06-27-16 CC Reg Mtg Item 6A Draft Memo and CAFRABDO
SICK �
At 1 S LLP
Certified hiblic Accountants & Consultants NEED DATE
Management, Honorable Mayor and City Council
City of Shorewood, Minnesota
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 Shorewood, Minnesota (the City) for the year ended December 31, 2015
and have issued our report thereon dated NEED DATE. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information in our letter to you dated December 8, 2015. Professional standards also require
that we communicate to you the following information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether the
financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with
accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are
flee of material misstatement. As part of our audit, we considered the'internal control over financial reporting (internal control) of the
City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control. We are responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to
design procedures specifically to, identify such matters. t _,
Significant Audit Findings
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting
(internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal
control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to
identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. However, as described below, we identified a certain
deficiency in internal control that we consider to be a material weakness and another we consider a significant deficiency.
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. We consider the
deficiency described on the following page as finding 2015 -001 to be a material weakness.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material
weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described on the
following page as finding 2015 -002 to be a significant deficiency.
5201 Eden Avenue, Suite 250
Edina, MN 55436 _
952.835.9090 1 Fax 952.835.3261 -1
2015 -001
Material audit adjustments
Condition: During our audit, adjustments were needed to correct the following:
1) Additional contracts payable related to the water tower rehabilitation
project.
2) Additional assets added to the City's enterprise funds to include
engineering.
3) Reversal of prior year contracts payable related to street improvement
projects.
4) Entry to eliminate transfer of funds and contribution of capital for
amounts paid for in the current year.
Criteria: The financial statements are the responsibility of the City's management;
therefore, the City must be able to prevent or detect a material misstatement in the
financial statements including footnote disclosures.
Cause: The City has not prepared a year -end trial balance reflecting all necessary journal
entries.
Effect: This indicates that a misstatement may occur and not be detected by the City's
system of internal control over financial reporting. The audit firm cannot serve as a
compensating control over this deficiency.
Recommendation: We recommend that management review each journal entry, obtain an
understanding of why the entries were necessary and modify current procedures to
ensure that future corrections are not needed.
Management response:
The City will adjust processes in the future. These adjustments were related to accruals between years
and expense allocation between funds, but make no difference in the total cash paid for any project.
2015 -002 Timely bank reconciliations
Condition: During our audit we noted bank reconciliations were not completed timely. The
2015 bank reconciliations were fully completed in May of 2016.
Criteria: Internal controls and procedures should be in place to provide reasonable
assurance over the reliability of financial records and reporting.
Cause: Unknown.
Effect: Without bank and investment reconciliations completed timely, the accuracy of
monthly financial information may not be accurate and allow for errors or
incomplete information to go unnoticed longer.
Recommendation: We recommend bank reconciliations be completed within 15 days of month end
and the City finance software be utilized for financial reporting. This will allow
for more efficient process and more accurate financial information. Also, we
recommend, upon completion of the reconciliations that someone other than the
finance director review, initial and date.
Management response:
The implementation of credit card charges led to some unique challenges with the timing of cash
posting to the general ledger. Despite several days being spent on the reconciliation, Mr. Rigdon and I
were unable to determine the cause. We are pursuing a solution to provide monthly reconciliations.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests
of compliance with certain provisions of Minnesota statutes. 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. While our audit provides a reasonable basis for our
opinion, it does not provide a legal determination on the City's compliance with those requirements. We noted no instances of
noncompliance with Minnesota statues.
Summary of Prior Year Findings
2014 -001 Authorized signers on investment account
Condition: When confirming balances and authorized account signers with the 4M fund, we noted that the
former City Administrator is still a signer on the City's account although he is no longer employed
by the City. It is our responsibility to inform you that this deficiency could increase the chances of
fraud.
Criteria: Authorized signers should be removed fi•om bank and investment accounts when they no longer need
signing rights.
Current status: The former City Administrator was removed as a signer from the account at 4M fund.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to you with the exception of fieldwork
being re- scheduled six weeks past the original dates.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by
the City are described in Note I to the financial statements'. As described in Note 8 to the financial statements, the City changed
accounting policies related to accounting and financial reporting for pensions by adopting Statement of Governmental Accounting
Standards (GASB) Statements No. 68 and 71 in 2015. Accordingly, the cumulative effect of the accounting change as of the beginning
of the year is disclosed in Note 8. 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 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 was capital asset
basis and depreciation, allocation of payroll, other post- employment benefits, and the liability for the City's pensions.
• Management's estimate of depreciation is based on estimated useful lives of the assets. Depreciation is calculated using the
straight -line method.
• Allocations of gross wages and payroll benefits are approved by City Council within the City's budget and are derived from
each employee's estimated time to be spent servicing the respective functions of the City. These allocations are also used in
allocating accrued compensated absences payable and the net pension liability.
• The City's liability for other post - employment benefits was estimated to be zero primarily based on the assumption that
employees, whom participate in the health insurance plan, are paying aged -based premiums and will not receive a large
benefit by staying on the plan following retirement.
• Management's estimate of its pension liability is based on several factors including, but not limited to, anticipated investment
return rate, retirement age for active employees, life expectancy, salary increases and form of annuity payment upon
retirement.
o The allocation of the pension liability related to Minnesota Public Employee Retirement Association (PERA) is
based on the City's proportionate share of employer contributions to the PERA cost - sharing multiple employer
Coordinated and Police and Fire pension plans.
We evaluated the key factors and assumptions used to develop these estimates in determining that they are people
reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are
neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their +process.
significance to financial statement users. (iOlilg
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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 trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. We
proposed four journal entries that we consider to be audit entries, as noted within finding 2015 -002.
We also assisted in preparing a number of year -end accounting entries. These were necessary to adjust the City's records at year end
to correct ending balances. We recommend that the City continue to establish more detailed processes and procedures to reduce the
total number of entries in each category. The City will receive better more timely information if the preparation of year -end entries is
completed internally.
Disagreements with Management
For put-poses of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated
NEED DATE.
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 governmental unit'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.
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Other Matters
We applied certain limited procedures to the required supplementary information (RSI) (Management's Discussion and Analysis, the
Schedule of Employer's Share of the Net Pension Liability, and the Schedule of Employer's Contributions), which is information 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 (combining and individual fund financial statements and schedules),
which accompany the financial statements but are 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 or statistical sections, which accompany the financial statements but are not RSI.
We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on
them.
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Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management
each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional
relationship and our responses were not a condition to our retention.
Financial Position and Results of Operations
Our principal observations and recommendations are summarized below. These recommendations resulted from our observations
made in connection with our audit of the City's financial statements for the year ended December 31, 2015.
General Fund
The General fund is used to account for resources traditionally associated with government, which are not required legally or by
sound principal management to be accounted for in another fund. The General fund balance increased $416,696 from 2014. The
City Council budgeted for the use of $142,178 of resources. The fund balance of $4,502,167 is 77 percent of the 2016 budgeted
expenditures and transfers. We recommend the fund balance be maintained at a level sufficient to fund operations until the major
revenue sources are received in June. We feel a reserve of approximately 50 percent of planned expenditures and transfers out is
adequate to meet working capital and small emergency needs.
The purposes and benefits of a strong fund balance are as follows:
• Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not
received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the
governmental fund expenditures.
• Expenditures not anticipated at the time the annual budget was adopted may need immediate City Council action. These
would include capital outlay, replacement, lawsuits and, other items. An adequate fund balance will provide the financing
needed for such expenditures.
A strong fund balance will assist the City in maintaining, improving or obtaining its bond rating. The result will be better
interest rates in future bond sales.
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A table summarizing the General fund balance in relation to budget follows:
$7,000,000
$6,000,000 - -
$5,223,830
$5,000,000
$4,000,000
$3,000,000 A%
$2,000,000 --
$1,000,000
2011
$5,547,054 $5,643,263
$5,367,218
72% 72%
68%
Percent
of Fund
Balance to
Budget
67 %
68
72
72
77
$5,857,087
2012 2013 2014 2015 2016
1 tFund Balance -IF-Budget
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Original
General
Fund Balance
Budget
Fund
Year
December 31
Year
Budget
2011
$ 3,488,227
2012
$ 5,223,830
2012
3,624,468
2013
5,367,218
2013
3,976,358
2014
5,547,054
2014
4,085,471
2015
5,643,263
2015
4,502,167
2016
5,857,087
Fund Balance as a Percent of Next
Year's Budget
$7,000,000
$6,000,000 - -
$5,223,830
$5,000,000
$4,000,000
$3,000,000 A%
$2,000,000 --
$1,000,000
2011
$5,547,054 $5,643,263
$5,367,218
72% 72%
68%
Percent
of Fund
Balance to
Budget
67 %
68
72
72
77
$5,857,087
2012 2013 2014 2015 2016
1 tFund Balance -IF-Budget
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The 2015 operations are summarized as follows:
Revenues
Expenditures
Excess of revenues
over expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, January 1
Fund balances, December 31
Final
Budgeted Actual Variance with
Amounts Amounts Final Budget
$ 5,476,085 $ 5,731,612 $ 255,527
4,599,750 4,296,403 303,347
876,335 1,435,209 558,874
25,000 25,000
(1,043,513) (1,043,513) -
(1,018,513) (1,018,513) -
(142,178) 416,696 558,874
4,085,471 4,085,471 -
$ 3,943,293 $ 4,502,167 $ 558,874
The General fund balance increased $416,696 during the year ended December 31, 2015. More detailed information of the
variances is as follows: -
• The largest revenue variance was in licenses and permits, which were over budget by $127,797 due to building permits
received in excess of expectations. Another significant revenue variance was in miscellaneous, which was over budget
by $68,349 which was due to additional refunds and reimbursements. }
• The largest expenditure variances were in general government and public works, which were $59,923 and $283,350
under budget, respectively.
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A more detailed comparison for the last five years General fund revenues and other sources as follows:
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Revenues and Other Sources (Excluding Property Taxes)
Percent
Per
Source
2011
2012
2013
2014
2015
of Total
Capita
Property taxes $
4,787,195
$ 4,783,939
$ 4,764,472
$ 4,864,095
$ 4,949,126
86.0 %
$ 667
Licenses and permits
174,119
175,087
204,600
270,841
275,567
4.8
37
Intergovernmental
72,968
76,102
76,544
114,069
91,636
1.6
12
Charges for services
30,741
61,611
50,829
52,731
67,618
1.2
9
Fines and forfeitures
52,635
66,230
59,294
64,290
65,234
1.1
9
Interest on investment
20,021
25,602
12,911
45,799
35,182
0.6
5
Miscellaneous
109,327
117,824
194,477
191,034
247,249
4.3
33
Transfers in
40,000
-
-
25,000
25,000
0.4
3
Sale of capital assets
-
-
317,182
-
-
-
-
Total revenues
and transfers in $
5,287,006
$ 5,306,395
$ 5,680,309
$ 5,627,859
$ 5,756,612
100.0 %
$ 775
The sources of revenues
and transfers from the past five years are presented graphically below. Property taxes have been excluded
fiom the graph to better illustrate the
fluctuation in
the General fund's
other revenue
sources due to property taxes consisting of
86.0 percent in 2015.
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Revenues and Other Sources (Excluding Property Taxes)
2011 2012 2013 2014 2015
t Licenses and permits -0- Charges for services -ir Fines and forfeitures
--X- Interest on investments -NO-Other
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2011 2012 2013 2014 2015
t Licenses and permits -0- Charges for services -ir Fines and forfeitures
--X- Interest on investments -NO-Other
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A more detailed comparison for the last five years General fund expenditures and transfers as follows:
Program
2011
2012
2013
2014
2015
Percent
of
Total
Per
Capita
Peer Group
Per
Capita
General government
$ 1,306,948
$ 1,282,580
$ 1,249,616
$ 1,198,707
$ 1,247,105
23.4 %
$ 168
$ 130
Public safety
1,460,664
1,445,149
1,494,633
1,526,786
1,579,400
29.6
213
231
Public works
866,413
823,234
852,667
740,824
712,736
13.3
96
120
Culture and recreation
256,601
205,542
209,112
229,122
255,826
4.8
34
58
Capital outlay
504,736
505,849
515,741
508,187
501,336
9.4
68
32
Transfers out
930,409
907,800
1,006,650
1,315,120
1,043,513
19.5
141
-
Total expenditures
and transfers out $ 5,325,771 $ 5,170,154 $ 5,328,419 $ 5,518,746 $ 5,339,916 100.0 % $ 720 $ 571
The above chart compares the amount the City spends per capita, in comparison to a peer group. The peer group average is
derived fiom information available on the website of the Office of the State Auditor for Cities of the 4`" class which have
populations between 2,500 and 10,000.
The function/program of the expenditures and transfers are presented graphically as follows:
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Expenditures and Transfers
2011 2012 2013 2014 2015
General government f Public safety —d— Public works —*—Transfers out —*—Other
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Debt Service Funds
Debt Service funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and
principal on debt (other than enterprise fund debt).
Debt Service funds may have one or a combination of the following revenue sources pledged to retire debt as follows:
• Property taxes - Primarily for general City benefit projects such as parks and municipal buildings. Property taxes may
also be used to fund special assessment bonds which are not fully assessed.
• Tax increments - Pledged exclusively for tax increment /economic development districts.
• Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax
increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference
considered in the form of capitalized interest.
• Special assessments - Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows:
• Residual project proceeds from the related capital projects fund
• Investment earnings
• State or federal grants
• Transfers from other funds
The following summarizes the assets of each Debt Service fund with the bonds payable at year end:
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Principal and Interest Scheduled Payments
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
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Final
Cash and
Total
Bonds
Maturity
Debt Description
Investments
Assets
Outstanding
Date
2007A Public Safety Building
$ 17,220
$ 2,702,220
$ 2,685,000
2023
2007B Public Safety Building
6,977
2,791,977
2,785,000
2023
2007C Public Safety Building
4,889
954,889
950,000
2022
2008 Lease Revenue Bond
2,719
2,719
980,000
2028
Total
$ 31,805
$ 6,451,805
$ 7,400,000
Total Interest Remaining
$ 1,424,725
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Principal and Interest Scheduled Payments
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
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Special Revenue Fund
Special revenue funds receive revenue from specific sources and expenditures for specific purposes. The City's only special
revenue fund is the Southshore Community Center fund. The Southshore Community Center operations ended the year with an
operating loss of $60,365. The City transferred in $70,000 to improve the fund balance. The fund has an ending fund balance of
$53,379.
Capital Projects Funds
Capital projects funds account for the acquisition of capital assets or construction of major capital projects not being financed by
proprietary funds. A summary of year end fund balances for all capital projects funds follows:
Fund
Major
Street Reconstruction
Nonmajor
Park Capital Improvement
Equipment Replacement
MSA Construction
Trail Construction
Community Infrastructure
Total
Following is some of the significant activity:
Street Reconstruction fund
• $813,924 of transfers in from other funds
• $907,885 of capital outlay expenditures
Equipment Replacement fund
• $261,197 of transfers in from other funds
Trail Construction fund
• $69,261 of revenues
• $231,850 of capital outlay expenditures
Community Infrastructure
• $120,446 of revenues
• $175,171 of capital outlay expenditures
Fund Balances
December 31,
2014 2015
Increase
(Decrease)
$ 1,536,672 $ 1,453,048 $ (83,624)
536,660
542,278
5,618
264,324
515,436
251,112
127,387
127,019
(368)
464,287
301,698
(162,589)
365,931
311,206
(54,725)
$ 3,295,261 $ 3,250,685 $ (44,576)
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Enterprise Funds
Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises -
where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges. The results of the operations in terms of cash flow and the breakdown of the cash balances for the past
four years are as follows:
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Water Cash Flow
2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts 2015 2015 Receipts
Disbursements Disbursements Disbursements Disbursements
■Operating costs ■Debt payments ■Other (capital, interfund, etc.) ■Operating receipts ■ Other (bonds, connections, assessments, etc.)
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
Water Cash Balances
2012 2013 2014 2015
Restricted ** i Unrestricted —*— Minhuum target balance (following year debt service plus 4 months of operating costs)
** Restricted cash consists of cash with fiscal agent held for the subsequent January 1 bond payment. The increase in 2013 is due
to the 1/1/2014 refunding of the G.O. Water Revenue bonds, Series 2006A.
2012 2013 2014 2015
Bonds payable $ 1,500,000 $ 3,540,000 $ 2,160,000 $ 1,900,000
The Water fund has been able to generate sufficient operating revenues to cover operating expenses, which has People
contributed to a strong cash balance. The decrease in the cash balance in 2015 was related to capital asset +Process.
acquisition of approximately $660,000.
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$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
Sewer Cash Flow
2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts 2015 2015 Receipts
Disbursements Disbursements Disbursements Disbursements
C■ Operating costs ■ Other (capital, inlerfund, etc.) ■ Operating receipts ■ Other (connection fees, interest, etc.)
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
Sewer Cash Balances
2012 2013 2014 2015
Unrestricted -*--Minimum target balance (4 months of operating costs)
The cash balance remains strong; however, it has decreased each of the last four years. A transfer out to the Stormwater
Management Utility fund of $500,000 was completed in 2015 to assist with capital outlay. The City should continue to monitor
operations to ensure charges are sufficient to cover operating expenses, debt service and future projects.
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$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Stormwater Management Utility Cash Flow
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts 2015 2015 Receipts
Disbursements Disbursements Disbursements Disbursements
■ Operating costs ■ Other (capital, etc.) ■ Operating receipts ■ Other (interest, interfund, etc.)
Stormwater Management Utility Cash Balances
2012 2013 2014 2015
Unrestricted —*— Minimum target balance (4 months of operating costs)
The cash balance in the fund increased $378,672 during the year due to a transfer in of $500,000 from the Sewer fund to assist
with capital outlay. We recommend the City monitor cash flows to ensure sufficient resources to cover expenses and project costs.
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$250,000
$200,000
$150,000
$100,000
$50,000
Recycling Cash Flow
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
2012 2012 Receipts 2013 2013 Receipts 2014 2014 Receipts 2015 2015 Receipts
Disbursements Disbursements Disbursements Disbursements
❑ Operating costs ■ Operating receipts ■ Other (interest, etc.)
Recycling Cash Balances
2012 2013 2014 2015
Unrestricted —dr- Minimum target balance (3 months of operating costs)
The majority of the Recycling fund activities is for operating receipts and disbursements. The fund maintains a healthy cash
balance considering the fund has no debt or capital expenditures. We recommend the City monitor cash flows to ensure sufficient
resources to cover expenses.
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Ratio Analysis
The following captures a few ratios from the City's financial statements that give some additional information for trend and peer
group analysis. We have compiled peer group average fund balance information from approximately 120 fourth class cities
(population of 2,500 - 10,000). The peer group average is derived from information available on the website of the Office of the State
Auditor. The majority of these ratios facilitate the use of economic resources focus and accrual basis of accounting at the government -
wide level. A combination of liquidity (ability to pay its most immediate obligations), solvency (ability to pay its long -term
obligations), funding (comparison of financial amounts and economic indicators to measure changes in financial capacity over time)
and common -size (comparison of financial data with other cities regardless of size) ratios are shown below.
Ratio
Calculation
Source
2012
2013
2014
2015
$
649
Debt to assets
Total liabilities /total assets
Government -wide
29%
30%
26%
27%
358
$
33%
32%
32%
N/A
Debt service coverage
Net cash provided by operations/
Enterprise Rinds
144%
73%
35%
1%
enterprise fund debt payments
106%
117%
114%
N/A
Debt per capita
Bonded debt/population
Government -wide
$ 1,643
$ 1,664
$ 1,368
$ 1,253
43%
$ 2,626
$ 2,656
$ 2,506
N/A
Taxes per capita
Tax revenues /population
Government -wide
$ 651
$ 641
$ 645
$ 664
$ 480
$ 487
$ 484
N/A
Current expenditures per capita Governmental fund current
Capital expenditures per capita
Capital assets % left to
depreciate - Governmental
Capital assets % left to
depreciate - Business -type
Represents the City of Shorewc
Peer Grortp ratio
expenditures / population
Governmental fund capital
outlay / population
Net capital assets/
gross capital assets
Net capital assets/
gross capital assets
od
Governmental funds $
532
$
528
$
502
$ 525
$
649
$
634
$
674
N/A
Governmental fiords 5
168)
358
$
318
$ 254
298 j
$
294
$
320
N/A
Government -wide
I -0/
28%
28%
26%
65%
64%
63%
N/A
Government -wide
44%
43%
42%
43%
63%
63%
61%
N/A
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Debt -to- Assets Leverage Ratio (Solvency Ratio)
The debt -to- assets leverage ratio is a comparison of a City's total liabilities to its total assets or the percentage of total assets that are
provided by creditors. It indicates the degree to which the City's assets are financed through borrowings and other long -term
obligations (i.e. a ratio of 50 percent would indicate half of the assets are financed with outstanding debt).
Debt Service Coverage Ratio (Solvency Ratio)
The debt coverage ratio is a comparison of cash generated by operations to total debt service payments (principal and interest) of
enterprise funds. This ratio indicates if there are sufficient cash flows from operations to meet debt service obligations. Except in
cases where other nonoperating revenues (i.e. taxes, assessments, transfers from other funds, etc.) are used to fund debt service
payments, an acceptable ratio would be above 100 percent.
Bonded Debt per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total bonded debt by the population of the City and represents the amount of bonded
debt obligation for each citizen of the City at the end of the year. The higher the amount, the more resources are needed in the future to
retire these obligations through taxes, assessments or user fees.
Taxes per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total tax revenues by the population of the City and represents the amount of taxes for
each citizen of the City for the year. The higher this amount is, the more reliant the City is on taxes to fund its operations.
Current Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total current governmental expenditures by the population of the City and represents
the amount of governmental expenditure for each citizen of the City during the year. Since this is generally based on ongoing
expenditures, we would expect consistent annual per capita results.
r
Capital Expenditures per Capita (Finding Ratio) p f
This dollar amount is arrived at by dividing the total governmental capital'outlay expenditures by the population of the City and
represents the amount of capital expenditure for each citizen of the City during the year. Since projects are not always recurring, the
per capita amount will fluctuate fiom year to year.
Capital Assets Percentage (Common -size Ratio)
This percentage represents the percent of governmental or business -type capital assets that are left to be depreciated. The lower this
percentage, the older the City's capital assets are and may need major repairs or replacements in the near future. A higher percentage
may indicate newer assets being constructed or purchased and may coincide with higher debt ratios or bonded debt per capita.
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Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future
City financial statements: (r)
GASB Statement No. 72 - Fair Vahie Measurement and Application
Summary
This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial
reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to
all fair value measurements.
Effective Date and Transition
The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will enhance comparability of financial statements among governments by requiring
measurement of certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and accepted
valuation techniques. This Statement also will enhance fair value application guidance and related disclosures in order to provide
information to financial statement users about the impact of fair value measurements on a government's financial position.
GASB Statement No. 73 - Accounting and financial reporting for pension and related assets that are not within the scope of
GASB Statement No. 68, and amendments to certain, provisions of GASB Statements No. 67 and No. 68
Summary w
The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose
external financial reports of state and local governments for making decisions and assessing accountability. This Statement results
from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all
postemployment benefits with regard to providing decision - useful information, supporting assessments of accountability and
interperiod equity, and creating additional transparency.
This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68,
Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions.
In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68. It also
amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement 68 for pension plans and
pensions that are within their respective scopes.
The requirements of this Statement extend the approach to accounting and financial reporting established in Statement 68 to all
pensions, with modifications as necessary to reflect that for accounting and financial reporting purposes, any assets accumulated
for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in
Statement 68 should not be considered pension plan assets. It also requires that information similar to that required by Statement
68 be included in notes to financial statements and required supplementary information by all similarly situated employers and
nonemployer contributing entities.
This Statement also clarifies the application of certain provisions of Statements 67 and 68 with regard to the following issues:
1. Information that is required to be presented as notes to the 10 -year schedules of required supplementary information
about investment- related factors that significantly affect trends in the amounts reported.
