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2020 09-15 CC PACKET
City -of Gem Lake; MN City Council Meeting September 15, 2020 Call To Order of City Council Meeting By Mayor Artig-Swomley at 7._,_ p.m. Cali of Roll Amlee _ Cacipppo ICuny _ Lindner Otheain Attendance: Sign-up.Sheet Approval of Ciity:Council Minutes and. Agenda • City Council Agenda for thismeeting (Accept Agenda) • Approve the minutes from August 18, 2020 Committee Reports None. Old Business Newsletter Ideas Public Hearings Comp Plan — Resolution 2OZO-0013 Comp Plan Acceptance MS New Business • 2021 Budget/Preliminary Ldvy Presentation • Resolution No, 2020-012 Adopting the Preliminary Amount to Be Raised by Property Taxation for the Year 2021 2019 Audit-Presentation/Acceptance of Report. • Gem Lake Villas Developers Agreement Update. Hoffman Road - continuation of discussion from August meeting • Deer Hunting Qrdinance Discussion ! Claims • A. R.M. Media • b, Schotarship;funds- • Monthly Fiinartciai.Reports Presentations frorri the public minutes maximum presentation • Open Items for the.Council Members to bring up. Future Council Meetings • Workshop Meeting -in October canceled { Next City Council Meeting October.20, at 7:00`P.M. Adjournment • The meeting adjourned at City of Gem. Lake City Council 'Meeting." August 18, 2020. Meeting Minutes Acting MayorArtig-Swomley called the meeting to order at 7.. p.m. Coun.cilmembers Cacioppo, Kuny and Lindner were present. Also present: Laurel Amlee, PlanningCoMmission member,JUsti. i Gese, City Engineer, City Attorney Patrick Kelly., City Finance Director Tom.Kellyand Emily Jennings,.S..E:H. August 18 2020. ftenda- A-motion was made by CouncllmeMber.Lindner, seconded by Cougcilmember Cacioppo to approve the agenda. Voice note taken, all voted yes, motion passes. Agenda approved. Minutes A motlolt was made by Councilmember Lindner,.seconded by Caun.cilmember.Cacioppo to approve the July ], 2020,. City Counei[ minutes. Voice vote taken;. all -voted yes, motion passes, minutes -approved. Committee Reports — Planning Commission. No meeting. Old Business Newsletter ideas.— Rush Line, MS41budget, candidates.. New Business Approve Preliminary Budget —Tom Kelly Finance Director Mr. Kelly gave an overview of the budget. 2nd Quarter Financial Report- Aroval —Tom Kelly, Finance Director' Mr. Kelly presented the 2110 quarter financial report. Potential RFP — Financial Audi --Tom Kell Mr. Kelly presented a sample RFP for an auditor for the City. Thetouncil discussed going out for an RFP for an auditor for the yearly audit A motion was. made. by Counclimember Lindner,. seconded by Cou ncilrnember Kuny to have White 'BearTownshlp staff prepare*an RFP for audit services for the City of Gem Lake. Voice -vote taken, all yet, motion passes; RFP*for ayditservices to proceed. 'Filing'Vacongi on the Council With the passing of Mjiyor Uzpen, the appointment of Councilmember Artig-Swomley to the-lyiayor position; a vacancy hot.opened up with the City. Council, Ms: laurel Am lee has applied: and.beenvetted and approved for vacant position. Amotibn'was made by CdUncillnember Lindner, seconded by C-ouncilmerhhdr Cacioppo-to.appoint Ms: i�mlee to the�vacant city council seat. Voice vote taken, all yes. W. Amlee.sworn in, using the Oath of Office. MS4-Report — Emily Jennings — S.E.H. Ms. Jennings gave a brief overview of the. MS4 program, discussed the changesIn the permit process, and:.Gem Lake's status, City of Gem Lake .City Councii meeting. minutes August 18,1M Page 2 Deer Hunting Ordinance currently there -are no applications for a hunt, MayorArtig-Swomley-asked members of the council to review the ordigance. Councilmember Kuny rnentlbned.Section 4.A.3.-distance from the property line, More discussion to follow at a later date. Initial Discussion of Hoffman Road Repair Options/Storm Sewer Fund Council discussed a potential ordinance for a storm water utility fee,. possible.workshop item, asked City Engineet Gese to -come uprwitha:possible•fee; Council discussed Hoffman road options; mill and. overlay, Bituminous replacementand reconstruction, What would be a fair splution to the-properfy.owners, are we going to becoming back here again in five - ten years with whatever option the council chooses? Mayor Artig Swomley will meet with the two property owners to discuss theirfuture plans for their properties. Council -agreed that the mill and overlay:process would be the least:experislve. process. City Engineer rioted. that the.proJected costs on the spreadsheet are 2 A years. old and costs may have increased. by 5% each year. Mayor Bob's Ben engineering/op_tions/update A location and cost for the Mayor Bob's-bench.has- been -complited. -initial cost for the bench is $1;700 without installation. A motion was made by Councilmenibertlndner, seconded by Councilmember Kuny to.budget $3000.00 or less for'installatloh4nd purchase. Voicevotetaken,:all-voted yes.'Motien passes, bench project moves forward:. Election Update. Primary went well, requests for mail in ballots has increased: by.4,000 percent. This information is from Ramsey County and it covers•th..e whole county. Gem Lake has twp council positions open and one Mayor candidate. Candidate basics will be covered in Gern Lake News: Sanitary Sewer Manhole Inspections Council discussed S.E H:'s proposal to inspection and assess the condition of the City's-sahitary sewer. manholes. A motion was made by Councilmember Lindner, secondgd:by.Councilmember Kunyto have S.E.H. complete. the Inspection and assessment of the City of Gem.Lake's sanitary sewer manholes: Cost of the project*is*$$,500. Voice vote taken,.all.voted yes. Mo.tlQn passes;. project to proceed: Claims :A mofion was made byC000cilm* eiiiber Lindner, seconded by. CbuncilrheniberCacioppo to approve the claims forAugust, 202P Voice votetalcen, all voted.yes. Motion passes, claim,s approved. Presentations.frorn the Public Briefly discussed the Gem Lake Villas project, contractor is. addressing the punch listitems, curb and gutter., trees -to be pla nted. Items to b'e corlipleted in late fa ll. City will take over the road when the developer's agreement has been met. Open Items from the Council Members to Bring Up Councilmember Amlee suggested that due to our lack of funds in the charitable.gariibiing budget; Mr. Birkeiand could ask Merrick if more.charitable gambling funds can be allocated to Gem Lakefor their scholarship fund: Tree T*rtrst trees —planting will take place in the spring of 2021; City of Gem Lake City Council meeting minutes August 18,..2020 Page 2 Next Meetings! Workshop City.Council, Tuesday, 5eptember 1.5, 5eptember workshop: cancelled. Adiournment Being there no further bu8iness, f6[low ing a.motion from Councilmernber Lin&er, Seconded by. Councilmember Cadoppo,..the meeting adjourned at 9:12 p:m. Respectfully submitted, Gloria. Tessier. City.of Gen! Lake City Council t e:eting minutes August 18, 2020 Page 3 I NORTHWEST ASSOCIATED CONSULTANTS.,, W... 4156..OIsd.n- Nienzorial Higliway, Ste. 320, Golden. Valley, MN 5547-2 Tele-p*hc.Yd : 7.63.9.57.1100 We.bsite: yiww.n;:a:cp-lanning:corr: STAFF MEMO TO.:. Gem Lake... City Council FROM: Nate. Sparks DATE: September 11,2020 RE: Genf Lake. Corttpreliensive Plan BACKGROUND Every ten years, the. City is required by the Metropolitari Coundil to update the Comprehensive Plan. The City prepareda draft.Comprehensiye Plan and sent it into the Metropolitan Council for preliminary.revieiv on August 29; 2018. The. Metropolitan Council provided.a set of comments and required revisions. -On January 18, 2019, the City sent out the plan to the required list of adjacent communities and aii'eoted jprisdictions. The -City received some more. minor comrrrents and requested revisions.retwed to.this review: Based on the. revisions associated with this review NAC and S1 H have completed all requested revisions. At this point, the plan is ready to be submit ted to. the Metropolitan Council for formal review. Prior to sendint the plan in for formal review,. the City must ltolrl a.public licaring and adopt a resolutiori'authorizittgsubmission. to the Metropolitan Council. PLAN RE'V'ISION$ The pfiW0.9I*mAsions made were technical in.nature throughout the plan.'The Metropolitan Council wanted more specific information on the location of new housing units in the City. The City's goal was to provide the required units within the Gateway. Mixed Use Area, The City's.adopted. zoning regulations and. policies were more clearly stated in the plan as,to how and when the units aree to be provided, Tfie section of the plan that includes housing was slightly modified, as well, to include -a required table of "common housing tools. This table is needed to list common housing tools used it the area and wlieii.tlle City would.specificaliy use these.topis; The.table was intended to reflect existing City policies. NEXT STEPS New comments and requested revisions may be provided to tl�e City and will be addressed as received: Upon addressing any future comments, the: City will need.to pass another resolution placing the.platt into effect. This will likely occur in the next few months. REQUESTED: ACTION The City Council should hold 'a public hearing, take any public comment, and there adopt the resolution authorizing the submission of the. Comp Plan, Ifthere are:any changes desired; these changes con. be made prior to*the formal. subpIiss qn. u City of Gem Lake RE$OLUTION. NO.2020-Ml$ September.'15, 2420 A resolution to approve the Gem Lake 2040 Comprehensive Plan and authorize submission to the Metropolitan Council; WHEREAS, under. state law, the.City:of Gem Lake -(the "City") is. required to preparea comprehensive plan every tenyears and -the Metropolitan Council is enabled to act as the reviewing authority for the CiV& cofnpre.hensive plan; and WHEREAS, the City's comprehensive -plan guides land use which. is the basis for zoning regulations in the City;. and WHEREAS, the City .sent the Cor - fehensive Plan to adjacent -and affected jurisdictions for review on January 18, 2019; -and WHEREAS;. the City received and reviewed comments associated with this review and incorporated the comments into the pleni,.phd WHEREAS, the. City held.a duly noticed public hearing an Se.pternber 15, and Now; therefore be it. resolved, that -the City. Council of Gem*L.ake approves the 2040 Comprehensive Plan. and authorizes submission to the Metropolitan Council. The motion for the adoption of the. foregoing Resolution was offered"ley, Councilor and was. supported by Councilor and was declared.adopted teased upon :the following vote:. Artig-swomley, Amlee cacioppo Lindner Kuny Mayor Attest .I,. Gloria Tessier, the duly qualified Acting City Clerk for the 'QN of'Gem Lake, County of Rainsey, State of Minnesota, -do: herrby certify that the > vrrgoing Resolution is a true and occurate representation of action taken by the City. Council of the City of Gem Lake on the date first. written, Septembe..15, 2020 A6009 MY Clerk I WO v A,.m- : F. 4i V " ' �'Jzr.�l• 3'] �'r�"rrr'. 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Y Q X w 0 .� Lr 0 �w 0o IL -.--.•-• .....F,._,,:...::.�:.w;.�:� _.., Wes:... �. LO q co m co r m CD C11 C9 . OD f OD Fh O N CV w } W. . a a M. z. = U L a X : O r u> co m E4 o (.:) u: (D co u: c"I c m Lo C rn ni m M N O 10 O" 6� N M N 64 b m o m us OD' O f0 OD N N. bq co O L CC C-L. Q CP M .N OD to O N N 69 LO N (D V C4cq N 4R C1 07 O. os 'n r� O r OJ N 609 O In iyi ao cl r QQ N Q b4 LLl. LU D LU mj } a u� ,n J w 2 .w a ► w w s m c m < r > CITY OF GEM LAKE, MN 42QO Otter Lame Road _ Gem Lake, Minnesota $5110 *-- - September 10,.2Q20 To: Mayor and :City Council From: Tbin Kelly,. Treasurer RE: 2021 Preliminary Property Tax Levy. State Statues require Cities -to certify their preliminary property tax levies by September 3&. this year. Once the -preliminar}► gioperty tax levy is approved -and certif ed to the County .Auditor, the .City can lower the leVy during the remaining budget process but cannotexceed the. certified preliminary levy.. ,Fair this reason, most Cities certify. a. preliminary levy using worst -case budget scenarios, which -Is. the case with the City's 2021 preliminaryproperty levy and budget. The 2021 preliminary property tax levy is proposed at.$55008, which :is.;a 6.83%A decrease from the 2020 certified preliminary property tax levy: The 2021 preliminary. Property* tax levy consists of a debt levy'of $89,941,00 (an ind.ease front 2020 preliminary debt.levy-af $9,106.00) and the general operating levy of $448,367.00 *(a decrease of-9.374% from the 2020 preliminary-tax:levy).. The following changes were made from'the 2020 adopted. budget as a basis for the.2021 proposed preliminary propeity tax levy: L Based on the *2015 Refunding. Bond schedule the debt levy for*2021 is: set for $80,876:.0.0..In addition: -in 2018, the City issued. bonds fog the impr6Vements on Scheuneman Road and the 2021 debt levyfor this issue.is $7,940. The two ofthese debt levies makes up the City'9 2N I debt levy of $8%941. 2.. Licenses and Perrhits decreased $3,450 for less building. activity.. 3. City Council contingency was left at $19,000.. 4. Police budget was increased 6% to S95,700. The City. of VAIite Beg Lake has not set their budget as of today. 5.. The. cost of fire services could increase-.1.60/h. to $25.,6$0,0.0. 6. .Building Inspections activity is -being decreased to .