HomeMy WebLinkAbout2017 Annual Comprehensive Financial Report
CITY OF LAKE ELMO, MINNESOTA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2017
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, 2017
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
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, 2017
TABLE OF CONTENTS (CONTINUED)
CITY OF LAKE ELMO, MINNESOTA
INTRODUCTORY SECTION
DECEMBER 31, 2017
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i
3800 Laverne Avenue North
Lake Elmo, MN 55042
651-747-3900 www.lakeelmo.org
June 29, 2018
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, 2017.
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, 2017 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, 2017 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, 2017 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 9,625 which represents 3,350 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 2017 Adopted Budget and final property tax levy was required to be adopted by
and submitted to Washington County by December 28, 2016. 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 2017 population estimates of 9,625 or an increase of 18%
since the 2010 census.
New housing starts in 2017 numbered 299 with a total value of $129,119,697 and an average
value of $431,838. Commercial new construction numbered 3 with a total value of $5,370,557
and an average value of $1,790,186. All these new starts have been built in 2017 or will be
finished in 2018, which will greatly strengthen the existing tax base of the City.
LONG TERM FINANCIAL PLANNING
Total unassigned General Fund balance as of December 31, 2017 was 81% of the total 2017
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 2017, Moody’s Investors Service increased the City's long term debt rating to AA+. 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 2018.
iv
MAJOR INITIATIVES
2017 was again an extremely robust year for the City due to continuation of ongoing infrastructure
upgrades and projects, as well as oversight of the ongoing residential and commercial
development activity.
Some of the 2017 infrastructure projects included the following:
The Lake Elmo Avenue Downtown project is well underway and Phase III was
substantially completed in 2017. Phase IV of the project will be completed in 2018. The
projects cover 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 2018 Street Reconstruction program will also be a significant project during 2018
continuing the City’s investment in capital expenditures and upkeep of its street
infrastructure.
Phase II – Ideal Avenue included construction of streets and sewer infrastructure.
Completion of a lift station, pump house, well and water tower
2017 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.
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, 2016. 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, 2017. 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, 2020
Council Member Justin Bloyer December 31, 2020
Council Member Julie Fliflet December 31, 2018
Council Member Jill Lundgren December 31, 2018
Council Member Christine Nelson December 31, 2020
APPOINTED OFFICIALS
City Administrator Kristina Handt Continuous
Finance Director Brian Swanson Continuous
City Clerk Julie Johnson Continuous
FINANCE COMMITTEE
Wally Nelson, Chairperson
Anne Cohen, Vice Chairperson
Terry Forrest, Member
CITY OF LAKE ELMO, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
December 31, 2017
vii
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CITY OF LAKE ELMO, MINNESOTA
FINANCIAL SECTION
DECEMBER 31, 2017
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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, 2017, 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,
2017, 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, 2018
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, 2017.
FINANCIAL HIGHLIGHTS
The assets and deferred outflows of resources of the City of Lake Elmo, Minnesota exceeded
its liabilities and deferred inflows of resources at the close of the most recent fiscal year by
$42,600,067 (net position). Of this amount, $13,783,466 (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 $4,347,094 during 2017.
As of the close of the current fiscal year, the City of Lake Elmo, Minnesota’s governmental
funds reported combined ending fund balances of $8,259,817, an increase of $36,063 from the
prior year.
At the end of the current fiscal year, unassigned fund balance for the general fund was
$3,499,133, or 81% of total general fund expenditures. The nonspendable portion of the
general fund balance as of December 31, 2017 ($410,193) 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, 2017 ($200,000) was a reserve for future insurance and legal fees.
The City's total noncurrent liabilities increased by $7,342,158 or 22% during the current fiscal
year due to the issuance of the 2017A 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 2016 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-four individual governmental funds, thirteen 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 $42,600,067
at the close of the most recent fiscal year.
The largest portion of the City of Lake Elmo, Minnesota’s net position, $21,063,698 (49%) reflects its
investment in capital assets (e.g. land, buildings and improvements, and machinery and equipment),
less any related debt used to acquire those assets that is still outstanding. The City of Lake Elmo,
Minnesota uses these capital assets to provide services to citizens; consequently, these assets are
not available for future spending. Although the City of Lake Elmo, Minnesota's investment in capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
2017 2016 2017 2016 2017 2016
Current and other assets 12,381,583$ 10,893,806$ 14,443,394$ 10,098,093$ 26,824,977$ 20,991,899$
Capital assets 24,394,812 20,755,034 33,741,028 30,240,029 58,135,840 50,995,063
Total assets 36,776,395 31,648,840 48,184,422 40,338,122 84,960,817 71,986,962
Deferred outflows of resources 330,948 856,676 88,562 128,684 419,510 985,360
Long-term liabilities outstanding 16,954,320 13,471,388 23,103,352 19,244,126 40,057,672 32,715,514
Other liabilities 1,418,646 955,137 1,152,033 812,316 2,570,679 1,767,453
Total liabilities 18,372,966 14,426,525 24,255,385 20,056,442 42,628,351 34,482,967
Deferred inflows of resources 138,956 206,031 12,953 30,351 151,909 236,382
Net position:
Net investment in capital assets 8,883,320 9,032,535 12,180,378 12,506,474 21,063,698 21,539,009
Restricted 5,057,169 4,704,133 2,695,734 1,473,164 7,752,903 6,177,297
Unrestricted 4,654,932 4,136,292 9,128,534 6,400,375 13,783,466 10,536,667
Total net position 18,595,421$ 17,872,960$ 24,004,646$ 20,380,013$ 42,600,067$ 38,252,973$
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 (18%) represents resources
that are subject to external restrictions on how they may be used. The remaining balance of
unrestricted net position ($13,783,466) 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 $722,461 during 2017. Key elements of this increase include:
Charges for services increased by $505,215 from the prior year due primarily to an increase
in the amount of building permits issued by the City.
Capital grants and contributions increased by $837,796 from the prior year due primarily to
state construction aid received from the State of Minnesota.
Business-type activities. Business-type activities increased the City of Lake Elmo, Minnesota's net
position by $3,624,633. This increase is due primarily to the requirement that developers pay the
water and sewer access fees at the time they submit their final plat to the City.
A condensed version of the Statement of Activities follows:
2017 2016 2017 2016 2017 2016
Revenues:
Program revenues:
Charges for services 2,308,746$ 1,803,531$ 5,353,972$ 3,330,409$ 7,662,718$ 5,133,940$
Operating grants and contributions 229,960 235,214 229,960 235,214
Capital grants and contributions 2,290,265 1,452,469 1,489,922 3,464,567 3,780,187 4,917,036
General revenues:
Property taxes 3,040,413 3,226,739 3,040,413 3,226,739
Other 210,086 104,291 46,757 45,171 256,843 149,462
Total revenues 8,079,470 6,822,244 6,890,651 6,840,147 14,970,121 13,662,391
Expenses:
General government 1,503,251 1,358,370 1,503,251 1,358,370
Public safety 1,528,253 1,308,360 1,528,253 1,308,360
Public works 2,800,044 1,698,566 2,800,044 1,698,566
Culture and recreation 1,299,551 660,947 1,299,551 660,947
Interest on long-term debt 225,910 178,266 225,910 178,266
Water 2,022,446 1,409,832 2,022,446 1,409,832
Sewer 1,030,058 380,650 1,030,058 380,650
Storm sewer 213,514 150,302 213,514 150,302
Total expenses 7,357,009 5,204,509 3,266,018 1,940,784 10,623,027 7,145,293
Increase in net position before transfers 722,461 1,617,735 3,624,633 4,899,363 4,347,094 6,517,098
Transfers 143,105 (143,105)
Change in net position 722,461 1,760,840 3,624,633 4,756,258 4,347,094 6,517,098
Net position - beginning of year 17,872,960 16,112,120 20,380,013 15,623,755 38,252,973 31,735,875
Net position - end of year 18,595,421$ 17,872,960$ 24,004,646$ 20,380,013$ 42,600,067$ 38,252,973$
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
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Expenses and Program Revenues -Governmental Activities
Program revenues
Expenses
Property taxes
38%
Charges for
services
28%
Capital grants and
contributions
28%
Operating grants
and contributions
3%Other
3%
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
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Expenses and Program Revenues -Business-Type Activities
Program revenues
Expenses
Charges for
services
78%
Capital grants and
contributions
22%
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 $8,259,817, an increase of $36,063 in comparison with
the prior year. Approximately $4,124,668 of this total fund balance, or 50%, constitutes assigned and
unassigned fund balance, which is available for spending at the government’s discretion. The
remainder of the fund balance ($4,135,149) 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 $3,499,133. 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 81% of total 2017 general fund expenditures. The general
fund’s total fund balance increased by $220,289 during the current fiscal year due primarily to an
increase in building permits and related revenue during the year.
The debt service fund decreased its fund balance by $11,126 due to debt service expenditures in
excess of property taxes, special assessments and intergovernmental revenues allocated to this fund.
The infrastructure reserve fund increased its fund balance by $308,364 due primarily to
intergovernmental revenue and bond proceeds allocated to this fund in excess of capital outlay
expenditures.
The vehicle acquisition fund decreased its fund balance by $7,351 due primarily to capital outlay
expenditures in excess of revenue and bond proceeds allocated to this fund. This fund will no longer
be used in 2018 and will therefore be closed.
The special revenue funds decreased their overall fund balances by $166,537 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, decreased their collective fund balance by $307,576 due primarily to capital
outlay expenditures in excess of park dedication fees 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 $3,521,522, $4,485,443 and $1,121,569, respectively. The water fund,
sewer fund and storm sewer fund increased their net position by $713,508, $2,727,030 and $184,095,
respectively, for the year ended December 31, 2017. 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 $220,289. Revenues were more than budget by $601,872 for the year ended December 31, 2017
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 $381,583 for the year. Three departments had
expenditures in excess of budget: general government expenditures exceeded budget by $274,158,
public safety expenditures exceeded budget by $49,243 and public works expenditures exceeded
budget by $129,907. The over expenditures in the general government department were primarily
related to professional services that were required for longer than anticipated . The over expenditures
in the public safety department were primarily related to an increase in the number of fire protection
staff during the year. The over expenditures in the public works department were primarily related to
a reallocation of wages between departments during the year.
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, 2017, amounted to $58,135,840 (net of accumulated
depreciation). This investment in capital assets includes land, buildings and improvements, and
machinery and equipment. Total capital assets increased by $7,140,777, or 14%, for the year ended
December 31, 2017, due primarily to completed construction projects and additional construction in
progress on various capital projects within the City.
2017 2016 2017 2016 2017 2016
Land 3,453,979$ 3,453,979$ 248,869$ 248,869$ 3,702,848$ 3,702,848$
Construction in progress 4,218,535 4,418,552 2,933,887 7,025,526 7,152,422 11,444,078
Buildings 2,504,533 2,576,941 2,504,533 2,576,941
Improvements other than buildings 378,336 438,996 378,336 438,996
Machinery and equipment 1,689,088 1,556,172 68,409 84,461 1,757,497 1,640,633
Infrastructure 12,150,341 8,310,394 30,489,863 22,881,173 42,640,204 31,191,567
Total 24,394,812$ 20,755,034$ 33,741,028$ 30,240,029$ 58,135,840$ 50,995,063$
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
$37,830,000 in bonds outstanding. The entire $37,830,000 outstanding comprises debt backed by
the full faith and credit of the government.
2017 2016 2017 2016 2017 2016
General obligation bonds 15,280,000$ 11,625,000$ 22,550,000$ 18,775,000$ 37,830,000$ 30,400,000$
Total 15,280,000$ 11,625,000$ 22,550,000$ 18,775,000$ 37,830,000$ 30,400,000$
Governmental Activities Business-Type Activities Total
The City of Lake Elmo, Minnesota's total bonds payable increased by $7,430,000 during the current
fiscal year. The increase was due to the issuance of the 2017A 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 AA+ bond rating from Moody's Investor Service for
general obligation debt.
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
Plans continue with subsequent phases of the multi-phased developments which were
approved by the City.
The Cities taxable market value increased 3.4% from 2015 to 2016 and 7.5% from
2016 to 2017.
There was an increase in the amount of total property taxes levied in 2018. This is
related to increased debt service for the 2017A bonds, changes in personnel related
structure, both for compensation model and staffing model.
Development continues to be strong in the new development areas. The 2018 budget
anticipates the building of another 250 new homes and the continuation of commercial
expansion.
The Lake Elmo Avenue Downtown project is well underway and Phase III was
substantially completed in 2017. Phase IV of the project will be completed in 2018.
