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HomeMy WebLinkAbout04/12/20221 LAUDERDALE CITY COUNCIL MEETING AGENDA 7:00 P.M. TUESDAY, APRIL 12, 2022 LAUDERDALE CITY HALL, 1891 WALNUT STREET The City Council is meeting as a legislative body to conduct the business of the City according to Robert's Rules of Order and the Standing Rules of Order and Business of the City Council. Unless so ordered by the Mayor, citizen participation is limited to the times indicated and always within the prescribed rules of conduct for public input at meetings. 1. CALL TO ORDER THE LAUDERDALE CITY COUNCIL MEETING 2. ROLL CALL 3. APPROVALS a. Agenda b. Minutes of the March 22, 2022 City Council Meeting c. Claims Totaling $109,725.55 4. CONSENT a. Resolution No. 041222A - Approving 2022 Tobacco Licenses b. Resolution No. 041222B - Approving 2022 3.2 Off Sale Malt Liquor License c. February Financial Report 5. SPECIAL ORDER OF BUSINESS/RECOGNITIONS/PROCLAMATIONS 6. INFORMATIONAL PRESENTATIONS / REPORTS a. City Council Updates 7. PUBLIC HEARINGS Public hearings are conducted so that the public affected by a proposal may have input into the decision. During hearings all affected residents will be given an opportunity to speak pursuant to the Robert's Rules of Order and the standing rules of order and business of the City Council. a. Resolution No. 041222C — Authorizing the Issuance, Sale, and Delivery of Multifamily Housing Revenue Obligations for the Benefit of Lauderdale AH I, LLLP, and Authorizing the Execution and Delivery of Documents Related Thereto 8. DISCUSSION / ACTION ITEM a. Audit Presentation by Bonnie Schwieger of Abdo Solutions b. 2022 Community Events 9. ITEMS REMOVED FROM THE CONSENT AGENDA 10. ADDITIONAL ITEMS 11. SET AGENDA FOR NEXT MEETING a. Annual Report by Police Chief John Mangseth b. Green Step Cities Update c. March Financial Report d. Briefing with County Attorney John Choi — May 10 12. WORK SESSION a. Community Development Update b. Opportunity for the Public to Address the City Council Any member of the public may speak at this time on any item not on the agenda. In consideration for the public attending the meeting, this portion of the meeting will be Limited to fifteen (15) minutes Individuals are requested to limit their comments to three (3) minutes or less. If the maim ity of the Council determines that additional time on a specific issue is warranted, then discussion on that issue shall be continued at the end of the agenda. Before addressing the City Council, members of the public are asked to step up to the microphone, give their name, address, and state the subject to be discussed. All remarks shall be addressed to the Council as a whole and not to any member thereof. No person other than members of the Council and the person having the floor shall be permitted to entei any discussion without permission of the presiding officer. Your participation, as prescribed by the Robert's Rules of Older and the standing rules of order and business of the City Council, is welcomed and your cooperation is greatly appreciated. 13 ADJOURNMENT LAUD F,RDALE CITY COUNCIL MFi,ETING MINUTES HELD REMOTF,LY VIA TEL Fi,CONFERENCE. Page 1 of 4 March 22, 2022 Call to Order Mayor Gaasch called the Regular City Council meeting to order at 7:00 p.m. Roll Call Councilors present: Andi Moffatt, Duane Pulford, Roxanne Grove, and Mayor Mary Gaasch. Councilor absent: Jeff Dains. Staff present: Heather Butkowski, City Administrator; Jim Bownik, Assistant to the City Administrator; and Miles Cline, Deputy City Clerk. Approvals Mayor Gaasch asked if there were any additions or corrections to the meeting agenda. There being none, Councilor Grove moved and seconded by Councilor Pulford to approve the agenda. Motion carried unanimously on a roll call vote. Mayor Gaasch asked if there were any corrections to the March 8, 2022 City Council meeting minutes. There being none, Councilor Pulford moved and seconded by Councilor Grove to approve the minutes of the March 8, 2022 City Council meeting. Motion carried unanimously on a roll call vote. Mayor Gaasch asked if there were any questions on the claims. There being none, Councilor Pulford moved and seconded by Councilor Grove to approve the claims totaling $101,996.95. Motion carried unanimously on a roll call vote. Consent Councilor Grove moved and seconded by Councilor Pulford to approve the Consent Agenda thereby approving the 2022 Street Sweeping Agreement with Mike McPhillips. Informational Presentations/Reports A. City Council Updates There were no new updates from the Council. Public Hearings A. Ordinance No. 20-02 Amending Title 9, Chapter 11 of the Code of Ordinances Regarding Rental Housing Provisions Butkowski explained that with the recent change to a contracted building official, it was necessary to make changes to the rental housing ordinance. The primary change eliminated the iefund for rental property owneis that do not require multiple inspections to qualify for a license. That benefit no longer aligns with the fee stiucture negotiated with the new building official. Mayor Gaasch opened the floor at 7:06 p.m. to anyone in attendance interested in addressing the Council on this topic. There being no one interested in speaking, Mayor Gaasch closed the floor LAUDERDALF, CITY COUNCIL MEF ,TING MINUTES HELD REMOTELY VIA ThLF,CONFERENCF, Page 2 of 4 March 22, 2022 at 7:07 p.m. Councilor Pulford made a motion to adopt Ordinance No. 22-02 Amending Title 9, Chapter 11 of the Code of Ordinances Regarding Rental Housing Provisions. This was seconded by Councilor Moffatt and carried unanimously on a roll call vote. B . Resolution No. 032222A — Authorizing Publication of Ordinance No. 22-02 by Title and Summary Councilor Pulford made a motion to adopt Resolution No. 032222A Authorizing Publication of Ordinance No. 22-02 by Title and Summary. This was seconded by Councilor Moffatt and carried unanimously on a roll call vote. Discussion/Action Item B utkowski explained that the resolutions and agreements prepared for the redevelopment of 1795 Eustis Street were ready for Council consideration. As mentioned at the last meeting, all discussions should happen prior to beginning adoption of the agreements and resolutions. They are all dependent upon each other, so all must be agreed to for the deal to move forward. These agreements were prepared ahead of those for the bonds and other private funding. Therefore, the city attorney drafted Resolution No. 32222D which allows the city attorney and city administrator to continue making minor changes to the agreements and resolutions without the need for additional approval by the city council. The City Council asked final questions of the city attorney, planning consultant, and financial advisor before considering adoption of the following. A. Resolution No. 032222B — Approving the Final Planned Unit Development (PUD), Rezoning and Conditional Use Permit at 1795 Eustis Street to Construct and Operate a Senior Multi -Family Housing Project ("Project") Counciloi Moffatt made a motion to approve Resolution No. 032222B - Approving the Final Planned Unit Development (PUD), Rezoning and Conditional Use Permit at 1795 Eustis Street to Construct and Opeiate a Senior Multi -Family Housing Project. This was seconded by Councilor Grove and carried unanimously on a roll call vote. B . Ordinance No. 22-03 Amending Title 10, Chapter 5 of the Code of Ordinances Regarding the Official Zoning Map and Zoning Distiicts Councilor Moffatt made a motion to approve Ordinance No. 22-03 Amending Title 10 Chapter 5 of the Code of Ordinances Regarding the Official Zoning Map and Zoning Districts. This was seconded by Councilor Grove and carried unanimously on a loll call vote. C. Resolution No. 032222C — Approving the Vacation of the Public Alley and Landscape Easement at 1795 Eustis Street LAUDERDALh CITY COUNCIL ME N,TII� G MINUTES HI-4,LD REMOTELY VIA TELECONFERENCE P age 3 of 4 March 22, 2022 Councilor Grove made a motion to approve Resolution No. 032222C — Approving the Vacation of the Public Alley and Landscape Easement at 1795 Eustis Street. This was seconded by Councilor Moffatt and carried unanimously on a roll call vote. D. Resolution No. 032222D — Approving the Sale of 1795 Eustis Street and Authorizing Execution of the Purchase and Development Agreement Related Thereto Counciloi Pulford made a motion to approve Resolution No. 032222D — Approving the Sale of 1795 Eustis Street and Authoiizing hxecution of the Purchase and Development Agieement Related Thereto. This was seconded by Councilor Grove and carried unanimously on a roll call vote. E Resolution No. 032222h — Authorizing Publication of Ordinance No. 22-03 by Title and Summary Councilor Grove made a motion to approve Resolution No. 032222E — Authorizing Publication of Ordinance No. 22-03 by Title and Summary. This was seconded by Councilor Pulford and carried unanimously on a roll call vote. F. Organic Turf Management Options B utkowski noted that the City Council made the decision a number of years ago to stop using chemical weed killers and fertilizers, which is beneficial to the environment, but has resulted in some tough looking turf at City buildings and parks. Staff proposed hiring a company that uses organic, non -chemical treatments to improve the turf at City Hall and the Public Works Garage. Staff have personal experience with the company and know the treatments work over time as they slowly eliminate invasive grasses and restore soil health through aeration and reseeding. Councilor Pulford made a motion to accept the quote for lawn care services to City properties. This was seconded by Councilor Grove and carried unanimously on a roll call vote. Set Agenda for Next Meeting The next council meeting may include the February Financial Report and the audit presentation. Work Session A. Community Development Update Mayor Gaasch discussed returning to in-person city council meetings in April since active cases and hospitalizations are at a low point. B Opportunity for the Public to Address the City Council Mayor Gaasch opened the floor to anyone in attendance interested in addressing the Council. Kaien Henry, 1764 Malvern Street, asked how she could see the renderings for the proposed building at 1795 Eustis Street. Staff said they will contact Ms. Henry with the link to the information on the City's website. LAUDERDALE CITY COUNCIL MEETING MINUTES HELD REMOTELY VIA TELECONFERENCE Page 4 of 4 March 22, 2022 There being no one else interested in speaking, Mayor Gaasch closed the floor. Adjournment Councilor Moffatt moved and seconded by Councilor Grove to adjourn the meeting at 8:00 p.m. Motion carried unanimously. Respectfully submitted, tit Miles Cline Deputy City Clerk To: From: Meeting Date: Subject: CITY OF LAUDERDALE LAUDERDALE CITY HALL 1891 WALNUT STREET LAUDERDALE, MN 55113 651-792-7650 651-631-2066 FAX Request for Council Action Mayor and City Council City Administrator April 12, 2022 List of Claims The claims totaling $109,725.55 are provided for City Council review and approval that includes check numbers 27858 to 27882. Accounts Payable Checks by Date -Detail by Check Date User: Printed: MILES.CLINE 4/8/2022 2:33 PM Check No Vendor No Vendor Name Invoice No Description ACH 43 ACH 44 ACH 45 ACH 46 ACH 47 27858 56 042022 27859 57 1Q2022 27860 148 622116 27861 184 Public Employees Retirement Association PR Batch 50700.04.2022 PERA Coordinated PR Batch 50700.04.2022 PERA Coordinated Check Date Reference 04/01/2022 PR Batch 50700.04.2022 PER PR Batch 50700.04.2022 PER Total for this ACH Check for Vendor 43: Minnesota Department of Revenue PR Batch 50700.04.2022 State Income Tax 04/01/2022 PR Batch 50700.04.2022 Stab Total for this ACH Check for Vendor 44: ICMA Retirement Corporation PR Batch 50700.04.2022 Deferred Comp PR Batch 50700.04.2022 Deferred Comp 04/01/2022 PR Batch 50700.04.2022 Def( PR Batch 50700.04.2022 Def( Total for this ACH Check for Vendor 45: Internal Revenue Service PR Batch 50700.04.2022 FICA Employer Portio PR Batch 50700.04.2022 Medicare Employer Po PR Batch 50700.04.2022 Medicare Employee Pc PR Batch 50700.04.2022 FICA Employee Portio PR Batch 50700.04.2022 Federal Income Tax 04/01/2022 PR Batch 50700.04.2022 FIC. PR Batch 50700.04.2022 Med PR Batch 50700.04.2022 Med PR Batch 50700.04.2022 FIC. PR Batch 50700.04.2022 Fed( Total for this ACH Check for Vendor 46: Public Employees Insurance Program PR Batch 50700.04.2022 Dental PR Batch 50700.04.2022 Health Insurance 04/01/2022 PR Batch 50700.04.2022 Den PR Batch 50700.04.2022 Hea Total for this ACH Check for Vendor 47: Total for 4/1/2022: James Bownik 04/12/2022 1Q22 Mileage Reimbursement Total for Check Number 27858: Heather Butkowski 1Q22 Mileage Cases Ink LLC Fax Toner Cintas 04/12/2022 Total for Check Number 27859: 04/12/2022 Total for Check Number 27860: 04/12/2022 Check Amount 1,190.69 1,031.93 2,222.62 684.28 684.28 1,498.21 1,183.04 2,681.25 1,067.04 249.55 249.55 1,067.04 1,679.34 4,312.52 80.32 2,655.66 2,735.98 12,636.65 35.92 35.92 53.35 53.35 129.60 129.60 AP Checks by Date - Detail by Check Date (4/8/2022 2:33 PM) Page 1 Check No Vendor No Invoice No Vendor Name Description 4114709536 4114709536 27862 36 0230807 27863 29 4193 27864 133 042022 27865 192 042022 27866 25 1 STHalt'22 27867 61 2030529 27868 82 9023175 27869 31 166670 166670 27870 30 362631 362691 362788 27871 23 INV2010125 27872 99 1115 March Uniforms March Uniforms City of Roseville April IT Services Check Date Reference Check Amount City of St Anthony April Police Services Miles Cline 1 Q22 Mileage Reimbursement Comcast Holdings Corporation Troubleshooting Cable Service "Total for Check Number 27861: 04/12/2022 Total for Check Number 27862: 04/12/2022 Total for Check Number 27863: 04/12/2022 Total for Check Number 27864: 04/12/2022 Total for Check Number 27865: County of Ramsey First Half 2022 Special Assessments - 1795 Eust Gopher State One Call March Locates Home Depot Milwaukee Tool Kit Kennedy & Graven Chartered 1795 Eustis TIF Agreement February Legal Services League of Minnesota Cities 2022 LMC Annual Conference - MG 2022 LMC Annual Conference - DP MCMA Aimual Conference - HB Metro Sales Inc 1Q22 Copy Charges 04/12/2022 Total for Check Number 27866: 04/12/2022 Total for Check Number 27867: 04/12/2022 Total for Check Number 27868: 04/12/2022 Total for Check Number 27869: 04/12/2022 Total for Check Number 27870: 04/12/2022 Total for Check Number 27871: Metropolitan Area Management Associatioi 04/12/2022 Luncheon Meeting - HB "Total for Check Number 27872: 4.23 4.23 8.46 1,802.97 1,802.97 66,856.92 66,856.92 53.09 53.09 110.10 110.10 1,893.94 1,893.94 9.45 9.45 322.99 322.99 4,810.00 699.25 5,509.25 439.00 199.00 575.00 1,213.00 105.97 105.97 25.00 25.00 AP Checks by Date - Detail by Check Date (4/8/2022 2:33 PM) Page 2 Check No Vendor No Invoice No Vendor Name Description Check Date Reference Check Amount 27873 24 0001137760 Metropolitan Council May Waste Water 04/12/2022 Total for Check Number 27873: 27874 79 Minnesota Department of Labor & Industry 04/12/2022 MARCH 1230252022 1 Q2022 Surcharge Report 27875 12 2022-048 2022-048 2022-048 27876 84 042022 042022 042022 042022 042022 042022 042022 042022 042022 27877 37 1213 27878 366 3113 27879 363 20040365 27880 4 SI003218 S1003218 27881 3 468463021 27882 7 9131398-0500-0 NineNorth March Webstreaming & Archiving March Virtual Meeting Production March Virtual Meeting Charge Total for Check Number 27874: 04/12/2022 Total for Check Number 27875: North Star Bank Cardmember Services 04/12/2022 Lunseth Lawn Care for City Hall March Costco Fuel Deluxe - Bank Deposit Books March Costco Fuel Lunseth Lawn Care for PW Garage Home Depot - Bags for Shredded Paper March Pioneer Press March Costco Fuel Target - Office Supplies Park Service Inc Truck Repairs St Marie Sheet Metal Inc City Hall Furnace Repair Surplus Services 4 Tables for Council Room Total for Check Number 27876: 04/12/2022 Total for Check Number 27877: 04/12/2022 Total for Check Number 27878: 04/12/2022 "Total for Check Number 27879: The Neighborhood Recycling Company Inc 04/12/2022 March Single Unit Dwelling March Multi -Family Recycling US National Equipment Finance Inc April Copier Lease Waste Management Inc April Public Works Total for Check Number 27880: 04/12/2022 Total for Check Number 27881: 04/12/2022 "Dotal for Check Number 27882: 11,614.67 11,614.67 401.35 401.35 255.41 360.00 98.25 713.66 438.05 58.99 75.50 275.31 639.95 8.65 10.00 59.00 33.11 1,598.56 144.41 144.41 680.00 680.00 120.00 120.00 2,972.06 412.62 3384.68 176.00 176.00 125.56 125.56 AP Checks by Date - Detail by Check Date (4/8/2022 2:33 PM) Page 3 Check No Vendor No Invoice No Vendor Name Description Check Date Reference Check Amount Total for 4/12/2022: 97,088.90 Report Total (30 checks): 109,725.55 AP Checks by Date - Detail by Check Date (4/8/2022 2:33 PM) Page 4 LAUDERDALE COUNCIL ACTION FORM Action Requested Consent X Public Hearing Discussion Action Resolution X Work Session Meeting Date April 12, 2022 ITEM NUMBER 2022 Tobacco Licenses STAFF INITIAL MC APPROVED BY ADMINISTRATOR DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: The City has received applications for renewal of tobacco licenses. The licenses would be val- id January 1, 2022 December 31, 2022. Larpenteur SupeiUSA - 2424 Larpenteur Avenue West Lauderdale Certified Auto Repair (BP Station) - 2421 Larpenteur Avenue West OPTIONS: 1. To approve Resolution No. 041222A. 2. To remove the item from the consent agenda for further consideration STAFF RECOMMENDATION: By approving the Consent Agenda, the Council adopts Resolution No. 041222A Approving the 2022 Tobacco Licenses. RESOLUTION NO. 041222A CITY OF LAUDERDALE COUNTY OF RAMSEY STATE OF MINNESOTA APPROVING 2022 TOBACCO LICENSES WHEREAS, the following applicants: Larpenteur SupeiUSA 2424 Larpenteur Avenue W Lauderdale Certified Auto Repair 2421 Larpenteur Avenue W have presented to the City of Lauderdale complete applications for renewal of current tobacco licenses; and WHI-h,REAS, the establishments listed above have provided the proper fee and the Certification of Workers Compensation form and insurance certificate. IOW, THEREFORE Bh IT RESOLVED, that the Lauderdale City Council authorizes that the establishments listed above be granted tobacco licenses with the City of Lauderdale for the term of January 1, 2022 through December 31, 2022. Adopted by the City of Lauderdale this 12th day of April, 2022. Mary Gaasch, Mayor ATT -ST: Heather Butkowski, City Administrator LAUDERDALE COUNCIL ACTION FORM Action Requested Consent X Public Hearing Discussion Action Resolution X Work Session Meeting Date April 12, 2022 ITEM NUMBER 3.2 Off -Sale Malt Liquor License STAFF INITIAL MC APPROVED BY ADMINISTRATOR DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: The City has received an application for renewal of a 3.2 off -sale malt liquor license. The li- cense would be valid January 1, 2022 — December 31, 2022. Larpenteur SuperT JSA - 2424 Larpenteur Avenue West OPTIONS: 1. To approve Resolution No. 041222B 2. To remove the item from the Consent Agenda for further consideration. STAFF RECOMMENDATION: By approving the Consent Agenda, the Council adopts Resolution No. 041222B Approving 3.2 Off -Sale Malt Liquor License foi 2022. RESOLUTION NO. 041222B CITY OF LAUDERDALE COUNTY OF RAMSEY STATE OF MINNESOTA APPROVING 3.2 OFF SALE MALT LIQUOR LICENSE FOR 2022 WHEREAS, the following applicant: Larpenteur SuperUSA 2424 Larpenteur Avenue W has presented to the City of Lauderdale their complete application for renewal of current 3.2 off sale malt liquor license and WHEREAS, the establishment listed above has provided the proper fee and the Certification of Workers Compensation form and insurance certificate. NOW, THEREFORE Bh IT RESOLVED, that the Lauderdale City Council authorizes that the establishment listed above, be granted 3 2 off sale malt liquor license with the City of Lauderdale for the term of January 1, 2022 through December 31, 2022. Adopted by the City of Lauderdale this 12th day of April, 2022. Mary Gaasch, Mayor ATTF ST: Heather Butkowski, City Administrator LAUDERDALE COUNCIL ACTION FORM Action Requested Consent X Public Hearing Discussion Action Resolution Work Session Meeting Date April 12, 2022 ITEM NUMBFR February Financial Report STAFF INITIAL APPROVED BY ADMINISTRATOR DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: Kvery month, staff provide the Council with an updated copy of the city's finances. Follow- ing are the revenue expense and cash balance reports for February 2022. The totals reflect all year end journal entries performed as part of the audit. OPTIONS: STAFF RECOMMENDATION: By approving the consent agenda, the Council acknowledges the city's financial report for February 2022. General Ledger Cash Balances User: heather.butkowski Printed: 3/23/2022 1:51:14 PM Period 02 - 02 Fiscal Year 2022 Description Account Beg Bal MTD Debit MTD Credit Current Balance Cash Change Fund Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cut rent Assets Petty Cash Petty Cash 101-00000-000-10100 101-00000-000-10300 226-00000-000-10100 227-00000-000-10100 228-00000-000-10100 305-00000-000-10100 306-00000-000-10100 401-00000-000-10100 403-00000-000-10100 404-00000-000-10100 414-00000-000=10100 416-00000-000-10100 602-00000-000-10100 603-00000-000-10100 101-00000-000-10200 Investments - Fair Value 101-00000-000-10410 Adj Investments Grand Total -2,628,417.43 100.00 9,190.77 59,626.48 137,840.69 7,656.40 174,730.44 148,798.04 415,253.05 216,994.56 227,096.41 92,009.71 915,984.74 380,295.82 157,159.68 300.00 300.00 3,341,813.88 3,341,813.88 3,499,273.56 244,494.51 0.00 2.04 8,852.10 42.33 2.35 53.66 45.69 127.52 66.64 69.74 0.00 16,776.18 11,685.04 282,217.80 0.00 0.00 1,010.62 1,010.62 283,228.42 137,079.28 0.00 2,558.69 5,291.