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5-10-23 Regular Meeting
CITY OF FALCON HEIGHTS Regular Meeting of the City Council City Hall 2077 West Larpenteur Avenue AGENDA Wednesday, May 10, 2023 7:00 p.m. A.CALL TO ORDER: B. ROLL CALL: GUSTAFSON LEEHY MEYER WASSENBERG WEHYEE STAFF PRESENT: LINEHAN C.APPROVAL OF AGENDA D. PRESENTATION 1.Peter Lindstrom, Metropolitan Council Member, District 10 2.Year-End 2022 Audit Report 3.Xcel Energy - Partners in Energy Program E.APPROVAL OF MINUTES: 1. April 26, 2023 Regular Meeting Minutes F.PUBLIC HEARINGS: G.CONSENT AGENDA: 1.General Disbursements through 5/4/23: $1,141,662.15 Payroll through 4/30/23: $19,905.86 Wire Payments through 4/30/23: $11,826.17 2.ARPA Funding Plan 3. 2023 Pay Equity Report Notice of Noncompliance Correction 4.Resignation of Andrea LaDouceur from the Community Engagement Commission H: POLICY ITEMS: 1.City Council Findings of Fact – Amber Union PUD Amendment and City Code Amendment to Allow for Drive-Through Coffee Shop 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: 1 BLANK PAGE 2 Item Year-End 2022 Annual Audit Report Description Matt Mayer of BerganKDV will present the Annual Comprehensive Financial Report for the Year Ended December 31, 2022. 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 2022. Budget Impact N/A Attachment(s) •Communications Letter •Legal Compliance Report •Annual Comprehensive Financial Report (2022) Action(s) Requested Motion to accept and approve the Year End 2022 Annual Audit Report. Meeting Date May 10, 2023 Agenda Item Presentation D2 Attachment Audit Materials Submitted By Jack Linehan, City Administrator 3 City of Falcon Heights Ramsey County, Minnesota Communications Letter December 31, 2022 4 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 Issues 18 5 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, 2022, 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. 6 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 26, 2023, 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 26, 2023 7 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 2022. 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. 8 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. 9 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, 2022. 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. 10 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. 11 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. 12 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. 13 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, 2022, the General Fund balance was $3,154,078 which is a decrease of $91,220 from 2021. Based on current expenditure levels, the fund balance represents over a year of expenditures. $40,800 $17,737 $53,084 $2,007,462 $2,515,136 $3,188,689 $3,245,298 $3,118,111 $- $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 2018 2019 2020 2021 2022 General Fund Balance Nonspendable Unassigned $35,967 14 10 City of Falcon Heights Financial Analysis General Fund $2,494,181 $2,952,007 $3,337,438 $3,183,568 $3,092,939 $2,263,275 $2,389,396 $2,470,538 $2,654,043 $2,544,159 $- $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 2018 2019 2020 2021 2022 General Fund Total Revenues Total Expenditures General Fund revenues decreased by $90,629, or 2.9%, in 2022. Expenditures in the General Fund decreased by $109,884, or 4.1%, and resulted in total revenues exceeding expenditures by $548,780. Further detailed explanations regarding variances will follow in subsequent charts. 15 11 City of Falcon Heights Financial Analysis General Fund Revenues 2018 2019 2020 2021 2022 Miscellaneous $110,083 $69,705 $73,470 $20,031 $60,552 Fines and Forfeitures 35,719 28,191 15,109 19,511 18,385 Charges for Services 65,213 108,901 58,138 101,149 31,069 Intergovernmental Revenue 706,270 825,387 1,177,761 759,424 652,290 Licenses and Permits 72,340 159,031 76,325 252,408 156,521 General Property Taxes 1,504,556 1,760,792 1,936,635 2,031,045 2,174,122 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 General Fund Revenues Property tax revenue increased $143,077 due to an increase in levy. Intergovernmental revenues decreased $95,887 as a result of not receiving the fire aid in 2022 as well as a decrease in police aid. Licenses and permit revenues decreased $95,887 due to a decrease in building permits. Charges for services decreased $70,080 as a result of less plan check fees with not having a similar project as Amber Union in the current year. Miscellaneous revenues increased $40,521 from the prior year, due to receiving tax increment excess in 2022. The other remaining General Fund revenues in 2022 stayed relatively consistent with the prior year. 16 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 70% Licenses and Permits 5% Intergovernmental Revenue 21% Charges for Services 1% Fines and Forfeitures 1% Miscellaneous 2% General Fund Revenues 2022 ` 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 Fund sources of revenue remained consistent in 2022 compared to 2021. 17 13 City of Falcon Heights Financial Analysis General Fund Expenditures 2018 2019 2020 2021 2022 Parks and Recreation $76,675 $85,174 $71,992 $71,896 $79,027 Public Works 221,418 208,414 222,964 309,582 273,384 Public Safety 1,305,759 1,424,994 1,505,502 1,525,779 1,383,570 General Government 659,423 670,814 670,080 746,786 808,178 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 General Fund Expenditures In 2022, expenditures decreased $109,884, or 4.1%, from 2021. Public safety expenditures decreased $142,209, or 9.3% in 2022. This was related to less police services during the year as well as the fire relief dissolving in 2021. General government expenditures increased $61,392 as a result of adding a part-time accountant position. Public works decreased $36,198 due to less tree maintenance in 2022. Other expenditures stayed relatively consistent with the prior year. 18 14 City of Falcon Heights Financial Analysis General Fund Expenditures (Continued) General Government 32% Public Safety 54% Public Works 11% Parks and Recreation 3% General Fund Expenditures 2022 General Government 28% Public Safety 57% Public Works 12% Parks and Recreation 3% General Fund Expenditures 2021 19 15 City of Falcon Heights Financial Analysis General Fund Budget Actual Amounts Revenues Taxes 2,166,934$ 2,174,122$ 7,188$ Tax increments - 34,431 34,431 Licenses and permits 82,750 156,521 73,771 Intergovernmental 633,532 652,290 18,758 Charges for services 20,600 31,069 10,469 Fines and forfeitures 15,000 18,385 3,385 Miscellaneous 18,700 26,121 7,421 Total revenues 2,937,516 3,092,939 155,423 Expenditures General government 876,521 808,178 (68,343) Public safety 1,396,600 1,383,570 (13,030) Public works 329,175 273,384 (55,791) Parks and recreation 95,220 79,027 (16,193) Total expenditures 2,697,516 2,544,159 (153,357) Excess of receipts over disbursements 240,000 548,780 308,780 Other Financing Uses Transfers out (240,000) (640,000) (400,000) Net change in fund balance -$ (91,220)$ (91,220)$ Original and Final Budget Variance with Final Budget - Over (Under) Overall, General Fund revenues were over budget by 4.1%, or $155,423. The largest budget variance was in licenses and permit revenue, which exceeded budget amounts by $73,771. This variance is a result of more building permits than anticipated. Other categories were relatively on budget. Expenditures were under budget by $153,357, or 5.7%. The largest variance was in general government, which was $68,343 under budget. This variance was due to a position being open for part of the year. Public works was under budget $55,791 as a result of less tree maintenance than anticipated. Other categories were relatively on budget. 20 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. 2018 2019 2020 2021 2022 Sewer Charges $945,893 $1,070,459 $852,185 $1,153,186 $1,038,379 Total Operating Expenses 708,321 901,784 867,393 960,715 852,016 Depreciation 12,620 13,281 12,272 15,333 18,577 Operating Income with Depreciation 237,572 168,675 (15,208) 192,471 186,363 Operating Income without Depreciation 250,192 181,956 (2,936) 207,804 204,940 $(200,000) $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Sanitary Sewer Fund The Sanitary Sewer Fund realized operating income of $186,363 during 2022. Sewer charges in 2022 decreased by $114,807 from 2021. This decrease was primarily the result of less SAC fees during the year. With an operating income of $186,363, $(5,442) in nonoperating revenue, the change in the Sanitary Sewer Fund net position was an increase of $180,921. Total net position increased to $2,986,740 in 2022. 21 17 City of Falcon Heights Financial Analysis Storm Drainage Fund 2018 2019 2020 2021 2022 Storm Drainage Charges $169,172 $174,608 $179,662 $188,125 $191,637 Total Operating Expenses 156,170 155,634 145,903 158,873 171,265 Depreciation 50,677 50,836 49,301 53,237 43,829 Operating Income with Depreciation 13,002 18,974 33,759 29,252 20,372 Operating Income without Depreciation 63,679 69,810 83,060 82,489 64,201 $- $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 $3,512. Operating expenses increased in 2022 by $12,392. The Storm Drainage Fund had operating income of $20,372 in 2022. With $(1,037) in investment income, the Storm Drainage Fund had a total increase in net position of $19,335. Ending net position at December 31, 2022, was $1,738,813. 22 18 City of Falcon Heights Emerging Issues Executive Summary The following is an executive summary of financial 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. 96 – Subscription-Based Information Technology Arrangements GASB has issued GASB Statement No. 96 relating to accounting and financial reporting for subscription-based information technology arrangements. The requirements of this Statement will improve financial reporting by establishing a definition for subscription-based information technology arrangements and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. Accounting Standard Update – GASB Statement No. 100 – Accounting Changes and Error Corrections GASB has issued GASB Statement No. 100 relating to accounting and financial reporting for accounting changes and error corrections. The requirements of this Statement will improve the clarity of the accounting and financial reporting requirements for accounting changes and error corrections, which will result in greater consistency in application in practice. In turn, more understandable, reliable, relevant, consistent, and comparable information will be provided to financial statement users for making decisions or assessing accountability. Accounting Standard Update – GASB Statement No. 101 – Compensated Absences GASB has issued GASB Statement No. 101 relating to accounting and financial reporting for compensated absences. The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. The following are extensive summaries of the current updates. As your continued business partner, we are committed to keeping you informed of new and emerging issues. We are happy to discuss these issues with you further and its applicability to your City. Accounting Standard Update – GASB Statement No. 96 – Subscription-Based Information Technology Arrangements This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset – an intangible asset – and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. 23 19 City of Falcon Heights Emerging Issues Accounting Standard Update – GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (Continued) A SBITA is defined as a contract that conveys control of the right to use another party's (a SBITA vendor's) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction. The subscription term includes the period during which a government has a noncancellable right to use the underlying IT assets. The subscription term also includes periods covered by an option to extend (if it is reasonably certain that the government or SBITA vendor will exercise that option) or to terminate (if it is reasonably certain that the government or SBITA vendor will not exercise that option). Under this Statement, a government generally should recognize a right-to-use subscription asset – an intangible asset – and a corresponding subscription liability. A government should recognize the subscription liability at the commencement of the subscription term, – which is when the subscription asset is placed into service. The subscription liability should be initially measured at the present value of subscription payments expected to be made during the subscription term. Future subscription payments should be discounted using the interest rate the SBITA vendor charges the government, which may be implicit, or the government's incremental borrowing rate if the interest rate is not readily determinable. A government should recognize amortization of the discount on the subscription liability as an outflow of resources (for example, interest expense) in subsequent financial reporting periods. The subscription asset should be initially measured as the sum of (1) the initial subscription liability amount, (2) payments made to the SBITA vendor before commencement of the subscription term, and (3) capitalizable implementation costs, less any incentives received from the SBITA vendor at or before the commencement of the subscription term. A government should recognize amortization of the subscription asset as an outflow of resources over the subscription term. Activities associated with a SBITA, other than making subscription payments, should be grouped into the following three stages, and their costs should be accounted for accordingly: Preliminary Project Stage, including activities such as evaluating alternatives, determining needed technology, and selecting a SBITA vendor. Outlays in this stage should be expensed as incurred. Initial Implementation Stage, including all ancillary charges necessary to place the subscription asset into service. Outlays in this stage generally should be capitalized as an addition to the subscription asset. Operation and Additional Implementation Stage, including activities such as subsequent implementation activities, maintenance, and other activities for a government's ongoing operations related to a SBITA. Outlays in this stage should be expensed as incurred unless they meet specific capitalization criteria. In classifying certain outlays into the appropriate stage, the nature of the activity should be the determining factor. Training costs should be expensed as incurred, regardless of the stage in which they are incurred. 24 20 City of Falcon Heights Emerging Issues Accounting Standard Update – GASB Statement No. 96 – Subscription-Based Information Technology Arrangements (Continued) If a SBITA contract contains multiple components, a government should account for each component as a separate SBITA or nonsubscription component and allocate the contract price to the different components. If it is not practicable to determine a best estimate for price allocation for some or all components in the contract, a government should account for those components as a single SBITA. This Statement provides an exception for short-term SBITAs. Short-term SBITAs have a maximum possible term under the SBITA contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources. This Statement requires a government to disclose descriptive information about its SBITAs other than short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other payments not included in the measurement of a subscription liability, principal and interest requirements for the subscription liability, and other essential information. GASB Statement No. 96 is effective for reporting periods beginning after June 15, 2022. Earlier application is encouraged. Information provided above was obtained from www.gasb.org. Accounting Standard Update – GASB Statement No. 100 – Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. As part of those descriptions, for (1) certain changes in accounting principles and (2) certain changes in accounting estimates that result from a change in measurement methodology, a new principle or methodology should be justified on the basis that it is preferable to the principle or methodology used before the change. That preferability should be based on the qualitative characteristics of financial reporting – understandability, reliability, relevance, timeliness, consistency, and comparability. This Statement also addresses corrections of errors in previously issued financial statements. This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. The requirements of this Statement for changes in accounting principles apply to the implementation of a new pronouncement in absence of specific transition provisions in the new pronouncement. 25 21 City of Falcon Heights Emerging Issues Accounting Standard Update – GASB Statement No. 100 – Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 (Continued) This Statement also requires that the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting unit in the financial statements. This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported to beginning balances as restated. Furthermore, this Statement addresses how information that is affected by a change in accounting principle or error correction should be presented in required supplementary information (RSI) and supplementary information (SI). For periods that are earlier than those included in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles. GASB Statement No. 100 is effective for reporting periods beginning after June 15, 2023. Earlier application is encouraged. Information provided above was obtained from www.gasb.org. Accounting Standard Update – GASB Statement No. 101 – Compensated Absences The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences. 26 22 City of Falcon Heights Emerging Issues Accounting Standard Update – GASB Statement No. 101 – Compensated Absences (Continued) This Statement requires that a liability for certain types of compensated absences – including parental leave, military leave, and jury duty leave – not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee's pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition, governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. GASB Statement No. 101 is effective for reporting periods beginning after December 15, 2023. Earlier application is encouraged. Information provided above was obtained from www.gasb.org. 27 City of Falcon Heights Ramsey County, Minnesota Independent Auditor's Report on Legal Compliance December 31, 2022 28 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, 2022, and the related notes to financial statements, and have issued our report thereon dated April 26, 2023. 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 26, 2023 29 ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY OF FALCON HEIGHTS, MINNESOTA For the Year Ended December 31, 2022 Prepared by THE DEPARTMENT OF FINANCE AND ADMINISTRATION Jack Linehan, City Administrator Roland Olson, Finance Director CITY OF FALCON HEIGHTS 2077 W. Larpenteur Avenue Falcon Heights, Minnesota 55113 30 (THIS PAGE LEFT BLANK INTENTIONALLY) 31 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 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities – Governmental Funds 38 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 39 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 32 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 General Capital Improvements – Capital Projects Fund 94 2023 Street Project – Capital Projects Fund 95 2021 Street Project – Capital Projects Fund 96 Tax Increment No. 1-3 – Capital Projects Fund 97 Public Safety Capital Improvements – Capital Projects Fund 98 Future Improvements – Capital Projects Fund 99 Parks/PW and Facilities Capital Improvements – Capital Projects Fund 100 Statistical Section Net Position by Component 1 104 Changes in Net Position 2 106 Governmental Activities Tax Revenues by Source 3 111 Fund Balances of Governmental Funds 4 112 Changes in Fund Balances of Governmental Funds 5 114 General Governmental Tax Revenues by Source 6 119 Assessed Value and Estimated Actual Value of Taxable Property 7 120 Property Tax Rates – Direct and Overlapping Governments 8 122 Principal Property Taxpayers 9 123 Property Tax Levies and Collections 10 124 Ratios of Outstanding Debt by Type 11 125 Ratios of General Bonded Debt Outstanding 12 127 Direct and Overlapping Governmental Activities Debt 13 128 Legal Debt Margin Information 14 130 Pledged-Revenue Coverage 15 132 Demographic and Economic Statistics 16 133 Principal Employers 17 135 Full-Time Equivalent City Government Employees by Function 18 136 Operating Indicators by Function 19 137 Capital Asset Statistics by Function 20 138 33 1 City of Falcon Heights Elected Officials and Administration December 31, 2022 Elected Officials Position Term Expires Randy Gustafson Mayor December 31, 2023 Eric Meyer Council Member December 31, 2025 Melanie Leehy Council Member December 31, 2025 James Wassenberg Council Member December 31, 2023 Yakasah Wehyee Council Member December 31, 2023 Administration Jack Linehan City Administrator Roland Olson Finance Director Tim Pittman Park and Public Works Director 34 2 City of Falcon Heights Organization Chart December 31, 2022 Community EngagementCommissionAccountantPublic WorksStaffEnvironment CommissionDirector of Public WorksPark & Recreation CommissionAdministrative/ Communication CoordinatorAdministrative InternPlanner / CommunityDevelopmentCoordinatorMayor & CouncilCity AdministratorAttorneyEngineerPlanningCommissionFire InspectorSummer RecreationCoordinatorRecStaffBuildingInspectorPlumbing InspectorMechanicalInspectorForestryInspectorPoliceFiscalConsultantPlanningConsultantAssistant to the City AdministratorFinance Director35 3 City of Falcon Heights City Map December 31, 2022 36 4 (THIS PAGE LEFT BLANK INTENTIONALLY) 37 5 April 26, 2023 To the Mayor, City Council Members, and Citizens of the City of Falcon Heights: Minnesota statutes require that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended December 31, 2022. Management assumes full responsibility for the completeness and propriety of the information contained in this report. The information herein is based upon a comprehensive framework of internal controls established for the summarization and disclosure of financial data. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. BerganKDV, Ltd., a firm of licensed certified public accountants, has audited the City of Falcon Heights’ financial statements. BerganKDV, Ltd. has issued an unmodified (“clean”) opinion on the City of Falcon Heights’ financial statements for the year ended December 31, 2022. The independent auditor’s report is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) immediately follows the Independent Auditor’s Report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements the Letter of Transmittal and should be read in conjunction with it. Profile of the Government The City of Falcon Heights, incorporated in 1949, is located near the center of the Minneapolis and St. Paul metropolitan area. This area is considered the major population and economic growth area in Minnesota, and one of the top economic growth areas in the country. The City of Falcon Heights currently occupies a land area of 2.28 square miles and serves a population of 5,400. The City of Falcon Heights is empowered to levy a property tax on both real and personal properties located within its boundaries. While it also is empowered by state statute to extend its corporate limits by annexation, Falcon Heights has never utilized this option to extend its borders. 