The projects cover 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 2018 Street Reconstruction program will also be a significant project during 2018
continuing the City’s investment in capital expenditures and upkeep of its street
infrastructure.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
13
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, 2017
This Page Left Blank Intentionally
See Notes to Financial Statements
14
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 8,820,331$ 10,265,669$ 19,086,000$
Receivables, net of allowance 2,281,638 3,420,636 5,702,274
Due from other governmental units 53,600 1,986 55,586
Internal balances (77,425) 77,425
Prepaid expenses 705,862 677,678 1,383,540
Net pension asset 597,577 597,577
Capital assets:
Nondepreciable 7,672,514 3,182,756 10,855,270
Depreciable, net 16,722,298 30,558,272 47,280,570
Total Assets 36,776,395 48,184,422 84,960,817
DEFERRED OUTFLOWS OF RESOURCES
Unamortized deferred amount on refunding 22,427 43,988 66,415
Deferred outflows from pension activity 308,521 44,574 353,095
Total Deferred Outflows of Resources 330,948 88,562 419,510
LIABILITIES
Accounts payable 761,874 404,996 1,166,870
Accrued expenses 74,015 4,391 78,406
Accrued interest 26,276 7,123 33,399
Escrow deposits 75,000 75,000
Due to other governmental units 473,181 206,523 679,704
Unearned revenue 8,300 529,000 537,300
Noncurrent liabilities:
Due within one year 1,221,378 1,157,235 2,378,613
Due in more than one year 14,580,797 21,756,684 36,337,481
Net pension liability 1,152,145 189,433 1,341,578
Total Liabilities 18,372,966 24,255,385 42,628,351
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pension activity 138,956 12,953 151,909
NET POSITION
Net investment in capital assets 8,883,320 12,180,378 21,063,698
Restricted
Debt service 5,057,169 2,695,734 7,752,903
Unrestricted 4,654,932 9,128,534 13,783,466
Total Net Position 18,595,421$ 24,004,646$ 42,600,067$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET POSITION
December 31, 2017
15
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities:
General government 1,503,251$ 206,856$ $ $
Public safety 1,528,253 2,101,890 81,840
Public works 2,800,044 122,883 2,024,482
Culture and recreation 1,299,551 25,237 265,783
Interest on long-term debt 225,910
Total governmental activities 7,357,009 2,308,746 229,960 2,290,265
Business-Type activities:
Water 2,022,446 2,628,848 88,972
Sewer 1,030,058 2,435,749 1,300,968
Storm sewer 213,514 289,375 99,982
Total business-type activities 3,266,018 5,353,972 1,489,922
Total 10,623,027$ 7,662,718$ 229,960$ 3,780,187$
General revenues:
General property taxes
Grants and contributions not restricted to specific programs
Interest earnings
Miscellaneous
Total general revenues
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, 2017
16
Governmental Business-Type
Activities Activities Total
(1,296,395)$ (1,296,395)$
655,477 655,477
(652,679) (652,679)
(1,008,531) (1,008,531)
(225,910) (225,910)
(2,528,038) (2,528,038)
695,374$ 695,374
2,706,659 2,706,659
175,843 175,843
3,577,876 3,577,876
(2,528,038) 3,577,876 1,049,838
3,040,413 3,040,413
2,749 2,749
48,987 46,705 95,692
158,350 52 158,402
3,250,499 46,757 3,297,256
722,461 3,624,633 4,347,094
17,872,960 20,380,013 38,252,973
18,595,421$ 24,004,646$ 42,600,067$
Net (Expense) Revenue
and Changes in Net Position
This Page Left Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
FUND FINANCIAL STATEMENTS
DECEMBER 31, 2017
See Notes to Financial Statements
17
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2017
General Fund
(101)
Debt Service
(300s)
Infrastructure
Reserve (409)
ASSETS
Cash and investments 3,712,848$ 2,931,225$ 893,935$
Receivables (Net of allowance for
uncollectibles)
Delinquent taxes 42,427
Special assessments 21,411 1,947,515 238,287
Accrued interest 18,801
Loans 13,197
Due from other funds 486,803
Advances to other funds 381,708
Due from other governmental units 35,688 233 17,679
Prepaid items 28,485 675,000
TOTAL ASSETS 4,741,368$ 5,553,973$ 1,149,901$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE
LIABILITIES
Accounts payable 435,838$ $ 171,347$
Escrow deposits payable
Accrued liabilities 62,919
Due to other funds 381,471 7,032
Due to other governments 61,147 395,000
Unearned revenue 8,300
Advances from other funds
Total liabilities 568,204 381,471 573,379
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue:
Property taxes 42,427
Special assessments 21,411 1,947,515 238,287
Total deferred inflows of resources 63,838 1,947,515 238,287
FUND BALANCE
Nonspendable 410,193 675,000
Restricted 2,849,956
Committed 200,000
Assigned 338,235
Unassigned 3,499,133 (299,969)
Total Fund Balance 4,109,326 3,224,987 338,235
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCE 4,741,368$ 5,553,973$ 1,149,901$
18
Vehicle
Acquisition
(410)
Other
Governmental
Funds Total
31,840$ 1,250,483$ 8,820,331$
42,427
2,207,213
18,801
13,197
486,803
381,708
53,600
703,485
31,840$ 1,250,483$ 12,727,565$
$ 172,396$ 779,581$
75,000 75,000
8,046 70,965
57,904 446,407
456,147
8,300
381,708 381,708
695,054 2,218,108
42,427
2,207,213
2,249,640
1,085,193
2,849,956
200,000
31,840 937,141 1,307,216
(381,712) 2,817,452
31,840 555,429 8,259,817
31,840$ 1,250,483$ 12,727,565$
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) 8,259,817$
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds:
Governmental funds - capital assets 32,328,936$
Accumulated depreciation (8,078,706)
24,250,230
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unavailable in the funds:
Delinquent property taxes 42,427$
Special assessments 2,207,213
2,249,640
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the funds:
Bonds and notes payable (15,280,000)$
Net pension liability (asset), deferred outflows and
inflows from pension activity (385,003)
Compensated absences (61,837)
Post employment benefit obligation (206,419)
Accrued interest (26,276)
Unamortized deferred amount on refunding 22,427
Unamortized bond premiums (332,817)
Unamortized bond discounts 78,898
(16,191,027)
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. 26,761
Net position of governmental activities (page 14) 18,595,421$
December 31, 2017
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF NET POSITION IN THE
GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND BALANCES
IN THE FUND BASIS FINANCIAL STATEMENTS
See Notes to 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, 2017
General Fund
(101)
Debt Service
(300s)
Infrastructure
Reserve (409)
REVENUES
Taxes 1,910,494$ 874,623$ $
Licenses and permits 2,046,462
Intergovernmental 206,185 817,679
Charges for services 137,920
Fines and forfeitures 41,418
Special assessments 444,293
Dedication fees
Refunds and reimbursements
Investment earnings 27,665 12,181 3,715
Miscellaneous revenue 183,114 24,899
TOTAL REVENUES 4,553,258 1,331,097 846,293
EXPENDITURES
Current
General government 1,411,995
Public safety 1,470,726
Public works 1,185,828
Culture and recreation 173,511
Unallocated 90,909
Capital Outlay
Public safety
Public works 4,934,431
Culture and recreation
Debt Service
Principal 910,000
Interest and other charges 432,223
Bond issuance costs 29,493
TOTAL EXPENDITURES 4,332,969 1,342,223 4,963,924
Excess (deficiency) of revenues
over (under) expenditures 220,289 (11,126) (4,117,631)
OTHER FINANCING SOURCES (USES)
Issuance of debt 4,295,000
Premium on issuance of debt 155,741
(Discount) on issuance of debt (24,746)
Sale of capital assets
TOTAL OTHER FINANCING SOURCES (USES) 4,425,995
Net change in fund balances 220,289 (11,126) 308,364
FUND BALANCES, Beginning 3,889,037 3,236,113 29,871
FUND BALANCES, Ending 4,109,326$ 3,224,987$ 338,235$
21
Vehicle
Acquisition
(410)
Other
Governmental
Funds Total
$ 256,957$ 3,042,074$
2,046,462
1,023,864
137,920
41,418
11,200 455,493
265,783 265,783
132 5,294 48,987
22,410 34,710 265,133
33,742 562,744 7,327,134
1,411,995
1,470,726
1,185,828
429,781 603,292
90,909
319,410 319,410
4,934,431
607,076 607,076
910,000
432,223
1,854 31,347
321,264 1,036,857 11,997,237
(287,522) (474,113) (4,670,103)
270,000 4,565,000
10,327 166,068
(1,556) (26,302)
1,400 1,400
280,171 4,706,166
(7,351) (474,113) 36,063
39,191 1,029,542 8,223,754
31,840$ 555,429$ 8,259,817$
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) 36,063$
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 4,709,797$
Depreciation expense (1,042,230)
3,667,567
Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds:
Special assessments 751,310$
Property taxes (1,661)
749,649
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 (61,837)$
Compensated absences, beginning of year 64,623
Post employment benefit obligation, end of year (206,419)
Post employment benefit obligation, beginning of year 206,419
2,786
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 910,000$
Issuance of long-term debt (4,565,000)
Change in net pension liability (asset) (14,715)
Change in deferred amount on refunding (2,643)
Change in accrued interest, bond premiums and
bond discounts (33,457)
(3,705,815)
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 (27,789)
Change in net position of governmental activities (page 16) 722,461$
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, 2017
See Notes to Financial Statements
23
Variance with
2017 Final Budget-
Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes
Property 1,818,847$ 1,818,847$ 1,841,212$ 22,365$
Franchise 76,000 76,000 69,282 (6,718)
Total Taxes 1,894,847 1,894,847 1,910,494 15,647
Licenses and Permits
Business 13,000 13,000 9,200 (3,800)
Nonbusiness 1,449,369 1,449,369 2,037,262 587,893
Total Licenses and Permits 1,462,369 1,462,369 2,046,462 584,093
Intergovernmental
MSA - maintenance 130,838 130,838 122,883 (7,955)
Fire state aid 47,000 47,000 61,147 14,147
Other 7,569 7,569 22,155 14,586
County and local 15,688 15,688 (15,688)
Total Intergovernmental 201,095 201,095 206,185 5,090
Charges for Services 39,675 39,675 137,920 98,245
Fines and Forfeits 46,500 46,500 41,418 (5,082)
Investment Earnings 40,000 40,000 27,665 (12,335)
Miscellaneous Revenue 266,900 266,900 183,114 (83,786)
TOTAL REVENUES 3,951,386$ 3,951,386$ 4,553,258$ 601,872$
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, 2017
See Notes to Financial Statements
24
Variance with
2017 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Mayor and Council
Personnel services 27,956$ 27,956$ 27,723$ 233$
Other services and charges 18,938 18,938 24,811 (5,873)
Total Mayor and Council 46,894 46,894 52,534 (5,640)
Election
Other services and charges 1,200 1,200 1,660 (460)
Finance and Administration
Personnel services 301,284 301,284 428,599 (127,315)
Supplies 7,175 7,175 5,388 1,787
Other services and charges 119,546 119,546 109,169 10,377
Total Finance and Administration 428,005 428,005 543,156 (115,151)
Communications
Personnel services 9,863 (9,863)
Other services and charges 7,349 (7,349)
Total Communications 17,212 (17,212)
City Facilities
Supplies 350 350 550 (200)
Other services and charges 63,303 63,303 60,918 2,385
Total City Facilities 63,653 63,653 61,468 2,185
Professional Services
Assessor 38,000 38,000 51,646 (13,646)
Accounting and auditing 29,601 29,601 214,028 (184,427)
Legal 170,000 170,000 140,883 29,117
Engineering 36,000 36,000 44,510 (8,510)
Total Professional Services 273,601 273,601 451,067 (177,466)
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, 2017
See Notes to Financial Statements
25
Variance with
2017 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Planning and Zoning
Personnel services 193,959$ 193,959$ 225,136$ (31,177)$
Supplies 2,300 2,300 336 1,964
Other services and charges 128,225 128,225 59,426 68,799
Total Planning and Zoning 324,484 324,484 284,898 39,586
Total General Government 1,137,837 1,137,837 1,411,995 (274,158)
Public Safety
Police
Contracted services 618,357 618,357 615,054 3,303
Other services and charges 1,000 1,000 1,800 (800)