2. Accounting and financial reporting for separately financed specific liabilities of individual employers
and nonemployer contributing entities for defined benefit pensions.
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Future Accounting Standard Changes - Continued
Effective Date and Transition
The requirements of this Statement that address accounting and financial reporting by employers and governmental nonemployer
contributing entities for pensions that are not within the scope of Statement 68 are effective for financial statements for fiscal
years beginning after June 15, 2016, and the requirements of this Statement that address financial reporting for assets accumulated
for purposes of providing those pensions are effective for fiscal years beginning after June 15, 2015. The requirements of this
Statement for pension plans that are within the scope of Statement 67 or for pensions that are within the scope of Statement 68 are
effective for fiscal years beginning after June 15, 2015. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve financial reporting by establishing a single framework for the presentation of
information about pensions, which will enhance the comparability of pension - related information reported by employers and
nonemployer contributing entities.
GASB Statement No. 74 - Financial Reporting for Postemployment Benefit Plans Other than Pension Plans
Summary
The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions
(other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local
governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive
review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions
and OPEB) with regard to providing decision - useful information, supporting assessments of accountability and inteiperiod equity,
and creating additional transparency.
This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as
amended, and No. 57, OPEB Measurements by Agent,Employers and Agent Multiple - Employer Plans. It also includes
requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25,
Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended,
Statement 43, and Statement No. 50, Pension Disclosures.
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, establishes new
accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for
certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees
of other entities.
The scope of this Statement includes OPEB plans - defined benefit and defined contribution - administered through trusts that meet
the following criteria:
• Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those
contributions are irrevocable.
• OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.
• OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the
OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected fiom creditors
of the plan members.
This Statement also includes requirements to address financial reporting for assets accumulated for purposes of providing defined
benefit OPEB through OPEB plans that are not administered through trusts that meet the specified criteria.
Effective Date and Transition
This Statement is effective for financial statements for fiscal years beginning after June 15, 2016. Earlier
application is encouraged.
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Future Accounting Standard Changes - Continued
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve financial reporting primarily through enhanced note disclosures and schedules of
required supplementary information that will be presented by OPEB plans that are administered through trusts that meet the
specified criteria. The new information will enhance the decision - usefulness of the financial reports of those OPEB plans, their
value for assessing accountability, and their transparency by providing information about measures of net OPEB liabilities and
explanations of how and why those liabilities changed fiom year to year. The net OPEB liability information, including ratios,
will offer an up -to -date indication of the extent to which the total OPEB liability is covered by the fiduciary net position of the
OPEB plan. The comparability of the reported information for similar types of OPEB plans will be improved by the changes
related to the attribution method used to determine the total OPEB liability. The contribution schedule will provide measures to
evaluate decisions related to the assessment of contribution rates in comparison with actuarially determined rates, if such rates are
determined. In addition, new information about rates of return on OPEB plan investments will inform financial report users about
the effects of market conditions on the OPEB plan's assets over time and provide information for users to assess the relative
success of the OPEB plan's investment strategy and the relative contribution that investment earnings provide to the OPEB plan's
ability to pay benefits to plan members when they come due.
GASB Statement No. 75 -Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pension
Summary
The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for
postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided
by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement
results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all
postemployment benefits (pensions and OPEB) with regard to providing decision - useful information, supporting assessments of
accountability and interperiod equity, and creating additional transparency.
This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent
Multiple - Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than
Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans.
The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and
local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows
of resources, deferred inflows of resources, and expense /expenditures. For defined benefit OPEB, this Statement identifies the
methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their
actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required
supplementary information requirements about defined benefit OPEB also are addressed.
In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit
OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided
with defined contribution OPEB. This Statement also addresses certain circumstances in which a nonemployer entity provides
financial support for OPEB of employees of another entity.
In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans through
which the benefits are provided are administered through trusts that meet the following criteria:
• Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those
contributions are irrevocable.
• OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.
• OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, the OPEB
plan administrator, and the plan members.
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Future Accounting Standard Changes - Continued
Effective Date
This Statement is effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve the decision - usefulness of information in employer and governmental
nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by
requiring recognition of the entire OPEB liability and a more comprehensive measure of OPEB expense. Decision - usefulness and
accountability also will be enhanced through new note disclosures and required supplementary information, as follows:
• More robust disclosures of assumptions will allow for better informed assessments of the reasonableness of OPEB
measurements.
• Explanations of how and why the OPEB liability changed from year to year will improve transparency.
• The summary OPEB liability information, including ratios, will offer an indication of the extent to which the total OPEB
liability is covered by resources held by the OPEB plan, if any.
• For employers that provide benefits through OPEB plans that are administered through trusts that meet the specified
criteria, the contribution schedules will provide measures to evaluate decisions related to contributions.
The consistency, comparability, and transparency of the information reported by employers and governmental nonemployer
contributing entities about OPEB transactions will be improved by requiring:
• The use of a discount rate that considers the availability of the OPEB plan's fiduciary net position associated with the
OPEB of current active and inactive employees and the.investment horizon of those resources, rather than utilizing only
the long -term expected rate of return regardless of whether the OPEB plan's fiduciary net position is projected to be
sufficient to make projected benefit payments and is expected to be invested using a strategy to achieve that return.
• A single method ofattributing the actuarial present value of projected benefit payments to periods of employee service,
rather than allowing a choice among six methods with additional variations.
• Immediate recognition in OPEB expense, rather than a choice of recognition periods, of the effects of changes of benefit
terms.
• Recognition of OPEB expense that incorporates deferred outflows of resources and deferred inflows of resources related
to OPEB over a defined, closed period, rather than a choice between an open or closed period.
GASB Statement No. 76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments
Summary
The objective of this Statement is to identify -in the context of the current governmental financial reporting environment -the
hierarchy of generally accepted accounting principles (GAAP). The "GAAP hierarchy" consists of the sources of accounting
principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the
framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP
and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or
other event is not specified within a source of authoritative GAAP.
This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local
Governments.
Effective Date
The requirements of this Statement are effective for financial statements for periods beginning after p le
June 15, 2015, and should be applied retroactively. Earlier application is permitted, Pe0
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Future Accounting Standard Changes - Continued
How the Changes in This Statement Will Improve Financial Reporting
The requirements in this Statement improve financial reporting by (1) raising the category of GASB Implementation Guides in
the GAAP hierarchy, thus providing the opportunity for broader public input on implementation guidance; (2) emphasizing the
importance of analogies to authoritative literature when the accounting treatment for an event is not specified in authoritative
GAAP; and (3) requiring the consideration of consistency with the GASB Concepts Statements when evaluating accounting
treatments specified in nonauthoritative literature. As a result, governments will apply financial reporting guidance with less
variation, which will improve the usefulness of financial statement information for making decisions and assessing accountability
and enhance the comparability of financial statement information among governments.
GASB Statement No. 77 - Tax Abatement Disclosures
Summary
Financial statements prepared by state and local governments in conformity with generally accepted accounting principles provide
citizens and taxpayers, legislative and oversight bodies, municipal bond analysts, and others with information they need to
evaluate the financial health of governments, make decisions, and assess accountability. This information is intended, among
other things, to assist these users of financial statements in assessing (1) whether a government's current -year revenues were
sufficient to pay for current -year services (known as interperiod equity), (2) whether a government complied with finance - related
legal and contractual obligations, (3) where a government's financial resources come from and how it uses them, and (4) a
government's financial position and economic condition and how they have changed over time.
Financial statement users need information about certain limitations on a government's ability to raise resources. This includes
limitations on revenue- raising capacity resulting from government programs that use tax abatements to induce behavior by
individuals and entities that is beneficial to the government or its citizens. Tax abatements are widely used by state and local
governments, particularly to encourage economic development. For financial reporting purposes, this Statement defines a tax
abatement as resulting from an agreement between a government and an individual or entity in which the government promises to
forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic
development or otherwise benefits the'government or its citizens.
Although many governments offer tax abatements and provide information to the public about them, they do not always provide
the information necessary to assess how tax abatements affect. their. financial position and results of operations, including their
ability to raise resources in the future. This Statement requires disclosure of tax abatement information about (1) a reporting
government's own tax abatement agreements and (2) those that are entered into by other governments and that reduce the
reporting government's tax revenues.
This Statement requires governments that enter into tax abatement agreements to disclose the following information about the
agreements:
Brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided,
eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of
commitments made by tax abatement recipients.
• The gross dollar amount of taxes abated during the period.
• Commitments made by a government, other than to abate taxes, as part of a tax abatement agreement.
Governments should organize those disclosures by major tax abatement program and may disclose information for individual tax
abatement agreements within those programs.
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Tax abatement agreements of other governments should be organized by the government that entered into the tax abatement
agreement and the specific tax being abated. Governments may disclose information for individual tax abatement agreements of
other governments within the specific tax being abated. For those tax abatement agreements, a reporting government should
disclose:
• The names of the governments that entered into the agreements.
• The specific taxes being abated.
• The gross dollar amount of taxes abated during the period.
Effective Date and Transition
The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2015. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement improve financial reporting by giving users of financial statements essential information that
is not consistently or comprehensively reported to the public at present. Disclosure of information about the nature and magnitude
of tax abatements will make these transactions more transparent to financial statement users. As a result, users will be better
equipped to understand (1) how tax abatements affect a government's future ability to raise resources and meet its financial
obligations and (2) the impact those abatements have on a government's financial position and economic condition.
GASB Statement No. 78 - Pension Provided Through Certain Multiple Employer Defined Benefit Pension Plans
Summary
The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68,
Accounting and Financial Reporting for Pensions.. This issue is associated with pensions provided through certain multiple -
employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such
pensions.
Prior to the issuance of this Statement, the requirements of Statement 68 applied to the financial statements of all state and local
governmental employers whose employees are provided with pensions through pension plans that are administered through trusts
that meet the criteria in paragraph 4 of that Statement.
This Statement amends the scope and applicability of Statement 68 to exclude pensions provided to employees of state or local
governmental employers through a cost- sharing multiple- employer defined benefit pension plan that (1) is not a state or local
governmental pension plan, (2) is used to provide defined benefit pensions both to employees of state or local governmental
employers and to employees of employers that are not state or local governmental employers, and (3) has no predominant state or
local governmental employer (either individually or collectively with other state or local governmental employers that provide
pensions through the pension plan). This Statement establishes requirements for recognition and measurement of pension
expense, expenditures, and liabilities; note disclosures; and required supplementary information for pensions that have the
characteristics described above.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after December 15, 2015. Earlier application is
encouraged.
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Future Accounting Standard Changes - Continued
GASB Statement No. 79 - Certain External Investment Pools and Pool Participants
Summary
This Statement addresses accounting and financial reporting for certain external investment pools and pool participants.
Specifically, it establishes criteria for an external investment pool to qualify for making the election to measure all of its
investments at amortized cost for financial reporting purposes. An external investment pool qualifies for that reporting if it meets
all of the applicable criteria established in this Statement. The specific criteria address (1) how the external investment pool
transacts with participants; (2) requirements for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and
requirements of a shadow price. Significant noncompliance prevents the external investment pool from measuring all of its
investments at amortized cost for financial reporting purposes. Professional judgment is required to determine if instances of
noncompliance with the criteria established by this Statement during the reporting period, individually or in the aggregate, were
significant.
If an external investment pool does not meet the criteria established by this Statement, that pool should apply the provisions in
paragraph 16 of Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment
Pools, as amended. If an external investment pool meets the criteria in this Statement and measures all of its investments at
amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for
financial reporting purposes. If an external investment pool does not meet the criteria in this Statement, the pool's participants
should measure their investments in that pool at fair value, as provided in paragraph 11 of Statement 31, as amended.
This Statement establishes additional note disclosure requirements for qualifying external investment pools that measure all of
their investments at amortized cost for financial reporting purposes and for governments that participate in those pools. Those
disclosures for both the qualifying external investment pools and their participants include information about any limitations or
restrictions on participant withdrawals.
Effective Date
The requirements of this Statement are effective for reporting periods beginning affter June 15, 2015, except for the provisions in
paragraphs 18, 19, 23 -26, and 40, which are effective for reporting periods begimr` after December 15, 2015.
How the Changes in This Statement Will Improve Financial Reporting'
This Statement will enhance comparability of financial statements among governments by establishing specific criteria used to
determine whether a qualifying external investment pool may elect to use an amortized cost exception to fair value measurement.
Those criteria will provide qualifying external investment pools and participants in those pools with consistent application of an
amortized cost -based measurement for financial reporting purposes. That measurement approximates fair value and mirrors the
operations of external investment pools that transact with participants at a stable net asset value per share.
GASB Statement No. 80 - Blending Requirements for Certain Component Units - an Amendment of GASB Statement No. 14
Summary
The objective of the Statement is to improve financial reporting by clarifying the financial statement presentation requirements for
certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14,
The Financial Reporting Entity, as amended.
This Statement amends the blending requirements for the financial statement presentation of component units of all state and local
governments. The additional criterion requires blending of a component unit incorporated as a not - for -profit corporation in which
the primary government is the sole corporate member. The additional criterion does not apply to component units included in the
financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are
Component Units.
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Futnre Accounting Standard Changes - Continued
Effective Date
The requirements of this Statement are effective for reporting periods beginning after June 15, 2016. Earlier application is
encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement enhance the comparability of financial statements among governments. Greater comparability
improves the decision- usefulness of information reported in financial statements and enhances its value for assessing government
accountability.
(')Note. From GASB Pronouncements Summaries. Copyright 2015 by the Financial Accounting Foundation, 401 Merritt 7, Norwalk,
CT 06856, USA, and is reproduced with permission.
Restriction on Use
This communication is intended solely for the information and use of the City Council, management, others within the City and the
Minnesota Office of the State Auditor and is not intended to be and should not be used by anyone other than these specified parties.
The comments and recommendation in this report are purely constructive in nature, and should be read in this context. Our audit
would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and
related data.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience.
We wish to thank you for the continued opportunity to be of service, and for the courtesy and cooperation extended to us by your staff.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
NEED DATE
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CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2015
BILL JOYNES, CITY ADMINISTRATOR
REPORT PREPARED BY
BRUCE DEJONG, FINANCE DIRECTOR/TREASURER
MEMBER OF GOVERNMENT FINANCE OFFICERS ASSOCIATION
OF THE UNITED STATES AND CANADA
THIS PAGE IS LEFT BLANK
INTENTIONALLY
CITY OF SHOREWOOD, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2015
INTRODUCTORY SECTION
Elected and Appointed Officials
Organization Chart
Letter of Transmittal
Certification of Achievement for Excellence in Financial Reporting
FINANCIAL SECTION
Independent Auditor's Report
Management's Discussion and Analysis
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position
Statement of Activities
Fund Financial Statements
Governmental Funds
Balance Sheet
Reconciliation of the Balance Sheet to the Statement of Net Position
Statement of Revenues, Expenditures and Changes in Fund Balances
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances to the Statement of Activities
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and "Actual
Proprietary Funds
Statement of Net Position!, r
Statement of Revenues, Expenses and Changes in Net Position
Statement of Cash Flows
Fiduciary Fund
Statement of Net Position
Notes to the Financial Statements
Required Supplementary Information
Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability -
General Employees Retirement Fund
Schedule of Employer's Public Employees Retirement Association Contributions -
General Employees Retirement Fund
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Capital Projects Funds
Combining Balance Sheet
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Debt Service Funds
Combining Balance Sheet
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances
Agency Fund
Combining Schedule of Changes in Assets and Liabilities
Summary Financial Report
Revenues and Expenditures for General Operations - Governmental Funds
iE
Exhibit Paee No.
4
5
7
12
15
19
1 33
2 34
3 38
4 41
5 42
6 44
7 45
8 46
9 47
10 48
11 50
51
78
78
A -1 82
A -2 83
B -1 86
B -2 87
C -1 88
D -1 92
D -2 93
E -1 94
F -1 95
CITY OF SHOREWOOD, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2015
-2-
Table
Page No.
STATISTICAL SECTION (UNAUDITED)
Net Position by Component
1
100
Changes in Net Position
2
102
Fund Balances of Governmental Funds
3
106
Changes in Fund Balances of Governmental Funds
4
108
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property
5
110
Property Tax Capacity Rates - Direct and Overlapping Governments
6
112
Principal Taxpayers
7
114
Property Tax Levies and Collections
8
115
Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita
9
116
Computation of Direct and Overlapping Debt
10
117
Legal Debt Margin Information
11
118
Pledged- Revenue Coverage
12
120
Demographic and Economic Statistics
13
121
Principal Employers
14
122
Full -Time Equivalent City Government Employees by Function
15
123
Operating Indicators by Function
16
124
Capital Asset Statistics by Function
17
125
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INTRODUCTORY SECTION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2015
1191!
CITY OF SHOREWOOD, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTED
Name Title
Scott Zerby
Mayor
Richard Woodruff
Council Member
Jennifer Labadie
Council Member
Debbie Siakel
Council Member
Kristine Sundberg
Council Member
APPOINTED
Name Title
Bill Joynes City Administrator
Bruce DeJong Finance Director /Treasurer
-4-
Term Expires
12/31/16
12/31/16
12/31/18
12/31/18
12/31/16
City of Shorewood Organizational Chart
-5-
June 20, 2016
5755 COUNTRY CLUB ROAD o SHOREWOOD, MINNESOTA 55331 - 8927. (952) 960 -7900
FAX (952)'474 -0128 • www.d.shorewood,mmus • cityhaII @ci.shorewood.mn.us
Honorable Mayor and Members of the City Council
City of Shorewood, Minnesota
Mayor and City Council Members:
The Comprehensive Annual Financial Report of the City of Shorewood, Minnesota, for the fiscal year
ended December 31, 2015, is hereby submitted. The report was prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) as established by
the. Governmental Accounting Standards Board and meets the requirements of the Office of State
Auditor.
The report consists of management's representations - concerning the finances of the City.
Consequently, management assumes full 'responsibility for the completeness and reliability of the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City has established internal controls designed to protect the City's assets from
loss, theft, or misuse, and to provide, sufficient information for the preparation of these financial .
statements in conformity with GAAP, Because the cost of internal controls should not outweigh the
benefits, the City's internal controls have been designed to provide, reasonable, rather than absolute,
assurance that the financial statements are free of any material misstatements. ' As management, 'we
assert that to the best of our knowledge and belief this financial report is complete and reliable in all
material respects, .
The City of Shol•ewood's financial statements have been audited by the firm of Abdo, Eick &.
Meyers, LLP, Certified Public ' Accountants. The goal of the audit was to provide reasonable .
assurance that the financial statements of the City for the year ended December 31,2015, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates used by management; and evaluating the overall financial
statement presentation; Based upon the audit, the independent auditor concluded that there was
reasonable basis for rendering an unqualified opinion that the City's financial statements, for the year
ended December 31, 2015, are fairly presented in conformity with GAAP, The independent auditor's,
report is presented at the front of the financial section of this report.
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®�® PRINTED ON RECYCLED PAPER
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management's Discussion and Analysis
(MD &A), The City's MD &A can be found in the financial section of this report immediately
following the independent auditor's report.
City Profile
The City of Shorewood is a suburban community located southwest of the Twin Cities on the
southern shore of Lake Minnetonka, a setting of rolling hills and picturesque lakes and creeks.
Shorewood has a convenient location, a comprehensive system of highways, and is a short distance
from downtown Minneapolis and St. Paul and the Minneapolis -St. Paul International Airport. The
City is predominantly a residential community with limited commercial businesses and two
commercial shopping malls. The City is 6 square miles in area and had an estimated population of
7,425 as of 2015. The City, which is currently 95% developed, continues to experience some growth
in its residential base.
Incorporated in 1956 as a village, the City of Shorewood operates under the Council- Administrator
form of government. Policy making and legislative authority are vested in a governing council
consisting of the mayor and four - member council, elected on a non - partisan basis. Council members
serve four -year staggered terms, with two council members elected every two years. The mayor is
elected to serve a two -year term. The City Administrator is responsible for overseeing the day -to -day
operations of the government, and to assign responsibility to City staff for the efficient and effective
delivery of City services.
The Economic Development Authority (EDA) of the City was created in 2001 pursuant to Minnesota
Statutes to carry out economic and industrial development and redevelopment consistent with policies
established by the Council. Its board is comprised of members of the City Council, The EDA
activities are blended and separate financial statements are not issued for this component unit.
The City provides its residents and businesses with a broad range of municipal services consisting of
police and fire protection, street maintenance, recreation programs, park maintenance, community and
economic development, and administrative services, including building inspections. During 2015, the
City operated four enterprises; a water utility, sanitary sewer, recycling, and storm water management
utilities.
Economic Conditions and Outlook
Governance
The City Council, in its leadership role, has effectively established a focus for government in
Shorewood and has established overall goals and expectations for the City. The Council's calendar
consists of three phases. The first phase is planning. It includes review of the previous year's work
plan and identifies goals and priorities for the next twelve months.
The second phase is capital finance planning; each year the ten -year Capital Improvement Program is
reviewed and updated based upon priorities established in the first phase. Those projects are then
incorporated into a financial management plan that includes both operating and capital spending plans
to determine the overall feasibility of the plans and the effect of that proposed spending level on fund
balances and tax levies necessary to support that level of investment.
WE
The third phase is budgeting; the annual operating budget is developed based on decisions made in
the first two phases, The annual budget serves as the foundation of the City of Shorewood's financial
planning and control. Departments submit budget requests to Finance in July and the City
Administrator presents the proposed budget to the City Council for review. Budget work- sessions are
held with the City Council in July and August. The City Council adopts a preliminary budget and tax
levy prior to September 30 °i of each year. After individualized property tax estimates are mailed to
all properties in November, the City Council holds a Truth -in- Taxation public hearing on the
proposed budget and adopts the final budget in December each year.
The budget is prepared by fund and function, The City's department directors develop their budgets,
with subsequent review and input from the City Administrator and Finance Director. Any changes in
the overall budget must be approved by the City Council.
Cooperative Public Service Delivery
Shorewood is committed to working cooperatively with other Lake Minnetonka area cities to
carefully consider methods to efficiently deliver public services. The City has various contractual
arrangements with other governmental jurisdictions and with private entities for providing many of
these services. The City is also involved in cooperative employee training, disaster preparedness and
other areas of mutual concern as an active participant in the Lake Minnetonka area.
The City has been a member city of the South Lake Minnetonka Police Department (SLMPD) since
its inception in 1973. The other members of this joint powers organization are the cities of Excelsior,
Greenwood, and Tonka Bay.
The City of Shorewood, along with the cities of Deephaven, Excelsior, Greenwood, and Tonka Bay,
has been a member of the Excelsior Fire District since 2000. The Excelsior Fire District is a joint
powers organization. A combined police and fire public safety building that serves the South Lake
Minnetonka Area cities was completed in late 2003.
The City of Shorewood, along with the cities of Deephaven, Excelsior, Greenwood, and Tonka Bay,
hold title to the Southshore Center, a community center used by senior citizens and community
groups for activities, meetings, and festivals. The City of Shorewood operated the Southshore
Community Center for the entire year of 2015. The Center was built in the late 1990s as a joint
venture by the following five Lake Minnetonka Area Cities; Shorewood, Excelsior, Tonka Bay,
Deephaven, and Greenwood. Until recently, the Center was leased to an organization that
emphasized senior programming, Many of the senior- oriented programs still remain during the day,
and these are a critical component, but Center renovations were made to attract new renters, including
businesses, community education classes, and wedding, birthday, and graduation parties. Shorewood
committed to operate the center through December, 2015, through the renewal of an automatic three
year extension. New programs have been developed to attract all ages. The Southshore Center's long
range options are being evaluated by a committee of the Southshore founding communities and other
interested parties.
The City contracts with Hennepin County for property assessment services. The Hennepin County
Assessor analyzes property sales information, sets taxable values, and handles the valuation appeal
process.
