HomeMy WebLinkAbout15 - 2016 Comprehensive Annual Financial Report
STAFF REPORT
DATE: August 1, 2017
REGULAR
TO: City Council
FROM: Brian A. Swanson – Finance Director
AGENDA ITEM: Presentation of 2016 Comprehensive Annual Financial Report (CAFR)
REVIEWED BY: Kristina Handt – City Administrator
BACKGROUND:
Annually, the City engages the services of an independent outside audit firm to audit and assist with the
preparation of the financial statements. The auditors are asked to assure that the financial statements are
free from material misstatement in accordance with U.S. Generally Accepted Accounting Principles
(GAAP). The firm also performs testing and makes inquiries to help ensure that proper internal controls
are in place. This is the fourth year that the City of Lake Elmo has presented the report in the
Comprehensive Annual Financial Report (CAFR) layout.
As such, the City has retained the services of Smith Schafer & Associates, Ltd., to perform the City of
Lake Elmo’s audit for 2016. The 2016 Comprehensive Annual Financial Report and Management Report
will be presented to the City Council by Mr. Jason Miller – Principal, from Smith Schafer and Associates,
Ltd. with the opportunity to ask questions of both Mr. Miller and City Staff.
An overview summary of the 2016 CAFR and results were presented to the Finance Committee on July
27, 2017. Copies of the report were provided to the Finance Committee and it was unanimously agreed to
recommend that the report be presented to the City Council.
QUESTION BEFORE THE CITY COUNCIL:
1) Does the City Council have any questions regarding the 2016 CAFR?
DISCUSSION:
Mr. Jason Miller – Principal, from Smith Schafer and Associates, Ltd., will present information
regarding the 2016 Audit, answer any questions the City Council may have, with staff also present
to answer any questions pertaining to the 2016 Audit and 2016 CAFR.
FISCAL IMPACT:
Overall sound policies, fiscal management, effective operational, capital, and long range planning are all
integral parts of City business leading up to the audit and completion of the CAFR. As such, continued
investment in the aforementioned items will help position the City to continue to provide quality,
efficient, timely and cost effective services to the constituents of the community.
RECOMMENDATION:
1) No formal recommendation is required, but the City Council at its discretion may accept the
results of the 2016 Audit and 2016 CAFR.
ATTACHMENT:
1) 2016 Comprehensive Annual Financial Report
CITY OF LAKE ELMO, MINNESOTA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2016
PREPARED BY:
FINANCE DEPARTMENT
CITY OF LAKE ELMO, MINNESOTA
PAGE
INTRODUCTORY SECTION
Letter of Transmittal i
GFOA Certificate of Achievement v
Elected and Appointed Officials vi
Organizational Chart vii
FINANCIAL SECTION
Independent Auditor's Report 1
Management's Discussion and Analysis 3
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 14
Statement of Activities 15
Fund Financial Statements
Balance Sheet - Governmental Funds 17
Reconciliation of Net Position in the Government-wide
Financial Statements and Fund Balances in the Fund
Basis Financial Statements 19
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds 20
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities 22
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual - General Fund 23
Combining Statement of Net Position - Proprietary Funds 27
Combining Statement of Revenues, Expenses and Changes in
Net Position - Proprietary Funds 31
Combining Statement of Cash Flows - Proprietary Funds 33
Statement of Fiduciary Net Position - Fiduciary Funds 35
Notes to Financial Statements 36
Required Supplemental Information
Schedule of City Contributions
General Employees Retirement Plan 84
Public Employees Police and Fire Plan 84
Schedule of Proportionate Share of Net Pension Liability
General Employees Retirement Plan 85
Public Employees Police and Fire Plan 85
City of Lake Elmo Fire Relief Association
Schedule of Funding Progress for the Fire Relief Association 86
Schedule of Employer Contributions for the Fire Relief Association 86
Schedule of Funding Progress - Other Post Employment Benefits 87
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet - Nonmajor Governmental Funds 88
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances - Nonmajor Governmental Funds 89
Combining Balance Sheet - Nonmajor Special Revenue Funds 90
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances - Nonmajor Special Revenue Funds 91
TABLE OF CONTENTS
CITY OF LAKE ELMO, MINNESOTA
For the Fiscal Year Ended December 31, 2016
FINANCIAL STATEMENTS
PAGE
FINANCIAL SECTION (CONTINUED)
Combining Balance Sheet - Nonmajor Capital Projects Funds 92
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances - Nonmajor Capital Projects Funds 94
Combining Statement of Net Position - Internal Service Funds 96
Combining Statement of Revenues, Expenses and Changes in Fund
Net Position - Internal Service Funds 97
Combining Statement of Cash Flows - Internal Service Funds 98
Combining Balance Sheet - Debt Service Funds 99
Combining Schedule of Revenues, Expenditures and Changes in Fund
Balances - Debt Service Funds 101
Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - City Events Special Revenue Fund 103
Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - Library Special Revenue Fund 104
Combining Schedule of Changes in Assets and Liabilities - Agency Funds 105
Supplemental Schedule of Sources and Uses - Redevelopment Grant Program 106
STATISTICAL SECTION (UNAUDITED)REFERENCE
Net Position by Component Schedule 1 107
Changes in Net Position Schedule 2 109
Fund Balances, Governmental Funds Schedule 3 113
Changes in Fund Balances, Governmental Funds Schedule 4 115
Tax Capacity and Estimated Actual Value of Taxable Property Schedule 5 117
Property Tax Rates and Tax Levies - Direct and Overlapping Property
Tax Rates Schedule 6 118
Principal Property Taxpayers Schedule 7 119
Schedule of Property Tax Levies and Collections Schedule 8 120
Water and Sanitary Sewer Charges by Customer Schedule 9 122
Ratios of Outstanding Debt by Type Schedule 10 124
Ratios of General Bonded Debt Outstanding Schedule 11 126
Computation of Direct and Indirect General Obligation Bonded Debt
and Legal Debt Margin Schedule 12 128
Legal Debt Margin Information Schedule 13 129
Pledged Revenue Coverage Schedule 14 131
Demographic and Economic Statistics Schedule 15 132
Principal Employers Schedule 16 133
Full-Time Equivalent Employees by Function Schedule 17 134
Operating Indicators by Function/Program Schedule 18 136
Capital Assets Statistics by Function/Program Schedule 19 138
OTHER REPORT SECTION
Independent Auditor's Report on Minnesota Legal Compliance 139
CITY OF LAKE ELMO, MINNESOTA
FINANCIAL STATEMENTS
For the Fiscal Year Ended December 31, 2016
TABLE OF CONTENTS (CONTINUED)
CITY OF LAKE ELMO, MINNESOTA
INTRODUCTORY SECTION
DECEMBER 31, 2016
This Page Left Blank Intentionally
i
3800 Laverne Avenue North
Lake Elmo, MN 55042
651-747-3900 www.lakeelmo.org
June 29, 2017
To the Honorable Mayor, Members of the City Council, and Citizens of the
City of Lake Elmo:
Minnesota Statutes require all cities to issue an annual report on its financial position and activity
prepared in accordance with generally accepted accounting principles (GAAP), under the
guidance of the Government Accounting Standard Board (GASB), and audited in accordance with
generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants
or the Office of the State Auditor. Pursuant to that requirement, we hereby issue the
comprehensive annual financial report of the City of Lake Elmo, MN for the fiscal year ended
December 31, 2016.
This report consists of management’s representation concerning the finances of the City of Lake
Elmo. Consequently, management assumes full responsibility for the completeness, accuracy
and reliability of all the information presented in this report. To provide a reasonable basis for
making these representations, the management of the City of Lake Elmo has established a
thorough internal control system designed to both protect the City’s assets from loss, theft and
misuse and to compile all necessary information for the preparation of the City of Lake Elmo’s
financial statements in conformity with GAAP and GASB. As a management team, we assert that
the financial statements will be free from material misstatement and that the financial report is
reliable in all material respects.
The City of Lake Elmo’s financial statements have been audited by Smith, Schafer and
Associates, Ltd, a firm of licensed certified public accountants. The goal of the independent audit
was to provide reasonable assurance that the financial statements of the City of Lake Elmo for
the fiscal year ended December 31, 2016 are free from material misstatement. The independent
audit involved examining, on an approved test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management and evaluating the overall financial statement presentation. The
independent auditor concluded, based upon the audit that there was a reasonable basis for
rendering an unmodified opinion that the City of Lake Elmo’s financial statements for fiscal year
ended December 31, 2016 are fairly presented in conformity with GAAP. The independent
auditor’s report is presented as the first component of the financial section of the report.
ii
A “Single Audit” designed to meet the special needs of a federal grantor agency was not
performed for the year ended December 31, 2016 as the City did not participate in any programs
that required this additional independent audit.
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in form of the Management’s Discussion and Analysis
(MD&A). This letter of transmittal is included to complement the MD&A and should be read in
conjunction with it. The City of Lake Elmo’s MD&A can be found immediately following the report
of the independent auditors.
PROFILE OF THE GOVERNMENT
The City of Lake Elmo was incorporated in 1926 and is a statutory city in the State of Minnesota
six miles east of St. Paul Minnesota. Located in Washington County, it covers 25 square miles
and has an estimated population of 9,000 which represents 3,100 households.
Policy-making and legislative authority are vested in a governing council consisting of an elected
Mayor and four council members. Per Minnesota State Statute, the governing council is
responsible for passing ordinances, adopting an annual budget, appointing committees and hiring
both the city’s administrator and attorney. The City Administrator is responsible for carrying out
the policies and ordinances of the governing council and overseeing the day-to-day operations of
the city. The Council is elected on a non-partisan basis. The Mayor serves a four-year term and
council members serve a four-year staggered term, with two of these positions elected every two
years. The Mayor and the Council are elected at-large.
The City of Lake Elmo provides a full range of Services including fire protection services,
construction and maintenance of streets and infrastructure; recreational facilities; and water,
sanitary sewer and storm water utility services. The City contracts with the Washington County
Sheriff’s Department for police services.
The annual budget serves as the foundation for the City of Lake Elmo’s financial management
and fiscal stewardship. City departments and agencies of the City submit their requested budget
to the City Administrator and the Finance Director in order to compile a preliminary budget for
submission to the Finance Committee for their consideration. The Finance Committee then meets
with the Department Heads to better understand their proposed budgets to later submit a budget
to the City Council. The preliminary balanced budget is presented to the City Council in
September each year so that the preliminary property tax levy can be submitted to Washington
County by the annual due date. The preliminary property tax levy may be decreased but not
increased. The 2016 Adopted Budget and final property tax levy was required to be adopted by
and submitted to Washington County by December 28, 2015. Included in the City annual budget
process is the compilation of a Capital Improvement Plan which allows for strategic planning of
City infrastructure and equipment needs while maintaining a reasonable level of debt and a strong
unassigned fund balance. Monthly budget to actual comparison reports are provided to the
Finance Committee and the City Council to keep them apprised of the financial performance of
the City.
iii
FACTORS AFFECTING FINANCIAL CONDITION
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 Lake
Elmo operates.
LOCAL ECONOMY
Lake Elmo is home to numerous businesses that are leaders in their respective industries. New
residential developments platted since 2014 number approximately 2,200 have been approved.
The City’s highway infrastructure continues to make Lake Elmo a desirable residential location.
Rapid growth is further reflected in 2016 population estimates of 9,000 or an increase of 10%
since the 2010 census.
New housing starts in 2016 numbered 252 with a total value of $79,884,649 and an average value
of $317,003. Commercial new construction numbered 4 with a total value of $32,058,022 and an
average value of $8,014,505. All these new start have been built in 2016 or will be finished in
2017, which will greatly strengthen the existing tax base of the City.
LONG TERM FINANCIAL PLANNING
Total unassigned General Fund balance as of December 31, 2016 was 89% of the total 2016
General Fund expenditures. Although the State Auditor recommends maintaining a level of 35%
- 50%, the City has consistently exceeded that rate, showing the City’s financial strength.
The City’s 5-year Capital Improvement Plan serves as the foundation for long-term financial
planning. Funding needs for capital replacements are reflected in tax levies for the street renewal
and general fund asset replacements. Funding needs for capital infrastructure in the enterprise
funds are funded through user fees in those funds.
During 2016, Moody’s Investors Service maintained the City's long term debt rating of Aa2. In
their assessment of the City, Moody’s noted the following:
Strong financial operations supported by healthy reserves and liquidity
Healthy unassigned fund balance
Affluent tax base favorably located in Twin Cities metropolitan area
Projections for the next 5 years indicate that property tax contributions, user fees and investment
income will continue to grow based on planned development and expansion within the City.
RELEVANT FINANCIAL POLICIES
During 2015, the Metropolitan Council issued the 2015 System Statement for the City of Lake
Elmo which outlines the updated forecasts for the City as a result of the termination in 2014 of the
Memorandum of Understanding (MOU). The previous forecasted population number for 2040
was reduced from 20,500 to 18,200. Receipt of the system statement plans triggers a community
obligation to review and amend its comprehensive plan as necessary, which began late in 2016
and will continue into 2017.
iv
MAJOR INITIATIVES
2016 was an extremely robust year for the City due to continuation of on-going infrastructure
upgrades, projects, as well as oversight of the on-going residential and commercial development
activity.
Some of the 2016 infrastructure projects included the following:
Joint project with Washington County on CSAH 17. This project included the replacement
of old water main and installation of sanitary sewer and storm sewer while reconstructing
the streets.
Continued work with the Union Pacific Railroad regarding the downtown project and a new
development impacting the Railroad at various locations.
Construction of a lift station, pump house, well and water tower
2016 seal coating and crack filling project
Use of Parkland dedication fees to continue to make improvements to existing parks and
providing oversight to the new City parks being constructed by developers.
2016 street reconstruction in the Stonegate, Kirkwood and Kelvin Avenue neighborhoods
including the extension of water service to Kelvin Avenue homes.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association (GFOA) of the United States and Canada awarded
a Certificate of Achievement for Excellence in Financial Reporting (CAFR) to the City again for
the fiscal year ending December 31, 2015. This certificate is a prestigious national award
recognizing conformance with the highest standards for preparation for state and local
government financial reports.
In order to be awarded a Certificate of Achievement, a government unit must publish an easily
readable and efficiently organized CAFR, whose contents conform to program standards. Such
reports must satisfy both accounting principles generally accepted in the United States of America
and applicable legal requirements. A certificate is valid for one year only.
The City of Lake Elmo is pleased to present its Comprehensive Annual Financial Report, which
will be submitted to the Government Finance Officers Association (GFOA) for consideration of a
Certificate of Achievement for Excellence in Financial Reporting for its financial reports for the
fiscal year ended December 31, 2016. The preparation of this report would not have been possible
without the efficient and dedicated services of the personnel of the City of Lake Elmo. Further,
we would like to express our appreciation to all members of the organization who assisted in
contributing to the preparation of the report. Credit must also be given to the Mayor and the City
Council for their unfailing support for maintaining the highest standards of management of the
City of Lake Elmo’s finances.
Respectfully submitted,
Kristina Handt Brian A. Swanson
City Administrator Finance Director
v
vi
POSITION NAME TERM EXPIRES
ELECTED OFFICIALS
City Council:
Mayor Mike Pearson December 31, 2016
Council Member Justin Bloyer December 31, 2016
Council Member Julie Fliflet December 31, 2018
Council Member Jill Lundgren December 31, 2018
Council Member Anne Smith December 31, 2016
APPOINTED OFFICIALS
City Administrator Kristina Handt Continuous
Finance Director Cathy Bendel Continuous
City Clerk Julie Johnson Continuous
FINANCE COMMITTEE
Julie Fliflet, Committee Chair and City Council
Anne Smith, City Council
Terry Forrest, Retired CFO
CITY OF LAKE ELMO, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
December 31, 2016
vii
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CITY OF LAKE ELMO, MINNESOTA
FINANCIAL SECTION
DECEMBER 31, 2016
This Page Left Blank Intentional
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members of the City Council
City of Lake Elmo, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of Lake Elmo,
Minnesota, as of and for the year ended December 31, 2016, and the related notes to the financial
statements, which collectively comprise the City's basic financial statements as listed in the table of
contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting principles used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the City of Lake Elmo, Minnesota, as of December 31,
2016, and the respective changes in financial position and, where applicable, cash flows thereof and the
budgetary comparison for the General Fund for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Honorable Mayor and Members of the City Council
City of Lake Elmo, Minnesota
Page 2
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis on pages 3 through 13 and the required supplemental information as listed in the
Table of Contents be presented to supplement the basic financial statements. Such information, although
not a part of the basic financial statements, is required by the Governmental Accounting Standards Board,
who considers it to be an essential part of financial reporting for placing the basic financial statements in
appropriate operational, economic or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the United
States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries,
the basic financial statements and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Lake Elmo, Minnesota's basic financial statements. The introductory section,
combining and individual nonmajor fund financial statements and statistical section listed in the Table of
Contents are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual nonmajor fund financial statements and schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used
to prepare the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the information is fairly stated, in all material respects, in relation to the basic financial
statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
Minneapolis, Minnesota
June 29, 2017
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
3
As management of the City of Lake Elmo, Minnesota, we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City of Lake Elmo, Minnesota for
the fiscal year ended December 31, 2016.
FINANCIAL HIGHLIGHTS
The assets of the City of Lake Elmo, Minnesota exceeded its liabilities at the close of the most
recent fiscal year by $38,252,973 (net position). Of this amount, $10,536,667 (unrestricted net
position) may be used to meet the City's ongoing obligations to citizens and creditors in
accordance with the City's fund designations and fiscal policies.
The City's total net position increased by $6,517,098 during 2016.
As of the close of the current fiscal year, the City of Lake Elmo, Minnesota’s governmental
funds reported combined ending fund balances of $8,223,754, an increase of $1,217,847 from
the prior year. This increase was due primarily to licenses and permit revenue related to
construction within the City.
At the end of the current fiscal year, unassigned fund balance for the general fund was
$3,279,815, or 89% of total general fund expenditures. The nonspendable portion of the
general fund balance as of December 31, 2016 ($409,222) related to the interfund loan to the
Village Project fund and prepaid items. The committed portion of the general fund balance as
of December 31, 2016 ($200,000) was a reserve for future insurance and legal fees.
The City's total noncurrent liabilities increased by $9,033,112 or 38% during the current fiscal
year due to the issuance of the 2016A General Obligation bonds.
The City was recognized by the Government Finance Officers Association of the United States
and Canada (GFOA) for obtaining a Certificate of Achievement for Excellence in Financial
Reporting for the City's 2015 Comprehensive Annual Financial Report.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Lake Elmo,
Minnesota’s basic financial statements. The City's basic financial statements are comprised of the
following three components: 1) government-wide financial statements, providing information for the
City as a whole, 2) fund financial statements, providing detailed information for the City's significant
funds, and 3) notes to the financial statements, providing additional information that is essential to
understanding the government-wide and fund statements. This report also contains other
supplementary information in addition to the basic financial statements themselves.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
4
Government-wide financial statements. The government-wide financial statements are designed
to provide readers with a broad overview of the City of Lake Elmo, Minnesota’s finances, in a manner
similar to a private-sector business.
The statement of net position presents information on all of the City of Lake Elmo, Minnesota’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
of Lake Elmo, Minnesota is improving or deteriorating.
The statement of activities presents information showing how the City's net position changed during
the most recent fiscal year. All changes in net position are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Lake Elmo,
Minnesota that are principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a significant portion of their costs
through user fees and charges (business-type activities). The governmental activities of the City of
Lake Elmo, Minnesota include general government, public safety, public works, and culture and
recreation. The business-type activities of the City of Lake Elmo, Minnesota include the water, sewer
and storm sewer funds.
The government-wide financial statements can be found on pages 14-16 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City of Lake Elmo,
Minnesota, like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. All of the funds of the City of Lake Elmo,
Minnesota can be divided into three categories: governmental funds, proprietary funds and fiduciary
funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-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
financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund statement
of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
5
The City of Lake Elmo, Minnesota maintains twenty-two individual governmental funds, twelve of
which are debt service 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, the debt service fund, the infrastructure reserve fund and the vehicle
acquisition fund, all of which are considered to be major funds. Data from the other governmental
funds are combined into a single, aggregated presentation. Individual fund data for each of these
nonmajor governmental funds is provided in the form of combining statements or schedules
elsewhere in this report.
The City of Lake Elmo, Minnesota adopts an annual budget for its general fund. Budgetary
comparison statements have been provided for this fund (pages 23 to 26) to demonstrate compliance
with the budget.
The basic governmental fund financial statements can be found on pages 17-22 of this report.
Proprietary funds. There are two different types of proprietary funds - enterprise funds and internal
service funds. Enterprise funds are used to report the same functions presented as business-type
activities in the government-wide financial statements. The City of Lake Elmo, Minnesota uses three
enterprise funds to account for its water, sewer and storm sewer operations. Internal service funds
are an accounting device used to accumulate and allocate costs internally among the City of Lake
Elmo, Minnesota's various functions. The City of Lake Elmo, Minnesota uses three internal service
funds to account for certain capital acquisition activities. Because all of these services predominantly
benefit governmental rather than business-type functions, they have been included within
governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail. The proprietary fund financial statements provide separate information for the
water, sewer and storm sewer funds, all of which are considered to be major funds of the City of Lake
Elmo, Minnesota.
The proprietary fund financial statements can be found on pages 27-34 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the City. Fiduciary funds are not reflected in the government-wide financial statements
because the resources of those funds are not available to support the City's own programs. The
accounting use for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statement can be found on page 35 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 36-83 of this report.
Other Information. The combining schedules referred to earlier in connection with non-major
governmental funds, debt service funds, internal service funds and the fiduciary fund can be found
on pages 88-105 of this report.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
6
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the City of Lake Elmo, Minnesota, assets exceeded liabilities by $38,252,973
at the close of the most recent fiscal year.