38 6 Profile of the Government (Continued) Falcon Heights is a completely developed community. It has operated under the council/city administrator form of government since 1974. Policy-making and legislative authority are vested in a city council consisting of the mayor and four council members, all elected on a nonpartisan basis. The council appoints the city administrator, who in turn appoints the heads of the various departments. The council is responsible for passing ordinances, adopting the budget, appointing committees, and hiring the city administrator. The city administrator is responsible for carrying out the policies and ordinances of the council and for overseeing the day-to-day operations of the city government. Council members serve four-year staggered terms, with two council members elected every two years. The mayor is elected to serve a four-year term. The mayor and all four council members are elected at large. The City of Falcon Heights provides a full range of services, including police and fire protection; construction and maintenance of highways, streets, and other infrastructure, sewer services; and recreational and cultural activities. St. Paul Regional Water Services provides the water services for the City. The council is required to adopt a final budget by no later than the close of the fiscal year. This annual budget serves as the foundation for the City of Falcon Heights' financial planning and control. All departments of the City of Falcon Heights are required to submit requests for appropriation to the city administrator during or before the second week in June each year. The City Administrator uses these requests as the starting point for developing a proposed budget. By September of each year, the city staff submits to the city council a proposed operating budget for the fiscal year commencing the following January 1. The council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than December 31, the close of the City of Falcon Heights’ fiscal year. The appropriated budget is prepared by fund, function (e.g., public safety), and department (e.g., police). Transfers of appropriations between funds require the special approval of the city council. Budget-to- actual comparisons are provided in the report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 39 as part of the basic financial statements for the governmental funds. For the Special Revenue funds, Debt Service funds, and Capital Project funds, this comparison is presented on pages 86-100. Expenditures may not legally exceed budgeted appropriations at the fund level. No fund's budget can be increased without City Council approval. The City Council may authorize transfers 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. Local Economy The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Falcon Heights operates. 39 7 Local Economy (Continued) The City of Falcon Heights is primarily a bedroom, residential, inner ring suburban community situated near the center of the Minneapolis and St. Paul metropolitan area. The economy of the City consists of retail, commerce, agricultural-related businesses, and institutional landowners, such as the St. Paul campus of the University of Minnesota and the Minnesota State Fair. The St. Paul campus of the University of Minnesota has 2,400 full time employees and a student population of approximately 6,300 students enrolled in the specific colleges located on the St. Paul Campus. The Minnesota State Fair, held over a 12-day period, is one of the nation’s largest and best-attended entertainment events with approximately 2 million visitors each year. Also, additional “non-fair” events have attendance estimated at 100,000 visitors. One of these “non-fair” events is the Minnesota Street Rod Convention, which attracts over 65,000 visitors. Unfortunately, in 2020, due to Covid 19, neither the Minnesota State Fair or the Minnesota Street Rod Convention could be held. However, in 2022, both the Minnesota State Fair and the Minnesota Street Rod convention were held. Attendance during the Minnesota State Fair increased approximately 30% in 2022. Because of its location in a region with a varied economic base, unemployment is relatively stable and tends to be less than the State of Minnesota and national rates. During the past ten years, the unemployment rate for Ramsey County, within which the City is located, was at a high of 12.5% in May 2020 and in December 2022, the unemployment rate was 2.6%. In 2022, the State of Minnesota’s ending unemployment rate was 3.2% and the national ending unemployment rate was 3.5%. The average 2022 state of Minnesota’s unemployment rate was 2.7% and the average 2022 national unemployment rate was 3.6%. The City is at or near full development, with a 17.2% increase in the median market value of property during 2022. The City’s economic conditions have remained relatively stable with the University of Minnesota agricultural campus, Spire Federal Credit Union, and the Minnesota State Fairgrounds providing a diversified economic employment base. The City continues an aggressive plan of reconstruction and improvement of its streets. Ongoing maintenance activities will continue with yearly sealcoating, curb/gutter repairs, and sidewalk replacement as needed throughout the City. MSA street funds and assessments will be utilized for all street maintenance activities. Long-Term Financial Planning During 2018, the City of Falcon Heights started updating its Comprehensive Plan with approval of the plan by the Metropolitan Council and adoption by the City Council in January 2020. As part of the plan, the City continues to look at alternative ways to increase the tax base of the City such as evaluating any re-development opportunities in our business district and increasing housing densities when appropriate. The City continues to complete a ten-year capital improvement plan as part of its annual budget and uses a financial planning company to assist with any plans and bonding requirements. 40 8 Relevant Financial Policies The Mayor and council members continue to evaluate the level of reserves of the city with their desire to minimize property tax increases on the citizens while still maintaining service levels. With tax revenues scheduled for receipt in the months of July and December, the City needs to maintain sufficient working capital to mitigate cash flow timing concerns. One important reason for maintaining a high fund balance in the general fund is that it leads to increased investment income allocated to the General Fund since the investment income is allocated based upon levels of fund balance among all the funds. This helps to minimize any levy increases needed to support the general operating expenses of the city. Major Initiatives In 2008, the City of Falcon Heights participated in a grant application of $ 1,078,000 with the University of Minnesota and the neighboring city of Roseville to complete a three-mile pedestrian trail. This grant was awarded with construction to have phase I completed in 2011 and phase II completed in 2012. The Northeast Connector Trail project has now been completed. This development project was a collaborative effort between the City of Roseville, the City of Falcon Heights and the University of Minnesota to allow for residents of both cities and the university to enjoy walking or biking through Falcon Heights. In 2013, the City completed two storm water underground storage and infiltration systems in our storm water system in an area of the city that had no storm water sewer system. In 2014 and 2015, the City completed the relining of sanitary sewer lines in a residential section of the city. Also in 2015, approximately one mile of city streets was improved with mill and overlay resurfacing. In 2015, an underground storage and infiltration system was completed in our Curtiss Field Park to prevent flooding whenever a large rainfall occurred. In 2017 and 2018, one mile of city streets was improved with a reclaim and resurface. New water lines were also installed with improvements in storm water catch basins and sanitary sewer basins. In 2021, the City completed the resurfacing of three miles of city streets. In 2019, 2020, 2021, and 2022, the City completed the relining of additional sections of the sanitary sewer system. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Falcon Heights for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended December 31, 2021. This was the 32nd consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized ACFR. This report satisfied both GAAP and applicable legal requirements. 41 9 Awards and Acknowledgements (Continued) A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance and administration department, as well as the auditing personnel of BerganKDV, Ltd. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report, and to the auditing firm for its professional assistance in preparing the Annual Comprehensive Financial Report for 2022. Credit also must be given to the mayor and the city council for their resolute support for maintaining high standards of professionalism in the management of the City’s finances. Respectfully submitted, ____________________________ ____________________________ Jack Linehan Roland Olson City Administrator Finance Director 42 10 City of Falcon Heights Certificate of Achievement for Excellence in Financial Reporting 43 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, 2022, and the related notes to the basic 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, 2022, 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. 44 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. 45 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 accompanying supplementary information identified in the Table of Contents is 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 accompanying supplementary information 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 26, 2023 46 14 (THIS PAGE LEFT BLANK INTENTIONALLY) 47 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, 2022. 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 $19,180,867. Of this amount, $8,544,212 (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 $1,175,061. Unrestricted net position increased by $524,939. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $8,241,844 an increase of $765,113 in comparison with the prior year. Debt principal payments of $120,000 and interest payments of $36,422 occurred in 2022. A negative change in fund balance in the general fund of $91,220, along with an increase of $856,333 in the fund balances of other governmental funds resulted in a net increase of $765,113 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 $3,118,111 is approximately 38% 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 $3,118,111, or 122%, of total General Fund expenditures at 2022 levels. For 2022, there was a 4.9% increase in the property tax levy. 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 decreased by $120,000 during the current fiscal year. This represents payments of $120,000 of the City's debt. The principal of general obligation debt outstanding as of December 31, 2022, is $1,045,000. 48 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. 49 City of Falcon Heights Management's Discussion and Analysis 17 FUND FINANCIAL STATEMENTS (CONTINUED) 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 19 individual governmental funds during 2022. Of these funds, four 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, Amber Union, 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 82-100 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 43-65 of this report. 50 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 74-100. Statistical tables can be found on pages 104-138 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 $19,180,867 at the close of the most recent fiscal year. Forty five percent ($8,544,212) of the City's net position is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. About 8% ($1,503,171) of the net position is restricted and represents resources that are subject to external restrictions on how they may be used. The remaining 47% ($9,133,484) reflects the City's investment in capital assets (e.g., land, buildings, machinery, and equipment) offset by any related debt used to acquire those assets that are still outstanding. City of Falcon Heights' Net Position 2022 2021 2022 2021 2022 2021 Assets Current and other assets 11,808,098$ 8,559,475$ 2,783,915$ 2,783,398$ 14,592,013$ 11,342,873$ Capital assets 6,994,386 7,053,078 2,312,482 2,201,504 9,306,868 9,254,582 Total assets 18,802,484 15,612,553 5,096,397 4,984,902 23,898,881 20,597,455 Deferred outflows of resources - pensions 161,074 206,301 59,778 75,294 220,852 281,595 Total assets and deferred outflows of resources 18,963,558$ 15,818,854$ 5,156,175$ 5,060,196$ 24,119,733$ 20,879,050$ Liabilities Long-term liabilities Outstanding 1,387,461$ 1,468,994$ 231,542$ 136,322$ 1,619,003$ 1,605,316$ Other liabilities 3,113,458 611,539 196,362 304,483 3,309,820 916,022 Total liabilities 4,500,919 2,080,533 427,904 440,805 4,928,823 2,521,338 Deferred inflows of resources - pensions 7,325 257,812 2,718 94,094 10,043 351,906 Net Position Net investment in capital assets 6,994,386 7,006,594 2,139,098 2,201,504 9,133,484 9,208,098 Restricted 1,503,171 778,435 - - 1,503,171 778,435 Unrestricted 5,957,757 5,695,480 2,586,455 2,323,793 8,544,212 8,019,273 Total net position 14,455,314 13,480,509 4,725,553 4,525,297 19,180,867 18,005,806 Total liabilities, deferred inflows of resources, and net position $ 18,963,558 $ 15,818,854 $ 5,156,175 $ 5,060,196 24,119,733$ 20,879,050$ Governmental Activities Business-Type Activities Total 51 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 2022 2021 2022 2021 2022 2021 Revenues Program revenues Charges for services $ 446,856 $ 600,161 $ 1,230,016 $ 1,341,311 $ 1,676,872 $ 1,941,472 Operating grants and contributions 1,344,686 730,258 - - 1,344,686 730,258 Capital grants and contributions 1,140,158 388,902 - 129,239 1,140,158 518,141 General revenues Property taxes 2,353,403 2,251,745 - - 2,353,403 2,251,745 Other 1,145,160 1,463,108 - - 1,145,160 1,463,108 Investment earnings (17,852) 9,901 (6,479) 2,876 (24,331) 12,777 Total revenues 6,412,411 5,444,075 1,223,537 1,473,426 7,635,948 6,917,501 Expenses General government 821,349 834,064 - - 821,349 834,064 Public safety 1,374,452 1,596,239 - - 1,374,452 1,596,239 Public works 2,978,204 2,006,502 - - 2,978,204 2,006,502 Park and recreation 243,927 114,604 - - 243,927 114,604 Community development 758 723 - - 758 723 Interest on long-term debt 18,916 48,811 - - 18,916 48,811 Sanitary sewer - - 852,016 960,715 852,016 960,715 Storm drainage - - 171,265 158,873 171,265 158,873 Total expenses 5,437,606 4,600,943 1,023,281 1,119,588 6,460,887 5,720,531 Increase in net position before transfers 974,805 843,132 200,256 353,838 1,175,061 1,196,970 Transfer - - - - Changes in net position 974,805 843,132 200,256 353,838 1,175,061 1,196,970 Net position – January 1 13,480,509 12,637,377 4,525,297 4,171,459 18,005,806 16,808,836 Net position - December 31 14,455,314$ 13,480,509$ 4,725,553$ 4,525,297$ 19,180,867$ 18,005,806$ Governmental Activities Business-type Activities Total 52 City of Falcon Heights Management's Discussion and Analysis 20 GOVERNMENTAL ACTIVITIES Governmental activities increased the City's net position by $974,805. For 2022, the City Council increased the tax levy by 4.9%. In 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%. In 2016, the City increased the tax levy by 8.4%. In 2015, the property tax levy 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 2022 delinquencies in property tax collections were consistent with the delinquency payments in 2021, 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 decreased $153,305 from the 2021 level. Comparing to 2021 levels, licenses and permits decreased $95,887 primarily due to permit fees from a large apartment complex in prior year 2021, fines and forfeitures decreased $1,126 primarily due to a decrease in parking ticket revenue from the U of M St Paul campus. Operating Grants and Contributions increased $614,428 due primarily to the City receiving a $962,200 TBRA grant from the Metropolitan Council for the Amber Union low income housing project and a $102,096 DEED grant from the state of Minnesota. Capital Grants and Contributions increased $751,256 primarily due to the City receiving a payments' in lieu of assessments related to Cleveland Avenue improvements. In regard to unrestricted state aid, Local Government Aid (LGA) to the City from the State of Minnesota increased $12,386 in 2022. The LGA level in 2021 was $708,576. The amount of LGA support from the State of Minnesota typically varies annually. In addition, governmental activities unrestricted investment revenues decreased from a positive $9,901 in 2021 to a negative $17,852 in 2022 due to the fair value adjustment in 2022. 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 $3,000,000 $3,500,000 General Government Public Safety Public Works Parks and Recreation Community Development Interest on Long-Term Debt Expenses Program Revenues 53 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 $200,256. There was a 2.2% increase in sanitary sewer fees and a 2.9% increase in storm drainage fees for 2022. 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. Property Taxes 37% Other General Revenues 17% Charges for Services 7% Capital Grants and Contributions 18% Operating Grants and Contributions 21% 54 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 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Sanitary Sewer Storm Drainage Expenses Operating Revenues Charges for Services 100.5% Unrestricted Investment Earnings -0.5% 55 City of Falcon Heights Management's Discussion and Analysis 23 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, 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 $8,241,844, an increase of $765,113 in comparison with the prior year. Approximately 38% ($3,118,111) of this total amount constitutes unassigned fund balance, which is available for spending at the City's discretion. There is $35,967 of the remainder of fund balance being non-spendable, which indicates that it is not available for new spending because it has been disbursed for various prepaid expenditures in the General Fund. Nine percent ($732,661) is restricted fund balance constrained to a specific purpose by outside legislation, external parties, or constitutional provisions. Six percent ($502,097) is committed fund balance constrained by the City Council for specific purposes. Forty seven percent ($3,853,008) 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 $3,118,111 , while total fund balance reached $3,154,078. 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 represents 124% of that same amount. The year 2022 was a much more normal year for the City as compared to 2021. In comparison, 2020, 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 2022 and 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 2022, the fund balance of the City's General Fund decreased by $91,220. Revenues were $155,435 over budget. Expenditures were $153,357 under budget. There were transfers out of $640,000 resulting in the $91,220 decrease to the fund balance. Key factors for this fund balance change are: Revenue Variances Property Tax revenue had a variance over budget of $7,188. In addition, there was excess tax increment revenue totaling $34,431. Property tax revenues are very stable for the City. The delinquency amount for 2022 was minimal at $218. 56 City of Falcon Heights Management's Discussion and Analysis 24 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Governmental Funds (Continued) Revenue Variances (Continued) Revenue from fees associated with licenses and permits was $73,771 over budget primarily due to remodeling/reconstruction of a major apartment complex. Intergovernmental revenue was consistent to the amount received in 2021 at the $603,532 level. There was also an additional $15,033 received in police support funds from Ramsey County. Fines and forfeits revenue had a positive variance of $3,385. Additional parking ticket revenue was received at the U of M campus. The City contracted with the neighboring city of Lauderdale for snow removal services providing an additional unbudgeted $12,150 in revenue for 2022. Investment income was $18,511 under budget for 2022. While there were increasing yields on investments, the fair market valuation requirement of the investments resulted in posting negative interest for the year due to the fair market valuation adjustment. Other revenues were over budget by $25,932 primarily due to receiving an insurance refund of $28,507 from the city's worker's compensation and general liability and property insurance policies. Expenditure Variances General Government was $68,343 under budget. The city continues to use a conservative approach to spending due to the pandemic. The departments within the general government contributing to this are as follows: The Legislative section was $3,555 under budget due to a shortage of one council member for part of the year. The Administrative section recognized a $1,093 expenditure variance under budget. The Finance section was $5,642 over budget due to expanding the part-time accountant position. Legal was $13,240 under budget due to less legal work. The Communications section was $29,557 under budget while the Planning and Inspection section was also under budget by $25,812. Further explanation follows. The Communications budget was $32,585 under budget. The full-time position remained open for two months during the year. Also, the employees holding this position waived health insurance benefits since they were able to obtain through other sources. Planning and inspections had a $25,812 expenditure variance under budget primarily due to a full-time position not being filled for a couple of months. Also, both the previous employee and the new employee both waived health insurance since their spouse had coverage for them. The Public Safety section was $13,030 under budget. The fire services contracted with the City of St Paul was $1,237 under budget. The police services contracted with the Ramsey County Sherriff's office was $5,595 under budget. The emergency preparedness compensation was $5,055 under budget due to not having a staff for two months. Expenditures for the Public Works buildings and grounds section was $9,100 over budget due to increased utility expenses of $8,784 in 2022. Expenditures for the Streets department were $55,791 under budget for the current year. Compensation was over budget by $9,058 due to a full-time public works employee instead of part-time summer help. Repairing equipment was $4,739 over budget due to increase repairs on older equipment. Snow removal costs were $23,052 under budget due to the City having two snow plow trucks so city staff could perform the snow removal. 57 City of Falcon Heights Management's Discussion and Analysis 25 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS (CONTINUED) Governmental Funds (Continued) Expenditure Variances (Continued) Expenditures for the City's Engineering department was $10,126 under budget. Engineering expenses for the 2023 street project were expenses in a separate street capital fund. City's Tree Program was $46,410 under budget due to the City not doing any tree trimming and having minimal tree removals during 2022. A $16,193 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 2022 due to the continued COVID-19 pandemic. Compensation was $4,791 under budget. In our largest park, Community Park, the sanitary sewer line collapsed and since we are going to replace the building in the near future, a decision was made to close the building. A $5,289 savings under budget resulted from savings in maintenance and utilities. 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 $114,000 was made from the General Fund to the General Capital Fund for future capital needs in city hall. A transfer of $100,000 was made from the General Fund to the Park/Public Works Capital Fund for future park improvements. 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 $55,241 in street and local government aid from the state of Minnesota and additional income of $1,028,878 from the University of Minnesota for the Cleveland Avenue project. This $1,028,878 was then paid to Ramsey County to fund the "right of way" purchases necessary for the Cleveland avenue project, along with an additional $6,900 of unassessed costs. Also, the City received $136,421 in the form of franchise fees from Xcel Energy during 2022. In addition, there also was $117,420 in Local Government Aid revenue from the State of Minnesota. This Future Improvement Fund holds $1,848,314 in assigned fund balance for future capital improvement infrastructure projects. The Amber Union Fund, a major fund, is the fund the City uses to record the City's relationship with the Amber Union low income housing project. The Metropolitan Council had awarded a grant of $962,200 for financial support of the project. Also, the State of Minnesota awarded another grant of $102,096 for financial support. These funds were required to pass through the City of Falcon Heights and onto the developer. Parks/PW and Facilities Capital Improvements Fund had minimal activity for the year although did receive a $500,000 transfer from the General Fund as previously noted. The fund balance will be partially utilized for a community park purchase as disclosed in the subsequent event footnote. 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 $1,959,595 while unrestricted net position for the Storm Drainage Fund amounted to $453,476. 