2018 FINAL Comprehensive Annual Financial Report
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2018
GREG LERUD, CITY ADMINISTRATOR
REPORT PREPARED BY
SHOREWOOD’S FINANCE DEPARTMENT
MEMBER OF GOVERNMENT FINANCE OFFICERS ASSOCIATION
OF THE UNITED STATES AND CANADA
City of Shorewood, Minnesota
Comprehensive Annual Financial Report
Table of Contents
For the Year Ended December 31, 2018
Exhibit Page No.
Introductory Section
Elected and Appointed Officials8
Organization Chart9
Letter of Transmittal11
Certification of Achievement for Excellence in Financial Reporting16
Financial Section
Independent Auditor’s Report19
Management’s Discussion and Analysis23
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position1 37
Statement of Activities2 38
Fund Financial Statements
Governmental Funds
Balance Sheet3 42
Reconciliation of the Balance Sheet to the Statement of Net Position4 45
Statement of Revenues, Expenditures and Changes in Fund Balances5 46
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balancesto the Statement of Activities6 48
General Fund
Statement of Revenues, Expenditures and Changes in FundBalances - Budget and Actual 7 49
Proprietary Funds
Statement of Net Position8 50
Statement of Revenues, Expenses and Changes in Net Position9 51
Statement of Cash Flows1052
Fiduciary Fund
Statement of Net Position1154
Notes to the Financial Statements55
Required Supplementary Information
Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability -
General Employees Retirement Fund82
Schedule of Employer’s Public Employees Retirement Association Contributions -
General Employees Retirement Fund82
Notes to the Required Supplementary Information - General Employees Retirement Fund 83
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds
Combining Balance SheetA-1 88
Combining Statement of Revenues, Expenditures and Changes in Fund Balances A-2 89
Nonmajor Capital ProjectsFunds
Combining Balance SheetB-1 92
Combining Statement of Revenues, Expenditures and Changes in Fund BalancesB-2 93
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual C-1 94
Debt Service Funds
Combining Balance SheetD-1 98
Combining Schedule of Revenues, Expenditures and Changes in Fund BalancesD-2 99
Agency Fund
Combining Statementof Changes in Assets and LiabilitiesE-1 100
Summary Financial Report
Revenues and Expenditures for General Operations - Governmental FundsF-1 101
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City of Shorewood, Minnesota
Comprehensive Annual Financial Report
Table of Contents (Continued)
For the Year Ended December 31, 2018
Table Page No.
Statistical Section (Unaudited)
Net Positionby Component1 106
Changes in Net Position2 108
Fund Balances of Governmental Funds3 112
Changes in Fund Balances of Governmental Funds4 114
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property5 116
PropertyTax Capacity Rates - Direct and Overlapping Governments6 118
Principal Taxpayers7 119
Property Tax Levies and Collections8 120
Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita9 121
Computation of Direct and Overlapping Debt10 123
Legal Debt Margin Information11 124
Pledged-Revenue Coverage12 126
Demographic and Economic Statistics13 127
Principal Employers14 128
Full-time Equivalent City Government Employees by Function15 129
Operating Indicators by Function16 130
Capital Asset Statistics by Function17 131
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INTRODUCTORY SECTION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
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City of Shorewood, Minnesota
Elected and Appointed Officials
For the Year Ended December 31, 2018
ELECTED
NameTitleTerm Expires
Scott ZerbyMayor12/31/20
Patrick JohnsonCouncil Member12/31/20
Jennifer LabadieCouncil Member12/31/22
Debbie SiakelCouncil Member12/31/22
Kristine SundbergCouncil Member12/31/20
APPOINTED
NameTitle
Greg LerudCity Administrator
Joe RigdonFinance Director
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FINANCIAL SECTION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
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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 fundand the aggregate remaining fund information of the City of Shorewood,Minnesota(the City), as of and for the
year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s
basic financial statementsas listed in the table of contents.
Management’s Responsibilityfor 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 inthe United States of America. Those standards requirethat 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 riskassessments, 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, 2018, 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.
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Other Matters
Required Supplementary Information
Accountingprinciples generally acceptedintheUnited States of America require that the Management’s Discussion and
Analysis starting on page2and the Scheduleof Employer’sShare of the NetPensionLiability,the Schedule of
Employer’s Contributions,and the related notedisclosuresstartingon page8bepresented to supplement the basic
financial statements. Such information, although not apart of thebasic financial statements, is requiredbythe
GovernmentalAccounting Standards Board whoconsiders it to beanessential part of financial reporting for placing the
basic financial statements in anappropriate operational,economic, or historical context.We haveapplied certainlimited
procedures to the requiredsupplementary informationin accordancewithauditing standardsgenerally accepted in the
UnitedStates of America, which consistedof inquiries ofmanagement about themethods of preparing the information
and comparingtheinformation for consistencywith management’s responses toour inquiries, the basic financial
statements, and other knowledgewe obtained duringour auditof the basic financial statements.We donotexpress an
opinion orprovide anyassurance ontheinformation because the limited proceduresdo not provide uswith sufficient
evidence toexpressanopinion or provideany assurance.
OtherInformation
Our auditwas conducted for the purposeof forming opinionson the financial statements that collectively comprise the
City’s basic financial statements.The introductory section, combiningand individual fund financial statements and
schedules and statistical sectionare presented for purposes of additionalanalysisandare nota requiredpart of the
financial statements.
The combining andindividual fund financial statementsand schedulesarethe responsibility of managementandwere
derived fromand relatedirectly to the underlying accounting and other recordsused topreparethe basic financial
statements.Suchinformation has been subjected to the auditing procedures applied in the audit of thebasic financial
statementsand certainadditional procedures,including comparing and reconciling such information directly to the
underlying accounting andother recordsused to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures inaccordancewith auditing standards generally accepted in the
UnitedStates of America. In our opinion, the combining and individual fund financial statements and schedules are fairly
stated,inall material respects, in relation to the basic financial statements as awhole.
The introductory sectionand statistical section havenot been subjected totheauditing procedures appliedin the audit of
the basic financial statements and, accordingly,wedo notexpressan opinion orprovideany assurance onthem.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
April 15, 2019
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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, 2018.
Financial Highlights
The assets and deferred outflows of resources of the City exceeded its liabilitiesand deferred inflows of resources
at the close ofthe most recent fiscal year by $33,733,551 (net position). Of this amount, $10,159,739
(unrestricted net position) may be used to meet the City’s ongoing obligations to residents and creditors.
The City’s total net positionincreased$1,301,531,which is mainly due to capital contributions in the business
type activities.
As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances
of$6,490,745,a decreaseof $103,727in comparison with the prior year. This decreaseis primarily the result of
current and capital expendituresexceedingcurrent year resources. Approximately 50.0percent of the total
ending fund balance,$3,243,631, is unassigned and available for spending at the City’s discretion.
At the end of thecurrent fiscal year, unassignedfund balance for the General fund was $4,261,500, or 69.2
percent of total 2018expendituresand transfers out.The City has a policy to maintain a General fund working
capital balance of 60.0percentof expendituresand transfers.
The City’s total debt decreased$1,182,563, or 15.9percent during the current fiscal year.This was the result of
regularly scheduled principal payments onthegeneral obligation revenue bonds and lease revenue bonds.
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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 illustrateshow 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
Management's
Basic Required
Discussion and
Financial Supplementary
Analysis
StatementsInformation
Government-FundNotes to the
wide Financial FinancialFinancial
StatementsStatementsStatements
Summary
Detail
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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
Fund Financial Statements
Government-wide Governmental FundsProprietaryFunds
Statements
ScopeEntire City governmentThe activities of the CityActivities the City operates
(except fiduciary funds)that are not proprietary orsimilar to private
and the City’s component fiduciary, such as police, businesses, such as the
unitsfire and parkswater and sewer system
Required financial
Statement of Net Balance SheetStatementsof Net
statements
PositionPosition
Statement of
Statement of ActivitiesRevenues, Statements of
Expenditures, and Revenues, Expenses
Changes in Fund and Changes in Fund
Balances Net Position
Statements of Cash
Flows
Accounting basis and Accrual accounting and Modified accrual Accrual accounting and
measurement focuseconomic resources focusaccounting and current economic resources focus
financial resources focus
Type of asset/liability All assets and liabilities, Onlyassets expectedto All assets and liabilities,
informationboth financial and capital, be used up and liabilities both financial and capital,
and short-term and long-that come due during the and short-term and long-
termyear or soon thereafter; no term
capital assets included
Type of deferred Alldeferred Only deferred outflows of All deferred
outflows/inflows of outflows/inflows of resources expected to be outflows/inflows of
resources informationresources, regardless of used up and deferred resources, regardless of
when cash is received orinflows of resources that when cash is received or
paidcome due during the year paid
of son thereafter; no
capital assets included
Type of in flow/out flow All revenues and Revenues for which cash All revenues and
informationexpenses during year, is received during or soon expenses during the year,
regardless of when cash after the end of the year; regardless of when cash
is received or paidexpenditures when goods isreceived or paid
or services have been
received and payment is
due during the year or
soon thereafter
Government-wide Financial Statements.
The government-wide financial statementsare 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 positionpresents information on all of the City’s assetsand deferred outflows of resources,and
liabilitiesand deferred inflows of resources, with the difference reported as net position.Over time, increases or
decreases in net positionmay serve as a useful indicator of whether the financial position of the City is improving or
deteriorating.
The statement of activitiespresents information showing how the City’s net positionchanged during the most recent fiscal
year. All changes in net positionare reported as soon as the underlying event giving rise to the change occurs, regardless
of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
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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 includegeneral government, public safety, public works, culture and recreation, and interest on long-term debt.
The business-type activities of the City includewater, sewer, stormwater management utility, and recycling.
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 starton page 37 of this report.
Fund Financial Statements.
Afundis a grouping of related accounts that is used to maintain control over resources that
have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.All of the funds of the City can
be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
Governmental Funds.Governmental fundsare used to account for essentially the same functions reported as
governmental activitiesin the government-wide financial statements.However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as
wellas on balances of spendable resourcesavailableat 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 fundswith similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better understandthe long-term impact ofthe
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 fundsandgovernmental activities.
The City maintains 13individual 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,Street Reconstruction funds, and the TIF #2 Oppidan Senior
Housing fund which areconsidered to be major funds. Data from the other sixgovernmental funds are combined into a
single, aggregated presentation.Individual fund data for each of these nonmajor governmental funds is provided in the
form of combining statements or scheduleselsewhere in this report.
The City adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been
provided for the General fund to demonstrate compliance with this budget.
The basic governmental fund financial statements starton page 42 of this report.
Proprietary Funds.The City maintains one type of proprietary fund. Enterprise fundsare used to report the same
functions presented as business-type activitiesin 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 theenterprise funds. The Water,
Sewer, and Stormwater Management Utility funds are considered to be major funds of the City, while the Recyclingfund
is a nonmajor fund.
The basic proprietary fund financial statements starton page 50 of this report.
FiduciaryFunds.Fiduciary funds are used to account for resources held for the benefit of parties outside the City.
Fiduciary funds are notreflected 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 54 of this report.
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Notes to theFinancial Statements.
The notes provide additional information that is essential to a full understanding of
the data provided in the government-wideand fund financial statements.The notes to the financial statements starton
page 55 of this report.
Required Supplementary Information.
Inaddition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the City’s progress in funding its obligation to
provide pension benefits to its employees. Required supplementary information can be found starting on page 82 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. Combiningand individual fund financial statements and
schedules starts on page 88of this report.
Government-wide Financial Analysis
As noted earlier, net positionmay serve over time as a useful indicator of a government’s financial position. In the case of
the City, assetsand deferred inflows of resourcesexceeded liabilitiesand deferred inflows of resourcesby $33,733,551at
the close of the most recent fiscal year.
By far the largest portion of the City’s net position (69.9percent) reflects its investment in capital assets (e.g., land,
buildings, machinery and equipment), less any related debt used to acquire those assets that is still outstanding.The City
uses these capital assets to provide services to citizens; consequently, these assets are notavailable for future spending.
Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.