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26,226.71 36,939.82 208,095.77 0.00 0.00 190,000.00 190,000.00 398,095.77 -2,521,002.20 100.00 6,634.12 63,187.31 137,883.02 7,658.75 174,784.10 148,843.73 415,380.57 217,061.20 227,166.15 92,009.71 906,534.21 355,041.04 231,281.71 300.00 300.00 3,152,824.50 3,152,824.50 3,384,406.21 GL - Cash Balances (03/23/2022 - 01:51 PM) Page 1 a N cip o • N N ro O0 on O O N 'a -Cs • N _) __ % ExpendCollect C) U Ct ceS YTD Balance Current Period r..) d c1 0 LQ Description Account Number O C\ on 0 oo0m O O O M el O N OO N O O 00 VDLCN O V') O 00 CO V1 D\CN N V M cN V7 vo d' O 00 �t t� N N M N N ' CTIra O O O d' CN C O V) O • vi O CT M CT N M N i 0I O O O O 0 0 0 0 O O N O p 0000—IN p O Vi C3ei of 4 O vD CA On NILn r vD N N O o 0 0 0 0 p 0 0 0 0 0 0 0 O' O O O O M10 V O�OO O\O d-ri v1 CT N M N L N C 0 ti 00 00 00 r1 rfl r-1 N 00 M N rl 'smog 1,556,692.00 O co + O NNO p c- cR f O O 1-1 Mcy• 06 M CT O cn Ofl O\ VD 00 O O 'D V1 0 0 p Oo N 0 0 O tel V1 l d vD l N hl O VD in co O N In M M N M 00 O O O O O O O O p 000.'0 O oo 4 p • V) 00 to 1-1 0 0 U 1 0 C/D 1-1 0 bO J." U tr) CD M o e�-•1 O N N en. M N irmq en,‘ N N r0 M 0 00 H General Fund 0 GL - Revenue vs Expense (03/23/2022 - 01:52 PM) % Expend/Collect U ct YTD Balance Current Period O ,a 1 U a A vn YC N O N ci O NNO N 0 • M N D P Pk • t [r Account Number ooIn ol o cD ICl n CD CNA �-i 0 O 0 4 o vi o 0o O c O OCD CD j CD • OcrN co CD 0 o OcD O O oo 0 0 p ental Revenues rimi a O\ O 0000 O N 00 O 1-4 l— O O 0 00 VO crN m0N 0 0000 00 od vi r r-•1 N Two( M M M O 0 0 1 0 N rM.1 en cco o N N N ell. , ,--� M O cN vv)Off-+-+ 0I b OR 00000 O 00 "0 N t` M N N O 0 0 0 0 O O O . -i �0 H 0rmi CT 0 In V' N 00 OT v) O 10 Immi M M M VD VD N N GL - Revenue vs Expense (03/23/2022 - 01:52 PM) % Expend/Collect YTD Balance Current Period • OI• 0 00 00 O N 00 CT V1I00 O 0 00 CT N V 0) N y ell l: o c C4 N v, 0 j Q 00 U D Ct o a4 a4 N M GO b M Ul ralm M O e-1 N Ufl 00 00 N M C•I O o0 v -, o. v -;O oo h O N O 0o M 1 N o ) 0 0 00 O O M 0 N M r M oho O N• O V O N O 0 M r. O O \00<O M �O d' O O O H N 00 00 b 00 (1, M 00 O tI� M O O bby U ct T N 51 0p o ')O co•q ' •^ q .Q ofai 04 Cs) A d WQ,CDOU W R N GL - Revenue vs Expense (03/23/2022 - 01:52 PM) P-+ N N O N M NO N 4 TJ O b O ct - nJal % Expend/Collect YTD Balance Current Period Account Number h c 00o N 00 M M (V O O E 0 O a) g b w715 as 00 N h vi 1/40 vi 0000 00 ONO ONO CO 00 N M 1-4 00 00 H a w 00 N GL - Revenue vs Expense (03/23/2022 - 01:52 PM) a N Ca X N ci O N O y M O N N dj M 'OO� u N 0 •C a a CI [r paIloj/puadxa oh YTD Balance Current Period 4) tlL 0 OP Description Account Number o N M OIO p N p cp O O O O M M M 01 N O OM O 1` 0 O N M wag O M GO t N r-- 4:71 a 00 N N N O M O H t N bD U .d 0 •U U En "'cf) a ) cu aa) WOfl GO TIF Revenue Bonds 2018A M M GL - Revenue vs Expense (03/23/2022 - 01:52 PM) % Expend/Collect YTD Balance Current Period Description Account Number VD 0 ei M hl O 0 O 00 d' 00 CA 00 b e-1 00 b 0 b efi 00 00 N .-1 O 0 O uj 0 0 O O o O• O d' O 0 0 0 O N O � O 0M 0 a W spuog;uawanoaduil V610Z b O M GL - Revenue vs Expense (03/23/2022 - 01:52 PM) N Caq V W G7 C� 0 P4 a v Y N 4D N 4D el O M O N PC el 1 c M N N .0 b 73 O J N G • (/) c) Expend/Collect YTD Balance Current Period Account Number o co 00 00 0 07t- CD 0 00CD CD 0 O Q 8 N Cl) 0(/)O cu 0 o 0 0 ti I -I 04 cuO R1 QJ 07 b 0 Ri A CI C O C yN ❑ a - > ci ti' 0 4,=by N s.. y +° 3 " 4a o 00 tn 1/40 M 1/40 1/40 Y H a\ 1/40 vi <14 O tn0 0 U d d 000l o m 000 0 O 6 O O 0 O 00 00CD 01 o o 0 CDO 0 <I- 0 O O toTti 1/40 00 M o C1 ITT11) O 0 0 a W General Capital Projects GL - Revenue vs Expense (03/23/2022 - 0 % Expend/Collect U YTD Balance Current Period dCILPts ri 000 O O O O Mr O O O g O M N CD 000 pl O O O Ov) 0 O N O O O O Account Number rctd O O 7 o O 0 O O O O O 0 O O p 000 O O O O O O O 00 O 00 et O O O rY Street Capital Projects 0 GL - Revenue vs Expense (03/23/2022 - 01:52 PM) a) '' 4) N aLi txo fil l cto 0 Q) 0 P4 a N v , 0 N C N N ;2, N O M O el • N idMN aJ b o C •[ fan w % Expend/Collect YTD Balance Current Period Description 00 CT p O O 0 0inp O o O \o O o m 00 O) b 00 O b 0 O O O O O O O O CT O �C O O 0 0001 • O 0001 O 0 0 00to 01 O O 0 O00 C O 4 C (n C) ct O d 0-�CI) Pifid,' tit a WUO W V O O O M Park Capital Projects GL - Revenue vs Expense (03/23/2022 - 01:52 PM) % Expend/Collect v 0 YTD Balance Current Period 4.4 as Rosehill Tax Increment 0 rt 00I o of o 0 0 0 0 0 0 00! o of 0 0 O 0 0 0 0 0 ooh 0 0� 0 0 O 0 0 0 0 0 oaf 0 0� 0 0 00 0 0 0 0 CD al 0 o O o O 0 O 0 0 N 0 t U .0 a U 0 0 0 o rM to cd C U a) 8 U a 6 u" 0 c v' C 0 U N cU 6J N 6) g O a WO W 0 Rosehill Tax Increment GL - Revenue vs Expense (03/23/2022 - 01:52 PM) ID a) \ k \/ cu \Q % Expend/Collect \ / \ YTD Balance Current Period k \ \\ f 5\ 26 k 05 \ \ k 5l N 5 5) \ / 3 o a 3 c c oo N \/ § \@ o; cr c\ r % _ \\| 0 00 \ $ 0 3 00 S 5@ 2 5@ CS 6 \ o � / / / \\ 0 \ƒ k ; 7 g '2 § E 00 ta f(/\ § //\ § $ tt�\ t 0'' / 13-4 A /k/o ¢ MCO k S aQ e« / \//0 0 \0.) \rd aa Account Number \ Development \ GL - Revenue vs Expense (03/23/2022 - 01:52 PM) poalloj/puadxa % YTD Balance Current Period Description Account Number 0 0 O 0 O 0 0 co O OI O O O 0 0 CD O OI O O rool O O O O O O O O 0 00 O 0 O 0 0 0 0 0 O O O O CD CD O O O O a) a W Housing Redevelopment GL - Revenue vs Expense (03/23/2022 - 01:52 PM) w Zvi 0cqi M O N c)1 ic-at cd M N N O .t• % Expend/Collect YTD Balance Current Period Description TIF District No. 1-2 00cp 01 O O O 00cp 01 O 0 0 O O O O 00 000 000 0 0 0 O 00 0 0 0 0 0 0 0 0 1 0 0 0 0 O 0 0 00 0I O 00 V) 0 0 0 O O 0 0 0 0 O O O 00 0 000 0) ai 0 L) cts4-1 � T U Ca ti CIO r-1 O a . x W O u O 0 0 i141 R o 0 0 0 0 0 vl TIF District No. 1-2 1/40 1 a GL - Revenue vs Expense (03/23/2022 - 01:52 PM) a) cj N b!) k (1) CD 0 N 0 P4 r. C•i up In3 N 0 0 N O N M O N N M M N N b N ' - % Expend/Collect YTD Balance Current Period CU A CION o 1 .-i .-,rncno 0 O 0 0N o r-1 ON O CT O p O CR C5 p CR fel d'NO p 00 1-1M O ,--' N p M •-i co M d' O( d' CN O CTO O VD N N. 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O N N O M O N cd Mel N a) .0 'O L.:0 t cn t P w % Expend/Collect YTD Balance Current Period Description Account Number CD O O 0 ( O 0 O o O 0 01 O 00 0 CD O O 0 00 0 CD O CD 0I 000 CD CD CD CD 000 cn U U t.' cu > 124 b0 CA [O a) U N (/) U N F;aF-c O 0\ 0 0 0 0 0 0 0 ca 0 0000ol 00000 0000 0 0000 0 0 o O O 0000 0 0000 0 00000 0000 0 0000 0 0000 0 0 0 0 0 O 0000 0 0000 0 00000 0 0 0 0 0 0 CD O 0 0 0 0 0 0 0 0 4) C) 04 W GL - Revenue vs Expense (03/23/2022 - 01:52 PM) % Expend/Collect YTD Balance Current Period M in N N 00 \O \O Te -fl M O N N O O r-1 V1 M of r-1 to 00 et \O N CO ri 4 O O O ,b r4 N r4 NV N 0i0 a1 o ri N CO 01 ri rti N N N' Account Number Revenue Total GL - Revenue vs Expense (03/23/2022 - 01:52 PM) LAUDERDALE COUNCIL ACTION FORM Action Requested Consent Public Hearing X Discussion X Action X Resolution X Work Session Meeting Date April 12, 2022 ITEM NUMBER STAFF INITIAL APPROVED BY ADMINISTRATOR 1795 Fustis Street Bonds DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: Julie Fddington, of Kennedy and Graven, will be at the meeting to answer any final ques- tions of the Council regarding the City's role in the issuance of tax-exempt revenue bond on behalf of Real Estate Equities (REE) for the redevelopment of 1795 Fustis Street. As the resolution details Real Estate Equities received bonding authority for over $15M to finance about half of the 1795 Eustis Street iedevelopment cost. Julie Fddington prepared a memo outlining the request being made of the City and the final resolution for Council considera- tion. Prior to considering the resolution, the City Council must hold a public hearing. OPTIONS: STAFF RECOMMENDATION: Motion to adopt Resolution 041222C A Resolution Authorizing the Issuance, Sale and Deliveiy of Multifamily Housing Revenue Obligations for the Benefit of Lauderdale All I, LLLP, and Authorizing the Execution and Delivery of Documents Related Thereto. Kenpedy C HAPT ERED Offices in Minneapolis Saint Paul St. Cloud 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer JULIE A. EDDINGTON Attorney at Law Direct Dial (612) 337-9213 Email: jeddington@kennedy-graven.com kennedy-graven.com April 1, 2022 Heather Butkowski, City Administrator City of Lauderdale 1891 Walnut Street Lauderdale, MN 55113 Re: Resolution approving the issuance of revenue obligations by the City of Lauderdale for the benefit of Lauderdale AH I, LLLP Dear Heather, Lauderdale AH I, LLLP, a Minnesota limited liability limited partnership (the "Borrower"), has requested that the City of Lauderdale, Minnesota (the "City") issue one or more series of taxable or tax-exempt revenue obligations (the "Obligations") in the maximum principal amount of $15,199,800 and loan the proceeds thereof to the Borrower to finance the costs of the acquisition, construction, and equipping of approximately 114 units of affordable senior housing and facilities functionally related and subordinate thereto to be located at 1795 Eustis Street in the City (the "Project"). A portion of the Obligations (the "Bonds") is expected to be sold publicly and underwritten by Colliers Securities LLC, and the remainder of the Obligations (the "Note") is expected to be privately placed with Bridgewater Investment Management, Inc. The Obligations will be considered "housing bonds" issued pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"). Pursuant to Section 462C.04, subdivision 2 of the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), the City Council is required to conduct a public hearing on the issuance of the Obligations, which will be held on April 12, 2022. Following the public hearing, the City Council will be asked to consider the enclosed resolution, which provides final approval to the issuance of the Obligations, adopts a housing program required under Section 462C.04, subdivision 2 of the Act, and authorizes the execution of loan documents and related documents. The Obligations will be secured solely by the revenues derived from one or more loan agreements (the "Loan Agreements") to be executed by the City and the Borrower and from other security provided by the Borrower, including a mortgage with respect to the Bonds and an assignment of capital contributions with respect to the Note. The Obligations will not constitute a general or moral obligation of the City and will not be secured by or payable from any property or assets of the City (other than the interests of the City in the Loan Agreements) and will not be secured by any taxing power of the City. The Obligations will not be subject to any debt limitation imposed on the City, and the issuance of the Obligations will not have any adverse impact on the credit rating of the City, even in the event that the Borrower encounters financial difficulties with respect to the Project. The Obligations have received allocation of bonding authority from the State of Minnesota pursuant to the requiiements of Section 146 of the Code. The Obligations will be `private activity bonds' within the meaning of Section 141(a) of the Code but will be "exempt facility bonds" the net pioceeds of which are to be used to provide a ` qualified residential rental project' within the meaning of Sections 142(a)(7) and 143(d) of the Code and will not affect the City's ability to issue and designate up to $10 000,000 in tax-exempt bonds as "qualified tax-exempt obligations" (or "bank -qualified bonds') foi calendar year 2022. The Borrowei will agree to pay the out-of-pocket expenses of the City with respect to this transaction as well as the City's administrative fee. I will be attending the City Council meeting on April 12, 2022 and can answer any questions that may arise during the meeting. Please contact me with any questions you may have prior to the City Council meeting. Sincerely, Julie A. Eddington LAI35-38 (JAE) 788910v1 RESOLUTION NO. 041222C CITY OF LAUDERDALE COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF MULTIFAMILY HOUSING REVENUE OBLIGATIONS FOR THE BENEFIT OF LAUDERDALE All I, LLLP, AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO BE IT RESOLVED by the City Council (the "City Council") of the City of Lauderdale, Minnesota (the "City") as follows: Section 1. Recitals. 1.01. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City is authorized to issue revenue obligations to provide funds to finance multifamily rental housing developments located within the City. 1.02 Lauderdale AH I, LLLP, a Minnesota limited liability limited partnership and an affiliate of Real Fstate Fquities, LLC, a Minnesota limited liability company (the "Borrower") has pioposed that the City issue one or more series of taxable or tax-exempt multifamily housing revenue obligations (the Obligations") in the approximate aggregate principal amount not to exceed $15,199,800, for the benefit of the Borrower, for the purposes of financing all or a portion of (i) the acquisition, construction, and equipping of approximately 114 units of affordable senior housing and facilities functionally related and subordinate thereto to be located at 1795 Eustis Street in the City (the `Project") (ii) one or mote reserve funds to secure the timely payment of the Obligations if necessary; (iii) capitalized interest on the Obhgations during the construction of the Project, if necessary; and (iv) the costs of issuing the Obligations. 1.03. In accoi dance with the Act, the City has prepared a housing pi ogram (the "Housing Program ') to authorize the City's issuance of the Obligations to finance the acquisition, construction, and construction of the Project. The Housing Program was prepared and submitted to Metropolitan Council for its review and comment. 1.04. On December 14, 2021, the City Council adopted Resolution No. 121421H, authorizing the submission of an application to the office of Minnesota Management and Budget for an allocation of bonding authority with respect to the Obligations to finance the Project in accordance with the requirements of Minnesota Statutes, Chapter 474A, as amended, and providing preliminary approval for the sale and issuance of the Obligations Pursuant to Certificate No. 420, the Obligations received an allocation of bonding authority from the State of Minnesota in the principal amount of $15,199,800. 1.05. A notice of public hearing (the "Public Notice") was published in the Pioneer Press, the official newspaper of and a newspaper of general circulation in the City, with respect to the required public hearing under Section 147(0 of the Internal Revenue Code of 1986, as amended (the "Code"), and Section 462C.04, subdivision 2 of the Act. 1.06. The Public Notice was published at least fifteen (15) days before the regularly scheduled meeting of the City Council and on the date hereof, the City Council conducted a public hearing at which a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing. Section 2. Housing Program. The Housing Program, in the form substantially on file with the City, is hereby approved. Section 3. The Bonds. 3.01. The Borrower has requested that the City issue, sell, and deliver a portion of the Obligations in the approximate principal amount of $14,000,000 (the 'Bonds"). The Bonds are proposed to be sold publicly and underwritten by Colliers Securities LLC a Delaware limited liability company (the "Underwriter"). 3.02. The Bonds are proposed to be issued pursuant to this resolution, the Act, and an Indenture of Trust (the "Bond Indenture") between the City and U.S. Bank Trust Company, National Association a national banking association (the "Bond Trustee"). 3.03. The proceeds derived from the sale of the Bonds will be loaned by the City to the B orrower (the 'Bond Loan") pursuant to the terms of a Loan Agreement (the "Bond Loan Agreement") between the City and the Boirower. 3.04. The Bonds and the interest on the Bonds (i) shall be payable solely from the revenues pledged therefor under the Bond Loan Agreement and additional sources of revenue provided by or on behalf of the Borrower; (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit 01 taxing powers (iv) shall not constitute a charge hen, or encumbrance, legal or equitable, upon any property of the City other than the City s interest in the Bond Loan Agreement; and (v) shall not constitute a general or moral obligation of the City. 3.05. The loan repayments to be made by the Borrower under the Bond Loan Agr eement will be fixed so as to produce revenue sufficient to pay the principal of premium if any, and interest on the B onds when due. Such loan repayments will be assigned to the Bond Trustee under the terms of the B ond Indenture. 3.06. The Borrower's repayment obligations in respect of the Bond Loan will be secured by a Combination Mortgage Security Agreement, Fixture Financing Statement, and Assignment of Leases and Rents (the "Bond Mortgage") by the Borrower in favor of the City, which the City will assign to the Trustee pursuant to an Assignment of Mortgage (the "Assignment of Bond Mortgage"). The Borrower's repayment obligations may also be secured by one or more guaranties. 3.07. The City acknowledges, finds determines, and declares that the issuance of the Bonds is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Bonds, and the other actions of the City under the Bond Indenture, the Bond Loan Agreement, and this resolution constitute a public purpose and are in the interests of the City. In authorizing the issuance of the Bonds to finance a portion of the Project and the related costs the City's purpose is and the effect thereof will be to promote the public welfare of the City and its residents by providmg multifamily housing developments for low or moderate income residents of the City and otherwise furthering the purposes and policies of the Act 2 3.08. For the purposes set forth above, there is hereby authorized the issuance, sale and delivery of the Bonds in the approximate principal amount of $14,000,000. The Bonds shall bear interest at the rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be in the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms details and provisions as ate prescribed in the Bond Indenture, substantially in the form now on file with the City, with the amendments referenced herein. The City hereby authorizes all or a portion of the Bonds to be issued as "tax-exempt bonds," the interest on which is not includable in gross Income for federal and State of Minnesota income tax purposes. All of the provisions of the Bonds, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorpoi ated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Bonds shall be substantially in the foim of the Bond Indenture on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions, and insertions (including changes to the aggregate principal amount of the Bonds, the stated maturities of the Bonds, the interest iates on the Bonds and the terms of redemption of the Bonds) as the Mayor and the City Administrator, in their discretion, shall determine. The execution of the Bonds with the manual or facsimile signatures of the Mayor and the City Administrator and the delivery of the Bonds by the City shall be conclusive evidence of such determination. 3.09. The Bonds shall be special, limited obligations of the City payable solely from the revenues provided by the Borrower pursuant to the Bond Loan Agieement and other funds pledged pursuant to the Bond Indenture. The City Council hereby author izes and directs the Mayor and the City Administrator to execute the Bonds in accordance with the terms thereof. 