Total Public Safety 619,357 619,357 616,854 2,503
Fire Protection
Personnel services 221,042 221,042 272,201 (51,159)
2% fire aid 47,000 47,000 61,147 (14,147)
Supplies 33,350 33,350 22,393 10,957
Other services and charges 110,229 110,229 131,398 (21,169)
Total Fire Protection 411,621 411,621 487,139 (75,518)
Building Inspector
Personnel services 312,975 312,975 299,862 13,113
Supplies 5,700 5,700 1,920 3,780
Other services and charges 15,510 15,510 7,900 7,610
Total Building Inspector 334,185 334,185 309,682 24,503
Animal Control
Other services and charges 7,725 7,725 11,448 (3,723)
Criminal Legal 43,200 43,200 42,874 326
Emergency Communications 5,395 5,395 2,729 2,666
Total Public Safety 1,421,483$ 1,421,483$ 1,470,726$ (49,243)$
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, 2017
See Notes to Financial Statements
26
Variance with
2017 Final Budget-
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
Public Works
General
Personnel services 340,234$ 340,234$ 434,130$ (93,896)$
Supplies 561,350 561,350 559,219 2,131
Other services and charges 154,337 154,337 160,802 (6,465)
Total General 1,055,921 1,055,921 1,154,151 (98,230)
Street Lighting 31,677 (31,677)
Total Public Works 1,055,921 1,055,921 1,185,828 (129,907)
Culture and Recreation
Parks
Personnel services 166,079 166,079 116,736 49,343
Supplies 10,150 10,150 7,153 2,997
Other services and charges 74,100 74,100 49,622 24,478
Total Culture and Recreation 250,329 250,329 173,511 76,818
Other Unallocated
IT and telephone expense 85,816 85,816 90,909 (5,093)
Total Other Unallocated 85,816 85,816 90,909 (5,093)
Total Expenditures 3,951,386 3,951,386 4,332,969 (381,583)
NET CHANGE IN FUND BALANCE 220,289 220,289
FUND BALANCE, January 1 3,889,037 3,889,037 3,889,037
FUND BALANCE, December 31 3,889,037$ 3,889,037$ 4,109,326$ 220,289$
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, 2017
See Notes to Financial Statements
27
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position
December 31, 2017
Water (601) Sewer (602)
Storm Sewer
(603)
ASSETS
Current Assets
Cash and investments 3,453,036$ 4,848,717$ 1,963,916$
Receivables
Accounts 404,629 39,096 242,042
Special assessments 314,073 2,382,251 38,545
Due from other governments 950 1,036
Due from other funds 54,305 23,915
Prepaid expenses 395,000 122,678 160,000
Total Current Assets 4,567,688 7,447,047 2,429,454
Noncurrent Assets
Property and Equipment
Land 248,869
Machinery and equipment 300,587
Infrastructure 26,252,872 7,883,389 2,224,765
Construction in progress 1,437,949 1,351,465 144,473
Total Property and Equipment 28,240,277 9,234,854 2,369,238
Less: Accumulated depreciation 5,196,014 732,616 174,711
Net Property and Equipment 23,044,263 8,502,238 2,194,527
Total Assets 27,611,951 15,949,285 4,623,981
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding 43,988
Deferred outflows from pension activity 28,236 9,959 6,379
Total Deferred Outflows of Resources 72,224$ 9,959$ 6,379$
Business-Type Activities - Enterprise Funds
28
Governmental
Activities -
Total
Internal
Service Funds
10,265,669$ $
685,767
2,734,869
1,986
78,220
677,678
14,444,189
248,869
300,587 654,692
36,361,026
2,933,887
39,844,369 654,692
6,103,341 510,110
33,741,028 144,582
48,185,217 144,582
43,988
44,574
88,562$ $
See Notes to Financial Statements
29
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position (Continued)
December 31, 2017
Water (601) Sewer (602)
Storm Sewer
(603)
LIABILITIES
Current Liabilities
Accounts payable 98,896$ 302,880$ 3,220$
Accrued salaries payable 3,182 710 499
Accrued interest payable 7,123
Due to other funds 795
Due to other governments 19,627 178,320 8,576
Unearned revenue 479,000 50,000
Current portion of compensated absences 6,694 3,701 1,840
Current portion of bonds payable 710,000 275,000 160,000
Total Current Liabilities 1,325,317 810,611 174,135
Long-term Liabilities
Other postemployment benefits payable 17,499 5,405 7,918
Compensated absences payable 2,231 1,234 613
Net pension liability 119,232 43,353 26,848
Bonds payable and unamortized premium on
bonds, net of unamortized discount on bonds 12,105,099 6,796,974 2,819,711
Total Long-term Liabilities 12,244,061 6,846,966 2,855,090
Total Liabilities 13,569,378 7,657,577 3,029,225
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pension activity 6,640 3,709 2,604
NET POSITION
Net investment in capital assets 10,273,152 1,430,264 476,962
Restricted
Debt service 313,483 2,382,251
Unrestricted 3,521,522 4,485,443 1,121,569
Total Net Position 14,108,157$ 8,297,958$ 1,598,531$
Business-Type Activities - Enterprise Funds
30
Governmental
Activities -
Total
Internal
Service Funds
404,996$ $
4,391
7,123
795 117,821
206,523
529,000
12,235
1,145,000
2,310,063 117,821
30,822
4,078
189,433
21,721,784
21,946,117
24,256,180 117,821
12,953
12,180,378 144,582
2,695,734
9,128,534 (117,821)
24,004,646$ 26,761$
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, 2017
Business-Type Activities - Enterprise Funds
Water (601) Sewer (602)
Storm Sewer
(603)
Operating Revenues 2,456,848$ 1,757,769$ 289,375$
Operating Expenses
Personnel services 159,177 39,299 22,273
Supplies 139,349 6,761 2,053
Professional services 250,040 306,905 50,818
Repairs and maintenance 56,517 52,283 21,419
Insurance 9,322
Utilities 298,510 90,694
Depreciation 808,865 350,903 56,299
Total Operating Expenses 1,721,780 846,845 152,862
Operating Income (Loss)735,068 910,924 136,513
Other Revenue (Expense)
Investment earnings 18,096 20,362 8,247
Future infrastructure charges 172,000 677,980
Bond issuance costs (11,262) (18,437) (1,064)
Intergovernmental revenue 67,736 9 5
Interest and fiscal expense (289,404) (164,776) (59,588)
Total Other Revenue (Expense) (42,834) 515,138 (52,400)
Income (Loss) Before Transfers
and Contributions 692,234 1,426,062 84,113
Capital contributions - special assessments 21,137 1,229,699
Noncash capital contributions 137 71,269 99,982
Change in net position 713,508 2,727,030 184,095
Net Position, Beginning 13,394,649 5,570,928 1,414,436
Net Position, End of Year 14,108,157$ 8,297,958$ 1,598,531$
32
Governmental
Activities -
Total
Internal
Service Funds
4,503,992$ $
220,749
148,163
607,763
130,219
9,322
389,204
1,216,067 27,789
2,721,487 27,789
1,782,505 (27,789)
46,705
849,980
(30,763)
67,750
(513,768)
419,904
2,202,409 (27,789)
1,250,836
171,388
3,624,633 (27,789)
20,380,013 54,550
24,004,646$ 26,761$
See Notes to Financial Statements
33
Governmental
Activities -
Water (601) Sewer (602)
Storm Sewer
(603) Total
Internal
Service Funds
Cash Flows from Operating Activities
Cash received from customers 5,953,933$ 2,488,893$ 268,241$ 8,711,067$ $
Cash payments to suppliers (678,366) (170,278) (72,876) (921,520)
Cash payments to employees (157,090) (42,478) (22,175) (221,743)
Net Cash Provided By Operating Activities 5,118,477 2,276,137 173,190 7,567,804
Cash Flows From Investing Activities
Interest earnings received 18,096 20,362 8,247 46,705
Cash Flows from Capital and Related Financing Activities
Acquisition of capital assets (2,292,406) (2,280,210) (144,450) (4,717,066)
Special assessments received (assessed), net 67,891 50,185 (24,114) 93,962
Outside capital contributions 99,982 99,982
Proceeds from issuance of long-term debt 1,640,000 2,685,000 155,000 4,480,000
Bond issuance costs (11,262) (18,437) (1,064) (30,763)
Increase in net unamortized bond premiums 33,950 66,545 894 101,389
Principal paid on long-term debt (485,000) (220,000) (705,000)
Principal prepaid on long-term debt (395,000) (115,000) (160,000) (670,000)
Interest paid on long-term debt (376,758) (222,380) (89,135) (688,273)
Net Cash (Used In) Capital and Related
Financing Activities (1,818,585) (54,297) (162,887) (2,035,769)
Net Increase in Cash and Cash Equivalents 3,317,988 2,242,202 18,550 5,578,740
Cash and Cash Equivalents, January 1 135,048 2,606,515 1,945,366 4,686,929
Cash and Cash Equivalents, December 31 3,453,036$ 4,848,717$ 1,963,916$ 10,265,669$ $
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Cash Flows
For the Year Ended December 31, 2017
Business-Type Activities - Enterprise Funds
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) 735,068$ 910,924$ 136,513$ 1,782,505$ (27,789)$
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 808,865 350,903 56,299 1,216,067 27,789
Principal prepaid on long-term debt 395,000 115,000 160,000 670,000
Change in net pension liability 7,588 1,815 911 10,314
Future infrastructure charges, included
in nonoperating revenue 172,000 677,980 849,980
Other income 67,698 67,698
(Increase) decrease in:
Accounts receivable (274,148) 1,678 (20,349) (292,819)
Due from other governments 3,431,535 1,466 (785) 3,432,216
Prepaid expenses (395,000) (122,678) (160,000) (677,678)
Increase (decrease) in:
Accounts payable 63,256 261,216 1,414 325,886
Accrued salaries payable (2,634) (1,124) (363) (4,121)
Due to other governments 12,116 32,827 44,943
Unearned revenue 100,000 50,000 150,000
Compensated absences payable (2,867) (3,870) (450) (7,187)
Net Cash Provided By Operating Activities 5,118,477$ 2,276,137$ 173,190$ 7,567,804$ $
Noncash Capital and Related Financing Activities
Amortization of deferred charges 6,236$ 1,088$ 850$ 8,174$ $
Amortization of bond premiums 12,835 4,899 4,043 21,777
Receipt of contributed capital 137 71,269 99,982 171,388
Business-Type Activities - Enterprise Funds
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Cash Flows (Continued)
For the Year Ended December 31, 2017
See Notes to Financial Statements
35
Agency Funds
ASSETS
Cash and investments 2,712,949$
Accounts receivable 128
TOTAL ASSETS 2,713,077$
LIABILITIES
Accounts payable 38,858$
Deposits payable 2,674,219
TOTAL LIABILITIES 2,713,077$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
December 31, 2017
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
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, 2017. This fund will be closed during 2018.
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.
Agency funds are fiduciary funds that are custodial in nature and do not present
results of operations or have a measurement focus. Agency funds are accounted
for using the accrual basis of accounting. The City’s agency funds are used to record
the receipt and remittance of monies held by the City as an agent primarily for land
developers and builders that will be refunded to the respective depositors when the
conditions are satisfied in accordance with the respective agreements.
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, donated works of art and similar items, and capital
assets received in a service concession arrangement are recorded at estimated
acquisition 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, 2017).
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, 2017, the General Fund total expenditures were $381,583
more than budget. The following funds and General Fund departments had expenditures
exceeding the latest amended budget:
2017 Budgeted
Expenditures
2017 Actual
Expenditures
Amount Exceeding
Budgeted Amount
General Fund:
General government 1,137,837$ 1,411,995$ 274,158$
Public safety 1,421,483 1,470,726 49,243
Public works 1,055,921 1,185,828 129,907
Other unallocated 85,816 90,909 5,093
Library Fund 260,957 429,781 168,824
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, 2017, the following funds had deficit fund balances:
Fund Amount
Nonmajor:
City Events Special Revenue 607$
Village Project Capital Project 376,500
Manning Avenue/Highway 36 Capital Project 4,605
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, 2017.
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 $10,000,000, a reporting dealer to the Federal Reserve
Bank of New York, or certain Minnesota securities broker-dealers.
(g) Money market funds with institutions that have portfolios consisting exclusively of United
States Treasury obligations and Federal Agency issues.
