2017 Monticello MN PAFR__________________________________________________________________________________________
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Awards
The Government Finance Officers Association (GFOA), with nearly 19,300 colleagues, is dedicated
to enhancing and promoting the professional management of governments for the public benefit.
Since 1906, the GFOA has been accomplishing this mission by identifying and developing the highest
quality financial policies and practices and promoting them to the public through education, training,
and leadership.
The GFOA has established several highly regarded professional recognition programs to encourage
and assist state and local governments of all types and sizes to improve the quality of their financial
management and to recognize their achievement.
Each award is valid for one year. The city of Monticello has received the following awards:
The mission of the city of Monticello is to responsibly use our resources to provide quality services and
programs that foster a dynamic community rooted in history and preparing for a vibrant future.
Popular Annual Financial
Report: 2015 - 2016
Distinguished Budget Presentation
Award: 2009 - 2016
Comprehensive Annual Financial
Report (CAFR): 2009 - 2016
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Financial Report Message
We are pleased to present the city of Monticello’s third Popular Annual Financial Report (PAFR). The PAFR is a
condensed version of the 2017 Comprehensive Annual Financial Report (CAFR), and as such, does not include
information on all the city's funds. The report focuses on the major governmental funds (General, Community
Center, and Economic Development Authority) and the city’s enterprise funds.
The CAFR is a detailed account of the city's financial statements, notes, schedules, and statistics. The CAFR
was prepared in conformance with Generally Accepted Accounting Principles (GAAP), audited by Malloy,
Montague, Karnowski, Radosevich, & Co. P.A. and received an unmodified (clean) opinion. A copy of the
CAFR can be found on the city's website at www.ci.monticello.mn.us/finance.
This report provides a summary of the financial position of the city and shows where revenues come from to
operate the city and where those dollars are spent. The report is presented in an effort to inform citizens and other
interested parties about the financial operations of the city in a simplified and easytoread format.
Thank you for your interest in your government and its functions. Please feel free to share any questions or
comments on the PAFR with Finance Director Wayne Oberg at wayne.oberg@ci.monticello.mn.us or Finance
Manager Sarah Rathlisberger at sarah.rathlisberger@ci.monticello.mn.us.
Respectfully submitted,
Wayne Oberg
Finance Director
Sarah Rathlisberger
Finance Manager
City Profile & Economic Outlook
The city of Monticello, organized as a municipality in 1856, has the Mississippi River as its north border. The city is
located approximately 45 miles northwest of the Minneapolis/St. Paul metropolitan area along the I-94 corridor in
Wright County. The city benefits from the employment opportunities offered in the area and a relatively low
unemployment rate of 3.5%.
The city provides its residents and businesses with a full range of municipal
services consisting of law enforcement (Wright County Sheriff) and fire
protection, the construction and maintenance of streets and other
infrastructure, a community center for recreation activities, park construction
and maintenance, and general administrative services. In addition, the city
operates five enterprises: a water utility, a sewage utility, a liquor store, a fiber
optics utility (FiberNet), and a deputy registrar (DMV).
The city of Monticello continues to grow! In 2017, the city issued 64 permits for new homes, compared to 61 in
2016, 44 in 2015, and 72 in 2014. While the number of buildable lots had been declining, new plats in 2017
increased the number of lots available for single family homes to 85.
For 2017, the city's population was estimated at 13,409, up 650, or about 5%, from the 2010 Census number of
12,759. The city currently occupies 8.9 square miles but could ultimately expand to 20.8 square miles as portions
of Monticello Township are annexed through an orderly annexation agreement.
he city's estimated market value of all properties within the city grew from $1.83 billion to $1.96 billion at the end
of 2017. Xcel Energy improvements at its nuclear power plant and increases in residential market values were the
primary contributors to the increase.
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City Organization
The city operates under the mayor-council form of government. The five-member city council is elected on a
nonpartisan basis. The mayor is elected to serve a two-year term. Councilmembers serve four-year staggered
terms, with two councilmembers elected every two years.
