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HomeMy WebLinkAbout11.03.14 Council Packet City of Farmington Mission Statement 430 Third Street Through teamwork and cooperation, Farmington,MN 55024 the City of Farmington provides quality services that preserve our proud past and foster a promising future. FARMINGTON CITY COUNCIL Todd Larson,Mayor Jason Bartholomay Douglas Bonar Terry Donnelly Christy Fogarty AGENDA REGULAR CITY COUNCIL MEETING NOVEMBER 3, 2014 7:00 P.M. CITY COUNCIL CHAMBERS Action Taken 1. CALL TO ORDER 7:00 P.M. 2. PLEDGE OFALLEGL4NCE 3. ROLL CALL 4. APPROVEAGENDA 5. ANNOUNCEMENTS/COMMENDATIONS a) Vince Donahue—Eagle Scout Project Information Received b) Leon On-Request to Expand Farmington Area Veteran's Memorial Information Received 6. CITIZEN COMMENTS/RESPONSES TO COMMENTS(This time is reserved for citizen comments regarding non-agenda items.No official Council action can be taken on these items. Speakers are limited to five minutes to address the Council during"Citizen Comment"time.) 7. CONSENT AGENDA a) Approve Council Minutes (10/20/14 Regular) Approved b) Approve Temporary On-Sale Liquor License Knights of Columbus Approved c) Approve Tamarack Park Additional Street and Park Lighting Approved d) Approve Seasonal Hiring Approved e) Approve Antenna Lease Amendment—Verizon Wireless (Daisy Knoll) Approved f) Adopt Resolution Accept Rambling River Center Donations R57-14 g) Approve Bills Approved REGULAR AGENDA (The Council takes a separate action on each item on the Regular Agenda. If you wish to address the Council regarding any or all of the items on the Regular Agenda,please address the item when the item is discussed Speakers will be given at least three minutes to speak per item.Additional time may be granted to speakers representing two or more persons.) 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT 10. PETITIONS,REQUESTS AND COMMUNICATIONS a) Appoint Malloy, Montague, Kamowski, Radosevich(MMKR) and Co.,PA as Auditor for 2014, 2015 and 2016 Approved b) Adopt Resolution -2015—2019 Dakota County Capital Improvement Plan R58-14 c) Adopt Resolution-Revocation of Municipal State Aid Status and Concurrence with County State Aid Highway Status— 195th Street R59-14 d) Adopt Resolution-Approve Joint Powers Agreement with Dakota County for 195th Street Project R60- 14 e) New Sunrise Addition Development Contract Amendment Approved 11. UNFINISHED BUSINESS a) Approve 2015 Rambling River Center and Schmitz-Maki Arena Fees and Arena Fees Tabled Charges Rambling River Center Fees Approved 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE 14. ADJOURN Persons with a disability may request a reasonable accommodation by contacting the City Administrator's office at 651-280-6803. Request should be made 24 hours in advance or as early as possible to allow time to arrange accommodation. 004 City of Farmington 4, 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 1-.4 p.' www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: David McKnight,City Administrator SUBJECT: Vince Donahue-Eagle Scout Project DATE: November 3, 2014 INTRODUCTION Mr.Vince Donahue will be present at your November 3,2014 city council meeting to discuss his Eagle Scout project. DISCUSSION Mr.Donahue will discuss his Eagle Scout project at your meeting. I am sure he would be willing to answer any questions that you may have. BUDGET IMPACT NA ACTION REOUESTED Hear the presentation by Mr.Donahue and ask any questions you may have. 4111146, City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 ,. "� ,4 +`', www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad SUBJECT: Leon Orr-Request to Expand Farmington Area Veteran's Memorial DATE: November 3,2014 INTRODUCTION While the Veteran's Memorial was officially dedicated on September 7,2014,Leon On, on behalf of the Farmington Area Veterans Memorial Committee(the Committee),will be attending the city council's November 3, 2014 meeting to request permission to slightly expand the Farmington Area Veteran's Memorial(Memorial). DISCUSSION Included in you packet is a new concept plan, shown as exhibit A,which shows the highlighted expanded area to be constructed as part of the Memorial. The new expanded area will include: • concrete areas that will hold additional memorial pavers • landscaped areas allowing for additional flowers to be planted • a boulder that will have the words of the Pledge of Allegiance engraved on it • additional benches The Committee felt this expanded area would fill-in gaps in the concrete around the perimeter of the Memorial. The Parks and Recreation Commission received a presentation from Mr.Orr, discussed the concept plan for the expanded area and voted unanimously at its October 22, 2014 meeting to recommend to the city council to approve allowing the Committee to expand the Memorial. BUDGET IMPACT The cost to construct the expansion area of the Memorial will fall entirely on the Committee to cover. ACTION REQUESTED By motion approve the request being made by Committee to be allowed to expand the Memorial as shown in exhibit A. ATTACHMENTS: Type Description n Backup Material Vets Memorial Expansion Map I 1.1.1 W O U W W e ® OW,5j __` l S3i3lVd 8Z ~a =kfl L? ♦ ®®0®0®© a<n ®� '® 0 i- 0 o S310r Sf10�'JJd w ,♦♦♦♦ �® Er F-- f 1 n ; ,.. r-,-.1 .. ..... 4,wydrimilm _, a� sa ° 0 ) ©o .t0®moo 'w ur4 zp 0_ o e e 81 000- p0©0000 IC IL CC cD J • • • IMJnru:owwwe ..---.. 0000 ' 0000 0000 one 00 0000 O_ 0®� O U4GQQ0 WO 0 00o _J G00G ,nom :n,n :'(u 0€ 0 Teo 000 p c. M0 N [V- I ` c7 4 m e 0 000 i,b (moo O�0' p �EuLo1��— 0) 0 C 1 �QJ[� W W 6 U __--CZ7 Q 4 m o z W o w J J Y :— T. Ir 0000 I 61,110 cWai —E3JR�I= K O < CC 0 0000 lit W t -p I:n WW 0000� "-r, > 9 � 4n� �� -i m '- o— . 0000 C2 a iii.? �+ 00(90 X00" OOm 00 O _ ea cm 0000 w w O70 p ` 000 0 I 0 0 f � 00 0000 > > L Noor Knam.I 1 RFArrrl 11 W__ tc e leeeeeeee• ee .o U e 0eeeeo0eee_, 0 000e00ee00 o— �' sa3nvj N SN'd831c7n ilei j C] & SZ dOk 0 @ Ll_I o v— —1 I` r 1 0 (0 cv �4...Ce t.0— I u!SL'6£ > a Z Inia0c1 AM'dlllIW W u it tt 'NI 06-'Id ZZ 0 1sa 41104 City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 1*.4 p 0.6 www.ci.farmington.mn.us TO: Mayor,Councilmembers and City Administrator FROM: Cynthia Muller,Executive Assistant SUBJECT: Approve City Council Minutes(10/20/2014 Regular) DATE: November 3,2014 INTRODUCTION Attached are the October 20, 2014, city council minutes for approval. DISCUSSION NA BUDGET IMPACT NA ACTION REQUESTED Approve the October 20,2014,city council minutes. ATTACHMENTS: Type Description 0 Backup Material City Council Meeting Minutes 10-20-2014 COUNCIL MINUTES REGULAR October 20, 2014 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE Kyle Kratz,Eagle Scout Troop 116, led the audience and city council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Larson,Bartholomay, Bonar,Fogarty Members Absent: Donnelly Also Present: Joel Jamnik, City Attorney; David McKnight, City Administrator; Robin Hanson,Finance Director;Adam Kienberger, Community Development Director;Randy Distad, Parks and Recreation Director;Kevin Schorzman, City Engineer;Todd Reiten, Municipal Services Director;Cynthia Muller, Executive Assistant Audience: Diane Lind,Tim Pitcher, David McMillen,Carol Kroc 4. APPROVE AGENDA City Administrator McKnight pulled item 5b)Kylie Wharton and Kayli McGee American Legion Auxiliary Minnesota Girls State,and added item 70 Approve Out of State Travel Police Department. MOTION by Fogarty, second by Bartholomay to approve the Agenda. APIF, MOTION CARRIED. 5. ANNOUNCEMENTS a) Dakota Communications Center Update Diane Lind,Executive Director of the Dakota Communications Center,gave an update on activities at the DCC, equipment updates and receiving of text messages. c) Kyle Kratz—Eagle Scout Project Kyle Kratz explained his Eagle Scout project. Gale Sprute had planted two blue spruce trees at Fire Station One in recognition of the twin towers. Mr.Kratz added a memorial to this location to recognize the first responders of 9/11/2001. He raised$4,000 and his project included 688 hours and 53 volunteers. Mr.Kratz will be joining the Navy following graduation. d) Proclaim October 19—25,2014,as Minnesota Manufacturers Week MOTION by Fogarty, second by Bartholomay to proclaim October 19—25, 2014, as Minnesota Manufacturers Week. APIF,MOTION CARRIED. 6. CITIZEN COMMENTS 7. CONSENT AGENDA MOTION by Bartholomay, second by Fogarty to approve the consent agenda as follows: Council Minutes(Regular) October 20,2014 Page 2 a) Approved City Council Minutes(10/6/14 Regular)(10/13/14 Workshop) b) Approved Recycling Contract Amendment c) Received Third Quarter 2014 New Construction and Population Estimate d) Approved Firefighter Fitness Reimbursement Policy e) Approved Bills f) Approve Out of State Travel Police Department APIF,MOTION CARRIED. 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT a) Adopt Resolution—2014 Pond Dredging Project At the September 15, 2014, meeting,the city council authorized bids for pond dredging for two ponds. Two bids were received. The low bid was $53,460 from Minnesota Dirt Works, Inc. There was a significant difference between the two bids,but the low bidder does understand the scope of the project. The project will be paid from the storm water budget. MOTION by Fogarty, second by Bonar to adopt RESOLUTION R56-14 accepting the bid of Minnesota Dirt Works,Inc., in the amount of$53,460 and awarding the project. APIF,MOTION CARRIED. 10. PETITIONS,REQUESTS AND COMMUNICATIONS a) Approve Application for a Pole Building within the Industrial Park Zoning District Todd and Karen Hochsprung, 5827 210th Street West,requested approval to construct a pole building on their property. City code states pole buildings are allowed in the A-1 district and in other districts upon approval of the city council. On September 9,2014,the planning commission approved a variance for construction of an accessory building as a legal, non-conforming expansion. Their property is zoned industrial,but is used as a residential property in an agricultural area. Due to financial considerations they are requesting to construct a pole building. The property is 20 acres in size surrounded by trees and farm fields so the building would not be in conflict with the area. MOTION by Fogarty, second by Bonar to approve construction of a pole building within the IP zoning district for the property located at 5827 210th Street West. APIF, MOTION CARRIED. 11. UNFINISHED BUSINESS 12. NEW BUSINESS a) Adopt Ordinance—Approve 2015 Fee Schedule City Administrator McKnight reviewed changes to the fee schedule effective January 1,2015. Fees for the Rambling River Center and ice rental will be brought to the November 3,2015,Council meeting. MOTION by Fogarty, second by Bonar to adopt ORDINANCE 014-670 establishing charges and fees for licenses,permits or other city approvals and services for the calendar year 2015, except Rambling River Center fees and ice rental fees. APIF,MOTION CARRIED. Council Minutes(Regular) October 20,2014 Page 3 b) Tax Increment Financing Update and Approve Early Redemption of 2014 TIF Bonds The city has two remaining tax increment financing districts,the Eagles and City Center. There are$70,000 in related bonds in the 2004B series that are outstanding. The Eagles district is scheduled to be decertified at the end of 2014. Any residual funds will be sent back to the county for redistribution to the school district, county and the city. The City Center district is scheduled to be decertified on December 31, 2020. However, once there are no obligations left we can decertify the district. This will occur in 2016 when the last developer payment is made. A portion of the predicted residual left in the City Center district may be used for a downtown redevelopment study. The 2004B bonds have$70,000 in outstanding principal and are scheduled to be fully retired on February 1, 2015. In December 2014 there will be sufficient funds to retire the bonds early. MOTION by Fogarty, second by Bartholomay to approve the early redemption of the Series 2004B bonds on December 1, 2014,or as soon thereafter as due notice can be properly given. APIF,MOTION CARRIED. 13. COUNCIL ROUNDTABLE City Engineer Schorzman: An open house for the 195th Street project will be held on October 22, 2014. Community Development Director Kienberger: He noted this is Minnesota Manufacturers Week and thanked the manufacturing businesses for being in Farmington. El Charro Mexican Restaurant is still under construction. Parks and Recreation Director Distad: The Rambling River Center Waffle Breakfast will be held on October 25, 2014. This is the largest fundraiser for the Rambling River Center. Mayor Larson: The city will be trimming boulevard trees in Charleswood. The Halloween Skate will be held on October 24,2014, at the arena. He reminded everyone to shop local. 14. ADJOURN MOTION by Fogarty, second by Bartholomay to adjourn at 7:38 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant Yo kRip,4 City of Farmington 6 Cp 430 Third Street cat z i Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 p •4 °_ www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Cynthia Muller,Executive Assistant SUBJECT: Approve Temporary On-Sale Liquor License Knights of Columbus DATE: November 3,2014 INTRODUCTION The Knights of Columbus is requesting a Temporary On-Sale Liquor License for a fundraiser. DISCUSSION The Knights of Columbus is requesting a Temporary On-Sale Liquor License for a fundraiser to be held on November 22, 2014 at 22120 Denmark Avenue. Per state statute, a Temporary On-Sale Liquor License must first be approved by the city and then forwarded to the state for approval. BUDGET IMPACT The State of Minnesota waives all fees for Temporary Liquor Licenses for non-profit organizations. Therefore,the city has not established a fee for a Temporary On-Sale Liquor License. ACTION REQUESTED Approve the attached application for a Temporary On-Sale Liquor License for the Knights of Columbus for a fundraiser on November 22,2014. ATTACHMENTS: Type Description 0 Cover Memo Application :+.�+y 7zv,,: fF tp., Mfimesota Department ofPublioSafety ; .' f ► G ALCOHOL AND GAMBLING ENFORCEMENT DIVISION :`,1 444 Cedar Street Suite 222,St.Paul Mt455101-5133 w°, 1., (651)2017507 Fax(651)297-5259 Tl'Y(651)232-6555 `' 'z' WWWDPS.STATE.MNUS APPLICATION AND PERNRT FORA 1 TO 4 DAY TEMPORARY ON-SALE LIQUOR LICENSE TYPE OR PRINT INFORMATION NAME OF ORGANIZATION DATE ORGANIZED TAX EXEMPT NUMBER S 41 ' 1/14,- / ,v/o C Jo/,JtlU 100 q S�cV STS AD N '4:.4: CITY STATE ZIP CODE a,z id_0 oe,p,.,,,,,,A fie,. "'com i'Rpim fl/V ,-S41- NAME OF PERSON MAKING APPLICATION BUSINESS liAONE HOME PHONE IAA. F, 6petIA e ( ) ( ) ',5?-9.53 '-01,7 DATES I;IQUOR'WILL BE SOLD N i i TYPE OF ORGANIZATIO ORGANIZATION OFFICI<R'$NA7�E O v ,W)�Oj 7 C RE CHARITABLE RELT IOU OTTER NONPROFIT D Ul C.-0 C G / 110 g .5 ! Ave, r vri ORGANIZATION OFMNAML ADDRESS ORGANIZATION OFFICER'S NAME ADDRESS Location license will be used.Ifan outdoor area,describe S9 . tGLad� eaiLkolt'C. C-11.(A-vtwh • Will the applicant contract for intoxicating liquor service? Use,give the name and address ofthe liquor licensee providing the aerobe. • Ad Will the applicant carry liquor liability insurance? If so,pleasepravide the earner's name and amount of coverage. APPROVAL APPLICATION MUST BE APPROVED BY CITY OR COUNTY BEFORE SUBMTITING TO ALCOHOL&GAMBLING ENFORCEMENT CITY/COUNTY DATE APPROVED CITY FEE AMOUNT LICENSE DATES DATE FEE PAID SIGNATURE CITY CLERIC OR COUNTY OFFICIAL APPROVED DIRECfORALCOIIOI,AND GAMBLING ENFORCEMENT NOTE:Submit this term to the city or county 30 days prior to event.Forward application signed by city and!or county to the address above.If the application Is approved the Alcohol and Gambling Enforcement Ridden Will return Oh application to used as the License for the event Ps-09079(12/09) kV* City of Farmington 47.11K.A 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 -r.4,8000-6 www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad SUBJECT: Approve Tamarack Park Additional Street and Park Lighting DATE: November 3, 2014 INTRODUCTION A resident of the Tamarack Townhome development has expressed a concern for safety of residents who use or walk adjacent to Tamarack Park in the evening due to inadequate lighting in and around Tamarack Park. DISCUSSION Sarah Nygard,who lives in the Tamarack Townhome development made a presentation to the Park and Recreation Commission(PRC)at its July 9, 2014 meeting expressing her concerns about safety in Tamarack Park and trails and sidewalk that are in and adjacent to the park. She requested additional lighting be provided in Tamarack Park. Her safety concern was mainly due to being able to hear people in the shelter during the evening, but not being able to see who is in the shelter and what they are doing. The PRC requested staff to look at lighting options and costs,which staff completed and then brought back the options for the PRC to consider at its October 22, 2014 meeting. These options and installation costs included the following: Option#1: Do not install any new lighting,which would not cost the city anything, but would not address the safety concern of Ms.Nygard. Option#2: Run electrical feeder line underground to new transformer in the park and then run underground electrical from new transformer to shelter and install new LED lighting inside the shelter. Xcel Energy and electrician's installation cost was estimated at a range of$15,975 to$18,475 depending on if the underground electrical to the transformer was either trenched in or was directionally bored.There would be an additional monthly operational cost for the electricity used to light the shelter in the evening. Ongoing maintenance associated with the shelter lighting for the fixture and/or bulb replacement would be at the city's cost.This option would address Ms.Nygard's safety lighting concerns. Option#3: Run underground to a new light pole installed in the boulevard and install a cobra light fixture for street lighting on the pole and install a directional night watch light fixture on the park side of the light pole that could shine towards the shelter. Installation cost was estimated at$4,700 for the one pole and fixture. Additionally there would be increased utility costs for the electrical usage by the two lights and this is estimated to be between$20-$24 per month total or$240-$288 total annually depending on the wattage of the bulbs used and the current amount that is charged by Xcel Energy.Ongoing maintenance costs for the fixtures and bulb replacement would be at Xcel Energy's cost. This option would address Ms.Nygard's safety lighting concerns. Option#4: Run overhead electrical line from an existing overhead line to two new light poles installed in the boulevard and install cobra light fixtures on the street side and two directional night watch fixtures on the park side of the light poles. This would increase the amount of lighting along the sidewalk and street located on the east side of the park. There would be no installation cost for this option. However,there would be an increase in the electrical costs that the city would pay for the additional street and park lighting. Based on the estimated cost shown in Option#3 the city would pay between $40-48 per month or$480- $576 annually. Ongoing maintenance costs for the fixtures and bulb replacement would be at Xcel Energy's cost.This option would address Ms.Nygard's safety lighting concerns. Staff recommended that Option#4 be approved by the PRC. The PRC reviewed all of the presented options and unanimously made a recommendation to the City Council to approve Option#4. Xcel Energy has informed staff that they would be able to complete the electrical installation yet this year as they would only need a permit from the city to work in the right of way. BUDGET IMPACT If Option#4 is approved by the city council,the budget impact is being recommended to be split between the city's Street Light Utility Fund and the Park Maintenance budgets based on the location and how the additional lighting will be used. ACTION REQUESTED By motion approve option#4 to provide additional lighting for the both the street adjacent to and for Tamarack Park. 4�F1�4* City of Farmington p 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 ° ,;per+° www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Brenda Wendlandt,Human Resources Director SUBJECT: Approve Seasonal Hiring DATE: November 3, 2014 INTRODUCTION The recruitment and selection process for the appointment of winter seasonal staff has been completed DISCUSSION After a thorough review by the Parks and Recreation Department and the Human Resources Department, offers of employment have been made to the individuals shown on the attached spreadsheet, subject to ratification by city council. BUDGET IMPACT These positions are included in various departmental budgets. ACTION REQUESTED By motion, approve the attached seasonal employment recommendations. ATTACHMENTS: Type Description © Backup Material Seasonal Staff List M N N N N CF 0. Q Q O. O. Q. I- 4- 4-,CU � � � +--, 0. w V) V) VI Un (n 0 O .+) i i H 0 0 0 0 0 0 w N U U 0 0 0 0 C 0 0 0 Q G 0 0 0 0 7 0 N O a U U U N U N �+ 4J 01 0) V) C C C C C C Y N t�0 CD CO V) Y Y Y C to bo DO OD h0 0A 'O V) V) V) `J C C C C C C as Q in CD CD CD (U CO 2 Y Y Y Y Y Y V) V) V) N V) V) CU •1• W N N N V) .4. ut O O O O 1A u) 00 00 00 N e- O O O O lD rl f0 O 01 O at O e-I CCs/ 00 00 00 00 C C al > O N i/1 i/) i/) i/)- VI- CO i/� t/� i/� i/). i/� i/} CD CO CU C 0 a- Q r O N L igr 0 N LL (L) LL co fa. t0 Z 2 Z Q LL LL Li. H LA N N W .J Z Q LL L fu H O W Q C ce ~ CD N N 0 A C ) J .7 Q -a W OJ 3 > C W C W Z Y M Z al z °) Z `° 0./ i re re eD C a) 5 H m oc < C O .� W = ray ° - 3 W 3 >• >- a 0< U Y Y 2 Q 2 Z C. 0C Z O H H itOARif , City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 ,,rit00$66 www.ci.farmington.mn.us TO: Mayor,Councilmembers and City Administrator FROM: Kevin Schorzman,City Engineer SUBJECT: Approve Antenna Lease Amendment-Verizon Wireless(Daisy Knoll) DATE: November 3,2014 INTRODUCTION On July 7, 1999,the city entered into a communications site lease agreement with US West Wireless which allowed them to place antennas on the Daisy Knoll water tower. Sometime prior to November,2002,US West Wireless was acquired by Qwest Wireless. In 2004,Qwest Wireless was acquired by Verizon. During these changes,the 1999 antenna lease was assigned to the acquiring company. Verizon has operated its antennas on the Daisy Knoll tower since then,and has been current on all of their lease payments. DISCUSSION The initial term of the 1999 lease was five years with the option to extend the lease for up to two additional five year terms(15 years total). On July 7,2014 the lease expired. It should be noted,that Verizon pays annually and had already pre-paid for the entire year. After discussing the lease expiration, city staff,Verizon staff, and attorneys for both parties agreed that an amendment to the 1999 lease was the preferred method of continuing the relationship rather than executing an entirely new lease. The attached amendment extends the term of the agreement by an additional five years with the option to extend it for up to four additional five-year terms. It also adjusts the rent to the rate included in the fee schedule for 2015 and includes a 5%annual escalator as required by the fee schedule. The only proposed change to the attached amendment is in section two. Staff proposes adding the city's ability to terminate the lease after the first extension period with at least a six month notice to Verizon. This has been discussed with Verizon, and they have verbally agreed to this change. At this time, staff does not anticipate terminating the lease in the future,but staff felt that it was important to preserve our ability to do so if it became necessary in the next 25 years. The remainder of the terms and conditions in the original 1999 lease remain in effect. At their October 27,2014 meeting,the water board approved this amendment contingent upon changing the language in section two as described above, and recommended approval by the city council with the same contingency. BUDGET IMPACT Antenna lease revenue is included in the annual water budget. ACTION REQUESTED Approve the attached amendment to the 1999 lease extending it for up to 25 years contingent upon the language in Section 2 "Options to Extend," being changed to allow for either party to terminate the agreement at the end of the current term with a six month notice to the other party. ATTACHMENTS: Type Description D Exhibit Lease Amendment D Exhibit Memorandum of Amendment D Backup Material Original Lease Site Name:MIN Pilot Knob AMENDED(NO.2)AND RESTATED COMMUNICATIONS SITE LEASE AGREEMENT This Amended (No. 2) and Restated Communications Site Lease Agreement ("Amendment")is made this day of ,201 ,by and between the City of Farmington, Minnesota ("Landlord") and Verizon Wireless (VAW) LLC d/b/a Verizon Wireless ("Tenant"), with its principal office located at One Verizon Way, Mail Stop 4AW100, Basking Ridge,New Jersey 07920(telephone number 866-862-4404), with reference to the facts set forth in the recital below: RECITAL Landlord and Tenant are parties to Communications Site Lease Agreement dated July 7, 1999, as amended by an Amendment No. 1 To Communications Site Lease Agreement dated June 24, 2005 (collectively, the "Agreement") whereby Landlord leases a portion of its water tower and property to Tenant. Landlord and Tenant desire to extend the term of the Agreement and ratify,restate and reaffirm the terms and conditions of the Agreement. AGREEMENT NOW, THEREFORE, in consideration of the facts contained in the recital above, the mutual covenants and conditions below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows: 1. TERM EXTENSION. The term of Agreement is hereby extended for one(1)five (5) year extension term commencing on July 8, 2014, and expiring on July 7, 2019 (the "Extension Term"). The parties acknowledge and agree that rent for 2014 has been paid in full by Tenant. Commencing on January 1, 2015, Tenant shall pay to Landlord annual rent in the amount of Thirty-three Thousand Five Hundred Two and 00/100 Dollars ($33,502.00). The annual rent shall be paid in advance of January 1 of each year. Commencing on January 1,2016, and each January 1 thereafter, the annual rent shall increase by five percent (5%). The parties acknowledge and agree that the increased rent payment for 2015 may not actually be sent by Tenant until thirty(30)days after the full execution and delivery of this Amendment. 2. OPTIONS TO EXTEND. Upon expiration of the Extension Term,the term of the Agreement shall automatically be extended on the same terms and conditions for four (4) additional five (5) year terms unless Tenant terminates it at the end of the then current term by giving Landlord written notice of the intent to terminate at least six(6)months prior to the end of the then current term. The annual rent shall increase by five percent(5%) each year on January 1. MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement 1 2572317v1 3. RATIFICATION AND RESTATEMENT OF THE AGREEMENT. Except as specifically modified by this Amendment,the parties hereby ratify,restate and reaffirm the terms and conditions of the Agreement and agree to perform and comply with the same. In the event of a conflict between any term or provision of the Agreement and this Amendment, the terms and provisions of this Amendment shall control. In addition, except as otherwise stated in this Amendment, all initially capitalized terms will have the same respective defined meaning stated in the Agreement. All captions are for reference purposes only and shall not be used in the construction or interpretation of this Amendment. IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be executed by each party's duly authorized representative effective as of the date written below. LANDLORD: TENANT: City of Farmington, Verizon Wireless(VAW)LLC a Minnesota municipal corporation d/b/a Verizon Wireless By: By: Name: Lynn Ramsey Its: Mayor Its:Area Vice President Network Date: By: Name: Its: City Administrator By: Name: Its: Water Board President Date: MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement 2 2572317v1 DRAFTED BY AND RETURN TO: Moss&Barnett(AAD) 150 South Fifth Street,Suite 1200 Minneapolis,MN 55402 (Site Name:MIN Pilot Knob) (Prepared by Cheryl S.Sheldon,Telephone No.