The largest portion of the City of Lake Elmo, Minnesota’s net position, $21,539,009 (56%) reflects its
investment in capital assets (e.g. land, buildings and improvements, and machinery and equipment),
less any related debt used to acquire those assets that is still outstanding. The City of Lake Elmo,
Minnesota uses these capital assets to provide services to citizens; consequently, these assets are
not available for future spending. Although the City of Lake Elmo, Minnesota's investment in capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
2016 2015 2016 2015 2016 2015
Current and other assets 10,893,806$ 9,687,510$ 10,098,093$ 6,221,558$ 20,991,899$ 15,909,068$
Capital assets 20,755,034 18,527,639 30,240,029 22,792,835 50,995,063 41,320,474
Total assets 31,648,840 28,215,149 40,338,122 29,014,393 71,986,962 57,229,542
Deferred outflows of resources 856,676 171,032 128,684 67,075 985,360 238,107
Long-term liabilities outstanding 13,471,388 10,889,186 19,244,126 12,793,216 32,715,514 23,682,402
Other liabilities 955,137 1,265,752 812,316 645,372 1,767,453 1,911,124
Total liabilities 14,426,525 12,154,938 20,056,442 13,438,588 34,482,967 25,593,526
Deferred inflows of resources 206,031 119,126 30,351 19,125 236,382 138,251
Net position:
Net investment in capital assets 9,032,535 8,723,329 12,506,474 10,170,351 21,539,009 18,893,680
Restricted 4,704,133 3,446,142 1,473,164 1,876,119 6,177,297 5,322,261
Unrestricted 4,136,292 3,942,646 6,400,375 3,577,285 10,536,667 7,519,931
Total net position 17,872,960$ 16,112,117$ 20,380,013$ 15,623,755$ 38,252,973$ 31,735,872$
City of Lake Elmo, Minnesota's Net Position
Governmental Activities Business-Type Activities Total
An additional portion of the City of Lake Elmo, Minnesota's net position (16%) represents resources
that are subject to external restrictions on how they may be used. The remaining balance of
unrestricted net position ($10,536,667) may be used to meet the government's ongoing obligations
to citizens and creditors.
At the end of the current fiscal year, the City of Lake Elmo, Minnesota is able to report positive
balances in all categories of net position for the City as a whole.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
7
Governmental activities. Governmental activities increased the City of Lake Elmo, Minnesota's net
position by $1,760,840 during 2016. Key elements of this increase include:
Charges for services increased by $864,288 from the prior year due primarily to an increase
in the amount of building permits issued by the City.
Special assessments revenue for 2015 projects increase by $239,804.
Business-type activities. Business-type activities increased the City of Lake Elmo, Minnesota's net
position by $4,756,258. This increase is due primarily to a construction grant received from the State
of Minnesota.
A condensed version of the Statement of Activities follows:
2016 2015 2016 2015 2016 2015
Revenues:
Program revenues:
Charges for services 1,803,531$ 939,243$ 3,330,409$ 3,602,559$ 5,133,940$ 4,541,802$
Operating grants and contributions 235,214 249,094 235,214 249,094
Capital grants and contributions 1,452,469 2,038,940 3,464,567 4,917,036 2,038,940
General revenues:
Property taxes 3,226,739 3,204,119 3,226,739 3,204,119
Other 104,291 123,076 45,171 39,757 149,462 162,833
Total revenues 6,822,244 6,554,472 6,840,147 3,642,316 13,662,391 10,196,788
Expenses:
General government 1,358,370 1,134,132 1,358,370 1,134,132
Public safety 1,308,360 1,344,282 1,308,360 1,344,282
Public works 1,698,566 1,377,969 1,698,566 1,377,969
Culture and recreation 660,947 639,006 660,947 639,006
Interest on long-term debt 178,266 215,611 178,266 215,611
Water 1,409,832 1,363,043 1,409,832 1,363,043
Sewer 380,650 250,866 380,650 250,866
Storm sewer 150,302 103,536 150,302 103,536
Total expenses 5,204,509 4,711,000 1,940,784 1,717,445 7,145,293 6,428,445
Increase in net position before transfers 1,617,735 1,843,472 4,899,363 1,924,871 6,517,098 3,768,343
Transfers 143,105 220,842 (143,105) (220,842)
Change in net position 1,760,840 2,064,314 4,756,258 1,704,029 6,517,098 3,768,343
Net position - beginning of year 16,112,120 14,047,803 15,623,755 13,919,726 31,735,875 27,967,529
Net position - end of year 17,872,960$ 16,112,117$ 20,380,013$ 15,623,755$ 38,252,973$ 31,735,872$
City of Lake Elmo, Minnesota's Change in Net Position
Governmental Activities Business-Type Activities Total
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
8
Below are specific graphs that provide comparisons of the governmental activities direct program
revenues with their expenditures. Any shortfalls in direct revenues are primarily supported by property
tax levy or general state aid.
$0
$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
Expenses and Program Revenues - Governmental Activities
Program revenues
Expenses
Property taxes
47%
Charges for
services
26%
Capital grants and
contributions
21%
Operating grants
and contributions
4%Other
2%
Revenues by Source - Governmental Activities
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
9
The following graphs related the business-type activity's program revenues with its expenditures.
Since this activity requires significant physical assets to operate, any excess revenues are held for
planned capital expenditures to keep pace with growing demand for services.
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Expenses and Program Revenues - Business-Type Activities
Program revenues
Expenses
Charges for
services
49%Capital grants and
contributions
51%
Other
less than 1%
Revenues by Source - Governmental Activities
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
10
Financial Analysis of the Government's Funds
As noted earlier, the City of Lake Elmo, Minnesota uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental funds. The focus of the City of Lake Elmo, Minnesota’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 of Lake Elmo, Minnesota’s financing requirements. In
particular, unassigned fund balance may serve as a useful measure of a government’s net resources
available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City of Lake Elmo, Minnesota’s governmental funds
reported combined ending fund balances of $8,223,754, an increase of $1,217,847 in comparison
with the prior year. Approximately $4,366,302 of this total fund balance, or 53%, constitutes assigned
and unassigned fund balance, which is available for spending at the government’s discretion. The
remainder of the fund balance ($3,857,452) is restricted, committed and nonspendable to indicate
that it is not available for new spending because it has already been restricted by creditors, grantors
or regulations of other governments, has been committed to a specific purpose by the City Council,
has been expensed for prepaid items, or is unavailable because the funds have been loaned to
another fund.
The general fund is the chief operating fund of City of Lake Elmo, Minnesota. At the end of the current
fiscal year, unassigned fund balance of the general fund was $3,279,815. As a measure of the general
fund's liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures.
Unassigned fund balance represented 89% of total 2016 general fund expenditures. The general
fund’s total fund balance increased by $701,755 during the current fiscal year due primarily to an
increase in building permits and related revenue during the year.
The debt service fund increased its fund balance by $761,605 due to property taxes, special
assessments and intergovernmental revenues allocated to this fund in excess of debt service
expenditures.
The infrastructure reserve fund decreased its fund balance by $210,621 due primarily to capital outlay
expenditures in excess of bond proceeds allocated to this fund.
The vehicle acquisition fund decreased its fund balance by $27,493 due primarily to capital outlay
expenditures in excess of revenue allocated to this fund. This fund will no longer be used in 2017.
The special revenue funds decreased their overall fund balances by $60,414 due primarily to current
expenditures for culture and recreation in excess of property taxes allocated to those funds.
The capital projects funds, other than the infrastructure reserve fund and vehicle acquisition fund
described previously, increased their collective fund balance by $53,015 due primarily to park
dedication fees in excess of capital outlay expenditures in those funds.
Proprietary funds. The City of Lake Elmo, Minnesota's proprietary funds provide the same type of
information found in the government-wide financial statements, but in more detail.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
11
Unrestricted net position for water operations, sewer operations and storm sewer operations at the
end of the year amounted to $3,071,906, $2,406,958 and $921,511, respectively. The water fund,
sewer fund and storm sewer fund increased their net position by $3,809,117, $868,277 and $78,864,
respectively, for the year ended December 31, 2016. Other factors concerning the finances of these
three funds have already been addressed in the discussion of the City of Lake Elmo, Minnesota's
business-type activities.
General Fund Budgetary Highlights
The City's General Fund budget was not amended during the year. The budget called for no change
in the General Fund balance. The actual net change to the General Fund balance was an increase
of $701,755. Revenues were more than budget by $899,019 for the year ended December 31, 2016
due primarily to licenses and permits in excess of budget as result of increased building within the
City.
Total expenditures were more than budget by $197,264 for the year. One department had
expenditures in excess of budget: general government expenditures exceeded budget by $324,086.
The over expenditures in the general government department were primarily related to legal expenses
incurred over the amounts budgeted.
Capital Asset and Debt Administration
Capital assets. The City of Lake Elmo, Minnesota’s investment in capital assets for its governmental
and business-type activities as of December 31, 2016, amounted to $50,995,063 (net of accumulated
depreciation). This investment in capital assets includes land, buildings and improvements, and
machinery and equipment. Total capital assets increased by $9,674,589, or 23%, for the year ended
December 31, 2016, due primarily to completed construction projects and additional construction in
progress on various capital projects within the City.
2016 2015 2016 2015 2016 2015
Land 3,453,979$ 3,453,979$ 248,869$ 248,869$ 3,702,848$ 3,702,848$
Construction in progress 4,418,554 2,857,416 7,025,526 4,193,729 11,444,080 7,051,145
Buildings 2,576,941 2,649,349 2,576,941 2,649,349
Improvements other than buildings 438,996 439,669 438,996 439,669
Machinery and equipment 1,556,170 1,609,507 84,461 100,512 1,640,631 1,710,019
Infrastructure 8,310,394 7,517,719 22,881,173 18,249,725 31,191,567 25,767,444
Total 20,755,034$ 18,527,639$ 30,240,029$ 22,792,835$ 50,995,063$ 41,320,474$
TotalBusiness-Type ActivitiesGovernmental Activities
City of Lake Elmo, Minnesota's Capital Assets
(net of depreciation)
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
12
Additional information on the City of Lake Elmo, Minnesota’s capital assets can be found in Note 3D
beginning on page 55 of this report.
Long-term debt. At the end of the current fiscal year, the City of Lake Elmo, Minnesota had
$30,400,000 in bonds, certificates and notes outstanding. The entire $30,400,000 outstanding
comprises debt backed by the full faith and credit of the government.
2016 2015 2016 2015 2016 2015
General obligation bonds 11,625,000$ 9,740,000$ 18,775,000$ 12,535,000$ 30,400,000$ 22,275,000$
General obligation certificates
General obligation notes payable 21,219 21,219
Total 11,625,000$ 9,761,219$ 18,775,000$ 12,535,000$ 30,400,000$ 22,296,219$
Governmental Activities Business-Type Activities Total
City of Lake Elmo, Minnesota's Outstanding Debt
General Obligation Bonds, Certificates and Notes
The City of Lake Elmo, Minnesota's total bonds and certificates payable increased by $8,103,781
during the current fiscal year. The increase was due primarily to the issuance of the 2016A General
Obligation bonds. A more detailed breakdown of these obligations can be found in Note 3E beginning
on page 57 of this report.
The City of Lake Elmo, Minnesota maintains an AA2 bond rating from Moody's Investor Service for
general obligation debt. The City has also recently been upgraded by Standard and Poor's to a AA+
bond rating.
State statutes limit the amount of general obligation debt a Minnesota City may issue to 3% of its
market value of taxable property. Net debt is payable solely from ad valorem taxes. The City is
currently well within this limit.
Economic Factors and Next Year's Budgets and Rates
The City planned a new minor collector road to be built (5th Street) in the I-94 Corridor
and many segments were completed in 2015 and 2016. A new minor collector road
(Village Parkway) in the Old Village has been planned out by the City with initial
sections having been built out in 2015 and 2016.
Plans continue with subsequent phases of the multi-phased developments which were
approved by the City.
The Cities taxable market value increased 13% from 2014 to 2015 and 8% from 2015
to 2016.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
13
Economic Factors and Next Year's Budgets and Rates (continued)
There was a slight reduction in the amount of total property taxes levied in 2017. This
was based on increases in charges for services revenues for building-related activities
and the planned use of fund balance, which helped to offset increases to the debt
service components of the tax levy.
Development continues to be strong in the new development areas. The 2017 budget
anticipates the building of 250 new homes and the continuation of commercial
expansion.
The Lake Elmo Avenue Downtown project with Washington County is well underway
and Phase I was completed in 2015. Phase II of the project was completed in 2016
and Phase III will be completed in 2017. The project covers full reconstruction of the
streets as well as upgrading the existing water system and installation of a new sewer
system and storm water drainage system.
The Inwood Avenue segment of the water line (for which the $3.5M in State Bonding
proceeds were secured) has moved into construction. This includes the construction
of a new water tower, booster station and the truck water main improvements
anticipated to be on-line in 2017.
Requests for Information
This financial report is designed to provide a general overview of the City of Lake Elmo, Minnesota’s
finances for all those with an interest in the City's finances. Questions concerning any of the
information provided in this report or requests for additional information should be addressed to City
of Lake Elmo, Minnesota, 3800 Laverne Avenue North, Lake Elmo, Minnesota, 55042.
This Page Left Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
FINANCIAL STATEMENTS
DECEMBER 31, 2016
This Page Left Blank Intentionally
See Notes to Financial Statements
14
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 8,879,954$ 4,686,929$ 13,566,883$
Receivables, net of allowance 1,584,601 1,899,537 3,484,138
Due from other governmental units 44,108 3,434,202 3,478,310
Internal balances (77,425) 77,425
Prepaid expenses 5,653 5,653
Net pension asset 456,915 456,915
Capital assets:
Nondepreciable 7,872,531 7,274,395 15,146,926
Depreciable, net 12,882,503 22,965,634 35,848,137
Total Assets 31,648,840 40,338,122 71,986,962
DEFERRED OUTFLOWS OF RESOURCES
Unamortized deferred amount on refunding 25,070 46,474 71,544
Deferred outflows from pension activity 831,606 82,210 913,816
Total Deferred Outflows of Resources 856,676 128,684 985,360
LIABILITIES
Accounts payable 670,456 79,110 749,566
Accrued expenses 66,038 8,512 74,550
Accrued interest 124,170 184,114 308,284
Escrow deposits 75,000 75,000
Due to other governmental units 11,173 161,580 172,753
Unearned revenue 8,300 379,000 387,300
Noncurrent liabilities:
Due within one year 958,467 722,625 1,681,092
Due in more than one year 11,060,143 18,322,092 29,382,235
Net pension liability 1,452,778 199,409 1,652,187
Total Liabilities 14,426,525 20,056,442 34,482,967
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pension activity 206,031 30,351 236,382
NET POSITION
Net investment in capital assets 9,032,535 12,506,474 21,539,009
Restricted
Debt service 4,704,133 1,473,164 6,177,297
Unrestricted 4,136,292 6,400,375 10,536,667
Total Net Position 17,872,960$ 20,380,013$ 38,252,973$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET POSITION
December 31, 2016
15
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities:
General government 1,358,370$ 51,009$ $ $
Public safety 1,308,360 1,752,522 72,591
Public works 1,698,566 139,121 1,388,315
Culture and recreation 660,947 23,502 64,154
Interest on long-term debt 178,266
Total governmental activities 5,204,509 1,803,531 235,214 1,452,469
Business-Type activities:
Water 1,409,832 1,801,228 3,443,636
Sewer 380,650 1,315,948 20,931
Storm sewer 150,302 213,233
Total business-type activities 1,940,784 3,330,409 3,464,567
Total 7,145,293$ 5,133,940$ 235,214$ 4,917,036$
General revenues:
General property taxes
Grants and contributions not restricted to specific programs
Interest earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Net position - ending
Program Revenues
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2016
16
Governmental Business-Type
Activities Activities Total
(1,307,361)$ (1,307,361)$
516,753 516,753
(171,130) (171,130)
(573,291) (573,291)
(178,266) (178,266)
(1,713,295) (1,713,295)
3,835,032$ 3,835,032
956,229 956,229
62,931 62,931
4,854,192 4,854,192
(1,713,295) 4,854,192 3,140,897
3,226,739 3,226,739
8,584 748 9,332
43,228 44,423 87,651
52,479 52,479
143,105 (143,105)
3,474,135 (97,934) 3,376,201
1,760,840 4,756,258 6,517,098
16,112,120 15,623,755 31,735,875
17,872,960$ 20,380,013$ 38,252,973$
Net (Expense) Revenue
and Changes in Net Position
This Page Left Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
FUND FINANCIAL STATEMENTS
DECEMBER 31, 2016
See Notes to Financial Statements
17
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2016
General Fund
(101)
Debt Service
(300s)
Infrastructure
Reserve (409)
ASSETS
Cash and investments 3,727,367$ 3,326,884$ 143,963$
Receivables (Net of allowance for
uncollectibles)
Accounts 2,168 65,511
Delinquent taxes 44,088
Special assessments 1,189,170 266,733
Accrued interest 16,931
Due from other funds 200,937
Advances to other funds 405,398
Due from other governmental units 39,274 4,834
Prepaid items 3,824
TOTAL ASSETS 4,439,987$ 4,520,888$ 476,207$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE
LIABILITIES
Accounts payable 438,008$ $ 172,571$
Escrow deposits payable
Accrued liabilities 60,554
Due to other funds 95,605 7,032
Unearned revenue 8,300
Advances from other funds
Total liabilities 506,862 95,605 179,603
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue:
Property taxes 44,088
Special assessments 1,189,170 266,733
Total deferred inflows of resources 44,088 1,189,170 266,733
FUND BALANCE
Nonspendable 409,222
Restricted 3,248,230
Committed 200,000
Assigned 29,871
Unassigned 3,279,815 (12,117)
Total Fund Balance 3,889,037 3,236,113 29,871
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCE 4,439,987$ 4,520,888$ 476,207$
18
Vehicle
Acquisition
(410)
Other
Governmental
Funds Total
39,191$ 1,642,549$ 8,879,954$
67,679
44,088
1,455,903
16,931
200,937
405,398
44,108
3,824
39,191$ 1,642,549$ 11,118,822$
$ 71,225$ 681,804$
75,000 75,000
3,480 64,034
57,904 160,541
8,300
405,398 405,398
613,007 1,395,077
44,088
1,455,903
1,499,991
409,222
3,248,230
200,000
39,191 1,435,594 1,504,656
(406,052) 2,861,646
39,191 1,029,542 8,223,754
39,191$ 1,642,549$ 11,118,822$
This Page Left Blank Intentionally
See Notes to Financial Statements
19
Amounts reported for governmental activities in the statement of net position are different because:
Total governmental fund balances (pages 17-18) 8,223,754$
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds:
Governmental funds - capital assets 27,619,139$
Accumulated depreciation (7,036,476)
20,582,663
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unavailable in the funds:
Delinquent property taxes 44,088$
Special assessments 1,455,903
1,499,991
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the funds:
Bonds and notes payable (11,625,000)$
Net pension liability (asset), deferred outflows and
inflows from pension activity (370,288)
Compensated absences (64,623)
Post employment benefit obligation (206,419)
Accrued interest (124,170)
Unamortized deferred amount on refunding 25,070
Unamortized bond premiums (181,792)
Unamortized bond discounts 59,224
(12,487,998)
Internal service funds are used by management to charge the cost
of services to individual funds. The assets and liabilities are
included in the governmental statement of net position. 54,550
Net position of governmental activities (page 14) 17,872,960$
December 31, 2016
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF NET POSITION IN THE
GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND BALANCES
IN THE FUND BASIS FINANCIAL STATEMENTS
20
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2016
General Fund
(101)
Debt Service
(300s)
Infrastructure
Reserve (409)
REVENUES
Taxes 2,310,177$ 664,540$ $
Licenses and permits 1,713,918
Intergovernmental 209,373 72,100 1,401
Charges for services 38,608
Fines and forfeitures 49,505
Special assessments 897,323
Dedication fees
Refunds and reimbursements
Investment earnings 20,437 15,309
Miscellaneous revenue 42,515
TOTAL REVENUES 4,384,533 1,649,272 1,401
EXPENDITURES
Current
General government 1,280,259
Public safety 1,262,040
Public works 893,644
Culture and recreation 168,788
Unallocated 78,047
Capital Outlay
Public safety
Public works 2,974,274
Culture and recreation
Debt Service
Principal 805,000
Interest and other charges 225,772
Bond issuance costs 16,233
TOTAL EXPENDITURES 3,682,778 1,030,772 2,990,507
Excess (deficiency) of revenues
over (under) expenditures 701,755 618,500 (2,989,106)
OTHER FINANCING SOURCES (USES)
Issuance of debt 2,690,000
Premium on issuance of debt 102,877
(Discount) on issuance of debt (14,392)
Transfers 143,105
TOTAL OTHER FINANCING SOURCES (USES) 143,105 2,778,485
Net change in fund balances 701,755 761,605 (210,621)
FUND BALANCES, Beginning 3,187,282 2,474,508 240,492
FUND BALANCES, Ending 3,889,037$ 3,236,113$ 29,871$
21
Vehicle
Acquisition
(410)
Other
Governmental
Funds Total
$ 256,957$ 3,231,674$
1,713,918
282,874
38,608
49,505
897,323
171,708 171,708
21,390 21,390
180 7,302 43,228
13,586 56,101
180 470,943 6,506,329
1,280,259
1,262,040
893,644
331,901 500,689
78,047
6,067 6,067
2,974,274
146,441 146,441
21,219 826,219
387 226,159
16,233
27,673 478,342 8,210,072
(27,493) (7,399) (1,703,743)
2,690,000
102,877
(14,392)
143,105
2,921,590
(27,493) (7,399) 1,217,847
66,684 1,036,941 7,005,907
39,191$ 1,029,542$ 8,223,754$
This Page Left Blank Intentionally
See Notes to Financial Statements
22
Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds (pages 20-21) 1,217,847$
Governmental funds report capital outlay as expenditures.