58 City of Falcon Heights Management's Discussion and Analysis 26 GENERAL FUND BUDGETARY HIGHLIGHTS During the year, General Fund expenditures were $153,357 less than the budgetary estimates. Revenues were $155,423 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, $114,000 was transferred from the General Fund to the General Capital Fund, and $100,000 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 2022, the net change in fund balance for the General Fund was a negative $91,220. 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, 2022, amounts to $9,306,868 (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, 2019 and 2022, 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 City's PCI rating was 69 for 2022. The City's lowest PCI rated street was Garden Avenue, which is scheduled for replacement in 2023. 59 City of Falcon Heights Management's Discussion and Analysis 27 CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) In 2021, 2019, and 2017, the City conducted mill and overlay resurfacing. The 2021 resurfacing program included three neighborhood streets of the City. Also, during 2019, 2020, 2021, and 2022 the City relined a portion of the sanitary sewer line in one of the sections of the city. City of Falcon Heights' Capital Assets (Net of Depreciation) 2022 2021 2022 2021 2022 2021 Land $ 419,707 $ 419,707 $ - $ - $ 419,707 $ 419,707 Construction in progress - - - - - - Building and system 129,299 157,117 2,312,482 2,200,467 2,441,781 2,357,584 Improvements other Than buildings 468,281 502,226 - - 468,281 502,226 Machinery and equipment 227,316 224,245 - 1,037 227,316 225,282 Infrastructure 5,749,783 5,749,783 - - 5,749,783 5,749,783 Total $ 6,994,386 $ 7,053,078 $ 2,312,482 $ 2,201,504 $ 9,306,868 $ 9,254,582 Governmental Activities Business-Type Activities Total Additional information on the City's capital assets can be found in Note 3 on pages 53-54 of this report. Long-Term Debt At the end of the current fiscal year, the City had total bonded debt outstanding of $1,045,000. The debt service payments in 2022 were $120,000. City of Falcon Heights' Outstanding Debt General Obligation (G.O.) and Revenue Bonds 2022 2021 2022 2021 2022 2021 G.O. Bonds $ 1,045,000 $ 1,165,000 $ - $ - $ 1,045,000 $ 1,165,000 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 $10,418,674 , 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 on pages 55-57 of this report. 60 City of Falcon Heights Management's Discussion and Analysis 28 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The December 2022 unemployment rate for Ramsey County, in which the City resides, is currently 2.6%, as compared to the rate of 2.7% a year ago. This local unemployment rate compares favorably to the state's December 2022 unemployment rate of 3.2% and favorably to the national December 2022 rate of 3.5%. 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 $272. This compares favorably to the average US citizen who pays approximately $289 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 2023 fiscal year. During the current fiscal year, the fund balance in the General Fund decreased by $91,220 to a total of $3,154,078. The City has designated $3,118,111 of this balance as unassigned fund balance available for spending at the City's discretion. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 2077 W. Larpenteur Ave., City of Falcon Heights, Minnesota 55113. 61 29 BASIC FINANCIAL STATEMENTS 62 See notes to basic financial statements. 30 Governmental Activities Business-Type Activities Total Assets Cash and investments (including cash eqivalents) 8,825,190$ 2,476,846$ 11,302,036$ Receivables Taxes receivable 9,070 - 9,070 Special assessments 132,519 - 132,519 Accounts receivable 54,796 244,058 298,854 Interest receivable 7,439 2,678 10,117 Due from other governments 2,743,117 - 2,743,117 Prepaid items 35,967 60,333 96,300 Capital assets (net of accumulated depreciation) Land 419,707 - 419,707 Infrastructure 5,749,783 - 5,749,783 Buildings and system 129,299 2,312,482 2,441,781 Improvements other than buildings 468,281 - 468,281 Machinery and equipment 227,316 - 227,316 Total assets 18,802,484 5,096,397 23,898,881 Deferred Outflows of Resources Deferred outflows of resources related to pensions 161,074 59,778 220,852 Total assets and deferred outflows of resources 18,963,558$ 5,156,175$ 24,119,733$ Liabilities Accounts payable 1,125,918$ 1,879$ 1,127,797$ Contracts payable 49,594 173,384 222,978 Due to other governments 1,037,719 - 1,037,719 Salaries and benefits payable 3,138 3,041 6,179 Interest payable 10,292 - 10,292 Unearned revenue 604,112 - 604,112 Bond principal payable Payable within one year 255,000 - 255,000 Payable after one year 823,957 - 823,957 Compensated absences payable Payable within one year 27,685 18,058 45,743 Payable after one year 55,187 42,897 98,084 Payable after one year 508,317 188,645 696,962 Total liabilities 4,500,919 427,904 4,928,823 Deferred Inflows of Resources Deferred inflows of resources related to pensions 7,325 2,718 10,043 Net Position Net investment in capital assets 6,994,386 2,139,098 9,133,484 Restricted for Debt service 1,380,444 - 1,380,444 Tax increment 83,282 - 83,282 Other Purposes 39,445 - 39,445 Unrestricted 5,957,757 2,586,455 8,544,212 Total net position 14,455,314 4,725,553 19,180,867 Total liabilities, deferred inflows of resources, and net position 18,963,558$ 5,156,175$ 24,119,733$ City of Falcon Heights Statement of Net Position December 31, 2022 Net pension liability 63 See notes to basic financial statements. 31 Program RevenuesExpensesCharges for ServicesOperating Grants and ContributionsCapital Grants and ContributionsGovernmental ActivitiesBusiness-Type ActivitiesTotalGovernmental activitiesGeneral government821,349$ 109,321$ -$ -$ (712,028)$ -$ (712,028)$ Public safety1,374,452 147,861 15,033 - (1,211,558) - (1,211,558) Public works2,978,204 178,430 1,329,153 1,140,158 (330,463) - (330,463) Park and recreation243,927 11,244 500 - (232,183) - (232,183) Community development758 - - - (758) - (758) Interest on long-term debt18,916 - - - (18,916) - (18,916) Total governmental activities5,437,606 446,856 1,344,686 1,140,158 (2,505,906) - (2,505,906) Business-type activitiesSanitary sewer852,016 1,038,379 - - - 186,363 186,363 Storm sewer171,265 191,637 - - - 20,372 20,372 Total business-type activities1,023,281 1,230,016 - - - 206,735 206,735 Total governmental and business-type activities6,460,887$ 1,676,872$ 1,344,686$ 1,140,158$ (2,505,906) 206,735 (2,299,171) General revenuesProperty taxes levied for general purposes2,160,953 - 2,160,953 Property taxes levied for debt service192,450 - 192,450 Franchise taxes136,421 - 136,421 Tax increments371,807 - 371,807 Unrestricted state aid611,055 - 611,055 Other general revenue25,877 - 25,877 Unrestricted investment earnings(17,852) (6,479) (24,331) Total general revenues 3,480,711 (6,479) 3,474,232 Change in net position974,805 200,256 1,175,061 Net position - beginning13,480,509 4,525,297 18,005,806 Net position - ending14,455,314$ 4,725,553$ 19,180,867$ Functions/ProgramsNet (Expense) Revenue and Changes in Net PositionCity of Falcon HeightsYear Ended December 31, 2022Statement of Activities64 See notes to basic financial statements. 32 General Amber Union Future Improvements Assets Cash and investments 3,719,343$ 58,637$ 1,823,508$ Taxes receivable - delinquent 9,070 - - Special assessment receivable - deferred - - - Accounts receivable - - 30,075 Interest receivable 4,989 - 2,450 Due from other governments 41,330 1,064,296 1,633,062 Prepaid items 35,967 - - Total assets 3,810,699$ 1,122,933$ 3,489,095$ Liabilities Accounts payable 39,222$ 1,064,296$ -$ Contracts payable - - - Due to other governments 1,122 - 1,036,597 Salaries and benefits payable 3,095 - - Unearned revenue 604,112 - - Total liabilities 647,551 1,064,296 1,036,597 Deferred Inflows of Resources Unavailable revenue - state shared taxes - - 604,184 Unavailable revenue - property tax 9,070 - - Unavailable revenue - special assessments - - - Total deferred inflows of resources 9,070 - 604,184 Fund Balances Nonspendable 35,967 - - Restricted - - - Committed - - - Assigned - 58,637 1,848,314 Unassigned 3,118,111 - - Total fund balances 3,154,078 58,637 1,848,314 Total liabilities, deferred inflows of resources, and fund balances 3,810,699$ 1,122,933$ 3,489,095$ Capital Projects City of Falcon Heights Balance Sheet - Governmental Funds December 31, 2022 65 33 Capital Projects Parks/PW and Facilities Capital Improvements Other Governmental Funds Total Governmental Funds 1,501,373$ 1,722,329$ 8,825,190$ - - 9,070 - 132,519 132,519 - 24,721 54,796 - - 7,439 - 4,429 2,743,117 - - 35,967 1,501,373$ 1,883,998$ 11,808,098$ -$ 22,400$ 1,125,918$ - 49,594 49,594 - - 1,037,719 - 43 3,138 - - 604,112 - 72,037 2,820,481 - - 604,184 - - 9,070 - 132,519 132,519 - 132,519 745,773 - - 35,967 33,575 699,086 732,661 - 502,097 502,097 1,467,798 478,259 3,853,008 - - 3,118,111 1,501,373 1,679,442 8,241,844 1,501,373$ 1,883,998$ 11,808,098$ 66 34 (THIS PAGE LEFT BLANK INTENTIONALLY) 67 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, 2022 Total fund balances - governmental funds 8,241,844$ 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 9,348,223 Less accumulated depreciation (2,353,837) 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 (1,045,000) Bond premium (33,957) Compensated absences payable (82,872) Net pension liability (508,317) 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 (7,325) Deferred outflows of resources related to pensions 161,074 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 9,070 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Deferred special assessments 132,519 State shared taxes 604,184 Governmental funds do not report a liability for accrued interest on long-term debt until due and payable.(10,292) 14,455,314$ Amounts reported for governmental activities in the Statement of Net Position are different because: Total net position - governmental activities 68 See notes to basic financial statements. 36 General Amber Union Future Improvements Revenues Property taxes 2,174,122$ -$ -$ Tax increments 34,431 - - Special assessments - - 3,648 Licenses and permits 156,521 - 136,421 Intergovernmental 652,290 1,064,296 1,201,549 Charges for services 31,069 - - Fines and forfeitures 18,385 - - Miscellaneous Investment income (3,511) (102) (4,470) Contributions and donations - - - Refunds and reimbursements 28,507 10,408 - Other 1,125 - 342 Total revenues 3,092,939 1,074,602 1,337,490 Expenditures Current General government 808,178 - - Public safety 1,383,570 - - Public works 273,384 1,065,055 1,520 Park and recreation 79,027 - - Community development - - - Miscellaneous - - - Debt service Principal - - - Interest and other charges - - - Capital outlay General government - - - Public works - - 1,053,404 Park and recreation - - - Total expenditures 2,544,159 1,065,055 1,054,924 Excess of revenues over (under) expenditures 548,780 9,547 282,566 Other Financing Sources (Uses) Proceeds from sale of capital assets - - - Transfers in - - - Transfers out (640,000) - (80,000) Total other financing sources (uses) (640,000) - (80,000) Net change in fund balances (91,220) 9,547 202,566 Fund Balances Beginning of year 3,245,298 49,090 1,645,748 End of year 3,154,078$ 58,637$ 1,848,314$ Capital Projects City of Falcon Heights Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended December 31, 2022 69 37 Parks/PW and Facilities Capital Improvements Other Governmental Funds Total Governmental Funds -$ 193,510$ 2,367,632$ - 337,376 371,807 - 53,585 57,233 - - 292,942 - 35,654 2,953,789 - 177,524 208,593 - - 18,385 (5,495) (4,274) (17,852) 500 - 500 - - 38,915 - 15,469 16,936 (4,995) 808,844 6,308,880 - 757 808,935 - 7,611 1,391,181 - 230,206 1,570,165 6,758 30,645 116,430 - 758 758 - 758 758 - 120,000 120,000 - 36,422 36,422 - 6,387 6,387 - 372,262 1,425,666 102,541 - 102,541 109,299 805,806 5,579,243 (114,294) 3,038 729,637 9,976 25,500 35,476 500,000 220,000 720,000 - - (720,000) 509,976 245,500 35,476 395,682 248,538 765,113 1,105,691 1,430,904 7,476,731 1,501,373$ 1,679,442$ 8,241,844$ Capital Projects 70 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, 2022 765,113$ 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 84,639 Depreciation expense (143,331) Compensated absences are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities. 60,453 Governmental funds recognized pension contributions as expenditures at the time of payment in items related to pensions on a full accrual perspective. (30,869) 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. 120,000 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. 4,979 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. 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 (48,391) State shared taxes 163,914 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. (14,229) 974,805$ 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: 71 See notes to basic financial statements. 39 Original and Final Budget Actual Amounts Revenues Property taxes 2,166,934$ 2,174,122$ 7,188$ Tax increments - 34,431 34,431 Licenses and permits 82,750 156,521 73,771 Intergovernmental 633,532 652,290 18,758 Charges for services 20,600 31,069 10,469 Fines and forfeitures 15,000 18,385 3,385 Miscellaneous revenues Investment income 15,000 (3,511) (18,511) Refunds and reimbursements 3,000 28,507 25,507 Other 700 1,125 425 Total revenues 2,937,516 3,092,939 155,423 Expenditures Current General government 876,521 808,178 (68,343) Public safety 1,396,600 1,383,570 (13,030) Public works 329,175 273,384 (55,791) Park and recreation 95,220 79,027 (16,193) Total expenditures 2,697,516 2,544,159 (153,357) Excess of revenues over expenditures 240,000 548,780 308,780 Other Financing Uses Transfers out (240,000) (640,000) (400,000) Net change in fund balance -$ (91,220) (91,220)$ Fund Balance Beginning of year 3,245,298 End of year 3,154,078$ 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, 2022 72 See notes to basic financial statements. 40 Sanitary Sewer Storm Drainage Total Assets Current assets Cash and investments 1,992,581$ 484,265$ 2,476,846$ Accounts receivable 212,691 31,367 244,058 Interest receivable 2,678 - 2,678 Prepaid items 58,333 2,000 60,333 Total current assets 2,266,283 517,632 2,783,915 Noncurrent assets Capital assets Sewer system 2,064,661 - 2,064,661 Storm drain - 2,088,550 2,088,550 Machinery and equipment 53,104 122,570 175,674 Total capital assets 2,117,765 2,211,120 4,328,885 Less accumulated depreciation (1,090,620) (925,783) (2,016,403) Net capital assets 1,027,145 1,285,337 2,312,482 Total assets 3,293,428 1,802,969 5,096,397 Deferred Outflows of Resouces Deferred outflows of resources related to pensions 40,044 19,734 59,778 Total assets and deferred outflows of resources 3,333,472$ 1,822,703$ 5,156,175$ Liabilities Current liabilities Accounts payable 419$ 1,460$ 1,879$ Contracts payable 173,384 - 173,384 Salaries and benefits payable 2,411 630 3,041 Amount due within one year 12,092 5,966 18,058 Total current liabilities 188,306 8,056 196,362 Noncurrent liabilities Compensated absences 42,327 18,628 60,955 Net pension liability 126,370 62,275 188,645 Less amount due within one year (12,092) (5,966) (18,058) Total noncurrent liabilities 156,605 74,937 231,542 Total liabilities 344,911 82,993 427,904 Deferred Inflows of Resouces Deferred inflows of resources related to pensions 1,821 897 2,718 Net Position Net investment in capital assets 853,761 1,285,337 2,139,098 Unrestricted 2,132,979 453,476 2,586,455 Total net position 2,986,740 1,738,813 4,725,553 Total liabilities, deferred inflows of resources, and net position 3,333,472$ 1,822,703$ 5,156,175$ City of Falcon Heights Statement of Net Position - Proprietary Funds December 31, 2022 73 See notes to basic financial statements. 41 Sanitary Sewer Storm Drainage Total Operating revenues Charges for services 1,038,379$ 191,637$ 1,230,016$ Operating expenses Wages, salaries, and compensation 193,087 93,012 286,099 Materials and supplies 437 5,878 6,315 Professional services 7,678 757 8,435 Maintenance 103,904 20,654 124,558 Repairs 11,830 2,848 14,678 Depreciation 18,577 43,829 62,406 Travel 958 - 958 Metro sewer charges 484,674 - 484,674 Sac charges 287 - 287 Billing fees 18,876 809 19,685 Insurance and bonds 5,371 1,488 6,859 Miscellaneous 6,337 1,990 8,327 Total operating expenses 852,016 171,265 1,023,281 Operating income 186,363 20,372 206,735 Nonoperating revenues Investment income (5,442) (1,037) (6,479) Income before transfers and capital contributions 180,921 19,335 200,256 Net position Beginning of year 2,805,819 1,719,478 4,525,297 End of year 2,986,740$ 1,738,813$ 4,725,553$ City of Falcon Heights Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Year Ended December 31, 2022 74 See notes to basic financial statements. 42 City of Falcon Heights Statement of Cash Flows - Proprietary Funds Year Ended December 31, 2022 Sanitary Sewer Storm Drainage Total Cash Flows - Operating Activities Receipts from customers and users 1,140,247$ 190,848$ 1,331,095$ Payments to suppliers (799,073) (48,554) (847,627) Payments to employees (173,457) (88,885) (262,342) Net cash flows - operating activities 167,717 53,409 221,126 Cash Flows - Capital and Related Financing Activities Acquisition of capital assets (173,384) - (173,384) Net Cash Flows - Capital and Related Financing Activities (173,384) - (173,384) Cash Flows - Investing Activities Investment Income (4,286) (1,037) (5,323) Net change in cash and cash equivalents (9,953) 52,372 42,419 Cash and Cash Equivalents Beginning of year 2,002,534 431,893 2,434,427 End of year 1,992,581$ 484,265$ 2,476,846$ Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities Operating income 186,363$ 20,372$ 206,735$ Adjustments to reconcile operating income (loss) to net cash flows - operating activities Depreciation expense 18,577 43,829 62,406 Accounts receivable 101,868 (789) 101,079 Prepaid items (58,333) (2,000) (60,333) Pension expense 10,199 3,245 13,444 Accounts payable (273,772) (12,130) (285,902) Contracts payable 173,384 - 173,384 Salaries payable 1,997 379 2,376 Compensated absences payable 7,434 503 7,937 Total adjustments (18,646) 33,037 14,391 Net cash flows - operating activities 167,717$ 53,409$ 221,126$ 75 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. 76 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. Amber Union Fund – This fund accounts for costs associated with the Amber Union 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. 77 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. 78 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. 79 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 assets 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 assets 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. 80 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. 81 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. 82 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 fund 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, 2022, the City's bank balance of $0 was not exposed to custodial credit risk because it was fully insured through the FDIC. 83 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, 2022, was $0 for deposits. As of December 31, 2022, the City had petty cash as follows: Petty cash 250$ 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 3,447,208$ 2,700,984$ 746,224$ -$ -$ NR 4M Term Series 1,500,000 1,500,000 - - - NR 4M Fund and 4M Fund Plus 6,117,992 - NR Brokered Money Markets 236,586 - NR Total investments 11,301,786$ 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 fair 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. 84 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, 2022: $3,447,208 of investments (all brokered certificates of deposit) are significant other observable inputs (Level 2 inputs) using closing market prices. Summary of cash deposits and investments as of December 31, 2022, were as follows: Deposits -$ Petty cash 250 Investments (Note 3.B.)11,301,786 Total deposits and investments 11,302,036$ Cash and Investments Deposits and investments are presented in the December 31, 2022, basic financial statements as follows: Statement of Net Position Cash and investments - governmental activities 8,825,190$ Cash and investments - business-type activities 2,476,846 Total 11,302,036$ 85 53 City of Falcon Heights Notes to Basic Financial Statements NOTE 3 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2022, 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 22,923 - 994,816 Machinery and equipment 958,430 61,716 196,539 823,607 Total capital assets being depreciated 3,290,633 84,639 196,539 3,178,733 Less accumulated depreciation for Buildings 1,203,193 27,818 - 1,231,011 Improvements other than buildings 469,667 56,868 - 526,535 Machinery and equipment 734,185 58,645 196,539 596,291 Total accumulated depreciation 2,407,045 143,331 196,539 2,353,837 Total capital assets being depreciated, net 883,588 (58,692) - 824,896 Governmental activities capital assets, net 7,053,078$ (58,692)$ -$ 6,994,386$ 86 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 3,979,827$ 173,384$ -$ 4,153,211$ Machinery and equipment 175,674 - - 175,674 Total capital assets being depreciated 4,155,501 173,384 - 4,328,885 Less accumulated depreciation for Buildings and system 1,779,360 61,369 - 1,840,729 Machinery and equipment 174,637 1,037 - 175,674 Total accumulated depreciation 1,953,997 62,406 - 2,016,403 Total capital assets being depreciated, net 2,201,504 110,978 - 2,312,482 Business-type activities capital assets, net 2,201,504$ 110,978$ -$ 2,312,482$ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities General government 70,252$ Public safety 20,610 Public works 36,066 Culture and recreation 16,403 Total depreciation expense - governmental activities 143,331$ Business-type activities Sanitary sewer 18,577$ Storm drainage 43,829 Total depreciation expense - business-type activities 62,406$ 87 55 City of Falcon Heights Notes to Basic Financial Statements NOTE 4 – INTERFUND TRANSFERS Transfers during the year ended December 31, 2022, were as follows: Future General Fund Improvements Total Parks/PW and facilities 500,000$ -$ 500,000$ Other non-major 140,000 80,000 220,000 Total 640,000$ 80,000$ 720,000$ 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 to provide for financing of street improvements. Debt service is funded by 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% 380,000$ G.O. Improvement Bonds, Series 2021A 665,000 2.00% 665,000 88 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 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 1,045,000$ 50,800$ G.O. Improvement Bonds B. Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2022, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Bonds payable G.O. Improvement Bonds 1,165,000$ -$ 120,000$ 1,045,000$ 255,000$ Unamortized Bond Premium 46,484 - 12,527 33,957 - Compensated absences 143,325 33,375 93,828 82,872 27,685 Total governmental activities 1,354,809 33,375 226,355 1,161,829 282,685 Business-type activities Compensated absences 53,017 23,455 15,517 60,955 18,058 Total long-term liabilities 1,407,826$ 56,830$ 241,872$ 1,222,784$ 300,743$ The General Fund typically liquidates the liability related to compensated absences, as well as pensions. 89 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, 2022, the following issues were outstanding: Original Balance Amount Outstanding Name Date of Issue of Issue as of 12/31/22 Pines of Hutchinson, LLC 2013 4,400,000$ 3,059,197$ Mounds Park Academy 2014 7,707,444 5,583,881 St Paul Academy & Summit School Project Series 2017 7,375,000 6,365,608 Senior Housing and Health Care Revenue Note 2018A 2018 3,000,000 2,797,509 Senior Housing and Health Care Revenue Refunding 2018B 2018 1,523,889 1,088,280 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 26,948,601 Total 57,982,521$ 52,843,076$ 90 58 City of Falcon Heights Notes to Basic Financial Statements NOTE 6 – FUND BALANCE DETAIL At December 31, 2022, fund balance was comprised of the following components: Parks/PW and Other Amber Future Facilities Governmental General Union Improvements Capital Fund Total Nonspendable Prepaid items 35,967$ -$ -$ -$ -$ 35,967$ Restricted Tax increment capital projects - - - - 83,282 83,282 Debt service - - - - 576,359 576,359 Grants - - - - 37,766 37,766 Park dedication - - - 33,575 - 33,575 Charitable gambling - - - - 1,679 1,679 Committed Recreation costs - - - - 57,716 57,716 Hydrant and fire truck costs - - - - 255,810 255,810 Recycling and environmental activities - - - - 101,043 101,043 Activities promoting economic development - - - - 20,327 20,327 Lighting costs - - - - 62,262 62,262 Garden costs - - - - 4,939 4,939 Assigned Capital projects - 58,637 1,848,314 1,467,798 478,259 3,853,008 Unassigned 3,118,111 - - - - 3,118,111 Total 3,154,078$ 58,637$ 1,848,314$ 1,501,373$ 1,679,442$ 8,241,844$ 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 2022 was estimated to be immaterial based on workers' compensation rates and salaries for the year. At December 31, 2022, 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. 