Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
06.20.23 Council Packet
Meeting Location: Farmington City Hall 430 Third Street Farmington, MN 55024 CITY COUNCIL REGULAR MEETING AGENDA Tuesday, June 20, 2023 4:30 PM Page 1. CALL TO ORDER 4:30 P.M. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVE AGENDA 5. ANNOUNCEMENTS / COMMENDATIONS 5.1. Parks and Recreation Month Proclamation Proclaim July 2023 as Parks and Recreation Month in Farmington. Agenda Item: Parks and Recreation Month Proclamation - Pdf 4 - 6 6. CITIZENS COMMENTS / RESPONSES TO COMMENTS (This time is reserved for citizen comments regarding non-agenda items. No official action can be taken on these items. Speakers are limited to five minutes to address the city council during citizen comment time.) 7. CONSENT AGENDA 7.1. City Council Work Session Minutes for June 5, 2023 Agenda Item: City Council Work Session Minutes for June 5, 2023 - Pdf 7 - 15 7.2. Regular City Council Meeting Minutes for June 5, 2023 Agenda Item: Regular City Council Meeting Minutes for June 5, 2023 - Pdf 16 - 23 7.3. Temporary On Sale Liquor License - Farmington Municipal Liquors Agenda Item: Temporary On Sale Liquor License - Farmington Municipal Liquors - Pdf 24 - 25 7.4. Resolution Granting a Third Time Extension for Recording of Final Plat - Vita Attiva at South Creek Third Addition Agenda Item: Adopt a Resolution Granting a Third Time Extension for Recording of Final Plat - Vita Attiva at South Creek Third Addition - Pdf 26 - 28 Page 1 of 358 7.5. Resolution Approving the Assignment of Development Contract - Ten Nineteen Development, LLC Agenda Item: Adopt Resolution Approving the Assignment of Development Contract - Ten Nineteen Development, LLC - Pdf 29 - 36 7.6. Approve Bills Agenda Item: Approve Bills - Pdf 37 - 38 Approve Bills - Confidential 7.7. Fire Service Agreement with Dakota County Agricultural Society Agenda Item: Approve Fire Service Agreement with Dakota County Agricultural Society - Pdf 39 - 41 7.8. Reclassification of the Building Official Position Agenda Item: Reclassification of the Building Official Position - Pdf 42 - 45 7.9. Staff Changes and Recommendations Agenda Item: Staff Changes and Recommendations - Pdf 46 7.10. Cradlepoint Upgrade Public Safety - ARPA Funds Agenda Item: Cradlepoint Upgrade Public Safety - ARPA Funds - Pdf 47 - 52 7.11. LOGIS Fiber Management Services Agreement Agenda Item: LOGIS Fiber Management Services Agreement - Pdf 53 - 64 7.12. Resolution Accepting Donations from the Farmington VFW and Veteran’s Steak Fry Committee to the Rambling River Center Agenda Item: Resolution Accepting Donations from the Farmington VFW and Veteran’s Steak Fry Committee to the Rambling River Center - Pdf 65 - 66 7.13. Shade Structure for Flagstaff Meadows Park Agenda Item: Shade Structure for Flagstaff Meadows Park - Pdf 67 - 92 7.14. Purchase of a new VACTOR 2100i from MacQueen Equipment Agenda Item: Purchase of a new VACTOR 2100i from MacQueen Equipment - Pdf 93 - 97 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT 10. PETITIONS, REQUESTS AND COMMUNICATIONS 10.1. Amendment to a Planned Unit Development - Trinity Care Center - 905 Elm Street Adopt Resolution No. R44-23 Approving a Third Amendment to the St. Francis Health Services of Morris, Inc. Planned Unit Development Site Plan. 98 - 109 Page 2 of 358 Agenda Item: Amendment to a Planned Unit Development - Trinity Care Center - 905 Elm Street - Pdf 10.2. Amendment to a Planned Unit Development - Vita Attiva at South Creek, 5140 216th Street W Approve and adopt Resolution No. R45-23, Approving a Second Amendment to the Vita Attiva at South Creek Planned Unit Development Agreement as it Pertains to a Monument Sign, to allow for a 135 square-foot monument sign to be located at 5140 216th Street West. Agenda Item: Amendment to a Planned Unit Development - Vita Attiva at South Creek, 5140 216th Street W - Pdf 110 - 119 11. UNFINISHED BUSINESS 12. NEW BUSINESS 12.1. 2022 Annual Financial Report and Management Report Ask any questions you may have of the auditors or City Staff. Once you are comfortable with the information provided, a motion should be made to accept the auditor’s reports. Agenda Item: 2022 Annual Financial Report and Management Report - Pdf 120 - 358 13. CITY COUNCIL ROUNDTABLE 14. ADJOURN Page 3 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Kellee Omlid, Parks & Recreation Director Department: Parks & Recreation Subject: Parks and Recreation Month Proclamation Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Since 1985, people in the United States have celebrated Parks and Recreation Month in July to promote building strong, vibrant, and resilient communities through the power of parks and recreation and to recognize the more than 160,000 full-time parks and recreation professionals, along with hundreds of thousands of part-time and seasonal workers and volunteers that maintain our country’s local, state, and community parks. DISCUSSION: This year’s theme, “Where Community Grows,” celebrates the vital role parks and recreation professionals play in bringing people together, providing essential services, and fostering the growth of our communities. Thank you to the Parks and Recreation Staff and volunteers fo r all you do to provide quality facilities, parks, programs, and an environment that improves quality of life and promotes community unity in Farmington! The Parks and Recreation Department will celebrate Parks and Recreation Month by hosting a party in the park on Friday, July 28, at Lake Julia Park. The party starts at 7 p.m. with Kidsdance, games, face painting, crafts, and more. Kidsdance is America’s interactive DJ service for kids. At dusk (approximately 8:40 p.m.), the movie, Ferris Bueller’s Day Off, will be shown. Thank you to the party sponsors including Farmington Youth Hockey Association, Marschall Line, Farmington VFW Post 7662, and Park Dental. This is a free event, so all are invited to attend. ACTION REQUESTED: Proclaim July 2023 as Parks and Recreation Month in Farmington. ATTACHMENTS: Parks and Recreation Month Proclamation Page 4 of 358 P R O C L A M A T I O N PARKS AND RECREATION MONTH, JULY 2023 WHEREAS, Parks and recreation is an integral part of communities throughout this country, including Farmington; and WHEREAS, Parks and recreation promotes health and wellness, improving the physical and mental health of people who live near parks; and WHEREAS, Parks and recreation promotes time spent in nature, which positively impacts mental health by increasing cognitive performance and well-being, and alleviating illnesses such as depression, attention deficit disorders, and Alzheimer’s; and WHEREAS, Parks and recreation encourages physical activities by providing space for popular sports, hiking trails, and many other activities designed to promote active lifestyles; and WHEREAS, Parks and recreation programming and education activities, such as out-of-school time programming, youth sports, and environmental education, are critical to child development; and WHEREAS, Parks and recreation increases a community’s economic prosperity through increased property values, expansion of the local tax base, increased tourism, the attraction and retention of businesses, and crime reduction; and WHEREAS, Parks and recreation is fundamental to the environmental well-being of our community; and WHEREAS, The city’s parks and natural recreation areas ensure the ecological beauty of Farmington and provide a place for children and adults to connect with nature and recreate outdoors; and WHEREAS, The U.S. House of Representatives has designated July as Parks and Recreation Month; and WHEREAS, The City of Farmington recognizes the benefits derived from parks and recreation resources. NOW THEREFORE, I, Joshua Hoyt, Mayor, on behalf of the Farmington City Council, do hereby proclaim July 2023 as PARKS AND RECREATION MONTH Page 5 of 358 IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the City of Farmington, Minnesota, to be affixed on this 20th day of June 2023. ___________________________________ Joshua Hoyt, Mayor Page 6 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Shirley Buecksler, City Clerk Department: Administration Subject: City Council Work Session Minutes for June 5, 2023 Meeting: Regular Council - Jun 20 2023 INTRODUCTION: City Council Work Session minutes for June 5, 2023 are attached for City Council review. DISCUSSION: Not applicable BUDGET IMPACT: Not applicable ACTION REQUESTED: Approve the City Council Work Session minutes from June 5, 2023. ATTACHMENTS: 06.05.23 Work Session Minutes Page 7 of 358 City of Farmington City Council Work Session Minutes Monday, June 5, 2023 The Farmington City Council met in a work session on Monday, June 5, 2023, at 5:00 p.m. in the City Hall Council Chambers, 430 3rd Street, Farmington, Minnesota. 1. CALL TO ORDER Mayor Hoyt called the work session to order at 5:00 p.m. Members Present: Mayor Joshua Hoyt Councilmembers Holly Bernatz, Nick Lien, Katie Porter, and Steve Wilson Members Absent: None Also Present: Lynn Gorski, City Administrator Julie Flaten, Asst City Administrator/HR Director Kellee Omlid, Parks & Recreation Director Gary Rutherford, Police Chief John Powell, Public Works Director Shirley Buecksler, City Clerk Ben Blomgren, President, JTN Communications 2. APPROVE AGENDA Motion was made by Councilmember Wilson and seconded by Councilmember Bernatz to approve the agenda, as presented. Motion carried: 5 ayes / 0 nays. 3. DISCUSSION ITEMS 3.1 Amend Fee Schedule for Small Antenna Installations Director Powell presented. Earlier this year, the City was notified by Sprint / T-Mobile that they are terminating their antenna lease on the Daisy Knoll tower. The 2020 revenue to the City from this one lease was over $47,000; they have recently initiated the physical decommissioning of this installation. Allowing for a negotiated lease rate for smaller installations could help replace at least some of this lost revenue. JTN Communication, a company based here in Farmington, provided some information on what may be involved with a smaller antenna installation. Images showing the typical antenna size, mounting examples, and ground cabinet space needs were provided for Council. Based on a review of this and other information, Staff finds that this type of smaller installation would be much less Page 8 of 358 City Council Work Session Minutes June 5, 2023 Page 2 of 8 intrusive to the maintenance and operation of water storage facilities and justifies a reduced lease rate. Director Powell reached out to the City Attorney on how to differentiate a small antenna installation versus larger and came up with the following criteria to qualify for a negotiated antenna lease rate: 1. A ground lease area no greater than 30 feet 2. No alteration of the tank exterior coating for antenna mounting Discussion: With a smaller size attachment, Mayor Hoyt said he assumes that whatever verbiage we use, we don’t find ourselves on another side of this with the larger carriers. Director Powell said the others have agreements already and we are not opening the door for renegotiations. Councilmember Bernatz asked for an explanation of the tank coating. Director Powell said this refers to paint. With water tanks, the interior and exterior coatings are critical and that all connections are restored properly. We inspect our tanks every five years, sometimes three years, both inside and outside. It’s a constant process to preserve the lifespan of the tank. Antenna lease agreements are annual licenses. Councilmember Porter asked if Sprint / T-Mobile told us why they terminated the lease. Director Powell said we don’t ask, but they have some redundant installations due to their merger and, therefore, are eliminating that cost. Councilmember Lien asked if they are looking to put antennas on both towers. Ben Blomgren said we understand Daisy Knolls was going to be decommissioned at some point. Director Powell said we haven’t gotten to the point of making that final decision on decommissioning Daisy Knolls. With the visioning and land use comp plan that we are going through now, we need to determine if that alters any assumptions we’ve made, as far as storage, elevated tanks or ground storage tanks, supply, and interim watermain. On ce we get the land use and evaluate that impact on the system, we may come to a decision on whether it’s one larger tank or what we need to balance the system. Councilmember Lien asked if you get a lot of overlap or if they’re close together. Director Powell said there is potential for multiple installations in the future as we grow, as we did have a tank plan and a site identified but, because of the assumptions and making sure we’re not getting ahead of ourselves, we want to be sure that’s the final decision on where that storage is going. Based on the cost to recoat tank exteriors, we are looking at ground storage to trade off energy costs for tank coating costs. Based on the costs of painting and repainting the tank, it’s about 25% of the costs for building one new. Page 9 of 358 City Council Work Session Minutes June 5, 2023 Page 3 of 8 Councilmember Wilson asked if we are going to establish a new base rate on the 2023 Fee Schedule or will it be negotiable? Director Powell said it will be negotiable to allow for small installations with no base rate. Councilmember Wilson added the fact that Sprint / T-Mobile is decommissioning, that this part is a follow-up to our earlier discussion. Director Powell agreed and said we heard from Sprint back in November. Councilmember Wilson said the fact that we have a new provider opportun ity, that, by itself, adds a nice component. It doesn’t have the same revenue part of it, but it brings a nice new opportunity for a local vendor. Mayor Hoyt asked Mr. Blomgren about previous discussions, in that they have some antenna locations or are looking at the possibility of some antennas – is that still some that are ground-placed antennas that you put stuff on, or is that not cost feasible? Mayor Hoyt clarified that our fee schedule states, ‘water tower communication devices.’ To be sure we don’t have redundancies going forward, yours can be affixed on not just water towers? Mr. Blomgren agreed. Mayor Hoyt asked if there is verbiage that we add that would include privately owned antennas and if that falls into franchise agreements. Director Powell didn’t think we would get involved in that. It’s between the property owner and the carrier. We could put in language such that we’re not limiting ourselves to a water tower, if the City for some reason has a monopole or convert something for antennas. Mayor Hoyt said our tornado sirens are all on poles. If there is something to be used to benefit other businesses and crea te other opportunities for service, in either unserved or underserved areas, do we change the verbiage so that it’s not something else that comes up after the fact. Not necessarily for now, but perhaps in the future. Director Powell said we can make this not specific to a water tower but to any city facility. Council approved and directed Staff to move forward. 3.2 Cardboard Recycling Bins Director Powell presented. The City currently has seven bins open to the public near the Maintenance Facility for disposal of cardboard. Despite being emptied daily during the week, by Monday morning they are frequently overfilled with cardboard debris placed outside of the bins. DS I indicates they are not able to empty the bins over the weekend. Public Works Staff routinely must pick up debris outside of the bins, including many items which have blown into nearby boulevards and ponds. Images documenting the overfilling of the recycling bins over the past several weeks were provided for Council review. The City has taken steps to reduce the overfilling of these bins, including: Page 10 of 358 City Council Work Session Minutes June 5, 2023 Page 4 of 8 • An additional bin was placed at this site a couple of months ago bringing the total number of bins to seven. • Considered options for providing additional capacity such as the installation of a compactor, but this was not pursued for safety reasons. • Using addresses taken off debris laying outside of the bins, Code Enforcement has contacted residents and other property owners. About 40% of the addresses contacted were located outside of the City of Farmington. • News items pertaining to Cardboard Dumpster Usage Reminders and Business Recycling Reminders have been placed on the City website. Via communication with Violet Penman, the City’s Solid Waste & Recycling Coordinator, she indicates that Hastings is the only other nearby City that she is aware of that offers cardboard dumpsters for free public disposal. She also indicates that Farmington residents also have other options for cardboard disposal: Curbside recycling is weekly throughout Farmington, and cardboard is accepted in curbside bins. Excess cardboard can be neatly bundled and placed next to the bin for pickup with no extra charge. • Recycle Minnesota in Lakeville accepts cardboard for free. • Alpha Services in Rosemount accepts cardboard for free. • The Recycling Zone in Eagan accepts cardboard for free. She further offered the following background: Dakota County requires that all businesses have recycling service, with an option to self-haul recycling to a recycling facility. Thus, businesses should have a recycling cart or dumpster as part of their recycling service that they can use for proper disposal of cardboard. The cardboard dumpsters are not a recycling facility and, thus, businesses cannot argue that they "self -haul recycling to a recycling facility." Dakota County Ordinance 110, Section 16.02, A4 also states that all businesses must "Ensure that the collection schedule and container cap acity are sufficient to contain all the recyclables collected..." and Section 16.05, A2 states: "Property owners, managers, and event sponsors shall... Provide a collection schedule and containers adequate to meet the requirements of this ordinance." Residents and businesses have multiple options for disposing of any excess cardboard. We also need to consider that vehicles parked at the recycling bins will interfere with City Staff traffic in this area that will be generated due to the new fueling facility. We also do not want to provide vehicles a reason for parking for extended periods near the fueling facility. We have found that even during Page 11 of 358 City Council Work Session Minutes June 5, 2023 Page 5 of 8 snow removal operations, vehicles have been parked at the recycling bins for drop off which has interfered with snow removal efforts. Discussion: • The fact that 40% of recycling is from out of town is a waste of our time and tax dollars. • Communication will be necessary to our residents on the removal. There must be a positive budget impact somewhere. • DSI provides the bins to us at no cost. • We should ask that DSI communicate and be reachable to our residents. In the agreement, it calls for an annual report. We just received it and will look at it. There is also a meeting to discuss their service. • Save these photos and include them in the communication to residents that explains why and give them as much information as we can. • Another component is how much does DSI pick up when it’s bundled next to a homeowner’s dumpster? What is the limitation? How much does it cost if it’s included in their residential service? What is considered neatly bundled? Also include other services that may be available; don’t leave any ambiguity. • Was this in the Farmington Currents? Most recently, it was on the City’s website, but there is general information in the Currents for recycling. • Also, any opportunities we have on social media or direct mail. We may be able to add information to the bottom of their utility bill. • Is there due diligence for alternatives, a card or identification to enter the area? Any other place residents can go that provide this service? The challenge is finding space. They would be expensive options for staffing, as well as adding security. Other communities now have Staff ensuring that only residents are using it and dropping off acceptable material. • Do we know if it’s businesses that are bringing home their business boxes? • When we contracted with DSI, it was for us to get out of trash service with DSI. They were going to handle all of it, then C OVID hit, and everyone has been buying online. Walking by this three times a week, it has been getting progressively worse. This is not our problem. People abuse this, we take it away. All of our surrounding communities no longer provide this service. • Share these photos and state that this service is ending as of a certain date. If there are any questions, contact your trash service provider. Add “Cardboard Recycling” to the website, linked to the ending date and what residents can do with their recycling. It also needs to be communicated at the site of the bins. • This problem exists because residents are not held accountable , and DSI cannot handle it. • State Statute requires that residents have both trash and recycling services. • DSI needs to lead this as a notification of discontinuation of service. It’s incumbent on DSI to work with their customers. Page 12 of 358 City Council Work Session Minutes June 5, 2023 Page 6 of 8 Council Direction: • Remove all bins on Friday, June 16th, as the last day. Take away all bins in one day. • Communicate clearly to residents – communication is key: newspaper, website, social media, etc. The link on our website takes them directly to DSI’s site with their rules. • This is a DSI-to-customer conversation. DSI has text messaging and other communication capabilities. • Be neighborly and work together as a neighborhood. If you have room in your bin, share the space with your neighbor. 4. COUNCIL COMMITTEE UPDATE Councilmember Wilson: The ALF Ambulance Board went from four meetings to one per year. The tragedy a week ago was one of the topics. For all First Responders the most devastating and challenging. Some calls that are frustrating and draining are minor situations that take away from someone who generally needs care. I was on the City Council when this converted from ALF to Allina and could not be prouder of how this is working. Allina does a good job taking care of their wellness with internal resources and critical incident debriefing. Fire Relief has their 150th Celebration in July and multiple different fundraising events. They are looking to make a sizable jump of $1,000 in their pension, from $8,500 to $9,500. The goal is to get to $10,000, based on financials. Administrator Gorski stated that Jeff Allbee will be coming to a future Council meeting for discussion. Councilmember Porter said there were neighbors there for Madden’s incident. Police Officers came to his memorial, and I couldn’t be prouder. Our people show up when it’s needed and when it’s meant the most. Councilmember Lien said the Dakota 911 Board of Directors approved a 9.3% increase in their budget. They had a debate between increasing salaries or hiring more staff. Salary was more important, in order to remain competitive. They have had a 20% turnover rate. They are now looking to be in the top ten of the st ate for pay. The County is still trying to take over and control. Empire uses the Sheriff’s Office for the foreseeable future. Councilmember Bernatz attended a meeting with the Airlake Airports Advisory Commission in March. They talked about history and flight patterns and have only had one noise complaint for the area. On Thursday, we will tour and learn more about the airport. Very interesting; I didn’t realize there are a lot of private owners in the area. Mayor Hoyt said the Dakota Broadband Board voted to approve the dissolution plan and dissolution of the Board. We will tidy up all the loose ends and will potentially have something that arises from the county between now and the end of July. Page 13 of 358 City Council Work Session Minutes June 5, 2023 Page 7 of 8 The CEEF (Castle Rock, Empire, Eureka, Farmington) Board had some changes in members. They have not signed by-laws since 2009 and have submitted no tax returns since 2019. We are going to clean this up. 5. CITY ADMINISTRATOR UPDATE a) Administrator Gorski said the Juneteenth holiday is on the Council’s regular agenda for approval, along with Memorandums of Understanding with the unions. City Hall will be closed on Monday, June 19. In the Council’s by-laws, the Regular Council meeting scheduled for June 19 th should move to Tuesday, June 20th. However, the Ambassador Coronation is also scheduled for that evening, starting at 6:30 p.m. Looking to move the EDA meeting to June 20 th at 3:30 p.m. and the Council Meeting to 5:00 p.m. Councilmember Bernatz said the Ambassador Coronation may not seem like a big deal, but these young people go all around the state of Minnesota, all year long, on behalf of Farmington. Doing what we can to be sure we have good representation there is important. It’s a lot of work for them, and it’s important to show up and support them. Council discussed and agreed to move the Regular City Council meeting to June 20th starting at 4:30 or 5:00 p.m., depending on items on the agenda, and to move the EDA meeting to June 26th starting at 3:30 p.m. or 4:00 p.m. If there is nothing with action on June 20th, items would go to the July 17th agenda. A special meeting could be added on June 26th, if needed. b) Administrator Gorski informed Council that benches, trash and recycling containers have been brought in and will be installed before Dew Days. c) Administrator Gorski said Staff is working on an ordinance amendment in regard to peddlers and solicitors, which will come back to Council for review. Some solicitors were knocking on doors as late at 10:00 p.m., but there are no time limits currently in the City Code d) Last night at 10:50 p.m., Administrator Gorski said the Union Pacific train sounded its horn for two minutes straight. The train was sitting idling. A Police report was drawn up; the Conductor said someone was pointing a laser pointer at him. Councilmember Bernatz said it has been relatively quiet but that this woke them last night. Then it stopped and he pulled the horn for another 38 seconds, for a total of two minutes and 38 seconds. Council discussion: • Do we have the ability to implement an ordinance? What is the enforcement? Administrator Gorski said there has been discussion of a noise ordinance, but this hasn’t happened to this magnitude before. Page 14 of 358 City Council Work Session Minutes June 5, 2023 Page 8 of 8 • Police Chief Rutherford said it was recorded to the Police Department that a horn was sounding. Union Pacific Railroad reported to us that a laser pointer was aimed into the cab. • Why was the train idling there? Did someone in the area investigate it? • We could implement a quiet zone, and they can still do their thing, by law, but it’s a long process to get through legislation. Winona and South St. Paul have them. • A noise ordinance isn’t going to do anything because of federal laws. We could work through some contacts at Union Pacific but it’s going to be a tough discussion. Is there value in a noise ordinance? • If the agreement was that the trains don’t idle in that neighborhood, and if you don’t have a train idling directly behind those homes, then none of this is an issue. Why are the trains no longer using the idling position they’ve used for years until that development came in? Part of that agreement is they were going to figure out the road. o Since that discussion, they found that it’s not their road and they have no rights to use it. They do not want to buy it. They will have to pick up their conductor in a vehicle. o Union Pacific is leasing the line from Canadian Pacific, who has an easement to a certain point. The outlot is the City’s trail. • This is their problem, and they need to fix it. Any other calls, direct them to Union Pacific. o A resident called Union Pacific and was directed to call the City Administrator. o We had clear expectations with Union Pacific, but they are not taking their end of the agreement. Their trains stop early. e) Administrator Gorski said Liquor Store Manager Josh Solinger is very eager about discussing sales of THC and beverages. We are investigating this topic and will discuss it at a future work session, possibly August or September. The Office of Cannabis Management does not start until January 2025, so we have time. 6. ADJOURNMENT Motion was made by Councilmember Wilson and seconded by Councilmember Porter to adjourn the meeting at 6:40 p.m. Motion carried: 5 ayes / 0 nays. Respectfully submitted, Shirley R Buecksler City Clerk Page 15 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Shirley Buecksler, City Clerk Department: Administration Subject: Regular City Council Meeting Minutes for June 5, 2023 Meeting: Regular Council - Jun 20 2023 INTRODUCTION: The minutes of the Regular City Council meeting dated June 5, 2023 are attached for review. DISCUSSION: Not applicable BUDGET IMPACT: Not applicable ACTION REQUESTED: Approve the minutes of the June 5, 2023 Regular City Council meeting. ATTACHMENTS: 06.05.23 Council Minutes Page 16 of 358 City of Farmington Regular Council Meeting Minutes Monday, June 5, 2023 The Farmington City Council met in regular session on Monday, June 5, 2023, at 7:00 p.m. in the City Hall Council Chambers, 430 3rd Street, Farmington, Minnesota. 1. CALL TO ORDER Mayor Hoyt called the meeting to order at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was recited. 3. ROLL CALL Members Present: Mayor Joshua Hoyt Councilmembers Holly Bernatz, Nick Lien, Katie Porter, and Steve Wilson Members Absent: None Also Present: Lynn Gorski, City Administrator Julie Flaten, Asst City Administrator/HR Director Leah Koch, City Attorney Deanna Kuennen, Community Development Director Chris Regis, Finance Director Justin Elvestad, Fire Chief Kellee Omlid, Parks & Recreation Director Tony Wippler, Planning Manager Gary Rutherford, Police Chief John Powell, Public Works Director Shirley Buecksler, City Clerk 4. APPROVE AGENDA Motion was made by Councilmember Bernatz and seconded by Councilmember Wilson to approve the agenda, as presented. Motion carried: 5 ayes / 0 nays. 5. ANNOUNCEMENTS / COMMENDATIONS 5.1 Introduction of New Employees and Swearing In of Police Officers and Paid-on-Call Fire Lieutenant New Staff members were introduced: Stephanie Aman, Economic Development Coordinator Anthony Berra, Park Maintenance Worker Page 17 of 358 Regular City Council Minutes June 5, 2023 Page 2 of 7 Shirley Buecksler, City Clerk Charissa Youngs, Senior Administrative Support Technician A Swearing In Ceremony was held for Police Officers Kyle Miller and Jason Witt, and Fire Lieutenant Mark Jones. Each Officer had his badge pinned and photos taken with family and loved ones. 5.2 Donation for the Farmington Firefighters Relief Association The Farmington Firefighters Relief Association presented a big check in the amount of $30,000 to the Farmington Fire Department. Motion was made by Councilmember Porter and seconded by Councilmember Wilson to adopt Resolution No. R40-23 Accepting a Donation of $30,000 from the Farmington Firefighters Relief Association for the Farmington Fire Department. Motion carried: 5 ayes / 0 nays. 5.3 Dakota County – Farmington Library Update Dakota County Library Branch Manager Barb Svoboda provided an update on events happening at the Farmington Library. The library has had 25,544 visitors and 82,200 items checked out between January and May 1st of this year, up 26% from last year. The Farmington Library will be open on Saturday during Dew Days from 9 a.m. to 5 p.m. Mayor Hoyt and Council thanked Ms. Svoboda for all the great work she and her Staff do at the Farmington Library. 6. CITIZENS COMMENTS / RESPONSES TO COMMENTS No one appeared before Council to speak. 7. CONSENT AGENDA 7.1 City Council Meeting Minutes of May 15, 2023 7.2 2024 Apple Valley/Lakeville/Farmington (ALF) Ambulance Report 7.3 Gambling Event Permit for Farmington Rotary Club (Date Change); Resolution No. R42-23 Concurring with the Issuance of a Minnesota Lawful Gambling Exemption Permit to Conduct Gambling by the Farmington Rotary Club, September 6, 2023 7.4 Perpetual Drainage and Utility Easement 7.5 Conveyance of Real Property and Lease Agreement with Ten Nineteen Farmington, LLC; Resolution No. R41-23 Page 18 of 358 Regular City Council Minutes June 5, 2023 Page 3 of 7 7.6 Development Contract, Vermillion Commons 2nd Addition 7.7 Time Extension for Submission of Final Plat, Meadowview Preserve 7.8 Bills Summary and Claims List 7.9 Resolution No. R39-23 Declaring Items as Surplus and Authorizing Disposal; Fire Department 7.10 2022 Pay Equity Compliance Report 7.11 Memorandums of Understanding for AFSCME Maintenance Unit, Local #3815, AFSCME Clerical, Technical, Professional Local #3815, LELS Patrol Local #187, LELS Sergeants Local #387, and the Addition of Juneteenth as a Paid Holiday for Non-Union Employees 7.12 Staff Changes and Recommendations 7.13 Memorandum of Agreement with the Dakota County Community Development Agency for Completion of Environmental Review for Community Project Funding 7.14 Resolution No. R38-23 Accepting Donations for the Dew Run 7.15 Professional Services Agreement with Kraus-Anderson for Facility Condition Assessments 7.16 Professional Services Agreement with TKDA for Public Works Campus Improvements 7.17 Professional Services Agreement with WSB for MS4 Inspections 7.18 Professional Services Agreement for the 2022 Street and Utility Improvements Amendment No. 2 Motion was made by Councilmember Lien and seconded by Councilmember Bernatz to approve the Consent Agenda, as presented. Motion carried: 5 ayes / 0 nays. 8. PUBLIC HEARINGS There were no public hearings. 9. AWARD OF CONTRACT None. 10. PETITIONS, REQUESTS AND COMMUNICATIONS 10.1 Request to Allow a Pole Building at 19215 Flagstaff Avenue Planning Manager Wippler presented. Matt Ocel, property owner of 19215 Flagstaff Avenue, has requested that the City allow a pole building to be constructed on his property within the R-2 Low / Medium Density zoning district. City Code Per City Code Section 4-5-4, pole buildings are only allowed in the A-1 Agriculture zoning district or in any other district upon approval by the City Council. Page 19 of 358 Regular City Council Minutes June 5, 2023 Page 4 of 7 Property/Surrounding Area The subject property is 10.05 acres and contains a house and a detached garage. The property is surrounded by agricultural uses to the west, south, and east. There is a 9.79-acre single-family property abutting to the north. The general vicinity is predominantly agricultural use. There are several other properties along Flagstaff Avenue that have pole buildings and are in residential zoning districts. Zoning The subject property is zoned R-2 Low / Medium Density Residential and is guided for Low / Medium Density Residential in the 2040 Comprehensive Plan. The property used to be zoned for Agriculture prior to the adoption of the 2040 Comprehensive Plan. Pole Building The proposed pole building would be 26 feet x 42 feet (see attached plans) and is to be used for storage. The size and placement of the building will be reviewed administratively for consistency with accessory building code requirements during the building permit process. Motion was made by Councilmember Bernatz and seconded by Councilmember Wilson to approve the request to allow a pole building at 19215 Flagstaff Avenue. Motion carried: 5 ayes / 0 nays. 10.2 Waiver of Plat Requests – Donald Peterson Limited Partnership Planning Manager Wippler presented. Bruce Boeder, on behalf of the Donald L. Peterson Limited Partnership, has requested a waiver of plats on three parcels owned by the Partnership. The three parcels are generally located south of the Vita Attiva at South Creek housing development. The three parcels are: Parcel 1 – PID #148290000010, Outlot A, Vita Attiva at South Creek First Addition (27.64 acres in total), of which 26.66 acres is to be purchased by Dakota County. Parcel 2 – PID #148290000070, Outlot G, Vita Attiva at South Creek First Addition (8.38 acres in total), of which 4.31 acres is to be purchased by Dakota County. Parcel 3 – PID #140360050010 (80.19 acres in total – metes and bounds property), of which 13.66 acres is to be purchased by Dakota County. Page 20 of 358 Regular City Council Minutes June 5, 2023 Page 5 of 7 Dakota County is in the process of acquiring portions of the above referenced parcels for the South Creek Greenway corridor, necessitating the splits, as proposed, for conveyance purposes. Parcels 1 and 2 meet all the requirements for an administrative approval of the lot splits (waivers of plat) and do not require Council action. Parcel 3, however, does require review by the City Council, as outlined in Section 11-1-5 of City Code, and is not part of a recorded plat (metes and bounds parcel) and is located within the city’s urban service area. Motion was made by Councilmember Wilson and seconded by Councilmember Bernatz to approve the requested waiver of the plat, specifically for Parcel 3 on the survey labeled Exhibit A and legally described in Exhibit B for the conveyance of said land to Dakota County. Motion carried: 5 ayes / 0 nays. 11. UNFINISHED BUSINESS None. 12. NEW BUSINESS None. 13. CITY COUNCIL ROUNDTABLE Councilmember Wilson Thank you to all of our Veterans, Police Officers, and Fire Staff that were in attendance at the Memorial Day events. They were both well attended, memorable, and appropriate. Councilmember Porter The Memorial Day services at Corinthian and Veteran’s Memorial were very nicely done. So great to see so many people out there. Councilmember Bernatz Dew Days buttons are for sale at various locations around town, as well as at City Hall. The $5 cost for the button benefits the Ambassador programs and Dew Days. A button also makes you eligible for deals around the Farmington area and gives back to the community. For more information, visit FarmingtonDewDays.com. Councilmember Lien Thank you for the Memorial Day services. City Administrator Gorski Thank you to Rotary for the flower baskets. Page 21 of 358 Regular City Council Minutes June 5, 2023 Page 6 of 7 City Clerk Buecksler Excited for Dew Days coming up and learning more about the Farmington community. Asst City Administrator/HR Director Flaten 1) Leah Koch is now our official City Attorney. 2) This legislative session approved new laws and changes. Working with the League of Minnesota Cities on these changes, including new election laws. Community Development Director Kuennen 1) The EDA has dedicated $25,000 to a micro grant program. 2) Actively working on community engagement. 3) On June 1st, the Building Division implemented an electronic plan review process for our builders. Our departments will be able to collaborate electronically. Public Works Director Powell 1) We are advertising for an Assistant City Engineer and a Temporary Front Desk person. 2) Preconstruction meeting for Akin Road is next week; work will begin around July 4th. Parks and Recreation Director Omlid 1) The Open House for Rambling River Park last week was well attended. Teens were most impressive, well spoken, and very excited. 2) The survey is open until June 25tgh, so please share it. 3) Sign up for recreational programs starting June 19th. 4) The Dew Run is June 17th; visit FarmingtonMN.gov for more information. Finance Director Regis Working on financial statements and the budget. Mayor Hoyt 1) Leah Koch is officially our City Attorney. 2) Kids are getting out of school, and there are a lot of great activities for them with Parks and Recreation and at the library, so much is happening. Kids are on bikes, and there is road construction, so have conversations with them about taking alternate routes around construction zones. 3) Farmington continues to grow with new Staff. 4) Unfortunately, we have experienced grief, but we have seen this community rise up with memorials and Go Fund Me and other fundraisers. Life is fragile and short, so take some extra time to talk to your neighbors and your kids. Take some time for reflection. Page 22 of 358 Regular City Council Minutes June 5, 2023 Page 7 of 7 14. ADJOURNMENT Motion was made by Councilmember Porter and seconded by Councilmember Wilson to adjourn the meeting at 8:03 p.m. Motion carried: 5 ayes / 0 nays. Respectfully submitted, Shirley R Buecksler City Clerk Page 23 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Shirley Buecksler, City Clerk Department: Administration Subject: Temporary On Sale Liquor License - Farmington Municipal Liquors Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Farmington Municipal Liquors is requesting a Temporary On Sale Liquor License for a wine tasting event on September 14, 2023. DISCUSSION: Farmington Municipal Liquors is requesting approval of a Temporary On Sale Liquor License for a wine tasting event to be held on September 14, 2023. Per State Statute, a Temporary On Sale Liquor License must first be approved by the City and forwarded to t he State for approval 30 days prior to the event date. BUDGET IMPACT: The State of Minnesota waives all fees for Temporary Liquor Licenses for non -profit organizations; therefore, the City has not established a fee for this type of license. ACTION REQUESTED: Approval of the attached application for a Temporary On Sale Liquor License for Farmington Municipal Liquors for an event to be held on September 14, 2023 at Rambling River Center, 325 Oak Street, west parking lot, Farmington, Minnesota. ATTACHMENTS: 09.14.23 Temp On Sale App, Farmington Municipal Liquors Page 24 of 358 Page 25 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Tony Wippler, Planning Manager Department: Community Development Subject: Resolution Granting a Third Time Extension for Recording of Final Plat - Vita Attiva at South Creek Third Addition Meeting: Regular Council - Jun 20 2023 INTRODUCTION: The developer of Vita Attiva at South Creek is requesting a third extension to the timeframe for recording of the approved Vita Attiva at South Creek Third Addition final plat. DISCUSSION: Section 11-2-3(E) of the City Code requires that, upon approval of a final plat by the City Council, the developer shall record it with the Dakota County Recorder within six (6) months of approval or the approval is considered void, unless a time extension is requested by the developer and submitted in writing and approved by the City Council. The Vita Attiva at South Creek Third Addition final plat was approved by City Council on July 18, 2022 and originally needed to be recorded by January 18, 2023. The Developer has since requested and been given approval of two extensions, with the latest extension going through July 1, 2023. The developer is requesting a third extension for the recording of the final plat (see attached request). The requested extension is to September 1, 2023. BUDGET IMPACT: Not applicable ACTION REQUESTED: Adopt Resolution No. R46-23, Allowing for a Third Extension for the Recording of the Final Plat Vita Attiva at South Creek Third Addition, and granting a third time extension to September 1, 2023, for the recording with Dakota County Recorder. ATTACHMENTS: Extension Letter Final Plat Vita Attiva 3rd Add Signed 6-5-23 Extension Resolution Page 26 of 358 , A ’\ 29180:aw:i§£2}Z /WV91!/\O3 'S>|L|BqJ_ 'paeuno?es|e?ugqmuesgeusuugMou>1uosmpuvuqurJDnasmu:3‘ eseem12916p|noM1eu1|EAoJdd2pueN\€!I\9JJo;6ug;eeu1|g:>uno3Aug;xeuemuuoSMa:ze|dpmoano)(;| '9ZOZU‘. aseudsgu)ucuononnsuoouexspue)e|duaugsgq;pmoajo1“us5;ueqd914;1102‘LJeqwexdesozszoz‘L /(mpmm;mm|euuam6ugpJooeJJo;exepuonmgdxaan;ouogsuauxaue1ssnbeJ01anpqnom'U0!)B0!|ddE WldI50!)U°!J!PPVP-‘NJ.X9910lW‘°S)95’\!\1V‘?l!/\9'41)03UE9!|dd9DUEJSUMO'UEW91!\4M|n?d'1 U°!5U3)’<3SIECI”°!l91!dX319|dIEUH“°!3!PPVFUNJ.3199K)1137103399’\!15V9!!/\53H Je|ddW\Kuoizuuv 173099NW‘“°35U!'1UE:i 333118PJ!UJ.OEV uoz?uguueg;o/‘mg €202‘S5|-W‘ Page 27 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA RESOLUTION NO. R46-23 A RESOLUTION ALLOWING FOR A THIRD EXTENSION FOR THE RECORDING OF THE FINAL PLAT VITA ATTIVA AT SOUTH CREEK THIRD ADDITION WHEREAS, pursuant to Resolution No. R55-22, the City Council approved the Final Plat of Vita Attiva at South Creek Third Addition subject to the following conditions: 1. The satisfaction of all engineering comments related to the construction plans for grading and utilities. 2. A Development Contract between the applicant and City of Farmington shall be executed and security fees and costs shall be paid. Submission of all other documents required under the Development Contract shall be required. WHEREAS, the developer of Vita Attiva at South Creek Third Addition requested and was granted an extension on September 19, 2022 for filing of the final plat for the aforementioned subdivision to May 1, 2023; and WHEREAS, a second extension was requested by the developer and approved by the City Council on April 3, 2023 extending the recording time line to July 1, 2023; and WHEREAS, the developer of Vita Attiva at South Creek Third Addition has requested the City Council approve a third extension for the filing of a final plat at Dakota County. NOW, THEREFORE, BE IT RESOLVED, that the Farmington Mayor and City Council hereby approve the requested third extension for the filing of the final plat for the aforementioned subdivision to September 1, 2023. Adopted by the City Council of the City of Farmington, Minnesota, this 20th day of June 2023. ATTEST: ____________________________ ______________________________ Joshua Hoyt, Mayor Shirley R Buecksler, City Clerk Page 28 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Tony Wippler, Planning Manager Department: Community Development Subject: Resolution Approving the Assignment of Development Contract - Ten Nineteen Development, LLC Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Attached for Council's consideration is a resolution granting the assignment of Development Contract from Ten Nineteen Development, LLC to Ten Nineteen - Farmington, LLC. DISCUSSION: The City entered into a Development Contract with Ten Nineteen Development, LLC for the redevelopment of 310 Third Street on April 3, 2023. Since that approval date, the developer has changed the name of the Limited Liability Company (LLC) tha t will redevelop and own the property from Ten Nineteen Development, LLC to Ten Nineteen - Farmington, LLC. The approved Development Contract requires City Council approval prior to assignment of the contract. The assignment has been reviewed by staff and legal and it is found to be acceptable. BUDGET IMPACT: Not applicable ACTION REQUESTED: Adopt Resolution No. R47-23, Approving the Assignment of Development Contract from Ten Nineteen Development, LLC to Ten Nineteen - Farmington, LLC. ATTACHMENTS: R47-23 Assignment of Development Contract to Ten Nineteen - Farmington LLC DOCS-#226840-v1-SIGNED_ASSIGNMENT_OF_DEVELOPMENT_CONTRACT Page 29 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA RESOLUTION NO. R47-23 RESOLUTION APPROVING THE ASSIGNMENT OF DEVELOPMENT CONTRACT FROM TEN NINETEEN DEVELOPMENT, LLC TO TEN NINETEEN – FARMINGTON, LLC WHEREAS, the City Council approved a Development Contract with Ten Nineteen Development, LLC (“Ten Nineteen”) on April 3, 2023, pertaining to the property described in Exhibit A (“Subject Property”); and WHEREAS, Ten Nineteen desires to assign all of its right, title and interest in the Development Contract to Ten Nineteen - Farmington LLC (“Ten Nineteen – Farmington”) and Ten Nineteen – Farmington desires to accept the assignment and assume all Developer obligations under the Development Contract; and WHEREAS, the Development Contract requires City consent prior to assignment; and WHEREAS, the City Council finds that the assignment of the Development Contract from Ten Nineteen Development to Ten Nineteen - Farmington is acceptable. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Farmington, Minnesota, as follows: 1. The Assignment of Development Contract, attached hereto as Exhibit A, is hereby approved. 2. The City Attorney and City Staff are authorized to finalize all documents necessary to complete the assignment of the Development Contract. 3. The Mayor and City Administrator are authorized to execute any and all documents necessary and required to affect the assignment of the Development Contract from Ten Nineteen Development to Ten Nineteen Farmington. Adopted by the City Council of the City of Farmington, Minnesota, this 20th day of June 2023. ATTEST: ____________________________ ______________________________ Joshua Hoyt, Mayor Shirley R Buecksler, City Clerk Page 30 of 358 Exhibit A Assignment Page 31 of 358 Page 32 of 358 Page 33 of 358 Page 34 of 358 ST ATE OF MINNESOTA ) )ss. COUNTY OF DAKOTA ) CITY OF FARMINGTON By ____________ _ Joshua Hoyt, Mayor And _____________ _ Shirley R Buecksler, City Clerk The foregoing instrument was acknowledged before me this ___ day of ___ _ 2023, by Joshua Hoyt and by Shirley R Buecksler, respectively the Mayor and City Clerk of the City of Farmington, a Minnesota municipal corporation, on behalf of said corporation and pursuant to the authority granted by its City Council. DRAFTED BY: CAMPBELL KNUTSON Professional Association Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 Telephone: 651-452-5000 LCMK 226744vl Notary Public 4 Page 35 of 358 Page 36 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Chris Regis, Finance Director Department: Finance Subject: Approve Bills Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Attached is the May 31, 2023 – June 13, 2023 City Council check register and recently processed automatic payments for your review. DISCUSSION: Not applicable BUDGET IMPACT: Not applicable ACTION REQUESTED: Approve the attached payments. ATTACHMENTS: 06.13.23 City Claims Report Page 37 of 358 CLAIMS SUBMITTED FOR APPROVAL AT THIS MEETING PROCESSED CHECKS 428,140.24$ PROCESSED AUTOMATIC PAYMENTS 174,414.51$ GRAND TOTAL 602,554.75$ CITY OF FARMINGTON CITY CHECKS AND AUTOMATIC PAYMENTS REPORT June 20, 2023 Page 38 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Justin Elvestad, Fire Chief Department: Fire Subject: Fire Service Agreement with Dakota County Agricultural Society Meeting: Regular Council - Jun 20 2023 INTRODUCTION: The Fire Department has partnered with the Dakota County Agricultural Society (Ag. Society) to provide fire and emergency medical services during the week of the Dakota County Fair. DISCUSSION: Fire and fair staff have determined the level of service for the fair week. The Ag. Society has agreed to pay $6,600 for fire and emergency medical services provided by the City for coverage during the 2023 fair. BUDGET IMPACT: Expenses are covered in the contracted price for service. ACTION REQUESTED: Approve the contract with the Dakota County Agricultural Society for $6,600 for fire services during the 2023 fair. ATTACHMENTS: 2023_FIRE_RESCUE_SERVICE_AGREEMENT_DAKOTA_COUNTY Page 39 of 358 FIRE-RESCUE SERVICE AGREEMENT THIS AGREEMENT (the “Agreement”) made this ____ day of _____________, 2023, by and between the CITY OF FARMINGTON, a Minnesota municipal corporation (“City”) with offices at 430 Third Street, Farmington, Minnesota 55024, and DAKOTA COUNTY AGRICULTURAL SOCIETY, a Minnesota non-profit corporation (“Owner”) with offices at 4008 220th Street West, Box 73, Farmington Minnesota 55024. WHEREAS, Owner owns the real property located in Dakota County described on Exhibit “A” attached hereto and incorporated herein, located within the City of Farmington, MN (“Subject Property”); and WHEREAS, Owner has requested that the City provide special fire-rescue and related emergency services to the Subject Property, in particular: Fire, rescue and emergency equipment and personnel available to provide emergency services as necessary in conjunction with the grandstand motor events held at the Dakota County Fairgrounds located at 4008 220th Street West, Farmington, Minnesota 55024. NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS: 1. The City will provide the requested service under this Agreement during the Dakota County Fair in the year 2023 and assume all responsibility for equipment and personnel to be provided, including, but not limited to, compensation and insurance matters. 2. The City will provide an assigned grounds crew consisting of two emergency medical and fire suppression trained personnel with two mobile brush units to respond quickly to any emergencies that arise during the fair; will provide six fire personnel with water tender for the three demolition derbies and one brush truck with two personnel for ATV rodeo. 3. Owner will compensate the City Six Thousand Six Hundred and no/100ths Dollars ($6,600.00) for its service commitment. Said compensation is due and payable thirty days after the final day of the fair. 4. Owner agrees to acknowledge both the City of Farmington and the Farmington Fire-Rescue Department as sponsors by using its colored logos in advertising, press releases, websites and on banners. 5. If Owner requests additional services beyond the grandstand motor events, Owner agrees to compensate the City according to the Farmington fee structure in place at the time of the requested services. Page 40 of 358 CITY OF FARMINGTON By ___________________________________ Joshua Hoyt, Mayor By ___________________________________ Shirley Buecksler, City Clerk DAKOTA COUNTY AGRICULTURAL SOCIETY By ____________________________________ Pete Storlie, Its President Page 41 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Julie Flaten, Asst City Admin/HR Director Department: HR Subject: Reclassification of the Building Official Position Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Staff is seeking approval of the reclassification of the Building Official position. DISCUSSION: Our current Building Official intends to retire this September. This provides the City an opportunity to review and update the job description. Staff have met with the current employee in this role and also with the Community Development Director on needs for this position going forward. The resulting updated job description was sent to Gallagher Inc. to determine if a re -classification was warranted. It was recommended by Gallagher to change the grade of this position. BUDGET IMPACT: The grade change will result in a higher compensation. These wages can be absorbed in the 2023 budget. ACTION REQUESTED: Approve the reclassification of the Building Official position. ATTACHMENTS: Building Official -2023 Page 42 of 358 CITY OF FARMINGTON, MN CLASS SPECIFICATION CLASS SPECIFICATION TITLE: BUILDING OFFICIAL 1 BAND GRADE SUBGRADE FLSA STATUS: C 5 1 Exempt CLASS SUMMARY: This class is responsible for administering the State Building Codes and supervising building division staff. Additional responsibilities include overseeing investigations and ensuring compliance with codes and regulations, code interpretation, completing and delivering required reports and documents, performing and delegating plan review and building inspections, and other related work. Work is performed under the direction of the Community Development Director. TYPICAL CLASS ESSENTIAL DUTIES: (These duties are a representative sample; position assignments may vary.) FRE- QUENCY BAND/ GRADE 1. Manges, plans, and coordinates the operations and staff related to building inspections and code enforcement; ensures compliance with and enforces State Building Code, fire code, federal and state laws, and city ordinance pertaining to building construction. D 25% C5 2. Supervises building inspection staff; trains employees on processes and procedures, coordinates work assignments, evaluates completed work and employee performance, participates in the selection and hiring process and resolving employee issues, and ensures that codes are applied uniformily. D 15% C5 3. Responds to questions and complaints from builders, trades, and reisdents regarding regulations for building structures and code interpretation. D 10% B2 4. Performs inspections, making sure buildings comply with the International and State Building Code and city ordinances and conduct plan reviews of residential and commercial structures ensuring they comply with building codes prior to construction.Answer questions in the office and in the field concerning building codes and procedures including providing work direction to inspectors and staff and final resolution regarding building code interpretation. D 25% C4 Page 43 of 358 CITY OF FARMINGTON, MN CLASS SPECIFICATION CLASS SPECIFICATION TITLE: BUILDING OFFICIAL 2 5. Analyzes and administers updated requirement of the State Code Administration procedures and monitors for updates on code compliances issued by the State and Federal regulations. Q 5% B2 6. Prepares and monitors division budget, prepare reports related to Building Inspection, and advise Director of issues affecting the department and/or division. Q 5% C4 7. Coordinates contract and supervise contract electrical inspector. D 5% 8. 