However, in the statement of activities the cost of those assets
is allocated over their estimated useful lives and reported as
depreciation expense:
Capital outlay capitalized 3,100,540$
Depreciation expense (917,521)
2,183,019
Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds:
Special assessments 487,491$
Property taxes 900
Intergovernmental revenue (70,000)
Park dedication fees (107,554)
310,837
Some expenses reported in the statement of activities do not require
the use of current financial resources and, therefore, are not
reported as expenditures in governmental funds:
Compensated absences, end of year (64,623)$
Compensated absences, beginning of year 70,161
Post employment benefit obligation, end of year (206,419)
Post employment benefit obligation, beginning of year 174,282
(26,599)
Bond, contract and loan proceeds provide current financial resources
to governmental funds, but issuing debt increase long-term
liabilities in the statement of net position. Repayment of long-term
debt is an expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the statement of net
position:
Principal retirement on long-term debt 826,219$
Issuance of long-term debt (2,690,000)
Change in net pension liability (asset) 70,909
Change in deferred amount on refunding (2,539)
Change in accrued interest, bond premiums and
bond discounts (104,223)
(1,899,634)
Internal service funds are used by management to charge the costs of
capital equipment replacement to individual funds. The net revenue
of certain activities of internal service funds is reported with
governmental activities in the government-wide financial statements (24,630)
Change in net position of governmental activities (page 16) 1,760,840$
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2016
See Notes to Financial Statements
23
Variance with
2016 Final Budget-
Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes
Property 2,218,406$ 2,218,406$ 2,210,359$ (8,047)$
Franchise 49,000 49,000 99,818 50,818
Total Taxes 2,267,406 2,267,406 2,310,177 42,771
Licenses and Permits
Business 15,180 15,180 12,185 (2,995)
Nonbusiness 901,529 901,529 1,701,733 800,204
Total Licenses and Permits 916,709 916,709 1,713,918 797,209
Intergovernmental
MSA - maintenance 101,696 101,696 123,433 21,737
Fire state aid 41,500 41,500 59,136 17,636
Other 7,813 7,813 11,116 3,303
County and local 15,500 15,500 15,688 188
Total Intergovernmental 166,509 166,509 209,373 42,864
Charges for Services 30,890 30,890 38,608 7,718
Fines and Forfeits 45,000 45,000 49,505 4,505
Investment Earnings 55,000 55,000 20,437 (34,563)
Miscellaneous Revenue 4,000 4,000 42,515 38,515
TOTAL REVENUES 3,485,514$ 3,485,514$ 4,384,533$ 899,019$
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2016
See Notes to Financial Statements
24
Variance with
2016 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Mayor and Council
Personnel services 27,956$ 27,956$ 27,656$ 300$
Other services and charges 18,000 18,000 28,257 (10,257)
Total Mayor and Council 45,956 45,956 55,913 (9,957)
Election
Other services and charges 15,800 15,800 9,092 6,708
Finance and Administration
Personnel services 304,906 304,906 361,223 (56,317)
Supplies 7,457 7,457 7,349 108
Other services and charges 60,040 60,040 84,590 (24,550)
Total Finance and Administration 372,403 372,403 453,162 (80,759)
Communications
Other services and charges 3,955 (3,955)
Total Communications 3,955 (3,955)
City Facilities
Supplies 350 350 4 346
Other services and charges 55,632 55,632 70,437 (14,805)
Total City Facilities 55,982 55,982 70,441 (14,459)
Professional Services
Assessor 38,000 38,000 52,049 (14,049)
Accounting and auditing 35,350 35,350 29,459 5,891
Legal 60,000 60,000 322,842 (262,842)
Engineering 48,000 48,000 34,229 13,771
Total Professional Services 181,350 181,350 438,579 (257,229)
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED)
For the Year Ended December 31, 2016
See Notes to Financial Statements
25
Variance with
2016 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Planning and Zoning
Personnel services 198,282$ 198,282$ 201,367$ (3,085)$
Supplies 2,550 2,550 810 1,740
Other services and charges 83,850 83,850 46,940 36,910
Total Planning and Zoning 284,682 284,682 249,117 35,565
Total General Government 956,173 956,173 1,280,259 (324,086)
Public Safety
Police
Contracted services 527,060 527,060 536,330 (9,270)
Fire Protection
Personnel services 235,170 235,170 218,234 16,936
2% fire aid 37,323 37,323 59,136 (21,813)
Supplies 32,250 32,250 21,237 11,013
Other services and charges 109,812 109,812 132,336 (22,524)
Total Fire Protection 414,555 414,555 430,943 (16,388)
Building Inspector
Personnel services 228,341 228,341 217,829 10,512
Supplies 9,300 9,300 2,123 7,177
Other services and charges 23,125 23,125 15,080 8,045
Total Building Inspector 260,766 260,766 235,032 25,734
Animal Control
Other services and charges 7,550 7,550 10,646 (3,096)
Criminal Legal 54,700 54,700 44,144 10,556
Emergency Communications 7,400 7,400 4,945 2,455
Total Public Safety 1,272,031$ 1,272,031$ 1,262,040$ 9,991$
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED)
For the Year Ended December 31, 2016
See Notes to Financial Statements
26
Variance with
2016 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
Public Works
General
Personnel services 265,259$ 265,259$ 347,070$ (81,811)$
Supplies 525,950 525,950 367,657 158,293
Other services and charges 126,225 126,225 155,817 (29,592)
Total General 917,434 917,434 870,544 46,890
Trees 1,000 1,000 615 385
Street Lighting 26,400 26,400 22,485 3,915
Total Public Works 944,834 944,834 893,644 51,190
Culture and Recreation
Parks
Personnel services 192,420 192,420 136,617 55,803
Supplies 10,000 10,000 9,884 116
Other services and charges 28,900 28,900 22,287 6,613
Total Culture and Recreation 231,320 231,320 168,788 62,532
Other Unallocated
Compensation adjustments 20,000 20,000 20,000
IT and telephone expense 61,156 61,156 78,047 (16,891)
Total Other Unallocated 81,156 81,156 78,047 3,109
Total Expenditures 3,485,514 3,485,514 3,682,778 (197,264)
Excess (deficiency) of revenues
over (under) expenditures 701,755 701,755
OTHER FINANCING SOURCES (USES)
Transfers
NET CHANGE IN FUND BALANCE 701,755 701,755
FUND BALANCE, January 1 3,187,282 3,187,282 3,187,282
FUND BALANCE, December 31 3,187,282$ 3,187,282$ 3,889,037$ 701,755$
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED)
For the Year Ended December 31, 2016
See Notes to Financial Statements
27
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position
December 31, 2016
Water (601) Sewer (602)
Storm Sewer
(603)
ASSETS
Current Assets
Cash and investments 135,048$ 2,606,515$ 1,945,366$
Receivables
Accounts 130,481 40,774 221,693
Special assessments 360,690 1,131,468 14,431
Due from other governments 3,432,485 1,466 251
Due from other funds 54,305 23,915
Total Current Assets 4,058,704 3,834,528 2,205,656
Noncurrent Assets
Property and Equipment
Land 248,869
Machinery and equipment 300,587
Infrastructure 20,536,904 6,404,080 611,337
Construction in progress 4,861,511 550,564 1,613,451
Total Property and Equipment 25,947,871 6,954,644 2,224,788
Less: Accumulated depreciation 4,387,149 381,713 118,412
Net Property and Equipment 21,560,722 6,572,931 2,106,376
Total Assets 25,619,426 10,407,459 4,312,032
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding 46,474
Deferred outflows from pension activity 55,931 16,581 9,698
Total Deferred Outflows of Resources 102,405$ 16,581$ 9,698$
Business-Type Activities - Enterprise Funds
28
Governmental
Activities -
Total
Internal
Service Funds
4,686,929$ $
392,948
1,506,589
3,434,202
78,220
10,098,888
248,869
300,587 654,692
27,552,321
7,025,526
35,127,303 654,692
4,887,274 482,321
30,240,029 172,371
40,338,917 172,371
46,474
82,210
128,684$ $
See Notes to Financial Statements
29
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position (Continued)
December 31, 2016
Water (601) Sewer (602)
Storm Sewer
(603)
LIABILITIES
Current Liabilities
Accounts payable 35,640$ 41,664$ 1,806$
Accrued salaries payable 5,816 1,834 862
Accrued interest payable 96,963 57,604 29,547
Due to other funds 795
Due to other governments 7,511 145,493 8,576
Unearned revenue 379,000
Current portion of compensated absences 8,844 6,604 2,177
Current portion of bonds payable 485,000 220,000
Total Current Liabilities 1,019,569 473,199 42,968
Long-term Liabilities
Other postemployment benefits payable 17,499 5,405 7,918
Compensated absences payable 2,948 2,201 726
Net pension liability 126,574 45,108 27,727
Bonds payable and unamortized premium on
bonds, net of unamortized discount on bonds 11,141,149 4,320,429 2,823,817
Total Long-term Liabilities 11,288,170 4,373,143 2,860,188
Total Liabilities 12,307,739 4,846,342 2,903,156
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pension activity 19,443 6,770 4,138
NET POSITION
Net investment in capital assets 9,981,047 2,032,502 492,925
Restricted
Debt service 341,696 1,131,468
Unrestricted 3,071,906 2,406,958 921,511
Total Net Position 13,394,649$ 5,570,928$ 1,414,436$
Business-Type Activities - Enterprise Funds
30
Governmental
Activities -
Total
Internal
Service Funds
79,110$ $
8,512
184,114
795 117,821
161,580
379,000
17,625
705,000
1,535,736 117,821
30,822
5,875
199,409
18,285,395
18,521,501
20,057,237 117,821
30,351
12,506,474 172,371
1,473,164
6,400,375 (117,821)
20,380,013$ 54,550$
See Notes to Financial Statements
31
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended December 31, 2016
Business-Type Activities - Enterprise Funds
Water (601) Sewer (602)
Storm Sewer
(603)
Operating Revenues 1,504,202$ 932,448$ 213,233$
Operating Expenses
Personnel services 184,129 55,740 30,248
Supplies 140,861 8,730 6,272
Professional services 15,442 13,311 31,111
Repairs and maintenance 10,800 27,428 21,944
Insurance 8,975
Utilities 180,117 22,754
Depreciation 612,352 132,265 15,962
Total Operating Expenses 1,152,676 260,228 105,537
Operating Income (Loss)351,526 672,220 107,696
Other Revenue (Expense)
Investment earnings 13,987 14,584 15,852
Rents 52,526
Future infrastructure charges 244,500 383,500
Bond issuance costs (19,465) (5,191) (16,718)
Intergovernmental revenue 525 142 81
Interest and fiscal expense (237,691) (115,231) (28,047)
Total Other Revenue (Expense) 54,382 277,804 (28,832)
Income (Loss) Before Transfers
and Contributions 405,908 950,024 78,864
Capital contributions 3,443,636 20,931
Transfers out (40,427) (102,678)
Change in net position 3,809,117 868,277 78,864
Net Position, Beginning 9,585,532 4,702,651 1,335,572
Net Position, End of Year 13,394,649$ 5,570,928$ 1,414,436$
See Notes to Financial Statements
32
Governmental
Activities -
Total
Internal
Service Funds
2,649,883$ $
270,117
155,863
59,864
60,172
8,975
202,871
760,579 24,630
1,518,441 24,630
1,131,442 (24,630)
44,423
52,526
628,000
(41,374)
748
(380,969)
303,354
1,434,796 (24,630)
3,464,567
(143,105)
4,756,258 (24,630)
15,623,755 79,180
20,380,013$ 54,550$
33
Governmental
Activities -
Water (601) Sewer (602)
Storm Sewer
(603) Total
Internal Service
Funds
Cash Flows from Operating Activities
Cash received from customers 2,191,512$ 1,570,518$ 235,763$ 3,997,793$ $
Cash payments to suppliers (558,431) 1,904 (56,666) (613,193)
Cash payments to employees (164,894) (44,897) (26,303) (236,094)
Net Cash Provided By (Used In)
Operating Activities 1,468,187 1,527,525 152,794 3,148,506
Cash Flows From Investing Activities
Interest earnings received 13,987 14,584 15,852 44,423
Cash Flows from Noncapital Financing Activities
Rents received 52,526 52,526
Increase in due to other funds 41,740
Transfers to other funds (40,427) (102,678) (143,105)
Net Cash Provided By (Used In) Noncapital
Financing Activities 12,099 (102,678) (90,579) 41,740
Cash Flows from Capital and Related Financing Activities
Acquisition of capital assets (6,187,932) (538,590) (1,481,249) (8,207,771) (69,003)
Special assessments received 137,938 292,432 2,487 432,857
Proceeds from issuance of long-term debt 3,225,000 860,000 2,770,000 6,855,000
Bond issuance costs (19,465) (5,191) (16,718) (41,374)
Increase in unamortized bond premiums 58,434 15,660 55,315 129,409
Principal paid on long-term debt (415,000) (200,000) (615,000)
Interest paid on long-term debt (197,021) (107,425) (304,446)
Net Cash Provided By (Used In) Capital and
Related Financing Activities (3,398,046) 316,886 1,329,835 (1,751,325) (69,003)
Net Increase (Decrease) in Cash
and Cash Equivalents (1,903,773) 1,756,317 1,498,481 1,351,025 (27,263)
Cash and Cash Equivalents, January 1 2,038,821 850,198 446,885 3,335,904 27,263
Cash and Cash Equivalents, December 31 135,048$ 2,606,515$ 1,945,366$ 4,686,929$ $
Business-Type Activities - Enterprise Funds
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Cash Flows
For the Year Ended December 31, 2016
See Notes to Financial Statements
34
Governmental
Activities -
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES Water (601) Sewer (602)
Storm Sewer
(603) Total
Internal Service
Funds
Operating income (loss) 351,526$ 672,220$ 107,696$ 1,131,442$ (24,630)$
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 612,352 132,265 15,962 760,579 24,630
Change in net pension liability 6,821 1,847 1,050 9,718
Future infrastructure charges, included
in nonoperating revenue 244,500 383,500 628,000
(Increase) decrease in:
Accounts receivable 227,290 256,036 22,781 506,107
Due from other governments 520 (1,466) (251) (1,197)
Prepaid expenses 1,290 1,290
Increase (decrease) in:
Accounts payable (207,454) (61,701) (1,279) (270,434)
Accrued salaries payable 2,418 568 57 3,043
Due to other governments 5,218 134,538 3,940 143,696
Unearned revenue 215,000 215,000
Other postemployment benefits payable 3,494 1,520 1,112 6,126
Compensated absences payable 6,502 6,908 1,726 15,136
Net Cash Provided By (Used In) Operating Activities 1,468,187$ 1,527,525$ 152,794$ 3,148,506$ $
Noncash Capital and Related Financing Activities
Amortization of deferred charges 5,333$ 547$ 402$ 6,282$ $
Amortization of bond premiums 8,966 2,032 1,902 12,900
Receipt of contributed capital 11,334 20,931 32,265
Capital asset grant included in receivables 3,432,302 3,432,302
Business-Type Activities - Enterprise Funds
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Cash Flows (Continued)
For the Year Ended December 31, 2016
See Notes to Financial Statements
35
Agency Funds
ASSETS
Cash and investments 2,394,526$
Accounts receivable 128
TOTAL ASSETS 2,394,654$
LIABILITIES
Accounts payable 64,812$
Deposits payable 2,329,842
TOTAL LIABILITIES 2,394,654$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
December 31, 2016
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
This Page Left Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
36
1. Summary of Significant Accounting Policies
The financial statements of the City of Lake Elmo, Minnesota (the City) have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental units.
The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. The more significant of the
City's accounting principles are described below.
A. Reporting Entity
The City operates under Optional Plan A as defined in the State of Minnesota statutes. The
City is governed by an elected Mayor and a four-member Council. The Council exercises
legislative authority and determines all matters of policy. The Council appoints personnel
responsible for the proper administration of all affairs relating to the City. The City has
considered all potential component units for which it is financially accountable, and other
organizations for which the nature and significance of their relationship with the City are
such that exclusion would cause the City's financial statements to be misleading or
incomplete. GASB has set forth criteria to be considered in determining financial
accountability for a component unit. These criteria include appointing a voting majority of
the component unit's governing body, and 1) the ability of the primary government to impose
its will on that component unit, or 2) the potential for the component unit to provide specific
benefits to, or impose specific financial burdens on the primary government. The City has
no component units.
Related Organizations
The Lake Elmo Firemen's Relief Association (Association) is organized as a legally separate
entity from the City by its members to provide pension and other benefits to its members in
accordance with Minnesota statutes. The membership appoints the board of the
Association and separate financial statements are issued by the Association. All funding is
conducted in accordance with Minnesota statutes. Although the City levies property taxes
for the Association, the Association is fiscally independent to determine and levy taxes. The
City's portion of the pension benefit costs related to the Association is included in the general
fund. The Association does not have any significant operational or financial relationship
with the City.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
37
1. Summary of Significant Accounting Policies (Continued)
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 nonfiduciary activities of the City.
Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business-type activities, which rely to a significant
extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment 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.
Separate financial statements are provided for governmental funds, proprietary funds and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. 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 fiscal
period.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
38
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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 when payment is due.
Property taxes, licenses and permits, and interest associated with the current fiscal period
are all considered to be susceptible to accrual and so have been recognized as revenues
of the current fiscal period. Only the portion of special assessments receivable due within
the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available
only when cash is received by the City.
Revenue resulting from exchange transactions, in which each party gives and receives
essentially equal value, is recorded on the accrual basis when the exchange takes place.
On a modified accrual basis, revenue is recorded in the year in which the resources are
measureable and become available.
Non-exchange transactions, in which the City receives value without directly giving equal
value in return, include property taxes, grants and donations. On an accrual basis,
revenue from property taxes is recognized in the year for which the tax is levied. Revenue
from grants and donations is recognized in the year in which all eligibility requirements
have been satisfied. Eligibility requirements include timing requirements, which specify
the year in which the resources are required to be used or the year when use is first
permitted; matching requirements, in which the City must provide local resources to be
used for a specific purpose; and expenditure requirements, in which the resources are
provided to the City on a reimbursement basis. On a modified accrual basis, revenue from
non-exchange transactions must also be available before it is recognized.
Unearned revenue is recorded when assets are recognized before revenue recognition
criteria have been satisfied. Grants received before eligibility requirements other than time
requirements are met are recorded as unearned revenue. Grants received before time
requirements are met are recorded as a deferred inflow of resources.
The City reports the following major governmental funds:
The general fund is the government’s primary operating fund. It accounts for all
financial resources of the City, except those required to be accounted for in another
fund.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
39
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
The debt service fund is an accumulation of resources (primarily special
assessments and property tax revenues) for the payments of principal and interest
on long-term general obligation debt of governmental funds.
The infrastructure reserve fund accounts for the accumulation of funds for the
current and future road and street infrastructure projects.
The vehicle acquisition fund accounts for the accumulation of funds for the
purchase of vehicles to be used by various City departments. Although this fund
did not meet the requirements to be considered a major fund, management has
elected to include this fund as a major fund as of and for the year ended December
31, 2016. This fund will be closed during 2017.
The City reports the following major proprietary funds:
The water fund accounts for the activities of the City's water distribution operations.
The sewer fund accounts for revenues and costs associated with the City's sewer
system.
The storm sewer fund accounts for costs associated with the City's storm sewer
system. These costs are financed by the storm sewer surcharge.
Additionally, the City reports the following fund types:
Internal service funds are used to account for the replacement of radios, information
technology and furniture, fixtures and equipment expenses of the governmental
activities. Internal service funds operate in a manner similar to enterprise funds;
however, they accumulate funding primarily from other departments within the City
on a cost reimbursement basis.
Fiduciary funds account for assets held by the City in a trustee capacity or as an
agent on behalf of others.
Agency funds are custodial in nature and do not present results of operations or
have a measurement focus. Agency funds are accounted for using the modified
accrual basis of accounting. These funds are used to account for assets that the
City holds for others in an agency capacity.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
40
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
As a general rule the effect of interfund activity has been eliminated from the government-
wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes
and other charges between the City's enterprise funds 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.
Amounts reported as program revenues include 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3)
capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenues rather than as program revenues. Likewise,
general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing
and delivering goods in connection with a proprietary fund's principal ongoing operations.
The principal operating revenues of the City's enterprise funds are charges to customers for
sales and services. Operating expenses for enterprise funds include the cost of sales and
services, administrative expenses, and depreciation of capital assets. All other revenues
and expenses are reported as nonoperating revenues and expenses.
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.
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position
1. Cash and investments (including cash equivalents)
Cash balances from all funds (including cash equivalents) are pooled and invested to
the extent available in various securities as authorized by Minnesota statutes. Earnings
from the pooled investments are allocated to the respective funds on the basis of
applicable cash balance (or due from other funds balance) participation by each fund.
Investments are stated at fair value, based upon quoted market prices at the reporting
date. Cash and cash equivalents for purposes of the basic financial statements includes
amounts in demand deposits as well as all investments held by the City.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
41
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
2. Receivables and payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other funds"
(i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the
non-current portion of interfund loans). All other outstanding balances between funds
are reported as "due to/from other funds." Any residual balances outstanding between
the governmental activities and business-type activities are reported in the government-
wide financial statements as "interfund balances."
Advances between funds, if any, are offset by a fund balance reserve account in
applicable governmental funds to indicate that they are not available for appropriation
and are not expendable available financial resources.
Property tax levies are set by the City Council in December of each year and are certified
to Washington County for collection in the following year. In Minnesota, counties act as
collection agents for all property taxes. The County spreads all levies over taxable
property. Such taxes become a lien on January 1, of the following year, and are
recorded as receivables by the City at that date. Revenues from property taxes are
accrued and recognized in the year collectible, net of delinquencies.
Real property taxes may be paid by taxpayers in two equal installments on May 15 and
October 15. Personal property taxes may be paid on February 28 and June 30. The
County provides tax settlements to cities and other taxing districts normally during the
months of January, July and December.
