator Rec Staff Community Development Coordinator Building Inspector Plumbing Inspector Mechanical Inspector Forestry Inspector Police Fiscal Consultant Planning Consultant Assistant to the City AdministratorFinance Director Public Works Staff Environment Commission Director of Public Works Park & Recreation Commission Administrative/ Communication Coordinator 3 City of Falcon Heights City Map December 31, 2021 4 (THIS PAGE LEFT BLANK INTENTIONALLY) 5 6 7 8 9 10 City of Falcon Heights Certificate of Achievement for Excellence in Financial Reporting 11 Independent Auditor's Report Honorable Mayor and Members of the City Council City of Falcon Heights Falcon Heights, Minnesota Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Falcon Heights, Minnesota, as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Falcon Heights, Minnesota, as of December 31, 2021, 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. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Falcon Heights, Minnesota, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements The City of Falcon Heights' management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about City of Falcon Heights' ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 12 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of Falcon Heights' internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City of Falcon Heights' ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and Required Supplementary information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB), 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. 13 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Falcon Heights' basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Minneapolis, Minnesota April 13, 2022 14 (THIS PAGE LEFT BLANK INTENTIONALLY) City of Falcon Heights Management's Discussion and Analysis 15 As management of the City of Falcon Heights (the "City"), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 5-9 of this report. All amounts, unless otherwise indicated, are expressed in dollars. FINANCIAL HIGHLIGHTS  The assets & deferred inflows of resources of the City exceeded its liabilities & deferred inflows of resources at the close of the most recent fiscal year by $18,005.806. Of this amount, $8,019,273 (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 $1,196,970. Unrestricted net position increased by $1,406,833.  As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $7,476,731 an increase of $1,174,167 in comparison with the prior year. Debt principal payments of $445,000 and interest payments of $56,875 occurred in 2021. A positive change in fund balance in the general fund of $3,525, along with an increase of $1,170,642 in the fund balances of other governmental funds resulted in a net increase of $1,174,167 in total fund balance.  Fund balance definitions must conform to the Government Accounting Standards Board (GASB) Statement No. 54 for the most current year-ended. GASB 54 requires governments to allocate fund balances pursuant to a new hierarchy; fund balances are defined as "Non-spendable," "Restricted," "Committed," "Assigned," and "Unassigned." The new hierarchy defines how a fund discloses its fund balance. Only the general fund maintains an unassigned residual fund balance. The fund balances maintained by all of the other funds are designated for a specific purpose. Restricted, committed, and assigned balances represent differing forms of legal constraint. The reservation of restricted fund balances is stipulated by a city charter, constitution, or grant contract. Committed fund balances have been reserved by the highest law-making body of the government. An assigned fund balance is reserved for the purpose of the fund; for example, the fund balance in the Future Improvements Fund is assigned for future improvements. The General Fund's unassigned fund balance of $3,245,298 is approximately 43% of the total fund balance of all governmental funds.  At the end of the current fiscal year, the unassigned fund balance for the General Fund was $3,245,298, or 122%, of total General Fund expenditures at 2021 levels.  For 2021, there was a 4.9% increase in the property tax levy. For 2020, there was a 7.9% increase in the property tax levy. For both 2019 and 2018, there was a 24% increase in the property tax levy. For 2017, there was an 8.9% increase in the property tax levy. For 2016, there was an 8.3% increase. In 2015 and 2014, there was no increase in the property tax levy. For 2013, there was a 6.5% increase in the property tax levy. For 2012, there was a 1.96% decrease in the property tax levy. For 2011, there was a 1.5% increase in the property tax levy.  The City's total debt increased by $220,000 during the current fiscal year. This represents payments of $445,000 of the City's debt and a new bond issue for $665,000. The principal of general obligation debt outstanding as of December 31, 2021 is $1,165,000. City of Falcon Heights Management's Discussion and Analysis 16 OVERVIEW OF THE FINANCIAL STATEMENTS This management's discussion and analysis (MD&A) is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements and 3) Notes to the Financial Statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the government'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 that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business- type activities). The governmental activities of the City include general government, public safety, public works, parks and recreation, and community development. The business-type activities of the City include sanitary sewer and storm drainage. The government-wide financial statements include only the City itself (known as the primary government). The City has no component units. The government-wide financial statements can be found on pages 30-31 of this report. FUND FINANCIAL STATEMENTS A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All funds of the City can be divided into two categories: governmental funds and proprietary funds. City of Falcon Heights Management's Discussion and Analysis 17 FUND FINANCIAL STATEMENTS Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City'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. Any fund experiencing financial change during the year is considered active. The City maintained 20 individual governmental funds during 2020. Of these funds, five are major 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 Fund, GO Improvement Bond 2021A, 2021 Street Project, Future Improvements, and Parks/PW Capital Improvement Fund. Data from the other 15 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. In addition, individual fund schedules are presented on pages 83-99 for all Special Revenue, Debt Service and Capital Projects Funds. The City adopts an annual appropriated budget for its General Fund, Special Revenue Funds Debt Service Funds and Capital Project Funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 32-39 of this report. Proprietary Funds The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its sanitary sewer and storm drainage activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in greater detail. The proprietary fund financial statements provide separate information for sanitary sewer and storm drainage, both of which are considered to be major funds of the City. The basic proprietary fund financial statements can be found on pages 40-42 of this report. NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The Notes to the Financial Statements can be found on pages 43-66 of this report. City of Falcon Heights Management's Discussion and Analysis 18 OTHER INFORMATION The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the Notes to the Financial Statements, along with statistical tables for the City. Combining and individual fund statements and schedules can be found on pages 74-101. Statistical tables can be found on pages 106-135 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a city's financial position. In the case of the City, assets & deferred outflows of resources exceeded liabilities & deferred inflows of resources by $18,005,806 at the close of the most recent fiscal year. Forty five percent ($8,019,273) of the City's net position is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. About 4% ($778,435) of the net position is restricted and represents resources that are subject to external restrictions on how they may be used. The remaining 51% ($9,208,098) reflects the City's investment in capital assets (e.g., land, buildings, machinery, and equipment) offset by any related debt used to acquire those assets that are still outstanding. City of Falcon Heights' Net Position Assets Current and other assets 8,559,475$ 6,486,660$ 2,783,398$ 2,590,483$ 11,342,873$ 9,077,143$ Capital assets 7,053,078 7,749,079 2,201,504 1,939,341 9,254,582 9,688,420 Total assets 15,612,553 14,235,739 4,984,902 4,529,824 20,597,455 18,765,563 Deferred outflows of resources - pensions 206,301 38,455 75,294 16,375 281,595 54,830 Total assets and deferred outflows of resources 15,818,854$ 14,274,194$ 5,060,196$ 4,546,199$ 20,879,050$ 18,820,393$ Liabilities Long-term liabilities Outstanding 1,468,994$ 1,150,985$ 136,322$ 342,815$ 1,605,316$ 1,493,800$ Other liabilities 611,539 455,664 304,483 19,078 916,022 474,742 Total liabilities 2,080,533 1,606,649 440,805 361,893 2,521,338 1,968,542 Deferred inflows of resources - pensions 257,812 30,168 94,094 12,847 351,906 43,015 Net Position Net investment in capital assets 7,006,594 7,390,580 2,201,504 1,939,341 9,208,098 9,329,921 Restricted 778,435 866,475 - - 778,435 866,475 Unrestricted 5,695,480 4,380,322 2,323,793 2,232,118 8,019,273 6,612,440 Total net position 13,480,509 12,637,377 4,525,297 4,171,459 18,005,806 16,808,836 Total liabilities, deferred inflows of resources, and net position $ 15,818,854 $ 14,274,194 $ 5,060,196 $ 4,546,199 20,879,050$ 18,820,393$ . City of Falcon Heights Management's Discussion and Analysis 19 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although, the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to extinguish these liabilities. At the end of the current fiscal year, the City was 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. The same situation holds true for the prior fiscal year. City of Falcon Heights' Changes in Net Position 2021 2020 2021 2020 2021 2020 Revenues Program revenues Charges for services $ 600,161 $ 361,700 $ 1,341,311 $ 1,031,847 $ 1,941,472 $ 1,393,547 Operating grants and contributions 730,258 807,921 - - 730,258 807,921 Capital grants and contributions 388,902 55,253 129,239 - 518,141 55,253 General revenues Property taxes 2,251,745 2,159,635 - - 2,251,745 2,159,635 Other 1,463,108 1,066,275 - - 1,463,108 1,066,275 Investment earnings 9,901 89,682 2,876 36,408 12,777 126,090 Total revenues 5,444,075 4,540,466 1,473,426 1,068,255 6,917,501 5,608,721 Expenses General government 834,064 765,683 - - 834,064 765,683 Public safety 1,596,239 1,604,140 - - 1,596,239 1,604,140 Public works 2,006,502 680,429 - - 2,006,502 680,429 Park and recreation 114,604 131,580 - - 114,604 131,580 Community development 723 747 - - 723 747 Interest on long-term debt 48,811 25,644 - - 48,811 25,644 Sanitary sewer - - 960,715 867,393 960,715 867,393 Storm drainage - - 158,873 145,903 158,873 145,903 Total expenses 4,600,943 3,208,223 1,119,588 1,013,296 5,720,531 4,221,519 Increase in net position before transfers 843,132 1,332,243 353,838 54,959 1,196,970 1,387,202 Transfer - - - - Changes in net position 843,132 1,332,243 353,838 54,959 1,196,970 1,387,202 Net position – January 1 12,637,377 11,305,134 4,171,459 4,116,500 16,808,836 15,421,634 Net position - December 31 13,480,509$ 12,637,377$ 4,525,297$ 4,171,459$ 18,005,806$ 16,808,836$ Governmental Activities Business-type Activities Total GOVERNMENTAL ACTIVITIES Governmental activities increased the City's net position by $843,132. City of Falcon Heights Management's Discussion and Analysis 20 GOVERNMENTAL ACTIVITIES (CONTINUED) For 2021, the City Council increased the tax levy by 4.9%. In 2020 the City increased the tax levy by 7.9%. In both 2019 and 2018, the City increased the tax levy by 24%. In 2017, the City increased the tax levy by 8.9% resulting in increased tax revenues by 8.4%. In 2016, the City increased the tax levy by 8.4%. In 2015, the property tax revenues increased by 3.63%. In 2014 there was a 3.4% decrease in property tax revenue due to a tax petition court case lowering the property taxes of one of the city's biggest taxpayers. The 2021 delinquencies in property tax collections were consistent with the delinquency payments in 2020, 2019, 2018, 2017, 2016, 2015 and 2014. The City's tax base continues to be very stable resulting in a low delinquency rate. In the governmental activities section, overall, charges for services increased $238,461 from the 2021 level. Comparing to 2020 levels, licenses and permits increased $170,400 primarily due to permit fees from a large apartment complex, fines and forfeitures decreased $489 primarily due to a decrease in parking ticket revenue from the U of M St Paul campus. Operating Grants and Contributions decreased $77,663 due primarily to the City not receiving a Covid-19 grant like in 2020. Capital Grants and Contributions increased $333,649 primarily due to new special assessments. In regard to unrestricted state aid, Local Government Aid (LGA) to the City from the State of Minnesota decreased $13,127 in 2021. The LGA level in 1920 was $682,505 which was comparable to 2019. The amount of LGA support from the State of Minnesota typically varies annually. In addition, governmental activities unrestricted investment revenues decreased $79,781 as compared to 2020. On the following pages are specific graphs, which provide comparisons of the governmental activities' revenues and expenses. Expenses and Program Revenue – Governmental Activities $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 General Government Public Safety Public Works Parks and Recreation Community Development Interest on Long-Term Debt Expenses Program Revenues City of Falcon Heights Management's Discussion and Analysis 21 GOVERNMENTAL ACTIVITIES (CONTINUED) Revenues by Source – Governmental Activities BUSINESS-TYPE ACTIVITIES Business-type activities increased the City's net position by $353,838. There was a 2.2% increase in sanitary sewer fees and a 3% increase in fees for storm drainage for 2021. There was a 2.3% fee increase in sanitary sewer fees and a 3.0% increase in storm drainage fees in 2020 as compared to no fee increases in 2019. In 2017, there was a 4.7% increase in sanitary sewer fees and a 6.8% increase in storm drainage fees. In 2016, there was a 10.4% increase in sanitary sewer fees and no increase in storm drainage fees. In 2015 and 2014, there was no price increase for either sanitary sewer or storm drainage fees. In 2013, the sanitary sewer fees raised 8.5% and an 11.4% increase of storm sewer fees. No price increases in 2012. In 2011, the City changed the method of billing the sanitary sewer fees. The City instituted a base fee plus a variable fee determined by water consumption, instead of the previous method of using a flat fee for residential property owners. This resulted in property owners having an incentive to use less water consumption to help lower their sanitary sewer charges. The commercial properties were raised the same percentage increase as the residential properties. With the environmental importance of clean storm water drainage flows being discharged into our neighboring lakes and ponds, the City will continue to be required to make future capital improvements to our storm water drainage system. City of Falcon Heights Management's Discussion and Analysis 22 BUSINESS-TYPE ACTIVITIES (CONTINUED) Expenses and Operating Revenues – Business-Type Activities Revenues by Source – Business-Type Activities FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Sanitary Sewer Storm Drainage Expenses Charges for Services 99.8% Unrestricted Investment Earnings 0.2% City of Falcon Heights Management's Discussion and Analysis 23 BUSINESS-TYPE ACTIVITIES (CONTINUED) 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, unreserved fund balance may serve as a useful measure of a city'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 $7,476,731, an increase of $1,174,167 in comparison with the prior year. Approximately 43% ($3,245,298) of this total amount constitutes unassigned fund balance, which is available for spending at the City's discretion. None of the remainder of fund balance is non-spendable, which indicates that it is not available for new spending because it has already been disbursed for various prepaid expenditures in the General Fund. Nine percent ($649,927) is restricted fund balance constrained to a specific purpose by outside legislation, external parties, or constitutional provisions. Six percent ($471,616) is committed fund balance constrained by the City Council for specific purposes. Forty two percent ($3,109,890) is assigned fund balance intended for specific purposes by management as delegated authority by the City Council. The General Fund is the principal operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $3,245,298, while total fund balance reached $3,245,298. The entire fund balance was unassigned. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 122% of total General Fund expenditures, while total fund balance also represents 122% of that same amount. The year 2021 was a much more normal year for the City as compared to 2020 which was a very challenging year. In 2020, it was fortunate that the City received $412,789 in Covid-19 federal/state funding due to the pandemic. Because of the pandemic, the City locked down in March of 2020 and suspended all recreational programs, cultural events, and city celebrations. In 2021 the City partially opened up the recreational programs, cultural events, and city celebrations. The City continued to place extra emphasis on conservative spending of the annual budget knowing that revenue shortfalls could occur due to the pandemic. In addition, the City strived to maintain its AAA bond rating by maintaining a large fund balance in the General Fund. In 2021 property tax collections were not adversely affected. A bond rating of AAA has the effect of savings of thousands of dollars in interest costs when the City would go out for bonding for upcoming street projects in the next couple of years. In 2021, the fund balance of the City's General Fund increased by $3,525. Revenues were $293,347 over budget. Expenditures were $110,178 under budget. Key factors for this fund balance change are: Revenue Variances  Property Tax revenue had a variance under budget of $6,686 along with delinquents decreasing $2,994. The total delinquents of $4,971 represent only 0.0025% of the total property tax revenue budget even though the Covid-19 pandemic continued in 2021. Property tax revenues are very stable for the City.  Revenue from fees associated with licenses and permits was $177,400 over budget primarily due to remodeling/reconstruction of a major apartment complex. City of Falcon Heights Management's Discussion and Analysis 24 BUSINESS-TYPE ACTIVITIES (CONTINUED) Governmental Funds (Continued) Revenue Variances (Continued)  Intergovernmental revenue had a variance over budget of $75,892 primarily due to the city receiving an additional $63,649 in police support funds from Ramsey County.  Fines and forfeits revenue only had a variance of $489 under budget primarily due to an increase in administrative fines from Ramsey County which was offset from a loss in parking ticket revenue when the University of Minnesota St Paul Campus closed down to virtual classes.  The fire contract with a neighboring community concluded in 2020. Fire aid for the fire relief association concluded in 2021 at $55,862 with the disbanding of the relief association in 2021. The Relief Association was also closed down in December 2021.  Investment income was $14,838 under budget due to decreasing yields on investments.  Other revenues were under budget by $19,781 primarily due to a $30,000 loss of revenue due to Ramsey County Sheriff's Office contracting directly with the MN State Fair for police services. On a positive note, the City continued to receive an insurance refund of $14,812 from the city's worker's compensation and general liability and property insurance policies. Expenditure Variances  General Government was $18,017 under budget due to the conservative approach to spending which the City undertook due to the pandemic. The departments within the general government contributing to this are as follows: The administrative section recognized a $22,789 expenditure variance under budget of which $10,000 of this variance was due to a reduction in compensation expenses for one part time position being unfilled during 2021.  The finance section recognized an $8,284 expenditure variance under budget due to lower salary and compensation expenses from one full time position being unfilled for one month and a temporary finance intern position being unfilled for eight months.  The communications budget was $36,959 over budget. Technical support for computer and internet services no longer was cost shared with the fire department since the fire department was disbanded in January 2021. This resulted in an increase of $21,703 for technical support in the communications budget. Also, the increase in virtual council meetings added an additional $15,518 to our cable TV expenditure line item.  While planning and inspections had an $10,961 expenditure variance under budget, there was a $9,412 savings for one employee waiving the cost of health insurance due to his spouse providing coverage with another employer and a $6,937 savings of a part time position not being filled. On the other hand, building inspections costs were $10,100 over budget due to the large apartment complex under way in 2021. These variances offset each other.  Fire Fighting section was $58,626 under budgeted amounts due to disbanding the fire department in January 2021. Fire Relief was $6,862 over budget due to closing out the Fire Relief association in 2021.  Expenditures for the City Hall budget were $2,179 under budget. Compensation was $741 under budget, materials and supplies were $5,014 under budget and other expenses were $3,576 over budget. City of Falcon Heights Management's Discussion and Analysis 25 BUSINESS-TYPE ACTIVITIES (CONTINUED) Governmental Funds (Continued) Expenditure Variances (Continued)  Expenditures for the Streets department were $2,477 over budget for the current year. Compensation was over budget due to increased summer help due to the street project while on the other hand, snow removal costs were $21,674 under budget due to the City having two snow plow trucks so city staff could perform the snow removal.  Expenditures for the City's Engineering department was $$6,081 over budget.  City's Tree Program was $5,608 over budget due to the City catching up on tree trimming that was delayed due to the Covid-19 pandemic.  A $19,194 expenditure variance under budget in total park and recreation expenditures was due to less maintenance and compensation expenses resulted from our three parks being partially closed in 2021.  A transfer of $26,000 was made from the General Fund to the Parks Program Special Revenue Fund to help support future summer recreational sports programming activities. A transfer of $80,000 was made from the General Fund to the Infrastructure Capital Fund for future capital needs in city hall. A transfer of $20,000 from the General Fund to the Community Inclusion Fund for Community program activities. And also a transfer of $400,000 from the General fund to provide funding in the Parks, Public Works Capital Fund for future park capital needs like a new community park building.  The Future Improvements Fund, a major fund, is the fund the City uses to record the infrastructure capital improvements of the City that would not be associated with any of the City's tax increment financing districts. The City received $154,216 in street and local government aid from the state of Minnesota and additional income of $132,896 in the form of franchise fees from Xcel Energy during 2021. In addition, there also was an $80,000 transfer from the General Fund for future capital needs. This Future Improvement Fund holds $1,645,748 in assigned fund balance for future construction projects. Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in greater detail. Unrestricted net position of the Sanitary Sewer Fund at the end of the year amounted to $1,933,481while unrestricted net position for the Storm Drainage Fund amounted to $390.312. GENERAL FUND BUDGETARY HIGHLIGHTS During the year, General Fund expenditures were $110,178 less than the budgetary estimates. Revenues were $293,347 more than the budgetary estimates. Also, $26,000 was transferred from the General Fund to the Parks Program Special Revenue Fund to help support park programs in the City, $20,000 was transferred from the General Fund to the Community Inclusion Special Revenue fund, and $80,000 was transferred from the General Fund to Future Improvements Fund for future capital needs. Also, there was a $400,000 from the General fund to provide funding in the Parks, Public Works Capital Fund for future park capital needs. In 2021, the net change in fund balance for the General Fund was a positive $3,525. City of Falcon Heights Management's Discussion and Analysis 26 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City's investment in capital assets for its governmental and business-type activities as of December 31, 2021amounts to $9,254,582 (net of accumulated depreciation). This investment in capital assets includes land, infrastructure, buildings and system, improvements other than buildings, and machinery and equipment. The City has elected to use the "modified approach," as defined by GASB Statement No. 34, for infrastructure reporting of its streets and alleys. The City implemented a pavement management program in 2001 to assist in maintaining and monitoring the performance of the paved street network. This is one of the City's largest investments and would have a significant dollar value if it were to be replaced today. The software program, MicroPAVER, developed by the Army Corps of Engineers, was used by the City in 2001 and 2004. For 2007, 2010, 2013, 2016. And 2019 the City used the software program ICON, which was developed and supported by Goodpointe Technology as a tool for pavement management. While the software is different, the methodology is the same. Both systems use field surveys to identify distresses and rate the current condition of the streets. Both systems use the segment and distress information to determine the current Pavement Condition Index (PCI) for each segment. However, ICON provides the City with the ability to determine future needs based on current and past maintenance strategies and prioritize the appropriate rehabilitation at optimum times. Also, ICON has a geographic information system interface to enable easy development of maps showing the results of the analysis. ICON used the information gathered in the field to calculate a PCI rating for each pavement segment. A PCI rating of 100 would be indicative of a newly constructed street with no distress, while a rating of 0 would show a completely failed street. Segments then can be grouped into like categories of PCI ratings to help determine a schedule of maintenance, rehabilitation and reconstruction. The PCI groups set up for the City are as follows: 100 to 66 – Adequate; 65 to 36 – Marginal; and 35 to 0 – Poor. The City's minimum desired PCI rating is 70. For the year 2007, the City's PCI rating was 87. For the year 2010, the City's PCI rating was 76. For 2013, the City's PCI rating was 74. For 2016, the City's PCI rating was 77 and for 2019 the City's PCI rating was 72. The next rating is scheduled for 2022. In 2021, 2018, and 2017, the City conducted mill and overlay resurfacing in three neighborhood streets of the City. Also, during 2021, the City relined a portion of the sanitary sewer line in one of the sections of the city at a cost of $274,095. In both 2020 and 2019, the city also relined other sections of the sanitary sewer system. City of Falcon Heights Management's Discussion and Analysis 27 CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) City of Falcon Heights' Capital Assets (Net of Depreciation) 2021 2020 2021 2020 2021 2020 Land $ 419,707 $ 419,707 $ - $ - $ 419,707 $ 419,707 Construction in progress - - Building and system 157,117 184,939 2,200,467 1,925,885 2,357,584 2,110,824 Improvements other Than buildings 502,226 559,332 - - 502,226 559,332 Machinery and equipment 224,245 835,318 1,037 13,457 225,282 848,775 Infrastructure 5,749,783 5,749,783 - - 5,749,783 5,749,783 Total $ 7,053,078 $ 7,749,079 $ 2,201,504 $ 1,939,342 $ 9,254,582 $ 9,688,421 Governmental Activities Business-Type Activities Total Additional information on the City's capital assets can be found in Note 3 of this report. Long-Term Debt At the end of the current fiscal year, the City had total bonded debt outstanding of $ 1,165,000. The debt service payments in 2021 were $445,000. City of Falcon Heights' Outstanding Debt General Obligation (G.O.) and Revenue Bonds 2021 2020 2021 2020 2021 2020 G.O. Bonds $ 1,165,000 $ 945,000 $ - $ - $ 1,165,000 $ 945,000 TotalGovernmental Activities Business-Type Activities The City earned a "AAA" rating from Standard and Poor's Rating Service on the debt issuance in 2017. State statutes limit the amount of G.O. debt a governmental entity may issue to a percentage of its total assessed valuation. The current debt limitation for the City is $10,551,540 , which is in excess of the City's outstanding G.O. debt. Additional information on the City's long-term debt can be found in Note 5 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The December 2021 unemployment rate for Ramsey County, in which the City resides, is currently 2.7%, as compared to the rate of 4.7% a year ago. This local unemployment rate compares favorably to the state's December 2021 unemployment rate of 2.7% and favorably to the national December 2021 rate of 3.9%. City of Falcon Heights Management's Discussion and Analysis 28 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES (CONTINUED) Inflationary trends in the region compare favorably to national indices. For a basket of goods indexed at $100 in 1984, a resident of the Midwest Region will pay approximately $260. This compares favorably to the average US citizen who pays approximately $265 for that same basket. The sources for this data are the Federal Reserve Bank of Minneapolis and the Federal Bureau of Labor and Statistics CPI inflation calculator. All of these factors were considered in preparing the City's budget for the 2022 fiscal year. During the current fiscal year, the fund balance in the General Fund increased by $3,525 to a total of $3,245,298. The City has designated $3,245,298 of this balance as unassigned fund balance available for spending at the City's discretion. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 2077 W. Larpenteur Ave., City of Falcon Heights, Minnesota 55113. 29 BASIC FINANCIAL STATEMENTS See notes to basic financial statements. 30 Governmental Activities Business-Type Activities Total Assets Cash and investments (including cash eqivalents) 7,736,728$ 2,434,427$ 10,171,155$ Receivables Taxes receivable 23,299 - 23,299 Special assessments 180,910 - 180,910 Accounts receivable 52,609 345,137 397,746 Interest receivable 10,829 3,834 14,663 Due from other governments 555,100 - 555,100 Capital assets (net of accumulated depreciation) Land 419,707 - 419,707 Infrastructure 5,749,783 - 5,749,783 Buildings and system 157,117 2,200,467 2,357,584 Improvements other than buildings 502,226 - 502,226 Machinery and equipment 224,245 1,037 225,282 Total assets 15,612,553 4,984,902 20,597,455 Deferred Outflows of Resources Deferred outflows of resources related to pensions 206,301 75,294 281,595 Total assets and deferred outflows of resources 15,818,854$ 5,060,196$ 20,879,050$ Liabilities Accounts payable 85,918$ 287,781$ 373,699$ Contracts payable 49,594 - 49,594 Due to other governments 233 - 233 Salaries and benefits payable 464 665 1,129 Interest payable 15,271 - 15,271 Unearned revenue 302,056 - 302,056 Bond principal payable Payable within one year 120,000 - 120,000 Payable after one year 1,091,484 - 1,091,484 Compensated absences payable Payable within one year 38,003 16,037 54,040 Payable after one year 105,322 36,981 142,303 Payable after one year 272,188 99,341 371,529 Total liabilities 2,080,533 440,805 2,521,338 Deferred Inflows of Resources Deferred inflows of resources related to pensions 257,812 94,094 351,906 Net Position Net investment in capital assets 7,006,594 2,201,504 9,208,098 Restricted for Debt service 651,573 - 651,573 Tax increment 80,543 - 80,543 Other Purposes 46,319 - 46,319 Unrestricted 5,695,480 2,323,793 8,019,273 Total net position 13,480,509 4,525,297 18,005,806 Total liabilities, deferred inflows of resources, and net position 15,818,854$ 5,060,196$ 20,879,050$ City of Falcon Heights Statement of Net Position December 31, 2021 Net pension liability See notes to basic financial statements. 31 Program RevenuesExpensesCharges for ServicesOperating Grants and ContributionsCapital Grants and ContributionsGovernmental ActivitiesBusiness-Type ActivitiesTotalGovernmental activitiesGeneral government 834,064$ 235,187$ -$ -$ (598,877)$ -$ (598,877)$ Public safety 1,596,239 190,431 120,011 - (1,285,797) - (1,285,797) Public works 2,006,502 164,379 610,223 388,902 (842,998) - (842,998) Park and recreation 114,604 6,374 24 - (108,206) - (108,206) Community development 723 3,790 - - 3,067 - 3,067 Interest on long-term debt 48,811 - - - (48,811) - (48,811) Total governmental activities 4,600,943 600,161 730,258 388,902 (2,881,622) - (2,881,622) Business-type activitiesSanitary sewer 960,715 1,153,186 - 50,246 - 242,717 242,717 Storm sewer158,873 188,125 - 78,993 - 108,245 108,245 Total business-type activities 1,119,588 1,341,311 - 129,239 - 350,962 350,962 Total governmental and business-type activities 5,720,531$ 1,941,472$ 730,258$ 518,141$ (2,881,622) 350,962 (2,530,660) General revenuesProperty taxes levied for general purposes 2,040,286 - 2,040,286 Property taxes levied for debt service 211,459 - 211,459 Franchise taxes 132,896 - 132,896 Tax increments 333,729 - 333,729 Unrestricted state aid 892,919 - 892,919 Other general revenue 103,564 - 103,564 Unrestricted investment earnings 9,901 2,876 12,777 Total general revenues and transfers 3,724,754 2,876 3,727,630 Change in net position 843,132 353,838 1,196,970 Net position - beginning 12,637,377 4,171,459 16,808,836 Net position - ending 13,480,509$ 4,525,297$ 18,005,806$ Functions/ProgramsNet (Expense) Revenue and Changes in Net PositionCity of Falcon HeightsYear Ended December 31, 2021Statement of Activities See notes to basic financial statements. 32 Debt Service Capital Project General G.O. Improvement Bonds, Series 2021A 2021 Street Project Assets Cash and investments 3,497,589$ 10,838$ 84,574$ Taxes receivable - delinquent 22,239 - - Special assessment receivable - deferred - 163,867 - Accounts receivable - - - Interest receivable 7,653 - - Due from other governments 109,053 2,688 - Total assets 3,636,534$ 177,393$ 84,574$ Liabilities Accounts payable 66,244$ -$ 1,408$ Contracts payable - - 49,594 Due to other governments 233 - - Salaries and benefits payable 464 - - Unearned revenue 302,056 - - Total liabilities 368,997 - 51,002 Deferred Inflows of Resources Unavailable revenue - state shared taxes - - - Unavailable revenue - property tax 22,239 - - Unavailable revenue - special assessments - 163,867 - Total deferred inflows of resources 22,239 163,867 - Fund Balances Restricted - 13,526 - Committed - - - Assigned - - 33,572 Unassigned 3,245,298 - - Total fund balances 3,245,298 13,526 33,572 Total liabilities, deferred inflows of resources, and fund balances 3,636,534$ 177,393$ 84,574$ City of Falcon Heights Balance Sheet - Governmental Funds December 31, 2021 33 Future Improvements Parks/PW and Facilities Capital Improvements Other Governmental Funds Total Governmental Funds 1,617,432$ 1,105,691$ 1,420,604$ 7,736,728$ - - 1,060 23,299 3,556 - 13,487 180,910 28,809 - 23,800 52,609 3,176 - - 10,829 440,325 - 3,034 555,100 2,093,298$ 1,105,691$ 1,461,985$ 8,559,475$ 3,724$ -$ 14,542$ 85,918$ - - - 49,594 - - - 233 - - - 464 - - - 302,056 3,724 - 14,542 438,265 440,270 - - 440,270 - - 1,060 23,299 3,556 - 13,487 180,910 443,826 - 14,547 644,479 - 33,575 602,826 649,927 - - 471,616 471,616 1,645,748 1,072,116 358,454 3,109,890 - - - 3,245,298 1,645,748 1,105,691 1,432,896 7,476,731 2,093,298$ 1,105,691$ 1,461,985$ 8,559,475$ Capital Project 34 (THIS PAGE LEFT BLANK INTENTIONALLY) See notes to basic financial statements. 