$37,779 for less buildi g activity but still includes the part -tine inspector to help with building activities that was included in the 20.19 and 2020 budget. 7. ioad Maintenance budget includes .$8,000 for trimming boulevard trees. 8. Salt/sand remEdIi. at $17,000 and snow plowing. contract decreased from $20,000 to $18,500. 9. Included a park -maintenance. -budget of $5,000 for maintaining park area ofthe Villas of Gem . Lake. 10. The 2021 budget does not include the $30;Q00 to construct a sidewalk/pathway along County Road B. I L The 2020 .budget. includes $25,000,00 fox. future. iaxprovements: Look-fowus on-tho World Wide Wcts:nt gemla.kemn.org 12, Revenue and:other expenditure line items adjusted based on past history. r 'These changes result in. the Cityproposed preliminary tax levy of $538,308:06-for-20-21. This -ewnpares to 2020 preliminary 1py of*$577,77.3,0.0 and 2020'final levy of $530,798,00; Using a. .2021 property tax. levy of $538,308-,00 and the City's.2021 tax capacity ($1,4.38,923.00) and;median valued -.home ($335,$50.00).. for Gem take, that ined. Nialued home, that property would pay2021. City property taxes af$1.,1.36.94 compared to 2020 preliminary levy of $1,429.00 (a decrease of $2.92.06)'and the 2020 final levy amount of $1,195,26.(a decrease. of $59.32). Again, as the City:prepares it final 2021 budget the property tax levy can be lowered from the preliminary levy but not increased above the preliminary levy. So tonight:, the.City-Council is requested to pass a resolution adopting the 202.1. preliminary property tax. levy of$538,368.00. Look for m an: the World. Wide Web at gem iakemn.o.rg 12. Revenue and other expenditure line items adjusted based on pasthistory.. These changes result in the City propased.preliminary tax levy of $538;30$.00 for-2021. This 773.00 and- 2020: f nal levy of $530,798,00, Using a compares to 2420 preliminary levy of $577, 9 3.00:.and median 2021 property tax levy of $538,30$:00 and the City's'2021 tax sagacity ($1,438; valued home ($335,850.00).for Gem Iake,'that median valued home, that property would pay 2021. City property taxes of $1336.94. compared to 2020lpreliminary levy of $�1,429.06 (a decrease of $292,00) and the 2020 final levy amount of.$1,195.26 (a decrew:of 09.32). Again, as the:City.prepares it final 202I budget:the piioperty-tfax levy -can bg1owereii from the' preliminary levy but not increased above the prelihiinaty levy So tonight, the Citq Council is requested to:pass.a.resolution adopting the 2021 preTunin y property Levy of $53$>308.00. Look for us on the.World Wide Web at geinlakeinn.org. AgAr CITY -OF GEM LAKE, MN 4200 O#ter*Lake Road Gem -Lake; Mi:nnesota'S$110 RE, S OLuTION .NO.2020-012 SEPTEMBER 15, 2020 A RESOLUTION ADOPTING THE PRELIMINARY AMOUNT TO BE RAISED BY PROPERTY TAXATION FOR THE YEAR 2021 WHEREAS, the City Treasurer has presented a (Proposed). General Fund Budget- of $405,217,00 which. includes a (Proposed) General Tax Levy of $448,367.00 and a Debt Tax.Levy of $89,94 i .00 for fiscal -and calendar year.2l}21 based upon best .estimates of costs for runningIhe.Cily.of Gem Lake in 2.021 and WHEREAS,. these estimates were reviewed by the City Council ob 18 August, 2020 and atneridied- based upon. best information received from outside contractors and input from the City Council NOW, THEREFORE BE IT RESOLVED, that the*City Council -of the City of Gem Lake does forinalty adopt the 2021 Preliminary Tax Levy as. i"allows General Property Tax Levy W6,137.60- Fiscal Disparities 14,755.0.0 Debt Levy 87,436.00 Total Levy $519,308.00 ; and 11E IT I'URTHER RESOLVED that the City Clerk .is: charged with Certifying said. Tax and Debt Levy to Ramsey County Property Taxation and other government.bodies for whom: this information is�equired. The.foregoing Resolution was offered by Councilor and was supported by Councilor. and. -was :declared adopted based upon the following vote; NAME ARTIG- SWOMLEY CA.CIO.PP.O LINDNER KUNY AMLEE Vote Attest I, Gloria Tessier; the duly qualified Acting City Clerk for the City. of Cxem Lake,. County of Ramsey, State. of Minnesota, do hereby certify that the foregoing Resolution- is ,a true and accurate tepresentatiori ofactift.taken by the City Council: of the City of Gem Lake on the: date first written. 1.5 September 20.20 GLORIA TESSIER, Actilag City Clerk Loak for us on the'World-Wide Web at. gemlakein.n.org City of Gem Lake, MN NPDES Phase II Stormwater Permit Program 2020 Annual Public Meeting Emily K. Jennings SEH September 15, 2020 Overview NPDES MS4 Program Background Status of Compliance 2019 Reporting Year 2019 Program Updates Permit Updates/Look Forward 2020 Culvert Inspections Comments / Questions 11 9/15/2020 1 NPDES Program Background Clean Water Act: Established NPDES Permit U.S. Environmental Protection Agency Administered locally by MPCA City of Gem Lake. Phase II Small MS4 General Permit coverage Stormwater Pollution Prevention Plan (SWPPP) 6 Minimum Control Measures (MCM) Best Management Practices (BMPs) , Measureable Goals NPDES National Pollutant Discharge Elimination System MS4 Municipal Separate Storm Sewer System Status of Compliance Permit requires annual review and self assessment of compliance Reporting period January 1 to December 31 -The City met the requirements of the pei mit for the 2019 permit year 9/15/2020 2 M �' �! � � � h+ �; ' '.y I is ��l r-• ' 4� � l�% � `y Clean WaterAct: Established NPDES Permit r. U.&-Environmental Protection Agency >. Administered locally by MPCA > City of Gem Lake: Phase II Small MS4 General Permit.coverage > Stormwater Pollution. Prevention Plan (5WPPP) 6 Minimum CantroF Wieasures (M.CPA) Best Management Practices (SMN.. Meaatueaple Goals nPDES [national Pollutant Discharge Elimination.Systern M54 Munscipal Separate Storm Sewar.SysWrn Status of COMPHanc(a ;c Permit requires annual review and self assessment of compliance >Reporfing period January 1 to December• 31 :>The City met the requirements of the permit for the 2019 permit year 9/9 SAO-io 2 Minimum Control Measures 1. Public Education and Outreach 2. Public Participation and Involvement 3. Illicit Discharge Detection and Elimination Construction Site Run -Off Control 5. Post -Construction Run-off Control Pollution Prevention/Good Housekeeping for Municipal Activities Program Summary MCM 1: Public Education & Outreach Articles in the City newsletter , Circulation -- 230 Stormwater Page on the City web site -Contacts/Audience — 100 Partnership with VLAWMO and RWMWD Workshops, Events 9/15/2020 3 Program Summary MCM 2: Public Participation/Involvement P Solicit and Respond to Public Comments .11/21/2017 (2016 Reporting Year) .12/18/2018 (2017 Reporting Year) .08/20/2019 Reporting Year) Today! 8/17/2020 (2020 Reporting Year) Program Summary MCM 3: Illicit Discharge, Detection & Elimination City storm water base map use for system inspections . 1 reported illicit discharge in Jan. 2019 (Haven Lane) 9/15/2020 rd MCM 2: Public Participation/[ * ny-91vei-hent Solicit and. Respond to. Public Cornrherits 11121/2017 (201-6 Reporting Yebr) 12/1 8/2Q1 8.(2-P 17 Reporting Year) 08/20/2010 Reporting Year) f6daly! 8117/2.02*0.(2020 Repoft0g.-Year) Program Summary PO MOM 3: Illicit Discharge, Detection & Elimination. o UtY-$Wern water base map use for system InSpectons I reported illicit'discharge: in Jan. 2019 (Haven Lane) e s"!e' -Oto r.y' Inspealons by 9/15/2020. M Program Summary -- MCM 4: Construction Site Stormwater Runoff Control 1 Active Co'�traction Sites > 1 acre in 2019 Villas of Gem Laie Program Summary MCM 5: Post -Construction Stormwater Management 0 Construction sites > 1 acre reviewed in 2019 -- New BMPs, new responsibilities 9/15/2020 a Program Summary MCM 6: Pollution Prevention &. Good Housekeeping for Municipal Operations Inspections: 13 Outfalls 1 Infiltration Basin (Structural Stonmwater BMPs) 2 Ponds Some minor sedimentation and over -vegetation Permit Updates r Permit expired on July 31, 2018 Keep operating under expired permit New permit will be issued soon (?) — Last Update said Fall 2020 - Application for Reauthorization (Part 2) I -review and Public Comment Coverage Extended — Clock Starts, Initiate Updates 12 PI�lonths (?) for Updates 9/15/2020 n. Program Summary MCM 6: Pollution Prevention & Good Housekeeping for Municipal Operations T Inspections: 13 Outfalls 1 Infiltration Basin (Struc.tuia[ Stormvmter Bti1Ps) p 2 Ponds r Some minor sedimentation and over -vegetation Permit Updated Permit expired on July 31, 2018 >.Keep.operating under expired permit -New,permit will be issued soon Last Update said Fall 2020 a Appiication. for Reaufhorization (part-2) Review and Public Comment Coverage Extended — Clock Starts, Initiate Updates T2 Months (?) for Updates 9/15./2.020 H 9/15/2020 Permit Updates Changes are coming! o Ordinances o MCMS y Budget Y Utilize Resources - VLAWMO ➢ Audit Considerations — Expect Soon y Program will be reviewed and updated accordingly 2020 Culvert Inspections Type, Material, Size Erosion ➢Sedimentation ➢Structural Integrity ➢Submerged Erosion Results Legend Culvert End O NO value Erosion NO O Partial • ves . Grayly l.Wm • flared end a INet C4 LunSs Gem Lake Parcels Sedimentation Results Legend Culvert End O NO Va us sernrtiernatlon No a Pa.'lial ♦ Yes - Pkaed • Crwlb Man Rared end ' Gti Limns Gem Lake Parcels 9/15/2020 i yc• 'lR;t,''. x rlr .. ..�.. Pip r•- - d r^ r� �k. �3 F ri ^b . I t � J p vl s. 7 .1 t r a• L Z 4' (r< Legend CUIVYrt Ertl a �zr =.:;� •rF'� n _ :,.z�T.t: _.=" �i'...N :;mar - �S-. • YM. Eroalan v'Y O yY '` A Parua' =�F7." i. 6. 25 -- G: avI:Y Main Y z - - J J 3SeC E R nq' r - - CrtyL1 rruts 4;Y'± :frs. rs Gtm LSK! Parcel m ,.1 at "r iM' • .t c a7 i=•)"tip nti j: a• r _ kw, :L ;` gti•+: --.i`' :. L ' ':tf.•-:=i'�^'. ...J:.- 5i•'�i�• >r:; -f•" .rr+-.... i:l• �. h�.- .fir- -y{'' - ary: :. sz^- ': ulvef End �'i^�a:' t �F: »��wC•.r• •vac- ;:. =tip:. .:•f F ::'?f'��,=•':t' - �'�' n.:K'^ Yr .:.>!-=?,��:^ram SEr1fTQnlJliJn ur'� .%;%zJ,,r...,y..,, :•:� -• - - - �:,1•rs - 8 2.J fc�'F j f - Pa. �x i NO Year ^ca •;� s . "uC `:l c• - `" ,l -jar •%+ 3a;s - �17 R _ 3PIet' ;?.1. ='s':. ,�=i^J i�:4�9`�•�:�iN _:Y ., Ge Lake .uie: aa•,,r :e ii. :: y:G 9/15/2020 P �:::. �r �. Structural Results Legend Cutvrt End o No value StrYCnRalConddlon Good Fair • Poor • Gravity Frain - Flared end City LutIts Gern Lake Parcels _ Submerged Results Legend Culvert End Subin•rged vo Partial • Yes Gravity Man Flared end z lrNet City L mGs Gem Lake Farces -- 9/15/2020 0 2020 Culvert Inspections M\ Ol�j� ���OM Increase Public Education yClean Out Sedimentation rSpring, Fall, As -needed Ylncrease Conveyance Capacity 9/15/2020 10 2020 Culvert Inspecdons E� Recommendations Increase Public Education -Glean Out Sedimentation Spring, Fall, As -needed iii,increase Conveyance Capacity Opportunity t® Provide Input o Collect comments Consider program changes Update. program BMPs as needed Annual wrdrt:W66 submitted to. MPCA on June. 9, 2020. 9/15/2020 10 Comments 1 Questions Direct comments to: Emily Jennings r ejenningsasehinc.com 651.302.7669 Justin Gese jgese(a sehinc.com 9520912.2612 9/15/2020 11 �:: �Y CllftonLarsonAllen LLP . CLAconnectcom Management City of Gem Lake Gem Lake, Minnesota In planning and performing our audit of the financial statements of the City of Gem Lake (the City) as of and for the year ended December 31, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. However, during our audit we became aware of matters that are opportunities to strengthen your internal control and improve the efficiency of your operations. Our comments and suggestions regarding those matters are summarized below. A separate communication dated August 28, 2020, contains our written communication of any significant deficiencies and material weaknesses in the City's internal control. This letter does not affect our communication dated August 28, 2020. Employment Policy During our audit procedures, we noted that there was no policy that dictates whether City employees can accrue vacation from year-to-year. CLA recommends that there be a formal policy implemented which details out the benefits of each employee position at the City, including the year-end accrual of any vacation or other compensated absences. Contract for Financial Services During our audit procedures, we noted that the City entered into a new contract with White Bear Township to provide accounting services, dated in the fall of 2019. The contract was signed by the City, but contained no signature from White Bear Township officials. We recommend that the City ensure all contracts with external parties be signed by both the City and the external party. Capitalization Policy During our audit procedures we noted that the City does not have an official capitalization policy. The City could miss capitalizing items in capital outlay without a standard amount or capitalize trivial items on an inconsistent basis. This can lead to inconsistencies in the matching of the expense to the life of the asset. We recommend that the City create a capitalization policy with a threshold somewhere in the range of $$2,500 to $10,000 for capital outlay expenditures. We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with various City personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. A member of Nexia International Management City of Gem Lake. Page 2 This communication is intended. solely for the information and use .of management and others within the City, and