City of Shorewood’s Summary of Net Position
Governmental ActivitiesBusiness-type Activities
IncreaseIncrease
20182017(Decrease)20182017(Decrease)
Assets
Cash and
temporary investments$ 7,440,717$ 8,065,843$ (625,126)$ 3,056,323$ 4,606,115$ (1,549,792)
Cash with fiscal agent 8,448 8,238 210 277,176 278,189 (1,013)
Receivables 4,175,937 5,405,695 (1,229,758) 1,327,171 1,451,311 (124,140)
Internal balances (997,018) (1,015,044) 18,026 997,018 1,015,044 (18,026)
Prepaids 157,914 132,477 25,437 - - -
Land held for resale 150,068 150,068 - - - -
Capital assets 13,641,709 12,870,886 770,823 11,842,410 9,471,693 2,370,717
Total Assets 24,577,775 25,618,163 (1,040,388) 17,500,098 16,822,352 677,746
Deferred Outflows of Resources 157,605 238,734 (81,129) 34,502 65,669 (31,167)
Liabilities
Noncurrent liabilities 6,262,962 7,240,371 (977,409) 1,301,261 1,648,195 (346,934)
Other liabilities 488,739 1,023,863 (535,124) 198,403 68,404 129,999
Total Liabilities 6,751,701 8,264,234 (1,512,533) 1,499,664 1,716,599 (216,935)
Deferred Inflows of Resources 233,866 260,427 (26,561) 51,198 71,638 (20,440)
Net Position
Net investment in capital assets 12,826,709 11,985,886 840,823 10,742,410 8,101,693 2,640,717
Restricted 4,693 - 4,693 - - -
Unrestricted 4,918,411 5,346,350 (427,939) 5,241,328 6,998,091 (1,756,763)
Total Net Position$17,749,813$17,332,236$ 417,577$15,983,738$15,099,784$ 883,954
The balance of unrestricted net positionis$10,159,739. This may be used to meet the City’s ongoing obligations to
citizens and creditors.At the end of the current fiscal year, the City is able to report positive balances in both categories of
net position, both for the City as a whole, as well as for its separate governmental and business-type activities.
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City of Shorewood’s ChangesinNet Position
Governmental Activities
. Governmental activities increasedthe City’s net position by $417,577. Key elements of this
increaseare as follows:
There was an overall increase of $661,029in revenues, predominately in charges for services andnewfranchise
taxes. Total expenses decreased from the prior year mainly due to a $558,516 drop in economic development
expensesoffset by an increase in public works expensesof $480,324.
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Expenses and Program Revenues - Governmental Activities
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
GeneralPublic safetyPublic worksCulture andEconomicInterest on long-
governmentrecreationdevelopmentterm debt
ExpensesProgram revenues
Revenues by Source - Governmental Activities
Charges for services
Unrestricted
Grants and
14.1%
investment earnings
contributions not
0.1%
Operating grants and
restricted to specific
contributions
programs
1.4%
1.2%
Capital grants and
contributions
12.3%
Property taxes
70.9%
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Business-type Activities
. Business-type activities increasedthe City’s net position by $883,954. Key elements of this
increaseare as follows:
Therewas an overall decreaseof $94,467in revenues, and an overall increasein expenses of $92,130, resulting in a
$186,597decreasein net position before transfers. Capital transfersin amounted to$1,945,177, and transfers out were
$1,134,978 for 2018.
Expenses and Program Revenues - Business-type Activities
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
WaterSewerRecyclingStormwater management
utility
ExpensesProgram revenues
Revenues by Source - Business-type Activities
Capital grants and
Operating grants and
contributions
Unrestricted
contributions
5.4%
investment earnings
1.1%
4.1%
Charges for services
89.4%
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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 fundsis to provide information on near-term inflows, outflows
and balances of spendableresources. Such information is useful in assessing the City’s financing requirements. In
particular, unassignedfund balancemay 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
$6,490,745,a decreaseof $103,727in comparison with the prior year. Approximately 50.0percent of this total amount,
$3,243,631constitutes unassignedfund balance, which is available for spending at the City’s discretion.The remaining
fund balance is made up of the following: 1) Nonspendable ($157,914), 2) Restricted ($462,758), 3) Committed ($15,163)
and4) Assigned ($2,611,279).
The General fund is the chiefoperating fund of the City. At the end of the current year, the fund balance of the General
fund was $4,419,414.As a measure of the General fund’s liquidity, it may be useful to compare both unassignedfund
balance and total fund balance to total fund expendituresand transfers out.Unassignedfund balance represents 69.2
percent of same year fund expendituresand transfers out, whereas, total fund balance represents 71.8percent.
The fund balance of the City’s General fund increased$257,365during the current fiscal year.The increaseis mainly due
to positive budget variations in both revenues and expenditures.
The Debt Service fund has a total fund balance of$462,758, all of which is restrictedfor the payment of debt service. The
increasein fund balance of $400,760was in line with the City’s debt service financing plan, and mainly due to an early
payment of lease revenue.
The Street Reconstruction fund has a fund balance of $1,329,034. The fund balance decreasedby $1,089,744during the
current fiscal year mainly due to planned street improvement expendituresin excess of current year resources.
The TIF #2 Oppidan Senior Housing fund has an ending fund balance deficit of$1,017,869.The fund was created in2016
along with the City’s tax increment district to account for resources and payments related to the senior housing project.
The deficit is expected to be paid with future tax increment revenues.
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 positionof the enterprise funds at the end of the year amounted
to$5,241,328.The total increase innet positionfor the funds was $883,954. Other factors concerning the finances of
thesefunds 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 during the year. Revenues were overbudget by $354,275, and
expenditures were underbudget by $96,037.The actual amounts were different from the final budget mainly due to the
following:
The largest revenue variance was in licenses and permits, which were over budget by $320,532due to building
permits received in excess of expectations.
The largest expenditure variancewas in public works, which was $208,966under budget mainly due to less than
expected general maintenance expenditures.
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Capital Asset and Debt Administration
Capital Assets
.The City’s investment in capital assets for its governmental and business-type activities as of
December31,2018, amounts to $25,484,119(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:
2018 Dump Truck
Badger Park Playground Equipment
Improvements - SCEC
Expenses and completion of 2017 Street Reclamation project
Expenses and completion of 2016 Water Main Extension
Expenses and completion of Badger Park Phase 2
Expenses for the Riviera Lane/Mann Lane/Shorewood Lane improvements
Boulder Bridge Well improvements
Purchase of Land for future use
Additionalinformation onthe City’s capitalassets canbe found in Note 3Bstartingon page6of this report.
City of Shorewood’s Capital Assets
(Netof Depreciation)
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Long-term Debt
. At the end of the current fiscal year, the City had total bonded debt outstanding of $6,250,606. While
all of the City’s bonds have dedicated revenue streamspledged to repayment, the general obligation revenue bondsare
all backed by the full faith and credit of the City.
City of Shorewood’s Outstanding Debt
Governmental ActivitiesBusiness-type Activities
IncreaseIncrease
20182017(Decrease)20182017(Decrease)
General Obligation
Revenue Bonds$-$-$-$1,100,000$1,370,000$(270,000)
Lease Revenue Bonds5,090,0005,990,000(900,000)
- - -
Unamortized Bond Premiums60,60673,169(12,563)
- - -
Total$5,150,606$6,063,169$(912,563)$1,100,000$1,370,000$(270,000)
Minnesotastatutes limit the amount of net general obligationdebta City mayissue to3 percent of the market value of
taxable propertywithin theCity. Net debtis debt payablesolely fromad valorem taxes.Additional information ontheCity’s
long-term debt can be found in Note 3D startingon page 7of this report.
Economic Factors and Next Year’sBudgetsand Rates
Property valuations within the City increased 6.1% from 2017 to 2018, and increased 4.2% from 2018 to 2019.
The unemployment rate for Hennepin County is currently (January 2019) 3.1%. This compares favorably to the
State of Minnesota’s average unemployment rate of 3.0% and the national average unemployment rate of 4.0%.
All of these factors were considered in preparing the City’s budget for the 2019 fiscal year. During the 2018 fiscal year, the
fund balance in the General Fund increasedby $257,365. For 2019, the City budgeted a $46,416 deficit using fund
balance to balance the budget. This planned use of fund balance was in accordance with the fund balance policy adopted
by the City Council. Total property taxes levied for 2019 increased by 3.0% from property taxes levied for 2018. The City’s
tax capacity rate decreased from 28.64% for 2018 property taxes to 28.54% for 2019 property taxes.
Requests for Information
This financial report is designedto 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 theCity of Shorewood, 5755 Country Club Road, Shorewood, Minnesota 55331.
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34
GOVERNMENT-WIDEFINANCIAL STATEMENTS
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
35
36
City of Shorewood, Minnesota Exhibit 1
Statement of Net Position
December 31, 2018
GovernmentalBusiness-type
ActivitiesActivitiesTotal
Assets
Cash and temporary investments$7,440,717$3,056,323$10,497,040
Cash with fiscal agent8,448277,176285,624
Receivables
Accrued interest47,90622,82270,728
Taxes86,197-86,197
Accounts89,161486,148575,309
Special assessments10,962192,380203,342
Lease3,915,000625,8214,540,821
Due from other governments26,711-26,711
Internal balances(997,018)997,018-
Prepaid items157,914-157,914
Land held for resale150,068-150,068
Capital assets
Land and construction in progress2,002,0112,185,8014,187,812
Depreciable assets (net of accumulated depreciation)11,639,6989,656,60921,296,307
Total Assets24,577,77517,500,09842,077,873
Deferred Outflows of Resources
Deferred pension resources157,60534,502192,107
Liabilities
Accounts and contracts payable408,232139,933548,165
Accrued salaries payable35,0417,76142,802
Due to other governments8,00744,02852,035
Accrued interest payable37,4596,68144,140
Noncurrent liabilities
Due within one year1,050,453270,0001,320,453
Due in more than one year5,212,5091,031,2616,243,770
Total Liabilities6,751,7011,499,6648,251,365
Deferred Inflows of Resources
Deferred pension resources233,86651,198285,064
Net Position
Net investment in capital assets12,826,70910,742,41023,569,119
Restricted for debt service4,693-4,693
Unrestricted 4,918,4115,241,32810,159,739
Total Net Position$17,749,813$15,983,738$33,733,551
The notes to the financial statements are an integral part of this statement.
37
City of Shorewood, Minnesota
Statement of Activities
For the Year Ended December 31, 2018
Program Revenues
OperatingCapital Grants
Charges forGrants andand
Functions/Programs
ExpensesServicesContributionsContributions
Governmental Activities
General government$1,416,928$214,354$-$-
Public safety2,321,660759,9638,441-
Public works2,033,598-97,07349,559
Culture and recreation552,147102,856545880,984
Economic development92,428---
Interest on long-term debt107,408---
Total Governmental Activities6,524,1691,077,173106,059930,543
Business-type Activities
Water743,832464,45074495,995
Sewer1,063,771933,74857421,568
Stormwater management utility148,975381,997161-
Recycling136,740156,79722,400-
Total Business-type Activities2,093,3181,936,99223,879117,563
Total$8,617,487$3,014,165$129,938$1,048,106
General Revenues
Taxes
Property taxes, levied for general purposes
Franchise taxes
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 and Transfers
Change in Net Position
Net Position, January 1
Net Position, December 31
The notes to the financial statements are an integral part of this statement.
38
Exhibit 2
Net (Expense) Revenue and
Changes in Net Position
GovernmentalBusiness-type
ActivitiesActivitiesTotal
$(1,202,574)$-$(1,202,574)
(1,553,256)-(1,553,256)
(1,886,966)-(1,886,966)
432,238-432,238
(92,428)-(92,428)
(107,408)-(107,408)
(4,410,394)-(4,410,394)
-(182,643)(182,643)
-(107,881)(107,881)
-233,183233,183
-42,45742,457
-(14,884)(14,884)
(4,410,394)(14,884)(4,425,278)
5,370,570-5,370,570
154,279-154,279
6,542-6,542
87,27988,639175,918
19,500-19,500
(1,945,177)1,945,177-
1,134,978(1,134,978)-
4,827,971898,8385,726,809
417,577883,9541,301,531
17,332,23615,099,78432,432,020
$17,749,813$15,983,738$33,733,551
The notes to the financial statements are an integral part of this statement.
39
40
FUNDFINANCIAL STATEMENTS
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
41
City of Shorewood, Minnesota
Balance Sheet
Governmental Funds
December 31, 2018
DebtStreet
GeneralServiceReconstruction
Assets
Cash and temporary investments$4,265,784$454,310$1,482,718
Cash with fiscal agent-8,448-
Receivables
Accrued interest9,854-10,760
Taxes86,197--
Accounts17,552-71,041
Special assessments10,962--
Lease-3,915,000-
Due from other governments26,711--
Due from other funds20,475--
Prepaid items157,914--
Land held for resale---
Total Assets$4,595,449$4,377,758$1,564,519
Liabilities
Accounts and contracts payable$75,257$-$235,485
Accrued salaries payable34,267--
Due to other governments7,469--
Due to other funds---
Advances from other funds---
Total Liabilities116,993-235,485
Deferred Inflows of Resources
Unavailable revenue - property taxes48,132--
Unavailable revenue - assessments10,910--
Unavailable revenue - lease receivable-3,915,000-
Total Deferred Inflows of Resources59,0423,915,000-
Fund Balances
Nonspendable prepaid items157,914--
Restricted for debt service-462,758-
Committed to community center operations---
Assigned to
Street reconstruction--1,329,034
Capital outlay---
Unassigned4,261,500--
Total Fund Balances4,419,414462,7581,329,034
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances$4,595,449$4,377,758$1,564,519
The notes to the financial statements are an integral part of this statement.