35 City of Falcon Heights Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Funds December 31, 2021 Total fund balances - governmental funds 7,476,731$ Capital assets used in governmental activities are not current financial resources and, therefore, are not reported as assets in governmental funds. Cost of capital assets 9,460,123 Less accumulated depreciation (2,407,045) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: Bond principal payable (1,165,000) Bond premium (46,484) Compensated absences payable (143,325) Net pension liability (272,188) Deferred outflows of resources and deferred inflows of resources are created as a result of various differences related to pensions that are not recognized in the governmental funds. Deferred inflows of resources related to pensions (257,812) Deferred outflows of resources related to pensions 206,301 Delinquent receivables will be collected in subsequent years, but are not available soon enough to pay for the current period'sexpenditures and, therefore, are deferred in the funds. Property taxes 23,299 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. funds. Deferred special assessments 180,910 State shared taxes 440,270 Governmental funds do not report a liability for accrued interest on long-term debt until due and payable. (15,271) 13,480,509$ Amounts reported for governmental activities in the Statement of Net Position are different because: Total net position - governmental activities See notes to basic financial statements. 36 Debt Service General G.O. Improvement Bonds, Series 2021A 2021 Street Project Future Improvements Revenues Property taxes 2,031,045$ -$ -$ -$ Tax increments - - - - Special assessments - 2,688 171,733 3,688 Licenses and permits 252,408 - - 132,896 Intergovernmental 759,424 - 288,715 154,216 Charges for services 101,149 - - - Fines and forfeitures 19,511 - - - Miscellaneous Investment income 3,162 13 672 1,121 Contributions and donations - - - - Refunds and reimbursements 14,812 - - - Other 2,057 - 1,350 342 Total revenues 3,183,568 2,701 462,470 292,263 Expenditures Current General government 746,786 - - - Public safety 1,525,779 - - - Public works 309,582 - 94,098 11,557 Park and recreation 71,896 - - - Community development - - - - Miscellaneous - - - - Debt service Principal - - - - Interest and other charges - - 27,613 - Capital outlay General government - - - - Public works - - 991,874 24,828 Park and recreation - - - - Total expenditures 2,654,043 - 1,113,585 36,385 Excess of revenues over (under) expenditures 529,525 2,701 (651,115) 255,878 Other Financing Sources (Uses) Proceeds from sale of capital assets - - - - Bond issuance - 10,825 654,175 - Bond premium - - 30,512 - Transfers in - - - 80,000 Transfers out (526,000) - - - Total other financing sources (uses) (526,000) 10,825 684,687 80,000 Net change in fund balances 3,525 13,526 33,572 335,878 Fund Balances Beginning of year 3,241,773 - - 1,309,870 End of year 3,245,298$ 13,526$ 33,572$ 1,645,748$ Capital Projects City of Falcon Heights Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended December 31, 2021 37 Parks/PW and Facilities Capital Improvements Other Governmental Funds Total Governmental Funds -$ 211,544$ 2,242,589$ - 333,729 333,729 - 6,159 184,268 - - 385,304 - 65,415 1,267,770 - 243,933 345,082 - - 19,511 242 4,691 9,901 - 24 24 - - 14,812 - 32,624 36,373 242 898,119 4,839,363 - 2,167 748,953 - 15,695 1,541,474 - 223,199 638,436 723 24,318 96,937 - 723 723 - 592 592 - 445,000 445,000 - 29,262 56,875 - 10,996 10,996 - 328,271 1,344,973 13,098 - 13,098 13,821 1,080,223 4,898,057 (13,579) (182,104) (58,694) 387,349 150,000 537,349 - - 665,000 - - 30,512 524,120 46,000 650,120 - (124,120) (650,120) 911,469 71,880 1,232,861 897,890 (110,224) 1,174,167 207,801 1,543,120 6,302,564 1,105,691$ 1,432,896$ 7,476,731$ Capital Projects See notes to basic financial statements. 38 City of Falcon Heights Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities - Governmental Funds Year Ended December 31, 2021 1,174,167$ Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays 23,346 Depreciation expense (177,414) Disposal of capital assets (541,933) Compensated absences are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. (17,847) Governmental funds recognized pension contributions as expenditures at the time of payment in items related to pensions on a full accrual perspective. 21,221 Principal payments on long-term debt are recognized as expenditures in the governmental funds but have no effect on net assets in the Statement of Activities. 445,000 Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. (4,463) Proceeds from long-term debt are recognized as another financing source in the Governmental funds but as a decrease in net assets in the statement of activities. (665,000) Bonds payable The governmental funds report the effect of bond premiums, discounts, and other similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Premium on new bond issuances (30,512) Amortization of bond premiums 12,527 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Special assessments 154,614 State shared taxes 440,270 Delinquent property taxes receivable will be collected in subsequent years, but are not available soon enough to pay for the current period's expenditures and, therefore, are deferred in the funds. 9,156 843,132$ Change in net position - governmental activities Net change in fund balances - governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: See notes to basic financial statements. 39 Original and Final Budget Actual Amounts Revenues Property taxes 2,037,731$ 2,031,045$ (6,686)$ Licenses and permits 75,008 252,408 177,400 Intergovernmental 683,532 759,424 75,892 Charges for services 19,300 101,149 81,849 Fines and forfeitures 20,000 19,511 (489) Miscellaneous revenues Investment income 18,000 3,162 (14,838) Refunds and reimbursements 3,000 14,812 11,812 Other 33,650 2,057 (31,593) Total revenues 2,890,221 3,183,568 293,347 Expenditures Current General government 764,803 746,786 (18,017) Public safety 1,610,733 1,525,779 (84,954) Public works 297,595 309,582 11,987 Park and recreation 91,090 71,896 (19,194) Total expenditures 2,764,221 2,654,043 (110,178) Excess of revenues over expenditures 126,000 529,525 403,525 Other Financing Uses Transfers out (126,000) (526,000) (400,000) Net change in fund balance -$ 3,525 3,525$ Fund Balance Beginning of year 3,241,773 End of year 3,245,298$ Variance with Final Budget - Over (Under) City of Falcon Heights Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund Year Ended December 31, 2021 See notes to basic financial statements. 40 Sanitary Sewer Storm Drainage Total Assets Current assets Cash and investments 2,002,534$ 431,893$ 2,434,427$ Accounts receivable 314,559 30,578 345,137 Interest receivable 3,834 - 3,834 Total current assets 2,320,927 462,471 2,783,398 Noncurrent assets Capital assets Sewer system 1,891,277 - 1,891,277 Storm drain - 2,088,550 2,088,550 Machinery and equipment 53,104 122,570 175,674 Total capital assets 1,944,381 2,211,120 4,155,501 Less accumulated depreciation (1,072,043) (881,954) (1,953,997) Net capital assets 872,338 1,329,166 2,201,504 Total assets 3,193,265 1,791,637 4,984,902 Deferred Outflows of Resouces Deferred outflows of resources related to pensions 49,678 25,616 75,294 Total assets and deferred outflows of resources 3,242,943$ 1,817,253$ 5,060,196$ Liabilities Current liabilities Accounts payable 274,191$ 13,590$ 287,781$ Salaries and benefits payable 414 251 665 Amount due within one year 10,053 5,984 16,037 Total current liabilities 284,658 19,825 304,483 Noncurrent liabilities Compensated absences 34,893 18,125 53,018 Net pension liability 65,544 33,797 99,341 Less amount due within one year (10,053) (5,984) (16,037) Total noncurrent liabilities 90,384 45,938 136,322 Total liabilities 375,042 65,763 440,805 Deferred Inflows of Resouces Deferred inflows of resources related to pensions 62,082 32,012 94,094 Net Position Net investment in capital assets 872,338 1,329,166 2,201,504 Unrestricted 1,933,481 390,312 2,323,793 Total net position 2,805,819 1,719,478 4,525,297 Total liabilities, deferred inflows of resources, and net position 3,242,943$ 1,817,253$ 5,060,196$ City of Falcon Heights Statement of Net Position - Proprietary Funds December 31, 2021 See notes to basic financial statements. 41 Sanitary Sewer Storm Drainage Total Operating revenues Charges for services 1,153,186$ 188,125$ 1,341,311$ Operating expenses Wages, salaries, and compensation 149,027 78,721 227,748 Materials and supplies 472 2,312 2,784 Professional services 2,385 969 3,354 Maintenance 25,808 5,843 31,651 Repairs 602 11,514 12,116 Depreciation 15,333 53,237 68,570 Metro sewer charges 578,355 - 578,355 Sac charges 157,635 - 157,635 Billing fees 17,940 764 18,704 Insurance and bonds 7,328 1,490 8,818 Miscellaneous 5,830 4,023 9,853 Total operating expenses 960,715 158,873 1,119,588 Operating income 192,471 29,252 221,723 Nonoperating revenues Investment income 957 1,919 2,876 Income before transfers and capital contributions 193,428 31,171 224,599 Capital Contributions 50,246 78,993 129,239 Change in net position 243,674 110,164 353,838 Net position Beginning of year 2,562,145 1,609,314 4,171,459 End of year 2,805,819$ 1,719,478$ 4,525,297$ City of Falcon Heights Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Year Ended December 31, 2021 See notes to basic financial statements. 42 City of Falcon Heights Statement of Cash Flows - Proprietary Funds Year Ended December 31, 2021 Sanitary Sewer Storm Drainage Total Cash Flows - Operating Activities Receipts from customers and users 964,114$ 185,221$ 1,149,335$ Payments to suppliers (520,164) (15,613) (535,777) Payments to employees (168,110) (87,371) (255,481) Net cash flows - operating activities 275,840 82,237 358,077 Cash Flows - Capital and Related Financing Activities Acquisition of capital assets (274,096) (82,918) (357,014) Net Cash Flows - Capital and Related Financing Activities (274,096) (82,918) (357,014) Cash Flows - Investing Activities Investment Income 7,298 1,919 9,217 Net change in cash and cash equivalents 9,042 1,238 10,280 Cash and Cash Equivalents Beginning of year 1,993,492 430,655 2,424,147 End of year 2,002,534$ 431,893$ 2,434,427$ Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities Operating income 192,471$ 29,252$ 221,723$ Adjustments to reconcile operating income (loss) to net cash flows - operating activities Depreciation expense 15,333 53,237 68,570 Accounts receivable (189,072) (2,904) (191,976) Prepaid items 2,000 1,000 3,000 Pension expense (19,780) (8,962) (28,742) Accounts payable 274,191 10,302 284,493 Salaries payable 370 245 615 Compensated absences payable 327 67 394 Total adjustments 83,369 52,985 136,354 Net cash flows - operating activities 275,840$ 82,237$ 358,077$ 43 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Falcon Heights is a statutory city governed by an elected mayor and four council members. The accompanying financial statements present the government entities for which the government is considered to be financially accountable. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from the business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment 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 and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Internally dedicated revenues are reported as general revenues rather than program revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 44 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Property taxes, franchise fees, licenses, and interest associated with the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current period. Only the portion of special assessments receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Description of Funds: Major Governmental Funds: General Fund – This fund is the City's primary operating fund. It accounts for all financial resources of the general City, except those required to be accounted for in another fund. G.O. Improvement Bonds, Series 2021A – This fund accounts for the debt associated with the 2021 Street Project. 2021 Street Project Capital Projects Fund – This fund accounts for costs associated with the 2021 Street Project. Future Improvements Capital Projects Fund – This fund accounts for costs associated with replacement of the City's utility and road systems. Parks/PW and Facilities Capital Improvements Capital Projects Fund - This fund accounts for capital outlay within the departments stated in its name. Major Proprietary Funds: Sanitary Sewer Enterprise Fund – This fund accounts for the operations of the City's sanitary sewer utility. Storm Drainage Enterprise Fund – This fund accounts for the activities of the City's storm drainage operations. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City's utility functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 Sanitary Sewer and the Storm Drainage Enterprise Funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 45 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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. Further, the City applies unrestricted funds in this order if various levels of unrestricted fund balances exist: committed, assigned, and unassigned. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity 1. Deposits and Investments Cash and investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the individual funds based on the average of month-end cash and investment balances. 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. Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and instrumentalities, shares of investment companies whose only investments are in the aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days and in the Minnesota Municipal Investment Pool. Certain investments for the City are reported at fair value as disclosed in Note 3. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The Hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. In accordance with GASB Statement No. 79, the Minnesota Municipal Investment Pool securities are valued at amortized cost, which approximates fair value. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14 day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. 2. Receivables and Payables All trade and property tax receivables are shown at a gross amount since both are assessable to the property taxes and are collectible upon the sale of the property. 46 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 2. Receivables and Payables (Continued) The City levies its property tax for the subsequent year during the month of December. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. The property tax is recorded as revenue when it becomes measurable and available. Ramsey County is the collecting agency for the levy and remits the collections to the City three times a year. The tax levy notice is mailed in March with the first half of the payment due on May 15 and the second half due on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. The County Auditor prepares the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor submits the list of taxes and special assessments to be collected on each parcel of property to the County Treasurer in January of each year. Unpaid taxes at December 31 become liens on the respective property and are classified in the financial statements as delinquent tax receivable. 3. Prepaid Items and Inventory 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. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. Inventory is valued at cost using the first-in, first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 4. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 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. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. 47 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 4. Capital Assets (Continued) Property, plant, and equipment of the City are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 40 Park Buildings 30 Building Improvements 15 Furniture and Equipment 5 Light Vehicles 5 Machinery and Equipment 5-7 Fire Trucks 20 Utility Distribution System 50 Assets The City uses the modified approach in accounting for its street and alley infrastructure assets. Under this method, depreciation expense is not recognized. A pavement condition policy has been established and all costs of maintaining the assets at this level are expensed. 5. 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 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 that time. The City presents deferred outflows of resources on the Statements of Net Position for deferred outflows of resources related to pensions for various estimate differences that will be amortized and recognized over future years. 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 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 two items that qualify for reporting in this category. The City presents deferred inflows of resources on the Governmental Fund Balance Sheet as unavailable revenue. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City presents deferred inflows of resources on the Statements of Net Position for deferred inflows of resources related to pensions for various estimate differences that will be amortized and recognized over future years. 