9. Completes, maintains, updates, and delivers reports, records, and related documents. Example of reporting includes septic reports, building permit inventory, monthly permit reports, and surcharge report. Performs other duties of a similar nature or level. As Required 10% Training and Experience (positions in this class typically require): Training in building inspections, 1 year experience in plan review, 1 year of technical training, Associate degree or 2-year technical certificate; 3+ years progressive supervisory experience; or, an equivalent combination of education and experience sufficient to successfully perform the duties listed above. Licensing Requirements (positions in this class typically require): • State of Minnesota Building Official licensure • ICBO Certificate as a Building Inspector and/or Plans Examiner • State Delegation upon hire or within designated timeframe • Valid Driver's License Knowledge (position requirements at entry): Knowledge of: • IBC ,IRC, IMC, IPC, Code Administration, State Building Codes and State Energy Codes • Construction • Vehicle driving capabilities • All types of on-site septic systems • Grading, commercial, and residential plans • Computers (Microsoft Office and PIMS preferred) Page 44 of 358 CITY OF FARMINGTON, MN CLASS SPECIFICATION CLASS SPECIFICATION TITLE: BUILDING OFFICIAL 3 Skills (position requirements at entry): Skill in: • Plan review (Commercial, Industrial and Residential) • Supervision and development of staff including the ability to manage performance. • Organization and time management including the ability to handle multiple priorities. • General business practices • Communication, interpersonal skills as applied to interaction with coworkers, supervisor, the general public, etc. sufficient to exchange or convey information and to receive work direction. • Demonstrated ability to develop positive working relationships and maintain a respectful work environment. • Ability to handle stress and/or stressful situations. • Ability to maintain confidentiality. Physical Requirements: Positions in this class typically require: climbing, balancing, stooping, kneeling, crouching, crawling, reaching, standing, walking, pushing, pulling, lifting, fingering, grasping, feeling, talking, hearing, seeing and repetitive motions. Light Work: Exerting up to 20 pounds of force occasionally, and/or up to 10 pounds of force frequently, and/or negligible amount of force constantly to move objects. If the use of arm and/or leg controls requires exertion of forces greater than that for Sedentary Work and the worker sits most of the time, the job is rated for Light Work. Incumbents may be subjected to moving mechanical parts, electrical currents, vibrations, fumes, odors, dusts, gases, poor ventilation, chemicals, oils, extreme temperatures, inadequate lighting, work space restrictions, intense noises and travel. NOTE: The above job description is intended to represent only the key areas of responsibilities; specific position assignments will vary depending on the business needs of the department. Classification History: Draft prepared by City of Farmington Date: 10/2002, Rev. 5/2013, Rev. 6/2023 Page 45 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Julie Flaten, Asst City Admin/HR Director Department: HR Subject: Staff Changes and Recommendations Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Approve the appointment of four Paid -on-Call Firefighters, one Skate School Instructor, and a Temporary Front Desk employee. Also, approve the promotion of Jason Graham to Fire Paid -on-Call Lieutenant. DISCUSSION: Joseph Furst, Marcos Hernandez, Carter Hobbs, and Kaden Mucha have successfully met all the requirements to be our newest Paid-on-Call Firefighters. They will begin employment on July 10th. Staff is also recommending the contingent appointment of Kate Jo hnson as a Skate School Instructor. We also recommend the appointment of Michele Tyburg as a Temporary Front Desk employee. Michele has years of relevant experience and has also served Farmington as an Election Judge. The employee who holds this position will be on a military assignment for three months from July to October. Also, Jason Graham has been selected to be promoted to the role of Fire Lieutenant at Fire Station 1. Jason has been a Paid-on-Call Firefighter since 2016 and has gained the experience necessary to move to the position of Lieutenant. We look forward to having Jason in this leadership role in the Fire Department. BUDGET IMPACT: Wages are included in the 2023 budget. ACTION REQUESTED: Approve the appointments of Joseph Furst, Marcos Hernandez, Carter Hobbs, and Kaden Mucha as Paid-on-Call Firefighters, Kate Johnson as a Skate School Instructor, and Michele Tyburg as a Temporary Front Desk employee. Approve the promotion of Jason Graham to the position of Fire Lieutenant. Page 46 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Peter Gilbertson, IT Director Department: IT Subject: Cradlepoint Upgrade Public Safety - ARPA Funds Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Utilize available American Rescue Plan Act (ARPA) funding to purchase Cradlepoint routers for Police and Fire Vehicles. DISCUSSION: Issues with public safety communication when dealing with potential life -or-death situations are a serious issue. Our public safety fleet is equipped with onboard computers which connect to Computer-aided Dispatch (CAD). This provides essential information for a call such as real-time call updates, GPS directions, cautions on an address, previous calls to that address, access information to an address, and hydrant locations. Call updates get sent on CAD because if they were all aired over the radio, the dispatchers couldn't keep up and the radio traffic would be going non -stop. Also, messages from CAD can dispatch other additional Police/Fire to a call. Police vehicles currently rely on Cradlepoint routers to establish a stable cellular connection. This solution has proven to be successful, and any issues have been promptly resolved by IT Staff or by leveraging Cradlepoint's 24/7 support. However, these devices will need to be refreshed in 2024 after their 5-year lifespan. On the other hand, Fire vehicles use Surface laptops with cellular capabilities, which have been laden with connection issues. In 2022, we had over 150 tickets for Fire, just over 50% of these tickets were related to connection problems. Working with Firstnet and Microsoft to resolve the connectivity issues for these has been problematic, involving months of back-and-forth testing. Leaving Fire with a patchwork solution; still having issues today. IT Staff recommends using ARPA funds to purchase new Cradlepoint devices for both Polic e and Fire vehicle fleets. The new models offer 5G LTE and WiFi 6 technologies, which will future -proof the vehicles for their next life cycle. The 5-year support license that comes with the new devices provides centralized management, policies, coverage m apping, 24/7 phone support, and industry-standard security. Additionally, IT Staff will start collecting data for the 5-year life cycle starting in 2024 to plan for future refresh cycles. The attached quote is on the State Contract. Page 47 of 358 BUDGET IMPACT: Use $63,305.65 of the City's ARPA fund balance to purchase Cradlepoint routers with a 5 -year license. ACTION REQUESTED: Request approval of the attached quote from Step CG LLC in the amount of $63,305.65 and approval to use ARPA funds for this purchase. ATTACHMENTS: Craldepoint Quote Page 48 of 358 STEP CG, LLC 50 E. Rivercenter Bldg, Suite 900 Covington, KY 41011 Quote Quote Date: May 1, 2023 Valid Till: Quote Number : Q-24155 BILL TO: Farmington Police Dept 19500 Municipal Dr Farmington, Minnesota 55024 SHIP TO: Farmington Police Dept 19500 Municipal Dr Farmington, Minnesota 55024 Contact Name:Peter Gilbertson Quote Stage:Budgetary S.No.Product Details Qty List Price Discount Total 1.Cradlepoint MBA5-2105-5GB-GA 5-yr NetCloud Mobile Performance 5G Router Essentials Plan, Advanced Plan, and R2105 router with WiFi (5G modem, 4FF SIM optional but not included), integrated antennas, no AC power supply, Global 21 $ 4,379.99 $ 26,674.14 $ 65,305.65 Sub Total $ 65,305.65 Tax $ 0.00 Grand Total $ 65,305.65 Terms and Conditions NOTICE: Due to the ongoing supply chain shortage, your order may be delayed due to availability. All orders placed will normally ship when entire order is in-stock, instead of partial shipments as inventory becomes available. If you chose to allow partial shipments and invoicing, your order will ship and invoice as supply becomes available and may speed up the total order fulfillment. If you would like to have your order partially shipped, please notify your sales rep for an authorization form. Shipping and state/local sales tax may apply. ACCEPTED INCLUDING TERMS AND CONDITIONS AS EXPRESSED BELOW: __________________________________ _________________________________________ (Signed) (Date) _____________________________________ (Print Name) Page 49 of 358 TERMS AND CONDITIONS OF SALE 1. Agreement The “Quotation” is the document from STEP CG, LLC (“Seller”) indicating the features, specifications, options, and prices applicable to the goods and related services offered for sale by it (“Products”). The Quotation, these Terms and Conditions of Sale (“Terms and Conditions”), and any document(s) to which Seller has attached these Terms and Conditions, is a contract (the “Agreement”)for the sale of Products by Seller to the buyer (“Buyer”) (Buyer and Seller are the “Parties”). A. Seller’s offer is expressly limited to the terms of the Agreement. Any terms or conditions proposed by Buyer (including those in Buyer’s purchase order or proposed terms and conditions) that are different from or in addition to these Terms and Conditions are hereby expressly rejected by Seller and are not part of the Agreement. B. Unless the context requires otherwise, words importing the singular include the plural and vice versa. Any reference to a section in these Terms and Conditions, or in the document(s) to which Seller has attached them, means the relevant section of these Terms and Conditions or said attached document(s). C. 2. Payment Terms Unless otherwise agreed to in writing by Seller, the terms of payment for this order are stated in the Quotation. Any other payment terms are hereby expressly rejected. Payment is made when Buyer’s funds have been received in Seller’s account. Late payment will automatically extend any delivery or service completion date agreed upon by the Parties by an amount of time equivalent to the delay in payment and Seller’s obligations to Buyer will automatically be based on such a revised schedule. Unless otherwise stated in the Quotation, amounts owed by Buyer remaining unpaid 30 days following Buyer’s receipt of an invoice shall accrue interest at the lesser of the maximum rate permitted by law or 1.5% per month from the due date. 3. No Set-off Right Buyer shall not have any right, in any way, to set-off any amounts owed by it to Seller under this Agreement. 4. Start of Production Seller will not ship, order shipment of, or install any Product until Buyer has made any advance payment as specified in the Quotation. 5. Taxes. Unless expressly stated in the Quotation, prices quoted do not include any excise, sales, occupational, use, value-added or similar taxes, levies, governmental charges, or surcharges applicable to the Products or the sale or use thereof. Any and all such charges are the responsibility of Buyer. 6. Currency of Payment All payments due under this contract shall be made in the currency stated in the Quotation. If no currency is specified, the currency shall be U.S. Dollars. 7. Product Appearance Buyer acknowledges and agrees that the Products may not be exactly as illustrated in any photographs, illustrations, brochures, manuals, or advertising materials relating to the Products and are subject to variations in design. Any minor deviation(s) shall not invalidate the sale of the Products or entitle Buyer to any price adjustment. 8. Product Specifications Buyer acknowledges and agrees that all weights, measurements, and power requirements given by Seller for the Products are approximate and are subject to reasonable variation. Any reasonable variation(s) shall not invalidate the sale of the Products or entitle Buyer to any price adjustment. 9. Shipment and Acceptance Unless otherwise specified in the Agreement, Products will be shipped by the manufacturer or manufacturer’s distributor to the address listed as the principal place of business for Buyer on the first page of this Agreement. Products will be shipped FOB manufacturer’s or distributor’s warehouse. Any shipping charges incurred by Seller will be passed through to Buyer. For any Products shipped directly from Seller to Buyer, standard shipment is by UPS Ground, FOB Seller’s warehouse. Shipping charges for products shipped directly from Seller to Buyer will be prepay and add. Buyer may request expedited delivery for an additional charge. Title and risk of loss passes to Buyer upon delivery of Products to the carrier. A. Buyer shall inspect Products upon delivery and notify Seller within 15 days of delivery of any damaged Products received. It shall be Buyer’s responsibility to file any damage claim with the carrier. B. Buyer shall file claims for defective Products in accordance with the manufacturer’s policy. Seller will assist Buyer if requested.C. Seller will accept return of new, unopened, unconfigured Product for 30 days following delivery, subject to a 20% restocking fee. Buyer is responsible for return shipping. Custom made products and special order items cannot be returned. Software shall be deemed accepted by Buyer upon installation. D. 10. Security Interest Seller hereby reserves a security interest in all Products and Software provided to Buyer to secure payment of the purchase price, license fees and any related charges. The security interest shall continue in effect until such amounts are paid in full by Buyer. 11. Installation In cases where the Agreement includes installation of Products by Seller, the on-site period begins when Seller’s representative has arrived at Buyer’s premises to begin installation. Seller will invoice Buyer for any delay on the part of Buyer in meeting its obligations as set forth in the Agreement, if a delay results in an extension of the on-site period beyond what is contemplated in the Agreement. 12. Limited Warranty Seller warrants that all installation services provided by Seller to Buyer in connection with the Agreement will be free of defects in workmanship for a period of 30 days (“Warranty Period”). A. Warranty Period begins from the last date on which Seller’s employee performed installation services. This warranty covers only defects arising under normal use (“Covered Defect”) and does not include malfunctions or failures resulting from usage not in accordance with product instructions, abuse, neglect, alteration, acts of nature, or improper installation, alteration, modification, or repairs made by anyone other than Seller. B. Buyer’s sole and exclusive remedy for breach of the warranty set forth in this section 12(A) will be performance by of services necessary to rectify Covered Defects at no expense to Buyer. Buyer must notify Seller in writing within 30 days after discovering a suspected Covered Defect. C. 13. Warranty Limitations Except as expressly provided elsewhere in this Agreement, Seller disclaims all express, implied, and statutory warranties regarding Products provided to Buyer. This disclaimer includes but is not limited to all warranties of performance, non-infringement, merchantability or fitness for a particular purpose of any Product. A. Page 50 of 358 The limited warranty described in section 12(A) of these Terms and Conditions does not cover services required to repair damages, malfunctions or failures caused by any of the following: Buyer’s failure to follow Seller’s or the manufacturers’ written operation or maintenance instructions as applicable and provided to Buyer or published on the manufacturer’s website; i. Reconstructed, repaired, or altered by Buyer or persons other than Seller or its authorized representative.ii. B. 14. Limitation of Liability. Buyer agrees that the entire liability of Seller, its officers, employees and agents shall be limited in the aggregate to the price paid to Seller for Products under this Agreement. A. Buyer agrees that Seller may be held liable only for direct compensatory damages proximately caused by Seller’s negligence in providing the Products contemplated in the Quotation. Buyer releases Seller from any liability caused by defective Products procured from, by, or through Seller. In addition, Buyer hereby releases Seller from liability for any incidental, consequential, cover, or punitive damages suffered by Buyer or third parties resulting from a loss caused by Seller’s Products. Such losses include without limitation: Damages arising out of the use of or the inability to use any Product;i. Any loss of data or inaccuracy of data produced by any Product;ii. Impairments to interoperability of Buyer’s technological systems;iii. Buyer’s inability to access or interact with other providers or their services through the internet;iv. The cost of procurement of substitute goods, services, or technology.v. B. 15. Indemnity Buyer hereby agrees to indemnify, defend and hold harmless Seller, its officers, employees and agents from and against all claims, damages, liability and costs (including reasonable attorney’s fees) resulting from: Buyer’s use of the Products for other than their intended purpose, as described in the Quotation;i. Buyer’s failure to follow the instructions for installation, maintenance and use of the goods and equipment;ii. Buyer’s unauthorized modification or alteration of the goods and equipment; oriii. Buyer’s failure to properly train its employees and agents concerning the proper installation, maintenance, and use of the goods and equipment.iv. 16. Choice of Law and Venue The rights and obligations of the parties under this Agreement shall not be governed by the provisions of the 1980 U.N. Convention on Contracts for the International Sale of Goods; rather these rights and obligations shall be governed exclusively by the laws of the State of Ohio, USA, without regard to its conflicts of law principles. Buyer agrees that any claim or dispute arising against Seller under this Agreement must be resolved by the United States District Court for the Southern District of Ohio or a court of competent jurisdiction located in Hamilton County, Ohio. Buyer agrees to submit to the personal jurisdiction of the courts located within Hamilton County, Ohio for the purpose of litigating all such claims or disputes. 17. Authority; No Conflicts Buyer warrants that Buyer has full organizational power and authority to enter into and perform its obligations under the Agreement;A. The Agreement constitutes a legal, valid and binding obligation of Buyer;B. The Products purchased from Seller are not for resale purposes but are purchased for Buyer’s own use; andC. Seller’s acceptance and performance of the Agreement will not conflict with, or result in any violation or breach of any provision of Buyer’s organizational documents, any material contract of Buyer, or any applicable Law. D. 18. Notices; Communications All notices required or permitted under the Agreement will be made in writing and be effective only upon receipt. Notices to Buyer will be provided at its address set forth in the Agreement. 19. Interpretation; Language For purposes of the Agreement, whenever the word “including” (or any variation thereof) is used, it is deemed to be followed by the words “without limitation.” A rule of construction will not apply to the disadvantage of Seller because of Seller’s preparation of the Agreement or any part of it. If these Terms and Conditions or other purchasing documents are made available in any language other than English, they are for information purposes only, and the English-language version will control. 20. Headings. The division of the Agreement into sections and paragraphs, and the insertion of headings, is for convenience of reference only and will not affect the construction or interpretation of this Agreement. 21. Waiver Seller’s failure at any time to require Buyer’s performance will in no way affect Seller’s right to require such performance at any time thereafter, nor will Seller’s waiver of any breach constitute a waiver of any succeeding breach. Any waiver of a right by Seller under the Agreement on any one occasion will not be construed as a bar to any right or remedy that Seller would otherwise have had on a subsequent occasion. 22. Severability Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such prohibition or unenforceability and will be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 23. Assignability This Agreement will inure to the benefit of, and be binding on, Buyer and its successors and permitted assigns and will inure to the benefit of, and be binding on, Seller and its successors and assigns. Buyer may not assign this Agreement, or any of its rights or obligations under this Agreement, without the prior written consent of Seller. 24. Force Majeure Seller shall not be held responsible for any delays or failures in performance due to a Force Majeure. The term “Force Majeure” means an occurrence that is beyond the reasonable control of Seller and occurs without its fault or negligence, including but not limited to acts of God, riots, vandalism, governmental regulations, national emergencies, terrorism, manufacturer/supplier shortages, fire, war, strikes, explosion, earthquake, flood, storm, lightning, pandemics or other similar catastrophe. 25. Entire Agreement Page 51 of 358 Agreement, which constitutes the entire agreement between Seller and Buyer pertaining to the subject matter of the Quotation and supersedes all purchase orders, and all other agreements, understandings, negotiations and discussions, whether oral or written, regarding this subject matter There are no conditions, warranties, representations or other agreements between the parties relating to the subject matter of the Quotation (whether oral or written, express or implied, statutory or otherwise) except as specifically set out in the Agreement. Any amendment to the Agreement shall only be binding and enforceable if in writing and signed by the Parties. Page 52 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Peter Gilbertson, IT Director Department: IT Subject: LOGIS Fiber Management Services Agreement Meeting: Regular Council - Jun 20 2023 INTRODUCTION: With the Dakota Broadband Board (DBB) dissolution effective August 1st, 2023, the City of Farmington will need to enter into a direct agreement with LOGIS for Fiber service management for continued support moving forward. DISCUSSION: The City of Farmington currently has an agreement with LOGIS to manage and support our fiber through an agreement governed by the DBB. Come August 1st, the DBB will dissolve, requiring each member to enter into a direct agreement with LOGIS for these services. This agreement provides the city with vital core services relating to our fiber: • Strategic Planning and budgeting • Implementation and Maintenance • Project management • Vendor management • Documentation • Break/Fix/Locates Overall, this department at LOGIS has offered outstanding service to the city over the past few years. City IT Staff recommends we continue to leverage the LOGIS fiber service management offering. BUDGET IMPACT: City Staff will use the existing DBB fund to cover the costs of the prorated LOGIS Fiber Agreement ($13,935) for 2023. In 2024, IT will budget for fiber management services moving forward. ACTION REQUESTED: Request approval and execution of the Fiber Management Services Agreement. ATTACHMENTS: LOGIS Fiber Management Services Agreement LOGIS Fiber Optic Service Page 53 of 358 City of Farmington Fiber Optic Service Quote Page 54 of 358 Page 1 of 5 LOGIS Fiber Management Services Agreement THIS AGREEMENT is between the City of Farmington, a Minnesota Local Government under the laws of the State of Minnesota (the “City”), and Local Government Information Systems, a joint powers organization under the laws of the State of Minnesota, located at 5750 Duluth Street, Golden Valley, MN 55422 (“LOGIS”). WHEREAS, For the past four years LOGIS has provided fiber network management services for the county-wide fiber network through an agreement between LOGIS and the Dakota Broadband Board (DBB) joint powers entity of which the City is a member; and WHEREAS, the City’s fiber network assets are part of the county-wide fiber network that the DBB has been granted authority to manage on behalf of the majority DBB members, including the City; and WHERAS, the City anticipates the DBB will dissolve or will be substantially restructured in 2023, requiring the City to individually contract with a third party for certain management services for its fiber network assets; and WHEREAS, upon dissolution of the DBB the City will once again be solely responsible for managing its fiber network assets that are within its geographical boundary; and WHEREAS, the City requires continuing technical services to assist in the management of its fiber network assets; and WHEREAS, LOGIS has gained specific knowledge and expertise in managing the fiber network assets in Dakota County including the City’s fiber assets, and in constructing and updating the database catalogue of those assets, and is willing and capable of providing the management services as described in this agreement. THERFORE, the parties agree as follows: 1. TERM AND COST OF THE AGREEMENT A. Term. LOGIS agrees to provide fiber network management services as described separately in the attached and incorporated Statement of Work to the City commencing on August 1, 2023, and terminating on July 31, 2026; unless terminated earlier in accordance with the Default and Cancellation provisions of this Agreement B. Cost. The City agrees to pay a fee based on the services described separately in the Statement of Work. The fee will be billed on a monthly basis, and is due within thirty days of receipt. Payment of interest on late payments is governed by the provisions of MN Statute, Section 471.425. Page 55 of 358 Page 2 of 5 2. COMMUNICATION AND COORDINATION OF SERVICES LOGIS and the City mutually agree to provide regular communications to ensure all terms and conditions outlined in this Agreement and all services outlined in the Statement of Work are being performed to each party’s satisfaction. 3. USE OF INDEPENDENT CONTRACTORS LOGIS will select the means, method, and manner of performing the services described in this Agreement and the accompanying Statement of Work. This includes the use of third-party contractors to maintain or construct the fiber assets covered under this Agreement. 4. INTELLECTUAL PROPERTY LOGIS hereby warrants that it will obtain the written consent of the owner and licensor to reproduce, publish or use any materials supplied to the City including, but not limited to; software, hardware, or documentation. LOGIS also warrants that any delivered material will not violate U.S. Copyright Law or any property right of another. If LOGIS determines that in the course of providing services to the City it is violating a property right of a third party, LOGIS will promptly obtain the right to use such property or will provide other materials to the City that are free from intellectual property infringement. 5. INDEMNIFICATION AND INSURANCE A. Indemnification. With the exception of its proportionate obligations as a member of LOGIS, each party to this Agreement shall be liable for the acts of their own officers, employees, and agents; and the results thereof to the extent authorized by law and shall not be responsible for the acts of the other party, its officers, employees, and agents. The parties agree that the provisions of the Municipal Tort Claims Act, M.S. 466, and other applicable laws govern liability arising from the parties’ acts or omissions. Nothing in this Agreement is intended as a waiver of any liability limits or immunities to which the parties are otherwise entitled to under law. B. Insurance. For the mutual protection of all parties in this Agreement, each party agrees to maintain the following insurance coverages: i. Commercial General Liability coverage in the minimum amount of $2,000,000 on an occurrence basis. ii. Workers Compensation and Employer’s Liability coverage in the minimum amount of $1,500,000. Page 56 of 358 Page 3 of 5 6. DATA PRACTICES All parties to this Agreement, including their officers, employees, and agents shall abide by the provisions in the Minnesota Government Data Practices Act M.S. Chapter 13, the Health Insurance Portability and Accountability Act, and all other applicable federal and state laws, rules, regulations, and orders relating to data privacy or confidentiality. 7. RECORDS RETENTION, AVAILABILITY, AND ACCESS Subject to the requirements of M.S. Section 16C.05, Subd. 5; all parties to this Agreement agree that each party, the State Auditor, the Legislative Auditor, or any of their authorized representatives, during normal business hours, and as they may deem reasonably necessary, shall have the right to examine, audit, and transcribe any documentation or records that involve transactions relating to this Agreement. The parties further agree to maintain all pertinent materials during the term of this Agreement and for six years after its termination or cancellation. 8. SUCCESSORS, SUBCONTRACTORS, AND ASSIGNMENTS LOGIS shall not assign, transfer, subcontract, or pledge this Agreement or any associated monies without the prior written consent of the City. If granted, any permission to assign, transfer, subcontract, or pledge shall not relieve LOGIS of its liabilities and obligations under this Agreement. 9. MERGER AND MODIFICATION Both parties agree that this Agreement supersedes all previous oral or written communications relating to the terms and conditions outlined in the Agreement and Statement of Work. Modifications to the Agreement or Statement of Work is valid only after both parties have agreed to them in writing. 10. DEFAULT AND CANCELLATION Both parties agree that if either party fails to perform any provision in this Agreement or Statement of Work as to endanger the performance of the Agreement, it could be held in default and subject to cancellation. If either party concludes the other is in default, it shall provide a written notice detailing the circumstances of that conclusion. The defaulting party shall have 30 days to cure the default. If the default is not cured, the non-defaulting party may, upon written notice, cancel the Agreement and Statement of Work, and suspend all payments for work that was not completed; or suspend any services that were underway. Both parties agree that they remain liable for any damages sustained by the other as a result of the default. Page 57 of 358 Page 4 of 5 11. NOTICES Any notice or demand, including events of default, shall be delivered in writing to the LOGIS Executive Director and the City Chief Administrative Officer accordingly. 12. MINNESOTA LAWS GOVERN The Laws of the State of Minnesota shall govern all questions and interpretations concerning the validity and construction of this Agreement, and the legal relations between the parties and their performance. The venue and jurisdiction for any litigation between the two parties will be initiated in the Dakota County district court where the City resides, and as necessary; with the Appellate and Supreme Court of the State of Minnesota. CITY OF ______ By: _________________________ Printed Name: Printed Title: Date: ________, 2023 LOGIS By: __________________________ Printed Name: Christopher K. Miller Printed Title: Executive Director Date: _______, 2023 Page 58 of 358 Page 5 of 5 LOGIS Fiber Management Statement of Work In accordance, with the LOGIS Fiber Management Services Agreement, this Statement of Work outlines the scope of services and costs for the City, and associated fee. Services include: Assigned Project Manager to serve as primary liaison between the member, LOGIS, and vendors. Planning and budgeting assistance regarding fiber upgrades & enhancements, replacements, and budget estimates Managing fiber installs, repairs, maintenance, and relocates. Vendor costs and project expenses will be billed to the member. Providing a lead role in the preparation of formal quotes or bids in accordance with MN Statutes, as well as general fiber-related procurement. LOGIS will manage the following vendor relationships: 1. Fiber 24-hour break-fix vendors 2. Fiber burial and installation vendors 3. Locate vendors 4. Splicing and testing vendors Provide change management oversight including project timelines, communications & notifications, and documentation. Organize, update, and maintain all available fiber documentation related to the member. Maintain a service-level standard of a 2-hour on-site response for fiber cuts/outages. Total 2023 Cost to City $13,935.00 Page 59 of 358 Fiber Optic Summary To meet member needs for fiber optic management and support, in September 2018 the LOGIS Network Services Fiber Optic group was formed. Under this group, LOGIS is offering a Managed Service for Fiber Optic Services. This document outlines the service level provided, LOGIS’ and member responsibilities and requirements, along with estimated charges associated when committing to this Managed Service. Core Services The following are areas of key responsibilities of the Fiber Optic Service group: Strategic Planning and Budgeting LOGIS will assist the member in providing strategic long term planning. This planning will consist of items such as fiber optic upgrades/replacements, connectivity enhancements, planning, technology and budgeting recommendations, replacement schedules, etc. LOGIS will also attend and present at meetings as requested by the member. Implementation and Maintenance LOGIS will engineer, organize, and manage all implementations, repairs, break fix work, maintenance, and relocates for the member. Vendor costs and all project expenses (permit fees, consultant expenses, materials, splicing, etc.) related to this work will be billed from LOGIS to the member. Project Management For the large projects that include critical facilities, implementations, upgrades etc. LOGIS will assign a staff project manager to work with the member and required vendors to assure a smooth process, including proper communication. Projects that are deemed smaller in-scope and less critical will be managed by the Fiber Optic Services Supervisor as part of their normal daily operation. Page 60 of 358 Page | 2 Fiber Optic March 2, 2020 Procurement, Bids, and Quotes LOGIS follows all laws set forth by the State of Minnesota related to governmental purchasing of equipment and services. LOGIS will perform formal bids when required by law and when not required, obtain quotes, or purchase under an established contracted agreement such as the State of Minnesota purchasing/procurement contract. This documentation will be maintained at LOGIS and made available to the member upon request. Vendor Management LOGIS will manage the following vendors for the member: Fiber Optic 24-Hour Break Fix Vendors – LOGIS will maintain an agreement with multiple fiber optic 24-hour break fix vendors. If issues arise, LOGIS will coordinate the activation of an appropriate vendor and oversee the repairs and testing. Fiber Optic Burial and Installation Vendors – LOGIS will coordinate bids on all required member planned fiber optic burial and installation projects. LOGIS would evaluate the bids and recommend a vendor to the member. Ideally multiple vendors will be selected to assure adequate availability for projects. LOGIS will coordinate quotes on small projects. Locate Vendors – LOGIS would produce a bid for all locates as part of the member. This bid would be for a span of three years. LOGIS would evaluate the bids and recommend a locate vendor. Splicing and Testing Vendors – LOGIS will select and coordinate with multiple vendors that will have the ability to perform splicing and testing of fiber strands according to LOGIS specifications. These vendors will be available to perform 24/7 maintenance. Change Management Effective change management is critical to minimize downtime, assure testing, proper communication and to maintain documentation. A change management process along with times frames, communication process, notifications, approvals, etc. will be discussed, agreed upon, and implemented. Documentation LOGIS will organize, update, and maintain all fiber optic documentation related to the member. Understanding that the documentation varies between members, working through this will require several meetings to define agreed upon documentation standards. Once these standards are defined, LOGIS will utilize these standards . Page 61 of 358 Page | 3 Fiber Optic March 2, 2020 Software To meet the support objectives of the member, LOGIS will utilize the following software: CrescentLink – Document fiber optic cabling, conduits, splicing, fiber paths in the ESRI ArcGIS application. ESRI ArcGiS – Document fiber optic plant on a graphical level. Laserfiche – Document repository for agreements, project requests and other. Webex and Webex Teams – This software will allow us to support the member through Webex which includes conference calling and sharing of desktop screens and documents. Note: The above listed software may change over time with new rel eases and enhancements in the industry. Reporting and Supervision Under this service, LOGIS will report to the assigned member representatives. LOGIS also requests that quarterly meetings be scheduled between the member and LOGIS Network Services Management. This will assure proper communication and allow for adequate planning. LOGIS will also allocate staff to be available to meet and discuss items as necessary. LOGIS Requirements To meet the requirements of the member, LOGIS will require the following: Member to supply all existing documentation related to their fiber optic network. Member to be responsible for all external costs related to managing the fiber optic infrastructure. This includes, but not limited to, all vendors, consultants, permits fees, locate costs, etc. The member to work with LOGIS to achieve the goals of the member. This includes, but not limited to, scheduling and participating in meetings, sharing documentation, assigning and sharing staff contacts, allowing access to facilities, sharing project information, etc. 24/7 access to the member sites to work on issues related to the fiber optic plant is required. This access will be coordinated by the member. Member staff to cooperate with LOGIS for scheduling maintenance windows, new upgrades and enhancements. Page 62 of 358 Page | 4 Fiber Optic March 2, 2020 LOGIS would manage all member owned fiber optic assets. This would include new implementations, existing conduits, hand holes, and fiber. LOGIS will support installation, maintenance and troubleshooting of the member owned fiber optic network. LOGIS will manage the documentation of the member fiber, conduits, hand holes, splices, agreements, etc. in ESRI ArcGIS, CrescentLink and Laserfiche. Members will be allowed read access to the applicable repositories. All ownership of the fiber optic network including conduits, hand holes, fiber optic cabling, etc. remain the property of the member. LOGIS will focus on projects based on member specified priorities. Fiber optic priorities, goals and needs will be communicated to LOGIS through the member representative(s). Page 63 of 358 March 29, 2023 Peter Gilbertson IT Director City of Farmington 430 Third St. Farmington, MN 55024 RE: Fiber Optic Service Quote As requested, the quote for the City of Farmington to join LOGIS Fiber Optic Service in 2023 is $13,935.00 prorated to the effective start date. LOGIS invoices monthly for the service and this pricing is good till Dec. 31st, 2023. The cost is based on a per foot rate so additional network footage constructed or added the to the City of Farmington owned network in 2023 will be used to calculate the cost for 2024. LOGIS will provide Locate & Maintenance Services at a rate of $.23 per foot utilizing the LOGIS contract with MP Nexlevel. This is a pass-through invoice that is billed by LOGIS to you quarterly. I would like to thank you and the City of Farmington for the opportunity to quote this service. If you have any questions, feel free to contact me. Sincerely, Chris Miller Executive Director Page 64 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Kellee Omlid, Parks & Recreation Director Department: Parks & Recreation Subject: Resolution Accepting Donations from the Farmington VFW and Veteran’s Steak Fry Committee to the Rambling River Center Meeting: Regular Council - Jun 20 2023 INTRODUCTION: The Farmington VFW and Veteran’s Steak Fry Committee recently gave donations to the Rambling River Center (RRC) from its annual steak fry. DISCUSSION: The Farmington VFW and the Veteran’s Steak Fry Committee held its 20th Annual Steak Fry Fundraising event for the Rambling River Center on Saturday, May 20, 2023. The Farmington VFW donated $500, and the Veteran’s Steak Fry Committee donated $722, for a to tal of $1,222. This is the most amount of money the RRC has received from the event. The donated money will be placed in the RRC Capital Improvement Fund, so it may either be used for future building improvements and/or to purchase new equipment or furnitu re. Staff will communicate the City’s appreciation on behalf of the City Council to the Farmington VFW and Veteran’s Steak Fry Committee for these generous donations. ACTION REQUESTED: Adopt Resolution No. R43-23 Accepting Donations of $500 from the Farmington VFW and $722 from the Veteran’s Steak Fry Committee to the Rambling River Center. ATTACHMENTS: Resolution Accepting Donations from the Farmington VFW and Veteran’s Steak Fry Committee to the Rambling River Center Page 65 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA RESOLUTION NO. R43-23 A RESOLUTION ACCEPTING DONATIONS OF $500 FROM THE FARMINGTON VFW AND $722 FROM THE VETERAN’S STEAK FRY COMMITTEE TO THE RAMBLING RIVER CENTER WHEREAS, a donation of $500 was made by the Farmington VFW and $722 from the Veteran’s Steak Fry Committee to the Rambling River Center; and WHEREAS, it is required by State Statute that such donations be formally accepted; and WHEREAS, it is in the best interest of the City to accept these donations. NOW, THEREFORE, BE IT RESOLVED, that the Farmington Mayor and City Council hereby accept, with gratitude, the generous donations of $500 from the Farmington VFW and $722 from the Veteran’s Steak Fry Committee to the Rambling River Center. Adopted by the City Council of the City of Farmington, Minnesota, this 20th day of June 2023. ATTEST: ____________________________ ______________________________ Joshua Hoyt, Mayor Shirley R Buecksler, City Clerk Page 66 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Kellee Omlid, Parks & Recreation Director Department: Parks & Recreation Subject: Shade Structure for Flagstaff Meadows Park Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Staff solicited proposals from four companies for the purchase and installation of a shade structure for Flagstaff Meadows Park. The proposal also included installation of the shade structure. DISCUSSION: City Council approved funding in the 2023 Park Improvement Fund to make improvements at Flagstaff the for amount budgeted The structure. a includes which Park, Meadows shade improvements is $200,000. Staff contacted four companies to submit shade structure proposals for Flagstaff Meadows Park. The proposals were to include installation of the shade structure and the ability to put four to six picnic tables under the shade. All four companies submitted proposals with three being a shade structure with fabric sails and the fourth was a standard gazebo. The three shade structures with fabric sails are all on the state contract. Thus, Staff is recommending purchasing the CoolTopper Full Sail with installation from Flagship Recreation / Landscape Structures fo r $33,369.27. Prices for the shade installed ranged from $33,369.27 to $65,210. The largest discrepancies in prices were installation and freight. Flagship Recreation / Landscape Structures has their own installation team and the shade structure vendor (Landscape Structures) is located in Delano, MN. This is why delivery is only $750. Flagship Recreation / Landscape Structures quote includes the shade, delivery, installation, concrete flatwork, and conduit for future electrical. The shade will be install ed on a 20 x 30 concrete slab and will fit six picnic tables. Flagship Recreation / Landscape Structures’ proposal is included in the packet. Please note the certificate of insurance in the proposal is generic, but a custom one with Farmington named will be issued upon the completion of a signed contract. Current estimates are 6-8 weeks from date of order for this standard shade structure. The Parks and Recreation Commission reviewed Flagship Recreation / Landscape Structures proposal at their June 14, 2023 meeting and choice pre-selected color palette BV for the sails and poles, which is the sixth rendering in the attached proposal. The City currently only has standard gazebos in parks, so this will be the first shade structure in the park system. BUDGET IMPACT: Page 67 of 358 The purchase and installation of the shade structure will be paid for through the Park Improvement Fund. ACTION REQUESTED: Staff is recommending City Council approve the purchase of Flagstaff Meadows Park shade structure and installation from Flagship Recreation / Landscape Structures at a cost of $33,369.27. ATTACHMENTS: Flagstaff Meadows Park Shade Structure Proposal Page 68 of 358 Pa g e 6 9 o f 3 5 8 Pa g e 7 0 o f 3 5 8 Pa g e 7 1 o f 3 5 8 Pa g e 7 2 o f 3 5 8 Pa g e 7 3 o f 3 5 8 Pa g e 7 4 o f 3 5 8 30' 20'5' 5' 5' Remove fabric when wind speed is expected to exceed 90 mph or snow load is expected to exceed 5 psf, per International Building Code (IBC) 2009. FUTURE PLAY CONTAINER (BY OTHERS) FL A G S T A F F M E A D O W S SH A D E 20 8 6 1 F L A G S T A F F A V E N U E FA R M I N G T O N , M N SALES REPRESENTATIVE: EMILY MALONEY DESIGNED BY: AO 5/24/23 1/4" = 1'-0" FLAGSHIP RECREATION 11123 UPPER 33RD ST N LAKE ELMO, MN 55082 763-550-7860 FLAGSHIPPLAY.COM @FLAGSHIPPLAY THIS PLAY AREA & PLAY EQUIPMENT IS DESIGNED FOR AGE RANGES AS NOTED ON PLAN. THE PLAY COMPONENTS IDENTIFIED ON THIS PLAN ARE IPEMA CERTIFIED. (UNLESS MODEL NUMBER IS PRECEDED WITH *) THE USE AND LAYOUT OF THESE COMPONENTS CONFORM TO THE REQUIREMENTS OF ASTM F1487. TO VERIFY PRODUCT CERTIFICATION, VISIT www.ipema.org. SHEET LS101 C: \ U s e r s \ E m i l y M a l o n e y \ F l a g s h i p R e c r e a t i o n \ F l a g s h i p R e c r e a t i o n - D o c u m e n t s \ 2 0 2 3 P l a n n i n g \ E m i l y \ F a r m i n g t o n - F l a g s t a f f M e a d o w s S h a d e \ D e s i g n \ O p t 2\ F a r m i n g t o n _ F l a g s t a f f M e a d o w s O p t 2 . d w g DETAILS TOTAL CONCRETE AREA 600 SF PICNIC TABLES BY OWNER Pa g e 7 5 o f 3 5 8 Flagstaff Meadows Shade 20861 Flagstaff Avenue Farmington, MN 55024 2023 Qty Item No.Description Price Ext Price 1 136759A CoolToppers Full Sail DB Only $15,932 $15,932.00 $15,932.00 EQUIPMENT INFORMATION & PRICING Total Equipment Cost at State Contract Pricing State Contract Pricing PROJECT INFORMATION Project name Address City, State ZIP Contract Year Page 76 of 358 5/24/2023 PREFFERED OPTION Preliminary Budget Possible Additions Possible Reductions QTY Notes Play Equipment Flagstaff Meadows Shade,EM706 15,932.00 2023 List Price of Equipment, CoolToppers Full Sail, picnic tables not included Sourcewell Discount (955.92)6%Sourcewell (6% discount under $80,000 & 8% discount $80,000 & above) Sales Tax - if applicable 0.00 ST3 Certificate of Exemption must be provided by owner. Delivery of Play equipment 750.00 Estimated / Final quote will be provided upon final design. Mobilization 750.00 Dumpster(s) - 30 Yard 750.00 Site work Excavation (new area) 897.60 660 Estimated. Final quote will be provided upon finalizing concrete details Hauling of Excavated Material (CY)464.09 19 Trucking costs to remove material from the project location to the disposal site. Disposal of Excavated Material (CY)116.28 19 Cost to dispose of material at approved site. Special Equipment (Lull, Lift, Compactor, etc.)1,634.62 Lift rental - includes delivery and pickup by the rental company Equipment Installation (Labor & Concrete for Footings)2,167.50 Full professional installation by Landscape Structures Certified Installers. Standard labor rate unless otherwise noted Concrete Flatwork Concrete Flatwork (Sq. Ft.)8,830.29 600 4" thick concrete Subgrade Preperation Compacted Aggregate Base (Recycled Concrete or Class 5) (Tons)1,595.68 24 Class 5 aggregate or recycled concrete (w/fines), delivery and installation . 