M
Debt Administration
As of December 31, 2015, the City's debt outstanding totaled $9,300,000, Of this total, $1,900,000
are General Obligation Water Revenue bonds issued in 2013. The proceeds from these bonds
financed water system extensions and improvements and will be repaid from special assessments and
water rate revenues.
The remaining outstanding debt balances of $7,400,000 are EDA Lease Revenue Advance Refunding
bonds issued in 2007 for the public safety buildings and EDA Lease Revenue bonds issued in 2008
for remodeling City Hall. These bonds will be repaid from lease payments from the Excelsior Fire
District, South Lake Minnetonka Police Department, and the City of Shorewood.
The City of Shorewood's bond rating was upgraded to Aa2 from Aa3 in July, 2008, by Moody's
Investors Service. At that time, Moody's also upgraded the Shorewood Economic Development
Authority (EDA) bond rating to Aa3 from Al, based upon the City's pledge to make the lease
payments subject to annual appropriation in the City's operating budget, and the fact that a city hall
facility is an essential part of a municipality.
Long -term Financial Planning
The City has implemented various financial /budgetary policies to guide the City Council and staff
when making financial decisions to ensure the long -term stability and flexibility of City finances and
operations. These policies include the following:
• The original budget should be balanced with revenues equal to expenditures.
• By policy, the City Council has set the fund balance level in the General Fund 55 -60% of the
next year's expenditure budget including transfers. This policy ensures the long -term
economic stability of the organization by providing adequate working capital given the
periodic nature of tax receipts and by providing for unexpected shortfalls or emergencies. In
accordance with this policy, the City Council may use any General Fund reserves in excess of
60% to reduce the budgeted tax levy, or for one -time projects, or transfer to any of the City's
capital funds,
• The City will maintain a ten -year capital improvement plan to provide for capital asset
acquisition, maintenance, replacement, and retirement.
• The City will continue to accumulate resources for future capital equipment and improvement
projects with operating transfers to various capital project funds in 2015. Budgeted transfers
from the General Fund for 2015 were $1,043,513.
Major Initiatives
The City began a program of trail improvements in 2013 which included a segment linking
Shorewood to the Three Rivers Regional Trail along County Road 19 and a trail along the south side
of Smithtown Road from Eureka Road North to the western border of the city which links to the City
of Victoria's trail system. Additional trail segments are planned for Excelsior Boulevard, Smithtown
Road east of Eureka Road North to County Road 19, Strawberry Lane & West 62nd Street, and Galpin
Lake Road.
-10-
The Minnetonka Country Club was closed at the end of 2014 and the property has been sold to
Mattamy Homes to develop up to 140 housing units. A specific development proposal and
construction time frame is anticipated in 2016, The City Council appointed a Citizen Advisory Board
to review community goals for the Minnetonka Country Club redevelopment. This board of 20+
citizens reported back to the City Council with findings for both the country club property and the
traffic impacts on the surrounding neighborhoods,
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement, for Excellence in Financial Reporting to the City of Shorewood for its
comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2014.
The Certificate of Achievement is a prestigious national award recognizing conformance with the
highest standards for .preparation of state and local government financial reports. In order to be
awarded a Certificate of Achievement, a government unit must publish an easily readable and
efficiently organized comprehensive annual financial report whose contents conform to program
standards, Such comprehensive annual financial report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. The City of Shorewood has received a
Certificate of Achievement for the past nineteen consecutive years. We believe our current report
continues to conform to the Certificate of Achievement program requirements, and we are submitting
it to the GFOA to determine its eligibility for another certificate,
Acknowledgments
We would like to express our appreciation to the employees of the Administration, Finance, Planning,
and Public Works departments for their contribution to the preparation of this report. We would also
like to thank the Mayor and Council members for their continued support in planning and conducting
the financial operations of the City in a responsible and prudent manner.
Respectfully submitted,
&ue--k
ruce M. De ong
Finance Director /Treasurer
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FINANCIAL SECTION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2015
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INTENTIONALLY
SO
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and City Council
City of Shorewood, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City of Shorewood, Minnesota (the City), as of and for the year ended
December 31, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements
as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair, presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with
auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
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, 2015, 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.
5201 Eden Avenue, Suite 250
Edina. MN 55436 -15-
952M5.9090 1 Fax 952.835.3261
THIS PAGE IS LEFT BLANK
INTENTIONALLY
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Change in Accounting Standards
As described in Note 8 to the financial statements, the City adopted the provisions of Governmental Accounting Standard Board
(GASB) Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and
Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB
Statement No. 68, for the year ended December 31, 2015. Adoption of the provisions of these statements results in significant change
to the classifications of the components of the financial statements.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis
starting on page 19 and the Schedules of Employer's Share of the Net Pension Liability and the Schedules of Employer's
Contributions starting on page 78 be presented to supplement the basic financial statements. Such information, although not a part of
the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic
financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the financial statements.
The combining and individual fund financial statements and schedules are the responsibility of management and were derived from
and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements
and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
NEED DATE
-17-
People
+ Nocess,
Gore
)E'VOIld tix,
Vlliibere
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-18-
Management's Discussion and Analysis
As management of the City of Shorewood, 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, 2015.
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close
of the most recent fiscal year by $30,398,490 (net position). Of this amount, $13,290,048 (unrestricted net position) may be
used to meet the City's ongoing obligations to residents and creditors.
• The beginning unrestrictednet position was decreased by $1,254,080.to recognize the effects of GASB Statement No. 68
implementation.
• The City's total net position decreased $27,169, which is due, to expenses in excess of revenues in business -type activities.
• As of the close of the current-fiscal year, the City's governmental funds reported combined ending fund balances of
$7,838,036, an increase of $387,906 in comparison with the prior year. This increase is primarily the result of revenues
exceeding expenditures. Approximately 56 percent of this total amount, $4,402,951, is unassigned and available for
spending at the City's discretion.
• At the end of the current fiscal year, unassigned fund balance for the General fund was $4,402,951, or 82.5 percent of total
2015 expenditures and transfers out. The City has a policy to maintain a General fund working capital balance of 55.0 -
60.0 percent of expenditures and transfers.
• The City's total debt increased $105,576, or 1.0 percent during the current fiscal year. This was the result of recording the
net pension liability in relation to the adoption of GASB Statement No. 68 offset by regularly scheduled principal and interest
payments.
-19-
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 comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves.
Figure 1 illustrates how the required parts of this annual report are arranged and relate to one another. In addition to these required
elements, we have included a section with combining and individual fund financial statements and schedules that provide details about
nonmajor governmental funds, which are added together and presented in single columns in the basic financial statements.
Figure 1
Required Components of the
City's Annual Financial Report
........................ ............................... I ...................
Management's Basic Required
Discussion and Financial Supplementary
Analysis Statements Information
Summary 0 0 Detail
-20-
Figure 2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and
the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the
structure and contents of each of the statements.
Figure 2
Major features of the Government -wide and Fund Financial Statements
Government -wide financial statements. The government -}vide 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 and deferred outflows of resources, and liabilities and
deferred inflows of resources, with the difference between the two 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 cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenue (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, culture and recreation, and interest on long -term debt. The business -type activities of the
City include water, sewer, stormwater management utility, and recycling.
-21-
Fund Financial Statements
Government -wide
Governmental Funds
Proprietary Funds
Statements
Scope
Entire City government
The activities of the City that
Activities the City operates
(except fiduciary funds) and
are not proprietary or
similar to private businesses,
the City's component units
fiduciary, such as police, fire
such as the water and sewer
and parks
system
Required financial
• Statement of Net
• Balance Sheet
• Statements of Net
statements
Position
• Statement of Revenues,
Position
• Statement of Activities
Expenditures, and
• Statements of Revenues,
Changes in Fund
Expenses and Changes in
Balances
Fund Net Position
• Statements of Cash
Flows
Accounting Basis and
Accrual accounting and
Modified accrual accounting
Accrual accounting and
measurement focus
economic resources focus
and current financial
economic resources focus
resources focus
Type of asset /liability
All assets and liabilities, both
Only assets expected to be
All assets and liabilities, both
information
financial and capital, and
used up and liabilities that
financial and capital, and
short-term and long -term
come due during the year or
short-term and long -term
soon thereafter; no capital
assets included
Type of deferred
All deferred
Only deferred outflows of
All deferred
outflows /inflows of
outflows /inflows;of'
resources expected to be
outflows /inflows of
resources information
resources, regardless of
used up and;deferred inflows;
resources, regardless of
when cash is received:or„paid
of resources that come due
when cash is received or paid
during the year of son
thereafter; no capital assets
included
Type of in flow /out flow
All revenues and expenses
Revenues for which cash is
All revenues and expenses
information
during year, regardless of
received during or soon after
during the year, regardless of
when cash is received or paid
the end of the year;
when cash is received or paid
expenditures when goods or
services have been received
and payment is due during
the year or soon thereafter
Government -wide financial statements. The government -}vide 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 and deferred outflows of resources, and liabilities and
deferred inflows of resources, with the difference between the two 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 cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenue (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, culture and recreation, and interest on long -term debt. The business -type activities of the
City include water, sewer, stormwater management utility, and recycling.
-21-
The government -wide financial statements include not only the City itself (known as the primary government), but also a legally
separate Economic Development Authority (EDA) for which the City is financially accountable. The EDA, although legally separate,
functions for all practical purposes as a department of the City, and therefore has been included as an integral part of the primary
government.
The government -wide financial statements start on page 33 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and
demonstrate compliance with finance - related legal requirements. All of the funds of the City can be divided into three categories:
governmental funds, proprietary funds and fiduciary funds.
Governmental fiords. Governmental Ands are used to account for essentially the same functions reported as governmental activities
in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund
financial statements focus on near -term irrflou,s and ouoows 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 fimds with similar information presented for governmental activities in the government -wide
financial statements. By doing so, readers may better understand the long -term impact of the government's near -term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in
fund balances provide a reconciliation to facilitate this comparison between governmental fimds and governmental activities.
The City maintains 12 individual governmental funds, four of which are Debt Service funds. Information is presented separately in
the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances
for the General, Debt Service, and Street Reconstruction funds, which are considered to be major funds. Data from the other six
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 conrbinirlg statements or schedules elsewhere in.this report.
The City adopts an ann
General fund to demon
The basic governments
is been provided for the
Proprietarll funds. The City maintains one type of proprietary fund. Enterprise finds are used to report the same functions presented
as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water, sewer,
stormwater management utility, and recycling.
Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The
proprietary fund financial statements provide separate information for each of the enterprise funds. The Water, Sewer, and Stormwater
Management Utility funds are considered to be major funds of the City, while the Recycling fund is a nonmajor fund.
The basic proprietary fund financial statements start on page 46 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds
are not reflected in the government -wide financial statements because the resources of those funds are not available to support the
City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements can be found on page 50 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements. The notes to the financial statements start on page 51 of this report.
Other information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented
following the notes to the financial statements. Combining and individual fund financial statements and schedules starts on page 82 of
this report.
-22-
Government -wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City,
assets and deferred inflows of resources exceeded liabilities and deferred inflows of resources by $30,398,490 at the close of the most
recent fiscal year.
Of the City's net position 56.3 percent reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less
any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital
assets themselves cannot be used to liquidate these liabilities.
Assets
Cash and
temporary investments
Cash with fiscal agent
Receivables
Prepaids
Land held for resale
Capital assets
Total assets
Deferred outflows of resource;
Liabilities
Noncurrent liabilities
Other liabilities
Total liabilities
Deferred inflows of resources
City of Shorewood's Summary of Net Position
Governmental Activities
2015 2014
Increase
(Decrease)
Business -type Activities
Increase
2015 2014 (Decrease)
$ 7,563,089 $ 7,145,458 $ 417,631 $ 5,970,378 $ 7,132,674 $ (1,162,296)
-
-
- 274,646 270,101
4,545
6,907,353
7,697,438
(790,085) 676,593 614,843
61,750
99,216
103,996
(4,780) 2,137 -
2,137
150,068
150,068
- - -
-
10,374,897
10,789,046
(414,149) 9,613,545 8,878,271
735,274
Net position
Net investment in capital assets
Unrestricted
Total net position
(358,590)
28,310
(13,372)
410,932 476,982 (66,050) 70,480 127,291 (56,811)
8,867,763 8,814,865 52,898 2,217,108 2,287,291 (70,183)
211,513 - 211,513 61,976 - 61,976
9,394,897 9,754,046 (359,149) 7,713,545 6,718,271 995,274
6,717,068 7,317,095 (600,027) 6,572,980 7,890,327 (1,317,347)
$16,111,965 $17,071,141 $ (959,176) $14.286,525 $14,608,598 $ (322,073)
The balance of unrestricted net position is $13,290,048. This maybe used to meet the City's ongoing obligations to citizens and
creditors.
-23-
Governmental activities. Governmental activities increased the City's net position by $8,333. Key elements of this decrease are as
follows:
City of Shorewood's Changes in Net Position
Governmental Activities
* Increase
2015 2014 (Decrease)
Revenues
Program revenues
Business -type Activities
* Increase
2015 2014 (Decrease)
Charges for services
$ 987,821
$ 946,281
$ 41,540
$ 1,785,419
$ 1,681,045
$ 104,374
Operating grants and contribution
86,370
48,284
38,086
26,198
31,279
(5,081)
Capital grants and contributions
184,605
811,522
(626,917)
5,706
115,490
(109,784)
General revenues
Change in net position
8,333
719,879
(711,546)
Property taxes
4,931,075
4,854,521
76,554
-
-
-
Grants and contributions not
14,657,126
(335,099)
Net position, December 31
$16,111,965
$17,071,141
restricted to specific programs
5,840
5,848
(8)
-
-
-
Unrestricted investment earnings
60,283
86,530
(26,247)
68,119
95,130
(27,011)
Gain on disposal of capital assets
30,000
-
30,000
-
-
-
Total revenues
6,285,994
6,752,986
(466,992)
1,885,442
1,922,944
(37,502)
Expenses
General government
1,318,558
1,277,118
41,440
-
-
-
Public safety
2,080,769
2,036,394
44,375
-
-
-
Public works
1,971,483
1,991,852
(20,369)
-
-
-
Culture and recreation
613,494
".397,365
216,129
-
-
-
Interest on long -term debt
3 18,35 7
355,378
(37,021)
-
-
-
Water
721;184
690,479
30,705
Sewer
-
-
-
944,263
873,711
70,552
Stormwater Management Utility
-
-
-
99,312
203,825
(104,513)
Recycling
-
-
-
131,185
178,457
(47,272)
Total expenses
6,302,661
6,058,107
244,554
1,895,944
1,946,472
(50,528)
Increase (decrease) in net position
before transfers
(16,667)
694,879
(711,546)
(10,502)
(23,528)
13,026
Transfers of capital assets
(245,121)
-
(245,121)
245,121
-
245,121
Transfers
270,121
25,000
245,121
(270,121)
(25,000)
(245,121)
Change in net position
8,333
719,879
(711,546)
(35,502)
(48,528)
13,026
Net position, January 1 as restated
16,103,632
16,351,262
(247,630)
14,322,027
14,657,126
(335,099)
Net position, December 31
$16,111,965
$17,071,141
$ (959,176)
$14,286,525
$14,608,598
$ (322,073)
* GASB Statement No. 68 was implemented for the year ended December 31, 2015 and required a $967,509 restatement of beginning
net position for governmental activities and $286,571 restatement for business -type activities. Prior year amounts were not restated
causing a variance in ending net position at December 31, 2014 and beginning net position January 1, 2015.
-24-
The following graph depicts various governmental activities and shows the revenue and expenses directly related to those activities.
Expenses and Program Revenues - Governmental Activities
$2,500,000
$2,000,000
I
$1,500,000
$1,000,000
i
i
$500,000
i
i
$- f
General government Public safety
I
i
i
■
Public works Culture and recreation Interest on long -term
debt
■ Expenses ■ Program revenues
Revenues by Source - Governmental Activities
Chants �,,,r ,.,,., +,•;r,,, *;,.,,�
not re!
Property to _
78.8%
Unrestricted investment Charges for services
earnings 15.70/n
-25-
ating grants and
ontributions
1.4%
ital grants and
ontributions
3.0%
Business -type activities. Business -type activities decreased the City's net position by $35,502.
Expenses and Program Revenues - Business -type Activities
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Water
Operating grant
contribution
1.4%
Sewer
Recycling Stonnwater management
uti 1 ity
■ Expenses ■ Program revenues
Revenues by Source - Business -type Activities
Capital grants and
--- .:I .. Unrestricted investment
6tTIII
ges for services
94.7%
Financial Analysis of the Government's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements.
Governmental funds. The focus of the City's governmental fzrnds is to provide information on near -term inflows, outflows and
balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned
find 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 $7,838,036, an
increase of $387,906 in comparison with the prior year. Approximately 56 percent of this total amount, $4,402,951 constitutes
unassigned_fund balance, which is available for spending at the City's discretion. The remaining fund balance is made up of the
following: 1) Nonspendable ($99,216), 2) Restricted ($31,805), and 3) Assigned ($3,304,064).
The General fund is the chief operating fund of the City. At the end of the current year, the fund balance of the General fund was
$4,502,167. As a measure of the General fund's liquidity, it may be useful to compare both unassigned fund balance and total fund
balance to total fund expenditures and transfers out. Unassigned fund balance represents 82.5 percent of same year fund expenditures
and transfers out, whereas, total fund balance represents 84.3 percent.
The fund balance of the City's General fund increased $416,696 during the current fiscal year.
The Debt Service fund has a total fund balance of $31,805, all of which is restricted for the payment of debt service. The increase in
fund balance of $6,151 was in line with the City's debt service financing plan.
The Street Reconstruction fund has a fund balance of $1,453,048. The fund balance decreased by $83,624 during the current fiscal
year due to expenditures for various capital projects.
Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial
statements, but in more detail. Unrestricted net position of the enterprise funds at the end of the year amounted to $6,572,980. The
total decrease in net position for the funds was $35,502. Other factors concerning the finances of this fund have already been
addressed in the discussion of the' �City's business -type activities.
General Fund Budgetary Highlights
The City's General fund budget was not amended duringthe;year., The budget called for the planned use of General fund reserves in
the amount of $142,178. Revenues were over'budget by $255,527, and expenditures were under budget by $303,347. The actual
amounts were different from the final budget amounts because of the following:
• The largest revenue variance was in licenses and permits, which were over budget by $127,797 due to building permits
received in excess of expectations. Another significant revenue variance was in miscellaneous, which was over budget by
$68,349 which was due to additional refunds and reimbursements.
• The largest expenditure variances were in general government and public works, which were $59,923 and $283,350 under
budget, respectively. The general government department was under budget due to Mayor and City Council and Municipal
Building expenditures. The public works department was under budget due to General Maintenance and Snow and Ice
Removal expenditures.
-27-
Capital Asset and Debt Administration
Capital assets. The City's investment in capital assets for its governmental and business -type activities as of December 31, 2015,
amounts to $19,988,442 (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements,
machinery and equipment, park facilities, and roads. Major capital asset events during the current fiscal year included the following:
Additional information on the City's capital assets can be found in Note 3B starting on page 63 of this report.
City of Shorewood's Capital Assets
(net of depreciation)
Governmental Activities Business -type Activities
Increase Increase
2015 2014 (Decrease) 2015 2014 (Decrease)
Land
$ 741,826
$ 741,826
$ -
Construction in progress
782,626
1,499,144
(716,518)
Buildings
1,862,369
1,938,885
(76,516)
Improvements other than buildings
239,287
252,644
(13,357)
Infrastructure
6,155,505
5,608,346
547,159
Machinery and equipment _
593,284
748,201
(154,917)
$ 434,113 $ 434,113 $ -
476,899 - 476,899
8,387,038 8,444,158 (57,120)
21 c d45 - '21 5 AQ5
Total $10,374,897; $40,789,046'' .$ (414,149) _ �S 9,613,545 $ 8,878,271 $ 735,274
Long -term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $9,300,000. Of this amount,
$7,400,000 is lease revenue bonds and $1,900,000 is general obligation revenue bonds. While all of the City's bonds have dedicated
revenue streams pledged to repayment, the general obligation revenue bonds are all backed by the full faith and credit of the City.
City of Shorewood's Outstanding Debt
Governmental Activities Business -type Activities
Increase Increase
2015 2014 (Decrease) 2015 2014 (Decrease)
General obligation
revenue bonds $ - $ - $ - $ 1,900,000 $ 2,160,000 $ (260,000)
Lease revenue bonds 7,400,000 8,135,000 (735,000) - - -
Compensated absences payable 215,129 202,883 12,246 - - -
Net pension liability 841,702 - 841,702 246,628 - 246,628
Total $_8,456 831 $ 8,337,883 $ 118,948 $ 211461628 $ 2,160,000 $ (13,372)
Minnesota statutes limit the amount of net general obligation debt a City may issue to 3 percent of the market value of taxable
property within the City. Net debt is debt payable solely from ad valorem taxes. Additional information on the City's long -term debt
can be found in Note 3D starting on page 66 of this report.
-28-
Economic Factors and Next Year's Budgets and Rates
• Unemployment trends in the region compare favorably to national indices.
All of these factors were taken into account in preparing the City's budget for the 2015 fiscal year.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's
finances. Questions concerning any of the information provided in this report or requests for additional financial information should
be addressed to the City of Shorewood, 5755 Country Club Road, Shorewood, Minnesota 55331.
IMPT
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INTENTIONALLY
t
s
-30-
GOVERNMENT —WIDE FINANCIAL STATEMENTS
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2015
{
a —
-31-
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INTENTIONALLY
-32-
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2015
Exhibit 1
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources
Governmental
Business -type
124,928
Activities
Activities
Total
ASSETS
Accounts and contracts payable
199,704 +
Cash and temporary investments
$ 7,563,089
$ 5,970,378
$ 13,533,467
Cash with fiscal agent
-
274,646
274,646
Receivables
32,529
Accrued interest payable
113,568
Accrued interest
140,756
35,463
176,219
Property taxes
86,563
-
86,563
Accounts, net
84,545
420,095
504,640
Special assessments
263
221,035
221,298
Lease
6,591,974
-
6,591,974
Due from other governments
3,252
-
3,252
Prepaid items
99,216
2,137
101,353
Land held for resale
150,068
-
150,068
Capital assets
273,489
Nondepreciable assets
1,524,452
911,012
2,435,464
Depreciable capital assets, net
8,850,445
8,702,533
17,552,978
TOTAL ASSETS
25,094,623
16,537,299
41,631,922
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources
96,618
28,310
124,928
LIABILITIES
Accounts and contracts payable
199,704 +
49,879
249,583
Accrued salaries payable
17,807
3,503
21,310
Due to other governments
24,582
7,947
32,529
Accrued interest payable
113,568
9,151
122,719
Unearned revenue
55,271
-
55,271
Noncurrent liabilities
Due within one year
928,453
265,000
1,193,453
Due in more than one year
7,528,378
1,881,628
9,410,006
TOTAL LIABILITIES
8,867,763
2,217,108
11,084,871
DEFERRED INFLOWS OF RESOURCES
Deferred pension resources
211,513
61,976
273,489
NET POSITION
Net investment in capital assets
9,394,897
7,713,545
17,108,442
Unrestricted
6,717,068
6,572,980
13,290,048
TOTAL NET POSITION
$ 16,111,965
$ 14,286,525
$ 30,398,490
The notes to the financial statements are an integral part of this statement.
-33-
Functions/Programs
Governmental activities
General government
Public safety
Public works
Culture and recreation
Interest on long -term debt
Total governmental activities
Business -type activities
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2015
Program Revenues
Operating Capital Grants
Charges for Grants and and
Expenses Services Contributions Contributions
$ 1,318,558 $ 260,440 $ 300 $ -
2,080,769 617,557 1,590 -
1,971,483 940 84,206 -
613,494 108,884 274 184,605
318,357 - -
6,302,661 987,821 86,370 184,605
Water
721,184 544,748 -
3,098
Sewer
944,263 858,066 -
2,608
Stormwater management utility
99,312 227,676 -
-
Recycling
131,185 154,929 26,198
-
Total business -type activities
1,895,944 1,785,419 26,198
5,706
Total -
$ 8198,605 $''21773,240 $' 112,568 $
190,311
General revenues
Taxes
Property taxes, levied for general purposes
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Gain on disposal of capital assets
Transfers of capital assets
Transfers
Total general revenues
Change in net position
Net position, January 1 as restated (Note 8)
Net position, December 31
The notes to the financial statements are an integral part of this statement.
