HomeMy WebLinkAboutItem 03.bCity of Lakeville
Finance Department
Memorandum
To: Mayor and Council
Justin Miller, City Administrator
From: Jerilyn Erickson, Finance Director
Date: June 22, 2015
Subject: 2014 Comprehensive Annual Financial Report
The 2014 Comprehensive Annual Financial Report and (Auditors) Management Report are
being presented to the City Council for your review and comment.
The certified public accounting firm of Malloy, Montague, Karnowski, Radosevich & Co., P.A.
(MMKR) has audited the financial report. In their opinion, the financial statements, as
presented, represent the financial position of City of Lakeville as of December 31, 2014 and
the results of operations for the year ended.
Mr. William Lauer, Partner with MMKR, will present an overview of the financial report at the
work session.
Supporting Information
A. City of Lakeville Comprehensive Annual Financial Report for the Year Ended December 31,
2014
B. Management Report
C. Special Purpose Audit Reports – Internal Controls, and Compliance with Laws and
Regulations
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
2014
Year Ended December 31, 2014
City of Lakeville, Minnesota
COMPREHENSIVE
ANNUAL FINANCIAL
REPORT
City of
Minnesota
For the Year Ended
December 31, 2014
ISSUED BY THE FINANCE DEPARTMENT
I N T R O D U C T O R Y S E C T I O N
CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2014
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Table of Contents 1 - 3
Elected and Appointed Officials 4
Organizational Structure 5
Letter of Transmittal 6 - 14
Certificate of Achievement 15
FINANCIAL SECTION
Independent Auditors' Report 16 - 18
Management's Discussion and Analysis 19 - 35
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 36
Statement of Activities 37
Fund Financial Statements
Balance Sheet - Governmental Funds 38- 39
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 40
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 41 - 42
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 43
Statement of Net Position - Proprietary Funds 44
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 45
Statement of Cash Flows - Proprietary Funds 46
Statement of Fiduciary Net Position - Agency Fund 47
Notes to Basic Financial Statements 48 - 84
Required Supplementary Information other than MD &A
General Fund - Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budgetary Comparison 85 - 91
Notes to Required Supplementary Information 92
Other Post-Employment Benefits Plan - Schedule of Funding Progress 93
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CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2014
TABLE OF CONTENTS (CONTINUED)
Page
FINANCIAL SECTION (continued)
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet 94
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 95
Combining Governmental Funds
Special Revenue Funds (Nonmajor)
Combining Balance Sheet 96
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 97
Debt Service Funds (Nonmajor)
Combining Balance Sheet 98
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 99
Capital Projects Funds (Nonmajor)
Combining Balance Sheet 100 - 101
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 102 - 103
Special Revenue Funds - Budgetary Comparison Schedules
Communications 104
Economic Development 105
Downtown Special Service District 106
Agency Fund - Statement of Changes in Assets and Liabilities 107
Supplemental Information
Schedule of Changes in Bonded Indebtedness 108
Schedule of Bonded Indebtedness and Annual Interest Payable 109 - 117
Combined Schedule of Bonded Indebtedness 118 - 119
STATISTICAL SECTION
Financial Trends
Net Position by Component - Government-wide 120 - 121
Changes in Net Position - Governmental Activities 122 - 123
Changes in Net Position - Business-type Activities 124 - 125
Changes in Net Position - Total Governmental and Business-type Activities 126 - 127
Fund Balances - Governmental Funds 128 - 129
Changes in Fund Balances - Governmental Funds 130 - 131
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CITY OF LAKEVILLE, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 2014
TABLE OF CONTENTS (CONTINUED)
Page
STATISTICAL SECTION (continued)
Revenue Capacity
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property 132 - 133
Property Tax Rates - Direct and Overlapping Governments 134
Principal Property Taxpayers 135
Property Tax Levy and Collections 136
Debt Capacity
Ratio of Outstanding Debt by Type 137
Ratio of Net Bonded Debt Outstanding 138
Direct and Overlapping Governmental Debt 139
Legal Debt Margin 140
Pledged Revenue Coverage 141
Demographic and Economic Information
Demographic and Economic Statistics 142
Principal Employers 143
Commercial and Industrial Building Permits Issued 144
Operating Information
Employees by Function/Program (Full-Time Equivalent)145
Operating Indicators by Function 146
Capital Assets Statistics by Function 147
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CITY OF LAKEVILLE, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
DECEMBER 31, 2014
ELECTED OFFICIALS Term of Office Expires
MAYOR Matt Little December 31, 2016
COUNCIL MEMBERS:Doug Anderson December 31, 2016
Bart Davis December 31, 2018
Colleen Ratzlaff LaBeau December 31, 2018
Kerrin Swecker December 31, 2016
APPOINTED OFFICIALS
City Administrator Justin Miller
Finance Director/Treasurer Dennis Feller
City Clerk Charlene Friedges
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20195 Holyoke Avenue, Lakeville, MN 55044
952‐985‐4400 952‐985‐4499 fax
www.lakevillemn.gov
6
June 9, 2015
The Honorable Mayor and Council Members
20195 Holyoke Avenue
Lakeville, Minnesota 55044
Honorable Mayor, Members of the City Council and Citizens of the City of Lakeville
The Comprehensive Annual Financial Report is hereby presented for the purpose of
providing you, the reader, with a thorough overview of the financial affairs of the City for
the year ended December 31, 2014. The Report was prepared in accordance with
Minnesota Statutes and Generally Accepted Accounting Principals (GAAP).
This report was prepared by the City’s Finance Department and 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 in 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 reliable
information for the preparation of these financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their 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 report is complete and reliable
in all material respects.
The City of Lakeville’s financial statements have been audited by Malloy, Montague,
Karnowski, Radosevich & Co., P.A., a professional firm of certified public accountants.
The independent auditors report is included in the Financial Section of this report. The
auditors have given this report an unmodified (“clean”) opinion, meaning that the
financial statements fairly present the City’s financial position at December 31, 2014 and
the changes in financial position for the year then ended.
Management’s discussion and analysis (MD&A) immediately follows the independent
auditor’s report and provides a narrative introduction, overview, and analysis of the basic
financial statements. The MD&A complements this letter of transmittal and should be
read in conjunction with it.
7
Profile of Government
The City of Lakeville is a suburban community located 20 miles south of downtown
Minneapolis in the southeast corner of the Twin Cities metropolitan area within Dakota
County. Lakeville continues to be one of the fastest growing cities in Minnesota with a
population that has grown from 43,128 in 2000 to 58,727 in 2014.
The City of Lakeville operates under the Mayor-Council form of organization. The
governing City Council consists of the Mayor and four other Council members. The City
Council is responsible for, among other things, passing ordinances, adopting the budget,
appointing members to the various committees and commissions; and hiring the City
Administrator, heads of various departments and City employees. The City Administrator
is responsible for carrying out the policies, directions and ordinances of the City Council
and for overseeing the day-to-day operations of the City. The City Council is elected on a
non-partisan at large basis. The Mayor is elected to serve a two-year term, while Council
members serve four-year staggered terms, with two Council Members elected every two
years.
The City provides its residents and businesses with a full range of municipal services
consisting of public safety (police and fire), public works, parks and recreation, and
general government administration. The City also operates two enterprises: utilities
(public water, sanitary sewer, street lights and environmental resources) and off-sale
liquor stores. Sewage treatment and disposal is operated on a regional basis by the
Metropolitan Council Environmental Services (MCES) and 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.lakevillemn.gov
The City is financially accountable for the Housing and Redevelopment Authority
(HRA), which is included in the City’s financial statements. Additional information on
the HRA can be found in Note 1A. – Summary of Significant Accounting Policies of the
Notes to Basic Financial Statements.
The annual budget serves as the foundation for the City of Lakeville’s financial planning
and control. The budgetary process is outlined in the notes within the required
supplementary information section of this report. The City applies budgetary controls to
ensure compliance with legal provisions of the laws of Minnesota. Budgets are adopted
on a basis consistent with GAAP. Annual appropriated budgets are adopted for the
general fund and special revenue funds. Budget to actual comparisons are provided in this
report for each individual governmental fund for which an annual budget has been
adopted. The general fund budgetary comparison schedules are presented within the
required supplementary information section and the special revenue funds budgetary
comparison schedules are presented in the nonmajor governmental funds subsection of
this report.
8
Factors Affecting Financial Condition
The City of Lakeville is committed to maintaining a strong financial condition, while
continuing to provide quality public services to its residents and businesses. The City’s
financial position, as reflected in the financial statements presented in this report, is
perhaps best understood when it is considered from the broader perspective of the
environment within which the City operates.
Local Economy
Our community has persevered through the economic struggles of the past six years. The
City responded in 2008 and 2009 to the economic challenges by downsizing its
operations and reducing personnel. The City has grown by almost 3,000 new residents
or approximately 5.3% since 2009, while the number of City employees has increased by
3.0%.
According to the Bureau of Labor Statistics, Lakeville’s unemployment rate is favorable
compared to the State and National rates.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2008 2009 2010 2011 2012 2013 2014
Unemployment Rate
United States
Minnesota
Lakeville
Source: www.positivelyminnesota.com
The trend for building permit activity for single family homes and newly platted lots or
applications from developers for new residential lots is on the rise although building
permits for single family homes decreased to 319 in 2014 compared to 374 permits for
single family homes in 2013. The 2015 budget is premised on an assumed steady growth
of new single family homes in the coming year.
9
Actual Residential Units
Estimated Residential Units
Actual Single Family
Estimated Single Family
According to the Dakota County Assessor’s office, the median value home increased by
8.9% as of January 2014 (for taxes payable 2015). The trend of improving market
values is expected to continue as the number of foreclosures and regional unemployment
becomes more favorable. The improving housing market is also strengthened with the
current low inflation and interest rate environment.
Major Initiatives
As the City emerges from the Great Recession and post-recession era, there are a number
of pressures and issues confronting the City that emerged as themes which affect the
community. The themes identified and addressed within the 2014 adopted budget
included legislative changes, resumption of growth, aging infrastructure, inflationary
pressures, emerging trends, innovation and efficiencies, entrepreneurial efforts and
preparing for the future.
0
100
200
300
400
500
2007 2008 2009 2010 2011 2012 2013 2014 2015
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YEAR
RESIDENTIAL PERMITS
Total Residential Units
Single Family
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Legislative Changes. Recent Legislative changes regarding (limited) sales tax exemption,
police pension financing and property tax levy limits as well as Federal Environmental
Protection Agency storm water regulations and sequestering are having or will have
financial implications for our City.
Resumption of Growth. New residential housing construction is at pre-recession levels
due in large part to improving economic conditions. The resumption of growth will
result in increased demands for infrastructure enhancements as well as service delivery
such as inspections, code enforcement, police, fire, streets and parks.
Addressing Aging Infrastructure. Our City has more than $300 million of investment in
infrastructure such as roads, water mains, parks, trails, facilities, equipment and other
assets. The assets have maintenance, and in certain situations, replacement requirements.
The 2014 budget addressed the short-term plan while the Capital Improvement Plan
addressed the anticipated intermediate and long term needs. The most significant 2014
projects included:
Accelerated pavement management program to improve city-wide pavement
management index
o 2014 Street Reconstruction
o Kenrick Avenue – surface mill and overlay
o Bridge replacement at 168th Street and Gannon Avenue
ADA Improvements to City Hall entrance doors
Downtown parking lot replacement
Ladder truck #4 acquisition
Highview Avenue trail overlay from 175th to 160th Street
Inflationary Pressures. As the economy improves; there will be upward pressure on
commodities, services and personnel costs. Although inflation is still relatively benign
compared to the decade preceding the recession, the budget anticipated modest price
increases in the near term.
Emerging Trends. There are trends emerging within our community which are
influenced at least in part by external factors such as technology related crimes and the
emerald ash borer insects. Currently there is a defined need for our community to react
to or be prepared to react to the issues; however, there is little or no financial assistance
available from State or federal agencies to react to the trends.
Innovation and Efficiencies. Lakeville has a long standing history of being fiscally
conservative and prudent. In spite of the fact that the City of Lakeville receives no state
aid for property tax relief, per capita current expenditures for operations are still amongst
the lowest in the twin cities according to the Minnesota State Auditor’s Office. The
adopted budget included several initiatives which continued the focus on a commitment
to cost effectiveness and efficiencies. Effective application of technology is a major
factor in optimizing organizational efficiencies.
11
Entrepreneurial Efforts. Continued marketing initiatives are proposed to promote
economic developments. Property was acquired in southwestern Lakeville for a future
new liquor store to improve revenues and sales opportunities.
Preparing for the Future. As a Community that embraces a high quality of life and a
pro-business attitude, Lakeville is “Positioned to Thrive.” It is an objective that embraces
a vision for the future and a commitment to preparing for it.
Long-Term Financial Planning
There is an interrelationship between a community’s physical development and its long-
term financial plan. A comprehensive plan provides the guidance for current and future
land use and public infrastructure decisions to provide managed growth throughout the
community. The City of Lakeville completed an update of its Comprehensive Plan in
2008.
A Capital Improvement Plan (CIP) is a flexible, five-year plan that identifies the City’s
infrastructure, development objectives and allocation of financial resources. It provides
policy makers and the community with a strategic (documented) approach to
implementation and administration of improvement projects. The City will invest $166
million in transportation, utility, equipment, facilities and parks over the next five years
to achieve program objectives.
Transportation
$109,159,457
66%
Utility
$36,729,751
22%
Parks
$3,544,575
2%
Facilities
$2,404,925
2%
Equipment
$13,740,069
8%
2015 ‐2019 PROJECTS
$165,578,777
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As of December 31, 2014, the City of Lakeville had approximately $113.430 million of
debt outstanding, including; $12.765 million of (cross-over) refunding debt issued in
August 2012 to refinance the G.O. Capital Improvement Bonds series 2004 A; and
$12.660 million of (cross-over) refunding debt in August 2014 to refinance the G.O.
Capital Improvement Bonds series 2007 D and the Street Reconstruction Bonds series
2005 A. The City will issue approximately $63 million general obligation improvement
bonds in the coming years to finance street reconstruction projects.
Relevant Financial Policies
The City has a number of policies which are utilized in the management of its fiscal
affairs. The primary policies include, but are not limited to, operating budget policy,
budget amendment process, revenue, debt, investment and fund balance.
Operating Budgets. The City’s operating budget policy sets forth guidance with
respect to balanced operating budgets, with an overriding goal of achieving structural
balance over a longer-term period, while recognizing that in certain periods, revenues
and expenditures may not be equal. A balanced budget for the General Fund is
defined as revenues and other sources equal to or exceeding operating expenditures
and other uses. Other sources can include that portion of General Fund balance that is
allowed to be budgeted for use per the City’s fund balance policy. The budget will
provide for adequate maintenance of capital facilities and equipment and for their
orderly replacement.
Balanced budgets for the proprietary enterprise funds are defined as providing
sufficient revenues to support the operations of those funds, without subsidy from the
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$20,000,000
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IN
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AS OF DECEMBER 31
LAKEVILLE BOND INDEBTEDNESS
COMPARISON WITH DEBT/HOUSEHOLDS
Indebtedness
Crossover Refunding Indebtedness
Debt per Household
13
General Fund or property taxes. Charges from the Proprietary Internal Service Funds
shall be sufficient to support such activities, with no trend of operating deficits.
The legal level of budgetary control (i.e., the level at which expenditures may not
legally exceed appropriations) is at the department level for the General Fund and
total expenditures level for Special Revenue Funds. The City Administrator has
authorization to expend funds in excess of the appropriation for individual line items.
Budgeted expenditure appropriations lapse at year-end. Supplementary
appropriations can be carried forward to the following year if approved by the City
Council.
Revenue Policies. The City will project its annual revenues by a conservative
objective and thorough analytical process. The City will endeavor to maintain a
diversified and stable revenue system to shelter it from annual fluctuations in any one
revenue source. All existing and potential revenue sources will be reexamined
annually. New sources of non-property-tax revenue should be actively explored at all
times. Where appropriate and not contrary to accepted public policy or statutes,
emphasis will be directed toward full cost recovery through user fees. User fees and
cost allocation formulas will be updated periodically (annually if needed). Ongoing,
the City will review the full cost of activities supported by user fees to identify the
impact of inflation and other factors. The fees along with the resulting net property
tax costs will be reviewed with the City Council during the budget process.
Sensitivity to market rates will also be considered in setting fees. Intergovernmental
grant requests are subject to fiscal review before the application is submitted. This
review is to ensure that the grants do not create an obligation for unfunded
expenditures by the City relating to the grant’s purpose and to provide an overall
budgetary review of grant proposals.
Debt. The City’s debt policy provides guidance to ensure that long-term debt is
utilized appropriately and in a fiscally prudent manner, limiting long-term borrowing
to capital improvements or other long-term projects which cannot, and appropriately
should not, be financed from current revenues. Final maturity of bonds and notes
should not exceed the expected useful life of the underlying project for which it is
being issued. Where possible, the City will endeavor to pledge special assessments,
State-aid or other non-tax revenues to debt service payments.
Investments. The City’s policy is to invest all available monies at competitive
interest rates, coordinated with projections of the City’s operating and program cash
flow needs. Interest earnings will be distributed to the funds based on the average
cash balances. Investments will take into consideration safety, liquidity and yield as
well as complying with State regulations.
Fund Balance. Fund balance or net position are terms used to define the difference
between a fund’s assets, deferred outflows of financial resources, liabilities and
deferred inflows of financial resources. Fund balance is used in governmental fund
types and net position is used in proprietary fund types.
Awards and Acknowledgements
The Government Finance Officers Association (GFOA) of the United States awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of
Lakeville, Minnesota, for its comprehensive annual financial report for the fiscal year
ended December 31, 2013. This is the twenty-sixth consecutive year that the City of
Lakeville has received this prestigious award.
In order to be awarded a Certificate of Achievement for Excellence, a government must
publish an easily readable and efficiently organized comprehensive annual financial
report, and the contents must conform to the program standards. Such reports must satisfy
both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement for Excellence in Financial Reporting is valid for a period
of one year only. We believe our current comprehensive annual financial report continues
to conform to the Certificate of Achievement for Excellence program requirements, and
we are submitting it to the GFOA to determine its eligibility for another certificate.
In addition, the City also received the GFOA's Distinguished Budget Presentation Award
for its fiscal year 2014 annual budget document. In order to qualify for the Distinguished
Budget Presentation Award, the City's budget document was judged to be proficient in a
number of categories, including a policy document, a financial plan, an operations guide,
and a communications device. The City of Lakeville has received the GFOA’s
Distinguished Budget Presentation Award for six consecutive years.
The preparation of this report could not have been accomplished without the professional,
efficient and dedicated services of the entire staff of the Finance Department. We would
like to express our appreciation to all members of the department, with special
recognition to Senior Accountants David Lang, Tom Nesseth, and Julie Werner.
We would also like to express our sincere gratitude to the City Council for its sincere
commitment and progressive leadership in the financial affairs of our community.
Respectfully submitted,
Justin Miller
City Administrator
Jeryilyn Erickson
Finance Director
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F I N A N C I A L S E C T I O N
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INDEPENDENT AUDITOR’S REPORT
To the City Council and Management
City of Lakeville, Minnesota
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City of Lakeville, Minnesota (the City)
as of and for the year ended December 31, 2014, 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 and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the 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 on 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)
17
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, 2014, and the
respective changes in financial position and, where applicable, cash flows thereof, for the year then
ended, in accordance with accounting principles generally accepted in the United States of America.
OTHER MATTERS
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis, the budgetary comparison information for the General Fund, and the Other
Post-Employment Benefits Plan – Schedule of Funding Progress, as listed in the table of contents, be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The introductory section, combining and individual fund
statements and schedules, supplemental information, and statistical section, as listed in the table of
contents, are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual fund statements and schedules and supplemental information are the
responsibility of management and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the combining and individual fund statements and schedules
and supplemental information are 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)
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OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated June 9, 2015 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 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 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 9, 2015
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19
CITY OF LAKEVILLE, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
This discussion and analysis presents an overview of the financial activities and financial
position for the City of Lakeville (the “City”) for the year ended December 31, 2014.
Please read the information presented here in conjunction with our letter of transmittal.
Financial Highlights
The assets of the City exceeded liabilities by $282,638,509 at the close of the
most recent fiscal year. Of this amount, $17,192,527 (unrestricted net position)
may be used to meet the government’s ongoing obligations to citizens and
creditors.
The City’s total net position increased by $13,796,984.
The City’s governmental funds reported combined ending fund balances of
$71,913,871. Of this total amount, $27,372,126 or 38% is unrestricted and
available for spending at the government’s discretion.
As of the end of the current fiscal year, the City’s unrestricted fund balance for
the general fund was $10,850,065 or 49.2% of total general fund expenditures of
$22,061,293.
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 are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements, and
3) notes to basic financial statements. This report also contains other required
supplementary information in addition to the basic financial statements themselves.
Government-wide financial statements. The government-wide financial statements are
designed to provide readers with a broad overview of the City’s finances, in a manner
similar to a private-sector business.
The statement of net position presents information on all of the City’s assets, deferred
outflows of resources, liabilities, and deferred inflows of resources, with the difference
reported as net position. Over time, increases or decreases in net position may serve as a
useful indicator of whether the financial position of the City is improving or
deteriorating.
20
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 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 the enterprise activities of
the liquor operation, and utility operation.
The government-wide financial statements include not only the City itself (known as the
primary government), but also a legally separate housing and redevelopment authority
(HRA) for which the City is considered to be financially accountable or for which the
nature and significance of their relationship with the City is such that the exclusion would
cause the City’s financial statements to be misleading or incomplete. Financial
information for this component unit is blended within the financial information presented
for the primary government itself.
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 three categories: governmental funds, proprietary
funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial
statements. However, unlike the government-wide financial statements, governmental
fund financial statements focus on near-term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in evaluating a government’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide
financial statements, it is useful to compare the information presented for governmental
funds with similar information presented for governmental activities in the government-
wide financial statements. By doing so, readers may better understand the long-term
impact of the government’s near-term financing decisions. Both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and
changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
21
The City maintains 22 individual governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund
statement of revenues, expenditures, and changes in fund balances for the general fund,
general obligation (debt service) fund, G.O. improvement (debt service) fund, building
(capital projects) fund, and the improvement construction (capital projects) fund, all of
which are considered to be major funds. Data from the other governmental funds is
combined into a single, aggregated presentation. Individual fund data for each of these
nonmajor governmental funds is provided in the form of combining statements following
the required supplementary information.
The City adopts annual appropriated budgets for its general fund and special revenue
funds. A budgetary comparison schedule has been provided as required supplementary
information for the general fund to demonstrate compliance with this budget. Special
revenue funds budgetary comparison schedules can be found in the nonmajor
governmental funds subsection of the report after the capital projects funds.
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 internal service fund is an
accounting device used to accumulate and allocate costs internally among the City’s
various functions.
The City uses enterprise funds to account for its off-sale liquor and utility (water, sanitary
sewer, street light, and environmental resources) operations. The City uses an internal
service fund to account for its risk management insurance liability program. These
services benefit the governmental and business-type functions; therefore, they have been
included within governmental and business-type 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 each of the enterprise funds, all of which are considered to be
major funds of the City. The internal service fund is presented in a single aggregated
presentation in the proprietary fund financial statements.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit
of parties outside the government. Fiduciary funds are not reflected in the government-
wide financial statement because the resources of those funds are not available to support
the City’s own programs. The accounting used for fiduciary funds is much like that used
for proprietary funds.
Notes to basic financial statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and fund
financial statements.
Other information. In addition to the basic financial statements and accompanying
notes, this report also presents certain required supplementary information.
22
This section includes a budgetary comparison schedule and related notes for the general
fund, and a schedule of funding progress for the other post-employment benefits plan of
the City. The combining statements referred to earlier in connection with nonmajor
governmental and internal service funds are presented immediately following the
required supplementary information.
Government-wide Financial Analysis
As presented on the following table, the City’s governmental and business-type assets
exceeded liabilities by $282,638,509 at the close of the fiscal year ending December 31,
2014. By far the largest portion or 86.7% of net position is reflected in its net investment
in capital assets (e.g. land, buildings and improvements, machinery and equipment,
infrastructure, and construction in process) less any related debt used to acquire those
assets that is still outstanding. The City uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the
City’s net investment in capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
2014 2013 2014 2013 2014 2013
Current and other assets 87,030,427$ 75,950,861$ 14,097,040$ 16,159,618$ 101,127,467$ 92,110,479$
Capital assets 200,577,423 190,143,507 112,623,635 108,310,808 313,201,058 298,454,315
Total assets 287,607,850$ 266,094,368$ 126,720,675$ 124,470,426$ 414,328,525$ 390,564,794$
Current and other liabilities 7,627,977$ 4,740,243$ 2,106,658$ 1,776,002$ 9,734,635$ 6,516,245$
Long-term liabilities 118,518,885 111,596,752 3,436,496 3,610,272 121,955,381 115,207,024
Total liabilities 126,146,862 116,336,995 5,543,154 5,386,274 131,690,016 121,723,269
Net position:
Net investment in
capital assets 135,673,737 129,599,494 109,535,106 105,055,746 245,208,843 234,655,240
Restricted 19,913,014 17,645,944 324,125 324,125 20,237,139 17,970,069
Unrestricted 5,874,237 2,511,935 11,318,290 13,704,281 17,192,527 16,216,216
Total net position 161,460,988 149,757,373 121,177,521 119,084,152 282,638,509 268,841,525
Total liabilities and
net position 287,607,850$ 266,094,368$ 126,720,675$ 124,470,426$ 414,328,525$ 390,564,794$
Governmental Activities Business-type Activities Total
The City’s total restricted net position of $20,237,139 comprises 7.2% of total net
position at the close of the fiscal year ending December 31, 2014. These assets are
subject to external restrictions on how they may be used.
The 2014 remaining balance of $17,192,527 (6.1% of total net position), in unrestricted
net position may be used to meet the government’s ongoing obligations to citizens and
creditors. Certain balances within unrestricted net position have internally imposed
commitments or limitations, which may further limit the purpose for which such net
position may be used.
23
Change in net position. The City’s 2014 total net position during the current fiscal year
increased by $13,796,984 as shown in the following table. This increase is primarily
attributed to economic conditions and an increase in community growth. Additional
details that account for the change in net position are provided in the following analysis
of the governmental and business-type activities.
2014 2013 2014 2013 2014 2013
Revenues
Program revenues
Charges for services 11,969,777$ 10,460,900$ 13,101,060$ 13,075,437$ 25,070,837$ 23,536,337$
Operating grants and contributions 4,562,781 2,317,530 115,943 73,730 4,678,724 2,391,260
Capital grants and contributions 10,090,946 7,843,284 4,252,192 3,414,738 14,343,138 11,258,022
General revenues
Property taxes 24,465,333 23,947,968 - - 24,465,333 23,947,968
Investment income (charges) 552,444 (28,949) 150,310 (42,114) 702,754 (71,063)
Gain on sale of capital assets - - - - - -
Total revenues 51,641,281 44,540,733 17,619,505 16,521,791 69,260,786 61,062,524
Expenses
General government 6,051,985 5,363,354 - - 6,051,985 5,363,354
Public safety 11,807,183 11,784,109 - - 11,807,183 11,784,109
Public works 14,776,390 11,241,434 - - 14,776,390 11,241,434
Parks and recreation 5,202,168 5,154,919 - - 5,202,168 5,154,919
Interest on long-term debt 3,665,421 3,864,333 - - 3,665,421 3,864,333
Liquor - - 2,498,103 2,473,738 2,498,103 2,473,738
Utility - - 11,462,552 10,863,625 11,462,552 10,863,625
Total expenses 41,503,147 37,408,149 13,960,655 13,337,363 55,463,802 50,745,512
Change in net position
before transfers 10,138,134 7,132,584 3,658,850 3,184,428 13,796,984 10,317,012
Transfers 1,565,481 2,094,059 (1,565,481) (2,094,059) - -
Change in net position 11,703,615 9,226,643 2,093,369 1,090,369 13,796,984 10,317,012
Net position - beginning 149,757,373 140,530,730 119,084,152 117,993,783 268,841,525 258,524,513
Net position - ending 161,460,988$ 149,757,373$ 121,177,521$ 119,084,152$ 282,638,509$ 268,841,525$
Governmental Activities Business-type Activities Total
Governmental activities. Governmental activities change in net position before transfers
were an increase of $10,138,134. As previously discussed, this increase is primarily due
to community growth. The governmental revenue increase in operating grants and
contributions is directly related to the increase in construction activity.
24
Revenues – The City’s 2014 total revenues for governmental activities increased by
$7,100,548. Charges for services increased a total of $1,508,877 primarily due to recent
growth in the community as evidenced by an increase in building permit fees, connection
and area charges, and park dedication fees. A summary of the various increases are
shown as follows:
Increase /
Charges for services 2014 2013 (Decrease)
Licenses and building permit fees 2,836,555$ 2,727,494$ 109,061$
Connection and area charges 3,723,587 3,244,126 479,461
Park dedication fees 1,642,309 1,201,812 440,497
Other 3,767,326 3,287,468 479,858
Total charges for services 11,969,777$ 10,460,900$ 1,508,877$
Operating grants and contributions experienced an overall increase of $2,245,251. The
increase is composed of state-aid provided for street maintenance and improvement
projects. A summary of the various operating grants and contributions are shown as
follows:
Increase /
Operating grants and contributions 2014 2013 (Decrease)
State-aid for street maintenance 2,343,083$ 374,335$ 1,968,748$
State-aid for street revenue bonds 837,342 847,628 (10,286)
Federal street reconstruction bonds payment 67,188 71,780 (4,592)
Other grants, contributions and donations 1,315,168 1,023,787 291,381
Total operating grants and contributions 4,562,781$ 2,317,530$ 2,245,251$
25
Capital grants and contributions increased by $2,247,662. The City received a payment
on the interest rate reduction loan from Southfork Apartments, the proceeds of which are
limited and subject to the authority of the HRA. The Downtown parking lot replacement
project was primarily funded by Dakota County CDA grant funds which increased by
$440,007. Special assessments increased by $600,054 primarily due to a major street
reconstruction project that was levied against the benefiting property owners in 2014.
Contributed infrastructure from private land developers decreased by ($100,043); the
infrastructure consists of street, storm sewer, and park and trail capital assets. The
summary of capital grants and contributions is shown as follows:
Increase /
Capital grants and contributions 2014 2013 (Decrease)
Southfork interest reduction loan repayment 2,230,000$ -$ 2,230,000$
Kenrick Trail grant - 826,400 (826,400)
Minnesota municipal state-aid 14,146 268,780 (254,634)
Downtown parking lot county grant 464,622 24,615 440,007
Special assessments 2,785,514 2,185,460 600,054
Contributed infrastructure from developers 4,038,286 4,138,329 (100,043)
Other grants and contributions 558,378 399,700 158,678
Total capital grants and contributions 10,090,946$ 7,843,284$ 2,247,662$
Property tax revenue increased $517,365 or 2.2% primarily due to an increase in the
overall tax levy and an increase in the collection of the current year’s levy.
Investment income earnings increased by $581,393 due to higher yields consistent with
prevailing market conditions and positive market value adjustments on the City’s
investment portfolio.
Increase /
General revenues 2014 2013 (Decrease)
Property taxes 24,465,333$ 23,947,968$ 517,365$
Investment income (charges)552,444 (28,949) 581,393
Total general revenues 25,017,777$ 23,919,019$ 1,098,758$
26
A summary of 2014 revenues by source for governmental activities are shown as follows:
Property Taxes
$24,465,333
47.4%
Charges for Services
$11,969,777
23.2%
Grants and
Contributions ‐
Restricted
$14,653,727
28.4%
Investment Earnings
$552,444
1.0%
Revenue by Source ‐Governmental Activities
Total Revenues $51,641,281
A summary of 2014 expenses by function for governmental activities are as follows:
Public Safety
$10,734,927
25.9%
Depreciation
$9,528,938
23.0%
Public Works
$8,277,831
19.9%
General Government
$5,793,424
14.0%
Interest on Debt
$3,665,421
8.8%
Parks and Recreation
$3,502,606
8.4%
Expenses by Function - Governmental Activities
Total Expenses $41,503,147
27
Expenses – The City’s 2014 total governmental activities expenses (before depreciation
on capital assets and interest on long-term debt) increased by $3,705,395, or 15.1%. Total
governmental activities expenses increased by $4,094,998, or 10.9%, shown as follows:
Increase /
Governmental activities expenses 2014 2013 (Decrease)
General government 5,793,424$ 5,135,338$ 658,086$
Public safety 10,734,927 10,879,335 (144,408)
Public works 8,277,831 5,085,633 3,192,198
Parks and recreation 3,502,606 3,503,087 (481)
Total before depreciation and interest 28,308,788 24,603,393 3,705,395
Depreciation on capital assets 9,528,938 8,940,423 588,515
Interest on long-term debt 3,665,421 3,864,333 (198,912)
Total governmental activities expenses 41,503,147$ 37,408,149$ 4,094,998$
Following are explanations of various increases and decreases in expenses by
governmental function as shown above.
General government expenses increased by $658,086, or 12.8%; which is primarily
attributed to the Downtown parking lot replacement and payment of excess tax increment
related to a decertified tax increment financing district.
Public safety expenses decreased by $144,408 or 1.3%; which is comprised of several
components that include installation of cameras in each of the police vehicles, upgrade to
the LOGIS public safety application suite and in the prior year the City paid for its share
of the construction for the joint Dakota County fire training center.
Public works expenses increased by $3,192,198, or 62.8%; primarily due to County
intersection reconstruction projects; the roundabout at Dodd Boulevard and Highview
Avenue and the roundabout at County Road 50 and County Road 60, which are not
considered City assets. The street department expenses in 2014 decreased due to snow
events at year end and the associated decrease in overtime, motor fuels and road de-icing
chemicals.
Parks and recreation expenses decreased $481, or 0.1%; in part due to an increase in
personnel services and decrease in capital outlay expensed.
Interest on long-term debt decreased $198,912, or 5.1%; which is primarily due to new
debt issuances and payment of crossover refunded debt.
28
Business-type activities. Business-type activities increased the City’s 2014 total net
position by $2,093,369. Key elements of the increase in net position along with a
comparison of revenues, expenses, and changes in net position during fiscal years 2014
and 2013 are shown as follows:
Increase /
2014 2013 (Decrease)
Revenues
Charges for services
Liquor 3,804,942$ 3,948,599$ (143,657)$
Utility 9,296,118 9,126,838 169,280
Operating grants and contributions
Liquor 3,762 3,762 -
Utility 112,181 69,968 42,213
Capital contributions
Utility 4,252,192 3,414,738 837,454
Investment earnings (charges)150,310 (42,114) 192,424
Total revenues 17,619,505 16,521,791 1,097,714
Expenses
Liquor 2,498,103 2,473,738 24,365
Utility 11,462,552 10,863,625 598,927
Total expenses 13,960,655 13,337,363 623,292
Change in net position before transfers 3,658,850 3,184,428 474,422
Transfers (1,565,481) (2,094,059) 528,578
Change in net position 2,093,369 1,090,369 1,003,000
Net position - beginning 119,084,152 117,993,783 1,090,369
Net position - ending 121,177,521$ 119,084,152$ 2,093,369$
The City’s 2014 business-type total revenues increased by $1,097,714 or 6.6%; the
various revenue components are discussed in detail in the following paragraphs.
○ The liquor fund 2014 charges for services (sales less cost of goods sold) decreased
due to sales volume. The 2014 cost of goods sold as a percentage of sales were
74.4%, compared to 74.3% in 2013.
○ The overall utility revenue charges for services increased by $169,280. This
overall increase is represented by a water revenue decrease of $146,909, sanitary
sewer revenue increase of $252,313, street light revenue increase of $48,552 and
environmental resources revenue increase of $15,324. The water decrease is due to
customer consumption as a result of changes in weather patterns, a rate increase
and an increase in customers as a result of community growth. The sanitary sewer
and street light increases are due to an increase in customers and rates. The
environmental resources increase is due to an increase in customers.