4" - 6" compacted depth. Conduit for Future Electrical (LF)437.14 25 Conduit provided from concrete edge to shade post at two locations for future eletrical needs. Security Guard 0.00 NOT INCLUDED Site security is recommended throughout the concrete cure time (minimum of 72 hours after completion of the work) especially in high traffic areas where there is a potential for vandalism. Defects due to trespass before sufficient cure time will not be covered by warranty. Site Restoration (Sq.Ft.)0.00 NOT INCLUDED Top soil, seed and blanket Budget Total Total Additions Total Reductions Total w/ Additions & Reductions 33,369.27 0.00 0.00 33,369.27 PRELIMINARY BUDGET - THIS IS AN ESTIMATE & NOT A FORMAL QUOTE City of Farmington 430 Third Street Farmington, MN 55024 Kellee Omlid Pa g e 7 7 o f 3 5 8 Date Expires Quote: Contact: Phone: Email: Ship To:Please Make PO's & Contracts Out To: Bill To:Please Remit Payment To: QTY ITEM #UNIT PRICE EXT. PRICE 1 EQUIPMENT $15,932.00 1 DISCOUNT 6.00%($955.92) Subtotal $14,976.08 Freight $750.00 Sales Tax Tax Exempt Cert Total $15,726.08 *Terms: Net 30 days; 1.5% finance charge on balances over 30 days Page 1 of 2 We are pleased to submit this proposal to supply the following products/services: Description Flagstaff Meadows Shade,EM706FMS045070 Sourcewell Discount Quotes from Landscape Structures,Inc.are subject to current Landscape Structures,Inc.policies as well as Terms &Conditions,Inclusions &Exclusions outlined below unless noted otherwise on this quote. Changes are subject to price adjustment.Sales tax,if applicable, will be applied unless a tax-exempt certificate is provided at the time of order entry.Customer deposits,if required,must be received before orders will be entered &installation scheduled. Purchases in excess of $1,000.00 must be supported by a formal Purchase Order made out to Landscape Structures, Inc. SDS 12-0395 PO Box 86 Farmington, MN 55024 Minneapolis, MN 55486-0395 Landscape Structures, Inc. 601 7th St. S Delano, MN 55328 5/24/2023 6/23/2023 City of Farmington Kellee Omlid 651-280-6851 komlid@farmingtonmn.gov Flagstaff Meadows Shade 20861 Flagstaff Avenue Farmington, MN 55024 City of Farmington Landscape Structures, Inc. 430 Third Street Page 78 of 358 Email: Purchase Amount: Page 2 of 2 Signature:komlid@farmingtonmn.gov Title:Phone: Date: $15,726.08 Acceptance of Quotation: Accepted By (Print)Kellee Omlid PO#: Terms &Conditions Contract:Seller's Copy of signed quote represents the contract between Seller and Buyer.This form supersedes all previous communicationsand negotiations and constitutes the entire agreementbetween the parties.Any changes to this contract are not binding unless jointly agreed in writing via Change Order. Project Scope (This Section For Quotes Including Installation) Inclusions: •One Mobilization •Accepting & Unloading of Order Prior to Installation •Unpacking of Play Equipment •Assembly of Play Equipment •Placing, Digging or Surface Mounting Equipment (as specificed) •Concrete for Play Equipment Footings •Standard Insurance Offer (Detail Provided Upon Request) •Standard Warranty Offer (Detail Provided Upon Request) •Standard Wage Rates Exclusions (Unless Specifically Quoted): •Storage or Security of Equipment •Private Utility Locates (irrigation, low voltage, lighting, etc.) •Additional Labor Due to Site Access. Require 8' Wide Clearance from Staging Area to Play Space. •Additional Labor and/or Related Costs Due to Subsurface Conditions (Rock, Hardpan, Heavy Clay, Ground Water, etc.) •Additional Labor and/or Related Costs Due to Working in Unstable Soils (Sand, Pea Rock, Mud, Poor Site Drainage, etc.) •Offsite Removal of Spoils From Footing Holes or Other Excavation. Can be stockpiled for owner removal or left in play space •Disposal of Packing Material. Can be Stockpiled for Owner Removal or Deposited in Owners Onsite Dumpster •Removal of Existing Play Equipment, Border or Safety Surfacing Material •Site Work of Any Kind. Exclusions include, site grading (owner to provide max slope of 1%), site restoration, drainage, etc. •Border for Play Space •Bonding of Any Type •Permits of Any Kind Page 79 of 358 Date Expires Quote: Contact: Phone: Email: Ship To:Please Make PO's & Contracts Out To: Bill To:Please Remit Payment To: QTY ITEM #UNIT PRICE EXT. PRICE 1 MOB $750.00 1 DUMPSTER $750.00 660 SITE WORK $897.60 19 SITE WORK $464.09 19 SITE WORK $116.28 25 CONDUIT Conduit for Future Electrical (LF)$437.14 24 SUBGRADE $1,595.68 1 INSTALL 14.47%$2,167.50 1 RENTAL $1,634.62 600 FLATWORK $8,830.29 0 GUARD NOT INCLUDED 0 RESTORE NOT INCLUDED Subtotal $17,643.19 Freight Sales Tax Tax Exempt Cert Total $17,643.19 Quotes from Flagship Recreation.are subject to current Flagship Recreation policies as well as Terms &Conditions,Inclusions &Exclusions outlined below unless noted otherwise on this quote. Changes are subject to price adjustment.Sales tax,if applicable, will be applied unless a tax-exempt certificate is provided at the time of order entry.Customer deposits,if required,must be received before orders will be entered &installation scheduled. Purchases in excess of $1,000.00 must be supported by a formal Purchase Order made out to Flagship Recreation *Terms: Net 30 days; 1.5% finance charge on balances over 30 days Page 1 of 2 Compacted Class 5 Base (TN) Security Guard Concrete Flatwork (Sq. Ft.) Installation by Landscape Structures Certified Installers Site Restoration Excavation (new area) Hauling of Excavated Material (CY) Disposal of Excavated Material (CY) Special Equipment (Lull, Lift, Compactor, etc.) Mobilization Dumpster - Disposal / Equipment Packing (30 Yard) Farmington, MN 55024 Lake Elmo, MN 55042 We are pleased to submit this proposal to supply the following products/services: Description Flagstaff Meadows Shade,EM706FMS045070 Farmington, MN 55024 Lake Elmo, MN 55042 City of Farmington Flagship Recreation 430 Third Street 11123 Upper 33rd St. N Flagstaff Meadows Shade Flagship Recreation 20861 Flagstaff Avenue 11123 Upper 33rd St. N 5/24/2023 6/23/2023 City of Farmington Kellee Omlid 651-280-6851 komlid@farmingtonmn.gov Page 80 of 358 Email: Purchase Amount:Date: $17,643.19 Page 2 of 2 Accepted By (Print)Kellee Omlid PO#: Signature:komlid@farmingtonmn.gov Title:Phone: Acceptance of Quotation: Terms &Conditions Contract:Seller's Copy of signed quote represents the contract between Seller and Buyer.This form supersedes all previous communicationsand negotiations and constitutes the entire agreementbetween the parties.Any changes to this contract are not binding unless jointly agreed in writing via Change Order. Project Scope (This Section For Quotes Including Installation) Inclusions: •One Mobilization •Accepting & Unloading of Order Prior to Installation •Unpacking of Play Equipment •Assembly of Play Equipment •Placing, Digging or Surface Mounting Equipment (as specificed) •Concrete for Play Equipment Footings •Standard Insurance Offer (Detail Provided Upon Request) •Standard Warranty Offer (Detail Provided Upon Request) •Standard Wage Rates Exclusions (Unless Specifically Quoted): •Storage or Security of Equipment •Private Utility Locates (irrigation, low voltage, lighting, etc.) •Additional Labor Due to Site Access. Require 8' Wide Clearance from Staging Area to Play Space. •Additional Labor and/or Related Costs Due to Subsurface Conditions (Rock, Hardpan, Heavy Clay, Ground Water, etc.) •Additional Labor and/or Related Costs Due to Working in Unstable Soils (Sand, Pea Rock, Mud, Poor Site Drainage, etc.) •Offsite Removal of Spoils From Footing Holes or Other Excavation. Can be stockpiled for owner removal or left in play space •Disposal of Packing Material. Can be Stockpiled for Owner Removal or Deposited in Owners Onsite Dumpster •Removal of Existing Play Equipment, Border or Safety Surfacing Material •Site Work of Any Kind. Exclusions include, site grading (owner to provide max slope of 1%), site restoration, drainage, etc. •Border for Play Space •Bonding of Any Type •Permits of Any Kind Page 81 of 358 Sky Lagoo n Seafoa m Pebble Blue Denim Grass Green Leaf Sprout Limon Slate Brick Red Tangeri n e Yellow Butterc u p Gray Acorn Tan ProShield® Colors For posts/arches, components and clamps, ProShield® finish combines a specially formulated primer with a high-quality, architectural-grade powdercoat top layer. The result is enhanced longevity, greater protection against UV rays, prevention from corrosion, and improved product performance. Custom colors are available for an additional charge. Learn more about our Color Inspirations at playlsi.com/color-inspirations Color Choices Vivid colors for lively play 888.438.6574 • 763.972.5200 playlsi.com Permalene® panels with a recycled core are a smart choice for your playground and the environment. Available in the 20 colors shown, the distinctive black core results from combining and recycling colored plastic—waste that would otherwise end up in landfills. Permalene® Color Panels Limon Sky Tangerine Hedra® product line option. Translucent panel provides visibility into structure as well as light and color play. Polycarbonate Panels Leaf Limon Sprout Denim Blue Pebble Seafoam Lagoon Sky Peacock Grass Green Pine Green Paprika Orange Tangerine Yellow Honey Buttercup Black Brown Acorn Copper Tan Dune Vanilla White Slate Purple Plum Maroon Berry Cranberry Red Red Metallic Silver Cool Silver Matte Matte Gray Carbon Page 82 of 358 Brick Red Limon ButtercupTangerine Leaf Tan Green Acorn BlueDenim Lagoon Gray Seafoam Sprout Slate GraniteGraniteGranite Tan GrayBrown TenderTuff ™ Coating For swing chains, handholds, pipe barriers, wheels, rings, etc. Insulates against temperature extremes and provides a safer grip surface compared to painted metal. Blue Red Steel Decks The heaviest, thickest decks for long-lasting safety: Flange-formed from 12-gauge steel with safe, rounded corners. Reinforced with .105" x 2" ribs welded on cross for superior strength and a consistently flat surface. Steel-Reinforced Cables Made of tightly woven, polyester-wrapped, six-stranded galvanized- steel cable. These abrasion- resistant, color-stable cables are extremely durable and vandal resistant. Brown Gray BlackTan Red Polyethylene For slides, tunnels, roofs, etc. The heavy-duty rotationally molded polyethylene material ensures strength and durability while resisting cracking, fading and peeling. *Denim, Seafoam, Leaf, Limon, Slate, Brick, Tangerine, Buttercup, Granite and Acorn are color blends. ©2023 Landscape Structures Inc. Printed in the U.S.A. 755-2667 Gun Metal FR Brown FR Denim FR Purple FR Grass FR Orange FR Black FR Cherry Red FR Cayenne FR Natural FR Yellow FR Tan FR Metallic Silver FR Pine Green FR Blue FR Cedar FR Sky Blue FR Lagoon FR Rivergum FR Deep Ochre FR SkyWays® and CoolToppers® Shade Fabrics Designed to block up to 97% of UV rays and keep playground temperatures up to 30 degrees cooler. NEW Page 83 of 358 Pick your palette Tour through carefully curated palettes and discover how color can tie your whole playground together. All of our colors take a cue from nature — from green trees and blue sky to minerals, birds, spices, fruits and more — to create vibrant hues that stimulate the senses and perfectly coordinate with the outdoors. Palette AG Palette AIPalette AH Palette AJ Me t a l l i c S i l v e r • L i m o n • D e n i m • G r a y Ta n g e r i n e • P l u m • L i m o n • G r a y • M e t a l l i c S i l v e r Br o w n • D u n e • A c o r n • T a n Bl a c k • Y e l l o w • R e d De n i m • V a n i l l a • T a n g e r i n e • G r a y • B l u e Br o w n • A c o r n • L e a f Re d • B l u e • Y e l l o w Le a f • B r o w n • A c o r n Br o w n • L i m o n • L e a f Li m o n • T a n g e r i n e • D e n i m • G r a y Palette AC Palette AEPalette AD Palette AF Palette AA Palette AB Me t a l l i c S i l v e r • D e n i m • B r i c k • G r a y Va n i l l a • P l u m • L i m o n • A c o r n • G r a y • M e t a l l i c S i l v e r Palette AK Palette ALPage 84 of 358 Ta n g e r i n e • M e t a l l i c S i l v e r • L i m o n • G r a y Me t a l l i c S i l v e r • T a n g e r i n e • D e n i m • G r a y Sk y • B e r r y • D e n i m • G r a y Bu t t e r c u p • L i m o n • G r a s s • L e a f • G r a y • M e t a l l i c S i l v e r Pl u m • T a n g e r i n e • O r a n g e • G r a n i t e • T a n • B r o w n • M e t a l l i c S i l v e r Pi n e G r e e n • T a n • B r o w n • G r e e n La g o o n • S k y • T a n g e r i n e • G r a y • D e n i m Bu t t e r c u p • G r a s s • A c o r n • L e a f • B r o w n Sk y • D e n i m • L a g o o n • A c o r n • B r o w n Me t a l l i c S i l v e r • O r a n g e • C a r b o n • D e n i m • G r a y Palette AO Palette AQPalette AP Palette AR Palette AM Palette AN Palette AS Palette AUPalette AT Palette AV Ca r b o n • L a g o o n • S k y • L i m o n • G r a y • M e t a l l i c S i l v e r Ac o r n • S k y • L a g o o n • B r o w n Palette AW Palette AX Page 85 of 358 Palette BE Palette BF Palette BG Palette BH Palette BA Palette BB Palette BC Palette BD Palette AY Palette AZ Li m o n • M e t a l l i c S i l v e r • L a g o o n • G r a y Bl u e • L i m o n • G r e e n Pe a c o c k • B u t t e r c u p • L a g o o n • G r a y Co o l S i l v e r • S k y • P e a c o c k • B l u e • G r a y Ca r b o n • P e a c o c k • L a g o o n • L i m o n • G r a y • M e t a l l i c S i l v e r Bl u e • Y e l l o w • R e d Pa p r i k a • L i m o n • P e a c o c k • G r a y • M e t a l l i c S i l v e r Me t a l l i c S i l v e r • L a g o o n • S k y • B u t t e r c u p • G r a y Du n e • P a p r i k a • A c o r n • T a n g e r i n e • B r o w n Bl a c k • L a g o o n • G r a y • S k y Palette BI Palette BJ Pa p r i k a • S k y • L a g o o n • G r a y Pe a c o c k • B l u e • L i m o n • G r a y • M e t a l l i c S i l v e r Page 86 of 358 Palette BQ Palette BSPalette BR Palette BT Palette BU Palette BXPalette BW Palette BV Palette BY Palette BM Palette BOPalette BN Palette BP Palette BK Palette BL Pa p r i k a • T a n g e r i n e • A c o r n • B r i c k • B r o w n • T a n Pe a c o c k • Y e l l o w • B u t t e r c u p • G r a n i t e • G r a y Ta n g e r i n e • S k y • L a g o o n • G r a y Pe a c o c k • L i m o n • C r a n b e r r y R e d • L a g o o n • G r a y • M e t a l l i c S i l v e r Sk y • L a g o o n • M e t a l l i c S i l v e r • L i m o n • G r a s s • G r a y De n i m • D u n e • L a g o o n • S k y • G r a y Du n e • D e n i m • L e a f • B r i c k • B r o w n Me t a l l i c S i l v e r • L a g o o n • S k y • G r a y Co p p e r • L a g o o n • S k y • L a g o o n • Gr a y • M e t a l l i c S i l v e r Me t a l l i c S i l v e r • T a n g e r i n e • L i m o n • G r a y • O r a n g e Me t a l l i c S i l v e r • D u n e • L i m o n • A c o r n • L e a f • B r o w n • T a n Ho n e y • L i m o n • G r a s s • B r o w n • R i v e r g u m Va n i l l a • L a g o o n • P e a c o c k • B u t t e r c u p • G r a y Me t a l l i c S i l v e r • B l u e • R e d Va n i l l a • T a n g e r i n e • P e a c o c k • L a g o o n • A c o r n • B r o w n Page 87 of 358 Palette CF Palette CH Palette CK Palette CG Palette CJPalette CI Palette CB Palette CDPalette CC Palette CE Palette BZ Palette CAPe b b l e • S l a t e • S k y • D e n i m • G r a y • M e t a l l i c S i l v e r Se a f o a m • La g o o n • Pe a c o c k • Ta n g e r i n e • Gr a y Co p p e r • S l a t e • P e b b l e • S e a f o a m • G r a y • G u n M e t a l Pe b b l e • L a g o o n • M e t a l l i c S i l v e r • S l a t e • S e a f o a m • G r a y Sl a t e • P e b b l e • Sk y • L a g o o n • G r a y • G u n M e t a l Sp r o u t • Le a f • Li m o n • Bu t t e r c u p • B r o w n • T a n De n i m • S e a f o a m • B u t t e r c u p • G r a y • B l u e Ca r b o n • S p r o u t • L a g o o n • P e b b l e • G r a y Me t a l l i c S i l v e r • Sl a t e • La g o o n • Se a f o a m • G r a y • S k y B l u e Se a f o a m • S p r o u t • P e a c o c k • S k y • G r a y • L a g o o n Ca r b o n • S l a t e • Sk y • Se a f o a m • Gr a y • Me t a l l i c S i l v e r De n i m • Co p p e r • Sl a t e • P e b b l e • G r a y ©2023 Landscape Structures Inc. Page 88 of 358 Signed:Date:01/01/2023 All the warranties commence on date of Manufacturer’s invoice. Should any failure to conform to the above express warranties appear within the applicable warranty period, Manufacturer shall, upon being notified in writing promptly after discovery of the defect and within the applicable warranty period, correct such nonconformity either by repairing any defective part or parts, or by making available a replacement part within 60 days of written notification. Manufacturer shall deliver the repaired or replacement part or parts to the site free of charge, but will not be responsible for providing labor or the cost of labor for the removal of the defective part or parts, the installation of any replacement part or parts or for disposal costs of any part or parts. Replacement parts will be warranted for the balance of the original warranty. THIS WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. The remedies hereby provided shall be the exclusive and sole remedies of the purchaser. Manufacturer shall not be liable for any direct, indirect, special, incidental or consequential damages. Manufacturer neither assumes nor authorizes any employee, representative or any other person to assume for Manufacturer any other liability in connection with the sale or use of the structures sold, and there are no oral agreements or warranties collateral to or affecting this agreement. The warranties stated above are valid only if the structures and/or equipment are erected in conformance with Landscape Structures’ installation instructions and maintained according to the maintenance procedures furnished by Landscape Structures Inc.; have been subjected to normal use for the purpose for which the goods were designed; have not been exposed to saltwater or salt spray; have not been subject to misuse, negligence, vandalism, or accident; have not been subjected to addition or substitution of parts; and have not been modified, altered, or repaired by persons other than Manufacturer or Manufacturer’s designees in any respect which, in the judgement of Manufacturer, affects the condition or operation of the structures. To make a claim, send your written statement of claim, along with the original job number or invoice number to: Landscape Structures Inc. 601 7th Street South, Delano, Minnesota, 55328-8605. Landscape Structures Inc. (“Manufacturer”) warrants that all equipment sold will conform in kind and in quality to the specifications manual for the products identified in the Acknowledgment of Order and will be free of defects in manufacturing and material. Manufacturer further warrants: 20-Year Limited Warranty On all SkyWays® and CoolToppers® steel components against structural failure due to material or manufacturing defects. 10-Year Limited Warranty On SkyWays® and CoolToppers® fabric and thread against failure from significant fading, deterioration, breakdown, mildew, outdoor heat, cold or discoloration. This warranty is limited to the design loads as stated in the manual, and applies to standard colors only. 3-Year Limited Warranty On all other parts, including Rapid Release®, against failure due to corrosion/natural deterioration or manufacturing defects. The environment near a saltwater coast can be extremely corrosive. Some corrosion and/or deterioration is considered “normal wear” in this environment. Product installed within 500 yards (457 meters) of a saltwater shoreline will only be covered for half the period of the standard product warranty, up to a maximum of five years, for defects caused by corrosion. Products installed in direct contact with saltwater or that are subjected to salt spray are not covered by the standard warranty for any defects caused by corrosion. This warranty does not include any cosmetic issues or wear and tear from normal use of the product, or misuse or abuse of the product. It is valid only if the equipment is erected to conform with Landscape Structures’ installation instructions and maintained according to the maintenance procedures furnished by Landscape Structures Inc. Maintenance is particularly critical in regions where dirt and/or sand may cause abrasion of the fabric. This warranty is void if conditions exceed local building codes. 2023 SkyWays® and CoolToppers® Shade Warranty You have our word. President Page 89 of 358 Terms of Sale PRICING: Landscape Structures’ list prices do not include delivery and handling charges. Prices are subject to change without notice. TERMS: To tax-supported institutions and those with established credit: net 30 days from the date of the invoice. 1.5% per month thereafter; freight charges are prepaid and applied to the invoice. TAXES: Landscape Structures’ list prices do not include applicable taxes, if any. WEIGHTS: Weights are approximate and may vary. DELIVERY: If delivery of the equipment is by common carrier, and there is damage or a shortage, notify the carrier at once and sign delivery documents provided by the carrier noting the damage or shortage. Most products are delivered on large pallets and will require a forklift or similar equipment to unload as a unit on the site. INSTALLATION: All playstructures and/or equipment are delivered unassembled and packaged with recyclable materials. For a list of factory-certified installers in your area, please contact your Landscape Structures playground consultant. SERVICE: We have knowledgeable, qualified playground consultants throughout the world who are available to help you before, during and after the sale. Landscape Structures has exclusive design software that features all of our parts and pieces in pull-down menus. With this software, your playground consultant can design a playground layout that meets not only your needs, but ASTM and CPSC standards as well. In addition, we have a full staff of CPSI-certified designers, along with 2-D and 3-D drawing capabilities and custom capabilities to assist you with your playground plans. RETURN POLICY: As an indication of our commitment to our customers, Landscape Structures will accept returns of new structures and/or new equipment purchased within 60 days of the original invoice date. Advance notification is necessary to ensure proper credit. Parts not included in this return policy are custom parts (including PlayShaper® posts), as well as used or damaged parts. A 20% restock fee plus all return freight charges will apply to all product returns. NOTE: All parts are subject to inspection upon return. Parts returned damaged may not receive a full credit. For this reason, it is important that all returned parts are properly packaged to prevent damage while in transit. Please contact your Landscape Structures playground consultant for the shipping address. PRODUCT CHANGES: Because of our commitment to safety, innovation, and value, we reserve the right to change specifications at any time. PLEASE CONTACT US AT: Landscape Structures Inc. 601 7th St. South Delano, MN 55328-8605 888.438.6574 (inside the U.S.A.) 763.972.5200 (outside the U.S.A.) playlsi.com 601 7th Street South • Delano, MN 55328-8605 • 888.438.6574 • 763.972.5200 • Fax 763.972.3185 • playlsi.com #321249 ©2023 Landscape Structures Inc Printed in the U.S.A. All rights reserved. #765-2143Page 90 of 358 ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? INSR ADDL SUBR LTR INSD WVD PRODUCER CONTACT NAME: FAXPHONE (A/C, No):(A/C, No, Ext): E-MAIL ADDRESS: INSURER A : INSURED INSURER B : INSURER C : INSURER D : INSURER E : INSURER F : POLICY NUMBER POLICY EFF POLICY EXPTYPE OF INSURANCE LIMITS(MM/DD/YYYY) (MM/DD/YYYY) AUTOMOBILE LIABILITY UMBRELLA LIAB EXCESS LIAB WORKERS COMPENSATION AND EMPLOYERS' LIABILITY DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) AUTHORIZED REPRESENTATIVE EACH OCCURRENCE $ DAMAGE TO RENTEDCLAIMS-MADE OCCUR $PREMISES (Ea occurrence) MED EXP (Any one person) $ PERSONAL & ADV INJURY $ GEN'L AGGREGATE LIMIT APPLIES PER:GENERAL AGGREGATE $ PRO-POLICY LOC PRODUCTS - COMP/OP AGGJECT OTHER:$ COMBINED SINGLE LIMIT $(Ea accident) ANY AUTO BODILY INJURY (Per person) $ OWNED SCHEDULED BODILY INJURY (Per accident) $AUTOS ONLY AUTOS HIRED NON-OWNED PROPERTY DAMAGE $AUTOS ONLY AUTOS ONLY (Per accident) $ OCCUR EACH OCCURRENCE CLAIMS-MADE AGGREGATE $ DED RETENTION $ PER OTH- STATUTE ER E.L. EACH ACCIDENT E.L. DISEASE - EA EMPLOYEE $ If yes, describe under E.L. DISEASE - POLICY LIMITDESCRIPTION OF OPERATIONS below INSURER(S) AFFORDING COVERAGE NAIC # COMMERCIAL GENERAL LIABILITY Y / N N / A (Mandatory in NH) SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. 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. 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(ies) must have ADDITIONAL INSURED provisions or 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). COVERAGES CERTIFICATE NUMBER:REVISION NUMBER: CERTIFICATE HOLDER CANCELLATION © 1988-2015 ACORD CORPORATION. All rights reserved.ACORD 25 (2016/03) CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY) $ $ $ $ $ The ACORD name and logo are registered marks of ACORD FLAGS-1 OP ID: KA 11/29/2022 USI Midwest USI Midwest Youngstown 570 Polaris Parkway Suite 500 Westerville, OH 43082 USI Midwest 877-834-5676 614-796-7840 USIpers@westfieldservices.com Westfield Insurance Company Westfield National Insurance Sawtooth Holdings Inc DBA Flagship Recreation; Simich IV, LLC 1340 Paris Tril N West Lakeland, MN 55082 A X 1,000,000 X X CWP4635072 07/14/2022 07/14/2023 500,000 X 5,000 1,000,000 2,000,000 X 2,000,000 1,000,000A X CWP4635072 07/14/2022 07/14/2023 XX 3,000,000A CWP4635072 07/14/2022 07/14/2023 3,000,000 0X XB WCP4635175 07/14/2022 07/14/2023 1,000,000 1,000,000 1,000,000 Job No. 2210200 - Sunny Square Redevelopment - eGordian - 2210200-008 See Attached: KRAMI-2 Kraus-Anderson Construction Company 501 S. 8th St. Minneapolis, MN 55404 877-834-5676 24112 24120 XCU Included Page 91 of 358 Date HOLDER CODE INSURED'S NAME PAGENOTEPAD: Kraus Anderson Construction Company and others required by the subcontract are included as additional insured on the General Liability with respect to ongoing and completed operations of the named insured for the certificate holder as required by written contract. General Liability coverage is primary and non-contributory. 30 day notice of cancellation applies with the exception of 10 days for nonpayment of premium with respect to the liability policy(s). All policy terms, conditions and exclusions apply. KRAMI-2 2 Sawtooth Holdings Inc DBA Flagship 11/29/2022 FLAGS-1 OP ID: KA Page 92 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: John Powell, Public Works Director Department: Engineering Subject: Purchase of a new VACTOR 2100i from MacQueen Equipment Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Sewer equipment with the capability to vacuum fluid and debris, and use pressurized water for cleaning pipe lines, is essential equipment for maintenance and operation of sewer systems. These are generally referred to as vactor units. Unit 01710 is a 2001 Sterling Vactor; it has exceeded is expected useful life and needs to be replaced. The City owns only one vactor unit. DISCUSSION: The vactor equipment is used both for routine preventative maintenance; and is critical when responding to utility emergencies. Examples include the following: • The City’s goal is to clean and televise sanitary sewers on a rotating basis such that the en tire system has been completed every seven years. • Areas of the system with heavier FOG (Fats-Oil-Grease) are cleaned more frequently. • If a sewer backup occurs, the vactor is available to pump down critical locations. • The vactor can remove obstructions in the system, helping reduce the number of backups. • When maintaining sanitary sewer lift stations, the effluent level in the lift station can be pumped down using the vactor. • Many storm sewer catch basins have shallow sumps in the bottom, to catch sedimen t before it flows into receiving waters. These sumps need to be vacuumed regularly to maintain their capacity. • If there is sediment or debris in a valve box, the vactor is used to clean it out, allowing the valve to be accessed. • The vactor can also be used for hydro-excavation around critical utilities, where typical equipment cannot be used. Staff have been in regular contact with MacQueen Equipment regarding pricing on this piece of equipment. We recently had MacQueen bring a VACTOR 2100i to the Maintenance Facility such that all Public Works Staff would have an opportunity to review the equipment and gain more information on its capabilities. A subcommittee, which included both mechanics, reviewed all the features and options to ensure what has been quoted will meet our needs. The equipment could be available as early as January of 2024. BUDGET IMPACT: Page 93 of 358 The total quote amount, including the VACTOR body and International chassis, is $583,246.76. As noted on the quote, the pricing is based on the Minnesota State Contract. Based on earlier quotes, $535,000 was budgeted for this piece of equipment under the Vehicles object account within the 2023 Sewer Operations Expenses budget (6202.6940). Once the new vactor unit is received, the existing unit will be prepared and put up for auction. Based on recent auction activity, Staff expects a good portion the costs overage will be recovered via auction of the existing vactor unit. ACTION REQUESTED: Approve the purchase of a new VACTOR 2100i per the June 6, 2023 quote from MacQueen Equipment in St. Paul, MN. ATTACHMENTS: NEW VACTOR 2100i MN State Contract Quote- Farmington- 6.6.23 Page 94 of 358 Page 95 of 358 Page 96 of 358 Page 97 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Tony Wippler, Planning Manager Department: Community Development Subject: Amendment to a Planned Unit Development - Trinity Care Center - 905 Elm Street Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Attached, for Council's review and approval is a resolution for a third amendment to a Planned Unit Development (PUD) for the Trinity Care Center campus located at 905 Elm Street. DISCUSSION: Farmington Health Services dba Trinity Care Center is requesting a third amendment to the Planned Unit Development site plan for the property located at 905 Elm Street. There have been two previous amendments approved to the PUD site plan, one in 2016 and the second in 2019. The original PUD site plan was approved by City Council on November 19, 2012 and contained the following proposed site changes: • Construction of an additional (10) bed group home for memory care residents. • The demolition of the remaining hospital building and construction of a utilities addition to the existing skilled nursing center. • The construction of two (2) senior living apartment buildings on the west side of the property. The 2016 PUD site plan amendment made several modifications to the original plan, including: • Removing the two (2) senior living apartment buildings from the plan. • Adds a twenty-nine (29) unit nursing home addition near the north end of the site. • Provides for a reduced front yard setback for the nursing home addition. The setback is reduced from twenty-five (25) feet to eighteen and one-half (18 1/2') feet. • Adds 5,997 square foot addition onto the north side of the existing nursing home for office, storage and delivery space. • Shows a north/south access road that connects from 213th Street W south to the entry drive off of Elm Street. This also shows cross access to the Pellicci Hardware site both at the north and south end of the Pellicci site. The second amendment to the PUD site plan approved in 2019 included the following revisions: • The removal of the north/south access road as it was determined that this access is not needed for fire protection services. Page 98 of 358 • Cross access to the Pellicci Hardware site (3560 213th Street West) was maintained with the second amendment as a proposed access drive was shown that extends from the southern boundary of the Pellicci Hardware site southeast to the Trinity entry drive. Additionally, cross access was provided on the north end of the Trinity site off of 213th Street West to the parking lot on the north end of the Pellicci Hardware site. Necessary easements were required to b e provided for cross access at the two locations to ensure those areas are available for construction of those accesses by the adjacent property owner. The third amendment, which is currently being proposed, consists of the following improvements: • The removal/demolition of approximately 7,700 square feet of the existing nursing home portion of the facility. • The construction of a 21,127 square foot addition onto the east side of the nursing home facility. This addition will largely consist of addition al storage and a additional twenty (20) nursing home units. This addition will also connect into the existing apartment building located in the northeast portion of the site as well as the group home memory care unit on the southeast portion of the site. Current building coverage is approximately 20.3%. With the proposed site work the building coverage will increase to approximately 22.7%. The city's multi-family zone (R-4) allows for a maximum building coverage of 30 percent. Setbacks are not an issue with the proposed expansion. The addition is situated towards the center of the parcel. The required setbacks are as follows: Front yard: 25 feet, Side and Rear yard: 10 feet. The proposed addition well exceeds these requirements. A total of 183 off-street parking stalls are provided on site. This well exceeds the requirements under city code for a senior care facility. Planning Commission Review The Planning Commission held a public hearing regarding this application at its June 13, 2023 regular meeting. The Commission voted 4-0 to recommend approval of the proposed PUD amendment and to forward that recommendation on to the City Council. BUDGET IMPACT: Not applicable ACTION REQUESTED: Adopt Resolution No. R44-23 Approving a Third Amendment to the St. Francis Health Services of Morris, Inc. Planned Unit Development Site Plan. ATTACHMENTS: Trinity Care Center PUD Application 4-2023 TCC SITE PLAN City of Farmington PUD Application and Supporting Docs. for Trinity Care Center 4 -26-2023 Trinity PUD Resolution Page 99 of 358 PLANNED UNIT DEVELOPMENT APPLICATION SUBMITTAL REQUIREMENTS – SEE ATTACHED FORM “A” Signature of Applicant 4-20-2023 Date Applicant: Ben Ryan on behalf of Farmington Health Services Telephone: 320-212-7215 Fax: NA Address: _905 Elm Street Farmington MN 55024 Street City State Zip Code Owner: St. Francis Health Services of Morris, MN Telephone: 320-212-7215 Fax: NA Mailing Address: 801 Nevada Ave. Morris MN 56267 Street City State Zip Code Premises Involved: Parcel ID:14-77200-01-010, Plat: TRINITY HEALTH CARE 1ST ADD, Lot: _1, Block:1, Township: 114, Range: 19, County: Dakota Address/ Legal Description (lot, block, plat name, section, township, range) Fee: $ 300 Mailed 4-26-2023 Paid Current Zoning District R-4 (High Density Residential) Names & Addresses of All Owners: St. Francis Health Services - dba Farmington Health Services/Trinity Care Center Carol Raw (SFHS CEO), 801 Nevada Avenue, Morris, MN 56267 Schematic Plan 1. Planning Commission Action 2. City Council Action Recommended Approval Approved For office use only Recommended Denial Denied Preliminary PUD Plan 1. Public Hearing Set for: 2. Planning Commission Action 3. City Council Action Advertised in Local Newspaper Recommended Approval Approved Recommended Denial Denied Final PUD Plan 1. City Council Action Approved Denied Comments: Conditions Set: Planning division: Date: 9/19 Page 100 of 358 ARCHITECTURAL SITE PLAN FARGO, ND 58104 PH # 701-235-0199 417 MAIN AVE #210 FARGO, ND 58103 PH # 701-365-0418 5306 51ST AVE S SUITE A XXX OPEN SPACE OPEN SPACE EXISTING HARDWARE STORE LABYRINTH EXISTING PARKING EXISTING APARTMENTS DAKOTA COUNTY ROAD #72 - 213TH STREET WESTELM STREETOPEN SPACE OPEN SPACE PROPERTY LINE PROPERTY LINE PROPERTY LINE PROPOSED NEW 21,127 SF 1"=30'-0" NSITE PLAN DISCLAIMER: THIS PLAN IS FOR REFERENCE ONLY. SEE CIVIL PLANS FOR ALL WORK ON THIS SITE. FACILITY SIGN LP LP TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 05 - 16 - 23 REVISIONS A -0 .1 190205 SP GENERAL NOTES: 1"=30'-0" ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: STRUCTURAL ENGINEER: ANDERSON ENGINEERING Pa g e 1 0 1 o f 3 5 8 EXISTING HARDWARE STORE OPEN SPACE DAKOTA COUNTY ROAD #72 - 213TH STREET WEST PROPERTY LINE PROPERTY LINE PROPERTY LINE EXISTING SITE PLAN 1"=120'-0" N N 0 ° 3 ' 5 5 " W 7 6 4 . 1 9 0 N 0 ° 0 ' 2 6 " W 1 8 0 . 0 0 0 N 0 ° 0 ' 2 6 " W 3 5 8 . 2 9 8 N 89°58'51" E 295.825 N 89°59'34" E 1012.940 N 89°59'34" E 85.000 RETENTION POND N 89°55'59.403" E 1351.061 N 1°40'12" W 226.322 N 89°59'34" E 1012.940 N 89°59'34" E 85.000 DETENTION POND TE N T H S T . EL E V E N T H S T . OAK STREET EXISTING APARTMENTS EXISTING APARTMENTS EXISTING APARTMENTS N 89°58'51" E 988.185 Pa g e 1 0 2 o f 3 5 8 C B.S. O M 12 UNITS 29 UNITS P P P P P P P P P SD SD SD SD SD SD SD SD P P P P P P SU B CL BP BPP P P P P JC DNP P PP P P P P PP P RR O CONF O C O O O O F PANTRY DO EBR O PPPPPSD SD SD SD SD SD SD SD P P P P P P P P P P P P P P (B) PP TRAINING KITCHEN DINING JC JC V V GCW C O DATA STOR OTPT DL CL O2ESS TR STOR TR O ELR RR RR JC NS C 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 04 - 20 - 23 REVISIONS: A-2.1 190205 P1 OVERALL PLAN TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - DISCLAIMER: ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: XXX XXX XXX PH # XXX STRUCTURAL ENGINEER: XXX XXX XXX PH # XXX MECHANICAL ENGINEER: XXX XXX XXX PH # XXX ELECTRICAL ENGINEER: XXX XXX XXX PH # XXX ALL DIVISIONS MUST REVIEW THEIR DETAILS; ANY INCOMPLETE DETAILS MUST BE BROUGHT TO THE ATTENTION OF THE OWNER-ARCHITECT PRIOR TO OWNER-CONTRACTOR AGREEMENT SIGNING. FAILURE TO DO SO REQUIRES THE CONTRACTOR AND SUB-CONTRACTORS TO MAKE ADJUSTMENTS TO THE DETAILS AT NO COST TO THE OWNER-ARCHITECT. THE PRODUCTS THAT ARE NOT LISTED ARE TO BE CONFIRMED WITH THE ARCHITECT AND NOT ASSUMED. LIKEWISE, IN ANY DIMENSIONS ARE MISSING, DO NOT SCALE THE PRINTS AND CALL THE ARCHITECT FOR DIRECTION. FAILURE TO DO SO WILL REQUIRE CORRECTIONS BY THE CONTRACTOR RESPONSIBLE AT NO EXTRA COST TO THE OWNER-ARCHITECT. X FIRE PROTECTION: XXX XXX XXX PH # XXX PRELIMINARY PLAN NOT FOR CONSTRUCTION 1"=20'-0" EXISTING APARTMENTS DINING GARDEN 19,100 SF ADDITION O BS CL NM NS CHAPEL PPPP PP P O O ACT M SRR PRR P(B) P P P P O PPPP PPPP STORAGE SU O STOR O JCSTOR 1:12 1:12 1:12 1:12 105' 7 1/4" 7' 1 1 " 30 ' 0 " 7' 7"45' 0"122' 8"40' 5" 59 ' 9 1 / 2 " 35 ' 0 " 79 ' 9 " 24 ' 1 0 " 18' 0"85' 5" 9' 4 3 / 4 " 35' 3"14' 0" 36' 4 1/2" 5' 0 " 10 ' 0 " 25 ' 2 7 / 8 " Pa g e 1 0 3 o f 3 5 8 EL. 100'-0" FINISH FLOOR EL. 110'-1 1/8" TRUSS BRG. 412 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 07 - 18 - 22 REVISIONS A -1 .1 190205 S1 TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - GENERAL NOTES: ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: XXX XXX XXX PH # XXX STRUCTURAL ENGINEER: XXX XXX XXX PH # XXX MECHANICAL ENGINEER: XXX XXX XXX PH # XXX ELECTRICAL ENGINEER: XXX XXX XXX PH # XXX 1/8"=1'-0" 1 NORTH ELEVATION 1/8"=1'-0" 2 EAST ELEVATION 1/8"=1'-0" 3 SOUTH ELEVATION 1/8"=1'-0" LINK LINK STORAGE EXTERIOR ELEVATIONSPa g e 1 0 4 o f 3 5 8 EL. 100'-0" FINISH FLOOR EL. 110'-1 1/8" TRUSS BRG. 412 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 07 - 20 - 22 REVISIONS A-1.1 190205 S1 TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - GENERAL NOTES: ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: XXX XXX XXX PH # XXX STRUCTURAL ENGINEER: XXX XXX XXX PH # XXX MECHANICAL ENGINEER: XXX XXX XXX PH # XXX ELECTRICAL ENGINEER: XXX XXX XXX PH # XXX 1/8"=1'-0" 1 NORTH ELEVATION 1/8"=1'-0" 2 EAST ELEVATION 1/8"=1'-0" 3 SOUTH ELEVATION 1/8"=1'-0" LINK LINK STORAGE LINK 2-HOUR FIRE WALL ACROSS LINK TYPE 2B CONSTRUCTION THIS SIDE OF THE FIRE WALL (NON- COMBUSTIBLE) TYPE 5B CONSTRUCTION THIS SIDE OF THE FIRE WALL (ANY MATERIAL) TO MATCH EXISTING MEMORY CARE BUILDING FFE - 97'-0" (36" LOWER THAN NH FFE) UTILITY BRICK MATCH EXISTING EIFS MATCH EXISTING EXISTING NURSING HOME EXISTING NURSING HOME SIDEWALK TYPE 2B CONSTRUCTION THIS SIDE OF THE FIRE WALL (NON- COMBUSTIBLE) TYPE 5B CONSTRUCTION THIS SIDE OF THE FIRE WALL (ANY MATERIAL) TO MATCH EXISTING MEMORY CARE BUILDING 2-HOUR FIRE WALL ACROSS LINK LINK EXISTING NURSING HOME FFE - 105'-0" (60" HIGHER THAN NH FFE) EXTERIOR ELEVATIONSPa g e 1 0 5 o f 3 5 8 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 06 - 29 - 22 REVISIONS: A -2 .2 190205 P1 OVERALL ROOF PLAN TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - DISCLAIMER: ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: XXX XXX XXX PH # XXX STRUCTURAL ENGINEER: XXX XXX XXX PH # XXX MECHANICAL ENGINEER: XXX XXX XXX PH # XXX ELECTRICAL ENGINEER: XXX XXX XXX PH # XXX ALL DIVISIONS MUST REVIEW THEIR DETAILS; ANY INCOMPLETE DETAILS MUST BE BROUGHT TO THE ATTENTION OF THE OWNER-ARCHITECT PRIOR TO OWNER-CONTRACTOR AGREEMENT SIGNING. FAILURE TO DO SO REQUIRES THE CONTRACTOR AND SUB-CONTRACTORS TO MAKE ADJUSTMENTS TO THE DETAILS AT NO COST TO THE OWNER-ARCHITECT. THE PRODUCTS THAT ARE NOT LISTED ARE TO BE CONFIRMED WITH THE ARCHITECT AND NOT ASSUMED. LIKEWISE, IN ANY DIMENSIONS ARE MISSING, DO NOT SCALE THE PRINTS AND CALL THE ARCHITECT FOR DIRECTION. FAILURE TO DO SO WILL REQUIRE CORRECTIONS BY THE CONTRACTOR RESPONSIBLE AT NO EXTRA COST TO THE OWNER-ARCHITECT. X FIRE PROTECTION: XXX XXX XXX PH # XXX 1"=20'-0" PRELIMINARY PLAN NOT FOR CONSTRUCTION PENTHOUSE COURTYARD Pa g e 1 0 6 o f 3 5 8 NOTE: SEE STRUCTURAL DRAWINGS FOR INFO. ON CONCRETE, DECKING, JOISTS AND REINFORCING. CONTRACTOR TO MAKE SURE ALL PENETRATIONS IN THE BUILDING ENVELOPE (INTERIOR & EXTERIOR) ARE ALL SEALED AIR TIGHT. ALL POTENTIAL OPENINGS SHOULD TAPPED, CAULKED, WEATHERSTRIPPED ETC. 1. 2. LOW/HIGH ROOF WALL SECTION 1/2"=1'-0" 3 EL. 108'-0" 10 MIL. POLY UNDER INSUL. MANSARD ROOF T.O. PARAPET EXT. WALL SECTION 1/2"=1'-0" 1 F .F . CONT. THRU WALL FLASHING TO EXTEND A MIN. OF 6" ABOVE MORTAR NET WEEPS @ 32" OC W/ MORTAR NET 12"H UTILITY BRICK APPROVED VAPOR BARRIER BY ROOF MANUFACTURER EL. 100'-0" EL. 115'-7" 1/2" BOND BREAKER GROUT BOTTOM 2 COURSES SOLID THRU WALL FLASHING BACK FLASHING EL. 112'-8 3/8" JST. BRG. EL. 112'-0" B.O. SOFFIT FLOOR AND CEILING RUNNERS - (NOT SHOWN) - CHANNEL SHAPED, FABRICATED FROM MIN 0.0329 IN., BARE METAL THICKNESS (NO. 20 MSG) CORROSION-PROTECTED STEEL, THAT PROVIDE A SOUND STRUCTURAL CONNECTION BETWEEN STEEL STUDS AND ADJACENT ASSEMBLIES SUCH AS FLOORS, CEILINGS AND/OR OTHER WALLS. ATTACHED TO FLOOR AND CEILING ASSEMBLIES WITH STEEL FASTENERS SPACED NOT GREATER THAN 24 IN. OC. STEEL STUDS - MIN 0.0329 IN., BARE METAL THICKNESS (NO. 20 MSG) CORROSION PROTECTED STEEL STUDS, MIN 3-1/2 IN. WIDE, COLD FORMED, DESIGNED IN ACCORDANCE WITH THE CURRENT EDITION OF THE SPECIFICATION FOR THE DESIGN OF COLD-FORMED STEEL STRUCTURAL MEMBERS BY THE AMERICAN IRON AND STEEL INSTITUTE (AISI). ALL DESIGN DETAILS ENHANCING THE STRUCTURAL INTEGRITY OF THE WALL ASSEMBLY, INCLUDING THE AXIAL DESIGN LOAD OF THE STUDS, SHALL BE AS SPECIFIED BY THE STEEL STUD DESIGNER AND/OR PRODUCER, AND SHALL MEET THE REQUIREMENTS OF ALL APPLICABLE LOCAL CODE AGENCIES. THE MAX STUD SPACING SHALL NOT EXCEED 24 IN. OC. STUDS ATTACHED TO FLOOR AND CEILING RUNNERS WITH 1/2 IN. LONG TYPE S-12 STEEL SCREWS ON BOTH SIDES OF THE STUDS OR BY WELDED OR BOLTED CONNECTIONS DESIGNED IN ACCORDANCE WITH THE AISI SPECIFICATIONS. LATERAL SUPPORT MEMBERS - (NOT SHOWN) - WHERE REQUIRED FOR LATERAL SUPPORT OF STUDS, SUPPORT SHALL BE PROVIDED BY MEANS OF STEEL STRAPS, CHANNELS OR OTHER SIMILAR MEANS AS SPECIFIED IN THE DESIGN OF A PARTICULAR STEEL STUD WALL SYSTEM. GYPSUM BOARD - NOM 5/8 IN. THICK GYPSUM PANELS WITH SQUARE EDGES, APPLIED HORIZONTALLY OR VERTICALLY. FOR THE 1 HOUR SINGLE LAYER SYSTEM -WHEN THE GYPSUM BOARD PANELS ARE INSTALLED HORIZONTALLY THE JOINTS ARE TO BE STAGGERED BY A MINIMUM OF 12 IN. ON OPPOSITE SIDES OF ASSEMBLY, THEY ARE TO BE SECURED ON EACH SIDE OF THE STUDS WITH 1-1/4 IN. LONG TYPE S-12 BUGLE HEAD STEEL SCREWS SPACED 8 IN. OC TO THE TOP AND BOTTOM TRACKS AND IN THE FIELD WITH SCREWS 1 IN. AND 4 IN. FROM THE HORIZONTAL JOINTS. WHEN THE GYPSUM BOARD PANELS ARE INSTALLED VERTICALLY ALL VERTICAL JOINTS MUST BE CENTERED OVER STUDS AND STAGGERED MIN 1 STUD CAVITY ON OPPOSITE SIDES OF STUDS. GYPSUM BOARD SECURED TO STUDS WITH 1-1/4 IN. LONG TYPE S-12 STEEL SCREWS SPACED 8 IN. OC TO THE TOP AND BOTTOM TRACKS AND IN THE FIELD WITH SCREWS 1 IN AND 4 IN. FROM THE PERIMETER. UNITED STATES GYPSUM CO - 5/8 IN. THICK TYPE USGX FASTENERS - (NOT SHOWN) - FOR USE WITH ITEM 5 - TYPE S-12 STEEL SCREWS USED TO ATTACH PANELS TO RUNNERS AND STUDS. SINGLE LAYER SYSTEMS: 1 IN. LONG FOR 1/2 AND 5/8 IN. THICK PANELS OR 1-1/4 IN. LONG FOR 3/4 IN. THICK PANELS, SPACED 8 IN. OC WHEN PANELS ARE APPLIED HORIZONTALLY, OR 12 IN. OC WHEN PANELS ARE APPLIED VERTICALLY. SPRAY FOAM - ALL EXTERIOR WALL STUD CAVITIES JOINT TAPE AND COMPOUND - VINYL OR CASEIN, DRY OR PREMIXED JOINT COMPOUND APPLIED IN TWO COATS TO JOINTS AND SCREW HEADS OF OUTER LAYERS. PAPER TAPE, NOM 2 IN. WIDE, EMBEDDED IN FIRST LAYER OF COMPOUND OVER ALL JOINTS OF OUTER LAYERS. PAPER TAPE AND JOINT COMPOUND MAY BE OMITTED WHEN GYPSUM BOARDS ARE SUPPLIED WITH SQUARE EDGES. SIDING, BRICK OR STUCCO - ALUMINUM, VINYL OR STEEL SIDING, BRICK VENEER OR STUCCO, MEETING THE REQUIREMENTS OF LOCAL CODE AGENCIES. BRICK VENEER ATTACHED TO STUDS WITH CORRUGATED METAL WALL TIES ATTACHED TO EACH STUD WITH STEEL SCREWS, NOT MORE THAN EACH SIXTH COURSE OF BRICK. CAULKING AND SEALANTS - A BEAD OF ACOUSTICAL SEALANT APPLIED AROUND THE PARTITION PERIMETER FOR SOUND CONTROL. UNITED STATES GYPSUM CO - TYPE AS * BEARING THE UL CLASSIFICATION MARKEXTERIOR WALL SYSTEM FLOOR SLAB SYSTEM FOUNDATION WALL 4 IN. CONCRETE FLOOR SLAB (SEE PLANS FOR LOCATION) (SEE STRUCTURAL DRAWINGS FOR REINFORCING) 6 MIL. POLY 14" POURED CONCRETE WALL 2" RIGID INSULATION (XEPS) (SEE STRUCTURAL DRAWINGS FOR REINFORCING) MINIMUM 6 IN. COMPACTED GRANULAR FILL 6" COMPACTED FILL (SAND) UTILITY FACE BRICK W/ AIR SPACE (VARIES) SEE ELEVATIONS EXTERIOR INSULATION FINISH SYSTEM (E.I.F.S.) AS SHOWN ON ELEVATIONS 2" EXPANDED POLYSTYRENE (EPS) FOAM INSULATION ABOVE BRICK TO ACCEPT E.I.F.S. 2" STYROFOAM "CAVITYMATE" INSULATION BETWEEN BRICK AND GWB ROOF/CEILING SYSTEM INSTALLED AS REQUIRED BY MANUFACTURER TAPERED RIGID INSULATION SYSTEM R-40 AVERAGE STEEL ROOF DECK (1-1/2" SEE STRUCT) STEEL ROOF JOISTS AND BRIDGING (BEARING THE UL CLASSIFICATION MARKING) (BEARING THE UL CLASSIFICATION MARKING) 5/8" (MIN) GYPSUM BOARD (DENS-DECK) (BEARING THE UL CLASSIFICATION MARKING) COLD ROLLED CHANNELS PLACED PERPENDICULAR TO UNDERSIDE OF ROOF JOISTS TO HANG ACOUSTICAL CEILING PANELS HANGER WIRE CEILING PANELS 24 BY 24 IN. LAY-IN PANELS PROTECTED MEMBRANE ROOFING SYSTEM (CLASS B RATING) 2" EPS E.I.F.S. (TYP) 3" SPRAY FOAM (R-20 MIN) T.O. BEAM EL. 124'-9 3/4" B.O. SOFFIT EL. 123'-6 7/8" CLG HGT - T.O. WDW EL. 121'-5" 1 LAYER 5/8" GWB FURRING CHANNELS 4" CONC. FLOOR E.I.F.S. RESIDENT ROOM 2" EPS 5/8" EXT. GRADE GWB T.O. PARAPET EL. 127'-5" CONT. THRU WALL FLASHING CONT. FLASHING 8" METAL STUD WALL 2" EPS E.I.F.S. (TYP) 3" SPRAY FOAM (R-20 MIN) CONT. THRU WALL FLASHING EL. 108'-0" F .F . CONT. THRU WALL FLASHING TO EXTEND A MIN. OF 6" ABOVE MORTAR NET WEEPS @ 32" OC W/ MORTAR NET 12"H UTILITY BRICK EL. 100'-0" GROUT BOTTOM 2 COURSES SOLID THRU WALL FLASHING BACK FLASHING T.O. PARAPET EL. 115'-7" EL. 112'-8 3/8" JST. BRG. EL. 112'-0" B.O. SOFFIT EXTERIOR WALL SYSTEM - CONTINUED MANSARD ROOF SPRAY OR ROLL-ON WATER RESISTIVE MEMBRANE AND AIR BARRIER TIE WIRE (TYP) 1-1/2" COLD ROLLED CHANNEL @ 48" OC 1 LAYER 5/8" GWB GWB CEILING TO FLUSH OUT W/ WINDOW HEAD RETURN HANGER WIRE (TYP) HANGER WIRE (TYP) DEMISING WALL SECTION 1/2"=1'-0" 4 CLG. HTG. 5/8" TYPE X GWB ACOUSTICAL CEILING TILE (TYP) SOUDPROOF INSULATION RESIDENT ROOM 4" CONC. SLAB RESIDENT ROOM 5/8" TYPE X GWB ROOF MEMBRANE (EPDM) STEEL DECKING TAPERED INSULATION SYSTEM 5/8" DENS DECK EL. 108'-6" ACOUSTICAL CEILING TILE (TYP) 4" CONC. SLAB 5 FIRE/SMOKE BARRIER WALL SECTION 1/2"=1'-0" EL. 100'-0" F.F. FLOOR AND CEILING RUNNERS - (NOT SHOWN) - CHANNEL SHAPED, FABRICATED FROM MIN 0.0329 IN. THICK, BARE METAL THICKNESS (NO. 20 MSG) CORROSION- PROTECTED STEEL, THAT PROVIDES A SOUND STRUCTURAL CONNECTION BETWEEN STEEL STUDS AND ADJACENT ASSEMBLIES SUCH AS FLOORS, CEILINGS AND/OR OTHER WALLS. ATTACHED TO FLOOR AND CEILING ASSEMBLIES WITH STEEL FASTENERS SPACED NOT GREATER THAN 24 IN. OC. STEEL STUDS - MIN 0.0329 IN. THICK, BARE METAL THICKNESS (NO. 20 MSG) CORROSION-PROTECTED STEEL STUDS, MIN 3-1/2 IN. WIDE, COLD FORMED, DESIGNED IN ACCORDANCE WITH THE CURRENT EDITION OF THE SPECIFICATION FOR THE DESIGN OF COLD-FORMED STEEL STRUCTURAL MEMBERS BY THE AMERICAN IRON AND STEEL INSTITUTE (AISI). ALL DESIGN DETAILS ENHANCING THE STRUCTURAL INTEGRITY OF THE WALL ASSEMBLY, INCLUDING THE AXIAL DESIGN LOAD OF THE STUDS, SHALL BE AS SPECIFIED BY THE STEEL STUD DESIGNER AND/OR PRODUCER, AND SHALL MEET THE REQUIREMENTS OF ALL APPLICABLE LOCAL CODE AGENCIES. THE MAX STUD SPACING SHALL NOT EXCEED 24 IN. OC. STUDS ATTACHED TO FLOOR AND CEILING RUNNERS WITH 1/2 IN. LONG TYPE S-12 STEEL SCREWS ON BOTH SIDES OF THE STUDS OR BY WELDED OR BOLTED CONNECTIONS DESIGNED IN ACCORDANCE WITH THE AISI SPECIFICATIONS (BEARING WALLS). STUDS TO BE CUT 1/2 TO 3/4 IN. LESS THAN ASSEMBLY HEIGHT AND FRICTION-FITTED INTO FLOOR AND CEILING RUNNERS (NONBEARING WALLS). LATERAL SUPPORT MEMBERS - (NOT SHOWN) - WHERE REQUIRED FOR LATERAL SUPPORT OF STUDS, SUPPORT SHALL BE PROVIDED BY MEANS OF STEEL STRAPS, CHANNELS OR OTHER SIMILAR MEANS AS SPECIFIED IN THE DESIGN OF A PARTICULAR STEEL STUD WALL SYSTEM. GYPSUM BOARD* - NOM 5/8 IN. THICK, 24 TO 54 IN. WIDE GYPSUM PANELS, ATTACHED VERTICALLY OR HORIZONTALLY WITH 1-1/4 IN. LONG TYPE S-12 STEEL SCREWS. WHEN APPLIED VERTICALLY TO STUDS, JOINTS CENTERED OVER STUDS AND STAGGERED ONE STUD CAVITY ON OPPOSITE SIDES OF STUDS AND ATTACHED WITH SCREWS SPACED 8 IN. OC ALONG THE EDGES AND 12 IN. OC IN THE FIELD. WHEN APPLIED HORIZONTALLY TO STUDS, NO DISTANCE REQUIREMENT ON JOINTS ON OPPOSITE SIDES OF STUDS AND ATTACHED WITH SCREWS SPACED 8 IN. OC ALONG THE EDGES AND IN THE FIELD. WHEN USED IN WIDTHS OTHER THAN 48 IN., GYPSUM PANELS TO BE INSTALLED HORIZONTALLY. *UNITED STATES GYPSUM CO - TYPE FRX-G. BATTS AND BLANKETS* - (OPTIONAL, NOT SHOWN) - PLACED IN STUD CAVITIES, ANY GLASS FIBER OR MINERAL WOOL INSULATION BEARING THE UL CLASSIFICATION MARKING AS TO SURFACE BURNING CHARACTERISTICS AND/OR FIRE RESISTANCE. SEE BATTS AND BLANKETS (BKNV OR BZJZ) CATEGORIES FOR NAMES OF CLASSIFIED COMPANIES. JOINT TAPE AND COMPOUND - VINYL OR CASEIN, DRY OR PREMIXED JOINT COMPOUND APPLIED IN TWO COATS TO JOINTS AND SCREW HEADS. PAPER TAPE, NOM 2 IN. WIDE, EMBEDDED IN FIRST LAYER OF COMPOUND OVER ALL JOINT. PAPER TAPE AND JOINT COMPOUND MAY BE OMITTED WHEN GYPSUM BOARDS ARE SUPPLIED WITH SQUARE EDGES. CAULKING AND SEALANTS* - (OPTIONAL, NOT SHOWN) - A BEAD OF ACOUSTICAL SEALANT APPLIED AROUND THE PARTITION PERIMETER FOR SOUND CONTROL. *UNITED STATES GYPSUM CO - TYPE AS FIRE/SMOKE BARRIER WALL SYSTEM U.L. DESIGN NO. U432 1 LAYER 5/8" FRX-G GWB 1 LAYER 5/8" FRX-G GWB FILL ALL VOIDS BETWEEN ROOF DECK AND TOP RUNNER WITH FIRE STOP MATERIAL APPROVED FOR 1-HOUR BY HILTI OR 3M NOTE: ALL PENETRATIONS IN THIS WALL SYSTEM SHALL BE PROPERLY SEALED W/ APPROVED FIRE STOP AND SHALL BE DONE SO ON BOTH SIDES OF WALL ASSEMBLY EXT. WALL SECTION 1/2"=1'-0" 2 10 MIL. POLY UNDER INSUL. 1/2" BOND BREAKER APPROVED VAPOR BARRIER BY ROOF MANUFACTURER T.O. BEAM EL. 112'-8 3/8" ROOF MEMBRANE (EPDM) STEEL DECKING TAPERED INSULATION SYSTEM 5/8" DENS DECK PARK AREA RESIDENT ROOM RESIDENT ROOM EL. 100'-0" F.F. EL. 100'-0" F.F. ACCUSTICAL TILE GRID SYSTEM 1 9 0 2 0 5 K A C PROJECT NO. DRAWN BY DATE COMPUTER NO. SUPERVISION, AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF - REPORT WAS PREPARED BY ME OR UNDER MY DIRECT I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR KIM R. STOKES DATE REG. NO. 601 SHEYENNE ST., HORACE, ND 58047 / 701-282-2850 PRAIRIE DESIGN STUDIO 07 - 18 - 22 REVISIONS A -3 .1 190205 S1 TRINITY CARE FARMINGTON, MN CENTER - ADDITION / REMODEL - GENERAL NOTES: ARCHITECT: PRAIRIE DESIGN STUDIO 601 SHEYENNE ST HORACE, ND 58047 PH # 701-282-2850 CIVIL ENGINEER: XXX XXX XXX PH # XXX STRUCTURAL ENGINEER: XXX XXX XXX PH # XXX MECHANICAL ENGINEER: XXX XXX XXX PH # XXX ELECTRICAL ENGINEER: XXX XXX XXX PH # XXX EL. 108'-6" 1/2"=1'-0" S.D. X/A-X S.D. 5/A-13.1 S.D. 6/A-13.1 S.D. 4/A-13.1 S.D. X/A-X 6" METAL STUD WALL W/ FULL THICK SPRAY INSUL. S.D. X/A-X S.D. X/A-X WALL SECTIONS & NOTES 8" 2" 2' 5 " 8" 2" 8" 6 1 / 2 " 6 1/2" 8' 6 " Pa g e 1 0 7 o f 3 5 8 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA RESOLUTION NO. A RESOLUTION FOR A THIRD AMENDMENT TO THE ST. FRANCIS HEALTH SERVIES OF MORRIS, INC. PLANNED UNIT DEVELOPMENT SITE PLAN WHEREAS, the City Council approved the Schematic Site Plan for the St. Francis Health Services of Morris, Inc. Planned Unit Development (PUD) on the 19th day of November, 2012 and the 12.94 acres known as the St. Francis Trinity Campus and legally described as Lot 1, Block 1, TRINITY HEALTH CARE 1ST ADDITION and rezoned the property to R-5 PUD; and WHEREAS, the original plan, as approved, included the construction of an additional ten (10) bed group home for Memory Care residents, the demolition of the remaining hospital, construction of a utilities addition to the existing skilled nursing care center, and construction of two (2) senior living apartments on the west side of the property. WHEREAS, an amendment to the original plan was approved by the City Council on September 6, 2016 and included the following revisions: removing the two senior living apartments and replacing them with an additional twenty nine (29) unit nursing home addition and additional office, storage and delivery space, the proposed nursing home addition is shown on the amended plans as having a reduced front setback of eighteen and one-half (18 ½’) feet, the parking for the site was changed to a total of 105 off-street parking stalls shown on the proposed plan, provided for a north/south access to the adjacent commercial site (3560 213th Street W) both at the north and south end of the adjacent site. WHEREAS, the second amendment to the PUD site plan includes the following revisions: the removal of the north/south access road, cross access to the adjacent commercial site (3560 213th Street W) is maintained with the proposed amended PUD site plan with an access that will extend from the southerly boundary of the adjacent commercial site southeast to the Triunity entry drive. Additionally, cross access was provided on the north end of the Trinity site off of 213th Street to the parking lot on the north end of the adjacent commercial site. The applicant provided the necessary easements for cross access at the two locations identified on the amended PUD site plan to ensure those areas are available for construction of those accesses by the adjacent property owner. WHEREAS, the Planning Commission held a public hearing on the 13th day of June 2023 after notice of the same was published in the official newspaper of the City and notice sent to surrounding property owners regarding a proposed third amendment to the PUD site plan. NOW, THEREFORE, BE IT RESOLVED, that Farmington Mayor and City Council hereby approves the third amendment to the PUD site plan which consists of the following site improvements: Page 108 of 358 •The removal/demolition of approximately 7,700 square feet of the existing nursing home portion of the facility. •The construction of a 21,127 square foot addition onto the east side of the nursing home facility. This addition largely consists of additional storage area and an additional twenty (20) nursing home units. This addition will also connect into the existing apartment building located in the northeast portion of the site as well as the group home memory care unit on the southeast portion of the site. Adopted by the City Council of the City of Farmington, Minnesota, this 20th day of June 2023. ATTEST: ____________________________ ______________________________ Joshua Hoyt, Mayor Shirley R Buecksler, City Clerk Page 109 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Jared Johnson, Planning Coordinator Department: Community Development Subject: Amendment to a Planned Unit Development - Vita Attiva at South Creek, 5140 216th Street W Meeting: Regular Council - Jun 20 2023 INTRODUCTION: Paul Whiteman, the applicant, has applied for an amendment to the Planned Unit Development (PUD) Agreement for Vita Attiva at South Creek to allow for a monument sign to be located nea r the Vita Attiva amenities building at 5140 216th Street West. DISCUSSION: Background The City first entered into a PUD Agreement for the Vita Attiva at South Creek development in August of 2021. The PUD Agreement outlined approved deviations from zoning requirements in City Code such as reduced setbacks and lot sizes. The PUD Agreement was then amended in July of 2022 to add a deviation to increase the allowed building coverage. PUD Amendment A second amendment to the PUD Agreement is being requested to add an additional deviation to allow for a monument sign that exceeds size requirements in City Code. Per City Code Section 10- 6-3(B)2b, Single-Family Subdivisions and Multi-Family Complexes are allowed one monument sign per street frontage and cannot exceed 50 square feet in area and 5 feet in height. The applicant initially requested approval of a monument sign that was 165 square feet in area and 5.5 feet in height but, after consideration from the Planning Commission, the request has changed to a monument sign that is 135 square feet in area and 4.5 feet in height. PUD's allow for flexibility in zoning standards, including sign requirements. The proposed amendment to the PUD Agreement would allow the proposed sign to deviate from the above -mentioned sign area requirement. Planning Commission The Planning Commission held a public hearing for the proposed amendment to the PUD Agreement at their June 13th meeting. As mentioned earlier, the initial request was for the monument sign to be 165 square feet in area and 5.5 feet tall. During the public hearing, the Planning Commission and several residents of Vita Attiva expressed their concern with the size of the sign as it would be over three times the square footage allowed per code. At the request of the Planning Commission, the Page 110 of 358 applicant agreed to reduce the height of the sign by one fo ot. The proposed monument sign would now be 135 square feet in area and 4.5 feet tall. The PUD amendment would only apply to the sign area. The height of the sign would meet the code requirement. The Planning Commission voted to recommend approval of the amendment to the PUD Agreement with the condition that the height of the sign is reduced by one foot. Monument Sign The proposed monument sign is to be located at grade in between the amenities building and the stormwater pond. The sign would span 30 feet and be centered with the amenities building in the background. The sign spells "Vita Attiva" using letters that will be up-lit from the ground. The letters would be attached to a stone base consisting of light brown tones. The sign would be anchored into the ground. BUDGET IMPACT: Not applicable ACTION REQUESTED: Approve and adopt Resolution No. R45 -23, Approving a Second Amendment to the Vita Attiva at South Creek Planned Unit Development Agreement as it Pertains to a Monument Sign, to allow for a 135 square-foot monument sign to be located at 5140 216th Street West. ATTACHMENTS: Application and Letter 5-24-2023 Plans-Combined Comment from 5069 216th St W Updated Vita Attiva Sign PUD Resolution Page 111 of 358 I-=o~*v>«»<»~Vc-»=-<~a'r=w»w/1 .3“y my .r.,.«..,._,.WW..m '7 430 Third st,Fannlngton,MN 55024 FARMINGTON FarmInglonMN gov PLANNED UNIT DEVELOPMENT APPLICATION Applicant:Vidz‘Telephone:'’DL{D*€‘ax:-’—“ Address:52%3 Z ‘?+h 7%‘rm}b3?’/'9-932 (‘I Street City State Zip Code Owner:P(7'VV\\i/‘31"‘\“'_C’M"fiTelephone:g/?/"'60/"5ZL‘(Fax: Maili?g Address:g (zcl?x CT Lu iC6“\M”‘”"/I/T! Street City State Zip Code Premises Involved:,._ 5/¢{(9 ?n 2&6“9 W,Pam»{¢»,w/64071‘-E»low afwf ( Addressl Legal Description (lot,block,plat name,section,township,range)C [M,i,‘awe,-¢_. Fee:$03>Paid Current Zoning District D Names &Addresses of All Owners: V/+4&4tl»~.t!«,«.,él—¢9/4 4 c.¢ 37 0 /ac)‘<1‘i .49 C»-~wt»..»<~«=.~r»mr s~~=.