(612)877-5392) (Space above this line for Recorder's use.) MEMORANDUM OF AMENDED(NO.2)AND RESTATED COMMUNICATIONS SITE LEASE AGREEMENT THIS MEMORANDUM OF AMENDED (NO. 2) AND RESTATED COMMUNICATIONS SITE LEASE AGREEMENT ("Memorandum") evidences that an Amended (No. 2) And Restated Communication Site Lease Agreement dated , 201_ ("Amendment") was entered into by and between the City of Farmington, a Minnesota municipal corporation ("Landlord") and Verizon Wireless (VAW) LLC d/b/a Verizon Wireless,with its address for notice located at 180 Washington Valley Road, Bedminster, New Jersey 07921 ("Tenant"), on the property of Landlord that is located in the County of Dakota, State of Minnesota, and being described as indicated on Exhibit A, which is attached hereto and made a part hereof. Landlord and Tenant are parties to Communications Site Lease Agreement dated July 7, 1999, as amended by an Amendment No. 1 To Communications Site Lease Agreement dated June 24, 2005 (collectively, the "Agreement") which is evidenced by a Memorandum of Amendment No. 1 To Communications Site Lease Agreement dated June 24,2005,and recorded July 15, 2005, as Document No. 2340504, whereby Landlord leases a portion of its water tower and property to Tenant. The Amendment provides that the term of Agreement is extended for one (1) five (5) year extension term commencing on July 8, 2014, and expiring on July 7, 2019 (the "Extension Term"). Upon expiration of the Extension Term, the term of the Agreement shall automatically be extended on the same terms and conditions for four(4) additional five (5) year terms unless Tenant terminates it at the end of the then current term by giving Landlord written notice of the intent to terminate at least six(6)months prior to the end of the then current term. MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement 2574525v1 1 IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Memorandum as of the day and year written below. LANDLORD: TENANT: City of Farmington, Verizon Wireless(VAW)LLC a Minnesota municipal corporation d/b/a Verizon Wireless By: By: Its Mayor Lynn Ramsey Its: Area Vice President Network By: Date: Its: City Administrator By: Its: Water Board President Date: Acknowledgments on following page The remainder of this page intentionally left blank MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement 2574525v1 2 ACKNOWLEDGMENTS LANDLORD ACKNOWLEDGMENT STATE OF MINNESOTA ) ss. COUNTY OF ) This instrument was acknowledged before me on , 20 , by , the Mayor, , the City Administrator and , the Water Board President of the City of Farmington, a Minnesota municipal corporation,on behalf of the corporation. Signature of Person Taking Acknowledgment (Seal if any) Title or rank Serial Number,if any TENANT ACKNOWLEDGMENT STATE OF ILLINOIS ) )ss. COUNTY OF COOK ) On this day of , 20_, before me, the undersigned, a Notary Public in and for the State of Illinois, duly commissioned and sworn, personally appeared Lynn Ramsey,to me known to be the Area Vice President Network of Verizon Wireless (VAW)LLC d/b/a Verizon Wireless that executed the foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of Verizon Wireless (VAW) LLC d/b/a Verizon Wireless for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year first above written. Print or Type Name: Notary Public in and for the State of Illinois My appointment expires: MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement 2574525v1 3 Exhibit A (Legal Description) Page 1 of 1 Commence at the Northeast corner of the Northeast Quarter of the Southeast Quarter of Section 14, Township 114, Range 20 West, thence Westerly along the North line of said Southeast Quarter a distance of 950.00 feet, thence South parallel with the East line of said Southeast Quarter a distance of 255.00 feet, thence Easterly parallel with the North line of said Southeast Quarter a distance of 200.00 feet, thence North parallel with the East line of said Southeast Quarter a distance of 215.00 feet, thence Easterly parallel with the North line of said Southeast Quarter a distance of 500.00 feet,thence South parallel with the East line of Southeast Quarter a distance of 160.00 feet, thence Easterly parallel with the North line of said Southeast Quarter a distance of 250.00 feet to the East line of said Southeast Quarter, thence North along the East line of said Southeast Quarter a distance of 200.00 feet to the point of beginning, subject to a highway easement of 50.00 feet along the East line of said Southeast Quarter. Dakota County,Minnesota Abstract Property MIN Pilot Knob Amended(No.2)and Restated Communications Site Lease Agreement • Site I.D.#:, m 11J.273 Site Name: Nelson Hills Water Tower ' COMMUNICATIONS SITE LEASE AGREEMENT_ THIS COMMUNICATIONS SITE LEASE AGREEMENT ("this Lease Agreement)" is entered into this 74 day o m n , , between the CITY OF FARMINGTON, a Minneso cipal corporation, ("Landlord"), and U S WEST Wireless, L.L.C., a Delaware limited liability company, whose address is 1999 Broadway, Tenth Floor, Denver, Colorado 80202, ("Tenant"). FOR GOOD AND VALUABLE CONSIDERATION, the parties agree as follows: 1. PROPERTY AND PREMISES. Subject to the following terms and conditions, Landlord leases to Tenant certain space on Landlord's Nelson Hills water tower (the "Tower"), and space adjacent to the Tower, subject to all existing easements, (collectively referred to as the "Premises") together with appurtenant non-exclusive easements for access and utilities on Landlord's Property located at 18515 Pilot Knob Road, Farmington, Minnesota (the "Property") on a non-exclusive basis. The property is legally described on Exhibit "A", attached hereto and the Premises are described on Exhibit "B", attached hereto, both of which are made a part hereof. The primary purpose of Landlord's ownership of the Property is to: (a) operate and maintain a municipal water tower so as to provide water service to residents of Farmington; and (b) to provide communication systems to the City of Farmington and other radio tenants. 2. TERM. The term of this Lease shall be five (5) years, commencing s.! , /.??7, (the "Commencement Date") and ending on aoosi . The - encement Date may be extended until the equipment • it "C" is installed, provided that the Commencement Date shall not be extended paste/"997 in any event. Tenant shall have the right to extend this Lease for two (2) additional five (5) year terms ("Renewal Term"). The Renewal Term shall be on the same terms and conditions as set forth herein except for rental adjustments as provided in Paragraph 3, Rent, below. Tenant shall have elected to renew this Lease for a Renewal Term unless it gives Landlord written notice of its intention not to renew at least ninety (90) days prior to the expiration of the term. 3. RENT. a. ' Upon Commencement Date, Tenant shall pay Landlord, as rent, the following - sums ("Rent"): Based on Tenant's initial installation as described in Exhibit "C", attached hereto, the annual rent on Commencement Date shall be Seven Thousand Five Hundred and No/100 Dollars ($7,500.00), provided that Tenant may not add additional equipment cabinets and/or antennas , 70262 Pens"gtona6 vest Wireless u Nelson Bills(P6) • , • • from that shown on Exhibit "C" without the approval of the Landlord, which approval shall not be unreasonably withheld or delayed. This provision shall not apply to replacement equipment resulting from technology changes or repairs. There shall be additional Rent charged for the additional equipment and/or antennas that are installed based upon the amount of new equipment or antennas in proportion to the then current Rent under this Lease and other similar communication sites. b. The Rent shall be increased annually by an amount equal to five percent (5%). c. If this Lease is terminated at any time other than on the last day of a month, Rent shall be prorated, based on a thirty day month, as of the date of termination, and in the event of termination for any reason other than nonpayment of Rent, or Tenant's default, all prepaid Rent shall be refunded to Tenant. d. In addition to Rent, Tenant agrees to timely pay its pro rata share of any taxes or payment in lieu of taxes required as a result of this Lease. 4. GOVERNMENTAL APPROVAL CONTINGENCY. a. Tenant Application. Tenant's right to use the Premises is expressly made contingent upon its obtaining all the certificates, permits, zoning and other approvals that may be required by any federal, state, or local authority. This shall include the engineering study specified in Subparagraph 4(b) below on the Tower to be conducted at Tenant's expense. Landlord shall cooperate with Tenant in its efforts to obtain and retain such approvals and shall take no action which would adversely affect the status of the Premises with respect to the Tenant's proposed use thereof. b. Interference Study. Before initial installation of any structure or facilities, Tenant must pay for the reasonable cost of(i) a radio frequency interference study carried out by the City's communications consultant showing that Tenant's intended use will not interfere with any existing communications facilities and (ii) an engineering study showing that the Tower is able to support the Tenant's Facilities, as defined in Subparagraph 5(a), without prejudice to the City's use of the Tower. If the study finds that there is potential for interference that cannot be reasonably remedied or for prejudice to the Tower, Landlord may terminate this Lease immediately and refund Rent paid for any months Tenant did not occupy the Premises. c. Ton-approval. In the event that any application necessary under Subparagraph 4(a) above is finally rejected or any certificate, permit, license or approval issued to Tenant is cancelled, expires, lapses, or is otherwise withdrawn or terminated by governmental - authority so that Tenant, in its sole discretion, will be unable to use the Premises for its intended purposes, Tenant shall have the right to terminate this Lease and be reimbursed for the rental payment if made pursuant to Subparagraph 3(a) above. Notice of Tenant's exercise of its right to terminate shall be given to Landlord. Except as required under 70262 -2— F� US West wireless -2- u. • • . •. ...r . .' `. :... ' , • . Subparagraph 10(d) below, upon such termination, this Lease shall become null and void and the parties shall have no further obligations to each other. 5. USE. • . a. Subject to the terms of this Lease, and the recommendations of the City's communications consultant, the Premises may be used by Tenant solely for the purposes of installing, removing, maintaining, and operating certain communications facilities in accordance with Exhibit "C", subject to such modification and alterations as may result from changes or improvements in technology (collectively the "Communications Facility") and in accordance with the transmission and reception of wireless communication signals authorized for use by Tenant by the Federal Communications Commission ("FCC"). This use is non- exclusive, and Landlord reserves the right to allow the Premises to be used by others, and to make additions, deletions or modifications to its own facilities on the Premises. Tenant shall comply with all ordinances, statutes and regulations of local, state and federal agencies. b. Tenant, its agents and contractors, are hereby granted the right, at its sole cost and expense, to enter upon the Property and conduct such studies as Tenant deems necessary to determine the Property's suitability for Tenant's intended use. These studies may include surveys, soil tests, environmental evaluations, radio wave propagation measurements, field strength tests and such other analyses and studies as Tenant deems necessary or desirable. c. The placement of the equipment cabinets and the manner in which the antennas are attached to the Tower shall be subject to the prior approval of the Landlord, which approval shall not be unreasonably withheld. Landlord shall, at all times, use reasonable efforts to provide Tenant ingress, egress, and access from an open and improved public road. • Landlord agrees to issue Tenant a key for the gate to the site. Tenant will not allow any mechanics' or materialmen's liens to be placed on the Property as a result of its work on the Property. d. Landlord agrees to give reasonable advance notice of any major repair or maintenance activities related to Tower operations. In the case of an emergency, notification is not required; however, Tenant will be notified as soon as possible of a recognized emergency. In the event that use of the Tower for water service, or use of the Tower to perform any necessary maintenance or repair, is interrupted or made impractical because of Tenant's antenna usage on the Tower, the City may interrupt Tenant's use of the Premises as reasonably necessary to prevent interruption of water service or interruption of maintenance and repair of the Tower. The City will use its best efforts to prevent or Tninimi7.e interruptions to Tenant's use. Landlord shall not be liable to Tenant or any other party for any interruption in Tenant's service or interference with Tenant's operation of its Antenna - Facilities. e. Tenant agrees that if its communications equipment produces noise levels that cause a disturbance to the surrounding neighbors of the Property, Tenant will at its own expense install noise mitigating equipment or a buffer to meet State noise standards. 70262 -3- Fuse West West wireless uc Netsm soh(F6) -- :r.:..... .. ...: . _. 1. All modifications to the Premises and all improvements made for Tenant's benefit shall be.at the Tenant's expense and such improvements, including antenna, facilities and equipment, shall be maintained in a good state of repair, at least equal to the standard of maintenance of the Landlord's facilities on or adjacent to the Premises, and secured by Tenant. If Tenant's Antenna Facilities are mounted on the Tower they shall, at all times, be painted, at Tenant's expense, the same color as the Tower. 6. FACILITIES. a. Landlord agrees to maintain and operate the Property in accordance with good engineering practices and with all applicable FCC rules and regulations and to cause all other site users and users of the Property, where feasible, to do the same. b. Tenant agrees to install equipment, (Tenant's "Antenna Facilities") in compliance with all FCC rules and regulations and good engineering practices. Any damage done to the Premises during installation or during operations shall be repaired at Tenant's expense within thirty (30) days after written notification of damage. Tenant shall complete its initial installation in a timely fashion. Landlord shall inspect Tenant's initial installation, and any subsequent operating changes made by Tenant, and shall notify Tenant of any punch list items that must be completed. Tenant shall complete all punch list items within thirty (30) days after receipt of written notification by the Landlord. Failure to complete the punch list items shall constitute a material breach of this Lease, and Landlord shall be entitled to terminate this Lease as provided in Section 10(a)(i) of this Lease. Tenant agrees that its Antenna Facilities will be of types and frequencies which will not cause radio frequency interference to Landlord or to any other Lessees of the premises, provided that Landlord, all Lessees and other users of the Property are in full compliance with Paragraph 6 (a) above. In the event such interference does occur, and Tenant is advised of such interference, Tenant shall eliminate such interference within twenty-four (24),hours or cease using the equipment causing the interference except for short tests necessary for the elimination of the interference. It is further agreed that Landlord in no way guarantees to Tenant non- interference to the operation of Tenant's equipment. Landlord will use its best efforts to notify other users of interference, and to coordinate elimination of interference among site users. If Tenant clearly demonstrates the primary cause of the interference to be the property of Landlord or another user, Landlord will notify the other user to eliminate the interference within 24 hours or cease using the equipment causing the interference. c. Prior to adding additional transmitter or receiver frequencies on the premises, Tenant agrees to notify the Landlord of the modified frequencies so that the Landlord can perform the necessary interference studies to insure that the modified frequencies will not cause harmful radio interference to other existing Premises leases. Tenant will be required to pay the reasonable costs for said study which will be performed by Landlord's registered professional communications engineer. In the alternative, Tenant may perform the interference studies and submit the results to the City. However, the City, in its sole discretion, shall retain the right provided herein to submit the study results to its registered professional communications engineer for review at Tenant's expense. 70262 -4- r Wireless LLC Welton Mlle •. .. •. .. .. ... • •. ._ . • .. • • I. .. .... .i..A..•.... .Lip ...i-.:v.....e..I.. .vr•�.. �.u.� . • d. Tenant shall be solely responsible for any taxes on its personal property. e. Tenant shall provide Landlord with as-built drawings of the equipment and improvements installed on the Premises, which show the actual location of all Antenna Facilities. Said drawings shall be accompanied by a complete and detailed inventory of all equipment, personal property, and Antenna Facilities actually placed on the Premises. f. Tenant shall, at its own expense, maintain any equipment on or attached to the Premises in a safe condition, in good repair and in a manner reasonably suitable to Landlord so as not to conflict with the use of the surrounding premises by Landlord. Tenant shall not unreasonably interfere with the operations of other tenants using the Tower and shall not interfere with the working use of the water storage facilities thereon or to be placed thereon by Landlord. g. Upon notice from Landlord, Tenant shall promptly pay to Landlord all additional Landlord expenses incurred in maintaining the Premises, including painting or other maintenance of the Tower, that are caused by Tenant's occupancy of the Premises. 7. UTILITY SERVICE. Tenant agrees to timely pay for and install all required utility services and meters. Payment for electric and/or telephone service for Tenant's Antenna Facilities shall be Tenant's responsibility without any adjustment to rent. The Landlord shall not be responsible for any damages which occur as a result of interruption of utility services. 8. ADVANCES IN TECHNOLOGY. As technology advances and improved antennas are developed which are routinely used in Tenant's business, Landlord may require, in its reasonable discretion and after Tenant's prior written approval, which approval shall not be unreasonably withheld, the replacement of existing antennas with the improved antennas if the new antennas are more aesthetically pleasing or otherwise foster a public purpose, as long as the installation and use of the improved antennas are practical and technically feasible at this location. 9. ADDITIONAL BUILDINGS. Tenant acknowledges that Landlord may permit additional buildings to be constructed on the property described in Exhibit "A". At such time as this may occur, Tenant will permit said buildings to be placed immediately adjacent to Tenant's buildings and will allow "attachments" to its building so as to give the appearance that all buildings are a connected facility. Said attachments will be made at no cost to Tenant and will not compromise the structural integrity of Tenant's building. 10. TERMINATION. a. Except as otherwise provided herein, this lease may be terminated, without penalty or further liability, on sixty (60) days written notice as follows: i. by either party upon a default of any covenant or term hereof by the other party which default is not cured within sixty (60) days of receipt of written 70262 —5— vastegtaenls west Wireless uc Helm)Hills teal • 1 L notice of default (without, however, limiting any other rights available to the parties pursuant to any other provisions hereof); ii. by Tenant if it is unable to obtain or maintain any license, permit or other Governmental Approval necessary to the installation and/or operation of the Antenna Facilities or Tenant's business; iii. by Tenant if the Property is or becomes unacceptable under Landlord's design or engineering specifications for its Antenna Facilities or the communications system to which the Antenna Facilities belong; iv. by Landlord in the event that the use of the Tower for water service is jeopardized because of antenna usage on the Tower, v. by Landlord, if its Council decides, for any reason, to redevelop the Premises and/or discontinue use of the Tower for all purposes; vi. by Landlord if it determines that the Tower is structurally unsound, including, but not limited to, consideration of age of the Tower, damage or destruction of all or part of the Tower on the Premises from any source, or factors relating to condition of the Premises; or vii. by Landlord if its determines that Tenant has failed to comply with applicable ordinances, or state or federal law, or any conditions attached to government approvals granted thereunder, and the failure to comply is not cured within sixty (60) days of receipt of written notice of failure to comply, and after a public hearing before the Landlord's Council. b. notice of Termination. The parties shall give notice of termination in writing by certified mail, return receipt requested. Such notice shall be effective upon receipt as evidenced by the return receipt. All rentals paid for the Lease prior to said termination date shall be retained by Landlord. c. Tenant's Liability for Early Termination. If Tenant terminates this Lease other than of right as provided in this Lease, Tenant shall pay to Landlord as liquidated damages for early termination, 150% of the annual Rent for the year in which Tenant terminates, unless Tenant terminates during the last year of any Term under Paragraph 4 and Tenant has paid the annual rental for that year. d. Site Restoration. Upon termination of this Lease, Tenant shall, within ninety (90) days thereof, remove all of its equipment cabinets from the Premises, and its transmission lines and antennas from the Tower. Tenant, at its expense, agrees to return the Premises and the Tower surface where Tenant's Antenna Facilities have been to their original condition, ordinary wear and tear excepted. Upon the commencement of this Lease, Tenant shall deposit with Landlord the sum of$5,000.00, which shall be fully refunded to Tenant, 70262 w.,eemru+s vess Wireless sit -6- aeiwi Hills crag •-' .. ... . .. .- •.•. .r..-...t.. .... ..a... . .r . .... .V . — ................. ....'. ♦ .... ...Y..«a.....-.......«.«..\.1....'t.!l a'i.'a.. .. �.�... ' • including a reasonable rate of interest the amount of which to be determined by the City, upon the timely removal of the Antenna Facilities, and related equipment, the repair of the site and the restoration of the Tower surface to the reasonable satisfaction of the Landlord. Any of Tenant's property remaining on the Premises or the Tower ninety (90) days after the expiration or the termination of this Lease shall become the property of Landlord free of any claim by Tenant or any person claiming through Tenant. 11. INSURANCE. a. Worker's Compensation,. The Tenant must maintain Workers' Compensation insurance in compliance with all applicable statutes. The policy shall also provide Employer's Liability coverage with limits of not less than$500,000 Bodily Injury each accident, $500,000 Bodily Injury by disease, policy limit, and $500,000 Bodily Injury by disease, each employee. b. General Liability. The Tenant must maintain an occurrence form comprehensive general liability coverage. Tenant may self-insure for the amounts and types of insurance required by this Section 11(b). If Tenant elects to self-insure, Tenant shall notify Landlord of its intent to self-insure, and shall receive Landlord's prior written approval, which approval shall not be unreasonably withheld. Such coverage shall include, but not be limited to, bodily injury, property damage --broad form, and personal injury, for the hazards of Premises/Operation, broad form contractual, independent contractors, and products/completed operations. The Tenant must maintain aforementioned comprehensive general liability coverage with limits of liability not less than $5,000,000 each occurrence; $1,000,000 personal and - advertising injury; $5,000,000 general aggregate, and $2,000,000 products and completed operations aggregate. These limits may be satisfied by the comprehensive general liability coverage or in combination with an umbrella or excess liability policy, provided coverage afforded by the umbrella or excess policy are no less than the underlying comprehensive general liability coverages. Tenant will maintain Completed Operations coverage for a minimum of two years after the construction is completed. • c. Automobile Liability. The Tenant must carry Automobile Liability coverage. Coverage shall afford total liability limits for Bodily Injury Liability and Property Damage Liability in the amount of$1,000,000 per accident. The liability limits may be afforded under the Commercial Policy, or in combination with an Umbrella or Excess Liability Policy provided coverage of rides afforded by the Umbrella Excess Policy are no less than the - underlying Commercial Auto Liability coverage. Coverage shall be provided by Bodily Injury and Property Damage for the ownership, use, maintenance or operation of all owned, non-owned and hired automobiles. 70262 vsre+eotorths west Wireless lit -7- welsse Wilts 1PC5) • > . „ . - .... >..i '... s..... a...:f{::i./�::.::�::.a ise;... :i.�:.�_ The Commercial Automobile Policy shall include at least statutory personal injury protection, uninsured motorists and underinsured motorists coverages. d. Tenant Proverty Insurance. The Tenant must keep in force for the duration of the Lease a policy covering damages to its property at the Premises. The amount of coverage shall be sufficient to replace the damaged property, loss of use and comply with any ordinance or law requirements. e. Adjustment to Insurance Coverage Limits. The coverage limits set forth herein shall be increased at the time of any Renewal Term by twenty-five percent (25%) over the preceding Term or Renewal Term. f. Additional Insured - Certificate of Insurance. The Tenant shall provide, prior to tenancy, evidence of the required insurance in the form of a Certificate of Insurance issued by a company (rated A+ or better), licensed to do business in the State of Minnesota, which includes all coverages required in this Paragraph 11. Tenant will list the Landlord as an Additional Insured on the General Liability and Commercial Automobile Liability Policies. The Certificate(s) shall also provide the coverage may not be cancelled, non-renewed, or material changed without thirty (30) days prior written notice to the Landlord. 12. DEFENSE AND INDEMNIFICATION. a. General. Tenant agrees to defend, indemnify and hold harmless Landlord and its elected officials, officers, employees, agents, and representatives, from and against any and all claims, costs, losses, expenses, demands, actions, or causes of action, including reasonable attorneys' fees and other costs and expenses of litigation, which may be asserted against or incurred by Landlord or for which Landlord may be liable in the performance of this Lease, except those which arise solely from the negligence, willful misconduct, or other fault of Landlord. Tenant shall defend all claims arising out of the installation, operation, use, maintenance, repair, removal, or presence of Tenant's Antenna Facilities, equipment and related facilities on the Premises. b. Hazardous Materials. Without limiting the scope of Subparagraph 12(a) above, Tenant will be solely responsible for and will defend, indemnify, and hold Landlord, its agents, and employees harmless from and against any and all claims, costs, and liabilities, including attorney's fees and costs, arising out of or in connection with the cleanup or restoration of the Premises associated with the Tenant's use of Hazardous Materials. For the purposes of this Lease, "Hazardous Materials" shall be interpreted broadly and specifically includes, without limitation; asbestos, fuel, batteries or any hazardous substance, waste, or _ materials as defined in any federal, state, or local environmental or safety law or regulations including, but not limited to, CERCLA. c. Tenant's Warranty. Tenant represents and warrants that its use of the Premises will not generate and Tenant will not store or dispose of on the Premises, nor transport to or over the Premises, any Hazardous Materials, unless Tenant specifically 70262 FsreingtonfUS Vest Wireless LIZ -8- Nelson Hills MS) rr informs Landlord thereof in writing twenty-four hours prior to such storage, disposal or transport, or otherwise as soon as Tenant becomes aware of the existence of Hazardous Materials on the Premises. Landlord acknowledges Tenant has notified Landlord it will store lead acid back-up batteries on the Premises, . The obligations of this Paragraph 12 shall survive the expiation or other termination of this Lease. d. Landlord's Responsibility. Landlord will be solely responsible for any claims, costs and liabilities, including reasonable attorneys' fees and costs, arising out of or in connection with the removal, cleanup or restoration of the Property with respect to Hazardous Materials from any and all sources other than those Hazardous Materials introduced to the Property by Tenant, its officers, employees, agents, representatives, successors or assigns. 13. DEFAULT. Except as expressly limited hereby, Landlord and Tenant shall have such remedies for the default of the other party hereto as may be provided at law or equity following written notice of such default and failure to cure the same within thirty (30) days. 14. LIMITATION OF LANDLORD'S LIABILITY. If Landlord terminates this Lease other than as of right as provided in this Lease, or Landlord causes interruption of the business of Tenant or for any other Landlord breach of this Lease, Landlord's liability for damages to Tenant shall be limited to the actual and direct costs of equipment repair and shall specifically exclude any recovery for value of the business of Tenant as a going concern, future expectation of profits, loss of business or profit or related damages to Tenant. 15. ASSIGNMENT. This Lease, or rights thereunder, may not be sold, assigned, or transferred at any time by Tenant except to Tenant's affiliates or subsidiaries. As to other parties, this Lease may not be sold, assigned, or transferred without the written consent of the Landlord, such consent not to be unreasonably withheld. For purposes of this paragraph, an "affiliate" or "subsidiary" means an entity in which Tenant owns greater than a 50% interest. Landlord hereby consents to the assignment by Tenant of its rights under this Lease as collateral to any entity which provides financing for the purchase of the equipment to be installed at the Premises. 