42
Exhibit 3
TIF 2 OtherTotal
OppidanGovernmentalGovernmental
Senior HousingFundsFunds
$-$1,237,905$7,440,717
--8,448
1627,13127,907
--86,197
-56889,161
--10,962
--3,915,000
--26,711
--20,475
--157,914
-150,068150,068
$162$1,395,672$11,933,560
$-$97,490$408,232
-77435,041
538-8,007
2,449-2,449
1,015,044-1,015,044
1,018,03198,2641,468,773
--48,132
--10,910
--3,915,000
--3,974,042
--157,914
--462,758
-15,16315,163
--1,329,034
-1,282,245
1,282,245
(1,017,869)-3,243,631
(1,017,869)1,297,4086,490,745
$162$1,395,672$11,933,560
The notes to the financial statements are an integral part of this statement.
43
44
City of Shorewood, Minnesota Exhibit 4
Reconciliation of the Balance Sheet
to the Statement of Net Position
Governmental Funds
December 31, 2018
Amounts reported for the governmental activities in the statement of net position are different because
Total Fund Balances - Governmental$6,490,745
Capital assets used in governmental activities are not financial
resources and therefore are not reported as assets in governmental funds.
Cost of capital assets45,388,141
Less: accumulated depreciation(31,746,432)
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(5,090,000)
Unamortized premium on bonds(60,606)
Compensated absences payable(193,004)
Pension liability(919,352)
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 receivable19,999
Taxes receivable48,132
Special assessments receivable10,910
Leases receivable3,915,000
Governmental funds do not report long-term amounts to pensions
Deferred outflows of pension resources157,605
Deferred inflows of pension resources(233,866)
Governmental funds do not report a liability for accrued interest until
due and payable.(37,459)
Total Net Position - Governmental Activities$17,749,813
The notes to the financial statements are an integral part of this statement.
45
City of Shorewood, Minnesota
Statement of Revenues, Expenditures and
Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2018
DebtStreet
GeneralServiceReconstruction
Revenues
Taxes$5,342,946$-$154,279
Licenses and permits565,687--
Intergovernmental 125,140--
Charges for services55,405--
Fines and forfeitures67,734--
Special assessments3,846--
Interest on investments32,88121032,778
Miscellaneous195,1711,333,700-
Total Revenues6,388,8101,333,910187,057
Expenditures
Current
General government1,362,881--
Public safety1,837,273--
Public works1,014,261-3,930
Culture and recreation274,533--
Capital outlay
General government---
Public safety484,752--
Public works--3,167,849
Culture and recreation---
Economic development---
Debt service
Principal-900,000-
Interest and service charges-127,045-
Total Expenditures4,973,7001,027,0453,171,779
Excess (Deficiency) of Revenues
Over (Under) Expenditures1,415,110306,865(2,984,722)
Other Financing Sources (Uses)
Transfers in25,00093,8951,894,978
Sale of capital assets---
Transfers out(1,182,745)--
Total Other Financing Sources (Uses)(1,157,745)93,8951,894,978
Net Change in Fund Balances257,365400,760(1,089,744)
Fund Balances, January 14,162,04961,9982,418,778
Fund Balances, December 31$4,419,414$462,758$1,329,034
The notes to the financial statements are an integral part of this statement.
46
Exhibit 5
TIF 2 OtherTotal
OppidanGovernmentalGovernmental
Senior HousingFundsFunds
$-$-$5,497,225
--565,687
-760,000885,140
-161,446216,851
--67,734
--3,846
10821,30287,279
-52,2341,581,105
108994,9828,904,867
--1,362,881
--1,837,273
--1,018,191
-98,631373,164
-38,98638,986
--484,752
-149,3523,317,201
-611,151611,151
92,428-92,428
--900,000
--127,045
92,428898,12010,163,072
(92,320)96,862(1,258,205)
-303,8502,317,723
-19,50019,500
--(1,182,745)
-323,3501,154,478
(92,320)420,212
(103,727)
(925,549)877,1966,594,472
$(1,017,869)$1,297,408$6,490,745
The notes to the financial statements are an integral part of this statement.
47
City of Shorewood, Minnesota Exhibit 6
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances to the Statement of Activities
Governmental Funds
For the Year Ended December 31, 2018
Amounts reported for governmental activities in the statement of activities are different because
Total Net Change in Fund Balances - Governmental Funds$(103,727)
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 outlays3,701,809
Depreciation expense(985,809)
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 repayments900,000
Amortization of bond premium12,563
Interest on long-term debt in the statement of activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities, however
interest expense is recognized as the interest accrues, regardless of when it is due.7,074
Long-term pension activity is not reported in governmental funds.
Pension expense30,428
Pension revenue7,012
Capital assets constructed in capital projects funds but intended for enterprise fund use
are transferred in the government-wide financial statements.(1,945,177)
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.
Taxes27,624
Special assessments 5,485
Leases(1,212,543)
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(27,162)
Change in Net Position - Governmental Activities$417,577
The notes to the financial statements are an integral part of this statement.
48
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, 2018
Budgeted Amounts
Actual Variance with
OriginalFinalAmountsFinal Budget
Revenues
Taxes$5,369,245$5,369,245$5,342,946$(26,299)
Licenses and permits245,155245,155565,687320,532
Intergovernmental91,25091,250125,14033,890
Charges for services50,88550,88555,4054,520
Fines and forfeitures60,00060,00067,7347,734
Special assessments--3,8463,846
Interest on investments35,00035,00032,881(2,119)
Miscellaneous 183,000183,000195,17112,171
Total Revenues6,034,5356,034,5356,388,810354,275
Expenditures
Current
General government1,363,5431,363,5431,362,881662
Public safety1,735,3941,735,3941,837,273(101,879)
Public works1,223,2271,223,2271,014,261208,966
Culture and recreation262,821262,821274,533(11,712)
Capital outlay
Public safety484,752484,752484,752-
Total Expenditures5,069,7375,069,7374,973,70096,037
Excess of Revenues
Over Expenditures964,798964,7981,415,110
450,312
Other Financing Sources (Uses)
Transfers in25,00025,00025,000-
Transfers out(1,163,895)(1,163,895)(1,182,745)(18,850)
Total Other Financing
Sources (Uses)(1,138,895)(1,138,895)(1,157,745)(18,850)
Net Change in Fund Balances(174,097)(174,097)257,365431,462
Fund Balances, January 14,162,0494,162,0494,162,049-
Fund Balances, December 31$3,987,952$3,987,952$4,419,414$431,462
The notes to the financial statements are an integral part of this statement.
49
50
51
52
53
City of Shorewood, Minnesota Exhibit 11
Statement of Net Position
Fiduciary Fund
December 31, 2018
Agency
Assets
Cash and temporary investments$542,486
Liabilities
Accounts payable$928
Escrow deposits payable541,558
Total Liabilities$542,486
The notes to the financial statements are an integral part of this statement.
54
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
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 469.090through
469.108 to carry out economic and industrial development and redevelopment consistent within the City in accordance
withpolicies established by the City Council.The EDA Boardis 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, andthe EDA creates both financial
benefits and burdens for the primary government, 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 positionand the statement of activities) report
information on all of the nonfiduciary 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 isoffset
by program revenues.Direct expenses are those that are clearly identifiable with a specific function or segment. Amounts
reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from
goods, services, or privileges provided by a given function or 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 fundsand fiduciary funds.Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements.
55
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
C.Measurement Focus, Basis ofAccounting and Financial Statement Presentation
The government-widefinancial 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 theprovider have beenmet.
Governmental fund financial statements are reported using the current financial 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 availablewhen 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 thecurrent 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 resultingfrom exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accrual basis when the exchange takes place.On a modified accrual basis, revenue is recorded in the
year in which the resources are measurable 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.
Unearnedrevenue arises when assets are recognized before revenue recognition criteriahave been satisfied.Grants and
entitlements received before eligibility requirements are met are also recorded as unearnedrevenue.
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 Cityreports the following major governmental funds:
The General fund is the City’s primary operating fund.It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
The Debt Service fundaccounts for the resources accumulated and payments made for principal and interest on long-
term general obligation debt of governmental funds.
The Street Reconstruction fundaccounts for the resources accumulated and payments made for the periodic
reconstruction of City streets and roadways.
The TIF #2 Oppidan Senior Housing fundaccounts for the resources accumulated and payments made for the senior
housing project.
56
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
The City reports the following major proprietary funds:
The Water fund accounts for the activities of the City’s water distribution system.
The Sewer fund accounts for the activities of the City’s sewage collection system.
The Stormwater Management Utility fundaccounts for the activities of the City’s stormwater collection system.
Additionally, the City reports the following fund types:
The fiduciary fundsaccount for assets held by theCityin a trustee capacity or as an agent on behalf of others.
The agency fundis custodial in nature and does not present results of operations or have a measurement focus.
Agency funds areaccounted for using the accrual basis of accounting.This fund is used to account for assets that the
Cityholds 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 tothis 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 variousfunctions
concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperatingitems. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund’s principal ongoing operations. The principal operating revenues of the 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 ofsales and services, administrative expenses, and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses.
57
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
D.Assets, Deferred Outflows ofResources, Liabilities, Deferred Inflows of ResourcesandNet Position/Fund
Balances
Deposits andInvestments
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.Theproprietary 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 Citymay 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 national bond rating 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
ReserveBank 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 ratingcategories by a nationally recognized rating agency.
The City’s investment policyhas further restricted theCity’s investments to items 1, 2,3, and7above.Earnings on
investments are allocated to the individual fundsbased upon the average cash and investment balances.
The City categorizes its fair value measurements within the fair value hierarchy establishedbygenerally accepted
accountingprinciples. The hierarchy isbasedon thevaluationinputs used to measure the fairvalue of theasset. Level 1
inputs are quotedprices inactive markets for identicalassets; Level2inputs are significant otherobservableinputs;Level
3 inputs are significantunobservable inputs. The City’s recurring fair value measurements are listed in detailon page6
andare valued using quoted market prices (Level1inputs).
58
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
The City has the following recurring fair value measurements as of December 31, 2018:
US Government Agency Securitiesof $979,533are valued using quoted market prices (Level 1 inputs)
Municipal Bonds of$3,119,649are valued using amatrixpricing model (Level 2 inputs)
Brokered Certificates of Deposit of $4,139,830are valued usinga matrix pricing model (Level 2 inputs)
The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the
League of Minnesota Cities andis an external investment pool not registered with the Securities Exchange Commission
(SEC) that follows the regulatory rules of the SEC. In accordance with GASB Statement No. 79, the City’s investment in
this pool is valued at amortized cost, which approximatesfair value. There are no restrictions or limitations on
withdrawalsfrom the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar
days. Withdrawals prior to the 14-day restriction period will be subject to a penalty equal to seven days interest on the
amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series
withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any
charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be
obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402-1240
Investment Policy
The City’s investment policy incorporates Minnesota statutes as described above which reduces the City’s exposure to
credit, custodial credit and interest rate risks. Specific risk information for the City is as follows:
Credit Risk. Credit risk is the risk that anissuer or other counterparty to an investment willnot fulfillits obligations.
Ratings areprovidedbyvarious credit rating agenciesandwhereapplicable, indicate associated credit risk.
Minnesota statutes and the City’s investment policylimit the City’s investments to the list on pageof the notes.
Custodial Credit Risk. The custodial credit risk for investments is the risk that, inthe event of the failure of the
counterpartyto a transaction,agovernmentwillnotbeable to recover thevalue of investment or collateral
securities thatare in the possession ofan outside party. In accordancewith the City’s investment policy, the
investment officer shall structure all investments, depositsand repurchaseagreements so that the custodialrisk is
categorized aseither insured or registered, or securities held by the City orits agentin the City’s name or
uninsured and unregistered, with securities held by the counterparty’s trust department or agentintheCity’sname.
All investments areplaced in safekeepingat financial institutions.
Concentration of Credit Risk.Concentration of credit risk is the risk of loss attributed to the magnitude of a
government’s investment ina single issuer. In accordancewith the City’s investment policy,theCity diversifies its
investment portfolio toeliminatethe risk of loss resulting from over-concentration of assets in a specific maturity, a
specific issuer ora specific class of securities.As of December 31,2018the Cityhadinvested 5.0percent ormore
of its total investment portfolio in the followingissuer: New Hampshire StateGO(6.34percent), Thief RiverFalls
MN School(5.33percent),FNMA(5.21percent),FNMA Cap Zero (5.21 percent).
Interest Rate Risk.Interestrate risk is the risk that changes in interest rateswill adverselyaffect the fair value ofan
investment.In accordancewith its investment policyand also detailed in thedescriptionof concentration ofcredit
risk, the City manages its exposure to declines in fair values by “laddering”theirinvestment maturities toensure
that a portion of theportfolio is maturing monthly, oras needed to meet projected expenditures.The Cityalso
permitsno more than30 percentof totalinvestments toextend beyond five(5)years anddoes not directlyinvest in
securities maturing more than 15years from the dateof purchase.
59
City of Shorewood, Minnesota
Notes to theFinancial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
Property 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 resourcesfor 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 receivablesare shown net of
an allowance for uncollectible accounts. The allowance for uncollectible accounts has a zero balance at the end of 2018.