91 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, 2022, was $99,478. 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. 92 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 2022 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, 2022, were $52,097. 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, 2022, the City reported a liability of $696,962 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 $20,528. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2021, through June 30, 2022, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.0088% at the end of the measurement period and 0.0087% for the beginning of the period. 93 61 City of Falcon Heights Notes to Basic Financial Statements NOTE 8 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) City's proportionate share of the net pension liability 696,962$ State of Minnesota's proportionate share of the net pension liability associated with the City 20,528 Total 717,490$ For the year ended December 31, 2022, the City recognized pension expense of $99,478 for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $3,067 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2022, the City reported its proportionate share of General Employee Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the following sources: Differences between expected and actual economic experience 5,822$ 7,337$ Changes in actuarial assumptions 155,996 2,706 Net collective difference between projected and actual investment earnings 13,877 - Changes in proportion 19,108 - Contributions paid to PERA subsequent to the measurement date 26,049 - Total 220,852$ 10,043$ Deferred Outflows of Resources Deferred Inflows of Resources 94 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 $26,049 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31, Amount 2023 73,070$ 2024 68,796 2025 (20,136) 2026 63,030 Total 184,760$ 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 95 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, 2022, 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 27 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 2022: General Employees Fund Changes in Actuarial Assumptions The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. Changes in Plan Provisions There have been no changes since the previous valuation. G. Discount Rate The discount rate for the General Employees Plan used to measure the total pension liability in 2022 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 was 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. 96 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 1,100,889$ 696,962$ 365,681$ 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. 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, 2022, the City generated $337,376 in tax increment revenue and made $326,609 in payments to developers. 97 65 City of Falcon Heights Notes to Basic Financial Statements NOTE 10 – NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 96, Subscription-Based Information Technology Arrangements establishes that a Subscription-Based Information Technology Arrangement (SBITA) results in a right-to-use subscription asset and a corresponding liability. Under this statement, a governmental entity generally should recognize a right-to-use subscription asset – an intangible asset – and a corresponding subscription liability. This statement will be effective for the year ending December 31, 2023. NOTE 11 – SUBSEQUENT EVENTS On February 22, 2023, the City Council approved the acquisition of Real Property from the University of Minnesota for a community park at the price of $1,107,127. Additionally, the City will pay all closing costs associated with the sale. 98 66 (THIS PAGE LEFT BLANK INTENTIONALLY) 99 67 REQUIRED SUPPLEMENTARY INFORMATION 100 See notes to required supplementary information. 68 City's Covered Payroll 2022 0.0088% $ 696,962 $ 20,528 717,490$ 660,880$ 105.46%76.67% 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% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 2022 $ 52,097 52,097$ -$ 694,627$ 7.50% 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% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 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) 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 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 101 City of Falcon Heights Required Supplementary Information and Notes to Required Supplementary Information 69 INFRASTRUCTURE ASSETS REPORTED USING THE MODIFIED APPROACH 2018 2019 2020 2021 2022 Streets and alleys Estimated 238,500$ 37,000$ -$ 997,000$ 60,000$ Actual 186,338 - - 1,819,330 38,524 Difference 52,162$ 37,000$ -$ (822,330)$ 21,476$ CONDITION RATING OF THE CITY'S STREET SYSTEMS 2016 2019 2022 Streets and alleys 77 71 69 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, 2019, and 2022 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 2022, the City's PCI rating was 69. This was the seventh analysis of the City's streets and alleys. The next rating will be completed in 2025. 102 City of Falcon Heights Notes to Required Supplementary Information 70 General Employees Fund 2022 Changes Changes in Actuarial Assumptions The mortality improvement scale was changed from scale MP-2020 to scale MP-2021. Changes in Plan Provisions There have been no changes since the prior valuation. 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. 103 City of Falcon Heights Notes to Required Supplementary Information 71 General Employees Fund (Continued) 2019 Changes Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 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. 104 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 $6.0 million, which meets the special funding situation definition, was due September 2015. 105 73 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 106 74 Park Programs Water Solid Waste Community Development Assets Cash and investments 57,716$ 250,056$ 94,913$ 20,327$ Special assessment receivable deferred - - - - Accounts receivable - 5,754 13,632 - Due from other funds - - - - Due from other governments - - - - Total assets 57,716$ 255,810$ 108,545$ 20,327$ Liabilities Accounts payable -$ -$ 7,459$ -$ Contracts payable - - - - Salaries and benefits payable - - 43 - Total liabilities - - 7,502 - Deferred inflows of resources Unavailable revenue - special assessments - - - - Total deferred inflows of resources - - - - Fund Balances Restricted - - - - Committed 57,716 255,810 101,043 20,327 Assigned - - - - Total fund balances 57,716 255,810 101,043 20,327 Total liabilities, deferred inflows of resources, and fund balances 57,716$ 255,810$ 108,545$ 20,327$ Special Revenue City of Falcon Heights Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2022 107 75 Street Lighting Community Garden Community Inclusion Charitable Gambling Total 60,752$ 4,939$ 38,757$ 1,679$ 529,139$ - - - - - 5,335 - - - 24,721 - - - - - - - - - - 66,087$ 4,939$ 38,757$ 1,679$ 553,860$ 3,825$ -$ 991$ -$ 12,275$ - - - - - - - - - 43 3,825 - 991 - 12,318 - - - - - - - - - - 37,766 1,679 39,445 62,262 4,939 - - 502,097 - - - - - 62,262 4,939 37,766 1,679 541,542 66,087$ 4,939$ 38,757$ 1,679$ 553,860$ Special Revenue 108 76 Capital Projects G.O. Improvement Bonds, Series 2017A G.O. Improvement Bonds, Series 2021A Total General Capital Improvements Assets Cash and investments 457,380$ 118,117$ 575,497$ 420,324$ Special assessment receivable deferred 8,992 123,527 132,519 - Accounts receivable - - - - Due from other funds - - - - Due from other governments (46) 908 862 2,800 Total assets 466,326$ 242,552$ 708,878$ 423,124$ Liabilities Accounts payable -$ -$ -$ -$ Contracts payable - - - - Salaries and benefits payable - - - - Total liabilities - - - - Deferred inflows of resources Unavailable revenue - special assessments 8,992 123,527 132,519 - Total deferred inflows of resources 8,992 123,527 132,519 - Fund Balances Restricted 457,334 119,025 576,359 - Committed - - - - Assigned - - - 423,124 Total fund balances 457,334 119,025 576,359 423,124 Total liabilities, deferred inflows of resources, and fund balances 466,326$ 242,552$ 708,878$ 423,124$ Debt Service City of Falcon Heights Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2022 109 77 2023 Street Project 2021 Street Project Tax Increment No. 1-3 Public Safety Capital Improvements Total Total Other Governmental Funds 16,851$ 64,545$ 83,546$ 32,427$ 617,693$ 1,722,329$ - - - - - 132,519 - - - - - 24,721 - - - - - - - - 767 - 3,567 4,429 16,851$ 64,545$ 84,313$ 32,427$ 621,260$ 1,883,998$ 8,281$ 813$ 1,031$ -$ 10,125$ 22,400$ - 49,594 - - 49,594 49,594 - - - - - 43 8,281 50,407 1,031 - 59,719 72,037 - - - - - 132,519 - - - - - 132,519 - - 83,282 - 83,282 699,086 - - - - - 502,097 8,570 14,138 - 32,427 478,259 478,259 8,570 14,138 83,282 32,427 561,541 1,679,442 16,851$ 64,545$ 84,313$ 32,427$ 621,260$ 1,883,998$ Capital Projects 110 78 Park Programs Water Solid Waste Community Development Revenues Property taxes -$ -$ -$ -$ Tax increments - - - - Special assessments - - - - Intergovernmental - - 15,742 - Charges for services 10,269 40,888 83,577 - Miscellaneous Investment income (61) (536) (208) (34) Other - - - - Total revenues 10,208 40,352 99,111 (34) Expenditures Current General government - - - - Public safety - - - - Public works - 13,153 105,211 - Park and recreation 30,594 - - - Community development - - - 758 Miscellaneous - - - - Debt service Principal - - - - Interest and other charges - - - - Capital outlay General government - - - - Public works - - - - Total expenditures 30,594 13,153 105,211 758 (20,386) 27,199 (6,100) (792) Other Financing Sources (Uses) Proceeds from sale of capital assets - - - - Transfers in 26,000 - - - Total other financing sources (uses) 26,000 - - - Net change in fund balances 5,614 27,199 (6,100) (792) Fund Balances Beginning of year 52,102 228,611 107,143 21,119 End of year 57,716$ 255,810$ 101,043$ 20,327$ Excess of revenues over (under) expenditures Special Revenue City of Falcon Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2022 111 79 Street Lighting Community Garden Community Inclusion Charitable Gambling Total -$ -$ -$ -$ -$ - - - - - - - - - - - - - - 15,742 41,815 975 - - 177,524 - (136) (8) (18) (3) (1,004) - - - - - 41,679 967 (18) (3) 192,262 - - - - - - - 6,853 - 6,853 38,035 - - - 156,399 - 51 - - 30,645 - - - - 758 - - - - - - - - - - - - - - - - - - - - - - - - - - - 38,035 51 6,853 - 194,655 3,644 916 (6,871) (3) (2,393) - - - - - - - - - 26,000 - - - - 26,000 3,644 916 (6,871) (3) 23,607 58,618 4,023 44,637 1,682 517,935 62,262$ 4,939$ 37,766$ 1,679$ 541,542$ Special Revenue 112 80 Capital Projects G.O. Improvement Bonds, Series 2017A G.O. Improvement Bonds, Series 2021A Total General Capital Improvements Revenues Property taxes 115,070$ 78,440$ 193,510$ -$ Tax increments - - - - Special assessments 5,928 47,657 53,585 - Intergovernmental - - - - Charges for services - - - - Miscellaneous - Investment income (1,410) (877) (2,287) (803) Other - - - 15,469 Total revenues 119,588 125,220 244,808 14,666 Expenditures Current General government - - - 757 Public safety - - - - Public works 759 - 759 - Park and recreation - - - - Community development - - - - Miscellaneous - 758 758 - Debt service - Principal 120,000 - 120,000 - Interest and other charges 17,459 18,963 36,422 - Capital outlay - General government - - - 6,387 Public works - - - - Total expenditures 138,218 19,721 157,939 7,144 (18,630) 105,499 86,869 7,522 Other Financing Sources (Uses) Proceeds from sale of capital assets - - - - Transfers in - - - 114,000 Total other financing sources (uses)- - - 114,000 Net change in fund balances (18,630) 105,499 86,869 121,522 Fund Balances Beginning of year 475,964 13,526 489,490 301,602 End of year 457,334$ 119,025$ 576,359$ 423,124$ Excess of revenues over (under) expenditures Debt Service City of Falcon Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2022 113 81 2023 Street Project 2021 Street Project Tax Increment No. 1-3 Public Safety Capital Improvements Total Total Other Governmental Funds -$ -$ -$ -$ -$ 193,510$ - - 337,376 - 337,376 337,376 - - - - - 53,585 14,626 5,286 - - 19,912 35,654 - - - - - 177,524 (48) 86 (141) (77) (983) (4,274) - - - - 15,469 15,469 14,578 5,372 337,235 (77) 371,774 808,844 - - - - 757 757 - - - 758 758 7,611 66,008 6,282 758 - 73,048 230,206 - - - - - 30,645 - - - - - 758 - - - - - 758 - - - - - 120,000 - - - - - 36,422 - - - - 6,387 6,387 - 38,524 333,738 - 372,262 372,262 66,008 44,806 334,496 758 453,212 805,806 (51,430) (39,434) 2,739 (835) (81,438) 3,038 - - - 25,500 25,500 25,500 60,000 20,000 - - 194,000 220,000 60,000 20,000 - 25,500 219,500 245,500 8,570 (19,434) 2,739 24,665 138,062 248,538 - 33,572 80,543 7,762 423,479 1,430,904 8,570$ 14,138$ 83,282$ 32,427$ 561,541$ 1,679,442$ Capital Projects 114 82 Original and Final Budget Actual Amounts Revenues Property taxes 2,166,934$ 2,174,122$ 7,188$ Tax increments - 34,431 34,431 Licenses and permits 82,750 156,521 73,771 Intergovernmental revenue Local government aid 603,532 603,532 - Cable television franchise fees 30,000 33,725 3,725 Police aid - 15,033 15,033 Total intergovernmental revenue 633,532 652,290 18,758 Charges for services Plan check fees 10,000 5,517 (4,483) Other 10,600 13,402 2,802 Snow removal - 12,150 12,150 Total charges for services 20,600 31,069 10,469 Fines and forfeitures 15,000 18,385 3,385 Miscellaneous revenue Investment income 15,000 (3,511) (18,511) Refunds and reimbursements 3,000 28,507 25,507 Other 700 1,125 425 Total miscellaneous revenue 18,700 26,121 7,421 Total revenues 2,937,516 3,092,939 155,423 Expenditures General government Legislative Wages, salaries, and compensation 22,315 22,054 (261) Materials and supplies 1,800 756 (1,044) Other 23,456 21,228 (2,228) Administration Wages, salaries, and compensation 235,860 251,379 15,519 Materials and supplies 9,900 8,341 (1,559) Other 43,000 30,133 (12,867) 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, 2022 115 83 Original and Final Budget Actual Amounts Expenditures (Continued) General government (continued) Finance Wages, salaries, and compensation 143,100$ 148,282$ 5,182$ Materials and supplies 300 343 43 Other 21,590 22,007 417 Legal 21,000 7,760 (13,240) Elections Materials and supplies 1,000 822 (178) Other 24,760 25,030 270 Communications Wages, salaries, and compensation 61,860 30,789 (31,071) Materials and supplies 6,000 9,626 3,626 Other 73,920 68,780 (5,140) Planning and inspections Wages, salaries, and compensation 105,630 74,631 (30,999) Materials and supplies 50 - (50) Other 80,980 86,217 5,237 Total general government 876,521 808,178 (68,343) Public safety Emergency preparedness Wages, salaries, and compensation 8,170 3,115 (5,055) Materials and supplies 1,000 - (1,000) Other 80 552 472 Police services 1,186,400 1,180,805 (5,595) Legal 31,000 30,385 (615) Fire fighting Other 169,950 168,713 (1,237) Total public safety 1,396,600 1,383,570 (13,030) Public works Buildings and grounds Wages, salaries, and compensation 31,115 29,957 (1,158) Materials and supplies 11,000 9,873 (1,127) Other 56,100 67,485 11,385 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, 2022 116 84 (THIS PAGE LEFT BLANK INTENTIONALLY) 117 85 Original and Final Budget Actual Amounts Expenditures (Continued) Public works (Continued) Streets Wages, salaries, and compensation 83,710$ 92,768$ 9,058$ Materials and supplies 20,100 22,322 2,222 Other 45,100 25,515 (19,585) Engineering 15,000 4,874 (10,126) Tree program Materials and supplies 50 - (50) Tree maintenance 67,000 20,590 (46,410) Total public works 329,175 273,384 (55,791) Park and recreation Park maintenance Wages, salaries, and compensation 63,620 58,830 (4,790) Materials and supplies 6,000 2,331 (3,669) Other 25,600 17,866 (7,734) Total parks and recreation 95,220 79,027 (16,193) Total expenditures 2,697,516 2,544,159 (153,357) Excess of revenues over expenditures 240,000 548,780 308,780 Other Financing Uses Transfers out (240,000) (640,000) (400,000) Net change in fund balance -$ (91,220) (91,220)$ Fund Balance Beginning of year 3,245,298 End of year 3,154,078$ Changes in Fund Balance - Schedule of Revenues, Expenditures, and Variance with Final Budget - Over (Under) Year Ended December 31, 2022 City of Falcon Heights Budget and Actual - General Fund - Detailed 118 86 Variance with Actual Amounts Final Budget - Over (Under) Revenues Charges for services 3,000$ 10,269$ 7,269$ Miscellaneous revenues Investment income 300 (61) (361) Total revenues 3,300 10,208 6,908 Expenditures Park and recreation Current Wages, salaries, and compensation 30,840 23,904 (6,936) Materials and supplies 1,650 - (1,650) Other 6,500 6,690 190 Total expenditures 38,990 30,594 (8,396) Excess of revenues over (under) expenditures (35,690) (20,386) 15,304 Other Financing Sources Transfers in 26,000 26,000 - Net change in fund balance (9,690)$ 5,614 15,304$ Fund Balance Beginning of year 52,102 End of year 57,716$ 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, 2022 119 87 Original and Final Budget Actual Amounts Variance with Final Budget- Over (Under) Revenues Charges for services 35,000$ 40,888$ 5,888$ Miscellaneous revenues Investment income 1,500 (536) (2,036) Total revenues 36,500 40,352 3,852 Expenditures Public works Wages, salaries, and compensation 11,732 11,126 (606) Other 6,170 2,027 (4,143) Total expenditures 17,902 13,153 (4,749) 18,598$ 27,199 8,601$ Fund Balance Beginning of year 228,611 End of year 255,810$ 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, 2022 120 88 Variance with Original and Final Budget Actual Amounts Final Budget Over (Under) Revenues Recycling grant 15,500$ 15,742$ 242$ Charges for services 78,000 83,577 5,577 Miscellaneous revenues Investment income 800 (208) (1,008) Total revenues 94,300 99,111 4,811 Expenditures Public works Wages, salaries, and compensation 21,040 13,517 (7,523) Materials and supplies 1,100 124 (976) Recycling contract 80,000 89,505 9,505 Other 3,550 2,065 (1,485) Total expenditures 105,690 105,211 (479) Excess of revenues over (under) expenditures (11,390)$ (6,100) 5,290$ Fund Balance Beginning of year 107,143 End of year 101,043$ Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Solid Waste Fund - Special Revenue Fund 121 89 Variance with Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 150$ (34)$ (184)$ Other 1,895 - (1,895) Total revenues 2,045 (34) (2,079) Expenditures Community development Other 9,100 758 (8,342) Excess of revenues over (under) expenditures (7,055)$ (792) 6,263$ Fund Balance Beginning of year 21,119 End of year 20,327$ 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, 2022 122 90 Variance with Original and Final Budget Actual Amounts Final Budget- Over (Under) Revenues Charges for services 41,000$ 41,815$ 815$ Miscellaneous revenues Investment income 200 (136) (336) Total revenues 41,200 41,679 479 Expenditures Public works Other 39,900 38,035 (1,865) Excess of revenues over expenditures 1,300$ 3,644 2,344$ Fund Balance Beginning of year 58,618 End of year 62,262$ 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, 2022 123 91 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Charges for services Park and recreation 950$ 975$ 25$ Miscellaneous revenues Investment income 40 (8) (48) Total revenues 990 967 (23) Expenditures Park and recreation Other 2,000 51 (1,949) Excess of revenues (under) expenditures (1,010)$ 916 1,926$ Fund Balance Beginning of year 4,023 End of year 4,939$ Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Garden Fund - Special Revenue Fund 124 92 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 200$ (18)$ (218)$ Contributions and donations 50 - (50) Total miscellaneous revenues 250 (18) (268) Expenditures Public Safety Wages, salaries and compensation 35,000 6,853 (28,147) Excess of revenues under (under) expenditures (34,750)$ (6,871) 27,879$ Fund Balance Beginning of year 44,637 End of year 37,766$ Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Inclusion Fund - Special Revenue Fund 125 93 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Property Taxes 115,070$ 115,070$ -$ Special assessments 4,500 5,928 1,428 Miscellaneous revenues Investment income 1,200 (1,410) (2,610) Total revenues 120,770 119,588 (1,182) Expenditures Public works Wages, salaries and compensation 800 759 (41) Debt service Principal 120,000 120,000 - Interest and other charges 18,200 17,459 (741) Total expenditures 139,000 138,218 (782) Excess of revenues over (under) expenditures (18,230)$ (18,630) (400)$ Fund Balance Beginning of year 475,964 End of year 457,334$ 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, 2022 126 94 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 1,200$ (803)$ (2,003)$ Other 4,000 15,469 11,469 Total revenues 5,200 14,666 9,466 Expenditures General government Current Other 800 757 (43) Capital outlay 6,500 6,387 (113) Total expenditures 7,300 7,144 (156) Excess of revenues over (under) expenditures (2,100) 7,522 9,622 Other Financing Sources Transfers in 114,000 114,000 - Net Change in Fund Balance 111,900$ 121,522 9,622$ Fund Balance Beginning of year 301,602 End of year 423,124$ 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, 2022 127 95 Variance with Original Final Actual Amounts Final Budget - Over (Under) Revenues Intergovernmental revenue: Other Grants and Aids 35,000$ 35,000$ 14,626$ (20,374)$ Total intergovernmental revenue 35,000 35,000 14,626 (20,374) Miscellaneous revenues Investment income - - (48) (48) Total revenues 35,000 35,000 14,578 (20,422) Expenditures Public works: Wages, salaries and compensation 52,800 52,800 66,008 13,208 Total public works 52,800 52,800 66,008 13,208 Total expenditures 52,800 52,800 66,008 13,208 Excess of revenues over (under) expenditures (17,800)$ (17,800)$ (51,430) (33,630)$ Fund Balance Beginning of year - End of year 8,570$ Year Ended December 31, 2022 Budgeted Amounts City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - 2023 Street Project - Capital Projects Fund 128 96 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Other grants and aids -$ 5,286$ 5,286$ Total intergovernmental revenue - 5,286 5,286 Miscellaneous revenues Investment income 1,000 86 (914) Total miscellaneous 1,000 86 (914) Total revenues 1,000 5,372 4,372 Expenditures Public works Current Other 5,800 6,282 482 Capital outlay 60,000 38,524 (21,476) Total expenditures 65,800 44,806 (20,994) Excess of revenues over (under) expenditures (64,800)$ (39,434) 25,366$ Other Financing Sources Transfers in 20,000 20,000 - Net change in fund balance (44,800)$ (19,434) 25,366$ Fund Balance Beginning of year 33,572 End of year 14,138$ Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - 2021 Street Project - Capital Projects Fund 129 97 Variance with Original Final Actual Amounts Final Budget - Over (Under) Revenues Tax increments 280,000$ 330,000$ 337,376$ 7,376$ Miscellaneous revenue Investment income 500 500 (141) (641) Total revenues 280,500 330,500 337,235 6,735 Expenditures Public works Current Other 800 800 758 (42) Capital outlay 289,000 339,000 333,738 (5,262) Total expenditures 289,800 339,800 334,496 (5,304) Excess of revenues over (under) expenditures (9,300)$ (9,300)$ 2,739 12,039$ Fund Balance Beginning of year 80,543 End of year 83,282$ Budgeted Amounts Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Tax Increment No. 1-3 - Capital Projects Fund 130 98 Variance with Original and Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 20$ (77)$ (97)$ Expenditures Public safety Current Other 800 758 (42) Excess of revenues under expenditures (780) (835) (55) Other Financing Sources Proceeds from sale of capital assets - 25,500 25,500 Net Change in Fund Balance (780)$ 24,665 25,445$ Fund Balance Beginning of year 7,762 End of year 32,427$ Budgeted Amounts Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Public Safety Capital Improvements - Capital Projects Fund 131 99 Variance with Original Budget Final Budget Actual Amounts Final Budget - Over (Under) Revenues Special assessments -$ -$ 3,648$ 3,648$ Licenses and permits 135,000 135,000 136,421 1,421 Intergovernmental Other grants and aids 167,000 167,000 1,201,549 1,034,549 Miscellaneous revenues Investment income 10,000 10,000 (4,470) (14,470) Other - - 342 342 Total revenues 312,000 312,000 1,337,490 1,025,490 Expenditures Public works Current Other 2,800 2,800 1,520 (1,280) Capital outlay 6,500 24,500 1,053,404 1,028,904 Total expenditures 9,300 27,300 1,054,924 1,027,624 