Taxes which remain unpaid at December 31 are classified as delinquent taxes
receivable. The net amount of delinquent taxes receivable are fully offset by deferred
inflows of resources in the governmental funds of the fund financial statements because
they are not known to be available to finance current expenditures.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
42
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
2. Receivables and payables (continued)
Assessments are levied at various times upon City Council resolution for property owner
improvements made by the City. Generally, assessment collections are deferred over
periods ranging from ten to twenty years with interest charged at 1% over the City’s
borrowing rate. Revenue from these assessments is recognized when assessed in the
government-wide financial statements and as the annual installments become
collectible in the governmental funds of the fund financial statements. Annual
installments not collected as of each December 31 are classified as delinquent
assessments receivable. The net amount of delinquent assessments receivable are
fully offset by deferred inflows of resources in the governmental funds of the fund
financial statements because they are not known to be available to finance current
expenditures.
3. Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g.,
roads, bridges, sidewalks, and similar items), are reported in the applicable
governmental or business-type activities columns in the government-wide financial
statements. Capital assets are defined by the City as assets with an initial, individual
cost of more than $25,000. Such assets are recorded at historical cost or estimated
historical cost if purchased or constructed. The costs of normal maintenance and repairs
that do not add to the value of the asset or materially extend assets lives are not
capitalized. Donated capital assets are recorded at estimated fair market value at the
date of donation.
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during the construction phase of capital assets of
business-type activities, if material, is included as part of the capitalized value of the
assets constructed, net of interest earned on the invested debt proceeds over the same
period.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
43
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
3. Capital assets (continued)
Property, plant and equipment are capitalized when acquired, and depreciation is
provided using the straight-line method applied over the following estimated useful lives
of the assets.
Useful Life
in Years
Buildings and Improvements 10 - 50
Infrastructure 20 - 40
Other Improvements 10 - 25
Machinery and Equipment 5 - 20
4. Postemployment benefits other than pensions
Under Minnesota Statute 471.61, subdivision 2b., public employers must allow retirees
and their dependents to continue coverage indefinitely in an employer-sponsored health
care plan, under the following conditions: 1) retirees must be receiving (or eligible to
receive) an annuity from a Minnesota public pension plan, 2) coverage must continue in
group plan until age 65, and retirees must pay no more than the group premium, and 3)
retirees may obtain dependent coverage immediately before retirement. All premiums
are funded on a pay-as-you-go basis. The postemployment benefit obligation liability
was determined using the alternative measurement method, in accordance with GASB
Statement No. 45.
5. 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 statements of net position.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
44
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
5. Long-term obligations (continued)
Bond premiums and discounts are deferred and amortized over the life of the bonds
using the effective interest method. Bonds payable are reported net of the applicable
bond premium or discount. In the fund financial statements, governmental fund types
recognize bond premiums and discounts 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 current expenditures.
6. 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.
7. Net Position and Fund Balance
In the government-wide and proprietary financial statements, net position is classified in
the following categories:
Net Investment in Capital Assets – This amount consists of capital assets net of
accumulated depreciation and reduced by outstanding debt attributed to the
acquisition, construction, or improvement of the assets.
Restricted Net Position – This amount is restricted by external creditors, grantors,
contributors, laws or regulations of other governments.
Unrestricted Net Position – This amount is all net position that does not meet the
definition of “net investment in capital assets” or “restricted net position.”
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
45
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
7. Net Position and Fund Balance (continued)
The City classifies governmental fund balances as follows:
Non-spendable – includes fund balance amounts that cannot be spent either because
it is not in spendable form or because of legal or contractual restraints.
Restricted – This amount is restricted by external creditors, grantors, contributors, laws
or regulations of other governments.
Committed – includes amounts that can be used only for the specific purposes
imposed by formal action (resolution) of the City Council, which is the City's highest
level of decision-making authority. Those committed amounts cannot be used for any
other purpose unless the Council rescinds or changes the specified use by taking the
same type of action (resolution) it employed to previously commit those amounts.
Assigned – includes fund balance amounts that are intended to be used for specific
purposes that are neither considered restricted or committed. The City Council, by
majority vote, may assign fund balances to be used for specific purposes when
appropriate. The Council has delegated the power to assign fund balances to the
City's finance committee. Unlike commitments, assignments generally only exist
temporarily. In other words, an additional action does not normally have to be taken
for the removal of an assignment. Conversely, as discussed above, an additional
action is essential to either remove or revise a commitment.
Unassigned – includes positive fund balances within the General Fund which have not
been classified within the above mentioned categories and negative fund balances in
other governmental funds.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
46
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position (Continued)
7. Net Position and Fund Balance (continued)
The City considers restricted/committed amounts to be spent first when both restricted
and unrestricted fund balance is available unless there are legal documents/contracts
that prohibit doing this, such as a grant agreement requiring dollar for dollar spending.
Additionally, the City would first use committed, then assigned and lastly unassigned
amounts when expenditures are made. The City Council has formally adopted a fund
balance policy for the General Fund. The City's policy is to maintain a minimum
unassigned fund balance in the General Fund equal to 50 percent of budgeted
expenditures to ensure funds are available at all times to meet cash flow needs and
accommodate emergency contingency concerns.
8. Interfund transactions
Interfund services provided and used are accounted for as revenues, expenditures or
expenses. Transactions that constitute reimbursements to a fund for
expenditures/expenses or revenues/income initially made from it that are properly
applicable to another fund are recorded as expenditures/expenses or revenues/income
in the fund that is reimbursed. All other interfund transactions, except interfund services
provided and used, are reported as transfers.
E. Concentration of Credit Risk
Financial instruments which expose the City to a concentration of credit risk consist primarily
of cash investments and accounts and loans receivable. Credit risk related to cash and
investments is discussed in Note 3A. The City's accounts and loans receivable are
concentrated geographically, and for the most part, amounts are due from individuals
residing in and businesses located in the City of Lake Elmo, Minnesota.
F. Use of Estimates
The preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America (GAAP) requires management to make estimates
that affect amounts reported in the financial statements during the reporting period. Actual
results could differ from such estimates.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
47
2. Stewardship, Compliance and Accountability
A. Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally
accepted in the United States of America. Annual appropriated budgets are legally adopted
by Council resolution for the General Fund and the special revenue funds. Formal budgetary
integration is employed as a management control device during the year for these funds.
The City follows these legal compliance procedures in establishing the budgetary data
reflected in the financial statements.
1. Budget requests are submitted by all department heads to the City Administrator and
Finance Director in August of each year. The Administrator's office compiles the budget
requests into an overall preliminary City budget, balancing budget requests with
available revenue.
2. The preliminary budget is submitted to the City Council in September for its review
and/or modification.
3. City administration presents the proposed budget to the City Council which in turn, when
required, holds a truth-in-taxation public hearing on the proposed budget. The budget
resolution adopted by the City Council sets forth the budget at the department level for
the General Fund and the special revenue funds.
4. All budgeted appropriations lapse at the end of the fiscal year. The legal level of control
(the level on which expenditures may not legally exceed appropriations) for each budget
is at the department level. Administration cannot legally amend or transfer
appropriations between departments without the approval of the City Council once the
budget has been approved. Any over expenditures of appropriations or transfers of
appropriated amounts must be approved by the City Council.
5. Budgeted amounts are as originally adopted, or as amended by the City Council. The
budget cannot be amended without approval by the City Council.
All budget amounts presented as a basic financial statement or in the accompanying
supplementary information reflect the original budget and the final budget (which were the
same for the year ended December 31, 2016).
The City does not use encumbrance accounting.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
48
2. Stewardship, Compliance, and Accountability
B. Expenditures Exceeding Appropriations
For the year ended December 31, 2016, the General Fund total expenditures were $197,264
more than budget. The following funds and General Fund departments had expenditures
exceeding the latest amended budget:
2016 Budgeted
Expenditures
2016 Actual
Expenditures
Amount Exceeding
Budgeted Amount
General Fund:
General government 956,173$ 1,280,259$ 324,086$
Library Fund 256,957 331,901 74,944
The above listed over expenditures in the general government department were due primarily
to legal expenses incurred over the amounts budgeted. The expenditures in excess of
budget for the Library fund were related to repairs to the library building during the year.
All overexpenditures were approved by the City Council.
C. Fund Balance Deficits
As of December 31, 2016, the following funds had deficit fund balances:
Fund Amount
Nonmajor:
City Events Special Revenue 609$
Village Project Capital Project 400,546
Manning Avenue/Highway 36 Capital Project 4,897
The fund balance deficits will be eliminated by future revenue and financing sources.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
49
3. Detailed Notes on All Funds
A. Deposits and Investments
In accordance with applicable Minnesota statutes, the City maintains deposits at depository
banks authorized by the City Council. All such depositories are members of the Federal
Reserve System.
Minnesota statutes require that all deposits be protected by insurance, surety bond or
collateral. The market value of collateral pledged must equal 110% of the deposits not
covered by insurance or surety bonds. Authorized collateral includes certain state or local
government obligations and legal investments described in the investment policy section.
Minnesota Statutes require that securities pledged as collateral be held in safekeeping by
the City Treasurer or in a financial institution other than the institution furnishing the
collateral.
The City's deposits were entirely covered by federal depository insurance or collateral at
December 31, 2016.
Investment Policy
The City does not maintain a formal investment policy that limits investment maturities as
a means of managing its exposure to fair value losses arising from increasing interest rates
or that would limit its investment choices as a means of managing its exposure to credit
risk.
The City is authorized by Minnesota Statutes to invest idle funds as follows:
(a) Direct obligations or obligations guaranteed by the United States or its agencies.
(b) Shares of investment companies registered under the Federal Investment Company Act
of 1940 and whose only investments are in securities described in (a) above.
(c) General obligations of the State of Minnesota or its municipalities.
(d) Bankers acceptances of United States banks eligible for purchase by the Federal
Reserve System.
(e) Commercial paper issued by United States corporations or their Canadian subsidiaries,
of the highest quality, and maturing in 270 days or less.
(f) Repurchase agreements with banks that are members of the Federal Reserve System
with capitalization exceeding $10,000,000, a reporting dealer to the Federal Reserve
Bank of New York, or certain Minnesota securities broker-dealers.
(g) Money market funds with institutions that have portfolios consisting exclusively of United
States Treasury obligations and Federal Agency issues.
(h) Guaranteed investment contracts (gic's) issued or guaranteed by United States
commercial banks or domestic branches of foreign banks or United States insurance
companies and with a credit quality in one of the top two highest categories.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
50
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment, the greater the
sensitivity of its fair value to changes in market interest rates. One of the ways that the City
manages its exposure to interest rate risk is by purchasing a combination of shorter and
longer term investments and by timing cash flows from maturities so that a portion of the
portfolio is maturing or coming close to maturity evenly over time as necessary to provide the
cash flow and liquidity needs for operation.
The following is a summary of the City of Lake Elmo, Minnesota's cash and investment
portfolio including the range of maturities and investment ratings by type of investment:
Investment Range of Maturities Rating Value
Cash N/A N/A 11,127,493$
Certificates of Deposit 10/22 N/A 2,933,500
Municipal Bonds 12/18 A 363,667
U.S. Government Agencies 10/23 AAA 1,536,750
Total cash and investments 15,961,410$
N/A Not applicable or not available
A reconciliation of cash and temporary investments as shown on the Statement of Net
Position for the City follows:
Carrying amount of deposits 11,127,493$
Investments 4,833,917
Total 15,961,410$
Government-wide
Cash and investments 13,566,883$
Fiduciary
Cash and investments 2,394,526
Total 15,961,409$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
51
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to
the holder of the investment. The City's investments are rated by various credit rating
agencies, where applicable, to indicate the associated credit risk. Investment ratings by
investment type (as applicable) are included in the preceding summary of investments.
Concentration of Credit Risk
Investments in any one issuer that represented 5% or more of total investments as of
December 31, 2016 were as follows:
Issuer Investment Type Value
Lake Elmo Bank Money Market Savings 10,608,299$
The City routinely reviews its deposits to determine that pledged securities are adequate to
cover any uninsured deposits.
Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counter
party, the City will not be able to recover the value of its investment securities that are in the
possession of an outside party. At December 31, 2016, all investments were insured or
registered or the securities were held by the City or its agent in the City's name.
Fair Value Measurements
Fair value measurements are determined utilizing the framework established by the
Governmental Accounting Standards Board. The framework provides a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy are as follows:
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
52
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Fair Value Measurements (continued)
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the City has the ability to access.
Level 2: Inputs to the valuation methodology include:
o Quoted prices for similar assets or liabilities in active markets
o Quoted prices for identical assets or liabilities in inactive markets
o Inputs other than quoted prices that are observable for the asset or liability
o Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
If the asset or liability has a specific (contractual) term, Level 2 input must be
observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based
on the lowest level of any input that is significant to the fair value measurement. Valuation
techniques used need to maximize the use of observable inputs and minimize the use of
unobservable inputs.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
53
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Fair Value Measurements (continued)
The City’s investments within the fair value hierarchy at December 31, 2016 and 2015 were
as follows:
Assets
Measured at
Fair Value Level 1 Level 2 Level 3
U.S. Government
Securities 1,536,750$ $ 1,536,750$ $
Certificates of Deposit 2,933,500 2,933,500
Municipal Bonds 363,667 363,667
Total 4,833,917$ 2,933,500$ 1,900,417$ $
Assets
Measured at
Fair Value Level 1 Level 2 Level 3
U.S. Government
Securities 1,133,809$ $ 1,133,809$ $
Certificates of Deposit 4,932,107 4,932,107
Municipal Bonds 365,072 365,072
Total 6,430,988$ 4,932,107$ 1,498,881$ $
Fair Value Hierarchy Level
As of December 31, 2016
As of December 31, 2015
Fair Value Hierarchy Level
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
54
3. Detailed Notes on All Funds (Continued)
B. Due from Other Governmental Units
Amounts due from other governmental units as of December 31, 2016 were as follows:
Fund Type
State of
Minnesota
Washington
County Total
General Fund $ 39,274$ 39,274$
Debt Service Fund 4,834 4,834
Water Fund 3,432,302 183 3,432,485
Sewer Fund 1,466 1,466
Storm Sewer Fund 251 251
Total 3,432,302$ 46,008$ 3,478,310$
C. Accounts and Loans Receivable
Accounts and loans receivable as of December 31, 2016 are expected to be collected in full.
Based upon management's assessment of the creditworthiness of the customers comprising
the receivable balance, no allowance for uncollectible accounts is necessary.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
55
3. Detailed Notes on All Funds (Continued)
D. Capital Assets
Capital asset activity for the City for the year ended December 31, 2016 was as follows:
Beginning Ending
Governmental Activities Balance Increases Decreases Balance
Capital assets, not being depreciated:
Land $ 3,453,979 $ $ $ 3,453,979
Construction in progress 2,857,416 2,971,529 1,410,393 4,418,552
Total capital assets, not being depreciated 6,311,395 2,971,529 1,410,393 7,872,531
Capital assets, being depreciated:
Buildings 3,533,542 3,533,542
Improvements other than buildings 1,347,650 67,747 1,415,397
Machinery and equipment 3,737,075 130,270 3,867,345
Infrastructure 10,174,623 1,410,393 11,585,016
Total capital assets, being depreciated 18,792,890 1,608,410 20,401,300
Less accumulated depreciation for:
Building 884,193 72,408 956,601
Improvements other than buildings 907,981 68,420 976,401
Machinery and equipment 2,127,568 183,605 2,311,173
Infrastructure 2,656,904 617,718 3,274,622
Total accumulated depreciation 6,576,646 942,151 7,518,797
Total capital assets, being depreciated, net 12,216,244 666,259 12,882,503
Governmental activities capital assets, net 18,527,639$ 3,637,788$ 1,410,393$ 20,755,034$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
56
3. Detailed Notes on All Funds (Continued)
D. Capital Assets (Continued)
Beginning Ending
Business-Type Activities Balance Increases Decreases Balance
Capital assets, not being depreciated:
Land $ 248,869 $ $ $ 248,869
Construction in progress 4,193,729 8,207,773 5,375,976 7,025,526
Total capital assets, not being depreciated 4,442,598 8,207,773 5,375,976 7,274,395
Capital assets, being depreciated:
Machinery and equipment 300,587 300,587
Infrastructure 22,176,345 5,375,976 27,552,321
Total capital assets, being depreciated 22,476,932 5,375,976 27,852,908
Less accumulated depreciation for:
Machinery and equipment 200,075 16,051 216,126
Infrastructure 3,926,620 744,528 4,671,148
Total accumulated depreciation 4,126,695 760,579 4,887,274
Total capital assets, being depreciated, net 18,350,237 4,615,397 22,965,634
Business-type activities capital assets, net 22,792,835$ 12,823,170$ 5,375,976$ 30,240,029$
Certain assets in the City's business-type activities have been partially funded by grants from
the State of Minnesota and therefore are considered jointly owned property. In the unlikely
event the City would sell these assets, the City would be required to reimburse the State up
to the full amount of the grants.
Depreciation expense for the year ended December 31, 2016 was charged to
functions/programs as follows:
Governmental Activities
General government 11,471$
Public safety 119,657
Public works 729,004
Culture and recreation 82,019
Total 942,151$
Business-Type Activities
Water 612,352$
Sewer 132,265
Storm sewer 15,962
Total 760,579$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
57
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt
The City issues general obligation bonds to provide funds for economic development and
for the acquisition and construction of major capital assets including infrastructure. General
obligation bonds have been issued for both governmental and business-type activities.
Bonds issued to provide funds for business-type activities are reported in proprietary funds
if they are expected to be repaid from proprietary revenues. General obligation bonds are
direct obligations and pledge the full faith and credit of the City. General obligation
improvement bonds are expected to be repaid, in part, from assessments to the benefited
properties. A summary of long-term debt outstanding at December 31, 2016 is as follows:
Range of Final Balance
Issue Date Interest Rates Maturity 12/31/16
General obligation bonds:
2009B Improvement Bonds 10/1/2009 3.00% - 3.05% 2020 250,000$
2010A Improvement Bonds 11/15/2010 1.85% - 2.80% 2021 365,000
2010B CIP Crossover Refunding Bonds 11/15/2010 2.00% - 3.20% 2025 1,535,000
2011A Improvement Bonds 10/1/2011 1.25% - 2.30% 2022 525,000
2012B Improvement Bonds 8/16/2012 0.75% - 1.90% 2023 625,000
2013A Improvement Bonds 10/1/2013 2.00% - 3.75% 2028 1,345,000
2014A Improvement Bonds 7/15/2014 2.00% - 3.50% 2030 2,670,000
2015A Improvement Bonds 8/13/2015 2.00% - 3.00% 2031 1,620,000
2016A Improvement Bonds 6/1/2016 2.00% 2027 2,690,000
General obligation revenue bonds:
2009A Refunding Bonds 5/1/2009 3.45% - 3.85% 2021 240,000
2012A Refunding Bonds 8/13/2012 2.00% - 2.50% 2030 3,840,000
2013A Improvement Bonds 10/1/2013 2.00% - 4.00% 2033 3,435,000
2014A Improvement Bonds 7/15/2014 2.00% - 3.50% 2030 3,210,000
2015A Improvement Bonds 8/13/2015 2.00% - 3.00% 2031 1,195,000
2016A Improvement Bonds 6/1/2016 2.00% 2032 6,855,000
Other Liabilities:
Compensated Absences 88,123
Post Employment Benefit Obligation 237,241
Unamortized premium 480,485
Less: Unamortized discount (142,522)
Total Long-Term Debt 31,063,327$
Liquidation of the compensated absences liability occurs within the department and fund
for which the corresponding employees are assigned. The City is subject to statutory
limitation by the State of Minnesota for bonded indebtedness payable principally from
property taxes. As of December 31, 2016, the City had not utilized approximately
$35,930,000 of its net legal debt margin.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
58
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt (Continued)
The following is a summary of the changes in long-term debt obligations for the year ended
December 31, 2016:
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable:
General obligation bonds:
2009A Refunding Bonds 70,000$ $ 70,000$ $ $
2009B Improvement Bonds 310,000 60,000 250,000 60,000
2010A Improvement Bonds 435,000 70,000 365,000 70,000
2010B CIP Crossover Refunding Bonds 1,685,000 150,000 1,535,000 155,000
2011A Improvement Bonds 610,000 85,000 525,000 85,000
2012B Improvement Bonds 710,000 85,000 625,000 85,000
2013A Improvement Bonds 1,450,000 105,000 1,345,000 105,000
2014A Improvement Bonds 2,850,000 180,000 2,670,000 210,000
2015A Improvement Bonds 1,620,000 1,620,000 140,000
2016A Improvement Bonds 2,690,000 2,690,000
General obligation note payable:
Note Payable - Lake Elmo Bank 21,219 21,219
Other Liabilities:
Compensated Absences 70,161 90,110 95,648 64,623 48,467
Post Employment Benefit Obligation 174,282 32,137 206,419
Unamortized premium 93,353 102,877 14,438 181,792
Less: Unamortized (discount) (50,262) (14,392) (5,430) (59,224)
Governmental Activities
Long-Term Liabilities 10,048,753 2,900,732 930,875 12,018,610 958,467
BUSINESS-TYPE ACTIVITIES
Bonds and Notes Payable:
General obligation revenue bonds:
2009A Refunding Bonds 280,000 40,000 240,000 45,000
2012A Refunding Bonds 4,035,000 195,000 3,840,000 190,000
2013A Improvement Bonds 3,640,000 205,000 3,435,000 205,000
2014A Improvement Bonds 3,385,000 175,000 3,210,000 205,000
2015A Improvement Bonds 1,195,000 1,195,000 60,000
2016A Improvement Bonds 6,855,000 6,855,000
Other Liabilities:
Compensated Absences 8,364 44,973 29,837 23,500 17,625
Post Employment Benefit Obligation 24,696 6,126 30,822
Unamortized premium 138,007 173,586 12,900 298,693
Less: Unamortized (discount) (50,523) (36,674) (3,899) (83,298)
Business-Type Activities
Long-Term Liabilities 12,655,544 7,043,011 653,838 19,044,717 722,625
Total 22,704,297$ 9,943,743$ 1,584,713$ 31,063,327$ 1,681,092$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
59
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt (Continued)
Debt service requirements to maturity for long-term debt, excluding compensated
absences and post employment benefit obligation, as of December 31, 2016 were as
follows:
Year Principal Interest Principal Interest
2017 910,000$ 267,528$ 705,000$ 457,498$
2018 1,175,000 240,855 1,145,000 422,505
2019 1,205,000 216,853 1,165,000 399,256
2020 1,230,000 191,308 1,175,000 375,525
2021 1,185,000 165,371 1,185,000 351,212
2022-2026 4,760,000 456,118 6,215,000 1,355,536
2027-2031 1,160,000 60,001 6,240,000 562,101
2032-2033 945,000 30,800
Totals 11,625,000$ 1,598,031$ 18,775,000$ 3,954,431$
General Obligation
Improvement Bonds
General Obligation Revenue
Bonds
F. Tax Abatement Agreements
The City enters into property tax abatement agreements through the use of tax increment
financing districts with local businesses under various Minnesota Statutes. Under these
statutes, the City annually abates taxes collected above the districts’ base tax capacity which
is established during adoption of the tax increment district. These agreements are
established to foster economic development and redevelopment through creating jobs,
removing blight and providing affordable housing. The City uses Minnesota Statutes 469.001
to 469.047 and 469.174 to 469.179 (the Tax Increment Act) to create these districts.