-34-
Exhibit 2
Net (Expense) Revenue and Changes in Net Position
Governmental Business -type
Activities Activities Total
$ (1,057,818) $ - $ (1,057,818)
(1,461,622) - (1,461,622)
(1,886,337) - (1,886,337)
(319,731) - (319,731)
(318,357) - (318,357)
(5,043,865) - (5,043,865)
-
(173,338)
(173,338)
-
(83,589)
(83,589)
-
128,364
128,364
-
49,942
49,942
-
(78,621)
(78,621)
(5,043,865)
(78,621)"
(5,122,486)
4,931,075
-
4,931,075
5,840
-
5,840
60,283
68,119
128,402
30,000
-
30,000
(245,121)
245,121
-
270,121
(270,121)
-
5,052,198
43,119
5,095,317
8,333
(35,502)
(27,169)
16,103,632
14,322,027
30,425,659
$ 16,111,965
$ 14,286,525
$ 30,398,490
-35-
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-36
FUND FINANCIAL STATEMENTS
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
-37-
CITY OF SHOREWOOD, MINNESOTA
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2015
FUND BALANCES
Nonspendable prepaid items
Restricted for debt service
Assigned to
Street reconstruction
Capital outlay
Community center operations
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
99,216 - -
- 31,805 -
1,453,048
4,402,951 - -
4,502,167 31,805 1,453,048
$ 4,747,901 $ 6,451,805 $ 1,504,542
The notes to the financial statements are an integral part of this statement.
-38-
Debt
Street
General
Service
Reconstruction
ASSETS
Cash and temporary investments
$ 4,534,092
$ 31,805
$ 1,498,142
Receivables
Accrued interest
16,285
-
6,400
Taxes
86,563
-
-
Accounts, net
8,230
-
-
Special assessments
263
-
-
Lease
-
6,420,000
-
Due from other governments
3,252
-
-
Prepaid items
99,216
-
-
Land held for resale
-
-
-
TOTAL ASSETS
$ 4,747,901
$ 6,451,805
$ 1,504,542
LIABILITIES
Accounts and contracts payable
$ 94,026
$ -
$ 51,494
Accrued salaries payable
17,404
-
-
Due to other governments
24,582
-
-
Unearned revenue
55,271
-
-
TOTAL LIABILITIES
191,283
-
51,494
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - property taxes
54,451
-
-
Unavailable revenue - lease receivables
-
6,420,000
-
TOTAL DEFERRED INFLOWS OF RESOURCES
54,451
6,420,000
-
FUND BALANCES
Nonspendable prepaid items
Restricted for debt service
Assigned to
Street reconstruction
Capital outlay
Community center operations
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
99,216 - -
- 31,805 -
1,453,048
4,402,951 - -
4,502,167 31,805 1,453,048
$ 4,747,901 $ 6,451,805 $ 1,504,542
The notes to the financial statements are an integral part of this statement.
-38-
Exhibit 3
Other Total
Governmental Governmental
Funds Funds
$ 1,499,050 $ 7,563,089
8,196
30,881
-
86,563
76,315
84,545
-
263
171,974
6,591,974
-
3,252
-
99,216
150,068
150,068
$ 1,905,603 $ 14,609,851
$ 54,184 $ 199,704
403 17,807
- 24,582 "
- 55,271
54,587 297,364
54,451
6,420,000
- 6,474,451
99,216
31,805
- 1,453,048
1,797,637 1,797,637
53,379 53,379
- 4,402,951
1,851,016 7,838,036
$ 1,905,603 $ 14,609,851
-39-
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l
f
-40-
CITY OF SHOREWOOD, MINNESOTA Exhibit 4
RECONCILIATION OF THE BALANCE SHEET
TO THE STATEMENT OF NET POSITION
GOVERNMENTAL FUNDS
DECEMBER 31, 2015
Amounts reported for the governmental activities in the statement of net position are different because
Total fund balances - governmental $ 7,838,036
Capital assets used in governmental activities are not financial
resources and therefore are not reported as assets in governmental funds.
Cost of capital assets 39,206,842
Less: accumulated depreciation (28,831,945)
Long -term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported as liabilities in the funds.
Long -term liabilities at year -end consist of
Bonds payable (7,400,000)
Compensated absences payable (215,129)
Pension liability (841,702)
Some receivables are not available soon enough to pay for the current period's expenditures,
and therefore are reported as unavailable revenue in the funds.
Interest on lease receivable
109,875
Delinquent taxes receivable °
54,451
Leases receivable
6,420,000
Governmental funds do not report long -term amounts to pensions
Deferred outflows of resources
96,618
Deferred inflows of resources
(211,513)
Governmental funds do not report a liability for accrued interest until
due and payable. (113,568)
Total net position - governmental activities $ 16,111,965
The notes to the financial statements are an integral part of this statement.
-41-
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2015
EXPENDITURES
Current
General government
Public safety
Public works
Culture and recreation
Capital outlay
Public safety
Public works
Culture and recreation
Debt service
Principal
Interest and service charges
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
735,000 -
330,931 -
4,296,403 1,065,931 907,885
1,435,209 (95,362) (897,548)
25,000 101,513 813,924
(1,043,513) - -
(1,018,513) 101,513 813,924
416,696 6,151 (83,624)
4,085,471 25,654 1,536,672
$ 4,502,167 $ 31,805 $ 1,453,048
The notes to the financial statements are an integral part of this statement.
-42-
Debt
Street
General
Service
Reconstruction
REVENUES
Taxes
$ 4,949,126
$ -
$ -
Licenses and permits
275,567
-
-
Intergovernmental
91,636
-
-
Charges for services
67,618
-
-
Fines and forfeitures
65,234
-
-
Interest on investments
35,182
-
10,337
Miscellaneous
247,249
970,569
-
TOTAL REVENUES
5,731,612
970,569
10,337
EXPENDITURES
Current
General government
Public safety
Public works
Culture and recreation
Capital outlay
Public safety
Public works
Culture and recreation
Debt service
Principal
Interest and service charges
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
735,000 -
330,931 -
4,296,403 1,065,931 907,885
1,435,209 (95,362) (897,548)
25,000 101,513 813,924
(1,043,513) - -
(1,018,513) 101,513 813,924
416,696 6,151 (83,624)
4,085,471 25,654 1,536,672
$ 4,502,167 $ 31,805 $ 1,453,048
The notes to the financial statements are an integral part of this statement.
-42-
Exhibit 5
Other Total
Governmental Governmental
Funds Funds
$ -
$ 4,949,126
-
275,567
65,135
156,771
48,719
116,337
-
65,234
14,764
60,283
126,522
1,344,340
255,140 6,967,658
1,247,105
1,579,400
- 726,905
88,967 344,793
- 501,336
14,114 907,830
476,573 476,573
735,000
330,931
579,654 6,849,873
(324,514) 117,785
373,197 1,313,634
(1,043,513)
373,197 270,121
48,683 387,906
1,802,333 7,450,130
$ 1,851,016 $ 7,838,036
Egli
CITY OF SHOREWOOD, MINNESOTA Exhibit 6
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2015
Amounts reported for governmental activities in the statement of activities are different because
Total net change in fund balances - governmental funds $ 387,906
Capital outlays are reported in governmental funds as expenditures. However, in the statement of
activities, the cost of those assets is allocated over the estimated useful lives as depreciation
expense.
Capital outlays 885,402
Depreciation expense (1,084,430)
A gain or loss on the disposal of capital assets, including the difference between carrying value and any
related sales proceeds, is included in net position. However, only the sales proceeds are included
in the change in the change in fund balance. 30,000
The issuance of long -term debt provides current financial resources to governmental funds, while
the repayment of principal of long -term debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net position. Also, governmental funds report
the effect of premiums, discounts and similar items when debt is first issued,
whereas these amounts are amortized in the statement of activities.
Principal repayments 735,000
Interest on long -term debt in the statement of activities differsfrom 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. 12,574
Long -term pension activity is not reported in governmental funds.
Pension expense 10,912
Capital assets constructed in capital projects funds but intended for enterprise fund use
are transferred in the government -wide financial statements. (245,121)
Certain revenues are recognized as soon as it is earned. Under the modified accrual
basis of accounting certain revenues cannot be recognized until they are available
to liquidate liabilities of the current period.
Delinquent taxes (18,051)
Special assessments (1,222)
Leases (692,391)
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences (12,246)
Change in net position - governmental activities $ 8,333
The notes to the financial statements are an integral part of this statement.
-44-
CITY OF SHOREWOOD, MINNESOTA Exhibit 7
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2015
REVENUES
Taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeitures
Interest on investments
Miscellaneous
TOTAL REVENUES
EXPENDITURES
Current
General government
Public safety
Public works
Culture and recreation
Capital outlay
Public safety
TOTAL EXPENDITURES
EXCESS OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
Budgeted Amounts
Actual
Variance with
Original
Final
Amounts
Final Budget
$ 4,931,464
$ 4,931,464
$ 4,949,126
$ 17,662
147,770
147,770
275,567
127,797
75,751
75,751
91,636
15,885
50,200
50,200
67,618
17,418
57,000
57,000
65,234
8,234
35,000
35,000
35,182
182
178,900
178,900
247,249
68,349
(1,043,513)
(1,043,513)
-
5,476,085
5,476,085
5,731,612
255,527
1,307,028
1,307,028
1,247,105
59,923
1,563,183
1,563,183
1,579,400
(16,217)
996,086
996,086
712,736
283,350
232,116
232,116
255,826
(23,710)
501,337
501,337
501,336
1
4,599,750
4,599,750 '
4,296,403
303,347
876,335
876,335
1,435,209
558,874
25,000
25,000
25,000
-
(1,043,513)
(1,043,513)
(1,043,513)
-
(1,018,513) (1,018,513) (1,018,513) -
(142,178) (142,178) 416,696 558,874
4,085,471 4,085,471 4,085,471 -
$ 3,943,293 $ 3,943,293 $ 4,502,167 $ 558,874
The notes to the financial statements are an integral part of this statement.
-45-
LIABILITIES
CURRENT LIABILITIES
Accounts and contracts payable
CITY OF SHOREWOOD, MINNESOTA
7,551
Exhibit 8
482
STATEMENT OF
NET POSITION
1,565
1,498
358
82
PROPRIETARY
FUNDS
5,487
2,460
-
-
DECEMBER 31, 2015
Accrued interest payable
9,151
-
Business -type Activities - Enterprise Funds
Bonds payable - current
265,000
-
-
Stormwater
265,000
TOTAL CURRENT LIABILITIES
322,399
11,509
1,008
Management
Nonmajor
NONCURRENT LIABILITIES
Water
Sewer
Utility
Recycling
Totals
ASSETS
1,635,000
-
-
-
1,635,000
CURRENT ASSETS
114,048
92,343
32,006
8,231
246,628
Cash and temporary investments
$ 2,783,726
$ 2,566,193
$ 497,758
$ 122,701
$ 5,970,378
Cash with fiscal agent
274,646
-
-
-
274,646
Receivables
DEFERRED INFLOWS OF RESOURCES
Accrued interest
17,835
16,018
1,119
491
35,463
Accounts
77,469
236,468
60,690
45,468
420,095
Special assessments
80,626
21,160
6,028
4,138
111,952
Prepaid Items
1,075
422
640
-
2,137
Unrestricted
TOTAL CURRENT ASSETS
3,235,377
2,840,261
566,235
172,798
6,814,671
$ 7,190,584
NONCURRENT ASSETS
$ 2,374,523 $
163,906
$ 14,286,525
Special assessments receivable
100,853
5,334
1,869
1,027
109,083
Capital assets
Land
-
-
434,113
-
434,113
Construction in progress
476,899
-
-
476,899
Machinery and equipment
215,144
218,660
59,499
-
493,303
Infrastructure
10,061,371
9,191,567
1,704,892
-
20,957,830
Less accumulated depreciation
(4,812,045)
(7,581,853)
(354,702)
-
(12,748,600)
NET CAPITAL ASSETS
5,941,369
1,828,374
1,843,802
-
9,613,545
TOTAL NONCURRENT ASSETS
6,042,222
1,833,708
1 ,845,671
1,027
9,722,628
TOTAL ASSETS
9,277,599
- 4,673,969
2,411,906
173,825
16,537,299
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension resources
13,091
10,600
3,674
945
28,310
LIABILITIES
CURRENT LIABILITIES
Accounts and contracts payable
41,196
7,551
650
482
49,879
Accrued salaries payable
1,565
1,498
358
82
3,503
Due to other governments
5,487
2,460
-
-
7,947
Accrued interest payable
9,151
-
9,151
Bonds payable - current
265,000
-
-
-
265,000
TOTAL CURRENT LIABILITIES
322,399
11,509
1,008
564
335,480
NONCURRENT LIABILITIES
Bonds payable
1,635,000
-
-
-
1,635,000
Pension liability
114,048
92,343
32,006
8,231
246,628
TOTAL NONCURRENT LIABILITIES
1,749,048
92,343
32,006
8,231
1,881,628
TOTAL LIABILITIES
2,071,447
103,852
33,014
8,795
2,217,108
DEFERRED INFLOWS OF RESOURCES
Deferred pension resources
28,659
23,205
8,043
2,069
61,976
NET POSITION
Net investment in capital assets
4,041,369
1,828,374
1,843,802
-
7,713,545
Unrestricted
3,149,215
2,729,138
530,721
163,906
6,572,980
TOTAL NET POSITION
$ 7,190,584
$ 4,557,512
$ 2,374,523 $
163,906
$ 14,286,525
The notes to the financial statements are an integral part of this statement.
-46-
NONOPERATING REVENUES (EXPENSES)
Special assessments
CITY OF SHOREWOOD, MINNESOTA
- - 138,201
Interest on investments
Exhibit 9
2,244 1,151 68,119
STATEMENT OF REVENUES, EXPENSES AND
-
- 26,198 26,198
Other income
CHANGES IN NET POSITION
400
Interest expense
(18,798)' -
(18,798)
PROPRIETARY FUNDS
(98,099)
(598,098)
REVENUES (EXPENSES)
153,441 31,086
FOR THE YEAR ENDED DECEMBER 31, 2015
(152,200)
(565,003)
630,608
51,093 (35,502)
Business -type Activities - Enterprise Funds
7,342,784
5,122,515
1,743,915
Stormwater
NET POSITION, DECEMBER 31 $
7,190,584
$ 4,557,512
$ 2,374,523 $
Management
Nomnajor
Water Sewer
Utility
Recycling
Totals
OPERATING REVENUES
Charges for services
$ 406,147 $ 858,066
$ 227,676
$ 154,929
$ 1,646,818
OPERATING EXPENSES
Personal services
184,210 153,854
25,316
13,675
377,055
Supplies
12,619 1,425
1,590
1,519
17,153
Repairs and maintenance
2,276 33,158
4
-
35,438
Depreciation
289,740 85,424
44,109
419,273
Professional services
31,582 795
25,870
-
58,247
Contracted services
71,394 16,319
2,164
115,742
205,619
Water purchases
29,234 -
-
-
29,234
Utilities
73,613 1,490
75,103
Disposal charges
- 651,156
-
-
651,156
Other
7,718 642
259
249
8,868
TOTAL OPERATING EXPENSES
702,386 944,263
99,312
131,185
1,877,146
OPERATING INCOME (LOSS)
(296,239) (86,197)
128,364
23,744
(230,328)
NONOPERATING REVENUES (EXPENSES)
Special assessments
138,201 -
- - 138,201
Interest on investments
33,638 31,086
2,244 1,151 68,119
Intergovernmental
-
- 26,198 26,198
Other income
400
400
Interest expense
(18,798)' -
(18,798)
TOTAL NONOPERATING
(98,099)
(598,098)
REVENUES (EXPENSES)
153,441 31,086
2,244 27,349 214,120
INCOME (LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS (142,798) (55,111) 130,608 51,093 (16,208)
CAPITAL CONTRIBUTIONS - CONNECTION FEES
3,098
2,608
-
5,706
CAPITAL CONTRIBUTIONS FROM OTHER FUNDS
85,599
85,598
73,924
245,121
TRANSFERS IN
-
-
500,000
500,000
TRANSFERS OUT
(98,099)
(598,098)
(73,924)
- (770,121)
CHANGE IN NET POSITION
(152,200)
(565,003)
630,608
51,093 (35,502)
NET POSITION, JANUARY 1 AS RESTATED (NOTE 8)
7,342,784
5,122,515
1,743,915
112,813 14,322,027
NET POSITION, DECEMBER 31 $
7,190,584
$ 4,557,512
$ 2,374,523 $
163,906 $ 14,286,525
The notes to the financial statements are an integral part of this statement.
-47-
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users
Other receipts related to operations
Payments to suppliers, contractors and other governments
Payments to employees
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
CASH FLOWS FROM
NONCAPITAL FINANCING ACTIVITIES
Transfers out
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Transfers in
Transfers out
Connection fees received
Special assessments received
Acquisition of capital assets
Principal paid on revenue bonds
Interest paid on revenue bonds
Exhibit 10
Business -type Activities - Enterprise Funds
Stonnwater
Management Nomnajor
Water Sewer Utility Recycling Totals
$ 406,362 $ 859,492 $ 227,502 $ 155,914 $ 1,649,270
400 - - 26,198 26,598
(226,444) (724,339) (51,812) (117,593) (1,120,188)
(176,637) (146,649) (46,557) (12,466) (382,309)
3,681 (11,496) 129,133 52,053 173,371
(12,500) (12,500) (25,000)
500,000
500,000
(85,599) (585,598) (73,924)
(745,121)
3,098 2,608
5,706
74,868 -
74,868
(661,234) (89,677) (178,660)
(929,571)
(260,000)
(260,000)
(19,254)
(19,254)
NET CASH PROVIDED (USED) BY CAPITAL
AND RELATED FINANCING ACTIVITIES (948,121) (672,667) 247,416
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 33,823 30,372 2,123
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (923,117) (666,291) 378,672
CASH AND CASH EQUIVALENTS, JANUARY 1
CASH AND CASH EQUIVALENTS, DECEMBER 31
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENT OF NET POSITION
Cash and temporary investments
Cash with fiscal agent
TOTAL CASH AND CASH EQUIVALENTS
(1,373,372)
932 67,250
52,985 (1,157,751)
3,981,489 3,232,484 119,086 69,716 7,402,775
$ 3,058,372 $ 2,566,193 $ 497,758 $ 122,701 $ 6,245,024
$ 2,783,726 $ 2,566,193 $ 497,758 $ 122,701 $ 5,970,378
274,646 - - - 274,646
$ 3,058,372 $ 2,566,193 $ 497,758 $ 122,701 $ 6,245,024
The notes to the financial statements are an integral part of this statement.
-48-
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF CASH FLOWS - CONTINUED
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2015
Exhibit 10
Business -type Activities - Enterprise Funds
Stormwater
Management Nonmajor
Water Sewer Utility Recycling Totals
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) S (296,239) $ (86,197) $ 128,364 $ 23,744 $ (230,328)
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities
Other income related to operations 400 - - 26,198 26,598
Depreciation 289,740 85,424 44,109 - 419,273
(Increase) decrease in assets /deferred outflows of resources
Accounts receivable
(1,655)
(1,243)
314
499
(2,085)
Special assessments receivable
1,870
2,669
(488)
486
4,537
Prepaid items
(1,075)
(422)
(640)
-
(2,137)
Deferred pension resources
(13,091)
(10,600)
(3,674)
(945)
(28,310)
Increase (decrease) in liabilities /deferred inflows of resources
Accounts and contracts payable
(2,091)
(18,874)
(21,285)
(83)
(42,333)
Due to other governments
5,158
(58)
-
5,100
Net pension liability
(8,293)
(6,032)
(25,715)
97
(39,943)
Accrued salaries payable
298
632
105
(12)
1,023
Deferred pension resources
28,659
23,205
8,043
2,069
61,976
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES $
3,681
$ (11,496) $
129,133 $
52,053 $
173,371
NONCASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Contribution of assets from other funds $
85,599
$ 85.598 $
73,924 - $
$
245,121
Capital assets purchased on account $
22,048 -
$ $
$
$
22,048
The notes to the financial statements are an integral part of this statement.
MIN
CITY OF SHOREWOOD, MINNESOTA Exhibit 11
STATEMENT OF NET POSITION
FIDUCIARY FUND
DECEMBER 31, 2015
ASSETS
Cash and temporary investments
LIABILITIES
Escrow deposits payable
Agency
$ 119,669
$ 119,669
The notes to the financial statements are an integral part of this statement.
-50-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting entity
The City of Shorewood, Minnesota (the City), operates under the "Optional Plan A" form of government as defined in
the State of Minnesota statutes. Under this plan, the government of the City is directed by a City Council composed of an
elected Mayor and four elected City Council members. The City Council exercises legislative authority and determines
all matters of policy. The City Council appoints personnel responsible for the proper administration of all affairs relating
to the City. The City has considered all potential units for which it is financially accountable, and other organizations for
which the nature and significance of their relationship with the City are such that exclusion would cause the City's
financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set
forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority
of an organization's governing body, and (1) the ability of the City to impose its will on that organization or (2) the
potential for the organization to provide specific benefits to, or impose specific financial burdens on the City. Blended
component units, although legally separate entities are, in substance, part of the City's operations and so data from these
units are combined with data of the City. The City has the following component unit:
Blended component unit
The Economic Development Authority (EDA) of the City was created pursuant to Minnesota statutes 469.090 through
469.108 to carry out economic and industrial development and redevelopment consistent within the City in accordance
with policies established by the City Council. The EDA Board is comprised of the members of the City Council and has
a December 31 year end. Because the EDA's Board is the same as the City Council, the EDA is blended and reported in
the Debt Service fund. Separate financial statements are not issued for this component unit.
B. Government- wide,and fund financial statements
The government -wide financial 'statements (i.e., the statement of net position and the�statement of activities) report
information on all of the nonfiduciar activities of the City and its component unit. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities,
which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Amounts reported as progran revenues include 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions
(including special assessments) that are restricted to meeting the operational or capital requirements of a particular
function or segment. Taxes and other items not properly included among program revenues are reported instead as
general revenues.
Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in the fund
financial statements.
sit
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note l: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
C. Measurement focus, basis of accounting and financial statement presentation
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current f nancial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences
and claims and judgments, are recorded only when payment is due.
Property taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to
accrual and so have been recognized as revenues of the current fiscal period. 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.
All other revenue items are considered to be measurable and available only when cash is received by the City.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accruatbasis when the. exchange takes place. On a modified accrual basis, revenue is recorded in the
year in which the resources are.meaIsurable and become available.
Non - exchange transactions, in,which the City receives value without directly giving equal value in return, include
property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the
year for which the tax is- levied. Revenue from:grants, entitlements and, donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non - exchange
transactions must also be available before it can be recognized.
Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as unearned revenue.
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 certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
The City reports the following major governmental funds:
The General find 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.
The Debt Service fund accounts for the resources accumulated and payments made for principal and interest on
long -term general obligation debt of governmental funds.
The Street Reconstruction fund accounts for the resources accumulated and payments made for the periodic
reconstruction of City streets and roadways.
-52-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The City reports the following major proprietary funds:
The Water find accounts for the activities of the City's water distribution system.
The Sewer find accounts for the activities of the City's sewage collection system.
The Stornmater Management Utility fund accounts for the activities of the City's stormwater collection system.
Additionally, the City reports the following fund types:
The fiduciary.funds account for assets held by the City in a trustee capacity or as an agent on behalf of others.
The agency fund is custodial in nature and does not present results of operations or have a measurement focus.