The City Council includes:
Mayor Brian Stumpf brian.stumpf@ci.monticello.mn.us
Councilmember Jim Davidson jim.davidson@ci.monticello.mn.us
Councilmember Bill Fair bill.fair@ci.monticello.mn.us
Councilmember Charlotte Gabler charlotte.gabler@ci.monticello.mn.us
Councilmember Lloyd Hilgart lloyd.hilgart@ci.monticello.mn.us
To email all councilmembers: allcitycounciladdress@ci.monticello.mn.us
Policy-making and legislative authority are vested in the city council.
The council is responsible for passing policies, ordinances, and
resolutions. The council adopts the annual tax levy and budget.
Council appointed boards, commissions and committees usually
include at least one councilor. A council-appointed city administrator
is responsible for implementing policies and providing general
operational oversight.
Pictured: (Top left to right) Charlotte Gabler, Brian Stumpf, Lloyd Hilgart
(Bottom left to right) Bill Fair and Jim Davidson
Citizens of Monticello
City Council
City Administrator:
Jeff O'Neill
Administration
City Clerk:
Jennifer
Schreiber
Human Resources:
Tracy Ergen
Communications:
Rachel Leonard
Planning
Community
Development
Director:
Angela Schumann
Building Official:
John Rued
Economic
Development
Manager:
Jim Thares
Finance
Finance Director:
Wayne Oberg
Finance Manager:
Sarah
Rathlisberger
DMV Manager:
Carolyn Granger
Liquor Store
Manager:
Randall Johnsen
Public Works
Streets
Superintendent:
Tom Moores
Parks
Superintendent:
Tom Pawelk
Utilities
Superintendent:
Matt Theisen
Fire
Fire Chief:
Mike Mossey
Community
Center
MCC Director:
Ann Mosack
Operations
Manager:
Sara Cahill
Event Coordinator:
Tricia Handorff
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Government-wide Financial Activity
Condensed Statement of Net Position
The Statement of Net Position presents information on all of the city’s assets and deferred outflows of
resources, and liabilities and deferred inflows of resources, with the difference reported as net position. Over
time, increases or decreases in net position may serve as a useful indicator of whether the financial position
of the city is improving or deteriorating. The assets and deferred outflows of resources of the city exceeded its
liabilities and deferred inflows of resources at year-end by $125,884,553 (net position). Of this amount,
$32,804,168 (unrestricted net position) may be used to meet the city’s ongoing obligations to citizens and
creditors.
Condensed Statement of Activities
The Statement of Activities presents information showing how the city’s net position changed during the most
recent fiscal year. The decrease in revenues was mostly due to fewer capital grants received in 2017. The
decrease in expenses was mainly attributable to recreation and culture and economic development expenses.
Recreation and culture expenses decreased due to the final land purchase at Bertram Chain of Lakes taking
place in 2016, and the economic development decrease was due to a write down in value of land held for resale
in 2016. The fiber optics network also had a decrease in expenses due to economies of scale recognized
through the hiring of a third-party management company. The special item in 2016 was a result of the
outsourcing of the fiber optic network management as all related employees transferred to the management
company and the city was no longer responsible for the pension liability associated with those employees.
2016 2017 Change
Current and other assets 48,365,019$ 53,304,170$ 4,939,151$
Capital assets 106,067,259 106,211,474 144,215
Total assets 154,432,278 159,515,644 5,083,366
Deferred outflows of resources 2,047,276 899,846 (1,147,430)
Long-term liabilities 30,707,817 30,271,175 (436,642)
Other liabilities 2,266,097 2,479,057 212,960
Total liabilities 32,973,914 32,750,232 (223,682)
Deferred inflows of resources 967,382 1,780,705 813,323
Net position
Net investment in capital assets 82,091,805 81,480,434 (611,371)
Restricted 10,569,693 11,599,951 1,030,258
Unrestricted 29,876,760 32,804,168 2,927,408
Total net position 122,538,258$ 125,884,553$ 3,346,295$
2016 2017 Change
Revenues 27,190,244$ 25,030,313$ (2,159,931)$
Expenses (22,772,360) (21,684,018) 1,088,342
Special item - transfer of operations 356,900 - (356,900)
Change in net position 4,774,784 3,346,295 (1,428,489)
Net position, January 1 117,763,474 122,538,258 4,774,784
Net position, December 31 122,538,258$ 125,884,553$ 3,346,295$
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What does it all mean?