is not intended to be, and should not be, used by anyone other than these specified parties. ZZ- CllftonLarsonAllen LLP Minneapolis, Minnesota August 28, 2a20 I CITY OF GEM LAKE, .MINNESOTA FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDE❑ DECEMBER.31, 2019 4200 OTTER LAKE ROAD GEM.LAKE, MINNESOTA 55110 CITY OF GEM LAKE, MINNESOTA TABLE OF CONTENTS YEAR ENDED ❑ECEMBER 31, 2019 1. FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 'I BASIC FINANCIAL STATEMENTS: STATEMENT OF NET POSITION 4 STATEMENT OF ACTIVITIES 5 BALANCE SHEET - GOVERNMENTAL FUNDS 6 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION -.GOVERNMENTAL ACTIVITIES 7 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS 8 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES -- GOVERNMENTAL ACTIVITIES 9 STATEMENT OF NET POSITION -- PROPRIETARY FUNDS 10 STATEMENT OF REVENUES, EXPENSES, AND CHANGE 1N. NET POSITION - PROPRIETARY FUNDS 11 STATEMENT OF CASH FLOWS- PROPRIETARY FUNDS 12 NOTES TO BASIC FINANCIAL STATEMENTS 13 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE -- BUDGET AND ACTUAL - GENERAL FUND 29 NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 30 11. OTHER REQUIRED REPORTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING. S TANDARDS 31 INDEPENDENT AUDITORS' REPORT ON MINNESOTA LEGAL COMPLIANCE 33 SCHEDULE OF FINDINGS AND RESPONSES 34 CITY OF GEM LAKE, MINNESOTA TABLE OF CONTENTS YEAR ENDED ©ECEMBER 31, 2019 I. FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION ` STATEMENT OF ACTIVITIES 5 BALANCE. SHEET -GOVERNMENTAL FUNDS 6 RECONCILIATION OF THE GOVERNMENTAL. FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION - GOVERNMENTAL ACTIVITIES 7 STATEMENT OF REVENUES, EXPENDITURES,. AND CHANGES IN FUND BALANCES -- GOVERNMENTAL FUNDS $ RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES STATEMENT OF NET POSITION - PROPRIETARY FUNDS 10 .STATEMENT OF REVENUES,. EXPENSES, AND CHANGE IN NET POSITION - PROPRIETARY FUNDS 11 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS 12 NOTES TO BASIC FINANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON INFORMATION. 13 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN. FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND 29 NOTE TO REQUIRED SUPPLEMENTARY INFORMATION 30 Il. OTHER REQUIRED REPORTS INDEPENDENT AUDITORS' REPORT ON INTERNAL. CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS .PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANVAMDS 31 INDEPENDENT AUDITORS' REPORT ON MINNESOTA LEGAL COMPLIANCE 33 SCHEDULE OF FINDINGS AND RESPONSES 34 CITY OF GEM LAKE, MINNESOTA SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) YEAR ENDED DECEMBER 31, 2019 MATERIAL WEAKNESS (CONTINUED) 2019-003: Material Audit Adjustments Conditiom During our audit procedures, we identified several material audit adjustments that needed to be posted to the City's .general ledger in order to arrive at the correct year-end balances. These include adjustments to beginning fund balances, accounts receivable, special assessment receivables and revenues, and deferred inflows of resources, Criteria: Management is responsible for having adequate controls and processes in. place to ensure that all year-end balances are reconciled,:accurate, and free from. material misstatements. Effect: The likelihood of a material misstatement in the year-end financial statements increases when the City does not have procedures. in place to identify errors in final general ledger balances.. Cause: The City does not have. the appropriate procedures andlor personnel in place to :properly reconcile year-end balances. Recommendation: We recommend City management work with the finance personnel to ensure there are appropriate procedures in place to reconcile and review all year-end balances to ensure they are free from material misstatements. Management Response: Management is exploring ways to provide a reconciliation between systems. (36) FINANCIAL SECTION 4R- # };r3 CllhonLarsonAllen LLP INDEPENDENT AUDITORS' REPORT Honorable Mayor Members of the City Council and Citizens City of Gem Lake Gem Lake, Minnesota Report on the Financiai Statements We have audited the accompanying financial statements. of the governmental activities, the business type activities and each major fund of the City of Gem Lake (the City); Minnesota as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the. Financial Statements Management is responsible for the preparation and fair presentation of these. financial statements in. accordance with accounting principles generally accepted in the United States of America; this includes the design; implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free frorim material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the. United States of America and the standards applicable to financial audits contained in Government Auditing.Standards,. issued by the Comptroller General of the United States: Those standards require that we. plan and perform the audit to obtain reasonable assurance .about whether the financial. statements are free from. material misstatement. .An audit involves performing procedures to obtain audit>evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error:. In making those risk. assessments, the auditor considers internal control relevant to the City's preparation and flair presentation of the fnancial 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. A member of �Vexia. International CliftonLamonAilen LLP 'M , , �� CLAcannecl.coni INDEPENDENT AUDITORS' REPORT Honorable Mayor Members of the City Council and. Citizens City of Gem Lake Gem Lake, Minnesota Report on the Financial Statements We have audited the accompanying. financial statements of the. governmental activities, the business - type activities and each major fund of the City of Gem Lake (the City), Minnesota as of and for the year ended December 31, 2019, and the. related notes to the. financial statements, which. collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in: the United States of America; this includes. the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit.. We. conducted our audit in accordance with. auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governrrrent Auditing Standards, issued. by the Comptroller General of the United States. Those standards require that we. plan and perform the audit to. obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and. disclosures M the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation. and fair presentation of the: financial statements in order to design audit procedures that are appropriate in .the circumstances, but not for the ,purpose of expressing an opinion on the effectiveness of the City's internal. control.. Accordingly, we express no such opinion. An audit. also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaivating 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, A member of Nexia International Honorable Mayor Members of the City Council and Citizens City of Gem.Lake, Minnesota Opinions in our opinion, the financial statements referred to above present fairly;: in all material respects, the financial position of the governmental activities, the business -type activities and each major fund of the. City of Gem Lake, Minnesota as of December 31, 20.19, and the: respective changes in financial position and cash flows, where applicable, thereof for the year then ended. in. conformity with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the City of Gem Lake's 2018 financial statements of the governmental activities, the businessAype activities, each major fund, and the aggregate remaining fund information,. and we expressed unmodified audit opinions on those financial. statements in our report dated July 31, 2019. In our opinion, the surnmarized comparative inform ation. presented..herein as of and for the year ended December 31, 2018 is consistent, in all material. respects, with the audited financial statements from which it has been derived. Other Matters Required Supplementary Information Accounting principles: generally accepted in the United States of America required that the budgetary comparison information as listed in the table: of contents, be presented to supplement the basic financial statements, Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it.to.be an essential part of financial reporting for placing the basic financial statements in an appropriate.operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance. with auditing standards generally accepted in the united States of America, which consisted of inquiries of management about the methods of preparing the information and comparing. the information for consistency with management's responses to our inquiries, the. basic financial statements; and other knowledge we obtained during our audit of. the. basic financial statements. We do not.express an opinion or provide any assurance on the information because the limited. procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has omitted the management's discussion and analysis that accounting principles .generally accepted in the United States of. America require to be presented to. supplement the basic financial statements. Such missing information, although not a part of the basic. financial statements, is required by the Governmental Accounting Standards Board who considers it:to bean essential part of financial reporting for placing the basic financial statements in an appropriate operations, economic, or historical context.. Our opinion on the basic financial statements is not affected by this missing information. (2) Honorable Mayor Members of the City Council and Citizens City of Gem Lake, Minnesota Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 28, 2020 on our consideration. of the City of. Gem Lake,. Minnesota's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,. regulations, contracts, grant agreements; and other matters. The purpose of that report is solely to describe. the scope. of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide. an opinion on the effectiveness of the. City of Gem Lake's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered. in assessing the results of our audit. Ciiftonl_arsonAllen UP Minneapolis, Minnesota August 28, 2020 (3) Honorable Mayor Members. of the City Co.u.nciI and Citizens f City of Gem Lake, Minnesota Other Reporting Required by GovemmentAuditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 28, 202.0 on our consideration of the City of Gem Lake, Minnesota's internal controf over financial reporting and on. our tests of its compliance with certain provisions of laws, regulations, contracts; grant agreements, and other matters: The purpose of that report. is. soloy to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and `not to provide an opinion on the effectiveness of the City of Gem Lake's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing. Standards and should be considered in assessing the results of our audit. CIiftonLarsonAllen. LLP Minneapolis, Minnesota August 28, 2020 BASIC FINANCIAL STATEMENTS CITY OF GEM LAKE, MINNESOTA STATEMENT OF NET POSITION ❑ECEMBER 31., 2019 ASSETS Cash and Investments Taxes Receivable Special Assessments Receivable Accounts Receivable Due from Other Governments Accrued Interest Prepaid Items Internal Balances Capital .Assets: Capital Assets Not.Being Depreciated Capital Assets Being Depreciated Accumulated Depreciation Total Assets LIABILITIES Vouchers and Accounts Payable Accrued Interest. Payable Due to Other Governments. Payroll Taxes and Withholdings Unearned Revenue Long -Term Liabilities; Amounts Due Within One Year Amounts Due in More than One Year Total. Liabilities NET POSITION Net Investment in Capital Assets Restricted for Debt Service Restricted for Park Improvements Unrestricted. Total Net Position See accompanying:Notes to 8asic.Financial Statements. Governmental Business -Type Activities Activities Total. $ 984;319 $ 216,986 $ 11201;305 22,300 - 22,300 922,680 6; 896 .928, 976 12,648 1.9,231 .31.,879 2,506. - 2,506 1,253 209 1,462 1,050 21826 3,876 (233;627) 233,627 - 20500 - 21:500 21483,860 1,537,630 4,021,490 (88.3,278) (226,598) (1,109,8.76) 3;3.15;611 1,790,807 5,1061418. 28.,584 7 28,591 15,969. - 15,969 7,167 25,731 32,B88 769 - 769 .9,400 - 9,400 90;000 90;000: 1,.177,363. - 1,1771353 11329,242 25,738 11354,980. 335.,719. 1,311,032 1.,646;751 749,099 - 749,099 45,317 - 45,317 856,234 454,037 . 1,310,271 $ 1,986,369 $ 1,765;069 $ 3,751,438 (4) CITY OF GEM LAKE, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2019 ASSETS Cash and Investments Taxes Receivable Special Assessments Receivable Accounts Receivable Due from Other Governments Accrued Interest Prepaid Items Internal Balances Capital Assets; Capital Assets .Not Being.Depredated Capital Assets Being Depreciated Accumulated Depreciation Total Assets LIABILITIES Vouchers and Accounts Payable Accrued Interest Payable Due to Other Governments Payroll Taxes and Withholdings Unearned Revenue Long -Term Liabilities: Amounts Due Within One Year Amounts .Due. in More than One Year Total Liabilities NET. POSITION Net Investment in Capital Assets Restricted for Debt Service Restricted.for Park improvements Unrestricted Total Net Position See.accompanying Notes to Basic Financial Statements:. Governmental Business -Type: Activities Activities Total $ :984,319 $ 216,986 $ 1;201,305 223800. - 22,300 922,080 Sj896 928,976 12,648 19 231 31,879 2,.5.06 — 2;506 1,253 209 1,46.2. 