3.10. All of the provisions of the Bond Indenture, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof The Bond Indenture shall be substantially in the form on file with the City, which is hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determination. The Mayor and the City Administrator are hereby authorized and directed to execute the Bond Indentwe, and to deliver the Bond bidenture to the Bond Tiustee and hereby authorizes and directs the execution of the Bonds in accordance with the terms of the Bond Indenture, and hereby provides that the Indenture shall provide the terms and conditions, covenants, rights obligations duties, and agreements of the owners of the Bonds, the City, and the Bond Trustee as set forth therein. 3.11. The Mayor and the City Administrator are hereby authorized and directed to execute and deliver the Bond Loan Agreement, a Bond Purchase Agreement between the City the Borrower, and the Underwriter, and all other documents and assignments related to the Bond Loan iequiied to be executed by the City, including but not limited to the Assignment of Bond Mortgage. All of the provisions of such documents, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The aforementioned documents shall be substantially m the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Administrator in their discretion, shall determine and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determinations. 3.12. The City will not participate in the preparation of the Preliminary Official Statement or the Official Statement (together, the "Official Statement") relating to the offer and sale of the Bonds and 3 will make no independent investigation with respect to the information contained therein, including the appendices thereto, except for the information set forth in the Official Statement regarding the City and certain matters relating to litigation, and the City assumes no responsibility for the sufficiency, accuracy or completeness of such mfoimation. Subject to the foregoing, the City hereby consents to the distribution and the use by the Underwriter of the Official Statement in connection with the offer and sale of the Bonds. The Official Statement is the sole material consented to by the City for use in connection with the offer and sale of the Bonds. 3.13. The City hereby authorizes the Borrower to provide such security for payment of its obligations under the Bond Loan Agi cement and for payment of the Bonds, including but not limited to the Mortgage and one or more guaranties, and the City hereby approves the execution and delivery of such security. Section 4. The Note. 4.01. The Borrower has requested that the City issue, sell, and deliver a portion of the Obligations in the approximate principal amount of $1,199,800 (the "Note"). The Note is proposed to be purchased by Bridgewater Investment Management, Inc., a Minnesota corporation (the "Note Lender"). 4.02. The proceeds derived from the sale of the Note will be loaned by the City to the Borrower pursuant to the terms of a Loan Agreement (the ' Note Loan Agreement") between the City and the Borrower. 4.03. The Note will be issued pursuant to this resolution and the Act, and the Note and the interest thereon (i) shall be payable solely from the revenues pledged therefor under the Note Loan Agreement and additional sources of revenues provided by or on behalf of the Bon ower; (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit 01 taxing powers; (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Note Loan Agreement; and (v) shall not constitute a general or moral obligation of the City. 4.04. The loan repayments to be made by the Born ower under the Note Loan Agreement will be fixed so as to pr oduce revenue sufficient to pay the pr incipal of, premium if any, and interest on the Note when due. The City will assign its rights to the basic payments and certain other rights under the Note Loan Agreement to the Note Lender pursuant to the terms of an Assignment of Loan Agreement (the "Assignment of Note Loan Agreement") between the City and the Note Lender. 4.05. To secure its obligations under the Note Loan Agreement, the Borrower will pledge to the Note Lender a portion of equity installments attributable to low-income housing tax credits for the Project Additionally, the Borrower may cause one or more guaranties to be delivered to secure the Borrower's obligations under the Note Loan Agreement. 4.06. The City acknowledges, finds, determines, and declares that the issuance of the Note is authorized by the Act and is consistent with the purposes of the Act and that the issuance of the Note, and the other actions of the City under the Note Loan Agreement and this resolution, constitute a public purpose and are in the interests of the City. In authorizing the issuance of the Note to finance a portion of the Project and the related costs, the City's purpose is and the effect thereof will be to promote the public welfare of the City and its residents by providing multifamily housing developments for low or moderate income residents of the City and otherwise fuithering the purposes and policies of the Act 4 4.07. For the purposes set forth above, there is hereby authorized the issuance, sale, and delivery of the Note in the approximate principal amount of $1,199,800. The Note shall bear interest at the rates, shall be designated shall be numbered, shall be dated shall mature, shall be m the aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and provisions as are prescribed in the form of Note now on file with the City, with the amendments referenced herein. The City hereby authorizes the Note to be issued, in whole or in part, as a "tax-exempt bond," the interest on which is not includable in gross income for federal and State of Minnesota income tax purposes. All of the provisions of the Note, when executed as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Note shall be substantially in the form on file with the City, which form is hereby approved, with such necessary and appropriate variations, omissions and insertions (including changes to the aggregate principal amount of the Note, the stated maturity of the Note, the interest rates on the Note and the terms of redemption of the Note) as the Mayor and the City Administrator in their discretion, shall determine. The execution of the Note with the manual or facsimile signatures of the Mayor and the City Administrator and the delivery of the Note by the City shall be conclusive evidence of such determination. 4.08. The Note shall be a special, limited obligation of the City payable solely from the revenues provided by the Borrower pursuant to the Note Loan Agreement, including the equity installments attributable to low-income housing tax credits foi the Project. The City Council hereby authorizes and directs the Mayor and the City Administrator to execute the Note in accordance with the terms thereof. 4.09. The Mayor and the City Administrator are hereby authorized and directed to execute and deliver the Note Loan Agreement and the Assignment of Note Loan Agreement, and all documents and assignments related to the Bond Mortgage Loan required to be executed by the City by Fannie Mae. All of the provisions of the Note Loan Agreement and the Assignment of Note Loan Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Note Loan Agreement and the Assignment of Note Loan Agreement shall be substantially in the forms on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, and as the Mayor and the City Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determinations. 4.10. The City hereby authorizes the Borrower to provide such security foi payment of its obligations under the Note Loan Agreement and for payment of the Note, and the City hereby approves the execution and delivery of such security. Section 5. Additional Findings and Certifications. 5.01. The Obligations are authorized to be issued in the approximate aggregate principal amount not to exceed $15,199,800. On the date hereof the Bonds are expected to be issued in the approximate principal anount of $14,000,000, and the Note is expected to be issued in the approximate principal amount of $1,199,800. However, the final principal amount of the Obligations may change so long as the total aggregate principal amount of the Obligations does not exceed $15,199,800. 5.02. To ensure compliance with certain rental and occupancy restrictions imposed by the Act and Section 142(d) of the Code, and to ensure compliance with certain restrictions imposed by the City 5 the Mayor and City Administrator are also hereby authorized and directed to execute and deliver a Regulatory Agreement (the "Regulatory Agreement") between the City, the Boirower, the Bond Trustee, and the Note Lender. All of the provisions of the Regulatory Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Regulatory Agreement shall be substantially in the form on file with the City which is hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor and the City Administrator, in their discretion, shall determine, and the execution thereof by the Mayor and the City Administrator shall be conclusive evidence of such determination. 5.03. The Mayor and the City Administrator are authorized and directed to execute any additional documents deemed necessary to carry out the intentions of this resolution and to complete the financing described herein, so long as City staff and legal counsel approve such documents. 5.04. The Mayor and the City Administrator are hereby authorized to execute and deliver on behalf of the City, such other documents and certificates as are necessary or appropriate in connection with the issuance, sale, and delivery of the Obligations including various certificates of the City, an Information Return for Tax -Exempt Private Activity Bond Issues Form 8038, an endorsement of the City to the tax certificate of the Borrower, and similar documents, and all other documents and certificates as shall be necessary and appropriate in connection with the issuance, sale and delivery of the Obligations. The City hereby authorizes Kennedy & Graven, Chartered, as bond counsel ( `Bond Counsel"), to prepare, execute, and deliver its approving legal opinions with respect to the Obligations. 5.05. Fxcept as otherwise provided in this resolution, all rights, powers, and privileges conferred and duties and liabilities imposed upon the City or the City Council by the provisions of this resolution or of the aforementioned documents shall be exercised or performed by the City or by such members of the City Council, or such officers, board, body or agency thereof as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation or agreement herein contained or contained in the aforementioned documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the City Council, or any officer agent or employee of the City in that person's individual capacity, and neither the City Council nor any officer or employee executing the Obligations shall be personally liable on the Obligations or be subject to any personal liability or accountability by reason of the issuance thereof. No provision, covenant or agreement contained in the aforementioned documents, the Obligations, or in any other document relating to the Obligations and no obligation therein 01 herein imposed upon the City 01 the breach thereof shall constitute or give rise to a general or moral obligation of the City or any pecuniary liability of the City or any charge upon its general credit or taxing powers In making the agreements, provisions, covenants, and representations set forth in such documents, the City has not obligated itself to pay or remit any funds or revenues, other than funds and revenues as described herein which are to be applied to the payment of the Obligations, as provided therein. 5.06. Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned documents expressed or implied is intended or shall be construed to confer upon any person 01 firm or corporation, other than the City, any holder of the Obligations issued under the provisions of this resolution, any right remedy or claim, legal or equitable, under and by reason of this resolution or any provisions hereof this resolution, the aforementioned documents, and all of their provisions being intended to be and being for the sole and exclusive benefit of the City, and any holder from time to time of the Obligations issued under the provisions of this resolution. 6 5.07. In case any one or more of the provisions of this resolution, other than the provisions contained in the first sentence of Sections 3.09 and 4.08 hereof or of the aforementioned documents, or of the Obligations issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution or of the aforementioned documents or of the Obligations, but this resolution, the aforementioned documents, and the Obligations shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein 5.08. The Obligations, when executed and delivered, shall contain a recital that they are issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of the Obligations and the regularity of the issuance thereof, and that all acts conditions, and things required by the laws of the State of Minnesota relating to the adoption of this i esolution to the issuance of the Obligations and to the execution of the aforementioned documents to happen, exist and be perfot med precedent to the execution of the aforementioned documents have happened, exist, and have been performed as so required by law. 5.09. The officers of the City, Bond Counsel, other attorneys, engineers, and other agents or employees of the City are hereby authorized to do all acts and things required of them by or in connection with this resolution, the aforementioned documents, and the Obligations, for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Bonds, the afoiementioned documents, and this resolution. If for any reason the Mayor or the City Administiator is unable to execute and deliver the documents referred to in this resolution such documents may be executed by any member of the City Council or any officer of the City delegated the duties of the Mayor or the City Administrator with the same force and effect as if such documents were executed and delivered by the Mayor or the City Administrator. 5.10. The Borrower shall pay the administrative fee of the City on the date of issuance of the Obligations as piovided in the Bond Loan Agreement and the Note Loan Agreement The Boil ower will also pay, or, upon demand reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Obligations, whether or not the Obligations are issued, including any costs for attorneys' fees. Section 6. Effective Date. This resolution shall be in full force and effect from and after its approval. The approvals contained in the resolution are effective for one year after the date hereof. Approved by the City Council of the City of Lauderdale, Minnesota this 121h day of April, 2022. ATTEST: City Administrator LA135-38 (JAE) 780084v2 7 Mayor LAUDERDALE COUNCIL ACTION FORM Action Requested Consent Public Hearing Discussion X Action Resolution Work Session X Meeting Date April 12, 2022 ITEM NUMBER Audit Materials STAFF INITIAL HB APPROVED BY ADMINISTRATOR DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: Each year, a representative of Abdo Solution presents the findings of the audit to the City Coun- cil. This year Bonnie Schwieger will present. Upon conclusion of the presentation, the Council should vote to accept the audit reports OPTIONS: STAFF RECOMMENDATION: Motion to accept the audit reports prepared by Abdo Solutions. 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O 00 O O N in t» <`1> <0 <!? 4-0 w 0 (0 A N -a u) O N co•41- 4- O co co 0 0 0 C7 ■ N CO cNi -co 0 I� O 10 ON N N In M N O 10 CO t� N <1) <1> <1> _' a ,1"; ! ,- ----s_ —_ - T. ---gr- --"I t v .�_ ,M w w -� f - i A ,_ 0 0 0 0 0 0 0 0 0 ON CO 0 0 10 10 d0 OM N <0 <0 <1) <1> <1) <1> <o <1) <o �• In r- M r" 00 O 1D 1--- N < <n « 00 lf) CO 10 r O 10 k0 O 10 t0 <0 D City of Lauderdale Class 4 Cities ■ Cities in Ramsey County "r- cf-1 (I 1, 1 Maggie Koebnick Bonnie Schwieger, CPA Andy Berg, CPA Senior Associate Senior Manager maggie.koebnick@abdofs.com Iuke.vogt@abdosolutions.com utions.com bonnie.schwieger@abdoso E 0 c tet0 0 V 0) ^0 ^J` V r:_ C__> 11 Cs0 E L ( ) I aJderda11L Lauderdale, Minnesota For the year ended December 31, 2021 //\\\ %SF bighting the path f t)rti'(Irc1 Edina Office Wlurrkato Office 5201 Eden Avenue, Ste 250 Edina, MN 55436 952.835.9090 952.835.3261 100 Warren Street, Ste 600 Mankato, MN 56001 507.625.2727 507.388.9139 P\N ain \\ 111110 ihre April 5, 2022 Management, Honorable Mayor and City Council City of Lauderdale, Minnesota Abdosolutions.com We have audited the financial statements of the governmental activities, the business -type activities each major fund, and the aggregate remaining fund information of the City of Lauderdale, Minnesota (the City) for the year ended December 31, 2021 and have issued out report thereon dated April 5, 2022 Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter dated December 8, 2021. Professional standards also require that we communicate to you the following information related to our audit. Our Responsibility Under Auditing Standards Generally Accepted in the United States of America As stated in our engagement letter, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is designed to provide reasonably, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or illegal acts may exist and not be detected by us. Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement. As part of our audit, we considered the internal control over financial reporting of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control over financial reporting. We are responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures specifically to identify such matters. Significant Audit Findings In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is Tess severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Lighting the path forward 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported in accordance with Minnesota statutes. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies were not changed during the year ended December 31, 2021. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were capital asset basis, depreciation, compensated absences, and the liability for the City's pensions. O Management's estimate of depreciation is based on estimated useful lives of the assets. Depreciation is calculated using the straight-line method. Allocations of gross wages and payroll benefits are approved by the City Council within the City's budget and are derived from each employee's estimated time to be spent servicing the respective function of the City. These allocations are also used in allocating accrued compensated absences payable. ® Management's estimate of its pension liability is based on several factors including, but not limited to, anticipated investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity payment upon retirement. We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole. We assisted in preparing a number of year end accounting entries. These were necessary to adjust the City's records at year end to correct ending balances. The City should establish more detailed processes and procedures to reduce the total number of entries in each category. The City will receive better and timelier information if the preparation of year end entries is completed internally. AbdoSolutions.com 3 o Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated April 5, 2022 Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the required supplementary information (RSI) (Management's Discussion and Analysis, the Schedules of Employer's Share of the Net Pension Liability, the Schedules of Employer's Contributions, which is information that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplementary information (combining and individual fund financial statements and schedules, and schedule of federal awards), which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory section which accompany the financial statements but is not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. Atbciosolutions.com 4 Future Accounting Standard Changes The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future City financial statements: 0) GASB Statement No. 87 -Leases Summary The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments' financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right -to -use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. Effective Date and Transition The requirements of this Statement are effective for reporting periods beginning after June 15, 2021 and all reporting periods thereafter. Leases should be recognized and measured using the facts and circumstances that exist at the beginning of the period of implementation (or, if applied to earlier periods, the beginning of the earliest period restated). However, lessors should not restate the assets underlying their existing sales -type or direct financing leases. Any residual assets for those leases become the carrying values of the underlying assets. How the Changes in This Statement Will Improve Accounting and Financial Reporting This Statement will increase the usefulness of governments' financial statements by requiring reporting of certain lease liabilities that currently are not reported. It will enhance comparability of financial statements among governments by requiring lessees and lessors to report leases under a single model. This Statement also will enhance the decision - u sefulness of the information provided to financial statement users by requiring notes to financial statements related to the timing, significance, and purpose of a government's leasing arrangements. GASB Statement No. 91 - Conduit Debt Obligations Summary The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; e stablishing standards for accounting and financial reporting of additional commitments and voluntary commitments e xtended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. All conduit debt obligations involve the issuer making a limited commitment Some issuers extend additional commitments or voluntary commitments to support debt service in the event the third party is, or will be, unable to do so. An issuer should not recognize a conduit debt obligation as a liability. However, an issuer should recognize a liability associated with an additional commitment or a voluntary commitment to support debt service if certain recognition criteria are met. As long as a conduit debt obligation is outstanding, an issuer that has made an additional commitment should evaluate at least annually whether those criteria are met. An issuer that has made only a limited commitment should evaluate whether those criteria are met when an event occurs that causes the issuer to reevaluate its willingness o r ability to support the obligor's debt service through a voluntary commitment. Abdosolutions.com 0 5 Future Accounting Standard Changes (Continued) This Statement also addresses arrangements - often characterized as leases - that are associated with conduit debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third -party obligors in the course of their activities. Payments from third -party obligors are intended to cover and coincide with debt service payments. During those arrangements, issuers retain the titles to the capital assets. Those titles may or may not pass to the obligors at the end of the arrangements. This Statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers' conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose information about the amount recognized and how the liabilities changed during the reporting period. Effective Date and Transition The requirements of this Statement are effective for reporting periods beginning after December 15, 2021. Earlier application is encouraged. How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders' uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers' roles in conduit debt obligations Abdosolutions:com 6 • Future Accounting Standard Changes (Continued) GASB Statement No. 92 -Omnibus 2020 Summary The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics and includes specific provisions about the following: The effective date of Statement No. 87, Leases, and Implementation Guide No 2019-3, Leases, for interim financial reports o Reporting of intra -entity transfers of assets between a primary government employer and a component unit defined benefit pension plan or defined benefit other postemployment benefit (OPEB) plan o The applicability of Statements No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, as amended, and No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, to reporting assets accumulated for postemployment benefits The applicability of certain requirements of Statement No. 84, Fiduciary Activities, to postemployment benefit arrangements ® Measurement of liabilities (and assets, if any) related to asset retirement obligations (AROs) in a government acquisition o Reporting by public entity risk pools for amounts that are recoverable from reinsurers or excess insurers o Reference to nonrecurring fair value measurements of assets or liabilities in authoritative literature ® Terminology used to refer to derivative instruments. Effective Date and Transition The requirements of this Statement are effective as follows: o The requirements related to the effective date of Statement 87 and Implementation Guide 2019-3, reinsurance recoveries, and terminology used to refer to derivative instruments are effective upon issuance. ® The requirements related to intra -entity transfers of assets and those related to the applicability of Statements 73 and 74 are effective for fiscal years beginning after June 15, 2020. O The requirements related to application of Statement 84 to postemployment benefit arrangements and those related to nonrecurring fair value measurements of assets or liabilities are effective for reporting periods beginning after June 15, 2020. o The requirements related to the measurement of liabilities (and assets, if any) associated with AROs in a government acquisition are effective for government acquisitions occurring in reporting periods beginning after June 15, 2020. Earlier application is encouraged and is permitted by topic. AbdoSolutions.coni 7 • o Future Accounting Standard Changes (Continued) How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will enhance comparability in the application of accounting and financial reporting requirements and will improve the consistency of authoritative literature. More comparable reporting will improve the usefulness of information for users of state and local government financial statements. GASB Statement No. 93 - Replacement of Interbank Offered Rates Summary The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. This Statement achieves that objective by: Providing exceptions for certain hedging derivative instruments to the hedge accounting termination provisions when an IBOR is replaced as the reference rate of the hedging derivative instrument's variable payment Clarifying the hedge accounting termination provisions when a hedged item is amended to replace the reference rate o Clarifying that the uncertainty related to the continued availability of IBORs does not, by itself, affect the assessment of whether the occurrence of a hedged expected transaction is probable o Removing LIBOR as an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap Identifying a Secured Overnight Financing Rate and the Effective Federal Funds Rate as appropriate benchmark interest rates for the qualitative evaluation of the effectiveness of an interest rate swap ® Clarifying the definition of reference rate, as it is used in Statement 53, as amended © Providing an exception to the lease modifications guidance in Statement 87, as amended, for certain lease contracts that are amended solely to replace an IBOR as the rate upon which variable payments depend Effective Date and Transition The removal of LIBOR as an appropriate benchmark interest rate is effective for reporting periods ending after December 31, 2021. All other requirements of this Statement are effective for reporting periods beginning after June 15, 2020. Earlier application is encouraged. The exceptions to the existing provisions for hedge accounting termination and lease modifications in this Statement will reduce the cost of the accounting and financial reporting ramifications of replacing IBORs with other reference rates. The reliability and relevance of reported information will be maintained by requiring that agreements that effectively maintain an existing hedging arrangement continue to be accounted for in the same manner as before the replacement of a reference rate. As a result, this Statement will preserve the consistency and comparability of reporting hedging derivative instruments and leases after governments amend or replace agreements to replace an IBOR. How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will enhance comparability in the application of accounting and financial reporting requirements and will improve the consistency of authoritative literature. More comparable reporting will improve the usefulness of information for users of state and local government financial statements. AbdoSoiutions.com o Future Accounting Standard Changes (Continued) GASB Statement No. 94 - Public -Private and Public -Public Partnerships and Availability Payment Arrangements Summary The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public -public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange -like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this Statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement. This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). As defined in this Statement, an APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange -like transaction. Effective Date and Transition The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged. PPPs should be recognized and measured using the facts and circumstances that exist at the beginning of the period of implementation (or if applicable to earlier periods, the beginning of the earliest period restated). How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will improve financial reporting by establishing the definitions of PPPs and APAs and providing uniform guidance on accounting and financial reporting for transactions that meet those definitions. That uniform guidance will provide more relevant and reliable information for financial statement users and create greater consistency in practice. This Statement will enhance the decision usefulness of a government's financial statements by requiring governments to report assets and liabilities related to PPPs consistently and disclose important information about PPP transactions. The required disclosures will allow users to understand the scale and important aspects of a government's PPPs and evaluate a government's future obligations and assets resulting from PPPs. AbdoSolutions.com 9 Future Accounting Standard Changes (Continued) GASB Statement No. 96 - Subscription -Based Information Technology Arrangements Summary This Statement provides guidance on the accounting and financial reporting for subscription -based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right -to -use subscription asset - an intangible asset - and a corresponding subscription liability (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. Under this Statement, a government generally should recognize a right -to -use subscription asset - an intangible asset - and a corresponding subscription liability. A government should recognize the subscription liability at the commencement o f the subscription term, - which is when the subscription asset is placed into service. The subscription liability should be initially measured at the present value of subscription payments expected to be made during the subscription term. Future subscription payments should be discounted using the interest rate the SBITA vendor charges the government, which may be implicit, or the government's incremental borrowing rate if the interest rate is not readily determinable. A government should recognize amortization of the discount on the subscription liability as an outflow of resources (for e xample, interest expense) in subsequent financial reporting periods. This Statement provides an exception for short-term SBITAs. Short-term SBITAs have a maximum possible term under the SBITA contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources. This Statement requires a government to disclose descriptive information about its SBITAs other than short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other payments not included in the measurement of a subscription liability, principal and interest requirements for the subscription liability, and other e ssential information. Effective Date and Transition The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged. Assets and liabilities resulting from SBITAs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year in which this Statement is implemented. Governments are permitted, but are not required, to include in the measurement of the subscription asset capitalizable outlays associated with the initial implementation stage and the operation and additional implementation stage incurred prior to the implementation of this Statement. How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will improve financial reporting by establishing a definition for SBITAs and providing u niform guidance for accounting and financial reporting for transactions that meet that definition. That definition and u niform guidance will result in greater consistency in practice Establishing the capitalization criteria for implementation costs also will reduce diversity and improve comparability in financial reporting by governments. This Statement also will e nhance the relevance and reliability of a government's financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government's SBITA activities and evaluate a government's obligations and assets resulting from SBITAs. AbdoSolutions.com 10 o Future Accounting Standard Changes (Continued) GASB Statement No. 97 - Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans - an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32 Summary The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. This Statement requires that for purposes of determining whether a primary government is financially accountable for a potential component unit, except for a potential component unit that is a defined contribution pension plan, a defined contribution OPEB plan, or another employee benefit plan (for example, certain Section 457 plans), the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board if the primary government performs the duties that a governing board typically would perform. This Statement also requires that the financial burden criterion in paragraph 7 of Statement No. 84, Fiduciary Activities, be applicable to only defined benefit pension plans and defined benefit OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement No. 67, Financial Reporting for Pension Plans, or paragraph 3 of Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, respectively. This Statement (1) requires that a Section 457 plan be classified as either a pension plan or another employee benefit plan depending on whether the plan meets the definition of a pension plan and (2) clarifies that Statement 84, as amended, should be applied to all arrangements organized under IRC Section 457 to determine whether those arrangements should be reported as fiduciary activities. This Statement supersedes the remaining provisions of Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, as amended, regarding investment valuation requirements for Section 457 plans. As a result, investments of all Section 457 plans should be measured as of the end of the plan's reporting period in all circumstances. Effective Date and Transition The requirements of this Statement that (1) exempt primary governments that perform the duties that a governing board typically performs from treating the absence of a governing board the same as the appointment of a voting majority of a governing board in determining whether they are financially accountable for defined contribution pension plans, defined contribution OPEB plans, or other employee benefit plans and (2) limit the applicability of the financial burden criterion in paragraph 7 of Statement 84 to defined benefit pension plans and defined benefit OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement 67 or paragraph 3 of Statement 74, respectively, are effective immediately. The requirements of this Statement that are related to the accounting and financial reporting for Section 457 plans are effective for fiscal years beginning after June 15, 2021. For purposes of determining whether a primary government is financially accountable for a potential component unit, the requirements of this Statement that provide that for all other arrangements, the absence of a governing board be treated the same as the appointment of a voting majority of a governing board if the primary government performs the duties that a governing board typically would perform, are effective for reporting periods beginning after June 15, 2021 Earlier application of those requirements is encouraged and permitted by requirement as specified within this Statement. AbdoSolutions.com 11 Future Accounting Standard Changes (Continued) The Board considered the effective dates for the requirements of this Statement in light of the COVID-19 pandemic and in concert with Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. How the Changes in This Statement Will Improve Accounting and Financial Reporting The requirements of this Statement will result in more consistent financial reporting of defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans, while mitigating the costs associated with reporting those plans. The requirements also will enhance the relevance, consistency, and comparability of (1) the information related to Section 457 plans that meet the definition of a pension plan and the benefits provided through those plans and (2) investment information for all Section 457 plans. 00) Note From GASB Pronouncements Summaries. Copyright 2021 by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, USA, and is reproduced with permission. Restriction on Use This purpose of this communication is solely for the information and use of the City Council and management of the City and is not intended to be, and should not be used by anyone other than those specified parties. Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this context. If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended to us by your staff. Abdo Minneapolis, Minnesota April 5, 2022 AbdoSolutions.com 12 *%-• Ob. 1/4, 114% 411/4 attikOik- Cfii:yLf"-70 audcrdallc Lauderdale, Minnesota For the year ended December 31, 2021 Lighting (he path./ orwar(l C F 7 f 0 Edina Office Mankato Office 5201 Eden Avenue, Ste 250 Edina, MN 55436 952.835.9090 952.835.3261 100 Warren Street, Ste 600 Mankato, MN 56001 I 507.625.2727 507.388.9139 City of Lauderdale, Minnesota Annual Financial Report Table of Contents For the Year Ended December 31, 2021 Page No. Introductory Section Elected and Appointed Officials 7 Financial Section Independent Auditor's Report Management's Discussion and Analysis 11 15 Basic Financial Statements Government -wide Financial Statements Statement of Net Position 27 Statement of Activities 28 Fund Financial Statements G overnmental Funds Balance Sheet 32 Reconciliation of the Balance Sheet to the Statement of Net Position 35 Statement of Revenues, Expenditures and Changes in Fund Balances 36 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 38 General Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 39 Proprietary Funds Statement of Net Position 40 Statement of Revenues, Expenses and Changes in Net Position 41 Statement of Cash Flows 42 N otes to the Financial Statements 43 Required Supplementary Information Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability - G eneral Employees Retirement Fund 66 Schedule of Employer's Public Employees Retirement Association Contributions - G eneral Employees Retirement Fund 66 N otes to the Required Supplementary Information - General Employee Retirement Fund 67 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 71 N onmajor Special Revenue Funds Combining Balance Sheet 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 73 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Communications Fund 74 Recycling Fund 75 N onmajor Capital Projects Funds Combining Balance Sheet 76 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 77 N eneral Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 79 Summary Financial Report Revenues and Expenditures for General Operations 82 Other Required Report Independent Auditor's Report on Minnesota Legal Compliance 3 85 INTRODUCTORY SECTION CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 5 Name Mary Gaasch Jeff Dains Duane Pulford Roxanne Grove Andi Moffatt Heather Butkowski City of Lauderdale Minnesota Elected and Appointed Officials For the Year Ended December 31, 2021 ELECTED Title Mayor Council Member Council Member Council Member Council Member APPOINTED City Administrator Term Expires 12/31/22 12/31/24 12/31/24 12/31/22 12/31/22 FINANCIAL SECTION CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 9 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Lauderdale, Minnesota Report on the Financial Statements Opinions AbdoSolutions.corn 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 Lauderdale, Minnesota (the City), as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the 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 as of December 31, 2021, and the respective changes in financial position, cash flows, where applicable, 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. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Lauderdale and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Lauderdale's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. • Lighting the path forward 11 The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: ® Exercise professional judgment and maintain professional skepticism throughout the audit. ® Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. ® Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Lauderdale's internal control. Accordingly, no such opinion is expressed. O Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. © Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Lauderdale's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis Page 15 and the Schedule of Employer's Shares of the Net Pension Liability and the Schedule of Employer's Contributions and the related note disclosures starting on page 66 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City's basic financial statements as a whole. The introductory section and combining and individual fund financial statements and schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements. AbdoSolutions.com 12 o The combining and individual 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 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in all material respects, in relation to the financial statements as a whole. The introductory section has 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 it. Abdo Minneapolis, Minnesota April 5, 2022 AbdoSolutions.com 13 Management's Discussion and Analysis As management of the City of Lauderdale, Minnesota (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31 2021 Financial Highlights • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $10,334,272 (net position). Of this amount, $2,970,800 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position decreased by $422,092. The majority of the decrease can be attributed to a decrease both in operating grants and contributions and capital grants and contributions. • As of the close of the current fiscal year, the City s governmental funds reported combined ending fund balances of $3,406,053 a decrease of $195 563 in comparison with the prior year.. Approximately 24.5 percent of this total amount $833,425, is unassigned fund balance. • At the end of the current fiscal year, unassigned fund balance for the General fund was $833,425, or 55.3 percent of 2021 budgeted expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. 15 The following chart shows how the various parts of this annual report are arranged and related to one another: Figure 1 Required Components of the City's Annual Financial Report • • • Managements Discussion and Analysis Government - wide Financial Statements Summary Basic Financial Statements Fund Financial Statements Required Supplementary Information • • • • Notes to the Financial Statements Detail The following chart summarizes the major features of the City's financial statements, including the portion of the City's activities they cover and the types of information they contain. The remainder of this overview section of Management's Discussion and Analysis highlights the structure and contents of each of the statements: Figure 2 Major Features of the Government -wide and Fund Financial Statements Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 17 Fund Financial Statements Government -wide Statements Governmental Funds Proprietary Funds Scope Entire City government (except fiduciary funds) and the City's component units The activities of the City that are not proprietary or fiduciary, such as police, fire and parks Activities the City operates similar to private businesses, such as the water and sewer system Required financial statements e Statement of Net Position • Statement of Activities • Balance Sheet • Statement of Revenues, Expenditures, and Changes in Fund Balances • Statements of Net Position • Statements of Revenues, Expenses and Changes Net Position • Statements of Cash Flows in Fund Accounting basis and measurement focus Accrual economic focus accounting and resources Modified accrual accounting and current financial resources focus Accrual accounting and economic resources focus Type of asset/liability information All assets and liabilities, both financial and capital, and short-term and long-term Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included All assets and liabilities, both financial and capital, and short - term and long-term Type of deferred outflows/inflows of resources information All deferred outflows/inflows resources, regardless when cash paid of of is received or Only resources up resources the capital deferred outflows of expected to be used and deferred inflows of that come due during year or soon thereafter; no assets included All deferred outflows/inflows of resources, regardless of when cash is received or paid Type of inflow/outflow information All revenues and expenses during year, regardless of when cash is received or paid Revenues for which cash is received during or soon after the end of the year expenditures when goods or services have been received and payment is due during the year or soon thereafter All revenues and expenses during the year, regardless of when cash is received or paid Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 17 Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, sanitation and recycling, culture and recreation, miscellaneous and interest on bonds The government -wide financial statements start on page 27 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local government, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary 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 financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact by the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains eleven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the G eneral fund, Street Improvement fund, TIF District No. 1-2 fund, Park Improvement fund, ARPA fund, 2018A / 2021A G.O Tax Increment Revenue Refunding Bond and the 2019A G.O. Improvement Bonds fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single aggregated presentation. The City adopts an annual appropriated budget for its General fund and certain special revenue funds. A budgetary comparison statement has been provided for the General fund and certain special revenue funds to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 32 of this report. Proprietary Funds. The City maintains one type of proprietary fund Enterprise funds are used to report the same functions presented as business -type activities in the government—wide financial statements. The City uses enterprise funds to account for its Sewer and Storm Sewer operations. P roprietary 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 each of the enterprise funds which are considered to be major funds of the City. The basic proprietary fund financial statements start on page 40 of this report. N otes 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 start on page 43 of this report. Other Information. The combining and individual fund financial statements and schedules are presented following the notes to the financial statements and start on page 70 of this report. 18 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, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $10,334,272 at the close of the most recent fiscal year. The largest portion of the City s net position (66.6 percent) reflects its net investment in capital assets (e.g., land, buildings, machinery and equipment); less any related debt used to acquire those assets that is still outstanding The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Lauderdale's Summary of Net Position Governmental Activities Business -type Activities Increase Increase 2021 2020 (Decrease) 2021 2020 (Decrease) Assets Current and other assets $ 3,965,845 $ 4,250,079 $ (284,234) $ 1,399,906 $ 1,593,476 $ (193,570) Capital assets 6,052,998 6,270,334 (217,336) 1,743,745 1,663,811 79,934 Total Assets 10,018,843 10,520,413 (501,570) 3,143,651 3,257,287 (113,636) Deferred Outflows of Resources Deferred pension resources 129,841 26,173 103,668 43,078 8,456 34,622 Liabilities Long-term liabilities outstanding 2,514,294 2,618,914 (104,620) 73,963 99,747 (25,784) Other liabilities 172,822 243,638 (70,816) 12,173 76,856 (64,683) Total Liabilities 2,687,116 2,862,552 (175,436) 86,136 176,603 (90,467) Deferred Inflows of Resources Deferred pension resources 170,884 12,623 158,261 57,005 4,187 52,818 Net Position Net investment in capital assets 5,135,499 5,250,502 (115,003) 1,743,745 1,663,811 79,934 Restricted 484,228 591,970 (107,742) Unrestricted 1,670,957 1,828,939 (157,982) 1,299,843 1,421,142 (121,299) Total Net Position $ 7,290,684 $ 7,671,411 $ (380,727) $ 3,043,588 $ 3,084,953 $ (41,365) The remaining balance of unrestricted net position ($2,970,800) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position both for the City as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. 19 Governmental Activities Governmental activities decreased the City's net position by $380,727 and business -type decreased the City's net position by $41,365. Key elements of the increase are as follows: Revenues Program Revenues Charges for services Operating grants and contributions Capital grants and contributions General Revenues Property taxes Grants and contributions not restricted to specific programs Investment earnings Gain on sale of capital asset Total Revenues Expenses General government Public safety Public works Sanitation and recycling Culture and recreation Miscellaneous Debt service Sewer Storm sewer Total Expenses Change in Net Position Net Position, January 1 Net Position, December 31 City of Lauderdale's Changes in Net Position Governmental Activities Increase 2021 2020 (Decrease) $ 163,690 10,583 15,557 917,667 562,964 (4,758) $ 175,295 192,195 193,601 862,589 556,042 32,284 1,665,703 2,012,006 $ (11,605) (181,612) (178,044) 55,078 6,922 (37,042) Business -type Activities Increase 2021 2020 (Decrease) $ 442,140 (346,303) 151 (2,636) 2,167 441,822 397,586 914,573 448,897 68,109 138,655 9,007 69,603 481,209 879,792 266,394 63,800 126,000 9,267 45,973 (83,623) 34,781 182,503 4,309 12,655 (260) 23,630 2,046,430 1,872,435 173,995 318,690 164,497 483,187 $ 419,691 225 15,303 $ 22,449 435,219 (74) (17,939) 2,167 6,603 313,326 93,857 407,183 IMP 5,364 70,640 76,004 (380,727) 7,671,411 $ 7,290,684 139,571 7,531,840 7,671,411 (520,298) 139,571 (380,727) (41,365) 3,084,953 3,043,588 20 28,036 3,056,917 3,084,953 (69,401) 28,036 $ (41,365) Overall, the financial position of governmental activities remained relatively close to the prior year. $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 6 - Expenses and Program Revenues - Governmental Activities General Government Grants and Contributions Not Restricted to Specific Programs 33.6% i 1 Public Safety Public Works Sanitation and Culture and Miscellaneous Interest on long Recycling Recreation term debt Expense Program Revenue Revenues by Source a Governmental Activities Investme -0.3°x° Gain on Sale of EarningsCapital Asset 0.0°x° Charges for Services 9.8% Operating Grants and Contributions 0.6% Capital Grants and Contributions 0.9% Business -type Activities. Business -type activities decreased the City's net position by $41,365.The decrease can be attributed to an increase in expenses. Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $3,406,053, a decrease of $195,563 in comparison with the prior year. Approximately 24.5 percent of this total amount $833 425 constitutes unassigned fund balance which is available for spending at the City's discretion The remainder of fund is nonspendable $748, restricted $1,415,915 committed $80,343, or assigned $1,075,622. The General fund is the chief operating fund of the City. At the end of the current year, unassigned fund balance of the General fund was $833 425. As a measure of the General fund's liquidity, it may be useful to compare both unrestricted fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 55.3 percent of total General fund expenditures and 55.3 percent of the 2020 budget. The fund balance of the City's General fund increased by $4,581 during the current fiscal year because revenue from property taxes and spending less then budget. The Street Improvement fund has a total fund balance of $414,980, a decrease of $111,406 from the previous year due to capital outlay expenditures in the current year The TIF District No. 1-2 fund has a total fund balance of $1,188,143, a decrease of $1,954 from the previous year due to capital outlay expenditures. The 2018A /2021A G.0 Tax Increment Revenue Refunding Bond fund has a total fund balance of $10,699 an increase of $10,387 from the prior year due to refunding bonds issued The 2019A G.O. Improvement Bonds fund has a total fund balance of $217,073, a decrease of $5,568 from the previous year due to expenditures higher than revenues and transfers in. The Park Improvement fund decreased $441 from the previous year due to various park improvements. The ARPA fund balance is zero as a result of the revenues for the year being deemed as unearned. Proprietary Funds. The City's proprietary fund provides the same type of information found in the government -wide financial statements but in more detail. The Sewer fund unrestricted net position of the Sewer operation amounted to $936,022.The total decrease in net position for the fund was $5,367. The Storm Sewer fund unrestricted net position amounted to $363,821. The total decrease in net position for the fund was $46,732 The factors concerning the finances of these funds have already been addressed in the discussion of the City's business - type activities. 22 General Fund Budgetary Highlights The original budget was not amended during the 2021 fiscal year. Revenues were more than budgetary estimates by $2,944 and expenditures were less than budgetary estimates by $1,637. As a result the City experienced an overall favorable budget variance. Capital Asset and Debt Administration Capital Assets. The City's investment in capital assets for its governmental and business -type activities as of December 31, 2021, amounts to $7,796,743, (net of accumulated depreciation) This investment in capital assets includes land, buildings and system, improvements, machinery and equipment park facilities, roads, highways, and bridges. The total decrease in the City's investment in capital assets for the current fiscal year was 1.7 percent (a 3.5 percent decrease for governmental activities and a 4.8 percent increase for business -type activities). City of Lauderdale's Capital Assets (Net of Depreciation) Governmental Activities Business -type Activities Land $ Construction in Progress Buildings Improvements other than Buildings 88,138 Machinery and Equipment 196,137 Infrastructure 5,412,166 2021 322,040 $ 34,517 Total Increase 2020 (Decrease) 2021 2020 Increase (Decrease) 322,040 $ 35,992 (1,475) 108,183 207,390 5,596,729 (20,045) (11,253) (184,563) 142,600 1,601,145 $ - $ 142,600 3,333 (3,333) 1,660,478 (59,333) $ 6,052,998 $ 6,270,334 $ (217,336) $ 1,743,745 $ 1,663,811 $ 79,934 Additional information on the City's capital assets can be found in Note 3B starting on page 53 of this report. Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $2,265,000. City of Lauderdale's Outstanding Debt Governmental Activities Increase 2021 2020 (Decrease) Business Activities Increase 2021 2020 (Decrease) Bonds Payable $ 2,265,000 $ 1,000,000 $ 1,265,000 $ S - $ Additional information on the City's long-term debt can be found in Note 3D starting on page 55 of this report. Economic Factors and Next Year's Budgets and Rates • The City closed on the purchase of 1795 Eustis Street in May 2018. The City anticipates selling the property for senior affordable housing in January 2022. The sale of the property to the developer is expected mid -2022 with construction starting shortly thereafter. • The City anticipates additional construction of new homes following the trend since 2019. Requests for Information This financial report is designed to provide a general overview of the City s finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City Administrator, Heather Butkowski, City of Lauderdale, 1891 Walnut Street Lauderdale, MN 55113. 23 GOVERNMENT -WIDE FINANCIAL STATEMENTS CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 25 City of Lauderdale, Minnesota Statement of Net Position December 31 2021 Assets Cash and temporary investments Receivables Accounts Delinquent taxes Interest Special assessments Due from other governments Prepaid items Land held for resale Capital assets Land and construction in progress Depreciable buildings, property and equipment, net Total Assets Deferred Outflows of Resources D eferred pension resources Liabilities Accounts payable Salaries payable Accrued interest payable Due to other governments Unearned revenue Current liabilities - due within one year Compensated absences payable Bonds payable N oncurrent liabilities - due in more than one year Compensated absences payable Bonds payable Net pension liability Total Liabilities Deferred Inflows of Resources Deferred pension resources Net Position N et investment in capital assets Restricted for Debt Service Tax increment financing Unrestricted Total Net Position Governmental Business -type Activities Activities $ 2,371,150 29,357 62,860 3,016 392,738 9,843 748 1,096,133 322,040 5,730,958 10,018,843 129,841 11,816 7,527 10,144 5,585 137,750 26,617 100,000 19,411 2,182,499 185,767 2,687,116 170,884 5,135,499 484,228 MIPS Total $ 1,305,119 $ 3,676,269 70,276 12,398 12,113 142,600 1,601,145 3,143,651 43,078 12,153 20 12,044 WPM 61,919 86,136 57,005 1,743,745 aME 1,670,957 1,299,843 $ 7,290,684 $ 3,043,588 The notes to the financial statements are an integral part of this statement. 27 99,633 62,860 3,016 405,136 9,843 12,861 1,096,133 464,640 7,332,103 13,162,494 172,919 23,969 7,527 10,144 5,605 137,750 38,661 100,000 19,411 2,182,499 247,686 2,773,252 227,889 6,879,244 484,228 MEM 2,970,800 $ 10,334,272 Functions/Programs Governmental Activities Current General government Public safety Public works Sanitation and recycling Culture and recreation Economic development Interest on long term debt Total Governmental Activities City of Lauderdale, Minnesota Statement of Activities For the Year Ended December 31, 2021 Business -type Activities Sewer Storm sewer Total Business -type Activities Total Expenses $ 397,586 914,573 448,897 68,109 138,655 9,007 69,603 Program Revenues Charges for Services Operating Grants and Contributions $ 8,891 $ 51,624 48,699 54,314 162 Edda EMI 8,833 1,750 2,046,430 163,690 10,583 318,690 164,497 323,668 118,472 483,187 442,140 IMMO Capital Grants and Contributions 15,557 15,557 $ 2,529,617 $ 605,830 $ 10,583 $ 15,557 General Revenues and Transfers Taxes Property taxes, levied for general purposes Franchise tax Grants and contributions not restricted to specific programs Investment earnings (loss) Gain on sale of capital assets Total General Revenues and Transfers Change in Net Position Net Position, January 1 Net Position, December 31 The notes to the financial statements are an integral part of this statement. 28 Net (Expense) Revenue and Changes in Net Position Governmental Business -type Activities Activities $ (388,695) $ (862,949) (384,641) (4,962) (138,493) (7,257) (69,603) (1,856,600) (1,856,600) Mir MA WM 4,978 (46,025) (41,047) (41,047) Total $ (388,695) (862,949) (384,641) (4,962) (138,493) (7,257) (69,603) (1,856,600) 4,978 (46,025) (41,047) (1,897,647) 899,760 17,907 562,964 (4,758) 1,475,873 $ (380,727) 7,671,411 7,290,684 MA 151 (2,636) 2,167 (318) (41,365) 3,084,953 $ 3,043,588 899,760 17,907 563,115 (7,394) 2,167 1,475,555 (422,092) 10,756,364 $ 10,334,272 The notes to the financial statements are an integral part of this statement. 