During the year ended December 31, 2016, the City had one agreement established under
Minnesota Statute 469.001 to 469.047 which resulted in property taxes totaling $3,629 being
abated.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
60
3. Detailed Notes on All Funds (Continued)
F. Interfund Receivables and Payables
The following schedule reports the interfund receivables and payables within the City's funds
as of December 31, 2016:
Due From Due To
Other Funds Other Funds
Major Governmental Funds:
General Fund 200,937$ $
Debt Service 95,605
Infrastructure Reserve 7,032
Subtotal 200,937 102,637
Nonmajor Governmental Funds:
City Events 1,144
Village Project 56,760
Subtotal 57,904
Proprietary Funds:
Water 795
Sewer 54,305
Storm Sewer 23,915
Subtotal 78,220 795
Internal Service Funds:
Radio Replacement 41,740
FFE Replacement 76,081
Subtotal 117,821
Total All Funds 279,157$ 279,157$
Interfund receivables and payables are the result of expenditures of funds prior to the
collection of special assessments, property taxes and other revenues. All interfund balances
will be repaid as the revenues are collected by the individual funds.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
61
3. Detailed Notes on All Funds (Continued)
F. Interfund Receivables and Payables (continued)
The City established an interfund loan from the General Fund to the Village Project fund. At
December 31, 2016, the outstanding balance was $405,398. The loan carries an interest
rate of 4 percent.
G. Interfund Transfers
The following schedule reports the interfund transfers within the City's funds as of December
31, 2016:
Transfers In Transfers Out
Major Governmental Funds:
Debt Service 143,105$ $
Proprietary Funds:
Water 40,427
Sewer 102,678
Total All Funds 143,105$ 143,105$
Transfers are used to move unassigned revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
62
3. Detailed Notes on All Funds (Continued)
H. Fund Equity
In accordance with the requirements of GASB Statement No. 54, below is a schedule of
ending fund balances as of December 31, 2016:
General Debt Service
Infrastructure
Reserve
Vehicle
Acquisition
Other
Governmental
Funds
Total
Governmental
Funds
Nonspendable
Prepaid items 3,824$ $ $ $ $ 3,824$
Advance to other funds 405,398 405,398
Total Nonspendable 409,222 409,222
Restricted
Debt service 3,248,230 3,248,230
Committed
Legal reserve 200,000 200,000
Assigned
Library 174,540 174,540
City facilities 272,924 272,924
Infrastructure improvements 29,871 8,089 37,960
Park improvements 980,041 980,041
Vehicle acquisition 39,191 39,191
Total Assigned 29,871 39,191 1,435,594 1,504,656
Unassigned 3,279,815 (12,117) (406,052) 2,861,646
Total Fund Balance 3,889,037$ 3,236,113$ 29,871$ 39,191$ 1,029,542$ 8,223,754$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
63
4. Other Information
A. Risk Management
The City is exposed to various risks of loss related to torts: theft of, damage to, or destruction
of assets; errors or omissions; injuries to employees; and natural disasters. The City
participates in the League of Minnesota Cities Insurance Trust (LMCIT) to provide its general
liability and property coverage. The LMCIT is a public entity risk pool currently operating as
a common risk management and insurance program for participating Minnesota Cities. All
Cities in the LMCIT are jointly and severally liable for all claims and expenses of the pool.
The amount of any liability in excess of assets of the pool may be assessed to the
participating cities if a deficiency occurs. The City purchases commercial insurance for
property values in excess of the LMCIT policy limits and all other risks of loss. Settled claims
have not exceeded the LMCIT or commercial coverage in any of the past three fiscal years.
Worker's compensation insurance is also purchased through the LMCIT. The worker
compensation program is a retrospectively rated contract with premiums or required
contributions based primarily on the experience rates of the participating cities. There were
no significant reductions in insurance coverage from the previous year or settlements in
excess of insurance coverage for any of the past three fiscal years.
B. Commitments and Contingencies
General Litigation:
Although the City is occasionally involved in litigation, management was unaware of any
pending lawsuits in which the City was involved as of December 31, 2016. It is the opinion
of management that any potential claim regarding any lawsuits against the City would be
covered by the liability insurance of the City and that any potential claim against the City
would not affect the financial statements.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
64
4. Other Information (Continued)
B. Commitments and Contingencies (Continued)
Operating Lease:
The City is obligated under a lease agreement for office space accounted for as an operating
lease. Expenditures under this operating lease for the year ended December 31, 2016 totaled
$30,147. The following is a schedule by year of future minimum rental payments required
under the lease as of December 31, 2016:
Year Ending
December 31, Amount
2017 31,992$
2018 32,301
2019 24,921
Total 89,214$
C. Other Post Employment Benefits
Plan Description
The City administers a single-employer defined benefit healthcare plan ("the Retiree Health
Plan"). The plan provides healthcare insurance for eligible retirees and their spouses through
the City's group health insurance plan until Medicare age, which covers both active and
retired members. During 2016, there were 20 active participants and no retiree participants.
Benefit provisions are established by the Council. The Retiree Health Plan does not issue a
publicly available financial report.
Funding Policy
The City has historically funded these liabilities on a pay-as-you-go basis. Contribution
requirements are negotiated between the City and union representatives on a per contract
basis. At the present time, no retiree benefits are provided except the allowance to continue
health insurance that is mandated by Minnesota Law. The City does not contribute any of
the cost of current-year premiums for eligible retired plan members or their spouses. Plan
members receiving benefits contribute 100 percent of their premium costs.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
65
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Annual Other Postemployment Benefit Cost and Net Other Postemployment Benefit
Obligations
The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based
on the annual required contribution of the employer (ARC). The City has elected to calculate
the ARC and related information using the alternative measurement method permitted by
GASB Statement No. 45 for employers in plans with fewer than one hundred total plan
members. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and to amortize any unfunded actuarial liabilities
(or funding excess) over a period not to exceed thirty years. The following table shows the
components of the City's annual OPEB cost for the year, the amount actually contributed to
the plan, and changes in the City's net OPEB obligation:
Annual required contribution 46,247$
Interest on net OPEB obligations 1,347
Adjustment to ARC (9,331)
Annual OPEB cost 38,263
Contributions during the year
Increase in net OPEB obligation 38,263
Net OPEB, beginning of year 198,978
Net OPEB, ending of year 237,241$
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan,
and the net OPEB obligation for fiscal years ended December 31, 2016, 2015 and 2014 are
as follows:
Fiscal Year
Ended
Annual
OPEB Cost
Percentage
Contributed
Net OPEB
Obligation
12/31/2014 2,484$ 0% 160,187$
12/31/2015 38,791 0% 198,978
12/31/2016 38,263 0% 237,241
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
66
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Funded Status and Funding Progress
As of January 1, 2016, the actuarial accrued liability for benefits was $188,502, all of which
was unfunded. The covered payroll (annual payroll of active employees covered by the plan)
was $1,417,483, and the ratio of the unfunded actuarial accrued liability to the covered payroll
was 13.30 percent.
The projection of future benefit payments for an ongoing plan involves estimates of the value
of reported amounts and assumptions about the probability of occurrence of events far into
the future. Examples include assumptions about future employment, mortality, and the
healthcare cost trend. Amounts determined regarding the funded status of the plan and the
annual required contributions of the employer are subject to continual revisions as actual
results are compared with past expectations and new estimates are made about the future.
The schedule of funding progress, presented as required supplementary information
following the notes to financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to
the actuarial accrued liabilities for benefits.
Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce the effects of short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations. The projected unit credit cost method was used.
The following simplifying assumptions were made:
Retirement age for active employees - Based on the historical average retirement age for the
covered group, active plan members were assumed to retire at age 63, or at the first
subsequent year in which the member would qualify for benefits. In addition, spouses of
retired employees were assumed to continue on the plan for the lesser of eighteen months
after the retired employee reaches Medicare age or until the spouse reaches Medicare age.
Marital status - Marital status of members at the calculation date was assumed to continue
throughout retirement.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
67
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Methods and Assumptions (Continued)
Mortality - Life expectancies were based on mortality tables from the National Center for
Health Statistics. The 2004 United States Life Tables for Males and Females was used.
Turnover - Non-group-specific age-based turnover data from GASB Statement No. 45 were
used as the basis for assigning active members a probability of remaining employed until the
assumed retirement age and for developing expected future working lifetime assumptions for
purposes of allocation to periods the present value of total benefits to be paid.
Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums
was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid
Services. A rate of 2.0 percent initially, rising to an ultimate rate of 6.0 percent after six years,
was used.
Health insurance premiums - 2016 health insurance premiums for retirees were used as the
basis for calculation of the present value of total benefits to be paid.
Inflation rate - The expected long-term inflation assumption of 4.00 percent was based on
projected changes in the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W).
Payroll growth rate - The expected long-term payroll growth rate was assumed to equal the
rate of inflation.
Based on the historical and expected return of the City's short-term investment portfolio, a
discount rate of 3.0 percent was used. In addition, a simplified version of the entry age
actuarial cost method was used. The unfunded actuarial accrued liability is being amortized
as a level percentage of projected payroll on an open basis. The remaining amortization
period at December 31, 2016 was thirty years.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
68
4. Other Information (Continued)
D. Pension Plans
1. Public Employees Retirement Association (PERA) - Defined Benefit
A. Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit
pension plans administered by the Public Employees Retirement Association of
Minnesota (PERA). PERA's defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's
defined benefit pension plans are tax qualified under Section 401(a) of the Internal
Revenue Code.
1. General Employees Retirement Plan (General Employees Plan (accounted for in the
General Employees Fund)) – All full-time and certain part-time employees of the City
of Lake Elmo are covered by the General Employees Retirement Plan. General
Employees Plan members belong to either the Coordinated Plan or the Basic Plan.
Coordinated Plan members are covered by Social Security and Basic Plan members
are not. The Basic Plan was closed to new members in 1967. All new members must
participate in the Coordinated Plan.
2. Public Employees Police and Fire Plan (Police and Fire Plan (accounted for in the
Police and Fire Fund)) – The Police and Fire Plan, originally established for police
officers and firefighters not covered by a local relief association, now covers all police
officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire
Plan also covers police officers and firefighters belonging to a local relief association
that elected to merge with and transfer assets and administration to PERA.
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.
Benefit increases are provided to benefit recipients each January. Increases are related
to the funding ratio of the plan. Members in plans that are at least 90 percent funded for
two consecutive years are given 2.5% increases. Members in plans that have not
exceeded 90% funded, or have fallen below 80%, are given 1% increases.
The benefit provisions stated in the following paragraph of this section are current
provisions and apply to active plan participants. Vested, terminated employees who are
entitled to benefits but are not receiving them yet are bound by the provisions in effect
at the time they last terminated their public service.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
69
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
A. Plan Description (continued)
1. General Employees Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for
any five successive years of allowable service, age, and years of credit at termination of
service. Two methods are used to compute benefits for PERA’s Coordinated and Basic
Plan members. The retiring member receives the higher of step-rate benefit accrual
formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity
accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten
years of service and 2.7% for each remaining year. The annuity accrual rate for a
Coordinated Plan member is 1.2% of average salary for each of the first ten years and
1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of
average salary for Basic Plan members and 1.7% for Coordinated Plan members for
each year of service. For members hired prior to July 1, 1989, a full annuity is available
when age plus years of service equal 90 and normal retirement age is 65. For members
hired on or after July 1, 1989, normal retirement age is the age for unreduced Social
Security benefits capped at 66.
2. PEPFF Benefits
Benefits for Police and Fire Plan members first hired after June 30, 2010, but before July
1, 2014, vest on a prorated basis from 50% after five years up to 100% after ten years
of credited service. Benefits for Police and Fire Plan members first hired after June 30,
2014, vest on a prorated basis from 50% after ten years up to 100% after twenty years
of credited service. The annuity accrual rate is 3% of average salary for each year of
service. For Police and Fire Plan members who were first hired prior to July 1, 1989, a
full annuity is available when age plus years of service equal at least 90.
B. Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee
contributions. Contribution rates can only be modified by the state legislature.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
70
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
B. Contributions (continued)
1. General Employees Fund Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.10%
and 6.50%, respectively, of their annual covered salary in calendar year 2016. The City
was required to contribute 11.78% of pay for Basic Plan members and 7.50% for
Coordinated Plan members in calendar year 2016. The City's contributions to the
General Employees Fund for the year ended December 31, 2016 were $85,649. The
City's contributions were equal to the required contributions as set by state statute.
2. Police and Fire Fund Contributions
Plan members were required to contribute 10.80% of their annual covered salary in
calendar year 2016. The City was required to contribute 16.20% of pay for members in
calendar year 2016. The City's contributions to the Police and Fire Fund for the year
ended December 31, 2016 were $13,967. The City's contributions were equal to the
required contributions as set by state statute.
C. Pension Costs
1. General Employees Fund Pension Costs
At December 31, 2016, the City reported a liability of $1,291,001 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 $6 million to
the fund in 2016. 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 $16,853. The net pension liability was measured as of June 30, 2016, and
the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of that date. The City's proportion of the net pension liability was
based on the City's contributions received by PERA during the measurement period for
employer payroll paid dates from July 1, 2015 through June 30, 2016 relative to the total
employer contributions received from all of PERA's participating employers. At June 30,
2016, the City's proportion share was .0159% which was a decrease of .001% from its
proportion measured as of June 30, 2015.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
71
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
C. Pensions Costs (continued)
1. General Employees Fund Pension Costs (continued)
For the year ended December 31, 2016, the City recognized pension expense of
$178,937 for its proportionate share of the General Employees Plan’s pension expense.
In addition, the City recognized an additional $5,025 as pension expense (and grant
revenue) for its proportionate share of the State of Minnesota’s contribution of $6 million
to the General Employees Fund.
At December 31, 2016, the City reported its proportionate share of the General
Employees Plan’s deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between expected and actual
economic experience $ 106,617$
Changes in actuarial assumptions 252,779
Difference between projected and actual
investment earnings 248,717
Changes in proportion 90,542
Contributions paid to PERA subsequent to
the measurement date 44,719
Total 546,215$ 197,159$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
72
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
C. Pensions Costs (continued)
1. General Employees Fund Pension Costs (continued)
$44,719 reported as deferred outflows of resources related to pensions resulting from
City contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended December 31, 2017. Other
amounts reported as deferred outflows and inflows of resources related to pensions will
be recognized in pension expense as follows:
Year ending June 30:
Pension Expense
Amount
2017 72,383$
2018 72,383
2019 112,938
2020 46,633
2. Police and Fire Fund Pension Costs
At December 31, 2016, the City reported a liability of $361,186 for its proportionate share
of the Police and Fire Fund’s net pension liability. The net pension liability was
measured as of June 30, 2016, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of that date. The City's
proportion of the net pension liability was based on the City's contributions received by
PERA during the measurement period for employer payroll paid dates from July 1, 2015
through June 30, 2016, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2016, the City's proportion was .009%,
which is unchanged from its proportion measured as of June 30, 2015. The City also
recognized $810 for the year ended December 31, 2016 as revenue and an offsetting
reduction of net pension liability for its proportionate share of the State of Minnesota’s
on-behalf contributions to the Police and Fire Fund. Legislation passed in 2013 required
the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each
year, starting in fiscal year 2014.
For the year ended December 31, 2016, the City recognized pension expense of
$61,416 for its proportionate share of the Police and Fire Plan’s pension expense.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
73
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
C. Pensions Costs (continued)
2. Police and Fire Fund Pension Costs (continued)
At December 31, 2016, the City reported its proportionate share of the Police and Fire
Plan’s deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between expected and actual
economic experience $ 39,223$
Changes in actuarial assumptions 198,776
Difference between projected and actual
investment earnings 55,119
Contributions paid to PERA subsequent to
the measurement date 7,561
Total 261,456$ 39,223$
$7,561 reported as deferred outflows of resources related to pensions resulting from
City contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended December 31, 2017. Other
amounts reported as deferred outflows and inflows of resources related to pensions will
be recognized in pension expense as follows:
Year ending June 30:
Pension Expense
Amount
2017 43,487$
2018 43,487
2019 49,015
2020 44,561
2021 34,122
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
74
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
D. Actuarial Assumptions
The total pension liability in the June 30, 2016 actuarial valuation was determined using
the following actual assumptions:
Inflation 2.50% per year
Active Member Payroll Growth 3.25% per year
Investment Rate of Return 7.50%
Salary increases were based on a service-related table. Mortality rates for active
members, retirees, survivors and disabilitants were based on RP-2014 tables for the
General Employees Plan and RP-2000 tables for the Police and Fire Plan for males or
females, as appropriate, with slight adjustments. Cost of living benefit increases for
retirees are assumed to be 1% per year for all future years for the General Employees
Plan and Police and Fire Plan.
Actuarial assumptions used in the June 30, 2016 valuation were based on the result of
actuarial experience studies. The most recent four-year experience study in the General
Employees Plan was completed in 2015. The experience study for Police and Fire Plan
was for the period July 1, 2004 through June 30, 2009.
The following changes in actuarial assumptions occurred in 2016:
General Employees Fund
The assumed post-retirement benefit increase rate was changed from 1.0% per
year through 2035 and 2.5% per year thereafter to 1.0% per year for all future
years.
The assumed investment return was changed from 7.9% to 7.5%. The single
discount rate was changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June
30, 2015. The assumed future salary increases, payroll growth, and inflation
were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
75
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
D. Actuarial Assumptions (continued)
Police and Fire Fund
The assumed post-retirement benefit increase rate was changed from 1.0% per
year through 2037 and 2.5% 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 changed from 7.9% to 5.6%.
The assumed future salary increases, payroll growth, and inflation were
decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation.
The State Board of Investment, which manages the investments of PERA, prepares an
analysis of the reasonableness of the long-term expected rate of return on a regular
basis using a building-block method in which best-estimate ranges of expected future
rates of return are developed for each major asset class. These ranges are combined
to produce an expected long-term rate of return by weighting the expected future rates
of return by the target asset allocation percentages.
The target allocation and best estimates of geometric real rates of return for each major
asset class are summarized in the following table:
Asset Class Target Allocation Long-Term Expected
Real Rate of Return
Domestic Stocks 45% 5.50%
International Stocks 15% 6.00%
Bonds 18% 1.45%
Alternative Assets 20% 6.40%
Cash 2% 0.50%
Total 100%
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
76
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
E. Discount Rate
The discount rate used to measure the total pension liability in 2016 was 7.50%, a
reduction from the 7.90% used in 2015. The projection of cash flows used to determine
the discount rate assumed that contributions from plan members and employers will be
made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net
position of the General Employees Fund 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.
In the Police and Fire Fund, the fiduciary net position was projected to be available to
make all projected future benefit payments of current plan members through June 30,
2056. Beginning in fiscal year ended June 30, 2057, when projected benefit payments
exceed the fund’s projected fiduciary net position, benefit payments were discounted at
the municipal bond rate of 2.85% based on an index of 20-year general obligation bonds
with an average AA credit rating at the measurement date. An equivalent single discount
rate of 5.60% was determined that produced approximately the same present value of
projected benefits when applied to all years of projected benefits as the present value
of projected benefits using 7.50% applied to all years of projected benefits through the
point of asset depletion and 2.85% after.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
77
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
F. 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% Higher 6.50% 1,833,604$ 4.60% 505,612$
Current Discount Rate 7.50% 1,291,001 5.60% 361,186
1% Lower 8.50% 844,044 6.60% 243,178
General Employees Fund Police and Fire Fund
Sensitivity of Net Pension Liability at Current Single Discount Rate
G. 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.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
78
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association
A. Plan Description
The Lake Elmo Firefighter's Relief Association administers a single-employer defined
benefit pension plan (FRA plan) available to volunteer firefighters. As of December 31,
2016, the plan covered 19 active firefighters and 5 vested terminated firefighters whose
pension benefits are deferred. The plan was established and is administered in
accordance with Minnesota Statutes, Chapters 69 and 424A. The December 31, 2016
information is the latest reported for this Plan.
B. Benefits Provided
Volunteer firefighters for the City are members of the Lake Elmo Firefighter's Relief
Association. Association members are eligible to receive a lump sum benefit after 20
years of service with a minimum retirement age of 50. Currently retirees receive a
benefit of $3,400 for every year of service. These benefit provisions and all other
requirements are consistent with State statutes. Volunteers of the fire department are
not required to contribute to the relief association. Members with 10 years of service
receive partial vesting at 60% of the 20-year rate and 4% added for every one year of
service beyond ten years up to 20 years.