29
○ The utility fund experienced a total increase of $837,454 in capital contributions.
The majority of the increase is derived from water and sanitary sewer contributed
from developer improvement projects. City improvement project infrastructure
assets of $230,565 were contributed to the utility fund which is within the net
transfer amount of ($1,565,481) on the Statement of Activities. The total amount
of contributed infrastructure assets received by the utility fund varies yearly.
○ Investment earnings increased $192,424. The increase is the result of changes in
investment market values and increasing interest earnings consistent with
prevailing market conditions.
The City’s 2014 business-type total expenses increased $623,292, or 4.7% as follows:
Liquor Utility
Business-type activities expenses Fund Fund Total
Personnel services 35,769$ 51,823$ 87,592$
Commodities 1,503 38,676 40,179
Other charges and services (8,646) 167,130 158,484
Sanitary sewage treatment and disposal - 205,787 205,787
Depreciation on capital assets 4,068 135,511 139,579
Interest, fiscal charges, bond premium (net)(8,329) - (8,329)
Total increase/(decrease)24,365$ 598,927$ 623,292$
Increase/(Decrease) From 2013
o The liquor fund personnel services increase of $35,769 is primarily the result of
filling prior year staffing vacancies.
o The utility fund other charges and services increase is attributed to several major
maintenance projects compared to the previous year on the water meter
replacement program. Metropolitan Council Environmental Services (MCES),
which is responsible for sewage treatment and disposal, increased sanitary sewer
processing costs by approximately 6.7%.
Financial Analysis of the City’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance
with finance-related legal requirements. Some funds are required statutorily while others
are established internally to assist management in accounting for certain activities.
Governmental funds. The focus of the City’s governmental funds is to provide
information on near-term inflows, outflows, and balances of spendable resources. Such
information is useful in assessing the City’s financing requirements. In particular,
unrestricted fund balance may serve as a useful measure of a government’s net resources
available for spending at the end of the fiscal year.
30
As of the end of the current fiscal year, the City’s governmental funds reported combined
ending fund balances of $71,913,871. Of this amount, $27,372,126 or 38% of this
combined ending fund balance constitutes unrestricted fund balance that is available for
spending at the government’s discretion. Nonspendable fund balances of $221,873 are
amounts that are not in a spendable form, such as prepaid items and inventory. The
remaining fund balance is restricted for (a) debt service of $39,734,802, (b) various
capital acquisition needs of $4,543,098, and (c) other restricted purposes of $41,972.
The general fund is the chief operating fund of the City. At the end of the current fiscal
year, the fund balance was $11,071,769, an increase of $1,405,209 of revenues over
expenditures.
The G.O. obligation (debt service) fund balance increased by $3,409,793 due to issuance
of refunding debt obligations. The G.O. improvement (debt service) fund balance
increased by $1,336,187. The City levies the required property taxes and special
assessments levied against benefited property owners to meet the bonded debt service
requirements in the following year. The change in fund balance is subject to principal
and interest requirements of existing debt and that of new debt issuance.
The building (capital projects) fund expended $275,892 for the replacement of the
rooftop HVAC unit at fire station #4, and major maintenance projects. Financing was
provided by $126,215 of revenues from investment income, donations and other revenue
sources. An additional $7,711 of financing was provided from transfers from the liquor
fund (enterprise), utility fund (enterprise) and communications fund (special revenue).
The improvement construction (capital projects) fund accounts for major infrastructure
reconstruction projects that require debt issuance for financing purposes. The activity in
this fund may fluctuate from year to year depending on the scope of the project. Large
projects such as the interstate highway interchange and bridge reconstruction projects
may take several years to complete. The fund balance increased by $57,078 due to the
preliminary engineering costs associated with the 2015 street reconstruction project. The
2015 street reconstruction project will be financed with bond issuance in 2015.
Other Post-Employment Benefits (OPEB)
In accordance with the provisions of the Governmental Accounting Standards Board
(GASB) Statement No. 45, Accounting and Financial Reporting by Employers for
Post-employment Benefits Other Than Pensions, an actuarial valuation was required to be
computed and reported for the City’s post-employment health insurance benefits
provided to eligible employees through the City’s Other Post-Employment Benefits Plan.
The net OPEB obligation and corresponding expense for governmental activities is
reported within the government-wide financial statements. The net OPEB obligation
liability and corresponding expense for enterprise funds are recorded within those funds.
Refer to Note 15. – Other Post-Employment Benefits (OPEB) Plan, of the Notes to Basic
Financial Statements for complete information concerning the City’s OPEB Plan.
31
General Fund Budgetary Highlights
With the exception of the committees and commissions, operations and maintenance,
street maintenance, heritage center, and arts center departments, all other general fund
departments expended their 2014 budget appropriations at or below the final adopted
budget. A schedule of revenues, expenditures and changes in fund balances – budgetary
comparison is disclosed in the required supplemental information section of this report.
A summary of general fund revenues, expenditures, other financing sources (uses),
variance with final budget, and net change in fund balance is as follows:
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Revenues
Property taxes 16,794,367$ 16,794,367$ 16,841,970$ 47,603$
Licenses and permits 1,947,676 1,975,626 2,159,289 183,663
Intergovernmental 608,401 712,876 811,709 98,833
Charges for services 2,148,167 2,163,171 2,489,277 326,106
Fines 274,590 274,590 223,642 (50,948)
Investment income (charges) 44,413 44,413 99,179 54,766
Donations 13,370 25,270 30,254 4,984
Miscellaneous 55,961 55,961 51,368 (4,593)
Total revenues 21,886,945 22,046,274 22,706,688 660,414
Expenditures
Personnel services 15,762,570 16,129,816 15,845,381 284,435
Commodities 1,626,533 1,718,959 1,765,378 (46,419)
Other charges and services 4,382,922 4,438,865 4,314,962 123,903
Capital outlay 108,563 117,859 135,572 (17,713)
Other 303,497 - - -
Total expenditures 22,184,085 22,405,499 22,061,293 344,206
Other financing sources 759,814 759,814 759,814 -
Net change in fund balance 462,674$ 400,589$ 1,405,209$ 1,004,620$
General Fund
The 2014 actual general fund revenues exceeded the final budget by $660,414 and
expenditures were under final adopted budget by $344,206. Other financing sources were
at the final budget. The general fund actual net change in fund balance surpassed final
budget by $1,004,620.
32
The following is a brief summary explanation of the various budgets to actual variances
for revenues:
○ Property taxes were greater than anticipated by $47,603 due to higher than
anticipated collection of current taxes.
○ Licenses and permits exceeded estimates by $183,663 due to greater than
anticipated building permit fees. The number of residential building permits
budgeted were 210 compared to 319 actual.
○ Intergovernmental revenues exceeded estimates by $98,833 due to federal grants
for public safety highway safety initiatives.
○ Charges for services exceeded estimates by $326,106 which is primarily related to
public works engineering fees derived from reconstruction projects.
○ Fines were below estimates by $50,948 due to police officer vacancies in the
traffic control division.
○ Investment income was above estimates by $54,766 due to prevailing market
conditions. The City’s Management employs prudent investment practices and
cash management techniques to maximize investment income while protecting the
City’s treasury.
○ Donations and miscellaneous revenues experienced variances of $4,984 and
($4,593), respectively.
The following is a brief summary explanation of the various budgets to actual variances
for expenditures:
○ Personnel costs including benefits were $284,435 below budget due to vacant
positions as a result of retirements and resignations, lower than anticipated benefit
costs, and lower fire emergency calls.
○ Commodities exceeded the budget by $46,419 due to an increase in motor fuel
costs.
○ Other charges and services were $123,903 below budget due to hiring seasonal
staff versus contracting out for summer park maintenance.
○ Capital outlay exceeded the budget by $17,713 due to remodeling existing space
and providing new computers for the newly created operations and maintenance
department.
33
Capital Asset and Debt Administration
Capital assets. The City’s capital assets for governmental and business-type activities as
of December 31, 2014 are $313.2 million (net of accumulated depreciation). This amount
represents an increase (including additions, deletions, and depreciation) of approximately
$14.75 million from 2013.
The net investment in capital assets including land, historical treasures, buildings,
machinery and equipment, other improvements, infrastructure, and construction in
process are shown as follows:
Governmental Business-type
Activities Activities Total
Land 23,501,740$ 3,812,073$ 27,313,813$
Historical treasures 100,000 - 100,000
Buildings and improvements 41,860,145 18,191,267 60,051,412
Machinery and equipment 7,814,743 1,432,931 9,247,674
Other improvements 3,027,368 - 3,027,368
Infrastructure
Streets 56,344,605 - 56,344,605
Storm sewer 42,655,929 - 42,655,929
Parks 7,754,686 - 7,754,686
Water - 49,213,969 49,213,969
Sanitary sewer - 37,280,071 37,280,071
Construction in process 17,518,207 2,693,324 20,211,531
Total 200,577,423$ 112,623,635$ 313,201,058$
Capital Assets
(net of depreciation)
The City’s 2015 adopted budget provides funding for $59.4 million in infrastructure
capital assets, public buildings improvements and upgrades, and equipment capital assets
such as vehicle replacements for public safety and public works, and technology
equipment. Refer to Note 3. - Capital Assets, of the Notes to Basic Financial Statements
for additional information.
Debt administration. At the end of the current fiscal year, the City of Lakeville had total
bonded debt outstanding of $113.430 million, which is an increase of $4.985 million
compared to the prior year. The increase is due to the issuance of two new bond issues
totaling $21.180 million, and principal bond maturities, including a crossover refunding
of ($10.035 million).
The City manages its debt structure by utilizing approaches that take full advantage of its
financial position, revenue trends and conditions in municipal bond markets. During
2014, the City issued the General Obligation Refunding Bonds Series 2014 B to call the
Street Reconstruction Bonds Series 2005 A and the Capital Improvement Plan Bonds
34
Series 2007 D on February 1, 2016, and February 1, 2017, respectively. The refunding
transaction yielded a net savings to the City of $1,628,573 with a present value economic
gain of $1,057,711. Refer to Note 5. – Long-Term Liabilities, of the Notes to Basic
Financial Statements for additional information about the City’s governmental and
business-type long-term debt activity.
The City’s outstanding bonded debt as of December 31, 2014 is shown as follows:
Balance Balance
January 1 Issued Redeemed December 31
Governmental bonds
General obligation bonds
Capital improvement 39,015,000$ 11,065,000$ 770,000$ 49,310,000$
Street reconstruction 29,580,000 1,595,000 11,205,000 19,970,000
G.O. Improvement 16,640,000 8,520,000 1,255,000 23,905,000
State-aid street revenue 4,590,000 - 700,000 3,890,000
Water revenue 2,865,000 - 890,000 1,975,000
Tax increment 2,335,000 - 445,000 1,890,000
Park 815,000 - 405,000 410,000
Arena revenue 1,045,000 - 135,000 910,000
HRA lease revenue 8,325,000 - 225,000 8,100,000
Total governmental 105,210,000 21,180,000 16,030,000 110,360,000
Business-type bonds
Liquor revenue 3,235,000 - 165,000 3,070,000
Total bonds payable 108,445,000$ 21,180,000$ 16,195,000$ 113,430,000$
Outstanding Debt
Governmental Bonds and Business-type Bonds
Credit Rating
Aa1
The City of Lakeville’s general obligation bond rating as of
December 31, 2014 is “Aa1” as rated by Moody’s Investors Service.
Moody’s Investor Service credit report stated the rating was “The
Aa1 underlying rating reflects the city’s history of excellent
financial management and strong reserve levels; wealthy tax base
located just south of the Twin Cities Metropolitan Area, and an
above average debt burden.”
State statutes limit the amount of general obligation debt a Minnesota city may issue to
3% of the total assessor’s taxable market valuation. The City has $34,767,965 of net
bonded debt, which is subject to the $149,874,547 current debt limitation, thereby
resulting in a legal debt margin of $115,106,582. Refer to the Statistical Section of this
report for a detailed computation of the City’s legal debt margin.
35
Economic Conditions and Next Year’s Budget
The City of Lakeville remains one of the top growth cities in the Minnesota twin city
metro area. The trend for building permit activity for single family homes is on the rise
although building permits for single family homes decreased to 319 in 2014 compared to
374 permits in 2013. In our opinion, the resurgence is due to a number of factors
including but not limited to; near historical low interest rates, a low regional
unemployment rate of 2.8%, improved personal income levels, a reduced number of
home foreclosures and increasing home values. The budget and five year capital
improvement plan are premised on the assumption growth will continue at a subdued
level for the foreseeable future.
The adopted 2015 budget reflects a continuation of the program and service levels
established by the City Council over the past several years. No new programs or services
were included in the adopted budget; however, key staff positions and resources were
added to accommodate community growth. The 2015 budget also focuses on City efforts
to achieve strategic priorities established in the Envision Lakeville Community Vision
Plan to prepare for the future; these efforts include investments in technology to
maximize efficiencies, developing effective partnerships to capitalize on opportunities
and multi-agency resources, infrastructure improvements to promote economic and
community development and service continuity through staffing enhancements to meet
the expectations of community residents and businesses.
Requests for Information
This financial report is designed to provide a general overview of the City of Lakeville’s
finances for all those with an interest in the government’s finances. Questions concerning
any of the information provided in this report or requests for additional financial
information should be directed to the City of Lakeville Finance Department at 20195
Holyoke Avenue, Lakeville, Minnesota 55044, (952) 985-4400, or email your request to
jerickson@lakevillemn.gov.
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B A S I C F I N A N C I A L S T A T E M E N T S
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CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2014
Governmental Business-type
Activities Activities Total
ASSETS:
Cash and investments 46,007,226$ 8,781,136$ 54,788,362$
Receivables 13,529,966 2,412,682 15,942,648
Internal balances (200,422) 200,422 -
Inventory 162,322 2,342,096 2,504,418
Prepaid items 59,551 36,579 96,130
Restricted assets (temporarily):
Cash and investments - 324,125 324,125
Investments held by trustee 27,471,784 - 27,471,784
Capital assets
Non-depreciable 41,119,947 6,505,397 47,625,344
Depreciable, net 159,457,476 106,118,238 265,575,714
Total capital assets 200,577,423 112,623,635 313,201,058
Total assets 287,607,850 126,720,675 414,328,525
LIABILITIES:
Salaries, accounts, contracts, interest, and deposits 7,134,099 2,106,658 9,240,757
Unearned revenue 493,878 - 493,878
Non-current liabilities
Due within one year 21,094,511 392,780 21,487,291
Due in more than one year 97,424,374 3,043,716 100,468,090
Total liabilities 126,146,862 5,543,154 131,690,016
NET POSITION:
Net investment in capital assets 135,673,737 109,535,106 245,208,843
Restricted for
Special purposes 41,980 - 41,980
Debt service 16,293,027 324,125 16,617,152
Capital acquisition 3,578,007 - 3,578,007
Unrestricted 5,874,237 11,318,290 17,192,527
Total net position 161,460,988$ 121,177,521$ 282,638,509$
See accompanying notes to basic financial statements.
36
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37
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CITY OF LAKEVILLE, MINNESOTA
BALANCE SHEET - GOVERNMENTAL FUNDS
DECEMBER 31, 2014
General G.O.
General Obligation Improvement
Assets
Cash and investments 11,160,908$ 3,763,882$ 4,103,787$
Investments held by trustee - 26,774,406 -
Interest receivable 21,638 36,143 6,644
Taxes receivable 1,181,436 255,132 88,313
Accounts receivable 568,957 - -
Due from other funds - - -
Special assessments receivable - 536,120 7,261,691
Inventory 162,322 - -
Prepaid items 59,382 - -
Total assets 13,154,643$ 31,365,683$ 11,460,435$
Liabilities
Salaries payable 513,738$ -$ -$
Accounts payable 779,846 - -
Due to other funds - - -
Contracts payable - - -
Deposits payable 175,872 - -
Unearned revenue 429,305 - -
Total liabilities 1,898,761 - -
Deferred inflows of resources
Unavailable revenue - taxes 184,113 48,111 15,469
Unavailable revenue - special assessments - 536,120 7,141,494
Unavailable revenue - other - - -
Total deferred inflows of resources 184,113 584,231 7,156,963
Fund balances
Nonspendable 221,704 - -
Restricted - 30,781,452 4,303,472
Committed 45,000 - -
Unassigned 10,805,065 - -
Total fund balances 11,071,769 30,781,452 4,303,472
Total liabilities, deferred inflows of
resources, and fund balances 13,154,643$ 31,365,683$ 11,460,435$
See accompanying notes to basic financial statements.
Debt Service
38
Nonmajor Total
Improvement Governmental Governmental
Building Construction Funds Funds
1,491,261$ 2,531,547$ 22,178,162$ 45,229,547$
- - 697,378 27,471,784
4,333 5,944 64,398 139,100
- - 114,575 1,639,456
122,063 14,146 2,720,727 3,425,893
- - 38,336 38,336
- - 493,635 8,291,446
- - - 162,322
- - 169 59,551
1,617,657$ 2,551,637$ 26,307,380$ 86,457,435$
-$ -$ 9,132$ 522,870$
20,359 578,598 2,074,561 3,453,364
- - 38,336 38,336
100,225 895,248 269,178 1,264,651
- - 26,125 201,997
- - 64,573 493,878
120,584 1,473,846 2,481,905 5,975,096
- - 28,022 275,715
- - 493,068 8,170,682
122,063 - 8 122,071
122,063 - 521,098 8,568,468
- - 169 221,873
- 1,603,920 7,631,028 44,319,872
1,375,010 105,906 15,673,180 17,199,096
- (632,035) - 10,173,030
1,375,010 1,077,791 23,304,377 71,913,871
1,617,657$ 2,551,637$ 26,307,380$ 86,457,435$
Capital Projects
39
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CITY OF LAKEVILLE, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2014
Fund balance - total governmental funds 71,913,871$
Amounts reported for governmental activities in the statement of net position
are different because:
1. Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported in the governmental funds.
Governmental capital assets 330,257,785$
Less accumulated depreciation (129,680,362) 200,577,423
2. Grant receivable that is applicable towards accrued bond interest payable
is susceptible to full accrual on the government-wide statements. 30,126
3. Long-term liabilities are not payable with current financial resources
and, therefore, are not reported in the governmental funds.
Bonds (110,360,000)
Accrued interest (1,682,752)
Loan (1,159,843)
Unamortized bond discount 182
Unamortized bond premium (4,290,199) (117,492,612)
4. Accrued compensated absences and net OPEB obligations are not
payable with current financial resources and, therefore, are not reported
in the governmental funds. (2,709,025)
5. Deferred inflows of resources in governmental funds is susceptible to full
accrual on the government-wide statements. 8,568,468
6. The City uses an internal service fund to charge the cost of insurance
activities to individual funds. A portion of the assets and liabilities of the
municipal reserves fund are included in governmental activities in the
Statement of Net Position.572,737
Net position of governmental activities 161,460,988$
See accompanying notes to basic financial statements.
40
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
YEAR ENDED DECEMBER 31, 2014
General G.O.
General Obligation Improvement
Revenues
Property taxes 16,841,970$ 3,702,381$ 1,288,974$
Tax increment - - -
Licenses and permits 2,159,289 - -
Intergovernmental 811,709 67,995 -
Charges for services 2,489,277 - -
Special assessments - 213,187 1,378,919
Fines 223,642 - -
Investment income 99,179 76,674 30,435
Loan repayments - - -
Donations 30,254 - -
Miscellaneous 51,368 - -
Total revenues 22,706,688 4,060,237 2,698,328
Expenditures - current
General government 4,484,313
Public safety 10,305,450
Public works 3,805,470
Parks and recreation 3,330,488
Total expenditures - current 21,925,721
Expenditures - capital outlay
General government 24,577
Public safety 4,017
Public works 95,568
Parks and recreation 11,410
Total expenditures - capital outlay 135,572
Expenditures - debt service
Principal bond maturities 2,345,000 1,255,000
Interest on debt 2,547,008 415,216
Fiscal charges 129,967 12,633
Total expenditures - debt service 5,021,975 1,682,849
Total expenditures 22,061,293 5,021,975 1,682,849
Excess (deficiency) of revenues over expenditures 645,395 (961,738) 1,015,479
Other financing sources and (uses)
Transfers from other funds 759,814 400,000 118,086
Transfers to other funds - - -
Issuance of debt - - 202,622
Refunding bonds issued - 12,660,000 -
Payment to refunded bonds escrow agent - (10,035,000) -
Premium on bonds issued - 1,346,531 -
Total other financing sources and (uses)759,814 4,371,531 320,708
Net change in fund balance 1,405,209 3,409,793 1,336,187
Fund balance, January 1 9,666,560 27,371,659 2,967,285
Fund balance, December 31 11,071,769$ 30,781,452$ 4,303,472$
See accompanying notes to basic financial statements.
Debt Service
41
Nonmajor Total
Improvement Governmental Governmental
Building Construction Funds Funds
-$ -$ 1,863,334$ 23,696,659$
- - 828,050 828,050
- - 677,266 2,836,555
- 14,146 4,085,306 4,979,156
44,473 - 5,871,742 8,405,492
- - 44,161 1,636,267
- - - 223,642
19,844 27,229 295,481 548,842
- - 2,230,000 2,230,000
38,623 - 173,750 242,627
23,275 - 883,294 957,937
126,215 41,375 16,952,384 46,585,227
1,205,917 5,690,230
- 10,305,450
- 3,805,470
- 3,330,488
1,205,917 23,131,638
29,431 88,049 240,405 382,462
174,300 - 1,279,674 1,457,991
23,542 8,730,528 7,975,094 16,824,732
48,619 - 2,695,661 2,755,690
275,892 8,818,577 12,190,834 21,420,875
2,395,000 5,995,000
738,366 3,700,590
34,189 176,789
3,167,555 9,872,379
275,892 8,818,577 16,564,306 54,424,892
(149,677) (8,777,202) 388,078 (7,839,665)
7,711 - 2,203,614 3,489,225
- (118,086) (1,526,538) (1,644,624)
- 8,317,378 - 8,520,000
- - - 12,660,000
- - - (10,035,000)
- 634,988 - 1,981,519
7,711 8,834,280 677,076 14,971,120
(141,966) 57,078 1,065,154 7,131,455
1,516,976 1,020,713 22,239,223 64,782,416
1,375,010$ 1,077,791$ 23,304,377$ 71,913,871$
Capital Projects
42
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7,131,455$
1. Governmental funds report capital outlays as expenditures while the government-wide
statement of activities reports depreciation expense to allocate those expenditures
over the life of the assets. As a result, fund balance decreases by the amount of
financial resources expended, whereas net position decreases by the amount of
depreciation expense charged for the year. This is the amount by which depreciation
expense exceeded capital outlay.
Capital outlay 16,029,441$
Capital contributed by developer 4,038,286
Depreciation expense (9,528,938) 10,538,789
2. In the government-wide Statement of Activities, only the gain or loss on the sale of
capital assets is reported, whereas in the governmental funds, the proceeds from the
sales increase financial resources. Thus, the change in net position differs from the
change in fund balance by the net book value of the capital assets disposed of.(104,873)
3. Revenues in the government-wide Statement of Activities that do not provide current
financial resources are not reported as revenues in the governmental funds.
Deferred inflows of resources - December 31, 2013 (7,491,769)
Deferred inflows of resources - December 31, 2014 8,568,468 1,076,699
4. Bond proceeds are reported as other financing sources in governmental funds and thus
contribute to the increase in fund balance. Bond, loan, and capital lease principal
maturities are reported as expenditures in governmental funds thus reducing fund
balance. In the government-wide statements, however, issuing debt increases
long-term liabilities while debt repayment reduces long-term liabilities thus affecting the
statement of activities.
Bond proceeds (21,180,000)
Bond, loan, and capital lease principal maturities 16,030,000 (5,150,000)
5. Interest and debt premium/discounts in the government-wide Statement of Activities
differs from the amounts reported in governmental funds because accrued interest was
calculated for long-term debt payable in addition to the amortizations of debt premiums/
discounts which are recognized respectively as expenditures and other financing sources
and uses in the governmental fund statements.
Accrued interest payable (38,123)
Grant applicable towards accrued interest payable (807)
Premium on 2014 bonds issued (1,981,519)
Amortization of debt premiums/discounts 250,081 (1,770,368)
6.Accrued compensated absences and net OPEB obligations are not payable with
current financial resources and, therefore, are not reported in the governmental funds.
Net compensated absences decrease - December 31, 2014 19,541
Net OPEB obligation increase - December 31, 2014 (60,236) (40,695)
7. Internal service funds are used by management to charge the costs of certain activities,
such as insurance, to individual funds. This amount represents a portion of the change
in net position of the internal service fund, which are reported in with governmental activities.22,608
Change in net position of governmental activities 11,703,615$
Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the Statement of Activities are
different because:
See accompanying notes to basic financial statements.
CITY OF LAKEVILLE, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2014
43
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
DECEMBER 31, 2014
Governmental
Enterprise Funds Activities -
Internal Service
Liquor Utility Total Funds
ASSETS
Current assets
Cash and investments 1,514,415$ 7,266,721$ 8,781,136$ 777,679$
Interest receivable 10,700 21,867 32,567 1,038
Accounts receivable 845 2,379,270 2,380,115 2,907
Inventory 1,723,071 619,025 2,342,096 -
Prepaid expenses 22,388 14,191 36,579 -
Total current assets 3,271,419 10,301,074 13,572,493 781,624
Non-current assets
Restricted cash and investments 324,125 324,125
Capital assets
Land 3,283,913 528,160 3,812,073
Buildings and improvements 3,896,890 22,245,024 26,141,914
Machinery and equipment 520,642 2,587,927 3,108,569
Infrastructure - 134,114,079 134,114,079
Construction in process - 2,693,324 2,693,324
Accumulated depreciation (1,426,392) (55,819,932) (57,246,324)
Net capital assets 6,275,053 106,348,582 112,623,635
Total non-current assets 6,599,178 106,348,582 112,947,760
Total assets 9,870,597 116,649,656 126,520,253 781,624
LIABILITIES
Current liabilities
Salaries payable 33,904 54,890 88,794 -
Accounts payable 1,017,288 920,426 1,937,714 8,465
Accrued interest payable 63,959 - 63,959 -
Deposits payable 8,191 8,000 16,191 -
Accrued compensated absences 54,649 163,131 217,780 -
Long-term debt-current 175,000 - 175,000 -
Total current liabilities 1,352,991 1,146,447 2,499,438 8,465
Non-current liabilities
Accrued compensated absences 65,363 15,246 80,609
Net OPEB obligation 17,385 32,193 49,578
Long-term debt 2,913,529 - 2,913,529
Total non-current liabilities 2,996,277 47,439 3,043,716
Total liabilities 4,349,268 1,193,886 5,543,154 8,465
NET POSITION
Net investment in capital assets 3,186,524 106,348,582 109,535,106
Restricted for debt service 324,125 - 324,125
Unrestricted 2,010,680 9,107,188 11,117,868 773,159
Total net position 5,521,329$ 115,455,770$ 120,977,099 773,159$
Explanation of difference between Proprietary Funds Statement Position
and the government-wide Statement of Net Position:
The City uses an internal service fund to charge the cost of its insurance
activities to individual funds. This amount consists of the necessary
adjustment to reflect the consolidation of internal service fund activities:200,422
Net position of business-type activities 121,177,521$
See accompanying notes to basic financial statements.
Business-type Activities -
44
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2014
Governmental
Enterprise Funds Activities -
Internal Service
Liquor Utility Total Funds
Sales and cost of sales
Sales 14,883,858$ 14,883,858$
Cost of sales 11,078,916 11,078,916
Gross profit 3,804,942 3,804,942
Operating revenues
User charges 9,143,659$ 9,143,659 381,324$
Other 152,459 152,459 62,469
Total operating revenues 9,296,118 9,296,118 443,793
Gross profit and total operating revenues 3,804,942 9,296,118 13,101,060 443,793
Operating expenses
Personnel services 1,317,782 1,847,945 3,165,727 -
Commodities 52,476 393,977 446,453 -
Other charges and services 858,837 2,665,859 3,524,696 368,572
Disposal charges - 3,297,982 3,297,982 -
Depreciation 117,984 3,296,855 3,414,839 -
Total operating expenses 2,347,079 11,502,618 13,849,697 368,572
Operating income (loss)1,457,863 (2,206,500) (748,637) 75,221
Non-operating revenue (expense)
Intergovernmental - grants 3,762 112,181 115,943 -
Investment income 49,005 100,155 149,160 4,752
Interest, fiscal charges, bond premium (net)(152,980) - (152,980) -
Disposal of capital assets 84 34,278 34,362 -
Total non-operating revenue (expense)(100,129) 246,614 146,485 4,752
Income (loss) before contributions and trans 1,357,734 (1,959,886) (602,152) 79,973
Contributed capital from governmental activities - 230,565 230,565 -
Contributed capital from developers - 4,252,192 4,252,192 -
Transfers from other funds - 2,989 2,989 -
Transfers to other funds (1,369,063) (429,972) (1,799,035) (48,555)
Total contributions and transfers (net)(1,369,063) 4,055,774 2,686,711 (48,555)
Change in net position (11,329) 2,095,888 2,084,559 31,418
Net position, January 1 5,532,658 113,359,882 741,741
Net position, December 31 5,521,329$ 115,455,770$ 773,159$
Explanation of difference between Proprietary Funds Statement of Revenue,
Expenses, and Changes in Fund Net Position and the Statement of Activities:
The City uses an internal service fund to charge the cost of its insurance activities
to individual funds. This amount represents the income that has been allocated
back to the business-type activities in the government-wide Statement of
Activities that is attributable to the City's business-type activities:8,810
Change in net position of business-type activities 2,093,369$
See accompanying notes to basic financial statements.
Business-type Activities -
45
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CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2014
Governmental
Activities -
Internal Service
Liquor Utility Total Funds
Cash flows from operating activities
Cash received from customers 14,883,094$ 9,279,276$ 24,162,370$ -$
Cash received from general service charges - - - 440,886
Cash paid to suppliers (12,224,883) (6,345,497) (18,570,380) (369,629)
Cash paid to and for employees (1,295,855) (1,869,952) (3,165,807) -
Net cash flows from operating activities 1,362,356 1,063,827 2,426,183 71,257
Cash flows from noncapital financing activities
Intergovernmental - grant 3,762 220,600 224,362 -
Transfers from other funds - 2,989 2,989 -
Transfers to other funds (1,369,063) (429,972) (1,799,035) (48,555)
Net cash flows from noncapital financing activities (1,365,301) (206,383) (1,571,684) (48,555)
Cash flows from capital and related financing activities
Acquisition of capital assets (2,093,779) (1,225,964) (3,319,743) -
Proceeds from sale of capital assets 84 37,798 37,882 -
Interest and fiscal charges (157,950) - (157,950) -
Principal maturities (165,000) - (165,000) -
Net cash flows from capital and related financing activities (2,416,645) (1,188,166) (3,604,811) -
Cash flows from investing activities
Investment income received 57,247 118,158 175,405 5,451
Net change in cash and cash equivalents (2,362,343) (212,564) (2,574,907) 28,153
Cash and cash equivalents, January 1 4,200,883 7,479,285 11,680,168 749,526
Cash and cash equivalents, December 31 1,838,540$ 7,266,721$ 9,105,261$ 777,679$
(including restricted cash account of $324,125)
Reconciliation of operating income (loss) to net cash flows
from operating activities
Operating income (loss)1,457,863$ (2,206,500)$ (748,637)$ 75,221$
Adjustments
Depreciation expense 117,984 3,296,855 3,414,839 -
(Increase) decrease in assets
Accounts receivable (764) (16,842) (17,606) (2,907)
Inventory (43,602) (576,606) (620,208) -
Prepaid expenses 322 (691) (369) -
Increase (decrease) in liabilities
Salaries payable 1,681 5,482 7,163 -
Accounts payable (190,628) 734,027 543,399 (1,057)
Contracts payable - (147,009) (147,009) -
Deposits payable (746) 2,600 1,854 -
Accrued compensated absences 16,702 (34,577) (17,875) -
Net OPEB obligation 3,544 7,088 10,632 -
Total adjustments (95,507) 3,270,327 3,174,820 (3,964)
Net cash flows from operating activities 1,362,356$ 1,063,827$ 2,426,183$ 71,257$
Supplemental schedule of non-cash financing activities:
The City assumes ownership of utility capital assets
from governmental projects and land developers.
Capital assets assumed were as follows:4,482,757$ 4,482,757$
See accompanying notes to basic financial statements.
Business-type Activities -
Enterprise Funds
46
CITY OF LAKEVILLE, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION -
AGENCY FUND
DECEMBER 31, 2014
Escrow
Fund
Assets
Cash and investments 7,227,588$
Liabilities
Deposits payable 7,227,588$
See accompanying notes to basic financial statements.
47
N O T E S T O B A S I C
F I N A N C I A L S T A T E M E N T S
Note 1 – Summary of Significant Accounting Policies
Note 2 – Cash and Investments
Note 3 – Capital Assets
Note 4 – Operating Leases
Note 5 – Long-Term Liabilities
Note 6 – Net Investment in Capital Assets
Note 7 – Net Position (Restricted)
Note 8 – Construction Commitments
Note 9 – Fund Balances
Note 10 – Contributed Capital Assets from Private Land Developers and City
Government
Note 11 – Excess of Expenditures over Appropriations
Note 12 – Interfund Receivables and Payables
Note 13 – Interfund Transfers
Note 14 – Joint Powers Debt Commitment
Note 15 – Other Post-Employment Benefits (OPEB) Plan
Note 16 – Risk Financing and Related Insurance Issues
Note 17 – Defined Benefit Pension Plans - Statewide
Note 18 – Defined Contribution Plan – Statewide
Note 19 – Lakeville Fire Relief Association
Note 20 – Deferred Compensation Plan
Note 21 – Litigation
Note 22 – Conduit Debt
Note 23 – GASB Standards Issued But Not Yet Implemented
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
48
Note 1 – Summary of Significant Accounting Policies
The City of Lakeville operates under the “Optional Plan A” form of government, according to applicable
State of Minnesota Statutes. The Statutes prescribe a Mayor-Council form of organization. The City
provides the following services: public safety, highways and streets, water and sanitary sewer, public
improvements, planning and zoning, culture-recreation, and general administration.
The basic financial statements of the City of Lakeville have been prepared in conformity with United States
generally accepted accounting principles (GAAP) as applied to government units. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental
accounting and financial reporting principles. The City’s more significant accounting policies are
described below.
A. Financial Reporting Entity of the City
The City of Lakeville is a municipal corporation governed by an elected mayor and a four-member
council. In accordance with GASB standards, these financial statements represent the City of
Lakeville and its sole component unit. The City includes all funds, organizations, agencies,
departments, and offices that are not legally separate from such. Component units are legally
separate organizations for which the elected officials of the City are financially accountable and are
included within the basic financial statements of the City based on the nature and the significance of
their operational or financial relationships with the City.
Blended Component Unit
The Housing and Redevelopment Authority (HRA) of Lakeville, Minnesota was created by the City
to provide housing and redevelopment assistance to its citizens. The HRA provides this assistance
through the administration of various programs. The HRA is governed by a five-member Board of
Commissioners comprised of the City of Lakeville Council in accordance with Minnesota Statutes
469.003, Subdivision 6. Although it is legally separate from the City, the HRA is reported as if it
were a part of the City (blended) because the City Council is also the HRA governing board. The
Commissioners terms of office coincide with those of the City Council member. The City
Administrator serves as the HRA Executive Director. The operational responsibility for the HRA
rests with management of the City.
During fiscal year 2006, the HRA issued $9,230,000 in Ice Arena Lease Revenue Bonds, Series
2006, to finance the construction of the single sheet Hasse ice arena facility. Debt service will be
payable from equal lease payments to be made by the City pursuant to the lease agreement between
the HRA and the City, and in conjunction with the joint powers agreement between the City and
Independent School District No. 194.
