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HomeMy WebLinkAbout06/13/2019 Meeting M eeting L ocation: M unicipal Center 7100 147th Street West Apple Valley, M innesota 55124 June 13, 2019 C IT Y C O UN C IL IN FO RMA L MEET IN G T EN TAT IVE D ISC USSIO N IT EM 5:30 P M 1.C ouncil Discussion Items (10 min.) 2.Discuss Feasibility Study for Project 2020-101, 2020 Street and Utility Improvements (Cimarron/Surrey Neighborhood) (20 min.) 3.Present 2018 Comprehensive Annual Financial Report (30 min.) 4.Discuss 2019-2023 C apital Improvements Program (15 min.) 5.Adjourn C IT Y C O UN C IL REG ULA R MEET IN G T EN TAT IVE A G EN D A 7:00 P M 1.C all to Order and Pledge 2.Approve Agenda 3.Audience - 10 Minutes Total Time Limit - For Items N O T on this Agenda 4.Approve C onsent Agenda Items C onsent Agenda Items are considered routine and will be enacted with a single motion, without discussion, unless a councilmember or citizen requests to have any item separately considered. It will then be moved to the regular agenda f or consideration. A.Approve Minutes of May 23, 2019, Regular Meeting B.Adopt Resolution Accepting Donation of Money from Daniel L. Schroeder and Marilyn J . Peterson for Use by Lebanon C emetery C .Adopt Resolution Accepting 1941 Buick "Quick Eight" Squad Car from Conny Mahoney for Use by Police Department D.Authorize Issuance of 1 to 4 Day Temporary On-Sale Liquor License to Apple Valley American Legion, Post 1776, in C onnection with a Community Festival, for Music at Kelley Park Concerts on J une 14, 21 and 28, and J uly 5 and 12, 2019 E.Authorize Issuance of 1 to 4 Day Temporary On-Sale Liquor License for Augustana Care Apple Valley Villa, 14610 Garrett Avenue on August 15, 2019 F.Authorize Issuance of 1 to 4 Day Temporary On-Sale Liquor License for H.O.O.A.H. (Helping Out Our American Heroes), Inc., in Parking Lot at Bogart's Entertainment C enter, 14917 Garrett Avenue on J uly 27, 2019 G.Receive Urban Affairs Advisory Committee 2018 Annual Report H.Receive 2018 Comprehensive Annual Financial Report I.Adopt Resolution Adopting 2019 Performance Measures and Approving Participation in Performance Measurement Program J .Approve A LF Ambulance 2020 Budget K.Declare Fire Department Self C ontained Breathing Apparatus as Surplus Equipment and Authorize Disposal by Online Auction L.Adopt Resolution of Support for Funding Application to Governor's 2020 Capital Budget for 147th Street Station Skyway Project M.Adopt Resolution Establishing Parking Restrictions and Road Closures for Freedom Days Celebration Events N.Adopt Resolution Approving Plans and Specifications for Project 2019- 109, 147th Street and J ohnny Cake Ridge Road Intersection Improvements, and Authorizing Advertising for Receipt of Bids, at 10:00 a.m. on J uly 9, 2019 O.Approve Water Quality Improvement Cost Share Program Agreement with Ralph and Susan Michels for Raingarden Installation at 13886 Duluth Drive P.Approve Water Quality Improvement Cost Share Program Agreement with Tamara and Kevin Weber for Native Garden Installation at 12526 Empress Court Q.Approve Water Quality Improvement Cost Share Program Agreement with C hristopher and C arol Read for Native Garden Installation at 5763 138th Street C ourt R.Approve Agreement with Cobalt Companies for Project 2019-129, 2019 Fence & Light Pole Reconditioning Services S.Approve Agreement with Irrigation by Design, Inc., for Exterior Landscape Irrigation at Apple Valley Education Building T.Approve Agreement with Loffler C ompanies, Inc., for Multifunction Copier Rental and Maintenance U.Approve Agreement with RES Specialty Pyrotechnics, Inc., d/b/a RESPY RO for Fireworks Display on J uly 4, 2019V.Approve Change Order No. 1 to Agreement with SavATree, LLC, for Project 2019-120, Right-of-Way Tree Pruning, and Approve Acceptance and Final Payment W.Approve Acceptance and Final Payment on Agreement with McNamara Contracting, Inc., for Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue X.Approve Personnel Report Y.Approve Claims and Bills 5.Regular Agenda Items A.Proclaim Hebert and Dorn Properties a Business Leader in C onnection with Apple Valley's 50th Golden Year Celebration B.Pass Ordinance Amending Planned Development No. 703/Zone 6 Pertaining to C lass III Restaurants with Drive-T hrough Window Service (Recommend waiving second reading) 6.Staff and C ouncil C ommunications 7.Approve C alendar of Upcoming Events 8.Adjourn Reminder: C ity Of f ices are closed Thursday, J uly 4, 2019, in observance of Independence Day Regular meetings are broadcast, live, on Charter Communications Cable Channel 180 and on the C ity's website at www.cityof applevalley.org I T E M: 2. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:I nformal A genda I tem Description: Discuss Feasibility S tudy for P roject 2020-101, 2020 S treet and Utility I mprovements (Cimarron/Surrey Neighborhood) (20 min.) S taff Contact: B randon A nderson, City Engineer Department / Division: E ngineering Division AC T I O N RE Q UE S T E D: N/A S UM M ARY: Staff has been working with the C ity’s consultant, Bolton & Menk, on preliminary design and feasibility for complete street and utility reconstruction and is looking for feedback from the City C ouncil regarding the design in the improvement area prior to hosting a neighborhood meeting. Staff is recommending completing the project in two (2) phases as shown on the attached figure and C apital Improvement Plan (C IP). T he C ity of Apple Valley 2019-2023 Capital Improvement Program identifies potential utility replacement and street reconstruction work on the following Streets in the Lebanon Hills and Palomino Hills neighborhood (C imarron/Surrey Neighborhoods): Cimarron Road (Phase 1 & 2) Cimarron C ircle (Phase 1) Cimarron C ourt (Phase 2) Yancey Court (Phase 1) Greylock C ourt (Phase 2) Surrey Trail South & North (Phase 2) Shasta Court (Phase 1) Beaumont C ourt (Phase 1) Sabra C ourt (Phase 1) Scope of work to be evaluated in two (2) phases in 2020 - 2021 includes total replacement of approximately 10,160 linear feet of sanitary sewer, water main and storm sewer and street reconstruction. B AC K G RO UND: On August 23, 2018, C ity Council adopted a resolution authorizing preparation of a feasibility study for Project 2020-101, 2020 Street and Utility Improvements. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Map Presentation CIMARRON R D SURREY T R L S SURREY TRL N CIMARRO N CI R YANCEY CT GREYLOCK CT 109 153 400 116 135 340100 141 403 108 101 315 305 346 366 352 117 385 379 367 287 124 296 394 303 307 309 144 373 117 136 358 121 349 116 111 302 100 290 112 272 123 278 281 137 275 108 326 355 12530 129 361 284 341 122 12529 320 104 132 376 140 120 391 12525 12533 12522 12521 404 102 104 208 106 176 190 184 196 139 202 245 102 103 251 214 103 127 257 213 115 237 263 266260 269 105 242 100 101 248 135 123 147 254 130185 157 102 144 169 191 128 136 120 193 185143 127 109 101 128 135 158 120 119 111 138 271 126121 135 112 291 283 156 148 177 122 134 137 123 145 122 103 140 124 169 150 104 161 121 113 109 153 201 CITY OF APPLE VALLEY 2020 / 2021 STREET & UTILITY IMPROVEMENTS 0 240120Feet I PROJECT AREA CHAPARRAL PARK PALOMINO PARK 2020 Street & Utility Reconstruction (Phase 1) 2020 Street & Utility Reconstruction (Phase 1A) 2021 Street & Utility Reconstruction Project Boundaries CIMARRON RD CIMA R R O N C T PALOMINO D R PENNOCK AVE¬«77 SHA S T A C T B E A U M O N T C T SABRA CT 6/13/2019 1 City of Apple Valley 2020-101 Street and Utility Improvements Feasibility Discussion (Cimarron/Surrey Neighborhood) June 13, 2019 6/13/2019 2 2020-2021 CIP Project Area 2020 2020 2016 2017 2021 PROPOSED IMPROVEMENTS Sanitary Sewer All existing 9” VCP Sanitary Sewer and Manholes to be replaced with 8” PVC sanitary sewer and new precast concrete structures Existing 4” cast iron service pipes are proposed to be replaced with 4” PVC service pipes from the proposed sanitary sewer main to the property line. Water main All existing CIP Water main to be replaced with 8” DIP Existing ¾” copper service pipes are proposed to be replaced with 1” copper services pipes from the proposed water main to the property line. All fire hydrants within the project area are proposed to be replaced, and existing fire hydrant leads are proposed to be replaced with 6” DIP. 6/13/2019 3 Existing Street Section – Cimarron Court PROPOSED IMPROVEMENTS Streets Street Section New Impervious Area (ac)Pros Cons 24’ Edge-to-Edge Rural Roadway 0.0 Matches existing street width No new impervious area created and no impacts to ponds and wetlands Driveway patches would match existing driveway slopes Grading outside of the street would match existing conditions Non-standard City street section All existing ditches would remain in place Existing off-road nuisance drainage issues would remain Ongoing edge-of-road maintenance due to vehicles and snow plows traveling off the paved surface No Parking 24’ Face-to-Face Urban Roadway STR-33 0.25 Minor new impervious area created and minor impacts to ponds and wetlands Driveway patches would closely match existing driveway slopes Some ditches could be filled and sloped towards the street. Stormwater could be collected and conveyed through the curb and gutter and the underground storm sewer. On-street parking is not permitted Typically only used on privately owned and maintained dead-end streets Public utilities would be located behind curb in some areas 6/13/2019 4 26’ Face-to-Face Urban Roadway STR-31A 0.62 Closely resembles the existing character of the neighborhood Manageable impacts to ponds and wetlands due to new impervious area created Intended to be used in environmentally sensitive areas Some ditches could be filled and sloped towards the street. Storm water could be collected and conveyed through the curb and gutter and the underground storm sewer. Driveway patches match closer to existing driveway slopes On-street parking is permitted on only one side of roadway 32’ Face-to-Face Urban Roadway STR-28A 1.72 Consistent with standard City roadway width On-street parking is permitted on both sides of roadway Some ditches could be filled and sloped towards the street. Stormwater could be collected and conveyed through the curb and gutter and the underground storm sewer. Runoff from new impervious area would be difficult to manage within existing ponds and wetlands without significant expansion Driveway patches would be difficult or impossible to match existing driveway slopes Grading behind curb would require steep slopes and retaining walls RECOMMENDED Street Section New Impervious Area (ac)Pros Cons Sidewalk extensions are NOT being proposed through the project area. 26’ F-F C&G Roadway w/ No Sidewalk recommended 6/13/2019 5 RE-DIRECT 5.0 ACRES DRAINAGE Storm pond modifications PROPOSED IMPROVEMENTS - Storm Sewer Dakota Electric Association – OH to UG Phase 1 Small Utilities Small utilities such as Gas, Electric, Communications, etc…are to be relocated from within Right-of-Way Staff is working with DEA for a plan to remove Overhead Power lines and place Underground 6/13/2019 6 Street and Utility Project (Year) LF Roadway Reconstruction No. of Properties Construction Start Date Construction Completion Date Total Project Cost 2013-101 6,888 111 4/22/13 10/23/13 $3,191,065 2016-104 5,761 76 4/22/16 11/08/16 $3,748,348 2017-104 8,015 112 4/17/17 11/14/17 $4,270,224 2018-101 6,605 104 4/11/18 11/16/18 $4,194,051 2019-101 5,835 91 4/15/19 *10/31/19 *$4,470,457 2020-101 4,850 82 *4/2020 *10/2020 $5,093,112 2021-101 5,200 68 *4/2021 *10/2021 $4,911,003 Street and Utility Reconstruction Costs 2013-2021 OVERALL PHASE 1 PROJECT SCHEDULE – NEXT STEPS Initial Neighborhood Meeting (Both Phases 1 & 2): August 2019 Design Process: September 2019– January 2020 Public Bidding of Project: January 2020 – March 2020 Award to Contractor: March 2020 Neighborhood Construction Meeting: +March 2020 City Staff/Contractor/Small Utility Companies Preconstruction Meeting: +April, 2020 Construction (Phase 1) to Begin: +April 2020 Phase 1 Construction Completion : +November 2020 6/13/2019 7 Questions for Staff ? I T E M: 3. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:I nformal A genda I tem Description: P resent 2018 Comprehensive A nnual F inancial Report (30 min.) S taff Contact: Ron Hedberg, Finance Director Department / Division: Finance Department AC T I O N RE Q UE S T E D: N/A S UM M ARY: A formal action to receive the 2018 C omprehensive Annual Financial Report will be included in the C ity Council agenda later the same evening. J im Eichten, Managing Partner, with the City’s auditing firm, Malloy Montague Karnowski Radosevich and C o., P.A. (MMKR), will present the 2018 C omprehensive Annual Finance Report and review their Management Report at the informal work session on J une 13, 2019. Included with the council packet information are three separate bound documents in addition to one unbound report; the first bound document, and largest, is a copy of the Comprehensive Annual Financial Statements (C A FR), the second is auditor’s Management Report, and the third is Special Purpose Audit Reports including opinions on compliance with Government Auditing Standards and Legal C ompliance. In addition to the bound reports also attached is a new report this year, titled "Popular Annual Financial Report". T he intent of this report is to present data included in the C A F R in an easy to understand format. T his report adds to the financial transparency for the city operations. T his report, along with the Comprehensive Financial Report will be posted on the City's website Since the documents are large, a good place to start reviewing the C A FR documents would be the Popular Annual Financial Report and in the C A FR the Transmittal Letter (starting on page iii), the Management Discussion and Analysis letter (starting on page 4) and with the Auditor’s Management Report on page 1 and their financial analysis section beginning on page 7 of that report. Last year was the seventh year that the City of Apple Valley participated in the Certificate of Achievement for Excellence in Financial Reporting program administered by the Governmental Finance O fficers Association (G FO A), the City of Apple Valley was recently awarded the C ertificate for the 2017 C A F R. T he Popular Annual Financial Report for 2017 received the Award for Outstanding Achievement in Popular Annual Financial Reporting program administrated by the G F O A, 2017 was the first year submitted for the Popular Annual Financial Report program. Staff believes that the current year’s submission will also meet the requirements to receive the award. T he presentation will cover some of the highlights of the year. If the Council has some items that they would like to be sure is covered just let me know prior to the meeting and we will be sure to cover it in the presentation. B AC K G RO UND: N/A B UD G E T I M PAC T: N/A AT TAC HM E NT S : Report Report Report Exhibit Presentation Comprehensive Annual Financial Report City of Apple Valley Minnesota Year Ended: December 2018 CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA Comprehensive Annual Financial Report for the Year Ended December 31, 2018 Prepared by Finance Department CITY OF APPLE VALLEY 7100 147th Street West Apple Valley, Minnesota 55124 THIS PAGE INTENTIONALLY LEFT BLANK Page INTRODUCTORY SECTION ELECTED OFFICIALS AND ADMINISTRATION i ORGANIZATIONAL STRUCTURE ii LETTER OF TRANSMITTAL iii–ix CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING x FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1–3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4–18 BASIC FINANCIAL STATEMENTS Government-Wide Financial StatementsStatement of Net Position 19Statement of Activities 20–21Fund Financial StatementsGovernmental FundsBalance Sheet 22–23Reconciliation of the Balance Sheet to the Statement of Net Position 24Statement of Revenue, Expenditures, and Changes in Fund Balances 25–26Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities 27 Statement of Revenue, Expenditures, and Changes in Fund Balances – General Fund – Budget and Actual 28Proprietary FundsStatement of Net Position 29–32Statement of Revenue, Expenses, and Changes in Net Position 33–34Statement of Cash Flows 35–36Notes to Basic Financial Statements 37–76 REQUIRED SUPPLEMENTARY INFORMATION PERA – General Employees Retirement Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 77Schedule of City Contributions 77 PERA – Public Employees Police and Fire Fund Schedule of City’s Proportionate Share of Net Pension Liability 78Schedule of City Contributions 78 Apple Valley Firefighters’ Relief Association Schedule of Changes in the Relief Association’s Net Pension Liability and Related Ratios 79Schedule of City Contributions 80Other Post-Employment Benefits Plan Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 81Notes to Required Supplementary Information 82–85 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents Page SUPPLEMENTARY INFORMATIONCombining and Individual Fund Statements and SchedulesNonmajor Governmental FundsCombining Balance Sheet 86Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 87Nonmajor Special Revenue Funds 88Combining Balance Sheet 89–90Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 91–92Nonmajor Debt Service Funds 93Combining Balance Sheet 94–97Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 98–101Nonmajor Capital Projects Funds 102–103Combining Balance Sheet 104–108Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 109–113General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 114–119Road Improvements Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 120Future Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 121Cable TV Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 122EDA Operations Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 123Cable Capital Equipment Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 124Internal Service Funds 125Combining Statement of Net Position 126Combining Statement of Revenue, Expenses, and Changes in Net Position 127Combining Statement of Cash Flows 128 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents (continued) Page STATISTICAL SECTIONNet Position by Component 129–130Changes in Net Position 131–134Fund Balances of Governmental Funds 135–136Changes in Fund Balances of Governmental Funds 137–138Assessed and Estimated Actual Value of Taxable Property 139–140Property Tax Capacity Rates 141–142Principal Property Taxpayers 143Property Tax Levies and Collections 144–145Ratios of Outstanding Debt by Type 146–147Ratios of General Bonded Debt Outstanding 148–149Direct and Overlapping Governmental Activities Debt 150Legal Debt Margin Information 151–152Pledged Revenue Coverage 153–154Demographic and Economic Statistics 155Principal Employers 156Full-Time Equivalent City Government Employees by Function 157–158Operating Indicators by Function 159–160Capital Asset Statistics by Function/Program 161–162 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents (continued) THIS PAGE INTENTIONALLY LEFT BLANK INTRODUCTORY SECTION -i- Term Expires Mary Hamann-Roland Mayor December 31, 2022John Bergman Councilmember December 31, 2022Thomas Goodwin Councilmember December 31, 2020Ruth Grendahl Councilmember December 31, 2020Clint Hooppaw Councilmember December 31, 2022 M. Thomas Lawell City AdministratorPamela Gackstetter City ClerkRonald Hedberg Finance Director/TreasurerMatt Saam Public Works DirectorJon Rechtzigel Police ChiefChuck Russell Fire ChiefBruce Nordquist Community Development DirectorBarry Bernstein Parks and Recreation DirectorCathy Broughten Assistant Finance DirectorCharles Grawe Assistant City AdministratorMelissa Haas Human Resource ManagerBrandon Anderson City EngineerCarol Blommel Johnson Public Works Superintendent ELECTED OFFICIALS ADMINISTRATION CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Elected Officials and AdministrationDecember 31, 2018 Organizational Structure City of Apple Valley Mayor and City Council Citizens City Attorney (contractual) Economic Development Authority Planning Commission City Administrator Administration Fire Police Finance Community Development Public Works Planning Economic Development Code Enforcement Finance Utility Billing Administration Information Technologies Human Resources Cable TV Fire Patrol Investigations Records Parks & Recreation Recreation Programs Park Maintenance Planning Accounting Administration Patrol Fire Recreation Programs Street Maintenance Economic Development Financial Reporting City Clerk/ Elections Investigations Fire Inspection Park Maintenance Natural Resources Code Enforcement Cash & Investments Utility Billing Information Technology Records Ice Arena Hayes Community & Engineering Building Inspections Human Resources Cable TV Senior Center AV Aquatic Center Utilities Fleet Maintenance Municipal Liquor Stores Apple Valley Community Center Cemetery Valleywood Golf Redwood Pool -ii- -iii- City of Telephone (952) 953-2540 Fax (952)953-2515 www.ci.apple-valley.mn.us June 4, 2019 To the Honorable Mayor, City Council, and Citizens of the City of Apple Valley: The Comprehensive Annual Financial Report (CAFR) of the City of Apple Valley, Minnesota (the City), for the year ended December 31, 2018, is hereby submitted. The report was prepared in accordance with accounting principles generally accepted in the United States of America as established by the Governmental Accounting Standards Board and meets the requirements of the State Auditor’s Office. The report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all information presented within this report. To provide a reasonable basis for making these representations, management of the City has established internal controls designed to protect the City’s assets from loss, theft , or misuse and to provide sufficient information for the preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh the benefits, the City’s internal controls have been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements. As management, we assert that to the best of our knowledge and belief this CAFR is complete and reliable in all material respects. The City’s financial statements have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A., Certified Public Accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the year ended December 31, 2018, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates used by management; and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements, for the year ended December 31, 2018, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented in the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The City’s MD&A complements this letter of transmittal and should be read in conjunction with it. 7100 147th St. W Apple Valley, MN 55124 -iv- Profile of the City of Apple Valley The City was incorporated as a village on January 1, 1969, and incorporated as a city on January 1, 1974. The City is a suburban community located 17 miles south of downtown Minneapolis within Dakota County, and has a convenient location with a comprehensive system of highways – Interstate 35E serves the northwest boundary of the City, while State Highway 77 runs north and south through the City. The City is served by a Bus Rapid Transit service that connects to the light rail system serving Minneapolis and St. Paul. The City is seven miles from the Minneapolis-St. Paul International Airport within the seven-county Twin Cities metropolitan region, has a land area of 17.5 square miles, and serves a community with a current population of 53,429. -v- The City operates as a Statutory Plan A City, the Mayor-Council form, under Minnesota law. The governing body, consisting of the Mayor and four council members, is elected at large and on a nonpartisan basis. Terms of office are four years, with elections held in each even-numbered year; not more than three council members’ terms expire in any one year. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to various advisory committees and commissions, and hiring the City Administrator and other city employees. The City Administrator is responsible for carrying out the policies, ordinances, and directions of the City Council and for overseeing the day-to-day operations of the City. The City provides its residents and businesses with a full range of municipal services consisting of public safety (police, fire, building inspections), public works, parks and recreation, and general government administration. The City also operates a number of enterprise activities including: water and sanitary sewer, Valleywood Golf Course, three off-sale liquor stores, storm water, street lights, sports arenas, and a cemetery. Sanitary sewage treatment and disposal is operated on a regional basis by the Metropolitan Council Environmental Services. Refuse collection and disposal are handled on a private basis through contractual arrangements by city residents with private haulers. Further information regarding city services can be obtained from the City’s website at www.ci.apple-valley.mn.us. The Apple Valley Economic Development Authority (EDA) is a separate legal entity organized pursuant to Minnesota Statutes Section 469, and is included as a blended component unit. The EDA is considered a component unit because the governing body is comprised of City Council members and two other members being appointed by the City Council. Also, the EDA is in a relationship of financial benefit or burden with the City. The annual budget serves as the foundation for the City’s financial planning and control. The budgetary process is outlined in the notes to basic financial statements. The City applies budgetary controls to ensure compliance with legal provisions of the laws of Minnesota. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual budgets are adopted for the General Fund in addition to certain special revenue and capital projects funds. Budget to actual comparisons are presented for each governmental fund for which an annual budget has been adopted. Factors Affecting Financial Condition The City is committed to maintaining a strong financial condition, while continuing to provide public services to its residents and businesses. The City’s financial position, as reflected in the financial statements presented in the reports, is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The economic conditions have improved for the City, its residents, and its businesses. The City’s unemployment rate as of December 2018, for example, is 2.4 percent, compared to the state of Minnesota’s rate of 3.2 percent and the national unemployment rate of 3.7 percent. Unemployment Rate: Dec 2018 Dec 2017 Dec. 2016 Dec. 2015 Dec 2014 City of Apple Valley 2.4% 2.5% 3.0% 2.6% 2.8% Dakota County 2.7% 2.7% 3.4% 3.1% 3.8% State of Minnesota 3.2% 3.4% 4.1% 3.7% 3.8% National 3.7% 3.9% 4.5% 5.0% 5.6% (Source: MN Dept. of Economic Development ) -vi - Housing Values Home values in the City are continuing a positive trend, reflecting the recovery of the housing market. The assessor’s estimated residential market values increased on the median valued home approximately 6.2 percent for 2018. Assessor values for 2019 and 2020 continue this positive trend. Increase (Decline) in Median Value Home: 2013 (5.8%) 2014 3.5% 2015 8.1% 2016 5.0% 2017 2.5% 2018 6.2% 2019 9.0% 2020 (Preliminary) 7.1% The population of the City has increased from 585 in 1960 to 49,084 according to the 2010 census and is estimated at 53,429 for 2018. According to the 2010 census, most of the population of the City concentrates in two age groups: 45–54 years and 5–14 years at 17.0 percent and 14.2 percent, respectively. The average age is 32 years and the median household income is $78,028. The most recent estimate of the median household income from the American Community Survey is $86,226 for 2018. The City is the home to Uponor and Wings Financial Credit Union. Other major employers in the area include Independent School District No. 196, Target, Walmart, Minnesota Zoo, Augustana Health Care, Cub Foods, and Menards. Market Value Growth The City consistently adds new tax base each year. In 2018, a total of $96.7 million of market value was added to the City’s tax base, which current data indicates is continuing. Total market value increased to $5.1 billion for 2018, resulting from improved market conditions. Conditions continue to improve for the future with preliminary County Assessor data for payable 2020 showing a 7.7 percent increase to a total city-wide taxable market value of $6.0 billion, of which $136 million and $71 million results from new construction for payable 2019 and 2020, respectively. -vii- Major Initiatives In 2018, investment continued in the City as new businesses opened and new developments were approved. What follows is a sample of some of the development projects that were reviewed, approved, began construction, or were completed in 2018, as well as some of the long-range planning and economic development initiatives that will help maintain the City’s high quality of life. Residential Development Over the past 10 years, single-family construction has averaged 77 units per year, and 2018 saw 65 single-family units constructed, valued at over $17 million. Recent multi-family construction shows strong activity for 2018 with 431 apartment units permitted. In 2018, the City saw the completion of a number of multi-family projects, these include: the Valley Bluffs senior apartments adding 163 units, the second phase of the Remington Cove building adding 95 units, and the Parkside Village Galante building adding 134 units. Multi-family projects permitted in 2018 with construction continuing into 2019 include: Nuvela at Parkside with 177 units, Springs at Cobblestone with 196 units, and Zvago senior condominiums with 58 units. While the construction of new single-family properties has dipped in 2018, which resulted from the availability of fully developed lots, the valuation added by remodeling and renovations is being maintained at a high level, valued at over $18.8 million. This reflects homeowners’ continued interest in investing in their properties. Commercial Development Commercial and industrial development continued to improve in 2018 with total improvement values, including commercial alterations, totaling $40 million in 2018. New commercial construction projects included the 53,000 square foot Uponor NA Expansion, the 8,500 square foot Cobblestone Marketplace retail building at 157th and Emperor Avenue, and a $7 million renovation of the Regency Center. -viii- Upcoming initiatives include: Mixed-Use Business Campus: In 2019, approximately 350 acres of mixed business campus will continue to be master planned with some mixed uses proposed to begin development in the area currently being actively mined for aggregate. Significant public infrastructure improvements including roads, trails, ponding, and park improvements, will be part of the plan and coincide with private development. Menard’s Hanson Development Site: The 50-acre site known as Menard’s/Hanson is proceeding with a proposal including mixed business uses (retail, office, industrial) at County Road 42 and Johnny Cake Ridge Road. Water Meter Replacement Program: The City has begun a water meter replacement program. Many water meters in the City have been in service for more than 25 years. The accuracy of water meters tend to diminish as they get older. The City’s Capital Improvement Program includes a two-year schedule for completing the water meter replacement project and will be funded within the water utility fund. Infrastructure Improvements The City is committed to maintaining its significant investment in the community’s infrastructure with the implementation of an aggressive street maintenance program in 2012. In 2018, over $4.6 million was invested to maintain the infrastructure and included the following significant projects:  Reconstruction of streets in the Apple Valley 12th addition  Reconstruction of portions of Redwood Drive, Redwood Circle, Keller Lake Drive  Additional resurfacing of streets throughout the community Long-Term Financial Planning In developing the annual budget, the City follows five core fiscal principles. These include:  Focus on the provision of basic city services and fund their provision at adequate levels.  Estimate anticipated revenues at realistic levels.  Retain adequate reserves to protect against fiscal uncertainty.  Anticipate continued community growth and program capital improvements to serve our growing community.  Demonstrate strong stewardship of existing infrastructure and plan for its repair/replacement in a proactive manner. Each year the City adopts a five-year Capital Improvement Program (CIP). The CIP is a five-year plan that identifies the City’s infrastructure, development objectives, and the allocation of resources for these projects. This CIP provides policy makers and the community with a strategic approach to implementation and administration of improvement projects. The 2019–2023 CIP identifies $125 million of capital projects along with the associated funding. The five-year CIP also includes five-year revenue and expenditure projections for the majority of funds identified in the document. One of the larger improvements included in the 2019–2023 CIP includes the continued street and utility reconstruction and reconditioning program, which totals $63 million over the next five years. -ix- Relevant Financial Policies The City utilizes various financial and budget policies to guide the City Council and staff when making financial decisions. These include adoption of a balanced budget, minimizing the reliance on state revenues which have proven to be unpredictable, setting of a 50 percent of subsequent year’s budgeted expenditures minimum fund balance level to provide for cash flow purposes, and adoption of a five-year capital improvement plan to provide for capital asset acquisition and replacement. Cash temporarily idle during the year was invested in U.S. government agency obligations, municipal securities, certificates of deposit, and money market instruments. The City’s investment policy calls for the investment of public funds in a manner that will provide the highest investment return with minimum risk while meeting the daily cash flow demands of the City. For investments held at December 31, 2017, the effective duration of the investment portfolio was 1.86 years. For investments held at December 31, 2018, the effective duration of the investment portfolio was 1.94 years. The City’s average return on investments in 2018 was 1.79 percent. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded the City a Certificate of Achievement for Excellence in Financial Reporting to the City of Apple Valley for its CAFR for the fiscal year ended December 31, 2017. This is the seventh year that the City achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report could not occur without the efficient and dedicated service of the entire finance department staff throughout the reporting year. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. We would like to thank the City Council for its commitment in planning and implementing the financial operations of the City in a fiscally prudent and progressive manner. Respectfully Submitted, CITY OF APPLE VALLEY, MINNESOTA Ronald Hedberg Finance Director -x- FINANCIAL SECTION -1- INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of Apple Valley, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit . We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts a nd disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion o n the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -2- OPINIONS In our opinion, the financial statements referred to on the previous page 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, 2018, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. EMPHASIS OF MATTER As described in Note 1 of the notes to basic financial statements, the City has implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, during the year ended December 31, 2018. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, supplementary information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. (continued) -3- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 4, 2019 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota June 4, 2019 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF APPLE VALLEY Management’s Discussion and Analysis Year Ended December 31, 2018 -4- As management of the City of Apple Valley, Minnesota (the City), we have provided readers of the City’s financial statements with this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2018. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, located earlier in this report. 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 $240,889,947 (net position). Of this amount, $41,295,271 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors; $15,352,356 is restricted for specific purposes (restricted net position); and $184,242,320 represents the net investment in capital assets. The City’s total net position increased by $10,128,318 during the year ended December 31, 2018, excluding the change in accounting principle and prior period adjustment reported in the current year as discussed below. • The City recorded a prior period adjustment in the current year related to the City’s inventory of capitalized assets and the related useful lives. This change reduced beginning net position in the government-wide financial statements by $18,851,915. • The City recorded a change in accounting principle in the current year with the implementation of the Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The change reflects standards established for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expenses as they relate to other post -employment benefit (OPEB) obligations. The implementation of this standard reduced beginning net position in the government-wide financial statements by $105,729. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $54,515,901, an increase of $3,690,455. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $17,052,177, or 50.1 percent, of total General Fund expenditures based on 2019 budgeted expenditure levels, including transfers. • The City’s long-term liabilities decreased by $5,241,308, or 11.0 percent, during the current fiscal year. The decrease is primarily attributable to the decrease in net pension liability of $3,457,094, as a result of the change in actuarial assumptions in the computation of the City’s obligation under GASB Statement No. 68. The remainder of the decrease is due to payments on the City’s outstanding debt obligations per the agreed upon schedules, in addition to the early retirement of the 2015A Liquor Revenue Bonds of which $880,000 was retired early. Please see further details of long-term debt in Note 5 of the notes to basic financial statements. -5- 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 include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic 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, liabilities, and deferred inflows/outflows 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). Both of the government-wide financial statements distinguish functions of the City that are principally supported by property 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, and parks and recreation. The business-type activities of the City include municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility. The government-wide financial statements not only include the City itself (known as the primary government), but also the Apple Valley Economic Development Authority (EDA). The EDA is legally separate and is reported as if it were part of the primary government because it provides services exclusively for the City. The EDA is reported as the Economic Development Debt Service Fund and the EDA Operations Special Revenue Fund. Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All 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 the 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. -6- 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 simil ar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances for the General Fund, Closed Bond Issues Debt Service Fund, Road Improvements Capital Projects Fund, and Future Capital Projects – Capital Projects Fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form o f combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General Fund, Road Improvements Capital Projects Fund, Future Capital Projects – Capital Projects Fund, Cable TV Special Revenue Fund, EDA Operations Special Revenue Fund, and Cable Capital Equipment Capital Projects Fund. A budgetary comparison statement or schedule has been provided for these funds to demonstrate compliance with this budget. Proprietary Funds – The City maintains two different types of proprietary funds. 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 municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility operations. Internal service funds are accounting devices used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its dental insurance, benefits/other insurance, and vehicle and equipment replacement. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility operations, all of which are considered to be major funds of the City. Conver sely, the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to Basic Financial Statements – The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other Information – In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information and the combining and individual fund statements and schedules (presented as supplementary information) referred to earlier in connection with nonmajor governmental funds and internal service funds, which are presented immediately following the basic financial statements. Further, a statistical section has been included as part of the Comprehensive Annual Financial Report (CAFR) to facilitate additional analysis, and is the third and final section of the report. -7- GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $240,889,947 at the close of the most recent fiscal year. By far, the largest portion of the City’s net position reflects its net investment in capital assets (e.g., land, buildings, machinery, equipment, distribution system, and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investments in its capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following table provides the City’s Summary of Net Position: 2018 2017 2018 2017 2018 2017 AssetsCurrent and other assets 69,233,578$ 64,266,249$ 18,606,217$ 20,180,433$ 87,839,795$ 84,446,682$ Capital assets, net 97,632,258 114,442,328 109,559,262 105,304,026 207,191,520 219,746,354 Total assets 166,865,836$ 178,708,577$ 128,165,479$ 125,484,459$ 295,031,315$ 304,193,036$ Deferred outflows of resourcesPension plan deferments 9,513,664$ 12,839,621$ 493,170$ 754,334$ 10,006,834$ 13,593,955$ OPEB plan deferments 98,129 – 16,722 – 114,851 – Total deferred outflowsof resources 9,611,793$ 12,839,621$ 509,892$ 754,334$ 10,121,685$ 13,593,955$ Total assets and deferred outflows of resources 176,477,629$ 191,548,198$ 128,675,371$ 126,238,793$ 305,153,000$ 317,786,991$ LiabilitiesOther liabilities 4,405,081$ 3,924,212$ 2,556,160$ 1,439,232$ 6,961,241$ 5,363,444$ Noncurrent liabilities 30,136,774 33,878,216 12,353,263 13,853,129 42,490,037 47,731,345 Total liabilities 34,541,855$ 37,802,428$ 14,909,423$ 15,292,361$ 49,451,278$ 53,094,789$ Deferred inflows of resourcesPension plan deferments 14,136,354$ 14,446,921$ 675,421$ 526,008$ 14,811,775$ 14,972,929$ Net positionNet investment in capital assets 83,980,389$ 99,642,040$ 100,261,931$ 94,851,212$ 184,242,320$ 194,493,252$ Restricted 15,352,356 15,364,368 – 178,665 15,352,356 15,543,033 Unrestricted 28,466,675 24,292,441 12,828,596 15,390,547 41,295,271 39,682,988 Total net position 127,799,420$ 139,298,849$ 113,090,527$ 110,420,424$ 240,889,947$ 249,719,273$ Total liabilities, deferred inflows of resources, and net position 176,477,629$ 191,548,198$ 128,675,371$ 126,238,793$ 305,153,000$ 317,786,991$ Business-Type Activities Totals Table 1 Summary of Net Position as of December 31, 2018 and 2017 Governmental Activities An additional portion of the City’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of $41,295,271 may be used to meet the City’s ongoing obligations to citizens and creditors. -8- 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. There was a decrease in net position in the governmental activities of $11,499,429, and an increase in business-type activities of $2,670,103, for a net total government-wide decrease of $8,829,326 in net position. This change in net position reflects an increase of $10,128,318 from the current year operating results, while the prior period adjustment mentioned earlier reduced net position by $18,851,915 and the change in accounting principle mentioned earlier reduced net position by $105,729. Both governmental activities and business-type activities experienced changes in deferred outflows of resources, deferred inflows of resources, and long-term liabilities as a result of the City’s participation in defined benefit pension plans. The City also experienced a decrease in long-term liabilities, due to payments made on the City’s bonds. The decline in capital assets, net is related to the inventory of capitalized assets previously mentioned. The following table provides a condensed version of the Statement of Activities for the year ended December 31, 2018 with comparative amounts for the year ended December 31, 2017: 2018 2017 2018 2017 2018 2017 RevenuesProgram revenuesCharges for services 8,556,300$ 7,776,342$ 24,118,992$ 23,577,253$ 32,675,292$ 31,353,595$ Operating grants and contributions 1,985,278 1,082,234 – – 1,985,278 1,082,234 Capital grants and contributions 3,741,660 3,206,571 1,693,236 1,057,916 5,434,896 4,264,487 General revenuesProperty taxes 26,496,094 25,053,457 121,000 121,000 26,617,094 25,174,457 Other taxes 150,340 182,377 – – 150,340 182,377 Franchise taxes 1,306,360 1,288,426 – – 1,306,360 1,288,426 Grants and contributions not restricted to specific programs 124,430 56,751 – – 124,430 56,751 Other 10,786 8,440 – – 10,786 8,440 Investment earnings 886,459 551,119 268,297 151,206 1,154,756 702,325 Total revenues 43,257,707 39,205,717 26,201,525 24,907,375 69,459,232 64,113,092 ExpensesGeneral government 7,670,285 6,260,768 – – 7,670,285 6,260,768 Public safety 12,750,741 13,443,699 – – 12,750,741 13,443,699 Public works 9,434,637 8,473,039 – – 9,434,637 8,473,039 Parks and recreation 6,992,203 7,239,268 – – 6,992,203 7,239,268 Interest and fiscal charges 284,621 886,283 – – 284,621 886,283 Municipal liquor – – 8,362,332 8,251,249 8,362,332 8,251,249 Municipal golf course – – 1,238,125 1,545,792 1,238,125 1,545,792 Sports arena – – 784,343 798,402 784,343 798,402 Water and sewer – – 9,203,936 10,031,223 9,203,936 10,031,223 Storm drainage – – 2,035,266 2,181,086 2,035,266 2,181,086 Cemetery – – 89,069 127,469 89,069 127,469 Street light utility – – 485,356 483,752 485,356 483,752 Total expenses 37,132,487 36,303,057 22,198,427 23,418,973 59,330,914 59,722,030 Increase in net position before transfers 6,125,220 2,902,660 4,003,098 1,488,402 10,128,318 4,391,062 Transfers 1,317,600 1,915,500 (1,317,600) (1,915,500) – – Change in net position 7,442,820 4,818,160 2,685,498 (427,098) 10,128,318 4,391,062 Net position – beginning, as previously reported 139,298,849 134,480,689 110,420,424 110,847,522 249,719,273 245,328,211 Change in accounting principle (90,334) – (15,395) – (105,729) – Prior period adjustment (18,851,915) – – – (18,851,915) – Net position – beginning, as restated 120,356,600 134,480,689 110,405,029 110,847,522 230,761,629 245,328,211 Net position – ending 127,799,420$ 139,298,849$ 113,090,527$ 110,420,424$ 240,889,947$ 249,719,273$ Table 2 Change in Net Position for the Years Ended December 31, 2018 and 2017 Business-Type Activities TotalGovernmental Activities -9- Governmental Activities – The City’s net position for governmental activities decreased by $11,499,429, or 8.3 percent, after $1,317,600 of net transfers from business-type activities and after the prior period adjustment and change in accounting principle previously discussed. Key elements of this decrease are seen in the table on the previous page. Revenues increased overall by $4,051,990, or 10.3 percent. This change included: • Increase in charges for services resulting from development related activities. • Increase in operating grants and contributions due to increased economic development related grants. • Increase in capital grants and contributions due to increased special assessment activity in the current year. • Increase in property taxes due to increases in the general tax levy. Expenses increased overall by $829,430, or 2.3 percent. This increase included: • The general government function increased $1,409,517 and public works function increased $961,598. These increases were offset by decreases in the public safety function of $692,958, parks and recreation function of $247,065, and interest and fiscal charges of $601,662. As seen in the following graph, taxes make up about 65 percent of the total governmental activities revenues for 2018. Charges for services make up about 20 percent of the total, and are followed by grants at 13 percent, and all other at 2 percent of the total. 2018 Revenues by Source – Governmental Activities 2017 Revenues by Source – Governmental Activities -10- 2018 Expenses – Governmental Activities 2017 Expenses – Governmental Activities The expenses in the graph above for governmental activities show the amounts spent on different activities for 2018 and 2017. In 2018, public safety makes up 34 percent, public works 25 percent, parks and recreation 19 percent, and general government 21 percent. Other includes debt service interest and fiscal charges in governmental activities and makes up 1 percent. -11- Business-Type Activities – Business-type activities increased the City’s total net position by $2,670,103. Key elements of the business-type activities are as follows: • Charges for services for business-type activities include sales for municipal liquor, municipal golf course, and sports arena; and charges for water and sewer, storm drainage, cemetery, and street light utility operations. The following graph shows the relationship between the revenues and expenses for the various activities. • About 79 percent of all business-type activity expenses are from the municipal liquor and water and sewer operations. • Overall, business-type activities generated an increase in net position before capital contributions and transfers of $2,309,862. After considering capital grants and contributions of $1,693,236, net transfers out to governmental activities totaling $1,317,600, and the change in accounting principle of $15,395, net position increased by $2,670,103. Revenues and Expenses – Business-Type Activities $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 MunicipalLiquor MunicipalGolfCourse SportsArena Water andSewer StormDrainage Cemetery Street LightUtility Revenues Expenses -12- 2018 Revenues by Source – Business-Type Activities 2017 Revenues by Source – Business-Type Activities -13- 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 currently available 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 $54,515,901, an increase of $3,690,455 in comparison with the prior year. The City has four major governmental funds: the General Fund, the Closed Bond Issues Debt Service Fund, the Road Improvements Capital Projects Fund, and the Future Capital Projects Capital Projects Fund. General Fund The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance of the General Fund was $17,640,331. As a measure of the General Fund’s liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures. Unassigned fund balance represents 50.1 percent of subsequent year budget expenditures, including transfers. Total fund balance for the City’s General Fund increased by $303,918 during 2018. Key factors in this increase are as follows: • The City adopted a balanced budget prior to the start of the current year. • License and permit revenues were approximately $750,000 over budget and are a decrease of about $990,345 from the prior year, due to a higher level of development activity in the prior year. • Expenditures were approximately $775,000 under the 2018 budgeted amounts, due to position vacancies and uncompleted 2018 capital purchases that were carried over into 2019. • The total fund balance increase of $303,918 is after transferring $1,165,000 out of the General Fund to the Future Capital Projects Capital Projects Fund in accordance with the City’s fund balance policy. Closed Bond Issues Fund – Debt Service Fund The Closed Bond Issues Fund accumulates resources remaining from retired debt service funds. The fund balance at the end of 2018 is $8,663,145, which decreased $777,521 from the prior year. The decrease results from the Closed Bond Issues Fund transferring out amounts to close certain retired bond funds that were carrying a deficit balance. Road Improvements Fund – Capital Projects Fund The Road Improvements Fund receives transfers from other funds. These resources are used to finance street overlays and reconstruction projects per the City’s pavement management plan. The fund balance at the end of 2018 is negative $5,250,659, which is a decrease of $76,379 from the prior year. -14- Future Capital Projects Fund – Capital Projects Fund The Future Capital Projects Fund accumulates resources according to the City Council’s adopted fund balance policy. This policy calls for amounts in the General Fund that exceed a maximum level to be transferred to the Future Capital Projects Fund. The fund balance at the end of 2018 is $14,300,138, which is a decrease of $1,053,263 from the prior year. A transfer from the General Fund was received in 2018 in the amount of $1,165,000 in accordance with the fund balance policy. Proprietary Funds – The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City has seven enterprise funds and three internal service funds. The seven enterprise funds include: Municipal Liquor Fund, Municipal Golf Course Fund, Sports Arena Fund, Water and Sewer Fund, Storm Drainage Fund, Cemetery Fund, and the Street Light Utility Fund. The total net position of all enterprise funds totals $113,237,587, $100,261,931, of which is capital assets, net of related debt and in total, is an increase of $5,410,719 from the prior year. The total unrestricted net position for all proprietary funds for the year was $12,975,656, a decrease of $2,530,128. The decrease in unrestricted net position is due to the use of unrestricted net position for capital asset purchases in the current year. Municipal Liquor Fund The net position in the Municipal Liquor Fund increased $506,125 mainly from current year operations. This increase reflects continued positive operations of the City’s liquor stores after transferring $630,000 to the General Fund in support of public safety equipment replacements and parks and recreation activities. The increase in the Municipal Liquor Fund current year operations comes from maintaining gross profit margins. Municipal Golf Course Fund The Municipal Golf Course Fund operations posted a decrease in net position of $371,741 mainly from current year operations. Sports Arena Fund The Sports Arena Fund posted an increase in net position of $130,066 mainly from current year operations, which is after inclusion of an annual $121,000 property tax levy. Water and Sewer Fund The Water and Sewer Fund is the City’s largest proprietary fund. Unrestricted net position at the end of the year amounted to $11,207,700, a decrease of $739,224. Net position increased $2,038,547 in the current year, due to current year operations and $1,383,138 in capital contributions. Total net investment in capital assets totals $60,658,307, an increase of $2,777,771, mainly due to capital asset acquisitions in 2018 and contributions from private developers. -15- Storm Drainage Fund The Storm Drainage Fund increased its net position by $286,049, mainly due to current year operations. Cemetery Fund The Cemetery Fund increased its net position by $72,914, which results from additional lot sales during the year. Street Light Utility Fund The Street Light Utility Fund increased its net position by $39,966 in the current year. GENERAL FUND BUDGETARY HIGHLIGHTS The most significant amendment to the 2018 General Fund budget was made to provide for projects that were carried over from 2017 to 2018. During the year, the total revenues exceeded the final amended budgetary estimates by $811,985, which can be attributed to licensing and permits exceeding the budget by $749,599, due to higher than projected development activity in the current year. Total actual expenditures were $774,438 less than the budgetary estimates. General Fund budget performance can be attributed to curtailing spending where possible, position vacancies during the year, and conservative budgeting practices. Personal services in the General Fund ended the year about $532,000 under budget. -16- CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets – The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2018 amounts to $207,191,520 (net of accumulated depreciation). This investment in capital assets includes land and land improvements, construction in progress, buildings, other improvements, furniture and equipment, and infrastructure. The total decrease in the City’s investment in capital assets for the current fiscal year was $12,554,834, or approximately 5.7 percent, mainly due to the prior period adjustment related to capital asset activity and depreciable lives. Total depreciation charged in 2018 was $10,854,303. City of Apple Valley’s Capital Assets 2018 2017 2018 2017 2018 2017 Capital assetsLand and land improvements 4,581,173$ 4,581,173$ 6,873,929$ 6,818,433$ 11,455,102$ 11,399,606$ Construction in progress 3,078,404 1,740,083 4,692,338 1,277,221 7,770,742 3,017,304 Buildings 34,325,350 32,587,544 22,147,457 22,086,746 56,472,807 54,674,290 Other improvements 25,508,085 25,457,057 157,454,172 154,024,344 182,962,257 179,481,401 Furniture and equipment 19,212,389 18,597,572 6,405,434 5,515,325 25,617,823 24,112,897 Infrastructure 114,422,998 109,815,968 – – 114,422,998 109,815,968 Less accumulated depreciation (103,496,141) (78,337,069) (88,014,068) (84,418,043) (191,510,209) (162,755,112) Total capital assets, net of depreciation 97,632,258$ 114,442,328$ 109,559,262$ 105,304,026$ 207,191,520$ 219,746,354$ Total Table 3 Capital Assets Governmental Activities Business-Type Activities Major capital asset additions during the current year included the following: • Street and improvement projects totaling approximately $3.8 million, including the following significant reconstruction projects: Redwood Drive, Redwood Court, 142nd Street and Fair Oak Court, and Micro Surfacing Street Improvements ($260,000), along with other 2018 street and trail improvements totaling $1,100,000. • A park pavilion and restroom was completed at Cobblestone Park at an approximate cost of $680,000. Various building improvements totaling $550,000 were completed at the old City Hall building used as the Education Building. Various lighting and energy efficiency projects were completed during the year with a cost of approximately $1,531,000. • Water, Sanitary and Storm Sewer Utility improvements in new and existing subdivisions totaling about $2,500,000. • Equipment additions totaling around $2,048,000. This includes about $1,070,000 of additions in governmental activities primarily related to vehicle and equipment replacements. It also includes approximately $852,000 of additions in business-type activities primarily related to new turf maintenance equipment at the golf course, a new street sweeper, and new sanitary sewer jetter. Additional information on the City’s capital assets can be found in Note 4 of the notes to basic financial statements. -17- Long-Term Debt – At the end of the current fiscal year, the City had total debt outstanding of $42,490,037. Of this amount, $22,184,941 is backed by the full faith and credit of the City. Of this total, property taxes are the primary source of repayment for the General Obligation Bonds noted below in the amount of $12,895,000. The General Obligation Improvement Bonds in the amount of $475,000 is special assessment debt for which the City is liable in the event of default by the property owners subject to the assessment. The revenue bonds and revenue notes have the full faith and credit backing of the City with enterprise fund revenues being the primary source of repayment, and the capital lease is backed by the revenues of the golf course enterprise fund. City of Apple Valley’s Debt 2018 2017 2018 2017 2018 2017 General obligation bonds 12,895,000$ 13,885,000$ –$ –$ 12,895,000$ 13,885,000$ General obligation improvement bonds 475,000 585,000 – – 475,000 585,000 General obligation revenue bonds – – 8,435,000 9,000,000 8,435,000 9,000,000 Revenue bonds – – – 1,120,000 – 1,120,000 General obligation revenue notes – – 379,941 – 379,941 – Capital lease – – 335,739 175,526 335,739 175,526 Unamortized premium 281,869 330,288 146,651 157,288 428,520 487,576 Total OPEB liability 1,900,268 1,537,306 330,379 268,527 2,230,647 1,805,833 Net pension liability 11,724,700 14,729,157 2,206,115 2,658,752 13,930,815 17,387,909 Compensated absences 2,859,937 2,811,465 519,438 473,036 3,379,375 3,284,501 Total 30,136,774$ 33,878,216$ 12,353,263$ 13,853,129$ 42,490,037$ 47,731,345$ Total Table 4 Outstanding Debt Governmental Activities Business-Type Activities The City’s total bonded debt decreased by $2,785,000 during 2018, which resulted from the scheduled debt payments during the year in addition to the call and early retirement of the 2015A Liquor Revenue Bonds. The City maintains an “Aaa” rating from Moody’s and “AAA” from Standard and Poor’s on all of its general obligation debt. State statutes limit the amount of general obligation debt a governmental entity may issue to 3 percent of its total market valuation. A complete calculation of the City’s legal debt margin can be found in the statistical section of this report. Additional information on the City’s long-term debt can be found in Note 5 of the notes to basic financial statements. -18- ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s budget, along with the 5-year Capital Improvement Plan, is an important part of the City’s public process. The combination of these documents provides the framework that allows the City to address needed maintenance and provide for the growth and demands for service. Through innovation and efficiencies, the City continues to provide quality services that meet or exceed the expectations of our community members. Strong financial stewardship and quality customer service is a hallmark of the City’s government and is evidenced by the City’s AAA bond rating. Departments successfully managed their expenditures and as a result General Fund expenditures were approximately 2.6 percent below the authorized budget. The City experienced growth in licenses and permits, due to a surge in single and multi-family development activity, which began in 2014 and is anticipated to last beyond 2019. The City will continue to make significant ongoing investments in the Street and Utility Infrastructure Preservation and Reconstruction Program. These factors were considered in preparing the City’s budget for the 2019 fiscal year: •Property taxes provide the largest source, approximately 73.0 percent, of the resources needed tosupport the General Fund activities. Minnesota cities are not subject to levy limits for 2019. •Property values in the City are increasing as they are in other locations. The increase in themedian valued residential property for the 2019 budget year will be approximately 9.0 percent,compared to an increase of 6.2 percent for the 2018 budget year. The preliminary county data for2020 shows a 7.1 percent increase in the median valued home. •The total property tax levy increased 2.2 percent for 2019. •The taxes paid by the median valued home increased for 2019 to $1,020 from $987 in 2018,approximately 3.3 percent. •Contract settlements with all of the City’s three unions have been reached through 2019. •A 5.0 percent increase in water utility rates was enacted for 2019 to fund the portion of the Streetand Utility Infrastructure Preservation Program related to the water utility and the water meterreplacement program. Utility rates for the sanitary sewer, storm water, and street light utilitieseach increased by 5.0, 10.0, and 3.0 percent, respectively for 2019. REQUESTS FOR INFORMATION This CAFR is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests fo r additional financial information should be addressed to the Office of the Finance Director, City of Apple Valley, 7100 – 147th Street West, Apple Valley, Minnesota 55124. THIS PAGE INTENTIONALLY LEFT BLANK GOVERNMENT-WIDE FINANCIAL STATEMENTS Governmental Business-TypeActivitiesActivities Total AssetsCash and investments 56,386,164$ 14,801,921$ 71,188,085$ Receivables Accounts and interest 808,305 3,273,780 4,082,085 Notes 574,320 – 574,320 Taxes 1,842,405 – 1,842,405 Special assessments 3,561,668 306,619 3,868,287 Due from other governmental units 85,584 214,048 299,632 Internal balances 1,944,542 (1,944,542) – Prepaids 326,197 272,913 599,110 Inventory 19,817 1,681,478 1,701,295 Land held for resale 1,877,559 – 1,877,559 Net pension asset 1,807,017 – 1,807,017 Capital assetsNot depreciated 7,659,577 11,566,267 19,225,844 Depreciated, net of accumulated depreciation 89,972,681 97,992,995 187,965,676 Total assets 166,865,836 128,165,479 295,031,315 Deferred outflows of resourcesPension plan deferments 9,513,664 493,170 10,006,834 OPEB plan deferments 98,129 16,722 114,851 Total deferred outflows of resources 9,611,793 509,892 10,121,685 Total assets and deferred outflows of resources 176,477,629$ 128,675,371$ 305,153,000$ LiabilitiesAccrued salaries payable 751,342$ 105,407$ 856,749$ Accounts payable 2,565,512 1,041,719 3,607,231 Contracts payable 1,017,857 1,204,108 2,221,965 Interest payable 11,399 9,435 20,834 Due to other governmental units 50,310 182,000 232,310 Claims incurred, but not reported 8,661 – 8,661 Unearned revenue – 13,491 13,491 Long-term liabilities Due within one year 2,851,000 929,780 3,780,780 Due in more than one year 27,285,774 11,423,483 38,709,257 Total long-term liabilities 30,136,774 12,353,263 42,490,037 Total liabilities 34,541,855 14,909,423 49,451,278 Deferred inflows of resourcesPension plan deferments 14,136,354 675,421 14,811,775 Net positionNet investment in capital assets 83,980,389 100,261,931 184,242,320 Restricted for Debt service 1,524,038 – 1,524,038 Tax increment financing 4,268,431 – 4,268,431 Economic development 743,520 – 743,520 Police forfeiture 61,466 – 61,466 Capital acquisition 7,357,305 – 7,357,305 Fire relief pension 1,235,335 – 1,235,335 Other purposes 162,261 – 162,261 Unrestricted 28,466,675 12,828,596 41,295,271 Total net position 127,799,420 113,090,527 240,889,947 Total liabilities, deferred inflows of resources, and net position 176,477,629$ 128,675,371$ 305,153,000$ CITY OF APPLE VALLEY Statement of Net Positionas of December 31, 2018 See notes to basic financial statements -19- Operating CapitalCharges for Grants and Grants andFunctions/Programs Expenses Services Contributions Contributions Governmental activitiesGeneral government 7,670,285$ 1,987,775$ 1,148,639$ 496$ Public safety 12,750,741 615,835 836,639 – Public works 9,434,637 3,555,717 – 3,741,164 Parks and recreation 6,992,203 2,396,973 – – Interest and fiscal charges 284,621 – – – Total governmental activities 37,132,487 8,556,300 1,985,278 3,741,660 Business-type activitiesMunicipal liquor 8,362,332 9,456,705 – – Municipal golf course 1,238,125 864,579 – – Sports arena 784,343 790,989 – – Water and sewer 9,203,936 10,365,726 – 1,383,138 Storm drainage 2,035,266 1,967,313 – 310,098 Cemetery 89,069 150,703 – – Street light utility 485,356 522,977 – – Total business-type activities 22,198,427 24,118,992 – 1,693,236 Total governmental and business-type activities 59,330,914$ 32,675,292$ 1,985,278$ 5,434,896$ General revenuesProperty taxesOther taxesFranchise taxesGrants and contributions not restricted to specific programsOther general revenuesInvestment earnings TransfersTotal general revenues and transfers Change in net position Net position – beginning, as previously reportedChange in accounting principlePrior period adjustment Net position – beginning, as restated Net position – ending Program Revenues CITY OF APPLE VALLEY Statement of ActivitiesYear Ended December 31, 2018 See notes to basic financial statements -20- Governmental Business-TypeActivitiesActivities Total (4,533,375)$ –$ (4,533,375)$ (11,298,267) – (11,298,267) (2,137,756) – (2,137,756) (4,595,230) – (4,595,230) (284,621) – (284,621) (22,849,249) – (22,849,249) – 1,094,373 1,094,373 – (373,546) (373,546) – 6,646 6,646 – 2,544,928 2,544,928 – 242,145 242,145 – 61,634 61,634 – 37,621 37,621 – 3,613,801 3,613,801 (22,849,249) 3,613,801 (19,235,448) 26,496,094 121,000 26,617,094 150,340 – 150,340 1,306,360 – 1,306,360 124,430 – 124,430 10,786 – 10,786 886,459 268,297 1,154,756 1,317,600 (1,317,600) – 30,292,069 (928,303) 29,363,766 7,442,820 2,685,498 10,128,318 139,298,849 110,420,424 249,719,273 (90,334) (15,395) (105,729) (18,851,915) – (18,851,915) 120,356,600 110,405,029 230,761,629 127,799,420$ 113,090,527$ 240,889,947$ Revenue and Changes in Net PositionNet (Expenses) -21- THIS PAGE INTENTIONALLY LEFT BLANK FUND FINANCIAL STATEMENTS THIS PAGE INTENTIONALLY LEFT BLANK Debt Service FutureGeneralClosed Bond Road CapitalFundIssuesImprovementsProjects(1000)(3205)(2025)(4930) AssetsCash and investments 16,206,366$ 5,145,237$ –$ 8,748,509$ ReceivablesAccounts 264,472 – – – Notes – 574,320 – – Taxes 1,842,405 – – – Special assessmentsCurrent 1,896 472,182 35,997 – Delinquent 11,426 20,425 – – Deferred – 2,248,564 251,178 – Interest 374,422 – – – Due from other governmental units 81,968 – – – Due from other funds – – – 3,892,971Advances to other funds – 1,079,159 – 1,797,482 Prepaids 125,827 – – – Inventory 19,817 – – – Land held for resale – 1,877,559 – – Total assets 18,928,599$ 11,417,446$ 287,175$ 14,438,962$ LiabilitiesAccrued salaries payable 744,996$ –$ –$ –$ Accounts payable 331,430 13,130 574,584 138,824 Contracts payable 1,168 – 798,238 – Due to other governmental units 50,126 – 184 – Due to other funds – – 3,877,653 – Advances from other funds – – – – Total liabilities 1,127,720 13,130 5,250,659 138,824 Deferred inflows of resources Unavailable revenue – property taxes 147,226 – – – Unavailable revenue – special assessments 13,322 2,741,171 287,175 – Total deferred inflows of resources 160,548 2,741,171 287,175 – Fund balances (deficit)Nonspendable 145,644 – – – Restricted – – – – Committed 367,510 – – – Assigned 75,000 8,663,145 – 14,300,138 Unassigned 17,052,177 – (5,250,659) – Total fund balances (deficit)17,640,331 8,663,145 (5,250,659) 14,300,138 Total liabilities, deferred inflows of resources, and fund balances 18,928,599$ 11,417,446$ 287,175$ 14,438,962$ Capital Projects CITY OF APPLE VALLEY Balance SheetGovernmental Fundsas of December 31, 2018 See notes to basic financial statements -22- Nonmajor TotalGovernmentalGovernmentalFundsFunds 21,782,553$ 51,882,665$ 168,023 432,495 – 574,320 – 1,842,405 130,000 640,075 – 31,851 390,000 2,889,742 – 374,422 3,616 85,584 – 3,892,971 – 2,876,641 – 125,827 – 19,817 – 1,877,559 22,474,192$ 67,546,374$ 6,346$ 751,342$ 1,471,972 2,529,940 218,451 1,017,857 – 50,310 15,318 3,892,971 1,079,159 1,079,159 2,791,246 9,321,579 – 147,226 520,000 3,561,668 520,000 3,708,894 – 145,644 13,608,420 13,608,420 – 367,510 6,412,331 29,450,614 (857,805) 10,943,713 19,162,946 54,515,901 22,474,192$ 67,546,374$ -23- THIS PAGE INTENTIONALLY LEFT BLANK Total fund balances – governmental funds 54,515,901$ Capital assets used in governmental activities are not current financial resources and,therefore,are not reported as assets in governmental funds.Cost of capital assets 187,993,554 Less accumulated depreciation (96,493,879) Net pension assets are included in net position,but are excluded from fund balances becausethey do not represent financial resources.1,807,017 Long-term liabilities are not payable with current financial resources and,therefore,are notreported in governmental funds.Bonds payable (13,370,000) Total OPEB liability (1,900,268) Net pension liability (11,724,700) Due to availability,certain revenues are not recognized under the governmental fund statementsuntilreceived;however,under full accrual in the government-wide Statement of Activities,revenues are recorded when earned regardless of when received.3,708,894 Accrued interest payable is included in net position,but is excluded from fund balances untildue and payable.(11,399) Internal service funds are used by management to charge certain costs to individual funds.TheassetsandliabilitiesoftheinternalservicefundsareincludedingovernmentalactivitiesintheStatement of Net Position.Internal service fund balances included in governmental activities 7,933,670 Add internal services balances allocated to business-type activities 147,060 Governmental funds report debt premiums as other financing sources at the time of issuance.Premiums are reported as liabilities in the Statement of Net Position.(281,869) Governmental funds do not report certain long-term amounts related to pensions and OPEB thatare included in net position. Deferred outflows of resources – pension plan deferments 9,513,664 Deferred outflows of resources – OPEB plan deferments 98,129 Deferred inflows of resources – pension plan deferments (14,136,354) Total net position – governmental activities 127,799,420$ Amounts reported for governmental activities in the Statement of Net Position are differentbecause: as of December 31, 2018 CITY OF APPLE VALLEY Reconciliation of the Balance Sheet to theStatement of Net PositionGovernmental Funds See notes to basic financial statements -24- Debt Service FutureGeneralClosed Bond Road CapitalFundIssuesImprovementsProjects(1000)(3205)(2025)(4930) RevenueTaxes 24,390,777$ –$ –$ –$ Other taxes 50,380 – – – Franchise taxes 515,000 – – – Special assessments 496 1,478,394 214,551 – Licenses and permits 2,254,309 – – – Intergovernmental 881,315 – 585,765 – Charges for services 3,086,720 – – – Fines and forfeits 302,494 – – – Investment earnings 237,028 92,424 – 204,366 Other 911,721 3,000 1,090 – Total revenue 32,630,240 1,573,818 801,406 204,366 ExpendituresCurrentGeneral government 5,411,406 – – – Public safety 13,102,632 – – – Public works 4,428,567 – – – Parks and recreation 5,461,620 – – – Capital outlay 295,621 – 4,873,595 1,631,819 Debt servicePrincipal – – – – Interest and fiscal charges – 12,818 – – Total expenditures 28,699,846 12,818 4,873,595 1,631,819 Excess (deficiency) of revenue over expenditures 3,930,394 1,561,000 (4,072,189) (1,427,453) Other financing sources (uses)Sale of capital assets 18,924 – – – Transfers in 1,317,600 1,307,012 3,995,810 1,165,000 Transfers (out)(4,963,000) (3,645,533) – (790,810) Total other financing sources (uses)(3,626,476) (2,338,521) 3,995,810 374,190 Net change in fund balances 303,918 (777,521) (76,379) (1,053,263) Fund balances (deficit)Beginning of year 17,336,413 9,440,666 (5,174,280) 15,353,401 End of year 17,640,331$ 8,663,145$ (5,250,659)$ 14,300,138$ Capital Projects CITY OF APPLE VALLEY Statement of Revenue, Expenditures, and Changes in Fund BalancesGovernmental FundsYear Ended December 31, 2018 See notes to basic financial statements -25- Nonmajor TotalGovernmentalGovernmentalFundsFunds 2,099,737$ 26,490,514$ 99,960 150,340 791,360 1,306,360 130,000 1,823,441 – 2,254,309 1,268,744 2,735,824 – 3,086,720 – 302,494 289,980 823,798 3,245,096 4,160,907 7,924,877 43,134,707 1,858,766 7,270,172 5,161 13,107,793 717,157 5,145,724 265,492 5,727,112 1,295,644 8,096,679 1,100,000 1,100,000 332,390 345,208 5,574,610 40,792,688 2,350,267 2,342,019 11,912 30,836 5,042,569 12,827,991 (2,111,048) (11,510,391) 2,943,433 1,348,436 5,293,700 3,690,455 13,869,246 50,825,446 19,162,946$ 54,515,901$ -26- THIS PAGE INTENTIONALLY LEFT BLANK Total net change in fund balances – governmental funds 3,690,455$ Capital outlays are reported in governmental funds as expenditures;however,in the Statement ofActivitiesthecostofthoseassetsisallocatedovertheestimatedusefullivesasdepreciationexpense. Capital outlay 7,722,110 Capital contributions 311,986 Depreciation expense (5,948,120) Net pension assets are only recorded in the government-wide financial statements as they are notcurrent financial resources to governmental funds.1,015,991 Repayment of long-term liabilities is an expenditure in the governmental funds,but therepayment reduces long-term liabilities in the Statement of Net Position.1,100,000 Interest on long-term debt in the Statement of Activities differs from the amount reported in thegovernmentalfundsbecauseinterestisrecognizedasanexpenditureinthefundswhenitisdue,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.12,168 Governmental funds report debt issuance premiums as other financing sources at the time ofissuance. Premiums are reported as liabilities in the Statement of Net Position.48,419 Certain revenues are recognized as soon as they are earned in the Statement of Activities;however,under the modified accrual basis of accounting,certain revenues cannot be recognizeduntil they are available to liquidate liabilities of the current period.(331,401) Internal service funds are used by management to charge certain costs to individual funds.Thenetrevenueofcertainactivitiesofinternalservicefundsisreportedwithgovernmentalactivitiesin the government-wide financial statements.Internal service fund activity included in governmental activities (25,179) Add back internal service fund activity allocated to business-type activities 31,823 Governmental funds do not report long-term amounts related to pensions and OPEB that areincluded in the change in net position.Net pension liability 3,004,457 Total OPEB liability (220,068) Deferred outflows of resources – pension plan deferments (3,325,957) Deferred outflows of resources – OPEB plan deferments 45,569 Deferred inflows of resources – pension plan deferments 310,567 Change in net position – governmental activities 7,442,820$ Amounts reported for governmental activities in the Statement of Activities are different because: CITY OF APPLE VALLEY Reconciliation of the Statement ofRevenue, Expenditures, and Changes in Fund Balancesto the Statement of ActivitiesGovernmental FundsYear Ended December 31, 2018 See notes to basic financial statements -27- THIS PAGE INTENTIONALLY LEFT BLANK Over (Under)Original Final Actual Budget RevenueTaxes 24,273,125$ 24,273,125$ 24,390,777$ 117,652$ Other taxes 103,900 103,900 50,380 (53,520) Franchise taxes 515,000 515,000 515,000 – Special assessments 14,000 14,000 496 (13,504) Licenses and permits 1,504,710 1,504,710 2,254,309 749,599 Intergovernmental 864,255 864,255 881,315 17,060 Charges for services 3,333,025 3,333,025 3,086,720 (246,305) Fines and forfeits 279,500 279,500 302,494 22,994 Investment earnings 195,000 195,000 237,028 42,028 Other 735,740 735,740 911,721 175,981 Total revenue 31,818,255 31,818,255 32,630,240 811,985 ExpendituresCurrentGeneral government 5,654,240 5,668,130 5,411,406 (256,724) Public safety 13,011,740 13,167,340 13,102,632 (64,708) Public works 4,761,675 4,695,315 4,428,567 (266,748) Parks and recreation 5,649,300 5,612,300 5,461,620 (150,680) Capital outlayGeneral government 115,100 117,634 122,569 4,935 Public safety 51,700 99,480 43,160 (56,320) Public works 38,000 55,500 74,679 19,179 Parks and recreation 76,500 58,585 55,213 (3,372) Total expenditures 29,358,255 29,474,284 28,699,846 (774,438) Excess of revenue over expenditures 2,460,000 2,343,971 3,930,394 1,586,423 Other financing sources (uses)Sale of capital assets 20,400 20,400 18,924 (1,476) Transfers in 1,317,600 1,317,600 1,317,600 – Transfers (out)(3,798,000) (3,798,000) (4,963,000) (1,165,000) Total other financing sources (uses)(2,460,000) (2,460,000) (3,626,476) (1,166,476) Net change in fund balances –$ (116,029)$ 303,918 419,947$ Fund balancesBeginning of year 17,336,413 End of year 17,640,331$ Budgeted Amounts CITY OF APPLE VALLEY Statement of Revenue, Expenditures, and Changes in Fund Balances General Fund – Budget and ActualYear Ended December 31, 2018 See notes to basic financial statements -28- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Current assetsCash and investments 2,443,857$ –$ 28,121$ 9,267,882$ Receivables Special assessmentsCurrent – – – 242,575Delinquent– – – 18,169Accounts– 8,452 128,032 2,498,425Due from other governmental units – – 201,427 979 Prepaids 14,611 448 605 257,249Inventory1,564,245 59,333 – 57,900Total current assets 4,022,713 68,233 358,185 12,343,179 Noncurrent assetsDeferred special assessment receivable – – – 25,813 Advance to other funds – – – 1,566,846 Capital assetsLand and land improvements 1,177,683 991,179 2,000 2,024,127Construction in progress 144,478 – 280,503 3,053,844Buildings3,627,680 3,190,504 3,548,670 11,780,603Other improvements 25,000 689,963 109,420 105,142,346Furniture and equipment 362,676 1,208,294 299,195 3,904,426Less accumulated depreciation (1,784,786) (1,795,243) (2,927,377) (57,729,132) Total capital assets (net of accumulated depreciation)3,552,731 4,284,697 1,312,411 68,176,214 Total noncurrent assets 3,552,731 4,284,697 1,312,411 69,768,873 Total assets 7,575,444 4,352,930 1,670,596 82,112,052 Deferred outflows of resourcesPension plan deferments 98,479 85,021 36,103 234,746 OPEB plan deferments 3,824 1,838 1,217 8,407 Total deferred outflows of resources 102,303 86,859 37,320 243,153 Total assets and deferred outflows of resources 7,677,747$ 4,439,789$ 1,707,916$ 82,355,205$ as of December 31, 2018 Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Net PositionProprietary Funds See notes to basic financial statements -29- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 2,291,828$ 599,729$ 170,504$ 14,801,921$ 4,503,499$ 1,224 – – 243,799 – – – – 18,169 – 501,768 – 137,103 3,273,780 1,388 11,038 – 604 214,048 – – – – 272,913 200,370 – – – 1,681,478 – 2,805,858 599,729 308,211 20,506,108 4,705,257 18,838 – – 44,651 – – – – 1,566,846 – 2,165,380 513,560 – 6,873,929 – 744,329 469,184 – 4,692,338 – – – – 22,147,457 – 50,637,142 850,301 – 157,454,172 – 630,843 – – 6,405,434 13,134,845 (23,524,780) (252,750) – (88,014,068) (7,002,262) 30,652,914 1,580,295 – 109,559,262 6,132,583 30,671,752 1,580,295 – 111,170,759 6,132,583 33,477,610 2,180,024 308,211 131,676,867 10,837,840 38,821 – – 493,170 – 1,436 – – 16,722 – 40,257 – – 509,892 – 33,517,867$ 2,180,024$ 308,211$ 132,186,759$ 10,837,840$ -30-(continued) Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Current liabilitiesAccrued salaries payable 31,990$ 11,493$ 11,060$ 46,834$ Accounts payable 854,768 36,181 23,630 74,430 Contracts payable – – 182,333 926,824Interest payable – – – 8,236 Due to other governmental units 99,257 247 18,191 56,101Claims payable – – – – Unearned revenue – 13,491 – – Accrued compensated absences 65,100 27,300 16,200 158,100Capital lease payable – 86,280 – – Bonds payable – – – 395,000Total current liabilities 1,051,115 174,992 251,414 1,665,525 Noncurrent liabilitiesAccrued compensated absences 51,096 53,610 11,966 122,858Total OPEB liability 80,778 40,956 25,919 169,496Net pension liability 469,339 316,912 153,348 1,075,144Advance from other fund – 3,364,328 – – Capital lease payable – 249,459 – – Revenue note payable – – – 379,941 Bonds payable – – – 6,742,966Total noncurrent liabilities 601,213 4,025,265 191,233 8,490,405 Total liabilities 1,652,328 4,200,257 442,647 10,155,930 Deferred inflows of resourcesPension plan deferments 149,508 87,886 47,112 333,268 Net position (deficit)Net investment in capital assets 3,552,731 3,948,958 1,312,411 60,658,307 Unrestricted 2,323,180 (3,797,312) (94,254) 11,207,700 Total net position 5,875,911 151,646 1,218,157 71,866,007 Total liabilities, deferred inflows of resources, and net position 7,677,747$ 4,439,789$ 1,707,916$ 82,355,205$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Net PositionProprietary Funds (continued)as of December 31, 2018 See notes to basic financial statements -31- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 4,009$ 21$ –$ 105,407$ –$ 38,504 11,290 2,916 1,041,719 35,572 30,890 64,061 – 1,204,108 – 1,199 – – 9,435 – 7,190 – 1,014 182,000 – – – – – 8,661 – – – 13,491 – 6,800 – – 273,500 1,671,000 – – – 86,280 – 175,000 – – 570,000 – 263,592 75,372 3,930 3,485,940 1,715,233 6,408 – – 245,938 1,188,937 13,230 – – 330,379 – 191,372 – – 2,206,115 – – – – 3,364,328 – – – – 249,459 – – – – 379,941 – 1,268,685 – – 8,011,651 – 1,479,695 – – 14,787,811 1,188,937 1,743,287 75,372 3,930 18,273,751 2,904,170 57,647 – – 675,421 – 29,209,229 1,580,295 – 100,261,931 6,132,583 2,507,704 524,357 304,281 12,975,656 1,801,087 31,716,933 2,104,652 304,281 113,237,587 7,933,670 33,517,867$ 2,180,024$ 308,211$ 132,186,759$ 10,837,840$ Total net position – enterprise funds 113,237,587$ Adjustment to reflect the consolidation of internal service fund activity related to enterprise funds (147,060) Net position – business-type activities 113,090,527$ -32- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Operating revenueSales and rentals 9,445,281$ 862,834$ 789,516$ –$ Charges for services – – – 10,352,835Total operating revenue 9,445,281 862,834 789,516 10,352,835 Cost of goods sold 6,568,030 75,112 11,680 – Gross profit 2,877,251 787,722 777,836 10,352,835 Operating expensesPersonal services 1,078,155 643,186 346,278 1,663,308Contractual services 27,762 66,396 43,626 209,533Other charges 340,921 22,442 14,808 828,120Supplies and repairs 56,097 134,259 58,116 438,110Insurance68,585 36,000 26,775 212,600Utilities53,013 48,173 145,303 411,637Depreciation141,535 192,783 135,441 2,357,710 Sewer charges – – – 2,919,524Total operating expenses 1,766,068 1,143,239 770,347 9,040,542 Operating income (loss)1,111,183 (355,517) 7,489 1,312,293 Nonoperating revenue (expense)Taxes – – 121,000 – Investment earnings 37,994 – 1,225 172,959 Other income 11,424 1,745 1,473 12,891Gain (loss) on sale of capital assets – – – 37,330 Interest expense (20,955) (16,277) – (184,725)Total nonoperating revenue (expense)28,463 (14,532) 123,698 38,455 Income (loss) before capital contributions and transfers 1,139,646 (370,049) 131,187 1,350,748 Capital contributions – – – 434,018 Capital contributions – connection fees – – – 949,120Transfers (out)(630,000) – – (687,600) Change in net position 509,646 (370,049) 131,187 2,046,286 Net positionBeginning of year, as previously reported 5,369,786 523,387 1,088,091 69,827,460 Change in accounting principle (3,521) (1,692) (1,121) (7,739) Beginning of year, as restated 5,366,265 521,695 1,086,970 69,819,721 End of year 5,875,911$ 151,646$ 1,218,157$ 71,866,007$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Revenue, Expenses, and Changes in Net PositionProprietary FundsYear Ended December 31, 2018 See notes to basic financial statements -33- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund –$ –$ –$ 11,097,631$ –$ 1,901,319 150,393 522,977 12,927,524 2,620,212 1,901,319 150,393 522,977 24,025,155 2,620,212 – – – 6,654,822 – 1,901,319 150,393 522,977 17,370,333 2,620,212 254,303 1,181 1,817 3,988,228 922,637 192,518 46,703 48,668 635,206 20,529 387,968 13,086 10,121 1,617,466 857,132 56,388 5,935 – 748,905 – 7,000 – 8,090 359,050 – 76,142 1,397 416,660 1,152,325 – 1,024,022 20,767 – 3,872,258 1,033,925 – – – 2,919,524 – 1,998,341 89,069 485,356 15,292,962 2,834,223 (97,022) 61,324 37,621 2,077,371 (214,011) – – – 121,000 – 42,494 11,280 2,345 268,297 62,661 65,994 310 – 93,837 – (4,291) – – 33,039 126,171 (29,902) – – (251,859) – 74,295 11,590 2,345 264,314 188,832 (22,727) 72,914 39,966 2,341,685 (25,179) 167,821 – – 601,839 – 142,277 – – 1,091,397 – – – – (1,317,600) – 287,371 72,914 39,966 2,717,321 (25,179) 31,430,884 2,031,738 264,315 110,535,661 7,958,849 (1,322) – – (15,395) – 31,429,562 2,031,738 264,315 110,520,266 7,958,849 31,716,933$ 2,104,652$ 304,281$ 113,237,587$ 7,933,670$ Change in net position – enterprise funds 2,717,321$ Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds (31,823) Change in net position – business-type activities 2,685,498$ -34- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Cash flows from operating activitiesCash received from customers 9,463,422$ 873,153$ 755,534$ 10,290,957$ Cash receipts on interfund services provided – – – – Cash payments to suppliers (6,847,819) (359,652) (312,471) (5,398,004) Cash payments to employees for services (1,058,631) (642,720) (344,816) (1,635,891) Net cash flows from operating activities 1,556,972 (129,219) 98,247 3,257,062 Cash flows from capital and related financing activitiesAcquisition and construction of capital assets (159,978) (255,256) (139,436) (3,763,640) Connection fees received – – – 949,120 Proceeds from sale of capital assets – – – 39,691 Proceeds from issuance of capital lease – 254,996 – – Proceeds from issuance of revenue note – – – 379,941 Payment on debt (1,120,000) (94,783) – (385,000) Interest paid (22,837) (16,277) – (192,824) Net cash flows from capital and related financing activities (1,302,815) (111,320) (139,436) (2,972,712) Cash flows from investing activitiesInterest received on investments 37,994 – 1,225 172,959 Cash flows from noncapital financing activitiesTaxes – – 121,000 – Cash received from other funds – 240,539 – – Cash paid to other funds – – (52,915) (237,805) Transfers (out)(630,000) – – (687,600) Net cash flows from noncapital financing activities (630,000) 240,539 68,085 (925,405) Net increase (decrease) in cash and cash equivalents (337,849) – 28,121 (468,096) Cash and cash equivalentsBeginning of year 2,781,706 – – 9,735,978 End of year 2,443,857$ –$ 28,121$ 9,267,882$ Reconciliation of operating income (loss) to net cash flows from operating activitiesOperating income (loss)1,111,183$ (355,517)$ 7,489$ 1,312,293$ Adjustments to reconcile operating income (loss) to net cash flows from operating activitiesDepreciation 141,535 192,783 135,441 2,357,710 Other revenue (expense)11,424 1,745 1,473 12,891 Change in assets, deferred outflows/inflows of resources, and liabilitiesReceivablesSpecial assessments – – – (13,841) Accounts 6,717 (4,917) (47,742) (338,753) Due from other governmental units – – 12,287 277,825 Inventory (54,281) (1,507) – 35,182 Prepaids 6,166 4,575 1,125 5,813 Deferred outflows of resources 57,959 27,875 18,515 127,383 Accounts payable 313,866 20,450 10,451 (105,436) Contracts payable – – – (224,244) Accrued salaries payable 4,050 (137) 3,675 7,502 Claims payable – – – – Total OPEB liability 8,577 4,121 2,730 18,854 Net pension liability (103,530) (49,792) (33,069) (227,540) Accrued compensated absences 18,293 1,962 (1,305) 26,109 Due to other governmental units 838 (788) (23,739) (89,795) Unearned revenue – 13,491 – – Deferred inflows of resources 34,175 16,437 10,916 75,109 Net cash flows from operating activities 1,556,972$ (129,219)$ 98,247$ 3,257,062$ Noncash investing, capital, and financing activitiesCapital contributions –$ –$ –$ 434,018$ Net book value of capital asset disposals –$ –$ –$ (2,361)$ Capital asset purchased on account –$ –$ 182,333$ 926,824$ Amortization of bond premium (discount)–$ –$ –$ 8,301$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Cash FlowsProprietary FundsYear Ended December 31, 2018 See notes to basic financial statements -35- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 1,958,309$ 150,703$ 520,865$ 24,012,943$ –$ – – – – 2,650,893 (692,794) (59,572) (501,315) (14,171,627) (1,584,265) (253,049) (1,160) (1,817) (3,938,084) (167,671) 1,012,466 89,971 17,733 5,903,232 898,957 (1,595,669) (446,266) – (6,360,245) (1,070,851) 142,277 – – 1,091,397 – – – – 39,691 207,228 – – – 254,996 – – – – 379,941 – (180,000) – – (1,779,783) – (32,388) – – (264,326) – (1,665,780) (446,266) – (6,638,329) (863,623) 42,494 11,280 2,345 268,297 62,661 – – – 121,000 – – – – 240,539 – – – – (290,720) – – – – (1,317,600) – – – – (1,246,781) – (610,820) (345,015) 20,078 (1,713,581) 97,995 2,902,648 944,744 150,426 16,515,502 4,405,504 2,291,828$ 599,729$ 170,504$ 14,801,921$ 4,503,499$ (97,022)$ 61,324$ 37,621$ 2,077,371$ (214,011)$ 1,024,022 20,767 – 3,872,258 1,033,925 65,994 310 – 93,837 – 5,124 – – (8,717) – (30,722) – (2,170) (417,587) 6,928 16,594 – 58 306,764 – – – – (20,606) – 1,460 – – 19,139 (3,298) 21,666 – – 253,398 – (12,318) 6,393 (18,790) 214,616 25,066 30,890 1,156 – (192,198) – 956 21 – 16,067 – – – – – 1,875 3,219 – – 37,501 – (38,706) – – (452,637) – 1,343 – – 46,402 48,472 7,190 – 1,014 (105,280) – – – – 13,491 – 12,776 – – 149,413 – 1,012,466$ 89,971$ 17,733$ 5,903,232$ 898,957$ 167,821$ –$ –$ 601,839$ –$ (4,291)$ –$ –$ (6,652)$ (81,057)$ –$ 62,905$ –$ 1,172,062$ –$ 2,336$ –$ –$ 10,637$ –$ -36- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF APPLE VALLEY Notes to Basic Financial Statements as of December 31, 2018 -37- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Apple Valley, Minnesota (the City) is a statutory city governed by an elected mayor and four councilmembers. The accompanying financial statements present the government entities for which the City is considered to be financially accountable. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. The Apple Valley Economic Development Authority (EDA) was established to provide economic development services to the City. Although a legally separate entity, the Apple Valley EDA is reported as if it were part of the primary government because it provides services exclusively for the City. The Apple Valley EDA governing body is substantially the same as the governing body of the primary government because five of the Apple Valley EDA boardmembers are City Council members and the two other members are appointed by the City Council. Management of the primary government also has operational responsibility for the Apple Valley EDA. The Apple Valley EDA is a blended component unit of the City, with the following funds reported as funds of the City: Economic Development Debt Service Fund and the EDA Operations Special Revenue Fund. The Apple Valley EDA does not issue separate financial statements. C. Government-Wide Financial Statement Presentation The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which significantly rely upon sales, fees, and charges for support. -38- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported as general revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. However, charges between the City’s enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner: 1. Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabili ties of the current period. For this purpose, the City considers revenues to be available if they are coll ected within 60 days after year-end. 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. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licens es and permits, fees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. 2. Recording of Expenditures – Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-term debt and other long-term liabilities, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. -39- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sales and services . The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses that do not meet this definition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the proprietary fund financial statements. Because the principal user of the internal services is the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Description of Funds The City reports the following major governmental funds: General Fund (1000) – This fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Closed Bond Issues Debt Service Fund (3205) – This fund accounts for all the closed bond issues that still have activity. Road Improvements Capital Projects Fund (2025) – This fund accounts for various road improvements. Future Capital Projects Capital Projects Fund (4930) – This fund accounts for funds set aside for future capital improvements. The City reports the following major enterprise funds: Municipal Liquor Fund (5000 and 5030) – This fund accounts for the operations of the City’s liquor stores. Municipal Golf Course Fund (5100) – This fund accounts for the operations of the City’s golf course. Sports Arena Fund (5200) – This fund accounts for the operations of the City’s sports arena. Water and Sewer Fund (5300 and 5400) – This fund accounts for the activities of the City’s water and sewer operations. -40- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Storm Drainage Fund (5500 and 5550) – This fund accounts for the activities of the City’s storm drainage operations. Cemetery Fund (5600 and 5700) – This fund accounts for the activities of the City’s cemetery operations. Street Light Utility Fund (5800) – This fund accounts for the activities of the City’s street light operations. Additionally, the City reports the following fund types: Internal Service Funds – Internal service funds account for the financing of goods and services provided to other departments or agencies of the City on a cost-reimbursement basis. The City utilizes a Dental Insurance Internal Service Fund, Benefits/Other Insurance Internal Service Fund, and a Vehicle Equipment Replacement Internal Service Fund in managing city operations. E. Cash and Investments Cash and investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. The City generally reports investments at fair value. The Minnesota Municipal Money Market (4M) Fund is an external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Commission (SEC), but follows the same regulatory rules of the SEC. The fair value of the position in the pool is the same as the value of the pool shares, which is based on an amortized cost method that approximates fair value. The 4M Fund is sponsored by the League of Minnesota Cities. For this investment pool, there are no unfunded commitments, redemption frequency is daily, and there is no redemption notice required for the Liquid Class; the redemption notice period is 14 days for the Plus Class. The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. 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; and Level 3 inputs are significant unobservable inputs. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. See Note 2 for the City’s recurring fair value measurements as of year-end. F. Receivables Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to certify delinquent amounts to the county for collection as special assessments, no allowance for uncollectible accounts has been provided on current receivables. The only receivables not expected to be collected within one year are property taxes and special assessments receivable. Notes receivable are amounts due to the City related to the Village Pointe Plaza project. -41- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Interfund Receivables and Payables In the fund financial statements, activity between funds that is representative of lending or borrowing arrangements is reported as either “due to/from other funds” (current portion) or “advances to/from other funds.” 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.” H. Land Held for Resale Land held for resale represents various property purchases made by the City with the intent to sell in order to increase the tax base or to attract new businesses. These assets are stated at the lower of cost or acquisition value. During the year ended December 31, 2018, management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial reporting purposes. I. Property Taxes Property tax levies are set by the City Council in December of each year, and are certified to Dakota County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county provides tax settlements to cities and other taxing districts three times a year; in July, December, and January. Property taxes are recognized as revenue in the year levied in the government -wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, taxes are recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable, and are offset by a deferred inflow of resources in the governmental fund financial statements. J. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. Special assessments are recorded as receivables upon certification to the county. Special assessments are recognized as revenue in the year levied in the government -wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, special assessments are recognized as revenue when received in cash or within 60 days after year -end. Governmental fund special assessments receivable which remain unpaid on December 31 are offset by a deferred inflow of resources in the governmental fund financial statements. K. Prepaids Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. -42- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Inventories The inventories for the Municipal Golf and Municipal Liquor Funds use the average cost valuation method. Inventories of the remaining governmental and proprietary funds are valued at cost using the first-in, first-out valuation method. Inventories are recorded as expenditures or expenses when consumed. M. Capital Assets Capital assets, which include land, land improvements, buildings, other improvements, furniture and equipment, and infrastructure assets (roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are capitalized at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated acquisition value on the date of donation. The City defines capital assets as those with an initial, individual cost of $5,000 or more with an estimated useful life in excess of two years. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not reported in the governmental fund financial statements. Interest incurred during the construction phase of capital assets for business-type activities is included as part of the capitalized value of the assets constructed. Capital assets are depreciated using the straight-line method over their estimated useful lives. Land and construction in progress are not depreciated. The estimated useful lives are as follows: Assets Years Buildings 7–40Improvements other than buildings 5–40Furniture and equipment 3–50Infrastructure25–50 N. Compensated Absences Full-time employees employed by the City after January 1, 1995 are eligible for three to six weeks of annual leave depending on their length of service with the City. Annual leave may not accrue in excess of 800 hours. Upon termination of employment with the City, employees in “good standing” are reimbursed for all accrued and unused annual leave. Employees employed by the City prior to January 1, 1995 were eligible to elect to continue earning sick leave and vacation in lieu of the annual leave option. Those employees who elected not to take the annual leave provisions continue to be eligible to earn 12 days of sick leave and two to four weeks of vacation per year, depending on their length of service with the Cit y. Sick leave may carry forward indefinitely. Upon termination of employment in “good standing,” employees with more than 10 years of continuous service shall be paid up to one-third of their accrued and unused sick leave. The maximum amount of vacation that may be accumulated is twice the amount earned in any one year. Upon termination of employment, “good standing” employees shall be paid for their accrued and unused vacation leave. Compensated absences are accrued in governmental fund financial statements only when used or matured prior to year-end, due to employee termination or similar circumstances. Vacation and sick benefits are recorded as expenses and liabilities in proprietary funds when earned. Compensated absences payable in the government-wide Statement of Net Position and the Statement of Net Position – Proprietary Funds include all leave balances accrued, but not yet used by employees, whether or not the employees have terminated employment with the City. -43- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Long-Term Liabilities In the government-wide and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed in the period incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources , while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. P. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, statements of financial position or balance sheets will sometimes report separate sections for deferred outflows or inflows of resources. These separate financial statement elements represent a consumption or acquisition of net position that applies to a future period, and so will not be recognized as an outflow of resources (expense/expenditure), or an inflow of financial resources (revenue) until then. The City reports deferred outflows and inflows of resources related to pensions and other post-employment benefits (OPEB) in the government-wide and enterprise funds Statement of Net Position. These deferred outflows and inflows result from differences between expected and actual economic experience, changes in actuarial assumptions, differences between projected and actual investment earnings, changes in proportion, and contributions to the plan subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under pension and OPEB standards. Unavailable revenue, arises only under a modified accrual basis of accounting and, therefore, is only reported in the governmental funds Balance Sheet. The governmental funds report unavailable revenue 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. Q. Pension Plans 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 the PERA’s fiduciary net position have been determined on the same basis as they are reported by the PERA, except that the 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 PERA has a special funding situation created by a direct aid contribution made by the state of Minnesota. The direct aid is a result of the merger of the Minneapolis Employees Retirement Fund into the PERA on January 1, 2015. -44- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In August of each year, city staff submits to the City Council, a proposed operating budget for the year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution by the City Council. 4. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. 5. Expenditures may not legally exceed budgeted appropriations at the fund level. No fund’s budget can be increased without City Council approval. The City Council may authorize transfers of budgeted amounts between departments within any fund. Management may amend budgets within a department level, so long as the total department budget is not changed. 6. Annual appropriated budgets are adopted during the year for the General Fund, Cable TV Special Revenue Fund, and EDA Operations Special Revenue Fund. Annual appropriated budgets are not adopted for debt service funds because effective budgetary control is alternatively achieved through bond indenture provisions. Budgetary control for capital projects funds is accomplished through the use of project controls and formal appropriated budgets are not adopted for most capital projects funds. In 2018, the City also adopted formal annual appropriated budgets for the Road Improvements Capital Projects, Future Capital Projects, and Cable Capital Equipment Capital Projects Funds. 7. The finance director/treasurer presents monthly reports to the City Council. 8. Budgeted amounts are as originally adopted or as amended by the City Council. Budgeted expenditures lapse at year-end. S. Statement of Cash Flows For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents. The proprietary fund’s portion in the government-wide cash and investment management pool is considered to be cash equivalent. -45- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Net Position and Flow Assumptions In the government-wide and proprietary fund financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position is displayed in three components: • Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets. • Restricted Net Position – Consists of net position restricted when there are limitations imposed on its use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Unrestricted Net Position – All other elements of net position that do not meet the definition of “restricted” or “net investment in capital assets.” The City applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. U. Fund Balance Classifications and Flow Assumptions In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: • Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets. • Restricted – Consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions. • Committed – Consists of internally imposed constraints that are established by resolution of the City Council. Those committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned – Consists of internally imposed constraints. These constraints consist of amounts intended to be used by the City for specific purposes, but do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. Pursuant to City Council resolution, the city administrator and/or the finance director/treasurer are authorized to establish assignments of fund balance. • Unassigned – The residual classification for the General Fund, which also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. -46- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) V. Risk Management The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers ’ compensation, and other miscellaneous insurance coverage. The LMCIT operates as a common risk management and insurance program for a large number of cities in Minnesota. The City pays an annual premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self-sustaining through member premiums and will reinsure through commercial companies for clai ms in excess of certain limits. The City also carries commercial insurance for certain other risks of loss . Settled claims resulting from these risks did not exceed insurance coverage in any of the past three fiscal years. There were no significant reductions in insurance coverage in 2018. The City uses its Dental Insurance Internal Service Fund to account for and finance its self-insured risk of loss for an employee dental plan. The dental plan is funded by the City, employee contributions, and investment earnings. The claims liability of $8,661 is included in the liabilities of the Dental Insurance Internal Service Fund at December 31, 2018, and is based on the requirement that a liability for claims be reported if information prior to issuance of the financial statements indicates that it is probabl e that a liability has been incurred on the date of the financial statements and the loss can be reasonably estimated. Changes in the fund’s claim liability for the past two years were: ClaimsBeginningand Changes Claim EndingBalancein Estimates Payments Balance 2017 7,560$ 207,642$ 208,416$ 6,786$ 2018 6,786$ 194,144$ 192,269$ 8,661$ W. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the financial statements during the reporting period. Actual results could differ from those estimates. X. Change in Accounting Principle and Prior Period Adjustment Change in Accounting Principle – During the year ended December 31, 2018, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement established standards for employer recognition and measurement of liabilities, deferred outflows of resources, deferred inflows of resources, and expense for OPEB. Certain amounts necessary to fully restate fiscal year 2017 financial information are not determinable; therefore, prior year comparative amounts have not been restated. The implementation of this statement in the current year resulted in the restatement of net position as of December 31, 2017. Prior Period Adjustment – During the year ended December 31, 2018, the City recorded a prior period adjustment in the government-wide financial statements decreasing net position. The change was related to the City’s inventory of capitalized assets and the related useful lives. -47- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The details of the change in accounting principle and prior period adjustment are as follows: Governmental Business-type EnterpriseActivitiesActivitiesFunds Net position – beginning, as previously reported 139,298,849$ 110,420,424$ 110,535,661$ Change in accounting principleNet OPEB obligation, under previous reporting standards 1,537,306 268,527 268,527 Total OPEB liability, under current reporting standards (1,680,200) (292,878) (292,878) Deferred outflows of resources, under current reporting standards 52,560 8,956 8,956 Total change in accounting principle (90,334) (15,395) (15,395) Prior period adjustment – change in capital asset reporting (18,851,915) – – Net position – beginning, restated 120,356,600$ 110,405,029$ 110,520,266$ NOTE 2 – CASH AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of the following: Deposits 1,205,402$ Investments 69,966,283 Petty cash 16,400 Total 71,188,085$ Cash and investments are presented in the financial statements as follows: Statement of Net PositionCash and investments 71,188,085$ B. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits: Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the 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 City has no additional deposit policies addressing custodial credit risk. -48- NOTE 2 – CASH AND INVESTMENTS (CONTINUED) At year-end, the carrying amount of the City’s deposits was $1,205,402, while the balance on the bank records was $1,341,274. At December 31, 2018, all deposits were fully covered by federal deposit insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. C. Investments The City has the following investments at year-end: Fair ValueMeasurements LessInvestment Type Rating Agency Using Than 1 1 to 5 6 to 10 Total U.S. agency securities AA S&P Level 2 1,980,680$ 8,983,536$ –$ 10,964,216$ State and local bonds AAA S&P Level 2 201,158 3,855,302 1,152,238 5,208,698 State and local bonds AA S&P Level 2 6,707,483 11,220,675 6,009,353 23,937,511 State and local bonds AA Moody'sMoody’s Level 2 2,088,452 4,499,712 1,345,672 7,933,836 State and local bonds A S&P Level 2 981,178 910,501 – 1,891,679 State and local bonds A Moody’s Level 2 – 551,117 – 551,117 Negotiable certificates of deposit N/R N/A Level 2 11,001,718 4,287,086 – 15,288,804 22,960,669$ 34,307,929$ 8,507,263$ 65,775,861 Investment pools/mutual fundsInvesco Government AAA S&P Level 1 3,633,940First American Government Obligation Fund AAA S&P Level 2 12,3934M Fund N/R N/A N/A 544,089 Total investments 69,966,283$ N/A – Not Applicable N/R – Not Rated Credit Risk Maturity Duration in YearsInterest Risk – Investments are subject to various risks, the following of which are considered the most significant: Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer), the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy states that the City may not invest in securities that are both uninsured and not registered in the name of the City and are held by either the counterparty or the counterparty’s trust department or agent, but not in the name of the City. Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase 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 $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City’s investment policy addresses credit risk by limiting investments to the safest type of securities and using prequalifying brokers/financial institutions. -49- NOTE 2 – CASH AND INVESTMENTS (CONTINUED) Concentration Risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5.0 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s investment policy states no more than 5.0 percent of the overall portfolio may be invested in the securities of a single issuer, except for the securities of the U.S. government or an external investment pool. As of December 31, 2018, the City’s investment portfolio includes the Federal Home Loan Bank at 9.2 percent. Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City’s investment policy does include specific limits on investment maturities as a means of managing its exposure to fair value arising from increasing interest rates . It also states investments should not be purchased that are considered to be highly sensitive to interest rate changes. NOTE 3 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS A. Due To and Due From Other Funds Interfund receivables and payables at year-end were as follows: Due From OtherFundsGovernmentalFuture CapitalDue To Other Funds Projects GovernmentalRoad Improvements 3,877,653$ Nonmajor 15,318 Total 3,892,971$ Interfund borrowing is utilized for cash flow borrowing to eliminate temporary cash balance deficits, due to the timing of projects and the related revenue sources. -50- NOTE 3 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED) B. Advance From and Advance To Other Funds Borrowing at year-end was as follows: EnterpriseClosed Bond Future Capital Water andAdvance From Other Funds Issues Projects Sewer Total GovernmentalNonmajor 1,079,159$ –$ –$ 1,079,159$ EnterpriseMunicipal Golf Course – 1,797,482 1,566,846 3,364,328 Total 1,079,159$ 1,797,482$ 1,566,846$ 4,443,487$ Advance To Other FundsGovernmental Advances are utilized to cover operations of the related city funds, including capital improvements. C. Interfund Transfers Closed Bond Road Future CapitalTransfers Out General Fund Issues Improvements Projects Nonmajor Total GovernmentalGeneral Fund –$ –$ 3,417,000$ 1,165,000$ 381,000$ 4,963,000$ Closed Bond Issues – – – – 3,645,533 3,645,533 Future Capital Projects – – 578,810 – 212,000 790,810 Nonmajor – 1,307,012 – – 804,036 2,111,048 EnterpriseMunicipal Liquor 630,000 – – – – 630,000 Water and Sewer 687,600 – – – – 687,600 Total 1,317,600$ 1,307,012$ 3,995,810$ 1,165,000$ 5,042,569$ 12,827,991$ GovernmentalTransfers In Transfers are made in accordance with budget appropriations or as approved by the City Council for special funding of city activities. These transfers were made to fund operations, debt payments, capital outlay, or to close funds. -51- NOTE 4 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2018 was as follows: A. Changes in Capital Assets Used in Governmental Activities Beginning Transfers of Year,Prior Beginning andas Previously Period of Year, as Completed EndReportedAdjustmentRestatedAdditionsDeletionsConstruction of Year Capital assets, not depreciatedLand 4,581,173$ –$ 4,581,173$ –$ –$ –$ 4,581,173$ Construction in progress 1,740,083 – 1,740,083 7,596,371 – (6,258,050) 3,078,404 Total capital assets, not depreciated 6,321,256 – 6,321,256 7,596,371 – (6,258,050) 7,659,577 Capital assets, depreciatedBuildings 32,587,544 – 32,587,544 – – 1,737,806 34,325,350 Other improvements 25,457,057 – 25,457,057 – – 51,028 25,508,085 Furniture and equipment 18,597,572 – 18,597,572 1,196,590 (755,945) 174,172 19,212,389 Infrastructure 109,815,968 – 109,815,968 311,986 – 4,295,044 114,422,998 Total capital assets, depreciated 186,458,141 – 186,458,141 1,508,576 (755,945) 6,258,050 193,468,822 Less accumulated depreciation onBuildings 13,533,535 – 13,533,535 888,939 – – 14,422,474 Other improvements 10,784,639 – 10,784,639 912,460 – – 11,697,099 Furniture and equipment 11,352,254 – 11,352,254 1,360,192 (674,888) – 12,037,558 Infrastructure 42,666,641 18,851,915 61,518,556 3,820,454 – – 65,339,010 Total accumulated, depreciation 78,337,069 18,851,915 97,188,984 6,982,045 (674,888) – 103,496,141 Net capital assets, depreciated 108,121,072 (18,851,915) 89,269,157 (5,473,469) (81,057) 6,258,050 89,972,681 Total capital assets, net 114,442,328$ (18,851,915)$ 95,590,413$ 2,122,902$ (81,057)$ –$ 97,632,258$ B. Changes in Capital Assets Used in Business-Type Activities TransfersandBeginningCompleted Endof Year Additions Deletions Construction of Year Capital assets, not depreciatedLand 6,818,433$ 55,496$ –$ –$ 6,873,929$ Construction in progress 1,277,221 6,541,500 – (3,126,383) 4,692,338 Total capital assets, not depreciated 8,095,654 6,596,996 – (3,126,383) 11,566,267 Capital assets, depreciatedBuildings 22,086,746 60,711 – – 22,147,457 Other improvements 154,024,344 586,330 (282,885) 3,126,383 157,454,172 Furniture and equipment 5,515,325 890,109 – – 6,405,434 Total capital assets, depreciated 181,626,415 1,537,150 (282,885) 3,126,383 186,007,063 Less accumulated depreciation onBuildings 9,927,436 391,929 – – 10,319,365 Other improvements 70,116,126 3,185,542 (276,233) – 73,025,435 Furniture and equipment 4,374,481 294,787 – – 4,669,268 Total accumulated depreciation 84,418,043 3,872,258 (276,233) – 88,014,068 Net capital assets, depreciated 97,208,372 (2,335,108) (6,652) 3,126,383 97,992,995 Total capital assets, net 105,304,026$ 4,261,888$ (6,652)$ –$ 109,559,262$ -52- NOTE 4 – CAPITAL ASSETS (CONTINUED) C. Depreciation Expense by Function Depreciation expense for the year ended December 31, 2018 was charged to the following functions: Governmental activitiesGeneral government 390,822$ Public safety 318,663 Public works 3,972,912 Parks and recreation 1,265,723 Capital assets held by the City’s internal service funds are charged to the various functions based on their usage of the assets 1,033,925 Total depreciation expense – governmental activities 6,982,045$ Business-type activitiesMunicipal liquor 141,535$ Municipal golf course 192,783 Sports arena 135,441 Water and sewer 2,357,710 Storm drainage 1,024,022 Cemetery 20,767 Total depreciation expense – business-type activities 3,872,258$ -53- NOTE 5 – LONG-TERM DEBT A. Components of Long-Term Debt Final Balance –Original Issue Interest Rate Maturity End of Year Governmental activitiesGeneral obligation bondsG.O. Equipment Certificate Bonds 2012A 1,305,000$ 2.00%12/15/2021 360,000$ G.O. Crossover Refunding Bonds 2013A 9,000,000$ 1.75–2.35%12/15/2031 8,855,000 G.O. Equipment Bonds 2014A 680,000$ 2.00%12/15/2020 275,000 G.O. Bonds 2015B 4,255,000$ 2.00–2.75%12/15/2029 3,405,000 Total general obligation bonds 12,895,000 General obligation improvement bondsG.O. Improvement Bonds 2012A 920,000$ 2.00%12/15/2022 475,000 Total governmental activities bonds 13,370,000 Unamortized premium 281,869 Total OPEB liability 1,900,268 Net pension liability 11,724,700 Compensated absences 2,859,937 Total governmental activities 30,136,774$ Business-type activitiesGeneral obligation revenue bondsG.O. Water Revenue Bonds 2014A 8,830,000$ 2.00–3.00%12/15/2033 7,010,000$ G.O. Bonds 2015B 1,605,000$ 2.00–2.75%12/15/2026 1,425,000 Total general obligation revenue bonds 8,435,000 General obligation revenue notesG.O. Water Revenue Note 2018A 4,000,000$ 2.95%6/15/2028 379,941 Capital lease 335,739 Unamortized premium 146,651 Total OPEB liability 330,379 Net pension liability 2,206,115 Compensated absences 519,438 Total business-type activities 12,353,263$ -54- NOTE 5 – LONG-TERM DEBT (CONTINUED) B. Changes in Long-Term Debt Balance –Beginning of Year,Change in Balance –as Previously Accounting Beginning of Year,Balance –Due WithinReportedPrinciple *as Restated Additions Deletions End of Year One Year Governmental activities General obligation bonds 13,885,000$ –$ 13,885,000$ –$ 990,000$ 12,895,000$ 1,065,000$ General obligation improvement bonds 585,000 – 585,000 – 110,000 475,000 115,000 Unamortized premium 330,288 – 330,288 – 48,419 281,869 – Total OPEB liability 1,537,306 142,894 1,680,200 229,044 8,976 1,900,268 – Net pension liability 14,729,157 – 14,729,157 1,437,269 4,441,726 11,724,700 – Compensated absences 2,811,465 – 2,811,465 1,719,429 1,670,957 2,859,937 1,671,000 Total governmental activities 33,878,216 142,894 34,021,110 3,385,742 7,270,078 30,136,774 2,851,000 Business-type activities General obligation revenue bonds 9,000,000 – 9,000,000 – 565,000 8,435,000 570,000 Revenue bonds 1,120,000 – 1,120,000 – 1,120,000 – – General obligation revenue notes – – – 379,941 – 379,941 – Capital lease 175,526 – 175,526 254,996 94,783 335,739 86,280 Unamortized premium 157,288 – 157,288 – 10,637 146,651 – Total OPEB liability 268,527 24,351 292,878 39,031 1,530 330,379 – Net pension liability 2,658,752 – 2,658,752 190,544 643,181 2,206,115 – Compensated absences 473,036 – 473,036 319,876 273,474 519,438 273,500 Total business-type activities 13,853,129 24,351 13,877,480 1,184,388 2,708,605 12,353,263 929,780 Total government-wide 47,731,345$ 167,245$ 47,898,590$ 4,570,130$ 9,978,683$ 42,490,037$ 3,780,780$ * The amounts in this column reflect only a portion of the change in accounting principle described earlier in these notes. C. Minimum Debt Payments Minimum annual payments required to retire bonds are as follows: Governmental Activities Year EndingDecember 31,Principal Interest Principal Interest Principal Interest 2019 1,065,000$ 264,075$ 115,000$ 9,500$ 1,180,000$ 273,575$ 2020 1,125,000 243,150 120,000 7,200 1,245,000 250,350 2021 905,000 221,025 120,000 4,800 1,025,000 225,825 2022 820,000 203,313 120,000 2,400 940,000 205,713 2023 865,000 187,300 – – 865,000 187,300 2024–2028 4,900,000 672,388 – – 4,900,000 672,388 2029–2031 3,215,000 146,591 – – 3,215,000 146,591 Total 12,895,000$ 1,937,842$ 475,000$ 23,900$ 13,370,000$ 1,961,742$ General Obligation Bonds TotalImprovement BondsGeneral Obligation -55- NOTE 5 – LONG-TERM DEBT (CONTINUED) Business-Type Activities Year EndingDecember 31,Principal Interest Principal Interest Principal Interest Principal Interest 2019 570,000$ 213,913$ –$ 11,208$ 86,280$ 14,169$ 656,280$ 239,290$ 2020 580,000 202,513 44,699 10,894 145,162 10,287 769,861 223,694 2021 590,000 190,913 44,699 9,560 50,879 5,184 685,578 205,657 2022 610,000 179,113 44,699 8,241 53,418 2,656 708,117 190,010 2023 615,000 165,863 44,699 6,923 – – 659,699 172,786 2024–2028 2,820,000 613,613 201,145 14,834 – – 3,021,145 628,447 2029–2033 2,650,000 243,000 – – – – 2,650,000 243,000 8,435,000$ 1,808,928$ 379,941$ 61,660$ 335,739$ 32,296$ 9,150,680$ 1,902,884$ Revenue Bonds TotalGeneral Obligation Capital LeaseGeneral ObligationRevenue Notes D. Description of Long-Term Debt • General Obligation Bonds and General Obligation Improvement Bonds – The City issues general obligation (G.O.) bonds to provide financing for street, utility, park, and cemetery project improvements. The City issues G.O. equipment certificates to provide financing for capital equipment. Debt service is covered respectively by special assessments, state aids, general property taxes, and tax increments. G.O. bonds and equipment certificates are direct obligations and pledge the full faith and credit of the City. Equipment certificates are issued as five-year notes with fluctuating debt service payments each year. • General Obligation Revenue Bonds and Revenue Bonds – The City issues revenue bonds to provide financing for its enterprise funds. The City issued revenue bonds for the liquor store and G.O. revenue bonds for the water and sewer and storm drainage activity. Debt service is covered through the revenue producing activities of these funds. • General Obligation Revenue Notes – The City issues revenue notes to provide financing for its enterprise funds. The City issued G.O. revenue notes for water and sewer activity. Debt service is covered through the revenue producing activities of these funds. • Capital Leases – The City entered into three lease agreements for financing the acquisition of equipment for the municipal golf course. Revenues from the Municipal Golf Course Fund financed these leases. The first lease agreement matures in November 2020 and carries an interest rate of 3.5 0 percent. As of December 31, 2018, these assets had a capitalized value of $253,419 with accumulated depreciation of $111,088. The second lease agreement matures in March 2022 and carries an interest rate of 4.95 percent. As of December 31, 2018, these assets had a capitalized value of $180,010 with accumulated depreciation of $10,569. The third lease agreement matures in June 2022 and carries an interest rate of 4.75 percent. As of December 31, 2018, these assets had a capitalized value of $74,987 with accumulated depreciation of $4,397. -56- NOTE 5 – LONG-TERM DEBT (CONTINUED) • Total OPEB Liability – This liability represents the City’s Other Post-Employment Benefits (OPEB) Plan liability as further described later in these notes. The General Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. • Net Pension Liability – This liability represents the City’s pension benefit obligations as further described later in these notes. The General Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. The City participates in two state-wide, cost-sharing, multiple-employer defined benefit pension plans administered by the PERA and a single-employer plan administered by the fire relief association. The following is a summary of the net pension asset, net pension liabilities, deferred outflows and inflows of resources, and pension expense reported for these plans as of and for the year ended December 31, 2018: Net Pension Net Pension Deferred Outflows Deferred Inflows PensionPension Plans Asset Liabilities of Resources of Resources Expense PERA – GERF –$ 8,609,861$ 1,798,919$ 2,727,523$ 689,333$ PERA – PEPFF – 5,320,954 7,534,279 10,838,934 602,041 Fire Relief 1,807,017 – 673,636 1,245,318 14,688 Total – all pensions 1,807,017$ 13,930,815$ 10,006,834$ 14,811,775$ 1,306,062$ • Compensated Absences – This liability represents vested benefits earned by employees through the end of the year, which will be paid or used in future periods . The Benefits/Other Insurance Internal Service Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. E. Revenue Pledged Percent of Remaining Principal PledgedUse of Total Debt Term of Principal and Interest RevenueBond Issue Proceeds Type Service Pledge and Interest Paid Received G.O. Water Revenue Bonds 2014A Utility improvements Utility charges 100%2014–2033 8,691,125$ 577,824$ 10,352,835$ G.O. Bonds 2015B Utility improvements Utility charges 100%2015–2026 1,552,803$ 212,388$ 1,901,319$ G.O. Water Revenue Note 2018A Utility improvements Utility charges 100%2018–2028 441,601$ –$ 10,352,835$ Revenue Pledged Current Year F. Arbitrage Rebate The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds from the issuance of debt in excess of interest costs, pending the expenditure of the borrowed funds. This rebate of interest income (known as arbitrage) applies to governmental debt issued after August 31, 1986. In the opinion of management, any obligation would be immaterial. -57- NOTE 5 – LONG-TERM DEBT (CONTINUED) G. Conduit Debt Obligations At times, the City has issued various types of revenue bonds to provide financial assistance to private sector, nonprofit, or governmental entities to finance the acquisition or construction of facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance . Neither the City, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the City’s financial statements. As of December 31, 2018, the following conduit debt issues were outstanding: Augustana CareHealth Care Revenue Bonds (Augustana Health Care Center Project), Series 2016A 16,440,000$ Minnesota Senior Living LLCSenior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016A 68,890,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016B 50,540,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016C 6,890,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016D 21,650,000 Lifeworks Services Inc.Educational Facilities Revenue Note, Series 2011 1,711,558 Apple Valley Senior Housing Inc.Senior Housing Revenue Refunding Bond, Series 2018 49,185,000 Total conduit debt obligations 215,306,558$ NOTE 6 – JOINT POWERS COMMITMENT On August 25, 2005, the City entered into a joint powers agreement (the Agreement) with the cities of Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights, Rosemount, South St. Paul, West St. Paul, and Dakota County, Minnesota, to establish the Dakota Communications Center (DCC), a Minnesota nonprofit corporation. The purpose of the DCC is to engage in the operation and maintenance of a county-wide public safety answering point and communications center for law enforcement, fire, emergency medical services, and other public safety services for the mutual benefit of residents residing in the above mentioned cities and county (members). Pursuant to the Agreement, members are required to provide the DCC their pro rata share of the cost of operations, maintenance, and capital projects. Information regarding the DCC can be obtained by contacting the City of Lakeville, 20195 Holyoke Avenue, Lakeville, Minnesota 55044-9177 or from the website www.mn-dcc.org/about-the-dcc/statistics/. -58- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE A. Plan Description The City participates in the following cost-sharing, multiple-employer defined benefit pension plans administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code (IRC). 1. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the GERF. The GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2. Public Employees Police and Fire Fund (PEPFF) The Public Employees Police and Fire Fund (PEPFF), originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to the PERA. B. Benefits Provided The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statutes 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. 1. GERF Benefits 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 the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan 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 each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7 percent of 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 unreduced Social Security benefits capped at age 66. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. If the GERF is at least 90.0 percent funded for two consecutive years, benefit recipients are given a 2.5 percent increase. If the plan has not exceeded 90.0 percent funded, or has fallen below 80.0 percent, benefit recipients are given a one percent increase. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one month, but less than 12 full months as of June 30, will receive a pro rata increase. -59- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a prorated basis from 50 percent after five years, up to 100 percent after 10 years of credited service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis from 50 percent after 10 years, up to 100 percent after 20 years of credited service. The annuity accrual rate is 3 percent of average salary for each year of service. A full, unreduc ed pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. PEPFF benefit recipients receive a future annual 1.0 percent increase. An annual adjustment will equal 2.5 percent any time the plan exceeds a 90.0 percent funded ratio for two consecutive years. If the adjustment is increased to 2.5 percent and the funded ratio falls below 80.0 percent for one year, or 85.0 percent for two consecutive years, the post-retirement benefit increase will be lowered to 1.0 percent. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30, will receive a full increase. Members receiving benefits for at least one month, but less than 12 full months as of June 30, will receive a pro rata increase. For retirements after May 31, 2014, the first increase will be delayed two years. C. Contributions Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature. 1. GERF Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2018. The City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2018 were $796,766. The City’s contributions were equal to the required contributions as set by state statutes. 2. PEPFF Contributions Plan members were required to contribute 10.80 percent of their annual covered salary in fiscal year 2018. The City was required to contribute 16.20 percent of pay for members. The City’s contributions to the PEPFF for the year ended December 31, 2018 were $858,645. The City’s contributions were equal to the required contributions as set by state statutes. -60- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) D. Pension Costs 1. GERF Pension Costs At December 31, 2018, the City reported a liability of $8,609,861 for its proportionate share of the GERF’s net pension liability. The net pension liability was measured as of June 30, 2018, 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 the PERA during the measurement period for employer payroll paid dates from July 1, 2017 through June 30, 2018, relative to the total employer contribu tions received from all of the PERA’s participating employers. The City’s proportionate share was 0.1552 percent at the end of the measurement period and 0.1643 percent for the beginning of the period. The City’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16 million to the fund. The state of Minnesota is considered a nonemployer contributing entity and the state’s contribution meets the definition of a special funding situation. The amount recognized by the City as its proportionate share of the net pension liability, the direct aid , and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 8,609,861$ State’s proportionate share of the net pension liability associated with the City 282,435$ For the year ended December 31, 2018, the City recognized pension expense of $623,470 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $65,863 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16 million to the GERF. At December 31, 2018, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 240,653$ 252,569$ Changes in actuarial assumptions 827,228 1,006,237 Differences between projected and actual investment earnings – 938,433 Changes in proportion 332,900 530,284 Contributions paid to the PERA subsequent to the measurement date 398,138 – Total 1,798,919$ 2,727,523$ -61- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Deferred outflows of resources reported $398,138 related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 200,982$ 2020 (479,509)$ 2021 (868,511)$ 2022 (179,704)$ 2. PEPFF Pension Costs At December 31, 2018, the City reported a liability of $5,320,954 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2018 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 the PERA during the measurement period for employer payroll paid dates from July 1, 2017 through June 30, 2018, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.4992 percent at the end of the measurement period and 0.5110 percent for the beginning of the period. For the year ended December 31, 2018, the City recognized pension expense of $557,113 for its proportionate share of the PEPFF’s pension expense. The City also recognized $44,928 for the year ended December 31, 2018 as revenue and an offsetting reduction of net pension liability for its proportionate share of the state of Minnesota’s on-behalf contributions to the PEPFF. Legislation passed in 2013 required the state of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. At December 31, 2018, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 217,398$ 1,354,192$ Changes in actuarial assumptions 6,877,658 8,014,092 Differences between projected and actual investment earnings – 1,098,651 Changes in proportion 22,725 371,999 Contributions paid to the PERA subsequent to the measurement date 416,498 – Total 7,534,279$ 10,838,934$ -62- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Deferred outflows of resources reported $416,498 related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 (171,309)$ 2020 (426,196)$ 2021 (825,797)$ 2022 (2,253,755)$ 2023 (44,096)$ E. Actuarial Assumptions The total pension liability in the June 30, 2018 actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per yearActive member payroll growth 3.25% per yearInvestment rate of return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP-2014 tables for males and females, as appropriate, with slight adjustments to fit the PERA’s experience. Cost of living benefi t increases after retirement for retirees are assumed to be 1.25 percent per year for the GERF, and 1.00 percent per year for the PEPFF. Actuarial assumptions used in the June 30, 2018 valuation were based on the results of actuarial experience studies. The most recent six-year experience study in the GERF was completed in 2015. The most recent four-year experience study for PEPFF was completed in 2016. Economic assumptions were updated in 2017 based on a review of inflation and investment return assumptions. The following changes in actuarial assumptions occurred in 2018: 1. GERF • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed post-retirement 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. 2. PEPFF • The mortality projection scale was changed from MP-2016 to MP-2017. • As set by statutes, the assumed post-retirement benefit increase was changed from 1.00 percent per year through 2064, and 2.50 percent per year thereafter, to 1.00 percent for all years with no trigger. -63- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The State Board of Investment, which manages the investments of the 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 stocks 36 % 5.10 %International stocks 17 5.30 %Bonds 20 0.75 %Alternative assets 25 5.90 %Cash 2 – % Total 100 % AllocationTarget Real Rate of ReturnLong-Term Expected F. Discount Rate The discount rate used to measure the total pension liability in 2018 was 7.50 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 positions of the GERF and the PEPFF were 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 table presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1% Decrease in 1% Increase inDiscount Rate Discount Rate Discount Rate6.50%7.50%8.50% City’s proportionate share of the GERF net pension liability 13,992,124$ 8,609,861$ 4,166,954$ City’s proportionate share of the PEPFF net pension liability 11,408,467$ 5,320,954$ 286,840$ H. Pension Plan Fiduciary Net Position Detailed information about the GERF’s fiduciary net position is available in a separately issued PERA financial report. That report may be obtained on the PERA website at www.mnpera.org; by writing to the PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103; or by calling (651) 296 -7460 or (800) 652-9026. -64- NOTE 8 – DEFINED CONTRIBUTION PENSION PLAN – STATE-WIDE Councilmembers of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by the PERA. The PEDCP is a tax qualified plan under Section 401(a) of the IRC and all contributions by or on behalf of employees are tax deferr ed until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary, which is matched by the elected official’s employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employee contributions must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fun d. For administering the plan, the PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (0.0025) of the assets in each member’s account annually. Total contributions made by the City for the fiscal year 2018 were: Required Ratefor EmployeesEmployeeEmployerEmployeeEmployerand Employers 1,949$ 1,949$ 5%5%5% Contribution Amount Percentage of Covered Payroll NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION A. Plan Description All members of the Apple Valley Fire Department (the Department) are covered by a defined benefit plan administered by the Apple Valley Firefighters’ Relief Association (the Association). As of the measurement date, the plan covered 64 active members, 16 inactive members entitled to future benefits, and 34 inactive members or beneficiaries currently receiving benefits. The plan is a single-employer retirement plan and is established and administered in accordance with Minnesota Statutes, Chapter 69. The Association maintains a separate Special Pension Trust Fund to accumulate assets to fund the retirement benefits earned by the Department’s membership. Funding for the Association is derived from an insurance premium tax in accordance with the Volunteer Firefighter’s Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980). Funds are also derived from investment income. -65- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) B. Benefits Provided Each member who is at least 50 years of age, has separated from service from the fire department, has served at least 5 years of active service for members commencing active duty prior to January 1, 2010, and 10 years of active service for members commencing active duty after January 1, 2010 with such department before separation and has been a member of the Association in good sta nding at least 5 years prior to such separation shall be entitled to a lump sum service pension in the amount of $6,700 for each year of service (including each year over 20) or a monthly service pension of $45 for each year of service (including each year over 20), but not exceeding the maximum amount per year of service allowed by law for the minimum average amount of available financing per firefighter as prescribed by law. According to the bylaws of the Association and pursuant to Minnesota Statutes, members who separate from service with less than 20 years of service and have reached the age of at least 50 , and have completed at least 5 years of active membership for members commencing active duty prior to January 1, 2010, and 10 years of active membership for members commencing active duty after January 1, 2010 , are entitled to a reduced service pension not to exceed the amount calculated by multiplying the member ’s service pension for the completed years of service times the applicable nonforfeitable percentage of pension for the completed years of service times the applicable nonforfeitable percentage of pension. C. Contributions Minnesota Statutes, Chapters 424 and 424A, authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings, and, if necessary, employer contributions as specified in Minnesota Statutes and voluntary city contributions (if applicable). Required employer contributions are calculated annually based on statutory provisions. The City’s statutorily-required contributions to the plan for the year ended December 31, 2018 were $252,930. The City’s contributions were equal to the required contributions as set by state statutes. The City made no voluntary contributions to the plan. Furthermore, the firefighter has no obligation to contribute to the plan. D. Pension Costs At December 31, 2018, the City reported a net pension liability (asset) of ($1,807,017) for the plan. The net pension liability (asset) was measured as of December 31, 2017. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB Statement No. 68 was determined by applying an actuarial formula to specific census data certified by the Department as of December 31, 2017. For the year ended December 31, 2018, the City recognized pension expense of $14,688. The City also recognized $283,581 as revenue from the state of Minnesota on-behalf contributions to the Department. -66- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) The following table presents the changes in net pension liability (asset) during the year: Total Pension Plan Fiduciary Net PensionLiabilityNet Position Liability (Asset) Beginning balance 5,790,805$ 6,581,831$ (791,026)$ Changes for the yearService cost 149,826 – 149,826 Interest 427,292 – 427,292 Difference between expected and actual experience (67,525) – (67,525) Change of assumptions 133,128 – 133,128 Contributions – state and local – 530,781 (530,781) Net investment income – 1,164,210 (1,164,210) Benefit payments (486,814) (486,814) – Administrative costs – (36,279) 36,279 Total net changes 155,907 1,171,898 (1,015,991) Ending balance 5,946,712$ 7,753,729$ (1,807,017)$ At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 7,240$ 75,465$ Changes in actuarial assumptions 114,715 493,134 Differences between projected and actual investment earnings – 377,968 City contributions subsequent to the measurement date 252,930 – State aid to the City subsequent to the measurement date 298,751 298,751 Total 673,636$ 1,245,318$ -67- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) Deferred outflows of resources totaling $551,681 related to pensions resulting from the City’s contributions and state aid received subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Deferred inflows of resources totaling $298,751 related to state aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 (115,869)$ 2020 (139,776)$ 2021 (261,198)$ 2022 (227,993)$ 2023 (76,838)$ Thereafter (2,938)$ E. Actuarial Assumptions The total pension liability at December 31, 2017 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Inflation 2.75%Salary increases N/AInvestment rate of return Index rate for 20-year, tax-exempt municipal bonds (Bond Buyer G.O. 20-Year Municipal Bond Index); used in discount rate determination 3.31% N/A – Not Applicable 7.25% net of pension plan investment expense, including inflation Mortality rates were based on the July 1, 2017 Minnesota Public Employees Retirement Association Police and Fire Plan actuarial valuation as described below: Healthy Pre-Retirement – RP-2014 Employee Generational Mortality Table projected with mortality improvement scale MP-2016, from a base year of 2006. Healthy Post-Retirement – RP-2014 Annuitant Generational Mortality Table projected with mortality improvement scale MP-2016 from a base year of 2006. Male rates are adjusted by a factor of 0.96. The expected investment return and discount rate decreased from 7.50 percent to 7.25 percent to reflect updated capital market assumptions. Mortality and termination rates were changed to those used in the most recent Minnesota PERA Police and Fire Plan actuarial valuation. -68- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These asset class estimates are combined to produce the portfolio long-term expected rate of return by weighting the expected future real rates of return by the current asset allocation percentage (or target allocation, if available) and by adding expected inflation. All results are then rounded to the nearest quarter percent. Asset Class Domestic equity 77.52 %5.39 %8.14 %International equity 8.25 5.20 %7.95 %Fixed income 10.82 1.98 %4.73 %Real estate and alternatives – 4.25 %7.00 %Cash and equivalents 3.41 0.79 %3.54 % Total (weighted average, rounded to 1/4 percent)100.00 %7.25 % Allocation atMeasurementDate Long-TermExpected NominalRate of Return Long-TermExpected RealRate of Return F. Discount Rate The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in state statutes. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate The following presents the net pension liability (asset) of the Association, calculated using the discount rate of 7.25 percent, as well as what the Association’s net pension liability (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (6.25 percent) or 1 percentage point higher (8.25 percent) than the current discount rate: 1% Decrease in Current 1% Increase inDiscount Rate Discount Rate Discount Rate6.25%7.25%8.25% Association’s net pension liability (asset)(1,258,612)$ (1,807,017)$ (2,276,181)$ H. Pension Plan Fiduciary Net Position The Association issues a publicly available financial report. This report may be obtained by writing to the Apple Valley Firefighters’ Relief Association, 7100 147th Street West, Apple Valley, Minnesota 55124. -69- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A. Plan Description The City provides post-employment insurance benefits to certain eligible employees through its OPEB plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report. No plan assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. B. Benefits Provided All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical and dental insurance. Per state statutes, the City is also required to contribute towards the cost of continued health insurance coverage for officers and firefighters disabled or killed in the line of duty. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees until the retiree reaches Medicare eligibility, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. C. Contributions The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined periodically by the City. The City’s current year required pay-as -you-go contributions to finance the benefits described in the previous section totaled $63,841. D. Membership Membership in the plan consisted of the following as of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 10 Active plan members 184 Total members 194 -70- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) E. Total OPEB Liability of the City The City’s total OPEB liability of $2,230,647 as of year-end was measured as of December 31, 2017, and was determined by an actuarial valuation as of January 1, 2018. F. Actuarial Methods and Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2018, using the entry age method. The following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount rate 3.44%20-year municipal bond yield 3.44%Inflation rate 2.75%Salary increases 3.50%Medical trend rate 10.00%, grading to 5.00% over 10 years The actuarial assumptions used in the latest valuation were based on those used to value pension liabilities for Minnesota city employees. The state pension plans base their assumptions on periodic experience studies. Economic assumptions are based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20 -year municipal bond yield rate of 3.44 percent, which was set by considering published rate information for 20-year high quality, tax-exempt, general obligation municipal bonds as of the measurement date. The City discount rate used in the prior measurement date was 4.50 percent. Mortality rates were based on the RP-2014 Mortality Table, adjusted for white collar and mortality improvements using projection scale MP-2015 from a base year of 2014 (using projection scale MP-2016 from a base year of 2006 for police and fire personnel). Future retirees electing coverage is assumed to be 65 percent. Married future retirees electing spouse coverage is assumed to be 40 percent (60 percent for police and fire personnel). G. Changes in the Total OPEB Liability Total OPEBLiability Beginning balance – January 1, 2018 1,973,078$ Changes for the yearService cost 181,510 Interest 80,281 Changes of assumptions 57,294 Benefit payments (61,516) Total net changes 257,569 Ending balance – December 31, 2018 2,230,647$ Assumption changes since the prior measurement date include the following: • The discount rate was changed from 4.50 percent to 3.44 percent. -71- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) H. Total OPEB Liability Sensitivity to Discount and Healthcare Cost Trend Rate Changes The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount rate: OPEB discount rate 3.44% Total OPEB liability $ 2,404,381 $ 2,065,094 2.44%4.44% 1% Decrease in 1% Increase inDiscount Rate Discount RateDiscountRate 2,230,647$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rates: OPEB healthcare trend rate Total OPEB liability $ 1,961,840 $ 2,550,028 4.00% over 10 years 6.00% over 10 years 1% Decrease in 1% Increase inHealthcare Trend Rate Healthcare Trend Rate 9.00% , decreasing to 11.00%, decreasing to Healthcare TrendRate 10.00%, decreasing to5.00% over 10 years $ 2,230,647 I. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources For the current year ended, the City recognized OPEB expense of $268,075. As of year-end, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Changes of assumptions 51,010$ –$ City’s contributions subsequent to the measurement date 63,841 – Total 114,851$ –$ Deferred outflows of resources reported $63,841 related to OPEB resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the total OPEB liability in the year ending December 31, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: OPEBYear Ending ExpenseJune 30,Amount 2019 $ 6,284 2020 $ 6,284 2021 $ 6,284 2022 $ 6,284 2023 $ 6,284 Thereafter $ 19,590 -72- NOTE 11 – STEWARDSHIP AND ACCOUNTABILITY A. Deficit Fund Balances The following funds have a deficit fund balance at December 31, 2018: Amount GovernmentalRoad Improvements 5,250,659$ Nonmajor fundsCapital projectsCentral Village Parking 15,853$ TIF District No. 15 Parkside Village 841,952$ The deficits listed above will be eliminated by transfers from other funds, collection of special assessments, future special assessment bond issues, future tax levies, future tax increment collections, and state grant reimbursements. B. Budget to Actual Expenditures exceeded budgeted amounts in the Future Capital Projects Fund by $1,103,879, EDA Operations Special Revenue Fund by $555,749, and Cable Capital Equipment Capital Projects Fund by $16,896. NOTE 12 – FUND BALANCES A. Classifications At December 31, 2018, the City had the following governmental fund balances: Debt ServiceClosed Future NonmajorGeneralBondRoadCapitalGovernmentalFundIssuesImprovementsProjectsFunds Total NonspendableInventory 19,817$ –$ –$ –$ –$ 19,817$ Prepaid items 125,827 – – – – 125,827 Total nonspendable 145,644 – – – – 145,644 Restricted Debt service – – – – 1,015,437 1,015,437 Economic development – – – – 743,520 743,520 Tax increment financing – – – – 1,302,822 1,302,822 Police forfeiture – – – – 61,466 61,466 Capital acquisitionCable capital equipment – – – – 595,275 595,275 Tax increment financing – – – – 2,965,609 2,965,609 Park dedication – – – – 2,228,618 2,228,618 Electric projects – – – – 4,460,859 4,460,859 Cable TV – – – – 72,553 72,553 Other purposesSolid waste grant – – – – 43,335 43,335 Lodging tax – – – – 118,926 118,926 Total restricted – – – – 13,608,420 13,608,420 Capital Projects -73- NOTE 12 – FUND BALANCES (CONTINUED) Debt ServiceClosed Future NonmajorGeneralBondRoadCapitalGovernmentalFundIssuesImprovementsProjectsFunds Total CommittedHome improvement guide 20,000 – – – – 20,000 Aquatic center equipment 13,000 – – – – 13,000 Comprehensive plan update contract services 30,000 – – – – 30,000 Chair replacement 1,000 – – – – 1,000 Finance automation Laserfich and accounts payable 5,000 – – – – 5,000 Public works snow and ice equipment 25,000 – – – – 25,000 Aquatic center rental cabanas 5,130 – – – – 5,130 Fleet Assetsworks System 33,500 – – – – 33,500 Fire bay floor coating 25,100 – – – – 25,100 Fire monument sign 19,100 – – – – 19,100 Fire ergonomic standing desk 1,600 – – – – 1,600 Finance ergonomic standing desk 2,100 – – – – 2,100 Community development Apple Valley50th Anniversary 8,000 – – – – 8,000 Aquatic center funbrellas 25,800 – – – – 25,800 Park maintenance training 1,700 – – – – 1,700 Park maintenance overlay trails 45,000 – – – – 45,000 Park maintenance puppet wagon trailer 9,000 – – – – 9,000 Public works folding machine 1,000 – – – – 1,000 Public works ergonomic standing desk 3,000 – – – – 3,000 Public works shade tree management 31,000 – – – – 31,000 Fleet ice machine 1,480 – – – – 1,480 Street maintenance backhoe bucket thumps 8,000 – – – – 8,000 Street maintenance stumper grinder parts 1,600 – – – – 1,600 Street maintenance supplies 12,000 – – – – 12,000 Street maintenance sidewalk repair/fog seal 5,000 – – – – 5,000 Street maintenance equipment repair 4,000 – – – – 4,000 Traffic signs driver feedback signs 7,500 – – – – 7,500 Building inspection iPad for building official 1,500 – – – – 1,500 Building inspection office modifications 1,400 – – – – 1,400 Building inspection Avolve workflows 20,000 – – – – 20,000 Total committed 367,510 – – – – 367,510 AssignedFacilities condition inventory 75,000 – – – – 75,000 Debt service – 8,663,145 – – 1,533,088 10,196,233 Other capital projects – – – 14,300,138 2,571,441 16,871,579 Police special projects – – – – 148,029 148,029 Tree preservation – – – – 371,129 371,129 Ponds – – – – 249,550 249,550 Pathways and sidewalks – – – – 256,433 256,433 Dodd Road – – – – 242,549 242,549 Former City Hall building – – – – 114,423 114,423 Capital building – – – – 749,199 749,199 Park improvement development – – – – 2,987 2,987 Physical improvement – – – – 155,992 155,992 Fire capital purchases – – – – 17,511 17,511 Total assigned 75,000 8,663,145 – 14,300,138 6,412,331 29,450,614 Unassigned 17,052,177 – (5,250,659) – (857,805) 10,943,713 Total 17,640,331$ 8,663,145$ (5,250,659)$ 14,300,138$ 19,162,946$ 54,515,901$ Capital Projects B. Minimum Fund Balance Policy The City Council has formally adopted a fund balance policy. The policy establishes the City will strive to maintain a minimum unassigned General Fund balance of 50.0 percent of the subsequent year’s budgeted expenditures. At December 31, 2018, the unassigned fund balance of the General Fund was 50.1 percent of the subsequent year’s budgeted expenditures, including transfers. -74- NOTE 13 – JOINT POWERS AGREEMENT WITH DAKOTA COUNTY In July 1987, the City and Dakota County (the County) entered into an agreement to maintain and operate the library in Apple Valley. The County will staff and operate the library and the City agreed to resurface the parking lot and driveways on a periodic basis. NOTE 14 – TAX ABATEMENT AGREEMENTS The City, in order to spur economic development and redevelopment , has entered into private development and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing properties and buildings or clean-up and redevelop blighted areas. The City has five agreements that would be considered a tax abatement under GASB Statement No. 77. The City is authorized to create a tax increment finance plan under Minnesota Statute s, Chapter 469.175. The criteria that must be met under the statutes are that, in the opinion of the municipality: • The proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less that the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the tax increment district permitted in the plan. The requirements of this item do not apply if the district is a housing district; • That the tax increment financing plan conforms to the general plan for the development or redevelopment of the municipality as a whole; and • That the tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the municipality as a whole, for the development or redevelopment of the project by private enterprise. The City has entered into private development agreements regarding certain properties within a tax increment district. Included in the development agreement was the reimbursement of eligible development costs. The vehicle used for this reimbursement is called a tax increment revenue note. These notes provide for the payment of principal, equal to the developer’s eligible costs, plus interest at a set rate. Payments on the note will be made at the lesser of the note payment or a percent of the available tax increment received during the specific year as stated in the agreement. Payments are first applied to accrued interest and then to the principal balance. The notes are to be cancelled at the end of the te rm, whether or not the note has been repaid in full. The agreements are not a general obligation of the City and are payable solely from available tax increments received from the property owner. The City’s position is that these are obligations to assign future and uncertain revenues sources and, as such, is not actual debt in substance. -75- NOTE 14 – TAX ABATEMENT AGREEMENTS (CONTINUED) The outstanding principal balances as of December 31, 2018 for these agreements are as follows: District Name Purpose Percentage of Taxes Returned During the Fiscal Year Amount of Taxes Returned During the Fiscal Year Outstanding Principal at Year-End Date of Required Decertification TIF No. 14 – Apple Valley Business Campus Construction of 147th St. and Felton Ct., 100,000 sq. ft. expansion of warehouse/office facilities and the addition of minimum of 40 full-time jobs. 90%$171,123 $1,428,910 12/31/2022 TIF No. 15 – Parkside Village – Gabella Housing district, including the construction of multi‑family residential buildings of 196 units with 20% affordable units. 70%$150,364 $2,601,324 12/31/2041 TIF No. 15 – Parkside Village – Galante Housing district, including the construction of multi‑family residential buildings of 134 units with 20% affordable units. 0%$0 $2,666,000 12/31/2041 TIF No. 16 –Uponor Creation of 86,000 sq. ft. of manufacturing facilities and the addition of 75 full-time jobs.90%$25,144 $427,758 12/31/2025 TIF No. 17 – Karamella Creation of 73,000 sq. ft. manufacturing facilities and the addition of 76 full-time jobs.90%$31,359 $736,000 12/31/2026 NOTE 15 – COMMITMENTS AND CONTINGENCIES A. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year -end. Although the outcome of these lawsuits is not presently determinable, the City’s management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City’s financial statements relating to these claims. B. Federal and State Funding Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. C. Tax Increment Districts The City’s tax increment districts are subject to review by the state of Minnesota Office of the State Auditor. 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. -76- NOTE 15 – COMMITMENTS AND CONTINGENCIES (CONTINUED) D. Construction Commitments At December 31, 2018, the City is committed to various construction contracts for the improvement of city property. The City’s remaining commitment under these contracts is approximately $7,220,000. E. Operating Lease On November 15, 2018, the City entered into an agreement to extend the existing liquor store building lease at Apple Valley Shopping Center with Time Square Shopping Center II, LLP for three years commencing February 1, 2019 and ending January 31, 2022, at a base rent of $11,500 per month. Lease expenditures for the year ending December 31, 2018 were $132,000. On January 25, 2018, the City entered into an agreement to lease equipment for the Municipal Golf Course for two years commencing April 23, 2018. Annual rental payments are $37,215. Lease expenditures for the year ending December 31, 2018 were $37,215. The following is a schedule by years of future minimum payments required under the leases as of December 31, 2018: Year Ending Liquor Lease Golf LeaseDecember 31, Amount Amount 2019 137,500$ 37,215$ 2020 138,000 – 2021 138,000 – 2022 11,500 – Total 425,000$ 37,215$ NOTE 16 – SUBSEQUENT EVENT In March 2019, the City entered into a capital lease for golf course equipment in the amount of $123,041 and a 5.65 percent interest rate. Annual payments will be made for $27,385 for five years. REQUIRED SUPPLEMENTARY INFORMATION ProportionateShare of the City’s Net PensionProportionateLiability and City’sShare of the the City’s Proportionate Plan FiduciaryState of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as aPERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a PercentageYear-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total(Measurement Pension Net Pension Net Pension Net Pension Covered Covered PensionDate)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.1634% 8,468,235$ –$ 8,468,235$ 9,603,176$ 88.18% 78.20% 06/30/2016 0.1561% 12,674,544$ 165,598$ 12,840,142$ 9,680,914$ 130.92% 68.90% 06/30/2017 0.1643% 10,488,804$ 131,924$ 10,620,728$ 10,539,668$ 99.52% 75.90% 06/30/2018 0.1552% 8,609,861$ 282,435$ 8,892,296$ 10,429,041$ 82.56% 79.50% Contributions Contributionsin Relation to as aStatutorilythe Statutorily Contribution PercentageRequiredRequiredDeficiencyCoveredof CoveredContributionsContributions(Excess)Payroll Payroll 750,987$ 750,987$ –$ 10,013,141$ 7.50% 741,397$ 741,397$ –$ 9,885,306$ 7.50% 768,029$ 768,029$ –$ 10,240,379$ 7.50% 796,766$ 796,766$ –$ 10,623,546$ 7.50% Note: 12/31/2017 City FiscalYear-End Date Year Ended December 31, 2018 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).This schedule is intended to present10-year trend information. Additional years will be added as they become available. 12/31/201512/31/2016 12/31/2018 CITY OF APPLE VALLEY Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability PERA – General Employees Retirement Fund Year Ended December 31, 2018 Schedule of City ContributionsPERA – General Employees Retirement Fund City FiscalYear-End Date 12/31/201512/31/201612/31/201712/31/2018 -77- City’sProportionate Plan Share of the Net Position City’s City’s Net Pension as aPERA Fiscal Proportion Proportionate Liability as a PercentageYear-End Date of the Net Share of the City’s Percentage of of the Total(Measurement Pension Net Pension Covered Covered PensionDate)Liability Liability Payroll Payroll Liability 06/30/2015 0.5150% 5,851,604$ 4,711,902$ 124.19% 86.60% 06/30/2016 0.5190% 20,828,373$ 4,976,069$ 418.57% 63.90% 06/30/2017 0.5110% 6,899,105$ 5,233,601$ 131.82% 85.40% 06/30/2018 0.4992% 5,320,954$ 5,261,108$ 101.14% 88.80% Contributions Contributionsin Relation to as aStatutorilythe Statutorily Contribution PercentageRequiredRequiredDeficiencyCoveredof CoveredContributionsContributions(Excess)Payroll Payroll 818,071$ 818,071$ –$ 5,049,825$ 16.20% 808,641$ 808,641$ –$ 4,991,606$ 16.20% 829,640$ 829,640$ –$ 5,121,237$ 16.20% 858,645$ 858,645$ –$ 5,300,284$ 16.20% Note: 12/31/2018 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2017 Schedule of City Contributions 12/31/2015 12/31/2016 Year Ended December 31, 2018 City FiscalYear-End Date 12/31/2015 12/31/2018 CITY OF APPLE VALLEY Schedule of City’s Proportionate Share of Net Pension Liability PERA – Public Employees Police and Fire Fund Year Ended December 31, 2018 PERA – Public Employees Police and Fire Fund City FiscalYear-End Date 12/31/201612/31/2017 -78- City fiscal year-end date – December 31 2018 2017 2016 2015 Apple Valley Firefighters’ Relief Association year-end date (measurement date) – December 31 2017 2016 2015 2014 Total pension liabilityService cost 149,826$ 179,770$ 181,221$ 168,532$ Interest 427,292 402,119 398,162 369,565 Differences between expected and actual experience (67,525) (23,940) 12,130 – Changes of assumptions 133,128 (509,724) (209,787) – Change in benefit terms – – – 265,088 Benefit payments (486,814) (528,192) (600,659) (269,330) Net change in total pension liability 155,907 (479,967) (218,933) 533,855 Total pension liability – beginning of year 5,790,805 6,270,772 6,489,705 5,955,850 Total pension liability – end of year 5,946,712$ 5,790,805$ 6,270,772$ 6,489,705$ Plan fiduciary net position Contributions (state and local)530,781$ 546,408$ 477,537$ 526,217$ Net investment income 1,164,210 549,126 (219,523) 239,737 Benefit payments (486,814) (528,192) (600,659) (269,330) Administrative costs (36,279) (34,516) (35,434) (22,641) Net change in plan fiduciary net position 1,171,898 532,826 (378,079) 473,983 Plan fiduciary net position – beginning of year 6,581,831 6,049,005 6,427,084 5,953,101 Plan fiduciary net position – end of year 7,753,729$ 6,581,831$ 6,049,005$ 6,427,084$ Net pension liability (asset) – ending (1,807,017)$ (791,026)$ 221,767$ 62,621$ Plan fiduciary net position as a percentage of the total pension liability 130.39%113.66%96.46%99.04% Note:The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31,2014 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. CITY OF APPLE VALLEY Apple Valley Firefighters’ Relief Association Schedule of Changes in the Relief Association’s NetPension Liability and Related RatiosDecember 31, 2018 -79- Contributions inRelation to theActuariallyActuarially ContributionDeterminedDeterminedDeficiencyContributionContribution(Excess) 449,869$ 526,217$ (76,348)$ 338,049$ 477,537$ (139,488)$ 404,811$ 546,408$ (141,597)$ 442,233$ 530,781$ (88,548)$ Note: 12/31/2015 The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31,2014 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2016 CITY OF APPLE VALLEY Schedule of City ContributionsApple Valley Firefighters’ Relief Association City FiscalYear-End Date 12/31/201712/31/2018 -80- 2018 Total OPEB liabilityService cost 181,510$ Interest 80,281 Changes of assumptions 57,294 Benefit payments (61,516) Net change in total OPEB liability 257,569 Total OPEB liability – beginning of year 1,973,078 Total OPEB liability – end of year 2,230,647$ Covered payroll 14,500,000$ Total OPEB liability as a percentage of covered payroll 15.4% Note 1: Note: 2:No plan assets are accumulated in a trust that meets the criteria in paragraph 4 ofGASB Statement No. 75. The City implemented GASB Statement No.75 in fiscal 2018.This schedule is intended topresent 10-year trend information. Additional years will be added as they become available. CITY OF APPLE VALLEY Schedule of Changes in the City’s TotalOPEB Liability and Related Ratios Other Post-Employment Benefits Plan Year Ended December 31, 2018 -81- CITY OF APPLE VALLEY Notes to Required Supplementary Information December 31, 2018 -82- PERA – GENERAL EMPLOYEES RETIREMENT FUND 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The mortality 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 CHANGES IN PLAN PROVISIONS: The state’s special funding contribution increased from $6 million to $16 million. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent for vested and nonvested deferred members. The revised CSA loads are now zero percent for active member liability, 15.00 percent for vested deferred member liability, and 3.00 percent for nonvested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2035, and 2.50 percent per year thereafter, to 1.00 percent per year for all years. The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate was changed from 7.90 percent to 7.50 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 CHANGES IN PLAN PROVISIONS: On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Retirement 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. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2035, and 2.50 percent per year thereafter. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -83- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The mortality projection scale was changed from MP-2016 to MP-2017. As set by state statutes, the assumed post-retirement benefit increase was changed from 1.00 percent per year through 2064, and 2.50 percent per year thereafter, to 1.00 percent for all years with no trigger. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The CSA load was 30.00 percent for vested and nonvested deferred members. The CSA has been changed to 33.00 percent for vested members, and 2.00 percent for nonvested members. The base mortality table for healthy annuitants was changed from the RP-2000 Fully Generational Table to the RP-2014 Fully Generational Table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 Disabled Mortality Table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years, to 1.00 percent per year through 2064, and 2.50 percent thereafter. The single discount rate changed from 5.60 percent to 7.50 percent. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -84- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2037, and 2.50 percent thereafter, to 1.00 percent per year for all future years. The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 5.60 percent. 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 CHANGES IN PLAN PROVISIONS: The post-retirement benefit increase to be paid after attainment of the 90.00 percent funding threshold was changed from inflation up to 2.50 percent, to a fixed rate of 2.50 percent. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2037, and 2.50 percent per year thereafter. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -85- APPLE VALLEY FIREFIGHTERS’ RELIEF ASSOCIATION 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The expected investment return and discount rate decreased from 7.50 percent to 7.25 percent to reflect updated capital market assumptions. Mortality and termination rates were changed to those used in the most recent Minnesota PERA Police and Fire Plan actuarial valuation. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: The expected investment return and discount rate increased from 6.50 percent to 7.50 percent to reflect updated capital market assumptions. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The discount rate was changed to reflect updated investment expectations. Disability decrements were added to reflect the disability benefit. Retirement rates were changed from 100.00 percent at age 50 with 20 years of service to a graded schedule. OTHER POST-EMPLOYMENT BENEFITS PLAN 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The discount rate was changed from 4.50 percent to 3.44 percent. SUPPLEMENTARY INFORMATION THIS PAGE INTENTIONALLY LEFT BLANK COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Special Debt CapitalRevenueServiceProjects Total AssetsCash and investments 1,042,823$ 3,851,347$ 16,888,383$ 21,782,553$ ReceivablesAccounts 6,844 – 161,179 168,023 Special assessmentsCurrent – 130,000 – 130,000 Deferred – 390,000 – 390,000 Due from other governmental units 3,616 – – 3,616 Total assets 1,053,283$ 4,371,347$ 17,049,562$ 22,474,192$ LiabilitiesAccrued salaries payable 6,346$ –$ –$ 6,346$ Accounts payable 7,137 – 1,464,835 1,471,972 Contracts payable – – 218,451 218,451 Due to other funds – – 15,318 15,318 Advances from other funds – – 1,079,159 1,079,159 Total liabilities 13,483 – 2,777,763 2,791,246 Deferred inflows of resources Unavailable revenue – special assessments – 520,000 – 520,000 Fund balances (deficit)Restricted 1,039,800 2,318,259 10,250,361 13,608,420 Assigned – 1,533,088 4,879,243 6,412,331 Unassigned – – (857,805) (857,805) Total fund balances 1,039,800 3,851,347 14,271,799 19,162,946 Total liabilities, deferred inflows of resources, and fund balances 1,053,283$ 4,371,347$ 17,049,562$ 22,474,192$ CITY OF APPLE VALLEY Nonmajor Governmental FundsCombining Balance Sheetas of December 31, 2018 -86- Special Debt CapitalRevenueServiceProjects Total RevenuesTaxes –$ 1,337,875$ 761,862$ 2,099,737$ Other taxes 99,960 – – 99,960 Franchise taxes – – 791,360 791,360 Special assessments –130,000 –130,000Intergovernmental1,268,744 –– 1,268,744 Investment earnings 18,011 58,149 213,820 289,980 Other 61,820 –3,183,276 3,245,096 Total revenues 1,448,535 1,526,024 4,950,318 7,924,877 ExpendituresCurrentGeneral government 702,229 2,196 1,154,341 1,858,766 Public safety 3,061 – 2,100 5,161 Public works 12,784 –704,373 717,157 Parks and recreation 223,961 –41,531 265,492 Capital outlay 14,116 –1,281,528 1,295,644 Debt servicePrincipal –1,100,000 –1,100,000Interest and fiscal charges –296,963 35,427 332,390Total expenditures 956,151 1,399,159 3,219,300 5,574,610 Excess of revenues over expenditures 492,384 126,865 1,731,018 2,350,267 Other financing sources (uses)Sale of capital assets 11,912 – – 11,912 Transfers in 120,105 3,719,659 1,202,805 5,042,569 Transfers (out)–(1,965,487) (145,561) (2,111,048) Total other financing sources (uses)132,017 1,754,172 1,057,244 2,943,433 Net change in fund balances 624,401 1,881,037 2,788,262 5,293,700 Fund balancesBeginning of year 415,399 1,970,310 11,483,537 13,869,246 End of year 1,039,800$ 3,851,347$ 14,271,799$ 19,162,946$ CITY OF APPLE VALLEY Nonmajor Governmental FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -87- THIS PAGE INTENTIONALLY LEFT BLANK -88- NONMAJOR SPECIAL REVENUE FUNDS Nonmajor special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. Nonmajor special revenue funds presently established are as follows: •Cable TV Fund – Accounts for the operating costs of the cable TV functions funded by cablefranchise fees. •Solid Waste Grant Fund – Accounts for the expenses related to recycling activities and thesemiannual cleanup day funded by grants from Dakota County. •Police Forfeiture Fund – Administers the resources received through court-ordered forfeitures. •EDA Operations Fund – Accounts for the operating activities of the Apple Valley EconomicDevelopment Authority. •Lodging Tax Fund – Administers the resources received from the lodging tax process. Solid Waste PoliceCable TV Grant Forfeiture(2010)(2040)(2060) AssetsCash and investments 75,865$ 43,388$ 61,466$ ReceivablesAccounts – – – Due from other governmental units 3,616 – – Total assets 79,481$ 43,388$ 61,466$ LiabilitiesAccrued salaries payable 6,346$ –$ –$ Accounts payable 582 53 – Total liabilities 6,928 53 – Fund balancesRestricted 72,553 43,335 61,466 Total liabilities and fund balances 79,481$ 43,388$ 61,466$ CITY OF APPLE VALLEY Nonmajor Special Revenue FundsCombining Balance Sheetas of December 31, 2018 -89- EDA LodgingOperationsTax(3210)(7000)Totals 743,520$ 118,584$ 1,042,823$ – 6,844 6,844 – – 3,616 743,520$ 125,428$ 1,053,283$ –$ –$ 6,346$ – 6,502 7,137 – 6,502 13,483 743,520 118,926 1,039,800 743,520$ 125,428$ 1,053,283$ -90- Solid Waste PoliceCable TV Grant Forfeiture(2010)(2040)(2060) RevenuesOther taxes –$ –$ –$ Intergovernmental 120,105 – – Investment earnings – 597 819 Other revenueMiscellaneous – 10,391 1,429Total revenues 120,105 10,988 2,248 ExpendituresCurrentGeneral government – – – Public safety – – 3,061Public works – 12,784 – Parks and recreation 223,961 – – Capital outlay 14,116 – – Total expenditures 238,077 12,784 3,061 Excess (deficiency) of revenue over expenditures (117,972) (1,796) (813) Other financing sourcesSale of capital assets – – 11,912Transfers in 120,105 – – Total other financing sources 120,105 – 11,912 Net change in fund balances 2,133 (1,796) 11,099 Fund balancesBeginning of year 70,420 45,131 50,367 End of year 72,553$ 43,335$ 61,466$ CITY OF APPLE VALLEY Nonmajor Special Revenue FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances Year Ended December 31, 2018 -91- EDA LodgingOperationsTax(3210)(7000)Totals –$ 99,960$ 99,960$ 1,148,639 – 1,268,744 14,849 1,746 18,011 50,000 – 61,820 1,213,488 101,706 1,448,535 594,499 107,730 702,229 – – 3,061 – – 12,784 – – 223,961 – – 14,116 594,499 107,730 956,151 618,989 (6,024) 492,384 – – 11,912 – – 120,105 – – 132,017 618,989 (6,024) 624,401 124,531 124,950 415,399 743,520$ 118,926$ 1,039,800$ -92- THIS PAGE INTENTIONALLY LEFT BLANK -93- NONMAJOR DEBT SERVICE FUNDS Nonmajor debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for principal, interest, and related costs on long-term debt of governmental funds. The individual nonmajor debt service funds presented are to distinguish between the various bond issues. 2001/2008B 2003/2009ARefundingImprovementImprovementRefundingG.O. Closed Improvement Bonds Bonds ImprovementBond Issues Bonds of 2006 of 2007 Bonds(3075)(3285)(3330)(3340)(3305) AssetsCash and investments 1,533,088$ –$ –$ –$ 743,420$ ReceivablesSpecial assessmentsCurrent – – – – – Deferred – – – – – Total assets 1,533,088$ –$ –$ –$ 743,420$ Deferred inflows of resources Unavailable revenue – special assessments –$ –$ –$ –$ –$ Fund balancesRestricted – – – – 743,420 Assigned 1,533,088 – – – – Total fund balances 1,533,088 – – – 743,420 Total deferred inflows of resources and fund balances 1,533,088$ –$ –$ –$ 743,420$ CITY OF APPLE VALLEY Nonmajor Debt Service FundsCombining Balance Sheetas of December 31, 2018 -94- Tax Taxable G.O.Improvement Increment Tax G.O.G.O. Park G.O. Park EquipmentBondsDowntownIncrementPark Bonds Bonds Bonds Certificatesof 2010 Redevelopment Bonds of 2003 of 2007 of 2008 of 2011 of 2012(3320)(3260)(3270)(3345)(3355)(3360)(3370) –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ – – – – – – – – – – – – – – –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ –$ –$ –$ –$ –$ –$ –$ – 180,748 1,122,074 – – – 43,061 – – – – – – – – 180,748 1,122,074 – – – 43,061 –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ -95-(continued) G.O.G.O.G.O.Refunding Improvement Refunding Equipment G.O.Bonds Bonds Bonds Certificates Park Bondsof 2012 of 2012 of 2013 of 2014 of 2015(3375)(3380)(3385)(3390)(3395) AssetsCash and investments –$ 81,035$ 31,949$ 32,986$ 63,162$ ReceivablesSpecial assessmentsCurrent – 130,000 – – – Deferred – 390,000 – – – Total assets –$ 601,035$ 31,949$ 32,986$ 63,162$ Deferred inflows of resources Unavailable revenue – special assessments –$ 520,000$ –$ –$ –$ Fund balances Restricted – 81,035 31,949 32,986 63,162 Assigned – – – – – Total fund balances – 81,035 31,949 32,986 63,162 Total deferred inflows of resources and fund balances –$ 601,035$ 31,949$ 32,986$ 63,162$ Nonmajor Debt Service FundsCombining Balance Sheet (continued)as of December 31, 2018 CITY OF APPLE VALLEY -96- G.O.EquipmentCertificatesof 2015(3400)Total 19,824$ 3,851,347$ – 130,000 – 390,000 19,824$ 4,371,347$ –$ 520,000$ 19,824 2,318,259 – 1,533,088 19,824 3,851,347 19,824$ 4,371,347$ -97- 2001/2008B 2003/2009ARefundingImprovementImprovementRefundingG.O. Closed Improvement Bonds Bonds ImprovementBond Issues Bonds of 2006 of 2007 Bonds(3075)(3285)(3330)(3340)(3305) RevenuesTaxes –$ –$ –$ –$ –$ Special assessments – – – – – Investment earnings 20,637 – – – 10,207 Total revenues 20,637 – – – 10,207 ExpendituresCurrentGeneral government – – – – – Debt servicePrincipal – – – – – Interest and fiscal charges – – – – – Total expenditures – – – – – Excess of revenue over expenditures 20,637 – – 10,207 Other financing sources (uses)Transfers in 658,476 2,846,426 – – – Transfers (out)– – (581,999) (725,013) – Total other financing sources (uses)658,476 2,846,426 (581,999) (725,013) – Net change in fund balances 679,113 2,846,426 (581,999) (725,013) 10,207 Fund balances (deficit)Beginning of year 853,975 (2,846,426) 581,999 725,013 733,213 End of year 1,533,088$ –$ –$ –$ 743,420$ CITY OF APPLE VALLEY Nonmajor Debt Service FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -98- Tax Taxable G.O.Improvement Increment Tax G.O.G.O. Park G.O. Park EquipmentBondsDowntownIncrementPark Bonds Bonds Bonds Certificatesof 2010 Redevelopment Bonds of 2003 of 2007 of 2008 of 2011 of 2012(3320)(3260)(3270)(3345)(3355)(3360)(3370) –$ –$ –$ –$ –$ –$ 125,000$ – – – – – – – – 2,438 15,105 – – – 1,072 – 2,438 15,105 – – – 126,072 – 2,196 – – – – – – – – – – – 110,000 – – – – – – 9,400 – 2,196 – – – – 119,400 – 242 15,105 – – – 6,672 189,301 – – – – – – – – – (215,119) (212,170) (47,172) – 189,301 – – (215,119) (212,170) (47,172) – 189,301 242 15,105 (215,119) (212,170) (47,172) 6,672 (189,301)180,506 1,106,969 215,119 212,170 47,172 36,389 –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ -99-(continued) G.O.G.O.G.O.Refunding Improvement Refunding Equipment G.O.Bonds Bonds Bonds Certificates Park Bondsof 2012 of 2012 of 2013 of 2014 of 2015(3375)(3380)(3385)(3390)(3395) RevenuesTaxes –$ –$ 344,830$ 130,000$ 604,380$ Special assessments – 130,000 – – – Investment earnings – 1,475 948 953 4,509 Total revenues – 131,475 345,778 130,953 608,889 ExpendituresCurrentGeneral government – – – – – Debt servicePrincipal – 110,000 145,000 115,000 500,000 Interest and fiscal charges – 11,700 184,163 7,800 76,600Total expenditures – 121,700 329,163 122,800 576,600 Excess of revenue over expenditures – 9,775 16,615 8,153 32,289 Other financing sources (uses)Transfers in – 25,456 – – – Transfers (out)(184,014) – – – – Total other financing sources (uses)(184,014) 25,456 – – – Net change in fund balances (184,014) 35,231 16,615 8,153 32,289 Fund balances (deficit)Beginning of year 184,014 45,804 15,334 24,833 30,873 End of year –$ 81,035$ 31,949$ 32,986$ 63,162$ Nonmajor Debt Service FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 CITY OF APPLE VALLEY -100- G.O.EquipmentCertificatesof 2015(3400)Total 133,665$ 1,337,875$ – 130,000 805 58,149 134,470 1,526,024 – 2,196 120,000 1,100,000 7,300 296,963127,300 1,399,159 7,170 126,865 – 3,719,659 – (1,965,487) – 1,754,172 7,170 1,881,037 12,654 1,970,310 19,824$ 3,851,347$ -101- -102- NONMAJOR CAPITAL PROJECTS FUNDS Nonmajor capital projects funds used are to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition and construction of capital facilities and other capital assets. Capital projects funds exclude those types of capital-related outflows financed by proprietary funds. Nonmajor capital projects funds presently established are as follows: • Park Dedication Fund – Accounts for expenditures for the expansion of the City’s park facilities funded by the collection of park dedication fees charged to developing property. • Police Special Projects Fund – Accounts for police department projects funded with specific funding sources. • Tree Preservation Fund – Accounts for the amounts received in the development process related to tree preservation efforts. • Pond Fund – Accounts for the amounts received in the development process related to ponding efforts on privately-developed projects. • Pathways and Sidewalks Fund – Accounts for the amounts received in the development process related to pathways and sidewalk development efforts. • Dodd Road Fund – Accounts for the amounts received from the development process on Dodd Road. • Former City Hall Building Fund – Accounts for the costs and revenues associated with the use of the former City Hall building. • Central Village Parking Fund – Accounts for the costs and revenues associated with the use of the Central Village Parking. • Capital Building Fund – Accounts for the cost of the construction of the municipal center and other city facilities. • Park Improvement Development Fund – Accounts for park improvement costs in the development process. • C.I.P. Development Fund – Accounts for the proceeds from and expenses related to the Fraser land sale. • 2012 Improvement Construction Fund – Accounts for the improvements initiated in 2012 to be funded with development charges or developer reimbursements. • Cable Capital Equipment Fund – Accounts for capital equipment needs of the cable TV function funded with portions of the cable franchise fees. • Cable Capital Equipment/PEG Fund – Accounts for capital equipment needs of the cable TV function funded with the cable PEG fees. • Physical Improvement Fund – Accounts for developer projects funded by developers. -103- NONMAJOR CAPITAL PROJECTS FUNDS (CONTINUED) •Private Development Fund – Accounts for developer projects funded by developers. •2003 Improvement Construction Fund – Accounts for the improvements funded with the2003 General Obligation Bonds. •Electric Franchise Fee Fund – Accounts for project costs and revenues associated with theelectric franchise fee. •Fire Grants Project Fund – Accounts for Fire Department projects funded with specific fundingsources. •TIF District No. 7 Fund – Accounts for project costs included within TIF District No. 7. •TIF District No. 1 Fund – Accounts for project costs included within TIF District No. 1. •TIF District No. 15 Parkside Village Fund – Accounts for project costs included within TIFDistrict No. 15 – Parkside Village. •TIF District No. 16 Uponor Fund – Accounts for project costs included within TIF DistrictNo. 16. •TIF District No. 14 Business Campus Fund – Accounts for project costs included within TIFDistrict No. 14 – Apple Valley Business Campus. •TIF District No. 17 Karamella Fund – Accounts for project costs included within TIF DistrictNo. 17 – Karamella. •Construction Projects Fund – This fund accounts for development projects, the costs of whichwill be recovered through the development process, including specially assessing the benefitingproperties. Park Police Special Tree Pathways andDedicationProjectsPreservationPondSidewalks(2015)(2055)(2070)(2075)(2080) AssetsCash and investments 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ ReceivablesAccounts – – – – – Total assets 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ LiabilitiesAccounts payable 484$ –$ –$ –$ –$ Contracts payable 1,044 – – – – Due to other funds – – – – – Advances from other funds – – – – – Total liabilities 1,528 – – – – Fund balances (deficit)Restricted 2,228,618 – – – – Assigned – 148,029 371,129 249,550 256,433 Unassigned – – – – – Total fund balances (deficit)2,228,618 148,029 371,129 249,550 256,433 Total liabilities and fund balances 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheetas of December 31, 2018 -104- Former Central Park 2012City Hall Village Capital Improvement C.I.P.ImprovementDodd Road Building Parking Building Development Development Construction(2085)(2090)(2095)(4000)(4010)(4045)(4715) 242,549$ 142,356$ –$ 910,538$ 2,987$ 268,671$ –$ – 8,160 – – – – – 242,549$ 150,516$ –$ 910,538$ 2,987$ 268,671$ –$ –$ 36,093$ 535$ 11,106$ –$ –$ –$ – – – 150,233 – – – – – 15,318 – – – – – – – – – – – – 36,093 15,853 161,339 – – – – – – – – – – 242,549 114,423 – 749,199 2,987 268,671 – – – (15,853) – – – – 242,549 114,423 (15,853) 749,199 2,987 268,671 – 242,549$ 150,516$ –$ 910,538$ 2,987$ 268,671$ –$ -105-(continued) 2003Cable Capital Cable Capital Physical Private ImprovementEquipmentEquipment/PEG Improvement Development Construction(4800)(4810)(4900)(4920)(4300) AssetsCash and investments 480,183$ 98,394$ 262,323$ 131,551$ 123,574$ ReceivablesAccounts – 21,393 – – – Total assets 480,183$ 119,787$ 262,323$ 131,551$ 123,574$ LiabilitiesAccounts payable 4,695$ –$ 106,331$ –$ 24,943$ Contracts payable – – – – – Due to other funds – – – – – Advances from other funds – – – – – Total liabilities 4,695 – 106,331 – 24,943 Fund balances (deficit)Restricted 475,488 119,787 – – – Assigned – – 155,992 131,551 98,631 Unassigned – – – – – Total fund balances (deficit)475,488 119,787 155,992 131,551 98,631 Total liabilities and fund balances 480,183$ 119,787$ 262,323$ 131,551$ 123,574$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheet (continued)as of December 31, 2018 -106- TIF District TIF District TIF DistrictElectricFire Grants TIF District TIF District No. 15 No. 16 No. 14Franchise Fee Project No. 7 No. 1 Parkside Village Uponor Business Campus(4750)(7600)(4710)(4730)(4740)(4743)(4735) 4,400,962$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ 130,897 – – – – – – 4,531,859$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ 42,464$ –$ 6,357$ –$ –$ –$ –$ 28,536 – – – – – – – – – – – – – – – – – 1,079,159 – – 71,000 – 6,357 – 1,079,159 – – 4,460,859 – 1,824,192 924,430 – 33,975 146,559 – 17,511 – – – –– – – – – (841,952) – – 4,460,859 17,511 1,824,192 924,430 (841,952) 33,975 146,559 4,531,859$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ -107-(continued) THIS PAGE INTENTIONALLY LEFT BLANK TIF DistrictNo. 17 ConstructionKaramellaProjects(4746)(4500)Total AssetsCash and investments 36,453$ 3,342,324$ 16,888,383$ ReceivablesAccounts – 729 161,179 Total assets 36,453$ 3,343,053$ 17,049,562$ LiabilitiesAccounts payable –$ 1,231,827$ 1,464,835$ Contracts payable – 38,638 218,451 Due to other funds – – 15,318 Advances from other funds – – 1,079,159 Total liabilities – 1,270,465 2,777,763 Fund balances (deficit)Restricted 36,453 – 10,250,361 Assigned – 2,072,588 4,879,243 Unassigned – – (857,805) Total fund balances (deficit)36,453 2,072,588 14,271,799 Total liabilities and fund balances 36,453$ 3,343,053$ 17,049,562$ as of December 31, 2018 CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheet (continued) -108- Park Police Special Tree Pathways andDedicationProjectsPreservationPondSidewalks(2015)(2055)(2070)(2075)(2080) RevenuesTaxes –$ –$ –$ –$ –$ Franchise taxes – – – – – Investment earnings 27,873 2,001 4,995 3,359 3,452 Other revenueContributions – 100 – – – Rentals – – – – – Miscellaneous 977,391 – – – – Total revenues 1,005,264 2,101 4,995 3,359 3,452 ExpendituresCurrentGeneral government – – – – – Public safety – 2,100 – – – Public works – – – – – Parks and recreation 41,531 – – – – Capital outlay 201,231 26,748 – – – Debt serviceInterest and fiscal charges – – – – – Total expenditures 242,762 28,848 – – – Excess (deficiency) of revenue over expenditures 762,502 (26,747) 4,995 3,359 3,452 Other financing sources (uses)Transfers in – – – – – Transfers (out)– – – – – Total other financing sources (uses)– – – – – Net change in fund balances 762,502 (26,747) 4,995 3,359 3,452 Fund balances (deficit)Beginning of year 1,466,116 174,776 366,134 246,191 252,981 End of year 2,228,618$ 148,029$ 371,129$ 249,550$ 256,433$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -109- Former Central Park 2012City Hall Village Capital Improvement C.I.P.ImprovementDodd Road Building Parking Building Development Development Construction(2085)(2090)(2095)(4000)(4010)(4045)(4715) –$ –$ –$ –$ –$ –$ –$ – – – – – – – 3,265 2,262 – 4,217 40 3,616 88 – – – – – – – – 193,976 4,300 – – – – – – – 9,900 – – – 3,265 196,238 4,300 14,117 40 3,616 88 – 184,867 9,265 – – – – – – – – – – – – – – – – – – – – – – – – – – 587,209 – 290,982 – – – – – – – – – – – 772,076 9,265 290,982 – – – 3,265 (575,838) (4,965) (276,865) 40 3,616 88 – – – 593,000 – – – – – – – – – (25,456) – – – 593,000 – – (25,456) 3,265 (575,838) (4,965) 316,135 40 3,616 (25,368) 239,284 690,261 (10,888)433,064 2,947 265,055 25,368 242,549$ 114,423$ (15,853)$ 749,199$ 2,987$ 268,671$ –$ -110-(continued) 2003Cable Capital Cable Capital Physical Private ImprovementEquipmentEquipment/PEG Improvement Development Construction(4800)(4810)(4900)(4920)(4300) RevenuesTaxes –$ –$ –$ –$ –$ Franchise taxes 138,403 68,122 – – – Investment earnings 6,301 1,606 3,648 1,771 1,665 Other revenueContributions – – – – – Rentals – – – – – Miscellaneous – – 3,853 – – Total revenues 144,704 69,728 7,501 1,771 1,665 ExpendituresCurrentGeneral government – – – – – Public safety – – – – – Public works 15,488 – 8,607 – – Parks and recreation – – – – – Capital outlay 111,408 11,235 – – – Debt serviceInterest and fiscal charges – – – – – Total expenditures 126,896 11,235 8,607 – – Excess (deficiency) of revenue over expenditures 17,808 58,493 (1,106) 1,771 1,665 Other financing sources (uses)Transfers in – – – – – Transfers (out)(120,105) – – – – Total other financing sources (uses)(120,105) – – – – Net change in fund balances (102,297) 58,493 (1,106) 1,771 1,665 Fund balances (deficit)Beginning of year 577,785 61,294 157,098 129,780 96,966 End of year 475,488$ 119,787$ 155,992$ 131,551$ 98,631$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 -111- TIF District TIF District TIF DistrictElectricFire Grants TIF District TIF District No. 15 No. 16 No. 14Franchise Fee Project No. 7 No. 1 Parkside Village Uponor Business Campus(4750)(7600)(4710)(4730)(4740)(4743)(4735) –$ –$ –$ –$ 448,408$ 55,875$ 187,892$ 584,835 – – – – – – 57,374 236 24,784 12,443 1,319 148 903 – – – – – – – – – – – – – – – – – – – – – 642,209 236 24,784 12,443 449,727 56,023 188,795 – – – – 727,366 26,720 172,781 – – – – – – – 42,464 – – – – – – – – – – – – – 28,536 – 24,179 – – – – – – – – 35,427 – – 71,000 – 24,179 – 762,793 26,720 172,781 571,209 236 605 12,443 (313,066) 29,303 16,014 – – – – – – – – – – – – – – – – – – – – – 571,209 236 605 12,443 (313,066) 29,303 16,014 3,889,650 17,275 1,823,587 911,987 (528,886) 4,672 130,545 4,460,859$ 17,511$ 1,824,192$ 924,430$ (841,952)$ 33,975$ 146,559$ -112-(continued) THIS PAGE INTENTIONALLY LEFT BLANK TIF DistrictNo. 17 ConstructionKaramellaProjects(4746)(4500)Total RevenuesTaxes 69,687$ –$ 761,862$ Franchise taxes – – 791,360 Investment earnings 108 46,346 213,820 Other revenueContributions – – 100 Rentals – – 198,276 Miscellaneous – 1,993,756 2,984,900 Total revenues 69,795 2,040,102 4,950,318 ExpendituresCurrentGeneral government 33,342 – 1,154,341 Public safety – – 2,100 Public works – 637,814 704,373 Parks and recreation – – 41,531 Capital outlay – – 1,281,528 Debt serviceInterest and fiscal charges – – 35,427 Total expenditures 33,342 637,814 3,219,300 Excess (deficiency) of revenue over expenditures 36,453 1,402,288 1,731,018 Other financing sources (uses)Transfers in – 609,805 1,202,805 Transfers (out)– – (145,561) Total other financing sources (uses)– 609,805 1,057,244 Net change in fund balances 36,453 2,012,093 2,788,262 Fund balances (deficit)Beginning of year – 60,495 11,483,537 End of year 36,453$ 2,072,588$ 14,271,799$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 -113- Over (Under)Original Final Actual Budget RevenueTaxesCurrent 24,223,125$ 24,223,125$ 24,256,311$ 33,186$ Delinquent 50,000 50,000 134,466 84,466 Total taxes 24,273,125 24,273,125 24,390,777 117,652 Other taxes 103,900 103,900 50,380 (53,520) Franchise taxes 515,000 515,000 515,000 – Special assessments 14,000 14,000 496 (13,504) Licenses and permitsGeneral government 171,380 171,380 192,049 20,669 Public safety 5,400 5,400 8,920 3,520 Public works 1,327,930 1,327,930 2,053,340 725,410 Total licenses and permits 1,504,710 1,504,710 2,254,309 749,599 Intergovernmental Federal grantsGeneral government 15,955 15,955 1,250 (14,705) State grantsPERA aid 43,000 43,000 43,426 426 Fire relief aid – public safety 285,000 285,000 298,751 13,751 Police relief aid – public safety 418,000 418,000 442,980 24,980 Other – public safety 102,300 102,300 94,908 (7,392) Total intergovernmental 864,255 864,255 881,315 17,060 Charges for services Administration charges – general governmentConstruction funds 69,200 69,200 – (69,200) Enterprise funds 769,450 769,450 769,450 – Investment charges – general government 124,000 124,000 124,000 – Engineering charges – public works – construction 1,018,000 1,018,000 837,618 (180,382) General government 30,910 30,910 25,044 (5,866) Public safety 239,365 239,365 252,126 12,761 Public works 15,800 15,800 17,518 1,718 Parks and recreation 1,066,300 1,066,300 1,060,964 (5,336) Total charges for services 3,333,025 3,333,025 3,086,720 (246,305) Fines and forfeitures 279,500 279,500 302,494 22,994 Investment earnings 195,000 195,000 237,028 42,028 Other Rentals – recreation 460,040 460,040 530,328 70,288 Rentals – other 188,600 188,600 245,919 57,319 Refunds and reimbursements 61,200 61,200 47,985 (13,215) Donations – – 7,497 7,497 Miscellaneous 25,900 25,900 79,992 54,092 Total other 735,740 735,740 911,721 175,981 Total revenue 31,818,255 31,818,255 32,630,240 811,985 Budgeted Amounts CITY OF APPLE VALLEY General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -114-(continued) Over (Under)Original Final Actual Budget ExpendituresGeneral governmentMayor and City CouncilPersonal services 125,965 125,965 120,377 (5,588) Supplies 655 655 743 88 Other current expenditures 30,755 30,755 22,386 (8,369) Total Mayor and City Council 157,375 157,375 143,506 (13,869) AdministrationPersonal services 457,945 457,945 444,060 (13,885) Supplies 265 1,135 995 (140) Other current expenditures 17,280 16,410 16,622 212 Total administration 475,490 475,490 461,677 (13,813) Finance and data processingPersonal services 612,670 612,670 603,080 (9,590) Supplies 11,470 11,470 9,544 (1,926) Other current expenditures 302,640 305,540 299,200 (6,340) Total finance and data processing 926,780 929,680 911,824 (17,856) Information technologyPersonal services 468,150 468,150 460,069 (8,081) Supplies 11,000 11,000 6,261 (4,739) Other current expenditures 242,225 257,225 244,602 (12,623) Capital outlay 115,100 115,100 115,895 795 Total information technology 836,475 851,475 826,827 (24,648) Human resourcesPersonal services 523,080 523,080 513,735 (9,345) Supplies 650 650 356 (294) Other current expenditures 78,845 82,835 75,227 (7,608) Capital outlay – 2,010 2,007 (3) Total human resources 602,575 608,575 591,325 (17,250) City clerk/electionsPersonal services 263,900 263,900 264,203 303 Supplies 49,700 49,700 31,184 (18,516) Other current expenditures 160,200 160,200 145,475 (14,725) Capital outlay – 524 524 – Total city clerk/elections 473,800 474,324 441,386 (32,938) LegalOther current expenditures 532,990 532,990 521,497 (11,493) General government buildingsPersonal services 183,270 183,270 185,769 2,499 Supplies 22,300 22,300 23,630 1,330 Other current expenditures 170,770 170,770 172,545 1,775 Capital outlay – – 4,143 4,143 Total general government buildings 376,340 376,340 386,087 9,747 Budget and Actual (continued) CITY OF APPLE VALLEY General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018 Budgeted Amounts -115-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)General government (continued)Community developmentPersonal services 628,950 628,950 619,682 (9,268) Supplies 1,400 1,400 38,013 36,613 Other current expenditures 100,475 92,475 59,150 (33,325) Total community development 730,825 722,825 716,845 (5,980) Code enforcementPersonal services 214,945 214,945 201,974 (12,971) Supplies 2,000 2,000 1,456 (544) Other current expenditures 20,750 20,750 13,672 (7,078) Total code enforcement 237,695 237,695 217,102 (20,593) UnallocatedPersonal services 6,200 6,200 2,749 (3,451) Other current expenditures 412,795 412,795 313,150 (99,645) Total unallocated 418,995 418,995 315,899 (103,096) Total general government 5,769,340 5,785,764 5,533,975 (251,789) Public safetyPolice protectionPersonal services 7,740,480 7,725,480 7,662,811 (62,669) Supplies 218,200 237,200 253,315 16,115 Other current expenditures 1,471,055 1,506,155 1,489,959 (16,196) Capital outlay 21,000 21,000 17,160 (3,840) Total police protection 9,450,735 9,489,835 9,423,245 (66,590) Fire protectionPersonal services 1,179,920 1,179,920 1,192,884 12,964 Supplies 86,405 110,505 113,627 3,122 Other current expenditures 664,305 748,105 719,853 (28,252) Total fire protection 1,930,630 2,038,530 2,026,364 (12,166) Fire reliefOther current expenditures 540,130 540,130 552,421 12,291 Civil defenseSupplies 2,000 2,000 635 (1,365) Other current expenditures 18,185 18,185 15,894 (2,291) Total civil defense 20,185 20,185 16,529 (3,656) Animal controlPersonal services 91,575 91,575 94,247 2,672 Supplies 6,625 6,625 5,906 (719) Other current expenditures 8,150 8,150 5,714 (2,436) Total animal control 106,350 106,350 105,867 (483) Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued)Year Ended December 31, 2018 Budgeted Amounts CITY OF APPLE VALLEY General Fund -116-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)Public safety (continued)Building inspectionPersonal services 757,865 757,865 691,953 (65,912) Supplies 50,605 23,955 15,773 (8,182) Other current expenditures 176,240 211,490 287,640 76,150 Capital outlay 30,700 78,480 26,000 (52,480) Total building inspection 1,015,410 1,071,790 1,021,366 (50,424) Total public safety 13,063,440 13,266,820 13,145,792 (121,028) Public worksPublic works administrationPersonal services 453,140 453,140 442,163 (10,977) Supplies 6,735 8,835 11,267 2,432 Other current expenditures 118,130 81,030 80,623 (407) Total public works administration 578,005 543,005 534,053 (8,952) Central maintenance facilityPersonal services 498,045 498,045 483,446 (14,599) Supplies 26,740 28,880 18,539 (10,341) Other current expenditures 125,975 125,975 153,865 27,890 Capital outlay – – 11,251 11,251 Total central maintenance facility 650,760 652,900 667,101 14,201 StreetsPersonal services 1,651,975 1,651,975 1,580,973 (71,002) Supplies 447,700 436,100 427,919 (8,181) Other current expenditures 574,080 553,630 523,600 (30,030) Capital outlay 38,000 55,500 63,428 7,928 Total streets 2,711,755 2,697,205 2,595,920 (101,285) EngineeringPersonal services 689,425 689,425 553,736 (135,689) Supplies 15,010 15,010 14,925 (85) Other current expenditures 154,720 153,270 137,511 (15,759) Total engineering 859,155 857,705 706,172 (151,533) Total public works 4,799,675 4,750,815 4,503,246 (247,569) Parks and recreationParks and recreation administrationPersonal services 807,830 807,830 801,799 (6,031) Supplies 3,600 3,600 2,748 (852) Other current expenditures 144,450 144,450 141,388 (3,062) Total parks and recreation administration 955,880 955,880 945,935 (9,945) Budgeted Amounts Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) General Fund CITY OF APPLE VALLEY Year Ended December 31, 2018 -117-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)Parks and recreation (continued)Recreation programsPersonal services 217,145 217,145 170,070 (47,075) Supplies 50,215 50,215 40,506 (9,709) Other current expenditures 120,545 120,545 130,762 10,217 Total recreation programs 387,905 387,905 341,338 (46,567) Parks maintenancePersonal services 1,781,995 1,781,995 1,695,680 (86,315) Supplies 301,600 301,600 280,197 (21,403) Other current expenditures 817,650 780,650 813,229 32,579 Capital outlay 41,500 24,500 23,052 (1,448) Total parks maintenance 2,942,745 2,888,745 2,812,158 (76,587) Redwood Community PoolPersonal services 64,095 64,095 66,971 2,876 Supplies 7,150 7,150 2,966 (4,184) Other current expenditures 33,425 33,425 32,616 (809) Capital outlay – 12,855 7,253 (5,602) Total Redwood Community Pool 104,670 117,525 109,806 (7,719) Apple Valley Family Aquatic CenterPersonal services 322,150 322,150 345,279 23,129 Supplies 36,000 36,000 29,990 (6,010) Other current expenditures 264,450 264,450 238,293 (26,157) Capital outlay 20,000 6,230 6,153 (77) Total Apple Valley Family Aquatic Center 642,600 628,830 619,715 (9,115) Apple Valley Community CenterPersonal services 194,695 194,695 194,707 12 Supplies 19,650 19,650 17,199 (2,451) Other current expenditures 78,000 78,000 75,004 (2,996) Total Apple Valley Community Center 292,345 292,345 286,910 (5,435) Apple Valley Senior CenterPersonal services 314,805 314,805 310,026 (4,779) Supplies 13,800 13,800 10,105 (3,695) Other current expenditures 56,050 56,050 62,085 6,035 Capital outlay 15,000 15,000 18,755 3,755 Total Apple Valley Senior Center 399,655 399,655 400,971 1,316 Total parks and recreation 5,725,800 5,670,885 5,516,833 (154,052) Total expenditures 29,358,255 29,474,284 28,699,846 (774,438) Excess of revenues over expenditures 2,460,000 2,343,971 3,930,394 1,586,423 Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) CITY OF APPLE VALLEY General Fund Year Ended December 31, 2018 Budgeted Amounts -118-(continued) Over (Under)Original Final Actual Budget Other financing sources (uses)Sale of capital assets 20,400 20,400 18,924 (1,476) Transfers in 1,317,600 1,317,600 1,317,600 – Transfers (out)(3,798,000) (3,798,000) (4,963,000) (1,165,000) Total other financing sources (uses)(2,460,000) (2,460,000) (3,626,476) (1,166,476) Net change in fund balances –$ (116,029)$ 303,918 419,947$ Fund balancesBeginning of year 17,336,413 End of year 17,640,331$ Budgeted Amounts General Fund Year Ended December 31, 2018 CITY OF APPLE VALLEY Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) -119- Over (Under)Budget Actual Budget RevenueSpecial assessments 125,000$ 214,551$ 89,551$ Intergovernmental 3,191,500 585,765 (2,605,735) Other – 1,090 1,090 Total revenue 3,316,500 801,406 (2,515,094) ExpendituresCapital outlayPublic works 10,014,310 4,873,595 (5,140,715) Excess (deficiency) of revenue over expenditures (6,697,810) (4,072,189) 2,625,621 Other financing sourcesTransfers in 6,697,810 3,995,810 (2,702,000) Net change in fund balances –$ (76,379) (76,379)$ Fund balances (deficit)Beginning of year (5,174,280) End of year (5,250,659)$ CITY OF APPLE VALLEY Road Improvements Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -120- Over (Under)Budget Actual Budget RevenueInvestment earnings 188,390$ 204,366$ 15,976$ ExpendituresCurrentPublic works 27,940 – (27,940) Capital outlay 500,000 1,631,819 1,131,819 Total expenditures 527,940 1,631,819 1,103,879 Excess (deficiency) of revenue over expenditures (339,550) (1,427,453) (1,087,903) Other financing sources (uses)Transfers in – 1,165,000 1,165,000 Transfers (out)(1,790,810) (790,810) 1,000,000 Total other financing sources (uses)(1,790,810) 374,190 2,165,000 Net change in fund balances (2,130,360)$ (1,053,263) 1,077,097$ Fund balancesBeginning of year 15,353,401 End of year 14,300,138$ CITY OF APPLE VALLEY Future Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -121- Over (Under)Budget Actual Budget RevenueIntergovernmental 120,105$ 120,105$ –$ Investment earnings 1,500 – (1,500) Total revenue 121,605 120,105 (1,500) ExpendituresCurrentParks and recreation 240,210 223,961 (16,249) Capital outlay – 14,116 14,116 Total expenditures 240,210 238,077 (2,133) Excess (deficiency) of revenue over expenditures (118,605) (117,972) 633 Other financing sourcesTransfers in 120,105 120,105 – Net change in fund balances 1,500$ 2,133 633$ Fund balancesBeginning of year 70,420 End of year 72,553$ CITY OF APPLE VALLEY Cable TV Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -122- Over (Under)Budget Actual Budget RevenueIntergovernmental –$ 1,148,639$ 1,148,639$ Investment earnings 1,500 14,849 13,349 Miscellaneous 50,000 50,000 – Total revenue 51,500 1,213,488 1,161,988 ExpendituresCurrentGeneral government 38,750 594,499 555,749 Net change in fund balances 12,750$ 618,989 606,239$ Fund balancesBeginning of year 124,531 End of year 743,520$ CITY OF APPLE VALLEY EDA Operations Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -123- Over (Under)Budget Actual Budget RevenueFranchise fees –$ 138,403$ 138,403$ Investment earnings 6,750 6,301 (449) Total revenue 6,750 144,704 137,954 ExpendituresCurrentPublic works – 15,488 15,488 Capital outlay 110,000 111,408 1,408 Total expenditures 110,000 126,896 16,896 Excess (deficiency) of revenue over expenditures (103,250) 17,808 121,058 Other financing sources (uses)Transfers (out)– (120,105) (120,105) Net change in fund balances (103,250)$ (102,297) 953$ Fund balancesBeginning of year 577,785 End of year 475,488$ CITY OF APPLE VALLEY Cable Capital Equipment Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -124- -125- INTERNAL SERVICE FUNDS Internal service funds account for the financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost-reimbursement basis. The City utilizes a Dental Insurance Internal Service Fund, a Benefits/Other Insurance Internal Service Fund, and a Vehicle Equipment Replacement Internal Service Fund in managing city operations. Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Current assetsCash and investments 106,385$ 2,934,984$ 1,462,130$ 4,503,499$ Receivables Accounts – 1,388 – 1,388Prepaids– 200,370 – 200,370Total current assets 106,385 3,136,742 1,462,130 4,705,257 Noncurrent assetsCapital assetsFurniture and equipment – – 13,134,845 13,134,845 Less accumulated depreciation – – (7,002,262) (7,002,262) Total noncurrent assets – – 6,132,583 6,132,583 Total assets 106,385$ 3,136,742$ 7,594,713$ 10,837,840$ Current liabilitiesAccounts payable –$ 11,819$ 23,753$ 35,572$ Claims payable 8,661 – – 8,661 Accrued compensated absences – 1,671,000 – 1,671,000 Total current liabilities 8,661 1,682,819 23,753 1,715,233 Noncurrent liabilitiesAccrued compensated absences – 1,188,937 – 1,188,937 Total liabilities 8,661 2,871,756 23,753 2,904,170 Net positionNet investment in capital assets – – 6,132,583 6,132,583 Unrestricted 97,724 264,986 1,438,377 1,801,087 Total net position 97,724 264,986 7,570,960 7,933,670 Total liabilities and net position 106,385$ 3,136,742$ 7,594,713$ 10,837,840$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Net Positionas of December 31, 2018 -126- Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Operating revenueCharges to other funds 245,240$ 1,336,496$ 1,038,476$ 2,620,212$ Operating expensesPersonal services 194,144 728,493 – 922,637 Contractual services – 20,529 – 20,529 Other charges – 857,132 – 857,132 Depreciation – – 1,033,925 1,033,925Total operating expenses 194,144 1,606,154 1,033,925 2,834,223 Operating income (loss)51,096 (269,658) 4,551 (214,011) Nonoperating revenueInvestment earnings 1,349 42,489 18,823 62,661 Gain on sale of capital assets – – 126,171 126,171 Total nonoperating revenue 1,349 42,489 144,994 188,832 Change in net position 52,445 (227,169) 149,545 (25,179) Net positionBeginning of year 45,279 492,155 7,421,415 7,958,849 End of year 97,724$ 264,986$ 7,570,960$ 7,933,670$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Revenue, Expenses, and Changes in Net PositionYear Ended December 31, 2018 -127- Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Cash flows from operating activitiesCash receipts on interfund services provided 245,240$ 1,343,424$ 1,062,229$ 2,650,893$ Cash payments to suppliers (197,686) (1,386,579) – (1,584,265) Cash payments to employees for services – (167,671) – (167,671) Net cash flows from operating activities 47,554 (210,826) 1,062,229 898,957 Cash flows from capital and related financing activitiesAcquisition and construction of capital assets – – (1,070,851) (1,070,851) Proceeds from sale of capital assets – – 207,228 207,228 Net cash flows from capital and related financing activities – – (863,623) (863,623) Cash flows from investing activitiesInterest received on investments 1,349 42,489 18,823 62,661 Net increase in cash and cash equivalents 48,903 (168,337) 217,429 97,995 Cash and investmentsBeginning of year 57,482 3,103,321 1,244,701 4,405,504 End of year 106,385$ 2,934,984$ 1,462,130$ 4,503,499$ Reconciliation of operating income (loss) to net cash flows from operating activitiesOperating income (loss)51,096$ (269,658)$ 4,551$ (214,011)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activitiesDepreciation – – 1,033,925 1,033,925 Change in assets and liabilitiesReceivablesAccounts – 6,928 – 6,928 Prepaids – (3,298) – (3,298) Accounts payable (5,417) 6,730 23,753 25,066 Claims payable 1,875 – – 1,875 Accrued compensated absences – 48,472 – 48,472 Net cash flows from operating activities 47,554$ (210,826)$ 1,062,229$ 898,957$ Noncash capital activitiesNet book value of capital asset disposals –$ –$ (81,057)$ (81,057)$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Cash FlowsYear Ended December 31, 2018 -128- STATISTICAL SECTION Page Contents: Financial Trends 129 Revenue Capacity 139 Debt Capacity 146 Demographic and Economic Information 155 Operating Indicators 157 Source: Unless otherwise noted, the information in these schedules is derived from the CAFR for the relevant year. These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides, and the activities it performs. STATISTICAL SECTION (UNAUDITED) This part of the City of Apple Valley,Minnesota’s (the City)Comprehensive Annual Financial Report (CAFR)presentsdetailedinformationasacontextforunderstandingwhattheinformationinthefinancialstatements,note disclosures,and required supplementary information says about the City’s overall financial health. These schedules contain trend information to help the reader understand how the City’s financialperformance and well-being have changed over time. These schedules contain information to help the reader assess the City’s most significant revenue source,including property tax and utility revenue. These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 2009 2010 2011 2012 Governmental activitiesNet investment in capital assets 43,981,788$ 45,477,393$ 54,928,735$ 64,226,520$ Restricted 24,664,257 24,656,491 21,580,777 17,001,111 Unrestricted 36,290,872 38,798,761 42,115,459 43,609,670 Total governmental activities net position 104,936,917$ 108,932,645$ 118,624,971$ 124,837,301$ Business-type activitiesNet investment in capital assets 101,447,457$ 102,320,160$ 104,198,009$ 110,376,210$ Restricted 289,049 291,591 309,518 319,582 Unrestricted 19,100,650 20,094,976 19,431,679 19,030,882 Total business-type activities net position 120,837,156$ 122,706,727$ 123,939,206$ 129,726,674$ Primary governmentNet investment in capital assets 145,429,245$ 147,797,553$ 159,126,744$ 174,602,730$ Restricted 24,953,306 24,948,082 21,890,295 17,320,693 Unrestricted 55,391,522 58,893,737 61,547,138 62,640,552 Total primary government net position 225,774,073$ 231,639,372$ 242,564,177$ 254,563,975$ Note 1: Note 2: Note 3:The City implemented GASB Statement No.75 in 2018,resulting in a restatement of beginning net position for theeffects of implementing this standard. Net position for previous years has not been restated. The City implemented GASB Statement No.68 in 2015,resulting in a restatement of beginning net position for theeffects of implementing this standard. Net position for previous years has not been restated. Fiscal Year Net Position by ComponentLast Ten Fiscal Years(accrual basis of accounting) The City implemented GASB Statement No.65 in 2012.Net position for 2011 was restated for the effects ofimplementing this standard. Net position for previous years has not been restated. CITY OF APPLE VALLEY -129- Table 1 2013 2014 2015 2016 2017 2018 70,526,658$ 78,398,734$ 86,664,918$ 93,945,022$ 99,642,040$ 83,980,389$ 18,619,396 15,253,042 16,541,831 16,141,535 15,364,368 15,352,356 38,654,601 36,056,447 26,805,077 24,394,132 24,292,441 28,466,675 127,800,655$ 129,708,223$ 130,011,826$ 134,480,689$ 139,298,849$ 127,799,420$ 118,410,631$ 120,092,250$ 118,288,727$ 119,417,084$ 94,851,212$ 100,261,931$ 303,823 329,167 178,529 178,977 178,665 – 13,228,257 14,998,933 14,230,604 17,104,636 15,390,547 12,828,596 131,942,711$ 135,420,350$ 132,697,860$ 136,700,697$ 110,420,424$ 113,090,527$ 188,937,289$ 198,490,984$ 204,953,645$ 213,362,106$ 194,493,252$ 184,242,320$ 18,923,219 15,582,209 16,720,360 16,320,512 15,543,033 15,352,356 51,882,858 51,055,380 41,035,681 41,498,768 39,682,988 41,295,271 259,743,366$ 265,128,573$ 262,709,686$ 271,181,386$ 249,719,273$ 240,889,947$ -130- 2009 2010 2011 2012 ExpensesGovernmental activitiesGeneral government 8,685,487$ 10,081,345$ 7,086,321$ 7,398,895$ Public safety 10,306,540 10,092,977 10,548,223 11,101,520 Public works 8,393,981 7,008,886 5,744,780 6,382,138 Park and recreation 5,754,969 6,261,801 6,169,552 6,166,397 Interest on long-term debt 1,773,863 1,556,130 1,459,728 1,235,352 Total governmental activities expenses 34,914,840$ 35,001,139$ 31,008,604$ 32,284,302$ Business-type activitiesMunicipal Liquor 8,062,876$ 8,285,841$ 8,177,679$ 8,377,991$ Municipal Golf Course 1,011,443 1,057,715 1,051,605 1,292,371 Sports Arena 771,198 748,541 799,993 778,931 Water and Sewer 7,226,393 7,302,254 7,309,277 7,194,007 Storm Drainage 869,376 846,743 917,054 1,001,140 Cemetery 56,518 68,868 69,004 69,376 Street Light Utility – 410,787 398,114 447,954 Total business-type activities 17,997,804 18,720,749 18,722,726 19,161,770 Total primary government expenses 52,912,644$ 53,721,888$ 49,731,330$ 51,446,072$ Program revenuesGovernmental activitiesCharges for servicesGeneral government 2,363,002$ 2,423,051$ 2,435,834$ 2,413,190$ Public safety 603,425 755,339 587,486 554,820 Public works 457,516 1,046,007 1,055,995 1,543,446 Park and recreation 1,259,959 1,721,486 1,314,377 1,504,546 Operating grants and contributions 1,577,419 1,872,316 534,041 579,675 Capital grants and contributions 2,451,327 3,271,761 4,398,403 4,445,816 Total governmental activities program revenues 8,712,648$ 11,089,960$ 10,326,136$ 11,041,493$ CITY OF APPLE VALLEY Changes in Net PositionLast Ten Fiscal Years(accrual basis of accounting) Fiscal Year -131- Table 2 2013 2014 2015 2016 2017 2018 5,012,638$ 6,107,245$ 5,468,843$ 6,974,444$ 6,260,768$ 7,670,285$ 11,336,972 11,946,671 12,464,603 15,097,659 13,443,699 12,750,741 6,905,011 9,011,324 7,038,033 7,746,304 8,473,039 9,434,637 6,345,937 6,403,907 6,543,162 7,025,281 7,239,268 6,992,203 1,194,974 1,037,527 1,037,567 912,007 886,283 284,621 30,795,532$ 34,506,674$ 32,552,208$ 37,755,695$ 36,303,057$ 37,132,487$ 8,419,472$ 8,332,921$ 7,772,369$ 7,872,023$ 8,251,249$ 8,362,332$ 1,507,451 1,526,108 1,653,759 1,728,605 1,545,792 1,238,125 759,930 853,315 770,215 770,666 798,402 784,343 7,794,274 8,186,262 8,154,989 9,336,567 10,031,223 9,203,936 1,052,087 1,257,566 1,444,800 1,481,121 2,181,086 2,035,266 51,472 51,646 49,086 60,790 127,469 89,069 444,106 424,670 446,644 437,439 483,752 485,356 20,028,792 20,632,488 20,291,862 21,687,211 23,418,973 22,198,427 50,824,324$ 55,139,162$ 52,844,070$ 59,442,906$ 59,722,030$ 59,330,914$ 2,315,613$ 2,828,709$ 1,696,786$ 1,768,008$ 1,956,499$ 1,987,775$ 549,371 541,947 496,566 543,950 617,729 615,835 892,267 1,001,148 2,620,283 2,489,539 3,740,394 3,555,717 1,271,031 2,030,716 1,989,084 2,740,747 1,461,720 2,396,973 900,223 837,763 771,220 1,531,412 1,082,234 1,985,278 3,250,152 1,897,081 5,918,652 5,489,541 3,206,571 3,741,660 9,178,657$ 9,137,364$ 13,492,591$ 14,563,197$ 12,065,147$ 14,283,238$ -132-(continued) Fiscal Year2009201020112012 Program revenues (continued)Business-type activitiesCharges for servicesMunicipal liquor 8,772,571$ 9,032,194$ 9,005,660$ 9,231,890$ Municipal golf course 1,085,429 1,114,395 1,023,866 1,122,791 Sports arena 627,595 606,262 650,350 647,134 Water and sewer 9,250,812 8,439,232 8,361,750 9,256,709 Storm drainage 1,233,346 1,360,483 1,370,348 1,517,090 Cemetery 95,320 89,695 114,365 127,735 Street light utility – 465,552 433,464 454,477 Operating grants and contributions 25,190 – 10,170 13,890 Capital grants and contributions 316,200 645,427 643,164 3,201,690 Total business-type activities program revenues 21,406,463 21,753,240 21,613,137 25,573,406 Total primary government program revenues 30,119,111$ 32,843,200$ 31,939,273$ 36,614,899$ Net (expense) revenueGovernmental activities (26,202,192)$ (23,911,179)$ (20,682,468)$ (21,242,809)$ Business-type activities 3,408,659 3,032,491 2,890,411 6,411,636 Total primary government net expense (22,793,533)$ (20,878,688)$ (17,792,057)$ (14,831,173)$ General revenues and other changes in net positionGovernmental activitiesProperty taxes 21,892,939$ 21,697,421$ 21,460,141$ 21,769,647$ Tax increments 2,185,762 2,311,405 2,240,269 2,012,281 Franchise taxes 1,096,578 1,160,771 1,177,715 1,197,288 Lodging tax 56,300 67,311 74,105 75,472 Gravel tax 40,692 36,314 38,666 36,439 Unallocated state and county aids 292,225 95,019 117,000 145,755 Other general revenue 433,956 271,622 176,575 116,558 Unrestricted investment earnings 912,413 643,741 2,372,693 1,026,594 Transfers 1,824,528 1,623,303 2,717,630 1,075,105 Total governmental activities 28,735,393$ 27,906,907$ 30,374,794$ 27,455,139$ Business-type activitiesUnrestricted investment earnings 426,300$ 320,166$ 888,863$ 388,923$ Property taxes 120,000 125,000 120,000 120,000 Other 152,243 15,217 50,835 43,845 Transfers (1,824,528) (1,623,303) (2,717,630) (1,075,105) Total business-type activities (1,125,985) (1,162,920) (1,657,932) (522,337) Total primary government 27,609,408$ 26,743,987$ 28,716,862$ 26,932,802$ Change in net positionGovernmental activities 2,533,201$ 3,995,728$ 9,692,326$ 6,212,330$ Business-type activities 2,282,674 1,869,571 1,232,479 5,889,299 Total primary government 4,815,875$ 5,865,299$ 10,924,805$ 12,101,629$ Note 1: Note 2:Fiscal 2012 and prior data has not been restated for the reclassifications made in fiscal 2013. The Street Light Utility was established in fiscal year 2010; the street light activity prior to 2010 was included in the Water and Sewer Fund. CITY OF APPLE VALLEY Changes in Net Position (continued)Last Ten Fiscal Years(accrual basis of accounting) -133- 2013 2014 2015 2016 2017 2018 9,380,818$ 9,292,269$ 8,480,414$ 8,738,804$ 9,185,736$ 9,456,705$ 1,168,154 1,289,089 1,387,821 1,356,436 1,180,209 864,579 643,855 746,351 722,270 783,962 732,979 790,989 8,951,798 8,913,191 8,995,642 9,754,601 9,917,074 10,365,726 1,525,136 1,567,066 1,631,761 1,718,352 1,866,306 1,967,313 123,197 104,128 132,305 160,716 187,589 150,703 449,885 465,584 483,680 500,877 507,360 522,977 80,707 – – – – – 1,497,501 1,612,392 2,110,667 3,631,836 1,057,916 1,693,236 23,821,051 23,990,070 23,944,560 26,645,584 24,635,169 25,812,228 32,999,708$ 33,127,434$ 37,437,151$ 41,208,781$ 36,700,316$ 40,095,466$ (21,616,875)$ (25,369,310)$ (19,059,617)$ (23,192,498)$ (24,237,910)$ (22,849,249)$ 3,792,259 3,357,582 3,652,698 4,958,373 1,216,196 3,613,801 (17,824,616)$ (22,011,728)$ (15,406,919)$ (18,234,125)$ (23,021,714)$ (19,235,448)$ 22,144,883$ 23,067,164$ 23,038,450$ 23,894,359$ 24,758,299$ 25,784,612$ 544,283 611,662 489,617 199,214 346,675 761,862 1,262,393 1,272,428 1,259,271 1,309,757 1,288,426 1,306,360 73,504 89,859 93,492 90,592 92,958 99,960 45,890 50,612 39,215 40,794 37,902 – 40,397 36,710 40,061 37,719 56,751 124,430 186,872 78,478 7,387 6,888 8,440 10,786 (1,056,882) 1,562,329 863,798 801,038 551,119 886,459 1,338,889 507,636 4,681,392 1,281,000 1,915,500 1,317,600 24,580,229$ 27,276,878$ 30,512,683$ 27,661,361$ 29,056,070$ 30,292,069$ (358,333)$ 506,693$ 235,424$ 204,464$ 151,206$ 268,297$ 121,000 121,000 121,000 121,000 121,000 121,000 – – – – – – (1,338,889) (507,636) (4,681,392) (1,281,000) (1,915,500) (1,317,600) (1,576,222) 120,057 (4,324,968) (955,536) (1,643,294) (928,303) 23,004,007$ 27,396,935$ 26,187,715$ 26,705,825$ 27,412,776$ 29,363,766$ 2,963,354$ 1,907,568$ 11,453,066$ 4,468,863$ 4,818,160$ 7,442,820$ 2,216,037 3,477,639 (672,270) 4,002,837 (427,098) 2,685,498 5,179,391$ 5,385,207$ 10,780,796$ 8,471,700$ 4,391,062$ 10,128,318$ Table 2 (continued) -134- Fiscal Year2009201020112012 General FundReserved 40,515$ 53,113$ –$ –$ Unreserved 12,181,208 12,594,013 – – Nonspendable – – 118,661 239,462 Committed – – 165,872 210,005 Assigned – – 278,724 279,973 Unassigned – – 12,142,496 12,646,076 Total General Fund 12,221,723$ 12,647,126$ 12,705,753$ 13,375,516$ All other governmental fundsUnreserved reported inSpecial revenue funds 342,464$ 324,251$ –$ –$ Debt service funds 16,996,037 15,892,926 – – Capital projects funds 10,965,444 14,011,232 – – Nonspendable – – – 1,750 Restricted – – 15,537,787 11,435,144 Committed – – – – Assigned – – 28,795,063 31,538,043 Unassigned – – (13,395,872) (12,381,234) Total all other governmental funds 28,303,945$ 30,228,409$ 30,936,978$ 30,593,703$ Total all funds 40,525,668$ 42,875,535$ 43,642,731$ 43,969,219$ Note:Fund balance descriptions changed due to GASB Statement No. 54 implementation effective January 1, 2011. CITY OF APPLE VALLEY Fund Balances of Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting) -135- Table 3 2013 2014 2015 2016 2017 2018 –$ –$ –$ –$ –$ –$ – – – – – – 90,745 337,564 345,004 119,947 325,282 145,644 154,100 146,300 405,990 693,145 595,215 367,510 151,502 54,416 20,000 56,000 64,300 75,000 13,830,037 14,617,170 15,321,110 15,740,362 16,351,616 17,052,177 14,226,384$ 15,155,450$ 16,092,104$ 16,609,454$ 17,336,413$ 17,640,331$ –$ –$ –$ –$ –$ –$ – – – – – – – – – – – – – – 1,750 600 1,730 – 20,966,147 21,772,784 27,424,225 27,079,147 13,431,367 13,608,420 – – – 140,000 15,000 – 26,215,087 27,614,620 27,008,733 28,454,255 28,779,829 29,375,614 (9,561,124) (11,108,352) (9,539,062) (8,921,232) (8,738,893) (6,108,464) 37,620,110$ 38,279,052$ 44,895,646$ 46,752,770$ 33,489,033$ 36,875,570$ 51,846,494$ 53,434,502$ 60,987,750$ 63,362,224$ 50,825,446$ 54,515,901$ -136- 2009 2010 2011 2012 RevenuesGeneral property taxes 21,544,567$ 21,709,126$ 21,408,873$ 21,773,048$ Tax increments 2,185,762 2,311,405 2,240,269 2,012,281 Other taxes 96,992 103,625 152,020 154,126 Special assessments 2,471,962 2,055,783 2,125,776 4,015,591 Licenses and permits 755,444 1,018,847 796,316 1,033,797 Intergovernmental 2,429,800 2,996,658 2,407,596 2,642,018 Charges for services 1,145,890 1,349,123 1,436,256 1,783,390 Franchise taxes 1,096,578 1,160,771 1,177,715 1,197,288 Fines and forfeits 316,324 258,165 288,946 278,913 Investment income 840,898 593,336 2,232,966 965,333 Rentals 444,877 592,831 511,453 559,702 Contributions and donations 7,150 11,484 2,750 1,801 Administrative fees 651,052 778,400 828,999 788,171 Other 509,778 697,054 321,565 338,142 Refunds and reimbursements 165,345 450,972 139,581 127,166 Total revenues 34,662,419 36,087,580 36,071,081 37,670,767 ExpendituresCurrentGeneral government 6,159,832 7,418,012 4,679,394 4,355,811 Public safety 9,635,166 9,728,340 9,890,086 9,987,493 Public works 3,501,792 3,593,951 3,675,687 3,674,876 Park and recreation 4,692,052 4,768,656 4,855,184 4,847,194 Capital outlay 11,727,599 5,879,024 6,370,109 13,266,487 Debt servicePrincipal 5,060,000 4,160,000 4,665,000 8,280,000 Interest and fiscal charges 1,880,399 1,615,929 1,487,399 1,224,409 Total expenditures 42,656,840 37,163,912 35,622,859 45,636,270 Excess (deficiency) of revenues over expenditures (7,994,421) (1,076,332) 448,222 (7,965,503) Other financing sources (uses)Transfers in 17,777,689 5,734,691 5,874,339 5,634,873 Transfers out (14,701,754) (3,680,241) (3,156,709) (4,559,768) Bonds issued 2,775,000 3,965,000 1,345,000 6,775,000 Payment of refunded debt (2,400,000) (2,750,000) (3,920,000) – Premium on debt issued 61,795 47,191 6,568 330,981 Discount on debt issued – – – – Sale of capital assets 48,309 109,558 169,776 110,905 Total other financing sources (uses)3,561,039 3,426,199 318,974 8,291,991 Net change in fund balances (4,433,382)$ 2,349,867$ 767,196$ 326,488$ Debt service as a percentage of noncapital expenditures 22.4%18.5%20.5%27.5% (modified accrual basis of accounting) Fiscal Year CITY OF APPLE VALLEY Changes in Fund Balances of Governmental FundsLast Ten Fiscal Years -137- Table 4 2013 2014 2015 2016 2017 2018 22,252,162$ 23,161,124$ 22,969,161$ 23,910,991$ 24,729,659$ 25,728,652$ 544,283 611,662 489,617 199,214 346,675 761,862 169,413 193,018 186,512 185,568 182,377 150,340 4,073,061 5,457,959 3,859,401 4,150,527 1,559,609 1,823,441 1,140,603 1,644,338 2,147,477 2,052,043 3,244,654 2,254,309 2,388,922 3,459,585 2,330,695 2,605,769 2,002,385 2,735,824 1,712,660 1,763,940 2,711,884 2,739,163 2,962,769 3,086,720 1,262,393 1,272,428 1,259,271 1,309,757 1,288,426 1,306,360 257,345 236,943 225,804 273,372 315,087 302,494 (991,703) 1,461,765 817,230 756,341 523,891 823,798 642,422 774,364 806,915 832,854 720,100 198,276 51,425 13,176 4,852 7,309 3,760 100 785,927 770,000 809,000 2,054,475 722,490 2,984,900 545,994 1,497,913 312,708 202,540 300,200 929,646 99,024 202,518 90,148 236,416 68,257 47,985 34,933,931 42,520,733 39,020,675 41,516,339 38,970,339 43,134,707 4,518,602 5,655,482 5,014,867 6,264,368 5,705,708 7,270,172 10,538,043 11,118,268 11,467,187 12,105,588 12,279,935 13,107,793 4,031,492 4,010,339 3,621,872 3,956,049 4,131,796 5,145,724 4,978,896 5,135,573 5,198,446 5,728,049 5,766,554 5,727,112 8,716,540 13,453,625 6,462,646 8,425,307 8,464,983 8,096,679 3,625,000 3,415,000 3,575,000 2,650,000 3,425,000 1,100,000 1,268,227 1,072,847 1,100,649 964,997 940,431 345,208 37,676,800 43,861,134 36,440,667 40,094,358 40,714,407 40,792,688 (2,742,869) (1,340,401) 2,580,008 1,421,981 (1,744,068) 2,342,019 11,182,608 9,800,593 9,678,084 8,046,274 8,743,125 12,827,991 (9,843,719) (7,745,923) (8,139,084) (7,226,274) (7,653,625) (11,510,391) 9,000,000 680,000 4,255,000 – – – – – (1,030,000) – (11,925,000) – 81,545 25,505 113,988 – – – – – – – – – 199,710 168,234 95,252 132,493 42,790 30,836 10,620,144 2,928,409 4,973,240 952,493 (10,792,710) 1,348,436 7,877,275$ 1,588,008$ 7,553,248$ 2,374,474$ (12,536,778)$ 3,690,455$ 16.7%13.1%15.3%11.4%13.2%4.4% -138- IndustrialResidentialCommercialand Utility AgriculturalPropertyPropertyPropertyProperty Apartments 43,107,127$ 10,171,716$ 1,225,657$ 127,972$ 2,564,523$ 39,692,580 10,053,775 1,238,900 130,237 2,498,076 36,918,099 9,363,833 1,038,862 130,124 2,319,888 32,937,899 9,210,935 1,004,132 116,719 2,445,781 30,220,442 9,015,644 829,980 92,210 2,704,250 31,239,597 9,045,624 837,008 88,030 2,723,667 34,412,031 9,071,960 859,888 85,694 2,864,337 36,561,330 9,186,796 874,912 78,636 3,038,517 38,063,519 9,379,705 842,612 75,901 3,572,226 40,870,116 9,633,311 947,308 44,601 4,844,046 Note: Source:Dakota County CITY OF APPLE VALLEY Assessed and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years 2011 The tax capacity (assessed taxable value)of the property is calculated by applying a statutory formula to theestimated market value of the property. 