Excess of revenues over (under) expenditures 302,700 284,700 282,566 (2,134) Other Financing Sources Transfers out - (80,000) (80,000) - Net change in fund balance 302,700$ 204,700$ 202,566 (2,134)$ Fund Balance Beginning of year 1,645,748 End of year 1,848,314$ Year Ended December 31, 2022 City of Falcon Heights Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Future Improvements - Capital Projects Fund 132 100 Variance with Original Final Budget Actual Amounts Final Budget - Over (Under) Revenues Miscellaneous revenues Investment income 800$ (5,495)$ (5,495)$ Contributions and Donations - 500 500 Total Miscellaneous 800 (4,995) (4,995) Expenditures Parks and recreation Current Other 800 6,758 6,758 Capital outlay 1,681,100 102,541 102,541 Total expenditures 1,681,900 109,299 109,299 Excess of revenues under expenditures (1,681,100) (114,294) (114,294) Other Financing Sources Proceeds from sale of capital assets - 9,976 9,976 Bond issuance 800,000 - - Transfers in 100,000 500,000 500,000 Total other financing sources 900,000 509,976 509,976 (781,100)$ 395,682 395,682$ Fund Balance Beginning of year 1,105,691 End of year 1,501,373$ 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, 2022 133 101 STATISTICAL SECTION 134 102 (THIS PAGE LEFT BLANK INTENTIONALLY) 135 103 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 18-20 136 Source: City of Falcon Heights financial records 104 2013 2014 2015 2016 Governmental Activities Net investment in capital assets 7,637,289$ 7,257,327$ 7,205,699$ 7,139,185$ Restricted 474,487 610,535 477,094 484,867 Unrestricted 2,493,059 2,545,364 2,302,829 2,421,877 Total governmental activities 10,604,835$ 10,413,226$ 9,985,622$ 10,045,929$ Business-Type Activities Net investment in capital assets 828,552$ 1,223,115$ 1,535,176$ 1,487,989$ Unrestricted 2,670,746 2,656,683 2,398,677 2,524,097 Total business-type activities 3,499,298$ 3,879,798$ 3,933,853$ 4,012,086$ Primary Government Net investment in capital assets 8,465,841$ 8,480,442$ 8,740,875$ 8,627,174$ Restricted 474,487 610,535 477,094 484,867 Unrestricted 5,163,805 5,202,047 4,701,506 4,945,974 Total primary government net position 14,104,133$ 14,293,024$ 13,919,475$ 14,058,015$ Fiscal Year City of Falcon Heights Net Position by Component Last Ten Fiscal Years 137 105 Table 1 2017 2018 2019 2020 2021 2022 7,073,360$ 7,136,755$ 7,256,270$ 7,390,580$ 7,006,594$ 7,114,386$ 613,084 528,460 913,108 866,475 778,435 1,503,171 2,534,275 2,754,612 3,135,756 4,380,322 5,695,480 5,837,757 10,220,719$ 10,419,827$ 11,305,134$ 12,637,377$ 13,480,509$ 14,455,314$ 1,675,687$ 1,620,358$ 1,727,018$ 1,939,341$ 2,201,504$ 2,312,482$ 2,139,335 2,252,575 2,389,482 2,232,118 2,323,793 2,413,071 3,815,022$ 3,872,933$ 4,116,500$ 4,171,459$ 4,525,297$ 4,725,553$ 8,749,047$ 8,757,113$ 8,983,288$ 9,329,921$ 9,208,098$ 9,426,868$ 613,084 528,460 913,108 866,475 778,435 1,503,171 4,673,610 5,007,187 5,525,238 6,612,440 8,019,273 8,250,828 14,035,741$ 14,292,760$ 15,421,634$ 16,808,836$ 18,005,806$ 19,180,867$ Fiscal Year 138 106 2013 2014 2015 2016 Expenses Governmental activities General government 649,412$ 665,388$ 634,328$ 696,194$ Public safety 870,860 956,694 1,009,561 1,073,268 Public works 1,473,421 643,323 1,068,292 648,892 Park and recreation 215,654 253,333 300,800 162,958 Community development 7,551 2,187 10,967 1,789 Interest on long-term debt 55352 - 19,695 18,363 Total governmental activities expenses 3,272,250 2,520,925 3,043,643 2,601,464 Business-type activities Sanitary sewer 704,897 629,452 613,868 760,415 Storm sewer 136,662 116,201 136,551 122,303 Total business-type activities expenses 841,559 745,653 750,419 882,718 Total primary government expenses 4,113,809$ 3,266,578$ 3,794,062$ 3,484,182$ Program Revenues Governmental activities Charges for services General government 155,006$ 132,811$ 158,077$ 167,214$ Public safety 129,220 137,377 145,952 125,161 Public works 149,158 147,014 149,152 152,128 Park and recreation 184,510 43,209 25,232 15,170 Community development 1,717 1,716 1,716 1,716 Operating grants and contributions 218,919 193,236 473,143 151,536 Capital grants and contributions 664,846 13,967 196,337 11,490 1,503,376 669,330 1,149,609 624,415 Business-type activities Charges for services Sanitary sewer 807,031 780,844 756,539 829,339 Storm sewer 156,632 155,116 154,984 157,067 Operating grants and contributions - - - 701 Capital grants and contributions - - - - 963,663 935,960 911,523 987,107 2,467,039$ 1,605,290$ 2,061,132$ 1,611,522$ Total primary government program revenues Total business-type activities program revenues City of Falcon Heights Changes in Net Position Total governmental activities program revenues Last Ten Fiscal Years Fiscal Year 139 107 Table 2 2017 2018 2019 2020 2021 2022 752,640$ 743,238$ 777,949$ 765,683$ 834,064$ 821,349$ 1,072,905 1,473,021 1,528,097 1,604,140 1,596,239 1,374,452 1,775,574 897,796 614,411 680,429 2,006,502 2,978,204 174,392 139,967 145,442 131,580 114,604 243,927 3,726 33,944 8,080 747 723 758 28,612 35,301 32,222 25,644 48,811 18,916 3,807,849 3,323,267 3,106,201 3,208,223 4,600,943 5,437,606 723,236 708,321 901,784 867,393 960,715 852,016 142,494 156,170 155,634 145,903 158,873 171,265 865,730 864,491 1,057,418 1,013,296 1,119,588 1,023,281 4,673,579$ 4,187,758$ 4,163,619$ 4,221,519$ 5,720,531$ 6,460,887$ 145,060$ 118,265$ 188,726$ 129,162$ 235,187$ 109,321$ 127,160 107,026 155,035 76,079 190,431 147,861 151,229 160,774 146,301 154,959 164,379 178,430 11,476 11,047 8,986 1,500 6,374 11,244 1,895 - 3,790 - 3,790 - 154,211 226,881 381,001 807,921 730,258 1,344,686 953,653 35,938 10,163 55,253 388,902 1,140,158 1,544,684 659,931 894,002 1,224,874 1,719,321 2,931,700 879,391 945,893 1,070,459 852,185 1,153,186 1,038,379 169,957 169,172 174,608 179,662 188,125 191,637 - - - - 129,239 - - - - - - - 1,049,348 1,115,065 1,245,067 1,031,847 1,470,550 1,230,016 2,594,032$ 1,774,996$ 2,139,069$ 2,256,721$ 3,189,871$ 4,161,716$ Fiscal Year 140 Source: City of Falcon Heights financial records 108 2013 2014 2015 2016 Net (Expense)/Revenue Governmental activities (1,768,874)$ (1,851,595)$ (1,894,034)$ (1,977,049)$ Business-type activities 122,104 190,307 161,104 104,389 (1,646,770)$ (1,661,288)$ (1,732,930)$ (1,872,660)$ General Revenues and Other Changes in Net Position Governmental activities Taxes Property taxes 1,080,588$ 1,043,863$ 1,081,384$ 1,181,336$ Franchise fees - - - - Tax increments 374,385 202,372 156,606 251,476 Unrestricted state aids 312,593 505,414 533,015 542,320 Other general revenue 66,520 38,602 15,000 - Unrestricted investment income 118 26,324 14,783 22,163 Gain on sale of assets 8,637 34,060 270 61 Transfers 80,000 (167,106) - 40,000 Total governmental activities 1,922,841 1,683,529 1,801,058 2,037,356 Business-type activities Other general revenue - - Unrestricted investment income 2,616 23,087 13,091 13,844 Proceeds sale of assets - - - - Transfers (80,000) 167,106 - (40,000) Total business-type activities (77,384) 190,193 13,091 (26,156) Total primary government 1,845,457$ 1,873,722$ 1,814,149$ 2,011,200$ Changes in Net Position Governmental activities 153,967$ (168,066)$ (92,976)$ 60,307$ Business-type activities 44,720 380,500 174,195 78,233 Total primary government 198,687$ 212,434$ 81,219$ 138,540$ *Governmental Accounting Standards Board Statement NO. 68 required implementation for fiscal year 2015. Total primary government net (expense)/revenue Fiscal Year City of Falcon Heights Changes in Net Position Last Ten Fiscal Years 141 109 Table 2 (Cont) 2017 2018 2019 2020 2021 2022 (2,263,165)$ (2,663,336)$ (2,212,199)$ (1,983,349)$ (2,881,622)$ (2,505,906)$ 183,618 250,574 187,649 18,551 350,962 206,735 (2,079,547)$ (2,412,762)$ (2,024,550)$ (1,964,798)$ (2,530,660)$ (2,299,171)$ 1,271,602$ 1,600,552$ 1,997,743$ 2,159,635$ 2,251,745$ 2,353,403$ - 22,179 131,659 138,243 132,896 136,421 172,018 294,506 229,181 271,247 333,729 371,807 546,524 604,943 605,967 604,477 892,919 611,055 18,437 31,975 11,333 52,308 103,564 25,877 29,149 78,289 121,623 89,682 9,901 (17,852) 225 - - - - - 400,000 230,000 - - - - 2,437,955 2,862,444 3,097,506 3,315,592 3,724,754 3,480,711 - 19,318 37,337 55,918 36,408 2,876 (6,479) - - - - - - (400,000) (230,000) - - - - (380,682) (192,663) 55,918 36,408 2,876 (6,479) 2,057,273$ 2,669,781$ 3,153,424$ 3,352,000 3,727,630 3,474,232 174,790$ 199,108$ 885,307$ 1,332,243$ 843,132$ 974,805$ (197,064) 57,911 243,567 54,959 353,838 200,256 (22,274)$ 257,019$ 1,128,874$ 1,387,202$ 1,196,970$ 1,175,061$ Fiscal Year 142 110 (THIS PAGE LEFT BLANK INTENTIONALLY) 143 Source: City of Falcon Heights financial records 111 Table 3 Fiscal Property Tax Franchise Year Tax Increment Tax Total 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 2022 2,353,403 371,807 136,421 2,861,631 City of Falcon Heights Governmental Activities Tax Revenues by Source Last Ten Fiscal Years 144 Source: City of Falcon Heights financial records 112 2013 2014 2015 2016 70,602$ 89,222$ 85,535$ 71,138$ - - - - - - - - - - - - 1,275,982 1,326,645 1,334,716 1,504,383 1,346,584$ 1,415,867$ 1,420,251$ 1,575,521$ -$ -$ -$ -$ 951,032 411,590 318,141 337,506 285,035 251,368 263,384 308,915 851,073 919,832 803,442 799,450 Unassigned - - - (43,120) 2,087,140$ 1,582,790$ 1,384,967$ 1,402,751$ City of Falcon Heights Fiscal Year 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 145 113 Table 4 2017 2018 2019 2020 2021 2022 37,201$ 40,800$ 17,737$ 53,084$ -$ 35,967$ - - - - - - - - - - - - - - - - - - 1,676,621 1,828,155 2,007,462 2,515,136 3,245,298 3,118,111 1,713,822$ 1,868,955$ 2,025,199$ 2,568,220$ 3,245,298$ 3,154,078$ -$ -$ -$ -$ -$ -$ 498,308 450,561 868,901 857,959 649,927 732,661 321,089 333,318 377,003 426,849 471,616 502,097 1,642,422 1,659,242 1,404,348 1,775,983 3,109,890 3,853,008 - - - - - 2,461,819$ 2,443,121$ 2,650,252$ 3,060,791$ 4,231,433$ 5,087,766$ Fiscal Year 146 114 2013 2014 2015 2016 Revenues Taxes 1,453,211$ 1,254,073$ 1,229,405$ 1,435,717$ Special assessments 130,256 62,977 76,673 54,579 Licenses and permits 75,077 68,253 80,864 73,339 Intergovernmental 761,796 755,281 1,142,257 792,070 Charges for services 393,542 253,357 238,876 225,347 Fines and forfeitures 68,208 67,638 80,415 73,901 Investment income 118 26,324 14,783 22,163 Miscellaneous 204,418 54,850 50,185 35,435 Total revenues 3,086,626 2,542,753 2,913,458 2,712,551 Expenditures General government 580,783$ 593,735$ 580,026$ 593,485$ Public safety 807,412 867,779 885,969 939,029 Public works 408,555 363,027 351,541 322,322 Park and recreation 179,299 180,126 218,807 110,393 Community development 7,551 2,187 10,967 1,789 Miscellaneous - - - - Capital outlay 1,614,042 1,097,652 796,133 364,916 Debt service Principal 65,000 70,000 125,000 140,000 Interest and other charges 52,336 19,966 20,248 18,813 Total expenditures 3,714,978 3,194,472 2,988,691 2,490,747 Excess of revenues under expenditures (628,352) (651,719) (75,233) 221,804 Fiscal Year City of Falcon Heights Changes in Fund Balances of Governmental Funds Last 10 Fiscal Years 147 115 Table 5 2017 2018 2019 2020 2021 2022 1,443,823$ 1,897,392$ 2,223,631$ 2,435,870$ 2,576,318$ 2,739,439$ 210,956 51,510 45,029 45,900 184,268 57,233 93,344 94,519 290,690 214,568 385,304 292,942 1,478,994 843,652 1,025,523 1,485,632 1,267,770 2,953,789 235,928 237,908 265,620 215,778 345,082 208,593 45,806 35,719 28,191 15,109 19,511 18,385 29,149 78,289 121,623 89,682 9,901 (17,852) 46,047 95,207 24,274 80,280 51,209 56,351 3,584,047 3,334,196 4,024,581 4,582,819 4,839,363 6,308,880 662,544$ 661,557$ 672,880$ 672,321$ 748,953$ 808,935$ 957,329 1,321,072 1,432,158 1,509,034 1,541,474 1,391,181 351,470 380,343 366,734 393,428 638,436 1,570,165 124,396 112,641 111,737 89,144 96,937 116,430 3,726 33,944 8,080 747 723 758 - - - 1,414 592 758 1,477,627 693,758 437,505 497,043 1,369,067 1,534,594 150,000 150,000 265,000 265,000 445,000 120,000 20,980 46,673 38,746 35,249 56,875 36,422 3,748,072 3,399,988 3,332,840 3,463,380 4,898,057 5,579,243 (164,025) (65,792) 691,741 1,119,439 (58,694) 729,637 Fiscal Year 148 Source: City of Falcon Heights financial records 116 2013 2014 2015 2016 Other Financing Sources (Uses) Transfers in 170,418$ 241,685$ 24,716$ 62,000$ Transfers out (90,418) (101,685) (24,716) (22,000) Proceeds sale of capital assets 8,637 34,060 270 61 Bonds issued 1,160,000 - - - Bond premium - - - - Total other financing sources (uses)1,248,637 174,060 270 40,061 Net change in fund balances 620,285$ (477,659)$ (74,963)$ 261,865$ Debt service as a percentage of noncapital expenditures 3.37%3.10%5.98%9.33% Fiscal Year City of Falcon Heights Changes in Fund Balances of Governmental Funds Last 10 Fiscal Years 149 117 Table 5 (Cont.) 2017 2018 2019 2020 2021 2022 442,000$ 291,770$ 479,912$ 158,000$ 650,120$ 720,000$ (42,000) (61,770) (479,912) (158,000) (650,120) (720,000) 225 - - - 537,349 35,476 845,000 - - - 665,000 - - 52,345 - - 30,512 - 1,245,225 230,000 - - 1,232,861 35,476 1,081,200$ 164,208$ 691,741$ 1,119,439$ 1,174,167$ 765,113$ 4.68%5.83%9.25%8.94% 10.63%2.85% Fiscal Year 150 118 (THIS PAGE LEFT BLANK INTENTIONALLY) 151 Source: City of Falcon Heights financial records 119 Table 6 Fiscal Property Tax Franchise Year Tax Increment Tax Total 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 2022 2,367,632 371,807 136,421 2,875,860 City of Falcon Heights General Governmental Tax Revenues by Source Last 10 Fiscal Years 152 Source: Ramsey County property tax and records 120 Real Property (1)Personal Property (1)Less Residential Commercial Motor Tax Exempt Property Property Vehicles Other Real Property (1) 2013 3,697,530$ NA NA 59,508$ NA 2014 3,776,860 NA NA 59,934 NA 2015 4,111,429 NA NA 61,664 NA 2016 4,100,084 NA NA 64,788 NA 2017 4,327,797 NA NA 68,082 NA 2018 4,602,900 NA NA 72,140 NA 2019 4,821,090 NA NA 68,604 NA 2020 5,290,593 NA NA 70,696 NA 2021 5,596,770 NA NA 78,544 NA 2022 5,519,656 NA NA 31,868 NA (1) Assessed values replaced by Gross Tax Capacity (GTC) by state statutes. Assessed values of commercial property, motor vehicles and tax exempt properties are not provided by Ramsey County. City of Falcon Heights Assessed Value and Estimated Actual Value of Taxable Property Last 10 Fiscal Years December 31, Year Ended 153 Source: Ramsey County property tax and records 121 Table 7 Assesed Total Estimated (Tax Capacity) Total Taxable Direct Actual Value(1) as a Assessed Tax Taxable Percentage of Value (1) Rate Market Value Taxable Market Value 3,757,038$ 27.884 362,697,600$ 1.04% 3,836,794 24.819 369,585,000 1.04% 4,173,093 23.470 385,888,200 1.08% 4,164,872 25.855 384,679,900 1.08% 4,395,879 26.342 403,438,700 1.09% 4,675,040 31.780 426,967,700 1.09% 4,889,694 37.356 464,013,600 1.05% 5,361,289 36.635 502,720,300 1.07% 5,675,314 36.348 527,577,000 1.08% 5,551,524 38.783 520,933,700 1.07% 154 Source: Ramsey County property tax and records 122 Table 8 City of Falcon Heights Overlapping Rates School Total Debt Total Technical Ramsey District Special Direct and Operating Service City College County No. 623 Districts Overlapping Rate (3) Rate Rate Rate Rate Rate Rate Rates 27.884 0.000 27.884 0.000 65.240 15.464 9.305 117.893 24.819 0.000 24.819 0.000 63.735 16.251 9.037 113.842 23.470 0.000 23.470 0.000 58.922 17.18 8.647 108.219 25.855 0.000 25.855 0.000 58.885 20.958 9.052 114.750 26.342 0.000 26.342 0.000 55.850 18.894 8.669 109.755 31.780 0.000 31.780 0.000 53.962 34.396 9.086 129.223 37.356 0.000 37.356 0.000 52.879 31.687 8.891 130.903 35.635 0.000 35.635 0.000 52.302 30.668 9.270 127.875 36.348 0.000 36.348 0.000 47.760 31.25 8.588 123.947 38.783 0.000 38.783 0.000 48.034 26.776 10.924 124.517 (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 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. 2021 2022 Net Tax Capacity Rates (2) 2017 2018 2019 2020 City of Falcon Heights Property Tax Rates Direct and Overlapping (1) Governments Last 10 Fiscal Years 2016 Fiscal Year 2013 2014 2015 155 Source: Ramsey County property tax and records 123 City of Falcon Heights Principal Property Taxpayers December 31, 2022 Table 9 2022 2013 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 348,502$ 1 6.28 % 136,880$ 2 3.64 % Sidal Realty Co. Limited Partnership 282,994 2 5.10 % 98,360 3 2.62 % Spire Federal Credit Union 268,638 3 4.84 % 170,646 1 4.54 % Town Square Senior Apartments, LLC 163,506 4 2.95 % 65,009 4 1.73 % 1750 Larpenteur LLC - Henrickson 153,540 5 2.77 %- - - Falcon Crossing, LLC 115,032 6 2.07 % 50,245 8 1.34 % Warner Properties of MN, LLP 99,367 7 1.79 % 38,862 10 1.03 % Anna Spiegler 95,564 8 1.72 % 36,579 6 0.97 % Xerxes Ave LLC 75,060 9 1.35 %- - - % JAK Rental Properties LLC 43,296 10 0.78 % 27,230 9 0.72 % Total 1,645,499$ 29.64 % 623,811$ 16.60 % (1) Assessed values replaced by Gross Tax Capacities (GTC) by state statute. Taxpayer 156 Source: City of Falcon Heights financial records 124 Table 10 Total Tax Levy for Pecentage Collections in Pecentage Fiscal Year Fiscal Year Amount of Levy Subsequent Years Amount of Levy 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%3,873 1,048,624 96.75% 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%4,459 1,276,264 99.85% 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%4,387 2,131,339 99.71% 2021 2,249,275 2,242,589 99.7%716 2,242,589 99.70% 2022 2,360,444 2,360,226 99.9%2,360,226 99.99% Fiscal Year of the Levy Total Collections to Date Collected within the City of Falcon Heights Property Tax Levies and Collections (1) Last 10 Fiscal Years 157 Source: City of Falcon Heights financial records 125 Table 11 Governmental Activities Total Percentage Fiscal G.O. Primary of Personal Per Year Bonds Government Income(1)Capita(1) 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 973,499 973,499 0.50%174 2021 1,211,484 1,211,484 0.59%216 2022 1,078,957 1,078,957 0.48%200 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 158 126 (THIS PAGE LEFT BLANK INTENTIONALLY) 159 Source: City of Falcon Heights financial records 127 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) 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 1,070,000 404,754 665,246 0.16%122 2018 1,475,000 351,141 1,123,859 0.26%206 2019 1,210,000 729,333 480,667 0.10%87 2020 973,499 704,542 268,957 0.05%48 2021 1,211,484 486,550 724,934 0.14%129 2022 1,078,957 576,359 502,598 0.10%93 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 Heights Ratios of General Bonded Debt Outstanding Last 10 Fiscal Years 160 Sources: Assessed value data used to estimate applicable percentages provided by the County, Board of Education, and Assessment. Debt outstanding data provided by the County. 128 Table 13EstimatedEstimated Share ofDebt Percentage OverlappingOutstandingApplicable(1)DebtDebt repaid with property taxes: county 2,235,309,925$ 0.6% 14,006,463$ Subtotal, overlapping debt14,006,463 City of Falcon Heights direct debt1,045,000 Unamoritzed bond premium direct debt33,957 Subtotal direct debt1,078,957 Total direct and overlapping debt15,051,463$ Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident and therefore, responsible for repaying the debt, of each overlapping government.(1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the county's total taxable assessed value. City of Falcon HeightsDirect and Overlapping Governmental Activities DebtDecember 31, 2022Governmental Unit 161 Source: Department of Property Records and Revenue – Ramsey County 129 Table 13 (Cont.)City's ShareGross Debt (1)Sinking FundsNet DebtPercentAmountDirectCity of Falcon Heights1,078,957$ 576,359$ 502,598$ 100.00 %502,598$ OverlappingSchool Districts ISD No. 623144,105,000 1,514,555 142,590,4457.17 10,217,825 ISD No. 91673,470,000 - 73,470,0000.01 458,698 Ramsey County Ramsey County184,577,000 105,122,226 79,454,7740.86 687,039 County Library23,110,000 2,729,464 20,380,5361.73 352,429 Metro Watershed12,540,000 - 12,540,0001.96 245,207 Metropolitan AgenciesMetro Council1,796,428,968 187,511,005 1,608,917,9630.13 2,045,265 Metro airports - - - - Commission- - - - Total Overlapping Debt2,234,230,968 296,877,250 1,937,353,718 14,006,463 Total direct and overlapping debt2,235,309,925$ 297,453,609$ 1,937,856,316$ 14,509,061$ (1) Gross debt totals include bonds which are financed by ad valorem tax levy, G.O. revenue financing and special assessments. Note: All overlapping debt presented is from the prior year. Information disseminated by the county was not available in time to include in this year's presentation.City of Falcon HeightsGovernmental UnitDirect and Overlapping Governmental Activities DebtDecember 31, 2022 162 130 2013 2014 2015 2016 Debt limit 6,838,406$ 6,991,052$ 7,717,764$ 7,693,598$ Total net debt applicable to limit - - - - Legal debt margin 6,838,406$ 6,991,052$ 7,717,764$ 7,693,598$ 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 163 131 Table 14 2017 2018 2019 2020 2021 2022 8,068,774$ 8,539,354$ 9,280,272$ 10,054,406$ 10,551,540$ 10,418,674$ - - - - - - 8,068,774$ 8,539,354$ 9,280,272$ 10,054,406$ 10,551,540$ 10,418,674$ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Legal Debt Margin Calculation for Fiscal Year 2022 Assessed value 520,933,700$ Add back exempt real property - Total assessed value 520,933,700 Debt limit (2% of total assessed value) 10,418,674 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 10,418,674$ Fiscal Year 164 Source: City of Falcon Heights financial records 132 Table 15 Special Assessment Bonds Special Fiscal Assessment Debt Service Year Collections Principal Interest Coverage 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% 2022 53,585 120,000 30,674 35.6% 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 165 133 Table 16 Education Per Level in Total Capita Years of Fiscal Personal Personal Median Formal School Year Population(1)Income Income(2)Age(3)Schooling(3)Enrollment(4) 2013 5,370 161,631,630$ 30,099$ NA 14.8 7,471 4.3 2014 5,490 165,117,240 30,076 NA 14.8 7,436 3.2 2015 5,450 165,314,850 30,333 NA 14.8 7,507 3.1 2016 5,460 170,657,760 31,256 NA 14.8 7,590 4.1 2017 5,450 170,345,200 36,156 NA 14.8 7,592 3.2 2018 5,450 197,535,250 36,245 NA 14.8 7,519 2.9 2019 5,500 199,347,500 36,245 NA 14.8 7,329 3.2 2020 5,600 196,072,800 35,013 NA 14.8 7,294 4.7 2021 5,600 204,948,800 36,598 NA 14.8 7,192 2.7 2022 5,400 226,249,200 41,898 NA 14.8 7,379 2.6 Data 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 available Note: Population, median age and education level information are based on surveys conducted during the last quarter of the calendar year. Personal income information is a total for the year. Unemployment rate information is an adjusted yearly average. School enrollment is based on the census at the start of the school year. Rate(5) Unemployment City of Falcon Heights Demographic and Economic Statistics Last 10 Fiscal Years 166 134 (THIS PAGE LEFT BLANK INTENTIONALLY) 167 Source: City of Falcon Heights administrative office 135 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 2,400 1 66.67 %2,655 1 78.09 % Spire Federal Credit Union 380 2 10.56 %94 3 2.76 % Minnesota State Fair (2)80 4 2.22 %74 4 2.18 % Twin Cities Laboratories 65 3 1.81 %125 2 3.68 % Falcon Heights Elementary 60 5 1.67 % Estimated Total City Employees All Businesses: 3,600 82.92 %3,400 86.71 % (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) 2022 2013 168 Source: City of Falcon Heights administrative office 136 Table 182013 2014 2015 2016 2017 2018 2019 2020 2021 2022General Government4.16 4.51 4.26 4.26 4.61 5.21 5.21 5.21 5.18 5.41Public SafetyPolice (1) Officers NA NA NA NA NA NA NA NA NA NAFire Firefighters and officers 2.27 3.02 3.02 3.02 2.77 2.77 2.77 2.77 0.35 0Highways and StreetsEngineering (2) Maintenance 1.13 1.13 1.13 1.13 1.10 1.11 1.11 1.11 1.11 1.13Park and Recreation2.49 2.49 2.49 2.49 2.44 2.49 2.49 2.49 1.64 2.49Sewer2.19 2.19 2.19 2.19 2.32 2.32 2.32 2.32 2.33 2.19Total 12.24 13.34 13.09 13.09 13.24 13.90 13.90 13.90 10.61 11.22(1) The City contracts with Ramsey County for police services.(2) The City contracts with outside entities for engineering services.FunctionCity of Falcon HeightsFiscal YearFull-Time Equivalent City Government Employees by FunctionLast 10 Fiscal Years 169 Source: Various government departments 137 Table 192013 2014 2015 2016 2017 2018 2019 2020 2021 2022PolicePhysical arrests 649 620 700 539 311 59 37 30 67 30Parking violations 336 427 313 303 155 304 410 88 135 274Traffic violations 1,608 1,496 1,987 1,344 1,653 270 299 73 207 288FireNumber of calls answered 94 117 108 120 119 143 200 106 171 190Inspections 618667771051469970 298Highways and Streets Streets resurfacing (miles) 1 - - - - 1 - - 3 - Potholes repaired7018580706829551002030SanitationRefuse collected (tons/day) (1)NANANANANANANANANANARecyclables collected (tons/day) (2)9.3 9.6 8.9 9.0 8.9 8.6 8.0 9.3 9.3 8.4 Park and RecreationAthletic field permits issued3333838793000Community centers admissions (3) NANANANANANANANANANAWaterNew connections- - - -3 2 - - - - Water mains breaks6 1 - - 1 1 1 7 3 2 Average daily consumption (thousands of gallons)1054 707 728 716 723 769 742 574 708 820WastewaterAverage daily sewage treatment 553 562 561 574 538 629 638 500 572 602 (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.