Agency funds are accounted for using the accrual basis of accounting. This fund is used to account for assets that the
City holds for certain residents, developers, and other parties that are involved with escrow related projects within
the City.
As a general rule, the effect of interfund activity has been eliminated from government -wide financial statements.
Exceptions to this general rule are charges between the City's water and sewer function and various other functions of
the City. Elimination of these charges would distort the direct costs and program revenues reported for the various
functions concerned.
Proprietary funds. distinguish operating revenues and expenses from nonoperating items.- Operating revenues and
expenses generally result from providing services and producing andsdelivering goods in connection with a proprietary
fund's principal ongoing oper�tionst The principal operating revenues of the water, sewer, stormwater management
utility, and recycling,enterprise funds are charges to customers for sales and services; Operating expenses for enterprise
funds include the cost of sales and services, administrative expenses,and depreciation on capital assets. All revenues and
expenses not meeting this definition are.reported asnonoperating revenues and expenses.
-53-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
D. Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position /fund balance
Deposits and investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments
with original maturities of three months or less from the date of acquisition. The proprietary funds' portion in the
government -wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of the
statements of cash flows.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of
the funds.
The City may invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received
the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have
a final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations
rated "AA' -' or better.
4. General obligations of the Minnesota Housing Finance Agency rated "A" or better.
5. Obligation of a school "district with an original maturity not exceeding 13 months and (i) rated in the highest
category by a natio'nal bondxating service or (ii) enrolled in the credit enhancement program pursuant to statute
section 126C.55.
6. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less.
8. Repurchase or reverse repurchase 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, a primary reporting dealer in U.S. government securities to
the Federal Reserve Bank of New York, or certain Minnesota securities broker - dealers.
9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
The City's investment policy has further restricted the City's investments to items 1, 2, 3, and 7 above. Investments for
the City are reported at fair value. Earnings on investments are allocated to the individual funds based upon the average
cash and investment balances.
-54-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Propero) taxes
The City Council annually adopts a tax levy in December and certifies it to the County for collection in the following
year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on
taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are
collected by the County Auditor and tax settlements are made to the City during January, July and December each year.
Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a deferred
inflow of resources for delinquent taxes not received within 60 days after year end in the governmental fund financial
statements.
Accounts receivable
Accounts receivable include amounts billed for services provided before year end. All trade receivables are shown net of
an allowance for uncollectible accounts. The allowance for uncollectible accounts at December 31, 2015 is $27,319.
Unbilled utility enterprise fund receivables are also included for services provided in 2015. The City annually certifies
delinquent water and sewer accounts to the County for collection in the following year. Therefore, there has been no
allowance for doubtful accounts established in the enterprise funds.
Special assessments
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the County,-Special-assessments are recognized as revenue
when they are received in cash or within 60.days after year end. All governmental assessments receivable are offset by a
deferred inflow of resources in the fund financial statements.
Lease receivable
The City has a total of five leases receivable. Three of the leases are related to public safety buildings that the City has
leased to the Excelsior Fire District and the South Lake Minnetonka Police Department. The other two leases were
issued to the Excelsior Fire District for equipment financing assistance. As of December 31, 2015, the City has
$6,591,974 of leases receivable outstanding.
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 of the City are accounted for using the consumption
method.
-55-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capital assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and
similar items), are reported in the applicable governmental or business -type activities columns in the government -wide
financial statements. Capital assets are defined by the City as assets with an estimated useful life in excess of one year.
Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation. For financial statement purposes only, a capitalization
threshold is established for each capital asset category as follows:
Assets
Threshold
Land and land improvements
$ 10,000
Other improvements
25,000
Buildings
25,000
Building improvements
25,000
Machinery and equipment
5,000
Vehicles
5,000
Infrastructure
100,000
Other assets
5,000
In the case of initial capitalization of general infrastructure assets, (i.e., those reported by_ governmental activities) the
City chose to include4tems dating back to June 30, 1980.;The City,was able to estimate the historical cost for the initial
reporting of these assets through backtrending (i.e., estimating the 9urrent:replacement cost of the infrastructure to be
capitalized and usingan appropriate price -level index to deflate the cost to the acquisition year or estimated acquisition
year). As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized
and reported at historical cost: "The reported value.excludes normal maintenance and repairs which are essentially
amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful
life beyond the original estimate.
Interest incurred during the construction phase of capital assets of business -type activities is included as part of the
capitalized value of the assets constructed.
Property, plant and equipment of the City are depreciated using the straight -line method over the following estimated
useful lives:
Assets
Land improvements
Buildings and improvements
System improvements /infrastructure
Machinery and equipment
Vehicles
-56-
Useful Lives
in Years
15-20
7 -40
20 -50
5 -15
5 -15
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Deferred outflows of resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense /expenditure)
until then. The City has only one item that qualifies for reporting in this category. Accordingly, the item, deferred
pension resources, is reported only in the statements of net position. This item results from actuarial calculations and
current year pension contributions made subsequent to the measurement date.
Pensions
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 PERA's fiduciary net position have been determined on the same basis as they are reported by PERA
except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll
paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Compensated absences
It is the City's policy to permit employees to accumulate a portion of earned but unused vacation and sick pay benefits.
Accumulated vacation and sick pay are accrued when incurred in the government -wide, proprietary, and fiduciary fund
financial statements. A liability for these amounts is reported in governmental, funds only if they have matured, for
example, as a result of employee resignations and retirements. In the 'case of an employee_leaving, the General fund
would be responsible ifor liquidation of the' liability.
Postemployment benefits other than pensions
Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue
coverage indefinitely in an employer - sponsored health care plan, under the following conditions: 1) Retirees must be
receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group
plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent
coverage immediately before retirement. All premiums are funded on a pay -as- you -go basis. It was determined, in
accordance with GASB Statement 45, at December 31, 2015 that the City has a zero liability.
Long -term obligations
In the government -wide financial statement and proprietary fund types in the fund financial statements, long -term debt
and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type
activities or proprietary fund type statement of net position. The recognition of bond premiums and discounts are
amortized over the life of the bonds using the straight -line method. Bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are reported as an expense in the period incurred.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
-57-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
I�t�i�E�Y1�► t1► �I: l�Y�l �. �[ eJ► 1�11��11 ►11�ISKK�11Ji;M_1I1►Le�Z�ll [�7i��K�7►Y Y 1►111_�fIJ
Deferred inflows of resources
In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an
inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a
modified accrual basis of accounting that qualifies as needing to be reported in this category. Accordingly, the item,
unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report
unavailable revenues from two sources: property taxes and lease receivables. These amounts are deferred and recognized
as an inflow of resources in the period that the amounts become available. Furthermore, the City has an additional item
which qualifies for reporting in this category on the statement of net position. The item, deferred pension resources, is
reported only in the statement of net position and results from actuarial calculations involving net differences between
projected and actuarial earnings on plan investments and changes in proportions.
Fund balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which
the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These
classifications are defined as follows:
Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items, land
held for resale, and amounts due from other funds.
Restricte
constrair
grantors or contributors; or
Committed - Amounts constrained for.specific.purposes that are internally impfosed by formal action (resolution) of
the City Council,,-which is the City's highest level of decision- making authority.!.Committed amounts cannot be used
for any other purpose unless the City Council modifies or rescinds the commitment by resolution.
Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than
the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable
and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established
by the City Council itself or by an official to which the governing body delegates the authority. The City Council
has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City
Administrator.
Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.
The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available.
Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund
balance when expenditures are made.
The City has formally adopted a fund balance policy for the General fund. The City's policy is to maintain a minimum
unassigned fund balance of 55 -60 percent of operating expenditures for cash -flow timing needs.
-58-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Net position
Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred
inflows of resources. Net position is displayed in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquire capital assets.
b. Restricted net position - Consists of net position balances restricted when there are limitations imposed on their
use through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net position - All other net position balances that do not meet the definition of "restricted" or "net
investment in capital assets ".
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources
first, then unrestricted resources as they are needed.
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgetary information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. All annual appropriations lapse at fiscal year end. The ;City-does not use encumbrance
accounting.
t � �
In August of each year, all departments of_the, City submit requests for appropriations to the City Administrator so that a
budget may be prepared' Before Se 'tember 30 , the prop6sabidgpt is presented to the City Council for review. In early
December, the City Council holds public hearings and:a -final budget is prepared and adopted.
The appropriated budget is prepared by fund, function and department. The City's department heads, with the approval of the
City Administrator, may make transfers of appropriations within a department. Transfers of appropriations between
departments require the approval of the City Council. The legal level of budgetary control is the department level.
The City's budget was not amended during the year.
-59-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS
A. Deposits and investments
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and
investments may not be returned or the City will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits
at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The fair value of
collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better
by a national bond rating service, or revenue obligation securities of any state or local government with taxing
powers which is rated "AA" or better by a national bond rating service;
• General obligation securities of a'local government with taxing powers maybe pledged as collateral against
funds deposited by that; same local government entity;
k
• Irrevocable standby letters of credit)issuedrby Federal Home Loan Banks to _a municipality accompanied by
written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or
Standard & Poor's Corporation; and
• Time deposits that are fully insured by any Federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a 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 selection should be approved by the government
entity.
At year end, the City's carrying amount of deposits was $1,594,496 and the bank balance was $1,388,686. The entire
bank balance was covered by Federal depository insurance or by collateral held by the City's agent in the City's name.
Investments
The Minnesota Municipal Money Market fund (the 4M fund) is a customized cash management and investment program
for Minnesota public funds. Sponsored and governed by the League of Minnesota Cities since 1987, the 4M fund is a
unique investment alternative designed to address the daily and long -term investment needs of Minnesota cities and other
municipal entities. Allowable under Minnesota statutes, the 4M fund is comprised of top quality, rated investments.
The Minnesota Municipal Money Market fund and broker money market investment pools operate in accordance with
appropriate State laws and regulations. The 4M fund is regulated by Minnesota statutes and the Board of Directors of the
League of Minnesota Cities and is an external investment pool not registered with the Securities and Exchange
Commission (SEC); however, it follows the same regulatory rules of the SEC under rule 2a7. The reported value of the
pool is the same as the fair value of the pool share. Financial statements of the 4M fund can be obtained by contracting
RBC Global Asset Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402 -1240.
-60-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
At year end, the City had the following investments that are insured or registered, or securities held by the City's agent in
the City's name:
(1) Ratings are provided by various credit ratings agency where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable or available.
sae
Fair Value
Credit
Segmented
and
Quality/
Time
Carrying
Types of Investments
Rating (1)
Distribution (2)
Amount
Non Pooled investments
U.S. Government Agency Securities
Aaa
1 to 3 years
$ 1,473,399
U.S. Government Agency Securities
Aaa
more than 3 years
463,010
Municipal Bonds
Aal
less than 6 months
1,027,240
Municipal Bonds
Aa2
less than 6 months
500,010
Municipal Bonds
A-
less than 6 months
291,685
Municipal Bonds
Aa2
less than 1 year
242,612
Municipal Bonds
A3
less than I year
509,910
Municipal Bonds
MIG2
less than 1 year
402,368
Municipal Bonds
Aaa
1 to 3 years
302,574
Municipal Bonds
Aal
1 to 3 years
316,080
Municipal Bonds
Aa2
1 to 3 years
316,044
Municipal Bonds
AA
1 to 3 years
613,752
Municipal Bondi
; A3
1 1o3 years
295,981
Municipal Bonds
A+
,.J to 3 years
104,527
Municipal Bonds
r A- ' ;
I to 3 years
816,481
Municipal Bonds.',
i.Aa2
more than 3 years
315,129
Municipal Bonds j
Al
mare than 3 years
463,330
Municipal Bonds
AA+
more than 3 years
407,888
Brokered Certificates of Deposit
N/A
1 to 3 years
244,853
Brokered Certificates of Deposit
N/A
more than 3 years
934,512
Total non pooled
10,041,385
Pooled investments
Minnesota Municipal Money Market fund
N/A
less than 6 months
1,668,747
Broker Money Market
N/A
less than 6 months
622,934
Total pooled
2,291,681
Total investments
$ 12,333,066
(1) Ratings are provided by various credit ratings agency where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable or available.
sae
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
A reconciliation of cash and temporary investments as shown on the financial statements for the City follows:
Carrying amount of deposits $ 1,594,496
Investments 12,333,066
Cash on hand 220
Total $ 13,927,782
As reported on the financial statements
Statement of net position $ 13,533,467
Cash with fiscal agent 274,646
Fiduciary fund 119,669.
Total $ 13,927,782
The investments of the City are subject to the following risks:
Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated
credit risk. Minnesota statutes and the City's investment policy limit the City's investments to the list on
page 54 of the notes.
Custodial Crredit Risk. The custodial credit risk'foi, investments is the risk that, in the event of the failure of the
counterparty, to a transaction, algovernmem w ill hot be able to recover the',-value of investment or collateral
securities that are in the possession of an outside party. In accordance with the City's investment policy, the
investment,officer =shall structure all investments,.deposits and repurchase agreements so that the custodial risk
is categorized as either insured or registered, or securities held by the City or its agent in the City's name or
uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's
name. All investments are placed in safekeeping at financial institutions.
• Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a
government's investment in a single issuer. In accordance with the City's investment policy, the City diversifies
its investment portfolio to eliminate the risk of loss resulting from over - concentration of assets in a'specific
maturity, a specific issuer or a specific class of securities. As of December 31, 2015 the City had invested
5.0 percent or more of its total investment portfolio in the following issuers: Columbia County GA, 6.7 percent,
and Illinois State Taxable, 6.6 percent.
• Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of
an investment. In accordance with its investment policy and also detailed in the description of concentration of
credit risk, the City manages its exposure to declines in fair values by "laddering" their investment maturities to
ensure that a portion of the portfolio is maturing monthly, or as needed to meet projected expenditures. The
City also permits no more than 30 percent of total investments to extend beyond five (5) years and does not
directly invest in securities maturing more than 15 years from the date of purchase.
-62-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS- CONTINUED
B. Capital assets
Capital asset activity for the year ended December 31, 2015 was as follows:
Total accumulated
depreciation
Total capital assets
being depreciated, net
Governmental activities
capital assets, net
(27,892,315) (1,084,430) 144,800 (28,831,945)
8,548,076 302,369 - 8,850,445
$ 10,789,046 $ 1,171,431 $ (1,585,580) $ 10,374,897
-63-
Beginning
Ending
Balance
Increases
Decreases
Balance
Governmental activities
Capital assets not being depreciated
Land
$ 741,826
$ -
$ -
$ 741,826
Construction in progress
1,499,144
869,062
(1,585,580)
782,626
Total capital assets
not being depreciated
2,240,970
869,062
(1,585,580)
1,524,452
Capital assets being depreciated
Buildings
3,066,002
-
-
3,066,002
Improvements other than buildings
1,012,469
26,900
-
1,039,369
Infrastructure
29,364,376
1,340,460
-
30,704,836
Machinery and equipment
2,997,544
19,439
(144,800)
2,872,183
Total capital assets
being depreciated
36,440,391
111386,799°
(144,800)
37,682,390
Less accumulated depreciation
Buildings
(1,127;117)_,
" _ (76,516)
-
(1,203,633)
Improvements other than buildings
(759,825)
(40,257)
-
(800,082)
Infrastructure
(23,756,030)
(793,301)
-
(24,549,331)
Machinery and equipment
(2,249,343)
(174,356)
144,800
(2,278,899)
Total accumulated
depreciation
Total capital assets
being depreciated, net
Governmental activities
capital assets, net
(27,892,315) (1,084,430) 144,800 (28,831,945)
8,548,076 302,369 - 8,850,445
$ 10,789,046 $ 1,171,431 $ (1,585,580) $ 10,374,897
-63-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Business -type activities
Capital assets not being depreciated
Land
Construction in progress
Total capital assets
not being depreciated
Capital assets being depreciated
Infrastructure
Machinery and equipment
Total capital assets
being depreciated
Less accumulated depreciation for
Beginning
Ending
Balance
Increases Decreases
Balance
$ 434,113 $
- $ -
$ 434,113
-
476,899 -
476,899
434,113
476,899 -
911,012
20,690,231
327,098 -
21,017,329
83,254
350,550 -
433,804
20,773,485
677,648 -
21,451,133
being depreciated, net
Business -type activities
capital assets, net
8,444,158 258,375 - 8,702,533
$ 8,878,271 $ 735,274 $ - $ 9,613,545
Depreciation expense was charged to functions /programs of the City as follows:
Governmental activities
General government
Public works
Culture and recreation
Total depreciation expense - governmental activities
Business -type activities
Water
Sewer
Stormwater management utility
Total depreciation expense - business -type activities
-64-
$ 70,569
954,707
59,154
$ 1,084,430
$ 289,740
85,424
44,109
$ 419,273
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Construction commitments
The City has active construction projects as of December 31, 2015. At year end, the commitment with the contractors for
these projects is as follows:
Spent Remaining
Project to date Commitment
2015 Utility and Street Improvements - Star Lane $ 538,840 $ 126,178
2015 Water Tower Improvements 418,902 22,048
Total $ 957,742 $ 148,226
C. Interfund transfers
The City made transfers during the fiscal year 2015 as shown and described below:
The City annually budgets transfers for specific purposes. Annual transfers are made for administrative costs, part of
capital improvement plans, as well as annual budgets.
For the year ended December 31, 2015, the City made the following significant one -time transfers:
• The Sewer fund transferred $500,000 to the Stormwater Management Utility fund for future capital
improvements.
• The General fund transferred $740,000 to the Street Reconstruction fund and $90,000 to the Nonmajor
Governmental Equipment Replacement fund for future capital purchases.
• The Storm Management Utility fund transferred $73,924 to the Street Reconstruction fund to reimburse for
project costs.
• The Water and Sewer funds transferred $171,197 to the Nonmajor Governmental Equipment Replacement fund
to reimburse for a dump truck purchase.
-65-
Transfers in
Stormwater
Street
Nonmajor
Management
Fund
General Debt Service
Reconstruction
Governmental
Utility
Total
Transfers out
General
`$ . - $ 101,513
$ 740,000 `
$ 202,000
$
$ 1,043,513
Water
12150,0 -
-
X85,599
-
98,099
Sewer
12,500 - _
-
85,598
500,000
598,098
Storm Management utility ,
-
73,924
-
73,924
Total
$ 25,000 $ 101,513
$ 813,924
$ 373,197
$ 500,000
$ 1,813,634 _
The City annually budgets transfers for specific purposes. Annual transfers are made for administrative costs, part of
capital improvement plans, as well as annual budgets.
For the year ended December 31, 2015, the City made the following significant one -time transfers:
• The Sewer fund transferred $500,000 to the Stormwater Management Utility fund for future capital
improvements.
• The General fund transferred $740,000 to the Street Reconstruction fund and $90,000 to the Nonmajor
Governmental Equipment Replacement fund for future capital purchases.
• The Storm Management Utility fund transferred $73,924 to the Street Reconstruction fund to reimburse for
project costs.
• The Water and Sewer funds transferred $171,197 to the Nonmajor Governmental Equipment Replacement fund
to reimburse for a dump truck purchase.
-65-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
D. Long -term debt
General obligation bonds
The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities.
General obligation bonds have been issued for both governmental and business -type activities. These bonds are reported
in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general obligation
bonds have been issued to refund special assessments related bonds.
General obligation bonds are direct obligations and pledge the full faith and credit of the City. The City has the following
general obligation debt:
General obligation revenue bonds
The following bonds were issued to finance capital improvements in the enterprise funds. They will be repaid from
future net revenues pledged from the Water fund and are backed by the taxing power of the City. Annual principal and
interest payments on the bonds are expected to require less than 69 percent of the net revenues from the Water fund.
Principal and interest paid for the current year and total customer net revenues for the Water fund were $279,254 and
$406,147, respectively.
-66-
Authorized Interest Issue Maturity
Balance at
Description
and Issued Rate Date Date
Year End
G.O. Water Revenue
y
Bonds of 2013 ! �
$ 2,260,000 0,25 - 1.45:% 03/01/13 �` 01/01/22
$ 1,900,000
Annual debt service requirements to maturity for general obligation revenue bonds sare as follows:
G.O. Revenue Bonds
Year Ending
Business -type Activities
December 31,
Principal Interest
Total
2016
$ 265,000 $ 17,640 $
282,640
2017
265,000 16,182
281,182
2018
270,000 14,375
284,375
2019
270,000 12,080
282,080
2020
275,000 9,216
284,216
2021-2022
555,000 7,878
562,878
Total
$ 1,900,000 $ 77,371 $
1,977,371
-66-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Lease revenue bonds
The City also issues bonds where the City pledges income derived from the leasing of the acquired or constructed assets
to pay debt service. Revenue bonds outstanding at year end are as follows:
Authorized Interest Issue Maturity Balance at
Description and Issued Rate Date Date Year End
Public Safety Fire Facility,
Refunding Series 2007A
$ 4,130,000
5.30-5.40 %
01/01/07
02/01/23
$ 2,685,000
Public Safety Police Facility,
257,068
1,057,068
830,000
225,287
1,055,287
Refunding Series 2007B
4,285,000
3.50-4.25
01/01/07
02/01/23
2,785,000
Public Safety Fire Facility,
276,800
3,221,800
280,000
27,030
307,030
Refunding Series 2007C
1,585,000
3.75-5.00
01/01/07
02/01/22
950,000
Public Project Lease Revenue
Bonds, Series 2008A
1,310,000
2.85-4.80
08/19/08
12/01/28
980,000
Total Lease Revenue Bonds
$ 7,400,000
The Public Safety Fire Facility Refunding Series 2007A, 2007B and 2007C were issued for construction of the public
safety building, which there is a lease receivable fiom the South Lake Minnetonka Police and Excelsior Fire District.
This debt is excluded from the calculation of net position invested in capital assets, net of related debt as the building is
reported on the South Lake Ivlimietonka Police and Excelsior Fire District as a capital asset. Refer to Note 5A and B for
further information.
Annual debt service requirements to maturity for revenue bonds are 'as follows:
Lease Revenue Bonds
Year Ending Governmental Activities
December 31,
2016
2017
2018
2019
2020
2021 -2025
2026-2028
Total
-67-
Principal
Interest
Total
$ 770,000
$ 290,863
$ 1,060,863
800,000
257,068
1,057,068
830,000
225,287
1,055,287
870,000
191,653
1,061,653
905,000
156,025
1,061,025
2,945,000
276,800
3,221,800
280,000
27,030
307,030
$ 7,400,000 $ 1,424,726 $ 8,824,726
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Changes in long -term liabilities
Long -term liability activity for the year ended December 31, 2015, was as follows:
Beginning
Ending
Due Within
Balance Increases Decreases
Balance
One Year
Governmental activities
Lease revenue bonds $ 8,135,000 $ - $ (735,000)
$ 7,400,000
$ 770,000
Net pension liability - 956,597 * (114,895)
841,702
-
Compensated absences 202,883 161,679 (149,433)
215,129
158,453
Governmental activity
long -term liabilities $ 8,337,883 $ 1,118,276 $ (999,328)
$ 8,456,831
$ 928,453
Business -type activities
General obligation
revenue bonds $ 2,160,000 $ - $ (260,000)
$ 1,900,000
$ 265,000
Net pension liability - 280,293_* (33,665)
246,628
-
Business -type activity
* Includ
for fur
-68-
$ 265,000
Tote 8
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE
A. Plan description
The City participates in the following cost - sharing multiple - employer defined benefit pension plans administered by the
Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established
and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA's defined benefit pension plans
are tax qualified plans under Section 401 (a) of the Internal Revenue Code.
General Employees Retirement Fund (GERF)
All full -time and certain part-time employees of the City are covered by the General Employees Retirement Fund
(GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are
covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All
new members must participate in the Coordinated Plan.
B. Benefits provided
PERA provides retirement, disability and death benefits. Benefit provisions are established by Minnesota statute and can
only be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan.
Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members
in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases.