C. Contributions
The Plan is funded by fire state aid, investment earnings and, if necessary, employer
contributions as specified in Minnesota statutes, and voluntary City contributions. The
State of Minnesota contributed $59,136 in state aid to the plan on behalf of the
Association for the year ended December 31, 2016. This contribution was recorded as
a revenue and an expenditure in the City's general fund. The City levies property taxes
for the benefit of the Association and passes through state aids allocated to the plan, all
in accordance with State statutes. During 2016, at the Association's direction, the City
did not levy any property taxes to be paid to the Association.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
79
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
D. Pension Costs
At December 31, 2016, the City reported a net pension asset of $456,915 for the plan.
The net pension asset was measured as of December 31, 2016. The total pension
liability used to calculate the net pension asset in accordance with GASB 68 was
determined by applying an actuarial formula to specific census data certified by the fire
department as of December 31, 2016. The following table presents the changes in net
pension liability during the year.
Total
Pension
Liability (a)
Plan
Fiduciary Net
Position (b)
Net Pension
Liability
(Asset) (a-b)
Beginning Balance 12/31/15 588,689$ 963,628$ (374,939)$
Changes for the Year
Service cost 27,579 27,579
Interest on pension liability 36,976 36,976
Assumption changes 11,690 11,690
Net investment income (46,403) 70,101 (116,504)
Contributions (employer)
Contributions (state) 59,136 (59,136)
Benefit payouts
Administrative expenses (17,419) 17,419
Net Changes 29,842 111,818 (81,976)
Balance End of Year 12/31/16 618,531$ 1,075,446$ (456,915)$
For the year ended December 31, 2016, the City did not recognize pension expense
related to the FRA plan.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
80
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
D. Pension Costs (continued)
At December 31, 2016, the Association reported deferred inflows of resources and
deferred outflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between projected and actual
investment earnings 106,145$ $
Total 106,145$ $
Amounts reported as deferred outflows and inflows of resources related to pensions will be
recognized in pension expense as follows:
Year ending June 30:
Pension Expense
Amount
2017 27,831$
2018 27,831
2019 27,830
2020 22,653
E. Actuarial Assumptions
The total pension liability at December 31, 2016 was determined using the entry age
normal actuarial cost method and the following actuarial assumptions:
Retirement eligibility at the later of age 50 or 20 years of service
Investment rate of return of 5.50%
Inflation rate 4.0%
During 2016, the investment rate of return decreased from 6.00% to 5.50%.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
81
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
F. Discount Rate
The discount rate used to measure the total pension liability was 5.50%. The projection
of cash flows used to determine the discount rate assumed that contributions to the FRA
plan will be made as specified in statute. Based on that assumption and considering
the funding ratio of the plan, the fiduciary net position was projected to be available to
make all projected future benefit payments of current active and inactive members.
Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension
liability.
G. Pension Liability Sensitivity
The following presents the City's net pension asset for the Association's plan, calculated
using the discount rate disclosed in the preceding paragraph, as well as what the City's
net pension asset would be if it were calculated using a discount rate 1% lower or 1%
higher than the current discount rate:
1% Decrease in
Discount Rate
(4.50%)
Discount Rate
(5.50%)
1% Increase in
Discount Rate
(6.50%)
Net pension liability (asset) (432,549)$ (456,915)$ (479,967)$
H. Plan Investments
1. Investment Policy
All investments undertaken by the plan are governed by the prudent person rule and
other standards codified in Minnesota Statutes, Chapter 11A and Chapter 356A.
Within the requirements defined by state law, the Plan establishes investment policy
for all funds under its control. These investment policies are tailored to the particular
needs of each fund and specify investment objectives, risk tolerance, asset
allocation, investment management structure and specific performance standards.
Studies guide the ongoing management of the funds and are updated periodically.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
82
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
2. Asset Allocation
The long-term target asset allocation and long-term expected real rate of return of
the Plan's assets is as follows:
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
Cash 17.00% 2.25%
Fixed income 28.00% 3.30%
Equities 54.00% 7.50%
Other 1.00% 6.00%
Total 100% 5.50%
The long-term return on assets has been set based on the plan's target investment
allocation along with long-term return expectations by asset class. When there is
sufficient historical evidence of market outperformance, historical average returns
may be considered.
3. Description of significant investment policy changes during the year
The Plan made no significant changes to their investment policy during the year.
I. Pension Plan Fiduciary Net Position
Detailed information about the Lake Elmo Firefighter's Relief Association plan's fiduciary
net position as of December 31, 2016 is available in a separately-issued financial report
that includes financial statements and required supplementary information. That report
may be obtained by contacting the Finance Director for the City of Lake Elmo.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
83
5. Implementation of New Accounting Principles
The City adopted the provisions of Governmental Accounting Standards Board Statement No. 72,
Fair Value Measurement and Application. This statement generally requires investments to be
measured at fair value and requires disclosures to be made about fair value measurements
including the level of hierarchy and the valuation techniques utilized by the City.
The City adopted the provisions of Governmental Accounting Standards Board Statement No. 76,
Hierarchy of Generally Accepted Accounting Principles of the State and Local Governments. This
statement established the order and priority of pronouncements and other sources of accounting
and financial reporting guidance that governments should apply. This statement did not impact the
preparation of these financial statements.
The City adopted the provisions of Governmental Accounting Standards Board Statement No. 77,
Tax Abatement Disclosures. This statement requires the disclosure of information related to tax
abatement agreements entered into by the City, such as the financial statement impact, amount of
taxes the City has promised to forego, and commitments made under the agreements.
The City adopted the provisions of Governmental Accounting Standards Board Statement No. 82,
Pension Issues – an Amendment of GASB Statements No. 67, No. 68, No. 73. The objective of
this statement is to improve consistency in the application of pension accounting and financial
reporting requirements by addressing certain issues that have been raised during implementation
of the three standards listed above. One of the significant changes included in this statement
clarifies the presentation of covered payroll in the required supplementary information to reflect the
amount of payroll on which contributions made to the pension plan are based.
6. Subsequent Event
In June 2017, the City issued 2017A General Obligation Bonds in the amount of $9,045,000. The
proceeds of the bonds will be used to finance an improvement project, the purchase of equipment,
a sewer project, a water project, a storm water project, and to pay costs associated with issuance
of the bonds.
CITY OF LAKE ELMO, MINNESOTA
REQUIRED SUPPLEMENTAL INFORMATION
December 31, 2016
This Page Left Blank Intentionally
84
Year Ended
December 31
Statutorily
Required
Contribution
(a)
Contributions
in Relation to
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess) (a-b)
Covered
Employee
Payroll (d)
Contributions as a
Percentage of
Covered Payroll
(b/d)
2014 73,182$ 73,182$ $ 1,009,407$ 7.2%
2015 70,582 70,582 941,092 7.5%
2016 85,649 85,649 1,141,987 7.5%
2017
2018
2019
2020
2021
2022
2023
Year Ended
December 31
Statutorily
Required
Contribution
(a)
Contributions
in Relation to
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess) (a-b)
Covered
Employee
Payroll (d)
Contributions as a
Percentage of
Covered Payroll
(b/d)
2014 13,035$ 13,035$ $ 85,195$ 15.3%
2015 14,257 14,257 88,005 16.2%
2016 13,967 13,967 86,216 16.2%
2017
2018
2019
2020
2021
2022
2023
PERA Public Employees Police and Fire Plan
December 31, 2016
CITY OF LAKE ELMO, MINNESOTA
Schedule of City Contributions
PERA General Employees Retirement Plan
December 31, 2016
Schedule of City Contributions
Note: These schedules are intended to provide information for ten years. The City will include that
information as it becomes available.
85
Fiscal Year
Ended June 30
Proportionate
(Percentage) of
Net Pension
Liability (Asset)
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset) (a)
Covered-
Employee
Payroll (b)
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset) as
a Percentage of its
Covered Employee
Payroll (a/b)
Plan Fiduciary
Net Position as a
Percentage of the
Total Pension
Liability
2014 0.0191% 897,222$ 1,009,407$ 88.9% 78.7%
2015 0.0169% 875,846 941,092 93.1% 78.2%
2016 0.0159% 1,291,001 1,141,987 113.0% 68.9%
2017
2018
2019
2020
2021
2022
2023
Fiscal Year
Ended June 30
Proportionate
(Percentage) of
Net Pension
Liability (Asset)
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset) (a)
Covered-
Employee
Payroll (b)
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset) as
a Percentage of its
Covered Employee
Payroll (a/b)
Plan Fiduciary
Net Position as a
Percentage of the
Total Pension
Liability
2014 0.0090% 97,204$ 85,195$ 114.1% 87.1%
2015 0.0090% 102,261 88,005 116.2% 86.6%
2016 0.0090% 361,186 86,216 418.9% 63.9%
2017
2018
2019
2020
2021
2022
2023
PERA Public Employees Police and Fire Plan
December 31, 2016
CITY OF LAKE ELMO, MINNESOTA
Schedule of Proportionate Share of Net Pension Liability
PERA General Employees Retirement Plan
December 31, 2016
Schedule of Proportionate Share of Net Pension Liability
Note: These schedules are intended to provide information for ten years. The City will include that
information as it becomes available.
86
CITY OF LAKE ELMO, MINNESOTA
Schedule of Funding Progress for the Fire Relief Association
December 31, 2016
Actuarial
Valuation Date
Actuarial Accrued
Liability (AAL)
Valuation of Plan
Assets (a)
Actuarial
Valuation of Plan
Assets (b)
Net Pension
Liability (Asset)
(a-b)
12/31/16 618,531$ 1,075,446$ (456,915)$
12/31/15 588,689 963,628 (374,939)
CITY OF LAKE ELMO, MINNESOTA
Schedule of Employer Contributions for the Fire Relief Association
December 31, 2016
2016 2015
Actuarially determined contributions $ $
Actual contributions paid
Contributions deficiency (excess) $ $
87
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
For the Year Ended December 31, 2016
Actuarial valuations are provided every one to three years unless events occur (e.g. plan changes,
layoffs, etc.) that would materially impact results. See Note 4C in the Notes to Financial Statements
for more details on this schedule.
Actuarial
Valuation
Date
Actuarial
Value of
Assets
Actuarial
Accrued
Liability
Unfunded
Actuarial
Accrued
Liability
Funded
Ratio
Covered
Payroll
UAAL as a
Percentage of
Covered Payroll
1/1/2009 $ 112,761$ 112,761$ 0% 892,528$ 12.63%
1/1/2012 101,981 101,981 0% 932,540 10.94%
1/1/2013 293,220 293,220 0% 913,884 32.09%
1/1/2014 204,437 204,437 0% 1,022,592 19.99%
1/1/2015 186,284 186,284 0% 1,041,665 17.88%
1/1/2016 188,502 188,502 0% 1,417,483 13.30%
CITY OF LAKE ELMO, MINNESOTA
COMBINING AND INDIVIDUAL
FUND STATEMENTS AND SCHEDULES
December 31, 2016
88
Special
Revenue
Capital
Projects Total
ASSETS
Cash and investments 249,780$ 1,392,769$ 1,642,549$
TOTAL ASSETS 249,780$ 1,392,769$ 1,642,549$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable 71,225$ $ 71,225$
Accrued liabilities 3,480 3,480
Due to other funds 1,144 56,760 57,904
Advances from other funds 405,398 405,398
Escrow deposits payable 75,000 75,000
Total liabilities 75,849 537,158 613,007
FUND BALANCE (DEFICIT)
Nonspendable
Assigned 174,540 1,261,054 1,435,594
Unassigned (609) (405,443) (406,052)
Total Fund Balance (Deficit) 173,931 855,611 1,029,542
TOTAL LIABILITIES AND FUND BALANCE 249,780$ 1,392,769$ 1,642,549$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2016
89
Special
Revenue
Capital
Projects Total
REVENUES
Taxes 256,957$ $ 256,957$
Dedication fees 171,708 171,708
Refunds and reimbursements 21,390 21,390
Investment earnings 944 6,358 7,302
Miscellaneous revenue 13,586 13,586
TOTAL REVENUES 271,487 199,456 470,943
EXPENDITURES
Current
Culture and recreation 331,901 331,901
Capital Outlay
Culture and recreation 146,441 146,441
TOTAL EXPENDITURES 331,901 146,441 478,342
Net change in fund balances (60,414) 53,015 (7,399)
FUND BALANCES, Beginning 234,345 802,596 1,036,941
FUND BALANCES, Ending 173,931$ 855,611$ 1,029,542$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2016
90
City Events
(204) Library (206)Total
ASSETS
Cash and investments 535$ 249,245$ 249,780$
TOTAL ASSETS 535$ 249,245$ 249,780$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 71,225$ 71,225$
Due to other funds 1,144 1,144
Accrued liabilities 3,480 3,480
Total liabilities 1,144 74,705 75,849
FUND BALANCE (DEFICIT)
Assigned 174,540 174,540
Unassigned (609) (609)
Total fund balance (deficit) (609) 174,540 173,931
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT)535$ 249,245$ 249,780$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2016
91
City Events
(204) Library (206)Total
REVENUES
Taxes $ 256,957$ 256,957$
Investment earnings 3 941 944
Miscellaneous revenue 532 13,054 13,586
TOTAL REVENUES 535 270,952 271,487
EXPENDITURES
Current
Culture and recreation 331,901 331,901
Net change in fund balances 535 (60,949) (60,414)
FUND BALANCES, Beginning (1,144) 235,489 234,345
FUND BALANCES (DEFICIT), Ending (609)$ 174,540$ 173,931$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2016
92
Park
Dedication
(404)
City Facilities
(411)
Village Project
(413)
ASSETS
Cash and investments 980,041$ 272,924$ 61,612$
TOTAL ASSETS 980,041$ 272,924$ 61,612$
LIABILITIES AND FUND BALANCE
LIABILITIES
Due to other funds $ $ 56,760$
Advances from other funds 405,398
Escrow deposits payable
Total liabilities 462,158
FUND BALANCE (DEFICIT)
Assigned 980,041 272,924
Unassigned (400,546)
Total fund balance (deficit) 980,041 272,924 (400,546)
TOTAL LIABILITIES AND FUND BALANCE 980,041$ 272,924$ 61,612$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2016
93
Manning
Avenue/Hwy
36 (414)
Washington
County
Downtown
Project (422)Total
70,103$ 8,089$ 1,392,769$
70,103$ 8,089$ 1,392,769$
$ $ 56,760$
405,398
75,000 75,000
75,000 537,158
8,089 1,261,054
(4,897) (405,443)
(4,897) 8,089 855,611
70,103$ 8,089$ 1,392,769$
94
Park
Dedication
(404)
City Facilities
(411)
Village Project
(413)
REVENUES
Dedication fees 171,708$ $ $
Refunds and reimbursements 21,390
Investment earnings (loss) 4,509 1,255 233
TOTAL REVENUES 176,217 1,255 21,623
EXPENDITURES
Capital Outlay
Culture and recreation 146,441
Net change in fund balances 29,776 1,255 21,623
FUND BALANCES (DEFICIT), Beginning 950,265 271,669 (422,169)
FUND BALANCES (DEFICIT), Ending 980,041$ 272,924$ (400,546)$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECT FUNDS
For the Year Ended December 31, 2016
95
Manning
Avenue/Hwy
36 (414)
Washington
County
Downtown
Project (422)Total
$ $ 171,708$
21,390
323 38 6,358
323 38 199,456
146,441
323 38 53,015
(5,220) 8,051 802,596
(4,897)$ 8,089$ 855,611$
96
Radio
Replacement
(701)
IT
Replacement
(702)
FFE
Replacement
(703) Total
ASSETS
Noncurrent Assets
Property and Equipment
Machinery and equipment 168,854$ 95,355$ 390,483$ 654,692$
Less: Accumulated depreciation 79,506 77,095 325,720 482,321
Net Property and Equipment 89,348 18,260 64,763 172,371
TOTAL ASSETS 89,348$ 18,260$ 64,763$ 172,371$
LIABILITIES AND NET POSITION
Current Liabilities
Due to other funds 41,740$ $ 76,081$ 117,821$
Net Position
Net investment in capital assets 89,348 18,260 64,763 172,371
Unrestricted (41,740) (76,081) (117,821)
Total Net Position 47,608 18,260 (11,318) 54,550
TOTAL LIABILITIES AND
NET POSITION 89,348$ 18,260$ 64,763$ 172,371$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
December 31, 2016
97
Radio
Replacement
(701)
IT
Replacement
(702)
FFE
Replacement
(703) Total
Operating Expenses
Depreciation 9,471$ 4,654$ 10,505$ 24,630$
Net (Loss) (9,471) (4,654) (10,505) (24,630)
Net Position, Beginning of Year 57,079 22,914 (813) 79,180
Net Position, End of Year 47,608$ 18,260$ (11,318)$ 54,550$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2016
98
Radio
Replacement
(701)
IT
Replacement
(702)
FFE
Replacement
(703) Total
Cash Flows From Noncapital Financing Activities
Increase in due to other funds 41,740$ $ $ 41,740$
Cash Flows From Capital and Related Financing Activities
Acquisition of capital assets (69,003) (69,003)
Net Increase (Decrease) in Cash and Cash Equivalents (27,263) (27,263)
Cash and Cash Equivalents, Beginning of Year 27,263 27,263
Cash and Cash Equivalents, End of Year $ $ $ $
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating (loss) (9,471)$ (4,654)$ (10,505)$ (24,630)$
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 9,471 4,654 10,505 24,630
Net Cash Provided By (Used In) Operating Activities $ $ $ $
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2016
This Page Left Blank Intentionally
99
2002 GO
Improvement
Bonds (312)
2006A GO
Equipment
Certificates
(314)
2009A GO
Refunding
Bonds (315)
2009B GO
Improvement
Bonds (316)
2010A GO
Improvement
Bonds (317)
ASSETS
Cash and investments 475$ 29,544$ $ 106,002$ 114,650$
Receivables (Net of allowance for
uncollectibles)
Special assessments 23,665 40,400
Due from other governmental units 121
TOTAL ASSETS 475$ 29,544$ $ 129,788$ 155,050$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE
LIABILITIES
Accounts payable $ $ $ $ $
Due to other funds 1,002
Total liabilities 1,002
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue:
Special assessments 23,665 40,400
Total deferred inflows of resources 23,665 40,400
FUND BALANCE (DEFICIT)
Restricted 475 29,544 106,123 114,650
Unassigned (1,002)
Total fund balance (deficit) 475 29,544 (1,002) 106,123 114,650
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCE 475$ 29,544$ $ 129,788$ 155,050$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
December 31, 2016
100
2010B GO
CIP Bonds
(318)
2011A GO
Improvement
Bonds (319)
2012B GO
Improvement
Bonds (321)
2013A GO
Improvement
Bonds (322)
2014A GO
Improvement
Bonds (323)
2015A GO
Improvement
Bonds (324)
2016A GO
Improvement
Bonds (326)Total
126,551$ 301,350$ 6,061$ 1,597,733$ 762,457$ 41,149$ 240,912$ 3,326,884$
39,920 119,700 28,560 565,065 371,860 1,189,170
4,713 4,834
126,551$ 341,270$ 125,761$ 1,626,293$ 1,332,235$ 41,149$ 612,772$ 4,520,888$
$ $ $ $ $ $ $ $
17,176 77,427 95,605
17,176 77,427 95,605
39,920 119,700 28,560 565,065 371,860 1,189,170
39,920 119,700 28,560 565,065 371,860 1,189,170
126,551 301,350 1,520,306 767,170 41,149 240,912 3,248,230
(11,115) (12,117)
126,551 301,350 (11,115) 1,520,306 767,170 41,149 240,912 3,236,113
126,551$ 341,270$ 125,761$ 1,626,293$ 1,332,235$ 41,149$ 612,772$ 4,520,888$
101
2002 GO
Improvement
Bonds (312)
2006A GO
Equipment
Certificates
(314)
2009A GO
Refunding
Bonds (315)
2009B GO
Improvement
Bonds (316)
2010A GO
Improvement
Bonds (317)
REVENUES
Taxes $ $ $ 49,598$ 59,043$
Intergovernmental 72,100
Special assessments 7,463 10,507
Investment earnings 2 136 489 528
TOTAL REVENUES 2 136 72,100 57,550 70,078
EXPENDITURES
Debt Service
Principal 70,000 60,000 70,000
Interest and other charges 5,177 8,163 9,550
TOTAL EXPENDITURES 75,177 68,163 79,550
Excess (deficiency) of revenues
over (under) expenditures 2 136 (3,077) (10,613) (9,472)
OTHER FINANCING SOURCES (USES)
Transfers
Net change in fund balances 2 136 (3,077) (10,613) (9,472)
FUND BALANCES (DEFICIT), Beginning 473 29,408 2,075 116,736 124,122
FUND BALANCES (DEFICIT), Ending 475$ 29,544$ (1,002)$ 106,123$ 114,650$
CITY OF LAKE ELMO, MINNESOTA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
For the Year Ended December 31, 2016
102
2010B GO
CIP Bonds
(318)
2011A GO
Improvement
Bonds (319)
2012B GO
Improvement
Bonds (321)
2013A GO
Improvement
Bonds (322)
2014A GO
Improvement
Bonds (323)
2015A GO
Improvement
Bonds (324)
2016A GO
Improvement
Bonds (326)Total
205,860$ 75,485$ 62,926$ $ 211,628$ $ $ 664,540$
72,100
8,175 23,904 483,548 123,922 239,804 897,323
583 1,386 28 7,351 3,509 189 1,108 15,309
206,443 85,046 86,858 490,899 339,059 189 240,912 1,649,272
150,000 85,000 85,000 105,000 180,000 805,000
42,603 10,296 9,751 38,105 68,838 33,289 225,772
192,603 95,296 94,751 143,105 248,838 33,289 1,030,772
13,840 (10,250) (7,893) 347,794 90,221 (33,100) 240,912 618,500
143,105 143,105
13,840 (10,250) (7,893) 490,899 90,221 (33,100) 240,912 761,605
112,711 311,600 (3,222) 1,029,407 676,949 74,249 2,474,508
126,551$ 301,350$ (11,115)$ 1,520,306$ 767,170$ 41,149$ 240,912$ 3,236,113$
103
Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES
Investment earnings $ $ 3$ 3$
Miscellaneous revenue 532 532
TOTAL REVENUES 535 535
EXPENDITURES
Current
Culture and recreation
Net change in fund balances 535 535
FUND BALANCES, Beginning (1,144) (1,144) (1,144)
FUND BALANCES, Ending (1,144)$ (1,144)$ (609)$ 535$
Note: The City adopted a $0 activity budget in this fund for the year ended December 31, 2016.