48 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 6. Compensated Absences City employees earn vacation time based on years of City service with a maximum at twice their annual vacation leave. At least one week of vacation must be used per calendar year. Upon termination, employees will receive compensation for unused vacation time. Sick leave is accumulated for all regular full-time employees at the rate of one day per calendar month to a maximum of 120 days. The City compensates employees who leave municipal service at the rate of 50% of unused sick leave. Vacation and sick leave benefits are recorded as expenditures in governmental funds when paid. Compensated absences payable are reported in governmental funds only if they have matured as a result of employee resignations and retirements. Vacation and sick benefits are recorded as expenses in proprietary funds when earned. 7. Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 9. Fund Equity a. Classification In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in those funds can be spent. 49 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 9. Fund Equity (Continued) a. Classification (Continued)  Nonspendable Fund Balance – These are amounts that cannot be spent because they are not in spendable form.  Restricted Fund Balance – These are amounts that are restricted to specific purposes either by a) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulations of other governments, or b) imposed by law through enabling legislation.  Committed Fund Balance – These are amounts that can only be used for specific purposes pursuant to constraints imposed by the City Council (highest level of decision making authority) through resolution.  Assigned Fund Balance – These are amounts that are constrained by the City's intent to be used for specific purposes but are neither restricted nor committed. Based on authorization provided by the City's fund balance policy, assignments are made by the City Administrator based on the City Council's direction.  Unassigned Fund Balance – These are residual amounts in the General Fund not reported in any other classification. The General Fund is the only fund that can report a positive unassigned fund balance. Other funds would report a negative unassigned fund balance should the total of nonspendable, restricted, and committed fund balances exceed the total net resources of that fund. b. Minimum Fund Balance The City will strive to maintain a minimum unassigned fund balance in the General Fund of 45% of the subsequent year's budgeted expenditures. 10. Net Position Net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources in the government-wide financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build, or acquire the capital assets. Net position is reported as restricted in the government-wide financial statement when there are limitations on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. 50 City of Falcon Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenditures/expense during the reporting period. Actual results could differ from those estimates. F. Budgetary Information 1. In August of each year, City staff submits to the City Council, a proposed operating budget for the year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution after obtaining taxpayer comments. 4. Budgets for the General, Special Revenue, Capital Projects, Debt Service, and Enterprise Funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. 5. Expenditures may not legally exceed budgeted appropriations at the department level. No fund's budget can be increased without City Council approval. The City Council may authorize transfer of budgeted amounts between departments within any fund. Management may amend budgets within a department level, so long as the total department budget is not changed. 6. Annual appropriated budgets are adopted during the year for the General, Special Revenue, Capital Projects, Debt Service, and Enterprise Funds,with the exception of the following funds: Charitable Gambling Special Revenue Fund, Amber Union Capital Project Fund and the G.O. Improvement Bonds, Series 2021A Debt Service Fund. 7. Budgeted amounts are as originally adopted or as amended by the City Council. Individual amendments were not material in relation to the original amounts budgeted. Budgeted expenditure appropriations lapse at year-end. NOTE 2 – DEPOSITS AND INVESTMENTS Cash balances of the City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed in the financial statements as "cash and cash equivalents" or "investments". For purposes of identifying risk of investing public funds, the balances and related restrictions are summarized as follows. A. Deposits Custodial Credit Risk – Deposits: This is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City has a policy that requires the District's deposits be collateralized as required by Minnesota Statutes for an amount exceeding FDIC, SAIF, BIF, or FCUA coverage. As of December 31, 2021, the City's bank balance of $624,000 was not exposed to custodial credit risk because it was fully insured through the FDIC. 51 City of Falcon Heights Notes to Basic Financial Statements NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) A. Deposits (Continued) The book balance as of December 31, 2021, was $624,000 for deposits. As of December 31, 2021, the City had petty cash as follows: Petty cash 250$ B. Investments Investment Type Fair Value Less than 1 Year 1 to 3 Years 3 - 5 Years Over 5 Years Rating Brokered Certificates of Deposit 3,212,594$ 839,844$ 2,372,750$ -$ -$ NR U.S. Agencies 99,062 - - 99,062 - AAA 4M Fund and 4M Fund Plus 5,960,292 5,960,292 NR Brokered Money Markets 274,957 274,957 NR Total investments 9,546,905$ Investment Maturity Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. The City's investment policy states the City shall set the goal that no one issuer represents 5% or more of total investments with the exception of U.S. Treasuries and U.S. government agencies that are either implicitly or explicitly guaranteed by the federal government. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market interest rates. The City's investment policy states the City will invest in approximately 10% to 25% of its available funds in liquid instruments, such as commercial paper and money market accounts. This is to ensure the City's funds could be available should unexpected large bills be presented for payment. The policy goes on to state once the liquidity needs have been met, the remaining investments shall be placed with institutions offering the highest rate of return consistent with the maturities determined by the City. Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments in commercial paper and corporate bonds to be in the top two ratings issued by nationally recognized statistical rating obligations. The policy lists the authorized investments to comply with the requirements of Minnesota Statutes 118A.04, 118A.05, and 118A.06, examples include commercial paper rated as A-1, P-1 and F-1 with maturities of 270 days or less, U.S. government obligations, obligations of the State of Minnesota, irrevocable letter of credit and interest bearing deposits. 52 City of Falcon Heights Notes to Basic Financial Statements NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Custodial Credit Risk – Investments: For an investment, this is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's investment policy states investments are to be fully insured or collateralized and/or registered in the name of the City with safekeeping for the security provided by the City's broker/financial institution or trust department. The financial institution is also required to be a member of the Securities Investor Protection Corporation (SIPC) to protect the securities in the City's account. All certificates of deposit up to $250,000 principal and interest will be protected by the FDIC. In the event the City purchases a certificate of deposit from a broker/financial institution that does not provide safekeeping, the City may provide safekeeping in a secured location at the City. The City has the following recurring fair value measurements as of December 31, 2021:  $3,111,687 of investments are significant other observable inputs (Level 2 inputs) using closing market prices. Summary of cash deposits and investments as of December 31, 2021, were as follows: Deposits 624,000$ Petty cash 250 Investments (Note 3.B.)9,546,905 Total deposits and investments 10,171,155$ Cash and Investments Deposits and investments are presented in the December 31, 2021, basic financial statements as follows: Statement of Net Position Cash and investments - governmental activities 7,736,728$ Cash and investments - business-type activities 2,434,427 Total 10,171,155$ 53 City of Falcon Heights Notes to Basic Financial Statements NOTE 3 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2021, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities Capital assets not being depreciated Land 419,707$ -$ -$ 419,707$ Infrastructure 5,749,783 - - 5,749,783 Total capital assets not being depreciated 6,169,490 - - 6,169,490 Capital assets being depreciated Buildings 1,360,310 - - 1,360,310 Improvements other than buildings 971,893 - - 971,893 Machinery and equipment 2,264,857 23,347 1,329,774 958,430 Total capital assets being depreciated 4,597,060 23,347 1,329,774 3,290,633 Less accumulated depreciation for Buildings 1,175,371 27,822 - 1,203,193 Improvements other than buildings 412,561 57,106 - 469,667 Machinery and equipment 1,429,539 92,486 787,840 734,185 Total accumulated depreciation 3,017,471 177,414 787,840 2,407,045 Total capital assets being depreciated, net 1,579,589 (154,067) 541,933 883,588 Governmental activities capital assets, net 7,749,079$ (154,067)$ 541,933$ 7,053,078$ 54 City of Falcon Heights Notes to Basic Financial Statements NOTE 3 – CAPITAL ASSETS (CONTINUED) Beginning Ending Balance Increases Decreases Balance Business-type activities Capital assets being depreciated Buildings and system 3,649,095$ 403,333$ 72,601$ 3,979,827$ Machinery and equipment 175,674 - - 175,674 Total capital assets being depreciated 3,824,769 403,333 72,601 4,155,501 Less accumulated depreciation for Buildings and system 1,723,210 56,150 - 1,779,360 Machinery and equipment 162,217 12,420 - 174,637 Total accumulated depreciation 1,885,427 68,570 - 1,953,997 Total capital assets being depreciated, net 1,939,342 334,763 72,601 2,201,504 Business-type activities capital assets, net 1,939,342$ 334,763$ 72,601$ 2,201,504$ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities General government 70,963$ Public safety 63,433 Public works 27,281 Culture and recreation 15,737 Total depreciation expense - governmental activities 177,414$ Business-type activities Sanitary sewer 15,333$ Storm drainage 53,237 Total depreciation expense - business-type activities 68,570$ 55 City of Falcon Heights Notes to Basic Financial Statements NOTE 4 – INTERFUND TRANSFERS Transfers during the year ended December 31, 2021, were as follows: Other General Fund Non-Major Total Future Improvements 80,000$ -$ 80,000$ Parks/PW and facilities 400,000 124,120 524,120 Other non-major 46,000 - 46,000 Total 526,000$ 124,120$ 650,120$ Transfers Out Transfers In The transfer from the General Fund to the Other Governmental Funds were to assist with park programs and community inclusion. All other transfers were to provide resources for capital expenditures. NOTE 5 – LONG-TERM DEBT A. G.O. Debt The City issues G.O. bonds and equipment certificates to provide for financing tax increment projects, street improvement, and capital purchases. Debt service is funded, respectively, by tax increment and special assessments against benefited properties with any shortfalls being paid from general taxes. G.O. bonds are direct obligations and pledge the full faith and credit of the City. Original Interest Principal Issue Rates Outstanding Long-term liabilities Governmental activities G.O. Improvement Bonds, Series 2017A 845,000$ 3.00% 500,000$ G.O. Improvement Bonds, Series 2021A 665,000 2.00% 665,000 56 City of Falcon Heights Notes to Basic Financial Statements NOTE 5 – LONG-TERM DEBT (CONTINUED) A. G.O. Debt Annual debt service requirements to maturity for G.O. bonds are as follows: Year Ending December 31, Principal Interest 2022 120,000$ 30,675$ 2023 255,000 21,525 2024 255,000 15,175 2025 265,000 8,700 2026 135,000 4,050 2027 135,000 1,350 Total 1,165,000$ 81,475$ G.O. Improvement Bonds B. Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2021, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Bonds payable G.O. Equipment Certificates 265,000$ -$ 265,000$ -$ -$ G.O. Improvement Bonds 680,000 665,000 180,000 1,165,000 120,000 Unamortized Bond Premium 28,499 30,512 12,527 46,484 - Compensated absences 125,478 54,808 36,961 143,325 38,003 Total governmental activities 1,098,977 750,320 494,488 1,354,809 158,003 Business-type activities Compensated absences 52,624 16,653 16,260 53,017 16,036 Total long-term liabilities 1,151,601$ 766,973$ 510,748$ 1,407,826$ 174,039$ The General Fund typically liquidates the liability related to compensated absences, as well as pensions. 57 City of Falcon Heights Notes to Basic Financial Statements NOTE 5 – LONG-TERM DEBT (CONTINUED) C. Conduit Debt Conduit debt is certain limited-obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued revenue bonds to provide funding to private-sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt beyond the resources provided by related leases or loans. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2021, the following issues were outstanding: Original Balance Amount Outstanding Name Date of Issue of Issue as of 12/31/21 Coventry Apartments 2008A 12,000,000$ 10,024,492$ Pines of Hutchinson, LLC 2013 4,400,000 3,214,535 Mounds Park Academy 2014 7,707,444 6,022,086 St Paul Academy & Summit School Project Series 2017 7,375,000 6,550,532 Senior Housing and Health Care Revenue Note 2018A 2018 3,000,000 2,899,921 Senior Housing and Health Care Revenue Refunding 2018B 2018 1,523,889 1,409,762 New Harmoney Project - Senior Housing and Healthcare Revnue Note 2021 7,000,000 7,000,000 Amber Union Project - 2021 Multifamily Housing Revenue Refunding 2021 26,976,188 8,361,728 Total 69,982,521$ 45,483,056$ 58 City of Falcon Heights Notes to Basic Financial Statements NOTE 6 – FUND BALANCE DETAIL At December 31, 2021, fund balance was comprised of the following components: G.O. Parks/PW and Other Improvement 2021 Future Facilities Governmental General Series 2021A Street Project Improvements Capital Fund Total Restricted Tax increment capital projects -$ -$ -$ -$ -$ 80,543$ 80,543$ Debt service - 13,526 - - - 475,964 489,490 Grants - - - - - 44,637 44,637 Park dedication - - - - 33,575 - 33,575 Charitable gambling - - - - 1,682 1,682 Committed Recreation costs - - - - - 52,102 52,102 Hydrant and fire truck costs - - - - - 228,611 228,611 Recycling and environmental activities - - - - - 107,143 107,143 Activities promoting economic development - - - - - 21,119 21,119 Lighting costs - - - - - 58,618 58,618 Garden costs - - - - - 4,023 4,023 Assigned Capital projects - - 33,572 1,645,748 1,072,116 358,454 3,109,890 Unassigned 3,245,298 - - - - - 3,245,298 Total 3,245,298$ 13,526$ 33,572$ 1,645,748$ 1,105,691$ 1,432,896$ 7,476,731$ The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT) with other cities in the state which is a public entity risk pool currently operating as a common risk management and insurance program. The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. NOTE 7 – RISK MANAGEMENT The City's workers' compensation insurance policy is retrospectively rated. With this type of policy, final premiums are determined after loss experience is known. The amount of premium adjustment for 2021 was estimated to be immaterial based on workers' compensation rates and salaries for the year. At December 31, 2021, there were no other claims liabilities reported in the fund based on the requirements of GASB Statement No. 10, which requires a liability for claims be reported if information prior to the issuance of the financial statements indicates it is probable a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. 59 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS The City participates in various pension plans, total pension expense for the year ended December 31, 2021, was $21,221. The components of pension expense are noted in the following plan summaries. The General Fund typically liquidates the liability related to the pensions. Public Employees' Retirement Association A. Plan Description The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by PERA. PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. B. Benefits Provided PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. General Employees Plan Benefits General Employees Plan benefits are based on a member's highest average salary for any 5 successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for a Coordinated members is 1.2% for each of the first 10 years of service and 1.7% for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7% for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. 60 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) General Employees Plan Benefits (Continued) Benefit increases are provided to benefit recipients each January. Beginning in 2019, the postretirement increase is equal to 50% of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6.5% of their annual covered salary in fiscal year 2021 and the City was required to contribute 7.5% for Coordinated Plan members. The City's contributions to the General Employees Fund for the year ended December 31, 2021, were $50,721. The City's contributions were equal to the required contributions as set by state statute. D. Pension Costs General Employees Fund Pension Costs At December 31, 2021, the City reported a liability of $371,529 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million. The State of Minnesota is considered a non- employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $11,389. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2020, through June 30, 2021, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.0087% at the end of the measurement period and 0.0084% for the beginning of the period. 61 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) City's proportionate share of the net pension liability 371,529$ State of Minnesota's proportionate share of the net pension liability associated with the City 11,389 Total 382,918$ For the year ended December 31, 2021, the City recognized pension expense of $1,677 for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $991 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2021, the City reported its proportionate share of General Employee Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the following sources: Differences between expected and actual economic experience 2,073$ 11,323$ Changes in actuarial assumptions 226,848 7,785 Net collective difference between projected and actual investment earnings - 323,090 Changes in proportion 27,313 9,708 Contributions paid to PERA subsequent to the measurement date 25,361 - Total 281,595$ 351,906$ Deferred Outflows of Resources Deferred Inflows of Resources 62 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) The $25,361 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2021. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31, Amount 2022 (14,523)$ 2023 5,443 2024 1,169 2025 (87,761) Total (95,672)$ E. Actuarial Assumptions Long-Term Expected Return on Investment The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Domestic equity 33.5 % 5.10 % International equity 16.5 5.30 Fixed income 25.0 0.75 Private markets 25.0 5.90 Total 100.0 % Target Allocation Long-Term Asset Class 63 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Methods and Assumptions The total pension liability in the June 30, 2021, actuarial valuation was determined using an individual entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.%. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.5% was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25% for the General Employees Plan. Benefit increases after retirement are assumed to be 1.25% for the General Employees. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25% after one year of service to 3.0% after 29 years of service and 6.0% per year thereafter. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. The table is adjusted slightly to fit PERA’s experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2019. The assumption changes were adopted by the Board and became effective with the July 1, 2020, actuarial valuation. The following changes in actuarial assumptions and plan provisions occurred in 2021: General Employees Fund Changes in Actuarial Assumptions:  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The mortality improvement scale was changed from scale MP-2019 to scale MP-2020. Changes in Plan Provisions  There have been no changes since the previous valuation. G. Discount Rate The discount rate used to measure the total pension liability in 2021 was 6.5%. The projection of cash flows used to determine the discount rate assumed that contributions from Plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net positions of the General Employees Fund are projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 64 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) H. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1% Decrease in Current 1% Increase in City's proportionate share of the General Employees Fund net pension liability 757,729$ 371,529$ 54,628$ Discount Rate (7.5%) Discount Rate (5.5%) Discount Rate (6.5%) I. Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. J. Defined Contribution Pension Plan – Volunteer Fire Fighter's Relief Association The Falcon Heights Firefighter's Relief Association is the administrator of a single employer defined contribution pension plan established to provide benefits for members of the Falcon Heights Fire Department per Minnesota State Statutes. The Association issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Falcon Heights Firefighter's Relief Association, 2077 Larpenteur Ave. W, St. Paul, MN 55113 or by calling (651) 792-7635. Members are not vested in their accounts until they attain five years of active service, at which time they become 40% vested. Thereafter, the vested portion of their accounts increases by 4% annually until they achieve 100% vesting after having served for 20 years. Plan provisions were established and may only be amended by amendments to the Association bylaws which require a majority vote by the Board of Trustees. During 2021, the City made no contributions to the plan and passed through to the association $47,862 in state aid. 65 City of Falcon Heights Notes to Basic Financial Statements NOTE 9 – TAX INCREMENT FINANCING The City has entered into one Tax Increment Financing agreement which meet the criteria for disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The City entered into these agreements for the purpose of economic development. Under the agreement, the City and developer agree on an amount of development costs to be reimbursed to the developer by the City though tax revenues from the additional taxable value of the property generated by the development (tax increment). A "pay-as-you-go" note is established for this amount, on which the City makes payments for a fixed period of time with available tax increment revenue after deducting for certain administrative costs. During the year ended December 31, 2021, the City generated $333,729 in tax increment revenue and made $323,728 in payments to developers. NOTE 10 – NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 87, Leases establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. This statement will be effective for the year ending December 31, 2022. 66 (THIS PAGE LEFT BLANK INTENTIONALLY) 67 REQUIRED SUPPLEMENTARY INFORMATION See notes to required supplementary information. 68 City's Covered Payroll 2021 0.0087% $ 371,529 $ 11,389 382,918$ 625,853 59.36%87.00% 2020 0.0084% 503,618 15,603 519,221 600,693 83.84% 79.06% 2019 0.0079% 436,773 13,666 450,439 561,133 77.84% 80.23% 2018 0.0086% 477,093 15,681 492,774 580,440 82.20% 79.53% 2017 0.0088% 561,786 7,039 568,825 564,907 99.45% 75.90% 2016 0.0084% 682,038 9,002 691,040 524,187 130.11% 68.91% 2015 0.0087% 450,879 - 450,879 502,440 89.74% 78.19% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 2021 $ 46,939 46,939$ -$ 625,853$ 7.50% 2020 45,483 45,483 - 606,440 7.50% 2019 44,191 44,191 - 589,213 7.50% 2018 43,247 43,247 - 576,627 7.50% 2017 43,937 43,937 - 585,827 7.50% 2016 40,580 40,580 - 541,067 7.50% 2015 36,927 36,927 - 492,360 7.50% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. Schedule of City Contributions City's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Last Ten Years Last Ten Years City's Proportionate Share of the Net Pension Liablility and the State's Proportionate Share of the Net Pension Liablility Associated with the City For Fiscal Year Ended June 30, State's Proportionate Share (Amount) of the Net Pension Liability Associated with the City General Employees Retirement Fund City of Falcon Heights Contribution Deficiency (Excess) Contributions as a Percentage of Covered Payroll Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contributions Fiscal Year Ending December 31, City's Covered Payroll City of Falcon Heights Schedule of City's Proportionate Share of Net Pension Liability General Employees Retirement Fund City's Proportionate Share (Percentage) of the Net Pension Liability (Asset) City's Proportionate Share (Amount) of the Net Pension Liability (Asset) City of Falcon Heights Required Supplementary Information and Notes to Required Supplementary Information See notes to required supplementary information. 69 INFRASTRUCTURE ASSETS REPORTED USING THE MODIFIED APPROACH 2017 2018 2019 2020 2021 Streets and alleys Estimated 1,211,500$ 238,500$ 37,000$ -$ 997,000$ Actual 1,234,522 186,338 - - 1,819,330 Difference (23,022)$ 52,162$ 37,000$ -$ (822,330)$ CONDITION RATING OF THE CITY'S STREET SYSTEMS 2013 2016 2019 Streets and alleys 74 77 71 The City implemented a pavement management program in 2001 to assist in maintaining and monitoring the performance of the paved street network. This is one of the City's largest investments and would have a significant dollar value if it were to be replaced today. The software program MircoPAVER, developed by the Army Corps of Engineers, was used by the City in 2001 and 2004. For 2007, 2010, 2013, 2016, and 2019 the City used the software program ICON, which was developed and supported by Goodpointe Technology, as a tool for pavement management. While the software is different, the methodology is the same. Both systems use field surveys to identify distresses and rate the current condition of the streets. Both systems use the segment and distress information to determine the current Pavement Condition Index (PCI) for each segment. However, ICON provides the City with the ability to determine future needs based on current and past maintenance strategies and prioritize the appropriate rehabilitation at optimum times. Also, ICON has a geographic information system interface to enable easy development of maps showing the results of the analysis. ICON used the information gathered in the field to calculate a PCI rating for each pavement segment. A PCI rating of 100 would be indicative of a newly constructed street with no distress, while a rating of 0 would show a completely failed street. Segments then can be grouped into like categories of PCI ratings to help determine a schedule of maintenance, rehabilitation, and reconstruction. The PCI groups set up for the City are as follows: 100 to 66 – Adequate; 65 to 36 – Marginal; 35 to 0 – Poor. The City's minimum desired PCI rating is 70. For the year 2021, the City's PCI rating was 71. This was the sixth analysis of the City's streets and alleys. The next rating will be completed in 2022. City of Falcon Heights Notes to Required Supplementary Information 70 General Employees Fund 2021 Changes Changes in Actuarial Assumptions  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The mortality improvement scale was changed from scale MP-2019 to scale MP-2020. Changes in Plan Provisions  There have been no changes since the prior valuation. 2020 Changes Changes in Actuarial Assumptions  The price inflation assumption was decreased from 2.5% to 2.25%.  The payroll growth assumption was decreased from 3.25% to 3.0%.  Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net effect is assumed rates that average 0.25% less than previous rates.  Assumed rates of retirement were changed as recommended in the June 30, 2019, experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.  Assumed rates of termination were changes as recommended in the June 30, 2019, experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter.  Assumed rates of disability were changed as recommended in the June 30, 2019, experience study. The change results in fewer predicted disability retirements for males and females.  The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-2014 disabled annuitant mortality table to the Pub-2010 General/Teacher disabled annuitant mortality table, with adjustments.  The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.  The assumed spouse age difference was changed from two years older for females to one year older.  The assumed number of married male new retirees electing the 100% Joint and Survivor option changed from 35% to 45%. The assumed number of married female new retires electing the 100% Joint and Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. Changes in Plan Provisions  Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023, and 0.0% thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2017 to MP-2018. City of Falcon Heights Notes to Required Supplementary Information 71 General Employees Fund (Continued) 2019 Changes (Continued) Changes in Plan Provisions  The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2015 to MP-2017.  The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year thereafter to 1.25% per year. Changes in Plan Provisions  The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024.  Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1, 2018.  Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply.  Contribution stabilizer provisions were repealed.  Postretirement benefit increases were changed from 1.00% per year with a provision to increase to 2.50% upon attainment of 90.00% funding ratio to 50.00% of the Social Security Cost of Living Adjustment, not less than 1.00% and not more than 1.50%, beginning January 1, 2019.  For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors.  Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 Changes Changes in Actuarial Assumptions  The CSA loads were changed from 0.8% for active members and 60% for vested and non-vested deferred members. The revised CSA loads are now 0.0% for active member liability, 15% for vested deferred member liability and 3% for non-vested deferred member liability.  The assumed post-retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year through 2044 and 2.5% per year thereafter. Changes in Plan Provisions  The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter.  The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. City of Falcon Heights Notes to Required Supplementary Information 72 General Employees Fund (Continued) 2016 Changes Changes in Actuarial Assumptions  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, the inflation was decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Changes in Plan Provisions  There have been no changes since the prior valuation. 2015 Changes Changes in Actuarial Assumptions  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030 and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year thereafter. Changes in Plan Provisions  On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised; the State's contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. 73 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 74 Park Programs Water Solid Waste Community Development Assets Cash and investments 52,102$ 223,191$ 101,062$ 21,119$ Taxes receivable - delinquent - - - - Special assessment receivable deferred - - - - Accounts receivable - 5,420 13,043 - Due from other governments - - - - Total assets 52,102$ 228,611$ 114,105$ 21,119$ Liabilities Accounts payable -$ -$ 6,962$ -$ Deferred inflows of resources Unavailable revenue - property tax - - - - Unavailable revenue - special assessments - - - - Total deferred inflows of resources - - - - Fund Balances Restricted - - - - Committed 52,102 228,611 107,143 21,119 Assigned - - - - Total fund balances 52,102 228,611 107,143 21,119 Total liabilities, deferred inflows of resources, and fund balances 52,102$ 228,611$ 114,105$ 21,119$ City of Falcon Heights Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2021 Special Revenue 75 Debt Service Street Lighting Community Garden Community Inclusion Charitable Gambling Total G.O. Improvement Bonds, Series 2017A 56,456$ 4,023$ 44,637$ 1,682$ 504,272$ 475,712$ - - - - - - - - - - - 13,487 5,337 - - - 23,800 - - - - - - 252 61,793$ 4,023$ 44,637$ 1,682$ 528,072$ 489,451$ 3,175$ -$ -$ -$ 10,137$ -$ - - - - - - - - - 13,487 - - - 13,487 - - 44,637 1,682 46,319 475,964 58,618 4,023 - - 471,616 - - - - - - - 58,618 4,023 44,637 1,682 517,935 475,964 61,793$ 4,023$ 44,637$ 1,682$ 528,072$ 489,451$ Special Revenue 76 General Capital Improvements Amber Union Tax Increment No. 1-3 Assets Cash and investments 302,820$ 49,090$ 80,948$ Taxes receivable - delinquent - - 1,060 Special assessment receivable deferred - - - Accounts receivable - - - Due from other governments 2,782 - - Total assets 305,602$ 49,090$ 82,008$ Liabilities Accounts payable 4,000$ -$ 405$ Deferred inflows of resources Unavailable revenue - property tax - - 1,060 Unavailable revenue - special assessments - - - Total deferred inflows of resources - - 1,060 Fund Balances Restricted - - 80,543 Committed - - - Assigned 301,602 49,090 - Total fund balances 301,602 49,090 80,543 Total liabilities, deferred inflows of resources, and fund balances 305,602$ 49,090$ 82,008$ City of Falcon Heights Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2021 Capital Projects 77 Public Safety Capital Improvements Total Total Other Governmental Funds 7,762$ 440,620$ 1,420,604$ - 1,060 1,060 - - 13,487 - - 23,800 - 2,782 3,034 7,762$ 444,462$ 1,461,985$ -$ 4,405$ 14,542$ - 1,060 1,060 - - 13,487 - 1,060 14,547 - 80,543 602,826 - - 471,616 7,762 358,454 358,454 7,762 438,997 1,432,896 7,762$ 444,462$ 1,461,985$ Capital Projects 78 Park Programs Water Solid Waste Community Development Revenues Property taxes -$ -$ -$ -$ Tax increments - - - - Special assessments - - - - Intergovernmental - - 15,737 - Charges for services 5,449 38,970 83,287 - Miscellaneous Investment income 175 699 331 75 Contributions and donations 24 - - - Other - - - 3,790 Total revenues 5,648 39,669 99,355 3,865 Expenditures Current General government - - - - Public safety - - - - Public works - 12,931 102,699 - Park and recreation 21,580 - - - Community development - - - 723 Miscellaneous - - - - Debt service Principal - - - - Interest and other charges - - - - Capital outlay General government - - - - Public works - - - - Total expenditures 21,580 12,931 102,699 723 (15,932) 26,738 (3,344) 3,142 Other Financing Sources (Uses) Proceeds from sale of capital assets - - - - Transfers in 26,000 - - - Transfers out - - - - Total other financing sources (uses) 26,000 - - - Net change in fund balances 10,068 26,738 (3,344) 3,142 Fund Balances Beginning of year 42,034 201,873 110,487 17,977 End of year 52,102$ 228,611$ 107,143$ 21,119$ City of Falcon Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2021 Excess