Unbilled utility enterprise fund receivables are also included for services provided in 2018.The City annually certifies
delinquent utilityaccounts to the County for collection in the following year.Therefore, there has been no allowance for
doubtful accounts establishedin the enterprise funds.
SpecialAssessments
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 governmentalassessments receivable are
offset by a deferred inflow of resourcesin the fund financial statements.
Lease Receivable
The City has a total of four leases receivable. The leases are related to public safety buildings that the City has leased to
the Excelsior Fire District and the South Lake Minnetonka Police Departmentand to the Excelsior Fire Districtfor the
purchase a new fire truck.As of December 31, 2018, the City has$4,540,821of leasesreceivable outstanding.
PrepaidItems
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.
Land Held forResale
These assets represent land owned by the City with the intent to sell to developers. This land is recorded at the lessor of
historical cost or net realizable value.
60
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
CapitalAssets
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 acquisitionvalue at the date of donation.For financial statement purposes only, a capitalization threshold
is established for each capital asset category as follows:
AssetsThreshold
Land and Land Improvements$10,000
Other Improvements25,000
Buildings25,000
Building Improvements25,000
Machinery and Equipment5,000
Vehicles5,000
Infrastructure100,000
Other Assets5,000
In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City
chose to include items 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 current replacement cost of the infrastructure to be
capitalized and using an 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:
Useful Lives
Assetsin Years
Land Improvements15 - 20
Buildings and Improvements7 - 40
System Improvements/Infrastructure20 - 50
Machinery and Equipment5 - 15
Vehicles5 - 15
61
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
DeferredOutflows of Resources
In addition to assets, the statement of netposition 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.
CompensatedAbsences
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 for liquidation of the liability.
PostemploymentBenefits 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 75, at December 31, 2018that the City has a zero liability.
Long-termObligations
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 activitiesor
proprietary fund type statement of net position.The recognition of bond premiums and discounts are amortized over the
life of the bondsusing 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.
62
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
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 fiduciarynet 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.The General fund is typically used to liquidate the governmental net pension
liability.
Deferred Inflows ofResources
In addition to liabilities, the statement of netposition 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 futureperiod 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 three
sources: property taxes, special assessments, and lease receivables. These amounts are deferred and recognized as an
inflow of resources in the period that the amounts become available.
The City has an additional item which qualifies for reporting in this category. The item, deferred pension resources, is
reported only in the statements of net position and results from actuarial calculations.
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.
Restricted -Amounts related to externally imposed constraints established by creditors, grantors or contributors; or
constraints imposed by state statutory provisions.
Committed - Amounts constrained for specific purposes that are internally imposed 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 governingbody 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 60 percent of operating expenditures and transfers out for cash-flow timing needs.
63
City of Shorewood, Minnesota
Notes to theFinancial Statements
December 31, 2018
Note 1:Summary of Significant Accounting Policies (Continued)
Net Position
Net positionrepresents the difference between assetsand deferred outflows of resourcesand liabilitiesand deferred
inflows of resources.Net positionisdisplayed in three components:
a.Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstandingdebt attributable to acquire capital assets.
b.Restricted net position - Consists of net positionbalances 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 positionbalancesthat 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
A.BudgetaryInformation
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. Annual appropriations lapse at fiscal yearend. The City does not use encumbrance
accounting.
In August of each year, all departments of the City submit requests for appropriations to the City Administrator so that a
th, the proposed budget is presented to the City Council for review. In early
budget may be prepared. Before September 30
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.
B.Deficit Fund Equity
The following funds had a deficit fund balance as of December 31, 2018:
Fund
Amount
Major Capital Project
TIF 2 Oppidan Senior Housing$1,017,869
The City plans to fund thisdeficit with future tax increment, miscellaneous revenue and/orinterfund transfers.
64
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on AllFunds
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 ReserveSystem.
Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market value of
collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, withthe exception of
irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral
pledged equal to 100 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 may be pledged as collateral against funds
deposited by that same local government entity;
Irrevocable standby letters of credit issued by 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 $1,924,770and the bank balance was $1,958,895. The entire
bank balance was covered by Federal depository insurance or by collateral held by the City’s agent in the City’s name.
65
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
Investments
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:
CreditSegmented
Fair Value Measurement Using
Quality/Time
Types of Investments
Rating (1)Distribution (2)AmountLevel 1Level 2
Pooled Investments at Amortized Costs
Minnesota Municipal Money Market fundN/Aless than 6 months$1,161,148
Non-pooled Investments at Fair Value
U.S. Government Agency SecuritiesN/A6 to 12 months489,590$489,590$-
U.S. Government Agency SecuritiesN/A1 to 3 years489,943489,943-
Municipal BondsAA16 to 12 months291,696-291,696
Municipal BondsAaa1 to 3 years390,767-390,767
Municipal BondsAA11 to 3 years596,023-596,023
Municipal BondsAA1 to 3 years252,208-252,208
Municipal BondsA21 to 3 years560,518-560,518
Municipal BondsAA21 to 3 years313,535-313,535
Municipal BondsAA31 to 3 years213,887-213,887
Municipal BondsAa2more than 3 years501,015-501,015
Brokered Certificates of DepositN/Aless than 6 months1,426,346-1,426,346
Brokered Certificates of DepositN/A6 to 12 months975,853975,853
Brokered Certificates of DepositN/A1 to 3 years1,737,631-1,737,631
Total Investments$9,400,160$979,533$7,259,479
(1)Ratings are provided by variouscredit ratings agencywhere applicable to indicate associated credit risk.
(2)Interest rate risk is disclosed using the segmented time distribution method.
N/AIndicates not applicable or available.
66
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
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:
Primary
Government
Carrying Amount of Deposits$1,924,770
Investments9,400,160
Cash on Hand220
Total$11,325,150
As Reported on the Financial Statements
Statement of net position$10,497,040
Cash with fiscal agent285,624
Fiduciary fund542,486
Total$11,325,150
B.Capital Assets
Capital asset activity for the year ended December 31, 2018was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental Activities
Capital Assets not being Depreciated
Land$741,826$-$-$741,826
Construction in progress2,360,5093,449,475(4,549,799)1,260,185
Total Capital Assets not being Depreciated3,102,3353,449,475(4,549,799)2,002,011
Capital Assets being Depreciated
Buildings3,483,099145,822-3,628,921
Improvements other than buildings1,881,585--1,881,585
Infrastructure32,307,9382,423,174-34,731,112
Machinery and equipment3,039,775287,960(183,223)3,144,512
Total Capital Assets being Depreciated40,712,3972,856,956(183,223)43,386,130
Less Accumulated Depreciation for
Buildings(1,399,937)(100,623)-(1,500,560)
Improvements other than buildings(948,288)(72,090)-(1,020,378)
Infrastructure(26,077,301)(689,225)-(26,766,526)
Machinery and equipment(2,518,320)(123,871)183,223(2,458,968)
Total Accumulated Depreciation(30,943,846)(985,809)183,223(31,746,432)
Total Capital Assets being Depreciated, Net9,768,5511,871,147-11,639,698
Governmental Activities Capital Assets, Net$12,870,886$5,320,622$(4,549,799)$13,641,709
67
Cityof Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
BeginningEnding
BalanceIncreasesDecreasesBalance
Business-type Activities
Capital Assets not being Depreciated
Land$434,113$599,821$-$1,033,934
Construction in progress17,3471,134,520-1,151,867
Total Capital Assets not being Depreciated451,4601,734,341-2,185,801
Capital Assets being Depreciated
Infrastructure22,021,1831,098,238-23,119,421
Machinery and equipment668,83723,009-691,846
Total Capital Assets being Depreciated22,690,0201,121,247-23,811,267
Less Accumulated Depreciation for
Infrastructure(13,446,525)(425,627)-(13,872,152)
Machinery and equipment(223,262)(59,244)-(282,506)
Total Accumulated Depreciation(13,669,787)(484,871)-(14,154,658)
Total Capital Assets being Depreciated, Net9,020,233636,376-9,656,609
Business-type Activities Capital Assets, Net$9,471,693$2,370,717$-$11,842,410
Depreciation expense was charged to functions/programs of the Cityas follows:
Governmental Activities
General government$68,947
Public works800,359
Culture and recreation116,503
Total Depreciation Expense - Governmental Activities$985,809
Business-type Activities
Water$334,084
Sewer91,392
Stormwater management utility59,395
Total Depreciation Expense - Business-type Activities$484,871
68
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
ConstructionCommitments
The City has an active construction projectas of December 31, 2018.At year end, the commitmentwith the contractorfor
thisprojectisas follows:
SpentRemaining
Project
to DateCommitment
Boulder Bridge Motor Control Replacement$76,366$55,094
C.InterfundReceivables, Payables and Transfers
InterfundBalances
The composition of interfund balances as of December 31, 2018is as follows:
Receivable FundPayable Fund
PurposeAmount
Major GovernmentalNonmajor Governmental
General2016B Public Safety BuildingCash flow$2,449
GeneralWaterCash flow18,026
WaterTIF 2 Oppidan Senior HousingProject funding1,015,044
InterfundTransfers
The City made transfers during the fiscal year 2018as shown and described below:
Transfers in
StreetNonmajor
Fund
GeneralDebt ServiceReconstructionGovernmentalTotal
Transfers Out
General $-$93,895$785,000$303,850$1,182,745
Water12,500-864,547-877,047
Sewer12,500-77,106-89,606
Storm Management Utility--168,325-168,325
Total $25,000$93,895$1,894,978$303,850$2,317,723
69
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
The City annually budgets transfers for specific purposes. Annual transfers are madefor administrative costs, part of
capital improvement plans, as well as annual budgets.For the year ended December 31, 2018, the City made the
following significantone-time transfers:
The General fund transferred $785,000to the Street Reconstruction fund for future capital purchases.
The General fund also transferred $18,850to Nonmajor Governmental funds for future park improvements.
Street, Water, and Storm Water transferred money to the Street Capital fund totaling $1,109,978 for 2018 street
projects.
D.Long-termDebt
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 andinterest
payments on the bonds areexpected to require less than 63.2percent 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 $286,620and $453,358,
respectively.
Interest
AuthorizedIssueMaturityBalance at
DescriptionRate
and IssuedDateDateYear End
G.O. Water Revenue
Bonds of 2013$2,260,0000.25 - 1.45%03/01/1301/01/221,100,000$
Annual debt service requirements to maturity for general obligation revenue bonds are as follows:
Business-type Activities
Year Ending
December 31,PrincipalInterest Total
2019$270,000$12,080$282,080
2020275,0009,216284,216
2021275,0005,848280,848
2022280,0002,030282,030
Total$1,100,000$29,174$1,129,174
70
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
LeaseRevenue Bonds
The City also issues bondsthrough the EDA,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:
Interest
AuthorizedIssueMaturityBalance at
DescriptionRate
and IssuedDateDateYear End
Public Safety Fire Facility,
Refunding Series 2016A$2,470,0002.00%01/07/1602/01/231,805,000$
Public Safety Police Facility,
Refunding Series 2016B2,565,0002.0001/07/1602/01/231,875,000
Public Safety Fire Facility,
Refunding Series 2016C875,0002.0001/07/1602/01/22595,000
Public Project Lease Revenue
Refunding Bonds, Series 2017A950,0002.7005/02/1712/01/28815,000
Total Lease Revenue Bonds$5,090,000
The Public Safety Fire Facility Refunding Series 2016A, 2016B and 2016C were issued for construction of the public
safety building, which there is a lease receivable from the South Lake Minnetonka Police and Excelsior Fire District. This
debt is excluded from the calculation of net investment in capital assetsas the building is reported on the South Lake
Minnetonka 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:
Governmental Activities
Year Ending
December 31,PrincipalInterestTotal
2019$925,000$98,956$1,023,956
2020940,00079,8661,019,866
2021955,00060,3901,015,390
2022990,00040,4661,030,466
2023845,00021,556866,556
2024 - 2028435,00035,642470,642
Total$5,090,000$336,876$5,426,876
71
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 3:Detailed Notes on All Funds (Continued)
Changes inLong-termLiabilities
Long-term liability activity for the year ended December 31, 2018was as follows:
BeginningEndingDue Within
BalanceIncreasesDecreasesBalanceOne Year
Governmental Activities
Bonds payable
Lease revenue bonds$5,990,000$-$(900,000)$5,090,000$925,000
Unamortized premium on bond73,169-(12,563)60,606-
Pension Liability
GERF1,011,36040,488(132,496)919,352-
Compensated Absences 165,842163,338(136,176)193,004125,453
Governmental Activity
Long-term Liabilities$7,240,371$203,826$(1,181,235)$6,262,962$1,050,453
Business-type Activities
Bonds payable
General obligation
revenue bonds $1,370,000$-$(270,000)$1,100,000$270,000
Pension Liability
GERF278,195-(76,934)201,261-
Business-type Activity
Long-term Liabilities$1,648,195$-$(346,934)$1,301,261$270,000
72
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
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 the Coordinated Plan. Coordinated Plan members are covered by Social Security.