29 FUND FINANCIAL STATEMENTS CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 31 City of Lauderdale, Minnesota Balance Sheet Governmental Funds December 31, 2021 Assets Cash and temporary investments Receivables Accounts Delinquent taxes Interest Special assessments Due from other governments Prepaid items Land held for resale Total Assets Liabilities Accounts payable Due to other governments S alaries payable Unearned revenue Total Liabilities Deferred Inflows of Resources Unavailable revenue - property taxes U navailable revenue - special assessments Total Deferred Inflows of Resources Fund Balances N onspendable Restricted Committed Assigned U nassigned Total Fund Balances Capital Projects Street General Improvement $ 766,617 $ 414,980 25,165 62,860 3,016 7,966 52,439 1,010 748 Mai $ 867,382 $ 5,171 5,585 7,527 18,283 6,960 7,966 14,926 748 EMI Edda 833,425 834,173 TIF District No. 1-2 Park Improvement 92,010 $ 216,852 ER 1,096,133 MEM MAE $ 467,419 $ 1,188,143 $ 216,852 52,439 52,439 414,980 414,980 $ WPM MEM WPM 1,188,143 1,188,143 Mai OPE Amid 216,852 WPM 216,852 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 867,382 $ 467,419 $ 1,188,143 $ 216,852 The notes to the financial• statements are an integral part of this statement. 32 Debt Service 2019A G O. Improvement Bonds 2018A / 2021A G.0 Tax Increment Revenue Refunding Bond ARPA 215,996 $ 10,699 $ 137,750 AIM 267,677 addi MIN $ 483,673 $ 10,699 $ 137,750 Mir MEM IMIM 266,600 266,600 217,073 217,073 PPP IMME Mad MIE VIM 10,699 Edda 10,699 137,750 137,750 MOM RIM $ 483,673 $ 10,699 $ 137,750 Other Governmental Funds Total Governmental Funds $ 516,246 $ 2,371,150 4,192 MIE 64,656 8,833 29,357 62,860 3,016 392,738 9,843 748 1,096,133 $ 593,927 $ 3,965,845 $ 6,645 $ 11,816 5,585 7,527 $ 137,750 6,645 162,678 63,149 63,149 6,960 390,154 397,114 748 1,415,915 80,343 80,343 443,790 1,075,622 833,425 524,133 3,406,053 593,927 $ 3,965,845 The notes to the financial statements are an integral part of this statement. 33 City of Lauderdale, Minnesota Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31, 2021 Amounts reported for governmental activities in the statement of net position are different because Total Fund Balances - Governmental Funds Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental fund. Cost of capital assets Less: accumulated depreciation Long-term liabilities including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of Compensated absences payable Net pension liability Bonds payable Bond premium D elinquent property taxes receivable are not available soon enough to pay for the current periods expenditures, and therefore are reported as deferred inflow of resources in the funds. Special assessments receivable are not available soon enough to pay for the current periods expenditures, and therefore are reported as deferred inflow of resources in the funds. G overnmental funds do not report long-term amounts related to pensions. Deferred outflows of pension resources Deferred inflows of pension resources G overnmental funds do not report a liability for accrued interest until due and payable. Total Net Position - Governmental Activities The notes to the financial statements are an integral part of this statement. 35 $ 3,406,053 8,772,998 (2,720,000) (46,028) (185,767) (2,265,000) (17,499) 6,960 390,154 129,841 (170,884) (10,144) $ 7,290,684 City of Lauderdale, Minnesota Statement of Revenues Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2021 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Interest on investments Miscellaneous Total Revenues Expenditures Current General government Public safety Public works Sanitation and recycling Culture and recreation Economic development Capital outlay Debt service Principal Interest Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Bonds issued Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 Capital Projects Street General Improvement $ 897,291 $ 29,689 524,591 7,913 22,615 843 (1,785) 30,136 1,511,293 401,487 915,827 97,508 88,559 3,331 WPM 1,506,712 4,581 4,581 829,592 $ 834,173 37,418 RIM 8,245 (842) 7,062 51,883 aMlir 163,289 163,289 (111,406) (111,406) 526,386 414,980 The notes to the financial statements are an integral part of this statement. 36 TIF District No. 1-2 Mad (184) (184) Mir 1,770 1,770 (1,954) (1,954) 1,190,097 $ 1,188,143 Park Improvement Mir (441) (441) Man EMEI MIE Mai (441) AIM (441) 217,293 $ 216,852 Debt Service 2019A 2018A / 2021A G 0. G.0 Tax Increment Improvement Revenue Bonds Refunding Bond 48,699 (437) 48,262 MEM 100,000 21,786 121,786 $ (22) (22) AIM 1,295,000 59,591 1,354,591 (73,524) (1,354,613) 67,956 AIM 1,365,000 67,956 1,365,000 (5,568) 10,387 2018A / 2021 A G.O. Tax Increment Revenue Refunc ARPA Mir Amid AIM MIE 222,641 312 $ 217,073 $ 10,699 $ Other Governmental Funds $ 17,907 8,833 54,314 dmia (1,047) 1,750 81,757 Man 68,109 22,460 14,394 Mir 104,963 (23,206) (67,956) (67,956) (91,162) 615,295 $ 524,133 Total Governmental Funds $ 915,198 29,689 570,842 62,227 22,615 57,787 (4,758) 38,948 1,692,548 401,487 915,827 97,508 68,109 111,019 3,331 179,453 1,395,000 81,377 3,253,111 (1,560,563) 67,956 (67,956) 1,365,000 1,365,000 (195,563) 3,601,616 3,406,053 The notes to the financial statements are an integral part of this statement. 37 City of Lauderdale, Minnesota Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Governmental Funds For the Year Ended December 31, 2021 Amounts reported for governmental activities in the statement of activities are different because Total Net Change in Fund Balances - Governmental Funds $ (195,563) Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays Depreciation expense The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources if governmental funds Neither transaction, however, has any effect on net position Also, governmental funds report the effect of premiums discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Bonds issued Bond principal paid Amortization of bond premium Interest on long-term debt in the statement of activities differs from the amount reported in the governmental fund because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however interest expense is recognized as the interest accrues, regardless of when it is due. Long-term pension activity is not reported in governmental funds. Pension expense Pension revenue from state contributions Delinquent taxes and special assessment receivables are not available soon enough to pay for the current period's expenditures, and therefore are reported as deferred inflow of resources in the funds. Special assessments Property taxes 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 9,563 (226,899) (1,365,000) 1,395,000 2,333 9,441 11,225 452 (29,766) 2,469 6,018 Change in Net Position - Governmental Activities $ (380,727) The notes to the financial statements are an integral part of this statement. 38 City of Lauderdale, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended December 31, 2021 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Interest on investments Miscellaneous Total Revenues Expenditures Current General government Public safety Public works Culture and recreation Economic development Total Expenditures Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 Budgeted Amounts Original Final $ 899,710 37,750 525,789 10,600 27,000 6,000 1,500 1,508,349 384,304 912,439 107,487 92,119 12,000 1,508,349 Mir 829,592 $ 829,592 $ 899,710 37,750 525,789 10,600 27,000 6,000 1,500 1,508,349 384,304 912,439 107,487 92,119 12,000 1,508,349 829,592 $ 829,592 The notes to the financial statements are an integral part of this statement. 39 Actual Amounts Variance with Final Budget $ 897,291 $ 29,689 524,591 7,913 22,615 843 (1,785) 30,136 1,511,293 401,487 915,827 97,508 88,559 3,331 1,506,712 4,581 829,592 (2,419) (8,061) (1,198) (2,687) (4,385) 843 (7,785) 28,636 2,944 (17,183) (3,388) 9,979 3,560 8,669 1,637 4,581 $ 834,173 $ 4,581 Assets Current Assets Cash and temporary investments Receivables Accounts receivable Special assessments Prepaid items Total Current Assets Noncurrent Assets Capital assets Construction in progress Infrastructure Less accumulated depreciation Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred pensions resources Liabilities Current Liabilities Accounts payable Due to other governments Compensated absences payable Total Current Liabilities N oncurrent Liabilities Net pension liability Total Liabilities D eferred Inflows of Resources Deferred pension resources N et Position Investment in capital assets Unrestricted Total Net Position City of Lauderdale, Minnesota Statement of Net Position Proprietary Funds December 31, 2021 Sewer Business -type Activities Storm Sewer $ 922,034 48,956 12,398 11,864 995,252 142,600 2,265,656 (664,511) 1,743,745 2,738,997 23,272 11,958 20 6,275 18,253 33,453 51,706 30,796 1,743,745 936,022 $ 2,679,767 The notes to the financial statements are an integral part of this statement. 40 Total $ 383,085 $ 1,305,119 21,320 249 404,654 EMI 404,654 19,806 195 5,769 5,964 28,466 34,430 26,209 VIM 363,821 $ 363,821 70,276 12,398 12,113 1,399,906 142,600 2,265,656 (664,511) 1,743,745 3,143,651 43,078 12,153 20 12,044 24,217 61,919 86,136 57,005 1,743,745 1,299,843 $ 3,043,588 City of Lauderdale, Minnesota Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2021 O perating Revenues Charges for services O perating Expenses Personal services Supplies Other services and charges Repair and maintenance Depreciation Total Operating Expenses O perating Income (Loss) N onoperating Revenues Gain on sale of capital asset Other revenue Interest income Total Nonoperating Revenues Change in Net Position N et Position, January 1 N et Position, December 31 Business -type Activities Sewer Storm Sewer $ 323,668 $ 118,472 77,293 600 180,964 59,833 318,690 4,978 2,167 81 (1,859) 389 5,367 2,674,400 $ 2,679,767 The notes to the financial statements are an integral part of this statement. 41 65,710 570 44,651 53,566 164,497 (46,025) Man 70 (777) (707) (46,732) 410,553 $ 363,821 Total $ 442,140 143,003 1,170 225,615 53,566 59,833 483,187 (41,047) 2,167 151 (2,636) (318) (41,365) 3,084,953 $ 3,043,588 City of Lauderdale, Minnesota Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2021 Cash Flows from Operating Activities Receipts from tenants and users Payments to suppliers Payments to employees Net Cash Provided by Operating Activities Cash Flows from Capital and Related Financing Activities Acquisition of capital assets Proceeds from sale of capital assets Net Cash Provided By Capital and Related Financing Activities Cash Flows from Investing Activities Interest on investments Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents, January 1 Cash and Cash Equivalents, December 31 Reconciliation of Operating Income (loss) to Net Cash Provided by Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation Other income Increase (decrease) in assets/deferred outflows Accounts receivable Prepaid items Special Assessments Deferred pension resources Increase (decrease) in liabilities/deferred inflows Accounts payable Due to other governments payable Compensated absences payable Net pension liability Deferred pension resources Net Cash Provided by Operating Activities Noncash Capital and Related Financing Activities Book value of assets sold Capital assets purchased on account Business -type Activities Sewer Storm Sewer $ 304,972 $ (193,983) (81,412) 29,577 (206,088) 5,000 (201,088) (1,859) (173,370) 1,095,404 $ 922,034 $ 126,419 (99,676) (69,028) (42,285) MA aME $ (777) (43,062) 426,147 383,085 Total $ 431,391 (293,659) (150,440) (12,708) (206,088) 5,000 (201,088) (2,636) (216,432) 1,521,551 $ 1,305,119 4,978 $ (46,025) $ (41,047) 59,833 81 (6,298) (11,864) (12,398) (18,703) (575) 20 (2,253) (11,778) 28,534 $ 29,577 2,833 11,698 The notes to the financial statements are an integral part of this statement. 42 70 7,947 (249) WIN (15,919) (640) (1,745) (10,008) 24,284 59,833 151 1,649 (12,113) (12,398) (34,622) (1,215) 20 (3,998) (21,786) 52,818 $ (42,285) $ (12,708) $ $ OWN City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies A. Reporting Entity The City of Lauderdale, Minnesota (the City), operates under the "Optional Plan A" form of government as defined in the State of Minnesota statutes Under this plan, the government of the City is directed by a City Council composed of an elected Mayor and four elected City Council members. The City Council exercises legislative authority and determines all matters of policy. The City Council appoints personnel responsible for the proper administration of all affairs relating to the City. The City has considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. The City has no component units that meet the GASB criteria. 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. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities which rely to a significant extent on 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. Amounts reported as 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 and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, 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. 43 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) 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 measurable and become available. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements which specify the year when 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 specified 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 can be recognized. Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The City reports the following major governmental funds: The General fund is the City's primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund The Street Improvement fund accounts for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds The Park Improvement Projects fund accounts for the costs associated with the park projects completed within the City. The TIF District No. 1-2 fund accounts for activity related to the tax increment financing district 1-2. The 2018A / 2021A G.O. Tax Increment Revenue Refunding Bonds fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of the fund. The 2019A G.O. Improvement Bonds fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of the fund. The ARPA fund accounts for the activity related to how the ARPA funds are collected and spent. The City reports the following major proprietary funds: The Sewer fund accounts for the costs associated with the City's sanitary sewer system and to ensure that user charges are sufficient to pay for those costs. The Storm Sewer fund accounts for the costs of the City's storm sewer system, which are financed by the storm sewer surcharge, and to ensure that the user charges are sufficient to pay of those costs. As a general rule, the effect of interfund activity has been eliminated from government -wide financial statements. Exceptions to this general rule are charges between the City's sewer function 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. 44 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) 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 fund are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance Deposits and Investments The City s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition The proprietary funds' portion in the government - wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of the statement of cash flows. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments Earnings from such investments are allocated on the basis of applicable participation by each of the funds. The City may invest idle funds as authorized by Minnesota statutes, as follows: 1. Direct obligations or obligations guaranteed by the United States or its agencies. 2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less. 3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations rated "AA' or better. 4. General obligations of the Minnesota Housing Finance Agency rated "A" or better Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55 6. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. 7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less. 8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions qualified as a "depository' by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10 000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker dealers. 9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency. 45 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City's recurring fair value measurements are listed in detail on page 52 and are valued using a matrix pricing model (Level 2 inputs). The City has the following recurring fair value measurements as of December 31, 2021: • Negotiable certificates of deposit of $2,692,862 are valued using a matrix pricing model (Level 2 inputs) The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the regulatory rules of the SEC. In accordance with GASB Statement No. 79, the City's investment in this pool is valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14 -day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402-1240. Property Taxes The City Council annually adopts a tax levy in December and certifies it to the County for collection the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County Treasurer and tax settlements are made to the City during January, July and December each year. In the fund financial statements, taxes that remain unpaid at December 31 are classified as delinquent taxes receivable and are fully offset by deferred inflow of resources, because they are not known to be available to finance current expenditures. Delinquent taxes receivable include the past six years' uncollected taxes. The billings are considered past due 60 days after the respective tax billing date, at which time the applicable property is subject to lien, and penalties and interest are assessed.. Accounts Receivable Accounts receivable include amounts billed for services provided before year end Unbilled utility enterprise fund receivables are also included for services provided in 2021. The City annually certifies delinquent sewer accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts established. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivables upon certification to the County. In the fund financial statements special assessments that remain unpaid at December 31 are classified as delinquent special assessments receivable All governmental special assessments receivable are offset by a deferred inflow of resources in the fund financial statements 46 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) Interfund 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 "internal balances.' Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Assets Held for Resale Assets held for resale represent property purchased by the City with the intent to sell in order to increase tax base or to attract new businesses. These assets are stated at the lower of costs or net realizable value. During the year ended December 31, 2021, management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial reporting purposes. 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 $5 000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant and equipment of the City are depreciated using the straight line method over the following estimated useful lives: Assets Useful Lives in Years Buildings and Improvements 7 - 40 Improvements other than Buildings 15 - 40 Machinery and Equipment 3 - 20 Infrastructure 25 - 50 47 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) Deferred Outflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) u ntil then The City has two items which qualify for reporting in this category. Accordingly, the items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year pension contributions made subsequent to the measurement dates. 