-Mt 1 SUBMITTAL RE UIREMENTS —SEE ATTACHED FORM }A ‘—-—--—%--54 —25 Signature?fApplicant Date Schematic Plan For office use only 1.Planning CommissionAction Recommended Approval _RecommendedDenial 2.City Council Action Approved Denied Preliminary PUD Plan 1.Public Hearing Set for:Advenised in Local Newspaper 2.Planning Commission Action RecommendedApproval Recommended Denial 3.City Council Action Approved ’Denied Final PUD Plan 1.City Council Action Approved Denied Comments: ConditionsSet: Planning division: Page 112 of 358 VITA ATTIVA AT SOUTH CREEK Vita Attiva Developers 3720 120th ct w.Faribault,MN 55021 Written Statement -Form A Ownership of the land where the Vita Attiva monument sign is owned and operated by Vita Attiva Developers,LLC.The amenity center will eventually be transferred to the HOA and residents once the amenity building and exterior amenities are completed. The general character of Vita Attiva at South Creek is an active adult 55+development that includes villas and townhomes,with luxury amenities that include a 5,000 sq.ft.amenity building with a swimming pool,pickleball courts and tennis courts planned for phase 2 of the development.The amenity building is scheduled to be done by June 2023. The expected time schedule of the 3 total phases is dependent on sales and market conditions, however,we plan to be 100%occupied through 3 phases by the end of 2025. The ultimate ownership and maintenance of the development is currently with the building and land owner,VAD,however,ownership transfer will be shifted to the HOA Management group once the project is completed and accepted fully by the city and county. The total number of dwellings is currently 189 total over the course of 3 phases.We are currently in phase 1 of 3 phases. Page 113 of 358 Pa g e 1 1 4 o f 3 5 8 Pa g e 1 1 5 o f 3 5 8 Pa g e 1 1 6 o f 3 5 8 1 Jared Johnson From:Schultz, Christine Collins <Christine.Schultz@collins.com> Sent:Tuesday, June 13, 2023 11:14 AM To:Jared Johnson Subject:RE: [EXTERNAL]Vita Attiva OK. Thank you for clarifying. That placement sounds even WORSE than on top of the building. This will be directly in front of our only view from the amenities building to the pond. Which was supposed to be seating areas with firepits. Thank you From: Jared Johnson <jjohnson@farmingtonmn.gov> Sent: Tuesday, June 13, 2023 10:52 AM To: Schultz, Christine Collins <Christine.Schultz@collins.com> Subject: RE: [EXTERNAL]Vita Attiva Hi Christine, Thanks for reaching out! The sign won’t be placed on top of the amenities building. It will be anchored into the ground in between the amenities building and the stormwater pond, facing Eaton Avenue. Sorry for any confusion. If you still have concerns, let me know. Thank you! Jared Johnson Planning Coordinator Main: 651-280-6800 | Direct: +1 651-280-6824 430 Third St. Farmington, MN 55024 From: Schultz, Christine Collins <Christine.Schultz@collins.com> Sent: Tuesday, June 13, 2023 10:47 AM To: Jared Johnson <jjohnson@farmingtonmn.gov> Subject: [EXTERNAL]Vita Attiva You don't often get email from christine.schultz@collins.com. Learn why this is important Page 117 of 358 2 Dear Sir, I am a current resident of the Vita Attiva development at 5069 216th St W and I am unable to attend the hearing regarding the amendment for a monument sign for the Vita Attiva Amenities building. I am writing because I would like to be heard on this issue. I strongly oppose any such sign being erected on top of the amenities building. I think it would be more aesthetically pleasing to our community to have it placed on the ground at the Eaton Ave entrance. Thank you for your time and consideration on this matter. Best regards, Christine Schultz CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. PLEASE REPORT SUSPICIOUS EMAILS TO: ITSUPPORT@FARMINGTONMN.GOV You don't often get email from christine.schultz@collins.com. Learn why this is important Page 118 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA RESOLUTION NO. R45-23 A RESOLUTION APPROVING A SECOND AMENDMENT TO THE VITA ATTIVA AT SOUTH CREEK PLANNED UNIT DEVELOPMENT AGREEMENT AS IT PERTAINS TO A MONUMENT SIGN WHEREAS, the City entered into a Planned Unit Development [PUD] Agreement with the Developer of the Vita Attiva at South Creek on August 16, 2021 after review of the Agreement by the Planning Commission and City Council; and WHEREAS, the PUD Agreement was first amended on July 18, 2022, after review of the amendment by the Planning Commission and City Council; and WHEREAS, within the PUD Agreement are the approved deviations from City Code including reduced setbacks and lot sizes, and increased building coverage; and WHEREAS, the Planning Commission held a public hearing on the 13th day of June 2023 after notice of the same was published in the official newspaper of the City and notice sent to surrounding property owners. NOW, THEREFORE, BE IT RESOLVED, that Farmington Mayor and City Council hereby amends #4 of the Vita Attiva at South Creek PUD Agreement for a second time, as follows, with all additions underlined: 4. Zoning. Except as otherwise modified by this Agreement, the land use, design and other requirements and standards of the R-2 and R-3 zoning districts shall apply to the Subject Property with the following exceptions: • Reduce the front yard setback for interior lots within the R-3 zone from 25 feet to 10 feet. • Reduce the minimum lot size within the R-2 zone from 6,000 square feet to 4,300 square feet. • Reduce the minimum lot width within the R-2 zone from 60 feet to 34 feet. • Reduce the size yard setback within the R-2 zone from 6 feet to 5 feet. • Increase the side yard setback on corner lot (second front yard) within the R-2 zone from 20 feet to 25 feet. • Increase the allowed building coverage from 35% to 51% within the R-2 zone. • Increase the maximum allowed square footage of a single monument sign from 50 square feet to 135 square feet. Adopted by the City Council of the City of Farmington, Minnesota, this 20th day of June 2023. ATTEST: ____________________________ ______________________________ Joshua Hoyt, Mayor Shirley R Buecksler, City Clerk Page 119 of 358 REGULAR COUNCIL AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: Chris Regis, Finance Director Department: Finance Subject: 2022 Annual Financial Report and Management Report Meeting: Regular Council - Jun 20 2023 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 financial statements 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 (Annual Report) to provide the City Council, Staff, citizens, investors, and other interested parties with useful information concerning the City's operations and financial position. DISCUSSION: Management assumes full responsibility for the completeness, accuracy, and reliability of the information presented in the Annual Report. 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. The City's financial records have been audited by Malloy, Montague, Ka rnowski, Radosevich & Co., P.A. (MMKR). Based upon their audit, they concluded there was a reasonable basis for rendering an unmodified opinion that the City of Farmington’s financial statements for the fiscal year ended December 31, 2022 are fairly presented in conformity with GAAP. An unmodified 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 2022 results, share their internal control findings, and answer questions. A copy of this year's Management Report, Special Purpose Reports, and the Annual Report are attached. Page 120 of 358 This past year, 2022, was a very good year for the City and should be celebrated. The assets and deferred outflows of resources of the City exceeded liabilities and deferred inflows of resources by $130,869,769 (net position) at the c lose of the most recent fiscal year. Of this amount, $32,465,272 (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 $854,443 in 2022, including an increase of $3,131,441 to governmental activities, and a decrease of $2,276,998 attributable to business-type activities. • The City’s outstanding bonded debt increased by $2,400,334, or 24 percent, during the fiscal year mainly due to the City issuing $3,650,000 of General Obligation Street Reconstruction Bonds, Series 2022A during the year. • The City’s governmental funds reported combined ending fund balances of $25,465,920 at December 31, 2022, an increase of $4,875,354 from the prior year. Approximately 81 percent of this total amount, $20,662,404, is available for use within the City’s constraints and policies. • At the end of the current fiscal year, the unassigned fund balance for the General Fund was $7,829,882, or 46 percent, of 2023 General Fund budgeted expenditures and transfers out. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Farmington for its Annual Report for the year ended December 31, 2021. This was the 13th 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 Annual Report 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 Annual Report continues to meet the Certificate of Achievement program requirements. We will be submitting the 2021 report to the GFOA to determine eligibility for another certificate. The City received the second installment of $1,261,718 from the American Rescue Plan Act (ARPA) in response to the COVID-19 pandemic and the financial stress that the pandemic caused cities in 2022. As of December 31, 2022, the City had only spent $99,363 of the ARPA funds. A single federal audit is required when a non -federal entity expends $750,000 or more in federal grant funds in a fiscal year. Since the City did not expend ARPA funds exceeding that threshold, a single audit was not required. As part of the auditors review of the City's internal control processes and compl iance testing, they identified two matters to communicate with the City Council. The first finding is a lack of segregation of duties in a number of areas, including, but not limited to, controls over payroll. This is considered a material weakness and was also shared with you last year. The lack of segregation of duties is not a reflection of the work of the staff involved. Rather, like other organizations with limited staff, it is a result of the inability to segregate certain duties due to the limited staff size. The second finding is the recording of a prior period adjustment in fiscal 2022 to record certain development related revenues that should have been recognized by the City in Page 121 of 358 the previous year. The prior period adjustment occurred due to a miscom munication over how developer revenues were to be recorded. This issue has been corrected and Staff will record developer revenues correctly in the future. As stated earlier, the responsibility for both the accuracy and completeness of the financial records rests with the City. This is not accomplished by one person. It takes everyone working together to make this possible. I would like to recognize and thank everyone involved. The Finance Department has done an excellent job maintaining the City's financ ial records. Increased customer service has resulted in new processes to learn and educate others. There is additional information to account for and reconcile. It has become more complicated. It requires a high degree of accuracy. They should be very proud of their work. • Thank you to the Human Resources staff for all of their assistance with payroll and the related benefits. Each year, the questions and data requested expand. They have done an excellent job. • City Staff members diligently code and/or review invoices for pa yment, enter receipts, submit supporting documentation, answer our many questions and are very conscientious and conservative with their spending. All of these activities directly contribute to the accuracy and completeness of the City’s financial records and improved financial strength. Thank you to Staff for paying close attention to detail, patience with complying with our numerous accounting requirements, some of which seem very tedious to those outside of Finance and Accounting, and their willingness t o learn new ways to process information. • The auditors did an excellent job. They were organized and asked great questions. Each year, their depth of understanding of the City and its processes and policies has increased. They were very thorough and respectful. Each Staff person was technically strong and they were instrumental in the ongoing reporting for pension accounting and disclosure requirements. • Thank you, Mayor, members of the City Council, and the City Administrator for your willingness to do what you believe is best for the City long-term. It is not easy, as it is a constant balancing act. You have worked hard to strengthen the City’s financial position and have demonstrated your commitment to long-term comprehensive financial planning. BUDGET IMPACT: Not applicable ACTION REQUESTED: Ask any questions you may have of the auditors or City Staff. Once you are comfortable with the information provided, a motion should be made to accept the auditor’s reports. ATTACHMENTS: 2022 Farmington Mgmt Rpt 2022 Farmington Fin Stmts 2022 Farmington Spec Purp Page 122 of 358 Management Report for City of Farmington, Minnesota December 31, 2022 Page 123 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 124 of 358 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, 2022. We have organized this report into the following sections: •Audit Summary •Governmental Funds Overview •Enterprise Funds Overview •Government-Wide Financial Statements •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 our audit. The purpose of this report is solely to provide those charged with governance of the City, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 14, 2023 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 Page 125 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 126 of 358 -1- AUDIT SUMMARY The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the City Council, administration, or those charged with governance of the City. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA, GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2022. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information related to our audit. PLANNED SCOPE AND TIMING OF THE AUDIT We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit. AUDIT OPINION AND FINDINGS Based on our audit of the City’s financial statements for the year ended December 31, 2022: • We have issued an unmodified opinion on the City’s basic financial statements. Our report included a paragraph emphasizing the City’s implementation of Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, during the year. Our opinion was not modified with respect to this matter. • We reported two matters involving the City’s internal control over financial reporting that we consider to be material weaknesses. o Due to the limited size of the City’s office staff, the City has limited segregation of duties in certain areas. o The City recorded a material prior period adjustment in fiscal 2022 to record certain development-related revenues that should have been recognized in previous years. • The results of our testing disclosed no instances of noncompliance that are required to be reported under Governmental Auditing Standards. • We reported no findings based on our testing of the City’s compliance with Minnesota laws and regulations. FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS As a part of our audit of the City’s financial statements for the year ended December 31, 2022, we performed procedures to follow-up on the findings and recommendations that resulted from our prior year audit. During our 2021 audit, we noted the City did not pay 1 of 25 disbursement claims tested within the 35-day statutory time limit. There was no similar finding in the current year. Page 127 of 358 -2- OTHER OBSERVATIONS AND RECOMMENDATIONS Deposit Sweep Account Minnesota Statutes § 118A.03 requires banks holding local government entity deposits to protect the deposits from custodial credit risk (the risk of loss in the event of a bank failure) by providing adequate insurance, bond, or pledged collateral to cover amounts “on deposit at the close of the financial institution’s banking day.” Some banks utilize arrangements under which governmental entities’ deposit balances in excess of Federal Deposit Insurance Corporation limits are swept out of their depository accounts daily into other investments or to depository accounts at other banks. An issue has arisen with some sweep account arrangements, caused by a lag between the timing of when the primary bank’s records show the funds being swept out of its account and when the receiving bank’s records acknowledge receipt of the funds. If the receiving bank’s records do not show the transferred funds arriving the same business day as the primary bank shows them being swept out, the funds in transit would legally still be considered in the custody of the primary depository at the end of the banking day. This would potentially subject any excess deposits to custodial credit risk and not complying with statutory requirements. The Minnesota Office of the State Auditor (OSA) has added audit requirements to test such sweep arrangements in their Legal Compliance Audit Guide. In addition, recent bank failures have placed additional emphasis on the importance of protecting local government deposits from custodial credit risk. We recommend the City review the terms of any sweep arrangement it has in place or is considering and verify that the financial institutions on both sides of the sweep transaction are recognizing the transfer of funds the same banking day. Credit Card Transactions Minnesota cities have the authority to make purchases using credit cards issued on behalf of their city. Credit card purchases are becoming more commonplace, especially with the proliferation of e-commerce, and have consequently been garnering increased scrutiny from oversight agencies. The statutes authorizing credit card use by cities restrict their use to purchases made on behalf of a city, do not permit personal use of the credit card by the card user, and specify they should only be used by employees authorized to make purchases. Employees are personally liable for unauthorized credit card purchases. Purchases made with credit cards must comply with other applicable state laws, including the requirement that all claims presented for payment must be in writing and itemized. In its Statement of Position (SOP) on credit card use, the OSA has clarified that the statement from the credit card company lacks sufficient detail to comply with this requirement and, therefore, “public entities using credit cards must retain the invoices and receipts needed to support the items charged in the bill from the credit c ard company.” The SOP also states that the individual vendors providing the goods or services should be listed on the claims list provided to a city council for review and approval, rather than the credit card company. While the authorized use of a credit card to make small purchases offers advantages, such as convenience and expedited purchasing, the ability of the credit card users to make a city liable for purchases that are improper or not in compliance with statutory requirements is an added risk rel ated to such transactions. The OSA recommends that a robust credit card policy be established by public entities allowing credit card purchases, which clearly delineates the requirements for use, supporting documentation required, and the review and approval process for credit card purchases. The OSA also recommends that cities obtain signed written acknowledgement of the policy from all authorized card users. Page 128 of 358 -3- SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2022. However, the City implemented the following governmental accounting standard during the fiscal year: • The City implemented GASB Statement No. 87, Leases, during fiscal year ended December 31, 2022. This standard changed the way lease transactions are reported by the City, and resulted in a restatement that reduced beginning government activities net position and fund balance in the General Fund by $80,271 in the current year. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: • Other Post-Employment Benefits (OPEB) and Pension Benefits – The City has recorded liabilities and activity for pension benefits and OPEB. These obligations are calculated using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions, including projected changes, healthcare insurance costs, investment returns, retirement ages, proportionate share, and employee turnover. • Depreciation/Amortization – Management’s estimates of depreciation/amortization expense are based on the estimated useful lives of the assets. • 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. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures included in the notes to the basic financial statements related to OPEB and pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and complex estimates involved in determining the disclosures. The financial statement disclosures are neutral, consistent, and clear. Page 129 of 358 -4- DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no significant difficulties in dealing with management in performing and completing our audit. CORRECTED AND UNCORRECTED MISSTATEMENTS Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Where applicable, management has corrected all such misstatements, including the prior period adjustment discussed earlier in this management report. There were no additional misstatements detected as a result of audit procedures that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. DISAGREEMENTS WITH MANAGEMENT For purposes of this report, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. MANAGEMENT REPRESENTATIONS We have requested certain representations from management that are included in the management representation letter dated June 14, 2023. 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 relationsh ip and our responses were not a condition to our retention. Page 130 of 358 -5- OTHER MATTERS We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the pension and OPEB-related required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management ’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplementary information accompanying the financial statements, which is not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements, but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Page 131 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 132 of 358 -6- 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 2021 fiscal year, local ad valorem property tax levies provided 44.0 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. Total property taxes levied by all Minnesota cities for taxes payable in 2022 increased 5.9 percent compared to the prior year, and 4.2 percent for taxes payable in 2023. The total tax capacity value of property in Minnesota cities increased about 5.6 percent for the 2022 levy year. The tax capacity values used for levying property taxes are based on the assessed market values for the previous fiscal year (e.g., tax capacity values for taxes levied in 2022 were based on assessed market values as of January 1, 2021), so the trend of change in these tax capacity values lags somewhat behind the housing market and economy in general. The City’s taxable market value increased 7.4 percent for taxes payable in 2021 and 4.9 percent for taxes payable in 2022. The following graph shows the City’s changes in taxable market value over the past 10 years: $– $300,000,000 $600,000,000 $900,000,000 $1,200,000,000 $1,500,000,000 $1,800,000,000 $2,100,000,000 $2,400,000,000 $2,700,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Taxable Market Value Page 133 of 358 -7- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year-to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 8.1 percent and 4.4 percent for taxes payable in 2021 and 2022, respectively. The following graph shows the City’s change in tax capacities over the past 10 years: $– $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 $21,000,000 $24,000,000 $27,000,000 $30,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Local Net Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2020 2021 2022 Average tax rate City 51.0 49.3 50.6 County 24.1 22.7 21.6 School 53.1 50.8 49.5 Special taxing 2.9 2.8 2.4 Total 131.1 125.6 124.1 Rates Expressed as a Percentage of Net Tax Capacity City of Farmington Despite the City historically having a higher dependence on property taxes than the average Minnesota city, the overall tax rate on Farmington residents has been steadily declining in recent years, due to the increasing taxable market value of property within the City. Page 134 of 358 -8- GOVERNMENTAL FUND BALANCES The following table summarizes the changes in the fund balances of the City’s governmental funds during the year ended December 31, 2022, presented both by fund balance classification and by major fund: 2022 2021, Restated Change Fund balances of governmental funds Total by classification Nonspendable 4,135$ 84,453$ (80,318)$ Restricted 4,799,381 4,411,713 387,668 Committed 13,005,454 8,876,306 4,129,148 Unassigned 7,656,950 7,218,094 438,856 Total governmental funds 25,465,920$ 20,590,566$ 4,875,354$ Total by fund General 7,831,517$ 7,331,014$ 500,503$ Federal Aid Special Revenue (82,501) (13,763) (68,738) Debt Service 3,154,949 3,146,223 8,726 Maintenance Capital Projects 1,628,109 1,572,324 55,785 Private Capital Projects 42,300 104,087 (61,787) Spruce Street Capital Projects 1,711,963 (16,069) 1,728,032 Nonmajor 11,179,583 8,466,750 2,712,833 Total governmental funds 25,465,920$ 20,590,566$ 4,875,354$ as of December 31, Governmental Funds Change in Fund Balance Fund Balance In total, the fund balances of the City’s governmental funds increased by $4,875,354 during the year ended December 31, 2022. The 2021 unassigned fund balance of the General Fund has been restated in the table above to reflect both the $80,271 reduction related to the implementation of GASB Statement No. 87, and the increase of $484,801 from the prior-period adjustment recorded by the City in 2022. The increase in restricted fund balances was mainly from resources restricted for park improvements in the (nonmajor) Park Improvement Special Revenue Fund. The increase in committed fund balances of $4,129,148 relates primarily to resources accumulated for capital improvements in the Spruce Street Capital Projects Fund and several nonmajor capital projects funds from bond proceeds, trunk fees, and transfers. Unassigned fund balances also increased $438,856, which is attributable to positive operating results in the General Fund. Page 135 of 358 -9- GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES The following table presents the per capita revenue of the City’s governmental funds for the past three years, along with state-wide averages. We have included the most recent comparative state-wide averages available from the OSA to provide a benchmark for interpreting the City’s data. The amounts received from the typical major sources of governmental fund revenue will naturally vary between cities based on factors such as a city’s stage of development, location, size and density of its population, property values, services it p rovides, and other attributes. It will also differ from year-to-year, due to the effect of inflation and changes in its operation. Also, certain data in these tables may be classified differently than how they appear in the City’s financial statements in order to be more comparable to the state-wide information, particularly in separating capital expenditures from current expenditures. We have designed this section of our management report using per capita data in order to better identify unique or unusual trends and activities of the City. We intend for this type of comparative and trend information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in presenting per capita information is the accuracy of the population count, which for most years is based on estimates. Year 2020 2021 2022 Population 10,000–20,000 20,000–100,000 23,123 23,632 23,654 Property taxes 529$ 557$ 564$ 580$ 611$ Tax increments 36 49 – – – Franchise and other taxes 66 53 11 10 10 Special assessments 41 56 18 12 23 Licenses and permits 46 53 25 33 35 Intergovernmental revenues 293 202 128 53 54 Charges for services 111 110 39 72 96 Other 39 26 29 24 (4) Total revenue 1,161$ 1,106$ 814$ 784$ 825$ December 31, 2021 City of FarmingtonState-Wide Governmental Funds Revenue per Capita With State-Wide Averages by Population Class The City’s governmental fund revenues for 2022 were $19,489,730, an increase of $964,362 (5.2 percent), or $41 per capita, from the prior year. Property tax revenue was $31 per capita more than last year, due a tax levy increase. Charges for services increased by $24 per capita, which was primarily due to the City now recording water trunk fees in a new Water Trunk Capital Projects Fund established in 2022, rather than in the Water Enterprise Fund. These increases were partially offset by a decrease in other revenues as shown above, mainly from fair value declines on the City’s investment portfolio, due to current market conditions. The City has historically received more of its governmental fund revenue from property taxes than the average Minnesota city, due to the lower than average amount of aid it typically receives from the state. Page 136 of 358 -10- The expenditures of governmental funds will also vary from state-wide averages and from year-to-year, based on the City’s circumstances. Expenditures are classified into three types as follows: • Current – These are typically the general operating type expenditures occurring on an annual basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues. • Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more typically fluctuating significantly from year-to-year. Many of these expenditures are project-oriented and are often funded by specific sources that have benefited from the expenditure, such as special assessment improvement projects. • Debt Service – Although the expenditures for debt service may be relatively consistent over the term of the respective debt, the funding source is the important factor . Some debt may be repaid through specific sources, such as special assessments or redevelopment funding, while other debt may be repaid with general property taxes. The City’s expenditures per capita of its governmental funds for the past three years, together with state-wide averages, are presented in the following table: Year 2020 2021 2022 Population 10,000–20,000 20,000–100,000 23,123 23,632 23,654 Current 131$ 116$ 114$ 114$ 135$ 296 327 256 272 289 124 112 121 112 138 124 107 67 80 82 79 77 12 16 10 754 739 570 594 654 Capital outlay and construction 407 317 115 129 168 Debt service 161 110 126 91 93 41 34 17 16 15 202 144 143 107 108 Total expenditures 1,363$ 1,200$ 828$ 830$ 930$ General government Governmental Funds Expenditures per Capita With State-Wide Averages by Population Class December 31, 2021 City of FarmingtonState-Wide Interest and fiscal charges Public safety Streets and highways Culture and recreation All other Principal Total expenditures in the City’s governmental funds for 2022 were $22,007,853, an increase of $2,395,801 (12.2 percent), or about $100 per capita, from the previous year. Current governmental expenditures for 2022 were $60 per capita more than last year, mainly in the general government, public safety, and public works functions. Contractual salary increases; inflationary increases to employee benefits, utilities, and fuel costs; and an increase in street maintenance contributed to the overall increase. Capital outlay expenditures were $39 per capita more than last year, primarily due to increased street reconstruction activity and the parking lot project started in the current year. Page 137 of 358 -11- 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. 2018 2019 2020 2021 2022 Fund Balances $5,722,071 $5,871,270 $6,202,066 $7,331,014 $7,831,517 Cash (Net)$4,555,548 $4,676,267 $4,837,575 $5,619,633 $6,635,513 Exp and Trans Out $12,801,620 $13,199,638 $14,840,260 $13,811,853 $15,595,683 $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 General Fund Financial Position Year Ended December 31, The City’s General Fund cash and investments, net of interfund borrowing at December 31, 2022 was $1,015,880 higher than at the previous year-end. Total fund balances at December 31, 2022 of $7,831,517 represented an increase of $500,503 from current year activity, as compared to a breakeven budget. As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels as the volume of financial activity has grown. This is an important factor because a government, like any organization, requires a certain amount of equity to operate. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state f unding 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 . Property taxes comprise about 82.2 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 $7,829,882 at the end of the 2022 fiscal year represents approximately 46.4 percent of budgeted expenditures and transfers out for 2023. This is within the City’s policy that calls for maintaining an unassigned fund balance of between 40.0–50.0 percent of the subsequent year’s budgeted expenditures and transfers out. Page 138 of 358 -12- The following graph reflects the City’s General Fund revenue sources for 2022 compared to budget: All Other Licenses and Permits Charges for Services Fines and Forfeits Intergovernmental Property Taxes General Fund Revenue Budget and Actual Budget Actual General Fund revenue for 2022 was $14,668,253, which was $366,392 (2.6 percent) more than budget. Intergovernmental revenue exceeded budget by $312,724, mainly due to Municipal State Aid (MSA) maintenance aid, police training aid, fire aid, and miscellaneous grant revenues. Charges for services were $239,410 higher than budget, due to fire service charges and engineering fees exceeding a conservative budget. “All other” revenues were $217,059 under budget, due to the fair value decline recorded on the City’s investment portfolio. It should be noted that the City’s practice is to hold investments to maturity, in which case these unrealized fair value adjustments would be recovered by the time the individual investments mature. 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: Property Taxes Intergovernmental Fines and Forfeits Charges for Services Licenses and Permits All Other 2018 $9,450,249 $965,250 $60,182 $479,637 $449,350 $221,935 2019 $9,714,270 $1,085,065 $63,561 $502,902 $421,578 $317,205 2020 $10,244,358 $2,261,674 $45,959 $419,761 $588,347 $303,387 2021 $10,555,567 $963,762 $52,340 $613,132 $789,965 $180,816 2022 $12,054,024 $984,811 $58,400 $696,870 $823,729 $50,419 $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 $12,000,000 $13,000,000 General Fund Revenue by Source Year Ended December 31, Total General Fund revenue for 2022 was $1,512,671 (11.5 percent) higher than last year. Property tax revenue increased $1,498,457 from last year, due to a higher certified tax levy. Charges for services increased $83,738, mainly due to the previously mentioned increase in fire service charges and engineering fees. “All other” revenues decreased $130,397 from the prior year, mainly due to the fair value decline on investments. Page 139 of 358 -13- The following graph illustrates the components of General Fund spending for 2022 compared to budget: Parks and Recreation Public Works Public Safety General Government General Fund Expenditures Budget and Actual Budget Actual General Fund expenditures for 2022 were $13,938,074, which was $149,036 (1.1 percent) under budget. Expenditures for public safety were $129,122 under budget in the current year, mainly due to unfilled police positions during 2022. Public works expenditures were also under budget by $125,591, due primarily to unfilled engineering and natural resource positions. Parks and recreation expenditures were over budget by $101,170, because of two maintenance positions added in 2022 that were not in the budget. The following graph presents the City’s General Fund expenditures by function for the last five years: General Government Public Safety Public Works Parks and Recreation Economic Development 2018 $2,248,227 $5,406,394 $2,278,842 $1,217,733 $30,000 2019 $2,369,885 $5,733,766 $2,605,435 $1,209,414 $50,000 2020 $2,695,928 $6,093,624 $2,484,231 $1,145,173 $40,000 2021 $2,620,186 $6,411,904 $2,474,368 $1,303,044 $– 2022 $2,994,602 $6,743,334 $2,769,231 $1,430,907 $– $– $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 General Fund Expenditures by Function Year Ended December 31, Total General Fund expenditures for 2022 were $1,128,572 (8.8 percent) higher than the previous year, with increases in each category shown above. Contractual salary increases; inflationary increases to employee benefits, utilities, and fuel and supply costs; and an increase in street maintenance contributed to the overall increase. Page 140 of 358 -14- ENTERPRISE FUNDS OVERVIEW The City maintains several enterprise funds to account for services the City provides that are financed primarily through fees charged to those utilizing the service. This section of the report provides you with an overview of the financial trends and activities of the City’s enterprise funds, which include the Liquor Operations, Sewer Operations, Solid Waste, Storm Water, Water, and Street Light funds. ENTERPRISE FUNDS FINANCIAL POSITION The following table summarizes the changes in the financial position of the City’s enterprise funds during the year ended December 31, 2022, presented both by classification and by fund: 2022 2021 Change Net position of enterprise funds Total by classification Net investment in capital assets 48,353,192$ 50,773,632$ (2,420,440)$ Restricted – future drinking water treatment plant 2,461,488 2,461,488 – Unrestricted 18,266,640 18,123,198 143,442 Total enterprise funds 69,081,320$ 71,358,318$ (2,276,998)$ Total by fund Liquor Operations 2,035,800$ 1,807,133$ 228,667$ Sewer Operations 18,677,310 19,325,404 (648,094) Solid Waste 1,872,667 2,230,188 (357,521) Storm Water 14,755,806 15,332,726 (576,920) Water 31,395,742 32,335,286 (939,544) Street Light 343,995 327,581 16,414 Total enterprise funds 69,081,320$ 71,358,318$ (2,276,998)$ Enterprise Funds Change in Financial Position Net Position as of December 31, In total, the net position of the City’s enterprise funds decreased by $2,276,998 during the year ended December 31, 2022. The City’s net investment in capital assets decreased by $2,420,440 during the year, mainly due to depreciation, as there were relatively few capital asset additions in the enterprise funds in 2022. All of the City’s enterprise operations had positive operating results for the year prior, excluding the Solid Waste Fund, which ended the majority of its operations the end of 2021. The enterprise funds transferred $3,276,558 to the governmental and internal service funds during the year to support the General Fund and help finance capital improvements. Page 141 of 358 -15- LIQUOR OPERATIONS FUND The following graph presents five years of comparative operating results for the City’s Liquor Operations Fund: 2018 2019 2020 2021 2022 Sales $5,256,645 $5,608,012 $5,347,194 $5,621,602 $6,387,611 Cost of Sales $3,923,968 $4,183,615 $3,984,504 $4,192,176 $4,728,067 Oper Exp $966,336 $1,073,621 $974,201 $1,064,135 $1,212,002 Oper Income $366,341 $350,776 $388,489 $365,291 $447,542 $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 Liquor Operations Fund Year Ended December 31, The City’s Liquor Operations Fund ended 2022. with a total net position of $2,035,800, an increase of $228,667 from the prior year. Of this, $262,988 represents the investment in liquor capital assets, leaving an unrestricted net position of $1,772,812. The Liquor Operations Fund had gross sales of $6,387,611 in 2022, an increase of $766,009 (13.6 percent) from the previous year. The current year sales increase was mainly at the Downtown store, which was closed temporarily during 2021 and relocated to a better site. Gross profit was $1,659,544, about 26.0 percent of sales, which is consistent with recent years. Operating expenses for 2022 increased $147,867 (13.9 percent) from the previous year. Personal and professional services both increased, mainly due to the Downtown store being fully open in the current year. Depreciation/amortization expense also increased in 2022. Page 142 of 358 -16- SEWER OPERATIONS FUND The following graph presents five years of comparative operating results for the City’s Sewer Operations Fund: 2018 2019 2020 2021 2022 Oper Rev $2,045,728 $2,117,934 $2,160,808 $2,260,523 $2,607,594 Oper Exp $1,930,839 $2,310,312 $2,331,935 $2,474,696 $2,604,412 Oper Inc (Loss)$114,889 $(192,378)$(171,127)$(214,173)$3,182 Inc Before Depr $711,639 $421,184 $474,161 $443,607 $662,268 $(500,000) $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 Sewer Operations Fund Year Ended December 31, The Sewer Operations Fund ended 2022 with a total net position of $18,677,310, a decrease of $648,094 from the prior year. Of this, $15,479,145 represents the investment in sewer collection system capital assets, leaving an unrestricted net position of $3,198,165. Operating revenue in the Sewer Operations Fund increased by $347,071 (15.4 percent) from the prior year, due to an increase in sewer rates. Operating expenses for 2022 were $129,716 (5.2 percent) higher than the previous year, mainly in professional services ($129,443 increase), due to increased municipal wastewater charges. Page 143 of 358 -17- SOLID WASTE FUND The following graph presents five years of comparative operating results for the City’s Solid Waste Fund: 2018 2019 2020 2021 2022 Oper Rev $2,071,672 $2,244,569 $2,692,155 $2,854,452 $21,746 Oper Exp $2,101,344 $1,941,102 $2,630,874 $2,566,976 $686,094 Oper Inc (Loss)$(29,672)$303,467 $61,281 $287,476 $(664,348) Inc Before Depr $51,763 $379,383 $162,475 $365,076 $(664,348) $(1,000,000) $(500,000) $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 Solid Waste Fund Year Ended December 31, The Solid Waste Fund ended 2022 with a total net position of $1,872,667, a decrease of $357,521 from the prior year. The entire amount of net position is unrestricted at year-end, as the Solid Waste Fund either sold off or transferred its capital assets in 2022. Operating revenue in the Solid Waste Fund decreased $2,832,706 (99.2 percent) from the prior year, due to the majority of the City’s solid waste operations ending after 2021, and being outsourced to a private contractor. Operating expenses for 2022 were $1,880,882 (73.3 percent) less than the previous year, due to the previously discontinuance of most solid waste operations. The current year expenses of $686,094 were mainly related to the City’s decision to pay the first quarter billing from the new service provider for previous city customers. This was done as part of the transition so customers would not receive two bills in the same quarter because of differences in billing practices between the City and the new service provider. The City was also contractually obligated to provide service for one customer through fiscal 2022 at a set price. Page 144 of 358 -18- STORM WATER FUND The following graph presents five years of comparative operating results for the City’s Storm Water Fund: 2018 2019 2020 2021 2022 Oper Rev $737,115 $1,130,563 $1,149,665 $1,158,564 $1,227,091 Oper Exp $533,465 $553,584 $530,438 $581,402 $719,225 Oper Inc (Loss)$203,650 $576,979 $619,227 $577,162 $507,866 Inc Before Depr $628,404 $1,014,979 $1,059,648 $1,028,358 $970,804 $– $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Storm Water Fund Year Ended December 31, The Storm Water Fund ended 2022 with a total net position of $14,755,806, a decrease of $576,920 from the prior year. Of this, $12,331,346 represents the investment in storm water operation capital assets, leaving an unrestricted net position of $2,424,460. Operating revenue in the Storm Water Fund was increased $68,527 (5.9 percent) from the prior year, as rates for storm water services increased 5.0 percent in 2022. Operating expenses for 2022 were $137,823 (23.7 percent) higher than the previous year, mainly due to increases in spending for materials and supplies and professional services. Page 145 of 358 -19- WATER FUND The following graph presents five years of comparative operating results for the City’s Water Fund: 2018 2019 2020 2021 2022 Oper Rev $1,852,381 $2,281,793 $2,533,753 $2,908,352 $2,238,210 Oper Exp $1,247,662 $1,393,568 $1,604,792 $1,746,446 $1,799,190 Oper Inc (Loss)$604,719 $888,225 $928,961 $1,161,906 $439,020 Inc Before Depr $1,335,659 $1,725,319 $1,920,612 $2,152,855 $1,432,301 $– $400,000 $800,000 $1,200,000 $1,600,000 $2,000,000 $2,400,000 $2,800,000 $3,200,000 Water Fund Year Ended December 31, The Water Fund ended 2022 with a total net position of $31,395,742, a decrease of 939,544 from the prior year. Of this, $20,279,713 represents the investment in water distribution system capital assets, $2,461,488 is restricted for a future drinking water treatment plant, and unrestricted net position is $8,654,541. Operating revenue in the Water Fund for 2022 decreased $670,142 (23.0 percent) from the prior year. Rates for water services increased 4.0 percent in the current year; however, there was a large decrease in nonconsumption-based charges, due to the City creating a new Water Trunk Capital Projects Fund in 2022, and recording trunk fees collected for new developments in that fund rather than in the Water Fund. Water Fund operating expenses for 2022 were $52,744 (3.0 percent) higher than the previous year, mainly due to an increase in materials and supplies costs. Page 146 of 358 -20- STREET LIGHT FUND The following graph presents five years of comparative operating results for the City’s Street Light Fund: 2018 2019 2020 2021 2022 Oper Rev $226,674 $226,971 $232,990 $230,479 $233,899 Oper Exp $180,254 $165,886 $173,604 $180,528 $210,174 Oper Inc (Loss)$46,420 $61,085 $59,386 $49,951 $23,725 $– $50,000 $100,000 $150,000 $200,000 $250,000 Street Light Fund Year Ended December 31, Street Light Fund operating revenue for 2022 increased $3,420 (1.5 percent) from the prior year. Operating expenses were $29,646 (16.4 percent) higher than the previous year, mainly in utilities and other service costs. Unrestricted net position increased $16,414 in 2022, ending the year at $343,995. Page 147 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 148 of 358 -21- GOVERNMENT-WIDE FINANCIAL STATEMENTS In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of the City as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets and long-term liabilities. STATEMENT OF NET POSITION The Statement of Net Position essentially tells you what the City owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources can be used. Therefore, net position is divided into three components: net investment in capital assets, restricted, and unrestricted. The following table presents the components of the City’s net position as of December 31, 2022 and 2021, for governmental activities and business-type activities: 2022 2021, Restated Change Net position Governmental activities Net investment in capital assets 37,033,206$ 36,819,084$ 214,122$ Restricted 10,556,611 9,841,913 714,698 Unrestricted 14,198,632 11,996,011 2,202,621 Total governmental activities 61,788,449 58,657,008 3,131,441 Business-type activities Net investment in capital assets 48,353,192 50,773,632 (2,420,440) Restricted 2,461,488 2,461,488 – Unrestricted 18,266,640 18,123,198 143,442 Total business-type activities 69,081,320 71,358,318 (2,276,998) Total net position 130,869,769$ 130,015,326$ 854,443$ As of December 31, The City’s total net position at December 31, 2022 was $854,443 higher than the previous year-end. The 2021 governmental activities unrestricted net position is restated in the table above to reflect both the implementation of GASB Statement No. 87 and the prior period adjustment recorded by the City in 2022. The City’s net position increased $3,131,441 from current year governmental activities and decreased $2,276,998 from current year business-type activities. The governmental activities net investment in capital assets increased $214,122, due to the relationship between capital asset additions, the rate at which capital assets are depreciated/amortized, and the repayment of the debt issued to construct or acquire the assets. Restricted net position increased $714,698, mainly in the amounts restricted for park improvements, and the amount restricted for state -funded street projects from unspent MSA street aid. The increase in governmental activities unrestricted net position of $2,202,621 in 2022, reflects positive operating results in the City’s governmental funds, along with resources accumulated for future capital needs. Changes to the net position of the business-type activities are as detailed in the previous discussion of the City’s enterprise fund operations. Page 149 of 358 -22- STATEMENT OF ACTIVITIES The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses. The following table presents the change in the net position of the City for the years ended December 31, 2022 and 2021: 2021 Program Expenses Revenues Net Change Net Change Net (expense) revenue Governmental activities General government 3,626,853$ 1,039,332$ (2,587,521)$ (1,688,051)$ Public safety 7,936,364 1,287,983 (6,648,381) (5,412,791) Public works 5,333,328 2,260,040 (3,073,288) 1,135,190 Parks and recreation 2,522,085 917,805 (1,604,280) (1,801,235) Economic development 247,970 83,292 (164,678) (235,554) Interest and fiscal charges 288,751 – (288,751) (189,858) Business-type activities Liquor operations 5,977,403 6,394,060 416,657 469,155 Sewer operations 2,606,288 2,611,202 4,914 (195,631) Solid waste 87,359 50,045 (37,314) 678,549 Storm water 719,225 1,227,091 507,866 734,026 Water 1,814,354 2,539,009 724,655 1,660,004 Street light 210,174 236,117 25,943 51,850 Total net (expense) revenue 31,370,154$ 18,645,976$ (12,724,178) (4,794,346) General revenues Property taxes 14,463,106 13,692,990 Franchise taxes 227,017 229,355 Unrestricted grants 207,501 107,962 Investment earnings (charges)(1,400,011) (155,629) Gain on disposal of capital assets 81,008 – Total general revenues 13,578,621 13,874,678 Change in net position 854,443$ 9,080,332$ 2022 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. The significant net change from public works activity is primarily due to decreases in capital grants and contributions from new special assessments and MSA street aid recognized, as compared to the prior year. The change in investment earnings (charges) is due to the fair value decline of the City’s investment portfolio caused by market conditions in 2022. Page 150 of 358 -23- ACCOUNTING AND AUDITING UPDATES The following is a summary of Governmental Accounting Standards Board (GASB) standards expected to be implemented in the next few years. GASB STATEMENT NO. 96, SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS This statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This statement (1) defines an SBITA; (2) establishes that an SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of an SBITA; and (4) requires note disclosures regarding an SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. An SBITA is defined as a contract that conveys control of the right to use anothe r party’s (an SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange -like transaction. Under this statement, a government generally should recognize a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability. This statement provides an exception for short-term SBITAs with a maximum possible term under the SBITA contract of 12 months, including any options to extend, regardless of their probability of being exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources. This statement requires a government to disclose descriptive information about its SBITAs other than short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other payments not included in the measurement of a subscription liability, principal and interest requirements for the subscription liability, and other essential information. The requirements of this statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. GASB STATEMENT NO. 99, OMNIBUS 2022 The objectives of this statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB statem ents and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this statement are as follows: • Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument. • Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short-term lease, recognition and measurement of a lease liability and a lease asset, and identification of lease incentives. • Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, related to (a) the determination of the public-private and public-public partnership (PPP) term and (b) recognition and measurement of installment payments and the transfer of the underlying PPP asset. Page 151 of 358 -24- • Clarification of provisions in Statement No. 96, Subscription-Based Information Technology Arrangements, related to the SBITA term, classification of an SBITA as a short-term SBITA, and recognition and measurement of a subscription liability. • Extension of the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt. • Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP). • Disclosures related to nonmonetary transactions. • Pledges of future revenues when resources are not received by the pledging government. • Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, related to the focus of the government-wide financial statements. • Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. • Terminology used in Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, to refer to resource flows statements. The requirements of this statement that are effective are as follows: • The requirements related to extension of the use of LIBOR, accounting for SNAP distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement No. 34, as amended, and terminology updates related to Statement No. 53 and Statement No. 63 are effective upon issuance. • The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. • The requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement No. 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter. GASB STATEMENT NO. 100, ACCOUNTING CHANGES AND ERROR CORRECTIONS – AN AMENDMENT OF GASB STATEMENT NO. 62 The primary objective of this statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The requirements of this statement will improve the clarity of the accounting and financial reporting requirements for accounting changes and error corrections, which will result in greater consistency in application in practice. In turn, more understandable, reliable, relevant, consistent, and comparable information will be provided to financial statement users for making decisions or assessing accountability. In addition, the display and note disclosure requirements will result in more consistent, decision useful, understandable, and comprehensive information for users about accounting changes and error corrections. The requirements of this statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter. Earlier application is encouraged. Page 152 of 358 -25- GASB STATEMENT NO. 101, COMPENSATED ABSENCES The objective of this statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. This statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used, but not yet paid in cash or settled through noncash means . A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. This statement requires that a liability for certain types of compensated absences —including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used, but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. With respect to financial statements prepared using the current financial resources measurement focus, this statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. The requirements of this statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. Earlier application is encouraged. Page 153 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 154 of 358 Annual Comprehensive Financial Report City of Farmington, Minnesota Year Ended December 31, 2022 Lynn Gorski – City Administrator Prepared by: Finance Department Page 155 of 358 Page 156 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA Annual Comprehensive Financial Report for the Year Ended December 31, 2022 Lynn Gorski City Administrator Report Prepared by Finance Department Member of Government Finance Officers Association of the United States and Canada Page 157 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 158 of 358 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 Notes to Basic Financial Statements 32–67 REQUIRED SUPPLEMENTARY INFORMATION PERA – General Employees Retirement Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 68 Schedule of City Contributions 68 PERA – Public Employees Police and Fire Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 69 Schedule of City Contributions 69 Farmington Fire Fighters’ Relief Association Schedule of Changes in the Relief Association’s Net Pension Liability (Asset) and Related Ratios 70 Schedule of City Contributions 71 Other Post-Employment Benefits Plan Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 72 Notes to Required Supplementary Information 73–80 CITY OF FARMINGTON Table of Contents Page 159 of 358 Page SUPPLEMENTARY INFORMATION Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds 81 Combining Balance Sheet 82 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 83 Nonmajor Special Revenue Funds 84 Combining Balance Sheet 85–86 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 87–88 Nonmajor Capital Projects Funds 89 Combining Balance Sheet 90–91 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 92–93 Debt Service Fund 94 Combining Balance Sheet by Account 95–96 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances by Account 97–98 Budgetary Comparison Schedules 99 Debt Service Fund 100 Maintenance Capital Projects Fund 101 Private Capital Projects Fund 102 Spruce Street Capital Projects Fund 103 Nonmajor Special Revenue Funds Economic Development Authority 104 Trident Housing Tax Increment 105 Police Donations and Forfeitures 106 K-9 107 Park Improvement 108 Arena 109 Nonmajor Capital Projects Funds Sanitary Sewer Trunk 110 Cable Communications 111 State Aid Construction 112 Fire 113 Storm Water Trunk 114 Recreation 115 Permanent Improvement Revolving 116 General Capital Equipment 117 Parking Lot Project 118 Internal Service Funds 119 Combining Statement of Net Position 120 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 121 Combining Statement of Cash Flows 122 CITY OF FARMINGTON Table of Contents (continued) Page 160 of 358 Page STATISTICAL SECTION (UNAUDITED) STATISTICAL TABLES (UNAUDITED)123 Net Position by Component 124–125 Changes in Net Position 126–129 Fund Balances of Governmental Funds 130–131 Changes in Fund Balances of Governmental Funds 132–133 Tax Capacity Value and Estimated Actual Value of Taxable Property 134–135 Property Tax Rates 136 Principal Property Taxpayers 137 Property Tax Levies and Collections 138 Ratios of Outstanding Debt by Type 139–140 Ratios of General Bonded Debt Outstanding 141–142 Direct and Overlapping Governmental Activities Debt 143 Legal Debt Margin Information 144–145 Pledged Revenue Coverage 146 Demographic and Economic Statistics 147 Principal Employers 148 Full-Time Equivalent City Government Employees by Function 149–150 Operating Indicators by Function 151–152 Capital Assets Statistics by Function/Program 153–154 CITY OF FARMINGTON Table of Contents (continued) Page 161 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 162 of 358 INTRODUCTORY SECTION Page 163 of 358 Page 164 of 358 -i- June 14, 2023 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Farmington, Minnesota, The Annual Comprehensive Financial Report (ACFR) of the City of Farmington, Minnesota (the City) for the fiscal year ended December 31, 2022 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 accounting principles generally accepted in the United States of America. 