16. QUIET ENJOYMENT. Tenant, upon paying rent, shall peaceably and quietly have, hold and enjoy the Property. 17. DAMAGE OR DESTRUCTION. If the Property or any portion thereof are destroyed or damaged so as to materially hinder effective use of the Antenna Facilities through no fault or negligence of Tenant, Tenant may elect to terminate this Lease upon thirty (30) day's - written notice to Landlord. In such event, all rights and obligations of the parties shall cease as of the date of the damage or destruction and Tenant shall be entitled to the reimbursement of any rent prepaid by Tenant. 70262 Fir -9- m anns�wireless ess u • • 18. CONDEMNATION. In the event the whole of the Premises is taken by eminent domain, this Lease shall terminate as of the date title to the Premises vests in the condemning authority. In event a portion of the Premises is taken by eminent domain, either party shall have the right to terminate this Lease as of the date of title transfer, by giving thirty (30) days' written notice to the other party. In the event of any taking under the power of eminent domain, Tenant shall not be entitled to any portion of the reward paid for the taking and the Landlord shall receive full amount of such award. Tenant hereby expressly waives any right or claim to any portion thereof. Although all damages, whether awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, shall belong to Landlord, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant on account or any and all damage to Tenant's business and any costs or expenses incurred by Tenant in moving/removing its equipment, personal property, Antenna Facilities, and leasehold improvements. 19. NOTICES. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed given if personally delivered or mailed, certified mail, return receipt requested, to the following addresses: If to Landlord: City of Farmington 325 Oak Street Farmington, Minnesota 55024 with copy to: Farmington City Attorney Campbell Knutson P.A. 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, Minnesota 55121 If to Tenant: U S WEST Wireless, L.L.C. c% U S WEST Communications Group Real Estate Services 8200 East Belleview, Suite 500 Englewood, CO 80111 Attention: PSI Manager/Wireless • with copy to: U S WEST Wireless, L.L.C. c/o U S WEST Communications Group Real Estate Services 8200 East Belleview, Suite 500 Englewood, CO 80111 Attention: Regional Real Estate Manager 70262 R,,.,ncs it s West Wireless uc —10— Nelson Hills(PLS) • 20. MISCELLANEOUS: a. Authority. Each of the individuals executing this Lease on behalf of the Tenant or the Landlord represents to the other party that such individual is authorized to do so by requisite action of the party to this Lease. b. Complete Lease: Amendments. This Agreement supersedes all prior discussions and negotiations and contains all agreements and understandings between the Landlord and Tenant. This Agreement may only be amended in writing signed by all parties. Exhibits "A" through "C" are incorporated into this Agreement by reference. c. Counterparts. This Agreement may be signed in counterparts by the parties hereto. d. Binding Effect. The terms and conditions of this Agreement shall extend to and bind the heirs, personal representatives, successors and assigns of Landlord and Tenant. e. Enforcement and Attorneys' Fees. The prevailing party in any action or proceeding in court to enforce the terms of this Agreement shall be entitled to receive its reasonable attorney's fees and other reasonable costs and expenses from the non-prevailing Ply. f. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Minnesota. g. Severability. If any term of this Lease is found to be void or invalid, such invalidity shall not affect the remaining terms of this Lease, which shall continue in full force and effect. IN WITNESS WHEREOF the parties hereto have executed this Lease Agreement the day and year first above written. LANDLORD: CITY OF FARMINGTON • • BY: 111,!:c _:==-�_ Ro•er Shirley Water Boa Chair Af if AND C7/" (E"APRIIW Jo I F. Erar, City Administrator t 1a 44- 41- 1.06575- 70262 -1 i_ Funinpte I rest Wireless LLC Welsee Hills MS) . .0.1.. .._ ...... ..... _••■... .... ..... .. • . ;• ..• — .7.,..... _........,`.�..._o,.:a.:i.�)�...�.... ........r.�r....i.u..—tea • •• 1 • • TENANT: • • U S WEST Wireless, L.L.C. BY: ta ' Its: V P CEO • 70262 FeraUgtOn/US hest wireless LLC -12- Nets=Mils(PCS) • .._.�.. ...._............- .....:......> - . ...:..... ti.•.w.� _. '•- 6 IJST OF EXHIBITS Exhibit "A": Legal Description of the Property. Exhibit "B": Sketch and Description of the Premises. Exhibit "C": Equipment/Initial Installation. • 70262 FYfligtanA6 Vest wm)ass to -13- *Om 811)s(Pa) For Minnesota Only Site ID#: MIN 273 Site Name: EXHIBIT"A" TO • COMMUNICATION SITE LEASE AGREEMENT • LEGAL DESCRIPTION OF OWNER'S PROPERTY: SEE ATTACHED ADDRESS: • • 18515 Pilot Knob Road Farmington,MN 55024 PID NUMBER 15-01400-012-75 It is agreed by owner and lessee that the precise legal description for the Owner's Property will be corrected if necessary, and that the correct legal description may be placed on this Exhibit "A Lease 981026 • `Dakota County Real Estate Inquiry http://dakota.barr.com/scripts/...g1&Cmd=Detaiis&PIN=140140001275 Property Record Details • PROPERTY ID NUMBER: 14-01400-012-75 PROPERTY ADDRESS: • 1998 ESTIMATED MARKET VALUE(PAYABLE 1999) LAND:$16,000 BUILDING:$ TOTAL:$16,000 1998 TAXES • NET TAX:$0.00 SPECIAL ASSESSMENTS:$0.00 TOTAL TAX&SA:$0.00 LAST QUALIFIED SALE DATE: AMOUNT:$ LOT SIZE R/W ACREAGE:0.34 TOTAL ACREAGE:2.77 SCHOOL DISTRICT: 192 WATERSHED DISTRICT:VERMILLION RIVER HOMESTEAD: NON HOMESTEAD ASSESSMENT USAGE: EXEMPT BUILDING CHARACTERISTICS: NO DATA AVAILABLE PLAT NAME: SECTION 14 TWN 114 RANGE 20 TAX DESCRIPTION: PT OF SE 1/4 BEG NE COR W 950 FT S 255 FT E 200 FT N 215FTE 500FTS 160 FTE 250 FT TOE LINE N 200 FT TO BEG 2.778 ACRES 14 114 20 1 of 1 2/2/99 3:51 PM SITE ID#: SITE NAME: Nelson Hills Water Tower EDIT "B" TO COMMUNICATION SITE LEASE AGREEMENT SKETCH AND DESCRIPTION OF THE PREMISES: • I C 1 o . 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BETA k GAMMA) SIR RAID SIREN BEYOND US WEST EQUIPMENT n '1 • OELEVATION LOOKING SOUTHEAST I 1. 411 S I P . •• .. • •• ••• •r• •••••• • •-•-••••=■ .n...P.2,1..4../...:.%fittes.a1A...'...isak.;..ItheNALAIISZet.AL....:.... - I . -. $ SITE ID I' • SITE NAME: Nelson Hills Water Tower EXHIBIT "C" . . TO COMMUNICATION STIE LEASE AGREEMENT it EQUIPMENT/INITIAL INSTALLATION: S • • !/' • SPACE WORKING. MINICELL . • CABINET POWER • CABINET • off` ITI 10'-8" 2'-6" 7'-2 1/1611-.1 I 13'-6" - a • TELCO BOX 911 METER BOX DISCONNECT BOX 5'_0" 5'—O" O mg - TELCO PULLBOX tq • ! N DIRECTORY CALLED DWGS FOR MINN - CALLED NWEQANCHORS2 QUIPMENT AND ANCHORS yo"„� City of Farmington •.. 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 441**4 O* www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad SUBJECT: Adopt Resolution Accept Rambling River Center Donations DATE: November 3,2014 INTRODUCTION A donation from Alyn McClintock in memory of Margaret McClintock was recently received at the Rambling River Center. A second donation from Valmont Industries, Inc.was made to the waffle breakfast fundraiser. DISCUSSION Alyn McClintock has donated a magnifying projection machine to the Rambling River Center in memory of his mother Margaret McClintock. The machine will be used for Rambling River Center members who may have difficulty reading small print. The original price of the machine when it was purchased in 2005 was $1,795.00. Valmont Industries,Inc. provided a cash donation of$500.00 to the Rambling River Center's Waffle Breakfast Fundraising event that was held on Saturday,October 25, 2014. Staff will communicate on behalf of the city council its appreciation of the magnifying projection machine donation from Alyn McClintock in memory of his mother Margaret McClintock and the$500.00 cash donation from Valmont Industries, Inc to the Rambling River Center's waffle breakfast fundraiser. BUDGET IMPACT NA ACTION REQUESTED Adopt the attached resolution accepting the magnifying projection machine with an original value of $1,795.00 from Alyn McClintock in memory of Margaret McClintock and the cash donation of$500.00 from Valmont Industries, Inc.to the Rambling River Center. ATTACHMENTS: Type Description 0 Cover Memo resolution RESOLUTION NO. R57-14 ADOPT RESOLUTION ACCEPTING A MAGNIFYING PROJECTION MACHINE DONATION FROM ALYN MCCL INTOCK AND $500.00 CASH DONATION FROM VALMONT INDUSTRIES,INC. TO THE RAMBLING RIVER CENTER Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Farmington, Minnesota, was held in the Council Chambers of said City on the 3`d day of November 2014 at 7:00 p.m. Members Present: Larson,Bartholomay, Bonar, Donnelly, Fogarty Members Absent: None Member Bartholomay introduced and Member Fogarty seconded the following: WHEREAS, a donation of a Magnifying Projection Machine with an original value of $1,795.00 has been given by Alyn McClintock to the Rambling River Center in memory of his mother Margaret McClintock; and, WHEREAS, a cash donation of$500.00 has been given by Valmont Industries, Inc. to the Rambling River Center for the Waffle Breakfast Fundraiser; and, WHEREAS, it is required by State Statute and in the best interest of the City to accept both donations. NOW,THEREFORE,BE IT RESOLVED that the City of Farmington hereby accepts with gratitude the generous donations of a Magnifying Projection Machine with an original value of $1,795.00 has been given by Alyn McClintock in memory of his mother Margaret McClintock and a cash donation of$500.00 has been given by Valmont Industries, Inc. to the Rambling River Center for the Waffle Breakfast Fundraiser. This resolution adopted by recorded vote of the Farmington City Council in open session on the 3rd day of November 2014. Mayor Attested to this /O day of November, 2014. r J" Administrato SEAL o1 City of Farmington 6 1 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 p ,4 PRO.6, www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Robin Hanson,Finance Director SUBJECT: Approve Bills DATE: November 3,2014 INTRODUCTION Attached is the list of bills for October 11-24,2014. 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CD s{ V' C O CO N CO CC) I- O at C CO CD tCI N sr sh N. t0 Ni CO IN CO r P) CV O CO CC O s)' O) O o N- C 70 f00 m co G t0 r N r r CO to s10- N r ,� N t0+1_ a T O Q r s- sY M n sT s{ CO co m CD- O co ; - ,_ ,_ a y O N N O N N N N< V I O r r a-- y U 40 16.. w 0)) m Y h O m N N N N CC Z = . , r U .411/34), City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 44',4 ",. www.ci.farmington.mn.us TO: Mayor,Councilmembers and City Administrator FROM: Robin Hanson SUBJECT: Appoint Malloy, Montague, Karnowski,Radosevich(MMKR)and Co., PA as Auditor for 2014,2015 and 2016 DATE: November 3, 2014 INTRODUCTION Each year the city's financial statements are audited by an independent public accounting firm.A request for proposal(RFP) for professional auditing services for 2014,2015, and 2016 with one two-year option to renew was issued in September 2014. DISCUSSION The request for proposal was sent to seven auditing firms, including the city's current auditing firm, and advertised on the League of Minnesota's website and in the Farmington Independent. City staff and the fire relief president reviewed and analyzed the technical proposals. Of the six firms that submitted proposals, staff invited three firms in for further discussion and evaluation. Staff felt these three firms had the most experience with other city's that were similar to Farmington. The interviews provided staff an opportunity to gain a better understanding of each firm. Following are some of the interview questions which were asked. • Review the primary client base of the proposed partner and manager as well as other audit team members. • Describe in more depth the clients you selected as being most comparable to the City of Farmington and why. • Describe your firms proposed audit approach,timing and CAFR preparation. • Explain your firm's philosophy and approach to communicating with city councils. • Explain the new GASB 67 and GASB 68 accounting rules and assume you are speaking to a city council. (What is their ability to simply explain complex new accounting rules?). • In light of GASB 67 does the Fire Relief need to obtain an actuarial study?If they do not,what is the impact on the Fire Relief's audit opinion? What is the impact on the city's audit opinion?The city's ability to apply for and successfully receive a Certificate of Achievement for Excellent in Financial Reporting from the GFOA? • Do you have any questions or concerns regarding the information contained in or the presentation of the City's and Fire Relief's most recent audit reports? After the interviews staff was most interested in Abdo and MMKR and proceeded to check their references. Based on the information in their proposal,responses received and the discussion had related to the city's interview questions, and the information received during the checking of references staff believes MMKR and Company,P.A would be the best fit for the city council and staff. A copy of MMKR's response to the RFP process,which provides information on their firm and proposed audit team is attached for your review. Section C of their RFP,the detailed continuing education reports,was removed because otherwise the file was too large to upload. The Fire Relief Association is also going to hire MMKR to complete their audit work and related compliance paperwork. Finally, in light of GASB 67,Financial Reporting of Pension Plans(effective for the City's 2014 audit) in order for the city to receive an unqualified opinion and be able to apply for the Certificate of Achievement for Excellence in Financial Reporting,the Fire Relief Association will most likely need to obtain an actuarial study. Staff has contacted two actuarial firms to ascertain if they are able to complete the necessary calculations,prepare the required GASB 67 footnote disclosure information and provide staff with an estimated cost for their services. Staff expects to bring this information back to the city council later this year. BUDGET IMPACT The amounts for the 2015, 2016 and 2017 audits would be$33,450, $33,900, and $34,350.Below is a recap of the cost proposals received from the three firms that staff interviewed: Firm Abdo KDV MMKR 2014 Base Fee 27,946 29,100 28,950 CAFR Preparation 3,000 3,000 4,500 Total 30,9461 32,100 33,450 2015 Base Fee 28,615 30,030 29,400 CAFR Preparation 3,000 3.000 4 500 Total 31,615 33,030 33.900 2016 Base Fee 29,612 30,960 29,850 CAFR Preparation 3,000 3,000 4 500 Total 32,612 33,960 34,350 Combined 3 Yr Total Base Fee 86,173 90,090 88,200 CAFR Preparation 9,000 9,000 13 500 Total 95,173 99,090 101,700 Total Hours 250 260 280 Ave Per Hour 127 127 121 ACTION REQUESTED Appoint Malloy Montague Karnowski Radosevich and Co.,P.A. as auditors for fiscal years 2014,2015 and 2016. ATTACHMENTS: Type Description D Backup Material MMKR Audit Proposal 1 Technical Proposal for City of Farmington,Minnesota for Professional Auditing Services For Fiscal Years Ending December 31,2014,2015,and 2016 By Malloy,Montague,Karnowski,Radosevich&Co.,P.A. William J.Lauer,Principal E-mail:blauer@mmkr.com 5353 Wayzata Boulevard,Suite 410 Minneapolis,MN 55416 (952)545-0424 Due Date:October 3,2014 4:00 p.m. City of Farmington For Fiscal Years Ending December 31,2014,2015,and 2016 Page Transmittal Letter I. Independence 1 II. License to Practice in Minnesota 1 III. Malloy,Montague,Kamowski,Radosevich&Co.,P.A. Qualifications and Experience 1 A. Organization and Goals 1 B. Location and Size of Malloy,Montague,Kamowski, Radosevich&Co.,P.A. 2 C. Personnel Experienced in Governmental Auditing 2 D. Memberships in Professional/Civic Organizations 2 E. Participation in Professional/Community Activities 2-3 F. Continuing Professional Education(CPE) 3 G. Malloy,Montague,Kamowski,Radosevich&Co.,P.A.Quality Control 4-5 H. No Regulatory or Disciplinary Action 5 I. Peer Review 5 IV. Principal,Supervisory,and Staff Qualifications and Experience 5 A. Assignment Policy 5 B. Personnel Assigned,Classification,and Experience 6 V. Similar Engagements With Other Governmental Entities 7 A.Most Similar Engagements 7 B. Complete List of Significant Governmental Audit Clients 8 C. Other Services 8-10 D. Financial Reporting Requirements of the Governmental Accounting Standards Board(GASB) 10 1. Malloy,Montague,Kamowski,Radosevich&Co.,P.A.'s Experience With GASB Statements 10 2. Assistance With Standards of GASB Statements 11 City of Farmington For Fiscal Years Ending December 31,2014,2015,and 2016 Page VI. Specific Audit Approach 11 A. Proposed Segmentation of the Engagement 11 B. Level of Staff and Number of Hours to be Assigned to Each Proposed Segment of the Engagement 11 Segmentation of Audit 12 C. Sample Sizes and the Extent to Which Statistical Sampling is to be Used in the Engagement 13 D. Extent of Use of Auditing Software in the Engagement 13 E. Type and Extent of Analytical Procedures to be Used in the Engagement 14 F. Approach to be Taken to Gain and Document an Understanding of the City's Internal Control 14 G. Approach to be Taken in Determining Laws and Regulations That Will be Subject to Audit Test Work 14 H. Approach to be Taken in Drawing Audit Samples for Purposes of Test of Compliance 15 VII. Identification of Auditing/Reporting Requirements and/or Anticipated Potential Audit 15 Problems . I . VIII. Report Formats 15 IX. Management Report 15 Appendix A:Peer Review Appendix B:Résumés Appendix C:Continuing Professional Education(CPE) Appendix D: Sample Report Formats Appendix E: Sample Management Report Appendix F:Proposer Guarantees and Warrantees PRINCIPALS Thomas M.Montague,CPA Thomas A.Kamowski,CPA Paul A.Radosevich,CPA - William J.Lauer,CPA CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L Holinka,CPA October 3,2014 Ms.Robin Hanson Finance Director City of Farmington 430 Third Street Farmington,MN 55024 1 Dear Ms.Hanson: I ' We are pleased to submit this proposal to provide auditing services for the City of Farmington(the City) and the Farmington Fire Relief Association(the Association). Our audits will be conducted in accordance with auditing standards generally accepted in the United States of America; and the provisions of the Legal Compliance Audit Guide,promulgated by the State Auditor pursuant to Minnesota Statute § 6.65. If necessary, our audits will also be conducted in accordance with the standards for financial and compliance audits contained in Government Auditing Standards,issued by the Comptroller General of the United States;the Single Audit Act;the provisions of the U.S.Office of Management and Budget(OMB)Circular A-133,Audits of States,Local Governments, and Non-Profit Organizations;and any other applicable state or federal audit guide. We anticipate issuing the following reports in relation to both the City's and the Association's audits: 1. A report on the fair presentation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America,with an"in relation to"opinion on any combining and individual fund financial statements or supporting schedules. 2. A report on compliance with Minnesota State Laws and Regulations. We understand that a Single Audit of the City's Federal Awards Expenditures is not expected to be required. Should one be required for any of the three years included in this proposal, the following additional reports would be issued: 1. A report on the Schedule of Expenditures of Federal Awards. 2. A report on compliance and internal control over financial reporting based on an audit of financial statements performed in accordance with Government Auditing Standards. 3. A report on compliance with requirements applicable to each major program and internal control over compliance with OMB Circular A-133. Malloy, Montague, Karnowski, Radosevich & Co., P.A. 1 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 •Telephone: 952-545-0424 • Telefax: 952-545-0569 • www.mmkr.com Ms.Robin Hanson Page 2 October 3,2014 If required,we will audit the financial statements of the Association's charitable gambling activities. An alternate bid has been included in this proposal for these services. We will also provide a management report to communicate comments and recommendations as a result of the City's audit. This management report will include a discussion of all financial reporting and internal control-related fmdings, including Minnesota Legal Compliance findings. This report also includes an analysis of the City's financial condition, discussion of the City's fiscal performance compared to prior years and other cities,recommendations to management on improving its accounting system and financial reports,and an update on prior year audit issues. If our audit procedures indicate that material errors,illegal acts,or other irregularities might exist,we will make an immediate,written report to the City Council and/or other city officials as appropriate. Our management report will include the formal communications to the City's audit/finance committee or its equivalent as required by Statement on Auditing Standards No. 114, The Auditor's Communication With Those Charged With Governance,including: • The auditor's responsibility under auditing standards generally accepted in the United States of America, • Planned scope and timing of the audit, • Significant findings from the audit, • Significant accounting policies, • Management judgments and accounting estimates, • Significant audit adjustments, } • Other information in documents containing audited financial statements, • Disagreements with management, • Management consultation with other accountants, • Major issues discussed with management prior to retention,and • Difficulties encountered in performing the audit. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information.We will advise you about appropriate accounting principles and their application and will assist you in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes the maintenance of adequate records and related internal control policies, the selection and application of accounting principles,and the safeguarding of assets. The assistance to be supplied by your personnel, including the preparation of schedules and analysis of accounts, typing all cash or other confirmations we request, and locating any invoices selected by us for testing,will be discussed and coordinated with you. We understand that it has not been determined whether the City or the auditor will be responsible for preparing the initial draft of the City's comprehensive annual financial report(CAFR); as well as editing, printing, and binding the CAFR. An alternate bid is included in this proposal for preparation and production of the City's CAFR. We understand that the auditor will be responsible for preparing the initial draft of the Association's financial statements and, if applicable, the financial statements of the Association's gambling activities; as well as editing,printing,and binding the financial statements. Prior to issuance of the final audit reports,we shall review the management report,internal control letters,and any other required state or federal compliance reports with the City's management. Ms.Robin Hanson Page 3 October 3,2014 We understand that we will be responsible for assisting with the completion of the Association's annual state reporting forms and relevant tax filings, including those required for the Association's gambling activities. Unless unforeseen circumstances occur(such as turnover of key city finance personnel),we anticipate no difficulty in meeting the time requirements for completion of the work described above as set forth in the City's Request for Proposal for Professional Auditing Services. We believe we are best qualified to perform the engagement for the following reasons: • Experience in providing auditing and consulting services to Minnesota municipalities and fire relief associations. • Experience with and expert knowledge of governmental financial reporting, including the standards of the Governmental Accounting Standards Board(GASH);and the requirements of the Government Finance Officers'Association(GFOA)Certificate of Achievement for Excellence in Financial Reporting Program. • Experience with Minnesota city public finance and various municipal enterprise operations, including liquor,water,sewer,storm sewer,and solid waste operations. • Experience with growing metropolitan municipalities, including those with significant development. • Ability to communicate and work with you. The current environment has placed incredible strains on city finances in Minnesota. In such times, you need more than an annual audit of past financial transactions. Obtaining good advice from a reliable consultant throughout the year can be an efficient use of funds. Our history of 50+ years of service to Minnesota cities is indicated in this proposal. This proposal presents our qualifications,but we ask that you contact any one of our references herein to provide you with the most convincing evidence.It is our belief that every addition to our city client group is a result of existing clientele who are more than satisfied with our services. The benefits of our firm (experience, quality, stability, etc.) are reflected by our exemplary retention record.We have served most of our city clients for many years,and rarely lose a city client once we have served them. The high degree of customer satisfaction represented by our client retention record is irrefutable documentation of our performance record. Our experience provides you with a valuable resource for varied management services, including cash flow projections, arbitrage consultation, operational reviews, computer utilization matters, and meaningful management reports. We are sincerely interested in working with you to improve the effectiveness and efficiency of your city's financial operations and internal controls. We can assist management in enhancing its fmancial system and provide varied consulting services. To help with your evaluation, the following is a "Summary of Key Qualifications" for quick reference. Please refer to other sections of our proposal for more detailed information. Ms.Robin Hanson Page 4 October 3,2014 SUMMARY OF KEY QUALIFICATIONS A. Quality: • Our firm emphasizes quality service, which is accomplished by recruiting and developing high quality personnel. • We are a member of the Governmental Audit Quality Center of the American Institute of Certified Public Accountants (AICPA). The section maintains standards for quality control in CPA firms. B. Experience and Expertise: • Specialization in municipal and other governmental entities for over 50 years; last year we audited approximately 25 municipalities, 10 fire relief associations, 30 school districts, and numerous other governmental and related entities. • Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) is an industry leader in providing guidance to Minnesota local governments on the accounting and reporting standards established in GASB Statements. Over the last several years, we have assisted our local governments with implementing many new standards, such as GASB Statement Nos. 34, 43, 44, 45, 54, 63, and 65. This process has provided us with a practical understanding of these new standards that can only be gained by firsthand experience. This is important as the City will be implementing GASB Statement No.68 for the year ending December 31,2015. • In addition to audits,we provide our clients with a wide range of consulting services, including evaluations of internal controls, management and operational reviews, budget development and monitoring, cash flow projections, human resources consulting, payroll tax and employee benefit-related matters,and calculation of tax increment referendum reimbursements. • As a result of our large governmental audit practice, we have a large pool of knowledgeable and experienced governmental auditors. Our professionals receive extensive continuing education with internal and external seminars specifically for governmental audits. • MMKR professionals are active members of many professional organizations and committees, including the Minnesota GFOA (MnGFOA) and the Minnesota Society of Certified Public Accountants(MNCPA). Our professionals have held various leadership positions on the MNCPA Board of Directors. We are also active in various MNCPA committees, which include planning, moderating, and presenting at the annual city and school district audit workshops, committee work on Single Audit implementation,and quality reviews. • On our staff we have reviewers for both the National GFOA and the Association of School Business Officials (ASBO) Certificate of Excellence in Financial Reporting Programs. We have assisted numerous clients with obtaining certificates on first-time submissions and with retaining certificates in subsequent years. • MMKR professionals are also active members of the AICPA. This active role includes being a member of the AICPA Council; a 400-member group representing members from around the country that provides strategic planning and direction to the AICPA Board of Directors. • Over the years, we have developed many customized audit tools, techniques, and paperless workpaper and report formats which allow us to perform our audits efficiently and with minimal disruption to our clients'operations. Ms.Robin Hanson Page 5 October 3,2014 C. Service: • Excellent client satisfaction supported by a high client retention record. • Our client references are our best proof of service commitment—please feel free to contact them. • We are much more than an audit firm;our clients receive many additional benefits and services. We hope you will give our firm and proposal due consideration. We are convinced we will give the administration and the City Council the kind of quality and timely service you expect and demand from your auditors. If you have any questions, please contact William J. Lauer, Principal. This proposal is a firm and irrevocable offer for sixty(60)days covering the fiscal years ending December 31,2014,2015, and 2016. Sincerely, MALLOY,MONTAGUE,KARNOWSKI,RADOSEVICH&CO.,P.A. P i I c?a,14.A.4 William J.Lauer,CP Principal WJL:lmb it Technical Proposal for City of Farmington for Professional Auditing Services For Fiscal Years Ending December 31,2014,2015,and 2016 By Malloy,Montague,Karnowski,Radosevich&Co.,P.A. I. INDEPENDENCE Malloy, Montague, Karnowski,Radosevich&Co.,P.A.