1,050 2,826 3,876. .(233,627) 233.627 - 2,5Q0 - 2,500 2;48300. 1,587,630 4,021,490 (883,278) (226,598) (1,109,876) 3,315,611 1,790,807 5,105;418 28,684 7 28,591 15,959. 15,969 7,157 25,731 32`,888 7.69 - 769. 9.,400: _ 0,400 90.;000 1,177, 363. 1, 329, 242. 1,177; 363 25,738 1,354,980 355,719 1,311,032 1,646,751 749,099 - 749,099 45,317 -- 45,317 8561234 464,037. 1,310,271. $ 1,9.86,369 $ 1,765,069 $ 3,751,438 (4) CITY OF GEM LAKE, MINNESOTA STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 Net (Expense) Revenue.and Program Revenues Changes in Net Position Fees, Charges, Operafing. Capital Grants FUNCTIONS/PROGRAMS Fines, and Grants and. and Governmental Business -Type. Expenses Other Contributions Contributions Activities Activities Total GOVERNMENTAL ACTIVITIES General.Govemment 5 168,165 s 50.867 .$ 9,172 S 385 S (107,741) S - $ (107,7.41) Public Safety 85725 - - (83,725) (85,725) Public Works 110,651 83,772 *382 29,503 - 29,503 Conservation and Development 97,769 - - (97.789) {97,789) Interest aM Fiscal Charges 38,960 (38,960) (38.960) Total Governmental Activities 501;290 134,639 9.172 -%767 (300;712) (306,712) BUSINESS TYPE ACTIVITIES Sewer 56,51& 65;428 - - 8,912 8;512 Water 55.212 37.53B (17,674) (17,674). Total Primary GovernMent $ 613.019 S. 257,605 S. 9,172 .$ 56,767 (300;7i2) (8;762) (309,474) GENERAL REVENUES Taxes Proped yTaxes, Levied for General Purposes 379392 379,392 Property Taxes, Levied for Debt. Service 73,702 - 73.702 Grants and Contributions. Not Restricted for a Particular Purpose 13 13 Investment Earnings 18;095 B;886 26;Sol Miscellaneous 2,500 - 2;500. Transfers (151,2291 151,229 Total Geneial•Revertaes 322,473 .160;115 482.588 ..CHANGE IN NET."ITIQN 21,761 151.353 173,114 Net-Pp9i w-•94wimofYBar 1,964,608 1,B33;71s . 3,57.8,324 NET PO$ITION - END OF -YEAR 5 1.986,369 5 1,765,069 $ 3,751,438 See accompanying Notes to Basic Financial Statements: (5) rp'r `V W e O' Y yy Q� aa pp Qyyp�� o W ppff N OD n.n't�pp N .�m A N � m N N to G'S Cr M fr 1+/ M �O� of M N � to'N N N O, n N M N W'O W 2 N ? ni'N N'lV r'v r id 1, M W N (ry v} W to H i r r r r EO , r u} to 64 N i0 m m' N N m N co N — M ID, ti r , ,. ti Q i , o o ►- W •Np � lV N NnI ... QC fi W.1 H . N rl. N Tf+ LL ZLa� can N l7 NO No N N M f Q.� L Uj✓ N e9 rn W O: go (N r r r CS rk ui LSI aria tD ` w W N N e �U��CD 'I ' N Y m . Q f1. Z O r m Sjr..' E Z Z N• N .H N 0Zw� WCD LIJw ck , m u O Q 0 Q VE U 9. m r qo N N M PtI+ + N ti O + • + t tr ti t0 N 1,311 fV !s jN m N Y1 v. 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I N � I N ry N W Y W �� o m Oi m co W O ci a v Z m LL a: � w a Z z W J W .i1�11 n MQ�y�1 r r w N N M N N ILz �¢ i.i fA - r r 0 0 o o.N.. U. V �%•% M O 'm lD i� r.GN] S7 'ID C �A v1. 4 I N r 0l V n I� O W O � 1 1 o 1�� Q N .SD ID 1fl W 10 •O � Cry LL � N �cc f" Ri w[ Cl 11 U1 O LU 9 i t� o �. z :,, d a O c A "I _0LU y N . y Q Srn LU ¢ 2 Nic m.0 U 'm LLLL �. �p N � Q yCC T N py C j Yy �jE a W S.i N N II ❑. E 41 m O_ M 71 ~ 61 = . O 3 y. 0. �a7 :5 �17 N . . y LL L 7 dfij _E w �" C7. _ LL ¢ 4 W. v S� a. `m LL .� Z U d' u o E. � w '9 w C. m' R y W to Z a DEL •• C -6 i G �a g1 .-o K g 7 R S: M 3 m c W O o' ..oo LL jz� ¢. u a o LL �. a LL. I CITY OF GEM LAKE, MINNESOTA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES DECEMBER 31,.2019 TOTAL FUND BALANCES FOR. GOVERNMENTAL FUNDS $ 732,771 Total net.position reported for governmental activities in the statement of net position is different because: Capital assets . used: in governmental activities are .not financial resources and, therefore, are not. reported in the funds. These.capital assets consist of: Land $ 2,500 Buildings 902,232 Office Equipment 17900 Infrastructure 1,563:728 Accumulated Depreciation (883,278) 1,603,082 Some of the City's property taxes. and specialassessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures.and, therefore, are reported as unavailable resources in the governmental funds.. 933;848 Some liabilities are not due and payable in the current period and, therefore, are not.reported.as fund liabilities. Balances at year-end are: General Obliigation. Bonds Payable (1,250,000) Unarnortized bond Premium (17,363) Accrued Interest on Long -Term Debt .(15;969j ("i.,283,3.32) TOTAL NET POSITION OF GOVERNMENTAL ACTIVITIES $ 1.,986;369 See. accompanying Notes to BasicHnanciai Statements.. (7) n' nN. p�p opp m .- [d T: If1 7 N. N 91 r � N l4 N m N m f� v1 ryZ r- p. W pf Cf S N P n, (O O W d N N N N OU c. r[l n LU C V N Q�l r. ry w N V1 rD O T n n afO m � �❑� � F w � � r io LL z W a. L v> m M L Z LLI U N 1yi v N f1 O o Y] C N W 0 n.LL CD 01 E rn I-Z Q az O WUpao V I zO.Z w ���zz��U � c QLOL N W WFWz m''ov odd` Q N N Q�Z�o a� O z 0 wz w W O N m r r . 1. , . , r , , i Ow o 6f r 1 pV1 M N d !� N iiiiii h ai u'i V O U m !_ Ig N N V w N Vl ¢ z (6 w V W z E o 0 g: n n w °.m W D o2 f N N .W: K. U. 'O 1y�� M O e , � tD • N , , N t�f 6p1f N O 1mN�. 'fir N ^ �t1 �. r W m m F Cl) W r a _ w 9. c a cn u o r 7 O w C] , a. = �c. .� m $. rn O p � p p ur Z �C y �n O. a. a bCC 7 F Ww N 2 C: ui ¢ m u o a W wa. Es z m lu a� re' E c w �, x 2 -� w U 2 �. y w u Lu Uzi .F c 1 0 Z `m p n �: .uJ W.i7a0.0 m aa` c c w � j H fn. : ii a Qr w iu 0 Z N V n �N�pp W'O. R 1 t[i lWo. O� m N, O m 6i 6 o+O'C N N N O. cV 6 q C m N m 1� Lp P) IOn r V N N T Q W Iti Q cA n r W N to fWp y' p] Cfl W 'D If1 N h v w N ics LV m N Qi 'n' W n N 'N C? Ifl pAp .- Oo n n O ttp� cl N to W n N P .mui �h m fOW .ry �Ifly.� N YN fA Z aco" a L r ❑ M _ � o a N z m LL N , ., f f • V f' ' '' � p f r S O Op W W �:1 'LP CV tV N uj Q �N N L �.4 Za Q= o 11 -Znm m�v LR Vy �NN LO LU Z D. Z' EL r Z Z u� toammo �W� n LL W ' 1 1 W F w Z 1J.1 N b N 4 CN7 7 N w . Z U p . �...� � © W Z W 0 C N r 1 1 I 1 f f p QV� c� ww oLL Z vyC �E ❑N �% ti NN OI Y N ��>Z .. 0 Q �E y . } (7 m " ~ W W Z. U � � ✓ n N. f f � � N p Cud O 4�T ate. ❑ Z' 'Z n C O N *➢gym N O O N N IL w ❑ .0 m`�' r ~ N C7 E a n " L> Q OS V} Oi N m'nlo� .rA.' N U u'] V fD.H Cf � /�. 1� ' O 1181 I�l3Y N LL W VY a w H N W v U) . 0' a M.% tu yEy w } a N w y z c a m N C• E z u lu UL w.5C7k a X.0 c�a or�_m Z ff w CITY OF GEM LAKE, MINNESOTA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES. GOVERNMENTAL ACTIVITIES YEAR ENDED DECEMBER 31, 2019 NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS $ 170,236 Amounts reported for governmental activities in the statement of activities are different because;. Governmentalfunds report capital outlays as expenditures. .However, in the statement of activities, assets are capitalized and. the cost.is allocated over their estimated useful lives and reported. as depreciation .expense. Capital Outlays: $. 66,883 Depreciation Expense (74,069) Transfer of. Capital Asset (151,229) (158,41.5) Delinquent and deferred property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period'.s expenditures and, therefore, are unay. aiiabie resources in the governmental funds. Unavailable Resources- December 31, 2018 991,780 Unavailable.Resources - December 31, 2010 933,848 (57,932) The.governmental funds report.bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the state ment.of net position, however, issuing debt increases long= term..liabilhies and does not affect.the statement of activities and repayment of principal reduces the liability. Also, governmental funds. report the effect of premiums and discounts when debt is first issued, :whereas these amounts are deferred and amortized in the statement Of activities. Interest is recognized as an expenditure in the. governmental funds :when it is due.. In the statement of activities, however, i nterest. ex pen se is recognized as it accrues, regardless of when it is due. The net effect of these differences is as follows: Repayment of Bond.Principal 65,000 Change in Accrued Interest Payable 1;590 Amortization. of Bond Premium 1,282. 67,872 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES S 21,761 See accompanying Ngtps to. Basic Financial Statements. (9) CITY OF GEM LAKE, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31., 2019 ASSETS Cash and Cash Equivalents Customer Accounts Receivable Accrued Interest Receivable Special Assessments Receivable Due From Other Funds Prepaid Items Total Current Assets Capital Assets: Utility Plant In Service Accumulated Depreciation Met Capital Assets Total Assets LIABILITIES Accounts Payable Due to. Other. 0ovem~ents Due to Other Funds Total Ltabitities NET. POSITION Net Investment iii Capital Assets Unrestricted Total Net Position see accompanying. Notes to Basic Financial. Statements, 00). Sewer Water 2019 Utility Utility Totals $ 21t3;986 •$ 18,151 209 91896 245,231 2,826 490,299 - S. 216.986 1,080 19.231 - 209 6,896 245,231 2,826 15780 491.379 8.13,678 723.952 1,537,630 191,696 (34,902) (226;598 621,982 689,050 1.311,032 1,112,281 690.130 1,802,411 7 - 7 13,483 12,248 25,731 - 11,604 11,604 13.406 23,862 37,342 621,982 689;05o 1,311,032 416.809. (22,772) 454,037 S 1,09819911 5 666,278 $ 1,765.069 (V - CITY OF GEM LAKE, MINNESOTA `STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2019 ASSETS. Cash and Cash Equivalents Customer Accounts Receivable Accrued Interest Receivable Speclal:.Assessments Receivable Due From Other Funds Prepaid items Total Current Assets Capital Assets; Utility Plant in Service Accumulated Depreciation Net Capital Assets Total Assets LIABILITIES Accounts Payable Due to Other Governments Due. to Other Funds Total liabilities NET POSITION Net Investment In Capital Assets Unrestricted Total Net Position See accompanying Notes to Basic Financial Statements (10) Sewer Water 2019 Utillty Utillty Totals S 216.986 $ - S 216;986 1ail 51 1,090 19,231 209 209 6,896 - 6,896 245.231 - 245,231 Z826 2,826 490,299 11080. 491,379 813,678 723,952 1,537,630 (191,696)_ {34,902 226,59.8. 621.982 689,050 1,311;032 1,112.281 690,130. 1,802,411 7 7 13,483 12,248 25,731 11,804 11,604 13,490 23,852 37,342 621P982 889,050 1,311.032 475.809 (22.772) 454.037 $ 1,098.791 5 666;278 _ S 1,765.069 CITY OF GEM LAKE, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION PROPRIETARY FUNDS { YEAR ENDED DECEMBER 31, 21019 Sewer Water 2019 Utility Utility Totals OPERATING REVENUES Public Charges for Services $ 65,428 $ 37,538 $ 102,968 OPERATING EXPENSES Operating.Expenses 40,451 42,688 83,139 Depreciation 16;065 12,524 28,589 Total Operating Expenses 58,616 . 55,212 111,728 OPERATING INCOME 8,912 (17,674) (8,782) NONOPERATING REVENUES Interest Revenue. 8,981 (95) 8;886 INCOME BEFORE CAPITAL; CONTRIBUTIONS AND TRANSFERS 17,893 (17,769) 124 CAPITAL CONTRIBUTIONS AND TRANSFERS Capital. Contributions. 20,886 130;343. 151,229 CHANGE IN NET POSITION 38,779 11.21574 151,353 Net Position.- B.eginnin9.of Year 1,060,01.2 . 553,704 1;613,716 NET POSITION - END OF YEAR $ 1,098,791 $ 666,2.78 . $ 1.765,069 Sae:accompanying Notes to Basis Financial Statements. (11) CITY OF GEM LAKE, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Utility Customers Cash Payments to. Suppliers for Goods and Services Net Cash Provided (Used..) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund Loans CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents . Beginning of Year CASRAND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments: to. Reconcile Operating Income.(L.oss) to Net Cash Provided (Used) by .Operating.Activibes; Depreciation Changes in Assets and liabilities: Accounts Receivable 5pecial.Assessments Receivable Prepaid Items Accounts Payable Due to Other Governments Net Cash Provided (Used) by Operating Activities NONCASH TRANSACTIONS Capital Coritribution from Governmental Activities See accompanying Notes. to Basic Financial. Statements. (12) Sewer Water 2019 utility Utility Totals $ 59,105 $ 36,458 $ 95,563 73,749 (30:535) 104,284 (1.41644) 51923 (8,721) 89,297 (5,830) 83,467 9,318 93 . 9.225 83,971 - 83.,971 1331015 - 133;015 $ 216,986 $ - $ 216.986 S 8,912 $. (17,674) $ (8,762) 16,065 12,524 281,589 (2,744) (1,030) (3;579) (528) - (528) {4.1,283) (53) (41.345) 8,513 12,216 20.729 $ 1 4,§L4j $ 5,923 $ {8;721] $ 20.886 ..$ 130,343 $ 157.229 CITY OF GEM LAKE, MINNESOTA STATEMENT OF CASH -FLOWS PROP RIETARY`F.U.14 $ YEAR ENDED DECEMBER- 31, 2019 CASH FLOWS FROM OPERATINGACTIVIT(ES Cash Deceived from Utility. Customers' Cash Payments to Suppliers for Goods•and Sorvices Net Cash Provided (Used) by Operatirig Activities CASH FLOWs•FROM NONCAPITALFINANCIN6ACTIVITIES Interfund Loans CASH FLOWS•FROM 19VESTING ACTIVITIE$ Interest on Iriiiestments NET INCREASE (DECREASE) IN CASH •AND.CASH EQUIVALENTS Cash and Cash. Equivalents - Beginning of Year CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) SY.OPERATING ACTIVITIES Operating Income.