(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. (3) The City of Falcon Heights has no community center, but does have park buildings to use when parks are rented.FunctionFiscal YearCity of Falcon HeightsOperating Indicators by FunctionLast 10 Fiscal Years170 Source: Various city departments, St Paul Water Utility, Metropolitan Council Environmental Services 138 Table 202013 2014 2015 2016 2017 2018 2019 2020 2021 2022Public 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 Streetlights210 210 210 210 210 210 210 210 210 210 Traffic signals9 9 9 9 9 9 9 9 9 9 Park and RecreationParks acreage18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 18.07 Parks3 3 3 3 3 3 3 3 3 3 Tennis courts2 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 hydrants146 146 146 146 146 146 146 146 146 146 Maximum daily capacity2,000 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. This number represents total system daily plant capacity authorized by (3) Falcon Heights is part of the Metropolitan Council Environmental Services metro area wide treatment facility.FunctionFiscal YearCity of Falcon HeightsCapital Asset Statistics by FunctionLast 10 Fiscal Years 171 BLANK PAGE 172 Item Partners in Energy Program, Xcel Energy Description With Resolution 23-04, Declaring a Climate Crisis and the Commitment of Falcon Heights to Take Action, the Environment Commission is looking toward preparing a Climate Action Plan and believe the Partners in Energy Program through Xcel Energy could assist with this process. The Partners in Energy Program is a program from Xcel Energy that supports communities by helping them develop energy action plans, identify the barriers to implementation, and work to implement those goals. They assist with forming teams within the community to play a role in developing the Energy Action Plan by establishing energy objectives and strategies to help achieve community goals. Budget Impact None. Attachment(s) - Information sheet from Partners in Energy - Presentation from Partners in Energy - Draft Application for Partners in Energy Action(s) Requested Staff and the Environment Commission request City Council allow staff to submit the necessary documents to apply for the Partners in Energy Program. Meeting Date May 10, 2023 Agenda Item Presentation D3 Attachment See below. Submitted By Hannah Lynch, Community Development Coordinator 173 AVERAGE SAVINGS PER COMMUNITY IN 2019 Electricity 5.2 Million kWH Greenhouse Gas Equivalent to removing 502 cars off the road TOTAL PARTICIPANTS IN IN 2019 Energy Efficiency Programs 43,500 Renewable Energy Programs 24,500 56 COMMUNITIES SERVED SINCE 2014 Partners in Energy provides the tools and resources to support communities in achieving their energy goals. The program offerings include support to develop an energy action plan or electric vehicle plan, tools to help implement your plan and deliver results, and resources designed to help the communities we serve stay informed and achieve their energy goals. Planning support Partners In EnergyHow can Partners in Energy energize your community? DEVELOP AN ENERGY ACTION PLAN ADVANCESyour economic development path FOSTERSa collaborative, energy-savvy communityPROVIDES a leadership platform ENGAGES and educates community members LAUNCHES your energy and sustainability goals FACILITATE WORKSHOPS Access to the ONLINE PORTAL Access to MARKETING TOOLKITS Begin a new STRATEGY SCENARIO PLANNING OUTREACH SUPPORT Access to OFFICE HOURS DOCUMENTING ENERGY PLAN JOINTMARKETING ENERGY EXPERTISE EDUCATION AND OUTREACH TRACKING AND REPORTINGPROJECT MANAGEMENT ESTABLISHING BASELIINES RECRUITING STAKEHOLDERS GOAL SETTING Partners In EnergyHow can Partners in Energy energize your community? DEVELOP AN ENERGY ACTION PLAN ADVANCESyour economic development path FOSTERSa collaborative, energy-savvy communityPROVIDESa leadershipplatform ENGAGESand educates community members LAUNCHES your energy and sustainability goals FACILITATE WORKSHOPS Access to the ONLINE PORTAL Access to MARKETING TOOLKITS Begin a new STRATEGY SCENARIO PLANNING OUTREACH SUPPORT Access to OFFICE HOURS DOCUMENTING ENERGY PLAN JOINT MARKETING ENERGY EXPERTISE EDUCATION AND OUTREACH TRACKING AND REPORTING PROJECT MANAGEMENT ESTABLISHING BASELIINES RECRUITING STAKEHOLDERS GOAL SETTING Implementation support INFORMATION SHEET MINNESOTAPARTNERS IN ENERGY HELPING COMMUNITIES BUILD AN ENERGY FUTURE 174 xcelenergy.com | © 2020 Xcel Energy Inc. | Xcel Energy is a registered trademark of Xcel Energy Inc. | 20-04-302 Additional resources to boost results In addition to our team, tools and resources, we provide opportunities for you to interact and network with other communities participating in Partners in Energy. Keeping graduates energized We invite communities that have participated to stay engaged. Since you’ve developed a blueprint for your energy future, we have resources to keep your momentum going and keep you up to date with what’s new at Xcel Energy. COMMUNITY SUMMITS Attend in-person events with other communities to share best practices. We provide educational opportunities that feature experts on current energy topics and opportunities to learn from each other. OFFICE HOURS Attend monthly webinars that cover trending topics, plus access to and examples of initiatives and activities happening in Partners in Energy communities. Ask questions and share experiences. ONLINE PORTAL Get access to documents related to your community’s work, and examples of other community goals, strategies, and collateral. It connects you to a variety of community program materials, a collateral library, toolkits for outreach and education, as well as collaboration forums. Access to MARKETING TOOLKITS + + + Begin a new STRATEGY Access to OFFICE HOURS Access to the ONLINE PORTAL Access to MARKETING TOOLKITS Begin a new STRATEGY Partners In EnergyHow can Partners in Energy energize your community?DEVELOP AN ENERGY ACTION PLANADVANCESyour economic development path FOSTERSa collaborative, energy-savvy communityPROVIDESa leadershipplatform ENGAGESand educates community membersLAUNCHESyour energy and sustainability goalsFACILITATE WORKSHOPSAccess to theONLINE PORTAL Access toMARKETING TOOLKITS Begin a newSTRATEGYSCENARIO PLANNINGOUTREACH SUPPORTAccess to OFFICE HOURS DOCUMENTING ENERGY PLANJOINTMARKETINGENERGY EXPERTISE EDUCATION AND OUTREACH TRACKING AND REPORTINGPROJECT MANAGEMENTESTABLISHING BASELIINESRECRUITING STAKEHOLDERSGOAL SETTINGPartners In EnergyHow can Partners in Energy energize your community?DEVELOP AN ENERGY ACTION PLANADVANCESyour economic development path FOSTERSa collaborative, energy-savvy communityPROVIDESa leadershipplatform ENGAGESand educates community membersLAUNCHESyour energy and sustainability goalsFACILITATE WORKSHOPSAccess to theONLINE PORTAL Access toMARKETING TOOLKITS Begin a newSTRATEGYSCENARIO PLANNINGOUTREACH SUPPORTAccess to OFFICE HOURS DOCUMENTING ENERGY PLANJOINTMARKETINGENERGY EXPERTISE EDUCATION AND OUTREACH TRACKING AND REPORTINGPROJECT MANAGEMENTESTABLISHING BASELIINESRECRUITING STAKEHOLDERSGOAL SETTING Access to MARKETING TOOLKITS + + + Begin a new STRATEGY Access to OFFICE HOURS Access to the ONLINE PORTAL Access to MARKETING TOOLKITS Begin a new STRATEGY Join us Apply in January or July. Applications available at xcelenergy.com/PartnersInEnergy. Questions: PartnersinEnergy@xcelenergy.com or 800.369.4362. 175 PARTNERS IN ENERGY INTRODUCTION FALCON HEIGHTS, MN MAY 10, 2023 1 176 2 177 3 178 4 179 WHAT IS PARTNERS IN ENERGY? Partners in Energy is a two-year collaboration with Xcel Energy to develop and implement your individual community energy plan goals. Opportunity to engage stakeholders, create goals and strategies, and develop a work plan to be successful. Developing the Plan(4-6 months) Implementation with Partners in Energy(18-20 months) Continued Implementation Traditional Planning Process 180 6 Develop a better understanding of the energy needs of communities we serve Better align the services and programs we offer with customer needs to save energy and advance clean energy goals Strengthen relationships with the community and support the Xcel Energy philosophy of community engagement White wind turbine in grass field, May 20, 2017. (Pexels/Pixabay) 181 COMMUNITIES BY STATUS, APRIL 2023 182 8 Energy Action Planning •Efficiency, renewables, and EVs •Action planning •Leverage existing plans/goals Electric Vehicle Planning •Infrastructure, fleet, policy, outreach •Connection to utility programs Implementation Support •Project management •Marketing and outreach support •Developing new ideas Data Analysis •Measure progress to goals •Quantitative and qualitative impact of implementation 183 9 Anchoring Kickoff Meeting Data Intake and Baselining Team Recruitment Workshop Series Visioning Goal Setting FocusAreas Strategies ActionPlanning Action Plan Development DraftingPlan Incorporating Team Feedback Plan Finalization Implementation Launch Plan Approval Kickoff Meeting Opportunity to Integrate Existing Goals or Strategies 184 10 Ultimate planning phase outcome Plan for pursing the Community’s Energy Vision Guides implementation 185 12 Downtown Business BlitzNorthfield, MN Residential Efficiency CampaignFridley, MN Rental Property Owner EngagementFaribault, MN Energy Resource WebsiteInver Grove Heights, MN 186 13 Applications due January 15, April 15, July 15 and October 15 of each calendar year Applications are reviewed and community participates in kickoff meeting to determine objectives and planning process approach Xcel Energy team available to meet with city staff and present to Commissions or City Council ahead of application Contact Tami Gunderzik, Program Manager PartnersinEnergy@xcelenergy.com 187 Page 1 of 6 19-03-514 Colorado | Minnesota Application Partners in Energy More communities are realizing energy planning plays a critical role in helping them reach their energy goals. The benefits of wise energy choices are diverse. Through collaborative work with citizens, businesses, and governments, a community can shave dollars off utility bills, promote renewable energy, drive resource conservation, and contribute to greenhouse gas reduction goals. Since 2014, Partners in Energy has been helping communities gather these stakeholders to develop and implement energy action plans that address the challenges of local energy priorities with actionable strategies and resources. In addition to offering support for community-based energy action plan development and implementation, Partners in Energy is evolving to include a broader spectrum of community engagement that includes supporting returning Partners in Energy communities as they define new goals and strategies, working with communities that have existing energy goals and strategies but need help implementing them, supporting smaller communities or geographic areas (i.e., districts or neighborhoods) that may benefit from a more tailored approach, or even convening collaborations that don’t fit the traditional definition of a community but are focused on increased efficiency and renewable energy opportunities in unusual settings. Partners in Energy continues to offer tools, data, and expertise to help communities analyze their energy trends, establish energy goals, identify energy strategies, and implement their energy priorities. Through the Partners in Energy process, Xcel Energy supports communities in convening stakeholders to develop custom roadmaps to achieve their energy goals. Xcel Energy also helps communities implement their energy strategies. The planning and implementation process is tailored to the unique needs and priorities of each community. Accepted communities will participate in a scoping meeting to determine the pathway that best aligns with your community’s interests and capabilities. Partners in Energy is offered at no cost to participating communities in Colorado and Minnesota, with the expectation that both Xcel Energy and the community will invest in the process. This investment includes staff and financial resources from Xcel Energy during both the planning and implementation phases. It also includes community staff time during both the planning and implementation phases and your community’s plan may require financial support to implement strategies. 188 Page 2 of 6 19-03-514 Partners in Energy Application Partners in Energy 800.369.4362 Colorado | Minnesota Xcel Energy wants to work with motivated, engaged, and action-oriented communities and champions who are willing to commit to the process and the outcomes. This application will help us better determine good community alignment for our limited, but valuable, resources. While completing the application does not guarantee acceptance as a participant, your application will be evaluated against other applicants using criteria that include, but may not be limited to, community size and structure, planning experience, stakeholder capacity, available resources (staff and otherwise), and willingness to share results publicly. If you have questions about the application or the opportunity, please visit xcelenergy.com/PartnersInEnergy, email us at PartnersInEnergy@xcelenergy.com or call 800.369.4362. Submit completed application via email to: PartnersInEnergy@xcelenergy.com. Return this application by 5:00 p.m. CST on January 15, 2020. Qualifying customers Communities in Colorado and Minnesota with retail energy services from Xcel Energy qualify to participate in Partners in Energy. Community customer information Company name Community jurisdiction (e.g., city, association, partnerships, county): _____________________________________________________________________ Contact name _____________________________________________________________________________________________________________ Title Phone Address _________________________________________________________________________________________________________________ City Email Community profile Approximate business count Approximate household count Approximate population Approximate area in square miles Would you be able to provide a GIS a shapefile of your community that would define the geographic boundaries of the area? Yes No Current community energy-related utility providers (e.g. gas service providers) 1)Name of company Fuel type Area served 2) Name of company Fuel type Area served 3)Name of company Fuel type Area served 189 Page 3 of 6 19-03-514 Partners in Energy Application Partners in Energy 800.369.4362 Colorado | Minnesota Interest in Partners in Energy Describe your interest in Partners in Energy and how you think Partners in Energy could provide value. What is/are the most pressing energy-related issue(s) facing your community today? If you’re accepted as a participant in Partners in Energy, what additional approvals within your community would you need to obtain prior to starting? (examples: City Council, City Manager, Sustainability Commission, etc.) 190 Page 4 of 6 19-03-514 Partners in Energy Application Partners in Energy 800.369.4362 Colorado | Minnesota Planning and energy management experience Does your community currently have any sustainability or energy plans, policies, codes, regulations or initiatives? If yes, please identify them and indicate the date(s) they were last revised. (Describe your interest in Partners in Energy and how you think Partners in Energy could provide value.) Describe any energy programs or energy management activities your community has participated in over the past two years. Please include goals/targets and results if applicable. This can include initiatives to track energy use in any part of your community (e.g., public buildings), a neighborhood energy challenge, etc. If you have participated in Partners in Energy before, what strategies would you like to pursue with additional support from Partners in Energy, and why? Additionally, please explain if your community is already engaged with Xcel Energy in other ways. Community resources and commitment Please indicate who in your community would be the point person (or people) to manage your Partners in Energy participation and describe his/her/their applicable experience and background relative to planning, energy and /or sustainability. Describe his/her/their availability to support this initiative through both strategy development and implementation (include multiple people as applicable for each stage). Describe whether they are paid staff or volunteers and the extent to which managing and/or implementing energy or sustainability initiatives is a component of their job duties. 191 Page 5 of 6 19-03-514 Partners in Energy Application Partners in Energy 800.369.4362 Colorado | Minnesota While Partners in Energy is offered to communities at no cost, communities are responsible for expenses associated with implementation. Does your community have staff, volunteer, budget or other funding resources to implement the energy initiatives that will be identified in the Partners in Energy process? Yes No If yes, please describe. Community involvement One of the keys of Partners in Energy is engaging representatives from your community to participate in developing and implementing strategies to meet your community goals. These representatives should be varied and willing to commit their time to the process. They may include city or town staff members, business association representatives, large local business representatives, local nonprofit staff members, school district staff members, county government officials, etc. Please describe who from the community you would anticipate engaging in developing your energy strategies. (Please list six to eight possible representatives.) Partners in Energy is designed to promote communities learning from each other and sharing best practices. Are you willing to share your community work through Partners in Energy with community members and other participating communities? Will you allow your final work products to be shared publicly? Yes No If no, please explain. 192 xcelenergy.com | © 2019 Xcel Energy Inc. | Xcel Energy is a registered trademark of Xcel Energy Inc. | 19-03-514 Partners in Energy Application Partners in Energy 800.369.4362 Colorado | Minnesota Is there anything else you would like us to consider when evaluating your application? Customer declaration I certify that the information in this application is accurate and complete and I am authorized to make this application on behalf of my community. Your signature confirms your community is interested in participating in Partners in Energy and is willing to enter into a Memorandum of Understanding with Xcel Energy that will define responsibilities and expectations of both parties. Community name Contact name Title By checking the box and indicating my name below, I am signing this application in declaration of its accuracy. Name Title 193 BLANK PAGE 194 CITY OF FALCON HEIGHTS Regular Meeting of the City Council City Hall 2077 West Larpenteur Avenue MINUTES April 26, 2023 A. CALL TO ORDER: 7:00 PM B. ROLL CALL: GUSTAFSON_X__ LEEHY_X__ MEYER ___ WASSENBERG _X__ WEHYEE__X_ STAFF PRESENT: LINEHAN_X__ SMITH_X_ C. APPROVAL OF AGENDA Councilmember Wehyee motions to approve the agenda; approved 4-0 D. PRESENTATION E. APPROVAL OF MINUTES: 1. April 5, 2023 Workshop Meeting Minutes 2. April 12, 2023 Regular Meeting Minutes Councilmember Leehy motions to approve the minutes; approved 4-0 F. PUBLIC HEARINGS: 1. Code Amendments to Chapter 22 to allow for “No Mow May” Mayor Gustafson asks City Administrator Linehan to provide an overview of the amendment to the City Code. City Administrator Linehan thanks the Mayor and Council and states that last year, the City participated in the initiative through a resolution. Following this, the Environment Commission expressed interest in making this a permanent change in the City Code. During the City Council workshop on Aril 5, 2023, City Staff proposed an amendment to code. City Administrator Linehan thanks Councilmember Wassenberg for working with Community Development Coordinator Hannah Lynch on writing and developing the ordinance. He notes, in the final draft, it’s specified as turf grass and residents are encouraged to grow native grasses and other grasses not impacted. He also clarifies it’s only for residential properties, excluding commercial, government and non-profit properties. Finally, Administrator Linehan stresses this initiative is voluntarily for residents to participate in and it officially ends on June 1st. Staff will exercise discretion to start 195 enforcement as June 1st is on a Thursday. We want to provide residents the flexibility of mowing over the weekend. On June 5th, City Staff will begin enforcement. Mayor Gustafson opens the Public Hearing. After making a second call for the public to speak, Mayor Gustafson then asks City Administrator Linehan if there were any written comments received. City Administrator Linehan answers no, only one Facebook comment on the original post. Someone expressed there is research out there that doesn’t show the benefit of participating in No Mow May. Councilmember Wehyee asks City Administrator Linehan to repeat the Facebook Comment. Linehan repeats that there is some research out there that shows that not mowing doesn’t benefit pollinators. However, Facebook comments are not official as we cannot verify if they are Falcon Heights residents. Mayor Gustafson makes a final motion for the public to speak. Councilmember Wassenberg motions to close the Public Hearing. Mayor Gustafson closes the public hearing by consent and opens the floor to discussion by City Council members. Councilmember Leehy appreciates Councilmember Wassenberg and Community Development Coordinator Hannah for their work on this; it answers and clarifies things that were discussed in the workshop. Councilmember Wehyee echoes those comments and adds that codifying No Mow May is the right thing to do as the community showed a lot of enthusiasm last year and he was excited to not have to mow. Councilmember Wassenberg states it will be good long-term, so it doesn’t have to be addressed each year. And, he feels the City will see a lot of positive benefits for their grass and not just for the pollinators. Councilmember Leehy and Mayor Gustafson state that residents still need to take care of noxious weeds. Councilmember Wassenberg wonders if this qualifies as an additional action towards our GreenStep City and if we can get credit for that as well. Councilmember Wehyee motions to approve the code amendment; approved 4-0 G. CONSENT AGENDA: 1. General Disbursements through 4/18/23: $207,738.44 196 Payroll through 4/15/23: $42,262.17 Wire Payments through 4/15/23: $37,127.60 2. City License(s) 3. Amber Union TBRA Modification Amendment – Exhibit 5 4. Accept Donation from AARP Tax-Aide 5. Appointment of Jacob Brooks to the Planning Commission Councilmember Wassenberg motions to approve the consent agenda; approved 4-0 Gustafson states Jacob Brooks joined the Planning Commission at their meeting on April 25th and says he will be a great addition to the commission. He then asks Linehan for clarification on item 3, Amber Union TBRA Modification Amendment – Exhibit 5. Linehan explains that at the last meeting Council approved Exhibit 6 and at this meeting, we’re looking to approve Exhibit 5. These exhibits are paperwork needed for Amber Union to close on the property. The exhibits require updated signatures as they currently list the previous City Administrator. In order to update the signatures, the exhibits needed amendment. Linehan also clarifies that the AARP donation will be dedicated to the City Hall Council Chamber. Linehan also wants to note that the payroll amount was double compared to normal payroll, because a part of it is a retirement cash out of vacation and sick time for former Public Works Director Tim Pittman. Wassenberg states that about two thirds of expenditures were for policing and sewer; standard expenditures. Linehan echoes that these expenditures are more normal compared to previous months. The top monthly expense is police contract and the second largest is Met Council sewer charges. Wassenberg asks Linehan if, apart from the signature and name updates to Amber Union TBRA Modification Amendment – Exhibit 5, if there were any other notable changes. Linehan says that there were no other notable changes; only names. H: POLICY ITEMS: 1. Ruggles Pathway Mayor Gustafson asks Administrator Linehan to explain the alternative bids received and the process regarding the pathway and its impact on the next policy item. Linehan thanks Mayor Gustafson and the Council and points out that the two policy items coincide. Council is familiar with the policy item. A Public Hearing was hosted on March 22, 2023, considering vacation of the Right of Way. There as a lot of discussion and resident 197 feedback and the policy item was tabled to explore further options. As part of the 2023 PMP bid, contractors were asked for pricing on various options. - Option 1: Install 5 ft. concrete sidewalk through the path. Traditional sidewalk. - Option 2: Install 5 ft. Permeable Paver that allows water to transfer through. - Option 3: Contractor to suggest alternative paving solution. City Administrator Linehan says that as a result of the Public Hearing, City Council asked Linehan to determine other legal options. According to the City Attorney, because the pathway is an easement and the underlayment are owned by the four adjacent property owners, the only way to change designation of the pathway is if the City took control of it, by making an offer to the property owners to purchase it, or to condemn it, which according to the City Attorney, is not a feasible option. The City obtained a second legal opinion. To summarize, it is the City’s duty to maintain the pathway and if do not pave it, we face the risk of ADA violations. The legal memo provides an option to pass a resolution qualifying discretional immunity. City Administrator Linehan advises the City Council to look at the full legal exposure detailed in the memo, as it would not remove the City’s liability. City Staff is recommending to select one out of the four options presented tonight. - Option 1 would be to accept the proposal for the 2023 PMP low bidder, Northwest Asphalt, Inc. for Alternate Bid #2 – a 5’ concrete walk for a total cost of $36,730.96. - Option 2 is to accept the proposal from the same contractor for Alternate Bid #3 – a 5’ permeable paver walk for a total cost of $61,585.65. - Option 3 would be to reject the alternate bids and rebid the project separately to allow for more customizable options. City Administrator Linehan states there are other contractors available. Roseville has a contractor they recommend. This could allow for more customization. This would be a costlier option. - Option 4 is to reject all of the bids and direct staff to further explore options for passing a resolution qualifying discretional immunity. Councilmember Wassenberg thanks City Administrator Linehan for the thorough research on this policy item. He states he is averse to legal exposure and therefore is not comfortable selecting option 4. He leans more towards option 1 or 2 and would like to know what the benefits of the permeable pavers would be, as this option is costlier. Councilmember Leehy asks Councilmember Wassenberg to repeat his comment regarding the permeable pavers and the impact on the adjacent residents. Councilmember Wassenberg repeats that the placing of the concrete sidewalk might cause drainage issues, which could potentially lead to flooding of the adjacent properties. He adds that avoiding this with permeable pavers is more beneficial for the adjacent homeowners. Councilmember Leehy agrees and says she also leans towards option 1 and option 2. However, she adds, permeable pavers might require more upkeep and could be more challenging with snow removal. She also wonders what the longevity is of permeable pavers versus a concrete sidewalk and thus leans towards option 1. 