(MMKR)is independent with respect to the City of Farmington(the City)and the Farmington Fire Relief Association(the Association)as defined by auditing standards generally accepted in the United States of America and the U.S.General Accounting Office's(GAO)Government Auditing Standards. MMICR has had no professional relationships involving the City,the Association,or any of their agencies or component units for the past five years. MMKR will give the City written notice of any such relationships entered into during the course of this agreement. II. LICENSE TO PRACTICE IN MINNESOTA MMKR and all assigned key professional staff are properly licensed to practice in Minnesota and shall remain so for the length of this engagement. III. MALLOY,MONTAGUE,KARNOWSKI,RADOSEVICH&CO.,P.A.QUALIFICATIONS AND EXPERIENCE A. Organization and Goals MMKR is a local CPA firm and a member of the Governmental Audit Quality Center of the American Institute of Certified Public Accountants(AICPA). The principals and professionals of MMKR perceive their firm as unique in its organizational structure and in the client-oriented approach taken to the management of its practice. Personalized principal attention is built into our services. Principal attention to client operations is typically a key to the reappointment of MMKR and the continuity of quality service for clients. This, in turn, symbolizes both the caliber of services we render and also the attention we,as a firm,devote to staff development. We have established an enviable reputation as a high-quality firm that gives total commitment to its clients. That reputation is built on the thoroughness and integrity of our audit practice and full range of tax,data processing,and other advisory services. In the current litigious environment, which is bringing into question the effectiveness of the audit process, we believe that no other firm's reputation for quality surpasses our own. MMKR has never been claimed as a defendant in any lawsuit or other legal action. -1- B. Location and Size of Malloy,Montague,Karnowski,Radosevich&Co.,P.A. Our office, which is located on the west side of Minneapolis at the intersection of Highways 394 and 100,is staffed by approximately 35 individuals. C. Personnel Experienced in Governmental Auditing The following lists those professionals by classification and years of experience who have substantial governmental audit experience: Number Providing Greater Than 500 Service Hours Number Per Year of Governmental Experience Classification Number of CPAs Services Ex p Principals 6 6 3 Up to 35 years Senior Managers and Senior Consultants 4 4 3 Up to 35 years Managers 2 2 2 Up to 10 years Senior Associates and Associates 6 3 6 Up to 8 years Staff Accountants 7 1 7 Up to 3 years One principal, one manager, and one senior associate will be used on this engagement on a full-tune basis.Additional professional staff will be used on an as-needed basis. D. Memberships in Professional/Civic Organizations MMKR, the principals, and all professional staff with CPA certificates belong to the following accounting organizations,as applicable: AICPA—American Institute of Certified Public Accountants MNCPA—Minnesota Society of Certified Public Accountants Membership in governmental-oriented professional organizations includes the following: ASBO(National)—Association of School Business Officials MASBO(State)—Minnesota Association of School Business Officials GFOA(National)—Government Finance Officers'Association MnGFOA(State)—Minnesota Government Finance Officers'Association MNCPA—Minnesota Society of Certified Public Accountants MACS—Minnesota Association of Charter Schools Other professional organizations include: AGC--Association of General Contractors Chamber of Commerce of the United States Minnesota Association of Commerce and Industry Twin West Chamber of Commerce Minnesota Office Systems Association • Minnesota Council of Nonprofits E. Participation in Professional/Community Activities The principals and staff are also heavily involved in civic and community activities. Memberships in all of these organizations are not passive. They are active memberships, particularly in professional accounting and trade/industry organizations. -2- Principals and managers participate heavily in trade/industry associations (i.e. GFOA, MASBO, MnGFOA, etc.). That participation involves making presentations, serving on planning committees, and serving as panel members and/or moderators. MASBO and MnGFOA presentations have included such topics as: Governmental Accounting Standards Board (GASB) Statement Implementation; GFOA Certificate of Achievement for Excellence in Financial Reporting; Audit Best Practices;GASB Updates;and Budget Projections. For many years various principals and staff have actively participated in the activities of the Governmental Accounting and Auditing Committees of the MNCPA.Principal and staff involvement with the work of the committee,often in the position of committee and subcommittee chair,includes quality review of annual governmental audit reports, technical developments, and annual city and school district workshops. We are frequent speakers at these workshops covering such topics as: Preparation of Comprehensive Annual Financial Reports; Review of Governmental Annual Audit Reports; the New Quality Review Program Mandated by the Revised GAO Government Auditing Standards; Financial and Compliance Auditing Under the New Statements on Auditing Standards; and Auditing Under Revised Group Audit Standards. F. Continuing Professional Education(CPE) The primary goal of MMKR's professional education is to enable principals and professionals to provide unparalleled services to the firm's clients.We achieve this by a continuing process of setting and maintaining the highest standards of competence for our principals and professionals. To meet this primary goal,we believe that all training must be responsive to two needs: 1)the firm's standards of performance, and 2)the growth and development of the firm's personnel. Generally, in the early years of a professional's career,the firm assumes much of the responsibility for planning and providing the necessary training. With more experience, the individual assumes more of the initiative in determining his or her own training needs and objectives. The responsibility for education in public accounting,therefore,is shared. The firm's continuing education approach combines on-the-job and varied formal training. The formal programs are supplemented by a wide range of specialized publications on technical topics which individuals in the firm use to expand their professional development. Professional regulations require a 40-hour average annual CPE minimum requirement for each principal and professional.Past years'experience has shown that the 40-hour average is not sufficient to meet today's fast-changing educational demands. Accordingly, most MMKR professionals routinely exceed this requirement. We believe that this demonstrates our dedication to the necessity for ongoing education. A significant portion of the CPE of the individuals assigned to your audit centers around various aspects of governmental accounting and auditing. Many of these individuals have also served as instructors for both internal and external seminars. These seminars include those sponsored by the MNCPA,MASBO,GFOA,internally-produced,and others. -3- G. Malloy,Montague,Karnowski,Radosevich&Co.,P.A.Quality Control MMKR is a member of the Governmental Audit Quality Center of the AICPA and as such is subjected to a peer review in accordance with the membership requirements of the section. MMKR is committed to providing our clients with professional services of the highest quality. In order to satisfy this commitment, we have developed a quality control program which we believe is unsurpassed in our profession. Our program is based on two fundamental principles adopted by our firm. First, in order to provide quality service, a firm must attract, retain, and develop highly competent staff members. Second, it must have an organizational structure and operating policies that will facilitate the execution of an effective quality control program. We believe the information that follows demonstrates our commitment to these principles. An effective quality control program begins with quality personnel and we believe that our staff recruitment and professional development programs are among the finest in the country. This is evidenced by the fact that: • We annually recruit new staff members from the top colleges and universities in the upper Midwest. • All of our professional staff members are college graduates. • It is our firm policy that all audit staff members at the manager level or above must be licensed certified public accountants. • Our professional principals and staff members are required to participate in an average of 40 or more hours of formal instruction each year. • • Our firm strongly supports and encourages the participation by staff members in professional and civic organizations in their communities. We believe that such participation enhances our staff members' professional growth and sense of public responsibility. • Our formal professional development program includes a review of staff members' performance on each engagement of more than one week's duration and formal career counseling. Additionally, our firm is structured and our operating policies are designed to ensure the highest possible standards of practice. This is evidenced by the fact that our firm policies require the following review procedures be employed for every engagement: • An Audit Planning Form must be prepared prior to the start of every audit.This form must address such topics as audit scope, staffing potential,audit issues,audit timing, fraud risk, and significant economic or other external factors that may affect the client's operations. The form must be reviewed and approved by the audit engagement principal during the initial stages of the audit. • All audit programs and time budgets must be approved, in writing, by the audit engagement principal prior to the start of the fieldwork. • Each working paper must be signed and dated by the preparer. 1 -4- 1 • Every working paper must be reviewed and approved by a manager or senior associate. • The working papers for all significant audit areas must be reviewed by the audit principal. • An independent review of all draft reports and specified supporting documentation must be made by a principal or manager not otherwise associated with the engagement. For governmental jobs,this review is performed using the most current GFOA Review Checklist for the Certificate of Achievement Program. • Specialized audit programs are used for specific industries, including governments. Such programs are updated annually to reflect changes in audit and accounting standards. H. No Regulatory or Disciplinary Action MMKR has not had any federal or state desk reviews or field reviews of its audits for the past three years. In addition,no disciplinary action has been taken or is pending against MMKR during the past three years with Minnesota state regulatory bodies or professional organizations.No regulatory action has been taken against any MMKR staff person. I. Peer Review MMKR has successfully completed all required peer reviews. See Appendix A for a copy of the report on our latest review,which included a review of specific government engagements. IV. PRINCIPAL,SUPERVISORY,AND STAFF QUALIFICATIONS AND EXPERIENCE A. Assignment Policy MMKR has a governmental auditing and accounting department, as the firm is involved in extensive governmental work (schools, state agencies, consortiums, federal grants, cities, special management services, etc.). Professionals of this department have extensive experience in governmental(fund)accounting,and particularly in local government auditing, reporting,and special services. Governmental services represented approximately 60 percent of MMKR's total billings for 2013. We annually serve approximately 25 municipalities, 30 school districts, 30 charter schools, and a number of joint-power and other governmental entities of varying size. Accordingly,our professional staff works on governmental audits year-round,accumulating a significant amount of experience in a short time in this very complex and specialized field. You,as a client,get the benefit of that acquired experience and knowledge. The firm's policy for governmental audits requires a principal,a senior manager or manager, a senior associate,and additional associates and staff accountants of varying qualifications as deemed necessary in the circumstances. In addition, a second principal is assigned to each engagement to consult on technical issues. The same principal, senior manager or manager, and senior associate are assigned in subsequent years,but associates and staff accountants may vary to some extent.After several years the situation is reviewed. If it is in the best interest of the client and/or the firm to change staffing assignments(to maintain independence,etc.)such a change is made. -5- • B. Personnel Assigned,Classification,and Experience We presently have a number of professionals with specific city auditing/special services experience.We contemplate the following assignments: Years of Years Government • Name Position With Firm Auditing Cities Currently Auditing William J.Lauer,CPA Principal 25 25 Chaska,Coon Rapids,Golden Valley,Lakeville, New Hope,St.Michael,and Wayzata James H.Eichten,CPA Consulting 21 21 Apple Valley,Brooklyn Center,Burnsville,Edina, Principal Monticello,Newport,Prior Lake,Saint Peter, South St.Paul,and Spring Park Jennifer L.Selzer,CPA Manager 9 9 Coon Rapids,Edina,Lakeville,New Hope,Newport, Prior Lake,and Shoreview Jessica A.Borglum Senior 9 9 Brooklyn Center,Golden Valley,Monticello, Associate North St.Paul,and Shoreview Victoria L. Holinka, CPA, a Principal with 18 years of experience, would be added to the engagement as an additional consulting principal to oversee the audit of the Association's gambling activity,if one is required. MMKR assures the City that the quality of the staffing,similar to what is listed above,will be maintained over the term of the agreement. Because MMKR performs more than 50 governmental audits in the Twin Cities metropolitan area, it is only natural that MMKR has a large pool of qualified and experienced governmental auditors. Memberships in professional organizations are summarized on the résumés of the above individuals.The resumes are included in Appendix B. CPE records for the last three years for the above individuals are included in Appendix C. MMKR enforces a formal policy on equal employment opportunity which states that the firm will not discriminate against employees or applicants for employment on any legally recognized basis including, but not limited to, race, age, color, religion, sex, marital status, national origin,handicap/disability,or veteran status. I ' -6- • V. SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENTAL ENTITIES A. Most Similar Engagements The following list represents 5 significant engagements chosen from over 85 governmental clients we serve. Each of these engagements was a certified audit assigned to William J.Lauer, CPA, or James H. Eichten, CPA, as engagement principal. All of these engagements complete a comprehensive annual fmancial report and participate in the GFOA Certificate of Achievement Program. Please feel free to contact any of the city clients listed here or in the more complete listing that follows. Staff Client Contact Person Phone Number Hours Principal Ii City of Golden Valley Sue Virnig (763)593-8010 345 William.1.Lauer,CPA City of Apple Valley Ron Hedberg (952)953-2540 340 James H.Eichten,CPA City of Edina John Wallin (952)826-0410 330 James H.Eichten,CPA City of Chaska Noel Graczyk (952)227-7551 325 William J.Lauer,CPA City of Lakeville Dennis Feller (952)985-4481 315 William J.Lauer,CPA -7- B. Complete List of Significant Governmental Audit Clients The following is a more complete list of the major governmental entities that we have performed/are performing audit and accounting services for years ending during 2013. The size of these organizations range from small entities to those exceeding$525 million in assets and over$470 million in revenues. Audit clients that have applied for or been awarded the ASBO or GFOA Certificate of Excellence in Financial Reporting are identified with an"*": *City of Apple Valley Centennial Lakes Police Department *ISD No.199,Inver Grove Heights *City of Arden Hills Centennial Fire Fighters'Relief ISD No.200,Hastings *City of Brooklyn Center Association ISD No.273,Edina *City of Burnsville Chaska Fire Department Relief ISD Na.278,Orono *City of Chaska Association *ISD No.279,Osseo—Maple Grove City of Circle Pines Golden Valley—Crystal—New Hope ISO No.280,Richfield *City of Coon Rapids Joint Water Commission *ISD No.281,Robbinsdale *City of Edina Golden Valley Fire Department Area Schools "City of Golden Valley Relief Association ISO No.286,Brooklyn Center *City of Lakeville Metropolitan Library Service Agency ISD No.621,Mounds View *City of Monticello Ramsey Firefighters'Relief ISD No.622,North St.Paul *City of Mounds View Association *ISD No,624,White Bear Lake *City of New Hope Roseville Firefighters'Relief ISD No.625,St.Paul Public Schools City of Newport Association *ISD No.728,Elk River *City of North St.Paul Savage Fire Department Firefighters' ISD No.831,Forest Lake *City of Plymouth Relief and Pension Association ISO No.832,Mabtomedi City of Prior Lake Spring Lake Park Firefighters' *ISD No.833,South Washington *City of Ramsey Relief Association County *City of Robbinsdale St.Michael Firemen's Relief *ISO No.834,Stillwater City of Saint Peter Association ISO No.911,Cambridge *City of Shoreview South Metro Public Safety Training Intermediate District No.287 City of Spring Paris Facility Association Intermediate School District No.917 *City of South St.Paul Suburban Rate Authority Northeast Metropolitan Intermediate *City of St.Michael West Metro Fire-Rescue District School District No.916 , . City of Wayzata *ISD No.I1,Anoka-Hennepin East Metro Integration District Minnesota State Fair 1513 No.12,Centennial No.6067 Andover Firefighters'Relief ISD No.15,St.Francis SSD No.6,South St.Paul Association *ISD No.16,Spring Lake Park West Metro Education Prognun Bassett Creek Watershed ISO No.139,Rush City Management Commission ISD No.194,Lakeville Black Dog Watershed *ISD No.196,Rosemount— Management Organization Apple Valley Centennial Fire District ISD No.197,West St.Paul C. Other Services In addition to audit services,there are a number of other special services and benefits MMKR offers its clients. Some of them are as follows: • Assistance in audit workpaper preparation and year-end close process. • Assistance with revenue projection reviews, with a special emphasis on tax sources and state aids,including local government aid. • Evaluations of internal controls using published best practices for business-type activities, including golf courses, community centers, event centers, and emergency medical service operations. • Operational or management audits to assist in achieving the highest standards of operation and long-range planning. -8- Some of the areas which we have reviewed during an operational audit are: — Organizational structure — Facilities — Financial planning,control,and reporting — Meetings/minutes format and structure — Personnel policies and procedures — Budget process and procedures • Assistance with information systems issues based on our extensive experience with the various fmancial systems used by Minnesota cities. • Assistance with financial projections, budget development, tax hearing materials, and other fmancial matters. • Semimonthly cash flow projections,numerically and graphically. • Assistance with grant expenditure reimbursement submissions. • Assistance with tax increment financing accounting and compliance issues. • Assistance in obtaining the Certificate of Achievement for Excellence in Financial Reporting Award. • Tax consultation for income,payroll,and employee benefit-related matters. • Assistance with salary negotiation costing. • Special services, such as developing and customizing Legal Compliance Manuals; preparation of general fixed asset records; forms and procedures for legal compliance in handling gifts, record retention, etc.; irregularities investigations; development of an accounting system for establishing a recording system for contracts for new construction, and many other special services too numerous to mention. • Assistance in evaluation of finalists selected for key fiscal management positions of the City;summarization of qualifications and recommendations. • Monthly and annual newsletter mailings which keep our clients informed of federal and state taxation issues. • Close monitoring of the ongoing activity of the Minnesota Legislature to keep abreast of the latest legislative intents and proposals in order to be a resource to our clients when they are evaluating the impacts of pending legislation. These are only a few examples.There are many other services we can provide.We would be glad to provide you with specific referrals relating to the above services upon request. We often respond to client inquiries on a no-cost basis,believing that such assistance should be provided to our clients as part of good client service. Examples of such no-cost inquiries depend on the individual matter, but would typically include payroll-related tax inquiries, technical inquiries relating to proper accounting or auditing procedures, or other inquiries related to best business practices or internal control matters in general. -9- The fees for any such additional services would depend on the scope of the services to be provided and the experience/expertise level required of the individuals performing the services. The expected fees for any additional services will be based on rates quoted in the Schedules of Professional Fees and Expenses included in the separate Dollar Cost Bid Proposal and will be discussed with city personnel prior to any work being done. When deemed appropriate, a separate engagement contract would be created outlining the services to be provided and the estimated fees. D. Financial Reporting Requirements of the Governmental Accounting Standards Board • (GASB) Over the last decade, the GASB has issued some of the most significant new technical pronouncements for governmental accounting and reporting in recent history, including: GASB Statement No. 34, Financial Reporting Model; GASB Statement Nos. 43 and 45, Other Post Employment Benefits; GASB Statement No. 44, Statistical Section; GASB Statement No.54,Fund Balance Reporting and Governmental Fund Type Definition; and GASB Statement Nos.63 and 65, Deferred Outflows, Deferred Inflows, Net Position, and hems Previously Reported as Assets and Liabilities. The GASB has also recently issued GASB Statement No. 67, Financial Reporting for Pension Plans An Amendment of GASB Statement Nos. 25 and 50, and GASB Statement No. 68, Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement Nos. 27 and 50 that are required to be implemented over the next few years. These statements have and do prescribe significant changes to governmental financial reports that must be used by virtually every governmental organization that issues financial statements in conformity with accounting principles generally accepted in the United States of America. These represent dramatic changes in the way local government entities must report and present financial information. 1. Malloy,Montague,Karnowski,Radosevich&Co.,P.A.'s Experience With GASB Statements MMKR is dedicated to educating ourselves and our clients in the intricacies of the new pronouncements. Through a combination of professional education and an abundance of hands-on experience, our governmental audit team has acquired the knowledge and expertise necessary to guide our clients through the implementation of these complex pronouncements. Our experience in assisting Minnesota governmental entities with the implementation of GASB Statements is second to none.MMKR has taken a proactive approach in assuring that our clients are prepared to meet the challenge of implementing new GASB standards. Through our management reports and annual audit presentations,we have communicated to our clients'governing bodies and constituents the impact this change will have on both their annual financial reports and the resources of their fmance departments. We have also worked closely with our clients' management and staff to devise implementation plans and provide assistance with a myriad of related technical issues. Beyond this, our firm has played an active leadership role as a resource on this issue amongst the Minnesota city government community and our peers.MIVIKR professionals have been called on to give numerous presentations at a variety of industry seminars on different aspects of GASB Statements. We have also been active participants on several committees formed to address the impact of these pronouncements on local governmental units. -10- i 2. Assistance With Standards of GASB Statements The services that MMKR provides to cities implementing and complying with GASB Statements vary greatly according to their needs. However, the following are some of the areas where we have typically provided assistance. We have provided assistance in this area in a number of ways, including: taking part in planning meetings, helping to develop compliance plans, and providing MMKR-developed checklists and other tools. We help our clients set timelines and assign tasks, identify areas where MMKR or other outside consultants will be used, identify and resolve the numerous report presentation issues inherent in these standards, and identify steps that are best completed prior to the year-end audit. Another critical, and often overlooked, factor of a successful financial report under new reporting guidelines is communication. As previously mentioned, MMKR has been proactive in preparing our clients' governing bodies and citizens for change.We also use opportunities such as city council presentations and workshops to help the financial statement users understand these new statement standards. In addition,MMKR has been involved in helping finance departments to communicate with city councils, outside consultants, and other departments within each city to help coordinate the resources necessary to comply with these standards. MMKR also works closely with all of our clients in preparing for the audit,helping them identify the areas where additional schedules or audit procedures will be required due to new GASB Statements. We offer our clients internally-developed checklists and electronic workpaper templates to make their audit preparations as efficient as possible, although we are always willing to work with client-prepared schedules in whatever formats they prefer. We also help our clients interpret the technical aspects of GASB Statements and the related pronouncements. All through the audit process, from planning through report preparation,we work closely with our clients to assure these new standards are properly applied. Finally, the area where we typically provide the most assistance is financial statement preparation. MMKR takes great pride in the quality of our clients' financial statements, whether we are reviewing a client-prepared report,or drafting the statement for them.We offer our clients the use of MMKR-developed financial statement templates and example note disclosures. Also, every report that bears our opinion goes through an extensive review process to help assure accuracy and compliance with governmental reporting standards. VI. SPECIFIC AUDIT APPROACH MMKR uses a two-step approach to auditing cities. First, we review, document, and test the City's internal control to meet audit requirements relating to both the basic fmancial statements and federal fmancial assistance programs. Second, we perform substantive tests of account balances which include analytical review procedures and tests of compliance with laws and regulations. Our audit approach satisfies the requirements of auditing standards, the standards generally accepted in the United States of America for fmancial compliance audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. A. Proposed Segmentation of the Engagement(see schedule on following page) B. Level of Staff and Number of Hours to be Assigned to Each Proposed Segment of the Engagement(see schedule on following page) -11- I d O d ...1- N co N in F .a 1 N oo I 1 0 U O o I ,0 ..1- I I 00, � p C/) w 4T it' I I I rn O U o d! y 4 N ,d- N I 0 o o p g 1 v, t-4 (.4 M N N 0 U g p y .ro E 5 R �' U 0 u ,.. p r 0 w.7 O0 0 d v� ' N O N ,� Gs U 0 � L' O p rn 0 Ti O .