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. Vested, terminated employees who are entitled to benefits but are not receiving
them yet are bound by the provisions in effect at the time they last terminated their public service.
GERFBenefits
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 CoordinatedPlan
members. Members hired prior to July 1, 1989 receive the higher of Method 1 or Method 2 formulas. Only Method 2 is
used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of
average salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year. Method
2, the accrual rate for Coordinated members is 1.7 percent for average salary for all years of service. For members hired
prior to July 1, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65.
For members hired on or after July 1, 1989 normal retirement age is the age for unreduced Social Security benefits
capped at 66.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. If
the General Employees Plan is at least 90 percent funded for two consecutive years, benefit recipients are given a 2.5
percent increase. If the plan has not exceeded 90 percent funded, or have fallen below 80 percent, benefit recipients are
given a one percent increase. A benefit recipient who has been receiving a benefit for at least 12 full months as of
June 30 will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as of
June 30 will receive a pro rata increase.
C.Contributions
Minnesota statuteschapter 353 sets the rates for employer and employee contributions.Contribution rates can only be
modified by the state legislature.
GERFContributions
Plan members were required to contribute 6.50 percent of their annual covered salary and the City was required to
contribute 7.50 percent of pay for Coordinated Plan members in fiscal year 2018. The City’s contributions to the GERF for
the years ending December 31, 2018,2017and 2016were $107,641, $97,079and $96,454, respectively.The City’s
contributions were equal to the required contributions for each year as set by Minnesota statute.
73
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 4:Defined Benefit Pension Plans - Statewide (Continued)
D.PensionCosts
GERF Pension Costs
At December 31, 2018, the City reported a liability of $1,120,613for its proportionate share of the GERF’s net pension
liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million to
the fund in 2018. The State of Minnesota is considered a non-employer contributing entity and the State’s contribution
meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability
associated with the City totaled $36,648. The net pension liability was measured as of June 30, 2018, 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 proportionate shareof 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, 2017through June 30, 2018relative to the total
employer contributions received from all of PERA’s participating employers. At June 30, 2018, the City’s proportionate
share was0.0202percent which wasthe same ofproportion measured as of June 30, 2017.
City's Proportionate Share of the Net Pension Liability
State of Minnesota's Proportionate Share of the Net Pension$1,120,613
Liability Associated with the City36,648
Total$1,157,261
For the year ended December 31, 2018, the City recognized pension expense of$4,751forits proportionate share of
GERF’s pension expense. In addition, the Cityrecognized an additional $8,546as pension expense (and grant revenue)
for its proportionate share of the State of Minnesota’s contribution of $16 million to the GERF.
At December 31, 2018, the City reported its proportionate share of GERF’s deferred outflowsof resources and deferred
inflows of resources, and its contributions subsequent to the measurement date, from the following sources:
DeferredDeferred
OutflowsInflows
of Resourcesof Resources
Differences Between Expected and
Actual Economic Experience$29,654$32,634
Changes in Actuarial Assumptions106,994125,913
Net Difference Between Projected and
Actual Earnings on Plan Investments-113,782
Changes in Proportion-12,735
Contributions to GERF Subsequent
to the Measurement Date55,459-
Total$192,107$285,064
74
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 4:Defined Benefit Pension Plans - Statewide (Continued)
Deferred outflows of resources totaling $55,459relatedto pensions resulting from the City’s contributionsto GERF
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31,2019.Other amounts reported as deferred outflows and inflows of resources related to GERF pensions will
be recognizedin pension expense as follows:
2019$27,960
2020(62,061)
2021(90,928)
2022(23,387)
Total Pension Expense
The total pension expense for all plans reconized by the City for the year ended December 31, 2018was $13,297.
E.Actuarial Assumptions
The total pension liability in the June 30, 2018actuarial valuation was determined using the following actuarial
assumptions:
Inflation2.50% per year
Active Member Payroll Growth3.25% per year
Investment Rate of Return7.50%
Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and
disabilitants were based on RP-2014 tables for all plans for males or females, as appropriate, with slight adjustments to fit
PERA’s experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25 percent per year.
Actuarial assumptions used in the June 30, 2018valuation were based on the results of actuarial experience studies. The
most recent six-year experience study was completed in 2015. Economic assumptions were updated in 2017 based on a
review of inflation and investment return assumptions.
The following changes in actuarial assumptions occurred in 2018:
GERF
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.0 percent per year through 2044 and 2.50 percent per year
thereafter to 1.25 percent per year.
75
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 4:Defined Benefit Pension Plans - Statewide (Continued)
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonablenesson
a regular basisof the long-term expected rate of return using a building-block method in which best-estimate ranges of
expected future rates of return are developed for each major asset class. These ranges are combined to produce an
expected long-term rate of return by weighting the expected future rates of return by the targetasset allocation
percentages. The target allocation and best estimates of geometricreal rates of return for each major asset class are
summarized in the following table:
Long-term
TargetExpected Real
AllocationRate of Return
Asset Class
Domestic Stocks36.00 %5.10 %
International Stocks17.005.30
Bonds (Fixed Income)20.000.75
Alternative Assets (Private Markets)25.005.90
Cash2.00-
Total100.00 %
F.DiscountRate
The discount rate used to measure the total pension liability in 2018was 7.5percent.The projection of cash flows used to
determine the discount rate assumed that contributions from plan members and employers will be made at rates set in
Minnesota statutes. Based on these assumptions, the fiduciary net position of the GERF plan wereprojected to be
available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate
of return on pension plan investments was applied to all periods of projected benefit payments to determine the total
pension liability.
G.PensionLiability 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:
1 Percent1 Percent
Decrease (6.50%)Current (7.50%)Increase (8.50%)
GERF$1,821,140$1,120,613$542,348
H.Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial
report that includes financial statements and required supplementary information. That report may be obtained on the
Internet at www.mnpera.org.
76
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
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 Department (the Department) for the purpose of providing police protection
within the four communities. The agreement 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 December31,2017.
Separate financial statements can be obtained by writing to the South Lake Minnetonka Police Department,
24150Smithtown Road, Shorewood, Minnesota 55331.
The following is a summary of the Department’sstatements of net positionas of December 31, 2017and 2016:
South Lake Minnetonka Police Department
Summary of Statements of Net Position
December 31,2017and 2016
20172016
Assets$4,954,091$4,885,721
Deferred Outflows of Resources2,929,6943,653,168
Total Assets and Deferred Outflows of Resources$7,883,785$8,538,889
Liabilities$4,315,173$7,953,009
Deferred Inflows of Resources3,483,091691,931
Net Position85,521(106,051)
Total Liabilities, Deferred Inflows
of Resources, and Net Position$7,883,785$8,538,889
The following is a summary of the Department’s statements of activitiesfor the years ended December 31, 2017and
2016:
77
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 5:Joint Ventures (Continued)
South Lake Minnetonka Police Department
Summary Statements of Activities
For the Years Ended December 31,2017and 2016
20172016
Revenues$3,032,374$2,949,600
Expenses2,867,8663,351,688
Net Revenues164,508(402,088)
General Revenues27,06421,321
Change in Net Position191,572(380,767)
Net Position, January 1(106,051)274,716
Net Position, December 31$85,521$(106,051)
B.Excelsior Fire District
In Augustof 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. The most recent year of audited information is
December31,2018.Separate financial statements can be obtained by writing to the Excelsior Fire District, 24100
Smithtown Road, Shorewood, Minnesota 55331.
78
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 5:Joint Ventures (Continued)
The following is a summary of the District’sstatements of net positionas of December31,2018and 2017:
Excelsior Fire District
Summary of Statements of Net Position
December 31, 2018and 2017
20182017
Assets$9,855,170$9,407,489
Deferred Outflows of Resources425,309739,512
Total Assets and Deferred Outflows of Resources$10,280,479$10,147,001
Liabilities$3,359,543$4,046,038
Deferred Inflows of Resources912,960614,275
Net Position6,007,9765,486,688
Total Liabilities, Deferred Inflows
of Resources, and Net Position$10,280,479$10,147,001
The following is a summary of the District’sstatements of activities for the years ended December 31,2018and 2017:
Excelsior Fire District
Summary Statements of Activities
For the Years Ended December 31, 2018 and 2017
20182017
Revenues$1,770,488$1,759,341
Expenses1,311,9201,469,776
Net Revenues458,568289,565
General Revenues62,7204,817
Change in Net Position521,288294,382
Net Position, January 1 5,486,6885,192,306
Net Position, December 31$6,007,976$5,486,688
According to a formula in the agreement, the City’s share of the District’s budget is 37.63percent. Payments to the District
in 2018totaled$625,953. The District issues a publicly available financial report that includes financialstatements and
required supplementary information. The report may be obtained by writing to the Excelsior Fire District, 24100 Smithtown
Road, Shorewood, Minnesota 55331.
79
City of Shorewood, Minnesota
Notes to the Financial Statements
December 31, 2018
Note 6:Other Information
A.RiskManagement
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-sustainingthrough 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.LegalDebt Margin
The City’s statutory debt limit is $50,566,253computed as threepercent of $1,685,541,755which 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 thatis subject tothe statutory debt limit.
80
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
81
City of Shorewood, Minnesota
Required Supplementary Information
For the Year Ended December 31, 2018
Schedule of Employer’s Share of PERA Net Pension Liability - General Employees Retirement Fund
City's
Proportionate
State's
Share of the
Proportionate
Net Pension
City'sShare of
Liability as aPlan Fiduciary
Proportionatethe Net Pension
City'sPercentage ofNet Position
Share ofLiabilityCity's
Proportion ofCoveredas a Percentage
Fiscalthe Net PensionAssociated withCovered
the Net PensionPayrollof the Total
YearLiabilitythe CityTotalPayroll
Liability((a+b)/c)Pension Liability
Ending(a)(b)(a+b)(c)
06/30/180.0202 %$1,120,613$36,648$ 1,157,261$1,346,370 %83.2 %79.5
06/30/170.02021,120,61316,1971,136,8101,299,85786.275.9
06/30/160.02031,648,25921,4591,669,7181,257,395131.168.9
06/30/150.02101,088,329-1,088,3291,233,86088.278.2
Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available.
Schedule ofEmployer’s PERAContributions - General Employees Retirement Fund
Contributions in
Contributions as
Relation to the
a Percentage of
StatutorilyStatutorilyContributionCity's
Covered
RequiredRequiredDeficiencyCovered
Payroll
YearContributionContribution(Excess)Payroll
(b/c)
Ending(a)(b)(a-b)(c)
12/31/18$107,641$107,641$-$1,435,208 %7.5
12/31/1797,07997,079-1,294,3907.5
12/31/1696,45496,454-1,286,0477.5
12/31/1593,61493,614-1,248,1827.5
Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available.
82
City of Shorewood, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2018
Notes to the Required Supplementary Information - General Employee Retirement Fund
Changes in Actuarial Assumptions
2018 - The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was
changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year.
2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for
vested and non-vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0
percent for vested deferred member liability and 3.0 percent for non-vested deferred member liability. The assumed
post-retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through
2044 and 2.5 percent per year thereafter.
2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5
percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from
7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions
were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll
growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation.
2015 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5
percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter.
Changes inPlan Provisions
2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund,
which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million.
Upon consolidation, state and employer contributions were revised.
83
84
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
85
86
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.
ShorewoodCommunity and Event Center
- This fund was established to account for the resources accumulated from
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.
87
City of Shorewood, Minnesota Exhibit A-1
Nonmajor Governmental Funds
Combining Balance Sheet
December 31, 2018
Special
Revenue
Shorewood
CommunityTotal
and Event CapitalNonmajor
CenterProjectsFunds
Assets
Cash and temporary investments$20,657$1,217,248$1,237,905
Receivables
Accrued interest4706,6617,131
Accounts -568568
Land held for resale-150,068150,068
Total Assets$21,127$1,374,545$1,395,672
Liabilities
Accounts and contracts payable$5,190$92,300$97,490
Accrued salaries payable774-774
Total Liabilities5,96492,30098,264
Fund Balances
Committed to community center operations15,163-15,163
Assigned to capital outlay-1,282,2451,282,245
Total Fund Balances15,1631,282,2451,297,408
Total Liabilities and
Fund Balances$21,127$1,374,545$1,395,672
88
City of Shorewood, Minnesota Exhibit A-2
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
For the Year Ended December 31, 2018
Special
Revenue
Shorewood
CommunityTotal
and EventCapitalNonmajor
CenterProjectsFunds
Revenues
Intergovernmental$-$760,000$760,000
Charges for services60,558100,888161,446
Interest on investments1,32119,98121,302
Miscellaneous
Contributions and donations41549,55949,974
Refunds and reimbursements-2,0002,000
Other260-260
Total Revenues62,554932,428994,982
Expenditures
Current
Culture and recreation98,631-98,631
Capital outlay
General government-38,98638,986
Public works -149,352149,352
Culture and recreation145,822465,329611,151
Total Expenditures244,453653,667898,120
Excess (Deficiency) of Revenues
Over (Under) Expenditures(181,899)278,76196,862
Other Financing Sources
Transfers in108,000195,850303,850
Sale of capital assets-19,50019,500
Total Other Financing Sources108,000215,350323,350
Net Change in Fund Balances(73,899)494,111420,212
Fund Balances, January 189,062788,134877,196
Fund Balances, December 31$15,163$1,282,245$1,297,408
89
90
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.