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 ACFR 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 (GFOA) of the United States and Canada, the American Institute of Certified Public Accountants, Minnesota’s Office of the State Auditor, and city policies. The City’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, 2022, 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 unmodified opinion that the City’s basic financial statements, for the year ended December 31, 2022, are fairly presented in conformity with accounting principles generally accepted in the United States of America. 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. Page 165 of 358 -ii- 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 2010 Census established the City’s population at 21,086, with a current population estimate of 23,654. 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 14.8 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 the City, the opportunity to locate further from the inner core, and the opportunity to live in a community with a “hometown” feel because of its discernable traditional downtown. The City operates under the mayor-council form of organization. The governing City Council, consisting of the mayor and four other councilmembers, is elected at large and on a nonpartisan 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 City Council, for overseeing the day-to-day operations of the City’s 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 began the process to transition its solid waste operations to a private contractor in 2022. It is planned that the operation will be fully discontinued and the fund closed in fiscal 2023. The City also contributes to the senior center operations, ice arena, 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, a building materials and installation company, an electric utility cooperative, an assisted living facility, an independent living senior facility, a transportation company, a trucking company, and manufacturers of dairy products. ISD No. 192 provides a significant economic presence providing employment to approximately 900 people. The Federal Aviation Administration and Installed Building Solutions employ 498 and 230 people, respectively. During 2022, a number of new businesses opened or expanded, including the start of a large expansion of an existing building in the Industrial Park. 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 was higher in 2022 compared to 2021. In 2022, the City issued new construction permits for 96 new single-family units and 43 townhome units. The new residential permits resulted in a total building valuation of $28,407,826. The number of foreclosures in the City remained relatively flat. There were nine foreclosures in the City in 2022, the same number as in 2021 . The City had a total of 91 Notices of Pendency filed in 2022. Page 166 of 358 -iii- Long-Term Planning The City Council meets each year to review changes that have taken place in the City and identify a set of priorities for the next 1–2 years. As an outcome of these meetings, the City Council established four priorities, which include: • Business Growth • Community Engagement • Infrastructure Support • Employee Engagement In working towards these established goals, the City has revised its processes for new development to make it a better experience for developers looking at the City. In addition, as part of the 2022 budget process, the City increased funding for several areas of infrastructure, including street maintenance and trail maintenance. The City Council will continue to strive to fulfill the goals it has set with the ultimate goal being the benefit of our community. During 2022, staff continued to review and revise various capital improvement plans, with an emphasis on those including streets, trails, and equipment. This review and revision process was in line with the City Council’s priority of infrastructure support. The mill and overlay program that began in 2019 continued in 2022 and will continue in future years, along with future street reconstruction projects. The City’s 2040 Comprehensive Plan was completed in 2019. Beginning in late 2022, it was decided to amend the Comprehensive Plan to update the vision of the City that will guide the next stage of planning and development. Additional information about the update of the Comprehensive Plan may be found on the City’s website, www.farmingtonmn.gov. Major Initiatives The City continues to place a high priority on planning for the community’s 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. 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 helped extend the life of some existing roadways and improve the quality and safety of other roads in the City. 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. The City is seeing its average residential home values continue to increase. Page 167 of 358 -iv- 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. City ordinances continue to be reviewed and updated to provide for new business opportunities. The City Council approved the 6th addition of Fairhill Estate at North Creek for 45 lots. The City also approved the 2nd and 3rd additions of Vita Attiva at South Creek for a total of 43 single-family lots and 24 townhome lots. Lastly, the City Council approved the Vermillion Commons 1st Addition and the Whispering Fields 2nd Addition, which consist of 76 townhome lots and 56 single-family lots, respectively. The City continued implementation of the Downtown Redevelopment Plan, including a Downtown Facade Improvement Grant Program. Farmington Municipal Liquor Operations have made tremendous improvements over the past several years. That improvement continued in 2022. During the year, the liquor operation increased sales by $766,009 over 2021 levels and reported operating income of $447,542. It is expected with the relocation of the downtown store to a location on the Highway 3 corridor in 2021, that sales will continue to improve. Store profits have benefited the community and the liquor operation has been able to provide roughly $1.7 million since 2005 to city departments and community organizations. The City continues to collaborate with Dakota County, Dakota County Community Development Agency, Dakota County Regional Chamber of Commerce, the Farmington Business Association, ISD No. 192, nearby communities, and neighboring townships to provide its citizens with various services. Relevant Financial Policies In accordance with the City’s investment policy, the City strives to maintain a fund balance of 40 to 50 percent of the subsequent year’s budgeted expenditures as a minimum fund balance level to provide for cash flow purposes. The City’s debt policy restricts long-term borrowing to capital equipment, public facilities, or infrastructure that have a life of more than five years and cannot be financed from current revenues. The maturity length of that debt shall be below 20 years, with at least 50 percent of the principle retired within 10 years. Cash temporarily idle during the year was invested in U.S. government treasury notes and agency obligations, municipal securities, certificates of deposit, and money market instruments. The City’s investment policy calls for the investment of public funds in a manner that will provide the highest investment return with minimum risk, while meeting the daily cash flow demands of the City. Awards The GFOA of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the year ended December 31, 2021. This is the 13th 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 ACFR. 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 ACFR continues to meet the Certificate of Achievement Program’s requirements and are submitting it to the GFOA of the United States and Canada to determine its eligibility for another certificate. Page 168 of 358 -v- 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, Page 169 of 358 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Farmington Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2021 Executive Director/CEO -vi-Page 170 of 358 Re s i d e n t s Ad m i n i s t r a t i o n Hu m a n Re s o u r c e s Po l i c e Fi n a n c e Pu b l i c W o r k s Ci t y A d m i n i s t r a t o r Ci t y C o u n c i l St r e e t s Ut i l i t y B i l l i n g Pr o g r a m m i n g Fi r e Pa r k s a n d Re c r e a t i o n Co m m u n i t y De v e l o p m e n t Li q u o r Op e r a t i o n s Co m m u n i c a t i o n s En g i n e e r i n g Fa c i l i t i e s In f o r m a t i o n Te c h n o l o g y Bu i l d i n g In s p e c t i o n s Pl a n n i n g a n d Zo n i n g Su r f a c e Wa t e r Sa n i t a r y Se w e r Wa t e r So l i d Wa s t e -vii- Page 171 of 358 -viii- Term Expires Joshua Hoyt Mayor December 31, 2024 Katie Bernhjelm Councilmember December 31, 2022 Nick Lien Councilmember December 31, 2022 Katie Porter Councilmember December 31, 2024 Steve Wilson Councilmember December 31, 2024 Lynn Gorski City Administrator Deanna Kuennen Community Development Director Chris Regis Finance Director Justin Elvestad Fire Chief Julie Flaten Human Resources Director/Assistant City Administrator Kellee Omlid Parks and Recreation Director Gary Rutherford Police Chief John Powell Public Works Director/City Engineer EXECUTIVE STAFF ELECTED OFFICIALS CITY OF FARMINGTON Elected Officials and Executive Staff December 31, 2022 Page 172 of 358 FINANCIAL SECTION Page 173 of 358 Page 174 of 358 -1- INDEPENDENT AUDITOR’S REPORT To the City Council and Management City of Farmington, Minnesota OPINIONS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Farmington, Minnesota (the City) as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of December 31, 202 2, and the respective changes in financial position, and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. BASIS FOR OPINIONS We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibil ities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. EMPHASIS OF MATTER Change in Accounting Principle As described in Note 1 to the basic financial statements, in fiscal 2022, the City adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinion is not modified with respect to this matter. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 Page 175 of 358 -2- RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for 12 months beyond the financial statements date, including any currently known information that may raise substantial doubt shortly thereafter. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. (continued) Page 176 of 358 -3- REQUIRED SUPPLEMENTARY INFORMATION Accounting principles generally accepted in the United States of America require that the management ’s discussion and analysis and the required supplementary information (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the G ASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, whi ch consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. SUPPLEMENTARY INFORMATION Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual fund statements and schedules, as listed in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such 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. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. OTHER INFORMATION Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do no t cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 14, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compli ance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Minneapolis, Minnesota June 14, 2023 Page 177 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 178 of 358 CITY OF FARMINGTON Management’s Discussion and Analysis Year Ended December 31, 2022 -4- As management of the City of Farmington, Minnesota (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2022. 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 and deferred outflows of resources of the City exceeded liabilities and deferred inflows of resources by $130,869,769 (net position) at the close of the most recent fiscal year. Of this amount, $32,465,272 (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 $854,443 from fiscal 2022 activity, including an increase of $3,131,441 attributable to governmental activities, and a decrease of $2,276,998 attributable to business-type activities. • The City’s outstanding debt, including bonds and lease liabilities, increased by $2,400,334, or 24 percent, during the fiscal year, mainly due to the City issuing $3,650,0000 of General Obligation Street Reconstruction Bonds, Series 2022A during the year. • The City’s governmental funds reported combined ending fund balances of $25,465,920 at December 31, 2022, an increase of $4,875,354 from fiscal 2022 activity. Approximately 81 percent of this total, or $20,662,404, is available for use within the City’s constraints and policies. • At the end of the current fiscal year, the unassigned fund balance for the General Fund was $7,829,882, or 46 percent, of 2023 General Fund budgeted expenditures and transfers out. • The City implemented Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, during the year ended December 31, 2022. As described in Note 1 of the notes to basic financial statements, this standard changed the way lease transactions are reported by the City. Implementation resulted in the reporting of a new lease receivable and related deferred inflow of financial resources for an agreement where the City is the lessor, and new “right-to-use” leased assets and related lease liabilities for agreements where the City is the lessee. The implementation also resulted in a restatement of beginning governmental activities net position and fund balance for the General Fund, reducing both by $80,271. • The City also recorded a prior period adjustment in 2022 for certain development-related revenues that should have been recognized by the Ci ty in previous years. The prior period adjustment resulted in a restatement of beginning governmental activities net position and fund balance for the General Fund, increasing both by $484,801. Page 179 of 358 -5- OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. These financial 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 blended component unit on the City’s financial statements in accordance with accounting principles generally accepted in the United States of America. Government-Wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows, 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 financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but unused 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 finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government ’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental 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. Page 180 of 358 -6- 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 six individual major governmental funds. They are as follows: • General Fund • Federal Aid Special Revenue Fund • Debt Service Fund • Maintenance Capital Projects Fund • Private Capital Projects Fund • Spruce Street 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, most special revenue funds, the Debt Service Fund (combined), and most capital projects funds. Budgetary comparison statements or schedules have been provided for these funds to demonstrate compliance with their respective budgets. Proprietary Funds – The City maintains six enterprise funds and four internal service funds within its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide financial 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 financial statements, only in more detail. The proprietary funds 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 financial 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 financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to Basic Financial Statements – The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information – In addition to the basic financial statements and accompanying notes, the financial 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. Furthermore, a statistical section has been included as part of the Annual Comprehensive Financial Report (ACFR) to facilitate additional analysis, and is the third and final section of the report. Page 181 of 358 -7- GOVERNMENT-WIDE FINANCIAL ANALYSIS An analysis of the City’s financial position begins with a review of the government-wide 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 financial position can also be affected by nonfinancial 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 financial position. As presented in the following condensed version of the Statement of Net Position, the City’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $130,869,769 at December 31, 2022. City of Farmington’s Net Position 2022 2021 2022 2021 2022 2021 Current and other assets 40,193,291$ 34,158,685$ 21,631,006$ 22,804,678$ 61,824,297$ 56,963,363$ Capital assets, net 47,611,027 46,526,236 49,866,617 51,439,664 97,477,644 97,965,900 Total assets 87,804,318$ 80,684,921$ 71,497,623$ 74,244,342$ 159,301,941$ 154,929,263$ Deferred outflows of resources 9,527,443$ 5,903,189$ 163,687$ 355,063$ 9,691,130$ 6,258,252$ Current liabilities 5,373,349$ 4,819,176$ 411,720$ 1,463,113$ 5,785,069$ 6,282,289$ Long-term liabilities 29,235,578 16,109,284 2,155,047 1,355,634 31,390,625 17,464,918 Total liabilities 34,608,927$ 20,928,460$ 2,566,767$ 2,818,747$ 37,175,694$ 23,747,207$ Deferred inflows of resources 934,385$ 7,407,172$ 13,223$ 422,340$ 947,608$ 7,829,512$ Net position Net investment in capital assets 37,033,206$ 36,819,084$ 48,353,192$ 50,773,632$ 85,386,398$ 87,592,716$ Restricted 10,556,611 9,841,913 2,461,488 2,461,488 13,018,099 12,303,401 Unrestricted 14,198,632 11,591,481 18,266,640 18,123,198 32,465,272 29,714,679 Total net position 61,788,449$ 58,252,478$ 69,081,320$ 71,358,318$ 130,869,769$ 129,610,796$ Governmental Activities Business-Type Activities Total The largest portion of the City’s net position, $85,386,398, or 65 percent, reflects its investment in capital assets (e.g., land, buildings, machinery and equipment); less any outstanding related debt used to acquire those assets. 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. Restricted net position of $13,018,099 comprised 10 percent of net position at the close of the fiscal year ended December 31, 2022. These assets are subject to external restrictions on how they may be used. The balance of unrestricted net position, $32,465,272, or approximately 25 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. Page 182 of 358 -8- CHANGE IN NET POSITION The following table provides a condensed version of the Statement of Activities for the year ended December 31, 2022, with comparative totals for the year ended December 31, 2021. The City’s total net position increased by $9,080,332, or 7.5 percent, during the current fiscal year. City of Farmington’s Change in Net Position 2022 2021 2022 2021 2022 2021 Revenues Charges for services 3,678,479$ 3,111,555$ 13,026,908$ 15,490,187$ 16,705,387$ 18,601,742$ Operating grants and contributions 1,076,883 1,062,789 30,616 240,598 1,107,499 1,303,387 Capital grants and contributions 833,090 4,106,221 – 476,930 833,090 4,583,151 Property taxes 14,463,106 13,692,990 – – 14,463,106 13,692,990 Franchise taxes 227,017 229,355 – – 227,017 229,355 Unrestricted grants 207,501 107,962 – – 207,501 107,962 Investment earnings (charges)(874,200) (91,107) (525,811) (64,522) (1,400,011) (155,629) Gain on disposal of capital assets 81,008 – – – 81,008 – Total revenues 19,692,884 22,219,765 12,531,713 16,143,193 32,224,597 38,362,958 Expenses General government 3,626,853 2,560,243 – – 3,626,853 2,560,243 Public safety 7,936,364 6,549,508 – – 7,936,364 6,549,508 Public works 5,333,328 3,977,134 – – 5,333,328 3,977,134 Parks and recreation 2,522,085 2,789,326 – – 2,522,085 2,789,326 Economic development 247,970 406,795 – – 247,970 406,795 Interest and fiscal charges 288,751 189,858 – – 288,751 189,858 Liquor – – 5,977,403 5,256,311 5,977,403 5,256,311 Sewer – – 2,606,288 2,459,637 2,606,288 2,459,637 Solid waste – – 87,359 2,566,976 87,359 2,566,976 Storm water – – 719,225 581,402 719,225 581,402 Water – – 1,814,354 1,764,908 1,814,354 1,764,908 Street light – – 210,174 180,528 210,174 180,528 Total expenses 19,955,351 16,472,864 11,414,803 12,809,762 31,370,154 29,282,626 Change in net position before transfers (262,467) 5,746,901 1,116,910 3,333,431 854,443 9,080,332 Transfers 3,393,908 1,831,571 (3,393,908) (1,831,571) – – Change in net position 3,131,441 7,578,472 (2,276,998) 1,501,860 854,443 9,080,332 Net position – beginning, as previously reported 58,252,478 50,674,006 71,358,318 69,856,458 129,610,796 120,530,464 Net effect of change in accounting principle (80,271) – – – (80,271) – Prior period adjustment 484,801 – – – 484,801 – Net position – beginning, as restated 58,657,008 50,674,006 71,358,318 69,856,458 130,015,326 120,530,464 Net position – ending 61,788,449$ 58,252,478$ 69,081,320$ 71,358,318$ 130,869,769$ 129,610,796$ Governmental Activities Business-Type Activities Total Governmental Activities – Governmental activities increased the City’s net position by $3,131,441. Charges for services were higher than last year, mainly due to trunk fees collected in the City’s new (nonmajor) Water Trunk Capital Projects Fund. Capital grants and contributions decreased, due to large new special assessment levies and state aid for street construction projects in the previous year. Revenue from property taxes increased, due to an increase in the adopted general levy. The decline in investment earnings (charges) relates to unrealized fair value declines on the City’s portfolio of investments less favorable market conditions. Governmental activities expenses increased $3,482,487 from the previous year with the increase mainly in the general government, public safety, and public works functions. Contractual salary increases; inflationary increases to employee benefits, utilities, and fuel costs; and an increase in street maintenance contributed to the overall increase. Business-Type Activities – Business-type activities increased the City’s net position before transfers by $1,116,910. As further detailed in the discussion of the City’s major enterprise funds later in this management’s discussion and analysis, program revenues exceeded expenses for all activities but solid waste operations. The City was in the process of transitioning its solid waste and recycling collection operation to a private contractor in 2022, greatly reducing the activity reported in that function compared to prior years. It is anticipated that operations will be fully discontinued, and the related enterprise fund closed in fiscal 2023. Page 183 of 358 -9- GOVERNMENTAL ACTIVITIES Revenues – The following chart illustrates the City’s revenues by source for its governmental activities: Revenues by Source – Governmental Activities 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 General Government Public Safety Public Works Parks and Recreation Economic Development Interest and Fiscal Charges Program Revenues $1,039,332 $1,287,983 $2,260,040 $917,805 $83,292 $– Expenses $3,626,853 $7,936,364 $5,333,328 $2,522,085 $247,970 $288,751 $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 $7,500,000 $8,000,000 $8,500,000 Page 184 of 358 -10- BUSINESS-TYPE ACTIVITIES Revenues – The following chart illustrates the City’s revenues by source for its business-type activities: Revenues by Source – Business-Type Activities Expenses – Below is a graph showing the City’s expenses and program revenues, excluding transfers, for its business-type activities: Expenses and Program Revenues – Business-Type Activities Liquor Fund Sewer Operations Solid Waste Storm Water Water Fund Street Light Program Revenues $6,394,060 $2,611,202 $50,045 $1,227,091 $2,539,009 $236,117 Expenses $5,977,403 $2,606,288 $87,359 $719,225 $1,814,354 $210,174 $– $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 Page 185 of 358 -11- FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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 $25,465,920, a 24 percent increase of $4,875,354 from 2022 activity. The increase is mainly attributable to resources accumulated for construction projects, trunk fees, and positive operating results in the General Fund. Committed and unassigned fund balances, which are available for spending at the City’s discretion, had a combined balance of $20,662,404 at year-end. The remainder of the fund balance is either not available for new spending, or available for new spending but limited in use, because it is either nonspendable ($4,135); or restricted: 1) to pay debt service ($3,154,949), 2) for economic development ($304,352), 3) for various police programs ($44,702), 4) for park or recreational capital improvements ($1,079,851), or 5) to pay for future cable communication expenditures ($215,527). 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 20 22, the unassigned fund balance of the General Fund was $7,829,882. As a measure of the General Fund’s liquidity, it may be useful to compare the fund balance to total fund expenditures. The 2022 unassigned fund balance represents approximately 46 percent of total 2023 General Fund budgeted expenditures and transfers out, up from 44 percent for the December 31, 2021 unassigned fund balance as a percentage of the 2022 General Fund budgeted expenditures and transfers out. The ratio of the General Fund’s unassigned fund balance to the subsequent years’ budgeted expenditures and transfers out has increased steadily from 21 percent as of December 31, 2011 to 46 percent as of December 31, 2022. The City Council has increased its commitment to not only sound, comprehensive budgets, but also long-term financial planning. In addition, the City has benefitted from community growth and tight budgetary control of expenditures, which have contributed to the strengthening of the General Fund’s balance over that period. The City 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). As of December 31, 2022, the City’s General Fund balance meets the minimum fund balance guideline. Total fund balances increased by $500,503 in the General Fund during the 2022 fiscal year. Higher than anticipated revenues from licenses and permits, intergovernmental sources, and charges for services; along with expenditures being held under budget in total, contributed to this increase. Federal Aid Special Revenue Fund – The decrease of $68,738 in fund balance was due to allocated investment charges related to the fair value decline of the City’s investment portfolio in 2022. Debt Service Fund – During the year, the City repaid $2,190,000 in bond principal. The fund balance in the Debt Service Fund was relatively stable, increasing $8,726 in 2022. Page 186 of 358 -12- Maintenance Capital Projects Fund – The increase of $55,785 in fund balance was due to the street and park project costs incurred in 2022, being less than anticipated and less than the state aid, investment charges, charges for services, and net transfers in received during the current year. Private Capital Projects Fund – There were no significant projects in this fund during 2022. The decrease in fund balance of $61,787 was due to allocated investment charges related to the fair value decline of the City’s investment portfolio in 2022. Spruce Street Capital Projects Fund – The increase of $1,728,032 in fund balance was due to the bond proceeds and other resources transferred into this fund to finance the full cost of the project exceeding project costs incurred by year-end. Total fund balances in the City’s nonmajor governmental funds increased $2,712,833 in fiscal 2022, to a year-end total of $11,179,583. Financial highlights for some of the significant changes in the City’s nonmajor governmental funds are as follows: Park Improvement Special Revenue Fund – The increase in fund balance of $324,065 is mainly a result of increased park development and dedication fees received from new developments. Sanitary Sewer Trunk Capital Projects Fund – During 2022, charges for services revenues and investment charges resulted in a net increase in fund balance of $151,396, as there were no projects in this fund in 2022. Storm Water Trunk Capital Projects Fund – There were no new projects in this fund in the current year. The increase of $490,186 in fund balance is mainly due to property taxes and trunk charges received from new developments. Water Trunk Capital Projects Fund – During 2022, charges for services revenues and investment charges resulted in a net increase in fund balance of $534,719, as there were no projects in this fund in 2022. Parking Lot Capital Projects Fund – The increase of $898,196 in fund balance was due to the bond proceeds and other resources transferred into this fund to finance the full cost of the project exceeding project costs incurred by year-end. Trail Maintenance Capital Projects Fund – The increase of $166,349 in fund balance is due to transfers in exceeding the planned project costs incurred by year-end. Building Maintenance Capital Projects Fund – The increase of $219,963 in fund balance is due to transfers in exceeding the planned project costs incurred by year-end. 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 Fund – Each year the City reviews the financial performance of its liquor operations. After setting aside a certain amount of funds for operations and administrative transfers, the remaining funds on hand are allocated to community investment and future capital improvements. Liquor operations produced income before transfers of $371,633, a decrease of $94,186 from the prior year, mainly due to increased personnel costs and depreciation/amortization. The net position of the Liquor Operations Fund at the end of 2022 totaled $2,035,800, an increase of $228,667, which is net of the $75,000 in funds contributed to community projects. The cash position for both stores increased from $1,530,326 at December 31, 2021 to $1,636,290 as of December 31, 2022. Page 187 of 358 -13- Sewer Operations Fund – The decrease in net position of $648,094 is primarily due to charges for services not being sufficient to cover depreciation expense. The City began to address the structural pricing deficit by implementing a rate increase, which went into effect January 1, 2016 and is designed to provide sufficient funds over time, along with other planned future rate increases, including the current year rate increase effective January 1, 2022, to cover both operations and depreciation. This fund continues to maintain a significant unrestricted net position of $3,198,165. Solid Waste Fund – The Solid Waste Fund net position decreased by $357,521, mainly due to a significant decline in charges for services as the City transitioned waste and recycling collections to a private contractor during the year. It is anticipated that operations will be completely discontinued, and the fund closed in fiscal 2023. Storm Water Fund – The decrease in net position of $576,920 is primarily due to charges for services not being sufficient to cover operating expenses. This fund continues to maintain a significant unrestricted net position of $2,424,460. Water Fund – The decrease in net position of $939,544 is primarily due to charges for services 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 2017. Over time, this increase, along with other planned fee increases, is designed to cover depreciation. This fund continues to maintain a significant unrestricted net position of $8,654,541. Street Light Fund – The Street Light Fund was established in 2010. By making this a utility fund, all properties within the City, including tax-exempt properties, pay for street lighting. This fund has achieved a modest positive net position of $343,995 at year-end, an increase of $16,414 from last year. 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 $366,392 over budget. Revenue variances from final budget to actual include: • Licenses and permits were $87,029 over budget, due to increased development within the City. • Intergovernmental revenue was $312,724 over budget, mainly due to street maintenance, training reimbursements, and other miscellaneous grants in excess of budget. • Charges for services were $239,410 more than the City’s conservative budget. • Investment earnings (charges) were $220,257 under budget due to the fair value decline on the City’s investment portfolio. As the City generally intends to hold investments to maturity, it is anticipated that this temporary market loss will be recovered when the investments mature, if not before. Expenditures were $149,036 less than the budgeted amount, mainly in the public safety and public works areas. The City benefited from lower salaries and benefits costs partially attributable to vacant positions. Page 188 of 358 -14- CAPITAL ASSETS AND LONG-TERM DEBT Capital Assets – The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2022 was $97,477,644 (net of accumulated depreciation/amortization). This investment in capital assets includes land, buildings, improvements other than buildings, park facilities, machinery and equipment, vehicles, roads, bridges, infrastructure, intangibles, water mains, water reservoirs, sewer mains, lift stations, and storm water mains. The City’s investment in capital assets for the current fiscal year decreased by 0.5 percent, mainly due to depreciation exceeding a relatively small amount of additions capitalized in the current year. City of Farmington’s Capital Assets 2022 2021 2022 2021 2022 2021 Land and easements 1,658,302$ 1,658,302$ 498,376$ 498,376$ 2,156,678$ 2,156,678$ Construction in progress 2,574,042 – – – 2,574,042 – Buildings 13,297,011 13,732,405 1,333,629 1,538,759 14,630,640 15,271,164 Improvements other than buildings 295,150 350,780 1,497,899 1,591,499 1,793,049 1,942,279 Machinery and equipment 3,899,180 3,746,498 632,716 1,110,177 4,531,896 4,856,675 Infrastructure 25,798,272 27,038,251 – – 25,798,272 27,038,251 Collection/distribution systems – – 45,008,564 46,700,853 45,008,564 46,700,853 Leased vehicles 89,070 – – – 89,070 – Leased buildings – – 895,433 – 895,433 – Total (net of depreciation)47,611,027$ 46,526,236$ 49,866,617$ 51,439,664$ 97,477,644$ 97,965,900$ Governmental Activities Business-Type Activities Total Additional information on the City’s capital assets can be found in Note 5 of the notes to basic financial statements. Long-Term Debt – At the end of the current fiscal year, the City had total debt (bonds and lease liabilities) outstanding of $12,255,334. All city bonded debt is general obligation debt, which is backed by the full faith and credit of the government. Furthermore, at year-end the City has long-term liabilities of $729,491 for unamortized bond premiums, $1,180,688 for compensated absences, $15,961,413 for net pension liabilities, and $1,263,701 for other post-employment benefits. City of Farmington’s Outstanding Debt 2022 2021 2022 2021 2022 2021 General obligation improvement bonds 6,305,000$ 4,120,000$ –$ –$ 6,305,000$ 4,120,000$ Capital improvement bonds 3,510,000 4,035,000 – – 3,510,000 4,035,000 Equipment certificates 905,000 1,105,000 – – 905,000 1,105,000 General obligation revenue bonds – – 530,000 595,000 530,000 595,000 Lease liabilities 83,029 – 922,305 – 1,005,334 – Total debt outstanding 10,803,029$ 9,260,000$ 1,452,305$ 595,000$ 12,255,334$ 9,855,000$ Governmental Activities Business-Type Activities Total The City issued $3,650,000 of general obligation improvement bonds in 2022, and repaid bond principal repayments during 2022 totaled $2,255,000. The City’s credit rating from Standard & Poor’s was raised from “AA” to “AA+” in April 2019, which was affirmed in 2022. 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 $70,719,430, 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 of the notes to basic financial statements. Page 189 of 358 -15- ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City increased its General Fund net operating levy in 2023 by $717,00. The final city total net tax levy for 2023 of $12,749,859 is 6.0 percent higher than the comparable 2022 levy. Of the total General Fund budgeted revenues, including transfers in for 2023, 77.0 percent are from property taxes, including $2.4 million in fiscal disparities revenue. The remaining General Fund budgeted revenues were adjusted to better reflect increased projected building activity and a reduction in intergovernmental-related revenues. Proposed 2023 General Fund expenditures, including transfers out, are estimated at $16,884,783, an increase of 7.3 percent compared to the 2022 budget. The 2023 budget maintains funding for core services—police and fire protection, street maintenance and snow removal, parks and recreation, and administration; and continues long-term funding for the City’s seal coating, trail maintenance, building maintenance, and police and fire equipment. The City’s Capital Improvement Plan provides for the replacement of police vehicles, along with continued replacement of public safety equipment in 2022. For 2023, the City is focused on its four priorities of business growth, community engagement, infrastructure support, and employee engagement; and providing quality core services to its residents. In addition, the City is undertaking an amendment to its 2040 Comprehensive Plan to create a vision that will guide the next stage of planning and development in the City. REQUESTS FOR INFORMATION This ACFR is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this ACFR, or requests for additional financial information, should be directed to the City’s Finance Director at the City of Farmington, 430 Third Street, Farmington, Minnesota 55024; by calling (651) 280-6800; or emailing the request to cregis@FarmingtonMN.gov. Page 190 of 358 BASIC FINANCIAL STATEMENTS Page 191 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 192 of 358 Governmental Business-Type Activities Activities Total Assets Cash and investments 31,574,917$ 16,788,674$ 48,363,591$ Receivables Accounts 591,761 1,330,771 1,922,532 Interest 99,094 60,340 159,434 Property taxes 1,284,848 – 1,284,848 Special assessments 3,121,150 278,875 3,400,025 Due from other governments 1,642,421 23,446 1,665,867 Lease 115,176 – 115,176 Inventory – 687,372 687,372 Prepaid items 49,819 40 49,859 Restricted assets – temporarily restricted Cash for future drinking water treatment plant – 2,461,488 2,461,488 Net pension asset – fire relief 1,714,105 – 1,714,105 Capital assets Not depreciated/amortized 4,232,344 498,376 4,730,720 Depreciated/amortized, net 43,378,683 49,368,241 92,746,924 Total capital assets, net 47,611,027 49,866,617 97,477,644 Total assets 87,804,318 71,497,623 159,301,941 Deferred outflows of resources Pension plan deferments – PERA 8,969,126 159,840 9,128,966 Pension plan deferments – fire relief 497,990 – 497,990 OPEB plan deferments 60,327 3,847 64,174 Total deferred outflows of resources 9,527,443 163,687 9,691,130 Total assets and deferred outflows of resources 97,331,761$ 71,661,310$ 168,993,071$ Liabilities Accounts and contracts payable 728,896$ 193,845$ 922,741$ Accrued salaries and employee benefits payable 236,359 – 236,359 Accrued interest payable 166,779 10,299 177,078 Deposits payable 1,816,899 99,912 1,916,811 Due to other governments 343 107,664 108,007 Unearned revenue 2,424,073 – 2,424,073 Long-term liabilities Due within one year 2,496,917 193,926 2,690,843 Due in more than one year 10,108,847 1,365,821 11,474,668 Net pension liability – due in more than one year 15,441,859 519,554 15,961,413 Total OPEB liability – due in more than one year 1,187,955 75,746 1,263,701 Total long-term liabilities 29,235,578 2,155,047 31,390,625 Total liabilities 34,608,927 2,566,767 37,175,694 Deferred inflows of resources Pension plan deferments – PERA 196,828 13,223 210,051 Pension plan deferments – fire relief 622,381 – 622,381 Lease revenue for subsequent years 115,176 – 115,176 Total deferred inflows of resources 934,385 13,223 947,608 Net position Net investment in capital assets 37,033,206 48,353,192 85,386,398 Restricted for Debt service 5,686,638 – 5,686,638 Economic development 306,852 – 306,852 Police programs 44,702 – 44,702 Park improvements 981,854 – 981,854 Capital projects 313,524 – 313,524 State-funded street projects 1,633,327 – 1,633,327 Fire relief pensions 1,589,714 – 1,589,714 Water Fund – future drinking water treatment plant – 2,461,488 2,461,488 Unrestricted 14,198,632 18,266,640 32,465,272 Total net position 61,788,449 69,081,320 130,869,769 Total liabilities, deferred inflows of resources, and net position 97,331,761$ 71,661,310$ 168,993,071$ CITY OF FARMINGTON Statement of Net Position as of December 31, 2022 See notes to basic financial statements -16- Page 193 of 358 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government Governmental activities General government 3,626,853$ 999,320$ 39,884$ 128$ Public safety 7,936,364 550,052 607,931 130,000 Public works 5,333,328 1,215,397 341,681 702,962 Parks and recreation 2,522,085 913,710 4,095 – Economic development 247,970 – 83,292 – Interest and fiscal charges 288,751 – – – Total governmental activities 19,955,351 3,678,479 1,076,883 833,090 Business-type activities Liquor operations 5,977,403 6,391,785 2,275 – Sewer operations 2,606,288 2,611,202 – – Solid waste 87,359 27,491 22,554 – Storm water 719,225 1,227,091 – – Water 1,814,354 2,533,222 5,787 – Street light 210,174 236,117 – – Total business-type activities 11,414,803 13,026,908 30,616 – Total government 31,370,154$ 16,705,387$ 1,107,499$ 833,090$ General revenues Property taxes Franchise taxes Grants and contributions not restricted to specific programs Investment earnings (charges) Gain on sale of capital assets Transfers Total general revenues and transfers Change in net position Net position – beginning, as previously reported Net effect of change in accounting principle Prior period adjustment Net position – beginning, as restated Net position – ending CITY OF FARMINGTON Statement of Activities Year Ended December 31, 2022 See notes to basic financial statements -17- Page 194 of 358 Governmental Business-Type Activities Activities Total (2,587,521)$ –$ (2,587,521)$ (6,648,381) – (6,648,381) (3,073,288) – (3,073,288) (1,604,280) – (1,604,280) (164,678) – (164,678) (288,751) – (288,751) (14,366,899) – (14,366,899) – 416,657 416,657 – 4,914 4,914 – (37,314) (37,314) – 507,866 507,866 – 724,655 724,655 – 25,943 25,943 – 1,642,721 1,642,721 (14,366,899) 1,642,721 (12,724,178) 14,463,106 – 14,463,106 227,017 – 227,017 207,501 – 207,501 (874,200) (525,811) (1,400,011) 81,008 – 81,008 3,393,908 (3,393,908) – 17,498,340 (3,919,719) 13,578,621 3,131,441 (2,276,998) 854,443 58,252,478 71,358,318 129,610,796 (80,271) – (80,271) 484,801 – 484,801 58,657,008 71,358,318 130,015,326 61,788,449$ 69,081,320$ 130,869,769$ Changes in Net Position Net (Expense) Revenue and -18- Page 195 of 358 Special Revenue – Federal Debt Service General Aid Fund Assets Cash and investments 6,560,121$ 2,338,329$ 3,145,367$ Receivables Accounts 336,150 – – Interest 19,131 7,340 10,830 Property taxes Unremitted 1,168,043 – – Delinquent 116,805 – – Special assessments Delinquent 61 – 432 Noncurrent 2,663 – 2,698,036 Due from other funds 75,392 – – Due from other governments 8,430 – – Lease 115,176 – – Prepaid items 1,635 – – Total assets 8,403,607$ 2,345,669$ 5,854,665$ Liabilities Accounts and contracts payable 307,865$ 4,097$ 1,248$ Deposits payable 29,394 – – Due to other governments 126 – – Due to other funds – – – Unearned revenue – 2,424,073 – Total liabilities 337,385 2,428,170 1,248 Deferred inflows of resources Unavailable revenue – property taxes 116,805 – – Unavailable revenue – special assessments 2,724 – 2,698,468 Unavailable revenue – long-term receivable – – – Lease revenue for subsequent years 115,176 – – Total deferred inflows of resources 234,705 – 2,698,468 Fund balances (deficits) Nonspendable 1,635 – – Restricted – – 3,154,949 Committed – – – Unassigned 7,829,882 (82,501) – Total fund balances (deficits)7,831,517 (82,501) 3,154,949 Total liabilities, deferred inflows of resources, and fund balances 8,403,607$ 2,345,669$ 5,854,665$ CITY OF FARMINGTON Balance Sheet Governmental Funds as of December 31, 2022 See notes to basic financial statements -19- Page 196 of 358 Capital Capital Capital Projects –Projects –Projects – Maintenance Private Spruce Street Nonmajor Total 1,623,375$ 1,799,781$ 1,918,216$ 11,150,317$ 28,535,506$ – 6,000 – 208,873 551,023 4,814 7,371 6,023 34,086 89,595 – – – – 1,168,043 – – – – 116,805 – – – – 493 – – – 419,958 3,120,657 – – – – 75,392 1,633,327 – – 540 1,642,297 – – – – 115,176 – – – 2,500 4,135 3,261,516$ 1,813,152$ 1,924,239$ 11,816,274$ 35,419,122$ 80$ –$ 212,276$ 126,477$ 652,043$ – 1,770,852 – 14,647 1,814,893 – – – 217 343 – – – 75,392 75,392 – – – – 2,424,073 80 1,770,852 212,276 216,733 4,966,744 – – – – 116,805 – – – 419,958 3,121,150 1,633,327 – – – 1,633,327 – – – – 115,176 1,633,327 – – 419,958 4,986,458 – – – 2,500 4,135 – – – 1,644,432 4,799,381 1,628,109 42,300 1,711,963 9,623,082 13,005,454 – – – (90,431) 7,656,950 1,628,109 42,300 1,711,963 11,179,583 25,465,920 3,261,516$ 1,813,152$ 1,924,239$ 11,816,274$ 35,419,122$ -20- Page 197 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 198 of 358 25,465,920$ Capital assets used in governmental activities are not financial resources and,therefore,are not reported in governmental funds. Cost of capital assets 96,197,799 Less accumulated depreciation/amortization (48,590,621) Net pension assets are only recorded in the government-wide financial statements as they are not current financial resources to governmental funds.1,714,105 Long-term liabilities are not payable with current financial resources and,therefore,are not reported in governmental funds. Bonds (10,720,000) Unamortized bond premiums (668,370) Lease liability (83,029) Compensated absences (1,085,260) Net pension liability (15,441,859) Total OPEB liability (1,187,955) 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.(166,779) 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.2,774,982 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. Delinquent property taxes 116,805 Delinquent and deferred special assessments 3,121,150 Long-term receivables 1,633,327 Governmental funds do not report certain long-term amounts related to pensions that are included in net position. Deferred outflows of resources – pension plan deferments 9,467,116 Deferred outflows of resources – OPEB plan deferments 60,327 Deferred inflows of resources – pension plan deferments (819,209) Total net position – governmental activities 61,788,449$ Amounts reported for governmental activities in the Statement of Net Position are different because: as of December 31, 2022 CITY OF FARMINGTON Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds Total fund balances – governmental funds See notes to basic financial statements -21- Page 199 of 358 Special Revenue – Federal Debt Service General Aid Fund Revenues Property taxes 12,054,024$ –$ 2,099,788$ Franchise taxes 145,000 – – Special assessments 1,497 – 531,346 Licenses and permits 823,729 – – Intergovernmental 984,811 99,363 – Charges for services 696,870 – – Fines and forfeits 58,400 – – Investment earnings (charges)(178,657)(68,738) (112,118) Other 82,579 – – Total revenues 14,668,253 30,625 2,519,016 Expenditures Current General government 2,992,925 99,363 – Public safety 6,705,553 – – Public works 2,765,474 – – Parks and recreation 1,428,030 – – Economic development – – – Capital outlay General government 1,677 – – Public safety 37,781 – – Public works 3,757 – – Parks and recreation 2,877 – – Debt service Principal – – 2,190,000 Interest and fiscal charges – – 347,157 Total expenditures 13,938,074 99,363 2,537,157 Excess (deficiency) of revenues over expenditures 730,179 (68,738) (18,141) Other financing sources (uses) Sale of capital assets 75 – – Bonds issued – – 3,650,000 Premium on bonds issued – – 346,246 Leases issued – – – Transfers in 1,427,858 – 91,737 Transfers out (1,657,609)– (4,061,116) Total other financing sources (uses)(229,676) – 26,867 Net change in fund balances 500,503 (68,738) 8,726 Fund balances (deficits) Beginning of year, as previously reported 6,926,484 (13,763) 3,146,223 Net effect of change in accounting principle (80,271) – – Prior period adjustment 484,801 – – Beginning of year, as restated 7,331,014 (13,763) 3,146,223 End of year 7,831,517$ (82,501)$ 3,154,949$ CITY OF FARMINGTON Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended December 31, 2022 See notes to basic financial statements -22- Page 200 of 358 Capital Capital Capital Projects –Projects –Projects – Maintenance Private Spruce Street Nonmajor Total –$ –$ –$ 295,288$ 14,449,100$ – – – 82,017 227,017 – 494 – – 533,337 – – – – 823,729 32,311 – 68,649 83,064 1,268,198 28,223 – – 1,550,164 2,275,257 – – – – 58,400 (40,640) (60,744) (47,508) (285,333) (793,738) – – – 565,851 648,430 19,894 (60,250) 21,141 2,291,051 19,489,730 – 1,537 – 97,521 3,191,346 – – – 129,150 6,834,703 20,653 – 304,268 170,929 3,261,324 34,240 – – 477,001 1,939,271 – – – 241,518 241,518 – – – 17,643 19,320 – – – 809,285 847,066 175,247 – 2,208,041 539,950 2,926,995 13,684 – – 168,605 185,166 – – – 9,417 2,199,417 – – – 14,570 361,727 243,824 1,537 2,512,309 2,675,589 22,007,853 (223,930) (61,787) (2,491,168) (384,538) (2,518,123) – – – 80,174 80,249 – – – – 3,650,000 – – – – 346,246 – – – 92,446 92,446 712,578 – 4,219,200 2,986,118 9,437,491 (432,863) – – (61,367) (6,212,955) 279,715 – 4,219,200 3,097,371 7,393,477 55,785 (61,787) 1,728,032 2,712,833 4,875,354 1,572,324 104,087 (16,069) 8,466,750 20,186,036 – – – – (80,271) – – – – 484,801 1,572,324 104,087 (16,069) 8,466,750 20,590,566 1,628,109$ 42,300$ 1,711,963$ 11,179,583$ 25,465,920$ -23- Page 201 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 202 of 358 4,875,354$ 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 3,339,925 Capital contributions 117,350 Depreciation/amortization expense (2,367,742) Net pension assets are included in net position,but are excluded from fund balances because they do not represent financial resources. 168,897 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 adjustments are also made between the governmental funds and the Statement of Activities for debt premiums,compensated absences,pension liabilities, and OPEB obligations. Debt issued (3,742,446) Principal payments for debt 2,199,417 Debt premiums (221,218) Compensated absences (77,201) Net pension liability (11,147,354) Total OPEB liability (132,276) 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.(52,052) 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.