of revenues over (under) expenditures Special Revenue 79 Street Lighting Community Garden Community Inclusion Charitable Gambling Total -$ -$ -$ -$ -$ - - - - - - - - - - - - - - 15,737 41,922 925 - - 170,553 - 156 20 135 2 1,593 - - - - 24 - - - - 3,790 42,078 945 135 2 191,697 - - - - - - - 14,973 - 14,973 32,122 - - - 147,752 - 2,738 - - 24,318 - - - - 723 - - - 592 592 - - - - - - - - - - - - - - - - - - - - - - 32,122 2,738 14,973 592 188,358 9,956 (1,793) (14,838) (590) 3,339 - - - - - - - 20,000 - 46,000 - - - - - - - 20,000 - 46,000 9,956 (1,793) 5,162 (590) 49,339 48,662 5,816 39,475 2,272 468,596 58,618$ 4,023$ 44,637$ 1,682$ 517,935$ Special Revenue 80 G.O. Improvement Bonds, Series 2017A G.O. Equipment Certificates, Series 2013B G.O. Improvement Series 2013A Total Revenues Property taxes 112,650$ 98,894$ -$ 211,544$ Tax increments - - - - Special assessments 6,086 - 73 6,159 Intergovernmental - - - - Charges for services - - - - Miscellaneous - Investment income 1,164 453 72 1,689 Contributions and donations - - - - Other - - - - Total revenues 119,900 99,347 145 219,392 Expenditures Current General government - 722 722 1,444 Public safety - - - - Public works 722 - - 722 Park and recreation - - - - Community development - - - - Miscellaneous - - - - Debt service - Principal 115,000 265,000 65,000 445,000 Interest and other charges 17,080 8,152 4,030 29,262 Capital outlay - General government - - - - Public works - - - - Total expenditures 132,802 273,874 69,752 476,428 (12,902) (174,527) (69,607) (257,036) Other Financing Sources (Uses) Proceeds from sale of capital assets - 150,000 - 150,000 Transfers in - - - - Transfers out - (116,782) (7,338) (124,120) Total other financing sources (uses) - 33,218 (7,338) 25,880 Net change in fund balances (12,902) (141,309) (76,945) (231,156) Fund Balances Beginning of year 488,866 141,309 76,945 707,120 End of year 475,964$ -$ -$ 475,964$ Debt Service City of Falcon Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2021 Excess of revenues over (under) expenditures 81 General Capital Improvements Amber Union Tax Increment No. 1-3 Public Safety Capital Improvements Total Total Other Governmental Funds -$ -$ -$ -$ -$ 211,544$ - - 333,729 - 333,729 333,729 - - - - - 6,159 - 49,678 - - 49,678 65,415 - 73,380 - - 73,380 243,933 1,037 35 290 47 1,409 4,691 - - - - - 24 28,834 - - - 28,834 32,624 29,871 123,093 334,019 47 487,030 898,119 723 - - - 723 2,167 - - - 722 722 15,695 - 74,003 722 - 74,725 223,199 - - - - - 24,318 - - - - - 723 - - - - - 592 - - - - - 445,000 - - - - - 29,262 10,996 - - - 10,996 10,996 - - 328,271 - 328,271 328,271 11,719 74,003 328,993 722 415,437 1,080,223 18,152 49,090 5,026 (675) 71,593 (182,104) - - - - - 150,000 - - - - - 46,000 - - - - - (124,120) - - - - - 71,880 18,152 49,090 5,026 (675) 71,593 (110,224) 283,450 - 75,517 8,437 367,404 1,543,120 301,602$ 49,090$ 80,543$ 7,762$ 438,997$ 1,432,896$ Capital Projects 82 Original and Final Budget Actual Amounts Revenues Property taxes 2,037,731$ 2,031,045$ (6,686)$ Licenses and permits 75,008 252,408 177,400 Intergovernmental revenue Local government aid 603,532 603,532 - Cable television franchise fees 30,000 36,381 6,381 Fire aid 50,000 55,862 5,862 Police aid - 63,649 63,649 Total intergovernmental revenue 683,532 759,424 75,892 Charges for services Plan check fees 8,500 91,458 82,958 Other 10,800 9,491 (1,309) Snow removal - 200 200 Total charges for services 19,300 101,149 81,849 Fines and forfeitures 20,000 19,511 (489) Miscellaneous revenue Investment income 18,000 3,162 (14,838) Refunds and reimbursements 3,000 14,812 11,812 Other 33,650 2,057 (31,593) Total miscellaneous revenue 54,650 20,031 (34,619) Total revenues 2,890,221 3,183,568 293,347 Expenditures General government Legislative Wages, salaries, and compensation 22,315 22,125 (190) Materials and supplies 1,800 1,075 (725) Other 24,550 20,014 (4,536) Administration Wages, salaries, and compensation 246,130 237,792 (8,338) Materials and supplies 9,900 6,754 (3,146) Other 37,300 25,995 (11,305) Variance with Final Budget - Over (Under) City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund - Detailed Year Ended December 31, 2021 83 Original and Final Budget Actual Amounts Expenditures (Continued) General government (continued) Finance Wages, salaries, and compensation 129,560$ 122,796$ (6,764)$ Materials and supplies 300 159 (141) Other 22,340 20,962 (1,378) Legal 16,000 9,414 (6,586) Elections Materials and supplies 500 371 (129) Other 24,718 23,941 (777) Communications Wages, salaries, and compensation 27,650 21,475 (6,175) Materials and supplies 4,700 11,824 7,124 Other 44,000 80,010 36,010 Planning and inspections Wages, salaries, and compensation 87,310 75,366 (11,944) Materials and supplies 50 53 3 Other 65,680 66,660 980 Total general government 764,803 746,786 (18,017) Public safety Emergency preparedness Wages, salaries, and compensation 7,580 5,819 (1,761) Materials and supplies 1,000 - (1,000) Other 200 133 (67) Police services 1,261,271 1,231,909 (29,362) Legal 31,000 30,000 (1,000) Fire fighting Wages, salaries, and compensation 25,432 4,931 (20,501) Fire relief pension 50,000 56,862 6,862 Materials and supplies 4,900 2,384 (2,516) Other 229,350 193,741 (35,609) Total public safety 1,610,733 1,525,779 (84,954) Public works Buildings and grounds Wages, salaries, and compensation 29,095 28,354 (741) Materials and supplies 11,000 5,986 (5,014) Other 56,400 59,976 3,576 City of Falcon Heights Variance with Final Budget - Over (Under) Changes in Fund Balance - Budget and Actual - General Fund - Detailed Schedule of Revenues, Expenditures, and Year Ended December 31, 2021 84 (THIS PAGE LEFT BLANK INTENTIONALLY) 85 Original and Final Budget Actual Amounts Expenditures (Continued) Public works (Continued) Streets Wages, salaries, and compensation 82,390$ 85,090$ 2,700$ Materials and supplies 18,900 24,134 5,234 Other 47,260 41,803 (5,457) Engineering 10,000 16,081 6,081 Tree program Materials and supplies 50 - (50) Tree maintenance 42,500 48,158 5,658 Total public works 297,595 309,582 11,987 Park and recreation Park maintenance Wages, salaries, and compensation 61,140 47,985 (13,155) Materials and supplies 5,800 790 (5,010) Other 24,150 23,121 (1,029) Total parks and recreation 91,090 71,896 (19,194) Total expenditures 2,764,221 2,654,043 (110,178) Excess of revenues over expenditures 126,000 529,525 403,525 Other Financing Uses Transfers out (126,000) (526,000) (400,000) Net change in fund balance -$ 3,525 3,525$ Fund Balance Beginning of year 3,241,773 End of year 3,245,298$ Changes in Fund Balance - Schedule of Revenues, Expenditures, and Variance with Final Budget - Over (Under) Year Ended December 31, 2021 City of Falcon Heights Budget and Actual - General Fund - Detailed 86 Variance with Actual Amounts Final Budget - Over (Under) Revenues Charges for services 6,500$ 5,449$ (1,051)$ Miscellaneous revenues Investment income 250 175 (75) Contributions and donations 1,000 24 (976) Total miscellaneous revenues 1,250 199 (1,051) Total revenues 7,750 5,648 (2,102) Expenditures Park and recreation Current Wages, salaries, and compensation 27,540 17,388 (10,152) Materials and supplies 1,750 356 (1,394) Other 6,350 3,836 (2,514) Total expenditures 35,640 21,580 (14,060) Excess of revenues over (under) expenditures (27,890) (15,932) 11,958 Other Financing Sources Transfers in 26,000 26,000 - Net change in fund balance (1,890)$ 10,068 11,958$ Fund Balance Beginning of year 42,034 End of year 52,102$ Original and Final Budget City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Park Programs Fund - Special Revenue Fund Year Ended December 31, 2021 87 Original and Final Budget Actual Amounts Variance with Final Budget- Over (Under) Revenues Charges for services 35,000$ 38,970$ 3,970$ Miscellaneous revenues Investment income 1,500 699 (801) Total revenues 36,500 39,669 3,169 Expenditures Public works Wages, salaries, and compensation 11,467 10,778 (689) Other 6,170 2,153 (4,017) Total expenditures 17,637 12,931 (4,706) 18,863$ 26,738 7,875$ Fund Balance Beginning of year 201,873 End of year 228,611$ Excess of revenues over expenditures City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Water Fund - Special Revenue Fund Year Ended December 31, 2021 88 Variance with Original and Final Budget Actual Amounts Final Budget Over (Under) Revenues Recycling grant 15,500$ 15,737$ 237$ Charges for services 76,000 83,287 7,287 Miscellaneous revenues Investment income 1,400 331 (1,069) Total revenues 92,900 99,355 6,455 Expenditures Public works Wages, salaries, and compensation 18,390 17,151 (1,239) Materials and supplies 1,100 - (1,100) Recycling contract 80,000 83,537 3,537 Other 3,550 2,011 (1,539) Total expenditures 103,040 102,699 (341) Excess of revenues over (under) expenditures (10,140)$ (3,344) 6,796$ Fund Balance Beginning of year 110,487 End of year 107,143$ Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Solid Waste Fund - Special Revenue Fund 89 Variance with Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 300$ 75$ (225)$ Other 1,895 3,790 1,895 Total revenues 2,195 3,865 1,670 Expenditures Community development Other 9,100 723 (8,377) Excess of revenues over (under) expenditures (6,905)$ 3,142 10,047$ Fund Balance Beginning of year 17,977 End of year 21,119$ Original and Final Budget City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Development Fund - Special Revenue Fund Year Ended December 31, 2021 90 Variance with Original and Final Budget Actual Amounts Final Budget- Over (Under) Revenues Charges for services 41,000$ 41,922$ 922$ Miscellaneous revenues Investment income 200 156 (44) Total revenues 41,200 42,078 878 Expenditures Public works Other 39,950 32,122 (7,828) Excess of revenues over expenditures 1,250$ 9,956 8,706$ Fund Balance Beginning of year 48,662 End of year 58,618$ City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Street Lighting Fund - Special Revenue Fund Year Ended December 31, 2021 91 Variance with Original Budget Final Budget Actual Amounts Final Budget - Over (Under) Revenues Charges for services Park and recreation 725$ 725$ 925$ 200$ Miscellaneous revenues Investment income 25 25 20 (5) Total revenues 750 750 945 195 Expenditures Park and recreation Other 4,000 4,888 2,738 (2,150) Excess of revenues (under) expenditures (3,250)$ (4,138)$ (1,793) 2,345$ Fund Balance Beginning of year 5,816 End of year 4,023$ Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Garden Fund - Special Revenue Fund 92 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income -$ 135$ 135$ Contributions and donations 50 - (50) Total miscellaneous revenues 50 135 85 Expenditures Public Safety Wages, salaries and compensation 35,000 14,973 (20,027) Excess of revenues under (under) expenditures (34,950) (14,838) 20,112 Other Financing Sources Transfers in 20,000 20,000 - Net change in fund balances (14,950)$ 5,162 20,112$ Fund Balance Beginning of year 39,475 End of year 44,637$ Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Inclusion Fund - Special Revenue Fund 93 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Property Taxes 112,650$ 112,650$ -$ Special assessments 5,000 6,086 1,086 Miscellaneous revenues Investment income 1,500 1,164 (336) Total revenues 119,150 119,900 750 Expenditures Public works Wages, salaries and compensation 800 722 (78) Debt service Principal 115,000 115,000 - Interest and other charges 21,725 17,080 (4,645) Total expenditures 137,525 132,802 (4,723) Excess of revenues over (under) expenditures (18,375)$ (12,902) 5,473$ Fund Balance Beginning of year 488,866 End of year 475,964$ City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - G.O. Improvement Bonds, Series 2017A - Debt Service Fund Year Ended December 31, 2021 94 Variance with Original Final Actual Amounts Final Budget - Over (Under) Revenues Special assessments - -$ 73$ 73$ Miscellaneous revenues Investment income 800 800 72 (728) Total revenues 800 800 145 (655) Expenditures General government Other 800 800 722 (78) Debt service Principal 65,000 65,000 65,000 - Interest and other charges 3,309 5,309 4,030 (1,279) Total expenditures 69,109 71,109 69,752 (1,357) Excess of revenues over (under) expenditures (68,309) (70,309) (69,607) 702 Other Financing Sources Transfers in 12,000 12,000 - (12,000) Transfers out - (7,500) (7,338) 162 Net Other Financing Sources and Uses 12,000 4,500 (7,338) (11,838) Net change in fund balance (56,309)$ (65,809)$ (76,945) (11,136)$ Fund Balance Beginning of year 76,945 End of year -$ Budgeted Amounts Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - G.O. Improvement Bonds, Series 2013A - Debt Service Fund 95 Variance with Original Final Actual Amounts Final Budget - Over (Under) Revenues Property taxes 98,894$ 98,894$ 98,894$ -$ Miscellaneous revenues Investment income 1,000 1,000 453 (547) Total revenues 99,894 99,894 99,347 (547) Expenditures General government Wages, salaries, and compensation 800 800 722 (78) Debt service Principal 85,000 265,000 265,000 - Interest and other charges 9,056 9,056 8,152 (904) Total expenditures 94,856 274,856 273,874 (982) Excess of revenues over (under) expenditures 5,038 (174,962) (174,527) 435 Other financing sources and uses Proceeds from sale of capital assets - - 150,000 150,000 Transfers out (120,000) (120,000) (116,782) 3,218 Net Other Financing Sources and Uses (120,000) (120,000) 33,218 153,218 Net change in fund balance (114,962)$ (294,962)$ (141,309) 153,653$ Fund Balance Beginning of year 141,309 End of year -$ Year Ended December 31, 2021 Budgeted Amounts City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - G.O. Equipment Certificates, Series 2013B - Debt Service Fund 96 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Special assessments 392,000$ 171,733$ (220,267)$ Intergovernmental revenue Other grants and aids 302,500 288,715 (13,785) Miscellaneous revenues Investment income - 672 672 Other - 1,350 1,350 Total miscellaneous - 2,022 2,022 Total revenues 694,500 462,470 (232,030) Expenditures Public works Current Other - 94,098 94,098 Capital outlay 997,000 991,874 (5,126) Interest and other charges - 27,613 27,613 Total expenditures 997,000 1,113,585 116,585 Excess of revenues under expenditures (302,500) (651,115) (348,615) Other Financing Sources Bond issuance 302,500 654,175 351,675 Bond premium - 30,512 30,512 Total other financing sources 302,500 684,687 382,187 Net change in fund balance -$ 33,572 33,572$ Fund Balance Beginning of year - End of year 33,572$ Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - 2021 Street Project - Capital Projects Fund 97 Variance with Original Budget Final Budget Actual Amounts Final Budget - Over (Under) Revenues Special assessments -$ -$ 3,688$ 3,688$ Licenses and permits 135,000 135,000 132,896 (2,104) Intergovernmental Other grants and aids 60,000 60,000 154,216 94,216 Miscellaneous revenues Investment income 12,000 12,000 1,121 (10,879) Other - - 342 342 Total revenues 207,000 207,000 292,263 85,263 Expenditures Public works Current Other 2,800 2,800 11,557 8,757 Capital outlay 3,000 33,000 24,828 (8,172) Total expenditures 5,800 35,800 36,385 585 Excess of revenues over expenditures 201,200 171,200 255,878 84,678 Other Financing Sources Transfers in 80,000 80,000 80,000 - Net change in fund balance 281,200$ 251,200$ 335,878 84,678$ Fund Balance Beginning of year 1,309,870 End of year 1,645,748$ Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Future Improvements - Capital Projects Fund 98 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 1,500$ 1,037$ (463)$ Other - 28,834 28,834 Total revenues 1,500 29,871 28,371 Expenditures General government Current Other 800 723 (77) Capital outlay 9,500 10,996 1,496 Total expenditures 10,300 11,719 1,419 Excess of revenues over (under) expenditures (8,800)$ 18,152 26,952$ Fund Balance Beginning of year 283,450 End of year 301,602$ City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Capital Improvements - Capital Projects Fund Year Ended December 31, 2021 99 Variance with Original Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 1,000$ 242$ 242$ Expenditures Parks and recreation Current Other 800 723 723 Capital outlay 84,000 13,098 13,098 Total expenditures 84,800 13,821 13,821 Excess of revenues over (under) expenditures (83,800) (13,579) (13,579) Other Financing Sources Proceeds from sale of capital assets - 387,349 387,349 Transfers in - 524,120 524,120 Total other financing sources - 911,469 911,469 (83,800)$ 897,890 897,890$ Fund Balance Beginning of year 207,801 End of year 1,105,691$ City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Parks/PW and Facilities Capital Improvements - Capital Projects Fund Year Ended December 31, 2021 100 Variance with Original Final Actual Amounts Final Budget - Over (Under) Revenues Tax increments 280,000$ 330,000$ 333,729$ 3,729$ Miscellaneous revenue Investment income 800 800 290 (510) Total revenues 280,800 330,800 334,019 3,219 Expenditures Public works Current Other 800 800 722 (78) Capital outlay 289,000 339,000 328,271 (10,729) Total expenditures 289,800 339,800 328,993 (10,807) Excess of revenues over (under) expenditures (9,000)$ (9,000)$ 5,026 14,026$ Fund Balance Beginning of year 75,517 End of year 80,543$ Budgeted Amounts Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Tax Increment No. 1-3 - Capital Projects Fund 101 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 100$ 47$ (53)$ Expenditures Public safety Current Other 800 722 (78) Capital outlay 7,000 - (7,000) Total expenditures 7,800 722 (7,078) Excess of revenues over (under) expenditures (7,700)$ (675) 7,025$ Fund Balance Beginning of year 8,437 End of year 7,762$ Budgeted Amounts Year Ended December 31, 2021 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Public Safety Capital Improvements - Capital Projects Fund 102 (THIS PAGE LEFT BLANK INTENTIONALLY) 103 STATISTICAL SECTION 104 (THIS PAGE LEFT BLANK INTENTIONALLY) 105 City of Falcon Heights Statistical Section This part of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. CONTENTS Financial Trends The tables contain trend information