(h) Guaranteed investment contracts (gic's) issued or guaranteed by United States
commercial banks or domestic branches of foreign banks or United States insurance
companies and with a credit quality in one of the top two highest categories.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
50
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment, the greater the
sensitivity of its fair value to changes in market interest rates. The City does not have a
formal policy related to interest rate risk for its investments, but one of the ways that the City
manages its exposure to interest rate risk is by purchasing a combination of shorter and
longer term investments and by timing cash flows from maturities so that a portion of the
portfolio is maturing or coming close to maturity evenly over time as necessary to provide the
cash flow and liquidity needs for operation. The following is a summary of the City of Lake
Elmo, Minnesota's cash and investment portfolio including the range of maturities and
investment ratings by type of investment:
Investment Range of Maturities Rating Value
Cash N/A N/A 16,861,314$
Certificates of Deposit 10/22 N/A 3,205,227
Municipal Bonds 12/18 A 180,076
U.S. Government Agencies 10/23 AA+ 1,552,332
Total cash and investments 21,798,949$
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 16,861,314$
Investments 4,937,635
Total 21,798,949$
Government-wide
Cash and investments 19,086,000$
Fiduciary
Cash and investments 2,712,949
Total 21,798,949$
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, 2017 were as follows:
Issuer Investment Type Value
Lake Elmo Bank Money Market Savings 7,520,026$
Lake Elmo Bank Checking Account 9,096,365
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, 2017, 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, 2017 and 2016 were
as follows:
Assets
Measured at
Fair Value Level 1 Level 2 Level 3
U.S. Government
Securities 1,552,332$ $ 1,552,332$ $
Certificates of Deposit 3,205,227 3,205,227
Municipal Bonds 180,076 180,076
Total 4,937,635$ 3,205,227$ 1,732,408$ $
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$ $
Fair Value Hierarchy Level
As of December 31, 2017
As of December 31, 2016
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, 2017 were as follows:
Fund Type
State of
Minnesota
Washington
County Total
General Fund 1,654$ 34,034$ 35,688$
Debt Service Fund 233 233
Infrastructure Reserve Fund 17,679 17,679
Water Fund 950 950
Storm Sewer Fund 1,036 1,036
Total 19,333$ 36,253$ 55,586$
C. Accounts and Loans Receivable
Accounts and loans receivable as of December 31, 2017 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, 2017 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 4,418,552 4,436,376 4,636,393 4,218,535
Total capital assets, not being depreciated 7,872,531 4,436,376 4,636,393 7,672,514
Capital assets, being depreciated:
Buildings 3,533,542 3,533,542
Improvements other than buildings 1,415,397 1,415,397
Machinery and equipment 3,867,345 351,903 4,219,248
Infrastructure 11,585,016 4,557,911 16,142,927
Total capital assets, being depreciated 20,401,300 4,909,814 25,311,114
Less accumulated depreciation for:
Building 956,601 72,408 1,029,009
Improvements other than buildings 976,401 60,660 1,037,061
Machinery and equipment 2,311,173 218,987 2,530,160
Infrastructure 3,274,622 717,964 3,992,586
Total accumulated depreciation 7,518,797 1,070,019 8,588,816
Total capital assets, being depreciated, net 12,882,503 3,839,795 16,722,298
Governmental activities capital assets, net 20,755,034$ 8,276,171$ 4,636,393$ 24,394,812$
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 7,025,526 4,717,066 8,808,705 2,933,887
Total capital assets, not being depreciated 7,274,395 4,717,066 8,808,705 3,182,756
Capital assets, being depreciated:
Machinery and equipment 300,587 300,587
Infrastructure 27,552,321 8,808,705 36,361,026
Total capital assets, being depreciated 27,852,908 8,808,705 36,661,613
Less accumulated depreciation for:
Machinery and equipment 216,126 16,052 232,178
Infrastructure 4,671,148 1,200,015 5,871,163
Total accumulated depreciation 4,887,274 1,216,067 6,103,341
Total capital assets, being depreciated, net 22,965,634 7,592,638 30,558,272
Business-type activities capital assets, net 30,240,029$ 12,309,704$ 8,808,705$ 33,741,028$
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, 2017 was charged to
functions/programs as follows:
Governmental Activities
General government 17,777$
Public safety 123,280
Public works 849,478
Culture and recreation 79,484
Total 1,070,019$
Business-Type Activities
Water 808,865$
Sewer 350,903
Storm sewer 56,299
Total 1,216,067$
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, 2017 is as follows:
Range of Final Balance
Issue Date Interest Rates Maturity 12/31/17
General obligation bonds:
2009B Improvement Bonds 10/1/2009 3.00% - 3.05% 2020 190,000$
2010A Improvement Bonds 11/15/2010 2.35% - 2.80% 2021 295,000
2010B CIP Crossover Refunding Bonds 11/15/2010 2.05% - 3.20% 2025 1,380,000
2011A Improvement Bonds 10/1/2011 1.25% - 2.30% 2022 440,000
2012B Improvement Bonds 8/16/2012 1.25% - 1.90% 2023 540,000
2013A Improvement Bonds 10/1/2013 2.00% - 3.75% 2028 1,240,000
2014A Improvement Bonds 7/15/2014 2.00% - 3.50% 2030 2,460,000
2015A Improvement Bonds 8/13/2015 2.00% - 3.00% 2031 1,480,000
2016A Improvement Bonds 6/1/2016 2.00% 2027 2,690,000
2017A Improvement Bonds 6/8/2017 2.50% - 3.00% 2033 4,565,000
General obligation revenue bonds:
2009A Refunding Bonds 5/1/2009 3.45% - 3.85% 2021 195,000
2012A Refunding Bonds 8/13/2012 2.00% - 2.50% 2030 3,650,000
2013A Improvement Bonds 10/1/2013 2.00% - 4.00% 2033 3,230,000
2014A Improvement Bonds 7/15/2014 2.00% - 3.50% 2030 3,005,000
2015A Improvement Bonds 8/13/2015 2.00% - 3.00% 2031 1,135,000
2016A Improvement Bonds 6/1/2016 2.00% 2032 6,855,000
2017A Improvement Bonds 6/1/2016 2.50% - 3.00% 2033 4,480,000
Other Liabilities:
Compensated Absences 78,150
Post Employment Benefit Obligation 237,241
Unamortized premium 753,023
Less: Unamortized discount (182,320)
Total Long-Term Debt 38,716,094$
Liquidation of the compensated absences liability and the post employment obligation
liability occurs within the department and fund (typically the General Fund for the
governmental fund liability) 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, 2017, the City had not utilized
approximately $36,710,000 of its net legal debt margin.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
58
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt (Continued)
The following is a summary of the changes in long-term debt obligations for the year ended
December 31, 2017:
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable:
General obligation bonds:
2009B Improvement Bonds 250,000$ $ 60,000$ 190,000$ 65,000$
2010A Improvement Bonds 365,000 70,000 295,000 70,000
2010B CIP Crossover Refunding Bonds 1,535,000 155,000 1,380,000 155,000
2011A Improvement Bonds 525,000 85,000 440,000 85,000
2012B Improvement Bonds 625,000 85,000 540,000 85,000
2013A Improvement Bonds 1,345,000 105,000 1,240,000 105,000
2014A Improvement Bonds 2,670,000 210,000 2,460,000 210,000
2015A Improvement Bonds 1,620,000 140,000 1,480,000 155,000
2016A Improvement Bonds 2,690,000 2,690,000 245,000
2017A Improvement Bonds 4,565,000 4,565,000
Other Liabilities:
Compensated Absences 64,623 94,226 97,012 61,837 46,378
Post Employment Benefit Obligation 206,419 206,419
Unamortized premium 181,792 166,069 15,044 332,817
Less: Unamortized (discount) (59,224) (26,301) (6,627) (78,898)
Governmental Activities
Long-Term Liabilities 12,018,610 4,798,994 1,015,429 15,802,175 1,221,378
BUSINESS-TYPE ACTIVITIES
Bonds and Notes Payable:
General obligation revenue bonds:
2009A Refunding Bonds 240,000 45,000 195,000 45,000
2012A Refunding Bonds 3,840,000 190,000 3,650,000 215,000
2013A Improvement Bonds 3,435,000 205,000 3,230,000 215,000
2014A Improvement Bonds 3,210,000 205,000 3,005,000 205,000
2015A Improvement Bonds 1,195,000 60,000 1,135,000 70,000
2016A Improvement Bonds 6,855,000 6,855,000 395,000
2017A Improvement Bonds 4,480,000 4,480,000
Other Liabilities:
Compensated Absences 23,500 23,704 30,891 16,313 12,235
Post Employment Benefit Obligation 30,822 30,822
Unamortized premium 298,693 143,291 21,778 420,206
Less: Unamortized (discount) (83,298) (25,811) (5,687) (103,422)
Business-Type Activities
Long-Term Liabilities 19,044,717 4,621,184 751,982 22,913,919 1,157,235
Total 31,063,327$ 9,420,178$ 1,767,411$ 38,716,094$ 2,378,613$
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, 2017 were as
follows:
Year Principal Interest Principal Interest
2018 1,175,000$ 366,709$ 1,145,000$ 552,647$
2019 1,615,000 325,852 1,415,000 514,144
2020 1,655,000 289,871 1,435,000 484,038
2021 1,615,000 253,245 1,445,000 453,224
2022 1,570,000 217,082 1,490,000 421,467
2023-2027 6,570,000 347,274 7,770,000 1,582,573
2028-2032 1,080,000 34,763 7,275,000 576,028
2033 575,000 14,000
Totals 15,280,000$ 1,834,793$ 22,550,000$ 4,598,120$
General Obligation
Improvement Bonds
General Obligation Revenue
Bonds
F. Tax Abatement Agreements
The City enters into property tax abatement agreements as authorized by Minnesota
Abatement Laws under State Statutes Sections 469.174 to 469.1974 through a tax increment
financing program. Any parcel of property in the City could qualify for tax abatement under
this program. The City negotiates tax increment financing agreements on an individual basis
generally with the purpose of promoting economic development within the City.
During the year ended December 31, 2017, the City had one agreement established under
Minnesota Statute 469.001 to 469.047 which resulted in property taxes totaling $8,795 being
abated.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
60
3. Detailed Notes on All Funds (Continued)
F. Interfund Receivables and Payables
The following schedule reports the interfund receivables and payables within the City's funds
as of December 31, 2017:
Due From Due To
Other Funds Other Funds
Major Governmental Funds:
General Fund 486,803$ $
Debt Service 381,471
Infrastructure Reserve 7,032
Subtotal 486,803 388,503
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 565,023$ 565,023$
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, 2017, the outstanding balance was $381,708. The loan carries an interest
rate of 4 percent.
G. Interfund Transfers
Transfers are used to move unassigned revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations.
There were no interfund transfers during the year ended December 31, 2017.
H. Fund Equity
In accordance with the requirements of GASB Statement No. 54, below is a schedule of
ending fund balances as of December 31, 2017:
General Debt Service
Infrastructure
Reserve
Vehicle
Acquisition
Other
Governmental
Funds
Total
Governmental
Funds
Nonspendable
Prepaid items 28,485$ 675,000$ $ $ 703,485$
Advance to other funds 381,708 381,708
Total Nonspendable 410,193 675,000 1,085,193
Restricted
Debt service 2,849,956 2,849,956
Committed
Legal reserve 200,000 200,000
Assigned
Library 4,486 4,486
City facilities 274,063 274,063
Infrastructure improvements 338,235 8,122 346,357
Park improvements 650,470 650,470
Vehicle acquisition 31,840 31,840
Total Assigned 338,235 31,840 937,141 1,307,216
Unassigned 3,499,133 (299,969) (381,712) 2,817,452
Total Fund Balance 4,109,326$ 3,224,987$ 338,235$ 31,840$ 555,429$ 8,259,817$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
62
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, 2017. 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)
63
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. As discussed further in Footnote 5, this lease became a capital lease during 2018.
Expenditures under this operating lease for the year ended December 31, 2017 totaled
$31,992. The following is a schedule by year of future minimum rental payments required
under the lease as of December 31, 2017:
Year Ending
December 31, Amount
2018 10,664$
2019 43,968
2020 85,972
2021 85,903
2022 85,742
Thereafter 1,024,740
Total 1,336,989$
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 2017, there were 21 active participants and one retiree participant.
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)
64
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 (i.e. no change in the OPEB liability
for the year ended December 31, 2017):
Annual required contribution $
Interest on net OPEB obligations
Adjustment to ARC
Annual OPEB cost
Contributions during the year
Increase in net OPEB obligation
Net OPEB, beginning of year 237,241
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, 2017, 2016 and 2015 are
as follows:
Fiscal Year
Ended
Annual
OPEB Cost
Percentage
Contributed
Net OPEB
Obligation
12/31/2015 38,791$ 0%198,978$
12/31/2016 38,263 0%237,241
12/31/2017 0%237,241
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
65
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Funded Status and Funding Progress
As of January 1, 2017, the actuarial accrued liability for benefits was $188,502, all of which
was unfunded.
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)
66
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 - 2017 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, 2017 was thirty years.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
67
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)
68
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)
69
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 2017. The City
was required to contribute 11.78% of pay for Basic Plan members and 7.50% for
Coordinated Plan members in calendar year 2017. The City's contributions to the
General Employees Fund for the year ended December 31, 2017 were $95,794. 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 2017. The City was required to contribute 16.20% of pay for members in
calendar year 2017. The City's contributions to the Police and Fire Fund for the year
ended December 31, 2017 were $20,327. 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, 2017, the City reported a liability of $1,206,564 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 2017. 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 $15,173. The net pension liability was measured as of June 30, 2017, 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, 2016 through June 30, 2017 relative to the total
employer contributions received from all of PERA's participating employers. At June 30,
2017, the City's proportionate share was .0189% which was an increase of .003% from
its proportion measured as of June 30, 2016.
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)
C. Pensions Costs (continued)
1. General Employees Fund Pension Costs (continued)
For the year ended December 31, 2017, the City recognized pension expense of
$86,835 for its proportionate share of the General Employees Plan’s pension expense.
In addition, the City recognized an additional $438 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, 2017, 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 $ 26,406$
Changes in actuarial assumptions 47,562
Difference between projected and actual
investment earnings 23,509
Changes in proportion 130,940
Contributions paid to PERA subsequent to
the measurement date 49,197
Total 227,699$ 49,915$
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)
$49,197 reported as deferred outflows of resources related to pensions resulting from
City contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended December 31, 2018. Other
amounts reported as deferred outflows and inflows of resources related to pensions will
be recognized in pension expense as follows:
Year ending December 31:
Pension Expense
Amount
2018 54,999$
2019 95,555
2020 29,249
2021 (51,216)
2. Police and Fire Fund Pension Costs
At December 31, 2017, the City reported a liability of $135,012 for its proportionate share
of the Police and Fire Fund’s net pension liability. The net pension liability was
measured as of June 30, 2017, 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, 2016
through June 30, 2017, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2017, the City's proportion was .010%,
which was an increase of .001% from its proportion measured as of June 30, 2016. The
City also recognized $900 for the year ended December 31, 2017 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, 2017, the City recognized pension expense of
$11,805 for its proportionate share of the Police and Fire Plan’s pension expense.