These HRA bond obligations are combined and presented separately in the debt service funds as
debt supported by HRA lease revenue.
The HRA has not issued separate financial statements for the period ending December 31, 2014.
Information of a non-financial matter regarding the HRA can be obtained at the City’s Finance
offices, located at 20195 Holyoke Avenue, Lakeville, Minnesota 55044.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
49
Note 1 – Summary of Significant Accounting Policies (continued)
B. Government-wide and Fund Financial Statements
The basic financial statements include both government-wide and fund financial statements. The
government-wide financial statements focus on the City as a whole (consolidation of the City,
excluding fiduciary funds) while the fund financial statements focus on the major individual funds
(reported as separate columns within the fund financial statements). Separate financial statements
are provided for governmental funds, proprietary funds, and fiduciary funds.
Both the government-wide and fund financial statements (within the basic financial statements)
categorize primary activities as either governmental or business-type. In the governmental-wide
Statement of Net Position, both the governmental and business-type activities columns (a) are
presented on a consolidated basis by column, and (b) are reflected, on a full accrual, economic
resources measurement focus, which incorporates long-term assets and receivables as well as long-
term debt and obligations. The City generally first uses restricted assets for expenses incurred for
which both restricted and unrestricted assets are available. The City may defer the use of restricted
assets based on a review of the specific transaction.
The government-wide Statement of Activities reflects both the gross cost and the net cost per
function category (general government, public safety, public works, and parks and recreation) which
are otherwise being supported by both program and general revenues (charges for services, grants
and contributions, property taxes, etc.). The Statement of Activities reduces gross expenses
(including depreciation) by the related program revenues and operating/capital grants and
contributions.
The program revenues must be directly associated with the function (general government, public
safety, public works, and parks and recreation) or a business-type activity. Program revenues are
derived directly from the program itself or from parties outside the City’s taxpayers or citizenry, as a
whole. The City does not allocate indirect expenses. The operating grants and contributions column
includes operating-specific and discretionary grants while the capital grants and contributions
column includes capital specific grants and contributions.
The governmental fund financial statements are presented using the current financial resources
measurement focus and the modified accrual basis of accounting. This is the manner in which these
funds are normally budgeted. Since the governmental fund statements are presented using a
measurement focus and basis of accounting different from that used in the government-wide
statement’s governmental column, a reconciliation is presented that briefly explains the adjustments
necessary to reconcile ending net position and the change in net position.
Both the City as a whole and the City’s major funds, including both governmental and enterprise
funds, as well as an agency fund, are presented utilizing the focus of the GASB Statement No. 34
reporting model. Each presentation provides valuable information that can be analyzed and
compared (between years and between governments) to enhance the usefulness of the information.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
50
Note 1 – Summary of Significant Accounting Policies (continued)
B. Government-wide and Fund Financial Statements (continued)
In the fund financial statements, financial transactions and accounts of the City are organized on the
basis of funds. The operation of each fund is considered to be an independent fiscal and separate
accounting entity, with a self-balancing set of accounts recording cash and/or other financial
resources together with all related liabilities and residual equities or balances, and changes therein,
which are segregated for the purpose of carrying on specific activities or attaining certain objectives
in accordance with special regulations, restrictions, or limitations.
Major governmental funds – The City reports the following major governmental funds:
General fund – The general fund is the general operating fund of the City. It is used to
account for all financial resources except for those required to be accounted for in another
fund. This fund records revenues such as property taxes, licenses and permits,
intergovernmental revenues, charges for services, fines, and investment income. Most of
the current day-to-day operations of the City are financed from this fund.
Debt service general obligation fund – This fund accounts for those bond issues that
financed debt approved by voter referendum, equipment certificates of indebtedness, and
capital improvement bonds. Revenues are provided primarily from property taxes.
Debt service G.O. Improvement fund – This fund accounts for those bond issues that
financed street, storm sewer, water, and sanitary sewer improvements. The special
assessments levied against benefited property owners are pledged toward the repayment of
the principal and interest on these bonds.
Capital projects building fund – This fund accounts for the accumulation and disbursement
of funds for the construction or improvement of public buildings.
Capital projects improvement construction fund – This fund accounts for complex
construction contracts that involve multiple financing resources from the City and other
government entities. Construction projects usually extend over several years before
completion.
Major proprietary funds – The City reports the following major proprietary funds:
Enterprise liquor fund – This fund is used to account for the retail operations of three off-
sale liquor stores.
Enterprise utility fund – This fund is used to account for water, sanitary sewer service,
street lighting, and environmental resources provided to City customers.
Other funds – The City reports the following other funds:
Internal service fund – The internal service fund accounts for the City’s risk management
program relating to general liability, excess liability, property, and casualty insurance costs
which are charged to other departments of the City.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
51
Note 1 – Summary of Significant Accounting Policies (continued)
B. Government-wide and Fund Financial Statements (continued)
Agency fund – The agency fund is used to record the receipt and remittance of monies held
by the City as an agent primarily for land developers and builders that will be refunded to
the respective depositors when the conditions are satisfied in accordance with the respective
agreements.
C. Measurement Focus and Basis of Accounting
The accounting and reporting treatment applied to a fund is determined by its measurement focus.
Funds are classified into three categories: Governmental, Proprietary, and Fiduciary. To provide an
accurate cost measurement of individual activities in the fund financial statement consolidation
process, the City’s interfund activity relating to services provided by and used between functions has
been removed from these statements; exceptions are for charges between the government’s liquor
and utility function and other functions of the government.
Governmental Funds:
Measurement focus: Governmental funds are accounted for using a current financial
resources measurement focus. With this measurement focus, only current assets and
current liabilities generally are included on the balance sheet. Reported fund balance is
considered a measure of “available spendable resources.” Governmental fund operating
statements represent increases (i.e., revenues and other financing sources) and decreases
(i.e., expenditures and other financing uses) in net current assets.
Basis of accounting: Governmental funds are accounted for using the modified accrual
basis of accounting. Their revenues are recognized when susceptible to accrual (i.e., when
they become measurable and available). “Measurable” means the amount of the transaction
can be determined and “available” means collectible within the current fiscal year or soon
enough thereafter to be used to pay liabilities of the current fiscal year. For this purpose the
City generally considers revenues to be available if collected within 60 days of year end.
Revenues: Major revenues that are susceptible to accrual include property taxes, excluding
delinquent taxes received over 60 days after current fiscal year-end; special assessments,
intergovernmental revenue, charges for services, investment income, and donations. Major
revenues that are not susceptible to accrual (i.e., license and permit revenues, and
miscellaneous revenues) are recorded when received because they are not measurable until
collected.
Expenditures: Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred, except for principal and interest on
long-term debt, other post-employment benefits, and compensated absences which are
recognized when due.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
52
Note 1 – Summary of Significant Accounting Policies (continued)
C. Measurement Focus and Basis of Accounting (continued)
Proprietary and Fiduciary Funds:
Measurement focus: Proprietary funds and fiduciary funds (with the exception of agency
funds) are accounted for on a flow of economic resources measurement focus. This means
that all assets, including capital assets, and all liabilities, including long-term liabilities,
associated with fund activity are included on the Statement of Net Position. Proprietary
fund types Statement of Revenues, Expenses and Changes in Net Position present increases
(i.e., revenues) and decreases (i.e., expenses) in net total position.
Basis of accounting: Proprietary funds and fiduciary funds (including agency funds) are
accounted for using the accrual basis of accounting. Revenues are recognized when earned
and expenses are recorded at the time the liabilities are incurred. Unbilled utility service
receivables are recorded at current fiscal year-end.
Operating versus non-operating items: Proprietary funds distinguish operating revenues
and expenses from non-operating 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 revenue of the
City’s enterprise funds and internal service funds are charges to customers for sales and
services. Operating expenses for enterprise funds and internal service funds include the
cost of sales and services, administrative expenses, and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as non-operating revenues
and expenses.
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity
1. Cash and investments, and interest receivable
Cash balances from all funds are combined and invested to the extent available in certificates of
deposit, commercial paper, U.S. Government securities, and other securities authorized by State
Statutes. Earnings from such investments are allocated to the respective funds on the basis of
applicable cash balance participation by each fund.
2. Investments held by trustee
Cash and investments held by trustee represent in part the fair value of deposits that are required
to be held in trust for various City obligations. These established escrow accounts will remain in
effect until the terms and conditions of the obligations have been fulfilled. Earnings from such
investments are allocated directly to the respective funds in which the assets are held.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
53
Note 1 – Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
3. Taxes receivable
Property tax levies are set by the City Council in December each year and are certified to Dakota
County for collection in the following year. Such taxes become a receivable of the City and
become a lien on the respective property as of January 1. In Minnesota, most counties act as
collection agents for all property taxes. Dakota County spreads the levies over all taxable
property within the City of Lakeville. Real and personal property taxes are payable in equal
installments by property owners to Dakota County on May 15 and October 15 of each year.
Dakota County remits these and delinquent collections to the City twice a year, in January and
July. Unpaid taxes on December 31 are classified in the fund financial statements as delinquent
taxes receivable.
Taxes receivable include the following components:
Unremitted - amounts collected by Dakota County but not yet remitted to the City by December 31.
Delinquent - amounts billed to property owners but not paid.
4. Special assessments receivable
Special assessments are levied against the benefited properties for the assessable costs of special
assessment improvement projects in accordance with State Statutes. The City usually adopts the
assessment rolls when the individual projects are complete or substantially complete. The City is
obligated for the payment of special assessment debt not covered through the collection of
special assessments from property owners. Any obligation by the City would be paid by property
taxes. Special assessments are collectable over a term of years generally consistent with the term
of years of the related bond issue. Collection of annual special assessment installments
(including interest) is administered by Dakota County in the same manner as property taxes.
Property owners are allowed to prepay total future installments without interest or prepayment
penalties. As of December 31, 2014 the special assessment delinquent receivable was $7,141 in
the governmental funds and $32,105 in the proprietary enterprise utility fund. Special
assessments receivable includes the following components:
Unremitted - amounts collected by Dakota County but not yet remitted to the City by December 31.
Delinquent - amounts billed to property owners but not paid.
Deferred - assessment installments that will be billed to property owners in future years.
O t h e r - assessments for which payment has been delayed based on State Statutes or City Council action.
5. Inventory
The inventory in the general fund is stated at FIFO (first-in, first-out) cost and consists of
expendable supplies held for consumption. Under FIFO, the cost is recognized as an expenditure
at the time the inventory items are used (consumption method). The inventories of the
proprietary funds are stated at the lower of FIFO cost or replacement market.
6. Prepaid items
Payments made to vendors for services that will benefit periods beyond the current year are
recorded as prepaid items. Prepaid items are also accounted for using the consumption method.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
54
Note 1 – Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
7. Unamortized bond premium and bond discount
In the governmental fund financial statements, bond premiums and discounts are recognized as
other financing sources and uses, respectively in the current fiscal year. Bond discounts and
bond premiums for the City’s government-wide financial statements are deferred and amortized
over the term of the bonds using the straight-line method. Unamortized bond premiums and
discounts are included within the non-current liabilities due in more than one year of the City’s
government-wide statement of net position.
The enterprise liquor fund includes a non-current liability for unamortized bond premium
associated with the issuance of the liquor revenue bonds of 2007. The bond premium is
amortized over the term of the bonds using the straight-line method.
8. Restricted assets (temporarily)
The government-wide Statement of Net Position “restricted assets (temporarily)” represents cash
and investments, and investments held by trustee that have imposed restrictions placed on them
by parties outside the government. These restricted amounts are pledged by bond covenants to
the repayment of City indebtedness. The assets are temporarily restricted until the terms and
conditions of the obligations have been fulfilled.
9. Capital assets
Capital assets, which include land, historical treasures, construction in process, buildings and
improvements, machinery and equipment, other improvements, and infrastructure, are reported in
the applicable governmental or business-type activity columns of the government-wide Statement
of Net Position. 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 fair 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 of not less than three
years. The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asset are not capitalized.
Capital outlays are recorded as expenditures in the City’s governmental fund financial
statements, which use the modified accrual basis of accounting. Capital outlays that meet the
City’s capitalization criteria are reported in the government-wide Statement of Net Position and
proprietary funds Statement of Net Position, both of which use the full accrual basis of
accounting. Interest incurred during the construction phase of capital assets for business-type
activities is included as part of the capitalization value of assets constructed.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
55
Note 1 – Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
9. Capital assets (continued)
Depreciation on the capital assets is recorded on a government-wide basis. Land, historical
treasures, and construction in process are not depreciated. Capital assets are depreciated using
the straight-line method over their estimated useful lives as follows:
Buildings and improvements 50-75 years
Machinery and equipment 3-15 years
Other improvements 10-50 years
Infrastructure 20-50 years
10. Deferred inflows of resources
In addition to liabilities, statements of financial position or balance sheets will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element
represents an acquisition of net position that applies to future periods and so will not be
recognized as an inflow of resources (revenue) until that time. The City has only one type of
item, which arises under a modified accrual basis of accounting, which qualifies for reporting in
this category. Accordingly, the item, unavailable revenue, is reported only in the governmental
funds Balance Sheet. The governmental funds report unavailable revenue from three sources:
property taxes, special assessments, and other receivables not collected within 60 days of year-
end. These amounts are deferred and recognized as an inflow of resources in the period the
amounts became available.
11. Compensated absences
It is the City’s policy to permit employees to accumulate earned but unused leave benefits as
either paid time off (PTO), or vacation and sick leave. Under the City’s personnel policies and
collective bargaining contracts, City employees are granted leave benefits in varying amounts
based on length of services. PTO accruals vary from 18 to 30 days per year, vacation accruals
vary from 10 to 20 days per year and sick leave accrues at a rate of 12 days per year.
As benefits accrue to employees, the accumulated PTO, vacation and vested sick leave is
reported as an expense and liability in the government-wide and proprietary fund financial
statements. Accrued PTO, vacation and a percentage of sick leave is paid to employees upon
termination (severance) and is reported as an expenditure in the governmental fund that will pay
for it. No liability is recorded for non-vesting accumulating rights to receive sick leave benefits.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
56
Note 1 – Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
12. Net other post-employment benefits (OPEB) obligation
In accordance with the provisions of GASB Statement No. 45, Accounting and financial
Reporting by Employers for Post-employment Benefits Other Than Pensions, an actuarial
valuation is required to be computed and reported for the City’s post-employment health
insurance benefits provided to eligible employees through the City’s Other Post-Employment
Benefits Plan. OPEB is reported as an expense on a pay-as-you-go basis and is accrued as it is
earned. The net OPEB obligation liability and corresponding expense for governmental activities
is reported within the government-wide financial statements. The net OPEB obligation liability
and corresponding expense for enterprise funds are recorded within those funds.
13. Long-term obligations
Long-term obligations are recorded in the City’s government-wide Statement of Net Position
when they become a liability of the City. Long-term obligations are recognized as a liability of a
governmental fund only when due or when payment is made to the paying agent.
14. Net Position Classifications
In the government-wide and proprietary fund financial statements, net position represents the
difference between assets, deferred outflows of resources (if any), 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 their 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.”
15. Fund balance classifications
In the fund financial statements, governmental fund reports 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.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
57
Note 1 – Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position or Equity (continued)
15. Fund balance classifications (continued)
Committed – Consists of amounts that can be used only for the specific purposes
determined by a formal action of the government’s highest level of decision-making
authority. The City Council is the highest level of decision-making authority for the
government that can, by adoption of a resolution prior to the end of the fiscal year,
commit fund balance. Once adopted, the limitation imposed by the resolution
remains in place until a similar action is taken (the adoption of another resolution) to
remove or revise the limitation.
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. Pursuant to City resolution, the
City Administrator and the Finance Director are authorized to establish assignments
of fund balance.
Unassigned – The residual classification for the General Fund, which also reflects
negative residual amounts in the other funds.
The City will endeavor to maintain an unrestricted (committed, assigned and unassigned) fund
balance in the General fund of an amount not less than 40 and not greater than 50 percent of the
next year’s budgeted expenditures of the General fund. This will assist in maintaining an adequate
level of fund balance to provide for cash flow requirements and contingency needs. At December
31, 2014, the unrestricted fund balance of the General Fund was 44.8 percent of the subsequent
year’s budgeted expenditures.
When both restricted and unrestricted resources are available for use, it is the City’s policy to first
use restricted resources, and 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.
E. Revenue, Expenditures and Expenses
1. In the governmental fund financial statements property tax revenue is recognized when it
becomes measurable and available to finance expenditures of the current fiscal year. All
delinquent taxes receivable are fully offset by deferred inflow of resources in the governmental
fund financial statements. Taxes due from Dakota County on December 31 are included in
revenue since they are remitted to the City within 60 days after December 31. In the
government-wide Statement of Activities property tax revenue is recognized when levied.
2. In the governmental fund financial statements special assessments principal and interest are
recognized as revenue when they become measurable and available to finance expenditures of the
current fiscal year. All delinquent and deferred assessments receivable are fully offset by
deferred inflow of resources in the fund financial statements. Both the principal and interest on
special assessments are payable in installments over a term of years that matches the scheduled
payments for the bond issue which financed the project. In the government-wide Statement of
Activities special assessments revenue is recognized when levied.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
58
Note 1 – Summary of Significant Accounting Policies (continued)
E. Revenue, Expenditures and Expenses (continued)
3. Investment income is recorded as revenue in the year earned. Elements of investment income
include interest earned on investments and unrealized gains or (losses) on net increases or
decreases in the fair value of investments.
4. Certain grants and aids received by the City require that eligible expenditures be made in order to
earn the grant. Revenue for these grants is recorded in the period of which eligible expenditures
are made.
5. Enterprise utility fund service charges are recognized when earned with no allowance for
uncollectibles because delinquent accounts deemed uncollectible during the normal billing
process are certified to Dakota County as a property tax lien. Quarterly utility service charges
provided to customers but unbilled are included as receivables as of December 31.
6. Interfund service transactions are accounted for as expenditures or expenses. Service transaction
payments to a fund are recorded as an expenditure or expense in the paying fund and conversely
recorded as a reduction of expenditure or expense in the fund that is receiving payment.
Interfund service transactions within the respective categories of governmental activities and
business-type activities in the government-wide Statement of Activities are eliminated.
F. 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 of three months or less to be cash
equivalents. The proprietary funds’ equity in the government-wide cash and investments
management pool is considered to be a cash equivalent.
Note 2 – Cash and Investments
A. Components of Cash and Investments
The City’s cash surpluses are pooled and invested in accordance with State Statute and City investment
policy. Investment earnings and unrealized gains and losses are allocated to funds on the basis of average
cash balances. Investments are stated at fair value, which is the amount that a financial instrument could be
exchanged for in a current transaction between willing parties. The investments are not identified with
specific funds. Investments held by trustee include balances held in segregated accounts for specific
purposes. Interest earned on these trustee accounts is allocated directly to the responsible fund. The
amounts represent funds held as required by the debt obligation covenants and other agreements.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
59
Note 2 – Cash and Investments (continued)
A. Components of Cash and Investments (continued)
The City’s cash and investments as of December 31, 2014 consist of the following:
Cash on hand 13,165$
Deposits 878,767
Investments 88,919,927
Total cash and investments 89,811,859$
The City’s cash and investments as of December 31, 2014 are presented in the financial statements as
follows:
Cash and investments 54,788,362$
Temporarily restricted cash and investments 324,125
Temporarily restricted investments held by trustee 27,471,784
Statement of Fiduciary Net Position
Cash and investments 7,227,588
Total cash and investments 89,811,859$
B. Deposits
In accordance with applicable Minnesota Statutes, the City is permitted to maintain deposits at depository
banks authorized by the City Council, including checking accounts, savings accounts, and non-negotiable
certificates of deposits. The City’s deposit policy does not limit depository choices. 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 does not have a formal policy addressing this risk.
At year-end, the carrying amount of the City’s deposits was $878,767 while the balance on the
bank records was $703,249. The City does not have any custodial credit risk for its deposits since
all City deposits held in safekeeping by the City's banks are fully protected by insurance and/or
collateral as required by Minnesota Statutes and authorized by the City Council.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
60
Note 2 – Cash and Investments (continued)
C. Investments
The City’s investments as of December 31, 2014 are as follows:
Less
Investment Type Rating Agency Fair Value Than 1 1 - 5 6 - 10
Money market funds
Minnesota Municipal (4M) N/R N/A 5,112,358$ -$ -$ -$
Wells Fargo Advantage AAAm S&P 765,741 - - -
First American Treasury
Obligation AAAm S&P 1,323 - - -
Certificates of deposit N/R N/A 25,769,690 14,868,000 10,901,690 -
U.S. treasury securities N/R N/A 26,760,226 13,048,739 13,711,487 -
U.S. government agencies Aaa Moody’s 3,690,832 2,945,453 745,379 -
U.S. government agencies AA+ S&P 19,480,930 3,014,762 15,181,309 1,284,860
Municipal Bonds Aaa Moody’s 607,072 607,072 - -
Municipal Bonds Aa1 Moody’s 1,487,361 121,548 1,262,503 103,310
Municipal Bonds AA+ S&P 129,409 129,409 - -
Municipal Bonds Aa2 Moody’s 996,828 - 996,828 -
Municipal Bonds AA S&P 887,048 77,692 809,356 -
Municipal Bonds Aa3 Moody’s 1,445,671 - 1,336,902 108,769
Municipal Bonds AA- S&P 225,506 225,506 - -
Municipal Bonds A1 Moody’s 109,936 - - 109,936
Municipal Bonds A S&P 221,033 221,033 - -
Municipal Bonds A3 Moody’s 1,228,963 1,228,963 - -
Total investments 88,919,927$ 36,488,177$ 44,945,454$ 1,606,875$
N/R - Not rated N/A - Not applicable
Credit Risk
Maturity Duration in Years
Interest Risk -
The 4M Fund is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota
Cities and is an external investment pool not registered with the Securities and Exchange Commission
(SEC) that follows the same regulatory rules of the SEC under rule 2a7. The City’s investment in the 4M
Fund is measured at the net asset value per share provided by the pool, which is based on an amortized cost
method that approximates fair value. The City’s investment policy does not place any further limitations
beyond the state statute requirements for the risk categories described below. 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 does not have any custodial credit risk for its investments since all of the City’s
investments held in safekeeping by the City's brokerage firm in the City's name are insured and
registered.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
61
Note 2 – Cash and Investments (continued)
C. Investments (continued)
Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill
its obligations. State Statutes authorize investments in money market funds, certificates of
deposit, commercial paper, U.S. treasury securities, U.S. government agencies, and other
securities provided they meet the two highest quality ratings of nationally recognized rating
organizations.
Concentration Risk – This is the risk associated with investing a significant portion of the City’s
investments (considered 5 percent or more) in the securities of a single issuer, excluding U.S.
guaranteed investments (such as treasuries), investment pools, and mutual funds.
As of December 31, 2014, the City’s investment portfolio includes the following securities of
single issuers exceeding 5 percent:
Federal National Mortgage Association 11.0%
Federal Home Loan Bank 9.7%
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).
D. Investment Policy
The City’s investment policy limits exposure to interest rate risk by investing in shorter term
securities (maturing in one year or less) to meet current operating cash requirements. Longer term
investments are to be purchased with the intent to match maturity periods with future funding
needs for capital replacement and debt obligations. The City will not purchase investments that, at
the time of investment, cannot be held to maturity. This does not mean that an investment cannot
be sold prior to maturity.
Investment activity will focus upon protection of taxpayer dollars and investment income,
consistent with statutory authorization and financial prudence. The City will conduct its
investment transactions with several legal competing, reputable investment security dealers and
qualifying banks. The City will invest only in the following instruments or those others that may
subsequently be permitted by State Statute.
United States Treasury obligations
Federal Agency Securities
Certificates of Deposit
Commercial Paper
Banker’s Acceptance
Money Market Funds
State and local securities
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
62
Note 3 – Capital Assets
A summary of changes in governmental capital assets during the year ended December 31, 2014 are as
follows:
Balance Balance
Governmental Activities January 1 Additions Deletions December 31
Depreciable
Buildings and improvements 54,465,289$ 136,350$ -$ 54,601,639$
Machinery and equipment 19,361,638 2,299,788 (699,499) 20,961,927
Other improvements 5,064,901 449,057 (40,795) 5,473,163
Infrastructure
Streets 126,909,351 2,670,273 - 129,579,624
Storm sewer 55,764,095 2,980,012 - 58,744,107
Parks 19,380,570 762,545 (365,737) 19,777,378
Total depreciable at cost 280,945,844 9,298,025 (1,106,031) 289,137,838
Less accumulated depreciation
Buildings and improvements (11,580,178) (1,161,316) - (12,741,494)
Machinery and equipment (12,240,651) (1,539,209) 632,676 (13,147,184)
Other improvements (2,204,925) (262,219) 21,349 (2,445,795)
Infrastructure
Streets (68,598,936) (4,636,083) - (73,235,019)
Storm sewer (14,937,234) (1,150,944) - (16,088,178)
Parks (11,590,658) (779,167) 347,133 (12,022,692)
Total accumulated depreciation (121,152,582) (9,528,938) 1,001,158 (129,680,362)
Total depreciable, net 159,793,262$ (230,913)$ (104,873)$ 159,457,476$
Non-depreciable
Land 22,717,752$ 783,988$ -$ 23,501,740$
Historical treasures 100,000 - - 100,000
Construction in process 7,532,493 11,296,997 (1,311,283) 17,518,207
Total non-depreciable 30,350,245 12,080,985 (1,311,283) 41,119,947
Depreciable, net 159,793,262 (230,913) (104,873) 159,457,476
Total capital assets, net 190,143,507$ 11,850,072$ (1,416,156)$ 200,577,423$
Depreciation expense was charged to governmental functions as follows:
General government 258,561$
Public safety 1,072,256
Public works 6,498,559
Parks and recreation 1,699,562
Total depreciation expense 9,528,938$
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
63
Note 3 – Capital Assets (continued)
A summary of changes in business-type capital assets during the year ended December 31, 2014 are as
follows:
Balance Balance
Business-type Activities January 1 Additions Deletions December 31
Depreciable
Buildings and improvements 25,945,370$ 203,318$ (6,774)$ 26,141,914$
Machinery and equipment 2,764,057 423,385 (78,873) 3,108,569
Infrastructure
Water 73,303,555 2,506,973 - 75,810,528
Sanitary sewer 55,973,997 2,329,554 - 58,303,551
Total depreciable at cost 157,986,979 5,463,230 (85,647) 163,364,562
Less accumulated depreciation
Buildings and improvements (7,404,178) (553,243) 6,774 (7,950,647)
Machinery and equipment (1,565,253) (185,738) 75,353 (1,675,638)
Infrastructure -
Water (25,060,816) (1,535,744) - (26,596,560)
Sanitary sewer (19,883,365) (1,140,114) - (21,023,479)
Total accumulated depreciation (53,913,612) (3,414,839) 82,127 (57,246,324)
Total depreciable, net 104,073,367$ 2,048,391$ (3,520)$ 106,118,238$
Non-depreciable
Land 1,800,456$ 2,011,617$ -$ 3,812,073$
Construction in process 2,436,985 433,561 (177,222) 2,693,324
Total non-depreciable 4,237,441 2,445,178 (177,222) 6,505,397
Depreciable, net 104,073,367 2,048,391 (3,520) 106,118,238
Total capital assets, net 108,310,808$ 4,493,569$ (180,742)$ 112,623,635$
Depreciation expense was charged to enterprise funds as follows:
Liquor fund 117,984$
Utility fund 3,296,855
Total depreciation expense 3,414,839$
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
64
Note 4 – Operating Leases
Operating Lease (Ames Arena):
On December 1, 2006, the City (as lessor) entered into a joint powers agreement with the Lakeville Arenas
(a Minnesota Joint Powers entity, as lessee), whereas the Lakeville Arenas is responsible for operations and
maintenance of the Ames Arena. Lakeville Arenas shall pay all debt service requirements due on the Gross
Revenue Recreation Facility Bonds of 1999 less payments received by Lakeville Hockey Association, Inc.
(Boosters) towards debt service payments in accordance with the revised and restated gaming revenue
agreement dated February 16, 1999. The agreement will remain in effect until August 1, 2019. The cost of
the leased space is included in the total Ames ice arena cost of $4,143,826, of which $1,477,144 has been
depreciated to date. These amounts are recorded in the City’s capital assets. The 2014 lease revenue totaled
$88,626.
Operating Sublease (Hasse Arena):
On December 1, 2006, the City (as sublessor) entered into a joint powers agreement with the Lakeville
Arenas (a Minnesota Joint Powers entity, as sublessee), whereas the Lakeville Arenas is responsible for
operations and maintenance of the Hasse Arena. In addition, the joint powers agreement calls for
Independent School District No. 194 to provide for one-half of all future ice arena lease payments to the
City. Lease agreement payments coinciding with the bonded debt service schedule commencing February
1, 2007 will remain in effect until February 1, 2032. The 2014 lease revenue totaled $284,070.
Operating Lease (Heritage Liquor Store):
The Heritage Liquor Store (located in Heritage Shopping Center) consists of 8,859 square feet of space at a
monthly lease cost of $14,600 plus a proportionate share of real estate taxes, property insurance, special
assessments, common area maintenance, and management fees. The fiscal year 2014 lease expense totaled
$175,200. The lease has a term of fifteen years expiring on June 30, 2015. The City owns the land and
buildings of its remaining two liquor stores.
Note 5 – Long-Term Liabilities
General Obligation Bonds
The City's general obligation bonds are supported primarily from revenues derived from property tax
levies, special assessment levies, tax increment levies, state-aid street revenue, water connection revenue
charges, ice arena operations, and contributions by an organization conducting lawful gaming at approved
locations. These bonds are backed by the full-faith and credit of the City.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
65
Note 5 – Long-Term Liabilities (continued)
Revenue Bonds
The following revenue bonds are not general obligations of the City and accordingly are not backed by the
full-faith and credit of the City.
Governmental Activities
The Gross Revenue Recreation Facility Bonds, Series 1999, are supported primarily from revenues
derived from ice arena operations and contributions from gaming revenues. The HRA Ice Arena Lease
Revenue Bonds, Series 2006, will be payable from equal lease payments to be made by the City
pursuant to the lease agreement between the HRA of Lakeville, the City, and in conjunction with the
joint powers agreement between the City and Independent School District No. 194. The City’s portion
of the lease payments are supported by property tax levies. The Water Revenue Refunding Bonds,
Series 2004, are payable solely from water connection revenues.
The lease, consisting of land, building and equipment of the Hasse Arena located at 8525 215th Street
West, requires the City to provide lease payments sufficient to pay when due, the principal and interest
on the HRA Ice Arena Lease Revenue Bonds, Series 2006 ($9,230,000 original amount issued), of
which the City paid $597,431 in 2014. Title to the arena will transfer to the City upon completing the
prescribed lease payments coinciding with the bonded debt service schedule commencing February 1,
2007 and maturing February 1, 2032. The cost of the leased space is included in the total Hasse ice
arena cost of $7,505,840, of which $986,641 has been depreciated to date. These amounts are
recorded in the HRA’s capital assets.
Business-type Activities
The Liquor Revenue Bonds, Series 2007, are payable solely from enterprise liquor fund revenues.
Future revenue pledged for the payment of long-term debt is as follows:
Bond Issue Use of Proceeds Type Term of Pledge
Remaining
Principal and
Interest
Principal and
Interest Paid
Pledged
Revenue
Received
Recreation Facility Ice arena Arena Revenues 2014-2019 1,040,985$ 182,788$ 183,626$
Ice Arena Lease Revenue Additional ice arena Lease Revenues 2014-2032 11,953,101 597,431 307,212
Liquor Revenue Additional Liquor Store Liquor Sales Revenue 2014-2027 4,172,250 322,625 3,804,942
Water Connection Revenue Water system infrastructure Water Connections 2014-2016 2,014,500 986,800 4,885,747
Current YearRevenue Pledged
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
66
Note 5 – Long-Term Liabilities (continued)
Metropolitan Council Loan Agreement 2006
On February 21, 2006, the City entered into a loan agreement with the Metropolitan Council for the
purpose of acquiring property for a commuter vehicle park and pool lot located within a proposed state
trunk highway right-of-way. The Metropolitan Council provided a loan to the City in the amount of
$1,466,300 to finance the acquisition of the property. In 2014, the City made no payments on this loan. As
of December 31, 2014 the balance of the loan is $1,159,843. The loan (free of interest charge) will be
discharged by the Metropolitan Council upon the conveyance of the property to the highway authority at an
undetermined future date.
General Obligation Refunding Bonds, Series 2012 B
On August 15, 2012, the City issued $22,450,000 in General Obligation Refunding Bonds, Series 2012 B.
The proceeds of this issue were used to retire, in advance of their stated maturities, the 2015 through 2026
maturities of the Street Reconstruction Bonds, Series 2003 A (refunded principal of $10,035,000) on their
February 1, 2014 call date; and will retire the 2016 through 2030 maturities of the Capital Improvement
Plan Bonds, Series 2004 A (refunded principal $12,460,000) on their February 1, 2015 call date.
The proceeds of the new bonds were placed in an escrow account (established by the City) whereby Open
Market Securities were purchased by the trustee in adequate amounts sufficient to be responsible for the
payment of the total called principal amount ($22,495,000) in addition to the series 2012 B accrued interest
payments of $350,150 due February 1, 2014, $199,425 due August 1, 2014, and $199,425 due on the
crossover refunding date of February 1, 2015. The refunding transaction yielded a net savings to the City
of $2,768,474 with a present value economic gain of $2,235,119.
General Obligation Improvement Bonds, Series 2014 A
On August 20, 2014, the City issued $8,520,000 in General Obligation Improvement Bonds, Series 2014 A
to finance various improvement projects in the City. The bonds mature February 1, 2035, with a
provisional call date of February 1, 2024, bearing interest rates ranging from 2.0% to 3.5%. Debt service
will be payable from property taxes and special assessments levied to benefiting properties.
General Obligation Refunding Bonds, Series 2014 B
On August 20, 2014, the City issued $12,660,000 in General Obligation Refunding Bonds, Series 2014 B.
The proceeds of this issue will be used to retire, in advance of their stated maturities, the 2018 through
2032 maturities of the Capital Improvement Plan Bonds, Series 2007 D (refunded principal of $11,185,000)
on their February 1, 2017 call date; and the 2017 through 2026 maturities of the Street Reconstruction
Bonds, Series 2005 A (refunded principal $1,950,000) on their February 1, 2016 call date.
The proceeds of the new bonds were placed in an escrow account (established by the City) whereby Open
Market Securities were purchased by the trustee in adequate amounts sufficient to be responsible for the
payment of the total called principal amount ($13,135,000) in addition to the series 2014 B accrued interest
payments of $228,452 due February 1, 2015, $255,413 due August 1, 2015, $255,413 due February 1,
2016, $221,931 due August 1, 2016 and $221,931 due on the crossover refunding date of February 1, 2017.