91
Exhibit B-1
City of Shorewood, Minnesota
Nonmajor Capital Projects Funds
Combining Balance Sheet
December 31, 2018
Park
CapitalEquipmentMSATrailCommunity
ImprovementReplacementConstructionConstructionInfrastructureTotal
Assets
Cash and temporary investments$482,895$473,327$131,649$403$128,974$1,217,248
Receivables
Accrued interest3,1662,301616-5786,661
Accounts ----568568
Land held for resale----150,068150,068
Total Assets$486,061$475,628$132,265$403$280,188$1,374,545
Liabilities
Accounts and contracts payable$89,697$-$-$-$2,603$92,300
Fund Balances
Assigned to capital outlay396,364475,628132,265403277,5851,282,245
Total Liabilities
and Fund Balances$486,061$475,628$132,265$403$280,188$1,374,545
92
Exhibit B-2
City of Shorewood, Minnesota
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures
And Changes in Fund Balances
For the Year Ended December 31, 2018
Park
CapitalEquipmentMSATrailCommunity
ImprovementReplacementConstructionConstructionInfrastructureTotal
Revenues
Intergovernmental$-$-$-$760,000$-$760,000
Charges for services100,888----100,888
Interest on investments9,0546,9851,965-1,97719,981
Miscellaneous
Contributions and donations----49,55949,559
Refunds and reimbursements2,000----2,000
Total Revenues111,9426,9851,965760,00051,536932,428
Expenditures
Capital outlay
General government-38,986---38,986
Public works -94,372--54,980149,352
Culture and recreation465,329----465,329
Total Expenditures465,329133,358--54,980653,667
Excess (Deficiency) of Revenues
(353,387)(126,373)1,965760,000(3,444)278,761
Over (Under) Expenditures
Other Financing Sources
Transfers in60,850135,000---195,850
Sale of capital assets-14,500--5,00019,500
Total Other Financing
Sources60,850149,500--5,000215,350
Net Change in Fund Balances(292,537)23,1271,965760,0001,556494,111
Fund Balances, January 1688,901452,501130,300(759,597)276,029788,134
Fund Balances, December 31$396,364$475,628$132,265$403$277,585$1,282,245
93
City of Shorewood, Minnesota
Exhibit C-1
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual (Continued on the Following Pages)
For the Year Ended December 31, 2018
(With Comparative Actual Amounts for the Year Ended December 31, 2017)
2018
2017
Budgeted Amounts
ActualVariance withActual
OriginalFinalAmountsFinal BudgetAmounts
Revenues
Taxes
General property taxes$ 5,369,245$ 5,369,245$ 5,215,324$ (153,921)$ 5,099,395
Fiscal disparities - - 127,622 127,622 121,979
Total taxes 5,369,245 5,369,245 5,342,946 (26,299) 5,221,374
Licenses and permits
Business 4,755 4,755 9,448 4,693 7,756
Nonbusiness 240,400 240,400 556,239 315,839 307,818
Total licenses and permits 245,155 245,155 565,687 320,532 315,574
Intergovernmental
Federal
FEMA - - - - 715
State
Property tax credits - - 42 42 43
Other 79,750 79,750 101,824 22,074 91,619
Other local governments
Other 11,500 11,500 23,274 11,774 52,545
Total intergovernmental 91,250 91,250 125,140 33,890 144,922
Charges for services
General government 11,285 11,285 15,237 3,952 15,236
Culture and recreation 39,600 39,600 40,168 568 44,170
Total charges for services 50,885 50,885 55,405 4,520 59,406
Fines and forfeitures 60,000 60,000 67,734 7,734 76,056
Special assessments - - 3,846 3,846 -
Interest on investments 35,000 35,000 32,881 (2,119) 20,024
Miscellaneous revenue
Refunds and reimbursements 15,000 15,000 20,036 5,036 37,173
Contributions and donations 3,000 3,000 2,356 (644) 4,650
Other 165,000 165,000 172,779 7,779 173,666
Total miscellanious revenue 183,000 183,000 195,171 12,171 215,489
Total Revenues 6,034,535 6,034,535 6,388,810 354,275 6,052,845
94
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, 2018
(With Comparative Actual Amounts for the Year Ended December 31, 2017)
2018
2017
Budgeted Amounts
ActualVariance withActual
OriginalFinalAmountsFinal BudgetAmounts
Expenditures
Current
General government
Mayor and city council
Personal services$ 22,600$ 22,600$ 22,176$ 424$ 22,176
Supplies 2,000 2,000 3,366 (1,366) 2,687
Other services and charges 59,500 59,500 51,691 7,809 83,283
Total mayor and city council 84,100 84,100 77,233 6,867 108,146
Administrative
Personal services 382,474 382,474 377,718 4,756 383,372
Supplies 21,000 21,000 16,929 4,071 21,099
Other services and charges 43,550 43,550 48,765 (5,215) 46,418
Total administrative 447,024 447,024 443,412 3,612 450,889
Elections
Personal services 14,700 14,700 9,977 4,723 -
Supplies 4,100 4,100 5,382 (1,282) -
Other services and charges 3,175 3,175 802 2,373 -
Total elections 21,975 21,975 16,161 5,814 -
Finance
Personal services 62,983 62,983 107,838 (44,855) 113,404
Supplies 15,600 15,600 15,588 12 14,581
Other services and charges 93,900 93,900 63,366 30,534 72,498
Total finance 172,483 172,483 186,792 (14,309) 200,483
Professional services
Other services and charges 240,000 240,000 236,627 3,373 265,077
Planning and zoning
Personal services 177,511 177,511 186,415 (8,904) 226,376
Supplies 450 450 1,210 (760) 449
Other services and charges 12,400 12,400 46,026 (33,626) 68,726
Total planning and zoning 190,361 190,361 233,651 (43,290) 295,551
Municipal building
Supplies 22,000 22,000 18,329 3,671 17,068
Other services and charges 185,600 185,600 150,676 34,924 155,806
Total municipal building 207,600 207,600 169,005 38,595 172,874
Total general government 1,363,543 1,363,543 1,362,881 662 1,493,020
95
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, 2018
(With Comparative Actual Amounts for the Year Ended December 31, 2017)
2018
2017
Budgeted Amounts
ActualVariance withActual
OriginalFinalAmountsFinal BudgetAmounts
Expenditures (Continued)
Current (continued)
Public safety
Police protection
Other services and charges$ 1,237,133$ 1,237,133$ 1,240,571$ (3,438)$ 1,184,213
Fire protection
Other services and charges 353,998 353,998 379,970 (25,972) 372,939
Protective inspection
Personal services 127,813 127,813 185,266 (57,453) 140,123
Supplies - - 16 (16) -
Other services and charges 16,450 16,450 31,450 (15,000) 25,353
Total protective inspection 144,263 144,263 216,732 (72,469) 165,476
Total public safety 1,735,394 1,735,394 1,837,273 (101,879) 1,722,628
Public works
General maintenance
Personal services 622,997 622,997 474,269 148,728 366,150
Supplies 156,500 156,500 186,815 (30,315) 94,563
Other services and charges 240,300 240,300 130,009 110,291 143,840
Total general maintenance 1,019,797 1,019,797 791,093 228,704 604,553
Snow and ice removal
Personal services 73,930 73,930 90,777 (16,847) 23,532
Supplies 40,000 40,000 49,334 (9,334) 38,954
Total snow and ice removal 113,930 113,930 140,111 (26,181) 62,486
City engineer
Other services and charges 89,500 89,500 83,057 6,443 83,314
Total public works 1,223,227 1,223,227 1,014,261 208,966 750,353
96
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, 2018
(With Comparative Actual Amounts for the Year Ended December 31, 2017)
2018
2017
Budgeted Amounts
ActualVariance withActual
OriginalFinalAmountsFinal BudgetAmounts
Expenditures (Continued)
Current (continued)
Culture and recreation
Personal services$ 172,721$ 172,721$ 182,123$ (9,402)$ 203,847
Supplies 31,200 31,200 16,554 14,646 28,057
Other services and charges 58,900 58,900 75,856 (16,956) 47,106
Total culture and recreation 262,821 262,821 274,533 (11,712) 279,010
Total current 4,584,985 4,584,985 4,488,948 96,037 4,245,011
Capital outlay
Public safety 484,752 484,752 484,752 - 470,455
Total Expenditures 5,069,737 5,069,737 4,973,700 96,037 4,715,466
Excess of Revenues
Over Expenditures 964,798 964,798 1,415,110 450,312 1,337,379
Other Financing Sources (Uses)
Transfers in 25,000 25,000 25,000 - 25,000
Transfers out (1,163,895) (1,163,895) (1,182,745) (18,850) (1,804,913)
Total Other Financing
Sources (Uses) (1,138,895) (1,138,895) (1,157,745) (18,850) (1,779,913)
Net Change in Fund Balances (174,097) (174,097) 257,365 431,462 (442,534)
Fund Balances, January 1 4,162,049 4,162,049 4,162,049 - 4,604,583
Fund Balances, December 31$ 3,987,952$ 3,987,952$ 4,419,414$ 431,462$ 4,162,049
97
Exhibit D-1
City of Shorewood, Minnesota
Debt Service Funds
Combining Balance Sheet
December 31, 2018
2016A2016B2016C2017
Public SafetyPublic SafetyPublic SafetyLease Revenue
BuildingBuildingBuildingBondTotal
Assets
Cash and temporary investments$37,232$396,996$13,031$7,051$454,310
Cash with fiscal agent2,3341,8334,281-8,448
Lease receivable1,805,0001,515,000595,000-3,915,000
Total Assets$1,844,566$1,913,829$612,312$7,051$4,377,758
Deferred Inflows of Resources
Unavailable revenue - lease receivable$1,805,000$1,515,000$595,000$-$3,915,000
Fund Balances
Restricted for debt service39,566398,82917,3127,051462,758
Total Deferred Inflows of
Resources and Fund Balances$1,844,566$1,913,829$612,312$7,051$4,377,758
98
City of Shorewood, Minnesota
Exhibit D-2
Debt Service Funds
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances
For the Year Ended December 31, 2018
2016A2016B2016C2017
Public SafetyPublic SafetyPublic SafetyLease Revenue
BuildingBuildingBuildingBondTotal
Revenues
Interest on investments$ 74$ 69$ 67$ -$ 210
Miscellaneous
Lease payments 379,500 784,900 153,300 - 1,317,700
Other 4,000 8,000 4,000 - 16,000
Total Revenues 383,574 792,969 157,367 - 1,333,910
Expenditures
Debt service
Principal 340,000 350,000 140,000 70,000 900,000
Interest and service charges 42,325 44,700 16,125 23,895 127,045
Total Expenditures 382,325 394,700 156,125 93,895 1,027,045
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,249 398,269 1,242 (93,895) 306,865
Other Financing Sources
Transfers in - - - 93,895 93,895
Net Change in Fund Balances 1,249 398,269 1,242 - 400,760
Fund Balances, January 1 38,317 560 16,070 7,051 61,998
Fund Balances, December 31$ 39,566$ 398,829$ 17,312$ 7,051$ 462,758
99
City of Shorewood, Minnesota Exhibit E-1
Agency Fund
Combining Statement of Changes in Assets and Liabilities
For the Year Ended December 31, 2018
BalanceBalance
January 1AdditionsDeductionsDecember 31
Developer Escrow Accounts
Assets
Cash and temporary investments$273,556$764,152$(495,222)$542,486
Liabilities
Accounts payable$-$928$-$928
Escrow deposits payable273,556892,463(624,461)541,558
Total Liabilities$273,556$893,391$(624,461)$542,486
100
City of Shorewood, Minnesota Exhibit F-1
Supplementary Information
Summary Financial Report
Revenues and Expenditures For General Operations
Governmental Funds
For the Years Ended December 31, 2018 and 2017
Percent
TotalIncrease
(Decrease)
20182017
Revenues
5.28
Taxes$5,497,225$5,221,374%
79.26
Licenses and permits565,687315,574
91.74
Intergovernmental885,140461,633
(47.01)
Charges for services216,851409,244
(10.94)
Fines and forfeitures67,73476,056
N/A
Special assessments3,846-
15.98
Interest on investments87,27975,256
15.78
Miscellaneous1,581,1051,365,593
12.37
%
Total Revenues$8,904,867$7,924,730
12.37
Per Capita$1,155$1,028%
Expenditures
Current
(8.72)
General government$1,362,881$1,493,020%
6.66
Public safety1,837,2731,722,628
35.51
Public works1,018,191751,394
(8.76)
Culture and recreation373,164409,010
Capital outlay
410.96
General government38,9867,630
3.04
Public safety484,752470,455
234.44
Public works3,317,201991,853
(20.75)
Culture and recreation611,151771,157
(85.80)
Economic development92,428650,944
Debt service
3.45
Principal900,000870,000
(30.04)
Interest and service charges127,045181,605
22.16
Total Expenditures$10,163,072$8,319,696%
22.16
Per Capita$1,319$1,079%
(15.03)
Total Long-term Indebtedness$5,090,000$5,990,000%
(15.02)
Per Capita$660$777
6.18
General Fund Balance - December 31$4,419,414$4,162,049%
6.18
Per Capita$573$540
The purpose of this report is to provide a summary of financial information concerning the City of Shorewoodto
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 the City of Shorewood at 952-960-
7900.