� 0 G A, .40 4 0 ° Q °�, W tw 0 W N :p• N j ,1 +� vyy O D O q v CL r ia O 5 um o a c 'C jI I w G � g i N N O b9 p O q � nn: g, , i OA.G ; s. g p a N F I ti 0 i2 ) O N "pO p q pi. G -s 0 p 1.1 l' 0 I. 3 .0 O a Cr. 0 U ,f, t p v 0 b x u aU o d w� v O O v co O N g d U " �p Q 3 45. p aQ O y fr Js o % �+' g W P. i W A -12- C. Sample Sizes and the Extent to Which Statistical Sampling is to be Used in the Engagement MMKR uses audit sampling techniques for both substantive and compliance testing. The sample size selected depends on the nature of the item to be tested, audit and sampling risk factors, and the amount of tolerable error. Once the sample size has been determined, the sample items are typically selected by using a haphazard, random, or systematic method depending on the item tested or risk identified. The following summarizes anticipated sample sizes in the primary audit areas: • Overall disbursement testing— General disbursements 25-40 items Payroll disbursements 25-40 items Federal program compliance tests— Sample size relating to each program selected to meet 50 percent test Up to 75 items Revenue testing— Property taxes,special assessments, and state and federal aids Substantially all items All balance sheet accounts are tested using various sample sizes depending on the dollar amount in the account and audit risk. Minnesota legal compliance sample sizes depend on the applicable requirement being tested. D. Extent of Use of Auditing Software in the Engagement At MMKR,we audit clients with a wide variety of computer systems, including new world systems financial software. Due to the size of our governmental audit practice, we are familiar with most financial software packages used by Minnesota local governmental units. This experience gives us the ability to extract reports and other critical data needed from our clients' systems efficiently. The use of technology is also heavily integrated into every aspect of our audit process. All MMKR auditors have notebook computers,which are networked in the field and to our office to optimize the sharing of data.Virtually all of our audit working papers have been generated and customized electronically.We work in a totally paperless audit environment, in which all audit programs and files will also be generated and stored electronically. We primarily use Microsoft Excel for spreadsheet applications and annually provide our governmental clients with audit working paper templates in Excel. We also utilize a variety of prepackaged and internally developed software for other functions, including: customized audit programs, fixed assets tracking and depreciation, amortization, financial statement preparation, graphing,and presentations. During our audit, we will utilize client-prepared workpapers in electronic format, data extracted from our clients' computer systems, and direct "read only" access to client data, when available,to facilitate our audit testing and financial statement analysis. MMKR's goal is to make optimum use of available technology to enhance both the quality and efficiency of our audit process.We believe that by maximizing the sharing of information between MMKR and our clients,we are able to minimize the disruption caused by the audit. -13- E. Type and Extent of Analytical Procedures to be Used in the Engagement MMKR uses analytical procedures in all phases of the audit. Analytical procedures are incorporated as a planning tool,as part of substantive testing,in the fmal review stages of the audit,and in reporting. In the planning stage, analytical procedures are used to indicate areas of potential audit risk, and to determine the nature, timing, and extent of planned substantive testing. Material revenues,expenditures,and balance sheet accounts are compared to the current year's budget and/or prior year actual amounts to identify accounts that vary significantly from expectations. In this phase of the audit, analytical review is typically done at an aggregated level,unless specific variances are considered to warrant further investigation. Analytical procedures are a key tool used in the substantive testing phase of all significant audit areas. In this phase of the audit, analytical procedures are applied to individually significant accounts. Some of the most common types of analytical tests employed include: comparison to current year budget and/or prior year actual amounts, analysis of significant ratios, comparison to available industry-wide data, and reasonableness tests where actual results are compared to expected results that are based on other known financial or non-fmancial variables related to the account being analyzed. In the final review stage of the audit,these same types of analytical procedures are applied to the final trial balance and the draft fmancial statements. The purpose of applying analytical procedures at this stage is to assist in assessing the conclusions reached during the audit and the adequacy of the audit evidence gathered. They are also used to evaluate the overall financial statement presentation. At MMKR, we also incorporate analytical comparisons in our management report. We believe that providing historical trend data and comparisons to state-wide averages enhances the perspective of the reader for interpreting their own financial results. F. Approach to be Taken to Gain and Document an Understanding of the City's Internal Control MMKR first gains an understanding of the internal control through interviews with the specific employees of the City that work in each function. The understanding for each function is documented with checklists and in narrative form and filed in the audit workpapers. This understanding is then confirmed through compliance sampling tests and other audit procedures. G. Approach to be Taken in Determining Laws and Regulations That Will be Subject to Audit Test Work All federal programs used in the City will be identified through inquiries of program and finance personnel and reviewing the state aid confirmation (for federal programs for which the state of Minnesota serves as a pass-through agency). Federal program Compliance Supplement requirements will be identified as necessary. The Minnesota Legal Compliance Audit Manual will also be used to determine laws and regulations that will be subject to audit test work. Beyond that, MMKR utilizes numerous other resources, such as regular communication with applicable federal and state oversight agencies and regulatory bodies, professional education, active participation in relevant professional organizations, an extensive and up-to-date library, and our experience in working with Minnesota cities, to assure that all applicable laws and regulations are addressed by our audit procedures. -14- H. Approach to be Taken in Drawing Audit Samples for Purposes of Test of Compliance MMKR obtains transaction sequence information and uses a software program to generate a random selection of sample items for purposes of its tests of compliance.The sample selected is provided to the client prior to fieldwork whenever possible to allow client personnel sufficient time to gather the transaction documentation for testing. However, some samples are selected during fieldwork to ensure an element of randomness to the testing performed. This process is also incorporated into the tests of controls as required by Statement on Auditing Standards Nos. 104-111 (SAS Suite). VII. IDENTIFICATION OF AUDITING/REPORTING REQUIREMENTS AND/OR ANTICIPATED POTENTIAL AUDIT PROBLEMS GASB Statement No. 67, Financial Reporting for Pension Plans—An Amendment of GASB Statement Nos. 25 and 50, will become effective for fire relief associations that administer a defined benefit pension plan during the fiscal year ending December 31, 2014. In order to fully implement this standard, such pension plans will likely be required to undergo an actuarial valuation in accordance with the actuarial method prescribed in this standard. GASB Statement No.67 will require significant changes to the Association's financial statements and disclosures. GASB Statement No. 68,Accounting and Financial Reporting for Pensions An Amendment of GASB Statement Nos. 27 and 50, will become effective during the fiscal year ending December 31, 2015. Municipalities will be required to include within their government-wide financial statements,the actuarial pension Iiability and annual pension cost for applicable pension plans in which their employees participate or are affiliated.For Minnesota cities,this will include the state-wide defined benefit pension plans administered by the Public Employees' Retirement Association and defined benefit plans administered by an affiliated fire relief association. We do not anticipate any potential problems with this audit. VIII. REPORT FORMATS Sample report formats for the reports expected to be issued in relation to the City's audit have been included as Appendix D to this proposal. IX. MANAGEMENT REPORT To provide the City with an example of the style and content of a typical MMKR management report,a sample has been included as Appendix E to this proposal. -15- APPENDIX A:PEER REVIEW 1 C • KerberRose Certified Public Accountants System Review Report To the Principals of Malloy,Montague,Karnowski,Radosevich and Co.,P.A. and the Peer Review Committee of the Minnesota Society of CPAs We have reviewed the system of quality control for the accounting and auditing practice of Malloy, Montague, Karnowski, Radosevich and Co., P.A. (the firm) in effect for the year ended May 31,2013. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants.As part of our peer review,we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards In all material respects. Our responsibility Is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review.The nature,objectives, scope,limitations of,and the procedures performed in a System Review are described in the standards at www.aicpa.org/prsummary. As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and an audit of an employee benefit plan. In our opinion, the system of quality control for the accounting and auditing practice of Malloy, Montague, Kamowski, Radosevich and Co., P.A. in effect for the year ended May 31, 2013,has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass,pass with deflclency(les)or fall. Malloy,Montague, Karnowski,Radosevich and Co.,P.A.has received a peer review rating of pass. li KerberRose SC September 19,2013 4211 N.Lightning Drive,Suite A Appleton,WI 54913 PrimeGlobal P:920-993-0105 F:920-993-0116 An Association of www.kerberrose.com Independent Amen rims APPENDIX B:RESUMES • I • QUALIFICATIONS OF WILLIAM J.LAUER,CPA PRINCIPAL PROFESSIONAL HISTORY Present Principal—Malloy,Montague,Kamowski, Radosevich&Co., P.A.,Minneapolis,Minnesota Previous Senior Accountant of Pannell Kerr Forster,Minneapolis office AREAS OF SPECIAL COMPETENCE Accounting, auditing, and consulting for governmental, nonprofit,and commercial entities MAJOR PROJECTS Audits of Minnesota municipalities, school districts, and other governmental organizations Audits of federal financial assistance programs of schools and municipalities Audits of various nonprofit organizations, including rural electric cooperatives,nursing homes,and health clinics Assist governmental clients obtain and retain GFOA and ASBO Certificates of Achievement for financial reporting Management consulting services, including internal control studies,operational reviews,and cash flow projections Various commercial audits, including audits of clients registering with and reporting to the Securities and Exchange Commission Development of audit manuals for school districts, municipalities,and federal assistance programs EDUCATION College of St.Thomas Bachelor of Arts in Business Double major in Accounting and Finance Graduated Magna Cum Laude QUALIFICATIONS OF WILLIAM J.LAUER,CPA PROFESSIONAL QUALIFICATIONS Certified Public Accountant in Minnesota Successfully completed the American Institute of Certified Public Accountants Certificate of Educational Achievement Program in Governmental Accounting and Auditing Receives at least 40 hours per year of Continuing Professional Education, including governmental CPE to meet compliance with Government Auditing Standards PROFESSIONAL MEMBERSHIPS American Institute of Certified Public Accountants (AICPA) Minnesota Society of Certified Public Accountants (MNCPA) Government Finance Officers' Association (GFOA) of the United States and Canada Minnesota Government Finance Officers'Association (MGFOA) Minnesota Association of School Business Officials(MASBO) PROFESSIONAL ACTIVITIES Served in many capacities on the Minnesota Society of Certified Public Accountants' Governmental Accounting and Auditing Committee,including: • Committee Chair • Chairperson of the Governmental Accounting and Auditing Conference Subcommittee • Chairperson of the City Quality Review Subcommittee Moderator and presenter at numerous professional education conferences sponsored by the Minnesota Society of CPAs Served on the MGFOA's Conference and Social Committees Special review committee member for the GFOA and ASBO Certificate of Achievement for Excellence in Financial Reporting Programs Serves on Minnesota Legal Compliance Task Force QUALIFICATIONS OF JAMES H.EICHTEN,CPA MANAGING PARTNER PROFESSIONAL HISTORY Present Managing Partner — Malloy, Montague, Karnowski, Radosevich&Co.,P.A.,Minneapolis,Minnesota Previous Senior Accountant of Pannell Kerr Forster,Minneapolis office MAJOR ASSIGNMENTS Annual audits of Minnesota school districts,municipalities,and various other governmental entities Audits of federal financial assistance programs of Minnesota school districts,municipalities,and various other governmental entities Assist city clients obtain and retain GFOA Certificate of Achievement for Excellence in Financial Reporting Assist school district clients obtain and retain ASBO Certificate of Excellence in Financial Reporting Management consulting services, including internal control studies,operational reviews,and cash flow projections Assistance in the development of audit manuals for cities, school districts, fire reliefs, and federal financial assistance programs Audits of various nonprofit organizations, including rural electric cooperatives,nursing homes,churches,and educational foundations Various commercial audits, including audits of clients registering with and reporting to the Securities and Exchange Commission Annual audits,tax returns,and monthly compilations EDUCATION College of St.Thomas Bachelor of Arts in Business Administration with an Emphasis in Accounting QUALIFICATIONS OF JAMES H.EICHTEN,CPA PROFESSIONAL QUALIFICATIONS Certified Public A ccountant in Minnesota Receives at least 40 hours per year of Continuing Professional Education, of which a portion of those hours are related specifically to governmental issues. This is in compliance with Government Auditing Standards PROFESSIONAL MEMBERSHIPS American Institute of Certified Public Accountants ( (AICPA) Minnesota Society of Certified Public Accountants (MNCPA) Minnesota Chapter of Government Finance Officers' Association(MGFOA) Minnesota and National Chapters of the Association of School Business Officials(ASBO) PROFESSIONAL ACTIVITIES Board Member of the Minnesota Society of' Certified Public Accountants,including chairperson Member of the Council of the American Institute of Certified Public Accountants Served in many capacities on the Minnesota Society of Certified Public Accountants' Governmental Accounting and Auditing Committee Chairperson of Minnesota Society of Certified Public Accountant's Professional Standard Strategic Council Served on committees of the Office of the State Auditor and the Minnesota Department of Education on the Implementation Issues of GASB Statement No.34 Special review committee member for the GFOA Certificate of Achievement for Excellence in Financial Reporting Programs Has made presentations to organizations such as MNCPAs, GFOA, and MASBO on subjects such as Implementation Issues of GASB Statement Nos. 34, 43, 45, and 54, technical reviews, quality reviews, and obtaining a Certificate of Achievement for Excellence in Financial Reporting QUALIFICATIONS OF VICTORIA L.HOLINKA,CPA,CMA PRINCIPAL PROFESSIONAL HISTORY February 1997—Present Principal (effective January 1, 2007) — Malloy, Montague, Karnowski,Radosevich&Co.,P.A.,Minneapolis,Minnesota February 1995—January 1997 Staff Accountant — Fiduciary Counseling, Inc., St. Paul, Minnesota MAJOR ASSIGNMENTS Annual tax, accounting, and audit engagements of employee benefit plans, construction companies, commercial companies, nonprofit organizations,and charitable gambling organizations. Management consulting services including: internal control and accounting systems review and design;cash flow projections and analysis;cash management;and analysis of computer software. Extensive tax and accounting experience for a wide range of commercial and individual clients, with an emphasis on construction companies. EDUCATION University of Wisconsin—LaCrosse Bachelor of Science in Accounting PROFESSIONAL QUALIFICATIONS Certified Public Accountant in Minnesota Certified Management Accountant in Minnesota PROFESSIONAL MEMBERSHIPS American Institute of Certified Public Accountants (AICPA) Institute of Management Accountants (IMA) Minnesota Society of Certified Public Accountants (MNCPA) QUALIFICATIONS OF JENNIFER L.SELZER,CPA MANAGER PROFESSIONAL HISTORY Present Manager — Malloy, Montague, Karnowski, Radosevich & Co.,P.A.,Minneapolis,Minnesota MAJOR ASSIGNMENTS Annual audits of Minnesota school districts,municipalities,and various other governmental entities Audits of federal financial assistance programs of Minnesota school districts,municipalities,and various other governmental entities Assist governmental clients obtain and retain Certificate of Achievement from GFOA program Assist school district clients obtain and retain ASBO Certificate of Excellence in Financial Reporting Assistance in the development of audit manuals for cities,school districts,fire reliefs,and federal financial assistance programs Various commercial and non-profit audits and tax returns EDUCATION University of North Dakota Bachelor of Accountancy PROFESSIONAL QUALIFICATIONS Certified Public Accountant in Minnesota Receives at least 40 hours per year of Continuing Professional Education, of which a portion of those hours are related specifically to governmental issues. This is in compliance with • Government Auditing Standards PROFESSIONAL MEMBERSHIPS American Institute of Certified Public Accountants (AICPA) Minnesota Society of Certified Public Accountants (MNCPA) • QUALIFICATIONS OF JESSICA A.IORGLUM SENIOR ASSOCIATE PROFESSIONAL HISTORY Present Senior Associate—Malloy,Montague,Karnowski,Radosevich& Co.,P.A.,Minneapolis,Minnesota MAJOR ASSIGNMENTS Annual audits of Minnesota school districts,municipalities,and various other governmental entities Audits of federal financial assistance programs of Minnesota school districts,municipalities,and various other governmental entities Assist governmental clients obtain and retain Certificate of Achievement for Excellence in Financial Reporting from GFOA program Assist school district clients obtain and retain ASBO Certificate of Excellence in Financial Reporting Assistance in the development of audit manuals for cities,school districts,fire reliefs,and federal financial assistance programs Various commercial and non-profit audits and tax returns EDUCATION University of Wisconsin—Eau Claire Bachelor of Arts in Business Double Major in Accounting and Finance PROFESSIONAL QUALIFICATIONS Receives at least 40 hours per year of Continuing Professional Education, of which a portion of those hours are related specifically to governmental issues. This is in compliance with Government Auditing Standards APPENDIX D:SAMPLE REPORT FORMATS PRINCIPALS Thomas M Montague,CPA /t‘ Thomas A.Karnowski,CPA Patti A.Radosevich,CPA William J.Lauer,CPA CERTIFIED PUBLIC ]amen Ti.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L.Holinka,CPA INDEPENDENT AUDITOR'S REPORT To the City Council and Management City of SAMPLE,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 SAMPLE,Minnesota(the City) as of and for the year ended December 31,2013,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) -xx- Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Telephone: 952-545-0424 • Telefax: 952-545-0569 • www.mmkr.com OPINIONS In our opinion, the fmancial 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 at December 31, 2013, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended, in conformity 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,and the schedules of funding progress for the SAMPLE Fire Department Relief Association and the City of SAMPLE Other Post-Employment Benefits Plan, 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 fmancial 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 fmancial 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, supplemental information, and statistical section,as listed in the table of contents,are presented for purposes of additional analysis and are not required parts of the basic financial statements. The supplemental information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic fmancial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic fmancial 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 fmancial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental information is fairly stated,in all material respects,in relation to the basic fmancial 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) -xx- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards,we have also issued our report dated June 4,2014 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 4,2014 -xx- M PRINCIPALS Thomas M.Montague,CPA Thomas A.KKtaows1d,CPA Paul A.Radosevich,CPA William J.Lauer,CPA CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L Holinka,CPA 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 City Council and Management City of SAMPLE,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 SAMPLE, Minnesota (the City) as of and for the year ended December 31, 2013, and the related notes to the financial statements,which collectively comprise the City's basic financial statements, and have issued our report thereon dated June 4,2014. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements,we considered the City's internal control over fmancial 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. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and,therefore,material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Responses, we identified one deficiency in internal control that we consider to be a material weakness. 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 fmancial statements will not be prevented,or detected and corrected,on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Responses as item 2013-001 to be a material weakness. (continued) -xx- Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Telephone: 952-545-0424 • Telefax: 952-545-0569 • www.mmkr.com COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City's financial statements are free of 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 fmancial 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. CITY'S RESPONSES TO FINDINGS The City's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Responses. The City's response was not subjected to the auditing procedures applied in the audit of the financial statements and,accordingly,we express no opinion on it. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis,Minnesota June 4,2014 ' f -xx- I PRINCIPALS I.C.R Thomas M.Montague,CPA Thomas A.Karnowski,CPA Paul A.Radosevich,CPA William J.Lauer,CPA CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L Holinka,CPA INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE City Council and Management City of SAMPLE,Minnesota I • 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 SAMPLE, Minnesota (the City) as of and for the year ended December 31, 2013, and the related notes to the financial statements,which collectively comprise the City's basic financial statements, and have issued our report thereon dated June 4,2014. 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. { The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing,and not to provide an opinion on compliance.Accordingly,this report is not suitable for any other purpose. Minneapolis,Minnesota June 4,2014 -xx- Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Telephone: 952-545-0424 • Telefax: 952-545-0569 • www.mmkr.com i . APPENDIX E:SAMPLE MANAGEMENT REPORT I Management Report for City of SAMPLE,Minnesota December 31,2013 I I I ' it PRINCIPALS Thomas M.Montague,CPA Thomas A.Kamawsid,CPA Paul A.Radosevich,CPA William J.Lauer,CPA 10L(R CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L.Holinka,CPA To the City Council and Management City of SAMPLE,Minnesota We have prepared this management report in conjunction with our audit of the City of SAMPLE, Minnesota's (the City)financial statements for the year ended December 31, 2013. 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 Ii We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address.We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City,management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota.Accordingly,this report is not suitable for any other purpose. Minneapolis,Minnesota June 4,2014 Malloy, Montague, Karnowski, Radosevich & Co., P.A. 1 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Telephone: 952-545-0424 • Telefax: 952-545-0569 • www.mmkr.com 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 GO VERNMENTAUDITING STANDARDS We have audited the fmancial 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, 2013 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 31,2013: • We have issued an unmodified opinion on the City's financial statements. • We reported one matter involving the City's internal control over financial reporting that we consider to be a material weakness.Due to the limited size of the City's office staff,the City has limited segregation of duties in certain areas. • 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. I • FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS As a part of our audit of the City's financial statements for the year ended December 31, 2013, we performed procedures to follow-up on the findings and recommendations that resulted from our prior year audit.In 2012,we reported a material weakness in the City's internal controls over financial reporting due to the City having recorded a prior period adjustment to correct a material error in the previous year's financial statements.There was no similar finding in the current year. SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic fmancial statements.No new accounting policies were adopted,and the application of existing policies was not changed in 2013. 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. -1- 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. 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 fmancial 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. We evaluated the key factors and assumptions used to develop these accounting estimates in determining • that they are reasonable in relation to the basic fmancial statements taken as a whole. The financial statement disclosures are neutral,consistent,and clear. 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 fmancial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated June 4,2014. 