(Loss) Adjustments to Reconcile.Operating Income (Loss) to Nat Cash Provided (Used) by Operating Activities: Depreciation Changes in Assets and Liabilities: Accounts Receivable Special Assessments Receivable Prepaid Items Accounts Payable Due to Other Governments Net Cash Provided (Used) -by Operating Actniities NONCASH TRANSACTIONS Capital Contribution from Governmental Activities See accompanying Notes to Basic Financial Statements. (12.) -Sower Water .2019 Utility Utility Totals $ 5% 05 $ 36,458 $ 95,563 (a7491 (30.535} 104,284 (U,w) 5,923 (8,721) 89,2.97 (5,830) 83,467 -91318 _(931 9,225 83,971 - 83,971 133,015 - _ 133,015_ S 216,9.86 $ - $ 21.6,986 6,912 $ (17,674) $ (8,7.82) 16,065 12,524 28,569. (2,744) (1,080) (3,824) (3,579) - (3,579) (525) - (528) (41.283) (63) (41,346) 8,513 12,216 20,729 $� 1�( 4,644) $ 5.923 S (8,721 . $ 20,886 $ 130,343 $ 151229 I CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The financial statements of the City of Gem Lake (the City), Minnesota have.been prepared in conformity with accounting principles generally accepted in the United States of America as :applied to governmental units by the Governmental Accounting Standards Board (GASB), The following is a summary of the significant accounting. policies: A. Financial Reporting Entity As required by accounting principles generally accepted in the United States of America, the financial statements. of the reporting entity include those of the City of Gem Lake and its component units. A component unit is a legally .separate entity for which. the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is .financially accountable. for a component include. whether or not the primary government appoints the voting majority of the potential component unit's board, .is able to impose its will on. the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the.potential component unit. Based on. these criteria, there are no organizations considered to be component units of the City. B. Basic Financial Statements 1. Government -Wide Statements The government -wide financial statements (i.e.., the statement of net position and the statement of activities) display information about the primary government and its component units. These statements include fhe financial activities of the overall City government. Eliminations have been made to minimize the double -counting of internal activities. 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 to external parties for support. In the government -wide statement of net position, both the governmental and. business -type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual; economic resource basis; which recognizes all long-term assets and. receivables as well as long-term debt and obligations. The City's net position is reported. in three parts: (1) net investment in capital assets;, (2) restricted net position; and (3) unrestricted net position. The City first utilizes restricted. resources..to finance qualifying activities. (13) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING. POLICIES (CONTINUED) S. Basic Financial. Statements..(Contineed) 1... Government -Wide Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of each function of the City's governmental activities and different business -type activity are offset by program revenues. Direct. expenses are those that are clearly identifiable with a specific function or activity: Program revenues include: (1) fees, fines, and charges paid by the recipients of goods, services, or privileges. provided by a given function or activity; and (2) grants and: contributions that are. restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund financial statements provide information about the City's funds. Separate statements for each fund category, governmental and proprietary, are presented. The emphasis of governmental.. and .proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. The City reports,the following major governmental funds: General Fund — 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. G.O. Capital Improvements Plan Bonds Series 2007A — The G.O..Capital Improvement Plan Bonds Series 200.7A Fund accounts for all. debt service activity related to the 2007A bond. G.O. Capital Improvements Plan Bonds Series 2018A -- The G.O. Capital Improvement Plan Bonds Series 2018A Fund accounts for all debt service activity related to the 201.8A bond.. Hoffman Road Fund — The Hoffman Road Construction Fund accounts for all activity related to the reconstruction activities of Hoffman Road. Sch.ueneman Road Fund _ The Schueneman Road Construction Fund accounts for activity related to the reconstruction activities of. Schueneman Road. Street Improvements Fund— The Street Improvements Fund is used to account for the accumulation of resources that are restricted, committed, or assigned to expenditures for capital outlays, including the, acquisition or construction of capital facilities. (14.) NOTE 1 CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basic Financial Statements (Continued) 1, Government -.Wide. Statements (Continued) The statement of activities demonstrates the degree to which the. direct. expenses of each function of the City's governmental activities and different business=type activity are offset by program revenues. Direct. expenses are those that are clearly identifiable with a specific function or activity. Program revenues iridude: (1) fees, fines, and charges paid by the recipients of goods, services, or privileges provided; by a given function or activity; and (2) grants and contributions that are. restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues; including all taxes, are .presented. as general revenues. 2. Fund Financial Statements The fund financial statements provide information about: the City's funds. Separate statements for each fund category, governmental and proprietary, are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds a re. agg reg ated and reported as non major funds. The City reports the following major governmental funds: General Fund — 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. G.O.. Capital Improvements Plan Bonds Series 2007A — The G.O. Capital Improvement Plan Bonds Series 2007A Fund accounts for all debt service .activity related to the 2007A bond. G.O: Capital. Improvements Plan Bonds Series 2018A. _ The G.O. Capital Improvement Plan Bonds Series 2018A Fund accounts: for all debt service activity related to the 2018A bond, Hoffman Road Fund -- The Hoffman Road. Construction Fund accounts for all activity related to the reconstruction activities of Hoffman Road. Schueneman Road Fund - The Schueneman Road Construction Fund accounts for activity related to the reconstruction activities of Schueneman Road. Street tmprovements.Fund — The Street Improvements Fund is used. to account for the accumulation of resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities. t1.4) I CITY OF GEM LAKE; MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER.31, 2019 NOTE 'i SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUE©) B. Basic Financial Statements (Continued). 2. Fund Financial Statements (Continued) Parks and Playgrounds Fund - The Parks. and Playgrounds Fund is used to account for the accumulation of resources that are restricted. for capital outlays and other costs related to maintaining and improving the City's parks arid playgrounds. The City reports thefollowing major.proprietary funds: Sewer Fund — The sewer fund accounts for customer sewer service charges that are used to finance sewer operating expenses. Water Fund — The water fund accounts for customer water service charges that are used to finance water operating expenses. C. Measurement Focus and Basis of Accounting The government -wide and proprietary fund financial statements are reported. using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash. flows.. Property taxes are recognized as revenues in the year for which they are levied. Grants and:similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been niet. Governmental fund financial statements are reported using the. current financial resources measurement focus and #he. modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable .and available. The City considers all revenues to be available if they are collected within 60 days after the end of the current period. Property and other taxes; licenses, and interest are all considered to be susceptible to accrual. Expenditures are. recorded when the related fund liability is incurred; except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long-term. debt and acquisitions under capital leases are reported as other financing sources. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietaryfund's principal ongoing operations. The principal operating revenue of the. City's enterprise funds are charges to customers for sales and services: Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation'on capital assets. All revenues and expenses. notmeeting this definition are reported as nonoperating revenues and expenses. (1 5) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ©ECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Budgets Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. An annual appropriated budget is adopted for the General Fund.. Budgeted expenditure appropriations lapse at. yea r-end. E. Cash and Investments Cash and investment: balances from all funds are pooled and invested. to the extent available in investments. authorized by Minnesota. Statutes. Earnings from investments are allocated to individual funds on the basis. of the fund's equity In the cash and investment pool; The City provides temporary advances to funds that have insufficient cash balances.by means of an: advance from another fund shown as interfuhd receivables in the advancing fund in the governmental fund financial statements, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund payables are eliminated far statement of net position presentation. Investments are stated at fair value as of the balance sheet date. Interest earnings are accrued at. the balance sheet date. For purposes of the statement of cash. flows; the Proprietary Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash. and. investments allocated to the proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. F. Prepaid Items Certain :payments to vendors reflect costs applicable to future accounting periods and are recorded as prepayments. Prepaid items are reported using the consumption method and recorded as. an expense or expenditure at. the time of consumption.. That portion of the relevant funds' balances equal to material prepaid items has been. segregated as .nonspendable. G. Property Tax Credits Property taxes on homestead property (as defined by state statutes) are partially reduced .by property tax credits. These credits are paid to the City by the state in lieu of taxes levied against homestead property. The state remits these credits through installments each year. These credits are recognized as revenue by the City at the time of collection. NOTE 1 CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER 31, 2019 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Budgets Budgets are adopted on a basis consistent `with .accounting principles generally accepted in the United States ofAmerica. An annual appropriated 'budget is adopted for the General Fund. Budgeted expenditure appropriations lapse at year-end. E: Cash and Investments Cash and investment balances from all funds are. pooled and invested to the extent available in investments. authorized by Minnesota Statptes. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund in the governmental fund financial statements, and an interfund. payable in the fund with the deficit, until. adequate resources are received. These interfund payables are eliminated. for statement of net position presentation. Investments are stated at fair value as of the balance sheet date. Interest earnings are accrued at the balance sheet date. For purposes of the statement of cash flows, the Proprietary Fund considers all highly liquid investments with a maturity of.three months or less. when purchased to be cash equivalents. All of the cash and investments allocated to the .proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types: is considered cash equivalents. F. Prepaid Items Certain payments to vendors reflect costs applicabl are recorded as 'prepayments: Prepaid items. are method and recorded as an expense -or expenditur portion of the relevant funds' balances equal to segregated as nonspendable. G. Property Tax Credits e e to future.. accounting periods and reported using. the consumption at the time of consumption. That material prepaid items has been Property taxes on homestead property (as defined by state statutes) are partially reduced by property tax credits: These credits are paid to the City by the .state in lieu of taxes levied against homestead property. The state remits these credits through installments each year, These credits are recognized as revenue by the City at the time of collectiori. (1s) �i �:: CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 201.9 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Property Tax Revenue Recognition The. City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in. the.. following year. The County is responsible for bi.11in.g and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May. 