101
102
STATISTICAL SECTION(UNAUDITED)
CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2018
103
104
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 inthe 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 thegovernment’s financial performance
and well-being have changed 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 affordability 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.
OperatingInformation
These schedules contain service and infrastructure data to help thereader understandhow the information in the
government’s financial report relocates to the services the government provides and the activities it performs.
105
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Year
2009201020112012
Governmental Activities
Net investment in capital assets$9,480,314$9,525,991$9,223,669$8,487,162
Restricted----
Unrestricted7,909,1068,252,4977,964,7037,979,370
Total Governmental Activities Net Position$17,389,420$17,778,488$17,188,372$16,466,532
Business-type Activities
Net investment in capital assets$6,482,297$6,494,996$6,675,613$6,494,076
Unrestricted9,449,2108,666,1498,186,8358,148,173
Total Business-type Activities Net Position$15,931,507$15,161,145$14,862,448$14,642,249
Total Primary Government
Net investment in capital assets$15,962,611$16,020,987$15,899,282$14,981,238
Restricted----
Unrestricted17,358,31616,918,64616,151,53816,127,543
Total Primary Government$33,320,927$32,939,633$32,050,820$31,108,781
106
Table 1
Fiscal Year
201320142015201620172018
$9,212,415$9,754,046$9,394,897$11,523,309$11,985,886$12,826,709
-----4,693
7,138,8477,317,0956,717,0685,683,6835,346,3504,918,411
$16,351,262$17,071,141$16,111,965$17,206,992$17,332,236$17,749,813
$6,705,907$6,718,271$7,713,545$7,641,711$8,101,693$10,742,410
7,951,2197,890,3276,572,9806,849,8586,998,0915,241,328
$14,657,126$14,608,598$14,286,525$14,491,569$15,099,784$15,983,738
$15,918,322$16,472,317$17,108,442$19,165,020$20,087,579$23,569,119
-----4,693
15,090,06615,207,42213,290,04812,533,54112,344,44110,159,739
$31,008,388$31,679,739$30,398,490$31,698,561$32,432,020$33,733,551
107
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Changes in Net Position (Continued on the Following Pages)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Year
2009201020112012
Expenses
Governmental activities
General government$1,486,281$1,235,098$1,405,791$1,331,286
Public safety1,904,9661,893,4131,960,8941,947,868
Public works1,941,2722,231,4732,031,1362,162,123
Culture and recreation394,110452,437412,257460,879
Economic development----
Interest on long-term debt638,768474,082449,773428,887
Total Governmental Activities Expenses6,365,3976,286,5036,259,8516,331,043
Business-type activities
Water659,113643,886690,363689,205
Sewer955,956980,1731,151,6261,065,926
Recycling99,286173,896174,857187,713
Stormwater management utility106,847131,107233,035273,846
Liquor12925--
Total Business-type Activities Expenses1,821,3311,929,0872,249,8812,216,690
Total Expenses$8,186,728$8,215,590$8,509,732$8,547,733
Program Revenues
Governmental activities
Charges for services
General government$34,064$53,381$108,394$144,883
Public safety634,742624,330544,749604,400
Public works6,279-6,2934,137
Culture and recreation35,84358,66172,67879,206
Economic development----
Operating grants and contributions90,68199,114113,717102,959
Capital grants and contributions43114,330--
Total Governmental Activities Program Revenues801,652949,816845,831935,585
Business-type activities
Charges for services
Water784,318668,676672,793757,395
Sewer802,252845,043819,496831,640
Recycling65,112146,002151,894157,585
Stormwater management utility191,157198,593196,070193,931
Operating grants and contributions28,48828,76233,58623,007
Capital grants and contributions--15,00022,400
Total Business-type Activities Program Revenues1,871,3271,887,0761,888,8391,985,958
Total Program Revenues$2,672,979$2,836,892$2,734,670$2,921,543
108
Table 2
Fiscal Year
201320142015201620172018
$1,310,296$1,277,118$1,318,558$1,504,101$1,568,635$1,416,928
2,010,3382,036,3942,080,7692,111,1552,194,4342,321,660
1,884,9861,991,8521,971,4831,544,2641,553,2742,033,598
471,784397,365613,494476,999489,690552,147
---682,787650,94492,428
379,685355,378318,357361,602160,832107,408
6,057,0896,058,1076,302,6616,680,9086,617,8096,524,169
693,193690,479721,184775,802751,143743,832
847,097873,711944,263989,147994,6111,063,771
181,537178,457131,185132,654137,693136,740
107,935203,82599,312111,373117,741148,975
------
1,829,7621,946,4721,895,9442,008,9762,001,1882,093,318
$7,886,851$8,004,579$8,198,605$8,689,884$8,618,997$8,617,487
$187,628$199,394$260,440$256,069$228,775$214,354
599,810642,680617,557608,410546,388759,963
2261,222940263--
120,794102,985108,884156,27196,381102,856
------
144,11248,28486,37095,80290,788106,059
-811,522184,6051,400,957835,083930,543
1,052,5701,806,0871,258,7962,517,7721,797,4152,113,775
537,713443,467544,748421,290416,938464,450
834,320852,254858,066878,999913,115933,748
165,713164,666154,929154,180156,951156,797
194,950220,658227,676275,171341,180381,997
25,83031,27926,19848,72432,15223,879
53,200115,4905,706388,077349,472117,563
1,811,7261,827,8141,817,3232,166,4412,209,8082,078,434
$2,864,296$3,633,901$3,076,119$4,684,213$4,007,223$4,192,209
109
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
Fiscal Year
2009201020112012
Net Revenues (Expenses)
Governmental activities$(5,563,745)$(5,336,687)$(5,414,020)$(5,395,458)
Business-type activities49,996(42,011)(361,042)(230,732)
Total Primary Government$(5,513,749)$(5,378,698)$(5,775,062)$(5,626,190)
General Revenues and Other Changes in Net Position
General Revenues
Governmental activities
Taxes
Property taxes, levied for general purpose$4,743,174$4,744,348$4,733,948$4,761,213
Franchise taxes
Grants and contributions not restricted to specific programs4,9404,4874,7516,019
Unrestricted investment earnings333,626132,35956,70561,584
Gain on sale of capital assets-31,13028,500-
Transfers of capital assets----
Transfers1,040,000813,431--
Total Governmental Activities General Revenues6,121,7405,725,7554,823,9044,828,816
Business-type activities
Unrestricted investment earnings102,83385,08062,34564,135
Gain on sale of capital assets----
Transfers of capital assets----
Transfers(1,040,000)(813,431)--
Total Business-type Activities General Revenues(937,167)(728,351)62,34564,135
Total Primary Government$5,184,573$4,997,404$4,886,249$4,892,951
Change in Net Position
Governmental activities$557,995$389,068$(590,116)$(566,642)
Business-type activities(887,171)(770,362)(298,697)(166,597)
Total Primary Government$(329,176)$(381,294)$(888,813)$(733,239)
110
Table 2
Fiscal Year
201320142015201620172018
$(5,004,519)$(4,252,020)$(5,043,865)$(4,163,136)$(4,820,394)$(4,410,394)
(18,036)(118,658)(78,621)157,465208,620(14,884)
$(5,022,555)$(4,370,678)$(5,122,486)$(4,005,671)$(4,611,774)$(4,425,278)
$4,768,989$4,854,521$4,931,075$5,127,950$5,189,101$5,370,570
$154,279
5,8185,8485,8405,84423,6446,542
37,46186,53060,28399,36975,25687,279
76,981-30,000-5,50019,500
--(245,121)-(395,707)(1,945,177)
-25,000270,12125,00047,8441,134,978
4,889,2494,971,8995,052,1985,258,1634,945,6384,827,971
32,91395,13068,11972,57951,73288,639
------
--245,121-395,7071,945,177
-(25,000)(270,121)(25,000)(47,844)(1,134,978)
32,91370,13043,11947,579399,595898,838
$4,922,162$5,042,029$5,095,317$5,305,742$5,345,233$5,726,809
$(115,270)$719,879$8,333$1,095,027$125,244$417,577
14,877(48,528)(35,502)205,044608,215883,954
$(100,393)$671,351$(27,169)$1,300,071$733,459$1,301,531
111
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Fund Balances of Governmental Funds
Last Ten Fiscal Years
Fiscal Year
2009201020112012
General Fund
Reserved$500$49,060$-$-
Unreserved3,555,2243,477,932--
Nonspendable--48,00050,000
Unassigned--3,440,2273,574,468
Total General Fund$3,555,724$3,526,992$3,488,227$3,624,468
All Other Governmental Funds
Reserved$1,934,628$96,333$-$-
Unreserved, reported in
Special revenue funds-(17,650)--
Capital project funds4,252,8704,520,558--
Nonspendable--150,068150,068
Restricted--30,43917,700
Committed----
Assigned--4,229,5284,368,656
Unassigned---(75,325)
Total All Other Governmental Funds$6,187,498$4,599,241$4,410,035$4,461,099
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.
112
Table 3
Fiscal Year
201320142015201620172018
$-$-$-$-$-$-
------
33,016103,99699,2166,687132,477157,914
3,943,3423,981,4754,402,9514,597,8964,029,5724,261,500
$3,976,358$4,085,471$4,502,167$4,604,583$4,162,049$4,419,414
$-$-$-$-$-$-
------
------
150,068-----
24,45025,65431,80518,44961,998462,758
-----15,163
3,117,4343,339,0053,304,0643,261,1704,055,5712,611,279
(52,437)--(972,608)(1,685,146)
(1,017,869)
$3,239,515$3,364,659$3,335,869$2,307,011$2,432,423$2,071,331
113
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Fiscal Year
2009201020112012
Revenues
Taxes$4,703,368$4,717,204$4,787,195$4,783,939
Licenses and permits127,883154,113174,119175,087
Intergovernmental66,411173,33472,96876,102
Charges for services41,649100,899102,500121,625
Fines and forfeitures52,96855,80652,63566,230
Special assessments-333--
Interest on investments333,626132,35956,70561,584
Miscellaneous1,059,9141,037,5221,032,5661,115,836
Total Revenues6,385,8196,371,5706,278,6886,400,403
Expenditures
General government1,386,6141,147,1981,306,9481,288,704
Public safety1,392,1391,392,9231,460,6641,445,149
Public works670,954859,069866,413823,234
Culture and recreation326,502342,654343,326331,524
Capital outlay1,953,7562,075,1091,457,0011,230,058
Debt service
Principal520,000600,000625,000655,000
Interest and service charges818,063516,167447,307439,429
Total Expenditures7,068,0286,933,1206,506,6596,213,098
Excess (Deficiency) of Revenues
Over (Under) Expenditures(682,209)(561,550)(227,971)187,305
Other Financing Sources (Uses)
Transfers in2,059,7731,942,550984,5411,170,216
Sale of capital assets-31,130--
Proceeds from sale of bonds----
Payment on refunding bonds(8,100,000)(1,900,000)--
Bond premium----
Transfers out(1,019,773)(1,129,119)(984,541)(1,170,216)
Total Other Financing
Sources (Uses)(7,060,000)(1,055,439)--
Net Change in Fund Balances$(7,742,209)$(1,616,989)$(227,971)$187,305
Debt Service as a Percentage of
Noncapital Expenditures22.4%19.1%18.4%18.3%
114
Table 4
Fiscal Year
201320142015201620172018
$4,764,472$4,864,095$4,949,126$5,129,620$5,221,374$5,497,225
204,600270,841275,567340,112315,574565,687
76,544891,055156,77197,735461,633885,140
92,54990,825116,337169,400409,244216,851
59,29464,29065,23448,86876,05667,734
-----3,846
37,46186,53060,28399,36975,25687,279
1,234,3121,185,2191,344,3402,432,2081,365,5931,581,105
6,469,2327,452,8556,967,6588,317,3127,924,7308,904,867
1,249,6161,198,7071,247,1051,413,3291,493,0201,362,881
1,494,6331,526,7861,579,4001,623,7491,722,6281,837,273
860,071743,803726,905786,780751,3941,018,191
324,745310,051344,793361,128409,010373,164
2,660,8302,391,8551,885,7394,177,0732,892,0394,544,518
675,000705,000735,0006,480,000870,000900,000
391,213367,396330,931434,990181,605127,045
7,656,1087,243,5986,849,87315,277,0498,319,69610,163,072
(1,186,876)209,257117,785(6,959,737)(394,966)(1,258,205)
2,482,6501,340,1201,313,6341,412,3131,871,2432,317,723
317,182----19,500
---5,910,000950,000-
----(920,000)-
---98,295--
(2,482,650)(1,315,120)(1,043,513)(1,387,313)(1,823,399)(1,182,745)
317,18225,000270,1216,033,29577,8441,154,478
$(869,694)$234,257$387,906$(926,442)$(317,122)$(103,727)
18.5%18.5%17.9%57.2%16.2%15.9%
115
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property
(Shown by Year of Tax Collectability)
2009201020112012
Taxable Market Value
Personal property$4,764,900$4,629,900$4,948,300$5,291,700
Real estate1,651,054,7001,631,938,0001,507,900,6001,430,712,101
Total Taxable Market Value$ 1,655,819,600$ 1,636,567,900$ 1,512,848,900$ 1,436,003,801
Estimated Actual Value of Taxable Property$ 1,673,720,100$ 1,638,118,400$ 1,514,456,700$ 1,453,867,700
Taxable Market Value as a Percentage of
Estimated Actual Value98.93%99.91%99.89%98.77%
Tax Capacity
Personal property$91,548$88,848$95,216$102,084
Real estate18,305,11418,087,55716,620,62915,761,142
Total Tax Capacity18,396,66218,176,40516,715,84515,863,226
Contribution to Fiscal Disparities Pool(396,336)(432,995)(419,002)(389,965)
Receivable from Fiscal Disparities Pool513,259526,521478,935435,462
Net Tax Capacity$18,513,585$18,269,931$16,775,778$15,908,723
Tax Levies
General$4,158,672$4,160,292$4,158,672$4,158,672
Debt service617,620616,000604,647-
Total$4,776,292$4,776,292$4,763,319$4,158,672
Direct Tax Rate
General22.463%22.771%24.790%26.141%
Debt service3.3363.3723.604-
Total25.799%26.143%28.394%26.141%
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.