Current and other assets are resources with present service capacity that the city controls
include cash or near cash items that can be used to liquidate liabilities due within a year.
Capital assets are nonfinancial assets that have an initial useful life of more than one year
and are used in providing services for the city and its residents.
Deferred outflows of resources is a consumption of net position by the city (outflow of
resources during the year) that is applicable to a future reporting period.
Long-term liabilities are obligations of the city including items such as bonds, loans,
compensated absences, pension liabilities and other city obligations, typically due beyond
the current reporting period.
Other liabilities are present obligations of the city to sacrifice resources that it has little or
no discretion to avoid.
Deferred inflows of resources are an acquisition of net position (inflow of resources during
the year) by the city that is applicable to a future reporting period
Net investment in capital assets consists of capital assets, net of accumulated depreciation,
reduced by any outstanding debt attributable to acquire capital assets.
Restricted net position consists of net position restricted when there are limitations imposed
on their use through external restrictions imposed by creditors, grantors, or other governments.
Unrestricted net position – All other net position that does not meet the definition of
“restricted” or “net investment in capital assets.
Governmental
Activities
Basic city services that are
primarily supported by taxes
& intergovernmental
revenues.
Business-Type
Activities
City services that are
intended to recover all or a
significant portion of their
costs through user fees and
charges.
City
Services
General
Government
Deputy
Registrar
Fiber
Optics
Liquor
Sewage
Water
Economic
Development
Recreation
& Culture
Transit
Sanitation
Public
Works
Public
Safety
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Governmental Activities
Where the money comes from…
Where the money goes…
Revenues: The most significant
revenue source for governmental
activities is property taxes at 58% of
total revenues. Charges for services
accounts for 18% of revenues, most
of which is generated by the
Community Center. Capital grants
and contributions (12%) include
special assessments and revenues
from other sources restricted to
capital asset acquisition.
Expenses: Public works
expenses are the most significant
(37%), followed by recreation and
culture (25%), and public safety
(15%). Public works expenses
include engineering, streets, ice &
snow removal, shop & garage, and
street lighting. Recreation and culture
includes parks, cemetery, senior
center, and community center
expenses. Included in public safety,
the city contracts with Wright County
for police services.
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Business-type Activities
Where the money comes from…
Revenues: The most
significant revenue source for
business-type activities is charges
for services at 90%. Charges for
services include fees for water,
sewage, and fiber optic utilities, as
well as liquor store sales, and
deputy registrar processing fees.
Capital grants and contributions
include impact fees related to new
development.
Where the money goes…
Expenses: The largest use of
funds within business-type activities
is for the sewage utility (37%). The
city contracts with Veolia to run is
wastewater treatment plant. Fiber
optics expenses are also significant
(30%). The city contracts with Arvig
to manage FiberNet, the city’s fiber
optic network. The water utility uses
16% of the city’s business-type
activities. Liquor expenses are mainly
the costs of goods sold and wages.
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What We Own
2017 Major Projects and Initiatives
Completed work on a wastewater treatment plant phosphorous reduction project, which includes
replacement of two digester covers.
Completed the 2016 street reconstruction project and constructed a significant portion of the 2017
street reconstruction project which includes Gillard Avenue, Haug Avenue, Mississippi Drive, Hart
Boulevard, and Sandberg Road.
Constructed improvements at the intersection of trunk highway 25 and 7th street. This project improved
traffic flow through the addition of turn lanes and flashing yellow arrow left turn signals.
Improvements and playground structure installation at various parks throughout the city.
Acquired land and right-of-way for Fallon Avenue bridge with construction scheduled for 2018.
Long-term Financial Planning
The city has developed a long-term financial
model for its four major operating funds:
General, Community Center, Water, and
Sewage.