to help the reader understand how the City's financial performance and well- being have changed over time. Tables 1-5 Revenue Capacity These tables contain information to help the reader assess the City's most significant local revenue source, the property tax. Tables 6-10 Debt Capacity These tables 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. Tables 11-15 Demographic and Economic Information These tables offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Tables 16-17 Operating Information These tables 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. Tables 18-20 Source: City of Falcon Heights financial records 106 2012 2013 2014 2015 Governmental Activities Net investment in capital assets 7,695,346$ 7,637,289$ 7,257,327$ 7,205,699$ Restricted 254,441 474,487 610,535 477,094 Unrestricted 2,501,081 2,493,059 2,545,364 2,302,829 Total Governmental Activities 10,450,868$ 10,604,835$ 10,413,226$ 9,985,622$ Business-Type Activities Net investment in capital assets 874,377$ 828,552$ 1,223,115$ 1,535,176$ Unrestricted 2,580,201 2,670,746 2,656,683 2,398,677 Total Business-Type Activities 3,454,578$ 3,499,298$ 3,879,798$ 3,933,853$ Primary Government Net investment in capital assets 8,569,723$ 8,465,841$ 8,480,442$ 8,740,875$ Restricted 254,441 474,487 610,535 477,094 Unrestricted 5,081,282 5,163,805 5,202,047 4,701,506 Total Primary Government Net Position 13,905,446$ 14,104,133$ 14,293,024$ 13,919,475$ City of Falcon Heights Net Position by Component Last Ten Fiscal Years Fiscal Year 107 Table 1 2016 2017 2018 2019 2020 2021 7,139,185$ 7,073,360$ 7,136,755$ 7,256,270$ 7,390,580$ 7,006,594$ 484,867 613,084 528,460 913,108 866,475 778,435 2,421,877 2,534,275 2,754,612 3,135,756 4,380,322 5,695,480 10,045,929$ 10,220,719$ 10,419,827$ 11,305,134$ 12,637,377$ 13,480,509$ 1,487,989$ 1,675,687$ 1,620,358$ 1,727,018$ 1,939,341$ 2,201,504$ 2,524,097 2,139,335 2,252,575 2,389,482 2,232,118 2,323,793 4,012,086$ 3,815,022$ 3,872,933$ 4,116,500$ 4,171,459$ 4,525,297$ 8,627,174$ 8,749,047$ 8,757,113$ 8,983,288$ 9,329,921$ 9,208,098$ 484,867 613,084 528,460 913,108 866,475 778,435 4,945,974 4,673,610 5,007,187 5,525,238 6,612,440 8,019,273 14,058,015$ 14,035,741$ 14,292,760$ 15,421,634$ 16,808,836$ 18,005,806$ Fiscal Year 108 2012 2013 2014 2015 Expenses Governmental Activities General Government 590,809$ 649,412$ 665,388$ 634,328$ Public Safety 882,722 870,860 956,694 1,009,561 Public Works 607,628 1,473,421 643,323 1,068,292 Park and Recreation 215,570 215,654 253,333 300,800 Community Development 615 7,551 2,187 10,967 Interest on Long-Term Debt 3,101 55352 - 19,695 Total Governmental Activities Expenses 2,300,445 3,272,250 2,520,925 3,043,643 Business-Type Activities Sanitary Sewer 565,107 704,897 629,452 613,868 Storm Sewer 139,766 136,662 116,201 136,551 Total Business-Type Activities Expenses 704,873 841,559 745,653 750,419 Total Primary Government Expenses 3,005,318$ 4,113,809$ 3,266,578$ 3,794,062$ Program Revenues Governmental Activities Charges for Services: General Government 150,366$ 155,006$ 132,811$ 158,077$ Public Safety 147,127 129,220 137,377 145,952 Public Works 135,552 149,158 147,014 149,152 Park and Recreation 36,368 184,510 43,209 25,232 Community Development 1,716 1,717 1,716 1,716 Operating Grants and Contributions 119,267 218,919 193,236 473,143 Capital Grants and Contributions 1,567 664,846 13,967 196,337 Total Governmental Activities Program Revenues 591,963 1,503,376 669,330 1,149,609 Business-Type Activities Charges for Services: Sanitary Sewer 788,551 807,031 780,844 756,539 Storm Sewer 141,630 156,632 155,116 154,984 Operating Grants and Contributions - - - - Capital Grants and Contributions - - - - Total Business-Type Activities Program Revenues 930,181 963,663 935,960 911,523 Total Primary Government Program Revenues 1,522,144$ 2,467,039$ 1,605,290$ 2,061,132$ Table 2 continued next page City of Falcon Heights Changes in Net Position Last Ten Fiscal Years Fiscal Year 109 Table 2 2016 2017 2018 2019 2020 2021 696,194$ 752,640$ 743,238$ 777,949$ 765,683$ 834,064$ 1,073,268 1,072,905 1,473,021 1,528,097 1,604,140 1,596,239 648,892 1,775,574 897,796 614,411 680,429 2,006,502 162,958 174,392 139,967 145,442 131,580 114,604 1,789 3,726 33,944 8,080 747 723 18,363 28,612 35,301 32,222 25,644 48,811 2,601,464 3,807,849 3,323,267 3,106,201 3,208,223 4,600,943 760,415 723,236 708,321 901,784 867,393 960,715 122,303 142,494 156,170 155,634 145,903 158,873 882,718 865,730 864,491 1,057,418 1,013,296 1,119,588 3,484,182$ 4,673,579$ 4,187,758$ 4,163,619$ 4,221,519$ 5,720,531$ 167,214$ 145,060$ 118,265$ 188,726$ 129,162$ 235,187$ 125,161 127,160 107,026 155,035 76,079 190,431 152,128 151,229 160,774 146,301 154,959 164,379 15,170 11,476 11,047 8,986 1,500 6,374 1,716 1,895 - 3,790 - 3,790 151,536 154,211 226,881 381,001 807,921 730,258 11,490 953,653 35,938 10,163 55,253 388,902 624,415 1,544,684 659,931 894,002 1,224,874 1,719,321 829,339 879,391 945,893 1,070,459 852,185 1,153,186 157,067 169,957 169,172 174,608 179,662 188,125 701 - - - - 129,239 - - - - - - 987,107 1,049,348 1,115,065 1,245,067 1,031,847 1,470,550 1,611,522$ 2,594,032$ 1,774,996$ 2,139,069$ 2,256,721$ 3,189,871$ Fiscal Year Source: City of Falcon Heights financial records 110 2012 2013 2014 2015 Net (Expense)/Revenue Governmental Activities (1,708,482)$ (1,768,874)$ (1,851,595)$ (1,894,034)$ Business-Type Activities 225,308 122,104 190,307 161,104 Total Primary Government Net (Expense)/Revenue (1,483,174)$ (1,646,770)$ (1,661,288)$ (1,732,930)$ General Revenues and Other Changes in Net Position Governmental Activities: Taxes Property Taxes 1,011,688$ 1,080,588$ 1,043,863$ 1,081,384$ Franchise Fees - - - - Tax Increments 349,752 374,385 202,372 156,606 Unrestricted State Aids 311,928 312,593 505,414 533,015 Other General Revenue - 66,520 38,602 15,000 Unrestricted Investment Income 28,174 118 26,324 14,783 Gain on Sale of Assets - 8,637 34,060 270 Transfers 56,075 80,000 (167,106) - Total Governmental Activities 1,757,617 1,922,841 1,683,529 1,801,058 Business-Type Activities: Other General Revenue - - - - Unrestricted Investment Income 21,673 2,616 23,087 13,091 Proceeds Sale of Assets - - - - Transfers (56,075) (80,000) 167,106 - Total Business-Type Activities (34,402) (77,384) 190,193 13,091 Total Primary Government 1,723,215$ 1,845,457$ 1,873,722$ 1,814,149$ Changes in Net Position Governmental Activities 49,135$ 153,967$ (168,066)$ (92,976)$ Business-Type Activities 190,906 44,720 380,500 174,195 Total Primary Government 240,041$ 198,687$ 212,434$ 81,219$ *Governmental Accounting Standards Board Statement NO. 68 required implementation for fiscal year 2015. City of Falcon Heights Changes in Net Position Last Ten Fiscal Years Fiscal Year 111 Table 2 (Cont) 2016 2017 2018 2019 2020 2021 (1,977,049)$ (2,263,165)$ (2,663,336)$ (2,212,199)$ (1,983,349)$ (2,881,622)$ 104,389 183,618 250,574 187,649 18,551 350,962 (1,872,660)$ (2,079,547)$ (2,412,762)$ (2,024,550)$ (1,964,798)$ (2,530,660)$ 1,181,336$ 1,271,602 1,600,552 1,997,743 2,159,635 2,251,745 - - 22,179 131,659 138,243 132,896 251,476 172,018 294,506 229,181 271,247 333,729 542,320 546,524 604,943 605,967 604,477 892,919 - 18,437 31,975 11,333 52,308 103,564 22,163 29,149 78,289 121,623 89,682 9,901 61 225 - - - - 40,000 400,000 230,000 - - - 2,037,356 2,437,955 2,862,444 3,097,506 3,315,592 3,724,754 - - - - - - 13,844 19,318 37,337 55,918 36,408 2,876 - - - - - - (40,000) (400,000) (230,000) - - - (26,156) (380,682) (192,663) 55,918 36,408 2,876 2,011,200$ 2,057,273$ 2,669,781$ 3,153,424$ 3,352,000 3,727,630 60,307$ 174,790$ 199,108$ 885,307$ 1,332,243$ 843,132$ 78,233 (197,064) 57,911 243,567 54,959 353,838 138,540$ (22,274)$ 257,019$ 1,128,874$ 1,387,202$ 1,196,970$ Fiscal Year 112 (THIS PAGE LEFT BLANK INTENTIONALLY) Source: City of Falcon Heights financial records 113 Table 3 Fiscal Property Tax Franchise Year Tax Increment Tax Total 2012 1,011,688$ 349,752$ -$ 1,361,440$ 2013 1,080,588 374,385 - 1,454,973 2014 1,043,863 202,372 - 1,246,235 2015 1,081,384 156,606 - 1,237,990 2016 1,181,336 251,476 - 1,432,812 2017 1,271,602 172,018 - 1,443,620 2018 1,600,552 294,506 22,179 1,917,237 2019 1,997,743 229,181 131,659 2,358,583 2020 2,159,635 271,247 138,243 2,569,125 2021 2,251,745 333,729 132,896 2,718,370 City of Falcon Heights Governmental Activities Tax Revenues by Source Last Ten Fiscal Years Source: City of Falcon Heights financial records 114 2012 2013 2014 2015 2016 2017 67,068$ 70,602$ 89,222$ 85,535$ 71,138$ 37,201$ - - - - - - - - - - - - - - - - - - 1,236,211 1,275,982 1,326,645 1,334,716 1,504,383 1,676,621 1,303,279$ 1,346,584$ 1,415,867$ 1,420,251$ 1,575,521$ 1,713,822$ -$ -$ -$ -$ -$ -$ 333,945 951,032 411,590 318,141 337,506 498,308 189,414 285,035 251,368 263,384 308,915 321,089 997,693 851,073 919,832 803,442 799,450 1,642,422 Unassigned - - - (43,120) - - 1,521,052$ 2,087,140$ 1,582,790$ 1,341,847$ 1,445,871$ 2,461,819$ Governmental Accounting Standards Board Statement NO. 54 required implementation for fiscal year 2011. Fiscal Year City of Falcon Heights Fund Balances of Governmental Funds Last 10 Fiscal Years General Fund Committed Assigned Nonspendable Restricted Assigned Unassigned Total General Fund Total All Other Governmental Funds All Other Governmental Funds Nonspendable Restricted Committed 115 Table 4 2018 2019 2020 2021 40,800$ 17,737$ 53,084$ -$ - - - - - - - - - - - - 1,828,155 2,007,462$ 2,515,136$ 3,245,298$ 1,868,955$ 2,025,199$ 2,568,220$ 3,245,298$ -$ -$ -$ -$ 450,561 868,901 857,959 649,927 333,318 377,003 426,849 471,616 1,659,242 1,404,348 1,775,983 3,109,890 - - - - 2,443,121$ 2,650,252$ 3,060,791$ 4,231,433$ Fiscal Year Source: City of Falcon Heights financial records 116 2012 2013 2014 2015 2016 2017 Other Financing Sources (Uses) Transfers in 246,775$ 170,418$ 241,685$ 24,716$ 62,000$ 442,000$ Transfers out (190,700) (90,418) (101,685) (24,716) (22,000) (42,000) Proceeds sale of capital assets 29,534 8,637 34,060 270 61 225 Bonds issued - 1,160,000 - - - 845,000 Bond premium - - - - - - Total other financing sources (Uses) 85,609 1,248,637 174,060 270 40,061 1,245,225 Net change in fund balances (103,701)$ 620,285$ (477,659)$ (74,963)$ 261,865$ 1,081,200$ Debt service as a percentage of 3.03% 3.43% 3.42% 6.60% 6.63% 4.59% noncapital expenditures Fiscal Year City of Falcon Heights Changes in Fund Balances of Governmental Funds Last 10 Fiscal Years 117 Table 5 (Cont.) 2018 2019 2020 2021 291,770$ 479,912$ 158,000$ 650,120$ (61,770) (479,912) (158,000) (650,120) - - - 537,349 - - - 665,000 52,345 - - 30,512 230,000 - - 1,232,861 164,208$ 691,741$ 1,119,439$ 1,174,167$ 5.87% 9.41% 9.13% 10.30% Fiscal Year Source: City of Falcon Heights financial records 118 Table 6 Fiscal Property Tax Franchise Year Tax Increment Tax Total 2012 1,021,683$ 349,716$ -$ 1,371,399$ 2013 1,078,855 374,356 - 1,453,211 2014 1,051,636 202,437 - 1,254,073 2015 1,072,799 156,606 - 1,229,405 2016 1,184,241 251,476 - 1,435,717 2017 1,271,805 172,018 - 1,443,823 2018 1,602,886 294,506 22,179 1,919,571 2019 1,994,450 229,181 131,659 2,355,290 2020 2,164,623 271,247 138,243 2,574,113 2021 2,242,589 333,729 132,896 2,709,214 City of Falcon Heights General Governmental Tax Revenues by Source Last 10 Fiscal Years Source: Ramsey County property tax and records 119 Table 7AssesedTotal Estimated (Tax Capacity)Year Real Property (1) Personal Property (1) Less Total Taxable Direct ActualValue(1) as aEnded Residential Commercial Motor Tax Exempt Assessed Tax Taxable Percentage ofDecember 31, Property Property Vehicles Other Real Property (1) Value (1) Rate Market Value Taxable Market Value20124,021,671$ NA NA55,328$ NA4,076,999$ 23.515 374,125,500$ 1.09%20133,697,530 NA NA59,508 NA3,757,038 27.884 362,697,600 1.04%20143,776,860 NA NA59,934 NA3,836,794 24.819 369,585,000 1.04%20154,111,429 NA NA61,664 NA4,173,093 23.470 385,888,200 1.08%20164,100,084 NA NA64,788 NA4,164,872 25.855 384,679,900 1.08%20174,327,797 NA NA68,082 NA4,395,879 26.342 403,438,700 1.09%20184,602,900 NA NA72,140 NA4,675,040 31.780 426,967,700 1.09%20194,821,090 NA NA68,604 NA4,889,694 37.356 464,013,600 1.05%20205,290,593 NA NA70,696 NA5,361,289 36.635 502,720,300 1.07%20215,596,770 NA NA78,544 NA5,675,314 36.348 527,577,000 1.08%(1) Assessed values replaced by Gross Tax Capacity (GTC) by state statutes.Assessed values of commercial property, motor vehicles and tax exempt properties are notprovided by Ramsey County.City of Falcon HeightsAssessed Value and Estimated Actual Value of Taxable PropertyLast 10 Fiscal Years Source: Ramsey County property tax and records 120 Table 8 City of Falcon Heights Overlapping Rates School Total Debt Total Technical Ramsey District Special Direct and Fiscal Operating Service City College County No. 623 Districts Overlapping Year Rate (3) Rate Rate Rate Rate Rate Rate Rates 2012 23.515 0.000 23.515 0.000 61.316 17.065 8.871 110.767 2013 27.884 0.000 27.884 0.000 65.240 15.464 9.305 117.893 2014 24.819 0.000 24.819 0.000 63.735 16.251 9.037 113.842 2015 23.470 0.000 23.470 0.000 58.922 17.18 8.647 108.219 2016 25.855 0.000 25.855 0.000 58.885 20.958 9.052 114.750 2017 26.342 0.000 26.342 0.000 55.850 18.894 8.669 109.755 2018 31.780 0.000 31.780 0.000 53.962 34.396 9.086 129.223 2019 37.356 0.000 37.356 0.000 52.879 31.687 8.891 130.903 2020 35.635 0.000 35.635 0.000 52.302 30.668 9.270 127.875 2021 36.348 0.000 36.348 0.000 47.760 31.25 8.588 123.947 (1) Overlapping rates are those of local and county governments that apply to property owners within the City of Falcon Heights. Not all overlapping rates apply to all City of Falcon Heights property owners (e.g., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). (2) Tax capacity rates are used by state statute instead of millage rates. (3) Does not include tax increments. Last 10 Fiscal Years Net Tax Capacity Rates (2) City of Falcon Heights Property Tax Rates Direct and Overlapping(1) Governments Source: Ramsey County property tax and records 121 City of Falcon Heights Principal Property Taxpayers Table 9 2021 2012 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Value (1) Rank Value Value Rank Value Falcon Heights Town Square Apartments, LP 183,519$ 1 4.40 % 114,732$ 2 2.54 % Sidal Realty Co. Limited Partnership 168,065 2 4.03 % 94,050 3 2.09 % Spire Federal Credit Union 157,590 3 3.58 % 186038 1 4.12 % Buhl GTA LP 111,477 4 - % - - - % Town Square Senior Apartments, LLC 86,520 5 1.77 % 114732 4 2.54 % Northern States Power 70,696 6 1.70 % 55328 5 1.23 % Falcon Crossing, LLC 66,566 7 1.51 % 44736 8 0.99 % Anna Spiegler 60,456 8 1.38 % 34664 6 0.77 % Warner Properties of MN, LLP 48,866 9 1.17 % 38862 10 0.86 % Carl and Eloise Pohlad Foundation 46,078 10 1.05 % - - - % Xerxes Ave LLC 45,650 11 1.04 % - - - % JAK Rental Properties LLC 41,210 12 1.04 % 42570 9 0.94 % Total 1,086,693$ 22.66 % 725,712$ 16.09 % (1) Assessed values replaced by Gross Tax Capacities (GTC) by state statute. Taxpayer December 31, 2021 Source: City of Falcon Heights financial records 122 Table 10 Total Tax Levy for Collections in Fiscal Year Fiscal Year Amount Percentage of Levy Subsequent Years Amount Percentage of Levy 2011 1,038,290$ 989,035$ 95.3% 5,963$ 994,998$ 95.83% 2012 1,017,944 1,011,688 99.4% 6,256 1,017,944 100.00% 2013 1,084,007 1,078,855 99.5% 4,411 1,083,266 99.93% 2014 1,083,850 1,044,751 96.4% 3,311 1,048,062 96.70% 2015 1,083,850 1,072,033 98.9% 11,280 1,083,313 99.95% 2016 1,173,447 1,171,208 99.8% 2,239 1,173,447 100.00% 2017 1,278,231 1,271,805 99.5% 3,340 1,275,145 99.76% 2018 1,487,059 1,480,385 99.6% 4,085 1,487,059 100.00% 2019 1,980,918 1,975,542 99.7% 7,965 1,980,918 100.00% 2020 2,137,524 2,131,339 99.7% 3,995 2,131,339 99.71% 2021 2,249,275 2,242,589 99.7% 2,242,589 99.70% Fiscal Year of the Levy Total Collections to Date Collected within the City of Falcon Heights Ramsey County, Minnesota Property Tax Levies and Collections (1) Last 10 Fiscal Years Source: City of Falcon Heights financial records 123 Table 11 Governmental Activities Total Percentage Fiscal G.O. Primary of Personal Per Year Bonds Government Income(1)Capita(1) 2012 170,000$ 170,000$ 0.10% 31 2013 1,265,000 1,265,000 0.78% 236 2014 1,195,000 1,195,000 0.72% 218 2015 1,070,000 1,070,000 0.65% 196 2016 930,000 930,000 0.54% 170 2017 1,625,000 1,625,000 0.95% 298 2018 1,475,000 1,475,000 0.75% 271 2019 1,210,000 1,210,000 0.61% 220 2020 945,000 945,000 0.48% 169 2021 1,165,000 1,165,000 0.57% 229 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 (Table 16) for personal income and population data. City of Falcon Heights Ratios of Outstanding Debt by Type Last 10 Fiscal Years 124 (THIS PAGE LEFT BLANK INTENTIONALLY) Source: City of Falcon Heights financial records 125 Table 12 Percentage of Estimated Less Amounts Actual Taxable Fiscal G.O. Available in Debt Value(1) of Per Year Bonds Service Fund Total Property Capita(2) 2012 170,000$ 2,427$ 167,573$ 0.04% 31 2013 1,265,000 44,007 1,220,993 0.34% 227 2014 1,195,000 260,990 934,010 0.25% 170 2015 1,070,000 234,341 835,659 0.22% 153 2016 930,000 247,198 682,802 0.18% 125 2017 1,625,000 404,754 1,220,246 0.30% 224 2018 1,475,000 351,141 1,123,859 0.26% 206 2019 1,210,000 729,333 480,667 0.10% 87 2020 945,000 704,542 240,458 0.05% 43 2021 1,165,000 486,550 678,450 0.13% 121 Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. (1) See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property (Table 7) for property value data. (2) Population data can be found in the Schedule of Demographic and Economic Statistics (Table 16) City of Falcon Heigths Ratios of General Bonded Debt Outstanding Last 10 Fiscal Years 126 Table 13EstimatedEstimated Share ofDebt Percentage OverlappingOutstandingApplicable(1)DebtDebt Repaid with Property Taxes: County 2,151,794,677$ 0.8% 17,819,202$ Subtotal, Overlapping Debt17,819,202 City of Falcon Heights Direct Debt1,165,000 Unamoritzed bond premium direct debt46,484 Subtotal Direct Debt1,211,484 Total Direct and Overlapping Debt18,984,202$ Note: Overlapping governments are those that coincide, at least in part, with the geographicboundaries of the City. This schedule estimates the portion of outstanding debt of thoseoverlapping governments that is borne by the residents and businesses of the City.This process recognizes that, when considering the government's ability to issueand repay long-term debt, the entire debt burden borne by the residents and businessesshould be taken into account. However, this does not imply that every taxpayer is a residentand, therefore, responsible for repaying the debt, of each overlapping government.