(126,892) 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. Delinquent property taxes 14,006 Delinquent and deferred special assessments (621,938) Long-term receivable 693,394 Governmental funds do not report additions or deletions to certain long-term amounts related to pensions that are included in the change in net position. Deferred outflows of resources – pension plan deferments 3,614,737 Deferred outflows of resources – OPEB plan deferments 9,517 Deferred inflows of resources – pension plan deferments 6,587,963 Change in net position – governmental activities 3,131,441$ CITY OF FARMINGTON Year Ended December 31, 2022 Governmental Funds to the Statement of Activities Amounts reported for governmental activities in the Statement of Activities are different because: Total net change in fund balances – governmental funds Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of See notes to basic financial statements -24- Page 203 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 204 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Property taxes 12,118,136$ 12,054,024$ (64,112)$ Franchise taxes 145,000 145,000 – Special assessments – 1,497 1,497 Licenses and permits 736,700 823,729 87,029 Intergovernmental 672,087 984,811 312,724 Charges for services 457,460 696,870 239,410 Fines and forfeits 50,000 58,400 8,400 Investment earnings (charges)41,600 (178,657) (220,257) Other 80,878 82,579 1,701 Total revenues 14,301,861 14,668,253 366,392 Expenditures Current General government 2,988,895 2,992,925 4,030 Public safety 6,854,456 6,705,553 (148,903) Public works 2,892,022 2,765,474 (126,548) Parks and recreation 1,308,937 1,428,030 119,093 Capital outlay General government 1,200 1,677 477 Public safety 18,000 37,781 19,781 Public works 2,800 3,757 957 Parks and recreation 20,800 2,877 (17,923) Total expenditures 14,087,110 13,938,074 (149,036) Excess of revenues over expenditures 214,751 730,179 515,428 Other financing sources (uses) Sale of capital assets – 75 75 Transfers in 1,427,858 1,427,858 – Transfers out (1,642,609)(1,657,609) (15,000) Total other financing sources (uses)(214,751) (229,676) (14,925) Net change in fund balances –$ 500,503 500,503$ Fund balances Beginning of year, as previously reported 6,926,484 Net effect of change in accounting principle (80,271) Prior period adjustment 484,801 Beginning of year, as restated 7,331,014 End of year 7,831,517$ CITY OF FARMINGTON Year Ended December 31, 2022 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual See notes to basic financial statements -25- Page 205 of 358 Liquor Sewer Solid Storm Operations Operations Waste Water Assets Current assets Cash and investments 1,636,290$ 2,398,203$ 1,847,760$ 2,153,620$ Cash restricted for drinking water treatment plant – – – – Receivables Accounts 78,771 564,881 2,924 271,381 Interest 5,127 7,531 5,704 6,762 Delinquent special assessments – 14,582 – – Deferred special assessments – 264,293 – – Due from other governments – – 21,526 – Inventory 687,372 – – – Prepaid items 40 – – – Total current assets 2,407,600 3,249,490 1,877,914 2,431,763 Noncurrent assets Capital assets Land – 85,000 – 84,992 Buildings – – – – Improvements other than buildings 358,276 – – – Machinery and equipment 297,625 999,791 – 433,883 Distribution system – – – – Collection system – 29,103,326 – 20,992,558 Leased buildings 951,551 – – – Less accumulated depreciation/amortization (422,159) (14,708,972) – (9,180,087) Total capital assets (net of accumulated depreciation/amortization)1,185,293 15,479,145 – 12,331,346 Total assets 3,592,893 18,728,635 1,877,914 14,763,109 Deferred outflows of resources Pension plan deferments – PERA 159,840 – – – OPEB plan deferments 3,847 – – – Total deferred outflows of resources 163,687 – – – Total assets and deferred outflows of resources 3,756,580$ 18,728,635$ 1,877,914$ 14,763,109$ Liabilities Current liabilities Accounts and contracts payable 82,595$ 6,595$ 5,247$ 7,303$ Accrued salaries and employee benefits payable – – – – Deposits payable – – – – Due to other governments 61,035 44,730 – – Accrued interest payable – – – – Compensated absences payable – current 34,742 – – – Bonds payable – current – – – – Lease liability – current 94,184 – – – Total current liabilities 272,556 51,325 5,247 7,303 Noncurrent liabilities Compensated absences payable 11,580 – – – Bonds payable (net of unamortized premiums)– – – – Lease liability 828,121 – – – Net pension liability – PERA 519,554 – – – Total OPEB liability 75,746 – – – Total noncurrent liabilities 1,435,001 – – – Total liabilities 1,707,557 51,325 5,247 7,303 Deferred inflows of resources Pension plan deferments – PERA 13,223 – – – Net position Net investment in capital assets 262,988 15,479,145 – 12,331,346 Restricted for drinking water treatment plant – – – – Unrestricted 1,772,812 3,198,165 1,872,667 2,424,460 Total net position 2,035,800 18,677,310 1,872,667 14,755,806 Total liabilities, deferred inflows of resources, and net position 3,756,580$ 18,728,635$ 1,877,914$ 14,763,109$ as of December 31, 2022 Business-Type Activities – Enterprise Funds CITY OF FARMINGTON Statement of Net Position Proprietary Funds See notes to basic financial statements -26- Page 206 of 358 Governmental Street Activities – Water Light Total Internal Service 8,406,603$ 346,198$ 16,788,674$ 3,039,411$ 2,461,488 – 2,461,488 – 382,215 30,599 1,330,771 40,738 34,129 1,087 60,340 9,499 – – 14,582 – – – 264,293 – 1,920 – 23,446 124 – – 687,372 – – – 40 45,684 11,286,355 377,884 21,631,006 3,135,456 328,384 – 498,376 – 5,290,137 – 5,290,137 – 1,534,818 – 1,893,094 – 539,160 – 2,270,459 99,124 33,365,710 – 33,365,710 – – – 50,095,884 – – – 951,551 – (20,187,376)– (44,498,594) (95,275) 20,870,833 – 49,866,617 3,849 32,157,188 377,884 71,497,623 3,139,305 – – 159,840 – – – 3,847 – – – 163,687 – 32,157,188$ 377,884$ 71,661,310$ 3,139,305$ 58,216$ 33,889$ 193,845$ 76,853$ – – – 236,359 99,912 – 99,912 2,006 1,899 – 107,664 – 10,299 – 10,299 – – – 34,742 49,105 65,000 – 65,000 – – – 94,184 – 235,326 33,889 605,646 364,323 – – 11,580 – 526,120 – 526,120 – – – 828,121 – – – 519,554 – – – 75,746 – 526,120 – 1,961,121 – 761,446 33,889 2,566,767 364,323 – – 13,223 – 20,279,713 – 48,353,192 3,849 2,461,488 – 2,461,488 – 8,654,541 343,995 18,266,640 2,771,133 31,395,742 343,995 69,081,320 2,774,982 32,157,188$ 377,884$ 71,661,310$ 3,139,305$ -27- Page 207 of 358 Liquor Sewer Solid Storm Operations Operations Waste Water Operating revenue Sales 6,387,611$ –$ –$ –$ Charges for services – 2,607,594 21,746 1,227,091 Insurance reimbursement – – – – Total operating revenue 6,387,611 2,607,594 21,746 1,227,091 Cost of goods sold 4,728,067 – – – Gross profit 1,659,544 2,607,594 21,746 1,227,091 Operating expenses Personal services 691,127 1,266 (238,788)780 Professional services 373,059 1,918,201 920,467 142,385 Materials and supplies 50,518 25,859 4,415 113,122 Insurance – – – – Depreciation/amortization 97,298 659,086 – 462,938 Total operating expenses 1,212,002 2,604,412 686,094 719,225 Operating income (loss)447,542 3,182 (664,348) 507,866 Nonoperating revenues (expenses) Intergovernmental 2,275 – 22,554 – Investment earnings (charges)(45,024)(67,170)(46,858)(58,734) Gain on sale of capital assets – – 598,735 – Capital contributions to governmental activities – – (117,350) – Other 4,174 3,608 5,745 – Interest and fiscal charges (37,334) (1,876)– – Total nonoperating revenues (expenses)(75,909) (65,438) 462,826 (58,734) Income (loss) before transfers 371,633 (62,256) (201,522) 449,132 Transfers Transfers in – – – – Transfers out (142,966)(585,838)(155,999)(1,026,052) Total transfers (142,966)(585,838)(155,999)(1,026,052) Change in net position 228,667 (648,094) (357,521) (576,920) Net position Beginning of year 1,807,133 19,325,404 2,230,188 15,332,726 End of year 2,035,800$ 18,677,310$ 1,872,667$ 14,755,806$ Business-Type Activities – Enterprise Funds CITY OF FARMINGTON Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Year Ended December 31, 2022 See notes to basic financial statements -28- Page 208 of 358 Governmental Street Activities – Water Light Total Internal Service –$ –$ 6,387,611$ –$ 2,238,210 233,899 6,328,540 3,684,824 – – – 383,295 2,238,210 233,899 12,716,151 4,068,119 – – 4,728,067 – 2,238,210 233,899 7,988,084 4,068,119 8,540 – 462,925 3,107,310 522,989 201,700 4,078,801 396,596 274,380 8,474 476,768 225,206 – – – 433,476 993,281 – 2,212,603 4,742 1,799,190 210,174 7,231,097 4,167,330 439,020 23,725 756,987 (99,211) 5,787 – 30,616 – (298,496)(9,529) (525,811) (80,462) – – 598,735 759 – – (117,350) – 295,012 2,218 310,757 – (15,164)– (54,374) – (12,861) (7,311) 242,573 (79,703) 426,159 16,414 999,560 (178,914) – – – 52,022 (1,365,703)– (3,276,558) – (1,365,703)– (3,276,558)52,022 (939,544) 16,414 (2,276,998) (126,892) 32,335,286 327,581 71,358,318 2,901,874 31,395,742$ 343,995$ 69,081,320$ 2,774,982$ -29- Page 209 of 358 Liquor Sewer Solid Storm Operations Operations Waste Water Cash flows from operating activities Cash received from customers 6,362,368$ 2,608,879$ 763,057$ 1,231,476$ Cash receipts from other funds and reimbursements – – – – Cash payments to suppliers (5,385,612) (1,921,119) (1,059,546) (262,874) Cash payments to employees for services (606,200) (1,266) (111,860) (780) Cash payments for interfund services used – – – – Net cash flows from operating activities 370,556 686,494 (408,349) 967,822 Cash flows from noncapital financing activities Intergovernmental revenue 2,275 – 22,554 – Transfers in – – – – Transfers out (142,966) (585,838) (155,999) (1,026,052) Net cash flows from noncapital financing activities (140,691) (585,838) (133,445) (1,026,052) Cash flows from capital and related financing activities Acquisition and construction of capital assets (11,104) – – – Principal payment on bonds and leases (29,246) – – – Proceeds from the disposal of capital assets – – 45,184 – Interest and fiscal charges paid (37,334) (1,876) – – Net cash flows from capital and related financing activities (77,684) (1,876) 45,184 – Cash flows from investing activities Interest received and changes in fair value on investments (46,217) (68,600) (46,402) (59,624) Net increase in cash and cash equivalents 105,964 30,180 (543,012) (117,854) Cash and cash equivalents Beginning of year 1,530,326 2,368,023 2,390,772 2,271,474 End of year 1,636,290$ 2,398,203$ 1,847,760$ 2,153,620$ Reconciliation of operating income (loss) to net cash flows from operating activities Operating income (loss)447,542$ 3,182$ (664,348)$ 507,866$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities Depreciation/amortization 97,298 659,086 – 462,938 Other 4,174 3,608 5,745 – Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources Accounts receivable (29,417) (28,466) 687,651 4,385 Special assessments – 26,143 – – Due from other governments – – 47,915 – Inventory (134,700) – – – Prepaid items 3,555 – – – Deferred outflows of resources – pension plan deferments 36,792 – 152,936 – Deferred outflows of resources – OPEB plan deferments (829) – 2,477 – Accounts and contracts payable (108,951) 576 (103,117) (7,367) Accrued salaries and employee benefits – – – – Deposits payable – – (700) – Due to other governments 6,128 22,365 (30,847) – Compensated absences (628) – (68,632) – Net pension liability 260,893 – (201,181) – Total OPEB liability 13,042 – (51,474) – Deferred inflows of resources – pension plan deferments (224,343) – (184,774) – Net cash flows from operating activities 370,556$ 686,494$ (408,349)$ 967,822$ Schedule of noncash capital and related financing activities Net book values of capital assets transferred to governmental activities –$ –$ 117,350$ –$ Net book values of capital asset disposals –$ –$ 221,552$ –$ Amortization of bond premium –$ –$ –$ –$ Business-Type Activities – Enterprise Funds CITY OF FARMINGTON Statement of Cash Flows Proprietary Funds Year Ended December 31, 2022 See notes to basic financial statements -30- Page 210 of 358 Governmental Street Activities – Water Light Total Internal Service 2,720,909$ 231,189$ 13,917,878$ –$ – – – 4,043,746 (853,556) (207,014) (9,689,721) – (8,540) – (728,646) (3,213,475) – – – (980,103) 1,858,813 24,175 3,499,511 (149,832) 5,787 – 30,616 – – – – 52,022 (1,365,703) – (3,276,558) – (1,359,916) – (3,245,942) 52,022 (15,803) – (26,907) – (65,000) – (94,246) – – – 45,184 759 (26,426) – (65,636) – (107,229) – (141,605) 759 (304,865) (9,761) (535,469) (81,923) 86,803 14,414 (423,505) (178,974) 10,781,288 331,784 19,673,667 3,218,385 10,868,091$ 346,198$ 19,250,162$ 3,039,411$ 439,020$ 23,725$ 756,987$ (99,211)$ 993,281 – 2,212,603 4,742 295,012 2,218 310,757 – 188,764 (4,928) 817,989 (24,249) – – 26,143 – (1,077) – 46,838 (124) – – (134,700) – – – 3,555 – – – 189,728 – – – 1,648 – (73,523) 3,160 (289,222) (13,988) – – – (21,261) 17,536 – 16,836 (957) (200) – (2,554) – – – (69,260) 5,216 – – 59,712 – – – (38,432) – – – (409,117) – 1,858,813$ 24,175$ 3,499,511$ (149,832)$ –$ –$ 117,350$ –$ –$ –$ 221,552$ –$ 9,912$ –$ 9,912$ –$ -31- Page 211 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 212 of 358 CITY OF FARMINGTON Notes to Basic Financial Statements December 31, 2022 -32- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Farmington, Minnesota (the 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 councilmembers 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 financial reporting principles. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component 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 financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. As a result of applying these criteria, one organization has been included in this report as follows: Blended Component Unit – The Farmington Economic Development Authority (EDA) is the City’s official decision-making body regarding economic development. The EDA 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 the City’s mayor and councilmembers, and the City has the ability to impose its will on the EDA. The EDA does not issue separate financial statements. Therefore, the EDA has been reported as a blended component unit of the City, with its funds reported as funds of the City. C. Government-Wide Financial Statement Presentation The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all of the financial activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which significantly rely upon sales, fees, and charges for support. Page 213 of 358 -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 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. Depreciation/amortization expense is included in the direct expenses of each function. 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 governm ent-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. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor funds is reported in a single column in the respective fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner: 1. Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liab ilities 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 financing 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 they are 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. Page 214 of 358 -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 financial statements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sales and services. The operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation/amortization on capital assets. All revenues and expenses that do not meet this definition are reported as nonoperating revenues and expenses. Aggregated information for the internal service funds is reported in a single column in the propriet ary fund financial statements. Because the principal user of the internal services is the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity. Description of Funds The City reports the following major governmental funds: General Fund – 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. Federal Aid Special Revenue Fund – This fund accounts for the operations and activities related to certain federal funding awarded during the COVID-19 pandemic. Debt Service Fund – This fund accounts for the financial resources accumulated and payments made for principal and interest on long-term debt of the City, other than enterprise fund debt. Maintenance Capital Projects Fund – This fund accounts for operations and activities related to maintenance of city roads and facilities. Private Capital Projects Fund – This fund accounts for engineering and administrative fee deposits related to private development projects within the City. Spruce Street Capital Projects Fund – This fund accounts for the financial resources accumulated and expenditures related to the City’s Spruce Street improvement project. 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. The City began the process of transitioning these functions to a private contractor during 2022. It is anticipated that the remaining activities of this operation will be discontinued, and this fund closed in 2023. Page 215 of 358 -35- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 financial activities related to city-owned street lights. Additionally, the City reports the following fund type: Internal Service Funds – Internal service funds account for the financing of goods and services provided to other departments or agencies of the City on a cost-reimbursement basis. The City’s internal service funds account for employee benefits expenses, insurance, fleet services, and technology services. E. Budgets and Budgetary Accounting Budgets are prepared annually on a modified accrual basis and legally adopted by the City Council for the General Fund, most special revenue funds, the Debt Service Fund (in total), and most capital projects funds. No fiscal 2022 budgets were adopted for the Federal Aid, Dakota Broadband, or Police Public Outreach Special Revenue Funds, or for the Water Trunk, Akin Street Reconstruction, Trail Maintenance, or Building Maintenance Capital Projects Funds. 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 financing them. 2. The City Council reviews the proposed budgets and makes the appropriate changes. 3. Public hearings are conducted to obtain taxpayer comments. 4. The budgets are 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 governmental 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 (e.g., 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. Page 216 of 358 -36- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) For the year ended December 31, 2022, expenditures exceeded budget for the following funds. Expenditures in excess of budget were approved by the City Council either through the disbursement process or separate City Council action. Budgeted Actual Expenditures Expenditures Major funds Debt Service 2,466,840$ 2,537,157$ Private Capital Projects –$ 1,537$ Nonmajor special revenue funds Police Donations and Forfeitures 2,000$ 19,177$ K-9 –$ 5,473$ Arena 428,251$ 430,811$ Nonmajor capital projects funds Fire 7,000$ 194,318$ Storm Water Trunk –$ 11,610$ Parking Lot Project 595,606$ 620,623$ 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 based on month-end outstanding balances for each fund. Certain resources set aside for future use, such as the construction of a drinking water treatment plant, are classified as restricted assets on the Statement of Net Position, because their use is limited by outside agreements. Interest on these investments is allocated to the respective fund. For purposes of the Statement of Cash Flows, the City considers all highly liquid 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 equivalent. 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 or with adequate collateral and interest rate risk by matching maturities to cash flow needs and holding securities to maturity. The City reports all investments at fair value. The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. See Note 2 for the City’s recurring fair value measurements as of the current year-end. Page 217 of 358 -37- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Receivables not expected to be fully collected within one year include leases, deferred special assessments, and delinquent property taxes. H. Interfund Balances and Transfers In the fund financial statements, balances between funds that are representative of lending or borrowing arrangements are 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.” Interfund balances and transfers reported in the fund financial statements are eliminated to the extent possible in the government-wide financial statements. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” I. Property Taxes Property tax levies are set by the City Council in December of each year and certified to Dakota County for collection in the following year. In Minnesota, counties act as collection agents for all property taxes, spreading 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. Tax levies on real property are payable 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 four times a year: in June, 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. Page 218 of 358 -38- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 his torical cost is not available. Leased capital assets are recorded based on the measurement of payments applicable to the lease term. Donated assets are recorded as capital assets at their estimated acquisition value on the date of donation. The City defines capital assets as those with an initial, individual cost of $5,000 or more with an estimated useful life in excess of five years. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not reported in the governmental fund financial statements. Land, easements, and construction in progress are not depreciated. Leased assets are amortized over the term of the lease or over the useful life of the applicable asset class previously described, if future ownership is anticipated. 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. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, statements of financial position or balance sheets may report separate financial statement elements called deferred outflows of resources or deferred inflows of resources. These separate financial statement elements represent a consumption or acquisition of net assets, respectively, that apply to future periods and will not be recognized as an outflow of financial resources (expense/expenditure) or an inflow of financial resources (revenue) until then. Deferred outflows and inflows of resources related to pension and other post-employment benefits (OPEB) plans are reported in the government-wide and enterprise funds Statements of Net Position. These deferred outflows and inflows result from differences between expected and actual experience, changes in proportion, changes of assumptions, net collective difference between projected and actual earnings on plan investments, and from contributions to the plans subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under applicable pension or OPEB standards. The City also reports deferred inflows of resources related to leases. Lessors are required to recognize deferred inflows of resources corresponding to lease receivables, which are reported in both the governmental fund financial statements and the government-wide financial statements. These amounts are deferred and amortized in a systematic and rationale manner over the term of the lease. Unavailable revenue arises only under a modified accrual basis of accounting and, therefore, is only reported in the governmental funds Balance Sheet. The governmental funds report unavailable revenue from three sources: property taxes, special assessments, and long-term receivables. These amounts are deferred and recognized as inflows of resources in the period that the amounts become available. Page 219 of 358 -39- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. Long-Term Obligations In the government-wide and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources , while discounts on debt issuances are reported as other financing uses. P. Compensated Absences It is the City’s policy to permit employees to accumulate earned, but unused leave benefits as either paid time off (PTO), or vacation and sick leave. Under the City’s personnel policies and collective bargaining contracts, city employees are granted leave benefits in varying amounts based on length of service. No liability is recorded for nonvesting 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 any po rtion of sick leave payable to employees upon termination are reported as expenditures in the governmental fund that will pay them when they become due and payable. Q. State-Wide Pension Plans For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from the PERA’s fiduciary net position have been determined on the same basis as they are reported by the PERA. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments, and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. R. 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 financial statements. 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. Page 220 of 358 -40- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Workers’ Compensation Insurance – Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments as deemed necessary by the LMCIT. The LMCIT reinsures through the Workers’ Compensation Reinsurance Association 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 is not recorded until received or paid. S. Net Position Classifications and Flow Assumptions In the government-wide and proprietary fund financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position is displayed in three components: • Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation and amortization, 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. T. 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. Page 221 of 358 -41- NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) When both restricted and unrestricted resources are available for use, the City first uses restricted resources, then unrestricted resources as needed. When committed, assigned, or unassigned resources are available for use, the City uses resources in th e following order: 1) committed, 2) assigned, and 3) unassigned. U. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the financial statements during the reporting period. Actual results could differ from those estimates. V. Change in Accounting Principle During the year ended December 31, 2022, the City implemented GASB Statement No. 87, Leases. This statement included major changes in recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intan gible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The implementation of the new GASB statement in the current year resulted in the restatement of certain balances reported by the City as of the beginning of the 2022 fiscal year, including restatements of the beginning governmental activities net position and fund balance for the General Fund, both of which were reduced by $80,271 for the removal of a lease agreement that had previously been reported as a loan receivable. See Notes 4, 5, and 6 for additional detail on this change in the current year. W. Prior Period Adjustment During the year ended December 31, 2022, the City recorded a prior period adjustment to record certain development-related revenues that should have been recognized by the City in previous years. The prior period adjustment resulted in restatements of the beginning governmental activities net position and fund balance for the General Fund, increasing both by $484,801. Page 222 of 358 -42- NOTE 2 – DEPOSITS AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of the following: Deposits 3,659,553$ Investments 47,161,494 Petty cash 4,032 Total 50,825,079$ Cash and investments are included on the basic financial statements as follows: Statement of Net Position Cash and investments 48,363,591$ Restricted assets – temporarily restricted Cash for future drinking water treatment plant 2,461,488 Total 50,825,079$ 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 financial 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 $3,659,553, while the balance on the bank records was $5,236,594. At December 31, 2022, all deposits were fully covered by federal deposit insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. Page 223 of 358 -43- NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) C. Investments The City has the following investments at year-end: Fair Value Measurements Investment Type Rating Agency Using Less Than 1 1 to 5 Total U.S. treasury securities Aaa Moody’s Level 2 4,611,462$ 7,772,087$ 12,383,549$ U.S. treasury securities AAA Fitch Level 2 993,330 – 993,330 U.S. agency securities AA S&P Level 2 4,433,121 6,428,357 10,861,478 Municipal bonds AAA S&P Level 2 199,924 1,243,530 1,443,454 Municipal bonds Aa Moody’s Level 2 685,942 3,753,154 4,439,096 Municipal bonds AA S&P Level 2 1,467,135 4,839,625 6,306,760 Municipal bonds A Moody’s Level 2 – 355,348 355,348 Municipal bonds Baa Moody’s Level 2 370,306 – 370,306 Negotiable certificates of deposit Level 2 1,697,553 6,236,610 7,934,163 14,458,773$ 30,628,711$ 45,087,484 Investment pools/mutual funds AAA S&P Level 1 2,074,010 Total investments 47,161,494$ Credit Risk Not rated Interest Risk – Maturity Duration in Years 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; comme rcial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. The City’s investment policies do not further address credit risk. Page 224 of 358 -44- NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) Concentration Risk – This is the risk associated with investing a significant portion of the City’s investments (considered 5.0 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s investment policy places no limit on the amount the City may invest in any one issuer . However, it discusses the need to diversify investments to minimize risk. Of the City’s investment portfolio at December 31, 2022, 7.3 percent were investments issued by the Federal Home Loan Bank, 6.5 percent were investments issued by the Federal National Mortgage Association, and 6.2 percent were investments issued by the Federal Farm Credit Bank. Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City’s investment policy states the investment portfolio should be structured to meet cash requirements for ongoing operations. The policy limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates, stating that no more than 30 percent of total investments should extend beyond 5 years and none should extend beyond 15 years. The City’s year-end investment portfolio maturities comply with this policy. NOTE 3 – INTERFUND BALANCES AND TRANSFERS A. Interfund Balances The City had the following interfund balances at year-end: Payable Fund Purpose Amount Governmental Governmental General Nonmajor Cash flow 75,392$ Receivable Fund 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, fund debt service payments, or close funds: Proprietary Funds Capital Projects Capital Projects Internal Transfers Out General Debt Service – Maintenance – Spruce Street Nonmajor Service Total Governmental funds General –$ 91,737$ 712,578$ 50,984$ 754,288$ 48,022$ 1,657,609$ Debt Service – – – 2,398,516 1,662,600 – 4,061,116 Maintenance – – – – 432,863 – 432,863 Nonmajor – – – – 61,367 – 61,367 Proprietary funds Enterprise Liquor Operations 66,466 – – – 75,000 1,500 142,966 Sewer Operations 340,438 – – 242,900 – 2,500 585,838 Solid Waste 155,999 – – – – – 155,999 Storm Water 415,052 – – 611,000 – – 1,026,052 Water 449,903 – – 915,800 – – 1,365,703 Total 1,427,858$ 91,737$ 712,578$ 4,219,200$ 2,986,118$ 52,022$ 9,489,513$ Transfers In Governmental Funds Page 225 of 358 -45- NOTE 4 – LEASES RECEIVABLE In 2018, the City entered into an agreement to lease space in City Hall to the U.S. Department of Agriculture (USDA). The USDA is required to make monthly payments for the space rental for a 20 -year term maturing February 28, 2038, with a 3.0 percent interest rate. As part of this agreement, the City made improvements to the space in accordance with USDA specifications with a total cost of $113,500. The USDA will reimburse the City for the full cost of these improvements through noncancelable monthly payments annually over a 10-year period, with 3.0 percent interest. During the current year, the City received principal and interest payments of $16,908. Additionally, the City received $12,637 in other variable payments for common area maintenance fees, which are not a part of the lease asset. NOTE 5 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2022 was as follows: A. Changes in Capital Assets Used in Governmental Activities Beginning Ending Balance Additions Deletions Transfers Balance Capital assets, not depreciated/amortized Land 1,350,435$ –$ –$ –$ 1,350,435$ Easements 307,867 – – – 307,867 Construction in progress – 2,574,042 – – 2,574,042 Total capital assets, not depreciated/amortized 1,658,302 2,574,042 – – 4,232,344 Capital assets, depreciated/amortized Buildings 21,339,531 – (35,681) – 21,303,850 Improvements other than buildings 1,848,362 – – – 1,848,362 Machinery and equipment 8,753,051 586,208 (178,462) 230,870 9,391,667 Infrastructure 59,341,025 80,034 – – 59,421,059 Leased vehicles – 99,641 – – 99,641 Total capital assets, depreciated/amortized 91,281,969 765,883 (214,143) 230,870 92,064,579 Less accumulated depreciation/amortization Buildings 7,607,126 435,394 (35,681) – 8,006,839 Improvements other than buildings 1,497,582 55,630 – – 1,553,212 Machinery and equipment 5,006,553 550,876 (178,462) 113,520 5,492,487 Infrastructure 32,302,774 1,320,013 – – 33,622,787 Leased vehicles – 10,571 – – 10,571 Total accumulated depreciation/amortization 46,414,035 2,372,484 (214,143) 113,520 48,685,896 Net capital assets, depreciated/amortized 44,867,934 (1,606,601) – 117,350 43,378,683 Total capital assets, net 46,526,236$ 967,441$ –$ 117,350$ 47,611,027$ Page 226 of 358 -46- NOTE 5 – CAPITAL ASSETS (CONTINUED) B. Changes in Capital Assets Used in Business-Type Activities Beginning Ending Balance Additions Deletions Transfers Balance Capital assets, not depreciated/amortized Land 498,376$ –$ –$ –$ 498,376$ Capital assets, depreciated/amortized Buildings 5,290,137 – – – 5,290,137 Improvements other than buildings 1,881,990 11,104 – – 1,893,094 Machinery and equipment 3,705,204 15,803 (1,219,678) (230,870) 2,270,459 Collection/distribution systems 83,461,594 – – – 83,461,594 Leased buildings (1)951,551 – – – 951,551 Total capital assets, depreciated/amortized 95,290,476 26,907 (1,219,678) (230,870) 93,866,835 Less accumulated depreciation/amortization Buildings 3,751,378 205,130 – – 3,956,508 Improvements other than buildings 290,491 104,704 – – 395,195 Machinery and equipment 2,595,027 154,362 (998,126) (113,520) 1,637,743 Collection/distribution systems 36,760,741 1,692,289 – – 38,453,030 Leased buildings – 56,118 – – 56,118 Total accumulated depreciation/amortization 43,397,637 2,212,603 (998,126) (113,520) 44,498,594 Net capital assets, depreciated/amortized 51,892,839 (2,185,696) (221,552) (117,350) 49,368,241 Total capital assets, net 52,391,215$ (2,185,696)$ (221,552)$ (117,350)$ 49,866,617$ (1) Beginning balance includes restatement for implementation of GASB Statement No. 87, Leases. C. Depreciation/Amortization Expense by Function Depreciation/amortization expense was charged to the following functions: Governmental activities General government 185,762$ Public safety 414,256 Public works 1,529,049 Parks and recreation 243,417 Total depreciation/amortization expense – governmental activities 2,372,484$ Business-type activities Liquor operations 97,298$ Sewer operations 659,086 Storm water 462,938 Water 993,281 Total depreciation/amortization expense – business-type activities 2,212,603$ Page 227 of 358 -47- NOTE 6 – LONG-TERM LIABILITIES A. Components of Long-Term Liabilities Final Original Interest Issue Maturity Balance – Issue Rate Date Date End of Year Governmental activities General obligation improvement bonds G.O. Street Reconstruction Bonds 2015A 3,050,000$ 2.00–3.00%10/15/2015 02/01/2030 1,800,000$ G.O. Improvement Refunding Bonds 2016A 3,450,000$ 2.00%12/01/2016 02/01/2023 445,000 G.O. Street Reconstruction Bonds 2019A 925,000$ 5.00%05/15/2019 02/01/2024 410,000 G.O. Street Reconstruction Bonds 2022A 3,650,000$ 3.00–5.00%07/06/2022 02/01/2033 3,650,000 Total general obligation improvement bonds 6,305,000 General obligation capital improvement bonds G.O. Capital Improvement Refunding Bonds 2016B 4,540,000$ 2.00–3.00%12/01/2016 02/01/2028 3,510,000 General obligation equipment certificates G.O. Equipment Certificates of Indebtedness 2020A 1,105,000$ 5.00%02/19/2020 02/01/2026 905,000 Total governmental activities bonds and certificates 10,720,000 Unamortized premiums 668,370 Lease liabilities Leased vehicle 31,238$ 6.62%06/23/2022 06/30/2026 27,471 Leased vehicle 31,238$ 6.62%06/23/2022 06/30/2026 27,471 Leased vehicle 29,970$ 7.71%09/23/2022 09/30/2026 28,087 Total governmental activities lease liabilities 83,029 Compensated absences 1,134,365 Total governmental activities 12,605,764$ Business-type activities General obligation revenue bonds G.O. Water Revenue Bonds 2019A 720,000$ 4.00–5.00%05/15/2019 02/01/2029 530,000$ Unamortized premiums 61,120 Lease liabilities Downtown liquor store 745,373$ 6.62%10/01/2021 05/31/2036 716,095 Pilot Knob liquor store 211,684$ 5.00%12/01/2022 11/30/2025 206,210 Total business-type activities lease liabilities 922,305 Compensated absences 46,322 Total business-type activities 1,559,747$ B. Bonds and Certificates Payable • 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. • General Obligation Equipment Certificates – The City issues general obligation equipment certificates of indebtedness in accordance with Minnesota Statutes § 412.301 to finance the purchase of equipment, which will be repaid primarily through ad valorem tax levies. • General Obligation Revenue Bonds – The City issues general obligation revenue bonds to finance capital improvements in the enterprise funds. These bonds will be repaid from future net operating revenues pledged from enterprise funds and are backed by the taxing power of the City. Page 228 of 358 -48- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) Minimum annual payments required to retire bonds and certificates are as follows: Governmental Activities Year Ending December 31,Principal Interest Principal Interest Principal Interest Principal Interest 2023 870,000$ 230,113$ 545,000$ 84,775$ 210,000$ 40,000$ 1,625,000$ 354,888$ 2024 740,000 194,400 560,000 68,200 220,000 29,250 1,520,000 291,850 2025 550,000 168,100 575,000 51,175 230,000 18,000 1,355,000 237,275 2026 570,000 147,450 595,000 33,625 245,000 6,125 1,410,000 187,200 2027 585,000 125,450 610,000 18,600 – – 1,195,000 144,050 2028–2032 2,550,000 285,737 625,000 6,250 – – 3,175,000 291,987 2033 440,000 6,600 – – – – 440,000 6,600 Total 6,305,000$ 1,157,850$ 3,510,000$ 262,625$ 905,000$ 93,375$ 10,720,000$ 1,513,850$ G.O. Improvement G.O. Capital Improvement TotalG.O. Equipment Business-Type Activities Year Ending December 31,Principal Interest 2023 65,000$ 23,175$ 2024 70,000 19,800 2025 70,000 16,300 2026 75,000 12,675 2027 80,000 8,800 2028–2029 170,000 6,800 Total 530,000$ 87,550$ G.O. Revenue C. Revenue Pledged Future revenue pledged for the payment of long-term bonded debt is as follows: Percent Remaining Principal Pledged Use of of Debt Term of Principal and Interest Revenue Bond Issue Proceeds Type Service Pledge and Interest Paid Received G.O. Water Revenue Bonds 2019A Utility improvements Utility charges 100%2019–2029 617,550$ 91,426$ 2,238,210$ Current YearRevenue Pledged D. Ultimate Responsibility for Debt All general obligation bonds are backed by 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 equal to 3.0 percent of the taxable market value of property in the City. As of December 31, 2022, the City had not utilized $60,774,284 of its $70,719,430 legal debt limit. Page 229 of 358 -49- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) E. Lease Liabilities • Leased Vehicles – The City is leasing three police vehicles under agreements that are secured by the leased equipment. The total amount of underlying lease assets by major classes and the related accumulated amortization is presented in Note 5 of the notes to basic financial statements. The leases are being paid by the (nonmajor) General Capital Equipment Capital Projects Fund. • Leased Building – The City operates two retail liquor stores known colloquially as Downtown and Pilot Knob. The City leases building space through two agreements that are being paid by the Liquor Operations Enterprise Fund. The Downtown store lease is for an approximately 7,400 square foot space in the Farmington Mall, for which the City paid $19,166 in common area operating expenses in 2022 that are not included in the lease liability. The Pilot Knob location occupies a 4,758 square foot store in the Farmington Gateway Center, for which the City paid $44,646 in common area operating expenses in 2022 that are not included in the lease liability. The total amount of underlying lease assets by major classes and the related accumulated amortization is presented in Note 5 of the notes to basic financial statements. Minimum annual payments required to retire bonds and certificates are as follows: Year Ending December 31,Principal Interest Principal Interest 2023 21,141$ 5,136$ 94,184$ 43,987$ 2024 22,664 3,615 100,907 39,125 2025 24,295 1,983 101,686 33,920 2026 14,929 373 37,356 30,440 2027 – – 41,348 28,482 2028–2032 – – 276,514 105,344 2033–2036 – – 270,310 24,721 Total 83,029$ 11,107$ 922,305$ 306,019$ Vehicle Leases Liquor Store Building Leases Governmental Activities Business-Type Activities F. Other Long-Term Liabilities The City provides its employees with various benefits, including compensated absences, and pension benefits and OPEB as further described elsewhere in these notes. The General Fund and Liquor Operations Enterprise Fund will be used to liquidate these liabilities. Page 230 of 358 -50- NOTE 6 – LONG-TERM LIABILITIES (CONTINUED) G. Changes in Long-Term Liabilities Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities G.O. improvement bonds 4,120,000$ 3,650,000$ 1,465,000$ 6,305,000$ 870,000$ G.O. capital improvement bonds 4,035,000 – 525,000 3,510,000 545,000 G.O. equipment certificates 1,105,000 – 200,000 905,000 210,000 Unamortized bond premiums 447,152 346,246 125,028 668,370 – Lease liabilities – 92,446 9,417 83,029 21,141 Compensated absences 1,051,948 729,358 646,941 1,134,365 850,776 Total governmental activities 10,759,100 4,818,050 2,971,386 12,605,764 2,496,917 Business-type activities G.O. revenue bonds 595,000 – 65,000 530,000 65,000 Unamortized bond premiums 71,032 – 9,912 61,120 – Lease liabilities (1)951,551 – 29,246 922,305 94,184 Compensated absences 115,582 – 69,260 46,322 34,742 Total business-type activities 1,733,165 – 173,418 1,559,747 193,926 Total government-wide 12,492,265$ 4,818,050$ 3,144,804$ 14,165,511$ 2,690,843$ (1) Beginning balance includes restatement for implementation of GASB Statement No. 87, Leases. NOTE 7 – DEFINED BENEFIT PENSION PLANS Employees of the City participate in three defined benefit pension plans. Two of the plans are state-wide, cost-sharing, multiple-employer defined benefit pension plans administered by the PERA of Minnesota: the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF). The third is a single-employer defined benefit pension plan administered through the Farmington Fire Fighters’ Relief Association (the Association). The details of the City’s participation in each of these plans are presented later in these notes. The following table summarizes the impact of these plans on the City’s government-wide financial statements: Farmington Fire Fighters’ Relief Total GERF PEPFF Total Association All Plans Net pension asset –$ –$ –$ 1,714,105$ 1,714,105$ Deferred outflows of resources 1,598,397$ 7,530,569$ 9,128,966$ 497,990$ 9,626,956$ Net pension liability 5,195,542$ 10,765,871$ 15,961,413$ –$ 15,961,413$ Deferred inflows of resources 132,230$ 77,821$ 210,051$ 622,381$ 832,432$ Pension expense 784,426$ 927,423$ 1,711,849$ 259,136$ 1,970,985$ State-Wide PERA Pension Plans Page 231 of 358 -51- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE A. Plan Descriptions The City participates in the following cost-sharing, multiple-employer defined benefit pension plans administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. 1. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the GERF. The GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2. Public Employees Police and Fire Fund (PEPFF) The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to the PERA. B. Benefits Provided The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statutes and can only be modified by the State Legislature. Vested, terminated employees who are entitled to benefits, but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. 1. GERF Benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan members is 1.2 percent for each of the first 10 years of service, and 1.7 percent for each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7 percent for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90, and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at age 66. Page 232 of 358 -52- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Benefit increases are provided to benefit recipients each January. The post-retirement increase is equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security Administration, with a minimum increase of at least 1.0 percen t and a maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least one month, but less than a full year as of the June 30 before the effective date of the increase, will receive a reduced prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a prorated basis from 50.0 percent after five years, up to 100.0 percent after 10 years of credited service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis from 50.0 percent after 10 years, up to 100.0 percent after 20 years of credited service. The annuity accrual rate is 3.0 percent of average salary for each year of service. For Police and Fire Plan members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The post-retirement increase is fixed at 1.0 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months, but less than 36 months as of the June 30 before the effective date of the increase, will receive a reduced prorated increase. C. Contributions Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature. 1. GERF Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2022, and the City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2022, were $360,931. The City’s contributions were equal to the required contributions as set by state statutes. 2. PEPFF Contributions Police and Fire Plan members were required to contribute 11.80 percent of their annual covered salary in fiscal year 2022, and the City was required to contribute 17.70 percent for Police and Fire Plan members. The City’s contributions to the PEPFF for the year ended December 31, 2022, were $536,433. The City’s contributions were equal to the required contributions as set by state statutes. Page 233 of 358 -53- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) D. Pension Costs 1. GERF Pension Costs At December 31, 2022, the City reported a liability of $5,195,542 for its proportionate share of the GERF’s net pension liability. The City’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer contributing entity and the state’s contribution meets the definition of a special funding situation. The state of Minnesota’s proportionate share of the net pension liability associated with the City totaled $152,265. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2021 through June 30, 2022, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.0656 percent at the end of the measurement period and 0.0673 percent for the beginning of the period. The amount recognized by the City as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 5,195,542$ State’s proportionate share of the net pension liability associated with the City 152,265$ For the year ended December 31, 2022, the City recognized pension expense of $761,674 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $22,752 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16.0 million to the GERF. At December 31, 2022, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual economic experience 43,397$ 56,780$ Changes in actuarial assumptions 1,205,397 21,002 Net collective difference between projected and actual investment earnings 37,132 – Changes in proportion 116,858 54,448 Contributions paid to the PERA subsequent to the measurement date 195,613 – Total 1,598,397$ 132,230$ Page 234 of 358 -54- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) A total of $195,613 reported as deferred outflows of resources related to pensions resulting from city contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2023 517,498$ 2024 484,064$ 2025 (200,868)$ 2026 469,860$ 2. PEPFF Pension Costs At December 31, 2022, the City reported a liability of $10,765,871 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2021 through June 30, 2022, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.2474 percent at the end of the measurement period and 0.2436 percent for the beginning of the period. The state of Minnesota contributed $18.0 million to the PEPFF in the plan fiscal year ended June 30, 2022. The contribution consisted of $9.0 million in direct state aid that does meet the definition of a special funding situation and $9.0 million in supplemental state aid that does not meet the definition of a special funding situation. The $9.0 million direct state aid was paid on October 1, 2021. Thereafter, by October 1 of each year, the state will pay $9.0 million to the PEPFF until full funding is reached or July 1, 2048, whichever is earlier. The $9.0 million in supplemental state aid will continue until the fund is 90.0 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90.0 percent funded, whichever occurs later. The state of Minnesota is included as a nonemployer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9.0 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the state of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2022, the City recognized pension expense of $836,197 for its proportionate share of the Police and Fire Plan’s pension expense. The City recognized $91,226 as grant revenue for its proportionate share of the state of Minnesota’s pension expense for the contribution of $9.0 million to the PEPFF. Page 235 of 358 -55- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The amount recognized by the City as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 10,765,871$ State’s proportionate share of the net pension liability associated with the City 470,299$ The state of Minnesota is not included as a nonemployer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9.0 million in supplemental state aid. The City recognized $22,266 for the year ended December 31, 2022 as revenue and an offsetting reduction of net pension liability for its proportionate share of the state of Minnesota ’s on-behalf contributions to the PEPFF. At December 31, 2022, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual economic experience 652,248$ –$ Changes in actuarial assumptions 6,302,884 62,069 Net collective difference between projected and actual investment earnings 182,474 – Changes in proportion 91,525 15,752 Contributions paid to the PERA subsequent to the measurement date 301,438 – Total 7,530,569$ 77,821$ A total of $301,438 reported as deferred outflows of resources related to pensions resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ending December 31, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2023 1,383,103$ 2024 1,398,575$ 2025 1,248,773$ 2026 2,220,231$ 2027 900,628$ Page 236 of 358 -56- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) E. Long-Term Expected Return on Investments The Minnesota State Board of Investment, which manages the investments of the PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best-estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic equity 33.50 %5.10 % International equity 16.50 5.30 % Fixed income 25.00 0.75 % Private markets 25.00 5.90 % Total 100.00 % Long-Term Expected Allocation Target Real Rate of Return F. Actuarial Methods and Assumptions The total pension liability in the June 30, 2022, actuarial valuation was determined using an individual entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.50 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.50 percent was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan. The Police and Fire Plan benefit increase is fixed at 1.00 percent per year and that increase was used in the valuation. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.00 percent after 27 years of service. In the Police and Fire Plan, salary growth assumptions range from 11.75 percent after one year of service to 3.00 percent after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit the PERA’s experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2019. The assumption changes were adopted by the Board and became effective with the July 1, 2020 actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was completed in 2020, adopted by the Board, and became effective with the July 1, 2021 actuarial valuation. Page 237 of 358 -57- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The following changes in actuarial assumptions occurred in 2022: 1. GERF CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2. PEPFF CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. • The single discount rate changed from 6.50 percent to 5.40 percent. G. Discount Rate The discount rate for the General Employees Plan used to measure the total pension liability in 2022 was 6.50 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. In the Police and Fire Fund, the fiduciary net position was projected to be available to make all projected future benefit payments of current plan members through June 30, 2060. Beginning in fiscal year ended June 30, 2061, projected benefit payments exceed the fund’s projected fiduciary net position. Benefit payments projected after were discounted at the municipal bond rate of 3.69 percent (based on the weekly rate closest to, but not later than, the measurement date of the Fidelity “20-Year Municipal GO AA Index”). The resulting equivalent single discount rate of 5.40 percent for the Police and Fire Fund was determined to give approximately the same present value of projected benefits when applied to all years of projected benefits as the present value of projected benefits using 6.50 percent applied to all years of projected benefits through the point of asset depletion and 3.69 percent thereafter. Page 238 of 358 -58- NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) H. Pension Liability Sensitivity The following table presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: GERF discount rate City’s proportionate share of the GERF net pension liability PEPFF discount rate City’s proportionate share of the PEPFF net pension liability 1% Decrease in Current 1% Increase in Discount Rate Discount Rate Discount Rate 5.50% 6.50% 7.50% 16,292,765$ 10,765,871$ 6,297,708$ 8,206,630$ 5,195,542$ 2,725,984$ 4.40% 5.40% 6.40% I. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the internet at www.mnpera.org. NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION A. Plan Description Volunteer firefighters of the Farmington Volunteer Fire Department (the Department) are members of the Association, which administers a single-employer defined benefit pension plan established to provide benefits for its members. The plan is established and administered in accordance with Minnesota Statutes, Chapter 69. The Association is governed by a Board of nine trustees; six voting trustees elected by the members of the Association, and the City’s mayor, city administrator, and fire chief as ex officio members. As of December 31, 2020, the plan covered 54 active firefighters and 9 vested terminated firefighters whose pension benefits are deferred. The Association maintains a separate Special Fund to accumulate assets to fund the retirement benefits earned by the Department’s membership. B. Benefits Provided A firefighter who completes at least 20 years as an active member of the Department is entitled, after age 50, to a full service pension upon retirement. The bylaws of the Association also provide for an early vested service pension for a retiring member who has completed fewer than 20 years of service. The reduced pension, available to members with 10 years of service, shall be equal to 60 percent of the pension as described by the bylaws. This percentage increases 4 percent per year, so that at 20 years of service, the full amount prescribed is paid. Members who retire with less than 20 years of service and have reached the age of 50 and have completed at least 10 years of active membership, are entitled to a reduced service pension not to exceed the amount calculated by multiplying the member’s service pension for the completed years of service times the applicable nonforfeitable percentage of pension. Page 239 of 358 -59- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) C. Contributions Minnesota Statutes, Chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings, and, if necessary, employer contributions as specified in Minnesota Statutes and voluntary city contributions (if applicable). The firefighters have no obligation to contribute to the plan. Nonemployer pension contributions include state aid from the state of Minnesota and municipal contributions from the City. On-behalf of state aid payments from the state of Minnesota are received initially by the City and subsequently remitted to the Association. These on-behalf of state aid payments, in addition to the City’s municipal contribution payments to the Association plan, are recognized as revenues and expenditures in the City’s General Fund during the period received. The state of Minnesota contributed $186,645 in fire state aid to the plan on behalf of the Department for the year ended December 31, 2022, which was recorded as revenue. Required employer contributions are calculated annually based on statutory provisions. The City’s statutorily-required contributions to the plan for the year ended December 31, 2022 were $0; however, the City made a voluntary contribution of $150,000 to the plan. D. Pension Costs At December 31, 2022, the City reported a net pension liability (asset) of ($1,714,105) for the plan. The net pension liability (asset) was measured as of December 31, 2021. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB Statement No. 68 was determined by applying an actuarial formula to specific census data certified by the Department as of December 31, 2020. The following table presents the changes in net pension liability (asset) during the year: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) (a)(b)(a-b) Beginning balance – January 1, 2022 2,244,067$ 3,789,275$ (1,545,208)$ Changes for the year Service cost 190,066 – 190,066 Interest 125,065 – 125,065 Changes of benefit terms 238,686 – 238,686 Contributions (state and local)– 321,822 (321,822) Net investment income – 419,642 (419,642) Benefit payments (103,887) (103,887) – Administrative costs – (18,750) 18,750 Total net changes 449,930 618,827 (168,897) Ending balance – December 31, 2022 2,693,997$ 4,408,102$ (1,714,105)$ For the year ended December 31, 2022, the City recognized pension revenue of $259,136 and pension expense of $61,446. Page 240 of 358 -60- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) At December 31, 2022, the City reported deferred inflows of resources and deferred outflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Difference between expected and actual liability –$ 58,936$ Change of assumptions 161,345 7,668 Net difference between projected and actual earnings on plan investments – 369,132 City contributions subsequent to the measurement date 150,000 – State aid to the City subsequent to the measurement date 186,645 186,645 Total 497,990$ 622,381$ Deferred outflows of resources totaling $336,645 related to pensions resulting from city contributions to the plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2023. Deferred inflows of resources totaling $186,645 related to state aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ending December 31, 2023. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2023 (71,344)$ 2024 (138,115)$ 2025 (66,629)$ 2026 (28,498)$ 2027 5,656$ Thereafter 24,539$ E. Actuarial Methods and Assumptions The total pension liability (asset) at December 31, 2021 was determined using the entry-age normal actuarial cost method and the following actuarial assumptions: Retirement eligibility at 100 percent service pension at age 50 with 20 years of service, early vested retirement at age 50 with 10 years of service vested at 60 percent and increased by 4 percent for each additional year of service up to 20 and eligibility for deferred service pension payable at age 50 with 20 years of service. Inflation rate 2.25% per Investment rate of return 5.25% 20-year municipal bond yield 2.00% Plan changes since the last valuation included an increase in the plan benefit level from $7,500 to $8,500 per year of service. Page 241 of 358 -61- NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION (CONTINUED) The 5.25 percent long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates for expected future real rates of return (expected returns, net of inflation) were developed for each asset class us ing the plan’s target investment allocation, along with long-term return expectations by asset class. Inflation expectations were applied to derive the nominal rate of return for the portfolio. The target allocation and best-estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic equity 50.17 %4.90 %7.15 % International equity 13.45 5.32 %7.57 % Fixed income 30.23 1.40 %3.65 % Real estate and alternatives 1.18 4.43 %6.68 % Cash and equivalents 4.97 0.09 %2.34 % Total 100.00 %5.25 % Long-Term Expected Nominal Rate of Return Long-Term Target Expected Real Allocation Rate of Return F. Discount Rate The discount rate used to measure the total pension liability was 5.25 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in state statutes. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability (Asset) Sensitivity The following presents the City’s net pension liability (asset) for the plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s net pension liability (asset) would be if it were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate: 1% Decrease in Current 1% Increase in Discount Rate Discount Rate Discount Rate (4.25%)(5.25%)(6.25%) Net pension liability (asset)(1,558,339)$ (1,714,105)$ (1,861,974)$ H. Pension Plan Fiduciary Net Position The Association issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Farmington Fire Fighters’ Relief Association, 430 Third Street, Farmington, Minnesota 55024, or by calling (651) 280-6953. Page 242 of 358 -62- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A. Plan Description The City provides post-employment insurance benefits to certain eligible employees through its OPEB Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are based on contractual agreements with employee groups. Eligibility for these benefits is based on years of service and/or minimum age requirements. These contractual agreements do not include any specific contribution or funding requirements. The Plan does not issue a publicly available financial report. No plan assets are accumulated in a trust that meets the criteria in paragra ph 4 of GASB Statement No. 75. B. Benefits Provided All retirees of the City upon retirement have the option under state law to continue their medical insurance coverage through the City. For members of certain employee groups, the City pays for all or part of the eligible retiree’s premiums for medical and/or dental insurance from the time of retirement until the employee reaches the age of eligibility for Medicare. Benefits paid by the City differ by bargaining unit and date of hire, with some contracts specifying a certain dollar amount per month, and some covering premium costs as defined within each collective bargaining agreement. Retirees not eligible for these city-paid premium benefits must pay the full city premium rate for their coverage. The City is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees until the retiree reaches Medicare eligibility, whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obt ain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. For police officers or firefighters disabled in the line-of-duty, Minnesota Statutes require the City to continue payment of the employer’s contribution toward health coverage for the police officer or firefighter and their spouse, if the spouse was covered at the time of disability, until age 65. C. Contributions The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined periodically by the City. The City’s current year required pay-as-you-go contributions to finance the benefits described in the previous section totaled $64,174. D. Membership Membership in the plan consisted of the following as of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 7 Active plan members 89 Total members 96 E. Total OPEB Liability of the City The City’s total OPEB liability of $1,263,701 as of year-end was measured as of December 31, 2021, and was determined by an actuarial valuation as of December 31, 2020. Page 243 of 358 -63- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) F. Actuarial Methods and Assumptions The total OPEB liability was determined using the entry-age normal cost method. Liability gains and losses and plan changes are recognized immediately, in accordance with GASB Statement No. 75 Alternative Measurement Method requirements. The following actuarial assumptions applied to all periods included in the measurement, unless otherwise specified: Discount rate 2.06% 20-year municipal bond yield 2.06% Inflation rate 2.50% Healthcare trend rate 6.50% grading to 3.90% over 54 years The actuarial assumptions used in the latest valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information, as well as for consistency with the other economic assumptions. Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond yield rate of 2.06 percent, which was set by considering published rate information for 20-year high quality, tax-exempt, general obligation municipal bonds as of the measurement date. Mortality rates were based on the July 1, 2014 through June 30, 2018 PERA and TRA experience studies. G. Changes in the Total OPEB Liability Total OPEB Liability Beginning balance – January 1, 2022 1,169,857$ Changes for the year Service cost 114,711 Interest 26,625 Differences between expected and actual experience 3,834 Changes of assumptions 6,058 Benefit payments – employer-financed (57,384) Total net changes 93,844 Ending balance – December 31, 2022 1,263,701$ Assumption changes since the prior measurement date include the following: • The discount rate was updated from 2.12 percent to 2.06 percent based on recent municipal bond index rates. Page 244 of 358 -64- NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) H. Total OPEB Liability Sensitivity to Discount and Healthcare Cost Trend Rate Changes The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount rate: OPEB discount rate Total OPEB liability $ 1,367,881 $ 1,165,731 1.06%3.06% 1% Decrease in 1% Increase in Discount Rate Discount Rate Current Discount Rate $ 1,263,701 2.06% The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare trend rates: OPEB healthcare trend rate Total OPEB liability $ 1,098,692 $ 1,460,497 2.90% over 54 years 4.90% over 54 years 1% Decrease in 1% Increase in Healthcare Trend Rate Healthcare Trend Rate 5.50% decreasing to 7.50% decreasing to Healthcare Trend Rate 6.50% decreasing to 3.90% over 54 years $ 1,263,701 I. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources For the current year, the City recognized OPEB expense of $151,228. As of year-end, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Contributions subsequent to the measurement date 64,174$ –$ Deferred outflows of resources reported $64,174 related to OPEB resulting from city contributions subsequent to the measurement date that will be recognized as a reduction of the total OPEB liability in the year ending December 31, 2023. NOTE 11 – DEFICIT FUND BALANCES At December 31, 2022, the Federal Aid Special Revenue Fund reported a deficit fund balance of $82,501, the (nonmajor) K-9 Special Revenue Fund reported a deficit fund balance of $175, and the (nonmajor) Akin Street Reconstruction Capital Projects Fund reported a deficit fund balance of $90,256. These deficits are due to allocated investment charges for fair value decline or project expenditures incurred in advance of funding, and will be eliminated through future revenues and other financing sources. Page 245 of 358 -65- NOTE 12 – NET POSITION/FUND BALANCES A. Net Investment in Capital Assets The government-wide Statement of Net Position at December 31, 2022 includes the City’s net investment in capital assets, calculated as follows: Governmental Business-Type Activities Activities Total Net investment in capital assets Capital assets Not depreciated/amortized 4,232,344$ 498,376$ 4,730,720$ Depreciated/amortized, net 43,378,683 49,368,241 92,746,924 Less capital-related long-term debt outstanding (11,471,399) (1,513,425) (12,984,824) Add unused bond proceeds 893,578 – 893,578 Total net investment in capital assets 37,033,206$ 48,353,192$ 85,386,398$ B. Governmental Fund Balance Classifications At December 31, 2022, the City had the following governmental fund balances: Special Revenue –Debt General Federal Aid Service Maintenance Private Spruce Street Nonmajor Total Nonspendable Prepaid items 1,635$ –$ –$ –$ –$ –$ 2,500$ 4,135$ Restricted Debt service – – 3,154,949 – – – – 3,154,949 Economic development – – – – – – 304,352 304,352 Police programs – – – – – – 44,702 44,702 Park improvements – – – – – – 981,854 981,854 PEG fees – – – – – – 215,527 215,527 Recreational capital projects – – – – – – 97,997 97,997 Total restricted – – 3,154,949 – – – 1,644,432 4,799,381 Committed Pavement management – – – 1,628,109 – – – 1,628,109 Improvement projects – – – – 42,300 – 285,040 327,340 Park improvements – – – – – – 329,559 329,559 Ice arena capital – – – – – – 97,602 97,602 Sanitary sewer trunk – – – – – – 785,398 785,398 Cable communications – – – – – – 735,557 735,557 Street construction – – – – – – 127,266 127,266 Fire capital programs – – – – – – 217,503 217,503 Storm water trunk – – – – – – 4,703,897 4,703,897 Water trunk – – – – – – 534,719 534,719 Capital equipment – – – – – – 522,033 522,033 Spruce street reconstruction – – – – – 1,711,963 – 1,711,963 Parking lot projects – – – – – – 898,196 898,196 Trail maintenance – – – – – – 166,349 166,349 Building maintenance – – – – – – 219,963 219,963 Total committed – – – 1,628,109 42,300 1,711,963 9,623,082 13,005,454 Unassigned 7,829,882 (82,501) – – – – (90,431) 7,656,950 Total 7,831,517$ (82,501)$ 3,154,949$ 1,628,109$ 42,300$ 1,711,963$ 11,179,583$ 25,465,920$ Capital Projects – C. Minimum Fund Balance Policy The City’s policy is to maintain an unassigned fund balance in the General Fund in the range of 40.0–50.0 percent of the subsequent year’s budgeted expenditures and transfers out. At December 31, 2022, the unassigned fund balance of the General Fund was 46.4 percent of the subsequent year’s budgeted expenditures and transfers out. Page 246 of 358 -66- NOTE 13 – TAX INCREMENT PAY-AS-YOU-GO FINANCING REVENUE NOTES On November 2, 2017, the EDA entered into a private development agreement regarding the Trident Housing tax increment property. Reimbursements to the developer (Legacy Partners of Farmington, LLC) for the Downtown Redevelopment Project were contemplated in the development agreement. The vehicle used for this reimbursement is called a tax increment revenue note. This note provides for the payment of principal, equal to the developer’s costs, plus interest at 3 percent. Payments on the loan will be made at the lesser of the note payment or 90 percent of the actual net tax increment received during specific years as stated in the agreement. Payments are first applied to accrued interest and then to principal balances. The note is cancelled at the end of the agreement term, whether or not it has been repaid. Any additional tax increments received in the years following the term are retained by the EDA. The City rebated $116,360 of property tax increment in the current year. The remaining principal balance as of December 31, 2022 for this agreement was $1,161,157. This amount is not included in long-term debt because of the nature of this note in that repayment is required only if sufficient tax increments are received. The EDA’s position is that these are obligations to assign future and uncertain revenue sources and these obligations are not actual debt in-substance. NOTE 14 – COMMITMENTS 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 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 it’s not aware of any instances of noncompliance, which would have a material effect on the financial statements. D. Contracts Payable At December 31, 2022, the City is committed to various construction contracts for the improvement of city property. The City’s remaining commitment under these contracts is approximately $2,188,703 at year-end. Page 247 of 358 -67- NOTE 15 – NEW ACCOUNTING STANDARD A new standard has been issued by the GASB that will result in significant changes in the reporting of subscription-based information technology arrangements (SBITAs) once it becomes effective for governmental entities. This standard will be adopted by the City beginning in 2023, and will require the restatement of certain balances reported as of December 31, 2022. The effects of this change have not yet been determined and are not reflected in these financial statements. Page 248 of 358 REQUIRED SUPPLEMENTARY INFORMATION Page 249 of 358 Proportionate Share of the City’s Net Pension Proportionate Liability and City’s Share of the the City’s Proportionate Plan Fiduciary State of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as a PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total (Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension Date)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.0623% 3,228,709$ –$ 3,228,709$ 3,660,794$ 88.20% 78.20% 06/30/2016 0.0583% 4,733,671$ 61,864$ 4,795,535$ 3,618,268$ 130.83% 68.90% 06/30/2017 0.0597% 3,811,209$ 47,942$ 3,859,151$ 3,847,797$ 99.05% 75.90% 06/30/2018 0.0607% 3,367,387$ 110,472$ 3,477,859$ 4,034,230$ 83.47% 79.50% 06/30/2019 0.0613% 3,389,141$ 105,329$ 3,494,470$ 4,340,798$ 78.08% 80.20% 06/30/2020 0.0652% 3,909,039$ 120,522$ 4,029,561$ 4,647,499$ 84.11% 79.10% 06/30/2021 0.0673% 2,874,012$ 87,697$ 2,961,709$ 4,840,585$ 59.37% 87.00% 06/30/2022 0.0656% 5,195,542$ 152,265$ 5,347,807$ 4,915,505$ 105.70% 76.70% Contributions Contributions in Relation to as a Statutorily the Statutorily Contribution Percentage Required Required Deficiency Covered of Covered Contributions Contributions (Excess)Payroll Payroll 271,726$ 271,726$ –$ 3,623,009$ 7.50% 279,774$ 279,774$ –$ 3,730,581$ 7.50% 290,225$ 290,225$ –$ 3,872,895$ 7.49% 312,863$ 312,863$ –$ 4,171,664$ 7.50% 340,100$ 340,100$ –$ 4,534,664$ 7.50% 372,817$ 372,817$ –$ 4,970,884$ 7.50% 371,254$ 371,254$ –$ 4,950,057$ 7.50% 360,931$ 360,931$ –$ 4,814,017$ 7.50% Note:The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).This schedule is intended to present 10-year trend information. Additional years will be added as they become available. Year Ended December 31, 2022 Year Ended December 31, 2022 Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 12/31/2017 Year-End Date City Fiscal 12/31/2016 12/31/2015 12/31/2018 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 CITY OF FARMINGTON PERA – General Employees Retirement Fund PERA – General Employees Retirement Fund Schedule of City Contributions Year-End Date City Fiscal 12/31/2016 12/31/2015 12/31/2017 12/31/2019 12/31/2020 12/31/2021 12/31/2022 -68- Page 250 of 358 Proportionate Share of the City’s Net Pension Proportionate Liability and City’s Share of the the City’s Proportionate Plan Fiduciary State of Share of the Share of the Net Position City’s City’s Minnesota’s State of Net Pension as a PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total (Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension Date)Liability Liability Liability Liability Payroll Payroll Liability 06/30/2015 0.2450% 2,783,773$ –$ 2,783,773$ 2,242,616$ 124.13%86.60% 06/30/2016 0.2430% 9,752,013$ –$ 9,752,013$ 2,344,593$ 415.94%63.90% 06/30/2017 0.2370% 3,199,781$ –$ 3,199,781$ 2,431,157$ 131.62%85.40% 06/30/2018 0.2300% 2,451,563$ –$ 2,451,563$ 2,424,781$ 101.10%88.80% 06/30/2019 0.2381% 2,534,816$ –$ 2,534,816$ 2,513,262$ 100.86%89.30% 06/30/2020 0.2410% 3,176,637$ 74,843$ 3,251,480$ 2,720,577$ 116.76%87.20% 06/30/2021 0.2436% 1,880,335$ 84,551$ 1,964,886$ 2,879,369$ 65.30%93.70% 06/30/2022 0.2474% 10,765,871$ 470,299$ 11,236,170$ 3,003,762$ 358.41%70.50% Contributions Contributions in Relation to as a Statutorily the Statutorily Contribution Percentage Required Required Deficiency Covered of Covered Contributions Contributions (Excess)Payroll Payroll 374,503$ 374,503$ –$ 2,311,741$ 16.20% 384,033$ 384,033$ –$ 2,370,262$ 16.20% 395,621$ 395,621$ –$ 2,442,894$ 16.19% 396,439$ 396,439$ –$ 2,447,155$ 16.20% 442,727$ 442,727$ –$ 2,611,958$ 16.95% 515,909$ 515,909$ –$ 2,914,733$ 17.70% 526,699$ 526,699$ –$ 2,975,703$ 17.70% 536,433$ 536,433$ –$ 3,030,694$ 17.70% Note: City Fiscal Year Ended December 31, 2022 Year Ended December 31, 2022 12/31/2017 12/31/2015 12/31/2018 12/31/2019 12/31/2020 Year-End Date The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).This schedule is intended to present 10-year trend information. Additional years will be added as they become available. 12/31/2016 12/31/2021 12/31/2022 CITY OF FARMINGTON PERA – Public Employees Police and Fire Fund Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability PERA – Public Employees Police and Fire Fund Schedule of City Contributions 12/31/2016 12/31/2015 Year-End Date City Fiscal 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 -69- Page 251 of 358 City fiscal year-end dated December 31,2015 2016 2017 2018 2019 2020 2021 2022 Farmington Fire Fighters’ Relief Association year-end dated (measurement date) December 31,2014 2015 2016 2017 2018 2019 2020 2021 Total pension liability Service cost 69,285$ 71,190$ 86,788$ 93,501$ 112,754$ 163,690$ 177,922$ 190,066$ Interest 110,249 92,788 82,702 95,308 105,418 118,151 119,981 125,065 Differences between expected and actual experience – – (14,504) – (13,870) – (51,474) – Changes of assumptions – 116,780 (15,678) – 86,336 61,961 18,063 – Changes of benefits terms – – 143,662 171,894 169,797 – (368) 238,686 Benefit payments (265,643) (596,137) (1,194) (292,064) (156,771) – (254,977) (103,887) Net change in total pension liability (86,109) (315,379) 281,776 68,639 303,664 343,802 9,147 449,930 Total pension liability Beginning of year 1,638,527 1,552,418 1,237,039 1,518,815 1,587,454 1,891,118 2,234,920 2,244,067 End of year 1,552,418$ 1,237,039$ 1,518,815$ 1,587,454$ 1,891,118$ 2,234,920$ 2,244,067$ 2,693,997$ Plan fiduciary net position Contributions (state and local)283,461$ 291,915$ 291,510$ 301,508$ 297,548$ 301,797$ 315,539$ 321,822$ Net investment income 84,277 (33,543) 163,457 342,985 (168,667) 508,896 366,662 419,642 Benefit payments (265,643) (596,137) (1,194) (292,064) (156,771) – (254,977) (103,887) Administrative costs (10,848) (15,756) (17,200) (18,282) (16,720) (18,400) (16,950) (18,750) Net change in plan fiduciary net position 91,247 (353,521) 436,573 334,147 (44,610) 792,293 410,274 618,827 Plan fiduciary net position Beginning of year 2,122,872 2,214,119 1,860,598 2,297,171 2,631,318 2,586,708 3,379,001 3,789,275 End of year 2,214,119$ 1,860,598$ 2,297,171$ 2,631,318$ 2,586,708$ 3,379,001$ 3,789,275$ 4,408,102$ Net pension liability (asset) – ending (661,701)$ (623,559)$ (778,356)$ (1,043,864)$ (695,590)$ (1,144,081)$ (1,545,208)$ (1,714,105)$ Plan fiduciary net position as a percentage of the total pension liability 142.62%150.41%151.25%165.76%136.78%151.19%168.86%163.63% Note: The City implemented GASB Statement No. 68 in fiscal 2015 (using a December 31, 2014 measurement date). This information is not available for previous fiscal years. CITY OF FARMINGTON Farmington Fire Fighters’ Relief Association Schedule of Changes in the Relief Association’s Net Pension Liability (Asset) and Related Ratios Year Ended December 31, 2022 -70- Page 252 of 358 Contributions in Relation to the Statutorily Statutorily Contribution Voluntary Required Required Deficiency City Contributions (a)Contributions (b)(Excess) (a-b)Contribution –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ –$ –$ –$ 150,000$ Note: The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31,2014 measurement date).This information is not available for previous fiscal years. Schedule of City Contributions Farmington Fire Fighters’ Relief Association CITY OF FARMINGTON City Fiscal Year-End Date 12/31/2017 12/31/2015 12/31/2016 12/31/2018 12/31/2019 12/31/2020 12/31/2021 Year Ended December 31, 2022 12/31/2022 -71- Page 253 of 358 2018 2019 2020 2021 2022 Total OPEB liability Service cost 113,275$ 85,451$ 74,564$ 92,066$ 114,711$ Interest 40,190 40,509 49,025 26,170 26,625 Differences between expected and actual experience – – (424,559) 489,862 3,834 Changes of assumptions 28,356 (57,133) 79,584 (278,274) 6,058 Benefit payments (38,891) (40,361) (33,373) (45,998) (57,384) Net change in total OPEB liability 142,930 28,466 (254,759) 283,826 93,844 Total OPEB liability – beginning of year 969,394 1,112,324 1,140,790 886,031 1,169,857 Total OPEB liability – end of year 1,112,324$ 1,140,790$ 886,031$ 1,169,857$ 1,263,701$ Covered-employee payroll 5,800,000$ 6,000,000$ 7,300,000$ 7,300,000$ 8,600,000$ Total OPEB liability as a percentage of covered-employee payroll 19.18% 19.01% 12.14% 16.03% 14.69% Note 1: Note: 2: Fiscal Year The City has not established a trust fund to finance GASB Statement No. 75 related benefits. The City implemented GASB Statement No.75 in fiscal 2018.This schedule is intended to present 10-year trend information. Additional years will be added as they become available. CITY OF FARMINGTON Other Post-Employment Benefits Plan Schedule of Changes in the City’s Total OPEB Liability and Related Ratios Year Ended December 31, 2022 -72- Page 254 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information December 31, 2022 -73- PERA – GENERAL EMPLOYEES RETIREMENT FUND 2022 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021 CHANGES IN ACTUARIAL ASSUMPTIONS • The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. • The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS • The price inflation assumption was decreased from 2.50 percent to 2.25 percent. • The payroll growth assumption was decreased from 3.25 percent to 3.00 percent. • Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25 percent less than previous rates. • Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. • Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years two through five, and slightly higher thereafter. • Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. • The base mortality table for healthy annuitants and employees was changed from the RP-2014 Table to the Pub-2010 General Mortality Table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-2014 Disabled Annuitant Mortality Table to the Pub-2010 General/Teacher Disabled Annuitant Mortality Table, with adjustments. • The mortality improvement scale was changed from MP-2018 to MP-2019. • The assumed spouse age difference was changed from two years older for females to one year older. • The assumed number of married male new retirees electing the 100.00 percent joint and survivor option changed from 35.00 percent to 45.00 percent. The assumed number of married female new retirees electing the 100.00 percent joint and survivor option changed from 15.00 percent to 30.00 percent. The corresponding number of married new retirees electing the life annuity option was adjusted accordingly. 2020 CHANGES IN PLAN PROVISIONS • Augmentation for current privatized members was reduced to 2.00 percent for the period July 1, 2020 through December 31, 2023, and zero percent thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020. Page 255 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -74- PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED) 2019 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality projection scale was changed from MP-2017 to MP-2018. 2019 CHANGES IN PLAN PROVISIONS • The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality projection scale was changed from MP-2015 to MP-2017. • The assumed benefit increase was changed from 1.00 percent per year through 2044, and 2.50 percent per year thereafter, to 1.25 percent per year. 2018 CHANGES IN PLAN PROVISIONS • The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. • Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. • Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. • Contribution stabilizer provisions were repealed. • Post-retirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. • For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. • Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. Page 256 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -75- PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED) 2017 CHANGES IN ACTUARIAL ASSUMPTIONS • The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent for vested and nonvested deferred members. The revised CSA loads are now zero percent for active member liability, 15.00 percent for vested deferred member liability, and 3.00 percent for nonvested deferred member liability. • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter. 2017 CHANGES IN PLAN PROVISIONS • The state’s contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018, and $6.0 million thereafter. • The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21.0 million to $31.0 million in calendar years 2019 to 2031. The state’s contribution changed from $16.0 million to $6.0 million in calendar years 2019 to 2031. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2035 and 2.50 percent per year thereafter, to 1.00 percent per year for all years. • The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 7.50 percent. • Other assumptions were changed pursuant to the experience study June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030 and 2.50 percent per year thereafter, to 1.00 percent per year through 2035, and 2.50 percent per year thereafter. 2015 CHANGES IN PLAN PROVISIONS • On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892.0 million. Upon consolidation, state and employer contributions were revised; the state’s contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. Page 257 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -76- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND 2022 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. • This single discount rate changed from 6.50 percent to 5.40 percent. 2021 CHANGES IN ACTUARIAL ASSUMPTIONS • The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. • The inflation assumption was changed from 2.50 percent to 2.25 percent. • The payroll growth assumption was changed from 3.25 percent to 3.00 percent. • The base mortality table for healthy annuitants and employees was changed from the RP-2014 Table to the Pub-2010 Public Safety Mortality Table. The mortality improvement scale was changed from MP-2019 to MP-2020. • The base mortality table for disabled annuitants was changed from the RP-2014 Healthy Annuitant Mortality Table (with future mortality improvement according to Scale MP-2019) to the Pub-2010 Public Safety Disabled Annuitant Mortality Table (with future mortality improvement according to Scale MP-2020). • Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall impact is a decrease in gross salary increase rates. • Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. • Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes result in more assumed terminations. • Assumed rates of disability were increased for ages 25–44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. • Assumed percent married for active female members was changed from 60.00 percent to 70.00 percent. Minor changes to form of payment assumptions were applied. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality projection scale was changed from MP-2018 to MP-2019. 2019 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality projection scale was changed from MP-2017 to MP-2018. Page 258 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -77- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2018 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality projection scale was changed from MP-2016 to MP-2017. 2018 CHANGES IN PLAN PROVISIONS • Post-retirement benefit increases were changed to 1.00 percent for all years, with no trigger. • An end date of July 1, 2048 was added to the existing $9.0 million state contribution. • New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter, until the plan reaches 100.00 percent funding, or July 1, 2048, if earlier. • Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019, and 11.80 percent of pay, effective January 1, 2020. • Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019, and 17.70 percent of pay, effective January 1, 2020. • Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. • Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. • Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS • Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. • Assumed rates of retirement were changed, resulting in fewer retirements. • The CSA load was 30.00 percent for vested and nonvested deferred members. The CSA has been changed to 33.00 percent for vested members, and 2.00 percent for nonvested members. • The base mortality table for healthy annuitants was changed from the RP-2000 Fully Generational Table to the RP-2014 Fully Generational Table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000 Disabled Mortality Table to the mortality tables assumed for healthy retirees. • Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. • Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent. • Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. • The assumed percentage of female members electing joint and survivor annuities was increased. • The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years, to 1.00 percent per year through 2064, and 2.50 percent thereafter. • The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum. Page 259 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -78- PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED) 2016 CHANGES IN ACTUARIAL ASSUMPTIONS • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2037, and 2.50 percent per year thereafter, to 1.00 percent per year for all future years. • The assumed investment return was changed from 7.90 percent to 7.50 percent. • The single discount rate changed from 7.90 percent to 5.60 percent. • The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation. 2015 CHANGES IN ACTUARIAL ASSUMPTIONS • The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2037, and 2.50 percent per year thereafter. 2015 CHANGES IN PLAN PROVISIONS • The post-retirement benefit increase to be paid after attainment of the 90.00 percent funding threshold was changed from inflation up to 2.50 percent, to a fixed rate of 2.50 percent. FARMINGTON FIRE FIGHTERS’ RELIEF ASSOCIATION 2022 CHANGES IN PLAN PROVISIONS • The plan benefit level increased from $7,500 to $8,500 per year of service. 2021 CHANGES IN ACTUARIAL ASSUMPTIONS • The mortality assumptions were updated from the rates used in the July 1, 2018 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2020 Minnesota PERA Police and Fire Plan actuarial valuation. • The inflation rate was changed from 2.50 percent to 2.25 percent. 2021 CHANGES IN PLAN PROVISIONS • Interest earned on deferred lump sum amounts has been updated from 5.00 percent for all members to 5.00 percent for member hired before July 1, 2019 and 2.00 percent for members hired on or after July 1, 2019. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for investment rate of return and the single discount rate both changed from 5.75 percent to 5.25 percent. Page 260 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -79- FARMINGTON FIRE FIGHTERS’ RELIEF ASSOCIATION (CONTINUED) 2019 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for investment rate of return and the single discount rate both changed from 6.50 percent to 5.75 percent. • The inflation rate was changed from 2.75 percent to 2.50 percent. • The mortality and withdrawal assumptions were updated from the rates used in the July 1, 2017 Minnesota PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2018 Minnesota PERA Police and Fire Plan actuarial valuation. 2019 CHANGES IN PLAN PROVISIONS • The plan benefit level increased from $6,500 to $7,500 per year of service. 2018 CHANGES IN PLAN PROVISIONS • The plan benefit level increased from $5,500 to $6,500 per year of service. 2017 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for investment rate of return and the single discount rate both changed from 6.25 percent to 6.50 percent. 2017 CHANGES IN PLAN PROVISIONS • The plan benefit level increased from $4,575 to $5,500 per year of service. 2016 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for the single discount rate changed from 7.00 percent to 6.25 percent. • The retirement rates were updated to graduated rates from 50.00 percent at the later of age 50 or 20 years of service, up to 100.00 percent at the earlier of age 65 or 30 years of service. Page 261 of 358 CITY OF FARMINGTON Notes to Required Supplementary Information (continued) December 31, 2022 -80- OTHER POST-EMPLOYMENT BENEFITS PLAN 2022 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for the single discount rate changed from 2.12 percent to 2.06 percent. 2021 CHANGES IN ACTUARIAL ASSUMPTIONS • Medical trend was updated based on recently published trend model and trend surveys to better reflect future anticipated experience. • Medical per capita claims tables were updated based on recent experience and demographics. • The actuarial assumptions for the single discount rate changed from 2.74 percent to 2.12 percent. • Withdrawal, mortality, and salary scale assumptions were updated to those included in the recently published PERA General Plan and Police and Fire Plan actuarial valuations. • Assumed retirement ages were updated from the PERA General Plan and Police and Fire Plan assumptions to age 56 for Police and Fire Plan members and 63 for General Plan members. • Assumed future retiree spouse participation was updated from 40.00 percent to current coverage elections. • The assumed inflation rate changed from 2.00 percent to 2.50 percent. 2021 CHANGES IN PLAN PROVISIONS • Medical premiums and retiree contributions were updated to current levels. 2020 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for the single discount rate changed from 4.09 percent to 2.74 percent. • The assumed inflation rate changed from 2.50 percent to 2.00 percent. 2019 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for the single discount rate changed from 3.44 percent to 4.09 percent. 2018 CHANGES IN ACTUARIAL ASSUMPTIONS • The actuarial assumptions for the single discount rate changed from 4.50 percent to 3.44 percent. Page 262 of 358 SUPPLEMENTARY INFORMATION Page 263 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 264 of 358 -81- 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. Page 265 of 358 Special Capital Revenue Projects Total Assets Cash and investments 1,661,910$ 9,488,407$ 11,150,317$ Receivables Accounts 112,042 96,831 208,873 Interest 5,215 28,871 34,086 Special assessments Noncurrent – 419,958 419,958 Due from other governments 540 – 540 Prepaid items 2,500 – 2,500 Total assets 1,782,207$ 10,034,067$ 11,816,274$ Liabilities Accounts and contracts payable 6,530$ 119,947$ 126,477$ Deposits payable 14,647 – 14,647 Due to other governments 217 – 217 Due to other funds 419 74,973 75,392 Total liabilities 21,813 194,920 216,733 Deferred inflows of resources Unavailable revenue – special assessments – 419,958 419,958 Fund balances (deficits) Nonspendable 2,500 – 2,500 Restricted 1,330,908 313,524 1,644,432 Committed 427,161 9,195,921 9,623,082 Unassigned (175) (90,256) (90,431) Total fund balances 1,760,394 9,419,189 11,179,583 Total liabilities, deferred inflows of resources, and fund balances 1,782,207$ 10,034,067$ 11,816,274$ CITY OF FARMINGTON Nonmajor Governmental Funds Combining Balance Sheet as of December 31, 2022 -82- Page 266 of 358 Special Capital Revenue Projects Total Revenue Property taxes 129,288$ 166,000$ 295,288$ Franchise taxes – 82,017 82,017 Intergovernmental 83,064 – 83,064 Charges for services 384,815 1,165,349 1,550,164 Investment earnings (charges)(45,532) (239,801) (285,333) Other Donations 44,559 188,187 232,746 Rentals 14,763 – 14,763 Miscellaneous 306,880 11,462 318,342 Total revenues 917,837 1,373,214 2,291,051 Expenditures Current General government – 97,521 97,521 Public safety 72,584 56,566 129,150 Public works – 170,929 170,929 Parks and recreation 450,404 26,597 477,001 Economic development 241,518 – 241,518 Capital outlay General government – 17,643 17,643 Public safety – 809,285 809,285 Public works – 539,950 539,950 Parks and recreation 10,250 158,355 168,605 Debt service Principal – 9,417 9,417 Interest and fiscal charges – 14,570 14,570 Total expenditures 774,756 1,900,833 2,675,589 Excess (deficiency) of revenues over expenditures 143,081 (527,619) (384,538) Other financing sources (uses) Sale of capital assets 30,884 49,290 80,174 Leases issued – 92,446 92,446 Transfers in 186,367 2,799,751 2,986,118 Transfers out (46,867) (14,500) (61,367) Total other financing sources (uses)170,384 2,926,987 3,097,371 Net change in fund balances 313,465 2,399,368 2,712,833 Fund balances Beginning of year 1,446,929 7,019,821 8,466,750 End of year 1,760,394$ 9,419,189$ 11,179,583$ Year Ended December 31, 2022 CITY OF FARMINGTON Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -83- Page 267 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 268 of 358 -84- 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: Economic Development Authority – Used to account for the general economic development activities of the City’s Economic Development Authority. Dakota Broadband – Used to account for the City’s agreement with Dakota Broadband. Trident Housing Tax Increment – Used to account for the development of this tax increment district. 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 costs related to the public safety of the City. Police Public Outreach – Used to account for the operations and activities related to police public outreach programs to foster positive relationships between the police department and the community. K-9 – Used to account for the operations and activities related to K-9 program donations and allows for the expenditure of those revenues for costs related to the City’s K-9 program. 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. Page 269 of 358 Economic Police Development Dakota Trident Housing Donations Authority Broadband Tax Increment and Forfeitures Assets Cash and investments 245,882$ –$ 57,563$ 18,299$ Receivables Accounts – – – – Interest 770 – 181 57 Due from other governments – 540 – – Prepaid items 2,500 – – – Total assets 249,152$ 540$ 57,744$ 18,356$ Liabilities Accounts and contracts payable 165$ –$ –$ –$ Deposits payable – – – 3,000 Due to other governments – – – – Due to other funds – 419 – – Total liabilities 165 419 – 3,000 Fund balances (deficits) Nonspendable 2,500 – – – Restricted for economic development 246,487 121 57,744 – Restricted for police programs – – – 15,356 Restricted for park improvements – – – – Committed for park improvements – – – – Committed for ice arena capital – – – – Unassigned – – – – Total fund balances (deficits)248,987 121 57,744 15,356 Total liabilities and fund balances 249,152$ 540$ 57,744$ 18,356$ CITY OF FARMINGTON Nonmajor Special Revenue Funds Combining Balance Sheet as of December 31, 2022 -85- Page 270 of 358 Police Public Park Outreach K-9 Improvement Arena Total 33,126$ 22$ 1,306,311$ 707$ 1,661,910$ – – 1,000 111,042 112,042 104 – 4,102 1 5,215 – – – – 540 – – – – 2,500 33,230$ 22$ 1,311,413$ 111,750$ 1,782,207$ 3,884$ 197$ –$ 2,284$ 6,530$ – – – 11,647 14,647 – – – 217 217 – – – – 419 3,884 197 – 14,148 21,813 – – – – 2,500 – – – – 304,352 29,346 – – – 44,702 – – 981,854 – 981,854 – – 329,559 – 329,559 – – – 97,602 97,602 – (175) – – (175) 29,346 (175) 1,311,413 97,602 1,760,394 33,230$ 22$ 1,311,413$ 111,750$ 1,782,207$ -86- Page 271 of 358 Economic Police Development Dakota Trident Housing Donations Authority Broadband Tax Increment and Forfeitures Revenues Property taxes –$ –$ 129,288$ –$ Intergovernmental – 83,064 – – Charges for services – – – – Investment earnings (charges)(6,627) – (1,556) (495) Other Donations – – – – Rentals – – – – Miscellaneous – – – – Total revenues (6,627) 83,064 127,732 (495) Expenditures Current Public safety – – – 19,177 Parks and recreation – – – – Economic development 40,600 82,929 117,989 – Capital outlay Parks and recreation – – – – Total expenditures 40,600 82,929 117,989 19,177 Excess (deficiency) of revenues over expenditures (47,227) 135 9,743 (19,672) Other financing sources (uses) Sale of capital assets – – – 30,884 Transfers in 94,367 – – – Transfers out – (44,367) – (2,500) Total other financing sources (uses)94,367 (44,367) – 28,384 Net change in fund balances 47,140 (44,232) 9,743 8,712 Fund balances (deficits) Beginning of year 201,847 44,353 48,001 6,644 End of year 248,987$ 121$ 57,744$ 15,356$ CITY OF FARMINGTON Nonmajor Special Revenue Funds Year Ended December 31, 2022 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -87- Page 272 of 358 Police Public Park Outreach K-9 Improvement Arena Total –$ –$ –$ –$ 129,288$ – – – – 83,064 – – – 384,815 384,815 (873) 8 (36,375) 386 (45,532) 39,309 250 – 5,000 44,559 – – 8,403 6,360 14,763 – – 306,880 – 306,880 38,436 258 278,908 396,561 917,837 47,934 5,473 – – 72,584 – – 19,593 430,811 450,404 – – – – 241,518 – – 10,250 – 10,250 47,934 5,473 29,843 430,811 774,756 (9,498) (5,215) 249,065 (34,250) 143,081 – – – – 30,884 – 2,500 75,000 14,500 186,367 – – – – (46,867) – 2,500 75,000 14,500 170,384 (9,498) (2,715) 324,065 (19,750) 313,465 38,844 2,540 987,348 117,352 1,446,929 29,346$ (175)$ 1,311,413$ 97,602$ 1,760,394$ -88- Page 273 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 274 of 358 -89- 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. State Aid Construction – Used to account for street construction and road/street rehabilitation or reconstruction projects related to municipal state aids. Fire – Used to account for the operations and activities related to fire capital projects and donations to the fire department. Storm Water Trunk – Used to account for the construction and improvement of storm water trunk infrastructure within the City. Recreation – 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. Permanent Improvement Revolving – Used to account for street construction projects financed with multiple funding sources. General Capital Equipment – Used to account for the operations and activities related to the City’s general capital equipment. Water Trunk – Used to account for the construction and improvement of water trunk infrastructure within the City. Parking Lot Project – Used to account for improvements to city parking lots. Akin Street Reconstruction – Used to account for street improvements related to Akin Street. Trail Maintenance – Used to account for improvements to city trails. Building Maintenance – Used to account for improvements to city buildings. Page 275 of 358 Sanitary Sewer Cable State Aid Storm Water Trunk Communications Construction Fire Trunk Recreation Assets Cash and investments 776,121$ 931,977$ 126,868$ 218,447$ 4,690,122$ 193,942$ Receivables Accounts 6,840 55,668 – – – 3,963 Interest 2,437 2,856 398 686 13,775 609 Special assessments Noncurrent – – 232,453 – – – Total assets 785,398$ 990,501$ 359,719$ 219,133$ 4,703,897$ 198,514$ Liabilities Accounts and contracts payable –$ 39,417$ –$ 1,630$ –$ 77$ Due to other funds – – – – – – Total liabilities – 39,417 – 1,630 – 77 Deferred inflows of resources Unavailable revenue – special assessments – – 232,453 – – – Fund balances (deficits) Restricted for public, educational, and governmental fees – 215,527 – – – – Restricted for recreational projects – – – – – 97,997 Committed for sanitary sewer trunk 785,398 – – – – – Committed for cable communications – 735,557 – – – – Committed for street construction – – 127,266 – – – Committed for fire capital programs – – – 217,503 – – Committed for storm water trunk – – – – 4,703,897 – Committed for improvement projects – – – – – 100,440 Committed for capital equipment – – – – – – Committed for water trunk – – – – – – Committed for parking lot projects – – – – – – Committed for trail maintenance – – – – – – Committed for building maintenance – – – – – – Unassigned – – – – – – Total fund balances (deficits)785,398 951,084 127,266 217,503 4,703,897 198,437 Total liabilities, deferred inflows of resources, and fund balances 785,398$ 990,501$ 359,719$ 219,133$ 4,703,897$ 198,514$ CITY OF FARMINGTON Nonmajor Capital Projects Funds Combining Balance Sheet as of December 31, 2022 -90- Page 276 of 358 Permanent General Akin Improvement Capital Water Parking Lot Street Trail Building Revolving Equipment Trunk Project Reconstruction Maintenance Maintenance Total 184,022$ 533,877$ 502,780$ 944,514$ –$ 166,463$ 219,274$ 9,488,407$ – – 30,360 – – – – 96,831 578 1,775 1,579 2,966 – 523 689 28,871 187,505 – – – – – – 419,958 372,105$ 535,652$ 534,719$ 947,480$ –$ 166,986$ 219,963$ 10,034,067$ –$ 13,619$ –$ 49,284$ 15,283$ 637$ –$ 119,947$ – – – – 74,973 – – 74,973 – 13,619 – 49,284 90,256 637 – 194,920 187,505 – – – – – – 419,958 – – – – – – – 215,527 – – – – – – – 97,997 – – – – – – – 785,398 – – – – – – – 735,557 – – – – – – – 127,266 – – – – – – – 217,503 – – – – – – – 4,703,897 184,600 – – – – – – 285,040 – 522,033 – – – – – 522,033 – – 534,719 – – – – 534,719 – – – 898,196 – – – 898,196 – – – – – 166,349 – 166,349 – – – – – – 219,963 219,963 – – – – (90,256) – – (90,256) 184,600 522,033 534,719 898,196 (90,256) 166,349 219,963 9,419,189 372,105$ 535,652$ 534,719$ 947,480$ –$ 166,986$ 219,963$ 10,034,067$ -91- Page 277 of 358 Sanitary Sewer Cable State Aid Storm Water Trunk Communications Construction Fire Trunk Recreation Revenues Property taxes –$ –$ –$ –$ 166,000$ –$ Franchise taxes – 82,017 – – – – Special assessments – – – – – – Intergovernmental – – – – – – Charges for services 172,896 – – – 437,995 – Investment earnings (charges)(21,500) (24,260) (3,411) (5,270) (102,199) (5,543) Other Donations – – – 130,000 – 58,187 Miscellaneous – 7,499 – – – 3,963 Total revenues 151,396 65,256 (3,411) 124,730 501,796 56,607 Expenditures Current General government – 97,521 – – – – Public safety – – – 56,372 – – Public works – – – – – – Parks and recreation – – – – – 4,416 Capital outlay General government – 17,643 – – – – Public safety – – – 137,946 – – Public works – – – – – – Parks and recreation – – – – – 3,075 Debt service Principal – – – – – – Interest and fiscal charges – – – – 11,610 – Total expenditures – 115,164 – 194,318 11,610 7,491 Excess (deficiency) of revenues over expenditures 151,396 (49,908) (3,411) (69,588) 490,186 49,116 Other financing sources Sale of capital assets – – – 120 – – Leases issued – – – – – – Transfers in – – – – – 20,000 Transfers out – – – – – (14,500) Total other financing sources – – – 120 – 5,500 Net change in fund balances 151,396 (49,908) (3,411) (69,468) 490,186 54,616 Fund balances (deficits) Beginning of year 634,002 1,000,992 130,677 286,971 4,213,711 143,821 End of year 785,398$ 951,084$ 127,266$ 217,503$ 4,703,897$ 198,437$ CITY OF FARMINGTON Nonmajor Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Year Ended December 31, 2022 -92- Page 278 of 358 Permanent General Akin Improvement Capital Water Parking Lot Street Trail Building Revolving Equipment Trunk Project Reconstruction Maintenance Maintenance Total –$ –$ –$ –$ –$ –$ –$ 166,000$ – – – – – – – 82,017 – – – – – – – – – – – – – – – – – – 554,458 – – – – 1,165,349 (3,753) (15,366) (19,739) (27,661) – (4,090) (7,009) (239,801) – – – – – – – 188,187 – – – – – – – 11,462 (3,753) (15,366) 534,719 (27,661) – (4,090) (7,009) 1,373,214 – – – – – – – 97,521 – 194 – – – – – 56,566 – – – 80,673 90,256 – – 170,929 – – – – – 9,563 12,618 26,597 – – – – – – – 17,643 – 671,339 – – – – – 809,285 – – – 539,950 – – – 539,950 – – – – – 155,280 – 158,355 – 9,417 – – – – – 9,417 – 2,960 – – – – – 14,570 – 683,910 – 620,623 90,256 164,843 12,618 1,900,833 (3,753) (699,276) 534,719 (648,284) (90,256) (168,933) (19,627) (527,619) – 49,170 – – – – – 49,290 – 92,446 – – – – – 92,446 – 658,399 – 1,546,480 – 335,282 239,590 2,799,751 – – – – – – – (14,500) – 800,015 – 1,546,480 – 335,282 239,590 2,926,987 (3,753) 100,739 534,719 898,196 (90,256) 166,349 219,963 2,399,368 188,353 421,294 – – – – – 7,019,821 184,600$ 522,033$ 534,719$ 898,196$ (90,256)$ 166,349$ 219,963$ 9,419,189$ -93- Page 279 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 280 of 358 -94- 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. 2010A General Obligation Improvement Refunding Bonds – The bonds were issued for the refinancing of the Police Station. The final payment on these bonds was made in 2018. 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. 2015A General Obligation Street Construction Bonds – The bonds were issued to fund the 195th Avenue Street reconstruction project. 2016A General Obligation Improvement Refunding Bonds – The bonds were issued to refund the 2008A&B and 2010C bonds, which were originally issued for the Elm Street, 195th Street Extension, and Walnut Street reconstruction projects. 2016B General Obligation Capital Improvement Refunding Bonds – The bonds were issued to refund the 2007A bonds, which were originally issued to finance City Hall and the City Garage. 2019A General Obligation Street Construction Bonds – The bonds were issued to fund the Westview Street improvement project. 2020A General Obligation Equipment Certificates – The certificates were issued to fund the purchase of a ladder truck. 