All four funds operate in a relatively stable
environment and no large adjustments to taxes
or user charges are anticipated.
The city has also developed a Capital
Improvement Program (CIP) plan, which is a
five-year forecast of the city’s facility,
equipment, and infrastructure needs. Items in
the first year of the CIP are incorporated into
the annual budget. Items in the later years are
less certain and difficult to plan.
Both the city’s debt load and annual debt
service property tax levy are evaluated for
large projects requiring debt issuance. Current
period revenues and one-time use of reserves
provide pay-as-you-go financing for smaller
projects.
Future Projects and Initiatives
Begin implementation of the Downtown Small Area
Plan with a $300,000 allocation from the General
Fund reserve, including various sidewalk
extensions.
Develop plans and specifications for phased
development of Bertram Chain of Lakes Park in
2018 and thereafter.
Acquire final parcels of land and right-of-way
needed for the Fallon Avenue bridge over I-94.
Complete the overpass over I-94 of Fallon Avenue
including the construction of two roundabouts on 7th
Street and one roundabout on Chelsea Road.
Complete improvements of Chelsea Road from
Edmonson Avenue to trunk highway 25, as well as
sidewalk and trail improvements.
Explore avenues to improve delivery of all city
services, including those provided by the city-owned
telecommunication utility.
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What We Owe
Total Long-term Liabilities
The city’s long-term liabilities outstanding at the end of the current fiscal year, December 31, 2017, were $30.3
million. The chart below displays the breakdown for the major categories of those liabilities.
Bonds
In 2017, Moody’s affirmed the city's A2 bond rating when the city issued $5,000,000 in
bonds for street reconstruction projects and the Fallon Avenue overpass right-of-way
acquisition and design. An A2 is an upper medium grade. A high bond rating is important
because it results in lower interest costs when issuing debt. The city plans to issue future
debt to take advantage of low interest rates.
The amount of debt outstanding at year-end 2017 was $25,918,402, compared to the 2016 year-end amount of
$25,068,850. The chart below provides a glimpse of the current debt load, excluding the Minnesota Public
Facilities Authority note payable for wastewater treatment plant improvements.
The city issues debt periodically to pay for capital projects, such as street and utility construction projects.
Additionally, the city issued debt (2014) to settle with telecommunication bondholders, purchase capital equipment
and refund prior bond issues. The city plans to issue approximately $5,000,000 in General Obligation (G.O.) bonds
in 2018 to further finance street improvement projects and the Fallon Avenue overpass construction.
A2
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General Fund
The chart below shows General Fund revenues and expenditures for the last five years. Revenues have
increased every year with higher tax levies and greater building permit activity. Expenditures rose in 2017 mostly
due to wage increases.
Fund balance is determined as follows:
(Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources) = Fund Balance
Certain portions of the fund balance are
non-spendable, restricted, committed, or
assigned. Unassigned fund balance is the
remaining portion. The city's policy is to
maintain a year-end unassigned fund
balance of 65% of the following year's
budgeted expenditures. This is the
amount needed to pay expenditures until
the city receives its first property tax
settlement in June. The year-end
unassigned fund balance is $7,029,093
at the end of 2017.
The chart to the right shows 2017 revenues
by category, excluding other financing
sources. Property taxes continue to be the
primary revenue source. In 2017, property
taxes were 78% of actual revenues, while
budgeted property taxes were 81% of
budgeted revenues. Why? Other revenue
sources are more conservatively estimated.
Revenues and other sources for 2017
totaled $8,495,070, compared to a budgeted
$7,802,000. Building permit revenue
exceeded the $315,000 estimate by
$205,692. Intergovernmental revenue,
charges for services, investment earnings
and insurance dividends (Other) also
contributed to the positive revenue variance.
In the chart to the left, General Fund
expenditures are distributed by
function. The 2017 total expenditures
were $7,442,697, which was $359,303
below the budgeted $7,802,000. The
variance is mainly due to position
vacancies, low fuel costs, and a mild
winter, as well as vigilant budget
management. The leadership of the
Public Works Department posted a
positive $363,164 variance
(expenditures less than budget).