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 fmancial 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. -2- 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 With respect to the supplemental information accompanying the financial statements, 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 fmancial statements. We compared and reconciled the supplemental information to the underlying accounting records used to prepare the basic financial statements or to the basic financial statements themselves. With respect to the introductory and statistical sections accompanying the financial statements, our procedures were limited to reading this other information, and in doing so we did not identify any material inconsistencies with the audited fmancial statements. -3- 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 Fund, 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. In recent years this dependence has been heightened, as economic conditions have resulted in reductions to other revenue sources such as state aids and fees generated from property development or redevelopment. Despite these conditions, property taxes levied by Minnesota cities increased a record low 0.9 percent state-wide for 2012,and 2.27 percent for 2013. Almost one-third of Minnesota cities kept their 2013 levy at the same level as the previous year,while another 13 percent reduced their levies for 2013. Economic conditions have also had a profound effect on the tax base of Minnesota cities with state-wide taxable market values declining each of the last four levy years, including average decreases of 8.8 percent and 4.5 percent for taxes payable in 2012 and 2013,respectively. There is optimism that this trend is reversing, as the market value decline for the 2013 levy year was the smallest of the past four years. However, since 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 2013 is based on estimated values as of January 1, 2012), taxable market value improvement has lagged behind recent upturns in the housing market and the economy in general. The City's taxable market value decreased 5.8 percent for taxes payable in 2012 and 3.0 percent for taxes payable in 2013, both of which were less severe than the state-wide average. The following graph shows the City's changes in taxable market value over the past 10 years: Taxable Market Value $3,500,000,000 $3,000,000,000 wirm—E ■ ■ in • irwis $2,500,000,000 • ■ ■ ■ ■ ■ ■ ■ ■ ■ , $2,000,000,000 , ■ • ■ ■ ■ ■ ■ ■ ■ , $1,500,000,000 , ■ ■ ■ ■ ■ ■ ■ ■ ■ , $1,000,000,000 I ■ ■ ■ ■ 1111 ■ U El ■ , $500,000,0$0 I E U U U U U U U U 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -4- 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 5.3 percent and 1.1 percent for taxes payable in 2012 and 2013,respectively. The following graph shows the City's change in tax capacities over the past 10 years: Local Net Tax Capacity $35,000,000 $30,000,000 . . . wirvirt $25,000,000 I . . IN - . . . . . $20,000,000 • ■ , $15,000,000 I . $10,000,000 III . ; . $5,000,0$0 1.1 1111 1111 1111 El In I 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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. The general increase in rates reflects both the increased reliance of local governments on property taxes and the recent decline in tax capacities. Rates expressed as a percentage of net tax capacity All Cities Seven-County City of State-Wide Metro Area SAMPLE 2012 2013 2012 2013 2012 2013 Average tax rate City 46.3 48.8 43.4 46.1 55.8 58.2 County 46.8 48.5 45.0 47.1 48.2 49.5 School 27.3 28.5 28.5 30.3 31.2 31.1 Special taxing 6.8 7.2 8.7 9.4 10.2 10.9 Total 127.2 133.0 125.6 132.9 145.4 149.7 The City's portion of the tax rate has been higher than average in recent years,primarily due to the levies fmancing the City's street improvement program debt. The school tax rate for the City represents an average of Independent School Districts No. 270, Hopkins and No. 281,Robbinsdale. -5- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City's governmental funds during the year ended December 31,2013,presented both by fund balance classification and by fund: Governmental Funds Change in Fund Balance Fund Balance as of December 31, Increase 2013 2012 (Decrease) Fund balances of governmental funds Total by classification Restricted $ 43,287,123 $ 33,693,776 $ 9,593,347 Committed 718,723 687,458 31,265 Assigned 8,532,562 9,666,763 (1,134,201) Unassigned 8,207,985 7,756,057 451,928 Total--governmental funds $ 60,746,393 $ 51,804,054 $ 8,942,339 Total by fund General $ 9,707,985 $ 9,316,057 $ 391,928 Golden Hills Tax Increment Special Revenue 7,225,521 7,607,249 (381,728) Street Reconstruction Debt Service 21,424,268 14,124,409 7,299,859 Street Reconstruction Capital Project 3,208,656 3,776,888 (568,232) Nonmajor funds 19,179,963 16,979,451 2,200,512 Total—governmental funds $ 60,746,393 $ 51,804,054 $ 8,942,339 In total, the fund balances of the City's governmental funds increased by $8,942,339 during the year ended December 31, 2013. The majority of the increase was in restricted fund balances. Fund balances restricted for debt service increased $9,581,852, mainly due to the issuance of$7,025,000 of refunding bonds, which increased assets held in crossover refunding escrow accounts in the Street Reconstruction Debt Service Fund. Fund balances assigned for capital improvements declined by $1,214,621 due to current year expenditures for capital projects in the nonmajor governmental funds. -6- 1 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. Governmental Funds Revenue per Capita With State-Wide Averages by Population Class State-Wide City of SAMPLE Year December 31,2011 2011 2012 2013 Population 2,500-10,000 10,000-20,000 20,000-100,000 20,427 20,642 20,642 Property taxes $ 414 $ 382 $ 416 $ 773 $ 793 $ 816 Tax increments 32 44 46 196 224 234 Franchise taxes 29 36 30 28 32 44 Special assessments 60 54 62 68 62 59 Licenses and permits 24 24 35 57 59 72 Intergovernmental revenues 278 279 138 47 167 48 Charges for services 104 81 83 80 102 92 Other 66 58 50 60 44 54 Total revenue $ 1,007 $ 958 $ 860 $ 1,309 $ 1,483 $ 1,419 The City's governmental fund revenues for 2013 were $29,305,503, a decrease of $1,319,141 (4.3 percent) from the prior year. On a per capita basis, the City received $1,419 in governmental fund revenue for 2013,a decrease of$64 from the prior year. The City has historically received more of its governmental fund revenue from property taxes than the average Minnesota city, due to the lower than average amount of aid it typically receives from the state and the levies for debt related to its street reconstruction program. The City has also been generating much higher tax increment revenue than average in recent years because of the amount of redevelopment within the City. Revenue from property taxes and tax increments increased$23 and$10 per capita,respectively, mainly due to levy increases.Intergovernmental revenue decreased$119 per capita to a more typical level for the City.The City's intergovernmental revenues were unusually high in 2012 due to grants from the state and Metropolitan Council for capital improvements. -7- 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. I , 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: Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class State-Wide City of SAMPLE Year December 31,2010 2011 2012 2013 Population 2,500-10,000 10,000-20,000 20,000-100,000 20,427 20,642 20,642 Current General government $ 127 $ 101 $ 84 $ 179 $ 157 $ 171 • Public safety 234 229 241 294 314 319 Streets and highways 114 105 92 102 112 112 Culture and recreation 82 95 86 102 104 105 All other 73 75 92 13 29 18 $ 630 $ 605 $ 595 $ 690 $ 716 $ 725 Capital outlay and construction $ 315 $ 313 $ 221 $ 231 $ 316 $ 300 Debt service Principal $ 187 $ 135 $ 103 $ 305 $ 251 $ 305 Interest and fiscal charges 58 46 39 152 143 137 $ 245 $ 181 $ 142 $ 457 $ 394 $ 442 Total expenditures in the City's governmental funds for 2013 were$30,296,542,an increase of$852,156 (2.9 percent) from the prior year. On a per capita basis, the City expended a total of$1,467 in 2013, an increase of$41 from the previous year. Debt service expenditures were $48 per capita higher than last year, mainly due to increasing scheduled principal payments on the City's outstanding tax increment bonds as they near their fmal maturities. -8- 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 and operating transfers out to reflect the change in the size of the General Fund operation over the same period. General Fund Financial Position Year Ended December 31, $18,000,000 $16,000,000 _ $14,000,000 $12,000,000 $10,000,000 r1i• $s,0oo,000 ■ ■�� �F$6,000,000 WI �$4,000,000 ■$2,000,0$0 ■ 2009 2010 2011 2012 2013 Nom Fund Balance I I Cash Balance(Net of Borrowing) Expenditures and Transfers Out The City's General Fund cash and investments, net of borrowing balance at December 31, 2013 was $10,533,872,an increase of$709,155.Total fund balance at December 31,2013 was$9,707,985,which is an increase of $391,928 from the prior year, as compared to final budget that projected a $60,000 decrease in fund balance. 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 fmancial 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 75 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 unassigned General Fund balance at the end of the 2013 fiscal year represents approximately 51.6 percent of annual expenditures and transfers out based on 2013 levels. -9- , { The following chart reflects the City's General Fund revenue sources for 2013 compared to budget: General Fund Revenue Budget and Actual 1 1 I I 1 I 1 f L Taxes - Intergovernmental Fines and Forfeits Ir Charges for Services Licenses and Permits All Other Id\ ,,r'f �� +8.3 +�7 18J' 18'6. ,8j ,8& +89 sr, cr7> ,rr3 et,/� °o OO 'OO 'D0 'OO 'OO 'O0 'OO 'OO o 0 0 0 0 0 0 0 0 0 0 0 00 00 00 00 ° .°°° .°°o .°°° °°° .°°° °°° o o ,0 0 .0 .0 oActual ■Budget General Fund revenue for 2013 was $16,197,707, which was $963,322 (6.3 percent) more than budget. Tax revenue was $153,823 over budget due to lower abatements than allowed for in the budget. Intergovernmental revenue was$51,463 over budget due to several small state and federal grants received during the year that were not budgeted. Fines and forfeits exceeded a conservative budget by$86,059 due to increased traffic enforcement. Charges for services were $106,419 higher than projected overall, as a $165,612 surplus in recreation fees from an expanded tennis program was partially offset by a $92,540 shortfall in charges to other funds for construction. Finally, licenses and permits were $611,743 higher than projected,mainly in building and construction-related permits. 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. General Fund Revenue by Source Year Ended December 31, $14,000,000 $12,000,000 r- $10,000,000 - $8,000,000 $6,000,000 — t $4,000,000 $2,000,000 $— — I ■ — Taxes Intergovernmental Fines and Charges for Licenses and All Other Forfeits Services Permits 112009 I•2010 0 2011 112012 ■2013 Total General Fund revenue for 2013 was $454,905 (2.9 percent) higher than last year. Property taxes increased by$155,292 due to an increase in the general levy. Licenses and permits were $272,605 higher than the previous year due to increases in both commercial and residential development. -10- The following graphs illustrate the components of General Fund spending for 2013 compared to budget: General Fund Expenditures Budget and Actual General Government Administration Public Safety ,.•.. Public Works "' " Parks and Recreation All Other =Nem Now= vr, dr urj �� d� �8� �3 `8y �d"A �s `Ps kb6- 'rep f8j 000 000 -.500 -000 X50 -000 ,p0 -000 S0 -000 J00 000 J0 -000 00 ,000 -'000 -00p X 000 -'000 -000 -'000 -'000 -'000 -000 -000 ,000 -000 Ci Actual ■Budget General Fund expenditures for 2013 were $14,721,069, which was $378,606 (2.5 percent) under budget. Expenditures were under budget in most departments due to continued cost containment efforts, with the largest savings in general government ($141,094), public works ($105,140), and casualty insurance ($77,441). Recreation program expenditures exceeded budget by $85,955 due to increased contracted service costs for the expanded tennis program. The City also transferred out $890,000 more than budgeted to other funds for capital projects and equipment,in accordance with its fund balance policy. The following graph presents the City's General Fund expenditures by function for the last five years: General Fund Expenditures by Function Year Ended December 31, $7,000,000 $6,000,000 $5,000,000 $4,000,000 2 $3,000,000 $2,000,000 4 ■ _ $1,000,000 111 • ■ ■ 1 ■ $_ General Administration Public Safety Public Works Parks and All Other Government Recreation •2009 12010 •2011 02012 •2013 Total General Fund expenditures for 2013 were$173,226(1.2 percent)higher than the previous year. The largest increases were in supplies and maintenance costs in the building operations, public safety, and street maintenance program areas; mainly due to higher utility, fuel, and supply costs caused by colder weather and more snow. -11- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service.This section of the report provides you with an overview of the financial trends and activities of the City's enterprise funds,which include the(Water and Sewer)Utility, Storm Sewer Utility,Brookview(Golf Course)Operating,Motor Vehicle Operating, and Recycling funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City's enterprise funds during the year ended December 31,2013,presented both by classification and by fund: Enterprise Funds Change in Financial Position Net Position as of December 31, •Increase 2013 2012 (Decrease) Net position of enterprise funds Total by classification Net investment in capital assets $ 28,427,621 $ 27,416,740 $ 1,010,881 Unrestricted 19,315,411 18,224,966 1,090,445 Total—enterprise funds $ 47,743,032 $ 45,641,706 $ 2,101,326 Total by fund Utility $ 22,718,203 $ 22,213,519 $ 504,684 Storm Sewer Utility 20,814,889 19,009,308 1,805,581 Brookview Operating 2,623,099 2,775,882 (152,783) Motor Vehicle Operating 597,028 662,298 (65,270) Recycling 989,813 980,699 9,114 Total—enterprise funds $ 47,743,032_ $ 45,641,706 $ 2,101,326 In total, the net position of the City's enterprise funds increased by $2,101,326 during the year ended December 31,2013,mainly due to positive operating results and significant capital contributions received in the(Water and Sewer)Utility and Storm Sewer Utility Funds. -12- UTILITY FUND The following graph presents five years of comparative operating results for the City's(Water and Sewer) Utility Fund: Utility Fund Year Ended December 31, $8,500,000 $8,000,000 $7,500,000 - $7,000,000 - - $6,500,000 - - $6,000,000 - $5,500,000 $5,000,000 = - $4,500,000 - $4,000,000 - $3,500,000 $3,000,000 = - $2,500,000 - -� $2,000,000 IV: �- -'-'-' $1,500,000 al $1,000,000 $500,000 = -= ` ■— 1111 mom= IN $- 2009 2010 2011 2012 2013 Operating Revenue I Operating Expenses Operating Income(Loss) Income Before Depreciation The Utility Fund ended 2013 with a total net position of$22,998,276, an increase of$504,684 from the prior year. Of this, $14,691,049 represents the investment in water distribution and sewer collection system capital assets,leaving unrestricted net position of$8,027,154. Operating revenue in the Utility Fund was $7,831,307, a decrease of$386,275 (4.7 percent) from the prior year. The City had a decrease in water consumption of 9.0 percent from 2012, which was the result of having a late winter and rainy spring in 2013 compared to a drier summer in 2012. The consumption decrease was partially offset by small increases to both water and sewer rates. Utility Fund operating expenses for 2013 were$7,595,895, a decrease of$432,749 (5.4 percent) from the previous year. The largest factors contributing to the change were increases in water purchases of $294,242 and sewer disposal charges of$201,318. -13- STORM SEWER UTILITY FUND The following graph presents five years of comparative operating results for the City's Storm Sewer Utility Fund: Storm Sewer Utility Fund Year Ended December 31, $2,500,000 $2,250,000 ■ _ $2,000,000 $1,750,000 ■ _ $1,500,000 • $1,250,000 ■ r r 0 � 2009 2010 2011 2012 2013 Nom Operating Revenue o Operating Expenses —Operating Income(Loss) Income Before Depreciation The Storm Sewer Utility Fund ended 2013 with a total net position of $20,814,889, an increase of $1,805,581 from the prior year. Of this, $12,187,618 represents the City's investment in its storm sewer collection system capital assets,leaving unrestricted net position of$8,627,271. Operating revenue in the Storm Sewer Utility Fund was $2,274,549, a slight decrease of $18,213 (0.8 percent)from the prior year. Storm Sewer Utility Fund operating expenses for 2013 were$1,470,273, an increase of $201,163 (15.9 percent) from the previous year, due to increased salaries, system maintenance costs,overhead charges,and depreciation. The Storm Sewer Fund received capital contributions of$886,492 in 2013, the majority of which was for improvement projects reimbursed by the Bassett Creek Watershed Management Commission. -14- BROOKVIEW OPERATING FUND The following graph presents five years of comparative operating results for the City's Brookview (Golf Course)Operating Fund: li Brookview Operating Fund Year Ended December 31, $2,000,000 $1,750,000 - $1,500,000 — $1,250,000 $1,000,000 $750,000 — $500,000 — $250,000 — $- $(250,000) 2009 2010 2011 2012 2013 Ism Operating Revenue o Operating Expenses Income Before Depreciation Operating Income(Loss) The Brookview Operating Fund ended 2013 with a total net position of $2,623,099, a decrease of $152,783 from the prior year. Of this, $1,538,977 represents the investment in capital assets, leaving an unrestricted net position of$1,084,122. Golf course operating revenue for fiscal 2013 was$1,502,897,a decrease of$262,289(14.9 percent)from the prior year,as a long winter and rainy spring decreased the number of days the courses were playable. Operating expenses for 2013 were$1,634,499, a decrease of$68,484 (4.0 percent), mainly due to lower salaries.This fund also transferred out$50,000 to support General Fund operations in 2013. -15- OTHER ENTERPRISE FUNDS The following graph presents operating revenues over the last five years for the City's Motor Vehicle Operating and Recycling Funds: Other Enterprise Funds' Operating Revenue Year Ended December 31, $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 — $150,000 — $100,000 $50,000 — 2009 2010 2011 2012 2013 ■Motor Vehicle Operating 0 Recycling Motor Vehicle Operating Fund Motor vehicle operating revenue was $304,424 for 2013, an increase of$211,798 (228.7 percent) from the previous year. Operating revenues declined substantially in 2011 and 2012, as the Motor Vehicle Licensing Center was closed for large portions of both years due to an investigation of employee fraud. Operating expenses were$320,606, up $169,812 (112.6 percent) from last year, mainly due to increased personnel costs with the operation being open for the entire year. Total net position decreased $65,270 in 2013, ending the year at $597,028. This fund also transferred out $50,000 to support General Fund operations in 2013. Recycling Fund Recycling Fund operating revenue was $276,099 for 2013, down slightly ($91) from the prior year. Operating expenses were $410,808 for 2013, an increase of$110,999 (37.0 percent) from the previous year, mainly due to maintenance costs financed with federal and state grants. Total net position increased $9,114 in 2013,ending the year at$989,813. -16- 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 capital assets,restricted,and unrestricted. The following table presents the components of City's net position as of December 31, 2013 and 2012, for governmental activities and business-type activities: As of December 31, Increase 2013 2012 (Decrease) Net position Governmental activities Net investment in capital assets $ 21,829,745 $ 22,622,764 $ (793,019) Restricted 29,535,846 26,673,032 2,862,814 Unrestricted 9,306,292 7,499,559 1,806,733 Total governmental activities 60,671,883 56,795,355 3,876,528 Business-type activities Net investment in capital assets 28,427,621 27,416,740 1,010,881 Unrestricted 18,562,323 17,508,592 1,053,731 Total business-type activities 46,989,944 44,925,332 2,064,612 Total net position $ 107,661,827 $101,720,687 $ 5,941,140 The City's total net position at December 31,2013 was$5.9 million higher than previous year-end.Of the increase,$3.9 million came from governmental activities and$2.0 million from business-type activities. The City's governmental restricted net position increased by$2.9 million in 2013,due to increases in net position restricted for debt service and capital improvements. The unrestricted portion of governmental • net position also increased $1.8 million, mainly due to the City reducing its outstanding tax increment debt by about $2.3 million. The governmental activities net investment in capital assets decreased $0.8 million during the year,mainly due to depreciation. The business-type activities net investment in capital assets increased$1.0 million in 2013,mainly due to capital contributions of $1.1 million received during the year. The unrestricted portion of the business-type activities net position also increased$1,053,731 due to the positive operating results of the City's(water and sewer)utility and storm sewer utility enterprise operations. -17- i STATEMENT OF ACTIVITIES The Statement of Activities tracks the City's yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed bands,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 net position of the City for the years ended December 31,2013 and 2012: 2013 2012 Program Expenses Revenues Net Change Net Change Net(expense)revenue Governmental activities General government $ 2,914,823 $ 370,957 $ (2,543,866) $ (2,792,433) Public safety 7,310,946 2,329,495 (4,981,451) (4,880,261) Public works 10,325,068 2,278,142 (8,046,926) (5,762,722) Parks and recreation 1,588,798 606,636 (982,162) (1,078,182) Interest on long-term debt 2,633,359 — (2,633,359) (2,724,495) Business-type activities Water and sewer 7,611,927 7,956,829 344,902 193,779 Storm sewer 1,589,410 3,335,995 1,746,585 955,148 Golf course 1,645,728 1,521,832 (123,896) 43,413 Motor vehicle operating 326,382 304,424 (21,958) (51,353) Recycling 410,808_ 417,722 6,914 42,116 Total net(expense)revenue $ 36,357,249 $ 19,122,032 (17,235,217) (16,054,990) General revenues Property taxes,tax increments,and franchise taxes 22,662,101 21,568,557 Investment earnings 151,276 310,528 Other revenues 362,980 495,863 Total general revenues 23,176,357 22,374,948 Change in net position $ 5,941,140 $ 6,319,958 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 which of 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. -18- LEGISLATIVE UPDATES Despite an improving economy, the 2013 Legislature faced the familiar prospect of having to address a significant projected deficit in order to adopt a balanced budget for the next biennium. The November 2012 financial forecast projected a deficit of$1.1 billion in the state General Fund for the 2014-2015 biennium,which was revised down to a$627 million deficit in the February 2013 forecast.Even with this challenge, there was an expectation that with one political party holding the Governor's office and majorities in both the House and Senate, this biennial budget agreement would be reached more quickly and easily than the previous one, which featured numerous vetoes, a special session, and the longest shutdown of non-essential state government services in Minnesota history.While in the end there was no special session or government shutdown, the 2013 session still stretched until the fmal day allowable under the state constitution,with the last bill passed at midnight. The following is a summary of recent legislative activity affecting the finances of Minnesota cities in 2013 and into the future: Local Government Aid (LGA) — The state-wide LGA appropriation for fiscal 2013 was set to ( increase about 2.8 percent to $426.4 million. However, the 2012 Legislature froze 2013 LGA payments at 2012 levels for cities with a population of 5,000 or more. For cities with populations below 5,000,2013 LGA was the greater of their 2012 aid or the amount they would have received for 2013 under existing law. The 2013 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 simplifies the LGA calculation, and is designed to reduce the volatility of the LGA distribution by limiting the amount it may decline in a given year.Under the new formula,each city's LGA distribution for 2014 will be no less than their 2013 LGA.Beginning in 2015, any reduction to a city's 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 is $507.6 million for fiscal 2014, $509.1 million for 2015, and $511.6 million for fiscal 2016 and thereafter. Levy Limits—A levy limit for city property tax levies payable in 2014 was established for all cities with populations exceeding 2,500. The levy limit base is the certified levy(excluding special levies) plus the certified LGA for taxes payable in fiscal 2012 or 2013, whichever is greater,increased by 3 percent. The levy limit is equal to the base, less the city's certified LGA for fiscal 2014. Levies for special purposes such as debt service,abatements,or voter-approved purposes,are not subject to this limitation. Market Value Definitions — A number of levy, tax, spending, debt, and similar limits that had previously been computed based on"market value"or"taxable market value"must now be computed based on"estimated market value."This change was enacted to eliminate the effects of the homestead market value exclusion established in 2011. Levy Authority for Watershed Management Plan—Cities are granted the authority to levy taxes to provide funding for the implementation of a comprehensive watershed management plan. Tax Status of Leased Tax-Exempt Property — Tax-exempt property owned by a political subdivision and held under a lease for a term of at least one year,or under a contract for the purchase thereof, is considered to be the property of the person holding it for all purposes of taxation. This change makes the tax treatment of leased property owned by local governments consistent with leased property owned by the federal government. -19- Tax Increment Financing (TIF) — A number of changes and clarifications were made to rules governing the use of TIF,including: • The prohibition on using tax increments for improvements or equipment primarily of a decorative or aesthetic nature,or with costs twice as high due to the selection of materials or designs compared to more commonly used improvements or equipment,is eliminated. • The four-year rule originally applying to TIF Districts certified between January 1,2005 and April 20,2009 is extended through December 31,2016. • Development authorities may elect to reduce the original net tax capacity of qualifying TIF districts for the effects of the homestead market value exclusion that replaced the homestead tax credit program. • Taxes paid by captured tax capacity of TIF districts that are attributable to the new general education levy authorized by the 2013 Legislature, will be paid to the school district that imposes the levy. Park Dedication Fees —A clarification was made to define the basis on which a city calculates a park dedication fee charged to a developer in lieu of dedicating land for park usage. The fee must be calculated on the fair market value of the land as annually determined by the city based on tax valuation or other relevant data. The new law also provides a method for resolving valuation disputes through negotiation or the use of independent appraisals of land in the same land use category. Host Community Economic Development Grants—A new program was created that will provide grants for the acquisition and improvement of publicly owned capital assets for metro-area cities that host waste disposal facilities.No local matching funds are required. Change to Small Cities Development Block Grants—The Minnesota Department of Employment and Economic Development is now allowed to provide a forgivable loan through the Small Cities Development Block Grant Program directly to a private enterprise. The city in which the private enterprise is located is no longer required to submit an application,only a resolution of support. Wastewater and Stormwater Funding—Several changes were made to wastewater and stormwater grant and loan programs administered by the Public Facilities Authority. The changes include expanded eligibility for some programs,and increased grant or loan ceilings for others. Sales Tax Exemption—Cities are exempted from paying sales tax on qualifying purchases,effective for purchases made on or after January 1,2014.This exemption does not include purchases of goods or services to be used as inputs to goods or services cities provide to the public that are generally provided by a private business,such as liquor stores,golf courses,marinas,or fitness centers. Cities with a population over 500 will be required to include a property tax savings report along with its proposed 2013 payable 2014 property tax levy certification, with the amount of sales or use taxes paid or estimated to have been paid in fiscal 2012. Cities must also discuss the savings resulting from the sales tax exemption at their fall truth-in-taxation public hearings. Organized Solid Waste Collection--The process for imposing the city-organized collection of solid waste was streamlined and better defined. The previous 180-day process for cities to adopt organized collection of solid waste was eliminated.The process now begins with a 60-day period in which cities may negotiate with collectors currently operating in the city,thereby giving them the first opportunity to develop a proposal for organized collection. If the 60-day negotiation period ends without an agreement, a city may continue the process by passing a resolution to form a committee to study the methods of organizing collection and make recommendations.A city must provide public notice and hold at least one public hearing before deciding to implement organized collection. -20- Pensions—An omnibus pension bill was passed that made a number of changes to both state-wide pension plans and single employer relief associations,including: • Changes to the Public Employees Retirement Association(PERA)General Plan: o The"average salary" for determining surviving spouse and dependent benefits was redefined. o A number of clarifications were made to what constitutes"salary"for plan purposes. o Changes were made to the level of annual post-retirement adjustments, which will vary based on the funding level of the plan. • Changes to the PERA Police and Fire Plan: o Increases employee contribution rate from 9.6 percent of salary to 10.2 percent for fiscal 2014,and 10.8 percent for fiscal 2015 and thereafter. o Increases employer contribution rate from 14.4 percent of salary to 15.3 percent for fiscal 2014,and 16.2 percent for fiscal 2015 and thereafter. o A 20-year proportional vesting period was established for new hires beginning in 2014,under which the member becomes 50 percent vested after 10 years, and vests an additional 5 percent annually until fully vested at 20 years. o The retirement annuity formula calculation was changed to incorporate the effect of the new 20-year vesting period,and a new cap of 33 years on allowable service time included in the annuity calculation. o The early retirement reduction factor was increased from the current 2.4 percent per year to 5 percent,phased in over a 5-year period beginning July 1,2014. o Changes were made to the level of annual post-retirement adjustments, which will vary based on the funding level of the plan. • Changes to single employer relief associations: o The threshold of assets at which police relief associations and salaried or volunteer fire relief associations must prepare financial statements and have them audited by an • independent auditor was raised from$200,000 to$500,000. o Volunteer firefighter relief associations are now required to pay a supplemental survivor benefit whenever it pays a survivor benefit, regardless of whether it is authorized in the association bylaws. o Any change to the interest rate paid during the deferral period of lump-sum service pensions must be approved by the governing body of the city or independent firefighting corporation to which the association is related. In addition,a new supplemental state aid was created to provide funding for pension plans.An annual allotment of$15.5 million will be distributed among the PERA Police and Fire Plan ($9 million), municipal volunteer firefighter associations ($5.5 million allocated based on proportionate share of fire state aid),and the Minnesota State Retirement System State Patrol Plan($1 million). Expansion of Debt Authority—Several changes were made to expand the allowable uses of certain types of debt,including: • Home rule charter city or statutory city capital notes are allowed to be used for the purchase of application development services and training related to the use of computer hardware and software. • Capital improvement program(CIP) bonds are allowed to be used for expenditures incurred before the adoption of the CIP,if the expenditures are included in the plan. • Street reconstruction bonds are allowed to be used for bituminous overlay projects, which previously had not been included in the definition of reconstruction. -21- . i ! Authorized Investments — The list of authorized investments for cities was expanded to include: revenue obligations issued by local governments without levy authority that are rated AA or better; short-term(13 month maturity or less)obligation issued by a school district that is either rated in the highest credit rating category or covered by the State of Minnesota Credit Enhancement Program;and short-term (18 month maturity or less) guaranteed investment contracts when the issuer's or guarantor's short-term debt is rated in the highest rating category,even if their long-term debt is rated below the top two rating categories. Elections—The Legislature passed an omnibus elections policy bill that made a number of changes and clarifications to election requirements,including: • Establishing"no excuse"absentee balloting; • Increasing the time for counting absentee ballots from 4 days prior to the election to 7; • Reducing the number of people a voter may vouch for in a polling place from 15 to 8; • Eliminating the requirement to have at least one telecommunications device for deaf voter registration in every city of the first,second,or third class; • Requiring that the municipal clerk designated to administer absentee ballots also be responsible for the administration of a"ballot board"; • Reducing the number of election judges required in a precinct for elections other than a general election from 4 to 3, for precincts with more than 500 voters; and allowing the minimum number of three election judges for all elections including general elections for precincts with less than 500 registered voters; • Modifying the vote differentials requiring publically funded recounts to 0.25 percent in elections where more than 50,000 votes are cast, and 0.5 percent for elections in which between 400 and 50,000 votes are cast; • Amending the time period in which cities are prohibited from holding a special election from the first 40 days following a general election to the first 56 days; • Increasing the number of days' notice a city clerk must provide to a county auditor before holding a municipal election from 67 to 74 days;and • Establishing a pilot program and task force for the use of electronic rosters of voters. Alternative Bid Publication for Projects Funded by Special Assessments —A technical change was made to eliminate duplicative publication requirements for projects funded with special assessments. The definition of"recognized industry trade journal"was broadened to include websites or electronic publications, thereby eliminating circumstances that were forcing cities utilizing an alternative electronic publication method to also publish written notice for certain projects. Met Council Allocated Costs—A change was made to allow cities that are allocated costs by the Met Council to request the cost be deferred, or to be paid over time on a payment schedule with interest as agreed to by the Met Council. Liquor Licensing—An omnibus liquor bill was passed that made several changes to liquor licensing and distribution. Among the changes are: authorizing cities with municipal liquor operations to issue brewer taproom licenses that allow consumption on the premises or adjacent to malt liquor breweries; authorizing cities to issue brewers a license for off-sale of malt liquor packaged by the brewer, providing for the sale of malt-liquor educator licenses that will allow malt liquor tastings and education to be conducted similar to wine tastings; and allowing micro-distilleries to provide product samples on site. Tax-Exempt folding Period for Development Property — The tax exempt holding period for city-owned land held for development is increased from 9 to 15 years for property acquired between January 1, 2000 and December 31, 2010, or for property located in a city outside of the metro area with a population under 20,000. -22- Citizen Contact Information Classified as Private Data—Citizen contact information submitted to cities in order to receive certain notifications or to subscribe to the city's electronic publications,such as phone numbers or email addresses,is now classified as private data. The names of people on such lists remain public information. • Criminal History and Background Checks — Cities are authorized to perform criminal history checks on applicants for: city employment, volunteer positions, or a license that does not otherwise subject the applicant to a criminal history check. Such criminal history checks may not be substituted for statutorily mandated background checks. Background checks are now required for all fire department applicants, and are allowed for current fire department employees. The fire chief is also required to perform criminal history record checks of applicants. -23- ACCOUNTING AND AUDITING UPDATES GOVERNMENTAL ACCOUNTING STANDARDS BOARD(GASB)STATEMENT NO.67—FINANCIAL REPORTING FOR PENSION PLANS-AN AMENDMENT OF GASB STATEMENT NOS.25 AND 50 The primary objective of this statement is to improve financial reporting by state and local government pension plans.GASB Statement No. 67 replaces the requirements of GASB Statement Nos.25 and 50 for pension plans that are administered through trusts or equivalent arrangements that meet the following criteria: contributions from employers and nonemployer contributing entities to the pension plan and earnings on those contributions are irrevocable;pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms;and pension plan assets are legally protected from the creditors of employers,nonemployer contributing entities,and the pension plan administrator.If the plan is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan members.The requirements of GASB Statement Nos. 25 and 50 remain applicable to pension plans that are not administered through trusts covered by the scope of this statement and to defined contribution plans that provide post-employment benefits other than pensions. The statement makes a number of changes in the financial statement presentation, measurement, and required disclosures relating to the reporting of these types of pension plans. This statement is effective for financial statements for fiscal years beginning after June 15,2013.Earlier application is encouraged. 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 50, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria (as described earlier for GASB Statement No. 67). The requirements of GASB Statement Nos. 27 and 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 expense/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 nonemployer 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. -24- GASB STATEMENT NO.69--GOVERNMENT COMBINATIONS AND DISPOSALS OF GOVERNMENT OPERATIONS This statement provides accounting and financial reporting guidance, including disclosure requirements, for government combinations and disposals of government operations.Government combinations include mergers, acquisitions, and transfers of operations. Included within the scope of this statement are combinations of governmental entities, or combinations of governmental entities with nongovernmental entities(such as a nonprofit entity), as long as the new or continuing organization is a government. This statement does not apply to combinations in which a government acquires an organization that continues to exist as a separate entity,or acquires an equity interest in an organization that remains legally separate from the acquiring government. A disposal of operations occurs when a government either transfers or sells specific operations.The provisions of this statement are effective for financial statements for periods beginning after December 15,2013.Earlier application is encouraged. CHANGES TO REQUIREMENTS FOR FEDERAL GRANTS In December 2013, the U.S. Office of Management and Budget(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, changes to the thresholds and process used for determining major programs,a reduction in the percentage of expenditures required to be covered by a Single Audit, revised criteria for determining low-risk auditees, and an increase in the threshold for reporting questioned costs. The draft version of this guidance also included proposed reductions in the number of compliance requirements to be tested in a Single Audit, but final guidance on those changes will not be available until an updated compliance supplement is issued in 2014. -25- ! 1 { I ' APPENDIX F:PROPOSER GUARANTEES AND WARRANTEES APPENDIX F PROPOSER GUARANTEES The proposer certifies it can and will provide and make available,as a minimum,all services set forth in Section II,Nature of Services Required. t ' PROPOSER WARRANTEES A. Proposer warrants that it is willing and able to comply with state of Minnesota laws with respect to foreign(non-state of Minnesota)corporations. B. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy • providing a prudent amount of coverage for the willful or negligent acts,or omissions of any officers, employees,or agents thereof. C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of the City of Farmington. D. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: Name: William J.Lauer,CP Title: Principal Finn: Malloy.Montague,Karnowski.Radosevich&Co..P.A. Date: October 3.2014 II o ARAN yyr City of Farmington i p 430 Third Street �! �u Farmington,Minnesota X 651.280.6800 -Fax 651.280.6899 °° w A ww.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Kevin Schorzman,City Engineer SUBJECT: 2015-2019 Dakota County Capital Improvement Plan DATE: November 3, 2014 INTRODUCTION Dakota County is in the process of preparing their 2015-2019 Capital Improvement Program(CIP). The county has asked that the city provide a resolution indicating Farmington's concurrence with the projects that are included in the 2015-2019 CIP prior to the county reviewing it later this month. DISCUSSION Dakota County's 2015-2019 CIP includes two projects in Farmington.The first is for signal reconstruction at TH-3 and Elm and Ash Streets as part of a larger MnDOT project that will be taking place in 2016. The project details are not set at this point,but the project will include major rehabilitation work to TH-3, potential access improvements, and signal reconstruction. As part of this,the city will be responsible for 25%of the cost of the signal reconstruction at Elm Street based on the fact that the intersection is comprised of two state highway legs, one county road leg,and one city street leg. Currently,we are estimating the city contribution to be approximately$25,000. There will be no city participation at the Ash Street signal. The second project is the 195th Street Reconstruction project. The project is bounded by Flagstaff Avenue on the west and Diamond Path on the east. The improvements included in this project include complete reconstruction of the road as well as the construction of roundabouts at the Flagstaff,Pilot Knob and Akin Road intersections It will also include turn lanes at other intersecting roads,trails on both sides of 195th, and a pedestrian underpass at Meadowview Elementary. Based on the comments received at the first open house for the 195th Street project,the city requested that the county consider an acceleration lane for eastbound traffic exiting Meadowview Elementary. The county did look at this option and decided not to include it in the project. The issue came up again at the most recent open house. An advantage of an acceleration lane would be that traffic could exit Meadowview and gain speed before merging into the through lane of traffic. This may be helpful with larger vehicles such as school busses which accelerate slower when going uphill. Another advantage is that it may decrease the wait time getting out of the school which could lead to less driver frustration and better decision-making. A disadvantage is that this creates a merging situation which could lead to side-swiping type accidents. Another disadvantage of this type of maneuver on a non-divided road is that a vehicle in the through lane might choose to cross the centerline of the road if a vehicle beside it merges into the through lane without looking. On any undivided road, crossing the centerline could lead to head-on collisions. BUDGET IMPACT This project is governed by the county's 45/55 cost share policy by which Dakota County pays 55%of the project costs for projects within the corporate limits of a city. Currently the total anticipated city portion of the project is approximately$4.1 million(design,right-of-way,construction and construction administration). Staff is currently working with the county and MnDOT to receive MSA funding for a portion of the project which will reduce the city's need to bond for the entire project amount. ACTION REQUESTED As staff believes that these projects are necessary improvements in the transportation system of the city, staff recommends that city council discuss the pros and cons of an eastbound acceleration lane at Meadowview Elementary and then adopt one of the attached resolutions indicating the city's continuing support for this projects that are included in the 2015-2019 Dakota County CIP. ATTACHMENTS: Type Description CI Resolution CIP Resolution Without Acceleration Lane © Resolution CIP Resolution With Acceleration Lane RESOLUTION NO. R58-14 A RESOLUTION REQUESTING THE INCLUSION OF CONSTRUCTION PROJECTS IN THE DAKOTA COUNTY 2015 TO 2019 TRANSPORTATION CIP Pursuant to due call and notice thereof, a regular meeting of the City Council of Farmington, Minnesota, was held in the Council Chambers of said City on the 3`d day of November, 2014 at 7:00 p.m. Members Present: Larson, Bartholomay, Bonar, Donnelly, Fogarty Members Absent: None Member Fogarty introduced and Member Bonar seconded the following resolution: WHEREAS,Dakota County has asked cities and townships to request projects for inclusion in the Dakota County 2015 to 2019 Transportation CIP; and WHEREAS,the City of Farmington believes that completion of the following transportation projects in the designated years is in the best interest of the City of Farmington and its residents: Project Year 195th Street from Flagstaff Avenue to Diamond Path 2015 Signal Reconstruction-TH-3 at Elm and Ash Streets 2016 ; and WHEREAS,the City of Farmington intends to participate in costs associated with these projects in accordance with applicable County cost sharing policies. NOW,THEREFORE,BE IT RESOLVED,that the City of Farmington hereby requests that these projects be included in the Dakota County 2015-2019 Transportation CIP for construction and/or funding in the year(s) indicated: Project Year 195th Street from Flagstaff Avenue to Diamond Path 2015 Signal Reconstruction-TH-3 at Elm and Ash Streets 2016 This resolution adopted by recorded vote of the Farmington City Council in open session on the 3`d day of November,2014. ayor Attested to the/0 day of November, 2014. Administr•t• SEAL °Ok Attu&. City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 ,4 .° www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Kevin Schorzman, City Engineer SUBJECT: Revocation of Municipal State Aid Status and Concurrence with County State Aid Hightway Status-195th Street DATE: November 3, 2014 INTRODUCTION Currently, 195th Street from Flagstaff Avenue to TH-3 is designated a Municipal State Aid(MSA)road. Dakota County has proposed to designate the portion of 195th Street from Pilot Knob Road to TH-3 as a County State Aid Highway(CSAH). DISCUSSION As part of the 195th Street project,the county is proposing to designate 195th Street from Pilot Knob Road to TH-3 a CSAH. This designation will allow the county to use state aid dollars to fund a portion of their cost of the project. To achieve this designation,the city needs to revoke the MSA status of this portion of the road so that it can then be re-designated a CSAH. There is no detriment to the city for doing this as MSA funds can be used on off-system roads as long as they are also a part of the overall state aid system. This means that even if a project comes up in the future on this portion of 195th Street,the city would be eligible to use MSA dollars toward the project. In addition,the MSA mileage that will be revoked can be applied to other roads within the city to make them eligible for MSA funding in the future. The city will keep the MSA designation on that portion of the road from Flagstaff Avenue to Pilot Knob Road. This will allow us to use MSA funds to offset construction costs on this project,and ensure that the entire corridor remains state aid eligible. The county board is expected to act on this item at their November 4, 2014 meeting. BUDGET IMPACT While there is no direct budget impact of this item, it will ensure that MSA funds could continue to be used on any future qualifying project along this corridor. ACTION REQUESTED Adopt the attached resolution revoking the MSA status of 195th Street from Pilot Knob Road to TH-3 and concurring with the county's desire to designate this portion of 195th Street a CSAH. Note the resolution is contingent upon the county approving the designation at their meeting on November 4,2014. ATTACHMENTS: Type Description n Resolution MSA Revocation Resolution ▪ Backup Material November 4th Dakota County CSAH Resolution RESOLUTION NO. R59-14 REVOKING A PORTION OF MUNICIPAL STATE AID STREET 102 (195TH/190TH STREET) FROM CSAH 31(PILOT KNOB ROAD)TO TRUNK HIGHWAY 3 IN THE CITY OF FARMINGTON AND CONCURRENCE IN DESIGNATING COUNTY STATE AID HIGHWAY 64 IN THE CITY OF FARMINGTON. Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Farmington, Minnesota, was held in the Council Chambers of said City on the 3rd day of November, 2014 at 7:00 p.m. Members present: Larson, Bartholomay, Bonar, Donnelly, Fogarty Members absent: None Member Bartholomay introduced and Member Bonar seconded the following resolution: WHEREAS,the portion of 195th Street/190th Street from Flagstaff Avenue to Trunk Highway 3 is currently designated as a Municipal State Aid street within the City of Farmington; and, WHEREAS, the Dakota Board of Commissioners will consider for adoption a resolution on November 4, 2014, locating, establishing, designating and numbering the County State Aid Highway System of Dakota County; and, WHEREAS, said resolution locates and establishes certain County State Aid Highways within the corporate limits of the City of Farmington; and, WHEREAS, the road hereinafter described is a Municipal State Aid Street under the provision of Minnesota Laws. NOW THEREFORE, BE IT RESOLVED that: 1. The road described as follows,to-wit: Beginning at the intersection of CSAH 31 (Pilot Knob Road) and 195th Street West, located near the west quarter corner of Section 24,Township 114 North, Range 20 West, in the City of Farmington;thence easterly along 195th Street West and 190th Street West to the intersection of 190th Street West and Trunk Highway 3 (Chippendale Avenue) and there terminating near the northeast corner of Section 19,Township 114 North, Range 19 West. be, and hereby is, revoked as a Municipal State Aid Street of said City subject to the approval of the commissioner of Transportation of the State of Minnesota. 2. The resolution being considered by the Dakota County Board of Commissioners at their November 4, 2014 meeting, a copy of which is attached hereto and made a part thereof, locating or establishing the County State Aid Highway system within the City limits (and revoking certain portions of said system) is in all things approved. 3. The City Clerk is authorized and directed to forward certified copies of this resolution to the commissioner of Transportation for his consideration. 4. This resolution is contingent upon the Dakota County Board approving the resolution referenced in number 2 above. This resolution adopted by recorded vote of the Farmington City Council in open session on the 3`d day of November, 2014. Mayor Attested to the /e+/-1 day of November, 2014. y Administrate SEAL DAKOTA COUNTY BOARD OF COMMISSIONERS Designate A Portion Of County State Aid Highway 64 In The City Of Farmington Meeting Date: 11/4/2014 Fiscal/FTE Impact: Item Type: Consent-Action ❑ None ® Other Division: Physical Development ❑ Current budget ❑ Amendment requested Department: Transportation ❑ New FTE(s) requested Contact: Krebsbach, Mark Board Goal: Good for Business Contact Phone: (952) 891-7102 Prepared by: Sorenson, Brian PURPOSE/ACTION REQUESTED Designate a Portion of County State Aid Highway (CSAH)64 in the City of Farmington. SUMMARY Background: The State Constitution directs, through the Minnesota Highway User Tax Distribution Fund (HUTDF), that Minnesota's eighty-seven counties shall receive County State Aid Highway(CSAH)funds from state-collected motor fuel taxes, motor vehicle sales taxes, and motor vehicle license fees. These CSAH funds can only be used for eligible road and bridge construction and maintenance on County State Aid Highways. Due to growth and development in Dakota County, County roadways constructed on new alignments,jurisdictional changes, and County roadways planned through system studies, the County Screening Board (in October 2012) awarded Dakota County 39.6 miles of State Aid mileage to be added to our CSAH system. Included in this award was County Road (CR) 64 (195th Street)from CSAH 31 to TH 3 in Farmington. CR 64 west of CSAH 31 to Flagstaff Avenue is not currently eligible to be added to Dakota County's CSAH system because CSAH's must begin and end at an equal or higher Functional Classification of Roadway. This segment will be eligible to be added to the CSAH system when CR 64 is constructed on a new alignment from CSAH 23 to Flagstaff Avenue, consistent with the recommendations of the East/West Corridor Study. State Aid Rules prohibit designating a non- existing roadway as a CSAH. In compliance with the Screening Board award and State Aid Rules, Dakota County is therefore requesting CR 64 be designated CSAH 64 from CSAH 31 to TH 3 in Farmington. The City of Farmington has Municipal State Aid (MSA) status designation on CR 64 (195th Street/190th Street)from Flagstaff Avenue to Trunk Highway 3. Prior to the County being able to designate CSAH 64, the City of Farmington must revoke Municipal State Aid (MSA) status on 195th/190th Street from CSAH 31 to Trunk Highway 3. The City, at their November 3 Council Meeting,will revoke Municipal State Aid needs on this portion of roadway and concur with the County's request for County State Aid status. The Dakota County 2014-2018 Capital Improvement Program includes County Project(CP) 31-68, which includes roadway improvements along CR 64 (195th Street)from Flagstaff Avenue to Diamond Path and the construction of roundabouts along CR 64 at the intersections of CSAH 31 (Pilot Knob Road), Flagstaff Avenue, and Akin Road. Designation of CSAH 64 will allow the County to use State Aid funds and the city to use"off-system" MSA funds for construction costs along CR 64 from CSAH 31 to the east. The city will retain MSA status on the portion of CR 64 from Flagstaff Ave to CSAH 31. Keeping Municipal State Aid (MSA) status on this portion of CR 64 will allow the city of Farmington to utilize MSA funds for the city's share of construction costs. Dakota County will use County funds for the County's share of construction costs along this segment of CR 64. RECOMMENDATION Staff recommends designation of County State Aid Highway 64 from County State Aid Highway 31 to Trunk Highway 3. EXPLANATION OF FISCAL/FTE IMPACTS Designation of CSAH 64 will allow Dakota County to use CSAH funds for the 2015 reconstruction of CR 64 and future projects in Farmington and to access State Aid Maintenance funds for maintenance and operation of this segment of CR 64. Supporting Documents: Previous Board Action(s): Attachment A: Location Map RESOLUTION WHEREAS, the County State Aid Screening Board awarded Dakota County an additional 39.6 miles of County State Aid Highways to be added to Dakota County's County State Aid Highway(CSAH) System in the fall of 2012; and WHEREAS, Minn. Stat. § 162.02, Subdivision 7 states that the county board of any county may establish and locate a county state aid highway in a new location where there is no existing road, or it may establish and locate the highway upon or over any established road or street or a specified portion thereof within its limits; and WHEREAS, the Transportation Director/Engineer recommends designating County State Aid Status, according to the recommendation in the adopted State Aid Mileage Request; and WHEREAS, the City of Farmington under separate action concurs with the CSAH designation. NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby designates County State Aid Status, subject to the approval of the Commissioner of Transportation of the State of Minnesota for a segment of CSAH 64 as follows: Beginning at the intersection of CSAH 31 (Pilot Knob Road) and 195th Street West, located near the west quarter corner of Section 24, Township 114 North, Range 20 West, in the City of Farmington, thence easterly along 195th Street West and 190th Street West to the intersection of 190th Street West and Trunk Highway 3 (Chippendale Avenue) and there terminating near the northeast corner of Section 19, Township 114 North, Range 19 West. BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the Dakota County Transportation Director/County Engineer to forward two certified copies of this resolution to the Minnesota Commissioner of Transportation for approval. Administrator's Comments: Reviewed by(if required): ❑ Recommend Action ❑ County Attorney's Office ❑ Do Not Recommend Action ❑ Financial Services ❑ Reviewed---No Recommendation ❑ Risk Management ❑ Reviewed---Information Only ❑ Employee Relations ❑ Submitted at Commissioner Request ❑ Information Technology ❑ Facilities Management County Administrator 10/3/2014 2:02 PM Page 2 oEFMM City of Farmington per, 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 ,4 , www.ci.farmington.mn.us TO: Mayor,Councilmembers and City Administrator FROM: Kevin Schorzman, City Engineer SUBJECT: Approve Joint Powers Agreement with Dakota County for 195th Street Project DATE: November 3,2014 INTRODUCTION Joint powers agreements (JPAs)are the typical contractual arrangements between governmental subdivisions when they are jointly working on a project. The WA outlines each party's responsibility for the project. DISCUSSION Attached is the JPA between Dakota County and the city for the 195th Street project. Some highlights of the JPA include: The county will be the lead agency for design,right-of way acquisition, inspection and contractor payment. The city will be responsible for storm sewer design,roundabout lighting design,pedestrian underpass lighting design,and storm sewer inspection. Standard cost share: 55%county,45%city. • County will not request first payment from city until October 15, 2015. • City will be responsible for power costs and routine maintenance costs for the lighting installed as part of the project. The JPA is consistent with the county's transportation policy and does include payment flexibility that will allow the city to sell bonds at a time that maximizes annual fluctuations in the bond market. It will also allow the city the time to have a good idea of actual project costs as well as how much we can reduce the bonding amount based on MSA fund availability. BUDGET IMPACT The anticipated city portion of the project is$4.1 million and will be funded through a combination of MSA funds and bonding. There are no assessments associated with the project. This project is included in the long-term capital improvement plan approved by the city council. ACTION REQUESTED By motion,approve the attached resolution authorizing execution of the JPA with Dakota County for the 195th Street project. ATTACHMENTS: Type Description 13 Resolution 195th Street JPA Resolution Exhibit 195th Street JPA RESOLUTION NO. R60-14 JOINT POWERS AGREEMENT 195th STREET RECONSTRUCTION PROJECT Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Farmington, Minnesota was held in the Council Chambers of said City on the 3`1 day of November 2014 at 7:00 p.m. Members present: Larson, Bartholomay, Bonar,Donnelly, Fogarty Members absent: None Member Fogarty introduced and Member Donnelly seconded the following resolution: WHEREAS,a resolution of the City Council adopted the 3`d day of November, 2014, authorized the City to complete the 195th Street Reconstruction Project as part of the Joint Powers Agreement with the Dakota County, administered by Dakota County; and, WHEREAS, said Joint Powers Agreement will be submitted to the Dakota County Board of Commissioners on November 4, 2014. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Farmington, Minnesota, 1. That the 195th Street Reconstruction Project will be completed as part of the Joint Powers Agreement with Dakota County, administered by Dakota County. 2. The Mayor and the City Administrator are hereby authorized to execute the Joint Powers Agreement with Dakota County. This resolution adopted by recorded vote of the Farmington City Council in open session on the 3`d day of November 2014. Mayor Attested to the /0441 day of November, 2014. ty Administr.to SEAL Dakota County Contract#C0026273 JOINT POWERS AGREEMENT FOR ENGINEERING, RIGHT OF WAY ACQUISTION AND CONSTRUCTION BETWEEN THE COUNTY OF DAKOTA AND THE CITY OF FARMINGTON DAKOTA COUNTY PROJECT NO. 31-68 AND 64-22 SYNOPSIS: Dakota County Transportation Department and the City of Farmington agree to widen County State Aid Highway(CSAH) 31 (Pilot Knob Road) from south of County Road(CR) 64(195th Street) to 190th Street, to construct a roundabout intersection at CSAH 31 and CR 64, to reconstruct CR 64 from Flagstaff Avenue to Diamond Path to a 3-lane undivided highway and to construct roundabout intersections at CR 64 and Flagstaff Avenue and at CR 64 and Akin Road in Farmington, Dakota County. Dakota County Project 31-68&64-22 October 21,2014 THIS AGREEMENT, made and entered into by and between the County of Dakota, referred to in this Agreement as"the County"; and the City of Farmington, referred to in this Agreement as"the City". WHEREAS, under Minnesota Statutes Section 162.17, subdivision 1 and 471.59, subdivision 1, two governmental units may enter into an Agreement to cooperatively exercise any power common to the contracting parties, and one of the participating governmental units may exercise one of its powers on behalf of the other governmental units; and WHEREAS, the County and the City desire to widen County State Aid Highway(CSAH) 31 (Pilot Knob Road) from south of County Road (CR) 64 (195th Street)to 190th Street, to construct a roundabout intersection at CSAH 31 and CR 64,to reconstruct CR 64 from Flagstaff Avenue to Diamond Path to a 3-lane undivided highway, and to construct roundabout intersections at CR 64 and Flagstaff Avenue and at CR 64 and Akin Road in Farmington, Dakota County; and WHEREAS, the County and the City have included this project in their Capital Improvement Programs and will jointly participate in the costs of said intersection construction and highway expansion as set forth herein. NOW, THEREFORE, it is agreed that the County and the City will share project responsibilities and jointly participate in the project costs associated with intersection construction and highway expansion and related activities as described in the following sections: 1. Engineering. Design engineering including all aspects of the project(public involvement, education, preliminary/final design etc.), construction engineering, construction management, construction inspection and all related materials testing shall be split based on the County's and City's share of the final construction costs. 2. Construction Items. The costs for the construction of the roundabout intersections on CR 64 and the expansion of CR 64 and CSAH 31 shall be shared in the amount of fifty-five (55%) by the County and forty-five (45%) by the City. Cost sharing includes all highway construction items, mitigation required by state and federal permits including accessibility requirements; storm sewer and other drainage facilities eligible for County State Aid funding based on contributing flows; replacement or restoration of fences, landscaping and driveways when affected by construction; 2 Dakota County Project 31-68&64-22 October 21, 2014 replacement or adjustment of sanitary sewer, water and storm sewer systems, if required due to construction; relocating or adjusting privately owned utilities when not performed at the expense of the utility; County's share of water pollution best management practices, based on contributing flows, meeting National Urban Runoff Protection (NURP) standards; installation of roundabout and design elements integral to the safe design and operation of the roundabouts; mitigation required for access modifications, pedestrian underpass, pedestrian underpass and roundabout intersection lighting, and all other construction aspects outlined in the plan except for elements as called out under this agreement or the current Dakota County Transportation Plan. 3. Aesthetic Elements. Aesthetic elements for the project consist of colored concrete, concrete surface treatments in the boulevard, splitter islands or roundabout center circle, and/or roundabout landscaping and plantings. The County will participate up to 50% of the cost of aesthetic elements up to a maximum amount of three percent of the County's share of highway construction costs. Highway construction costs exclude costs for items such as right of way, storm sewer and ponding. The City shall be responsible for 50% of the costs of all aesthetic elements and 100% of the costs that exceed the County's maximum participation for aesthetic elements. The responsibility for maintenance of all aesthetic elements shall be in accordance with the current adopted Dakota County Transportation Plan. 4. Miscellaneous Elements. General maintenance will be handled as detailed in the policies with the current Dakota County Transportation Plan. 5. Lighting Maintenance and Energy Costs. The City shall be the lead agency for the design and installation of roundabout intersection and pedestrian underpass lighting. After completion of the project,the City shall be responsible for maintenance and energy costs of the roundabout intersection and pedestrian underpass lighting. The City will perform or coordinate the lighting maintenance, receive billings and pay for all routine maintenance(relamping) and energy costs for the project. The County will be responsible for up to 55% of lighting replacement;the City will be responsible for all remaining costs. 6. City Utilities. Except as stated in the above sections of this agreement,the City shall pay all other costs for new sanitary sewer, water mains and appurtenances constructed as part of this 3 Dakota County Project 31-68&64-22 October 21,2014 project. Further,the City shall be responsible for the maintenance of all such facilities after the completion of the project. 7. Right-of-Way. The County will undertake all actions necessary to acquire all permanent and temporary highway right of way, including relocations, and will acquire all right of way for sidewalk and trail construction, wetland damage mitigation and banking, drainage and ponding, and water pollution control best management practices for the project. Except as set forth below, the costs of acquiring highway right of way, including right of way for drainage inlets and outlets, shall be shared in the amount of 55% by the County and 45% by the City. Upon completion of the project, the ownership of the drainage and ponding easements and permanent right of way for City streets shall be transferred to the City. Any right of way costs for new sanitary sewer, water mains and appurtenances, and aesthetic elements outside of the right of way needed for the highway improvements shall be the responsibility of the City. 8. Plans and Specifications. The County is the lead agency for design engineering for the Project to prepare complete grading and paving plans and specifications consistent with State Aid design standards and the Dakota County Transportation Plan. The City shall be the lead agency for the preparation of plans and specifications for the storm sewer and ponding design. The County will incorporate the City's plan sheets and specifications into the final bid documents. The City and the County shall approve the plans and specifications prior to advertising for bids. 9. Payment. The County will administer the contract and act as the paying agent for all payments to the Contractor. Payments to the Contractor will be made as the project work progresses and when certified by the County Engineer. The County shall provide a financial status report to the City on a quarterly basis. The report shall show estimated final costs, costs paid to date, and each agency's prorated share of the total project cost. The County will request first payment of the City's share of the project costs (i.e. engineering, right-of-way acquisition, construction) after October 15, 2015, but no later than November 30, 2015. The County will request payment on a quarterly basis for any project costs incurred after those included in the 2015 payment request. Upon presentation of an itemized claim by one agency to the other,the receiving agency shall reimburse the invoicing agency for its share of the costs incurred under this agreement within 35 days from the presentation of the claim. If any portion of an itemized claim is questioned by the receiving agency,the remainder of the claim shall be promptly paid, and 4 Dakota County Project 31-68&64-22 October 21, 2014 accompanied by a written explanation of the amounts in question. Payment of any amounts in dispute will be made following good faith negotiation and documentation of actual costs incurred in carrying out the work. 10. Amendments. Any amendments to this Agreement will be effective only after approval by both governing bodies and execution of a written amendment document by duly authorized officials of each agency. 11. Effective Dates. This Agreement will be effective upon execution by duly authorized officials of each governing body and shall continue in effect until all work to be carried out in accordance with this Agreement has been completed. Except for on-going maintenance activities including sidewalk, landscape and lighting maintenance, in no event will this Agreement continue in effect after December 31, 2016, unless the parties mutually agree to an extension of the project term. 12. Change Orders and Supplemental Agreements. Any change orders or supplemental agreements that affect the project cost participation must be approved by appointed representatives of both Parties prior to execution of work. For the purposes of this section, the City's appointed representative is Kevin Schorzman, City Engineer, and the County's appointed representative is Ross Beckwith, Construction Engineer, or their successors. Both Parties shall endeavor to provide timely approval of change orders and supplemental agreements so as not to delay construction operations. 13. Final completion. Final completion of the construction project must be approved by both the County and the City. 14. Storm Sewer Construction and Maintenance. The City shall be responsible for assisting with storm sewer inspection including having an inspector on-site during storm sewer installation. Upon completion of the project, the City shall be responsible for routine storm sewer maintenance and cleaning. The County will participate in replacement or repair of storm sewer constructed by this project in accordance with the current version of the County Transportation Plan. 5 Dakota County Project 31-68&64-22 October 21,2014 15. Sidewalks and Bike Trails. Upon acceptance of the project, the City shall be responsible for sidewalk and trail maintenance. The County and the City shall be responsible for the costs of trail resurfacing or reconstruction in accordance with the current Dakota County Transportation Plan. 16. Pavement Maintenance. Upon acceptance of the project by the County and City, the County shall be responsible for all pavement maintenance within County right of way unless necessitated by a failure of a municipal utility system or installation of new facilities. 17. Subsequent Excavation. After completion of the project, and after expiration of the warranty period regarding repair, if excavation within the highway right of way is necessary to repair or install water, sewer, or other city utilities, the City shall apply for a permit from the County and shall be responsible to restore the excavated area and road surface to its original condition at the time of disturbance. If the City fails to have the highway properly restored, the County Engineer may have the work done and the City shall pay for the work within 30 days following receipt of a written claim by the County. 18. Rules and Regulations. The County and the City shall abide by Minnesota Department of Transportation standard specifications, rules and contract administration procedures. 19. Indemnification. The County agrees to defend, indemnify, and hold harmless the City against any and all claims, liability, loss, damage, or expense arising under the provisions of this Agreement and caused by or resulting from negligent acts or omissions of the County and/or those of County employees or agents. The City agrees to defend, indemnify, and hold harmless the County against any and all claims, liability, loss, damage, or expense arising under the provisions of this Agreement for which the City is responsible, including future operation and maintenance of facilities owned by the City and caused by or resulting from negligent acts or omissions of the City and/or those of City employees or agents. All Parties to this agreement recognize that liability for any claims arising under this agreement are subject to the provisions of the Minnesota Municipal Tort Claims Law; Minnesota Statutes, Chapter 466. In the event of any claims or actions filed against either party, nothing in this agreement shall be construed to allow a claimant to obtain separate judgments or separate liability caps from the individual Parties. 6 Dakota County Project 31-68&64-22 October 21, 2014 20. Waiver. Any and all persons engaged in the work to be performed by the County shall not be considered employees of the City for any purpose, including Worker's Compensation, or any and all claims that may or might arise out of said employment context on behalf of said employees while so engaged. Any and all claims made by any third party as a consequence of any act or omission on the part of said County employees while so engaged on any of the work contemplated herein shall not be the obligation or responsibility of the City. The opposite situation shall also apply: the County shall not be responsible under the Worker's Compensation Act for any employees of the City. 21. Audits. Pursuant to Minnesota Statutes Sec 16 C. 05, Subd. 5, any books, records, documents, and accounting procedures and practices of the County and the City relevant to this Agreement are subject to examination by the County or the City and either the Legislative Auditor or the State Auditor as appropriate. The County and the City agree to maintain these records for a period of six years from the date of performance of all services covered under this Agreement. 22. Integration and Continuing Effect. The entire and integrated agreement of the Parties contained in this Agreement shall supersede all prior negotiations, representations or agreements between the City and the County regarding the project;whether written or oral. All agreements for future maintenance or cost responsibilities shall survive and continue in full force and effect after completion of the roundabout intersections and road expansion provided for in this Agreement. [SIGNATURE PAGE TO FOLLOW] 7 Dakota County Project 31-68&64-22 October 21, 2014 8 IN WITNESS THEREOF, the parties have caused this agreement to be executed by their duly authorized officials. CITY OF FARMINGTON RECOMMENDED FOR APPROVAL: By City Engineer Mayor (SEAL) By City Administrator Date DAKOTA COUNTY RECOMMENDED FOR APPROVAL: By Physical Development Director Date County Engineer APPROVED AS TO FORM: Assistant County Attorney Date KS-2014- COUNTY BOARD RESOLUTION No. 14- Date: October 7, 2014 City of Farmington �: 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 p ,ava '4° . www.ci.farmington.mn.us TO: Mayor,Councilmembers and City Administrator FROM: Kevin Schorzman, City Engineer SUBJECT: New Sunrise Addition Development Contract Amendment DATE: November 3, 2014 INTRODUCTION An amendment to the development contract for New Sunrise Addition is forwarded herewith for city council consideration.The amendment extends the completion time for the public utility installation in both phases of the development. DISCUSSION The developer is requesting an extension of the completion time for the public utility installation consistent with the provisions of paragraph six of the original development contract. The developer has completed the public utility improvements and the alley removal required for phase one of the development. However the road in phase one has not been replaced, and if the amendment is approved, it will not be until 2015. Staff does not believe this is of great concern as paragraph five of the original development contract requires the developer to maintain the existing roadway(snow plowing,pothole repair, etc.)until such time that the road has been replaced and 211th Street has been constructed. This requirement has been discussed with the developer and he understands these obligations. While progress has been slower than originally anticipated,work has occurred in the development this summer. In addition to the public utility improvements and alley removal in phase one,the developer has also deeded the required outlots to the city,and has constructed two new homes in the development. Based on current market conditions,both staff and the developer feel that these adjustments are a reflection of a more realistic timeframe for completion as opposed to the timeframe included in the original development contract. The following completion date changes are reflected in the development contract amendment: • Completion of phase one(including the final wearing course)will change from November 30,2014 to November 30,2015. • Completion of phase two(not including the final wearing course because of new utility installation) will change from November 30, 2014 to November 30,2016. • Completion of the fmal wearing course in phase two will be complete on or before October 15,2017. • Requirement that the developer enter into a development agreement for phase two in sufficient time to complete the phase two infrastructure(excluding the final wearing course)by November 30,2016. In addition to the above-mentioned changes,the developer will also be required to maintain the letter of credit for the development. Outside of the changes listed in the amendment, all other terms and conditions of the original development contract remain in place. BUDGET IMPACT None. ACTION REQUESTED Approve the attached amendment to the New Sunrise Addition development contract. ATTACHMENTS: Type Description i Exhibit New Sunrise Addition DC Amendment FIRST AMENDMENT TO DEVELOPMENT CONTRACT THIS FIRST AMENDMENT TO DEVELOPMENT CONTRACT dated this 3`d day of November, 2014, by, between, and among the City of Farmington, a Minnesota municipal corporation (CITY) and Tru Value Homes, LLC, a Minnesota Limited Liability Company (DEVELOPER), modifies the Development Contract between the parties dated May 5,2014,recorded June 2,2014 in the office of the Dakota County Recorder as Document No. 3013571,(the"Development Contract"). RECITALS A. As a condition of final plat approval for NEW SUNRISE ADDITION,the Development Agreement in paragraph 6 specified that the Developer install all required public utilities for Phase I by a specified date. B. The Development Contract also authorized the Developer to request an extension of time from the City and the City to grant an extension with certain conditions. C. The Developer has requested,and the City hereby agrees,to an extension of the time of performance. D. The Developer and City agree that all of the mutual promises and covenants contained in the original development contract remain in full force and effect unless modified specifically by this amendment. NOW, THEREFORE, the City and Developer, in consideration of the executed Development Contract and the mutual promises and covenants contained herein, now mutually agree to amend the existing Development Contract as follows: A. Delete Paragraph 6 in its entirety and replace it with: 6. Time of Performance. The Developer shall install all required public utilities for Phase One (1), including removal and replacement of the existing bituminous surface and the final wearing course, by November 30, 2015, in accordance with the requirements set forth in the City's Engineering Guidelines. The Developer may, however, request an extension of time from the City. If an extension is granted, it shall be conditioned upon updating the security posted by the Developer to reflect cost increases. An extension of the security shall be considered an extension of this contract and the extension of the contract will coincide with the date of the extension of the security. The Developer further agrees that he will enter into a development contract with the City for Phase Two (2) in such time that all of the required public utilities for Phase Two(2)will be installed prior to November 30,2016. The final lift of asphalt in Phase Two(2)will be placed prior to October 15,2017. CITY OF FARMINGTON By: Todd Larson,Mayor By: David McKnight,City Administrator DEVELOPER: Tru Value Homes,L.L.C. By: Its: DRAFTED BY: CAMPBELL KNUTSON Professional Association 317 Eagandale Office Center 1380 Corporate Center Curve Eagan,MN 55121 Telephone: (651)452-5000 [JJJ] STATE OF MINNESOTA) (ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of 20 by Todd Larson, Mayor, and by David McKnight, City Administrator, of the City of Farmington, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by the City Council. Notary Public STATE OF MINNESOTA) (ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of 20 by ,the of Tru Value Homes,L.L.C., a limited liability company under the laws of Minnesota,on behalf of the corporation. Notary Public o�FAR��, City of Farmington ea Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 114*,� ,�.�° www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad,Parks and Recreation Director SUBJECT: Approve 2015 Rambling River Center and Schmitz-Maki Arena Fees and Charges DATE: November 3,2014 INTRODUCTION The city council reviewed the recommended Rambling River Center and Schmitz-Maki Arena 2015 fees and charges at its October 13,2014 Work Session. During the work session there was direction given to complete the following: • survey other City Senior Centers to compare rental rates, membership rates,membership numbers and subsidies • inform the Farmington Youth Hockey Association(FYHA)about the increase in ice rental rates At the subsequent city council meeting on October 20,2014,the 2015 fees and charges for the Rambling River Center and Schmitz-Maki Arena were tabled to the November 3,2014 city council meeting in order to allow staff some additional time to compile the senior center information requested by the city council and to allow more time for FYHA to respond to the rental rate increase. DISCUSSION Exhibit A identifies a survey that was completed by staff of other city funded senior centers that are operationally comparable to the Rambling River Center. This means the senior centers that were surveyed not only operate out of a stand-alone facility, but the facility may also be rented during non-senior center business hours. Based on the survey completed by staff,the survey compares several items including: • 2014 budgeted expenses and revenues • 2014 projected cost recovery from fees generated by the facility and programs • 2014 annual membership rates • 2013 number of annual paying members(2014 membership won't be finalized until the end of 2014) • Amount of subsidy per member Additionally the city council provided direction during the work session to combine the rental rate and the cleaning fee into one rental fee for the banquet room. As you can see in Exhibit B this was completed. Exhibit C shows a comparison of rental fees from other South Metro facilities that were surveyed. As you can see,no facilities are alike in the rental fees they charge. If the rental fee for the banquet room is increased to the recommended amount, it would result in approximately$3,825.00 in additional revenue from rentals in 2015 based on past rental history. Staff contacted the FYHA after the October 13,2014 city council work session and made them aware of the rental rate increases proposed by staff. It is possible that representatives from FYHA may be in attendance at the November 3,2014 city council meeting to share their comments and thoughts about the proposed ice rental rate increases. BUDGET IMPACT Based on the increase of certain fees,overall revenues should increase at the Rambling River Center and at Schmitz-Maki Arena in 2015. ACTION REQUESTED By motion approve the recommended 2015 Rambling River Center and Schmitz-Maki Arena fees and charges and include them in the 2015 Fee Schedule Ordinance. ATTACHMENTS: Type Description Cover Memo Exhibit A-Senior Center Cost Recovery D Comparison Report O Cover Memo Exhibit B-Rambling River Center 2014 Fees n Cover Memo Exhibit C-2014 Room Rental Rate City Comparison 6 a.s >., 0 � O .0 N 00 O a •4*.. d e o +i JR N z N V 69 69. 69 .. 4.a a b a d CL y u q is U y cot al a O i .0 a a w m m E y as W aa p N In w w a • g a' F. F.\ a w 0 • u .- a • w O a d a N • q 8 •ea © ai s 8 aaa d 0.. as la F C6 q a b . % en aa � � = e .,�" p GTr N N 1 u 0 q G E3 b 'tl O :a .n El co " w a 5 ,a. as k I. V a s 5 N oo n O� u O G `n_' I oo a ai O 0 0 `}' a s `�' a 'a a ea N u a L 4w a on 0 col a a/ a d q *A d p s {p 'y .O d 01 CJ a' • d �a Co) - O NO a p.., o ND o N o in O a 00 ON N .--, O 00 L a CI i s a'i 'd N N N .-. .- aa .q d a a0a d0 • y en Ca 00 tit ra V 7 a a a M u .y 0 N oa a it "O n' ru.. as 04 O y o 0 0 0 0 0 q •0 0 01 ,•T+ 00 00o a h °o vO. U m aa d a 6 • d C ; w m Qa a N Lie .LA ao • a y a u a +. \O a .wi.a N N N h g a .a d '�• _ 0• y a + 8 N N a 8 W 7.i Te N+▪' O q u a 0 ' e. a 3 ea as O u ;fl E W s a O Al q a■W U Wo d W W a x Exhibit B Rambling River Center 2014 Fees Rambling River Center Item 2014 Rate 2015 Rate Annual Membership $27/individual Same (includes tax) Member Incentive Program NA 30 day money-back guarantee(Financial Support Program funded memberships excluded) 10%discount off of a current member's annual membership (either general or fitness)for each new member recruited up to a maximum of 50 percent. New fitness center members charged regular$27 general membership rate and get additional month of general membership free. Rambling River Center Room Rental Rates See Schedule G See Schedule G Rambling River Center Key and Damage Deposit $150.00 Rambling River Center Damage Deposit Banquet Room NA $150 Rambling River Center Damage Deposit Meeting Rooms NA $75 Rambling River Center Fitness Room Membership $65/year $60/year(includes tax) Annual Membership only available to Rambling River (includes tax) Center members who are age 50 and older. No couple's discount Fitness Room Non-Member One-Time Visitor Pass $5.50(includes tax) Same Rambling River Center Non-Member User Fee(new) $2(includes tax) $3 (includes tax) Rambling River Center Newsletter Advertisement $80 (includes tax) $85 (includes tax) (2 inch x 1 inch ad space for one year) VCR Rental $27(includes tax) included with rental fee if requested DVD Rental $27(includes tax) included with rental fee if requested Sound System Rental $150 Same (includes tax) 1 SCHEDULE G RAMBLING RIVER CENTER ROOM RENTAL RATES* Room Name: 2014 Rate 2015 Rate Banquet Room $150.00 for four hour blocks of time $300 for four hour blocks of (capacity 130 people and this fee includes set up time and clean time which includes: includes use of kitchenette) up time for renter and set up of set up time, clean up time, 12 round tables use of up to 12 round tables and chairs and mandatory cleaning fee for cleaning the room after rental ends,which includes garbage removal and tear down. If cleaning takes more than 2 hours,then billing for additional cleaning time beyond the two hours will be at a rate of$32 per additional hour $55 for each additional hour rented $75 for each additional hour beyond the original four hour block rented beyond the original four block $100 mandatory cleaning fee,which $10 tory cle ni g ee, includes garbage removal and tear which includes garbage down. If cleaning takes more than removal and tear down. If 2 hours,then additional billing will cleaning takes more than 2 occur at a cleaning rate of$32.00 hours,then billing for per additional hour. Additional time for cleaning will be at a rate of$32 per Empire Room $65 for two hour time block and $70 for two hour time block (capacity 57 people) $32.50 each additional hour and$35 per additional hour Two Small Conference Rooms $17 for two hour time block and $18 for two hour time block& (capacity 15 people) $8.50 each additional hour $9 each additional hour Arts and Crafts Room $50.00 for two hour time block and $55 for two hour time block (capacity 30 people) $25.00 for each additional hour $27.50 for each additional hour Garage $50 per stall or $55 per stall or $180 entire garage per day $185 entire garage per day Garage Set Up/Tear Down $60 per day $65 per day *Returning regularly scheduled renters receive first priority for rental of the room they rented in the previous year. 2 • • H w C o C TO CU v: v u C c C uw 3'' E E= y a m as c N C W C ?0 0 'O 7- u H N v E 0 c t-. 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