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)
2. Police and Fire Fund Pension Costs (continued)
At December 31, 2017, 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 $ 24,954$
Changes in actuarial assumptions 32,663
Difference between projected and actual
investment earnings 2,615
Changes in proportion 33,443
Contributions paid to PERA subsequent to
the measurement date 11,943
Total 45,386$ 60,232$
$11,943 reported as deferred outflows of resources related to pensions resulting from
City contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended December 31, 2018.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
73
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
C. Pensions Costs (continued)
1. Police and Fire Fund Pension Costs (continued)
Other amounts reported as deferred outflows and inflows of resources related to
pensions will be recognized in pension expense as follows:
Year ending December 31:
Pension Expense
Amount
2018 1,750$
2019 7,278
2020 2,824
2021 (7,615)
2022 (31,026)
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, 2017 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 all
plans for males or females, as appropriate, with slight adjustments to fit PERA’s
experience. Cost of living benefit increases for retirees are assumed to be 1% per year
for the General Employees Plan through 2044 and Police and Fire Plan through 2064
and then 2.5% thereafter for both plans.
Actuarial assumptions used in the June 30, 2017 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 most recent five-year experience study
for Police and Fire Plan was completed in 2016.
The following changes in actuarial assumptions occurred in 2017:
General Employees Fund
The Combined Service Annuity (CSA) loads were changed from 0.8% for active
members and 60% for vested and non-vested deferred members. The revised
CSA loads are now 0.0% for active member liability, 15.0% for vested deferred
member liability and 3.0% for non-vested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.0% per
year for all years to 1.0% per year through 2044 and 2.5% per year thereafter.
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
Assumed salary increases were changed as recommended in the June 30,
2016 experience study. The net effect is proposed rates that average 0.34%
lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The Combined Service Annuity (CSA) load was 30% for vested and non-
vested deferred members. The CSA has been changed to 33% for vested
members and 2% for non-vested members.
The base mortality table for healthy annuitants was changed from the RP-2000
fully generational table to the RP-2014 fully generational table (with a base
year of 2006), with male rates adjusted by a factor of 0.96. The mortality
improvement scale was changed from Scale AA to Scale MP-2016. The base
mortality table for disabled annuitants was changed from the RP-2000 disabled
mortality table to the mortality tables assumed for healthy retirees.
Assumed termination rates were decreased to 3.0% for the first three years of
service. Rates beyond the select period of three years were adjusted, resulting
in more expected terminations overall.
Assumed percentage of married female members was decreased from 65% to
60%.
Assumed age difference was changed from separate assumptions for male
members (wives assumed to be three years younger) and female members
(husbands assumed to be four years older) to the assumption that males are
two years older than females.
The assumed percentage of female members electing Joint and Survivor
annuities was increased.
The assumed post-retirement benefit increase rate was changed from 1.00%
for all years to 1.00% per year through 2064 and 2.50% thereafter.
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.
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)
D. Actuarial Assumptions (continued)
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 39% 5.10%
International Stocks 19% 5.30%
Bonds 20% 0.75%
Alternative Assets 20% 5.90%
Cash 2% 0.00%
Total 100%
E. Discount Rate
The discount rate used to measure the total pension liability in 2017 was 7.50%. 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
and the Police and Fire 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.
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% Lower 6.50% 1,871,470$ 6.50% 254,267$
Current Discount Rate 7.50% 1,206,564 7.50% 135,012
1% Higher 8.50% 662,217 8.50% 36,560
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,
2017, the plan covered 18 active firefighters and 6 vested terminated firefighters whose
pension benefits are deferred. The plan was established and is administered in
accordance with Minnesota Statutes, Chapters 69 and 424A.
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 $61,147 in state aid to the plan on behalf of the
Association for the year ended December 31, 2017. 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 2017, 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, 2017, the City reported a net pension asset of $597,577 for the plan.
The net pension asset was measured as of December 31, 2017. The total pension
liability used to calculate the net pension asset in accordance with GASB 68 was
determined by applying an actuarial formula to specific census data certified by the fire
department as of December 31, 2017. The following table presents the changes in net
pension asset during the year.
Total
Pension
Liability (a)
Plan
Fiduciary
Net Position
(b)
Net Pension
Liability
(Asset) (a-b)
Beginning Balance 12/31/16 618,531$ 1,075,446$ (456,915)$
Changes for the Year
Service cost 27,727 27,727
Interest on pension liability 35,544 35,544
Assumption changes
Net investment income 156,879 (156,879)
Contributions (employer)
Contributions (state) 61,147 (61,147)
Benefit payouts
Administrative expenses (14,093) 14,093
Net Changes 63,271 203,933 (140,662)
Balance End of Year 12/31/17 681,802$ 1,279,379$ (597,577)$
For the year ended December 31, 2017, the City recognized pension expense of
$(72,765) 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, 2017, 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
Differences between expected and actual
economic experience $ $ 41,762
Changes in actuarial assumptions 10,521
Difference between projected and actual
investment earnings 69,489
Total 80,010$ 41,762$
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
2018 22,152$
2019 22,151
2020 16,974
2021 (5,676)
2022 (3,472)
Thereafter (13,881)
The total pension expense for all plans (including the General Employees Fund, the Police
and Fire Fund, and the Lake Elmo Firefighter’s Relief Association) recognized by the City for
the year ended December 31, 2017 was $25,875.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
81
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
E. Actuarial Assumptions
The total pension liability at December 31, 2017 was determined using the entry age
normal actuarial cost method and the following actuarial assumptions:
Retirement eligibility at the later of age 50 or 20 years of service
Investment rate of return of 5.50%
Inflation rate 4.0%
There were no changes to plan provisions, assumptions or methods during 2017.
F. Discount Rate
The discount rate used to measure the total pension liability was 5.50%. The projection
of cash flows used to determine the discount rate assumed that contributions to the FRA
plan will be made as specified in statute. Based on that assumption and considering
the funding ratio of the plan, the fiduciary net position was projected to be available to
make all projected future benefit payments of current active and inactive members.
Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension
liability.
G. Pension Liability Sensitivity
The following presents the City's net pension asset for the Association's plan, calculated
using the discount rate disclosed in the preceding paragraph, as well as what the City's
net pension asset would be if it were calculated using a discount rate 1% lower or 1%
higher than the current discount rate:
1% Decrease in
Discount Rate
(4.50%)
Discount Rate
(5.50%)
1% Increase in
Discount Rate
(6.50%)
Net pension liability (asset) (575,042)$ (597,577)$ (618,882)$
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)
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.
2. Asset Allocation
The long-term target asset allocation and long-term expected real rate of return of
the Plan's assets as of December 31, 2017 was 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.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
83
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Firefighter's Relief Association (Continued)
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, 2017 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.
5. Subsequent Event
In April 2018, the City purchased the building where City offices are currently located for a price of
$875,000. In June 2018, the City’s Economic Development Authority (EDA) issued taxable public
project lease revenue and limited tax bonds in the amount of $933,000 to purchase the building
from the City and pay related costs associated with the issuance of the bonds. At that time, the City
and the EDA entered into a lease-purchase agreement for the property. The City is required to
make semiannual payments to the EDA through 2034.
CITY OF LAKE ELMO, MINNESOTA
REQUIRED SUPPLEMENTAL INFORMATION
December 31, 2017
This Page Left Blank Intentionally
84
Year Ended
December 31
Statutorily
Required
Contribution
(a)
Contributions
in Relation to
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess) (a-b)
Covered
Payroll (d)
Contributions as a
Percentage of
Covered Payroll
(b/d)
2014 73,182$ 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 95,794 95,794 1,276,944 7.5%
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
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 20,327 20,327 125,475 16.2%
2018
2019
2020
2021
2022
2023
PERA Public Employees Police and Fire Plan
December 31, 2017
CITY OF LAKE ELMO, MINNESOTA
Schedule of City Contributions
PERA General Employees Retirement Plan
December 31, 2017
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
City's
Proportionate
Share
(Percentage) of
Net Pension
Liability
(Asset)
City's
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset)
(a)
State's Proportionate
Share (Amount) of the
Net Pension Liability
Associated with the
City (b)
City's Proportionate
Share of the Net
Pension Liability and
the State's
Proportionate Share of
the Net Pension
Liability Associated
with the City (a+b)
Covered
Payroll (c)
City's
Proportionate
Share of the Net
Pension Liability
(Asset) as a
Percentage of its
Covered Payroll
((a+b)/c)
Plan Fiduciary
Net Position as a
Percentage of the
Total Pension
Liability
2014 0.0191% 897,222$ $ 897,222$ 1,009,407$ 88.9% 78.7%
2015 0.0169% 875,846 875,846 941,092 93.1% 78.2%
2016 0.0159% 1,291,001 16,853 1,307,854 1,141,987 114.5% 68.9%
2017 0.0189% 1,206,564 15,173 1,221,737 1,276,944 95.7% 75.9%
2018
2019
2020
2021
2022
2023
CITY OF LAKE ELMO, MINNESOTA
Schedule of Proportionate Share of Net Pension Liability
PERA General Employees Retirement Plan
December 31, 2017
Fiscal Year
Ended June 30
City's
Proportionate
Share
(Percentage) of
Net Pension
Liability
(Asset)
City's
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset)
(a) Covered Payroll (b)
City's Proportionate
Share of the Net
Pension Liability
(Asset) as a
Percentage of its
Covered 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 0.0100% 135,012 125,475 107.6% 85.4%
2018
2019
2020
2021
2022
2023
PERA Public Employees Police and Fire Plan
December 31, 2017
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, 2017
Actuarial
Valuation Date
Actuarial Accrued
Liability (AAL)
Valuation of Plan
Assets (a)
Actuarial
Valuation of Plan
Assets (b)
Net Pension
Liability (Asset)
(a-b)
12/31/15 588,689$ 963,628$ (374,939)$
12/31/16 618,531 1,075,446 (456,915)
12/31/17 681,802 1,279,379 (597,577)
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
CITY OF LAKE ELMO, MINNESOTA
Schedule of Employer Contributions for the Fire Relief Association
December 31, 2017
Year Ended
December 31
Actuarially
determined
contributions (a)
Actual
contributions
paid (b)
Contributions
deficiency
(excess) (a-b)
2015 $ $ $
2016
2017
2018
2019
2020
2021
2022
2023
2024
Note: These schedules are intended to provide information for ten years. The City will include that
information as it becomes available.