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
CITY EVENTS SPECIAL REVENUE FUND
For the Year Ended December 31, 2016
104
Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES
Taxes 256,957$ 256,957$ 256,957$ $
Investment earnings 941 941
Miscellaneous revenue 13,054 13,054
TOTAL REVENUES 256,957 256,957 270,952 13,995
EXPENDITURES
Current
Culture and recreation 256,957 256,957 331,901 (74,944)
Net change in fund balances (60,949) (60,949)
FUND BALANCES, Beginning 235,489 235,489 235,489
FUND BALANCES, Ending 235,489$ 235,489$ 174,540$ (60,949)$
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
LIBRARY SPECIAL REVENUE FUND
For the Year Ended December 31, 2016
105
Balance Balance
January 1 Additions Deletions December 31
ESCROW
ASSETS
Cash and investments 1,827,298$ 2,062,165$ 1,494,809$ 2,394,654$
LIABILITIES
Accounts payable 99,952$ 1,403,507$ 1,438,647$ 64,812$
Deposits payable 1,727,346 2,155,295 1,552,799 2,329,842
TOTAL LIABILITIES 1,827,298$ 3,558,802$ 2,991,446$ 2,394,654$
YELLOW RIBBON
ASSETS
Cash and investments (128)$ $ $ (128)$
Accounts receivable 128 128
TOTAL ASSETS $ $ $ $
TOTAL AGENCY FUNDS
ASSETS
Cash and investments 1,827,170$ 2,062,165$ 1,494,809$ 2,394,526$
Accounts receivable 128 128
TOTAL ASSETS 1,827,298$ 2,062,165$ 1,494,809$ 2,394,654$
LIABILITIES
Accounts payable 99,952$ 1,403,507$ 1,438,647$ 64,812$
Deposits payable 1,727,346 2,155,295 1,552,799 2,329,842
TOTAL LIABILITIES 1,827,298$ 3,558,802$ 2,991,446$ 2,394,654$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDS
For the Year Ended December 31, 2016
106
Total (1)
SOURCES 3,432,302$
USES**
Inwood Avenue trunk watermain construction 953,584$
Inwood Avenue booster station construction 775,000
Inwood Avenue water tower construction 1,703,718
TOTAL USES 3,432,302$
(1) Redevelopment Grant Program SPAP-14-0007-P-FY14
** Amounts expended for grant purposes are recorded under the full accrual method in the
proprietary funds and therefore were recorded as a noncurrent asset (property and equipment)
rather than current period expenses.
CITY OF LAKE ELMO, MINNESOTA
REDEVELOPMENT GRANT PROGRAM
Supplemental Schedule of Sources and Uses
For the Year Ended December 31, 2016
This Page Left Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
December 31, 2016
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.
Content Page
Financial Trends
These schedules contain trend information to help the reader understand how
the City's financial performance and well-being have changed over time. 107
Revenue Capacity
These schedules contain information to help the reader assess the City's
most significant local revenue source, the property tax. 117
Debt Capacity
These schedules present information to help the reader assess the
affordability of the City's current levels of outstanding debt and the City's
ability to issue additional debt in the future. 124
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the
reader understand the environment within which the City's financial activities
take place. 132
Operating Information
These schedules contain service and infrastructure data to help the reader
understand how the information in the City's financial report relates to the
services the City provides and the activities it performs. 134
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year. The City implemented GASB
Statement 34 in 2004; schedules presenting government-wide information include information
beginning in that year.
107
CITY OF LAKE ELMO, MINNESOTA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2016 2015 2014 2013
Net investment in capital assets 9,032,535$ 8,723,329$ 7,957,840$ 9,056,353$
Restricted 4,704,133 3,446,142 1,106,200 1,225,849
Unrestricted 4,136,292 3,942,646 5,405,920 4,593,463
Total governmental activities net position 17,872,960$ 16,112,117$ 14,469,960$ 14,875,665$
Business-type activities
Net investment in capital assets 12,506,474$ 10,170,351$ 10,567,418$ 6,855,807$
Restricted 1,473,164 1,876,119 2,387,312 2,612,569$
Unrestricted 6,400,375 3,577,285 1,100,422 1,846,681
Total business-type activities net position 20,380,013$ 15,623,755$ 14,055,152$ 11,315,057$
Primary government
Net investment in capital assets 21,539,009$ 18,893,680$ 18,525,258$ 15,912,160$
Restricted 6,177,297 5,322,261 3,493,512 3,838,418
Unrestricted 10,536,667 7,519,931 6,506,342 6,440,144
Total primary government net position 38,252,973$ 31,735,872$ 28,525,112$ 26,190,722$
NOTE: The City adopted GASB Statement No. 65 in 2013. Amounts in this schedule prior to 2012 have not been
restated for GASB Statement No. 65.
The City adopted GASB Statements No. 68 and 71 in 2015. Amounts in this schedule prior to 2015 have not been
restated for GASB Statements No. 68 and 71.
Governmental activities
Fiscal Year
108
Schedule 1
201220112010200920082007
8,782,840$ 8,553,984$ 8,368,479$ 7,983,822$ 7,151,543$ 5,648,702$
4,205,247 2,664,689 2,057,467 1,399,968 718,617 711,966
918,996 2,555,596 3,439,106 3,824,156 4,698,858 5,139,270
13,907,083$ 13,774,269$ 13,865,052$ 13,207,946$ 12,569,018$ 11,499,938$
6,788,377$ 6,422,782$ 6,713,292$ 6,644,334$ 6,181,055$ 5,617,960$
39,153$
1,105,847 1,449,340 1,193,509 1,056,968 951,793 1,080,666
7,933,377$ 7,872,122$ 7,906,801$ 7,701,302$ 7,132,848$ 6,698,626$
15,571,217$ 14,976,766$ 15,081,771$ 14,628,156$ 13,332,598$ 11,266,662$
4,244,400 2,664,689 2,057,467 1,399,968 718,617 711,966
2,024,843 4,004,936 4,632,615 4,881,124 5,650,651 6,219,936
21,840,460$ 21,646,391$ 21,771,853$ 20,909,248$ 19,701,866$ 18,198,564$
109
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2016 2015 2014 2013
Expenses
Governmental activities:
General government 1,358,370$ 1,134,132$ 1,072,888$ 1,103,337$
Public safety 1,308,360 1,344,282 1,530,609 1,277,798
Public works 1,698,566 1,377,969 1,032,426 1,273,977
Culture and recreation 660,947 639,006 448,361 424,687
Interest on long-term debt 178,266 215,611 165,028 133,694
Total governmental activities expenses 5,204,509 4,711,000 4,249,312 4,213,493
Business-Type activities:
Water 1,409,832 1,363,043 1,069,511 958,870
Sewer 380,650 250,866 353,438 119,370
Storm sewer 150,302 103,536 149,887 86,989
Total business-type activities expenses 1,940,784 1,717,445 1,572,836 1,165,229
Total primary government expenses 7,145,293$ 6,428,445$ 5,822,148$ 5,378,722$
Program Revenues
Governmental activities:
Charges for services:
General government 51,009$ 42,706$ 45,161$ 32,778$
Public safety 1,752,522 866,708 496,916 414,472
Public works 3,615 2,647
Culture and recreation 26,214 10,753 17,000
Operating grants and contributions 235,214 249,094 204,462 208,276
Capital grants and contributions 1,452,469 2,038,940 557,601 1,364,622
Total governmental activities program revenues 3,491,214 3,227,277 1,314,893 2,039,795
Business-type activities:
Charges for services:
Water 1,801,228 1,850,240 1,291,091 596,421
Sewer 1,315,948 1,523,067 741,054 53,142
Storm sewer 213,233 229,252 214,915 191,087
Operating grants and contributions
Capital grants and contributions 3,464,567 1,159,222 3,781,528
Total business-type activities program revenues 6,794,976 3,602,559 3,406,282 4,622,178
Total primary government program revenues 10,286,190$ 6,829,836$ 4,721,175$ 6,661,973$
Fiscal Year
110
Schedule 2
2012 2011 2010 2009 2008 2007
1,093,204$ 1,036,038$ 980,456$ 971,677$ 1,168,625$ 914,212$
1,302,857 1,107,050 1,171,158 1,125,464 1,002,408 956,649
891,169 1,008,686 1,135,351 872,045 868,804 1,247,398
362,432 247,845 239,389 248,856 228,393 333,164
316,039 266,730 222,404 218,319 237,753 207,648
3,965,701 3,666,349 3,748,758 3,436,361 3,505,983 3,659,071
872,786 845,474 898,319 857,014 849,018 735,499
53,903 73,797 61,513 59,243 63,400 125,773
73,590 142,517 151,384 140,365 123,902 78,807
1,000,279 1,061,788 1,111,216 1,056,622 1,036,320 940,079
4,965,980$ 4,728,137$ 4,859,974$ 4,492,983$ 4,542,303$ 4,599,150$
48,476$ 22,058$ 18,296$ 15,631$ 19,430$ 28,890$
379,557 283,813 320,242 270,653 295,353 365,327
3,256 3,058 3,425 6,584 3,833 18,573
9,341 10,800 61,274
160,060 184,476 168,491 174,433 140,176 94,185
160,444 222,488 1,090,419 798,687 1,345,803 1,371,489
761,134 715,893 1,611,673 1,265,988 1,804,595 1,939,738
699,159 575,534 562,585 479,430 467,336 471,226
65,737 53,012 48,508 45,146 44,568 99,581
171,229 235,252 185,425 149,407 134,674 138,092
17,000 32,721 30,100
115,127 75,885 418,400 776,473 684,400 298,928
1,051,252 956,683 1,247,639 1,480,556 1,330,978 1,007,827
1,812,386$ 1,672,576$ 2,859,312$ 2,746,544$ 3,135,573$ 2,947,565$
111
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2016 2015 2014 2013
Net (Expense) Revenue
Governmental Activities (1,713,295)$ (1,483,723)$ (2,934,419)$ (2,173,698)$
Business-type activities 4,854,192 1,885,114 1,833,446 3,456,949
Total primary government net revenue 3,140,897$ 401,391$ (1,100,973)$ 1,283,251$
General Revenues and Other Changes
In Net Position
Governmental activities:
General property taxes 3,226,739$ 3,204,119$ 3,200,291$ 3,231,609$
Grants and contributions not restricted
to specific programs 8,584 2,749 2,749 2,749
Interest income 43,228 46,589 87,586 35,259
Miscellaneous 52,479 73,738 125,400 1,833
Gain on sale of capital assets 8,979
Transfers 143,105 220,842 (887,312)
Total governmental activities 3,474,135 3,548,037 2,528,714 3,280,429
Business-type activities:
Grants and contributions not restricted
to specific programs 748
Interest income 44,423 39,757 19,337 30,346
Transfers (143,105) (220,842) 887,312
Total business-type activities (97,934) (181,085) 906,649 30,346
Total primary government 3,376,201$ 3,366,952$ 3,435,363$ 3,310,775$
Change in Net Position
Governmental activities 1,760,840$ 2,064,314$ (405,705)$ 1,106,731$
Business-type activities 4,756,258 1,704,029 2,740,095 3,487,295
Total primary government 6,517,098$ 3,768,343$ 2,334,390$ 4,594,026$
Fiscal Year
112
Schedule 2
(continued)
2012 2011 2010 2009 2008 2007
(3,204,567)$ (2,950,456)$ (2,137,085)$ (2,170,373)$ (1,701,388)$ (1,719,333)$
50,973 (105,105) 136,423 423,934 294,658 67,748
(3,153,594)$ (3,055,561)$ (2,000,662)$ (1,746,439)$ (1,406,730)$ (1,651,585)$
3,183,078$ 2,793,776$ 2,711,067$ 2,718,691$ 2,568,705$ 2,424,782$
10,628 9,771 8,764 57,390 46,154
111,705 94,501 113,989 160,679 209,539 335,578
42,599 20,405 17,311 41,827 50,865 33,204
8,517
(59,637) (57,947) (129,177) (116,031) (424,940)
3,337,382 2,859,673 2,794,191 2,809,301 2,770,468 2,414,778
10,282 10,789 11,129 15,343 23,533 94,325
59,637 57,947 129,177 116,031 424,940
10,282 70,426 69,076 144,520 139,564 519,265
3,347,664$ 2,930,099$ 2,863,267$ 2,953,821$ 2,910,032$ 2,934,043$
132,815$ (90,783)$ 657,106$ 638,928$ 1,069,080$ 695,445$
61,255 (34,679) 205,499 568,454 434,222 587,013
194,070$ (125,462)$ 862,605$ 1,207,382$ 1,503,302$ 1,282,458$
113
CITY OF LAKE ELMO, MINNESOTA
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2016 2015 2014 2013 2012
General fund
Reserved $ $ $ $ $
Unreserved
Nonspendable 409,222 432,306 638,963 859,072 1,024,433
Committed 200,000
Unassigned 3,279,815 2,754,976 2,542,038 2,318,310 2,414,692
Total general fund 3,889,037 3,187,282 3,181,001 3,177,382 3,439,125
All other
governmental funds
Reserved
Unreserved
Nonspendable 3,908
Restricted 3,248,230 2,477,730 717,781 743,976 3,959,111
Committed -
Assigned 1,504,656 1,768,742 2,943,525 2,252,931 1,244,900
Unassigned (418,169) (431,755) (693,904) (885,360) (1,670,915)
Total all other
governmental funds 4,334,717 3,818,625 2,967,402 2,111,547 3,533,096
Total governmental funds 8,223,754$ 7,005,907$ 6,148,403$ 5,288,929$ 6,972,221$
Note: The City implemented GASB Statement No. 54 in 2011, therefore, classifications of fund balance have changed.
114
Schedule 3
2011 2010 2009 2008 2007
$ 1,068,950$ 1,032,570$ 1,015,753$ 1,003,823$
1,617,211 1,403,240 1,395,088 1,251,127
1,206,209
1,707,711
2,913,920 2,686,161 2,435,810 2,410,841 2,254,950
3,605,250 1,422,049 727,673 698,683
504,106 1,077,659 1,976,379 2,554,808
4,691,748
7,114
654,358
(1,353,754)
3,999,466 4,109,356 2,499,708 2,704,052 3,253,491
6,913,386$ 6,795,517$ 4,935,518$ 5,114,893$ 5,508,441$
115
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
LAST FISCAL TEN YEARS
(Modified Accrual Basis of Accounting)
2016 2015 2014 2013 2012
Revenues
Taxes 3,231,674$ 3,222,216$ 3,203,111$ 3,231,609$ 3,221,733$
Licenses and permits 1,713,918 828,494 451,953 374,974 330,819
Intergovernmental 282,874 296,902 413,968 1,704,178 237,254
Charges for services 38,608 35,796 30,192 6,113 5,726
Fines and forfeitures 49,505 48,739 48,647 52,110 58,385
Special assessments 897,323 1,316,239 115,424 180,023 136,150
Dedication fees 171,708 138,158 274,257
Refunds and reimbursements 21,390
Investment earnings 43,228 46,415 87,467 35,127 111,737
Miscellaneous revenue 56,101 99,055 165,319 57,260 87,562
Total Revenues 6,506,329 6,032,014 4,790,338 5,641,394 4,189,366
EXPENDITURES
Current
General government 1,280,259 1,025,320 1,046,906 1,527,732 1,034,712
Public safety 1,262,040 1,203,765 1,198,546 1,174,145 1,109,937
Public works 893,644 686,401 585,071 614,270 446,541
Culture and recreation 500,689 457,749 368,276 301,404 260,404
Unallocated 78,047 69,403
Debt service
Principal 826,219 667,342 585,000 3,348,000 406,000
Interest and other charges 226,159 203,738 135,382 171,148 267,253
Bond issuance costs 16,233 22,873 22,267 7,870 41,828
Capital outlay 3,126,782 2,729,512 2,881,437 1,784,914 1,428,856
Total Expenditures 8,210,072 7,066,103 6,822,885 8,929,483 4,995,531
Excess (deficiency) of revenues
over (under) expenditures (1,703,743) (1,034,089) (2,032,547) (3,288,089) (806,165)
OTHER FINANCING
SOURCES (USES)
Issuance of debt 2,690,000 1,620,000 2,850,000 1,604,797 865,000
Premium on issuance of debt 102,877 32,137 31,520
(Discount) on issuance of debt (14,392) (11,386)
Payment to bond escrow agent
Sale of property 30,000
Transfers in 143,105 220,842 10,501
Transfers out
Total other financing
sources (uses) 2,921,590 1,891,593 2,892,021 1,604,797 865,000
Net change in fund balances 1,217,847$ 857,504$ 859,474$ (1,683,292)$ 58,835$
Debt service as a percentage
of noncapital expenditures 20.60% 19.48% 17.67% 47.79% 18.66%
116
Schedule 4
2011 2010 2009 2008 2007
2,790,773$ 2,737,225$ 2,685,894$ 2,523,332$ 2,416,861$
230,419 261,450 225,166 242,074 315,975
276,638 239,244 288,881 261,743 384,160
14,691 22,416 11,433 15,623 39,163
63,819 68,897 54,052 60,919 57,652
153,536 134,257 73,013 102,929 75,993
94,066 113,033 160,679 209,539 335,578
48,217 84,860 61,533 177,599 1,094,478
3,672,159 3,661,382 3,560,651 3,593,758 4,719,860
1,016,898 921,590 929,960 1,108,737 942,131
996,733 1,064,176 988,082 882,135 984,090
447,629 473,293 459,703 438,591 459,478
168,747 168,971 180,965 154,011 160,940
344,000 313,000 361,000 280,000 334,000
251,385 216,820 229,175 235,450 206,020
34,327 74,580 45,056
1,029,183 1,203,309 998,031 888,382 2,281,938
4,288,902 4,435,739 4,191,972 3,987,306 5,368,597
(616,743) (774,357) (631,321) (393,548) (648,737)
845,000 2,680,000 1,110,000
4,356 17,756
(525,000)
9,190
204,972 314,698 1,466,041 8,500 778,074
(315,360) (364,698) (1,626,041) (8,500) (778,074)
734,612 2,634,356 451,946
117,869$ 1,859,999$ (179,375)$ (393,548)$ (648,737)$
17.43% 15.11% 17.81% 15.42% 14.69%
117
SCHEDULE 5
Total
Taxable Total Adjusted City % of Tax Capacity
Payable Market Real Personal Tax Tax Urban Tax to Total Estimated
Year Value Property Property Capacity Capacity (1) Rate Market Value
2007 $ 1,131,010,100 $ 12,506,910 $ 207,913 $ 12,714,823 $ 12,714,823 19.274 % 0.01
2008 1,146,659,500 12,750,173 203,610 12,953,783 12,953,783 20.553 0.01
2009 1,208,072,300 13,490,182 201,896 13,692,078 13,692,078 19.810 0.01
2010 1,201,213,400 13,394,423 202,299 13,596,722 13,596,722 20.479 0.01
2011 1,142,936,500 12,678,177 221,613 12,899,790 12,899,790 21.832 0.01
2012 1,037,557,100 11,525,623 229,157 11,754,780 11,754,780 27.271 0.01
2013 1,028,011,400 11,392,876 237,584 11,630,460 11,630,460 29.259 0.01
2014 1,046,031,000 11,504,611 238,764 11,743,375 11,743,375 27.761 0.01
2015 1,184,578,800 12,938,515 243,104 13,181,619 13,181,619 23.798 0.01
2016 1,267,841,100 13,386,725 266,218 13,652,943 13,652,943 23.121 0.01
(1) Tax Capacity adjusted for captured tax increment, fiscal disparities, and transmission lines.
NOTE - Valuations are determined as of January 1 of year preceding tax collection year.
The County determines a property's tax capacity by multiplying a property's estimated market value times the property's class rate which is determined
by its use. The total City tax levy divided by the total City tax capacity determines a percentage, the City tax rate, that is applied to each parcel's tax
capacity to determine the tax amount.
Tax Capacity
CITY OF LAKE ELMO, MINNESOTA
TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
118
Schedule 6
Operating Debt Total
Tax Service City Special
Fiscal Rate Tax Rate Tax Rate Washington Taxing
Year Urban Urban Urban County Districts
2007 19.274 % % 19.274 % 17.698 - 22.628 % 25.673 % 1.315 - 4.580 % 2.331 % 66.291 - 74.486 %
2008 20.553 20.553 17.404 - 22.691 25.936 1.608 - 4.532 2.367 67.868 - 76.079
2009 17.059 2.751 19.810 17.714 - 24.480 26.371 1.545 - 4.002 2.351 67.791 - 77.014
2010 18.033 2.446 20.479 19.734 - 26.389 27.775 1.511 - 4.153 2.558 72.057 - 81.354
2011 19.448 2.384 21.832 20.300 - 34.330 29.772 1.725 - 4.275 2.664 76.293 - 92.873
2012 23.679 (1) 3.592 27.271 22.333 - 38.360 31.939 2.340 - 4.906 2.909 86.792 - 105.385
2013 23.555 5.704 29.259 22.017 - 37.104 31.548 0.779 - 5.306 4.857 88.460 - 108.074
2014 23.472 4.289 27.761 23.150 - 39.770 30.243 0.761 - 5.066 4.641 86.556 - 107.481
2015 20.121 3.677 23.798 21.120 - 35.860 27.691 0.692 - 4.769 4.183 77.484 - 96.301
2016 18.184 4.937 23.121 19.849 - 35.569 27.860 0.075 - 5.111 4.568 75.473 - 96.229
Source: Washington County Taxation Division
Note: The City's direct property tax rate is determined by dividing the amount of tax levied by the City Council
by the City's total tax capacity.
*Overlapping rates are those of local and county governments that apply to property owners within the City
of Lake Elmo. Not all overlapping rates apply to all City of Lake Elmo property owners. Although the property tax rates
apply to all city property owners, some city properties lie within the geographical boundaries of different
school and watershed districts.
(1) Beginning in 2012, operating tax rate urban includes library levy component
CITY OF LAKE ELMO, MINNESOTA
for Independent
Tax Rates622, 832 and 834
Direct and Ovelapping
Overlapping Rates
PROPERTY TAX RATES AND TAX LEVIES
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
(Percent of Tax Capacity)
Watershed Districts
Range of TotalRange of Tax Rates
forSchool Districts
Range of Tax Rates
City of Lake Elmo
119
SCHEDULE 7
Percentage Percentage
of Total City of Total City
Taxable Tax Taxable Tax
Tax Capacity Tax Capacity
Taxpayers (1) Capacity Rank Value Capacity Rank Value
Xcel Energy 223,288$ 1 1.64 % 177,104$ 3 1.39 %
IRET Properties 205,342 2 1.50 239,610 1 1.88
Dakota Upreit LP 179,262 3 1.31
Bremer Financial Services Inc 169,652 4 1.24 195,538 2 1.53
MHC Cimarron LLC 136,610 5 1.02 134,090 7 1.05
Heart of America 108,150 6 0.79
Tartan Park LLC 100,704 7 0.74
Norman James LLC 64,976 8 0.48
Davis Estates LTD 64,912 9 0.48
Danate Proper Inv I LLC 59,250 10 0.43 61,276 9 0.48
Moline Plow 139,208 5 1.09
United Land LLC 155,494 4 1.22
Lake Elmo Foundation 139,073 6 1.09
United Properties Inv, LLC 58,624 10 0.46
Bri-mar Co In. Etal. 63,518 8 0.50
TOTAL 1,312,146$ 9.63 % 1,363,535$ 10.69 %
(1) Source: Washington County Taxation Division
2007
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
2016
This Page Left Blank Intentionally
120
Fiscal
Year Taxes Levied Net Tax Levy Collections
Ended for the for the Percentage in Subsequent
December 31 Fiscal Year Fiscal Year (1) Amount of Net Levy Years
2007 $ 2,428,644 $ 2,394,822 $ 2,357,634 98.45 $ 37,188
2008 2,597,983 2,559,227 2,485,397 97.12 73,830
2009 2,708,155 2,672,623 2,624,026 98.18 48,591
2010 2,743,346 2,705,782 2,645,536 97.77 59,627
2011 2,789,559 2,745,785 2,692,423 98.06 52,284
2012 3,113,017 3,110,478 3,071,202 98.74 36,721
2013 3,163,359 3,160,524 3,133,764 99.15 23,735
2014 3,163,359 3,160,285 3,128,695 99.00 15,415
2015 3,113,017 3,133,137 3,112,989 99.36 12,713
2016 3,112,204 3,112,204 3,068,116 98.58
(1) Tax Levy adjusted for powerlines, market value credits and AG program credits prior to 2016
Fiscal Year of the Levy
Collected within the
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
121
Schedule 8
Delinquent
Total Taxes As A
Percentage Delinquent % Of Total
Amount of Net Levy Taxes Net Tax Levy
$ 2,394,822 100.00 $ 0.00
2,559,227 100.00 0.00
2,672,617 100.00 6 0.00
2,705,163 99.98 619 0.02
2,744,707 99.96 1,078 0.04
3,107,923 99.92 2,555 0.08
3,157,499 99.90 3,025 0.10
3,144,110 99.49 16,175 0.51
3,125,702 99.76 7,435 0.24
3,068,116 98.58 44,088 1.42
Total Collections to Date
122
Water (in millions of gallons)
Type of Customer 2016 2015 2014 2013 2012
Residential 98.044 84.007 98.573 120.676 154.747
Commercial Service 29.379 21.653 12.156 8.253 10.405
Total gallons 127.423 105.660 110.729 128.929 165.152
Total direct rate per 1,000 gallons - residential 2.14$ 2.14$ 2.14$ 2.14$ 2.14$
Total direct rate per 1,000 gallons - commercial 3.11$ 3.11$ 3.11$ 3.11$ 3.11$
Sanitary Sewer (in millions of gallons)
Type of Customer 2016 2015 2014 2013 2012
Residential (1) 6.812 3.794 0.000 0.000 0.000
Commercial Service 9.125 8.179 6.532 6.149 6.172
Total gallons 15.937 11.973 6.532 6.149 6.172
Total direct rate per 1,000 gallons 4.50$ 4.50$ 4.50$ 4.50$ 4.50$
(1) City did not have any residential sanitary sewer customers in 2014 and prior
* City converted to a tiered rate structure effective January 1, 2010; lowest tier rate listed for 2010-2015
CITY OF LAKE ELMO, MINNESOTA
WATER AND SANITARY SEWER CHARGES BY CUSTOMER
LAST TEN FISCAL YEARS
123
2011 2010*2009 2008 2007
105.290 95.704 122.461 120.986 108.649
6.872 7.261 7.989 7.851 8.746
112.162 102.965 130.450 128.837 117.395
2.14$ 2.10$ 2.15$ 2.05$ 2.05$
3.11$ 3.05$ 3.10$ 3.00$ 3.00$
2011 2010*2009 2008 2007
0.000 0.000 0.000 0.000 0.000
6.961 7.086 5.381 5.130 4.409
6.961 7.086 5.381 5.130 4.409
4.50$ 4.35$ 4.08$ 3.71$ 2.75$
Schedule 9
124
Total
Special Certificates Capital Governmental
Fiscal Assessment of Improvement Note Activities
Year Bonds Indebtedness Bonds Payable Debt
2007 $ 780,000 $ 364,000 $ 3,855,000 $ $ 4,999,000
2008 695,000 324,000 3,700,000 4,719,000
2009 1,120,000 283,000 3,540,000 4,943,000
2010 1,725,000 240,000 5,345,000 7,310,000
2011 2,440,000 196,000 5,175,000 7,811,000
2012 3,100,092 150,000 4,969,153 8,219,245
2013 4,436,967 102,000 1,941,135 6,480,102
2014 6,919,568 52,000 1,808,024 8,779,592
2015 8,095,288 1,687,803 21,219 9,804,310
2016 10,210,038 1,537,530 11,747,568
Note: Details of the city's outstanding debt can be found in the notes to
the financial statements.
Other Governmental Activities Debt
CITY OF LAKE ELMO, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
125
Total Total
Utility Business Primary Percentage
Revenue Activities Government of Personal Per
Bonds Debt Debt Income Capita
$ 4,810,000 $ 4,810,000 $ 9,809,000 0.03 $ 1,429
4,730,000 4,730,000 9,449,000 0.03 1,377
4,715,000 4,715,000 9,658,000 0.03 1,407
4,680,000 4,680,000 11,990,000 0.03 1,486
4,640,000 4,640,000 12,451,000 0.03 1,543
8,314,837 8,314,837 16,534,082 0.04 2,049
12,476,920 12,476,920 18,957,022 0.05 2,349
15,530,642 15,530,642 24,310,234 0.07 3,013
12,622,484 12,622,484 22,426,794 0.06 2,779
18,990,395 18,990,395 30,737,963 N/A 3,809
Schedule 10
Business-Type Activities
126
Special Certificates Capital Utility
Fiscal Assessment of Improvement Revenue
Year Bonds Indebtedness Bonds Bonds Total
2007 $ 780,000 $ 364,000 $ 3,855,000 $ 4,810,000 9,809,000$
2008 695,000 324,000 3,700,000 4,730,000 9,449,000
2009 1,120,000 283,000 3,540,000 4,715,000 9,658,000
2010 1,725,000 240,000 5,345,000 4,680,000 11,990,000
2011 2,440,000 196,000 5,175,000 4,640,000 12,451,000
2012 3,100,092 150,000 4,969,153 8,314,837 16,534,082
2013 4,436,967 102,000 1,941,135 12,476,920 18,957,022
2014 6,919,568 52,000 1,808,024 15,530,642 24,310,234
2015 8,095,288 1,687,803 12,622,484 22,405,575
2016 10,210,038 1,537,530 18,990,395 30,737,963
Note: Details regarding the city's outstanding debt can be found in the notes to the
financial statements.
See Schedule 15 for population data
See Schedule 5 for estimated market value information
Source: City of Lake Elmo Finance Department
General Bonded Debt Outstanding
CITY OF LAKE ELMO, MINNESOTA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
127
Net
Less: General Percentage
Available Bonded of Actual
in Debt Debt Taxable Value Per
Service Outstanding of Property Capita
$ 698,683 9,110,317$ 0.81 1,327$
727,673 8,721,327 0.76 1,271
1,422,049 8,235,951 0.68 1,200
3,605,250 8,384,750 0.70 1,039
3,534,742 8,916,258 0.78 1,105
3,500,799 13,033,283 1.26 1,615
726,753 18,230,269 1.77 2,259
691,700 23,618,534 2.26 2,927
2,477,730 19,927,845 1.68 2,470
3,215,590 27,522,373 2.17 3,411
Schedule 11
128
Schedule 12
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable (a)Debt
Debt repaid with property taxes
Independent School District #622 138,410,000$ 3.10% 4,290,710$
Independent School District #832 53,720,033 4.70% 2,524,842
Independent School District #834 113,990,000 14.10% 16,072,590
Other debt
Washington County 177,010,000 4.15% 7,345,915
Metropolitan Council 1,442,296,908 1.10% 15,865,266
Subtotal, overlapping debt 46,099,323
City direct debt 11,747,568 100.00% 11,747,568
Total direct and overlapping debt 57,846,891$
Sources: Tax capacity data to estimate applicable percentages provided by Washington County.
Debt outstanding data provided by each governmental unit.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses
of the City of Lake Elmo. This process recognizes that, when considering the city's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply
that every taxpayer is a resident, and therfore responsible for repaying the debt, of each overlapping government.
(a) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using tax capacity values.
Applicable percentages were estimated by determining the portion of another governmental unit's tax capacity value that is
within the city's boundaries and dividing it by each unit's total tax capacity value.
December 31, 2016
COMPUTATION OF DIRECT AND INDIRECT GENERAL OBLIGATION BONDED DEBT
CITY OF LAKE ELMO, MINNESOTA
AND LEGAL DEBT MARGIN
This Page Left Blank Intentionally
129
2016 2015 2014 2013 2012
Debt limit 38,035,233$ 36,733,899$ 35,537,364$ 32,470,203$ 32,054,064$
Total net debt applicable to limit 2,102,343 1,572,289 1,757,421 1,894,510 2,099,369
Legal debt margin 35,932,890$ 35,161,610$ 33,779,943$ 30,575,693$ 29,954,695$
Total net debt applicable to the limit
as a percentage of debt limit 5.53% 4.28% 4.95% 5.83% 6.55%
The legal debt limit for municipalities in Minnesota was increased in 2008 from 2% to 3% of the market value of
taxable property. This limit applies only to the City's general obligation tax levy bonds and excludes special
assessment, tax increment and tax abatement bonds.
LAST TEN FISCAL YEARS
Fiscal Year
CITY OF LAKE ELMO, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
130
Taxable Market Value 1,267,841,100$
Debt Limit (3% of market value) 38,035,233
Debt applicable to limit:
General obligation bonds 2,320,000
Less: Amount set aside for repayment
of general obligation debt 217,657
Total net debt applicable to limit 2,102,343
Legal debt margin 35,932,890$
2011 2010 2009 2008 2007
31,126,713$ 34,288,095$ 36,036,402$ 36,242,169$ 22,620,202$
2,148,203 2,195,153 271,142 315,169 358,220
28,978,510$ 32,092,942$ 35,765,260$ 35,927,000$ 22,261,982$
6.90% 6.40% 0.75% 0.87% 1.58%
Schedule 13
Legal Debt Margin Calculation for the Fiscal Year 2016
131
Schedule 14
Net
Fiscal Gross Operating Available
Year Revenue (1) Expenses (2) Revenue Principal Interest Coverage
2007 1,011,400$ 595,824$ 415,576$ 205,000$ 211,482$ 1.00
2008 715,611 536,475 179,136 80,000 202,224 0.63
2009 776,899 513,226 263,673 530,000 208,803 0.36
2010 920,768 563,896 356,872 35,000 191,156 1.58
2011 891,587 516,157 375,430 40,000 190,094 1.63
2012 946,407 426,118 520,289 40,000 221,129 1.99
2013 3,501,321 504,648 2,996,673 165,000 300,789 6.43
2014 2,266,397 678,394 1,588,003 365,000 424,080 2.01
2015 3,642,316 627,977 3,014,339 4,165,000 456,782 0.65
2016 3,407,097 757,862 2,649,235 615,000 380,969 2.66
Notes: (1) Gross revenue includes investment earnings, hook-up charges and special assessments.
(2) Operating expenses do not include interest, depreciation, or amortization expense.
(3) Details regarding the City's outstanding debt can be found in the notes to the financial
statements.
CITY OF LAKE ELMO, MINNESOTA
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Utility Revenue Bonds
Debt Service (3)
132
SCHEDULE 15
PERSONAL
INCOME PER CAPITA STATE CITY
(thousands of PERSONAL UNEMPLOYMENT UNEMPLOYMENT
YEAR POPULATION (1)dollars)INCOME (2) RATE (3) RATE (3)
2007 6,863 $ 323,426 $ 47,126 5.0 4.2
2008 6,863 329,774 48,051 6.3 5.8
2009 6,863 317,997 46,335 7.6 7.1
2010 8,069 383,834 47,569 7.0 6.4
2011 8,069 409,203 50,713 5.8 5.2
2012 8,069 420,242 52,081 5.4 4.9
2013 8,069 420,879 52,160 4.6 4.0
2014 8,069 357,723 44,333 3.8 3.7
2015 8,069 371,602 46,053 3.2 2.9
2016 8,069 374,345 46,393 3.8 3.3
Sources: (1) Metropolitan Council 2000/2010-Census Bureau
(2) Bureau of Economic Analysis - Washington County, Minnesota
(3) Estimate based on County unemployment rate provided by Minnesota Department of
Employment and Economic Development
CITY OF LAKE ELMO, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
133
SCHEDULE 16
Employer Employees (2) Rank
Percentage of
Total City
Employment (1)Employees (1) Rank
Percentage of
Total City
Employment (1)
3M Company (Maplewood) 9,100 1 39.0% 10,100 1 56.4%
Andersen Corp (Bayport) 2,400 2 10.3%
Washington County (Stillwater) 1,600 3 6.9%
Healtheast Care/St. Johns Hospital (Maplewood) 1,200 4 5.1%
Woodwinds Health (Woodbury) 1,100 5 4.7% 485 5 2.7%
Fortis Company (Woodbury)1,021 2 5.5%
ISD 834 (Stillwater) 1,050 6 4.5% 1,000 3 5.6%
3M Company (Woodbury)
Ecowater Systems, Inc. (Woodbury) 440 7 1.9% 400 7 2.2%
Bremer Bank Operations Ctr (Lake Elmo) 425 8 1.8% 401 6 2.2%
MN Correctional Facility (Oak Park Hts) 355 9 1.5%
SunAmerica Financial Group (Woodbury) 310 10 1.3%
Imation (Oakdale)500 4 2.8%
High Pointe Health Campus (Lake Elmo) 180 8 1.0%
Lake Elmo Inn Inc.125 9 0.7%
Machine Shed/Wildwood Inn (Lake Elmo) 110 10 0.6%
(1) City staff estimate
(2) Number of current year employees for each employer was taken from information prepared for the 2016A bond issuance. Bond was issued
in April 2016 and therefore this information was updated prior to issuance of the 2015 CAFR and information has not changed since that date.
2007
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2016
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134
Function 2016 2015 2014 2013 2012
Administration 2.45 3.20 3.55 3.55 3.15
Finance 1.20 0.80 1.25 1.25 0.50
Planning and Zoning 2.21 2.75 2.70 2.95 1.55
General Government 5.86 6.75 7.50 7.75 5.20
Fire 3.80 1.50 1.55 2.05 1.60
Building Inspections 4.21 3.15 1.55 1.30 0.95
Public Safety 8.01 4.65 3.10 3.35 2.55
Streets and Roadways 4.55 3.90 3.20 3.21 3.05
Public Works 4.55 3.90 3.20 3.21 3.05
Parks 3.00 1.85 3.30 2.74 2.52
Parks and Recreation 3.00 1.85 3.30 2.74 2.52
Communications 0.00 0.70 0.35 0.40 0.15
0.00 0.70 0.35 0.40 0.15
Total Governmental Activities 21.42 17.85 17.45 17.45 13.47
Water Utility 2.00 2.45 2.60 2.10 1.85
Sewer Utility 1.66 1.30 0.70 0.70 0.30
Total Business Activities 3.66 3.75 3.30 2.80 2.15
Totals for Organization 25.08 21.60 20.75 20.25 15.62
Source: City's Adopted Budgets
CITY OF LAKE ELMO, MINNESOTA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
135
Schedule 17
2011 2010 2009 2008 2007
3.15 3.15 3.18 3.75 2.40
0.50 0.50 0.50 1.00 1.29
1.55 1.55 1.75 1.75 2.15
5.20 5.20 5.43 6.50 5.84
1.10 1.10 1.10 1.10 1.26
0.95 0.95 1.95 1.20 2.68
2.05 2.05 3.05 2.30 3.94
3.05 3.05 3.05 3.05 2.78
3.05 3.05 3.05 3.05 2.78
2.52 2.52 3.10 2.72 3.40
2.52 2.52 3.10 2.72 3.40
0.15 0.15 0.19 0.00 0.00
0.15 0.15 0.19 0.00 0.00
12.97 12.97 14.82 14.57 15.96
1.85 1.85 1.85 2.30 2.02
0.30 0.30 0.30 0.35 0.22
2.15 2.15 2.15 2.65 2.24
15.12 15.12 16.97 17.22 18.20
136
Function/Program 2016 2015 2014 2013 2012
Planning and Zoning
Conditional use permits 3 2 4 2 3
Interim use permits 2 1 1 1 0
Minor subdivisions 2 2 0 2 1
Plats/Planned unit developments 11 9 17 1 0
Rezonings 3 2 11 2 7
Site plans 1 0021
Variances 4 2 2 5 4
Fire
Total emergency responses 430 429 358 448 399
EMS responses 268 274 237 280 262
Fire responses 162 32 21 28 28
Building Inspections
Residential permit valuations 119,301 50,401 23,032 19,979 20,320
(thousands of dollars)
Commercial permit valuations 2,003 1,952 7,309 966 2,351
(thousands of dollars)
New residential units (1) 240 140 41 32 31
New commercial units 1 1 3 0 0
Water Utility
Number of customers 1,538 1,234 1,073 1,051 1,016
Average daily consumption (2) 18 18 19 21 15
(thousands of gallons)
Sanitary Sewer Utility
Number of customers 321 82452929
Average daily flow (3)
(thousands of gallons) 14 74 77 77 75
Sources: Various City Department's annual budget workload measurements
(1) Excludes fire/demolition rebuilds
(2) Residential and Commercial; rate increase effective 1/1/2010 to encourage conservation
(3) Billed and measured based on water usage; new developer homes built in 2014 but not yet sold
or occupied so no impact to flows
CITY OF LAKE ELMO, MINNESOTA
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
137
Schedule 18
2011 2010 2009 2008 2007
00213
31011
00211
00000
00110
01101
62568
315 361 319 294 369
195 211 205 204 244
24 14 24 20 46
16,133 15,889 12,903 16,525 22,739
2,590 2,013 1,617 1,370 3,600
24 26 29 23 29
01101
998 967 941 935 918
14 18 24 28 26
29 29 28 28 26
71 72 68 73 66
138
Function/Program 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Fire
Stations 2222222222
Public Works
Bituminous streets (miles) 103 65 65 63 63 63 62 62 62 62
Gravel streets (miles) 2222222333
Street lights 150 144 144 142 137 137 137 137 137 137
Storm sewer (miles) 30252525252525252323
Park & Recreation
Acres of parkland 451 451 451 451 451 451 451 451 451 451
Number of parks 17171717171717171717
Water Utility
Water towers 3332222221
Miles of watermain 50434039373737373426
Number of fire hydrants 415 378 351 293 280 280 280 280 280 233
Sanitary Sewer Utility
Miles of sanitary sewer 8433333333
Lift stations 4443333333
Sources: Various City Department's annual financial report statistics
CITY OF LAKE ELMO, MINNESOTA
CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Schedule 19
CITY OF LAKE ELMO, MINNESOTA
OTHER REPORT SECTION
December 31, 2016
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MINNESOTA LEGAL COMPLIANCE
Independent Auditor's Report
To the Honorable Mayor and
Members of the City Council
City of Lake Elmo, 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 Lake Elmo, Minnesota, as of and for the
year ended December 31, 2016, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, and have issued our report thereon dated June 29, 2017.
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to
Minnesota State Statutes Sec. 6.65, contains seven categories of compliance to be tested: contracting and
bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements,
miscellaneous provisions and tax increment financing. Our audit considered all of the listed categories,
except that we did not test for compliance with the provisions for tax increment financing because the City
has not established a tax increment financing district.
In connection with our audit, nothing came to our attention that caused us to believe that the City of Lake
Elmo, Minnesota failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for
Cities, except as described below. 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 of Lake Elmo, Minnesota's noncompliance with the
above referenced provisions.
As of December 31, 2016, the City's records showed uncashed checks held for more than
three years. These checks were not reported and paid to the State Commission of
Commerce pursuant to Minn. Stat. Sections 345.41 and 345.43.
This report is intended solely for the information and use of those charged with governance and
management of the City of Lake Elmo, Minnesota and the State Auditor and is not intended to be and
should not be used by anyone other than these specified parties.
Minneapolis, Minnesota
June 29, 2017
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