The refunding transaction yielded a net savings to the City of $1,628,573 with a present value economic
gain of $1,057,711.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
67
Note 5 – Long-Term Liabilities (continued)
The total long-term bonded debt outstanding as of December 31, 2014 (including amounts to be called
2/1/2015 of $12,460,000, 2/1/2016 of $1,950,000, and 2/1/2017 of $11,185,000) is summarized as follows:
Maturities Interest Rates Amount
Governmental Activity Bonds
General obligation bonds
Park bonds 2015 0.75% 410,000$
Capital improvement bonds 2030, 2032 2.00%-5.00% 49,310,000
Street reconstruction bonds 2016-2030 1.75%-5.95% 19,970,000
G.O. Improvement bonds 2016-2035 0.95%-4.125% 23,905,000
Tax increment bonds 2022 4.00%-4.20% 1,890,000
State-aid street revenue bonds 2018-2021 0.75% - 4.00% 3,890,000
Water connection revenue bonds 2015 4.00% 1,975,000
Arena revenue bonds 2015-2019 3.25%-5.40%910,000
Total general obligation bonds 102,260,000
HRA lease revenue bonds 2032 4.25%-4.625%8,100,000
Total governmental activity bonds 110,360,000
Business-Type Bonds
Liquor revenue bonds 2027 5.00%3,070,000
Total long-term bonded debt outstanding 113,430,000$
The City is in compliance with all significant bond covenants. The annual requirements to amortize all
outstanding bonded debt as of December 31, including interest payments of $26,403,808 are as follows:
Year Ending
December 31,Principal Interest Principal Interest Total
2015 19,845,000$ 3,735,118$ 175,000$ 149,125$ 23,904,243$
2016 7,885,000 3,248,564 180,000 140,250 11,453,814
2017 17,095,000 2,768,430 190,000 131,000 20,184,430
2018 6,125,000 2,304,358 200,000 121,250 8,750,608
2019 5,840,000 2,094,840 210,000 111,000 8,255,840
2020-2024 26,315,000 7,497,960 1,225,000 381,625 35,419,585
2025-2029 19,140,000 3,179,421 890,000 68,000 23,277,421
2030-2034 8,000,000 470,855 - - 8,470,855
2035 115,000 2,012 - - 117,012
Total 110,360,000$ 25,301,558$ 3,070,000$ 1,102,250$ 139,833,808$
Business-typeGovernmental
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
68
Note 5 – Long-Term Liabilities (continued)
Accrued Compensated Absences
Governmental Activities
The governmental funds accumulated liability for accrued PTO, vacation and vested sick pay
(including applicable salary-related payments) as of December 31, 2014 is $2,423,708. This amount is
included in the non-current liabilities of the government-wide Statement of Net Position.
In the event of employee separation from the City, the general fund and the responsible special revenue
fund will pay the accumulated vacation portion, while the internal service compensation liability fund
paid the PTO and vested sick pay portion. In future years the general fund and the responsible special
revenue fund will pay the PTO and vested sick pay portion.
Business-type Activities
The accumulated liability for accrued PTO, vacation and vested sick pay for proprietary enterprise
funds (including applicable salary-related payments) as of December 31, 2014 is $298,389. In the
event of employee separation from the City, the responsible enterprise fund will pay the accumulated
severance portion. These amounts are recorded as a liability and as an expense when earned in the
responsible funds.
Unamortized Bond Premium and Discount
Unamortized bond premium and bond discount included within non-current liabilities are as follows:
Governmental Business-type
Unamortized bond premium 4,290,199$ 18,529$
Unamortized bond discount (182) -
Total unamortized (net)4,290,017$ 18,529$
Net Other Post-Employment Benefit (OPEB) Obligation
Other post-employment benefit obligations in prior years have been liquidated primarily by the general
fund for governmental activities and by the liquor fund and utility fund for business-type activities.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
69
Note 5 – Long-Term Liabilities (continued)
During the year ended December 31, 2014 the following changes occurred in non-current liabilities:
Balance Balance Due Within
January 1 Additions Deletions December 31 One Year
Governmental Activities
G.O. Improvement bonds 69,410,000$ 12,660,000$ (12,380,000)$ 69,690,000$ 14,825,000$
Other bonds 35,800,000 8,520,000 (3,650,000) 40,670,000 5,020,000
Total bonds 105,210,000 21,180,000 (16,030,000) 110,360,000 19,845,000
Metropolitan Council loan 1,159,843 - - 1,159,843 -
Total long-term debt 106,369,843 21,180,000 (16,030,000) 111,519,843 19,845,000
Accrued compensated absences 2,443,249 1,229,970 (1,249,511) 2,423,708 1,249,511
Unamortized bond premium/discount 2,558,579 1,981,519 (250,081) 4,290,017 -
Net OPEB obligation 225,081 75,342 (15,106) 285,317 -
Total governmental activities 111,596,752 24,466,831 (17,544,698) 118,518,885 21,094,511
Business-type Activities
Liquor revenue bonds 3,235,000 - (165,000) 3,070,000 175,000
Accrued compensated absences 316,264 199,905 (217,780) 298,389 217,780
Unamortized bond premium 20,062 - (1,533) 18,529 -
Net OPEB obligation 38,946 16,048 (5,416) 49,578 -
Total business-type activities 3,610,272 215,953 (389,729) 3,436,496 392,780
Total governmental and
business-type activities 115,207,024$ 24,682,784$ (17,934,427)$ 121,955,381$ 21,487,291$
Note 6 – Net Investment in Capital Assets
Net investment in capital assets as of December 31, 2014 is calculated as follows:
Governmental Business-type Total
Capital assets, net of depreciation 200,577,423$ 112,623,635$ 313,201,058$
Less applicable:
Bonds payable (63,715,000) (3,070,000) (66,785,000)
Loan payable (1,159,843) - (1,159,843)
Unamortized bond premium/
discount (net) (1,632,763) (18,529) (1,651,292)
Unspent bond proceeds 1,603,920 - 1,603,920
Invested in capital assets, net 135,673,737$ 109,535,106$ 245,208,843$
The City has $46,645,000 in bonds and $2,657,254 in bond premium/discount (net) that are unrelated in the
calculation above.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
70
Note 7 – Net Position (Restricted)
The government-wide Statement of Net Position reports restricted amounts in the net position section.
These amounts represent assets (less any related liabilities) that have imposed restrictions placed on them
by parties outside the City government. Net position restricted for debt service represents assets pledged by
bond covenant to the repayment of City bond obligations. The government-wide restricted net position is
as follows:
Governmental Business-type
Activities Activities Total
Restricted Net Position
Cash and investments 15,682,622$ -$ 15,682,622$
Temporarily restricted
Cash and investments - 324,125 324,125
Investments held by trustee 27,471,784 - 27,471,784
Receivables 10,832,559 - 10,832,559
Less related liabilities (34,073,951) - (34,073,951)
Total restricted net position 19,913,014$ 324,125$ 20,237,139$
Note 8 – Construction Commitments
The City has outstanding construction and build projects as of December 31, 2014. These projects include
a street reconstruction project, equipment purchases, and other sanitary sewer projects. The City’s
commitments with contractors and other governmental entities are shown as follows:
Remaining
Projects Spent-to-Date Commitment
Governmental Activities
Improvement Project 14-02 6,317,307$ 443,223$
Ladder Truck #4 405,618 295,524
Antlers Retaining Wall 33,597 8,286
City of Lakeville/City of Apple Valley
sanitary sewer interceptor 53,591 55,614
Total governmental 6,810,113$ 802,647$
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
71
Note 9 – Fund Balances
At December 31, 2014, a summary of the governmental fund balance classification are as follows:
General G.O.Improvement
General Fund Obligation Improvement Building Construction Nonmajor Total
Nonspendable
Inventory 162,322$ –$ –$ –$ –$ –$ 162,322$
Prepaid items 59,382 – – – – 169 59,551
Total nonspendable 221,704 – – – – 169 221,873
Restricted
Debt Service – 30,781,452 4,303,472 – – 4,649,878 39,734,802
Public improvements – – – – 1,603,920 – 1,603,920
Street construction – – – – – 1,409,684 1,409,684
Park development – – – – – 1,287,265 1,287,265
Tax increment – – – – – 242,229 242,229
Public communications – – – – – 26,933 26,933
Special Service District – – – – – 15,039 15,039
Total restricted – 30,781,452 4,303,472 – 1,603,920 7,631,028 44,319,872
Committed
Emerald Ash Borer 45,000 – – – – – 45,000
Public improvements – – – – 105,906 – 105,906
Public buildings – – – 1,375,010 – – 1,375,010
Pavement management – – – – – 1,630,391 1,630,391
Storm sewer trunk system – – – – – 2,823,792 2,823,792
Water trunk system – – – – – 2,668,607 2,668,607
Sanitary sewer trunk system – – – – – 4,414,212 4,414,212
Trail improvement – – – – – 742,470 742,470
Capital acquisitions – – – – – 2,423,247 2,423,247
Public communications – – – – – 918,083 918,083
Economic development – – – – – 52,378 52,378
Total committed 45,000 – – 1,375,010 105,906 15,673,180 17,199,096
Unassigned 10,805,065 – – – (632,035) – 10,173,030
Total 11,071,769$ 30,781,452$ 4,303,472$ 1,375,010$ 1,077,791$ 23,304,377$ 71,913,871$
Debt Service Capital Projects
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
72
Note 10 – Contributed Capital Assets from Private Land Developers and City Government
The ownership of local streets, storm sewer, parks, water and sanitary sewer infrastructure capital assets
that are constructed and completed during the year by private land developers becomes contributed
property of the City. Storm sewer, water and sanitary sewer infrastructure assets constructed within Dakota
County and State of Minnesota right-of-way boundaries also become City capital assets since they are
serviced and maintained by the City. Roads and highways constructed within Dakota County and State of
Minnesota right-of-way boundaries are excluded from City capital assets. The City assumed ownership of
the following governmental and business-type capital assets contributed through private land developers
during the current fiscal year as follows:
Enterprise
From Private Land Developers Governmental Utility Fund
Infrastructure
Streets 1,501,419$ -$
Storm sewer 2,274,510 -
Parks 262,357 -
Water - 2,041,419
Sanitary sewer - 2,210,773
Total 4,038,286$ 4,252,192$
The ownership of water and sanitary sewer infrastructure assets that are constructed and completed during
the year by City governmental activities (through various funding sources at cost) becomes contributed
property of the City’s enterprise utility fund. The City’s enterprise utility fund assumed ownership of the
following capital assets contributed during the current fiscal year as follows:
Enterprise
From governmental activities Utility Fund
Infrastructure
Water 230,565$
Note 11 – Excess of Expenditures over Appropriations
For the year ended December 31, 2014, total expenditures (the legal level of budgetary control) in the
special revenue downtown special service district fund exceeded appropriations. The expenditures
exceeding budget of ($3,202) were funded by available fund balance.
Note 12 – Interfund Receivables and Payables
Activity between funds representative of lending or borrowing arrangements is reported in the fund
financial statements as “due from/to other funds” (current portion) or “advances to/from other funds.” Such
amounts are eliminated in the government-wide financial statements, with any residual balances
outstanding between the governmental and business-type activities reported as “internal balances.” At
December 31, 2014 the nonmajor special revenue Economic Development Fund had a payable of $38,336
to the nonmajor special revenue Communications Fund to finance a temporary cash deficit.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
73
Note 13 – Interfund Transfers
The City provides financing for a variety of operations and capital projects utilizing resources from certain
funds; interfund transfers used for these various activities during the current fiscal year are as follows:
Nonmajor Enterprise
General G.O. Govntl.
Transfers From Fund G.O.Improve.Bldg.Funds Utility Total
Improve Const. Fund -$ -$ 118,086$ -$ -$ -$ 118,086$
Nonmajor govntl. funds 122,654 - - 270 1,403,614 - 1,526,538
Total 122,654 - 118,086 270 1,403,614 - 1,644,624
Enterprise - Liquor 159,323 400,000 - 6,751 800,000 2,989 1,369,063
Enterprise - Utility 429,282 - - 690 - - 429,972
Internal service funds 48,555 - - - - - 48,555
Total 759,814$ 400,000$ 118,086$ 7,711$ 2,203,614$ 2,989$ 3,492,214
(1) (2) (3) (4) (5)(6) (7)
Less: Utility fund (2,989)
Total governmental funds 3,489,225$
Transfers To:
Debt Service Capital Projects
The following are explanations to interfund transfers sub-notes 1 through 7.
Abbreviation key:
(SR) special revenue fund, (DS) debt service fund, (CP) capital projects fund,
(E) enterprise fund, (IS) internal service fund.
(1) The transfers to general fund were provided mainly as overhead and maintenance costs from the
following funds:
Fund Amount Description
Communications (SR) 122,654$ Public communications and city hall overhead costs.
Liquor (E) 159,323 Patrol, chemical awareness, and city hall overhead costs.
Utility (E) 429,282 City hall overhead costs.
Municipal reserves (IS)48,555 City hall overhead costs.
Total 759,814$
(2) The total transfer to the debt service general obligation fund was provided by the liquor fund
($400,000) to be applied towards the debt service of the new police station completed in 2008.
(3) The total transfer to the debt service G.O. improvement fund was provided by the improvement
construction fund ($118,086) to reduce the future special assessment fee requirements and provide
adequate cash flow.
(4) The total transfer to the capital projects building fund was provided by the special revenue fund
communications ($270) and enterprise utility fund ($690) to finance various future building
maintenance, and by the enterprise liquor fund ($6,751) for fundraising revenues collected on behalf
of the Heritage Center.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
74
Note 13 – Interfund Transfers (continued)
(5) The total transfer to nonmajor governmental funds ($1,403,614) was provided from the following
governmental funds:
From:Amount To:
Park Dedication (CP) 416,464$ Trail improvement (CP) for Kenrick Avenue Trail.
Water (CP)987,150 Water revenue (DS) for debt service requirements.
Total other govntl. 1,403,614$
(6) The total transfer to the nonmajor governmental funds was provided by the enterprise liquor fund
($800,000) to fund various equipment purchases.
(7) The total transfer to the enterprise utility fund was provided by the enterprise liquor fund ($2,989)
for customer service billing overhead costs.
Included within the transfers to governmental activities from business-type activities of $1,565,481 on the
Statement of Activities is the City’s contributed capital from governmental activities to enterprise utility
fund capital assets of ($230,565).
Note 14 – Joint Powers Debt Commitment
On August 25, 2005 the City of Lakeville entered into a joint powers agreement with the Cities of Apple
Valley, Burnsville, Eagan, Farmington, Hastings, Inver Grove Heights, Mendota Heights, Rosemount,
South St. Paul, West St. Paul, Minnesota, 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 countywide 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
joint powers agreement, members are required to provide the DCC their pro rata share of cost of operations
and maintenance, and capital projects.
Information regarding the Dakota Communications Center can be obtained at the website www.mn-
dcc.org/stats.asp or by contacting Jerilyn Erickson at the City of Lakeville, 20195 Holyoke Avenue,
Lakeville, Minnesota 55044. Telephone 952-985-4481 or email address jerickson@lakevillemn.gov.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
75
Note 15 – Other Post-Employment Benefits (OPEB) Plan
A. Plan Description
The City provides post-employment insurance benefits to certain eligible employees through the
City’s Other Post-Employment Benefits 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. These benefits are summarized as follows:
Post-Employment Insurance Benefits - 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.
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, 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.
B. Funding Policy
The required contribution is based on projected pay-as-you-go financing requirements, with
additional amounts to pre-fund benefits as determined annually by the City.
C. Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of the
City, an amount determined on an actuarially determined basis in accordance with the parameters of GASB
Statement No. 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to
cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a
period not to exceed 30 years.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
76
Note 15 – Other Post-Employment Benefits (OPEB) Plan (continued)
C. Annual OPEB Cost and Net OPEB Obligation (continued)
The following table shows the components of the City’s annual OPEB cost for the year, the amount
actually contributed to the plan, and the changes in the City’s net OPEB obligation to the plan:
Annual required contribution 96,418$
Interest on net OPEB obligation 10,561
Adjustment to annual required contribution (15,589)
Annual OPEB cost (expense) 91,390
Contributions made (20,522)
Increase in net OPEB obligation 70,868
Net OPEB obligation - beginning of year 264,027
Net OPEB obligation - end of year 334,895$
The City’s annual OPEB cost; the percentage of annual OPEB cost contributed to the plan; and the
net OPEB obligation for the year are as follows:
Fiscal Annual Employer Annual OPEB Net OPEB
Year Ended OPEB Cost Contribution Cost Contributed Obligation
December 31, 2012 72,144$ 16,594$ 23.0% 214,674$
December 31, 2013 71,043$ 21,690$ 30.5% 264,027$
December 31, 2014 91,390$ 20,522$ 22.5% 334,895$
D. Funded Status and Funding Progress
As of January 1, 2014, the most recent actuarial valuation date, the plan was zero percent funded.
The actuarial accrued liability for benefits was $728,270, and the actuarial value of assets was $0,
resulting in an unfunded actuarial accrued liability (UAAL) of $728,270.
The covered payroll (annual payroll of active employees covered by the plan) was $12,363,168, and
the ratio of the UAAL to the covered payroll was 5.9 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and ARCs of the employer are subject to
continual revision as actual results are compared with past expectations and new estimates are made
about the future. The Schedule of Funding Progress immediately following the notes to the basic
financial statements presents multi-year trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
77
Note 15 – Other Post-Employment Benefits (OPEB) Plan (continued)
E. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial
value of assets, consistent with the long-term perspective of the calculations.
In the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used.
The actuarial assumptions included: a 4.0 percent investment rate of return (net of administrative
expenses) based on the City’s own investments; a 2014 annual healthcare cost trend rate of 7.5
percent, and reduced by decrements of .25 percent to an ultimate rate of 5.0 percent after ten years
for medical insurance. Both rates included a 2.5% inflation assumption. The UAAL is being
amortized on a level dollar basis over a closed period. The remaining amortization periods at
January 1, 2014 for the various amortization layers ranged from 24 to 30 years.
Note 16 – Risk Financing and Related Insurance Issues
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The City purchased the following
insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk
pool currently operating as a common risk management and insurance program for Minnesota cities:
general liability, excess liability, workers compensation, property, automobile, marine, crime, employee
dishonesty, boiler, petro fund, and open meeting law.
The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining
through member premiums and will reinsure through commercial companies for claims in excess of
reserved amounts for each insured event. The LMCIT allows for the pool to make additional assessments
to make the pool self-sustaining. Current state statutes (Minnesota Statutes Subd. 466.04) provide limits of
liability for the City.
These limits are that the combination of defense expense and indemnification expense shall not exceed
$1,500,000 for any number of claims arising out of a single occurrence. The Minnesota statutory limit on
claims is $1,500,000 per occurrence. The City self-insures the risk of any potential judicial ruling in excess
of the statutory maximum. The City has never had a claim in excess of the statutory maximum.
There have been no significant reductions in insurance coverage from the prior year and insurance
settlements have not exceeded coverage in the past three years.
Workers’ compensation premiums for 2014 and 2013 were $448,455 and $360,277, respectively. The City
is enrolled in the LMCIT workers compensation “regular” program. The LMCIT regular program provides
a fixed premium based on payroll and provides no claim risk to the City as a result of high claims
experience. The City’s workers’ compensation premiums are accounted for directly in the responsible
funds.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
78
Note 17 – Defined Benefit Pension Plans - Statewide
A. Plan Description
All full-time and certain part-time employees of the City are covered by defined benefit plans
administered by the Public Employees’ Retirement Association (PERA) of Minnesota. PERA
administers the General Employees’ Retirement Fund (GERF) and the Public Employees Police and
Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement plans. These plans are
established and administered in accordance with Minnesota Statutes, Chapters 353 and 356.
GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members
are covered by Social Security and Basic Plan members are not. All new members must participate
in the Coordinated Plan. All police officers, firefighters, and peace officers who qualify for
membership by statute are covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to
survivors upon death of eligible members. Benefits are established by state statute, and vest after
five years of credited service. The defined retirement benefits are based on a member’s highest
average salary for any five successive years of allowable service, age, and years of credit at
termination of service.
Two methods are used to compute benefits for PERA’s Coordinated and Basic Plan members. The
retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level
accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is
2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each
remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average
salary for each of the first 10 years of service and 1.7 percent for each remaining year. Under
Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7
percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity
accrual rate is 3.0 percent for each year of service. For all PEPFF members and GERF members
hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available
when age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for
Basic and Coordinated Plan members hired prior to July 1, 1989. Normal retirement age is the age
for unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after
July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early
retirement.
There are different types of annuities available to members upon retirement. A single-life annuity is
a lifetime annuity that ceases upon the death of the retiree—no survivor annuity is payable. There
are also various types of joint and survivor annuity options available which will be payable over
joint lives. Members may also leave their contributions in the fund upon termination of public
service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are
available at any time to members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and
apply to active plan participants.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
79
Note 17 – Defined Benefit Pension Plans – Statewide (continued)
A. Plan Description (continued)
PERA issues a publicly available financial report that includes financial statements and required
supplementary information for GERF and PEPFF. That report may be obtained on the internet at
www.mnpera.org, or by writing to PERA at 60 Empire Drive #200, Saint Paul, Minnesota, 55103-
2088 or by calling (651) 296-7460 or 1-800-652-9026.
B. Funding Policy
Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. These
statutes are established and amended by the State Legislature. The City makes annual contributions
to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and
Coordinated Plan members were required to contribute 9.1 percent and 6.25 percent, respectively, of
their annual covered salary in 2014. PEPFF members were required to contribute 10.2 percent of
their annual covered salary in 2014. In 2014, the City was required to contribute the following
percentages of annual covered payroll: 11.78 percent for Basic Plan members, 7.25 percent for
Coordinated Plan members, and 15.3 percent for PEPFF members.
The City’s contributions to the GERF coordinated plan for the years ending December 31, 2014,
2013, and 2012 were $644,215, $611,079, and $587,750, respectively. The City’s contributions to
the PEPFF for the years ending December 31, 2014, 2013, and 2012 were $719,853, $693,976, and
$650,578, respectively. The City’s contributions were equal to the contractually required
contributions for each year as set by state statutes.
Contribution rates will increase on January 1, 2015 in the coordinated Plan (6.5% for members and
7.5% for employers) and the Police and Fire Fund (10.8% for members and 16.2% for employers).
Note 18 – Defined Contribution Plan – Statewide
A. Plan Description
Two Council members of the City of Lakeville are covered by the Public Employees Defined
Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by the
Public Employees Retirement Association of Minnesota (PERA).
The PEDCP is a tax qualified plan under Section 401 (a) of the Internal Revenue Code and all
contributions by or on behalf of employees are tax deferred until time of withdrawal.
B. Funding Policy
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less
administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including
the employee and employer contribution rates for those qualified personnel who elect to participate.
An eligible elected official who decides to participate contributes 5 percent of salary which is
matched by the elected official’s employer.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
80
Note 18 – Defined Contribution Plan – Statewide (continued)
B. Funding Policy (continued)
Employer and employee contributions are combined and used to purchase shares in one or more of
the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan,
PERA receives 2 percent of employer contributions and twenty-five hundredths of one percent of the
assets in each member’s account annually. Total contributions made by the City of Lakeville for the
year ending December 31, 2014 were as follows:
Required
Employee Employer Employee Employer Rates
1,756$ 1,756$ 5.0% 5.0% 0.0%
Contribution Amount Covered Payroll
Percentage of
Note 19 – Lakeville Fire Relief Association
A. Plan Description
Firefighters of the City of Lakeville Fire Department are members of the Lakeville Fire Relief
Association. There are no covered salaries or related fringe benefits in connection with the Relief
Association plan. Since members are volunteers, City of Lakeville contributions to the Lakeville
Fire Relief Association are not based on payroll, but rather on years of active service.
The Association is the administrator of a single employer defined benefit pension plan available to
firefighters that was established in 1972 and operates under the provisions of Minnesota State
Statutes Chapter 424A. The plan is governed by a board of six members elected by the members of
the Association for three year terms. One City Council member, Finance Director, and Fire Chief
are ex officio, nonvoting members of the Board of Trustees.
Non-employer pension contributions include state-aid from the State of Minnesota and municipal
contributions from the City of Lakeville. On-behalf state-aid payments from the State of Minnesota
are received initially by the City of Lakeville and subsequently remitted to the Relief Association.
These on-behalf state-aid payments in addition to the City’s municipal contribution payments to the
Relief Association plan are recognized as revenues and expenditures in the City’s general fund
during the period.
The Lakeville Fire Relief Association issues a publicly available financial report that includes
financial statements and required supplementary information. That report may be obtained by
writing to Lakeville Volunteer Firefighters’ Relief Association, 20195 Holyoke Avenue, Lakeville,
Minnesota, 55044 or by calling (952) 985-4480.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
81
Note 19 – Lakeville Fire Relief Association (continued)
B. Current Plan Membership
At December 31, 2014, membership data related to the Association was as follows:
Members
Retired members entitled to benefits,
but not yet receiving them 22
Active Plan Participants
Vested 3
Partially vested 31
Non-vested 48
Total plan membership 104
C. Benefit Provisions
Authority for payment of pension benefits is established in Minnesota State Statue 69.77 and may be
amended only by the Minnesota State Legislature.
Twenty-Year Service Pension - Each member who is at least 50 years of age, has retired from the
Fire Department, has served at least 20 years of active service with the department before retirement
and has been a member of the Association in good standing at least 7 years prior to retirement, shall
be entitled to a lump sum service pension in the amount of $6,610 (effective January 1, 2014) 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.
The Association’s benefit amount will increase to $6,742 for calendar year 2015 and $6,877 for
calendar year 2016.
Any member who retires after 20 years of service and is under the age of 50 is placed on the deferred
pension roll. In 2009, the Association amended their bylaws on March 30, 2009 which changed how
interest is earned on a deferred member’s retirement account. All moneys deferred prior to the
amendment shall earn interest at 5 percent compounded annually. All moneys deferred after the
amendment will be placed in a separate investment account and will earn interest at the current
market rate.
Seven-Year Service, but Less than Twenty-Year Service Pension - Each member who is at least 50
years of age; who has retired from the Fire Department; who has served at least 7 years of active
service with the department before retirement, but has not served at least 20 years of active service;
and, who has been a member of the Association in good standing at least 7 years prior to retirement,
shall be entitled to a pro-rated lump sum service pension based on the percentages shown in the
following table:
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
82
Note 19 – Lakeville Fire Relief Association (continued)
C. Benefit Provisions (continued)
For Duty of:
More Less % of
Than Than Pension
7 Years 8 Years 48%
8 9 52%
9 10 56%
10 11 60%
11 12 64%
12 13 68%
13 14 72%
14 15 76%
15 16 80%
16 17 84%
17 18 88%
18 19 92%
19 20 96%
20 - 100%
The payment amount will be calculated by using the amount payable per year of service in effect at
the time of such early retirement, multiplied by the number of accumulative years of service,
multiplied by the appropriate percentage as defined above.
Death Benefit - Upon the death of any member who is in good standing, the Association will pay a
death benefit equal to the full annual service pension amount for each year the member has served.
Disability Benefits - In the event of total permanent disability incurred in the line of duty, a member
shall be eligible to collect a disability benefit in an amount equal to his/her full years of active
service on the Fire Department multiplied by the base sum pension benefit. The benefit is payable
immediately upon approval by the Association regardless of age. For total permanent disability not
incurred in the line of duty, a member shall be paid in accordance with the seven-year partial vesting
provision described above.
State Supplemental Benefits - Minnesota Statutes provide for the payment of a supplemental benefit
equal to 10 percent of a regular lump sum distribution up to a maximum of $1,000.
D. Contributions and Reserves
The Lakeville Fire Relief Association’s funding policy provides for contributions from the State of
Minnesota and the City of Lakeville, in amounts sufficient to accumulate assets to pay benefits when
due.
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
83
Note 19 – Lakeville Fire Relief Association (continued)
D. Contributions and Reserves (continued)
The Volunteer Firefighters’ Relief Association Financing Guidelines Act of 1971 (Chapter 261 as
amended by Chapter 509 of Minnesota Statutes 1980) specifies minimum contributions required on
an annual basis. The minimum support rates from the municipality and state aid are determined in
the amount required to meet the normal cost plus amortizing any existing prior year service costs
over a closed 10-year period. The minimum contribution from the City of Lakeville and state aid is
determined as follows:
Normal cost
+ Amortization payment on unfunded accrued liability prior to any change
+ Amortization contribution on unfunded accrued liability prior to any change
= Total contribution required
The annual pension cost (APC) contributed from the State of Minnesota and the City of Lakeville for
the most recent three years available is as follows:
State of City of Pension % of APC Pension
Year Minnesota Lakeville Contribution APC Contributed Obligation
2013 314,365$ 60,000$ 374,365$ 374,365$ 100% -$
2012 221,958 44,804 266,762 266,762 100% -
2011 213,067 44,804 257,871 257,871 100% -
E. Funding Progress
Valuation Date Value Accrued (Unfunded) Funded
December 31,of Assets Liability Overfunded Ratio
2013 7,022,870$ 5,674,075$ 1,348,795$ 123.8%
2012 5,852,995 5,485,211 367,784 106.7%
2011 5,619,763 5,480,096 139,667 102.5%
F. Additional Information:
Actuarial valuation date: August 1, 2013
Actuarial valuation method: Fair Value
Actuarial cost method: Entry age normal cost
Actuarial assumptions rate of
investment return: 5% per annum, compounded annually
Annual covered payroll: None (all volunteer firefighters)
Age and service retirement age: Assumed to occur at age 50. No turnover or early retirement
Amortization method: Level Dollar Closed
Amortization period: 10 Years
Inflation rate: Not applicable
CITY OF LAKEVILLE, MINNESOTA
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2014
84
Note 20 – Deferred Compensation Plan
The City offers its employees an optional deferred compensation plan created in accordance with Internal
Revenue Service Code Section 457. The plan is available to all City employees, which permits them to tax
defer a portion of their salary until future years. The deferred compensation is not available to employees
until termination, retirement, death or unforeseeable emergency. Under provisions of Section 72(p) of the
Internal Revenue Code, a plan may permit participant loans once 457 plan assets are held in a trust. As of
the current fiscal year, the City’s plan does not have a loan provision for its participants. All amounts of
compensation deferred under the plan must be held in trust for the exclusive benefit of plan participants
and/or beneficiaries. Investments are managed by the plan's trustee under various investment options or a
combination thereof. The choice of investment options is made by the participant.
Note 21 – Litigation
There are several lawsuits pending in which the City is involved. The City Attorney has indicated that
existing and pending lawsuit claims and other actions in which the City is a defendant are either covered by
insurance, fully reserved for by the City, or the cases are in the early stages of discovery, and accordingly,
the ultimate outcome cannot presently be determined. It is the opinion of City management that in each
case the possibility of material loss, net of amounts reserved is remote.
Note 22 – Conduit Debt
On April 7, 2008, the Housing and Redevelopment Authority (HRA) of Lakeville approved the issuance of
the Housing and Redevelopment Authority of Lakeville, Minnesota Education Facilities Revenue Note (All
Saints School Project), Series 2008. The HRA acted as the conduit for a bank qualified tax-exempt
refinancing of existing debt for All Saints School (the School) under the responsibility of All Saints Church
(the Church), a religious corporation organized as a nonprofit corporation under the laws of the State of
Minnesota. The note funds provided funding for the non-religious portions of the renovation and equipping
of, and construction of additions to the School (serving kindergarten through 8th grade), owned and
operated by the Church, and located at 19795 Holyoke Avenue in Lakeville.
The HRA authorized the $2,000,000 revenue note to provide needed financial assistance to a private-sector
entity deemed to be in the public interest. Neither the HRA nor the City is obligated in any circumstance
for repayment of this note, and accordingly the note is not reported as a liability in the accompanying
financial statements. As of December 31, 2014, $2,000,000 remains outstanding on this note.
Note 23 – GASB Standards Issued But Not Yet Implemented
GASB Statement No. 68 replaces the requirements of Statement No. 27, “Accounting for Pensions by State
and Local Governmental Employers” and Statement No. 50, “Pension Disclosures,” as they relate to
governments that provide pensions through pension plans administered as trusts or similar arrangements
that meet certain criteria. Statement No. 68 requires governments providing defined benefit provisions to
recognize their long-term obligation for pension benefits as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits. This statement will be
effective for the City’s 2015 fiscal year. The City has not yet determined the financial statement impact of
adopting this new standard.
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R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Revenues
Property taxes
General property taxes
Current 14,631,396$ 14,631,396$ 14,895,165$ 263,769$
Delinquent 193,640 193,640 51,618 (142,022)
Fiscal disparities 1,904,664 1,904,664 1,834,465 (70,199)
Mobile home tax 45,200 45,200 51,731 6,531
Gravel tax 19,467 19,467 8,991 (10,476)
Total property taxes 16,794,367 16,794,367 16,841,970 47,603
Licenses and permits 1,947,676 1,975,626 2,159,289 183,663
Intergovernmental
Market value homestead credit - - 2,113 2,113
State-aid police 349,747 349,747 397,301 47,554
State-aid fire 213,067 317,542 317,542 -
State-aid PERA 21,303 21,303 21,303 -
State police and fire grants 19,704 19,704 34,242 14,538
State other grants 200 200 200 -
Federal other grants - - 39,008 39,008
County and other grants 4,380 4,380 - (4,380)
Total intergovernmental 608,401 712,876 811,709 98,833
Charges for services
General government 221,323 223,923 277,836 53,913
Public safety 418,318 419,466 414,334 (5,132)
Public works 929,517 929,517 1,147,996 218,479
Parks and recreation 579,009 590,265 649,111 58,846
Total charges for services 2,148,167 2,163,171 2,489,277 326,106
Fines 274,590 274,590 223,642 (50,948)
Investment income 44,413 44,413 99,179 54,766
(continued)
85
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Revenues (continued)
Donations 13,370$ 25,270$ 30,254$ 4,984$
Miscellaneous 55,961 55,961 51,368 (4,593)
Total revenues 21,886,945 22,046,274 22,706,688 660,414
Expenditures
General government
Mayor and Council
Personnel services 49,740 49,740 48,448 1,292
Commodities 50 50 - 50
Other charges and services 47,231 47,231 44,674 2,557
Total Mayor and Council 97,021 97,021 93,122 3,899
Committees/Commissions
Personnel services 49,884 53,904 56,044 (2,140)
Commodities 1,530 2,630 2,605 25
Other charges and services 11,380 12,880 11,973 907
Total committees/commissions 62,794 69,414 70,622 (1,208)
City administration
Personnel services 388,671 394,878 358,993 35,885
Commodities 1,052 1,052 624 428
Other charges and services 13,505 13,505 26,734 (13,229)
Total city administration 403,228 409,435 386,351 23,084
(continued)
86
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Expenditures (continued)
General government (continued)
City Clerk
Personnel services 112,724$ 114,347$ 109,735$ 4,612$
Commodities 1,686 1,686 380 1,306
Other charges and services 70,314 70,314 73,170 (2,856)
Total City Clerk 184,724 186,347 183,285 3,062
Legal counsel
Other charges and services 82,351 82,351 53,495 28,856
Planning
Personnel services 406,183 411,930 377,771 34,159
Commodities 2,573 2,573 1,755 818
Other charges and services 17,086 17,086 37,497 (20,411)
Capital outlay 1,945 1,945 1,169 776
Total planning 427,787 433,534 418,192 15,342
Community and economic development
Personnel services 261,480 265,548 251,837 13,711
Commodities 192 192 224 (32)
Other charges and services 34,281 34,281 20,533 13,748
Total community and economic development 295,953 300,021 272,594 27,427
Inspections
Personnel services 649,227 664,783 666,616 (1,833)
Commodities 11,901 11,901 11,925 (24)
Other charges and services 167,614 198,164 191,614 6,550
Capital outlay 22,460 22,460 23,408 (948)
Total inspections 851,202 897,308 893,563 3,745
(continued)
87
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Expenditures (continued)
General government (continued)
General government facilities
Personnel services 196,686$ 199,695$ 203,802$ (4,107)$
Commodities 22,339 23,114 20,365 2,749
Other charges and services 197,652 197,652 168,189 29,463
Capital outlay 775 - - -
Total general government facilities 417,452 420,461 392,356 28,105
Finance
Personnel services 549,882 566,165 567,613 (1,448)
Commodities 4,024 4,024 3,375 649
Other charges and services 72,797 72,797 68,534 4,263
Total finance 626,703 642,986 639,522 3,464
Information systems
Personnel services 307,362 311,917 305,945 5,972
Commodities 5,847 5,847 2,187 3,660
Other charges and services 177,424 177,424 164,553 12,871
Total information systems 490,633 495,188 472,685 22,503
Human resources
Personnel services 264,704 268,870 268,720 150
Commodities 1,609 1,609 1,986 (377)
Other charges and services 82,099 82,099 73,322 8,777
Capital outlay 2,601 2,601 - 2,601
Total human resources 351,013 355,179 344,028 11,151
Insurance coverage
Other charges and services 289,075 289,075 289,075 -
Total general government 4,579,936 4,678,320 4,508,890 169,430
(continued)
88
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Expenditures (continued)
Public safety
Police
Personnel services 6,945,066$ 7,041,490$ 6,803,235$ 238,255$
Commodities 347,025 336,425 349,733 (13,308)
Other charges and services 1,629,759 1,640,359 1,633,344 7,015
Capital outlay - - 4,017 (4,017)
Total police 8,921,850 9,018,274 8,790,329 227,945
Fire protection
Personnel services 1,044,462 1,155,490 1,144,157 11,333
Commodities 132,484 132,484 126,833 5,651
Other charges and services 254,669 254,669 248,148 6,521
Total fire protection 1,431,615 1,542,643 1,519,138 23,505
Total public safety 10,353,465 10,560,917 10,309,467 251,450
Public works
Engineering
Personnel services 745,746 712,246 580,251 131,995
Commodities 10,542 10,542 6,258 4,284
Other charges and services 69,652 69,402 62,725 6,677
Capital outlay 78,788 78,788 66,051 12,737
Total engineering 904,728 870,978 715,285 155,693
Operations and Maintenance
Personnel services - 40,690 109,089 (68,399)
Commodities - - 2,372 (2,372)
Other charges and services - 250 6,332 (6,082)
Capital outlay - - 27,018 (27,018)
Total operations and maintenance - 40,940 144,811 (103,871)
Street maintenance
Personnel services 1,672,427 1,705,534 1,806,345 (100,811)
Commodities 787,830 887,358 916,799 (29,441)
Other charges and services 278,445 278,445 315,299 (36,854)
Capital outlay - - 2,499 (2,499)
Total street maintenance 2,738,702 2,871,337 3,040,942 (169,605)
Total public works 3,643,430 3,783,255 3,901,038 (117,783)
(continued)
89
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
Expenditures (continued)
Parks and recreation
Park maintenance
Personnel services 1,509,110$ 1,525,215$ 1,550,286$ (25,071)$
Commodities 254,394 254,394 276,257 (21,863)
Other charges and services 470,177 480,177 385,135 95,042
Capital outlay 1,994 1,994 783 1,211
Total park maintenance 2,235,675 2,261,780 2,212,461 49,319
Recreation
Personnel services 335,988 365,447 362,731 2,716
Commodities 26,404 26,404 21,981 4,423
Other charges and services 221,848 221,848 217,718 4,130
Total recreation 584,240 613,699 602,430 11,269
Heritage Center
Personnel services 28,055 33,432 31,655 1,777
Commodities 1,846 3,469 5,295 (1,826)
Other charges and services 48,873 52,166 53,659 (1,493)
Capital outlay - 10,071 10,627 (556)
Total heritage center 78,774 99,138 101,236 (2,098)
Arts Center
Personnel services 245,173 248,495 242,108 6,387
Commodities 13,205 13,205 14,424 (1,219)
Other charges and services 146,690 146,690 169,239 (22,549)
Total arts center 405,068 408,390 425,771 (17,381)
Total parks and recreation 3,303,757 3,383,007 3,341,898 41,109
Other 303,497 - - -
Total expenditures 22,184,085 22,405,499 22,061,293 344,206
Excess (deficiency) of revenues
over expenditures (297,140) (359,225) 645,395 1,004,620
(continued)
90
CITY OF LAKEVILLE, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGETARY COMPARISON
YEAR ENDED DECEMBER 31, 2014
Budget As Variance
Originally Final With Final
Adopted Budget Actual Budget
(continued)
Other financing sources
Transfers from
Special Revenue - Communications Fund 122,654$ 122,654$ 122,654$ -$
Enterprise - Liquor Fund 159,323 159,323 159,323 -
Enterprise - Utility Fund 429,282 429,282 429,282 -
Internal Service - Municipal Reserves Fund 48,555 48,555 48,555 -
Total other financing sources 759,814 759,814 759,814 -
Net change in fund balance 462,674$ 400,589$ 1,405,209 1,004,620$
Fund balance, January 1 9,666,560
Fund balance, December 31 11,071,769$
91
CITY OF LAKEVILLE, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2014
92
A. Budgetary Information
Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual
appropriated budgets are adopted for the General Fund and Special Revenue Funds. Budgeted amounts are
as originally adopted or as amended by the City Council. The City follows these procedures in establishing
the budgetary data reflected in the financial statements:
1. The City Administrator submits a proposed operating budget to the City Council.
2. Public hearings are conducted to obtain taxpayer comments.
3. Upon Council approval the budget is legally adopted and employs formal budgetary
integration during the year.