The benefit provisions stated in the following paragraphs of this section are cu: rrent provisions and apply to active plan
participants. Vested, erminated,,employeeswho are entitled to benefits but are not receiving them yet are bound by the
provisions in effect at the time tfiey last terminated their.public service."
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 PERA's Coordinated and Basic
Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level
accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average
salary for each of the first ten years of service and 2.7 percent for each remaining year. The annuity accrual rate for a
Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each
remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and
1.7 percent for Coordinated Plan members for each year of service. For 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 66.
C. Contributions
Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be
modified by the state legislature.
GERF contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.10 percent and 6.50 percent,
respectively, of their annual covered salary in calendar year 2015. The City was required to contribute 11.78 percent of
pay for Basic Plan members and 7.50 percent for Coordinated Plan members in calendar year 2015. The City's
contributions to the GERF for the years ending December 31, 2015, 2014 and 2013 were $93,614, $89,427 and $86,064,
respectively, The City's contributions were equal to the contractually required contributions for each year as set by
Minnesota statute.
-69-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED
D. Pension costs
GERF pension costs
At December 31, 2015, the City reported a liability of $1,088,330 for its proportionate share of the GERF's net pension
liability. The net pension liability was measured as of June 30, 2015, 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 PERA during the measurement period for employer payroll
paid dates from July 1, 2014 through June 30, 2015 relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2015, the City's proportionate share was 0.021 percent which was a
decrease of 0.003 percent from its proportion measured as of June 30, 2014.
For the year ended December 31, 2015, the City recognized pension expense of $76,424 for its proportionate share of
GERF's pension expense.
At December 31, 2015, the City reported its proportionate share of GERF's deferred outflows of resources and deferred
inflows of resources, and its contributions subsequent to the measurement date, from the following sources:
to the measurement date
Total
Deferred
Deferred
Outflows
Inflows
of Resources
of Resources
11,535
$ 54,870
66,336
-
96,881
- -
121,738
47,057
$ 124,928 $ 273,489
Deferred outflows of resources totaling $47,057 related to pensions resulting from the City's contributions to GERF
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions
will be recognized in pension expense as follows:
2016
$ (60,813)
2017
(60,813)
2018
(99,748)
2019
25,756
91-112
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED
E. Actuarial assumptions
The total pension liability in the June 30, 2015 actuarial valuation was determined using the following actuarial
assumptions:
Inflation
Active member payroll growth
Investment rate of return
2.75% per year
3.50% per year
7.90%
Salary increases were based on a service - related table. Mortality rates for active members, retirees, survivors and
disabilitants were based on RP -2000 tables for males or females, as appropriate, with slight adjustments. Cost of living
benefit increases for retirees are assumed to be: 1 percent effective every January 1st until 2034, then 2.5 percent for
GERF.
Actuarial assumptions used in the June 30, 2015 valuation were based on the results of actuarial experience studies. The
experience study in the GERF was for the period July 1, 2004 through June 30, 2008, with an update of economic
assumptions in 2014. Experience studies have not been prepared for PERA's other plans, but assumptions are reviewed
annually.
There were no changes in actuarial assumptions in 2015.
The long -term expected rate of return on pension plan investments is 7.9 percent. The State Board of Investment, which
manages the investments ofPERA, prepares,an analysis of the reasonableness.of the long -term expected rate of return on
a regular basis using a building- blockxmethod in whicWbest- estimate'iranges of expected future rates of return are
developed for each maj or asset class.= These ranges are combined to produce an expected long -term rate of return by
weighting the expected future` rates of return by theJarget asset allocation` percentages. The target allocation and best
estimates of arithmetic real rates of return for each major asset class are summarized m the following table:
Long -term
Target Expected Real
Asset Class Allocation Rate of Return
Domestic stocks 45.00 % 5.50 %
International stocks 15.00 6.00
Bonds 18.00 1.45
Alternative assets 20.00 6.40
Cash 2.00 0.50
Total
F. Discount rate
100.00 %
The discount rate used to measure the total pension liability was 7.9 percent. The projection of cash flows used to
determine the discount rate assumed that employee and employer contributions will be made at the rate specified in
statute. Based on that assumption, each of the pension plan's fiduciary net position was projected to be available to
make all projected future benefit payments of current active and inactive employees. 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.
-71-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED
G. Pension liability sensitivity
The following 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:
City Proportionate Share of NPL
1 Percent 1 Percent
Decrease (6.90 %) Current (7.90 %) Increase (8.90 %)
GERF $ 1,711,240 $ 1,088,330 $ 573,900
H. Pension plan fiduciary net position
Detailed information about each defined benefit 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; by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-
2088; or by calling (651) 296 -7460 or (800) 652 -9026.
Note 5: JOINT VENTURES
A. South Lake Minnetonka Police Department
The City participates in a joint powers agreement with the cities of Excelsior, Greenwood and Tonka Bay, which
establishes the South Lake Minnetonka Police Depart ment (the Department) for the purpose of providing police
protection within.the four, communities..Tha agree ent creates; a. coordinating committee, comprised of the Mayors of
each participating community, as the governing body, which meets quarterly. Each year, the coordinating committee
adopts an operating budget, which is approved by all participating cities. The cost of the operating budget is divided
between the participating cities based upon a five -year average demand for service in each City.
Any budget shortfall is made up first from department reserves, with any excess shortfall assessed to each participating
community according to the formula. The most recent year of audited information is December 31, 2015.
Separate financial statements can be obtained by writing to the South Lake Minnetonka Police Department,
24150 Smithtown Road, Shorewood, Minnesota 55331.
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CITY OF SHOREWOOD, NIlNNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 5: JOINT VENTURES - CONTINUED
The following is a summary of the Department's Statements of Net Position as of December 31, 2015 and 2014:
SOUTH LAKE M[INNETONKA POLICE DEPARTMENT
SUMMARY OF STATEMENTS OF NET POSITION
DECEMBER 31, 2015 AND 2014
Assets
Deferred outflows of resources
Total assets and deferred outflows of resources
Liabilities
Deferred inflows of resources
Net position
Total liabilities, deferred inflows
of resources, and net position
2015 2014
$
4,933,813
$
5,051,223
370,165
-
$
5,303,978
$
5,051,223
$
4,717,104
$
3,326,740
312,158
-
274,716
1,724,483
$
5,303,978
$
5,051,223
The following is a summary of the Department's statements of activities -for the.years ended December 31, 2015 and
2014:
i
SOUTH LAKE MINNETONKA POLICE DEPARTMENT
SUMMARY STATEMENTS .OF ACTIVITIES!
FOR THE YEARS.ENDED DECEMBER 31, 2015,AND.2014
Revenues
Expenses
Net revenues
General revenues
Change in net position
Net position, January 1 as restated
Net position, December 31
B. Excelsior Fire District
2015 2014
$ 2,863,327 $ 2,829,638
2,830,418 2,692,164
32,909 137,474
18,558 11,770
51,467 149,244
223,249 1,575,239
$ 274,716 $ 1,724,483
In August of 2000, the cities of Deephaven, Excelsior, Greenwood, Shorewood and Tonka Bay entered a joint powers
agreement to provide fire protection and medical response service to their residents and created an entity called the
Excelsior Fire District (the District). The Board of Directors is comprised of ten members and five alternate members.
Each Member City appoints two representatives on the Board of Directors and one alternate. The City is billed for
service based on a formula that determines its share of the total expenditures.
Separate financial statements can be obtained by writing to the Excelsior Fire District, 24100 Smithtown Road,
Shorewood, Minnesota 55331.
-73-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 5: JOINT VENTURES - CONTINUED
The following is a summary of the District's Statements of Net Position as of December 31, 2015 and 2014:
EXCELSIOR FIRE DISTRICT
SUMMARY OF STATEMENTS OF NET POSITION
DECEMBER 31, 2015 AND 2014
Assets
Deferred outflows of resources
Total assets and deferred outflows of resources
Liabilities
Deferred inflows of resources
Net position
Total liabilities, deferred inflows
of resources, and net position
2015 2014
$ 8,918,967 $ 7,868,422
202,136 -
$ 9,121,103 $ 7,868,422
$ 4,156,120 $ 4,454,504
210,985 -
4,753,998 3,413,918
$ 9,121,103 $ 7,868,422
The following is a.sumnlary, of the District's statements,of activities for -the years ended December 31, 2015 and 2014:
'.EXCELSIOR;FIREDISTRICT�
,'SUMMARY STATEMENTS OF ACTIVITIES;
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Revenues
Expenses
Net revenues
General revenues
Change in net position
Net position, January 1 as restated
Net position, December 31
x(11 5 101 d
$ 1,588,403 $ 1,585,458
1,345,611 1,289,669
242,792 295,789
4,921 3,803
247,713 299,592
4,506,285 3,114,326
$ 4,753,998 $ 3,413,918
According to a formula in the agreement, the City's share of the District's budget is 38.56 percent. Payments to the
District in 2015 totaled $613,471. The District issues a publicly available financial report that includes financial
statements and required supplementary information. The report may be obtained by writing to the Excelsior Fire District,
24100 Smithtown Road, Shorewood, Minnesota 5 533 1.
-74-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 6: OTHER INFORMATION
A. 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 for which the City carries insurance. The City obtains insurance
through participation in the League of Minnesota Cities Insurance Trust ( LMCIT) which is a risk sharing pool with
approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self - sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage
in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's
management is not aware of any incurred but not reported claims.
B. Legal debt margin
The City's statutory debt limit is $43,675,353 computed as three percent of $1,455,845,111, which is the taxable market
value of property within the City. Long -term debt issued and financed partially or entirely by special assessments, tax
increments or the net revenues of enterprise fund operations is excluded from the debt limit computation. The City has
no debt that is subject to the statutory debt limit.
C. Southshore Community Center
On July 1, 2009, the City entered into: an agreement to take over operations of the Southshore Community Center. The
City also contracted with Community Recreation Resources (CRR) for the operation; management, and programming of
the Southshore Community Center. [The contract with CRR-was for the period of July 1, 2009 to July 1, 2012 with an
option to renew for `another three years or renegotiate. The contract was re- negotiated in January, 2012. The City agreed
to pay CRR $5,000 permonth for.the period of January 1, 2012 to December 31, -2012. During this time, the City paid a
15 percent commission on monthly revenues to CRR. A quarterly bonus commission of five percent was due if the
quarterly program and rental income exceeded $13,500. The contract was subsequently extended on a month by month
basis through March 31, 2013 when CRR ceased to provide services as the Southshore Community Center management
company.
Note 7: SUBSEQUENT EVENT
On January 7, 2016 the City issued $2,470,000, $2,565,000 and $875,000 of Lease Revenue Crossover Refunding Bonds
Series 2016A, 2016B and 2016, respectively. The bonds were issued to refund Lease Revenue Bonds Series 2007A, 2007B
and 2007C. The interest rate on the future revenue bonds is 2 percent with a maturity date of February 1, 2022 (2007C) and
February 1, 2023 (2007A and 2007B).
-75-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 8: CHANGE IN ACCOUNTING STANDARDS
During 2015, the City implemented several new accounting pronouncements issued by the Governmental Accounting
Standards Board (GASB), including Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of
GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Nteasurement
Date - an Amendment of GASB Statement No. 68, for the year ended December 31, 2015. These standards required a
retroactive implementation which resulted in the restatement of beginning balances in the December 31, 2014 financial
statements. Changes related to these standards are reflected in the financial statements and schedules and related disclosures
are included in Note 4.
As a result of the restatement of beginning balances, the following schedule reconciles the previously reported
December 31, 2014 balances to the December 31, 2015 financial statements:
Fund
Governmental activities
December 31, 2015
Net Position
January 1, 2015 Net Position
as Previously Prior Period January 1, 2015
Reported Restatement (1) as Restated
$ 17,071,141 $ (967,509) $ 16,103,632
Business -type activities
$ 14,608,598
$ (286,571)
$ 14,322,027
Business -type activities) ,.
Water
$ 7,465,125
$ (122,341)
$ 7,342,784
Sewer
5,220,890
(98,375)
5,122,515
Stormwater Management Utility '
'1 ', 1,801,636
(57,721)
1,743,915
Recycling
120,947
r- (8,134)
112,813
Total business -type activities
$ 14,608,598 $ (286,571) $ 14,322,027
(1) To record beginning net pension liability, deferred inflows of resources and deferred outflow of resources at
December 31, 2014,
-76-
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2015
-77-
CITY OF SHOREWOOD, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2015
Schedule of employer's share of PERA net pension liability - General Employees Retirement Fund
Schedule of employer's PERA contributions - General Employees Retirement Fund
Required Supplementary Information
Required Supplementary Information
Contributions in
Relation to the
City's
Statutorily
Statutorily
Contribution
State's
Contributions as
Proportionate
Required
Deficiency
Covered
a Percentage of
Proportionate
Contribution
Share of the
- Payroll
Covered Payroll
Ending (a)
City's
Share of
c
Net Pension
12/31/15 $ ' 93;614
(93,614)
Proportionate
the Net Pension
Liability as a
Plan Fiduciary
City's
Share of
Liability
City's
Percentage of
Net Position
Fiscal
Proportion of
the Net Pension
Associated with
Covered
Covered
as a Percentage
Year
the Net Pension
Liability
the City Total
Payroll
Payroll
of the Total
Ending
Liability
(a)
(b) (a +b)
(c)
((a +b) /c)
Pension Liability
06/30/15
0.0210 %
$ 1,088,330
$ - $ 1,088,330
$ 1,233,860
88.2 %
78.2 %
Schedule of employer's PERA contributions - General Employees Retirement Fund
-78-
Required Supplementary Information
Contributions in
Relation to the
Statutorily
Statutorily
Contribution
City's
Contributions as
Required
Required
Deficiency
Covered
a Percentage of
Year Contribution
Contribution
'(Excess)
- Payroll
Covered Payroll
Ending (a)
(b),;'
(a -b)
c
b/c
( )
12/31/15 $ ' 93;614
(93,614)
$ 1,248,187
7.5
-78-
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
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INTENTIONALLY
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NONMAJOR GOVERNMENTAL FUNDS
NONMAJOR SPECIAL REVENUE FUNDS
Special revenue funds are used to account for revenue derived from specific taxes or other earmarked revenue sources. They are
usually required by Minnesota statute or local ordinances to finance particular functions or other activities of government.
Southshore Community Center - This fund was established to account for the resources accumulated fi•om events and activities held
at the City's community center, and the payment of expenditures related to operations of the community center. The City has
committed charges for services revenues for operations.
k
-81-
CITY OF SHOREWOOD, MINNESOTA Exhibit A -1
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2015
LIABILITIES
Accounts and contracts payable $ 12,270 $ 41,914 $ 54,184
Accrued salaries payable 403 - 403
Due to other funds - - -
TOTAL LIABILITIES 12,673 41,914 54,587
FUND BALANCES
Assigned to capital outlay - 1,797,637 1,797,637
Assigned to community center operations 53,379 - 53,379
TOTAL FUND BALANCES
TOTAL LIABILITIES AND
FUND BALANCES
-82-
53,379 1,797,637 1,851,016
$ 66,052 $ 1,839,551 $ 1,905,603
Special
Revenue
Southshore
Total
Community
Capital
Nonmajor
Center
Projects
Funds
ASSETS
Cash and temporary investments
$ 65,779
$ 1,433,271
$ 1,499,050
Receivables
Accrued interest
273
7,923
8,196
Accounts
-
76,315
76,315
Lease
-
171,974
171,974
Land held for resale
-
150,068
150,068
TOTAL ASSETS
$ 66,052
$ 1,839,551
$ 1,905,603
LIABILITIES
Accounts and contracts payable $ 12,270 $ 41,914 $ 54,184
Accrued salaries payable 403 - 403
Due to other funds - - -
TOTAL LIABILITIES 12,673 41,914 54,587
FUND BALANCES
Assigned to capital outlay - 1,797,637 1,797,637
Assigned to community center operations 53,379 - 53,379
TOTAL FUND BALANCES
TOTAL LIABILITIES AND
FUND BALANCES
-82-
53,379 1,797,637 1,851,016
$ 66,052 $ 1,839,551 $ 1,905,603
CITY OF SHOREWOOD, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2015
REVENUES
Intergovernmental
Charges for services
Interest on investments
Miscellaneous
Park dedication fees
Contributions and donations
Refunds and reimbursements
Other
TOTAL REVENUES
EXPENDITURES
Current
Culture and recreation
Capital outlay
Public works
Culture and recreation
TOTAL EXPENDITURES
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
OTHER FINANCING SOURCES
Transfers in
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
Exhibit A -2
Special
Revenue
Southshore Total
Community Capital Nonmajor
Center Projects Funds
$ - $ 65,135 $ 65,135
48,719 - 48,719
546 14,218 14,764
- 6,500 6,500
254 - 254
- 119,470 119,470
298 - 298
49,817 205,323 255,140
-83-
(60,365)
(264,149)
(324,514)
70,000
303,197
373,197
9,635
39,048
48,683
43,744
1,758,589
1,802,333
$ 53,379
$ 1,797,637
$ 1,851,016
THIS PAGE IS LEFT BLANK
7 ,
INTENTIONALLY
-84-
NONMAJOR CAPITAL PROJECTS FUNDS
Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by
enterprise funds.
Park Capital Improvement - This fund accounts for park land acquisition and other capital improvements in the City parks.
Equipment Replacement - This fund was established for the purpose of funding the replacement of capital equipment.
MSA Construction - This fund was established to account for the accumulation of Municipal State Aid (MSA) to fund the periodic
reconstruction of MSA designated roads.
Trail Construction - This fund was established to accounts for the resources accumulated and payments made for trail improvements
and construction.
Community Infrastructure - This fund was established for the purpose of funding future improvements in the City.