198 Interim City Engineer Smith explains what maintenance would be required for permeable pavers. Roughly $150 - $200 per year would be needed for upkeep. Additionally, every 5 years a more thorough cleaning would be needed, which would cost $3,000 to $4,000. This type of upkeep would not be required for concrete sidewalk. City Administrator Linehan adds that tree roots could cause issues to concrete sidewalks, but apart from that, it would last 10 – 15 years. Councilmember Wassenberg asks about the longevity of either option. Interim City Engineer Smith answers, if one concrete panel cracks, the whole panel needs to be replaced. Whereas, pavers allow for smaller sections to be replaced if needed. However, pavers won’t last as long as concrete. Councilmember Wassenberg then asks about snow removal and if permeable pavers cause more challenges. City Administrator Linehan says that he could foresee the regular sidewalk machine used for snow removal could affect the pavers more than concrete sidewalk, but he is not entirely sure. Mayor Gustafson asks about implications of closing the path during winter/snow months and if this is allowed to be done. Currently, the path is maintained by the community during the winter months, but if the City maintained the path and the city is liable, would it be in our right to close it down in the winter. City Administrator Linehan says that putting up signs to close the path during a certain time is possible, and if someone decides to ignore the signs, they would do so at their own risk. Councilmember Wehyee wants clarification as to whether the City would still be liable then. City Administrator Linehan answers that it would help mitigate liability risk but, he adds if the City takes over maintenance, there is liability. We avoid salt for snow removal on sidewalks, which should help the condition of the pavers. Interim City Engineer Smith adds that there is a similar permeable paver surface at the City Hall in Roseville that is maintained in winter with different equipment as it is a parking lot. Councilmember Leehy finds the initial cost and maintenance of the pavers expensive. Mayor Gustafson adds that we would need to budget for the maintenance. Councilmember Wehyee thinks the permeable pavers best align with what the community wants, as well as being ADA compliant; the cost would be worth it. Councilmember Wassenberg echoes these comments. He then asks City Administrator Linehan for more details about the kind of pavers. 199 City Administrator Linehan answers that as part of the bid, we select the design of the pavers. He then adds, that a simple design is cheaper and easier to maintain than a more intricate design. There would be the opportunity to rebid the project with a contractor who specializes in this area. The design chosen looks like a brick house. Interim City Engineer Smith explains they would be 4” x 8” bricks and the material in between would look like grout, but the material is soft and sandy. Councilmember Leehy asks if weeds would be an issue and if that would need to be treated. Interim City Engineer Smith answers that weeds have not been an issue in previous applications. City Councilmembers question if the four adjacent property owners pay taxes for the pathway property. City Administrator Linehan clarifies, that staff checked plot surveys and the property owners are currently not paying taxes for the pathway property. It’s an untaxed parcel currently. If it would have been vacated, then the owners would have been responsible for the taxes. Councilmember Wassenberg has one additional question regarding the expectation for the lifetime of permeable pavement. City Administrator Linehan answers that it would be similar as to what the City has been doing with replacing concrete sidewalks. The City currently replaces stretches of sidewalks as needed. For the permeable pavers, he states the City would have to buy spare pavers, store them with Public Works and replace pavers as needed for maintenance. Interim City Engineer Smith adds that the cost of purchasing extra pavers is included in the quote. Councilmember Wassenberg states that this helps him understand that the replacement time of the pavers in total would possibly be less frequent. City Administrator Linehan asks Interim City Engineer Smith to provide more detail regarding storm drainage included in the design. Interim City Engineer Smith explains that for the concrete sidewalk option, a storm pickup catch basin was included in the design, in the middle of the length of the pathway, with the two sides draining towards the basin, allowing for the water to drain towards the middle rather than towards the adjacent properties. It will then run off to a catch basin in the street. Mayor Gustafson then asks if the drainage component is included with the permeable pavers as well. Interim City Engineer Smith answers yes, it is. She explains that under the pavers there will be clear rock with gaps in between and those gaps are great for holding water. It was also 200 proposed to have a perforated pipe following the entire length of the pathway, set at a small slope to allow for the water to run off to the catch basin in the street. Mayor Gustafson states that the path will be a nice amenity for the community but wonders if the permeable pavers will be worth the extra upfront cost. Councilmember Wassenberg comments that the upfront cost made him question the lifetime of the pavers. However, compared to replacing significant pieces of sidewalk, the upkeep of the pavers might be less. Councilmember Leehy adds that City Staff will have to perform special maintenance every 5 years. Councilmember Wassenberg agrees, but says this might be counterbalanced by the fact that you would need to replace significant sections of concrete sidewalk more frequently than you would need to make significant improvement to the pavers. City Administrator Linehan feels confident there is room in the budget for either option as the bids for the 2023 Pavement Management Project came in substantially lower than expected. Mayor Gustafson asks City Council if they, after this discussion, can provide City Staff with direction on how to proceed with Ruggles Pathway. He then explains that as part of Policy item H2, City Council will have to choose between option 1 – the concrete sidewalk or option 2 – the permeable pavers. Councilmember Wehyee comments that after the discussion, he stands firm with option 2 as this option serves the purpose of making it ADA compliant, while also aligning with the community’s vision of the path. Councilmember Leehy asks Councilmember Wehyee if he is in favor of the Mayor’s idea of blocking the path in the wintertime. Councilmember Wassenberg stands with Councilmember Wehyee on option 2, but he has to give blocking it off in the winter more thought. He expresses his concern for accessibility year-round, but this could be considered later down the road. Mayor Gustafson adds that the city will have to determine how the brick pathway will have to be maintained. City Administrator Linehan mentions he can check with the City attorney on what the City’s liability would be if the path was closed in the winter. Councilmember Leehy adds it would be helpful to mention this part, even though it would not be part of the decision tonight. ROLL CALL TO APPROVE option 2: GUSTAFSON_X___ LEEHY_X__ MEYER ___ WASSENBERG __X__ WEHYEE__X__ 201 Approved; 4-0 2. 2023 Pavement Management Project (PMP) – Award Contract Mayor Gustafson asks Interim City Engineer Smith to provide more detail. Interim City Engineer Smith says that the City opened bids on April 20, 2023 and received 5 qualifying bids; the bid summary and full abstract is included in the packet. The lowest qualified bidder was Northwest Asphalt, Inc. Additionally, bidders were asked to provide bids for the following add alternates: - Alternate 1: Garden Avenue Roadway Striping - Alternate 2: Concrete Ruggles Pathway - Alternate 3: Permeable Paver Ruggles Pathway - Alternate 4: Contractor-Determined Surface Ruggles Pathway City Staff is recommending to award the base bid, alternate 1, and after discussion of the City Council, alternate 3 as well. Alternate 1 will restore the striping on Garden Avenue, which designates the centerline (offset due to the parking on one side), and will visually narrow the driving lane. Interim City Engineer Smith clarifies that Alternate 4 was a Contractor-Determined Surface. Northwest Asphalt, Inc., chose to use concrete, thereby making Alternate 4 the same as Alternate 2. As far as budget impacts, the low bid came in significantly lower than the engineer’s estimate. The project will be funded through assessments levied according to the City’s assessment policy and those are anticipated to be lower than proposed. Additionally, use of municipality state aid and street infrastructure funds will be used to pay the City’s portion of the project. Expenditure of utility funds will be used to pay for sanitary, sewer and stormwater improvements. Councilmember Wassenberg asks Interim City Engineer Smith about the striping of Garden Avenue as residents have expressed concerns. Question 1: Will the parking area be divided by a white stripe? Question 2: Would the same white striping extend from Hamline to Holton or from Hamline to the access road at Snelling? Interim City Engineer Smith answers that it will be a solid white line at the parking area and the centerline will be double solid yellow lines to not allow for passing. City Administrator Linehan answers question 2 and says that would depend on where parking is available. He adds, the center striping will go down the whole street. He stresses Garden Ave is currently striped but the striping is worn down due to wear and tear. He also mentions that the striping of Garden Ave is an alternate bid and can be removed if City Council chooses so. Lastly, he notes City Staff strongly recommends striping Garden Avenue because it is currently not an obvious lane configuration, and left unstriped, could pose danger to pedestrians. Data shows that striping is a safety measure and would not make people drive faster, but rather contains them in their lane. Mayor Gustafson comments it was beneficial to wait on deciding regarding Ruggles Pathway until the bids came in. 202 Councilmember Wehyee adds that he is pleased to hear that the residents’ assessments will be lower than anticipated, as this was a huge concern for the residents and some of the councilmembers. Interim City Engineer Smith adds that the only funding area that came in slightly higher than expected was the stormwater funding due to the bump outs on Garden Ave. These required reconfigurations of the stormwater at the intersection as some of the new catch basins have to be moved to the new curb line location. City Administrator Linehan explains the bump outs will create a shorter crossover for pedestrians and it also would not affect Public Works when they have to plow the streets. Storm water drainage will also be modernized. He also adds what the timeline of the construction would be. The plan is to start construction as soon as school is out and contractors are required to be done before the State Fair begins. Because there is not a lot of utility replacement needed, the project should wrap up fairly quickly as utility replacement is what often slows down construction. He feels confident in the timeline. Councilmember Leehy motions to award the contract for the 2023 Pavement Management Project to Northwest Asphalt, Inc. for the Base Bid, Alternate 1 and 3 Approved; 4-0 I. INFORMATION/ANNOUNCEMENTS: Councilmember Wassenberg has no announcements. Councilmember Leehy has no announcements. Councilmember Wehyee has no announcements. Mayor Gustafson mentions the Planning Commission had a great discussion at their last meeting on April 25, 2023 regarding the 2040 Comprehensive Plan on how things were moving along. And, part of that is undertaking a study of the Larpenteur corridor; work on collaborating more with the University of Minnesota. He notes there is 1 vacancy with the Planning Commission. The Mayor also states that the shooting incident that happened recently at Amber Union is currently under investigation. The Sherriff’s office also is working on scheduling a crime prevention meeting with the residents of Amber Union. Lastly, he would like to note that May 20, 2023 is the Spring Together Event at Curtiss Field from 4:00 PM to 6:00 PM. City Administrator Linehan announces that Wednesday May 3, 2023 a Special Council Meeting will be hosted at 6:30 PM with a hard stop at 7:30 PM, to review the findings of the Planning Commission regarding the Caribou proposal at Amber Union. The City Council Workshop will start at 7:30 PM and City consultant Bostrom will teleconference with councilmembers to have a discussion regarding the law enforcement contracts for 2024. During the workshop, City Administrator Linehan will also have a brief ARPA update. Then, regarding the Community Park purchase, there is an official closing date for May 4, 203 2023. Another thing he wants to mention is the Administrative and Communications Coordinator Elke van der Werff, is up and running. For communications, the City wants to work on more transparency regarding City Council meetings on social media and continue with more community engagement. Public Works updates include street sweeping west of Snelling has been completed and they were moving East of Snelling before the weather turned poor and the sweeper machine got damaged. Once repaired, Public Works will continue street sweeping. American Environmental was also in town doing sewer line cleaning. He also notes that he appreciates the patience of residents regarding the Ramsey County construction of Cleveland Ave. Interim City Engineer Smith has no announcements but would like to note that newsletters will be sent out once construction schedules are known to the affected properties. 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: 8:31 PM Councilmember Leehy motions to adjourn the meeting Approved; 4-0 204 BLANK PAGE 205 206 207 208 209 210 211 212 213 214 215 BLANK PAGE 216 Item ARPA Funding Plan Description Under the American Rescue Plan Act (ARPA), federal funds were allocated to municipalities and counties to help aid the recovery of the nation at the local level. The City of Falcon Heights received $302,056.11 in the fall of 2021 as the first allocation of funds, and received the same sum in 2022 for a total of $604,112.20. Funds are intended to cover eligible costs incurred in the time period that begins on March 3, 2021 and ends on December 31, 2024, as long as the obligations for funds are incurred by the end date are expended by December 31, 2026. In Resolution 22-08, the City Council authorized staff to report that the City would be taking the Standard Allowance Election of Revenue Loss as defined in the Compliance and Reporting Guidance – State and Local Fiscal Recovery Funds (SLFRF) version 3.0. This allows municipalities to estimate revenue losses up to $10 million rather than calculate their losses. This was intended to help communities under 50,000 population, such as Falcon Heights. Under the final rule, municipalities can spend their ARPA allocations on a broad range of uses under the “general government provisions” category. For example, a City could allocate their funds towards a specific project or towards personnel salaries. The only expenses that cannot be qualified are items such as pension obligations, debt payments, legal settlements or any action that undermines the Federal government’s response to COVID-19. Following the April 5th, 2023 City Council Workshop, staff worked on a plan that would spend the ARPA funds in the 2023 year in accordance with the SLFRF final rule requirements for revenue loss. In further discussions with the City auditor, BerganKDV, it was recommended that the ARPA funds be allocated to non-procurement expenditures to avoid the complications of reporting under federal procurement standards. As such, staff identified the City’s sanitary sewage treatment payments to the Metropolitan Council as qualifying expenditures. Meeting Date May 10, 2023 Agenda Item Consent G2 Attachment Resolution 23-35 Submitted By Jack Linehan, City Administrator 217 Allocating the ARPA funding towards a major sanitary sewer expense is in the spirit of the act and has been approved by our auditors. The total Metropolitan Council sewer charges for 2023 are $669,996. ARPA funds would cover the majority of this expense for 2023, creating needed relief in the fund. Proposed ARPA Funds Allocation Plan Project Name Project Allocation Project Description Sanitary Sewer – Metropolitan Council Sewer Charges $604,112.20 Proper sanitary sewage disposal and treatment is a critical component of combatting COVID-19. Due to major changes in activity in consumer behavior, the sanitary sewer fund experienced major revenue losses and compounding costs associated with the COVID-19 pandemic. Total $604,112.20 Budget Impact The City has $604,112.20 of unrecognized revenue from SLFRF. Staff did not budget the expenditure of these funds. Attachment(s) • Resolution 23-35 Action(s) Requested Staff recommends the City Council approve the spending authorization of the ARPA / SLFRF funds in accordance with the federal standards as outlined in the final rule. 218 CITY OF FALCON HEIGHTS COUNCIL RESOLUTION May 10, 2023 No. 23-35 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A RESOLUTION TO AUTHORIZE EXPENDITURE OF CORONAVIRUS LOCAL FISCAL RECOVERY FUNDS ESTABLISHED UNDER THE AMERICAN RESCUE PLAN ACT WHEREAS, since the first case of coronavirus disease 2019 (COVID-19) was discovered in the United States in January 2020, the disease has infected over 32 million and killed over 575,000 Americans (“Pandemic”). The disease has impacted every part of life: as social distancing became a necessity, businesses closed, schools transitioned to remote education, travel was sharply reduced, and millions of Americans lost their jobs; WHEREAS, as a result of the Pandemic, cities have been called on to respond to the needs of their communities through the prevention, treatment, and vaccination of COVID-19; and WHEREAS, city revenues, businesses and nonprofits in the city have faced economic impacts due to the Pandemic; and WHEREAS, Congress adopted the American Rescue Plan Act in March 2021 (“ARPA”) which included $65 billion in recovery funds for cities across the country; and WHEREAS, ARPA funds are intended to provide support to state, local, and tribal governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 in their communities, residents, and businesses; and WHEREAS, $604,112.20 has been allocated to the City of Falcon Heights of which the initial distribution of $302,056.11 has already been received pursuant to the ARPA (“Allocation”); and WHEREAS, the United States Department of Treasury has adopted guidance regarding the use of ARPA funds; and WHEREAS, the City, in response to the Pandemic, has had expenditures and anticipates future expenditures consistent with the Department of Treasury’s ARPA guidance; and WHEREAS, the State of Minnesota distributed ARPA funds to the City because its population is less than 50,000; and WHEREAS, In May of 2021, the US department of Treasury (“Treasury”) published the Interim Final Rule describing eligible and ineligible uses of funds as well as other program provisions, sought feedback from the public on these program rules, and began to distribute funds; and 219 WHEREAS, On January 6, 2022, Treasury issued the final rule. The final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in the comment process; and WHEREAS, the final rule offers a standard allowance for revenue loss of up to $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation; and WHEREAS, recipients that select the standard allowance may use that amount, in many cases their full award, for governmental services, with streamlined reporting requirements; and WHEREAS, the City Council has discussed the expenditures of the funds under the guidance of our attorneys and city auditors; and WHEREAS, the City Council has determined that the funds are best used in our Sanitary Sewer Fund 601, which experienced significant revenue losses during and after the pandemic. The funds are to be used on our Metropolitan Council sanitary sewage treatment costs. NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of Falcon Heights, Minnesota: 1. The City elects under the standard allowance available under the revenue loss provision of the American Rescue Plan Act in the amount of $604,112.20 to be used for the replacement of revenue lost. 2 The City intends to utilize the funds towards our Metropolitan Council sanitary sewer charges in 2023. 3 City staff, together with the Mayor and the City Attorney are hereby authorized to take any actions necessary to allocate the City’s share of ARPA funds from the State of Minnesota for expenses incurred because of the Pandemic. Adopted by the City Council of City of Falcon Heights, Minnesota this ninth day of March 2022. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Moved by: Approved by: ________________________ Randy Gustafson Mayor GUSTAFSON ____ In Favor Attested by: ________________________ LEEHY Jack Linehan MEYER ____ Against City Administrator WASSENBERG WEHYEE 220 BLANK PAGE 221 Item Approve State of Minnesota Pay Equity Report Correction for Noncompliance Notice #1 Description In 1984, the Minnesota Legislature passed the Local Government Pay Equity Act. This act created a three-year cycle whereby each unit of local government is required to provide a report on levels of pay for each class of employee, with the goal of achieving equity among male and female classes. The City of Falcon Heights was required to submit a report by January 31, 2023 based on salary levels as of December 31, 2022. The City submitted a report on January 26th, following council approval. The City received a letter in March from the State of Minnesota Pay Equity Coordinator noting one area of noncompliance in our report. Under the “exceptional service – longevity” test, 66% of employees that the City claimed as receiving higher pay for years of service credit were male. Under the act, no more than 50% can be male. As a small organization of under 10 employees, this is difficult to achieve with the vast majority of our long-term employees male, and many of our recent hires female. This is due partially to our pay structure, as we reward employees at 6-months, 18-months, 5-years, 10-years and every five years after with pay increases. At the time of the reporting period (December 31, 2022), many of our new hires had not yet received their 6-month step increase and as such were at the base hiring pay. To fix the issue, staff worked with the MMB office to review our updated report. The issue was resolved by removing the “exceptional service – longevity” claim for all employees, as it was not necessary to achieve compliance. The State’s Pay Equity Coordinator reviewed our draft submission and signed off that this updated report would be compliant. There is no penalty for one order of noncompliance. If it is uncorrected by June 7, 2023, the City receives fines as outlined under the act. Budget Impact N/A Attachment(s) • State of Minnesota Pay Equity Report Action(s) Requested Staff recommends that the Council approve the attached State of Minnesota Pay Equity Report. Meeting Date May 10, 2023 Agenda Item Consent G3 Attachment State of Minnesota Pay Equity Compliance Report Submitted By Jack Linehan, City Administrator 222 223 Compliance Report Jurisdiction: Falcon Heights Report Year: 2023 2077 West Larpenteur Avenue Case: 7 - 2022 Data - Noncompliance Updated Data (Shared (Jur and MMB)) Falcon Heights, -1 55113 Contact: Jack Linehan Phone: (651) 792-7611 E-Mail: jack.linehan@falconhei ghts.org The statistical analysis, salary range and exceptional service pay test results are shown below. Part I is general information from your pay equity report data. Parts II, III and IV give you the test results. For more detail on each test, refer to the Guide to Pay Equity Compliance and Computer Reports. I. GENERAL JOB CLASS INFORMATION Male Classes Female Classes Balanced Classes All Job Classes # Job Classes 4 4 0 8 # Employees 4 4 0 8 Avg. Max Monthly Pay per employee 8332.09 5512.43 6922.26 II. STATISTICAL ANALYSIS TEST A. Underpayment Ratio = 100 * Male Classes Female Classes a. # At or above Predicted Pay 3 3 b. # Below Predicted Pay 1 1 c. TOTAL 4 4 d. % Below Predicted Pay (b divided by c = d) 25.00 25.00 *(Result is % of male classes below predicted pay divided by % of female classes below predicted pay.) B. T-test Results Degrees of Freedom (DF) = 6 Value of T = -1.067 a. Avg. diff. in pay from predicted pay for male jobs = 0 b. Avg. diff. in pay from predicted pay for female jobs = 1427 III. SALARY RANGE TEST = 0.00 (Result is A divided by B) A. Avg. # of years to max salary for male jobs = 0.00 B. Avg. # of years to max salary for female jobs = 0.00 IV. EXCEPTIONAL SERVICE PAY TEST = 0.00 (Result is B divided by A) A. % of male classes receiving ESP = 0.00 * B. % of female classes receiving ESP = 0.00 *(If 20% or less, test result will be 0.00) Page 1 of 1 5/5/2023 10:31:44 AM 224 BLANK PAGE 225 Item Resignation of Andrea LaDouceur from the Community Engagement Commission Description Andrea LaDouceur was appointed in May 2020 and has been a great addition to the commission. Staff would like to thank Andrea for her commitment and time while wishing her well in future endeavors. Budget Impact N/A Attachment(s) • Resolution 23-36 Resignation of Andrea LaDouceur from CEC Action(s) Requested Staff recommend approval of attached resolution, accepting the resignation of Andrea LaDouceur from the Community Engagement Commission. Meeting Date May 10, 2023 Agenda Item Consent G5 Attachment Resolution 23-36 Submitted By Kelly Nelson, Assistant to the City Administrator 226 CITY OF FALCON HEIGHTS COUNCIL RESOLUTION May 10, 2023 No. 23-36 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - RESOLUTION ACCEPTING THE RESIGNATION OF ANDREA LADOUCEUR FROM THE FALCON HEIGHTS COMMUNITY ENGAGEMENT COMMISSION WHEREAS, the City appointed Andrea LaDouceur as a member of the City of Falcon Heights Community Engagement Commission in 2020 and WHEREAS, on April 9, 2023 Ms. LaDouceur communicated her intent to resign her duties from the Commission effective immediately; NOW THEREFORE BE IT RESOLVED by the City Council of the City of Falcon Heights, Minnesota: 1. That the resignation is accepted by the City Council of the City of Falcon Heights. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Moved by: Approved by: ________________________ Randall C. Gustafson Mayor GUSTAFSON ____ In Favor Attested by: ________________________ MEYER Jack Linehan LEEHY ____ Against City Administrator WEHYEE WASSENBERG 227 BLANK PAGE 228 Item Planning Commission Recommendation - Buhl Proposal – Caribou Coffee Description On March 28, 2023, the Planning Commission held a public hearing to review a proposed development next to the current Amber Union Apartment site. The proposal is for a Caribou Coffee, drive-through and walk-up only, coffee shop. The Falcon Heights City Council met at a special meeting on May 3, 2023 to consider this proposal. Hannah Lynch, Community Development Coordinator, presented an overview of the request and the applicant gave an updated presentation. The meeting had a hard stop at 7:30 PM. City Council discussed the proposal and asked questions about the requirements for drive-through only and discussed providing the applicant with direction should he want to continue to pursue this project. They also discussed revising some of the Findings of Fact due to the incorporation of findings relating to Comprehensive Plan goals that are not codified. Examples of this include the goal to eventually require applicants to complete a Health Impact Assessment and to not allow redevelopment until a study is done of the Larpenteur / Snelling corridor. These items are currently being discussed by the Planning Commission in a review of the Comprehensive Plan, but neither of those requirements have been put into place yet. Due to this and the need for more review by City Council, this was tabled to the May 10, 2023 regular City Council meeting. Currently the City Code does not allow drive-throughs for food establishments anywhere in the city. Should City Council choose to move forward with approval of this proposal, a number of amendments would need to be made to City Code. History of Amber Union & Current Status The Amber Union PUD encompasses the 3.78 acres of the parcel located on the southwest corner of the intersection of Snelling and Larpenteur Avenues. The additional two parcels, located just to the west, have served as 214 parking Meeting Date May 10, 2023 Agenda Item Policy H1 Attachment See below. Submitted By Hannah Lynch, Community Development Coordinator 229 stalls, some reserved for additional Amber Union parking, with approximately 167 of those utilized as overflow parking. Proposed Use & Changes to Code In February 2023, an application was received for an amendment to City Code to rezone the additional two parcels to PUD, amend the Amber Union PUD to allow a drive-through eating establishment, and amend the definition of “drive-through facility” and supplemental regulations in City Code. Historically, drive-through facilities for eating establishments have not been permitted in Falcon Heights. Currently the definition for “drive-through facility” in City Code Sec. 113-3 Definitions states, “the use of land, buildings or structures, or parts thereof, to provide or dispense products or services, either wholly or in part, through an attendant or window or automated machine, to persons remaining in motorized vehicles that are in a designated stacking lane. A drive-through facility may be permitted only as an accessory use in combination with a bank of financial institution. A drive-through facility does not include a vehicle washing facility, a vacuum cleaning station accessory to a vehicle washing facility, or an automobile/gasoline service station.” This definition specifically prohibits drive-through facilities except as an accessory to banking or financial institutions. To allow this project to move forward, this definition would need to be amended, while keeping with the intent of protecting the City from drive-through facilities being permitted by right in any specific zoning district. The suggested amendment to this definition proposes allowing drive-through facilities for eating establishments only as part of a PUD, which would go through an extensive review and public hearing process. In addition, the Amber Union PUD would be amended to allow drive-through eating establishments as a permitted use and updated with new drawings referenced. Finally, there are supplemental regulations for drive-through facilities within City Code. Specifically, the section regarding operation time was requested by the applicant to be amended to state it may be operated starting at 6:00 a.m. Public Hearing & Recommendation from the Planning Commission A number of residents appeared at the public hearing to speak on the proposal. There were many concerns centered around safety for pedestrians, emissions from idling vehicles, and consistency with the Comprehensive Plan. 230 According to City Code, no amendment to the chapter may be adopted unless it is found to be consistent with the city’s comprehensive plan. The term “drive-through” is not specifically stated anywhere in the 2040 Comprehensive Plan. Because of this, the general goals and policies of the plan should be assessed to determine if the addition of a drive-through facility for an eating establish is or is not consistent with the plan. After review by the Planning Commission, it was voted 4-0 to recommend denial of the project to City Council. A number of reasons were behind this, all of which are stated in the Findings of Fact and recommendation from the Planning Commission, available in the packet for the May 3, 2023 City Council meeting. Budget Impact None. Attachment(s) - Updated Findings of Fact and Decision from City Council Available in 5/3/2023 City Council Packet: - Signed Findings of Fact and Recommendation from the Falcon Heights Planning Commission - Draft Minutes from March 28, 2023 Planning Commission meeting - Copy of Staff Presentation from March 28, 2023 Planning Commission meeting - Copy of Buhl Presentation from March 28, 2023 Planning Commission meeting - RCA Packet from March 28, 2023 Planning Commission meeting, including: o Application for Amendment to Amber Union PUD o Narrative from Applicant o Proposed Plans from Applicant o Traffic Study from SRF o Stormwater Management Memorandum from Kimley-Horn o Posted Notice o Newspaper Notice o Newspaper Notice Affidavit o Notice to Property Owners o Notice to Residents o Comments from Fire Marshal, City Engineer o Section 113-35 from Falcon Heights City Code – Amendments to Zoning Code o An Ordinance Amending Chapter 113 of the Falcon Heights City Code Concerning Drive-Through Facilities and Amber Union PUD 231 Action(s) Requested The Planning Commission recommends City Council deny the application for the Caribou Coffee, including all proposed amendments to City Code that would be required, and adopt the Findings of Fact as proposed. Staff has drafted revised Findings of Fact for City Council to review as an alternative. 232 CITY OF FALCON HEIGHTS RAMSEY COUNTY, MINNESOTA IN RE: Application of Buhl Larpenteur West LLC, 5100 Eden Ave, Suite 317, Edina, MN 55436, FINDINGS OF FACT for an amendment to City Code and the AND Amber Union PUD to allow drive-through DECISION facilities for eating establishments. On May 3March 28, 2023, the Falcon Heights Planning CommissionCity Council met at its regularly scheduledheld a special meeting to consider the application of Buhl Larpenteur West LLC, 5100 Eden Ave, Suite 317, Edina, MN 55436 for an amendment to City Code and the Amber Union PUD to allow drive-through facilities for eating establishments, and extend the Amber Union PUD to cover two additional parcels. This meeting was tabled to be continued at the May 10, 2023 regularly scheduled meeting. The Planning Commission previously conducted a public hearing at their March 28, 2023 meeting on the proposed amendment preceded by published and mailed notice. The applicant was present, and the Planning Commission heard testimony from all interested persons wishing to speak and now makes the following: FINDINGS OF FACT: 1. The subject property is three adjacent parcels, Ramsey County Tax Parcel IDs 212923110030, 212923110028, and 212923110029, located at the southwest corner of Larpenteur Avenue and Snelling Avenue in Falcon Heights, MN. 233 2. Tax Parcel ID 212923110030, 1667 Snelling Avenue, Falcon Heights, MN 55108, is currently zoned Planned Unit Development (PUD) and is otherwise known as the Amber Union PUD. 3. Tax Parcel IDs 212923110028, 1644 Larpenteur Avenue W, Falcon Heights, MN 55113, and 212923110029, 0 Larpenteur Avenue W, Falcon Heights, MN 55113, are currently zoned R5M, High Density Residential Mixed Use. 4. The subject properties are legally described as: 212923110030: The North Half of the Northeast Quarter of the Northeast Quarter of the Northeast Quarter, in section 21, township 29, range 23, Ramsey County, Minnesota, except that part taken for Snelling and Larpenteur Avenues. 212923110028: The West 150 feet of the East 160 feet of the North 283 feet of the Northwest quarter of the Northeast quarter of the Northeast quarter of Section 21, Township 29, Range 23, West of the Fourth Principal Meridian. 212923110029: The East 250 feet of the North 500 feet except the West 150 feet of the East 160 feet of the North 283 feet of the Northwest quarter of the Northeast quarter of the Northeast quarter of Section 21, Township 29, Range 23. 5. The current Amber Union PUD is to provide for the mixed uses of multi-family apartments and a retail space. Permitted uses and zoning regulations are as follows: The R5-M mixed use high density residential district regulations shall apply to the property subject to the following modifications: (1) Permitted uses: One principal structure consisting of 111,640 square feet and 89 apartment units and one principal structure consisting of 59,195 square feet, 39 apartment units, and one retail space. 234 (2) No conditional uses. (3) No interim uses. (4) Setbacks as depicted in the site plan dated September 23, 2019 prepared by Kimley Horn and Mohagen Hansen. 6. On March 6, 2023, an application was received from Pete Deanovic, Buhl Larpenteur West LLC, 5100 Eden Avenue Suite 317, Edina, MN 55436 for a rezoning and plan review of a proposed coffee shop with drive-through located on Tax Parcel ID 212923110029. This would require a text amendment to City Code and extending the boundary of the Amber Union PUD to cover two additional parcels, 212923110029 and 212923110028. 7. The proposed PUD amendment is not in compliance with the City Code. 8. In City Code, drive-through facilities are “defined as the use of land, buildings or structures, or parts thereof, to provide or dispense products or services, either wholly or in part, through an attendant or window or automated machine, to persons remaining in motorized vehicles that are in a designated stacking lane. A drive-through facility may be permitted only as an accessory use in combination with a bank of financial institution. A drive-through facility does not include a vehicle washing facility, a vacuum cleaning station accessory to a vehicle washing facility, or an automobile/gasoline service station.” 9. As drive-through facilities for eating establishments are not permitted anywhere in the City of Falcon Heights, it was determined to accommodate this change, the definition of “drive-through facility,” the uses permitted in the Amber Union PUD, the boundaries of the Amber Union PUD, and the supplemental guidelines for “drive-through facilities” would need to be amended within City Code. 235 10. When an amendment to a PUD is requested after the PUD has been issued its Certificate of Occupancy, including but not limited to changes in land use, increases in development density or intensity or changes in the provisions for common open spaces shall require a PUD amendment. The amendment process for planned unit developments is the same as that for all other amendments of the Zoning chapter in City Code. 11. The City of Falcon Heights Planning Commission met at its regularly scheduled meeting on March 28, 2023 to conduct a public hearing and issue a recommendation on the requested amendment and rezoning request. The Planning Commission voted 4-0 to recommend denial of the amendment and rezoning request. 12. An amendment to a planned unit development or any other amendment of the Zoning chapter of City Code must conform to the process outlined in Section 113-35. It was determined all requirements from Section 113-35(a-d) were met. The applicant for the proposed amendment was the property owner, Buhl Larpenteur West LLC, and the application was received on an official application form. Required notice of the public notice was sent to all property owners within 350’ of the subject properties, and published in the newspaper in the required timeframe. A public hearing was held by the Planning Commission with a recommendation voted on to be sent to City Council. Requirement 113-35(f) will be conformed with upon action by City Council. 13. Section 113-35(e) requires the following: (e) Consistency with comprehensive plan. No amendment to this chapter shall be adopted which is in conflict with the city's comprehensive plan. 14. Upon review by the Planning CommissionCity Council of the information provided by the applicant, staff, and comments from citizens, and the recommendation from the 236 Planning Commission, the following has been found regarding consistency with the comprehensive plan: (a) The Planning CommissionFalcon Heights City Council has found the proposed amendments and rezoning to not be consistent with the Comprehensive Plan in the following sections with additional commentary – General Land Use Goals (page 44) – 4. To encourage practices that conserve energy and lower the City’s over-all carbon emissions, making Falcon Heights a healthier, more sustainable community. 5. To encourage sustainability and resiliency practices that reduce energy consumption and carbon emissions, mitigate the effects severe weather and a changing climate. The Planning CommissionCity Council finds allowing a drive-through facility for an eating establishment does not contribute to lowering the City’s overall carbon emissions as it has been shown that idling vehicles increase carbon emissions. 3. To enhance access and safety for pedestrians and non-motorized transportation. The Planning CommissionCity Council finds a drive-through eating establishment would not enhance access and safety for pedestrians and non- motorizes transportation as it encourages vehicle use. Despite the proposal including a walk-up window for pedestrians, there is still an issue of the safety for pedestrians traveling across the drive-through lane. 237 General Land Use Policies (page 45) – 1. Adopt and encourage “complete streets best practices” to promote public health and encourage an active lifestyle for residents. Require a health impact assessment for new development/redevelopment. The Planning Commission finds no health impact assessment to have been completed. Axis of Redevelopment – The Larpenteur Corridor (page 50) – A comprehensive corridor study of both Snelling and Larpenteur, with ample opportunity for public participation, is recommended as part of the implementation of this plan, before any significant redevelopment is initiated along the Larpenteur Avenue corridor in Falcon Heights. The Planning Commission finds a comprehensive corridor study has not yet been completed for the area of the proposed project. The Planning Commission also finds a comprehensive corridor study is needed before amending City Code to allow uses previously not allowed entirely. Larpenteur Corridor Policies (page 51) – 6. Employ the health impact assessment and other tools to ensure that new development along Larpenteur Avenue is safe, attractive and walkable and enhances the quality of life for residents of the City. The Planning Commission finds no health impact assessment to have been completed. 8. Make sure all development follows the City’s sustainability and resiliency goals (page 52). 238 The Planning CommissionCity Council finds developing a drive-through facility to be a contradiction to the City’s sustainability and resiliency goals, as the practice increases the carbon emissions within the City. Commercial / Business Policies (page 63) – 2. Require health impact assessments and environmental impact assessments for new development or redevelopment. The Planning Commission finds no health impact assessment to have been completed. Environmental Protection Goals (page 143) – 2. To protect people and property from excessive noise, pollution and natural hazard. The Planning CommissionCity Council finds the development of a drive- through facility for an eating establishment to increase pollution due to the idling of vehicles. 3. To improve the health of residents and those who work within the city. The Planning CommissionCity Council finds the development of a drive- through facility for an eating establishment that increases pollution due to the idling of vehicles to decrease the health of residents and those who work within the city. Environmental Protection Policies (page 143) – 8. Monitor air quality at Snelling/Larpenteur Avenues and maintain the intersection as necessary to assure that ambient pollution levels are not substantially increased. 239 The Planning CommissionCity Council finds the increase of carbon emissions due to the development of a drive-through facility and additional idling vehicles will increase the ambient pollution levels of the intersection at Snelling and Larpenteur Avenues. 15. The Planning CommissionCity Council finds the usage of a Planned Unit Development in the case of this proposal to be inconsistent with the goal of a PUD as outlined in City Code: ARTICLE V - PLANNED UNIT DEVELOPMENT (PUD) Sec. 113-199 - Purpose The planned unit development district is intended to permit flexibility of site design, the conservation of land and open space through clustering of buildings and activities, and an incentive to developers to plan creatively by providing density bonuses. This flexibility can be achieved by allowing deviations from standards including setbacks, heights and similar regulations. PUDs are characterized by central management, integrated planning and architecture, joint or common use of parking, open space and other facilities, and a harmonious selection and efficient distribution of uses. The Planning CommissionCity Council finds the cumulative outcome of the proposed amendments and rezoning does not conserve land or open space and does not increase density with an efficient distribution of uses. While technically there will be mixed uses within the Amber Union PUD as a whole, the additional building to be constructed for the coffee shop will be a singular use which is not the intent of a Planned Unit Development. 240 RECOMMENDATION: The Falcon Heights Planning CommissionCity Council hereby recommends denialdenies of the Applicant’s request for an amendment to City Code and the Amber Union PUD and rezoning. ADOPTED by the Falcon Heights Planning CommissionCity Council on this _______ day of ________________, 2023. FALCON HEIGHTS PLANNING COMMISSION City Council By: ________________________________ Scott Wilson, Planning Commission ChairRandy Gustafson, Mayor GUSTAFSON ___ In favor LEEHY ATTEST: ___________________________ MEYER ___ Against Hannah B. LynchJack Linehan WEHYEE City Administrator WASSENBERG 241 242