(1) The percentage of overlapping debt applicable is estimated using taxable assessedproperty values. Applicable percentages were estimated by determining the portion of thecounty's total taxable assessed value.Sources: Assessed value data used to estimate applicable percentages provided by the CountyBoard of Equalization and Assessment. Debt outstanding data provided by the County.City of Falcon HeightsDirect and Overlapping Governmental Activities DebtDecember 31, 2021Governmental Unit Source: Department of Property Records and Revenue – Ramsey County 127 Computation of Direct and Overlapping Bonded DebtDecember 31, 2021Table 13 (Cont.)City's ShareGross Debt (1)Sinking Funds Net Debt Percent AmountDirectCity of Falcon Heights 1,211,484$ 486,550$ 724,934$ 100.00 % 724,934$ OverlappingSchool DistrictsISD No. 623 172,285,000 1,549,985 170,735,015 7.46 12,734,836 ISD No. 916 75,365,000 - 73,357,058 1.86 1,362,176 Ramsey CountyRamsey County 176,402,000 51,506,566 124,895,434 0.90 1,119,498 County Library 25,185,000 2,472,504 22,712,496 1.78 404,397 Metro Watershed 12,720,531 - 12,720,531 1.99 252,732 Metropolitan AgenciesMetro Council 1,688,625,662 191,569,090 1,497,056,572 0.13 1,945,563 Metro Airports- - CommissionTotalOverlappingDebt 2,150,583,193 247,098,145 1,901,477,106 17,819,202 Total Direct and Overlapping Debt 2,151,794,677$ 247,584,695$ 1,902,202,040$ 18,544,136$ (1) Gross debt totals include bonds which are financed by ad valorem tax levy, G.O. Revenue financing andspecial assessments.Metro Council has G.O. Revenue debt of $ 1,443,245,662 and Revenue debt of $ 0. Metro Airports Commission has G.O. Revenue debt of $ 0 and Revenue debt of $ 1,774,270,000.Governmental UnitCity of Falcon Heights 128 2012 2013 2014 2015 Debt Limit 7,482,510$ 6,838,406$ 6,991,052$ 7,717,764$ Total Net Debt Applicable to Limit - - - - Legal Debt Margin 7,482,510$ 6,838,406$ 6,991,052$ 7,717,764$ Total Net Debt Applicable to the Limit as a Percentage of Debt Limit 0.00% 0.00% 0.00% 0.00% Note: Under state finance law, the City's G.O. debt should not exceed 2% of total assessed tax capacity. By law, the G.O. debt subject to the limitation may be offset by amounts set aside for repaying G.O. bonds. Fiscal Year City of Falcon Heights Legal Debt Margin Information Last 10 Fiscal Years 129 Table 14 2016 2017 2018 2019 2020 2021 7,693,598$ 8,068,774$ 8,539,354$ 9,280,272$ 10,054,406$ 10,551,540$ - - - - - - 7,693,598$ 8,068,774$ 8,539,354$ 9,280,272$ 10,054,406$ 10,551,540$ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Legal Debt Margin Calculation for Fiscal Year 2020 Assessed Value 527,577,000$ Add Back Exempt Real Property - Total Assessed Value 527,577,000 Debt Limit (2% of Total Assessed Value) 10,551,540 Debt Applicable to Limit: G.O. Bonds - Less Amount Set Aside for Repayment of G.O. Debt - Total Net Debt Applicable to Limit - Legal Debt Margin 10,551,540$ Fiscal Year Source: City of Falcon Heights financial records 130 Table 15 Special Assessment Bonds Special Fiscal Assessment Debt Service Year Collections Principal Interest Coverage 2011 -$ 200,000$ 5,200$ 0.0% 2012 - - - 0.0% 2013 31,483 - - 0.0% 2014 58,007 - 6,701 865.6% 2015 50,145 60,000 6,870 75.0% 2016 45,371 60,000 6,345 68.4% 2017 39,328 65,000 5,606 55.7% 2018 43,579 65,000 30,772 45.5% 2019 41,048 180,000 27,151 19.8% 2020 41,393 180,000 22,418 20.4% 2021 8,847 180,000 21,110 4.4% Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. City of Falcon Heights Pledge-Revenue Coverage Last Ten Fiscal Years 131 City of Falcon HeightsDemographic and Economic StatisticsLast 10 Fiscal YearsTable 16EducationPer Level inTotal Capita Years ofFiscal Personal Personal Median Formal SchoolYearPopulation(1)IncomeIncome(2)Age(3)Schooling(3)Enrollment(4)2012 5,426 165,113,180$ 30,430$ NA 14.8 6,793 5.42013 5,370 161,631,630 30,099 NA 14.8 7,471 4.32014 5,490 165,117,240 30,076 NA 14.8 7,436 3.22015 5,450 165,314,850 30,333 NA 14.8 7,507 3.12016 5,460 170,657,760 31,256 NA 14.8 7,590 4.12017 5,450 170,345,200 36,156 NA 14.8 7,592 3.22018 5,450 197,535,250 36,245 NA 14.8 7,519 2.92019 5,500 199,347,500 36,245 NA 14.8 7,329 3.22020 5,600 196,072,800 35,013 NA 14.8 7,294 4.72021 5,600 204,948,800 36,598 NA 14.8 7,192 2.7Data sources(1) Bureau of the Census/Metropolitan Council(2) State of Minnesota Demography Department - Ramsey County data and US Census data (3) Census Data for 2020(4) School District(5) State Department of Labor* Revenue Information for Ramsey County not availableNote: Population, median age and education level information are based on surveys conducted during the last quarter ofthe calendar year. Personal income information is a total for the year. Unemployment rate information is an adjusted yearlyaverage. School enrollment is based on the census at the start of the school year.Rate(5)Unemployment Source: City of Falcon Heights administrative office 132 City of Falcon Heights Principal Employers Current Year and Nine Years Ago Table 17 Percentage of Percentage of Total City Total City Taxpayer Employees Rank Employment Employees Rank Employment 2,200 1 61.11 % 2,800 1 82.35 % Spire Federal Credit Union 300 2 8.33 91 3 - Twin Cities Laboratories 120 3 3.33 100 2 - Minnesota State Fair (2) 80 4 2.22 80 5 2.35 Falcon Heights Elementary 60 5 1.67 45 4 1.32 Estimated Total City Employees All Businesses 3,600 76.67 % 3,400 86.03 % (1) The University of Minnesota Saint Paul Campus employs an additional 1100 part time people during the year. (2) During the Minnesota State Fair held each fall, there are an additional 2,500 people contingently employed. University of Minnesota (1) 2021 2012 Source: City of Falcon Heights administrative office 133 Table 182012 2013 2014 2015 2016 2017 2018 2019 2020 2021General Government4.16 4.16 4.51 4.26 4.26 4.61 5.21 5.21 5.21 5.18Public SafetyPolice (1)Officers NANANANANANANANANANAFireFirefighters and Officers 2.27 2.27 3.02 3.02 3.02 2.77 2.77 2.77 2.77 0.35Highways and StreetsEngineering (2) Maintenance 1.13 1.13 1.13 1.13 1.13 1.10 1.11 1.11 1.11 1.11Park and Recreation2.49 2.49 2.49 2.49 2.49 2.44 2.49 2.49 2.49 1.64Sewer2.19 2.19 2.19 2.19 2.19 2.32 2.32 2.32 2.32 2.33Total 12.24 12.24 13.34 13.09 13.09 13.24 13.90 13.90 13.90 10.61(1) The City contracts with a neighboring city for police services.(2) The City contracts with outside entities for engineering services.FunctionCity of Falcon HeightsFull-Time Equivalent City Government Employees by FunctionLast 10 Fiscal Years Source: Various government departments 134 Table 192012 2013 2014 2015 2016 2017 2018 2019 2020 2021PolicePhysical Arrests 605 649 620 700 539 311 59 37 30 67Parking Violations 215 336 427 313 303 155 304 410 88 135Traffic Violations 1,486 1,608 1,496 1,987 1,344 1,653 270 299 73 207FireNumber of Calls Answered 149 94 117 108 120 119 143 200 106 171Inspections 68618667771051469970 2Highways and Streets Streets Resurfacing (Miles) - 1 - - - - 1 - - 3 Potholes Repaired 60 70 185 80 70 68 29 55 100 20SanitationRefuse Collected (Tons/Day) (1) NANANANANANANANANANARecyclables Collected (Tons/Day) (2) 9.3 9.3 9.6 8.9 9.0 8.9 8.6 8.0 9.3 9.3 Park and RecreationAthletic Field Permits Issued 3333383879300Community Centers Admissions (3) NANANANANANANANANANAWaterNew Connections - - - - - 3 2 - - - Water Mains Breaks - 6 1 - - 1 1 1 7 3 Average Daily Consumption (Thousands of Gallons) 903 1054 707 728 716 723 769 742 574 708WastewaterAverage Daily Sewage Treatment 688 553 562 561 574 538 629 638 500 572 (Thousands of Gallons per Day)Note: Indicators are not available for the general government function.(1) Individual property owners contract privately with refuse collectors to provide this service.(3) The City of Falcon Heights has no community center, but does have park buildings to use when parks are rented.(2) The City of Falcon Heights contracts with a recycling collector to collect recyclables. Starting 2011, recyclables were picked up every week during the year instead of twice a month.City of Falcon HeightsOperating Indicators by FunctionLast 10 Fiscal YearsFunctionFiscal Year Source: Various city departments, St Paul Water Utility, Metropolitan Council Environmental Services 135 Table 202012 2013 2014 2015 2016 2017 2018 2019 2020 2021Public SafetyPolice (1)Stations - - - - - - - - - - Patrol Units - - - - - - - - - - Fire Stations (2) 1 1 1 1 1 1 1 1 1 - Highways and StreetsStreets (Miles) 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 Streetlights 210 210 210 210 210 210 210 210 210 210 Traffic Signals 9 9 9 9 9 9 9 9 9 9 Park and RecreationParks Acreage 18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 Parks 3 3 3 3 3 3 3 3 3 3 Tennis Courts 2 2 2 2 2 2 2 2 2 2 WaterWater Mains (Miles) 14.5 14.5 14.5 14.5 14.5 14.5 14.5 14.5 14.5 14.5 Fire Hydrants 146 146 146 146 146 146 146 146 146 146 Maximum Daily Capacity 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 (Thousands of Gallons)SewerSanitary Sewers (Miles) 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7 14.7 Storm Sewers (Miles) 4 4 4 4 4 4 4 4 4 4 Maximum Daily Treatment Capacity (2) 339,000 339,000 339,000 339,000 339,000 339,000 339,000 339,000 339,000 339,000 (Thousands of Gallons)Note: No capital asset indicators are available for the general government function.(1) Falcon Heights contracts with the Ramsay County Sherriff's Department for 24 hour police coverage(2) The fire service was disbanded in January 2021. Contract for fire services with City of St Paul.(3) Falcon Heights is part of the Metropolitan Council Environmental Services metro area wide treatment facility. This number represents total system daily plant capacity authorized by permit for the area including the City.FunctionCity of Falcon HeightsCapital Asset Statistics by FunctionLast 10 Fiscal YearsFiscal Year BLANK PAGE  REQUEST FOR COUNCIL ACTION City of Falcon Heights, Minnesota __________________________ Item General Disbursements, Payroll and Wire Payments Description General Disbursements through: 5/4/22 $118,579.58 Payroll through: 4/30/22 $17,492.77 Wire Payments through: 5/4/22 $11,912.64 Budget Impact The general disbursements, payroll and wire payments are consistent with the budget. Attachment(s) • General Disbursements, Payroll and Wire Payments Action(s) Requested Staff recommends that the Falcon Heights City Council approve general disbursements, payroll and wire payments. Meeting Date May 11, 2022 Agenda Item Consent G1 Attachment General Disbursements. Payroll, and Wire Payments Submitted By Roland Olson, Finance Director BLANK PAGE  REQUEST FOR COUNCIL ACTION City of Falcon Heights, Minnesota __________________________ Item Approval of City License(s) Description The following individuals/entities have applied for a Municipal Business License for 2022. Staff have received the necessary documents for licensure. 1. Jackson Hewitt Tax Service 2. Northern Tier Retail LLC DBA: Speedway #4353 The following individuals/entities have applied for a Tobacco License for 2022. Staff have received the necessary documents for licensure. 1. Northern Tier Retail LLC DBA: Speedway #4353 The following individuals/entities have applied for a Gasoline Station Operator License for 2022. Staff have received the necessary documents for licensure. 1. Northern Tier Retail LLC DBA: Speedway #4353 The following individuals/entities have applied for a Retail Grocery License for 2022. Staff have received the necessary documents for licensure. 1. Northern Tier Retail LLC DBA: Speedway #4353 Budget Impact N/A Attachment(s) N/A Action(s) Requested Staff recommends approval of the City license application(s) contingent on background checks and fire inspections as required. Meeting Date May 11, 2022 Agenda Item Consent G2 Attachment N/A Submitted By Megan Pavek Assistant to the City Administrator BLANK PAGE  REQUEST FOR COUNCIL ACTION City of Falcon Heights, Minnesota __________________________ Item Designated Signor of City Funds for Newly Appointed City Administrator/City Clerk. Description In accordance with Minnesota Statute 412.271 the Mayor and City Clerk are required to be the designated signors for orders drawn on city funds. The signors currently are Mayor Randall Gustafson and Interim City Administrator/City Clerk Tim Pittman. Tim Pittman assumed these roles when the past City Administrator Sack Thongvanh resigned. The newly appointed City Administrator, Jack Linehan, needs to be the designated signor as City Clerk for the city’s funds. The Mayor Pro Tem, Kay Andrews would continue to be a designated signor in Mayor Gustafson’s absence. It takes a week or more for the bank to change the signors, so staff recommends continuing with Tim Pittman as City Clerk for check signing authority until the bank recognizes the new signor. Budget Impact N/A Attachment(s) N/A Action(s) Requested Staff asks for Council approval to appoint the new City Administrator, Jack Linehan, as City Clerk for designated signing authority for orders drawn on the City’s funds. Meeting Date May 11, 2022 Agenda Item Consent G3 Attachment N/A Submitted By Roland Olson, Finance Director BLANK PAGE  REQUEST FOR COUNCIL ACTION City of Falcon Heights, Minnesota __________________________ Item Support for No Mow May Description No Mow May is an initiative to encourage residents who wish to participate to not mow their lawns during the month of May to allow pollinators, particularly bees, additional time to safely come out of hibernation in tall grasses and weeds. To accomplish this goal, the City will need to temporarily suspend enforcement of Sec. 22-19 and Sec. 22-21 of the City Code, which requires weeds and grass to be kept under 6” at all times. The attached resolution provides temporary relief of this restriction for weeds and grass for a period that lasts through May 31, 2022. Beginning June 1, 2022, the City will begin once again enforcing ordinances related to mowing. The proposed resolution would not preempt the Minnesota State Stat. 18.77, which requires properties to manage noxious weeds/vegetation. Noxious weeds/vegetation will need to continue to be maintained on all properties per statute. In 2022, a number of Minnesota cities have adopted No Mow May resolutions including Edina, Mendota Heights, Vadnais Heights, Columbia Heights, West St. Paul, New Brighton, and Roseville. The language in the attached Resolution was modeled after other successful No Mow May programs in these nearby communities and it was reviewed by the City Attorney to confirm enforceability. As part of the No Mow May program, we will be seeking data from residents to determine if grass and weeds grow over six inches in the month of May. This will vary year-to-year, but can help determine if a more permanent City Code change may be applicable. Budget Impact Attachment(s) • Resolution 22-19 Supporting the No Mow May initiative 2022 by temporarily suspending the regulation requirements of Sec. 22-19 and Sec. 22-21 of the City Code for a period ending May 31, 2022. Meeting Date May 11, 2022 Agenda Item Consent G4 Attachment N/A Submitted By Jack Linehan, City Administrator Action(s) Requested Staff recommends approval of the attached resolution to support No Mow May. CITY OF FALCON HEIGHTS COUNCIL RESOLUTION May 11, 2022 No. 22-19 -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RESOLUTION SUPPORTING THE NO MOW MAY INITIATIVE 2022 BY TEMPORARILY SUSPENDING THE REGULATION REQUIREMENTS OF SEC. 22-19 AND SEC. 22-21 OF THE CITY CODE FOR A PERIOD ENDING MAY 31, 2022 WHEREAS, the City Council and the Environment Commission have an ongoing commitment to protect the environment and the natural habitat within the City; and WHEREAS, the City Council and the Environment Commission recognize the importance of bees and other pollinators in the process of growing a diverse and healthy ecosystem; and WHEREAS, recent research suggests that bee pollinators make use of no mow spaces as key floral resources during early spring in the upper Midwest United States; and WHEREAS, pollinators and floral resources have a positive relationship, where the increase in pollinators can increase the amount of flora and vice versa; and WHEREAS, the Falcon Heights City Council and the Environment Commission finds it is in the public interest and consistent with adopted City policies, including the City’s Beekeeping Ordinance 20-05, for the City to demonstrate its commitment to a safe and healthy community environment through the implementation of initiatives that help increase the pollinator population. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Falcon Heights, Minnesota: 1.To proclaim the remainder of May 2022 as No Mow May, and encourage all residents of the city who wish to participate in this initiative to refrain from mowing their lawns in the month of May to provide vital early spring flowers for bees that emerge from hibernation, and 2.To temporarily suspend enforcement for No Mow May relating to the requirements of Sec. 22-19 and Sec. 22-21, specifically that “…weeds or grass growing to a height of greater than six inches” from a period beginning May 12, 2022 to May 31, 2022, while continuing to enforce the Minnesota State Mandate regarding the management of noxious weeds, and 3.Beginning on June 1, 2022, the temporary stay on enforcement will expire and the regulation requirements related to Sec. 22-19 and Sec. 22-21 of the City Code will resume enforcement. ADOPTED by the Falcon Heights City Council this 11th day of May, 2022 -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Moved by: Approved by: ________________________ Randall Gustafson Mayor GUSTAFSON ____ In Favor Attested by: ________________________ LEEHY Jack Linehan MEYER ____ Against City Administrator ANDREWS WEHYEE