2015 2010 PayableYear 2009 201220132014 201620172018 -139- Table 5 EstimatedTotalActualTaxableTotal Direct TaxablePersonalAssessedTax Capacity MarketOtherPropertyValueRateValue 4,760$ 701,073$ 57,902,828$ 37.086 5,135,644,200$ 1.13 %4,283 688,202 54,306,053 39.867 4,787,691,200 1.13 3,959 764,694 50,539,459 42.388 4,457,368,700 1.13 2,316 773,692 46,491,474 44.110 4,061,762,557 1.14 2,159 755,422 43,620,107 49.210 3,791,294,766 1.15 2,194 763,784 44,699,904 47.891 3,897,057,902 1.15 2,369 790,695 48,086,974 45.274 4,228,421,500 1.14 2,564 835,973 50,578,728 44.721 4,464,893,416 1.13 2,521 872,987 52,809,471 44.473 4,669,204,881 1.13 2,524 928,330 57,270,236 42.475 5,072,183,189 1.13 Actual Value TaxableAssessed Percentage ofValue as a -140- Fiscal School DistrictYearGeneral Debt Service Total City Dakota County (1)Other (2) 2009 37.078 0.008 37.086 25.821 21.109 4.916 2010 39.861 0.006 39.867 27.269 25.391 4.987 2011 42.382 0.006 42.388 29.149 26.959 5.199 2012 44.104 0.006 44.110 31.426 28.440 5.562 2013 49.199 0.011 49.210 33.421 27.956 5.884 2014 47.880 0.011 47.891 31.827 27.606 5.538 2015 45.265 0.009 45.274 29.633 23.271 5.033 2016 44.711 0.010 44.721 28.570 24.317 5.063 2017 44.462 0.011 44.473 28.004 23.336 4.907 2018 42.467 0.008 42.475 26.580 25.759 3.878 Total Direct andFiscalSchool District Total OverlappingYearDebt Service Total City Dakota County (1)Overlapping Tax Rate 2009 0.000311 0.000311 0.000047 0.002103 0.002150 0.002461 2010 0.000337 0.000337 0.000050 0.002227 0.002277 0.002614 2011 0.000375 0.000375 0.000054 0.002260 0.002314 0.002689 2012 0.000417 0.000417 0.000055 0.002213 0.002268 0.002685 2013 0.000212 0.000212 – 0.002354 0.002354 0.002566 2014 0.000212 0.000212 – 0.002581 0.002581 0.002793 2015 0.000204 0.000204 – 0.002548 0.002548 0.002752 2016 0.000199 0.000199 – 0.002700 0.002700 0.002899 2017 0.000197 0.000197 – 0.002738 0.002738 0.002935 2018 0.000180 0.000180 – 0.002672 0.002672 0.002851 Note 1:Overlapping rates are those of local and county governments that apply to property owners within the City. Note 2:Not all overlapping rates apply to all of the City’s property owners. (1)Independent School District No. 196 (2) Source: Dakota County Includes Metropolitan Council,Mosquito Control Abatement,Metro Transit,Dakota County CDA,Light Rail,and Vermillion River Watershed CITY OF APPLE VALLEY Property Tax Capacity RatesDirect and Overlapping GovernmentsLast Ten Fiscal Years City Direct Tax Capacity Rate Overlapping Tax Capacity Rates City Direct Market Value Tax Rate Overlapping Market Value Tax Rates -141- Total Direct andTotalOverlapping Overlapping Tax Rate 51.846 88.932 57.647 97.514 61.307 103.695 65.428 109.538 67.261 116.471 64.971 112.862 57.937 103.211 57.950 102.671 56.247 100.720 56.217 98.692 Table 6 Overlapping Tax Capacity Rates -142- THIS PAGE INTENTIONALLY LEFT BLANK Percentage Net Tax Net TaxCapacityCapacityTaxpayerValueRankValue Rank Individual 634,725$ 1 1.1 %450,000$ 3 0.8 %Principal Life Insurance Co.515,598 2 0.9 630,662 1 1.1 Apple Valley Leased Housing Assoc. III 476,433 3 0.8 312,500 7 0.5 Bigos–Gabella, LLC 474,093 4 0.8 – – – Continental 313 Fund, LLC 441,126 5 0.8 – – – CAR Apple Valley Square, LLC 376,322 6 0.7 467,238 2 0.8 Dakota Electric Association 354,196 7 0.6 375,228 4 0.6 Centro Bradley Southport Centre 344,592 8 0.6 363,748 5 0.6 Regent at Apple Valley, LLC 318,815 9 0.6 – – – Uponor North America 311,774 10 0.5 – – – Target Corporation – – – 313,744 6 0.5 Fischer Sand & Aggregate Co.– – – 308,122 8 0.5 Wings Financial Federal Credit Union – – – 284,630 9 0.5 Fischer Sand & Aggregate, LLP – – – 240,076 10 0.4 Total 4,247,674$ 7.4 %3,745,948$ 6.5 % Source: Dakota County of TotalCity TaxCapacityValue Percentageof TotalCity TaxCapacityValue 20092018 Table 7 CITY OF APPLE VALLEY Principal Property TaxpayersCurrent Fiscal Year and Nine Years Prior -143- Taxes Levied for the Fiscal YearMVHC/Ag Creditand FiscalFiscalGross Operating Disparities Total NetYearTax Levy Received Tax Levy Amount 2009 22,627,731$ (3,436,931)$ 19,190,369$ 18,828,050$ 98.11 %2010 22,839,554 (3,815,622) 19,000,860 18,723,194 98.54 2011 22,700,000 (3,612,353) 19,087,647 18,846,881 98.74 2012 22,025,249 (2,821,637) 19,203,612 18,996,562 98.92 2013 22,410,946 (2,751,166) 19,659,780 19,411,582 98.74 2014 22,727,000 (2,994,265) 19,732,735 19,607,759 99.37 2015 23,134,000 (2,881,124) 20,252,876 20,069,635 99.10 2016 24,058,000 (2,784,776) 21,273,224 21,138,944 99.37 2017 24,840,000 (2,915,340) 21,924,660 21,783,179 99.35 2018 25,793,000 (3,141,511) 22,651,489 22,536,290 99.49 CITY OF APPLE VALLEY Property Tax Levies and CollectionsLast Ten Fiscal Years Fiscal Year of LevyCollected Within the Levyof Percentage -144- DelinquenciesCollectedas of MostRecent Report Amount 295,040$ 19,123,090$ 99.65 %105,140 18,828,334 99.09 166,351 19,013,232 99.61 205,155 19,201,717 99.99 205,256 19,616,838 99.78 96,630 19,704,389 99.86 143,021 20,212,656 99.80 96,287 21,235,231 99.82 141,481 21,924,660 100.00 – 22,536,290 99.49 Table 8 Total Collections to DatePercentageofLevy -145- General GeneralObligation Tax General Special MSA ObligationIncrementObligationAssessmentsRoadRevenueRevenue CapitalBondsBondsBondsBondsBondsNotesLease 1,050,000$ 24,295,000$ 13,750,000$ 2,775,000$ 4,649,229$ –$ 40,918$ 865,000 20,535,000 14,750,000 2,775,000 4,014,416 – 109,211 – 19,925,000 9,000,000 2,760,000 6,020,717 – 77,975 – 20,128,873 8,062,109 2,320,000 5,531,461 – 44,884 – 27,922,953 6,247,398 1,760,000 5,044,929 – 190,645 – 27,023,868 4,972,687 1,185,000 13,209,567 – 138,799 – 29,669,149 2,637,976 590,000 13,420,425 – 97,919 – 27,900,442 2,298,265 – 12,653,255 – 56,285 – 14,191,734 608,554 – 10,277,288 – 175,526 – 13,158,026 493,843 – 8,581,651 379,941 335,739 Note: (1) (2) CITY OF APPLE VALLEY Ratios of Outstanding Debt by TypeLast Ten Fiscal Years YearFiscal Business-Type ActivitiesGovernmental Activities City personal income not available for 2018. See the Demographic and Economic Statistics schedule for personal income and population data. Details regarding the City’s outstanding debt can be found in the notes to basic financial statements.All figures are presented net ofrelated premiums, discounts, and adjustments if applicable. 2018 20102009 201720162015 20122011 20142013 -146- Table 9 TotalPrimary PerGovernmentCapita (1) 46,560,147$ 2.61 %943$ 43,048,627 2.47 877 37,783,692 2.10 759 36,087,327 2.00 723 41,165,925 2.22 818 46,529,921 2.40 924 46,415,469 2.44 925 42,908,247 2.16 836 25,253,102 1.20 482 22,949,200 N/A (2)430 Percentage Income (1)of Personal -147- Less AmountsGeneralGeneralSpecialMSAAvailableObligation Tax Obligation Assessments Road in DebtIncrement Bonds Bonds Bonds Bonds Service Funds (3) 1,050,000$ 25,815,420$ 13,750,000$ 2,775,000$ 10,034,145$ 865,000 21,547,391 14,750,000 2,775,000 14,386,682 – 23,075,476 9,000,000 2,760,000 9,455,268 – 22,885,334 8,062,109 2,320,000 8,176,337 – 30,337,882 6,247,398 1,760,000 15,297,560 – 37,753,435 4,972,687 1,185,000 13,581,184 – 41,504,574 2,637,976 590,000 17,807,062 – 40,553,697 2,298,265 – 17,649,041 – 24,469,022 608,554 – 4,152,062 – 21,739,677 493,843 – 2,318,259 Note: (1) (2) (3) CITY OF APPLE VALLEY Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years 201720162015201420132012201120102009 YearFiscal 2018 Amounts shown here are the total restricted fund balances for all debt service funds and include restricted amountsheld in escrow for advance refunding bond issues. Details regarding the City’s outstanding debt can be found in the notes to the financial statements.All debt ispresented net of related premiums, discounts, and adjustments if applicable. City personal income not available for 2018. See the Demographic and Economic Statistics schedule for personal income and population data. -148- Table 10 PerTotalCapita (1) 33,356,275$ 0.65 %1.87 %676$ 25,550,709 0.53 1.47 521 25,380,208 0.57 1.41 510 25,091,106 0.62 1.39 503 23,047,720 0.61 1.24 458 30,329,938 0.78 1.57 603 26,925,488 0.64 1.41 537 25,202,921 0.56 1.27 491 20,925,514 0.45 0.99 400 19,915,261 0.39 N/A (2)373 PersonalIncome Percentage ofPercentage ofTaxable MarketValue ofProperty -149- THIS PAGE INTENTIONALLY LEFT BLANK Table 11 City of Apple Valley’sShare ofNet Debt OverlappingOutstanding (1)Debt OverlappingDakota County (2)–$ 11.22 %–$ School districts ISD No. 191, Burnsville – Eagan – Savage 144,690,000 0.58 839,202 ISD No. 196, Rosemount – Apple Valley – Eagan 146,585,000 26.84 39,343,414 Metropolitan Council (3)4,650,000 1.29 59,985 Metro Transit (4)181,455,000 1.45 2,631,098 Total overlapping 477,380,000 42,873,699 City of Apple Valley direct debt 13,651,869 100.00 13,651,869 Total direct and overlapping debt 491,031,869$ – 56,525,568$ Note: (1)As of December 31, 2018, unless noted otherwise. (2) (3) (4) Source: to City Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the City.ThisscheduleestimatestheportionoftheoutstandingdebtofthoseoverlappinggovernmentsthatisbornebytheresidentsandbusinessesoftheCity.This process recognizes that,when considering the City’s ability to issue andrepaylong-term debt,the entire debt burden borne by the residents and businesses should be taken into account.However,this does not imply that every taxpayer is a resident and,therefore,responsible for repaying the debt,ofeach term debt, the entire debt burden borne by the residents and businesses should be taken into account. Metro Transit has bond indebtedness of $181,455,000 as of December 31,2018.Transit debt is issued by theMetropolitanCouncilforallpublictransitoperationsinthetransitdistrictandispayablefromadvaloremtaxeslevied on all taxable property within the Metropolitan Transit District. Dakota County.Percentage of debt applicable is calculated by dividing a portion of tax capacity of the authoritythat lies in the City divided by the total tax capacity that lies in Dakota County. CITY OF APPLE VALLEY Direct and Overlapping Governmental Activities DebtDecember 31, 2018 Percentageof DebtApplicable Dakota County has bond indebtedness of $81,610,000 as of December 31,2018,of which $81,610,000 has beenexcluded as it is payable from housing revenues. Metropolitan Council has $4,650,000 of general obligation debt outstanding as of December 31,2018.This debt ispayablefromadvaloremtaxesleviedonalltaxablepropertywithintheMetropolitanTaxingDistrict.This amountexcludes$1,295,417,818 of general obligation debt payable from wastewater and sewer revenues,and leaseagreements. -150- Fiscal Year2009201020112012 Debt limit 154,069,326$ 143,630,736$ 133,721,061$ 121,852,877$ Total net debt applicable to limit 24,295,000 20,535,000 19,830,000 19,845,000 Legal debt margin 129,774,326$ 123,095,736$ 113,891,061$ 102,007,877$ Total net debt applicable to the limit as a percentage of the debt limit 15.77%14.30%14.83%16.29% CITY OF APPLE VALLEY Legal Debt Margin InformationLast Ten Fiscal Years -151- Table 12 2013 2014 2015 2016 2017 2018 123,111,918$ 116,911,737$ 126,852,645$ 133,946,802$ 140,076,146$ 152,165,496$ 27,590,000 26,700,000 29,275,000 27,550,000 13,885,000 12,895,000 95,521,918$ 90,211,737$ 97,577,645$ 106,396,802$ 126,191,146$ 139,270,496$ 22.41%22.84%23.08%20.57%9.91%8.47% Market value 5,072,183,189$ Debt limit (3% of assessed value)152,165,496 Debt applicable to the limit 12,895,000 Legal debt margin 139,270,496$ Legal Debt Margin Calculation for Fiscal Year 2018 -152- Operating Less Net Operating Less NetFiscalRevenues/Operating Available Debt Service Revenues/Operating AvailableYearGross Profit Expense Revenue Principal Interest Coverage Gross Profit Expense Revenue 2009 2,501,430$ 1,656,559$ 844,871$ 115,000$ 132,210$ 1,233,346$ 818,151$ 415,195$ 2010 2,486,461 1,607,986 878,475 130,000 129,220 1,360,483 806,506 553,977 2011 2,557,573 1,601,269 956,304 135,000 125,450 1,370,348 872,369 497,979 2012 2,528,423 1,557,994 970,429 140,000 121,333 1,517,090 936,991 580,099 2013 2,685,372 1,595,221 1,090,151 145,000 116,436 1,505,136 989,295 515,841 2014 2,692,077 1,612,171 1,079,906 150,000 111,850 1,562,067 1,196,115 365,952 2015 2,443,210 1,626,498 816,712 200,000 71,256 1,629,361 1,376,670 252,691 2016 2,567,113 1,682,574 884,539 230,000 29,127 1,717,350 1,399,093 318,257 2017 2,709,997 1,750,717 959,280 235,000 27,288 1,769,842 2,116,752 (346,910) 2018 2,877,251 1,766,068 1,111,183 1,120,000 22,837 1,901,319 1,998,341 (97,022) (1)Excludes principal refunded from the proceeds of refunding bond issues. Note: Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. CITY OF APPLE VALLEY Liquor Store – Revenue Bonds G.O. Storm Water – Revenue Bonds Pledged Revenue CoverageLast Ten Fiscal Years 3.418 3.389 3.672 3.713 4.170 0.972 3.657 4.124 3.011 3.414 -153- Operating Less NetDebt Service Revenues/Operating Available Debt ServicePrincipal (1)Interest Coverage Gross Profit Expense Revenue Principal Interest Coverage 300,000$ 48,416$ 1.192 8,876,346$ 6,832,611$ 2,043,735$ 170,000$ 18,275$ 10.86 315,000 31,035 1.601 8,423,373 7,285,380 1,137,993 105,000 12,495 9.69 220,000 63,313 1.758 8,358,787 7,361,390 997,397 120,000 8,820 7.74 225,000 68,558 1.976 9,256,709 7,214,372 2,042,337 – – – 230,000 64,553 1.751 8,949,608 7,776,510 1,173,098 – – – 240,000 59,908 1.220 8,911,018 7,997,799 913,219 320,000 129,223 2.03 150,000 73,036 1.133 8,988,411 7,950,081 1,038,330 365,000 215,125 1.79 155,000 84,979 1.326 9,450,362 9,130,962 319,400 370,000 207,825 0.55 160,000 81,870 (1.434) 9,910,773 9,785,093 125,680 380,000 200,425 0.22 180,000 32,388 (0.457) 10,352,835 9,040,542 1,312,293 385,000 192,824 2.27 G.O. Water – Revenue Bonds Table 13 -154- Table 14 PerCapitaPersonalPersonal School UnemploymentPopulation (1)Income Income (2)Enrollment (3)Rate (4) 49,376 1,782,325,472$ 36,097$ 11,216 6.80%49,084 1,740,027,800 35,450 11,291 6.50%49,801 1,801,750,379 36,179 11,264 4.80%49,895 1,801,658,555 36,109 11,219 4.20%50,326 1,855,167,338 36,863 11,189 3.60%50,330 1,934,886,520 38,444 11,312 2.80%50,161 1,903,961,077 37,957 11,272 2.60%51,338 1,985,959,192 38,684 11,883 3.00%52,361 2,104,650,395 40,195 12,070 2.50%53,429 N/A N/A 11,996 2.40% N/A – Not Available Sources:(1)U.S. Census Bureau, Population Division (2) (3)Schools located in the City’s boundaries: Independent School District No. 196, including Dakota Ridge School.School enrollment defined as adjusted ADMs (average daily membership). ADM is weighted as follows in computing adjusted ADMs: Secondary Fiscal 2009 through 2014 1.250 1.000 0.612 0.612 1.115 1.060 1.300Fiscal 2015 through 2018 1.000 1.000 0.550 1.000 1.000 1.000 1.200 (4)Minnesota Department of Employment and Economic Development 2016 CITY OF APPLE VALLEY Demographic and Economic StatisticsLast Ten Fiscal Years FiscalYear 2009201020112012201320142015 2017 City of Apple Valley, American Community Survey, U.S. Census Bureau (2018 data for the City not yet available). Pre-Kindergarten Handicapped Kindergarten Half-Day Kindergarten Full-Day Kindergarten Elementary 1–3 Elementary 4–6 2018 -155- Table 15 Taxpayer Employees Rank Employees Rank ISD No. 196 1,469 1 9.21 %1,913 1 13.66 %Uponor 713 2 4.47 450 3 3.21 Target 520 3 3.26 500 2 3.57 Dakota County 392 4 2.46 349 4 2.49 Wings Financial Federal Credit Union 356 5 2.23 – – – Walmart 350 6 2.19 340 5 2.43 Cub Foods 320 7 2.01 300 6 2.14 Augustana Health Care Center 265 8 1.66 – – – Menard’s 250 9 1.57 – – – Minnesota Zoo 220 10 1.38 260 8 1.86 Fischer Sand and Aggregate Co.– – – 295 7 2.11 Apple Valley Health Care Center – – – 250 9 1.78 Apple Valley Red-E-Mix, Inc.– – – 200 10 1.43 Total 4,855 30.43 %4,857 34.67 % Source: City of Apple Valley Community Development Department Percentageof Total Employment Percentageof Total Employment 20092018 CITY OF APPLE VALLEY Principal EmployersCurrent Fiscal Year and Nine Years Ago -156- Fiscal Year2009201020112012 General governmentAdministration 3.00 3.00 2.81 3.00 Finance and data processing 4.95 5.00 5.00 4.71 Information and technology 3.20 3.17 3.21 3.33 Human resources 5.92 6.00 5.38 3.97 City clerk/elections 1.50 1.65 1.73 2.05 General government buildings 3.00 3.00 2.46 2.00 Community development 5.00 5.01 5.02 5.16 Code enforcement 2.15 2.00 1.71 1.82 Total general government 28.72 28.83 27.32 26.04 Public safetyPolice 64.00 62.00 60.09 58.72 Fire 18.94 16.44 18.45 18.40 Building inspections 5.99 4.93 4.02 5.07 Total public safety 88.93 83.37 82.56 82.19 Public worksPublic works administration 6.00 7.13 8.48 6.25 Central maintenance facility 5.50 5.52 5.48 5.25 Streets 17.07 17.19 17.32 16.63 Engineering (1)– – 0.73 4.28 Total public works 28.57 29.84 32.01 32.41 Culture and recreationPark and recreation administration 7.29 7.81 7.82 7.28 Recreation programs 7.02 7.84 7.41 6.16 Park maintenance 25.96 25.27 25.06 25.02 Redwood Pool 2.80 2.13 1.94 2.32 Aquatic swim center 13.92 12.85 11.28 13.25 Community center 4.56 3.76 4.03 5.07 Apple Valley Senior Center 1.15 2.04 1.89 1.92 Cable TV 2.58 2.61 2.43 2.27 Total culture and recreation 65.28 64.31 61.86 63.29 Total general government 211.50 206.35 203.75 203.93 Enterprise fundsMunicipal liquor 19.91 19.49 18.99 18.98 Municipal golf (2)13.83 13.76 14.44 15.96 Sports arena 6.29 6.05 6.72 6.47 Stormwater drainage utility (3)– – – – Water and sewer 18.88 18.58 18.45 18.84 Total enterprise funds 58.91 57.88 58.60 60.25 Total 270.41 264.23 262.35 264.18 (1)The City engineering function began in 2011(2)New expanded golf clubhouse opened September 2012(3)The stormwater drainage FTEs were included in Public Works Administration prior to 2014 Source: CITY OF APPLE VALLEY Full-Time Equivalent (FTE) City Government Employees by FunctionLast Ten Fiscal Years City of Apple Valley Human Resources Office –FTEs based on hours worked during the fiscal year.Part-time employees convertedto FTE based on 2,080 hours per year.-157- Table 16 2013 2014 2015 2016 2017 2018 3.00 3.00 3.00 3.00 3.00 3.00 4.00 4.00 4.00 4.00 4.58 5.00 3.24 3.53 3.64 3.78 3.11 4.06 4.00 4.63 5.00 5.00 5.00 5.02 1.81 4.84 2.00 5.39 1.92 5.32 2.00 2.00 2.00 2.00 1.92 2.00 5.00 5.00 4.77 4.35 5.00 5.00 2.00 2.00 2.44 2.40 2.36 2.39 25.05 29.00 26.85 29.92 26.89 31.79 61.16 60.22 62.27 62.58 62.74 64.18 18.63 16.21 15.46 15.54 16.02 17.89 5.22 5.75 6.93 6.76 7.72 7.90 85.01 82.18 84.66 84.88 86.48 89.97 5.99 5.30 3.83 3.80 4.20 4.31 5.34 5.44 5.51 5.29 5.30 5.25 16.66 16.66 16.92 16.95 17.07 16.75 4.24 4.49 4.03 4.48 4.91 5.32 32.23 31.89 30.29 30.52 31.48 31.63 7.87 7.82 7.83 7.45 7.85 7.89 6.76 5.06 6.88 6.23 5.91 5.66 23.09 23.24 22.97 24.18 23.79 24.70 2.47 2.55 2.35 2.63 2.26 2.21 12.80 11.95 12.25 12.65 12.14 12.55 5.67 5.95 4.64 4.72 4.55 4.12 2.27 3.13 3.03 3.36 3.43 3.70 2.44 2.46 2.61 2.74 2.84 3.01 63.37 62.16 62.56 63.96 62.77 63.84 205.66 205.23 204.36 209.28 207.62 217.23 18.86 18.51 17.51 17.47 17.57 17.43 20.41 20.10 19.68 18.89 19.15 13.18 6.88 7.09 6.57 6.85 6.47 5.71 – 0.28 1.96 2.00 2.00 0.08 18.14 18.26 18.07 17.61 17.35 18.86 64.29 64.24 63.79 62.82 62.54 55.26 269.95 269.47 268.15 272.10 270.16 272.49 CITY OF APPLE VALLEY Full-Time Equivalent (FTE) City Government Employees by FunctionLast Ten Fiscal Years -158- 2009 2010 2011 2012 General governmentElections N/A 2 N/A 2 Registered voters N/A 32,094 N/A 35,354 Number of voters casting votes N/A 21,271 N/A 29,715 Number of absentee ballots received N/A 1,316 N/A 2,993 Percentage of absentee ballots to total votes N/A 6.2% N/A 10.1% Voter participation (registered) (elections are held every other year)N/A 66.28% N/A 84.05% Public safetyPolice Crimes – Part I 1,366 1,565 1,230 1,187 Crimes – Part II 2,542 2,364 2,072 1,970 Total arrests 2,137 1,985 1,963 1,962 DWI arrests 288 205 213 145 Traffic citations issued 7,997 6,329 7,587 6,670 Total calls for service 41,049 38,335 40,272 39,223 FireCalls for service 1,307 1,340 1,408 1,417 Medical 735 712 792 639 Fire 572 628 616 778 Fire call responses times under 5 minutes 41% 37% 40% 42% Fire call responses times 5–10 minutes 48% 52% 51% 49% Fire call responses times over 10 minutes 11% 11% 9% 9% Public worksBuilding permits issued 577 1,241 1,630 1,398 Permits issued for new dwelling units 91 228 31 47 Commercial building permits issued 73 102 71 96 Plumbing permits issued 912 920 886 1,027 Heating permits issued 557 771 540 692 Building permits issued 2,688 2,995 4,248 4,248 Building inspections 3,470 3,621 5,187 6,890 Streets maintained (lane miles)405 407 408 410 Cul-de-sacs maintained 314 329 329 330 Snow/ice events 48 35 29 25 Signs replaced 385 500 460 700 Boulevard trees trimmed 1,600 1,800 5,200 2,137 Fleet division vehicle work orders 1,733 1,735 1,751 1,850 Diseased elm and oak trees mitigated 729 588 486 260 Lakes and ponds monitored with water quality samples 18 18 18 18 Sump catch basins cleaned 1,406 1,505 1,303 1,400 Sewage pumped (billion gallons)1.2 1.2 1.2 1.2 Miles of sanitary sewer cleaned 47.6 64.2 72.1 75.0 Sanitary lift station inspections 1,716 1,716 1,716 1,716 Water produced (billion gallons)2.4 2.1 2.3 2.4 Water samples taken 1,098 1,128 1,098 1,098 Fire hydrants maintained 2,401 2,405 2,410 2,410 Pressure stations inspected 13 13 13 13 Air relief manholes inspected 15 15 15 15 Hydrant flushing 3,050 5,250 1,020 – Hydrant flushing (minutes)– – – 24,455 Water breaks repaired 20 12 16 10 Burial sites sold 50 44 56 70 Burials 32 36 38 43 N/A – Not Available Source: Various city departments Function/Program CITY OF APPLE VALLEY Operating Indicators by Function Last Ten Years Fiscal Year -159- Table 17 2013 2014 2015 2016 2017 2018 N/A 2 N/A 2 N/A 2 N/A 32,370 N/A 35,836 N/A 35,544 N/A 19,351 N/A 29,853 N/A 27,170 N/A 2,100 N/A 8,692 N/A 7,759 N/A 10.9% N/A 29.1% N/A 28.6% N/A 59.78% N/A 83.30% N/A 76.44% 1,124 1,098 1,207 1,232 1,237 1,039 1,756 1,627 1,833 1,936 1,993 1,939 1,307 1,096 969 1,234 1,206 1,198 160 152 120 87 176 224 5,726 4,735 4,246 5,441 4,471 4,831 35,215 34,497 35,510 39,548 40,079 40,864 1,454 1,412 1,397 1,622 1,787 2,074 636 623 668 812 1,097 1,363 818 789 729 810 690 711 44% 43% 43% 38% 43% 44% 46% 46% 48% 51% 48% 49% 10% 11% 9% 11% 9% 7% 1,005 1,893 1,785 1,883 1,902 1,750 63 71 115 140 167 65 113 115 197 98 184 99 1,090 1,173 1,334 1,560 1,620 1,572 786 851 951 1,076 1,170 1,043 4,248 5,430 5,755 1,883 1,902 1,750 6,848 8,636 10,543 10,702 11,794 12,406 410 416 416 418 418 418 331 322 324 325 325 325 53 45 29 29 32 34 411 657 451 354 402 425 1,990 1,175 1,250 939 1,565 1,063 1,890 2,148 1,486 2,138 1,507 1,122 430 340 322 326 444 289 18 17 18 18 18 18 885 1,455 983 1,106 1,282 873 1.3 1.1 1.2 1.1 1.1 1.1 77.0 79.0 54.0 62.0 47.0 38.0 1,716 1,716 1,716 1,716 1,716 1,716 2.4 2.1 2.0 2.0 2.0 2.0 1,098 1,098 1,098 1,098 1,098 1,098 2,444 2,454 2,466 2,484 2,489 2,494 13 13 13 13 13 13 15 15 16 16 16 16 – – – – – – 24,189 23,987 24,916 26,687 24,688 25,005 16 11 16 8 10 8 59 57 69 75 108 62 45 34 50 46 58 58 -160- Function/Program 2009 2010 2011 2012 Public safetyPoliceStations 1 1 1 1Marked squad units 18 20 23 23FireStations3333Fire engine trucks 5 5 5 5Fire ladder trucks 2 2 2 2Fire brush/rescue trucks 1 1 1 1 Public worksCity-owned lights 126 246 246 261Dakota Electric Association-owned 2,124 2,207 2,270 2,494Xcel owned lights 301 301 301 301Streets (centerline miles)171 171 172 172Cul-de-sacs 314 329 329 329Roundabouts3333Trees (number of boulevard trees)9,500 9,500 9,500 9,500 ParksParks 49 50 50 50Total park acreage 847 879 879 879 Trails – street side trails (miles)65 65 65 65Athletic complexes 4 5 5 5Golf course 1 1 1 1Community centers 2 2 2 2Senior center 1 1 1 1Pools/aquatic centers 2 2 2 2Ice arenas 2 2 2 2 WaterNumber of connections 15,464 15,518 15,566 15,596Miles of water mains and laterals 240 241 241 241Wells19191919Water valves 3,705 3,712 3,726 3,751Fire hydrants 2,401 2,405 2,410 2,410Water reservoirs 5 5 5 5Reservoir capacity (millions of gallons)12.5 12.5 12.5 12.5 Sanitary sewerNumber of connections 15,033 15,087 15,130 15,160Miles of sanitary sewer mains and laterals 193 193 194 194Sanitary lift stations 9 9 9 9Sanitary manholes 5,360 5,372 5,384 5,384 Storm sewerLift stations 12 12 12 12Mile of storm sewers 162 162 163 164 N/A – Not Available Source: Various city departments CITY OF APPLE VALLEY Capital Assets Statistics by Function/ProgramLast Ten Years Fiscal Year -161- Table 18 2013 2014 2015 2016 2017 2018 1 1 1 1 1 1 23 24 24 24 25 25 3 3 3 3 3 3 5 5 5 5 5 5 2 2 2 2 2 2 1 1 1 1 1 1 261 271 271 302 308 310 2,718 2,942 3,167 3,303 3,112 3,115 301 301 301 343 343 343 175 177 177 179 180 180 329 329 324 325 325 325 3 3 4 4 4 4 9,330 9,250 9,175 9,100 8,800 8,400 50 50 50 50 50 51 879 879 879 879 879 888 65 65 65 75 78 78 5 5 5 5 5 5 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 15,674 15,752 15,874 16,024 16,226 16,342 245 247 248 250 266 287 19 19 19 20 20 20 3,774 3,812 3,836 3,872 3,886 3,917 2,438 2,454 2,466 2,484 2,489 2,494 5 5 5 5 5 5 12.5 13 13 13 13 13 15,229 15,307 15,422 15,563 15,764 15,877 200 204 204 204 212 223 9 9 9 9 9 9 5,466 5,514 5,538 5,587 5,596 5,603 12 12 12 12 12 12 165 167 170 173 196 196 -162- THIS PAGE INTENTIONALLY LEFT BLANK Management Report for City of Apple Valley, Minnesota December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK To the City Council and Management City of Apple Valley, Minnesota We have prepared this management report in conjunction with our audit of the City of Apple Valley, Minnesota’s (the City) financial statements for the year ended December 31, 2018. We have organized this report into the following sections: •Audit Summary •Governmental Funds Overview •Enterprise Funds Overview •Government-Wide Financial Statements •Legislative Updates •Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota . Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS 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 as of and for the year ended December 31, 2018. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2018: • We have issued an unmodified opinion on the City’s basic financial statements. Our report included a paragraph emphasizing the City’s implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions during the year ended December 31, 2018. Our opinion was not modified with respect to this matter. • We reported no deficiencies in the City’s internal control over financial reporting that we considered to be material weaknesses. o It should be understood that internal controls are never perfected, and those controls which protect the City’s funds from such things as fraud and accounting errors need to be continually reviewed and modified as necessary. • The results of our testing disclosed no instances of noncompliance required to be reported under Government Auditing Standards. • We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. -2- FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS As a part of our audit of the City’s financial statements for the year ended December 31, 2018, we performed procedures to follow-up on the findings and recommendations that resulted from our prior year audit. We reported the following findings that were corrected by the City in the current year: • During the prior year audit, we noted the City had limited segregation of duties over cash receipts, community center refunds and reimbursements, golf course inventory, and utility billing adjustments. During the current year, the City implemented procedures to eliminate this finding. • Minnesota Statutes require the City to include responsible contractor language for each construction contract in excess of $50,000, awarded pursuant to a lowest responsible bidder or best value process. The successful contractor must submit a verification of compliance sign ed under oath by an owner or officer verifying compliance with the minimum criteria set forth in Minnesota Statutes. One of four bids tested was not in compliance in fiscal year 2017. We are pleased to report this is not a finding in the current year. • Minnesota Statutes require cities to pay each vendor obligation according to the terms of each contract of within 35 days after the receipt of the goods or services, or the invoice for the goods or services. If such obligations are not paid within the appropriate time period, cities must pay interest on the unpaid obligations at the rate of 1.5 percent per month or part of a month. For one disbursement selected for testing in fiscal year 2017, the City did not pay the obligation within the required time period, and did not pay interest on the unpaid obligation. We are pleased to report this is not a finding in the current year. SIGNIFICANT ACCOUNTING POLICIES 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 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2018; however, the City implemented the following governmental accounting standards during the fiscal year: • GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which established new accounting and financial reporting requirements for governments whose employees are provided with other post-employment benefits (OPEB). • GASB Statement No. 85, Omnibus 2017, which addresses issues that have been identified during implementation and application of certain GASB statements. • GASB Statement No. 86, Certain Debt Extinguishment Issues, which improves the consistency in accounting and financial reporting for in-substance defeasances of debt. We noted no transactions entered into by the City 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 th e proper period. -3- ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS 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: • Depreciation – Management’s estimates of depreciation expense are based on the estimated useful lives of the assets. • OPEB and Pension Liabilities – The City has recorded liabilities and activity for OPEB and pension benefits. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. • Compensated Absences – Management’s estimates are based on current rates of pay and unused compensated absence balances. • Self-Insurance Reserves – Management’s estimates of self-insurance reserves are based on the estimated liability for incurred but not reported claims. • Land Held for Resale – Management’s estimates of these assets are based on the lower of cost or acquisition value. We evaluated the key factors and assumptions used by management to develop these accounting estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Where applicable, management has corrected all such misstatements, including the prior period adjustment noted in the comprehensive annual financial report. There were no additional misstatements detected as a result of audit procedures that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, a disagreement with management is 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. -4- MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated June 4, 2019. 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 City’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 management’s discussion and analysis (MD&A) and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing th e 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 accompanying the financial statements, which is 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 and statistical sections, which accompany the financial statements, but are not RSI. Such information 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. -5- GOVERNMENTAL FUNDS OVERVIEW This section of the report provides you with an overview of the financial trends and activities of the City’s governmental funds, which includes the General, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City’s financial statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2017 fiscal year, local ad valorem property tax levies provided 41.1 percent of the total governmental fund revenues for cities over 2,500 in population, and 37.4 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for taxes payable in 2018 increased 6.2 percent from the prior year, and total certified levies payable in 2019 are projected to incr ease by 5.6 percent. The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year (state-wide market value information for the 2018 levy year was not available at the time this report was issued). The market values used for levying property taxes are based on the previous fiscal year (e.g., market values for taxes levied in 2018 were based on assessed values as of January 1, 2017), so the trend of change in these market values lags somewhat behind the housing market and economy in general. The City’s taxable market value increased 4.6 percent for taxes payable in 2017 and 8.6 percent for taxes payable in 2018. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Taxable Market Value -6- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state ’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year -to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 4.4 percent and 8.4 percent for taxes payable in 2017 and 2018, respectively. The following graph shows the City’s change in tax capacities over the past 10 years: $– $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2016 2017 2018 Average tax rate City 44.7 44.5 42.5 County 28.6 28.0 26.6 School 24.4 23.3 25.8 Special taxing 5.0 4.9 3.9 Total 102.7 100.7 98.8 City of Apple Valley Rates Expressed as a Percentage of Net Tax Capacity The total average tax rate decreased from the prior year. An increase in the school portion was offset by decreases in the City, county, and special taxing authority rates. -7- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2018, presented both by fund balance classification and by fund: Increase20172018(Decrease) Fund balances of governmental fundsTotal by classificationNonspendable 327,012$ 145,644$ (181,368)$ Restricted 13,431,367 13,608,420 177,053 Committed 610,215 367,510 (242,705) Assigned 28,844,129 29,450,614 606,485 Unassigned 7,612,723 10,943,713 3,330,990 Total governmental funds 50,825,446$ 54,515,901$ 3,690,455$ Total by fundGeneral 17,336,413$ 17,640,331$ 303,918$ Closed Bond Issues 9,440,666 8,663,145 (777,521) Road Improvements (5,174,280) (5,250,659) (76,379) Future Capital Projects 15,353,401 14,300,138 (1,053,263) Nonmajor 13,869,246 19,162,946 5,293,700 Total governmental funds 50,825,446$ 54,515,901$ 3,690,455$ Governmental Funds Change in Fund Balance Fund Balanceas of December 31, In total, the fund balances of the City’s governmental funds increased by $3,690,455 during the year ended December 31, 2018. The overall increase is mainly due to additional project escrow charges and park dedications received, which increased restricted, assigned, and the nonmajor fund balances. As seen in the graph above, the increase is mainly in unassigned fund balance, due to the City closing out funds with transfers from assigned fund balances. These funds that were closed previously had deficit balances resulting in the increase in the unassigned balance. -8- GOVERNMENTAL FUND REVENUES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the Office of the State Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as a city’s stage of development, location, size and density of its population, property values, services it provides, and other attributes. It will also differ from year-to-year, due to the effect of inflation and changes in its operation. Also, certain data in these tables may be classified differently than how they appear in the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of the City. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year December 31, 2016 December 31, 2017 2016 2017 2018Population20,000–100,000 20,000–100,000 51,338 52,361 53,429 Property taxes 455$ 475$ 466$ 472$ 482$ Tax increments 42 38 4 7 14 Franchise and other taxes 45 48 29 28 27 Special assessments 59 59 81 30 34 Licenses and permits 42 49 40 62 42 Intergovernmental revenues 152 147 51 38 51 Charges for services 103 103 53 57 58 Other 54 48 85 51 99 Total revenue 952$ 967$ 809$ 745$ 807$ Governmental Funds Revenue per CapitaWith State-Wide Averages by Population Class State-Wide City of Apple Valley The City’s governmental funds have generated significantly less revenue per capita in total than other Minnesota cities in its population class. As noted above, the City receives a lower level of intergovernmental revenue than the average city, causing the City to rely on property taxes and other forms of revenue to operate the governmental activities of the City. The City generated $43,134,707 of total revenue in its governmental funds in 2018, an increase of $4,164,368 (10.7 percent) from the prior year. The City’s per capita governmental funds revenue for 2018 was $807, an increase of $62, or 8.3 percent, from the prior year. The largest changes occurred in other revenue, intergovernmental revenues, and licenses and permits. Other revenue increased $48 per capita, due to additional project escrow charges and park dedications received. Intergovernmental revenues increased $13 per capita, due to a one-time pass-through grant as part of the Village Pointe Plaza project. These increases were offset by the $20 per capita decrease in licenses and permits, due to a decrease in building activity in the current year. -9- GOVERNMENTAL FUND EXPENDITURES The expenditures of governmental funds will also vary from state-wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows: • Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues. • Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented, and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects. • Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor. Some debt may be repaid through specific sources, such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with comparative state-wide averages, are presented in the following table: Year December 31, 2016 December 31, 2017 2016 2017 2018Population20,000–100,000 20,000–100,000 51,338 52,361 53,429 CurrentGeneral government 97$ 101$ 123$ 109$ 136$ Public safety 273 287 236 235 245 Street maintenance 95 101 76 79 96 Parks and recreation 95 99 112 110 107 All other 91 77 – – – Total current 651 665 547 533 584 Capital outlay and construction 301 263 164 162 152 Debt servicePrincipal 115 121 52 65 21 Interest and fiscal 34 32 19 18 6 Total debt service 149 153 71 83 27 Total expenditures 1,101$ 1,081$ 782$ 778$ 763$ State-Wide City of Apple Valley Governmental Funds Expenditures per CapitaWith State-Wide Averages by Population Class As the above table reflects, the City’s current expenditures per capita have also been below the state-wide average. Total expenditures in the City’s governmental funds for 2018 were $40,792,688, an increase of $78,281 (0.2 percent). The City’s per capita governmental funds current expenditures increased $51 per capita, mainly in the general government function, which includes the pass-through of the Economic Development Authority grant for the Village Pointe Plaza project. Debt service expenditures experienced a decrease of $56 per capita as established with the scheduled payment plans approved at the time of issuing debt. -10- GENERAL FUND The City’s General Fund accounts for the financial activity of the basic services provided to the community. The primary services included within this fund are the administration of the municipal operation, police and fire protection, building inspection, streets and highway maintenance, and parks and recreation. The graph below illustrates the change in the General Fund financial position over the last five years. We have also included a line representing annual expenditures to reflect the change in the size of the General Fund operation over the same period. 2014 2015 2016 2017 2018 Fund Balance $15,155,450 $16,092,104 $16,609,454 $17,336,413 $17,640,331 Cash Balance $11,476,467 $14,299,304 $14,202,606 $15,908,162 $16,206,366 Expenditures $24,642,712 $24,927,799 $25,986,358 $27,274,374 $28,699,846 $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 General Fund Financial PositionYear Ended December 31, The City’s General Fund cash and investments balance at December 31, 2018 was $16,206,366, an increase of $298,204 from the previous year. Total fund balance at December 31, 2018 was $17,640,331, an increase of $303,918 from the prior year. Having an appropriate fund balance is an important factor in assessing the City’s financial health because a government, like any organization, requires a certain amount of equity to operate. Generally, the amount of equity required typically increases as the size of the operation increases. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in determining the City’s bond rating and resulting interest costs. The City Council has formally adopted a fund balance policy that states the City will strive to maintain a minimum unassigned General Fund balance of 50.0 percent of the subsequent year’s budgeted expenditures. At December 31, 2018, the unassigned fund balance of the General Fund was 50.1 percent of the subsequent year’s budgeted expenditures, including transfers. -11- The following graph reflects the City’s General Fund revenue sources for 2018 compared to budget: Other Charges for Services Intergovernmental Licenses and Permits Taxes General Fund RevenueBudget to Actual Budget Actual Total General Fund revenues for 2018 were $811,985 (2.6 percent) over the final budget. The majority of this variance was in licenses and permits, which was over budget $749,599, due to more than anticipated building-related activities. The following graph presents the City’s General Fund revenues by source for the last five years: Taxes Intergovernmental Other2014$22,188,314 $874,473 $5,465,3022015$22,226,012 $781,409 $6,044,7282016$23,126,722 $806,909 $6,119,933 2017 $23,940,494 $831,908 $7,427,411 2018 $24,956,157 $881,315 $6,792,768 $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 General Fund Revenue by Source Year Ended December 31, Total General Fund revenues for 2018 were $32,630,240, an increase of $430,427 (1.3 percent) from the previous year. Taxes increased $1,015,663, due to an overall increase in the general tax levy. This increase was offset by a $634,643 decrease in revenue from other sources, mainly in licenses and permits revenue, due to a decrease in building-related activity, when compared to the prior year. -12- The following graph reflects the City’s General Fund expenditures compared to budget for 2018: Parks and Recreation Public Works Public Safety General Government General Fund ExpendituresBudget to Actual Budget Actual Total General Fund expenditures for 2018 were $28,699,846, which was $774,438 (2.6 percent) less than budget. This variance was spread across all functions. General government, public safety, public works, and parks and recreation expenditures were under budget $251,789, $121,028, $247,569, and $154,052, respectively, mostly due to position vacancies. The following graph presents the City’s General Fund expenditures by function for the last five years: GeneralGovernment Public Safety Public Works Parks andRecreation2014$4,576,708 $11,057,938 $3,986,727 $5,021,339 2015 $4,792,595 $11,390,204 $3,637,190 $5,107,810 2016 $4,984,412 $11,817,350 $3,725,606 $5,458,990 2017 $5,148,448 $12,419,830 $4,041,044 $5,665,0522018$5,533,975 $13,145,792 $4,503,246 $5,516,833 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 General Fund Expenditures by FunctionYear Ended December 31, General Fund expenditures increased by $1,425,472, or 5.2 percent, from the prior year. General government expenditures increased $385,527, mainly in the information technology department, due to filling vacancies and city clerk/elections department, due to the 2018 elections. Public safety expenditures increased $725,962, mainly in the police protection and fire protection departments. The increase in expenditures in the public works department of $462,202 was mainly in the streets department. Expenditures in parks and recreation decreased $148,219, mainly in the Apple Valley Community Center department, related to higher capital outlay in the prior year. Typical to other cities we audit, public safety costs for the City comprise the largest portion of General Fund spending and have seen the largest increases over the past five years. -13- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which includes the Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, Storm Drainage, Street Light Utility, and Cemetery Funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2018, presented both by classification and by fund: Increase20172018(Decrease) Net position of enterprise fundsTotal by classificationNet investment in capital assets 94,851,212$ 100,261,931$ 5,410,719$ Restricted 178,665 – (178,665) Unrestricted 15,505,784 12,975,656 (2,530,128) Total enterprise funds 110,535,661$ 113,237,587$ 2,701,926$ Total by fundMunicipal Liquor 5,369,786$ 5,875,911$ 506,125$ Municipal Golf Course 523,387 151,646 (371,741) Sports Arena 1,088,091 1,218,157 130,066 Water and Sewer 69,827,460 71,866,007 2,038,547 Storm Drainage 31,430,884 31,716,933 286,049 Street Light Utility 264,315 304,281 39,966 Cemetery 2,031,738 2,104,652 72,914 Total enterprise funds 110,535,661$ 113,237,587$ 2,701,926$ Enterprise Funds Change in Financial Position Net Positionas of December 31, In total, the net position ($113,237,587) of the City’s enterprise funds increased by $2,701,926 during the year ended December 31, 2018. The change in accounting principle, as previously mentioned, reduced net position by $15,395, while current year operating results increased net position by $2,717,321. The increase in the net investment in capital assets reflects the continued investment in utility infrastructure and other capital assets. The decrease in unrestricted net position ($2,530,128) is due to the use of unrestricted net position for capital asset purchases in the current year. -14- MUNICIPAL LIQUOR FUND The following graph presents five years of operating results for the Municipal Liquor Fund: 2014 2015 2016 2017 2018 Sales $9,292,224 $8,480,414 $8,738,804 $9,183,272 $9,445,281 Cost of Sales $6,600,147 $6,037,204 $6,171,691 $6,473,275 $6,568,030 Operating Expenses(Excluding Depreciation)$1,479,096 $1,485,163 $1,546,028 $1,609,959 $1,624,533 Operating Income (Loss)(Excluding Depreciation)$1,212,981 $958,047 $1,021,085 $1,100,038 $1,252,718 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Municipal Liquor FundYear Ended December 31, The Municipal Liquor Fund ended 2018 with a net position of $5,875,911, an increase of $506,125 from the prior year. Of this net position, $3,552,731 represents the investment in liquor capital assets, and $2,323,180 is in unrestricted net position. Liquor sales for 2018 were $9,445,281, $262,009 (2.9 percent) higher than the prior year. The Municipal Liquor Fund generated operating income (excluding depreciation) of $1,252,718 in 2018, or 13.3 percent, of gross sales, which is an increase from the 12.0 percent reported in fiscal 2017. The Municipal Liquor Fund gross profit margin was 30.5 in fiscal 2018, slightly more than 29.5 in fiscal 2017. -15- MUNICIPAL GOLF COURSE FUND The following graph presents five years of operating results for the Municipal Golf Course Fund: 2014 2015 2016 2017 2018 Operating Revenue $1,289,089 $1,387,821 $1,354,645 $1,173,102 $862,834 Operating Expenses(Excluding Depreciation)$1,135,917 $1,208,454 $1,301,452 $1,206,920 $950,456 Cost of Goods Sold $210,461 $256,331 $237,409 $188,557 $75,112 Depreciation $175,518 $174,033 $174,171 $183,693 $192,783Operating Income (Loss)(Excluding Depreciation)$(57,289)$(76,964)$(184,216)$(222,375)$(162,734) $(400,000) $(200,000) $– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 Municipal Golf Course FundYear Ended December 31, The Municipal Golf Course Fund ended 2018 with a net position of $151,646, a decrease of $371,741 from the prior year. Of this net position, $3,948,958 represents the investment in golf course land and capital assets, leaving a deficit of ($3,797,312) in unrestricted net position. Municipal Golf Course Fund operating revenues for 2018 were $862,834, which is $310,268 less than the prior year. Operating expenses (excluding depreciation) for 2018 were $950,456, a decrease of $256,464 from the prior year. The overall decrease in operating revenues and expenses is due to the City contracting food and beverage operations in the current year. On an annual basis, this fund has had to borrow from other funds to fund cash flow and capital needs. This interfund borrowing was a total of $3,364,328 at December 31, 2018. Interfund borrowing for cash flow needs totals $1,515,160 at December 31, 2018. The remainder, $1,849,168, is for capital needs and is to be repaid over multiple years. We recommend the City continue to monitor the financial results in this fund and update the long-range financial plan for this fund. -16- SPORTS ARENA FUND The following graph presents five years of operating results for the Sports Arena Fund: 2014 2015 2016 2017 2018 Sales and User Fees $714,351 $722,270 $783,089 $732,919 $789,516 Operating Expenses(Excluding Depreciation)$697,754 $606,977 $618,747 $659,107 $646,586 Nonoperating Revenue(Expense)$152,162 $121,419 $123,022 $127,945 $123,698 Income (Loss)$19,779 $73,273 $135,513 $56,342 $131,187 $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 Sports Arena FundYear Ended December 31, The Sports Arena Fund ended 2018 with a net position of $1,218,157, an increase of $130,066 from the prior year. Of the net position balance, $1,312,411 represents investments in sports arena capital assets, leaving a deficit of ($94,254) of unrestricted net position. Sports Arena Fund operating revenues for 2018 were $789,516, an increase of $56,597 (7.7 percent) from the prior year. Operating expenses (including cost of goods sold and excluding depreciation) for 2018 were $646,586, a decrease of $12,521 from the prior year. Nonoperating revenue includes an annual property tax levy of $121,000. -17- WATER AND SEWER FUND The following graph presents five years of operating results for the Water and Sewer Fund: 2014 2015 2016 2017 2018 Operating Revenue $8,911,018 $8,988,411 $9,450,362 $9,910,773 $10,352,835 Operating Expenses (ExcludingDepreciation)$6,388,459 $6,102,574 $6,401,847 $7,016,546 $6,682,832 Depreciation $1,609,340 $1,847,507 $2,729,115 $2,768,547 $2,357,710 Operating Income (Loss)(Excluding Depreciation)$2,522,559 $2,885,837 $3,048,515 $2,894,227 $3,670,003 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 Water and Sewer FundYear Ended December 31, The Water and Sewer Fund ended 2018 with a net position of $71,866,007, an increase of $2,038,547 from the prior year. Of this net position, $60,658,307 represents the investment in water and sewer distribution system capital assets, leaving $11,207,700 of unrestricted net position. Water and Sewer Fund operating revenue was $10,352,835 for 2018, an increase of $442,062 (4.5 percent) from the prior year, due to an increase in rates. Operating expenses (excluding depreciation) of $6,682,832 were $333,714 (4.8 percent) lower than last year, mainly due to a decrease in building repairs and consulting services related to the comprehensive plan. Although this fund is in a healthy financial position, we suggest that the City continue to review the water and sewer rates on an annual basis. Water and sewer rates are generally designed to cover operating costs and provide an accumulation of resources for significant repairs and replacements, and an operating cushion for potential negative years in financial operations. -18- STORM DRAINAGE FUND The following graph presents five years of operating results for the Storm Drainage Fund: 2014 2015 2016 2017 2018 Operating Revenue $1,562,067 $1,629,361 $1,717,350 $1,769,842 $1,901,319 Operating Expenses(Excluding Depreciation)$695,341 $840,901 $823,837 $1,121,262 $974,319 Depreciation $500,774 $535,769 $575,256 $995,490 $1,024,022 Operating Income (Loss)(Excluding Depreciation)$866,726 $788,460 $893,513 $648,580 $927,000 $– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 Storm Drainage FundYear Ended December 31, The Storm Drainage Fund ended 2018 with a net position of $31,716,933, an increase of $286,049 from the prior year. Of this, $29,209,229 represents the investment in storm drainage capital assets and $2,507,704 of unrestricted net position. Storm Drainage Fund operating revenues for 2018 were $1,901,319, which was an increase of $131,477 (7.4 percent) from the prior year, due to the increased rates. Operating expenses (excluding depreciation) for 2018 were $974,319, which was $146,943 (13.1 percent) lower than the prior year, mainly due to a decrease in contractual services related to the surface water management plan. -19- STREET LIGHT UTILITY FUND The following graph presents five years of operating results for the Street Light Utility Fund: 2014 2015 2016 2017 2018 Operating Revenue $465,584 $483,680 $500,877 $507,360 $522,977 Operating Expenses $424,670 $446,644 $437,439 $483,752 $485,356 Operating Income (Loss)$40,914 $37,036 $63,438 $23,608 $37,621 $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 Street Light Utility FundYear Ended December 31, The Street Light Utility Fund ended 2018 with a net position of $304,281, an increase of $39,966 from the prior year, which is all in unrestricted net position. Street Light Utility Fund operating revenues for 2018 were $522,977, a slight increase of $15,617 from the prior year, due to the rate increase. Operating expenses for 2018 were $485,356, an increase of $1,604 from the previous year. -20- CEMETERY FUND The following graph presents five years of operating results for the Cemetery Fund: 2014 2015 2016 2017 2018 Operating Revenue $104,128 $132,305 $160,716 $187,334 $150,393 Operating Expenses (ExcludingDepreciation)$32,582 $30,022 $41,726 $108,158 $68,302 Operating Income (Loss)(Excluding Depreciation)$71,546 $102,283 $118,990 $79,176 $82,091 $– $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 Cemetery FundYear Ended December 31, The Cemetery Fund ended 2018 with a net position of $2,104,652, an increase of $72,914 from the prior year. Of the net position balance, $1,580,295 represents investments in cemetery capital assets, leaving $524,357 of unrestricted net position. Cemetery Fund operating revenues for 2018 were $150,393, a decrease of $36,941 from the prior year. Operating expenses (excluding depreciation) for 2018 were $68,302, a decrease of $39,856 from the prior year. -21- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government -wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement of Net Position divides the net position into three components: • Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets (i.e., capital assets minus related debt). • Restricted Net Position – The portion of net position equal to resources whose use is legally restricted minus any noncapital-related liabilities payable from those same resources. • Unrestricted Net Position – The residual balance of net position after the elimination of net investment in capital assets and restricted net position. The following table presents the components of the City’s net position as of December 31, 2018 and 2017, for governmental activities and business-type activities: Increase20172018(Decrease) Net position Governmental activitiesNet investment in capital assets 99,642,040$ 83,980,389$ (15,661,651)$ Restricted 15,364,368 15,352,356 (12,012) Unrestricted 24,292,441 28,466,675 4,174,234 Total governmental activities 139,298,849 127,799,420 (11,499,429) Business-type activitiesNet investment in capital assets 94,851,212 100,261,931 5,410,719 Restricted 178,665 – (178,665) Unrestricted 15,390,547 12,828,596 (2,561,951) Total business-type activities 110,420,424 113,090,527 2,670,103 Total net position 249,719,273$ 240,889,947$ (8,829,326)$ As of December 31, The City’s total net position at December 31, 2018 was $8,829,326 lower than the previous year-end, which was comprised of a decrease of $11,499,429 in governmental activities and an increase of $2,670,103 in business-type activities. In the current year, the City reported a prior period adjustment in the governmental activities related to the City’s inventory of capitalized assets and the related useful lives. This prior period adjustment reduced beginning equity by $18,851,915. In the current year, the City also reported a change in accounting principle for reporting OPEB that reduced beginning equity by $90,334 in governmental activities and $15,395 in business-type activities. -22- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2018 and 2017: 2017 2018 Net (expense) revenueGovernmental activitiesGeneral government (4,301,558)$ (4,533,375)$ Public safety (11,743,736) (11,298,267) Public works (1,528,785) (2,137,756) Parks and recreation (5,777,548) (4,595,230) Interest and fiscal charges (886,283) (284,621) Business-type activitiesMunicipal liquor 934,487 1,094,373 Municipal golf course (365,583) (373,546) Sports arena (65,423) 6,646 Water and sewer 650,938 2,544,928 Storm drainage (21,951) 242,145 Cemetery 60,120 61,634 Street light utility 23,608 37,621 Total net (expense) revenue (23,021,714) (19,235,448) General revenuesProperty taxes 25,174,457 26,617,094 Other taxes 182,377 150,340 Franchise taxes 1,288,426 1,306,360 Grants and contributions not restricted to specific programs 56,751 124,430 Other general revenues 8,440 10,786 Investment earnings (net of market value adjustment)702,325 1,154,756 Total general revenues 27,412,776 29,363,766 Change in net position 4,391,062$ 10,128,318$ Change in Net Position One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City’s governmental and business-type operations are financed. The table clearly illustrates the dependence of the City’s governmental operations on general revenues, such as property taxes and unrestricted grants. It also shows that, for the most part, the City’s business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. -23- LEGISLATIVE UPDATES The 2018 legislative session, falling in the second half of the state’s fiscal biennium, was a short session in which only two major finance-related bills were passed, omnibus bonding bills related to bonding, and pensions. The following is a brief summary of specific legislative changes from the 2018 session or previous legislative sessions potentially impacting Minnesota cities. Omnibus Bonding Bill – The omnibus bonding bill authorized financing for over $1.5 billion in capital improvements. Included in the approved funding was $542 million for various transportation infrastructure, $99 million for local city-related economic development projects, and appropriations for a number of different utility (water, sewer, wastewater, etc.) infrastructure improvement programs. Wastewater Investment Protection – Effective retroactively back to August 1, 2017, when a city builds a new wastewater treatment facility or upgrades one to meet current standards that exceed its previous performance, the investment in that facility would be considered adequate for a period of 16 years before a city could be required to upgrade the facility again to meet updated state wastewater facility standards. Competitive Bidding Threshold – Effective for contracts awarded on or after August 1, 2018, the dollar threshold at which Minnesota Statutes require the use of a sealed bidding process was raised from $100,000 to $175,000. This extends the dollar range for which contracts may be awarded using direct negotiation (obtaining two quotations) to contracts between $25,000 and $175,000. By reference, this change also increased the dollar threshold at which public contractors’ performance and payment bonds are required for contracts over $175,000. Water Tank Maintenance Contracts – Effective for contracts awarded on or after September 1, 2018, multi-year service contracts for water tank maintenance work that were previously allowed to be awarded through direct negotiation, are required to be awarded through a sealed bid or best value bid procurement process when the total cost of the contract for the services and supplies is expected to exceed the competitive bid threshold of $175,000. Minnesota Licensing and Registration System (MNLARS) – The Legislature established the MNLARS steering committee, and a one-time appropriation of $9.65 million was approved for fiscal year 2018 to fund costs related to the continued development, improvement, operation, and deployment of the MNLARS. However, a bill to provide an additional proposed appropriation of $9 million to partially compensate deputy registrars throughout the state for financial losses related to the flawed rollout of the MNLARS was vetoed by the Governor. Pension Benefit Reforms – The 2018 pension bill included a number of reforms to the various defined benefit pension plans across the state, including the plans administered by the Public Employees Retirement Association (PERA). • Reforms impacting the PERA General Employees Retirement Fund (GERF) plan included: o Post-retirement cost of living adjustments (COLAs) will be equal to 50.0 percent of the annual increase for Social Security, but not less than 0.5 percent , and not more than 1.5 percent. o For early retirees that retire on or after January 1, 2024, COLAs are deferred until the retiree reaches the normal retirement age. o Phases in actuarial reduction factors over five year on early retirement benefits payable beginning July 1, 2019. o The rate of interest paid on refunds of employee contributions to former public employees was reduced from an annual rate of 4.0 percent to 3.0 percent. -24- • Reforms impacting the PERA Public Employees Police and Fire Fund (PEPFF) plan included: o Post-retirement COLAs were permanently set at 1.00 percent. o Employer contribution rates increase from the current 16.20 percent of covered salaries to 16.95 percent beginning January 1, 2019, and 17.70 percent beginning January 1, 2020. o Employee contribution rates increase from the current 10.80 percent of covered salaries to 11.30 percent beginning January 1, 2019, and 11.80 percent beginning January 1, 2020. o To reduce the need for additional contribution increases, the state will contribute an additional $4.5 million to the plan annually for fiscal years 2019 and 2020, increasing to $9.0 million annually thereafter through fiscal 2048, or until the plan is fully funded. o The rate of interest paid on refunds of employee contributions to former public employees was reduced from an annual rate of 4.00 percent to 3.00 percent. • Reforms impacting the volunteer firefighter relief associations plan included: o Added a requirement that the fire chief annually certify each firefighter’s service credit to the relief association and the related municipality effective January 1, 2019. -25- ACCOUNTING AND AUDITING UPDATES GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS This statement addresses accounting and financial reporting for certain asset retirement obligations (ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset. This statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability when it is both incurred and reasonably estimable. The measurement of an ARO is required to be based on the best estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources associated with an ARO is required to be measured at the amount of the corresponding liability upon initial measurement. This statement requires the current value of a government’s AROs to be adjusted for the effects of general inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually to determine whether the effects of one or more of the factors are expected to significantly change the estimated asset retirement outlays. A government should remeasure an ARO only when the resul t of the evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources should be reduced and recognized as outflows of resources in a systematic and rational manner over the estimated useful life of the tangible capital asset. If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s minority share of an ARO should be reported using the measurement produced by the nongovernmental majority owner or the nongovernmental minority owner that has operational responsibility, without adjustment to conform to the liability measurement and recognition requirements of this statement. The statement also requires disclosures of any funding or financial assurance requirements a government has related to the performance of asset retirement activities, along with any assets restricted for the payment of the government’s AROs. This statement also requires disclosure of information about the nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portio ns thereof) has been incurred by a government but is not yet recognized because it is not reasonably estimable, the government is required to disclose that fact and the reasons therefor. This statement requires similar disclosures for a government’s minority shares of AROs. The requirements of this statement are effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged. GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES This statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity, and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and post-employment benefit arrangements that are fiduciary activities. -26- An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements, which should present a statement of fiduciary net position and a statement of changes in fiduciary net position. This statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria. A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should combine its information with its component units that are fiduciary component units and aggregate that combined information with the primary government’s fiduciary funds. This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources, defined as when a demand for the resources has been made or when no further action, approval, or condition is required to be taken or met by the beneficiary to release the assets. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged. GASB STATEMENT NO. 87, LEASES A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange -like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this statement. Governments enter into leases for many types of assets. Under the previous guidance, leases were classified as either capital or operating depending on whether the lease met any of the four tests. In many cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease financing transactions. The goal of this statement is to better meet the information needs of users by improving accounting and financial reporting for leases by governments. It establishes a single model for lease accounting based on the principle that leases are financings of the right-to-use an underlying asset. This statement increases the usefulness of 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. 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. To reduce the cost of implementation, this statement includes an exception f or short-term leases, defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. -27- GASB STATEMENT NO. 88, CERTAIN DISCLOSURES RELATED TO DEBT, INCLUDING DIRECT BORROWINGS AND DIRECT PLACEMENTS The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The requirements of this statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. In addition, information about resources to liquidate debt and the risks associated with changes in terms associated with debt will be disclosed. As a result, users will have better information to understand the effects of debt on a government’s future resource flows. This statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. The statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance -related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. It also requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. The requirements of this statement are effective for reporting periods beginning after June 15, 2018. GASB STATEMENT NO. 89, ACCOUNTING FOR INTEREST COST INCURRED BEFORE THE END OF A CONSTRUCTION PERIOD The objectives of this statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. This statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will no longer be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should continue to be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Earlier application is encouraged. The requirements of this statement should be applied prospectively. -28- GASB STATEMENT NO. 90, MAJORITY EQUITY INTEREST—AN AMENDMENT OF GASB STATEMENTS NO. 14 AND NO. 61 The primary objectives of this statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. It further specifies that such investments should generally be measured using the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund, in which case the majority equity interest should be measured at fair value. All other holdings of a majority equity interest in a legally separate organization that do not meet the definition of an investment result in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit, and should report an asset related to the majority equity interest using the equity method. This statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged. The requirements should be applied retroactively, except for the provisions related to reporting a majority equity interest in a component unit and reporting a component unit if the government acquires a 100 percent equity interest, which should be applied prospectively. UNIFORM GUIDANCE, MICRO-PURCHASE THRESHOLD Under the Uniform Guidance for federal programs, a micro-purchase is one for goods or services that, due to its relatively low value, does not require the government to abide by many of its ordinary competitive procedures, including small business set-asides. Because the contract is theoretically such a low amount, the contracting officer can pick virtually whatever company and product he or she wants to satisfy the procurement, so long as the price is reasonable. The standard micro-purchase threshold has been amended to increase the threshold to $10,000, effective June 20, 2018. Entities are not required to increase the micro-purchase and simplified acquisition thresholds but, if they wish to do so, they must update their procurement policies and procedures to reflect the change in thresholds. They cannot retroactively make these changes effective prior to June 20, 2018. CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK Page Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 1–2 Independent Auditor’s Report on Minnesota Legal Compliance 3 Table of Contents CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Special Purpose Audit ReportsYear Ended December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK -1- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of Apple Valley, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, t he financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 4, 2019. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the 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 City’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 less 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. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -2- COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 -3- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of Apple Valley, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 4, 2019. MINNESOTA LEGAL COMPLIANCE The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 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 obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK City of Apple Valley Popular Annual Financial Report To The Community FOR THE YEAR ENDED DECEMBER 31, 2018 Dear Apple Valley Resident, We are pleased to present the City of Apple Valley’s Popular Annual Financial Report (PAFR). This report provides a summary of the City’s financial information in a simplified, easy to read format. We trust this report gives you a better understanding on city government and our financial condition. Information in this report comes from Apple Valley’s 2018 Comprehensive Annual Financial Report (CAFR). The CAFR was prepared in conformity with Generally Accepted Accounting Principles (GAAP), was audited by MMKR and received an unmodified opinion, which is the best audit opinion possible. In order for Apple Valley to manage the community finances smoothly, it divides various activities into several different funds. Governmental funds account for tax- supported activities and include: General Fund activities that provide for basic operations of the City, i.e. administration, building maintenance, police & fire, street & park maintenance, recreation activity, community development and planning. Special Revenue Funds account for activities restricted to specific purposes like the City’s Economic Development Authority. Debt Service Funds track revenues and expenses related to repayment of long-term debt. Capital Projects Funds collect revenue from special assessments, state and county aids and allots them toward construction or major capital expenses. Proprietary Funds account for activities that operate as a public enterprise which are paid for by user fees, i.e. water, sanitary sewer, storm sewer, liquor stores, and Valleywood Golf Course. Internal Service Funds account for the acquisition, operation, and maintenance of governmental facilities and services, which are entirely or predominately self- supported by user charges to the governmental funds. If you would like a copy of the CAFR, visit the City’s website at CityofAppleValley.org or contact the Finance Department at: 952-953-2540 Dividing Up Your Property Tax Dollar Your tax dollar is divided up into several governmental entities. Apple Valley collects 36 cents of every tax dollar for City services. The remaining portions are divided among Dakota County, the school district, and other agencies. These tax rates are based on a residential home valued at $238,490. City of Apple Valley 7100 147th Street West Apple Valley, MN 55124 952‐953‐2500 CityofAppleValley.org Elected Officials: MAYOR: Mary Hamann‐Roland CITY COUNCIL: John Bergman Tom Goodwin Ruth Grendahl Clint Hooppaw INSIDE THIS ISSUE: IntroducƟon 1 Dividing up your 1 Tax Dollar Monthly Bill 2 Tax Cost 2 Comparison General Fund 3 Special Revenue 4 Funds Long‐Term Debt 4 Internal Service 4 Funds Capital Funds 5 Enterprise Funds 5‐6 CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 2 How Tax Dollars Buy City Services Residents receive a variety of City services for an affordable price. The cost of City services in 2018 for the owner of a single‐family home in Apple Valley with an assessor’s market value of $238,490 was $82.33 per month. The tax cost per month of $82.33 is the amount leŌ requiring tax support aŌer allocaƟng grants, program fees, lodging taxes and other non‐property tax revenue to the appropriate services. Quarterly Cost of UƟliƟes Based on an average usage of 21,000 gallons of water and 15,000 gallons of sewer per quarter, the cost of uƟliƟes for a home in Apple Valley was $137.83 in 2018. Apple Valley bills on a quarterly basis. Services include water, sewer, storm water, and street lighƟng. Police $24.70 Parks $13.01 Public Works $9.76 Street ReconstrucƟon $9.57 Fire $5.96 General Gov. $13.07 Debt Service $4.01 Insurance $2.25 TOTAL $82.33 Below is a 2018 comparison of monthly city property taxes paid on a median valued home with twelve similar sized com‐ muniƟes in the metro area. Using the median home value in each community, we compared the property tax cost per month for each city. Monthly City Property Tax Cost Comparison * *Apple Valley’s tax rate supports road reconstrucƟon projects within the City without the need for special assessments. Other ciƟes rouƟnely levy special assessments against their property owners to support such costs. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 3 General Fund Revenue The City’s General Fund is the largest Governmental fund and also one of the most vital to the City’s operaƟon. The General Fund is the primary fund that accounts for everyday general expenditures like street and park maintenance, police protecƟon, and fire protecƟon while at the same Ɵme supporƟng the annual street and uƟlity infrastructure program. Like most funds, the General Fund relies on the inflow of cash, shown as revenues and subsequently the ouƞlow listed as expenditures. The primary revenue for the General Fund is property taxes. Intergovernmental revenues include state or county aids and grants. For the year end of 2018, the City’s revenue total was $32,630,240 which was a $430,427 (1.3%) net increase from the previous year. This includes an increase in property taxes ($1,050,000), which was reduced by a decrease in licenses and fees ($990,000). City Departments General Fund Expenditures The City’s total General Fund expenditures for 2018 were $28,699,846 which was $763,414 (2.6%) under the final 2018 budget. Overall, General Fund expenditures increased $1,425,472 (5.2%) primarily in the public safety area. The chart below highlights the amount funded to each of the City’s funcƟons. AdministraƟon: This department provides the overall direcƟon for the City as determined by the City Council. It is responsible for maintaining City records, issuing licenses, administering Council policies, and overseeing elecƟon procedures. Finance: This department conducts the financial affairs of the City of Apple Valley in accordance with the Government AccounƟng Standards Board (GASB) and Generally Accepted AccounƟng Principals (GAAP). Planning & Community Development: This department is responsible for ensuring that laws, ordinances, and zoning codes are enforced. It is also responsible for Economic Development within the City. Public Works: This department is responsible for maintaining the City’s infrastructure, vehicles, and buildings as well as civil and traffic engineering, inspecƟons, natural resources, and the City cemetery. Parks & RecreaƟon: This department is responsible for providing recreaƟon acƟviƟes in the City and maintain the City’s parks and trails. Public Safety: This department is responsible for maintaining the peace and the protecƟon of the community through diligent enforcement of laws and effecƟve response to calls for service. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 4 Special Revenue Funds Special Revenue Funds are used to account for general government financial resources that are RESTRICTED by law or contractual agreement to specific purposes other than debt service or major capital projects. The City of Apple Valley has the following Special Revenue Funds: Cable TV—This fund accounts for the operaƟng costs of the cable TV funcƟons funded by cable franchise fees. EDA OperaƟons—This fund accounts for the operaƟng acƟviƟes of the Apple Valley Economic Development Authority. Lodging Tax—This fund administers the resources from the lodging tax process. *Please note that Solid Waste Grant and Police Forfeiture are not recognized in this report, but are included in the CAFR. Long‐Term Bonded Debt Apple Valley received a “AAA” raƟng from Standard and Poor’s and a “Aaa” raƟng from Moody’s. These are the highest possible raƟngs you can receive. A high bond raƟng translates into lower future borrowing costs. This raƟng is based on the City’s: Moderately‐sized tax base with recent improvement in its valuaƟon aŌer a trend decline. Sound financial posiƟon characterized by healthy reserves. Average debt burden with quick principal amorƟzaƟon. Favorably located in the Twin CiƟes metropolitan area. In 2018, the City issued new debt to cover the costs of the water meter replacement program. In December 2018, the City called debt (paid off early) totaling $1,120,000, contribuƟng to the lowering of total net bonded debt to $20,294,203 and net debt per capita to $380. Once again the City received the CerƟficate of Achievement for Excellence in Financial ReporƟng awarded by the Government Finance Officers AssociaƟon for the City’s Comprehensive Annual Financial Report (CAFR). Although the financial numbers in the CAFR come from an audited source, they are presented in this report in a condensed, unaudited, non‐GAAP format. Internal Service Funds Internal service funds are an accounƟng procedure used to accumulate and allocate costs internally among the City’s various funcƟons. The City maintains internal service funds for the following services: CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 5 Capital Projects Funds Road Improvement Fund: This fund accounts for street overlays and reconstrucƟon projects per the City’s Pavement Management Plan. The ending balance in this fund for 2018 was negaƟve $5,250,659. Future Capital Projects Fund: This fund accumulates resources directly from the General Fund. City Council policy calls for amounts in the General Fund that exceed a maximum level to be moved into the Future Capital Projects Fund. Funds are used to pay for any capital improvement costs needed in the future. The ending fund balance in this fund for 2018 was $14,300,138. Non‐Major Capital Projects Funds: The City has an addiƟonal 26, non‐major capital project funds that are used to account for various project‐related costs. The net ending fund balance in these funds for 2018 was $14,271,799. Please see the 2018 CAFR for further detail Enterprise Funds The Enterprise Funds account for the City’s uƟliƟes (water, sewer, storm drainage, and street lights), liquor stores, golf course, sports arena, and cemetery, which are all run like businesses in that they rely on fees and charges for revenue to cover expenditures. UƟliƟes: Water, Sewer, Storm Water, & Street Light About this Report The City of Apple Valley reports financial year‐end results in the Comprehensive Annual Financial Report (CAFR). The Popular Annual Financial Report (PAFR) is an unaudited report that summarizes the most significant data from the 2018 CAFR, and is consistent with Generally Accepted AccounƟng Principles. The report reflects the net tax cost by service expenditure, developed by crediƟng related revenues against appropriate expenditures and allocaƟng local taxes against the remaining balance. For a complete review of the City’s financial posiƟon for 2018, consult the 2018 CAFR available on the City’s website at CityofAppleValley.org, or from the Finance Department at 952‐953‐2540. These funds consist of uƟlity services provided to the community by the City such as water & sewer, storm drainage, and street lighƟng. Revenues from these funds go to support operaƟons, maintenance, and improvements of the City’s uƟliƟes. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 6 Municipal Liquor The City owns and operates three municipal liquor stores. Profits from your purchases stay in the City of Apple Valley to help aid in providing funding for police, fire, and public works vehicles, maintaining and improving city parks along with other General Fund services. Valleywood Golf Course Valleywood Golf Course features an 18‐hole, par 71 course along with a large banquet space, full scale bar, restaurant, and outdoor paƟo. Valleywood was recently named MGA Member Club of the Year for 2015. Sports Arena The Sports Arena offers tennis lessons during the summer and ice skaƟng during the winter. Hayes Park Arena offers ice Ɵme from mid‐ June to mid‐March and indoor turf Ɵme from mid‐March to mid‐June. City Facts PopulaƟon: 53,429 Per Capita $40,195 Personal Income High School 95.0% GraduaƟon Rate Unemployment 2.4% Rate Home of the MN Zoo 51 parks 78 miles of trails Valleywood Golf Course Sports Arena AquaƟc Center Senior Center Community Center AmeniƟes In the general elecƟon of 1968, the residents voted to incorporate the Town of Lebanon as the Village of Apple Valley. A mayor and four councilmembers were elected and took office on January 1, 1969. On January 1, 1974, Apple Valley became a statutory city. History 6/13/2019 1 CITY OF APPLE VALLEY AUDIT REPORT YEAR ENDED DECEMBER 31, 2018 James H. Eichten, CPA Opinion on Financial Statements Financial statements are fairly presented in accordance with accounting principles generally accepted in the United States of America Testing of Internal Controls and Compliance Internal controls over financial reporting Compliance with laws and regulations related to financial reporting State Laws and Regulations Compliance with Minnesota laws and regulations Single Audit of Federal Awards Not Required for Fiscal 2018 AUDITOR’S ROLE 6/13/2019 2 Financial Report Unmodified or Clean Opinion Emphasis of a Matter – Implementation of GASB Statement #75 – Other Post-Employment Benefits (OPEB) Internal Controls Over Financial Reporting No findings Minnesota Legal Compliance Audit No findings AUDIT OPINIONS AND FINDINGS Internal Controls Over Financial Reporting Inadequate Segregation of Duties over Cash Receipts, Community Center Refunds, Golf Course Inventory, and Utility Billing Adjustments Minnesota Legal Compliance Audit Responsible Contractor Language Claims and Disbursements Other Observations and Recommendations Golf Course Inventory and Event Revenue Tracking FOLLOW UP ON PRIOR YEAR FINDINGS 6/13/2019 3 TAX RATES 2016 2017 2018 Average tax rate City 44.7 44.5 42.5 County 28.6 28.0 26.6 School 24.4 23.3 25.8 Special taxing 5.0 4.9 3.9 Total 102.7 100.7 98.8 City of Apple Valley Rates Expressed as a Percentage of Net Tax Capacity REVENUE PER CAPITA Year December 31, 2016 December 31, 2017 2016 2017 2018 Population 20,000–100,000 20,000–100,000 51,338 52,361 53,429 Property taxes 455$ 475$ 466$ 472$ 482$ Tax increments 42 38 4 7 14 Franchise and other taxes 45 48 29 28 27 Special assessments 59 59 81 30 34 Licenses and permits 42 49 40 62 42 Intergovernmental revenues 152 147 51 38 51 Charges for services 103 103 53 57 58 Other 54 48 85 51 99 Total revenue 952$ 967$ 809$ 745$ 807$ Governmental Funds Revenue per Capita With State-Wide Averages by Population Class State-Wide City of Apple Valley 6/13/2019 4 EXPENDITURES PER CAPITA Year December 31, 2016 December 31, 2017 2016 2017 2018 Population 20,000–100,000 20,000–100,000 51,338 52,361 53,429 Current General government 97$ 101$ 123$ 109$ 136$ Public safety 273 287 236 235 245 Street maintenance 95 101 76 79 96 Parks and recreation 95 99 112 110 107 All other 91 77 – – – Total current 651 665 547 533 584 Capital outlay and construction 301 263 164 162 152 Debt service Principal 115 121 52 65 21 Interest and fiscal 34 32 19 18 6 Total debt service 149 153 71 83 27 Total expenditures 1,101$ 1,081$ 782$ 778$ 763$ State-Wide City of Apple Valley Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class GENERAL FUND FINANCIAL POSITION 6/13/2019 5 MUNICIPAL LIQUOR FUND MUNICIPAL GOLF COURSE FUND 6/13/2019 6 SPORTS ARENA FUND WATER AND SEWER FUND 6/13/2019 7 STORM DRAINAGE FUND STREET LIGHT FUND 6/13/2019 8 Clean Opinion on Financial Statements No Findings Reported Certificate of Achievement in Financial Reporting Overall Improving Financial Condition in City’s General Fund Discussion on Enterprise Fund Financial Results Continued Ongoing Assessment of Financial Projections and Results Including General, Other Operational and Enterprise Fund Activities SUMMARY I T E M: 4. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:I nformal A genda I tem Description: Discuss 2019-2023 Capital I mprovements Program (15 min.) S taff Contact: Ron Hedberg, Finance Director and Charles Grawe, A ssistant City A dministrator Department / Division: Administration / I nformation Technologies AC T I O N RE Q UE S T E D: N/A S UM M ARY: At the J une 13, 2019 C ity Council informal workshop meeting, staff plans to present the draft 2019-2023 C apital Improvements Program for discussion. B AC K G RO UND: T he C ity of Apple Valley's C apital Improvement Program (C IP) is a five-year financial plan for building and maintaining significant municipally-owned assets throughout the community. T he C IP provides a forecast of funds available for capital projects and identifies all major planned capital improvement projects and their estimated costs over the five-year period. B UD G E T I M PAC T: N/A AT TAC HM E NT S : C I P Presentation CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 (This Page Intentionally Left Blank) CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM Table of Contents Introduction ............................................................................................................................. 1 Section 1: Summary Tables ................................................................................................... 4 Section 2: Financial Impact Analysis of Selected Funds ........................................................ 8 Section 3: Five Year CIP Tables .......................................................................................... 36 Appendix A: Street Overlay and Reconstruction Schedule .................................................... 60 Appendix B: Vehicle and Equipment Replacement Schedule ................................................ 64 Introduction The City of Apple Valley believes that it is necessary to develop and maintain a Capital Improvements Program (CIP). Such a program allows the Council and Staff to better plan for the City’s capital and financial needs in future years. With growth, the need for services will continue to increase in the City. At the same time, the costs of vehicles, equipment, and infrastructure are expected to increase. The CIP formalizes a process in which future projects and outlays can be identified and prioritized. It is intended to provide a realistic projection of future capital expenditures necessary to meet the anticipated needs of the community. The identified improvements reflect City policies for growth, maintenance, and development. The CIP is a planning document intended to assist policy makers and staff to plan for major capital improvement, renewal, and replacement expenditures. As a planning document, the CIP does not bind the City to the anticipated expenditures in the projected years. The CIP is not a budget, nor is it an authorization to expend funds. The authorization of the expenditures occurs through City Council action and in adoption of the annual budget. As a planning document, the CIP facilitates two distinct planning purposes. First, the CIP is a tool with which to implement the City’s Comprehensive Guide Plan. As the City looks at future projects, it is important to make sure that they will appropriately integrate with the Comprehensive Guide Plan. Second, the CIP is a financial planning document. As many capital purchases are made in various dollar amounts in various periods of time, it is important to appropriately plan so that the necessary funding mechanisms are available as expenditures take place. The City’s annual budget document categorizes expenditures into three major groups as a means to summarize and describe expenditures: personnel services, capital outlay, and other. Capital outlay as a sum total is generally the smallest of these three expense categories in the General Fund. Capital outlay is a term used to describe an expenditure of a significant amount, generally over $5,000.00, that benefits more than one year or extends the useful life of an asset. The CIP document totals will not necessarily tie to line items within the annual budget document for several reasons. There are some expenditures included within the CIP that are not currently categorized as capital outlay in the budget, such as the street overlay project and computer software. Also, it is not uncommon for a few medium-to-large capital purchases initially anticipated as General Fund department operating expenditures to be ultimately funded through equipment certificates by the end of the annual budget process. 1 The CIP may include some items that are not line-itemized as a capital outlay in an annual operating budget and it is not intended to anticipate the sporadic purchases of very small tools or equipment. The CIP document generally line itemizes outlays which exceed $50,000, but there are a few major exceptions: Selected divisional expenses such as computer and video related equipment, improvements, renewal, or replacements to City buildings exceeding $5,000, improvements, renewal, or replacement to key infrastructures exceeding $5,000, and subtotaled minor expenditures found in the appendices to the CIP. The rationale for the exception to divisional expenses is that in some cases, and particularly with video and computer equipment, the cost of any individual item might be quite small, but when purchased in large bundles or as a system, can amount to a very large total expenditure. The rationale for the exceptions for City buildings and key infrastructure is that for land use planning, a more comprehensive listing of these improvements is desirable. Some of these recurring infrastructure improvements itemized in the document include pathway overlay and repair, pedestrian ramps, street striping, catch basin retrofits, and Ring Route maintenance. The rationale for the exception for subtotals in the appendices is primarily to provide internal consistency to the document. Using similar rationale to the exceptions listed above, the Replacement Schedule line itemizes some items under $50,000. Departments are asked to only include expenditures exceeding $5,000 in these documents. For use in the CIP, these smaller purchases are subtotaled by department and itemized as a subtotal in the CIP as “minor” equipment or vehicles. As mentioned previously, there are some expenditures found in the CIP that are not classified as capital outlay in the annual budget. Each year, the City spends very significant resources to overlay City streets as part of ongoing street maintenance. As this work is provided by private contractors, the expenditures are classified as a contractual service in the operating budget. Similarly, while computer software is essential to operate the physical hardware assets, the software itself is not considered capital in the budget. As these items are a critical component of the City’s infrastructure and capital assets, the expenditures related to these items are included within the CIP. 2 (This Page Intentionally Left Blank) 3 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 Section 1 Summaries 4 (This Page Intentionally Left Blank) 5 City of Apple Valley Capital Improvements Program 2019-2023 2019 - 2023 Projects All Funding Sources Funding Sources 2019 2020 2021 2022 2023 Total General Fund 4,304,655$ 4,013,105$ 4,562,500$ 4,777,000$ 5,048,000$ 22,705,260$ VERF Charges - (Internal Service Fund) 1,048,460 1,120,580 1,327,910 1,368,700 1,413,050 6,278,700$ Equip / VERF Expense 2,172,920 797,700 1,741,900 1,353,000 1,312,200 7,377,720$ Municipal Building Fund 550,000 378,500 962,900 371,000 438,000 2,700,400$ Future Capital Projects Fund 422,000 2,002,000 6,337,000 3,825,000 859,000 13,445,000$ GO/Revenue Bonds - - - - - -$ EDA Funding - - - - - -$ TIF Funding - 2,000,000 - - - 2,000,000$ Park Dedication 28,240 2,023,786 670,000 - 300,000 3,022,026$ Ice Arena 1,515,000 288,750 215,000 330,000 420,000 2,768,750$ Golf 282,950 1,146,950 222,950 247,950 196,885 2,097,685$ Liquor - 22,500 - - - 22,500$ Old City Hall Fund 67,000 90,000 - - - 157,000$ Special Assessments 225,000 350,000 100,000 500,000 - 1,175,000$ Water Utility 4,078,500 4,941,300 1,806,000 1,443,500 2,096,000 14,365,300$ San. Sewer Utility 1,468,000 1,584,500 1,539,600 893,000 1,085,000 6,570,100$ Storm Drainage Utility 2,061,200 2,447,000 1,591,000 2,339,500 1,947,000 10,385,700$ Street Light Utility 137,000 66,000 43,000 43,000 113,000 402,000$ Road Improvement Fund 240,000 (274,000) 389,000 (117,000) 227,000 465,000$ Muncipal State Aid 2,824,000 3,016,500 2,223,000 5,878,500 1,200,000 15,142,000$ Cemetery Fund 448,000 150,000 75,000 130,000 80,000 883,000$ Grant Funding 1,847,000 - - - - 1,847,000$ Other Govt 559,000 80,000 328,000 3,578,000 4,080,000 8,625,000$ Other Sources 1,690,000 257,750 1,132,000 1,260,000 250,000 4,589,750$ Total Funding 25,968,925$ 26,502,921$ 25,266,760$ 28,221,150$ 21,065,135$ 127,024,891$ 6 City of Apple Valley Capital Improvements Program 2019-2023 2019 - 2023 Projects All Project Categories Project Categories 2019 2020 2021 2022 2023 Total Building and Facility Improvements 5,071,740$ 5,894,286$ 8,467,900$ 4,167,000$ 1,777,000$ 25,377,926$ Capital Technology 327,155 362,105 370,000 350,000 350,000 1,759,260$ Fleet Vehicles and Equipment 4,058,530 2,372,230 3,471,860 3,046,650 2,922,135 15,871,405$ Parks, Playgrounds, Paths, Open Space 10,000 10,000 1,150,000 1,115,000 665,000 2,950,000$ Ponds, Natural Resources, and Environment 778,000 816,000 819,000 1,442,000 1,297,000 5,152,000$ Street and Utility Improvements 13,000,000 12,393,500 9,239,000 15,881,500 12,265,000 62,779,000$ Utility Infrastructure Preservation 2,723,500 4,654,800 1,749,000 2,219,000 1,789,000 13,135,300$ Grand Total 25,968,925$ 26,502,921$ 25,266,760$ 28,221,150$ 21,065,135$ 127,024,891$ 7 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 Section 2 Financial Impact Analysis 8 (This Page Intentionally Left Blank) 9 General Fund Fund Description The General Fund is the largest fund in the City’s accounting system. This fund is the primary fund affecting many of the City’s daily operations. Background The General Fund contains a wide variety of services offered by many different departments. Most of these services do not generate their own revenue stream or are not operated as an enterprise function. The majority of the City’s annual budget is dedicated to the operations within the General Fund. Typically, capital outlay is a very small percentage of the total General Fund expenditures, with the vast majority of expenses occurring for personnel services or commodities. However, large changes in capital outlay expenditures can have a significant impact on the General Fund. Source of Funds The Fund receives its revenues from many different sources. The primary funding sources is property taxes, comprising approximately 75 percent of the General Fund revenues. The next largest funding source is Transfers In from other funds and Administrative charges to other funds, comprising about ten percent of the revenues. The remaining revenues are each under five percent of the Fund’s total revenues. Generally, residents and the City Council have been very sensitive to significant changes in the property tax level from year to year. As a result, the City has attempted to keep the expenditures in the General Fund as steady as possible. Use of Funds The City prepares a detailed five year capital improvement plan that outlines all planned renovations and improvements. Because the expenditures in this fund tend to be smaller, there are a large number of different expenses which are listed individually in the tables. Examples of expenditures include vehicles and equipment pieces costing less than $50,000, small building maintenance projects, and recurring amenity maintenance, such as recreational trails and pathways. Fund Outlook Operational projects typically begin as proposals in the General Fund budget. Because the main funding source for the general fund is the property tax levy there are a number of projects that have not been included in this 5 year program. 10 Financial Analysis: General Fund 2019 2020 2021 2022 2023 Source of Funds Tax Levy 867,655$ 473,105$ 898,500$ 976,000$ 1,095,000$ Other Sources - - - - - Total Source of Funds 867,655$ 473,105$ 898,500$ 976,000$ 1,095,000$ Use of Funds IT Various IT annual expenditures 327,155$ 332,105$ 355,000$ 350,000$ 350,000$ Public Works Streets wire feed welder 9,500$ Streets Van Tech Anti-Ice Slide in unit for Plow 16,000$ PW - Asset Management Software 20,000$ CMF Stand up desks 8,000$ Public Works Subtotal 45,000$ -$ 25,500$ -$ -$ Parks Overlay park trails 90,000$ 150,000$ 50,000$ 50,000$ Park Reforestation 10,000$ 10,000$ 10,000$ 10,000$ 10,000$ Play Structure Replacement 130,000$ 130,000$ 130,000$ Valley Middle -backstop replacement 40,000$ JCRPE- Gazebo concrete replacement 13,500$ JCRPE- parking lot chip seal 60,000$ JCRPE- Concessions remodel 60,000$ Redwood Pool & playground fencing 40,000$ Redwood Pool drain cover replacement 10,000$ Redwood Pool diving board replacement 5,000$ Redwood Pool Funbrellas 10,000$ Quarry Park Backstop (#3,4 & 7)60,000$ Quarry Park Pave Storage Yard 75,000$ Tintah soccer field irrigation 100,000$ Wildwood Tennis Courts 140,000$ Upgrades to Parks builldings 50,000$ Lac Lavon Dock 75,000$ Pennock Basketball Court Scott Park tennis court 100,000$ Johnny Cake Ridge Park irrigation 150,000$ 300,000$ Total Parks and Open Space 233,500$ 105,000$ 480,000$ 525,000$ 725,000$ 11 2019 2020 2021 2022 2023 Community Center rental room audio/visual equip $ 8,000$ Community Center rental room tables & chairs 6,000$ Community Center kitchen & conf room appliances 7,000 Community Center rental room tables & chairs 6,000$ 8,000$ Community Center - Maint. Eq (floor scrubers/vacuums)10,000$ Total Community Center -$ 16,000$ 13,000$ 16,000$ 10,000$ Senior Center - banquet tables and chairs 15,000$ Senior Center - painting 10,000$ Senior Center - audio/visual equipment 17,000$ 20,000$ Senior Center - backup boiler Senior Center - concrete replacement Senior Center - cove lighting replacement Total Senior Center 27,000$ 20,000$ -$ 15,000$ -$ Aquatic Center rental cabanas 20,000$ Aquatic Center Diamond Brite Diving well 200,000$ Aquatic Center Drain Cover Replacement 25,000$ Aquatic Center Convection Oven 10,000$ Aquatic Center lifeguard sun protectors 15,000$ 15,000$ 10,000$ Aquatic Center Concessions Improvements 15,000$ Aquatic Center Concessions Appliances 10,000$ Aquatic Center play structure Aquatic Center walk in cooler 20,000$ Total Aquatic Center 235,000$ -$ 25,000$ 70,000$ 10,000$ Teen Center minor improvements Total Teen Center -$ -$ -$ -$ -$ Parks Subtotal 495,500$ 141,000$ 518,000$ 626,000$ 745,000$ Total Use of Funds 867,655$ 473,105$ 898,500$ 976,000$ 1,095,000$ 12 Municipal Building Fund Fund Description The Municipal Building Fund accounts for significant capital improvements pertaining to vehicles and equipment, the use of this fund provides for the funding of scheduled equipment replacement. Background With the 2016 budget, the City began budgeting for building improvement projects out of a new fund called the Municipal Building Fund. Rather than budgeting for individual projects in individual operating budgets which are subject to large swings in expenditures from year to year. This provides a more stable budgeting approach without the annual volatility in the individual department budgets. Source of Funds The Fund receives its revenues from transfers from the General Fund and the Future Capital Projects Fund, the initial amount of the transfer from the General Fund is approximately equal to what the General Fund had been paying for these projects out of the General Fund operating budget. The transfer amount from the Future Capital Projects Fund is equal to the amount of interest earned in that fund in the previous year. Use of Funds The Fund covers the projected and budgeted building improvements for general government buildings. Fund Outlook The Municipal Building Fund was created to provide a financing mechanism for the systematic building improvements to general government buildings. Based on the existing conservative funding estimates the fund balance will maintain reach a nominal positive fund balance over the next five years. Each year the timing of projects must be closely monitored to maintain a positive fund balance. Expenditures total approximately $2.7 million over the next five years. 13 Financial Analysis: Muncipal Building Fund 2019 2020 2021 2022 2023 Source of Funds Investment Earnings 6,500$ 8,300$ 8,800$ 700$ 1,600$ Transfer from Future Capital Projects fund 202,000 202,000 218,000 225,000 232,000 Transfer from General Fund 186,000 192,000 198,000 204,000 210,000 Estimate of FCPF Investment earnings above budgeted 10,000 10,000 - - - Total Source of Funds 404,500$ 412,300$ 424,800$ 429,700$ 443,600$ Use of Funds City Hall Municipal Center - PD Training room area 56,000 Municipal Center - Recarpet 150,000 Municipal Center - PD / HVAC Phase 2 60,000 Municipal Center - Recarpet 200,000 Municipal Center - Municipal Center Roof replacement 150,000 144,000 150,000$ 60,000$ 406,000$ -$ 144,000$ Public Safety - Fire Fire Station 1 Roof Replacement 61,000 Fire Station 3 Roof Replacement 44,500 Fire Station 3 Apparatus Bay Floor 30,000 Fire Station 2 Roof Replacement 44,500$ Fire Station 1 Bay Pit Repair 60,000$ Fire Station 2 Apparatus Bay Floor 30,000$ Fire Station 2 HVAC Replacement 50,000$ Fire Station 3 HVAC Replacement 50,000$ -$ 135,500$ 104,500$ 130,000$ -$ Public Works CMF restrooms 20,000 CMF Hallway tile flooring 12,000 CMF Old Wash Bay Conversion 27,000 CMF roof section 30,000 CMF- Bldg Windows 20,000 9,500 CMF- Replace Vehicle Hoist Bay #3 27,000 CMF- Replace Vehicle Hoist Bay #5 26,000 CMF- Upgrade to Accubrine Machine 35,400 CMF Police / Storage Bldg Unit Heater #1 - 15,500 CMF Parks / Storage Bldg Unit Heater #2 16,000 CMF Streets / Storage Bldg Unit Heater #3 16,000 CMF Small HVAC Units - 30,000 CMF Windows, doors and Overhead doors 40,000 89,000$ 47,000$ 118,400$ 70,000$ -$ 14 2019 2020 2021 2022 2023 Financial Analysis: Muncipal Building Fund (continued) 2019 2020 2021 2022 2023 Parks Community Center - restroom / locker room flooring 46,000 Community Center - Water Heater 28,000 Community Center - Sport Court divider curtains 45,000 51,000 Community Center - Caulk /Sealant/Masonary 34,000 Community Center - Concrete Work 75,000 Community Center - Flooring 40,000 Community Center - Entry Doors 50,000 Community Center - Roof Sport Court and Garage 26,000 Community Center - Gym Ceiling Fans 27,000 Community Center - Electronic Sign Total Community Center 100,000 45,000 125,000 125,000 27,000 Senior Center - Building upgrades 35,000 Senior Center - Boiler Replacement 25,000 Senior Center - Cooling Tower 10,000 Senior Center - Core Water pipes 10,000 Senior Center - Concrete Dumpster Area 50,000 Senior Center - Flooring (Kitchen '22, Sequoia, Denali '23)10,000 10,000 Senior Center - Garage & Storage Roof 26,000 Senior Center - Heat Pumps 50,000 Senior Center - Green Room Completion - - Senior Center - Irrigation - 7,000 Senior Center - Plumbing Fixtures - - Senior Center - Yellowstone Room Carpet 50,000 - Total Senior Center 35,000 25,000 110,000 46,000 67,000 Aquatic Center - Waterslide 150,000 Aquatic Center - Waterslide Total Aquatic Center 150,000 - - - - Teen Center - Roof 85,000 Total Teen Center (JCRP)- - 85,000 - - Redwood boiler replacement 20,000 Total Redwood 20,000 - - - - JCRP east- Soccer Stadium Roof 6,000 JCRP east- Legion Field roof 6,000 14,000 JCRP east - restroom facility 60,000 Galaxie Park Building Reconstruction 200,000 Total Parks 311,000$ 136,000$ 334,000$ 171,000$ 294,000$ Total Use of Funds 550,000$ 378,500$ 962,900$ 371,000$ 438,000$ Net Change (145,500)$ 33,800$ (538,100)$ 58,700$ 5,600$ Beginning Cash/ Fund Balance 699,430$ 553,930$ 587,730$ 49,630$ 108,330$ Ending Cash/ Fund Balance 553,930$ 587,730$ 49,630$ 108,330$ 113,930$ 15 Future Capital Projects Fund Fund Description The Future Capital Projects Fund accounts for significant capital improvement projects for various service areas within the City as appropriated by the City Council. Some of these projects are projected one-time construction projects. Others, such as the Pavement Management Support Transfer and support of the Municipal Building Fund, may be ongoing based on Council policy. Background The Future Capital Fund was created as a means to fund significant capital projects not included elsewhere in the budget or CIP, especially those that may not have an alternate or dedicated revenue stream other than property tax support. More recently, it has also provided funding support for the City’s Pavement Management Program. Beginning with the 2016-2017 operating budget a transfer has been identified to go to the Municipal Building Fund to support that funds capital outlay, this ongoing transfer is included at an amount equal to the prior year’s interest earnings. Source of Funds The Fund receives its revenues from two primary sources—annual transfer of the ending operating General Fund-Fund Balance and investment earnings. For this document, staff has conservatively estimated a $500,000 annual fund balance transfers from the General Fund between 2019 and 2023. However, the actual transfer each year in accordance with the adopted find balance policy is targeted to maintain a fund balance in the General Fund of 50% of the following year’s budget. Use of Funds The City prepares a detailed five year capital improvement plan that outlines all planned renovations and improvements, the attached scheduled goes out to 2023. Significant anticipated projects include reconfiguring fire station(s), reconstruction of the shared entrance with the Dakota County Western Services Center off of Galaxie Avenue, replacement of the Park Maintenance Building and finish of the Municipal Center lower level office space, construction of Pickleball courts, construction of a Police Department garage at the Municipal Center Site, and funding of a local share of the Cedar Avenue overpasses if those projects are to move forward. Transfers The Future Capital Projects Fund transfers funds to support the annual street maintenance program in years when the other sources are short of the funding needed to complete the road projects for that year. Fund Outlook Projected expenditures will significantly reduce the fund balance over the next five years, assuming conservative fund balance transfers from the General Fund. The Fund’s outlook could improve with additional transfers from the General Fund ending balance. 16 Financial Analysis: Future Capital Projects Fund (4930) 2019 2020 2021 2022 2023 Source of Funds Investment Earnings 191,000$ 196,000$ 181,000$ 97,000$ 49,000$ Valleywood Loan Repayment 50,000 50,000 50,000 50,000 50,000 Transfer from General Fund 500,000 500,000 500,000 500,000 500,000 Total Source of Funds 741,000$ 746,000$ 731,000$ 647,000$ 599,000$ Use of Funds Admin Cedar Avenue Entrance Monument 60,000$ Cedar Avenue Overpass at @147th (city share)400,000$ Cedar Avenue Overpass at @140th (city share)600,000$ Municipal Center - Lower Level Office Expansion 800,000$ Fire Reconfiguring existing fire station(s)500,000$ 4,500,000$ Police PD Garage at Muni Center 3,000,000$ Parks JCRP east new maintenance facility 1,050,000$ Pickleball courts 250,000$ Public Works Overlay -Western Service Center Entrance 120,000$ Other Transfer to Road Improvement Fund 220,000$ -$ 389,000$ -$ 227,000$ Transfer to Municipal Building Fund 202,000$ 202,000$ 218,000 225,000 232,000 Total Use of Funds 422,000$ 1,752,000$ 6,337,000$ 3,825,000$ 859,000$ Net Change 319,000$ (1,006,000)$ (5,606,000)$ (3,178,000)$ (260,000)$ Beginning Cash Balance 12,726,547$ 13,045,547$ 12,039,547$ 6,433,547$ 3,255,547$ Ending Cash Balance 13,045,547$ 12,039,547$ 6,433,547$ 3,255,547$ 2,995,547$ 17 Vehicle and Equipment Replacement Fund Fund Description The Vehicle and Equipment Replacement Fund (VERF) accounts for significant capital improvements pertaining to vehicles and equipment, the use of this fund provides for the funding of scheduled equipment replacement. Background In 2013, the City began budgeting for vehicles and equipment replacement using the fleet management approach. Rather than budgeting for individual units on an annual basis, which is subject to large swings in expenditures from year to year, departments are charged an annual fee by the Vehicle and Equipment Replacement Fund, an Internal Service Fund. This provides a more stable budgeting approach without the annual volatility. Source of Funds The Fund receives its revenues from annual charges to each departments operating budget. Use of Funds The Fund covers the annual vehicle and equipment purchase needs for participating departments within the general government. Fund Outlook The Vehicle and Equipment Replacement Fund (VERF) was being created to provide a financing mechanism for the systematic replacement of vehicles in the City’s Fleet. The goal of the fund is to have sufficient cash flow to fund annual equipment purchases without the need to borrow and to stabilize budgeting for major equipment purchases. The goal is to accumulate funds but it is not planned to have all the resources to fund 100% of the replacement value of the entire fleet at any one time. The projected low balance over the next five years is approximately $576,000. Over the next five years the VERF is expected to spend $7,378,000 on equipment replacement. 18 Financial Analysis: Vehicle and Equipment Replacement Fund 2019 2020 2021 2022 2023 Source of Funds (Internal Charge to Operatiing Budgets) VERF Interfund Charges 1,045,950$ 1,117,970$ 1,325,230$ 1,436,420$ 1,475,540$ Sales Proceeds 108,000 68,500 144,000 126,000 132,500 Investment Earnings 21,576 6,615 12,545 8,644 11,915 Transfer from Closed GO Debt Fund - - - - - Total Source of Funds 1,175,526$ 1,193,085$ 1,481,775$ 1,571,064$ 1,619,955$ Use of Funds Fire 1,008,600$ 94,600$ 973,600$ 318,100$ 262,100$ General Government -$ -$ -$ 28,700 - Code Enforcement -- - -- Police 566,200 365,200 345,500 265,400 75,700 Parks 293,900 142,400 279,000 44,300 230,400 Building Inspections - - - - 26,900 Engineering - - - 27,700 27,200 Fleet Maintenance -11,600 - 24,300 - Public Works Admin / Nat Res.--- - 26,900 Streets 304,220 183,900 143,800 644,500 663,000 Total Use of Funds 2,172,920$ 797,700$ 1,741,900$ 1,353,000$ 1,312,200$ Net Change (997,394)$ 395,385$ (260,125)$ 218,064$ 307,755$ Beginning Cash Balance 1,438,376$ 440,982$ 836,366$ 576,242$ 794,305$ Ending Cash Balance 440,982$ 836,366$ 576,242$ 794,305$ 1,102,060$ 19 Water Utility Fund Fund Description The Water Utility provides high quality, safe and reliable drinking water. Background Water is derived from the operation of 20 municipal groundwater wells and pumped to a central water treatment plant. The existing capacity of the water treatment plant is 24 million gallons of water per day, which is sufficient to meet the future water demands of the city. The water distribution system consists of 240 miles of water main pipe and 5 reservoirs with a storage capacity of 12.7 million gallons. The current average daily demand is 6.8 million gallons. Source of Funds The fund receives nearly all of its revenue from the sale of water to customers within the City. The tiered rates are structured so that the consumption charge increases as the use exceeds certain tiers. This escalating rate structure is intended to encourage conservation. With the meter replacement program it is estimated that metered consumption will increase 3% beginning in 2018. With the significant capital outlay needs of the fund in the next five years this document assumes that the meter replacement program would be financed over a ten year term. Use of Funds The utility is also responsible for the portion of the annual street maintenance project related to the water system; in 2019 and 2020 the CIP includes $1,658,000 and $1,369,000 respectively for this purpose. Over the five year span of this CIP the water utility is shown to be expending $5,130,000 on the annual street and utility program, this will create significant pressure on available funding in the Water and Sewer Fund. Fund Outlook The next large expenditure of the utility will be the replacement of customer water meters, which is included in the years 2019 and 2020. The five year projection below assumes a 5% increase in the utility rates for 2019 and beyond. One of the larger upcoming expenditures is the meter replacement program, included here at $4 million over the next two years. Once the estimated costs and timing of the meter replacement program is determined rates may need to be adjusted in future years. The capital needs combined with the meter replacement program may result in additional rate increases. 20 Financial Analysis: Water Utility 2019 Budget 2020 Budget 2021 estimate 2022 estimate 2023 estimate Revenues: Utility Charges 5%5,014,000$ 5,401,000$ 5,806,000$ 6,096,000$ 6,401,000$ Investment Earnings 1.5%100,000$ 100,000$ 63,000$ 54,000$ 54,000$ Other Revenues 75,000 75,000 75,000 75,000 75,000 Total 5,189,000 5,576,000 5,944,000 6,225,000 6,530,000 Expenses: Personnel Services- Wages 3%800,065 835,445 861,000 887,000 914,000 Personnel Services- Benefits 3%304,255 322,055 332,000 342,000 352,000 Total Personnel Services 1,104,320 1,157,500 1,193,000 1,229,000 1,266,000 Supplies 2%181,180 194,785 198,700 202,700 206,800 Services 2%289,260 453,165 462,200 471,400 480,800 Utilities 4%394,800 411,800 428,300 445,400 463,200 Repairs & Maint 2%241,695 244,540 249,400 254,400 259,500 Other operating Costs 2%406,880 420,100 428,500 437,100 445,800 Items for resale 2%45,000 55,000 56,100 57,200 58,300 Depreciation 1,900,000 1,957,000 2,147,000 2,201,000 2,249,000 Transfers/Admin Fee to General Fund 3%568,600 585,000 602,600 620,700 639,300 Debt Service interest 236,125 274,225 240,225 218,025 194,575 Total Expense 5,367,860 5,753,115 6,006,025 6,136,925 6,263,275 Net Income (loss)(178,860) (177,115) (62,025) 88,075 266,725 Addback Depreciation 1,900,000 1,957,000 2,147,000 2,201,000 2,249,000 Add Debt Issued 2,000,000 2,000,000 - - - Less: Debt Service Principal - Trmt Plant (395,000) (400,000) (410,000) (420,000) (425,000) Less: Debt Service Principal - Meter Replacement - (470,000) (470,000) (470,000) (470,000) Less: Capital Outlay -Annual Street Program (1,658,000) (1,369,000) (894,000) (494,000) (715,000) Less Capital Outlay -Meter Replacement (2,000,000) (2,000,000) - - - Less: Capital Outlay (420,500) (1,572,300) (912,000) (949,500) (1,381,000) Net addition (use) of cash (752,360) (2,031,415) (601,025) (44,425) (475,275) Beginning Cash Balance 7,000,000 6,247,640 4,216,225 3,615,200 3,570,775 Ending Cash Balance 6,247,640$ 4,216,225$ 3,615,200$ 3,570,775$ 3,095,500$ 21 Sanitary Sewer Fund Fund Description The Sanitary Sewer Utility provides wastewater service to over 50,000 Apple Valley residents. The Sanitary Sewer Utility Fund operates and maintains the sanitary sewer conveyance system and delivers wastewater to the regional treatment plants operated by the Metropolitan Council Environmental Services (MCES). Background The sanitary sewer system consists of 193 miles of sanitary sewer mains and 9 sanitary lift stations. The system conveys the sewage to the regional wastewater treatment facilities operated by Metropolitan Council Environmental Services (MCES). The system conveys approximately 1.2 billion gallons of wastewater each year. Source of Funds The fund receives nearly all of its revenue from the sale of water to customers. The sanitary sewer charges are based on actual water usage for each individual property. The rates are structured so that the consumption charge increases as the use exceeds certain thresholds. This escalating rate structure is intended to encourage conservation. Use of Funds In addition to the personnel and maintenance costs of operating the utility the largest expense of the utility is the annual charge levied by the MCES for the treatment of wastewater based on the sanitary sewer flows from the City. The 2019 and 2020 budget includes $3,042,500 and $3,217,000 respectively for the treatment of wastewater by MCES. The utility is also responsible for the portion of the annual street maintenance project related to the sanitary system; in 2019 and 2020 the CIP includes $1,146,000 and $1,392,000 respectively for this purpose. Over the five year span of this CIP the water utility is shown to be expending $4,889,000 on the annual street and utility program, this will create pressure on available funding in the Water and Sewer Fund. Fund Outlook The working capital levels of the fund continue to be maintained at sufficient levels for the operation of the utility. The five year projection below assumes a 3% increase in the utility rates for 2019 and thereafter. 