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. The General fund is typically used to liquidate the governmental net pension liability. The total pension expense for the for the year ended December 31, 2021 was $17,322 The components of pension e xpense are noted in the plan summaries in Note 4. Compensated Absences The City's policy allows for the carryover of unused vacation and sick leave to the next calendar year. Unused vacation and sick leave is accrued to the fund from which it is expected to be liquidated Half of unused sick leave earned is payable upon separation from the City if the employee has been employed by the City for ten or more years. Three e mployees met the ten-year requirement at year end. The General fund is typically used to liquidate governmental compensated absences payable. Long-term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. The recognition of bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as an expense in the period incurred. In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 48 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) Deferred Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies as needing to be reported in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City has an additional item which qualifies for reporting in this category The item, deferred pension resources, is reported only in the statements of net position and results from actuarial calculations. Fund Balance In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These classifications are defined as follows: Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items. Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council, which is the City's highest level of decision-making authority. Committed amounts cannot be used for any other purpose unless the City Council modifies or rescinds the commitment by resolution. Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established by the City Council itself or by an official to which the governing body delegates the authority. The City Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City Administrator. Unassigned - The residual classification for the General fund and also negative residual amounts in other funds. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has formally adopted a fund balance policy for the General fund. The City's policy is to maintain a minimum unassigned fund balance of an amount not less than 45 percent of budgeted expenditures of the General fund for cash- flow timing needs. 49 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 1: Summary of Significant Accounting Policies (Continued) Net Position In the government -wide financial statements, net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources Net position is displayed in three components: a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b. Restricted net position - Consists of net position balances restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. Unrestricted net position - All other net position balances that do not meet the definition of "restricted" or "net investment in capital assets'. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Note 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 for the General fund and special revenue funds. All annual appropriations lapse at fiscal year-end. The City does not use encumbrance accounting. In early summer of each year, the City Administrator works with staff to prepare a draft budget that identifies spending priorities. The City Administrator presents to the Council in August for review and discussion The preliminary levy is established by the Council in September. The City Council holds a public hearing and the final budget and levy is adopted in early December. The appropriated budget is prepared by fund, function, and department. The City's department heads may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the City Administrator. The legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is the department level Budgeted amounts are as originally adopted, or as amended by the City Council. There were no budget amendments in 2021. B. Excess of Expenditures Over Appropriations For the year ended December 31, 2021 expenditures exceeded appropriations in the following funds. Excess of Expenditures Over Fund Budget Actual Appropriations Communications $ 18,212 $ 22,460 $ 4,248 Recycling 64,813 68,109 3,296 The excess expenditures were funded by revenues in excess of expectations or available fund balance. 50 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds A. Deposits and Investments Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure the City's deposits and investments may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds with the exception of irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral pledged equal to 100 percent of the deposits not covered by insurance or bonds. Authorized collateral in lieu of a corporate surety bond includes: • United States government Treasury bills, Treasury notes, Treasury bonds; • Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; • General obligation securities of any state or local government with taxing powers which is rated 'A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; • General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; • Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's Corporation; and • Time deposits that are fully insured by any federal agency. Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection should be approved by the City. At year end, the City's carrying amount of deposits was $243,872 and the bank balance was $251,398. The bank balance was covered by federal depository insurance and collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. 51 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) Investments At year end, the City's investment balances were as follows: Credit Segmented Quality/ Time Fair Value Measurement Using Type of Investment Ratings (1) Distribution (2) Amount Level 1 Level 2 Level 3 Pooled Investments at Amortized Costs Broker Money Market N/A less than 6 months $ 1,221 $ $ $ 4M Fund P1 less than 6 months 738,314 Non -pooled Investments at Fair Value Negotiable Certificates of Deposit N/A less than 1 year 2,692,862 2,692,862 Total Investments $ 3,432,397 $ - $ 2,692,862 $ - (1) Ratings provided by Moody's credit rating agency. (2) Interest rate risk is disclosed using the segmented time distribution method. N/A Indicates not applicable or available Investment Policy It is the policy of the City to invest public funds in a manner, which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the City in accordance with all Minnesota and local statutes governing the investment of public funds. The investments of the City are subject to the following risks: • Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota statutes and the City's investment policy limit the City's investments. • Custodial Credit Risk. The custodial credit risk for investments is the risk that in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City's investment policy specifically addresses custodial credit risk by limiting the amount that the City may invest in any one financial institution. • Concentration of Credit Risk. The concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The City's investment policy limits investments in any one investment company to a maximum of 60 percent of the investment portfolio or $2,000 000 (whichever) is less. • Interest Rate Risk. The interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maturity of its investment portfolio to less than ten years. 52 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) Cash and Investments Summary A reconciliation of cash and temporary investments as shown on the statement of net position for the City follows: Carrying Amount of Deposits Investments Total Cash and Temporary Investments B. Capital Assets Capital asset activity for the year ended December 31, 2021 was as follows: Governmental Activities Capital Assets not being Depreciated Land Total Reporting Entity $ 243,872 3,432,397 $ 3,676,269 Beginning Ending Balance Increases Decreases Balance $ 322,040 $ $ $ 322,040 Capital Assets, being Depreciated Buildings 241,031 - 241,031 Improvements other than buildings 340,801 - - 340,801 Machinery and equipment 390,215 9,563 399,778 Infrastructure 7,469,348 - 7,469,348 Total Capital Assets being Depreciated 8,441,395 9,563 - 8,450,958 Less Accumulated Depreciation for Buildings (205,039) (1,475) - (206,514) Improvements other than buildings (232,618) (20,045) - (252,663) Machinery and equipment (182,825) (20,816) - (203,641) Infrastructure (1,872,619) (184,563) - (2,057,182) Total Accumulated Depreciation (2,493,101) (226,899) - (2,720,000) Total Capital Assets being Depreciated, Net 5,948,294 (217,336) - 5,730,958 Governmental Activities Capital Assets, Net $ 6,270,334 53 (217,336) $ - $ 6,052,998 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) Business -type Activities Capital Assets not being Depreciated Construction in progress Beginning Ending Balance Increases Decreases Balance $ $ 142,600 $ $ 142,600 Capital Assets being Depreciated Infrastructure 2,265,656 - 2,265,656 Machinery and equipment 15,000 - (15,000) Total Capital Assets being Depreciated 2,280,656 (15,000) 2,265,656 Less Accumulated Depreciation for Infrastructure (605,178) (59,333) (664,511) Machinery and equipment (11,667) (500) 12,167 - Total Accumulated Depreciation (616,845) (59,833) 12,167 (664,511) Total Capital Assets Being Depreciated, Net Business -type Activities Capital Assets, Net 1,663,811 (59,833) (2,833) 1,601,145 $ 1,663,811 $ 82,767 $ (2,833) $ 1,743,745 Depreciation expense was charged to functions/programs of the City as follows: Governmental Activities General government $ 3,615 Public works 193,557 Culture and recreation 29,727 Total Depreciation Expense - Governmental Activities $ 226,899 Business -type Activities Sewer $ 59,833 54 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) C. Interfund Receivables, Payables and Transfers The City made transfer during the fiscal year 2021 as shown and described below: Fund Transfer Out Other governmental funds Transfer In 2019A G.O. Improvement Bonds $ 67,956 Transfers were made for the following purposes: • $67,769 was transferred from the other governmental funds to the other 2019A GO Improvement Bonds fund to fund debt service requirements D. Long-term Debt General Obligation Special Assessment Bonds The following bonds were issued to finance various capital improvements and will be repaid from special assessments levied on the properties benefiting from the improvements and from ad valorem tax levies. All special assessment debt is backed by the full faith and credit of the City. Each year the combined assessment and tax levy equals 105 percent of the amount required for debt service. The excess of 5 percent is to cover any delinquencies in tax or assessment payments. Description G.O. Improvement Bonds, Series 2019A Authorized and Issued Interest Rate Issue Date Maturity Date Balance at Year End $ 1,000,000 1.50 - 3.00 % 06/26/19 02/01/30 $ 900,000 The annual service requirements to maturity for the general obligation special assessment bonds are as follows: Year Ending December 31, 2022 2023 2024 2025 2026 2027 - 2030 Total 55 Governmental Activities Principal Interest $ 100,000 $ 100,000 100,000 100,000 100,000 400,000 19,500 17,938 16,313 14,625 12,875 23,999 $ 900,000 $ Total $ 119,500 117,938 116,313 114,625 112,875 423,999 105,250 $ 1,005,250 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) General Obligation Tax Increment Bonds The following bonds were issued for redevelopment projects. The bonds will be repaid from future net revenues pledged from the additional tax increments resulting from increased tax capacity of the redevelopment properties in the Tax Increment District No. 1-2 or land sale proceeds. Description G.O. Tax Increment Revenue Bonds, Series 2021A Authorized Interest Issue Maturity Balance at and Issued Rate Date Date Year End $ 1,365,000 0.03 % 01/27/21 02/01/24 $ 1,365,000 Annual debt service requirements to maturity for general obligation tax increment bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest 2022 2023 2024 Total - $ 4,096 $ 4,096 4,095 4,095 2,047 1,367,047 1,365,000 Total $ 1,365,000 $ 10,238 $ 1,375,238 Changes in Long-term Liabilities Long-term liability activity for the year ended December 31, 2021, was as follows: Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental Activities Bonds Payable G.O. improvement bonds $ 1,000,000 $ $ (100,000) G.O. tax increment bonds 1,295,000 1,365,000 (1,295,000) Total Bonds Payable 2,295,000 1,365,000 (1,395,000) 900,000 $ 100,000 1,365,000 2,265,000 100,000 Unamortized Premium on Bonds 19,832 (2,333) 17,499 Compensated Absences Payable 52,045 (26,617) 46,028 26,617 Governmental Activity Long-term Liabilities $ 2,366,877 $ 1,365,000 $ (2,818,950) $ 2,328,527 $ 126,617 Business -type Activities Compensated Absences Payable $ 16,042 $ $ (12,044) $ 12,044 $ 12,044 On January 27, 2021, the City issued $1,365,000 of General Obligation Tax Increment Refunding Bonds, Series 2021 A. The bonds bear an average coupon rate of 3 percent and will refund the outstanding principal of the General Obligation Tax Increment Revenue Bonds, Series 2018A. As a result of the refunding issue, the City will save $59 421 in debt service payments and achieve an economic gain (the present value of the difference between the old and the new debt service) of $14,177 56 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 3: Detailed Notes on All Funds (Continued) E. Components of Fund Balance At December 31 2021, portions of the City's fund balance are not available for appropriation due to not being in spendable form (Nonspendable) legal restrictions (Restricted), City Council action (Committed), policy and/or intent (Assigned). The following is a summary of the components of fund balance: Fund Purpose Fund Balance - Nonspendable General Prepaid items Fund Balance - Restricted TIF District No 1-2 2018A / 2021A G.O. TIF Revenue Bonds 2019A G.O. Improvement Bonds Total fund balance - Restricted Fund Balance - Committed Communications Recycling Total Fund Balance - Committed Fund Balance - Assigned Capital improvement - streets General capital improvement Development Park improvement Total Fund Balance - Assigned Fund Balance - Unassigned General Total Fund Balance 57 Tax increments Debt service Debt service Cable access Recycling Street capital Capital purchases Development Park capital Amount 748 1,188,143 10,699 217,073 1,415,915 9,954 70,389 80,343 414,980 148,700 295,090 216,852 1,075,622 833,425 $ 3,406,053 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 4: Defined Benefit Pension Plan - Statewide 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 plans under Section 401(a) of the Internal Revenue Code. G eneral Employees Retirement Plan All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan Coordinated Plan members are covered by Social Security. B . Benefits Provided P ERA provides retirement, disability and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Vested terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. G eneral Employee Plan Benefits G eneral 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 P ERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent of average salary for e ach additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent for average salary for all years of service. For members hired prior to July 1, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65 For members hired on or after July 1, 1989 normal retirement age is the age for u nreduced Social Security benefits capped at 66 Benefit increases are provided to benefit recipients each January. Beginning in 2020, the postretirement increase is equal to 50 percent of the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until n ormal retirement age (age 65 if hired prior to July 1 1989 or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. C. Contributions Minnesota statutes chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6 50 percent of their annual covered salary in fiscal year 2021 and the City was required to contribute 7.50 percent for Coordinated Plan members. The City's contributions to the General Employees Fund for the year ending December 31 2021, 2020 and 2019 were $31,987, $30,623 and $29,770 respectively. The City's contributions were equal to the required contributions for each year as set by state statute. 58 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 4: Defined Benefit Pension Plan - Statewide (Continued) D . Pension Costs G eneral Employees Fund Pension Costs At December 31, 2021, the City reported a liability of $247,686 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million to the fund in 2021. 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 $7,466. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City s 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, 2020 through June 30, 2021 relative to the total employer contributions received from all of PERA's participating employers. At June 30 2021, the City's proportionate share was 0.0058 percent which was the same as its proportion measured as of June 30,2020. City's Proportionate Share of the Net Pension Liability $ 247,686 State of Minnesota's Proportionate Share of the Net Pension Liability Associated with the City 7,466 Total $ 255,152 For the year ended December 31, 2021, the City recognized pension expense of $16 720 for its proportionate share of the General Employees Plan's pension expense. In addition, the City recognized an additional $602 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2021, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources: Differences between Expected and Actual Economic Experience Changes in Actuarial Assumptions Net Difference between Projected and Actual Earnings on Plan Investments Changes in Proportion Contributions Paid to PERA Subsequent to the Measurement Date Total 59 D eferred O utflows of Resources Deferred Inflows of Resources $ 1,445 $ 7,547 151,232 5,260 AIM 4,115 16,127 $ 172,919 215,082 227,889 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 4: Defined Benefit Pension Plan - Statewide (Continued) The $16,127 reported as deferred outflows of resources related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2022. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2021 $ (8,645) 2022 (2,068) 2023 (1,881) 2024 (58,503) E. Actuarial Assumptions The total pension liability in the June 30, 2021 actuarial valuation was determined using an individual entry -age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.5 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.5 percent was deemed to be within that range of reasonableness for financial reporting purposes. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.0 percent after 29 years of service and 6.0 percent per year thereafter Mortality rates for the General Employees Plan are based on the Pub -2010 General Employee Mortality Table. The tables are adjusted slightly to fit PERA's experience. Actuarial assumptions used in the June 30 2021 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the General Employees plan was completed in 2019. The following changes in actuarial assumptions and plan provisions occurred in 2021: General Employees Fund Changes in Actuarial Assumptions • The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. • The mortality improvement scale was changed from Scale MP -2019 to Scale MP -2020. Changes in Plan Provisions • There were no changes in plan provisions since the previous valuation. 60 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 4: Defined Benefit Pension Plan - Statewide (Continued) The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity Alternative Assets (Private Markets) Bonds (Fixed Income) International Equity Total F. Discount Rate Target Allocation 33.5 % 25.0 25.0 16.5 100.00 % Long-term Expected Real Rate of Return 5.10 % 5.90 0.75 5.30 The discount rate used to measure the total pension liability in 2021 was 6.50 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund was projected to be available to make all projected future benefit payments of current plan members. Therefore the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: General Employees Fund H. Pension Plan Fiduciary Net Position City Proportionate Share of NPL 1 Percent 1 Percent Decrease (5.50%) Current (6.50%) Increase (7.50%) $ 505,153 $ 247,686 $ 36,419 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 61 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 5: Other Information A. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and o missions; injuries to employees; and natural disasters for which the City carries commercial insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably e stimated. An excess coverage insurance policy covers individual claims in excess of $1,000,000. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City s management is not aware of any incurred but not reported claims. B . Legal Debt Margin The City's statutory debt limit is computed as 3.0 percent of the taxable market value of property within the City. Long- term debt issued and financed partially or entirely by special assessments, tax increments or the net revenues of e nterprise fund operations is excluded from the debt limit computation. The City has no debt which is applied against the statutory debt limit. C. Concentrations The City receives a significant amount of its annual General fund revenue from the State of Minnesota from the Local G overnment Aid (LGA) program. The amount received in 2021 was $524,591 for LGA. This accounted for 35 percent of General fund revenue. D . Tax Increment Financing Districts The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance, which would have a material effect on the financial statements. 62 City of Lauderdale, Minnesota Notes to the Financial Statements December 31, 2021 Note 6: Conduit Debt Obligations Conduit debt obligations are certain limited -obligation revenue bonds or similar instruments issued for express purpose of providing capital financing for a specific third party. The City has issued revenue bonds to provide funding to private - sector entities for projects deemed to be in public interest. Although these bonds bear the name of the City, the City has no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2021 the following issues were outstanding: Name Catholic Eldercare Benedictine Health System Catholic Eldercare Note 7: COVID-19 Date of Issue 12/1/2014 7/14/2016 11/7/2017 Original Amount of Issue $ 9,300,000 10,000,000 9,000,000 Balance Outstanding $ 6,882,318 8,141,415 8,628,721 On January 30, 2020, the World Health Organization ("WHO") announced a global health emergency because of a new strain of coronavirus (` COVID-19') and the risks to the international community as virus spreads globally. On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. In response to the pandemic, the State of Minnesota has issued stay-at-home orders and other measures aimed at slowing the spread of the coronavirus. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Due to the rapid development and fluidity of this situation the City cannot determine the ultimate impact that the COVID-19 pandemic will have on its financial condition, liquidity and future revenue collection, and therefore any prediction as to the ultimate impact on the City's financial condition liquidity, and future results of its revenue collections is uncertain. 63 REQUIRED SUPPLEMENTARY INFORMATION CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 65 City of Lauderdale, Minnesota Required Supplementary Information December 31, 2021 Schedule of Employer's Share of PERA Net Pension Liability - General Employees Fund Fiscal Year Ending City's Proportionate City's Share of Proportion of the Net Pension the Net Pension Liability Liability (a) State's Proportionate Share of the Net Pension Liability Associated with the City (b) Total (a+b) City's Covered Payroll (c) City's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll ((a+b)/c) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 06/30/21 06/30/20 06/30/19 06/30/18 06/30/17 06/30/16 06/30/15 0.0058 0.0056 0.0055 0.0055 0.0057 0.0054 0.0054 $ 247,686 $ 335,746 304,083 305,117 363,884 438,453 279,856 7,466 10,402 9,500 9,738 nap $ 255,152 346,148 313,583 314,855 363,884 438,453 279,856 $ 415,003 403,062 389,732 371,496 365,590 348,652 312,684 59.7 83.3 78.0 82.1 99.5 125.8 89.5 °/Q Note: Schedule is intended to show 10 -year trend. Additional years will be reported as they become available. Schedule of Employer's PERA Contributions - General Employees Fund Year Ending 12/31/21 12/31/20 12/31/19 12/31/18 12/31/17 12/31/16 12/31/15 Statutorily Required Contribution (a) Contributions in Relation to the Statutorily Required Contribution (b) $ 31,987 $ 30,623 29,770 28,591 27,025 26,561 23,836 Contribution Deficiency (Excess) (a -b) 31,987 $ 30,623 29,770 28,591 27,025 26,561 23,836 City's Covered Payroll (c) $ 426,493 408,307 396,933 381,213 360,333 354,147 317,813 87.0 79.0 80.2 79.5 75.9 68.9 78.2 Contributions as a Percentage of Covered Payroll (b/c) Note: Schedule is intended to show 10 -year trend. Additional years will be reported as they become available. 66 7.5 7.5 7.5 7.5 7.5 7.5 7.5 City of Lauderdale, Minnesota Required Supplementary Information (Continued) December 31, 2021 Notes to the Required Supplementary Information - General Employees Fund Changes in Actuarial Assumptions 2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The mortality improvement scale was changed from Scale MP -2019 to Scale MP -2020. 2020 - The price inflation assumption was decreased from 2 50% to 2.25%. The payroll growth assumption was decreased from 3.25% to 3.00%. Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25% less than previous rates. Assumed rates of retirement were changed as recommended in the June 30 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination were changed as recommended in the June 30 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter. Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. The base mortality table for healthy annuitants and employees was changed from the RP -2014 table to the Pub -2010 General Mortality table, with adjustments The base mortality table for disabled annuitants was changed from the RP - 2014 disabled annuitant mortality table to the PUB -2010 General/Teacher disabled annuitant mortality table, with adjustments. The mortality improvement scale was changed from Scale MP -2018 to Scale MP -2019. The assumed spouse age difference was changed from two years older for females to one year older. The assumed number of married male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. 2019 - The mortality projection scale was changed from MP -2017 to MP -2018. 2018 - The morality projection scale was changed from MP -2015 to MP -2017 The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non -vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for non -vested deferred member liability. The assumed post- retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter. 2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year thereafter to 1.0 percent per year for all future years The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions were changed pursuant to the experience study dated June 30 2015. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2 50 percent for inflation. 2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2 5 percent per year thereafter to 1.0 percent per year through 2035 and 2 5 percent per year thereafter. 67 City of Lauderdale, Minnesota Required Supplementary Information (Continued) December 31, 2021 Notes to the Required Supplementary Information General Employees Fund (Continued) Changes in Plan Provisions 2021 - There were no changes in plan provisions since the previous valuation. 2020 - Augmentation for current privatized members was reduced to 2.0°%o for the period July 1, 2020 through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 - The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00 percent to 3 00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply Contribution stabilizer provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1 50 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age, does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 - The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21 000 000 to $31,000,000 in calendar years 2019 to 2031. The state's contribution changed from $16,000 000 to $6,000 000 in calendar years 2019 to 2031. 2016 - There were no changes in plan provisions since the previous valuation. 2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised. 68 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 69 Assets Cash and temporary investments Receivables Accounts Special assessments Due from other goverments Total Assets City of Lauderdale, Minnesota Nonmajor Governmental Funds Combining Balance Sheet December 31, 2021 Special Revenue $ 72,456 4,192 64,656 8,833 $ 150,137 Capital Projects Total $ 443,790 $ 516,246 ME 4,192 64,656 8,833 $ 443,790 $ 593,927 Liabilities Accounts payable $ 6,645 $ Deferred Inflows of Resources Unavailable revenue - special assessments 63,149 Fund Balances Committed Assigned Total Fund Balances 80,343 80,343 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 150,137 70 - $ 6,645 MA 443,790 443,790 63,149 80,343 443,790 524,133 $ 443,790 $ 593,927 City of Lauderdale, Minnesota Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2021 Revenues Taxes Franchise fees Intergovernmental Charges for services Interest on investments Miscellaneous Total Revenues Expenditures Current Sanitation and recycling Culture and recreation Capital outlay General government Economic development Total Expenditures Excess (Deficiency) of Revenues Under (Over) Expenditures Other Financing Sources (Uses) Transfers out Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 71 Special Revenue Capital Projects $ 17,907 $ 8,833 54,314 (147) 80,907 68,109 22,460 90,569 (9,662) AIM (9,662) 90,005 80,343 MN (900) 1,750 850 10,488 3,906 14,394 (13,544) (67,956) (81,500) 525,290 $ 443,790 Total Nonmajor Governmental Funds $ 17,907 8,833 54,314 (1,047) 1,750 81,757 68,109 22,460 10,488 3,906 104,963 (23,206) (67,956) (91,162) 615,295 $ 524,133 Assets Cash and temporary investments Receivables Accounts Special assessments Due from other governments City of Lauderdale, Minnesota Nonmajor Special Revenue Funds Combining Balance Sheet December 31, 2021 226 Communications $ 227 Recycling Total 5,762 $ 66,694 $ 72,456 4,192 ME Total Assets $ Liabilities Accounts payable $ Deferred Inflows of Resources Unavailable revenue - special assessments Fund Balances Committed 64,656 8,833 4,192 64,656 8,833 9,954 $ 140,183 $ 150,137 9,954 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 72 $ 6,645 $ 6,645 63,149 70,389 63,149 80,343 9,954 $ 140,183 $ 150,137 City of Lauderdale, Minnesota Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2021 Revenues Taxes Franchise fees Intergovernmental Charges for services Interest on investments Total Revenues Expenditures Current Sanitation and recycling Personal services Other services and charges Culture and recreation Personal services Other services and charges Total Expenditures Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 73 226 Communications $ 227 Recycling 17,907 $ WE IMIIIM (12) 17,895 RIM 9,546 12,914 22,460 8,833 54,314 (135) 63,012 27,907 40,202 WEI 68,109 (4,565) 14,519 $ 9,954 $ (5,097) 75,486 70,389 Total $ 17,907 8,833 54,314 (147) 80,907 27,907 40,202 9,546 12,914 90,569 (9,662) 90,005 $ 80,343 City of Lauderdale, Minnesota Communications Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) 2021 2020 Final Actual Variance with Actual Budget Amounts Final Budget Amounts Revenues Taxes Franchise fees $ 19,000 $ 17,907 $ (1,093) $ 17,161 Intergovernmental - - 525 Interest on investments 100 (12) (112) 193 Total Revenues 19,100 17,895 (1,205) 17,879 Expenditures Current Culture and recreation Personal services 9,612 9,546 66 9,513 Other services and charges 8,600 12,914 (4,314) 10,477 Total Expenditures 18,212 22,460 (4,248) 19,990 Net Change in Fund Balances 888 (4,565) (5,453) (2,111) Fund Balances, January 1 14,519 14,519 - 16,630 Fund Balances, December 31 $ 15,407 $ 9,954 $ (5,453) $ 14,519 74 City of Lauderdale, Minnesota Recycling Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) Final Budget 2021 Actual Amounts Revenues Intergovernmental County $ 5,900 $ Charges for services Sanitation Interest on investments Total Revenues Expenditures Current Sanitation and recycling Personal services Other services and charges Total Expenditures Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 48,699 1,200 55,799 24,594 40,219 64,813 (9,014) 75,486 $ 66,472 75 Variance with Final Budget 8,833 $ 2,933 54,314 (135) 63,012 27,907 40,202 68,109 (5,097) 75,486 5,615 (1,335) 7,213 (3,313) 17 (3,296) 3,917 WM $ 70,389 $ 3,917 2020 Actual Amounts $ 5,806 39,559 804 46,169 21,147 42,653 63,800 (17,631) 93,117 $ 75,486 City of Lauderdale, Minnesota Nonmajor Capital Projects Funds Combining Balance Sheet December 31, 2021 414 401 General Capital Development Improvement Total Assets Cash and temporary investments $ 295,090 $ 148,700 $ 443,790 Fund Balances Assigned 76 • $ 295,090 $ 148,700 $ 443,790 City of Lauderdale, Minnesota Nonmajor Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2021 Revenues Interest on investments Miscellaneous Total Revenues Expenditures Capital outlay General government Economic development Total Expenditures Excess (Deficiency) Of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers out Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 77 414 Development $ (599) 1,750 1,151 Man 3,906 3,906 (2,755) (67,956) (70,711) 365,801 $ 295,090 401 General Capital Improvement Total $ (301) $ (900) 1,750 (301) 850 10,488 10,488 (10,789) (10,789) 159,489 $ 148,700 10,488 3,906 14,394 (13,544) (67,956) (81,500) 525,290 $ 443,790 City of Lauderdale, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued on the Following Pages) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) Revenues Taxes P roperty taxes Licenses and permits Business N onbusiness Total licenses and permits Intergovernmental Federal Other Federal Aid State Local government aid Other state grants Local Other local grants Total intergovernmental Charges for services G eneral government Public safety Culture and recreation Total charges for services Fines and forfeitures Special assessments Interest on investments Miscellaneous Contributions and donations Other Total miscellaneous Total Revenues 2021 Budgeted Amounts Original Final Actual Variance with Amounts Final Budget $ 899,710 $ 899,710 $ 897,291 $ 3,650 34,100 37,750 524,591 1,198 525,789 3,650 34,100 37,750 524,591 1,198 525,789 4,125 25,564 29,689 524,591 524,591 10,000 600 10,600 27,000 6,000 1,500 1,500 1,508,349 10,000 600 10,600 27,000 6,000 MIL 1,500 1,500 1,508,349 79 7,751 MIE 162 7,913 22,615 843 (1,785) 305 29,831 30,136 1,511,293 2020 Actual Amounts (2,419) $ 845,642 475 (8,536) (8,061) (1,198) (1,198) 4,118 32,339 36,457 127,007 548,671 53,887 5,000 734,565 (2,249) (438) (2,687) (4,385) 843 (7,785) 305 28,331 28,636 2,944 11,532 35 42 11,609 24,203 539 15,558 55 2,801 2,856 1,671,429 City of Lauderdale, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) Expenditures Current General government Legislative and executive Personal services Supplies Other services and charges Total legislative and executive Administration Personal services Supplies Other services and charges Total administration Election, audit, and legal fees Personal services Supplies Other services and charges Total election, audit, and legal fees 2021 Budgeted Amounts Original Final $ 17,803 350 5,800 23,953 180,861 5,850 37,498 224,209 16,335 2,600 49,500 68,435 Planning and zoning Personal services 22,082 Supplies 1,200 Other services and charges 44,425 Total planning and zoning 67,707 Total general government 384,304 Public safety Police Other services and charges Fire Other services and charges 786,021 75,000 Building inspections Personal services 45,218 Other services and charges 6,200 Total building inspections 51,418 Total public safety 912,439 17,803 350 5,800 23,953 180,861 5,850 37,498 224,209 16,335 2,600 49,500 68,435 22,082 1,200 44,425 67,707 384,304 786,021 75,000 45,218 6,200 51,418 912,439 80 Actual Variance with Amounts Final Budget $ 17,800 119 5,620 23,539 190,905 3,684 39,090 233,679 16,517 1,167 36,948 54,632 22,076 914 66,647 89,637 401,487 785,422 75,773 49,195 5,437 54,632 915,827 $ 3 231 180 414 (10,044) 2,166 (1,592) (9,470) (182) 1,433 12,552 13,803 6 286 (22,222) (21,930) (17,183) 599 (773) (3,977) 763 (3,214) (3,388) 2020 Actual Amounts $ 17,811 695 5,701 24,207 179,210 8,358 94,612 282,180 21,206 3,188 58,594 82,988 21,886 627 25,817 48,330 437,705 762,452 64,574 47,232 6,718 53,950 880,976 City of Lauderdale, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2021 (With Comparative Actual Amounts for the Year Ended December 31, 2020) 2021 Budgeted Amounts Original Final Expenditures (Continued) Current (continued) Public works Streets and highways Personal services $ 57,837 Supplies 5,200 Other services and charges 38,450 Total streets and highways 101,487 Street lighting Other services and charges 6,000 Total public works Culture and recreation Parks and recreation Personal services Supplies Other services and charges Total culture and recreation Economic development Other services and charges Total Expenditures $ 57,837 5,200 38,450 Actual Variance with Amounts Final Budget $ 52,052 $ 5,194 33,938 101,487 91,184 6,000 6,324 107,487 107,487 97,508 84,969 1,000 6,150 84,969 1,000 6,150 75,115 1,044 12,400 92,119 92,119 88,559 12,000 12,000 3,331 1,508,349 1,508,349 1,506,712 Excess of Revenues Over Expenditures - 4,581 Other Financing Sources (Uses) Transfers out Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 829,592 829,592 $ 829,592 $ 829,592 81 4,581 829,592 5,785 6 4,512 10,303 (324) 9,979 9,854 (44) (6,250) 3,560 8,669 2020 Actual Amounts $ 51,443 3,736 51,619 106,798 6,041 112,839 73,327 1,178 6,601 81,106 4,652 1,637 1,517,278 4,581 4,581 $ 834,173 $ 154,151 (116,897) 37,254 792,338 4,581 $ 829,592 City of Lauderdale, Minnesota Summary Financial Report Revenues and Expenditures For General Operations Governmental Funds For the Years Ended December 31, 2021 and 2020 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Interest on investments Miscellaneous Total Revenues Per Capita Expenditures Current General government Public safety Public works Sanitation and recycling Economic development Culture and recreation Capital outlay Debt service Principal Interest and bond issuance costs Total Expenditures Per Capita Total Long-term Indebtedness Per Capita General Fund Balance - December 31 Per Capita Total 2021 $ 915,198 29,689 570,842 62,227 22,615 57,787 (4,758) 38,948 2020 $ 862,803 36,457 855,896 51,168 24,203 76,967 32,284 41,025 $ 1,692,548 $ 1,980,803 $ 745 $ 811 $ 401,487 915,827 97,508 68,109 3,331 111,019 179,453 1,395,000 81,377 3,253,111 1,432 $ 2,265,000 997 $ 834,173 367 $ 437,705 880,976 112,839 63,800 4,652 101,096 295,465 MIN 50,068 $ 1,946,601 $ 797 $ 1,000,000 410 $ 829,592 340 Percent Increase (Decrease) 6.07 % (18.56) (33.30) 21.61 (6.56) (24.92) (114.74) (5.06) (14.55) % (8.12) % (8.27) % 3.96 (13.59) 6.75 (28.40) 9.82 (39.26) N /A 62 53 67.12 % 79.70 % N /A N /A 055 % 812 The purpose of this report is to provide a summary of financial information concerning the City of Lauderdale to interested citizens. The complete financial statements may be examined at City Hall, 1891 Walnut Street, Lauderdale, MN 55113. Questions about this report should be directed to Heather Butkowski, City Administrator at (651)792-7650. 82 OTHER REQUIRED REPORT CITY OF LAUDERDALE LAUDERDALE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2021 83 INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and City Council City of Lauderdale, Minnesota AbdoSolutions.com 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 City of Lauderdale, Minnesota (the City) as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated April 5, 2022 The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota statute §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. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our audit was not directed primarily toward procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions. This report is intended solely for the information and use of those charged with governance and management of the City of Lauderdale and the State Auditor and is not intended to be, and should not be, used by anyone other than these specified parties. Abdo Minneapolis, Minnesota April 5, 2022 • Lighting the path forward 85 i LAUDERDALE COUNCIL ACTION FORM i Action Requested Consent Public Hearing Discussion X Action Resolution Work Session Meeting Date April 12, 2022 ITEM NUMBER Summer Community Events STAFF INITIAL JB APPROVED BY ADMINISTRATOR DESCRIPTION OF ISSUE AND PAST COUNCIL ACTION: Last yeai, we planned events in June, July, and September. However, the September event with the Roseville Community Band was cancelled due to rain. Staff pioposes one Day in the Park type event this year. The proposed date and time is Thurs- day, July 21 from 5-8 p.m. We envision the event having music, food and beer. Other possible activities include the water slide, kickball the puppet wagon, a dance troupe, an inflatable and games The newsletter will have an article asking people to contact me if they would like to help plan the event. OPTIONS: 1) Discuss and direct staff to plan for events this summer. 2) Do not plan for events this summer.. STAFF RECOMMENDATION: Move forward with plans for community events this summer if pandemic restrictions allow. COUNCIL ACTION: