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05.18.15 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 Tim Pitcher AGENDA REGULAR CITY COUNCIL MEETING MAY 18, 2015 7:00 P.M. CITY COUNCIL CHAMBERS Action Taken 1. CALL TO ORDER 7:00 P.M. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVE AGENDA 5. ANNOUNCEMENTS/COMMENDATIONS a) 2015 Heritage Preservation Award Award Presented b) Police Department Citizen Service Award Awards Presented 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(5/4/15 Regular)(5/11/15 Work Session) Approved b) Amend Ordinance On-Sale Sunday Liquor License Hours- Administration Ord 015-697 c) Adopt Resolution Supplementing Needs Assessment—Human Resources R21-15 d) Approve Seasonal Hiring—Human Resources Approved e) Approve Agreement Arena West Entrance Improvements—Parks and Recreation Approved f) Approve Agreement Park Sign Landscape Concrete Curb Project—Parks and Recreation Approved g) Approve Bills-Finance 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) 2014 Comprehensive Annual Financial Report(CAFR)—Finance Information Received b) 2015 Community Survey Results—Administration Information Received c) 2014 Year in Review—Police Department Information Received d) Approve Agreement Rambling River Center Lighting Improvement Project— Parks and Recreation Approved e) Approve Agreement Central Maintenance Facility Lighting Improvement Project—Parks and Recreation Approved 11. UNFINISHED BUSINESS 12. NEW BUSINESS a) 2015 City Council Strategic Plan Update -Administration Approved 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. � City of Farmington 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Tony Wippler, Planning Manager SUBJECT: 2015 Heritage Preservation Award DATE: May 18,2015 INTRODUCTION Annually, as part of the celebration of Heritage Preservation month(May),the City's Heritage Preservation Commission solicits nominations and selects an individual, family, company or organization that has made an outstanding contribution to the preservation, rehabilitation,restoration and use of Farmington's heritage resources and presents them with a certificate of appreciation at a city council meeting. DISCUSSION The 2015 Heritage Preservation Award recipients are Bruce and Ann Jensen. The Jensen's are the owners of the home located at 708 3rd Street(please see attached picture). The Jensen's home was built in 1918 and is classified as an example of the vernacular American Foursquare house type and possesses the following distinctive design characteristics: two story height, symmetrical massing,hip roof with overhanging eaves,wood lap wall cladding with cornerboards, double-hung windows, and a front porch extending across the entire façade. The house was designated a Farmington Heritage Landmark by the city council in 2011 due in large part to its architectural significance. Heritage Preservation Commission Vice Chair Zachary Mohlis will be in attendance at the city council meeting to present the certificate of appreciation to Mr. and Mrs. Jensen. BUDGET IMPACT NA ACTION REQUESTED Join with the Heritage Preservation Commission in presenting the 2015 Heritage Preservation Award to Bruce and Ann Jensen for their property located at 708 3rd Street. ATTACHMENTS: Type Description © Backup Material 708 3rd Street Picture i ..1 n I Al ry s • *. t t 3T 4 ' • --, i..7'....._.'.,,..-. _,- . t 71. n b i M { y w•s'i �`-N� �7 T `�1 $ . 4. •,plii! ,,-IT, — i'. .-.. . ' ' ' i II 1 1 1 E .' Z P 3 Ni .�. i, V 1 aw•«. . I t 1 t r •.,• - s'''.' f.1 :' I.;. ; ' I * ,,,,,, 4 : s i• � 0f J t am S ?e ?,j l I" • _ �y � irsr ;! J" . „.?"' . ',/41 .. \ �„ %i.. G . , F i r {" ff } r• gip. . 4„....„, u .4. , \ i''',1r".,i.' 4%4 „ � *-4,, r r j 4l•"1401 1.' 91 �" �'`' .t`a t• t. 4 , a t .. e _ r . s I it ' 411111r, 'iiir'-„ . tr,„20.- ', „_ '', 0 `'''-'I.. . ..: 1.,,...;., .,1:' .'lit' 11%,. , A ',, . - '10 044 City of Farmington p 430 Third Street Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 pP,4v '.o www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Brian Lindquist, Police Chief SUBJECT: Police Department Citizen Service Award DATE: May 18, 2015 INTRODUCTION At your meeting on May 18, 2015 the Farmington Police Department will honor the individuals who went above and beyond what is expected during an incident that occurred in the Vermillion River on April 30,2015. DISCUSSION Police Chief Brian Lindquist will honor two Farmington youth and the police officers involved for their efforts to save the individual involved in this incident. BUDGET IMPACT NA ACTION REQUESTED Hear the presentation that Police Chief Lindquist makes and share any thoughts you have with the individuals we will honor. 41AR1/9, City of Farmington 430 Third Street Farmington,Minnesota ________ 651.280.6800 - Fax 651.280.6899 '4 ran10.4 www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Cynthia Muller,Executive Assistant SUBJECT: Approve City Council Meeting Minutes (5/4/2015 Regular)(5/11/2015 Work Session)-Administration DATE: May 18, 2015 INTRODUCTION Attached are the May 4, 2015, city council minutes and May 11, 2015, city council work session minutes. DISCUSSION NA BUDGET IMPACT NA ACTION REQUESTED Approve the May 4, 2015, city council minutes and May 11, 2015, city council work session minutes. ATTACHMENTS: Type Description D Cover Memo May 4, 2015 Council minutes D Backup Material May 11, 2015 City Council Work Session Minutes COUNCIL MINUTES REGULAR May 4, 2015 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OFALLEGL4NCE Fire Chief Larsen led the audience and Council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Larson,Bartholomay, Bonar,Pitcher 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; Brenda Wendlandt, Human Resources Director; Jim Larsen, Fire Chief; Cynthia Muller, Executive Assistant Audience: Farmington Fire Department members, family of Fire Chief Larsen, Commissioner Mike Slavik, Kurt Weider 4. APPROVE AGENDA Finance Director Hanson pulled item 7e)Agreement with VANCO Services for check consolidation services. MOTION by Bartholomay, second by Pitcher to approve the Agenda. APIF,MOTION CARRIED. 5. ANNOUNCEMENTS a) Swearing In of Fire Chief Jim Larsen Jim Larsen was sworn-in by City Administrator McKnight, as Farmington's first full time fire chief. The pinning of the badge was done by Chief Craig Hague of the Hanover Park, IL fire department. b) Dakota County Update—Commissioner Mike Slavik Commissioner Slavik spoke about road construction projects in the area. An agreement was reached between the county, city and school district regarding the use of fiber optic lines along 195t Street. Dakota county and the city have begun work on a CIP for the next five years. Dakota county has joined with other suburban counties regarding some challenges with the Met Council. Farmington recently received a Planning Grant from the Dakota County Community Development Agency(CDA)for a redevelopment plan for the downtown. The CDA has also been working with the county on broadband. Council Minutes(Regular) May 4,2015 Page 2 c) Apple Valley—Lakeville—Farmington (ALF)Ambulance Update Mr. Kurt Weider from Allina provided an update on the ALF Ambulance response times,programs,training and current activities. In 2009 there were 640 calls, in 2014 there were 906 calls in Farmington. d) Proclaim May Historic Preservation Month Mayor Larson proclaimed May as Historic Preservation Month. 6. CITIZEN COMMENTS 7. CONSENT AGENDA MOTION by Bartholomay, second by Bonar to approve the Consent Agenda as follows: a) Approved Council Minutes (4/20/15 Regular) b) Approved Dakota Mutual Aid Assistance Group Joint Powers Agreement-Police c) Approved Amendment to the Farmington Firefighters Relief Association Bylaws Section 6.1.5 Deferred Service Pension-Fire d) Adopted RESOLUTION R20-15 Accepting Donation to the Rambling River Center—Parks and Recreation f) Approved Bills APIF, MOTION CARRIED. 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT a) 2015 Trail Crack Sealing-Engineering In 2014 Council approved a CIP which included fog sealing and crack sealing of trails. The fog sealing is part of a joint powers agreement with several other cities. Staff solicited quotes for the crack sealing. The low quote was from All Things Asphalt in the amount of$4,000 for 10,000 linear feet of trails. MOTION by Bartholomay, second by Pitcher to accept the quote of All Things Asphalt in the amount of$4,000 and authorize execution of a contract. APIF, MOTION CARRIED. 10. PETITIONS,REQUESTS AND COMMUNICATIONS a) Approve Agreement Rambling River Park Tennis Court Lighting Improvement Project—Parks and Recreation Staff has proposed changing the quartz lights to LED lights at the Rambling River Park tennis courts. The low bid was from Premier Lighting, Inc. in the amount of $2,019.80. Funding will be from the park maintenance supplies. There will be an annual savings in energy and labor costs of$834. There are currently 12 fixtures and will be reduced to four fixtures. MOTION by Bartholomay, second by Pitcher to approve the agreement with Premier Lighting, Inc. in the amount of $2,019.80. APIF,MOTION CARRIED. Council Minutes(Regular) May 4,2015 Page 3 b) Community Development Update Community Development Director Kienberger provided an update on activities in community development. He spoke on various areas included in community development and current activities in each area. Through April 2015 there have been 285 permits issued and 832 inspections. The comprehensive plan update process will begin in early 2016. The city has received a planning grant from the CDA for a downtown redevelopment project. Staff will be soliciting proposals from redevelopment firms for the study to be done this summer. Commercial sites are available in Vermillion River Crossing. The city will continue with the Open to Business program and with the county's CDBG program. Staff will also be working on a strategic plan for economic development for 2016—2018. 11. UNFINISHED BUSINESS 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Councilmember Bartholomay: He challenged residents to visit a local business at least once a week. If we support our current businesses, more will come. Councilmember Pitcher: May 7, 2015, is National Day of Prayer with an observance at Faith United Methodist Church. City Engineer Schorzman: The 195th Street project is underway. Residents can receive updates through the county's website or can be placed on a county e-mail list. Mayor Larson: Encouraged residents to shop local. 14. ADJOURN MOTION by Bartholomay, second by Pitcher to adjourn at 8:02 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant Farmington City Council Work Session Meeting Minutes May 11, 2015 Mayor Larson called the meeting to order at 6:30 p.m. Present: Larson, Bartholomay, Bonar, Donnelly and Pitcher Absent: None Also in attendance were City Administrator David McKnight and City Engineer Kevin Schorzman Councilmember Bartholomay made a motion to adopt the agenda as presented, Councilmember Pitcher seconded the motion. The motion was approved 5-0. City Engineer Schorzman presented an update on the proposed work to be performed on Highway 3 by the Minnesota Department of Transportation (MnDOT) in 2015. Mr. Schorzman met with MnDOT officials the previous week and shared concerns raised by the city council on potential access closings on Highway 3. After discussing a number of items related to the proposed closings the city council instructed Mr. Schorzman to continue to work with MnDOT on this issue and the possibility of looking at the issue in a phased approach over a few years. Mr. Schorzman provided the city council with an update on the status of the 195th Street construction project. City Administrator McKnight presented study options and a recommendation on the work associated with maintenance staff in the Municipal Services and Parks and Recreation Departments. Mr. McKnight reviewed the information that was developed by the Human Resources Director, department heads and city staff. After a thorough discussion the city council directed Mr. McKnight to gather additional information, review how this issue could impact the 2016 budget and tax levy and provide some additional detail on a number of issues. Mr. McKnight updated the city council on a number of issues including a house fire over the weekend and upcoming city council meetings. Councilmember Bonar made a motion to adjourn the meeting at 7:47 p.m. The motion was seconded by Councilmember Donnelly. The motion was approved 5-0. 41 City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 -Fax 651.280.6899 **P. ' www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Cynthia Muller, Executive Assistant SUBJECT: Amend Ordinance On-Sale Sunday Liquor License Hours-Administration DATE: May 18, 2015 INTRODUCTION This is an amendment to the current city code regarding the hours for the sale of intoxicating liquor on Sundays. DISCUSSION The state legislature has recently approved a bill changing the hours for the sale of intoxicating liquor on Sundays from starting at 10:00 a.m. to 8:00 a.m. through midnight. The city has received a request from a local business to amend our code to match state requirements. BUDGET IMPACT There will be no budget impact to the city. ACTION REQUESTED Adopt the attached ordinance amending the hours for on-sale Sunday liquor licenses to 8:00 a.m. through midnight on Sundays. ATTACHMENTS: Type Description D Ordinance Ordinance CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA ORDINANCE NO. 015 - 697 AN ORDINANCE AMENDING SECTION 3-12-4(C), OF THE CITY CODE AS IT RELATES TO ON-SALE SUNDAY LIQUOR LICENSES THE CITY COUNCIL OF THE CITY OF FARMINGTON ORDAINS: SECTION 1. That Title 3 of the Farmington City Code, is hereby amended by replacing the current code with the following language: (C) "On-Sale Sunday Liquor Sale License": On-sale Sunday liquor sale licenses may be issued to establishments holding an on-sale liquor license or club license and which have facilities for serving not less than fifty (50) guests at one time. Such license shall permit the sale of liquor to be consumed on the premises between the hours of ten o'clock (10:00) A.M.eight o'clock (8:00) a.m. and twelve o'clock(12:00) midnight on Sundays in conjunction with the serving of food. A separate application for such license shall be made to the city in the same manner as applications for other licenses to sell intoxicating liquor are made hereunder. SECTION 2. Effective Date. This ordinance shall be effective upon its passage according to law. ADOPTED this 18th day of May, 2015, by the City Council of the City of Farmington. CITY OF FARMINGTON By: Todd Larson, Mayor ATTEST: By: � lr1 avid McKnight, Administrator SEAL Approved as to form thegay of ;231 2015 By: ity Attorn Published in the Farmington Independent theaS'i4 day of , 2015 otj City of Farmington p� 430 Third Street Farmington, Minnesota 651.280.6800 -Fax 651.280.6899 pwrsr•4 www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Brenda Wendlandt, Human Resources Director SUBJECT: Adopt Resolution Supplementing Needs Assessment-Human Resources DATE: May 18, 2015 INTRODUCTION The purpose of this memorandum is to ask the city council to adopt the attached resolution supplementing the Cable Franchise Renewal Needs Ascertainment Report. DISCUSSION As the city council is aware,the existing cable franchises will expire at the end of 2015 and the Apple Valley, Farmington and Rosemount Cable Commission(AFRCC)began negotiations in 2011. As part of this process, a needs ascertainment was completed which provides a legal basis for the city's proposed franchise language. In 2014, Charter Communications requested approval of a change of ownership of the cable system and approval to move the city's public access channels to accommodate a conversion to digital cable transmission. The city consented with conditions. In recent weeks, Charter terminated its proposed plans for ownership change. Based on these events,the city's cable attorney, Bob Vose,recommends that the city clarify the expectation that the conditions will still be met, even if the ownership transfer does not take place. The attached resolution adds these conditions as an amendment to the needs ascertainment report. The original Needs Ascertainment Report was received by the city council on June 3, 2013 and is attached. BUDGET IMPACT NA ACTION REQUESTED Adopt the attached resolution supplementing the Cable Needs Ascertainment Report. ATTACHMENTS: Type Description D Resolution Resolution Supplementing Needs Assessment D Backup Material Needs Ascertainment Report RESOLUTION NO. R21-15 A RESOLUTION SUPPLEMENTING NEEDS ASSESSMENT 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 18t day of May, 2015 at 7:00 p.m. Members Present: Larson, Bartholomay, Bonar, Donnelly, Pitcher Members Absent: None Member Bartholomay introduced and Member Donnelly seconded the following: WHEREAS, Charter Cable Partners, LLC, 1/k/a Charter Communications ("Charter") operates a Cable System within the City of Farmington ("City")pursuant to a franchise ordinance issued by the City ("Franchise"); WHEREAS, the City is a member of the Apple Valley, Farmington, Rosemount Cable Commission("Commission"); WHEREAS, in 2011, Charter requested renewal of the Franchise originally set to expire in mid- 2014; WHEREAS, Charter and the Commission, on behalf of the City, agreed to proceed with "informal renewal"as contemplated by applicable federal law; WHEREAS, by certified letter dated February 20, 2014, the Commission provided an informal renewal proposal to Charter consisting of a Needs Ascertainment Report ("Report") identifying community cable-related needs and interests and certain past performance or franchise non- compliance concerns, and a draft franchise including a list of the requested live origination sites and free cable sites for the City; WHEREAS, as of the date of this resolution, Charter has not provided a response to the Report or proposed franchise; WHEREAS, by letters dated March 14, 2014, Charter notified the Commission and its member cities that the company intended to convert all its video channels to digital and, in conjunction with this conversion, wished to relocate the PEG channels requiring the City's approval under the Franchise; WHEREAS, in July, 2014, the City adopted a resolution conditionally consenting to the requested PEG channel relocations; WHEREAS, the conditions establish beneficial requirements related to Charter's provision of PEG channel capacity for the Commission and City's use; WHEREAS, also in conjunction with its all-digital conversion, Charter elected to encrypt its basic tier of service requiring public institutional sites receiving free cable services pursuant to the Franchise to install converter boxes; 459582 RJV AP155-1 WHEREAS, without agreement or meaningful advance communication, Charter began invoicing converter box charges to public institutions entitled to free service; WHEREAS,the Commission and its members have repeatedly disputed Charter's charges while simultaneously, on multiple occasions, and through a variety of company representatives including two different law firms, sought to discuss a cooperative resolution to the disputed charges; WHEREAS, the dispute remains unresolved, charges continue to be imposed, and Charter is now periodically discontinuing free services to public institutional sites in violation of the Franchise; WHEREAS, Charter's communications regarding this matter have been unclear, inconsistent, and reflective of a lack of interest in cooperation, and Charter continues invoicing varying, non- uniform charges for converters with little or no explanation of such varying charges; WHEREAS, after providing the Report and proposed franchise to Charter, the Commission and City received an audit of Charter's franchise fee and PEG fee payments reflecting miscalculations and underpayments of amounts owed under the Franchise; WHEREAS, in August, 2014, the City entered into a Settlement and Release Agreement ("Settlement") with Charter, and subsequently received payment of amounts due; WHEREAS,the Settlement extended the Franchise to December 31, 2014; WHEREAS, on or about August 29, 2014, Charter, on behalf of its ultimate corporate parent, Charter Communications, Inc., filed an FCC Form 394 with the City seeking approval to fundamentally restructure the company requiring the City's approval under applicable state law and the Franchise; WHEREAS, in relation to such restructuring, Charter was to provide various services and operational support for all Comcast systems in Minnesota being divested to a newly formed company, GreatLand Connections, in which Charter would own 33%; and WHEREAS, in December, 2014, the City adopted a resolution conditionally approving Charter's fundamental corporate restructuring; WHEREAS, the conditions establish beneficial requirements related to Charter's fundamental corporate restructuring; WHEREAS, Comcast has recently announced that the GreatLand divesture will not occur and the associated Charter restructuring is not expected to occur; WHEREAS, at Charter's request, the City adopted a resolution further extending the Franchise to December 31, 2015; WHEREAS, the Report identifies a need to continue adequate funding of public, educational, and governmental ("PEG") programming, and the draft franchise proposes an up-front grant and continuation of PEG support payments by Charter calculated as a per month,per subscriber amount itemized on subscriber bills as a"PEG fee;" 459582 RJV AP155-1 WHEREAS, since the Report was approved, the Commission has become aware that a number of franchising authorities in Minnesota are seeking or have obtained PEG support arrangements calculated as a percentage of the cable operator's revenues (as franchise fees are typically calculated); WHEREAS, the Commission recommends that calculation of PEG support as a percentage of cable revenues is likely to produce greater stability in funding, and will allow franchise and PEG fees to be audited in an identical manner; WHEREAS, Charter has accepted PEG funding arrangements calculated as a percentage of cable revenues in other pending or recently completed franchise renewals including in Minnesota; WHEREAS, based on the foregoing, the Commission recommends that the City supplement the Report as provided herein. NOW,THEREFORE,BE IT RESOLVED as follows: 1. The conditions imposed in the resolution approving relocation of PEG channels are hereby identified as cable-related needs or interests. 2. The conditions imposed in the resolution approving the fundamental corporate restructuring of Charter Communications, Inc. are hereby identified as cable-related needs or interests. 3. The need to address Charter's poor communications with the Commission and its member cities and the company's apparent lack of interest in cooperation are hereby identified as cable-related needs or interests. 4. The need to provide for future PEG support and funding as a percentage of Charter's gross cable revenues, and at a level adequate to address previously identified PEG needs, is hereby identified as a cable-related need or interest. BE IT RESOLVED FURTHER, that the Report is hereby supplemented as indicated herein and any renewed Franchise shall include corresponding provisions. Approved by the City of Farmingto Minnesota this 18th day of May, 2015. Its: Mayo By: Its: City Administrator 459582 RJV AP155-1 R.E Y I • Rf1 Apple Valley, Farmington, Rosemount Cable Commission Needs Ascertainment Related to Cable Franchise Renewal January 14,2013 Holly Hansen Consulting HollyMHansen @comcast.net EXECUTIVE SUMMARY Background and Process The cities of Apple Valley,Farmington, and Rosemount have individually granted identical franchises to Charter Communications,which expire in mid 2014. The cities created a Joint Powers Commission(AFRCC)to serve as an advisory body for the administration of the cable system, operations of community television, and telecommunications activities and issues. In accordance with its responsibilities the AFRCC is preparing for franchise renewal and retained Holly Hansen Consulting to conduct a Needs Ascertainment that included a review of the franchise, PEG equipment and operations, focus groups and interviews, and a non-scientific public survey. Charter Communications is presently engaged in upgrading its system to an all-digital cable subscriber network. The PEG Channels(Public,Educational, and Governmental)are analog and the franchise requires five PEG channels of 6 MHz. each. This is important to note as Standard Digital (SD) Channels require less spectrum than analog channels, and with the digital conversion, Charter will be able to fit 8— 10 SD channels in the space of a single (6 MHz.) analog channel. Although the current franchise designates five 6 MHz channels for PEG access and community programming, only four PEG Channels are active: • Channel 10 ISD#192 in Farmington ISD#196 in Apple Valley and Rosemount • Channel 12 Community Access Bulletin Board • Channel 16 Cities of Apple Valley and Farmington • Channel 22 City of Rosemount, Dakota County programming A review of the franchise documents and supporting materials revealed that the cities do not appear to have received FCC reports from Charter, as required by the current franchise. This requirement is under the"Design" section of the franchise and would pertain to reports such as Proof of Performance, signal leakage reports, and reports of other tests that may have been made and filed with the FCC. A review of the three city halls' council chambers and control room equipment was conducted as part of the project. The findings were that the equipment at the cities was 10— 12 years old and some of it was failing. As a result,the AFRCC decided to move ahead with replacing the equipment and has retained a vendor to provide a design and recommendations for the equipment used to cablecast city meetings. Ms. Hansen also reviewed the equipment used in government productions and playback for channels 12, 16, and 22 as well as council meetings from each city and copies of government programming such as Valley Beat, Hook and Ladder and community event coverage. Discussions were held with AFRCC staff regarding productions,equipment resources, and priorities for franchise renewal. i AFRCC PEG Needs Assessment Report Dated 1-14-2013 Focus Groups and interviews were conducted by Ms. Hansen with the AFRCC Commissioners, AFRCC staff,representatives from each of the cities,representatives from school districts#192 and#196, and the Apple Valley Telecommunications Advisory Committee. Technology continues to change and improve and it can be expensive to replace all the components of a system to make it fully integrated. The equipment in use by the AFRCC cities and government programming is a combination of analog and digital,which does not provide optimum quality(regardless of the equipment age issue) and creates a cumbersome workflow. HD (High Definition) is the digital standard that is becoming more prevalent and will continue to expand over the next franchise term. Given the equipment that the AFRCC and its cities have in place, it makes the most sense from an economic and technical viewpoint to skip the SD (Standard Digital)phase and transition from analog to High Definition in the entire workflow process. Due to computer technology that is central to the operation of today's video production equipment,replacement schedules run 5-7 years; some equipment will therefore need to be replaced more than once during a ten year franchise period. Public Web Survey A public survey was conducted via the website of each of the three cities. The survey was available for approximately one month and although it is not scientific,it gave the public an opportunity to voice their opinions about Charter Communications and local programming. Highlights from the survey include the following findings. Local Programming • 75%of respondents were somewhat to very interested in watching local programs. • 88%of respondents had watched a local program within the past 6 months. • Council meetings were the most frequently watched, followed by ISD#196 programs, and Planning Commission meetings. • Shows the public would like to see include high school sports, community events,and local history as the top three choices. Charter Communications • The top three services taken are: Internet,regular cable service, and HD cable service. • More people were dissatisfied with Charter's customer service than were satisfied. • Only 27%of respondents who called Charter with a problem got it resolved with one phone call. • Top three reasons people don't subscribe to Charter: 1)too expensive, 2)poor customer service,and 3)they subscribe to satellite TV. • Charter's local office received higher marks and there were more satisfied respondents than dissatisfied. • Open-ended comments were coded into categories,the top three comment types were: 1) Charter is too expensive,2)people want competition from another provider, and 3) Charter has poor customer service. ii AFRCC PEG Needs Assessment Report Dated 1-14-2013 Key Needs and Interests/Recommendations PEG Channels and Support • Maintain the PEG channels in their existing locations(10, 12, 16, and 22). • Maintain the requirement for five channels for PEG access and community programming. • Simulcast PEG channels in SD and HD to ensure that subscribers who have HD technology can view PEG programming in the same format. • Provide PEG programming in a Video on Demand format, consistent with the quality and usability of Charter's other offerings of On Demand programming. • Ensure that the PEG fee is adequate to support PEG needs, including the equipment upgrade and replacement needs over the term of a renewed franchise. • Preserve the ability of the AFRCC to increase the PEG fee throughout the term of the franchise to ensure PEG funding keeps pace with inflation. Other Franchise Provisions • Maintain many of the provisions of the current franchise including but not limited to franchise fees, insurance,bonds, and letter of credit. • Maintain Grantor's enforcement ability. • Maintain the existing requirement for emergency message override of the system to advise and protect citizens. • Maintain requirements regarding customer service. • Maintain reporting requirements of Grantee including but not limited to financial reports, technical reports, and customer service-related reports. • Maintain Charter's local office for the convenience and accessibility of local residents. • Provide and maintain a high quality,reliable,up-to-date cable system. • Continue to provide drops and complimentary service to existing governmental and educational facilities. Provide future drops and complimentary cable service under the same terms and conditions throughout the term of a renewed franchise as facilities are built or re-located. AFRCC PEG Needs Assessment Report Dated 1-14-2013 TABLE OF CONTENTS Introduction 1 Document and Media Review 2 Focus Groups and Interviews 3 AFRCC Programming 11 Equipment Needs 13 Drops to Public Facilities 19 Web Survey 22 Needs and Interests/Recommendations 24 Attachment A Web Survey Results 26 iv AFRCC PEG Needs Assessment Report Dated 1-14-2013 INTRODUCTION Project Description The cable franchises between Charter Communications (Grantee) and the individual cities of Apple Valley, Farmington and Rosemount will expire in mid 2014. To prepare for franchise renewal,the AFRCC (Apple Valley, Farmington, and Rosemount Cable Commission)retained Holly Hansen Consulting (Consultant)to perform a needs ascertainment. The scope of work to be performed by the Consultant included the following tasks: • Review franchise and PEG documents • Review PEG programming media • Review the three city halls facilities and equipment • Review government production and playback equipment • Interview AFRCC to identify key franchise issues • Interview AFRCC staff • Conduct three focus groups • Research equipment trends and costs • Analyze and format data • Prepare non-scientific public web survey, analyze and format results • Prepare written report with findings and recommendations • Present report to AFRCC Process Evolution In addition to the tasks noted above, during the course of conducting this study,two actions took place that had an impact on the project and development of recommendations for this report. One action was the decision of the AFRCC to pursue the upgrade of the equipment at each of the city halls and enter into a contract with Alpha Video to consult and design systems for the three cities. This equipment was in need of replacement; it was old,had reliability problems, and the video was of poor quality at all three locations. Since this issue is being addressed in detail by Alpha Video,this report will provide an overall estimate of costs associated with the city hall upgrades. The second action was Charter's announcement that it is converting to an all-digital format now. This affects the timing of recommendations regarding technical upgrades needed in AFRCC production,playback, and the connections from each of the three cities to Charter's headend. 1 AFRCC PEG Needs Assessment Report Dated 1-14-2013 DOCUMENT AND MEDIA REVIEW Documents Reviewed • Franchise Agreements for Apple Valley, Farmington, and Rosemount is Charter Transfer Resolution July 2009: Reorganization under U.S. Bankruptcy Court • Franchise Fee Settlement Agreement 2009 • Charter Renewal Notification Letter:November 2011 • AFRCC Budget • Data from ISD#192 • Programming Policies • Data from ISD#196 • Joint Powers Agreement 1999 • Programming Statistics Findings Overall,the franchise does not appear to need major changes. Areas to update include those related to PEG and technology. There are very few subscriber complaints filed with the AFRCC. Section C2-6 (a) (1)requires Grantee to dedicate five 6 MHz channels for PEG access and community programming; only four PEG Channels are active (10, 12, 16 and 22). Section C2-4 (g) (Design Provisions) of the Franchise requires Grantee to file results of any test required by the FCC to be filed with the city or its designee within ten days of the conduct of such test. This would include reports such as the twice annual Proof of Performance test and the CLI (Cumulative Leakage Index)Test. It does not appear that Charter has filed copies of FCC reports with the AFRCC or its member cities. The 2009 Franchise Fee Settlement Agreement includes certain exclusions to Gross Revenues that should be incorporated into a renewal franchise document. A city review regarding the amounts required for insurance,bonds, subcontractors, and the Letter of Credit would be useful in determining whether the amounts listed in the existing franchise are sufficient for an anticipated ten year renewal franchise. Media Reviewed Excerpts from city council meetings from Apple Valley, Farmington, and Rosemount were viewed on DVD copies. Excerpts from Valley Beat, Hook and Ladder, Beyond the Yellow Ribbon, Candidate Forums, State of the City addresses, and assorted PSAs and promos were also viewed. The video from the city hall equipment was grainy and of poor quality, although other production values were good. The poor video quality is due primarily to the age of the equipment. The video quality of other programs produced by AFRCC staff was significantly better. 2 AFRCC PEG Needs Assessment Report Dated 1-14-2013 FOCUS GROUPS AND INTERVIEWS Three focus groups were conducted for the project. A Government Focus Group consisted of city staff from the AFRCC cities, an Educational Focus Group was attended by representatives from ISD#192 and ISD# 196, and the third group was held with the Apple Valley Telecommunications Advisory Committee (AVTAC). Two interviews were also conducted: one with AFRCC video staff, and a second interview with the AFRCC directors. Government Focus Group City departments represented in this group included Parks and Recreation, and Police and Fire Chiefs from all three cities. A variety of media is used to communicate with the public, including city web sites, e-mail, local newspapers, direct mail,newsletters,telephone messages, banners, sign boards,the cable channels' bulletin boards, Valley Beat and Hook and Ladder. The trend for the cities has been to use traditional print media such as the local newspaper less frequently, and to use electronic-based communications, including city web sites and video, more often. It is important to provide information to the public in a variety of forms as one participant noted: "Different generations get information in different ways." Another participant stated that"You have to bridge all gaps to communicate." Types of Programs Would Like to Watch • Information about the city: what's available,where things are located • Information about city departments and functions (what we do,why we do it) • Safety messages: PSAs, short programs • Street closings,road work updates • Recycling • Citizen Police Academy • Show about the cities(e.g.video magazine) Barriers to producing programs and issues facing the cities included: need more expertise and time,viewership is unknown, don't know how programs are marketed, city tax money is tight— have to do more with less, and competition for viewer attention. There was an interest in having the PEG channels available in HD and PEG programming available in a Video on Demand(VOD)basis as well. One person commented that they"liked the convenience of Video on Demand and watching when I want to watch." Others commented that VOD would be"helpful"and"Great,but not if it costs the city." Emergency provisions in the existing franchise was also discussed and seen as important to keep in a renewal franchise. Section C2-3 (h) of the existing franchise states: "In the case of any emergency or disaster, the grantee shall, upon request of the city, make available its facilities to city during the period of emergency or disaster. " 3 AFRCC PEG Needs Assessment Report Dated 1-14-2013 AVTAC Focus Group The Apple Valley Telecommunications Advisory Committee (AVTAC) focus group was attended by five members who are long-time members and residents of Apple Valley, and the City staff liaison. This is the third franchise renewal these advisors have been part of, except for one member for whom this is his second franchise renewal. The opinions of this group were sought to augment public input from the web survey, and to incorporate a long-term view and experience of cable franchising in the Apple Valley area. Observations by committee members about Charter Communications included: Working Well • There are fewer complaints in the quarterly logs than there used to be. • Drop burials are better;not as bad as they used to be (doesn't take as long). • The local office and local techs are helpful. Needs Improvement • There is not much presence/participation from Charter(at meetings). • There are pixelation problems in the video: could vary by parts of the network. • The 888#(call center) does not admit to company having a technical problem. • Customer service was better when you could call the local office. • Age of end-user equipment is a problem; Charter needs a replacement program. • Charter should give notice when promo rates are about to expire. PEG and Programming • Programming is good to get message out(Valley Beat, Hook and Ladder). • Live city council and planning commission meetings are high quality. • Quality has improved the last 5-6 years. • Would like to have HD (PEG)channels. • Explore TV Guide possibilities. • Would like VOD "a lot," "awesome," "a game changer." • PEG fee should be increased every few years. • PEG fee increase of$0.25 would be"almost painless." • PEG fee is a user fee,not a tax. • We don't hear from the public on Public Access;used to,but not any more. Franchise Renewal • Keep PEG fee up with inflation. • Suggest PEG fee of$0.85 per subscriber. • Like HD for the city channel(s). Like VOD. • Keep 5th channel. • 10-12 year franchise. • Get fiber between Master Control and head end for HD,VOD,etc. • Get HD equipment for 4 channels. • Get more fiber into the system(closer to the home). 4 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Educational Focus Group Background and Channels The Educational Focus Group was attended by representatives from ISD#192, serving the Farmington area, and ISD#196, serving Rosemount-Apple Valley-Eagan. Prior to the focus group,both districts were sent questionnaires asking for information on funding, staffing, programming, and equipment currently being used for video production and playback. These questionnaires were collected at the focus group session. In addition to the AFRCC cities, some ISD#192 programming is shown on Channel 12 in Charter's Lakeville system. This channel is shared with Lakeville's Public Access and ISD#192 is seeking its own channel in the Lakeville system to enable it to run a full program schedule and live School Board meetings. ISD#196 programs Channel 10 in Charter's Lakeville system and Channel 19 in Comcast's Burnsville-Eagan system in addition to Channel 10 in the AFRCC system. A limited amount of ISD#196 programs are also shown on Channel 20 in Comcast's Inver Grove Heights(Northern Dakota County) system. The two districts share Channel 10 in the AFRCC system;their signals are narrow casted on a 24x7 basis to residents in their districts,which enables each district to have full-time channel programming. There are no written agreements between the districts and Charter Communications regarding how their playback signals are to be transmitted from their master controls to the Charter head end,but these arrangements have been made over time and are working. The schools in each district are connected via fiber networks. District programs have won some awards over the past few years: ISD#192 won an Award of Merit for Patriotic Day Pledge of Allegiance Tribute from the MN School Public Relations Association in 2010. AV High School won a National Broadcast Pacemaker Award in 2012 and seven(7)NATAS (National Association of Television Arts and Sciences). Eastview won two (2)NATAS Awards. Staffing,Funding and Equipment The staff assigned to educational access is small in both districts: ISD#192 has two stipend positions that represent a .5 FTE and ISD#196 has a stipend position and staff that represent 1.0 FTE. Educational access is funded by the general fund in both districts. Master control for ISD#196 Channel 10 is located at Apple Valley High School;the signal is analog and is transmitted over fiber to Charter's head end. A Leightronix video server,DVDs, and mini-DV are playback formats,which are all Standard Defmition(SD). The District programs Channel 10 on a 24x7 basis. Master control for ISD#192 is located at Boeckman Middle School;the signal is analog and sent over district-owned and Charter-owned fiber. ISD #192 also programs its Channel 10 on a 24x7 basis and uses a Tightrope Media System Cablecast server(SX4),which is Standard Definition. Production equipment is primarily located at the school level and is a mixture of analog and Standard Definition(SD). 5 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Programming Programs are produced by students and staff at both districts, are typical of educational access in other areas and include: school board meetings, school concerts and plays, high school sports, student news and magazine shows, and special events. ISD#192 Programming PROGRAM 2010 2011 2012 School Board Meetings 24 28 24 Staff Programs(including Educational Matters) 6 10 18 Tiger News (HS) 20 20 20 Midday Show with Charlie Weireke 10 TOTAL 50 58 72 ISD #196 Programming PROGRAM 2010 2011 2012 School Board Meetings (average) 18 18 18 Staff Programs(average) 2 2 2 Student/Community Ed. *(average) 167 167 167 TOTAL 187 187 187 ISD #196 Programming Community Education - 20% Elementary 40% Opp. School Board 15% High School 15% Middle School 10% 6 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Working Well ISD#192 • Channel 10 location. • Convenience of playback automation. • Integration of website and cable channel. • Board meetings are popular. • Elementary schools do daily newscasts. • Fiber connection to all schools. • Have own RF network and channel line up—send to all schools. • Each school can originate a live program to Channel 10. ISD#196 • Broad reach of cable (e.g.parents,retirees, students, etc.). • Channel 10 location. • Charter is mostly responsive when we have a technical problem. • Channel commitment: all schools are on the channel. • Fiber connections to all schools. Needs Improvement ISD#192 • Equipment in the buildings is old(S-VHS vintage). • Have had a few audio problems with the channel. • Don't want townships to freeload(Empire). ISD#196 • Transmitter overheats • Fairly good relationship with Charter,but takes awhile to troubleshoot problems. • Had issue with Apple Valley-Rosemount and Farmington sections getting the wrong Channel 10 feeds. • Have had problems with audio bleed from other channels; has been better last 6 months. • Not enough access to (video production)equipment. • No Public Access • No van Franchise Renewal • Maintain Channel. • Remain on lowest tier of service. • HD capability. • VOD. • Channel Guide listing to know what's on. • Would like some benefit from PEG fee. • Would like shared portable production resources(van). 7 AFRCC PEG Needs Assessment Report Dated 1-14-2013 AFRCC Interview Process This meeting began with a general discussion of what was"top of mind" for the Commission when its members thought about franchise renewal. Following this discussion, several aspects of the franchise were reviewed by the Consultant, including provisions regarding drops,PEG channels and funding. Results from the staff interviews were shared with the Commission and a focused discussion/goal setting process was facilitated by the Consultant. The following issues were identified using a Goal Grid planning process. The issues below in italics were those identified as being the most important. However,this was a short planning process and additional priorities may be identified by the Commission and member cities during the next year of the franchise renewal process. The Commission also noted that cost and staff time need to be taken into account in making any changes. AFRCC GOAL GRID ACHIEVE AVOID Money is the most important thing S year franchise HD PEG Channels Reduction of franchise fee Equipment upgrades to city halls Restriction on use of PEG fees 10-15 year franchise Getting stuck with analog and SD channels Video playback on Channel 12 Getting stuck on Channel 99 Video on Demand for PEG More local programming More government programming Closed captioning PRESERVE ELIMINATE Franchise Fee Obsolete, non-functional equipment PEG Fee Excessive staff time spent on repairs Location of PEG Channels Ability to increase PEG fee Foreign CSR offices/call centers PEG fee option for operations Customer services/local office (Note: Italicized items above are the higher priorities.) 8 AFRCC PEG Needs Assessment Report Dated 1-14-2013 AFRCC Staff Interview The AFRCC has two full time staff who were interviewed by the Consultant regarding technical issues,video production and playback capabilities, channel usage, and programming. Discussions regarding Charter and priority issues for the upcoming franchise renewal were also held. In addition to the staff interview, several conversations with staff took place throughout the project both by telephone and in person. Staff provided documents, information and video for review and tours of the three City Hall Council Chambers and equipment used to produce city meetings Working Well ® Have a high quality product; get compliments on meeting coverage. ® Meeting video staff are quick to get shots, follow the action. ® Have good production values on other programs(Valley Beat, Hook and Ladder). Needs Improvement ® Don't have time,budget or personnel to do more programming. ® Equipment is getting old and malfunctioning. ® Need equipment upgrades (city halls and government production). • Would like HD. • Picture is sometimes a little fuzzy. A Goal Grid planning exercise was conducted with staff. The non-prioritized results are below. AFRCC STAFF GOAL GRID ACHIEVE AVOID HD equipment Adversarial relationship w/Charter HD channels for all PEG Uninformed City Councils 5th channel, so each school district has own Increased PEG fee Upfront capital grants for city hall upgrades PRESERVE ELIMINATE 5th PEG channel Problems due to old equipment Use PEG fee for operations PEG channel locations Protect cities, customers Customer service standards Letter of credit,bonds, abandonment, etc. Emergency override provision Reliable cable system Good relationship with Charter 9 AFRCC PEG Needs Assessment Report Dated 1-14-2013 COMBINED GOAL GRIDS: AFRCC AND STAFF ACHIEVE AVOID Commission: Commission: Money is the most important thing 5 year franchise HD PEG Channels Reduction of franchise fee Equipment upgrades to city halls Restriction on use of PEG fees 10-15 year franchise Getting stuck with analog and SD channels Video playback on Channel 12 Getting stuck on Channel 99 Video on Demand for PEG More local programming More government programming Staff: Staff: HD equipment Adversarial relationship w/Charter HD channels for all PEG Uninformed City Councils 5th channel, so each school district has own Increased PEG fee Upfront capital grants for city hall upgrades PRESERVE ELIMINATE Commission: Commission: Franchise Fee Obsolete, non-functional equipment PEG Fee Excessive staff time spent on repairs Location of PEG Channels Ability to increase PEG fee Distant CSR offices/call centers that are not PEG fee option for operations equipped to solve many customer Customer services/local office complaints and CSRs who do not communicate well in English. Staff: 5th PEG channel Use PEG fee for operations Staff: PEG channel locations Problems due to old equipment Customer service standards Letter of credit,bonds, abandonment, etc. Emergency override provision Reliable cable system Good relationship with Charter (Note: Italicized items above are the Commission's higher priorities.) 10 AFRCC PEG Needs Assessment Report Dated 1-14-2013 AFRCC PROGRAMMING Channel Usage The following channels are programmed by AFRCC: • Channel 12 Community Access Bulletin Board • Channel 16 Government Access: Apple Valley and Farmington • Channel 22 Government Access: Rosemount and Dakota County Board Meetings PROGRAM 2011 2012 Apple Valley City Council 22 25 Apple Valley Planning Commission 16 16 Apple Valley Parks&Recreation Advisory Committee 5 4 Town Hall: Cedar Avenue 1 Apple Valley State of the City 1 1 Apple Valley Beyond the Yellow Ribbon 1 2 Valley Beat* 6 6 Hook and Ladder 6 6 Candidate Forums 4 Farmington City Council 23 23 Farmington Planning Commission 11 11 Farmington State of the City 1 1 Rosemount City Council 24 24 Rosemount Planning Commission 12 13 Rosemount State of the City 1 1 Liquid Assets 1 Improved Water Maintenance 1 Public Service Announcements and Promos* 30 30 Dakota County Board Meetings** 23 23 TOTAL 184 191 * Valley Beat has won a national LEVA Award(Law Enforcement Video Association)and an award from NATOA(National Association of Telecommunications Officers and Advisors). ** Dakota County Meetings and approximately 60%of PSAs are from outside sources. 11 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Community Organizations Served: Channel 12 American Cancer Society Grace Lutheran Church of Apple Valley Apple Valley American Legion Post#1776 Hayes Community Center Apple Valley Baptist Church Home In-Stead Apple Valley Garden Club House of Hope Twin Cities Apple Valley Toastmasters Lions International Bible Bee.org MN Soybean Festival BNI Minnesota MOMS Club of Apple Valley South Boy Scout Pack 295 National Day of Prayer(South of the River) Christian Heritage Academy Paideia Academy Dakota County Farmington Library Pickleball Dakota Electric Association Rambling River Center of Farmington DARTS Relay for Life Dunsmore Real Estate Rosemount American Legion Post#65 Eastview Lacrosse Association Rosemount Cub Scout Troop#270 Faith Lutheran Church Rosemount United Methodist Church Faith United Methodist Church Rosemount VFW Farmington Boy Scout Troop#116 Shepherd of the Valley Church Farmington Business Association South Cross Community Church Farmington Lutheran Church South Metro ATV Club Farmington Soccer Club The Rivers Senior Living Gardening Matters Trinity Campus of Farmington 12 AFRCC PEG Needs Assessment Report Dated 1-14-2013 EQUIPMENT NEEDS City Halls Due to aging equipment and ongoing problems at the three city halls,the AFRCC has decided to implement the replacement/upgrade process for the equipment used to cablecast city meetings. The Commission has retained Alpha Video to recommend and design systems for the council chambers and control rooms at Apple Valley, Farmington, and Rosemount City Halls. Since this effort is already underway, it is not necessary for this report to address equipment needs in detail regarding the equipment used for the cablecasting of city meetings. General cost estimates are provided for the City Hall upgrades based on the Consultant's experience, system size, and discussion of usage and needs with AFRCC staff. The Council Chamber cameras, control room, and transmission equipment at each city hall should be upgraded to a HD format to ensure it remains up-to-date for as long as possible. The cost estimate for the Apple Valley Council Chambers is slightly higher than Farmington and Rosemount due to the configuration of its chambers and equipment needs. In addition to the initial cost of upgrading the city halls, equipment replacements will need to be made over the term of a renewed franchise. The transmission equipment(encoders and decoders)would need to be specified by Charter to ensure the equipment is appropriate for integration into the Charter cable system. It is recommended that the encoders/decoders be HD capable to provide the AFRCC with the maximum amount of flexibility with respect to the channel carriage on the cable system. For example,if the PEG signal is HD, Charter can carry it as a HD channel on the cable system and also convert it to a SD channel for simulcasting. CITY HA LL INITIAL EQUIPMENT UPGRADES APPLE VALLEY FARMINGTON ROSEMOUNT City Equipment Upgrade $175,000- 190,000 $135,000 - 160,000 $135,000 -$160,000 HD encoder and decoder 5,000 5,000 5,000 TOTAL $180,000- 195,000 $140,000—165,000 $140,000— 165,000 Government Production Current Equipment The AFRCC staff uses a combination of analog and SD equipment to record, edit, and playback programming on the Government Channels. The field equipment was last updated ca. 2006 and uses Mini-DV,DVD,and VHS formats for recording. Editing is performed in a non-linear format using Final Cut Pro and a Photo Shop suite. One editing computer is new(2012) and the other is ca. 2006. The playback system uses a video server(Tightrope SX4)that has SD and 13 AFRCC PEG Needs Assessment Report Dated 1-14-2013 BNC (analog) outputs. Bulletin Board messages are generated using the Tightrope CG systems for Government Channels 16 and 22 and Power Point is used for Community Channel 12. The Apple Valley Police Department has a studio area that the AFRCC uses to record parts of Valley Beat. The field cameras are used with"studio in a box" equipment that includes a switcher, camera and preview/program monitors, and an audio mixer Mini-DV and DV recorders that are rack-mounted in Anvil cases. The "studio in a box" equipment is used for remote productions such as candidate forums and events in addition to Valley Beat. Other programs are produced EFP-style (Electronic Field Production)using one or two isolated cameras whose footage is combined in the editing process. Graphics for both types of productions are added during the editing process. The equipment that is currently used to produce these programs is a combination of analog recording, digital non-linear editing, digital and analog playback, and analog transmission. The conversions between analog and digital needed to perform different function in the production process requires real-time converting and rendering of video, which adds to the staff time it takes to produce a program. Converting digital playback files to an analog format for transmission to the Charter head end adversely affects the technical quality of the program. 1 -• 410 1 • Oa r► S e' -� ff`I t } 1 } I sI• c eA • pp... ...-...... Fed ■ .. . .. . ;;I: . I 11111k _ EMI ..w Lamm 0 Ci_. ,*t� ##,, , `i. ,# i • Playback Rack: Ch. 12, 16, & 22 Master Control Apple Valley 14 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Equipment Trends Digital formats and tapeless formats have been the direction many production operations have been taking over the past several years. The costs for equipment have been going down while the quality and capabilities of equipment have improved significantly. HD is more widely available via cable and satellite systems,newer television sets are HD capable and viewers are demanding more HD programming. SD (standard definition) as a production format is being replaced by HD, and when considering equipment replacements and upgrades, it makes economic sense to forgo the SD step and transition into HD production capability. Even if the HD channel capability is not immediately available,HD production and transmission generate the highest quality product that can be down-converted to SD and analog. The end result to a viewer is a higher technical quality program than one produced in analog or SD and then up- converted to HD. As noted previously, Charter is in the process of converting the cable system serving the AFRCC cities, and analog signals will no longer be sent to viewers when the conversion is completed, although viewers can down-convert the digital signals to analog for viewing on older television sets. Another aspect about newer technology is that much of the technology used in various pieces of video production equipment is computer based and can have a shorter life span than some of the old analog equipment. This means that equipment may need to be replaced on a schedule that is more similar to the replacement schedule used for computers. A conservative estimate would be that equipment will need to be replaced every 5-7 years. Depending on the current status and when existing equipment is replaced, it may need to be replaced once or twice during a new franchise term. 15 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Government Equipment Needs DESCRIPTION AMOUNT REPLACE ONCE Field Equipment HD camera with studio accessories(3 units) $30,000 $30,000 HD field monitor(3) 2,400 2,400 Camera accessories 3,000 3,000 Taxes, shipping,warranties 10,000 10,000 Total Field Equipment $45,400 $45,400 Studio in a Box Studio accessories for cameras(3 sets) $6,000 $6,000 HD production switcher 12,000 12,000 HD monitors or multi-viewer 3,000 3,000 Audio mixer 1,000 1,000 Recording&backup recording 6,000 6,000 Rack case w/casters(2) 1,600 1,600 Taxes, shipping and warranties 5,920 5,920 Total Studio in a Box $35,520 $35,520 Accessories Microphones(lavalieres,hand held, shotgun) $5,000 $5,000 Lighting w/cases 5,000 5,000 Tripods(3)w/cases, 1 dolly 2,000 2,000 Cables, cases,headphones,memory cards,misc. 5,000 5,000 Taxes, shipping and warranties 3,400 3,400 Total Accessories $20,400 $20,400 Edit Edit station hardware& software (2) $10,000 $10,000 HD Monitors(2) 2,400 2,400 Backup/video server/storage(2) 4,000 4,000 Taxes, shipping,warranties 3,280 3,280 Total Edit $19,680 $19,680 Playback and Dubbing(3 channels) Transmission equipment for HD signal (3 channels) $15,000 $15,000 Tightrope SX2 HD video server, cablecast bundle(2) 60,000 60,000 Cablecast Pro server/controller 8,000 8,000 Carousel CG310 (3 units) 13,500 13,500 HD monitors (each channel outbound& incoming= 6) 7,200 7,200 Cables,HD routing switcher, connectors, etc. 8,000 8,000 DVD duplicator 2,500 2,500 Blu-ray DVD players(8) (playback backup system) 4,000 4,000 Taxes, shipping,warranties, installation 16,800 16,800 Total Playback and Dubbing $135,000 $135,000 16 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Educational Access Channels and Equipment As previously noted,ISD#192 and ISD#196 both cablecast programming from their school districts on Channel 10: ISD#192 in Farmington and ISD#196 in Apple Valley and Rosemount. Both districts like the Channel 10 position and did not express an interest in changing the current arrangement. The districts have a variety of analog, SD, and some HD equipment which is primarily located at the school level in both districts. Funding for equipment purchases is provided by the general fund of each district. At the focus group,representatives from both districts indicated an interest in having access to some shared equipment that could be used for staff-facilitated productions, including high school sports. Since both ISD#192 and ISD#196 cablecast programming in other franchise areas in addition to the AFRCC cities,there are possibilities for funding to come from these communities,the AFRCC and the general fund for each district. If such a joint effort were to be undertaken, it would require an entity to organize it, develop guidelines, and manage the use and care of any shared equipment. Although such an undertaking is beyond the scope of this project, it is mentioned here to bring it to the awareness of the AFRCC in case it would like to follow up on such an initiative. An amount for a shared equipment grant is listed below for the AFRCC to accept,reject, or alter based on its policies and priorities. Cost estimates to upgrade the encoders/decoders at each of the districts to HD is listed below. The HD format is suggested because each of the districts has some HD-capable equipment and will likely continue to make HD equipment purchases in a new franchise term. Transmitting programming in a HD format enable the signal to be re-transmitted in HD when HD channels are available on the Charter system, and the signal can also be converted to a SD standard. Transmitting in a HD format will ensure the highest quality and will be most cost-effective for the districts as they will not have to convert from the present analog to SD and then make a later transition to HD transmitting. Educational Access Equipment Needs DESCRIPTION AMOUNT REPLACE ISD#192 SD encoder/decoder $5,000 $5,000 ISD#196 SD encoder/decoder 5,000 5,000 Shared equipment g rant 10,000 10,000 TOTAL $20,000 $20,000 17 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Summary of Capital Equipment Needs The following table represents initial capital costs for upgrading equipment for the AFRCC, its member cities,and ISD#192 and ISD #196. Costs listed in the"Replacement"column indicate estimated costs for replacing equipment a second time during a ten year franchise. It is estimated that existing equipment will be replaced during the first 3-4 years of the franchise,that life spans of computer-based equipment are 5-7 years, and that some equipment will need to be replaced a second time during a ten year franchise term. DESCRIPTION INITIAL UPGRADE REPLACE TOTALS: 10 YEARS Apple Valley City Hall $180,000-$195,000 $97,500 Farmington City Hall 140,000- 165,000 82,500 Rosemount City Hall 140,000- 165,000 82,500 TOTAL CITIES $460,000-$525,000 $262,500 $722,500- $787,500 AFRCC Field Equipment 45,400 45,400 AFRCC Studio in a Box 35,200 35,200 AFRCC Accessories 20,400 15,000 AFRCC Edit 19,680 19,680 AFRCC Playback 135,000 135,000 TOTAL AFRCC $255,680 $250,280 $505,960 ISD#192 &ISD#196 20,000 20,000 TOTAL EDUCATION _ $20,000 $20,000 $40,000 TOTAL EQUIPMENT $735,680-$800,680 $532,780 $1,268,460- $1,333,460 18 AFRCC PEG Needs Assessment Report Dated 1-14-2013 DROPS TO PUBLIC FACILITIES Apple Valley Government Facilities Municipal Center/City Hall 7100— 147th Street West Aquatic Center* 14421 Johnny Cake Ridge Road Central Maintenance Facility 6442 West 140th Street Fire Station 1 15000 Hayes Road Fire Station 3 14195 Essex Avenue Fire Station 2 13995 Galaxie Avenue Hayes Community Center 14603 Hayes Road Hayes Senior Center 14601 Hayes Road Ice Arena(Hayes Park) 14595 Hayes Road Ice Arena(High School) 14452 Hayes Road Liquor Store#1 * 7525 West 148th Street Liquor Store#2* 14261 Essex Avenue Liquor Store#3 5470 West 157th Street Police Department 7100— 147th Street West Redwood Community 311 County Road 42 Teen Center 14255 Johnny Cake Ridge Road Valleywood Golf Course 4851 West 125th Street *If landlord permits and if economically feasible Apple Valley Schools: ISD #196 Apple Valley High School 14450 Hayes Road Cedar Park Elementary 7500 Whitney Drive Cedar Valley Learning Center ** 141420 Glenda Drive Dakota Ridge 4629— 144th Street Diamond Path Elementary 14455 Diamond Path District Office 14445 Diamond Path Eastview High School 6200— 140th Street Falcon Ridge Middle School 12900 Johnny Cake Ridge Road Greenleaf Elementary 13333 Galaxie Avenue Highland Elementary 14001 Pilot Knob road School of Environmental Studies* 12155 Johnny Cake Ridge Road Scott Highlands Middle School 14011 Pilot Knob Road Southview Elementary 1025 Whitney Drive Tranisition Plus/Pathway/ALC 5840— 149th Street West Valley Middle School 900 Gardenview Drive Westview Elementary 225 Gardenview Drive * If landlord permits and if economically feasible **Needs a drop 19 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Farmington Government Facilities City Hall 430 Third Street Central Maintenance Facility 19650 Municipal Drive FAA Center 512 Division Street Farmington Library 508 Third Street Fire Station 1 21625 Denmark Avenue Fire Station 2 19695 Municipal Drive Liquor Store 109 Elm Street Liquor Store* 18350 Pilot Knob Road Municipal Pool 626 Heritage Way Police Department 19500 Municipal Drive Schmitz Maki Ice Arena 114 Spruce Street Senior Center 325 Oak Street *If landlord permits and if economically feasible to serve Farmington Schools: ISD #192 Akin Road Elementary School 5231 195t Street West Boeckman Middle School 800 Denmark Avenue Dodge Middle School 4200—208th Street West Farmington Elementary School *** 500 Maple Street Farmington High School * 20655 Flagstaff Avenue Farmington Idea Program** 304 Spruce Street Instructional Service Center ** 510 Walnut Street Meadowview Elementary 6100— 195T11 Street West North Trail Elementary 5580— 170th Street West * If becomes economically feasible to serve ** Verb drop status ***Need drop into building 20 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Rosemount Government Facilities City Hall 2875 West 145th Street Community Center 13885 South Robert Trail Family Resource Center 14521 Cimarron Avenue Fire Station 1 14700 Shannon Parkway Fire Station 2 2047 Connemara Trail West Public Works Building 14425 Brazil Avenue Public Works Garage 14455 Brazil Avenue Rosemount Steeple Center 14375 South Robert Trail Rosemount Schools: ISD #196 Rosemount Elementary 3155 West 143rd Street Rosemount Middle School 3135 West 143r1 Street Rosemount High School 3335 West 142nd Street Shannon Park Elementary 13501 Shannon Parkway Other Rosemount Educational Facilities* Alliance Education Center 300 Biscayne Avenue West Dakota County Technical College 1300 East 145th Street First Baptist School 14400 Diamond Path West St. Joseph Catholic School 13900 Biscayne Avenue West *If landlord permits and if economically feasible to serve 21 AFRCC PEG Needs Assessment Report Dated 1-14-2013 WEB SURVEY OVERVIEW Process A non-scientific survey was conducted as part of the needs assessment process to gather public input regarding satisfaction levels with Charter Communications and interest in local programming. Survey questions were developed by the consultant based on AFRCC priorities, and the survey questionnaire was reviewed and fmalized by the Commission before being launched on the cities' web sites. The survey was promoted by the cities of Apple Valley, Farmington, and Rosemount,and was accessible on their websites from November 8— December 9,2012. Respondents answered 20 questions: four questions were of a demographic nature, one was open-ended, and 15 questions focused primarily on respondent's satisfaction with Charter, and interest in and use of the local channels. As noted above,this was not a scientific survey and does not represent a random sample. Respondents self selected to take the survey, and the results do not necessarily represent the views of all Charter subscribers. Demographics There were 290 responses to the survey. The first table below compares the relationship of each the three AFRCC cities to the whole in three measurements: the 2010 Census, subscribers to Charter, and respondents to the survey. Compared to the percentage of cable subscribers by city, Apple Valley was under represented in the survey by 13%,Farmington was under represented by 3%, and Rosemount was over represented by 16%. Males represented 58% of the respondents and females 42%. This is slightly higher than Dakota County demographics from the 2010 census,which showed that males represented 49.6%of the population and females 50.4%. City 2010 Census Cable Subscribers Survey Respondents Apple Valley 53% 59% 46% Farmington 23% 21% 18% Rosemount 24% 20% 36% Age Range 2010 Census Representation Survey Respondents Under 25 n/a 1% 25-34 14% 14% 35-44 15% 25% 45-54 17% 24% 55-64 11% 22% 65+ 9% 14% 22 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Response Highlights A sample of responses is listed below. For complete results, see Attachment A to this report. Local Programming ® 75% of respondents were somewhat to very interested in watching local programs. • 88% of respondents had watched a local program within the past 6 months. ® Council meetings were the most frequently watched, followed by ISD#196 programs, and Planning Commission meetings. • Shows the public would like to see include high school sports, community events,and local history as the top three choices. Charter Communications • The top three services taken are: Internet,regular cable service, and HD cable service. • More people were dissatisfied with Charter's customer service than were satisfied. • Only 27%of respondents who called Charter with a problem got it resolved with one phone call. • Top three reasons people don't subscribe to Charter: 1)too expensive,2)poor customer service, and 3)they subscribe to satellite TV. • Charter's local office received higher marks and there were more satisfied respondents than dissatisfied. • Open-ended comments were coded into categories,the top three comment types were: 1) Charter is too expensive,2)people want competition from another provider, and 3) Charter has poor customer service. 23 AFRCC PEG Needs Assessment Report Dated 1-14-2013 NEEDS AND INTERESTS/RECOMMENDATIONS PEG Channels and Support Based on information gathered during the needs assessment process and the Consultant's experience with other communities,there is a need and interest in ensuring that PEG access continues and is enhanced in a renewal franchise period. A renewal franchise should include the following provisions for PEG access channels,programming, and support. • Maintain the PEG channels in their existing locations(10, 12, 16,and 22). • Maintain the requirement for five channels for PEG access and community programming • Ensure that the AFRCC maintains the equivalent bandwidth currently allocated to it(5 PEG channels at 6 MHz. each)or receives adequate compensation if the AFRCC chooses to use less than the 30 MHz.provided by the current franchise. • Maintain PEG channels on the lowest tier of service. • Provide PEG.channels in a SD format that is non-discriminatory and consistent with the digital quality and capabilities provided to broadcast channels. • Simulcast PEG channels in SD and HD to ensure that subscribers who have HD technology can view PEG programming in the same format. • Provide PEG programming in a Video on Demand format, consistent with the quality and usability of Charter's other offerings of On Demand programming. • Maintain the connections for the transmission of live and recorded programming from the city halls of Apple Valley,Farmington, and Rosemount and ISD#192 and ISD#196. • Ensure that the PEG fee is adequate to support PEG needs, including the equipment upgrade and replacement needs over the term of a renewed franchise. • Preserve the ability of the AFRCC to increase the PEG fee throughout the term of the franchise to ensure PEG funding keeps pace with inflation. 24 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Other Franchise Provisions Based on information gathered during the needs assessment process and the Consultant's experience,the following needs and interest have been identified and should be addressed in a renewal franchise. • Maintain many of the provisions of the current franchise including but not limited to franchise fees, insurance,bonds, and letter of credit. • Maintain Grantor's enforcement ability. • Maintain the existing requirement for emergency message override of the system to advise and protect citizens. • Maintain requirements regarding customer service. • Maintain reporting requirements of Grantee including but not limited to financial reports, technical reports, and customer service-related reports. • Maintain Charter's local office for the convenience and accessibility of local residents. • Provide and maintain a high quality,reliable,up-to-date cable system. • Continue to provide drops and complimentary service to existing governmental and educational facilities. Provide future drops and complimentary cable service under the same terms and conditions throughout the term of a renewed franchise as facilities are built or re-located. 25 AFRCC PEG Needs Assessment Report Dated 1-14-2013 ATTACHMENT A Web Survey Results 26 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Subscriber Status Never Subscriber 4% Former Subscriber 19% Current --Subscriber 77% Why Don't Subscribe 60 - 50 50 44 35 40 - 31 30 20 -- 11 10 II 0 Too Poor Subscribe Poor Watch Other Expensive Customer to Satellite Technical Broadcast Service. TV Quality TV 27 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Charter Services Used 250 233 194 177 200 - — 142 129 150 100 68 50 0 Internet Regular HD Cable On Telephone Pay-Per- Cable TV TV Demand View Watch Local Channels No .41 45% ) Yes 55% 28 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Times Watched Local Shows Past six Months 9+ Times 8% 0 Times 12% 4-8 Times iiii R 19% \_1-3 Times 61% Local Shows Watched Past Six Months 140 119 120 100 7 — 80 48 60 28 23 23 20 19 40 - 20 -- 0 o°c• 'kN oP �� b a moo' aa�` moo, 0 sr , o Go oo`� C Qua- �o<a Qa 29 AFRCC PEG Needs Assessment Report Dated 1-14-2013 How Interested In Watching Local Shows? Not At All Extremely 4% 5% Very Not Very 18% 21% Somewhat 52% Watch More Local If On Demand? Definitely Not 2% Definitely Probably Not r 15% 19% Not sure 24% jProbably 40% 30 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Local Shows Would Like To See Top Four Categories 80 72 68 70 66_ -- —_ 60 — 52 50 40 - — 30 20 10 — 0 I I f HS Sports Community Local History HS Events Events Other Show Topics of Interest 60 49 49 45 50 - - 4 0 -- 33 29 30 - - 20 10 0 I - I I - City Local City Arts & Music Elementary Middle School Department News School Events Events Info. 31 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Technical Quality of Local Channels Very Unsatisfied Very Satisfied 7% 5% Unsatisfied 12% Satisfied 42% Neutrail 34% Variety of Local Shows Very Unsatisfied Very Satisfied Unsatisfied 2% 2% 9% -\: il Satisfied 34% Neutral 53% 32 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Charter's Overall Technical Quality Very Very Satisfied Unsatisfied 6% 15% Satisfied Unsatisfied 33% 23% Neutral 23% Charter's Customer Service Very Satisfied Very 5% Unsatisfied 28% Satisfied ki 22% Unsatisfied Neutral 23% 22% 33 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Customer Support Via Charter's Website Very Satisfied 4% Very Satisfied Unsatisfied 16% 27% :3 10 N Neutral 26% Unsatisfied 27% Customer Support Via Charter's Local Office Very Unsatisfied 2% Very Satisfied 8% Unsatisfied 28% Satisfied 35% Neutral 27% 34 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Calls Required To Resolve Problem 3 Calls 165, L:c 2 Calls 32% 4+Calls 25% 1 Call 27% Open-Ended Comments Of the 290 survey respondents, 166 or 57%contributed comments. There were no comments on local programming, and ten of the comments were positive about Charter. Cost was the highest concern expressed by respondents, followed by poor customer service, and poor technical quality that included problems with channel quality and outages, and problems with equipment provided by Charter such as DVRs. Programming was also a concern,especially the relocation of programming to higher-cost tiers of service. Of those providing written comments, 38%wanted competition in the cable market and more options than just having Charter as a cable provider. Open-Ended Comments 90 82 80 70 63 60 57 48 50 39 40 30 20 10 - 0 Too Want Poor Poor Programming Expensive Competition Customer Technical Issues Service Quality 35 AFRCC PEG Needs Assessment Report Dated 1-14-2013 Verbatim Open-Ended Comments (Unedited) 1. I'm satisfied with Charter's offerings and pricing. I am not impressed with what I see from other vendors like Comcast. I would be pretty unhappy if our area transitioned to Comcast(perhaps other vendors too,I have not heard as much about other vendors other than Comcast). 2. When we moved to Apple Valley, our only cable option was Charter, &we had a horrible experience. We moved to Dish,which I'm not happy with Dish,but it's better than Charter. Please, figure out a way to get Comcast in Apple Valley. Thank You. 3. Apple Valley needs to start offering its residents more options. I have nothing against Cable providers but I am fed up with Charter. I am currently shopping for a new home and will consider the town I move to regarding the entertainment options that are available. 4. Charter website is terrible. As current customer they block you from trying to see options to change and will not allow you to see fees. Internet speed is a fraud,they charge us for "faster" speed but I think they are screwing us. Overall, if I had a choice to change services-I would TODAY!!! 5. Website is terrible and not user friendly. Can't find fees for anything. Main office on Cedar Ave is terrible-you can't find a phone number to contact them or a website. Charter is worthless, I want something new/ANYTHING!!! 6. We are just ending our 2 year contract with them and have not been impressed with their service. I am l000king at changing to Frontier. 7. When is the overbuild of FTTH coming to other neighborhoods?This was a requirement of their franchise agreement! 8. Need many many more hd channels 9. Certain channels start to flicker or completely "pop out." Have had the box replaced as well as some of the wiring but still an issue.Not sure if it is due to some of the lines run to the house going bad or corrupt. 10. Charter does not offer good pricing or product options on basic television. Our community needs a low cost television option for basic channels and this option should be availalbe as a stand alone product or bundled. 36 AFRCC PEG Needs Assessment Report Dated 1-14-2013 11. It would be nice if Charter offered OnDemand for Fox as well. I am always getting advertisements about phone serivce,however EVERYTIME I call,they say it is not available in my area. Prices could be better. Really hate having to use Charter. 12. Charter is very expensive for what you get. It would be nice to get someone else. 13. Charter is too expensive for the low quality and smaller number of cable channels they offer. Offering local community programming on Charter exclusively is a total disservice to the community. I dropped Charter cable because they charge twice what competitors charge for half-as-many channels. 14. I would like to see a change from charter as their products and services are limited when compaired to comcast and their ixfinity program. Charter doesn't seem to care about their customers as well. Very frustrating and expensive for what you get. 15. We, like many other Apple Valley Residents,would like the opportunity to have more cable/internet/phone provider choices to choose from(for example, comcast, century link, etc.). It is not fair for Charter to have a monopoly on these services. It makes the costs much higher than they should be. 16. I have had excellant service everytime I have had to work woth anyone at Charter. 17. Charter's terrible service is the reason I went to satellite TV. I will not go back to Charter ever again!!!! 18. Charter is expensive and doesn't provide the channels i want as part of a reasonable package. Some folks do wish to have Big 10 network, CMT, Oxygen,without subscribing to HBO or Skin-e-max. I am actively looking for an alternative,but feel held hostage by my internet connestion through them. 19. their price is too high. I had comcast before I moved to Apple Valley and the same services were less. 20. Too many channels moved to Basic Plus requiring higher fees. Other companies have lower prices and better equipment but not allowed to compete against Charter in area. Was given wrong information by Charter sales people and when it came time for equipment installation promises not fulfilled. 21. Very expensive for the amount of TV may family watches... We are currently looking for an alternative. 37 AFRCC PEG Needs Assessment Report Dated 1-14-2013 22. The price charged for bundled services is REDICULOUSLY high. I am considering dropping Charter. Office hours are TERRIBLE. NO weekend hours and are only open late on Wednesday nights,which is church night. Please research city of Rosemount going to citywide WIFI. This could benefit many. 23. I would like to try Comcast. Everyone I know that has Comcast has better quality and pays a lot less than we pay. 24. Wish Big Ten Network was still included, instead of being taken away. Also would like to see WCHA Hockey on TV again. Comcast is going to cover St. Cloud State Games. Contemplating a switch to Direct TV in the Future do to the above mentioned. 25. I believe the cost of cable TV is way to high for what you get. We subscribe to Direct TV because the costs are lower. We subscribe to the phone and internet (also too high)because it is better than the alternatives. 26. The price for cable is extremely high and keeps rising a few cents each month. After awhile, it adds up to be quite a bit of an increase. 27. Charter's offerings appear to be substantially below that of other options and with higher pricing. 28. I'm going to grad school online,needs the internet connection,but the cable TV service is just terrible. When you complain they tell you,you need to pay them to come out and look at the wiring in your house. Our programs unsynch,where the voice and the picture are different. 29. We are very unhappy with the price and customer service. The service is expensive and their customer service is very cumbersome&time consuming to use& often requires you to unplug everything before giving the message that service is unavailable. Service outage seems to happen frequently. 30. After moving to Rosemount,we used FTTH for a few months-that was HORRIBLE. Quickly switched to Charter. Service is poor,the cable tv went out a lot(so much for that being a satellite issue), and the picture was always fuzzy. We recently switched back to satellite and are very satisfied. 31. Bad customer service and overprice product 38 AFRCC PEG Needs Assessment Report Dated 1-14-2013 32.the worst customer service,many outages, cable box failure,horrible pricing, billing horrors,programming is old and repetative,movies are repeated too often, customer service reps read from script and do not address specific concerns,problems,the billing is different every month in errors 33. Because data are data, Charter should be mandated to deliver local programming over the Internet as well as their CATV in order to best reach all people in the area. 34. Bill is always changing, do not have and discounts and is over priced right now 35. Charter's irresponsible contractors for instal ,svc wrk,unwilling to take responsibility,help recover/repair damages to home from instals EXPAND Comcast's coverage,ANY other cable provider's access to our market S of McAndrews, Comcast svcs N of the rd but not on our side. 36. I have had to replace my DVR box several times. The equipment works fine for awhile and then incurs recording and playback problems 37. Charter is terrible.The technitians were unable to install phone lines,but billing department continues to bill me.l have called numerous times as well as gone into the location on Pilot Knob to resolve this. Very poor customer service, high fees,very unsatisfied.Please get comcast in this area! 38. rates are too high and with no other competition they continue to increase. If you don't call on the right exact date after one year,your rates will go up and even if you do call each year rates continue to increase 39. Whenever we had a problem, Charter C.S. was very helpful and problem was resolved in a timely manner. We like Charter and would not want to lose their services- We have our phone,H.S. internet and T.V. with Charter for years and totally satisfied with their service and programming availability. 40. I wish I had other options than just Charter or Frontier or Satillite. If there are other Vendors like Xfinity or others,please tell me. 952-431-5253. John Westrum,Apple Valley. 8010 132nd Court. Charter service has a lot of outages. I think their services are high priced. 41. I don't like the package choices I am given for cable TV. I would like to select the channels I want and view similar to purchasing songs on iTunes. They need to improve their technology to make this possible. They spend too much money on advertising. Thanks for allowing me to comment. 39 AFRCC PEG Needs Assessment Report Dated 1-14-2013 42. Please do not renew the franchise license with Charter. By having a monopoly, they price gouge customers. Just the Basic Cable package costs$25+tax. However,they don't even offer it as they want you on one of their three packages(Bad,Really Bad and Worst)that start at$55! 43. I think Charter's pricing could be more competitive i.e. cheaper. With cable there is no choice for the consumer for any other cable options,not fair. 44. I think that Charter has capitalized on the exclusive service they offer. My price has steadily gone up. Being a customer for over 15 years, I have never gotten a "loyal customer" discount. I have been told "discontinue your service for 3 months and we can sign you up as a new customer". Thanks 45. We have been relatively happy with the services provided by Charter Communications. However, we feel that their pricing is very high, and there are no other companies to choose from. It would be nice to see more than one option for cable service in the area. 46. I know in this economy it would be nice to have the oportunity to not have to spend close to 200.00 for a basic package of internet/phone/tv. 47. I would like to see more competition for the cable services. Would a city owned service be more competitive? I note that in cities where there is competition among cable companies, costs go down. 48. HD programming should NOT require cable boxes(required to be leased)as modern TV's have the ability to decode HD signals. Channel realignment causes me to lose the channels I want forcing me to either pay more for less or go into HD programming which REQUIRES a cable box and leasing fees 49. Too many "deals" then high price and all the sales are hard to understand 50. have had to return cable boxes several times as they were defective. It seems as if Charter should be repairing the defective boxes and remote control devices before handing them off to another customer. I have wasted many trips to the Charter office to return defective devices. 51. We need more options for providers as costs are getting out of control. Comcast and Direct TV are much lower but can not get them. 52. I would like more variety in cable companys to choose from. Charters customer service is poor and always has been since I moved here in 1998. I think the market should decide what companys make it and which do not. I do not understand why the city makes this decision and not the market(us). Thanks 40 AFRCC PEG Needs Assessment Report Dated 1-14-2013 53. I wish Charter would include the Weather Channel and the TV schedule channel in with "Basic" cable--they used to. I mis the weather channel! And how do they expect to "sell" me on additional channel packages if I don't know what the channels are?Let customers select channels they want. 54. I moved to the Rosemount area last spring. This community should be offering customers more of a choice besides Charter and direct TV. I would like to see COMCAST in this area. THey have improved their customer service so much in recent years and should be given a chance in this area. 55. Price is too expensive for the service provided. Have to take too many channels not wanted to get the few we watch. 56. Please open up the market to Comcast. I moved too Apple Valley recently from Bloomington where I had Comcast. Comcast/X-Finity provided more channels, more on-demand options, and faster internet for less than I am paying with Charter. 57. We pay more for Charter for less channels and slower Internet. When lived in Bloomington 1 year ago we paid 30 dollars less for the same service. Comcast deal is better than Charter we had faster internet and more tv channels. There needs to be competition to keep the price fair. 58. I would very much like to have the option of basic cable tv for local channels only at a lower rate. I was told by Charter when I asked that they did not offer such a plan. However,I know that other cable providers such as Comcast in Mpls and St. Paul have this option. 59. Customer service via telephone is less than satisfactory. More often than not,I get an overseas call center and there is a language barrier. They often seem to be speaking from a script. Only way to get US help is to ask to cancel my account. Then I'm transferred to a US call center, get results. 60. The price is hugely expensive. The cost of basic cable just kept going up every year, so I dropped it completely and now I watch shows on Netflix. If the cost was more reasonable,I would consider subscribing again. 61. If you call with phone,you have a hard time getting out of automated;very irritating! Also,recording on DVR not always reliable. Cable box buzzes; dropped occasionally as well. I am saisfied with the choice of programming. Picture quality is generally good. 41 AFRCC PEG Needs Assessment Report Dated 1-14-2013 62.VERY tired of Charter moving channels from Basic to higher levels. Removing channels is essentially a price increase. Charter claims providers require; we doubt. IF required,provision should be made to include the higher channels in Basic. Continued movement will result in switch to satellite. 63. Our family feels that it would be nice to at least have a choice as to what provider we use. 64. I had a question on my bill and was passed around 5 times before I got someone in INDIA! who said she couldn't help me. I had to call another number which was disconnected 65. I have not heard much good about them, I have Comcast and I like it just fine. Charter-NO THANKS! 66. every time I call w/issue (there are lots,modem goes down,DVR, doesn't work, slow internet, incorrect bills they always have a different program option and its more expensive, or I have to order more to get the shows I want. Seem like scam sometimes trying to get a straight answer from them 67. I wish they would stick with one price plan, Why don't they tell customers about new packages? Not fair that I pay more than I needed to for channels that are cheaper now. Wish they were more honest about"true" prices 68. Always raising prices,moved Hallmark channel and Country channel from basic cable to a premium channel,change channel numbers without notifying customer 69. Had to get new remote three times before I had one that worked-The choices of pay per view movies are terrible-do not all movies go to cable??there also is too much repeating of same movies on regular cable channels-I think I could go . back to local channels only and be entertained. 70. I have always had issues with Charter-their service and am'stuck'using them if I want to live in Apple Valley and not get a satellite dish. I lived in Eagan for a while and loved Comcast-Had no trouble at all. Moved back to AV and this is the only thing we dislike. Give us another cable option. 71. I really wish other cable services were available to us ie Centery Link, Quest, etc.because I feel Charter's rates are too high and competition would be good. Now we do not have a choice!! 72. it would be nice to have a choice for cable provider 42 AFRCC PEG Needs Assessment Report Dated 1-14-2013 73. most questions were for Charter's TV programming and service. I have DirecTV and only use Charter for broadband and landline phone 74. Charter takes advantage of being the only option of cable programming in this area. They have a take it or leave it attitude and without competition-quality will be poor and prices will be out of control. They have the monopoly and they treat their "customers" accordingly. 75.I would like to thank you for the opportunity to voice our reality with Charter 76. Communications. Our internet service is horrible,the cable goes out often,their equipment has caught fire, and their web interface (website) is unusable! Please consider something else. At 180.00 a month, this is nuts! 77. My concern is with renewing once a contract is up. If you're a new customer you get a better deal than a renewing customer. That certainly does not reward it's customers. Also one's ability to have some various options in channel line up -it's either too little or too much. 78. I am not happy that Charter keeps taking programs away from me. They are forcing you to take their digital subscription. 79. Cable packages have different catagories. The HD channels are scattered through the catagories. If a customer wants more than one HD channel,the customer must purchase each catagory at an additional charge. I think this should be stopped. The rates are high enough. 300 characters insufficient. 80. The price fixing is outrageous and their customer service is very disappointing (it takes many calls and visits to the office before problems/questions can be answered/solved),I wish there was more competition so the prices would be so inflated because they have a monopoly in Rosemount for cable. 81. I have on occasion found it difficult to call and acctually speak to a Charter employee that is based in the United States. This makes understanding difficult. 82. The only thing I am unhappy with is I can lock into a price but only way to reduce my price was to upgrade There are no other options other than getting a satellite dish and I think that the lack of competition lets them have all the power. I am paying $218 a month for cable,phone and internet. 83. Charters cable TV is the only provider in Rosemount which gives them the ability to over charge we need another provider to cut cost o cable tv. 84. Why Charter and Frontier does not have any competition in AV,F and R? 43 AFRCC PEG Needs Assessment Report Dated 1-14-2013 85. Their customer service is non-existent and i've been told by a rep,we can charge what we want because there is no choice,unless you don't want service. HD quality is horrible and distorts during important times movies sports etc. When service is called they simply say to turn off the box and reset 86. The way they handled this change, and the lack of a satisfactory solution is just not acceptable. We had use of 4-V's in the house and now we have 2. They sau we have a weak connection? 87. We discontinued all TV services due to cost and kept internet only,which is really all we can afford for "entertainment" purchases. Charter's rates for television are outrageous unless you sign long-term contracts. In this economy, a contract on a non-necessity is a risk we cannot take. 88. I would like to see FSN+, ESPNU, and ESPN3 added to the Basic Cable TV package. I would also like to see more package and pricing options. 89. the cost seems too high. could the service somehow be put out for bids? 90. I hate paying for basic cable services,then pay an additional charge for a"cable box"just to receive what is already being paid for. Then pay for an HD Equipment Upgrade,when I'm already paying for a cable box.I'm paying for a Wire Maintenance Plan-what is that all about?NEED MORE THAN 300 CHTRS 91. charter is our only option for cable. Their prices are NOT competitive with other cable providers! . One of our local channels (WCCO 4) cuts out daily for a few seconds at a time;this happens many times per hour. Calls have done nothing to resolve the problem. 92. Charter is charging 7.225% sales tax. The sales tax in this area(Farmington) is 7.125%. Have gotten no satisfaction from Charter. I have contacted the state attorney generals office. 93. I believe that Charter's price for Cable TV is at the high end of the market.And, their recent ad campaign is misleading. For example,the ad says Charter provides X number of free HD programs but all broadcasts must now be in HD. Charter doesn't say you must pay an extra$5 @ mo for anHD box. 94.you need other cable companies in apple valley besides charter and frontier. more compatition to lower the costs. 95. Charter has terrible customer service. Every time I call it's someone from India and I can't understand them. 44 AFRCC PEG Needs Assessment Report Dated 1-14-2013 96. To expensive, and bad customer service! Not able to make payment arrangements or set up a future payment so your cable will not get disconnected. Tis is something I can do with Verizon and many other companies! 97. With YouTube you don't need to waste tax payer money on paying charter to broadcast anything,put it on YouTube for FREE or links on City of Rosemount site to view. 98. I would like to have a choice between carriers. I think have just one cable carrier available results in higher prices. Their only real competition here is the satellite services, and that just doesn't work in my wooded neighborhood. 99. The cost keeps going up, and programming channels are being taken away. With no competition it;'s a monopoly and the cost vs. benefit is not desireable. When can we hook up to the new cable channel "jaguar"that is near us,but do not have access.? CMT needs to be brought back. 100. Charter's services are so grossly over-priced. Their customer service is incredible poor. They disrespect the customer and employ bullying tactics. If I had a better choice,I'd switch. We really hope you can do something about their overpriced services. 101. every couple months are rates increase with no more new services,when you call ,they just want to sll you more. time to get some competition so the rates and quality stay high 102. I wish there was another cable option in Rosemount. Charter no longer offers discounts for people who subscribe to lower tier packages. They only promote packages with many channels at a high price. People who want this already have options with satellite tv. I would like more/better choice. 103. The workers at the local office in Apple Valley off Cedar Ave. are very rude and unfriendly. They also keep raising rates. Why are cable companies allowed to monopolize an area? Bring in multiple companies to held bring rates downiWWWI 104. I think Charter has way too much of a monopoly in cable Tv. They pretty much can charge what they want or make changes at will. Their customer service is atrocious at best and trying to talk to a"live" person is extremely difficult. I defmitely would not recommend Charter to anyone. 45 AFRCC PEG Needs Assessment Report Dated 1-14-2013 105. high charges&rising (across the country) I"m ill so it's read or watch tv or go online. 2 yr contracts are typical,required. ur locked in! big bucks to end one. cust svc calls take 20-30 minutes. stressful. can't stand that automated voice. repair calls r scheduled 3-4 days later:( 106. I wish we had access to Channel 17's weather programming (tpt2-wx). There are multiple tpt-2 substations but why not the weather?I also have issues with the DVR not recording programs that have been scheduled to record. It would also be nice to be able to record more than 2 shows at once. 107. I am 64,retired, and NEVER had a WORSE experience with ANY company. I HOPE ROSEMOUNT DOES NOT RENEW WITH CHARTER. Both my daughter and grand-daughter in other cities have Charter and also have terrible experiences with Charter! At least, give us some choices of another company to go with. 108. We have called repeatedly about the previews that are played during the on- demand selection process. While searching for CHILDREN'S SHOWS,there are extremely offensive and inappropriate previews playing in the preview box (horror movies,R rated movies, violence, sexual). Disgusting. 109. I think Charter services are expensive. I would like to see better rates for their services. 110. Seems as though there are better cable values available through other carriers. 111. The signal has been spotty. Multiple times I have had connection errors that take ten to fifteen minutes to resolve. Calling Charter doesn't help. I did not have this issue with Comcast in South St Paul. 112. It would be nice to explore more competitive pricing from other companies. Charter has good quality, although I believe there are better options out there. 113. It appears some of the channels do not take advantage of HD. At this point i would guess the majprity of TV sets have been replaced with the new format. 114. Charter bundles claim they do not charge movie channels for 24 months,but charges for them after 12 months. Charter's billing is very conplexed has hidden charges. Local cities should investigate multiple offerings. Charter takes advantage of customers because of the non competitive environment. 115. The best part about Charter is that you are not required to have a set top box on any TV to view basic and expanded basic channels. This should continue. 46 AFRCC PEG Needs Assessment Report Dated 1-14-2013 116. Charter is OVERPRICED in comparison to other communities and channels offered. I DO NOT NEED 20 HISPANIC CHANNELS when I get nearly NO watchable movie channels. My cable bill with internet is $96.00 per month and I get NO premium channels-I WILL TAKE ANY OTHER CABLE COMPANY OVER CHARTER!!"""""" 117. We used Charter TV for 15+years and found that the service was deteriorating. Customer Service over the phone was nonexistent and required a trip to their Lakeville office. Updated equipment(DVR, etc.)was rarely available without going on a waiting list for months. Pricing was noncompetitive. 118. I would like to have more cable providers beside Chater Communications. Chater is VERY EXPENSIVE!!!! I wonder sometimes if someone is getting kickbacks. 119. loose picture, sound or both about 4 times per hour. duration varies from 1 second to several minutes. 120. Prices are too high and when you get into a special package for X amount of time when that comes to the end you are bumped back up to a higher price without much of a notice. when you call on support you get people that are hard to understand. As far as i am concered there are better deals out there 121. I want to see more competition,It is basically a monopoly and very expensive if you bundle. I would also like the ability to choose only the channels I like to watch. 122. Added a$20 fee for canceling cable w/o telling me. Then did not send a bill that month.They also double billed me and didn't show at scheduled for equipment pick-up and turned it over to equipment collections co. in less than 30 days from when they were to pick it up.SCAM! 123. Would like new internet services in our area. 124. Will never get charter cable. Would only think about a new service such as Verizon FIOS. Please encourage other providers. 125. It took 5 techs to get my cable installed. They won't run cable and they have installed it incorrectly. I wouldn't recommend any cable because of the fees and extra costs. For$200/month one would think you would get a service that was worth the expense. 126. We have had Charter out three times to fix both audio and video. They have not been able to correct the problem. We just put up with it. 47 AFRCC PEG Needs Assessment Report Dated 1-14-2013 127. Phone technical people great. They work with you until problem resolved. Customer service reps not customer oriented. Pricing for cable continues to climb and no special offered just for TV. Company continues to rip people off because there is no other competition for cable. 128. ..,the signal is still not acceptable. I am very disappointed with charter and bascially have given up. I keep chcking to see if FTTP oR THE cable company that supplies evermore will ever extend thier service,but hope there can be another option couldn't explain charter is crap 129. Want more competition and choice options. Would like to have Comcast as a choice besides Charter. This should help to lower service costs. 130. The customer service at Charter Communications is, and has always been,in need of improvement. We have been very dissapointed that we have no alternative to Charter. We would like a different provider than Charter for Cable TV. 131. Don't find Charter 2 b the best value...compared 2 Comcast or satellite. Their cable product is also suspect...alot. 2 many 'Wait for channel'notes and channel never comes on line(which I'm paying for). Last night ALL channels went this route. I went to bed so not sure when they came back up. 132. -I think Charter should be forced to offer a no contract,very cheap basic cable option -I would like to see at least two cable companies in our area so we have a choice -Charter cable programming was not very accessible. The Guide channel made it really difficult to find something to watch 133. Poor customer service, bad pricing. Will give clients obsolete equipment that breaks or fails after a short time. Will call you a lot to add services and when you do order they forget to process it. Horrible moving here and being told Charter was only option and hearing bad things from others 134. I think it is terrible that we have no access to cable TV or the higher speed of the internet!!! We are the slaves of Frontier Phone service....faster internet is just a mere block away!!!! In this day and age I would expect that faster internet for streaming would be available for everyone!!!! 135. We were Charter customers for quite some time. We had a number of technical issues...especially internet,and never really had good customer service. Additionally,we weren't satisfied with the programming offered nor with the price charged. We lost our tv connection frequently 48 AFRCC PEG Needs Assessment Report Dated 1-14-2013 136. They keep removing programs, or channels and still charging high fees. so much adds per hr, it makes you feel like your paying to watch adds, removing channels is my big complaint. 137. I don't know why there isn't more competition between cable companies. For example,my parents live on the East Coast and in their town they have a choice between Verizon, Comcast and RCN. We should not rule Charter out,but they should not be the only choice either. 138. PLEASE, get another cable company in here. Charter was horrible to deal with, I simply needed a new modem, for which I was paying a monthly fee,they refused to test the modem,I went for 2 1/2 months without internet because they refused to listen to me. Long story,not enough room here to tell. 139. Charter Communications performance is extremely poor and continues to get worse. Their infrastructure cannot support the technology of today and into the future. 140. We often had periods when we did not have service due to some kind of technical problems. I wrote to Charter headquarters and complained about pricing. We had Comcast cable service when we lived in IL. I think Comcast has better programming options and better service than Charter. 141. I feel that Charter's prices are too high. In addition," regular channels", such as the Big 10 Network where the U of Minnesota is a part of, should be included in basic packages(I don't have this channel). I would welcome including other cable providers into the discussion to drive prices down. 142. The tv service is ok. I have huge. Issues with the internet and the wsy they do appts. I keep losing internet service. A service tech hsd an appt lOsm to noon. No one showed but because I missed their call the appt was cancelled. This is not the first time. 143. programming choices much fewer than other providers for same cost(e.g. Comcast); on demand extremely ltd compared to Comcast;had problem with interruption of sys&tv pixiliation,they said it was due to upgrades but don't buy that; finally 4th visit technician resolved it; VERY AGGRAVATING 144. Sure would be nice to have another cable company option...Dish is a proven failure. 145. The service is getting very expensive and I am considering dropping it. Too bad they can't have a rate like the phone company cheap rate w/o a lock time period. It would make it easier to make commitment and be a satisfied customer. Brand loyalty. 49 AFRCC PEG Needs Assessment Report Dated 1-14-2013 146. Charter does not have enough people at the front desk to help customers during the day. They also call at all hours of the day trying to sell more product. 147. Charter is too expensive and the service is unreliable. PLEASE look for another provider for the Farmington area. 148. after I got one of their pkg. deal they always seem to take one of my fravore ch. out of that pkg. 149. We were previous customers in St. Cloud,but ran into massive billing issues. We decided to give Charter another chance when we moved into the Rosemount. Unfortunately, it was the same story. Both times we were quoted a price and then charged a much higher price then what was originally agreed upon. 150. We had Comcast in Coon Rapids and never had any problems with billing or technical support. We went with Charter on two occasions and had to constantly battle customer support for price increases that we were never notified of. Incredible disconnect from billing department and sales/customer service 151. After Charter switched to Digital,now we will pay an extra$5 per month(after one year) and will get fewer channels. Comcast provides around 50 channels as part of their Basic-Basic programming(the Federally required one). We're annoyed with Charter and would rather have Comcast in this area. 152. Install was done improperly. Called about a billing problem it was difficult to understand the CSR. My problem was resolved but on my next bill, I was charged for a new service that I did not request. I do not have a converter box, so they keep removing access to channels,yet I still pay the same. 153. 1. I'm disappointed Charter offers deals to new customers but doesn't make an effort(with discounts)to retain existing customers. Repeat customers should be rewarded for their loyalty. 2. Why don't we have a choice in cable providers, like we do for garbage haulers? 154. I am extremely disappointed that we lost the Big Ten Network coverage, as well as,the Game Show Network. I would really like to see the BTN again. Also, disappointed with the clarity of the TV picture when the cable box is hooked up to the TV. 155. We definitely have need for more competition in terms of TV service and internet service. Prices are too high and there is a general disregard for providing any service. Frontier Communications which I also have dealt with over the years has been poor in providing any customer service. 50 AFRCC PEG Needs Assessment Report Dated 1-14-2013 156. Poor channel lineup when compared to similar services offered by TimeWarner or Comcast in adjacent areas of the Twin Cities. HD selection is very sub- standard for the price of HD subscription. I only subscribe to Charter Internet, and only because I don't have another high-speed provider to use. 157. Too many occasions of interrupted cable service. Too many internet connection problems. Our Charter bundle jumped significantly when our introductory offer expired. They were unwilling to reduce our rate without losing services. We would like to have a different cable service. 158. We don't like the programming choices given from Charter. They offer way too much inappropriate programming and not enough quality programming. We don't watch much that they offer. 159. I think Charter is gouging the residents of AV on it's fees for services. Our other option is Frontier. Yet, all the communities around AV can have Comcast. Force competition and drive monthly charges down, improving the services to the residents of AV. Let Comcast in and have its residents decide! 160. I've been a long time Charter customer and have been very satisfied with the company. Their customer service has always been friendly and accommodating. I look forward to many more years with Charter. 161. Good customer service. 162. Need different company. Charter doesn't care!!!! 163. our tv picture quality has been bad ever since we signed on with charter 6 yrs ago. we have had aprox. 15 service calls to our house to fix the problem,which require you to waste 1/2 your day waiting for them.I think someone who has had that many service calls should be 1st on the list for service. 164. Charter continually decreases the number of channels (basis&expanded basic) available but does not reduce the cost. Seems like the reduction in available channels is a ploy on the part of charter to force people to subscribe to higher priced packages. 165. We believe Charter rates are unacceptably high(we pay over $100 per month). When we call Charter with issues,we're given promises which are routinely ignored. When we complain,we are given some "mumbo jumbo" explanation or are left sitting on hold. We are refused access to a supervisor. 51 AFRCC PEG Needs Assessment Report Dated 1-14-2013 o ttl*. City of Farmington 464 41; 430 Third Street a Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 • POO* www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Brenda Wendlandt, Human Resources Director SUBJECT: Approve Seasonal Hiring-Human Resources DATE: May 18, 2015 INTRODUCTION The city has conducted the recruitment and selection process for the appointment of summer seasonal staff. DISCUSSION After a thorough review by the Parks and Recreation and Human Resources Departments, offers of employment have been made to the individuals shown on the attached spreadsheet, subject to ratification by city council. BUDGET IMPACT The positions are included in various department budgets. ACTION REQUESTED By motion, approve the attached seasonal employment recommendations. ATTACHMENTS: Type Description D Backup Material 2015 Summer Seasonal Staff 2015 Summer Seasonal Staff 2015 Name Pay Rate Pos/Step RETURNING ARENA STAFF Tyler Wenck $ 8.60 Arena Supervisor-Step 1 Brandi Adelmann $ 14.24 Head Skate Instructor-Step 3 Michelle Becker $ 14.24 Head Skate Instructor-Step 3 Karla Villanueva $ 9.82 Skating Instructor-Step 2 Abigale Sliva $ 9.82 Skating Instructor-Step 2 NEW ARENA STAFF Aydan Lewis $ 9.25 Skating Instructor-Step 1 Allison Peterson $ 9.25 Skating Instructor-Step 1 RETURNING POOL STAFF Lauren Ellis $ 9.85 Assistant Pool Supervisor-Step 1 Alexis Johnson $ 9.85 Assistant Pool Supervisor-Step 1 NEW POOL STAFF Yasmin Navarro-Lopez $ 8.60 Swim Bus NEW RECREATION STAFF Bria Donnelly $ 13.56 Assistant Tennis Coach Audreya Edwards $ 8.21 Recreation Assistant-Step 1 Nick Hinnenkamp $ 8.21 Recreation Assistant-Step 1 Marcella Gaitan $ 13.63 Recreation Program Supervisor-Step 3 Megan Graham $ 8.21 Recreation Assistant-Step 1 NEW PARK MAINTENANCE STAFF Matt Thompson $ 8.94 Park Maintenance-Step 1 o� AR � City of Farmington A ®, 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,Parks and Recreation Director SUBJECT: Approve Agreement Arena West Entrance Improvements-Parks and Recreation DATE: May 18, 2015 INTRODUCTION The existing roof and concrete block walls that surround the west entrance to Schmitz-Maki Arena (arena)have deteriorated to the point where they should be replaced. DISCUSSION The existing concrete block walls and roof area that provides cover over the west entrance to the arena from the parking lot has reached the end of its useful life. Photos are attached showing the current condition. Parks and Facilities Supervisor Jeremy Pire met with three concrete contractors to explain the project and receive quotes for the project work. The project work will consist of demolition of the existing block wall and roof and then replacement of the concrete block walls. The roof will be constructed by building maintenance staff. Garvey Construction, Inc. submitted the low quote for this project in the amount of$2,275.00. The proposal submitted is included with the agreement form and is shown as Exhibit A. Exhibit B shows a tabulation of the quotes received. BUDGET IMPACT There is sufficient funding in the arena's budget to cover the project cost. ACTION REQUESTED Staff is requesting the city council approve the attached agreement with Garvey Construction,Inc. in the amount of$2,275.00 for demolition of the existing roof and concrete block walls and reconstruction of the concrete block walls. ATTACHMENTS: Type Description D Contract Agreement Form and Proposal D Exhibit Quote Tabulation D Exhibit Photos AGREEMENT AGREEMENT made this I 44 day of , 2015, between.the • CITY OF FARMINGTON, a Minnesota municipalaration ("City"), and GARVEY CONSTRUCTION,INC.,a Minnesota corporation("Contractor"). IN CONSIDERATION OF THE MUTUAL UNDERTAKINGS BERM CONTAINED,THE PARTfl?$AGREE AS FOLLOWS: 1. CONTRACT DOCUMENTS. The following documents shall be referred to as the "Contract Documents",all of which shall be taken together as a whole as the contract between the parties as if they were set verbatim and in full herein: A. This Agreement B. Contractor Proposal attached as Exhibit"A." In the event of conflict among the provisions of the Contract Documents,the order in which they are listed above shall control in resolving any such conflicts with Contract Document"A" having the fast priority and Contract Document'B"having the last prioiity. 2. OBLIGATIONS OF THE CONTRACTOR. The Contractor shall provide the goods,services,and perform the work in accordance with the Contract Documents. 3. OBLIGATIONS OF THE CITY. The City shall pay the Contractor in accordance with the bid. 4. SOFTWARE LICENSE. If the equipment provided by the Contractor pursuant to this Contract contains software,including that which the manufacturer may have embedded into the hardware as an integral part of the equipment, the Contractor shall pay all software licensing fees. The Contractor shall also pay for all software updating fees for a period of one year following cutover. The Contractor shall have no obligation to pay for such fees thereafter. Nothing in the software license or licensing agreement shall obligate the City to pay any additional fees as a condition for continuing to use the software. 5. ASSIGNMENT. Neither party may assign, sublet, or transfer any interest or obligation in this Contract without the prior written consent of the other party, and then only upon such terms and conditions as both parties may agree to and set forth in writing. 6. TIME OF PERFORMANCE. The Contractor shall complete its obligations on or before August 28,2015. • • 7. PAYMENT. a, When the obligations of the Contractor have been fulfilled,inspected,and accepted, the City shall pay the Contractor$2,275.00. Such payment shall be made not later than thirty(30) days after completion,certification thereof,and invoicing by the Contractor. b. No final payment shall be made under this Contract until Contractor has satisfactorily established compliance with the provisions of Minn. Stat. Section 290.92. A certificate of the commissioner shall satisfy this requirement with respect to the Contractor or any subcontractor. • 8. EXTRA SERVICES. No claim will be honored for compensation for extra services or beyond the scope of this Agreement or the not-to-exceed price for the services identified in the proposal without written submittal by the Contractor,and approval of an amendment by the City, with specific estimates of type, time, and maximum costs, prior to commencement of the work. • 9. PROMPT PAYMENT TO SUBCONTRACTORS. Pursuant to Minnesota Statute 471.25, Subdivision 4a,the Contractor must pay any subcontractor within ten(10) days of the Contractor's receipt of payment from the City for undisputed services provided by the subcontractor. The Contractor must pay interest of one and one-half percent(1%%)per month or . any part of a month to subcontractor on any undisputed amount not paid on time to the subcontractor. The minimum monthly interest penalty payment for an unpaid balance of$100.00 or . . more is $10.00. For an unpaid balance of less than $100.00, the Contractor shall pay the actual • • penalty due to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from the Contractor shall be awarded its costs and disbursements, including attorney's fees,incurred in bringing the action. 10. WORKER'S COMPENSATION, If Contractor does public work,the Contractor shall obtain and maintain for the duration of this Contract, statutory Worker's Compensation Insurance and Employer's Liability Insurance as required under the laws of the State of Minnesota. 11. COMPREHENSIVE GENERAL LIABILITY. Contractor shall obtain the following minimum insurance coverage and maintain it at all times throughout the life of the Contract,with the City included as an additional name insured by endorsement: Bodily Injury: $2,000,000 each occurrence $2,000,000 aggregate,products and completed operations Property Damage: $2,000,000 each occurrence. $2,000,000 aggregate Products and Completed Operations Insurance shall be maintained for a minimum period of three (3) years after final payment and Contractor shall continue to provide evidence of such coverage to 2 City on an annual basis during the aforementioned period;or if any reason Contractor's work ceases before final payment,for a minimum period of three(3)years from the date Contractor ceases work. Property Damage Liability Insurance shall include coverage for the following hazards: X (Explosion) C (Collapse) U (Underground) Contractual Liability(identifying the contract): Bodily Injury: $2,000,000 each occurrence Property Damage: $2,000,000 each occurrence $2,000,000 aggregate Personal Injury,with Employment Exclusion deleted: $2,000,000 aggregate Comprehensive Automobile Liability(owned,non-owned,hired): Bodily Injury: $2,000,000 each occurrence • $2,000,000 each accident . • • .• • Property Damage: $2,000,000 each occurrence 12. MINNESOTA GOVERNMENT DATA PRACTICES ACT. Contractor must comply with the Minnesota Government Data Practices Act, Minnesota Statutes,Chapter 13, as it applies to (1) all data provided by the City pursuant to this Agreement, and (2) all data, created, collected, received, stored, used, maintained, or disseminated by Contractor pursuant to this Agreement. Contractor is subject to all the provisions of the Minnesota Government Data Practices Act,including but not limited to the civil remedies of Minnesota Statutes Section 13.08,as if it were a government entity. In the event Contractor receives a.request to release data, Contractor must immediately notify City. City will give Contractor instructions concerning the release of the data to the requesting party before the data is released. Contractor agrees to defend, indemnify, and hold City, its officials, officers, agents, employees, and volunteers harmless from any claims resulting from Contractor's officers', agents', city's, partners', employees', volunteers', assignees' or subcontractors'unlawful disclosure and/or use of protected data. The terms of this paragraph shall survive the cancellation or termination of this Agreement. 13. RECORDS. Contractor shall maintain complete and accurate records of expenses involved in the performance of services. • 14. WARRANTY. The Contractor guarantees that all new equipment warranties as specified within the bid shall be in full force and transferred to the City upon payment by the City. The Contractor shall be held responsible for any and all defects in workmanship, materials, and 3 equipment which may develop in any part of the contracted service,and upon proper notification by the City shall immediately replace, without cost to the City, any such faulty part or parts and damage done by reason of the same in accordance with the bid specifications. The Contractor further warrants to the City that all goods and services furnished under the Contract will be in conformance with Contract Documents and that the goods are of merchantable quality and are fit for the use for which they are sold. This warranty is in addition to any manufacturer's standard warranty,and any warranty provided by law. 15. NONDISCRIN.QNATION. All Contractors and subcontractors employed shall comply 'with all applicable provisions of all federal, state and municipal laws which prohibit discrimination in employment to members of a protected class and all rules and regulations, promulgated and adopted pursuant thereto. The Contractor will include a similar provision in all subcontracts entered into for the performance of this contract. 16. INDEMNITY. The Contractor agrees to defend,hold harmless,and indemnify the City, its officers,agents, and employees,for and against any and all claims, demands,actions,or causes of action, of whatever nature or character, arising from the Consultant's performance of work or services provided for herein.The Contractor shall take all reasonable precautions for the • safety of all employees on the site and shall provide reasonable protection to prevent damage or loss to the property on the site or properties adjacent thereto and to work, materials and equipment under the Contractor's control. 17. WAIVER. In the particular event that either party shall at any time or time waive • any breach of this Contract by the other, such waiver shall not constitute a waiver of any other or • . any succeeding breach of this Contract by either party,whether of the same or any other covenant, condition,or obligation. 18. GOVERNING LAW. The laws of the State of Minnesota govern the interpretation of this Contract. • 19. SEVERABILITY. If any provision,term,or condition of this Contract is found to be or become unenforceable or invalid, it shall not effect the remaining provisions, terms, and conditions of this Contract, unless such invalid or unenforceable provision, term, or condition renders this Contract impossible to perform. Such remaining terms and conditions of the Contract shall continue in full force and effect and shall continue to operate as the parties'entire contract. 20. ENTIRE AGREEMENT. This Contract represents the entire agreement of the parties and is a final,complete,and all inclusive statement of the terms thereof;and supersedes and terminates any prior agreement(s), understandings, or written or verbal representations made between the parties with respect thereto. 21. TERMINATION. This Agreement may be terminated by the City for any reason or for convenience upon written notice to the Contractor. In the event of termination, the City shall be obligated to the Contractor for payment of amounts due and owing for materials provided or for services performed or furnished to the date and time of termination. • 4 Dated: 07`7-7. 7 /9 ,2015. CITY OF FARMINGTON By: Todd Larson,Mayor By: avid Mclnigh, CttMdrninistrator 5 Dated: ,2015 CONTRACTOR: GARVEY CONSTRUCTION,INC. By: Its: • • 6 • PROPOSAL b "Fkhib If /4 Garvey Construction,Inc. 100 5th Street Farmington,MN.55024 Phone:651-463-4825 • Proposal Submitted To: Work performed at: CITY OF FARMINGTON ICE ARENA DATE.4-28-15 We hereby propose to furnish all the materiel end performed all the labor necessary for the completion of:. • TEAR OUT DEMO CONCRETE ROOF 2 WALLS HAUL AWAY RELAY 2-13 CRS WALLS ADD 4 COREFILL5 WILL LEAVE 412"BOLTS STICK UP 2"TO BOLT PLATE ON FOR TRUSSES • Note:Does not include import and export of materials unless itemized NOTICE IN ACORDANCE WITH MINNESOTA STATUTE ARE GIVEN ON THE SECOND PAGE HEREOF AND ARE DEEMED A PART OF THIS AGREEMENT. All material is guaranteed to be as specified,and the above work to be performed in accordance with the drawings and specifications submitted-for above work and completed in a substantial workmanlike manner for the sum of boilers( $ 2275.00 with payment to be made as follows: • Any alteration or deviation from above specifications involving extra costs,will be executed only upon written orders,and will become an extra charge over and above the estimate. All agreements contingent upon strikes,accidents or delays beyond our control. Owner to carry fire,tornado and other necessary insurance upon above work.Workmen's Compensation and Public Liability Insurance,on above work to be taken out by Garvey Construction,Inc.All accounts are due and payable upon substantial completion unless sooner owing as stated above,thereafter,all accounts shall bear interest at 18%per annum,computed monthly. Respectfully Submitted: Garvey Construction Note-this proposal may be withdrawn by us if BY: Colin Garvey Not accept with 15 days Title:Owner ACCEPTANCE OFD PROPOSAL The above prices,specifications and conditions are satisfactory and are hereb accepted.You are authorized to do the work as specified.Payment will be as outlined above Acce p ted 5,es" Signature Date � 19 o7p/s' EXHIBIT B Arena West Entrance Improvement Project Quote Tabulation CONTRACTOR QUOTE SUBMITTED Garvey Construction,Inc. $2,275.00 Ayars&Ayars,Inc. $3,171.00 Schumm Concrete,Inc. $3,250.00 • yy Z.■+ ti r+t� 1 "�r+l� 4c . i i.”. !.., tiiiii, iqiii,.,.„.,:itti ii,hithit.to,.._ t 1 s:., ii) . 4 ,i0 8 �Z . i, , ' .:;)$,:,t4.,:-!-,..4.4.;;11"1, 't-..li 1 . :I, ,, . .?. c 4,,,. .;.4.,i-ti ' 0 . 1 _..wAP•�1 �!1 • i ■ __ __ , . t r t y1 rjSrr 7'44 t 1 - qq r xr r . 1r„ iij?jt'. ?it;1 �1" f 1. _-V • �' tY i k:. �+ sjst�4i ; t I i�"„ , ,NtM ,? y3 ,,,ta s' vC-`$ rpp x iij ,-v 4.4 n4, .., r +... .z �< Y � "tom " ;( i:ar` QAR ,y City of Farmington 430 Third Street Farmington, Minnesota 651.280.6800 -Fax 651.280.6899 PO" ' www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad, Parks and Recreation Director SUBJECT: Approve Agreement Park Sign Landscape Concrete Curb Project-Parks and Recreation DATE: May 18, 2015 INTRODUCTION A majority of park signs have landscape concrete curbing around them that separates the landscape plants and wood mulch inside the container from the area mowed around the park signs. There have been 19 park signs installed over the past seven years that do not have any landscape concrete curb around them. DISCUSSION Existing park signs have a concrete curb around them that is useful for separating the landscaping and mulch from the mowed area around the sign. Since new park signs do not have this, quotes were solicited to create a uniform look for all park signs. Photos attached show a couple of park signs with a concrete curb and a couple of new park signs without a concrete curb. Parks and Facilities Supervisor Jeremy Pire met with two concrete contractors to explain the project and receive quotes for the project work. The project work will consist of prepping the existing sites around park signs,pouring and stamping the concrete edging and finish work. The color and stamp of the concrete edging will be similar to what exists around other park signs. Curb Creations,Inc. submitted the low quote for this project in the amount of$4,214.00. The proposal submitted is included in the Agreement Form and is shown as Exhibit A. Exhibit B shows a tabulation of the quotes received. While there may be other styles of landscape edging,the concrete curbing being recommended for installation will have a 30 year or longer shelf life before it will need to be replaced. Once the landscape concrete curb has cured adequately, low maintenance plants and shrubs will be planted inside the concrete container to dress them up, since the park signs serve as a gateway into the parks. Staff has received an offer of assistance from a community volunteer to plant the landscape shrubs and plants around the Jim Bell Park and Preserve park signs, which will be one of the parks involved in this project. Staff will also solicit planting assistance from the Adopt-A-Park groups who have adopted a park that have park signs involved in this project. BUDGET IMPACT There is funding in the Park Maintenance budget to cover the project cost. ACTION REQUESTED Staff is requesting the City Council approve the attached Agreement Form with Curb Creations,Inc. in the amount of$4,214.00 for installation of concrete landscape edging around 19 park signs. ATTACHMENTS: Type Description D Contract Agreement Form and Exhibit D Exhibit Quote Tabulation Form D Exhibit Photos AGREEMENT AGREEMENT made this /`a'lh day of• , 2015, between the CITY •OF FARM NGTON, a Minnesota municipaY corporation ("City"), and CURB CREATIONS,INC.,a Minnesota corporation("Contractor"). IN CONSIDERATION OF THE MUTUAL UNDERTAKINGS HEREIN CONTAINED,THE PARTIES AGREE AS FOLLOWS: I. CONTRACT DOCUMENTS. The following documents shall be referred to as the "Contract Documents", all of which shall be taken together as a whole as the contract between the • parties as if they were set verbatim and in full herein: A. This Agreement • B. Contractor's proposal attached as Exhibit"A," In the event of conflict among the provisions of the Contract Documents,the order in which they are listed above shall control in resolving any such conflicts with Contract Document "A" having• the first priority and Contract Document"B"having the last priority. 2. OBLIGATIONS OF THE CONTRACTOR. The Contractor shall provide the • goods,services,and perform the work in accordance with the Contract Documents. • • 3. OBLIGATIONS OF TUE CITY. The City shall pay the Contractor in accordance with the quote, 4. SOFTWARE LICENSE. If the equipment provided by the Contractor pursuant to this Contract contains software,including that which the manufacturer may have embedded into the hardware as an integral part of the equipment,the Contractor shall pay all software licensing fees. The Contractor shall also pay for all software updating fees for a period of one year following cutover. The Contractor shall have no obligation to pay.for such fees thereafter. Nothing in the software license or licensing agreement shall obligate the City to pay any additional fees as a conditions for continuing to use the software. • 5. ASSIGNMENT. Neither party may assign, sublet, or transfer any interest or obligation in this Contract without the prior written consent of the other party, and then only upon such terms and conditions as both parties may agree to and set forth in writing. 6. TIME OF PERFORMANCE. The Contractor shall begin work on or after May 19,2015 and complete its obligations on or before September 30,2015. 7. PAYMENT. a. When the obligations of the Contractor have been fulfilled,inspected,and accepted, the City shall pay the Contractor$4,214.00 for the project. Such payment shall be made not later than thirty(3 0)days after completion,certification thereof,and invoicing by the Contractor, b. No final payment shall be made under this Contract until Contractor has satisfactorily established compliance with the provisions of Minn. Stat. Section 290.92. A certificate of the commissioner shall satisfy this requirement with respect to the Contractor or any subcontractor. 8. EXTRA SERVICES. No claim will be honored for compensation for extra services or beyond the scope of this Agreement or the not-to-exceed price for the services identified in the proposal without written submittal by the Contractor, and approval of an amendment by the City, with specific estimates of type, time, and maximum costs, prior to commencement of the work. 9. PROMPT PAYMENT TO SUBCONTRACTORS. Pursuant to Minnesota • Statute 471.25, Subdivision 4a, the Contractor must pay any subcontractor within ten (10)days of the Contractor's receipt of payment from the City for undisputed services provided by the subcontractor. The Contractor must pay interest of one and one-half percent(1'/2%)per month or any part of a month to subcontractor on any undisputed amount not paid on time to the . • • subcontractor. The'ininimum monthly interest penalty papnent for an unpaid balance of$100.00 or . more i.,4110.-00. For an unpaid balance of less than $100.00;the•Contractor shall pay the,actual ... penalty'due to the subcontractor. A subcontractor who prevails in a.civil action to collect interest • • -penalties from the Contractor shall be awarded its costs.and disbursements, including attorney's fees,incurred in bringing the action. 10. WORKER'S COMPENSATION. If Contractor does public work,the Contractor shall obtain and maintain for the duration of this Contract, statutory Worker's Compensation Insurance and Employer's Liability Tnsurance as required under the laws of the State of Minnesota. 11. COMPREHENSIVE GENERAL LIABILITY. Contractor shall obtain the following minimum insurance coverage and maintain it at all times throughout the life of the Contract,with the City included as an additional name insured by endorsement: Bodily Injury: $2,000,000 each occurrence $2,000,000 aggregate,products and completed operations Property Damage: $2,000,000 each occurrence $2,000,000 aggregate Products and Completed Operations Insurance shall be maintained for a minimum period of three (3)years after final payment and Contractor shall continue to provide evidence of such coverage to • 2 City on an annual basis during the aforementioned period;or if any reason Contractor's work ceases before final payment,for a minimum period of three(3)years from the date Contractor ceases work. Property Damage Liability Insurance shall include coverage for the following hazards: X (Explosion) C (Collapse) U (Underground) Contractual Liability(identifying the contract): . Bodily Injury: $2,000,000 each occurrence Property Damage: $2,000,000 each occurrence $2,000,000 aggregate Personal Injury,with Employment Exclusion deleted: $2,000,000 aggregate Comprehensive Automobile Liability(owned,non-owned,hired): • .. Bodily Injury: $2,000,000 each occurrence • $2,000,000 each accident Property Damage: - - •• $2,000,000 each occurrence • 12. MINNESOTA GOVERNMENT DATA PRACTICES ACT. Contractor must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to (1) all data provided by the City pursuant to this Agreement, and (2) all data, created, collected, received, stored, used, maintained, or disseminated by Contractor pursuant to this Agreement. Contractor is subject to all the provisions of the Minnesota Government Data Practices Act,including but not limited to the civil remedies of Minnesota Statutes Section 13.08,as if it were a government entity. In the event Contractor receives a request to release data, Contractor must immediately notify City. City will give Contractor instructions concerning the release of the data to the requesting party before the data is released. Contractor agrees to defend,indemnify, and hold City, its officials, officers, agents, employees, and volunteers harmless from any claims resulting from Contractor's officers', agents', city's, partners', employees', volunteers', assignees' or subcontractors'unlawful disclosure and/or use of protected data. The terms of this paragraph shall survive the cancellation or termination of this Agreement. 13. RECORDS. Contractor shall maintain complete and accurate records of expenses involved in the performance of services. 14. WARRANTY. The Contractor guarantees that all new equipment warranties as specified within the bid shall be in full force and all warranty documents shall be transferred to the City upon payment by the City. The Contractor shall be held responsible for any and all defects in 3 workmanship,materials, and equipment which may develop in any part of the contracted service, and upon proper notification by the City shall immediately replace, without cost to the City, any such faulty part or parts and damage done by reason of the same in accordance with the bid specifications. The Contractor further warrants to the City that all goods and services furnished under the Contract will be in conformance with Contract Documents and that the goods are of merchantable quality and are fit for the use for which they are sold. This warranty is in addition to any manufacturer's standard warranty y,and any warranty provided by law. • 15. NONAISCRIIVI NATION. All Contractors and subcontractors employed shall comply with all applicable provisions of all federal, state and municipal laws which prohibit discrimination in employment to members of a protected class and all rules and regulations, promulgated and adopted pursuant thereto. The Contractor will include a similar provision in all subcontracts entered into for the performance of this contract. 16. INDEMNITY. The Contractor agrees to defend,hold harmless,and indemnify the City,its officers,agents, and employees, for and against any and all claims,demands,actions, or causes of action, of whatever nature or character, arising'from the Consultant's performance of work or services provided for herein. The Contractor shall take all reasonable precautions for the safety of all employees on the site and shall provide reasonable protection to prevent damage or loss to the property on the site or properties adjacent thereto and to work, materials and equipment under the Contractor's control. • • :r,• 17. WAIVER In the particular event that either party-shall at any time or times waive • any breach of this Contract by the other, such waiver shall constitute a waiver of any other or any succeeding breach of this Contract by either party, whether of the same or any other covenant, • condition,or obligation. • 18. GOVERNING LAW. The laws of the State of Minnesota govern the interpretation of this Contract. 19. SEVERABI ITY. If any provision,term,or condition of this Contract is found to be or become unenforceable or invalid, it ,shall not effect the remaining provisions, terms, and conditions of this Contract, unless such invalid or unenforceable provision, term, or condition renders this Contract impossible to perform. Such remaining terms and conditions of the Contract shall continue in full force and effect and shall continue to operate as the parties'entire contract. 20. ENTIRE AGREEMENT. This Contract represents the entire agreement of the parties and is a final,complete,and all inclusive statement of the terms thereof,and supersedes and terminates any prior agreement(s), understandings, or written or verbal representations made between the parties with respect thereto. 21. TERMINATION. This Agreement may be terminated by the City for any reason or for convenience upon written notice to the Contractor. In the event of termination, the City shall be obligated to the Contractor for payment of amounts due and owing for materials provided or for services performed or furnished to the date and time of termination. • 4 Dated: ,2015. CITY OF FARMINGTON By: Todd Larson,Mayor By: e(,1 • /(11‘) avid McKnig t,C Administrator • • • 5 Dated: ,2015 CONTRACTOR: CURB CREATIONS,INC. By: Its: Cee'LliKli--Pr Precision Concrete Job Number e� Landscape Edging Date, _D. V w 1724 3rd Ave,NE Buffalo,MN 55313 1' /: ©Q • 763-477-4532 A- CUSTOMER C I r 1 0 f 6 9 A , r 0 f Otp...T...4-Nr\--i ) f ) ADDRESS LI"30 '"i'`rkA-ckp s 5.e r 605 p,V...5,-, I)c-t‘,....Vr1£.S_Sy pt-nv%Sb1`t,) CITY gg -r'7)r T Q A .ZIP -5.50 Z* PHONE 1-T1S""'Si..W" REPRESENTATIVE J A C.k car 1 Z.,"S'3Z-91X14 CELL PHONE Cs).Q.14- £ • WORK ORDER I STATEMENT ESTIMATED FOOTAGE 3 . ACTUAL FOOTAGE AT$7 V.Fr $ AT$ /FT .$. EXTRAS $ EXTRAS $ EXTRAS $ p L ESTIMATED TOTAL $ J' '� EXTRAS $ DEPOSIT $ TOTAL $ RECEIVED BY LESS DEPOSIT PAID $ . ESTIMATED BALANCE a) LP1-- RECEIVED BY DUE ON COMPLETION $ • THE ESTIMATED FOOTAGE WILL BE ADJUSTED WHEN THEJOB BALANCE DUE ON COMPLETION $ IS COMPLETED ANDCTUAL FOOTAGE MEASURED. PLEASE PAY FROM THIS STATEMENT. CUSTOMER ACCEPTANCE• NO OTHER STATEMENT WILL BE SENT r _ ADDITIONAL BIDS DATE SOLD 5.5.zs• " 'F' -c-. V-2;r% -s,rt (14ii . iS JOB DETAILS DT.ate.o R c 1-1,4 C~I NEW EXISTING '(�. C.A �� L� MOLD STYLE Vi sr STAMP • Wysi A. rtn. T rwq. P.S. Vial. #• TEXTURE, 3,,,S 1 " r}� 1 ' k -P� .�- i BASE COLOR • I0 L. f } .c- 'S)G r., S 35 0 j ACCENT COLORS ad 0 Sr (i),A, S 'G� z ) )4 C � Cry) l ® 0,W 1 in r )V r", S3 C; kE co » tee. cur. E. L. - r$C. t)YALA --' Referrals 0 Y)C.s L S. 1..3 Cr f • ) z • HOW DID CUSTOMER HEAR ABOUT US? C.ID - ' s ` SI EXHIBIT B Request for Quotes Park Sign Curb Edging Project Quote Tabulation CONTRACTOR QUOTE SUBMITTED Curb Creations,Inc. $4,214.00 Creative Curbing $4,514.25 Park Signs without Concrete Border L _ • 4 ):t " i.> Parks Signs with Concrete Border 04* •10,16,4p impl 17 4 ' i>'L ft`.3.."!..- ;31 Viiii.... '• 1 0 1 li — _ uotrats titr Ilk NIP AR City of Farmington 140 430 Third Street Farmington,Minnesota �� 651.280.6800 -Fax 651.280.6899 .4 , www.ci.farmmgton.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Robin Hanson, Finance Director SUBJECT: Approve Bills-Finance DATE: May 18, 2015 INTRODUCTION Attached is the list of bills for April 30-May 8, 2015. DISCUSSION NA BUDGET IMPACT NA ACTION REQUESTED Approved the list of bills for April 30-May 8, 2015. ATTACHMENTS: Type Description D Exhibit List of Bills D. 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P < - 0 m N• Q m ■ \(O CO m a ° ° Lc,; O O O co O 0) • 'S 7 F- Lo �} [] a I. CO o m C ° N ": a- N (°O r CO° O) >. E N O < N O CO C co O 0 .O w 10 o a N U ao (0 N m 0 (O 0 N t U U Ot 10 Y 0 P 10 Z a- „. U 0104„ City of Farmington etr 1111 h 430 Third Street Farmington, Minnesota . 651.280.6800 -Fax 651.280.6899 444..4 46 www.ci.farmington.mn.us No iv' TO: Mayor, Councilmembers and City Administrator FROM: Robin Hanson,Finance Director SUBJECT: 2014 Comprehensive Annual Financial Report(CAFR) DATE: May 18,2015 INTRODUCTION Each year the city's financial records are audited by an independent public accounting firm. The goal of an independent audit is to provide reasonable assurance that the city's fmancial statements for the fiscal year-end are free of material misstatement. The audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Upon completion,the auditors render an audit opinion,review their management report with the city council, and the city publishes a Comprehensive Annual Financial Report(CAFR)to provide you, city staff, citizens, investors, and other interested parties with useful information concerning the city's operations and financial position. This year the city's financial records have been audited by Malloy,Montague, Karnowski, Radosevich& Co., P.A. (MMKR). Based upon their audit,they concluded there was a reasonable basis for rendering an unqualified opinion that the City of Farmington's financial statements for the fiscal year ended December 31, 2014, are fairly presented in conformity with GAAP. An unqualified opinion is issued when the independent auditor believes that the company's financial statements are sound; that is,the statements are free from material misstatement. Representatives of the audit firm will be at the city council meeting to review this year's audit,provide a financial overview of the city's 2014 results, share their internal control findings and answer questions.A copy of this year's Management Report, Special Purpose Reports and the CAFR are attached. DISCUSSION Management assumes full responsibility for the completeness, accuracy and reliability of the information presented in the CAFR. To provide a reasonable basis for making these representations,management has established a comprehensive internal framework that is designed both to protect the government's assets from loss,theft or misuse and to provide sufficient, reliable information for the preparation of the city's financial statements in conformity with Generally Accepted Accounting Principles (GAAP). The cost of internal controls should not outweigh their benefits,therefore,the City of Farmington's comprehensive framework of internal control has been designed to provide reasonable, rather than absolute assurance, that the financial statements will be free from material misstatement. As management,we assert that to the best of our knowledge and belief,the financial report is complete and reliable in all material respects. This past year,2014, was a very good year for the city and should be celebrated. Following are the financial highlights included in the Management Discussion and Analysis (MD&A). • The assets of the city exceeded liabilities by $114,011,672 (net position) at the close of the most recent fiscal year. Of this amount, $23,547,007 (unrestricted net position)may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net position increased by $773,150 in 2014. • The City's total bonded debt decreased by $3,811,739 or 11.0 percent during the fiscal year due to a combination of annual bond principal payments and payoff of the 2005B General Obligation Bonds with the proceeds from the 2013A bond refunding escrow and 2004B Tax Increment Bonds. • The city's governmental funds reported combined ending fund balances of$17,311,957 at December 31, 2014, a decrease of$527,980 from the prior year. Approximately 67.0 percent of this total amount, $11,605,267, is available for use within the city's constraints and policies. • The city has one interfund loan which was for the purchase of a new fire truck by the General Fund with funds from the Water Fund. This loan will be fully repaid by the end of 2017. • At the end of the current fiscal year,the unassigned fund balance for the General Fund was $3,993,191,or 34.8 percent of the 2015 General Fund budgeted expenditures and transfers out. From a financial perspective,while the city continues to face financial challenges which it needs to remain diligent in addressing, during 2014 the city's financial position continued to strengthen. The city's General Fund cash flow was positive each calendar month,the outstanding delinquent taxes receivable decreased,building permit activity was higher than budgeted,the city's outstanding debt decreased,the liquor stores had another solid year and modest increases in property tax values indicate the economy is continuing to improve. The Government Finance Officers Association(GFOA)awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Farmington for its Comprehensive Annual Financial Report(CAFR) for the year ended December 31, 2013. This was the fifth year the city received this prestigious national award. In order to be awarded this Certificate of Achievement,the government needs to publish an easily readable and efficiently organized CAFR and has satisfied both GAAP and applicable legal requirements. The Certificate of Achievement is valid for a period of only one year and we believe the current CAFR continues to meet the Certificate of Achievement program requirements. We will be submitting the 2014 report to the GFOA to determine eligibility for another certificate. As stated earlier,the responsibility for both the accuracy and completeness of the financial records rests with the city. I would like to recognize and thank everyone involved in making this report possible. • The Finance Department staff spends the most direct time creating and maintaining the City's fmancial records. They do an outstanding job. They should be very proud of their good work. • It is also very important to recognize the diligence of every city staff member,be it conservative spending, cash receipting, coding invoices and receipts, submitting supporting documentation, entering payroll information, every action directly contributes to the accuracy and completeness of the city's financial records. I appreciate their diligence, close attention to detail and patience in complying with our numerous accounting requirements. • The auditors did an excellent job. This was their first year. They were organized, asked very good questions, quickly learned the city's processes and policies,were very thorough and respectful, each staff person was technically very strong, and they completed the Fire Relief and city's audits on time. • Finally,I would like to thank you, Mayor and members of the City Council, for your support and the steps you have taken to continue to strengthen the city's finances and long-term fmancial planning. BUDGET IMPACT N/A ACTION REQUESTED Ask any questions you may have the auditors or city staff and once you are comfortable with the information a motion should be made to accept the auditor's reports. ATTACHMENTS: Type Description D Backup Material 2014 Management Report D Backup Material 2014 Special Purpose Reports D Backup Material 2014 City of Farmington CAFR Management Report for City of Farmington,Minnesota December 31,2014 THIS PAGE INTENTIONALLY LEFT BLANK PRINCIPALS Thomas M.Montague,CPA Thomas A.Karnowski CPA Paul A.Radosevich,CPA William J.Lauer.CPA LAMEMIM CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L.Holinka,CPA To the City Council and Management City of Farmington,Minnesota We have prepared this management report in conjunction with our audit of the City of Farmington, Minnesota's (the City) financial statements for the year ended December 31, 2014. The purpose of this report is to provide comments resulting from our audit process and to communicate information relevant to city fmances in Minnesota.We have organized this report into the following sections: • Audit Summary • Governmental Funds Overview • Enterprise Funds Overview • Government-Wide Financial Statements • Legislative Updates • Accounting and Auditing Updates We would be pleased to further discuss any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city fmances in Minnesota. Accordingly,this report is not suitable for any other purpose. Minneapolis, innesota May 12,2015 Malloy, Montague. Karnowski, Radosevich. & Co., P.A. 5353 Wayzata Boulevard• Suite 410•Minneapolis.MN 55416•Telephone:952-545-0424 •Telefax:952-545-0569•wnvw.mtnkr.com THIS PAGE INTENTIONALLY LEFT BLANK AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GoVERNMENT AUDITING STANDARDS We have audited the fmancial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31,2014,and the related notes to the financial statements. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City's fmancial statements for the year ended December 31,2014: • We have issued an unmodified opinion on the City's basic 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. • We reported no fmdings based on our testing of the City's compliance with Minnesota laws and regulations. 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 during the fiscal year ended December 31,2014. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus.All significant transactions have been recognized in the fmancial statements in the proper period. 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. -1- ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected.The most sensitive estimates affecting the fmancial statements were: • Depreciation — Management's estimates of depreciation expense are based on the estimated useful lives of the assets. • Net Other Post-Employment Benefit(OPEB)Liabilities—Actuarial estimates of the net OPEB obligation is based on eligible participants, estimated future health insurance premiums, and estimated retirement dates. • Compensated Absences—Management's estimate is based on current rates of pay, compensated absence balances,and the likelihood that sick leave will ultimately be paid at termination. We evaluated the key factors and assumptions used by management to develop these estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole. The fmancial 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 financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated May 12,2015. MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge,there were no such consultations with other accountants. OTHER AUDIT FINDINGS OR ISSUES We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. -2- OTHER MATTERS We applied certain limited procedures to Management's Discussion and Analysis, and Schedules of Funding Progress for the Farmington Fire Relief Association and City of Farmington Other Post-Employment Benefits Plan, which are required supplementary information (RSI) that supplements the basic fmancial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fmancial statements, and other knowledge we obtained during our audit of the basic fmancial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplemental information accompanying the financial statements which is not RSI. With respect to this supplemental information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplemental information to the underlying accounting records used to prepare the fmancial statements or to the fmancial statements themselves. We were not engaged to report on the introductory and statistical sections which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. -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, special revenue, debt service, and capital project funds. These funds are used to account for the basic services the City provides to all of its citizens, which are financed primarily with property taxes. The governmental fund information in the City's financial statements focuses on budgetary compliance, and the sufficiency of each governmental fund's current assets to finance its current liabilities. PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. For the 2013 fiscal year, local property tax levies provided 41.1 percent of the total governmental fund revenues for cities over 2,500 in population, and 35.5 percent for cities under 2,500 in population. Property tax levies certified by Minnesota cities for 2014 increased about 1.6 percent over 2013, compared to an increase of 2.3 percent the prior year. This moderate increase was due in part to a one-year levy limit for 2014 imposed on cities over 2,500 in population. The total market value of Minnesota cities increased about 1.1 percent for the 2014 levy year, ending a four-year trend of declining market values that began in 2010 and peaked with a state-wide decline of about 8.8 percent for levy year 2012. Market values showed modest increases in all property categories for 2014, with the largest gains in agricultural and non-homestead residential properties. Because the assessed valuation used for levying property taxes is based on values from the previous fiscal year (e.g. the market value for taxes payable in 2014 is based on estimated values as of January 1, 2013), market value improvement has lagged behind recent upturns in the housing market and the economy in general. The City's taxable market value decreased 5.8 percent for taxes payable in 2013 and increased 3.6 percent for taxes payable in 2014.The following graph shows the City's changes in taxable market value over the past 10 years: Taxable Market Value $2,000,000,000 - $1,800,000,000 $1,600,000,000 - $1,400,000,000 - - $1,200,000,000 1•111 t 0 $800,000,000 - - $600,000,000 $400,000,000 - $200,000,000 $- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -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 5.4 percent for taxes payable in 2013 and increased 3.0 percent for taxes payable in 2014. The following graph shows the City's change in tax capacities over the past 10 years: Local Net Tax Capacity $20,000,000 $18,000,000 - $16,000,000 MP r $14,000,000 $12,000,000 - -- - $10,000,000 - - -__- - - $8,000,000 - - -$6,000,000 - - -- $4,000,000 -- $2,000,000 - 200> 2006 2007 2008 2009 2010 2011 2012 2013 2014 The following table presents the average tax rates applied to city residents for each of the last two levy years,along with comparative state-wide and metro area rates. Rates expressed as a percentage of net tax capacity All Cities Seven-County City of State-Wide Metro Area Farmington 2013 2014 2013 2014 2013 2014 Average tax rate City 48.8 48.8 46.1 46.0 66.8 65.9 County 48.5 47.6 47.1 46.6 33.4 31.8 School 28.5 28.9 30.3 30.9 57.2 56.3 Special taxing 7.2 7.3 9.4 9.5 4.4 4.2 Total 133.0 132.6 132.9 133.0 161.9 158.2 The City's portion of the tax rate is higher than the average Minnesota city. 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. -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 31,2014,presented both by fund balance classification and by fund: Governmental Funds Change in Fund Balance Fund Balance as of December 31, Increase 2014 2013 (Decrease) Fund balances of governmental funds Total by classification Nonspendable $ 33,529 $ 13,388 $ 20,141 Restricted 5,673,161 6,881,858 (1,208,697) Assigned 7,612,076 7,865,678 (253,602) Unassigned 3,993,191 3,079,013 914,178 Total—governmental funds $ 17,311,957 $ 17,839,937 $ (527,980) Total by fund General $ 4,107,560 $ 3,092,401 $ 1,015,159 Debt service 5,034,389 6,028,557 (994,168) State aid construction capital project 1,936,898 1,677,577 259,321 Storm water trunk capital project 3,860,802 3,962,297 (101,495) Permanent improving revolving capital project 115,082 91,578 23,504 Nonmajor 2,257,226 2,987,527 (730,301) Total—governmental funds $ 17,311,957 $ 17,839,937 $ (527,980) In total,the fund balances of the City's governmental funds decreased by$527,980 during the year ended December 31, 2014. Restricted fund balances decreased$1,208,697,primarily due to the use of crossover bond proceeds held in escrow at the previous year end to retire $1,435,000 of outstanding bonds during 2014. Unassigned fund balance increased $914,178 due to positive operating results in the General Fund for the current year. -6- 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 the 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 Farmington Year December 31,2013 2012 2013 2014 Population 2,500-10,000 10,000-20,000 20,000-100,000 21,806 22,154 22,446 Property taxes $ 422 $ 388 $ 423 $ 503 $ 488 $ 491 Tax increments 30 42 40 7 — — Franchise and other taxes 31 39 34 11 12 12 Special assessments 63 58 72 158 43 37 Licenses and permits 27 26 38 19 30 23 Intergovernmental revenues 253 268 148 26 60 45 Charges for services 109 84 91 51 46 40 Other 56 33 30 9 7 17 Total revenue $ 991 $ 938 $ 876 $ 784 $ 686 $ 665 The City's governmental fund revenues for 2014 were $14,909,168, a decrease of$294,690 (1.9 percent) from the prior year. On a per capita basis,the City received$665 in governmental fund revenue for 2014, a decrease of$21 from the prior year. The majority of the decrease was in intergovernmental revenue,which was $15 per capita lower than the prior year due to a reduction of$504,547 in the amount of state aid received for street improvements. 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 its capital improvement bonds. -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. 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 Farmington Year December 31,2013 2012 2013 2014 Population 2,500-10,000 10,000-20,000 20,000-100,000 21,806 22,154 22,446 Current General government $ 129 $ 100 $ 83 $ 84 $ 76 $ 77 Public safety 244 235 239 229 230 217 Streets and highways 123 121 91 47 79 91 Culture and recreation 83 99 85 65 69 65 All other 66 73 91 8 7 2 645 628 589 433 461 452 Capital outlay and construction 303 288 219 25 58 82 Debt service Principal 164 133 102 134 334 106 Interest and fiscal charges 55 43 39 61 62 49 219 176 141 195 396 155 Total expenditures $ 1,167 $ 1,092 $ 949 $ 653 $ 915 $ 689 Total expenditures in the City's governmental funds for 2014 were$15,438,740,a decrease of$4,824,967 (23.8 percent) from the prior year. On a per capita basis, the City expended a total of$689 in 2014, a decrease of$226 from the previous year. The majority of the decrease was in debt service expenditures, which were$241 lower than last year due to a$3.94 million current refunding in 2013. -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 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, $12,000,000 - $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 ■ I Al $1,000,000 s_ 2010 2011 2012 2013 2014 mom Fund Balance =Cash Balance(Net of Borrowing) —Expenditures and Transfers Out The City's General Fund cash and investments, net of interfund borrowing at December 31, 2014 was $2,934,620, an increase of$1,330,382. Total fund balance at December 31, 2014 was $4,107,560, which was an increase of$1,015,159 from the prior year. As the graph illustrates,the City has generally been able to maintain healthy cash and fund balance levels as the volume of financial activity has grown. This is an important factor because a government, like any organization, requires a certain amount of equity to operate. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining the City's bond rating and resulting interest costs. Maintaining an adequate fund balance has become increasingly important given the fluctuations in state funding for cities in recent years. A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the unusual cash flow experienced throughout the year. The City's General Fund cash disbursements are made fairly evenly during the year other than the impact of seasonal services such as snowplowing, street maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Taxes comprise about 78 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 of $3,993,191 at the end of 2014 fiscal year represented approximately 34.8 percent of annual expenditures and transfers out based on 2015 levels. This is close to the City's policy that calls for maintaining an unassigned fun balance of between 40-50 percent of annual expenditures and transfers out. -9- The following chart reflects the City's General Fund revenue sources for 2014 compared to budget: General Fund Revenue Budget and Actual Taxes Intergovernmental IMM Fines and Forfeits I Charges for Services - Licenses and Permits MI All Other r gO '000 'JO 'ouo 'soo '0oo "io° '000 'soo '000 's '000 'a' 'o,O 'soo 'OO° 'soo °00 '°o '0 '°0, '610'O°o �O°o '0 'goo -'�o 'O°o 'qo '0 '�o '�O '0 '°o •Actual •Budget General Fund revenue for 2014 was $10,418,140, which was $535,921 (5.4 percent) more than budget. Tax revenue was $137,454 over budget due to a $120,000 levy to repay internal financing for a firetruck that is not included in the budget. Intergovernmental revenue exceeded budget by $165,985, as MSA street maintenance, fire pension aid, and police aid were all higher than projected. Revenue from licenses and permit fees were $96,855 higher than the City's conservative budget. Finally, revenue in the "all other" category exceeded budget by $104,876, mainly due to a positive market value adjustment on the City's investment portfolio. The City does not budget for market value fluctuations on investments, as this revenue is not realized until the investments are sold. 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. General Fund Revenue by Source Year Ended December 31, $9,000,000 - $8,000,000 $7,000,000 $6,000,000 - $5,000,000 $4,000,000 - - $3,000,000 $2,000,000 $1,000,000 �+ — Taxes Intergovernmental Fines and Forfeits Charges for Licenses and All Other Services Permits ■2010 ■2011 ❑2012 ■2013 ■2014 Total General Fund revenue for 2014 was $152,371 (1.5 percent)higher than last year. Intergovernmental revenue increased $279,273 from the prior year, mainly due to the City receiving increased local government aid under a new formula. License and permit revenues declined $149,945 from last year due to a decrease in building permits. All other revenues were $192,579 higher than last year, mainly due to the market value fluctuations in the City's investment portfolio. -10- The following graphs illustrate the components of General Fund spending for 2014 compared to budget: General Fund Expenditures Budget and Actual General Government Public Safety Public Works Parks and Recreation All Other 4 '8r '2 4 4 4 4 Ts 5' °° 'o°o ''roo '6bo ''ro 'O o 'Oo s°o °o 'so 'O° "` o o s°o 00 '°o '6/7'6o �%o b° �o°° o°o cbo °° q7 b •Actual •Budget General Fund expenditures for 2014 were $9,857,077, which was $679,426 (6.4 percent) under budget. Expenditures were under budget in almost every department due to conservative spending, with the largest savings in general government($207,475), public safety($333,063),and public works($100,335). 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, $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 $1,500,000 $1,000,000 $500,000 General Public Safety Public Works Parks and All Other Government Recreation ■2010 ■2011 ❑2012 •2013 •2014 Total General Fund expenditures for 2014 were $621,826 (5.9 percent) lower than the previous year. The majority of the difference was in public safety expenditures, which were $593,138 lower than the prior year due to the purchase of a firetruck for approximately$570,000 in 2013. -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 fmancial trends and activities of the City's enterprise funds,which includes the Liquor Operations, Sewer Operations, Solid Waste, Storm Water,Water,and Street Light Funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the fmancial position of the City's enterprise funds during the year ended December 31,2014,presented both by classification and by fund: Enterprise Funds Change in Financial Position Net Position as of December 31, Increase 2014 2013 (Decrease) Net position of enterprise funds Total by classification Net investment in capital assets $ 55,685,476 $ 57,427,060 $ (1,741,584) Restricted—future Drinking Water Treatment Plant 2,160,566 2,159,566 1,000 Unrestricted 10,396,218 8,891,769 1,504,449 Total—enterprise funds $ 68,242,260 $ 68,478,395 $ (236,135) Total by fund Liquor Operations $ 1,060,244 $ 806,900 $ 253,344 Sewer Operations 21,652,653 21,800,965 (148,312) Solid Waste 1,314,332 1,028,473 285,859 Storm Water 14,104,609 14,479,717 (375,108) Water 30,031,939 30,327,952 (296,013) Street Light 78,483 34,388 44,095 Total—enterprise funds $ 68,242,260 $ 68,478,395 $ (236,135) In total, the net position of the City's enterprise funds decreased by $236,135 during the year ended December 31,2014. The City's net investment in capital assets decreased$1,741,584 during the year due to depreciation. Unrestricted net position increased by $1,504,449, as most of the City's enterprise operations had positive operating results. -12- LIQUOR OPERATIONS FUND The following graph presents five years of comparative operating results for the City's Liquor Operations Fund: Liquor Operations Fund Year Ended December 31, $5,000,000 $4,500,000 $4,000,000 • — $3,500,000 , — $3,000,000 i $2,500,000 i I $2,000,000 , $1,500,000 , $1,000,000 I 1 $500,000 $— 7 174 '7 2010 2011 2012 2013 2014 •Sales •Cost of Sales ❑Operating Expenses •Operating Income(Loss) The City's Liquor Operation Fund ended 2014 with a total net position of $1,060,244, an increase of $253,344 from the prior year. Of this, $5,931 represents the City's investment in liquor operation capital assets, leaving an unrestricted net position of$1,054,313. The Liquor Operation Fund had gross sales of$4,639,194 in 2014, an increase of$117,740 (2.6 percent) from the previous year. Gross profit was $1,171,397,about 25.3 percent of sales. Operating expenses for 2014 were $848,037, an increase of$20,235 (2.4 percent)from the previous year, due to increased salaries and purchased services. -13- SEWER OPERATIONS FUND The following graph presents operating revenues over the last five years for the City's Sewer Operations Fund: Sewer Operations Fund Year Ended December 31, $2,000,000 $1,750,000 $1,500,000 . . $1,250,000 . . fl .$750,000 :$500,000 . • $250,000 MI= Mow II $(250,000) 2010 2011 2012 2013 2014 =Operating Revenue Operating Expenses Income Before Depreciation —Operating Income(Loss) The Sewer Operations Fund ended 2014 with a total net position of$21,652,653, a decrease of$148,312 from the prior year. Of this, $19,113,558 represents the investment in sewer collection system capital assets, leaving an unrestricted net position of$2,539,095. Operating revenue in the Sewer Operations Fund was $1,843,746 for 2014, an increase of $26,983 (1.5 percent)from the prior year due to increased sewer rates. Operating expenses for 2014 were $1,710,843, an increase of$85,623 (5.3 percent) from the previous year. The largest factor contributing to the change was an increase of approximately $74,000 in disposal fees paid to Metropolitan Council Environmental Services. -14- SOLID WASTE FUND The following graph presents five years of comparative operating results for the City's Solid Waste Fund: Solid Waste Fund Year Ended December 31, $2,250,000 $2,000,000 - $1,750,000 $1,500,000 $1,250,000 — $1,000,000 $750,000 $500,000 $250,000 $- $(250,000) 2010 2011 2012 2013 2014 I I Operating Revenue Operating Expenses Income Before Depreciation —Operating Income(Loss) The Solid Waste Fund ended 2014 with a total net position of$1,314,332, an increase of$285,859 from the prior year. Of this, $183,486 represents the investment in solid waste operation capital assets, leaving an unrestricted net position of$1,130,846. Operating revenue in the Solid Waste Fund was $1,979,623 for 2014, an increase of$27,446(1.4 percent) from the prior year. Operating expenses for 2014 were $1,600,434, a decrease of $58,113 (3.5 percent) from the previous year. The largest factors contributing to the change were decreases in personnel costs, and a decrease in purchased services due to the City entering into a new recycling contract in 2014 at a more favorable price. -15- STORM WATER FUND The following graph presents operating revenues over the last five years for the City's Storm Water Fund: Storm Water Fund Year Ended December 31, $750,000 - $600,000 $450,000 $300,000 $150,000 $- $(150,000) $(300,000) 2010 2011 2012 2013 2014 o Operating Revenue =IN Operating Expenses Operating Income(Loss) Income Before Depreciation The Storm Water Fund ended 2014 with a total net position of$14,104,609, a decrease of$375,108 from the prior year. Of this, $13,402,037 represents the investment in storm water operation capital assets, leaving an unrestricted net position of$702,572. Operating revenue in the Storm Water Fund was $559,327 for 2014, a decrease of$5,839 (1.0 percent) from the prior year. Operating expenses for 2014 were $615,684, an increase of$102,102 (19.9 percent) from the previous year. Most of the increase was in purchased service costs, due to start-up costs for a hydro modeling project with the city of Lakeville and the initial design costs for the 195th Street Reconstruction Project. -16- WATER FUND The following graph presents five years of comparative operating results for the City's Water Fund: Water Fund Year Ended December 31, $2,000,000 $1,700,000 $1,400,000 $1,100,000 MI$800,000 . $500,000 $200,000 INI $(100,000) $(400,000) 2010 2011 2012 2013 2014 NNE Operating Revenue o Operating Expenses —Operating Income(Loss) Income Before Depreciation The Water Fund ended 2014 with a total net position of$30,031,939, a decrease of$296,013 from the prior year. Of this, $22,980,464 represents the investment in water distribution system capital assets, $2,160,566 is restricted for a future drinking water treatment plant, and unrestricted net position is $4,890,909. Operating revenue in the Water Fund for 2014 was $1,499,091, a decrease of$59,309 (3.8 percent) from the prior year due to a decrease in water consumption of about 3.4 percent. Water Fund operating expenses for 2014 were $1,409,961, a decrease of$16,986 (1.1 percent) from the previous year,mainly in materials and supplies. -17- STREET LIGHT FUND The following graph presents operating revenues over the last five years for the City's Street Light Fund: Street Light Fund Year Ended December 31, $225,000 $200,000 $175,000 ■ $lso,000 � ■ $125,000 111111 . i4°°o ■,000 1111 $(25,000) $(50,000) 2010 2011 2012 2013 2014 I !Operating Revenue Operating Expenses Operating Income(Loss) Street Light Fund operating revenue was$219,052 for 2014,up$2,333 (1.1 percent)from the prior year. Operating expenses were$174,957 for 2014, a decrease of$9,877 (5.3 percent)from the previous year. Unrestricted net position increased $44,095 in 2014, ending the year at$78,483. -18- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information,the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide statements provide information on the total cost of delivering services,including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what your city owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled.However,those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, net position is divided into three components:net investment in capital assets,restricted,and unrestricted. The following table presents the components of the City's net position as of December 31, 2014 and 2013,for governmental activities and business-type activities: As of December 31, Increase 2014 2013 (Decrease) Net position Governmental activities Net investment in capital assets $ 23,383,175 $ 23,462,934 $ (79,759) Restricted 9,235,448 11,669,054 (2,433,606) Unrestricted 13,150,789 9,628,139 3,522,650 Total governmental activities 45,769,412 44,760,127 1,009,285 Business-type activities Net investment in capital assets 55,685,476 57,427,060 (1,741,584) Restricted 2,160,566 2,159,566 1,000 Unrestricted 10,396,218 8,891,769 1,504,449 Total business-type activities 68,242,260 68,478,395 (236,135) Total net position $ 114,011,672 $ 113,238,522 $ 773,150 The City's total net position at December 31,2014 was $773,150 higher than the previous year-end. The City's net position increased $1,009,285 from governmental activities, and decreased $236,135 from business-type activities. The restricted net position of the governmental activities decreased $2.4 million in 2014, mainly due to the use of restricted assets held in escrow for a bond refunding. The unrestricted portion of governmental net position increased$3.5 million,due in part to the improvement in the City's General Fund. The business-type activities net investment in capital assets decreased$1.7 million in 2013,mainly due to depreciation. The unrestricted portion of the business-type activities net position increased $1.5 million due to the positive operating results of the City's enterprise operations. -19- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City's yearly revenues and expenses, as well as any other transactions that increase or reduce total net positions. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based fmancial statements. This statement includes the cost of supplies used,depreciation of long-lived capital assets,and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2014 and 2013: 2014 2013 Program Expenses Revenues Net Change Net Change Net(expense)revenue Governmental activities General government $ 1,940,630 $ 557,339 $ (1,383,291) $ (1,076,705) Public safety 5,192,091 773,836 (4,418,255) (4,319,479) Public works 4,893,341 776,059 (4,117,282) (2,926,987) Parks and recreation 1,730,734 610,089 (1,120,645) (1,145,174) Economic development 49,417 83,959 34,542 94,292 Interest on long-term debt 1,020,096 — (1,020,096) (1,290,439) Business-type activities Liquor 4,315,834 4,639,194 323,360 315,396 Sewer 1,712,146 1,843,746 131,600 280,727 Solid waste 1,600,434 2,000,623 400,189 312,930 Storm water 615,684 559,327 (56,357) 51,584 Water 1,410,214 1,499,091 88,877 147,853 Street light 174,957 219,052 44,095 31,885 Total net(expense)revenue $ 24,655,578 $ 13,562,315 (11,093,263) (9,524,117) General revenues Property taxes 10,962,860 10,748,581 Franchise taxes 269,208 259,671 Unrestricted grants 246,597 24,845 Investment earnings 387,748 (72,479) Gain on sale of asset — 73,354 Total general revenues 11,866,413 11,033,972 Change in net position $ 773,150 $ 1,509,855 One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way the City's governmental and business-type operations are financed. The table clearly illustrates the dependence of the City's governmental operations on general revenues, such as property taxes and unrestricted grants. It also shows that, for the most part,the City's business-type activities are generating sufficient program revenues (service charges and program-specific grants) to cover expenses. This is critical given the current downward pressures on the general revenue sources. -20- LEGISLATIVE UPDATES The 2014 legislative session began with a projected budget excess for the remainder of the biennium of $1.09 billion, later revised upward to a projected excess of$1.23 billion in the February 2014 economic forecast. The Legislature utilized a portion of the projected excess to bolster the state's financial condition;repaying$246 million"borrowed"from K-12 education through previous financing shifts, and using$150 million to replenish the state"Rainy Day Fund"budget reserve.The Legislature also approved increases to future funding for local government aid, and expanded the sales tax exemption approved for cities in 2013 to include joint powers entities and other instrumentalities of local government. The following is a summary of recent legislation affecting Minnesota cities in 2014 and into the future: Local Government Aid (LGA)—The Legislature completely overhauled the LGA formula for fiscal year 2014 and thereafter, creating a three-tiered formula that includes separate "need factor" calculations for cities with populations under 2,500, between 2,500 and 10,000, or over 10,000. The new formula simplified the LGA calculation, and reduced the volatility of the LGA distribution by limiting the amount it may decline in a given year. Under the new formula,the minimum LGA 2014 distribution for each city was an amount equal to their 2013 LGA. Beginning in 2015, any reduction to a city's calculated LGA distribution will be limited to the lesser of$10 per capita, or 5 percent of their previous year net tax levy. For cities that gain under the new formula, the increases will be distributed proportionate to their unmet need, as determined by the new "need factor" calculations. The state-wide LGA appropriation was $507.6 million for fiscal 2014, $516.9 million for 2015, and $519.4 million for fiscal 2016 and thereafter. Sales Tax Exemption—Cities are exempted from paying sales tax on qualifying purchases, effective for purchases made on or after January 1, 2014. Purchases of goods or services by an exempt local government for a publically provided liquor store, gas or electric utility, golf course, marina, campground, café, Laundromat, solid waste hauling or recycling operation, or landfill will remain taxable.The definition of"cities"for this statute include both home-rule and statutory cities. The 2014 Legislature extended the definition of tax exempt local government to include all special district; city, county, or township instrumentalities; economic development authorities; housing and redevelopment authorities; and all joint power boards or organizations. However, this expanded exemption list is not effective until January 1,2016. Proposed Property Tax Levy Certification Date—The deadline for cities to certify their proposed annual tax levies was extended from September 15 to September 30. Agricultural Homestead Market Value Credit— The rate of agricultural homestead market value was increased to a maximum of$490 at a market value of$270,000 and over. Capital Investment Act Requirements — The Legislature approved capital improvement projects totaling about$1.1 billion under two separate capital investment(bonding) acts. Both require that,to the extent practicable, a public entity receiving an appropriation of public money for a project under these acts must assure those facilities are built with American-made steel. Authority to Inspect Public Buildings and State-Licensed Facilities—A formal delegation process was established that must be used by the state Department of Labor and Industry (DLI) when delegating the authority to inspect public buildings and state-licensed facilities to local building officials. The new provisions did not alter the circumstances under which the DLI is required to delegate this authority in most circumstances, only the process to be followed. However, for certain smaller construction projects designated as "reserved projects," the DLI is now required to delegate inspection authority to any municipality with a designated building official without going through the formal delegation process. -21- Open Meeting Law—A change was made to the Open Meeting Law to clarify that the use of social media by members of a public body does not violate the Open Meeting Law if the use is limited to exchanges open to the public. The new statute specifically excludes email but does not otherwise define the term social media. Deputy Registrar Residency — The statutory requirement that an individual appointed as deputy registrar for a statutory or home-rule charter city be a resident of the county in which the city is located was repealed. Local Campaign Finance — Changes were made to increase the campaign contribution limits for local elections. For candidates in a territory with a population of 100,000 or less, the contribution limits were raised to $600 in an election year and $250 in a non-election year. For candidates in a territory with a population over 100,000,the limits were raised to$1,000 in an election year and$250 in a non-election year. In addition, all campaign fmance reports required to be filed with a local government must now be published on the local government's website, if the local government maintains a website. Data Practices—Several changes were made to address unauthorized access of private data by public employees, requiring local governments to: establish security measures to help ensure private data is only accessible to public employees whose work assignment reasonably requires access to the data, and that the data is only being accessed by those individuals for the purposes of their work assignment; follow the data breach reporting requirements that were previously only applicable to state agencies; and perform annual security assessments of personal information maintained by the entity. The statute also states that accessing private data without authorization is a misdemeanor, and willful violation by a public employee constitutes just cause for suspension without pay or dismissal. Part-Time Peace Officers—A change in the statutes now prohibits law enforcement agencies from hiring new part-time peace officers, existing part-time peace officers from transferring to new agencies, and the Peace Officer Standards and Training Board from licensing new part-time peace officers. Part-time peace officers that are currently employed may continue to serve indefinitely with their current employer, but must turn in their license upon leaving their current place of employment or otherwise becoming unemployed. Responsible Contractor Requirement — Contractors who bid on public contracts in excess of $50,000 are now required to certify that they are a "responsible bidder" in order to be awarded a contract as the lowest responsible bidder or best value alternative.A responsible contractor must be in compliance with various state and federal requirements for income tax, workers' compensation, unemployment insurance, minimum wage, and safety. City solicitations for bid must include: the definition of "responsible contractor," which may include criteria in addition to the statutory requirements established by the city, or reference to the statutory definition; a statement that a contractor failing to meet the criteria or verify compliance is ineligible to be awarded or perform work on the contract; a statement that submitting a false verification renders the contractor ineligible and can result in termination of the contract; and a statement requiring the contractor to provide copies of verification forms for all subcontractors upon request. Cities are not obligated to verify any of the information in the contractor verification; and have no liability if reasonably relying on the certification when awarding the contract, or declining to award the contract based on a reasonable determination that a contractor failed to verify compliance. Disaster Assistance Contingency Fund — A new state account was created to provide emergency cash flow for local governments located in counties declared federal disaster areas. The fund may be used to meet non-federal fund matching requirements to speed the availability of federal funds. -22- Pensions—A number of changes to the Public Employees Retirement Association (PERA) General Plan were adopted, including: • The minimum salary threshold for inclusion into the PERA General Plan was changed from $425 in any one month to $5,100 on any year for non-school employees or$3,800 in any year for school employees. • Employers are required to provide written notice to any employee excluded from membership in the PERA General Plan within two weeks of the determination on a form prescribed by the PERA executive director. • PERA contribution rates for both employees and employers were increased by 0.25 percent of salary effective January 1,2015. -23- ACCOUNTING AND AUDITING UPDATES GASB STATEMENT No.68-ACCOUNTINGAND FINANCIAL REPORTING FOR PENSIONS-AN AMENDMENT OF GASB STATEMENT NOS.27 AND 50 The primary objective of this statement is to improve accounting and fmancial reporting by state and local governments for pensions. This statement replaces the requirements of GASB Statement Nos. 27 and No. 50, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. The requirements of GASB Statement Nos. 27 and No. 50 remain applicable for pensions that are not covered by the scope of this statement. This statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources,deferred inflows of resources, and expenses/expenditures. In addition,this statement details the recognition and disclosure requirements for employers with liabilities (payables) to a defmed benefit pension plan and for employers whose employees are provided with defmed contribution pensions. This statement also addresses circumstances in which a non-employer entity has a legal requirement to make contributions directly to a pension plan. This statement is effective for financial statements for fiscal years beginning after June 15,2014.Earlier application is encouraged. Included in this statement are major changes in how employers that participate in cost-sharing pension plans, such as the Teachers' Retirement Association (TRA) and PERA, account for pension benefit expenses and liabilities. In financial statements prepared using the economic resources measurement focus and accrual basis of accounting (government-wide and proprietary funds), a cost-sharing employer that does not have a special funding situation is required to recognize a liability for its proportionate share of the net pension liability of all employers with benefits provided through the pension plan. A cost-sharing employer is required to recognize pension expense and report deferred outflows of resources and deferred inflows of resources related to pensions for its proportionate share of collective pension expense and collective deferred outflows of resources and deferred inflows of resources related to pensions.In addition,the effects of(1)a change in the employer's proportion of the collective net pension liability and (2) differences during the measurement period between the employer's contributions and its proportionate share of the total of contributions from employers included in the collective net pension liability are required to be determined. These effects are required to be recognized in the employer's pension expense in a systematic and rational manner over a closed period equal to the average of the expected remaining service lives of all active and inactive employees that are provided with pensions through the pension plan. GASB STATEMENT NO.72-FAIR VALUE MEASURE AND APPLICATION GASB Statement No. 72 addresses accounting and financial reporting issues related to fair value measurements. The requirements of this statement are intended to enhance comparability among government fmancial statements by requiring certain assets and liabilities be reported at fair value,using a consistent definition of fair value and accepted valuation techniques. The requirements of this statement are effective for fmancial statements for periods beginning after June 15, 2015, with earlier application encouraged. GASB Statement No. 72 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are generally assumed to take place in the government's principal or most advantageous market, taking into account the highest and best use for a nonfmancial asset, and assuming market participants would act in their economic best interest. The statement requires a government to use measurement techniques that are appropriate under the circumstances and for which sufficient data are available to measure fair value; consistent with a market, (replacement)cost, or income approach. It also establishes a hierarchy of inputs to be used in valuation techniques. -24- The statement establishes or clarifies the applicability of fair value measurement for certain assets and liabilities. Fair value is generally required for investments, defined as securities or other assets held primarily for the purpose of generating income, or which have a present service capacity based solely on their ability to generate cash. The statement requires measurement at acquisition value for donated capital assets, donated works of art, historical treasures, and capital assets received through a service concession arrangement. The statement also outlines the required financial statement disclosures about fair value measurements,valuation techniques,and the hierarchy of inputs used for valuation. CHANGES TO REQUIREMENTS FOR FEDERAL GRANTS In December 2013, the OMB issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Audits, which supersedes all or parts of eight OMB circulars; consolidating federal cost principles, administrative principles, and audit requirements in one document. The "Super Circular" includes a number of significant changes to the federal Single Audit process, including: an increase in dollar threshold for requiring a Single Audit from $500,000 to $750,000; changes to the thresholds and process used for determining major programs; reductions in the percentages of expenditures required to be covered by a Single Audit from 50 percent to 40 percent for high-risk auditees and from 25 percent to 20 percent for low-risk auditees;revised criteria for determining low-risk auditees; and an increase in the threshold for reporting questioned costs from $10,000 to $25,000. Auditees are required to implement the administrative requirements of the new "Super Circular" by December 26, 2014. The revised audit requirements will be effective for fiscal year 2015 city audits, with an optional one-year grace period for implementing the new procurement standards included in this guidance. -25- COSO INTERNAL CONTROL FRAMEWORK The clarified auditing standards applicable to governmental audits incorporate a definition of internal control that is based on the internal control integrated framework developed and issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In May 2013, COSO issued an updated framework which supersedes the original after December 15, 2014. The new COSO framework retains the basic defmition of internal control and its five components established in its original framework, along with the fundamental requirements to consider these five components and to use judgment when assessing and evaluating the effectiveness of a system of internal controls. The new COSO framework enhances and clarifies a number of concepts from the original framework to make it easier to use and apply. One of the more significant enhancements was the establishment of 17 principles, associated with the 5 components of internal control, intended to assist users in understanding the requirements of effective internal control and designing effective systems of internal control. The 5 components of internal control and 17 underlying principles are as follows: Control Environment— 1. Organization demonstrates a commitment to integrity and ethical values. 2. Governing body is independent from management and exercises oversight control. 3. Management establishes structure,reporting lines,authority,and responsibilities. 4. Organization demonstrates a commitment to the competence of individuals involved with internal control. 5. Organization holds individuals accountable for internal control responsibilities. Risk Assessment— 6. Organization specifies clear objectives for the identification and assessment of risks. 7. Organization identifies and analyzes risk. 8. Organization assesses the potential for fraud risks. 9. Organization identifies and assesses significant changes that could impact internal control. Control Activities— 10. Organization selects and develops control activities to mitigate risks. 11. Organization selects and develops general IT controls. 12. Organization establishes and implements control policies and procedures. Information and Communication— 13. Organization uses relevant, quality information to support internal control. 14. Organization communicates internal control information internally. 15. Organization communicates internal control information externally. Monitoring— 16. Organization conducts ongoing and/or separate internal control evaluations. 17. Organization evaluates and communicates deficiencies to responsible parties for corrective action. COSO defines an effective system of internal control as one that reduces to an acceptable level the risk of failing to achieve an organizational objective in the areas of operations, compliance, or reporting. According to the new framework, an organization can achieve effective internal control by applying all of the principles listed above. To achieve this, each of these five components and the relevant principles must be present and functioning, and the five components must operate in an integrated manner. Local governments should be reviewing their internal control systems to assure these principles have been incorporated and implemented. -26- CITY OF FARMINGTON DAKOTA COUNTY,MINNESOTA Special Purpose Audit Reports Year Ended December 31,2014 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON DAKOTA COUNTY,MINNESOTA Special Purpose Audit Reports Year Ended December 31,2014 Table of Contents Page Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 1-2 Independent Auditor's Report on Minnesota Legal Compliance 3 Schedule of Findings and Responses 4 THIS PAGE INTENTIONALLY LEFT BLANK PRINCIPALS Thomas M.Montague,CPA Thomas A.Kamowaki,CPA Paul A.Radosevich.CPA William J.Lauer,CPA -M CERTIFIED PUBLIC James H.Eicten,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 To the City Council and Management City of Farmington,Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the fmancial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Farmington, Minnesota (the City) as of and for the year ended December 31, 2014, and the related notes to the fmancial statements, which collectively comprise the City's basic financial statements,and have issued our report thereon dated May 12,2015. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the fmancial 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 fmancial 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Responses as item 2014-001 to be a material weakness. (continued) -1- Malloy, Montague, Karnowski, Radosevich. & Co., P.A. 5353 Wayzata Boulevard•Suite 410•Minneapolis.Mir 55416•Telephone:952.545.0424•Telefax:952-545-0569•www.mmhr.com COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City's fmancial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements,noncompliance with which could have a direct and material effect on the determination of 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 RESPONSE TO FINDING 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. /1014011400, K •, A A . Minneapolis,Minnesota May 12,2015 -2- PRINCIPALS Thomas M.Montague,CPA Thomas A.Karnowski,CPA Paul A.Radosevich.CPA William J.Lauer,CPA ta CERTIFIED PUBLIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L Holinka,CPA INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE To the City Council and Management City of Farmington,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 fmancial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Farmington, Minnesota (the City) as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements,and have issued our report thereon dated May 12,2015. MINNESOTA LEGAL COMPLIANCE The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of the State Auditor pursuant to Minnesota Statute § 6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment fmancing. Our audit considered all of the listed categories. In connection with our audit,nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. m12.I ►, ll034.014 , Kmo cc,. 4 ea A A • Minneapolis,Minnesota May 12,2015 -3- 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 CITY OF FARMINGTON Schedule of Findings and Responses Year Ended December 31,2014 MATERIAL WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL REPORTING 2014-001 INADEQUATE SEGREGATION OF DUTIES Criteria—Internal control over financial reporting. Condition — The City of Farmington, Minnesota (the City) has inadequate segregation of duties in a number of areas, including, but not limited to, controls over cash disbursements and payroll. Context—This is a current year finding. Cause—The inadequate segregation of duties is primarily caused by the limited size of the City's Finance Department staff. Effect—One important element of internal accounting controls is an adequate segregation of duties such that no individual has responsibility to execute a transaction,have physical access to the related assets, and have responsibility or authority to record the transaction. A lack of segregation of duties subjects the City to a higher risk that errors or fraud could occur and not be detected in a timely manner in the normal course of business. Recommendation — We recommend that the City continue to review its accounting procedures and internal controls to segregate accounting functions wherever it is considered practical and cost-beneficial. Management Response—There is no disagreement with the audit fmding. The City reviews and makes improvements to its internal control structure on an ongoing basis to maximize the segregation of duties in all areas within the limits of the staff available. However, the City does not consider it cost-beneficial at this time to increase the size of its Finance Department staff in order to further segregate accounting functions. -4- Comprehensive Annual Financial Report ''. 4._ . i y `9 !% ` i 4 '4 , . 1=ar` ington 6 _ " ✓ Y $- "Iv . sr' �, • .-. ' . a ` , 1, } +s :' t ` .0 v r 1 Photo: "Americana" by Anna Koch City Of Farmington, Minnesota Year Ended December 31 , 2014 David McKnight - City Administrator Prepared by: Finance Department CITY OF FARMINGTON DAKOTA COUNTY,MINNESOTA Comprehensive Annual Financial Report , for the Year Ended December 31,2014 David McKnight City Administrator Report Prepared by Finance Department Member of Government Finance Officers Association of the United States and Canada THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal i v GFOA Certificate of Achievement vi Organizational Chart vii Elected Officials and Executive Staff viii FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 1-3 MANAGEMENT'S DISCUSSION AND ANALYSIS 4-15 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 16 Statement of Activities 17-18 Fund Financial Statements Governmental Funds Balance Sheet 19-20 Reconciliation of the Balance Sheet to the Statement of Net Position 21 Statement of Revenues,Expenditures, and Changes in Fund Balances 22-23 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances to the Statement of Activities 24 Statement of Revenues,Expenditures,and Changes in Fund Balances— Budget and Actual—General Fund 25 Proprietary Funds Statement of Net Position 26-27 Statement of Revenues,Expenses,and Changes in Fund Net Position 28-29 Statement of Cash Flows 30-31 Fiduciary Fund Statement of Net Position 32 Notes to Basic Financial Statements 33-56 REQUIRED SUPPLEMENTARY INFORMATION Farmington Fire Relief Association Schedule of Funding Progress 57 City of Farmington Other Post-Employment Benefits Plan Schedule of Funding Progress 57 SUPPLEMENTAL INFORMATION Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds 58 Combining Balance Sheet 59 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances 60 CITY OF FARMINGTON Table of Contents(continued) Page SUPPLEMENTAL INFORMATION(CONTINUED) Combining and Individual Fund Statements and Schedules(continued) Nonmajor Special Revenue Funds 61 Combining Balance Sheet 62 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances 63 Nonmajor Capital Projects Funds 64 Combining Balance Sheet 65-66 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances 67-68 Debt Service Fund 69 Combining Balance Sheet by Account 70-71 Combining Schedule of Revenues,Expenditures,and Changes in Fund Balances by Account 72-73 Budgetary Comparison Schedules 74 Debt Service Fund 75 State Aid Construction Capital Projects Fund 76 Storm Water Trunk Capital Projects Fund 77 Permanent Improvement Revolving Capital Projects Fund 78 Nonmajor Special Revenue Funds Police Donations and Forfeitures 79 Park Improvement 80 Arena 81 Nonmajor Capital Projects Funds Sanitary Sewer Trunk 82 Cable Communications 83 Private Capital Projects 84 Maintenance 85 Internal Service Funds 86 Combining Statement of Net Position 87 Combining Statement of Revenues,Expenses,and Changes in Fund Net Position 88 Combining Statement of Cash Flows 89 Agency Fund 90 Statement of Changes in Assets and Liabilities 91 STATISTICAL SECTION(UNAUDITED) Net Position by Component 92-93 Changes in Net Position 94-97 Fund Balances of Governmental Funds 98-99 Changes in Fund Balances of Governmental Funds 100-101 Tax Capacity Value and Estimated Actual Value of Taxable Property 102-103 Property Tax Rates 104 Principal Property Taxpayers 105 CITY OF FARMINGTON Table of Contents(continued) Page STATISTICAL SECTION(UNAUDITED)(CONTINUED) Property Tax Levies and Collections 106 Ratios of Outstanding Debt by Type 107-108 Ratios of General Bonded Debt Outstanding 109-110 Direct and Overlapping Governmental Activities Debt 111 Legal Debt Margin Information 112-113 Pledged Revenue Coverage 114 Demographic and Economic Statistics 115 Principal Employers 116 Full-Time Equivalent City Government Employees by Function 117 Operating Indicators by Function 118-119 Capital Asset Statistics by Function 120-121 THIS PAGE INTENTIONALLY LEFT BLANK INTRODUCTORY SECTION 4i iy City of Farmington 430 Third Street . Farmington,Minnesota o 651.280.6800•Fax 651.280.6899 `*."s00 www.cilarmington.m.n.us May 12, 2015 Honorable Mayor,Members of the City Council and Citizens of the City of Farmington,Minnesota The Comprehensive Annual Financial Report (CAFR) of the City of Farmington, Minnesota (the City) for the fiscal year ended December 31, 2014 is hereby submitted. This report was prepared by the Finance Department and responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, supporting schedules and statistical tables rests with the City. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed to protect the City's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of these financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City's internal controls have been designed to provide reasonable, rather than the absolute assurance,that the financial statements will be free from material misstatements. As management, we assert that to the best of our knowledge and belief, this financial report is complete and reliable in all material respects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The organization, form and contents of this report were prepared in accordance with the standards prescribed by the Governmental Accounting Standards Board, the Government Finance Officers Association of the United States and Canada (GFOA), the American Institute of Certified Public Accountants, Minnesota's Office of the State Auditor and City policies. The City of Farmington's financial statements have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A., a professional firm of certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the year ended December 31, 2014, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Farmington's financial statements,for the year ended December 31, 2014, are fairly presented in conformity with GAAP. The Independent Auditor's Report is presented as the first component of the financial section of this report. This transmittal letter is designed to complement the Management's Discussion and Analysis (MD&A) and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. -i- Profile of the Government The City is a suburban community located 30 miles south and east of downtown Minneapolis in Dakota County and was established in 1872 as a railroad center for the surrounding farming community. The City has seen a 13 percent growth in population over the past 10 years due to an influx of new housing developments. The 2010 Census established the City population at 21,086. Additionally, the City's boundary has grown easterly, adding 1,407 acres of annexation and growing from 12.5 square miles in 2000 to its current size of 14.82 square miles. The growth that the City has experienced is due to a number of factors such as relatively affordable home ownership as compared to homes north and west of Farmington, the opportunity to locate further from the inner core, and the opportunity to live in a community with a "small-town"feel because of its discernable traditional downtown. The City operates under the Mayor-Council form of organization.The governing City Council, consists of the Mayor and four other Councilmembers, is elected at large and on a non-partisan basis. Terms of office are staggered four-year terms, with elections held in each even-numbered year. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to the various committees and commissions, and hiring the City Administrator, heads of various departments and city employees. The City Administrator is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the City government, and the heads of various departments and City employees. The City provides its residents and businesses a full range of municipal services, including police and fire protection, ambulance services, construction and maintenance of highways, streets, and other infrastructure, as well as recreational and cultural activities. The City operates the following enterprise funds: municipal liquor operations, sewer, solid waste, storm water, water and street lights. The City also contributes to the senior center operations, outdoor municipal pool, ice arena, limited community recreation services,and several other important community-based events and projects. Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy Major industries located within the City's boundaries include the Independent School District (ISD) No. 192, Federal Aviation Administration, an electric company, a transportation company, an assisted living facility, an independent living senior facility, manufacturers of dairy products and flag and light poles, a home health care business and a trucking company. ISD No. 192 and the Federal Aviation Administration provide a significant economic presence providing employment to approximately 900 and 400 people, respectively. During 2014, three of the City's local businesses undertook expansion projects, the county library completed a complete remodeling of their facility and several new businesses opened their doors. The City continues to partner with Dakota County to offer the Open to Business initiative, which provides financial and business advice to small and future business owners. New residential construction continued to be steady in the City. There were 87 new single family residential permits issued in 2014 with a total valuation of $17,894,610. The number of foreclosures in the City continued to decline. There were 64 foreclosures in the City in 2014, which is down from 123 in 2012. -ii- Long-Term Planning In April 2013,the City Council adopted a set of strategies for 2013-2017,which include: • ensure the long-term financial health of the City, • position the City for future economic development, • review the use and efficiency of city facilities, • maintain the long-term viability of the City liquor operations,and • continue communication with residents and partnerships with other local governments. Under each strategy, the City has adopted a specific set of goals. In early 2014, the City Council met to review changes that have taken place in the City and identify a set of priorities and specific goals for each priority for the City to further its progress toward meeting the long-term strategies identified for 2013-2017. These priorities and goals were approved by the City Council in June 2014. Additional information about these strategies and goals can be found on the City's website, www.ci.farmington.mn.us. During 2013, the City Council reviewed a 30 year capital improvement plan for the City's streets and equipment needs. Later that year the City Council adopted a 2014-2018 Street Reconstruction Plan.The first project, the Akin Park Estates East and West Street Reconstruction Project, was completed during the summer of 2014. During 2015,the Henderson and 195th Street Projects will be completed. The 2014 budget included local government aid (LGA) dollars for the first time in nearly 10 years, the City Council designated that the majority of these funds (approximately $168,000) be used to begin to address deferred fire equipment and building needs. If the City continues to receive LGA monies, the City Council intends to continue to utilize a portion of these funds for the next several years to address fire equipment needs. In the fall of 2013, the Water Board adopted a long-term financial plan for the City's Water Fund. This plan projects revenues, operating expenditures and infrastructure needs for the next 30 years. This analysis was used to set the City's 2014 water rates and will be periodically updated. Finally, the City's outdoor pool, is over thirty years old, and will at some point need a major capital investment. During 2014, an Aquatic Facility Feasibility Study was completed with recommendations for the existing pool/site and an alternative site. Council has authorized a Community Survey for 2015, which includes questions for residents to provide feedback on their preferences regarding the existing outdoor pool or a possible alternative.The results of the survey will be available in the summer of 2015 and will be used to inform the City's 2016 budget as well as longer-term plans for the outdoor pool. Relevant Financial Policies Operating Budgets The annual budget serves as the foundation for the City's financial planning control.All departments of the City submit budget requests for the following year to the City Administrator in the spring/summer of each year. These requests serve as a starting point for the development of a proposed budget. These requests are then presented to the City Council for review in the summer. The City Council adopts a preliminary tax levy by September 30. The Council is required to hold hearings and obtain input on the proposed budget and to adopt a final budget and property tax levy no later than December 28 of the close of the fiscal year. The budget of the City is prepared by fund (e.g., General Fund), function, (e.g., public safety), and department (i.e., police department). Departments may request transfers of appropriations within line items in the department; however, City Council approval is required when making transfers between funds. Budget to actual comparisons are provided in this report for the General Fund, special revenue funds, most capital project funds (excludes Fire, Recreation, and General Capital Equipment Capital Projects Funds), and debt service funds (in total). The General Fund budget to actual comparison is on page 25. The remaining budgets to actual comparisons are presented starting on page 74. -iii- Revenue Policies The City conservatively projects its annual revenues after a thorough analytical process which involves annually reexamining existing and potential revenues sources. Cash Management Policy and Practice The City's Investment Policy was reviewed and updated in 2013. The primary goal of the City's investment policy is to ensure the safety of the principal invested. Idle cash during the year was invested according to the City's Investment Policy. The City continued to experience investing in a low interest rate environment, but saw its overall investment portfolio increase as well as an increase in overall market values as of the end of 2014. As a result, the City's 2014 investment earnings were higher than 2013. Staff is monitoring interest rates and is continuing the diligent practice of reviewing the City's cash flow needs, determining the length of investment and the interest rate available to determine how best to invest available funds. The continued low interest rates available for investments will continue to affect the interest earnings of the City and has been factored into the City's 2015 budget and will be considered as the 2016 budget is developed. Debt Management Policy and Practice The City Council reviewed and adopted an updated Debt Management Policy in 2013. The purpose of the policy is to establish parameters and provide guidance governing the issuance, management, continuing evaluation of and reporting on all debt obligations of the City. The City did not issue any new debt in 2014. Remaining bond proceeds from the 20136 bonds will finance the Henderson Street Project. The City will issue bonds in 2015 to pay for the City's share of the joint County/City 195th Street Reconstruction Project.Staff also continues to review its outstanding debt issues and advise the Council as to which bonds it would make financial or program sense to refund and/or restructure. Fund Balance Policy and Practice During 2014, for the first time in seven years, the City's General Fund cash flow was positive each calendar month during the year. No interfund borrowing was required. Further evidence of the General Fund's improved financial strength can be see in the General Fund's unassigned fund balance which has increased from 20.8 percent of subsequent years budgeted expenditures and transfers out as of December 31,2011 to 34.8 percent as of December 31,2014. In April 2015,the City adopted an updated fund balance policy, effective as of December 31, 2014.This policy acknowledges the progress the City has made in strengthening its General Fund balance and challenged the City to continue to improve by increasing the minimum General Fund balance. The updated policy states the City will strive to maintain the fund balance in the General Fund between 40-50 percent of the subsequent year's budgeted expenditures and transfers out in order to provide enough funding to carry city operations to the next semiannual receipt of tax proceeds (in June/July). The City Council and staff realize the City does not currently meet the 40 percent recommended minimum fund balance, but is aware of its importance and is committed to work towards achieving this goal. Major Initiatives The City continues to place a high priority on planning for the community needs as growth and expansion issues impact city operations. The availability of land, infrastructure and services continue to drive the community development focus of the City. A community that helps grow value has a positive impact on the net worth of all its property owners.As an organization,the City has worked diligently to build a variety of services,facilities, infrastructure, and secure a financial foundation for its residents and stakeholders. During 2014, the City completed the reconstruction of the Akin Park Estates East and West Project. In 2015, the City will complete the Henderson Street reconstruction project and work closely with the county to complete the 195th Street Reconstruction Project. Maintaining high quality services plays a key role in favorable appreciation of the community's property values.The City's substantial investments in its infrastructure have aided not only in the improvement of quality of services but it has also spurred additional community investment. -iv- Investments in homes and businesses represent the most important assets in an American citizen's personal portfolio; therefore the continued enhancement of that value is extremely important. While, the City's market value had declined in the past few years, in 2014 and for 2015 the City is starting to see some of its residential house values begin to rebound. The City needs to continue to progress forward by building and renewing its community.The community and organizational strength, both financial and operational, allows the City to create even greater opportunities.The City Council placed the goal of assisting and encouraging economic development as a high priority; during 2014, the City hired a Community Development Director. The City Council has further strengthened the organization by hiring its first full-time Fire Chief in April 2015. The City continues to collaborate with the County, Dakota County Regional Chamber, the Farmington Business Association, ISD No. 192, nearby communities and neighboring townships to provide its citizens with various services.Also during 2014,the City continued to provide support to the efforts of a local group as they completed and dedicated the Farmington Area Veterans Memorial in the City's Rambling River Park. For 2014 and 2015, the City Council adopted budgets which continue to fund seal coating, building maintenance and trail maintenance needs as well as beginning to address deferred fire equipment needs, the City's 2014-2018 Street Reconstruction Plan and as previously mentioned provide for the hiring of the City's first full-time Fire Chief. Awards The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the year ended December 31, 2013. This is the fifth year the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a city must publish an easily readable and efficiently organized CAFR. This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current CAFR continues to meet the Certificate of Achievement Program's requirements and are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments The preparation of this report would not have been possible without the talented and dedicated services of the entire staff of the Finance Department and other key city personnel. We would like to express our appreciation to all city staff for their attention to detail and budget management throughout the year. Credit also must be given to the Mayor and the City Council for their support and the steps they have taken to continue to strengthen the City's finances and longer-term financial planning. Respectively Submitted, .vid McKnight, inistrator '614-4—„ Robin Hanson,Finance Director -v- Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Farmington Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2013 Executive Director/CEO -vi- CITY OF FARMINGTON, MINNESOTA Organizational Chart December 31, 2014 citizens City Council City Administrator I Administration Finance Human Resources Police Fire I I Liquor Operations Information Technology Community Development Engineering Parks and Recreation Municipal Services I I Building Inspections Planning and Solid Waste Division Zoning Division rii- CITY OF FARMINGTON Elected Officials and Excutive Staff December 31,2014 ELECTED OFFICIALS Term Expires Todd Larson Mayor December 31,2016 Jason Bartholomay Councilmember December 31,2014 Doug Bonar Councilmember December 31,2016 Terry Donnelly Councilmember December 31,2016 Christy Jo Fogarty Councilmember December 31,2014 EXECUTIVE STAFF David McKnight City Administrator Kevin Schorzman Engineer Robin Hanson Finance Director Tim Pietsch Fire Chief Brenda Wendlandt Human Resources Director Todd Reiten Municipal Services Director Randy Distad Parks and Recreation Director Brian Lindquist Police Chief -viii- FINANCIAL SECTION PRINCIPALS Thomas M.Montague,CPA Thomas A.Karnowski,CPA Paul A.Radosevich,CPA IY11111.1MgE Will iam J.Lauer,CPA CERTIFIED LIC James H.Eichten,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L Holinka,CPA INDEPENDENT AUDITOR'S REPORT To the City Council and Management City of Farmington,Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the fmancial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Farmington, Minnesota (the City) as of and for the year ended December 31, 2014, and the related notes to the financial statements,which collectively comprise the City's basic financial statements as listed in the table of contents. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these fmancial 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 fmancial 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 fmancial 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 fmancial 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 fmancial 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) -1- Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5353 Wayzata Boulevard• Suite 410•Minneapolis,MN 55416•Telephone:952.545.0424 •Telefaz:952-545.0569•www.mmkr.com OPINIONS In our opinion, the financial statements referred to on the previous page present fairly, in all material respects, the respective fmancial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City as of December 31,2014,the respective changes in financial position and,where applicable,cash flows thereof, and the budgetary comparison for the General Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America. 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 City of Farmington Other Post-Employment Benefits Plan and the Farmington Fire Department Relief Association, as listed in the table of contents, be presented to supplement the basic fmancial 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 fmancial 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 fmancial statements that collectively comprise the City's basic fmancial 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 relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic 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 fmancial 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 fmancial statements and, accordingly, we do not express an opinion or provide any assurance on them. (continued) -2- OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 12, 2015 on our consideration of the City's internal control over fmancial 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 fmancial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over fmancial 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 fmancial reporting and compliance. 114111 14(41(.7, 11 , K e-0•4 A . Minneapolis,Minnesota May 12,2015 -3- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Management's Discussion and Analysis Year Ended December 31,2014 As management of the City of Farmington, Minnesota(the City), we offer readers of the City's fmancial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2014. The discussion and analysis is intended to be considered in conjunction with the additional information that we have furnished in our letter of transmittal, located earlier in this report, and the City's financial statements contained within this report. FINANCIAL HIGHLIGHTS • The assets of the City exceeded liabilities by $114,011,672 (net position) at the close of the most recent fiscal year. Of this amount, $23,547,007 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net position increased by$773,150 in 2014. • The City's total bonded debt decreased by $3,811,739, or 11.0 percent during the fiscal year due to a combination of annual bond principal payments and payoff of the 2005B General Obligation Bonds with the proceeds from the 2013A bond refunding escrow and 2004B Tax Increment Bonds. • The City's governmental funds reported combined ending fund balances of $17,311,957 at December 31, 2014, a decrease of$527,980 from the prior year. Approximately 67.0 percent of this total amount, $11,605,267, is available for use within the City's constraints and policies. • The City has one interfund loan which was for the purchase of a new fire truck by the General Fund with funds from the Water Fund.This loan will be fully repaid by the end of 2017. • At the end of the current fiscal year, the unassigned fund balance for the General Fund was $3,993,191,or 34.8 percent of 2015 General Fund budgeted expenditures and transfers out. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City's basic fmancial statements.The City's basic fmancial statements are comprised of three components: 1)government-wide fmancial statements,2)fund fmancial statements, and 3)notes to the financial statements.This report also contains other supplementary information in addition to the basic fmancial statements themselves. Government-Wide Financial Statements —The government-wide fmancial statements are designed to provide readers with a broad overview of the City's fmances, in a manner similar to a private sector business. These fmancial statements include not only the City itself(known as the primary government), but also the Farmington Economic Development Authority (EDA). The EDA has been presented as a discretely presented component unit on the City's fmancial statements in accordance with accounting principal generally accepted in the United States of America. The Statement of Net Position presents information on all of the City's assets, liabilities, and deferred inflows/outflows as applicable with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the fmancial position of the City is improving or deteriorating. -4- The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs,regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.uncollected taxes and earned,but unused personal leave time). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues(governmental activities)from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, parks and recreation, and economic development. The business-type activities of the City include liquor operations,and sewer,solid waste,storm water,water and street light utility operations. Fund Financial Statements—A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives.The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds,and fiduciary funds. Governmental Funds — Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide fmancial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term fmancing requirements. Because the focus of governmental funds is narrower than that of the government-wide fmancial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term fmancing decisions. Both the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances for the City's five individual major governmental funds.They are as follows: • General Fund • Debt Service Fund • State Aid Construction—Capital Projects Fund • Storm Water Trunk—Capital Projects Fund • Permanent Improvement Revolving—Capital Projects Fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts annual appropriated budgets for its General Fund, Special Revenue Funds, the Debt Service Fund (combined) and the majority of Capital Projects Funds (excludes Fire, Recreation Capital Projects, and General Capital Equipment Funds). A budgetary comparison statement has been provided for these funds to demonstrate compliance with their respective budgets. -5- Proprietary Funds—The City maintains six enterprise funds and four internal service funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide fmancial statements. The City uses enterprise funds to account for its liquor operations; and its sewer, solid waste, storm water, water, and street light utility operations. Proprietary funds provide the same type of information as the government-wide fmancial statements, only in more detail. The proprietary fund financial statements provide separate information for the enterprise funds,all of which are considered to be major funds of the City. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its employee benefits, property and liability insurance, maintaining its fleet of vehicles, and information technology needs. All internal service funds are combined into a single, aggregated presentation in the proprietary fund fmancial statements, labeled Governmental Activities — Internal Service Funds. Because all of these services predominately benefit governmental, rather than business-type functions, they have been included within governmental activities in the government-wide fmancial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Fiduciary Funds — Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide fmancial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to Basic Financial Statements — The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund fmancial statements. Other Information—In addition to the basic fmancial statements and accompanying notes, the fmancial section also presents required supplementary information, and the combining and individual fund statements and schedules (presented as supplementary information) referred to earlier in connection with nonmajor governmental funds and internal service funds, which are presented immediately following the basic financial statements. Further, a statistical section has been included as part of the comprehensive annual fmancial report to facilitate additional analysis,and is the third and fmal section of the report. -6- GOVERNMENT-WIDE FINANCIAL ANALYSIS An analysis of the City's financial position begins with a review of the Statement of Net Position and the Statement of Activities. These two statements report the City's net position and changes in net position.It should be noted that the fmancial position can also be affected by non-financial factors, including economic conditions,population growth and new regulations. As noted earlier,net position may serve over time as a useful indicator of the City's fmancial position.As presented in the following condensed version of the Statement of Net Position,the City's assets exceeded liabilities by$114,011,672 at December 31,2014. City of Farmington's Net Position Governmental Activities Business-Type Activities Total 2014 2013 2014 2013 2014 2013 Current and other assets $ 25,254,532 $ 27,238,000 $ 13,084,078 $ 11,672,822 $ 38,338,610 $ 38,910,822 Capital assets 54.496,035 55,484,071 55,685,476 57,427,060 110,181,511 112,911,131 Total assets $ 79 750 567 $ 82 722.071 $ 68 769 554, $ 69 099 882 $ 148 520 121, $ 151 821 953 Current liabilities $ 4,956,696 $ 6,035,266 $ 440,138 $ 545,040 $ 5,396,834 $ 6,580,306 Long-term liabilities 29.024,459 31,926,678 87,156 76,447 29.111,615 32.003,125 Total liabilities $ 33.981.155,• $ 37 961 944 $ 527.294,, $ 621 487 $ 34 508 449 , $ 38 583 431 Net position Net invested in capital assets $ 23,383,175 $ 23,462,934 $ 55,685,476 $ 57,427,060 $ 79,068,651 $ 80,889,994 Restricted 9,235,448 11,669,054 2,160,566 2,159,566 11,396,014 13,828,620 Unrestricted 13,150.789 9,628,139 10.396.218 8,891,769 23.547.007 18.519,908 Total net position $ 45.769.412, $ 44.760.127, $ 68.242.260 $ 68 478.395 $ 114.011.672,, $ 113138.522 The largest portion of the City's net position, $79,068,651, or 69 percent,reflects its investment in capital assets(e.g., land, buildings, machinery and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City's total restricted net position of$11,396,014 comprises 10 percent of total net position at the close of the fiscal year ending December 31,2014.These assets are subject to external restrictions on how they may be used. The balance of unrestricted net position, $23,547,007, or approximately 21 percent, may be used to meet the City's ongoing obligations to citizens and creditors. Certain balances within unrestricted net position may have internally imposed commitments or limitations, which may further limit the purpose for which such net position may be used. -7- CHANGES IN NET POSITION The following table provides a condensed version of the Statement of Activities for the year ended December 31, 2014 with comparative totals for the year ended December 31, 2013. The City's net position increased by$773,150,or 0.7 percent,during the current fiscal year. City of Farmington's Change in Net Position Governmental Activities Business-Type Activities Total Total 2014 2013 2014 2013 2014 2013 Revenues Charges for services $ 1,645,450 $ 1,878,544 $ 10,740,033 $ 10,630,679 $ 12,385,483 $ 12,509,223 Operating grants and contributions 677,999 713,378 21,000 19,300 698,999 732,678 Capital grants and contributions 477,833 645,233 - 108,642 477,833 753,875 Property taxes 10,962,860 10,748,581 - - 10,962,860 10,748,581 Other taxes 269,208 259,671 - - 269,208 259,671 Unrestricted grants 257,386 24,845 - - 257,386 24,845 Investment earnings(loss)and other other 130.739 (14,140) 246,220 15,015 376.959 875 Total revenues 14.421.475 14,256,112 11,007,253 10,773,636 25,428,728 25.029,748 Expenses General government 1,940,630 1,778,549 - - 1,940,630 1,778,549 Public safety 5,192,091 5,156,950 - - 5,192,091 5,156,950 Public works 4,893,341 3,849,742 - - 4,893,341 3,849,742 Parks and recreation 1,730,734 1,775,967 - - 1,730,734 1,775,967 Economic development 49,417 50,000 - - 49,417 50,000 Interest on long-term debt 1,020,096 1,290,439 - - 1,020,096 1,290,439 Liquor - - 4,315,834 4,206,058 4,315,834 4,206,058 Sewer - - 1,712,146 1,627,927 1,712,146 1,627,927 Solid waste - - 1,600,434 1,658,547 1,600,434 1,658,547 Storm water - - 615,684 513,582 615,684 513,582 Water - - 1,410,214 1,427,298 1,410,214 1,427,298 Street lights - - 174.957 184.834 174.957 184.834 Total expenses 14.826.309 13.901.647 9,829,269 9.618.246 24,655.578 23,519,893 Change in net position before transfers (404,834) 354,465 1,177,984 1,155,390 773,150 1,509,855 Transfers 1,414.119 1,410,114 (1,414,119) (1,410,114) - - Change in net position 1,009,285 1,764,579 (236,135) (254,724) 773,150 1,509,855 Net position-beginning 44,760,127 42,995,548 68,478,395 68,733,119 113,238,522 106.532.051 Netposition-ending $ 45,769,412 $ 44.760.127 $ 68,242,260, $ 68.478.395, $ 114,011,672 $ 113.238,522 Governmental Activities-Governmental activities decreased the City's net position before transfers by $404,834 primarily due increased street maintenance costs and the disposal of infrastructure capital assets replaced during the year. Business-Type Activities-Business-type activities increased the City's net position before transfers by approximately $1,177,984 due to a combination of increased liquor store profits, rates charged for services, investment earnings,and reduced solid waste recycling costs. -8- GOVERNMENTAL ACTIVITIES Revenues—The following chart illustrates the City's revenue by source for its governmental activities: Revenues by Source—Governmental Activities Capital Grants and Unrestricted Contributions Grants 2% Other Operating Grants 1% Charges for and Contributions Services 5% 0 11% Other Taxes 2% Property Taxes 76% Expenses—The following chart illustrates the City's governmental expenses and corresponding program revenues,excluding transfers, for its governmental activities: Expenses and Program Revenues—Governmental Activities $5,500,000 - $4,500,000 - $3,500,000 - $2,500,000 - $1,500,000 - $500,000 - $(500,000) General Parks and Economic Interest on Government Public Safety Public Works Recreation Development Long-Term Debt 'Program Revenues $557,339 $773,836 $776,059 $610,089 $83,959 8- 'Expenses $1,940,630 $5,192,091 $4,893,341 $1,730,734 $49,417 $1,020,096 -9- BUSINESS-TYPE ACTIVITIES Revenues—The following chart illustrates the City's revenue by source for its business-type activities: Program Revenues by Source—Business-Type Activities Operating Grants Other &Contributions 2% <1% Charges for Services 98% Expenses — Below is a graph showing the business-type activities program revenues and expenses, excluding transfers, comparisons for 2014: Expenses and Program Revenues— Business-Type Activities $5,000,000 - $4,500,000 - $4,000,000 - $3,500,000 - $3,000,000 - $2,500,000 - $2,000,000 - $1,500,000 - $1,000,000 - $500,000 - .1111$ �� Liquor Fund Sewer Solid Waste Storm Water Water Fund Street Light Operations •Program Revenues $4,639,194 $1,843,746 $2,000,623 $559,327 $1,499,091 $219,052 •Expenses $4,315,834 $1,712,146 i $1,600,434 $615,684 $1,410,214 $174,957 -10- FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier the City uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. Governmental Funds – The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of currently available resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $17,311,957, a 3.0 percent decrease or $527,980 from 2013. In 2014 the City received increased property taxes related to the payment of previously delinquent amounts,recorded an increase in revenues due to increased new single family building activity and recorded increased investment earnings as a result of a larger investment portfolio and an improvement in market values. Human resource costs were less than budgeted and conservative spending by staff resulted in lower spending in the General Fund. The Debt Service Fund fund balance decreased primarily due to the repayment of bonds from assets on deposit with an escrow agent from previously issued refunding bonds. The most significant change in the Nonmajor Governmental Funds was a decrease of $908,174 in the Maintenance Fund, which was primarily attributable to the 2014 Akin Park East/West street reconstruction project. Assigned and unassigned fund balance, which is available for spending at the government's discretion, had a balance of$11,605,267 at year-end.The remainder of the fund balance is nonspendable or restricted to indicate that it is not available for new spending because it has already been obligated 1) to pay debt service ($5,034,389), 2) to pay for capital improvements and future cable communication expenditures ($553,000), 3) for park improvement ($77,482), and 4) the remainder is from donations and other restricted funds($8,290). Financial highlights for the City's major governmental funds are as follows: General Fund—The General Fund is the chief operating fund of the City. At the end of 2014, the unassigned fund balance of the General Fund was $3,993,191. As a measure of the General Fund's liquidity, it may be useful to compare fund balance to total fund expenditures. The 2014 unassigned fund balance represents 34.8 percent of total 2015 General Fund budgeted expenditures and transfers out, up from 28.0 percent for the December 31, 2013 unassigned fund balance as a percentage of the 2014 General Fund budgeted expenditures and transfers out. The reason for the increase is two-fold: 1) In 2014, with the exception of fines, all revenue line items met or exceeded budget, and 2) due to lower than budgeted human resource costs and conservative spending by the various departments, actual expenditures were less than budgeted. As a result, the General Fund realized an overall increase in fund balance and the City saw the overall percentage of unassigned fund balance as a percentage of General Fund expenditures and transfers out increase. The General Fund's unassigned fund balance has increased from 20.8 percent as of December 31, 2011 to 34.8 percent as of December 31, 2014. Since 2011, not only has the economy improved, but Council has also worked to eliminate the negative fund balances in the Economic Development Authority and Ice Arena, as well as increasing their commitment to not only sound, comprehensive budgets, but also long-term fmancial planning. Together these efforts have resulted in the General Fund's fund balance strengthening. Council also recently revised the City's fund balance policy and stated it would strive to maintain the fund balance in the General Fund between 40-50 percent of the subsequent year's budgeted expenditures and transfers out in order to provide enough funding to carry City operations to the next semiannual receipt of tax proceeds(in June/July).Council and staff realize the City does not currently meet the 40 percent recommended minimum fund balance, but is aware of its importance and will continue to work towards achieving this goal. -11- Debt Service Fund—During the year the City repaid $3.8 million in principal, which included fully retiring the 2004A bonds through the standard payoff bond schedule and the crossover refunding of the 2005B bonds with a portion of the 2013A bond proceeds. Please refer to Footnote 6 in the Notes to the Financial Statements for additional information about the 2013A refunding bonds. The fund balance in the Debt Service Fund decreased$994,168,primarily due to the refunding. State Aid Construction,Capital Project Fund—The first priority for this Fund's fund balance is to provide for future debt service payments, as needed, for certain bonds in the Debt Service Funds. During 2014,the property tax levy, special assessments and intergovernmental revenues exceeded the amount needed to be transferred to the related bond funds in the Debt Service Funds,resulting in a net increase of$259,321 in this Fund's fund balance. Storm Water Trunk, Capital Project Fund — The decrease of$101,495 in fund balance is due to planned transfers to the related bond fund in the Debt Service Fund exceeding special assessment revenue. Permanent Improvement Revolving, Capital Project Fund —There were no new projects in this fund during 2014.There was a modest increase in the fund balance of$23,504 as special assessments received exceeded expenses. Financial highlights for the significant changes in the City's nonmajor governmental funds are as follows: Sanitary Sewer Trunk, Capital Project Fund—The increase in fund balance of$57,236 is a result of the charges for services revenue exceeding the public works expenditures needed in 2014. Cable Communications, Capital Project Fund — During 2014, the City completed a planned upgraded of the Council chambers cable communications equipment. This resulted in a net decrease in fund balance of$61,577 as the City's investment in new capital equipment exceeded the franchise fee revenues recorded for 2014. Fire Capital Projects, Capital Project Fund — In 2013 the City adopted a long-term capital equipment plan for its fire department. The increase in fund balance of$118,191 is a combination of planned transfers in for future equipment replacement exceeding the current year's equipment expenditures and donations received from the Farmington Fire Relief Association. Maintenance Fund, Capital Project Fund — In addition to its ongoing seal coating and trail maintenance activities, the City completed work on the Akin Park Estates East and West Street Reconstruction Project resulting in a net decrease in the Maintenance Fund balance of$908,174. Proprietary Funds — The City's proprietary funds provide the same type of information found in the government-wide financial statements,but in more detail. Financial highlights for the significant changes in the City's proprietary funds are as follows: Liquor Operations — The net position of the Liquor Operation Fund at the end of 2014 totaled $1,060,244, an increase of$253,344. While new competition has been introduced into the southern Twin Cities metropolitan area, placing significant pressure on neighboring municipal liquor stores, the City's liquor stores seem to be far enough away that both stores were able to maintain their sales base and record another year of solid fmancial results. In addition, the cash position for both stores has also continued to strengthen increasing from a combined total of$520,667 at December 31, 2013 to$775,059 as of December 31,2014. Sewer Operations—Overall, revenues and expenses are comparable to the prior year. The decrease in net position of$148,312, is primarily due to charges for services not being sufficient to cover depreciation expense. This fund continues to maintain a significant unrestricted net position of $2,539,095. -12- Solid Waste — The Solid Waste Fund recorded an increase in net position of$285,859, due to a combination of increased revenues, reduced expenses due to the savings realized from lower costs associated with a new recycling contract and a reduction in the amount needed to be contributed to a related bond financed project. Storm Water—The decrease in net position of$375,108 is primarily due to charges for services not being sufficient to cover depreciation expense. This fund continues to maintain an unrestricted net position of$702,572. Water— The 2014 decrease in net position of$296,013 is primarily due to charges for service not being sufficient to cover depreciation expense. In conjunction with a long-term financial analysis of this fund performed in 2014, which does take into consideration the long-term need to cover depreciation expense,a fee increase went into effect in January 2015. This fund continues to maintain a significant unrestricted net position of$4,890,909. Street Light — The Street Light Fund was established in 2010. By making this a utility fund, all properties, including tax-exempt properties, within the City now pay for street lighting. After its fourth year of operation,this fund has achieved a modest positive net position of$78,483. GENERAL FUND BUDGETARY HIGHLIGHTS The City's original and final budgets are the same,as no budget amendments were made during the year. Actual revenues were $535,921 more than budgeted. Revenue variances from final budget to actual include: • Property taxes received were more than budgeted by$137,454 due to an increase in the collection of previously delinquent taxes and a debt levy for a recently purchased fire truck which was not reflected in the original General Fund budget. • Licenses and permits revenue was $96,855 higher than budgeted primarily due to higher than anticipated building permit activity. The number of new single-family building permits totaled 87 in 2014, which was less than the 123 permits issued in 2013, but still higher than the amount budgeted for in 2014. • Intergovernmental revenue came in over budget by $165,985 due to higher than anticipated state aid for roads,police aid and fire aid. • Charges for services were $36,069 higher than budgeted as a result of increased reimbursement from one of the neighboring townships for fire protection services. • Investment earnings revenues were more than budgeted primarily due to an overall increase in market value of the City's General Fund investments. Expenditures were $679,426 less than the budgeted amount. Almost all areas of expenditures were under budget due to conservative spending and use of City resources by all staff. -13- CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets—The City's investment in capital assets for its governmental and business type activities as of December 31, 2014,was $110,181,511 (net of accumulated depreciation).This investment in capital assets includes land, buildings, improvements other than buildings, park facilities, machinery and equipment, vehicles, roads, bridges, infrastructure, intangibles, water mains, water reservoirs, sewer mains, lift stations and storm water mains. The only major capital addition during the year was the Akin Park Street Reconstruction Project in the City's Maintenance Fund. As a result, the City's investment in capital assets for the current fiscal year decreased by 2.4 percent due to depreciation. City of Farmington's Capital Assets Governmental Activities Business-Type Activities Total 2014 2013 2014 2013 2014 2013 Land and easement $ 1,749,824 $ 1,749,824 $ 414,576 $ 414,576 $ 2,164,400 $ 2,164,400 Construction in progress — 60,417 83,274 — 83,274 60,417 Buildings 16,581,076 17,023,869 379,056 587,967 16,960,132 17,611,836 Improvements other than buildings 584,280 636,118 — 532 584,280 636,650 Machinery and equipment 1,571,715 1,477,859 335,467 330,152 1,907,182 1,808,011 Infrastructure 34,009,140 34,535,984 — — 34,009,140 34,535,984 Collection and distribution system — — 54,473,103 56,093,833 54,473,103 56,093,833 Total(net of depreciation) $ 54,496,035 $ 55,484,071 $ 55,685,476 $ 57,427,060 $ 110,181,511 $ 112,911,131 Additional information on the City's capital assets can be found in Note 4 of the notes to basic financial statements. Long-Term Debt—At the end of the current fiscal year, the City had total bonded debt outstanding of $30,935,696. All City debt is general obligation (G.O.) debt,which is backed by the full faith and credit of the government. Furthermore, the City has long-term liabilities of $177,829 for unamortized bond premiums, $798,673 for compensated absences,and$697,588 for other post-employment benefits. City of Farmington's Outstanding Debt Governmental Activities Business-Type Activities Total 2014 2013 2014 2013 2014 2013 G.O.improvement bonds $ 17,125,000 $ 19,730,000 $ — $ — $ 17,125,000 $ 19,730,000 Capital improvement bonds 9,380,000 9,885,000 — — 9,380,000 9,885,000 Public Project Revenue Bond 2,700,000 2,995,000 — — 2,700,000 2,995,000 Revenue bonds 945,696 1,092,435 — — 945,696 1,092,435 Certificates ofindebtedness 785,000 905,000 — — 785,000 905,000 Tax increment bonds — 140,000 — — — 140,000 Total bonds outstanding $ 30,935,696 $ 34,747,435 $ — $ — $ 30,935,696 $ 34,747,435 , Bond principal repayments during 2014 totaled $3,811,739. The City's "AA-" rating from Standard & Poor's was reaffirmed in September 2013. Minnesota Statutes limit the amount of general obligation debt a Minnesota city may issue to 3 percent of total estimated market value. The current debt limitation for the City is $39,352,574, which is significantly more than the City's outstanding general obligation debt. Additional information on the City's long-term debt may be found in Note 6,Long-Term Debt on pages 47-49 of this report. -14- ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City increased its net operating levy in 2015 by$433,352. The fmal City net operating levy for 2015 is $9,164,208 and is 4.96 percent higher than the comparable 2014 levy. Of the total budgeted revenues, including transfers in, for 2015, 73 percent are from property taxes, including $2.2 million in fiscal disparities revenue. The remaining General Fund budgeted revenues were adjusted to better reflect increased building activity and intergovernmental related revenues and further reduce the city's reliance on investment earnings to pay for general operations. Proposed 2015 General Fund expenditures, including transfers out, are estimated at $11,482,624, an increase of 4.7 percent compared to the 2014 budget. The 2015 budget continues the funding for the City's seal coating, trail maintenance and building maintenance, focuses local government aid (LGA) spending on one-time expenditures and begins to address some deferred fire capital needs. The 2015 debt levy increased from $2,943,000 to $3,059,728 as the City continues to implement its 2014-2018 Street Reconstruction Plan,begins to provide for the City's share of the costs for the county's 195th Street Reconstruction and continues to strengthen the reserves in its various Debt Service Fund accounts. For 2015,user charges have been increased in the Storm Water Fund. Since 2011, the City has experienced a significant reduction in the amount of outstanding delinquent property taxes. Overall, for many residential properties taxable values showed modest increases in 2015 for taxes payable in 2016. In 2014, the City issued 87 residential building permits. For 2015, one of the City's biggest challenges is the reduction in the number of lots available for new residential homes.While there are indicators the local economy continues to improve,the reduced inventory of available residential lots will impact the amount of potential new activity that will actually be recorded in 2015. REQUESTS FOR INFORMATION These fmancial statements are designed to provide a general overview of the City's fmances for all those with an interest in the government's fmances. Questions concerning any of the information provided in this report or requests for additional fmancial information should be directed to the City's Finance Director, 430 Third Street, Farmington, Minnesota 55024, (651) 280-6800, or email the request to rhanson @ci.farmington.mn.us. -15- BASIC FINANCIAL STATEMENTS THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Statement of Net Position as of December 31,2014 Primary Government Component Unit Economic Governmental Business-Type Development Activities Activities Total Authority Assets Cash and investments $ 18,139,592 $ 8,407,331 $ 26,546,923 $ 549,532 Restricted assets-temporarily restricted Cash and investments-future drinking water treatment plant - 2,160,566 2,160,566 - Receivables Accounts 331,551 1,325,789 1,657,340 - Interest 23,110 42,695 65,805 853 Property taxes 1,420,635 - 1,420,635 - Special assessments 5,388,055 374,328 5,762,383 - Due from other governments 199,382 1,502 200,884 - Internal balances (345,432) 345,432 - - Inventory - 425,995 425,995 - Prepaid items 97,639 440 98,079 - Capital assets Not depreciated Land 1,441,957 414,576 1,856,533 - Easement 307,867 - 307,867 - Construction in progress - 83,274 83,274 - Depreciated Buildings 21,383,065 3,243,203 24,626,268 - Improvements other than buildings 1,996,811 121,012 2,117,823 - Machinery and equipment 5,828,892 2,654,265 8,483,157 - Distribution system - 32,511,466 32,511,466 - Collection system - 47,339,883 47,339,883 - Infrastructure 57,509,416 - 57,509,416 - Less accumulated depreciation (33,971,973) (30,682,203) (64,654,176) - Total capital assets,net of depreciation 54,496,035 55,685,476 110,181,511 - Total assets $ 79,750,567 $ 68,769,554 $ 148,520,121 $ 550,385 Liabilities Accounts and contracts payable $ 553,141 $ 266,048 $ 819,189 $ 3,752 Accrued salaries and employee benefits payable 194,511 - 194,511 - Accrued interest payable 414,572 - 414,572 - Deposits payable 342,492 63,909 406,401 - Due to other governments 1,944 62,046 63,990 - Long-term liabilities Due within one year 3,450,036 48,135 3,498,171 - Due in more than one year 29,024,459 87,156 29,111,615 - Total noncurrent liabilities 32,474,495 135,291 32,609,786 - Total liabilities 33,981,155 527,294 34,508,449 3,752 Net position Net investment in capital assets 23,383,175 55,685,476 79,068,651 - Restricted for Debt service 8,582,847 - 8,582,847 - Capital projects 553,000 - 553,000 - Police programs 8,290 - 8,290 - Park improvements 91,311 - 91,311 - Tax increment - - - 295,267 Water Fund-future drinking water treatment plant - 2,160,566 2,160,566 - Unrestricted 13,150,789 10,396,218 23,547,007 251,366 Total net position 45,769,412 68,242,260 114,011,672 546,633 Total liabilities and net position $ 79,750,567 $ 68,769,554 $ 148,520,121 $ 550,385 See notes to basic financial statements -16- CITY OF FARMINGTON Statement of Activities Year Ended December 31,2014 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government Governmental activities General government $ 1,940,630 $ 534,008 $ 23,331 $ — Public safety 5,192,091 409,460 364,376 — Public works 4,893,341 94,416 206,333 475,310 Parks and recreation 1,730,734 607,566 — 2,523 Economic development 49,417 — 83,959 — Interest and fiscal charges 1,020,096 — — — Total governmental activities 14,826,309 1,645,450 677,999 477,833 Business-type activities Liquor operations 4,315,834 4,639,194 — — Sewer operations 1,712,146 1,843,746 — — Solid waste 1,600,434 1,979,623 21,000 — Storm water 615,684 559,327 — — Water 1,410,214 1,499,091 — — Street light 174,957 219,052 — — Total business-type activities 9,829,269 10,740,033 21,000 — Total primary government $ 24,655,578 $ 12,385,483 $ 698,999 $ 477,833 Component unit Economic development authority $ 148,327 $ — $ 64,138 $ — General revenues Property taxes Franchise taxes Grants and contributions not restricted to specific programs Investment earnings Transfers Total general revenues and transfers Change in net position Net position—beginning Net position—ending See notes to basic financial statements -17- Net(Expense)Revenue and Changes in Net Position Primary Government Component Unit Economic Governmental Business-Type Development Activities Activities Total Authority $ (1,383,291) $ — $ (1,383,291) $ — (4,418,255) — (4,418,255) — (4,117,282) — (4,117,282) — (1,120,645) — (1,120,645) — 34,542 — 34,542 — (1,020,096) — (1,020,096) — (12,025,027) — (12,025,027) — — 323,360 323,360 — — 131,600 131,600 — — 400,189 400,189 — — (56,357) (56,357) — — 88,877 88,877 — — 44,095 44,095 — — 931,764 931,764 — (12,025,027) 931,764 (11,093,263) — — — — (84,189) 10,962,860 — 10,962,860 138,771 269,208 — 269,208 — 257,386 — 257,386 — 130,739 246,220 376,959 4,924 1,414,119 (1,414,119) — — 13,034,312 (1,167,899) 11,866,413 143,695 1,009,285 (236,135) 773,150 59,506 44,760,127 68,478,395 113,238,522 487,127 $ 45,769,412 $ 68,242,260 $ 114,011,672 $ 546,633 -18- CITY OF FARMINGTON Balance Sheet Governmental Funds as of December 31,2014 Capital Projects— Debt Service State Aid General Fund Construction Assets Cash and investments $ 3,280,052 $ 5,035,686 $ 1,936,289 Receivables Accounts 177,088 — — Interest 22,904 — — Property taxes Unremitted 1,229,518 — — Delinquent 191,117 — — Special assessments Delinquent — 16,060 1,421 Noncurrent — 3,890,675 295,986 Due from other governments 140,144 57,181 609 Prepaid items 33,369 — — Total assets $ 5,074,192 $ 8,999,602 $ 2,234,305 Liabilities Accounts and contracts payable $ 390,767 $ 2,183 $ — Deposits payable 37,633 — — Due to other governments 1,683 — — Due to other funds 120,000 — — Advances from other funds 225,432 — — Total liabilities 775,515 2,183 — Deferred inflows of resources Unavailable revenue—accounts receivable — 56,295 — Unavailable revenue—property taxes 191,117 — — Unavailable revenue—special assessments — 3,906,735 297,407 Total deferred inflows of resources 191,117 3,963,030 297,407 Fund balances Nonspendable 33,369 — — Restricted — 5,034,389 — Assigned 81,000 — 1,936,898 Unassigned 3,993,191 — — Total fund balances 4,107,560 5,034,389 1,936,898 Total liabilities,deferred inflows of resources,and fund balances $ 5,074,192 $ 8,999,602 $ 2,234,305 See notes to basic financial statements -19- Capital Capital Projects- Projects- Permanent Storm Water Improvement Trunk Revolving Nonmajor Total $ 3,859,354 $ 115,082 $ 2,546,993 $ 16,773,456 - - 146,905 323,993 - - 206 23,110 - - - 1,229,518 - - - 191,117 10,963 651 1,055 30,150 49,054 1,099,068 23,122 5,357,905 1,448 - - 199,382 - - 160 33,529 $ 3,920,819 $ 1,214,801 $ 2,718,441 $ 24,162,160 $ - $ - $ 132,226 $ 525,176 - 304,551 342,184 - - 261 1,944 - - - 120,000 - - - 225,432 - - 437,038 1,214,736 - - - 56,295 - - - 191,117 60,017 1,099,719 24,177 5,388,055 60,017 1,099,719 24,177 5,635,467 - - 160 33,529 - - 638,772 5,673,161 3,860,802 115,082 1,618,294 7,612,076 - - - 3,993,191 3,860,802 115,082 2,257,226 17,311,957 $ 3,920,819 $ 1,214,801 $ 2,718,441 $ 24,162,160 -20- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds as of December 31,2014 Total fund balances—governmental funds $ 17,311,957 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in governmental funds. Cost of capital assets 88,388,555 Less accumulated depreciation (33,892,520) Long-term liabilities are not payable with current financial resources and,therefore,are not reported in governmental funds. Bonds and certificates of indebtedness (30,935,696) Unamortized bond premiums (177,829) Compensated absences (719,715) Net OPEB obligation (626,674) Interest on long-term debt is included in the change in net position as it accrues,regardless of when payment is due.However,it is included in the change in fund balances when due. (414,572) Internal service funds are used by management to charge certain costs to individual funds.The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 1,200,239 Due to availability, certain revenues are not recognized under the governmental fund statements until received; however, under full accrual in the government-wide Statement of Activities, revenues are recorded when earned regardless of when received. Accounts receivable 56,295 Delinquent property taxes 191,117 Delinquent and deferred special assessments 5,388,055 Total net position—governmental activities $ 45,769,212 See notes to basic financial statements -21- CITY OF FARMINGTON Statement of Revenues,Expenditures,and Changes in Fund Balances Governmental Funds Year Ended December 31,2014 Capital Projects— Debt Service State Aid General Fund Construction Revenues Property taxes $ 8,173,509 $ 2,680,710 $ 177,000 Franchise taxes 100,000 — — Special assessments — 592,017 49,009 Licenses and permits 514,728 — — Intergovernmental 849,876 74,720 86,625 Charges for services 519,169 — — Fines and forfeits 65,482 — — Investment earnings 127,743 1,825 — Other 67,633 — — Total revenues 10,418,140 3,349,272 312,634 Expenditures Current General government 1,717,186 — — Public safety 4,851,608 — — Public works 2,038,136 — — Parks and recreation 1,129,641 — — Economic development 40,000 9,417 — Capital outlay General government — — — Public safety 66,485 — — Public works — — 3,313 Parks and recreation 5,438 — — Debt service Principal — 2,376,739 — Interest and fiscal charges 8,583 1,087,424 — Total expenditures 9,857,077 3,473,580 3,313 Excess(deficiency)of revenues over expenditures 561,063 (124,308) 309,321 Other financing sources(uses) Sale of capital assets 3,063 — — Transfers in 1,091,612 565,140 — Transfers out (640,579) — (50,000) Paid to refunded bond escrow agent — (1,435,000) — Total other financing sources(uses) 454,096 869,860) (50,000) Net change in fund balances 1,015,159 (994,168) 259,321 Fund balances Beginning of year 3,092,401 6,028,557 1,677,577 End of year $ 4,107,560 $ 5,034,389 $ 1,936,898 See notes to basic financial statements -22- Capital Capital Projects- Projects- Permanent Storm Water Improvement Trunk Revolving Nonmajor Total $ - $ - $ - $ 11,031,219 - - 169,208 269,208 106,587 23,892 49,826 821,331 - - - 514,728 - - - 1,011,221 - - 371,112 890,281 - - - 65,482 - - 1,171 130,739 - - 107,326 174,959 106,587 23,892 698,643 14,909,168 - - 808 1,717,994 - - 20,137 4,871,745 - - 25 2,038,161 - - 319,310 1,448,951 - - - 49,417 - - 230,785 230,785 - - 105,758 172,243 449 388 1,327,776 1,331,926 - - 99,334 104,772 - - - 2,376,739 - - - 1,096,007 449 388 2,103,933 15,438,740 106,138 23,504 (1,405,290) (529,572) - - 19,410 22,473 - - 673,579 2,330,331 (207,633) - (18,000) (916,212) - - - (1,435,000) 207,633) - 674,989 1,592 (101,495) 23,504 (730,301) (527,980) 3,962,297 91,578 2,987,527 17,839,937 $ 3,860,802 $ 115,082 $ 2,257,226 $ 17,311,957 -23- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended December 31,2014 Total net change in fund balances—governmental funds $ (527,980) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures.However,in the Statement of Activities,the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay 1,446,978 Depreciation expense (2,083,077) A gain or loss on the disposal of capital assets,including the difference between the carrying value and any related sale proceeds,is included in the change in net position.However,only the sale proceeds are included in the change in fund balances. (351,272) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of long-term debt consumes the current financial resources of governmental funds.Neither transaction, however, has any effect on net position. Other long-term debt adjustments are also made between the governmental funds and the Statement of Activities for compensated absences and OPEB obligations. Principal payments for bonds and certificate of indebtedness 3,811,739 Amortization of debt premiums 25,873 Compensated absences (45,041) OPEB liability (82,026) Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues,regardless of when it is due. 50,038 Internal service funds are used by management to charge certain costs to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities in the government-wide financial statements. 40,266 Certain revenues included in net position as soon as they are earned are not included in the change in fund balances until available to liquidate liabilities of the current period. Accounts receivable (130,937) Delinquent property taxes (68,359) Delinquent and deferred special assessments (1,076,917) Change in net position—governmental activities $ 1,009,285 See notes to basic financial statements -24- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON Statement of Revenues,Expenditures,and Changes in Fund Balances Budget and Actual General Fund Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Property taxes $ 8,036,055 $ 8,173,509 $ 137,454 Franchise taxes 100,000 100,000 - Licenses and permits 417,873 514,728 96,855 Intergovernmental 683,891 849,876 165,985 Charges for services 483,100 519,169 36,069 Fines and forfeits 70,800 65,482 (5,318) Investment earnings 55,000 127,743 72,743 Other 35,500 67,633 32,133 Total revenues 9,882,219 10,418,140 535,921 Expenditures Current General government 1,924,661 1,717,186 (207,475) Public safety 5,031,156 4,851,608 (179,548) Public works 2,138,471 2,038,136 (100,335) Parks and recreation 1,222,215 1,129,641 (92,574) Economic development - 40,000 40,000 Capital outlay Public safety 220,000 66,485 (153,515) Parks and recreation - 5,438 5,438 Debt service Interest and fiscal charges - 8,583 8,583 Total expenditures 10,536,503 9,857,077 (679,426) Excess(deficiency)of revenues over expenditures (654,284) 561,063 1,215,347 Other financing sources(uses) Sale of capital assets 2,000 3,063 1,063 Transfers in 1,086,612 1,091,612 5,000 Transfers out (490,579) (640,579) (150,000) Total other financing sources(uses) 598,033 454,096 (143,937) Net change in fund balances $ (56,251) 1,015,159 $ 1,071,410 Fund balances Beginning of year 3,092,401 End of year $ 4,107,560 See notes to basic financial statements -25- CITY OF FARMINGTON Statement of Net Position Proprietary Funds as of December 31,2014 Business-Type Activities-Enterprise Funds Liquor Sewer Solid Storm Operations Operations Waste Water Assets Current assets Cash and investments $ 775,059 $ 1,800,082 $ 857,606 $ 587,663 Cash and investments restricted for drinking water treatment plant - - - - Receivables Accounts 49,700 405,167 444,259 127,339 Interest - 3,126 413 1,666 Special assessments Delinquent - 35,326 - - Noncurrent - 305,654 - - Due from other funds - - - - Due from other governments - 617 - - Inventory 425,995 - - - Prepaid items 440 - - - Total current assets 1,251,194 2,549,972 1,302,278 716,668 Noncurrent assets Advances to other fund - - - - Capital assets Land - 85,000 - 1,192 Construction in progress - - - 83,274 Buildings - - - - Improvements other than buildings 121,012 - - - Machinery and equipment 242,513 695,880 1,392,282 55,581 Distribution system - - - - Collection system - 28,273,060 - 19,066,823 Less accumulated depreciation (357,594) (9,940,382) (1,208,796) (5,804,833) Total capital assets(net of accumulated depreciation) 5,931 19,113,558 183,486 13,402,037 Total noncurrent assets 5,931 19,113,558 183,486 13,402,037 Total assets $ 1,257,125 $ 21,663,530 $ 1,485,764 $ 14,118,705 Current liabilities Accounts and contracts payable $ 81,340 $ 10,877 $ 90,330 $ 14,096 Accrued salaries and employee benefits payable - - - - Deposits payable - - - - Due to other governments 40,619 - 20,733 - Compensated absences payable-current 29,354 - 18,781 - Total current liabilities 151,313 10,877 129,844 14,096 Noncurrent liabilities Compensated absences payable 9,783 - 6,259 - Net OPEB obligation 35,785 - 35,329 - Total noncurrent liabilities 45,568 - 41,588 - Total liabilities 196,881 10,877 171,432 14,096 Net position Investment in capital assets 5,931 19,113,558 183,486 13,402,037 Restricted for drinking water treatment plant - - - - Unrestricted 1,054,313 2,539,095 1,130,846 702,572 Total net position 1,060,244 21,652,653 1,314,332 14,104,609 Total liabilities and net position $ 1,257,125 $ 21,663,530 $ 1,485,764 $ 14,118,705 See notes to basic financial statements -26- Governmental Water Street Activities- Fund Light Total Internal Service $ 4,317,461 $ 69,460 $ 8,407,331 $ 1,366,136 2,160,566 - 2,160,566 - 261,426 37,898 1,325,789 7,558 37,490 - 42,695 - 5,086 - 40,412 - 28,262 - 333,916 - 120,000 - 120,000 - 885 - 1,502 - - - 425,995 - - - 440 64,110 6,931,176 107,358 12,858,646 1,437,804 225,432 - 225,432 - 328,384 - 414,576 - - - 83,274 - 3,243,203 - 3,243,203 - - - 121,012 - 268,009 - 2,654,265 79,453 32,511,466 - 32,511,466 - - - 47,339,883 - (13,370,598) - (30,682,203) (79,453) 22,980,464 - 55,685,476 _ - 23,205,896 - 55,910,908 - $ 30,137,072 $ 107,358 $ 68,769,554 $ 1,437,804 $ 40,530 $ 28,875 $ 266,048 $ 27,965 - - - 194,511 63,909 - 63,909 308 694 - 62,046 - - - 48,135 14,781 105,133 28,875 440,138 237,565 - - 16,042 - - - 71,114 - - - 87,156 - 105,133 28,875 527,294 237,565 22,980,464 - 55,685,476 - 2,160,566 - 2,160,566 - 4,890,909 78,483 10,396,218 1,200,239 30,031,939 78,483 68,242,260 1,200,239 $ 30,137,072 $ 107,358 $ 68,769,554 $ 1,437,804 -27- CITY OF FARMINGTON Statement of Revenues,Expenses,and Changes in Fund Net Position Proprietary Funds Year Ended December 31,2014 Business-Type Activities-Enterprise Funds Liquor Sewer Solid Storm Operations Operations Waste Water Operating revenue Sales $ 4,634,524 $ - $ - $ - Charges for services - 1,839,935 1,976,113 557,517 Insurance reimbursement - - - - Miscellaneous 4,670 3,811 3,510 1,810 Total operating revenue 4,639,194 1,843,746 1,979,623 559,327 Cost of goods sold 3,467,797 - - - Gross profit 1,171,397 1,843,746 1,979,623 559,327 Operating expenses Personal services 395,972 3,796 340,748 1,394 Professional services 419,342 1,094,374 1,081,108 202,552 Materials and supplies 16,464 22,471 126,133 24,462 Insurance - - - - Depreciation 16,259 590,202 52,445 387,276 Total operating expenses 848,037 1,710,843 1,600,434 615,684 Operating income(loss) 323,360 132,903 379,189 (56,357) Nonoperating revenues(expenses) Intergovernmental - - 21,000 - Investment earnings - 19,462 2,397 9,200 Gain on sale of capital assets - 500 - - Interest expense - (1,803) - - Total nonoperating revenue(expenses) - 18,159 23,397 9,200 Income(loss)before transfers 323,360 151,062 402,586 (47,157) Transfers out (70,016) (299,374) (116,727) (327,951) Change in net position 253,344 (148,312) 285,859 (375,108) Net position Beginning of year 806,900 21,800,965 1,028,473 14,479,717 End of year $ 1,060,244 $ 21,652,653 $ 1,314,332 $ 14,104,609 See notes to basic financial statements -28- Governmental Water Street Activities- Fund Light Total Internal Service $ - $ - $ 4,634,524 $ - 1,326,540 218,811 5,918,916 2,504,417 - - - 313,243 172,551 241 186,593 - 1,499,091 219,052 10,740,033 2,817,660 - - 3,467,797 - 1,499,091 219,052 7,272,236 2,817,660 10,692 - 752,602 2,129,328 334,989 174,957 3,307,322 171,508 184,977 - 374,507 171,076 - - - 315,606 879,303 - 1,925,485 665 1,409,961 174,957 6,359,916 2,788,183 89,130 44,095 912,320 29,477 - - 21,000 10,789 215,161 - 246,220 - - - 500 - (253) - (2,056) - 214,908 - 265,664 10,789 304,038 44,095 1,177,984 40,266 (600,051) - (1,414,119) - (296,013) 44,095 (236,135) 40,266 30,327,952 34,388 68,478,395 1,159,973 $ 30,031,939 $ 78,483 $ 68,242,260 $ 1,200,239 -29- CITY OF FARMINGTON Statement of Cash Flows Proprietary Funds Year Ended December 31,2014 Business-Type Activities-Enterprise Funds Liquor Sewer Solid Storm Operations Operations Waste Water Cash flows from operating activities Cash received from customers $ 4,639,261 $ 1,881,706 $ 1,976,904 $ 558,210 Cash receipts from other funds and reimbursements - - - - Cash payments to suppliers (3,930,743) (1,126,732) (1,221,403) (217,630) Cash payments to employees for services (384,110) (3,796) (335,335) (1,394) Cash payments for interfund services used - - - - Net cash flows from operating activities 324,408 751,178 420,166 339,186 Cash flows from noncapital financing activities Intergovernmental revenue - - 21,000 - Transfers out (70,016) (299,374) (116,727) (327,951) Net cash flows from noncapital financing activities (70,016) (299,374) (95,727) (327,951) Cash flows from capital and related financing activities Acquisition and construction of capital assets - (40,100) - (113,537) Advances(to)from other funds - - - - Proceeds from the disposal of capital assets - 500 - - Interest paid - (1,803) - - Net cash flows from capital and related financing activities - (41,403) - (113,537) Cash flows from investing activities Interest received(charged)on investments - 16,490 2,198 8,797 Net cash flows from investing activities - 16,490 2,198 8,797 Net increase(decrease)in cash and cash equivalents 254,392 426,891 326,637 (93,505) Cash and investments Beginning of year 520,667 1,373,191 530,969 681,168 End of year $ 775,059 $ 1,800,082 $ 857,606 $ 587,663 Reconciliation of operating income(loss)to net cash flows from operating activities Operating income(loss) $ 323,360 $ 132,903 $ 379,189 $ (56,357) Adjustments to reconcile operating income(loss)to net cash flows from operating activities Depreciation 16,259 590,202 52,445 387,276 Change in assets and liabilities Accounts receivable 67 9,059 (2,719) (1,117) Special assessments - 29,518 - - Due from other governments - (617) - - Inventory (36,249) - - - Prepaid items 881 78,707 - - Accounts and contracts payable (32,391) (88,594) (34,895) 9,384 Accrued salaries and employee benefits - - - - Deposits payable - - - - Due to other governments 40,619 - 20,733 - Compensated absences 7,172 - 1,580 - Net OPEB obligation 4,690 - 3,833 - Net cash flows from operating activities $ 324,408 $ 751,178 $ 420,166 $ 339,186 See notes to basic financial statements -30- Governmental Water Street Activities- Fund Light Total Internal Service $ 1,557,874 $ 207,603 $ 10,821,558 $ - - - - 2,810,102 (550,072) (165,720) (7,212,300) - (10,692) - (735,327) (2,183,499) - - - (682,612) 997,110 41,883 2,873,931 (56,009) - - 21,000 10,789 (600,051) - (1,414,119) - (600,051) - (1,393,119) 10,789 (30,264) - (183,901) - 111,417 - 111,417 - - - 500 - (253) - (2,056) - 80,900 - (74,040) - 204,200 - 231,685 - 204,200 - 231,685 - 682,159 41,883 1,638,457 (45,220) 5,795,868 27,577 8,929,440 1,411,356 $ 6,478,027 $ 69,460 $ 10,567,897 $ 1,366,136 $ 89,130 $ 44,095 $ 912,320 $ 29,477 879,303 - 1,925,485 665 16,693 (11,449) 10,534 (7,558) 48,430 - 77,948 - (885) - (1,502) - - - (36,249) - - - 79,588 (47,551) (30,800) 9,237 (168,059) (29,023) - - - 12,214 (5,455) - (5,455) (12,360) 694 - 62,046 - - - 8,752 (1,873) - - 8,523 - $ 997,110 $ 41,883 $ 2,873,931 $ (56,009) -31- CITY OF FARMINGTON Statement of Net Position Fiduciary Fund December 31,2014 Agency Fund Assets Cash and investments $ 349,120 Liabilities Deposits payable $ 349,120 See notes to basic fmancial statements -32- CITY OF FARMINGTON Notes to Basic Financial Statements December 31,2014 NOTE 1—SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Farmington, Minnesota (City) was incorporated in 1872 and operates under the state of Minnesota Statutory Plan A form of government. The City Council is the governing body and is composed of an elected mayor and four council members who exercise legislative authority and determine all matters of policy. The City provides the following services: public safety, roads, water and sanitary sewer, storm water management, solid waste and recycling disposal, public improvements, planning and zoning,recreation,and general administration. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and fmancial reporting principles. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component unit. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the fmancial statements of the primary government misleading. The criteria used to determine if the primary government is fmancially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit's board, is able to impose its will on the potential component unit, is in a relationship of fmancial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. As a result of applying these criteria, certain organizations have been included or disclosed in this report as follows: 1. Discretely Presented Component Unit — The Farmington Economic Development Authority (EDA) is the City's official decision-making body regarding economic development. It promotes the retention and expansion of existing businesses while attracting new businesses to the community in order to promote a diversified tax base,job opportunities,and convenient shopping for residents. The EDA is a legally separate entity from the City, however,the City is financially accountable for the EDA. The EDA's governing board is comprised of two City Council Members and three members appointed by the City Council. The EDA does not issue separate fmancial statements. Information on the EDA's governmental funds is presented as supplemental information elsewhere in this report. C. Government-Wide Financial Statement Presentation The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole, except for fiduciary activities. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which significantly rely upon sales,fees,and charges for support. -33- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) The government-wide Statement of Activities demonstrates the extent to which the direct expense of a given function (general government, public safety, public works, parks and recreation, and economic and community development) or business-type activity (liquor operations, utility services) is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity Interest on debt is considered an indirect expense and is reported separately in the Statement of Activities. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Internally directed revenues are reported as general revenues rather than program revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. As a general rule,the effect of interfund activity has been eliminated from the government-wide financial statements. However, charges between the City's enterprise funds and other functions are not eliminated, as that would distort the direct costs and program revenues reported in those functions. Depreciation expense is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental,proprietary, and fiduciary funds.Major individual governmental and enterprise funds are reported as separate columns in the fund fmancial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. Governmental fund fmancial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting transactions are recorded in the following manner: 1. Revenue Recognition — Revenue is recognized when it becomes measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days after year-end. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met.Proceeds of long-term debt are reported as other fmancing sources. Major revenues susceptible to accrual include property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Major revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue. Such revenues are recorded only when received because it is not measurable until collected. 2. Recording of Expenditures —Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-term debt and other long-term liabilities which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. -34- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide fmancial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and internal service funds are charges to customers for sales and services. The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses that do not meet this defmition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the proprietary fund financial statements. Because the principal user of the internal services is the City's governmental activities, the fmancial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Agency funds have no measurement focus, but utilize the accrual basis of accounting for reporting assets and liabilities. Description of Funds The City reports the following major governmental funds: General Fund—This fund is the City's primary operating fund. It accounts for all financial resources of the general government,except those required to be accounted for in another fund. Debt Service Fund—This fund accounts for the accounts for the fmancial resources accumulated and payments made for principal and interest on long-term bond-financed debt of the City. State Aid Construction Capital Projects Fund—This fund,also referred to as the Road and Bridge Fund,accounts for street construction and road/street rehabilitation or reconstruction projects related to Municipal State Aids. Storm Water Trunk Capital Projects Fund—This fund accounts for construction and improvement storm water trunk infrastructure projects constructed within the City. Permanent Improvement Revolving Capital Projects Fund — This fund accounts for street construction projects fmanced with multiple funding sources. The City reports the following major enterprise funds: Liquor Operations Fund — The Liquor Operations Fund accounts for the retail operations of the City's two off-sale municipal liquor stores. Sewer Operations Fund — The Sewer Operations Fund accounts for the operations of the City's wastewater collection and treatment systems. Solid Waste Fund — The Solid Waste Fund accounts for the revenue and expenses related to the operation of the City's garbage collection and recycling programs. Storm Water Fund — The Storm Water Fund accounts for revenues and expenses related to the maintenance and cleaning of the City's existing storm water collection and holding pond system. -35- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) Water Fund —The Water Fund accounts for the operations of the City's water distribution system including wells,reservoirs,and trunk infrastructure system. Street Light Fund—The Street Light Fund accounts for the fmancial activities related to City owned street lights. Additionally,the City reports the following fund types: Internal Service Funds — Internal service funds account for the fmancing of goods and services provided to other departments or agencies of the City on a cost reimbursement basis. The City's internal service funds account for employee expenses, insurance, fleet services, and technology services. Agency Fund—The agency fund is used to record the receipt and remittance of monies held by the City as an agent primarily for land developers and builders that will be refunded to the respective depositors when the conditions are satisfied in accordance with the respective agreements. E. Budgets and Budgetary Accounting Budgets are prepared annually on a modified accrual basis and legally adopted by Council for the General Fund, Special Revenue Funds,the Debt Service Fund(in total) and most Capital Project Funds(excludes Fire Capital Projects,Recreation Capital Projects,and General Capital Equipment).Budgeted expenditure appropriations lapse at year-end. The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The city administrator submits a proposed operating budget for the fiscal year commencing the following January 1 to the City Council. The operating budget includes proposed expenditures and the means of fmancing them. 2. The City Council reviews the proposed budget and makes appropriate changes. 3. Public hearings are conducted to obtain taxpayer comments. 4. The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund,the Arena(Special Revenue Fund)and Enterprise Funds. 6. The legal level of budgetary control is at the fund level. Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e. personnel services, supplies, other services and charges, etc.) within each department. Management can exceed appropriations at the department level without City Council approval.The City Council must approve any amounts over budget at the fund level by resolution or through the disbursement process. 7. The City Council may authorize transfers of budgeted amounts between funds. -36- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) For the year ended December 31, 2014, expenditures exceeded budget for the following funds. Expenditures in excess of budget were approved by Council either through the disbursement process or separate Council action. Budgeted Actual Expenditures Expenditures Major funds Debt Service Fund $ 3,432,919 $ 3,473,580 State Aid Construction 1,806 3,313 Permanent Improvement Revolving — 388 Nonmajor Special Revenue Funds Park Improvement 80,000 81,351 Arena 298,450 302,084 Nonmajor Capital Projects Funds Sanitary Sewer Trunk — 7,588 Maintenance 300,000 1,338,753 F. Cash and Investments Cash and investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the respective funds according to the approved budget interest allocation. Certain resources set aside for future use, such as the construction of a drinking water treatment plant, or set aside for the repayment of crossover refunding bonds, are classified as Cash and Investments- Restricted or Cash with Fiscal Agent on the Statement of Net Position, because their use is limited by outside agreements and/or applicable debt covenants. Investments are stated at fair value, based upon quoted market prices as of the balance sheet date. Investment income is accrued at the balance sheet date. It is the City's policy to invest in a manner that seeks to ensure preservation of capital in the overall portfolio. Safety of principal is the foremost objective, but liquidity and yield are also important considerations. The objective will be to mitigate credit risk by purchasing only highly rated securities with adequate collateral and interest rate risk by matching maturities to cash flow needs and holding securities to maturity. G. Receivables Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to certify delinquent amounts to the county for collection as special assessments, no allowance for uncollectible accounts has been provided on current receivables. Significant receivable balances not expected to be collected within one year include$56,295 due from other governments in the Debt Service Fund,which is offset by a deferred inflow of resources. H. Interfund Receivables and Payables In the fund fmancial statements, activity between funds that is representative of lending or borrowing arrangements is reported as either"due to/from other funds" (current portion) or"advances to/from other funds." All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as"internal balances." -37- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) I. Property Taxes Property tax levies are set by the City Council in December of each year, and are certified to Dakota County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The county spreads the levies over all taxable property. Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county provides tax settlements to cities and other taxing districts three times a year; in July, December,and January. Property taxes are recognized as revenue in the year levied in the government-wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, taxes are recognized as revenue when received in cash or within 60 days after year-end. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable, and are offset by a deferred inflow of resources in the governmental fund financial statements. J. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. Special assessments are recorded as receivables upon certification to the county. Special assessments are recognized as revenue in the year levied in the government-wide financial statements and proprietary fund financial statements. In the governmental fund financial statements, special assessments are recognized as revenue when received in cash or within 60 days after year-end. Governmental fund special assessments receivable which remain unpaid on December 31 are offset by a deferred inflow of resources in the governmental fund financial statements. K. Inventories Inventories of the proprietary funds, primarily the liquor operations, are stated at cost, which approximates market,using the average cost method. L. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. M. Capital Assets Capital assets, which include property, buildings, improvements, equipment, and infrastructure assets (roads,bridges, sidewalks,and similar items),and intangible assets,such as easements,are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are capitalized at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated fair market value on the date of donation. The City defines capital assets as those with an initial, individual cost of$5,000 or more with an estimated useful life in excess of three year. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. -38- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not reported in the governmental fund fmancial statements. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Land, easements, and construction in progress are not depreciated. The other classes of capital assets are depreciated using the straight-line method over the following estimated useful lives: Buildings 20-50 years Improvements other than buildings 20-50 years Machinery and equipment 5-20 years Infrastructure 30 years Collection/distribution systems 50 years N. Compensated Absences It is the City's policy to permit employees to accumulate earned, but unused leave benefits as either paid time off(PTO), or vacation or sick leave. Under the City's personnel policies and collective bargaining contracts, City employees are granted leave benefits in varying amounts based on length of service. No liability is recorded for non-vesting accumulating rights to receive sick leave benefits. As benefits accrue to employees,the accumulated PTO,vacation and vested sick leave is reported as expense and liability in the government-wide and proprietary fund financial statements. Accrued PTO, vacation and a percentage of sick leave is paid to employees and reported as an expenditure in the governmental fund that will pay for it upon termination. O. Long-Term Obligations In the government-wide and proprietary fund fmancial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and amortized over the life of the bonds using the straight-line method. In the fund fmancial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other fmancing sources. Premiums received on debt issuances are reported as other fmancing sources while discounts on debt issuances are reported as other fmancing uses. P. Deferred Inflows of Resources In addition to liabilities, statements of fmancial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate fmancial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises under a modified accrual basis of accounting, which qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from three sources: property taxes, special assessments, and other accounts receivable not collected within 60 days of year-end. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. Q. Statement of Cash Flows For purposes of the Statement of Cash Flows,the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents.The proprietary funds' portion in the government-wide cash and investment management pool is considered cash equivalents. -39- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) R. Net Position and Flow Assumptions In the government-wide and proprietary fund financial statements, net position represents the difference between assets and liabilities.Net position is displayed in three components: • Net Investment in Capital Assets—Consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets. • Restricted Net Position—Consists of net position restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Unrestricted Net Position—All other elements of net position that do not meet the definition of "restricted"or"net investment in capital assets." The City applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. S. Fund Balance Classifications and Flow Assumptions In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent.These classifications are as follows: • Nonspendable — Consists of amounts that are not in spendable form, such as prepaid items, inventory,and other long-term assets. • Restricted — Consists of amounts related to externally imposed constraints established by creditors,grantors,or contributors;or constraints imposed by state statutory provisions. • Committed—Consists of internally imposed constraints that are established by resolution of the City Council. Those committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned — Consists of internally imposed constraints for amounts intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. These constraints are established by the City Council and/or management. The City Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City Administrator and/or Finance Director. • Unassigned — The residual classification for the General Fund, which also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, the City first uses restricted resources, then unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, the City uses resources in the following order: 1)committed, 2)assigned, and 3)unassigned. -40- NOTE 1—SIGNIFICANT ACCOUNTING POLICIES(CONTINUED) T. Risk Management The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City continues to carry commercial insurance for risks of loss, including workers compensation, property and general liability and employee health and accident insurance. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the fmancial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Property and Casualty Insurance —Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust(LMCIT), a public entity risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability, excess liability, property, automobile,marine,crime,federal laws,employee dishonesty,boiler,petro fund,and open meeting law. The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through member premiums and will reinsure through commercial companies for excess claims. The LMCIT allows the pool to make additional assessments to make the pool self-sustaining. Current state statutes (Minnesota Statutes Subd. 466.04) provide limits of liability for the City. These limits are that the combination of defense expense and indemnification expense shall not exceed $500,000 in the case of one claimant or$1,500,000 for any number of claims arising out of a single occurrence.The City retains risk for the deductible portion of its insurance policies and any potential judicial ruling in excess of the statutory maximum. The City has never had a claim in excess of the statutory maximum. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Workers Compensation Insurance—Workers compensation coverage is provided through a pooled self- insurance program through the LMCIT.The City pays an annual premium to LMCIT.The City is subject to supplemental assessments as deemed necessary by the LMCIT. The LMCIT reinsures through Worker's Compensation Reinsurance Association (WCRA) as required by law. The City's premiums are determined after loss experience is known. The amount of premium adjustment, if any,is considered immaterial and not recorded until received or paid. U. Use of Estimates The preparation of fmancial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmancial statements, and the reported amounts of revenue and expenditures/expenses during the reporting period.Actual results could differ from those estimates. -41- NOTE 2—DEPOSITS AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of the following: Deposits $ 10,267,469 Investments 19,338,672 Total $ 29,606,141 Cash and investments are included on the basic financial statements as follows: Primary government Statement of Net Position Cash and investments $ 26,546,923 Restricted assets—temporarily restricted Cash and investments for construction 2,160,566 Fiduciary fund Cash and investments 349,120 Component unit Statement of Net Position Cash and investments 549,532 $ 29,606,141 B. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council, including checking and savings accounts. The following is considered the most significant risk associated with deposits: Custodial Credit Risk—In the case of deposits,this is the risk that in the event of a bank failure,the City's deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance,corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated"A"or better; revenue obligations rated "AA" or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the fmancial institution furnishing the collateral. The City has no additional deposit policies addressing custodial credit risk. At year-end, the carrying amount of the City's deposits was $10,267,469. At December 31, 2014, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the City's agent in the City's name. -42- NOTE 2—DEPOSITS AND INVESTMENTS(CONTINUED) C. Investments The City has the following investments at year-end: Credit Risk Interest Risk—Maturity Duration in Years Investment Type Rating Agency Less Than 1 1 to 5 5 to10 Total U.S.agency securities AA S&P $ — $ 1,997,364 $ 1,135,818 $ 3,133,181 Municipal bonds AAA S&P — 817,691 247,753 1,065,444 Municipal bonds AA S&P — 568,655 — 568,655 Municipal bonds AA Moody's 310,182 495,570 — 805,752 Negotiable certificates of deposit Not Rated 2,275,822 9,301,619 2,188,199 13,765,640 Total investments $ 2,586,004 $ 13,180,898 $ 3,571,770 $ 19,338,672 Investments are subject to various risks,the following of which are considered the most significant: Custodial Credit Risk — For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the City would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.The City's investment policies do not further address this risk. Credit Risk—This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating,are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less;general obligations rated"A"or better;revenue obligations rated"AA" or better;general obligations of the Minnesota Housing Finance Agency rated "A"or better;bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries,rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank,domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with fmancial institutions qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City's investment policies do not further address credit risk. Concentration Risk— This is the risk associated with investing a significant portion of the City's investments (considered 5 percent or more) in the securities of a single issuer, excluding U.S.guaranteed investments (such as treasuries), investment pools, and mutual funds. The City's investment policy places no limit on the amount the City may invest in any one issuer. However, it discusses the need to diversify investments to minimize risk. At year-end, securities issued by the Federal Home Loan Bank and Federal National Mortgage Association comprised 7.7percent and 8.5 percent,respectively,of the City's investment portfolio. -43- NOTE 2-DEPOSITS AND INVESTMENTS(CONTINUED) Interest Rate Risk-This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City's investment policy states the investment portfolio should be structured to meet cash requirements for ongoing operations.The policy limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates, stating that no more than 30 percent of total investments should extend beyond five years and none should extend beyond fifteen years. NOTE 3-INTERFUND BALANCES AND TRANSFERS A. Interfund Balances The interfund receivable/payable(current portion)and advances(long-term portion)represent the internal fmancing used to purchase a new fire truck in 2013,which is being repaid over five years according to a Council approve resolution.Balances at year-end were as follows: Due From Due To Advances To Advances From Funds Other Funds Other Funds Other Funds Other Funds General Fund $ - $ 120,000 $ - $ 225,432 Water Fund,Proprietary 120,000 - 225,432 - Total $ 120,000 $ 120,000 $ 225,432 $ 225,432 B. Interfund Transfers The following transfers were made during the year in accordance with budget appropriations or as approved by City Council resolution to fund administrative overhead costs, debt service payments, eliminate fund balance deficits,or close funds: Transfers In Governmental General Debt Service Transfers Out Fund Fund Nonmajor Total Governmental General Fund $ - $ - $ 640,579 $ 640,579 State Aid Construction - 50,000 - 50,000 Storm Water Trunk - 207,633 - 207,633 Nonmajor - - 18,000 18,000 Proprietary Liquor Operations 55,016 - 15,000 70,016 Sewer Operations 268,236 31,138 - 299,374 Solid Waste 70,020 46,707 - 116,727 Storm Water 312,382 15,569 - 327,951 Water Fund 385,958 214,093 - 600,051 Total $ 1,091,612 $ 565,140 $ 673,579 $ 2,330,331 -44- NOTE 4—CAPITAL ASSETS Capital asset activity for the year ended December 31,2014 was as follows: A. Changes in Capital Assets Used in Governmental Activities Beginning Completed Ending Balance Additions Deletions Construction Balance Capital assets,not depreciated Land $ 1,441,957 $ — $ — $ — $ 1,441,957 Easements 307,867 — — — 307,867 Construction in progress 60,417 — — (60,417) — Total capital assets,not depreciated 1,810,241 — — (60,417) 1,749,824 Capital assets,depreciated Buildings 21,383,065 — — — 21,383,065 Improvements other than buildings 2,011,337 58,950 (73,476) — 1,996,811 Machinery and equipment 5,711,422 356,203 (238,733) — 5,828,892 Infrastructure 57,462,301 1,031,825 (1,045,127) 60,417 57,509,416 Total capital assets,depreciated 86,568,125 1,446,978 (1,357,336) 60,417 86,718,184 Less accumulated depreciation on Buildings 4,359,196 442,793 — — 4,801,989 Improvements other than buildings 1,375,219 110,788 (73,476) — 1,412,531 Machinery and equipment 4,233,563 252,420 (228,806) — 4,257,177 Infrastructure 22,926,317 1,277,741 (703,782) — 23,500,276 Total accumulated depreciation 32,894,295 2,083,742 (1,006,064) — 33,971,973 Total capital assets,depreciated 53,673,830 (636,764) (351,272) 60,417 52,746,211 Net capital assets $ 55,484,071 $ (636,764) $ (351,272) $ — $ 54,496,035 B. Changes in Capital Assets Used in Business-Type Activities Beginning Completed Ending Balance Additions Deletions Construction Balance Capital assets,not depreciated Land $ 414,576 $ — $ — $ — $ 414,576 Construction in progress — 83,274 — — 83,274 Total capital assets,not depreciated 414,576 83,274 — — 497,850 Capital assets,depreciated Buildings 3,243,203 — — — 3,243,203 Improvements other than buildings 121,012 — — — 121,012 Machinery and equipment 2,574,361 100,627 (20,723) — 2,654,265 Collection/Distribution systems 79,851,349 — — — 79,851,349 Total capital assets,depreciated 85,789,925 100,627 (20,723) — 85,869,829 Less accumulated depreciation on Buildings 2,655,236 208,911 — — 2,864,147 Improvements other than buildings 120,480 532 — — 121,012 Machinery and equipment 2,244,209 95,312 (20,723) — 2,318,798 Collection/Distribution systems 23,757,516 1,620,730 — — 25,378,246 Total accumulated depreciation 28,777,441 1,925,485 (20,723) — 30,682,203 Total capital assets,depreciated 57,012,484 (1,824,858) — — 55,187,626 Net capital assets $ 57,427,060 $ (1,741,584) $ — $ — $ 55,685,476 -45- NOTE 4—CAPITAL ASSETS(CONTINUED) C. Depreciation Expense by Function Depreciation expense was charged to the following functions: Governmental activities General government $ 195,369 Public safety 254,860 Public works 1,411,878 Parks and recreation 221,635 Total depreciation expense—governmental activities $ 2,083,742 Business-type activities Liquor operations $ 16,259 Sewer operations 590,202 Solid waste 52,445 Storm water 387,276 Water 879,303 Total depreciation expense—business-type activities $ 1,925,485 NOTE 5—OPERATING LEASES The City has two retail liquor stores known colloquially as Downtown and Pilot Knob. The Downtown store consists of 6,250 square feet of space in the City Center. In 2012, the City extended the lease for a five-year term at an initial monthly rent of$7,031 plus a proportionate share of common area operating expenses. The City has the option to renew for two additional five-year terms at rates to be negotiated. In addition, the City has the option to terminate the lease on or after August 1, 2015 should the City choose to no longer be in the municipal liquor business. The rent increases $.50 per square foot each year during the remaining term of the lease. In 2014, the City paid $88,802 in rent for the Downtown store and $39,360 in common area operating expenses. The Pilot Knob location occupies a 4,758 square foot store in the Farmington Gateway Center. In 2011, the City renewed the lease for a five-year term at a monthly cost of$6,344 plus a proportionate share of common area operating expenses.The City has the option to renew for an additional three-year term at set lease rates. The City paid$76,128 in rent for the Pilot Knob store and $41,315 in common area operating expenses,during 2014. The following is a schedule by year of future minimum payments required under the leases as of December 31,2014. Year Ending December 31 Amount 2015 $ 168,055 2016 158,492 2017 56,510 $ 383,057 -46- NOTE 6—LONG-TERM DEBT A. Components of Long-Term Debt Final Original Interest Issue Maturity Balance— Issue Rate Date Date End of Year Governmental activities General obligation improvement bonds G.O.Improvement Bonds 2008A $ 1,355,000 3.20-4.10% 07/08/2008 02/01/2024 $ 990,000 G.O.Improvement Bonds 2008B $ 8,545,000 3.00-3.90% 07/08/2008 02/01/2023 5,630,000 G.O.Improvement Bonds 2010C $ 2,455,000 2.00-3.75% 06/10/2010 02/01/2027 2,075,000 G.O.Improvement Refunding Bonds 201IA $ 2,385,000 2.00-2.50% 08/25/2011 02/01/2019 1,570,000 G.O.Improvement Refunding Bonds 2013A $ 5,365,000 2.00% 01/15/2013 02/01/2022 5,365,000 G.O.Street Reconstruction Bonds 2013B $ 1,495,000 0.45-1.95% 10/09/2013 02/01/2020 1,495,000 Total general obligation improvement bonds 17,125,000 Capital improvement bonds G.O.Capital Improvement Bonds 2005C $ 2,280,000 3.50-4.40% 07/01/2005 02/01/2026 1,590,000 G.O.Capital Improvement Bonds 2007A $ 9,990,000 4.00-4.20% 06/28/2007 02/01/2028 7,790,000 Total capital improvement bonds 9,380,000 Public project revenue bond G.O.Capital Improvement Bonds 2010A $ 3,850,000 2.00-4.00% 01/13/2010 02/01/2022 2,700,000 Revenue bonds G.O.Wastewater Treatment Bonds 1995 $ 1,053,000 4.63% 04/04/1995 08/20/2016 110,696 G.O.Utility Revenue Refunding Bonds 2010B $ 1,200,000 2.00-3.25% 01/13/2010 02/01/2022 835,000 Total revenue bonds 945,696 Certificates of indebtedness G.O.Equipment Certificate 2010D $ 1,145,000 1.00-3.10% 06/10/2010 02/01/2020 785,000 Total governmental activities bonds 30,935,696 Unamortized premium 177,829 Compensated absences 734,496 Net OPEB obligation 626,474 Total governmental activities $ 32,474,495 Business-type activities Compensated absences 64,177 Net OPEB obligation 71,114 Total business-type activities $ 135,291 -47- NOTE 6-LONG-TERM DEBT(CONTINUED) B. Changes in Long-Term Debt Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities G.O.improvement bonds $ 19,730,000 $ - $ 2,605,000 $ 17,125,000 $ 1,800,000 Capital improvement bonds 9,885,000 - 505,000 9,380,000 520,000 Public project revenue bond 2,995,000 - 295,000 2,700,000 305,000 Revenue bonds 1,092,435 - 146,739 945,696 149,162 Certificates of indebtedness 905,000 - 120,000 785,000 125,000 Tax increment bonds 140,000 - 140,000 - - Unamortized bond premium 203,702 - 25,873 177,829 - Compensated absences 691,328 459,313 416,145 734,496 550,874 Net OPEB obligation 544,448 91,178 9,152 626,474 - Total governmental activities 36,186,913 550,491 4,262,909 32,474,495 3,450,036 Business-type activities Compensated absences 55,425 42,540 33,788 64,177 48,135 Net OPEB obligation 62,591 9,474 951 71,114 - Total business-type activities 118,016 52,014 34,739 135,291 48,135 Total government-wide $ 36,304,929 $ 602,505 $ 4,297,648 $ 32,609,786 $ 3,498,171 C. Minimum Debt Payments Minimum annual payments required to retire bonds are as follows: Year Ending G.O.Improvement Capital Improvement Public Project Revenue December 31, Principal Interest Principal Interest Principal Interest 2015 $ 1,800,000 $ 455,844 $ 520,000 $ 375,196 $ 305,000 $ 87,906 2016 1,895,000 410,729 540,000 354,124 310,000 79,825 2017 1,910,000 363,214 565,000 332,159 320,000 70,375 2018 2,085,000 311,706 590,000 309,128 330,000 60,213 2019 2,370,000 254,216 615,000 285,028 340,000 49,325 2020-2024 6,505,000 512,784 3,515,000 1,016,047 1,095,000 66,900 2025-2028 560,000 31,950 3,035,000 247,746 - - Total $ 17,125,000 $ 2,340,443 $ 9,380,000 $ 2,919,428 $ 2,700,000 $ 414,544 Year Ending Revenue Certificates of Indebtedness Total December 31, Principal Interest Principal Interest Principal Interest 2015 $ 149,162 $ 27,528 $ 125,000 $ 19,184 $ 2,899,162 $ 965,658 2016 156,534 22,794 125,000 16,621 3,026,534 884,093 2017 95,000 18,378 130,000 13,558 3,020,000 797,684 2018 100,000 15,731 130,000 10,145 3,235,000 706,923 2019 105,000 12,691 135,000 6,365 3,565,000 607,625 2020-2024 340,000 16,738 140,000 2,170 11,595,000 1,614,639 2025-2028 - - - - 3,595,000 279,696 Total $ 945,696 $ 113,860 $ 785,000 $ 68,043 $ 30,935,696 $ 5,856,318 -48- NOTE 6—LONG-TERM DEBT(CONTINUED) D. Descriptions of Long-Term Debt • General Obligation Bonds- The City issues general obligation bonds to provide funds for the acquisition and construction of major capital improvements or to refinance (refund) previous bond issues. The reporting entity's long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. The City is subject to statutory limitation by the state of Minnesota for bonded indebtedness payable principally from property taxes. As of December 31, 2014, the City had not utilized $24,831,878 of its net legal debt margin. • Refunding Bonds-On January 15,2013,the city of Farmington,Minnesota issued$5,365,000 of General Obligation bonds, Series 2013A. A portion of this issue ($1,425,000)was used to refund the outstanding principal of the City's 2005B bonds in advance of their stated maturities on their February 1, 2014 call date. This was considered an advance or crossover refunding. The refunding bond proceeds were placed in an escrow account pending the call date of the old bonds. After the call date, the City will assume all future the debt service payments for the crossover portion of the refunding issue. The difference in cash flows required to service the old debt and the new debt is $136,465. The economic gain, reflected as the difference between the present value of the refunded debt requirements and the refunding debt requirements will be$126,264. • Net OPEB Obligation — This liability represents the City's other post-employment benefits obligation(OPEB)as further described later in these notes. The General,Liquor,and Solid Waste Funds will be used to liquidate this liability. • Compensated Absences—This liability represents vested benefits earned by employees through the end of the year, which will be paid or used in future periods. The General, Liquor, and Solid Waste Funds will be used to liquidate this liability. E. Ultimate Responsibility for Debt All long-term debt is backed by the full faith and credit of the City. F. Conduit Debt Obligations Conduit debt obligations are certain limited obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2014, there was one series of Industrial Revenue Bonds outstanding with an approximate aggregate principal amount payable of$425,000. -49- NOTE 7–DEFINED BENEFIT PENSION PLANS–STATE-WIDE A. Plan Description All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees' Retirement Association(PERA)of Minnesota.PERA administers the General Employees' Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes,Chapters 353 and 356. GERF members belong to either the Coordinated or Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not.All new members must participate in the Coordinated Plan. All police officers, firefighters, and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after five years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service,age,and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula(Method 2).Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent for each remaining year. Under Method 2,the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service.For PEPFF members,the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF and GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1,a full annuity is available when age plus years of service equal 90.Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated Plan members hired prior to July 1, 1989.Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime annuity that ceases upon the death of the retiree—no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service,but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. PERA issues a publicly available fmancial report that includes fmancial statements and required supplementary information for GERF and PEPFF. That report may be obtained at mnpera.org; by writing to PERA at 60 Empire Drive, Suite 200, St.Paul,Minnesota 55103-2088;or by calling(651)296-7460 or (800)652-9026. -50- NOTE 7—DEFINED BENEFIT PENSION PLANS—STATE-WIDE(CONTINUED) B. Funding Policy Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State Legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic and Coordinated Plan members were required to contribute 9.1 percent and 6.25 percent, respectively, of their annual covered salary in 2014. PEPFF members were required to contribute 10.2 percent of their annual covered salary in 2014. In 2014, the City was required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan members, 7.25 percent for Coordinated Plan members, and 15.3 percent for PEPFF members. The City's contributions for the past three years ending December 31, which were equal to the contractually required contributions for each year as set by state statutes,were as follows: GERF PEPFF 2014 $ 282,938 $ 339,338 2013 $ 259,713 $ 323,971 2012 $ 264,756 $ 313,095 Contribution rates will increase on January 1,2015 in the Coordinated Plan(6.5 percent for members and 7.5 percent for employers)and the PEPFF(10.8 percent for members and 16.2 percent for employers). NOTE 8—DEFINED BENEFIT PENSION PLAN—FIRE RELIEF ASSOCIATION A. Plan Description Firefighters of the City of Farmington are members of the Farmington Firefighters Relief Association (Relief Association), a volunteer fire department relief association. The Relief Association is the administrator of a single-employer defined benefit pension plan established to provide benefits for members of the Farmington Fire Department. The plan is established and administered in accordance with Minnesota Statute, Chapter 424A.The plan is governed by a Board of nine members. Six boardmembers are elected by the members of the Relief Association, while the City of Farmington Mayor, City Administrator and Fire Chief are ex-officio members of the Board of Trustees. Benefits begin vesting after ten years of credited service and are payable in a lump sum, based on years of service, to eligible members of the Association upon retirement, permanent disability incurred in the performance of duties or death. At December 31, 2014, the pension benefit was calculated at $4,575 per year of service. Minnesota Statutes assign the authority to establish and amend the benefit provisions of the plan to the Board of Trustees of the Relief Association, provided the benefits are within the limitations established by Minnesota Statutes 424.02, Subd.3(a). There are no covered salaries or related fringe benefits in connection with the Relief Association plan. The defined retirement benefits are based on a member's years of service. Non-employer pension contributions include state-aid from the State of Minnesota and municipal contributions from the City of Farmington. On behalf of state-aid payments from the State of Minnesota are received initially by the City of Farmington and subsequently remitted to the Relief Association. These on-behalf of state-aid payments in addition the City's municipal contribution payments to the Relief Association plan are recognized as revenues and expenditures in the City's general fund during the period received. The Farmington Firefighters Relief Association issues a publicly available fmancial report that includes financial statements and required supplementary information. That report may be obtained by writing to Farmington Firefighters Relief Association, 403 Third Street, Farmington, Minnesota, 55024 or by calling (651)280-6880. -51- NOTE 8—DEFINED BENEFIT PENSION PLAN—FIRE RELIEF ASSOCIATION (CONTINUED) B. Contributions The Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980) specifies the minimum contribution requirement for the City and state aid on an annual basis. These statutes are established and amended by the state Legislature. The minimum support rates from the municipality and state aid are determined in the amount required to meet the normal cost plus amortizing any existing prior year service costs (i.e. unfunded liability, if any) over a closed 10-year period. The minimum contribution from the City and state aid is determined as follows: Normal cost +Amortization payment on unfunded accrued liability prior to any change +Amortization contribution on unfunded accrued liability attributed to any change =Total contribution required The City's annual pension cost(APC)contributed from the state of Minnesota and the City for the three most recent audits are as follows: Total Percent Net State of City of Pension of APC Pension Year Minnesota Farmington Contribution APC Contributed Obligation 2013 $ 127,359 $ 169,445 $ 296,804 $ 296,804 100% $ — 2012 89,419 170,008 259,427 259,427 100% — 2011 87,709 187,713 275,422 275,422 100% — C. Funding Progress The funding progress for the three most recent calculations available are as follows: (Unfunded)/ Actuarial Actuarial Assets Valuation Date— Value Accrued in Excess of Funded December 31, of Assets Liability(AAL) AAL(UAAL) Ratio 2013 $ 2,122,872 $ 2,096,560 $ 26,312 101.3% 2012 1,802,077 2,203,297 (401,220) 81.8% 2011 1,562,690 2,211,705 (649,015) 70.7% D. Additional Information The additional information for the most recent calculation available is as follows: Actuarial valuation date December 31,2013 Actuarial valuation method Fair value Actuarial cost method Entry age normal cost Actuarial assumptions rate of investment return 5% Annual covered payroll None,all volunteer firefighters Age and service retirement age Assumed to occur at age 50 Amortization method Level dollar closed Amortization period 10 years Inflation rate 3.5% -52- NOTE 9—OTHER POST-EMPLOYMENT BENEFITS(OPEB)PLAN A. Plan Description The City provides post-employment benefits to certain eligible employees through the City's Other Post-Employment Benefits (OPEB) Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report.These benefits are summarized as follows: Post-Employment Insurance Benefits —All retirees of the City have the option under state law to continue their medical insurance coverage through the City from the time of retirement until the employee reaches the age of eligibility for Medicare. For members of all employee groups,the retiree must pay the full premium to continue coverage for medical and dental insurance. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees, whether the premiums are paid by the City or the retiree. Consequently,participating retirees are considered to receive a secondary benefit known as an "implicit rate subsidy." This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City's younger and statistically healthier active employees. B. Funding Policy The required contribution is based on projected pay-as-you-go fmancing requirements, with additional amounts to pre-fund benefits as determined annually by the City. C. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost(expense) is calculated based on the ARC of the City. The City has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement No. 45 for employers in plans with fewer than 100 total plan members. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The annual OPEB cost is accrued in the accrual based statements. The liability is funded through payments from the City's General Fund and enterprise funds. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan,and the changes in the City's net OPEB obligation to the plan: ARC $ 96,253 Interest on net OPEB obligation 27,317 Adjustment to ARC (22,918) Annual OPEB cost(expense) 100,652 Contributions made (10,103) Increase in net OPEB obligation 90,549 Net OPEB obligation—beginning of year 607,039 Net OPEB obligation—end of year $ 697,588 -53- NOTE 9—OTHER POST-EMPLOYMENT BENEFITS(OPEB)PLAN(CONTINUED) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years are as follows: Fiscal Percentage of Year Ended Annual Employer Annual OPEB Net OPEB December 31, OPEB Cost Contribution Cost Contributed Obligation 2012 $ 112,108 $ 14,980 13.36% $ 502,051 2013 $ 115,468 $ 10,480 9.08% $ 607,039 2014 $ 100,652 $ 10,103 10.04% $ 697,588 D. Funded Status and Funding Progress As of January 1, 2014,the most recent actuarial valuation date,the actuarial accrued liability for benefits and unfunded actuarial accrued liability (UAAL) were both $822,299, as the plan was unfunded. The covered payroll(annual payroll of active employees covered by the plan)was$5,332,090 and the ratio of the UAAL to the covered payroll was 15 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARC of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress immediately following the notes to basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members)and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets,consistent with the long-term perspective of the calculations. In the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5 percent discount rate and an annual healthcare cost trend rate of 9 percent initially reduced incrementally to an ultimate rate of 5 percent after 12 years. Both rates included a 3 percent inflation assumption.The UAAL is being amortized at an increasing 3.75 percent per year of projected payroll on an open basis. The remaining amortization period at January 1, 2014 was 30 years. -54- NOTE 10-FUND BALANCES A. Classifications At December 31,2014,the City had the following governmental fund balances: Debt Permanent Service State Aid Storm Water Improvement General Fund Fund Construction Trunk Revolving Nonmajor Total Nonspendable Prepaid items $ 33,369 $ - $ - $ - $ - $ 160 $ 33,529 Restricted Debt service - 5,034,389 - - - - 5,034,389 Police programs - - - - - 8,290 8,290 Park improvements - - - - - 77,482 77,482 PEG fees - - - - - 124,095 124,095 Recreational capital projects - - - - - 22,734 22,734 Pavement management - - - - - 406,171 406,171 Total restricted - 5,034,389 - - - 638,772 5,673,161 Assigned Fire department 81,000 - - - - - 81,000 Street construction - - 1,936,898 - - - 1,936,898 Storm water trunk - - - 3,860,802 - - 3,860,802 Improvement projects - - - - 115,082 84,185 199,267 Park improvements - - - - - 134,801 134,801 Ice arena - - - - - 73,614 73,614 Sanitary sewer trunk - - - - - 339,952 339,952 Cable communications - - - - - 408,290 408,290 Fire capital programs - - - - - 140,943 140,943 Pavement management - - - - - 430,249 430,249 Capital equipment - - - - - 6,260 6,260 Total assigned 81,000 - 1,936,898 3,860,802 115,082 1,618,294 7,612,076 Unassigned 3,993,191 - - - - - 3,993,191 Total $ 4,107,560 $ 5,034,389 $ 1,936,898 $ 3,860,802 $ 115,082 $ 2,257,226 $ 17,311,957 B. Minimum Fund Balance Policy The City's policy is to maintain an unassigned fund balance in the General Fund in the range of 40- 50 percent of the subsequent year's budgeted expenditures and transfers out. At December 31, 2014, the unassigned fund balance of the General Fund was 34.9 percent of the subsequent year's budgeted expenditures and transfers out. -55- NOTE 11—COMNIITMENTS AND CONTINGENCIES A. Federal and State Funding Amounts recorded or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected,may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time,although the City expects such amounts,if any,to be immaterial. B. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although the outcome of these lawsuits is not presently determinable,the City's management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City's financial statements relating to these claims. C. Tax Increment Districts The City's tax increment districts are subject to review by the state of Minnesota Office of the State Auditor. Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance,which would have a material effect on the financial statements. D. Future Change in Accounting Standards GASB Statement No. 68 replaces the requirements of Statement No.27,Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to employer governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. GASB Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. This statement will be effective for the City's 2015 fiscal year. The City has not yet determined the fmancial statement impact of adopting this new standard. -56- REQUIRED SUPPLEMENTARY INFORMATION CITY OF FARMINGTON Required Supplementary Information Farmington Fire Relief Association Schedule of Funding Progress Unfunded/ Actuarial Actuarial Assets Valuation Date- Value of Accrued in Excess of Funded December 31, Assets Liability(AAL) AAL(UAAL) Ratio 2011 $ 1,562,690 $ 2,211,705 $ (649,015) 70.7 % 2012 $ 1,802,077 $ 2,203,297 $ (401,220) 81.8 % 2013 $ 2,122,872 $ 2,096,560 $ 26,312 101.3 % City of Farmington Other Post-Employment Benefits Plan Schedule of Funding Progress Unfunded Unfunded Actuarial Actuarial Actuarial Actuarial Liability as a Valuation Date Accrued Value of Accrued Funded Covered Percentage of January 1, Liability Plan Assets Liability Ratio Payroll Payroll 2012 $ 787,156 $ — $ 787,156 — % $5,533,262 14.2% 2013 $ 886,732 $ — $ 886,732 — % $5,740,759 15.1% 2014 $ 822,299 $ — $ 822,299 — % $5,332,090 15.4% -57- SUPPLEMENTARY INFORMATION THIS PAGE INTENTIONALLY LEFT BLANK NONMAJOR GOVERNMENTAL FUNDS The statements that follow are to provide further detail and support additional analysis for the City's nonmajor special revenue and capital projects funds. -58- CITY OF FARMINGTON Nonmajor Governmental Funds Combining Balance Sheet as of December 31,2014 Special Capital Revenue Projects Total Assets Cash and investments $ 265,737 $ 2,281,256 $ 2,546,993 Receivables Accounts 51,797 95,108 146,905 Interest 206 — 206 Special assessments Delinquent 810 245 1,055 Noncurrent 13,019 10,103 23,122 Prepaid items 160 — 160 Total assets $ 331,729 $ 2,386,712 $ 2,718,441 Liabilities Accounts and contracts payable $ 19,508 $ 112,718 $ 132,226 Deposits payable 3,784 300,767 304,551 Due to other governments 261 — 261 Total liabilities 23,553 413,485 437,038 Deferred inflows of resources Unavailable revenue—special assessments 13,829 10,348 24,177 Fund balances Nonspendable 160 — 160 Restricted 85,772 553,000 638,772 Assigned 208,415 1,409,879 1,618,294 Total fund balances 294,347 1,962,879 2,257,226 Total liabilities,deferred inflows of resources,and fund balances $ 331,729 $ 2,386,712 $ 2,718,441 -59- CITY OF FARMINGTON Nonmajor Governmental Funds Combining Statement of Revenues,Expenditures,and Changes in Fund Balances Year Ended December 31,2014 Special Capital Revenue Projects Total Revenue Franchise taxes $ - $ 169,208 $ 169,208 Special assessments 34,467 15,359 49,826 Charges for services 295,596 75,516 371,112 Investment earnings 1,171 - 1,171 Other Donations 5,078 57,901 62,979 Rentals 6,300 - 6,300 Miscellaneous 38,047 - 38,047 Total revenues 380,659 317,984 698,643 Expenditures Current General government - 808 808 Public safety 4,936 15,201 20,137 Public works - 25 25 Parks and recreation 309,760 9,550 319,310 Capital outlay General government - 230,785 230,785 Public safety - 105,758 105,758 Public works - 1,327,776 1,327,776 Parks and recreation 73,675 25,659 99,334 Total expenditures 388,371 1,715,562 2,103,933 Excess(deficiency)of revenues over expenditures (7,712) (1,397,578) (1,405,290) Other fmancing sources(uses) Sale of capital assets 3,000 16,410 19,410 Transfers in 30,000 643,579 673,579 Transfers out (18,000) - (18,000) Total other financing sources(uses) 15,000 659,989 674,989 Net change in fund balances 7,288 (737,589) (730,301) Fund balances Beginning of year 287,059 2,700,468 2,987,527 End of year $ 294,347 $ 1,962,879 $ 2,257,226 -60- THIS PAGE INTENTIONALLY LEFT BLANK NONMAJOR SPECIAL REVENUE FUNDS Nonmajor special revenue funds are used to account for the proceeds of certain specific revenue sources that are restricted or committed to expenditures for specified purposes. Nonmajor special revenue funds presently established are as follows: Police Donations and Forfeitures — used to account for the operations and activities related to donations and the forfeiture of confiscated property and allows for the expenditure of those revenues for expenses related to the public safety of the City. Park Improvement—used to account for the operations and activities related to the collection of park dedication fees and other revenues earmarked for construction and improvement of the City's park and trail system. Arena(Ice)—used to account for the operation of the City's ice arena; one sheet of indoor ice for use by hockey and figure skating groups,both school and youth organizations supported. -61- CITY OF FARMINGTON Nonmajor Special Revenue Funds Combining Balance Sheet as of December 31,2014 Police Donations Park &Forfeitures Improvement Arena Total Assets Cash and investments $ 11,787 $ 212,077 $ 41,873 $ 265,737 Receivables Accounts - - 51,797 51,797 Interest - 206 - 206 Special assessments Delinquent - 810 - 810 Noncurrent - 13,019 - 13,019 Prepaid items - - 160 160 Total assets $ 11,787 $ 226,112 $ 93,830 $ 331,729 Liabilities Accounts and contracts payable $ 3,497 $ - $ 16,011 $ 19,508 Deposits payable - - 3,784 3,784 Due to other governments - - 261 261 Total liabilities 3,497 - 20,056 23,553 Deferred inflows of resources Unavailable revenue-special assessments - 13,829 - 13,829 Fund balances Nonspendable - - 160 160 Restricted for police programs 8,290 - - 8,290 Restricted for park improvements - 77,482 - 77,482 Assigned for park improvements - 134,801 - 134,801 Assigned for ice arena capital - - 73,614 73,614 Total fund balances 8,290 212,283 73,774 294,347 Total liabilities,deferred inflows of resources,and fund balances $ 11,787 $ 226,112 $ 93,830 $ 331,729 -62- CITY OF FARMINGTON Nonmajor Special Revenue Funds Combining Statement of Revenues,Expenditures, and Changes in Fund Balances Year Ended December 31,2014 Police Donations Park &Forfeitures Improvement Arena Total Revenues Special assessments $ - $ 34,467 $ - $ 34,467 Charges for services - - 295,596 295,596 Investment earnings - 1,171 - 1,171 Other Donations 78 - 5,000 5,078 Rentals - 6,300 - 6,300 Miscellaneous 134 36,863 1,050 _ 38,047 Total revenues 212 78,801 301,646 380,659 Expenditures Current Public safety 4,936 - - 4,936 Parks and recreation - 7,676 302,084 309,760 Capital outlay Parks and recreation - 73,675 - 73,675 Total expenditures 4,936 81,351 302,084 388,371 Excess(deficiency)of revenues over expenditures (4,724) (2,550) (438) (7,712) Other financing sources(uses) Sale of capital assets 3,000 - - 3,000 Transfers in - 10,000 20,000 30,000 Transfers out - - (18,000) (18,000) Total other financing sources(uses) 3,000 10,000 2,000 15,000 Net change in fund balances (1,724) 7,450 1,562 7,288 Fund balances Beginning of year 10,014 204,833 72,212 287,059 End of year $ 8,290 $ 212,283 $ 73,774 -$ 294,347 -63- THIS PAGE INTENTIONALLY LEFT BLANK NONMAJOR CAPITAL PROJECTS FUNDS Nonmajor capital projects funds are maintained to account for financial resources that are restricted, committed or assigned to expenditures for capital outlays. Projects are financed through the issuance of debt, special assessments,tax levies,dedicated fees and intergovernmental aids or grants. Nonmajor capital projects funds presently established are as follows: Sanitary Sewer Trunk—used to account for the operations and activities dedicated to the construction and improvement of sanitary sewer trunk facilities in the City. Cable Communications—used to account for the operations and activities related to the provision of cable communications for public access. Fire Capital Projects — used to account for the operations and activities related to fire capital projects and donations to the fire department. Private Capital Projects — used to account for the operations and activities related to engineering and administrative fees related to new development in the City. Recreation Capital Projects —used to account for the operations and activities related to capital improvements to the City owned recreation facilities, such as, the senior center, ice arena and swimming pool,and donations to these activities. Maintenance — formerly called Seal Coating. This fund is used to account for the operations and activities related to maintenance of City roads,trails and buildings. General Capital Equipment — This fund is used to account for the operations and activities related to the City's general capital equipment. -64- CITY OF FARMINGTON Nonmajor Capital Projects Funds Combining Balance Sheet as of December 31,2014 Sanitary Fire Sewer Cable Capital Trunk Communications Projects Assets Cash and investments $ 339,952 $ 475,639 $ 158,282 Receivables Accounts — 67,985 — Special assessments Delinquent 203 — — Noncurrent 9,832 — — Total assets $ 349,987 $ 543,624 $ 158,282 Liabilities Accounts and contracts payable $ — $ 695 $ 17,339 Deposits payable — 10,544 — Total liabilities — 11,239 17,339 Deferred inflows of resources Unavailable revenue—special assessments 10,035 — — Fund balances Restricted for PEG fees — 124,095 — Restricted for recreational capital projects — — — Restricted for pavement management — — — Assigned for sanitary sewer trunk 339,952 — — Assigned for cable communications — 408,290 — Assigned for fire capital programs — — 140,943 Assigned for improvement projects — — — Assigned for pavement management — — — Assigned for capital equipment — — — Total fund balances 339,952 532,385 140,943 Total liabilities,deferred inflows of resources,and fund balances $ 349,987 $ 543,624 $ 158,282 -65- Private Recreation General Capital Capital Capital Projects Projects Maintenance Equipment Total $ 322,194 $ 49,225 $ 929,704 $ 6,260 $ 2,281,256 27,123 - - - 95,108 42 - - - 245 271 - - - 10,103 $ 349,630 $ 49,225 $ 929,704 $ 6,260 $ 2,386,712 $ - $ 1,400 $ 93,284 $ - $ 112,718 290,223 - - - 300,767 290,223 1,400 93,284 - 413,485 313 - - - 10,348 - - - 124,095 - 22,734 - - 22,734 - 406,171 - 406,171 - - - 339,952 - - - - 408,290 - - - - 140,943 59,094 25,091 - - 84,185 - 430,249 - 430,249 - - 6,260 6,260 59,094 47,825 836,420 6,260 1,962,879 $ 349,630 $ 49,225 $ 929,704 $ 6,260 $ 2,386,712 -66- CITY OF FARMINGTON Nonmajor Capital Projects Funds Combining Statement of Revenues,Expenditures, and Changes in Fund Balances Year Ended December 31,2014 Sanitary Fire Sewer Cable Capital Trunk Communications Projects Revenues Franchise taxes $ — $ 169,208 $ — Special assessments 12,984 — — Charges for services 51,840 — — Other Donations — — 39,000 Total revenues 64,824 169,208 39,000 Expenditures Current General government — — — Public safety — — 15,201 Public works 25 — — Parks and recreation — — — Capital outlay General government — 230,785 — Public safety — — 105,758 Public works 7,563 — — Parks and recreation — — — Total expenditures 7,588 230,785 120,959 Excess(deficiency)of revenues over expenditures 57,236 (61,577) (81,959) Other financing sources Sale of capital assets — — 10,150 Transfers in — — 190,000 Total other fmancing sources — — 200,150 Net change in fund balances 57,236 (61,577) 118,191 Fund balances Beginning of year 282,716 593,962 22,752 End of year $ 339,952 $ 532,385 $ 140,943 -67- Private Recreation General Capital Capital Capital Projects Projects Maintenance Equipment Total $ - $ - $ - $ - $ 169,208 2,375 - - - 15,359 23,676 - - - 75,516 18,901 - - 57,901 26,051 18,901 - - 317,984 808 - - - 808 - - - - 15,201 - 25 9,550 - - 9,550 - 230,785 - 105,758 853 - 1,319,360 - 1,327,776 6,266 19,393 - 25,659 1,661 15,816 1,338,753 - 1,715,562 24,390 3,085 (1,338,753) - (1,397,578) - - - 6,260 16,410 23,000 430,579 - 643,579 - 23,000 430,579 6,260 659,989 24,390 26,085 (908,174) 6,260 (737,589) 34,704 21,740 1,744,594 - 2,700,468 $ 59,094 $ 47,825 $ 836,420 $ 6,260 $ 1,962,879 -68- THIS PAGE INTENTIONALLY LEFT BLANK MAJOR DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for the payment of principal and interest on long-term debt obligations other than those issued for and serviced by an enterprise fund. 1995 General Obligation Wastewater Treatment Bonds—The bonds were issued to help fmance a wastewater treatment facility. 2004B General Obligation Tax Increment Refunding Bonds — The bonds were issued for the City Center TIF District. 2005B General Obligation Improvement Bonds — The bonds were refunded in February 2014 with proceeds from the 2013A Bonds. 2005C General Obligation Capital Improvement Bonds—The bonds were issued to fmance Fire Station 2. 2007A General Obligation Capital Improvement Bonds—The bonds were issued to finance City Hall and the City Garage. 2008A&B General Obligation Improvement Bonds—The 2008A bonds were issued for the Elm Street project and the 2008B Bonds were issued for the 195th Street Extension Project. 2010A General Obligation Improvement Refunding Bond — The bonds were issued for the refinancing of the Police Station. 2010B General Obligation Utility Revenue Refunding Bonds— The bonds were issued for the refmancing of the Maintenance Facility bonds. 2010C General Obligation Street Construction Bonds—The bonds were issued for the Walnut Street Reconstruction Project. 2010D General Obligation Equipment Certificate Bonds — The equipment certificates were issued in conjunction with the Ice Arena rehabilitation project. 2011A General Obligation Improvement Refunding Bonds — The bonds were issued for the Main Street Project. 2013A General Obligation Improvement Refunding Bonds — The bonds were issued to refund the 2005B and 2006A bonds which were originally issued for the Ash Street, Hill Dee and Spruce Street Projects. 2013B General Obligation Street Reconstruction Bonds — The bonds were issued to fund the Akin Park Estates East and West Street Reconstruction Project. -69- CITY OF FARMINGTON Debt Service Fund Combining Balance Sheet by Account as of December 31,2014 1995 G.O. 2004B G.O. 2005C G.O. 2007A G.O. Wastewater Tax Increment 2005B G.O. Capital Capital 2008A&B G.O. Treatment Refunding Improvement Improvement Improvement Improvement Bonds Bonds Bonds Bonds Bonds Bonds Assets Cash and investments $ 59,767 $ - $ - $ 140,448 $ 376,757 $ 2,883,286 Receivables Special assessments Delinquent - - - - - 7,517 Noncurrent - - - - 8,280 2,184,807 Due from other governments - - - - - 486 Total assets $ 59,767 $ - $ - $ 140,448 $ 385,037 $ 5,076,096 Liabilities Accounts and contracts payable $ 182 $ - $ - $ 182 $ 182 $ 364 Deferred inflows of resources Unavailable revenue-accounts receivable - - - - - - Unavailable revenue-special assessments - - - - 8,280 2,192,324 Total deferred inflows of resources - - - - 8,280 2,192,324 Fund balances Restricted for debt service 59,585 - - 140,266 376,575 - 2,883,408 Total liabilities,deferred inflows of resources,and fund balances $ 59,767 $ - $ - $ 140,448 $ 385,037 $ 5,076,096 -70- 2010A G.O. 2010B G.O. 2010C G.O. 2010D G.O. 2011A G.O. 2013A G.O. 2013B G.O. Improvement Utility Revenue Street Equipment Improvement Improvement Street Refunding Refunding Construction Certificate Refunding Refunding Construction Bonds Bonds Bonds Bonds Bonds Bonds Bonds Total $ 24,607 $ 135,028 $ 24,618 $ 34,647 $ 342,732 $ 896,469 $ 117,327 $ 5,035,686 - - 1,862 - 1,033 5,648 - 16,060 - - 249,720 - 175,666 1,272,202 - 3,890,675 - - - - - 56,695 - 57,181 $ 24,607 $ 135,028 $ 276,200 $ 34,647 $ 519,431 $ 2,231,014 $ 117,327 $ 8,999,602 $ 182 $ 182 $ 182 $ 182 $ 181 $ 182 $ 182 $ 2,183 - - - - - 56,295 - 56,295 - - 251,582 - 176,699 1,277,850 - 3,906,735 - - 251,582 - 176,699 1,334,145 - 3,963,030 24,425 134,846 24,436 34,465 342,551 896,687 117,145 5,034,389 • $ 24,607 $ 135,028 $ 276,200 $ 34,647 $ 519,431 $ 2,231,014 $ 117,327 $ 8,999,602 -71- CITY OF FARMINGTON Debt Service Fund Combining Schedule of Revenues,Expenditures, and Changes in Fund Balances by Account Year Ended December 31,2014 1995 G.O. 2004B G.O. 2005C G.O. 2007A G.O. Wastewater Tax Increment 2005B G.O. Capital Capital 2008A&B G.O. Treatment Refunding Improvement Improvement Improvement Improvement Bonds Bonds Bonds Bonds Bonds Bonds Revenues Property taxes $ 70,500 $ - $ 36,506 $ 276,000 $ 734,000 $ 50,000 Special assessments - - - - 5,010 400,402 Intergovernmental - 74,720 - - - - Investment earnings - - - - - - Total revenues 70,500 74,720 36,506 276,000 739,010 450,402 Expenditures Current Economic development - 9,417 - - - - Debt service Principal retirement 51,739 140,000 170,000 100,000 405,000 585,000 Interest and fiscal fees 7,110 7,099 31,152 68,241 328,574 260,271 Total expenditures 58,849 156,516 201,152 168,241 733,574 845,271 Excess(deficiency)of revenues over expenditures 11,651 (81,796) (164,646) 107,759 5,436 (394,869) Other financing sources(uses) Transfers in - - - - - 390,588 Paid to refunded bond escrow agent - - - - - - Total other fmancing sources(uses) - - - - - 390,588 Net change in fund balances 11,651 (81,796) (164,646) 107,759 5,436 (4,281) Fund balances Beginning of year 47,934 81,796 164,646 32,507 371,139 2,887,689 End of year $ 59,585 $ - $ - $ 140,266 $ 376,575 $ 2,883,408 ■ -72- 2010A G.O. 2010B G.O. 2010C G.O. 20I0D G.O. 2011A G.O. 2013A G.O. 2013B G.O. Improvement Utility Revenue Street Equipment Improvement Improvement Street Refunding Refunding Construction Certificate Refunding Refunding Construction Bonds Bonds Bonds Bonds Bonds Bonds Bonds Total $ 398,000 $ - $ - $ 166,550 $ 312,000 $ 502,154 $ 135,000 $ 2,680,710 - - 34,149 - 32,218 120,238 - 592,017 - - - - - - - 74,720 - - - - - 1,825 - 1,825 398,000 - 34,149 166,550 344,218 624,217 135,000 3,349,272 - - - - - - - 9,417 295,000 95,000 130,000 120,000 285,000 - - 2,376,739 98,919 29,602 70,222 21,872 37,500 109,007 17,855 1,087,424 393,919 124,602 200,222 141,872 322,500 109,007 17,855 3,473,580 4,081 (124,602) (166,073) 24,678 21,718 515,210 117,145 (124,308) - 124,552 - - - 50,000 - 565,140 - - - - - (1,435,000) - (1,435,000) - 124,552 - - - (1,385,000) - (869,860) 4,081 (50) (166,073) 24,678 21,718 (869,790) 117,145 (994,168) 20,344 134,896 190,509 9,787 320,833 1,766,477 - 6,028,557 $ 24,425 $ 134,846 $ 24,436 i $ 34,465 $ 342,551 $ 896,687 $ 117,145 $ 5,034,389 -73- THIS PAGE INTENTIONALLY LEFT BLANK BUDGETARY COMPARISON SCHEDULES Debt Service Fund State Aid Construction Capital Projects Fund Storm Water Trunk Capital Projects Fund Permanent Improvement Revolving Capital Projects Fund Nonmajor Special Revenue Funds Police Donations and Forfeitures Park Improvement Arena(Ice) Nonmajor Capital Projects Funds Sanitary Sewer Trunk Cable Communications Private Capital Projects Maintenance -74- CITY OF FARMINGTON Debt Service Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Property taxes $ 2,645,000 $ 2,680,710 $ 35,710 Special assessments 543,748 592,017 48,269 Intergovernmental 74,720 74,720 — Investment earnings — 1,825 1,825 Total revenues 3,263,468 3,349,272 85,804 Expenditures Current Economic development — 9,417 9,417 Debt service Principal retirement 2,306,739 2,376,739 70,000 Interest and fiscal fees 1,126,180 1,087,424 (38,756) Total expenditures 3,432,919 3,473,580 40,661 Excess(deficiency)of revenues over expenditures (169,451) (124,308) 45,143 Other financing sources(uses) Transfers in 565,140 565,140 — Paid to refunded bond escrow agent — (1,435,000) (1,435,000) Total other financing sources(uses) 565,140 (869,860) (1,435,000) Net change in fund balances $ 395,689 (994,168) $ (1,389,857) Fund balances Beginning of year 6,028,557 End of year $ 5,034,389 -75- CITY OF FARMINGTON State Aid Construction Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Property taxes $ 177,000 $ 177,000 $ — Special assessments 34,091 49,009 14,918 Intergovernmental 500,000 86,625 (413,375) Total revenues 711,091 312,634 (398,457) Expenditures Capital outlay Public works — 3,313 3,313 Debt service Interest and fiscal charges 1,806 — (1,806) Total expenditures 1,806 3,313 1,507 Excess(deficiency)of revenues over expenditures 709,285 309,321 (399,964) Other financing sources(uses) Transfers out (50,000) (50,000) — Net change in fund balances $ 659,285 259,321 $ (399,964) Fund balances Beginning of year 1,677,577 End of year $ 1,936,898 -76- CITY OF FARMINGTON Storm Water Trunk Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Special assessments $ — $ 106,587 $ 106,587 Other 10,000 — (10,000) Total revenues 10,000 106,587 96,587 Expenditures Capital outlay Public works 60,000 449 (59,551) Excess(deficiency)of revenues over expenditures (50,000) 106,138 156,138 Other financing sources(uses) Transfers out (207,633) (207,633) — Net change in fund balances $ (257,633) (101,495) $ 156,138 Fund balances Beginning of year 3,962,297 End of year $ 3,860,802 -77.- CITY OF FARMINGTON Permanent Improvement Revolving Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Special assessments $ — $ 23,892 $ 23,892 Expenditures Capital outlay Public works — 388 388 Net change in fund balances $ — 23,504 $ 23,504 Fund balances Beginning of year 91,578 End of year $ 115,082 -78- CITY OF FARMINGTON Police Donations and Forfeitures Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Other Donations $ — $ 78 $ 78 Miscellaneous — 134 134 Total revenues — 212 212 Expenditures Current Public safety 6,500 4,936 (1,564) Excess(deficiency)of revenues over expenditures (6,500) (4,724) 1,776 Other financing sources(uses) Sale of capital assets 5,000 3,000 (2,000) Net change in fund balances $ (1,500) (1,724) $ (224) Fund balances Beginning of year 10,014 End of year $ 8,290 -79- CITY OF FARMINGTON Park Improvement Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Special assessments $ 40,000 $ 34,467 $ (5,533) Investment earnings 500 1,171 671 Other Rentals 9,360 6,300 (3,060) Miscellaneous 3,000 36,863 33,863 Total revenues 52,860 78,801 25,941 Expenditures Current Parks and recreation — 7,676 7,676 Capital outlay Parks and recreation 80,000 73,675 (6,325) Total expenditures 80,000 81,351 1,351 Excess(deficiency)of revenues over expenditures (27,140) (2,550) 24,590 Other financing sources(uses) Transfers in — 10,000 10,000 Net change in fund balances $ (27,140) 7,450 $ 34,590 Fund balances Beginning of year 204,833 End of year $ 212,283 -80- CITY OF FARMINGTON Arena Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Charges for services $ 279,100 $ 295,596 $ 16,496 Other Donations 5,000 5,000 — Miscellaneous 1,000 1,050 50 Total revenues 285,100 301,646 16,546 Expenditures Current Parks and recreation 298,450 302,084 3,634 Excess(deficiency)of revenues over expenditures (13,350) (438) 12,912 Other financing sources(uses) Transfers in 20,000 20,000 — Transfers out — (18,000) (18,000) Total other financing sources(uses) 20,000 2,000 (18,000) Net change in fund balances $ 6,650 1,562 $ (5,088) Fund balances Beginning of year 72,212 End of year $ 73,774 -81- CITY OF FARMINGTON Sanitary Sewer Trunk Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Special assessments $ 10,000 $ 12,984 $ 2,984 Charges for services 20,000 51,840 31,840 Total revenues 30,000 64,824 34,824 Expenditures Current Public works — 25 25 Capital outlay Public works — 7,563 7,563 Total expenditures — 7,588 7,588 Net change in fund balances $ 30,000 57,236 $ 27,236 Fund balances Beginning of year 282,716 End of year $ 339,952 -82- CITY OF FARMINGTON Cable Communications Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Over(Under) Final Budget Actual Final Budget Revenues Franchise taxes $ 115,000 $ 169,208 $ 54,208 Expenditures Capital outlay General government 330,500 230,785 (99,715) Net change in fund balances $ (215,500) (61,577) $ 153,923 Fund balances Beginning of year 593,962 End of year $ 532,385 -83- CITY OF FARMINGTON Private Capital Projects Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Revenues Special assessments $ — $ 2,375 $ 2,375 Charges for services 50,000 23,676 (26,324) Total revenues 50,000 26,051 (23,949) Expenditures Current General government — 808 808 Capital outlay Public works 50,000 853 (49,147) Total expenditures 50,000 1,661 (48,339) Net change in fund balances $ — 24,390 $ 24,390 Fund balances Beginning of year 34,704 End of year $ 59,094 -84- CITY OF FARMINGTON Maintenance Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31,2014 Original and Over(Under) Final Budget Actual Final Budget Expenditures Capital outlay Public works $ 300,000 $ 1,319,360 $ 1,019,360 Parks and recreation — 19,393 19,393 Total expenditures 300,000 1,338,753 1,038,753 Other financing sources(uses) Transfers in 430,579 430,579 — Net change in fund balances $ 130,579 (908,174) $ (1,038,753) Fund balances Beginning of year 1,744,594 End of year $ 836,420 -85- INTERNAL SERVICE FUNDS Employee Expense — used to account for the costs of employer paid benefits including pension, social security, health, life and dental insurance, and worker's compensation insurance. Property and Liability Insurance—used to account for the costs of property and liability insurance for the City. Fleet — used to account for the costs of vehicle maintenance services provided to divisions by staff at the City garage facility. Information Technology—used to account for the costs of computer hardware, software and internet services provided to all City departments. -86- CITY OF FARMINGTON Internal Service Funds Combining Statement of Net Position as of December 31,2014 Property and Employee Liability Information Expense Insurance Fleet Technology Total Assets Current assets Cash and investments $ 807,672 $ 227,831 $ 130,048 $ 200,585 $ 1,366,136 Accounts receivable - 7,558 - - 7,558 Prepaid items 60,990 - - 3,120 64,110 Total current assets 868,662 235,389 130,048 203,705 1,437,804 Noncurrent assets Capital assets Machinery and equipment - - 79,453 - 79,453 Less accumulated depreciation - - (79,453) - 79,453) Total capital assets - - - - - Total assets $ 868,662 $ 235,389 $ 130,048 $ 203,705 $ 1,437,804 Current liabilities Accounts and contracts payable $ 5,262 $ 4,064 $ 11,871 $ 6,768 $ 27,965 Accrued salaries and employee benefits payable 194,139 - 372 - 194,511 Deposits payable 308 - - - 308 Compensated absences payable - - 14,346 435 14,781 Total current liabilities 199,709 4,064 26,589 7,203 237,565 Net position Unrestricted 668,953 231,325 103,459 196,502 1,200,239 Total liabilities and net position $ 868,662 $ 235,389 $ 130,048 $ 203,705 $ 1,437,804 -87- CITY OF FARMINGTON Internal Service Funds Combining Statement of Revenues,Expenses, and Changes in Fund Net Position Year Ended December 31,2014 Property and Employee Liability Information Expense Insurance Fleet Technology Total Operating revenues Charges for services $ 1,931,497 $ - $ 251,294 $ 321,626 $ 2,504,417 Insurance reimbursement - 313,243 - - 313,243 Total operating revenues 1,931,497 313,243 251,294 321,626 2,817,660 Operating expenses Personal services 1,881,587 - 164,291 83,450 2,129,328 Professional services - - 14,545 156,963 171,508 Materials and supplies - - 55,599 115,477 171,076 Insurance - 315,606 - - 315,606 Depreciation - - 665 - 665 Total operating expenses 1,881,587 315,606 235,100 355,890 2,788,183 Operating income(loss) 49,910 (2,363) 16,194 (34,264) 29,477 Nonoperating revenue Intergovernmental 10,789 - - - 10,789 Change in net position 60,699 (2,363) 16,194 (34,264) 40,266 Net position Beginning of year 608,254 233,688 87,265 230,766 1,159,973 End of year $ 668,953 $ 231,325 $ 103,459 $ 196,502 $ 1,200,239 -88- CITY OF FARMINGTON Internal Service Funds Combining Statement of Cash Flows Year Ended December 31,2014 Property and Employee Liability Information Expense Insurance Fleet Technology Total Cash flows from operating activities Cash receipts from other funds and reimbursements $ 1,931,497 $ 305,685 $ 251,294 $ 321,626 $ 2,810,102 Cash payments to employees for services (1,922,575) - (166,243) (94,681) (2,183,499) Cash payments for interfund services used - (321,542) (75,005) (286,065) (682,612) Net cash flows from operating activities 8,922 (15,857) 10,046 (59,120) (56,009) Cash flows from noncapital related financing activities Intergovernmental 10,789 - - - 10,789 Net increase(decrease)in cash and cash equivalents 19,711 (15,857) 10,046 (59,120) (45,220) Cash and cash equivalents Beginning of year 787,961 243,688 120,002 259,705 1,411,356 End of year $ 807,672 $ 227,831 $ 130,048 $ 200,585 $ 1,366,136 Reconciliation of operating income(loss)to net cash flows from operating activities Operating income(loss) $ 49,910 $ (2,363) $ 16,194 $ (34,264) $ 29,477 Adjustments to reconcile operating income(loss)to net cash flows from operating activities Depreciation - - 665 - 665 Change in assets and liabilities Accounts receivable - (7,558) - - (7,558) Prepaid items (52,221) - - 4,670 (47,551) Accounts and contracts payable 69 (5,936) (4,861) (18,295) (29,023) Accrued salaries and employee benefits 12,214 - - - 12,214 Deposits payable (1,050) - - (11,310) (12,360) Compensated absences payable - - (1,952) 79 (1,873) Total adjustments (40,988) (13,494) (6,148) (24,856) (85,486) Net cash flows from operating activities $ 8,922 $ (15,857) $ 10,046 $ (59,120) $ (56,009) -89- FIDUCIARY FUND Agency Fund — used to account for receipt and remittance of monies held by the City as an agent primarily for land developers and builders that will be refunded to the respective depositors when the conditions are satisfied in accordance with the respective agreements. -90- CITY OF FARMINGTON Agency Fund Statement of Changes in Assets and Liabilities for the Year Ended December 31,2014 Balance Balance January 1, December 31, 2014 Additions Deductions 2014 Assets Cash and investments $ 398,172 $ 1,097,196 $ 1,146,248 $ 349,120 Liabilities Deposits payable $ 398,172 $ 1,097,196 $ 1,146,248 $ 349,120 -91- STATISTICAL SECTION (UNAUDITED) THIS PAGE INTENTIONALLY LEFT BLANK STATISTICAL SECTION (UNAUDITED) This part of the City of Farmington's(the City)comprehensive annual financial report(CAFR)presents detailed information as a context for understanding what the information in the financial statements,note disclosures,and required supplementary information says about the City's overall financial health. Page Contents: Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 92 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source,property taxes. 102 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 107 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. 115 Operating Indicators These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides,and the activities it performs. 117 Sources: Unless otherwise noted,the information in these schedules is derived from the CAFR for the relevant year. CITY OF FARMINGTON,MINNESOTA Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 Governmental activities Net investment in capital assets $ (11,370,862) $ 24,059,576 $ 34,026,294 $ 27,179,331 Restricted 471,092 491,830 5,621,371 5,239,803 Unrestricted 14,106,747 14,738,527 8,664,996 14,298,196 Total governmental activities net position $ 3,206,977 $ 39,289,933 $ 48,312,661 $ 46,717,330 Business-type activities Net investment in capital assets $ 10,804,369 $ 58,772,575 $ 58,050,157 $ 61,492,839 Restricted 1,916,861 2,049,445 2,035,244 2,094,245 Unrestricted 8,427,496 8,655,523 7,438,368 7,357,600 Total business-type activities net position $ 21,148,726 $ 69,477,543 $ 67,523,769 $ 70,944,684 Primary government Net investment in capital assets $ (566,493) $ 82,832,151 $ 92,076,451 $ 88,672,170 Restricted 2,387,953 2,541,275 7,656,615 7,334,048 Unrestricted 22,534,243 23,394,050 16,103,364 21,655,796 Total primary government net position $ 24,355,703 $ 108,767,476 $ 115,836,430 $ 117,662,014 -92- 2009 2010 2011 2012 2013 2014 $ 33,485,859 $ 22,287,712 $ 20,484,140 $ 21,263,670 $ 23,462,934 $ 23,383,175 4,036,063 3,757,948 1,661,973 11,034,909 11,669,054 9,235,448 9,568,551 11,197,982 14,963,297 11,131,928 9,628,139 13,150,789 $ 47,090,473 $ 37,243,642 $ 37,109,410 $ 43,430,507 $ 44,760,127 $ 45,769,412 $ 59,999,027 $ 60,219,892 $ 60,462,689 $ 58,728,008 $ 57,427,060 $ 55,685,476 2,094,245 2,108,045 2,140,345 2,159,566 2,159,566 2,160,566 5,622,790 6,067,114 6,819,607 7,845,545 8,891,769 10,396,218 $ 67,716,062 $ 68,395,051 $ 69,422,641 $ 68,733,119 $ 68,478,395 $ 68,242,260 $ 93,484,886 $ 82,507,604 $ 80,946,829 $ 79,991,678 $ 80,889,994 $ 79,068,651 6,130,308 5,865,993 3,802,318 13,194,475 13,828,620 11,396,014 15,191,341 17,265,096 21,782,904 18,977,473 18,519,908 23,547,007 $ 114,806,535 $ 105,638,693 $ 106,532,051 $ 112,163,626 $ 113,238,522 $ 114,011,672 -93- CITY OF FARMINGTON,MINNESOTA Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 Expenses Governmental activities General government $ 3,030,092 $ 2,247,160 $ 2,137,956 $ 2,476,747 Public safety 5,020,180 1,894,841 4,267,469 4,415,667 Public works 5,802,236 6,076,693 4,410,908 8,676,538 Park and recreation 2,068,799 2,013,105 2,018,845 2,188,941 Economic development — — — — Intergovernmental donations — — — — Interest and fiscal charges 977,554 1,026,436 1,281,558 1,615,144 Total governmental activities expenses $ 16,898,861 $ 13,258,235 $ 14,116,736 $ 19,373,037 Business-type activities Liquor operations $ 3,187,323 $ 4,039,247 $ 4,167,586 $ 4,385,187 Sewer operations 1,262,381 1,722,708 1,938,784 1,786,170 Solid waste 1,596,797 1,683,859 1,803,932 1,830,082 Storm water 262,208 631,755 1,083,760 807,791 Water 981,503 1,564,104 1,606,115 2,588,880 Street light — — — — Total business-type activities 7,290,212 9,641,673 10,600,177 11,398,110 Total primary government expenses $ 24,189,073 $ 22,899,908 $ 24,716,913 $ 30,771,147 Program revenues Governmental activities Charges for services General government $ 1,038,719 $ 1,012,197 $ 1,556,119 $ 641,069 Public safety 332,934 369,808 451,233 481,589 Public works 3,785,515 2,147,413 1,436,915 300,437 Park and recreation 1,160,181 585,691 614,693 689,487 Economic development — — — — Operating grants and contributions 1,358,230 2,837,112 7,418,326 10,695,352 Capital grants and contributions 959,582 2,514,025 862,732 944,140 Total governmental activities program revenues $ 8,635,161 $ 9,466,246 $ 12,340,018 $ 13,752,074 -94- 2009 2010 2011 2012 2013 2014 $ 2,603,290 $ 2,410,637 $ 1,897,429 $ 1,865,415 $ 1,778,549 $ 1,940,630 4,568,041 4,844,128 5,162,361 4,989,522 5,156,950 5,192,091 5,891,010 3,261,582 2,800,221 3,063,908 3,849,742 4,893,341 1,814,966 1,864,728 1,666,466 1,719,254 1,775,967 1,730,734 149,749 83,572 114,639 44,114 50,000 49,417 - 8,526,239 313,198 - - - 1,625,021 1,718,077 1,431,468 1,302,605 1,290,439 1,020,096 $ 16,652,077 $ 22,708,963 $ 13,385,782 $ 12,984,818 $ 13,901,647 $ 14,826,309 $ 4,335,267 $ 4,267,536 $ 4,091,541 $ 4,116,030 $ 4,206,058 $ 4,315,834 1,887,357 1,811,992 1,879,752 1,891,872 1,627,927 1,712,146 1,799,151 1,773,240 1,789,114 1,727,384 1,658,547 1,600,434 714,058 702,089 745,967 734,516 513,582 615,684 1,859,342 1,732,559 1,772,096 1,705,167 1,427,298 1,410,214 - 175,050 180,200 176,513 184,834 174,957 10,595,175 10,462,466 10,458,670 10,351,482 9,618,246 9,829,269 $ 27,247,252 $ 33,171,429 $ 23,844,452 $ 23,336,300 $ 23,519,893 $ 24,655,578 $ 504,802 $ 503,258 $ 470,572 $ 436,113 $ 684,528 $ 534,008 430,107 427,593 461,659 423,721 482,759 409,460 1,031,006 355,506 306,860 225,497 115,092 94,416 508,655 537,773 520,522 581,341 596,165 607,566 25,789 13,374 6,333 - - - 1,214,756 551,257 507,180 533,939 713,378 677,999 1,140,980 2,449,930 2,388,656 4,976,219 645,233 477,833 $ 4,856,095 $ 4,838,691 $ 4,661,782 $ 7,176,830 $ 3,237,155 $ 2,801,282 (continued) -95- CITY OF FARMINGTON,MINNESOTA Changes in Net Position(continued) Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 Program revenues(continued) Business-type activities Charges for services Liquor operations $ 3,444,147 $ 3,992,181 $ 4,267,756 $ 4,436,714 Sewer operations 1,303,488 1,323,564 1,680,885 1,553,707 Solid waste 1,648,856 1,661,226 1,665,752 1,775,170 Storm water 417,816 433,035 349,445 445,815 Water 1,487,575 1,427,926 1,312,212 1,490,169 Street light — — — — Operating grants and contributions 14,762 368,006 119,604 103,010 Capital grants and contributions 972,127 3,973,033 — 41,047 Total business-type activities program revenues 9,288,771 13,178,971 9,395,654 9,845,632 Total primary government program revenues $ 17,923,932 $ 22,645,217 $ 21,735,672 $ 23,597,706 Net(expense)/revenue Governmental activities $ (8,263,700) $ (3,791,989) $ (1,776,718) $ (5,620,963) Business-type activities 1,998,559 3,537,298 (1,204,523) (1,552,478) Total primary government net expense $ (6,265,141) $ (254,691) $ (2,981,241) $ (7,173,441) General revenues and other changes in net position Governmental activities Property taxes $ 7,290,224 $ 8,093,748 $ 8,040,734 $ 8,743,569 Tax increments — — — — Franchise taxes — — — — Unrestricted grants and contributions — — 337,753 173,383 Unrestricted investment earnings(charges) 295,294 433,129 750,689 513,072 Gain on sale of assets — — — — Transfers 509,815 537,894 1,120,865 (4,713,510) Total governmental activities $ 8,095,333 $ 9,064,771 $ 10,250,041 $ 4,716,514 Business-type activities Unrestricted investment earnings(charges) $ 166,157 $ 274,685 $ 371,614 $ 204,480 Gain on disposal of assets — — — 55,403 Transfers (509,815) (537,894) (1,120,865) 4,713,510 Total business-type activities (343,658) (263,209) (749,251) 4,973,393 Total primary government $ 7,751,675 $ 8,801,562 $ 9,500,790 $ 9,689,907 r Change in net position Governmental activities $ (168,367) $ 5,272,782 $ 8,473,323 $ (904,449) Business-type activities 1,654,901 3,274,089 (1,953,774) 3,420,915 Total primary government $ 1,486,534 $ 8,546,871 $ 6,519,549 $ 2,516,466 -96- 2009 2010 2011 2012 2013 2014 $ 4,335,565 $ 4,285,471 $ 4,199,344 $ 4,397,572 $ 4,521,454 $ 4,639,194 1,376,043 1,581,526 1,600,303 1,787,957 1,816,763 1,843,746 1,767,750 1,850,073 1,872,771 1,869,426 1,952,177 1,979,623 460,346 464,043 467,729 475,060 565,166 559,327 1,509,100 1,439,906 1,417,708 1,595,116 1,558,400 1,499,091 - 140,773 178,464 215,029 216,719 219,052 104,206 72,631 29,000 20,010 19,300 21,000 53,354 100,162 49,473 100,525 108,642 - 9,606,364 9,934,585 9,814,792 10,460,695 10,758,621 10,761,033 $ 14,462,459 $ 14,773,276 $ 14,476,574 $ 17,637,525 $ 13,995,776 $ 13,562,315 $ (11,795,982) $ (17,870,272) $ (8,724,000) $ (5,807,988) $ (10,664,492) $ (12,025,027) (988,811) (527,881) (643,878) 109,213 1,140,375 931,764 $ (12,784,793) $ (18,398,153) $ (9,367,878) $ (5,698,775) $ (9,524,117) $ (11,093,263) $ 8,963,578 $ 9,189,015 $ 9,607,893 $ 10,742,860 $ 10,748,581 $ 10,962,860 185,726 155,094 150,339 154,214 - - 219,722 228,932 237,449 243,635 259,671 269,208 47,830 927 1,500 1,816 24,845 257,386 311,546 181,943 119,632 77,276 (32,408) 130,739 4,626 25,412 75,306 - 18,268 - 2,436,097 (1,107,882) (1,602,351) 909,284 1,410,114 1,414,119 $ 12,169,125 $ 8,673,441 $ 8,589,768 $ 12,129,085 $ 12,429,071 $ 13,034,312 $ 196,286 $ 98,988 $ 69,117 $ 110,549 $ (40,071) $ 246,220 - - - - 55,086 - (2,436,097) 1,107,882 1,602,351 (909,284) (1,410,114) (1,414,119) (2,239,811) 1,206,870 1,671,468 (798,735) (1,395,099) (1,167,899) $ 9,929,314 $ 9,880,311 $ 10,261,236 $ 11,330,350 $ 11,033,972 $ 11,866,413 $ 373,143 $ (9,196,831) $ (134,232) $ 6,321,097 $ 1,764,579 $ 1,009,285 (3,228,622) 678,989 1,027,590 (689,522) (254,724) (236,135) $ (2,855,479) $ (8,517,842) $ 893,358 $ 5,631,575 $ 1,509,855 $ 773,150 -97- CITY OF FARMINGTON,MINNESOTA Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 General Fund Reserved $ — $ — $ — $ 29,198 Unreserved 1,254,700 1,518,153 2,139,686 2,008,315 Nonspendable — — — — Restricted — — — — Assigned — — — — Unassigned — — — — Total General Fund $ 1,254,700 $ 1,518,153 $ 2,139,686 $ 2,037,513 All other governmental funds Reserved $ 1,697,337 $ 2,320,397 $ 2,303,108 $ 1,962,741 Unreserved,designated,reported in Capital projects funds 6,528,512 4,825,951 11,164,672 9,185,158 Unreserved,undesignated,reported in Special revenue funds 899,469 670,597 823,821 343,559 Capital projects funds (676,629) (1,474,992) (2,312,185) (518,992) Debt service funds — — (12,236) (148,755) Nonspendable — — — — Restricted — — — — Assigned — — — — Unassigned — — — — Total all other governmental funds $ 8,448,689 $ 6,341,953 $ 11,967,180 $ 10,823,711 Total all funds $ 9,703,389 $ 7,860,106 $ 14,106,866 $ 12,861,224 Note: The City implemented GASB Statement No.54 in fiscal 2011.Prior year information has not been restated. -98- 2009 2010 2011 2012 2013 2014 $ 31,996 $ 30,314 $ - $ - $ - $ - 2,125,884 2,188,528 - - - - - - 43,102 612,518 13,388 33,369 - - - - - 81,000 - - 2,093,006 2,067,246 3,079,013 3,993,191 $ 2,157,880 $ 2,218,842 $ 2,136,108 $ 2,679,764 $ 3,092,401 $ 4,107,560 $ 435,000 $ 381,500 $ - $ - $ - $ - 52,771 (159,042) - - - - 3,415,978 6,244,182 - - - - 1,155,954 738,371 - - - - - - 307,074 146 - 160 - - 2,312,309 2,950,166 6,881,858 5,673,161 - - 6,726,928 9,134,820 7,865,678 7,531,076 - - (576,114) - - - $ 5,059,703 $ 7,205,011 $ 8,770,197 $ 12,085,132 $ 14,747,536 $ 13,204,397 $ 7,217,583 $ 9,423,853 $ 10,906,305 $ 14,764,896 $ 17,839,937 $ 17,311,957 -99- CITY OF FARMINGTON,MINNESOTA Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2005 2006 2007 2008 Revenues General property taxes $ 7,269,878 $ 8,039,988 $ 7,974,235 $ 8,565,878 Franchise fees 155,758 191,051 196,454 215,689 Special assessments 2,607,868 1,053,646 1,157,022 893,897 Licenses and permits 704,763 784,250 1,217,163 360,068 Intergovernmental 1,358,230 2,837,150 7,756,079 10,868,735 Charges for services 1,227,846 1,476,806 1,545,478 723,875 Fines and forfeits 73,951 86,635 75,411 75,522 Investment earnings 295,294 433,129 750,689 513,072 Other 1,547,163 522,682 892,832 717,206 Total revenues 15,240,751 15,425,337 21,565,363 22,933,942 Expenditures Current General government 2,054,693 1,812,423 1,822,699 1,925,414 Public safety 3,064,745 3,187,253 3,802,591 4,050,691 Public works 931,386 1,391,838 1,507,555 1,581,410 Park and recreation 1,886,103 2,052,856 2,058,213 1,812,370 Economic development 664,376 514,870 336,351 114,997 Capital outlay 7,276,364 11,384,435 13,715,576 21,511,910 Debt service Principal 4,325,541 1,975,875 2,202,183 1,854,314 Interest and fiscal charges 802,943 925,435 1,045,361 1,424,339 Total expenditures 21,006,151 23,244,985 26,490,529 34,275,445 Excess(deficiency)of revenues over expenditures (5,765,400) (7,819,648) (4,925,166) (11,341,503) Other financing sources(uses) Bonds issued 8,210,068 5,438,471 9,919,439 9,818,996 Payment of refunded debt — — — — Sale of capital assets — — 131,622 20,222 Transfers in 2,514,585 3,284,777 2,588,096 1,156,057 Transfers out (2,004,769) (2,746,883) (1,467,231) (899,414) Total other financing sources(uses) 8,719,884 5,976,365 11,171,926 10,095,861 Net change in fund balances $ 2,954,484 $ (1,843,283) $ 6,246,760 $ (1,245,642) Debt service as a percentage of noncapital expenditures 37.4% 24.5% 25.4% 25.7% -100- 2009 2010 2011 2012 2013 2014 $ 8,944,965 $ 9,392,326 $ 9,690,053 $ 11,112,325 $ 10,808,636 $ 11,031,219 219,722 228,932 237,449 243,635 259,671 269,208 778,101 1,450,515 720,862 3,296,216 913,313 821,331 376,183 454,769 456,791 423,153 664,673 514,728 1,915,315 2,657,788 2,217,217 556,496 1,329,395 1,011,221 1,585,069 1,141,182 1,096,174 1,015,835 865,736 890,281 67,155 64,779 78,710 73,210 81,919 65,482 311,546 176,191 20,444 158,657 46,707 130,739 503,493 375,201 272,234 222,083 233,808 174,959 14,701,549 15,941,683 14,789,934 17,101,610 15,203,858 14,909,168 2,061,106 2,064,477 1,828,147 1,830,470 1,686,263 1,717,994 4,234,175 4,589,650 4,705,581 4,702,399 4,850,400 4,871,745 3,407,642 1,379,325 1,382,306 1,402,838 2,081,956 2,038,161 1,525,303 1,591,378 1,399,541 1,427,257 1,530,238 1,448,951 102,769 84,572 112,612 91,165 50,000 49,417 7,287,689 4,046,022 316,134 555,293 1,290,875 1,839,726 2,796,155 2,238,084 5,090,101 2,912,213 7,394,424 2,376,739 1,681,127 1,507,873 1,527,970 1,336,414 1,379,551 1,096,007 23,095,966 17,501,381 16,362,392 14,258,049 20,263,707 15,438,740 (8,394,417) (1,559,698) (1,572,458) 2,843,561 (5,059,849) (529,572) - 8,710,984 2,418,979 - 7,088,037 - - (5,948,057) - - - (1,435,000) 4,626 25,412 139,454 105,746 26,154 22,473 5,830,778 3,359,406 2,455,874 3,997,318 7,492,556 2,330,331 (3,084,628) (2,381,778) (1,959,397) (3,088,034) (6,082,442) (916,212) 2,750,776 3,765,967 3,054,910 1,015,030 8,524,305 1,592 $ (5,643,641) $ 2,206,269 $ 1,482,452 $ 3,858,591 $ 3,464,456 $ (527,980) 28.3% 27.8% 41.2% 31.0% 46.2% 24.8% -101- CITY OF FARMINGTON,MINNESOTA Tax Capacity Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Commercial/Industrial, Public Utility, Less Captured Payable Residential Railroads,and Agricultural Tax Increment Year Property Personal Property Apartments Property Tax Capacity 2005 $ 11,774,130 $ 1,450,016 $ 332,263 $ 102,283 $ (1,394,984) 2006 13,603,653 1,597,805 307,836 161,240 (1,454,782) 2007 15,288,158 1,978,027 307,472 153,964 (495,460) 2008 16,248,923 2,335,426 307,317 186,181 (272,852) 2009 16,198,494 2,718,255 293,783 251,152 (276,434) 2010 14,657,576 2,849,385 289,447 272,170 (227,913) 2011 13,340,049 2,765,411 267,263 224,369 (143,056) 2012 11,604,460 2,683,032 269,378 207,859 (137,147) 2013 10,805,838 2,666,688 270,394 220,247 (130,805) 2014 11,207,086 2,669,813 272,246 234,772 (119,175) Note: The tax capacity(assessed taxable value)of the property is calculated by applying a statutory formula to the estimated market value of the property. Source: Dakota County -102- Estimated Tax Capacity Less Contributions Total Direct Actual Value as a to Fiscal Fiscal Disparities Total Tax Tax Capacity Taxable Percentage of Disparities Pool Distribution Capacity Value Rate Value Actual Value $ (224,005) $ 675,486 $ 12,715,189 43.767 % $ 1,291,198,400 0.98% (216,076) 794,764 14,794,440 42.770 1,488,314,400 0.99% (231,416) 931,980 17,932,725 41.882 1,670,767,400 1.07% (293,226) 929,718 19,441,487 43.821 1,785,560,700 1.09% (366,353) 1,224,665 20,043,562 44.186 1,804,253,700 1.11% (462,792) 1,304,003 18,681,876 49.274 1,661,903,500 1.12% (554,552) 1,537,976 17,437,460 55.730 1,522,502,000 1.15% (611,325) 2,016,261 16,032,518 63.093 1,344,600,257 1.19% (642,069) 2,195,874 15,386,167 66.821 1,266,601,230 1.21% (1,011,274) 3,371,993 16,625,461 65.876 1,311,752,463 1.27% -103- CITY OF FARMINGTON,MINNESOTA Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years City Direct Rates Overlapping Rates(1) School Total Direct and Fiscal Debt Total Dakota District Other Special Overlapping Year Operating Service City County ISD No. 192 Districts Rate 2005 34.488 9.279 43.767 28.256 36.521 3.752 112.296 2006 34.088 8.682 42.770 26.308 43.692 3.780 116.550 2007 31.286 10.596 41.882 25.119 44.177 3.771 114.949 2008 33.348 10.473 43.821 25.177 45.819 3.749 118.566 2009 32.212 11.974 44.186 25.821 49.238 3.693 122.938 2010 37.103 12.171 49.274 27.261 53.439 3.821 133.795 2011 38.788 16.942 55.730 29.149 52.157 3.429 140.465 2012 43.954 19.139 63.093 31.417 55.292 4.187 153.989 2013 45.597 21.224 66.821 33.411 57.208 4.426 161.866 2014 47.308 18.568 65.876 31.820 56.300 4.150 158.146 (1) Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all of the City's property owners. Source: Dakota County -104- CITY OF FARMINGTON,MINNESOTA Principal Property Taxpayers Current Fiscal Year and Nine Years Prior 2014 2005 Percentage Percentage of Total of Total Net Tax City Tax Net Tax City Tax Capacity Capacity Capacity Capacity Taxpayer Value Rank Value Value Rank Value Northern Natural Gas $ 424,534 1 2.95% $ 207,990 1 1.52% Xcel Energy(Northern States Power) 180,474 2 1.25% 57,807 5 0.42% Dakota Electric Association 130,672 3 0.91% 113,829 2 0.83% Farmington City Center,LLC 86,348 4 0.60% 74,976 3 0.55% Dakota Storage,LLC 81,608 5 0.57% — — — RLR Investments,LLC 68,204 6 0.47% — — — St.Francis Health Systems 67,253 7 0.47% — — — POR-MKR Real Estate,LLC 65,936 8 0.46% 40,000 8 0.29% RoundBank 63,729 9 0.44% — — — Schwiness,LLC 63,322 10 0.44% — — — Valmont Industries — — 61,404 4 0.45% Utilicorp United,Inc. — — 53,580 6 0.39% B&L Adventures,LLC — — 46,094 7 0.34% Farmington Family Housing — — 40,000 8 0.29% JG Leasing — — 39,048 10 0.29% Total $ 1,232,080 8.56% $ 734,728 5.37% Source: Dakota County -105- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON,MINNESOTA Property Tax Levies and Collections Last Ten Fiscal Years Collected Within the Fiscal Year of Levy(2) Total Collections to Date Total Tax Percentage Delinquent Percentage Fiscal Levy for of Tax of Year Fiscal Year(1) Amount Levy Collections(2) Amount Levy 2005 $ 5,849,302 $ 5,789,356 98.98% $ 41,356 $ 5,830,712 99.68% 2006 6,668,204 6,563,837 98.43% 59,440 6,623,277 99.33% 2007 7,926,780 7,727,933 97.49% 195,586 7,923,519 99.96% 2008 8,869,919 8,435,469 95.10% 427,588 8,863,057 99.92% 2009 9,313,415 8,637,012 92.74% 668,949 9,305,961 99.92% 2010 9,586,323 8,826,496 92.07% 748,518 9,575,014 99.88% 2011 9,869,985 9,334,157 94.57% 522,142 9,856,299 99.86% 2012 10,582,243 10,377,369 98.06% 178,495 10,555,864 99.75% 2013 10,734,608 10,581,301 98.57% 118,962 10,700,263 99.68% 2014 10,981,055 10,889,973 99.17% — 10,889,973 99.17% (1) Includes fiscal disparity revenues. (2) Includes fiscal disparity revenues and is net of county/state adjustments. Source: Dakota County -106- CITY OF FARMINGTON,MINNESOTA Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Special Certificates General Assessment Tax of Fiscal Year Obligation Bonds(1) Bonds Increment Bonds Indebtedness 2005 $ 11,360,783 $ 9,615,000 $ 560,000 $ 2,025,000 2006 10,314,908 14,600,000 520,000 1,650,000 2007 19,287,725 13,895,000 475,000 1,215,000 2008 18,788,411 22,935,000 425,000 770,000 2009 17,757,256 21,685,000 370,000 310,000 2010 16,629,173 22,645,000 320,000 1,305,000 2011 15,774,072 21,010,000 265,000 1,145,000 2012 14,891,859 19,160,000 205,000 1,025,000 2013 15,467,435 18,235,000 140,000 905,000 2014 14,520,696 15,630,000 — 785,000 Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. (1) Includes all general obligations of the City including Capital Improvement Plan Bonds,Revenue and Lease Revenue Bonds. -107- Business-Type Activities Net Total Premiums Revenue Primary Per (Discounts) Bonds Government Population Capita $ — $ 1,665,000 $ 25,225,783 19,810 1,273 — 1,475,000 28,559,908 20,502 1,393 — 1,280,000 36,152,725 21,072 1,716 — 1,080,000 43,998,411 21,343 2,061 — 875,000 40,997,256 21,654 1,893 — 665,000 41,564,173 21,086 1,971 — 450,000 38,644,072 21,558 1,793 — 230,000 35,511,859 21,806 1,629 203,702 — 34,951,137 22,154 1,578 177,829 — 31,113,525 22,446 1,386 -108- CITY OF FARMINGTON,MINNESOTA Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Less Amounts General Restricted for Market Percentage of Fiscal Obligation Repaying Value of Market Value of Year Bonds(1) Principal(2) Total Property Property 2005 $ 11,360,783 $ — $ 11,360,783 $ 1,238,291,400 0.92% 2006 10,314,908 — 10,314,908 1,488,314,400 0.69% 2007 19,287,725 — 19,287,725 1,670,767,400 1.15% 2008 18,788,411 — 18,788,411 1,785,560,700 1.05% 2009 17,757,256 — 17,757,256 1,804,370,373 0.98% 2010 16,629,173 — 16,629,173 1,661,903,500 1.00% 2011 15,774,072 — 15,774,072 1,522,502,000 1.04% 2012 14,891,859 — 14,891,859 1,344,600,257 1.11% 2013 15,467,435 606,820 14,860,615 1,266,601,230 1.17% 2014 14,520,696 852,842 13,667,854 1,311,752,463 1.04% Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. (1) Includes all general obligations of the City,including Capital Improvement Plan Bonds,Revenue and (2) Amounts restricted for repaying principal for years prior to 2013 are not readily available. (3) Personal income is not available. Source: Dakota County website and Dakota County Assessor's Office -109- Assessed Percentage of Percentage Value of Assessed Value of Personal Per Property of Property Population Income(3) Capita $ 11,821,271 96.10% 19,810 — % 573 13,732,616 75.11% 20,502 _ — 503 16,701,068 115.49% 21,072 — 915 18,135,711 103.60% 21,343 — 880 18,314,489 96.96% 21,654 — 820 16,808,764 98.93% 21,086 — 789 16,454,036 95.87% 21,558 — 732 14,764,729 100.86% 21,806 — 683 13,963,167 106.43% 22,154 — 671 14,383,917 95.02% 22,446 — 609 -110- THIS PAGE INTENTIONALLY LEFT BLANK CITY OF FARMINGTON,MINNESOTA Direct and Overlapping Governmental Activities Debt December 31,2014 Estimated Estimated Share of Net Debt Percentage Overlapping Governmental Unit Outstanding Applicable(1) Debt Overlapping debt Dakota County $ 33,575,000 3.766% $ 1,264,367 ISD No. 192 Farmington 277,935,199 57.745% 160,492,535 ISD No. 196 Rosemount—Apple Valley—Eagan 62,465,000 0.004% 2,360 Metropolitan Council 220,775,000 3.863% 8,527,707 Total overlapping debt 594,750,199 170,286,969 Direct debt City of Farmington direct debt 31,113,525 100.00% 31,113,525 Total direct and overlapping debt $ 625,863,724 $ 201,400,494 (1) The percentage of overlapping debt applicable is estimated using tax capacity.Applicable percentages were Note: Overlapping governments are those that coincide, at least in part,with the geographic boundaries of the City.This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident and,therefore,responsible for repaying the debt of each overlapping government. Source: Dakota County Property Taxation Office and related Comprehensive Annual Financial Reports -111- CITY OF FARMINGTON,MINNESOTA Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 Debt limit $ 25,823,968 $ 29,766,288 $ 33,415,348 $ 35,711,214 Total net debt applicable to limit 9,673,139 9,513,423 17,448,186 17,963,411 Legal debt margin $ 16,150,829 $ 20,252,865 $ 15,967,162 $ 17,747,803 Total net debt applicable to the limit as a percentage of debt limit 37.46% 31.96% 52.22% 50.30% Note:The debt limit was raised from 2 percent to 3 percent of taxable market value,effective June 30,2008. -112- 2009 2010 2011 2012 2013 2014 $ 36,087,407 $ 33,238,070 $ 45,675,060 $ 40,338,008 $ 37,998,037 $ 39,352,574 16,327,256 17,934,173 16,919,072 15,916,859 15,442,435 14,520,696 $ 19,760,151 $ 15,303,897 $ 28,755,988 $ 24,421,149 $ 22,555,602 $ 24,831,878 45.24% 53.96% 37.04% 39.46% 40.64% 36.90% Legal Debt Margin Calculation for Fiscal Year 2014 Market value $ 1,311,752,463 Debt limit(3%of market value) 39,352,574 Debt applicable to limit 14,520,696 Legal debt margin $ 24,831,878 -113- CITY OF FARMINGTON,MINNESOTA Pledged Revenue Coverage Last Ten Fiscal Years Less Net Revenue Fiscal Gross Direct Operating Available for Debt Service Requirements Year Revenue(a) Expenses(b) Debt Service Principal Interest Total Coverage 2005 $ 1,325,914 $ (1,030,686) $ 295,228 $ 185,000 $ 42,416 $ 227,416 129.82% 2006 1,469,340 (1,115,498) 353,842 190,000 40,381 230,381 153.59% 2007 1,795,043 (1,308,518) 486,525 195,000 37,911 232,911 208.89% 2008 1,588,810 (1,154,444) 434,366 200,000 33,831 233,831 185.76% 2009 1,376,043 (1,190,315) 185,728 205,000 30,791 235,791 78.77% 2010 1,581,526 (1,191,274) 390,252 210,000 25,923 235,923 165.41% 2011 1,600,303 (1,243,796) 356,507 215,000 21,760 236,760 150.58% 2012 1,787,957 (1,286,270) 501,687 230,000 7,360 237,360 211.36% 2013 No longer applicable-debt repaid in full in 2013 2014 No longer applicable-debt repaid in full in 2013 (a) Includes gross revenues of the Sewer Operations Funds (b) Exclusive of depreciation Note: Details regarding the City's outstanding debt can be found in the notes to basic financial statements. -114- CITY OF FARMINGTON,MINNESOTA Demographic and Economic Statistics Last Ten Fiscal Years Total Fiscal School Unemployment Personal Per Capita Year Population(1) Households Enrollment(3) Rate(2) Income Income 2005 19,810 6,783 5,995 3.6 % (4) (4) 2006 20,502 6,949 6,021 3.5 (4) (4) 2007 21,072 7,143 6,207 4.1 (4) (4) 2008 21,343 7,453 6,472 6.1 (4) (4) 2009 21,654 7,824 6,320 7.3 (4) (4) 2010 21,086 7,412 6,499 6.5 (4) (4) 2011 21,558 7,464 6,555 5.2 (4) (4) 2012 21,806 7,532 6,560 6.1 (4) (4) 2013 22,154 7,806 6,877 4.7 (4) (4) 2014 22,446 7,906 7,075 3.1 (4) (4) (1) Farmington Building Inspections Department—2014 (2) Minnesota Department of Employment and Economic Development—Dakota County 2014 Annual Rate (3) Farmington School District—October 2014 (4) Personal income is not available -115- CITY OF FARMINGTON,MINNESOTA Principal Employers Current Fiscal Year and Eight Years Prior 2014 2006(1) Percentage of Total Percentage Employees Employment Employees of Total Taxpayer (2) Rank (3) (2) Rank Employment Farmington Public Schools 900 1 20% 540 1 11.5% Federal Aviation Administration 400 2 9% 450 2 9.6% Dakota Electric 200 3 4% 220 3 4.7% Marshall Lines,Inc. 182 4 4% 60 8 1.3% Kemps Dairy 131 5 3% 139 4 3.0% Valmont Industries(Lexington Standard) 130 6 3% 130 5 2.8% River Valley Home Care 110 7 2% — — 0.0% R&L Carriers 110 8 2% — — 0.0% City of Farmington 91 9 2% 88 6 1.9% JIT Powder Coating 65 10 1% 55 9 1.2% Controlled Air — — 0% 67 7 1.4% Peerless Plastics — — — 45 10 1.0% Total 2,319 51% 1,794 38% (1) 2005 information is unavailable.2006 information(nearest available to 2005)is included for reference. (2) Per City of Farmington records. (3) Minnesota Department of Employment and Economic Development,Q3 Total Employment of 4,558. -116- CITY OF FARMINGTON,MINNESOTA Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012* 2013* 2014* General government Administration 5.50 5.50 6.00 6.00 6.00 6.00 5.00 5.25 3.50 3.50 Finance 3.00 3.50 3.50 3.50 3.50 3.50 2.75 2.50 4.00 4.00 Human resources/information technology 3.00 3.00 3.00 3.00 3.00 3.00 2.80 1.80 3.00 3.00 Community development 9.00 5.00 4.00 4.00 4.00 4.00 3.00 1.00 2.00 2.50 Total general government 20.50 17.00 16.50 16.50 16.50 16.50 13.55 10.55 12.50 13.00 Public safety Police admin 5.00 5.00 5.00 6.00 6.00 6.00 6.15 6.15 5.15 5.15 Police patrol 16.00 18.00 18.00 18.00 16.00 16.00 16.00 16.50 18.00 17.00 Investigations 4.00 4.00 4.00 4.00 7.00 7.00 7.00 6.50 5.00 5.00 Fire 1.00 1.00 1.00 1.00 1.00 1.00 1.25 1.40 1.40 1.40 Total public safety 26.00 28.00 28.00 29.00 30.00 30.00 30.40 30.55 29.55 28.55 Public works Building inspections - 4.00 4.00 3.00 3.00 3.00 3.00 2.93 2.50 2.50 Engineering 2.18 1.95 2.30 2.10 2.10 2.10 2.42 2.34 5.10 4.60 Streets 3.50 4.10 4.10 4.00 4.68 4.68 4.68 4.68 10.00 10.00 Snowplowing 0.51 0.40 0.40 0.43 0.45 0.45 0.45 0.45 - - Natural resources 0.50 0.75 0.80 0.75 1.12 1.12 1.02 1.02 1.00 1.00 Total public works 6.69 1120 11.60 1028 11.35 11.35 11.57 11.42 18.60 18.10 Parks and recreation Park maintenance 4.00 4.50 4.50 5.00 5.44 5.44 4.44 4.44 3.50 3.50 Building maintenance 0.75 1.00 1.30 1.00 - - - - 1.00 1.00 Recreation programming 3.00 3.00 3.00 3.00 1.50 2.00 2.00 2.00 2.00 2.00 Total parks and recreation 7.75 8.50 8.80 9.00 6.94 7.44 6.44 6.44 6.50 _ 6.50 Senior center 1.50 1.50 1.50 1.50 1.50 1.00 1.10 1.10 1.50 1.50 Swimming pool 2.10 2.00 220 0.50 0.40 0.40 0.40 0.40 0.40 0.40 Arena 1.62 2.00 1.50 1.50 1.86 1.86 2.11 2.11 2.35 2.35 Liquor operations 4.00 4.00 6.00 6.00 5.00 5.00 725 725 725 7.50 Sewer 2.82 2.90 2.90 2.81 2.41 2.41 2.60 2.59 - - Solid waste 7.06 7.40 7.40 6.39 6.38 6.38 6.38 6.38 5.00 5.00 Storm water utility 2.06 2.50 2.50 2.53 2.53 2.53 2.93 2.93 - - Water 2.87 3.00 3.10 2.99 3.64 3.64 3.83 3.83 - - Fleet 2.00 2.00 2.00 2.00 2.00 2.00 2.00 1.00 2.00 2.00 Total employees 86.97 92.00 , 94.00 91.00 90.51 90.51 90.56 86.55 85.65 84.90 *In addition to the above,the City has a volunteer Fire Department of 50 people and hires seasonal staff for its summer parks and recreation operations. Source: Various City Departments -117- CITY OF FARMINGTON,MINNESOTA Operating Indicators by Function Last Ten Years Fiscal Year Function/Program 2005 2006 2007 2008 General government Elections N/A 1 N/A 1 Registered voters N/A 11,462 N/A 13,070 Number of votes cast N/A 6,853 N/A 10,309 Voter participation(registered) N/A 59.8% N/A 78.9% Public safety Police Arrests 613 643 666 563 All citations and warnings 1,731 1,519 1,552 1,618 Calls for service 13,235 13,388 13,775 12,976 Fire Medical 582 478 398 370 Fire 213 181 226 230 Inspections Building permits 895 752 2,430 628 Value of building permits(in millions) $ 44 $ 49 $ 130 $ 18 Parks and recreation Parks Park reservations 72 71 77 106 Pool Pool open swim admissions 12,866 14,392 12,627 13,833 Pool swim lesson registrations 464 548 542 528 Pool season passes sold 61 118 126 75 Pool punch cards sold 218 172 198 230 Swim bus riders 447 99l 1,069 997 Rambling River Center Memberships 447 489 523 531 Program participation 15,812 15,936 N/A 13,279 Number of volunteers 497 497 184 200 Total volunteer hours 2,332 2,706 2,174 2,400 Ice areN/A Ice skating lessons total participants 135 268 198 195 AreN/A rental hours N/A 1,258 1,237 1,263 Outdoor rinks total number of skaters N/A 3,406 3,995 4,740 Other Recreation program/event participants 9,293 9,117 9,662 8,427 Youth scholarships provided 28 67 69 44 N/A-Not Available *Beginning in 2012 this figure includes warnings. Source: Various City of Farmington Departments -118- 2009 2010 2011 2012 2013 2014 N/A 1 N/A 1 N/A 1 N/A 11,820 N/A 13,358 N/A 12,541 N/A 7,002 N/A 11,185 N/A 6,419 N/A 59.2% N/A 84.0% N/A 51.0% 440 399 527 435 403 266 1,498 1,848 2,253 4,359* 4,517* 3,383 13,025 12,710 13,807 15,094 13,138 13,035 251 257 274 290 323 386 324 272 227 254 235 241 576 907 747 818 679 711 $ 20 $ 22 $ 25 $ 17 $ 35 $ 24 77 76 67 69 65 66 11,163 13,009 11,869 13,069 11,566 8,032 371 405 410 407 308 267 69 71 63 89 78 N/A 202 163 142 130 154 193 1,059 729 620 641 786 408 440 430 430 428 435 406 18,104 11,738 15,817 16,198 16,875 15,285 215 107 108 152 94 130 6,315 4,276 4,601 3,741 4,780 4,348 213 263 195 200 215 230 1,191 1,171 1,271 1,197 1,147 1,197 6,542 9,797 6,499 5,259 7,819 7,481 6,568 6,258 6,126 6,607 6,971 6,425 31 45 20 22 25 7 -119- CITY OF FARMINGTON,MINNESOTA Capital Assets Statistics by Function/Program Last Ten Years Fiscal Year Function/Program 2005 2006 2007 2008 Public safety Police Stations 1 1 1 1 Patrol squads 14 16 16 20 Fire Stations 1 2 2 2 Fire trucks 6 6 7 7 Public works Vehicles 17 19 21 21 Streets(miles) 77 79 82 89 Parks and recreation Senior center—building 1 1 1 1 Swimming pool 1 1 1 1 Ice arena—building 1 1 1 1 Parks 21 21 21 21 Liquor operations Store—building 1 — — — Solid waste Compactor trucks 5 5 6 6 Sanitary sewer Collection system(miles) 73 80 83 84 Storm sewer Storm sewer(miles) n/a 70 70 71 Water n/a 104 108 108 Water main(miles) 7 7 7 7 Wells 2 2 2 2 Water reservoirs Source: City of Farmington financial records -120- 2009 2010 2011 2012 2013 2014 1 1 1 1 1 1 18 18 18 17 17 16 2 2 2 2 2 2 7 7 7 7 7 6 21 21 21 20 21 21 89 89 89 89 89 89 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 21 21 21 21 21 23 6 6 6 6 5 5 84 84 84 84 84 84 70 71 71 71 71 71 108 109 109 109 109 109 7 7 7 7 7 7 2 2 2 2 2 2 -121- THIS PAGE INTENTIONALLY LEFT BLANK o`` kR,„3► City of Farmington � o 430 Third Street i Farmington,Minnesota $ 651.280.6800 -Fax 651.280.6899 ,.•4/��. www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: David J. McKnight, City Administrator SUBJECT: 2015 Community Survey Results DATE: May 18,2015 INTRODUCTION The 2015 budget included funding for a community survey. The results of the survey will assist the city council on decisions related to strategic plan projects and offer insight from our residents on the perception of city government in our community. Farmington last completed this type of survey in 2006. DISCUSSION The Morris Leatherman Company performed the community survey. This is the same company that performed the city survey in 2001. Mr. Peter Leatherman will be in attendance at your meeting to present the results of the survey. The 2015 results will include responses from 400 Farmington residents on the 90 questions that were included in the survey. Residents were contacted by telephone for the survey. BUDGET IMPACT The cost of the 2015 survey was $16,000 and was included in the 2015 budget. ACTION REQUESTED Receive the results of the 2015 community survey and ask any questions you may have on the information presented at your meeting. ATTACHMENTS: Type Description © Backup Material 2015 City Survey Results THE MORRIS LEATHERMAN COMPANY City of Farmington 3128 Dean Court Residential Survey Minneapolis, Minnesota 55416 FINAL APRIL 2015 Hello, I 'm of the Morris Leatherman Company, a polling firm located in Minneapolis. We've been retained by the City of Farmington to speak with a random sample of residents about issues facing the city. The survey is being taken because your city representatives and staff are interested in your opinions and suggestions. I want to assure you that all individual responses will be held strictly confidential; only summaries of the entire sample will be reported. (DO NOT PAUSE) 1 . Approximately how many years have LESS THAN FIVE YEARS. . . 8% you lived in Farmington? FIVE TO TEN YEARS 24% TEN TO TWENTY YEARS33% 20 TO 30 YEARS 18% OVER THIRTY YEARS 17% DON'T KNOW/REFUSED 0% 2 . What do you like most about living DON'T KNOW/REFUSED 1% in Farmington? HOUSING/NEIGHBORHOOD. . 17% SMALL TOWN FEEL 32% SAFE 11% CONVENIENT LOCATION. . . .2% CLOSE TO FAMILY 10% FRIENDLY PEOPLE 11% PARKS/TRAILS 2% RURAL/OPEN SPACE 10% SCHOOLS 2% CLOSE TO JOB 3% 3. What do you think is the most DON' T KNOW/REFUSED 4% serious issue facing Farmington NOTHING 20% today? TOO MUCH GROWTH 21% HIGH TAXES 15% POOR SPENDING 8% RISING CRIME 7% LACK OF RETAIL 16% LACK OF JOBS 5% SCHOOL FUNDING 2% SCATTERED 2% 4 . How would you rate the quality of EXCELLENT 32% life in Farmington -- excellent, GOOD 66% good, only fair, or poor? ONLY FAIR 2% POOR 0% DON'T KNOW/REFUSED 0% 1 5. All in all, do you think things in RIGHT DIRECTION 87% Farmington are generally headed in WRONG TRACK 12% the right direction, or do you feel DON'T KNOW/REFUSED 2% things are off on the wrong track? Moving on. . . . I would like to read you a list of a few city services. For each one, please tell me whether you would rate the quality of the service as excellent, good, only fair, or poor? (ROTATE) EXCL GOOD FAIR POOR DKR 6. Police protection? 59% 37% 4% 0% 1% 7. Fire protection? 61% 36% 1% 0% 2% 8 . Storm drainage and flood control? 20% 62% 11% 1% 6% 9. Upkeep and maintenance of city parks? 42% 50% 7% 0% 1% 10. Upkeep and maintenance of city trails? 39% 52% 6% 0% 3% 11. City-sponsored recreation programs? 33% 55% 6% 1% 5% 12. Code enforcement? 17% 65% 10% 1% 7% 13. Building Inspections? 14% 58% 8% 2% 18% 14 . Economic Development? 16% 47% 28% 6% 4% 15. Garbage and recycling pick-up? 47% 51% 2% 0% 0% Now, for the next three city services, please consider only city-maintained street and roads. That means excluding interstate highways, state and county roads taken care of by other levels of government. For example, Highway 3 and County Road 50 should not be considered. How would you rate . . . . EXCL GOOD FAIR POOR DKR 16. City street repair and maintenance? 18% 59% 22% 1% 0% 17 . Snow plowing? 32% 57% 11% 1% 0% 18 . Street sweeping? 25% 70% 4% 1% 0% 19. Do you consider the city portion VERY HIGH 13% - of your property taxes to be SOMEWHAT HIGH 50% very high, somewhat high, about ABOUT AVERAGE 32% average, somewhat low, or very low SOMEWHAT LOW 1% in comparison with neighboring VERY LOW 0% cities? DON'T KNOW/REFUSED 5% 2 20. When you consider the property EXCELLENT 15% taxes you pay and the quality of GOOD 68% city services you receive, would ONLY FAIR 15% you rate the general value of city POOR 1% services as excellent, good, only DON'T KNOW/REFUSED 1% fair, or poor? Currently, the City of Farmington generally enforces codes con- cerning residential property when a complaint is made. Some cities take a more active approach. 21 . Would you favor or oppose a more STRONGLY FAVOR 10% active approach by the City in the FAVOR 42% enforcement of residential pro- OPPOSE 34% perty codes? (WAIT FOR RESPONSE) STRONGLY OPPOSE 10% Do you feel strongly that way? DON'T KNOW/REFUSED 5% IF "STRONGLY FAVOR" OR "FAVOR, " ASK: (n=207) 22 . Would you support a property YES 54% tax increase for this purpose? NO 41% DON'T KNOW/REFUSED 5% Thinking about another topic. . . . 23. Please tell me which one you consider to be the greatest concern in Farmington? If you feel that none of these problems are serious in Farmington, just say so. Violent crime 3% Traffic speeding 15% Drugs 14% Youth crimes and vandalism 27% Identity theft 2% Business crimes, such as shoplifting and check fraud 3% Residential crimes, such as burglary, and theft 8% ALL EQUALLY 4% NONE OF THE ABOVE 23% DON'T KNOW/REFUSED 1% 24 . Over the past year, have you had YES 13% contact with the Farmington Police NO 87% Department? DON'T KNOW/REFUSED 0% IF "YES, " ASK: (n=52) 3 25. What was the reason? REFUSED, 12%; REPORT A CRIME, 40%; REPORT SUSPICIOUS ACTIVITY, 4%; TRAFFIC STOP, 4%; MEDICAL EMERGENCY, 4%; NUISANCE COMPLAINT, 17%; NON-MEDICAL EMERGENCY, 12%; SCATTERED, 7%. 26. How would you rate the way EXCELLENT 39% police employees handled the GOOD 50% situation -- excellent, ONLY FAIR 10% good, only fair, or poor? POOR 2% DON'T KNOW/REFUSED 0% Continuing. . . . 27. Other than voting, do you feel YES 64% that if you wanted to, you could NO 30% have a say about the way the City DON'T KNOW/REFUSED 7% of Farmington runs things? 28. How much do you feel you know A GREAT DEAL 7% about the work of the Mayor and A FAIR AMOUNT 44% City Council -- a great deal, a VERY LITTLE 31% fair amount, very little, or none NONE AT ALL 18% at all? DON'T KNOW/REFUSED 0% 29. From what you know, do you approve STRONGLY APPROVE 10% or disapprove of the job the Mayor APPROVE 67% and City Council are doing? (WAIT DISAPPROVE 15% FOR RESPONSE) And do you feel STRONGLY DISAPPROVE. . . .2% strongly that way? DON'T KNOW/REFUSED 6% IF A RESPONSE IS GIVEN, ASK: (n=375) 30. Why do you feel that way? DON'T KNOW/REFUSED 1% GOOD JOB 44% HELPFUL 15% LISTEN 11% GOOD COMMUNICATION11% POOR JOB 2% DON'T LISTEN 5% POOR SPENDING 9% SCATTERED 2% 31 . How much contact, in-person, by QUITE A LOT 3% telephone or e-mail, have you had SOME 37% with the Farmington City staff -- VERY LITTLE 39% quite a lot, some, very little, or NONE 22% none? DON'T KNOW/REFUSED 0% 4 • 32. From what you have heard or seen, EXCELLENT 14% how would you rate the job per- GOOD 67% formance of the Farmington City ONLY FAIR 13% staff -- excellent, good, only POOR 2% fair or poor? DON'T KNOW/REFUSED 5% IF A RESPONSE IS GIVEN, ASK: (n=380) 33. Why do you feel that way? DON'T KNOW/REFUSED 1% GOOD JOB 39% HELPFUL 26% LISTEN 10% GOOD COMMUNICATION 8% POOR JOB 3% DON'T LISTEN 5% POOR SPENDING 6% SCATTERED 2% As the City of Farmington continues development. . . . 34 . Do you support or oppose the City STRONGLY SUPPORT 16% providing financial incentives to SUPPORT 53% attract specific types of develop- OPPOSE 21% ment? (WAIT FOR RESPONSE) Do you STRONGLY OPPOSE 6% feel strongly that way? DON'T KNOW/REFUSED 5% Some cities have issued bonds backed by city property taxes to acquire the funds for development efforts. Other cities have used an additional property tax levy to fund development activities. If it were necessary to spur development in certain areas. . . . 35. How much would you be willing to NOTHING 42% pay in additional property taxes $2 . 00 7% for the development of certain $4 . 00 16% areas of the city? How about $6.00 14% $ per month? (CHOOSE A RANDOM $8 .00 8% STARTING POINT; MOVE UP OR DOWN $10. 00 6% DEPENDING ON RESPONSE) How about $12. 00 2% $ per month? (REPEAT PROCESS) OVER $12.00 2% DON'T KNOW 4% REFUSED 0% 36. Are you aware that a major recon- YES 81% struction project will take place NO 19% on 195th Street in 2015? DON'T KNOW/REFUSED 0% 37 . Are you aware of the Farmer' s YES 92% Market in downtown Farmingtion NO 7% during the summer? DON'T KNOW/REFUSED 1% 5 Turning to park and recreation facilities. . . . I will now read you a short list of park and recreational oppor- tunities within the City. First, for each one, please tell me if you or members of your household have used it during the past year. Then, for those you have used, please rate it as excellent, good, only fair, or poor. . . . NOT EXC GOO FAI POR DKR 38 . Larger community parks? 31% 29% 38% 3% 0% 0% 39. Smaller neighborhood parks? 34% 19% 41% 6% 0% 1% 40. Trails? 23% 25% 45% 6% 0% 0% 41. Community ballfields? 43% 22% 28% 6% 1% 1% 42 . Outdoor swimming pool? 47% 13% 19% 12% 9% 0% 43. Ice arena? 59% 8% 24% 8% 1% 1% 44 . Rambling River Center? 45% 16% 35% 3% 0% 1% 45. In general, do you feel that YES 98% existing recreational facilities NO 1% offered by the City meet the DON'T KNOW/REFUSED 1% needs of you and members of your household? IF "NO, " ASK: (n=5) 46. What additional recreational facilities would you like to see the City offer its residents? WATER PARK, 40%; COMMUNITY CENTER, 60%. 47. Have you or members of your house- YES 14% hold participated in any City NO 86% park and recreation programs? DON'T KNOW/REFUSED 0% IF "YES, " ASK: (n=55) 48 . Which ones? BASEBALL/SOFTBALL, 54%; T-BALL, 4%; SOCCER, 9%; FOOTBALL, 6%; CITY EVENTS, 2%; MULTIPLE SPORTS, 14%; SWIMMING, 4%; VOLLEYBALL, 6%; GYMNASTICS, 2%. 49. Were you satisfied or dis- SATISFIED 96% satisfied with your exper- DISSATISFIED 0% ience? DON'T KNOW/REFUSED 4% 6 50. Does the current mix of City park YES 99% and recreation programming meet NO 1% the needs of your household? DON'T KNOW/REFUSED 1% IF "NO, " ASK: (n=4) 51. What park and recreation program(s) do you feel are lacking? PRE-SCHOOL PROGRAMS, 50%; TEEN PROGRAMS, 50%. 52 . Do you or members of your household currently leave the city for park and recreation facilities or programs? (IF "YES, " ASK: ) What would that be? NO, 92%; TRAILS, 2%; POOLS, 2%; SCATTERED, 4% . The city' s outdoor swimming pool was constructed in 1970. The pool needs extensive repair and maintenance. One option the city is considering is to close the pool and build a splash pad at the site. 53. Do you support or oppose this STRONGLY SUPPORT 17% option? (WAIT FOR RESPONSE) Do SUPPORT 42% you feel strongly that way? OPPOSE 21% STRONGLY OPPOSE 13% DON'T KNOW/REFUSED 7% Suppose the City of Farmington proposed a parks and recreational facilities referendum which you considered to be a reasonable approach. The proposal would be placed on a referendum ballot for approval by the voters. In order to fund construction, residents would be asked to approve a property tax increase for a twenty year period. 54 . How much would you be willing to NOTHING 44% see your property taxes increase $25. 00 26% to fund these improvements? Let' s $50. 00 13% say, would you be willing to see $75. 00 4% your annual property taxes in- $100. 00 3% crease by $ ? (CHOOSE RANDOM $125. 00 1% STARTING POINT; MOVE UP OR DOWN $150.00 1% DEPENDING ON RESPONSE) How about OVER $150. 00 0% $ per year? DON'T KNOW/REFUSED 9% I would like to read you a list of offerings which could be in- cluded in a parks and recreation facilities referendum. For each one, please tell me if you would strongly support a property tax 7 increase for that offering, somewhat support, somewhat oppose, or strongly oppose it. (ROTATE) STS SMS SMO STO DKR 55. An aquatic facility? 23% 43% 25% 9% 0% 56. Athletic fields for soccer, lacrosse and baseball? 23% 32% 34% 11% 0% 57 . A second sheet of ice at the Ice Arena? 13% 27.% 43% 17% 1% 58 . Outdoor tennis courts? 8% 28% 45% 18% 1% 59. Outdoor basketball courts? 12% 30% 39% 17% 2% 60. Outdoor ice rinks? 12% 25% 43% 20% 1% 61 . Off-leash dog park? 15% 34% 33% 16% 2% 62 . Updated playground equipment? 26% 41% 24% 8% 0% 63. Expansion of trails? 26% 38% 26% 10% 1% 64 . Are there any facilities we have not discussed that you would like to see included in a referendum? (IF "YES, " ASK: ) What would that be? NO, 96%; FITNESS CENTER, 2%; SCATTERED (POOL, SENIOR CENTER) , 2%. Moving on 65 . What is your principal source of DON' T KNOW/REFUSED 0% information about Farmington City NOTHING 1% Government and its activities? LOCAL NEWSPAPER 13% CITY NEWSLETTER 41% WORD OF MOUTH 8% CABLE TELEVISION 3% WEBSITE 21% MAILINGS 13% SCATTERED 2% 66. How would you prefer to receive DON' T KNOW/REFUSED 0% information about Farmington City NOTHING 1% Government and its activities? LOCAL NEWSPAPER 12% CITY NEWSLETTER 44% WORD OF MOUTH 4% CABLE TELEVISION 2% WEBSITE 18% E-MAILS 13% MAILINGS 4% SCATTERED 2% 8 67 . During the past year, did you YES 89% receive the "City News and Recrea- NO 11% tion Guide," the city's newsletter? DON'T KNOW/REFUSED 0% IF "YES, " ASK: (n=355) 68 . Do you or any members of your YES 87% household regularly read it? NO 13% DON'T KNOW/REFUSED 0% 69. How would you evaluate its EXCELLENT 25% content and format -- excel- GOOD 66% lent, good, only fair, or ONLY FAIR 6% poor? POOR 0% DON'T KNOW/REFUSED 3% 70. During the past year, did you YES 77% receive the city calendar? NO 21% DON'T KNOW/REFUSED 2% IF "YES, " ASK: (n=309) 71. How would you evaluate its EXCELLENT 23% content and format -- excel- GOOD 75% lent, good, only fair, or ONLY FAIR 1% poor? POOR 0% DON'T KNOW/REFUSED 1% 72 . Do you have access to the Internet HOME ONLY 28% at home? (WAIT FOR RESPONSE) Do WORK ONLY 2% you have access to the Internet BOTH 51% at work? NEITHER 19% DON'T KNOW/REFUSED 0% IF "YES, " ASK: (n=324) 73. How satisfied are you with VERY SATISFIED 22% your competitive choice of SOMEWHAT SATISFIED58% internet service providers -- NOT TOO SATISFIED 16% very satisfied, somewhat sat- NOT AT ALL SATISFIED. . .4% isfied, not too satisfied, or DON'T KNOW/REFUSED 0% not at all satisfied? 9 74 . How satisfied are you with VERY SATISFIED 15% price you pay for telecommun- SOMEWHAT SATISFIED46% ications services -- tele- NOT TOO SATISFIED 31% phone, cable and Internet -- NOT AT ALL SATISFIED. . . 6% very satisfied, somewhat sat- DON'T KNOW/REFUSED 2% isfied, not too satisfied, or not at all satisfied? IF A RESPONSE IS GIVEN, ASK: (n=317) 75. Why are you (satisfied/dissatisfied) ? COST TOO MUCH 38%; FAIR PRICE, 42%; LIMITED OFFERINGS, 2%; GOOD SERVICE/DEPENDING, 13%; NOT RELIABLE/OUTAGES, 2%; SCATTERED, 3%. 76. Have you accessed the City' s YES 74% website? NO 26% DON'T KNOW/REFUSED 0% IF "YES, " ASK: (n=241) 77 . Were you able to find YES 100% what you were looking NO 0% for? DON'T KNOW/REFUSED 0% 78 . Have you visited any of the YES 11% City' s social media sites on NO 88% Facebook or Twitter? DON'T KNOW/REFUSED 0% IF "YES, " ASK: (N=37) 79. How would you rate the EXCELLENT 49% City' s social media sites GOOD 38% - excellent, good, only ONLY FAIR 14% fair or poor? POOR 0% DON'T KNOW/REFUSED 0% IF "GOOD," "ONLY FAIR," OR "POOR," ASK: (n=19) 80. How could the city' s social media sites be improved? UNSURE, 37%; EASIER TO NAVIGATE, 5%; MORE INFORMATION, 37%; UPDATED INFORMATION, 21% Some cities and counties are exploring or already providing Internet service. 10 81. Do you support or oppose the City STRONGLY SUPPORT 16% of Farmington being involved in SUPPORT 63% providing internet services for OPPOSE 6% for residents, institutions and STRONGLY OPPOSE 4% businesses? (WAIT FOR RESPONSE) DON'T KNOW/REFUSED. . . .11% Do you feel strongly that way? IF "OPPOSE" OR "STRONGLY OPPOSE, " ASK: (n=41) 82. Could you tell me one or two reasons for your deci- sions? NOT PROPER ROLE FOR CITY, 17%; PRICE WILL INCREASE, 20%; CITY IS NOT AN EXPERT, 12%; LIMITS CHOICES/OPTIONS, 37%; LEAVE AS IS, 10%; LIKE CURRENT PROVIDER, 5%. Now, just a few more questions for demographic purposes. . . . Could you please tell me how many people in each of the following age groups live in your household. 83. Persons 65 or over? NONE 86% ONE 7% TWO OR MORE 7% 84 . Adults under 65? NONE 12% ONE 16% TWO 67% THREE OR MORE 6% 85. School-aged children and pre- NONE 52% schoolers? ONE 24% TWO 19% THREE OR MORE 6% 86. Do you own or rent your present OWN 88% residence? RENT 12% REFUSED 0% 87 . What is your age, please? 18-34 14% (READ CATEGORIES, IF NEEDED) 35-44 31% 45-54 29% 55-64 15% 65 AND OVER 11% And now, for one final question, keeping in mind that your answers are held strictly confidential. . . . 11 88 . Is your pre-tax yearly household UNDER $50, 000 18% income over or under $75, 000? $50, 001-$75, 000 33% IF "OVER, " ASK: $75, 001-$100, 000 31% Is it over $100, 000? (IF "YES, " $100, 000-$125, 000 7% ASK: ) Is it over $125, 000? OVER $125, 000 4% IF "UNDER, " ASK: DON'T KNOW/REFUSED 8% Is it under $50, 000? 89. Gender MALE 50% FEMALE 50% 90. REGION OF CITY PRECINCT ONE 9% PRECINCT TWO 19% PRECINCT THREE 16% PRECINCT FOUR 21% PRECINCT FIVE 19% PRECINCT SIX 16% 12 /0,,114194.,.+► City of Farmington 4 430 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: Brian Lindquist, Police Chief SUBJECT: 2014 Year in Review-Police Department DATE: May 18,2015 INTRODUCTION Police Chief Brian Lindquist will present his annual report for 2014. DISCUSSION Police Chief Lindquist will review the events that occurred in 2014 from the police department perspective. This annual report will talk about the work that the department performed and the challenges they faced last year. BUDGET IMPACT NA ACTION REQUESTED Hear the presentation from Chief Lindquist and ask any questions you may have. Q 11i,A► City of Farmington 430 Third Street MIR Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 1.161'•4pio- www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad,Parks and Recreation Director SUBJECT: Approve Agreement Rambling River Center Lighting Improvement Project DATE: May 18,2015 INTRODUCTION City staff worked with the Minnesota Pollution Control Agency's (MPCA)Retiree Environmental Technical Assistance Program(RETAP) in 2013 to complete an energy assessment of the Rambling River Center(RRC)building. DISCUSSION One of the recommendations made by RETAP for reducing energy consumption at the RRC was to have occupancy sensors installed on various light switches that would turn on the lights when motion or heat is detected, and then after a set period of time of not detecting motion or heat, would automatically turn the lights off. A second recommendation was to replace the existing fluorescent light ballasts with ballasts that have a higher power factor,which costs less to operate than the ballasts that are currently being used. It was estimated the city would save annually $622.00 from installing occupancy sensors and$496.00 from installing new ballasts with a higher power factor. Staff solicited a request for proposals (RFP)to receive base quotes for a lighting improvement project at the RRC relating to the replacement of existing light switches with occupancy sensors and an alternate quote for the replacement of the fluorescent ballasts. The RFP is shown as Exhibit B in the Agreement Form. There were no quotes submitted during the solicitation period. Staff then contacted two of the electrical contractors who received the RFP to see if both electricians would still be interested in submitting a quote for the project. The two electrical contractors contacted, then submitted quotes for the project. Attached in Exhibit A is the tabulation form showing the quotes received. Helm Electric, Inc. submitted the low base quote for the replacement of existing lights switches with occupancy sensors in the amount of$4,085.00,which is shown as Exhibit A in the Agreement Form. The Alternate A quote submitted by Helm Electric for replacing the ballasts was $6,985.00. Staff is recommending to not complete this work as part of the project due to not having adequate funds in the budget. BUDGET IMPACT The city budgeted$6,600.00 in the RRC budget to complete this project. Funding from local government aid received from the State of Minnesota was identified to be used for project costs. Given the total amount quoted for installing the occupancy sensors and replacing the ballasts would be more than what was budgeted for the project, it is recommended that only the replacement of the existing light switches with occupancy sensors be completed at this time. As a result,the project cost would be$2,515.00 under the$6,600.00 that was budgeted for the project. Based on RETAP's estimated energy savings(staff feels the energy savings will be higher than estimated),this project will have a payback of approximately 6.5 years. ACTION REQUESTED Staff is requesting the city council approve the attached agreement with Helm Electric,Inc. in the amount of$4,085.00 for the RRC lighting improvement project consisting of replacing the existing light switches with occupancy sensors. ATTACHMENTS: Type Description D Contract Agreement Form and Exhibits D Exhibit Project Quote Tabulation Form • a - AGREEMENT AGREEMENT made this /VI" day of , 2015, between the CITY OF FARMINGTON, a Minnesota municip corporation ("City"), and HELM ELECTRIC,INC.,a Minnesota corporation("Contractor"). IN CONSIDERATION OF THE MUTUAL UNDERTAKINGS HEREIN CONTAINED,THE PARTIES AGREE AS FOLLOWS: 1. CONTRACT DOCUMENTS. The following documents shall be referred to as the "Contract Documents", all of which shall be taken together as a whole as the contract between the parties as if they were set verbatim and in full herein: A. This Agreement B. Contractor's proposal attached as Exhibit"A." C. Request For Proposal Project Specifications attached as Exhibit`B" In the event of conflict among the provisions of the Contract Documents,the order in which they are.listed above shall control in resolving any such conflicts with Contract Document "A" having the first priority and Contract Document"C"having the last priority. , - 2... OBLIGATIONS OF THE CONTRACTOR. .The Contractor shall provide the goods,services,and perform the work in accordance with the Contract Documents. 3. OBLIGATIONS OF THE CITY. The City shall pay the Contractor in accordance with the quote. • 4. SOFTWARE-LICENSE. If the equipment provided by the Contractor pursuant to this Contract contains software,including that which the manufacturer may have embedded into the hardware as an integral part of the equipment,the Contractor shall pay all software licensing fees. The Contractor shall also pay, for all software updating fees for a period of one year following • cutover. The Contractor shall have no obligation to pay for such fees thereafter. Nothing in the software license or licensing agreement shall obligate the City to pay any additional fees as a condition for continuing to use-the software. 5. • ASSIGNMENT. Neither party may assign, sublet, or transfer any interest or obligation in this Contract without the prior written consent of the other party, and then only upon such terms and conditions as both parties may agree to and set forth in writing. 6. TIME OF PERFORMANCE. The Contractor shall begin work on or after May 19,2015 and complete its obligations on or before September 1,2015. 7. PAYMENT. a. When the obligations of the Contractor have been fulfilled,inspected,and accepted, the City shall pay the Contractor$4,085.00 for the project. Such payment shall be made not later than thirty(30)days after completion,certification thereof,and invoicing by the Contractor. b. No final payment shall be made under this Contract until Contractor has satisfactorily established compliance with the provisions of Minn. Stat. Section 290.92. A certificate of the commissioner shall satisfy this requirement with respect to the Contractor or any subcontractor. 8. EXTRA SERVICES. No claim will be honored for compensation for extra services or beyond the scope of this Agreement or the not-to-exceed price for the services identified in the proposal without written submittal by the Contractor, and approval of an amendment by the City, with specific estimates of type, time, and maximum costs, prior to commencement of the work. 9. PROMPT PAYMENT TO SUBCONTRACTORS. Pursuant to Minnesota Statute 471.25, Subdivision 4a,the Contractor must pay any subcontractor within ten(10) days of the Contractor's receipt of payment from the City for undisputed services provided by the subcontractor. The Contractor must pay interest of one and one-half percent(1'/2%)per month or any part of a month to subcontractor,, on any undisputed amount not paid on time to.the subcontractor. The minimum monthly interest penalty payment for an unpaid balance of$100:00 or more is $10.00. For an unpaid balance of less than $100.00, the Contractor shall pay the actual penalty due to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from the Contractor shall be awarded its costs and disbursements, including attorney's fees,incurred in bringing the action. 10. WORKER'S COMPENSATION. If Contractor does public work,the Contractor shall obtain and maintain for the duration of this Contract, statutory Worker's Compensation insurance and Employer's Liability Insurance as required under the laws of the State of Minnesota. 11. COMPREHENSIVE GENERAL LIABILITY. Contractor shall obtain the following minimum insurance coverage and maintain it at all times throughout the life of the Contract,with the City included as an additional name insured by endorsement Bodily Injury: $2,000,000 each occurrence $2,000,000 aggregate,products and completed operations Property Damage: $2,000,000 each occurrence $2,000,000 aggregate 2 Products and Completed Operations Insurance shall be maintained for a minimum period of three (3)years after final payment and Contractor shall continue to provide evidence of such coverage to City on an annual basis during the aforementioned period;or if any reason Contractor's work ceases before final payment,for a minimum period of three(3)years from the date Contractor ceases work. Property Damage Liability Insurance shall include coverage for the following hazards: X (Explosion) C (Collapse) U (Underground) Contractual Liability(identifying the contract): Bodily Injury: $2,000,000 each occurrence Property Damage: $2,000,000 each occurrence $2,000,000 aggregate Personal Injury,with Employment Exclusion deleted: $2,000,000 aggregate Comprehensive Automobile Liability(owned,non-owned,hired): • Bodily Injury: $2,000,000 each occurrence $2,000,000 each accident • Property Damage: . $2,000,000 each occurrence 12. MINNESOTA GOVERNMENT DATA PRACTICES ACT. Contractor must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to (1) all data provided by the City pursuant to this Agreement, and (2) all data, created, collected, received, stored, used, maintained, or disseminated by Contractor pursuant to this Agreement Contractor is subject to all the provisions of the Minnesota Government Data Practices Act,including but not limited to the civil remedies of Minnesota Statutes Section 13.08,as if it were a government entity. In the event Contractor receives a request to release data, Contractor must immediately notify City. City will give Contractor instructions concerning the release of the data to the requesting party before the data is released. Contractor agrees to defend, indemnify, and hold City, its officials, officers, agents, employees, and volunteers harmless from any claims resulting from Contractor's officers', agents', city's, partners', employees', volunteers', assignees' or subcontractors' unlawful disclosure and/or use of protected data. The terms of this paragraph shall survive the cancellation or termination of this Agreement 13. RECORDS. Contractor shall maintain complete and accurate records of expenses involved in the performance of services. 3 14. WARRANTY. The Contractor guarantees that all new equipment warranties as specified within the bid shall be in full force and all warranty documents shall be transferred to the City upon payment by the City. The Contractor shall be held responsible for any and all defects in workmanship, materials, and equipment which may develop in any part of the contracted service, and upon proper notification by the City shall immediately replace, without cost to the City, any such faulty part or parts and damage done by reason of the same in accordance with the bid specifications. The Contractor further warrants to the City that all goods and services furnished under the Contract will be in conformance with Contract Documents and that the goods are of merchantable quality and are fit for the use for which they are sold. This warranty is in addition to any manufacturer's standard warranty y,and any warranty provided by law. 15. NONDISCRIMINATION. All Contractors and subcontractors employed shall comply with all applicable provisions of all federal, state and municipal laws which prohibit discrimination in employment to members of a protected class and all rules and regulations, promulgated and adopted pursuant thereto. The Contractor will include a similar provision in all subcontracts entered into for the performance of this contract, 16. INDEMNITY. The Contractor agrees to defend,hold harmless,and indemnify the City,its officers,agents, and employees,for and against any and all claims, demands, actions,or causes of action, of whatever nature or character, arising from the Consultant's performance of work or services provided for herein. The Contractor shall take all reasonable precautions for the safety of all employees on the site and shall provide reasonable protection to prevent damage or loss to the property on the site or properties adjacent thereto. and to •work, materials•and equipment under the Contractor's control. ,• 17. WAIVER. In the particular event that either party shall at anytime or times waive any breach of this Contract by the other, such waiver shall not constitute a waiver of any other or any succeeding breach of this Contract by either party,whether of the same or any other covenant, condition,or obligation. 18. GOVERNING LAW. The laws of the State of Minnesota govern the interpretation of this Contract. 19. SEVERABILITY. If any provision,teen,or condition of this Contract is found to be or become unenforceable or invalid, it shall not effect the remaining provisions, terms, and conditions of this Contract, unless such invalid or unenforceable provision, tern, or condition renders this Contract impossible to perfonrr. Such remaining terms and conditions of the Contract shall continue in full force and effect and shall continue to operate as the parties'entire contract 20. ENTIRE AGREEMENT. This Contract represents the entire agreement of the parties and is a.final,complete,and all inclusive statement of the terms thereof, and supersedes and terminates any prior agreement(s), understandings, or written or verbal representations made between the parties with respect thereto. 21. TERMINATION. This Agreement may be terminated by the City for any reason or for convenience upon written notice to the Contractor. In the event of termination, the City 4 • shall be obligated to the Contractor for payment of amounts due and owing for materials provided or for services performed or furnished to the date and time of termination. Dated: g'") /9 ,2015. CITY OF FARMINGTON By: Todd Larson,Mayor • By: 6,7111--• (� David McKnigh ,Cit�Administrator • • • 5 Dated: 5 " Z4- , 2015 CONTRACTOR: HELM ELECTRIC,INC. By: iii/L'4 "- Its: • • • 6 ' 05/88/2015 08:27PM 9524613057 HELM ELECTRIC INC PAGE 01 esdetIlf A PROPOSAL, 2015 Rambling River Center Lighting Improvement Project Farmington,Minnesota Quotes due by:• .0:00 a.m.Tuesday May 12,2015 Fax Number.(651)2S0-6899 Randy Distad • City of Farmington 430 Third St Farmington,MN 55024 Email:rdistad(tt ci.fnrmiugton.cx ,us, Interested Contractors The undersigned,being familiar with your local conditions,having made the field inspections and investigations deemed necessary,having studied the plans and specifications for the work and being familiar with all factors and other conditions affecting the work and costs thereof hereby propose to fah all labor,tools,materials,skills,equipment all else necessary to completely construct the project in accordance with the plans and specifications on file with the Parks and Recreation Director. All unit prices shall include all applicable sales taxes. I. PROPOSAL Main Items Unit Qty. Unit Price Totals . 1. Electrical Permit LS 1" $ $ ( 5 • 2. Occupancy Sensors BA 27 $ l 2.4 3 $ 3 5 fir i 3. • Separate Light Switch Reception/Office Area LS 1 $ $ Uj Total Base Bid Including Sales Tax(1+2+3) $ 4 O tS S Alternate"A" 1. Ballast Replacement EA 103 $ $ CM. %C- Total Alternate"A"Bid Including Sales Tax $ (.o 1 Sg' r The City will open,tabulate and select the lowest quote.The City will contact by phone the contractor submitting the lowest quote informing them they submitted the low quote for the project.All other contractors submitting a quote will be notified by email that they did not submit the low quote for the project.Included with the email will be a tabulation form that compares all contractor quotes received by the City for the project. 3 05f 0812015 08:27PM 95246/3057 HELM ELECTRIC INC PAGE 02 In submitting this quote,it is understood that the Owner retains the right to reject any and all_quotes and to waive irregularities and informalities therein and to award the contract to the best interests of the • Owner. In submitting this quote,it is understood that payment will be by cash or check. It is understood that quotes may not be withdrawn for a period of 60 days aver the date and time set for the opening of quotes. It is understood that the owner reserves the right to retain the three lowest quotes as determined by the Owner for a.period not to exceed 60 days after the date set for the opening of quotes. Submitted by: )„,„., 1 v.c (a Corporation) Company (an Individual} (a Partnersbip) tA 4 By C-c,•ce.. 0L .ft Q.o Title • • Address .. . • City,state,Zip Code cl 5" 2- - 4G-.A — 2 4 Telephone tr yrgn,r' 4t5ov% ecIAA cc4-1,p;tt`»a, C.S3 Email Address 4 0 0,i' City of Farmington 430 Third Street xU. Farmington,Minnesota ‘°4,1 651.280.6800•Fax 651.280.6899 " 'p3° www.cilarmingtonann.us FAr-;(6i- REQUEST FOR PROPOSALS 2015 RAMBLING RIVER CENTER LIGHTING IMPROVEMENT PROJECT FARMINGTON, MINNESOTA April 28, 2015 Ofiffilgt "tr 2015 RAMBLING RIVER CENTER LIGHTING IMPROVEMENT PROJECT �o o a4ryT•APROVO* TABLE OF CONTENTS Item Page Proposal 3 Special Provisions 5 Project Specifications 8 2 PROPOSAL 2015 Rambling River Center Lighting Improvement Project Farmington,Minnesota Quotes due by: 10:00 a.m.Tuesday May 12,2015 Fax Number: (651)280-6899 Randy Distad City of Farmington 430 Third St Farmington,MN 55024 Email:rdistad @ci.farmington.mn.us Interested Contractors The undersigned,being familiar with your local conditions,having made the field inspections and investigations deemed necessary,having studied the plans and specifications for the work and being familiar with all factors and other conditions affecting the work and costs thereof,hereby propose to furnish all labor,tools,materials,skills,equipment all else necessary to completely construct the project in accordance with the plans and specifications on file with the Parks and Recreation Director. All unit prices shall include all applicable sales taxes. I. PROPOSAL Main Items Unit Qty. Unit Price Totals 1. Electrical Permit LS 1 $ $ 2. Occupancy Sensors EA 27 $ $ 3. Separate Light Switch Reception/Office Area LS 1 $ $ Total Base Bid Including Sales Tax(1+2+3) $, Alternate"A" 1. Ballast Replacement EA 103 $ $ Total Alternate"A"Bid Including Sales Tax $ The City will open,tabulate and select the lowest quote.The City will contact by phone the contractor submitting the lowest quote informing them they submitted the low quote for the project.All other contractors submitting a quote will be notified by email that they did not submit the low quote for the project.Included with the email will be a tabulation form that compares all contractor quotes received by the City for the project. 3 • In submitting this quote,it is understood that the Owner retains the right to reject any and all quotes and to waive irregularities and informalities therein and to award the contract to the best interests of the Owner. • In submitting this quote,it is understood that payment will be by cash or check. It is understood that quotes may not be withdrawn for a period of 60 days after the date and time set for the opening of quotes. It is understood that the owner reserves the right to retain the three lowest quotes as determined by the Owner for a period not to exceed 60 days after the date set for the opening of quotes. Submitted by: (a Corporation) Company (an Individual) (a Partnership) • By Title Address City,State,Zip Code Telephone Email Address 4 SPECIAL PROVISIONS 1. PROJECT LOCATIONS The Rambling River Center is located at 325 Oak Street,Farmington,Minnesota.The contractor should access the Rambling River Center site via either the 4th Street or Oak Street entrances. Contractor may park its vehicle(s)in public parking lot located just west of the Rambling River Center on Oak and Fourth Streets while construction work is occurring. 2. DELIVERY OF PROPOSALS One printed copy and one electronic copy of proposal must be submitted and signed by an officer of the company on the Proposal Form on page four(4)above,and delivered before the time set forth on page three(3)above to the Park and Recreation Director's office. 3. OWNER The City of Farmington is designated as the owner. The contractor is advised to coordinate work with Randy Distad,Parks and Recreation Director either via his office phone number at(651)280-6851,cell phone at(651)775-3154 or by email at r distad 4ei.farmington.mn.us 4. START AND COMPLETION DATE The Contractor shall start work upon receipt of a"Notice to Proceed"from the Owner. All project work shall be completed on or before August 31 ,2015. 5. WORK.HOURS The hours work may be performed are: Monday through Friday : . 7:30 AM—3:30 PM(unless otherwise authorized for early or later work hours by the Parks and Recreation Director in writing) • Saturday, Sundays and Holidays No work unless otherwise authorized by the Parks and Recreation Director in writing. • 6. PERMITS AND'TESTS The Contractor shall apply for and pay for the electrical permit required during the project. The Contractor shall be required to schedule electrical permit inspections.All lighting improvements-are required to meet the 2014 National Electrical Code adopted by the Minnesota Board of Electricity including the quick connect requirements.The electrical inspection of the ballasts shall be completed prior to any of the ballasts being covered up in order to confirm correct installation was done.All inspection failures are the responsibility of the contractor to correct. • 7. CUSTOMER TRAFFIC Interior building customer traffic controls shall be the sole responsibility of the Contractor. These controls may include barricades,cones, safety ribbon or other safety measures that alert customers in the building to refrain from using areas that are considered non passable. The Contractor shall maintain the safety measure until the area can be opened for customers to safely navigate through the project area. 8. QUANTITY CHANGE AND DEVIATIONS The quantity stated in the proposal is not guaranteed and the actual extent of work to be performed will depend on conditions at the time of construction and the direction of the Owner at the time of contract award. No unit price adjustment for any magnitude of increased,decreased,or deleted quantities is allowed for any line item in the proposal. The Contractor's unit price, as shown on the proposal,shall apply to items independent of any quantity change. 5 9. FACILITY CONDITIONS AND AREA INSPECTION All prospective bidders are advised to inspect the entire project area prior to submitting a bid. It is the Contractors duty to explore,test and analyze the conditions with regard to the constructability factors that may affect work to the extent and in the manner appropriate to the nature of the work. 10.EXISTING UTILITIES The Contractor shall protect all existing utilities inside the building that may be impacted by project work. • 11.PRE-CONSTRUCTION CONFERENCE Prior to starting the project,a pre--construction conference will be held with the Contractor and City of Farmington Parks and Recreation Department staff. This meeting will be held to clarify any questions and determine procedures to be used in completing the project. At the pre-construction conference,the Contractor shall submit a written list of project sub-contractors and/or suppliers that may be on the job site and a proposed project schedule. 12. CLEAN UP All extra material and debris from the project work shall be cleaned up and removed from the building. The project area shall be returned to a condition equal to or superior to that in existence at the start of the project. All construction debris shall be removed and recycled if possible, or disposed of at a licensed landfill. Clean up and disposal of debris is incidental to the work in this contract. 13.OVERRUNS No quantity overruns shall be paid for without prior authorization by the Parks and Recreation Director. 14.DEMOLITION The Contractor hired will perform all necessary demolition needed at the Rambling River Center prior to the installation of the lighting improvements. 15.WARRANTY Warranty for this project shall be one year from the written acceptance of the project by the Owner to the Contractor. This warranty shall cover any defects resulting from suppliers,manufacturing,construction or workmanship. 16.SUBCONTRACTING The City reserves the right to approve all subcontractors. A subcontractor's list shall be provided at the pre-construction conference. The work shall not be further subcontracted to subcontractors not included on the original subcontractor's list without prior written permission from the City. 17.EQUAL OPPORTUNITY COMPLIANCE The City of Farmington is an Equal Opportunity and Affirmative Action employer. The Contractor with the City is required to follow and conform to all Federal,State and Local laws as they apply to the Contractor's responsibility to insure compliance with the Equal Opportunity and Affirmative Action employment requirements may lead to Contractor sanctions. 18.REBATES The Contractor will be responsible to research,complete and submit all rebate applications the project is eligible to receive. All rebates received from the project will be provided to the city of Farmington. 6 19. COMPREHENSIVE GENERAL LIABILITY Contractor shall obtain the following minimum insurance coverage and maintain it at all times throughout the life of the Contract,with the City included as an additional name insured by endorsement: Bodily Injury: $2,000,000 each occurrence $2,000,000 aggregate,products and completed operations Property Damage: $2,000,000 each occurrence $2,000,000 aggregate Property Damage Liability Insurance shall include coverage for the following hazards: X (Explosion) C (Collapse) U (Underground) Contractual Liability(identifying the contract): Bodily Injury: $2,000,000 each occurrence Property Damage: $2,000,000 each occurrence • $2,000,000 aggregate , Personal Injury,with Employment Exclusion deleted: $2,000,000 aggregate Comprehensive Automobile Liability(owned,non-owned,hired): • Bodily Injury: $2,000,000 each occurrence $2,000,000 each accident Property Damage: $2,000,000 each occurrence The Contractor shall fully and completely defend,indemnify and hold harmless the City and its employees, officials,officers,and agents from and against any claims for personal injury, including death, and for destruction or damage to its equipment on the City's property,which claims are related to the equipment on the City's property and the source of which occur while this Agreement is in effect. 20.MA]vUFACTURERS INSTALLATION INSTRUCTIONS All work associated with the project shall meet the manufacturers equipment installation instructions. End of Section 7 SPECIFICATIONS General Requirements Lighting Control Devices Improvements 1. Manufacturers: Subject to compliance with requirements,provide products by one of the following: • Hubbell Lighting • Leviton Mfg. Company,Inc. • Lithonia Lighting;Acuity Lighting Group,Inc. • Novitas,Inc. • RAB Lighting,Inc. • Sensor Switch,Inc. • TORK • The Watt Stopper • Luton. 2. General Description:Wall mounting,solid state units with separate relay unit. A. Operation:Unless otherwise indicated,turn lights on when covered area is occupied and off when unoccupied;with a time delay for turning lights offs adjustable over a minimum range of 1 to 15 minutes. B. Sensor Output: Contacts rated to operate the connected relay,complying with UL773A. Sensor shall be powered from the relay unit. C. Relay Unit: Dry contacts rated for 20-A ballast load at 120-and 277-V ac,for 13-A tungsten at 120-V ac,and for 1 hp at 120-V ac. Power supply to sensor shall be 24-V do, 150-mA,Class 2 power source as defined by NFPA 70. D. Mounting: a. Sensor: Suitable for mounting in any position on a standard outlet box. b. Relay:Externally mounted through a'/2 inch(13-mm)knockout on a standard electrical enclosure. c. Time-Delay and Sensitivity Adjustments: Recessed and concealed behind hinged door. E. Indicator: LED,to show when motion is being detected during testing and normal operation of the sensor. F. Bypass Switch: Override the"on"function in case of a sensor failure. G. Automatic Light Level Sensor: Adjustable from 2 t o200 fc(21.5 to 21521x);keep lighting off when selected lighting level is present. 3. Dual Technology Type:Wall and ceiling mounting;detect occupancy by using a combination of PIR and ultrasonic detection methods in area of coverage. Particular technology or combination of technologies that controls on-off functions shall be selectable in the field by operating controls on unit. 8 A. Sensitivity Adjustment: Separate for each sensing technology. B. Detector Sensitivity: Detect occurrences of 6 inch minimum movement of any portion of a human body that presents a target of not less than 36 sq.in.,and detect a person of average size and weight moving not less than 12 inches in either a horizontal or vertical • manner at an approximate speed of 12 inches per second. C. Detection Coverage(Standard Room):Detect occupancy anywhere within a circular area of 1,000 sq.ft. when mounted on a 96 inch high ceiling. 4. Locations of Lighting Control Devices: Type and quantity of lighting control devices are identified to be installed in the following locations: A. Nicolai Board Room: One(1)occupancy sensor to be installed at the current wall light switch just inside the room. B. Weber Room: One(1) occupancy sensor to be installed at the current wall light switch just inside the room. C. Jerry Ristow Library: One(1)occupancy sensor to be installed at the current wall light switch just inside the room. D. Restrooms (4 rooms): Total of four(4)occupancy sensors to be installed in the following manner in each of the four restrooms: one(1) occupancy sensor to be installed at the current wall light switch just inside the restroom door. E. Red Slipper Room: One(1)occupancy sensor to be installed at the current wall light switch just inside the room. • F. Copier Room: One(1)occupancy sensor to be installed at the current wall light switch just inside the room. G. Garage: Three(3)occupancy sensors to be installed at the three current wall light switches that are found just inside three entrance doors to the garage. H. Coffee Nook Area: One(1)occupancy sensor to be installed at the current wall light switch just inside the room. I. Anchor Bank Room: Two(2)occupancy sensors to be installed at the two current wall light switches. J. Arts and Crafts Room: Two(2)occupancy sensors to be installed at the current two wall light switches that are found just inside the two entrance doors to the room and a vacancy sensor to be installed in the ceiling. K. Kitchenette: Two (2)occupancy sensors to be installed at the current two wall light switches that are found just inside the two entrance doors to the room. 9 L. Jack and Bev McKnight Fitness Center:Two(2) occupancy sensors to be installed,one (1)at the wall light switch found just inside the door entrance to the room from the hallway and one(1)at the wall light switch for the shoe changing area. M. Coat Room: One(1)occupancy sensor to be installed at the current wall light switch that is found just inside the one entrance door to the room. N. Rotary Club Room: One(1) occupancy sensor to be installed at the current wall light switch that is found just inside the one entrance door to the room. O. Train Room Hallway: Two(2)occupancy sensors to be installed at the two current light switches that are found just inside the two entrances to the hallway. P. Table and Chair Storage Room: One (1) occupancy sensor to be installed at the current wall light switch that is found just inside the one entrance door to the room. Q. Janitorial Supply Storage Room: One(1)occupancy sensor to be installed at the current wall light switch that is found just inside the one entrance door to the room. R. Recreation Supervisor's Office: One(1)occupancy sensor to be installed on the wall switch. S. Front Reception and Office Area Light Switch Control: Install new double light switch that splits the lighting control so one switch tugs on/off the reception area lights and a second switch turns on/off the office lights. 5. Execution A. Sensor Installation:Install and aim sensors in locations to achieve not less than 90 percent coverage of areas indicated. Do not exceed coverage limits specified in manufacturer's written instructions. B. Field Quality Control: Perform the following field tests and inspections and prepare test reports: 1. After installing sensors and after electrical circuitry has been energized,adjust and test for compliance with requirements. 2. Operational Test:Verify operation of each lighting control device,and adjust time delays. Lighting control devices that fail tests and inspections are defective work. C. Occupancy Adjustments: When requested within 12 months of date of project completion,provide on-site assistance in adjusting sensors to suit occupied conditions. Provide up to two visits to Project during other than normal occupancy hours for this purpose. D. Demonstration: Engage a factory authorized service representative to train Owner's maintenance personnel to adjust, operate, and maintain lighting control devices. 10 II. Alternate A General Requirements Interior Lighting Improvements 1. Electronic Ballast Replacement: Replace existing ballasts with electronic ballasts that comply with; instant start type,unless otherwise indicated,and designed for type and quantity of 25 watt lamps served. Ballasts shall be designed for full light output.The following minimum requirements must be met: A. Sound Rating: A B. Total Harmonic Distortion Rating:Less than 20 percent C. Transient Voltage Protection: IEEE C62.41, Category A or better D. Operating Frequency: 20 kHz or higher E. Lamp Current Crest Factor: 1.7 or less F. Ballast Factor: 0.85 or higher G. High Power Factor Ballast: .95 or higher H. Shall not have any PCBs 2. Location of Electronic Ballast Replacement:Location and quantities of existing ballasts to be replaced with electronic ballasts that meet the minimum requirements identified in#1 are to be installed in the following locations: A, Main Hallways(10) • B. Empire Room(17) C. Nicolai Board Room(6) • D. Front Receptionist Area and Staff Office(4). E. Jerry Ristow Library(4) F. Men and Women Restrooms by Banquet Room (4) G. Men and Women Restrooms by Fitness Room(2) H. Arts and Crafts Room(16) I. Red Slipper Room(2) J. Webber Room (2) K. Coffee Nook(2) L. Anchor Bank Room(5) M. Jack and Bev McKnight Fitness Center(10) N. Copier Room(2) O. Hallway by Copier Room(2) P. Coat Room(1) Q. Table and Chair Store Room(2) R. Rotary Club of Farmington Room (4) S. Kitchenette(6) T. Recreation Supervisor's Office(3) 3. Warranty: The manufacturer shall provide written warranty against defects in material or workmanship,including replacement,for five years from date of manufacture. 4. Scope of Work: Remove and recycle existing ballasts and replace with new ballasts that meet the minimum requirements listed in#1 above. End of Section 11 HELME-1 OP ID:SK ACORD I DATE(MIr/DD/YYYY) CERTIFICATE OF LIABILITY INSURANCE 05/26/2015 This CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED,the pollcy(les)must be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s). PRODUCER CONTACT Susan Kouba pm Miller Hartwig Insurance 20960 Holyoke Avenue P NE I:xn.952-469-0406 I mac,No):952.469-1881 Lakeville MN 55044 A :skoubatmlllerhartwig.com Richard M.Miller INSURERS)AFFORDING COVERAGE NAIC 0 INSURER A:Cincinnati insurance 10677 INSURED Helm Electric Inc. INSURER B:SFM Mutual Insurance Company 21596 Vernon Ave Lakeville,MN 55044 INSURERC: INSURER D: INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR ADDL SUER POLICY EFF POUCY EXP LTR TYPE OF INSURANCE MSD WVD POLICY NUMBER (MMIDDDYYYY) (MM/DD/YYYYI UNITS A X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 1,000,000 CLAIMS-MADE X OCCUR X ENP 0326669 05116/2015 05/16/2016 DAMAGE 70 RFJNTED 500,000 PREMISES(F�occurrence) $ MED EXP(Any one person) $ 10,000 PERSONAL&ADV INJURY $ 1,000,000 GE_IVL AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 2,000,000 POLICY JECTT LOC PRODUCTS-COMP/OP AGG $ 2,000,000 OTHER: $ AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ 500,000 (Ea accident) — A X ANY AUTO ENP 0326669 05/16/2015 05116/2016 BODILY INJURY(Per person) $ ALL OWNED — SCHEDULED BODILY INJURY(Per accident) $ AUTOS X X NOON-OWNED PROPERTY DAMAGE HIRED AUTOS _ AUTOS (Per accident) _ X UMBRELLA UAB X OCCUR EACH OCCURRENCE $ 4,000,000 A EXCESS LIAB CLAIMS-MADE ENP 0326669 05/16/2015 05116/2016 AGGREGATE $ 4,000,000 DED I I RETENTION$ $ WORKERS COMPENSATION PER 0TH- AND EMPLOYERS'LIABILITY X I STATUTE I I W- AND ANY PROPRIETOR/PARTNER/EXECUTIVE Y�N/A 12106.219 05116/2015 05/16/2016 EL EACH ACCIDENT $ 500,000 OFFICER/MEMBER EXCLUDED? (Mandatory In NH) EL DISEASE-EA EMPLOYEE $ 500,000 lives describe under DES6RIPTION OF OPERATIONS below EL DISEASE-POLICY LIMIT $ 500,000 A Equipment Floater ENP 0326669 05/16/2015 05116/2016 Limit 105,000 Rentdlieased equip REPLACEMENT COST Ded 500 • DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached If mom space Is required) City of Farmington Is named as additional insured per endorsement form GA 233. CERTIFICATE HOLDER CANCELLATION CITYF-5 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Farmington THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN by ACCORDANCE WITH THE POLICY PROVISIONS. 430 Third Street Farmington,MN AUTHORIZED REPRESENTATIVE ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25(2014/01) The ACORD name and logo are registered marks of ACORD '4' ,,y City of Farmington 430 Third Street • Wa Farmington, Minnesota Ar 651.280.6800 -Fax 651.280.6899 44'at ,- www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: Randy Distad, Parks and Recreation Director SUBJECT: Approve Agreement Central Maintenance Facility Lighting Improvement Project DATE: May 18, 2015 INTRODUCTION The existing lights in the Central Maintenance Facility (CMF) shop area are original metal halide fixtures and lamps. Metal halide lighting is very inefficient and more costly to operate than other lighting sources. The existing metal halide fixtures should be replaced with new fixtures and lamps that are more energy efficient. DISCUSSION Parks and Facilities Supervisor Jeremy Pire met with three lighting contractors about replacing in the shop area at the CMF the 73 existing metal halide fixtures that use 400 watt lamps. The proposed retrofitting of the existing shop area's lighting system will consist of removing and replacing the existing fixtures and lamps with 25 new T-8 fluorescent fixtures and 32 watt lamps. There will be a reduction in energy usage and as a result lighting cost in the shop area will be reduced substantially. This new lighting system will allow the lights to immediately turn on rather than having to wait for the existing metal halide lamps to warm up first before turning on. Premier Lighting,Inc. (PLI) submitted the low quote for this project in the amount of$11,409.50 after a Dakota Electric Association rebate is applied. The proposal submitted is included as part of the agreement form and is shown as Exhibit A in the agreement form. Exhibit B shows a tabulation of the quotes received. BUDGET IMPACT As you can see in the proposal submitted by PLI there are several positive outcomes including: • The number of fixtures will be reduced from 73 metal halide to 25 T-8 fluorescent fixtures but yet still have the same level of light emitted • The cost of the project is reduced due to an available rebate program through Dakota Electric Association,which the contractor will be responsible to apply for and receive • The payback for the project is estimated to be 2.5 years • The estimated reduction in annual energy use is 50% • The estimated annual savings for energy and labor costs is $4,562.27 (energy$3,856.11 and labor $706.16) • The estimated return on investment is 39.99% • All recycling and disposal costs of existing lighting equipment will be handled by the contractor While there was no funding identified in the 2015 budget to cover the cost of this project, staff is proposing to charge this cost to the CMF electricity expenditure line item of the budget. The electrical expenditures for the CMF are split in the budget in the following manner: • 25%of electric invoice paid from Solid Waste Fund budget • 25%of electric invoice paid from Water Fund budget • 25% of electric invoice paid from Sewer Fund budget • 5% of electric invoice paid from Stormwater Fund budget • 10% of electric invoice paid from Street Maintenance budget • 10% of electric invoice paid from Park Maintenance budget The energy savings will offset some of the project cost in 2015. It will however likely mean the electricity expenditure line items in the above budgets will be over budget at the end of the 2015 budget year. ACTION REOUESTED Staff is requesting the city council approve the attached agreement with Premier Lighting,Inc. in the amount of$11,409.50 for the CMF lighting retrofit project and split the project cost to the electricity expenditure line item budgets as outlined above, so the work may be completed as soon as possible in order to begin to capture the energy and cost savings. ATTACHMENTS: Type Description D Contract Agreement and Proposal D Exhibit Lighting Proposal Tabulation • AGREEMENT AGREEMENT made this ler€17 day or ,.2015, between the CITY OF `FARMINGTON, a Minnesota municipal coifiration ("City"), and PREMIER LIGHTING7INC.,a Minnesota emporation("Contractor"). IN CONSIDERATION OF Ti E MUTUAL INDERTAICING5 HEREIN CONTAINED,THE PARTIES AGREE AS FOLLOWS: L .CONTRACT DOCUMENTS: The:.following documents shall he referred to as the 'Contract DocOntents",all of which.shall be taken together ae a whole as the Contract:between the parties$:if they were setverbatimand hi full.herein:. A. This Agreement B. Centractor'sprOpoealattachedaS Exbibit."A." hi the event.of conflict among the.proVisiens of the:Contract Documents,the-order-1n which they are-listed.above Shall,control in resolving any such conflide with Contract Document"A" having thearst priority and Contractbocurnent"B"having the last priority. 2. OBLIGATIONS.OF THE CONTRACTOR. .The Contractor shall provide the goods,Services,and perform the work it acobidance With the ContradtDoeuments.. 3: OBLIGATIONS OF Trig CITY. The Oitythall pay the Contractor hi accordance with thequote, 4. SOFTWARELICENSE, If the equipment proVided by-the Contractor pursuant to Ibi§.Contract.contahil saw-%%4n:chiding that which the inanifactuterinayhave embedded into the hardWare as an integral part of the*equipment,the Contractor.shail pay all softwate licensing fees. The.Contractor shall also pay for all°software updating fees for a period of one year. following cutoyer; The Contractor shall have no obligation to.pay for such fees thereafter.Nothing in the software libellee of licensing 'figreottent:shall obligate the. City to pay any additional fees as a condition thrcontiiiningto We the software. S. ASSIGNMENT: Neither patty may .assigni, sublet, or transfer any. interest or obligation it this Contract without the prior written consent of the other party;and then only upon Suchterms and conditiOneas both paitie,s may agree to and set forth inwiiting. 6. TIME 002,PEREORMANCE.. The.Contractor sbol begin work on or after May 1%2015 and complete its obligations on orbefore September 1,2015.. • 7. PAYIVItNT. a. When the-obligations of the Contractor have been fUlfilled,inspeetedi and accepted; - the City Shall pay the Contractor$11,409.50 for the project. Such payment hall be made not later thanthirt3r00)-Clays after coMpletion,certification thereof,dila sinvoi6ifigby the Contractor. b. No final payment shall be made 'under this. Contract until Contractor has satisfactorily established 'compliance with the :provisions of Min% Stat. Section 290.92. A. Certificate bt the commissioner shall satisfy is reqUirement vvith respectto the COntraeteir Of.any Stilicontractor. 8*, EXTRA SERVICES. No. Claim Will be honored for compensation for extra services or beyond the.scope of this Agreement or the not-to 7ekeeedpriedfOr the services identified. in the proposal'without-Mitten subniittal by the COntractor,,and appreVal of an amendment by the . City, 'with.s.peCific esthnotes; of type, tine, and Maximum costs,.prioi to commencement of the worit. • .9. PROMPT' PAYMENT TO SUBCONTRACTORS. Pursuant to Minnesota. 'Statute-47115, Subdivision.4,the Contractor mitt pay anyisubcontraCtot Within ten (10) day's of the Contractor's receipt of payment :from the City for undisputed services -provided by the subcontractor. The.Contractor mustpay interest of one and one-half-percent(16V0),per month or any part of 'a month to•subcontractor on any undisputed amount not paid. on time to the sikcentracter. The Minimum monthly interest penalty payment fotan unpaid balance of$100,00 or more is $10.60. For an unpaid balance sales&than $100.00; the Contractor shall pay the Wail penalty clue to the subcontractor,- A-subcontractor Who prevails in a civil action to collect interest penalties from the Contractor shall,be awarded its costs and disbursements, including attorney's fees incurred in bringing the action. 10.. WORKER'S COMPENSATION If Contractor does public Work,the.Contractet shall.obtain and maintain,'for the 'duration of this Contract, statutory Worker's Compensation Insurance and Employer's Liability Insurance as required underthe laws of the State.of Minnesota, .11. COMP REHENSIVE. -GENERAL LIABILITY. Contractor AO Obtain the following—minimum ;ammo coverage and *maintain, it at all tunes throughout the life of the Contract;with the City Included as an additional naine,insured by endorsement: Bodily Injury:. $2,000,000 each Occurrence $2,000,000 aggregate,products and completed.operations • Property Damage: $2,000,000 each occurrence • $2,000,000 aggregate Products and Completed.0perations.TuSurante shall be maintained for a minim* .um period of Three (3)years,after final payment and Contractor shall continue toprovide eyidence-of suchcoverage•to 2 City on:an annual basis during.the aforementioned peric.)d;or if any reason-Contractor's work teases before,final.payment,for a minitrunn period ofthree(3)'years from thedate-Contractor ceaseswork. Property Damage Liability Insurance shall iiicludeociiierage for the following hazards: X (Explosion). • C. (C911a1)* U (Underground) • Contractual.Liability(ideiatiying the 000114: Bodilyinituy: • $2,000,000 each occurrence PrOpertyDamage: $2,000,000 each ocCurrende . $2,000,000 aggregate Personallujury,with Employment Exclusion deleted: $2,000000 aggregate • Comprehensive.Automobile Liability(owned,non4cwried,hired): Bodily hijmy: $2,000,000 each occurrence $2,0000O0 each accident . • . Property-Damage: $2,000,000 each occurrence• • • 12. 1VIENNESOTA GOVERNMENT DATA PRACTICES ACT. Contractor.must comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter LI,as it applies to (1) all:data provided by the City pursuant to'NA Agreenient, and M.all data, created, collected, .received, stored, used maintained,. or disseminated by Contractor pursuant.to this AgiVement, Contractor is:subject to all.the•prOViaions of the Minnesota Government Data Practices Act including bid notlitnited.tO the civil remedies of Minnesota Statutes Section 13.08as if it were a..,goVerinteriteniity. In-the event Contractor receives a.request to release data Contractor must' immediately note City, CityWill,giVe Contract&instructions concerning the:release of the data to the requesting:party s:before the data is relealed, Contractor agites.to•defend, iridemnify,:andhold City, its official's,officers, agents,.employees;.and volunteers:harmless from any elairm.resulting from. Contractor's officers', agents city's, partners", employees',, volunteers', 'assignees' or sattbconitactoit'utilaWful diseleatte and/Or use Of protected data. The territS•Of this paragraph shall survive the cancellation-or Tenninationiof this Agreement. 13. RECORDS. Contractor shall maintain-complete and accurate records of expenses involvedin theperformance of services. 14. WARRANTY. The COntractor gnaranteeS that all new equipment.Wan'aiities as specified Within the bid shall be in full'force and'all warranty doeuments shall.be tonletredst0 the City upon payment by the:City. Contractor shRil be.heldresponsible for any and all defects in 3 workmanship,materials, and equipment Which may develop in any part of the contracted service, and upon proper notification by the City shall.iminediately replace%without cost to the City, any such faulty part or.parts and damage:done by mast* -of the mine hi accordance With the bid speciaations. The.Contractor further warrant:s.to the City that all goods and. services furnished -under.the Contract will be in conformance With Contract Documents and that the goods are of merchantable and are fit for the use for which they are sold. This warranty is in addition to any.manufacturer's-standard warranty y?and any Wairanty provided:by law. NONDISCRIMINATION. All Contractors and snbcontraetors employed shall comply with, all applicable pro-visions 'of all federal, state and municipal laws which prohibit discrimination in.employment in members of a:protected class and all idles-and regulations, promulgated.and adopted pursuant thereto. The Contractor will iAclttde gni-liar proWon in'all subcontracts enteredirito forthe_perferrnance of this contract, 10... INDEMNITY. Tlie Contractor agrees-th defend;hold harmless,and indemnify the City,its'officers,agents„and employees, for and*dna any arid-all*claims,demands,.eictiOns, Or causes of action, of whatever hattire or character, atising.from the Constiltant's performance of work:or rVices priivided for herein,The Contractor shall take all reasonable precautions for the safety of all.erciployees-on the site and shall.providereasonabie protection.to prevent damage on loss to. the property on the sites or properties adjacent thereto and to work, Materials and equipment.under-the Contractor'S control.- • • 11. 'WAI'VER. in'thepaiticular event thateither patty shall at any time or thneswaive any breach of th*Contract by The ether,such waiver shall not constitute a waiver of any other or any succeeding breath of this Contract-by either party,--whether of the same or any other covenant, condition,or obligation, 18, GOVERNING LAW. The laws of the State of Minnesota govern the interpretation. ofthis Contact • 19. SEVERABILITY. If any ptoViSien,term, or condition of this Contract is found to be.or become unenforceable or invalid, it.shall not effect the-remaining•provisions, terms, and conditions of this Contract, unless such invalid or unenforceable provision, term, or condition, renders this ContractiMpossible to,pefforrn.Such remaining terms and conditions,of the Contract shall continuein full forceand effect and shall continue to.operate as-theriattiesT entire contract. 20. ENTIRE AGREEMENT: This Contract representa the entire-agreement of parties and is artnal,complete,and all inclusive statement of the terms thereof,and supersedes and terminates any prior agreernent(S); understanding; or written or verbal representations. made between the'parties withrespect thereto. 21. TER1VIINATION1 This Agreemeritmay be teirninated by the City for any reason. or for convenience upon written notice to the'Contractor, In the event of termination, the City shall be obligated to the Contractor for payment' of amounts due and owing, for materials 'provided orfor services performed or furnished to the date and time oftermination. 4 Dated: J ,j20'15.. CITY OF FARMINGTON By: Todd Larsoti,Mayor By; 61A-:" '/C-4 /4-11 David Mani t,ety Administrator 5 • Dated: ,2015 CONTRACTOR PREMIER LTGffTING,llC. By: Its: 6 PREMIER Lighting LIGHTING AUDIT ENERGY & COST SAVINGS Property Address: City of Farmington 19650 Municipal Drive Farmington,MN 55024 Presented To: Jeremy Pire Project: Central Maintenance Facility Report Date: April 29,2015 Energy Company: Dakota Electric Presented by Auditor: Eric Meurer Premier Lighting,Inc. 2885 Country Drive Suite 135 St.Paul,MN 55117 Direct:651-253-1408 Office:651-490-0886 Fax:651-490-0963 eric@premieritg.com • Property of Premier Lighting.All rights reserved.Confidential Proprietary.Duplication/Disclosure to third parties without written consent of Premier Lighting is prohibited. Premier Lighting Mission To provide our customers with the optimal and practical lighting system PREMIER Lighting --- idp - #. �A 11 #1 I i t '' 1•�k '4 ' vo; �_�'' `i _ ; ti 'Fot Al .ur Li»htlrtg Nerds; Service We communicate with our customers in a timely manner and make it convenient and easy for them to work with us for all of their lighting needs. We are there for you before, during and after the sale. Our goal is to be your lighting supplier for life. Options/Lighting Knowledge We have been in business for 25 years and stay on top of the latest in greatest in lighting technology. Lighting is confusing so we sort through all of the practical options and provide you with the optimal recommendation for your facility. Quality Everything we provide is commercial grade and backed by warranty from reputable manufacturers. Price We competitively price everything we provide to save our customers time and provide peace of mind that they are getting the best lighting product at the best price. PREMIER Lighting Lighting Retrofit Benefits ▪ Reduce Energy Usage • Rebates (limited time offering) ▪ Increase Light Quality ' Increase Light Levels • Increased Worker Productivity ' Improved Quality Control • Light Level and Color Uniformity • Enhanced Company Image • Longer Lasting Products = Reduced Maintenance Costs • Lamp Type Consolidation • Instant on/off • Magnetic T12 Lamps and Ballasts and many incandescent lamps have been phased out of production or will be in the next few years • Environmental Impact • HVAC Savings • Rising Energy Costs Safety PREMIER Lighting PROJECT HIGHLIGHTS Measurable Benefits: *Reduce Energy use by 50% *Improve Light Levels by 20%or more *Limited Time Rebate of $6,174.00 PROJECT HIGHLIGHTS: Project Cost After Rebates: $11,409.50 Yearly Energy/Maintenance Savings: $4,562.27 Payback: 2.50 PREMIER Energy and Maintenance Lighting Savings Chart Company Name: City of Farmington Contact Name: Jeremy Pire Project: Central Maintenance Facility Projected Energy& Maintenance Savings $45,000 $40,000 $42,016 ul U $35,000 _- ›„ $30,000 /J$33,613 Er) $25,000 c$ $25,210 w $20,000 >_ l$16,806 $19,205 .1;. $15,000 - / -$15,364 o $10,000 •$8,403 r____----$11,523 a $5,000 x$7,682 a Existing Fixtures.Cosi U -$3,841 $0 , 0 Proposed Fixtures Cost Year 1 Year2 Year3 Year4 Year5 Total Savings $4,562 $9,125 $13,687 $18,249 $22,811 CUMULATIVE ENERGY COST&MAINTENANCE SAVINGS Year 1 Year2 Year3 Year4 Year5 Existing Fixtures Cost $8,403 $16,806 $25,210 $33,613 $42,016 Proposed Fixtures Cost $3,841, $7,682 $11,523 $15,364 $19,205 Total Annual Savings $4,562 $9,125 $13,687 $18,249 $22,811 PREMIER Summary of Suggested Liglil:ing Lighting Upgrades Company Name: Cily of Farmington Contact Name: Jeremy Pire Project: Central Maintenance Facility LIGHTING UPGRADES EST.COSTS EST.SAVINGS MATERIAL COSTS Before Rebates $12,000.00 INSTALLATION(WITH LIFT AND PERMIT IF NECESSARY) $5,405.00 ANNUAL MAINTENANCE SAVINGS $706.16 RECYCLING $178.50 FREIGHT TAX ANNUAL ENERGY SAVINGS $3,856.11 TOTAL COST BEFORE SAVINGS $17,583.50 TOTAL ANNUAL SAVINGS $4,562.27 EST.REBATES $6,1.74.00 FINAL COST $11,409.50 PAYBACK(Years) 2.50 • RETURN ON INVESTMENT 39.99% • PREMIER LIGHTING RETROFIT CONTRACT Light tttg Company Name: COyotFamiington Contact llama; JeremyPTre Pio)eet CsntralMaLderianaeFac30y Remit DascdpRon #Units Cost Total Contract Price 6-Lamp TB.Htghbay 32 WATT NSF(includes hanging kit. cord,and high lumen extended We lamps) FX•HQN6LT8323BF 73 $150.0 $10,950.00' Sailolol 412000.00 3S1dp Fixture Retry R Ia4-4II 3 Lamps(includes'bracket FX-8114LNEP NI.HEN bandit,and high lumen extendgcl R!e tamps) $4200 $1.050,00 Fielghl tales Tax fr slatlaftep $5.0050 LIFT/PERMIT IP NEEDED $400.00 Recycling $178,50 Total Contract Price $17,583.60 Rebates Wry $64174.00 • UEDyPs:Meier DakorinElechin Net Cos7After Rebalei $11A09.BOr Prouder Upbfn8`+W'lrlcur herebate.so you pay,tha'0not cast at •$1:1409.50 • Payback Thai Zb0 RETURN ON INVESTMENT f0 At COST n 12000.00 39.99% 4/29/2ol5c PROPOSALACCEPTED AND INSTALIAtIONAUT11O81ZED BY: PAOPOSAL DAffi uitem rstprirriarj gala • kanary GwterxaNaas* Bair By,sigtftngIhliagr eementyouacceptthecontracliatmsldb d)ntheprotioie1,Poymint1rslull(Nee oz paygbl eirpohcomp lollpn alb"workunlesstit evAmalgtadabbikx This quote Is vaild tor30 days Irom proposal dale. SAM FERST AI1lD1lARM auEnlmsaw revs �■111 PREMLIG-01 SSKILLINGS AFRO DATE CERTIFICATE OF LIABILITY INSURANCE S/2s/2o15YY) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(les)must be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT NAME: __ Stein Agency Inc. PHONE 1 651 257-1042 No: 1 (651 257-5772 12800 Lake Blvd E M No,E=u: ( ) i 1 E-MAIL Lindstrom,MN 55045 ADDRESS: INSURER(S)AFFORDING COVERAGE NAIC# ------ --- ------------- - - -------------- INSURER A:AmTrust North America }00240 INSURED INSURER B: J Premier Lighting Inc INSURER C: 2885 Country Drive#135 INSURER D_ 1 _ _ ' Little Canada,MN 55117 INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS INSR1 TYPE OF INSURANCE AWL SUER POLICY EFF 7 POLICY EXP ; LIMITS LTR _ _ INSD WVD POLICY NUMBER (MM/DD/YYYYJMM/DD/YYYY)I A I X I COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE T$ 1,000,000 I X SBP116950 07/09/2014 07/09/2015 I PREMISES E TOWNTED $ 50,000 J CLAIMS-MADE I J OCCUR PREMISES(Ea occurrence) MED EXP Any one person) $ 5,0001 PERSONAL&ADV INJURY $ 1,000,0001 GEN'L AGGREGATE LIMIT APPLIES PER GENERAL AGGREGATE $ 2,000,000 `X POLICY PRO- JECT LOC PRODUCTS-COMP/OP AGG $ 2,000,000 OTHER -- AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ 1,000,000 (Ea accident) A X I 1 ANY AUTO SPP1116951 07/09/2014 07/09/2015 BODILY INJURY(Per person) ; $ ALL OWNED I SCHEDULED BMA Y INJURY Per ecc,denh $ AUTOS AUTOS ' NON-OWNED PROPERTY DAMAGE $ HIRED AUTOS _ _ AUTOS ' ,Per ac ■aeni) X UMBRELLA UAB X OCCUR EACH OCCURRENCE $ 1,000,000 A EXCESS LAB CLAIMS_-MADE MMB1015140 07/09/2014 07/09/2015 AGGREGATE I $ DED f X 1 RETENTION$ 10,000 $ — -- WORKERS COMPENSATION STATUTE ER AND EMPLOYERS'LIABILITY A ANY PROPRIETOR/PARTNER/EXECUTIVE r N MWC1005874 07/09/2014 07/09/2015 E L EACH ACCIDENT $ 1,000,000 OFFICER/MEMBER EXCLUDED/ N/A (Mandatory in NH) E.L.DISEASE-EA EMPLOYEE $ 1,000,000 If yes,describe under I E L DISEASE POLICY LIMIT $ 1,000,000 — 4DESCRIPTION OF OPERATIONS below - ------ ---- i 1 —� — —'--II- --� - -- DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES (ACORD 101,Additional Remarks Schedule,may be attached If more space is required) Certificate Holder Is Hereby Named As Additional Insured For Their Insterest In The Above Coverages. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN City of Farmington ACCORDANCE WITH THE POLICY PROVISIONS. 19650 Municipal Drive Farmington,MN 55024 — — — — — AUTHORIZED REPRESENTATIVE � joi.A...1-.0 ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25(2014/01) The ACORD name and logo are registered marks of ACORD Oft'R1/fir, City of Farmington , 430 Third Street f WI� Farmington,Minnesota 651.280.6800 -Fax 651.280.6899 '"r• moir8P- www.ci.farmington.mn.us TO: Mayor, Councilmembers and City Administrator FROM: David J. McKnight, City Administrator SUBJECT: 2015 City Council Strategic Plan Update DATE: May 18, 2015 INTRODUCTION The city council and city staff met in March 2015 to review and update the 2014/2015 Farmington City Council Strategic Plan. This meeting was facilitated by Dave Unmacht of Springsted Incorporated. Mr. Unmacht worked with the city in the development of the original plan in 2014. DISCUSSION City councilmembers and city staff met with Mr. Unmacht for an afternoon in March to review the successes of the strategic plan and to update the plan for 2015. Department heads shared the progress of work occurring in their department and finally the city council and city administrator talked about goals and priorities for 2015. The attached strategic plan update is a summary of the discussions that took place. The plan was reduced from six strategic areas down to four by the city council. Each of the four strategic areas has both specific goals and philosophical approaches to our work as a city. The four strategic areas include: 1. Organizational Development 2. Community Development 3. Communication/Engagement 4. Finance/Operations If I were to summarize the priorities that the city council has put in place for 2015 I would say that they are to continue to look for efficiencies in our organization while at the same time preparing us for the future,progress and completion of the Vermillion River Crossings development, enhanced efforts at communicating with our residents and incorporating their thoughts into our decision making progress and finally continuing our efforts to become a city of fiscal excellence. I will review each of the strategic areas and the specific projects included under each area as a part of the meeting. BUDGET IMPACT Budget impacts vary by goal and project and will be discussed with individual projects as they move forward and as part of annual budget discussions. ACTION REQUESTED Review and discuss the 2015 strategic plan update as presented. If the city council gets to a point of being comfortable with the document a motion should be made to approved the 2015 Farmington City Council Strategic Plan update. City staff would be happy to answer any questions you may have. ATTACHMENTS: Type Description D Exhibit 2015 Strategic Plan Update ���: I 2015 Farmington City Council Strategic Plan Update Organizational Development The city will annually review the operational structure of the organization to maximize results and ensure our structure meets both the current and future needs of the community. Project 1-1 Complete Municipal Services/Parks and Recreation maintenance study and recommendation. 1-2 Successful transition of the full-time fire chief into the organization. 1-3 Incorporate staffing assistance in the Finance Department. 1-4 Determine how/when do we incorporate new IT positions into the organization. 1-5 Development of options by the Fire Chief to address the daytime firefighter response issue. 1-6 Continue to plan for and implement improved technology plans. Community Development Position the city for future economic development with a professional approach and planned efforts. Project 2-1 Progress/completion of the Vermillion River Crossings development. 2-2 Complete hotel project decision by mid/early 2015 with current partners. 2-3 Begin work on the 2018 comprehensive plan. 2-4 Review the Fairhill planned unit development agreement. 2-5 Develop and review options for the deferred assessments on the Vermillion River Crossings development. 2-6 Review options for future industrial land development. 2-7 Continue our efforts on positive relationships with land owners. Communication/Engagement Continue to use a wide variety of tools to communicate with our residents and improve our efforts to share the status of our work. Project 3-1 Successful completion of the city website update. 3-2 Review the results of the 2015 community survey. 3-3 Continue our efforts to improve the image of Farmington. 3-4 Continue to enhance our communication efforts through social media. 3-5 Refresh the city image on channel 180. 3-6 Continue our efforts to partner and communicate with other local governments. Finance/Operations Farmington will work towards becoming a city of fiscal excellence by developing and implementing plans that position us for a strong economic future. Project 4-1 Continue work on the development and approval of the 20 year financial plan. 4-2 Continue work and earlier implementation of the vehicle replacement and funding plan. 4-3 Work to make greater efforts in the area of green energy. 4-4 Continue work to get all funds to a positive status year round. 4-5 Ask for a bond rating review in 2015 as a part of debt issuance. 4-6 Formally approve the four pots philosophy related to liquor store finances. 4-7 Continue plans for the proposed pool transformation in 2016. 4-8 Make decisions on a possible athletic complex question on the 2016 ballot.