4. Expenditures may legally exceed budgeted appropriations at the fund level through
City Council action.
5. The legal level of budgetary control (i.e., the level at which expenditures may not
legally exceed appropriations) is at the department level for the General Fund and
total expenditures for the Special Revenue Funds. The City Administrator has
authorization to expend funds in excess of the appropriation for individual line items.
6. Budget appropriations of all funds lapse at year-end to the extent they were not
encumbered. Encumbrances are re-appropriated in the following year's budget.
CITY OF LAKEVILLE, MINNESOTA
OTHER POST-EMPLOYMENT BENEFITS PLAN - SCHEDULE OF FUNDING PROGRESS
DECEMBER 31, 2014
93
Unfunded Unfunded
Actuarial Actuarial Actuarial Actuarial Liability as a
Valuation Accrued Value of Accrued Funded Covered Percentage
Date Liability Plan Assets Liability Ratio Payroll of Payroll
January 1, 2008 290,424$ -$ 290,424$ - 11,365,890$ 2.6%
January 1, 2011 588,458$ -$ 588,458$ - 11,683,196$ 5.0%
January 1, 2014 728,720$ -$ 728,720$ - 12,363,168$ 5.9%
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N O N M A J O R G O V E R N M E N T A L F U N D S
Special Revenue Funds - These funds are used to account for revenues and expenditures that
have a legally restricted use for a specific purpose.
Communications Fund
This fund accounts for franchise fees from cable TV provider operations.
Expenditures and other financing uses are used to finance the City’s cable TV
channels and public communications, including long-term replacement of
equipment.
Economic Development Fund
This fund accounts for a $125,000 Economic Recovery Grant received from the
State of Minnesota Department of Trade and Economic Development in 1995.
The grant’s purpose is to provide loans to businesses expanding in or locating to
Lakeville. The fund also accounts for administrative fees received from the
issuance of conduit debt.
Downtown Special Service District Fund
The Downtown Special Service District was created in 1998 pursuant to
Minnesota Statute 428A. A service charge, payable with property taxes, is levied
against the commercial properties in the Downtown Business District for the
purpose of financing budgeted programs and activities within the District.
Debt Service Funds – These funds account for the accumulation of resources that are restricted
to the payment of long-term debt principal and interest, but excluding debt issued for and serviced
by an enterprise fund.
Tax Increment Fund
Debt issued to finance construction of public improvements in accordance with
approved tax increment plans. Property tax increments received from designated
tax increment financing districts are pledged to the payment of the bonds.
State-aid Revenue Fund
Debt issued to finance construction of State-aid street projects within the City.
The primary revenue source is municipal state aid allotments from the State of
Minnesota Department of Transportation.
Water Revenue Fund
Debt issued to finance the construction of wells, pump houses, towers, water
main systems, and the City’s water treatment facility. Water connection fees are
pledged toward the repayment of the principal and interest on these bonds.
Arena Revenue Fund
Debt issued for the construction of the Lakeville Ames Ice Arena first and second
sheet of ice, spectator seating and locker rooms. Revenue sources include
donations from net operating ice arena revenues and other sources pledged to
the payment of the bonds. The Ice Center Refunding Bonds, Series 2008 A and
the 2005 Capital Dehumidification Lease-Purchase agreement are general
obligations that are backed by the full-faith and credit of the City. The Gross
Revenue Recreation Facility Bonds of 1999 are not general obligations and
accordingly are not backed by the full-faith and credit of the City.
(continued)
N O N M A J O R G O V E R N M E N T A L F U N D S
Debt Service Funds (continued)
HRA Revenue Fund
The HRA also issued the HRA Ice Arena Lease Revenue Bonds, Series 2006 for
the Hasse single sheet ice arena facility. Debt service will be payable from
property taxes and lease payments to be made to the City pursuant to the lease
agreement between the Authority and Independent School District 194. These
HRA bonds are not general obligations and accordingly are not backed by the
full-faith and credit of the City.
Capital Projects Funds – These funds account for financial resources used in the acquisition of
capital facilities, equipment, and infrastructure (except those financed by enterprise funds).
Municipal State-aid Fund
This fund accounts for an annual allotment from the State of Minnesota Municipal
State-aid street construction account.
Pavement Management Fund
This fund accounts for pavement management activities relating to cracksealing,
patching, seal coating and overlays. These major maintenance projects are
financed with property taxes.
Storm Sewer Fund
This fund accounts for fees and area charges to land developers for construction
of storm sewer systems.
Water Fund
This fund accounts for revenues derived primarily from connection charges
collected at the time building permits are issued and antenna site leases with
wireless communications companies. Funds are appropriated towards the
construction costs of water supply lines, wells and water storage facilities, and
provide the debt service to bonds issued to finance the construction of the City’s
water treatment facility and other trunk infrastructure improvements.
Sanitary Sewer Fund
This fund accounts for sewer connection and area fees charged to land
developers for connecting to the City’s sanitary sewer system; appropriations are
applied to the construction of sanitary sewer trunk systems.
Park Dedication Fund
This fund accounts for park dedication fees received from land developers. The
expenditures consist of acquiring and developing City parks and trails.
Trail Improvement Fund
This fund accounts for the long term maintenance, repairs and replacement of
City trails.
Tax Increment Fund
This fund accounts for revenue received from tax increment property districts that
does not require debt financing. The expenditures are for current and future
development of tax increment property.
Equipment Fund
This fund accounts for the purchase of equipment for general government, public
safety, public works, and park maintenance.
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CITY OF LAKEVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2014
Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
Assets
Cash and investments 797,830$ 4,105,059$ 17,275,273$ 22,178,162$
Investments held by trustee - 697,378 - 697,378
Interest receivable 3,032 7,240 54,126 64,398
Taxes receivable
Unremitted - (605) 87,158 86,553
Delinquent - 4,324 23,698 28,022
Accounts receivable 288,636 47,500 2,384,591 2,720,727
Due from other funds 38,336 - - 38,336
Special assessments
Unremitted - - 567 567
Delinquent - - 14 14
Deferred - - 172,728 172,728
Other - - 320,326 320,326
Prepaid items 169 - - 169
Total assets 1,128,003$ 4,860,896$ 20,318,481$ 26,307,380$
Liabilities
Salaries payable 9,132$ -$ -$ 9,132$
Accounts payable 58,943 206,694 1,808,924 2,074,561
Due to other funds 38,336 - - 38,336
Contracts payable 8,982 - 260,196 269,178
Deposits payable - - 26,125 26,125
Unearned revenue - - 64,573 64,573
Total liabilities 115,393 206,694 2,159,818 2,481,905
Deferred inflows of resources
Unavailable revenue - taxes - 4,324 23,698 28,022
Unavailable revenue - special assessments - - 493,068 493,068
Unavailable revenue - other 8 - - 8
Total deferred inflows of resources 8 4,324 516,766 521,098
Fund balance
Nonspendable 169 - - 169
Restricted 41,972 4,649,878 2,939,178 7,631,028
Committed 970,461 - 14,702,719 15,673,180
Total fund balance 1,012,602 4,649,878 17,641,897 23,304,377
Total liabilities, deferred inflows of
resources, and fund balances 1,128,003$ 4,860,896$ 20,318,481$ 26,307,380$
94
CITY OF LAKEVILLE, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2014
Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
Revenues
Property taxes -$ 314,628$ 1,548,706$ 1,863,334$
Tax increment - 638,312 189,738 828,050
Licenses and permits 677,266 - - 677,266
Intergovernmental 468,702 837,342 2,779,262 4,085,306
Charges for services 98,008 395,838 5,377,896 5,871,742
Special assessments - - 44,161 44,161
Investment income 11,438 36,150 247,893 295,481
Loan repayments - 2,230,000 - 2,230,000
Donations - 95,000 78,750 173,750
Miscellaneous 1,393 - 881,901 883,294
Total revenues 1,256,807 4,547,270 11,148,307 16,952,384
Expenditures - current
General government 1,002,294 203,623 1,205,917
Expenditures - capital outlay
General government 87,777 152,628 240,405
Public safety - 1,279,674 1,279,674
Public works - 7,975,094 7,975,094
Parks and recreation - 2,695,661 2,695,661
Total expenditures - capital outlay 87,777 12,103,057 12,190,834
Expenditures - debt service
Principal bond maturities 2,395,000 2,395,000
Interest on debt 738,366 738,366
Fiscal charges 34,189 34,189
Total expenditures - debt service 3,167,555 3,167,555
Total expenditures 1,090,071 3,371,178 12,103,057 16,564,306
Excess (deficiency) of revenues over expenditures 166,736 1,176,092 (954,750) 388,078
Other financing sources (uses)
Transfers from other funds - 987,150 1,216,464 2,203,614
Transfers to other funds (122,924) - (1,403,614) (1,526,538)
Total other financing sources (uses)(122,924) 987,150 (187,150) 677,076
Net change in fund balance 43,812 2,163,242 (1,141,900) 1,065,154
Fund balance, January 1 968,790 2,486,636 18,783,797 22,239,223
Fund balance, December 31 1,012,602$ 4,649,878$ 17,641,897$ 23,304,377$
95
CITY OF LAKEVILLE, MINNESOTA
SPECIAL REVENUE FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2014
Downtown
Economic Special
Communications Development Service District Total
Assets
Cash and investments 783,255$ -$ 14,575$ 797,830$
Interest receivable 2,560 - 472 3,032
Accounts receivable 178,856 109,780 - 288,636
Due from other funds 38,336 - - 38,336
Prepaid items 169 - - 169
Total assets 1,003,176$ 109,780$ 15,047$ 1,128,003$
Liabilities
Salaries payable 9,132$ -$ -$ 9,132$
Accounts payable 48,859 10,084 - 58,943
Contracts payable - 8,982 - 8,982
Due to other funds - 38,336 - 38,336
Total liabilities 57,991 57,402 - 115,393
Deferred inflows of resources
Unavailable revenue - other - - 8 8
Fund balance
Nonspendable 169 - - 169
Restricted 26,933 - 15,039 41,972
Committed 918,083 52,378 - 970,461
Total fund balance 945,185 52,378 15,039 1,012,602
Total liabilities, deferred inflows of
resources, and fund balances 1,003,176$ 109,780$ 15,047$ 1,128,003$
96
CITY OF LAKEVILLE, MINNESOTA
SPECIAL REVENUE FUNDS (NONMAJOR)
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2014
Downtown
Economic Special
Communications Development Service District Total
Revenues
Licenses and permits 677,266$ -$ -$ 677,266$
Intergovernmental
Federal grants - 3,564 - 3,564
State-aid PERA 516 - - 516
County and local grants - 464,622 - 464,622
Charges for services 64,423 2,500 31,085 98,008
Investment income (charges) 11,727 (289) - 11,438
Miscellaneous 1,393 - - 1,393
Total revenues 755,325 470,397 31,085 1,256,807
Expenditures
Current
General government 493,715 477,877 30,702 1,002,294
Capital outlay
General government 87,777 - - 87,777
Total expenditures 581,492 477,877 30,702 1,090,071
Excess (deficiency) of revenues over expenditures 173,833 (7,480) 383 166,736
Other financing uses
Transfer to
General Fund (122,654) - - (122,654)
Capital Projects - Building Fund (270) - - (270)
Total other financing uses (122,924) - - (122,924)
Net change in fund balance 50,909 (7,480) 383 43,812
Fund balance, January 1 894,276 59,858 14,656 968,790
Fund balance, December 31 945,185$ 52,378$ 15,039$ 1,012,602$
97
CITY OF LAKEVILLE, MINNESOTA
DEBT SERVICE FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2014
Tax State-aid Water Arena HRA
Increment Revenue Revenue Revenue Revenue Total
Assets
Cash and investments 3,512,817$ 23,647$ -$ 213,174$ 355,421$ 4,105,059$
Investments held by trustee - - - - 697,378 697,378
Interest receivable 6,490 70 - 511 169 7,240
Taxes receivable
Unremitted (18,220) - - - 17,615 (605)
Delinquent 58 - - - 4,266 4,324
Accounts receivable - - - 47,500 - 47,500
Total assets 3,501,145$ 23,717$ -$ 261,185$ 1,074,849$ 4,860,896$
Liabilities
Accounts payable 206,694$ -$ -$ -$ -$ 206,694$
Deferred inflows of resources
Unavailable revenue - taxes 58 - - - 4,266 4,324
Fund balance
Restricted for debt service 3,294,393 23,717 - 261,185 1,070,583 4,649,878
Total liabilities, deferred inflows of
resources, and fund balances 3,501,145$ 23,717$ -$ 261,185$ 1,074,849$ 4,860,896$
Bonds
98
CITY OF LAKEVILLE, MINNESOTA
DEBT SERVICE FUNDS (NONMAJOR)
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2014
Tax State-aid Water Arena HRA
Increment Revenue Revenue Revenue Revenue Total
Revenues
Property taxes
Current and delinquent 34$ -$ -$ -$ 280,163$ 280,197$
Fiscal disparities 5 - - - 34,426 34,431
Total property taxes 39 - - - 314,589 314,628
Tax increment 638,312 - - - - 638,312
Intergovernmental - State-aid - 837,342 - - - 837,342
Charges for services - - - 88,626 307,212 395,838
Investment income (charges) 29,720 319 - 2,340 3,771 36,150
Loan repayments 2,230,000 - - - - 2,230,000
Donations - - - 95,000 - 95,000
Total revenues 2,898,071 837,661 - 185,966 625,572 4,547,270
Expenditures - current
General government 203,623 - - - - 203,623
Expenditures - debt service
Principal bond maturities 445,000 700,000 890,000 135,000 225,000 2,395,000
Interest on debt 84,004 137,343 96,800 47,788 372,431 738,366
Fiscal charges 27,189 3,074 350 1,375 2,201 34,189
Total expenditures - debt service 556,193 840,417 987,150 184,163 599,632 3,167,555
Total expenditures 759,816 840,417 987,150 184,163 599,632 3,371,178
Excess (deficiency) of revenues
over expenditures 2,138,255 (2,756) (987,150) 1,803 25,940 1,176,092
Other financing sources
Transfer from
Capital Projects - Water Fund - - 987,150 - - 987,150
Net change in fund balance 2,138,255 (2,756) - 1,803 25,940 2,163,242
Fund balance, January 1 1,156,138 26,473 - 259,382 1,044,643 2,486,636
Fund balance, December 31 3,294,393$ 23,717$ -$ 261,185$ 1,070,583$ 4,649,878$
Bonds
99
CITY OF LAKEVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS (NONMAJOR)
COMBINING BALANCE SHEET
DECEMBER 31, 2014
Municipal Pavement Storm
State-aid Management Sewer Water
Assets
Cash and investments 447,317$ 1,717,547$ 2,817,326$ 2,814,602$
Interest receivable 8,411 4,404 6,466 6,458
Taxes receivable
Unremitted - 67,068 - -
Delinquent - 17,211 - -
Accounts receivable 2,384,591 - - -
Special assessments
Unremitted - 40 - -
Delinquent - - - -
Deferred - 2,986 1,499 100,399
Other - - 60,171 44,733
Total assets 2,840,319$ 1,809,256$ 2,885,462$ 2,966,192$
Liabilities
Accounts payable 1,430,635$ 145,183$ -$ 92,406$
Contracts payable - 13,485 - -
Deposits payable - - - -
Unearned revenue - - - 60,047
Total liabilities 1,430,635 158,668 - 152,453
Deferred inflows of resources
Unavailable revenue - taxes - 17,211 - -
Unavailable revenue - special assessments - 2,986 61,670 145,132
Total deferred inflows of resources - 20,197 61,670 145,132
Fund balance
Restricted 1,409,684 - - -
Committed - 1,630,391 2,823,792 2,668,607
Total fund balance 1,409,684 1,630,391 2,823,792 2,668,607
Total liabilities, deferred inflows of
resources, and fund balances 2,840,319$ 1,809,256$ 2,885,462$ 2,966,192$
100
Sanitary Park Trail Tax
Sewer Dedication Improvement Increment Equipment Total
4,427,981$ 1,360,759$ 986,840$ 256,390$ 2,446,511$ 17,275,273$
11,829 5,016 2,655 371 8,516 54,126
- - 2,609 1,341 16,140 87,158
- - 324 - 6,163 23,698
- - - - - 2,384,591
527 - - - - 567
14 - - - - 14
67,652 192 - - - 172,728
215,422 - - - - 320,326
4,723,425$ 1,365,967$ 992,428$ 258,102$ 2,477,330$ 20,318,481$
-$ 73,984$ 2,923$ 15,873$ 47,920$ 1,808,924$
- - 246,711 - - 260,196
26,125 - - - - 26,125
- 4,526 - - - 64,573
26,125 78,510 249,634 15,873 47,920 2,159,818
- - 324 - 6,163 23,698
283,088 192 - - - 493,068
283,088 192 324 - 6,163 516,766
- 1,287,265 - 242,229 - 2,939,178
4,414,212 - 742,470 - 2,423,247 14,702,719
4,414,212 1,287,265 742,470 242,229 2,423,247 17,641,897
4,723,425$ 1,365,967$ 992,428$ 258,102$ 2,477,330$ 20,318,481$
101
CITY OF LAKEVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS (NONMAJOR)
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
YEAR ENDED DECEMBER 31, 2014
Municipal Pavement Storm
State-aid Management Sewer Water
Revenues
Property taxes
Current -$ 1,071,531$ -$ -$
Fiscal disparities - 131,595 - -
Total property taxes - 1,203,126 - -
Tax increment - - - -
Intergovernmental
Municipal state-aid 1,968,748 374,335 - -
County and local grants 415,843 - - -
Charges for services - - 1,448,032 1,726,957
Special assessments - 4,118 244 21,288
Investment income 38,521 20,171 29,612 29,577
Donations - - - -
Miscellaneous 276,641 40,000 - 337,806
Total revenues 2,699,753 1,641,750 1,477,888 2,115,628
Expenditures - capital outlay
General government - - - -
Public safety - - - -
Public works 4,573,763 1,511,419 169,907 763,392
Parks and recreation 117,195 - - -
Total expenditures - capital outlay 4,690,958 1,511,419 169,907 763,392
Excess (deficiency) of revenues
over expenditures (1,991,205) 130,331 1,307,981 1,352,236
Other financing sources (uses)
Transfer from/(to)
Debt Service - Water Revenue Bond Fund - - - (987,150)
Capital Projects - Park Dedication Fund - - - -
Capital Projects - Trail Improvement Fund - - - -
Enterprise - Liquor Fund - - - -
Total other financing sources (uses)- - - (987,150)
Net change in fund balance (1,991,205) 130,331 1,307,981 365,086
Fund balance, January 1 3,400,889 1,500,060 1,515,811 2,303,521
Fund balance, December 31 1,409,684$ 1,630,391$ 2,823,792$ 2,668,607$
102
Sanitary Park Trail Tax
Sewer Dedication Improvement Increment Equipment Total
-$ -$ 39,972$ -$ 267,920$ 1,379,423$
- - 4,935 - 32,753 169,283
- - 44,907 - 300,673 1,548,706
- - - 189,738 - 189,738
- - - - - 2,343,083
- 522 - - 19,814 436,179
548,598 1,642,309 - 12,000 - 5,377,896
18,447 64 - - - 44,161
54,174 22,976 12,161 1,700 39,001 247,893
- 78,750 - - - 78,750
- 22,138 - - 205,316 881,901
621,219 1,766,759 57,068 203,438 564,804 11,148,307
- - - 36,181 116,447 152,628
- - - - 1,279,674 1,279,674
116 - - - 956,497 7,975,094
- 1,406,189 656,710 - 515,567 2,695,661
116 1,406,189 656,710 36,181 2,868,185 12,103,057
621,103 360,570 (599,642) 167,257 (2,303,381) (954,750)
- - - - - (987,150)
- - 416,464 - - 416,464
- (416,464) - - - (416,464)
- - - - 800,000 800,000
- (416,464) 416,464 - 800,000 (187,150)
621,103 (55,894) (183,178) 167,257 (1,503,381) (1,141,900)
3,793,109 1,343,159 925,648 74,972 3,926,628 18,783,797
4,414,212$ 1,287,265$ 742,470$ 242,229$ 2,423,247$ 17,641,897$
103
CITY OF LAKEVILLE, MINNESOTA
COMMUNICATIONS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2014
Budget Variance With
As Originally Final Final
Adopted Budget Actual Budget
Revenues
Licenses and permits 610,915$ 610,915$ 677,266$ 66,351$
Intergovernmental
State-aid PERA 516 516 516 -
Charges for services - 64,695 64,923 228
Investment income 8,689 8,689 11,727 3,038
Miscellaneous - - 893 893
Total revenues 620,120 684,815 755,325 70,510
Expenditures - general government
Current
Personnel 326,866 331,466 337,882 (6,416)
Commodities 5,649 5,649 3,060 2,589
Other charges and services 114,031 159,031 152,773 6,258
Capital outlay 70,564 92,540 87,777 4,763
Total expenditures - general government 517,110 588,686 581,492 7,194
Excess of revenues over expenditures 103,010 96,129 173,833 77,704
Other financing uses
Transfer to
General Fund (122,654) (122,654) (122,654) -
Capital Projects - Building Fund (270) (270) (270) -
Total other financing uses (122,924) (122,924) (122,924) -
Net change in fund balance (19,914)$ (26,795)$ 50,909 77,704$
Fund balance, January 1 894,276
Fund balance, December 31 945,185$
104
CITY OF LAKEVILLE, MINNESOTA
ECONOMIC DEVELOPMENT - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2014
Budget Variance With
As Originally Final Final
Adopted Budget Actual Budget
Revenues
Intergovernmental
Federal grants -$ -$ 3,564$ 3,564$
County and local grants - 471,000 464,622 (6,378)
Charges for services 2,500 2,500 2,500 -
Investment income (charges)624 624 (289) (913)
Total revenues 3,124 474,124 470,397 (3,727)
Expenditures - General government
Current
Other charges and services 7,500 482,500 477,877 4,623
Net change in fund balance (4,376)$ (8,376)$ (7,480) 896$
Fund balance, January 1 59,858
Fund balance, December 31 52,378$
105
CITY OF LAKEVILLE, MINNESOTA
DOWNTOWN SPECIAL SERVICE DISTRICT - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED DECEMBER 31, 2014
Variance With
Original and Final
Final Budget Actual Budget
Revenues
Charges for services 27,500$ 31,085$ 3,585$
Expenditures - general government
Current
Personnel 11,250 11,823 (573)
Commodities 7,000 512 6,488
Other charges and services 9,250 18,367 (9,117)
Total expenditures - general government 27,500 30,702 (3,202)
Net change in fund balance -$ 383 383$
Fund balance, January 1 14,656
Fund balance, December 31 15,039$
106
A G E N C Y F U N D
Agency Fund – The Agency Fund is used to account for assets held by the City as an agent for
other City funds, governments, and individuals.
Escrow Fund
This fund accounts for deposits paid by land developers, builders, and other
individuals for future disbursements. The disbursements relating to these events
will be made when specific terms and conditions have been satisfied.