87
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
For the Year Ended December 31, 2017
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, 2017
88
Special
Revenue
Capital
Projects Total
ASSETS
Cash and investments 160,450$ 1,090,033$ 1,250,483$
TOTAL ASSETS 160,450$ 1,090,033$ 1,250,483$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable 143,866$ 28,530$ 172,396$
Accrued liabilities 8,046 8,046
Due to other funds 1,144 56,760 57,904
Advances from other funds 381,708 381,708
Escrow deposits payable 75,000 75,000
Total liabilities 153,056 541,998 695,054
FUND BALANCE (DEFICIT)
Assigned 8,001 929,140 937,141
Unassigned (607) (381,105) (381,712)
Total Fund Balance (Deficit) 7,394 548,035 555,429
TOTAL LIABILITIES AND FUND BALANCE 160,450$ 1,090,033$ 1,250,483$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2017
89
Special
Revenue
Capital
Projects Total
REVENUES
Taxes 256,957$ $ 256,957$
Dedication fees 265,783 265,783
Investment earnings 667 4,627 5,294
Miscellaneous revenue 5,620 29,090 34,710
TOTAL REVENUES 263,244 299,500 562,744
EXPENDITURES
Current
Culture and recreation 429,781 429,781
Capital Outlay
Culture and recreation 607,076 607,076
TOTAL EXPENDITURES 429,781 607,076 1,036,857
Net change in fund balances (166,537) (307,576) (474,113)
FUND BALANCES, Beginning 173,931 855,611 1,029,542
FUND BALANCES, Ending 7,394$ 548,035$ 555,429$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
90
City Events
(204) Library (206)
Lions Park
Sign Program
(207)Total
ASSETS
Cash and investments 537$ 156,398$ 3,515$ 160,450$
TOTAL ASSETS 537$ 156,398$ 3,515$ 160,450$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 143,866$ $ 143,866$
Due to other funds 1,144 1,144
Accrued liabilities 8,046 8,046
Total liabilities 1,144 151,912 153,056
FUND BALANCE (DEFICIT)
Assigned 4,486 3,515 8,001
Unassigned (607) (607)
Total fund balance (deficit) (607) 4,486 3,515 7,394
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT)537$ 156,398$ 3,515$ 160,450$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2017
91
City Events
(204) Library (206)
Lions Park
Sign Program
(207)Total
REVENUES
Taxes $ 256,957$ $ 256,957$
Investment earnings 2 650 15 667
Miscellaneous revenue 2,120 3,500 5,620
TOTAL REVENUES 2 259,727 3,515 263,244
EXPENDITURES
Current
Culture and recreation 429,781 429,781
Net change in fund balances 2 (170,054) 3,515 (166,537)
FUND BALANCES, Beginning (609) 174,540 173,931
FUND BALANCES (DEFICIT), Ending (607)$ 4,486$ 3,515$ 7,394$
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, 2017
92
Park
Dedication
(404)
City Facilities
(411)
Village Project
(413)
ASSETS
Cash and investments 675,485$ 274,063$ 61,968$
TOTAL ASSETS 675,485$ 274,063$ 61,968$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable 28,530$ $ $
Due to other funds 56,760
Advances from other funds 381,708
Escrow deposits payable
Total liabilities 28,530 438,468
FUND BALANCE (DEFICIT)
Assigned 646,955 274,063
Unassigned (376,500)
Total fund balance (deficit) 646,955 274,063 (376,500)
TOTAL LIABILITIES AND FUND BALANCE 675,485$ 274,063$ 61,968$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2017
93
Manning
Avenue/Hwy
36 (414)
Washington
County
Downtown
Project (422)Total
70,395$ 8,122$ 1,090,033$
70,395$ 8,122$ 1,090,033$
$ $ 28,530$
56,760
381,708
75,000 75,000
75,000 541,998
8,122 929,140
(4,605) (381,105)
(4,605) 8,122 548,035
70,395$ 8,122$ 1,090,033$
94
Park
Dedication
(404)
City Facilities
(411)
Village Project
(413)
REVENUES
Dedication fees 265,783$ $ $
Investment earnings (loss) 2,807 1,139 356
Miscellaneous revenue 5,400 23,690
TOTAL REVENUES 273,990 1,139 24,046
EXPENDITURES
Capital Outlay
Culture and recreation 607,076
Net change in fund balances (333,086) 1,139 24,046
FUND BALANCES (DEFICIT), Beginning 980,041 272,924 (400,546)
FUND BALANCES (DEFICIT), Ending 646,955$ 274,063$ (376,500)$
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, 2017
95
Manning
Avenue/Hwy
36 (414)
Washington
County
Downtown
Project (422)Total
$ $ 265,783$
292 33 4,627
29,090
292 33 299,500
607,076
292 33 (307,576)
(4,897) 8,089 855,611
(4,605)$ 8,122$ 548,035$
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 94,727 81,749 333,634 510,110
Net Property and Equipment 74,127 13,606 56,849 144,582
TOTAL ASSETS 74,127$ 13,606$ 56,849$ 144,582$
LIABILITIES AND NET POSITION
Current Liabilities
Due to other funds 41,740$ $ 76,081$ 117,821$
Net Position
Net investment in capital assets 74,127 13,606 56,849 144,582
Unrestricted (41,740) (76,081) (117,821)
Total Net Position 32,387 13,606 (19,232) 26,761
TOTAL LIABILITIES AND
NET POSITION 74,127$ 13,606$ 56,849$ 144,582$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
December 31, 2017
97
Radio
Replacement
(701)
IT
Replacement
(702)
FFE
Replacement
(703) Total
Operating Expenses
Depreciation 15,221$ 4,654$ 7,914$ 27,789$
Net (Loss) (15,221) (4,654) (7,914) (27,789)
Net Position, Beginning of Year 47,608 18,260 (11,318) 54,550
Net Position, End of Year 32,387$ 13,606$ (19,232)$ 26,761$
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, 2017
98
Radio
Replacement
(701)
IT
Replacement
(702)
FFE
Replacement
(703) Total
Cash Flows From Operating Activities
Cash received from customers $ $ $ $
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year $ $ $ $
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating (loss) (15,221)$ (4,654)$ (7,914)$ (27,789)$
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 15,221 4,654 7,914 27,789
Net Cash Provided By Operating Activities $ $ $ $
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2017
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)
2010B GO
CIP Bonds
(318)
ASSETS
Cash and investments 477$ 29,667$ $ 31,290$ 104,222$ 134,713$
Receivables (Net of allowance for
uncollectibles)
Special assessments 17,968 32,320
Due from other governmental units 22
Prepaid items 65,000
TOTAL ASSETS 477$ 29,667$ $ 114,258$ 136,564$ 134,713$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE
LIABILITIES
Accounts payable $ $ $ $ $ $
Due to other funds 1,317
Total liabilities 1,317
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue:
Special assessments 17,968 32,320
Total deferred inflows of resources 17,968 32,320
FUND BALANCE (DEFICIT)
Nonspendable 65,000
Restricted 477 29,667 31,290 104,244 134,713
Unassigned (1,317)
Total fund balance (deficit) 477 29,667 (1,317) 96,290 104,244 134,713
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCE 477$ 29,667$ $ 114,258$ 136,564$ 134,713$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
December 31, 2017
100
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)
2017A GO
Improvement
Bonds (327)Total
290,017$ 3,864$ 1,451,172$ 552,222$ $ 321,222$ 12,359$ 2,931,225$
34,166 95,400 24,480 503,206 808,175 431,800 1,947,515
211 233
210,000 155,000 245,000 675,000
324,183$ 99,475$ 1,475,652$ 1,265,428$ 155,000$ 1,374,397$ 444,159$ 5,553,973$
$ $ $ $ $ $ $ $
17,176 77,427 285,551 381,471
17,176 77,427 285,551 381,471
34,166 95,400 24,480 503,206 808,175 431,800 1,947,515
34,166 95,400 24,480 503,206 808,175 431,800 1,947,515
210,000 155,000 245,000 675,000
290,017 1,373,745 552,222 321,222 12,359 2,849,956
(13,101) (285,551) (299,969)
290,017 (13,101) 1,373,745 762,222 (130,551) 566,222 12,359 3,224,987
324,183$ 99,475$ 1,475,652$ 1,265,428$ 155,000$ 1,374,397$ 444,159$ 5,553,973$
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)
2010B GO
CIP Bonds
(318)
REVENUES
Taxes $ $ $ 52,959$ 57,683$ 202,606$
Special assessments 7,117 10,158
Investment earnings 2 123 130 433 559
TOTAL REVENUES 2 123 60,206 68,274 203,165
EXPENDITURES
Debt Service
Principal 60,000 70,000 155,000
Interest and other charges 315 10,039 8,680 40,003
TOTAL EXPENDITURES 315 70,039 78,680 195,003
Excess (deficiency) of revenues
over (under) expenditures 2 123 (315) (9,833) (10,406) 8,162
FUND BALANCES (DEFICIT), Beginning 475 29,544 (1,002) 106,123 114,650 126,551
FUND BALANCES (DEFICIT), Ending 477$ 29,667$ (1,317)$ 96,290$ 104,244$ 134,713$
CITY OF LAKE ELMO, MINNESOTA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
For the Year Ended December 31, 2017
102
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)
2017A GO
Improvement
Bonds (327)Total
74,367$ 62,656$ $ 207,218$ 17,756$ 199,378$ $ 874,623$
7,328 29,456 5,366 91,895 211,873 81,100 444,293
1,206 16 6,031 2,295 1,335 51 12,181
82,901 92,128 11,397 301,408 17,756 412,586 81,151 1,331,097
85,000 85,000 105,000 210,000 140,000 910,000
9,234 9,114 52,958 96,356 49,456 87,276 68,792 432,223
94,234 94,114 157,958 306,356 189,456 87,276 68,792 1,342,223
(11,333) (1,986) (146,561) (4,948) (171,700) 325,310 12,359 (11,126)
301,350 (11,115) 1,520,306 767,170 41,149 240,912 3,236,113
290,017$ (13,101)$ 1,373,745$ 762,222$ (130,551)$ 566,222$ 12,359$ 3,224,987$
103
Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES
Investment earnings $ $ 2$ 2$
TOTAL REVENUES 2 2
Net change in fund balances 2 2
FUND BALANCES, Beginning (609) (609) (609)
FUND BALANCES, Ending (609)$ (609)$ (607)$ 2$
Note: The City adopted a $0 activity budget in this fund for the year ended December 31, 2017.
Budgeted Amounts
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
CITY EVENTS SPECIAL REVENUE FUND
For the Year Ended December 31, 2017
104
Variance with
Final Budget
Favorable
Original Final Actual (Unfavorable)
REVENUES
Taxes 256,957$ 256,957$ 256,957$ $
Investment earnings 650 650
Miscellaneous revenue 4,000 4,000 2,120 (1,880)
TOTAL REVENUES 260,957 260,957 259,727 (1,230)
EXPENDITURES
Current
Culture and recreation 260,957 260,957 429,781 (168,824)
Net change in fund balances (170,054) (170,054)
FUND BALANCES, Beginning 174,540 174,540 174,540
FUND BALANCES, Ending 174,540$ 174,540$ 4,486$ (170,054)$
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, 2017
105
Balance Balance
January 1 Additions Deletions December 31
ESCROW
ASSETS
Cash and investments 2,394,654$ 2,094,429$ 1,776,006$ 2,713,077$
LIABILITIES
Accounts payable 64,812$ 1,491,532$ 1,517,486$ 38,858$
Deposits payable 2,329,842 2,147,429 1,803,052 2,674,219
TOTAL LIABILITIES 2,394,654$ 3,638,961$ 3,320,538$ 2,713,077$
YELLOW RIBBON
ASSETS
Cash and investments (128)$ $ $ (128)$
Accounts receivable 128 128
TOTAL ASSETS $ $ $ $
TOTAL AGENCY FUNDS
ASSETS
Cash and investments 2,394,526$ 2,094,429$ 1,776,006$ 2,712,949$
Accounts receivable 128 128
TOTAL ASSETS 2,394,654$ 2,094,429$ 1,776,006$ 2,713,077$
LIABILITIES
Accounts payable 64,812$ 1,491,532$ 1,517,486$ 38,858$
Deposits payable 2,329,842 2,147,429 1,803,052 2,674,219
TOTAL LIABILITIES 2,394,654$ 3,638,961$ 3,320,538$ 2,713,077$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDS
For the Year Ended December 31, 2017
CITY OF LAKE ELMO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
December 31, 2017
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.