s
r
f
r`s
-85-
CITY OF SHOREWOOD, MINNESOTA Exhibit B -1
NONMAJOR CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2015
-86-
Park
Capital
Equipment
MSA
Trail
Community
Improvement
Replacement
Construction
Construction
Infrastructure
Total
ASSETS
Cash and temporary investments
$
539,940
$ 344,780
$ 126,387
$ 307,353
$ 114,811
$
1,433,271
Receivables
Accrued interest
2,604
-
632
3,835
852
7,923
Accounts
-
-
-
-
76,315
76,315
Lease
-
171,974
-
-
-
171,974
Land held for resale
-
-
-
-
150,068
150,068
TOTAL ASSETS
$
542,544
$ 516,754
$ 127,019
$ 311,188
$ 342,046
$
1,839,551
LIABILITIES
Accounts and contracts payable
$
266
$ 1,318
$ -
$ 9,490
$ 30,840
$
41,914
FUND BALANCES
Assigned to capital outlay
542,278
515,436
127,019
301,698
311,206
1,797,637
TOTAL LIABILITIES
AND FUND BALANCES
$
542,544
$ 516,754
$ 127,019
$ 311,188
$ 342,046
$
1,839,551
-86-
EXPENDITURES
Capital outlay
Public works
Culture and recreation
TOTAL EXPENDITURES
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
OTHER FINANCING SOURCES
- 14,114
48,337 -
48,337 14,114
(36,382) (10,085)
- - 14,114
231,850 175,171 455,358
231,850 175,171 469,472
(368) (162,589) (54,725) (264,149)
Transfers in
CITY OF SHOREWOOD, MINNESOTA
261,197.<
- - - 303,197
Exhibit B -2
5,618
NONMAJOR CAPITAL PROJECTS FUNDS
(368) (162,589) (54,725) 39,048
FUND BALANCES, JANUARY 1
536,660
264,324
COMBINING STATEMENT OF REVENUES, EXPENDITURES
FUND BALANCES, DECEMBER 31
$ 542,278 $
515,436 $
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2015
Park
Capital Equipment MSA
Trail
Community
Improvement Replacement Construction Construction
Infrastructure
Total
REVENUES
Intergovernmental
$ - $ - $ - $
65,135
$ -
$ 65,135
Interest on investments
5,455 4,029 (368)
4,126
976
14,218
Miscellaneous
Park dedication fees
6,500 - -
-
-
6,500
Refunds and reimbursements
- - -
-
119,470
119,470
TOTALREVENUES
11,955 4,029 (368)
69,261
120,446
205,323
EXPENDITURES
Capital outlay
Public works
Culture and recreation
TOTAL EXPENDITURES
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
OTHER FINANCING SOURCES
- 14,114
48,337 -
48,337 14,114
(36,382) (10,085)
- - 14,114
231,850 175,171 455,358
231,850 175,171 469,472
(368) (162,589) (54,725) (264,149)
Transfers in
42,000
261,197.<
- - - 303,197
NET CHANGE IN FUND BALANCES
5,618
251,112
(368) (162,589) (54,725) 39,048
FUND BALANCES, JANUARY 1
536,660
264,324
127,387 464,287 365,931 1,758,589
FUND BALANCES, DECEMBER 31
$ 542,278 $
515,436 $
127,019 $ 301,698 $ 311,206 $ 1,797,637
-87-
-88-
CITY OF SHOREWOOD, MINNESOTA
Exhibit C -1
GENERALFUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
-
BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES
FOR THE YEAR ENDED DECEMBER 31,
2015
(With comparative actual amounts for the year ended December 31, 2014)
2015
2014
Budgeted Amounts
Actual Variance with
Actual
Original
Final
Amounts Final Budget
Amounts
REVENUES
Taxes
General property taxes
$ 4,827,938
$ 4,827,938 $
4,825,492 $
(2,446)
$ 4,752,388
Fiscal disparities
103,526
103,526
123,634
20,108
111,707
Total
4,931,464
4,931,464
4,949,126
17,662
4,864,095
Licenses and permits
Business
14,320
14,320
6,189
(8,131)
14,932
Nonbusiness
133,450
133,450
269,378
135,928
255,909
Total
147,770
147,770
275,567
127,797
270,841
Intergovernmental
Federal
Other
-
-
-
34,536
State
Property tax credits
-
-
49
49
44
Other
75,751
75,751
91,587
15,836
79,489
Total
75,751
75,751
91,636
15,885
114,069
Charges for services
General government
5,200
5,200
14,251
9,051
11,850
Culture and recreation
45,000
45,000
53,367
8,367
40,881
Total
50,200
50,200
67,618
17,418
52,731
Fines and forfeitures
57,000
57,000
65,234
8,234
64,290
Interest on investments
35,000
35,000
35,182
182
45,799
Miscellaneous revenue
Refunds and reimbursements
10,000
10,000
63,574
53,574
19,792
Contributions and donations
3,500
3,500
3,570
70
4,595
Other
165,400
165,400
180,105
14,705
166,647
Total
178,900
178,900
247,249
68,349
191,034
TOTAL REVENUES
5,476,085
5,476,085
5,731,612
255,527
5,602,859
-88-
CITY OF SHOREWOOD, MINNESOTA Exhibit C -1
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2015
(With comparative actual amounts for the year ended December 31, 2014)
EXPENDITURES
Current
General government
Mayor and City Council
Personal services
Supplies
Other services and charges
Total
Administrative
Personal services
Supplies
Other services and charges
2015
Budgeted Amounts
Original Final
Actual
Amounts
2014
Variance with Actual
Final Budget Amounts
$ 22,600
$ 22,600
$ 22,176
$ 424
$ 16,794
2,000
2,000
1,751
249
1,014
110,350
110,350
67,618
42,732
54,930
134,950
134,950
91,545
43,405
72,738
251,153
251,153
249,239
1,914
242,352
20,900
20,900
13,288
7,612
17,852
145,500
145,500
146,504
(1,004)
148,468
Total
417,553
417,553
409;031
8,522
408,672
Finance
Personal services
134,758
134,758
143,248
(8,490)
138,465
Supplies
10,050 -
10,050
19,253
(9,203)
15,415
Other services and charges
16,000
16,000
21,018
(5,018)
14,191
Total
160,808
160,808
183,519
(22,711)
168,071
Professional services
Other services and charges
215,060
215,060
200,096
14,964
207,153
Planning and zoning
Personal services
173,157
173,157
184,405
(11,248)
182,641
Supplies
300
300
423
(123)
302
Other services and charges
11,000
11,000
28,125
(17,125)
14,461
Total
184,457
184,457
212,953
(28,496)
197,404
Municipal building
Supplies
23,400
23,400
54,591
(31,191)
56,990
Other services and charges
170,800
170,800
95,370
75,430
87,679
Total
194,200
194,200
149,961
44,239
144,669
Total general government
1,307,028
1,307,028
1,247,105
59,923
1,198,707
-89-
CITY OF SHOREWOOD, MINNESOTA Exhibit C -1
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2015
(With comparative actual amounts for the year ended December 31, 2014)
2015 2014
Budgeted Amounts Actual Variance with Actual
Original Final Amounts Final Budget Amounts
EXPENDITURES - CONTINUED
Current - continued
Public safety
Police protection
Other services and charges $ 1,072,645 $ 1,072,645 $ 1,082,129 $ (9,484) $ 1,051,134
Fire protection
Other services and charges
361,315
361,315
360,644
671
348,789
Protective inspection
Personal services
121,323
121,323
126,667
(5,344)
120,530
Supplies
200
200
73
127
157
Other services and charges
7,700
7,700
9,887
(2,187)
6,176
Total
129,223
129,223
136,627
(7,404)
126,863
Total public safety
L563,183
.1,563,183
1,579,400
(16,217)
1,526,786
Public works
General maintenance
Personal services
494,547
494,547
350,006
144,541
321,038
Supplies
167,700
167,700
103,882
63,818
132,205
Other services and charges
142,600
142,600
103,058
39,542
95,277
Total
804,847
804,847
556,946
247,901
548,520
Snow and ice removal
Personal services
58,339
58,339
25,274
33,065
61,363
Supplies
45,000
45,000
16,229
28,771
34,444
Total
103,339
103,339
41,503
61,836
95,807
Sanitation and waste removal
Personal services
-
-
23,187
(23,187)
23,704
City engineer
Supplies - - - - 612
Other services and charges 87,900 87,900 91,100 (3,200) 72,181
Total 87,900 87,900 91,100 (3,200) 72,793
Total public works 996,086 996,086 712,736 283,350 740,824
-90-
-91-
CITY OF SHOREWOOD, MINNESOTA
Exhibit C -1
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES -
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER
31, 2015
(With comparative actual amounts for the year ended December 31, 2014)
2015
2014
Budgeted Amounts
Actual
Variance with
Actual
Original Final
Amounts
Final Budget
Amounts
EXPENDITURES - CONTINUED
Current - continued
Culture and recreation
Personal services
$ 146,216 $ 146,216
$ 192,106
$ (45,890)
$ 164,292
Supplies
29,100 29,100
23,588
5,512
21,443
Other services and charges
56,800 56,800
40,132
16,668
43,387
Total culture and recreation
232,116 232,116
255,826
(23,710)
229,122
Total current
4,098,413 4,098,413
3,795,067
303,346
3,695,439
Capital outlay
Public safety
501,337 501,337
501,336
1
508,187
TOTAL EXPENDITURES
4,599,750 4,5.99,750
4,296,403
303,347
4,203,626
EXCESS OF REVENUES
OVER EXPENDITURES
876,335 876,335
1,435,209
558,874
1,399,233
OTHER FINANCING SOURCES (USES)
Transfers in
25,000 25,000
25,000
-
25,000
Transfers out
(1,043,513) (1,043,513)
(1,043,513)
-
(1,315,120)
TOTAL OTHER FINANCING
SOURCES (USES)
(1,018,513) (1,018,513)
(1,018,513)
-
(1,290,120)
NET CHANGE IN FUND BALANCES
(142,178) (142,178)
416,696
558,874
109,113
FUND BALANCES, JANUARY 1
4,085,471 4,085,471
4,085,471
-
3,976,358
FUND BALANCES, DECEMBER 31
$ 3,943,293 $ 3,943,293
$ 4,502,167
$ 558,874
$ 4,085,471
-91-
-92-
CITY OF SHOREWOOD, MINNESOTA
Exhibit D -1
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2015
2007A 2007B
2007C
2008
Public Safety Public Safety
Public
Safety
Lease
Revenue
Building Building
Building
Bond
Total
ASSETS
Cash and temporary investments
$ 17,220 $ 6,977
$
4,889
$
2,719
$
31,805
Lease receivable
2,6$5,000 2,785,000
950,000
-
6,420,000
TOTAL ASSETS
$ 2,702,220 $ 2,791,977
$
954,889
$
2,719
$
6,451,805
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - lease receivables
$ 2,685,000 $ 2,785,000
$
950,000
$
-
$
6,420,000
FUND BALANCES
Restricted for debt service
17,220 6,977
4,889
2,719
31,805
TOTAL DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
$ 2,702,220 $ 2,791,977
$
954,889
$
2,719
$
6,451,805
-92-
CITY OF SHOREWOOD, MINNESOTA Exhibit D -2
DEBT SERVICE FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2015
REVENUES
Miscellaneous
Lease payments
Other
TOTAL REVENUES
EXPENDITURES
Debt service
Principal
Interest and service charges
TOTAL EXPENDITURES
2007A 2007B 2007C 2008
Public Safety Public Safety Public Safety Lease Revenue
Building Building Building Bond Total
$ 392,025 $ 411,478 $ 155,066 $ - $ 958,569
4,000 4,000 4,000 - 12,000
396,025 415,478 159,066 - 970,569
275,000 290,000 115,000 55,000 735,000
118,975 123,428 42,016 46,512 330,931
393,975 413,428 157,016 101,512 1,065,931
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,050 2,050 2,050 (101,512) (95,362)
OTHER FINANCING SOURCES
Transfers in - - - 101,513 101,513
NET CHANGE IN FUND BALANCES
2,050
2,050
2,050 -
1
6,151
FUND BALANCES, JANUARY 1
15,170
4,927
2,839
2,718
25,654
FUND BALANCES, DECEMBER 31
$ 17,220 $
6,977 $
4,889 $
2,719 $
31,805
-93-
CITY OF SHOREWOOD, MINNESOTA
AGENCY FUND
COMBINING SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED DECEMBER 31, 2015
Developer Escrow Accounts
ASSETS
Cash and temporary investments
LIABILITIES
Escrow deposits payable
Exhibit E -1
Balance Balance
January 1 Additions Deductions December 31
$ 128,561 $ 115,918 $ (124,810) $ 119,669
$ 128,561 $ 115,918 $ (124,810) $ 119,669
-94-
REVENUES
Taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeits
Interest on investments
Miscellaneous
TOTAL REVENUES
Per Capita
CITY OF SHOREWOOD, MINNESOTA
SUPPLEMENTARY INFORMATION
SUMMARY FINANCIAL REPORT
REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS
GOVERNMENTAL FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Total
2015 2014
$ 4,949,126 $ 4,864,095
275,567
270,841
156,771
891,055
116,337
90,825
65,234
64,290
60,283
86,530
1,344,340
1,185,219
$ 6,967,658 $ 7,452,855
$ 938 $ 991
EXPENDITURES
Current
General government
$ 1,247,105
$ 1,198,707
Public safety
1,579,400
1,526,786
Public works
726,905
743,803
Culture and recreation
344,793
310,051
Capital outlay
General government
_ -
55,827
Public safety
501,336
508,187
Public works
907,830
1,525,025
Culture and recreation
476,573
302,816
Debt service
Principal
Interest and service charges
TOTAL EXPENDITURES
Per Capita
Total Long -term Indebtedness
Per Capita
735,000 705,000
330,931 367,396
$ 6,849,873 $ 7,243,598
$ 923 $ 963
$ 7,400,000 $ 8,135,000
$ 997 $ 1,081
Exhibit F -1
Percent
Increase
(Decrease)
1.75 %
1.74
(82.41)
28.09
1.47
(30.33)
13.43
(6.51)
(5.31) %
4.04 %
3.45
(2.27)
11.21
(100.00)
(1.35)
(40.47)
57.38
4.26
(9.93)
(5.44)
(4.17) %
(9.04)
(7.82)
General Fund Balance - December 31 $ 4,502,167 $ 4,085,471 10.20
Per Capita $ 606 $ 543 11.67
The purpose of this report is to provide a summary of financial information concerning the City of Shorewood to interested
citizens. The complete financial statements may be examined at City Hall, 5755 Country Club Road, Shorewood, Minnesota
55331. Questions about this report should be directed to Bruce DeJong, Finance Director at 952- 960 -7903.
-95-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-96-
STATISTICAL SECTION (UNAUDITED)
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2015
V
-97-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-98-
STATISTICAL SECTION (UNAUDITED)
This part of the City of Shorewood's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says about
the government's overall financial health.
Financial trends
These schedules contain trend information to help the reader understand how the government's financial performance and well-
being have charged over time.
Revenue capacity
These schedules contain information to help the reader assess the government's most significant local revenue source, the
property tax.
Debt capacity
These schedules present information to help the reader assess the affordabilio3 of the government's current levels of outstanding
debt and the government's ability to issue additional debt in the future.
Demographic and economic information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the
government 's financial activities take place.
Operating information
These schedules contain service =and infi-astructuu-e data to help the reader understand #ow, the information in the government's
financial report relocates to the services the government provides,and the activities it performs.
f
-99-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting)
-100-
Fiscal Year
2006
2007
2008
2009
Governmental activities
Net investment in capital assets
$ 11,690,620
$ 10,960,550
$ 9,430,566
$ 9,480,314
Restricted
24,632
-
-
-
Unrestricted
5,716,027
6,147,185
7,400,859
7,909,106
Total governmental activities net position
$ 17,431,279
$ 17,107,735
$ 16,831,425
$ 17,389,420
Business -type activities
Net investment in capital assets
$ 5,668,683
$ 6,066,229
$ 6,631,854
$ 6,482,297
Unrestricted
9,829,761
10,422,397
10,186,824
9,449,210
Total business -type activities net position
$ 15,498,444
$ 16,488,626
$ 16,818,678
$ 15,931,507
Total primary government
Net investment in capital assets
$ 17,359,303
$ 17,026,779
$ 16,062,420
$ 15,962,611
Restricted
24,632
-
-
-
Unrestricted
15,545,788
16,569,582
17,587,683
17,358,316
Total primary government
$ 32,929,723
$ 33,596,361
$ 33,650,103
$ 33,320,927
-100-
Fiscal Year
2010 2011 2012
2013
2014
Table 1
2015
$ 9,525,991
$ 9,223,669
$ 8,487,162
$ 9,212,415
$ 9,754,046
$ 9,394,897
8,252,497
7,964,703
7,979,370
7,138,847
7,317,095
6,717,068
$ 17,778,488
$ 17,188,372
$ 16,466,532
$ 16,351,262
$ 17,071,141
$ 16,111,965
$ 6,494,996
$ 6,675,613
$ 6,494,076
$ 6,705,907
$ 6,718,271
$ 7,713,545
8,666,149
8,186,835
8,148,173
7,951,219
7,890,327
6,572,980
$ 15,161,145
$ 14,862,448
$ 14,642,249
$ 14,657,126
$ 14,608,598
$ 14,286,525
$ 16,020,987
$ 15,899,282
$ 14,981,238
$ 15,918,322
$ 16,472,317
$ 17,108,442
16,918,646
16,151,538
16,127,543
15,090,066
15,207,422
13,290,048
$ 32,939,633
$ 32,050,820
$ 31;108,781
$ 31,008,388
$ 31,679,739
$ 30,398,490
still
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Expenses
Governmental activities
General government
Public safety
Public works
Culture and recreation
Interest on long -term debt
Total governmental activities expenses
Business -type activities
Water
Sewer
Recycling
Stormwater management utility
Liquor
Total business -type
Total expenses
Program revenues
Governmental activities
Charges for services
General government
Public safety
Public works
Culture and recreation
Operating grants and contributions
Capital grants and contributions
Fiscal Year
2006 2007 2008 2009
$ 1,357,714
$ 1,321,971
$ 1,483,913
$ 1,486,281
1,806,915
1,819,250
1,906,890
1,904,966
2,275,402
1,971,571
2,485,752
1,941,272
233,881
258,906
273,054
394,110
600,723
1,000,230
1,002,423
638,768
6,274,635
6,371,928
7,152,032
6,365,397
488,513
636,506
657,776
659,113
785,638
952,107
921,238
955,956
124,354
91,157
96,945
99,286
171,190
63,888
106,143
106,847
2,017,217
1,885,537
16,167
129
activities expenses 3,586,912
3,629;195
1,798,269
1,821,331
$ 9,861,547
$10,001,123
$ 8,950,301
$ 8,186,728
Total governmental activities program revenues
Business -type activities
Charges for services
Water
Sewer
Recycling
Stormwater management utility
Liquor
Operating grants and contributions
Capital grants and contributions
Total business -type activities program revenues
Total program revenues
$ 25,340
$ 41,475
$ 32,528
$ 34,064
1,060,506
896,731
793,041
634,742
-
-
-
6,279
1,800
1,960
605
35,843
31,730
99,800
90,493
90,681
395,229
132,912
674,343
43
1,514,605
1,172,878
1,591,010
801,652
1,350,041
782,549
752,338
784,318
836,175
832,956
829,117
802,252
144,886
89,934
64,629
65,112
129,708
164,413
204,618
191,157
1,984,344
1,788,835
-
-
-
-
27,950
28,488
4,445,154
3,658,687
1,878,652
1,871,327
$ 5,959,759
$ 4,831,565
$ 3,469,662
$ 2,672,979
-102-
Fiscal Year
2010 2011 2012 2013
2014
Table 2
2015
$ 1,235,098
$ 1,405,791
$ 1,331,286
$ 1,310,296
$ 1,277,118
$ 1,318,558
1,893,413
1,960,894
1,947,868
2,010,338
2,036,394
2,080,769
2,231,473
2,031,136
2,162,123
1,884,986
1,991,852
1,971,483
452,437
412,257
460,879
471,784
397,365
613,494
474,082
449,773
428,887
379,685
355,378
318,357
-
15,000
6,286,503
6,259,851
6,331,043
6,057,089
6,058,107
6,302,661
1,887,076
1,888,839
1,985,958
1,811,726
1,827,814
1,817,323
643,886
690,363
689,205
693,193
690,479
721,184
980,173
1,151,626
1,065,926
847,097
873,711
944,263
173,896
174,857
187,713
181,537
178,457
131,185
131,107
233,035
273,846
107,935
203,825
99,312
25
-
-
-
-
-
1,929,087
2,249,881 ``
2,216,690 "'
1,829,762
1,946 472
1,895,944
$ 8,215,590
$ 8,509,732"
$ 8,547,733
$ 7,886,851
$ 8,004;579
$ 8,198,605
$ 53,381
$ 108,394
$ 144,883
$ 187,628
$ 199,394
$ 260,440
624,330
544,749
604,400
599,810
642,680
617,557
-
6,293
4,137
226
1,222
940
58,661
72,678
79,206
120,794
102,985
108,884
99,114
113,717
102,959
144,112
48,284
86,370
114,330
-
-
-
811,522
184,605
949,816
845,831
935,585
1,052,570
1,806,087
1,258,796
668,676
672,793
757,395
537,713
443,467
544,748
845,043
819,496
831,640
834,320
852,254
858,066
146,002
151,894
157,585
165,713
164,666
154,929
198,593
196,070
193,931
194,950
220,658
227,676
28,762
33,586
23,007
25,830
31,279
26,198
-
15,000
22,400
53,200
115,490
5,706
1,887,076
1,888,839
1,985,958
1,811,726
1,827,814
1,817,323
$ 2,836,892
$ 2,734,670
$ 2,921,543
$ 2,864,296
$ 3,633,901
$ 3,076,119
-103-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Net revenues (expenses)
Governmental activities
Business -type activities
Total primary government
General Revenues and Other Changes in Net Position
General Revenues
Governmental activities
Taxes
Property taxes, levied for general purpose
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Gain on sale of capital assets
Transfers
Fiscal Year
2006 2007 2008 2009
$ (4,760,030) $ (5,199,050) $ (5,561,022) $ (5,563,745)
858,242 29,492 80,383 49,996
$ (3,901,788) $ (5,169,558) $ (5,480,639) $ (5,513,749)
$ 4,144,543
$ 4,360,254
$ 4,582,909
$ 4,743,174
4,925
37,746
19,957
4,940
327,921
621,234
641,846
333,626
25,000
(143,728)
40,000
1,040,000
Total governmental activities general revenues 4,502,389 4,875,506 5,284,712 6,121,740
Business -type activities
Unrestricted investment earnings 310,281 434,072 289,669 102,833
Gain on sale of capital assets " - 382,890 - -
Transfers (25,000) 143,728 (40,000) (1,040,000)
Total business -type activities general revenues
Total primary government
Change in Net Position
Governmental activities
Business -type activities
285,281 960,690 249,669 (937,167)
$ 4,787,670 $ 5,836,196 $ 5,534,381 $ 5,184,573
$ (257,641) $ (323,544) $ (276,310) $ 557,995
1,143,523 990,182 330,052 (887,171)
Total primary government $ 885,882 $ 666,638 $ 53,742 $ (329,176)
-104-
Fiscal Year
2010 2011 2012
Table 2
2013 2014 2015
$ (5,336,687) $ (5,414,020) $ (5,395,458) $ (5,004,519) $ (4,252,020) $ (5,043,865)
(42,011) (361,042) (230,732) (18,036) (118,658) (78,621)
$ (5,378,698) $ (5,775,062) $ (5,626,190) __L (L222,5551 $ (4,370,678) $ (5,122,486)
$ 4,744,348
$ 4,733,948
$ 4,761,213
$ 4,768,989
$ 4,854,521
$ 4,931,075
4,487
4,751
6,019
5,818
5,848
5,840
132,359
56,705
61,584
37,461
86,530
60,283
31,130
28,500
-
76,981
-
30,000
813,431
-
-
-
25,000
270,121
5,725,755
4,823,904
4,828,816
4,889,249
4,971,899
5,297,319
85,080
62,345
64,135
32,913
95130
68,119
(813,431)
-
-
-
,(25,000)
(270,121)
(728,351)
62,345
64,135
32,913
70,130
(202,002)
$ 4,997,404
$ 4,886,249
$ 4,892,951
$ 4,922,162
$ 5,042,029
$ 5,095,317
$ 389,068
$ (590,116)
$ (566,642)
$ (115,270)
$ 719,879
$ 253,454
(770,362)
(298,697)
(166,597)
14,877
(48,528)
(280,623)
$ (381,294) $ (888,813) $ (733,239) $ (100,393) $ 671,351 $ (27,169)
-105-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
Fiscal Year
-106-
2006
2007
2008
2009
General fund
Reserved
$
-
$ -
$ 47,750
$
500
Unreserved
3,383,906
3,761,509
3,660,359
3,555,224
Nonspendable
-
-
-
-
Unassigned
-
-
-
-
Total general fund
$
3,3832906
$ 3,761,509
$ 3,708,109
$
3,555,724
All other governmental funds
Reserved
$
262,438
$ 10,040,556
$ 10,033,342
$
1,934,628
Unreserved, reported in
Special revenue funds
-
-
-
-
Capital project funds
2,197,367
2,473,097
3,743,980
4,252,870
Nonspendable
-
-
-
-
Restricted
-
-
-
-
Assigned
-
-
-
-
Unassigned
-
-
-
-
Total all other governmental funds
$
2,459,805
$'12,513;653
$ 13,777,322
$
6,187,498
Note: The City implemented GASB 54 in fiscal year
2011, resulting
in significant
reclassification of the components
of fund balance.
Years prior to 2011 have not been restated.
-106-
2010
2011
Table 3
Fiscal Year
2012 2013 2014 2015
$
49,060
$
-
$
-
$
-
$
-
$
-
3,477,932
-
-
-
-
-
-
48,000
50,000
33,016
103,996
99,216
-
3,440,227
3,574,468
3,943,342
3,981,475
4,402,951
$
3,526,992
$
3,488,227
$
3,624,468
$
3,976,358
$
4,085,471
$
4,502,167
$
96,333
$
-
$
-
$
-
$
-
$
-
(17,650)
-
-
-
-
-
4,520,558
-
-
-
-
-
-
150,068
150,068
150,068
-
-
-
30,439
17,700
24,450
25,654
31,805
-
4,229,528
4,368,656
3,117,434
3,339,005
3,304,064
-
-
(75,325)
(52,437)
-
-
$
4,599,241
$
4,410,035 "
$
4,461,099
$
3,239,515
$
3,364,659
$
3,335,869
-107-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
Other financing sources (uses)
Transfers in 635,000 770,091 933,366 2,059,773
Sale of capital assets - - - -
Proceeds from sale of bonds - 10,000,000 1,310,000
Bonds refunded - - (8,100,000)
Discount on long -term debt issued - (24,233) - -
Transfers out (610,000) (913,819) (893,366) (1,019,773)
Total other financing
sources (uses) 25,000 9,832,039 1,350,000 (7,060,000)
Net change in fund balances $ (504,780) $ 10,431,451 $ 1,210,269 $ (7,742,209)
Debt service as a percentage of
Noncapital expenditures 20.1% 26.3% 23.1% 22.4%
-108-
Fiscal Year
2006
2007
2008
2009
Revenues
Taxes
$ 4,141,539
$ 4,332,741
$ 4,582,602
$ 4,703,368
Licenses and permits
382,408
256,472
195,419
127,883
Intergovernmental
365,732
224,286
753,605
66,411
Charges for services
45,450
50,819
50,753
41,649
Fines and forfeitures
79,040
77,777
53,369
52,968
Special assessments
895
418
-
-
Interest on investments
327,921
621,234
641,846
333,626
Miscellaneous
1,110,860
1,077,012
1,053,916
1,059,914
Total revenues
6,453,845
6,640,759
7,331,510
6,385,819
Expenditures
General government
1,264,509
1,253,223
1,443,549
1,386,614
Public safety
1,257,998
1,263,921
1,352,254
1,392,139
Public works
626,048
718,350
760,287
670,954
Culture and recreation
169,411
190,931
229,259
326,502
Capital outlay
2,571,204
1,123,796
2,164,366
1,953,756
Debt service
Principal
486,728
534,594 !
485,000
520,000
Interest and service charges
607,727
956,532
977,957
818,063
Bond issuance costs
-
-
58,569
-
Total expenditures
6,983,625
6,041,347
7,471,241
7,068,028
Excess (deficiency) of revenues
over (under) expenditures
(529,780)
599,412
(139,731)
(682,209)
Other financing sources (uses)
Transfers in 635,000 770,091 933,366 2,059,773
Sale of capital assets - - - -
Proceeds from sale of bonds - 10,000,000 1,310,000
Bonds refunded - - (8,100,000)
Discount on long -term debt issued - (24,233) - -
Transfers out (610,000) (913,819) (893,366) (1,019,773)
Total other financing
sources (uses) 25,000 9,832,039 1,350,000 (7,060,000)
Net change in fund balances $ (504,780) $ 10,431,451 $ 1,210,269 $ (7,742,209)
Debt service as a percentage of
Noncapital expenditures 20.1% 26.3% 23.1% 22.4%
-108-
2010
2011
Table 4
Fiscal Year
2012 2013 2014 2015
$ 4,717,204
$ 4,787,195
$ 4,783,939
$ 4,764,472
$ 4,864,095
$ 4,949,126
154,113
174,119
175,087
204,600
270,841
275,567
173,334
72,968
76,102
76,544
891,055
156,771
100,899
102,500
121,625
92,549
90,825
116,337
55,806
52,635
66,230
59,294
64,290
65,234
333
-
-
-
-
-
132,359
56,705
61,584
37,461
86,530
60,283
1,037,522
1,032,566
1,115,836
1,234,312
1,185,219
1,344,340
6,371,570
6,278,688
6,400,403
6,469,232
7,452,855
6,967,658
1,147,198
1,306,948
1,288,704
1,249,616
1,198,707
1,247,105
1,3 92,923
1,460,664
1,445,149
1,494,633
1,526,786
1,579,400
859,069
866,413
823,234
860,071
743,803
726,905
342,654
343,326
331,524
324,745
310,051
344,793
2,075,109
1,457,001
1,230,058
2,660,830
2,391,855
1,885,739
600,000
625,000
655,000
675,000
705,000
735,000
516,167
447,307
439,429
39 -1,213
367,396
330,931
6,933,120
6,506,659
6,213,098
7,656,108
7,243,598
6,849,873
(561,550)
(227,971)
187,305
(1,186,876)
209,257
117,785
1,942,550
984,541
1,170,216
2,482,650
1,340,120
1,313,634
31,130
-
-
317,182
-
-
(1,900,000)
-
-
-
-
-
(1,129,119)
(984,541)
(1,170,216)
(2,482,650)
(1,315,120)
(1,043,513)
(1,055,439) -
317,182
25,000 270,121
$ (1,616,989)
$ (227,971) $
187,305
$ (869,694) $
234,257 $
387,906
19.1%
18.4%
18.3%
18.5%
18.5%
17.9%
-109-
Source: Hennepin County Assessor
Note: Property in the county is reassessed annually. The county assesses property at approximately 90 percent of actual value for all types of
real and personal property.