CITY OF LAKEVILLE, MINNESOTA
AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
YEAR ENDED DECEMBER 31, 2014
Balance Balance
Escrow Fund January 1 Increases Decreases December 31
Assets
Cash and investments 6,851,480$ 2,209,351$ 1,833,243$ 7,227,588$
Liabilities
Deposits payable 6,851,480$ 2,209,351$ 1,833,243$ 7,227,588$
107
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S U P P L E M E N T A L I N F O R M A T I O N
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF CHANGES IN BONDED INDEBTEDNESS
YEAR ENDED DECEMBER 31, 2014
Outstanding Outstanding
January 1 Issued Redeemed December 31
Governmental Activities:
General obligation bonds 69,410,000$ 12,660,000$ 12,380,000$ 69,690,000$
G.O. Improvement bonds 16,640,000 8,520,000 1,255,000 23,905,000
Tax increment bonds 2,335,000 - 445,000 1,890,000
State-aid street revenue bonds 4,590,000 - 700,000 3,890,000
Water connection revenue bonds 2,865,000 - 890,000 1,975,000
Arena revenue bonds 1,045,000 - 135,000 910,000
HRA lease revenue bonds 8,325,000 - 225,000 8,100,000
Total governmental activity bonds 105,210,000 21,180,000 16,030,000 110,360,000
Business-type Activities:
Liquor revenue bonds 3,235,000 - 165,000 3,070,000
Total bonded indebtedness 108,445,000$ 21,180,000$ 16,195,000$ 113,430,000$
108
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
General Obligation Bonds:
Park Refunding Bonds of 2011 B 12/1/11
Principal and Interest 0.75 4/1/15 410,000$ 1,538$
Total 410,000 1,538
Capital Improvement Bonds of 2004 A 11/1/04
(Central Maintenance Facility)
Principal and interest 4.00 2/1/15 360,000 290,053
Principal (call 2/1/15)12,460,000 -
Total 12,820,000 290,053
Capital Improvement Refunding Bonds of 2012 B 8/15/12
(Central Maintenance Facility)
Interest 2.00 2/1/15 - 398,850
Principal and interest 2.00 2/1/16 505,000 393,800
Principal and interest 2.00 2/1/17 530,000 383,450
Principal and interest 4.00 2/1/18 570,000 366,750
Principal and interest 4.00 2/1/19 635,000 342,650
Principal and interest 4.00 2/1/20 670,000 316,550
Principal and interest 4.00 2/1/21 750,000 288,150
Principal and interest (call provision date)3.00 2/1/22 770,000 261,600
Principal and interest 3.00 2/1/23 810,000 237,900
Principal and interest 3.00 2/1/24 865,000 212,775
Principal and interest 3.00 2/1/25 930,000 185,850
Principal and interest 3.00 2/1/26 1,040,000 156,300
Principal and interest 3.00 2/1/27 1,070,000 124,650
Principal and interest 3.00 2/1/28 1,125,000 91,725
Principal and interest 3.00 2/1/29 1,200,000 56,850
Principal and interest 3.00 2/1/30 1,295,000 19,425
Total 12,765,000 3,837,275
Capital Improvement Bonds of 2007 D 8/1/07
(Police Station)
Principal and interest 5.00 2/1/15 470,000 607,113
Principal and interest 5.00 2/1/16 490,000 583,113
Principal and Interest (call provision date)5.00 2/1/17 11,700,000 285,430
Total 12,660,000 1,475,656
Capital Improvement Refunding Bonds of 2014 B 8/20/14
Interest 2.00 2/1/15 - 420,437
Interest 2.00 2/1/16 - 443,863
Interest 2.00 2/1/17 - 443,863
Principal and interest 5.00 2/1/18 555,000 429,988
Principal and interest 5.00 2/1/19 580,000 401,613
Principal and interest 5.00 2/1/20 605,000 371,988
Principal and interest 1.75 2/1/21 635,000 351,305
Principal and interest 5.00 2/1/22 640,000 329,750
(continued)
Principal Maturity
109
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
General Obligation Bonds: (continued)
Capital Improvement Refunding Bonds of 2014 B (continued)
Principal and interest 5.00 2/1/23 670,000$ 297,000$
Principal and interest (call provision date)5.00 2/1/24 700,000 262,750
Principal and interest 4.00 2/1/25 735,000 230,550
Principal and interest 4.00 2/1/26 765,000 200,550
Principal and interest 4.00 2/1/27 790,000 169,450
Principal and interest 4.00 2/1/28 815,000 139,388
Principal and interest 3.50 2/1/29 845,000 110,338
Principal and interest 3.50 2/1/30 875,000 80,238
Principal and interest 3.50 2/1/31 910,000 49,000
Principal and interest 3.50 2/1/32 945,000 16,538
Total 11,065,000 4,748,605
Street Reconstruction Refunding Bonds of 2012 B 8/15/12
Principal and interest 2.00 2/1/15 645,000 295,000
Principal and interest 2.00 2/1/16 725,000 281,300
Principal and interest 2.00 2/1/17 675,000 267,300
Principal and interest 4.00 2/1/18 730,000 245,950
Principal and interest 4.00 2/1/19 765,000 216,050
Principal and interest 4.00 2/1/20 805,000 184,650
Principal and interest 4.00 2/1/21 835,000 151,850
Principal and interest (call provision date)3.00 2/1/22 850,000 122,400
Principal and interest 3.00 2/1/23 880,000 96,450
Principal and interest 3.00 2/1/24 905,000 69,675
Principal and interest 3.00 2/1/25 935,000 42,075
Principal and interest 3.00 2/1/26 935,000 14,025
Total 9,685,000 1,986,725
Street Reconstruction Bonds of 2005 A 12/1/05
Principal and interest 3.75 2/1/15 150,000 87,115
Principal and Interest (call provision date)3.75 2/1/16 2,105,000 39,245
Total 2,255,000 126,360
Street Reconstruction Refunding Bonds of 2014 B 8/20/14
Interest 2.00 2/1/15 - 63,428
Interest 2.00 2/1/16 - 66,963
Principal and interest 2.00 2/1/17 130,000 65,663
Principal and interest 5.00 2/1/18 135,000 60,988
Principal and interest 5.00 2/1/19 140,000 54,113
Principal and interest 5.00 2/1/20 145,000 46,988
Principal and interest 1.75 2/1/21 155,000 42,006
Principal and interest 5.00 2/1/22 160,000 36,650
Principal and interest 5.00 2/1/23 170,000 28,400
Principal and interest (call provision date)5.00 2/1/24 175,000 19,775
Principal and interest 4.00 2/1/25 190,000 11,600
Principal and interest 4.00 2/1/26 195,000 3,900
Total 1,595,000 500,472
(continued)
110
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
General Obligation Bonds: (continued)
Street Reconstruction Bonds of 2007 H 12/15/07
Principal and interest 4.00 2/1/15 125,000$ 92,945$
Principal and interest 4.00 2/1/16 125,000 87,945
Principal and interest 4.00 2/1/17 130,000 82,845
Principal and Interest (call provision date)4.00 2/1/18 140,000 77,445
Principal and interest 4.00 2/1/19 145,000 71,745
Principal and interest 4.00 2/1/20 150,000 65,845
Principal and interest 4.10 2/1/21 155,000 59,668
Principal and interest 4.125 2/1/22 160,000 53,190
Principal and interest 4.20 2/1/23 170,000 46,320
Principal and interest 4.375 2/1/24 175,000 38,922
Principal and interest 4.375 2/1/25 185,000 31,047
Principal and interest 4.50 2/1/26 190,000 22,725
Principal and interest 4.50 2/1/27 200,000 13,950
Principal and interest 4.50 2/1/28 210,000 4,724
Total 2,260,000 749,316
Taxable Street Reconstruction Bonds of 2009 A
(Build America Bonds)12/30/09
Principal and interest 3.00 2/1/15 205,000 203,502
Principal and interest 3.50 2/1/16 210,000 196,752
Principal and interest 4.00 2/1/17 215,000 188,778
Principal and interest 4.25 2/1/18 225,000 179,696
Principal and interest 4.50 2/1/19 230,000 169,740
Principal and Interest (call provision date)4.65 2/1/20 235,000 159,101
Principal and interest 4.75 2/1/21 245,000 147,819
Principal and interest 4.90 2/1/22 250,000 135,875
Principal and interest 5.00 2/1/23 260,000 123,250
Principal and interest 5.20 2/1/24 270,000 109,730
Principal and interest 5.30 2/1/25 280,000 95,290
Principal and interest 5.40 2/1/26 290,000 80,040
Principal and interest 5.50 2/1/27 300,000 63,960
Principal and interest 5.65 2/1/28 310,000 46,953
Principal and interest 5.80 2/1/29 320,000 28,915
Principal and interest 5.95 2/1/30 330,000 9,818
Total 4,175,000 1,939,219
Total General Obligation Bonds 69,690,000$ 15,655,219$
111
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
G.O. Improvement Bonds:
Improvement Refunding Bonds of 2007 B 2/1/07
Principal and interest 3.875 2/1/15 90,000$ 5,425$
Principal and interest 3.875 2/1/16 95,000 1,841
Total 185,000 7,266
Improvement Bonds of 2007 F 8/1/07
Principal and interest 4.00 2/1/15 50,000 7,113
Principal and interest 4.00 2/1/16 50,000 5,113
Principal and interest 4.00 2/1/17 50,000 3,088
Principal and interest 4.125 2/1/18 50,000 1,030
Total 200,000 16,344
Improvement Bonds of 2008 A 10/1/08
Principal and interest 3.25 2/1/15 30,000 4,988
Principal and interest 3.75 2/1/16 30,000 3,938
Principal and interest 3.75 2/1/17 30,000 2,813
Principal and interest 3.75 2/1/18 30,000 1,688
Principal and interest 3.75 2/1/19 30,000 560
Total 150,000 13,987
Improvement Refunding Bonds of 2009 B 12/30/09
Principal and interest 2.00 2/1/15 380,000 49,963
Principal and interest 2.50 2/1/16 390,000 41,288
Principal and interest 2.75 2/1/17 375,000 31,256
Principal and interest 3.00 2/1/18 355,000 20,775
Principal and interest 3.00 2/1/19 360,000 10,050
Principal and interest 3.00 2/1/20 155,000 2,324
Total 2,015,000 155,656
Improvement Bonds of 2011 A 12/1/11
Principal and interest 0.95 2/1/15 195,000 36,864
Principal and interest 1.20 2/1/16 190,000 34,798
Principal and interest 1.40 2/1/17 190,000 32,328
Principal and interest 1.70 2/1/18 190,000 29,383
Principal and interest 1.90 2/1/19 190,000 25,963
Principal and interest 2.10 2/1/20 190,000 22,163
Principal and interest 2.25 2/1/21 195,000 17,974
Principal and interest 2.60 2/1/22 50,000 15,130
Principal and interest 2.60 2/1/23 50,000 13,830
Principal and interest 3.10 2/1/24 50,000 12,530
Principal and interest 3.10 2/1/25 45,000 11,183
Principal and interest 3.10 2/1/26 45,000 9,788
Principal and interest 3.10 2/1/27 45,000 8,393
Principal and interest 3.50 2/1/28 45,000 6,998
Principal and interest 3.50 2/1/29 45,000 5,513
Principal and interest 3.50 2/1/30 45,000 3,938
Principal and interest 3.50 2/1/31 45,000 2,363
Principal and interest 3.50 2/1/32 45,000 781
Total 1,850,000 289,920
(continued)
112
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
G.O. Improvement Bonds: (continued)
Improvement Bonds of 2012 A 8/15/12
Principal and interest 2.00 2/1/15 550,000$ 168,675$
Principal and interest 2.00 2/1/16 550,000 157,675
Principal and interest 2.00 2/1/17 555,000 146,625
Principal and interest 2.00 2/1/18 550,000 135,575
Principal and interest 3.00 2/1/19 550,000 121,825
Principal and interest 3.00 2/1/20 555,000 105,250
Principal and interest 3.00 2/1/21 565,000 88,450
Principal and interest (call provision date)3.00 2/1/22 565,000 71,500
Principal and interest 4.00 2/1/23 575,000 51,525
Principal and interest 4.00 2/1/24 135,000 37,325
Principal and interest 3.00 2/1/25 130,000 32,675
Principal and interest 3.00 2/1/26 130,000 28,775
Principal and interest 3.00 2/1/27 130,000 24,875
Principal and interest 3.00 2/1/28 130,000 20,975
Principal and interest 3.00 2/1/29 130,000 17,075
Principal and interest 3.00 2/1/30 125,000 13,250
Principal and interest 3.00 2/1/31 125,000 9,500
Principal and interest 3.00 2/1/32 125,000 5,750
3.10 2/1/33 125,000 1,938
Total 6,300,000 1,239,238
Improvement Bonds of 2013 A 8/15/13
Principal and interest 2.00 2/1/15 295,000 117,600
Principal and interest 2.00 2/1/16 360,000 111,050
Principal and interest 2.00 2/1/17 360,000 103,850
Principal and interest 2.00 2/1/18 365,000 96,600
Principal and interest 2.00 2/1/19 370,000 89,250
Principal and interest 2.00 2/1/20 375,000 81,800
Principal and interest 2.25 2/1/21 380,000 73,775
Principal and interest 2.50 2/1/22 380,000 64,750
Principal and interest (call provision date)2.75 2/1/23 385,000 54,706
Principal and interest 2.75 2/1/24 395,000 43,981
Principal and interest 3.50 2/1/25 100,000 36,800
Principal and interest 3.50 2/1/26 100,000 33,300
Principal and interest 3.50 2/1/27 100,000 29,800
Principal and interest 3.75 2/1/28 100,000 26,175
Principal and interest 3.75 2/1/29 100,000 22,425
Principal and interest 3.75 2/1/30 100,000 18,675
Principal and interest 4.00 2/1/31 105,000 14,700
Principal and interest 4.00 2/1/32 105,000 10,500
Principal and interest 4.00 2/1/33 105,000 6,300
Principal and interest 4.00 2/1/34 105,000 2,100
Total 4,685,000 1,038,137
(continued)
113
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
G.O. Improvement Bonds: (continued)
Improvement Refunding Bonds of 2014 A 8/20/14
Interest 2.00 2/1/15 -$ 250,185$
Principal and interest 2.00 2/1/16 675,000 257,375
Principal and interest 2.00 2/1/17 685,000 243,775
Principal and interest 2.00 2/1/18 695,000 229,975
Principal and interest 2.00 2/1/19 705,000 215,975
Principal and interest 3.00 2/1/20 710,000 198,275
Principal and interest 3.00 2/1/21 730,000 176,675
Principal and interest 4.00 2/1/22 745,000 150,825
Principal and interest 4.00 2/1/23 775,000 120,425
Principal and interest (call provision date)4.00 2/1/24 800,000 88,925
Principal and interest 4.00 2/1/25 825,000 56,425
Principal and interest 3.00 2/1/26 120,000 38,125
Principal and interest 3.00 2/1/27 120,000 34,525
Principal and interest 3.50 2/1/28 120,000 30,625
Principal and interest 3.50 2/1/29 120,000 26,425
Principal and interest 3.50 2/1/30 120,000 22,225
Principal and interest 3.50 2/1/31 115,000 18,113
Principal and interest 3.50 2/1/32 115,000 14,088
Principal and interest 3.50 2/1/33 115,000 10,062
Principal and interest 3.50 2/1/34 115,000 6,038
Principal and interest 3.50 2/1/35 115,000 2,012
Total 8,520,000 2,191,073
Total G.O. Improvement Bonds 23,905,000$ 4,951,621$
114
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
Tax Increment Bonds:
Tax Increment Refunding 2/1/07
Bonds of 2007 A
Principal and interest 4.00 2/1/15 210,000$ 72,561$
Principal and Interest (call provision date)4.00 2/1/16 220,000 63,961
Principal and interest 4.00 2/1/17 220,000 55,161
Principal and interest 4.00 2/1/18 230,000 46,161
Principal and interest 4.00 2/1/19 240,000 36,761
Principal and interest 4.125 2/1/20 245,000 26,908
Principal and interest 4.125 2/1/21 260,000 16,493
Principal and interest 4.20 2/1/22 265,000 5,565
Total 1,890,000 323,571
Total Tax Increment Bonds 1,890,000$ 323,571$
State-aid Street Revenue Bonds:
State-aid Street Bonds of 2007 G 12/15/07
Principal and interest 4.00 4/1/15 390,000 58,600
Principal and Interest (call provision date)4.00 4/1/16 405,000 42,700
Principal and interest 4.00 4/1/17 425,000 26,100
Principal and interest 4.00 4/1/18 440,000 8,800
Total 1,660,000 136,200
State-aid Street Refunding 1/1/10
Bonds of 2010 A
Principal and interest 2.00 4/1/15 260,000 49,750
Principal and interest 3.00 4/1/16 275,000 43,025
Principal and interest 3.00 4/1/17 280,000 34,700
Principal and interest 3.00 4/1/18 285,000 26,225
Principal and interest 3.25 4/1/19 300,000 17,075
Principal and interest 4.00 4/1/20 305,000 6,100
Total 1,705,000 176,875
State-aid Street Refunding 12/1/11
Bonds of 2011 B
Principal and interest 0.75 4/1/15 75,000 8,051
Principal and interest 1.25 4/1/16 70,000 7,333
Principal and interest 1.25 4/1/17 75,000 6,426
Principal and interest 1.75 4/1/18 75,000 5,301
Principal and interest 1.75 4/1/19 75,000 3,989
Principal and interest 2.15 4/1/20 75,000 2,526
Principal and interest 2.15 4/1/21 80,000 860
525,000 34,486
Total State-aid Street Revenue Bonds 3,890,000$ 347,561$
115
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
Water Connection Revenue Bonds:
Water Revenue Refunding 11/1/04
Bonds of 2004 B
Principal and interest 4.00 2/1/15 1,975,000$ 39,500$
Total Water Connection Revenue Bonds 1,975,000$ 39,500$
Arena Revenue Bonds:
Ice Center Refunding Bonds of 2008 A 10/1/08
(Ames Ice Arena)
Principal and interest 3.25 2/1/15 140,000 2,275
Total 140,000 2,275
Gross Revenue Recreation Facility 4/1/99
Bonds of 1999 (Ames Ice Arena)
Principal and interest 5.30 8/1/15 135,000 41,145
Principal and interest 5.30 8/1/16 145,000 33,990
Principal and interest 5.30 8/1/17 155,000 26,305
Principal and interest 5.40 8/1/18 165,000 18,090
Principal and interest 5.40 8/1/19 170,000 9,180
Total 770,000 128,710
Total Arena Revenue Bonds 910,000$ 130,985$
HRA Lease Revenue Bonds:
HRA Ice Arena Lease Revenue 12/01/06
Bonds of 2006 (Hasse Ice Arena)
Principal and interest 4.25 2/1/15 245,000 362,444
Principal and interest 4.25 2/1/16 270,000 351,500
Principal and Interest (call provision date)4.50 2/1/17 315,000 338,675
Principal and interest 4.50 2/1/18 340,000 323,938
Principal and interest 4.50 2/1/19 355,000 308,300
Principal and interest 4.50 2/1/20 370,000 291,988
Principal and interest 4.50 2/1/21 390,000 274,888
Principal and interest 4.50 2/1/22 415,000 256,775
Principal and interest 4.50 2/1/23 435,000 237,650
Principal and interest 4.50 2/1/24 450,000 217,738
Principal and interest 4.50 2/1/25 470,000 197,038
Principal and interest 4.50 2/1/26 495,000 175,325
Principal and interest 4.625 2/1/27 520,000 152,163
Principal and interest 4.625 2/1/28 545,000 127,534
Principal and interest 4.625 2/1/29 575,000 101,634
Principal and interest 4.625 2/1/30 605,000 74,347
(continued)
116
CITY OF LAKEVILLE, MINNESOTA
SCHEDULE OF BONDED INDEBTEDNESS AND ANNUAL INTEREST PAYABLE
DECEMBER 31, 2014
Issue Interest Annual
Date Rate Date Amount Interest
Principal Maturity
HRA Lease Revenue Bonds: (continued)
HRA Ice Arena Lease Revenue Bonds of 2006 (continued)
Principal and interest 4.625 2/1/31 635,000$ 45,672$
Principal and interest 4.625 2/1/32 670,000 15,492
Total HRA Lease Revenue Bonds 8,100,000$ 3,853,101$
Total Governmental Activity Bonds 110,360,000$ 25,301,558$
Liquor Revenue Bonds:
Liquor Revenue Bonds of 2007 5/1/07
Principal and interest 5.00 2/1/15 175,000 149,125
Principal and interest 5.00 2/1/16 180,000 140,250
Principal and Interest (call provision date)5.00 2/1/17 190,000 131,000
Principal and interest 5.00 2/1/18 200,000 121,250
Principal and interest 5.00 2/1/19 210,000 111,000
Principal and interest 5.00 2/1/20 220,000 100,250
Principal and interest 5.00 2/1/21 235,000 88,875
Principal and interest 5.00 2/1/22 245,000 76,875
Principal and interest 5.00 2/1/23 255,000 64,375
Principal and interest 5.00 2/1/24 270,000 51,250
Principal and interest 5.00 2/1/25 285,000 37,375
Principal and interest 5.00 2/1/26 295,000 22,875
Principal and interest 5.00 2/1/27 310,000 7,750
Total Business-type Activity Bonds 3,070,000$ 1,102,250$
Total Bonded Indebtedness and Annual Interest Payable 113,430,000$ 26,403,808$
117
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CITY OF LAKEVILLE, MINNESOTA
COMBINED SCHEDULE OF BONDED INDEBTEDNESS
DECEMBER 31, 2014
Interest Issue Call Maturity
Rates %Date Date Date
Governmental Activities:
General Obligation Bonds:
Park Refunding Bonds of 2011 B 0.50-0.75 Dec-01-11 N/A Apr-01-15
Capital Improvement Bonds of 2004 A 3.50-4.75 Nov-01-04 Feb-01-15 Feb-01-30
Capital Improvement Refunding Bonds of 2012 B 2.00-4.00 Aug-15-12 Feb-01-22 Feb-01-30
Capital Improvement Bonds of 2007 D 4.625-5.00 Aug-01-07 Feb-01-17 Feb-01-32
Capital Improvement Refunding Bonds of 2014 B 1.75-5.00 Aug-20-14 Feb-01-24 Feb-01-32
Street Reconstruction Bonds of 2003 A 3.50-4.50 Mar-15-03 Feb-01-14 Feb-01-26
Street Reconstruction Refunding Bonds of 2012 B 2.00-4.00 Aug-15-12 Feb-01-22 Feb-01-30
Street Reconstruction Bonds of 2005 A 3.85-4.20 Dec-01-05 Feb-01-16 Feb-01-26
Street Reconstruction Refunding Bonds of 2014 B 1.75-5.00 Aug-20-14 Feb-01-24 Feb-01-32
Street Reconstruction Bonds of 2007 H 3.50-4.50 Dec-15-07 Feb-01-18 Feb-01-28
Street Reconstruction Bonds of 2009 A (Taxable) 1.55-5.95 Dec-30-09 Feb-01-20 Feb-01-30
Total General Obligation Bonds
G.O. Improvement Bonds:
Improvement Refunding Bonds of 2007 B 3.875 Feb-01-07 N/A Feb-01-16
Improvement Bonds of 2007 F 4.00-4.125 Aug-01-07 Feb-01-14 Feb-01-18
Improvement Bonds of 2008 A 2.70-3.75 Oct-01-08 N/A Feb-01-19
Improvement Refunding Bonds of 2009 B 2.00-3.00 Dec-30-09 N/A Feb-01-20
Improvement Refunding Bonds of 2011 A 0.50-3.50 Dec-01-11 Feb-01-21 Feb-01-32
Improvement Refunding Bonds of 2012 A 2.00-4.00 Aug-15-12 Feb-01-22 Feb-01-33
Improvement Refunding Bonds of 2013 A 2.00-4.00 Aug-15-13 Feb-01-23 Feb-01-34
Improvement Refunding Bonds of 2014 A 2.00-3.50 Aug-20-14 Feb-01-24 Feb-01-35
Total G.O. Improvement Bonds
Tax Increment Bonds:
Tax Increment Refunding Bonds of 2007 A 4.00-4.20 Feb-01-07 Feb-01-16 Feb-01-22
State-aid Street Revenue Bonds:
State-aid Street Bonds of 2007 G 4.00 Dec-15-07 Apr-01-16 Apr-01-18
State-aid Street Refunding Bonds of 2010 A 2.00-4.00 Jan-01-10 N/A Apr-01-20
State-aid Street Refunding Bonds of 2011 B 0.50-2.15 Dec-01-11 N/A Apr-01-21
Total State-aid Street Revenue Bonds
Water Revenue Bonds:
Water Connection Rev. Refunding Bonds of 2004 B 4.00 Nov-01-04 Feb-01-14 Feb-01-16
Arena Revenue Bonds:
Ice Center Refunding Bonds of 2008 A 2.70-3.25 Oct-01-08 N/A Feb-01-15
Gross Revenue Recreation Facility Bonds of 1999 5.30-5.40 Apr-01-99 N/A Aug-01-19
Total Arena Revenue Bonds
HRA Lease Revenue Bonds:
HRA Ice Arena Lease Revenue Bonds of 2006 4.25-4.625 Dec-01-06 Feb-01-17 Feb-01-32
Total Governmental Activity Bonds
Business-type Activity;
Liquor Revenue Bonds:
Liquor Revenue Bonds of 2007 5.00 May-01-07 Feb-01-17 Feb-01-27
Total Bonded Indebtedness
N/A – Not Applicable
118
Bonds Due in 2015
Authorized Issued Retired Outstanding Principal Interest
1,215,000 1,215,000 805,000 410,000 410,000 1,538
14,445,000 14,445,000 1,625,000 12,820,000 12,820,000 290,053
12,765,000 12,765,000 - 12,765,000 - 398,850
15,115,000 15,115,000 2,455,000 12,660,000 470,000 607,112
11,065,000 11,065,000 - 11,065,000 - 420,436
14,890,000 14,890,000 14,890,000 - - -
9,685,000 9,685,000 - 9,685,000 645,000 295,000
5,430,000 5,430,000 3,175,000 2,255,000 150,000 87,115
1,595,000 1,595,000 - 1,595,000 - 63,428
2,810,000 2,810,000 550,000 2,260,000 125,000 92,945
4,945,000 4,945,000 770,000 4,175,000 205,000 203,503
93,960,000 93,960,000 24,270,000 69,690,000 14,825,000 2,459,980
3,165,000 3,165,000 2,980,000 185,000 90,000 5,426
1,310,000 1,310,000 1,110,000 200,000 50,000 7,113
620,000 620,000 470,000 150,000 30,000 4,988
4,250,000 4,250,000 2,235,000 2,015,000 380,000 49,963
2,385,000 2,385,000 535,000 1,850,000 195,000 36,864
6,805,000 6,805,000 505,000 6,300,000 550,000 168,675
4,685,000 4,685,000 - 4,685,000 295,000 117,600
8,520,000 8,520,000 - 8,520,000 - 250,185
31,740,000 31,740,000 7,835,000 23,905,000 1,590,000 640,812
2,265,000 2,265,000 375,000 1,890,000 210,000 72,561
3,675,000 3,675,000 2,015,000 1,660,000 390,000 58,600
2,680,000 2,680,000 975,000 1,705,000 260,000 49,750
665,000 665,000 140,000 525,000 75,000 8,051
7,020,000 7,020,000 3,130,000 3,890,000 725,000 116,401
9,735,000 9,735,000 7,760,000 1,975,000 1,975,000 39,500
775,000 775,000 635,000 140,000 140,000 2,275
1,250,000 1,250,000 480,000 770,000 135,000 41,145
2,025,000 2,025,000 1,115,000 910,000 275,000 43,420
9,230,000 9,230,000 1,130,000 8,100,000 245,000 362,444
155,975,000 155,975,000 45,615,000 110,360,000 19,845,000 3,735,118
3,955,000 3,955,000 885,000 3,070,000 175,000 149,125
159,930,000$ 159,930,000$ 46,500,000$ 113,430,000$ 20,020,000$ 3,884,243$
119
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S T A T I S T I C A L S E C T I O N
This part of the City of Lakeville’s Comprehensive Annual Financial Report presents detailed
information as a context for understanding the current year’s financial statements, note disclosures,
and required supplementary information about the government’s overall financial health. This
information has not been audited by the independent auditor.
Financial Trends
These schedules present trend information that may assist the reader in assessing the City’s
financial performance from a historical perspective.
Net Position by Component - Government-wide
Changes in Net Position - Governmental Activities
Changes in Net Position - Business-type Activities
Changes in Net Position - Total Governmental and Business-type Activities
Fund Balances - Governmental Funds
Changes in Fund Balances - Governmental Funds
Revenue Capacity
These schedules contain information that may assist the reader in assessing the City’s most
significant revenue source, the property tax.
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property
Property Tax Rates - Direct and Overlapping Governments
Principal Property Taxpayers
Property Tax Levy and Collections
D e bt C a p a c i t y
These schedules provide information that may assist the reader in evaluating the affordability of the
City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.
Ratio of Outstanding Debt by Type
Ratio of Net Bonded Debt Outstanding
Direct and Overlapping Governmental Debt
Legal Debt Margin
Pledged Revenue Coverage
Demographic and Economic Information
These schedules present demographic and economic indicators that are commonly used for
financial analysis in understanding the City’s ongoing and future financial status.
Demographic and Economic Statistics
Principal Employers
Commercial and Industrial Building Permits Issued
Operating Information
These schedules contain service and infrastructure indicators that may assist the reader in
understanding the information in the City’s financial report as it relates to the services the City
provides and the activities it performs.
Employees by Function/Program (Full-Time Equivalent)
Operating Indicators by Function
Capital Assets Statistics by Function
Source:
Unless otherwise noted, the information contained within these schedules is derived from
comprehensive annual financial reports for the relevant year.
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CITY OF LAKEVILLE, MINNESOTA
Net Position by Component - Government-wide
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
Governmental Activities
Net investment in capital assets (1) 34,629,141$ 47,013,052$ 125,574,976$ 120,954,521$
Restricted 7,728,450 7,200,932 9,727,357 9,037,087
Unrestricted 1,834,965 2,727,757 2,225,861 3,100,244
Total governmental activities 44,192,556 56,941,741 137,528,194 133,091,852
Business-type Activities
Net investment in capital assets 102,503,832 105,571,786 103,156,352 104,535,771
Restricted 59,000 45,500 326,133 311,133
Unrestricted 7,396,116 7,423,725 11,770,501 14,107,347
Total business-type activities 109,958,948 113,041,011 115,252,986 118,954,251
Total Government-wide
Net investment in capital assets 137,132,973 152,584,838 228,731,328 225,490,292
Restricted 7,787,450 7,246,432 10,053,490 9,348,220
Unrestricted 9,231,081 10,151,482 13,996,362 17,207,591
Total government-wide 154,151,504$ 169,982,752$ 252,781,180$ 252,046,103$
Notes:
(1) The net investment in capital assets amount for fiscal years 2004 through 2006 excludes infrastructure assets
that were acquired prior to January 1, 2004. 2007 includes the addition of these infrastructure assets
acquired (net of depreciation) for $76,014,220.
(2) Includes a restatement of $186,003 in Business-type activities.
(3) The City implemented GASB Statement No. 65 in 2012. Net position for 2011 was restated for the effects of
implementing this standard. Net position for previous years has not been restated.
120
2009 2010 2011 2012 2013 2014
119,699,102$ 119,249,751$ 120,485,858$ 125,051,058$ 129,599,494$ 135,673,737$
10,542,926 10,027,737 16,474,815 17,403,167 17,645,944 19,913,014
1,210,922 2,324,315 (5,970,712) (1,923,495) 2,511,935 5,874,237
131,452,950 131,601,803 130,989,961 140,530,730 149,757,373 161,460,988
103,150,022 101,893,442 100,390,175 102,009,893 105,055,746 109,535,106
295,133 295,133 325,750 325,750 324,125 324,125
15,828,861 16,363,211 16,666,856 15,658,140 13,704,281 11,318,290
119,274,016 118,551,786 117,382,781 117,993,783 119,084,152 121,177,521
222,849,124 221,143,193 220,876,033 227,060,951 234,655,240 245,208,843
10,838,059 10,322,870 16,800,565 17,728,917 17,970,069 20,237,139
17,039,783 18,687,526 10,696,144 13,734,645 16,216,216 17,192,527
250,726,966$ 250,153,589$ 248,372,742$ 258,524,513$ 268,841,525$ 282,638,509$
(2) (3)
121
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Governmental Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
Expenses
General government 3,733,657$ 4,452,707$ 4,712,995$ 6,169,957$
Public safety 8,928,681 10,057,597 10,308,296 10,019,681
Public works 12,970,903 7,507,095 15,844,963 15,706,515
Parks and recreation 3,535,082 3,819,806 4,556,759 4,900,341
Interest on long-term debt 4,032,004 3,278,091 3,867,395 4,218,695
Total expenses 33,200,327 29,115,296 39,290,408 41,015,189
Program Revenues
Charges for services
General government 3,313,130 2,960,761 2,495,649 2,238,739
Public safety 691,070 850,033 659,989 581,930
Public works 9,123,403 6,064,174 4,985,965 4,239,190
Parks and recreation 2,598,033 1,556,284 1,437,308 1,937,523
Operating grants and contributions
General government 42,748 114,152 43,839 25,083
Public safety 683,047 741,342 698,926 639,173
Public works 105,659 106,871 6,604,149 783,843
Parks and recreation 15,906 33,575 13,456 46,058
Capital grants and contributions
General government - 171,400 - -
Public safety - 326,143 5,000 50,000
Public works 13,320,961 6,169,357 3,384,857 1,420,813
Parks and recreation 1,595,022 2,272,358 550,757 871,266
Total program revenues 31,488,979 21,366,450 20,879,895 12,833,618
Net (Expense) Revenue
General government (377,779) (1,206,394) (2,173,507) (3,906,135)
Public safety (7,554,564) (8,140,079) (8,944,381) (8,748,578)
Public works 9,579,120 4,833,307 (869,992) (9,262,669)
Parks and recreation 673,879 42,411 (2,555,238) (2,045,494)
Interest on long-term debt (4,032,004) (3,278,091) (3,867,395) (4,218,695)
Total net (expense) revenue (1,711,348) (7,748,846) (18,410,513) (28,181,571)
General Revenues and Other
Property taxes 15,491,536 18,009,237 20,873,431 23,391,055
Investment earnings (charges) 1,023,616 1,505,062 1,977,519 1,383,236
Gain on sale of capital assets - 1,434,692 - -
Transfers in (out)(867,254) (450,960) 131,796 (2,029,933)
Total general revenues and other (net)15,647,898 20,498,031 22,982,746 22,744,358
Change in net position 13,936,550$ 12,749,185$ 4,572,233$ (5,437,213)$
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011
was restated for the effect of implementing this standard. Change in net position for
previous years has not been restated.
122
2009 2010 2011 2012 2013 2014
5,916,590$ 5,248,677$ 5,134,169$ 5,258,319$ 5,363,354$ 6,051,985$
9,726,394 10,858,447 11,068,287 11,202,018 11,784,109 11,807,183
12,866,216 12,197,868 13,778,800 10,849,213 11,241,434 14,776,390
4,774,745 4,775,015 4,796,035 4,780,666 5,154,919 5,202,168
3,994,790 3,740,076 4,383,684 3,496,878 3,864,333 3,665,421
37,278,735 36,820,083 39,160,975 35,587,094 37,408,149 41,503,147
1,940,423 1,834,856 2,108,396 2,736,653 3,061,568 3,219,644
643,174 654,226 746,207 714,587 686,130 660,910
2,817,604 1,967,309 2,313,334 3,588,062 4,481,445 5,280,338
984,206 1,555,560 1,299,364 2,087,640 2,231,757 2,808,885
44,648 42,661 37,970 40,359 60,076 5,399
1,048,160 846,553 649,253 698,949 902,783 825,434
1,142,494 1,399,661 1,451,359 1,396,560 1,295,018 3,665,373
20,294 30,144 160,852 100,315 59,653 66,575
- - - 91,735 195,693 2,762,609
- 21,576 26,325 19,530 - -
2,783,528 3,025,905 2,906,106 5,569,732 6,350,827 6,892,230
187,699 267,360 297,245 370,237 1,296,764 436,107
11,612,230 11,645,811 11,996,411 17,414,359 20,621,714 26,623,504
(3,931,519) (3,371,160) (2,987,803) (2,389,572) (2,046,017) (64,333)
(8,035,060) (9,336,092) (9,646,502) (9,768,952) (10,195,196) (10,320,839)
(6,122,590) (5,804,993) (7,108,001) (294,859) 885,856 1,061,551
(3,582,546) (2,921,951) (3,038,574) (2,222,474) (1,566,745) (1,890,601)
(3,994,790) (3,740,076) (4,383,684) (3,496,878) (3,864,333) (3,665,421)
(25,666,505) (25,174,272) (27,164,564) (18,172,735) (16,786,435) (14,879,643)
23,912,318 24,369,009 24,207,406 24,221,741 23,947,968 24,465,333
463,092 340,336 280,364 176,409 (28,949) 552,444
- - - 214,004 - -
(347,807) 613,780 2,692,671 3,101,350 2,094,059 1,565,481
24,027,603 25,323,125 27,180,441 27,713,504 26,013,078 26,583,258
(1,638,902)$ 148,853$ 15,877$ 9,540,769$ 9,226,643$ 11,703,615$
123
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Business-type Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
Expenses
Liquor 1,791,612$ 1,940,626$ 2,164,440$ 2,407,714$
Utility 7,020,440 7,925,809 8,029,064 8,319,303
Total expenses 8,812,052 9,866,435 10,193,504 10,727,017
Program Revenues
Charges for services
Liquor 2,911,820 3,080,692 3,314,721 3,603,240
Utility 5,263,274 5,855,346 6,553,811 7,355,207
Operating grants and contributions
Liquor 3,762 3,762 3,762 3,762
Utility 3,264 3,264 3,264 3,264
Capital grants and contributions
Liquor - - - -
Utility 6,911,241 3,239,467 1,394,810 975,410
Total program revenues 15,093,361 12,182,531 11,270,368 11,940,883
Net (Expense) Revenue
Liquor 1,123,970 1,143,828 1,154,043 1,199,288
Utility 5,157,339 1,172,268 (77,179) 14,578
Total net (expense) revenue 6,281,309 2,316,096 1,076,864 1,213,866
General Revenues and Other
Investment income (charges) 127,669 315,007 468,478 457,466
Disposal of capital assets - - 798,429 -
Transfers in (out)867,254 450,960 (131,796) 2,029,933
Total general revenues and other (net)994,923 765,967 1,135,111 2,487,399
Change in net position 7,276,232$ 3,082,063$ 2,211,975$ 3,701,265$
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011 was
restated for the effect of implementing this standard. Change in net position for previous
years has not been restated.
(1) Includes a restatement of $186,003.
124
2009 2010 2011 2012 2013 2014
2,437,654$ 2,424,290$ 2,439,261$ 2,392,945$ 2,473,738$ 2,498,103$
9,086,172 9,903,296 10,401,650 10,365,651 10,863,625 11,462,552
11,523,826 12,327,586 12,840,911 12,758,596 13,337,363 13,960,655
3,611,777 3,612,321 3,546,877 3,839,723 3,948,599 3,804,942
7,491,674 7,432,391 8,866,345 9,542,284 9,126,838 9,296,118
3,762 3,762 3,762 3,762 3,762 3,762
3,264 3,264 59,707 103,525 69,968 112,181
- 17,050 - - - -
158,252 999,716 1,129,764 2,903,043 3,414,738 4,252,192
11,268,729 12,068,504 13,606,455 16,392,337 16,563,905 17,469,195
1,177,885 1,208,843 1,111,378 1,450,540 1,478,623 1,310,601
(1,432,982) (1,467,925) (345,834) 2,183,201 1,747,919 2,197,939
(255,097) (259,082) 765,544 3,633,741 3,226,542 3,508,540
227,055 150,632 130,403 78,611 (42,114) 150,310
- - - - - -
347,807 (613,780) (2,692,671) (3,101,350) (2,094,059) (1,565,481)
574,862 (463,148) (2,562,268) (3,022,739) (2,136,173) (1,415,171)
319,765$ (722,230)$ (1,796,724)$ 611,002$ 1,090,369$ 2,093,369$
(1)
125
CITY OF LAKEVILLE, MINNESOTA
Changes in Net Position - Total Governmental and Business-type Activities
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
Expenses
Governmental activities 33,200,327$ 29,115,296$ 39,290,408$ 41,015,189$
Business-type activities 8,812,052 9,866,435 10,193,504 10,727,017
Total expenses 42,012,379 38,981,731 49,483,912 51,742,206
Program Revenues
Governmental activities 31,488,979 21,366,450 20,879,895 12,833,618
Business-type activities 15,093,361 12,182,531 11,270,368 11,940,883
Total program revenues 46,582,340 33,548,981 32,150,263 24,774,501
Net (Expense) Revenue
Governmental activities (1,711,348) (7,748,846) (18,410,513) (28,181,571)
Business-type activities 6,281,309 2,316,096 1,076,864 1,213,866
Total net (expense) revenue 4,569,961 (5,432,750) (17,333,649) (26,967,705)
General Revenues and Other
Governmental activities 15,647,898 20,498,031 22,982,746 22,744,358
Business-type activities 994,923 765,967 1,135,111 2,487,399
Total general revenues and other (net)16,642,821 21,263,998 24,117,857 25,231,757
Change in Net Position
Governmental activities 13,936,550 12,749,185 4,572,233 (5,437,213)
Business-type activities 7,276,232 3,082,063 2,211,975 3,701,265
Total change in net position 21,212,782$ 15,831,248$ 6,784,208$ (1,735,948)$
Note: The City implemented GASB Statement No. 65 in 2012. Change in net position for 2011 was
restated for the effects of implementing this standard. Change in net position for previous years
has not been restated.
(1) Includes a restatement of $186,003.
126
2009 2010 2011 2012 2013 2014
37,278,735$ 36,820,083$ 39,160,975$ 35,587,094$ 37,408,149$ 41,503,147$
11,523,826 12,327,586 12,840,911 12,758,596 13,337,363 13,960,655
48,802,561 49,147,669 52,001,886 48,345,690 50,745,512 55,463,802
11,612,230 11,645,811 11,996,411 17,414,359 20,621,714 26,623,504
11,268,729 12,068,504 13,606,455 16,392,337 16,563,905 17,469,195
22,880,959 23,714,315 25,602,866 33,806,696 37,185,619 44,092,699
(25,666,505) (25,174,272) (27,164,564) (18,172,735) (16,786,435) (14,879,643)
(255,097) (259,082) 765,544 3,633,741 3,226,542 3,508,540
(25,921,602) (25,433,354) (26,399,020) (14,538,994) (13,559,893) (11,371,103)
24,027,603 25,323,125 27,180,441 27,713,504 26,013,078 26,583,258
574,862 (463,148) (2,562,268) (3,022,739) (2,136,173) (1,415,171)
24,602,465 24,859,977 24,618,173 24,690,765 23,876,905 25,168,087
(1,638,902) 148,853 15,877 9,540,769 9,226,643 11,703,615
319,765 (722,230) (1,796,724) 611,002 1,090,369 2,093,369
(1,319,137)$ (573,377)$ (1,780,847)$ 10,151,771$ 10,317,012$ 13,796,984$
(1)
127
CITY OF LAKEVILLE, MINNESOTA
Fund Balances - Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
General Fund
Reserved 10,322$ 8,238$ 8,483$ 7,420$
Unreserved 10,012,455 11,010,426 11,698,291 11,238,093
Nonspendable - - - -
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total general fund 10,022,777 11,018,664 11,706,774 11,245,513
All Other Governmental Funds
Reserved 19,548,472 15,314,937 16,217,023 10,464,632
Unreserved
Special revenue 810,972 937,978 1,083,601 1,107,202
Capital projects 13,076,770 9,839,833 17,115,258 11,074,322
Nonspendable - - - -
Restricted - - - -
Committed - - - -
Unassigned - - - -
Total all other governmental funds 33,436,214 26,092,748 34,415,882 22,646,156
Total Governmental Funds
Reserved 19,558,794 15,323,175 16,225,506 10,472,052
Unreserved 23,900,197 21,788,237 29,897,150 23,419,617
Nonspendable - - - -
Restricted - - - -
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total governmental funds 43,458,991$ 37,111,412$ 46,122,656$ 33,891,669$
All governmental funds
percentage change -22.1%-14.6%24.3%-26.5%
Note: The implementation of Governmental Accounting Standards Board Statement No. 54,
Fund Balance Reporting and Governmental Type Definitions, in fiscal year 2011
resulted in significant change in the City's fund balance classifications. Information
prior to 2011 has not been restated.