107
CITY OF LAKE ELMO, MINNESOTA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2017 2016 2015 2014
Net investment in capital assets 8,883,320$ 9,032,535$ 8,723,329$ 7,957,840$
Restricted 5,057,169 4,704,133 3,446,142 1,106,200
Unrestricted 4,654,932 4,136,292 3,942,646 5,405,920
Total governmental activities net position 18,595,421$ 17,872,960$ 16,112,117$ 14,469,960$
Business-type activities
Net investment in capital assets 12,180,378$ 12,506,474$ 10,170,351$ 10,567,418$
Restricted 2,695,734 1,473,164 1,876,119 2,387,312
Unrestricted 9,128,534 6,400,375 3,577,285 1,100,422
Total business-type activities net position 24,004,646$ 20,380,013$ 15,623,755$ 14,055,152$
Primary government
Net investment in capital assets 21,063,698$ 21,539,009$ 18,893,680$ 18,525,258$
Restricted 7,752,903 6,177,297 5,322,261 3,493,512
Unrestricted 13,783,466 10,536,667 7,519,931 6,506,342
Total primary government net position 42,600,067$ 38,252,973$ 31,735,872$ 28,525,112$
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
2013 2012 2011 2010 2009 2008
9,056,353$ 8,782,840$ 8,553,984$ 8,368,479$ 7,983,822$ 7,151,543$
1,225,849 4,205,247 2,664,689 2,057,467 1,399,968 718,617
4,593,463 918,996 2,555,596 3,439,106 3,824,156 4,698,858
14,875,665$ 13,907,083$ 13,774,269$ 13,865,052$ 13,207,946$ 12,569,018$
6,855,807$ 6,788,377$ 6,422,782$ 6,713,292$ 6,644,334$ 6,181,055$
2,612,569 39,153
1,846,681 1,105,847 1,449,340 1,193,509 1,056,968 951,793
11,315,057$ 7,933,377$ 7,872,122$ 7,906,801$ 7,701,302$ 7,132,848$
15,912,160$ 15,571,217$ 14,976,766$ 15,081,771$ 14,628,156$ 13,332,598$
3,838,418 4,244,400 2,664,689 2,057,467 1,399,968 718,617
6,440,144 2,024,843 4,004,936 4,632,615 4,881,124 5,650,651
26,190,722$ 21,840,460$ 21,646,391$ 21,771,853$ 20,909,248$ 19,701,866$
109
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2017 2016 2015 2014
Expenses
Governmental activities:
General government 1,503,251$ 1,358,370$ 1,134,132$ 1,072,888$
Public safety 1,528,253 1,308,360 1,344,282 1,530,609
Public works 2,800,044 1,698,566 1,377,969 1,032,426
Culture and recreation 1,299,551 660,947 639,006 448,361
Interest on long-term debt 225,910 178,266 215,611 165,028
Total governmental activities expenses 7,357,009 5,204,509 4,711,000 4,249,312
Business-Type activities:
Water 2,022,446 1,409,832 1,363,043 1,069,511
Sewer 1,030,058 380,650 250,866 353,438
Storm sewer 213,514 150,302 103,536 149,887
Total business-type activities expenses 3,266,018 1,940,784 1,717,445 1,572,836
Total primary government expenses 10,623,027$ 7,145,293$ 6,428,445$ 5,822,148$
Program Revenues
Governmental activities:
Charges for services:
General government 206,856$ 51,009$ 42,706$ 45,161$
Public safety 2,101,890 1,752,522 866,708 496,916
Public works 3,615
Culture and recreation 26,214 10,753
Operating grants and contributions 229,960 235,214 249,094 204,462
Capital grants and contributions 2,290,265 1,452,469 2,038,940 557,601
Total governmental activities program revenues 4,828,971 3,491,214 3,227,277 1,314,893
Business-type activities:
Charges for services:
Water 2,628,848 1,801,228 1,850,240 1,291,091
Sewer 2,435,749 1,315,948 1,523,067 741,054
Storm sewer 289,375 213,233 229,252 214,915
Operating grants and contributions
Capital grants and contributions 1,489,922 3,464,567 1,159,222
Total business-type activities program revenues 6,843,894 6,794,976 3,602,559 3,406,282
Total primary government program revenues 11,672,865$ 10,286,190$ 6,829,836$ 4,721,175$
Fiscal Year
110
Schedule 2
2013 2012 2011 2010 2009 2008
1,103,337$ 1,093,204$ 1,036,038$ 980,456$ 971,677$ 1,168,625$
1,277,798 1,302,857 1,107,050 1,171,158 1,125,464 1,002,408
1,273,977 891,169 1,008,686 1,135,351 872,045 868,804
424,687 362,432 247,845 239,389 248,856 228,393
133,694 316,039 266,730 222,404 218,319 237,753
4,213,493 3,965,701 3,666,349 3,748,758 3,436,361 3,505,983
958,870 872,786 845,474 898,319 857,014 849,018
119,370 53,903 73,797 61,513 59,243 63,400
86,989 73,590 142,517 151,384 140,365 123,902
1,165,229 1,000,279 1,061,788 1,111,216 1,056,622 1,036,320
5,378,722$ 4,965,980$ 4,728,137$ 4,859,974$ 4,492,983$ 4,542,303$
32,778$ 48,476$ 22,058$ 18,296$ 15,631$ 19,430$
414,472 379,557 283,813 320,242 270,653 295,353
2,647 3,256 3,058 3,425 6,584 3,833
17,000 9,341 10,800
208,276 160,060 184,476 168,491 174,433 140,176
1,364,622 160,444 222,488 1,090,419 798,687 1,345,803
2,039,795 761,134 715,893 1,611,673 1,265,988 1,804,595
596,421 699,159 575,534 562,585 479,430 467,336
53,142 65,737 53,012 48,508 45,146 44,568
191,087 171,229 235,252 185,425 149,407 134,674
17,000 32,721 30,100
3,781,528 115,127 75,885 418,400 776,473 684,400
4,622,178 1,051,252 956,683 1,247,639 1,480,556 1,330,978
6,661,973$ 1,812,386$ 1,672,576$ 2,859,312$ 2,746,544$ 3,135,573$
111
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2017 2016 2015 2014
Net (Expense) Revenue
Governmental Activities (2,528,038)$ (1,713,295)$ (1,483,723)$ (2,934,419)$
Business-type activities 3,577,876 4,854,192 1,885,114 1,833,446
Total primary government net revenue 1,049,838$ 3,140,897$ 401,391$ (1,100,973)$
General Revenues and Other Changes
In Net Position
Governmental activities:
General property taxes 3,040,413$ 3,226,739$ 3,204,119$ 3,200,291$
Grants and contributions not restricted
to specific programs 2,749 8,584 2,749 2,749
Interest income 48,987 43,228 46,589 87,586
Miscellaneous 158,350 52,479 73,738 125,400
Gain on sale of capital assets
Transfers 143,105 220,842 (887,312)
Total governmental activities 3,250,499 3,474,135 3,548,037 2,528,714
Business-type activities:
Grants and contributions not restricted
to specific programs 748
Interest income 46,705 44,423 39,757 19,337
Miscellaneous 52
Transfers (143,105) (220,842) 887,312
Total business-type activities 46,757 (97,934) (181,085) 906,649
Total primary government 3,297,256$ 3,376,201$ 3,366,952$ 3,435,363$
Change in Net Position
Governmental activities 722,461$ 1,760,840$ 2,064,314$ (405,705)$
Business-type activities 3,624,633 4,756,258 1,704,029 2,740,095
Total primary government 4,347,094$ 6,517,098$ 3,768,343$ 2,334,390$
Fiscal Year
112
Schedule 2
(continued)
2013 2012 2011 2010 2009 2008
(2,173,698)$ (3,204,567)$ (2,950,456)$ (2,137,085)$ (2,170,373)$ (1,701,388)$
3,456,949 50,973 (105,105) 136,423 423,934 294,658
1,283,251$ (3,153,594)$ (3,055,561)$ (2,000,662)$ (1,746,439)$ (1,406,730)$
3,231,609$ 3,183,078$ 2,793,776$ 2,711,067$ 2,718,691$ 2,568,705$
2,749 10,628 9,771 8,764 57,390
35,259 111,705 94,501 113,989 160,679 209,539
1,833 42,599 20,405 17,311 41,827 50,865
8,979 8,517
(59,637) (57,947) (129,177) (116,031)
3,280,429 3,337,382 2,859,673 2,794,191 2,809,301 2,770,468
30,346 10,282 10,789 11,129 15,343 23,533
59,637 57,947 129,177 116,031
30,346 10,282 70,426 69,076 144,520 139,564
3,310,775$ 3,347,664$ 2,930,099$ 2,863,267$ 2,953,821$ 2,910,032$
1,106,731$ 132,815$ (90,783)$ 657,106$ 638,928$ 1,069,080$
3,487,295 61,255 (34,679) 205,499 568,454 434,222
4,594,026$ 194,070$ (125,462)$ 862,605$ 1,207,382$ 1,503,302$
113
CITY OF LAKE ELMO, MINNESOTA
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2017 2016 2015 2014 2013
General fund
Reserved $ $ $ $ $
Unreserved
Nonspendable 410,193 409,222 432,306 638,963 859,072
Committed 200,000 200,000
Unassigned 3,499,133 3,279,815 2,754,976 2,542,038 2,318,310
Total general fund 4,109,326 3,889,037 3,187,282 3,181,001 3,177,382
All other
governmental funds
Reserved
Unreserved
Nonspendable 675,000 3,908
Restricted 2,849,956 3,248,230 2,477,730 717,781 743,976
Committed
Assigned 1,307,216 1,504,656 1,768,742 2,943,525 2,252,931
Unassigned (681,681) (418,169) (431,755) (693,904) (885,360)
Total all other
governmental funds 4,150,491 4,334,717 3,818,625 2,967,402 2,111,547
Total governmental funds 8,259,817$ 8,223,754$ 7,005,907$ 6,148,403$ 5,288,929$
Note: The City implemented GASB Statement No. 54 in 2011, therefore, classifications of fund balance have changed.
114
Schedule 3
2012 2011 2010 2009 2008
$ $ 1,068,950$ 1,032,570$ 1,015,753$
1,617,211 1,403,240 1,395,088
1,024,433 1,206,209
2,414,692 1,707,711
3,439,125 2,913,920 2,686,161 2,435,810 2,410,841
3,605,250 1,422,049 727,673
504,106 1,077,659 1,976,379
3,959,111 4,691,748
7,114
1,244,900 654,358
(1,670,915) (1,353,754)
3,533,096 3,999,466 4,109,356 2,499,708 2,704,052
6,972,221$ 6,913,386$ 6,795,517$ 4,935,518$ 5,114,893$
115
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
LAST FISCAL TEN YEARS
(Modified Accrual Basis of Accounting)
2017 2016 2015 2014 2013
Revenues
Taxes 3,042,074$ 3,231,674$ 3,222,216$ 3,203,111$ 3,231,609$
Licenses and permits 2,046,462 1,713,918 828,494 451,953 374,974
Intergovernmental 1,023,864 282,874 296,902 413,968 1,704,178
Charges for services 137,920 38,608 35,796 30,192 6,113
Fines and forfeitures 41,418 49,505 48,739 48,647 52,110
Special assessments 455,493 897,323 1,316,239 115,424 180,023
Dedication fees 265,783 171,708 138,158 274,257
Refunds and reimbursements 21,390
Investment earnings 48,987 43,228 46,415 87,467 35,127
Miscellaneous revenue 265,133 56,101 99,055 165,319 57,260
Total Revenues 7,327,134 6,506,329 6,032,014 4,790,338 5,641,394
EXPENDITURES
Current
General government 1,411,995 1,280,259 1,025,320 1,046,906 1,527,732
Public safety 1,470,726 1,262,040 1,203,765 1,198,546 1,174,145
Public works 1,185,828 893,644 686,401 585,071 614,270
Culture and recreation 603,292 500,689 457,749 368,276 301,404
Unallocated 90,909 78,047 69,403
Debt service
Principal 910,000 826,219 667,342 585,000 3,348,000
Interest and other charges 432,223 226,159 203,738 135,382 171,148
Bond issuance costs 31,347 16,233 22,873 22,267 7,870
Capital outlay 5,860,917 3,126,782 2,729,512 2,881,437 1,784,914
Total Expenditures 11,997,237 8,210,072 7,066,103 6,822,885 8,929,483
Excess (deficiency) of revenues
over (under) expenditures (4,670,103) (1,703,743) (1,034,089) (2,032,547) (3,288,089)
OTHER FINANCING
SOURCES (USES)
Issuance of debt 4,565,000 2,690,000 1,620,000 2,850,000 1,604,797
Premium on issuance of debt 166,068 102,877 32,137 31,520
(Discount) on issuance of debt (26,302) (14,392) (11,386)
Payment to bond escrow agent
Sale of property 1,400 30,000
Transfers in 143,105 220,842 10,501
Transfers out
Total other financing
sources (uses) 4,706,166 2,921,590 1,891,593 2,892,021 1,604,797
Net change in fund balances 36,063$ 1,217,847$ 857,504$ 859,474$ (1,683,292)$
Debt service as a percentage
of noncapital expenditures 18.42% 20.60% 19.48% 17.67% 47.79%
116
Schedule 4
2012 2011 2010 2009 2008
3,221,733$ 2,790,773$ 2,737,225$ 2,685,894$ 2,523,332$
330,819 230,419 261,450 225,166 242,074
237,254 276,638 239,244 288,881 261,743
5,726 14,691 22,416 11,433 15,623
58,385 63,819 68,897 54,052 60,919
136,150 153,536 134,257 73,013 102,929
111,737 94,066 113,033 160,679 209,539
87,562 48,217 84,860 61,533 177,599
4,189,366 3,672,159 3,661,382 3,560,651 3,593,758
1,034,712 1,016,898 921,590 929,960 1,108,737
1,109,937 996,733 1,064,176 988,082 882,135
446,541 447,629 473,293 459,703 438,591
260,404 168,747 168,971 180,965 154,011
406,000 344,000 313,000 361,000 280,000
267,253 251,385 216,820 229,175 235,450
41,828 34,327 74,580 45,056
1,428,856 1,029,183 1,203,309 998,031 888,382
4,995,531 4,288,902 4,435,739 4,191,972 3,987,306
(806,165) (616,743) (774,357) (631,321) (393,548)
865,000 845,000 2,680,000 1,110,000
4,356 17,756
(525,000)
9,190
204,972 314,698 1,466,041 8,500
(315,360) (364,698) (1,626,041) (8,500)
865,000 734,612 2,634,356 451,946
58,835$ 117,869$ 1,859,999$ (179,375)$ (393,548)$
18.66% 17.43% 15.11% 17.81% 15.42%
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
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