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These: taxes are collected by the County and remitted to the. City on or before July 15. and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Within the governmental fund financial statements, the City recognizes property tax revenue when it becomes both .measurable and available to finance expenditures of the current period. in practice;. current and delinquent taxes and state credits received by the City in July,. December and the following January are: recognized as revenue. for the current year. Taxes and credits not received at the year=end are classified as delinquent and due from County taxes `receivable. The portion of delinquent taxes not collected by the. City in January is fully offset by deferred inflows of resources because it is not available to finance current. expenditures. Deferred inflows of resources in governmental activities is susceptible to full accrual an the, government -wide statements. The City's property tax revenue includes. payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per Minnesota Statute: 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to. various taxing authorities within the. defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. Property taxes. paid to the City through this formula for 2019 totaled $7,098. Receipt of property taxes from this'`fiscal disparities pool" does not increase or decrease total tax revenue. I. Special Assessment Revenue Recognition Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with state statutes.. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to. (and often do) prepay future installments without interest or prepayment penalties. (17) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑RCEMBER,31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Special Assessment Revenue Recognition (Continued) Within the fund: financial statements, the revenue. from special assessments is recognized by the City when it becomes measurable and. available. to finance expenditures of the current fiscal period. In practice', current and delinquent special assessments ,received by the City are recognized as revenue for the current year. Special. assessments are collected by the County and. reritted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments. receivable in governmental funding are completely offset by deferred inflows of resources.. Deferred inflows of resources in governmental activities is susceptible to full accrual on the government -wide statements. Once a special assessment roll is adopted, the amount attributed to.each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City's City Council or court action. if special assessments are allowed to go delinquent, the. property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties, and expenses of. sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not: adjusted by the City's City Councilor court action. Pursuant to state statutes, a property shall be subject to a tax forfeit sale after three.years unless It is homesteaded, agricultural, or seasonal recreational land in which event the property is subject to such sale after five years. J. Capital Assets Capital assets, which include property, plant, equipment; and infrastructure assets (e.g„ roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized, Major outlays for capital assets and improvements are capitalized as projects are constructed.. The government reports infrastructure assets on a network and subsystem basis. In the case of the initial capitalization of general infrastructure assets (i:e., those reported by governmental activities) the City chose :to include :all such items regardless of their acquisition date or amount. r t (18) CITY OF GEM LAKE, MINNESOTA NOTES TO BASK FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I.. Special:Assessment Revenue Recognition (Continued.) Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and. delinquent special. assessments received by the City are recognized as revenue :for the current :year. Special assessments are. collected by the County and remitted by December 31 (remitted to the City the. following January) and are also recognized as revenue for the current year. All remaining delinquents deferred and special deferred assessments receivable in governmental funding are. completely offset by deferred inflows of resources: Deferred infiaws of resources in. governmental activities is susceptibie to foil accrual on the government -wide statements. Once.a special assessment roll is. adopted, the amount attributed to each parcel is alien upon that. property until full payment is made or the amount is determined to be excessive by the City's City Council or court action: If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties,. and expenses of sale) are remitted to the,City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by the City's City Council or court action. Pursuant to state statutes, a property shall be subject.to a tax forfeit sale after three years unless it is. homesteaded, agricultural, or seasonal recreational land in which event the.prope.rty is subject to. such sale.after five years. J. Capital Assets Capital assets, which include property, plant, equipment, and: infrastructure assets (e.g., roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are recorded at historical cost or estimatedhistorical cost if purchased or constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets. and improvements are capitalized as projects are constructed,. The government reports infrastructure assets on a network and subsystem basis. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City chose to include all such items regardless of their acquisition date or amount:. (18) CITY OF GEM FAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31,.201.9 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Capital Assets (Continued) Depreciat'ion on exhaustible assets is recorded as an allocated expense in the statement of activities with accumulated depreciation reflected in the statement of net position. Since surplus assets are sold for an immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into consideration for depreciation purposes. Capital assets not being depreciated include construction.in progress.. Depreciation Estimated Assets Method Useful Life. Buildings Straight -Line 40 Years Office Equipment Straight -Line .5 to 10 Years Utility Systems Straight -Line 20 to:50 Years Infrastructure Straight -Line 20 to 50 Years K. Long -Term Obligations In the entity -wide financial.statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method, Bond issue costs are expensed as a current period cost. In the governmental fund financial statements, bond premiums and discounts, as well as bond issue posts are recognized during the current period. The face amount of the debt issue is reported as on other financing source.: Premiums received on debt issuances .are reported as other financing sources.while discounts are reported as other financing uses. Issue costs.are reported as debt service expenditures. L..Net Position/Fund Balance Net position represents the difference between assets and liabilities in the. government - wide and proprietary fund financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used.to build or acquire the capital assets. Net position is reported as restricted when#here are limitations imposed on their use. through external restrictions imposed by creditors,: grantors, or laws or regulations of other governments. In the fund financial statements; governmental funds report fund balances in the classifications that disclose constraints for which amounts in those funds can be spent. These classifications areas follows. Nonspendable — portion of fund balances related to prepaid items, inventories, long- term receivables, and corpus on any permanent fund. (19) CITY OF GENT LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Net Position/Fund Balance (Continued) Restricted — funds are constrained from outside parties .(statute, grantors, bond. agreements, etc.). Committed — funds are established and modified by a resolution approved by the City Council. Assigned consists of internally imposed constraints approved by the. City. Finance D irector. Unassigned. - is the residual classification for the General Fund and also reflects the negative residual amounts in other funds. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the City's policy to use restricted first, then unrestricted fund balance. When an expenditure is incurred for purposes. for which committed, assigned and unassigned amounts are available, it is the City's policy to use committed. first, then assigned:, and finally unassigned amounts. M. Interfund Transactions Interfund services provided and used are accounted for as revenues, expenditures or expenses: Transactions that constitute reimbursements to. a. fund for expenditures/ expenses initially made from it that are properly applicable to another fund, are recorded. as expenditures/expenses in the reimbursing fund and as reductions of expenditures or expenses in the: fund that is reimbursed. All other interfund transactions are reported as transfers. All interfund transactions are eliminated except for activity between governmental activities and business -type activities for presentation in the entity -wide statements of. net position and statements of activities. NOTE 2 DEPOSITS AND INVESTMENTS A. Deposits The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and the balance sheet as: "Cash and Investments." In accordance with Minnesota Statutes, the City maintains deposits at financial institutions. which are authorized by the City. Council, (20) .CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER .31, 2019 NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Net Position/Fund Balance: (Continued) Restricted _ funds are constrained from outside parties (statute, grantors, bond agreements, etc.). Committed — funds are established and modified by .a resolution approved by the City Council.. Assigned — consists of internally imposed constraints approved by the City Finance Director. Unassigned — is the residual classification for the General Fund and also reflects the negative residual amounts in other funds. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the City's policy to use restricted first, then unrestricted fund balance. When an expenditure is incurred for purposes for which .committed, assigned and unassignedamounts. are available, it is the City's: policy to use committed first, then assigned, and finally unassigned amounts. M. Interfund Transactions lnterfund. services provided and used are. accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements. to a fund. for expenditures/ expenses initially. made from it that are properly applicable to another fund, are recorded as expend itureslexpenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. Ali other 'interfund transactions are reported as transfers. All interfund transactions are eliminated except for activity between governmental activities and. business -type activities for presentation. in the entity -wide statements of net position and statements of activities. NOTE 2 DEPOSITS AND INVESTMENTS A. Deposits The City maintains. a cash and investment pool that. is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net position and. the balance sheet as "Cash and Investments." In accordance with Minnesota Statutes, the City maintains deposits at#inancial 'institutions which are authorized by the City Council. t2o) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER 31, 2019 NOTE 2. DEPOSIT AND INVESTMENT (CONTINUED) A. Deposits (Continued) Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank. failure, the City's. deposits may not be. returned. to it. The. City does not have a deposit policy for custodial credit risk and. follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged. must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized .collateral include:. U.S. government treasury bills, notes, or bonds; issues .of a U.S. government agency; general obligations of a state or local government rated "A" or better; revenue obligations of a state or local government rated "AA". or better; irrevocable standby letter of .credit issued by a Federal Home Loan Bank; and time deposits insured by a. federal agency. Minnesota Statutes requiresecurities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution not owned or controlled by the depository. At December 31, 2019, the bank balance of the City's deposits was $632,7.18: the entire amount of which was insured or collateralized. B. investments The City may also invest idle funds as authorized by Minnesota Statutes as follows: • Direct obligations or obligations guaranteed by the. United States or its agencies. • Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, are rated in one. of the two `highest rating categories by a statistical rating agency and all of the investments have a finial. maturity of 13 months or leas. ■ General obligations rated "A" or better; revenue obligations rated "AA" or better. • General obligations of the Minnesota Housing Finance Agency rate "A" or better. • Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. • Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category. by a least two nationally recognized rating agencies, and maturing in .270 days or less. Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches. of foreign banks or United States insurance. companies if similar debt obligations of the issuer or the collateral' pledged by the issuer is in the top two rating categories. (21) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 DEPOSITS -AND INVESTMENTS (CONTINUED) B. Investments (Continued) • Repurchase or reverse purchase .agreement and securities lending agreements firianciai institutions qualified as a "depository" by the government entity, with bariks. that are members. of the .Federal Reserve System with capitalization exceeding $10,000,000, a.primary reporting dealer in,U.S. government securities to the Federal Reserve Barak of New York, or certain Minnes©ta securitles broker -dealers. • Any security.whlch i$ an -obligation of a school district with an original. maturity nQt exceeding 13•months and (i) rated in the. highest. category by a national 4pnd rating service (1111•enrolled in athe cedit enhancement program pursuant to Minnesota $tatute §126C.55 Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the. event of failure of the counterparty, the City will not be able to recover the••value of its investment or collateral securities that are in the possessiiot) of an 6091de party. The CWs investment policy doesn't specifically address custodial credit risk. interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the•:maturity of an investment, -the greater the sensitivity of its•fair value'to changes in market interest rates. The City's investment. policy doesri't specifically address interest rate risk. Information about the sensitivty of the fair values. ;qf the City's investments. to market interest rate risk fluctuations is provided by the *following table -that shows the. distribution of the City's investments by maturity:: Maturity Duration in Years: Inue*nertType Total Less Than 1 1 to 2 2 to 5 Rating Negotiable C40cohm of Do posk• $ 584,252 3 175,976 S. - S 408,276 Not Rated Money Marks 8,222 81222 - Aaa(AAA Total S 592,474 $ 184,198 . $ $ 4� 0 Credit Risk Generally, credit risk is the risk that an issyier of an investment will not fdlfili :lts•obligation to. the. holder of the investment. This is measured by the assignment of a .•rating �y a nationally recognized statistical -rating organization. The City's investment policy does not specifically address credit risk. (22) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS 0ECEM.SER 3.1, 2019 NOTE 2 DEPOSITS AND, INVESTMENTS (CONTINUED) B. Investments (Continued) ■ Repurchase or reverse purchase agreement and securities lending agreements financial institutions qualified as a "depository" by the .government entity, with banks that are members of the Federal Reserve System with capitalization. exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Sank of New York, or certain Minnesota securities broker -dealers; Any security which is an obligation of a school district with an original maturity not exceeding 13 months and (1) rated in the highest category by a national Bond rating service (ii) enrolled in athe cedit enhancement program pursuant to Minnesota Statute §126C:55 Custodial Credit Risk For an investment, custodiat credit risk is the. risk that, in the event of 'failure of the counterparty, the City will not be abie to recover the value of its investment or collateral securities that are 'in the. possession of an outside party. The City's investment policy doesn't specifically address custodial credit risk. Interest Rate Risk interest rate risk:is. the. risk that changes in interest rates will adversely affect the fair value of an investment. Generally; the longer the maturity of %a.h. investment, the greater the sensitivity of its fair value to changes in market interest rates. The City's investment policy. doesn't specifically address interest rate risk.. Information about the sensitivity of the fair values of the City's investments to market interest rate risk fluctuations is provided by the following table that shows the distribution of the Gity`s investments by maturity: Maturity Ouration in Years Investment Type . Total. Less Than 1 1 to-2 2 to.5 Rating Negotiable Certificates of Deposit S 584,252 $ 175,978 $ $ 498,276 Not Rated Money Markets 8,222 . 8,222 AWAAA Total $ 692,474 S 184,198 5 S 408,276 Credit Risk Generally, credit risk is.the risk -that an issuer of -an investment will not fulfill its .obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City's investment policy does not specifically address credit risk, (22). CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER 31, 2019 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Concentration of Credit Risk The City places no limit on the amount.that the City may invest in any one issuer. The following is a list of investments which individually comprise More than 5% of the City's total investments: Goldman Sachs Bank CD $ 41,025 6.92 % Comenity Bank 121,254 20.47 HSBC CD 245,997. 4.1:52 Enerbank CD 175,976 29.70 Fair Value Measurements The City uses fair value measurements to record fair value adjustments to certain asset and liabilities and to determine fair value disclosures. The City follows an accounting standard.which defines fair value, establishes framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires. expanded disclosures. about fair value measurements. In accordance with this standard, the City has categorized its investments, based on the priority of inputs to the valuation technique, into a .three -level fair value hierarchy. The fair value hierarchy gives the highest: priority to quotes and prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used. to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is .significant.to the fair value measurement of the instrument. Financial assets and liabilities recorded on the combined statements of financial position are categorized based on the. inputs to the valuation techniques as follows; Level 7 Financial assets and liabilities are valued using inputs. that. are unadjusted quoted pries in active markets accessible at the measurement date of identical financial assets and liabilities. Level 2 — Financial assets and liabilities are valued based. on quoted prices for similar assets. or inputs that are observable, either directly or iridirectly, for substantially the full term. through corroboration with observable market. data. Level 3 — Financial assets and liabilities are valued using pricing inputs which are unobservable for the asset, inputs that. reflect the reporting entity's. own assumptions about the assumptions market particloants would use in pricing the asset. (23) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC. FINANCIAL STATEMENTS DEC EMBER 31, 2019 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Fair Value Measurements (Continued) The levels .of investments at December 31, 2.019 areas follows: Investment . Type Level1. Level Level Total Negotiable. Certificates of Deposit.with Maturities at Purchase of Greater Than 1 Year. $ - $ 584,252 $. - $. 584,252 Investments Measured at Amortized Cost 8,222 Total $ 592,474 NOTE 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 201.9 was as follows: Governmental Activities Capital Assets Not Being Depreciated- Land Construction in Progress Capital Assets Being Depreciated: Buildings. Office Equipment Infrastructure Total Capital Assets Being Depreciated. Total Capital Assets Accumulated Depreciation: Buildings. Office Equipment Infrastructure Total :Accumulated Depreciation Net Capital Assets - Capital Activities Beginning Ending Balance Increases .. Decreases Transfers Balance 8 - $ 2,500 $ - $. $.: 2,500 561.,531 55,8.90 - (620.,421) 902;232 - - 902,232 12,895: 5,493 (488) 17900 1,094,536 469.192 1,563,728 2,009,663 5,493 (488) 469,192 2,483,860 21571;194 66;883 (488) (15T,229) 2,486,360 (244,571) (22,497). (267,068) (12,786) (608) 488 - 02;905? (552.341) (50,964) - _ (503,305) (809.97) _(74,069) 488 (883,278) $. 1,761,497 $ 1,186) $ 5 (151,229) .$ 1;503,082 Depreciation expense was charged to the governmental functions as folloWS:. General Government $ .23,105 Public Works 50;964 Total Depreciation - Governmental Activities $. 74069 (24) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Fair Value Measurements (Continued) The levels of investments at December 31, 2019 are as follows; Investment Type LeveJ 1 Level 2 Leyel.3 Total Negotiable Certificates of Deposit with Maturities at Purchase of Greater Than 1 Year $ 584,252 $ - 5 584,252 Investments..Weasured at Amortized Cost 8,222. Total $ .592;474. NOTE 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 201.9 was as follows: Governmental Activities Capital Assets Not Being. Depreciated Land Construction in Progress Capital Assets Being Depreciated - Buildings Office Equipment Infrastructure Total Capital Assets Beifig .Depreciated Total Capital:Assets Accumulated Depreciation,. Buildings Ofifice.E..quip :merit Infrastructure Totai.Accumulated Depredation Net Capital Assets - Capital Activities .Beginning Ending Balance Increases Deueases. Transfers Balance $ $ 21500 $ 561;531 58,890 902,232: - 12;895 5,403 1,094,536 2,009,663. 5,493 2,571194 66,883 $ - 5 2,500 (620,421) - 902,232 (4$$) 17,900. _ 469.192 11563.728 (488) 469,192. 2,483,860 (488) (151,229) 214K360 (244,571) (22,49.7) - (267,068) (12,785). (606) 485. (12,905) 5552,341) 5uu - (603,305) 809607 (74;069]_ 488 . 883 278 $ 1.761,497 5 (7,196) $ $ (151;229) $ 1,603,082 Depreciation expense Was charged to the.governmental functions as follows: General Government $ 23,105 Public Works 50,964 Total Depreciation%- Governmental Activities. $ 74,069 . (z4) t. NOTE 3 NOTE 4 CITY OF GEM LAKE, MINNESOTA NOTES TO.BASIC FINANCIAL STATEMENTS: DECEMBER 31, 2019 CAPITAL ASSETS (CONTINUED) Beginning. Ending Balance Increases. Decreases Transfers Balance Business Type Activities Capital Assets Being Depreciated: Infrastructure. $ 1.386.401 5 - 5 151,229 5 1,537,630 Less: Accumulated Depreciation. (198,009 {28;5BEI - - 2{ Net Capital Assets. -Business -Type Activities 1 188,392 28;589) �$� 151,229. $ 11311,03 Depreciation expense was charged to the proprietary funds as follows: Water $ 16,065 Sewer 12,524 Total Depreciation - Business-Type.Activities. $ 28,589 CITY INDEBTEDNESS City indebtedness at December 31, 2019 is composed of the following: Final Issue Maturity Interest Original Balance Date Dale Rate Issue 12131119. Governmental Activities General Obligation bonds: 201.5A Refunding Bonds 0611712015 02101/2028 1.25-2:90% $ 775;000 $ 590,000 2018A Improvement Bonds. 0711212018 0210112034 3.00.4.00%a 660000 660;000 Total General Obligation: Bonds 1,435,000 1,250,000 Unannortiaed Bond Premium 19,227 17,363 Total $ 1,472,872. $ 1;267,363 The following is a schedule of changes in City indebtedness. for the year :ended December 31, 2019: Balance Balance Due Within 12131118 Additions Reductions. 12131110 One Year Long -Term Debt Governmental Activities: General.Obligation Bonds: .2015A Refunding Bonds $ 655,000. $ - $ 65,000 5901000 $ 60,000 2018A Improvement Bonds 660,006 - 660,000. 30,000 Unamortized Bond Premium 18,645 - 1,282 171.363 - Total Long Term Debt $ 1,333,645 $ - $ 66;282 $ 1,267,363 $ 90,000 All long-term bonded indebtedness outstanding' at December 31, 2019 is backed. by the full faith and credit of the City, including special assessment bond. issues. (25) NOTE 4 NOTE 5 CITY OF GENT LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 CITY INDEBTEDNESS (CONTINUED) Minimum annual principal and interest payments required to retire long-term debt are as follows; Year Ending December 31 2Q20 - - 2021 2022 2023 2024 .2025-2029. 2030-2034 Total princi al Interest Total $ 90,000 36.,165 $ 126,165 95..1000 34,085. 120106.6 1051000 3.1,669. 136,65.9 105,000 29,029 134,029 1.05,000 26,301 131,301 490,000 .86,424 .576,424 260,000 26,600 .286,600 $ 1;250;040 $---270,243 �$ 1,520243 Descri tion.and Restrictions of Lan -Term Debt General Obligation Bonds The bonds. were. issued for improvements. or projects which benefited the. City as a whale and are, therefore, repaid from ad valorem levies. General Obligation Refunding Bonds — In 2015, the City issued General Obligation Crossover Refunding Bonds to refund the.200.7A General Obligation Bonds. The City was responsible for the February 2016 payment and after the crossover occurred the escrow is responsible for the remaining principal and interest payments of the 2007A band, resulting in a defeasance of the bond: General Obligation Improvement Bonds — In 2018, the City issued General Obligation Improvement Bonds for improvements and projects which benefitted the entire city. STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances The City has deficit fund balances at December 31, 2019 as follows:. Hoffman. Road fund Scheunernan Road Fund Fund Balance Deficit $ (M,018) (2,210) The City intends to fund these deficits through future tax levies, transfers from other funds, and various other sources. (26) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 4 CITY INDEBTEDNESS (CONTINUED) minimum annual principal and interest payments required to. retire long-term debt are. as follows: Year Ending December 31 2020 .2021 2022 2023 2024 2025-202.9 2030-2034 Total Principal .Interest Total. $ 90;.000 36,165 $ 126,165 95;000 34,065 129,065 105;00.0 31,659 1 n,659 105000 29,029 134jQ29 105,000 26;3.01 131,301 490,000 86;424 576,424 2.60,000 26,600 286,600 $ 1,250.000 _ $ 270.243 1.520 243 Description and Restrictions of Long -Term Debt General Obligation Bonds — The bonds were issued for improvements or projects which benefited the City as a whole and are, therefore, repaid from ad valorem levies. .General Obligation Refunding Bonds w In 2015, the City issued General Obligation Crossover Refunding Bonds to refund the 2007A General Obligation. Bonds. The City was responsible for the February. 