128
2009 2010 2011 2012 2013 2014
9,899$ 10,726$ -$ -$ -$ -$
11,196,826 9,385,202 - - - -
- - 384,329 256,476 126,014 221,704
- - - - 45,000 45,000
- - 519,146 620,725 - -
- - 9,644,863 10,614,574 9,495,546 10,805,065
11,206,725 9,395,928 10,548,338 11,491,775 9,666,560 11,071,769
16,713,410 11,060,144 - - - -
1,325,731 1,444,846 - - - -
12,549,905 15,384,343 - - - -
- - 75 - - 169
- - 14,744,057 38,587,037 38,716,666 44,319,872
- - 9,989,221 11,861,800 16,620,820 17,154,096
- - (112,102) (233,910) (221,630) (632,035)
30,589,046 27,889,333 24,621,251 50,214,927 55,115,856 60,842,102
16,723,309 11,070,870 - - - -
25,072,462 26,214,391 - - - -
- - 384,404 256,476 126,014 221,873
- - 14,744,057 38,587,037 38,716,666 44,319,872
- - 9,989,221 11,861,800 16,665,820 17,199,096
- - 519,146 620,725 - -
- - 9,532,761 10,380,664 9,273,916 10,173,030
41,795,771$ 37,285,261$ 35,169,589$ 61,706,702$ 64,782,416$ 71,913,871$
23.3%-10.8%-5.7%75.5%5.0%11.0%
129
CITY OF LAKEVILLE, MINNESOTA
Changes in Fund Balances - Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year 2005 2006 2007 2008
Revenues
Property taxes and tax increment 15,398,468$ 17,882,708$ 20,171,031$ 22,901,637$
Licenses and permits 2,984,753 2,651,382 2,182,252 1,936,532
Intergovernmental 1,305,587 2,400,581 8,420,985 2,250,332
Charges for services 12,460,552 8,207,104 7,105,600 6,713,370
Special assessments 931,771 709,126 826,453 777,153
Investment income (charges) 1,019,087 1,496,836 1,970,411 1,379,315
Donations 319,949 896,414 475,676 1,008,326
Miscellaneous 381,247 371,033 326,059 366,680
Total revenues 34,801,414 34,615,184 41,478,467 37,333,345
Expenditures
General government 3,199,306 3,582,410 3,939,573 5,172,645
Public safety 8,063,605 8,865,167 9,346,490 8,911,017
Public works 3,437,161 3,551,118 3,970,680 4,535,118
Parks and recreation 2,446,065 2,706,898 2,968,924 3,233,422
Capital outlay 29,290,726 15,745,297 29,913,271 18,133,199
Debt service
Principal retirement 4,016,900 4,097,026 7,021,291 5,301,622
Interest on debt 3,726,938 3,597,771 3,449,720 4,367,257
Fiscal charges 37,072 24,707 123,438 46,136
Total expenditures 54,217,773 42,170,394 60,733,387 49,700,416
Excess (deficiency) of revenues
over (under) expenditures (19,416,359) (7,555,210) (19,254,920) (12,367,071)
Other financing sources (uses)
Transfers in 4,343,025 5,634,822 4,327,025 7,688,315
Transfers out (2,775,293) (4,997,410) (3,600,158) (6,857,231)
Bond, note, loan and lease proceeds 5,564,000 12,281,300 30,850,000 2,280,000
Payment on refunded bonds called (12,825,000) (3,945,000) (2,975,000)
Premium on bonds issued - 68,479 610,404 -
Discount on bonds issued (13,955) - (3,242) -
Sale of capital assets - 1,045,440 27,135 -
Total other financing sources (uses)7,117,777 1,207,631 28,266,164 136,084
Net change in fund balances (12,298,582)$ (6,347,579)$ 9,011,244$ (12,230,987)$
Debt service as a % of noncapital
expenditures (excl. fiscal charges) 33.7%30.7%29.2%24.4%
Note: The City has no taxes other than property taxes and tax increment.
130
2009 2010 2011 2012 2013 2014
23,785,468$ 24,435,538$ 24,057,622$ 24,453,849$ 23,981,375$ 24,524,709$
1,603,909 1,565,028 1,820,408 2,429,951 2,727,494 2,836,555
3,158,128 4,242,195 2,622,487 2,291,376 3,534,512 4,979,156
4,145,717 4,002,246 3,938,204 5,833,776 6,925,867 8,405,492
769,624 573,301 622,799 1,132,126 1,143,349 1,636,267
459,967 337,788 270,378 174,358 (28,008) 548,842
305,146 155,477 269,762 207,391 265,953 242,627
635,781 732,816 731,763 871,798 885,323 3,411,579
34,863,740 36,044,389 34,333,423 37,394,625 39,435,865 46,585,227
4,850,726 4,687,662 4,493,368 4,572,777 4,774,775 5,690,230
8,835,563 9,337,884 9,755,251 9,844,232 10,113,958 10,305,450
3,906,485 3,593,862 3,019,293 3,245,103 3,766,665 3,805,470
2,881,402 3,038,433 3,047,906 3,050,782 3,206,004 3,330,488
7,140,715 4,611,659 10,345,908 12,413,360 12,523,103 21,420,875
6,436,971 7,337,338 7,689,182 7,642,027 5,825,000 5,995,000
4,157,176 3,945,265 3,633,285 3,358,324 3,948,740 3,700,590
126,570 61,222 78,143 173,072 26,351 176,789
38,335,608 36,613,325 42,062,336 44,299,677 44,184,596 54,424,892
(3,471,868) (568,936) (7,728,913) (6,905,052) (4,748,731) (7,839,665)
5,156,485 5,740,982 5,324,043 6,699,447 7,094,079 3,489,225
(4,386,727) (5,046,945) (2,524,276) (2,839,332) (4,857,921) (1,644,624)
10,125,000 2,680,000 4,265,000 29,255,000 4,685,000 21,180,000
- (7,955,000) - (1,830,000) - (10,035,000)
116,016 99,322 - 1,957,050 78,287 1,981,519
- - - - - -
365,196 540,067 - 200,000 825,000 -
11,375,970 (3,941,574) 7,064,767 33,442,165 7,824,445 14,971,120
7,904,102$ (4,510,510)$ (664,146)$ 26,537,113$ 3,075,714$ 7,131,455$
30.7%32.9%31.6%32.2%28.6%25.3%
131
CITY OF LAKEVILLE, MINNESOTA
Tax Capacity Valuation and Assessor's Taxable Market Value of Taxable Property
Last Ten Fiscal Years
Fiscal Year 2005 2006 2007 2008
Taxable Net Tax Capacity Valuation of Taxable Property
Tax capacity value 48,211,759$ 55,521,140$ 62,477,351$ 66,208,936$
Less:
Captured tax increment tax capacity (1,821,312) (1,935,093) (2,129,445) (2,173,426)
Contributions to fiscal disparities pool (2,848,021) (3,429,966) (3,848,084) (4,416,898)
Plus:
Distribution from fiscal disparities pool 4,416,475 4,707,601 5,329,560 5,967,401
Total taxable net tax capacity 47,958,901$ 54,863,682$ 61,829,382$ 65,586,013$
Taxable Net Tax Capacity Valuation by Class of Property
Homestead residential 37,990,902$ 44,087,330$ 49,458,056$ 52,038,379$
Commercial/industrial, public utility,
and personal property 8,512,830 9,178,530 10,660,273 11,801,273
Non-homestead residential/apartments 913,735 939,412 1,008,576 1,000,649
Agriculture and seasonal/recreational 541,434 658,410 702,477 745,712
Total taxable net tax capacity 47,958,901$ 54,863,682$ 61,829,382$ 65,586,013$
Assessor’s taxable market valuation 4,361,601,400$ 5,034,819,600$ 5,642,591,100$ 5,951,319,600$
Taxable net tax capacity as a percentage of
assessor's taxable market value 1.100%1.090%1.096%1.102%
Direct tax capacity rate 31.326%31.610%31.583%34.195%
Notes:
Taxes are determined by multiplying the taxable net tax capacity by the direct tax capacity rate as expressed
as a percentage.
The foregoing direct tax capacity rates do not reflect reductions for state property tax credits.
Source: Dakota County Auditor and Treasurer’s Office.
132
2009 2010 2011 2012 2013 2014
67,887,456$ 65,235,789$ 61,005,594$ 57,583,990$ 54,853,225$ 57,174,306$
(2,127,819) (1,998,923) (904,389) (862,243) (863,946) (861,019)
(4,888,029) (5,623,626) (5,845,456) (5,591,597) (5,494,207) (5,439,491)
7,115,384 7,429,875 7,807,412 7,194,884 6,825,229 6,316,073
67,986,992$ 65,043,115$ 62,063,161$ 58,325,034$ 55,320,301$ 57,189,869$
51,916,328$ 48,558,421$ 44,951,025$ 41,780,807$ 38,983,401$ 41,029,548$
14,325,341 14,626,593 15,226,802 14,711,893 14,351,101 13,833,973
1,082,546 1,127,962 1,271,776 1,265,526 1,311,388 1,468,225
662,777 730,139 613,558 566,808 674,411 858,123
67,986,992$ 65,043,115$ 62,063,161$ 58,325,034$ 55,320,301$ 57,189,869$
6,024,665,500$ 5,736,602,200$ 5,356,855,900$ 5,030,003,164$ 4,767,475,321$ 4,995,818,217$
1.128%1.134%1.159%1.160%1.160%1.145%
33.973%36.624%38.250%39.051%41.234%40.696%
134
CITY OF LAKEVILLE, MINNESOTA
Property Tax Rates - Direct and Overlapping Governments
Last Ten Fiscal Years
Operating Debt Service Total Debt Service
2005 25.475% 5.851% 31.326% 0.00616% 28.267% 0.00666% 192 36.540% 0.04078% 3.752% 99.885% 0.05360%
194 25.411% 0.17349% 88.756% 0.18631%
196 22.065% 0.10862% 85.410% 0.12144%
2006 25.043% 6.567% 31.610% 0.00830% 26.318% 0.00592% 192 43.708% 0.05599% 3.780% 105.416% 0.07021%
194 25.670% 0.17079% 87.378% 0.18501%
196 27.554% 0.22437% 89.262% 0.23859%
2007 23.319% 8.264% 31.583% 0.00743% 25.127% 0.00516% 192 44.190% 0.05679% 3.771% 104.671% 0.06938%
194 25.252% 0.16868% 85.733% 0.18127%
196 23.607% 0.20824% 84.088% 0.22083%
2008 25.616% 8.579% 34.195% 0.00714% 25.184% 0.00471% 192 45.831% 0.13781% 3.749% 108.959% 0.14966%
194 26.272% 0.17167% 89.400% 0.18352%
196 21.136% 0.21274% 84.264% 0.22459%
2009 25.450% 8.523% 33.973% 0.00696% 25.821% 0.00471% 192 49.238% 0.13660% 4.301% 113.333% 0.14827%
194 27.062% 0.17413% 91.157% 0.18580%
196 21.109% 0.21032% 85.204% 0.22199%
2010 28.066% 8.558% 36.624% 0.00738% 27.269% 0.00501% 192 53.452% 0.14742% 4.987% 122.332% 0.15981%
194 27.714% 0.18363% 96.594% 0.19602%
196 25.391% 0.22268% 94.271% 0.23507%
2011 30.904% 7.346% 38.250% 0.00803% 29.149% 0.00537% 192 52.157% 0.14558% 5.199% 124.755% 0.15898%
194 32.138% 0.19241% 104.736% 0.20581%
196 26.959% 0.22601% 99.557% 0.23941%
2012 31.122% 7.929% 39.051% 0.00784% 31.426% 0.00551% 192 55.308% 0.14005% 5.562% 131.347% 0.15340%
194 32.061% 0.18932% 108.100% 0.20267%
196 28.440% 0.22131% 104.479% 0.23466%
2013 32.206% 9.028% 41.234% 0.00843% 33.421% - 192 57.226% 0.15065% 5.884% 137.765% 0.15908%
194 33.535% 0.19955% 114.074% 0.20798%
196 27.956% 0.23542% 108.495% 0.24385%
2014 32.045% 8.651% 40.696% 0.00678% 31.827% - 192 56.326% 0.11117% 5.538% 134.387% 0.11795%
194 33.048% 0.25954% 111.109% 0.26632%
196 27.606% 0.25809% 105.667% 0.26487%
Notes:
Taxes are determined by multiplying the taxable net tax capacity by the tax capacity rate and market valued based rate expressed as
a percentage. The foregoing tax capacity rates do not reflect reductions for state property tax credits.
Special Districts include: Metropolitan Mosquito Control, Metropolitan Council, Metropolitan Transit District, Dakota County
Community Development Agency, Light Rail Authority, and Vermillion River Watershed District.
Source: Dakota County Auditor and Treasurer’s Office.
Overlapping Rates
City of Lakeville Total Direct and
Direct Rates Dakota County School District Overlapping Rates
Special
Districts
Levy (Tax
Capacity-
based)
Tax
Capacity -
based
Market
Value-
based
General Levy (Tax Capacity-based)
Fiscal
Year
Referendum
Levy (Market
Value-based)
General Levy
(Tax Capacity-
based)
Referendum
Levy (Market
Value-based)
General Levy
(Tax
Capacity-
based)
Referendum
Levy (Market
Value-based)Ind.
School
District
134
CITY OF LAKEVILLE, MINNESOTA
Principal Property Taxpayers
Fiscal Years Ended December 31, 2014 and December 31, 2005
Percentage Percentage
Taxable of Taxable Taxable of Taxable
Tax Tax Tax Tax
Capacity Capacity Capacity Capacity
Principal Property Taxpayer Type of Business Value Rank Value Value Rank Value
Lakeville 2004, LLC Commercial 331,302$ 1 0.6% 219,870$ 3 0.5%
Heritage Commons, LLC Retail 319,220 2 0.6%
Dakota Electric Association Utility 268,116 3 0.5% 271,868 1 0.6%
Target Corporation Retail 256,414 4 0.4% 260,182 2 0.5%
Argonne Investments, LLC Retail 254,243 5 0.4%
Walker Highview Hills, LLC Senior Housing 246,873 6 0.4%
LTF Real Estate Company, Inc. Real estate 238,810 7 0.4%
Minnegasco, Inc. Utility 215,522 8 0.4% 159,015 7 0.3%
FR/CAL Interstate South, LLC Industrial 230,222 9 0.4%
Xcel Energy Utility 215,522 10 0.4% 156,312 8 0.3%
Southfork Apts. Ltd. Partnership Apartments 192,938 4 0.4%
CRW Lakeville, LLC Retail 181,598 5 0.4%
Wausau Supply Company Lumber supply distributor 159,330 6 0.3%
Muller Family Theatres of Lakeville Commercial 155,800 9 0.3%
Mills Property, Inc. Retail - - 140,176 10 0.3%
Total principal taxpayers 2,576,244 4.5% 1,897,089 3.9%
All other taxpayers 54,598,062 95.5%46,314,670 96.1%
Total City of Lakeville taxpayers 57,174,306$ 100.0%48,211,759$ 100.0%
Source: Dakota County Auditor and Treasurer’s Office.
2014 2005
135
CITY OF LAKEVILLE, MINNESOTA
Property Tax Levy and Collections
Last Ten Fiscal Years
Percentage
of Total
Total Tax Collection Collections
Fiscal Levy for of Prior Total To Tax Levy
Year Fiscal Year (2)Amount (3)Percent Year Levy (4)Collections Certified
2005 (1) 15,232,317$ 14,460,888$ 94.94% 98,266$ 14,559,154$ 95.58%
2006 (1) 17,741,065 16,943,054 95.50% 162,281 17,105,335 96.42%
2007 19,943,578 19,652,615 98.54% 290,963 19,943,578 100.00%
2008 (1) 22,690,614 22,023,558 97.06% 408,068 22,431,626 98.86%
2009 (1) 23,527,163 22,473,650 95.52% 405,882 22,879,532 97.25%
2010 (1) 24,041,653 22,982,110 95.59% 258,612 23,240,722 96.67%
2011 (1) 24,036,652 22,837,484 95.01% 355,278 23,192,762 96.49%
2012 23,126,960 23,050,840 99.67% 18,996 23,069,836 99.75%
2013 23,079,185 22,848,820 99.00% 230,365 23,079,185 100.00%
2014 23,657,996 23,541,510 99.51% - 23,541,510 99.51%
Notes (1) The State of Minnesota unalloted state aid for property tax relief -
Market Value Homestead Credit (MVHC) in the fiscal years as follows:
As a
MVHC Percentage
Loss of Tax Levy
Fiscal Year Amount Certified
2005 607,574$ 3.99%
2006 632,238$ 3.56%
2007 -$ -
2008 305,479$ 1.35%
2009 630,561$ 2.68%
2010 731,494$ 3.04%
2011 835,005$ 3.47%
2012 -$ -
2013 -$ -
2014 -$ -
(2) Total levy is net of current year cancellations and abatements.
(3) Total tax levy and current tax collections include state paid credits.
(4) Includes county adjustments for prior year over collections, cancellations, and abatements.
Collection of Current
Year's Levy
136
CITY OF LAKEVILLE, MINNESOTA
Ratio of Outstanding Debt by Type
Last Ten Fiscal years
Business-type Total
General Metropolitan Activity Total Outstanding
Fiscal Obligation Other Capital Council Revenue Outstanding Population Debt
Year Bonds Bonds Leases Loan Bond Debt (1)Per Capita
2005 87,740,266$ 3,355,000$ 210,142$ -$ 720,000$ 92,025,408$ 51,472 4.2 %1,788$
2006 72,557,465 12,493,799 183,697 1,466,300 590,000 87,291,261 52,323 3.8 1,668
2007 93,176,053 12,346,854 152,037 1,466,300 4,439,260 111,580,504 53,829 4.5 2,073
2008 87,305,937 12,144,909 119,061 1,466,300 4,292,727 105,328,934 54,828 4.1 1,921
2009 91,331,837 11,847,964 112,090 1,466,300 4,011,194 108,769,385 55,772 4.4 1,950
2010 79,746,332 10,821,019 104,752 1,466,300 3,714,661 95,853,064 55,954 3.8 1,713
2011 76,815,712 10,539,074 97,027 1,159,843 3,568,128 92,179,784 56,534 3.5 1,631
2012 100,480,497 8,572,129 - 1,159,843 3,416,595 113,629,064 57,048 4.0 1,992
2013 99,408,395 8,360,184 - 1,159,843 3,255,062 112,183,484 57,789 3.8 1,941
2014 106,516,778 8,133,239 - 1,159,843 3,088,529 118,898,389 58,727 N/A 2,025
Source:
(1) Metropolitan Council as of April 1 (except for 2010 Federal Census, 2014 estimates by the City).
(2) See Demographic and Economic Statistics page.
N/A - Not available.
Governmental Activities
Income (2)
Personal
% of
137
CITY OF LAKEVILLE, MINNESOTA
Ratio of Net Bonded Debt Outstanding
Last Ten Fiscal Years
Percentage Net
Gross Debt Payable Debt Service Net Taxable of Net Bonded Bonded
Fiscal Bonded From Other Monies Bonded Net Tax Debt to Taxable (3)Debt
Year Debt Sources (1)Available (2)Debt Capacity Net Tax Capacity Population Per Capita
2005 87,740,266$ 47,625,000$ 4,649,080$ 35,466,186$ 47,958,901$ 73.95% 51,472 689$
2006 72,557,465 34,855,000 4,894,911 32,807,554 54,863,682 59.80% 52,323 627
2007 93,176,053 42,870,000 5,171,284 45,134,769 61,829,382 73.00% 53,829 838
2008 87,305,937 38,030,000 5,925,387 43,350,550 65,586,013 66.10% 54,828 791
2009 91,331,837 39,015,000 6,941,902 45,374,935 67,986,667 66.74% 55,772 814
2010 79,746,332 29,460,000 6,527,316 43,759,016 65,043,115 67.28% 55,954 782
2011 76,815,712 28,305,000 5,663,237 42,847,475 62,063,161 69.04% 56,534 758
2012 100,480,497 29,550,000 29,084,558 41,845,939 58,325,034 71.75% 57,048 734
2013 99,408,395 30,710,000 28,416,302 40,282,093 55,320,301 72.82% 57,789 697
2014 106,516,778 35,640,000 34,767,965 36,108,813 57,189,869 63.14% 58,727 615
Source:
(1) G.O. Improvement bonds, tax increment bonds, State-aid street revenue bonds, water connection revenue bonds,
arena revenue bonds, HRA public facility lease revenue bonds, and liquor revenue bonds.
(2) Debt service monies available include amounts restricted in the debt service funds repaying the related debt. We believe
this is the most accurate and consistent representation of the resources restricted for debt service when crossover
refunding bonds are being held in escrow, as those resources are not included in the governmental activities net position
restricted for debt service due to conversion for full accrual accounting.
(3) Metropolitan Council as of April 1, except for 2010 (Federal Census).
138
CITY OF LAKEVILLE, MINNESOTA
Direct and Overlapping Governmental Debt
As of December 31, 2014
Debt Applicable to Taxable
Debt Net Tax Capacity in the City
Governmental Unit Outstanding (2)Percentage (2)Amount
Overlapping Debt (1)
Independent School District #194 155,085,000$ 87.80% 136,164,630$
Independent School District #192 194,835,000 18.80% 36,628,980
Independent School District #196 96,477,253 5.50% 5,306,249
Dakota County 40,890,000 12.70% 5,193,030
Special District
Metropolitan Council 391,050,000 2.08%8,127,890
191,420,779
Direct Debt
City of Lakeville bonded debt 106,516,778 100.00%106,516,778
297,937,557$
Source: Debt figures and applicable percentages for other than the City of Lakeville are provided by the
City’s fiscal consultant Springsted.
Notes:
(1) Overlapping governments are those that coincide, at least in part, with the geographical
boundaries of the City. This schedule estimates the portion of the outstanding debt of those
overlapping governments that is borne by the residents and businesses of the City.
This process recognizes that, when considering the government’s ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken
into account. However, this does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt, of each overlapping government.
(2) The percentage of overlapping debt applicable is estimated using taxable property market
values. Applicable percentages were estimated by determining the portion of the county’s
taxable market value that is within the City’s boundaries and dividing it by the county’s total
taxable market value.
Total overlapping debt
Total direct and overlapping debt
139
CITY OF LAKEVILLE, MINNESOTA
Legal Debt Margin
Last Ten Fiscal Years
Net Bonded
Assessor’s Net Bonded Debt Applicable
Taxable Debt Legal to Debt Limit as
Fiscal Market Legal Applicable to Debt a Percentage of
Year Valuation Debt Limit Debt Limit Margin Legal Debt Limit
2005 4,361,601,400$ 87,232,028$ 39,070,920$ 48,161,108$ 44.79%
2006 5,034,819,600 100,696,392 45,395,089 55,301,303 45.08%
2007 5,642,591,100 112,851,822 60,848,716 52,003,106 53.92%
2008 5,951,319,600 178,539,588 58,799,613 119,739,975 32.93%
2009 6,024,665,500 180,739,965 60,213,098 120,526,867 33.31%
2010 5,736,602,200 172,098,066 57,282,684 114,815,382 33.28%
2011 5,356,855,900 160,705,677 56,046,763 104,658,914 34.88%
2012 5,030,003,164 150,900,095 39,180,442 111,719,653 25.96%
2013 4,767,475,321 143,024,260 37,758,698 105,265,562 26.40%
2014 4,995,818,217 149,874,547 34,767,965 115,106,582 23.20%
Legal Debt Margin Calculation:Fiscal Year 2014
Assessor’s taxable market valuation 4,995,818,217$
Legal debt limit:
3% of Assessor’s taxable market valuation 149,874,547$
Amount of debt applicable to legal debt limit:
Gross bonded debt 102,260,000$
Less debt payable from sources other than taxes:
G.O. Improvement bonds 23,905,000$
Tax increment bonds 1,890,000
State-aid street revenue bonds 3,890,000
Water connection revenue bonds 1,975,000
Arena revenue bonds 910,000
Liquor revenue bonds 3,070,000 (35,640,000)
Debt payable from taxes 66,620,000
Less debt service monies available to pay
principal and interest (31,852,035)
Net bonded debt applicable to debt limit 34,767,965 34,767,965
Legal debt margin 115,106,582$
Note: Minnesota Statutes § 475.53, Subdivision 1, No municipality, except a school district or a city of the first
class, shall incur or be subject to a net debt in excess of two percent of the taxable market value of
taxable property in the municipality for years 2007 and prior; three percent for years beginning in 2008.
Source: Dakota County Auditor and Treasurer’s Office.
140
CITY OF LAKEVILLE, MINNESOTA
Pledged Revenue Coverage
Last Ten Fiscal Years
Net Revenue
Available
Fiscal Gross (1)Operating For Debt Times
Year Revenues Expenses Service Principal Interest Total Coverage
2005 9,048,259$ 3,587,604$ 5,460,655$ 1,095,000$ 848,550$ 1,943,550$ 2.81
2006 8,094,630 4,113,336 3,981,294 1,150,000 920,015 2,070,015 1.92
2007 8,731,414 3,945,627 4,785,787 1,335,000 1,011,204 2,346,204 2.04
2008 9,615,243 4,094,080 5,521,163 1,400,000 1,161,886 2,561,886 2.16
2009 8,507,945 4,485,946 4,021,999 1,575,000 1,066,238 2,641,238 1.52
2010 7,380,163 4,749,304 2,630,859 1,685,000 998,751 2,683,751 0.98
2011 8,146,497 4,307,467 3,839,030 1,635,000 937,952 2,572,952 1.49
2012 9,608,620 4,296,022 5,312,598 3,115,000 832,499 3,947,499 1.35
2013 9,425,862 4,549,736 4,876,126 1,395,000 731,755 2,126,755 2.29
2014 9,181,527 4,942,276 4,239,251 1,415,000 674,644 2,089,644 2.03
Notes:
(1) The primary revenue source for debt service includes water system connection charges,
water system user fees, ice arena net operating revenue and contributions from one
organization conducting lawful gambling at approved locations, and liquor fund gross profits.
(2) Revenue bonds include water connection revenue, arena revenue, and liquor revenue.
Requirements (2)
141
CITY OF LAKEVILLE, MINNESOTA
Demographic and Economic Statistics
Last Ten Fiscal Years
Percentage Personal Per Capita
(1)Increase from Income (2)Personal Housing units
Year Population Previous Year (in thousands)Income Single Multiple Total Valuation
2005 51,472 4.84% 2,174,229$ 42,241$ 237 428 665 131,774,000$
2006 52,323 1.65% 2,287,875 43,726 221 223 444 101,474,955
2007 53,829 2.88% 2,456,163 45,629 183 195 378 72,128,000
2008 54,828 1.86% 2,541,333 46,351 137 279 416 71,062,000
2009 55,772 1.72% 2,474,827 44,374 127 54 181 41,010,000
2010 55,954 0.33% 2,519,161 45,022 138 2 140 38,718,000
2011 56,534 1.04% 2,617,468 46,299 122 2 124 37,621,000
2012 57,048 0.91% 2,843,672 49,847 280 2 282 84,444,000
2013 57,789 1.30% 2,929,151 50,687 374 - 374 120,393,000
2014 58,727 1.62% N/A N/A 319 - 319 108,181,000
Annual percentage
increase average last
ten fiscal years 1.81%
Labor Unemployment Labor Unemployment State of United
Year Force Rate Force Rate Minnesota States
2005 28,745 3.2%231,322 4.0%4.8% 4.8%
2006 29,677 3.9%230,427 4.1%4.9% 4.5%
2007 30,492 4.3%232,670 4.6%4.7% 5.1%
2008 30,471 5.6%229,716 6.1%6.8% 7.1%
2009 30,727 6.4%231,391 6.9%7.4% 10.0%
2010 30,782 6.0%230,247 6.6%6.9% 9.4%
2011 31,237 4.8%232,257 5.2%5.7% 8.5%
*2012 31,221 4.5%231,902 4.9%5.4% 7.6%
*2013 32,879 3.6%230,160 4.0%4.6% 6.5%
*2014 32,903 2.8%230,176 3.1%3.6% 5.4%
Source:
(1) Metropolitan Council as of April 1 (except for 2010 Federal Census).
(2) U.S. Department of Commerce Bureau of Economic Analysis as of December 31, 2014.
* Not seasonally adjusted, information is not available.
(3) City of Lakeville Inspections Department.
N/A - Not available.
Building Permits Issued
Family Dwellings (3)
Labor Force and Unemployment Rate (seasonally adjusted) (2)
City of Lakeville Dakota County Rates
142
CITY OF LAKEVILLE, MINNESOTA
Principal Employers
Fiscal Years Ended December 31, 2014 and December 31, 2005
Principal Employer (1)Product/Service Employees Rank %Employees Rank %
Independent School District #194 Elementary & secondary schools 1,684 1 5.1% 1,124 1 3.9%
Hearthside Food Solutions Food service contractors 715 2 2.2% 500 3 1.7%
ConAgra Store Brands Breakfast cereal products 515 3 1.6% 545 2 1.9%
Schmitty & Sons Bus Company Transportation 400 4 1.2%
MOM Brands Cereal production 250 5 0.8%
Despatch Industries, Inc. Industrial furnace & oven mfg. 230 6 0.7% 142 9 0.5%
Menasha Corporation Corrugated & solid fiber box mfg. 221 7 0.7% 220 4 0.8%
BTD Manufacturing Metal manufacturing 210 8 0.6%
City of Lakeville (2) City government 207 9 0.6% 209 5 0.7%
National Polymers, Inc. Plastics material & resin mfg. 150 10 0.5% 132 10 0.5%
Hearth & Home Technologies, Inc. Fireplaces/metal work 170 6 0.6%
Carquest Distribution Center General warehousing & storage 155 7 0.5%
Jeff Belzer’s Chevy-Dodge-KIA New & used auto dealership 150 8 0.5%
Total principal employers 4,582 13.9% 3,347 11.5%
All other employers 28,321 86.1% 25,398 88.5%
Total City of Lakeville civilian labor force (3) 32,903 100.0% 28,745 100.0%
Source:
(1) Telephone survey of individual employers, December 2014.
(2) As of December 31, 2014 (full-time equivalent).
(3) U.S. Department of Commerce Bureau of Economic Analysis as of December 31, 2014.
2014 2005
143
CITY OF LAKEVILLE, MINNESOTA
Commercial and Industrial Building Permits Issued
Years 2014 and 2013
BUSINESS PRODUCT/SERVICE VALUATION (1)
Cosmopolitan Orthodontics Medical 1,400,000$
Super America Convenience Store 995,000
McDonalds Corp (Kenyon Avenue) Restaurant 900,000
Ballet Royale Dance Studio 724,000
Advanced Auto Parts Retail 500,000
Sheila A. Lewis, Trust Office/Warehouse/Storage 474,000
BUSINESS PRODUCT/SERVICE VALUATION (1)
MOM Brands Admin. Offices/technology center 4,758,000$
Jeff Belzer’s Chevy-Dodge-KIA New & used auto dealership 2,270,000
QA-1 Precision Products Motorsports products manufacturer 759,000
Park Dental Medical 312,000
Holiday Station Convenience Store 260,000
Notes:
(1) Valuation excludes land and personal property.
Source: City of Lakeville Inspections Department.
NEW BUILDING PERMITS 2014 AND 2013 (in excess of $250,000)
EXPANSION OR REMODEL BUILDING PERMITS 2014 AND 2013 (in excess of $250,000)
144
CITY OF LAKEVILLE, MINNESOTA
Employees by Function/Program (Full-Time Equivalent)
Last Ten Fiscal Years
Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
General government
City administration 3.0 3.0 3.0 3.0 2.8 2.5 2.5 2.5 2.4 2.8
Communications 4.7 4.7 4.8 4.1 3.9 4.0 4.0 4.0 4.0 4.0
City clerk 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Finance 6.0 5.6 6.6 6.6 6.5 6.4 6.0 7.0 7.0 7.0
Information systems 3.0 3.9 4.0 4.0 3.3 3.0 3.0 3.0 2.9 3.0
Human resources 2.8 2.9 3.0 3.0 2.8 2.8 2.8 2.8 2.8 2.8
Planning 5.5 5.5 5.5 4.5 3.8 3.0 3.0 3.0 2.8 3.5
Community and economic development 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.4
Protective inspection 12.0 12.0 12.0 12.4 8.7 8.0 8.0 7.0 7.0 7.0
General government buildings 2.0 2.5 3.1 3.1 3.0 3.0 3.0 3.0 3.0 3.0
Total general government 42.5 43.6 45.5 44.2 38.3 36.2 35.8 35.8 35.4 36.5
Public safety
Police officers (sworn)48.0 49.5 51.2 52.8 51.0 51.5 51.9 53.0 50.2 54.0
Police dispatchers 10.0 10.0 - - - - - - - -
Police administration 11.4 11.4 12.9 12.4 11.1 10.8 11.3 12.2 11.5 11.8
Fire (excluding volunteer firefighters)3.5 4.5 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6
Total public safety 72.9 75.4 68.7 69.8 66.7 66.9 67.8 69.8 66.3 70.4
Public works
Engineering 13.0 14.0 14.0 12.3 9.3 9.0 6.8 7.0 6.0 6.0
Operations and maintenance - - - - - - - - - 2.0
Street maintenance 17.6 18.5 19.8 20.0 19.4 19.0 19.0 19.3 19.3 21.0
Total public works 30.6 32.5 33.8 32.3 28.7 28.0 25.8 26.3 25.3 29.0
Parks and recreation
Park maintenance 14.8 15.0 15.0 15.0 14.5 15.0 15.0 15.0 15.0 15.0
Recreation 4.7 4.7 5.3 5.3 4.9 4.7 4.7 4.7 4.7 4.7
Arts center 3.0 3.0 3.2 3.6 3.7 3.7 3.7 3.7 3.7 3.7
Total parks and recreation 22.5 22.7 23.5 23.9 23.1 23.4 23.4 23.4 23.4 23.4
Total governmental activities 168.5 174.2 171.5 170.2 156.8 154.5 152.8 155.3 150.4 159.3
Liquor 24.8 25.9 26.4 25.9 25.7 25.7 25.8 25.7 24.9 26.3
Utility 15.5 16.5 17.5 18.0 18.0 18.0 20.0 20.0 20.0 21.0
Total business-type activities 40.3 42.4 43.9 43.9 43.7 43.7 45.8 45.7 44.9 47.3
Total employees 208.8 216.6 215.4 214.1 200.5 198.2 198.6 201.0 195.3 206.6
Source: City of Lakeville Human Resources Department.
145
CITY OF LAKEVILLE, MINNESOTA
Operating Indicators by Function
Last Ten Fiscal Years
Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
General government
Number of registered voters N/A 30,072 N/A 31,024 N/A 32,617 N/A 32,200 N/A 36,571
Number of final plats approved 34 21 18 10 8 10 12 14 15 16
Number of building permits issued 2,179 3,970 3,487 1,878 1,428 1,421 1,467 2,349 1,647 3,852
Valuation of building permits
issued (in millions)187$ 165$ 126$ 111$ 62$ 49$ 77$ 119$ 142$ 139$
Public safety
Crimes against person reported 194 141 155 158 151 151 142 133 141 166
Crimes against property reported 1,376 1,165 1,477 1,424 1,245 1,259 1,161 1,186 1,057 1,187
Traffic citations issued 5,935 6,348 6,773 6,229 6,499 5,497 5,241 4,400 3,370 3,803
Number of volunteer firefighters 88 80 80 90 78 74 83 77 79 80
Number of annual fire calls 1,048 1,078 1,149 1,230 1,343 1,189 1,262 1,208 1,062 1,103
Public works
City street miles added 10.8 3.9 7.2 2.5 1.0 0.4 1.0 1.4 2.6 2.8
Parks and recreation
Park acres mowed 409 421 421 427 427 427 429 429 430 430
Park facility reservations taken 312 400 432 479 559 661 655 717 888 958
Program activity registrations taken 5,396 6,749 6,836 7,994 8,201 8,369 9,051 9,850 9,310 9,627
Liquor
Annual sales (in millions)11.5$ 12.1$ 13.0$ 14.4$ 14.6$ 14.7$ 14.4$ 15.2$ 15.4$ 14.9$
Utility (in millions of gallons)
Water (average daily consumption)5.6 6.0 6.5 6.3 6.1 4.8 5.7 6.7 5.9 5.5
Sanitary sewer (1)4.1 3.9 3.9 4.0 3.3 3.3 3.3 3.4 3.4 3.4
(average daily treatment)
Notes:
(1) Sewage is treated by the Metropolitan Council Environmental Services
N/A Indicates information is not available for this period at the printing of this report
Source: Various City of Lakeville Departments.
146
CITY OF LAKEVILLE, MINNESOTA
Capital Assets Statistics by Function
Last Ten Fiscal Years
Function (1)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Public safety
Police stations 1 1 1 1 1 1 1 1 1 1
Fire stations 4 4 4 4 4 4 4 4 4 4
Public works
City streets (miles)244.0 247.9 255.1 257.6 258.6 259.0 260.0 261.4 264.0 266.8
Parks and recreation
Acres of parks, conservation areas,
and greenways 1,325 1,610 1,610 1,623 1,636 1,663 1,671 1,712 1,776 1,776
Parks 53 53 55 56 59 59 59 59 59 59
Conservation areas 18 18 18 18 18 18 18 20 20 20
Trails and sidewalks - paved (miles)83 86 88 91 91 91 100 100 103 103
Ice rinks - outdoor (fully boarded)11 12 12 12 12 12 12 12 12 12
Ice rinks - indoor 2233333333
Fields (softball, soccer, baseball,
football, Lacrosse)125 125 135 136 136 136 150 150 150 150
Courts (basketball, volleyball, tennis)27 27 36 39 39 39 38 38 38 38
Playgrounds 36 38 38 39 39 40 40 40 40 40
Swimming beaches 3333333333
Liquor
Number of on-sale stores owned 2222222222
Number of on-sale stores leased 1111111111
Utility
Water
Water mains (miles)290 297 304 310 311 311 313 313 321 321
Fire hydrants 3,031 3,128 3,313 3,374 3,386 3,386 3,434 3,434 3,572 3,572
Wells 15 15 16 16 17 17 17 17 17 17
Water Towers 4 5 5 5 5 5 5 5 5 5
Sanitary sewer
Sanitary sewer mains (miles)230 238 253 255 256 259 261 261 261 261
Sanitary sewer lift stations 21 20 20 20 20 19 19 19 20 20
Notes:
(1) Indicators for general government functions are not available.
Source: Various City of Lakeville Departments.
147
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Management Report
for
City of Lakeville, Minnesota
December 31, 2014
THIS PAGE INTENTIONALLY LEFT BLANK
To the City Council and Management
City of Lakeville, Minnesota
We have prepared this management report in conjunction with our audit of the City of Lakeville,
Minnesota’s (the City) financial statements for the year ended December 31, 2014. The purpose of this
report is to provide comments resulting from our audit process and to communicate information relevant
to city finances in Minnesota. 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 9, 2015
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, 2014, and the related notes to the financial statements. 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, 2014:
We have issued an unmodified opinion on the City’s basic financial statements.
We reported no deficiencies in the City’s internal control over financial reporting that we
considered to be material weaknesses.
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.
Overall, we found the City’s financial records to be in excellent condition. This not only provides for an
efficient year-end audit, but should also provide confidence in the interim financial data used to manage
the City throughout the 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
fiscal year ended December 31, 2014.
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 the
proper period.
-2-
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.
Net Other Post-Employment Benefit (OPEB) Liabilities – Actuarial estimates of the net OPEB
obligation is based on eligible participants, estimated future health insurance premiums, and
estimated retirement dates.
Compensated Absences – Management’s estimate is based on current rates of pay and sick leave
balances estimated to be paid out as future severance pay.
We evaluated the key factors and assumptions used to develop these accounting estimates in determining
that they are reasonable in relation to the 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. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management, when applicable,
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, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor’s report. We are pleased to report that no such
disagreements arose during the course of our audit.
MANAGEMENT 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.
-3-
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated June 9, 2015.
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 Management’s Discussion and Analysis, the budgetary
comparison schedule for the General Fund, and the Schedule of Funding Progress for the Other
Post-Employment Benefits Plan, which are required supplementary information (RSI) that supplement the
basic financial statements. Our procedures consisted of inquiries of management regarding the methods of
preparing the information and comparing the information for consistency with management’s responses to
our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We did not audit the RSI and do not express an opinion or provide any
assurance on the RSI.
We were engaged to report on the combining and individual fund statements and schedules, and the
supplemental information accompanying the financial statements which are not RSI. With respect to the
combining and individual fund statements and schedules, and supplemental 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 he combining and individual fund statements and schedules, and the supplemental 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. We did not audit or perform other procedures on this other information and
we do not express an opinion or provide any assurance on it.
-4-
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 2013 fiscal year, local property tax levies provided 41.1 percent of the total governmental fund
revenues for cities over 2,500 in population, and 35.5 percent for cities under 2,500 in population.
Property tax levies certified by Minnesota cities for 2014 increased about 1.6 percent over 2013,
compared to an increase of 2.3 percent the prior year. This moderate increase was due in part to a
one-year levy limit for 2014 imposed on cities over 2,500 in population.
The total market value of Minnesota cities increased about 1.1 percent for the 2014 levy year, ending a
four-year trend of declining market values that began in 2010 and peaked with a state-wide decline of
about 8.8 percent for levy year 2012. Market values showed modest increases in all property categories
for 2014, with the largest gains in agricultural and non-homestead residential properties. Because the
assessed valuation used for levying property taxes is based on values from the previous fiscal year (e.g.
the market value for taxes payable in 2014 is based on estimated values as of January 1, 2013), market
value improvement has lagged behind recent upturns in the housing market and the economy in general.
The City’s taxable market value decreased 5.2 percent for taxes payable in 2013 and increased 4.8 percent
for taxes payable in 2014. 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
$7,000,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Taxable Market Value
-5-
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 the City’s 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 decreased 4.7 percent and increased 4.2 percent
for taxes payable in 2013 and 2014, 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
$70,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Local Net Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last two levy
years, along with comparative state-wide and metro area rates.
Rates expressed as a percentage of net tax capacity
2013 2014 2013 2014 2013 2014
Average tax rate
City 48.8 48.8 46.1 46.0 41.2 40.7
County 48.5 47.6 47.1 46.6 33.4 31.8
School 28.5 28.9 30.3 30.9 34.9 34.3
Special taxing 7.2 7.3 9.4 9.5 5.8 5.4
Total 133.0 132.6 132.9 133.0 115.3 112.3
Lakeville
City of
Metro Area
Seven-CountyAll Cities
State-Wide
Both the total tax rate applied to Lakeville taxpayers and the City’s tax rate have been well below both the
state-wide and metro averages in recent years. The City’s tax rate for 2014 was lower than the previous
year, despite a 2.5 percent increase in the City’s tax levy, due to the improvement in tax capacity as
discussed above.
The school tax rate for the City represents an average of Independent School District (ISD) No. 192,
Farmington; ISD No. 194, Lakeville; and ISD No. 196, Rosemount – Apple Valley – Eagan.
-6-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2014, presented both by fund balance classification and by fund:
Increase
2014 2013 (Decrease)
Fund balances of governmental funds
Total by classification
Nonspendable 221,873$ 126,014$ 95,859$
Restricted 44,319,872 38,716,666 5,603,206
Committed 17,199,096 16,665,820 533,276
Unassigned 10,173,030 9,273,916 899,114
Total governmental funds 71,913,871$ 64,782,416$ 7,131,455$
Total by fund
General 11,071,769$ 9,666,560$ 1,405,209$
General Obligation Debt Service 30,781,452 27,371,659 3,409,793
G.O. Improvement Debt Service 4,303,472 2,967,285 1,336,187
Building Capital Projects 1,375,010 1,516,976 (141,966)
Improvement Construction Capital Projects 1,077,791 1,020,713 57,078
Nonmajor funds 23,304,377 22,239,223 1,065,154
Total governmental funds 71,913,871$ 64,782,416$ 7,131,455$
Governmental Funds Change in Fund Balance
Fund Balance
as of December 31,
In total, the fund balances of the City’s governmental funds increased $7,131,455 during the year ended
December 31, 2014.
The majority of the increase was in restricted fund balances, which were $5.6 million higher than at the
prior year-end. Fund balances restricted for debt service increased a total of $6.9 million, with increases
in the General Obligation Debt Service Fund ($3.4 million) due to the issuance of crossover refunding
bonds; in the G.O. Improvement Debt Service Fund ($1.3 million) due mainly to special assessment
prepayments; and in the nonmajor debt service funds ($2.2 million) due to the repayment of an interest
rate reduction loan by a local business.
The increase in committed fund balances is primarily from utility connection charges in the nonmajor
utility (water, sanitary sewer, and storm sewer) capital projects funds.
The increase in unassigned fund balances is primarily due to the positive operating results in the General
Fund.
-7-
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past three
years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as
the City’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year-to-year due to the effect of inflation and
changes in the City’s operation. Also, certain data on these tables may be classified differently than how
they appear on the City’s financial statements in order to be more comparable to the state-wide
information, particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of your city. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the Management’s Discussion and
Analysis. An inherent difficulty in presenting per capita information is the accuracy of the population
count, which for most years is based on estimates.
Year 2012 2013 2014
Population 20,000–100,000 57,048 57,789 58,727
Property taxes 423$ 414$ 400$ 404$
Tax increments 40 15 15 14
Franchise and other taxes 34 10 11 12
Special assessments 72 20 20 28
Licenses and permits 38 32 36 37
Intergovernmental revenues 148 40 61 85
Charges for services 91 102 120 143
Other 30 22 19 72
Total revenue 876$ 655$ 682$ 795$
December 31, 2013
City of LakevilleState-Wide
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
The City’s governmental funds have typically generated less revenue per capita in total than other
Minnesota cities in its population class.
The City’s governmental funds received total revenues of $46.6 million in 2014, about $7.1 million
(18.1 percent) more than the prior year. On a per capita basis, governmental fund revenue for 2014 was
$113 higher than the prior year. Intergovernmental revenue increased $24, mainly due to the amount of
municipal state aid received for qualifying street improvement projects. Charges for services were $23
higher than last year, reflecting an increase in development activity and growth as evidenced by
connection and area charges, and park dedication fees. Revenue in the “other” category shown above
increased $53 per capita, mainly due to the $2.23 million interest rate reduction loan repayment discussed
earlier, and market value adjustments on the City’s investment portfolio included in investment income.
-8-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources such as taxes and intergovernmental revenues.
Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Year 2012 2013 2014
Population 20,000–100,000 57,048 57,789 58,727
Current
83$ 80$ 83$ 97$
239 173 175 175
91 57 65 65
85 53 55 57
91 – – –
589 363 378 394
Capital outlay
and construction 219 218 217 365
Debt service
102 134 101 102
39 62 69 66
141 196 170 168
Total expenditures 949$ 777$ 765$ 927$
General government
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
December 31, 2013
City of LakevilleState-Wide
Interest and fiscal
Public safety
Public works
Parks and recreation
All other
Principal
Total expenditures in the City’s governmental funds for 2014 were $54.4 million, an increase of
$10.2 million (23.2 percent) from the previous year.
The City’s current governmental operating expenditures increased $16 per capita in total, mainly in the
general government category due to an increase in economic development expenditures. Capital outlay
was $148 per capita higher than the previous year, primarily due to street improvement projects.
Scheduled debt service principal and interest costs were $2 per capita less than the prior year.
-9-
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.
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
$22,000,000
$24,000,000
2010 2011 2012 2013 2014
General Fund Financial Position
Year Ended December 31,
Fund Balance Cash Balance (Net)Expenditures
The City’s General Fund cash and investments balance at December 31, 2014 was $11,160,908, an
increase of $1,574,748. Total fund balance at December 31, 2014 was $11,071,769, which is an increase
of $1,405,209 from the prior year, and $1,004,620 higher than projected in the City’s final budget.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has grown. This is an important factor because a government, like any
organization, requires a certain amount of equity to operate. 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 is a factor in determining
the City’s bond rating and resulting interest costs. Maintaining an adequate fund balance has become
increasingly important given the fluctuations in state funding for cities in recent years.
A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are
made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street
maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Taxes
comprise about 74 percent of the fund’s total annual revenue. Approximately half of these revenues are
received by the City in July and the rest in December. Consequently, the City needs to have adequate cash
reserves to finance its everyday operations between these payments.
The City’s General Fund balance at the end of the 2014 fiscal year represents approximately 50.2 percent
of annual expenditures based on 2014 levels, compared to 45.4 percent at the end of the previous year.
-10-
The following chart reflects the City’s General Fund revenue sources for 2014 compared to budget:
$– $2 $4 $6 $8 $10 $12 $14 $16 $18
Taxes
Intergovernmental
Charges for Services
Licenses and Permits
All Other
Millions
General Fund Revenue
Budget and Actual
Budget Actual
General Fund revenue for 2014 was $22,706,688, which was $660,414 (3.0 percent) more than budget.
Intergovernmental revenue exceeded budget by $98,833 due to the City receiving more police state aid
and federal highway safety grants than anticipated. Charges for services were $326,106 over budget,
mostly due to engineering fees charged to reconstruction projects. Licenses and permits revenue was over
budget by $183,663, primarily due to the number of residential building permits issued.
The following graph presents the City’s General Fund revenues by source for the last five years. The
graph reflects the City’s reliance on property taxes and other local sources of revenue, and shows the
virtual elimination of general state aid revenue in recent years.
$–
$1,500,000
$3,000,000
$4,500,000
$6,000,000
$7,500,000
$9,000,000
$10,500,000
$12,000,000
$13,500,000
$15,000,000
$16,500,000
$18,000,000
Taxes Intergovernmental Charges for
Services
Licenses and
Permits
All Other
General Fund Revenue by Source
Year Ended December 31,
2010 2011 2012 2013 2014
Overall, General Fund revenues increased $1,532,905 (7.2 percent) from the previous year. Property tax
revenue was $880,211 more than last year due to a 5.8 percent increase in the General Fund levy.
Revenue from charges for services (up $461,372) and licenses and permits (up $71,352) were both higher
than last year due to increased development activity. Finally, revenue in the “all other” category as shown
above was $108,602 higher than last year, primarily due to a $126,385 increase in investment income
resulting from positive market value adjustments on the City’s investment portfolio in the current year.
-11-
The following graphs illustrate the components of General Fund spending for 2014 compared to budget:
$– $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11
General Government
Public Safety
Public Works
Parks and Recreation
Millions
General Fund Expenditures
Budget and Actual
Budget Actual
Total General Fund expenditures for 2014 were $22,061,293, which was $344,206 (1.5 percent) under the
final budget. General Fund expenditures were under budget in every department except public works,
which was over budget by $117,783 due to increased personnel and supply costs for street maintenance.
General government expenditures were $169,430 under budget, with the largest savings in the City’s
administration, legal counsel, community development, general government facilities, and information
systems departments. Public safety expenditures were $251,450 under budget, mainly due to unfilled
police officer positions and fewer fire calls than anticipated. Parks and recreation costs were under budget
by $41,109, mainly in park maintenance charges and services.
The following graph presents the City’s General Fund expenditures by function for the last five years:
$–
$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
General Government Public Safety Public Works Parks and Recreation
General Fund Expenditures by Function
Year Ended December 31,
2010 2011 2012 2013 2014
Total General Fund expenditures for 2014 were $748,605 (3.5 percent) higher than the previous year,
with the increase spread across all program areas. The majority of the increase was in personnel costs,
which were $659,038 higher than last year due to contractual wage increases, inflationary benefit cost
increases, and the addition of about nine full-time employees compared to the prior year.
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ENTERPRISE FUNDS OVERVIEW
The City maintains two enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which include the (water,
sewer, street light, and environmental resources) Utility Fund and Liquor Fund.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the years ended December 31, 2014 and 2013, presented both by classification and by fund:
Increase
2014 2013 (Decrease)
Net position of enterprise funds
Total by classification
Net investment in capital assets 109,535,106$ 105,055,746$ 4,479,360$
Restricted for debt service 324,125 324,125 –
Unrestricted 11,117,868 13,512,669 (2,394,801)
Total enterprise funds 120,977,099$ 118,892,540$ 2,084,559$
Total by fund
Liquor 5,521,329$ 5,532,658$ (11,329)$
Utility 115,455,770 113,359,882 2,095,888
Total enterprise funds 120,977,099$ 118,892,540$ 2,084,559$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
In total, the net position of the City’s enterprise funds increased by $2,084,559 during the year ended
December 31, 2014. The Liquor Fund net position decreased by $11,329 due mostly to transfers of almost
$1.4 million to governmental funds to provide funding for debt service requirements, various capital
projects, and general overhead costs. The increases in both the net investment in capital assets and the net
position of the Utility Enterprise Fund were primarily due to capital infrastructure contributions of
$4.3 million received from developers.
-13-
LIQUOR FUND
The following graphs present five years of operating results for the Liquor Fund:
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
2010 2011 2012 2013 2014
Liquor Fund – Revenues, Expenses, and Income
Year Ended December 31,
Sales Cost of Sales Operating Expenses Operating Income
The Liquor Fund ended 2014 with a net position of $5,521,329, a decrease of $11,329 from the prior year.
Of this, $3,186,524 represents the net investment in capital assets and $324,125 is restricted in accordance
with revenue bond covenants, leaving $2,010,680 of unrestricted net position.
Gross liquor sales for 2014 were $14,883,858, a $497,266 (3.2 percent) decrease from last year. The
Liquor Fund generated a gross profit of $3,804,942 in 2014, or about 25.6 percent, of gross sales.
Operating expenses for 2014 were $2,347,079, an increase of $66,180 (2.9 percent) from last year,
primarily in increased personnel costs and other charges. Net operating income for 2014 was $1,457,863,
about 9.8 percent, of gross sales. The Liquor Fund also made transfers out of $1,369,063 to support the
General Fund, for debt service, and for various capital needs.
24.5% 24.7% 25.2% 25.7% 25.6%
9.3% 9.4% 10.7% 10.8% 9.8%
–
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014
Liquor Fund – Operating Ratios
Year Ended December 31,
Gross Profit as a Percentage of Sales
Operating Income as a Percentage of Sales
-14-
UTILITY FUND
The following graph presents five years of comparative operating results for the City’s (water, sewer,
street light, and environmental resources) Utility Fund:
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2010 2011 2012 2013 2014
Utility Fund
Year Ended December 31,
Operating Expense
Depreciation
Operating Revenue
Income Before Depreciation
The Utility Fund ended 2014 with net position of $115,455,770, an increase of $2,095,888 from prior
year operations. Of the net position balance, $106,348,582 represents the City’s net investment in utility
capital assets, leaving $9,107,188 of unrestricted net position.
Utility Fund operating revenue was $9,296,118 for 2014, an increase of $169,280 (1.9 percent). Water
revenue was $146,909 lower than last year due to a decrease in water usage, mainly attributable to a
decrease in irrigation usage caused by a change in weather conditions. Revenues from sewer, street light,
and environmental services all increased from last year due to an increase in customers, as well as sewer
and street light rate increases.
Operating expenses (including depreciation of $3,296,855) were $11,502,618, which represents an
increase of $757,809 (7.1 percent). The increase was primarily attributable to increases in water main
repairs, sanitary sewer disposal charges, and depreciation.
The Utility Fund also received capital contributions of $4,482,757 in 2014, the majority of which was
contributed by developers.
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what your city owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of City’s net position as of December 31, 2014 and 2013,
for governmental activities and business-type activities:
Increase
2014 2013 (Decrease)
Net position
Governmental activities
Net investment in capital assets 135,673,737$ 129,599,494$ 6,074,243$
Restricted 19,913,014 17,645,944 2,267,070
Unrestricted 5,874,237 2,511,935 3,362,302
Total governmental activities 161,460,988 149,757,373 11,703,615
Business-type activities
Net investment in capital assets 109,535,106 105,055,746 4,479,360
Restricted 324,125 324,125 –
Unrestricted 11,318,290 13,704,281 (2,385,991)
Total business-type activities 121,177,521 119,084,152 2,093,369
Total net position 282,638,509$ 268,841,525$ 13,796,984$
As of December 31,
The City’s total net position at December 31, 2014 was $13,796,984 higher than the total net position
reported at the previous year-end. Of the increase, $11.7 million came from governmental activities and
$2.1 million from business-type activities. One of the primary reasons for the increases in both the
governmental and business-type activities was the amount of infrastructure contributed by developers
during 2014, which totaled about $8.3 million.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net positions. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2014 and 2013:
2013
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 6,051,985$ 5,987,652$ (64,333)$ (2,046,017)$
Public safety 11,807,183 1,486,344 (10,320,839) (10,195,196)
Public works 14,776,390 15,837,941 1,061,551 885,856
Parks and recreation 5,202,168 3,311,567 (1,890,601) (1,566,745)
Interest on long-term debt 3,665,421 – (3,665,421) (3,864,333)
Business-type activities
Liquor 2,498,103 3,808,704 1,310,601 1,478,623
Utility 11,462,552 13,660,491 2,197,939 1,747,919
Total net (expense) revenue 55,463,802$ 44,092,699$ (11,371,103) (13,559,893)
General revenues
Property taxes and tax increments 24,465,333 23,947,968
Investment earnings (charges)702,754 (71,063)
Total general revenues 25,168,087 23,876,905
Change in net position 13,796,984 10,317,012
Net position – beginning 268,841,525 258,524,513
Net position – ending 282,638,509$ 268,841,525$
Net (expense) revenue
2014
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.
The difference in the general government net change is primarily due to the $2.23 million interest rate
reduction loan repayment received in 2014. The difference in investment earnings is mainly the result of
market value adjustments to the City’s investment portfolio.
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LEGISLATIVE UPDATES
The 2014 legislative session began with a projected budget excess for the remainder of the biennium of
$1.09 billion, later revised upward to a projected excess of $1.23 billion in the February 2014 economic
forecast. The Legislature utilized a portion of the projected excess to bolster the state’s financial
condition; repaying $246 million “borrowed” from K–12 education through previous financing shifts, and
using $150 million to replenish the state “Rainy Day Fund” budget reserve. The Legislature also approved
increases to future funding for local government aid, and expanded the sales tax exemption approved for
cities in 2013 to include joint powers entities and other instrumentalities of local government.
The following is a summary of recent legislation affecting Minnesota cities in 2014 and into the future:
Local Government Aid (LGA) – The Legislature completely overhauled the LGA formula for fiscal
year 2014 and thereafter, creating a three-tiered formula that includes separate “need factor”
calculations for cities with populations under 2,500, between 2,500 and 10,000, or over 10,000. The
new formula simplified the LGA calculation, and reduced the volatility of the LGA distribution by
limiting the amount it may decline in a given year. Under the new formula, the minimum LGA 2014
distribution for each city was an amount equal to their 2013 LGA. Beginning in 2015, any reduction
to a city’s calculated LGA distribution will be limited to the lesser of $10 per capita, or 5 percent of
their previous year net tax levy. For cities that gain under the new formula, the increases will be
distributed proportionate to their unmet need, as determined by the new “need factor” calculations.
The state-wide LGA appropriation was $507.6 million for fiscal 2014, $516.9 million for 2015, and
$519.4 million for fiscal 2016 and thereafter.
Sales Tax Exemption – Cities are exempted from paying sales tax on qualifying purchases, effective
for purchases made on or after January 1, 2014. Purchases of goods or services by an exempt local
government for a publically provided liquor store, gas or electric utility, golf course, marina,
campground, café, laundromat, solid waste hauling or recycling operation, or landfill will remain
taxable. The definition of “cities” for this statute include both home-rule and statutory cities.
The 2014 Legislature extended the definition of tax exempt local government to include all special
district; city, county, or township instrumentalities; economic development authorities; housing and
redevelopment authorities; and all joint power boards or organizations. However, this expanded
exemption list is not effective until January 1, 2016.
Proposed Property Tax Levy Certification Date – The deadline for cities to certify their proposed
annual tax levies was extended from September 15 to September 30.
Agricultural Homestead Market Value Credit – The rate of agricultural homestead market value
was increased to a maximum of $490 at a market value of $270,000 and over.
Capital Investment Act Requirements – The Legislature approved capital improvement projects
totaling about $1.1 billion under two separate capital investment (bonding) acts. Both require that, to
the extent practicable, a public entity receiving an appropriation of public money for a project under
these acts must assure those facilities are built with American-made steel.
Authority to Inspect Public Buildings and State-Licensed Facilities – A formal delegation process
was established that must be used by the state Department of Labor and Industry (DLI) when
delegating the authority to inspect public buildings and state-licensed facilities to local building
officials. The new provisions did not alter the circumstances under which the DLI is required to
delegate this authority in most circumstances, only the process to be followed. However, for certain
smaller construction projects designated as “reserved projects,” the DLI is now required to delegate
inspection authority to any municipality with a designated building official without going through the
formal delegation process.
-18-
Open Meeting Law – A change was made to the Open Meeting Law to clarify that the use of social
media by members of a public body does not violate the Open Meeting Law if the use is limited to
exchanges open to the public. The new statute specifically excludes email but does not otherwise
define the term social media.
Deputy Registrar Residency – The statutory requirement that an individual appointed as deputy
registrar for a statutory or home-rule charter city be a resident of the county in which the city is
located was repealed.
Local Campaign Finance – Changes were made to increase the campaign contribution limits for
local elections. For candidates in a territory with a population of 100,000 or less, the contribution
limits were raised to $600 in an election year and $250 in a non-election year. For candidates in a
territory with a population over 100,000, the limits were raised to $1,000 in an election year and $250
in a non-election year. In addition, all campaign finance reports required to be filed with a local
government must now be published on the local government’s website, if the local government
maintains a website.
Data Practices – Several changes were made to address unauthorized access of private data by public
employees, requiring local governments to: establish security measures to help ensure private data is
only accessible to public employees whose work assignment reasonably requires access to the data,
and that the data is only being accessed by those individuals for the purposes of their work
assignment; follow the data breach reporting requirements that were previously only applicable to
state agencies; and perform annual security assessments of personal information maintained by the
entity. The statute also states that accessing private data without authorization is a misdemeanor, and
willful violation by a public employee constitutes just cause for suspension without pay or dismissal.
Part-Time Peace Officers – A change in the statutes now prohibits law enforcement agencies from
hiring new part-time peace officers, existing part-time peace officers from transferring to new
agencies, and the Peace Officer Standards and Training Board from licensing new part-time peace
officers. Part-time peace officers that are currently employed may continue to serve indefinitely with
their current employer, but must turn in their license upon leaving their current place of employment
or otherwise becoming unemployed.
Responsible Contractor Requirement – Contractors who bid on public contracts in excess of
$50,000 are now required to certify that they are a “responsible bidder” in order to be awarded a
contract as the lowest responsible bidder or best value alternative. A responsible contractor must be in
compliance with various state and federal requirements for income tax, workers’ compensation,
unemployment insurance, minimum wage, and safety. City solicitations for bid must include: the
definition of “responsible contractor,” which may include criteria in addition to the statutory
requirements established by the city, or reference to the statutory definition; a statement that a
contractor failing to meet the criteria or verify compliance is ineligible to be awarded or perform
work on the contract; a statement that submitting a false verification renders the contractor ineligible
and can result in termination of the contract; and a statement requiring the contractor to provide
copies of verification forms for all subcontractors upon request. Cities are not obligated to verify any
of the information in the contractor verification; and have no liability if reasonably relying on the
certification when awarding the contract, or declining to award the contract based on a reasonable
determination that a contractor failed to verify compliance.
Disaster Assistance Contingency Fund – A new state account was created to provide emergency
cash flow for local governments located in counties declared federal disaster areas. The fund may be
used to meet non-federal fund matching requirements to speed the availability of federal funds.
-19-
Pensions – A number of changes to the Public Employees Retirement Association (PERA) General
Plan were adopted, including:
The minimum salary threshold for inclusion into the PERA General Plan was changed
from $425 in any one month to $5,100 on any year for non-school employees or $3,800
in any year for school employees.
Employers are required to provide written notice to any employee excluded from
membership in the PERA General Plan within two weeks of the determination on a form
prescribed by the PERA executive director.
PERA contribution rates for both employees and employers were increased by
0.25 percent of salary effective January 1, 2015.
-20-
ACCOUNTING AND AUDITING UPDATES
GASB STATEMENT NO. 68 – ACCOUNTING AND FINANCIAL REPORTING FOR PENSIONS—AN
AMENDMENT OF GASB STATEMENT NOS. 27 AND 50
The primary objective of this statement is to improve accounting and financial reporting by state and local
governments for pensions. This statement replaces the requirements of GASB Statement Nos. 27 and
No. 50, as they relate to pensions that are provided through pension plans administered as trusts or
equivalent arrangements that meet certain criteria. The requirements of GASB Statement Nos. 27 and
No. 50 remain applicable for pensions that are not covered by the scope of this statement.
This statement establishes standards for measuring and recognizing liabilities, deferred outflows of
resources, deferred inflows of resources, and expenses/expenditures. In addition, this statement details the
recognition and disclosure requirements for employers with liabilities (payables) to a defined benefit
pension plan and for employers whose employees are provided with defined contribution pensions. This
statement also addresses circumstances in which a non-employer entity has a legal requirement to make
contributions directly to a pension plan. This statement is effective for financial statements for fiscal years
beginning after June 15, 2014. Earlier application is encouraged.
Included in this statement are major changes in how employers that participate in cost-sharing pension
plans, such as the Teachers’ Retirement Association (TRA) and PERA, account for pension benefit
expenses and liabilities. In financial statements prepared using the economic resources measurement
focus and accrual basis of accounting (government-wide and proprietary funds), a cost-sharing employer
that does not have a special funding situation is required to recognize a liability for its proportionate share
of the net pension liability of all employers with benefits provided through the pension plan. A
cost-sharing employer is required to recognize pension expense and report deferred outflows of resources
and deferred inflows of resources related to pensions for its proportionate share of collective pension
expense and collective deferred outflows of resources and deferred inflows of resources related to
pensions. In addition, the effects of (1) a change in the employer’s proportion of the collective net pension
liability and (2) differences during the measurement period between the employer’s contributions and its
proportionate share of the total of contributions from employers included in the collective net pension
liability are required to be determined. These effects are required to be recognized in the employer’s
pension expense in a systematic and rational manner over a closed period equal to the average of the
expected remaining service lives of all active and inactive employees that are provided with pensions
through the pension plan.
GASB STATEMENT NO. 72 – FAIR VALUE MEASURE AND APPLICATION
GASB Statement No. 72 addresses accounting and financial reporting issues related to fair value
measurements. The requirements of this statement are intended to enhance comparability among
government financial statements by requiring certain assets and liabilities be reported at fair value, using a
consistent definition of fair value and accepted valuation techniques. The requirements of this statement
are effective for financial statements for periods beginning after June 15, 2015, with earlier application
encouraged.
GASB Statement No. 72 defines fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Fair
value measurements are generally assumed to take place in the government’s principal or most
advantageous market, taking into account the highest and best use for a nonfinancial asset, and assuming
market participants would act in their economic best interest. The statement requires a government to use
measurement techniques that are appropriate under the circumstances and for which sufficient data are
available to measure fair value; consistent with a market, (replacement) cost, or income approach. It also
establishes a hierarchy of inputs to be used in valuation techniques.
-21-
The statement establishes or clarifies the applicability of fair value measurement for certain assets and
liabilities. Fair value is generally required for investments, defined as securities or other assets held
primarily for the purpose of generating income, or which have a present service capacity based solely on
their ability to generate cash. The statement requires measurement at acquisition value for donated capital
assets, donated works of art, historical treasures, and capital assets received through a service concession
arrangement. The statement also outlines the required financial statement disclosures about fair value
measurements, valuation techniques, and the hierarchy of inputs used for valuation.
CHANGES TO REQUIREMENTS FOR FEDERAL GRANTS
In December 2013, the OMB issued Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Audits, which supersedes all or parts of eight OMB circulars; consolidating
federal cost principles, administrative principles, and audit requirements in one document. The “Super
Circular” includes a number of significant changes to the federal Single Audit process, including: an
increase in dollar threshold for requiring a Single Audit from $500,000 to $750,000; changes to the
thresholds and process used for determining major programs; reductions in the percentages of
expenditures required to be covered by a Single Audit from 50 percent to 40 percent for high-risk auditees
and from 25 percent to 20 percent for low-risk auditees; revised criteria for determining low-risk auditees;
and an increase in the threshold for reporting questioned costs from $10,000 to $25,000. Auditees are
required to implement the administrative requirements of the new “Super Circular” by December 26,
2014. The revised audit requirements will be effective for fiscal year 2015 city audits, with an optional
one-year grace period for implementing the new procurement standards included in this guidance.
-22-
COSO INTERNAL CONTROL FRAMEWORK
The clarified auditing standards applicable to governmental audits incorporate a definition of internal
control that is based on the internal control integrated framework developed and issued in 1992 by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In May 2013, COSO
issued an updated framework which supersedes the original after December 15, 2014. The new COSO
framework retains the basic definition of internal control and its five components established in its
original framework, along with the fundamental requirements to consider these five components and to
use judgment when assessing and evaluating the effectiveness of a system of internal controls. The new
COSO framework enhances and clarifies a number of concepts from the original framework to make it
easier to use and apply. One of the more significant enhancements was the establishment of 17 principles,
associated with the 5 components of internal control, intended to assist users in understanding the
requirements of effective internal control and designing effective systems of internal control.
The 5 components of internal control and 17 underlying principles are as follows:
Control Environment –
1. Organization demonstrates a commitment to integrity and ethical values.
2. Governing body is independent from management and exercises oversight control.
3. Management establishes structure, reporting lines, authority, and responsibilities.
4. Organization demonstrates a commitment to the competence of individuals involved with
internal control.
5. Organization holds individuals accountable for internal control responsibilities.
Risk Assessment –
6. Organization specifies clear objectives for the identification and assessment of risks.
7. Organization identifies and analyzes risk.
8. Organization assesses the potential for fraud risks.
9. Organization identifies and assesses significant changes that could impact internal control.
Control Activities –
10. Organization selects and develops control activities to mitigate risks.
11. Organization selects and develops general IT controls.
12. Organization establishes and implements control policies and procedures.
Information and Communication –
13. Organization uses relevant, quality information to support internal control.
14. Organization communicates internal control information internally.
15. Organization communicates internal control information externally.
Monitoring –
16. Organization conducts ongoing and/or separate internal control evaluations.
17. Organization evaluates and communicates deficiencies to responsible parties for corrective
action.
COSO defines an effective system of internal control as one that reduces to an acceptable level the risk of
failing to achieve an organizational objective in the areas of operations, compliance, or reporting.
According to the new framework, an organization can achieve effective internal control by applying all of
the principles listed above. To achieve this, each of these five components and the relevant principles
must be present and functioning, and the five components must operate in an integrated manner. Local
governments should be reviewing their internal control systems to assure these principles have been
incorporated and implemented.
CITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2014
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 LAKEVILLE
Year Ended December 31, 2014
DAKOTA COUNTY, MINNESOTA
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 Lakeville, 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 Lakeville, Minnesota (the City) as of and for the year ended December 31, 2014, 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 9, 2015.
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 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)
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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 9, 2015
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INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Lakeville, 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 Lakeville, Minnesota (the City) as of and for the year ended December 31, 2014, 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 9, 2015.
MINNESOTA LEGAL COMPLIANCE
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of
the State Auditor pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be
tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness,
claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered
all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions.
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 9, 2015
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