22 Financial Analysis: Sewer Utility 2019 Budget 2020 Budget 2021 estimate 2022 estimate 2023 estimate Revenues: Utility Charges 3%5,603,000$ 5,967,000$ 6,146,000$ 6,330,000$ 6,520,000$ Investment Earnings 1.5%100,000 100,000 45,000 50,000 58,000 Other Revenues 60,000 60,000 60,000 60,000 60,000 Total 5,763,000 6,127,000 6,251,000 6,440,000 6,638,000 Expenses: Personnel Services- Wages 3% 571,760 594,530 612,000 630,000 649,000 Personnel Services- Benefits 3% 229,635 243,465 251,000 259,000 267,000 Total Personnel Services 801,395 837,995 863,000 889,000 916,000 Supplies 2% 72,155 79,960 82,000 84,000 86,000 Services 2% 38,000 46,840 48,000 49,000 50,000 Utilities 4% 29,000 30,000 31,000 32,000 33,000 Repairs & Maint 2% 73,800 74,800 76,000 78,000 80,000 Other operating Costs 2% 331,930 324,510 331,000 338,000 345,000 MCES Treatment 5% 3,042,500 3,217,500 3,378,000 3,547,000 3,724,000 Depreciation 3%1,120,000 1,150,000 1,187,000 1,230,000 1,256,000 Non Capitalized Capital outlay - - - - - Transfers/Admin Fee to General Fund 3% 569,500 587,000 605,000 623,000 642,000 Total Expenses 6,078,280 6,348,605 6,601,000 6,870,000 7,132,000 Net Income (loss)(315,280) (221,605) (350,000) (430,000) (494,000) Addback Depreciation 1,120,000 1,150,000 1,187,000 1,230,000 1,256,000 Less: Capital Outlay -Annual Street Program (1,146,000) (1,392,000) (891,000) (614,500) (845,000) Less: Capital Outlay (322,000) (192,500) (495,000) (278,500) (240,000) Net addition (use) of cash 482,720 735,895 342,000 521,500 522,000 Beginning Cash Balance 1,800,000 2,282,720 3,018,615 3,360,615 3,882,115 Ending Cash Balance 2,282,720$ 3,018,615$ 3,360,615$ 3,882,115$ 4,404,115$ 23 Storm Water Utility Fund Fund Description The Storm Water Utility Fund provides for the operation and maintenance of the City’s storm water drainage system and the management of surface water bodies. A majority of expenses related to this activity relate to improvement projects to fulfill State and Federal mandates for pollutant load reduction to lakes, maintenance of the drainage system, and the drainage system costs related to the annual street maintenance program. Background The storm water sewer system consists of 193 miles of sewer pipe and 12 storm water lift stations. Source of Funds The fund receives nearly all of its revenue from storm water charges to customers on their utility bills. The rates are based on estimated runoff from impervious surfaces on each parcel. In 2011, the City issued $2,600,000 of GO Storm water Utility Revenue bonds to fund a number of projects. Use of Funds The majority of the expenditures of the fund are used to address Federal or State mandates. The utility is also responsible for the portion of the annual street maintenance project related to the sanitary system; in 2019 and 2020 the CIP includes $950,000 and $870,000 respectively for this purpose. Over the five year span of this CIP the water utility is shown to be expending $3,782,000 on the annual street and utility program, this will create pressure on available funding in the Storm Water fund and result in rate increases beyond what has been experienced in recent years. Fund Outlook The five year projection below assumes an annual increase of 10% in the storm water rates beginning in 2019. As additional mandates are created, negative pressure will be placed on the fund resources and additional rate increases may be needed. 24 Financial Analysis: Storm Water Utility 2019 Budget 2020 Budget 2021 estimate 2022 estimate 2023 estimate Revenues: Utility Charges 10%1,976,000$ 2,174,000$ 2,391,000$ 2,630,000$ 2,893,000$ Investment Earnings 1.5%38,000 40,000 27,000 27,000 16,000 Other Revenues 195,000 269,000 292,000 720,000 310,000 Total 2,209,000 2,483,000 2,710,000 3,377,000 3,219,000 Expenses: Personnel Services- Wages 3% 218,420 226,460 233,000 240,000 247,000 Personnel Services- Benefits 3% 58,830 62,470 64,000 66,000 68,000 Total Personnel Services 277,250 288,930 297,000 306,000 315,000 Supplies 2% 46,420 44,270 45,000 46,000 47,000 Services 2% 291,305 500,125 510,000 520,000 530,000 Utilities 2% 64,800 66,800 68,000 69,000 70,000 Repairs & Maint 3% 51,500 54,000 56,000 58,000 60,000 Other operating Costs 2% 31,825 33,065 34,000 35,000 36,000 Depreciation 1,000,000 1,000,000 1,107,000 1,177,000 1,312,000 Non Capitalized Capital outlay Transfers/Admin Fee to General Fund 3% 360,000 370,000 381,000 392,000 404,000 Debt Service - interest 42,650 38,700 34,270 29,370 24,060 Total Expenses 2,165,750 2,395,890 2,532,270 2,632,370 2,798,060 Net Income (loss)43,250 87,110 177,730 744,630 420,940 Addback Depreciation 1,000,000 1,000,000 1,107,000 1,177,000 1,312,000 Less: Debt Service Principal (165,000) (170,000) (175,000) (180,000) (185,000) Less: Capital Outlay -Annual Street Program (950,000) (870,000) (704,000) (507,500) (750,000) Less: Capital Outlay (1,111,200) (1,786,000) (1,119,000) (2,492,000) (1,447,000) Net addition (use) of cash (232,950) (868,890) (9,270) (750,370) 100,940 Beginning Cash Balance 2,902,000 2,669,050 1,800,160 1,790,890 1,040,520 Ending Cash Balance 2,669,050$ 1,800,160$ 1,790,890$ 1,040,520$ 1,141,460$ 25 Park Dedication Fund Fund Description Apple Valley’s subdivision ordinance requires subdivision applicants to dedicate a reasonable portion of land within the development to the public to address infrastructure needs created by the development. In lieu of this dedication of land the City may accept a cash fee for some costs of development. Background Cash payments received are placed in a special fund to be used only for the purposes for which the money was obtained. Cash payments received must be used only for the acquisition and development or improvement of parks, recreational facilities, playgrounds, trails, wetlands, or open space based on the approved park systems plan. Source of Funds The fund receives its revenues from two primary sources; cash payments received from developers and investment earnings. Use of Funds Funds are used for the acquisition and development or improvement of parks, recreational facilities, playgrounds, trails, wetlands, or open space. Cash payments may not be used for ongoing operation or maintenance of parks, recreational facilities, playgrounds, trails, wetlands, or open space. Fund Outlook The Park Dedication Fund has recovered and has a balance in the fund of $2,230,000 at the beginning of 2019. The 2019-2023 CIP includes: The remaining assessments on the property purchases for the Kelley Park expansion which will retire in 2022. Development of Kelley Park Extension of sewer services to Huntington Park 26 Financial Analysis: Park Dedication Fund 2019 2020 2021 2022 2023 Source of Funds Dedication Fees received 150,000$ 250,000$ 250,000$ 250,000$ 250,000$ Investment Earnings 27,900 17,300 15,900 17,700 16,500 Total Source of Funds 177,900$ 267,300$ 265,900$ 267,700$ 266,500$ Use of Funds Parks Special Assessments from the Kelley Park Land Purchase 28,240$ 23,786$ 22,556$ 14,480$ -$ Kelley Park development 2,000,000 Huntington Park sewer connection 300,000 Total Use of Funds 28,240$ 2,023,786$ 22,556$ 14,480$ 300,000$ Net Change 149,660$ (1,756,486)$ 243,344$ 253,220$ (33,500)$ Beginning Cash/ Fund Balance 2,230,889$ 2,380,549$ 624,063$ 867,407$ 1,120,627$ Ending Cash/ Fund Balance 2,380,549$ 624,063$ 867,407$ 1,120,627$ 1,087,127$ 27 Tax Increment Finance Funding Fund Description Tax increment financing is an economic tool established under State law. This fund pertains to projects that are authorized expenditures for tax increment financing as established under State law. Background The laws have changed over the years and have limited applicability. However, the general concept is that the City, under certain conditions, may establish a tax increment district in an area where property values are currently low, typically because the property is undeveloped or is blighted in some way. The City can issue debt to fund certain types of improvements to the property. After the improvements and additional development or redevelopment activity, the property tax value increases. The City then captures this incremental increase in property tax revenue to pay off the debt for the improvements. In some cases, the increments captured exceed the amount necessary to retire the debt for the improvements. In a limited number of those cases, the City can use the excess increment revenues to fund additional eligible tax increment financing projects. Source of Funds The Fund receives its revenues from two primary sources—receipt of tax increments and investment earnings. Estimating the amount of the increment is dependent on accurate forecasting of the future value of the property after it has been improved. In our case, the districts have been established for decades and there is a long history of property valuations after the improvements were made. Apple Valley’s two included districts (TIF 1 & 7) were decertified by 12-31-15. For this document the resources include previously collected and unspent funds. Use of Funds The State law is very restrictive on the types of expenditures that can be used with tax increment revenues and the geographic locations that these expenditures can be made. Generally, the allowed expenditures are for public improvements such as roadways, traffic signals, or parking facilities. Fund Outlook Projects associated with this fund are typically linked with development activity. The projected expenditures in this document assume that certain development activity will occur in the future that would be supported with tax increment backed improvements. The current capital improvement program currently includes the street and utility improvements at the Glazier and 147th Street intersection, leaving approximately 1 million available for other eligible expenditures. 28 Financial Analysis: Tax Increment Finance Funding (Decertified Districts #1 & #7) 2018 2019 2020 2021 2022 2023 Source of Funds Investment Earnings 43,741$ 44,397$ 45,063$ 15,739$ 15,975$ 16,215$ Tax Increments - - - - - - Total Source of Funds 43,741$ 44,397$ 45,063$ 15,739$ 15,975$ 16,215$ Use of Funds Streets & utility Improvements 147th & Glazier Intersection Impr. (Cedar to Galaxie)2,000,000$ Total Use of Funds -$ -$ 2,000,000$ -$ -$ -$ Net Change 43,741$ 44,397$ (1,954,937)$ 15,739$ 15,975$ 16,215$ Beginning Cash/ Fund Balance 2,916,079$ 2,959,820$ 3,004,217$ 1,049,281$ 1,065,020$ 1,080,995$ Ending Cash / Fund Balance 2,959,820$ 3,004,217$ 1,049,281$ 1,065,020$ 1,080,995$ 1,097,210$ 29 Road Improvement Fund Fund Description The Road Improvement Fund accounts for significant capital improvement projects for construction, maintenance, and repair of roadways and pathways. Background The Road Improvement Fund is a mechanism to account for certain portions of roadway improvement projects. It is also important to note that in many cases, the full cost of the roadway project includes many different funding sources. For example, the City’s Utility Funds support portions of the annual street overlay project. For another example, for County roadways, the City pays a portion of the project cost, but large portions of the project may be funded by the County, the State, or other adjoining cities. Source of Funds The Fund receives its revenues from many sources, a large portion of the project costs are shared with the utility funds and other sources, e.g. Municipal State Aid for eligible projects. A portion of the funding identified as property tax levy is included within the General Fund Levy and is transferred each year to the Road Improvement Fund and represents the taxpayer’s support of the annual street program. Use of Funds The City prepares a detailed five year capital improvement plan that outlines all planned renovations and improvements. Significant anticipated projects include a number of street reconstructions, annual street overlay, and traffic signals. Fund Outlook The current Pavement Management Program began with the 2013 construction season. This fund has had a negative balance for many years and is related to a number of years prior to 2010 when the annual Pavement Management Program was without an identified funding source. The projected expenditures over the next 5 years will exceed the revenues available by approximately $1,616,000 requiring transfers from other funds. As the program is developed further additional revenue sources may need to be contemplated to maintain the anticipated management program. The Fund’s outlook could improve with additional transfers from the General Fund positive ending balance, or savings on individual construction projects. 30 Financial Analysis: Road Improvement Fund (2025) 2019 2020 2021 2022 2023 Source of Funds Tax Levy - Transfer from General Fund 3,437,000 3,540,000 3,664,000 3,801,000 3,953,000 General Fund Operating Budget - - - - MSA Maintenance 583,000 599,500 599,500 599,500 600,000 MSA Construction 2,241,000 2,417,000 1,623,000 5,279,000 600,000 Special Assessments 125,000 250,000 - 500,000 - TIF 1 or TIF 7 - 2,000,000 - - - Grants or Other Governments share 2,406,000 80,000 288,000 3,578,000 4,080,000 Water Utility 1,658,000 1,369,000 894,000 494,000 715,000 Sewer Utility 1,146,000 1,392,000 891,000 614,500 845,000 Storm Water Utility 950,000 870,000 704,000 507,500 750,000 Other Funds 114,000 50,000 26,000 25,000 95,000 Transfer from (to) other funds 240,000 389,000 600,000 627,000 Total Source of Funds 12,900,000$ 12,567,500$ 9,078,500$ 15,998,500$ 12,265,000$ Use of Funds Annual Pavement / Infrastructure Program ADA Transition Plan - - - - - JCRR, Lapaz 2nd 6,633,000 - - - - Apple Valley 11th and 12th 4,495,000 - - - - 147th / Glazier instersection improvements - 2,000,000 - - - Cimmarron Rd (phase 1 and 1a)- 5,093,000 - - - Garden View Dr - CR 42 to Whitney - 2,415,000 - - - Cimmarron Rd (phase 2- Surrey Trail)4,707,000 - - 133rd St (Galaxie to Flagstaff)- - 1,510,000 - - AV 3rd (Rdwd, Prk, Juniper)- - - 2,060,000 - Greenleaf 6th & 7th Ph.2 (138th Ct.,Upper 138th Ct,136th St. Ct)- 2,015,000 - CSAH 23 (Cedar)/140th ped overpass - - - 4,000,000 - CSAH 33 (Diamond Path)/ 140th roundabout - - - 563,000 - AV 3rd Walnut Ln (Elm Dr.- Park Ln) Edwood Ln, Park Ln.- - - - 3,015,000 Pedestrian overpass Cedar @ 147th - - - - 4,400,000 Street proj, Greenleaf 6th & 7th - - - - 2,015,000 Street proj, 142nd St. (Cedar to Galaxie)- - - - 1,255,000 Watermain break street patching 50,000 50,000 50,000 50,000 50,000 Subtotal Annual Pavement / Infrastructure Program 11,178,000 9,558,000 6,267,000 8,688,000 10,735,000 31 Financial Analysis: Road Improvement Fund (2025) 2019 2020 2021 2022 2023 (continued) Annual Overlay/Microsurface/Cracksealing Street overlay/resurfacing 408,000 1,484,000 145th St (Pennock to Cedar)189,000 Pennock Lane (145th to 140th)500,000 140th St (Pennock to Cedar)420,000 157th St (Cedar to Galaxie)436,000 Hayes Rd (150th to 140th)769,000 Gantry Ln, Gantry Ct, Genevan Ln, Safari Pass, 121st 1,000,000 127th St (Cedar to Galaxie)650,000 Street microsurface/ crack sealing 583,000 599,500 599,500 599,500 600,000 Subtotal Annual Overlay/Microsurface/Cracksealing 991,000 2,083,500 1,708,500 2,804,500 1,250,000 Recurring Ring Route /Cedar Ave Annual Ring Route concrete repairs 50,000 50,000 50,000 50,000 50,000 Cedar Ave / Ring Route concrete and landscaping - - 30,000 - - Ring Route benches and trash bins - - 81,000 - - Cedar Ave. pedestrian connections 100,000 - - - - Ring Route monument replacement - 72,000 - - - Subtotal Recurring Ring Route /Cedar Ave 150,000 122,000 161,000 50,000 50,000 Recurring Trail Maintenance/ Improvements Trail rehabilitation / resurfacing 81,000 180,000 180,000 180,000 180,000 Trail on 140th South side, Galaxie to Cedar - - - - Metro Red Line Bike & Ped Improvements - - - 123,000 ADA General Improvements 50,000 50,000 50,000 Misc Intersection Improvements 100,000 Subtotal Recurring Trail Maintenance/ Improvements 81,000 280,000 230,000 353,000 230,000 Traffic Signals City signal install 147th @ JCRR 500,000 - - - DC signal CR 42 @ JCRR - 250,000 - - HAWK traffic signal at Greenleaf on Galaxie - - 312,000 - Traffic signal Galaxie at 132nd - - 400,000 - DC signal JCRR at 157th St - - - 250,000 DC signal 157th @ JCRR 250,000 CSAH 42 Traffic Signal / intersection / ped. Upgrades (city share)- - - 3,324,000 - CSAH 38 ATMS Signal Upgrades - - - 162,000 - Subtotal Traffic Signals 500,000 250,000 712,000 3,986,000 - Total Use of Funds 12,900,000$ 12,293,500$ 9,078,500$ 15,881,500$ 12,265,000$ Net Change -$ 274,000$ -$ 117,000$ -$ Beginning Fund Balance (3,855,929)$ (3,855,929)$ (3,581,929)$ (3,581,929)$ (3,464,929)$ Ending Fund Balance (3,855,929)$ (3,581,929)$ (3,581,929)$ (3,464,929)$ (3,464,929)$ 32 Former City Hall Fund (Education Building) Fund Description This Former City Hall Fund accounts for the operations of the former city hall location along with capital improvement projects pertaining to the former city hall property. The City currently leases the property to the St. Mary’s University and the MacPhail Center for Music as education facilities. Background In 2001, the City moved its operations to the Municipal Center location and vacated the former City Hall property. As the City did not have an immediate use for the property, but was also sensitive to the type of new use of the property, the City chose to rent the property. The City continues to have obligations to maintain the facility for the tenants. Source of Funds The fund receives its revenues from two primary sources—rents received from the tenants and investment earnings. Use of Funds Under the current leases, the City assumes all responsibilities for the maintenance of the property including daily maintenance of the interior and exterior space along with the roof structure, the HVAC system, and plumbing. Capital improvements to the building in 2018 included significant improvements; replacing the boiler and HVAC system, bathroom improvements, residing and repainting the exterior, conversion of the former garage space and the replacement of two of the roof sections. Future expenditures include replacement of the system camera, entryway improvements, landscaping improvements, re-carpeting of the St. Mary’s space, roofing replacement in one section and the replacement of the HVAC system. Fund Outlook This fund will expend accumulated fund balance during 2019 and 2020 on the noted improvements, once these are completed many of the more significant improvements will be completed. 33 Financial Analysis: Former City Hall Fund (2090) (Education Building) 2019 2020 2021 2022 2023 Source of Funds Investment Earnings 2,071$ 1,303$ 135$ 281$ 409$ Rents 212,480 212,500 212,500 212,500 223,100 Total Source of Funds 214,551$ 213,803$ 212,635$ 212,781$ 223,509$ Use of Funds Operating Exp: Salaries & Wages Emp. Benefits Supplies 50 50 50 50 50 Telephone 880 910 940 950 960 Contractual Serv.86,970 88,080 88,460 88,850 89,240 Utilities 32,090 33,050 33,500 34,000 34,500 Repairs & Maint.28,590 29,450 29,900 30,300 30,800 Other Exp.130 130 100 100 100 Building Management Fee 50,000 50,000 50,000 50,000 50,000 Subtotal Operating Expense 198,710 201,670 202,950 204,250 205,650 Capital outlay: Security Camera System 12,000 Landscaping & Irrigation System 25,000 McPhail Entryway Replacement 30,000 St. Mary's carpeting 30,000 Roof section 6 18,000 HVAC 6 ton unit replace open ceiling burner 42,000 Subtotal Capital Outlay 67,000$ 90,000$ -$ -$ -$ Total Use of Funds 265,710$ 291,670$ 202,950$ 204,250$ 205,650$ Net Change (51,159)$ (77,867)$ 9,685$ 8,531$ 17,859$ Beginning Fund Balance 138,057$ 86,898$ 9,032$ 18,717$ 27,248$ Ending Fund Balance 86,898$ 9,032$ 18,717$ 27,248$ 45,107$ 2734 (This Page Intentionally Left Blank) 35 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 Section 3 5 Year CIP Tables 36 (This Page Intentionally Left Blank) 37 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 2019 Projects 38 City of Apple Valley Capital Improvements Program 2019-2023 2019 Projects Dept Division Site Project Name General Fund Municipal Building Fund Future Capital Projects Fund Park Dedication Ice Arena Golf Old City Hall Fund Cemetery Fund Other Sources Total Funding Building and Facility Improvements Tranfer from Future Capital to Municipal Building 202,000$ 202,000$ Tranfer from Future Capital to Road Improvement 220,000$ 220,000$ Muni Cntr Muni Cntr Muni Cntr Western Service Center - Overlay entrance/parking lot -$ Muni Cntr Muni Cntr Muni Cntr Municipal Center PD recarpet 150,000$ 150,000$ Ed Bldng Security Ed Bldng Ed building camera system 12,000$ 12,000$ Ed Bldng Buildings Ed Bldng Landscaping and irrigation system 25,000$ 25,000$ Ed Bldng Buildings Ed Bldng McPhail entryway replacement 30,000$ 30,000$ Parks Arena AVSA Refrigeration plant replacement 1,500,000$ 1,500,000$ 3,000,000$ Parks Comm Cntr Comm Cntr Comm Cntr roof section replacement 46,000$ 46,000$ Parks Comm Cntr Comm Cntr Comm Cntr -Water Heater 28,000$ 28,000$ Parks Comm Cntr Comm Cntr Comm Cntr -Sport Court and Garage Roof 26,000$ 26,000$ Parks Comm Cntr Redwood Redwood boilers 20,000$ 20,000$ Parks Comm Cntr Redwood Redwood fencing 40,000$ 40,000$ Parks Comm Cntr Redwood Redwood drain cover replacment 10,000$ 10,000$ Parks Comm Cntr Senior Cnt Senior Center painting 10,000$ 10,000$ Parks Comm Cntr Senior Cnt Senior Cntr building upgrades 35,000$ 35,000$ Parks Comm Cntr Senior Cnt Senior Cntr -Yosemite Room AV Eq 17,000$ 17,000$ Parks Golf Golf Valleywood building cameras 25,000$ 25,000$ Parks Golf Golf Valleywood clubhouse & exterior lighting 10,000$ 10,000$ Parks Golf Golf Valleywood ceremony chairs 5,000$ 5,000$ Parks Park Mnt JCRPE JCRPE Soccer Stadium roof 6,000$ 6,000$ Parks Park Mnt JCRPE JCRPE gazebo concrete replacement 13,500$ 13,500$ Parks Park Mnt JCRPE JCRPW parking lot chip seal 60,000$ 60,000$ Parks Park Mnt JCRPE JCRPE concessions remodel 60,000$ 60,000$ Parks Park Mnt JCRPE Valley Middle backstop replacements 40,000$ 40,000$ Parks Park Mnt Kelley Kelley Park Land Purchase Special Assess 28,240$ 28,240$ Parks Pools FAC Aquatic Cntr waterslide green & yellow 150,000$ 150,000$ Parks Pools FAC Diamond Brite diving well 200,000$ 200,000$ Parks Pools FAC Aquatic Center drain cover replacement 25,000$ 25,000$ Parks Pools FAC FAC concessions improvements 10,000$ 10,000$ Parks Security Comm Cntr Comm Center security card readers 15,000$ 15,000$ Parks Security Hayes Hayes Arena security card readers 15,000$ 15,000$ Pub Wrks Buildings CMF CMF hallway tile flooring 12,000$ 12,000$ Pub Wrks Buildings CMF CMF old washbay conversion 27,000$ 27,000$ Pub Wrks Buildings CMF CMF restrooms 20,000$ 20,000$ Pub Wrks Buildings CMF CMF roof section 30,000$ 30,000$ Pub Wrks Buildings CMF Office furniture--standing desks 8,000$ 8,000$ Pub Wrks Cemetery Cemetery Cemetery decorative fence 305,000$ 305,000$ Pub Wrks Cemetery Cemetery Cemetery security cameras 15,000$ 15,000$ Pub Wrks Cemetery Cemetery Funeral off-site burial structure feature 50,000$ 50,000$ Pub Wrks Cemetery Cemetery Irrigation extension into new section 6,500$ 6,500$ Pub Wrks Cemetery Cemetery Tree plantings 9,500$ 9,500$ Pub Wrks Cemetery Cemetery Concrete walk way west curb to center 55,000$ 55,000$ Subtotal 493,500$ 550,000$ 422,000$ 28,240$ 1,515,000$ 15,000$ 67,000$ 441,000$ 1,540,000$ 5,071,740$ Capital Technology Info Tech Network Tech IT servers, networking, pc's, etc.96,000$ 96,000$ Info Tech Network Tech IT software & network licenses 181,155$ 181,155$ Info Tech Network Tech IT special projects 50,000$ 50,000$ Subtotal 327,155$ 327,155$ 39 City of Apple Valley Capital Improvements Program 2019-2023 2019 Projects Dept Division Site Project Name Type Description Descrip 2 Ref Number General Fund VERF Charges - (Internal Service Fund) Equip / VERF Expense Golf Water Utility San. Sewer Utility Storm Drainage Utility Other Sources Total Funding Fleet Vehicles and Equipment (appendix B) Com Dev Code Fleet Code Enforcement VERF Charge Fleet Vehicles and Equipment VERF Charge - Internal Service Fund VERF 2,540$ 2,540$ Com Dev Code Fleet Code Enforcment vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ Fire Fleet Fire Fire vehicles & equipment Fleet Vehicles and Equipment Replacement VERF 103,400$ 103,400$ Fire Fleet Fire Step van replacement Fleet Vehicles and Equipment Replacement VERF 273,200$ Fire Fleet Fire Rescue truck Fleet Vehicles and Equipment Replacement VERF 273,200$ Fire Fleet Fire SCBA replacement Fleet Vehicles and Equipment Replacement VERF 358,800$ Fire Fleet Fire Fire VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service Fund VERF 353,100$ 353,100$ Muni Cntr Fleet Muni Cntr Municipal Center vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ Muni Cntr Fleet Muni Cntr Municipal Center VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service Fund VERF 2,620$ 2,620$ Parks Fleet Golf Valleywood cart lease annual payment Fleet Vehicles and Equipment 44,500$ 44,500$ Parks Fleet Golf Valleywood mower & equipment lease annual paymentFleet Vehicles and Equipment 83,450$ 83,450$ Parks Fleet Golf Valleywood vehicles & equipment Fleet Vehicles and Equipment Replacement 140,000$ 140,000$ Parks Fleet Park Mnt Parks Maint vehicles & equipment Fleet Vehicles and Equipment Replacement VERF 293,900$ 293,900$ Parks Fleet Park Mnt Parks Maint VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 236,780$ 236,780$ Police Fleet Patrol Police 800 Mhz Radios Fleet Vehicles and Equipment Replacement VERF 328,000$ 328,000$ Police Fleet Patrol Police vehicles & equipment Fleet Vehicles and Equipment Replacement VERF 238,200$ 238,200$ Police Fleet Patrol Police VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service Fund VERF 238,220$ 238,220$ Pub Wrks Fleet EngineeringEngineering vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ -$ Pub Wrks Fleet EngineeringEngineering VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 10,250$ 10,250$ Pub Wrks Fleet Fleet Fleet Maint vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ -$ Pub Wrks Fleet Fleet Fleet Maint VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 2,850$ 2,850$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ -$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 12,600$ 12,600$ Pub Wrks Fleet Nat Res Natural Resources vehicles & equipment Fleet Vehicles and Equipment Replacement VERF -$ -$ Pub Wrks Fleet Nat Res Natural Resources VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 4,500$ 4,500$ Pub Wrks Fleet Storm DU Storm Utility vehicles & equipment # 604 Fleet Vehicles and Equipment Replacement VERF 23,200$ 23,200$ Pub Wrks Fleet Streets Sewer Jet/ vac Fleet Vehicles and Equipment 215,000$ 215,000$ 430,000$ Pub Wrks Fleet Streets Blacktop roller Fleet Vehicles and Equipment 17,000$ 17,000$ Pub Wrks Fleet Streets Streets vehicles & equipment Fleet Vehicles and Equipment Replacement VERF 304,220$ 304,220$ Pub Wrks Fleet Streets Streets VERF charge Fleet Vehicles and Equipment VERF Charge - Internal Service FundReplacement VERF 185,000$ 185,000$ Pub Wrks Fleet Utilities Water Pickups # 419, #421 Fleet Vehicles and Equipment Replacement VERF 99,000$ 99,000$ Subtotal 17,000$ 1,048,460$ 2,172,920$ 267,950$ 99,000$ 215,000$ 238,200$ 4,058,530$ Parks, Playgrounds, Paths, Open Space Parks Park Mnt Forests Park reforestation Parks, Playgrounds, Paths, Open Space maint Rehabilitation 10,000$ 10,000$ Parks Park Mnt Play Park plastic playground timbers Parks, Playgrounds, Paths, Open Space Maint Rehabilitation -$ Subtotal 10,000$ -$ 10,000$ Ponds, Natural Resources, and Environment Pub Wrks Storm DU Lakes Cobblestone Manor impr. (AL-P3)Ponds, Natural Resources, and Environment 213,000$ 75,000$ 288,000$ Pub Wrks Storm DU Ponds Pond easement acquisition Ponds, Natural Resources, and Environment 17.17 50,000$ 50,000$ Pub Wrks Storm DU Ponds Falcon Ridge rain garden Ponds, Natural Resources, and Environment 20,000$ 20,000$ Pub Wrks Storm DU Ponds Sunset Pond improvements (Alimagnet)Ponds, Natural Resources, and Environment 185,000$ 75,000$ 260,000$ Pub Wrks Storm DU Ponds Briar Oaks Improvements Ponds, Natural Resources, and Environment 70,000$ 70,000$ Pub Wrks Storm DU Ponds Storm pond sediment removal Ponds, Natural Resources, and Environment Rehabilitation 19.16 90,000$ 90,000$ Subtotal 628,000$ 150,000$ 778,000$ 40 City of Apple Valley Capital Improvements Program 2019-2023 2019 Projects Dept Division Site Project Name General Fund Special Assessments Water Utility San. Sewer Utility Storm Drainage Utility Street Light Utility Road Improvement MSA Maintenance MSA Construction Muncipal State Aid Cemetery Fund Grant Funding Dakota County Other Govt Total Funding Street and Utility Improvements Street reconstruction -$ Pub Wrks Street Imp SR 01 Street project G/F levy allocation 3,437,000$ (3,437,000)$ -$ Pub Wrks Street Imp SR 03 Apple Valley 11th and 12th 915,000$ 959,000$ 638,000$ 25,000$ 1,958,000$ 4,495,000$ Pub Wrks Street Imp SR 07 JCRR, Lapaz 2nd 693,000$ 187,000$ 312,000$ 89,000$ 1,209,000$ 2,116,000$ 2,116,000$ 1,597,000$ 430,000$ 6,633,000$ -$ Street overlay/resurfacing:-$ Pub Wrks Street Imp SR 09 Trail rehabilitation 32,000$ 49,000$ 49,000$ 81,000$ Pub Wrks Street Imp SR 10 Street overlay/resurfacing (142nd St)408,000$ 408,000$ Pub Wrks Street Imp SR 11 Street microsurface/ crack sealing 583,000$ -$ 583,000$ 583,000$ Pub Wrks Signal SR 06 City signal install 147th @ JCRR 125,000$ 125,000$ 125,000$ 250,000$ 500,000$ Pub Wrks Street Imp SR 16 Cedar Ave. Entrance Monument -$ Pub Wrks Street Imp 147th and Glazier intersection improvements -$ Pub Wrks Street Imp Annual Ring Route concrete repairs 50,000$ 50,000$ Pub Wrks Street Imp Cedar Ave. pedestrian connections 20,000$ 80,000$ 80,000$ 100,000$ Finance Finance Subdivision improvements 100,000$ 100,000$ Pub Wrks Street Imp Water main break street patching 50,000$ 50,000$ Subtotal 3,437,000$ 225,000$ 1,658,000$ 1,146,000$ 950,000$ 114,000$ 240,000$ 583,000$ 2,241,000$ 2,824,000$ 1,847,000$ 129,000$ 559,000$ 13,000,000$ Utility Infrastructure Preservation Pub Wrks Lights UI 10 Ring Route street light painting 16,000$ 16,000$ Pub Wrks San Sewer UI 06 Lift 1 pump replacement (3 of 3)60,000$ 60,000$ Pub Wrks Storm DU UI 12 General stormwater improvements 100,000$ 100,000$ Pub Wrks Water UI 01 Well Maint Wells 6, 11, 20 140,000$ 140,000$ Pub Wrks Water UI 02 WTP Pump Maint - LZP4 15,000$ 15,000$ Pub Wrks Water UI 03 Nordic Booster Station pump rehab 14,000$ 14,000$ Pub Wrks Water UI 04 Water meter system replacement 2,000,000$ 2,000,000$ Pub Wrks Water UI 09 Fiber network extension 40,000$ 40,000$ 80,000$ Pub Wrks Water UI 11 Gate valve replacements 25,000$ 25,000$ Pub Wrks Water UI 09 Asset Management software 20,000$ 7,000$ 7,000$ 7,000$ 7,000$ 7,000$ 55,000$ Pub Wrks Water Nordic Booster Station pump inspection 14,000$ 14,000$ Pub Wrks Water Palomino Reservoir emergency electrical 5,000$ 5,000$ Pub Wrks Water Well 11 Driveway 10,000$ 10,000$ Pub Wrks Water WTP deicing cables 21,500$ 21,500$ Pub Wrks Water DNR Groundwter monitoring well 30,000$ 30,000$ Pub Wrks Water Hunters Wood check vaolves 8,000$ 8,000$ Pub Wrks Water Farquar sluice gate 25,000$ 25,000$ Pub Wrks Water Briar Oaks easements & erosion impts 25,000$ 25,000$ Pub Wrks Water Cedar Knolls pump upgrade 45,000$ 45,000$ Pub Wrks Water 133rd/ Gossamer pipe repair 35,000$ 35,000$ Subtotal 20,000$ -$ 2,321,500$ 107,000$ 245,000$ 23,000$ 7,000$ 2,723,500$ 41 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 2020 Projects 42 City of Apple Valley Capital Improvements Program 2019-2023 2020 Projects Dept Division Site Project Name General Fund Municipal Building Fund Future Capital Projects Fund Park Dedication Ice Arena Golf Liquor Old City Hall Fund Cemetery Fund Other Sources Total Funding Building and Facility Improvements Tranfer from Future Capital to Municipal Building 202,000$ 202,000$ Fire Fire F Station Fire Station 1 roof replacement 61,000$ 61,000$ Fire Fire F Station Fire Station 3 apparatus bay floor 30,000$ 30,000$ Fire Fire F Station Fire Station 3 roof relacement 44,500$ 44,500$ Fire Fire F Station Fire Station reconfiguration / construction 500,000$ 500,000$ Liquor Liquor Store 1 Liquor 1 three door cooler 7,500$ 7,500$ Liquor Liquor Store 3 Liquor 3 three door coolers 15,000$ 15,000$ Muni Cntr HVAC Muni Cntr Municipal Center PD HVAC phase 2 60,000$ 60,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center Basement Office Expansion 800,000$ 800,000$ Ed Bldng Buildings Ed Bldng St. Mary's carpeting 30,000$ 30,000$ Ed Bldng Buildings Ed Bldng Roof section 6 18,000$ 18,000$ Ed Bldng Buildings Ed Bldng HVAC 6 ton unit replace open ceiling burner 42,000$ 42,000$ Parks Arena AVSA Sports Arena lobby enclosure 45,000$ 45,000$ 90,000$ Parks Arena AVSA Rental skate replacement 3,750$ 3,750$ 7,500$ Parks Arena Hayes Hayes Arena cooling tower 90,000$ 90,000$ Parks Comm Cntr Comm CntrComm Cntr rental room tables & chairs 6,000$ 6,000$ Parks Comm Cntr Comm CntrComm Cntr hardwood gym divider curtains 45,000$ 45,000$ Parks Comm Cntr Redwood Redwood diving board replacement 5,000$ 5,000$ Parks Comm Cntr Senior Cnt Senior Center boiler 25,000$ 25,000$ Parks Golf Golf Irrigation system replacement 900,000$ 900,000$ Parks Golf Golf Range equipment 10,000$ 10,000$ Parks Golf Golf Clubhouse appliance replacement 7,000$ 7,000$ Parks Golf Golf Banquet/ Bar/ Patio furniture 7,000$ 7,000$ Parks Golf Golf Clubhouse A/V equipment 15,000$ 15,000$ Parks Park Mnt Cobble Overlay Cobblestone Paths 90,000$ 90,000$ Parks Park Mnt JCRPE JCRPE Legion Field press box roof 6,000$ 6,000$ Parks Park Mnt JCRPE JCRPE restroom facility 60,000$ 60,000$ Parks Park Mnt Kelley Kelley Park Land Purchase Special Assess 23,786$ 23,786$ Pub Wrks Buildings CMF CMF building windows 20,000$ 20,000$ Pub Wrks Buildings CMF CMF vehicle hoists Bay #3 27,000$ 27,000$ Parks Facilities Kelley Kelley Park Improvements 2,000,000$ 2,000,000$ Parks Facilities TBD Pickleball Courts 250,000$ 250,000$ Pub Wrks Cemetery Cemetery Concrete walk way east curb to center 55,000$ 55,000$ Pub Wrks Cemetery Cemetery Columbarium 50,000$ 50,000$ Pub Wrks Cemetery Cemetery Boulder development area 45,000$ 45,000$ Subtotal 101,000$ 378,500$ 1,752,000$ 2,023,786$ 138,750$ 939,000$ 22,500$ 90,000$ 150,000$ 48,750$ 5,644,286$ Capital Technology Info Tech Network Tech IT servers, networking, pc's, etc.87,000$ 87,000$ Info Tech Network Tech IT software & network licenses 185,105$ 185,105$ Info Tech Network Tech IT special projects 60,000$ 60,000$ Parks Comm Cntr Tech Comm Cntr rental room audio/visual equip 10,000$ 10,000$ Parks Comm Cntr Tech Senior Cntr audio/visual equipment 20,000$ 20,000$ Subtotal 362,105$ 362,105$ 43 City of Apple Valley Capital Improvements Program 2019-2023 2020 Projects Dept Division Site Project Name General Fund VERF Charges - (Internal Service Fund) Equip / VERF Expense Ice Arena Golf Water Utility San. Sewer Utility Storm Drainage Utility Other Sources Total Funding Fleet Vehicles and Equipment (appendix B) Com Dev Code Fleet Code Enforcement VERF Charge 2,620$ 2,620$ Com Dev Code Fleet Code Enforcment vehicles & equipment -$ Fire Fleet Fire Fire vehicles & equipment 94,600$ 94,600$ Fire Fleet Fire Fire VERF charge 388,400$ 388,400$ Muni Cntr Fleet Muni Cntr Municipal Center vehicles & equipment -$ Muni Cntr Fleet Muni Cntr Municipal Center VERF charge 2,690$ 2,690$ Parks Arena Hayes Hayes Arena ice resurfacer 150,000$ 150,000$ Parks Fleet Golf Valleywood cart lease annual payment 44,500$ 44,500$ Parks Fleet Golf Valleywood mower & equipment lease annual payment 83,450$ 83,450$ Parks Fleet Golf Valleywood vehicles & equipment 80,000$ 80,000$ Parks Fleet Park Mnt Parks Maint vehicles & equipment 142,400$ 142,400$ Parks Fleet Park Mnt Parks Maint VERF charge 236,700$ 236,700$ Police Fleet Patrol Police 800 Mhz Radios -$ Police Fleet Patrol Police vehicles & equipment 365,200$ 365,200$ Police Fleet Patrol Police VERF charge 262,000$ 262,000$ Pub Wrks Fleet EngineeringEngineering vehicles & equipment -$ -$ Pub Wrks Fleet EngineeringEngineering VERF charge 10,510$ 10,510$ Pub Wrks Fleet Fleet Fleet Maint vehicles & equipment 11,600$ 11,600$ Pub Wrks Fleet Fleet Fleet Maint VERF charge 5,700$ 5,700$ Pub Wrks Fleet Utilities JD 991 Mower (Cost share with Fleet VERF)11,000$ 11,000$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment -$ -$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge 12,980$ 12,980$ Pub Wrks Fleet Nat Res Natural Resources vehicles & equipment -$ -$ Pub Wrks Fleet Nat Res Natural Resources VERF charge 4,610$ 4,610$ Pub Wrks Fleet Storm DU Storm Utility vehicles & equipment -$ Pub Wrks Fleet Streets Streets vehicles & equipment 183,900$ 183,900$ Pub Wrks Fleet Streets Streets VERF charge 194,370$ 194,370$ Pub Wrks Fleet Utilities Sewer vehicles #418 42,500$ 42,500$ Pub Wrks Fleet Water 3/4 ton pick-up # 408 42,500$ 42,500$ Subtotal -$ 1,120,580$ 797,700$ 150,000$ 207,950$ 53,500$ 42,500$ -$ -$ 2,372,230$ Parks Park Mnt Forests Park reforestation 10,000$ 10,000$ Subtotal 10,000$ -$ 10,000$ Ponds, Natural Resources, and Environment Pub Wrks Storm DU Ponds Erickson Park stormwater improvements (Long/ Farquar)160,000$ 100,000$ 260,000$ Pub Wrks Storm DU Ponds Redwood Pond improvements (Keller Lake)276,000$ 109,000$ 385,000$ Pub Wrks Storm DU Ponds Pond easement acquisition 50,000$ 50,000$ Pub Wrks Storm DU Ponds Storm pond sediment removal 52,000$ 52,000$ Pub Wrks Storm DU Ponds Storm water monitoring improvements (Whitney Pond)69,000$ 69,000$ Subtotal 607,000$ 209,000$ 816,000$ 44 City of Apple Valley Capital Improvements Program 2019-2023 2020 Projects Dept Division Site Project Name General Fund TIF Funding Special Assessments Water Utility San. Sewer Utility Storm Drainage Utility Street Light Utility Road Improvement MSA Maintenance MSA Construction Muncipal State Aid Other Govt Total Funding Street and Utility Improvements Street reconstruction Pub Wrks Street Imp SR 01 Street project G/F levy allocation 3,540,000$ (3,540,000)$ -$ Pub Wrks Street Imp SR 04 Cimmarron Rd (phase 1)563,000$ 594,000$ 600,000$ 20,000$ 1,501,000$ 3,278,000$ Pub Wrks Street Imp SR 05 Cimmarron Rd (phase 1a)324,000$ 342,000$ 270,000$ 15,000$ 864,000$ 1,815,000$ Pub Wrks Street Imp SR 05 Gardenview (Whitney to 42)432,000$ 456,000$ 15,000$ 1,512,000$ 1,512,000$ 2,415,000$ Pub Wrks Street Imp 147th and Glazier intersection improvements 2,000,000$ 2,000,000$ -$ Street overlay / resurfacing:-$ Pub Wrks Street Imp SR 06 Overlay Garden View Dr - CR 46 to Whitney 550,000$ 550,000$ 550,000$ Pub Wrks Street Imp Overlay Garden View Dr - CR 42 to Walnut 355,000$ 355,000$ 355,000$ Pub Wrks Street Imp Overlay Lac Lavon Shores (Highveiw/Hopewell/Hyacinth 416,000$ 416,000$ Pub Wrks Street Imp Overlay 134th St (140th to Gardenview) & Hughes Ct 163,000$ 163,000$ Pub Wrks Street Imp Misc Interesction Improvements 100,000$ 100,000$ Pub Wrks Street Imp SR 09 Street microsurface/ crack sealing 599,500$ 599,500$ 599,500$ Pub Wrks Street Imp Annual Ring Route concrete repairs 50,000$ 50,000$ Pub Wrks Street Imp Ring Route monument replacement 72,000$ 72,000$ Pub Wrks Street Imp Trail resurfacing 100,000$ 80,000$ 180,000$ Pub Wrks Street Imp DC signal CR 42 @ JCRR 250,000$ 250,000$ Finance Finance Subdivision improvements 100,000$ 100,000$ Pub Wrks Street Imp Water main break street patching 50,000$ 50,000$ Subtotal 3,540,000$ 2,000,000$ 350,000$ 1,369,000$ 1,392,000$ 870,000$ 50,000$ (274,000)$ 599,500$ 2,417,000$ 3,016,500$ 80,000$ 12,393,500$ Utility Infrastructure Preservation Pub Wrks Lights UI 04 Ring Route street light painting 16,000$ 16,000$ Pub Wrks Storm DU UI 05 Lift Station, Storm No. 3 (Farquar) Rehab 790,000$ 790,000$ Pub Wrks Storm DU UI 07 General stormwater improvements 100,000$ 100,000$ Pub Wrks Storm DU Highwood Way catch basin/ pipe repair 50,000$ 50,000$ Pub Wrks Storm DU Alimagnet weed/ leaf device 30,000$ 30,000$ Pub Wrks Water UI 01 Well Maint Wells 4, 13 and 16 105,000$ 105,000$ Pub Wrks Water UI 02 WTP Pump Maint - HZP4 16,000$ 16,000$ Pub Wrks Water UI 03 Water Reservoir Maint Longridge 900,000$ 900,000$ Pub Wrks Water UI 05 Fiber network extension 40,000$ 40,000$ 80,000$ Pub Wrks Water UI 06 Gate valve replacements 30,000$ 30,000$ Pub Wrks Water Nordic booster A/C replacement 15,000$ 15,000$ Pub Wrks Water Palomino Tower wash/ inspect 8,800$ 8,800$ Pub Wrks Water Utility garage door replace 12,000$ 12,000$ Pub Wrks Water Well 10 AC 10,000$ 10,000$ Pub Wrks Water Install valve 135th/ Foliage 20,000$ 20,000$ Pub Wrks Water Water meter replacement 2,000,000$ 2,000,000$ Pub Wrks Water Diamond Path water main 330,000$ 330,000$ Pub Wrks Water Irrigation sensors (conservation grant)10,000$ 10,000$ Pub Wrks Water Well 19 AC 7,000$ 7,000$ Pub Wrks Water GPS Unit/ Software 15,000$ 15,000$ Pub Wrks San Sewer Intercommunity flow meter w Eagan 35,000$ 35,000$ Pub Wrks San Sewer Lift Station 7 controls, landscape 65,000$ 65,000$ Pub Wrks San Sewer Lift 10, Pump 2 replacement 10,000$ 10,000$ Subtotal 3,518,800$ 150,000$ 970,000$ 16,000$ 4,654,800$ 45 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 2021 Projects 46 City of Apple Valley Capital Improvements Program 2019-2023 2021 Projects Dept Division Site Project Name General Fund Municipal Building Fund Future Capital Projects Fund Park Dedication Ice Arena Water Utility San. Sewer Utility Storm Drainage Utility Cemetery Fund Other Sources Total Funding Building and Facility Improvements Tranfer from Future Capital to Municipal Building 218,000$ 218,000$ Tranfer from Future Capital to Road Improvement 389,000$ 389,000$ Fire Fire F Station Fire Station 1 bay pit repair 60,000$ 60,000$ Fire Fire F Station Fire Station 2 roof relacement 44,500$ 44,500$ Fire Fire F Station Fire Station reconfiguration construction 4,500,000$ 4,500,000$ Muni Cntr Muni Cntr Muni Cntr Western Service Center - Overlay entrance/parking lot 120,000$ 120,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center PD training room area 56,000$ 56,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center campus add PD garage -$ Muni Cntr Muni Cntr Muni Cntr Municipal Center roof replacement 150,000$ 150,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center recarpet 200,000$ 200,000$ Parks Arena AVSA AVSA lockerroom rubber 30,000$ 30,000$ Parks Arena AVSA AVSA Scoreboard replacement 15,000$ 15,000$ Parks Arena Hayes Hayes Arena artificial turf 140,000$ 140,000$ Parks Arena Hayes Hayes Arena sound system 30,000$ 30,000$ Parks Comm Cntr Comm CntrComm Cntr kitchen & conf room appliances 7,000$ 7,000$ Parks Comm Cntr Comm CntrComm Cntr rental room tables & chairs 6,000$ 6,000$ Parks Comm Cntr Comm CntrComm Cntr sport court gym main curtain 51,000$ 51,000$ Parks Comm Cntr Comm CntrComm Cntr caulk/ sealant/ masonry 34,000$ 34,000$ Parks Comm Cntr Comm CntrComm Cntr flooring 40,000$ 40,000$ Parks Comm Cntr Redwood Redwood HVAC replacement -$ Parks Comm Cntr Redwood Redwood front doors -$ Parks Comm Cntr Redwood Redwood flooring -$ Parks Comm Cntr Senior CntrSenior Center cooling tower 10,000$ 10,000$ Parks Comm Cntr Senior CntrSenior Center flooring 50,000$ 50,000$ Parks Comm Cntr Senior CntrSenior Center Concrete Dumpster Area 50,000$ 50,000$ Parks Comm Cntr Teen Cntr Teen Cntr (JCRP) roof replacement 85,000$ 85,000$ Parks Pools FAC Aquatic Cntr lifeguard shade structures 15,000$ 15,000$ Parks Pools FAC Aquatic Cntr convection oven 10,000$ 10,000$ Parks Park Mnt Quarry Upgrade Quarry backstop -$ Parks Park Mnt JCRPE JCPRE new maintenance facility 1,050,000$ 1,050,000$ Parks Park Mnt JCRPE JCRPE new LED lighting 900,000$ 900,000$ Parks Park Mnt JCRPE JCRPE Legion Field roof 14,000$ 14,000$ Parks Park Mnt Kelley Kelley Park Land Purchase Special Assess 22,556$ 22,556$ Pub Wrks Buildings CMF CMF building windows 9,500$ 9,500$ Pub Wrks Buildings CMF CMF vehicle hoists Bay #5 26,000$ 26,000$ Pub Wrks Buildings CMF Upgrade AccuBrine machine 35,400$ 35,400$ Pub Wrks Cemetery Cemetery Cemetery Master Plan improvmeents 25,000$ 25,000$ Pub Wrks Cemetery Cemetery Veterans Memorial area with flags 50,000$ 50,000$ Pub Wrks HVAC CMF CMF Parks/ Storage bldg unit heater #2 16,000$ 16,000$ Pub Wrks HVAC CMF CMF Police/ Storage bldg unit heater #1 15,500$ 15,500$ Pub Wrks HVAC CMF CMF Streets / Storage bldg unit heater #3 16,000$ 16,000$ Subtotal 38,000$ 962,900$ 6,277,000$ 22,556$ 215,000$ 75,000$ 900,000$ 8,490,456$ Capital Technology Info Tech Network Tech IT servers, networking, pc's, etc.105,000$ 105,000$ Info Tech Network Tech IT software & network licenses 175,000$ 175,000$ Info Tech Network Tech IT special projects 70,000$ 70,000$ Pub Wrks Software Tech Asset Management Citizen App 5,000$ 5,000$ 5,000$ 5,000$ 20,000$ Subtotal 355,000$ 5,000$ 5,000$ 5,000$ 370,000$ 47 City of Apple Valley Capital Improvements Program 2019-2023 2021 Projects Dept Division Site Project Name General Fund VERF Charges - (Internal Service Fund) Equip / VERF Expense Golf San. Sewer Utility Storm Drainage Utility Other Sources Total Funding Fleet Vehicles and Equipment (appendix B) Com Dev Code Fleet Code Enforcement VERF Charge 2,700$ 2,700$ Com Dev Code Fleet Code Enforcment vehicles & equipment -$ Fire Fleet Fire Fire vehicles & equipment 58,200$ 58,200$ Fire Fleet Fire Aerial truck replacement 915,400$ 915,400$ Fire Fleet Fire 800 Mhz radio replacement -$ -$ Fire Fleet Fire Fire VERF charge 407,800$ 407,800$ Muni Cntr Fleet Muni Cntr Municipal Center vehicles & equipment -$ Muni Cntr Fleet Muni Cntr Municipal Center VERF charge 2,760$ 2,760$ Parks Fleet Golf Valleywood cart lease annual payment 44,500$ 44,500$ Parks Fleet Golf Valleywood mower & equipment lease annual payment 83,450$ 83,450$ Parks Fleet Golf Valleywood vehicles & equipment 95,000$ 95,000$ Parks Fleet Park Mnt Parks Maint vehicles & equipment 279,000$ 279,000$ Parks Fleet Park Mnt Parks Maint VERF charge 242,620$ 242,620$ Police Fleet Patrol Police vehicles & equipment 345,500$ 345,500$ Police Fleet Patrol Police VERF charge 288,200$ 288,200$ Pub Wrks Fleet EngineeringEngineering vehicles & equipment -$ -$ Pub Wrks Fleet EngineeringEngineering VERF charge 10,770$ 10,770$ Pub Wrks Fleet Fleet Fleet Maint vehicles & equipment -$ -$ Pub Wrks Fleet Fleet Fleet Maint VERF charge 6,560$ 6,560$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment -$ -$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge 13,370$ 13,370$ Pub Wrks Fleet Nat Res Natural Resources vehicles & equipment -$ -$ Pub Wrks Fleet Nat Res Natural Resources VERF charge 4,730$ 4,730$ Pub Wrks Fleet Sewer Message Board # 427 19,200$ 19,200$ Pub Wrks Fleet Sewer Versa Vac # 403 57,400$ 57,400$ Pub Wrks Fleet Storm DU Storm Utility vehicles & equipment -$ Pub Wrks Fleet VanTech Anti-ice slide in unit for plow truck 16,000$ 16,000$ Pub Wrks Fleet F 08 Streets wire feed welder 9,500$ -9,500$ Pub Wrks Fleet Streets Streets vehicles & equipment 143,800$ 143,800$ Pub Wrks Fleet Streets Streets VERF charge 348,400$ 348,400$ Pub Wrks Fleet Utilities Water & Sewer vehicles & equipment -$ Pub Wrks Water Utilities 3/4 ton pick-ups #412, 414 77,000$ 77,000$ Subtotal 25,500$ 1,327,910$ 1,741,900$ 222,950$ 153,600$ 3,471,860$ Parks, Playgrounds, Paths, Open Space Parks Park Mnt Forests Park reforestation 10,000$ 10,000$ Parks Park Mnt Play Park play structure 130,000$ 130,000$ Parks Park Mnt JCRPW Park, JCRPW pickleball courts -$ Parks Park Mnt Fields Park, Tintah soccer field irrigation -$ Parks Park Mnt Park Park, Wildwood Tennis Courts 140,000$ 140,000$ Parks Park Mnt Park Park, upgrades to Parks builldings 50,000$ 50,000$ Parks Park Mnt Trails Park trail overlays 150,000$ 150,000$ 48 Subtotal 480,000$ -$ -$ -$ -$ -$ -$ 480,000$ Ponds, Natural Resources, and Environment Pub Wrks Storm DU Ponds Alimagnet Park/ Edgewood & Refleciton Rd improvements 30,000$ 30,000$ Pub Wrks Storm DU Ponds EVR-P7 & P55 outlet mods/ infiltration bench improvements 82,000$ 82,000$ 164,000$ Pub Wrks Storm DU Ponds Pond easement acquisition 50,000$ 50,000$ Pub Wrks Storm DU Ponds Regatta, JCRP & City Hall pond improvements 150,000$ 150,000$ 300,000$ Pub Wrks Storm DU Ponds Storm pond sediment removal 52,000$ 52,000$ Pub Wrks Storm DU Ponds Storm water monitoring improvements (Keller Lake)20,000$ 20,000$ Pub Wrks Storm DU Ponds Pennock Park improvments (LK-003-031)203,000$ 203,000$ Subtotal -$ -$ -$ -$ -$ 587,000$ 232,000$ 819,000$ 49 City of Apple Valley Capital Improvements Program 2019-2023 2021 Projects Dept Division Site Project Name General Fund Future Capital Projects Fund Special Assessments Water Utility San. Sewer Utility Storm Drainage Utility Street Light Utility Road Improvement MSA Maintenance MSA Construction Muncipal State Aid Dakota County Federal Funding Other Govt Total Funding Street and Utility Improvements Street reconstruction -$ Pub Wrks Street Imp SR 01 Street project G/F levy allocation 3,664,000$ (3,664,000)$ -$ Cimmaron Road Phase 2 844,000$ 891,000$ 704,000$ 16,000$ 2,252,000$ 4,707,000$ Pub Wrks Street Imp Street proj. 133rd St (Galaxie to Flagstaff)10,000$ 1,500,000$ 1,510,000$ Street overlay/resurfacing:-$ -$ Pub Wrks Street Imp SR 06 145th St (Pennock to Cedar)189,000$ 189,000$ 189,000$ Pub Wrks Street Imp SR 06 Pennock Lane (145th to 140th)500,000$ 500,000$ 500,000$ Pub Wrks Street Imp SR 06 140th St (Pennock to Cedar)420,000$ 420,000$ 420,000$ Pub Wrks Street Imp SR 07 Street microsurface/ crack sealing 600,000$ 600,000$ 600,000$ Pub Wrks Street Imp Annual Ring Route concrete repairs 50,000$ 50,000$ Pub Wrks Street Imp Cedar Ave/ Ring Route concrete & landscape 20,000$ 10,000$ 10,000$ 30,000$ Pub Wrks Street Imp ADA General Improvements 50,000$ 50,000$ Pub Wrks Street Imp HAWK traffic signal at Greenleaf on Galaxie 114,000$ 114,000$ 198,000$ 312,000$ Traffic Signal (Galaxie & 132nd)400,000$ 400,000$ 400,000$ Pub Wrks Street Imp SR 16 Cedar Ave. Entrance Monument 60,000$ 60,000$ Pub Wrks Street Imp Ring Route benches and trash bins 81,000$ 81,000$ Pub Wrks Street Imp Trail resurfacing 100,000$ 80,000$ 80,000$ 180,000$ Finance Finance Subdivision improvements 100,000$ 100,000$ Pub Wrks Street Imp Water main break street patching 50,000$ 50,000$ Subtotal 3,664,000$ 60,000$ 100,000$ 894,000$ 891,000$ 704,000$ 26,000$ 389,000$ 600,000$ 1,623,000$ 2,223,000$ 90,000$ 288,000$ 9,239,000$ Utility Infrastructure Preservation Pub Wrks Lights UI 05 Ring Route street light painting 17,000$ 17,000$ Pub Wrks Storm DU UI 07 General stormwater improvements 110,000$ 110,000$ Pub Wrks Storm DU Pilot Knob structural BMP device 160,000$ 40,000$ 40,000$ 200,000$ Pub Wrks Storm DU Fawn Ridge Court insulate water service line 25,000$ 25,000$ Pub Wrks Water UI 01 Well Maint Wells 7, 9, and 19 155,000$ 155,000$ Pub Wrks Water UI 02 WTP Pump Maint - HZP2 16,000$ 16,000$ Pub Wrks Water UI 03 Water Reservoir Maint Palomino 200,000$ 200,000$ Pub Wrks Water UI 04 Well 1 & 3 electrical upgrade 65,000$ 65,000$ Pub Wrks Water UI 05 Fiber network extension 40,000$ 40,000$ 80,000$ Pub Wrks Water UI 06 Gate valve replacements 30,000$ 30,000$ Pub Wrks Water UI 03 Pressure station rehab GVD & 137th St 100,000$ 100,000$ Pub Wrks Water UI 06 Water Reservoir Maint Quarry Pt 226,000$ 226,000$ Pub Wrks Water Fiber to Wells 8, 12, 13, Herald Way for SCADA 75,000$ 75,000$ Pub Wrks San Sewer Lift SCADA upgrade software, hardware, repeaters 250,000$ 250,000$ Pub Wrks San Sewer CIPP sanitary sewer townhome mains 146th St Crt 200,000$ 200,000$ Subtotal 907,000$ 490,000$ 295,000$ 17,000$ 40,000$ 40,000$ 1,749,000$ 50 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 2022 Projects 51 City of Apple Valley Capital Improvements Program 2019-2023 2022 Projects Dept Division Site Project Name General Fund Municipal Building Fund Future Capital Projects Fund Park Dedication Ice Arena Cemetery Fund Total Funding Building and Facility Improvements Tranfer from Future Capital to Municipal Building 225,000$ 225,000$ Fire Fire F Station Fire Station 2 HVAC replacement 50,000$ 50,000$ Fire Fire F Station Fire Station 2 apparatus bay floor 30,000$ 30,000$ Fire Fire F Station Fire Station 3 HVAC replacement 50,000$ 50,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center campus add PD garage 3,000,000$ 3,000,000$ Parks Arena AVSA Sports Arena bleacher replacement 100,000$ 100,000$ Parks Arena Hayes Hayes Arena access roade to refrigerator room 50,000$ 50,000$ Parks Arena Hayes Hayes Arena dasher boards 180,000$ 180,000$ Parks Comm Cntr Comm CntrCommunity Center entry doors 50,000$ 50,000$ Parks Comm Cntr Comm CntrCommunity Center meeting room audio/ visual 8,000$ 8,000$ Parks Comm Cntr Comm CntrCommunity Center roof sport court garage -$ Parks Comm Cntr Comm CntrCommunity Center basketball backboards 8,000$ 8,000$ Parks Comm Cntr Comm CntrCommunity Center Concrete Work 75,000$ 75,000$ Parks Comm Cntr Redwood Redwood flooring -$ Parks Comm Cntr Senior Cnt Senior Center banquet chairs and tables 15,000$ 15,000$ Parks Comm Cntr Senior Cnt Senior Center Garage & Storage Roof 26,000$ 26,000$ Parks Comm Cntr Senior Cnt Senior Center core water pumps 10,000$ 10,000$ Parks Comm Cntr Senior Cnt Senior Center concrete dumpster area -$ Parks Comm Cntr Senior Cnt Senior Center flooring (Kitchen)10,000$ 10,000$ Parks Pools FAC Aquatic Cntr improvements to concessions 15,000$ 15,000$ Parks Pools FAC Aquatic Center concessions appliances -$ Parks Pools FAC Aquatic Center play structure -$ Parks Pools FAC Aquatic Center rental cabanas 20,000$ 20,000$ Parks Pools FAC Aquatic Center shade canopies (2)15,000$ 15,000$ Parks Pools FAC Aquatic Center walk-in cooler 20,000$ 20,000$ Parks Pools Redwood Redwood pool funbrellas 10,000$ 10,000$ Parks Park Mnt Kelley Kelley Park Land Purchase Special Assess 14,480$ 14,480$ Pub Wrks Buildings CMF CMF small HVAC units 30,000$ 30,000$ Pub Wrks Buildings CMF CMF windows, doors, OH doors 40,000$ 40,000$ Pub Wrks Cemetery Cemetery Columbarium, footing, landscape design 100,000$ 100,000$ Pub Wrks Cemetery Cemetery Cemetery Master Plan improvmeents 30,000$ 30,000$ Subtotal 111,000$ 371,000$ 3,225,000$ 14,480$ 330,000$ 130,000$ 4,181,480$ Capital Technology Info Tech Network Tech IT servers, networking, pc's, etc.105,000$ 105,000$ Info Tech Network Tech IT software & network licenses 175,000$ 175,000$ Info Tech Network Tech IT special projects 70,000$ 70,000$ Subtotal 350,000$ 350,000$ 52 City of Apple Valley Capital Improvements Program 2019-2023 2022 Projects Dept Division Site Project Name General Fund VERF Charges - (Internal Service Fund) Equip / VERF Expense Golf Water Utility San. Sewer Utility Storm Drainage Utility Other Sources Total Funding Fleet Vehicles and Equipment (appendix B)-$ Com Dev Code Fleet Code Enforcement VERF Charge 2,780$ 2,780$ Com Dev Code Fleet Code Enforcment vehicles & equipment -$ Fire Fleet Fire Fire vehicles & equipment 90,800$ 90,800$ Fire Fleet Fire Fire 800 Mhz radios 227,300$ 227,300$ Fire Fleet Fire Fire VERF charge 418,000$ 418,000$ Muni Cntr Fleet Muni Cntr Municipal Center vehicles & equipment 28,700$ 28,700$ Muni Cntr Fleet Muni Cntr Municipal Center VERF charge 2,830$ 2,830$ Parks Fleet Golf Valleywood cart lease annual payment 44,500$ 44,500$ Parks Fleet Golf Valleywood mower & equipment lease annual payment 83,450$ 83,450$ Parks Fleet Golf Valleywood vehicles & equipment 120,000$ 120,000$ Parks Fleet Park Mnt Parks Maint vehicles & equipment 44,300$ 44,300$ Parks Fleet Park Mnt Parks Maint VERF charge 248,690$ 248,690$ Police Fleet Patrol Police vehicles & equipment 265,400$ 265,400$ Police Fleet Patrol Police VERF charge 295,400$ 295,400$ Pub Wrks Fleet EngineeringEngineering vehicles & equipment 27,700$ 27,700$ Pub Wrks Fleet EngineeringEngineering VERF charge 11,040$ 11,040$ Pub Wrks Fleet Fleet Fleet Maint vehicles & equipment 24,300$ 24,300$ Pub Wrks Fleet Fleet Fleet Maint VERF charge 7,540$ 7,540$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment -$ -$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge 13,770$ 13,770$ Pub Wrks Fleet Nat Res Natural Resources vehicles & equipment -$ -$ Pub Wrks Fleet Nat Res Natural Resources VERF charge 4,850$ 4,850$ Pub Wrks Fleet Sewer 3/4 ton pick-up (No. 409)38,500$ 38,500$ Pub Wrks Fleet Storm DU Storm Utility vehicles & equipment -$ Pub Wrks Fleet Streets Streets vehicles & equipment 644,500$ 644,500$ Pub Wrks Fleet Streets Streets VERF charge 363,800$ 363,800$ Pub Wrks Fleet Utilities Water extended cab pick-up (No. 416)38,500$ 38,500$ Subtotal 1,368,700$ 1,353,000$ 247,950$ 38,500$ 38,500$ -$ -$ 3,046,650$ Parks, Playgrounds, Paths, Open Space Parks Park Mnt JCRP Johnny Cake Ridge Park irrigation (phase 1 of 3)150,000$ 150,000$ Parks Park Mnt Park Park, Lac Lavon dock 75,000$ 75,000$ Parks Park Mnt Park Park, Pennock basketball court -$ Parks Park Mnt Park Park, Quarry Point pave storage yard -$ Parks Park Mnt Courts Park, Scott Park tennis court 100,000$ 100,000$ Parks Park Mnt Play Park, misc small park backstops -$ Parks Park Mnt Play Park, play structures (2)130,000$ 130,000$ Parks Park Mnt Trails Park, trail overlays 50,000$ 50,000$ Parks Park Mnt Trails Park, Greenway underpass trails 600,000$ 600,000$ Parks Park Mnt Park, reforestation 10,000$ 10,000$ Subtotal 515,000$ -$ -$ -$ -$ -$ -$ 600,000$ 1,115,000$ Ponds, Natural Resources, and Environment Pub Wrks Storm DU Ponds Greening Park pond improvements (Keller Lake)210,000$ 210,000$ 420,000$ Pub Wrks Storm DU Ponds Holyoke Pond & AL-P2.2 improvements (Alimagnet)300,000$ 300,000$ 600,000$ Pub Wrks Storm DU Ponds Pond easement acquisition 50,000$ 50,000$ Pub Wrks Storm DU Ponds Storm pond sediment removal 52,000$ 52,000$ Pub Wrks Storm DU Ponds Storm water monitoring improvements (Keller Lake)20,000$ 20,000$ Pub Wrks Storm DU Ponds WVW priority projects 150,000$ 150,000$ 300,000$ Subtotal -$ -$ -$ -$ -$ -$ 782,000$ 660,000$ 1,442,000$ 53 City of Apple Valley Capital Improvements Program 2019-2023 2022 Projects Dept Division Site Project Name General Fund Future Capital Projects Fund Special Assessments Water Utility San. Sewer Utility Storm Drainage Utility Street Light Utility Road Improvement Muncipal State Aid Other Govt Total Funding Street and Utility Improvements Street reconstruction Pub Wrks Street Imp Street project G/F levy allocation 3,801,000$ (3,801,000)$ -$ Pub Wrks Street Imp SR 04 Street proj, AV 3rd (Rdwd, Prk, Juniper)-$ Pub Wrks Street Imp Greenleaf 6th and 7th (Euclid/Eveleth Ct/139th St Ct) Phase 1 75,000$ 225,000$ 200,000$ 15,000$ 1,500,000$ 2,015,000$ Redwood Drive / Juniper Lane 369,000$ 389,500$ 307,500$ 10,000$ 984,000$ 2,060,000$ Street overlay/resurfacing:-$ Pub Wrks Street Imp SR 09 157th St (Cedar to Galaxie)436,000$ 436,000$ Hayes Rd (150th to 140th)769,000$ 769,000$ Gantry Ln, Gantry Ct, Genevan Ln, Safari Pass, 121st 1,000,000$ -$ 1,000,000$ Pub Wrks Street Imp SR 10 Street microsurface/ crack sealing 599,500$ 599,500$ Pub Wrks Street Imp Annual Ring Route concrete repairs 50,000$ 50,000$ Pub Wrks Street Imp CSAH 23 (Cedar)/140th ped overpass 600,000$ 3,400,000$ 4,000,000$ Pub Wrks Street Imp CSAH 33 (Diamond Path)/ 140th roundabout (city share only)563,000$ -$ 563,000$ Pub Wrks Street Imp CSAH 42 traffic signal/ intersection/ ped upgrades (city share only)3,324,000$ -$ 3,324,000$ Pub Wrks Street Imp CSAH 38 ATMS signal upgrades (city share only)162,000$ -$ 162,000$ Traffic Signal - 157th & JCRR 250,000$ 250,000$ Traffic Signal Cr 46 & JCRR 250,000$ 250,000$ Pub Wrks Street Imp Metro Red Liine bike and ped improvements 25,000$ 98,000$ 123,000$ ADA General Improvements 50,000$ 50,000$ Pub Wrks Street Imp Trail resurfacing 100,000$ 80,000$ 180,000$ Pub Wrks Street Imp Water main break street patching 50,000$ 50,000$ Subtotal 3,801,000$ 600,000$ 500,000$ 494,000$ 614,500$ 507,500$ 25,000$ (117,000)$ 5,878,500$ 3,578,000$ 15,881,500$ Utility Infrastructure Preservation Pub Wrks Lights UI 04 Ring Route street light painting 18,000$ 18,000$ Pub Wrks Storm DU UI 05 General stormwater improvements 110,000$ 110,000$ Pub Wrks Water UI 01 Well Maint Wells 3 and 17 150,000$ 150,000$ Pub Wrks Water UI 02 WTP Pump Maint - HZP3 16,000$ 16,000$ Pub Wrks Water UI 05 Fiber network extension 40,000$ 40,000$ 80,000$ Pub Wrks Water UI 06 Gate valve replacements 30,000$ 30,000$ Pub Wrks Water HZP add VFD 60,000$ 60,000$ Pub Wrks Water WTP additional cholrtainer 280,000$ 280,000$ Pub Wrks Water Palomino tower interior rehab 235,000$ 235,000$ Pub Wrks Water Well 4 nat gas eng heat exchanger rehab 25,000$ 25,000$ Pub Wrks Water Fiber to wells 4, 15,k 10, 11, 14 for SCADA 75,000$ 75,000$ Pub Wrks Storm DU Hunters Wood storm lift control panel upgrade 40,000$ 40,000$ Pub Wrks Storm DU Farquar storm lift station rehab 900,000$ 900,000$ Pub Wrks San Sewer CIPP sanitary sewer townhome mains 143rd St Crt 200,000$ 200,000$ Subtotal 911,000$ 240,000$ 1,050,000$ 18,000$ 2,219,000$ 54 CITY OF APPLE VALLEY CAPITAL IMPROVEMENTS PROGRAM 2019-2023 2023 Projects 55 City of Apple Valley Capital Improvements Program 2019-2023 2023 Projects Dept Division Site Project Name General Fund Municipal Building Fund Future Capital Projects Fund Park Dedication Ice Arena Cemetery Fund Total Funding Building and Facility Improvements Tranfer from Future Capital to Municipal Building 232,000$ 232,000$ Tranfer from Future Capital to Road Improvement 227,000$ 227,000$ Muni Cntr Muni Cntr Muni Cntr Municipal Center roof replacement 144,000$ 144,000$ Parks Comm Cntr Comm CntrElectronic Signage -$ Parks Comm Cntr Comm CntrAVCC Gym Ceiling Fans 27,000$ 27,000$ Parks Comm Cntr Comm CntrAVCC Maintenance Equipment (Scrubbers/vacuums)10,000$ 10,000$ Parks Comm Cntr Senior Cnt Senior Center - Irrigation 7,000$ 7,000$ Parks Comm Cntr Senior Cnt Senior Center - Flooring (Denali and Sequia Rooms)10,000$ 10,000$ Parks Comm Cntr Senior Cnt Senior Center - Yellowstone Room Carpet -$ Parks Comm Cntr Senior Cnt Senior Center - Heat Pumps 50,000$ 50,000$ Parks Park Mnt JCRPE Teen Center (JCRP) Roof -$ Parks Park Mnt Galaxie PKPark Building Reconstruction 200,000$ 200,000$ Parks Park Mnt Huntington Sewer Connection 300,000$ 300,000$ Parks Park Mnt Quarry Upgrade Quarry backstop 60,000$ 60,000$ Parks AVFAC AVFAC Lifegaurd Sun Shades 10,000$ 10,000$ Parks Arena AVSA AVSA skate sharpener replacement 20,000$ 20,000$ Parks Arena Hayes Hayes refrigeration plant replacement 400,000$ 400,000$ Pub Wrks Buildings -$ Pub Wrks Buildings -$ Pub Wrks Cemetery Emergency services/ police memorial 30,000$ 30,000$ Pub Wrks Cemetery Master Plan improvements 50,000$ 50,000$ Subtotal 80,000$ 438,000$ 459,000$ 300,000$ 420,000$ 80,000$ 1,777,000$ Capital Technology Info Tech Network Tech IT servers, networking, pc's, etc.105,000$ 105,000$ Info Tech Network Tech IT software & network licenses 175,000$ 175,000$ Info Tech Network Tech IT special projects 70,000$ 70,000$ Subtotal 350,000$ -$ -$ -$ -$ -$ 350,000$ 56 City of Apple Valley Capital Improvements Program 2019-2023 2023 Projects Dept Division Site Project Name General Fund VERF Charges - (Internal Service Fund) Equip / VERF Expense Golf Storm Drainage Utility Other Sources Total Funding Fleet Vehicles and Equipment (appendix B) Com Dev Code Fleet Code Enforcement VERF Charge 2,860$ 2,860$ Com Dev Code Fleet Code Enforcment vehicles & equipment -$ Fire Fleet Fire Fire vehicles & equipment 34,800$ 34,800$ Fire Fleet Fire Fire 800 Mhz radios 227,300$ 227,300$ Fire Fleet Fire Fire VERF charge 428,450$ 428,450$ Muni Cntr Fleet Muni Cntr Municipal Center vehicles & equipment -$ Muni Cntr Fleet Muni Cntr Municipal Center VERF charge 2,900$ 2,900$ Parks Fleet Golf Valleywood cart lease annual payment 44,500$ 44,500$ Parks Fleet Golf Valleywood mower & equipment lease annual payment 27,385$ 27,385$ Parks Fleet Golf Valleywood vehicles & equipment 125,000$ 125,000$ Parks Fleet Park Mnt Parks Maint vehicles & equipment 230,400$ 230,400$ Parks Fleet Park Mnt Parks Maint VERF charge 254,910$ 254,910$ Police Fleet Patrol Police vehicles & equipment 75,700$ 75,700$ Police Fleet Patrol Police VERF charge 302,800$ 302,800$ Pub Wrks Fleet EngineeringEngineering vehicles & equipment 27,200$ 27,200$ Pub Wrks Fleet EngineeringEngineering VERF charge 11,320$ 11,320$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment -$ -$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge 8,670$ 8,670$ Pub Wrks Fleet InspectionsBuilding Inspections vehicles & equipment 26,900$ 26,900$ Pub Wrks Fleet InspectionsBuilding Inspections VERF charge 14,180$ 14,180$ Pub Wrks Fleet Nat Res Natural Resources vehicles & equipment 26,900$ 26,900$ Pub Wrks Fleet Nat Res Natural Resources VERF charge 4,970$ 4,970$ Pub Wrks Fleet Streets Streets vehicles & equipment 663,000$ 663,000$ Pub Wrks Fleet Streets Streets VERF charge 381,990$ 381,990$ Pub Wrks -$ Subtotal 1,413,050$ 1,312,200$ 196,885$ 2,922,135$ Parks, Playgrounds, Paths, Open Space Parks Park Mnt Play Park, play structures (2)130,000$ 130,000$ Parks Park Mnt Trails Park, trail overlays 50,000$ 50,000$ Parks Park Mnt Parks Park, Quarry Point pave storage yard 75,000$ 75,000$ Parks Park, JCRP - Irrigation (phase 2 of 3)300,000$ 300,000$ Parks Park Mnt Trails Park, Tintah soccer field irrigation 100,000$ 100,000$ Parks Park Mnt Trails Park, Greenway underpass trails 600,000$ 600,000$ Parks Park Mnt Park, reforestation 10,000$ 10,000$ Subtotal 665,000$ 665,000$ Ponds, Natural Resources, and Environment Pub Wrks Storm DU Ponds Pond easement acquisition 50,000$ 50,000$ Pub Wrks Storm DU Ponds Storm pond sediment removal 52,000$ 52,000$ Pub Wrks Storm DU Ponds Storm pond monitoring improvements (Keller Lake)20,000$ 20,000$ 57 Pub Wrks Storm DU Ponds Outlet modifications EVR P-1, P-2 (Long/Farquar)25,000$ 25,000$ Pub Wrks Storm DU Ponds Whitney Pond expansion (Keller)750,000$ 100,000$ 850,000$ Pub Wrks Storm DU Ponds WVW priority projects 150,000$ 150,000$ 300,000$ Subtotal 1,047,000$ 250,000$ 1,297,000$ 58 City of Apple Valley Capital Improvements Program 2019-2023 2023 Projects Dept Division Site Project Name General Fund Future Capital Projects Fund Water Utility San. Sewer Utility Storm Drainage Utility Street Light Utility Road Improvement Muncipal State Aid Other Govt Total Funding Street and Utility Improvements Street reconstruction Pub Wrks Street Imp Street project G/F levy allocation 3,953,000$ (3,953,000)$ -$ Pub Wrks Street Imp Street Proj. Garden View Dr.-$ Pub Wrks Street Imp Greenleaf 6th & 7th Ph.2 (138th Ct.,Upper 138th Ct,136th St. Ct)75,000$ 225,000$ 200,000$ 15,000$ 1,500,000$ 2,015,000$ Pub Wrks Street Imp 142nd St. (Cedar to Galaxie)50,000$ 50,000$ 100,000$ 15,000$ 1,040,000$ 1,255,000$ AV 3rd Walnut Ln (Elm Dr.- Park Ln) Edwood Ln, Park Ln.540,000$ 570,000$ 450,000$ 15,000$ 1,440,000$ 3,015,000$ -$ Street overlay/resurfacing:-$ 127th St (Cedar to Galaxie)50,000$ 600,000$ 650,000$ Pub Wrks Street Imp Street Microsurface/Crack sealing 600,000$ 600,000$ -$ Cedar /147th St Overpass 400,000$ 4,000,000$ 4,400,000$ Pub Wrks Street Imp Street Overlay/Resurfacing -$ Pub Wrks Street Imp Annual Ring Route concrete repairs 50,000$ 50,000$ Pub Wrks Street Imp Trail resurfacing 100,000$ 80,000$ 180,000$ ADA General Improvements 50,000$ 50,000$ Pub Wrks Street Imp Water main break street patching 50,000$ 50,000$ Subtotal 3,953,000$ 400,000$ 715,000$ 845,000$ 750,000$ 95,000$ 227,000$ 1,200,000$ 4,080,000$ 12,265,000$ Utility Infrastructure Preservation Pub Wrks Lights Ring Route Street Light Repainting 18,000$ 18,000$ Pub Wrks Water UI 01 Well Maint Wells 5,10 and 14 150,000$ 150,000$ Pub Wrks Water UI 02 WTP Pump Maint - HZP1 16,000$ 16,000$ Pub Wrks Water UI 05 Fiber network extension 40,000$ 40,000$ 80,000$ Pub Wrks Water UI 06 Gate valve replacements 30,000$ 30,000$ Pub Wrks Water Fiber to Wells 5,6,7 for SCADA 75,000$ 75,000$ Pub Wrks Water Nordic & Valleywood Towers Wash & Inspect 20,000$ 20,000$ Pub Wrks Water Lost GV Install 42/Granada & 42/Dundee 50,000$ 50,000$ Pub Wrks Water Longridge Corrosion 900,000$ 900,000$ Pub Wrks Water Loop Watermain 100,000$ 100,000$ Pub Wrks San Sewer CIPP Sanitary Townhome Mains 142nd St Ct 200,000$ 200,000$ Pub Wrks Storm DU UI 05 General stormwater improvements 110,000$ 110,000$ Pub Wrks Storm DU Belmont Storm Lift Control Panel Upgrade 40,000$ 40,000$ Subtotal 1,381,000$ 240,000$ 150,000$ 18,000$ 1,789,000$ 59 APPENDIX A STREET OVERLAY AND RECONSTRUCTION SCHEDULE 2019-2023 60 Pavement Management Program The City of Apple Valley is responsible for maintaining 180 centerline miles, or approximately 418 lane miles, of city streets within its boundaries. A variety of methods are used to preserve street pavement and maximize the service life of existing streets. The city uses preservation practices such as overlays, micro surfacing, seal coating, and crack sealing for asphalt pavements. While preservation practices help to significantly extend the service life of pavement, eventually there is a diminishing return on investment. All streets will eventually need to be reconstructed as part of an ongoing maintenance program. The street system in Apple Valley grew rapidly with development beginning in the 1960s. During the 15 year period between 1967 and 1982, approximately 80 miles of city streets were constructed throughout the community. The service life for an asphalt street constructed in the 1960s or 1970s is commonly assumed to be about 45 years. The City currently has approximately five miles of streets reaching the end of the anticipated 45-year service life each year. The City monitors pavement conditions of the street system through field inspections and the use of pavement condition ratings. The ASTM D6433 rating system is used to assign pavement condition ratings to 25 percent of the total pavement mileage each year. This pace allows the City to update pavement conditions for all street segments on a four year cycle. Pavement condition rating information is entered into the City’s pavement management software. The pavement management software serves two important functions for managing the condition of city streets. First, the software is used to calculate an “Overall Condition Index” providing a single broad-scale measurement of the whole street system. Second, the software is used to forecast the Overall Condition Index of the street system in future years based on the amount of investment provided in the Capital Improvement Program. This forecast process provides a valuable tool for use by the City Council and staff to evaluate the appropriate level of investment in maintaining the street system. The City has established a goal of maintaining an Overall Condition Index score of 73 out of a possible 100 points. The current Overall Condition Index for the street system is 73 for the year 2018. Based on the amount of investment identified in the 2019 – 2023 Capital Improvement Program, the Overall Condition Index for the street system is forecasted to remain within two points (+/-) of the 73 target over the next five years. 61 CAPITAL IMPROVEMENT PROGRAM Path: S:\public-works\private\Administration PW\Budget & CIP\CIP\2019 CIP (2019-2023)\GIS\2019-2023\2019-2023 CIP Areas_w_mileage.mxd Project areas are preliminary and subjectto change based on available funding. 5/29/2019 2019 - 2023 0 1,250 2,500 3,750 5,000625Feet I IMPROVEMENT TYPE STREET & UTILITY RECONSTRUCTION STREET RECONSTRUCTION STREET MILL & OVERLAY >TRAFFIC SIGNAL CONSTRUCTION STREET & UTILITY IMPROVEMENTAREAS MILEAGE BY YEAR / IMPROVEMENT TYPE 2019 Improvement Area 2020 Improvement Area 2021 Improvement Area 2022 Improvement Area 2023 Improvement Area - Street & Utility (Combined)- Street Mill & Overlay 2.26 Miles0.53 Miles 2.74 Miles0.18 Miles 1.78 Miles2.85 Miles- Street & Utility (Combined)- Street Mill & Overlay 1.48 Miles1.15 Miles- Street & Utility (Combined)- Street Mill & Overlay 1.19 Miles3.29 Miles- Street & Utility (Combined)- Street Mill & Overlay - Street & Utility (Combined)- Street Mill & Overlay 2.92 Miles 4.63 Miles 2.63 Miles 4.48 Miles 2.79 Miles + + + + + 62 CAPITAL IMPROVEMENT PROGRAM Path: S:\public-works\private\Administration PW\Budget & CIP\CIP\2019 CIP (2019-2023)\GIS\2019-2023\2019-2023 CIP Areas_MICRO_w_mileage.mxd Project areas are preliminary and subjectto change based on available funding. 5/29/2019 2019 - 2023 0 1,250 2,500 3,750 5,000625Feet I IMPROVEMENT TYPE MICRO SURFACE MILEAGE BY YEAR / IMPROVEMENT TYPE 2019 Improvement Area 2020 Improvement Area 2021 Improvement Area 2022 Improvement Area 2023 Improvement Area PAVEMENT PRESERVATION Micro Surface - 4.56 Miles Micro Surface - 5.68 Miles Micro Surface - 3.76 Miles Micro Surface - 3.29 Miles Micro Surface - 6.79 Miles 63 APPENDIX B VEHICLE AND EQUIPMENT REPLACEMENT SCHEDULE 2019-2023 64 Introduction A major portion of the City’s capital outlays is derived from vehicle and equipment replacements. This report is a replacement schedule, listing each individual vehicle or major piece of equipment owned by the City of Apple Valley. The Replacement Schedule serves three main functions: 1) The Replacement Schedule accounts for the City’s vehicle and equipment purchases. The CIP lists only department summary totals of expenditures for vehicles and pieces of equipment. 2) The Replacement Schedule provides additional information concerning the condition of vehicles and equipment. For each vehicle or piece of equipment, the Replacement Schedule provides the production date, the cost to the City at the time of purchase, the expected useful life-span, the scheduled date of replacement, and the expected cost of replacement. Replacement dates are based on detailed examination of each individual vehicle or piece of equipment and determination of its likely remaining useful life. 3) The Replacement Schedule provides a comprehensive plan for vehicle and equipment replacement within each department. Purchases in one year may greatly affect purchases in the next. The Schedule is a budgeting tool that helps departments budget for long-term capital outlays. The Replacement Schedule includes the budgeted purchases for the current year, as well as future purchases projected over the next five years. It does not include funding sources for these purchases. However, the funding sources can be found in the vehicle and equipment tables within the CIP. 65 Replacement Criteria The City’s practice is to replace vehicles and equipment when the Fleet Maintenance Division determines that it is cost prohibitive to keep the vehicle and pay for repairs. Since the CIP is a five-year projection, it is challenging for Fleet Maintenance to determine exactly when a particular vehicle or piece of equipment is in need of replacement. Many variables such as design and production properties of individual vehicle models, extent of use of the vehicle, and severity of use while in the City’s fleet determine the useful life-span of a vehicle. Thus, for example, a sedan used by the Police Department for patrol may only be useful for four years, while the same model may be useful to Building Inspections for eight years. The Fleet Maintenance Division has established guidelines or replacement standards for the expected useful life of various vehicles and equipment. Vehicles are scheduled for replacement in the CIP and Replacement Schedule in the year that departments project the vehicles will meet the standards established in the guidelines. However, prior to the annual budgeting process, the Fleet Maintenance Division evaluates each vehicle and piece of equipment scheduled for replacement that year. If the Fleet Maintenance Division evaluates the vehicle and determines that it can continue to be used cost effectively, the vehicle will remain in service even if it exceeds the replacement criteria. Similarly, if a vehicle does not meet the replacement criteria, but the Fleet Maintenance Division evaluates the vehicle and determines that it is cost prohibitive to continue using the vehicle, a replacement will be requested in the operating budget. Thus, the CIP serves as a general planning document and may vary from actual proposed annual budgets. Appendix B: Vehicle and Equipment Sheets Appendix B lists all of the vehicles in the City’s fleet, sorted by Department and with projected expenditures for vehicle replacements. Appendix B also lists all of the significant equipment items used by the City, sorted by Department and with projected expenditures for vehicle replacements. Below is a brief description of the different City Departments/ Division and the types of fleet and equipment uses they have. 66 Fire Department The Fire Department uses three types of vehicles--fire-fighting vehicles which are used for emergency response and should be replaced with similar models; vehicles used by the fire officers that are used for daily use as well as for emergency response; and vehicles used to transport fire fighters to training drills. The fire department also has water emergency equipment. The VERF for the Fire Department includes four expensive groups of equipment that will need to be replaced in the coming years; these include the Self Contained Breathing Apparatus, Thermal Imagers, hydraulic rescue tools and 800 Mhz radios. The strategy of including this equipment in the VERF is to level out the budgetary impacts in the coming years. Liquor Operations The Liquor Operations division is an enterprise operation and has its own funding sources. Parks Maintenance The Park and Recreation Department requires many vehicles and much equipment to maintain the City’s parks and facilitate the City’s recreation programs. Parks and Recreation / Golf Operations The Park and Recreation Department also maintains the City’s 18 hole golf course. The needs of the golf course are quite different from the needs of regular park maintenance. The golf course is an enterprise operation and has its own funding sources. Arena Operations The City runs two ice arenas under the Park and Recreation Department. During the spring and summer, special surfaces placed on the floors of the arenas to create indoor tennis courts. The Arena Operations division is an enterprise operation and has its own funding sources. Pool and Aquatic Park Operations The City runs one pool and aquatic park under the Park and Recreation Department. During the summer, both operations are in full use. The Pool and Aquatic Park Operations are not an enterprise operation and are part of the General Fund programs. 67 Police Department The Police Department vehicles, aside from the squad cars, are used for the sergeants, investigators, and captains. Public Works Inspections, Natural Resources, & City Hall The Public Works Department vehicles in this section are used for three different functions--building inspections, natural resources, and general purpose. The building inspectors use their vehicles to make on-site inspections. The forester uses a vehicle for on-site work. The general-purpose vehicle is shared by many other City departments. Fleet Maintenance The Fleet Maintenance division of the Public Works Department is responsible for the maintenance of the City’s buildings, vehicles, and equipment. Streets The Streets division of the Public Works Department is responsible for the maintenance of the City’s street-scape and storm sewer system. The responsibilities of this department include patching the roads in the summer and plowing in the winter. Utilities The Utilities division of the Public Works Department is responsible for the maintenance of the City’s water and sanitary sewer operations. The Utilities division is an enterprise operation and has its own funding sources. Stormwater The Streets division of the Public Works Department is responsible for the maintenance of the City’s stormwater sewer operations. The Stormwater operation is an enterprise operation and has its own funding sources. 68 TARGET REPLACEMENT CYCLES VEHICLE CATEGORIES AGE MILES OR HOURS Administrative/Inspection Sedan 10 100,000 Pickup 10 100,000 Vans (mini & multi-passenger) 10 100,000 Specialty Light Duty Pickup 2-wheel drive 10 100,000 Bronco/Blazer 10 100,000 Utility Van 10 100,000 Park Mowers 10 Boulevard Mowers 5 Medium Duty Utility Truck 10 100,000 4x4 Pickup 10 100,000 1-ton Dump Truck 10 100,000 Skidsteer (Bobcat) 10 4,000 Hrs. Fire Rescue or Grass Rig 15 Does Not Apply Heavy Duty Single Axle Dump Truck 12 80,000 Tandem Axle Dump Truck 12 80,000 Front End Loader 20 10,000 Hrs. Tractor Backhoe 15 6,000 Hrs. Sweeper 15 6,000 Hrs. Jetter 12 Does Not Apply Tanker/Flusher 20 8,000 Hrs. Sewer Vac 8 Does Not Apply Fire Apparatus (Engines / Ladders) 21 Does Not Apply Police Investigation 10 100,000 Police Patrol 10 100,000 69 Vehicle & Equipment Replacement Fund COMMUNITY DEVELOPMENT - CODE ENFORCEMENT (7410) Target Estimated Future Repacement Cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 696 2014 GMC ½ Ton Ext. Cab 4X4 Truck 12 2014 2026 26,027 27,900 7,000 - - - - - TOTALS 26,027 27,900 - - - - - Number of Active Assets 2019 2020 2021 2022 2023 Beg Cash Balance 5,607 8,231 10,974 13,839 16,826 VERF Charges Rec'd 3% 2,540 2,620 2,700 2,780 2,860 Purchases - - - - - Trade in rec'd - - - - - Interest Earnings 1.50% 84 123 165 208 252 End Cash Balance 8,231 10,974 13,839 16,826 19,939 70 Vehicle & Equipment Replacement Fund General Government (7410) Target Estimated Future Replacement Cost Per year CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 1201 2012 Chev Traverse 10 2012 2022 25,000 26,000 5,000 - - - 28,700 - TOTALS 25,000 26,000 - - - 28,700 - Number of Active Assets 2019 2020 2021 2022 2023 Beg Cash Balance 13,607 16,431 19,367 22,418 1,884 VERF Charges Rec'd 2,620 2,690 2,760 2,830 2,900 Purchases - - - 28,700 - Trade in rec'd - - - 5,000 - Interest Earnings 2% 204 246 291 336 28 End Cash Balance 16,431 19,367 22,418 1,884 4,812 71 Vehicle & Equipment Replacement Fund POLICE DEPARTMENT (7400) Target Estimated Trade in future replacement cost CITY Replace 2019 Value 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase NUMBER MAKE/MODEL MILEAGE Years Year Year Cost Price 901 2014 Ford Explorer 79832 6 2014 2020 32,550 47,000 4,000 - 49,400 - - - 902 2014 Ford Explorer 55741 8 2013 2021 31,100 47,000 4,000 - - 50,600 - - 903 2015 Ford Explorer 55541 6 2015 2022 33,000 47,000 3,500 - - - 51,900 - 904 # 2013 Ford Police Interceptor 81339 6 2012 2020 29,400 47,000 3,500 - 28,400 - - - 905 2014 Ford Police Interceptor 60227 6 2014 2020 33,000 47,000 3,500 - 49,400 - - - 906 2013 Ford Police Interceptor 43816 8 2013 2022 20,590 47,000 3,000 - - - 51,900 - 907 2015 Ford Explorer 72898 7 2014 2021 37,000 47,000 4,000 - - 50,600 - - 908 2013 Ford Police Interceptor 52053 8 2012 2020 31,100 47,000 3,500 - 49,400 - - - 909 2015 Ford Explorer 71380 5 2016 2021 37,000 47,000 4,000 - - 50,600 - - 910 2015 Ford Explorer 70498 6 2014 2020 37,000 47,000 4,000 - 49,400 - - - 911 2017 Ford Explorer 6600 6 2018 2024 24,238 47,000 3,500 - - - - - 912 2013 Ford Police Interceptor 66397 9 2012 2021 31,100 47,000 3,500 - - 50,600 - - 913 2014 Ford Police Interceptor 65555 8 2013 2021 32,550 47,000 3,500 - - 50,600 - - 914 2015 Ford Police Interceptor 64157 6 2015 2021 17,358 47,000 3,000 - - 50,600 - - 915 2014 Ford Explorer 88659 6 2013 2019 32,550 47,000 4,000 48,200 - - - - 916 2014 Ford Explorer 91091 6 2013 2019 29,400 47,000 4,000 48,200 - - - - 917 2013 Ford Explorer 91100 6 2013 2019 32,550 47,000 4,000 48,200 - - - - 918 2014 Ford Explorer 79835 6 2014 2020 32,550 47,000 4,000 - 49,400 - - - 919 2013 Ford Explorer 93753 6 2013 2019 32,550 47,000 4,000 48,200 - - - - 920 2014 Ford Explorer (K-9)92333 5 2014 2019 24,216 54,000 4,000 10,400 - - - - 921 # 2013 Ford Police Interceptor 78383 6 2012 2020 24,238 47,000 3,500 - 28,400 - - - 922 2017 Ford Explorer (K-9)11874 6 2018 2024 31,100 54,000 3,500 - - - - - 931 2015 Chev Traverse (invest.)35692 10 2015 2025 27,454 30,000 5,000 - - - - - 932 # 2016 Ford Police Interceptor (invest.) 18197 6 2016 2022 31,100 27,000 5,000 - - - 29,800 - 933 2012 Dodge Caravan (invest.)44883 10 2012 2022 25,750 25,000 5,000 - - - 27,600 - 944 ** 2017 Ford Explorer (admin.)26260 8 2017 2025 31,100 47,000 3,500 - - - - - 945 # 2016 Ford Police Interceptor (invest.) 9730 6 2016 2022 31,100 27,000 5,000 - 10,000 - 29,800 - 946 ** 2017 Ford Explorer (admin.)21569 8 2016 2024 31,100 47,000 3,500 - - - - - 947 ** 2017 Ford Police Interceptor (admin.) 6123 8 2013 2022 31,100 47,000 3,500 - - - 51,900 - 948 2015 Ford Police Interceptor (invest.) 22718 8 2015 2023 15,600 47,000 3,000 - 10,000 - - 53,200 960 2011 GMC 1/2 Ton 4-WD Pickup (CSO) 100000 7 2011 2018 24,500 35,000 5,000 35,000 - - - - 963 2016 GMC 1/2 Ton 4-WD Pickup (CSO) 39726 8 2016 2024 27,246 35,000 5,000 - - - - - 800 Mhz Radios-Portable (65)8 2008 2016 328,000 328,000 - - - - 800 Mhz Radios-Mobile (30)8 2008 2016 112,500 - 22,500 22,500 22,500 22,500 972 1997 Radar Trailer #1 20 1997 2020 14,468 18,000 500 - 18,900 - - - 973 2001 Radar Trailer #2 (Mod. 5700)20 2001 2021 11,920 18,000 1,000 - - 19,400 - - TOTALS 968,578 1,891,500 566,200 365,200 345,500 265,400 75,700 Estimated replacment cost includes tax, license, equipment & set-up cost. ** First 3 years Admin, last 5 years Patrol # Investigation Vehicle to be replaced with Civilian vehicle 2019 2020 2021 2022 2023 Beg Cash Balance 420,352 118,677 43,757 10,114 65,266 VERF Charges Rec'd 238,220 262,000 288,200 295,400 302,800 Purchases 566,200 365,200 345,500 265,400 75,700 Trade in rec'd 20,000 26,500 23,000 25,000 3,000 1.50%Interest Earnings 6,305 1,780 656 152 979 End Cash Balance 118,677 43,757 10,114 65,266 296,344 72 Vehicle & Equipment Replacement Fund FIRE DEPARTMENT (7405) Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 4971 2014 Ford Explorer 10 2014 2024 38,664 41,100 3,000 - - - - - 4972 2012 Ford Explorer 10 2012 2022 38,591 41,100 3,000 - - - 45,400 - 4974 2012 Ford Explorer 10 2012 2022 38,591 41,100 3,000 - - - 45,400 - 4976 2014 Ford Explorer 10 2014 2024 38,491 41,100 3,000 - - - - - 4980 2000 HME Fire Aerial Ladder Truck 21 2000 2021 438,398 850,000 60,000 - - 915,400 - - 4981 2003 Spartan Fire Pumper 1250 GPM/500gal.21 2003 2024 339,525 510,000 40,000 - - - - - 4982 2007 Spartan Fire Aerial Ladder Truck 21 2007 2028 584,393 850,000 60,000 - - - - - 4983 2010 Spartan Fire Pumper 1500 GPM/500gal.21 2010 2031 454,079 510,000 40,000 - - - - - 4987 #1991 Spartan Fire Pumper 1250 GPM/500gal 25 1991 2018 495,370 510,000 20,000 - - - - - 4984 2014 Spartan Fire Pumper 1250 GPM/500gal 21 2014 2035 495,944 510,000 20,000 - - - - - 4985 2015 Spartan Fire Pumper 1250 GPM/500 gal 21 2016 2037 495,370 510,000 40,000 - - - - - 4990 1992 Chev Step Van 26 1992 2019 23,932 266,500 3,000 273,200 - - - - 4991 2012 Chev Colorado Pickup 10 2013 2023 36,046 30,750 3,000 - - - - 34,800 4992 2017 GMC Sierra K2500 Crew Cab Pickup 15 2017 2032 30,400 35,000 5,000 - - - - - 4993 2002 Chev K2500 Crew Cab Pickup 16 2002 2019 26,375 30,800 3,000 31,600 - - - - 4995 #2006 Ford F-350 4-WD (grass rig – Sta.2)12 2006 2018 24,606 - - - - - 4997 2006 Chev K2500 Crew Cab Pickup 15 2006 2021 25,669 28,000 5,000 - - 30,200 - - 4975 2015 Zodiac /Evenrude Boat & Trailer 15 2015 2030 14,975 15,500 1,000 - - - - - 4995_ Rescue / Initial Attack truck (replaces 4995& 4987) see # above 10 2018 2019 266,500 273,200 - - - - eq 800 Mhz Radio (63)10 2008 2021 422,100 - - - 227,300 227,300 eq Hydraulic Rescue tools 15 2005 2020 90,000 - 94,600 - - - eq SCBA (51 packs/120 bottles)10 2008 2019 314,000 358,800 - - - - eq Thermal Imagers 7 2012 2019 70,000 71,800 - - - - New Fire Engine Station #4 0 - - - - - 4973 2005 Pace Am Sprinkler Trailer 15 2006 2021 5,013 26,000 2,000 - - 28,000 - - TOTALS 3,644,432 6,009,550 314,000 1,008,600 94,600 973,600 318,100 262,100 Number of Active Assets 2019 2020 2021 2022 2023 Beginning Cash Balance 906,434 265,614 565,602 71,043 178,757 Annual Charge 2.50% 353,100 388,400 407,800 418,000 428,450 Annual Expenditures 1,008,600 94,600 973,600 318,100 262,100 Trade in Value 6,000 - 67,000 6,000 3,000 Interest earnings 1.5% 8,680 6,188 4,241 1,815 3,929 Ending Cash Balance 265,614 565,602 71,043 178,757 352,036 73 Vehicle & Equipment Replacement Fund PARKS DEPARTMENT (7430) Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value Light Duty Pickups 224 2016 Dodge 1/2 Ton Pickup 10 2016 2026 19,677.00 20,170 1,500 - - - - - 225 2014 Ford ¾ Ton Quad Cab Pickup 10 2014 2024 23,031.00 24,800 3,000 - - - - - 226 2009 Ford F250 3/4 Ton Pickup 10 2009 2019 17,391.00 25,850 1,500 26,500 - - - - 227 2016 Ford 3/4 Ton Pickup (4-WD)10 2016 2026 28,000.00 28,700 3,000 - - - - - 228 2015 Ford F250 ¾ Ton Pickup (4-WD) w/ 8’6" Pro-Plow 10 2015 2025 30,550.00 32,000 4,000 - - - - - 231 2013 Ford F250 ¾ Ton Pickup 10 2013 2023 19,000.00 21,000 1,500 - - - - 23,800 233 2003 Ford E-350 Van (Puppet Van)12 2003 2018 18,366.00 22,000 1,500 - - - - - 235 2016 Ford F250 Pickup 10 2016 2026 25,000.00 25,625 1,500 - - - - - 236 #1989 Chev. K3500 4-WD Pickup (grass rig)1989 1989 13,737.00 3,500 - - - - - 241 2011 Dodge 1/2 Ton Pickup 10 2011 2021 18,662.00 20,170 1,500 - - 21,700 - - 243 2010 Dodge 3/4 Ton Pickup (4-WD) w/7.5’ Boss Plow 10 2010 2020 19,646.00 22,000 7,000 - 23,100 - - - 247 2017 Ford F250 ¾ Ton Pickup 10 2017 2027 28,700.00 29,400 1,500 - - - - - 248 2008 Ford F250 ¾ Ton Pickup (4-WD)10 2008 2018 21,630.00 25,500 1,500 - - - - - Heavy Duty Trucks 229 2012 Ford F-350 4-WD 1 Ton Dump Box 10 2012 2022 37,800.00 40,100 7,000 - - - 44,300 - 230 2014 Ford 1 Ton Drop Side Dump Truck (4-WD) 9’ Unimount Pro-Plus Plow 10 2014 2024 33,177.00 40,100 7,000 - - - - - 237 2008 Ford F350 1 Ton Dump Truck (4-WD) -replace with F450 10 2008 2018 34,500.00 45,300 5,000 - - - - - 238 2016 Ford F450 1-1/2 Ton Dump Truck (4-WD)10 2016 2026 44,223.00 45,300 7,000 - - - - - 240 2008 Isuzu Trash Truck 10 2008 2018 70,233.00 87,700 8,000 - - - - - 246 2017 Ford F350 1 Ton Dump Truck (4-WD)10 2017 2027 41,708.00 42,750 18,000 - - - - - 249 2014 Ford 1 Ton Drop Side Dump Truck (4-WD) 9’ Plow 10 2014 2024 33,177.00 40,100 7,000 - - - - - 250 2014 Ford 1 Ton Drop Side Dump Truck (4-WD) 9’ Unimount Pro-Plus Plow 10 2014 2024 33,177.00 40,100 7,000 - - - - - Water Trucks 232 2017 Kenworth Water Truck (3500 Gal.)15 2016 2031 145,000.00 148,600 10,000 - - - - - 234 2014 Kenworth Water Truck (3500 Gal.)14 2013 2027 138,000.00 148,600 10,000 - - - - - 260 2011 Ford F350 1 Ton Dump Truck 10 2011 2021 38,798.00 40,100 7,000 - - 43,200 - - Mowers 211 2018 Toro Grounds Master 6 2018 2024 91,351.00 91,351 14,500 - - - - - 215 2013 Toro 580D Grounds Master 7 2013 2020 72,000.00 73,800 5,000 - 77,500 - - - 216 2017 Bobcat Skid Loader W/Cab 15 2017 2032 37,000.00 37,900 10,000 - - - - - 218 2014 Toro GM4700-D Mower 7 2014 2021 66,000.00 66,000 10,000 - - 71,100 - - 220 2014 Toro GM4700-D Mower 7 2014 2021 66,000.00 66,000 10,000 - - 71,100 - - 244 2016 Toro GM 4700-D 7 2016 2023 71,396.00 73,180 10,000 - - - - 82,800 Sidwalk Plow Units 209 2017 Holder C-270 Tractor W/ 60" Snow Blower & 50" V- Plow 12 2017 2029 125,000.00 128,100 5,000 - - - - - 210 2016 Holder C270 Tractor w/Broom, Snowblower & Plow 10 2016 2026 120,000.00 128,100 5,000 - - - - - 222 2015 Holder C270 Tractor w/Broom, Snowblower & Plow 10 2015 2025 124,940.00 128,100 15,000 - - - - - 74 Vehicle & Equipment Replacement Fund PARKS DEPARTMENT (7430) Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value Tractors 201 2007 JD 5425 (4-WD) Tractor W/Cab & Loader 12 2007 2019 42,553.00 45,000 5,000 46,100 - - - - 202 2013 JD 5420 (4-WD) Tractor W/Cab & Loader 12 2013 2025 40,000.00 42,000 5,000 - - - - - 203 2009 JD 6230 (2-WD) Tractor W/Cab 12 2009 2021 38,614.00 40,000 4,500 - - 43,100 - - 203R 2006 Sweepster CH Dual Drive Broom 11 2006 2017 8,209.00 10,200 1,000 - - - - - 204 2011 JD 6230 Tractor 12 2011 2023 40,153.00 40,000 4,500 - - - - 45,300 206 2014 JD 5085E Tractor 12 2015 2027 49,947.00 50,000 4,500 - - - - - 212 2017 JCB 3CX (4-WD) Tractor W/Loader & Backhoe 15 2017 2032 65,600.00 8 8,000 - - - - - 217 2017 JCB 4160 Bi-directional Tractor 12 2017 2029 190,922.00 195,000 50,000 - - - - - 251 2005 New Holland TV145 Tractor w/ Snowblower 12 2005 2019 69,757.00 190,000 35,000 194,800 - - - - Misc. Equipment 252 2016 Toro Workman 7 2016 2023 24,700.00 25,900 1,500 - - - - 29,300 253 2011 Kaw 4x4 Mule 3010 & 80 Gal. Field Liner 6 2011 2017 15,000.00 25,900 1,500 - - - - 30,000 254 2015 Toro Workman HDX-D Utility Cart w/Groomer- Leveler 6 2015 2021 26,770.00 26,770 6,000 - - 28,800 - - 255 2013 Kawasaki 4x4 Mule 4010 6 2013 2019 15,000.00 25,900 2,500 26,500 - - - - 256 2016 Toro Rake-O-Vac Turf Sweeper 12 2016 2028 33,000.00 33,825 1,000 - - - - - 257 Leveler 6 2014 2020 24,000.00 27,800 3,000 - 29,200 - - - 259 2010 Toro Workman 7 2010 2017 21,018.00 23,000 1,500 - - - - - 262 2001 AERA-vator 80" Aerator 15 2001 2016 8,048.00 10,500 500 - - - - - 272 2016 Toro Rake-O-Vac Turf Sweeper 12 2016 2028 33,000.00 32,000 1,000 - - - - - 274 2008 Olympia 82.5" Ice Resurfacer 12 2008 2020 10,118.00 12,000 1,000 - 12,600 - - - 286 2003 Bannerman BTD-20 Turf Topdresser 20 2003 2023 14,537.00 17,000 500 - - - - 19,200 # 2006 Grass/Trash Sweeper 10 2006 2016 26,103.00 26,000 1,000 - - - - - TOTALS $2,503,919 $2,707,299 $348,500 293,900 142,400 279,000 44,300 230,400 # - Will not be replaced 2019 2020 2021 2022 2023 Beg Cash Balance 12,214 (723) 109,566 113,830 326,927 VERF Charges Rec'd 236,780 236,700 242,620 248,690 254,910 Purchases 293,900 142,400 279,000 44,300 230,400 Trade in rec'd 44,000 16,000 39,000 7,000 19,500 Interest Earnings 0.015 183 (11) 1,643 1,707 4,904 End Cash Balance (723)109,566 113,830 326,927 375,841 75 Engineering (7420) Vehicle & Equipment Replacement Fund Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 114 2012 Chev Traverse 10 2012 2022 23,900.00 25,100 5,000 - - - 27,700 - 115 2013 GMC ½ Ton Pickup (4-WD) 10 2013 2023 21,400.00 24,050 7,000 - - - - 27,200 116 2017 GMC 1/2 Ton Pickup (4-WD)10 2017 2027 25,100.00 27,500 7,000 - - - - - 117 2017 GMC 1/2 Ton Pickup (4-WD)10 2017 2027 25,100.00 27,500 7,000 - - - - - TOTALS 95,500 104,150 26,000 - - - 27,700 27,200 Number of Active Assets 2019 2020 2021 2022 2023 Beg Cash Balance 19,321 29,861 40,819 52,201 41,324 VERF Charges Rec'd 10,250 10,510 10,770 11,040 11,320 Purchases - - - 27,700 27,200 Trade in rec'd - - - 5,000 7,000 Interest Earnings 0.015 290 448 612 783 620 End Cash Balance 29,861 40,819 52,201 41,324 33,064 76 Vehicle & Equipment Replacement Fund PW - NATURAL RESOURCES (7425) Target Estimated future replacement cost CITY Replace 2019 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase NUMBER MAKE/MODEL VIN DEPT Years Date Year Cost Price 601 2013 Chev ½ Ton Pickup (4-WD)DZ309830 Natural Res.10 2013 2023 20,750.00 23,800 - - - - 26,900 TOTALS 20,750 23,800 - - - - 26,900 2019 2020 2021 2022 2023 Beg Cash Balance 34,236 36,740 39,291 41,930 44,659 VERF Charges Rec'd 1,990 2,000 2,050 2,100 2,150 Purchases - - - - 26,900 Trade in rec'd - - - - 7,000 Interest Earnings 514 551 589 629 670 End Cash Balance 36,740 39,291 41,930 44,659 27,579 77 Vehicle & Equipment Replacement Fund Building Inspections (7415) Target Estimated CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 101 2013 Chev ½ Ton Pickup (4-WD)10 2013 2023 19,000 23,800 7,000 - - - - 26,900 104 2015 GMC ½ Ton Pickup (4 WD) 10 2015 2025 22,670 23,800 7,000 - - - - - 105 2017 GMC ½ Ton Pickup (4 WD) 10 2017 2027 23,000 23,500 7,000 - - - - - 107 2014 GMC ½ Ton Pickup (4 WD) 10 2014 2024 22,670 23,800 7,000 - - - - - TOTALS 64,670 71,100 - - - - 26,900 Number of Active Assets 2019 2020 2021 2022 2023 Beg Cash Balance 45,887 59,175 73,043 87,509 ###### VERF Charges Rec'd 3% 12,600 12,980 13,370 13,770 14,180 Purchases - - - - 26,900 Trade in rec'd - - - - 7,000 Interest Earnings 0.015 688 888 1,096 1,313 1,539 End Cash Balance 59,175 73,043 87,509 102,591 98,410 78 Vehicle & Equipment Replacement Fund PW - FLEET & BUILDINGS (7435) Target Estimated Future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 701 2010 GMC 1 Ton Service Truck 15 2010 2025 40,833 47,300 10,000 - - - - - 702 2012 Chev Colorado 4X4 10 2012 2022 19,375 22,000 4,000 - - - 24,300 - 704 2012 JD 997 (50% Shared with utilities)5 2012 2020 11,000 4,000 - 11,600 - - - TOTALS 60,208 80,300 - 11,600 - 24,300 - Number of Active Assets 2019 2020 2021 2022 2023 Beg Cash Balance 24,720 27,941 26,460 33,417 21,158 VERF Charges Rec'd 2,850 5,700 6,560 7,540 8,670 Purchases - 11,600 - 24,300 - Trade in rec'd - 4,000 - 4,000 - Interest Earnings 1.50% 371 419 397 501 317 End Cash Balance 27,941 26,460 33,417 21,158 30,145 79 Vehicle & Equipment Replacement Fund PW - STREET MAINTENANCE (7440) Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE MAKE/MODEL Cycle In-service Replace Original Purchase Trade NUMBER Years Date Year Cost Price Value 300 2010 Mack Dump Truck GU812 12 2010 2022 179,444 212,000 30,000 - - - 240,000 - 301 2010 Mack Dump Truck GU812 12 2011 2023 179,802 212,000 30,000 - - - - 240,000 305 2010 Mack Dump Truck GU812 12 2011 2023 179,802 212,000 30,000 - - - - 240,000 307 2016 Kenworth Dump Truck T470 13 2015 2028 203,000 212,000 30,000 - - - - - 310 2015 Kenworth Dump Truck T470 12 2014 2026 202,647 212,000 27,500 - - - - - 312 2015 Kenworth Dump Truck T470 12 2014 2026 202,647 212,000 27,500 - - - - - 313 2017 GMC ¾ Ton Pickup (4-WD)10 2017 2027 28,150 34,000 17,500 - - - - - 314 2019 Kenworth T470 Single Axle (314) 12 2019 2031 208,533 212,000 28,500 - - - - - 316 2018 Chev 3/4 Ton pickup (4WD) 316 10 2018 2028 36,480 34,000 7,000 - - - - - 319 2007 Sterling Dump Truck LT7500 (Tandem)12 2007 2019 163,550 225,000 30,000 230,600 - - - - 322 2010 Mack Dump Truck GU812 12 2010 2022 179,444 212,000 30,000 - - - 240,000 - 323 2017 Ford F550 Dump Truck 10 2017 2027 89,000 91,200 28,000 - - - - - 325 2017 Ford F550 Dump Truck 10 2017 2027 89,000 91,200 32,000 - - - - - 326 2002 Ford F550 Bucket Truck 15 2002 2017 72,027 100,000 12,000 - - - - - 327 2016 Kenworth Dump Truck T470 13 2015 2028 208,500 212,000 30,000 - - - - - 330 2011 Ford F750 Bucket Truck 15 2011 2026 115,658 130,000 14,000 - - - - - 331 2013 Chev ¾ Ton Ext. Cab Pickup (4-WD)10 2013 2023 27,248 34,850 9,000 - - - - 39,400 336 2015 SPH-0 Blacktop Trailer 20 2015 2035 52,000 54,600 7,000 - - - - - 337 2015 Chev ¾ Ton Pickup (4-WD)10 2014 2024 34,082 36,000 7,000 - - - - - 338 2017 Ford F550 Bucket/Sign Truck 15 2017 2032 92,654 100,000 12,000 - - - - - 340 2016 Ford F550 Dump Truck 10 2015 2025 60,000 61,500 10,000 - - - - - 341 2013 Chev ¾ Ton Ext. Cab Pickup (4-WD)10 2013 2023 27,248 34,850 9,000 - - - - 39,400 344 2019 Kenworth T470 Tandem Axle (344) 12 2019 2031 227,398 225,000 28,500 - - - - - 360 2010 GMC 3/4 Ton Pickup (4-WD)10 2010 2020 24,876 30,000 7,000 - 31,500 - - - 361 2010 Ford F550 Dump Truck 10 2010 2020 50,822 65,000 10,000 - 68,300 - - - 362 2011 Chev 1 Ton Dump Truck 10 2011 2021 45,000 53,500 10,000 - - 57,600 - - 381 2017 Kenworth Dump Truck T470 12 2017 2029 213,500 212,000 30,000 - - - - - 302 1994 Model XA5905D Compressor 25 1994 2024 11,000 18,000 2,000 - - - - - 303 2011 CAT Tractor Backhoe Model 430E 15 2011 2026 102,659 119,000 15,000 - - - - - 309 2010 Vermeer BC 1800 XL Chipper 10 2010 2020 45,674 80,000 5,000 - 84,100 - - - # 321 1983 CASE 450 Dozer 1983 32,750 8,000 - - - - - 328 1998 Daewoo Forklift 25 1998 2023 18,500 30,300 3,000 - - - - 34,300 # 329 1993 853 Skid Loader 1993 26,400 5,000 - - - - - 332 2017 Skid Loader A-770 11 2017 2028 61,350 62,900 20,000 - - - - - 333 2004 JCB 520 Loadall Teles. Load Handler 15 2004 2019 44,368 71,800 8,000 73,600 - - - - 334 2007 AEBI TT75 Tractor 15 2007 2022 85,000 105,000 8,000 - - - 115,900 - 335 2017 JD 1570 Mower 5 2017 2022 21,500 22,000 3,000 - - - 24,300 - 342 2003 Chipper 18 2003 2021 25,280 80,000 5,000 - - 86,200 - - 345 2015 Model SC802 Stump Grinder 22 2015 2037 39,245 41,200 7,500 - - - - - 346 2014 Toolcat 5600 10 2014 2024 52,333 64,000 15,400 - - - - - 80 Vehicle & Equipment Replacement Fund PW - STREET MAINTENANCE (7440) Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE MAKE/MODEL Cycle In-service Replace Original Purchase Trade NUMBER Years Date Year Cost Price Value 347 2017 Toolcat 5600 10 2017 2027 62,500 64,000 15,400 - - - - - 349 2017 JD 1570 Mower 5 2017 2022 21,500 22,000 3,000 - - - 24,300 - 350 2012 New Holland Bi-directional Tractor 15 2012 2027 134,000 157,800 15,000 - - - - - 351 2016 CAT 938M Loader 28 2016 2044 230,940 236,700 40,000 - - - - - # 352 1987 CAT 950B Loader 1987 98,879 15,000 - - - - - # 353 2006 Power Boss Sweeper 2006 31,445 3,000 - - - - - 354 2008 Dura Patch 125DJT 15 2008 2023 52,000 61,800 5,000 - - - - 69,900 355 2013 New Holland Bi-directional Tractor 15 2013 2028 143,000 157,800 15,000 - - - - - 363 2012 JCB 520 Loadall Teles. Load Handler 15 2012 2027 63,500 71,800 8,000 - - - - - 371 2013 Doosan Ingersoll Rand Air Compressor 25 2013 2038 17,600 19,400 1,000 - - - - - 2003 Crash Attenuator 25 2003 2028 12,000 15,000 3,000 - - - - - # 3M54 1990 Manhole Cutter 1990 13,280 2,000 - - - - - 4,639,215 5,021,200 304,200 183,900 143,800 644,500 663,000 # - Will not be replaced 2019 2020 2021 2022 2023 Beg Cash Balance 114,753 34,987 67,895 288,343 155,718 VERF Charges Rec'd 3% 185,000 194,370 348,400 434,270 447,300 Purchases 304,200 183,900 143,800 644,500 663,000 Trade in rec'd 38,000 22,000 15,000 74,000 86,000 Interest Earnings 0.0125 1,434 437 849 3,604 1,946 End Cash Balance $34,987 $67,895 $288,343 $155,718 $27,964 81 Enterprise Fund- Equipment Replacement Schedule PW - STREET MAINTENANCE-STORM WATER Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE MAKE/MODEL VIN DEPT Cycle In-service Replace Original Purchase Trade NUMBER Years Date Year Cost Price Value 604 2009 Chev Malibu 9F223550 Storm Water 10 2009 2019 17,742 24,140 3,000 24,700 - - - - 603 2018 Chev Silverado 4x4 Z278125 Storm Water 10 2018 2028 24,602 24,600 7,000 - - - - - 304 2011 Elgin Pelican Street Sweeper NS2222D Streets 15 2011 2026 185,600 214,000 15,000 - - - - - 317 2015 Elgin Pelican Street Sweeper NP30630 Streets 17 2015 2032 198,931 214,000 15,000 - - - - - 306 # 1998 Elgin Pelican Street Sweeper S8596D Streets 1985 1985 63,000 - - - - - 324 2018 Tymco 500X Sweeper JH340427 Streets 13 2018 2031 281,956 282,000 30,000 - - - - - Totals 771,831 758,740 - - - - - # Will not be replaced 82 Enterprise Fund- Equipment Replacement Schedule PW - UTILITIES Target Estimated future replacement cost CITY Replace 2019 Estimated 2019 2020 2021 2022 2023 VEHICLE Cycle In-service Replace Original Purchase Trade NUMBER MAKE/MODEL Years Date Year Cost Price Value 404 2016 Chev 1 Ton Utility Pickup (4-WD)10 2016 2026 87,375 90,000 7,000 - - - - - 405 2017 GMC 3/4 Ton Ext. Cab Pickup (4-WD)10 2017 2027 27,650 28,300 7,000 406 2008 Chev 3/4 Ton Ext. Cab Pickup (4-WD)10 2008 2018 22,469 34,850 7,000 - - - - - 408 2010 GMC 3/4 Ton Pickup (4-WD) 10 2010 2020 23,256 34,850 7,000 - 36,600 - - - # 410 2005 Chev 1 Ton Utility Pickup (4-WD)2005 43,200 7,000 - - - - - 411 2015 Chev 3/4 Ton Ext. Cab Pickup (4-WD)10 2014 2024 29,850 34,850 7,000 - - - - - 416 2012 Chev 3/4 Ton Ext. Cab Pickup (4-WD)10 2012 2022 24,600 34,850 7,000 - - - 38,500 - 419 2009 Chev 3/4 Ton Pickup (4-WD) 10 2009 2019 21,386 34,850 7,000 35,700 - - - - 421 2009 Chev 3/4 Ton Pickup (4-WD) 10 2009 2019 33,920 34,850 7,000 35,700 - - - - 466G 2011 Cat 125KW Portable Generator 25 2011 2036 57,000 62,525 8,000 - - - - - Subtotal Water 370,706 389,925 71,000 71,400 36,600 - 38,500 - 401 2010 Mack Gap Vax Sewer Cleaner 9 2010 2019 320,000 430,000 40,000 473,341 - - - - 402 2019 KW T370 Jetter 12 2018 2030 240,440 280,000 25,000 - - - - - 409 2012 Chev 3/4 Ton Ext. Cab Pickup (4-WD)10 2012 2022 24,600 34,850 7,000 - - - 38,500 - 412 2011 GMC 3/4 Ton Pickup (4-WD) 10 2011 2021 24,505 34,850 7,000 - - 37,500 - - 414 2011 GMC 3/4 Ton Pickup w/ Tommy Lift (4-WD)10 2011 2021 24,505 34,850 7,000 - - 37,500 - - # 415 2005 Chev 1 Ton Utility Pickup (4-WD)2004 52,000 7,000 - - - - - 417 2015 Chev 1-Ton Utility Truck 10 2015 2025 83,000 87,125 7,000 - - - - - 418 2010 GMC 3/4 Ton Ext. Cab Pickup (4-WD)10 2010 2020 25,511 34,850 7,000 - 36,600 - - - 422 2008 Chev Sewer Camera Express Van 15 2008 2023 33,657 35,875 7,000 - - - - 40,600 425 2013 Easement Machine 20 2013 2033 32,000 33,620 4,000 - - - - - 427 2009 Port. Changeable Message Board 12 2009 2021 16,700 17,425 1,000 - - 18,800 - - 428 2012 Cornell Pump 20 2013 2033 40,132 42,230 1,000 - - - - - # 451G 1985 Kohler Portable Generator 1985 24,000 8,000 - - - - - 452G 1999 Olympia Portable Generator 25 1999 2024 31,982 51,250 8,000 - - - - - 403 2001 VersaVac 20 2001 2021 45,000 53,300 8,000 - - 57,400 - - 704 2012 John Deere 997 Mower 6 2012 2018 15,500 20,000 4,000 - - - - - Subtotal Sewer 1,033,532 1,190,225 148,000 473,341 36,600 151,200 38,500 40,600 TOTALS 1,404,238 1,580,150 219,000 544,741 73,200 151,200 77,000 40,600 # - Will not be replaced 83 Enterprise Fund- Equipment Replacement Schedule VALLEYWOOD GOLF Future Replacement Cost UNIT# YEAR MAKE DESCRIPTION COST NEW 2019 2020 2021 2022 2023 501 2004 1 Ton Truck w/ plow 502 2004 1 Ton Truck w/ plow 504 2009 Toro Mower, Greensmaster 3150 20,000 40,000 40,000 505 2010 Smithco Greens Roller 11,000 20,000 Greens Roller - Fleet Addition 15,000 506 2009 Toro Mower, Greensmaster 3150 20,000 40,000 40,000 520 2005 Toro Mower, Greens 3000 22,500 30,000 40,000 523 2005 Toro Mower, Greens 3100 22,500 40,000 507 2006 Toro Mower, Rough 4700D 47,000 65,000 522 1999 Toro Mower, Reelmaster 5200D 35,000 60,000 527 2012 Toro Mower, Reelmaster 5200D 47,000 50,000 50,000 530 2008 Toro Mower, Rough 4700D 47,000 75,000 75,000 558 2002 Toro Mowe, Reelmaster 5200D 35,000 40,000 40,000 514 1978 JD Tractor Loader 401C 12,000 90,000 586 1987 Bobcat Skidloader Backhoe 14,950 25,000 25,000 535 1998 Ryan Aerator 30,000 25,000 25,000 519 1988 Cushman Core Harvester 5,000 - - 528 2012 Toro Zero-Turn 20,000 - - 547 1999 Toro 5500 Sprayer (Large)37,000 55,000 55,000 Sprayer (small)15,000 518 2001 Dakota Spreader 9,850 15,000 15,000 581 2010 Pro Force Leaf Blower 6,200 - Sod Cutter 5,000 5,000 Spin Grinder 60,000 60,000 508 2009 Toro Utility, Worman 12,000 30,000 30,000 509 2009 Toro Utility, Workman 14,000 - - 512 2009 Toro Utility, Worman 6,830 25,000 25,000 510 2012 Toro Utility, Truckster 13,000 20,000 20,000 Estimated 2019 Purchase Price 84 Enterprise Fund- Equipment Replacement Schedule VALLEYWOOD GOLF Future Replacement Cost UNIT# YEAR MAKE DESCRIPTION COST NEW 2019 2020 2021 2022 2023 Estimated 2019 Purchase Price 538 1996 Cushman Utility, Trap Rake 15,000 - - 529 2001 Toro Utility, Workman 10,000 20,000 526 2001 Toro Utility, Workman 10,000 25,000 517 2001 Toro Utility, Workman 12,842 25,000 NEW 2013 EZGO Golf Carts (55 total) - Annual Lease $4500/cart 44,500 44,500 44,500 44,500 44,500 Golf Total $184,500 $124,500 $139,500 $164,500 $169,500 TCF lease '18 Groundsmaster 4700D, Greensmaster 3150Q 39,645 39,645 39,645 39,645 VGM Lease '18 Smithco Sprayer 16,420 16,420 16,420 16,420 TCF Lease '19 Groundsmaster 4700D, Greensmaster 3150Q 27,385 27,385 27,385 27,385 27,385 83,450$ 83,450$ 83,450$ 83,450$ 27,385$ 85 6/13/2019 1 City of Apple Valley Capital Improvements Program CIP as a Tool Anticipates future service demands and costs CIP as a Planning Document, Not a Budget The CIP is not an authorization to expend funds Authorization occurs through City Council action and in adoption of the annual budget What is in the CIP? The CIP includes significant capital outlays CIP Integrates into Budget Process The CIP is a basis from which departments formulate their budget requests The annual budget provides the funding for identified projects 6/13/2019 2 2019‐23 CIP Totals $127 million 2019‐23 CIP Totals $127 million Building & Facility Impr. $25,378 20%Capital Technology $1,759 1% Vehicles & Equip. $15,872 13% Parks, Playgrounds, Paths $2,950 2%Ponds, Nat. Res., & Environment $5,152 4% Street and Infrastructure Preservation $75,916 60% 2019 - 23 CIP Totals $127 million (in 1000's) 6/13/2019 3 Anticipated Public Safety and General Govt.  Projects Exceeding $500,000 •Fire Station(s) Reconfiguring $5,000,000 •PD Garage @ Muni Center $3,000,000 •Municipal Center Lower Level Finish $ 800,000 Anticipated Parks Projects Exceeding  $500,000 2020 Kelley Park – Development $2,000,000 Greenway Underpass $ 600,000 Sports Arena Refrigeration $1,500,000 Valleywood Irrigation System Replacement $ 900,000 2021 Greenway Underpasses $ 600,000 JCRP East Maintenance Bldg $1,050,000 2022 •Greenway Underpasses $ 600,000 JCRP LED Lighting $ 900,000 2023 Greenway Underpasses $ 600,000 6/13/2019 4 Anticipated Public Works Projects Exceeding  $500,000 Streets & Road Construction 2019 JCRR & Lapaz 2nd AV 11 th & 12th Signal 147th & JCRR 2020 Cimmarron Rd (phase 1 & 1a) Garden View Dr (42 to Whitney) 147th & Glazier 2021 AV 3 rd(Redwood Pk, Juniper) CR 42 Signal & Intersection Impr. Greenleaf 6th & 7th (phase 1) Microsurface Hayes HAWK Signal –Galaxie (@ Greenleaf) $- $5,000 $10,000 $15,000 $20,000 2019 2020 2021 2022 2023 $15,724 $17,049 $10,988 $18,101 $14,054 Street and Infrastructure Preservation (in $1,000's) Anticipated Public Works Projects Exceeding  $500,000 (continued) Streets & Road Construction 2022 AV 3 rd (Pinewood, Walnut) Pedestrian Overpass @ 140th CR 33 (Diamond Path) / 140th Roundabout Greenleaf 6th & 7th (Phase 1) (Euclid, Eveleth Ct, 139th St Ct.) 2023 Greenleaf 6th & 7th (138th Ct, Upper 138th, 136th Ct,) 142nd St (Cedar to Galaxie) Pedestrian Overpass@147th CR 42 Signals $- $5,000 $10,000 $15,000 $20,000 2019 2020 2021 2022 2023 $15,724 $17,049 $10,988 $18,101 $14,054 Street and Infrastructure Preservation (in $1,000's) 6/13/2019 5 Anticipated Utility Projects Exceeding  $500,000 Utility & Facility Improvements 2019 Water meter replacement (1 of 2) $2,000,000 2020 Water meter replacement (2 of 2) $2,000,000 Water Reservoir Maint. (Longridge) $ 900,000 Stormwater Lift # 3 (Farquar) Rehab $ 790,000 2022 Holyoke Pond Impr. (Alimagnet) $ 600,000 Stormwater Lift Rehab $ 900,000 2023 Longridge/ Harwell Corrosion Mitigation $ 900,000 Street & Infrastructure Program makes up $ 76 million, 60% of CIP (p.60) 6/13/2019 6 Reconstruction/Overlay  17.5 Miles (2019‐23) Microsurfacing Projects  24 miles  (2019‐23) 6/13/2019 7 Looking Forward 2019 projects in progress 2020/21 planning will begin Managing road projects impacts to all funds Monitor utility rates Projects with need to finalize funding Overpass 147th &140th @ Cedar ’22/’23 (state funding ?) Fire Station(s) Reconfiguration ‘21 $4,500,000 Greenway Underpasses (‘19 to ‘23) $2,400,000 JCRP east Maintenance Facility ‘21 $1,050,000 JCRP east LED Lighting ’21 $ 900,000 Police Dept. Garage ’21 $3,000,000 Future CMF Space Needs (not included in CIP) $7,000,000 Discussion I T E M: 4.A. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Minutes of May 23, 2019, Regular Meeting S taff Contact: P amela J . Gackstetter, City Clerk Department / Division: City Clerk’s Office AC T I O N RE Q UE S T E D: Approve the minutes of the regular meeting of May 23, 2019. S UM M ARY: T he minutes from the last regular C ity C ouncil meeting are attached for your review and approval. B AC K G RO UND: State statute requires the creation and preservation of meeting minutes which document the official actions and proceedings of public governing bodies. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Minutes CITY OF APPLE VALLEY Dakota County, Minnesota May 23, 2019 Minutes of the regular meeting of the City Council of Apple Valley, Dakota County, Minnesota, held May 23, 2019, at 7:00 o’clock p.m., at Apple Valley Municipal Center. PRESENT: Mayor Hamann-Roland; Councilmembers Bergman, Goodwin, Grendahl, and Hooppaw. ABSENT: None. City staff members present were: City Administrator Lawell, Deputy City Clerk Marschall, City Attorney Dougherty, City Engineer Anderson, Police Captain Dahlstrom, Police Captain Francis, Human Resources Manager Haas, Finance Director Hedberg, City Planner Lovelace, Recreation Manager Muelken, Community Development Director Nordquist, Police Chief Rechtzigel, Fire Chief Russell, Public Works Director Saam, Planner/Econ. Dev. Specialist Sharpe, and Golf Course Manager Zinck. Mayor Hamann-Roland called the meeting to order at 7:00 p.m. Everyone took part in the Pledge of Allegiance to the flag led by Troops 292 and 55875. APPROVAL OF AGENDA MOTION: of Bergman, seconded by Grendahl, moving items 4.N - Approve Water Quality Improvement Cost Share Program Agreement with Bradford Alan Arthur for Raingarden Installation at 8155 134th Street W., 4.O - Approve Water Quality Improvement Cost Share Program Agreement with Annika Dommer for Native Garden Installation at 5901 139th Street W., 4.P - Approve Water Quality Improvement Cost Share Program Agreement with David and Catherine Bartle for Raingarden Installation at 14433 Guthrie Way, and 4.Q - Approve Water Quality Improvement Cost Share Program Agreement with Anna and Bernhard Zimmermann for Native Garden Installation at 15676 Highview Drive, to the regular agenda and approving the agenda for tonight’s meeting, as amended. Ayes - 5 - Nays - 0. As requested by Councilmember Grendahl, Mr. Saam described the Water Quality Improvement Cost Share Agreement Program. MOTION: of Grendahl, seconded by Hooppaw, approving the Water Quality Improvement Cost Share Program Agreements with Bradford Alan Arthur for raingarden at 8155 134th Street W., Annika Dommer for native garden at 5901 139th Street W., David and Catherine Bartle for raingarden at 14433 Guthrie Way, and Anna and Bernhard Zimmermann for native garden at 15676 Highview Drive, each one in an amount not to exceed $500.00, and authorizing the Mayor and City Clerk to sign the same. Ayes - 5 - Nays - 0. CITY OF APPLE VALLEY Dakota County, Minnesota May 23, 2019 Page 2 CONSENT AGENDA MOTION: of Hooppaw, seconded by Grendahl, approving the remaining items on the consent agenda. Ayes - 5 - Nays - 0. CONSENT AGENDA ITEMS MOTION: of Hooppaw, seconded by Grendahl, approving the minutes of the regular meeting of May 9, 2019, as written. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving issuance of a new 2019 License to Sell Tobacco and Tobacco Products to Apple Valley Tobacco and Vape, Inc., d/b/a Apple Valley Tobacco and Vape, 7539 148th Street W., as described in the City Clerk’s memo. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving issuance of a Temporary Event License in connection with a community festival for Apple Valley American Legion, Post 1776, on June 28, 2019, outdoors at 14521 Granada Drive, as described in the City Clerk’s memo. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, authorizing issuance of a 1 to 4 Day Temporary On-Sale Liquor License to Apple Valley American Legion, Post 1776, by Minnesota Alcohol and Gambling Enforcement Division, for use on July 4, 2019, outdoors at the American Legion, 14521 Granada Drive, as described in the City Clerk’s memo. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, adopting Resolution No. 2019-72 amending the 2019 fee schedule. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, proclaiming June 14, 21, and 28; July 5, 12, 19, and 26; and August 2, 9, and 16, 2019, from 6:00 p.m. to 9:00 p.m. as “Music in Kelley Park” and declaring it a community festival and encouraging citizens to support and attend these community events. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving renaming the Teen Center building to Johnny Cake Activity Center, as described in the Parks and Recreation Director’s memo. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, adopting Resolution No. 2019-73 appointing Mark Schori to the Parks and Recreation Advisory Committee, for a term expiring March 1, 2022. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, continuing consideration of Springs at Cobblestone Lake sign setback and height variance request to June 13, 2019, City Council Meeting. Ayes - 5 - Nays - 0. CITY OF APPLE VALLEY Dakota County, Minnesota May 23, 2019 Page 3 MOTION: of Hooppaw, seconded by Grendahl, approving the Non-Exclusive License Agreement with Continental 432 Fund, LLC, for residential monument sign in drainage and utility easement on Lot 1, Block 1, Springs at Cobblestone Lake (15899 Elmhurst Lane), and authorizing the Mayor and City Clerk to sign the same. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving the Agreement for professional services related to the Valleywood Golf Course Irrigation Improvement Project with Erik Christiansen Design Group, Ltd., and authorizing the Mayor and City Clerk to sign the same. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving the Intergovernmental Agreement with the Metropolitan Council, for 2019 Citizen Assisted Lake Monitoring Program (CAMP), as attached to the Natural Resources Coordinator’s memo, and authorizing the Mayor and City Clerk to sign the same. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving the License Agreement with St. Paul Growers Association, Inc., for Farmers Market in the Municipal Center parking lot on Saturdays from June 8 through October 26, 2019, from 6:30 a.m. to 2:00 p.m., and authorizing the Mayor and City Clerk to sign the same. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving Change Order No. 2 to the agreement with Mueller Systems, LLC, for Project 2016-101, Water Meter Replacement, in the amount of an additional $5,883.00. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, accepting Project 2018-104, 2018 Utility Improvements, as complete and authorizing final payment on the agreement with G.F. Jedlicki, Inc., in the amount of $88,267.19. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, approving the personnel actions as listed in the Personnel Report dated May 23, 2019. Ayes - 5 - Nays - 0. MOTION: of Hooppaw, seconded by Grendahl, to pay the claims and bills, check registers dated May 1, 2019, in the amount of $1,992,887.50; and May 9, 2019, in the amount of $1,140,684.20. Ayes - 5 - Nays - 0. END OF CONSENT AGENDA AUDIENCE Ms. Lauren Boubelik, 13079 Ferris Court, requested an ordinance be established regulating honeybees on personal property. Mayor Hamann-Roland referred Ms. Boubelik to Mr. Nordquist. CITY OF APPLE VALLEY Dakota County, Minnesota May 23, 2019 Page 4 MEMORIAL DAY PROCLAMATION Mr. Lloyd Cybart, on behalf of American Legion, Post 1776, invited everyone to the Memorial Day ceremonies at 11:00 a.m. at the Apple Valley American Legion Memorial located behind the American Legion Post on Granada Avenue. The Mayor presented the “Memorial Day” proclamation to Mr. Cybart. He then read the proclamation. MOTION: of Grendahl, seconded by Hooppaw, acknowledging the Federal Proclamation of May 27, 2019, as “Memorial Day” and asking citizens to remember those who were casualties and injured in the various wars and police actions of the United States. Ayes - 5 - Nays - 0. UPONOR NORTH AMERICA Mr. Nordquist introduced this item, provided a history, and read the proclamation recognizing Uponor North America as a business leader. He then presented the proclamation to Mr. Bill Gray, President of Uponor North America. MOTION: of Grendahl, seconded by Bergman, proclaiming Uponor North America a business leader in connection with Apple Valley’s 50th Golden Year celebration. Ayes - 5 - Nays - 0. Discussion followed. Mr. Gray addressed the Council and thanked everyone for the recognition. Mr. Nordquist then explained in 2016 the City applied for and received a Minnesota Investment Fund (MIF) $500,000 forgivable loan on behalf of Uponor through the Minnesota Department of Employment and Economic Development (DEED). Uponor has been reporting their employee growth and wages to DEED and met the program requirements, which allows the loan to be forgiven. Discussion followed. Mr. Bob Isaacson, Executive Director of Business Finance for DEED, addressed the Council and thanked the City and Uponor for their collaboration. Discussion continued. MOTION: of Grendahl, seconded by Hooppaw, recognizing the financial award by the Minnesota Department of Employment and Economic Development (DEED) to Uponor North America for business development and expansion. Ayes - 5 - Nays - 0. CITY OF APPLE VALLEY Dakota County, Minnesota May 23, 2019 Page 5 COMMUNICATIONS Mr. Lawell thanked the Mayor for the great message she delivered at the State of the City address on May 22, 2019. Mayor Hamann-Roland thanked staff for their assistance in planning the State of the City address. CALENDAR OF UPCOMING EVENTS MOTION: of Grendahl, seconded by Hooppaw, adding the Memorial Day Ceremony on May 27, 2019, at the Apple Valley American Legion to the calendar of upcoming events included in the Deputy City Clerk’s memo dated May 23, 2019, and approving the calendar of upcoming events as amended, and noting that each event listed is hereby deemed a Special Meeting of the City Council. Ayes - 5 - Nays - 0. Ms. Muelken invited the public to the annual Apple Valley Arts Foundation “Music in Kelley Park” concert series from 6:00 p.m. to 9:00 p.m. on June 14, 21, and 28; July 5, 12, 19, and 26; and August 2, 9, and 16, 2019. She then read the proclamation approved earlier in the evening. MOTION: of Bergman, seconded by Hooppaw, to adjourn. Ayes - 5 - Nays - 0. The meeting was adjourned at 7:50 o’clock p.m. Respectfully Submitted, /s/ Stephanie Marschall Stephanie Marschall, Deputy City Clerk Approved by the Apple Valley City Council on Mary Hamann-Roland, Mayor I T E M: 4.B. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution A ccepting Donation of Money from Daniel L . Schroeder and Marilyn J . P eterson for Use by L ebanon Cemetery S taff Contact: Cheryl Groves, Public Works/Cemetery Administrative Coordinator Department / Division: P ublic Works Department AC T I O N RE Q UE S T E D: A dopt resolution accepting the donation of $20.00 from Daniel L. Schroeder and Marilyn J . Peterson for the beautification of Lebanon Cemetery in memory of Paul Bresnahan. S UM M ARY: T he C ity C ouncil has encouraged public donations to improve the quality of life in Apple Valley. Daniel L. Schroeder and Marilyn J . Petersen have offered to donate $20.00 to the City of Apple Valley for use in the beautification of Lebanon Cemetery. T he donation is made in memory of Paul Bresnahan. B AC K G RO UND: N/A B UD G E T I M PAC T: Donations help to offset budgeted expenses for the replacement of trees and landscape plantings in Lebanon C emetery. AT TAC HM E NT S : Resolution CITY OF APPLE VALLEY RESOLUTION NO. 2019 - ___ A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Valley encourages public donations to help defray costs to the general public of providing goods and services to improve the quality of life in Apple Valley; and WHEREAS, Daniel L. Schroeder and Marilyn J. Petersen have offered to donate $20.00 (Twenty Dollars) in memory of Paul Bresnahan for use by Lebanon Cemetery of Apple Valley toward the purchase of trees, shrubs, and/or other landscape materials used for the beautification of the Cemetery; and WHEREAS, Minnesota Statutes 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City Council; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks Daniel L. Schroeder and Marilyn J. Petersen for their gracious donation. ADOPTED this 13th day of June, 2019. ____________________________________ Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk I T E M: 4.C. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution A ccepting 1941 B uick "Quick Eight" Squad Car from Conny Mahoney for Use by Police Department S taff Contact: Nick Francis, Police Captain Department / Division: P olice Department AC T I O N RE Q UE S T E D: Adopt the attached resolution accepting a 1941 Buick "quick eight" squad car from C onny Mahoney for use by the Police Department. S UM M ARY: T he C ity's Police Department uses a number of tools to promote outreach and relationship with the community. Ms. Mahoney is donating a vintage Buick for use by the Department in its outreach efforts. B AC K G RO UND: T he donated vehicle has been evaluated by the C ity's Fleet Maintenance Division and found to be in good mechanical and operational condition. T he Police Department's intention is to get the vehicle out of the donor's name. Once accepted by the C ity, the Police Department will work to raise funds or partner with local businesses to pay for any restoration. T he Police Department does not intend to use budgeted funds to restore the vehicle. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Resolution CITY OF APPLE VALLEY RESOLUTION NO. 2019- A RESOLUTION ACCEPTING DONATION WHEREAS, the City Council of Apple Valley encourages public donations to help defray costs to the general public of providing services and improve the quality of life in Apple Valley; and WHEREAS, Conny Mahoney, has donated a 1941 Buick four-door, “quick eight”; and WHEREAS, Minnesota Statues 465.03 requires that all gifts and donations of real or personal property be accepted only with the adoption of a resolution approved by two-thirds of the members of the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this donation is hereby formally accepted for use by the City. BE IT FURTHER RESOLVED that the City sincerely thanks Ms. Mahoney for her gracious donation. ADOPTED this 13th day of June, 2019. ___________________________________ Mary Hamann-Roland, Mayor ATTEST: _____________________________________ Pamela Gackstetter, City Clerk I T E M: 4.D. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A uthorize I ssuance of 1 to 4 Day Temporary On-S ale L iquor L icense to A pple Valley A merican L egion, Post 1776, in Connection with a Community Festival, for Music at Kelley Park Concerts on J une 14, 21 and 28, and J uly 5 and 12, 2019 S taff Contact: P amela J . Gackstetter, City Clerk Department / Division: City Clerk’s Office AC T I O N RE Q UE S T E D: Authorize issuance of a 1 to 4 Day Temporary On-Sale Liquor License to American Legion, Post 1776, by Minnesota Alcohol and Gambling Enforcement Division, for use on J une 14, 21 and 28, and J uly 5 and 12, 2019, from 6:00 to 9:00 p.m., in connection with a community festival (Music in Kelley Park concert series). S UM M ARY: American Legion, Post 1776, submitted an application for a 1 to 4 Day Temporary On-Sale Liquor License. T he application requests wine and beer sales for five 1-day events in Kelley Park, at 6855 Fortino Street. T he events are for the Music in Kelley Park concerts on J une 14, 21 and 28, and J uly 5 and 12, 2019, from 6:00 to 9:00 p.m. T he Music in Kelley Park concert series was declared a community festival on May 23, 2019. A C ertificate of Liability Insurance covering this event has been provided. B AC K G RO UND: Temporary O n-Sale Liquor Licenses are issued by the Minnesota Alcohol and Gambling Enforcement Division subject to approval by the City C ouncil. B UD G E T I M PAC T: N/A I T E M: 4.E. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A uthorize I ssuance of 1 to 4 Day Temporary On-S ale L iquor L icense for Augustana Care A pple Valley Villa, 14610 Garrett Avenue on August 15, 2019 S taff Contact: P amela J . Gackstetter, City Clerk Department / Division: City Clerk’s Office AC T I O N RE Q UE S T E D: Authorize issuance of a 1 to 4 Day Temporary O n-Sale Liquor License for Augustana Care Apple Valley Villa, by Minnesota Alcohol and Gambling Enforcement Division, for use on August 15, 2019, in Fireside Dining Room (5th Floor), located at 14610 Garrett Avenue. S UM M ARY: Augustana Care Apple Valley Villa submitted an application for a 1 to 4 D ay Temporary On-Sale Liquor License. T he application requests intoxicating liquor sales in the Fireside Dining Room (5th Floor), located at 14610 Garrett Avenue, on August 15, 2019. Augustana Care Apple Valley Villa has provided a Certificate of Liability Insurance covering this event. B AC K G RO UND: Temporary O n-Sale Liquor Licenses are issued by the Minnesota Alcohol and Gambling Enforcement Division subject to approval by the City C ouncil. B UD G E T I M PAC T: N/A I T E M: 4.F. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A uthorize I ssuance of 1 to 4 Day Temporary On-S ale L iquor L icense for H.O.O.A.H. (Helping Out Our A merican Heroes), I nc., in P arking L ot at B ogart's E ntertainment Center, 14917 Garrett Avenue on J uly 27, 2019 S taff Contact: P amela J . Gackstetter, City Clerk Department / Division: City Clerk’s Office AC T I O N RE Q UE S T E D: Authorize issuance of a 1 to 4 Day Temporary On-Sale Liquor License to H.O.O.A.H. (Helping Out Our American Heroes), Inc., by Minnesota A lcohol and G ambling Enforcement Division, for use on J uly 27, 2019, from noon to 11:00 p.m., in north parking lot at Bogart's Entertainment C enter, located at 14917 Garrett Avenue. S UM M ARY: H.O.O.A.H. (Helping O ut Our American Heroes), Inc., submitted an application for a 1 to 4 Day Temporary On-Sale Liquor License in connection with the Ben Kopp Memorial Ride. T he application requests intoxicating liquor consumption in the north parking lot at Bogart’s Entertainment C enter, located at 14917 Garrett Avenue on J uly 27, 2019, from noon to 11:00 p.m. All alcohol sales will be indoors with consumption permitted within the fenced area on the north side of the building. A sketch showing the location is attached. T here will not be any outdoor music with this event. H.O.O.A.H., Inc., is contracting liquor service and security with LoKo Bowling, Inc., d/b/a Bogart's Entertainment C enter, for this event and LoKo Bowling, Inc., has provided a Certificate of Liability Insurance covering this event. T his event has been held successfully in the past without any issues. B AC K G RO UND: Temporary O n-Sale Liquor Licenses are issued by the Minnesota Alcohol and Gambling Enforcement Division subject to approval by the City C ouncil. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Background Material I T E M: 4.G. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: Receive Urban Affairs Advisory Committee 2018 Annual Report S taff Contact: J oan Murphy, Department A ssistant Department / Division: Community Development Department AC T I O N RE Q UE S T E D: Receive the Urban Affairs Advisory Committee 2018 Annual Report. S UM M ARY: T he C ommunity Development Department is responsible for coordinating the work of the Urban Affairs Advisory C ommittee. City ordinance requires that a report of the Committee be provided annually representing the work during the preceding year, 2018. B AC K G RO UND: T he next steps for the Urban Affairs Advisory C ommittee in 2019 and 2020 are to address items related to: Sustainability and environment 1. Receive an introduction to the 2009 through 2017 efforts by the C ity in the area of GreenStep C ities initiatives, stormwater and natural resources management and infrastructure, public/private partnership, city facility investment in energy efficiency and building retrofits, and transit and bike friendly trail expansion. 2. Receive an update from Public Works, Park and Recreation and Community Development Departments on 2018 initiatives and 2019 and 2020 plans related to sustainability and energy efficiency. 3. Review, discuss and prioritize the C ity role as a sustainable city related to: solar power, residential raingarden expansion, gray water management, autonomous and electric vehicle advancements, wildflower/butterfly fly-way and dark sky initiatives. Continued support for initiatives related to Apple Valley's 50 golden years, as called upon. Introductions and promotion of the 2020 U.S. Census. Further discussion about city code regulations concerning bees and chickens. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Report Background Material Background Material APPLE VALLEY Urban Affairs Advisory Committee 2018 ANNUAL REPORT Urban Affairs The role of the Urban Affairs Advisory Committee is to make recommendations to the City Council on a variety of ad hoc topics, as assigned. In 2018, there were 6 Urban Affairs Advisory Committee meetings held that consisted of a recommendation to the City Council. Members of the Apple Valley Urban Affairs Advisory Committee included:  Sharon Schwartz, Chair  Tom Adamini – appointed 2-28-18  Linda Blake – appointed 5-10-18  Sandy Breuer, Secretary  Walton Mahlum  Pamela Sohlberg  John Vegter 50th Golden Anniversary Celebration The Urban Affairs Advisory Committee was appointed by the City Council to research and plan the 50th Golden Anniversary Celebration. The Committee reviewed and discussed the adopted pin and banner now in use which has been well received. Activities throughout the calendar year for 2019 were discussed. The Committee encouraged “keeping it simple” and leveraging a 50th emphasis to many of the planned events the City offers throughout the year. Attached as part of the report are the pin, banner and bus wrap planned for 2019 as a result of Committee’s discussion and direction to staff. Planning for the 2020 Census Cities across the County have been tasked with assisting the Census Bureau to ensure that all persons are counted. Staff met with the Regional Census Director to learn about the best practices for establishing a "Complete Count Committee". On June 28, 2018, the City Council directed the Urban Affairs Advisory Committee to be the “Complete Count Committee” for the 2020 Census. The Census is an important tool for the City that becomes the basis for funding and policy decisions. The Census Bureau has found that involving local partners is essential to ensure that the process is successful. The "Complete Count Committee" is the leader of local involvement with the goal of achieving high participation rates and reaching lower responding census tracts. The Census Bureau has tasked all cities to create a "Complete Count Committee" that facilitates encouraging Census participation. When directed to do so, the Urban Affairs Advisory Committee will host representatives from organizations such as faith based organizations, businesses, housing groups, the Chamber of Commerce, and educational institutions. Each of these groups will be asked to offer ways they can assist the Committee to best reach their constituent members. Census Day is April 1, 2020. In 2019, "Complete Count Committees" will be actively working to encourage response within their community. By establishing the Committee at this time, and providing the background information, the City of Apple Valley will be ready to assist with outreach within the Community. Findings and recommendations from the Urban Affairs Advisory Committee will be presented to the City Council, initially in the annual report from 2018 and throughout 2019 as needed. PLEASE DELETE THIS LAYERBEFORE SAVINGAll images must be embeddedAll fonts must be outlinedBLEED AREA - 95.5”W x 47.5”HNOT VISIBLE WHEN DISPLAYEDFINISHED AREA - 95”W x 47”HVISIBLE WHEN DISPLAYEDSAFE AREA - 93”W x 45”HKEEP IMPORTANT TEXT/LOGOS WITHIN THIS AREA I T E M: 4.H. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: Receive 2018 Comprehensive A nnual F inancial Report S taff Contact: Ron Hedberg, Finance Director Department / Division: Finance Department AC T I O N RE Q UE S T E D: Receive the 2018 Comprehensive Annual Financial Report. S UM M ARY: J im Eichten, Managing Partner, with the City’s auditing firm, Malloy Montague Karnowski Radosevich and C o. P.A . (MMKR) will present the 2018 Comprehensive Annual Finance Report and review their Management Report at the informal work session on J une 13, 2018. Included with the council packet information are three separate bound documents in addition to one unbound report; the first bound document, and largest, is a copy of the Comprehensive Annual Financial Statements (C A FR), the second is auditor’s Management Report, and the third is Special Purpose Audit Reports including opinions on compliance with Government Auditing Standards and Legal C ompliance. In addition to the bound reports also attached is a new report this year, titled "Popular Annual Financial Report". T he intent of this report is to present data included in the C A F R in an easy to understand format. T his report adds to the financial transparency for the city operations. T his report, along with the Comprehensive Financial Report will be posted on the City's website Since the documents are large, a good place to start reviewing the C A FR documents would be the Popular Annual Financial Report and in the C A FR the Transmittal Letter (starting on page iii), the Management Discussion and Analysis letter (starting on page 4) and with the Auditor’s Management Report on page 1 and their financial analysis section beginning on page 7 of that report. Last year was the seventh year that the City of Apple Valley participated in the Certificate of Achievement for Excellence in Financial Reporting program administered by the Governmental Finance O fficers Association (G FO A), the City of Apple Valley was recently awarded the C ertificate for the 2017 C A F R. T he Popular Annual Financial Report for 2017 received the Award for Outstanding Achievement in Popular Annual Financial Reporting program administrated by the G F O A, 2017 was the first year submitted for the Popular Annual Financial Report program. Staff believes that the current year ’s submissions will also meet the requirements to receive the award. T he presentation will cover some of the highlights of the year. If the Council has some items that they would like to be sure is covered just let me know prior to the meeting and we will be sure to cover it in the presentation. B AC K G RO UND: N/A B UD G E T I M PAC T: No budget impact. AT TAC HM E NT S : Report Report Report Exhibit Comprehensive Annual Financial Report City of Apple Valley Minnesota Year Ended: December 2018 CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA Comprehensive Annual Financial Report for the Year Ended December 31, 2018 Prepared by Finance Department CITY OF APPLE VALLEY 7100 147th Street West Apple Valley, Minnesota 55124 THIS PAGE INTENTIONALLY LEFT BLANK Page INTRODUCTORY SECTION ELECTED OFFICIALS AND ADMINISTRATION i ORGANIZATIONAL STRUCTURE ii LETTER OF TRANSMITTAL iii–ix CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING x FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1–3 MANAGEMENT’S DISCUSSION AND ANALYSIS 4–18 BASIC FINANCIAL STATEMENTS Government-Wide Financial StatementsStatement of Net Position 19Statement of Activities 20–21Fund Financial StatementsGovernmental FundsBalance Sheet 22–23Reconciliation of the Balance Sheet to the Statement of Net Position 24Statement of Revenue, Expenditures, and Changes in Fund Balances 25–26Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities 27 Statement of Revenue, Expenditures, and Changes in Fund Balances – General Fund – Budget and Actual 28Proprietary FundsStatement of Net Position 29–32Statement of Revenue, Expenses, and Changes in Net Position 33–34Statement of Cash Flows 35–36Notes to Basic Financial Statements 37–76 REQUIRED SUPPLEMENTARY INFORMATION PERA – General Employees Retirement Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 77Schedule of City Contributions 77 PERA – Public Employees Police and Fire Fund Schedule of City’s Proportionate Share of Net Pension Liability 78Schedule of City Contributions 78 Apple Valley Firefighters’ Relief Association Schedule of Changes in the Relief Association’s Net Pension Liability and Related Ratios 79Schedule of City Contributions 80Other Post-Employment Benefits Plan Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 81Notes to Required Supplementary Information 82–85 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents Page SUPPLEMENTARY INFORMATIONCombining and Individual Fund Statements and SchedulesNonmajor Governmental FundsCombining Balance Sheet 86Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 87Nonmajor Special Revenue Funds 88Combining Balance Sheet 89–90Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 91–92Nonmajor Debt Service Funds 93Combining Balance Sheet 94–97Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 98–101Nonmajor Capital Projects Funds 102–103Combining Balance Sheet 104–108Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 109–113General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 114–119Road Improvements Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 120Future Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 121Cable TV Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 122EDA Operations Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 123Cable Capital Equipment Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and Actual 124Internal Service Funds 125Combining Statement of Net Position 126Combining Statement of Revenue, Expenses, and Changes in Net Position 127Combining Statement of Cash Flows 128 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents (continued) Page STATISTICAL SECTIONNet Position by Component 129–130Changes in Net Position 131–134Fund Balances of Governmental Funds 135–136Changes in Fund Balances of Governmental Funds 137–138Assessed and Estimated Actual Value of Taxable Property 139–140Property Tax Capacity Rates 141–142Principal Property Taxpayers 143Property Tax Levies and Collections 144–145Ratios of Outstanding Debt by Type 146–147Ratios of General Bonded Debt Outstanding 148–149Direct and Overlapping Governmental Activities Debt 150Legal Debt Margin Information 151–152Pledged Revenue Coverage 153–154Demographic and Economic Statistics 155Principal Employers 156Full-Time Equivalent City Government Employees by Function 157–158Operating Indicators by Function 159–160Capital Asset Statistics by Function/Program 161–162 CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Table of Contents (continued) THIS PAGE INTENTIONALLY LEFT BLANK INTRODUCTORY SECTION -i- Term Expires Mary Hamann-Roland Mayor December 31, 2022John Bergman Councilmember December 31, 2022Thomas Goodwin Councilmember December 31, 2020Ruth Grendahl Councilmember December 31, 2020Clint Hooppaw Councilmember December 31, 2022 M. Thomas Lawell City AdministratorPamela Gackstetter City ClerkRonald Hedberg Finance Director/TreasurerMatt Saam Public Works DirectorJon Rechtzigel Police ChiefChuck Russell Fire ChiefBruce Nordquist Community Development DirectorBarry Bernstein Parks and Recreation DirectorCathy Broughten Assistant Finance DirectorCharles Grawe Assistant City AdministratorMelissa Haas Human Resource ManagerBrandon Anderson City EngineerCarol Blommel Johnson Public Works Superintendent ELECTED OFFICIALS ADMINISTRATION CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Elected Officials and AdministrationDecember 31, 2018 Organizational Structure City of Apple Valley Mayor and City Council Citizens City Attorney (contractual) Economic Development Authority Planning Commission City Administrator Administration Fire Police Finance Community Development Public Works Planning Economic Development Code Enforcement Finance Utility Billing Administration Information Technologies Human Resources Cable TV Fire Patrol Investigations Records Parks & Recreation Recreation Programs Park Maintenance Planning Accounting Administration Patrol Fire Recreation Programs Street Maintenance Economic Development Financial Reporting City Clerk/ Elections Investigations Fire Inspection Park Maintenance Natural Resources Code Enforcement Cash & Investments Utility Billing Information Technology Records Ice Arena Hayes Community & Engineering Building Inspections Human Resources Cable TV Senior Center AV Aquatic Center Utilities Fleet Maintenance Municipal Liquor Stores Apple Valley Community Center Cemetery Valleywood Golf Redwood Pool -ii- -iii- City of Telephone (952) 953-2540 Fax (952)953-2515 www.ci.apple-valley.mn.us June 4, 2019 To the Honorable Mayor, City Council, and Citizens of the City of Apple Valley: The Comprehensive Annual Financial Report (CAFR) of the City of Apple Valley, Minnesota (the City), for the year ended December 31, 2018, is hereby submitted. The report was prepared in accordance with accounting principles generally accepted in the United States of America as established by the Governmental Accounting Standards Board and meets the requirements of the State Auditor’s Office. The report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all information presented within this report. To provide a reasonable basis for making these representations, management of the City has established internal controls designed to protect the City’s assets from loss, theft , or misuse and to provide sufficient information for the preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh the benefits, the City’s internal controls have been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements. As management, we assert that to the best of our knowledge and belief this CAFR is complete and reliable in all material respects. The City’s financial statements have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A., Certified Public Accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the year ended December 31, 2018, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates used by management; and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements, for the year ended December 31, 2018, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented in the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The City’s MD&A complements this letter of transmittal and should be read in conjunction with it. 7100 147th St. W Apple Valley, MN 55124 -iv- Profile of the City of Apple Valley The City was incorporated as a village on January 1, 1969, and incorporated as a city on January 1, 1974. The City is a suburban community located 17 miles south of downtown Minneapolis within Dakota County, and has a convenient location with a comprehensive system of highways – Interstate 35E serves the northwest boundary of the City, while State Highway 77 runs north and south through the City. The City is served by a Bus Rapid Transit service that connects to the light rail system serving Minneapolis and St. Paul. The City is seven miles from the Minneapolis-St. Paul International Airport within the seven-county Twin Cities metropolitan region, has a land area of 17.5 square miles, and serves a community with a current population of 53,429. -v- The City operates as a Statutory Plan A City, the Mayor-Council form, under Minnesota law. The governing body, consisting of the Mayor and four council members, is elected at large and on a nonpartisan basis. Terms of office are four years, with elections held in each even-numbered year; not more than three council members’ terms expire in any one year. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to various advisory committees and commissions, and hiring the City Administrator and other city employees. The City Administrator is responsible for carrying out the policies, ordinances, and directions of the City Council and for overseeing the day-to-day operations of the City. The City provides its residents and businesses with a full range of municipal services consisting of public safety (police, fire, building inspections), public works, parks and recreation, and general government administration. The City also operates a number of enterprise activities including: water and sanitary sewer, Valleywood Golf Course, three off-sale liquor stores, storm water, street lights, sports arenas, and a cemetery. Sanitary sewage treatment and disposal is operated on a regional basis by the Metropolitan Council Environmental Services. Refuse collection and disposal are handled on a private basis through contractual arrangements by city residents with private haulers. Further information regarding city services can be obtained from the City’s website at www.ci.apple-valley.mn.us. The Apple Valley Economic Development Authority (EDA) is a separate legal entity organized pursuant to Minnesota Statutes Section 469, and is included as a blended component unit. The EDA is considered a component unit because the governing body is comprised of City Council members and two other members being appointed by the City Council. Also, the EDA is in a relationship of financial benefit or burden with the City. The annual budget serves as the foundation for the City’s financial planning and control. The budgetary process is outlined in the notes to basic financial statements. The City applies budgetary controls to ensure compliance with legal provisions of the laws of Minnesota. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual budgets are adopted for the General Fund in addition to certain special revenue and capital projects funds. Budget to actual comparisons are presented for each governmental fund for which an annual budget has been adopted. Factors Affecting Financial Condition The City is committed to maintaining a strong financial condition, while continuing to provide public services to its residents and businesses. The City’s financial position, as reflected in the financial statements presented in the reports, is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The economic conditions have improved for the City, its residents, and its businesses. The City’s unemployment rate as of December 2018, for example, is 2.4 percent, compared to the state of Minnesota’s rate of 3.2 percent and the national unemployment rate of 3.7 percent. Unemployment Rate: Dec 2018 Dec 2017 Dec. 2016 Dec. 2015 Dec 2014 City of Apple Valley 2.4% 2.5% 3.0% 2.6% 2.8% Dakota County 2.7% 2.7% 3.4% 3.1% 3.8% State of Minnesota 3.2% 3.4% 4.1% 3.7% 3.8% National 3.7% 3.9% 4.5% 5.0% 5.6% (Source: MN Dept. of Economic Development ) -vi - Housing Values Home values in the City are continuing a positive trend, reflecting the recovery of the housing market. The assessor’s estimated residential market values increased on the median valued home approximately 6.2 percent for 2018. Assessor values for 2019 and 2020 continue this positive trend. Increase (Decline) in Median Value Home: 2013 (5.8%) 2014 3.5% 2015 8.1% 2016 5.0% 2017 2.5% 2018 6.2% 2019 9.0% 2020 (Preliminary) 7.1% The population of the City has increased from 585 in 1960 to 49,084 according to the 2010 census and is estimated at 53,429 for 2018. According to the 2010 census, most of the population of the City concentrates in two age groups: 45–54 years and 5–14 years at 17.0 percent and 14.2 percent, respectively. The average age is 32 years and the median household income is $78,028. The most recent estimate of the median household income from the American Community Survey is $86,226 for 2018. The City is the home to Uponor and Wings Financial Credit Union. Other major employers in the area include Independent School District No. 196, Target, Walmart, Minnesota Zoo, Augustana Health Care, Cub Foods, and Menards. Market Value Growth The City consistently adds new tax base each year. In 2018, a total of $96.7 million of market value was added to the City’s tax base, which current data indicates is continuing. Total market value increased to $5.1 billion for 2018, resulting from improved market conditions. Conditions continue to improve for the future with preliminary County Assessor data for payable 2020 showing a 7.7 percent increase to a total city-wide taxable market value of $6.0 billion, of which $136 million and $71 million results from new construction for payable 2019 and 2020, respectively. -vii- Major Initiatives In 2018, investment continued in the City as new businesses opened and new developments were approved. What follows is a sample of some of the development projects that were reviewed, approved, began construction, or were completed in 2018, as well as some of the long-range planning and economic development initiatives that will help maintain the City’s high quality of life. Residential Development Over the past 10 years, single-family construction has averaged 77 units per year, and 2018 saw 65 single-family units constructed, valued at over $17 million. Recent multi-family construction shows strong activity for 2018 with 431 apartment units permitted. In 2018, the City saw the completion of a number of multi-family projects, these include: the Valley Bluffs senior apartments adding 163 units, the second phase of the Remington Cove building adding 95 units, and the Parkside Village Galante building adding 134 units. Multi-family projects permitted in 2018 with construction continuing into 2019 include: Nuvela at Parkside with 177 units, Springs at Cobblestone with 196 units, and Zvago senior condominiums with 58 units. While the construction of new single-family properties has dipped in 2018, which resulted from the availability of fully developed lots, the valuation added by remodeling and renovations is being maintained at a high level, valued at over $18.8 million. This reflects homeowners’ continued interest in investing in their properties. Commercial Development Commercial and industrial development continued to improve in 2018 with total improvement values, including commercial alterations, totaling $40 million in 2018. New commercial construction projects included the 53,000 square foot Uponor NA Expansion, the 8,500 square foot Cobblestone Marketplace retail building at 157th and Emperor Avenue, and a $7 million renovation of the Regency Center. -viii- Upcoming initiatives include: Mixed-Use Business Campus: In 2019, approximately 350 acres of mixed business campus will continue to be master planned with some mixed uses proposed to begin development in the area currently being actively mined for aggregate. Significant public infrastructure improvements including roads, trails, ponding, and park improvements, will be part of the plan and coincide with private development. Menard’s Hanson Development Site: The 50-acre site known as Menard’s/Hanson is proceeding with a proposal including mixed business uses (retail, office, industrial) at County Road 42 and Johnny Cake Ridge Road. Water Meter Replacement Program: The City has begun a water meter replacement program. Many water meters in the City have been in service for more than 25 years. The accuracy of water meters tend to diminish as they get older. The City’s Capital Improvement Program includes a two-year schedule for completing the water meter replacement project and will be funded within the water utility fund. Infrastructure Improvements The City is committed to maintaining its significant investment in the community’s infrastructure with the implementation of an aggressive street maintenance program in 2012. In 2018, over $4.6 million was invested to maintain the infrastructure and included the following significant projects:  Reconstruction of streets in the Apple Valley 12th addition  Reconstruction of portions of Redwood Drive, Redwood Circle, Keller Lake Drive  Additional resurfacing of streets throughout the community Long-Term Financial Planning In developing the annual budget, the City follows five core fiscal principles. These include:  Focus on the provision of basic city services and fund their provision at adequate levels.  Estimate anticipated revenues at realistic levels.  Retain adequate reserves to protect against fiscal uncertainty.  Anticipate continued community growth and program capital improvements to serve our growing community.  Demonstrate strong stewardship of existing infrastructure and plan for its repair/replacement in a proactive manner. Each year the City adopts a five-year Capital Improvement Program (CIP). The CIP is a five-year plan that identifies the City’s infrastructure, development objectives, and the allocation of resources for these projects. This CIP provides policy makers and the community with a strategic approach to implementation and administration of improvement projects. The 2019–2023 CIP identifies $125 million of capital projects along with the associated funding. The five-year CIP also includes five-year revenue and expenditure projections for the majority of funds identified in the document. One of the larger improvements included in the 2019–2023 CIP includes the continued street and utility reconstruction and reconditioning program, which totals $63 million over the next five years. -ix- Relevant Financial Policies The City utilizes various financial and budget policies to guide the City Council and staff when making financial decisions. These include adoption of a balanced budget, minimizing the reliance on state revenues which have proven to be unpredictable, setting of a 50 percent of subsequent year’s budgeted expenditures minimum fund balance level to provide for cash flow purposes, and adoption of a five-year capital improvement plan to provide for capital asset acquisition and replacement. Cash temporarily idle during the year was invested in U.S. government agency obligations, municipal securities, certificates of deposit, and money market instruments. The City’s investment policy calls for the investment of public funds in a manner that will provide the highest investment return with minimum risk while meeting the daily cash flow demands of the City. For investments held at December 31, 2017, the effective duration of the investment portfolio was 1.86 years. For investments held at December 31, 2018, the effective duration of the investment portfolio was 1.94 years. The City’s average return on investments in 2018 was 1.79 percent. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded the City a Certificate of Achievement for Excellence in Financial Reporting to the City of Apple Valley for its CAFR for the fiscal year ended December 31, 2017. This is the seventh year that the City achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report could not occur without the efficient and dedicated service of the entire finance department staff throughout the reporting year. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. We would like to thank the City Council for its commitment in planning and implementing the financial operations of the City in a fiscally prudent and progressive manner. Respectfully Submitted, CITY OF APPLE VALLEY, MINNESOTA Ronald Hedberg Finance Director -x- FINANCIAL SECTION -1- INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of Apple Valley, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit . We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts a nd disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion o n the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -2- OPINIONS In our opinion, the financial statements referred to on the previous page 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, 2018, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. EMPHASIS OF MATTER As described in Note 1 of the notes to basic financial statements, the City has implemented Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, during the year ended December 31, 2018. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, supplementary information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. (continued) -3- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 4, 2019 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota June 4, 2019 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF APPLE VALLEY Management’s Discussion and Analysis Year Ended December 31, 2018 -4- As management of the City of Apple Valley, Minnesota (the City), we have provided readers of the City’s financial statements with this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2018. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, located earlier in this report. 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 $240,889,947 (net position). Of this amount, $41,295,271 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors; $15,352,356 is restricted for specific purposes (restricted net position); and $184,242,320 represents the net investment in capital assets. The City’s total net position increased by $10,128,318 during the year ended December 31, 2018, excluding the change in accounting principle and prior period adjustment reported in the current year as discussed below. • The City recorded a prior period adjustment in the current year related to the City’s inventory of capitalized assets and the related useful lives. This change reduced beginning net position in the government-wide financial statements by $18,851,915. • The City recorded a change in accounting principle in the current year with the implementation of the Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The change reflects standards established for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expenses as they relate to other post -employment benefit (OPEB) obligations. The implementation of this standard reduced beginning net position in the government-wide financial statements by $105,729. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $54,515,901, an increase of $3,690,455. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $17,052,177, or 50.1 percent, of total General Fund expenditures based on 2019 budgeted expenditure levels, including transfers. • The City’s long-term liabilities decreased by $5,241,308, or 11.0 percent, during the current fiscal year. The decrease is primarily attributable to the decrease in net pension liability of $3,457,094, as a result of the change in actuarial assumptions in the computation of the City’s obligation under GASB Statement No. 68. The remainder of the decrease is due to payments on the City’s outstanding debt obligations per the agreed upon schedules, in addition to the early retirement of the 2015A Liquor Revenue Bonds of which $880,000 was retired early. Please see further details of long-term debt in Note 5 of the notes to basic financial statements. -5- 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 include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic 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, liabilities, and deferred inflows/outflows 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). Both of the government-wide financial statements distinguish functions of the City that are principally supported by property 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, and parks and recreation. The business-type activities of the City include municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility. The government-wide financial statements not only include the City itself (known as the primary government), but also the Apple Valley Economic Development Authority (EDA). The EDA is legally separate and is reported as if it were part of the primary government because it provides services exclusively for the City. The EDA is reported as the Economic Development Debt Service Fund and the EDA Operations Special Revenue Fund. Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All 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 the 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. -6- 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 simil ar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and Changes in Fund Balances for the General Fund, Closed Bond Issues Debt Service Fund, Road Improvements Capital Projects Fund, and Future Capital Projects – Capital Projects Fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form o f combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General Fund, Road Improvements Capital Projects Fund, Future Capital Projects – Capital Projects Fund, Cable TV Special Revenue Fund, EDA Operations Special Revenue Fund, and Cable Capital Equipment Capital Projects Fund. A budgetary comparison statement or schedule has been provided for these funds to demonstrate compliance with this budget. Proprietary Funds – The City maintains two different types of proprietary funds. 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 municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility operations. Internal service funds are accounting devices used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its dental insurance, benefits/other insurance, and vehicle and equipment replacement. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, municipal golf course, sports arena, water and sewer, storm drainage, cemetery, and street light utility operations, all of which are considered to be major funds of the City. Conver sely, the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to Basic Financial Statements – The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other Information – In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information and the combining and individual fund statements and schedules (presented as supplementary information) referred to earlier in connection with nonmajor governmental funds and internal service funds, which are presented immediately following the basic financial statements. Further, a statistical section has been included as part of the Comprehensive Annual Financial Report (CAFR) to facilitate additional analysis, and is the third and final section of the report. -7- GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $240,889,947 at the close of the most recent fiscal year. By far, the largest portion of the City’s net position reflects its net investment in capital assets (e.g., land, buildings, machinery, equipment, distribution system, and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investments in its capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following table provides the City’s Summary of Net Position: 2018 2017 2018 2017 2018 2017 AssetsCurrent and other assets 69,233,578$ 64,266,249$ 18,606,217$ 20,180,433$ 87,839,795$ 84,446,682$ Capital assets, net 97,632,258 114,442,328 109,559,262 105,304,026 207,191,520 219,746,354 Total assets 166,865,836$ 178,708,577$ 128,165,479$ 125,484,459$ 295,031,315$ 304,193,036$ Deferred outflows of resourcesPension plan deferments 9,513,664$ 12,839,621$ 493,170$ 754,334$ 10,006,834$ 13,593,955$ OPEB plan deferments 98,129 – 16,722 – 114,851 – Total deferred outflowsof resources 9,611,793$ 12,839,621$ 509,892$ 754,334$ 10,121,685$ 13,593,955$ Total assets and deferred outflows of resources 176,477,629$ 191,548,198$ 128,675,371$ 126,238,793$ 305,153,000$ 317,786,991$ LiabilitiesOther liabilities 4,405,081$ 3,924,212$ 2,556,160$ 1,439,232$ 6,961,241$ 5,363,444$ Noncurrent liabilities 30,136,774 33,878,216 12,353,263 13,853,129 42,490,037 47,731,345 Total liabilities 34,541,855$ 37,802,428$ 14,909,423$ 15,292,361$ 49,451,278$ 53,094,789$ Deferred inflows of resourcesPension plan deferments 14,136,354$ 14,446,921$ 675,421$ 526,008$ 14,811,775$ 14,972,929$ Net positionNet investment in capital assets 83,980,389$ 99,642,040$ 100,261,931$ 94,851,212$ 184,242,320$ 194,493,252$ Restricted 15,352,356 15,364,368 – 178,665 15,352,356 15,543,033 Unrestricted 28,466,675 24,292,441 12,828,596 15,390,547 41,295,271 39,682,988 Total net position 127,799,420$ 139,298,849$ 113,090,527$ 110,420,424$ 240,889,947$ 249,719,273$ Total liabilities, deferred inflows of resources, and net position 176,477,629$ 191,548,198$ 128,675,371$ 126,238,793$ 305,153,000$ 317,786,991$ Business-Type Activities Totals Table 1 Summary of Net Position as of December 31, 2018 and 2017 Governmental Activities An additional portion of the City’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of $41,295,271 may be used to meet the City’s ongoing obligations to citizens and creditors. -8- 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. There was a decrease in net position in the governmental activities of $11,499,429, and an increase in business-type activities of $2,670,103, for a net total government-wide decrease of $8,829,326 in net position. This change in net position reflects an increase of $10,128,318 from the current year operating results, while the prior period adjustment mentioned earlier reduced net position by $18,851,915 and the change in accounting principle mentioned earlier reduced net position by $105,729. Both governmental activities and business-type activities experienced changes in deferred outflows of resources, deferred inflows of resources, and long-term liabilities as a result of the City’s participation in defined benefit pension plans. The City also experienced a decrease in long-term liabilities, due to payments made on the City’s bonds. The decline in capital assets, net is related to the inventory of capitalized assets previously mentioned. The following table provides a condensed version of the Statement of Activities for the year ended December 31, 2018 with comparative amounts for the year ended December 31, 2017: 2018 2017 2018 2017 2018 2017 RevenuesProgram revenuesCharges for services 8,556,300$ 7,776,342$ 24,118,992$ 23,577,253$ 32,675,292$ 31,353,595$ Operating grants and contributions 1,985,278 1,082,234 – – 1,985,278 1,082,234 Capital grants and contributions 3,741,660 3,206,571 1,693,236 1,057,916 5,434,896 4,264,487 General revenuesProperty taxes 26,496,094 25,053,457 121,000 121,000 26,617,094 25,174,457 Other taxes 150,340 182,377 – – 150,340 182,377 Franchise taxes 1,306,360 1,288,426 – – 1,306,360 1,288,426 Grants and contributions not restricted to specific programs 124,430 56,751 – – 124,430 56,751 Other 10,786 8,440 – – 10,786 8,440 Investment earnings 886,459 551,119 268,297 151,206 1,154,756 702,325 Total revenues 43,257,707 39,205,717 26,201,525 24,907,375 69,459,232 64,113,092 ExpensesGeneral government 7,670,285 6,260,768 – – 7,670,285 6,260,768 Public safety 12,750,741 13,443,699 – – 12,750,741 13,443,699 Public works 9,434,637 8,473,039 – – 9,434,637 8,473,039 Parks and recreation 6,992,203 7,239,268 – – 6,992,203 7,239,268 Interest and fiscal charges 284,621 886,283 – – 284,621 886,283 Municipal liquor – – 8,362,332 8,251,249 8,362,332 8,251,249 Municipal golf course – – 1,238,125 1,545,792 1,238,125 1,545,792 Sports arena – – 784,343 798,402 784,343 798,402 Water and sewer – – 9,203,936 10,031,223 9,203,936 10,031,223 Storm drainage – – 2,035,266 2,181,086 2,035,266 2,181,086 Cemetery – – 89,069 127,469 89,069 127,469 Street light utility – – 485,356 483,752 485,356 483,752 Total expenses 37,132,487 36,303,057 22,198,427 23,418,973 59,330,914 59,722,030 Increase in net position before transfers 6,125,220 2,902,660 4,003,098 1,488,402 10,128,318 4,391,062 Transfers 1,317,600 1,915,500 (1,317,600) (1,915,500) – – Change in net position 7,442,820 4,818,160 2,685,498 (427,098) 10,128,318 4,391,062 Net position – beginning, as previously reported 139,298,849 134,480,689 110,420,424 110,847,522 249,719,273 245,328,211 Change in accounting principle (90,334) – (15,395) – (105,729) – Prior period adjustment (18,851,915) – – – (18,851,915) – Net position – beginning, as restated 120,356,600 134,480,689 110,405,029 110,847,522 230,761,629 245,328,211 Net position – ending 127,799,420$ 139,298,849$ 113,090,527$ 110,420,424$ 240,889,947$ 249,719,273$ Table 2 Change in Net Position for the Years Ended December 31, 2018 and 2017 Business-Type Activities TotalGovernmental Activities -9- Governmental Activities – The City’s net position for governmental activities decreased by $11,499,429, or 8.3 percent, after $1,317,600 of net transfers from business-type activities and after the prior period adjustment and change in accounting principle previously discussed. Key elements of this decrease are seen in the table on the previous page. Revenues increased overall by $4,051,990, or 10.3 percent. This change included: • Increase in charges for services resulting from development related activities. • Increase in operating grants and contributions due to increased economic development related grants. • Increase in capital grants and contributions due to increased special assessment activity in the current year. • Increase in property taxes due to increases in the general tax levy. Expenses increased overall by $829,430, or 2.3 percent. This increase included: • The general government function increased $1,409,517 and public works function increased $961,598. These increases were offset by decreases in the public safety function of $692,958, parks and recreation function of $247,065, and interest and fiscal charges of $601,662. As seen in the following graph, taxes make up about 65 percent of the total governmental activities revenues for 2018. Charges for services make up about 20 percent of the total, and are followed by grants at 13 percent, and all other at 2 percent of the total. 2018 Revenues by Source – Governmental Activities 2017 Revenues by Source – Governmental Activities -10- 2018 Expenses – Governmental Activities 2017 Expenses – Governmental Activities The expenses in the graph above for governmental activities show the amounts spent on different activities for 2018 and 2017. In 2018, public safety makes up 34 percent, public works 25 percent, parks and recreation 19 percent, and general government 21 percent. Other includes debt service interest and fiscal charges in governmental activities and makes up 1 percent. -11- Business-Type Activities – Business-type activities increased the City’s total net position by $2,670,103. Key elements of the business-type activities are as follows: • Charges for services for business-type activities include sales for municipal liquor, municipal golf course, and sports arena; and charges for water and sewer, storm drainage, cemetery, and street light utility operations. The following graph shows the relationship between the revenues and expenses for the various activities. • About 79 percent of all business-type activity expenses are from the municipal liquor and water and sewer operations. • Overall, business-type activities generated an increase in net position before capital contributions and transfers of $2,309,862. After considering capital grants and contributions of $1,693,236, net transfers out to governmental activities totaling $1,317,600, and the change in accounting principle of $15,395, net position increased by $2,670,103. Revenues and Expenses – Business-Type Activities $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 MunicipalLiquor MunicipalGolfCourse SportsArena Water andSewer StormDrainage Cemetery Street LightUtility Revenues Expenses -12- 2018 Revenues by Source – Business-Type Activities 2017 Revenues by Source – Business-Type Activities -13- 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 currently available 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 $54,515,901, an increase of $3,690,455 in comparison with the prior year. The City has four major governmental funds: the General Fund, the Closed Bond Issues Debt Service Fund, the Road Improvements Capital Projects Fund, and the Future Capital Projects Capital Projects Fund. General Fund The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance of the General Fund was $17,640,331. As a measure of the General Fund’s liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures. Unassigned fund balance represents 50.1 percent of subsequent year budget expenditures, including transfers. Total fund balance for the City’s General Fund increased by $303,918 during 2018. Key factors in this increase are as follows: • The City adopted a balanced budget prior to the start of the current year. • License and permit revenues were approximately $750,000 over budget and are a decrease of about $990,345 from the prior year, due to a higher level of development activity in the prior year. • Expenditures were approximately $775,000 under the 2018 budgeted amounts, due to position vacancies and uncompleted 2018 capital purchases that were carried over into 2019. • The total fund balance increase of $303,918 is after transferring $1,165,000 out of the General Fund to the Future Capital Projects Capital Projects Fund in accordance with the City’s fund balance policy. Closed Bond Issues Fund – Debt Service Fund The Closed Bond Issues Fund accumulates resources remaining from retired debt service funds. The fund balance at the end of 2018 is $8,663,145, which decreased $777,521 from the prior year. The decrease results from the Closed Bond Issues Fund transferring out amounts to close certain retired bond funds that were carrying a deficit balance. Road Improvements Fund – Capital Projects Fund The Road Improvements Fund receives transfers from other funds. These resources are used to finance street overlays and reconstruction projects per the City’s pavement management plan. The fund balance at the end of 2018 is negative $5,250,659, which is a decrease of $76,379 from the prior year. -14- Future Capital Projects Fund – Capital Projects Fund The Future Capital Projects Fund accumulates resources according to the City Council’s adopted fund balance policy. This policy calls for amounts in the General Fund that exceed a maximum level to be transferred to the Future Capital Projects Fund. The fund balance at the end of 2018 is $14,300,138, which is a decrease of $1,053,263 from the prior year. A transfer from the General Fund was received in 2018 in the amount of $1,165,000 in accordance with the fund balance policy. Proprietary Funds – The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City has seven enterprise funds and three internal service funds. The seven enterprise funds include: Municipal Liquor Fund, Municipal Golf Course Fund, Sports Arena Fund, Water and Sewer Fund, Storm Drainage Fund, Cemetery Fund, and the Street Light Utility Fund. The total net position of all enterprise funds totals $113,237,587, $100,261,931, of which is capital assets, net of related debt and in total, is an increase of $5,410,719 from the prior year. The total unrestricted net position for all proprietary funds for the year was $12,975,656, a decrease of $2,530,128. The decrease in unrestricted net position is due to the use of unrestricted net position for capital asset purchases in the current year. Municipal Liquor Fund The net position in the Municipal Liquor Fund increased $506,125 mainly from current year operations. This increase reflects continued positive operations of the City’s liquor stores after transferring $630,000 to the General Fund in support of public safety equipment replacements and parks and recreation activities. The increase in the Municipal Liquor Fund current year operations comes from maintaining gross profit margins. Municipal Golf Course Fund The Municipal Golf Course Fund operations posted a decrease in net position of $371,741 mainly from current year operations. Sports Arena Fund The Sports Arena Fund posted an increase in net position of $130,066 mainly from current year operations, which is after inclusion of an annual $121,000 property tax levy. Water and Sewer Fund The Water and Sewer Fund is the City’s largest proprietary fund. Unrestricted net position at the end of the year amounted to $11,207,700, a decrease of $739,224. Net position increased $2,038,547 in the current year, due to current year operations and $1,383,138 in capital contributions. Total net investment in capital assets totals $60,658,307, an increase of $2,777,771, mainly due to capital asset acquisitions in 2018 and contributions from private developers. -15- Storm Drainage Fund The Storm Drainage Fund increased its net position by $286,049, mainly due to current year operations. Cemetery Fund The Cemetery Fund increased its net position by $72,914, which results from additional lot sales during the year. Street Light Utility Fund The Street Light Utility Fund increased its net position by $39,966 in the current year. GENERAL FUND BUDGETARY HIGHLIGHTS The most significant amendment to the 2018 General Fund budget was made to provide for projects that were carried over from 2017 to 2018. During the year, the total revenues exceeded the final amended budgetary estimates by $811,985, which can be attributed to licensing and permits exceeding the budget by $749,599, due to higher than projected development activity in the current year. Total actual expenditures were $774,438 less than the budgetary estimates. General Fund budget performance can be attributed to curtailing spending where possible, position vacancies during the year, and conservative budgeting practices. Personal services in the General Fund ended the year about $532,000 under budget. -16- CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets – The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2018 amounts to $207,191,520 (net of accumulated depreciation). This investment in capital assets includes land and land improvements, construction in progress, buildings, other improvements, furniture and equipment, and infrastructure. The total decrease in the City’s investment in capital assets for the current fiscal year was $12,554,834, or approximately 5.7 percent, mainly due to the prior period adjustment related to capital asset activity and depreciable lives. Total depreciation charged in 2018 was $10,854,303. City of Apple Valley’s Capital Assets 2018 2017 2018 2017 2018 2017 Capital assetsLand and land improvements 4,581,173$ 4,581,173$ 6,873,929$ 6,818,433$ 11,455,102$ 11,399,606$ Construction in progress 3,078,404 1,740,083 4,692,338 1,277,221 7,770,742 3,017,304 Buildings 34,325,350 32,587,544 22,147,457 22,086,746 56,472,807 54,674,290 Other improvements 25,508,085 25,457,057 157,454,172 154,024,344 182,962,257 179,481,401 Furniture and equipment 19,212,389 18,597,572 6,405,434 5,515,325 25,617,823 24,112,897 Infrastructure 114,422,998 109,815,968 – – 114,422,998 109,815,968 Less accumulated depreciation (103,496,141) (78,337,069) (88,014,068) (84,418,043) (191,510,209) (162,755,112) Total capital assets, net of depreciation 97,632,258$ 114,442,328$ 109,559,262$ 105,304,026$ 207,191,520$ 219,746,354$ Total Table 3 Capital Assets Governmental Activities Business-Type Activities Major capital asset additions during the current year included the following: • Street and improvement projects totaling approximately $3.8 million, including the following significant reconstruction projects: Redwood Drive, Redwood Court, 142nd Street and Fair Oak Court, and Micro Surfacing Street Improvements ($260,000), along with other 2018 street and trail improvements totaling $1,100,000. • A park pavilion and restroom was completed at Cobblestone Park at an approximate cost of $680,000. Various building improvements totaling $550,000 were completed at the old City Hall building used as the Education Building. Various lighting and energy efficiency projects were completed during the year with a cost of approximately $1,531,000. • Water, Sanitary and Storm Sewer Utility improvements in new and existing subdivisions totaling about $2,500,000. • Equipment additions totaling around $2,048,000. This includes about $1,070,000 of additions in governmental activities primarily related to vehicle and equipment replacements. It also includes approximately $852,000 of additions in business-type activities primarily related to new turf maintenance equipment at the golf course, a new street sweeper, and new sanitary sewer jetter. Additional information on the City’s capital assets can be found in Note 4 of the notes to basic financial statements. -17- Long-Term Debt – At the end of the current fiscal year, the City had total debt outstanding of $42,490,037. Of this amount, $22,184,941 is backed by the full faith and credit of the City. Of this total, property taxes are the primary source of repayment for the General Obligation Bonds noted below in the amount of $12,895,000. The General Obligation Improvement Bonds in the amount of $475,000 is special assessment debt for which the City is liable in the event of default by the property owners subject to the assessment. The revenue bonds and revenue notes have the full faith and credit backing of the City with enterprise fund revenues being the primary source of repayment, and the capital lease is backed by the revenues of the golf course enterprise fund. City of Apple Valley’s Debt 2018 2017 2018 2017 2018 2017 General obligation bonds 12,895,000$ 13,885,000$ –$ –$ 12,895,000$ 13,885,000$ General obligation improvement bonds 475,000 585,000 – – 475,000 585,000 General obligation revenue bonds – – 8,435,000 9,000,000 8,435,000 9,000,000 Revenue bonds – – – 1,120,000 – 1,120,000 General obligation revenue notes – – 379,941 – 379,941 – Capital lease – – 335,739 175,526 335,739 175,526 Unamortized premium 281,869 330,288 146,651 157,288 428,520 487,576 Total OPEB liability 1,900,268 1,537,306 330,379 268,527 2,230,647 1,805,833 Net pension liability 11,724,700 14,729,157 2,206,115 2,658,752 13,930,815 17,387,909 Compensated absences 2,859,937 2,811,465 519,438 473,036 3,379,375 3,284,501 Total 30,136,774$ 33,878,216$ 12,353,263$ 13,853,129$ 42,490,037$ 47,731,345$ Total Table 4 Outstanding Debt Governmental Activities Business-Type Activities The City’s total bonded debt decreased by $2,785,000 during 2018, which resulted from the scheduled debt payments during the year in addition to the call and early retirement of the 2015A Liquor Revenue Bonds. The City maintains an “Aaa” rating from Moody’s and “AAA” from Standard and Poor’s on all of its general obligation debt. State statutes limit the amount of general obligation debt a governmental entity may issue to 3 percent of its total market valuation. A complete calculation of the City’s legal debt margin can be found in the statistical section of this report. Additional information on the City’s long-term debt can be found in Note 5 of the notes to basic financial statements. -18- ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s budget, along with the 5-year Capital Improvement Plan, is an important part of the City’s public process. The combination of these documents provides the framework that allows the City to address needed maintenance and provide for the growth and demands for service. Through innovation and efficiencies, the City continues to provide quality services that meet or exceed the expectations of our community members. Strong financial stewardship and quality customer service is a hallmark of the City’s government and is evidenced by the City’s AAA bond rating. Departments successfully managed their expenditures and as a result General Fund expenditures were approximately 2.6 percent below the authorized budget. The City experienced growth in licenses and permits, due to a surge in single and multi-family development activity, which began in 2014 and is anticipated to last beyond 2019. The City will continue to make significant ongoing investments in the Street and Utility Infrastructure Preservation and Reconstruction Program. These factors were considered in preparing the City’s budget for the 2019 fiscal year: •Property taxes provide the largest source, approximately 73.0 percent, of the resources needed tosupport the General Fund activities. Minnesota cities are not subject to levy limits for 2019. •Property values in the City are increasing as they are in other locations. The increase in themedian valued residential property for the 2019 budget year will be approximately 9.0 percent,compared to an increase of 6.2 percent for the 2018 budget year. The preliminary county data for2020 shows a 7.1 percent increase in the median valued home. •The total property tax levy increased 2.2 percent for 2019. •The taxes paid by the median valued home increased for 2019 to $1,020 from $987 in 2018,approximately 3.3 percent. •Contract settlements with all of the City’s three unions have been reached through 2019. •A 5.0 percent increase in water utility rates was enacted for 2019 to fund the portion of the Streetand Utility Infrastructure Preservation Program related to the water utility and the water meterreplacement program. Utility rates for the sanitary sewer, storm water, and street light utilitieseach increased by 5.0, 10.0, and 3.0 percent, respectively for 2019. REQUESTS FOR INFORMATION This CAFR is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests fo r additional financial information should be addressed to the Office of the Finance Director, City of Apple Valley, 7100 – 147th Street West, Apple Valley, Minnesota 55124. THIS PAGE INTENTIONALLY LEFT BLANK GOVERNMENT-WIDE FINANCIAL STATEMENTS Governmental Business-TypeActivitiesActivities Total AssetsCash and investments 56,386,164$ 14,801,921$ 71,188,085$ Receivables Accounts and interest 808,305 3,273,780 4,082,085 Notes 574,320 – 574,320 Taxes 1,842,405 – 1,842,405 Special assessments 3,561,668 306,619 3,868,287 Due from other governmental units 85,584 214,048 299,632 Internal balances 1,944,542 (1,944,542) – Prepaids 326,197 272,913 599,110 Inventory 19,817 1,681,478 1,701,295 Land held for resale 1,877,559 – 1,877,559 Net pension asset 1,807,017 – 1,807,017 Capital assetsNot depreciated 7,659,577 11,566,267 19,225,844 Depreciated, net of accumulated depreciation 89,972,681 97,992,995 187,965,676 Total assets 166,865,836 128,165,479 295,031,315 Deferred outflows of resourcesPension plan deferments 9,513,664 493,170 10,006,834 OPEB plan deferments 98,129 16,722 114,851 Total deferred outflows of resources 9,611,793 509,892 10,121,685 Total assets and deferred outflows of resources 176,477,629$ 128,675,371$ 305,153,000$ LiabilitiesAccrued salaries payable 751,342$ 105,407$ 856,749$ Accounts payable 2,565,512 1,041,719 3,607,231 Contracts payable 1,017,857 1,204,108 2,221,965 Interest payable 11,399 9,435 20,834 Due to other governmental units 50,310 182,000 232,310 Claims incurred, but not reported 8,661 – 8,661 Unearned revenue – 13,491 13,491 Long-term liabilities Due within one year 2,851,000 929,780 3,780,780 Due in more than one year 27,285,774 11,423,483 38,709,257 Total long-term liabilities 30,136,774 12,353,263 42,490,037 Total liabilities 34,541,855 14,909,423 49,451,278 Deferred inflows of resourcesPension plan deferments 14,136,354 675,421 14,811,775 Net positionNet investment in capital assets 83,980,389 100,261,931 184,242,320 Restricted for Debt service 1,524,038 – 1,524,038 Tax increment financing 4,268,431 – 4,268,431 Economic development 743,520 – 743,520 Police forfeiture 61,466 – 61,466 Capital acquisition 7,357,305 – 7,357,305 Fire relief pension 1,235,335 – 1,235,335 Other purposes 162,261 – 162,261 Unrestricted 28,466,675 12,828,596 41,295,271 Total net position 127,799,420 113,090,527 240,889,947 Total liabilities, deferred inflows of resources, and net position 176,477,629$ 128,675,371$ 305,153,000$ CITY OF APPLE VALLEY Statement of Net Positionas of December 31, 2018 See notes to basic financial statements -19- Operating CapitalCharges for Grants and Grants andFunctions/Programs Expenses Services Contributions Contributions Governmental activitiesGeneral government 7,670,285$ 1,987,775$ 1,148,639$ 496$ Public safety 12,750,741 615,835 836,639 – Public works 9,434,637 3,555,717 – 3,741,164 Parks and recreation 6,992,203 2,396,973 – – Interest and fiscal charges 284,621 – – – Total governmental activities 37,132,487 8,556,300 1,985,278 3,741,660 Business-type activitiesMunicipal liquor 8,362,332 9,456,705 – – Municipal golf course 1,238,125 864,579 – – Sports arena 784,343 790,989 – – Water and sewer 9,203,936 10,365,726 – 1,383,138 Storm drainage 2,035,266 1,967,313 – 310,098 Cemetery 89,069 150,703 – – Street light utility 485,356 522,977 – – Total business-type activities 22,198,427 24,118,992 – 1,693,236 Total governmental and business-type activities 59,330,914$ 32,675,292$ 1,985,278$ 5,434,896$ General revenuesProperty taxesOther taxesFranchise taxesGrants and contributions not restricted to specific programsOther general revenuesInvestment earnings TransfersTotal general revenues and transfers Change in net position Net position – beginning, as previously reportedChange in accounting principlePrior period adjustment Net position – beginning, as restated Net position – ending Program Revenues CITY OF APPLE VALLEY Statement of ActivitiesYear Ended December 31, 2018 See notes to basic financial statements -20- Governmental Business-TypeActivitiesActivities Total (4,533,375)$ –$ (4,533,375)$ (11,298,267) – (11,298,267) (2,137,756) – (2,137,756) (4,595,230) – (4,595,230) (284,621) – (284,621) (22,849,249) – (22,849,249) – 1,094,373 1,094,373 – (373,546) (373,546) – 6,646 6,646 – 2,544,928 2,544,928 – 242,145 242,145 – 61,634 61,634 – 37,621 37,621 – 3,613,801 3,613,801 (22,849,249) 3,613,801 (19,235,448) 26,496,094 121,000 26,617,094 150,340 – 150,340 1,306,360 – 1,306,360 124,430 – 124,430 10,786 – 10,786 886,459 268,297 1,154,756 1,317,600 (1,317,600) – 30,292,069 (928,303) 29,363,766 7,442,820 2,685,498 10,128,318 139,298,849 110,420,424 249,719,273 (90,334) (15,395) (105,729) (18,851,915) – (18,851,915) 120,356,600 110,405,029 230,761,629 127,799,420$ 113,090,527$ 240,889,947$ Revenue and Changes in Net PositionNet (Expenses) -21- THIS PAGE INTENTIONALLY LEFT BLANK FUND FINANCIAL STATEMENTS THIS PAGE INTENTIONALLY LEFT BLANK Debt Service FutureGeneralClosed Bond Road CapitalFundIssuesImprovementsProjects(1000)(3205)(2025)(4930) AssetsCash and investments 16,206,366$ 5,145,237$ –$ 8,748,509$ ReceivablesAccounts 264,472 – – – Notes – 574,320 – – Taxes 1,842,405 – – – Special assessmentsCurrent 1,896 472,182 35,997 – Delinquent 11,426 20,425 – – Deferred – 2,248,564 251,178 – Interest 374,422 – – – Due from other governmental units 81,968 – – – Due from other funds – – – 3,892,971Advances to other funds – 1,079,159 – 1,797,482 Prepaids 125,827 – – – Inventory 19,817 – – – Land held for resale – 1,877,559 – – Total assets 18,928,599$ 11,417,446$ 287,175$ 14,438,962$ LiabilitiesAccrued salaries payable 744,996$ –$ –$ –$ Accounts payable 331,430 13,130 574,584 138,824 Contracts payable 1,168 – 798,238 – Due to other governmental units 50,126 – 184 – Due to other funds – – 3,877,653 – Advances from other funds – – – – Total liabilities 1,127,720 13,130 5,250,659 138,824 Deferred inflows of resources Unavailable revenue – property taxes 147,226 – – – Unavailable revenue – special assessments 13,322 2,741,171 287,175 – Total deferred inflows of resources 160,548 2,741,171 287,175 – Fund balances (deficit)Nonspendable 145,644 – – – Restricted – – – – Committed 367,510 – – – Assigned 75,000 8,663,145 – 14,300,138 Unassigned 17,052,177 – (5,250,659) – Total fund balances (deficit)17,640,331 8,663,145 (5,250,659) 14,300,138 Total liabilities, deferred inflows of resources, and fund balances 18,928,599$ 11,417,446$ 287,175$ 14,438,962$ Capital Projects CITY OF APPLE VALLEY Balance SheetGovernmental Fundsas of December 31, 2018 See notes to basic financial statements -22- Nonmajor TotalGovernmentalGovernmentalFundsFunds 21,782,553$ 51,882,665$ 168,023 432,495 – 574,320 – 1,842,405 130,000 640,075 – 31,851 390,000 2,889,742 – 374,422 3,616 85,584 – 3,892,971 – 2,876,641 – 125,827 – 19,817 – 1,877,559 22,474,192$ 67,546,374$ 6,346$ 751,342$ 1,471,972 2,529,940 218,451 1,017,857 – 50,310 15,318 3,892,971 1,079,159 1,079,159 2,791,246 9,321,579 – 147,226 520,000 3,561,668 520,000 3,708,894 – 145,644 13,608,420 13,608,420 – 367,510 6,412,331 29,450,614 (857,805) 10,943,713 19,162,946 54,515,901 22,474,192$ 67,546,374$ -23- THIS PAGE INTENTIONALLY LEFT BLANK Total fund balances – governmental funds 54,515,901$ Capital assets used in governmental activities are not current financial resources and,therefore,are not reported as assets in governmental funds.Cost of capital assets 187,993,554 Less accumulated depreciation (96,493,879) Net pension assets are included in net position,but are excluded from fund balances becausethey do not represent financial resources.1,807,017 Long-term liabilities are not payable with current financial resources and,therefore,are notreported in governmental funds.Bonds payable (13,370,000) Total OPEB liability (1,900,268) Net pension liability (11,724,700) Due to availability,certain revenues are not recognized under the governmental fund statementsuntilreceived;however,under full accrual in the government-wide Statement of Activities,revenues are recorded when earned regardless of when received.3,708,894 Accrued interest payable is included in net position,but is excluded from fund balances untildue and payable.(11,399) Internal service funds are used by management to charge certain costs to individual funds.TheassetsandliabilitiesoftheinternalservicefundsareincludedingovernmentalactivitiesintheStatement of Net Position.Internal service fund balances included in governmental activities 7,933,670 Add internal services balances allocated to business-type activities 147,060 Governmental funds report debt premiums as other financing sources at the time of issuance.Premiums are reported as liabilities in the Statement of Net Position.(281,869) Governmental funds do not report certain long-term amounts related to pensions and OPEB thatare included in net position. Deferred outflows of resources – pension plan deferments 9,513,664 Deferred outflows of resources – OPEB plan deferments 98,129 Deferred inflows of resources – pension plan deferments (14,136,354) Total net position – governmental activities 127,799,420$ Amounts reported for governmental activities in the Statement of Net Position are differentbecause: as of December 31, 2018 CITY OF APPLE VALLEY Reconciliation of the Balance Sheet to theStatement of Net PositionGovernmental Funds See notes to basic financial statements -24- Debt Service FutureGeneralClosed Bond Road CapitalFundIssuesImprovementsProjects(1000)(3205)(2025)(4930) RevenueTaxes 24,390,777$ –$ –$ –$ Other taxes 50,380 – – – Franchise taxes 515,000 – – – Special assessments 496 1,478,394 214,551 – Licenses and permits 2,254,309 – – – Intergovernmental 881,315 – 585,765 – Charges for services 3,086,720 – – – Fines and forfeits 302,494 – – – Investment earnings 237,028 92,424 – 204,366 Other 911,721 3,000 1,090 – Total revenue 32,630,240 1,573,818 801,406 204,366 ExpendituresCurrentGeneral government 5,411,406 – – – Public safety 13,102,632 – – – Public works 4,428,567 – – – Parks and recreation 5,461,620 – – – Capital outlay 295,621 – 4,873,595 1,631,819 Debt servicePrincipal – – – – Interest and fiscal charges – 12,818 – – Total expenditures 28,699,846 12,818 4,873,595 1,631,819 Excess (deficiency) of revenue over expenditures 3,930,394 1,561,000 (4,072,189) (1,427,453) Other financing sources (uses)Sale of capital assets 18,924 – – – Transfers in 1,317,600 1,307,012 3,995,810 1,165,000 Transfers (out)(4,963,000) (3,645,533) – (790,810) Total other financing sources (uses)(3,626,476) (2,338,521) 3,995,810 374,190 Net change in fund balances 303,918 (777,521) (76,379) (1,053,263) Fund balances (deficit)Beginning of year 17,336,413 9,440,666 (5,174,280) 15,353,401 End of year 17,640,331$ 8,663,145$ (5,250,659)$ 14,300,138$ Capital Projects CITY OF APPLE VALLEY Statement of Revenue, Expenditures, and Changes in Fund BalancesGovernmental FundsYear Ended December 31, 2018 See notes to basic financial statements -25- Nonmajor TotalGovernmentalGovernmentalFundsFunds 2,099,737$ 26,490,514$ 99,960 150,340 791,360 1,306,360 130,000 1,823,441 – 2,254,309 1,268,744 2,735,824 – 3,086,720 – 302,494 289,980 823,798 3,245,096 4,160,907 7,924,877 43,134,707 1,858,766 7,270,172 5,161 13,107,793 717,157 5,145,724 265,492 5,727,112 1,295,644 8,096,679 1,100,000 1,100,000 332,390 345,208 5,574,610 40,792,688 2,350,267 2,342,019 11,912 30,836 5,042,569 12,827,991 (2,111,048) (11,510,391) 2,943,433 1,348,436 5,293,700 3,690,455 13,869,246 50,825,446 19,162,946$ 54,515,901$ -26- THIS PAGE INTENTIONALLY LEFT BLANK Total net change in fund balances – governmental funds 3,690,455$ Capital outlays are reported in governmental funds as expenditures;however,in the Statement ofActivitiesthecostofthoseassetsisallocatedovertheestimatedusefullivesasdepreciationexpense. Capital outlay 7,722,110 Capital contributions 311,986 Depreciation expense (5,948,120) Net pension assets are only recorded in the government-wide financial statements as they are notcurrent financial resources to governmental funds.1,015,991 Repayment of long-term liabilities is an expenditure in the governmental funds,but therepayment reduces long-term liabilities in the Statement of Net Position.1,100,000 Interest on long-term debt in the Statement of Activities differs from the amount reported in thegovernmentalfundsbecauseinterestisrecognizedasanexpenditureinthefundswhenitisdue,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.12,168 Governmental funds report debt issuance premiums as other financing sources at the time ofissuance. Premiums are reported as liabilities in the Statement of Net Position.48,419 Certain revenues are recognized as soon as they are earned in the Statement of Activities;however,under the modified accrual basis of accounting,certain revenues cannot be recognizeduntil they are available to liquidate liabilities of the current period.(331,401) Internal service funds are used by management to charge certain costs to individual funds.Thenetrevenueofcertainactivitiesofinternalservicefundsisreportedwithgovernmentalactivitiesin the government-wide financial statements.Internal service fund activity included in governmental activities (25,179) Add back internal service fund activity allocated to business-type activities 31,823 Governmental funds do not report long-term amounts related to pensions and OPEB that areincluded in the change in net position.Net pension liability 3,004,457 Total OPEB liability (220,068) Deferred outflows of resources – pension plan deferments (3,325,957) Deferred outflows of resources – OPEB plan deferments 45,569 Deferred inflows of resources – pension plan deferments 310,567 Change in net position – governmental activities 7,442,820$ Amounts reported for governmental activities in the Statement of Activities are different because: CITY OF APPLE VALLEY Reconciliation of the Statement ofRevenue, Expenditures, and Changes in Fund Balancesto the Statement of ActivitiesGovernmental FundsYear Ended December 31, 2018 See notes to basic financial statements -27- THIS PAGE INTENTIONALLY LEFT BLANK Over (Under)Original Final Actual Budget RevenueTaxes 24,273,125$ 24,273,125$ 24,390,777$ 117,652$ Other taxes 103,900 103,900 50,380 (53,520) Franchise taxes 515,000 515,000 515,000 – Special assessments 14,000 14,000 496 (13,504) Licenses and permits 1,504,710 1,504,710 2,254,309 749,599 Intergovernmental 864,255 864,255 881,315 17,060 Charges for services 3,333,025 3,333,025 3,086,720 (246,305) Fines and forfeits 279,500 279,500 302,494 22,994 Investment earnings 195,000 195,000 237,028 42,028 Other 735,740 735,740 911,721 175,981 Total revenue 31,818,255 31,818,255 32,630,240 811,985 ExpendituresCurrentGeneral government 5,654,240 5,668,130 5,411,406 (256,724) Public safety 13,011,740 13,167,340 13,102,632 (64,708) Public works 4,761,675 4,695,315 4,428,567 (266,748) Parks and recreation 5,649,300 5,612,300 5,461,620 (150,680) Capital outlayGeneral government 115,100 117,634 122,569 4,935 Public safety 51,700 99,480 43,160 (56,320) Public works 38,000 55,500 74,679 19,179 Parks and recreation 76,500 58,585 55,213 (3,372) Total expenditures 29,358,255 29,474,284 28,699,846 (774,438) Excess of revenue over expenditures 2,460,000 2,343,971 3,930,394 1,586,423 Other financing sources (uses)Sale of capital assets 20,400 20,400 18,924 (1,476) Transfers in 1,317,600 1,317,600 1,317,600 – Transfers (out)(3,798,000) (3,798,000) (4,963,000) (1,165,000) Total other financing sources (uses)(2,460,000) (2,460,000) (3,626,476) (1,166,476) Net change in fund balances –$ (116,029)$ 303,918 419,947$ Fund balancesBeginning of year 17,336,413 End of year 17,640,331$ Budgeted Amounts CITY OF APPLE VALLEY Statement of Revenue, Expenditures, and Changes in Fund Balances General Fund – Budget and ActualYear Ended December 31, 2018 See notes to basic financial statements -28- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Current assetsCash and investments 2,443,857$ –$ 28,121$ 9,267,882$ Receivables Special assessmentsCurrent – – – 242,575Delinquent– – – 18,169Accounts– 8,452 128,032 2,498,425Due from other governmental units – – 201,427 979 Prepaids 14,611 448 605 257,249Inventory1,564,245 59,333 – 57,900Total current assets 4,022,713 68,233 358,185 12,343,179 Noncurrent assetsDeferred special assessment receivable – – – 25,813 Advance to other funds – – – 1,566,846 Capital assetsLand and land improvements 1,177,683 991,179 2,000 2,024,127Construction in progress 144,478 – 280,503 3,053,844Buildings3,627,680 3,190,504 3,548,670 11,780,603Other improvements 25,000 689,963 109,420 105,142,346Furniture and equipment 362,676 1,208,294 299,195 3,904,426Less accumulated depreciation (1,784,786) (1,795,243) (2,927,377) (57,729,132) Total capital assets (net of accumulated depreciation)3,552,731 4,284,697 1,312,411 68,176,214 Total noncurrent assets 3,552,731 4,284,697 1,312,411 69,768,873 Total assets 7,575,444 4,352,930 1,670,596 82,112,052 Deferred outflows of resourcesPension plan deferments 98,479 85,021 36,103 234,746 OPEB plan deferments 3,824 1,838 1,217 8,407 Total deferred outflows of resources 102,303 86,859 37,320 243,153 Total assets and deferred outflows of resources 7,677,747$ 4,439,789$ 1,707,916$ 82,355,205$ as of December 31, 2018 Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Net PositionProprietary Funds See notes to basic financial statements -29- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 2,291,828$ 599,729$ 170,504$ 14,801,921$ 4,503,499$ 1,224 – – 243,799 – – – – 18,169 – 501,768 – 137,103 3,273,780 1,388 11,038 – 604 214,048 – – – – 272,913 200,370 – – – 1,681,478 – 2,805,858 599,729 308,211 20,506,108 4,705,257 18,838 – – 44,651 – – – – 1,566,846 – 2,165,380 513,560 – 6,873,929 – 744,329 469,184 – 4,692,338 – – – – 22,147,457 – 50,637,142 850,301 – 157,454,172 – 630,843 – – 6,405,434 13,134,845 (23,524,780) (252,750) – (88,014,068) (7,002,262) 30,652,914 1,580,295 – 109,559,262 6,132,583 30,671,752 1,580,295 – 111,170,759 6,132,583 33,477,610 2,180,024 308,211 131,676,867 10,837,840 38,821 – – 493,170 – 1,436 – – 16,722 – 40,257 – – 509,892 – 33,517,867$ 2,180,024$ 308,211$ 132,186,759$ 10,837,840$ -30-(continued) Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Current liabilitiesAccrued salaries payable 31,990$ 11,493$ 11,060$ 46,834$ Accounts payable 854,768 36,181 23,630 74,430 Contracts payable – – 182,333 926,824Interest payable – – – 8,236 Due to other governmental units 99,257 247 18,191 56,101Claims payable – – – – Unearned revenue – 13,491 – – Accrued compensated absences 65,100 27,300 16,200 158,100Capital lease payable – 86,280 – – Bonds payable – – – 395,000Total current liabilities 1,051,115 174,992 251,414 1,665,525 Noncurrent liabilitiesAccrued compensated absences 51,096 53,610 11,966 122,858Total OPEB liability 80,778 40,956 25,919 169,496Net pension liability 469,339 316,912 153,348 1,075,144Advance from other fund – 3,364,328 – – Capital lease payable – 249,459 – – Revenue note payable – – – 379,941 Bonds payable – – – 6,742,966Total noncurrent liabilities 601,213 4,025,265 191,233 8,490,405 Total liabilities 1,652,328 4,200,257 442,647 10,155,930 Deferred inflows of resourcesPension plan deferments 149,508 87,886 47,112 333,268 Net position (deficit)Net investment in capital assets 3,552,731 3,948,958 1,312,411 60,658,307 Unrestricted 2,323,180 (3,797,312) (94,254) 11,207,700 Total net position 5,875,911 151,646 1,218,157 71,866,007 Total liabilities, deferred inflows of resources, and net position 7,677,747$ 4,439,789$ 1,707,916$ 82,355,205$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Net PositionProprietary Funds (continued)as of December 31, 2018 See notes to basic financial statements -31- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 4,009$ 21$ –$ 105,407$ –$ 38,504 11,290 2,916 1,041,719 35,572 30,890 64,061 – 1,204,108 – 1,199 – – 9,435 – 7,190 – 1,014 182,000 – – – – – 8,661 – – – 13,491 – 6,800 – – 273,500 1,671,000 – – – 86,280 – 175,000 – – 570,000 – 263,592 75,372 3,930 3,485,940 1,715,233 6,408 – – 245,938 1,188,937 13,230 – – 330,379 – 191,372 – – 2,206,115 – – – – 3,364,328 – – – – 249,459 – – – – 379,941 – 1,268,685 – – 8,011,651 – 1,479,695 – – 14,787,811 1,188,937 1,743,287 75,372 3,930 18,273,751 2,904,170 57,647 – – 675,421 – 29,209,229 1,580,295 – 100,261,931 6,132,583 2,507,704 524,357 304,281 12,975,656 1,801,087 31,716,933 2,104,652 304,281 113,237,587 7,933,670 33,517,867$ 2,180,024$ 308,211$ 132,186,759$ 10,837,840$ Total net position – enterprise funds 113,237,587$ Adjustment to reflect the consolidation of internal service fund activity related to enterprise funds (147,060) Net position – business-type activities 113,090,527$ -32- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Operating revenueSales and rentals 9,445,281$ 862,834$ 789,516$ –$ Charges for services – – – 10,352,835Total operating revenue 9,445,281 862,834 789,516 10,352,835 Cost of goods sold 6,568,030 75,112 11,680 – Gross profit 2,877,251 787,722 777,836 10,352,835 Operating expensesPersonal services 1,078,155 643,186 346,278 1,663,308Contractual services 27,762 66,396 43,626 209,533Other charges 340,921 22,442 14,808 828,120Supplies and repairs 56,097 134,259 58,116 438,110Insurance68,585 36,000 26,775 212,600Utilities53,013 48,173 145,303 411,637Depreciation141,535 192,783 135,441 2,357,710 Sewer charges – – – 2,919,524Total operating expenses 1,766,068 1,143,239 770,347 9,040,542 Operating income (loss)1,111,183 (355,517) 7,489 1,312,293 Nonoperating revenue (expense)Taxes – – 121,000 – Investment earnings 37,994 – 1,225 172,959 Other income 11,424 1,745 1,473 12,891Gain (loss) on sale of capital assets – – – 37,330 Interest expense (20,955) (16,277) – (184,725)Total nonoperating revenue (expense)28,463 (14,532) 123,698 38,455 Income (loss) before capital contributions and transfers 1,139,646 (370,049) 131,187 1,350,748 Capital contributions – – – 434,018 Capital contributions – connection fees – – – 949,120Transfers (out)(630,000) – – (687,600) Change in net position 509,646 (370,049) 131,187 2,046,286 Net positionBeginning of year, as previously reported 5,369,786 523,387 1,088,091 69,827,460 Change in accounting principle (3,521) (1,692) (1,121) (7,739) Beginning of year, as restated 5,366,265 521,695 1,086,970 69,819,721 End of year 5,875,911$ 151,646$ 1,218,157$ 71,866,007$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Revenue, Expenses, and Changes in Net PositionProprietary FundsYear Ended December 31, 2018 See notes to basic financial statements -33- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund –$ –$ –$ 11,097,631$ –$ 1,901,319 150,393 522,977 12,927,524 2,620,212 1,901,319 150,393 522,977 24,025,155 2,620,212 – – – 6,654,822 – 1,901,319 150,393 522,977 17,370,333 2,620,212 254,303 1,181 1,817 3,988,228 922,637 192,518 46,703 48,668 635,206 20,529 387,968 13,086 10,121 1,617,466 857,132 56,388 5,935 – 748,905 – 7,000 – 8,090 359,050 – 76,142 1,397 416,660 1,152,325 – 1,024,022 20,767 – 3,872,258 1,033,925 – – – 2,919,524 – 1,998,341 89,069 485,356 15,292,962 2,834,223 (97,022) 61,324 37,621 2,077,371 (214,011) – – – 121,000 – 42,494 11,280 2,345 268,297 62,661 65,994 310 – 93,837 – (4,291) – – 33,039 126,171 (29,902) – – (251,859) – 74,295 11,590 2,345 264,314 188,832 (22,727) 72,914 39,966 2,341,685 (25,179) 167,821 – – 601,839 – 142,277 – – 1,091,397 – – – – (1,317,600) – 287,371 72,914 39,966 2,717,321 (25,179) 31,430,884 2,031,738 264,315 110,535,661 7,958,849 (1,322) – – (15,395) – 31,429,562 2,031,738 264,315 110,520,266 7,958,849 31,716,933$ 2,104,652$ 304,281$ 113,237,587$ 7,933,670$ Change in net position – enterprise funds 2,717,321$ Adjustment to reflect the consolidation of internal service fund activities related to the enterprise funds (31,823) Change in net position – business-type activities 2,685,498$ -34- Municipal Municipal Sports Water andLiquorGolf Course Arena Sewer(5000, 5030)(5100)(5200)(5300, 5400) Cash flows from operating activitiesCash received from customers 9,463,422$ 873,153$ 755,534$ 10,290,957$ Cash receipts on interfund services provided – – – – Cash payments to suppliers (6,847,819) (359,652) (312,471) (5,398,004) Cash payments to employees for services (1,058,631) (642,720) (344,816) (1,635,891) Net cash flows from operating activities 1,556,972 (129,219) 98,247 3,257,062 Cash flows from capital and related financing activitiesAcquisition and construction of capital assets (159,978) (255,256) (139,436) (3,763,640) Connection fees received – – – 949,120 Proceeds from sale of capital assets – – – 39,691 Proceeds from issuance of capital lease – 254,996 – – Proceeds from issuance of revenue note – – – 379,941 Payment on debt (1,120,000) (94,783) – (385,000) Interest paid (22,837) (16,277) – (192,824) Net cash flows from capital and related financing activities (1,302,815) (111,320) (139,436) (2,972,712) Cash flows from investing activitiesInterest received on investments 37,994 – 1,225 172,959 Cash flows from noncapital financing activitiesTaxes – – 121,000 – Cash received from other funds – 240,539 – – Cash paid to other funds – – (52,915) (237,805) Transfers (out)(630,000) – – (687,600) Net cash flows from noncapital financing activities (630,000) 240,539 68,085 (925,405) Net increase (decrease) in cash and cash equivalents (337,849) – 28,121 (468,096) Cash and cash equivalentsBeginning of year 2,781,706 – – 9,735,978 End of year 2,443,857$ –$ 28,121$ 9,267,882$ Reconciliation of operating income (loss) to net cash flows from operating activitiesOperating income (loss)1,111,183$ (355,517)$ 7,489$ 1,312,293$ Adjustments to reconcile operating income (loss) to net cash flows from operating activitiesDepreciation 141,535 192,783 135,441 2,357,710 Other revenue (expense)11,424 1,745 1,473 12,891 Change in assets, deferred outflows/inflows of resources, and liabilitiesReceivablesSpecial assessments – – – (13,841) Accounts 6,717 (4,917) (47,742) (338,753) Due from other governmental units – – 12,287 277,825 Inventory (54,281) (1,507) – 35,182 Prepaids 6,166 4,575 1,125 5,813 Deferred outflows of resources 57,959 27,875 18,515 127,383 Accounts payable 313,866 20,450 10,451 (105,436) Contracts payable – – – (224,244) Accrued salaries payable 4,050 (137) 3,675 7,502 Claims payable – – – – Total OPEB liability 8,577 4,121 2,730 18,854 Net pension liability (103,530) (49,792) (33,069) (227,540) Accrued compensated absences 18,293 1,962 (1,305) 26,109 Due to other governmental units 838 (788) (23,739) (89,795) Unearned revenue – 13,491 – – Deferred inflows of resources 34,175 16,437 10,916 75,109 Net cash flows from operating activities 1,556,972$ (129,219)$ 98,247$ 3,257,062$ Noncash investing, capital, and financing activitiesCapital contributions –$ –$ –$ 434,018$ Net book value of capital asset disposals –$ –$ –$ (2,361)$ Capital asset purchased on account –$ –$ 182,333$ 926,824$ Amortization of bond premium (discount)–$ –$ –$ 8,301$ Business-Type Activities – Enterprise Funds CITY OF APPLE VALLEY Statement of Cash FlowsProprietary FundsYear Ended December 31, 2018 See notes to basic financial statements -35- GovernmentalStormStreet Light ActivitiesDrainageCemeteryUtilityInternal(5500, 5550)(5600, 5700)(5800)Totals Service Fund 1,958,309$ 150,703$ 520,865$ 24,012,943$ –$ – – – – 2,650,893 (692,794) (59,572) (501,315) (14,171,627) (1,584,265) (253,049) (1,160) (1,817) (3,938,084) (167,671) 1,012,466 89,971 17,733 5,903,232 898,957 (1,595,669) (446,266) – (6,360,245) (1,070,851) 142,277 – – 1,091,397 – – – – 39,691 207,228 – – – 254,996 – – – – 379,941 – (180,000) – – (1,779,783) – (32,388) – – (264,326) – (1,665,780) (446,266) – (6,638,329) (863,623) 42,494 11,280 2,345 268,297 62,661 – – – 121,000 – – – – 240,539 – – – – (290,720) – – – – (1,317,600) – – – – (1,246,781) – (610,820) (345,015) 20,078 (1,713,581) 97,995 2,902,648 944,744 150,426 16,515,502 4,405,504 2,291,828$ 599,729$ 170,504$ 14,801,921$ 4,503,499$ (97,022)$ 61,324$ 37,621$ 2,077,371$ (214,011)$ 1,024,022 20,767 – 3,872,258 1,033,925 65,994 310 – 93,837 – 5,124 – – (8,717) – (30,722) – (2,170) (417,587) 6,928 16,594 – 58 306,764 – – – – (20,606) – 1,460 – – 19,139 (3,298) 21,666 – – 253,398 – (12,318) 6,393 (18,790) 214,616 25,066 30,890 1,156 – (192,198) – 956 21 – 16,067 – – – – – 1,875 3,219 – – 37,501 – (38,706) – – (452,637) – 1,343 – – 46,402 48,472 7,190 – 1,014 (105,280) – – – – 13,491 – 12,776 – – 149,413 – 1,012,466$ 89,971$ 17,733$ 5,903,232$ 898,957$ 167,821$ –$ –$ 601,839$ –$ (4,291)$ –$ –$ (6,652)$ (81,057)$ –$ 62,905$ –$ 1,172,062$ –$ 2,336$ –$ –$ 10,637$ –$ -36- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF APPLE VALLEY Notes to Basic Financial Statements as of December 31, 2018 -37- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Apple Valley, Minnesota (the City) is a statutory city governed by an elected mayor and four councilmembers. The accompanying financial statements present the government entities for which the City is considered to be financially accountable. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. The Apple Valley Economic Development Authority (EDA) was established to provide economic development services to the City. Although a legally separate entity, the Apple Valley EDA is reported as if it were part of the primary government because it provides services exclusively for the City. The Apple Valley EDA governing body is substantially the same as the governing body of the primary government because five of the Apple Valley EDA boardmembers are City Council members and the two other members are appointed by the City Council. Management of the primary government also has operational responsibility for the Apple Valley EDA. The Apple Valley EDA is a blended component unit of the City, with the following funds reported as funds of the City: Economic Development Debt Service Fund and the EDA Operations Special Revenue Fund. The Apple Valley EDA does not issue separate financial statements. C. Government-Wide Financial Statement Presentation The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which significantly rely upon sales, fees, and charges for support. -38- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported as general revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. However, charges between the City’s enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner: 1. Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabili ties of the current period. For this purpose, the City considers revenues to be available if they are coll ected within 60 days after year-end. 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. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licens es and permits, fees, and miscellaneous revenue. Such revenue is recorded only when received because it is not measurable until collected. 2. Recording of Expenditures – Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-term debt and other long-term liabilities, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. -39- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sales and services . The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses that do not meet this definition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the proprietary fund financial statements. Because the principal user of the internal services is the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Description of Funds The City reports the following major governmental funds: General Fund (1000) – This fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Closed Bond Issues Debt Service Fund (3205) – This fund accounts for all the closed bond issues that still have activity. Road Improvements Capital Projects Fund (2025) – This fund accounts for various road improvements. Future Capital Projects Capital Projects Fund (4930) – This fund accounts for funds set aside for future capital improvements. The City reports the following major enterprise funds: Municipal Liquor Fund (5000 and 5030) – This fund accounts for the operations of the City’s liquor stores. Municipal Golf Course Fund (5100) – This fund accounts for the operations of the City’s golf course. Sports Arena Fund (5200) – This fund accounts for the operations of the City’s sports arena. Water and Sewer Fund (5300 and 5400) – This fund accounts for the activities of the City’s water and sewer operations. -40- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Storm Drainage Fund (5500 and 5550) – This fund accounts for the activities of the City’s storm drainage operations. Cemetery Fund (5600 and 5700) – This fund accounts for the activities of the City’s cemetery operations. Street Light Utility Fund (5800) – This fund accounts for the activities of the City’s street light operations. Additionally, the City reports the following fund types: Internal Service Funds – Internal service funds account for the financing of goods and services provided to other departments or agencies of the City on a cost-reimbursement basis. The City utilizes a Dental Insurance Internal Service Fund, Benefits/Other Insurance Internal Service Fund, and a Vehicle Equipment Replacement Internal Service Fund in managing city operations. E. Cash and Investments Cash and investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. The City generally reports investments at fair value. The Minnesota Municipal Money Market (4M) Fund is an external investment pool regulated by Minnesota Statutes that is not registered with the Securities and Exchange Commission (SEC), but follows the same regulatory rules of the SEC. The fair value of the position in the pool is the same as the value of the pool shares, which is based on an amortized cost method that approximates fair value. The 4M Fund is sponsored by the League of Minnesota Cities. For this investment pool, there are no unfunded commitments, redemption frequency is daily, and there is no redemption notice required for the Liquid Class; the redemption notice period is 14 days for the Plus Class. The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. 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; and Level 3 inputs are significant unobservable inputs. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. See Note 2 for the City’s recurring fair value measurements as of year-end. F. Receivables Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to certify delinquent amounts to the county for collection as special assessments, no allowance for uncollectible accounts has been provided on current receivables. The only receivables not expected to be collected within one year are property taxes and special assessments receivable. Notes receivable are amounts due to the City related to the Village Pointe Plaza project. -41- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Interfund Receivables and Payables In the fund financial statements, activity between funds that is representative of lending or borrowing arrangements is reported as either “due to/from other funds” (current portion) or “advances to/from other funds.” 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.” H. Land Held for Resale Land held for resale represents various property purchases made by the City with the intent to sell in order to increase the tax base or to attract new businesses. These assets are stated at the lower of cost or acquisition value. During the year ended December 31, 2018, management has reviewed the cost value reported for these assets and has indicated the properties are fairly presented for financial reporting purposes. I. Property Taxes Property tax levies are set by the City Council in December of each year, and are certified to Dakota County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county provides tax settlements to cities and other taxing districts three times a year; in July, December, and January. Property taxes are recognized as revenue in the year levied in the government -wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, taxes are recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable, and are offset by a deferred inflow of resources in the governmental fund financial statements. J. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. Special assessments are recorded as receivables upon certification to the county. Special assessments are recognized as revenue in the year levied in the government -wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, special assessments are recognized as revenue when received in cash or within 60 days after year -end. Governmental fund special assessments receivable which remain unpaid on December 31 are offset by a deferred inflow of resources in the governmental fund financial statements. K. Prepaids Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. -42- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Inventories The inventories for the Municipal Golf and Municipal Liquor Funds use the average cost valuation method. Inventories of the remaining governmental and proprietary funds are valued at cost using the first-in, first-out valuation method. Inventories are recorded as expenditures or expenses when consumed. M. Capital Assets Capital assets, which include land, land improvements, buildings, other improvements, furniture and equipment, and infrastructure assets (roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are capitalized at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated acquisition value on the date of donation. The City defines capital assets as those with an initial, individual cost of $5,000 or more with an estimated useful life in excess of two years. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not reported in the governmental fund financial statements. Interest incurred during the construction phase of capital assets for business-type activities is included as part of the capitalized value of the assets constructed. Capital assets are depreciated using the straight-line method over their estimated useful lives. Land and construction in progress are not depreciated. The estimated useful lives are as follows: Assets Years Buildings 7–40Improvements other than buildings 5–40Furniture and equipment 3–50Infrastructure25–50 N. Compensated Absences Full-time employees employed by the City after January 1, 1995 are eligible for three to six weeks of annual leave depending on their length of service with the City. Annual leave may not accrue in excess of 800 hours. Upon termination of employment with the City, employees in “good standing” are reimbursed for all accrued and unused annual leave. Employees employed by the City prior to January 1, 1995 were eligible to elect to continue earning sick leave and vacation in lieu of the annual leave option. Those employees who elected not to take the annual leave provisions continue to be eligible to earn 12 days of sick leave and two to four weeks of vacation per year, depending on their length of service with the Cit y. Sick leave may carry forward indefinitely. Upon termination of employment in “good standing,” employees with more than 10 years of continuous service shall be paid up to one-third of their accrued and unused sick leave. The maximum amount of vacation that may be accumulated is twice the amount earned in any one year. Upon termination of employment, “good standing” employees shall be paid for their accrued and unused vacation leave. Compensated absences are accrued in governmental fund financial statements only when used or matured prior to year-end, due to employee termination or similar circumstances. Vacation and sick benefits are recorded as expenses and liabilities in proprietary funds when earned. Compensated absences payable in the government-wide Statement of Net Position and the Statement of Net Position – Proprietary Funds include all leave balances accrued, but not yet used by employees, whether or not the employees have terminated employment with the City. -43- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Long-Term Liabilities In the government-wide and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed in the period incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources , while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. P. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, statements of financial position or balance sheets will sometimes report separate sections for deferred outflows or inflows of resources. These separate financial statement elements represent a consumption or acquisition of net position that applies to a future period, and so will not be recognized as an outflow of resources (expense/expenditure), or an inflow of financial resources (revenue) until then. The City reports deferred outflows and inflows of resources related to pensions and other post-employment benefits (OPEB) in the government-wide and enterprise funds Statement of Net Position. These deferred outflows and inflows result from differences between expected and actual economic experience, changes in actuarial assumptions, differences between projected and actual investment earnings, changes in proportion, and contributions to the plan subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under pension and OPEB standards. Unavailable revenue, arises only under a modified accrual basis of accounting and, therefore, is only reported in the governmental funds Balance Sheet. The governmental funds report unavailable revenue 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. Q. Pension Plans 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 the PERA’s fiduciary net position have been determined on the same basis as they are reported by the PERA, except that the 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 PERA has a special funding situation created by a direct aid contribution made by the state of Minnesota. The direct aid is a result of the merger of the Minneapolis Employees Retirement Fund into the PERA on January 1, 2015. -44- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) R. Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In August of each year, city staff submits to the City Council, a proposed operating budget for the year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution by the City Council. 4. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. 5. Expenditures may not legally exceed budgeted appropriations at the fund level. No fund’s budget can be increased without City Council approval. The City Council may authorize transfers of budgeted amounts between departments within any fund. Management may amend budgets within a department level, so long as the total department budget is not changed. 6. Annual appropriated budgets are adopted during the year for the General Fund, Cable TV Special Revenue Fund, and EDA Operations Special Revenue Fund. Annual appropriated budgets are not adopted for debt service funds because effective budgetary control is alternatively achieved through bond indenture provisions. Budgetary control for capital projects funds is accomplished through the use of project controls and formal appropriated budgets are not adopted for most capital projects funds. In 2018, the City also adopted formal annual appropriated budgets for the Road Improvements Capital Projects, Future Capital Projects, and Cable Capital Equipment Capital Projects Funds. 7. The finance director/treasurer presents monthly reports to the City Council. 8. Budgeted amounts are as originally adopted or as amended by the City Council. Budgeted expenditures lapse at year-end. S. Statement of Cash Flows For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents. The proprietary fund’s portion in the government-wide cash and investment management pool is considered to be cash equivalent. -45- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Net Position and Flow Assumptions In the government-wide and proprietary fund financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position is displayed in three components: • Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets. • Restricted Net Position – Consists of net position restricted when there are limitations imposed on its use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Unrestricted Net Position – All other elements of net position that do not meet the definition of “restricted” or “net investment in capital assets.” The City applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. U. Fund Balance Classifications and Flow Assumptions In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: • Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets. • Restricted – Consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions. • Committed – Consists of internally imposed constraints that are established by resolution of the City Council. Those committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned – Consists of internally imposed constraints. These constraints consist of amounts intended to be used by the City for specific purposes, but do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. Pursuant to City Council resolution, the city administrator and/or the finance director/treasurer are authorized to establish assignments of fund balance. • Unassigned – The residual classification for the General Fund, which also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. -46- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) V. Risk Management The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers ’ compensation, and other miscellaneous insurance coverage. The LMCIT operates as a common risk management and insurance program for a large number of cities in Minnesota. The City pays an annual premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self-sustaining through member premiums and will reinsure through commercial companies for clai ms in excess of certain limits. The City also carries commercial insurance for certain other risks of loss . Settled claims resulting from these risks did not exceed insurance coverage in any of the past three fiscal years. There were no significant reductions in insurance coverage in 2018. The City uses its Dental Insurance Internal Service Fund to account for and finance its self-insured risk of loss for an employee dental plan. The dental plan is funded by the City, employee contributions, and investment earnings. The claims liability of $8,661 is included in the liabilities of the Dental Insurance Internal Service Fund at December 31, 2018, and is based on the requirement that a liability for claims be reported if information prior to issuance of the financial statements indicates that it is probabl e that a liability has been incurred on the date of the financial statements and the loss can be reasonably estimated. Changes in the fund’s claim liability for the past two years were: ClaimsBeginningand Changes Claim EndingBalancein Estimates Payments Balance 2017 7,560$ 207,642$ 208,416$ 6,786$ 2018 6,786$ 194,144$ 192,269$ 8,661$ W. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the financial statements during the reporting period. Actual results could differ from those estimates. X. Change in Accounting Principle and Prior Period Adjustment Change in Accounting Principle – During the year ended December 31, 2018, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement established standards for employer recognition and measurement of liabilities, deferred outflows of resources, deferred inflows of resources, and expense for OPEB. Certain amounts necessary to fully restate fiscal year 2017 financial information are not determinable; therefore, prior year comparative amounts have not been restated. The implementation of this statement in the current year resulted in the restatement of net position as of December 31, 2017. Prior Period Adjustment – During the year ended December 31, 2018, the City recorded a prior period adjustment in the government-wide financial statements decreasing net position. The change was related to the City’s inventory of capitalized assets and the related useful lives. -47- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The details of the change in accounting principle and prior period adjustment are as follows: Governmental Business-type EnterpriseActivitiesActivitiesFunds Net position – beginning, as previously reported 139,298,849$ 110,420,424$ 110,535,661$ Change in accounting principleNet OPEB obligation, under previous reporting standards 1,537,306 268,527 268,527 Total OPEB liability, under current reporting standards (1,680,200) (292,878) (292,878) Deferred outflows of resources, under current reporting standards 52,560 8,956 8,956 Total change in accounting principle (90,334) (15,395) (15,395) Prior period adjustment – change in capital asset reporting (18,851,915) – – Net position – beginning, restated 120,356,600$ 110,405,029$ 110,520,266$ NOTE 2 – CASH AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of the following: Deposits 1,205,402$ Investments 69,966,283 Petty cash 16,400 Total 71,188,085$ Cash and investments are presented in the financial statements as follows: Statement of Net PositionCash and investments 71,188,085$ B. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits: Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the 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 City has no additional deposit policies addressing custodial credit risk. -48- NOTE 2 – CASH AND INVESTMENTS (CONTINUED) At year-end, the carrying amount of the City’s deposits was $1,205,402, while the balance on the bank records was $1,341,274. At December 31, 2018, all deposits were fully covered by federal deposit insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. C. Investments The City has the following investments at year-end: Fair ValueMeasurements LessInvestment Type Rating Agency Using Than 1 1 to 5 6 to 10 Total U.S. agency securities AA S&P Level 2 1,980,680$ 8,983,536$ –$ 10,964,216$ State and local bonds AAA S&P Level 2 201,158 3,855,302 1,152,238 5,208,698 State and local bonds AA S&P Level 2 6,707,483 11,220,675 6,009,353 23,937,511 State and local bonds AA Moody'sMoody’s Level 2 2,088,452 4,499,712 1,345,672 7,933,836 State and local bonds A S&P Level 2 981,178 910,501 – 1,891,679 State and local bonds A Moody’s Level 2 – 551,117 – 551,117 Negotiable certificates of deposit N/R N/A Level 2 11,001,718 4,287,086 – 15,288,804 22,960,669$ 34,307,929$ 8,507,263$ 65,775,861 Investment pools/mutual fundsInvesco Government AAA S&P Level 1 3,633,940First American Government Obligation Fund AAA S&P Level 2 12,3934M Fund N/R N/A N/A 544,089 Total investments 69,966,283$ N/A – Not Applicable N/R – Not Rated Credit Risk Maturity Duration in YearsInterest Risk – Investments are subject to various risks, the following of which are considered the most significant: Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer), the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy states that the City may not invest in securities that are both uninsured and not registered in the name of the City and are held by either the counterparty or the counterparty’s trust department or agent, but not in the name of the City. Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase 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 $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City’s investment policy addresses credit risk by limiting investments to the safest type of securities and using prequalifying brokers/financial institutions. -49- NOTE 2 – CASH AND INVESTMENTS (CONTINUED) Concentration Risk – This is the risk associated with investing a significant portion of the City’s investment (considered 5.0 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s investment policy states no more than 5.0 percent of the overall portfolio may be invested in the securities of a single issuer, except for the securities of the U.S. government or an external investment pool. As of December 31, 2018, the City’s investment portfolio includes the Federal Home Loan Bank at 9.2 percent. Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City’s investment policy does include specific limits on investment maturities as a means of managing its exposure to fair value arising from increasing interest rates . It also states investments should not be purchased that are considered to be highly sensitive to interest rate changes. NOTE 3 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS A. Due To and Due From Other Funds Interfund receivables and payables at year-end were as follows: Due From OtherFundsGovernmentalFuture CapitalDue To Other Funds Projects GovernmentalRoad Improvements 3,877,653$ Nonmajor 15,318 Total 3,892,971$ Interfund borrowing is utilized for cash flow borrowing to eliminate temporary cash balance deficits, due to the timing of projects and the related revenue sources. -50- NOTE 3 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED) B. Advance From and Advance To Other Funds Borrowing at year-end was as follows: EnterpriseClosed Bond Future Capital Water andAdvance From Other Funds Issues Projects Sewer Total GovernmentalNonmajor 1,079,159$ –$ –$ 1,079,159$ EnterpriseMunicipal Golf Course – 1,797,482 1,566,846 3,364,328 Total 1,079,159$ 1,797,482$ 1,566,846$ 4,443,487$ Advance To Other FundsGovernmental Advances are utilized to cover operations of the related city funds, including capital improvements. C. Interfund Transfers Closed Bond Road Future CapitalTransfers Out General Fund Issues Improvements Projects Nonmajor Total GovernmentalGeneral Fund –$ –$ 3,417,000$ 1,165,000$ 381,000$ 4,963,000$ Closed Bond Issues – – – – 3,645,533 3,645,533 Future Capital Projects – – 578,810 – 212,000 790,810 Nonmajor – 1,307,012 – – 804,036 2,111,048 EnterpriseMunicipal Liquor 630,000 – – – – 630,000 Water and Sewer 687,600 – – – – 687,600 Total 1,317,600$ 1,307,012$ 3,995,810$ 1,165,000$ 5,042,569$ 12,827,991$ GovernmentalTransfers In Transfers are made in accordance with budget appropriations or as approved by the City Council for special funding of city activities. These transfers were made to fund operations, debt payments, capital outlay, or to close funds. -51- NOTE 4 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2018 was as follows: A. Changes in Capital Assets Used in Governmental Activities Beginning Transfers of Year,Prior Beginning andas Previously Period of Year, as Completed EndReportedAdjustmentRestatedAdditionsDeletionsConstruction of Year Capital assets, not depreciatedLand 4,581,173$ –$ 4,581,173$ –$ –$ –$ 4,581,173$ Construction in progress 1,740,083 – 1,740,083 7,596,371 – (6,258,050) 3,078,404 Total capital assets, not depreciated 6,321,256 – 6,321,256 7,596,371 – (6,258,050) 7,659,577 Capital assets, depreciatedBuildings 32,587,544 – 32,587,544 – – 1,737,806 34,325,350 Other improvements 25,457,057 – 25,457,057 – – 51,028 25,508,085 Furniture and equipment 18,597,572 – 18,597,572 1,196,590 (755,945) 174,172 19,212,389 Infrastructure 109,815,968 – 109,815,968 311,986 – 4,295,044 114,422,998 Total capital assets, depreciated 186,458,141 – 186,458,141 1,508,576 (755,945) 6,258,050 193,468,822 Less accumulated depreciation onBuildings 13,533,535 – 13,533,535 888,939 – – 14,422,474 Other improvements 10,784,639 – 10,784,639 912,460 – – 11,697,099 Furniture and equipment 11,352,254 – 11,352,254 1,360,192 (674,888) – 12,037,558 Infrastructure 42,666,641 18,851,915 61,518,556 3,820,454 – – 65,339,010 Total accumulated, depreciation 78,337,069 18,851,915 97,188,984 6,982,045 (674,888) – 103,496,141 Net capital assets, depreciated 108,121,072 (18,851,915) 89,269,157 (5,473,469) (81,057) 6,258,050 89,972,681 Total capital assets, net 114,442,328$ (18,851,915)$ 95,590,413$ 2,122,902$ (81,057)$ –$ 97,632,258$ B. Changes in Capital Assets Used in Business-Type Activities TransfersandBeginningCompleted Endof Year Additions Deletions Construction of Year Capital assets, not depreciatedLand 6,818,433$ 55,496$ –$ –$ 6,873,929$ Construction in progress 1,277,221 6,541,500 – (3,126,383) 4,692,338 Total capital assets, not depreciated 8,095,654 6,596,996 – (3,126,383) 11,566,267 Capital assets, depreciatedBuildings 22,086,746 60,711 – – 22,147,457 Other improvements 154,024,344 586,330 (282,885) 3,126,383 157,454,172 Furniture and equipment 5,515,325 890,109 – – 6,405,434 Total capital assets, depreciated 181,626,415 1,537,150 (282,885) 3,126,383 186,007,063 Less accumulated depreciation onBuildings 9,927,436 391,929 – – 10,319,365 Other improvements 70,116,126 3,185,542 (276,233) – 73,025,435 Furniture and equipment 4,374,481 294,787 – – 4,669,268 Total accumulated depreciation 84,418,043 3,872,258 (276,233) – 88,014,068 Net capital assets, depreciated 97,208,372 (2,335,108) (6,652) 3,126,383 97,992,995 Total capital assets, net 105,304,026$ 4,261,888$ (6,652)$ –$ 109,559,262$ -52- NOTE 4 – CAPITAL ASSETS (CONTINUED) C. Depreciation Expense by Function Depreciation expense for the year ended December 31, 2018 was charged to the following functions: Governmental activitiesGeneral government 390,822$ Public safety 318,663 Public works 3,972,912 Parks and recreation 1,265,723 Capital assets held by the City’s internal service funds are charged to the various functions based on their usage of the assets 1,033,925 Total depreciation expense – governmental activities 6,982,045$ Business-type activitiesMunicipal liquor 141,535$ Municipal golf course 192,783 Sports arena 135,441 Water and sewer 2,357,710 Storm drainage 1,024,022 Cemetery 20,767 Total depreciation expense – business-type activities 3,872,258$ -53- NOTE 5 – LONG-TERM DEBT A. Components of Long-Term Debt Final Balance –Original Issue Interest Rate Maturity End of Year Governmental activitiesGeneral obligation bondsG.O. Equipment Certificate Bonds 2012A 1,305,000$ 2.00%12/15/2021 360,000$ G.O. Crossover Refunding Bonds 2013A 9,000,000$ 1.75–2.35%12/15/2031 8,855,000 G.O. Equipment Bonds 2014A 680,000$ 2.00%12/15/2020 275,000 G.O. Bonds 2015B 4,255,000$ 2.00–2.75%12/15/2029 3,405,000 Total general obligation bonds 12,895,000 General obligation improvement bondsG.O. Improvement Bonds 2012A 920,000$ 2.00%12/15/2022 475,000 Total governmental activities bonds 13,370,000 Unamortized premium 281,869 Total OPEB liability 1,900,268 Net pension liability 11,724,700 Compensated absences 2,859,937 Total governmental activities 30,136,774$ Business-type activitiesGeneral obligation revenue bondsG.O. Water Revenue Bonds 2014A 8,830,000$ 2.00–3.00%12/15/2033 7,010,000$ G.O. Bonds 2015B 1,605,000$ 2.00–2.75%12/15/2026 1,425,000 Total general obligation revenue bonds 8,435,000 General obligation revenue notesG.O. Water Revenue Note 2018A 4,000,000$ 2.95%6/15/2028 379,941 Capital lease 335,739 Unamortized premium 146,651 Total OPEB liability 330,379 Net pension liability 2,206,115 Compensated absences 519,438 Total business-type activities 12,353,263$ -54- NOTE 5 – LONG-TERM DEBT (CONTINUED) B. Changes in Long-Term Debt Balance –Beginning of Year,Change in Balance –as Previously Accounting Beginning of Year,Balance –Due WithinReportedPrinciple *as Restated Additions Deletions End of Year One Year Governmental activities General obligation bonds 13,885,000$ –$ 13,885,000$ –$ 990,000$ 12,895,000$ 1,065,000$ General obligation improvement bonds 585,000 – 585,000 – 110,000 475,000 115,000 Unamortized premium 330,288 – 330,288 – 48,419 281,869 – Total OPEB liability 1,537,306 142,894 1,680,200 229,044 8,976 1,900,268 – Net pension liability 14,729,157 – 14,729,157 1,437,269 4,441,726 11,724,700 – Compensated absences 2,811,465 – 2,811,465 1,719,429 1,670,957 2,859,937 1,671,000 Total governmental activities 33,878,216 142,894 34,021,110 3,385,742 7,270,078 30,136,774 2,851,000 Business-type activities General obligation revenue bonds 9,000,000 – 9,000,000 – 565,000 8,435,000 570,000 Revenue bonds 1,120,000 – 1,120,000 – 1,120,000 – – General obligation revenue notes – – – 379,941 – 379,941 – Capital lease 175,526 – 175,526 254,996 94,783 335,739 86,280 Unamortized premium 157,288 – 157,288 – 10,637 146,651 – Total OPEB liability 268,527 24,351 292,878 39,031 1,530 330,379 – Net pension liability 2,658,752 – 2,658,752 190,544 643,181 2,206,115 – Compensated absences 473,036 – 473,036 319,876 273,474 519,438 273,500 Total business-type activities 13,853,129 24,351 13,877,480 1,184,388 2,708,605 12,353,263 929,780 Total government-wide 47,731,345$ 167,245$ 47,898,590$ 4,570,130$ 9,978,683$ 42,490,037$ 3,780,780$ * The amounts in this column reflect only a portion of the change in accounting principle described earlier in these notes. C. Minimum Debt Payments Minimum annual payments required to retire bonds are as follows: Governmental Activities Year EndingDecember 31,Principal Interest Principal Interest Principal Interest 2019 1,065,000$ 264,075$ 115,000$ 9,500$ 1,180,000$ 273,575$ 2020 1,125,000 243,150 120,000 7,200 1,245,000 250,350 2021 905,000 221,025 120,000 4,800 1,025,000 225,825 2022 820,000 203,313 120,000 2,400 940,000 205,713 2023 865,000 187,300 – – 865,000 187,300 2024–2028 4,900,000 672,388 – – 4,900,000 672,388 2029–2031 3,215,000 146,591 – – 3,215,000 146,591 Total 12,895,000$ 1,937,842$ 475,000$ 23,900$ 13,370,000$ 1,961,742$ General Obligation Bonds TotalImprovement BondsGeneral Obligation -55- NOTE 5 – LONG-TERM DEBT (CONTINUED) Business-Type Activities Year EndingDecember 31,Principal Interest Principal Interest Principal Interest Principal Interest 2019 570,000$ 213,913$ –$ 11,208$ 86,280$ 14,169$ 656,280$ 239,290$ 2020 580,000 202,513 44,699 10,894 145,162 10,287 769,861 223,694 2021 590,000 190,913 44,699 9,560 50,879 5,184 685,578 205,657 2022 610,000 179,113 44,699 8,241 53,418 2,656 708,117 190,010 2023 615,000 165,863 44,699 6,923 – – 659,699 172,786 2024–2028 2,820,000 613,613 201,145 14,834 – – 3,021,145 628,447 2029–2033 2,650,000 243,000 – – – – 2,650,000 243,000 8,435,000$ 1,808,928$ 379,941$ 61,660$ 335,739$ 32,296$ 9,150,680$ 1,902,884$ Revenue Bonds TotalGeneral Obligation Capital LeaseGeneral ObligationRevenue Notes D. Description of Long-Term Debt • General Obligation Bonds and General Obligation Improvement Bonds – The City issues general obligation (G.O.) bonds to provide financing for street, utility, park, and cemetery project improvements. The City issues G.O. equipment certificates to provide financing for capital equipment. Debt service is covered respectively by special assessments, state aids, general property taxes, and tax increments. G.O. bonds and equipment certificates are direct obligations and pledge the full faith and credit of the City. Equipment certificates are issued as five-year notes with fluctuating debt service payments each year. • General Obligation Revenue Bonds and Revenue Bonds – The City issues revenue bonds to provide financing for its enterprise funds. The City issued revenue bonds for the liquor store and G.O. revenue bonds for the water and sewer and storm drainage activity. Debt service is covered through the revenue producing activities of these funds. • General Obligation Revenue Notes – The City issues revenue notes to provide financing for its enterprise funds. The City issued G.O. revenue notes for water and sewer activity. Debt service is covered through the revenue producing activities of these funds. • Capital Leases – The City entered into three lease agreements for financing the acquisition of equipment for the municipal golf course. Revenues from the Municipal Golf Course Fund financed these leases. The first lease agreement matures in November 2020 and carries an interest rate of 3.5 0 percent. As of December 31, 2018, these assets had a capitalized value of $253,419 with accumulated depreciation of $111,088. The second lease agreement matures in March 2022 and carries an interest rate of 4.95 percent. As of December 31, 2018, these assets had a capitalized value of $180,010 with accumulated depreciation of $10,569. The third lease agreement matures in June 2022 and carries an interest rate of 4.75 percent. As of December 31, 2018, these assets had a capitalized value of $74,987 with accumulated depreciation of $4,397. -56- NOTE 5 – LONG-TERM DEBT (CONTINUED) • Total OPEB Liability – This liability represents the City’s Other Post-Employment Benefits (OPEB) Plan liability as further described later in these notes. The General Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. • Net Pension Liability – This liability represents the City’s pension benefit obligations as further described later in these notes. The General Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. The City participates in two state-wide, cost-sharing, multiple-employer defined benefit pension plans administered by the PERA and a single-employer plan administered by the fire relief association. The following is a summary of the net pension asset, net pension liabilities, deferred outflows and inflows of resources, and pension expense reported for these plans as of and for the year ended December 31, 2018: Net Pension Net Pension Deferred Outflows Deferred Inflows PensionPension Plans Asset Liabilities of Resources of Resources Expense PERA – GERF –$ 8,609,861$ 1,798,919$ 2,727,523$ 689,333$ PERA – PEPFF – 5,320,954 7,534,279 10,838,934 602,041 Fire Relief 1,807,017 – 673,636 1,245,318 14,688 Total – all pensions 1,807,017$ 13,930,815$ 10,006,834$ 14,811,775$ 1,306,062$ • Compensated Absences – This liability represents vested benefits earned by employees through the end of the year, which will be paid or used in future periods . The Benefits/Other Insurance Internal Service Fund, Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, and Storm Drainage Funds will be used to liquidate this liability. E. Revenue Pledged Percent of Remaining Principal PledgedUse of Total Debt Term of Principal and Interest RevenueBond Issue Proceeds Type Service Pledge and Interest Paid Received G.O. Water Revenue Bonds 2014A Utility improvements Utility charges 100%2014–2033 8,691,125$ 577,824$ 10,352,835$ G.O. Bonds 2015B Utility improvements Utility charges 100%2015–2026 1,552,803$ 212,388$ 1,901,319$ G.O. Water Revenue Note 2018A Utility improvements Utility charges 100%2018–2028 441,601$ –$ 10,352,835$ Revenue Pledged Current Year F. Arbitrage Rebate The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds from the issuance of debt in excess of interest costs, pending the expenditure of the borrowed funds. This rebate of interest income (known as arbitrage) applies to governmental debt issued after August 31, 1986. In the opinion of management, any obligation would be immaterial. -57- NOTE 5 – LONG-TERM DEBT (CONTINUED) G. Conduit Debt Obligations At times, the City has issued various types of revenue bonds to provide financial assistance to private sector, nonprofit, or governmental entities to finance the acquisition or construction of facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance . Neither the City, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the City’s financial statements. As of December 31, 2018, the following conduit debt issues were outstanding: Augustana CareHealth Care Revenue Bonds (Augustana Health Care Center Project), Series 2016A 16,440,000$ Minnesota Senior Living LLCSenior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016A 68,890,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016B 50,540,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016C 6,890,000 Senior Living Revenue Bonds (Minnesota Senior Living LLC Project), Series 2016D 21,650,000 Lifeworks Services Inc.Educational Facilities Revenue Note, Series 2011 1,711,558 Apple Valley Senior Housing Inc.Senior Housing Revenue Refunding Bond, Series 2018 49,185,000 Total conduit debt obligations 215,306,558$ NOTE 6 – JOINT POWERS COMMITMENT On August 25, 2005, the City entered into a joint powers agreement (the Agreement) with the cities of Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights, Rosemount, South St. Paul, West St. Paul, and Dakota County, Minnesota, to establish the Dakota Communications Center (DCC), a Minnesota nonprofit corporation. The purpose of the DCC is to engage in the operation and maintenance of a county-wide public safety answering point and communications center for law enforcement, fire, emergency medical services, and other public safety services for the mutual benefit of residents residing in the above mentioned cities and county (members). Pursuant to the Agreement, members are required to provide the DCC their pro rata share of the cost of operations, maintenance, and capital projects. Information regarding the DCC can be obtained by contacting the City of Lakeville, 20195 Holyoke Avenue, Lakeville, Minnesota 55044-9177 or from the website www.mn-dcc.org/about-the-dcc/statistics/. -58- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE A. Plan Description The City participates in the following cost-sharing, multiple-employer defined benefit pension plans administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code (IRC). 1. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the GERF. The GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2. Public Employees Police and Fire Fund (PEPFF) The Public Employees Police and Fire Fund (PEPFF), originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to the PERA. B. Benefits Provided The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statutes 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. 1. GERF Benefits 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 the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan 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 each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7 percent of 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 unreduced Social Security benefits capped at age 66. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. If the GERF is at least 90.0 percent funded for two consecutive years, benefit recipients are given a 2.5 percent increase. If the plan has not exceeded 90.0 percent funded, or has fallen below 80.0 percent, benefit recipients are given a one percent increase. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one month, but less than 12 full months as of June 30, will receive a pro rata increase. -59- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a prorated basis from 50 percent after five years, up to 100 percent after 10 years of credited service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis from 50 percent after 10 years, up to 100 percent after 20 years of credited service. The annuity accrual rate is 3 percent of average salary for each year of service. A full, unreduc ed pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. PEPFF benefit recipients receive a future annual 1.0 percent increase. An annual adjustment will equal 2.5 percent any time the plan exceeds a 90.0 percent funded ratio for two consecutive years. If the adjustment is increased to 2.5 percent and the funded ratio falls below 80.0 percent for one year, or 85.0 percent for two consecutive years, the post-retirement benefit increase will be lowered to 1.0 percent. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30, will receive a full increase. Members receiving benefits for at least one month, but less than 12 full months as of June 30, will receive a pro rata increase. For retirements after May 31, 2014, the first increase will be delayed two years. C. Contributions Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature. 1. GERF Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2018. The City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2018 were $796,766. The City’s contributions were equal to the required contributions as set by state statutes. 2. PEPFF Contributions Plan members were required to contribute 10.80 percent of their annual covered salary in fiscal year 2018. The City was required to contribute 16.20 percent of pay for members. The City’s contributions to the PEPFF for the year ended December 31, 2018 were $858,645. The City’s contributions were equal to the required contributions as set by state statutes. -60- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) D. Pension Costs 1. GERF Pension Costs At December 31, 2018, the City reported a liability of $8,609,861 for its proportionate share of the GERF’s net pension liability. The net pension liability was measured as of June 30, 2018, 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 the PERA during the measurement period for employer payroll paid dates from July 1, 2017 through June 30, 2018, relative to the total employer contribu tions received from all of the PERA’s participating employers. The City’s proportionate share was 0.1552 percent at the end of the measurement period and 0.1643 percent for the beginning of the period. The City’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16 million to the fund. The state of Minnesota is considered a nonemployer contributing entity and the state’s contribution meets the definition of a special funding situation. The amount recognized by the City as its proportionate share of the net pension liability, the direct aid , and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 8,609,861$ State’s proportionate share of the net pension liability associated with the City 282,435$ For the year ended December 31, 2018, the City recognized pension expense of $623,470 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $65,863 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16 million to the GERF. At December 31, 2018, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 240,653$ 252,569$ Changes in actuarial assumptions 827,228 1,006,237 Differences between projected and actual investment earnings – 938,433 Changes in proportion 332,900 530,284 Contributions paid to the PERA subsequent to the measurement date 398,138 – Total 1,798,919$ 2,727,523$ -61- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Deferred outflows of resources reported $398,138 related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 200,982$ 2020 (479,509)$ 2021 (868,511)$ 2022 (179,704)$ 2. PEPFF Pension Costs At December 31, 2018, the City reported a liability of $5,320,954 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2018 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 the PERA during the measurement period for employer payroll paid dates from July 1, 2017 through June 30, 2018, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.4992 percent at the end of the measurement period and 0.5110 percent for the beginning of the period. For the year ended December 31, 2018, the City recognized pension expense of $557,113 for its proportionate share of the PEPFF’s pension expense. The City also recognized $44,928 for the year ended December 31, 2018 as revenue and an offsetting reduction of net pension liability for its proportionate share of the state of Minnesota’s on-behalf contributions to the PEPFF. Legislation passed in 2013 required the state of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. At December 31, 2018, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 217,398$ 1,354,192$ Changes in actuarial assumptions 6,877,658 8,014,092 Differences between projected and actual investment earnings – 1,098,651 Changes in proportion 22,725 371,999 Contributions paid to the PERA subsequent to the measurement date 416,498 – Total 7,534,279$ 10,838,934$ -62- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Deferred outflows of resources reported $416,498 related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 (171,309)$ 2020 (426,196)$ 2021 (825,797)$ 2022 (2,253,755)$ 2023 (44,096)$ E. Actuarial Assumptions The total pension liability in the June 30, 2018 actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per yearActive member payroll growth 3.25% per yearInvestment rate of return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP-2014 tables for males and females, as appropriate, with slight adjustments to fit the PERA’s experience. Cost of living benefi t increases after retirement for retirees are assumed to be 1.25 percent per year for the GERF, and 1.00 percent per year for the PEPFF. Actuarial assumptions used in the June 30, 2018 valuation were based on the results of actuarial experience studies. The most recent six-year experience study in the GERF was completed in 2015. The most recent four-year experience study for PEPFF was completed in 2016. Economic assumptions were updated in 2017 based on a review of inflation and investment return assumptions. The following changes in actuarial assumptions occurred in 2018: 1. GERF • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed post-retirement 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. 2. PEPFF • The mortality projection scale was changed from MP-2016 to MP-2017. • As set by statutes, the assumed post-retirement benefit increase was changed from 1.00 percent per year through 2064, and 2.50 percent per year thereafter, to 1.00 percent for all years with no trigger. -63- NOTE 7 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The State Board of Investment, which manages the investments of the 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 stocks 36 % 5.10 %International stocks 17 5.30 %Bonds 20 0.75 %Alternative assets 25 5.90 %Cash 2 – % Total 100 % AllocationTarget Real Rate of ReturnLong-Term Expected F. Discount Rate The discount rate used to measure the total pension liability in 2018 was 7.50 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 positions of the GERF and the PEPFF were 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 table presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1% Decrease in 1% Increase inDiscount Rate Discount Rate Discount Rate6.50%7.50%8.50% City’s proportionate share of the GERF net pension liability 13,992,124$ 8,609,861$ 4,166,954$ City’s proportionate share of the PEPFF net pension liability 11,408,467$ 5,320,954$ 286,840$ H. Pension Plan Fiduciary Net Position Detailed information about the GERF’s fiduciary net position is available in a separately issued PERA financial report. That report may be obtained on the PERA website at www.mnpera.org; by writing to the PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103; or by calling (651) 296 -7460 or (800) 652-9026. -64- NOTE 8 – DEFINED CONTRIBUTION PENSION PLAN – STATE-WIDE Councilmembers of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by the PERA. The PEDCP is a tax qualified plan under Section 401(a) of the IRC and all contributions by or on behalf of employees are tax deferr ed until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5 percent of salary, which is matched by the elected official’s employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employee contributions must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fun d. For administering the plan, the PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (0.0025) of the assets in each member’s account annually. Total contributions made by the City for the fiscal year 2018 were: Required Ratefor EmployeesEmployeeEmployerEmployeeEmployerand Employers 1,949$ 1,949$ 5%5%5% Contribution Amount Percentage of Covered Payroll NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION A. Plan Description All members of the Apple Valley Fire Department (the Department) are covered by a defined benefit plan administered by the Apple Valley Firefighters’ Relief Association (the Association). As of the measurement date, the plan covered 64 active members, 16 inactive members entitled to future benefits, and 34 inactive members or beneficiaries currently receiving benefits. The plan is a single-employer retirement plan and is established and administered in accordance with Minnesota Statutes, Chapter 69. The Association maintains a separate Special Pension Trust Fund to accumulate assets to fund the retirement benefits earned by the Department’s membership. Funding for the Association is derived from an insurance premium tax in accordance with the Volunteer Firefighter’s Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980). Funds are also derived from investment income. -65- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) B. Benefits Provided Each member who is at least 50 years of age, has separated from service from the fire department, has served at least 5 years of active service for members commencing active duty prior to January 1, 2010, and 10 years of active service for members commencing active duty after January 1, 2010 with such department before separation and has been a member of the Association in good sta nding at least 5 years prior to such separation shall be entitled to a lump sum service pension in the amount of $6,700 for each year of service (including each year over 20) or a monthly service pension of $45 for each year of service (including each year over 20), but not exceeding the maximum amount per year of service allowed by law for the minimum average amount of available financing per firefighter as prescribed by law. According to the bylaws of the Association and pursuant to Minnesota Statutes, members who separate from service with less than 20 years of service and have reached the age of at least 50 , and have completed at least 5 years of active membership for members commencing active duty prior to January 1, 2010, and 10 years of active membership for members commencing active duty after January 1, 2010 , are entitled to a reduced service pension not to exceed the amount calculated by multiplying the member ’s service pension for the completed years of service times the applicable nonforfeitable percentage of pension for the completed years of service times the applicable nonforfeitable percentage of pension. C. Contributions Minnesota Statutes, Chapters 424 and 424A, authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings, and, if necessary, employer contributions as specified in Minnesota Statutes and voluntary city contributions (if applicable). Required employer contributions are calculated annually based on statutory provisions. The City’s statutorily-required contributions to the plan for the year ended December 31, 2018 were $252,930. The City’s contributions were equal to the required contributions as set by state statutes. The City made no voluntary contributions to the plan. Furthermore, the firefighter has no obligation to contribute to the plan. D. Pension Costs At December 31, 2018, the City reported a net pension liability (asset) of ($1,807,017) for the plan. The net pension liability (asset) was measured as of December 31, 2017. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB Statement No. 68 was determined by applying an actuarial formula to specific census data certified by the Department as of December 31, 2017. For the year ended December 31, 2018, the City recognized pension expense of $14,688. The City also recognized $283,581 as revenue from the state of Minnesota on-behalf contributions to the Department. -66- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) The following table presents the changes in net pension liability (asset) during the year: Total Pension Plan Fiduciary Net PensionLiabilityNet Position Liability (Asset) Beginning balance 5,790,805$ 6,581,831$ (791,026)$ Changes for the yearService cost 149,826 – 149,826 Interest 427,292 – 427,292 Difference between expected and actual experience (67,525) – (67,525) Change of assumptions 133,128 – 133,128 Contributions – state and local – 530,781 (530,781) Net investment income – 1,164,210 (1,164,210) Benefit payments (486,814) (486,814) – Administrative costs – (36,279) 36,279 Total net changes 155,907 1,171,898 (1,015,991) Ending balance 5,946,712$ 7,753,729$ (1,807,017)$ At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Differences between expected and actual economic experience 7,240$ 75,465$ Changes in actuarial assumptions 114,715 493,134 Differences between projected and actual investment earnings – 377,968 City contributions subsequent to the measurement date 252,930 – State aid to the City subsequent to the measurement date 298,751 298,751 Total 673,636$ 1,245,318$ -67- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) Deferred outflows of resources totaling $551,681 related to pensions resulting from the City’s contributions and state aid received subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2019. Deferred inflows of resources totaling $298,751 related to state aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ending December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized in pension expense as follows: PensionYear Ending ExpenseDecember 31,Amount 2019 (115,869)$ 2020 (139,776)$ 2021 (261,198)$ 2022 (227,993)$ 2023 (76,838)$ Thereafter (2,938)$ E. Actuarial Assumptions The total pension liability at December 31, 2017 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Inflation 2.75%Salary increases N/AInvestment rate of return Index rate for 20-year, tax-exempt municipal bonds (Bond Buyer G.O. 20-Year Municipal Bond Index); used in discount rate determination 3.31% N/A – Not Applicable 7.25% net of pension plan investment expense, including inflation Mortality rates were based on the July 1, 2017 Minnesota Public Employees Retirement Association Police and Fire Plan actuarial valuation as described below: Healthy Pre-Retirement – RP-2014 Employee Generational Mortality Table projected with mortality improvement scale MP-2016, from a base year of 2006. Healthy Post-Retirement – RP-2014 Annuitant Generational Mortality Table projected with mortality improvement scale MP-2016 from a base year of 2006. Male rates are adjusted by a factor of 0.96. The expected investment return and discount rate decreased from 7.50 percent to 7.25 percent to reflect updated capital market assumptions. Mortality and termination rates were changed to those used in the most recent Minnesota PERA Police and Fire Plan actuarial valuation. -68- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These asset class estimates are combined to produce the portfolio long-term expected rate of return by weighting the expected future real rates of return by the current asset allocation percentage (or target allocation, if available) and by adding expected inflation. All results are then rounded to the nearest quarter percent. Asset Class Domestic equity 77.52 %5.39 %8.14 %International equity 8.25 5.20 %7.95 %Fixed income 10.82 1.98 %4.73 %Real estate and alternatives – 4.25 %7.00 %Cash and equivalents 3.41 0.79 %3.54 % Total (weighted average, rounded to 1/4 percent)100.00 %7.25 % Allocation atMeasurementDate Long-TermExpected NominalRate of Return Long-TermExpected RealRate of Return F. Discount Rate The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in state statutes. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate The following presents the net pension liability (asset) of the Association, calculated using the discount rate of 7.25 percent, as well as what the Association’s net pension liability (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (6.25 percent) or 1 percentage point higher (8.25 percent) than the current discount rate: 1% Decrease in Current 1% Increase inDiscount Rate Discount Rate Discount Rate6.25%7.25%8.25% Association’s net pension liability (asset)(1,258,612)$ (1,807,017)$ (2,276,181)$ H. Pension Plan Fiduciary Net Position The Association issues a publicly available financial report. This report may be obtained by writing to the Apple Valley Firefighters’ Relief Association, 7100 147th Street West, Apple Valley, Minnesota 55124. -69- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A. Plan Description The City provides post-employment insurance benefits to certain eligible employees through its OPEB plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report. No plan assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. B. Benefits Provided All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to continue coverage for medical and dental insurance. Per state statutes, the City is also required to contribute towards the cost of continued health insurance coverage for officers and firefighters disabled or killed in the line of duty. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees until the retiree reaches Medicare eligibility, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. C. Contributions The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined periodically by the City. The City’s current year required pay-as -you-go contributions to finance the benefits described in the previous section totaled $63,841. D. Membership Membership in the plan consisted of the following as of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 10 Active plan members 184 Total members 194 -70- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) E. Total OPEB Liability of the City The City’s total OPEB liability of $2,230,647 as of year-end was measured as of December 31, 2017, and was determined by an actuarial valuation as of January 1, 2018. F. Actuarial Methods and Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2018, using the entry age method. The following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount rate 3.44%20-year municipal bond yield 3.44%Inflation rate 2.75%Salary increases 3.50%Medical trend rate 10.00%, grading to 5.00% over 10 years The actuarial assumptions used in the latest valuation were based on those used to value pension liabilities for Minnesota city employees. The state pension plans base their assumptions on periodic experience studies. Economic assumptions are based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20 -year municipal bond yield rate of 3.44 percent, which was set by considering published rate information for 20-year high quality, tax-exempt, general obligation municipal bonds as of the measurement date. The City discount rate used in the prior measurement date was 4.50 percent. Mortality rates were based on the RP-2014 Mortality Table, adjusted for white collar and mortality improvements using projection scale MP-2015 from a base year of 2014 (using projection scale MP-2016 from a base year of 2006 for police and fire personnel). Future retirees electing coverage is assumed to be 65 percent. Married future retirees electing spouse coverage is assumed to be 40 percent (60 percent for police and fire personnel). G. Changes in the Total OPEB Liability Total OPEBLiability Beginning balance – January 1, 2018 1,973,078$ Changes for the yearService cost 181,510 Interest 80,281 Changes of assumptions 57,294 Benefit payments (61,516) Total net changes 257,569 Ending balance – December 31, 2018 2,230,647$ Assumption changes since the prior measurement date include the following: • The discount rate was changed from 4.50 percent to 3.44 percent. -71- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) H. Total OPEB Liability Sensitivity to Discount and Healthcare Cost Trend Rate Changes The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount rate: OPEB discount rate 3.44% Total OPEB liability $ 2,404,381 $ 2,065,094 2.44%4.44% 1% Decrease in 1% Increase inDiscount Rate Discount RateDiscountRate 2,230,647$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rates: OPEB healthcare trend rate Total OPEB liability $ 1,961,840 $ 2,550,028 4.00% over 10 years 6.00% over 10 years 1% Decrease in 1% Increase inHealthcare Trend Rate Healthcare Trend Rate 9.00% , decreasing to 11.00%, decreasing to Healthcare TrendRate 10.00%, decreasing to5.00% over 10 years $ 2,230,647 I. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources For the current year ended, the City recognized OPEB expense of $268,075. As of year-end, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred DeferredOutflowsInflowsof Resources of Resources Changes of assumptions 51,010$ –$ City’s contributions subsequent to the measurement date 63,841 – Total 114,851$ –$ Deferred outflows of resources reported $63,841 related to OPEB resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the total OPEB liability in the year ending December 31, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: OPEBYear Ending ExpenseJune 30,Amount 2019 $ 6,284 2020 $ 6,284 2021 $ 6,284 2022 $ 6,284 2023 $ 6,284 Thereafter $ 19,590 -72- NOTE 11 – STEWARDSHIP AND ACCOUNTABILITY A. Deficit Fund Balances The following funds have a deficit fund balance at December 31, 2018: Amount GovernmentalRoad Improvements 5,250,659$ Nonmajor fundsCapital projectsCentral Village Parking 15,853$ TIF District No. 15 Parkside Village 841,952$ The deficits listed above will be eliminated by transfers from other funds, collection of special assessments, future special assessment bond issues, future tax levies, future tax increment collections, and state grant reimbursements. B. Budget to Actual Expenditures exceeded budgeted amounts in the Future Capital Projects Fund by $1,103,879, EDA Operations Special Revenue Fund by $555,749, and Cable Capital Equipment Capital Projects Fund by $16,896. NOTE 12 – FUND BALANCES A. Classifications At December 31, 2018, the City had the following governmental fund balances: Debt ServiceClosed Future NonmajorGeneralBondRoadCapitalGovernmentalFundIssuesImprovementsProjectsFunds Total NonspendableInventory 19,817$ –$ –$ –$ –$ 19,817$ Prepaid items 125,827 – – – – 125,827 Total nonspendable 145,644 – – – – 145,644 Restricted Debt service – – – – 1,015,437 1,015,437 Economic development – – – – 743,520 743,520 Tax increment financing – – – – 1,302,822 1,302,822 Police forfeiture – – – – 61,466 61,466 Capital acquisitionCable capital equipment – – – – 595,275 595,275 Tax increment financing – – – – 2,965,609 2,965,609 Park dedication – – – – 2,228,618 2,228,618 Electric projects – – – – 4,460,859 4,460,859 Cable TV – – – – 72,553 72,553 Other purposesSolid waste grant – – – – 43,335 43,335 Lodging tax – – – – 118,926 118,926 Total restricted – – – – 13,608,420 13,608,420 Capital Projects -73- NOTE 12 – FUND BALANCES (CONTINUED) Debt ServiceClosed Future NonmajorGeneralBondRoadCapitalGovernmentalFundIssuesImprovementsProjectsFunds Total CommittedHome improvement guide 20,000 – – – – 20,000 Aquatic center equipment 13,000 – – – – 13,000 Comprehensive plan update contract services 30,000 – – – – 30,000 Chair replacement 1,000 – – – – 1,000 Finance automation Laserfich and accounts payable 5,000 – – – – 5,000 Public works snow and ice equipment 25,000 – – – – 25,000 Aquatic center rental cabanas 5,130 – – – – 5,130 Fleet Assetsworks System 33,500 – – – – 33,500 Fire bay floor coating 25,100 – – – – 25,100 Fire monument sign 19,100 – – – – 19,100 Fire ergonomic standing desk 1,600 – – – – 1,600 Finance ergonomic standing desk 2,100 – – – – 2,100 Community development Apple Valley50th Anniversary 8,000 – – – – 8,000 Aquatic center funbrellas 25,800 – – – – 25,800 Park maintenance training 1,700 – – – – 1,700 Park maintenance overlay trails 45,000 – – – – 45,000 Park maintenance puppet wagon trailer 9,000 – – – – 9,000 Public works folding machine 1,000 – – – – 1,000 Public works ergonomic standing desk 3,000 – – – – 3,000 Public works shade tree management 31,000 – – – – 31,000 Fleet ice machine 1,480 – – – – 1,480 Street maintenance backhoe bucket thumps 8,000 – – – – 8,000 Street maintenance stumper grinder parts 1,600 – – – – 1,600 Street maintenance supplies 12,000 – – – – 12,000 Street maintenance sidewalk repair/fog seal 5,000 – – – – 5,000 Street maintenance equipment repair 4,000 – – – – 4,000 Traffic signs driver feedback signs 7,500 – – – – 7,500 Building inspection iPad for building official 1,500 – – – – 1,500 Building inspection office modifications 1,400 – – – – 1,400 Building inspection Avolve workflows 20,000 – – – – 20,000 Total committed 367,510 – – – – 367,510 AssignedFacilities condition inventory 75,000 – – – – 75,000 Debt service – 8,663,145 – – 1,533,088 10,196,233 Other capital projects – – – 14,300,138 2,571,441 16,871,579 Police special projects – – – – 148,029 148,029 Tree preservation – – – – 371,129 371,129 Ponds – – – – 249,550 249,550 Pathways and sidewalks – – – – 256,433 256,433 Dodd Road – – – – 242,549 242,549 Former City Hall building – – – – 114,423 114,423 Capital building – – – – 749,199 749,199 Park improvement development – – – – 2,987 2,987 Physical improvement – – – – 155,992 155,992 Fire capital purchases – – – – 17,511 17,511 Total assigned 75,000 8,663,145 – 14,300,138 6,412,331 29,450,614 Unassigned 17,052,177 – (5,250,659) – (857,805) 10,943,713 Total 17,640,331$ 8,663,145$ (5,250,659)$ 14,300,138$ 19,162,946$ 54,515,901$ Capital Projects B. Minimum Fund Balance Policy The City Council has formally adopted a fund balance policy. The policy establishes the City will strive to maintain a minimum unassigned General Fund balance of 50.0 percent of the subsequent year’s budgeted expenditures. At December 31, 2018, the unassigned fund balance of the General Fund was 50.1 percent of the subsequent year’s budgeted expenditures, including transfers. -74- NOTE 13 – JOINT POWERS AGREEMENT WITH DAKOTA COUNTY In July 1987, the City and Dakota County (the County) entered into an agreement to maintain and operate the library in Apple Valley. The County will staff and operate the library and the City agreed to resurface the parking lot and driveways on a periodic basis. NOTE 14 – TAX ABATEMENT AGREEMENTS The City, in order to spur economic development and redevelopment , has entered into private development and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing properties and buildings or clean-up and redevelop blighted areas. The City has five agreements that would be considered a tax abatement under GASB Statement No. 77. The City is authorized to create a tax increment finance plan under Minnesota Statute s, Chapter 469.175. The criteria that must be met under the statutes are that, in the opinion of the municipality: • The proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less that the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the tax increment district permitted in the plan. The requirements of this item do not apply if the district is a housing district; • That the tax increment financing plan conforms to the general plan for the development or redevelopment of the municipality as a whole; and • That the tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the municipality as a whole, for the development or redevelopment of the project by private enterprise. The City has entered into private development agreements regarding certain properties within a tax increment district. Included in the development agreement was the reimbursement of eligible development costs. The vehicle used for this reimbursement is called a tax increment revenue note. These notes provide for the payment of principal, equal to the developer’s eligible costs, plus interest at a set rate. Payments on the note will be made at the lesser of the note payment or a percent of the available tax increment received during the specific year as stated in the agreement. Payments are first applied to accrued interest and then to the principal balance. The notes are to be cancelled at the end of the te rm, whether or not the note has been repaid in full. The agreements are not a general obligation of the City and are payable solely from available tax increments received from the property owner. The City’s position is that these are obligations to assign future and uncertain revenues sources and, as such, is not actual debt in substance. -75- NOTE 14 – TAX ABATEMENT AGREEMENTS (CONTINUED) The outstanding principal balances as of December 31, 2018 for these agreements are as follows: District Name Purpose Percentage of Taxes Returned During the Fiscal Year Amount of Taxes Returned During the Fiscal Year Outstanding Principal at Year-End Date of Required Decertification TIF No. 14 – Apple Valley Business Campus Construction of 147th St. and Felton Ct., 100,000 sq. ft. expansion of warehouse/office facilities and the addition of minimum of 40 full-time jobs. 90%$171,123 $1,428,910 12/31/2022 TIF No. 15 – Parkside Village – Gabella Housing district, including the construction of multi‑family residential buildings of 196 units with 20% affordable units. 70%$150,364 $2,601,324 12/31/2041 TIF No. 15 – Parkside Village – Galante Housing district, including the construction of multi‑family residential buildings of 134 units with 20% affordable units. 0%$0 $2,666,000 12/31/2041 TIF No. 16 –Uponor Creation of 86,000 sq. ft. of manufacturing facilities and the addition of 75 full-time jobs.90%$25,144 $427,758 12/31/2025 TIF No. 17 – Karamella Creation of 73,000 sq. ft. manufacturing facilities and the addition of 76 full-time jobs.90%$31,359 $736,000 12/31/2026 NOTE 15 – COMMITMENTS AND CONTINGENCIES A. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year -end. Although the outcome of these lawsuits is not presently determinable, the City’s management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City’s financial statements relating to these claims. B. Federal and State Funding Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. C. Tax Increment Districts The City’s tax increment districts are subject to review by the state of Minnesota Office of the State Auditor. 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. -76- NOTE 15 – COMMITMENTS AND CONTINGENCIES (CONTINUED) D. Construction Commitments At December 31, 2018, the City is committed to various construction contracts for the improvement of city property. The City’s remaining commitment under these contracts is approximately $7,220,000. E. Operating Lease On November 15, 2018, the City entered into an agreement to extend the existing liquor store building lease at Apple Valley Shopping Center with Time Square Shopping Center II, LLP for three years commencing February 1, 2019 and ending January 31, 2022, at a base rent of $11,500 per month. Lease expenditures for the year ending December 31, 2018 were $132,000. On January 25, 2018, the City entered into an agreement to lease equipment for the Municipal Golf Course for two years commencing April 23, 2018. Annual rental payments are $37,215. Lease expenditures for the year ending December 31, 2018 were $37,215. The following is a schedule by years of future minimum payments required under the leases as of December 31, 2018: Year Ending Liquor Lease Golf LeaseDecember 31, Amount Amount 2019 137,500$ 37,215$ 2020 138,000 – 2021 138,000 – 2022 11,500 – Total 425,000$ 37,215$ NOTE 16 – SUBSEQUENT EVENT In March 2019, the City entered into a capital lease for golf course equipment in the amount of $123,041 and a 5.65 percent interest rate. Annual payments will be made for $27,385 for five years. REQUIRED SUPPLEMENTARY INFORMATION ProportionateShare of the City’s Net PensionProportionateLiability and City’sShare of the the City’s Proportionate Plan FiduciaryState of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as aPERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a PercentageYear-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total(Measurement Pension Net Pension Net Pension Net Pension Covered Covered PensionDate)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.1634% 8,468,235$ –$ 8,468,235$ 9,603,176$ 88.18% 78.20% 06/30/2016 0.1561% 12,674,544$ 165,598$ 12,840,142$ 9,680,914$ 130.92% 68.90% 06/30/2017 0.1643% 10,488,804$ 131,924$ 10,620,728$ 10,539,668$ 99.52% 75.90% 06/30/2018 0.1552% 8,609,861$ 282,435$ 8,892,296$ 10,429,041$ 82.56% 79.50% Contributions Contributionsin Relation to as aStatutorilythe Statutorily Contribution PercentageRequiredRequiredDeficiencyCoveredof CoveredContributionsContributions(Excess)Payroll Payroll 750,987$ 750,987$ –$ 10,013,141$ 7.50% 741,397$ 741,397$ –$ 9,885,306$ 7.50% 768,029$ 768,029$ –$ 10,240,379$ 7.50% 796,766$ 796,766$ –$ 10,623,546$ 7.50% Note: 12/31/2017 City FiscalYear-End Date Year Ended December 31, 2018 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).This schedule is intended to present10-year trend information. Additional years will be added as they become available. 12/31/201512/31/2016 12/31/2018 CITY OF APPLE VALLEY Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability PERA – General Employees Retirement Fund Year Ended December 31, 2018 Schedule of City ContributionsPERA – General Employees Retirement Fund City FiscalYear-End Date 12/31/201512/31/201612/31/201712/31/2018 -77- City’sProportionate Plan Share of the Net Position City’s City’s Net Pension as aPERA Fiscal Proportion Proportionate Liability as a PercentageYear-End Date of the Net Share of the City’s Percentage of of the Total(Measurement Pension Net Pension Covered Covered PensionDate)Liability Liability Payroll Payroll Liability 06/30/2015 0.5150% 5,851,604$ 4,711,902$ 124.19% 86.60% 06/30/2016 0.5190% 20,828,373$ 4,976,069$ 418.57% 63.90% 06/30/2017 0.5110% 6,899,105$ 5,233,601$ 131.82% 85.40% 06/30/2018 0.4992% 5,320,954$ 5,261,108$ 101.14% 88.80% Contributions Contributionsin Relation to as aStatutorilythe Statutorily Contribution PercentageRequiredRequiredDeficiencyCoveredof CoveredContributionsContributions(Excess)Payroll Payroll 818,071$ 818,071$ –$ 5,049,825$ 16.20% 808,641$ 808,641$ –$ 4,991,606$ 16.20% 829,640$ 829,640$ –$ 5,121,237$ 16.20% 858,645$ 858,645$ –$ 5,300,284$ 16.20% Note: 12/31/2018 The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2017 Schedule of City Contributions 12/31/2015 12/31/2016 Year Ended December 31, 2018 City FiscalYear-End Date 12/31/2015 12/31/2018 CITY OF APPLE VALLEY Schedule of City’s Proportionate Share of Net Pension Liability PERA – Public Employees Police and Fire Fund Year Ended December 31, 2018 PERA – Public Employees Police and Fire Fund City FiscalYear-End Date 12/31/201612/31/2017 -78- City fiscal year-end date – December 31 2018 2017 2016 2015 Apple Valley Firefighters’ Relief Association year-end date (measurement date) – December 31 2017 2016 2015 2014 Total pension liabilityService cost 149,826$ 179,770$ 181,221$ 168,532$ Interest 427,292 402,119 398,162 369,565 Differences between expected and actual experience (67,525) (23,940) 12,130 – Changes of assumptions 133,128 (509,724) (209,787) – Change in benefit terms – – – 265,088 Benefit payments (486,814) (528,192) (600,659) (269,330) Net change in total pension liability 155,907 (479,967) (218,933) 533,855 Total pension liability – beginning of year 5,790,805 6,270,772 6,489,705 5,955,850 Total pension liability – end of year 5,946,712$ 5,790,805$ 6,270,772$ 6,489,705$ Plan fiduciary net position Contributions (state and local)530,781$ 546,408$ 477,537$ 526,217$ Net investment income 1,164,210 549,126 (219,523) 239,737 Benefit payments (486,814) (528,192) (600,659) (269,330) Administrative costs (36,279) (34,516) (35,434) (22,641) Net change in plan fiduciary net position 1,171,898 532,826 (378,079) 473,983 Plan fiduciary net position – beginning of year 6,581,831 6,049,005 6,427,084 5,953,101 Plan fiduciary net position – end of year 7,753,729$ 6,581,831$ 6,049,005$ 6,427,084$ Net pension liability (asset) – ending (1,807,017)$ (791,026)$ 221,767$ 62,621$ Plan fiduciary net position as a percentage of the total pension liability 130.39%113.66%96.46%99.04% Note:The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31,2014 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. CITY OF APPLE VALLEY Apple Valley Firefighters’ Relief Association Schedule of Changes in the Relief Association’s NetPension Liability and Related RatiosDecember 31, 2018 -79- Contributions inRelation to theActuariallyActuarially ContributionDeterminedDeterminedDeficiencyContributionContribution(Excess) 449,869$ 526,217$ (76,348)$ 338,049$ 477,537$ (139,488)$ 404,811$ 546,408$ (141,597)$ 442,233$ 530,781$ (88,548)$ Note: 12/31/2015 The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31,2014 measurement date).Thisschedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2016 CITY OF APPLE VALLEY Schedule of City ContributionsApple Valley Firefighters’ Relief Association City FiscalYear-End Date 12/31/201712/31/2018 -80- 2018 Total OPEB liabilityService cost 181,510$ Interest 80,281 Changes of assumptions 57,294 Benefit payments (61,516) Net change in total OPEB liability 257,569 Total OPEB liability – beginning of year 1,973,078 Total OPEB liability – end of year 2,230,647$ Covered payroll 14,500,000$ Total OPEB liability as a percentage of covered payroll 15.4% Note 1: Note: 2:No plan assets are accumulated in a trust that meets the criteria in paragraph 4 ofGASB Statement No. 75. The City implemented GASB Statement No.75 in fiscal 2018.This schedule is intended topresent 10-year trend information. Additional years will be added as they become available. CITY OF APPLE VALLEY Schedule of Changes in the City’s TotalOPEB Liability and Related Ratios Other Post-Employment Benefits Plan Year Ended December 31, 2018 -81- CITY OF APPLE VALLEY Notes to Required Supplementary Information December 31, 2018 -82- PERA – GENERAL EMPLOYEES RETIREMENT FUND 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The mortality 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 CHANGES IN PLAN PROVISIONS: The state’s special funding contribution increased from $6 million to $16 million. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent for vested and nonvested deferred members. The revised CSA loads are now zero percent for active member liability, 15.00 percent for vested deferred member liability, and 3.00 percent for nonvested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2035, and 2.50 percent per year thereafter, to 1.00 percent per year for all years. The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate was changed from 7.90 percent to 7.50 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 CHANGES IN PLAN PROVISIONS: On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Retirement 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. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2035, and 2.50 percent per year thereafter. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -83- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The mortality projection scale was changed from MP-2016 to MP-2017. As set by state statutes, the assumed post-retirement benefit increase was changed from 1.00 percent per year through 2064, and 2.50 percent per year thereafter, to 1.00 percent for all years with no trigger. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The CSA load was 30.00 percent for vested and nonvested deferred members. The CSA has been changed to 33.00 percent for vested members, and 2.00 percent for nonvested members. The base mortality table for healthy annuitants was changed from the RP-2000 Fully Generational Table to the RP-2014 Fully Generational Table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 Disabled Mortality Table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing joint and survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years, to 1.00 percent per year through 2064, and 2.50 percent thereafter. The single discount rate changed from 5.60 percent to 7.50 percent. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -84- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2037, and 2.50 percent thereafter, to 1.00 percent per year for all future years. The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 5.60 percent. 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 CHANGES IN PLAN PROVISIONS: The post-retirement benefit increase to be paid after attainment of the 90.00 percent funding threshold was changed from inflation up to 2.50 percent, to a fixed rate of 2.50 percent. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS: The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2037, and 2.50 percent per year thereafter. CITY OF APPLE VALLEY Notes to Required Supplementary Information (continued) December 31, 2018 -85- APPLE VALLEY FIREFIGHTERS’ RELIEF ASSOCIATION 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The expected investment return and discount rate decreased from 7.50 percent to 7.25 percent to reflect updated capital market assumptions. Mortality and termination rates were changed to those used in the most recent Minnesota PERA Police and Fire Plan actuarial valuation. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS: The expected investment return and discount rate increased from 6.50 percent to 7.50 percent to reflect updated capital market assumptions. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS: The discount rate was changed to reflect updated investment expectations. Disability decrements were added to reflect the disability benefit. Retirement rates were changed from 100.00 percent at age 50 with 20 years of service to a graded schedule. OTHER POST-EMPLOYMENT BENEFITS PLAN 2018 CHANGES IN ACTUARIAL ASSUMPTIONS: The discount rate was changed from 4.50 percent to 3.44 percent. SUPPLEMENTARY INFORMATION THIS PAGE INTENTIONALLY LEFT BLANK COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Special Debt CapitalRevenueServiceProjects Total AssetsCash and investments 1,042,823$ 3,851,347$ 16,888,383$ 21,782,553$ ReceivablesAccounts 6,844 – 161,179 168,023 Special assessmentsCurrent – 130,000 – 130,000 Deferred – 390,000 – 390,000 Due from other governmental units 3,616 – – 3,616 Total assets 1,053,283$ 4,371,347$ 17,049,562$ 22,474,192$ LiabilitiesAccrued salaries payable 6,346$ –$ –$ 6,346$ Accounts payable 7,137 – 1,464,835 1,471,972 Contracts payable – – 218,451 218,451 Due to other funds – – 15,318 15,318 Advances from other funds – – 1,079,159 1,079,159 Total liabilities 13,483 – 2,777,763 2,791,246 Deferred inflows of resources Unavailable revenue – special assessments – 520,000 – 520,000 Fund balances (deficit)Restricted 1,039,800 2,318,259 10,250,361 13,608,420 Assigned – 1,533,088 4,879,243 6,412,331 Unassigned – – (857,805) (857,805) Total fund balances 1,039,800 3,851,347 14,271,799 19,162,946 Total liabilities, deferred inflows of resources, and fund balances 1,053,283$ 4,371,347$ 17,049,562$ 22,474,192$ CITY OF APPLE VALLEY Nonmajor Governmental FundsCombining Balance Sheetas of December 31, 2018 -86- Special Debt CapitalRevenueServiceProjects Total RevenuesTaxes –$ 1,337,875$ 761,862$ 2,099,737$ Other taxes 99,960 – – 99,960 Franchise taxes – – 791,360 791,360 Special assessments –130,000 –130,000Intergovernmental1,268,744 –– 1,268,744 Investment earnings 18,011 58,149 213,820 289,980 Other 61,820 –3,183,276 3,245,096 Total revenues 1,448,535 1,526,024 4,950,318 7,924,877 ExpendituresCurrentGeneral government 702,229 2,196 1,154,341 1,858,766 Public safety 3,061 – 2,100 5,161 Public works 12,784 –704,373 717,157 Parks and recreation 223,961 –41,531 265,492 Capital outlay 14,116 –1,281,528 1,295,644 Debt servicePrincipal –1,100,000 –1,100,000Interest and fiscal charges –296,963 35,427 332,390Total expenditures 956,151 1,399,159 3,219,300 5,574,610 Excess of revenues over expenditures 492,384 126,865 1,731,018 2,350,267 Other financing sources (uses)Sale of capital assets 11,912 – – 11,912 Transfers in 120,105 3,719,659 1,202,805 5,042,569 Transfers (out)–(1,965,487) (145,561) (2,111,048) Total other financing sources (uses)132,017 1,754,172 1,057,244 2,943,433 Net change in fund balances 624,401 1,881,037 2,788,262 5,293,700 Fund balancesBeginning of year 415,399 1,970,310 11,483,537 13,869,246 End of year 1,039,800$ 3,851,347$ 14,271,799$ 19,162,946$ CITY OF APPLE VALLEY Nonmajor Governmental FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -87- THIS PAGE INTENTIONALLY LEFT BLANK -88- NONMAJOR SPECIAL REVENUE FUNDS Nonmajor special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. Nonmajor special revenue funds presently established are as follows: •Cable TV Fund – Accounts for the operating costs of the cable TV functions funded by cablefranchise fees. •Solid Waste Grant Fund – Accounts for the expenses related to recycling activities and thesemiannual cleanup day funded by grants from Dakota County. •Police Forfeiture Fund – Administers the resources received through court-ordered forfeitures. •EDA Operations Fund – Accounts for the operating activities of the Apple Valley EconomicDevelopment Authority. •Lodging Tax Fund – Administers the resources received from the lodging tax process. Solid Waste PoliceCable TV Grant Forfeiture(2010)(2040)(2060) AssetsCash and investments 75,865$ 43,388$ 61,466$ ReceivablesAccounts – – – Due from other governmental units 3,616 – – Total assets 79,481$ 43,388$ 61,466$ LiabilitiesAccrued salaries payable 6,346$ –$ –$ Accounts payable 582 53 – Total liabilities 6,928 53 – Fund balancesRestricted 72,553 43,335 61,466 Total liabilities and fund balances 79,481$ 43,388$ 61,466$ CITY OF APPLE VALLEY Nonmajor Special Revenue FundsCombining Balance Sheetas of December 31, 2018 -89- EDA LodgingOperationsTax(3210)(7000)Totals 743,520$ 118,584$ 1,042,823$ – 6,844 6,844 – – 3,616 743,520$ 125,428$ 1,053,283$ –$ –$ 6,346$ – 6,502 7,137 – 6,502 13,483 743,520 118,926 1,039,800 743,520$ 125,428$ 1,053,283$ -90- Solid Waste PoliceCable TV Grant Forfeiture(2010)(2040)(2060) RevenuesOther taxes –$ –$ –$ Intergovernmental 120,105 – – Investment earnings – 597 819 Other revenueMiscellaneous – 10,391 1,429Total revenues 120,105 10,988 2,248 ExpendituresCurrentGeneral government – – – Public safety – – 3,061Public works – 12,784 – Parks and recreation 223,961 – – Capital outlay 14,116 – – Total expenditures 238,077 12,784 3,061 Excess (deficiency) of revenue over expenditures (117,972) (1,796) (813) Other financing sourcesSale of capital assets – – 11,912Transfers in 120,105 – – Total other financing sources 120,105 – 11,912 Net change in fund balances 2,133 (1,796) 11,099 Fund balancesBeginning of year 70,420 45,131 50,367 End of year 72,553$ 43,335$ 61,466$ CITY OF APPLE VALLEY Nonmajor Special Revenue FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances Year Ended December 31, 2018 -91- EDA LodgingOperationsTax(3210)(7000)Totals –$ 99,960$ 99,960$ 1,148,639 – 1,268,744 14,849 1,746 18,011 50,000 – 61,820 1,213,488 101,706 1,448,535 594,499 107,730 702,229 – – 3,061 – – 12,784 – – 223,961 – – 14,116 594,499 107,730 956,151 618,989 (6,024) 492,384 – – 11,912 – – 120,105 – – 132,017 618,989 (6,024) 624,401 124,531 124,950 415,399 743,520$ 118,926$ 1,039,800$ -92- THIS PAGE INTENTIONALLY LEFT BLANK -93- NONMAJOR DEBT SERVICE FUNDS Nonmajor debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for principal, interest, and related costs on long-term debt of governmental funds. The individual nonmajor debt service funds presented are to distinguish between the various bond issues. 2001/2008B 2003/2009ARefundingImprovementImprovementRefundingG.O. Closed Improvement Bonds Bonds ImprovementBond Issues Bonds of 2006 of 2007 Bonds(3075)(3285)(3330)(3340)(3305) AssetsCash and investments 1,533,088$ –$ –$ –$ 743,420$ ReceivablesSpecial assessmentsCurrent – – – – – Deferred – – – – – Total assets 1,533,088$ –$ –$ –$ 743,420$ Deferred inflows of resources Unavailable revenue – special assessments –$ –$ –$ –$ –$ Fund balancesRestricted – – – – 743,420 Assigned 1,533,088 – – – – Total fund balances 1,533,088 – – – 743,420 Total deferred inflows of resources and fund balances 1,533,088$ –$ –$ –$ 743,420$ CITY OF APPLE VALLEY Nonmajor Debt Service FundsCombining Balance Sheetas of December 31, 2018 -94- Tax Taxable G.O.Improvement Increment Tax G.O.G.O. Park G.O. Park EquipmentBondsDowntownIncrementPark Bonds Bonds Bonds Certificatesof 2010 Redevelopment Bonds of 2003 of 2007 of 2008 of 2011 of 2012(3320)(3260)(3270)(3345)(3355)(3360)(3370) –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ – – – – – – – – – – – – – – –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ –$ –$ –$ –$ –$ –$ –$ – 180,748 1,122,074 – – – 43,061 – – – – – – – – 180,748 1,122,074 – – – 43,061 –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ -95-(continued) G.O.G.O.G.O.Refunding Improvement Refunding Equipment G.O.Bonds Bonds Bonds Certificates Park Bondsof 2012 of 2012 of 2013 of 2014 of 2015(3375)(3380)(3385)(3390)(3395) AssetsCash and investments –$ 81,035$ 31,949$ 32,986$ 63,162$ ReceivablesSpecial assessmentsCurrent – 130,000 – – – Deferred – 390,000 – – – Total assets –$ 601,035$ 31,949$ 32,986$ 63,162$ Deferred inflows of resources Unavailable revenue – special assessments –$ 520,000$ –$ –$ –$ Fund balances Restricted – 81,035 31,949 32,986 63,162 Assigned – – – – – Total fund balances – 81,035 31,949 32,986 63,162 Total deferred inflows of resources and fund balances –$ 601,035$ 31,949$ 32,986$ 63,162$ Nonmajor Debt Service FundsCombining Balance Sheet (continued)as of December 31, 2018 CITY OF APPLE VALLEY -96- G.O.EquipmentCertificatesof 2015(3400)Total 19,824$ 3,851,347$ – 130,000 – 390,000 19,824$ 4,371,347$ –$ 520,000$ 19,824 2,318,259 – 1,533,088 19,824 3,851,347 19,824$ 4,371,347$ -97- 2001/2008B 2003/2009ARefundingImprovementImprovementRefundingG.O. Closed Improvement Bonds Bonds ImprovementBond Issues Bonds of 2006 of 2007 Bonds(3075)(3285)(3330)(3340)(3305) RevenuesTaxes –$ –$ –$ –$ –$ Special assessments – – – – – Investment earnings 20,637 – – – 10,207 Total revenues 20,637 – – – 10,207 ExpendituresCurrentGeneral government – – – – – Debt servicePrincipal – – – – – Interest and fiscal charges – – – – – Total expenditures – – – – – Excess of revenue over expenditures 20,637 – – 10,207 Other financing sources (uses)Transfers in 658,476 2,846,426 – – – Transfers (out)– – (581,999) (725,013) – Total other financing sources (uses)658,476 2,846,426 (581,999) (725,013) – Net change in fund balances 679,113 2,846,426 (581,999) (725,013) 10,207 Fund balances (deficit)Beginning of year 853,975 (2,846,426) 581,999 725,013 733,213 End of year 1,533,088$ –$ –$ –$ 743,420$ CITY OF APPLE VALLEY Nonmajor Debt Service FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -98- Tax Taxable G.O.Improvement Increment Tax G.O.G.O. Park G.O. Park EquipmentBondsDowntownIncrementPark Bonds Bonds Bonds Certificatesof 2010 Redevelopment Bonds of 2003 of 2007 of 2008 of 2011 of 2012(3320)(3260)(3270)(3345)(3355)(3360)(3370) –$ –$ –$ –$ –$ –$ 125,000$ – – – – – – – – 2,438 15,105 – – – 1,072 – 2,438 15,105 – – – 126,072 – 2,196 – – – – – – – – – – – 110,000 – – – – – – 9,400 – 2,196 – – – – 119,400 – 242 15,105 – – – 6,672 189,301 – – – – – – – – – (215,119) (212,170) (47,172) – 189,301 – – (215,119) (212,170) (47,172) – 189,301 242 15,105 (215,119) (212,170) (47,172) 6,672 (189,301)180,506 1,106,969 215,119 212,170 47,172 36,389 –$ 180,748$ 1,122,074$ –$ –$ –$ 43,061$ -99-(continued) G.O.G.O.G.O.Refunding Improvement Refunding Equipment G.O.Bonds Bonds Bonds Certificates Park Bondsof 2012 of 2012 of 2013 of 2014 of 2015(3375)(3380)(3385)(3390)(3395) RevenuesTaxes –$ –$ 344,830$ 130,000$ 604,380$ Special assessments – 130,000 – – – Investment earnings – 1,475 948 953 4,509 Total revenues – 131,475 345,778 130,953 608,889 ExpendituresCurrentGeneral government – – – – – Debt servicePrincipal – 110,000 145,000 115,000 500,000 Interest and fiscal charges – 11,700 184,163 7,800 76,600Total expenditures – 121,700 329,163 122,800 576,600 Excess of revenue over expenditures – 9,775 16,615 8,153 32,289 Other financing sources (uses)Transfers in – 25,456 – – – Transfers (out)(184,014) – – – – Total other financing sources (uses)(184,014) 25,456 – – – Net change in fund balances (184,014) 35,231 16,615 8,153 32,289 Fund balances (deficit)Beginning of year 184,014 45,804 15,334 24,833 30,873 End of year –$ 81,035$ 31,949$ 32,986$ 63,162$ Nonmajor Debt Service FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 CITY OF APPLE VALLEY -100- G.O.EquipmentCertificatesof 2015(3400)Total 133,665$ 1,337,875$ – 130,000 805 58,149 134,470 1,526,024 – 2,196 120,000 1,100,000 7,300 296,963127,300 1,399,159 7,170 126,865 – 3,719,659 – (1,965,487) – 1,754,172 7,170 1,881,037 12,654 1,970,310 19,824$ 3,851,347$ -101- -102- NONMAJOR CAPITAL PROJECTS FUNDS Nonmajor capital projects funds used are to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition and construction of capital facilities and other capital assets. Capital projects funds exclude those types of capital-related outflows financed by proprietary funds. Nonmajor capital projects funds presently established are as follows: • Park Dedication Fund – Accounts for expenditures for the expansion of the City’s park facilities funded by the collection of park dedication fees charged to developing property. • Police Special Projects Fund – Accounts for police department projects funded with specific funding sources. • Tree Preservation Fund – Accounts for the amounts received in the development process related to tree preservation efforts. • Pond Fund – Accounts for the amounts received in the development process related to ponding efforts on privately-developed projects. • Pathways and Sidewalks Fund – Accounts for the amounts received in the development process related to pathways and sidewalk development efforts. • Dodd Road Fund – Accounts for the amounts received from the development process on Dodd Road. • Former City Hall Building Fund – Accounts for the costs and revenues associated with the use of the former City Hall building. • Central Village Parking Fund – Accounts for the costs and revenues associated with the use of the Central Village Parking. • Capital Building Fund – Accounts for the cost of the construction of the municipal center and other city facilities. • Park Improvement Development Fund – Accounts for park improvement costs in the development process. • C.I.P. Development Fund – Accounts for the proceeds from and expenses related to the Fraser land sale. • 2012 Improvement Construction Fund – Accounts for the improvements initiated in 2012 to be funded with development charges or developer reimbursements. • Cable Capital Equipment Fund – Accounts for capital equipment needs of the cable TV function funded with portions of the cable franchise fees. • Cable Capital Equipment/PEG Fund – Accounts for capital equipment needs of the cable TV function funded with the cable PEG fees. • Physical Improvement Fund – Accounts for developer projects funded by developers. -103- NONMAJOR CAPITAL PROJECTS FUNDS (CONTINUED) •Private Development Fund – Accounts for developer projects funded by developers. •2003 Improvement Construction Fund – Accounts for the improvements funded with the2003 General Obligation Bonds. •Electric Franchise Fee Fund – Accounts for project costs and revenues associated with theelectric franchise fee. •Fire Grants Project Fund – Accounts for Fire Department projects funded with specific fundingsources. •TIF District No. 7 Fund – Accounts for project costs included within TIF District No. 7. •TIF District No. 1 Fund – Accounts for project costs included within TIF District No. 1. •TIF District No. 15 Parkside Village Fund – Accounts for project costs included within TIFDistrict No. 15 – Parkside Village. •TIF District No. 16 Uponor Fund – Accounts for project costs included within TIF DistrictNo. 16. •TIF District No. 14 Business Campus Fund – Accounts for project costs included within TIFDistrict No. 14 – Apple Valley Business Campus. •TIF District No. 17 Karamella Fund – Accounts for project costs included within TIF DistrictNo. 17 – Karamella. •Construction Projects Fund – This fund accounts for development projects, the costs of whichwill be recovered through the development process, including specially assessing the benefitingproperties. Park Police Special Tree Pathways andDedicationProjectsPreservationPondSidewalks(2015)(2055)(2070)(2075)(2080) AssetsCash and investments 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ ReceivablesAccounts – – – – – Total assets 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ LiabilitiesAccounts payable 484$ –$ –$ –$ –$ Contracts payable 1,044 – – – – Due to other funds – – – – – Advances from other funds – – – – – Total liabilities 1,528 – – – – Fund balances (deficit)Restricted 2,228,618 – – – – Assigned – 148,029 371,129 249,550 256,433 Unassigned – – – – – Total fund balances (deficit)2,228,618 148,029 371,129 249,550 256,433 Total liabilities and fund balances 2,230,146$ 148,029$ 371,129$ 249,550$ 256,433$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheetas of December 31, 2018 -104- Former Central Park 2012City Hall Village Capital Improvement C.I.P.ImprovementDodd Road Building Parking Building Development Development Construction(2085)(2090)(2095)(4000)(4010)(4045)(4715) 242,549$ 142,356$ –$ 910,538$ 2,987$ 268,671$ –$ – 8,160 – – – – – 242,549$ 150,516$ –$ 910,538$ 2,987$ 268,671$ –$ –$ 36,093$ 535$ 11,106$ –$ –$ –$ – – – 150,233 – – – – – 15,318 – – – – – – – – – – – – 36,093 15,853 161,339 – – – – – – – – – – 242,549 114,423 – 749,199 2,987 268,671 – – – (15,853) – – – – 242,549 114,423 (15,853) 749,199 2,987 268,671 – 242,549$ 150,516$ –$ 910,538$ 2,987$ 268,671$ –$ -105-(continued) 2003Cable Capital Cable Capital Physical Private ImprovementEquipmentEquipment/PEG Improvement Development Construction(4800)(4810)(4900)(4920)(4300) AssetsCash and investments 480,183$ 98,394$ 262,323$ 131,551$ 123,574$ ReceivablesAccounts – 21,393 – – – Total assets 480,183$ 119,787$ 262,323$ 131,551$ 123,574$ LiabilitiesAccounts payable 4,695$ –$ 106,331$ –$ 24,943$ Contracts payable – – – – – Due to other funds – – – – – Advances from other funds – – – – – Total liabilities 4,695 – 106,331 – 24,943 Fund balances (deficit)Restricted 475,488 119,787 – – – Assigned – – 155,992 131,551 98,631 Unassigned – – – – – Total fund balances (deficit)475,488 119,787 155,992 131,551 98,631 Total liabilities and fund balances 480,183$ 119,787$ 262,323$ 131,551$ 123,574$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheet (continued)as of December 31, 2018 -106- TIF District TIF District TIF DistrictElectricFire Grants TIF District TIF District No. 15 No. 16 No. 14Franchise Fee Project No. 7 No. 1 Parkside Village Uponor Business Campus(4750)(7600)(4710)(4730)(4740)(4743)(4735) 4,400,962$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ 130,897 – – – – – – 4,531,859$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ 42,464$ –$ 6,357$ –$ –$ –$ –$ 28,536 – – – – – – – – – – – – – – – – – 1,079,159 – – 71,000 – 6,357 – 1,079,159 – – 4,460,859 – 1,824,192 924,430 – 33,975 146,559 – 17,511 – – – –– – – – – (841,952) – – 4,460,859 17,511 1,824,192 924,430 (841,952) 33,975 146,559 4,531,859$ 17,511$ 1,830,549$ 924,430$ 237,207$ 33,975$ 146,559$ -107-(continued) THIS PAGE INTENTIONALLY LEFT BLANK TIF DistrictNo. 17 ConstructionKaramellaProjects(4746)(4500)Total AssetsCash and investments 36,453$ 3,342,324$ 16,888,383$ ReceivablesAccounts – 729 161,179 Total assets 36,453$ 3,343,053$ 17,049,562$ LiabilitiesAccounts payable –$ 1,231,827$ 1,464,835$ Contracts payable – 38,638 218,451 Due to other funds – – 15,318 Advances from other funds – – 1,079,159 Total liabilities – 1,270,465 2,777,763 Fund balances (deficit)Restricted 36,453 – 10,250,361 Assigned – 2,072,588 4,879,243 Unassigned – – (857,805) Total fund balances (deficit)36,453 2,072,588 14,271,799 Total liabilities and fund balances 36,453$ 3,343,053$ 17,049,562$ as of December 31, 2018 CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Balance Sheet (continued) -108- Park Police Special Tree Pathways andDedicationProjectsPreservationPondSidewalks(2015)(2055)(2070)(2075)(2080) RevenuesTaxes –$ –$ –$ –$ –$ Franchise taxes – – – – – Investment earnings 27,873 2,001 4,995 3,359 3,452 Other revenueContributions – 100 – – – Rentals – – – – – Miscellaneous 977,391 – – – – Total revenues 1,005,264 2,101 4,995 3,359 3,452 ExpendituresCurrentGeneral government – – – – – Public safety – 2,100 – – – Public works – – – – – Parks and recreation 41,531 – – – – Capital outlay 201,231 26,748 – – – Debt serviceInterest and fiscal charges – – – – – Total expenditures 242,762 28,848 – – – Excess (deficiency) of revenue over expenditures 762,502 (26,747) 4,995 3,359 3,452 Other financing sources (uses)Transfers in – – – – – Transfers (out)– – – – – Total other financing sources (uses)– – – – – Net change in fund balances 762,502 (26,747) 4,995 3,359 3,452 Fund balances (deficit)Beginning of year 1,466,116 174,776 366,134 246,191 252,981 End of year 2,228,618$ 148,029$ 371,129$ 249,550$ 256,433$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018 -109- Former Central Park 2012City Hall Village Capital Improvement C.I.P.ImprovementDodd Road Building Parking Building Development Development Construction(2085)(2090)(2095)(4000)(4010)(4045)(4715) –$ –$ –$ –$ –$ –$ –$ – – – – – – – 3,265 2,262 – 4,217 40 3,616 88 – – – – – – – – 193,976 4,300 – – – – – – – 9,900 – – – 3,265 196,238 4,300 14,117 40 3,616 88 – 184,867 9,265 – – – – – – – – – – – – – – – – – – – – – – – – – – 587,209 – 290,982 – – – – – – – – – – – 772,076 9,265 290,982 – – – 3,265 (575,838) (4,965) (276,865) 40 3,616 88 – – – 593,000 – – – – – – – – – (25,456) – – – 593,000 – – (25,456) 3,265 (575,838) (4,965) 316,135 40 3,616 (25,368) 239,284 690,261 (10,888)433,064 2,947 265,055 25,368 242,549$ 114,423$ (15,853)$ 749,199$ 2,987$ 268,671$ –$ -110-(continued) 2003Cable Capital Cable Capital Physical Private ImprovementEquipmentEquipment/PEG Improvement Development Construction(4800)(4810)(4900)(4920)(4300) RevenuesTaxes –$ –$ –$ –$ –$ Franchise taxes 138,403 68,122 – – – Investment earnings 6,301 1,606 3,648 1,771 1,665 Other revenueContributions – – – – – Rentals – – – – – Miscellaneous – – 3,853 – – Total revenues 144,704 69,728 7,501 1,771 1,665 ExpendituresCurrentGeneral government – – – – – Public safety – – – – – Public works 15,488 – 8,607 – – Parks and recreation – – – – – Capital outlay 111,408 11,235 – – – Debt serviceInterest and fiscal charges – – – – – Total expenditures 126,896 11,235 8,607 – – Excess (deficiency) of revenue over expenditures 17,808 58,493 (1,106) 1,771 1,665 Other financing sources (uses)Transfers in – – – – – Transfers (out)(120,105) – – – – Total other financing sources (uses)(120,105) – – – – Net change in fund balances (102,297) 58,493 (1,106) 1,771 1,665 Fund balances (deficit)Beginning of year 577,785 61,294 157,098 129,780 96,966 End of year 475,488$ 119,787$ 155,992$ 131,551$ 98,631$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 -111- TIF District TIF District TIF DistrictElectricFire Grants TIF District TIF District No. 15 No. 16 No. 14Franchise Fee Project No. 7 No. 1 Parkside Village Uponor Business Campus(4750)(7600)(4710)(4730)(4740)(4743)(4735) –$ –$ –$ –$ 448,408$ 55,875$ 187,892$ 584,835 – – – – – – 57,374 236 24,784 12,443 1,319 148 903 – – – – – – – – – – – – – – – – – – – – – 642,209 236 24,784 12,443 449,727 56,023 188,795 – – – – 727,366 26,720 172,781 – – – – – – – 42,464 – – – – – – – – – – – – – 28,536 – 24,179 – – – – – – – – 35,427 – – 71,000 – 24,179 – 762,793 26,720 172,781 571,209 236 605 12,443 (313,066) 29,303 16,014 – – – – – – – – – – – – – – – – – – – – – 571,209 236 605 12,443 (313,066) 29,303 16,014 3,889,650 17,275 1,823,587 911,987 (528,886) 4,672 130,545 4,460,859$ 17,511$ 1,824,192$ 924,430$ (841,952)$ 33,975$ 146,559$ -112-(continued) THIS PAGE INTENTIONALLY LEFT BLANK TIF DistrictNo. 17 ConstructionKaramellaProjects(4746)(4500)Total RevenuesTaxes 69,687$ –$ 761,862$ Franchise taxes – – 791,360 Investment earnings 108 46,346 213,820 Other revenueContributions – – 100 Rentals – – 198,276 Miscellaneous – 1,993,756 2,984,900 Total revenues 69,795 2,040,102 4,950,318 ExpendituresCurrentGeneral government 33,342 – 1,154,341 Public safety – – 2,100 Public works – 637,814 704,373 Parks and recreation – – 41,531 Capital outlay – – 1,281,528 Debt serviceInterest and fiscal charges – – 35,427 Total expenditures 33,342 637,814 3,219,300 Excess (deficiency) of revenue over expenditures 36,453 1,402,288 1,731,018 Other financing sources (uses)Transfers in – 609,805 1,202,805 Transfers (out)– – (145,561) Total other financing sources (uses)– 609,805 1,057,244 Net change in fund balances 36,453 2,012,093 2,788,262 Fund balances (deficit)Beginning of year – 60,495 11,483,537 End of year 36,453$ 2,072,588$ 14,271,799$ CITY OF APPLE VALLEY Nonmajor Capital Projects FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)Year Ended December 31, 2018 -113- Over (Under)Original Final Actual Budget RevenueTaxesCurrent 24,223,125$ 24,223,125$ 24,256,311$ 33,186$ Delinquent 50,000 50,000 134,466 84,466 Total taxes 24,273,125 24,273,125 24,390,777 117,652 Other taxes 103,900 103,900 50,380 (53,520) Franchise taxes 515,000 515,000 515,000 – Special assessments 14,000 14,000 496 (13,504) Licenses and permitsGeneral government 171,380 171,380 192,049 20,669 Public safety 5,400 5,400 8,920 3,520 Public works 1,327,930 1,327,930 2,053,340 725,410 Total licenses and permits 1,504,710 1,504,710 2,254,309 749,599 Intergovernmental Federal grantsGeneral government 15,955 15,955 1,250 (14,705) State grantsPERA aid 43,000 43,000 43,426 426 Fire relief aid – public safety 285,000 285,000 298,751 13,751 Police relief aid – public safety 418,000 418,000 442,980 24,980 Other – public safety 102,300 102,300 94,908 (7,392) Total intergovernmental 864,255 864,255 881,315 17,060 Charges for services Administration charges – general governmentConstruction funds 69,200 69,200 – (69,200) Enterprise funds 769,450 769,450 769,450 – Investment charges – general government 124,000 124,000 124,000 – Engineering charges – public works – construction 1,018,000 1,018,000 837,618 (180,382) General government 30,910 30,910 25,044 (5,866) Public safety 239,365 239,365 252,126 12,761 Public works 15,800 15,800 17,518 1,718 Parks and recreation 1,066,300 1,066,300 1,060,964 (5,336) Total charges for services 3,333,025 3,333,025 3,086,720 (246,305) Fines and forfeitures 279,500 279,500 302,494 22,994 Investment earnings 195,000 195,000 237,028 42,028 Other Rentals – recreation 460,040 460,040 530,328 70,288 Rentals – other 188,600 188,600 245,919 57,319 Refunds and reimbursements 61,200 61,200 47,985 (13,215) Donations – – 7,497 7,497 Miscellaneous 25,900 25,900 79,992 54,092 Total other 735,740 735,740 911,721 175,981 Total revenue 31,818,255 31,818,255 32,630,240 811,985 Budgeted Amounts CITY OF APPLE VALLEY General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -114-(continued) Over (Under)Original Final Actual Budget ExpendituresGeneral governmentMayor and City CouncilPersonal services 125,965 125,965 120,377 (5,588) Supplies 655 655 743 88 Other current expenditures 30,755 30,755 22,386 (8,369) Total Mayor and City Council 157,375 157,375 143,506 (13,869) AdministrationPersonal services 457,945 457,945 444,060 (13,885) Supplies 265 1,135 995 (140) Other current expenditures 17,280 16,410 16,622 212 Total administration 475,490 475,490 461,677 (13,813) Finance and data processingPersonal services 612,670 612,670 603,080 (9,590) Supplies 11,470 11,470 9,544 (1,926) Other current expenditures 302,640 305,540 299,200 (6,340) Total finance and data processing 926,780 929,680 911,824 (17,856) Information technologyPersonal services 468,150 468,150 460,069 (8,081) Supplies 11,000 11,000 6,261 (4,739) Other current expenditures 242,225 257,225 244,602 (12,623) Capital outlay 115,100 115,100 115,895 795 Total information technology 836,475 851,475 826,827 (24,648) Human resourcesPersonal services 523,080 523,080 513,735 (9,345) Supplies 650 650 356 (294) Other current expenditures 78,845 82,835 75,227 (7,608) Capital outlay – 2,010 2,007 (3) Total human resources 602,575 608,575 591,325 (17,250) City clerk/electionsPersonal services 263,900 263,900 264,203 303 Supplies 49,700 49,700 31,184 (18,516) Other current expenditures 160,200 160,200 145,475 (14,725) Capital outlay – 524 524 – Total city clerk/elections 473,800 474,324 441,386 (32,938) LegalOther current expenditures 532,990 532,990 521,497 (11,493) General government buildingsPersonal services 183,270 183,270 185,769 2,499 Supplies 22,300 22,300 23,630 1,330 Other current expenditures 170,770 170,770 172,545 1,775 Capital outlay – – 4,143 4,143 Total general government buildings 376,340 376,340 386,087 9,747 Budget and Actual (continued) CITY OF APPLE VALLEY General Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018 Budgeted Amounts -115-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)General government (continued)Community developmentPersonal services 628,950 628,950 619,682 (9,268) Supplies 1,400 1,400 38,013 36,613 Other current expenditures 100,475 92,475 59,150 (33,325) Total community development 730,825 722,825 716,845 (5,980) Code enforcementPersonal services 214,945 214,945 201,974 (12,971) Supplies 2,000 2,000 1,456 (544) Other current expenditures 20,750 20,750 13,672 (7,078) Total code enforcement 237,695 237,695 217,102 (20,593) UnallocatedPersonal services 6,200 6,200 2,749 (3,451) Other current expenditures 412,795 412,795 313,150 (99,645) Total unallocated 418,995 418,995 315,899 (103,096) Total general government 5,769,340 5,785,764 5,533,975 (251,789) Public safetyPolice protectionPersonal services 7,740,480 7,725,480 7,662,811 (62,669) Supplies 218,200 237,200 253,315 16,115 Other current expenditures 1,471,055 1,506,155 1,489,959 (16,196) Capital outlay 21,000 21,000 17,160 (3,840) Total police protection 9,450,735 9,489,835 9,423,245 (66,590) Fire protectionPersonal services 1,179,920 1,179,920 1,192,884 12,964 Supplies 86,405 110,505 113,627 3,122 Other current expenditures 664,305 748,105 719,853 (28,252) Total fire protection 1,930,630 2,038,530 2,026,364 (12,166) Fire reliefOther current expenditures 540,130 540,130 552,421 12,291 Civil defenseSupplies 2,000 2,000 635 (1,365) Other current expenditures 18,185 18,185 15,894 (2,291) Total civil defense 20,185 20,185 16,529 (3,656) Animal controlPersonal services 91,575 91,575 94,247 2,672 Supplies 6,625 6,625 5,906 (719) Other current expenditures 8,150 8,150 5,714 (2,436) Total animal control 106,350 106,350 105,867 (483) Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued)Year Ended December 31, 2018 Budgeted Amounts CITY OF APPLE VALLEY General Fund -116-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)Public safety (continued)Building inspectionPersonal services 757,865 757,865 691,953 (65,912) Supplies 50,605 23,955 15,773 (8,182) Other current expenditures 176,240 211,490 287,640 76,150 Capital outlay 30,700 78,480 26,000 (52,480) Total building inspection 1,015,410 1,071,790 1,021,366 (50,424) Total public safety 13,063,440 13,266,820 13,145,792 (121,028) Public worksPublic works administrationPersonal services 453,140 453,140 442,163 (10,977) Supplies 6,735 8,835 11,267 2,432 Other current expenditures 118,130 81,030 80,623 (407) Total public works administration 578,005 543,005 534,053 (8,952) Central maintenance facilityPersonal services 498,045 498,045 483,446 (14,599) Supplies 26,740 28,880 18,539 (10,341) Other current expenditures 125,975 125,975 153,865 27,890 Capital outlay – – 11,251 11,251 Total central maintenance facility 650,760 652,900 667,101 14,201 StreetsPersonal services 1,651,975 1,651,975 1,580,973 (71,002) Supplies 447,700 436,100 427,919 (8,181) Other current expenditures 574,080 553,630 523,600 (30,030) Capital outlay 38,000 55,500 63,428 7,928 Total streets 2,711,755 2,697,205 2,595,920 (101,285) EngineeringPersonal services 689,425 689,425 553,736 (135,689) Supplies 15,010 15,010 14,925 (85) Other current expenditures 154,720 153,270 137,511 (15,759) Total engineering 859,155 857,705 706,172 (151,533) Total public works 4,799,675 4,750,815 4,503,246 (247,569) Parks and recreationParks and recreation administrationPersonal services 807,830 807,830 801,799 (6,031) Supplies 3,600 3,600 2,748 (852) Other current expenditures 144,450 144,450 141,388 (3,062) Total parks and recreation administration 955,880 955,880 945,935 (9,945) Budgeted Amounts Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) General Fund CITY OF APPLE VALLEY Year Ended December 31, 2018 -117-(continued) Over (Under)Original Final Actual Budget Expenditures (continued)Parks and recreation (continued)Recreation programsPersonal services 217,145 217,145 170,070 (47,075) Supplies 50,215 50,215 40,506 (9,709) Other current expenditures 120,545 120,545 130,762 10,217 Total recreation programs 387,905 387,905 341,338 (46,567) Parks maintenancePersonal services 1,781,995 1,781,995 1,695,680 (86,315) Supplies 301,600 301,600 280,197 (21,403) Other current expenditures 817,650 780,650 813,229 32,579 Capital outlay 41,500 24,500 23,052 (1,448) Total parks maintenance 2,942,745 2,888,745 2,812,158 (76,587) Redwood Community PoolPersonal services 64,095 64,095 66,971 2,876 Supplies 7,150 7,150 2,966 (4,184) Other current expenditures 33,425 33,425 32,616 (809) Capital outlay – 12,855 7,253 (5,602) Total Redwood Community Pool 104,670 117,525 109,806 (7,719) Apple Valley Family Aquatic CenterPersonal services 322,150 322,150 345,279 23,129 Supplies 36,000 36,000 29,990 (6,010) Other current expenditures 264,450 264,450 238,293 (26,157) Capital outlay 20,000 6,230 6,153 (77) Total Apple Valley Family Aquatic Center 642,600 628,830 619,715 (9,115) Apple Valley Community CenterPersonal services 194,695 194,695 194,707 12 Supplies 19,650 19,650 17,199 (2,451) Other current expenditures 78,000 78,000 75,004 (2,996) Total Apple Valley Community Center 292,345 292,345 286,910 (5,435) Apple Valley Senior CenterPersonal services 314,805 314,805 310,026 (4,779) Supplies 13,800 13,800 10,105 (3,695) Other current expenditures 56,050 56,050 62,085 6,035 Capital outlay 15,000 15,000 18,755 3,755 Total Apple Valley Senior Center 399,655 399,655 400,971 1,316 Total parks and recreation 5,725,800 5,670,885 5,516,833 (154,052) Total expenditures 29,358,255 29,474,284 28,699,846 (774,438) Excess of revenues over expenditures 2,460,000 2,343,971 3,930,394 1,586,423 Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) CITY OF APPLE VALLEY General Fund Year Ended December 31, 2018 Budgeted Amounts -118-(continued) Over (Under)Original Final Actual Budget Other financing sources (uses)Sale of capital assets 20,400 20,400 18,924 (1,476) Transfers in 1,317,600 1,317,600 1,317,600 – Transfers (out)(3,798,000) (3,798,000) (4,963,000) (1,165,000) Total other financing sources (uses)(2,460,000) (2,460,000) (3,626,476) (1,166,476) Net change in fund balances –$ (116,029)$ 303,918 419,947$ Fund balancesBeginning of year 17,336,413 End of year 17,640,331$ Budgeted Amounts General Fund Year Ended December 31, 2018 CITY OF APPLE VALLEY Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual (continued) -119- Over (Under)Budget Actual Budget RevenueSpecial assessments 125,000$ 214,551$ 89,551$ Intergovernmental 3,191,500 585,765 (2,605,735) Other – 1,090 1,090 Total revenue 3,316,500 801,406 (2,515,094) ExpendituresCapital outlayPublic works 10,014,310 4,873,595 (5,140,715) Excess (deficiency) of revenue over expenditures (6,697,810) (4,072,189) 2,625,621 Other financing sourcesTransfers in 6,697,810 3,995,810 (2,702,000) Net change in fund balances –$ (76,379) (76,379)$ Fund balances (deficit)Beginning of year (5,174,280) End of year (5,250,659)$ CITY OF APPLE VALLEY Road Improvements Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -120- Over (Under)Budget Actual Budget RevenueInvestment earnings 188,390$ 204,366$ 15,976$ ExpendituresCurrentPublic works 27,940 – (27,940) Capital outlay 500,000 1,631,819 1,131,819 Total expenditures 527,940 1,631,819 1,103,879 Excess (deficiency) of revenue over expenditures (339,550) (1,427,453) (1,087,903) Other financing sources (uses)Transfers in – 1,165,000 1,165,000 Transfers (out)(1,790,810) (790,810) 1,000,000 Total other financing sources (uses)(1,790,810) 374,190 2,165,000 Net change in fund balances (2,130,360)$ (1,053,263) 1,077,097$ Fund balancesBeginning of year 15,353,401 End of year 14,300,138$ CITY OF APPLE VALLEY Future Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances – Year Ended December 31, 2018Budget and Actual -121- Over (Under)Budget Actual Budget RevenueIntergovernmental 120,105$ 120,105$ –$ Investment earnings 1,500 – (1,500) Total revenue 121,605 120,105 (1,500) ExpendituresCurrentParks and recreation 240,210 223,961 (16,249) Capital outlay – 14,116 14,116 Total expenditures 240,210 238,077 (2,133) Excess (deficiency) of revenue over expenditures (118,605) (117,972) 633 Other financing sourcesTransfers in 120,105 120,105 – Net change in fund balances 1,500$ 2,133 633$ Fund balancesBeginning of year 70,420 End of year 72,553$ CITY OF APPLE VALLEY Cable TV Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -122- Over (Under)Budget Actual Budget RevenueIntergovernmental –$ 1,148,639$ 1,148,639$ Investment earnings 1,500 14,849 13,349 Miscellaneous 50,000 50,000 – Total revenue 51,500 1,213,488 1,161,988 ExpendituresCurrentGeneral government 38,750 594,499 555,749 Net change in fund balances 12,750$ 618,989 606,239$ Fund balancesBeginning of year 124,531 End of year 743,520$ CITY OF APPLE VALLEY EDA Operations Special Revenue Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -123- Over (Under)Budget Actual Budget RevenueFranchise fees –$ 138,403$ 138,403$ Investment earnings 6,750 6,301 (449) Total revenue 6,750 144,704 137,954 ExpendituresCurrentPublic works – 15,488 15,488 Capital outlay 110,000 111,408 1,408 Total expenditures 110,000 126,896 16,896 Excess (deficiency) of revenue over expenditures (103,250) 17,808 121,058 Other financing sources (uses)Transfers (out)– (120,105) (120,105) Net change in fund balances (103,250)$ (102,297) 953$ Fund balancesBeginning of year 577,785 End of year 475,488$ CITY OF APPLE VALLEY Cable Capital Equipment Capital Projects Fund Schedule of Revenue, Expenditures, and Changes in Fund Balances –Budget and ActualYear Ended December 31, 2018 -124- -125- INTERNAL SERVICE FUNDS Internal service funds account for the financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost-reimbursement basis. The City utilizes a Dental Insurance Internal Service Fund, a Benefits/Other Insurance Internal Service Fund, and a Vehicle Equipment Replacement Internal Service Fund in managing city operations. Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Current assetsCash and investments 106,385$ 2,934,984$ 1,462,130$ 4,503,499$ Receivables Accounts – 1,388 – 1,388Prepaids– 200,370 – 200,370Total current assets 106,385 3,136,742 1,462,130 4,705,257 Noncurrent assetsCapital assetsFurniture and equipment – – 13,134,845 13,134,845 Less accumulated depreciation – – (7,002,262) (7,002,262) Total noncurrent assets – – 6,132,583 6,132,583 Total assets 106,385$ 3,136,742$ 7,594,713$ 10,837,840$ Current liabilitiesAccounts payable –$ 11,819$ 23,753$ 35,572$ Claims payable 8,661 – – 8,661 Accrued compensated absences – 1,671,000 – 1,671,000 Total current liabilities 8,661 1,682,819 23,753 1,715,233 Noncurrent liabilitiesAccrued compensated absences – 1,188,937 – 1,188,937 Total liabilities 8,661 2,871,756 23,753 2,904,170 Net positionNet investment in capital assets – – 6,132,583 6,132,583 Unrestricted 97,724 264,986 1,438,377 1,801,087 Total net position 97,724 264,986 7,570,960 7,933,670 Total liabilities and net position 106,385$ 3,136,742$ 7,594,713$ 10,837,840$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Net Positionas of December 31, 2018 -126- Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Operating revenueCharges to other funds 245,240$ 1,336,496$ 1,038,476$ 2,620,212$ Operating expensesPersonal services 194,144 728,493 – 922,637 Contractual services – 20,529 – 20,529 Other charges – 857,132 – 857,132 Depreciation – – 1,033,925 1,033,925Total operating expenses 194,144 1,606,154 1,033,925 2,834,223 Operating income (loss)51,096 (269,658) 4,551 (214,011) Nonoperating revenueInvestment earnings 1,349 42,489 18,823 62,661 Gain on sale of capital assets – – 126,171 126,171 Total nonoperating revenue 1,349 42,489 144,994 188,832 Change in net position 52,445 (227,169) 149,545 (25,179) Net positionBeginning of year 45,279 492,155 7,421,415 7,958,849 End of year 97,724$ 264,986$ 7,570,960$ 7,933,670$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Revenue, Expenses, and Changes in Net PositionYear Ended December 31, 2018 -127- Benefits/VehicleDentalOtherEquipmentInsuranceInsuranceReplacement(7100)(7200)(7400–7440)Totals Cash flows from operating activitiesCash receipts on interfund services provided 245,240$ 1,343,424$ 1,062,229$ 2,650,893$ Cash payments to suppliers (197,686) (1,386,579) – (1,584,265) Cash payments to employees for services – (167,671) – (167,671) Net cash flows from operating activities 47,554 (210,826) 1,062,229 898,957 Cash flows from capital and related financing activitiesAcquisition and construction of capital assets – – (1,070,851) (1,070,851) Proceeds from sale of capital assets – – 207,228 207,228 Net cash flows from capital and related financing activities – – (863,623) (863,623) Cash flows from investing activitiesInterest received on investments 1,349 42,489 18,823 62,661 Net increase in cash and cash equivalents 48,903 (168,337) 217,429 97,995 Cash and investmentsBeginning of year 57,482 3,103,321 1,244,701 4,405,504 End of year 106,385$ 2,934,984$ 1,462,130$ 4,503,499$ Reconciliation of operating income (loss) to net cash flows from operating activitiesOperating income (loss)51,096$ (269,658)$ 4,551$ (214,011)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activitiesDepreciation – – 1,033,925 1,033,925 Change in assets and liabilitiesReceivablesAccounts – 6,928 – 6,928 Prepaids – (3,298) – (3,298) Accounts payable (5,417) 6,730 23,753 25,066 Claims payable 1,875 – – 1,875 Accrued compensated absences – 48,472 – 48,472 Net cash flows from operating activities 47,554$ (210,826)$ 1,062,229$ 898,957$ Noncash capital activitiesNet book value of capital asset disposals –$ –$ (81,057)$ (81,057)$ CITY OF APPLE VALLEY Internal Service FundsCombining Statement of Cash FlowsYear Ended December 31, 2018 -128- STATISTICAL SECTION Page Contents: Financial Trends 129 Revenue Capacity 139 Debt Capacity 146 Demographic and Economic Information 155 Operating Indicators 157 Source: Unless otherwise noted, the information in these schedules is derived from the CAFR for the relevant year. These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides, and the activities it performs. STATISTICAL SECTION (UNAUDITED) This part of the City of Apple Valley,Minnesota’s (the City)Comprehensive Annual Financial Report (CAFR)presentsdetailedinformationasacontextforunderstandingwhattheinformationinthefinancialstatements,note disclosures,and required supplementary information says about the City’s overall financial health. These schedules contain trend information to help the reader understand how the City’s financialperformance and well-being have changed over time. These schedules contain information to help the reader assess the City’s most significant revenue source,including property tax and utility revenue. These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 2009 2010 2011 2012 Governmental activitiesNet investment in capital assets 43,981,788$ 45,477,393$ 54,928,735$ 64,226,520$ Restricted 24,664,257 24,656,491 21,580,777 17,001,111 Unrestricted 36,290,872 38,798,761 42,115,459 43,609,670 Total governmental activities net position 104,936,917$ 108,932,645$ 118,624,971$ 124,837,301$ Business-type activitiesNet investment in capital assets 101,447,457$ 102,320,160$ 104,198,009$ 110,376,210$ Restricted 289,049 291,591 309,518 319,582 Unrestricted 19,100,650 20,094,976 19,431,679 19,030,882 Total business-type activities net position 120,837,156$ 122,706,727$ 123,939,206$ 129,726,674$ Primary governmentNet investment in capital assets 145,429,245$ 147,797,553$ 159,126,744$ 174,602,730$ Restricted 24,953,306 24,948,082 21,890,295 17,320,693 Unrestricted 55,391,522 58,893,737 61,547,138 62,640,552 Total primary government net position 225,774,073$ 231,639,372$ 242,564,177$ 254,563,975$ Note 1: Note 2: Note 3:The City implemented GASB Statement No.75 in 2018,resulting in a restatement of beginning net position for theeffects of implementing this standard. Net position for previous years has not been restated. The City implemented GASB Statement No.68 in 2015,resulting in a restatement of beginning net position for theeffects of implementing this standard. Net position for previous years has not been restated. Fiscal Year Net Position by ComponentLast Ten Fiscal Years(accrual basis of accounting) The City implemented GASB Statement No.65 in 2012.Net position for 2011 was restated for the effects ofimplementing this standard. Net position for previous years has not been restated. CITY OF APPLE VALLEY -129- Table 1 2013 2014 2015 2016 2017 2018 70,526,658$ 78,398,734$ 86,664,918$ 93,945,022$ 99,642,040$ 83,980,389$ 18,619,396 15,253,042 16,541,831 16,141,535 15,364,368 15,352,356 38,654,601 36,056,447 26,805,077 24,394,132 24,292,441 28,466,675 127,800,655$ 129,708,223$ 130,011,826$ 134,480,689$ 139,298,849$ 127,799,420$ 118,410,631$ 120,092,250$ 118,288,727$ 119,417,084$ 94,851,212$ 100,261,931$ 303,823 329,167 178,529 178,977 178,665 – 13,228,257 14,998,933 14,230,604 17,104,636 15,390,547 12,828,596 131,942,711$ 135,420,350$ 132,697,860$ 136,700,697$ 110,420,424$ 113,090,527$ 188,937,289$ 198,490,984$ 204,953,645$ 213,362,106$ 194,493,252$ 184,242,320$ 18,923,219 15,582,209 16,720,360 16,320,512 15,543,033 15,352,356 51,882,858 51,055,380 41,035,681 41,498,768 39,682,988 41,295,271 259,743,366$ 265,128,573$ 262,709,686$ 271,181,386$ 249,719,273$ 240,889,947$ -130- 2009 2010 2011 2012 ExpensesGovernmental activitiesGeneral government 8,685,487$ 10,081,345$ 7,086,321$ 7,398,895$ Public safety 10,306,540 10,092,977 10,548,223 11,101,520 Public works 8,393,981 7,008,886 5,744,780 6,382,138 Park and recreation 5,754,969 6,261,801 6,169,552 6,166,397 Interest on long-term debt 1,773,863 1,556,130 1,459,728 1,235,352 Total governmental activities expenses 34,914,840$ 35,001,139$ 31,008,604$ 32,284,302$ Business-type activitiesMunicipal Liquor 8,062,876$ 8,285,841$ 8,177,679$ 8,377,991$ Municipal Golf Course 1,011,443 1,057,715 1,051,605 1,292,371 Sports Arena 771,198 748,541 799,993 778,931 Water and Sewer 7,226,393 7,302,254 7,309,277 7,194,007 Storm Drainage 869,376 846,743 917,054 1,001,140 Cemetery 56,518 68,868 69,004 69,376 Street Light Utility – 410,787 398,114 447,954 Total business-type activities 17,997,804 18,720,749 18,722,726 19,161,770 Total primary government expenses 52,912,644$ 53,721,888$ 49,731,330$ 51,446,072$ Program revenuesGovernmental activitiesCharges for servicesGeneral government 2,363,002$ 2,423,051$ 2,435,834$ 2,413,190$ Public safety 603,425 755,339 587,486 554,820 Public works 457,516 1,046,007 1,055,995 1,543,446 Park and recreation 1,259,959 1,721,486 1,314,377 1,504,546 Operating grants and contributions 1,577,419 1,872,316 534,041 579,675 Capital grants and contributions 2,451,327 3,271,761 4,398,403 4,445,816 Total governmental activities program revenues 8,712,648$ 11,089,960$ 10,326,136$ 11,041,493$ CITY OF APPLE VALLEY Changes in Net PositionLast Ten Fiscal Years(accrual basis of accounting) Fiscal Year -131- Table 2 2013 2014 2015 2016 2017 2018 5,012,638$ 6,107,245$ 5,468,843$ 6,974,444$ 6,260,768$ 7,670,285$ 11,336,972 11,946,671 12,464,603 15,097,659 13,443,699 12,750,741 6,905,011 9,011,324 7,038,033 7,746,304 8,473,039 9,434,637 6,345,937 6,403,907 6,543,162 7,025,281 7,239,268 6,992,203 1,194,974 1,037,527 1,037,567 912,007 886,283 284,621 30,795,532$ 34,506,674$ 32,552,208$ 37,755,695$ 36,303,057$ 37,132,487$ 8,419,472$ 8,332,921$ 7,772,369$ 7,872,023$ 8,251,249$ 8,362,332$ 1,507,451 1,526,108 1,653,759 1,728,605 1,545,792 1,238,125 759,930 853,315 770,215 770,666 798,402 784,343 7,794,274 8,186,262 8,154,989 9,336,567 10,031,223 9,203,936 1,052,087 1,257,566 1,444,800 1,481,121 2,181,086 2,035,266 51,472 51,646 49,086 60,790 127,469 89,069 444,106 424,670 446,644 437,439 483,752 485,356 20,028,792 20,632,488 20,291,862 21,687,211 23,418,973 22,198,427 50,824,324$ 55,139,162$ 52,844,070$ 59,442,906$ 59,722,030$ 59,330,914$ 2,315,613$ 2,828,709$ 1,696,786$ 1,768,008$ 1,956,499$ 1,987,775$ 549,371 541,947 496,566 543,950 617,729 615,835 892,267 1,001,148 2,620,283 2,489,539 3,740,394 3,555,717 1,271,031 2,030,716 1,989,084 2,740,747 1,461,720 2,396,973 900,223 837,763 771,220 1,531,412 1,082,234 1,985,278 3,250,152 1,897,081 5,918,652 5,489,541 3,206,571 3,741,660 9,178,657$ 9,137,364$ 13,492,591$ 14,563,197$ 12,065,147$ 14,283,238$ -132-(continued) Fiscal Year2009201020112012 Program revenues (continued)Business-type activitiesCharges for servicesMunicipal liquor 8,772,571$ 9,032,194$ 9,005,660$ 9,231,890$ Municipal golf course 1,085,429 1,114,395 1,023,866 1,122,791 Sports arena 627,595 606,262 650,350 647,134 Water and sewer 9,250,812 8,439,232 8,361,750 9,256,709 Storm drainage 1,233,346 1,360,483 1,370,348 1,517,090 Cemetery 95,320 89,695 114,365 127,735 Street light utility – 465,552 433,464 454,477 Operating grants and contributions 25,190 – 10,170 13,890 Capital grants and contributions 316,200 645,427 643,164 3,201,690 Total business-type activities program revenues 21,406,463 21,753,240 21,613,137 25,573,406 Total primary government program revenues 30,119,111$ 32,843,200$ 31,939,273$ 36,614,899$ Net (expense) revenueGovernmental activities (26,202,192)$ (23,911,179)$ (20,682,468)$ (21,242,809)$ Business-type activities 3,408,659 3,032,491 2,890,411 6,411,636 Total primary government net expense (22,793,533)$ (20,878,688)$ (17,792,057)$ (14,831,173)$ General revenues and other changes in net positionGovernmental activitiesProperty taxes 21,892,939$ 21,697,421$ 21,460,141$ 21,769,647$ Tax increments 2,185,762 2,311,405 2,240,269 2,012,281 Franchise taxes 1,096,578 1,160,771 1,177,715 1,197,288 Lodging tax 56,300 67,311 74,105 75,472 Gravel tax 40,692 36,314 38,666 36,439 Unallocated state and county aids 292,225 95,019 117,000 145,755 Other general revenue 433,956 271,622 176,575 116,558 Unrestricted investment earnings 912,413 643,741 2,372,693 1,026,594 Transfers 1,824,528 1,623,303 2,717,630 1,075,105 Total governmental activities 28,735,393$ 27,906,907$ 30,374,794$ 27,455,139$ Business-type activitiesUnrestricted investment earnings 426,300$ 320,166$ 888,863$ 388,923$ Property taxes 120,000 125,000 120,000 120,000 Other 152,243 15,217 50,835 43,845 Transfers (1,824,528) (1,623,303) (2,717,630) (1,075,105) Total business-type activities (1,125,985) (1,162,920) (1,657,932) (522,337) Total primary government 27,609,408$ 26,743,987$ 28,716,862$ 26,932,802$ Change in net positionGovernmental activities 2,533,201$ 3,995,728$ 9,692,326$ 6,212,330$ Business-type activities 2,282,674 1,869,571 1,232,479 5,889,299 Total primary government 4,815,875$ 5,865,299$ 10,924,805$ 12,101,629$ Note 1: Note 2:Fiscal 2012 and prior data has not been restated for the reclassifications made in fiscal 2013. The Street Light Utility was established in fiscal year 2010; the street light activity prior to 2010 was included in the Water and Sewer Fund. CITY OF APPLE VALLEY Changes in Net Position (continued)Last Ten Fiscal Years(accrual basis of accounting) -133- 2013 2014 2015 2016 2017 2018 9,380,818$ 9,292,269$ 8,480,414$ 8,738,804$ 9,185,736$ 9,456,705$ 1,168,154 1,289,089 1,387,821 1,356,436 1,180,209 864,579 643,855 746,351 722,270 783,962 732,979 790,989 8,951,798 8,913,191 8,995,642 9,754,601 9,917,074 10,365,726 1,525,136 1,567,066 1,631,761 1,718,352 1,866,306 1,967,313 123,197 104,128 132,305 160,716 187,589 150,703 449,885 465,584 483,680 500,877 507,360 522,977 80,707 – – – – – 1,497,501 1,612,392 2,110,667 3,631,836 1,057,916 1,693,236 23,821,051 23,990,070 23,944,560 26,645,584 24,635,169 25,812,228 32,999,708$ 33,127,434$ 37,437,151$ 41,208,781$ 36,700,316$ 40,095,466$ (21,616,875)$ (25,369,310)$ (19,059,617)$ (23,192,498)$ (24,237,910)$ (22,849,249)$ 3,792,259 3,357,582 3,652,698 4,958,373 1,216,196 3,613,801 (17,824,616)$ (22,011,728)$ (15,406,919)$ (18,234,125)$ (23,021,714)$ (19,235,448)$ 22,144,883$ 23,067,164$ 23,038,450$ 23,894,359$ 24,758,299$ 25,784,612$ 544,283 611,662 489,617 199,214 346,675 761,862 1,262,393 1,272,428 1,259,271 1,309,757 1,288,426 1,306,360 73,504 89,859 93,492 90,592 92,958 99,960 45,890 50,612 39,215 40,794 37,902 – 40,397 36,710 40,061 37,719 56,751 124,430 186,872 78,478 7,387 6,888 8,440 10,786 (1,056,882) 1,562,329 863,798 801,038 551,119 886,459 1,338,889 507,636 4,681,392 1,281,000 1,915,500 1,317,600 24,580,229$ 27,276,878$ 30,512,683$ 27,661,361$ 29,056,070$ 30,292,069$ (358,333)$ 506,693$ 235,424$ 204,464$ 151,206$ 268,297$ 121,000 121,000 121,000 121,000 121,000 121,000 – – – – – – (1,338,889) (507,636) (4,681,392) (1,281,000) (1,915,500) (1,317,600) (1,576,222) 120,057 (4,324,968) (955,536) (1,643,294) (928,303) 23,004,007$ 27,396,935$ 26,187,715$ 26,705,825$ 27,412,776$ 29,363,766$ 2,963,354$ 1,907,568$ 11,453,066$ 4,468,863$ 4,818,160$ 7,442,820$ 2,216,037 3,477,639 (672,270) 4,002,837 (427,098) 2,685,498 5,179,391$ 5,385,207$ 10,780,796$ 8,471,700$ 4,391,062$ 10,128,318$ Table 2 (continued) -134- Fiscal Year2009201020112012 General FundReserved 40,515$ 53,113$ –$ –$ Unreserved 12,181,208 12,594,013 – – Nonspendable – – 118,661 239,462 Committed – – 165,872 210,005 Assigned – – 278,724 279,973 Unassigned – – 12,142,496 12,646,076 Total General Fund 12,221,723$ 12,647,126$ 12,705,753$ 13,375,516$ All other governmental fundsUnreserved reported inSpecial revenue funds 342,464$ 324,251$ –$ –$ Debt service funds 16,996,037 15,892,926 – – Capital projects funds 10,965,444 14,011,232 – – Nonspendable – – – 1,750 Restricted – – 15,537,787 11,435,144 Committed – – – – Assigned – – 28,795,063 31,538,043 Unassigned – – (13,395,872) (12,381,234) Total all other governmental funds 28,303,945$ 30,228,409$ 30,936,978$ 30,593,703$ Total all funds 40,525,668$ 42,875,535$ 43,642,731$ 43,969,219$ Note:Fund balance descriptions changed due to GASB Statement No. 54 implementation effective January 1, 2011. CITY OF APPLE VALLEY Fund Balances of Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting) -135- Table 3 2013 2014 2015 2016 2017 2018 –$ –$ –$ –$ –$ –$ – – – – – – 90,745 337,564 345,004 119,947 325,282 145,644 154,100 146,300 405,990 693,145 595,215 367,510 151,502 54,416 20,000 56,000 64,300 75,000 13,830,037 14,617,170 15,321,110 15,740,362 16,351,616 17,052,177 14,226,384$ 15,155,450$ 16,092,104$ 16,609,454$ 17,336,413$ 17,640,331$ –$ –$ –$ –$ –$ –$ – – – – – – – – – – – – – – 1,750 600 1,730 – 20,966,147 21,772,784 27,424,225 27,079,147 13,431,367 13,608,420 – – – 140,000 15,000 – 26,215,087 27,614,620 27,008,733 28,454,255 28,779,829 29,375,614 (9,561,124) (11,108,352) (9,539,062) (8,921,232) (8,738,893) (6,108,464) 37,620,110$ 38,279,052$ 44,895,646$ 46,752,770$ 33,489,033$ 36,875,570$ 51,846,494$ 53,434,502$ 60,987,750$ 63,362,224$ 50,825,446$ 54,515,901$ -136- 2009 2010 2011 2012 RevenuesGeneral property taxes 21,544,567$ 21,709,126$ 21,408,873$ 21,773,048$ Tax increments 2,185,762 2,311,405 2,240,269 2,012,281 Other taxes 96,992 103,625 152,020 154,126 Special assessments 2,471,962 2,055,783 2,125,776 4,015,591 Licenses and permits 755,444 1,018,847 796,316 1,033,797 Intergovernmental 2,429,800 2,996,658 2,407,596 2,642,018 Charges for services 1,145,890 1,349,123 1,436,256 1,783,390 Franchise taxes 1,096,578 1,160,771 1,177,715 1,197,288 Fines and forfeits 316,324 258,165 288,946 278,913 Investment income 840,898 593,336 2,232,966 965,333 Rentals 444,877 592,831 511,453 559,702 Contributions and donations 7,150 11,484 2,750 1,801 Administrative fees 651,052 778,400 828,999 788,171 Other 509,778 697,054 321,565 338,142 Refunds and reimbursements 165,345 450,972 139,581 127,166 Total revenues 34,662,419 36,087,580 36,071,081 37,670,767 ExpendituresCurrentGeneral government 6,159,832 7,418,012 4,679,394 4,355,811 Public safety 9,635,166 9,728,340 9,890,086 9,987,493 Public works 3,501,792 3,593,951 3,675,687 3,674,876 Park and recreation 4,692,052 4,768,656 4,855,184 4,847,194 Capital outlay 11,727,599 5,879,024 6,370,109 13,266,487 Debt servicePrincipal 5,060,000 4,160,000 4,665,000 8,280,000 Interest and fiscal charges 1,880,399 1,615,929 1,487,399 1,224,409 Total expenditures 42,656,840 37,163,912 35,622,859 45,636,270 Excess (deficiency) of revenues over expenditures (7,994,421) (1,076,332) 448,222 (7,965,503) Other financing sources (uses)Transfers in 17,777,689 5,734,691 5,874,339 5,634,873 Transfers out (14,701,754) (3,680,241) (3,156,709) (4,559,768) Bonds issued 2,775,000 3,965,000 1,345,000 6,775,000 Payment of refunded debt (2,400,000) (2,750,000) (3,920,000) – Premium on debt issued 61,795 47,191 6,568 330,981 Discount on debt issued – – – – Sale of capital assets 48,309 109,558 169,776 110,905 Total other financing sources (uses)3,561,039 3,426,199 318,974 8,291,991 Net change in fund balances (4,433,382)$ 2,349,867$ 767,196$ 326,488$ Debt service as a percentage of noncapital expenditures 22.4%18.5%20.5%27.5% (modified accrual basis of accounting) Fiscal Year CITY OF APPLE VALLEY Changes in Fund Balances of Governmental FundsLast Ten Fiscal Years -137- Table 4 2013 2014 2015 2016 2017 2018 22,252,162$ 23,161,124$ 22,969,161$ 23,910,991$ 24,729,659$ 25,728,652$ 544,283 611,662 489,617 199,214 346,675 761,862 169,413 193,018 186,512 185,568 182,377 150,340 4,073,061 5,457,959 3,859,401 4,150,527 1,559,609 1,823,441 1,140,603 1,644,338 2,147,477 2,052,043 3,244,654 2,254,309 2,388,922 3,459,585 2,330,695 2,605,769 2,002,385 2,735,824 1,712,660 1,763,940 2,711,884 2,739,163 2,962,769 3,086,720 1,262,393 1,272,428 1,259,271 1,309,757 1,288,426 1,306,360 257,345 236,943 225,804 273,372 315,087 302,494 (991,703) 1,461,765 817,230 756,341 523,891 823,798 642,422 774,364 806,915 832,854 720,100 198,276 51,425 13,176 4,852 7,309 3,760 100 785,927 770,000 809,000 2,054,475 722,490 2,984,900 545,994 1,497,913 312,708 202,540 300,200 929,646 99,024 202,518 90,148 236,416 68,257 47,985 34,933,931 42,520,733 39,020,675 41,516,339 38,970,339 43,134,707 4,518,602 5,655,482 5,014,867 6,264,368 5,705,708 7,270,172 10,538,043 11,118,268 11,467,187 12,105,588 12,279,935 13,107,793 4,031,492 4,010,339 3,621,872 3,956,049 4,131,796 5,145,724 4,978,896 5,135,573 5,198,446 5,728,049 5,766,554 5,727,112 8,716,540 13,453,625 6,462,646 8,425,307 8,464,983 8,096,679 3,625,000 3,415,000 3,575,000 2,650,000 3,425,000 1,100,000 1,268,227 1,072,847 1,100,649 964,997 940,431 345,208 37,676,800 43,861,134 36,440,667 40,094,358 40,714,407 40,792,688 (2,742,869) (1,340,401) 2,580,008 1,421,981 (1,744,068) 2,342,019 11,182,608 9,800,593 9,678,084 8,046,274 8,743,125 12,827,991 (9,843,719) (7,745,923) (8,139,084) (7,226,274) (7,653,625) (11,510,391) 9,000,000 680,000 4,255,000 – – – – – (1,030,000) – (11,925,000) – 81,545 25,505 113,988 – – – – – – – – – 199,710 168,234 95,252 132,493 42,790 30,836 10,620,144 2,928,409 4,973,240 952,493 (10,792,710) 1,348,436 7,877,275$ 1,588,008$ 7,553,248$ 2,374,474$ (12,536,778)$ 3,690,455$ 16.7%13.1%15.3%11.4%13.2%4.4% -138- IndustrialResidentialCommercialand Utility AgriculturalPropertyPropertyPropertyProperty Apartments 43,107,127$ 10,171,716$ 1,225,657$ 127,972$ 2,564,523$ 39,692,580 10,053,775 1,238,900 130,237 2,498,076 36,918,099 9,363,833 1,038,862 130,124 2,319,888 32,937,899 9,210,935 1,004,132 116,719 2,445,781 30,220,442 9,015,644 829,980 92,210 2,704,250 31,239,597 9,045,624 837,008 88,030 2,723,667 34,412,031 9,071,960 859,888 85,694 2,864,337 36,561,330 9,186,796 874,912 78,636 3,038,517 38,063,519 9,379,705 842,612 75,901 3,572,226 40,870,116 9,633,311 947,308 44,601 4,844,046 Note: Source:Dakota County CITY OF APPLE VALLEY Assessed and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years 2011 The tax capacity (assessed taxable value)of the property is calculated by applying a statutory formula to theestimated market value of the property. 