2016 payment.and: after the crossover occurred the escrow is responsible for the remaining principal and interest payments of the 2007A bond, resulting in a defeasance ,of the bond. General Obligation Improvement Bonds — In 2018, the City issued General Obligation Improvement Bonds for improvements and projects which benefitted the entire city. NOTE 5 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances The City nas deficit.fund balances at'December 31, 2019 as follows: Hoffman Road. Fund Scheuneman Road Fund Fund: Balance Deficit $ (232,01 S} (2,210) The City intends to fund these. deficits through future tax levies, transfers from. other funds and various other sources. (26) NOTE 6 CITY OF GEM LAKE, MINNESOTA. NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 1NTERFUND BALANCES AND ACTIVITIES Due To/From Other Funds Individual fund receivable and payable balances at December 31, 2019 are as follows: Governmental Activity; General Fund Capital Projects Fund - Scheuneman Road Hoffman Road Fund Business -Type Activity; Sewer Fund Water Fund Total Interfund Receivable Interfund Payable 2,647 $ - 2,647 - 233.,627 245,231 - - 11,604 $ 24T878. $ 247,878 Interfund receivable and payable balances represent the elimination of negative. cash between funds. Interfund Transfers Individual fund transfers at December 31, 2019 are follows: Governmental Activity; General Fund Street Improvement Fund Parks and Playgrounds Fund Transfer In 20,000 30,25.0 50 250 Transfer Out $ 50,250 During 2019, the City made routine interfund transfers for various reasons including to fund negative fund balances as well as provide additional funds for completing upcoming capital projects. NOTE 7 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;. errors and omissions.; injuries. to employees; and natural disasters. The City carries commercial insurance for all risks of loss; including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. (27) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2a19 NOTE 8 FUND BALANCES Certain portions of fund balance are restricted to provide for funding on certain long-term liabilities or as required by other outside parties. Restricted, Committed, and Assigned fund balances at December 31,.2019 are as follows: A: Restricted for Debt Service — This represents.. amounts which are restricted for .future debt payments. B. Restricted for Park improvements. = Represents .amounts which are received through park dedication fees and are restricted for park acquisitions and improvements. C. Restricted for Street Projects — Represents amounts: which are received from special assessments and are restricted for street projects, ❑. Assigned for Capital Improvements Benefitting individual Property Owners -- Represents amouhts which are received from. special assessments and. are assigned for capital. improvements benefitting individual properlty owners. (28) CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS OECEMBER 31, 2019 NOTE 8 FUND BALANCES Certain portions of fund balance are restricted to provide for funding on certain long-term liabilities oras. required by other outside parties. Restricted; Committed, and Assigned fund balances. at December 31, 2 01 9 are as follows: A. Restricted for Debt- Service — This represents amounts which. are restricted for future debt payments. B. Restricted for Park improvements — Represents amounts which are received through park dedication fees and are restricted for park acquisitions and improvements. C. Restricted .for Street Projects — Represents amounts which are received from special assessments and are restricted for street projects, D. Assigned for Capital Improvements, Benefitting Individual Property Owners — Represents amounts which are received from special assessments and are assigned for capital improvements benefitting individual properlty owners. (25) REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON INFORMATION CITY OF GEM LAKE, MINNESOTA. SCHEDULE nF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL .GENERAL FUND YEAR ENDED DECEMBER 31, 2019 REVENUES. Taxes Special Assessments Intergovernmental Licenses and Permits Fines and Forfeits Public Charges for.Services Miscellaneous:.. Interest Other Total Revenues EXPENDITURES General Government Public Safety Public Works Conservation .and. Development Capital Outlay Total: Expenditures EXCESS OF REVENUE OVER (UNDER).EXPENDITURES OTHER FINANCING USES Transfers Out NET CHANGE IN FUND BALANCE. Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR. Budgeted Amounts Actual Variance with Original Final Amounts Final Budget. $ 385;088 $ 385,088 $ .870,729 $ (14,359) - - 385 385 29,135 291.36 16,759 (12,376) 36,050. 36;050 96,742 66.692 2,000 2100.0 1,769 (231) 5,700 5,700 21,817 161117 2,000. 2,000 1.1; 698 .91698 4r900 41900 6;737 1,837. 464,873. 464,873 526,636 61,763 176,304 176,304 1.51,038 25,266. 95;825 95;825 85.,725 10,100 77;769 77,769 54,687 23,082 64,725. 641725 79,091 (14,366) - 5,493 414,623 414,623 376,034 38,589 60,250 50;25o 150,602 1.00,352 - (50,250) (50,250) $. 50250 $ - 100,352 394,915 $ 495,267 See accompanying Note to Required Supplementary information: $ 100,352 (29) CITY OF GEM LAKE, MINNESOTA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL GENERALFUND YEAR ENDED DECEMBER 31, 2019. Budgeted Amounts Actual Variance with Ori inal Final. Amounts Final -budget. REVENUES Taxes $ 385,088 $ 385,08$ $ 370,729 $. (14.350) Special Assessments - - 385 385 In 29,135 29,135 16,75.9 (12,376) Licenses and.Permits 36,050 36;050 961742 60,592 Fines and Forfeits 2,000. 2,0.00 1,769 (231) Public Charges for Services 57700 5,700 21,817 16,117 Mlscellaneous: Interest 4000 2,000 11,698 .9,698 Other. 4,900 4,900 6,737 1,837 Total Revenues. 46073 464,873 .526.,636 61,763 EXPENDITURES. General Government 1.76,304 176,304 151,0.3& .25.266 Public Safety 95;825 95,825 85,725 10,100 Public Works .77,769 77,769 54,687 231 .. Conservation and Development 64,125 641725 79,091 (.14,366) Capital Outlay - - 5,493 _ 5,493 Total Expenditures 414,623 414,623 376,:03.4 381589 EXCESS OFREVENUE OVER (UNDER) EXPENDITURES 50,260 50,250 150,602 100,352 OTHER FINANCING USES Transfers Out (50;250) (50,250)- NET CHANGE IN FUND BALANCE s 50,250 $ - 1.00,352 $ 100,352. Fund Balance = Beginning of Year 394,915 FUND BALANCE - END OF YEAR $. 495,26.7 See accompanying Note to Required Supplementary information. (29} I I CITY OF GEM LAKE, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED DEC EMBER 31, 2019 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY - BUDGET The General Fund budget is legally adopted on. a basis con sistent.with accounting principles generally accepted.in the United States of America. The legal level of budgetary control is at the department level.. The following is a listing of expenditures that exceeded budgeted appropriates. Final Budget Actual Excess General Fund. - Conservation and Development s 64,725 $ 79,091 $ (14;365) Capital Outlay - 5;493 (5,493) (36) OTHER REQUIRED REPORTS v JF PO REQUIRED R Honorable Mayor and Members of the City Council .City of Gem Lake, Minnesota Compliance and Other Mattets- As part of obtaining .reasonable* assurance about. whether the -City's financial statements are free of material misstatement, we performed tests of its cdrbokifte W91h. certain proVision5 of laws, regulations, contracts; and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those pr0yisions was not an objective of our audit and,. accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City dfSem Lake's Response to the Finding The City's responses to the -findings identified in our audit are described in the accompanying schedule of findings. and responses. The CIVs: responses were not subjected to the auditing procedures applied ihtthe allditof the financial statements. and., accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the. scope of our testing of internal control -sind compliance and the result of that testing; and not *tb provide an opinion on the effectivoneois of the City's internal control or on compliance. This. report is an integral part an audit performed irt adcordance with Govemment Auditing.. Standard$ in considering the City's Internal control and compliance. Accordingly, this communication is not :suitable for. any other purpose. zz_;1�11 CliftonLarsonAllen LLP Minneapolis, Minnesota August 28, 2020 (32) .Honorable Mayor and Members of the City Council City of Gem Lake, Minnesota Compliance and Other Matters As part of obtaining reasonable assuranceabout whether the City's financial statements are. free ,of Material misstatement, we performed tests. of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a. direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other. matters that are required to be reported uride r Government Auditing Standards. City of Gem Lake's Responseto the Finding The. City's responses to the findings identified in our audit are described in the accompanying schedu le. of findings. and :responses. The City'.s responses were not subjected to the auditing procedures applied in the audit of the financial statements. and, accordingly, we express no opinion. on their.. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of compliance and the result of that testing, and not to provide an opinion on the City's internal control or on compliance. This. report is an integral part of ai accordance with Government Auditing Standards in considering the City's compliance. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Minneapolis, Minnesota August 28, 2020 (32? internal .control and effectiveness of the i audit performed in internal control and CliftonLarsonAllen LL. P CLAcQgriect.com INDEPENDENT AUDITORS' REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor, Members of-t .e City Council, and Citizens City of Gem Lake, Minnesota We. have audited,. in accordance with the auditing standards generally accepted in, the United States of America, and the standards applicable to financial audits. contained in.. Government.Audifing Standards issued by the Comptroller* General of -the United States, the financial• statements of the governmental activities, the busi[ress-type activities,. and each major fund of the City of Gerri Lake, as of and for the year ended December 31, 2019, and the related notes.ta the financial statements, which collectively campriae the City'$ basic financial statements, and have —issued our report thereon dated August 28, 2020. *In connection with. our audit, *nothing came to our attention that caused us to believe that flies City- of Gem Lake, failed: *to comply with 4�0 *provtsions of the Minnesota Legal Compliance. Audit Guide for Cities, except. as described in the schedule of findings and. recommendations as item 2019=004. However, Pur :audit was not directed primarily toward obtaining knowledge of -such. riondbr ipliance. Accordingly., had. we performed additional procedures, other matters may have come to our attention regarding the City of Gem Lake's noncompliance with the above-Peferenced provisions, insofar as they relate to accounting matters. The. *City's-response to the fl..nding.-identified in our audit is described in the accompanying schedule of findings and responsbs: The CRy's response was not subjected to the auditing procedures applied in the audit cif the financial statements and, accordingly, we express no opinion on it. The purpose:of this: report is solelyloAescribe the.scope *of *our testing of compliance and the results of that. testing, and not to provide. *an opinion *on -corripliance, Accordingly, this communication is not suitable-for4hy other purpose. Clifton LarsonAllen LLP Minneapolis, Minnesota August`28, 2020 AA member of CITY OF GEM LAKE, MINNESOTA SCHEDULE OF FINDINGS AND RESPONSES YEAR ENDEQ DECEMBER 31, 2019 MATERIAL WEAKNESS 2019-001- Limited Segregation of Duties Condition; Due to the small size of the City's staff, there is by definition a lack of segregation of the accounting functions that is necessary to ensure adequate internal accounting control. While we realize this scenario. is common for small entities, we are required to report.this issue and to advise that a concentration of duties and responsibilities in a limited number of individuals is not desirable from an iriterna€ control perspective. During our audit procedures, we noted a lack of segregation of duties with regards to adjusting journal entry approval, counting of cash receipts, second review of capitalized assets, review of debt ba€ances and reconciliations, and reviews of cash and investment reconciliations. Criteria, Generally,. a system of internal control contemplates. separation of duties such that no individual has responsibility to execute a transaction, have.physical access to the related assets, and have responsibility or authority to record the transaction. Effect: The City. is unable to maintain segregation of incompatible duties, Cause: The condition is due to a limited number of personnel involved in receipt arid disbursement processes. Recommendation: Controls should. be reviewed periodically and consideration given to improving the segregation of duties. In making this review, it is important to consider the benefit derived as weighed against the cost of the improvements. Management Response, Management has decided, due. to the small ,size of the City's staff, that the additional costs of implementing the necessary controls outweigh the.benefits that would be derived.. (34)