2017 1,285,225,800 14,520,320 292,938 14,813,258 14,631,062 20.017 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 6Operating Debt TotalTax Service CitySpecialFiscal Rate Tax Rate Tax Rate Washington TaxingYear Urban Urban Urban County Districts2008 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 -77.0142010 18.033 2.446 20.479 19.734 - 26.389 27.775 1.511 - 4.153 2.558 72.057- 81.3542011 19.448 2.384 21.832 20.300 - 34.330 29.772 1.725 - 4.275 2.664 76.293 -92.8732012 23.679 (1) 3.592 27.271 22.333 - 38.360 31.939 2.340 - 4.906 2.909 86.792 - 105.3852013 23.555 5.704 29.259 22.017 - 37.104 31.548 0.779 - 5.306 4.857 88.460 -108.0742014 23.472 4.289 27.761 23.150 - 39.770 30.243 0.761 - 5.066 4.641 86.556 -107.4812015 20.121 3.677 23.798 21.120 - 35.860 27.691 0.692 - 4.769 4.183 77.484 -96.3012016 18.184 4.937 23.121 19.849 - 35.569 27.860 0.075 - 5.111 4.568 75.473 -96.2292017 14.083 5.934 20.017 20.390 - 34.093 27.852 0.839 - 5.275 4.345 73.443 -91.582Source: Washington County Taxation DivisionNote: The City's direct property tax rate is determined by dividing the amount of tax levied by the City Councilby the City's total tax capacity.*Overlapping rates are those of local and county governments that apply to property owners within the Cityof Lake Elmo. Not all overlapping rates apply to all City of Lake Elmo property owners. Although the property tax ratesapply to all city property owners, some city properties lie within the geographical boundaries of differentschool and watershed districts.(1) Beginning in 2012, operating tax rate urban includes library levy componentTax Rates622, 832 and 834Direct and OvelappingOverlapping RatesPROPERTY TAX RATES AND TAX LEVIESDIRECT AND OVERLAPPING PROPERTY TAX RATESLAST TEN FISCAL YEARS(Percent of Tax Capacity)Watershed DistrictsRange of TotalRange of Tax RatesforSchool DistrictsRange of Tax RatesCity of Lake ElmoCITY OF LAKE ELMO, MINNESOTAfor Independent
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 235,058$ 1 1.59 % 171,806$ 3 1.27 %
IRET Properties 229,588 2 1.55 239,610 1 1.78
Dakota Upreit LP 217,448 3 1.47
Bremer Financial Services Inc 212,330 4 1.43 195,538 2 1.45
MHC Cimarron LLC 139,714 5 0.94
HOA Hotels LLC 137,850 6 0.93
HC Golf Course Development LLC 101,536 7 0.69
Eagle Point Medical Building LLC 92,788 8 0.63
Danate Proper Inv I LLC 74,250 9 0.50
Norman James LLC 68,628 10 0.46
Davis Estates LTD 81,328 9 0.60
Moline Plow 139,208 4 1.03
United Land LLC 119,478 7 0.89
Lake Elmo Foundation 138,922 5 1.03
United Properties Inv, LLC 109,468 8 0.81
Bri-mar Co In. Etal. 63,518 10 0.47
Lakeland Harbor SPE LLC 134,090 6 0.99
TOTAL 1,509,190$ 10.19 % 1,392,966$ 10.32 %
(1) Source: Washington County Taxation Division
2008
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
2017
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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
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 48,597
2010 2,743,346 2,705,782 2,645,536 97.77 60,246
2011 2,789,559 2,745,785 2,692,423 98.06 52,741
2012 3,113,017 3,110,478 3,071,202 98.74 36,796
2013 3,163,359 3,160,524 3,133,764 99.15 23,969
2014 3,163,359 3,160,285 3,128,695 99.00 17,405
2015 3,113,017 3,133,137 3,112,989 99.36 16,155
2016 3,112,204 3,112,204 3,068,116 98.58 11,491
2017 2,950,426 2,950,426 2,935,173 99.48
(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
$ 2,559,227 100.00 $ 0.00
2,672,623 100.00 0.00
2,705,782 100.00 0.00
2,745,164 99.98 621 0.02
3,107,998 99.92 2,480 0.08
3,157,733 99.91 2,791 0.09
3,146,100 99.55 14,185 0.45
3,129,144 99.87 3,993 0.13
3,079,607 98.95 32,597 1.05
2,935,173 99.48 15,253 0.52
Total Collections to Date
122
Water (in millions of gallons)
Type of Customer 2017 2016 2015 2014 2013
Residential 93.513 98.044 84.007 98.573 120.676
Commercial Service 16.603 29.379 21.653 12.156 8.253
Total gallons 110.116 127.423 105.660 110.729 128.929
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 3.20$ 3.11$ 3.11$ 3.11$ 3.11$
Sanitary Sewer (in millions of gallons)
Type of Customer 2017 2016 2015 2014 2013
Residential (1) 38.340 6.812 3.794 0.000 0.000
Commercial Service 6.807 9.125 8.179 6.532 6.149
Total gallons 45.147 15.937 11.973 6.532 6.149
Total direct rate per 1,000 gallons 4.55$ 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
2012 2011 2010*2009 2008
154.747 105.290 95.704 122.461 120.986
10.405 6.872 7.261 7.989 7.851
165.152 112.162 102.965 130.450 128.837
2.14$ 2.14$ 2.10$ 2.15$ 2.05$
3.11$ 3.11$ 3.05$ 3.10$ 3.00$
2012 2011 2010*2009 2008
0.000 0.000 0.000 0.000 0.000
6.172 6.961 7.086 5.381 5.130
6.172 6.961 7.086 5.381 5.130
4.50$ 4.50$ 4.35$ 4.08$ 3.71$
Schedule 9
124
Total
Special Certificates Capital Governmental
Fiscal Assessment of Improvement Note Activities
Year Bonds Indebtedness Bonds Payable Debt
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
2017 14,151,671 1,382,249 15,533,920
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
$ 4,730,000 $ 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 0.08 3,809
22,866,787 22,866,787 38,400,707 N/A 3,990
Schedule 10
Business-Type Activities
126
Special Certificates Capital Utility
Fiscal Assessment of Improvement Revenue
Year Bonds Indebtedness Bonds Bonds (1) Total
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
2017 14,151,671 1,382,249 22,866,787 38,400,707
Note: Details regarding the city's outstanding debt can be found in the notes to the
financial statements.
(1) All revenue bonds currently outstanding are general obligation bonds of the City and
therefore have recourse to the general resources of the City.
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
$ 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
3,524,956 34,875,751 2.71 3,623
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 97,480,000$ 3.10% 3,021,880$
Independent School District #832 51,850,000 4.70% 2,436,950
Independent School District #834 108,130,000 14.10% 15,246,330
Other debt
Washington County 126,060,000 4.80% 6,050,880
Metropolitan Council 1,484,038,432 1.10% 16,324,423
Subtotal, overlapping debt 43,080,463
City direct debt 15,533,920 100.00% 15,533,920
Total direct and overlapping debt 58,614,383$
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, 2017
COMPUTATION OF DIRECT AND INDIRECT GENERAL OBLIGATION BONDED DEBT
CITY OF LAKE ELMO, MINNESOTA
AND LEGAL DEBT MARGIN
This Page Left Blank Intentionally
129
2017 2016 2015 2014 2013
Debt limit 38,556,774$ 38,035,233$ 36,733,899$ 35,537,364$ 32,470,203$
Total net debt applicable to limit 1,846,657 2,102,343 1,572,289 1,757,421 1,894,510
Legal debt margin 36,710,117$ 35,932,890$ 35,161,610$ 33,779,943$ 30,575,693$
Total net debt applicable to the limit
as a percentage of debt limit 4.79% 5.53% 4.28% 4.95% 5.83%
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 1,285,225,800$
Debt Limit (3% of market value) 38,556,774
Debt applicable to limit:
General obligation bonds 2,070,000
Less: Amount set aside for repayment
of general obligation debt 223,343
Total net debt applicable to limit 1,846,657
Legal debt margin 36,710,117$
2012 2011 2010 2009 2008
32,054,064$ 31,126,713$ 34,288,095$ 36,036,402$ 36,242,169$
2,099,369 2,148,203 2,195,153 271,142 315,169
29,954,695$ 28,978,510$ 32,092,942$ 35,765,260$ 35,927,000$
6.55% 6.90% 6.40% 0.75% 0.87%
Schedule 13
Legal Debt Margin Calculation for the Fiscal Year 2017
131
Schedule 14
Net
Fiscal Gross Operating Available
Year Revenue (1) Expenses (2) Revenue Principal Interest Coverage
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
2017 6,651,513 1,505,420 5,146,093 705,000 513,768 4.22
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)
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
2017 9,625 438,563 45,565 3.3 3.3
Sources: (1) Metropolitan Council 2000/2010-Census Bureau; updated for staff estimate starting in 2017
(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 (1) Rank
Percentage of
Total City
Employment (1) Employees (1) Rank
Percentage of
Total City
Employment (1)
3M Company (Maplewood) 9,100 1 41.4% 10,100 1 56.4%
Andersen Corp (Bayport) 2,622 2 11.9%
Healtheast Care/St. Johns Hospital (Maplewood) 1,200 3 5.5%
Washington County (Stillwater) 1,188 4 5.4%
Woodwinds Health (Woodbury) 1,100 5 5.0% 485 5 2.7%
ISD 834 (Stillwater) 1,049 6 4.8% 1,000 3 5.6%
Bremer Bank Operations Ctr (Lake Elmo) 425 7 1.9% 400 6 2.2%
MN Correctional Facility (Oak Park Hts) 355 8 1.6%
SunAmerica Financial Group (Woodbury) 310 9 1.4%
Minncor Industries (Bayport) 250 10 1.1%
The Hartford (Woodbury)1,021 2 5.7%
Imation (Oakdale)500 4 2.8%
Ecowater Systems, Inc. (Woodbury)400 7 2.2%
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
2008
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2017
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134
Function 2017 2016 2015 2014 2013
Administration 2.45 2.45 3.20 3.55 3.55
Finance 1.20 1.20 0.80 1.25 1.25
Planning and Zoning 2.21 2.21 2.75 2.70 2.95
General Government 5.86 5.86 6.75 7.50 7.75
Fire 3.80 3.80 1.50 1.55 2.05
Building Inspections 4.21 4.21 3.15 1.55 1.30
Public Safety 8.01 8.01 4.65 3.10 3.35
Streets and Roadways 4.55 4.55 3.90 3.20 3.21
Public Works 4.55 4.55 3.90 3.20 3.21
Parks 3.00 3.00 1.85 3.30 2.74
Parks and Recreation 3.00 3.00 1.85 3.30 2.74
Communications 0.00 0.00 0.70 0.35 0.40
0.00 0.00 0.70 0.35 0.40
Total Governmental Activities 21.42 21.42 17.85 17.45 17.45
Water Utility 2.00 2.00 2.45 2.60 2.10
Sewer Utility 1.66 1.66 1.30 0.70 0.70
Total Business Activities 3.66 3.66 3.75 3.30 2.80
Totals for Organization 25.08 25.08 21.60 20.75 20.25
Source: City's Adopted Budgets
CITY OF LAKE ELMO, MINNESOTA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
135
Schedule 17
2012 2011 2010 2009 2008
3.15 3.15 3.15 3.18 3.75
0.50 0.50 0.50 0.50 1.00
1.55 1.55 1.55 1.75 1.75
5.20 5.20 5.20 5.43 6.50
1.60 1.10 1.10 1.10 1.10
0.95 0.95 0.95 1.95 1.20
2.55 2.05 2.05 3.05 2.30
3.05 3.05 3.05 3.05 3.05
3.05 3.05 3.05 3.05 3.05
2.52 2.52 2.52 3.10 2.72
2.52 2.52 2.52 3.10 2.72
0.15 0.15 0.15 0.19 0.00
0.15 0.15 0.15 0.19 0.00
13.47 12.97 12.97 14.82 14.57
1.85 1.85 1.85 1.85 2.30
0.30 0.30 0.30 0.30 0.35
2.15 2.15 2.15 2.15 2.65
15.62 15.12 15.12 16.97 17.22
136
Function/Program 2017 2016 2015 2014 2013
Planning and Zoning
Conditional use permits 5 3 2 4 2
Interim use permits 2 2 1 1 1
Minor subdivisions 1 2 2 0 2
Plats/Planned unit developments 10 11 9 17 1
Rezonings 5 3 2 11 2
Site plans 1 1 0 0 2
Variances 6 4225
Fire
Total emergency responses 456 430 429 358 448
EMS responses 313 268 274 237 280
Fire responses 143 162 32 21 28
Building Inspections
Residential permit valuations 86,710 119,301 50,401 23,032 19,979
(thousands of dollars)
Commercial permit valuations 1,185 2,003 1,952 7,309 966
(thousands of dollars)
New residential units (1) 299 240 140 41 32
New commercial units 1 1 1 3 0
Water Utility
Number of customers 1,727 1,538 1,234 1,073 1,051
Average daily consumption (2) 28 18 18 19 21
(thousands of gallons)
Sanitary Sewer Utility
Number of customers 712 321 82 45 29
Average daily flow (3)
(thousands of gallons) 14 14 74 77 77
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
CITY OF LAKE ELMO, MINNESOTA
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
137
Schedule 18
2012 2011 2010 2009 2008
30021
03101
10021
00000
70011
10110
46256
399 315 361 319 294
262 195 211 205 204
28 24 14 24 20
20,320 16,133 15,889 12,903 16,525
2,351 2,590 2,013 1,617 1,370
31 24 26 29 23
00110
1,016 998 967 941 935
15 14 18 24 28
29 29 29 28 28
75 71 72 68 73
138
Function/Program 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Fire
Stations 2222222222
Public Works
Bituminous streets (miles) 103 103 65 65 63 63 63 62 62 62
Gravel streets (miles) 2222222233
Street lights 150 150 144 144 142 137 137 137 137 137
Storm sewer (miles) 30302525252525252523
Park & Recreation
Acres of parkland 451 451 451 451 451 451 451 451 451 451
Number of parks 17171717171717171717
Water Utility
Water towers 3333222222
Miles of watermain 50 50 43 40 39 37 37 37 37 34
Number of fire hydrants 415 415 378 351 293 280 280 280 280 280
Sanitary Sewer Utility
Miles of sanitary sewer 8843333333
Lift stations 4444333333
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, 2017
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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, 2017, 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, 2018.
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, 2017, 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, 2018
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