2015 2010 PayableYear 2009 201220132014 201620172018 -139- Table 5 EstimatedTotalActualTaxableTotal Direct TaxablePersonalAssessedTax Capacity MarketOtherPropertyValueRateValue 4,760$ 701,073$ 57,902,828$ 37.086 5,135,644,200$ 1.13 %4,283 688,202 54,306,053 39.867 4,787,691,200 1.13 3,959 764,694 50,539,459 42.388 4,457,368,700 1.13 2,316 773,692 46,491,474 44.110 4,061,762,557 1.14 2,159 755,422 43,620,107 49.210 3,791,294,766 1.15 2,194 763,784 44,699,904 47.891 3,897,057,902 1.15 2,369 790,695 48,086,974 45.274 4,228,421,500 1.14 2,564 835,973 50,578,728 44.721 4,464,893,416 1.13 2,521 872,987 52,809,471 44.473 4,669,204,881 1.13 2,524 928,330 57,270,236 42.475 5,072,183,189 1.13 Actual Value TaxableAssessed Percentage ofValue as a -140- Fiscal School DistrictYearGeneral Debt Service Total City Dakota County (1)Other (2) 2009 37.078 0.008 37.086 25.821 21.109 4.916 2010 39.861 0.006 39.867 27.269 25.391 4.987 2011 42.382 0.006 42.388 29.149 26.959 5.199 2012 44.104 0.006 44.110 31.426 28.440 5.562 2013 49.199 0.011 49.210 33.421 27.956 5.884 2014 47.880 0.011 47.891 31.827 27.606 5.538 2015 45.265 0.009 45.274 29.633 23.271 5.033 2016 44.711 0.010 44.721 28.570 24.317 5.063 2017 44.462 0.011 44.473 28.004 23.336 4.907 2018 42.467 0.008 42.475 26.580 25.759 3.878 Total Direct andFiscalSchool District Total OverlappingYearDebt Service Total City Dakota County (1)Overlapping Tax Rate 2009 0.000311 0.000311 0.000047 0.002103 0.002150 0.002461 2010 0.000337 0.000337 0.000050 0.002227 0.002277 0.002614 2011 0.000375 0.000375 0.000054 0.002260 0.002314 0.002689 2012 0.000417 0.000417 0.000055 0.002213 0.002268 0.002685 2013 0.000212 0.000212 – 0.002354 0.002354 0.002566 2014 0.000212 0.000212 – 0.002581 0.002581 0.002793 2015 0.000204 0.000204 – 0.002548 0.002548 0.002752 2016 0.000199 0.000199 – 0.002700 0.002700 0.002899 2017 0.000197 0.000197 – 0.002738 0.002738 0.002935 2018 0.000180 0.000180 – 0.002672 0.002672 0.002851 Note 1:Overlapping rates are those of local and county governments that apply to property owners within the City. Note 2:Not all overlapping rates apply to all of the City’s property owners. (1)Independent School District No. 196 (2) Source: Dakota County Includes Metropolitan Council,Mosquito Control Abatement,Metro Transit,Dakota County CDA,Light Rail,and Vermillion River Watershed CITY OF APPLE VALLEY Property Tax Capacity RatesDirect and Overlapping GovernmentsLast Ten Fiscal Years City Direct Tax Capacity Rate Overlapping Tax Capacity Rates City Direct Market Value Tax Rate Overlapping Market Value Tax Rates -141- Total Direct andTotalOverlapping Overlapping Tax Rate 51.846 88.932 57.647 97.514 61.307 103.695 65.428 109.538 67.261 116.471 64.971 112.862 57.937 103.211 57.950 102.671 56.247 100.720 56.217 98.692 Table 6 Overlapping Tax Capacity Rates -142- THIS PAGE INTENTIONALLY LEFT BLANK Percentage Net Tax Net TaxCapacityCapacityTaxpayerValueRankValue Rank Individual 634,725$ 1 1.1 %450,000$ 3 0.8 %Principal Life Insurance Co.515,598 2 0.9 630,662 1 1.1 Apple Valley Leased Housing Assoc. III 476,433 3 0.8 312,500 7 0.5 Bigos–Gabella, LLC 474,093 4 0.8 – – – Continental 313 Fund, LLC 441,126 5 0.8 – – – CAR Apple Valley Square, LLC 376,322 6 0.7 467,238 2 0.8 Dakota Electric Association 354,196 7 0.6 375,228 4 0.6 Centro Bradley Southport Centre 344,592 8 0.6 363,748 5 0.6 Regent at Apple Valley, LLC 318,815 9 0.6 – – – Uponor North America 311,774 10 0.5 – – – Target Corporation – – – 313,744 6 0.5 Fischer Sand & Aggregate Co.– – – 308,122 8 0.5 Wings Financial Federal Credit Union – – – 284,630 9 0.5 Fischer Sand & Aggregate, LLP – – – 240,076 10 0.4 Total 4,247,674$ 7.4 %3,745,948$ 6.5 % Source: Dakota County of TotalCity TaxCapacityValue Percentageof TotalCity TaxCapacityValue 20092018 Table 7 CITY OF APPLE VALLEY Principal Property TaxpayersCurrent Fiscal Year and Nine Years Prior -143- Taxes Levied for the Fiscal YearMVHC/Ag Creditand FiscalFiscalGross Operating Disparities Total NetYearTax Levy Received Tax Levy Amount 2009 22,627,731$ (3,436,931)$ 19,190,369$ 18,828,050$ 98.11 %2010 22,839,554 (3,815,622) 19,000,860 18,723,194 98.54 2011 22,700,000 (3,612,353) 19,087,647 18,846,881 98.74 2012 22,025,249 (2,821,637) 19,203,612 18,996,562 98.92 2013 22,410,946 (2,751,166) 19,659,780 19,411,582 98.74 2014 22,727,000 (2,994,265) 19,732,735 19,607,759 99.37 2015 23,134,000 (2,881,124) 20,252,876 20,069,635 99.10 2016 24,058,000 (2,784,776) 21,273,224 21,138,944 99.37 2017 24,840,000 (2,915,340) 21,924,660 21,783,179 99.35 2018 25,793,000 (3,141,511) 22,651,489 22,536,290 99.49 CITY OF APPLE VALLEY Property Tax Levies and CollectionsLast Ten Fiscal Years Fiscal Year of LevyCollected Within the Levyof Percentage -144- DelinquenciesCollectedas of MostRecent Report Amount 295,040$ 19,123,090$ 99.65 %105,140 18,828,334 99.09 166,351 19,013,232 99.61 205,155 19,201,717 99.99 205,256 19,616,838 99.78 96,630 19,704,389 99.86 143,021 20,212,656 99.80 96,287 21,235,231 99.82 141,481 21,924,660 100.00 – 22,536,290 99.49 Table 8 Total Collections to DatePercentageofLevy -145- General GeneralObligation Tax General Special MSA ObligationIncrementObligationAssessmentsRoadRevenueRevenue CapitalBondsBondsBondsBondsBondsNotesLease 1,050,000$ 24,295,000$ 13,750,000$ 2,775,000$ 4,649,229$ –$ 40,918$ 865,000 20,535,000 14,750,000 2,775,000 4,014,416 – 109,211 – 19,925,000 9,000,000 2,760,000 6,020,717 – 77,975 – 20,128,873 8,062,109 2,320,000 5,531,461 – 44,884 – 27,922,953 6,247,398 1,760,000 5,044,929 – 190,645 – 27,023,868 4,972,687 1,185,000 13,209,567 – 138,799 – 29,669,149 2,637,976 590,000 13,420,425 – 97,919 – 27,900,442 2,298,265 – 12,653,255 – 56,285 – 14,191,734 608,554 – 10,277,288 – 175,526 – 13,158,026 493,843 – 8,581,651 379,941 335,739 Note: (1) (2) CITY OF APPLE VALLEY Ratios of Outstanding Debt by TypeLast Ten Fiscal Years YearFiscal Business-Type ActivitiesGovernmental Activities City personal income not available for 2018. See the Demographic and Economic Statistics schedule for personal income and population data. Details regarding the City’s outstanding debt can be found in the notes to basic financial statements.All figures are presented net ofrelated premiums, discounts, and adjustments if applicable. 2018 20102009 201720162015 20122011 20142013 -146- Table 9 TotalPrimary PerGovernmentCapita (1) 46,560,147$ 2.61 %943$ 43,048,627 2.47 877 37,783,692 2.10 759 36,087,327 2.00 723 41,165,925 2.22 818 46,529,921 2.40 924 46,415,469 2.44 925 42,908,247 2.16 836 25,253,102 1.20 482 22,949,200 N/A (2)430 Percentage Income (1)of Personal -147- Less AmountsGeneralGeneralSpecialMSAAvailableObligation Tax Obligation Assessments Road in DebtIncrement Bonds Bonds Bonds Bonds Service Funds (3) 1,050,000$ 25,815,420$ 13,750,000$ 2,775,000$ 10,034,145$ 865,000 21,547,391 14,750,000 2,775,000 14,386,682 – 23,075,476 9,000,000 2,760,000 9,455,268 – 22,885,334 8,062,109 2,320,000 8,176,337 – 30,337,882 6,247,398 1,760,000 15,297,560 – 37,753,435 4,972,687 1,185,000 13,581,184 – 41,504,574 2,637,976 590,000 17,807,062 – 40,553,697 2,298,265 – 17,649,041 – 24,469,022 608,554 – 4,152,062 – 21,739,677 493,843 – 2,318,259 Note: (1) (2) (3) CITY OF APPLE VALLEY Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years 201720162015201420132012201120102009 YearFiscal 2018 Amounts shown here are the total restricted fund balances for all debt service funds and include restricted amountsheld in escrow for advance refunding bond issues. Details regarding the City’s outstanding debt can be found in the notes to the financial statements.All debt ispresented net of related premiums, discounts, and adjustments if applicable. City personal income not available for 2018. See the Demographic and Economic Statistics schedule for personal income and population data. -148- Table 10 PerTotalCapita (1) 33,356,275$ 0.65 %1.87 %676$ 25,550,709 0.53 1.47 521 25,380,208 0.57 1.41 510 25,091,106 0.62 1.39 503 23,047,720 0.61 1.24 458 30,329,938 0.78 1.57 603 26,925,488 0.64 1.41 537 25,202,921 0.56 1.27 491 20,925,514 0.45 0.99 400 19,915,261 0.39 N/A (2)373 PersonalIncome Percentage ofPercentage ofTaxable MarketValue ofProperty -149- THIS PAGE INTENTIONALLY LEFT BLANK Table 11 City of Apple Valley’sShare ofNet Debt OverlappingOutstanding (1)Debt OverlappingDakota County (2)–$ 11.22 %–$ School districts ISD No. 191, Burnsville – Eagan – Savage 144,690,000 0.58 839,202 ISD No. 196, Rosemount – Apple Valley – Eagan 146,585,000 26.84 39,343,414 Metropolitan Council (3)4,650,000 1.29 59,985 Metro Transit (4)181,455,000 1.45 2,631,098 Total overlapping 477,380,000 42,873,699 City of Apple Valley direct debt 13,651,869 100.00 13,651,869 Total direct and overlapping debt 491,031,869$ – 56,525,568$ Note: (1)As of December 31, 2018, unless noted otherwise. (2) (3) (4) Source: to City Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the City.ThisscheduleestimatestheportionoftheoutstandingdebtofthoseoverlappinggovernmentsthatisbornebytheresidentsandbusinessesoftheCity.This process recognizes that,when considering the City’s ability to issue andrepaylong-term debt,the entire debt burden borne by the residents and businesses should be taken into account.However,this does not imply that every taxpayer is a resident and,therefore,responsible for repaying the debt,ofeach term debt, the entire debt burden borne by the residents and businesses should be taken into account. Metro Transit has bond indebtedness of $181,455,000 as of December 31,2018.Transit debt is issued by theMetropolitanCouncilforallpublictransitoperationsinthetransitdistrictandispayablefromadvaloremtaxeslevied on all taxable property within the Metropolitan Transit District. Dakota County.Percentage of debt applicable is calculated by dividing a portion of tax capacity of the authoritythat lies in the City divided by the total tax capacity that lies in Dakota County. CITY OF APPLE VALLEY Direct and Overlapping Governmental Activities DebtDecember 31, 2018 Percentageof DebtApplicable Dakota County has bond indebtedness of $81,610,000 as of December 31,2018,of which $81,610,000 has beenexcluded as it is payable from housing revenues. Metropolitan Council has $4,650,000 of general obligation debt outstanding as of December 31,2018.This debt ispayablefromadvaloremtaxesleviedonalltaxablepropertywithintheMetropolitanTaxingDistrict.This amountexcludes$1,295,417,818 of general obligation debt payable from wastewater and sewer revenues,and leaseagreements. -150- Fiscal Year2009201020112012 Debt limit 154,069,326$ 143,630,736$ 133,721,061$ 121,852,877$ Total net debt applicable to limit 24,295,000 20,535,000 19,830,000 19,845,000 Legal debt margin 129,774,326$ 123,095,736$ 113,891,061$ 102,007,877$ Total net debt applicable to the limit as a percentage of the debt limit 15.77%14.30%14.83%16.29% CITY OF APPLE VALLEY Legal Debt Margin InformationLast Ten Fiscal Years -151- Table 12 2013 2014 2015 2016 2017 2018 123,111,918$ 116,911,737$ 126,852,645$ 133,946,802$ 140,076,146$ 152,165,496$ 27,590,000 26,700,000 29,275,000 27,550,000 13,885,000 12,895,000 95,521,918$ 90,211,737$ 97,577,645$ 106,396,802$ 126,191,146$ 139,270,496$ 22.41%22.84%23.08%20.57%9.91%8.47% Market value 5,072,183,189$ Debt limit (3% of assessed value)152,165,496 Debt applicable to the limit 12,895,000 Legal debt margin 139,270,496$ Legal Debt Margin Calculation for Fiscal Year 2018 -152- Operating Less Net Operating Less NetFiscalRevenues/Operating Available Debt Service Revenues/Operating AvailableYearGross Profit Expense Revenue Principal Interest Coverage Gross Profit Expense Revenue 2009 2,501,430$ 1,656,559$ 844,871$ 115,000$ 132,210$ 1,233,346$ 818,151$ 415,195$ 2010 2,486,461 1,607,986 878,475 130,000 129,220 1,360,483 806,506 553,977 2011 2,557,573 1,601,269 956,304 135,000 125,450 1,370,348 872,369 497,979 2012 2,528,423 1,557,994 970,429 140,000 121,333 1,517,090 936,991 580,099 2013 2,685,372 1,595,221 1,090,151 145,000 116,436 1,505,136 989,295 515,841 2014 2,692,077 1,612,171 1,079,906 150,000 111,850 1,562,067 1,196,115 365,952 2015 2,443,210 1,626,498 816,712 200,000 71,256 1,629,361 1,376,670 252,691 2016 2,567,113 1,682,574 884,539 230,000 29,127 1,717,350 1,399,093 318,257 2017 2,709,997 1,750,717 959,280 235,000 27,288 1,769,842 2,116,752 (346,910) 2018 2,877,251 1,766,068 1,111,183 1,120,000 22,837 1,901,319 1,998,341 (97,022) (1)Excludes principal refunded from the proceeds of refunding bond issues. Note: Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. CITY OF APPLE VALLEY Liquor Store – Revenue Bonds G.O. Storm Water – Revenue Bonds Pledged Revenue CoverageLast Ten Fiscal Years 3.418 3.389 3.672 3.713 4.170 0.972 3.657 4.124 3.011 3.414 -153- Operating Less NetDebt Service Revenues/Operating Available Debt ServicePrincipal (1)Interest Coverage Gross Profit Expense Revenue Principal Interest Coverage 300,000$ 48,416$ 1.192 8,876,346$ 6,832,611$ 2,043,735$ 170,000$ 18,275$ 10.86 315,000 31,035 1.601 8,423,373 7,285,380 1,137,993 105,000 12,495 9.69 220,000 63,313 1.758 8,358,787 7,361,390 997,397 120,000 8,820 7.74 225,000 68,558 1.976 9,256,709 7,214,372 2,042,337 – – – 230,000 64,553 1.751 8,949,608 7,776,510 1,173,098 – – – 240,000 59,908 1.220 8,911,018 7,997,799 913,219 320,000 129,223 2.03 150,000 73,036 1.133 8,988,411 7,950,081 1,038,330 365,000 215,125 1.79 155,000 84,979 1.326 9,450,362 9,130,962 319,400 370,000 207,825 0.55 160,000 81,870 (1.434) 9,910,773 9,785,093 125,680 380,000 200,425 0.22 180,000 32,388 (0.457) 10,352,835 9,040,542 1,312,293 385,000 192,824 2.27 G.O. Water – Revenue Bonds Table 13 -154- Table 14 PerCapitaPersonalPersonal School UnemploymentPopulation (1)Income Income (2)Enrollment (3)Rate (4) 49,376 1,782,325,472$ 36,097$ 11,216 6.80%49,084 1,740,027,800 35,450 11,291 6.50%49,801 1,801,750,379 36,179 11,264 4.80%49,895 1,801,658,555 36,109 11,219 4.20%50,326 1,855,167,338 36,863 11,189 3.60%50,330 1,934,886,520 38,444 11,312 2.80%50,161 1,903,961,077 37,957 11,272 2.60%51,338 1,985,959,192 38,684 11,883 3.00%52,361 2,104,650,395 40,195 12,070 2.50%53,429 N/A N/A 11,996 2.40% N/A – Not Available Sources:(1)U.S. Census Bureau, Population Division (2) (3)Schools located in the City’s boundaries: Independent School District No. 196, including Dakota Ridge School.School enrollment defined as adjusted ADMs (average daily membership). ADM is weighted as follows in computing adjusted ADMs: Secondary Fiscal 2009 through 2014 1.250 1.000 0.612 0.612 1.115 1.060 1.300Fiscal 2015 through 2018 1.000 1.000 0.550 1.000 1.000 1.000 1.200 (4)Minnesota Department of Employment and Economic Development 2016 CITY OF APPLE VALLEY Demographic and Economic StatisticsLast Ten Fiscal Years FiscalYear 2009201020112012201320142015 2017 City of Apple Valley, American Community Survey, U.S. Census Bureau (2018 data for the City not yet available). Pre-Kindergarten Handicapped Kindergarten Half-Day Kindergarten Full-Day Kindergarten Elementary 1–3 Elementary 4–6 2018 -155- Table 15 Taxpayer Employees Rank Employees Rank ISD No. 196 1,469 1 9.21 %1,913 1 13.66 %Uponor 713 2 4.47 450 3 3.21 Target 520 3 3.26 500 2 3.57 Dakota County 392 4 2.46 349 4 2.49 Wings Financial Federal Credit Union 356 5 2.23 – – – Walmart 350 6 2.19 340 5 2.43 Cub Foods 320 7 2.01 300 6 2.14 Augustana Health Care Center 265 8 1.66 – – – Menard’s 250 9 1.57 – – – Minnesota Zoo 220 10 1.38 260 8 1.86 Fischer Sand and Aggregate Co.– – – 295 7 2.11 Apple Valley Health Care Center – – – 250 9 1.78 Apple Valley Red-E-Mix, Inc.– – – 200 10 1.43 Total 4,855 30.43 %4,857 34.67 % Source: City of Apple Valley Community Development Department Percentageof Total Employment Percentageof Total Employment 20092018 CITY OF APPLE VALLEY Principal EmployersCurrent Fiscal Year and Nine Years Ago -156- Fiscal Year2009201020112012 General governmentAdministration 3.00 3.00 2.81 3.00 Finance and data processing 4.95 5.00 5.00 4.71 Information and technology 3.20 3.17 3.21 3.33 Human resources 5.92 6.00 5.38 3.97 City clerk/elections 1.50 1.65 1.73 2.05 General government buildings 3.00 3.00 2.46 2.00 Community development 5.00 5.01 5.02 5.16 Code enforcement 2.15 2.00 1.71 1.82 Total general government 28.72 28.83 27.32 26.04 Public safetyPolice 64.00 62.00 60.09 58.72 Fire 18.94 16.44 18.45 18.40 Building inspections 5.99 4.93 4.02 5.07 Total public safety 88.93 83.37 82.56 82.19 Public worksPublic works administration 6.00 7.13 8.48 6.25 Central maintenance facility 5.50 5.52 5.48 5.25 Streets 17.07 17.19 17.32 16.63 Engineering (1)– – 0.73 4.28 Total public works 28.57 29.84 32.01 32.41 Culture and recreationPark and recreation administration 7.29 7.81 7.82 7.28 Recreation programs 7.02 7.84 7.41 6.16 Park maintenance 25.96 25.27 25.06 25.02 Redwood Pool 2.80 2.13 1.94 2.32 Aquatic swim center 13.92 12.85 11.28 13.25 Community center 4.56 3.76 4.03 5.07 Apple Valley Senior Center 1.15 2.04 1.89 1.92 Cable TV 2.58 2.61 2.43 2.27 Total culture and recreation 65.28 64.31 61.86 63.29 Total general government 211.50 206.35 203.75 203.93 Enterprise fundsMunicipal liquor 19.91 19.49 18.99 18.98 Municipal golf (2)13.83 13.76 14.44 15.96 Sports arena 6.29 6.05 6.72 6.47 Stormwater drainage utility (3)– – – – Water and sewer 18.88 18.58 18.45 18.84 Total enterprise funds 58.91 57.88 58.60 60.25 Total 270.41 264.23 262.35 264.18 (1)The City engineering function began in 2011(2)New expanded golf clubhouse opened September 2012(3)The stormwater drainage FTEs were included in Public Works Administration prior to 2014 Source: CITY OF APPLE VALLEY Full-Time Equivalent (FTE) City Government Employees by FunctionLast Ten Fiscal Years City of Apple Valley Human Resources Office –FTEs based on hours worked during the fiscal year.Part-time employees convertedto FTE based on 2,080 hours per year.-157- Table 16 2013 2014 2015 2016 2017 2018 3.00 3.00 3.00 3.00 3.00 3.00 4.00 4.00 4.00 4.00 4.58 5.00 3.24 3.53 3.64 3.78 3.11 4.06 4.00 4.63 5.00 5.00 5.00 5.02 1.81 4.84 2.00 5.39 1.92 5.32 2.00 2.00 2.00 2.00 1.92 2.00 5.00 5.00 4.77 4.35 5.00 5.00 2.00 2.00 2.44 2.40 2.36 2.39 25.05 29.00 26.85 29.92 26.89 31.79 61.16 60.22 62.27 62.58 62.74 64.18 18.63 16.21 15.46 15.54 16.02 17.89 5.22 5.75 6.93 6.76 7.72 7.90 85.01 82.18 84.66 84.88 86.48 89.97 5.99 5.30 3.83 3.80 4.20 4.31 5.34 5.44 5.51 5.29 5.30 5.25 16.66 16.66 16.92 16.95 17.07 16.75 4.24 4.49 4.03 4.48 4.91 5.32 32.23 31.89 30.29 30.52 31.48 31.63 7.87 7.82 7.83 7.45 7.85 7.89 6.76 5.06 6.88 6.23 5.91 5.66 23.09 23.24 22.97 24.18 23.79 24.70 2.47 2.55 2.35 2.63 2.26 2.21 12.80 11.95 12.25 12.65 12.14 12.55 5.67 5.95 4.64 4.72 4.55 4.12 2.27 3.13 3.03 3.36 3.43 3.70 2.44 2.46 2.61 2.74 2.84 3.01 63.37 62.16 62.56 63.96 62.77 63.84 205.66 205.23 204.36 209.28 207.62 217.23 18.86 18.51 17.51 17.47 17.57 17.43 20.41 20.10 19.68 18.89 19.15 13.18 6.88 7.09 6.57 6.85 6.47 5.71 – 0.28 1.96 2.00 2.00 0.08 18.14 18.26 18.07 17.61 17.35 18.86 64.29 64.24 63.79 62.82 62.54 55.26 269.95 269.47 268.15 272.10 270.16 272.49 CITY OF APPLE VALLEY Full-Time Equivalent (FTE) City Government Employees by FunctionLast Ten Fiscal Years -158- 2009 2010 2011 2012 General governmentElections N/A 2 N/A 2 Registered voters N/A 32,094 N/A 35,354 Number of voters casting votes N/A 21,271 N/A 29,715 Number of absentee ballots received N/A 1,316 N/A 2,993 Percentage of absentee ballots to total votes N/A 6.2% N/A 10.1% Voter participation (registered) (elections are held every other year)N/A 66.28% N/A 84.05% Public safetyPolice Crimes – Part I 1,366 1,565 1,230 1,187 Crimes – Part II 2,542 2,364 2,072 1,970 Total arrests 2,137 1,985 1,963 1,962 DWI arrests 288 205 213 145 Traffic citations issued 7,997 6,329 7,587 6,670 Total calls for service 41,049 38,335 40,272 39,223 FireCalls for service 1,307 1,340 1,408 1,417 Medical 735 712 792 639 Fire 572 628 616 778 Fire call responses times under 5 minutes 41% 37% 40% 42% Fire call responses times 5–10 minutes 48% 52% 51% 49% Fire call responses times over 10 minutes 11% 11% 9% 9% Public worksBuilding permits issued 577 1,241 1,630 1,398 Permits issued for new dwelling units 91 228 31 47 Commercial building permits issued 73 102 71 96 Plumbing permits issued 912 920 886 1,027 Heating permits issued 557 771 540 692 Building permits issued 2,688 2,995 4,248 4,248 Building inspections 3,470 3,621 5,187 6,890 Streets maintained (lane miles)405 407 408 410 Cul-de-sacs maintained 314 329 329 330 Snow/ice events 48 35 29 25 Signs replaced 385 500 460 700 Boulevard trees trimmed 1,600 1,800 5,200 2,137 Fleet division vehicle work orders 1,733 1,735 1,751 1,850 Diseased elm and oak trees mitigated 729 588 486 260 Lakes and ponds monitored with water quality samples 18 18 18 18 Sump catch basins cleaned 1,406 1,505 1,303 1,400 Sewage pumped (billion gallons)1.2 1.2 1.2 1.2 Miles of sanitary sewer cleaned 47.6 64.2 72.1 75.0 Sanitary lift station inspections 1,716 1,716 1,716 1,716 Water produced (billion gallons)2.4 2.1 2.3 2.4 Water samples taken 1,098 1,128 1,098 1,098 Fire hydrants maintained 2,401 2,405 2,410 2,410 Pressure stations inspected 13 13 13 13 Air relief manholes inspected 15 15 15 15 Hydrant flushing 3,050 5,250 1,020 – Hydrant flushing (minutes)– – – 24,455 Water breaks repaired 20 12 16 10 Burial sites sold 50 44 56 70 Burials 32 36 38 43 N/A – Not Available Source: Various city departments Function/Program CITY OF APPLE VALLEY Operating Indicators by Function Last Ten Years Fiscal Year -159- Table 17 2013 2014 2015 2016 2017 2018 N/A 2 N/A 2 N/A 2 N/A 32,370 N/A 35,836 N/A 35,544 N/A 19,351 N/A 29,853 N/A 27,170 N/A 2,100 N/A 8,692 N/A 7,759 N/A 10.9% N/A 29.1% N/A 28.6% N/A 59.78% N/A 83.30% N/A 76.44% 1,124 1,098 1,207 1,232 1,237 1,039 1,756 1,627 1,833 1,936 1,993 1,939 1,307 1,096 969 1,234 1,206 1,198 160 152 120 87 176 224 5,726 4,735 4,246 5,441 4,471 4,831 35,215 34,497 35,510 39,548 40,079 40,864 1,454 1,412 1,397 1,622 1,787 2,074 636 623 668 812 1,097 1,363 818 789 729 810 690 711 44% 43% 43% 38% 43% 44% 46% 46% 48% 51% 48% 49% 10% 11% 9% 11% 9% 7% 1,005 1,893 1,785 1,883 1,902 1,750 63 71 115 140 167 65 113 115 197 98 184 99 1,090 1,173 1,334 1,560 1,620 1,572 786 851 951 1,076 1,170 1,043 4,248 5,430 5,755 1,883 1,902 1,750 6,848 8,636 10,543 10,702 11,794 12,406 410 416 416 418 418 418 331 322 324 325 325 325 53 45 29 29 32 34 411 657 451 354 402 425 1,990 1,175 1,250 939 1,565 1,063 1,890 2,148 1,486 2,138 1,507 1,122 430 340 322 326 444 289 18 17 18 18 18 18 885 1,455 983 1,106 1,282 873 1.3 1.1 1.2 1.1 1.1 1.1 77.0 79.0 54.0 62.0 47.0 38.0 1,716 1,716 1,716 1,716 1,716 1,716 2.4 2.1 2.0 2.0 2.0 2.0 1,098 1,098 1,098 1,098 1,098 1,098 2,444 2,454 2,466 2,484 2,489 2,494 13 13 13 13 13 13 15 15 16 16 16 16 – – – – – – 24,189 23,987 24,916 26,687 24,688 25,005 16 11 16 8 10 8 59 57 69 75 108 62 45 34 50 46 58 58 -160- Function/Program 2009 2010 2011 2012 Public safetyPoliceStations 1 1 1 1Marked squad units 18 20 23 23FireStations3333Fire engine trucks 5 5 5 5Fire ladder trucks 2 2 2 2Fire brush/rescue trucks 1 1 1 1 Public worksCity-owned lights 126 246 246 261Dakota Electric Association-owned 2,124 2,207 2,270 2,494Xcel owned lights 301 301 301 301Streets (centerline miles)171 171 172 172Cul-de-sacs 314 329 329 329Roundabouts3333Trees (number of boulevard trees)9,500 9,500 9,500 9,500 ParksParks 49 50 50 50Total park acreage 847 879 879 879 Trails – street side trails (miles)65 65 65 65Athletic complexes 4 5 5 5Golf course 1 1 1 1Community centers 2 2 2 2Senior center 1 1 1 1Pools/aquatic centers 2 2 2 2Ice arenas 2 2 2 2 WaterNumber of connections 15,464 15,518 15,566 15,596Miles of water mains and laterals 240 241 241 241Wells19191919Water valves 3,705 3,712 3,726 3,751Fire hydrants 2,401 2,405 2,410 2,410Water reservoirs 5 5 5 5Reservoir capacity (millions of gallons)12.5 12.5 12.5 12.5 Sanitary sewerNumber of connections 15,033 15,087 15,130 15,160Miles of sanitary sewer mains and laterals 193 193 194 194Sanitary lift stations 9 9 9 9Sanitary manholes 5,360 5,372 5,384 5,384 Storm sewerLift stations 12 12 12 12Mile of storm sewers 162 162 163 164 N/A – Not Available Source: Various city departments CITY OF APPLE VALLEY Capital Assets Statistics by Function/ProgramLast Ten Years Fiscal Year -161- Table 18 2013 2014 2015 2016 2017 2018 1 1 1 1 1 1 23 24 24 24 25 25 3 3 3 3 3 3 5 5 5 5 5 5 2 2 2 2 2 2 1 1 1 1 1 1 261 271 271 302 308 310 2,718 2,942 3,167 3,303 3,112 3,115 301 301 301 343 343 343 175 177 177 179 180 180 329 329 324 325 325 325 3 3 4 4 4 4 9,330 9,250 9,175 9,100 8,800 8,400 50 50 50 50 50 51 879 879 879 879 879 888 65 65 65 75 78 78 5 5 5 5 5 5 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 15,674 15,752 15,874 16,024 16,226 16,342 245 247 248 250 266 287 19 19 19 20 20 20 3,774 3,812 3,836 3,872 3,886 3,917 2,438 2,454 2,466 2,484 2,489 2,494 5 5 5 5 5 5 12.5 13 13 13 13 13 15,229 15,307 15,422 15,563 15,764 15,877 200 204 204 204 212 223 9 9 9 9 9 9 5,466 5,514 5,538 5,587 5,596 5,603 12 12 12 12 12 12 165 167 170 173 196 196 -162- THIS PAGE INTENTIONALLY LEFT BLANK Management Report for City of Apple Valley, Minnesota December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK To the City Council and Management City of Apple Valley, Minnesota We have prepared this management report in conjunction with our audit of the City of Apple Valley, Minnesota’s (the City) financial statements for the year ended December 31, 2018. We have organized this report into the following sections: •Audit Summary •Governmental Funds Overview •Enterprise Funds Overview •Government-Wide Financial Statements •Legislative Updates •Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota . Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS 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 as of and for the year ended December 31, 2018. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2018: • We have issued an unmodified opinion on the City’s basic financial statements. Our report included a paragraph emphasizing the City’s implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions during the year ended December 31, 2018. Our opinion was not modified with respect to this matter. • We reported no deficiencies in the City’s internal control over financial reporting that we considered to be material weaknesses. o It should be understood that internal controls are never perfected, and those controls which protect the City’s funds from such things as fraud and accounting errors need to be continually reviewed and modified as necessary. • The results of our testing disclosed no instances of noncompliance required to be reported under Government Auditing Standards. • We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. -2- FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS As a part of our audit of the City’s financial statements for the year ended December 31, 2018, we performed procedures to follow-up on the findings and recommendations that resulted from our prior year audit. We reported the following findings that were corrected by the City in the current year: • During the prior year audit, we noted the City had limited segregation of duties over cash receipts, community center refunds and reimbursements, golf course inventory, and utility billing adjustments. During the current year, the City implemented procedures to eliminate this finding. • Minnesota Statutes require the City to include responsible contractor language for each construction contract in excess of $50,000, awarded pursuant to a lowest responsible bidder or best value process. The successful contractor must submit a verification of compliance sign ed under oath by an owner or officer verifying compliance with the minimum criteria set forth in Minnesota Statutes. One of four bids tested was not in compliance in fiscal year 2017. We are pleased to report this is not a finding in the current year. • Minnesota Statutes require cities to pay each vendor obligation according to the terms of each contract of within 35 days after the receipt of the goods or services, or the invoice for the goods or services. If such obligations are not paid within the appropriate time period, cities must pay interest on the unpaid obligations at the rate of 1.5 percent per month or part of a month. For one disbursement selected for testing in fiscal year 2017, the City did not pay the obligation within the required time period, and did not pay interest on the unpaid obligation. We are pleased to report this is not a finding in the current year. SIGNIFICANT ACCOUNTING POLICIES 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 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2018; however, the City implemented the following governmental accounting standards during the fiscal year: • GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which established new accounting and financial reporting requirements for governments whose employees are provided with other post-employment benefits (OPEB). • GASB Statement No. 85, Omnibus 2017, which addresses issues that have been identified during implementation and application of certain GASB statements. • GASB Statement No. 86, Certain Debt Extinguishment Issues, which improves the consistency in accounting and financial reporting for in-substance defeasances of debt. We noted no transactions entered into by the City 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 th e proper period. -3- ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS 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: • Depreciation – Management’s estimates of depreciation expense are based on the estimated useful lives of the assets. • OPEB and Pension Liabilities – The City has recorded liabilities and activity for OPEB and pension benefits. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. • Compensated Absences – Management’s estimates are based on current rates of pay and unused compensated absence balances. • Self-Insurance Reserves – Management’s estimates of self-insurance reserves are based on the estimated liability for incurred but not reported claims. • Land Held for Resale – Management’s estimates of these assets are based on the lower of cost or acquisition value. We evaluated the key factors and assumptions used by management to develop these accounting estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Where applicable, management has corrected all such misstatements, including the prior period adjustment noted in the comprehensive annual financial report. There were no additional misstatements detected as a result of audit procedures that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, a disagreement with management is 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. -4- MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated June 4, 2019. 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 City’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 management’s discussion and analysis (MD&A) and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing th e 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 accompanying the financial statements, which is 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 and statistical sections, which accompany the financial statements, but are not RSI. Such information 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. -5- GOVERNMENTAL FUNDS OVERVIEW This section of the report provides you with an overview of the financial trends and activities of the City’s governmental funds, which includes the General, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City’s financial statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2017 fiscal year, local ad valorem property tax levies provided 41.1 percent of the total governmental fund revenues for cities over 2,500 in population, and 37.4 percent for cities under 2,500 in population. Total property taxes levied by all Minnesota cities for taxes payable in 2018 increased 6.2 percent from the prior year, and total certified levies payable in 2019 are projected to incr ease by 5.6 percent. The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year (state-wide market value information for the 2018 levy year was not available at the time this report was issued). The market values used for levying property taxes are based on the previous fiscal year (e.g., market values for taxes levied in 2018 were based on assessed values as of January 1, 2017), so the trend of change in these market values lags somewhat behind the housing market and economy in general. The City’s taxable market value increased 4.6 percent for taxes payable in 2017 and 8.6 percent for taxes payable in 2018. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Taxable Market Value -6- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state ’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year -to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 4.4 percent and 8.4 percent for taxes payable in 2017 and 2018, respectively. The following graph shows the City’s change in tax capacities over the past 10 years: $– $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2016 2017 2018 Average tax rate City 44.7 44.5 42.5 County 28.6 28.0 26.6 School 24.4 23.3 25.8 Special taxing 5.0 4.9 3.9 Total 102.7 100.7 98.8 City of Apple Valley Rates Expressed as a Percentage of Net Tax Capacity The total average tax rate decreased from the prior year. An increase in the school portion was offset by decreases in the City, county, and special taxing authority rates. -7- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2018, presented both by fund balance classification and by fund: Increase20172018(Decrease) Fund balances of governmental fundsTotal by classificationNonspendable 327,012$ 145,644$ (181,368)$ Restricted 13,431,367 13,608,420 177,053 Committed 610,215 367,510 (242,705) Assigned 28,844,129 29,450,614 606,485 Unassigned 7,612,723 10,943,713 3,330,990 Total governmental funds 50,825,446$ 54,515,901$ 3,690,455$ Total by fundGeneral 17,336,413$ 17,640,331$ 303,918$ Closed Bond Issues 9,440,666 8,663,145 (777,521) Road Improvements (5,174,280) (5,250,659) (76,379) Future Capital Projects 15,353,401 14,300,138 (1,053,263) Nonmajor 13,869,246 19,162,946 5,293,700 Total governmental funds 50,825,446$ 54,515,901$ 3,690,455$ Governmental Funds Change in Fund Balance Fund Balanceas of December 31, In total, the fund balances of the City’s governmental funds increased by $3,690,455 during the year ended December 31, 2018. The overall increase is mainly due to additional project escrow charges and park dedications received, which increased restricted, assigned, and the nonmajor fund balances. As seen in the graph above, the increase is mainly in unassigned fund balance, due to the City closing out funds with transfers from assigned fund balances. These funds that were closed previously had deficit balances resulting in the increase in the unassigned balance. -8- GOVERNMENTAL FUND REVENUES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the Office of the State Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as a city’s stage of development, location, size and density of its population, property values, services it provides, and other attributes. It will also differ from year-to-year, due to the effect of inflation and changes in its operation. Also, certain data in these tables may be classified differently than how they appear in the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of the City. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year December 31, 2016 December 31, 2017 2016 2017 2018Population20,000–100,000 20,000–100,000 51,338 52,361 53,429 Property taxes 455$ 475$ 466$ 472$ 482$ Tax increments 42 38 4 7 14 Franchise and other taxes 45 48 29 28 27 Special assessments 59 59 81 30 34 Licenses and permits 42 49 40 62 42 Intergovernmental revenues 152 147 51 38 51 Charges for services 103 103 53 57 58 Other 54 48 85 51 99 Total revenue 952$ 967$ 809$ 745$ 807$ Governmental Funds Revenue per CapitaWith State-Wide Averages by Population Class State-Wide City of Apple Valley The City’s governmental funds have generated significantly less revenue per capita in total than other Minnesota cities in its population class. As noted above, the City receives a lower level of intergovernmental revenue than the average city, causing the City to rely on property taxes and other forms of revenue to operate the governmental activities of the City. The City generated $43,134,707 of total revenue in its governmental funds in 2018, an increase of $4,164,368 (10.7 percent) from the prior year. The City’s per capita governmental funds revenue for 2018 was $807, an increase of $62, or 8.3 percent, from the prior year. The largest changes occurred in other revenue, intergovernmental revenues, and licenses and permits. Other revenue increased $48 per capita, due to additional project escrow charges and park dedications received. Intergovernmental revenues increased $13 per capita, due to a one-time pass-through grant as part of the Village Pointe Plaza project. These increases were offset by the $20 per capita decrease in licenses and permits, due to a decrease in building activity in the current year. -9- GOVERNMENTAL FUND EXPENDITURES The expenditures of governmental funds will also vary from state-wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows: • Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues. • Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented, and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects. • Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor. Some debt may be repaid through specific sources, such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with comparative state-wide averages, are presented in the following table: Year December 31, 2016 December 31, 2017 2016 2017 2018Population20,000–100,000 20,000–100,000 51,338 52,361 53,429 CurrentGeneral government 97$ 101$ 123$ 109$ 136$ Public safety 273 287 236 235 245 Street maintenance 95 101 76 79 96 Parks and recreation 95 99 112 110 107 All other 91 77 – – – Total current 651 665 547 533 584 Capital outlay and construction 301 263 164 162 152 Debt servicePrincipal 115 121 52 65 21 Interest and fiscal 34 32 19 18 6 Total debt service 149 153 71 83 27 Total expenditures 1,101$ 1,081$ 782$ 778$ 763$ State-Wide City of Apple Valley Governmental Funds Expenditures per CapitaWith State-Wide Averages by Population Class As the above table reflects, the City’s current expenditures per capita have also been below the state-wide average. Total expenditures in the City’s governmental funds for 2018 were $40,792,688, an increase of $78,281 (0.2 percent). The City’s per capita governmental funds current expenditures increased $51 per capita, mainly in the general government function, which includes the pass-through of the Economic Development Authority grant for the Village Pointe Plaza project. Debt service expenditures experienced a decrease of $56 per capita as established with the scheduled payment plans approved at the time of issuing debt. -10- GENERAL FUND The City’s General Fund accounts for the financial activity of the basic services provided to the community. The primary services included within this fund are the administration of the municipal operation, police and fire protection, building inspection, streets and highway maintenance, and parks and recreation. The graph below illustrates the change in the General Fund financial position over the last five years. We have also included a line representing annual expenditures to reflect the change in the size of the General Fund operation over the same period. 2014 2015 2016 2017 2018 Fund Balance $15,155,450 $16,092,104 $16,609,454 $17,336,413 $17,640,331 Cash Balance $11,476,467 $14,299,304 $14,202,606 $15,908,162 $16,206,366 Expenditures $24,642,712 $24,927,799 $25,986,358 $27,274,374 $28,699,846 $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 General Fund Financial PositionYear Ended December 31, The City’s General Fund cash and investments balance at December 31, 2018 was $16,206,366, an increase of $298,204 from the previous year. Total fund balance at December 31, 2018 was $17,640,331, an increase of $303,918 from the prior year. Having an appropriate fund balance is an important factor in assessing the City’s financial health because a government, like any organization, requires a certain amount of equity to operate. Generally, the amount of equity required typically increases as the size of the operation increases. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and can be a factor in determining the City’s bond rating and resulting interest costs. The City Council has formally adopted a fund balance policy that states the City will strive to maintain a minimum unassigned General Fund balance of 50.0 percent of the subsequent year’s budgeted expenditures. At December 31, 2018, the unassigned fund balance of the General Fund was 50.1 percent of the subsequent year’s budgeted expenditures, including transfers. -11- The following graph reflects the City’s General Fund revenue sources for 2018 compared to budget: Other Charges for Services Intergovernmental Licenses and Permits Taxes General Fund RevenueBudget to Actual Budget Actual Total General Fund revenues for 2018 were $811,985 (2.6 percent) over the final budget. The majority of this variance was in licenses and permits, which was over budget $749,599, due to more than anticipated building-related activities. The following graph presents the City’s General Fund revenues by source for the last five years: Taxes Intergovernmental Other2014$22,188,314 $874,473 $5,465,3022015$22,226,012 $781,409 $6,044,7282016$23,126,722 $806,909 $6,119,933 2017 $23,940,494 $831,908 $7,427,411 2018 $24,956,157 $881,315 $6,792,768 $– $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 General Fund Revenue by Source Year Ended December 31, Total General Fund revenues for 2018 were $32,630,240, an increase of $430,427 (1.3 percent) from the previous year. Taxes increased $1,015,663, due to an overall increase in the general tax levy. This increase was offset by a $634,643 decrease in revenue from other sources, mainly in licenses and permits revenue, due to a decrease in building-related activity, when compared to the prior year. -12- The following graph reflects the City’s General Fund expenditures compared to budget for 2018: Parks and Recreation Public Works Public Safety General Government General Fund ExpendituresBudget to Actual Budget Actual Total General Fund expenditures for 2018 were $28,699,846, which was $774,438 (2.6 percent) less than budget. This variance was spread across all functions. General government, public safety, public works, and parks and recreation expenditures were under budget $251,789, $121,028, $247,569, and $154,052, respectively, mostly due to position vacancies. The following graph presents the City’s General Fund expenditures by function for the last five years: GeneralGovernment Public Safety Public Works Parks andRecreation2014$4,576,708 $11,057,938 $3,986,727 $5,021,339 2015 $4,792,595 $11,390,204 $3,637,190 $5,107,810 2016 $4,984,412 $11,817,350 $3,725,606 $5,458,990 2017 $5,148,448 $12,419,830 $4,041,044 $5,665,0522018$5,533,975 $13,145,792 $4,503,246 $5,516,833 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 General Fund Expenditures by FunctionYear Ended December 31, General Fund expenditures increased by $1,425,472, or 5.2 percent, from the prior year. General government expenditures increased $385,527, mainly in the information technology department, due to filling vacancies and city clerk/elections department, due to the 2018 elections. Public safety expenditures increased $725,962, mainly in the police protection and fire protection departments. The increase in expenditures in the public works department of $462,202 was mainly in the streets department. Expenditures in parks and recreation decreased $148,219, mainly in the Apple Valley Community Center department, related to higher capital outlay in the prior year. Typical to other cities we audit, public safety costs for the City comprise the largest portion of General Fund spending and have seen the largest increases over the past five years. -13- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which includes the Municipal Liquor, Municipal Golf Course, Sports Arena, Water and Sewer, Storm Drainage, Street Light Utility, and Cemetery Funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2018, presented both by classification and by fund: Increase20172018(Decrease) Net position of enterprise fundsTotal by classificationNet investment in capital assets 94,851,212$ 100,261,931$ 5,410,719$ Restricted 178,665 – (178,665) Unrestricted 15,505,784 12,975,656 (2,530,128) Total enterprise funds 110,535,661$ 113,237,587$ 2,701,926$ Total by fundMunicipal Liquor 5,369,786$ 5,875,911$ 506,125$ Municipal Golf Course 523,387 151,646 (371,741) Sports Arena 1,088,091 1,218,157 130,066 Water and Sewer 69,827,460 71,866,007 2,038,547 Storm Drainage 31,430,884 31,716,933 286,049 Street Light Utility 264,315 304,281 39,966 Cemetery 2,031,738 2,104,652 72,914 Total enterprise funds 110,535,661$ 113,237,587$ 2,701,926$ Enterprise Funds Change in Financial Position Net Positionas of December 31, In total, the net position ($113,237,587) of the City’s enterprise funds increased by $2,701,926 during the year ended December 31, 2018. The change in accounting principle, as previously mentioned, reduced net position by $15,395, while current year operating results increased net position by $2,717,321. The increase in the net investment in capital assets reflects the continued investment in utility infrastructure and other capital assets. The decrease in unrestricted net position ($2,530,128) is due to the use of unrestricted net position for capital asset purchases in the current year. -14- MUNICIPAL LIQUOR FUND The following graph presents five years of operating results for the Municipal Liquor Fund: 2014 2015 2016 2017 2018 Sales $9,292,224 $8,480,414 $8,738,804 $9,183,272 $9,445,281 Cost of Sales $6,600,147 $6,037,204 $6,171,691 $6,473,275 $6,568,030 Operating Expenses(Excluding Depreciation)$1,479,096 $1,485,163 $1,546,028 $1,609,959 $1,624,533 Operating Income (Loss)(Excluding Depreciation)$1,212,981 $958,047 $1,021,085 $1,100,038 $1,252,718 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Municipal Liquor FundYear Ended December 31, The Municipal Liquor Fund ended 2018 with a net position of $5,875,911, an increase of $506,125 from the prior year. Of this net position, $3,552,731 represents the investment in liquor capital assets, and $2,323,180 is in unrestricted net position. Liquor sales for 2018 were $9,445,281, $262,009 (2.9 percent) higher than the prior year. The Municipal Liquor Fund generated operating income (excluding depreciation) of $1,252,718 in 2018, or 13.3 percent, of gross sales, which is an increase from the 12.0 percent reported in fiscal 2017. The Municipal Liquor Fund gross profit margin was 30.5 in fiscal 2018, slightly more than 29.5 in fiscal 2017. -15- MUNICIPAL GOLF COURSE FUND The following graph presents five years of operating results for the Municipal Golf Course Fund: 2014 2015 2016 2017 2018 Operating Revenue $1,289,089 $1,387,821 $1,354,645 $1,173,102 $862,834 Operating Expenses(Excluding Depreciation)$1,135,917 $1,208,454 $1,301,452 $1,206,920 $950,456 Cost of Goods Sold $210,461 $256,331 $237,409 $188,557 $75,112 Depreciation $175,518 $174,033 $174,171 $183,693 $192,783Operating Income (Loss)(Excluding Depreciation)$(57,289)$(76,964)$(184,216)$(222,375)$(162,734) $(400,000) $(200,000) $– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 Municipal Golf Course FundYear Ended December 31, The Municipal Golf Course Fund ended 2018 with a net position of $151,646, a decrease of $371,741 from the prior year. Of this net position, $3,948,958 represents the investment in golf course land and capital assets, leaving a deficit of ($3,797,312) in unrestricted net position. Municipal Golf Course Fund operating revenues for 2018 were $862,834, which is $310,268 less than the prior year. Operating expenses (excluding depreciation) for 2018 were $950,456, a decrease of $256,464 from the prior year. The overall decrease in operating revenues and expenses is due to the City contracting food and beverage operations in the current year. On an annual basis, this fund has had to borrow from other funds to fund cash flow and capital needs. This interfund borrowing was a total of $3,364,328 at December 31, 2018. Interfund borrowing for cash flow needs totals $1,515,160 at December 31, 2018. The remainder, $1,849,168, is for capital needs and is to be repaid over multiple years. We recommend the City continue to monitor the financial results in this fund and update the long-range financial plan for this fund. -16- SPORTS ARENA FUND The following graph presents five years of operating results for the Sports Arena Fund: 2014 2015 2016 2017 2018 Sales and User Fees $714,351 $722,270 $783,089 $732,919 $789,516 Operating Expenses(Excluding Depreciation)$697,754 $606,977 $618,747 $659,107 $646,586 Nonoperating Revenue(Expense)$152,162 $121,419 $123,022 $127,945 $123,698 Income (Loss)$19,779 $73,273 $135,513 $56,342 $131,187 $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 Sports Arena FundYear Ended December 31, The Sports Arena Fund ended 2018 with a net position of $1,218,157, an increase of $130,066 from the prior year. Of the net position balance, $1,312,411 represents investments in sports arena capital assets, leaving a deficit of ($94,254) of unrestricted net position. Sports Arena Fund operating revenues for 2018 were $789,516, an increase of $56,597 (7.7 percent) from the prior year. Operating expenses (including cost of goods sold and excluding depreciation) for 2018 were $646,586, a decrease of $12,521 from the prior year. Nonoperating revenue includes an annual property tax levy of $121,000. -17- WATER AND SEWER FUND The following graph presents five years of operating results for the Water and Sewer Fund: 2014 2015 2016 2017 2018 Operating Revenue $8,911,018 $8,988,411 $9,450,362 $9,910,773 $10,352,835 Operating Expenses (ExcludingDepreciation)$6,388,459 $6,102,574 $6,401,847 $7,016,546 $6,682,832 Depreciation $1,609,340 $1,847,507 $2,729,115 $2,768,547 $2,357,710 Operating Income (Loss)(Excluding Depreciation)$2,522,559 $2,885,837 $3,048,515 $2,894,227 $3,670,003 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 Water and Sewer FundYear Ended December 31, The Water and Sewer Fund ended 2018 with a net position of $71,866,007, an increase of $2,038,547 from the prior year. Of this net position, $60,658,307 represents the investment in water and sewer distribution system capital assets, leaving $11,207,700 of unrestricted net position. Water and Sewer Fund operating revenue was $10,352,835 for 2018, an increase of $442,062 (4.5 percent) from the prior year, due to an increase in rates. Operating expenses (excluding depreciation) of $6,682,832 were $333,714 (4.8 percent) lower than last year, mainly due to a decrease in building repairs and consulting services related to the comprehensive plan. Although this fund is in a healthy financial position, we suggest that the City continue to review the water and sewer rates on an annual basis. Water and sewer rates are generally designed to cover operating costs and provide an accumulation of resources for significant repairs and replacements, and an operating cushion for potential negative years in financial operations. -18- STORM DRAINAGE FUND The following graph presents five years of operating results for the Storm Drainage Fund: 2014 2015 2016 2017 2018 Operating Revenue $1,562,067 $1,629,361 $1,717,350 $1,769,842 $1,901,319 Operating Expenses(Excluding Depreciation)$695,341 $840,901 $823,837 $1,121,262 $974,319 Depreciation $500,774 $535,769 $575,256 $995,490 $1,024,022 Operating Income (Loss)(Excluding Depreciation)$866,726 $788,460 $893,513 $648,580 $927,000 $– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 Storm Drainage FundYear Ended December 31, The Storm Drainage Fund ended 2018 with a net position of $31,716,933, an increase of $286,049 from the prior year. Of this, $29,209,229 represents the investment in storm drainage capital assets and $2,507,704 of unrestricted net position. Storm Drainage Fund operating revenues for 2018 were $1,901,319, which was an increase of $131,477 (7.4 percent) from the prior year, due to the increased rates. Operating expenses (excluding depreciation) for 2018 were $974,319, which was $146,943 (13.1 percent) lower than the prior year, mainly due to a decrease in contractual services related to the surface water management plan. -19- STREET LIGHT UTILITY FUND The following graph presents five years of operating results for the Street Light Utility Fund: 2014 2015 2016 2017 2018 Operating Revenue $465,584 $483,680 $500,877 $507,360 $522,977 Operating Expenses $424,670 $446,644 $437,439 $483,752 $485,356 Operating Income (Loss)$40,914 $37,036 $63,438 $23,608 $37,621 $– $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 Street Light Utility FundYear Ended December 31, The Street Light Utility Fund ended 2018 with a net position of $304,281, an increase of $39,966 from the prior year, which is all in unrestricted net position. Street Light Utility Fund operating revenues for 2018 were $522,977, a slight increase of $15,617 from the prior year, due to the rate increase. Operating expenses for 2018 were $485,356, an increase of $1,604 from the previous year. -20- CEMETERY FUND The following graph presents five years of operating results for the Cemetery Fund: 2014 2015 2016 2017 2018 Operating Revenue $104,128 $132,305 $160,716 $187,334 $150,393 Operating Expenses (ExcludingDepreciation)$32,582 $30,022 $41,726 $108,158 $68,302 Operating Income (Loss)(Excluding Depreciation)$71,546 $102,283 $118,990 $79,176 $82,091 $– $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 Cemetery FundYear Ended December 31, The Cemetery Fund ended 2018 with a net position of $2,104,652, an increase of $72,914 from the prior year. Of the net position balance, $1,580,295 represents investments in cemetery capital assets, leaving $524,357 of unrestricted net position. Cemetery Fund operating revenues for 2018 were $150,393, a decrease of $36,941 from the prior year. Operating expenses (excluding depreciation) for 2018 were $68,302, a decrease of $39,856 from the prior year. -21- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government -wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, the Statement of Net Position divides the net position into three components: • Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets (i.e., capital assets minus related debt). • Restricted Net Position – The portion of net position equal to resources whose use is legally restricted minus any noncapital-related liabilities payable from those same resources. • Unrestricted Net Position – The residual balance of net position after the elimination of net investment in capital assets and restricted net position. The following table presents the components of the City’s net position as of December 31, 2018 and 2017, for governmental activities and business-type activities: Increase20172018(Decrease) Net position Governmental activitiesNet investment in capital assets 99,642,040$ 83,980,389$ (15,661,651)$ Restricted 15,364,368 15,352,356 (12,012) Unrestricted 24,292,441 28,466,675 4,174,234 Total governmental activities 139,298,849 127,799,420 (11,499,429) Business-type activitiesNet investment in capital assets 94,851,212 100,261,931 5,410,719 Restricted 178,665 – (178,665) Unrestricted 15,390,547 12,828,596 (2,561,951) Total business-type activities 110,420,424 113,090,527 2,670,103 Total net position 249,719,273$ 240,889,947$ (8,829,326)$ As of December 31, The City’s total net position at December 31, 2018 was $8,829,326 lower than the previous year-end, which was comprised of a decrease of $11,499,429 in governmental activities and an increase of $2,670,103 in business-type activities. In the current year, the City reported a prior period adjustment in the governmental activities related to the City’s inventory of capitalized assets and the related useful lives. This prior period adjustment reduced beginning equity by $18,851,915. In the current year, the City also reported a change in accounting principle for reporting OPEB that reduced beginning equity by $90,334 in governmental activities and $15,395 in business-type activities. -22- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2018 and 2017: 2017 2018 Net (expense) revenueGovernmental activitiesGeneral government (4,301,558)$ (4,533,375)$ Public safety (11,743,736) (11,298,267) Public works (1,528,785) (2,137,756) Parks and recreation (5,777,548) (4,595,230) Interest and fiscal charges (886,283) (284,621) Business-type activitiesMunicipal liquor 934,487 1,094,373 Municipal golf course (365,583) (373,546) Sports arena (65,423) 6,646 Water and sewer 650,938 2,544,928 Storm drainage (21,951) 242,145 Cemetery 60,120 61,634 Street light utility 23,608 37,621 Total net (expense) revenue (23,021,714) (19,235,448) General revenuesProperty taxes 25,174,457 26,617,094 Other taxes 182,377 150,340 Franchise taxes 1,288,426 1,306,360 Grants and contributions not restricted to specific programs 56,751 124,430 Other general revenues 8,440 10,786 Investment earnings (net of market value adjustment)702,325 1,154,756 Total general revenues 27,412,776 29,363,766 Change in net position 4,391,062$ 10,128,318$ Change in Net Position One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City’s governmental and business-type operations are financed. The table clearly illustrates the dependence of the City’s governmental operations on general revenues, such as property taxes and unrestricted grants. It also shows that, for the most part, the City’s business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. -23- LEGISLATIVE UPDATES The 2018 legislative session, falling in the second half of the state’s fiscal biennium, was a short session in which only two major finance-related bills were passed, omnibus bonding bills related to bonding, and pensions. The following is a brief summary of specific legislative changes from the 2018 session or previous legislative sessions potentially impacting Minnesota cities. Omnibus Bonding Bill – The omnibus bonding bill authorized financing for over $1.5 billion in capital improvements. Included in the approved funding was $542 million for various transportation infrastructure, $99 million for local city-related economic development projects, and appropriations for a number of different utility (water, sewer, wastewater, etc.) infrastructure improvement programs. Wastewater Investment Protection – Effective retroactively back to August 1, 2017, when a city builds a new wastewater treatment facility or upgrades one to meet current standards that exceed its previous performance, the investment in that facility would be considered adequate for a period of 16 years before a city could be required to upgrade the facility again to meet updated state wastewater facility standards. Competitive Bidding Threshold – Effective for contracts awarded on or after August 1, 2018, the dollar threshold at which Minnesota Statutes require the use of a sealed bidding process was raised from $100,000 to $175,000. This extends the dollar range for which contracts may be awarded using direct negotiation (obtaining two quotations) to contracts between $25,000 and $175,000. By reference, this change also increased the dollar threshold at which public contractors’ performance and payment bonds are required for contracts over $175,000. Water Tank Maintenance Contracts – Effective for contracts awarded on or after September 1, 2018, multi-year service contracts for water tank maintenance work that were previously allowed to be awarded through direct negotiation, are required to be awarded through a sealed bid or best value bid procurement process when the total cost of the contract for the services and supplies is expected to exceed the competitive bid threshold of $175,000. Minnesota Licensing and Registration System (MNLARS) – The Legislature established the MNLARS steering committee, and a one-time appropriation of $9.65 million was approved for fiscal year 2018 to fund costs related to the continued development, improvement, operation, and deployment of the MNLARS. However, a bill to provide an additional proposed appropriation of $9 million to partially compensate deputy registrars throughout the state for financial losses related to the flawed rollout of the MNLARS was vetoed by the Governor. Pension Benefit Reforms – The 2018 pension bill included a number of reforms to the various defined benefit pension plans across the state, including the plans administered by the Public Employees Retirement Association (PERA). • Reforms impacting the PERA General Employees Retirement Fund (GERF) plan included: o Post-retirement cost of living adjustments (COLAs) will be equal to 50.0 percent of the annual increase for Social Security, but not less than 0.5 percent , and not more than 1.5 percent. o For early retirees that retire on or after January 1, 2024, COLAs are deferred until the retiree reaches the normal retirement age. o Phases in actuarial reduction factors over five year on early retirement benefits payable beginning July 1, 2019. o The rate of interest paid on refunds of employee contributions to former public employees was reduced from an annual rate of 4.0 percent to 3.0 percent. -24- • Reforms impacting the PERA Public Employees Police and Fire Fund (PEPFF) plan included: o Post-retirement COLAs were permanently set at 1.00 percent. o Employer contribution rates increase from the current 16.20 percent of covered salaries to 16.95 percent beginning January 1, 2019, and 17.70 percent beginning January 1, 2020. o Employee contribution rates increase from the current 10.80 percent of covered salaries to 11.30 percent beginning January 1, 2019, and 11.80 percent beginning January 1, 2020. o To reduce the need for additional contribution increases, the state will contribute an additional $4.5 million to the plan annually for fiscal years 2019 and 2020, increasing to $9.0 million annually thereafter through fiscal 2048, or until the plan is fully funded. o The rate of interest paid on refunds of employee contributions to former public employees was reduced from an annual rate of 4.00 percent to 3.00 percent. • Reforms impacting the volunteer firefighter relief associations plan included: o Added a requirement that the fire chief annually certify each firefighter’s service credit to the relief association and the related municipality effective January 1, 2019. -25- ACCOUNTING AND AUDITING UPDATES GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS This statement addresses accounting and financial reporting for certain asset retirement obligations (ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset. This statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability when it is both incurred and reasonably estimable. The measurement of an ARO is required to be based on the best estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources associated with an ARO is required to be measured at the amount of the corresponding liability upon initial measurement. This statement requires the current value of a government’s AROs to be adjusted for the effects of general inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually to determine whether the effects of one or more of the factors are expected to significantly change the estimated asset retirement outlays. A government should remeasure an ARO only when the resul t of the evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources should be reduced and recognized as outflows of resources in a systematic and rational manner over the estimated useful life of the tangible capital asset. If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s minority share of an ARO should be reported using the measurement produced by the nongovernmental majority owner or the nongovernmental minority owner that has operational responsibility, without adjustment to conform to the liability measurement and recognition requirements of this statement. The statement also requires disclosures of any funding or financial assurance requirements a government has related to the performance of asset retirement activities, along with any assets restricted for the payment of the government’s AROs. This statement also requires disclosure of information about the nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portio ns thereof) has been incurred by a government but is not yet recognized because it is not reasonably estimable, the government is required to disclose that fact and the reasons therefor. This statement requires similar disclosures for a government’s minority shares of AROs. The requirements of this statement are effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged. GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES This statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity, and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and post-employment benefit arrangements that are fiduciary activities. -26- An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements, which should present a statement of fiduciary net position and a statement of changes in fiduciary net position. This statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria. A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should combine its information with its component units that are fiduciary component units and aggregate that combined information with the primary government’s fiduciary funds. This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources, defined as when a demand for the resources has been made or when no further action, approval, or condition is required to be taken or met by the beneficiary to release the assets. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged. GASB STATEMENT NO. 87, LEASES A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange -like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this statement. Governments enter into leases for many types of assets. Under the previous guidance, leases were classified as either capital or operating depending on whether the lease met any of the four tests. In many cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease financing transactions. The goal of this statement is to better meet the information needs of users by improving accounting and financial reporting for leases by governments. It establishes a single model for lease accounting based on the principle that leases are financings of the right-to-use an underlying asset. This statement increases the usefulness of 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. 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. To reduce the cost of implementation, this statement includes an exception f or short-term leases, defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. -27- GASB STATEMENT NO. 88, CERTAIN DISCLOSURES RELATED TO DEBT, INCLUDING DIRECT BORROWINGS AND DIRECT PLACEMENTS The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The requirements of this statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. In addition, information about resources to liquidate debt and the risks associated with changes in terms associated with debt will be disclosed. As a result, users will have better information to understand the effects of debt on a government’s future resource flows. This statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. The statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance -related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. It also requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. The requirements of this statement are effective for reporting periods beginning after June 15, 2018. GASB STATEMENT NO. 89, ACCOUNTING FOR INTEREST COST INCURRED BEFORE THE END OF A CONSTRUCTION PERIOD The objectives of this statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. This statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will no longer be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should continue to be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. Earlier application is encouraged. The requirements of this statement should be applied prospectively. -28- GASB STATEMENT NO. 90, MAJORITY EQUITY INTEREST—AN AMENDMENT OF GASB STATEMENTS NO. 14 AND NO. 61 The primary objectives of this statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. It further specifies that such investments should generally be measured using the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund, in which case the majority equity interest should be measured at fair value. All other holdings of a majority equity interest in a legally separate organization that do not meet the definition of an investment result in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit, and should report an asset related to the majority equity interest using the equity method. This statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition. The requirements of this statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged. The requirements should be applied retroactively, except for the provisions related to reporting a majority equity interest in a component unit and reporting a component unit if the government acquires a 100 percent equity interest, which should be applied prospectively. UNIFORM GUIDANCE, MICRO-PURCHASE THRESHOLD Under the Uniform Guidance for federal programs, a micro-purchase is one for goods or services that, due to its relatively low value, does not require the government to abide by many of its ordinary competitive procedures, including small business set-asides. Because the contract is theoretically such a low amount, the contracting officer can pick virtually whatever company and product he or she wants to satisfy the procurement, so long as the price is reasonable. The standard micro-purchase threshold has been amended to increase the threshold to $10,000, effective June 20, 2018. Entities are not required to increase the micro-purchase and simplified acquisition thresholds but, if they wish to do so, they must update their procurement policies and procedures to reflect the change in thresholds. They cannot retroactively make these changes effective prior to June 20, 2018. CITY OF APPLE VALLEY DAKOTA COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK Page Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 1–2 Independent Auditor’s Report on Minnesota Legal Compliance 3 Table of Contents CITY OF APPLE VALLEYDAKOTA COUNTY, MINNESOTA Special Purpose Audit ReportsYear Ended December 31, 2018 THIS PAGE INTENTIONALLY LEFT BLANK -1- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of Apple Valley, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, t he financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 4, 2019. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the 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 City’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 less 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. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 -2- COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 -3- INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of Apple Valley, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Apple Valley, Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 4, 2019. MINNESOTA LEGAL COMPLIANCE The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 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 obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 4, 2019 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 THIS PAGE INTENTIONALLY LEFT BLANK City of Apple Valley Popular Annual Financial Report To The Community FOR THE YEAR ENDED DECEMBER 31, 2018 Dear Apple Valley Resident, We are pleased to present the City of Apple Valley’s Popular Annual Financial Report (PAFR). This report provides a summary of the City’s financial information in a simplified, easy to read format. We trust this report gives you a better understanding on city government and our financial condition. Information in this report comes from Apple Valley’s 2018 Comprehensive Annual Financial Report (CAFR). The CAFR was prepared in conformity with Generally Accepted Accounting Principles (GAAP), was audited by MMKR and received an unmodified opinion, which is the best audit opinion possible. In order for Apple Valley to manage the community finances smoothly, it divides various activities into several different funds. Governmental funds account for tax- supported activities and include: General Fund activities that provide for basic operations of the City, i.e. administration, building maintenance, police & fire, street & park maintenance, recreation activity, community development and planning. Special Revenue Funds account for activities restricted to specific purposes like the City’s Economic Development Authority. Debt Service Funds track revenues and expenses related to repayment of long-term debt. Capital Projects Funds collect revenue from special assessments, state and county aids and allots them toward construction or major capital expenses. Proprietary Funds account for activities that operate as a public enterprise which are paid for by user fees, i.e. water, sanitary sewer, storm sewer, liquor stores, and Valleywood Golf Course. Internal Service Funds account for the acquisition, operation, and maintenance of governmental facilities and services, which are entirely or predominately self- supported by user charges to the governmental funds. If you would like a copy of the CAFR, visit the City’s website at CityofAppleValley.org or contact the Finance Department at: 952-953-2540 Dividing Up Your Property Tax Dollar Your tax dollar is divided up into several governmental entities. Apple Valley collects 36 cents of every tax dollar for City services. The remaining portions are divided among Dakota County, the school district, and other agencies. These tax rates are based on a residential home valued at $238,490. City of Apple Valley 7100 147th Street West Apple Valley, MN 55124 952‐953‐2500 CityofAppleValley.org Elected Officials: MAYOR: Mary Hamann‐Roland CITY COUNCIL: John Bergman Tom Goodwin Ruth Grendahl Clint Hooppaw INSIDE THIS ISSUE: IntroducƟon 1 Dividing up your 1 Tax Dollar Monthly Bill 2 Tax Cost 2 Comparison General Fund 3 Special Revenue 4 Funds Long‐Term Debt 4 Internal Service 4 Funds Capital Funds 5 Enterprise Funds 5‐6 CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 2 How Tax Dollars Buy City Services Residents receive a variety of City services for an affordable price. The cost of City services in 2018 for the owner of a single‐family home in Apple Valley with an assessor’s market value of $238,490 was $82.33 per month. The tax cost per month of $82.33 is the amount leŌ requiring tax support aŌer allocaƟng grants, program fees, lodging taxes and other non‐property tax revenue to the appropriate services. Quarterly Cost of UƟliƟes Based on an average usage of 21,000 gallons of water and 15,000 gallons of sewer per quarter, the cost of uƟliƟes for a home in Apple Valley was $137.83 in 2018. Apple Valley bills on a quarterly basis. Services include water, sewer, storm water, and street lighƟng. Police $24.70 Parks $13.01 Public Works $9.76 Street ReconstrucƟon $9.57 Fire $5.96 General Gov. $13.07 Debt Service $4.01 Insurance $2.25 TOTAL $82.33 Below is a 2018 comparison of monthly city property taxes paid on a median valued home with twelve similar sized com‐ muniƟes in the metro area. Using the median home value in each community, we compared the property tax cost per month for each city. Monthly City Property Tax Cost Comparison * *Apple Valley’s tax rate supports road reconstrucƟon projects within the City without the need for special assessments. Other ciƟes rouƟnely levy special assessments against their property owners to support such costs. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 3 General Fund Revenue The City’s General Fund is the largest Governmental fund and also one of the most vital to the City’s operaƟon. The General Fund is the primary fund that accounts for everyday general expenditures like street and park maintenance, police protecƟon, and fire protecƟon while at the same Ɵme supporƟng the annual street and uƟlity infrastructure program. Like most funds, the General Fund relies on the inflow of cash, shown as revenues and subsequently the ouƞlow listed as expenditures. The primary revenue for the General Fund is property taxes. Intergovernmental revenues include state or county aids and grants. For the year end of 2018, the City’s revenue total was $32,630,240 which was a $430,427 (1.3%) net increase from the previous year. This includes an increase in property taxes ($1,050,000), which was reduced by a decrease in licenses and fees ($990,000). City Departments General Fund Expenditures The City’s total General Fund expenditures for 2018 were $28,699,846 which was $763,414 (2.6%) under the final 2018 budget. Overall, General Fund expenditures increased $1,425,472 (5.2%) primarily in the public safety area. The chart below highlights the amount funded to each of the City’s funcƟons. AdministraƟon: This department provides the overall direcƟon for the City as determined by the City Council. It is responsible for maintaining City records, issuing licenses, administering Council policies, and overseeing elecƟon procedures. Finance: This department conducts the financial affairs of the City of Apple Valley in accordance with the Government AccounƟng Standards Board (GASB) and Generally Accepted AccounƟng Principals (GAAP). Planning & Community Development: This department is responsible for ensuring that laws, ordinances, and zoning codes are enforced. It is also responsible for Economic Development within the City. Public Works: This department is responsible for maintaining the City’s infrastructure, vehicles, and buildings as well as civil and traffic engineering, inspecƟons, natural resources, and the City cemetery. Parks & RecreaƟon: This department is responsible for providing recreaƟon acƟviƟes in the City and maintain the City’s parks and trails. Public Safety: This department is responsible for maintaining the peace and the protecƟon of the community through diligent enforcement of laws and effecƟve response to calls for service. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 4 Special Revenue Funds Special Revenue Funds are used to account for general government financial resources that are RESTRICTED by law or contractual agreement to specific purposes other than debt service or major capital projects. The City of Apple Valley has the following Special Revenue Funds: Cable TV—This fund accounts for the operaƟng costs of the cable TV funcƟons funded by cable franchise fees. EDA OperaƟons—This fund accounts for the operaƟng acƟviƟes of the Apple Valley Economic Development Authority. Lodging Tax—This fund administers the resources from the lodging tax process. *Please note that Solid Waste Grant and Police Forfeiture are not recognized in this report, but are included in the CAFR. Long‐Term Bonded Debt Apple Valley received a “AAA” raƟng from Standard and Poor’s and a “Aaa” raƟng from Moody’s. These are the highest possible raƟngs you can receive. A high bond raƟng translates into lower future borrowing costs. This raƟng is based on the City’s: Moderately‐sized tax base with recent improvement in its valuaƟon aŌer a trend decline. Sound financial posiƟon characterized by healthy reserves. Average debt burden with quick principal amorƟzaƟon. Favorably located in the Twin CiƟes metropolitan area. In 2018, the City issued new debt to cover the costs of the water meter replacement program. In December 2018, the City called debt (paid off early) totaling $1,120,000, contribuƟng to the lowering of total net bonded debt to $20,294,203 and net debt per capita to $380. Once again the City received the CerƟficate of Achievement for Excellence in Financial ReporƟng awarded by the Government Finance Officers AssociaƟon for the City’s Comprehensive Annual Financial Report (CAFR). Although the financial numbers in the CAFR come from an audited source, they are presented in this report in a condensed, unaudited, non‐GAAP format. Internal Service Funds Internal service funds are an accounƟng procedure used to accumulate and allocate costs internally among the City’s various funcƟons. The City maintains internal service funds for the following services: CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 5 Capital Projects Funds Road Improvement Fund: This fund accounts for street overlays and reconstrucƟon projects per the City’s Pavement Management Plan. The ending balance in this fund for 2018 was negaƟve $5,250,659. Future Capital Projects Fund: This fund accumulates resources directly from the General Fund. City Council policy calls for amounts in the General Fund that exceed a maximum level to be moved into the Future Capital Projects Fund. Funds are used to pay for any capital improvement costs needed in the future. The ending fund balance in this fund for 2018 was $14,300,138. Non‐Major Capital Projects Funds: The City has an addiƟonal 26, non‐major capital project funds that are used to account for various project‐related costs. The net ending fund balance in these funds for 2018 was $14,271,799. Please see the 2018 CAFR for further detail Enterprise Funds The Enterprise Funds account for the City’s uƟliƟes (water, sewer, storm drainage, and street lights), liquor stores, golf course, sports arena, and cemetery, which are all run like businesses in that they rely on fees and charges for revenue to cover expenditures. UƟliƟes: Water, Sewer, Storm Water, & Street Light About this Report The City of Apple Valley reports financial year‐end results in the Comprehensive Annual Financial Report (CAFR). The Popular Annual Financial Report (PAFR) is an unaudited report that summarizes the most significant data from the 2018 CAFR, and is consistent with Generally Accepted AccounƟng Principles. The report reflects the net tax cost by service expenditure, developed by crediƟng related revenues against appropriate expenditures and allocaƟng local taxes against the remaining balance. For a complete review of the City’s financial posiƟon for 2018, consult the 2018 CAFR available on the City’s website at CityofAppleValley.org, or from the Finance Department at 952‐953‐2540. These funds consist of uƟlity services provided to the community by the City such as water & sewer, storm drainage, and street lighƟng. Revenues from these funds go to support operaƟons, maintenance, and improvements of the City’s uƟliƟes. CITY OF APPLE VALLEY POPULAR ANNUAL FINANCIAL REPORT PAGE 6 Municipal Liquor The City owns and operates three municipal liquor stores. Profits from your purchases stay in the City of Apple Valley to help aid in providing funding for police, fire, and public works vehicles, maintaining and improving city parks along with other General Fund services. Valleywood Golf Course Valleywood Golf Course features an 18‐hole, par 71 course along with a large banquet space, full scale bar, restaurant, and outdoor paƟo. Valleywood was recently named MGA Member Club of the Year for 2015. Sports Arena The Sports Arena offers tennis lessons during the summer and ice skaƟng during the winter. Hayes Park Arena offers ice Ɵme from mid‐ June to mid‐March and indoor turf Ɵme from mid‐March to mid‐June. City Facts PopulaƟon: 53,429 Per Capita $40,195 Personal Income High School 95.0% GraduaƟon Rate Unemployment 2.4% Rate Home of the MN Zoo 51 parks 78 miles of trails Valleywood Golf Course Sports Arena AquaƟc Center Senior Center Community Center AmeniƟes In the general elecƟon of 1968, the residents voted to incorporate the Town of Lebanon as the Village of Apple Valley. A mayor and four councilmembers were elected and took office on January 1, 1969. On January 1, 1974, Apple Valley became a statutory city. History I T E M: 4.I . C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution A dopting 2019 Performance Measures and Approving Participation in P erformance Measurement Program S taff Contact: J ake B osley, Finance A nalyst Department / Division: Finance Department AC T I O N RE Q UE S T E D: Adopt resolution adopting 2019 performance measures and approve participation in performance measurement program. S UM M ARY: In 2010, the Minnesota State Legislature created the C ouncil on Local Results and Innovation (C LRI). T he C LRI created a standard set of ten performance measures for cities intended to aid residents, taxpayers, and state and local elected officials in determining the efficacy of cities in providing services and to measure residents' opinions on those services. In February of 2012, the C LRI created a comprehensive performance measurement system for cities and counties to implement. In 2013, the C LRI revised the performance measures, removing the need to include community survey results, and clarified the system requirements to increase participation in the program. T he C ity of Apple Valley has participated in the program since the changes made in 2013. T he C ity Council is now being asked to continue its participation in the program for 2019. B AC K G RO UND: Participation in the program is voluntary. However, participating cities are eligible for a reimbursement of $0.14 per capita in local government aid and are exempt from levy limits under sections 275.70 t o 275.74 for taxes payable in the following calendar year, if levy limits are in effect. T he C ity of Apple Valley received $7,331 in 2018 for participation in the 2017 year. T he City is required to file a report on the collected measurements by J uly 1st. Attached is a draft of the performance data that was collected in 2018 that staff intends to submit to the State Auditor. T he first page is the summary scorecard, followed by a graphical presentation. T he results need to be publicized and shared with the community. Staff proposes to publish the survey on the C ity's website and include the information in an upcoming newsletter. Attached is a draft report that would be used to share the data. Staff recommends the C ity Council adopt the attached resolution adopting 2019 performance measures and approve participation in performance measurement program, as recommended by the C LRI. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Resolution Exhibit CITY OF APPLE VALLEY RESOLUTION NO. 2019- A RESOLUTION ADOPTING 2019 PERFORMANCE MEASURES AND APPROVE PARTICIPATION IN PERFORMANCE MEASUREMENT PROGRAM WHEREAS, benefits to the City of Apple Valley for participation in the Minnesota Council on Local Results and Innovation’s comprehensive performance measurement program are outlined in MS 6.91 and include eligibility for a reimbursement as set by State statute; and WHEREAS, any city or county participating in the comprehensive performance measurement program is also exempt from state levy limits for taxes, if levy limits are in effect; and WHEREAS, the City Council of Apple Valley has adopted and implemented at least10 of the performance measures, as developed by the Council on Local Results and Innovation, and a system to use this information to help plan, budget, manage and evaluate programs and processes for optimal future outcomes; and NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this Council does hereby approve the following Performance Measures and will publish the results of the Performance Measures on the City’s website before the end of the following calendar year. BE IT FURTHER RESOLVED, by the City Council of the City of Apple Valley, Dakota County, Minnesota, that this Council will submit to the Office of the State Auditor the actual results of the performance measures adopted by the City. Performance Indicator General Percent change in the taxable property market value Nuisance code enforcement cases per 1,000 population Bond rating (Moody's and S&P) Accuracy of post-election audit (% of ballots counted accurately) Police Part I and II Crime Rates Part I and II Crime Clearance Rates Fire Insurance industry rating of fire services Fire calls per 1,000 population EMS call per 1,000 population Streets Average city street pavement condition rating Expenditures for road rehabilitation per paved lane mile rehabilitated Percentage of all jurisdiction lane miles rehabilitated in the year Average hours to complete road system during snow event Water Operating cost per 1,000,000 gallons of water pumped/produced Sanitary Sewer Number of sewer blockages on city system per 100 connections ADOPTED this 13th day of June, 2019. ___________________________________ Mary Hamann-Roland, Mayor ATTEST: _____________________________________ Pamela Gackstetter, City Clerk 2018 City Performance Measurement Program Results   (Data from 2014‐2018, Unless Otherwise Noted)  Background  In  2010,  the  Minnesota  Legislature  created  the  Council  on  Local  Results  and  Innovation  (CLRI).   Currently, the CLRI has a standard set of 27 performance measurements  for  counties  and  29  performance measurements for cities that they believe will aid residents, taxpayers, and state and local  elected officials in determining the efficacy of counties and cities in providing services.  Participation in  the standard measures program by a city or a county is voluntary.  Cities and counties that choose to  participate in the standards measure program may be eligible for funding of 14 cent per capita from the  State of MN.    The Apple Valley City Council chose to participate in the program for the 2018 reporting year. In order to  receive the per capita reimbursement for the following calendar year, cities must adopt and implement  a minimum of ten performance measures from the CLRI’s list of 29 measures and file a report with the  Office of the State Auditor.    The  measurements  are  divided  into  six  different  categories:  General,  Police  Services,  Fire  &  EMS  Services, Streets, Water, and Sanitary Sewer. As part of this process, the City submitted five years of  data  (generally  2014  to  2018,  sometimes  2014  to  2017)  for  15  of  the  29  standard  performance  measurements, which were selected from each of the six categories. Below are the data related to each  of the measurements the City chose to track.      City of Apple Valley Performance Scorecard Performance Category 2014 2015 2016 2017 2018 General Percent change in the taxable property market value 2.77% 8.50% 5.59% 4.58% 8.63% Nuisance code enforcement cases per 1,000 population 32.23           38.50           46.89           60.92           69.94           Bond rating (Moody's) Aaa Aaa Aaa Aaa Aaa Bond rating (S&P) AAA AAA AAA AAA AAA Accuracy of post election audit (% of ballots counted accurately) 100.00% N/A 100.00% N/A 100.00% Police Services Part I and II Crime Rates ‐ Part I 1,088           1,207           1214 1237 # Part I and II Crime Rates ‐ Part II 1,640           1,919           1872 1993 # Part I and II Crime Clearance Rates ‐ Part I 33.73% 38.44% 34.35% 34.60% # Part I and II Crime Clearance Rates ‐ Part II 61.65% 62.69% 54.70%60.91% # Fire & EMS Services Insurance industry rating of fire services 3/9 3/9 3/9 3/9 2 Fire calls per 1,000 population 15.68           14.53           15.78           13.18           13.31           EMS call per 1,000 population 12.38           13.32           15.82           20.95           25.51           Streets Average city street pavement condition rating 74 75 75 74 73 Expenditures for road rehabilitation per paved lane mile rehabilitated 314,332      346,312      336,579      488,711      653,479      Percentage of all jurisdiction lane miles rehabilitated in the year 4.59% 2.64% 1.75% 2.08% 1.64% Average hours to complete road system during snow event 7.9               7.4               8.0               8.9               7.5               Water Operating cost per 1,000,000 gallons of water pumped/produced 1,654           1,797           2,017           1,959           1,739           Sanitary Sewer Number of sewer blockages on city system per 100 connections ‐               0.006           0.026           0.108           0.050           # ‐ BCA Data not available for 2018 GENERAL MEASURES  Percent Change in the Taxable Property Market Value:    Nuisance Code Enforcement Cases per 1,000 Population:           2.77% 8.50% 5.59% 4.58% 8.63% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 2014 2015 2016 2017 2018 Property Values are Recovering Following  the Latest Recession % Change in Taxable Property Market Value 32.23  38.50  46.89  60.92  69.94   ‐  20.00  40.00  60.00  80.00 2014 2015 2016 2017 2018 Nuisance Code Enforcement Cases per 1,000  Population Cases/1,000 Population City of Apple Valley Bond Rating:  The City of Apple Valley maintains the highest possible credit rating from both Moody’s and Standard &  Poor’s ratings agencies. The City did not start receiving ratings from Standard & Poor’s until 2014.      Accuracy of Post‐Election Audit (% of Ballots Counted Accurately):      One precinct in the City of Apple Valley was selected for the Post‐Election Review in each of the last  three elections (2014, 2016, and 2018). There were no elections held in 2015, or 2017. The results from  each election met the standard of acceptable performance of the voting system. There were 1,532,  2,072, and 1,813 ballots audited in 2014, 2016, and 2018, respectively. The manual counts for each year  matched 100 percent to the machine counts taken on Election Day.      Agency 2014 2015 2016 2017 2018 Moody's Aaa Aaa Aaa Aaa Aaa S&P N/A AAA AAA AAA AAA 100.00% 100.00% 100.00% 98.0% 98.5% 99.0% 99.5% 100.0% 2014 2016 2018 Percent of Ballots Counted Accurately Percent of Ballots Counted Accurately POLICE SERVICES MEASURES  Part I and II Crime Rates, per the Minnesota Bureau of Criminal Apprehension:    Part I and II Crime Clearance Rates, per the Minnesota Bureau of Criminal Apprehension:    Part I crimes include murder, rape, aggravated assault, burglary, larceny, motor vehicle theft, arson, and  human trafficking. Part II crimes include other assaults, forgery and counterfeiting, embezzlement,  stolen property, vandalism, weapons, prostitution, other sex offenses, narcotics, gambling, family and  children crime, DUI, liquor laws, disorderly conduct, and other offenses. 2018 data will not be available  until July 2019. Therefore, the date range shown is 2014 to 2017.   1,088 1,207 1,214 1,237  ‐ 1,640  1,919 1,872 1,993  ‐  ‐  500  1,000  1,500  2,000  2,500 2014 2015 2016 2017 2018 Part I and II Crime Rates Part I Part II 33.73%38.44%34.35%34.60% 61.65%62.69% 54.70% 60.91% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2014 2015 2016 2017 Part I and II Crime Clearance Rates Part I Cleared Rate Part II Cleared Rate FIRE SERVICES MEASURES  Insurance Industry Rating of Fire Services:    The  City  of  Apple  Valley  completed  a  Public  Protection  Classification  (PPC™)  survey  evaluating  the  community’s  structural  fire  suppression  capabilities  in  2018  in  which  the  City’s  overall  score  was  improved to a Class 2 rating. Previously, Apple Valley held a Class 3 rating since 1998 (with some areas  rated a Class 9  due to a recent revision in how the Insurance Service Office (ISO) rates certain properties  located over 1,000 feet from a fire hydrant).   Fire Calls per 1,000 Population:    Emergency Medical Services (EMS) Calls per 1,000 Population:    NOTE: EMS services for the City of Apple Valley are provided by Allina Medical Transportation.   2014 2015 2016 2017 2018 3/9 3/9 3/9 3/9 2 15.68  14.53  15.78  13.18  13.31   11  12  13  14  15  16 2014 2015 2016 2017 2018 Fire Calls per 1,000 Population Fire Calls/1,000 Population 12.38 13.32  15.82  20.95  25.51   ‐  5  10  15  20  25  30 2014 2015 2016 2017 2018 EMS Calls per 1,000 Population EMS Calls/1,000 Population STREETS MEASURES  Average City Street Pavement Condition Rating:  The implementation of the City’s Pavement Management Program in 2013 is resulting in improving  street quality. The Pavement Condition Index target rating is 73.      Expenditures for Road Rehabilitation per Paved Lane Mile Rehabilitated:               2014 2015 2016 2017 2018 74 75 75 74 73 $314,332 $346,312 $336,579 $488,711 $653,479 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2014 2015 2016 2017 2018 Expenditures per Paved Lane Mile Expenditures per Paved Land Mile Percentage of all Jurisdiction Lane Miles Rehabilitated in the Year:      Average Hours to Complete Road System During Snow Event:         4.59% 2.64% 1.75% 2.08% 1.64% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2014 2015 2016 2017 2018 Percentage of Lane Miles Rehabilitated Percentage of Lane Miles Rehabilitated 7.9 7.4 8.0  8.9  7.5   ‐  2.0  4.0  6.0  8.0  10.0 2014 2015 2016 2017 2018 Average Hours to Complete Road System  During Snow Event of Over 2 Inches Average hours to complete road system during snow event WATER & SANITARY SEWER MEASURES  Operating Cost per 1,000,000 Gallons of Water Pumped/Produced:    Note:  Expanded Water Treatment Plant began operations in 2015.  Number of Sewer Blockages on City System per 100 Connections:      $1,654 $1,797 $2,017 $1,959 $1,739  ‐  500  1,000  1,500  2,000  2,500 2014 2015 2016 2017 2018 Operating Cost/1,000,000 Gallons Pumped Operating Cost/1,000,000 Gallons Pumped 0.00 0.01 0.03 0.11 0.05  ‐  0.020  0.040  0.060  0.080  0.100  0.120 2014 2015 2016 2017 2018 Blockages/100 Connections Blockages/100 Connections I T E M: 4.J . C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove A L F A mbulance 2020 B udget S taff Contact: Tom L awell, City A dministrator Department / Division: A dministration Department AC T I O N RE Q UE S T E D: In accordance with the A LF Ambulance J oint Powers Agreement between the cities of Apple Valley, Lakeville and Farmington, the draft 2020 A LF Ambulance budget is attached for your consideration and adoption. S UM M ARY: As you will recall, Allina Health Systems began providing Advanced Life Support (A LS) ambulance service to the three cities in early 2009. Allina operates under A LF’s State of Minnesota license for this service territory and the A LF Board administers the contract with Allina. C ouncilmember J ohn Bergman serves as our primary representative on the A LF Board and C ouncilmember Hooppaw serves as our alternate representative. Because the member cities no longer need to budget for operational costs, A LF budgets since 2010 have been greatly simplified. T he attached A LF A mbulance 2020 C ash Flow Statement, which serves as the A LF Ambulance 2020 Budget, identifies the minimal additions and deductions anticipated during the year. T his budget was approved by the A LF Board on May 9, 2019. Should you have questions regarding this information, please let me know. Council should consider a motion to approve the attached 2020 A LF Ambulance Budget as recommended by the A LF Ambulance Board. B AC K G RO UND: T he J oint Powers Agreement states “On or before J uly 1 of each year, the annual operating budget for the following calendar year as recommended by the Board shall be submitted to each member City C ouncil for approval or disapproval”. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Budget ALF Ambulance Annual Operating Budget 2020 Statement of Cash Flows I T E M: 4.K. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: Declare Fire Department S elf Contained B reathing Apparatus as S urplus E quipment and A uthorize Disposal by Online Auction S taff Contact: Chuck Russell, F ire Chief Department / Division: Fire Department AC T I O N RE Q UE S T E D: 1. Declare 55 - Scott N XG2 Self C ontained Breathing Apparatus (SC BA), 128 - 30 minute SC BA air cylinders, 100 - Scott AV-3000 face pieces, 15 - Scott Epic 3 voice amplifiers, 50 - Scott voice amplifiers, and 3 - Scott Rapid Intervention Team (RIT ) packs as surplus equipment. 2. Authorize the disposal of the surplus equipment by selling it at a public auction with Lust Auction Services, LLC, to be held J uly 8 through J uly 19, 2019. S UM M ARY: T he Fire Department recently purchased new SC BA and put them into service May 20, 2019. T he old SC BA, 55 - Scott N XG2 Self C ontained Breathing Apparatus (SC BA), 128 - 30 minute SC BA air cylinders, 100 - Scott AV-3000 face pieces, 15 - Scott Epic 3 voice amplifiers, 50 - Scott voice amplifiers, and 3 - Scott Rapid Intervention Team (RIT ) packs are no longer of use to us and should be disposed of by selling them at auction. Lust Auction Services, LLC , will run an online auction on their website, www.WisconsinSurplus.com. T he auction will run from J uly 8 through J uly 19, 2019. T he auction service does not require a signed agreement to run an auction on their site. T he auction service charges a buyers fee for sales made on their site, so there is no cost to a municipality to have a sale on the site. T he City will also run a legal ad and provide a link on its website to the online auction website. B AC K G RO UND: N/A B UD G E T I M PAC T: N/A AT TAC HM E NT S : Background Material I T E M: 4.L . C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution of Support for Funding Application to Governor's 2020 Capital Budget for 147th Street S tation S kyway Project S taff Contact: Matt Saam, Public Works Director Department / Division: P ublic Works Department AC T I O N RE Q UE S T E D: Adopt resolution of support for a funding application to the Governor's 2020 C apital Budget for the 147th Street Station Skyway Project. S UM M ARY: T he State of Minnesota recently notified cities of the process to have projects considered for inclusion in the upcoming Governor's bonding recommendations for 2020. T he process includes an on-line funding application through the Minnesota Management and Budget (MMB) office. C ity staff believes the 147th Street Station Skyway Project would be an excellent project to submit for state bonding consideration. One of the requirements in order to be considered for State funding is a resolution of support from the local governing body. B AC K G RO UND: N/A B UD G E T I M PAC T: T he maximum funding amount from the State for this process is 50%. Given the total estimated project cost shown below of $5,250,000, the maximum funding amount staff can request from this application is $2,625,000. Estimated Project C ost $4,620,000 15% Overhead 630,000 Total Project C ost $5,250,000 AT TAC HM E NT S : Resolution CITY OF APPLE VALLEY RESOLUTION NO. 2019- A RESOLUTION OF SUPPORT FOR A FUNDING APPLICATION TO THE GOVERNOR’S 2020 CAPITAL BUDGET FOR 147TH STREET STATION SKYWAY PROJECT WHEREAS, the City’s draft Capital Improvements Program identifies the 147th Street Station Skyway Project for proposed infrastructure improvement in 2023; and WHEREAS, the 147th Street Station Skyway Project was always envisioned as a needed element for the Red Line and would fulfil the ultimate planned vision for the transit stations at 147th Street; and WHEREAS, the 147th Street Station Skyway Project is a “Shovel Ready Project” as both existing transit station structures already include enclosed waiting areas and are ready to have the skyway installed between them. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that: 1. Support for a funding application in the amount of $2,625,000 to the Governor’s 2020 Capital Budget process for the 147th Street Station Skyway Project is approved. ADOPTED this 13th day of June 2019. __________________________________ Mary Hamann-Roland, Mayor ATTEST: _________________________________ Pamela J. Gackstetter, City Clerk I T E M: 4.M. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution Establishing Parking Restrictions and Road Closures for Freedom Days Celebration Events S taff Contact: Michael Glewwe, P ublic Works S uperintendent - Streets Department / Division: S treets Division AC T I O N RE Q UE S T E D: Adopt the resolution establishing parking restrictions and road closures for the Freedom Days celebration events. S UM M ARY: T he Public Works Department is requesting the establishment of temporary parking restrictions and road closures for the 2019 Freedom Days celebration events. T he requested parking restrictions and road closures provide for an unrestricted parade route, staging area, Fun Run Route, and support for the public fireworks display. In addition, Public Works is requesting the temporary street closure of Upper 145th Street W. and a portion of Granada Avenue for the Freedom Days kick-off event featuring classic cars and music. Should Council adopt the attached resolution, the Public Works Department will schedule the installation of appropriate "No Parking" signs and post road closures to provide advance notice to the public. B AC K G RO UND: Parking restrictions have been established for the Freedom Days celebration for the past several years. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Resolution CITY OF APPLE VALLEY RESOLUTION NO. 2019- A RESOLUTION RESTRICTING PARKING AND CLOSING ROADS WHEREAS, the Apple Valley City Code, Section 71.19, authorizes the City Council to restrict parking and close roads by ordering the erection of appropriate signs; and WHEREAS, it is necessary to restrict parking and close certain City streets to provide for Freedom Days events, parade route, staging area, and Fun Run route. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, that Road Closures are hereby established on the following streets from 3:00 p.m. on June 28, 2019 to 12:00 a.m. June 29, 2019: • Upper 145th Street West between Granada Drive and Glenda Drive • Granada Drive from 40’ South of Upper 145th Street West to 220’ North of Upper 145th Street West; and No Parking zones are hereby established on the following streets from 11:00 a.m. on July 3, 2019, to 4:00 p.m. on July 4, 2019: • North side of Jonathan Drive from McIntosh Drive to Pennock Avenue • Whitney Drive from Cedar Avenue to Harmony Way • Pennock Avenue from Whitney Drive to 153rd Street West • Pennock Avenue from 147th Street West to 145th Street West • 145th Street West from Pennock Avenue to Hayes Road • Hayes Road from 145th Street West to 140th Street West • North side of 143rd Street West from Hayes Road to Garden View Drive; and Road Closures are hereby established on the following streets from 11:00 a.m. until 4:00 p.m. on July 4, 2019: • Whitney Drive from Cedar Avenue to Cortland Drive • Pennock Avenue from Whitney Drive to 145th Street West • 145th Street West from Pennock Avenue to Hayes Road • Hayes Road from 145th Street West to 143rd Street West Road Closures are hereby established on the following street from 4:30 p.m. until 11:59 p.m. on July 4, 2019: • Johnny Cake Ridge Road between 140th Street West and 142nd Street West BE IT FURTHER RESOLVED that appropriate No Parking and Road Closure signage on said street segments are hereby ordered installed. ADOPTED this 13th day of June, 2019. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk I T E M: 4.N. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A dopt Resolution A pproving P lans and Specifications for P roject 2019-109, 147th S treet and J ohnny Cake Ridge Road I ntersection I mprovements, and A uthorizing A dvertising for Receipt of B ids, at 10:00 a.m. on J uly 9, 2019 S taff Contact: B randon A nderson, City Engineer Department / Division: E ngineering Division AC T I O N RE Q UE S T E D: Adopt resolution approving plans and specifications for Project 2019-109, 147th Street and J ohnny C ake Ridge Road Intersection Improvements and authorizing advertising for receipt of bids at 10:00 a.m. on J uly 9, 2019. S UM M ARY: T he C ity of Apple Valley has received and approved a preliminary plat for a new Menards store located at the N W corner of C S A H 42 and J ohnny C ake Ridge Road (J C RR). Menards, Inc. has requested that efforts for construction of public infrastructure serving the site proceed prior to their receipt of final approvals for the development. Menards has petitioned the City to complete the improvements within the public rights of way for J ohnny C ake Ridge Road and 147th Street intersection in 2019 and be specially assessed for the public improvements required as part of the development. In order to meet the terms of the Redevelopment Incentive Grant (RIG) from the Dakota County C ommunity Development Agency (C D A) and due to timing of the required relocation of the Great River Energy transmission line along the west side of J C RR, the overall J C RR public improvements associated with Menards at Hanson C oncrete will be completed in two phases of construction. T he first phase will include intersection improvements at 147th Street including a new traffic signal. T he second phase which includes reconstruction at C R 42, 149th Street and J C RR will be bid and constructed in 2020. Phase two work would consist of construction of a roundabout at 149th Street and J C RR and a new traffic signal with additional turn lanes at C R 42 and J C RR. A map of the proposed phase one project area is attached (Figure: 2). B AC K G RO UND: In 2017, the C ity received a $250,000 Redevelopment Incentive Grant (RIG) from the Dakota C ounty C ommunity Development Agency (C D A), which will be used for the 147th Street and J ohnny C ake Ridge Road intersection improvements associated with the agreement. T he grant agreement requires that the funds be spent by November 2019. At the November 15, 2018 meeting, C ity Council approved the following items as they relate to the redevelopment of the Hanson Property: 1. Approve Preliminary Plan Development Agreement with Menard, Inc. 2. Approve Design Agreement with Menard, Inc., for Design Services of Public Infrastructure 3. Adopt Resolution Approving Re-designation of Lot 1, Block 1, Menards at Hanson Concrete Preliminary Plat from “IN D” (Industrial) to “C ” (Commercial) on 2030 Comprehensive Plan Land Use Map 4. Pass Ordinance Rezoning Lots 1 and 2, Block 1, and O utlots A-D, Menards at Hanson Concrete, Preliminary Plat from “I-2” (General Industrial) to “PD ” (Planned Development) 5. Pass Planned Development Ordinance C odifying the Uses, Performance Standards, and Area Requirements for the Planned Development (Recommend waiving second reading) 6. Adopt Resolution Approving Preliminary Plat 7. Adopt Resolution Approving Site Plan/Building Permit A uthorization to Allow for Construction of 206,209-Sq. Ft. Menards Store and 48,970-Sq. Ft. Warehouse on Lot 1, Block 1, Menards at Hanson Concrete On May 9, 2019, City C ouncil approved Waiver of Objection to Special Assessments with Menards, Inc. for C onstruction of Public Infrastructure Relating to the Proposed Menards at Hanson Concrete Redevelopment. On May 9, 2019, City Council approved Advance Purchase of Traffic Signal C ontroller Cabinet and C ontroller Unit in the amount of $26,945.90 from Traffic C ontrol Corporation, contingent on execution of Waiver of Objection to Special Assessments with Menards, Inc., for construction of public infrastructure relating to the proposed Menards at Hanson C oncrete Redevelopment Public Improvements, C ity Project Number 2019-109. On May 9, 2019, City Council approved Advance Purchase of Traffic Signal System Materials and Electrical Equipment in the amount of $63,441.00 from Millerbend Manufacturing, contingent on execution of Waiver of Objection to Special Assessments with Menards, Inc., for construction of public infrastructure relating to the proposed Menards at Hanson Concrete Redevelopment Public Improvements, C ity Project Number 2019-109. B UD G E T I M PAC T: Project costs associated with this work would be paid by Menard’s, Inc. contingent on execution of Waiver of Objection to Special Assessments at the time of award. T he extension of bituminous trail along A bdallah C andies and the additional left turn lane north of 147th Street are City costs as part of the project. Project costs and funding sources are summarized as follows: Estimated Project C osts: C onstruction Cost $ 2,419,293 C onstruction Contingency (10%)241,929 Engineering Design, C ontract Admin (25%)671,278 Total Estimated C ost 3,332,500 Estimated Project Funding Developer (Menard’s)$ 3,014,800 Trail Escrow (Abdallah Candies)16,000 C ommunity Development Agency Grant (C D A)250,000 C ity Cost (Municipal State Aid Funds)51,700 Total Estimated Funding $ 3,332,500 AT TAC HM E NT S : Map Map Resolution Exhibit 2.. City of Apple Valley Figure 1 160th Street (Co. Rd 46)Pilot Knob Rd140th Street McAndrews Rd Garden View DriveCedar Ave150th Street (Co. Rd 42)Interstate 35EFEETSCALE 0 1500 3000 N CITY HALL 2019-109 147th STREET & JOHNNY CAKE RIDGE ROAD INTERSECTION IMPROVEMENTS PROJECT LOCATION © 2019 Microsoft Corporation © 2019 DigitalGlobe ©CNES (2019) Distribution Airbus DS 0 feetscale 30 6030 15 LEGEND PROPOSED PAVEMENT PROPOSED CURB AND GUTTER PROPOSED MEDIAN/SIDEWALK PROPOSED DRIVEWAY PROPOSED TRAIL EXISTING RIGHT OF WAY EXISTING EASEMENT 8' TRAIL 13' THRU LANE 12' THRU LANE 14'X130' LEFT TURN LANE 12' THRU LANE 12' THRU LANE 8' TRAIL PROPOSED RIGHT OF WAY PROPOSED EASEMENT PROPOSED TEMPORARY EASEMENT 13'X150' LEFT TURN LANE 12' THRU LANE 13' THRU/RIGHT TURN LANE 13' THRU LANE 13' THRU LANE 13' THRU LANE 12' THRU LANE 13'X300' LEFT TURN LANE 12' THRU LANE 12' THRU LANE 10:1 45:1 45:1 10:1 UPPER 147TH ST148TH ST18' BLVD 8' BLVD 8' BLVD 8' BLVD 8' BLVD PP #3 PP #4 PP #5 EXISTING DRAINAGE AND UTILITY EASEMENT EXISTING ROW EXISTING ROW PROPOSED TRANSMISSION LINE EASEMENT EXISTING ROW PROPOSED TEMPORARY GRADING EASEMENT PROPOSED TRANSMISSION LINE EASEMENT PROPOSED ROW EXISTING ROW EXISTING ROW EXISTING ROW EXISTING ROW EXISTING ROADWAY EASEMENT EXISTING ROADWAY EASEMENT PROPOSED BMP/LANDSCAPE AREA EXISTING PIPELINE EASEMENT DATE:COMM: 2019-109 06/03/2019 2 JCRR LAYOUT.DWG FIGURECITY OF APPLE VALLEY 147th St and Johnny Cake Ridge Road Intersection Improvements CITY OF APPLE VALLEY RESOLUTION NO. 2019- A RESOLUTION APPROVING PLANS AND SPECIFICATIONS AND DIRECTING RECEIPT OF SEALED BIDS FOR PROJECT 2019-109, 147TH STREET AND JOHNNY CAKE RIDGE ROAD INTERSECTION IMPROVEMENTS WHEREAS, the Apple Valley City Council has reviewed plans and specifications for Project 2019-109, 147th Street and Johnny Cake Ridge Road Intersection Improvements; and WHEREAS, the City Council believes that the interests of the City would be best served by receiving sealed bids based on said plans and specifications. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Apple Valley, Dakota County, Minnesota, as follows: 1. Such plans and specifications for Project 2019-109, 147th Street and Johnny Cake Ridge Road Intersection Improvements, a copy of which is on file in the office of the City Clerk and made a part hereof, are hereby approved. 2. The City Clerk is hereby authorized to receive sealed bids for Project 2019-109, 147th Street and Johnny Cake Ridge Road Intersection Improvements at the time and place specified in the form of notice attached hereto as Exhibit A. 3. The City Clerk is further authorized and directed to cause an advertisement for said bids to be posted on the City’s website and on the online Quest Construction Data Network, not less than ten (10) days prior to the opening of said bids. ADOPTED this 13th day of June, 2019 __________________________________ Mary Hamann-Roland, Mayor ATTEST: _________________________________ Pamela J. Gackstetter, City Clerk CITY OF APPLE VALLEY ADVERTISEMENT FOR BIDS 2019-109 00 11 13 SECTION 00 11 13 ADVERTISEMENT FOR BIDS Sealed Bids will be received by the City of Apple Valley, Minnesota, in the Apple Valley Municipal Center 7100 147th Street West, until 10:00am, CST, Tuesday, July 9th, at which time they will be publicly opened and read aloud for the furnishing of all labor, materials, and all else necessary for the following: City Project 2019-109, 147th Street and Johnny Cake Ridge Road Intersection Improvements 12,400 SY 21,400 CY 5,800 CY 10,800 TON 5,650 TON 2,600 LF 340 LF 130 LF 94 LF 3,800 LF 2,650 CY 5,500 SY 380 LF 1 LS 1 SYSTEM Remove Bituminous Pavement Common Excavation Select Granular Borrow Aggregate Base Class 5 Bituminous Pavement 15” Storm Sewer Pipe 27” Storm Sewer Pipe 33” Storm Sewer Pipe 48” Manhole B618 Curb and Gutter Common Topsoil Borrow Sodding Type Lawn 10” PVC Sanitary Sewer Traffic Control Interconnect Traffic Control Signal System With related items Bidders desiring Bidding Documents may purchase them for a non-refundable fee of $20 by visiting www.cityofapplevalley.org or www.questcdn.com. Contact Casy Weise at (952) 953-2400 for questions about ordering. The Bidding Documents may be viewed at the office of the City Clerk, 7100 147th Street West, Apple Valley, MN. Direct inquiries to Engineer’s Project Manager Brandon Anderson at (952) 953-2490. This project is subject to prevailing wage. Bid Security in the amount of 5 percent of the amount of the Bid must accompany each Bid in accordance with the Instructions to Bidders. The Owner reserves the right to retain the deposits of the 3 lowest Bidders for a period not to exceed 60 days after the date and time set for the Opening of Bids. No Bids may be withdrawn for a period of 60 days after the date and time set for the Opening of Bids. The Owner reserves the right to reject any and all Bids, to waive irregularities and informalities therein, and further reserves the right to award the Contract to the best interests of the Owner. This project is subject to Minnesota Department of Labor and Industry Prevailing Wage and Truck Rental Rates. Pamela J. Gackstetter, City Clerk City of Apple Valley, Minnesota I T E M: 4.O. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Water Quality I mprovement Cost Share Program Agreement with Ralph and Susan Michels for Raingarden I nstallation at 13886 Duluth Drive S taff Contact: J essica Schaum, Natural Resources Coordinator Department / Division: Natural Resources Division AC T I O N RE Q UE S T E D: Approve Water Quality Improvement Cost Share Program Agreement with Ralph and Susan Michels for raingarden installation at 13886 Duluth Drive; payment not to exceed $500.00 per project. S UM M ARY: T he following water quality cost share application was received by C ity staff and the project was determined to be eligible for the program. Name Address P roject Watershed Ralph and Susan Michels 13886 Duluth Dr Raingarden E Vermillion River T he standard C ity water quality improvement cost share program agreement approved by the City Attorney was utilized for this project. B AC K G RO UND: In 2009 the City of Apple Valley began a voluntary cost share program for residential, multiple-family, or institutional property owners to promote the installation of water quality improvements. T hese improvements typically consist of rain gardens, native gardens, buffers, and shoreline stabilization projects to reduce and treat stormwater runoff prior to its entering the stormwater system. T his cost share program assists the C ity in meeting State and Federal storm water management requirements. T he program provides for reimbursement of 50 percent of qualifying expenses, not to exceed a total reimbursement from the C ity of $500.00. T he program requires that the property owner maintain their project to meet program standards for a period of no less than seven years. B UD G E T I M PAC T: T he maximum allowable reimbursement is $500.00 per lot or project. Funding for this program is included in the 2019 operating budget for the Storm Drainage Utility. I T E M: 4.P. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Water Quality I mprovement Cost Share Program Agreement with Tamara and K evin Weber for Native Garden I nstallation at 12526 Empress Court S taff Contact: J essica Schaum, Natural Resources Coordinator Department / Division: Natural Resources Division AC T I O N RE Q UE S T E D: Approve Water Quality Improvement Cost Share Program Agreement with Tamara and Kevin Weber for native garden installation at 12526 Empress Ct; payment not to exceed $500.00 per project. S UM M ARY: T he following water quality cost share application was received by C ity staff and the project was determined to be eligible for the program. Name Address P roject Watershed Tamara and Kevin Weber 12526 Empress C t Native garden E Vermillion River T he standard C ity water quality improvement cost share program agreement approved by the City Attorney was utilized for this project. B AC K G RO UND: In 2009 the City of Apple Valley began a voluntary cost share program for residential, multiple-family, or institutional property owners to promote the installation of water quality improvements. T hese improvements typically consist of rain gardens, native gardens, buffers, and shoreline stabilization projects to reduce and treat stormwater runoff prior to its entering the stormwater system. T his cost share program assists the C ity in meeting State and Federal storm water management requirements. T he program provides for reimbursement of 50 percent of qualifying expenses, not to exceed a total reimbursement from the C ity of $500.00. T he program requires that the property owner maintain their project to meet program standards for a period of no less than seven years. B UD G E T I M PAC T: T he maximum allowable reimbursement is $500.00 per lot or project. Funding for this program is included in the 2019 operating budget for the Storm Drainage Utility. I T E M: 4.Q. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Water Quality I mprovement Cost Share Program Agreement with Christopher and Carol Read for Native Garden I nstallation at 5763 138th S treet Court S taff Contact: J essica Schaum, Natural Resources Coordinator Department / Division: Natural Resources Division AC T I O N RE Q UE S T E D: Approve Water Quality Improvement Cost Share Program Agreement with C hristopher and Carol Read for native garden installation at 5763 138th Street C t; payment not to exceed $500.00 per project. S UM M ARY: T he following water quality cost share application was received by C ity staff and the project was determined to be eligible for the program. Name Address P roject Watershed Christopher and Carol Read 5763 138th St Ct Native garden E Vermillion River T he standard C ity water quality improvement cost share program agreement approved by the City Attorney was utilized for this project. B AC K G RO UND: In 2009 the City of Apple Valley began a voluntary cost share program for residential, multiple-family, or institutional property owners to promote the installation of water quality improvements. T hese improvements typically consist of rain gardens, native gardens, buffers, and shoreline stabilization projects to reduce and treat stormwater runoff prior to its entering the stormwater system. T his cost share program assists the C ity in meeting State and Federal storm water management requirements. T he program provides for reimbursement of 50 percent of qualifying expenses, not to exceed a total reimbursement from the C ity of $500.00. T he program requires that the property owner maintain their project to meet program standards for a period of no less than seven years. B UD G E T I M PAC T: T he maximum allowable reimbursement is $500.00 per lot or project. Funding for this program is included in the 2019 operating budget for the Storm Drainage Utility. I T E M: 4.R. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Agreement with Cobalt Companies for P roject 2019-129, 2019 Fence & L ight Pole Reconditioning S ervices S taff Contact: Michael Glewwe, P ublic Works S uperintendent - Streets Department / Division: S treets Division AC T I O N RE Q UE S T E D: Approve agreement with C obalt Companies for Project 2019-129, 2019 Fence & Light Pole Reconditioning Services in the amount of $51,199.00. S UM M ARY: On May 7, 2019, C ity staff solicited quotations from seven companies for reconditioning and painting fence sections, fence support posts, and decorative light poles along the Ring Route. Two companies submitted quotes for this project. C obalt C ompanies submitted the low quote (see attached Exhibit A - Bid Tab). A standard City agreement will be utilized for this project. B AC K G RO UND: Reconditioning and painting of the Ring Route fencing and light poles is on a 6-year maintenance schedule to keep it in good condition. T he C ity annually requests quotes to have a percentage of the fencing and light poles maintained. B UD G E T I M PAC T: Funding for this project is included in the 2019 operating budget for the Public Works Streets Division. AT TAC HM E NT S : Exhibit Exhibit A BID TABULATIONPROJECT 2019-1292019 FENCE & LIGHT POLE RECONDITIONING SERVICES ITEM EST.UNIT TOTAL UNIT TOTALNo.ITEM UNIT QUANTITY PRICE PRICE PRICE PRICE 1 3-RAIL FENCE PAINTING LF 836 32.50 $27,170.00 32.98 $27,571.282FENCE POST CAPS Each 20 100.00 $2,000.00 64.00 $1,280.003L-SHAPED MOUNTING BRACKETS Each 648 3.00 $1,944.00 4.75 $3,078.004FENCE SUPPORT POST PAINTING (32")Each 72 65.00 $4,680.00 124.00 $8,928.005DECORATIVE LIGHT POLE PAINTING Each 79 195.00 $15,405.00 246.00 $19,434.00 TOTAL BID $51,199.00 $60,291.28 Cobalt Companies Budget Sandblasting & Painting, Inc. S:\public-works\private\Projects\2019 Public Infrastructure Projects\2019-129 2019 Fence & Light Pole Reconditioning Services\Bid Tab 2019-129 I T E M: 4.S. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Agreement with I rrigation by Design, I nc., for Exterior L andscape I rrigation at A pple Valley Education Building S taff Contact: A lex Sharpe, Planner and Economic Development Spec. Department / Division: Community Development Department AC T I O N RE Q UE S T E D: Approve agreement with Irrigation by D esign, Inc., for exterior landscape irrigation at the Apple Valley Education Building. S UM M ARY: In 2017 City C ouncil approved the renovation of the Education Building at 14200 Cedar Ave as well as a new lease for MacPhail School of Music. Substantial improvements to the exterior facade, tree removal and replacement, and sod installation were completed in 2018. T hese improvements also included the installation of the J oy of Music statuary adjacent to Cedar Ave. Irrigation was not included as part of the renovation, however bids were sought from multiple companies. At that time the bids were outside of the scope of the renovation, and irrigation was added to the budget as a future high priority project. Staff and a valued C ity volunteer watered the grass and new plantings for the 2018 season, but the area of the site is substantial and made more difficult due to limited exterior water supply connection locations. T he 2019 budget projected the installation of irrigation as funds became available which are generated through the building leases. Most City facilities have irrigation installed as it is more efficient and maintains a better site appearance. Healthy watered grass is a deterrent to weeds, which thrive in drought conditions. B AC K G RO UND: Irrigation by Design, Inc. has previously done work for the C ity of Apple Valley Parks Department, and has always delivered a good product. T he project will include some interior plumbing alterations to provide adequate water supply to the irrigation, and the installation of an additional water meter specific to the exterior irrigation to ensure the City is able to monitor it's use. T he site plan, scope of work, and contract are attached to this report for reference. B UD G E T I M PAC T: Resources in the amount of $32,411 are available from the Education Building fund. Irrigation by Design offered the best bid after multiple solicitations. AT TAC HM E NT S : Agreement Proposal Proposal Plan S et Plan S et CITY OF APPLE VALLEY, MINNESOTA AGREEMENT FOR EDUCATION BUILDING IRRIGATION THIS AGREEMENT, made this 13th day of June, 2019, by and between the City of Apple Valley, hereinafter called "City", and Irrigation by Design, Inc., hereinafter called "Contractor"; WITNESSETH, that the City and the Contractor, for the consideration hereinafter stated, agree as follows: 1. SERVICES TO BE PERFORMED The Contractor hereby covenants and agrees to perform and execute all the provisions of the specifications prepared by the City dated June 3rd, 2019, and made a part of this Agreement by reference, for furnishing of: Education Building Irrigation and to do everything required by this Agreement. 2. COMPLETION DATE The Contractor agrees that the work contemplated by this Agreement shall be fully and satisfactorily completed on or before August 31st, 2019. 3. CHANGE ORDERS Any changes to the work specified by this Agreement shall be made in writing and signed by both parties. Only the Community Development Director will have the authority to initiate any change orders which must be submitted to the City Council for approval. No payment will be made for any claim for additional charges not processed in this manner. 4. PAYMENT The City agrees to pay and the Contractor agrees to receive and accept payment in accordance with the prices bid as set forth in the copy of the accepted Proposal Form hereto attached, the aggregate amount of which is $32,411.00. Upon completion of delivery and installation by the Contractor and acceptance by the City, Contractor shall submit an invoice for the lump sum of the aggregate amount. This invoice will be paid by the City within thirty (30) days of receipt. If the aggregate amount of this Agreement exceeds $50,000.00, and the work contemplated by this Agreement is associated with building, erection, construction, alteration, remodeling, demolition, or repair of buildings, real property, highways, roads, bridges, or other construction work, Contractor must be a “responsible contractor” pursuant to Minnesota Statutes 2 § 16C.285. Contractor has verified under oath that it meets the minimum criteria specified in Minnesota Statutes § 16C.285, subdivision 3, by providing a verification of compliance (Affidavit of Responsible Contractor), with its Proposal Form. The Affidavit of Responsible Contractor verifies that the Contractor complies with the minimum criteria in Minnesota Statutes § 16C.285, subdivision 3, with the exception of clause (7). Contractor is required to comply with Minnesota Statutes § 16C.285 throughout the duration of this Agreement. 5. CONTRACTOR’S OBLIGATIONS TO SUBCONTRACTORS The Contractor shall pay any subcontractor within ten days of the Contractor’s receipt of payment from the City for undisputed services provided by the subcontractor. The Contractor shall pay interest of one and one-half (1-1/2%) percent per month or any part of a month to the subcontractor on any undisputed amount not paid on time pursuant to this provision to the subcontractor. The minimum monthly interest penalty payment for an unpaid balance of one hundred ($100.00) dollars or more shall be ten ($10.00) dollars. For an unpaid balance of less than one hundred ($100.00) dollars, the Contractor shall pay the actual penalty due under this provision to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from the Contractor shall be awarded its costs and disbursements, including attorneys’ fees, incurred in bringing this action. 6. INSURANCE Contractor shall not commence work under this Agreement until it has obtained all insurance required under this section and shall have filed the certificate of insurance or the certified copy of the insurance policy with the City. Each insurance policy shall contain a clause providing that it shall not be canceled by the insurance company without thirty (30) days written notice to the City of the intent to cancel. Minimum requirements: A. Worker’s compensation insurance as may be required by law. B. Employer’s liability insurance with minimum limits as follows: Bodily Injury by Disease - $500,000 per person Bodily Injury by Disease - $500,000 general aggregate Bodily Injury by Accident - $500,000 general aggregate C. Contractor's comprehensive general and automobile liability insurance, including coverage for non-owned and hired vehicles, in limits as follows: General Liability - $1,000,000 each occurrence - $2,000,000 aggregate Automobile Liability - $1,000,000 combined single limit for bodily injury and property damage 3 D. The City of Apple Valley shall be listed as an additional insured on the above policies. In addition, those property owners, if any, from whom temporary construction easements were obtained shall be listed as an additional insured on the above policies. Names of the property owners, along with other required information, will be provided to the successful bidder after the Project has been awarded. E. In addition to all listed coverages, Contractor shall procure and maintain an Umbrella or Excess liability policy in a minimum limit of $1,500,000. 7. INDEMNIFICATION The Contractor shall indemnify and hold harmless the City and its officers, agents and employees from and against all claims, damages, losses or expenses, including attorney fees, which may be suffered or for which they may be held liable, arising out of or resulting from the assertion against them of any claims, debts or obligations in consequence of the performance of this Agreement by the Contractor, its employees, agents or subcontractors, whether or not caused in part by a party indemnified hereunder. Contractor shall comply with all applicable Laws and Regulations relating to the safety of persons or property, or to the protection of persons or property from damage, injury, or loss. 8. CONTRACT DOCUMENTS The contract documents shall include the following documents, as if fully set forth herein, and the Contractor acknowledges familiarity with said documents: A. This Agreement B. Detailed Specifications C. Bid Proposal Form D. Certificate of Insurance E. Affidavit of Responsible Contractor (when applicable) 9. WHOLE AGREEMENT This Agreement embodies the entire agreement between the parties including all prior understanding and agreements and may not be modified except in writing signed by all the parties. EXECUTED as of the day and year written below. CITY OF APPLE VALLEY Date By Mary Hamann-Roland, Mayor 4 Date And Pamela J. Gackstetter, City Clerk Irrigation by Design, Inc. Date By Date And STATE OF ________________ ) ) SS. COUNTY OF ______________ ) On this _____ day of ______________, ____, before me personally appeared ___________________________ and _________________________, to me known who, being by me duly sworn, did say that they are respectively the ___________________________ and ______________________ of ________________________________, that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was executed in behalf of the corporation by authority of its Board of Directors, and said officers acknowledged the instrument to be the free act and deed of said corporation. (Notarial Seal) Notary Public P:\Projects\2017\17041\5 - Construction Admin\PR - Proposal Requests\Proposal Request\PR05 Irrigation\PR-05.docx 7300 WEST 147TH STREET SUITE 504 APPLE VALLEY, MN 55124-7580 (952) 431 - 4433 PROPOSAL REQUEST #05: PROJECT: Education Building Renovation CNH NO: 17041 DATE: 5/1/18 Please submit an itemized quotation for changes in Contract Sum and/or Time for the following proposed modifications. This is not a change order nor a direction to proceed with work. 1. Irrigation: Provide pricing for Irrigating the surrounding area of the building as a base bid. Provide pricing for irrigating the north island as Alternate #01 and provide pricing for irrigating the east portion of the site as Alternate #02 as shown on the attached detail A1/A1.1. 2. A junction box for the Irrigation Control Panel has been located as shown on the attached detail A1/A1.1 Submitted By: Jessica Johnson CNH Architects, Inc. cc: File Alex Sharpe, Planning and Economic Development, City of Apple Valley Ryan Beyer, Dering Pierson Group Pheng Chang, ,EDI Sandy Koop, EDI Wayne Hilbert, CNH A3.1 A7 1 1 1 2 2 1 1 1 4 5 4 5 5 6 8 8 8 7 7 7 9 5 4 RDx RDx RDx RDx RDx RDx RDx RDx XA-09 1 XA-10 1 XA-11 1 10 11 8 8 8 12 13 8 8' - 0"8' - 0"8' - 0"19' - 0" Painted HC symbol 3" wide minimum painted striping lines 8" high minimum, painted letters Painted HC symbol 3' - 4" 12"x18" -.080 aluminum sign with identification symbol and lettering as required by handicap code. Include fine information within sign or below Add sign stating "VAN ACCESSIBLE" below top sign 2" diameter galvanized steel sign post Grade, see site plan for condition and material 6" diameter concrete pier with 3/8" crown Note: Verify sign placement with Architect and handicap code2' - 6"2' - 7" NTS5' -3"7 3/8"2' -0" NTSPARKING UP TO $200 FINE FOR VIOLATION VEHICLE ID REQUIRED VANACCESSIBLE 12"x18" -.080 aluminum sign 2" diameter galvanized steel sign post Grade, see site plan for condition and material 6" diameter concrete pier with 3/8" crown Note: Verify sign placement with Architect and handicap code NO PARKING 3' - 6"2' - 0" NTS5'-3" NTS2" diameter galvanized steel sign post ACCESS AISLE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 A B C D E F G H J K L M A B C D E F G H J K L M © COPYRIGHT BY CNH ARCHITECTS, INC.7300 WEST 147TH STREET SUITE 504 APPLE VALLEY, MN 55124-7580 (952) 431-4433CNH NO.: 2 3 4 5 6 7 8 9 10 11 12 13 14 151 REVISIONS: DATE:C:\REVIT (local files)\REVIT 2018\17041 - Arts Building Renovation_jjohnson.rvt5/1/2018 9:50:49 AMA1.1Site PlanEducation Building Renovation14200 Cedar Ave SApple Valley, MN 5512417041 11/27/17 Site Plan Keynotes 1 Light pole - see Electrical Drawings 2 Concrete paving - see Landscape drawings 3 Statues and concrete bases by Owner 4 ADA parking stall sign - Type S1; see detail 5 No parking aisle sign - Type S2; see detail 6 Asphalt paving, match in with existing 7 Pavement striping, see Landscape drawings 8 Planting island, see Landscape drawings; Alternate #3 9 Patio - see Landscape drawings; Alternate #4 10 PR #5 - Base Bid - Irrigate surrounding area of building 11 PR #5 - Alternate #1 - Irrigate North island 12 PR #5 - Alternate #2 - Irrigate East portion of Site 13 Junction box for irrigation control panel 1" = 20'-0"A1.1 A1 Overall Site Plan 1/8" = 1'-0"A1.1 A13 ADA No Parking Stall 1/2" = 1'-0"A1.1 E13 ADA Parking Sign-Van Accessible - S1 1/2" = 1'-0"A1.1 J13 No Parking Access Aisle Sign - S2 8 2 9/15/17 Addendum #2 4 11/17/17 Code Review Response 8 04/30/18 PR #5 - Irrigation I T E M: 4.T. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Agreement with L offler Companies, I nc., for Multifunction Copier Rental and Maintenance S taff Contact: Nathan B ang, I T Manager Department / Division: Administration / I nformation Technologies AC T I O N RE Q UE S T E D: Approve Agreement with Loffler C ompanies, Inc., for Multifunction C opier Rental and Maintenance. S UM M ARY: T he city utilizes a number of large networked copier/ printer units to provide the large scale printing and copying needs of the city. T hese units are provided at a number of the city’s facilities. D ue to the high volume of output and the frequent need for mechanical maintenance on these units, the city has found that a rental agreement with regular maintenance by the provider is the preferred method of providing these assets. B AC K G RO UND: T he C ity currently utilizes numerous multifunction copiers throughout various facilities to meet the large volume, copier and print needs across multiple departments and locations. Based on specifications to meet these needs, pricing was previously obtained from multiple local service providers for the lease or rental of equipment, plus all-inclusive maintenance on the multifunction machines. Based on the monthly rental costs, plus the expected cost-per-print maintenance costs, Loffler Companies was shown to provide the lowest cost solution over the length of term for the numerous machines utilizing State of Minnesota contract #84336. T hese devices replace higher-cost end-of-life machines, with newer devices with a lower total operating cost. B UD G E T I M PAC T: Sixty month rental of fifteen multifunction copiers totals $101,073.00. All inclusive cost-per- page maintenance will be billed at $.005 per page B&W, $.0425 per page color. AT TAC HM E NT S : Agreement Agreement Agreement Agreement 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801 Comments: Client Signature: x 1 2/3 Hole Punch Kit A1 1 Booklet Finisher V2 1 Canon IR ADV 6575i III located at MC 2nd Floor Workroom $272.25 1 Paper Deck Unit Vendor Swift Code 000195734-011 TOTAL 1 Fax Board State of MN Contract #84336 - 60 Month Rental (Continued on next page) 1 Buffer Pass Unit 1 Paper Deck Unit F1 1 2/3 Hole Punch Kit 1 Canon IR ADV C5550i III located at MC 1st Floor Workroom 1 High Capacity Cassette Feed 1 Staple Finisher 1 Buffer Pass Unit 1 2/3 Hole Punch Kit 1 Fax Board 1 Canon IR ADV C5550i III located at MC 2nd Floor Finance 1 High Capacity Cassette Feed 1 Staple Finisher ORDER QTY PRODUCT NUMBER DESCRIPTION UNIT PRICE TOTAL Trade In ID#s Model/Serial Number Trade-In Ownership State Contract 84336/Vendor Swift 000195734-011 Bill to: Canon USA C/O Canon Financial Services, 14904 Collections Center Drive, Chicago IL 60693 LOFFLER Truck SELECT ONE Networking Networking Contact Phone E-Mail Address YES Nathan Bang YES Nathan Bang Delivery/Pickup Date & Date Carrier If "Other", Please Describe Stairs Nathan Bang E-Mail Address Training Training Contact Phone E-Mail Address MN 55124 B I L L T O Company Customer Number City State Zip City State Zip Address Address 7100 147th Street West Address 2 Address 2 Loffler Contact Phone Contact Minnesota State Contract #84336 ORDER AGREEMENT - RENTAL Date Meter Contact Phone Preferred Meter Method Fax Preferred Meter Method E-Mail Address Preferred Meter Method Suite/Floor/Dept Suite/Floor/Dept S H I P T O Company Customer NumberCity of Apple Valley See Schedule A Equipment Listing Apple Valley $177.00 $151.93 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801 Comments: Client Signature: x 1 Canon IR ADV C5540i III located at MC 1st Floor Workroom 1 Cassette Feed Unit 1 Canon IR ADV C3525i III located at MC 1st Floor Inspections $47.69 1 Cassette Feed Unit Vendor Swift Code 000195734-011 TOTAL State of MN Contract #84336 - 60 Month Rental (Continued on next page) 1 2/3 Hole Punch Kit 1 Fax Board 1 Buffer Pass Unit 1 High Capacity Cassette Feed 1 Paper Deck Unit F1 1 Canon IR ADV C5550i III located at Police 2nd Floor Workroom 1 High Capacity Cassette Feed 1 Booklet Finisher 1 Inner Finisher 1 Fax Board ORDER QTY PRODUCT NUMBER DESCRIPTION UNIT PRICE TOTAL Trade In ID#s Model/Serial Number Trade-In Ownership State Contract 84336/Vendor Swift 000195734-011 Bill to: Canon USA C/O Canon Financial Services, 14904 Collections Center Drive, Chicago IL 60693 LOFFLER Truck SELECT ONE Networking Networking Contact Phone E-Mail Address YES Nathan Bang YES Nathan Bang Delivery/Pickup Date & Date Carrier If "Other", Please Describe Stairs Nathan Bang E-Mail Address Training Training Contact Phone E-Mail Address MN 55124 B I L L T O Company Customer Number City State Zip City State Zip Address Address 7100 147th Street West Address 2 Address 2 Loffler Contact Phone Contact Minnesota State Contract #84336 ORDER AGREEMENT - RENTAL Date Meter Contact Phone Preferred Meter Method Fax Preferred Meter Method E-Mail Address Preferred Meter Method Suite/Floor/Dept Suite/Floor/Dept S H I P T O Company Customer NumberCity of Apple Valley See Schedule A Equipment Listing Apple Valley $192.51 $109.39 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801 Comments: Client Signature: x 1 Buffer Pass Unit 1 Paper Deck Unit F1 1 Staple Finisher 1 Canon IR ADV C5550i III located at Police 1st Floor Briefing Room $177.00 1 High Capacity Cassette Feed Vendor Swift Code 000195734-011 TOTAL State of MN Contract #84336 - 60 Month Rental (Continued on next page) 1 Fax Board 1 Booklet Finisher V2 1 Paper Deck Unit E1 1 2/3 Hole Punch Kit A1 1 Canon IR ADV C356iF III located at Police 1st Floor Reception 1 Canon IR ADV C7565i III located at Community Center Workroom 1 2/3 Hole Punch Kit 1 Fax Board ORDER QTY PRODUCT NUMBER DESCRIPTION UNIT PRICE TOTAL Trade In ID#s Model/Serial Number Trade-In Ownership State Contract 84336/Vendor Swift 000195734-011 Bill to: Canon USA C/O Canon Financial Services, 14904 Collections Center Drive, Chicago IL 60693 LOFFLER Truck SELECT ONE Networking Networking Contact Phone E-Mail Address YES Nathan Bang YES Nathan Bang Delivery/Pickup Date & Date Carrier If "Other", Please Describe Stairs Nathan Bang E-Mail Address Training Training Contact Phone E-Mail Address MN 55124 B I L L T O Company Customer Number City State Zip City State Zip Address Address 7100 147th Street West Address 2 Address 2 Loffler Contact Phone Contact Minnesota State Contract #84336 ORDER AGREEMENT - RENTAL Date Meter Contact Phone Preferred Meter Method Fax Preferred Meter Method E-Mail Address Preferred Meter Method Suite/Floor/Dept Suite/Floor/Dept S H I P T O Company Customer NumberCity of Apple Valley See Schedule A Equipment Listing Apple Valley $289.01 $30.09 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801 Comments: Client Signature: x 1 Fax Board 1 Inner 2 way tray 1 Canon IR ADV C3525i III located at Senior Center Workroom $42.68 1 Cabinet Vendor Swift Code 000195734-011 TOTAL 1 Loffler Delivery, Installation, & Training per State of MN Contract State of MN Contract #84336 - 60 Month Rental 1 Canon C356iF III located at Liquor Store 2 1 Canon C356iF III located at Liquor Store 3 1 Canon C356iF III located at Liquor Store 1 1 Canon IR ADV C3525i III located at Valleywood 1 Cassette Feed Unit 1 Internal Staple Finisher 1 Canon C356iF III located at Sports Arena 1 Cassette Feed Unit AK1 ORDER QTY PRODUCT NUMBER DESCRIPTION UNIT PRICE TOTAL Trade In ID#s Model/Serial Number Trade-In Ownership State Contract # 84336/Vendor Swift 000195734-011 Bill to: Canon USA C/O Canon Financial Services, 14904 Collections Center Drive, Chicago IL 60693 LOFFLER Truck SELECT ONE Networking Networking Contact Phone E-Mail Address YES Nathan Bang YES Nathan Bang Delivery/Pickup Date & Date Carrier If "Other", Please Describe Stairs Nathan Bang E-Mail Address Training Training Contact Phone E-Mail Address MN 55124 B I L L T O Company Customer Number City State Zip City State Zip Address Address 7100 147th Street West Address 2 Address 2 Loffler Contact Phone Contact Minnesota State Contract #84336 ORDER AGREEMENT - RENTAL Date Meter Contact Phone Preferred Meter Method Fax Preferred Meter Method E-Mail Address Preferred Meter Method Suite/Floor/Dept Suite/Floor/Dept S H I P T O Company Customer NumberCity of Apple Valley See Schedule A Equipment Listing Apple Valley $30.09 $30.09 $30.09 $62.68 $42.05 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801 $$ $ $$ $ $$ $ $For Yes No Yes No Phone Fax MAINTENANCE AGREEMENT Address Address 7100 147th Street W Address 2 Address 2 Company Company Customer # Customer # City of Apple Valley See Schedule A Equipment Listing B I L L T O S H I P T O Contact Phone Contact Phone Nathan Bang Apple Valley MN 952-953-2500 Zip State City Suite/Floor/Dept Suite/Floor/Dept Zip State City EFFECTIVE DATE: CONTRACT TERM: MAKE/MODEL BEGIN METERDESCRIPTIONSERIAL NUMBER ID Install Date Other: See Equipment listing on Schedule A Document B&W Copies Allowed B&W Overage ChargeAnnual Rate Monthly Rate B&W Copies Allowed B&W Overage Charge Color Copies Allowed 0 Color Overage Charge Quarterly Rate B&W Copies Allowed 0 B&W Overage Charge0.00 0.005000 0.042500 Color Copies Allowed Color Overage Charge Color Overage ChargeColor Copies Allowed Addtl. Charge Supplies Included: Staples Included: Black Toner Color Toner Preferred Meter Method Special Instructions:State of MN Contract. Rates Locked for Term. Staple Inclusive. 11 x 17 is single click Please carefully review the Terms and Conditions on the second page and provide a customer signature. Meter ContactimageWHERE REMOTE E-mail AddressPreferred Meter Method Preferred Meter Method 1 Year 2 Year 3 Year 4 Year 5 Year RenewalNew Customer Signature X Loffler Companies Representative TERMS & CONDITIONS Loffler Companies Officer Approval Signature Print Customer Name Time Date Loffler Company Acceptance Date Maintenance ServicesDuring the term of this contract Loffler Companies, Inc will repair or replace according to the terms of this agreement any p art of the equipment which becomes unserviceable due to normal usage (other than consumable supplies, i.e. toner, image units). All parts replaced will be furnished on an exchange basis and will be new, reconditioned, or used. All parts removed due to replacement will become the property of Loffler Companies, Inc. Maintenance services provided by Loffler Companies, Inc. under this agreement do not include the foll owing:A.Repair of damage not caused by vendor, including without limitation, damage resulting from accident, transportation neglect or misuse, failure or fluctuation of electrical power, telephone equipment or communication lines failure, environmental conditions, or acts of God.B.Repairs made necessary because of service that was provided by persons other than vendor.C.Exit trays, copy cabinet, removable cassettes, or other breakable items that are not related to the mechanical or electrical operation of the equipment.D.Repairs and/or service calls resulting from attachments not purchased and/or approved by Loffler Business Systems.E. Network or IT triage related to IT infrastructure issues affecting the operation of the hardware device. Performance of Maintenance Services Maintenance services will be provided at the customer’s place of business where the equipment is located during regular business hours (8:00 a.m. –5:00 p.m.) Monday through Friday, except holidays. ChargesThe maintenance charges for all maintenance agreements, i.e. annually, quarterly, monthly, will be payable by the customer in advance with the overages billed in arrears. The relocation of equipment indicated on the face hereof may result in an increase of mainten ance charges or the termination of this agreement. The client will provide timely meter readings at the end of each billing period in respons e to Loffler Companies fax/email requests or contacted by telephone. If meter reads are not received in a timely manner, Loffler Companies reserves the right to estimate the meter readings. The charges established in this agreement include payment for the maintenance of the eq uipment and consumable supplies including black and color toner and developer, if indicated on the reverse side. Paper and staples must be purchased separately by you. For the purpose of this agreement, an impression is defined as a one sided, 8.5 x 11 or smaller image on a single sheet of media. This agreement is based upon manufacturer stated yields: 6% coverage for black toner and 20% coverage for color toners . Tonerusage/coverage beyond manufacturer stated yields can result in additional charges for toner at current market pricing. Toner provided under this agreement is the property of Loffler Co. Inc until consumed in covered equipment. Customer ObligationsCustomer agrees to provide a suitable place for use (including suitable electric service) as specified by the manufacturer. C ustomer to provide 360 degree service access to equipment. Customer will provide a key operator for the equipment and make available operators f or instruction in use and care of the equipment. Limitations Loffler Companies, Inc. shall not be liable for failure to perform its obligations hereunder, and such failure to perform sha ll not constitute a breach of this agreement when repair of the equipment is required as a result of accident, misuse, use of supplies or accesso ries that do not meet manufacturer’s standards, fire, flood, or other adverse conditions damaging the equipment at customer’s premises. Loffle r Companies, Inc. shall not be liable for delay or failure to perform under this agreement for causes beyond its reasonable control for th e period of time that such causes are enduring. Additionally, Loffler Companies, Inc. shall not be responsible or liable for any circumstances occu rring due to the failure of any equipment or accessories covered under this agreement. TermThis agreement will become effective as of the effective date indicated on the reverse side and is a non -cancelable contract. This agreement will be automatically renewed at the prevailing rates at the time of expiration unless canceled in writing thirty (30) days p rior to the expiration of the agreement. Maintenance agreement rates may be subject to an annual rate adjustment. Loffler Companies, Inc. may terminate this agreement upon written notice prior to any renewals. Entire Agreement/Applicable LawThis agreement constitutes the entire agreement between Loffler Companies, Inc. and the customer and supersedes any previous agreements between Loffler Companies, Inc. and the customer with respect to services to the equipment. This agreement shall be interpret ed and continued in accordance with the law of the State of Minnesota and the parties hereby consent to the personal jurisdiction of any state or federal court having appropriate subject matter jurisdiction located within the State of Minnesota. Non-SolicitationClient acknowledges and agrees that the employees of Loffler Companies, Inc. who perform the services are a valuable asset to Loffler Companies, Inc. and are difficult to replace. Accordingly, Client agrees that, for a period of one (1) year after the comple tion of said services, it will not, directly or indirectly, solicit, recruit, hire or otherwise employ any employee or agent of Loffler Companies, Inc.who performed such services. If Client violates this paragraph, Client will pay to Loffler Companies, Inc. damages equal to one hundred percent (100%) of that individual’s annual salary. For purposes of this Agreement only, an “individual’s” annual salary shall mean the individual’s annual salary with either Loffler Companies, Inc. or with Client, as of the date of Client’s violation of this paragraph, whichever is greater. License FeesIn the event that license fees are paid by Loffler, we will incorporate that charge into the billing rates to amortize the co st over a year's time. If Client cancels the contract prior to the end of the term, the Client will be charged with the remainder of the amount due for the license. Net ConnectMaintenance services include Net Connect services, which provide support for printing, scanning, and connectivity of the mult ifunctional equipment. This Schedule “A” is to be attached to and becomes part of the above-referenced Agreement by and between the undersigned and Loffler Companies, Inc. EQUIPMENT DESCRIPTION Purchase the Equipment for MAKE/MODEL/ACCESSORIES SERIAL NO. STARTING METER Canon IR ADV 6575i located at Municipal Center - 2nd Floor Workroom Canon IR ADV C5550i located at Municipal Center - 2nd Floor Finance Canon IR ADV C5550i located at Municipal Center 1st Floor Workroom Canon IR ADV C3525i located a Municipal Center 1st Floor Inspections Canon IR ADV C5540i located at Municipal Center 1st Floor Mailroom Canon IR ADV C5550i located at Police 2nd Floor Workroom Canon IR ADV C5550i located at Police 1st Floor Briefing Room Canon IR ADV C356iF located at Police 1st Floor Reception Canon IR ADV C7565i located at Community Center Workroom Canon IR ADV C3525i located at Senior Center Workroom Canon C356iF located at Sports Arena Canon IR ADV C3525i located at Valleywood Canon C356iF located at Liquore Store 1 Canon C356iF located at Liquore Store 2 Canon C356iF located at Liquore Store 3 All Devices to bill quarterly at $0.005 BW and $0.0425 Color State of Minnesota Contract #84336. Staple Inclusive Building Addresses Municipal Center - 7100 147th Street W Apple Valley, MN 55124 Police Dept - 7100 147th Street W Apple Valley, MN 55124 Community Center - 14603 Hayes Rd Apple Valley MN 55124 Senior Center - 14601 Hayes Rd Apple Valley MN 55124 Valleywood - 4851 McAndrews Rd Apple Valley, MN 55124 Liquor Store 1 - 7525 148th St W Apple Valley MN 55124 Liquor Store 2 - 14261 Essex Ave Apple Valley MN 55124 CLIENT ACCEPTANCE This Schedule “A” is hereby verified as correct by the undersigned Client, who acknowledges receipt of a copy. X CLIENT SIGNATURE TITLE DATED 18647 Rev. 06/19/2014 APPLICATION NO. AGREEMENT NO. Schedule “A” This Schedule “A” is to be attached to and becomes part of the above-referenced Agreement by and between the undersigned and Loffler Companies, Inc. EQUIPMENT DESCRIPTION Purchase the Equipment for MAKE/MODEL/ACCESSORIES SERIAL NO. STARTING METER Liquor Store 3 - 5470 157th St W, Apple Vallet MN 55124 CLIENT ACCEPTANCE This Schedule “A” is hereby verified as correct by the undersigned Client, who acknowledges receipt of a copy. X CLIENT SIGNATURE TITLE DATED 18647 Rev. 06/19/2014 APPLICATION NO. AGREEMENT NO. Schedule “A” Canon       Contract Acknowledgement in lieu of Purchase Order I, __________________________, as an authorized agent of _________________________am making (Purchasing Agent Name) (Agency Name) the attached purchase / lease / rental as specified in agreement ______________________ under the (circle procurement type) (Purchase Agreement Number) terms and conditions of State/Association Contract Number _________________________________________. (State/Association Contract Number) _____________________________________ Signature _____________________________________ Title _____________________________________ Date Version 06/4/2019 1101 E 78th Street, Bloomington, MN 55420 952-925-6800 ● Fax 952-925-6801   ADDENDUM Customer Name City of Apple Valley Date June 4, 2019 This addendum is part of our agreement between Loffler Companies Inc. (Loffler) and the City of Apple Valley. End of Term – Per the State of Minnesota Contract #84336, Loffler is fully responsible for costs associated with the pick up, removal, and shipment of devices back to Canon. In addition, per the State of Minnesota Contract #84336, Loffler is responsible for cleansing of the hard drives and will provide certification. All costs associated with this process is Loffler’s responsibility. Loffler Representative / Date Customer Signature / Date I T E M: 4.U. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Agreement with R E S S pecialty Pyrotechnics, I nc., d/b/a R E S P YR O for Fireworks Display on J uly 4, 2019 S taff Contact: B arry B ernstein, Parks and Recreation Director Department / Division: Parks and Recreation Department AC T I O N RE Q UE S T E D: Approve an Agreement with RES Specialty Pyrotechnics, Inc., d/b/a RESPY RO in the amount of $25,000, to provide fireworks display services on J uly 4, 2019; subject to receiving an acceptable certificate of insurance and permit approval by the Fire Department. S UM M ARY: RES Specialty Pyrotechnics, Inc., dba RESPY RO has submitted a proposal for the 2019 Freedom Days fireworks display. Staff has reviewed the proposal and recommends an agreement retaining their services, contingent on their ability to obtain the applicable permit from the Apple Valley Fire Marshall. B AC K G RO UND: T he Fourth of J uly fireworks display is a long-standing tradition in Apple Valley and is the closing event of the annual Freedom Days community celebration. T he 2018 Agreement with RES Specialty Pyrotechnics, Inc., dba RESPY RO stipulated an opportunity for 2019, pending approval of funding and an excellent rating of the 2018 show. Staff recommends an agreement with RES Specialty Pyrotechnics, Inc., based on their superior show proposal and positive past performances in A pple Valley, as well as other area communities. An Application for Fireworks/Pyrotechnic Display is being completed by RES Specialty Pyrotechnics, Inc., dba RES PY RO and the C ity of Apple Valley Fire Marshal will issue a Permit upon review and approval. One of the requirements is proof of a current certificate for their supervising operator. B UD G E T I M PAC T: $25,000 funding allocated within the 2019 budget AT TAC HM E NT S : Agreement DISPLAY CONTRACT AGREEMENT THIS AGREEMENT, made and entered into on this 17th day of May, 2019 between RES Pyro hereafter referred to as the SELLER and the City of Apple Valley, hereafter referred to as the BUYER. IT IS MUTUALLY AGREED BETWEEN THE SELLER AND THE BUYER AS FOLLOWS: Service Provided Outdoor Fireworks Display Date(s) Thursday, July 4, 2019 (Rain date: July 5, 2019) Time 10:00 PM (approximately) Duration 20-23 minutes (depending on intensity) Location Scott Highlands/ Johnny Cake Ridge Park; Apple Valley, MN Event Sponsor City of Apple Valley OBLIGATIONS OF SELLER: SELLER shall provide all materials, equipment and personnel necessary to perform the above-mentioned display. SELLER is required and will comply with NFPA 1123, Code for Outdoor Display of Fireworks, 2010 edition and NFPA 1126, Pyrotechnics before a Proximate Audience, 2006 edition. SELLER shall provide a certificate of liability insurance in the amount of $5,000,000.00 to cover the fireworks display and cleanup. BUYER shall be listed as Certificate Holder on the Certificate of Liability insurance. All individuals/entities listed on the certificate of liability insurance will be deemed an additional insured per this contract. SELLER shall include the BUYER, as co-insured on Certificate of Insurance. SELLER shall provide a copy of the Certificate of Insurance to BUYER. The certificate of Insurance shall provide that the insurance shall not be modified, cancelled, or fail to be renewed without 30 days’ prior notice to the City of Apple Valley. SELLER shall, during the term of this agreement, maintain workers compensation insurance for those employees involved in the performance of this agreement. SELLER shall have a licensed technician thoroughly inspect the display site fall out area on July 5th to ensure pyrotechnic material is not present. OBLIGATIONS OF BUYER: BUYER shall provide a suitable location for firing of the fireworks display. BUYER shall provide and cover all costs for security, safety and cleanup at the display site. TERMS AND CONDITIONS: The terms of this agreement shall begin on the day of the signing of this agreement and shall conclude upon the completion of the display. However, if before the date of the scheduled performance, the BUYER has not performed fully its obligations under the terms of this agreement or that the financial credit of the BUYER has been impaired, the SELLER may cancel this agreement at any time. In the event the BUYER does not perform fully all of its obligations herein, the SELLER shall have the option to perform or refuse to perform hereunder, and in either event the BUYER shall be liable to the SELLER for any damages, compensation or costs incurred including but not limited to attorney and court fees in addition to the compensation herein. The SELLER shall retain the right to stop or interrupt the display at any time if, in the opinion of the SELLER, conditions have become unsafe. In event of rain, fireworks may be rescheduled at a mutually agreeable date. PAYMENT: Contracted amount: $25,000.00 inclusive of sales tax, if applicable. Contracted amount includes fire watch and permit fee. All payments shall be paid by BUYER to and in the name of RES Pyro in the form of a company check, certified bank check, money order, or cash. CANCELLATION: In the event the BUYER cancels this agreement any time during the contract period, the SELLER shall be entitled to and receive 25% of the contracted fee for the remainder of the contract period plus compensation for any pre- and post-production costs incurred. NON ASSIGNMENT/INDEMNITY: This agreement may not be assigned by either party. Notwithstanding any provision herein to the contrary, SELLER shall indemnify and hold BUYER and its City Council members, agents and employees harmless from any and all claims, demands, actions, or causes of action, including reasonable attorneys' fees and costs, related to or arising out of any negligent act or omission on the part of the SELLER or its agents or employees in the performance of this agreement. THIS AGREEMENT is the whole agreement of the parties’ above named. No representation inducement or agreement has been given by one to the other to enter into this agreement other than expressly set forth herein. This agreement shall not be altered, modified, or amended except in writing by a duly authorized officer of each party. IN WITNESS WHEREOF, the parties hereunto set their names on the day and year listed below. CONTRACT VALID WHEN SIGNED BY AUTHORIZED PERSONS. BUYER: CITY OF APPLE VALLEY SELLER: Erv Haman - RES Pyro Title: Mary Hamann-Roland, Mayor Title: Director of Business Development Signature: Signature: Date: Date: 5/24/2019 ATTEST Title: Pamela J. Gackstetter, City Clerk Signature: Date: I T E M: 4.V. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Change Order No. 1 to Agreement with S avATree, L L C, for P roject 2019-120, Right- of-Way Tree Pruning, and Approve A cceptance and F inal Payment S taff Contact: Michael Glewwe, P ublic Works S uperintendent - Streets Division Department / Division: S treets Division AC T I O N RE Q UE S T E D: Approve C hange Order N o. 1 to agreement with SavATree, LLC, for a deduction of $3,000.00; and accept Project 2019-120, Right-of-Way Tree Pruning as complete and authorize final payment in the amount of $45,384.00. S UM M ARY: SavATree, LLC has requested final payment for right-of-way tree pruning services within the City. T his is the first and final payment request. T he contractor has completed all work per the agreement. T he improvements have been inspected and found to be acceptable for final payment. Change Order No. 1 is a deduction from the total cost due to fewer trees being trimmed which were located under power lines. B AC K G RO UND: On J anuary 10, 2019, C ity C ouncil approved an agreement with SavATree, LLC , in the amount of $48,384.00 for pruning trees located within the right-of-way. B UD G E T I M PAC T: Funds for this project are included in the 2019 operating budgets for the Public Works Streets Division and Natural Resources. AT TAC HM E NT S : Change Order Document(s) F inal Pay Documents I T E M: 4.W. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Acceptance and Final P ayment on Agreement with Mc Namara Contracting, I nc., for P roject 2016-138, Signal Modification at 140th Street and Galaxie Avenue S taff Contact: B randon A nderson, City Engineer Department / Division: E ngineering Division AC T I O N RE Q UE S T E D: Approve acceptance and final payment on the agreement with McNamara C ontracting, Inc., in the amount of $54,239.37; and accepting Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue, as complete and authorizing final payment in the amount of $54,239.37 for a contract total of $739,320.69. S UM M ARY: Attached please find the fourth and final payment for Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue. All public improvements associated with the project are complete and in acceptable condition to become public infrastructure of the C ity. T his final payment of $54,239.37 will close the agreement with McN amara C ontracting, Inc., and result in a total construction cost of $739,320.69. Final total project expenses are less than the project budget of $834,165.50. B AC K G RO UND: On December 27, 2018, C ity C ouncil approved Change Order No. 1 to the agreement with McNamara C ontracting, Inc., for Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue, by adding the amount of $70,488.19. On J une 14, 2018, the City Council awarded a construction contract to McNamara Contracting, Inc., in the amount of $668,832.50 for Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue. Resolution 2018-78. City Council adopted Resolution 2016-46 on March 24, 2016, directing the preparation of plans and specifications for Project 2016-138, Galaxie Avenue and 140th Street Traffic Signal Improvements. Resolution 2017-116 was adopted by C ity C ouncil on J uly 27, 2017, amending plans and specifications for Project 2016-138, 2016 Galaxie Avenue and 140th Street Traffic Signal Improvements. T he MnD O T Metro State Aid Office approved the plans on March 6, 2018. City C ouncil adopted Resolution 2018-37 on March 22, 2018, approving plans and specifications and directing receipt of bids for Project 2016-138, Signal Modification at 140th Street and Galaxie Avenue. B UD G E T I M PAC T: Final cost breakdown and funding for the project is summarized below. Estimated Project C osts: Awarded C osts Final Costs Construction C ost $668,832.50 $668,832.50 Change Order No. 1 70,488.19 Construction C ontingency 93,167.00 Engineering Design & Inspection 72,166.00 92,166.00 Total Estimated Cost $834,165.50 $831,486.69 Estimated Project Funding: Municipal State Aid $ 834,165.50 831,486.69 Total Estimated Funding $834,165.50 $831,486.69 AT TAC HM E NT S : F inal Pay Documents OWNER: City of Apple Valley 7100 147th Street West Apple Valley, MN 55124 Amount of Contract: Change Order #1 Total Amount Account Number Mun icipal State Aid 2027-6810-2016138G Subtotal Total $ PAYMENT VOUCHER NO. 4 (& Final) 140th Street & Galaxie Avenue Improvements CITY PROJECT NO. 2016-138 For Period : 01-01-2019 Through 5-17-2019 $668 ,832 .50 $70,488.19 $739,320.69 Contract Amount Per Resolution 2018-78 $739 ,320 .69 739 ,320 .69 $739,320.69 Value of Work Certified To Date $739,320 .69 $739 ,32 0.69 $739 ,320 .69 CONTRACTOR: Contractor Contractor Address City , State , Zip Telephone No . Less 5 Percent Retained $0.00 $0.00 $0.00 Date ~ Wie, McNamara Contracting Inc. 16700 Chippendale Avenue Rosemount , MN 55068 612-221-3063 Less Net Previous Amount Payments Due $685 ,081 .32 $54,239 .37 $685 ,081.32 $54,239 .37 $685,081.32 $54,239.37 Date ~ ~-=--- ••• •••• ••••• •••• ·••· Owner : City of Aoole Vallev, 7100 W. 147th St., Aoo le Vallev , MN 55124 For Period : Ja nuary 1, 2019 to May 17, 2019 Date : Reauest No : ApP.lell Va ey Contractor: McNamara ContractinQ, Inc., 16700 Chippendale Avenue , Rosemount MN 55068 CONTRACTOR'S REQUEST FOR PAYMENT 140th Street & Gala xie Avenue Improvements Project File No . 2016 -138 SUMMARY Original Contra ct Amount 2 Change Order -Additi on $ 70 ,4 88 .19 3 Change Order -Deduction $ 0.00 4 Revised Contract Amount 5 Value Completed to Date 6 Material on Hand 7 Amount Earned 8 Less· Retainage 0% 9 Subtotal 10 Less Amount Paid Previously ll Liquidated damages • 12 AMOUNT DUE THIS REQUEST FOR PAYMENT NO . 4 Approved by Engineer: $ $ $ $ $ $ $ $ $ $ Mav 20 , 2019 4 /FINAL) $668,83 2.50 $739 ,320.69 $739,320.69 $0 .00 $739,320.69 $0 .00 $739,320 .69 $685 ,081 .32 $0.00 $54,239.37 Sho,t Elliott HeadM..3 John ~ect Manager Specified Contract Comp letion D ate: Attest: 2016-138 Request for Payment 4 .xls Date: n S. Anderson, City Engineer Date: S / ~ I ) I 4 Mary Hamann-Roland, Mayor Date: Pamela J. Gackstetter, City Clerk Contrnct Uuit P.-cviou s Curr-cnt Quantity Amount No . I tem Unit Quantity Price Qnantity Quantity to Date to Dale 2011.601 As Dnill L.S. Sl,700.00 0.00 SI ,7 00.00 2021.50 I Mobilizati on L.S. $40,000.00 1.00 0 S40,000.00 2 101.505 Clea.ring Acre 0.13 SI0,500.00 0.13 0 0.13 Sl ,365 .00 2 10 1.505 Grubbing Acre 0.13 SI0,500.00 0.13 0 0.13 Sl,365 .00 2 101.524 Clearing Tree 15 S2l0.00 15.00 0 16 SJ,360.00 2 101.524 Gnibbing Tr ~c 15 S200 .00 15.00 0 16 SJ ,200 .00 2 102.503 Pavcn1ent Marki ng Remova l L.F . 760 S1.25 760 .00 0 760 S950 .00 2104 .502 Remove Casting F.ac h 3 S40.00 3.00 0 3 $120.00 2104.502 Remove Drainage Stn1c1urc E.1ch S775 .00 3.00 0 3 $2,325 .00 2 104 .503 Remove Sewer Pip e (Slonn) L.F. 20 SI 1.00 20.00 0 19 5209.00 2104 .503 Remove Curb & Guller L.F . 1,309 S4.00 1309 .00 0 I 186 54,744 .00 2104.5 03 Sawing Bi tuminous Pavement (Full Dcp lh) L.F. 1,4 41 52.00 1441.00 0 1668 S3 ,336.00 2104 .503 Sawing Concrelc Pavement (Full Depth) L.F . 16 SI.DO 16.00 0 16 S32 .00 2104 .504 Remove Bitumin ous PaYcmcnl S.Y . 320 $25.00 320.00 0 649 $16,225 .00 2 104 .5 18 Remove Bituminous \Valk S.F. 59 1 SJ .DO 59 1.00 0 5087 S15 ,261.00 2104 .518 Remove Concrete Walk S.F. 426 S3 .00 426.00 0 156 S468 .00 2105.507 Common E.xcava li o n (P) C.Y . 3,456 $25.00 3456.00 0 3736 $93 ,4 00 .00 21 05.507 Select Granular Bom,w (CV) (P) C.Y . 1,309 $25.00 1309.00 0 1418 .85 $35,471.25 2211.509 Aggregate Base Cl asa 5 Ton 1,121 $25.00 1121.00 0 1271.74 SJ 1,793 .50 2360.509 Type SP 9 .5 Wearin g Course Mix (3 :E) Ton 184 $90,00 184 .00 0 230.85 520,776 .50 2360.509 Type SP 9 .5 Non Wear Course Mix (3:E) Ton 184 $90.00 184 .00 0 282.8 525,452.00 2360.509 Type SP 9 .5 Weari ng Course Mix (2 :B) Ton 106 $80.00 106.00 0 109 .24 S8,739 .20 2411.6 18 Prefabricated M odular Block Wall S.F. 1,833 S?J.00 1833 .00 0 1833 S133,809 .00 2503.503 12" RC Pipe Sewer Class V L.F. 45 $70.00 45.00 0 34.6 $2,422 .00 2503.602 Connec t to Ex.is ling Stenn Sewer Each 2 Sl ,700 .00 2.00 0 2 $3,400.00 2503.602 Connect [nlo Existi ng Manhole Each Sl,700.00 1.00 0 Sl,700.00 2504.602 Adjust Gale Vall'< and Box Each 2 S550 .00 2.00 0 5 $2,750.00 2504.602 AdjUS1 Fram• & Ring Casting Each Sl,000.00 1.00 0 Sl,000.00 25 06.602 Cas1ing Assembly Special (Type Rl624 1l) Each SI,300,00 1.00 0 2 52,600.00 2506.602 CastinH Assem bly Special (Type R-3290-VB) Each 3 S800 .00 3.00 0 3 $2,400.00 2506.602 Constntcl Drainage Structure, De.sign Special I Each s2.200.oo 3.00 0 3 $6,600.00 2506.602 Construct Drainage Stnicture, Design Special 2 Each $2,900.00 1.00 0 $2,900.00 2521.5 18 6" Concrete Walk S .F. 1,520 S12 .00 1520 .00 0 1561 $18 ,732 .00 2531.503 Concrete Curt, & Gutter Design 8618 L.F . 1,093 518.00 1093 .00 0 1305 $23,490.00 2531.503 Concrete Curb Desigu V6 L.F. 196 S22 .00 196.00 0 227 $4 ,994 .00 2531.618 Tnmcalcd Domes S.F. 128 S46 .00 128.00 0 136 $6,256.00 2550.602 AdjUS1 Fiber Optic Vaull Each Sl,600.00 4.00 0 4 $6,400.00 2016•1!8 Requf:St lor Pay:T.t!n! (.Jets Cuntnict Unil P1 ·evious Cu1-rc11 1 Quanlity Amount No . ftem Unil Quantily Price Qu:rntity Quonlily to O;lfc to D:ate 2563 ,601 Trame Control L.S . S5 ,200.00 1.00 0 S5 ,200.00 256•1.5 I 8 Sign Panels T}l'c C S.F. 68 .S S32 .00 68.50 0 68 .5 S2,192 .00 2565.501 Traffic Control Interconnect L.S . 512,000.00 1.00 0 S12 ,000.00 2565.616 Revise Sign;:sl Syslcm Sys tem SI 55,000.00 0.95 0.05 S 155,000.00 2571.524 Coniferous Tree 4' HT B & B Tree 11 S480 .00 0 ,00 II II SS ,280.00 2571.524 Deciduous Tree 4' I IT B & B Tree S510.00 7.00 0 SJ,570.00 2573.501 S1onn Dr.Jin lnlci Protection Each S125.00 7.00 0 $875 .00 2573 .503 Scdimcnl Conlrol Los Type Compos! L.F. 16 S15 .00 16.00 0 50 $750.00 2574.508 Fertilizer Type 3 LB 218 Sl.00 218.00 0 218 S218.00 2575.50 5 Seeding Acre 0.'18 S7,000 .00 0.'18 0 0.48 S3,360.00 2575.508 Seed Mi,nrre 25-151 LB 1•14 S4 .00 144 .00 0 144 S576 .00 2575.513 Turf Esioblisluncnl L.S . S2,700 .00 1.00 0 S2.700.00 2582.503 4 " Solid Linc Paint L.F . 1,650 SO .JO 1650.00 0 1780 5534.00 1582.503 12" Solid Linc Pain l Gr In (WR) L.r-. 1,)50 Sl.25 13 50.00 0 1352 51,690.00 2582.50) 24" Solid Line Paint Gr In (WR) L.F. 400 S2 .50 400.00 0 360 $900.00 2582.518 Pavt Mss~ Paint Gr In (WR) S.F. 120 S3 .50 120.00 0 120 S420.00 TOTAL BASE 8 10 S725,0I0.45 State Aid Change Order Items 2565.602 Change Order 1 (Luminaire and Masl ArmO Each SJ,452.46 0.00 1.00 1.00 53 ,452.46 2563.602 Change Order 2 (Traffic Contro~Special-Event) Each S5,679 .74 0.00 1.00 1.00 $5,679.74 2563.613 Change Order 3 (Portable Changeable Message Sign) Uday S550.00 0 ,00 8.00 8.00 S4,400.00 2506.602 Change Order 4 (Modify Drainage Structure) Each S778 .(),1 0.00 1.00 1.00 $778.04 TOTAL STATE AID CHANGEOROER COSTS Sl~,310.14 TOTAL BASE BID AND CHANGE ORDER COSTS $739,320.69 PROJECT PAYMENT STATUS OWNER City of Apple Valley Project File No. 2016-138 CONTR A CTOR McNamara Contracting, In c. CHANGE ORDERS No. Date Description 1 12/14/20 18 Miscellaneous Intersecti on Improve ments and State Aid Approved Chanqe Orders Total Change Orders PAYMENT SUMMARY No. From 1 06/27/2018 2 09/01/2018 3 11/16/2018 4 (FINAL) 01/01/2019 Material on Hand Total Payment to Date Retainaqe Pay No . 4 (FINAL) Total Amount Earned 2016-138 Request for Payment 4.xls To 08/31/18 11/15/18 12/31/18 05/17/19 Payment Retainage 65,145 .30 3,428 .70 556 ,252 .07 29,276.43 63 ,683 .95 3,351 .78 54 ,239 .37 0.00 $739,320.69 Origina l Contract Change Orders $739 ,320 .69 Revised Contract Amount $70,488.19 $70,488 .19 Completed 68,574 .00 585,528 .50 67 ,035 .73 54,239 .37 $668 ,832 .50 $70,488 .19 $739 ,320 .69 I T E M: 4.X. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove P ersonnel Report S taff Contact: Melissa Haas, Human Resources Manager Department / Division: Human Resources Division AC T I O N RE Q UE S T E D: Approve the personnel report. S UM M ARY: T he employment actions attached to this memo are recommended for City C ouncil Approval. B AC K G RO UND: T he City Council's approval of the Personnel Report includes the ratification of the City Administrator's actions in carrying out the terms and conditions of the employment of the City personnel. B UD G E T I M PAC T: Budgeted positions. AT TAC HM E NT S : Personnel Report PERSONNEL REPORT June 13, 2019 City of Apple Valley Human Resources EMPLOYMENT ACTIONS The following employment actions are recommended for City Council approval: First Name Last Name Action Position Status Dept. Base Pay Rate Pay Type Pay Scale Date (on or about) Angelina Acostacano Hire Facility Attendant - Pool Casual, Seasonal 1940 $ 10.30 Hourly C-01 5/30/2019 Maren Beach Rehire Pool Manager Casual, Seasonal 1940 $ 16.95 Hourly C-08 5/24/2019 Rosemary Beach Rehire Facility Attendant - Pool Casual, Seasonal 1940 $ 10.55 Hourly C-01 6/7/2019 John Becker Hire Lead Puppet Performer Casual, Seasonal 1800 $ 11.90 Hourly C-04 6/10/2019 Molly Beckman Rehire Lifeguard I Casual, Seasonal 1940 $ 12.85 Hourly C-03 5/30/2019 Owen Benson Rehire Lifeguard I Casual, Seasonal 1940 $ 11.65 Hourly C-03 6/13/2019 Nolan Bessler Rehire Golf Outside Service Attendant Casual, Seasonal 5105 $ 10.80 Hourly C-01 6/1/2019 Blake Blascziek Hire Maintenance I Casual, Seasonal 1710 $ 12.52 Hourly SM1 6/3/2019 Lauren Bogart Rehire Lifeguard I Casual, Seasonal 1940 $ 11.65 Hourly C-03 6/7/2019 Anthony Buckner Rehire Facility Supervisor - Teen Center Casual, Variable Hour 1900 $ 17.15 Hourly C-07 6/7/2019 Stephanie Carlson Hire Lifeguard I Casual, Seasonal 1940 $ 11.65 Hourly C-03 5/30/2019 Annika Challgren Rehire Lifeguard I Casual, Seasonal 1940 $ 11.95 Hourly C-03 6/7/2019 Hope Davis Hire Lifeguard I Casual, Seasonal 1940 $ 11.35 Hourly C-03 5/30/2019 Mason DuPuis Hire Maintenance I Casual, Seasonal 5305 $ 12.52 Hourly SM1 5/28/2019 Haley Ford Rehire Lifeguard I Casual, Seasonal 1940 $ 12.25 Hourly C-03 5/30/2019 Rachel Gagne Rehire Pool Manager Casual, Seasonal 1940 $ 19.75 Hourly C-08 5/30/2019 Hailey Gallagher Hire Puppet Performer Casual, Seasonal 1800 $ 10.30 Hourly C-01 6/10/2019 Nick Guden Rehire Head Guard Casual, Seasonal 1940 $ 14.10 Hourly C-05 5/30/2019 Josie Hanneken Rehire Lifeguard I Casual, Seasonal 1930 $ 11.95 Hourly C-03 6/7/2019 Sarah Hannon Hire Recreation Program Leader Casual, Seasonal 1800 $ 10.80 Hourly C-02 6/10/2019 Justin Harms Hire Recreation Program Leader Casual, Seasonal 1800 $ 10.80 Hourly C-02 6/10/2019 The Council’s approval of the Personnel Report includes the ratification of the City Administrator’s actions in carrying out the terms and conditions of the employment of the City personnel. Page 1 of 3 PERSONNEL REPORT June 13, 2019 City of Apple Valley Human Resources First Name Last Name Action Position Status Dept. Base Pay Rate Pay Type Pay Scale Date (on or about) Averie Hillyer Hire Recreation Program Assistant Casual, Seasonal 1800 $ 10.30 Hourly C-01 6/10/2019 Ryan Hoffrogge Hire Sales Clerk Casual, Variable Hour 5020 $ 12.00 Hourly L-1 5/28/2019 Reid Jarvi Rehire Recreation Program Leader Casual, Seasonal 1800 $ 11.05 Hourly C-02 6/6/2019 Allyson Johnson Rehire Lifeguard I Casual, Seasonal 1940 $ 12.85 Hourly C-03 5/30/2019 John Kelin Hire Lifeguard I Casual, Seasonal 1930 $ 11.35 Hourly C-03 6/7/2019 Callie Kiefat Hire Lifeguard I Casual, Seasonal 1940 $ 11.35 Hourly C-03 6/7/2019 Brianna Kieffer Hire Lifeguard I Casual, Seasonal 1930 $ 11.35 Hourly C-03 5/30/2019 Jarrett Kotsmith Hire Maintenance I Casual, Seasonal 1710 $ 12.52 Hourly SM1 5/20/2019 Kenton LaDoux Hire Recreation Program Assistant Casual, Seasonal 1800 $ 10.30 Hourly C-01 6/7/2019 Jeanne Lind Hire Sales Clerk Casual, Variable Hour 5060 $ 12.00 Hourly L-1 5/28/2019 Alyssa Lokensgard Hire Water Safety Instructor Casual, Seasonal 1930 $ 12.50 Hourly C-05 6/7/2019 Matt Majeski Rehire Maintenance I Casual, Seasonal 5305 $ 12.85 Hourly SM1 5/28/2019 Nicole Martchev Rehire Lifeguard I Casual, Seasonal 1930 $ 12.25 Hourly C-03 6/7/2019 Jack Mead Rehire Lifeguard I Casual, Seasonal 1940 $ 11.95 Hourly C-03 5/30/2019 Will Michels Rehire Lifeguard II Casual, Seasonal 1940 $ 13.45 Hourly C-04 5/30/2019 Matt Moorlach Hire Lifeguard I Casual, Seasonal 1940 $ 11.35 Hourly C-03 6/7/2019 Adam Morken Hire Maintenance I Casual, Seasonal 5305 $ 12.52 Hourly SM1 6/3/2019 Claire Nack Rehire Lifeguard I Casual, Seasonal 1940 $ 11.65 Hourly C-03 5/30/2019 Olivia Nehring Hire Lifeguard I Casual, Seasonal 1940 $ 11.35 Hourly C-03 6/5/2019 Alan Olson Accept Resignation Fire Fighter Paid on Call Volunteer 1300 5/14/2019 Daniel Portnov Hire Lifeguard II Casual, Seasonal 1940 $ 11.90 Hourly C-04 6/7/2019 Kyle Rathman Rehire Maintenance I Casual, Seasonal 1710 $ 13.27 Hourly SM1 5/14/2019 Abigail Rousseau Rehire Water Safety Instructor Casual, Seasonal 1930 $ 13.45 Hourly C-05 5/30/2019 The Council’s approval of the Personnel Report includes the ratification of the City Administrator’s actions in carrying out the terms and conditions of the employment of the City personnel. Page 2 of 3 PERSONNEL REPORT June 13, 2019 City of Apple Valley Human Resources First Name Last Name Action Position Status Dept. Base Pay Rate Pay Type Pay Scale Date (on or about) Maxwell Schaefer Rehire Lifeguard I Casual, Seasonal 1940 $ 11.95 Hourly C-03 5/30/2019 Sydney Schliesing Rehire Lifeguard II Casual, Seasonal 1940 $ 12.50 Hourly C-04 5/30/2019 Nathan Schmaltz Hire I.T. Support Technician Full-Time, Regular 1030 $ 32.00 Hourly 150 7/1/2019 Lindsey Schmidt Rehire Lead Puppet Performer Casual, Seasonal 1800 $ 12.20 Hourly C-04 6/10/2019 Nicole Sowada Hire Sales Clerk Casual, Variable Hour 5020 $ 12.00 Hourly L-1 6/10/2019 Samantha Stevens Rehire Pool Manager Casual, Seasonal 1940 $ 17.35 Hourly C-08 5/30/2019 Ellette Tong Rehire Lifeguard I Casual, Seasonal 1930 $ 11.95 Hourly C-03 5/30/2019 Anders Torp Rehire Lifeguard I Casual, Seasonal 1940 $ 11.95 Hourly C-03 6/7/2019 Soren Torp Rehire Lifeguard I Casual, Seasonal 1940 $ 12.25 Hourly C-03 6/7/2019 Grace Troje Rehire Facility Attendant - Pool Casual, Seasonal 1940 $ 10.30 Hourly C-01 5/30/2019 Scott Werner Promotion Technical Specialist Full-Time, Regular 5365 $ 31.39 Hourly UMT 6/14/2019 Cassandra Wolf Rehire Head Guard Casual, Seasonal 1940 $ 14.10 Hourly C-05 5/30/2019 Elizabeth Yung Rehire Facility Attendant - Pool Casual, Seasonal 1940 $ 10.55 Hourly C-01 5/30/2019 The Council’s approval of the Personnel Report includes the ratification of the City Administrator’s actions in carrying out the terms and conditions of the employment of the City personnel. Page 3 of 3 I T E M: 4.Y. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Consent A genda Description: A pprove Claims and B ills S taff Contact: Ron Hedberg, Finance Director Department / Division: Finance Department AC T I O N RE Q UE S T E D: Approve claims and bills. S UM M ARY: Attached for C ity C ouncil review and approval are check registers for recent claims and bills. B AC K G RO UND: N/A B UD G E T I M PAC T: Check registers dated May 15, 2019, May 22, 2019 and May 30, 2019, in the amounts of $723,889.44, $1,320,864.20 and $534,693.47, respectively. AT TAC HM E NT S : Claims and Bills Claims and Bills Claims and Bills I T E M: 5.A. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Regular A genda Description: P roclaim Hebert and Dorn P roperties a Business L eader in Connection with A pple Valley's 50th Golden Year Celebration S taff Contact: B ruce Nordquist, A I C P Community Development Director Department / Division: Community Development Department AC T I O N RE Q UE S T E D: Proclaim Hebert and Dorn Properties a business leader in connection with Apple Valley's 50th golden year celebration. S UM M ARY: In the months ahead, as part of our 50th Golden Year A nniversary C elebration, staff is planning to invite notable Apple Valley businesses to come before the C ity C ouncil to be recognized for their long-standing contributions to the community. T hese are businesses that have contributed to the economic well-being of the C ity and have demonstrated a long-term commitment to the vitality of the community and its residents. T he C ity is very fortunate to have many such businesses which help to strengthen the fabric of our community and contribute to our collective prosperity. While we will not be able to honor all such businesses during the year, it is our hope that highlighting some will emphasize the important role our businesses play in providing economic stability and community vibrancy for us all. Mark Hebert and Mike Dorn as partners in owning, developing and leasing small suite business opportunities, have done so in Apple Valley since 1986. As the attached proclamation will further explain, 53 small businesses have been able to do business because of their affordable development and long term ownership strategy. Businesses that have benefitted include Dog D ay Getaway and Kwik Kopy/Alpha G raphics that had sought an Apple Valley location for several years. Image 360 and Brown Box Tees are examples of new business locations found for their industrial graphics shops. It is also noted that Bruce Rydeen and C erron C ommercial Properties is acknowledged by Mark Hebert for providing the marketing, land acquisition and tenant negotiation work that makes them successful Hebert and Dorn Properties of Apple Valley is our J une recipient. Mark Hebert will be present to receive the proclamation. Bruce Rydeen of C erron Properties will also be attending. B AC K G RO UND: N/A B UD G E T I M PAC T: N/A AT TAC HM E NT S : Proclamation Presentation CITY OF APPLE VALLEY WHEREAS, pioneering business efforts are demonstrated in many ways. In this example, it is the waves of just right location, product and time of development over 33 years in Apple Valley that has made a difference; and WHEREAS, “able” describes the partnership represented by Mark Hebert and Mike Dorn in offering dependable, reliable, and affordable industrial building styles that has earned the honored description of “handsome” in the planning/zoning field guides used by staff, and WHEREAS, a confident pioneer is defined as: • When you build an auto service center where Southport airport hangers were torn down and in advance of Target’s arrival. • When you build multiple phases of the Apple Valley Business Campus, totaling close to a quarter million square feet, before high-pressure oil and fuel pipelines are relocated and utilities and roads are completed, and they both finished together and on time. • When you worked in partnership with the City and committed to deliver Stream Global with plans and a lease in hand to build a service center for 1,000 employees, until a corporate acquisition and relocation took them away; and WHEREAS, you make these business decisions, in your words, because of the high level of confidence you have in the strength of the Apple Valley marketplace, its long time leaders and positive support of business that has been received; and WHEREAS, your efforts are based on a core value to satisfy your customer’s needs, which in the case of the Apple Valley Business Campus and their other properties, have provided 53 small businesses a place in Apple Valley to Plant, Grow and Prosper; and WHEREAS, let it also be noted that this development partnership succeeded because they had the able expertise in marketing, land acquisition and tenant negotiations from Bruce Rydeen and Cerron Commercial Properties. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Apple Valley, Dakota County, Minnesota, hereby recognizes: “HEBERT AND DORN PROPERTIES” as a well-established business leader demonstrating on-going excellence in business development and leasing during Apple Valley’s celebration of its 50 Golden Years. PROCLAIMED this 13th day of June, 2019. Mary Hamann-Roland, Mayor ATTEST: Pamela J. Gackstetter, City Clerk 6/13/2019 1 Recognize Hebert and Dorn Properties in our 50th Golden Year City Council Meeting June 13, 2019 6/13/2019 2 147th Street Apple Valley Business Campus 6/13/2019 3 6/13/2019 4 I T E M: 5.B. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Regular A genda Description: P ass Ordinance Amending Planned Development No. 703/Zone 6 P ertaining to Class I I I Restaurants with Drive-T hrough W indow Service (Recommend waiving second reading) S taff Contact: Thomas L ovelace, City Planner Department / Division: Community Development Department Applicant: E mperor Avenue Realty, L L C P roject Number: P C19-06-Z Applicant Date: 4/3/2019 60 Days: 6/1/2019 120 Days: 7/31/2019 AC T I O N RE Q UE S T E D: Pass ordinance amendment to allow for C lass III restaurants with drive-through window service as a permitted use in Planned Development No. 703/zone 6. (Recommend waiving second reading) S UM M ARY: Emperor Avenue Realty, LLC , is requesting an amendment to Planned Development Ordinance No. 703 to allow C lass III restaurants to have drive-through window service in zone 6 of the C obblestone Lake planned development. Zone 6, which encompasses approximately 49 acres, bounded by Pilot Knob Road to the west, 155th Street West to the north, Cobblestone Lake Parkway and C obblestone Lake to the east, and the North C reek Greenway trail to the south. A little over half of zone 6 is occupied by the Orchard Path continuum-of-care facility (12 acres) and Target (17 acres). Two vacant parcels totaling 1.2 acres also exist within the zone. T he applicant is currently constructing an 8,148-sq. ft. multi-tenant retail building on a 1.26- acre lot located in the southeast corner of 157th Street West and Emperor Avenue. T he building includes a drive-through window for a future restaurant at the north end of the building. T he drive-through lane wraps around the east and north sides of the building. At the time of the approval of site plan/building permit authorization on November 9, 2017, the applicant also received approval of a zoning amendment to allow for a second drive- through window in conjunction with a C lass II restaurant in zone 6 of the planned development. T hey are now asking that the C ity consider further amending the ordinance to allow for a C lass III restaurant, in particular a coffee shop, with drive-through window service. T his coffee shop would occupy the north end of the their new building. No changes to their approved plans are being requested with the addition of a coffee shop. T he current planned development ordinance allows for a Class II restaurant with drive- through window service as a permitted use, subject to the following: 1. T he restaurant shall be located within a multi-tenant building and shall not occupy more than 50% of the building and shall not exceed 3,000 square feet of floor area. 2. Only two restaurants with drive-through windows shall be allowed in zone 6. 3. Landscaping, screen wall, or a combination thereof shall be installed between the drive- through window lane and any private and public street, and open gathering spaces. 4. Hours of drive-through window operation shall be confined to the hours of 10: 00 a.m. to 11: 00 p.m. daily. 5. Only one drive-through lane and menu board shall be allowed. T he applicant is proposing amendments that would include C lass III restaurants with drive- through window service as a permitted use, subject to the following additional conditions: 1. T he restaurant shall be located within a multi-tenant building and shall not occupy more than 50% of the building and shall not exceed 2,500 square feet in floor area for a C lass III restaurant. 2. Class III restaurant drive-through window operation hours shall be confined to the hours of 6:00 a.m. to 11:00 p.m. daily. B AC K G RO UND: Comprehensiv e P lan: T he property owned by the applicant is currently guided “MIX” (Mixed Use). "MIX" designated areas should contain a mix of retail and service business, office, institutional, medium and higher density residential, public uses and/or park and recreation uses. T he uses may be mixed vertically (in a common structure) or horizontally (in a common site or area). Among the objectives for "MIX" areas are: Organize land use in a compact and walkable environment. Set standards for private development and public improvements that produce enduring quality and enhance the character and identity of Apple Valley. Encourage parking strategies that support greater intensity of use. Integrate green/open space and trails into Mixed Use areas. Improve environmental conditions, such as water quality and energy use, through development incentives. Connect Mixed Use areas to public facilities, including transit systems, and to the broader community. Mixed Use will be implemented through planned development zoning. T he C ity will use design standards and other land use controls to achieve the desired outcomes. T hese design standards will be implemented through the planned development zoning process. At the present time, the C entral Village, Apple Valley Transit Station, former Apple Valley Transit Station, and a small portion of C obblestone Lake are designated "MIX". Zoning: T he property is zoned Planned Development No. 703/zone 6. Identified uses in zone 6 include a wide variety of retail, C lass I, II, and III restaurants, professional offices, educational tutoring services, convenience stores, apartments, and continuum of care facilities. T he zoning ordinance defines a C lass II restaurant as: 1. Carry-out and delivery restaurant where food is prepared for consumption off the premises only. 2. A fast food restaurant, which is an eating facility where a majority of the customers order food and are served at a counter and then take their food to a table, counter, outdoor seating area or off the premises for consumption. T he food is either pre- prepared or quickly prepared and served with non-reusable food packaging and non- reusable utensils, plates and cups. Customers typically bus their own tables and 45% or more of the floor area is devoted to food preparation. A ny eating facility with drive- through service shall be deemed a fast food restaurant. A C lass III (neighborhood restaurant) is defined as an eating facility including bagel shop, sandwich shop, coffee house, lunch counter, delicatessen, ice cream shop where all of the following exist: 1. Restaurant does not exceed 2,500 square feet in size; 2. Hours of operation shall be limited to 6:00 a.m. to 11:00 p.m. daily; and 3. T he restaurant does not serve foods which require the installation of a Type I ventilation hood, grease and smoke removing, as defined in the Uniform Mechanical Code. T he C ity's "RB" (Retail Business) zoning district allows a C lass I restaurant, and a C lass III restaurant without a drive-through window, as permitted uses. A C lass II restaurant is a conditional use in this zoning district. Drive-through window in conjunction with a C lass III Neighborhood Restaurant is allowed as a conditional use in the "RB" zoning district, when the following requirements are met: 1. T he C ity C ouncil shall find that any noise, headlights, traffic volume and emissions from idling vehicles resulting from the operation of the window does not negatively impact surrounding residential and institutional uses. 2. T he drive-through lane shall not impede or conflict with vehicular, bicycle or pedestrian traffic circulation on the site, as determined by the C ity Traffic Engineer. 3. When a neighborhood restaurant is located less than 1,000 feet from residential or institutional use, the City Council may restrict the hours of operation of a drive-through window to mitigate any adverse impacts caused by noise, headlights, traffic volume and emissions from idling vehicles. During the review of the zoning amendments and site plan/building permit authorization requests in 2017, concerns were raised regarding the impacts that an additional drive-through window would have on traffic in and around the proposed development. Because of this concern, the applicant was asked to do a traffic analysis and provide the findings to the City for review. A traffic memorandum was prepared by the applicant and reviewed by the C ity's traffic consultant. T he memo also provided additional data in their review that included future development on lot adjacent to the south. T hey concluded that the intersections adjacent and near the proposed subdivision would have acceptable levels of service. T hey did indicate that if traffic to and from Pilot Knob Road were to back up on 158th Street West, consideration should be given to modifying the Emperor Avenue/158th Street West intersection from a full to a three-quarter or right in/right out intersection. Staff had no signification issues with their consultant's findings. T he applicant submitted a revised traffic memo per staff's request that reflects the change in restaurant use from a C lass II to a Class III coffee shop. T he memo, which is attached, has been reviewed by the C ity's traffic consultant who concluded the following: 1. T he changes in estimated trip generation are accurate based on the Institute of Transportation Engineers Trip Generation Manual, 10th Edition. 2. T here is not expected to be any significant intersection capacity impacts based on the land use change, however, vehicular operations between Pilot Knob Road and Emperor Drive along 157th Street should be monitored after opening to determine if an access modification is necessary. A public hearing was on May 1, 2019. One comment was received from the public. T hat person, who is a tenant in the building where the applicant would like to put the C lass III restaurant, commented that as a business owner he is excited to see a coffee shop at this location. No other comments were received, and the hearing was closed. On May 15, 2019, the Planning Commission voted 5-1 to recommend approval of the proposed planned development ordinance amendments. B UD G E T I M PAC T: N/A AT TAC HM E NT S : Ordinance Background Material Background Material Area Map Comp Plan Map Z oning Map Site P lan L andscaping Plan Elevations Presentation CITY OF APPLE VALLEY ORDINANCE NO. ___ AN ORDINANCE OF THE CITY OF APPLE VALLEY, AMENDING CHAPTER 155-APPENDIX F OF THE CITY CODE ENTITLED “APPENDIX F: PLANNED DEVELOPMENT DESIGNATIONS” BY AMENDING ARTICLE A28 REGULATING PLANNED DEVELOPMENT DESIGNATION NO. 703 The City Council of Apple Valley ordains: Section 1. Article A28 of the Apple Valley City Code is hereby amended by revising Section A28-2 (G) (3) to read as follows: * * * * (3) Permitted uses within the shopping center or freestanding buildings shall be limited to the following unless similar uses are specifically approved by the city council: Stores and shops selling the personal service or goods over a counter. These include antique or gift shops; appliance store (sales and/or repair); art and school supply store; auto accessory store (installation and/or service facilities subject to conditional use); bakery; bank; savings and loan; barbershop; beauty salon; bicycle sales; books; stationary and office supplies; candy; camera and photographic supplies; carpet and rug sales; catering services; china and glassware sales; clothing and costume sales and rental; coin operated amusement devices and similar facilities; copy sales and service; day spa; department store; drugstore; dry cleaning; dry goods; electronic sales and/or service; florist; furniture store; garden supplies; hardware store; health or athletic club and facilities; hobby/crafts store; interior decorating; jewelry and watch repair; laundromat; leather goods and luggage; locksmith; musical instruments; off-sale liquor store; on-sale wine or 3.2 beer in conjunction with a restaurant facility; nail salon; paint and wallpaper sales; pet store; photography studio; pipe and tobacco shop; recorded music sales; Class I and III restaurant (no drive through window service allowed), Class II and III restaurant, shoe sales or repair; sporting goods; tailoring; theater (except open air drive-in); toy store; video rental and sales. Section 2. Article A28 of the Apple Valley City Code is hereby amended by adding Section A28-2(G) (12) to read as follows: § A2-2 PERMITTED USES. * * * * (12) Class III restaurant with drive-through window service, subject to the following conditions: 2 (a) The restaurant shall be located within a multi-tenant building and shall not occupy more than 50% of the building and shall not exceed 2,500 square feet of floor area. (b) Only two restaurants with a drive-through window shall be allowed in zone 6. (c) Landscaping, screen wall, or a combination thereof shall be installed between the drive-through window lane and any private and public street, and open gathering spaces. (d) Hours of drive-through window operation shall be confined to the hours of 6:00 a.m. to 11:00 p.m. daily. (e) Only one drive-through lane and menu board shall be allowed. (f) The City Council shall find that any noise, headlights, traffic volume and emissions from idling vehicles resulting from the operation of the window does not negatively impact surrounding residential and institutional uses. (g) The drive-through lane shall not impede or conflict with vehicular, bicycle or pedestrian traffic circulation on the site, as determined by the City Traffic Engineer. (h) When a neighborhood restaurant is located less than 1,000 feet from a residential or institutional use, the City Council may restrict the hours of operation of the drive-through window to mitigate any adverse impacts caused by noise, headlights, traffic volume and emissions from idling vehicles. (i) The restaurant shall not serve foods that requires the installation of a Type I ventilation hood, grease and smoke removing, as defined in the Uniform Mechanical Code. Section 2. Effective date. This ordinance shall take effect upon its passage and publication of its title and official summary. PASSED by the City Council this ___ day of (month), 2019. _________________________________ Mayor Hamann-Roland, Mayor ATTEST: 3 ________________________________ Pamela J. Gackstetter, City Clerk One SE Main St #204, Minneapolis, MN 55414 888.232.5512 www.SpackConsulting.com Technical Memorandum To: Ben Krsnak - Hempel Companies From: Max Moreland, PE Date: April 30, 2019 Re: Traffic Impact Memorandum - Cobblestone Outlot A Retail Purpose of Report and Study Objectives In October of 2017, Spack Consulting conducted trip generation forecasts for Outlot A of the Cobblestone Lakes retail area located at the southwest corner of the 157th Street/Cobblestone Lake Parkway intersection in Apple Valley, Minnesota. Those forecasts included a 3,000 square foot fast casual restaurant and 5,148 square feet of general retail. The purpose of this study is to compare the expected traffic for the site with that previous land use breakdown to a new land use breakdown. The new land use breakdown consists of a 2,000 square foot coffee shop with drive-thru and 6,500 square feet of general retail. This study will also forecast the anticipated traffic impacts to four of the surrounding intersections as well as includes a review of the site layout from a traffic perspective. Conclusions The changes in land uses represent a swap of a fast-casual restaurant for a coffee shop with drive-through and a change in the amount of retail space being provided . Using standard trip generation data, the expected changes with the new development compared to the previous development are: • An increase in raw daily (778) and raw peak hour trips (177 in the AM peak and 52 in PM peak). • A decrease in new daily (246) and new PM peak hour trips (3). • An increase in new AM peak hour trips (20). No significant operational impacts are anticipated for the surrounding roadways and intersections due to trips from this proposed development. Spack Consulting 2 of 5 Traffic Impact Memorandum Cobblestone Outlot A Retail One SE Main St #204, Minneapolis, MN 55414 888.232.5512 www.SpackConsulting.com Existing Site The proposed site is a retail center nearing completion on the southwest corner of the 157th Street/Cobblestone Lake Parkway intersection. The area is currently zoned PD-6, planned development, and the development site is surrounded by a variety of different land uses, including a big box store, small shop retail, full-service and fast casual restaurants, a preschool, apartments, a liquor store, a bank and a clinic. Trip Generation The traffic forecasts for the site are based on the data and methods published in the Institute of Transportation Engineers (ITE) Trip Generation Manual, 10th Edition. The ITE Trip Generation Manual is a compilation of traffic data for various land uses from existing developments throughout the United States. Table 1 presents the trip generation for both the current and former land use plans for the site. It should be noted only the raw trip generation is presented in Table 1, without reductions for pass-by or internal trips, to present a direct comparison of trip generation . Table 1 – Raw Trip Generation Comparison Scenario Description (source) Daily Trips AM Peak Hour PM Peak Hour Entering Exiting Entering Exiting Entering Exiting 2017 Land Use Scenario Retail – 5,148 feet2 (ITE-814) 164 164 9 7 18 17 Fast-Casual Restaurant – 3,000 feet2 (ITE-930) 473 473 4 2 23 19 TOTAL 637 637 13 9 42 36 Current Land Use Scenario Retail – 6,500 feet2 (ITE-814) 206 206 12 9 23 21 Coffee Shop w/Drive-Thru – 2,000 feet2 (ITE-937) 820 820 91 87 43 43 TOTAL 1,026 1,026 103 96 66 64 Change in Site Trips with Current Plan 389 389 90 87 24 28 The raw trip generation shown in Table 1 can be divided among three types of trips – new, pass- by, and internal. Pass-by trips are those vehicles already on the roads which will stop at the development site in the future. For a coffee shop with a drive-thru, it is estimated that most of the trips to the site, 89%, will be pass-by trips. Internal trips are those vehicles within the site visiting multiple land uses. New trips represent traffic increasing the overall number of vehicles at the intersections. With that, the raw trip numbers shown in Table 1 do not correspond to the number of vehicles that will be added to surrounding roadways and intersections. Table 2 shows the new trips anticipated for the site for both land use scenarios. Spack Consulting 3 of 5 Traffic Impact Memorandum Cobblestone Outlot A Retail One SE Main St #204, Minneapolis, MN 55414 888.232.5512 www.SpackConsulting.com Table 2 – New Trip Generation Comparison Scenario Description (source) Daily Trips AM Peak Hour PM Peak Hour Entering Exiting Entering Exiting Entering Exiting 2017 Land Use Scenario Retail – 5,148 feet2 (ITE-814) 155 155 9 7 17 16 Fast-Casual Restaurant – 3,000 feet2 (ITE-930) 256 256 2 1 13 10 TOTAL 411 411 11 8 30 26 Current Land Use Scenario Retail – 6,500 feet2 (ITE-814) 200 200 11 9 22 21 Coffee Shop w/Drive-Thru – 2,000 feet2 (ITE-937) 88 88 10 9 5 5 TOTAL 288 288 21 18 27 26 Change in Site Trips with Current Plan -123 -123 10 10 -3 0 As shown in Table 1, the proposed change of land use with the inclusion of a coffee shop with drive-thru increases total raw daily traffic from the previous land use scenario. However, as mentioned previously, that comparison is presented without reductions for pass-by or internal trips. With the heavy pass-by percentage anticipated for a coffee shop, Table 2 shows the number of new trips to the area is similar between land uses. Intersection Impact Analysis To be able to see the impact of site trips on surrounding intersections, trips need to be distributed throughout the roadway network. A trip distribution pattern for the generated traffic going to and from the proposed development was included in the 2017 analysis. Without updated count information available, this pattern is still valid and is: i. 21% of the generated traffic to/from the north on Pilot Knob Road ii. 18% of the generated traffic to/from the east on 160th Street iii. 16% of the generated traffic to/from the south on Pilot Knob Road iv. 16% of the generated traffic to/from the west on 160th Street v. 15% of the generated traffic to/from the north on Cobblestone Lake Parkway vi. 10% of the generated traffic to/from the south on Cobblestone Lake Parkway vii. 4% of the generated traffic to/from the west on 155th Street Traffic generated by the site development was assigned to the area roadways per this distribution pattern. Intersection Impact Analysis Using the trip generation and trip distribution, new trips for the current land use plan were routed through the following intersections: • 157th Street & Emperor Avenue • 157th Street & Pilot Knob Road Spack Consulting 4 of 5 Traffic Impact Memorandum Cobblestone Outlot A Retail One SE Main St #204, Minneapolis, MN 55414 888.232.5512 www.SpackConsulting.com • 157th Street & Cobblestone Lake Parkway • 158th Street & Cobblestone Lake Parkway Pass-by trips were also routed through the network. Pass-by trip origins/destinations are based on the available daily volumes and are assumed for this analysis to all be going to/from Pilot Knob Road, 160th Street and 155th Street. These trips are shown for the AM and PM peak hours in Figure 1. Figure 1 – Peak Hour Site Trips with Current Land Use Scenario Spack Consulting 5 of 5 Traffic Impact Memorandum Cobblestone Outlot A Retail One SE Main St #204, Minneapolis, MN 55414 888.232.5512 www.SpackConsulting.com As seen in Figure 1, the highest volume increase for any intersection movement due to the site traffic is 47 vehicles making eastbound right turns at 157th Street & Emperor Avenue in the AM peak hour. That equates to an increase of less than one vehicle per minute for that movement. Based on these volumes, none of the surrounding intersections are anticipated to be significantly impacted by site traffic. Site Plan Review The current site plan for this development, which is attached, was reviewed from a traffic perspective. The following recommendations are made to improve site safety and circulation: • Sign the exit of the drive-thru as a do not enter area to signify the one-way operations. • The drive-thru for the coffee shop portion of the site is approximately 160 feet long. Assuming 20 feet per vehicle in a queue (to account for the vehicle length and space between vehicles), that would hold eight vehicles. Measurements of drive-thru queues conducted by Spack Consulting in 2018 and 2019 found an average maximum queue length of 9.6 vehicles for coffee shops. Based on the location of the drive -thru, there is expected to be enough stacking room in the drive-thru for much of the time, but queues may occasionally back up into the parking lot. If a large backup were to occur, only a few parking spaces for this site would be impacted with the majority of the site able to operate without being impacted. The southeastern parking lot for the proposed adjacent building would be temporarily blocked only during those peak maximum queues. • The pedestrian crossing near the drive-thru entrance is close to the trash enclosure. Proper sight lines will need to be maintained between approaching vehicles and the pedestrian crossing area to make for a safe crossing location. • Though it is part of the proposed adjacent site, the access on 158th Street is likely not needed from a capacity standpoint and may be used as a cut -through for vehicles heading to this site. With the close spacing to Emperor Avenue, it is recommended that site access not be included and the only site access be on Emperor Avenue. Review Summary ONE CARLSON PARKWAY, SUITE 150 | MINNEAPOLIS, MN 55447 | 763.475.0010 | WWW.SRFCONSULTING.COM SRF No. 12795.00 To: Brandon Anderson, PE, City Engineer City of Apple Valley From: Tom Sachi, PE, Associate Matthew Pacyna, PE, Principal Date: May 10, 2019 Subject: Review of Traffic Impact Memorandum - Cobblestone Outlot A Retail Apple Valley, MN Introduction As requested, SRF has completed a review of the Traffic Impact Memorandum – Cobblestone Outlot A Retail document, dated April 30, 2019 completed by Spack Consulting. The proposed development is located in the southwest quadrant of the 157th Street and Cobblestone Lake Parkway intersection in the City of Apple Valley. The memorandum is an update to a previous study completed in October 2017. Since that time, land use changes have occurred. Therefore, review of the current memorandum identified the following questions and comments for consideration. Review Summary Based on our review, the following items were identified: Site Trip Generation/Distribution 1. The peak hour trip generation using the Institute of Transportation Engineers Trip Generation Manual, 10th Edition is accurate for both the previous and updated proposed land uses. As previously noted in a review of the October 2017 study, the ITE code for the retail portion is representative of a “variety store”. Although ITE code 820, which represents a “general shopping center ,” may provide a more realistic description of the future land use, the overall trip generation is relatively similar and not expected to be an issue. A comparison of the site trip generation is shown in Table 1. Table 1: Site Development Trip Generation Comparison Land Use Type (ITE Code) Size A.M. Peak Hour Trips P.M. Peak Hour Trips Weekday Daily Trips In Out In Out 2017 Land Use Scenario Variety Store–Retail (814) 5,148 SF 9 7 18 17 328 Fast–Casual Restaurant (930) 3,000 SF 4 2 23 19 946 Total 13 9 41 36 1,274 Current Land Use Scenario Variety Store–Retail (814) 6,500 SF 12 9 23 21 412 Coffee-Shop (937) 2,000 SF 91 87 43 43 1,640 Total 103 96 66 64 2,052 Change In Site Trips +90 +87 +25 +28 +778 Percent Change in Site Strips +692% +967% +57% +78% +61% Brandon Anderson, PE, City of Apple Valley May 10, 2019 Review of Traffic Impact Memorandum – Cobblestone Outlot A Retail Page 2 2. While there is expected to be a significant increase in site trip generation, specifically during the a.m. peak hour, the majority of these trips are already traveling along the roadway network and do not represent the increase in overall area trips. 3. The pass-by percentages used for the previous land use Fast-Casual Restaurant and proposed Coffee Shop are accurate. It was noted that internal capture was accounted for, but a specific percentage is not identified. Based on calculations, it is estimated that a five (5) percent internal capture rate was used, which is reasonable. The changes in overall area trips are shown in Table 2. Table 2: Total Area Trip Generation Comparison Land Use Type (ITE Code) Size A.M. Peak Hour Trips P.M. Peak Hour Trips Weekday Daily Trips In Out In Out 2017 Land Use Scenario Variety Store–Retail (814) 5,148 SF 9 7 17 16 310 Fast–Casual Restaurant (930) 3,000 SF 2 1 13 10 512 Total 11 8 30 26 822 Current Land Use Scenario Variety Store–Retail (814) 6,500 SF 11 9 22 21 400 Coffee-Shop (937) 2,000 SF 10 9 5 5 176 Total 21 18 27 26 576 Change In Site Trips +10 +10 (-3) 0 (-246) Percent Change in Site Strips +91% +125% (-10%) 0% (-30%) 4. The overall changes in area trips is expected to be an increase of 20 a.m. peak hour trips, and a decrease of three (3) p.m. peak hour and 246 daily trips. While there is expected to be a significant percentage increase in a.m. peak hour area trips, this is due to the low magnitude of the previous trip generation and only represents an increase of 20 peak hour trips. 5. The directional distribution percentages are reasonable. Traffic Impact Analysis 6. The peak hour trips identified within Figure 1 of the Spack Consulting Report do not add up to the expected amounts identified within the trip generation table. The a.m. peak hour arrival trips are six (6) vehicles low, the p.m. peak hour arrival trips are two (2) vehicles high, and the p.m. peak hour departure trips are three (3) vehicles high. These discrepancies may be attributed to rounding error within the analysis program and are not expected to change the analysis results. 7. The increase in a.m. peak hour vehicles due to the coffee-shop is not expected to be an issue due to the relatively low background volume associated with the existing land uses nearby. 8. There is expected to be an additional 24 entering and 28 exiting trips during the p.m. peak hour when side-street delays on Emperor Avenue are expected to operate near the LOS D/E threshold under existing and year 2020 build conditions, as noted during the previous review. Side-street delays of this magnitude are generally considered acceptable and do not necessitate mitigation. Brandon Anderson, PE, City of Apple Valley May 10, 2019 Review of Traffic Impact Memorandum – Cobblestone Outlot A Retail Page 3 9. However, if queues from Pilot Knob Road regularly impact operations at Emperor Avenue, safety issues develop, and/or side-street delays increase further, potential modification to a three-quarter or right-in/right-out access should be considered. Site Plan Review 10. The review of the proposed site plan by Spack Consulting adequately addresses the issues identified on the site plan. Additional Outlot A Development 11. As noted on the site plan, there is the potential an additional 5,000 square foot retail development could be constructed on the southern portion of the site. An additional 5,000 square foot development would generate an additional five (5) trips during the a.m. peak hour, 10 trips during the p.m. peak hour, and 170 daily trips, assuming a general retail land use (ITE Code 820), in addition to the trip generation noted in the Traffic Impact Memorandum – Cobblestone Outlot A Retail document. 12. Under the site plan review, the access through the additional Outlot site is noted that it is not necessary. If this access is removed, the parking lot should be designed in a way to allow for the vehicles parked in the southwest corner of the site to back out into a hammerhead area to ensure they can drive forward within the parking lot aisle. 13. If the driveway off 158th Street is to remain, an alternative to consider would be to move the building in Lot 2 to the east so that the driveway aisle is located further away from Emperor Avenue. Additionally, this site reorientation could move the east parking for Lot 2 and reduce conflicts with the drive-thru lane. Conclusions and Recommendations 14. The changes in estimated trip generation are accurate based on the Institute of Transportation Engineers Trip Generation Manual, 10th Edition. 15. There is not expected to be any significant intersection capacity impacts based on the land use change, however, vehicular operations between Pilot Knob Road and Emperor Drive along 157th Street should be monitored after opening to determine if an access modification is necessary. 6/13/2019 1 “PD‐703” ZONING AMENDMENTS APPLE VALLEY CITY COUNCIL PRESENTATION JUNE 13, 2019 “PD‐703” ZONING AMENDMENTS REQUEST FOR: Approval of zoning amendments to allow for a drive‐up window in conjunction with a Class III restaurant in zone 6 of Planned Development No. 703 6/13/2019 2 RESTAURANT DEFINITIONS CLASS II. CARRY‐OUT AND DELIVERY RESTAURANT.Food is prepared for consumption off the premises only. FAST‐FOOD RESTAURANT.An eating facility where a majority of the customers order food and are served at a  counter and then take their food to a table, counter, outdoor seating area or off the premises for consumption.   The food is either pre‐prepared or quickly prepared and served with non‐reusable food packaging and non‐ reusable utensils, plates and cups.  Customers typically bus their own tables and 45% more of the floor area is  devoted to food preparation.  Any eating facility with drive‐thru service shall be deemed a fast food restaurant. CLASS III. NEIGHBORHOOD RESTAURANT.An eating facility including bagel shop, sandwich shop, coffee house, lunch  counter, delicatessen, ice cream shop where all of the following exist: 1. Restaurant does not exceed 2,500 square feet in size;  2. Hours of operation shall be limited to 6:00 a.m. to 11:00 p.m. daily; and 3. The restaurant does not serve foods which require the installation of a Type I ventilation hood, grease and  smoke removing, as defined in the Uniform Mechanical Code.    RETAIL BUSINESS ZONING REQUIREMENTS PERMITTED USES Restaurants (Class I, and Class III Neighborhood Restaurant without a drive‐through  window, only) CONDITIONAL USES Drive‐through window in conjunction with a Class III Neighborhood Restaurant, when the  following requirements are met: •The City Council shall find that any noise, headlights, traffic volume and emissions from idling  vehicles resulting from the operation of the window does not negatively impact surrounding  residential and institutional uses. •The drive‐through lane shall not impede or conflict with vehicular, bicycle or pedestrian  traffic circulation on the site, as determined by the City Traffic Engineer. •When a neighborhood restaurant is located less than 1,000 feet from residential or  institutional use, the City Council may restrict the hours of operation of a drive‐through  window to mitigate any adverse impacts caused by noise, headlights, traffic volume and  emissions from idling vehicles. 6/13/2019 3 EXISTING “PD” ORDINANCE LANGUAGE § A2‐2  PERMITTED USES. (11) Class II restaurant with drive‐through window service, subject to the following: (a) The restaurant shall be located within a multi‐tenant building and shall not occupy more  than 50% of the building and shall not exceed 3,000 square feet of floor area. (b) Only two restaurants with drive‐through windows shall be allowed in zone 6. (c) Landscaping, screen wall, or a combination thereof shall be installed between the drive‐ through window lane and any private and public street, and open gathering spaces.  (d) Hours of drive‐through window operation shall be confined to the hours of 10: 00 a.m. to  11: 00 p.m. daily. (e) Only one drive‐through lane and menu board shall be allowed. PROPOSED “PD”ORDINANCE LANGUAGE PERMITTED USES Class II and III restaurants with drive‐through window service, subject to the following  conditions: •The restaurant shall be located within a multi‐tenant building and shall not occupy more than  50% of the building and shall not exceed 2,500 for a Class III restaurant and 3,000 square feet  of floor area for a Class II restaurant. •Only two restaurants with drive‐through windows shall be allowed in zone 6. •Landscaping, screen wall, or a combination thereof shall be installed between the drive‐ through window lane and any private and public street, and open gathering spaces. •Class II restaurant drive‐through window operation hours shall be confined to the hours of  10:00 a.m. to 11:00 p.m. daily.  Class III restaurant drive‐through window operation hours  shall be confined to the hours of 6:00 a.m. to 11:00 p.m. daily.   •Only one drive‐through lane and menu board shall be allowed. 6/13/2019 4 PROPOSED “PD”ORD. AMENDMENTS § A2‐2  PERMITTED USES. (12) Class III restaurant with drive‐through window service, subject to the following  conditions: (a) The restaurant shall be located within a multi‐tenant building and shall not  occupy more than 50% of the building and shall not exceed 2,500 square feet of floor area. (b) Only two restaurants with a drive‐through window shall be allowed in zone 6. (c) Landscaping, screen wall, or a combination thereof shall be installed between the  drive‐through window lane and any private and public street, and open gathering spaces. (d) Hours of drive‐through window operation shall be confined to the hours of 6:00  a.m. to 11:00 p.m. daily. PROPOSED “PD”ORD. AMENDMENTS (d) Only one drive‐through lane and menu board shall be allowed. (e) The City Council shall find that any noise, headlights, traffic volume and  emissions from idling vehicles resulting from the operation of the window does not negatively  impact surrounding residential and institutional uses. (f) The drive‐through lane shall not impede or conflict with vehicular, bicycle or  pedestrian traffic circulation on the site, as determined by the City Traffic Engineer. (g) When a neighborhood restaurant is located less than 1,000 feet from a residential  or institutional use, the City Council may restrict the hours of operation of the drive‐through  window to mitigate any adverse impacts caused by noise, headlights, traffic volume and  emissions from idling vehicles. (h) The restaurant shall not serve foods that requires the installation of a Type I  ventilation hood, grease and smoke removing, as defined in the Uniform Mechanical Code. 6/13/2019 5 LOCATION MAP PKWYZONE 6COBBLESTONELAKESITE PILOT KNOB RD155TH ST W 157TH ST W 160TH ST W 159TH ST W COBBLESTONE LAKE PKWY ENGLISH AVEEAGLE BAY DR158TH ST W ELMHURST LNE LM W O O D WAY E L M C R O F T W AY EDDINGTON WAY EDDY CREEK WAY PILOT KNOB RDZONING MAP “PD‐703/Zone 6” (Planned Development) PD-703 5 6 8 8 2 2A 3 3 2 6 A P PD-703 M-6PD-856PD-856 1 2 6ZONE 6SITE PILOT KNOB RD155TH ST W EMBRY PATHCOBBLESTONE LAKE PKWY 157TH ST W 159TH ST W 154TH ST W COBBLESTONE LAKE PKWY S EASTBEND WAYEAGLE BAY DRELMWOOD WAY ELMHURST LNEARLY BIRD CIR ELM CREEK LNEAMES WAY EDDY CREEK WAY 158TH ST W EAGLES NEST WAY EASTCHESTER RDE A S T B R O O K L N E A G L E V IE W W A Y 159TH ST WPILOT KNOB RD 6/13/2019 6 SITE PLAN Proposed  Coffee Shop Location Drive‐through  Window SITE PLAN/W DRIVE LANE QUEUE Proposed  Coffee Shop Location 6/13/2019 7 LANDSCPE PLAN Proposed  Coffee Shop Location BUILDING ELEVATIONS 6/13/2019 8 BUILDING PERSPECTIVE FLOOR PLAN Proposed  Coffee Shop Location 6/13/2019 9 AERIAL VIEW Cobblestreet  Market Vacant  Lot Orchard  Path Landscaping  Cobblestone  Square AERIAL VIEW Cobblestreet Market  Building Orchard Path Median  Landscaping 6/13/2019 10 AERIAL VIEW Cobblestreet Market Vacant  LotCobblestone  Square Orchard  Path Median  Landscaping TRAFFIC ANALYSIS CONCLUSIONS •Expected to be a significant increase in site trip generation, specifically during the a.m. peak hour,  •The majority of these trips are already traveling along the roadway network and do not represent the  increase in overall area trips.  •Overall changes in area trips is expected to be: •An increase of 20 a.m. peak hour trips, and  •A decrease of three (3) p.m. peak hour and 246 daily trips.  •Expected to be a significant percentage increase in a.m. peak hour area trips, due to the low  magnitude of the previous trip generation and only represents an increase of 20 peak hour trips.  •The increase in a.m. peak hour vehicles due to the coffee‐shop is not expected to be an issue due to the  relatively low background volume associated with the existing land uses nearby.  •There is not expected to be any significant intersection capacity impacts based on the land use change,  however, vehicular operations between Pilot Knob Road and Emperor Drive along 157th Street should  be monitored after opening to determine if an access modification is necessary.  6/13/2019 11 “PD‐703” ZONING AMENDMENTS RECOMMENDED ACTION Pass Ordinance Amending Planned Development No. 703/Zone 6 Pertaining  to Class III Restaurants with Drive‐Through Window Service (Recommend  waiving second reading) 6/14/2019 1 6/14/2019 1 6/14/2019 1 Think Mutual Bank, Bogart’s and Raising Canes Presents 2019 Music in Kelley Park Concert Series Show times 6-9 pm FREE! Food and beverages available for purchase FREE prize drawings (must be present to win) 6/14/2019 2 This Friday 6/14/2019 3 Thanks Sponsors! I T E M: 7. C O UNC I L ME E T I NG D AT E :J une 13, 2019 S E C T I O N:Calendar of Upcoming Events Description: A pprove Calendar of Upcoming E vents S taff Contact: S tephanie Marschall, Deputy City Clerk Department / Division: City Clerk’s Office AC T I O N RE Q UE S T E D: Approve the calendar of upcoming events as listed in the summary below, and noting each event listed is hereby deemed a Special Meeting of the C ity Council. S UM M ARY: Day/Date Time Location Ev ent Mon./J une 10 3:00 p.m.Apple Valley Transit Station Groundbreaking Ceremony for Expansion Project T hur./J une 13 5:30 p.m.Municipal Center Informal City C ouncil Meeting T hur./J une 13 7:00 p.m.Municipal Center Regular C ity Council Meeting Fri./J une 14 6:00-9:00 p.m.Kelley Park Apple Valley Arts Foundation Music in Kelley Park Concert Series Wed./J une 19 7:00 p.m.Municipal Center Planning C ommission Meeting Fri./J une 21 6:00-9:00 p.m.Kelley Park Apple Valley Arts Foundation Music in Kelley Park Concert Series Tue./J une 25 6:00 p.m.Municipal Center Urban Affairs Advisory Committee Meeting J une 26-28 Duluth, MN League of Minnesota Cities Annual Conference Wed./J une 26 9:00 a.m.Municipal Center Firefighters Relief Association Meeting Fri./J une 28 1:30-3:00 p.m.Municipal Center Barb Gevik Retirement Reception Fri./J une 28 6:00-9:00 p.m.Kelley Park Apple Valley Arts Foundation Music in Kelley Park Concert Series T hur./J uly 4 City Offices C losed Independence Day T hur./J uly 4 1:00 p.m.Pennock & Fireside Freedom Days Parade T hur./J uly 4 10:00 p.m.J ohnny Cake Ridge Park East Freedom Days Fireworks Display Fri./J uly 5 6:00-9:00 p.m.Kelley Park Apple Valley Arts Foundation Music in Kelley Park Concert Series Wed./J uly 10 7:00 p.m.Municipal Center Traffic Safety Advisory Committee Meeting T hur./J uly 11 5:30 p.m.Municipal Center Informal City C ouncil Meeting T hur./J uly 11 7:00 p.m.Municipal Center Regular C ity Council Meeting Fri./J uly 12 6:00-9:00 p.m.Kelley Park Apple Valley Arts Foundation Music in Kelley Park Concert Series B AC K G RO UND: Each event is hereby deemed a Special Meeting of the C ity Council, the purpose being informational or social gathering. Only events marked with an asterisk (*) will any action of the Council take place. B UD G E T I M PAC T: N/A