116
Table 5
201320142015201620172018
$6,006,500$6,068,600$6,348,000$6,514,900$7,209,300$8,236,300
1,367,209,5841,345,804,5401,449,497,1111,517,977,6651,581,429,8401,677,305,455
$ 1,373,216,084$ 1,351,873,140$ 1,455,845,111$ 1,524,492,565$ 1,588,639,140$ 1,685,541,755
$ 1,392,562,700$ 1,371,752,400$ 1,472,996,800$ 1,539,170,100$ 1,602,654,100$ 1,697,548,000
98.61%98.55%98.84%99.05%99.13%99.29%
$113,130$114,632$122,460$125,798$139,686$160,226
15,025,75114,770,32715,926,41416,691,55217,449,21018,551,740
15,138,88114,884,95916,048,87416,817,35017,588,89618,711,966
(393,282)(393,620)(399,759)(395,610)(420,193)(412,101)
368,528374,494377,934376,674413,438438,619
$15,114,127$14,865,833$16,027,049$16,798,414$17,582,141$18,738,484
$4,763,319$4,858,585$4,931,464$5,079,408$5,180,996$5,369,245
------
$4,763,319$4,858,585$4,931,464$5,079,408$5,180,996$5,369,245
31.516%32.683%30.723%30.227%29.450%28.635%
------
31.516%32.683%30.723%30.227%29.450%28.635%
117
City of Shorewood, Minnesota Table 7
Statistical Section (Unaudited)
Principal Taxpayers
Current Year and Nine Years Ago
20182009
PercentPercent
of Totalof Total
TaxTax
Tax CapacityTax Capacity
TaxpayerCapacityRankCapacityRank
Kraus-Anderson$ 159,81010.91%$---
%
DMA Investments, LLC151,16320.86---
Big Box One, LLC132,69030.75151,25010.82
Shurgard Storage Center90,81040.5277,25040.42
South Lake Office Building LLC76,21050.4379,25030.43
Ryan Simon58,68860.33---
Alerus (formerly Beacon Bank)58,15070.3364,25060.35
Elaine & Gary Jarrett56,81380.3265,88850.36
Waterford Center LLP54,07090.31---
Cornerstone Trust52,838100.3049,288100.27
Stanley M. Taube---123,25020.67
John & Margaret G. Wiehoff---56,37570.30
The Mary Sue Simon Qprt---54,31380.29
Minnetonka Country Club---54,09090.29
Totals$ 891,2425.06%$ 775,2044.20%
Source: Hennepin County Assessor
119
City of Shorewood, Minnesota Table 8
Statistical Section (Unaudited)
Property Tax Levies and Collections
Last Ten Fiscal Years
Percent
(1)
Percentageof Total
CollectionCollection
of LevyCollections
FiscalTotalof Currentin SubsequentTotal
Collectedto Levy
YearLevyYear's LevyYearsCollections
2009$4,776,292$4,649,90497.35%$121,741$4,771,64599.90%
20104,776,2924,685,06098.0988,0754,773,13599.93
20114,763,3194,706,90098.8256,4194,763,319100.00
20124,763,3194,717,65899.0445,6614,763,319100.00
20134,763,3194,720,74899.1142,8054,763,553100.00
20144,858,5854,812,47899.0544,6024,857,08099.97
20154,931,4644,907,22299.5119,9644,927,18699.91
20165,079,4085,091,851*100.24*24,1655,116,016100.72*
20175,180,9965,184,635
*100.07*-5,184,635100.07
20185,369,2455,342,45399.50-5,342,45399.50
(1) Includes state paid property tax credits.
* Noted collections more than 100 percent of levy due to current year adjustment of market value or other adjustments.
120
Table 9
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Ratio of Net Bonded Debt to
Assessed Value and Net Bonded Debt Per Capita
Last Ten Fiscal Years
Business-
type
Governmental Activities
Activities
Percentage of
GeneralLeaseGeneralTotal
Personal
FiscalObligationRevenueCapitalObligationPrimaryPer
Income
YearBondsBondsLeasesRevenue BondsGovernmentCapita
2009$-$13,295,000$-$3,165,000$16,460,0004.14%$2,076
2010- 10,795,000- 2,915,00013,710,0003.191,876
2011- 10,170,000- 2,675,00012,845,0002.961,785
2012- 9,515,000- 2,500,00012,015,0002.861,615
2013- 8,840,000- 3,540,00012,380,0002.831,664
2014- 8,135,000- 2,160,00010,295,0002.261,368
2015- 7,400,000- 1,900,0009,300,0001.991,253
2016- 6,915,732- 1,635,0008,550,7321.931,129
2017- 6,063,169- 1,370,0007,433,1691.93992
2018- 5,150,606- 1,100,0006,250,6061.51811
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See the Demographicand Economic Statistics table on page 12 for personal income and population data.
121
122
City of Shorewood, Minnesota
Table 10
Statistical Section (Unaudited)
Computation of Direct and Overlapping Debt
December 31, 2018
Gross Amount
Bonded of
Percentage
Debt UsedNet Debt
Applicable to
For Net Debt NetApplicable
District
CalculationDebtto District
Direct Debt
City of Shorewood$ 5,150,606$ 5,150,606 100.00%$ 5,150,606
Overlapping Debt
School District #276 166,330,000 102,587,953 18.67 19,153,171
School District #277 43,065,000 42,433,343 1.90 806,234
Hennepin County 1,225,230,000 1,056,890,798 1.12 11,837,177
Henn Suburban Park District 66,300,000 43,575,708 1.56 679,781
Henn Regional RR Authority 29,865 24,600,380 1.56 383,766
Metropolitan Council 1,549,087,966 75,902,689 0.53 402,284
Total Overlapping Debt 3,050,042,831 1,345,990,871 2.47 33,262,413
Total Direct and Overlapping Debt$ 3,055,193,437$ 1,351,141,477 2.84%$ 38,413,019
Sources : Hennepin 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 tax capacity. Applicable percentages were estimated
by determining the portion of each overlapping government's tax capacity within the City's boundaries and dividing
it by that governments's total tax capacity.
123
City of Shorewood, Minnesota
Statistical Section (Unaudited)
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2009201020112012
Debt Limit$ 33,116,392$ 32,731,358$ 30,256,978$ 28,720,076
Total Net Debt Applicable to Limit----
Legal Debt Margin$ 33,116,392$ 32,731,358$ 30,256,978$ 28,720,076
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.
124
Table 11
Fiscal Year
201320142015201620172018
$ 27,464,322$ 27,037,463$ 43,675,353$ 45,734,777$ 47,659,174$ 50,566,253
------
$ 27,464,322$ 27,037,463$ 43,675,353$ 45,734,777$ 47,659,174$ 50,566,253
$ -$ -$ -$ -$ -$ -
Legal Debt Margin Calculation for Fiscal Year 2018
Taxable Market Value$1,685,541,755
Debt Limit (3% of Market Value)50,566,253
Debt Applicable to Limit
General obligation bonds-
Less: amount available in
debt service funds-
Total Net Debt Applicable to Limit-
Legal Debt Margin$ 50,566,253
125
City of Shorewood, Minnesota Table 12
Statistical Section (Unaudited)
Pledged - Revenue Coverage
Last Ten Fiscal Years
General Obligation Revenue Bonds
(1)Net
Debt Service
FiscalGross(2)Revenue
Coverage
YearRevenueExpensesAvailablePrincipalInterest
2009$821,778$250,995$570,783$250,000$142,5891.45%
2010700,678238,780461,898250,000125,4071.23
2011718,561299,962418,599240,000116,7281.17
2012809,746313,620496,126175,000100,6681.80
2013595,599300,232295,367185,00075,6301.13
2014542,606401,476141,130220,00019,7080.59
2015581,484412,646168,838260,00018,7980.61
2016727,126439,737287,389265,00018,1831.01
2017709,647412,513297,134265,00015,8831.06
2018593,249394,141199,108270,00015,6070.70
(1) Including interest and other income
(2) Excluding depreciation and interest on bonds
Lease Revenue Bonds
Revenue from
Debt Service
FiscalLease
Coverage
YearPaymentsPrincipalInterest
2009$992,835$495,000$737,8630.81%
2010982,037555,000457,8400.97
2011902,003575,000393,3570.93
2012978,744605,000372,2301.00
2013972,513625,000335,5131.01
2014969,650650,000335,5130.98
2015958,569680,000284,4190.99
2016776,9806,420,000389,2010.11
2017950,216805,000119,5001.03
20181,317,700830,000103,1501.41
126
City of Shorewood, Minnesota
Table 13
Statistical Section (Unaudited)
Demographic and Economic Statistics
Last Ten Fiscal Years
Percent of
Population
Which Has a
TotalPer Capita
Bachelor's or PostUnemployment
FiscalPersonal Personal Median
Graduate Degree (4)Rate (5)
YearPopulation (1)Income (2)Income (2)Age (3)
20097,929$ 397,683,475$ 54,425 39.0 7.3%
20107,307 429,651,600 58,800 39.1 7.0
20117,307 433,743,520 59,360 44.2 51.1% 6.1
20127,312 420,264,512 57,476 44.1 49.8 5.2
20137,438 438,083,324 58,898 43.6 56.4 4.6
20147,524 455,961,924 60,601 44.5 61.8 3.8
20157,458 466,700,130 61,295 43.7 63.1 3.3
20167,496 438,823,336 58,541 45.3 62.8 3.4
20177,708 505,143,780 65,535 46.4 65.9 2.6
20187,708 523,350,076 67,897 47.1 66.1 2.5
Data Sources:
(1) Metropolitan Council
(2) US Census Bureau
(3) US Census Bureau
(4) US Census Bureau
(5) Bureau of Labor Statistics - 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.
127
City of Shorewood, Minnesota Table 14
Statistical Section (Unaudited)
Principal Employers
Current Year and Nine Years Ago
20182009
PercentagePercentage
of Total Cityof Total City
EmployerEmploymentEmployment
EmployeesRankEmployeesRank
Minnewashta Elementary School12319.83%1031N/A%
Cub Foods12129.671012N/A
Xcel Energy7536.00353N/A
Alerus (formerly Beacon Bank)3442.72334N/A
City of Shorewood29*52.32325N/A
Park Nicollet Clinic20*61.60--N/A
Minnetonka Country Club---306N/A
Total40232.13%334-%
Total City Employment1,251N/A
Source: City of Shorewood
* Includes part-time and temporary seasonal employees.
N/A - indicates not available
128
City of Shorewood, Minnesota Table 15
Statistical Section (Unaudited)
Full-time Equivalent City Government Employees by Function
Last Ten Fiscal Years
Function
2009201020112012201320142015201620172018
General Government12121010999101010
Public Works
Engineering--11------
Maintenance6655666666
Culture and Recreation
Parks5533222222
Water1.51.51.51.51.21.21111
Sewer1.51.51.51.51.51.52111
Total262622222020202020
20
Source: City of Shorewood
129