2022A General Obligation Street Construction Bonds – The bonds were issued to fund the Spruce Street and Parking Lot improvement projects. Page 281 of 358 2010A G.O.2013A G.O.2015A G.O.2016A G.O. Improvement Improvement Street Improvement Refunding Refunding Construction Refunding Bonds Bonds Bonds Bonds Assets Cash and investments 57,794$ 183,685$ 467,170$ 1,229,883$ Receivables Interest 181 577 1,467 4,815 Special assessments Delinquent – 25 – 407 Noncurrent – 2,361,288 – 336,748 Total assets 57,975$ 2,545,575$ 468,637$ 1,571,853$ Liabilities Accounts and contracts payable –$ 208$ 208$ 208$ Deferred inflows of resources Unavailable revenue – special assessments – 2,361,313 – 337,155 Fund balances Restricted for debt service 57,975 184,054 468,429 1,234,490 Total liabilities, deferred inflows of resources, and fund balances 57,975$ 2,545,575$ 468,637$ 1,571,853$ CITY OF FARMINGTON Debt Service Fund Combining Balance Sheet by Account as of December 31, 2022 -95- Page 282 of 358 2016B G.O. Capital 2019A G.O.2022A G.O. Improvement Street 2020A G.O.Street Refunding Construction Equipment Construction Bonds Bonds Certificates Bonds Total 625,022$ 246,695$ 247,112$ 88,006$ 3,145,367$ 1,963 775 776 276 10,830 – – – – 432 – – – – 2,698,036 626,985$ 247,470$ 247,888$ 88,282$ 5,854,665$ 208$ 208$ 208$ –$ 1,248$ – – – – 2,698,468 626,777 247,262 247,680 88,282 3,154,949 626,985$ 247,470$ 247,888$ 88,282$ 5,854,665$ -96- Page 283 of 358 2010A G.O.2013A G.O.2015A G.O.2016A G.O. Improvement Improvement Street Improvement Refunding Refunding Construction Refunding Bonds Bonds Bonds Bonds Revenues Property taxes –$ –$ 335,500$ 624,750$ Special assessments – 297,120 – 234,226 Investment earnings (charges)(1,554) (6,374) (14,950) (47,618) Total revenues (1,554) 290,746 320,550 811,358 Expenditures Debt service Principal – 520,000 220,000 535,000 Interest and fiscal charges – 8,919 49,759 22,750 Total expenditures – 528,919 269,759 557,750 Excess (deficiency) of revenues over expenditures (1,554) (238,173) 50,791 253,608 Other financing sources (uses) Bonds issued – – – – Premium on bonds issued – – – – Transfers in – – – – Transfers out – (148,399) – – Total other financing sources (uses)– (148,399) – – Net change in fund balances (1,554) (386,572) 50,791 253,608 Fund balances Beginning of year 59,529 570,626 417,638 980,882 End of year 57,975$ 184,054$ 468,429$ 1,234,490$ CITY OF FARMINGTON Debt Service Fund Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances by Account Year Ended December 31, 2022 -97- Page 284 of 358 2016B G.O. Capital 2019A G.O.2022A G.O. Improvement Street 2020A G.O.Street Refunding Construction Equipment Construction Bonds Bonds Certificates Bonds Total 640,000$ 231,525$ 268,013$ –$ 2,099,788$ – – – – 531,346 (21,360) (8,273) (8,534) (3,455) (112,118) 618,640 223,252 259,479 (3,455) 2,519,016 525,000 190,000 200,000 – 2,190,000 101,484 29,759 50,957 83,529 347,157 626,484 219,759 250,957 83,529 2,537,157 (7,844) 3,493 8,522 (86,984) (18,141) – – – 3,650,000 3,650,000 – – – 346,246 346,246 – – – 91,737 91,737 – – – (3,912,717) (4,061,116) – – – 175,266 26,867 (7,844) 3,493 8,522 88,282 8,726 634,621 243,769 239,158 – 3,146,223 626,777$ 247,262$ 247,680$ 88,282$ 3,154,949$ -98- Page 285 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 286 of 358 -99- BUDGETARY COMPARISON SCHEDULES Debt Service Fund Maintenance Capital Projects Fund Private Capital Projects Fund Spruce Street Capital Projects Fund Nonmajor Special Revenue Funds Economic Development Authority Trident Housing Tax Increment Police Donations and Forfeitures K-9 Park Improvement Arena Nonmajor Capital Projects Funds Sanitary Sewer Trunk Cable Communications State Aid Construction Fire Storm Water Trunk Recreation Permanent Improvement Revolving General Capital Equipment Parking Lot Project Page 287 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Property taxes 2,099,788$ 2,099,788$ –$ Special assessments 276,197 531,346 255,149 Investment earnings (charges)16,900 (112,118) (129,018) Total revenues 2,392,885 2,519,016 126,131 Expenditures Debt service Principal 2,190,000 2,190,000 – Interest and fiscal charges 276,840 347,157 70,317 Total expenditures 2,466,840 2,537,157 70,317 Excess (deficiency) of revenues over expenditures (73,955) (18,141) 55,814 Other financing sources (uses) Bonds issued – 3,650,000 3,650,000 Premium on bonds issued – 346,246 346,246 Transfers in – 91,737 91,737 Transfers out (306,900) (4,061,116) (3,754,216) Total other financing sources (uses)(306,900) 26,867 333,767 Net change in fund balances (380,855)$ 8,726 389,581$ Fund balances Beginning of year 3,146,223 End of year 3,154,949$ CITY OF FARMINGTON Debt Service Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -100- Page 288 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Intergovernmental 80,000$ 32,311$ (47,689)$ Charges for service – 28,223 28,223 Investment earnings (charges)12,400 (40,640) (53,040) Total revenues 92,400 19,894 (72,506) Expenditures Current Public works 810,960 20,653 (790,307) Parks and recreation 124,040 34,240 (89,800) Capital outlay Public works – 175,247 175,247 Parks and recreation – 13,684 13,684 Total expenditures 935,000 243,824 (691,176) Excess (deficiency) of revenues over expenditures (842,600) (223,930) 618,670 Other financing sources (uses) Transfers in 1,029,587 712,578 (317,009) Transfers out – (432,863) (432,863) Total other financing sources (uses)1,029,587 279,715 (749,872) Net change in fund balances 186,987$ 55,785 (131,202)$ Fund balances Beginning of year 1,572,324 End of year 1,628,109$ CITY OF FARMINGTON Maintenance Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -101- Page 289 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Special assessments –$ 494$ 494$ Investment earnings (charges)11,900 (60,744) (72,644) Total revenues 11,900 (60,250) (72,150) Expenditures Current General government – 1,537 1,537 Net change in fund balances 11,900$ (61,787) (73,687)$ Fund balances Beginning of year 104,087 End of year 42,300$ CITY OF FARMINGTON Private Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -102- Page 290 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Intergovernmental –$ 68,649$ 68,649$ Investment earnings (charges)– (47,508) (47,508) Total revenues – 21,141 21,141 Expenditures Current Public works – 304,268 304,268 Capital outlay Public works 3,361,665 2,208,041 (1,153,624) Total expenditures 3,361,665 2,512,309 (849,356) Excess (deficiency) of revenues over expenditures (3,361,665) (2,491,168) 870,497 Other financing sources Transfers in – 4,219,200 4,219,200 Net change in fund balances (3,361,665)$ 1,728,032 5,089,697$ Fund balances (deficits) Beginning of year (16,069) End of year 1,711,963$ CITY OF FARMINGTON Spruce Street Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -103- Page 291 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Intergovernmental 183,465$ –$ (183,465)$ Investment earnings (charges)2,400 (6,627) (9,027) Total revenues 185,865 (6,627) (192,492) Expenditures Current Economic development 227,181 40,600 (186,581) Excess (deficiency) of revenues over expenditures (41,316) (47,227) (5,911) Other financing sources Transfers in 50,000 94,367 44,367 Net change in fund balances 8,684$ 47,140 38,456$ Fund balances Beginning of year 201,847 End of year 248,987$ CITY OF FARMINGTON Economic Development Authority Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -104- Page 292 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Property taxes 146,210$ 129,288$ (16,922)$ Investment earnings (charges)500 (1,556) (2,056) Total revenues 146,710 127,732 (18,978) Expenditures Current Economic development 134,439 117,989 (16,450) Net change in fund balances 12,271$ 9,743 (2,528)$ Fund balances Beginning of year 48,001 End of year 57,744$ CITY OF FARMINGTON Trident Housing Tax Increment Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -105- Page 293 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)–$ (495)$ (495)$ Expenditures Current Public safety 2,000 19,177 17,177 Excess (deficiency) of revenues over expenditures (2,000) (19,672) (17,672) Other financing sources (uses) Sale of capital assets 3,500 30,884 27,384 Transfers out – (2,500) (2,500) Total other financing sources (uses)3,500 28,384 24,884 Net change in fund balances 1,500$ 8,712 7,212$ Fund balances Beginning of year 6,644 End of year 15,356$ CITY OF FARMINGTON Police Donations and Forfeitures Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -106- Page 294 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)100$ 8$ (92)$ Other Donations – 250 250 Total revenues 100 258 158 Expenditures Current Public safety – 5,473 5,473 Excess (deficiency) of revenues over expenditures 100 (5,215) (5,315) Other financing sources Transfers in – 2,500 2,500 Net change in fund balances 100$ (2,715) (2,815)$ Fund balances (deficits) Beginning of year 2,540 End of year (175)$ CITY OF FARMINGTON K-9 Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -107- Page 295 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)3,200$ (36,375)$ (39,575)$ Other Rentals 8,400 8,403 3 Miscellaneous 25,000 306,880 281,880 Total revenues 36,600 278,908 242,308 Expenditures Current Parks and recreation 157,500 19,593 (137,907) Capital outlay Parks and recreation – 10,250 10,250 Total expenditures 157,500 29,843 (127,657) Excess (deficiency) of revenues over expenditures (120,900) 249,065 369,965 Other financing sources Transfers in 75,000 75,000 – Net change in fund balances (45,900)$ 324,065 369,965$ Fund balances Beginning of year 987,348 End of year 1,311,413$ CITY OF FARMINGTON Park Improvement Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -108- Page 296 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Charges for services 386,700$ 384,815$ (1,885)$ Investment earnings 300 386 86 Other Donations 5,000 5,000 – Rentals 3,000 6,360 3,360 Miscellaneous 1,000 – (1,000) Total revenues 396,000 396,561 561 Expenditures Current Parks and recreation 427,751 430,811 3,060 Capital outlay Parks and recreation 500 – (500) Total expenditures 428,251 430,811 2,560 Excess (deficiency) of revenues over expenditures (32,251) (34,250) (1,999) Other financing sources Transfers in – 14,500 14,500 Net change in fund balances (32,251)$ (19,750) 12,501$ Fund balances Beginning of year 117,352 End of year 97,602$ CITY OF FARMINGTON Arena Special Revenue Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -109- Page 297 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Charges for services 66,600$ 172,896$ 106,296$ Investment earnings (charges)4,300 (21,500) (25,800) Total revenues 70,900 151,396 80,496 Net change in fund balances 70,900$ 151,396 80,496$ Fund balances Beginning of year 634,002 End of year 785,398$ CITY OF FARMINGTON Sanitary Sewer Trunk Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -110- Page 298 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Franchise taxes 140,000$ 82,017$ (57,983)$ Investment earnings (charges)8,300 (24,260) (32,560) Other Miscellaneous – 7,499 7,499 Total revenues 148,300 65,256 (83,044) Expenditures Current General government 93,000 97,521 4,521 Capital outlay General government 30,000 17,643 (12,357) Total expenditures 123,000 115,164 (7,836) Net change in fund balances 25,300$ (49,908) (75,208)$ Fund balances Beginning of year 1,000,992 End of year 951,084$ CITY OF FARMINGTON Cable Communications Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -111- Page 299 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)1,200$ (3,411)$ (4,611)$ Net change in fund balances 1,200$ (3,411) (4,611)$ Fund balances Beginning of year 130,677 End of year 127,266$ CITY OF FARMINGTON State Aid Construction Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -112- Page 300 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)1,100$ (5,270)$ (6,370)$ Other Donations – 130,000 130,000 Total revenues 1,100 124,730 123,630 Expenditures Current Public safety 2,000 56,372 54,372 Capital outlay Public safety 5,000 137,946 132,946 Total expenditures 7,000 194,318 187,318 Excess (deficiency) of revenues over expenditures (5,900) (69,588) (63,688) Other financing sources Sale of capital assets – 120 120 Net change in fund balances (5,900)$ (69,468) (63,568)$ Fund balances Beginning of year 286,971 End of year 217,503$ CITY OF FARMINGTON Fire Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -113- Page 301 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Property taxes 166,000$ 166,000$ –$ Charges for service – 437,995 437,995 Investment earnings (charges)24,800 (102,199) (126,999) Total revenues 190,800 501,796 310,996 Expenditures Debt service Interest and fiscal charges – 11,610 11,610 Excess of revenues over expenditures 190,800 490,186 299,386 Other financing sources Transfers in 306,900 – (306,900) Net change in fund balances 497,700$ 490,186 (7,514)$ Fund balances Beginning of year 4,213,711 End of year 4,703,897$ CITY OF FARMINGTON Storm Water Trunk Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -114- Page 302 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)1,100$ (5,543)$ (6,643)$ Other Donations 20,000 58,187 38,187 Miscellaneous – 3,963 3,963 Total revenues 21,100 56,607 35,507 Expenditures Current Parks and recreation 14,000 4,416 (9,584) Capital outlay Parks and recreation 6,000 3,075 (2,925) Total expenditures 20,000 7,491 (12,509) Excess of revenues over expenditures 1,100 49,116 48,016 Other financing sources (uses) Transfers in 20,000 20,000 – Transfers out – (14,500) (14,500) Total other financing sources (uses)20,000 5,500 (14,500) Net change in fund balances 21,100$ 54,616 33,516$ Fund balances Beginning of year 143,821 End of year 198,437$ CITY OF FARMINGTON Recreation Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -115- Page 303 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)1,600$ (3,753)$ (5,353)$ Net change in fund balances 1,600$ (3,753) (5,353)$ Fund balances Beginning of year 188,353 End of year 184,600$ CITY OF FARMINGTON Permanent Improvement Revolving Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -116- Page 304 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)5,300$ (15,366)$ (20,666)$ Expenditures Current Public safety – 194 194 Capital outlay Public safety 938,649 671,339 (267,310) Debt service Principal – 9,417 9,417 Interest and fiscal charges – 2,960 2,960 Total expenditures 938,649 683,910 (254,739) Excess (deficiency) of revenues over expenditures (933,349) (699,276) 234,073 Other financing sources Sale of capital assets – 49,170 49,170 Leases issued – 92,446 92,446 Transfers in 510,000 658,399 148,399 Total other financing sources 510,000 800,015 290,015 Net change in fund balances (423,349)$ 100,739 524,088$ Fund balances Beginning of year 421,294 End of year 522,033$ CITY OF FARMINGTON General Capital Equipment Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -117- Page 305 of 358 Original and Variance With Final Budget Actual Final Budget Revenues Investment earnings (charges)–$ (27,661)$ (27,661)$ Expenditures Current Public works – 80,673 80,673 Capital outlay Public works 595,606 539,950 (55,656) Total expenditures 595,606 620,623 25,017 Excess (deficiency) of revenues over expenditures (595,606) (648,284) (52,678) Other financing sources Transfers in – 1,546,480 1,546,480 Net change in fund balances (595,606)$ 898,196 1,493,802$ Fund balances Beginning of year – End of year 898,196$ CITY OF FARMINGTON Parking Lot Project Capital Projects Fund Budgetary Comparison Schedule Year Ended December 31, 2022 -118- Page 306 of 358 -119- 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 workers’ 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. Page 307 of 358 Property Employee and Liability Information Expense Insurance Fleet Technology Total Assets Current assets Cash and investments 1,781,258$ 429,454$ 126,925$ 701,774$ 3,039,411$ Receivables Accounts – 40,738 – – 40,738 Interest 5,594 1,349 399 2,157 9,499 Due from other governments 124 – – – 124 Prepaid items – – – 45,684 45,684 Total current assets 1,786,976 471,541 127,324 749,615 3,135,456 Noncurrent assets Capital assets Machinery and equipment – – 99,124 – 99,124 Less accumulated depreciation – – (95,275)– (95,275) Total capital assets – – 3,849 – 3,849 Total assets 1,786,976$ 471,541$ 131,173$ 749,615$ 3,139,305$ Current liabilities Accounts and contracts payable 1,678$ 8,799$ 2,189$ 64,187$ 76,853$ Accrued salaries and employee benefits payable 236,359 – – – 236,359 Deposits payable 2,006 – – – 2,006 Compensated absences payable – – 32,864 16,241 49,105 Total current liabilities 240,043 8,799 35,053 80,428 364,323 Net position Investment in capital assets – – 3,849 – 3,849 Unrestricted 1,546,933 462,742 92,271 669,187 2,771,133 Total net position 1,546,933 462,742 96,120 669,187 2,774,982 Total liabilities and net position 1,786,976$ 471,541$ 131,173$ 749,615$ 3,139,305$ as of December 31, 2022 CITY OF FARMINGTON Internal Service Funds Combining Statement of Net Position -120- Page 308 of 358 Property Employee and Liability Information Expense Insurance Fleet Technology Total Operating revenues Charges for services 2,772,038$ –$ 232,240$ 680,546$ 3,684,824$ Insurance reimbursement – 383,295 – – 383,295 Total operating revenues 2,772,038 383,295 232,240 680,546 4,068,119 Operating expenses Personal services 2,644,013 – 231,653 231,644 3,107,310 Professional services 3,191 3,385 34,828 355,192 396,596 Materials and supplies – – 37,611 187,595 225,206 Insurance – 433,476 – – 433,476 Depreciation – – 4,742 – 4,742 Total operating expenses 2,647,204 436,861 308,834 774,431 4,167,330 Operating income (loss)124,834 (53,566) (76,594) (93,885) (99,211) Nonoperating revenue Investment earnings (charges)(47,927) (11,387)(3,067)(18,081) (80,462) Gain on sale of capital assets – – – 759 759 Total nonoperating revenue (47,927) (11,387) (3,067) (17,322) (79,703) Income (loss) before transfers 76,907 (64,953) (79,661) (111,207) (178,914) Transfers in 13,022 24,000 – 15,000 52,022 Change in net position 89,929 (40,953) (79,661) (96,207) (126,892) Net position Beginning of year 1,457,004 503,695 175,781 765,394 2,901,874 End of year 1,546,933$ 462,742$ 96,120$ 669,187$ 2,774,982$ Year Ended December 31, 2022 CITY OF FARMINGTON Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position -121- Page 309 of 358 Property Employee and Liability Information Expense Insurance Fleet Technology Total Cash flows from operating activities Cash receipts from other funds and reimbursements 2,771,914$ 348,643$ 238,067$ 685,122$ 4,043,746$ Cash payments to employees for services (2,755,394) – (229,511) (228,570) (3,213,475) Cash payments for interfund services used (3,191) (428,062) (70,250) (478,600) (980,103) Net cash flows from operating activities 13,329 (79,419) (61,694) (22,048) (149,832) Cash flows from noncapital financing activities Transfers in 13,022 24,000 – 15,000 52,022 Cash flows from capital and related financing activities Proceeds from the disposal of capital assets – – – 759 759 Cash flows from investing activities Interest received and changes in fair value on investments (49,128) (11,457) (2,972) (18,366) (81,923) Net increase (decrease) in cash and cash equivalents (22,777) (66,876) (64,666) (24,655) (178,974) Cash and cash equivalents Beginning of year 1,804,035 496,330 191,591 726,429 3,218,385 End of year 1,781,258$ 429,454$ 126,925$ 701,774$ 3,039,411$ Reconciliation of operating income (loss) to net cash flows from operating activities Operating income (loss) 124,834$ (53,566)$ (76,594)$ (93,885)$ (99,211)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities Depreciation – – 4,742 – 4,742 Change in assets and liabilities Accounts receivable – (34,652) 5,827 4,576 (24,249) Due from other governments (124) – – – (124) Accounts and contracts payable (89,163) 8,799 2,189 64,187 (13,988) Accrued salaries and employee benefits (21,261) – – – (21,261) Deposits payable (957) – – – (957) Compensated absences payable – – 2,142 3,074 5,216 Total adjustments (111,505) (25,853) 14,900 71,837 (50,621) Net cash flows from operating activities 13,329$ (79,419)$ (61,694)$ (22,048)$ (149,832)$ Year Ended December 31, 2022 CITY OF FARMINGTON Internal Service Funds Combining Statement of Cash Flows -122- Page 310 of 358 STATISTICAL SECTION (UNAUDITED) Page 311 of 358 Page 312 of 358 -123- STATISTICAL TABLES (UNAUDITED) This part of the City’s Annual Comprehensive Financial Report (ACFR) presents detailed information as a context for understanding this year’s financial statements, note disclosures, and supplementary information. This information has not been audited by the independent auditor. The contents of the statistical section include: Financial Trends – These tables contain trend information that may assist the reader in assessing the City’s current financial performance by placing it in historical perspective. Revenue Capacity – These tables contain information to assist the reader in assessing the City’s most significant local revenue source—property taxes. Debt Capacity – These tables present information that may assist the reader in analyzin g the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information – These tables offer economic and demographic indicators that are commonly used for financial analysis and that can assist the reader in understanding the City’s present and ongoing financial status. Operating Information – These tables contain service and infrastructure indicators that can assist the reader in understanding how the information in the City’s financial report relates to the services the City provides and the activities it performs. Source – Unless otherwise noted, the information in these tables is derived from the ACFR for the relevant year. Page 313 of 358 Fiscal Year 2013 2014 2015 2016 Governmental activities Net investment in capital assets 23,462,934$ 23,383,175$ 21,417,203$ 23,684,773$ Restricted 11,669,054 9,235,448 9,063,587 10,441,391 Unrestricted 9,628,139 13,150,789 8,920,144 5,142,435 Total governmental activities net position 44,760,127$ 45,769,412$ 39,400,934$ 39,268,599$ Business-type activities Net investment in capital assets 57,427,060$ 55,685,476$ 54,807,938$ 53,225,787$ Restricted 2,159,566 2,160,566 2,160,566 2,231,966 Unrestricted 8,891,769 10,396,218 11,439,369 12,575,526 Total business-type activities net position 68,478,395$ 68,242,260$ 68,407,873$ 68,033,279$ Primary government Net investment in capital assets 80,889,994$ 79,068,651$ 76,225,141$ 76,910,560$ Restricted 13,828,620 11,396,014 11,224,153 12,673,357 Unrestricted 18,519,908 23,547,007 20,359,513 17,717,961 Total primary government net position 113,238,522$ 114,011,672$ 107,808,807$ 107,301,878$ Note 1: Note 2:The City implemented GASB Statement No.87 in fiscal 2022,recording a change in accounting principle that decreased unrestricted net position. Prior year balances were not restated. CITY OF FARMINGTON Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) The City implemented GASB Statement No.68 in fiscal 2015,recording a change in accounting principle that decreased unrestricted net position. Prior year balances were not restated. -124- Page 314 of 358 2017 2018 2019 2020 2021 2022 28,820,307$ 32,909,853$ 33,867,761$ 35,883,311$ 36,819,084$ 37,033,206$ 6,961,837 4,797,191 5,343,074 5,224,015 9,841,913 10,556,611 6,576,959 7,997,614 8,001,782 9,236,760 11,591,481 14,198,632 42,359,103$ 45,704,658$ 47,212,617$ 50,344,086$ 58,252,478$ 61,788,449$ 51,464,649$ 50,747,479$ 53,677,776$ 51,976,059$ 50,773,632$ 48,353,192$ 2,238,206 2,316,500 2,461,488 2,461,488 2,461,488 2,461,488 13,508,485 14,594,293 13,187,014 15,418,911 18,123,198 18,266,640 67,211,340$ 67,658,272$ 69,326,278$ 69,856,458$ 71,358,318$ 69,081,320$ 80,284,956$ 83,657,332$ 87,545,537$ 87,859,370$ 87,592,716$ 85,386,398$ 9,200,043 7,113,691 7,804,562 7,685,503 12,303,401 13,018,099 20,085,444 22,591,907 21,188,796 24,655,671 29,714,679 32,465,272 109,570,443$ 113,362,930$ 116,538,895$ 120,200,544$ 129,610,796$ 130,869,769$ -125- Page 315 of 358 Fiscal Year 2013 2014 2015 2016 Expenses Governmental activities General government 1,778,549$ 1,940,630$ 2,284,974$ 2,268,779$ Public safety 5,156,950 5,192,091 5,357,738 6,979,608 Public works 3,849,742 4,893,341 7,473,095 5,497,796 Park and recreation 1,775,967 1,730,734 1,815,882 1,904,792 Economic development 50,000 49,417 90,000 40,000 Interest and fiscal charges 1,290,439 1,020,096 992,422 1,032,748 Total governmental activities expenses 13,901,647$ 14,826,309$ 18,014,111$ 17,723,723$ Business-type activities Liquor operations 4,206,058$ 4,315,834$ 4,352,597$ 4,448,932$ Sewer operations 1,627,927 1,712,146 1,875,225 2,051,152 Solid waste 1,658,547 1,600,434 1,658,128 1,753,162 Storm water 513,582 615,684 731,444 534,988 Water 1,427,298 1,410,214 1,339,588 1,359,215 Street light 184,834 174,957 173,212 288,924 Total business-type activities 9,618,246 9,829,269 10,130,194 10,436,373 Total primary government expenses 23,519,893$ 24,655,578$ 28,144,305$ 28,160,096$ Program revenues Governmental activities Charges for services General government 684,528$ 534,008$ 399,053$ 668,849$ Public safety 482,759 409,460 351,038 459,240 Public works 115,092 94,416 9,624 195,716 Parks and recreation 596,165 607,566 604,111 651,936 Operating grants and contributions 713,378 677,999 649,541 744,730 Capital grants and contributions 645,233 477,833 671,671 818,545 Total governmental activities program revenues 3,237,155$ 2,801,282$ 2,685,038$ 3,539,016$ CITY OF FARMINGTON Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) -126- Page 316 of 358 2017 2018 2019 2020 2021 2022 2,178,067$ 2,511,818$ 2,609,059$ 2,933,062$ 2,560,243$ 3,626,853$ 6,472,115 5,728,925 6,118,203 6,834,253 6,549,508 7,936,364 3,888,778 4,358,465 5,612,872 5,262,979 3,977,134 5,333,328 1,782,783 1,772,351 2,202,631 1,430,839 2,789,326 2,522,085 40,000 30,000 50,000 276,900 406,795 247,970 549,075 350,431 404,893 193,167 189,858 288,751 14,910,818$ 14,751,990$ 16,997,658$ 16,931,200$ 16,472,864$ 19,955,351$ 4,634,488$ 4,890,304$ 5,257,236$ 4,958,705$ 5,256,311$ 5,977,403$ 2,105,901 1,931,276 2,326,630 2,334,000 2,459,637 2,606,288 1,864,175 2,092,844 1,913,258 2,630,874 2,566,976 87,359 571,572 521,465 557,749 530,438 581,402 719,225 1,313,482 1,246,667 1,439,178 1,626,279 1,764,908 1,814,354 197,150 180,254 165,886 173,604 180,528 210,174 10,686,768 10,862,810 11,659,937 12,253,900 12,809,762 11,414,803 25,597,586$ 25,614,800$ 28,657,595$ 29,185,100$ 29,282,626$ 31,370,154$ 434,411$ 467,417$ 471,569$ 631,118$ 855,812$ 999,320$ 405,648 408,434 437,054 413,594 560,518 550,052 76,049 273,695 189,282 201,401 708,197 1,215,397 619,026 709,490 582,631 389,870 987,028 913,710 684,376 702,853 838,569 713,470 1,062,789 1,076,883 848,167 942,627 869,849 50,478 4,106,221 833,090 3,067,677$ 3,504,516$ 3,388,954$ 2,399,931$ 8,280,565$ 5,588,452$ -127-(continued) Page 317 of 358 Fiscal Year 2013 2014 2015 2016 Program revenues (continued) Business-type activities Charges for services Liquor operations 4,521,454$ 4,639,194$ 4,607,417$ 4,742,313$ Sewer operations 1,816,763 1,843,746 1,957,902 2,043,859 Solid waste 1,952,177 1,979,623 1,991,179 2,041,561 Storm water 565,166 559,327 670,353 643,479 Water 1,558,400 1,499,091 1,439,873 1,631,643 Street light 216,719 219,052 222,159 224,781 Operating grants and contributions 19,300 21,000 22,000 23,000 Capital grants and contributions 108,642 – 945,938 – Total business-type activities program revenues 10,758,621 10,761,033 11,856,821 11,350,636 Total primary government program revenues 13,995,776$ 13,562,315$ 14,541,859$ 14,889,652$ Net (expense) revenue Governmental activities (10,664,492)$ (12,025,027)$ (15,329,073)$ (14,184,707)$ Business-type activities 1,140,375 931,764 1,726,627 914,263 Total primary government net expense (9,524,117)$ (11,093,263)$ (13,602,446)$ (13,270,444)$ General revenues and other changes in net position Governmental activities Property taxes 10,748,581$ 10,962,860$ 11,460,209$ 11,806,302$ Franchise taxes 259,671 269,208 265,485 275,691 Unrestricted grants and contributions 24,845 257,386 278,974 287,252 Unrestricted investment earnings (charges)(32,408) 130,739 189,540 255,021 Gain on sale of capital assets 18,268 – – – Transfers 1,410,114 1,414,119 1,222,807 1,428,106 Total governmental activities 12,429,071$ 13,034,312$ 13,417,015$ 14,052,372$ Business-type activities Unrestricted grants and contributions –$ –$ –$ –$ Unrestricted investment earnings (charges)(40,071) 246,220 152,954 139,249 Gain on disposal of capital assets 55,086 – – – Transfers (1,410,114) (1,414,119) (1,222,807) (1,428,106) Total business-type activities (1,395,099) (1,167,899) (1,069,853) (1,288,857) Total primary government 11,033,972$ 11,866,413$ 12,347,162$ 12,763,515$ Change in net position Governmental activities 1,764,579$ 1,009,285$ (1,912,058)$ (132,335)$ Business-type activities (254,724) (236,135) 656,774 (374,594) Total primary government 1,509,855$ 773,150$ (1,255,284)$ (506,929)$ CITY OF FARMINGTON Changes in Net Position Last Ten Fiscal Years (continued) (accrual basis of accounting) -128- Page 318 of 358 2017 2018 2019 2020 2021 2022 4,967,468$ 5,256,645$ 5,608,012$ 5,347,194$ 5,724,828$ 6,391,785$ 2,068,388 2,045,728 2,117,934 2,160,808 2,264,006 2,611,202 2,061,324 2,071,672 2,244,569 2,692,155 2,858,958 27,491 647,767 737,115 1,130,563 1,149,665 1,158,564 1,227,091 1,681,079 1,852,381 2,281,793 2,533,753 3,251,453 2,533,222 225,570 226,674 226,971 232,990 232,378 236,117 24,000 30,263 34,190 26,710 240,598 30,616 – – 81,634 – 476,930 – 11,675,596 12,220,478 13,725,666 14,143,275 16,207,715 13,057,524 14,743,273$ 12,220,478$ 13,807,300$ 14,143,275$ 16,684,645$ 13,057,524$ (11,843,141)$ (11,247,474)$ (13,608,704)$ (14,531,269)$ (8,192,299)$ (14,366,899)$ 988,828 1,357,668 2,065,729 1,889,375 3,397,953 1,642,721 (10,854,313)$ (9,889,806)$ (11,542,975)$ (12,641,894)$ (4,794,346)$ (12,724,178)$ 12,181,830$ 12,659,480$ 12,916,115$ 13,044,381$ 13,692,990$ 14,463,106$ 266,728 266,324 262,148 244,839 229,355 227,017 289,854 316,100 317,172 2,042,381 107,962 207,501 200,851 239,714 657,977 526,283 (91,107) (874,200) 54,408 531 17,218 16,174 – 81,008 1,939,974 1,110,880 946,033 1,788,680 1,831,571 3,393,908 14,933,645$ 14,593,029$ 15,116,663$ 17,662,738$ 15,770,771$ 17,498,340$ –$ –$ –$ 18,136$ –$ –$ 129,207 200,144 548,310 411,349 (64,522) (525,811) – – – – – – (1,939,974) (1,110,880) (946,033) (1,788,680) (1,831,571) (3,393,908) (1,810,767) (910,736) (397,723) (1,359,195) (1,896,093) (3,919,719) 13,122,878$ 13,682,293$ 14,718,940$ 16,303,543$ 13,874,678$ 13,578,621$ 3,090,504$ 3,345,555$ 1,507,959$ 3,131,469$ 7,578,472$ 3,131,441$ (821,939) 446,932 1,668,006 530,180 1,501,860 (2,276,998) 2,268,565$ 3,792,487$ 3,175,965$ 3,661,649$ 9,080,332$ 854,443$ -129- Page 319 of 358 Fiscal Year 2013 2014 2015 2016 General Fund Nonspendable 13,388$ 33,369$ 6,034$ 33,762$ Committed – – – – Assigned – 81,000 4,250 – Unassigned 3,079,013 3,993,191 4,734,534 5,031,529 Total General Fund 3,092,401$ 4,107,560$ 4,744,818$ 5,065,291$ All other governmental funds Nonspendable –$ 160$ 150$ 110$ Restricted 6,881,858 5,673,161 5,776,314 16,959,150 Committed – – 8,025,185 5,158,828 Assigned 7,865,678 7,531,076 – – Unassigned – – – – Total all other governmental funds 14,747,536$ 13,204,397$ 13,801,649$ 22,118,088$ Total all funds 17,839,937$ 17,311,957$ 18,546,467$ 27,183,379$ Note:The City modified its fund balance policy in 2015, resulting in an increase in committed fund balances. CITY OF FARMINGTON Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) -130- Page 320 of 358 2017 2018 2019 2020 2021 2022 34,529$ 5,045$ 109,523$ 141,196$ 83,088$ 1,635$ – 240,000 – – – – – – – – – – 5,666,183 5,477,026 5,761,747 6,060,870 6,843,396 7,829,882 5,700,712$ 5,722,071$ 5,871,270$ 6,202,066$ 6,926,484$ 7,831,517$ –$ –$ –$ 1,184,677$ 1,365$ 2,500$ 4,071,837 2,009,629 3,196,214 3,235,717 4,411,713 4,799,381 6,373,022 7,586,959 7,298,103 8,427,605 8,876,306 13,005,454 – – – – – – – – – – (29,832) (172,932) 10,444,859$ 9,596,588$ 10,494,317$ 12,847,999$ 13,259,552$ 17,634,403$ 16,145,571$ 15,318,659$ 16,365,587$ 19,050,065$ 20,186,036$ 25,465,920$ -131- Page 321 of 358 Fiscal Year 2013 2014 2015 2016 Revenues Property taxes 10,808,636$ 11,031,219$ 11,462,986$ 11,852,567$ Franchise taxes 259,671 269,208 265,485 275,691 Special assessments 913,313 821,331 661,187 545,777 Licenses and permits 664,673 514,728 370,889 650,311 Intergovernmental 1,329,395 1,011,221 2,097,509 1,633,388 Charges for services 865,736 890,281 820,445 1,077,860 Fines and forfeits 81,919 65,482 52,299 41,750 Investment earnings (charges)46,707 130,739 172,818 237,224 Other 233,808 174,959 160,193 260,564 Total revenues 15,203,858 14,909,168 16,063,811 16,575,132 Expenditures Current General government 1,686,263 1,717,994 1,947,768 1,996,410 Public safety 4,850,400 4,871,745 5,131,076 5,301,211 Public works 2,081,956 2,038,161 1,971,079 2,006,606 Park and recreation 1,530,238 1,448,951 1,538,452 1,513,411 Economic development 50,000 49,417 90,000 40,000 Capital outlay 1,290,875 1,839,726 4,695,581 2,755,780 Debt service Principal 7,394,424 2,376,739 2,899,162 4,411,534 Interest and fiscal charges 1,379,551 1,096,007 1,041,780 1,095,380 Total expenditures 20,263,707 15,438,740 19,314,898 19,120,332 Excess (deficiency) of revenues over expenditures (5,059,849) (529,572) (3,251,087) (2,545,200) Other financing sources (uses) Debt issued 7,088,037 – 3,184,641 10,120,095 Payment of refunded debt – (1,435,000) – – Sale of capital assets 26,154 22,473 157,599 13,043 Transfers in 7,492,556 2,330,331 5,937,539 5,590,211 Transfers out (6,082,442) (916,212) (4,794,182) (4,541,237) Total other financing sources (uses)8,524,305 1,592 4,485,597 11,182,112 Net change in fund balances 3,464,456$ (527,980)$ 1,234,510$ 8,636,912$ Debt service as a percentage of noncapital expenditures 46.2%24.8%21.0%29.5% CITY OF FARMINGTON Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) -132- Page 322 of 358 2017 2018 2019 2020 2021 2022 12,186,789$ 12,665,721$ 12,926,730$ 13,049,745$ 13,700,787$ 14,449,100$ 266,728 266,324 262,148 244,839 229,355 227,017 532,744 314,594 625,308 407,412 279,579 533,337 415,005 449,350 421,578 588,347 789,965 823,729 1,632,170 1,768,219 1,796,575 2,948,939 1,257,177 1,268,198 929,784 1,094,360 1,042,292 890,408 1,697,708 2,275,257 45,102 60,182 63,561 45,959 52,340 58,400 183,402 209,968 567,539 455,233 (81,823) (793,738) 201,288 305,014 226,316 161,687 600,280 648,430 16,393,012 17,133,732 17,932,047 18,792,569 18,525,368 19,489,730 2,051,143 2,311,024 2,407,932 2,637,945 2,693,428 3,191,346 5,537,937 5,348,888 5,705,820 5,917,499 6,438,859 6,834,703 2,381,695 2,690,271 3,272,313 2,794,566 2,639,935 3,261,324 1,585,656 1,595,924 1,855,261 1,560,781 1,884,846 1,939,271 40,000 30,000 50,000 276,900 385,434 241,518 586,495 1,597,191 4,715,989 2,664,884 3,045,812 3,978,547 6,395,000 5,180,000 2,435,000 2,910,000 2,155,000 2,199,417 818,144 503,061 412,373 397,231 368,738 361,727 19,396,070 19,256,359 20,854,688 19,159,806 19,612,052 22,007,853 (3,003,058) (2,122,627) (2,922,641) (367,237) (1,086,684) (2,518,123) – – 1,009,555 1,279,300 – 4,088,692 (9,990,000) – – – – – 54,408 11,000 18,939 12,867 84,662 80,249 2,981,402 3,214,991 4,280,247 4,263,090 2,854,791 9,437,491 (1,080,560) (1,930,276) (1,339,172) (2,503,542) (1,046,718) (6,212,955) (8,034,750) 1,295,715 3,969,569 3,051,715 1,892,735 7,393,477 (11,037,808)$ (826,912)$ 1,046,928$ 2,684,478$ 806,051$ 4,875,354$ 37.9%31.3%16.5%18.5%14.1%13.7% -133- Page 323 of 358 Commercial/ Industrial,Less Public Utility,Captured Residential Railroads, and Agricultural Tax Increment Property Personal Property Apartments Property Tax Capacity 10,805,838$ 2,666,688$ 270,394$ 220,247$ (130,805)$ 11,207,086 2,669,813 272,246 234,772 (119,175) 12,802,297 2,688,017 271,615 266,387 (113,361) 14,005,748 2,739,868 280,096 272,897 (117,585) 14,798,507 2,805,453 295,234 272,086 (118,368) 15,932,445 2,884,545 382,700 257,966 (37,168) 17,392,473 2,937,228 487,014 266,572 (146,966) 18,650,539 2,893,434 476,353 275,228 (145,234) 20,067,551 3,129,074 519,937 266,742 (106,443) 21,162,785 3,085,886 533,529 277,064 (104,238) Note: Source:Dakota County The tax capacity (assessed taxable value)of the property is calculated by applying a statutory formula to the estimated market value of the property. 2014 2013 2015 2017 2016 2018 2019 2020 2021 2022 CITY OF FARMINGTON Payable Year Tax Capacity Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years -134- Page 324 of 358 Less Estimated Contributions Actual to Fiscal Fiscal Disparities Total Tax Taxable Disparities Pool Distribution Capacity Value Value (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 (1,002,736) 3,397,197 18,309,416 61.455 1,475,969,866 1.24 (953,101) 3,424,887 19,652,810 59.239 1,601,441,554 1.23 (1,039,820) 3,607,141 20,620,233 58.760 1,685,287,604 1.22 (1,061,204) 3,721,925 22,081,209 57.161 1,810,826,485 1.22 (1,080,604) 3,892,519 23,748,236 54.372 1,968,969,293 1.21 (1,074,146) 4,219,127 25,295,301 50.971 2,093,214,877 1.21 (996,932) 4,468,538 27,348,467 49.251 2,247,736,496 1.22 (1,186,065) 4,774,320 28,543,281 50.623 2,357,314,320 1.21 Rate Tax Capacity Value as a Percentage of Actual Value Total Direct Tax Capacity -135- Page 325 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 326 of 358 Total Direct and Debt Total Dakota Other Special Overlapping Operating Service City County ISD No. 192 Districts Tax Rate 45.597 21.224 66.821 33.411 57.208 4.426 161.866 47.308 18.568 65.876 31.820 56.300 4.150 158.146 44.964 16.491 61.455 29.625 53.460 3.741 148.281 44.220 15.019 59.239 28.562 57.570 3.802 149.173 44.050 14.710 58.760 27.996 54.256 3.692 144.704 42.451 14.710 57.161 26.573 52.813 3.203 139.750 43.721 10.651 54.372 25.379 51.390 2.983 134.124 N/A N/A 50.971 24.126 53.095 2.880 131.072 38.300 10.951 49.251 22.710 50.796 2.764 125.521 42.649 7.974 50.623 21.630 49.481 2.412 124.146 N/A – Not Available (1) (2) Source:Dakota County 2019 2018 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. Information reflects total tax rates levied by each entity.Tax rates are expressed in terms of “net tax capacity.”A property’s tax capacity is determined by multiplying its taxable market value by a state determined class rate.Class rates vary by property type and change periodically based on state legislation. 2020 2021 2022 CITY OF FARMINGTON Property Tax Rates (1) Direct and Overlapping Governments Last Ten Fiscal Years City Direct Rates Overlapping Rates (2) 2017 Year Fiscal 2016 2015 2014 2013 -136- Page 327 of 358 Net Tax Net Tax Capacity Capacity Taxpayer Value Rank Value Rank Northern Natural Gas 536,222$ 1 2.14 %414,680$ 1 2.97 % Xcel Energy (Northern States Power)137,752 2 0.55 183,802 2 1.32 Legacy Partners of Farmington, LLC 105,519 3 0.42 – – – Dakota Electric Association 99,996 4 0.40 137,130 3 0.98 Dakota Storage, LLC 95,840 5 0.38 81,608 8 0.58 Valmont Industries 92,734 6 0.37 – – – Minnesota Energy Resources 89,170 7 0.36 – – – RLR Investments, LLC 77,604 8 0.31 68,204 10 0.49 Seeger Properties LLC 75,592 9 0.30 – – – Schwiness LLC 72,482 10 0.29 – – – St. Francis Health Systems – – – 131,781 4 0.94 Builder’s Development and Finance – – – 98,874 5 0.71 Farmington City Center, LLC – – – 95,820 6 0.69 Farmington Land, LLC – – – 88,358 7 0.63 Castle Rock Development – – – 71,849 9 0.51 Total 1,382,911$ 5.52 %1,372,106$ 9.82 % Source: Dakota County 2022 2013 Current Fiscal Year and Nine Years Prior Principal Property Taxpayers CITY OF FARMINGTON Percentage of Total City Tax Capacity Value Percentage of Total City Tax Capacity Value -137- Page 328 of 358 Total Tax Delinquent Levy for Tax Fiscal Year (1)Amount Collections (2)Amount 10,734,608$ 10,581,301$ 98.57 %151,752$ 10,733,053$ 99.99 % 10,981,055 10,889,973 99.17 87,444 10,977,417 99.97 11,402,145 11,307,924 99.17 91,699 11,399,623 99.98 11,718,018 11,656,384 99.47 60,558 11,716,942 99.99 12,133,656 12,073,701 99.51 59,735 12,133,436 100.00 12,681,188 12,601,932 99.38 79,256 12,681,188 100.00 13,020,768 12,950,561 99.46 70,207 13,020,768 100.00 13,036,578 12,967,610 99.47 60,632 13,028,242 99.94 13,546,213 13,476,144 99.48 4,959 13,481,103 99.52 14,383,924 14,309,308 99.48 – 14,309,308 99.48 (1) (2) Source: 2021 Includes fiscal disparity revenues. Includes fiscal disparity revenues and is net of county/state adjustments. Dakota County 2020 2022 Percentage of Levy 2019 2018 2017 Year Fiscal 2016 2015 2013 Percentage 2014 of Levy CITY OF FARMINGTON Property Tax Levies and Collections Last Ten Fiscal Years Total Collections to Date Collected Within the Fiscal Year of Levy (2) -138- Page 329 of 358 General Special Tax Certificates Net Obligation Assessment Increment of Premiums Lease Bonds Bonds Bonds Indebtedness (Discounts)Liabilities 15,467,435$ 18,235,000$ 140,000$ 905,000$ 203,702$ –$ 14,520,696 15,630,000 – 785,000 177,829 – 16,496,534 13,930,000 – 660,000 277,972 – 20,115,000 15,645,000 – 535,000 738,645 – 12,455,000 7,455,000 – – 645,061 – 9,155,000 5,575,000 – – 551,475 – 8,865,000 4,355,000 – – 532,060 – 7,550,000 2,760,000 – 1,105,000 578,829 – 6,655,000 1,500,000 – 1,105,000 447,152 – 9,370,000 445,000 – 905,000 668,370 83,029 N/A – Not Applicable Note 1: Note 2: CITY OF FARMINGTON Ratios of Outstanding Debt by Type Last Ten Fiscal Years 2016 2015 2014 2013 Fiscal Year 2017 Governmental Activities 2018 2019 2020 2021 2022 Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. See Demographic and Economic Statistics schedule for population and personal income information. -139- Page 330 of 358 Net Total Revenue Premiums Lease Primary Bonds (Discounts)Liabilities Government Per Capita –$ –$ –$ 34,951,137$ 1,578$ 3.2 % – – – 31,113,525 1,386 2.7 – – – 31,364,506 1,386 2.6 – – – 37,033,645 1,650 3.0 – – – 20,555,061 920 1.6 – – – 15,281,475 682 1.1 720,000 90,856 – 14,562,916 636 1.0 655,000 80,944 – 12,729,773 551 0.9 595,000 71,032 951,551 11,324,735 479 0.7 530,000 61,121 922,305 12,984,825 549 N/A Income of Personal Percentage Business-Type Activities -140- Page 331 of 358 Less Amounts General Restricted for Market Obligation Repaying Value of Bonds (1)Principal Total Property 15,467,435$ 606,820$ 14,860,615$ 1,266,601,230$ 1.17 % 14,520,696 852,842 13,667,854 1,311,752,463 1.04 16,496,534 1,157,993 15,338,541 1,475,969,866 1.04 20,115,000 7,894,089 12,220,911 1,601,441,554 0.76 12,455,000 2,167,387 10,287,613 1,685,287,604 0.61 9,155,000 1,588,980 7,566,020 1,810,826,485 0.42 8,865,000 1,651,796 7,213,204 1,968,969,293 0.37 7,550,000 1,255,057 6,294,943 2,093,214,877 0.30 6,961,052 1,296,028 5,665,024 2,247,736,496 0.25 9,945,146 1,130,750 8,814,396 2,357,314,320 0.37 (1) (2) Note: Source: 2021 2020 Percentage of Market Value of Property 2019 2018 CITY OF FARMINGTON Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Dakota County website and Dakota County Assessor’s Office Includes all general obligations of the City, including Capital Improvement Plan Bonds. 2017 Year See Demographic and Economic Statistics schedule for population and personal income information. Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. 2016 2015 2014 2013 N/A – Not Applicable 2022 -141- Page 332 of 358 Total City Tax Capacity Per Value Population (2)Capita 13,963,167$ 106.43 %22,154 1.27 %671$ 14,383,917 95.02 22,446 1.24 609 16,028,316 95.70 22,622 1.32 678 17,298,609 70.65 22,451 1.38 544 18,171,280 56.61 22,343 1.41 460 19,457,656 38.88 22,421 1.43 337 21,083,287 34.21 22,880 1.49 315 22,295,554 28.23 23,123 1.49 272 23,983,304 23.62 23,632 1.49 240 25,059,264 35.17 23,654 N/A 373 Percentage of Total City Tax Capacity Value Percentage of Personal Income (2) -142- Page 333 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 334 of 358 Estimated Share of Net Debt Overlapping Outstanding Debt Overlapping debt Dakota County 73,950,000$ 4.009 %2,964,878$ ISD No. 192, Farmington 134,380,000 58.755 78,955,242 ISD No. 196, Rosemount–Apple Valley–Eagan 97,905,000 0.002 2,437 Metropolitan Council (2)218,520,000 4.022 8,788,350 Total overlapping debt 524,755,000 90,710,906 Direct debt City of Farmington direct debt 11,388,370 100.000 11,388,370 Total direct and overlapping debt 536,143,370$ 102,099,276$ (1) (2) Note: Source:Dakota County Property Taxation Office and related ACFRs 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. CITY OF FARMINGTON Direct and Overlapping Governmental Activities Debt December 31, 2022 Governmental Unit The percentage of overlapping debt applicable is estimated using tax capacity.Applicable percentages were estimated by determining the portion of the governmental unit’s tax capacity that is within the City’s boundaries and dividing it by the governmental unit’s total tax capacity. The above debt includes all outstanding general obligation debt of the Metropolitan Council supported by taxes. The Metropolitan Council also has general obligation sewer revenue,wastewater revenue,and radio revenue bonds and lease obligations outstanding,all of which are supported entirely by revenues and are not included in the overlapping debt or debt ratios sections above. Estimated Percentage Applicable (1) -143- Page 335 of 358 Fiscal Year 2013 2014 2015 2016 Debt limit 37,998,037$ 39,352,574$ 44,279,096$ 48,043,247$ Total net debt applicable to the limit 15,442,435 14,520,696 16,496,534 20,115,000 Legal debt margin 22,555,602$ 24,831,878$ 27,782,562$ 27,928,247$ Total net debt applicable to the limit as a percentage of debt limit 40.64%36.90%37.26%41.87% CITY OF FARMINGTON Legal Debt Margin Information Last Ten Fiscal Years -144- Page 336 of 358 2017 2018 2019 2020 2021 2022 50,558,628$ 54,324,795$ 59,069,079$ 62,796,446$ 67,432,095$ 70,719,430$ 12,455,000 9,155,000 8,865,000 7,550,000 6,961,052 9,945,146 38,103,628$ 45,169,795$ 50,204,079$ 55,246,446$ 60,471,043$ 60,774,284$ 24.63%16.85%15.01%12.02%10.32%14.06% Market value 2,357,314,320$ Debt limit (3% of market value)70,719,430 Debt applicable to the limit 9,945,146 Legal debt margin 60,774,284$ Legal Debt Margin Calculations for Fiscal Year 2022 -145- Page 337 of 358 Less Direct Net Revenue Gross Operating Available for Revenue (a)Expenses (b)Debt Service Principal Interest Total 2,281,793$ (556,474)$ 1,725,319$ –$ –$ –$ N/A 2,533,753 (613,141) 1,920,612 65,000 39,916 104,916 1,830.62 % 2,908,352 (755,497) 2,152,855 60,000 29,550 89,550 2,404.08 2,238,210 (805,909) 1,432,301 65,000 26,426 91,426 1,566.62 (a) (b) Note: 2021 Fiscal years 2019–2022 include gross revenues of the Water Fund. Exclusive of depreciation. Details regarding the City’s outstanding debt can be found in the notes to basic financial statements. N/A – Not Applicable 2022 Coverage 2020 2019 2018 No revenue bonds outstanding from 2013–2018 2017 No revenue bonds outstanding from 2013–2018 No revenue bonds outstanding from 2013–2018 No revenue bonds outstanding from 2013–2018 No revenue bonds outstanding from 2013–2018 2016 2015 2014 No revenue bonds outstanding from 2013–20182013 Year Pledged Revenue Coverage CITY OF FARMINGTON Debt Service RequirementsFiscal Last Ten Fiscal Years -146- Page 338 of 358 Total School Unemployment Personal Per Capita Population (1)Households (1)Enrollment (3)Rate (2)Income (5)Income (4) 22,154 7,806 6,877 4.7 1,097,930,086$ 49,559$ 22,446 7,906 7,075 3.1 1,159,941,942 51,677 22,622 7,959 7,019 3.3 1,215,027,620 53,710 22,451 7,657 7,074 3.4 1,251,486,093 55,743 22,343 7,691 7,126 2.7 1,287,805,834 57,638 22,421 7,779 7,138 2.7 1,357,344,919 60,539 22,880 7,925 7,143 3.0 1,418,033,760 61,977 23,123 7,926 6,996 4.3 1,497,168,004 64,748 23,632 7,906 6,825 2.4 1,605,250,864 67,927 23,654 7,936 6,853 2.5 N/A N/A (1) (2) (3) (4) (5) N/A – Not Applicable Per capita personal income for Dakota County residents multiplied by the estimated city population. CITY OF FARMINGTON Demographic and Economic Statistics Last Ten Fiscal Years 2014 2013 Year Fiscal 2015 Numbers for 2013–2015 are from the Farmington Building Inspections Department.The 2016–2022 numbers are from the Metropolitan Council,which uses a more scientific and in-depth approach to estimating these values.They also have a one-year lag in reporting. Minnesota Department of Employment and Economic Development – Dakota County Annual Rate. ISD No. 192, Farmington Public Schools – October enrollment count. U.S. Bureau of Economic Analysis – Per capita personal income for Dakota County residents. 2016 2022 2017 2018 2019 2020 2021 -147- Page 339 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 340 of 358 Employees Employees (1)Rank (1)Rank ISD No. 192, Farmington Public Schools 900 1 18.5 %800 1 18.8 % Federal Aviation Administration 498 2 10.3 460 2 10.8 Trinity Care Center & Trinity Terrace 234 3 4.8 138 5 3.2 City of Farmington 232 4 4.8 86 10 2.0 Installed Building Solutions 230 5 4.7 – – – Dakota Electric Association 209 6 4.3 210 3 4.9 Marschall Lines, Inc.200 7 4.1 193 4 4.5 R&L Carriers 175 8 3.6 95 9 2.2 Bachman’s 150 9 3.1 – – – River Valley Home Care 150 10 3.1 110 8 2.6 Kemps Dairy – – – 124 6 2.9 Valmont Industries – – – 115 7 2.7 Total 2,978 61.4 %2,331 54.6 % (1) (2) Per City of Farmington records. Metropolitan Council Employment by Community as of 2021 (latest available), 4,852 total employment. Current Fiscal Year and Nine Years Prior Principal Employers CITY OF FARMINGTON 2022 Taxpayer (2) Employment of Total Employment of Total Percentage Percentage 2013 -148- Page 341 of 358 Fiscal Year 2013 2014 2015 2016 General government Administration 3.50 3.50 3.00 2.00 Finance 4.00 4.00 4.50 5.50 Human resources/information technology/communications 3.00 3.00 3.00 3.00 Community development 2.00 2.50 2.50 3.00 Total general government 12.50 13.00 13.00 13.50 Public safety Police administration 5.15 5.15 5.15 5.15 Police patrol 18.00 17.00 17.00 17.00 Investigations 5.00 5.00 5.00 5.00 Fire 1.40 1.40 1.50 1.50 Total public safety 29.55 28.55 28.65 28.65 Public works Building inspections 2.50 2.50 2.50 3.20 Engineering 5.10 4.60 4.50 4.50 Streets 10.00 10.00 9.00 9.50 Natural resources 1.00 1.00 1.00 1.00 Total public works 18.60 18.10 17.00 18.20 Parks and recreation Park maintenance 3.50 3.50 3.50 3.50 Building maintenance 1.00 1.00 1.00 1.00 Recreation programming 2.00 2.00 2.00 2.00 Total parks and recreation 6.50 6.50 6.50 6.50 Senior center 1.50 1.50 1.00 1.40 Swimming pool 0.40 0.40 0.40 0.40 Arena 2.35 2.35 2.35 2.35 Liquor operations 7.25 7.50 8.00 8.00 Solid waste 5.00 5.00 5.00 5.50 Fleet 2.00 2.00 2.00 2.00 Total employees 85.65 84.90 83.90 86.50 Note: Source: Various city departments CITY OF FARMINGTON Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years 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. -149- Page 342 of 358 2017 2018 2019 2020 2021 2022 1.00 1.00 1.00 1.00 2.00 2.00 5.50 5.50 5.50 5.50 5.50 5.50 4.00 5.00 5.00 5.00 5.00 6.00 3.00 4.00 5.00 4.00 4.00 3.00 13.50 15.50 16.50 15.50 16.50 16.50 5.15 5.00 5.00 5.00 5.00 5.00 17.00 15.00 16.00 17.00 17.00 18.00 5.00 6.00 6.00 6.00 6.00 6.00 1.50 1.00 2.00 2.00 2.00 2.00 28.65 27.00 29.00 30.00 30.00 31.00 3.50 3.50 3.00 4.00 4.00 5.00 5.50 4.50 5.00 5.00 5.00 5.00 9.50 9.00 10.00 10.00 10.00 9.50 – 1.00 1.00 – – 1.00 18.50 18.00 19.00 19.00 19.00 20.50 3.60 4.00 4.00 4.00 4.00 7.00 1.00 1.00 3.00 3.00 3.00 3.00 2.00 2.00 2.00 2.00 2.00 2.00 6.60 7.00 9.00 9.00 9.00 12.00 1.40 1.00 1.00 1.50 1.50 1.50 0.40 – – – – – 2.35 2.00 2.00 2.00 2.00 1.50 8.00 9.50 9.00 13.00 13.00 13.00 5.50 5.50 5.00 5.00 5.00 – 2.00 2.00 2.00 2.00 2.00 2.00 86.90 87.50 92.50 97.00 98.00 98.00 -150- Page 343 of 358 Fiscal Year 2013 2014 2015 2016 General government Elections N/A 1 N/A 1 Registered voters N/A 12,541 N/A 13,788 Number of votes cast N/A 6,419 N/A 11,545 Voter participation (registered) N/A 51.0%N/A 84.0% Public safety Police Arrests 403 266 153 351 All citations and warnings 4,517 3,383 2,494 2,070 Calls for service 13,138 13,035 12,085 11,943 Fire Medical calls 323 386 359 356 Fire calls 235 241 361 345 Inspections Building permits 679 711 619 1,184 Value of building permits (in millions)35$ 24$ 15$ 38$ Parks and recreation Parks Park reservations 65 66 66 81 Pool (closed after 2017) Pool open swim admissions 11,566 8,032 7,652 7,372 Pool swim lesson registrations 308 267 256 309 Pool season passes sold 78 N/A N/A NA Pool punch cards sold 154 193 176 125 Swim bus riders 786 408 536 507 Rambling River Center Memberships 435 406 381 404 Program participation 16,875 15,285 13,885 13,042 Number of volunteers 94 130 107 82 Total volunteer hours 4,780 4,348 5,944 8,573 Ice arena Ice skating lessons total participants 215 230 216 329 Arena rental hours 1,147 1,197 1,315 1,285 Outdoor rinks total number of skaters 7,819 7,481 7,851 5,187 Other Recreation program/event participants 6,971 6,425 5,976 8,344 Youth scholarships provided 25 7 4 6 Source: CITY OF FARMINGTON Operating Indicators by Function Last Ten Years Various city departments Function/Program N/A – Not Available -151- Page 344 of 358 2017 2018 2019 2020 2021 2022 N/A 1 N/A 1 N/A 1 N/A 13,403 N/A 14,736 N/A 14,480 N/A 9,632 N/A 12,102 N/A 9,479 N/A 72.0%N/A 82.0%N/A 65.0% 281 284 253 232 268 230 2,021 2,484 2,176 2,319 1,982 2,434 11,221 13,033 14,005 15,413 11,361 13,567 452 411 480 467 712 747 407 340 370 284 353 465 1,036 1,059 1,049 1,318 1,705 1,155 19$ 26$ 22$ 27$ 40$ 42$ 71 64 59 – 78 85 6,302 – – – – – 136 – – – – – N/A – – – – – 139 – – – – – 496 – – – – – 467 497 372 305 471 399 15,203 16,015 17,730 3,651 8,728 11,777 80 69 74 31 57 65 4,298 3,426 3,749 347 1,732 2,135 284 296 310 122 221 211 1,490 1,380 1,390 1,191 1,641 1,537 7,276 5,451 3,892 4,209 4,142 6,115 8,171 7,034 5,657 361 5,927 6,746 8 1 – – 1 2 -152- Page 345 of 358 Fiscal Year Function/Program 2013 2014 2015 2016 Public safety Police Stations 1 1 1 1 Patrol squads 17 16 16 15 Fire Stations 2 2 2 2 Fire trucks 7 6 6 8 Public works Vehicles 21 21 24 29 Streets (miles)89 89 89 89 Parks and recreation Senior center – building 1 1 1 1 Swimming pool (closed after 2017)1 1 1 1 Ice arena – building 1 1 1 1 Parks 21 23 23 23 Solid waste Compactor trucks 5 5 5 5 Sanitary sewer Collection system (miles)84 84 84 84 Storm sewer Storm sewer (miles)71 71 73 73 Water Water main (miles)109 109 109 109 Wells 7 7 7 7 Water reservoirs 2 2 2 2 Source: The City’s financial records CITY OF FARMINGTON Capital Assets Statistics by Function/Program Last Ten Years -153- Page 346 of 358 Fiscal Year 2017 2018 2019 2020 2021 2022 1 1 1 1 1 1 15 16 19 19 19 21 2 2 2 2 2 2 8 8 8 8 8 8 29 29 30 31 31 28 89 89 89 90 90 90 1 1 1 1 1 1 1 – – – – – 1 1 1 1 1 1 23 24 26 26 26 27 5 5 5 6 6 – 90 90 87 90 92 94 78 78 78 81 84 85 113 113 113 116 119 121 7 7 8 9 9 9 2 2 2 2 2 2 -154- Page 347 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 348 of 358 CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2022 Page 349 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 350 of 358 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 4–5 Table of Contents CITY OF FARMINGTON DAKOTA COUNTY, MINNESOTA Special Purpose Audit Reports Year Ended December 31, 2022 Page 351 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 352 of 358 -1- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and Management City of 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, t he financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Farmington, Minnesota (the City) as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 14, 2023. REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that have not been identified. We identified certain deficiencies in internal control, described in the accompanying Schedule of Findings and Responses as findings 2022-001 and 2022-002, that we consider to be material weaknesses. (continued) C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 Page 353 of 358 -2- REPORT ON COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. CITY’S RESPONSES TO FINDINGS Government Auditing Standards requires the auditor to perform limited procedures on the City’s responses to the findings identified in our audit and described in the accompanying Schedule of Findings and Responses. The City’s responses were not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the responses. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 14, 2023 Page 354 of 358 -3- 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 financial statements of the governmental activities, the business-type activities, 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, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 14, 2023. MINNESOTA LEGAL COMPLIANCE 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 contracting – bid laws, depositories of public funds and public investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. 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, insofar as they relate to accounting matters. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other purpose. Minneapolis, Minnesota June 14, 2023 C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 Page 355 of 358 CITY OF FARMINGTON Schedule of Findings and Responses Year Ended December 31, 2022 -4- FINDINGS – MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING 2022-001 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 payroll. Questioned Costs – Not applicable. Context – The condition applies to multiple areas as noted above. Repeat Finding – This is a current year and prior 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 one 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 finding. 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. Page 356 of 358 CITY OF FARMINGTON Schedule of Findings and Responses (continued) Year Ended December 31, 2022 -5- FINDINGS – MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING (CONTINUED) 2022-002 PRIOR PERIOD ADJUSTMENT Criteria – Management is responsible for establishing and maintaining effective internal controls. These controls include the responsibility for preparation, or oversight of the preparation, of the City’s annual financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). Condition – The City recorded a material prior period adjustment in fiscal 2022 to record certain development-related revenues that should have been recognized by the City in previous years. Auditing standards consider the identification of material misstatements in prior year financial statements to be a material weakness in the internal control over financial reporting. Questioned Costs – Not applicable. Context – The prior period adjustment increased 2022 beginning governmental activities net position in the government-wide financial statements and fund balances in the General Fund by $484,801. Repeat Finding – This is a current year finding. Cause – The adjustment described above was to correct prior period accounting errors noted during the current fiscal year for developer deposits that should have been recognized as revenue to reimburse city services provided in previous years. Effect – The City’s financial statements for the previous period contained a material misstatement, which understated revenue and fund balances/net position in the City’s fund-based and government-wide financial statements. Recommendation – We recommend that the City review its internal controls and accounting procedures over developer deposits to ensure revenues for development-related services are being recognized in the proper fiscal period, and that revenues, fund balances, and net position reported in the annual financial statements are fairly stated in accordance with GAAP in the future. Management Response – There is no disagreement with the audit finding. The adjustment represents a correction of financial reporting from a prior period identified by city personnel that occurred due to a miscommunication over how developer deposits were to be recorded. The City will continue to review its internal controls and accounting procedures to ensure account balances and transactions are fairly stated in future financial statements. Page 357 of 358 THIS PAGE INTENTIONALLY LEFT BLANK Page 358 of 358