-110-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION
(UNAUDITED)
TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
(Shown by year of tax collectability)
2006
2007
2008
2009
Taxable market value
Personal property
$ 4,361,600
$ 4,591,200
$ 4,336,600
$ 4,764,900
Real estate
1,318,313,000
1,475,529,200
1,597,262,400
1,651,054,700
Total taxable market value
$1,322,674,600
$1,480,120,400
$1,601,599,000
$1,655,819,600
Estimated actual value of taxable property
$1,416,341,600
$1.553,767,900
$1,645,188,300
$1,673,720,100
Taxable market value as a percentage of
estimated actual value
93.39 %
95.26%
97.35 %
98.93 %
Tax capacity
Personal property
$ 85,635
$ 89,872
$ 84,780
$ 91,548
Real estate
14,269,195
16,130,097
17,619,943
18,305,114
Total tax capacity
14,354,830
16,219,969
17,704,723
18,396,662
Contribution to fiscal disparities pool
(276,939)
(308,590)
(351,789)
(396,336)
Receivable from fiscal disparities pool
399,944
407,687
445,780
513,259
Net tax capacity
$ 14,477,835
$ 16,319,066
$ 17,798,714
$ 18,513,585
Tax levies
General
$ 3,678,592
$ 3,835,173
$ 4,056,917
$ 4,158,672
Debt service
511,803
561,135
555,078
617,620
Total
$ ' 4,190,395
$ 4,396,308
$ 4,611,995
$ 4,776,292
Direct tax rate
General
25.408 %
23,501 %
22.793 %
22.463 %
Debt service
3.535
3.439
3.119
3.336
Total
28.944 %
26.940%
25.912%
25.799 %
Source: Hennepin County Assessor
Note: Property in the county is reassessed annually. The county assesses property at approximately 90 percent of actual value for all types of
real and personal property.
-110-
2010 2011 2012 2013 2014
2015
Table 5
$ 4,629,900
$ 4,948,300
$ 5,291,700
$ 6,006,500
$
6,068,600
$
6,348,000
1,631,938,000
1,507,900,600
1,430,712,101
1,367,209,584
1,345,804,540
1,449,497,111
$1,636,567,900
$1,512,848,900
$1,436,003,801
$1,373,216,084
$
1,351,873,140
$
1,455,845,111
$1.638,118,400
$1,514,456,700
$1,453,867,700
$1,392,562,700
$
1,371,752,400
$
1,472,996,800
99.91 %
99.89 %
98.77 %
98.61 %
98.55 %
98.84 %
$ 88,848
$ 95,216
$ 102,084
$ 113,130
$
114,632
$
122,460
18,087,557
16,620,629
15,761,142
15,025,751
14,770,327
15,926,414
18,176,405
16,715,845
15,863,226
15,138,881
14,884,959
16,048,874
(432,995)
(419,002)
(389,965)
(393,282)
(393,620)
(399,759)
526,521
478,935
435,462
368,528
374,494
377,934
$ 18,269,931
$ 16,775,778
$ 15,908,723
$ 15,114,127
$
14,865,833
$
16,027,049
$ 4,160,292
$ 4,158,672
$ 4,158,672
$ 4,763,319
$
4,858,585
$
4,931,464
616,000
604,647
-
-
-
-
$ 4,776,292
$ 4,763,319
$ 4,158;672
$' 4,763,319
$
4,858,585
$
4,931,464
22.771 %
24.790 %
26.141 %
31.516 %
32.683 %
30.770 %
3.372
3.604
_
-
26.143 %
28.394 %
26.141 %
31.516 %
32.683 %
30.770 %
MINE
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX CAPACITY RATES - DIRECT AND OVERLAPPING GOVERNMENTS
(PER $1,000 OF TAX CAPACITY IN 2006 - 2015)
Source: Hennepin County Assessor
(1) Includes vocational school
Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates
apply to all City property owners (e.g. the rates for special districts apply only to the proportion of the government's property owners
whose property is located within the geographic boundaries of the special district).
DIVA
Overlapping Rates
Year
(1)
Taxes
School District
Watershed District
Payable
City
County
No. 276
No. 277
No.3
No.4
Misc.
2006
28.944 %
41.016 %
22.952 %
10.522 %
1.072 %
0.787 %
6.998 %
2007
26.940
39.110
24.793
9.911
1.121
0.743
7.310
2008
25.912
38.571
17.980
8.521
1.404
1.302
7.397
2009
25.799
40.413
17.186
8.284
1.489
1.246
7.154
2010
26.143
42.640
18.657
9.772
1.511
1.279
8.138
2011
28.394
45.840
21.274
10.900
1.606
1.352
9.172
2012
26.141
48.231
23.015
17.262
1.705
1.387
9.923
2013
31.516
49.461
24.487
18.119
1.769
1.523
10.089
2014
32.683
49.959
24.374
19.075
1.806
1.880
10.561
2015
30.770
46.398
25.093
20.377
1.738
1.855
9.785
Source: Hennepin County Assessor
(1) Includes vocational school
Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates
apply to all City property owners (e.g. the rates for special districts apply only to the proportion of the government's property owners
whose property is located within the geographic boundaries of the special district).
DIVA
Totals
School District No. 276
Watershed Watershed
District District
No. 3 No. 4
Table 6
School
District
No. 277
Watershed
District
No. 3
100.982 %
100.697 %
88.552 %
99.274
98.896
84.392
91.264
91.162
81.805
92.041
91.798
83.139
97.089
96.857
88.204
106.286
106.032
95.912
109.015
108.697
103.262
117.322
117.076
110.954
119.383
119.457
114.084
113.784
113.901
109.068
-113-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
Kimberley & Frank Venues
The Mary Sue Simon Qprt
Xcel Energy
Totals $ 961,446
Source: Hennepin County Assessor
Tax
Taxpayer
Capacity
of Total
Mattamy Minneapolis LLC (Minnetonka Country Club)
$ 180,000
Krause- Anderson (Shorewood Village Ctr -Towle Real Est)
158,530
Big Box One, LLC
130,310
Two S Properties (Shurgard Storage)
120,404
South Lake Office Building LLC
76,210
Jack & Gretchen Norqual
65,876
W of Shorewood LLC (Minnetonka Portable Dredging)
62,688
Beacon Bank
57,750
Waterford Center LLP
53,790
Stephen R Litman Trustee
55,888
Kimberley & Frank Venues
The Mary Sue Simon Qprt
Xcel Energy
Totals $ 961,446
Source: Hennepin County Assessor
-114-
2006
Rank
Table 7
Percent
of Total
Tax Capacity
4 0.36 %
3 0.50
1 0.64
2 0.51
6 0.33
10 0.30
9 0.31
5 0.35
7 0.32
8 0.32
3.94 %
Percent
of Total
Tax
Rank
Tax Capacity
Capacity
1
1,07 %
$ 51,890
2
0.94
71,790
3
0.77
92,190
4
0.72
73,610
5
0.45
-
6
0.39
-
7
0.37
48,250
8
0.34
43,490
9
0.32
45,110
10
0.33
-
-
50,625
46,940
-
46,410
5.70 %
$ 570,305
-114-
2006
Rank
Table 7
Percent
of Total
Tax Capacity
4 0.36 %
3 0.50
1 0.64
2 0.51
6 0.33
10 0.30
9 0.31
5 0.35
7 0.32
8 0.32
3.94 %
CITY OF SHOREWOOD, MINNESOTA Table 8
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(1) Includes state paid property tax credits.
-115-
(1)
Percent
Collection
Percentage
Collection
of Total
Fiscal
Total
of Current
of Levy
in subsequent
Total
Collections
Year
Levy
Year's Levy
Collected
years
Collections
to Levy
2006
$ 4,190,395
$ 4,145,829
98.94 %
$ 41,120
$ 4,186,949
99.92 %
2007
4,396,308
4,320,289
98.27
75,258
4,395,547
99.98
2008
4,611,995
4,546,899
98.59
61,628
4,608,527
99.92
2009
4,776,292
4,649,904
97.35
121,741
4,771,645
99.90
2010
4,776,292
4,685,060
98.09
88,075
4,773,135
99.93
2011
4,763,319
4,706,900
98.82
54,448
4,761,348
99.96
2012
4,763,319
4,717,658
99.04
40,812
4,758,470
99.90
2013
4,763,319
4,720,748
99.11
38,073
4,758,821
99.91
2014
4,858,585
4,812,478
99.05
30,373
4,842,851
99.68
2015
4,931,464
4,907,222
99.51
-
4,907,222
99.51
(1) Includes state paid property tax credits.
-115-
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See the Demographic and Economic Statistics table on page 121 for personal income and population data.
-116-
Table 9
Percentage of
CITY OF SHOREWOOD, MINNESOTA
Per
Income
Capita
STATISTICAL SECTION (UNAUDITED)
$ 2,073
6.31
3,301
RATIO OF NET BONDED DEBT TO
3,199
4.14
ASSESSED VALUE AND NET BONDED DEBT PER CAPITA
3.19
1,876
LAST TEN FISCAL YEARS
1,785
2.86
1,615
Business -
1,664
2.26
1,368
type
1,253
Governmental Activities
Activities
General Lease
General
Total
Fiscal
Obligation Revenue
Capital Obligation
Primary
Year
Bonds Bonds
Leases Revenue Bonds Government
2006
$ 11,555,000
$ 69,594 $ 3,920,000 $
15,544,594
2007
21,090,000
- 3,665,000
24,755,000
2008
21,915,000
3,415,000
25,330,000
2009
13,295,000
3,165,000
16,460,000
2010
10,795,000
2,915,000
13,710,000
2011
10,170,000
2,675,000
12,845,000
2012
9,515,000
2,500,000
12,015,000
2013
8,840,000
3,540,000
12,380,000
2014
8,135,000
2,160,000
10,295,000
2015
7,400,000
1,900,000
9,300,000
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See the Demographic and Economic Statistics table on page 121 for personal income and population data.
-116-
Table 9
Percentage of
Personal
Per
Income
Capita
4.12 %
$ 2,073
6.31
3,301
5.87
3,199
4.14
2,076
3.19
1,876
2.96
1,785
2.86
1,615
2.83
1,664
2.26
1,368
1.99
1,253
CITY OF SHOREWOOD, MINNESOTA Table 10
STATISTICAL SECTION (UNAUDITED)
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
DECEMBER 31, 2015
Total Overlapping Debt $ 1,146,885,169 $ 959,543,696 2.92 % $ 27,972,993
Total Direct and Overlapping Debt $ 1,154,285,169 $ 966,943,696 3.66 % $ 35,372,993
Sources : Market value data used to estimate applicable percentages provided by the County Board of Equalization
and Assessment. Debt outstanding data provided by the county.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This
schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and
businesses of the City. This process recognized that, when considering the government's ability to issue and repay long -term
debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not
imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.
* The percentage of overlapping debt applicable is estimated using taxable market property values. Applicable
percentages were estimated by determining the portion of the county's taxable market value that is within the City's
boundaries and dividing it by the county's total taxable market value.
-117-
Gross
Amount
Bonded
of
Debt Used
Percentage
Net Debt
For Net Debt
Net
Applicable to
Applicable
Calculation
Debt
District
to District
Direct Debt
City of Shorewood
$ 7,400,000
$ 7,400,000
100.00 %
$ 7,400,000
Overlapping Debt
School District #276
$ 108,315,169
$ 91,870,579
18.77 %
$ 17,244,108
School District #277
27,720,000
27,006,458
2.31
623,849
Hennepin County
706,625,000
689,516,184
1.21
8,343,146
Henn Suburban Park District
63,510,000
49,596,497
1.65
818,342
Henn Regional RR Authority
34,695,000
34,389,498
1.65
567,427
Metropolitan Council
206,020,000
67,164,480
0.56
376,121
Total Overlapping Debt $ 1,146,885,169 $ 959,543,696 2.92 % $ 27,972,993
Total Direct and Overlapping Debt $ 1,154,285,169 $ 966,943,696 3.66 % $ 35,372,993
Sources : Market value data used to estimate applicable percentages provided by the County Board of Equalization
and Assessment. Debt outstanding data provided by the county.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This
schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and
businesses of the City. This process recognized that, when considering the government's ability to issue and repay long -term
debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not
imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.
* The percentage of overlapping debt applicable is estimated using taxable market property values. Applicable
percentages were estimated by determining the portion of the county's taxable market value that is within the City's
boundaries and dividing it by the county's total taxable market value.
-117-
CITY OF SHOREWOOD, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Fiscal Year
2006 2007 2008 2009
Debt limit $ 26,453,492 $ 29,602,408 $ 32,031,980 $ 33,116,392
Total net debt applicable to limit - - - -
Legal debt margin $ 26,453,492 $ 29,602,408 $ 32,031,980 $ 33,116,392
Total net debt applicable to the limit
as a percentage of debt limit $ - $ - $ - $ -
Note: Under state law, the City's outstanding general obligation debt should not exceed 3 percent of the market value of
taxable property. The percentage was changed to 3 percent for fiscal year 2008, prior to that, the percentage was 2 percent.
By law, the general obligation debt subject to the limitation may be offset by amounts set aside for the extinguishment
of those obligations.
-118-
Table 11
Fiscal Year
2010
2011
2012
2013
2014
2015
$ 32,731,358
$ 30,256,978
$ 43,080,114
$ 41,196,483
$ 40,556,194
$ 43,675,353
$ 32,731,358 $ 30,256,978 $ 43,080,114 $ 41,196,483 $ 40,556,194 $ 43,675,353
Legal Debt Margin Calculation for Fiscal Year 2015
Taxable market value $1,455,845,111
Debt limit (3% of market value) $ 43,675,353
Debt applicable to limit
General obligation bonds -
Less: amount available in
debt service funds -
Total net debt applicable to limit -
Legal debt margin $ 43,675,353
-119-
CITY OF SHOREWOOD, MINNESOTA Table 12
STATISTICAL SECTION (UNAUDITED)
PLEDGED - REVENUE COVERAGE
LAST TEN FISCAL YEARS
(1) Including interest and other income
(2) Excluding depreciation and interest on bonds
$ 1,040,693
Capital Leases
General Obligation Revenue Bonds
Revenue from
2007
Fiscal
(1)
Debt Service
Net
Taxes
- Principal <- > Interest Coverage
2006
Fiscal
Gross
(2)
Revenue
Debt Service
2008
Year
Revenue
Expenses
Available
Principal
Interest
Coverage
2006
$ 1,264,892
$ 223,243
$ 1,041,649
$ 275,000
$ 79,456
2.94 %
2007
765,717
259,056
506,661
255,000
81,165
1.51
2008
857,890
278,164
579,726
250,000
172,050
1.37
2009
821,778
250,995
570,783
250,000
142,589
1.45
2010
700,678
238,780
461,898
250,000
125,407
1.23
2011
718,561
299,962
418,599
240,000
116,728
1.17
2012
809,746
313,620
496,126
175,000
100,668
1.80
2013
595,599
300,232
295,367
185,000
75,630
1.13
2014
542,606
401,476
141,130
220,000
19,708
0.59
2015
581,484
412,646
168,838
260,000
18,798
0.61
(1) Including interest and other income
(2) Excluding depreciation and interest on bonds
Lease Revenue Bonds
Revenue from
Fiscal Lease Debt Service
Year Payments Principal Interest Coverage
2006
$ 1,040,693
Capital Leases
$ 589,056
Revenue from
2007
Fiscal
Property
Debt Service
Year
Taxes
- Principal <- > Interest Coverage
2006
$ 37,544
$ 31,728 $ 5,816 1.00 %
2007
73;406
69,594 3,812 1.00
2008
0.81
- - -
2009
555,000
- -
2010
-
- - -
2011
-
- - -
2012
-
- - -
2013
-
- - -
2014
-
- - -
2015
-
- - -
Lease Revenue Bonds
Revenue from
Fiscal Lease Debt Service
Year Payments Principal Interest Coverage
2006
$ 1,040,693
$ 455,000
$ 589,056
1.00 %
2007
1,034,751
465,000
941,222
0.74
2008
1,037,241
485,000
970,065
0.71
2009
992,835
495,000
737,863
0.81
2010
982,037
555,000
457,840
0.97
2011
902,003
575,000
393,357
0.93
2012
978,744
605,000
372,230
1.00
2013
972,513
625,000
335,513
1.01
2014
969,650
650,000
335,513
0.98
2015
958,569
680,000
284,419
0.99
-120-
CITY OF SHOREWOOD, MINNESOTA Table 13
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Data Sources:
(1) Metropolitan Council
(2) Bureau of Economic Analysis
(3) US Census Bureau
(4) US Census Bureau 2000
(5) Minnesota Department of Employment and Economic Development Hennepin County
Note: Population, median age, and education level information are based on surveys, conducted during the last quarter of the
calendar year. Personal income information is a total for the year. Unemployment rate information is an adjusted yearly average.
School enrollment is based on the census at the start of the school year.
-121-
Percent of
Population
Total
Per Capita
Which Has a
Fiscal
Personal
Personal
Median
Bachelor's or Post
Unemployment
Year
Population (1)
Income (2)
Income (2)
Age (3)
Graduate Degree (4)
Rate (5)
2006
7,499
$ 377,246,826
$ 49,566
38.7
3.3 %
2007
7,611
392,414,022
49,566
38.7
4.7
2008
7,917
431,535,825
54,425
39.0
7.3
2009
7,929
397,683,475
54,425
39.0
7.4
2010
7,307
429,651,600
58,800
39.1
5.1
2011
7,307
433,743,520
59,360
44.2
51.1 %
5.7
2012
7,312
420,264,512
57,476
44.1
49.8
4.6
2013
7,438
438,083,324
58,898
43.6
56.4
3.8
2014
7,524
455,961,924
60,601
44.5
61.8
3.0
2015
7,425
466,700,130
61,295
43.7
63.1
3.1
Data Sources:
(1) Metropolitan Council
(2) Bureau of Economic Analysis
(3) US Census Bureau
(4) US Census Bureau 2000
(5) Minnesota Department of Employment and Economic Development Hennepin County
Note: Population, median age, and education level information are based on surveys, conducted during the last quarter of the
calendar year. Personal income information is a total for the year. Unemployment rate information is an adjusted yearly average.
School enrollment is based on the census at the start of the school year.
-121-
Source: Minnesota Department of Employment and Economic Development
* Includes part -time and temporary seasonal employees.
N/A - indicates not available
(1) All information for 2006 was not available. The table will be updated for future years.
-122-
CITY OF SHOREWOOD, MINNESOTA
Table 14
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO (1)
2015
2006
Percentage
Percentage
of Total City
of Total City
Employer
Employees
Rank Employment Employees
Rank
Employment
Minnewashta Elementary School
123
1 9.83 %
-
N/A %
Cub Foods
121
2 9.67
115
1
N/A
Xcel Energy
75
3 6.00
90
2
N/A
Beacon Bank
34
4 2.72
-
N/A
City of Shorewood
26 *
5 2.08
54
3
N/A
Park Nicollet Clinic
20 *
6 1.60
-
N/A
Minnetonka Country Club
-
-
50
4
N/A
Total
399
31.89 %
309
%
Total City Employment
1,251
N/A
Source: Minnesota Department of Employment and Economic Development
* Includes part -time and temporary seasonal employees.
N/A - indicates not available
(1) All information for 2006 was not available. The table will be updated for future years.
-122-
Source: City of Shorewood
-123-
CITY OF SHOREWOOD, MINNESOTA
Table 15
FULL -TIME EQUIVALENT
CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
Function
2007
2008 2009 2010 2011
2012
2013
2014
2015
General government
13
13 12 12 10
10
9
9
9
Public works
Engineering
-
- - - 1
1
-
-
-
Maintenance
6
6 6 6 5
5
6
6
6
Culture and recreation
Parks
5
5 5 5 3
3
2
2
2
Economic development
Water
1.5
1.5 1.5 1.5 1.5
1.5
1
1
1
Sewer
1.5
1.5 1.5 1.5 1.5
1.5
2
2
2
Municipal Liquor
2
- - - -
-
-
-
-
Total
29
27 26 26 22
22
20
20
20
Source: City of Shorewood
-123-
Source: City of Shorewood
Note: Indicators are not available for the general government function.
-124-
CITY OF SHOREWOOD, MINNESOTA
Table 16
OPERATING
INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Function
2007
2008 2009 2010
2011
2012
2013
2014
2015
Building/engineering
Permits issued
710
686 603 591
512
585
481
792
684
Public works
Street sweeping (hours)
1,614
1,500 1,550 1,400
1,600
1,600
1,400
1,400
1,400
Snowplowing (hours)
1,394
1,508 765 1,024
895
616
1,403
833
530
Equipment repair (hours)
2,080
2,080 2,080 1,280
1,591
1,725
1,716
1,542
1,551
Water
New connections
22
13 11 1
2
3
9
4
Water mains breaks
7
3 3 5
6
7
3
7
6
Average daily consumption (thousands of gallons)
482,000
482,000 467,600 467,600
465,300
465,300
465,300
465,300
465,300
Sewer
Average daily treatment flow (thousands of gallons)
1,000,000
1,000,000 1,000,000 1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
Source: City of Shorewood
Note: Indicators are not available for the general government function.
-124-
CITY OF SHOREWOOD, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Table 17
Function
2007
2008
2009
2010
2011
2012
2013
2014
2015
Public works
Highways and streets
Streets (miles)
51
51
51
51
51
51
51
51
51
Streetlights
194
194
194
194
194
194
194
194
194
Traffic signals
5
5
5
5
5
5
5
5
5
Culture and recreation
Parks division
Parks
7
7
7
7
7
7
7
7
7
Parks acreage
102
102
102
102
102
102
102
102
102
Baseball diamonds
5
5
5
5
5
5
5
5
5
Basketball courts
I
1
1
1
1
1
1
1
1
Bike trails (miles)
2.45
2.45
2.45
2.45
2.45
2.45
4.00
4.00
5.80
Hockey rinks /outdoor
3
3
3
3
3
3
3
3
3
Softball diamonds
1
3
3
3
3
3
3
3
3
Swimming areas
1
1
l
1
1'
1
1
1
1
Tennis courts
5
5
5
S
5
5
5
5
5
Volleyball courts
2
2
2"
2
2'
2
2
2
2
Utilities
Water
Miles of water main
28
28
28
28
28
28
28
28
28
Consumers
1,297
1,310
1,321
1,322
1,324
1,327
1,336
1,336
1,340
Maximum daily capacity (gallons)
919,000
919,000
919,000
919,000
919,000
919,000
919,000
919,000
919,000
Sewer
Miles of sanitary sewer
60
60
60
60
60
60
60
60
60
Lift stations
14
14
14
14
14
14
14
14
14
Maximum daily treatment capacity (gallons)
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
Storm sewer
Miles of storm sewer
12
12
12
12
12
12
12
12
12
Source: City of Shorewood
Note: No capital asset indicators are available for the general government function.
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