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All Governmental Funds
The chart to the left displays total
governmental revenues and
expenditures for the past five years. In
years 2013 and 2014, reserves were
used to retire debt and finance capital
asset acquisitions. In 2015, revenues
grew with increases in property taxes,
intergovernmental revenues, and
licenses/permits. Street reconstruction
projects contributed to large
expenditure increases in 2016 and
2017
The governmental funds operate on the modified accrual basis of accounting, and include various fund types
including:
General fund - accounts for all financial resources except those accounted for in another fund
Special revenue funds - accounts for revenues that are restricted by law or administrative action for
specific purposes.
Debt service fund - accounts for the activity related to long-term debt principal, interest, and related
costs
Capital project funds - account for the acquisition or construction of major governmental capital facilities
What does it all mean?
Fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are
segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance
with special regulations, restrictions, or limitations.
Fund balance denotes the difference between fund assets & deferred outflows of resources, and liabilities
& deferred inflows of resources in governmental funds balance sheets.
Modified accrual basis of accounting is the method of accounting used in governmental funds where
revenues are not recognized until they are both measurable and available. Expenditures are recognized in
the period when the liability is liquidated rather than incurred.
Nonspendable consists of amounts that are not in spendable form, such as prepaid items or inventory.
Restricted consists of amounts related to externally imposed constraints established by creditors,
grantors, or contributors; or constraints imposed by state statutory provisions.
Assigned consists of internally imposed constraints. These constraints consist of amounts intended to be
used by the city for specific purposes but do not meet the criteria to be classified as restricted or
committed. In governmental funds, assigned amounts represent intended uses established by the
governing body itself or by an official to which the governing body delegates the authority. Pursuant to city
council resolution, the council, city administrator, or finance director are authorized to establish
assignments of fund balance.
Unassigned is the residual classification for the General Fund which also reflects negative residual
amounts in other funds.
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Tax Levy
The City Council adopts a tax levy for the General Fund, Monticello Community Center Fund, Economic
Development Authority (EDA) Fund, Debt Service Fund, and Capital Projects Fund. The levy for taxes payable in
2017 was $9,430,000, which is $225,000 (2.4%) higher than the 2016 levy of $9,205,000. Most residents
experienced an increase in their 2017 property taxes as property values rebounded, reducing the homestead value
exclusion. Xcel continued to make improvements to its nuclear power generating plant in 2015. The 2015
improvements reached the tax rolls in 2017. Xcel plant uprate improvements in 2011 and 2013 added significant
taxable market value, leading to big tax capacity rates decreases in 2013 and 2015, respectively.
The chart to the left displays the
property tax levy using the left
scale (green bars) and the tax
capacity rate using the right
scale (red line). The city has
increased the levy the last two
years to compensate for the
drop in the tax capacity rates
caused by Xcel uprates. The tax
levy divided by the tax capacity
equals the tax capacity rate.
Tax capacity is a derivative of
the taxable market value.
The General Fund is primarily supported by property
taxes. Annual General Fund budgets typically plan to
receive 80% of the total revenue from the property tax
levy. No other revenue source comprises more than
5% of General Fund total revenues.
Debt service funds are typically supported by a wide
range of revenue sources (property taxes, special
assessments, developer impact fees, transfers from
other funds, etc.).
The MCC Fund is primarily supported by use fees
(memberships, activity fees, rental charges, etc.)
Additionally, the MCC Fund receives a portion of the
tax levy for operations and for debt service.
Three tax levying authorities compete
for your property tax dollar: Wright
County, City of Monticello, and
Independent School District #882.
Monticello property owners pay more
tax dollars to the county than to the
city. Monticello’s tax capacity rate is
the lowest in Wright County. A little
more than one-third of your property
tax supports a wide range of city
services, including public safety,
streets, parks and recreation, and
administration.
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Largest Taxpayers, Employers, and Customers
As taxpayers go, none is larger in Monticello than Northern States Power Co. (dba Xcel Energy). The company
operates a nuclear power plant located inside Monticello’s western boundary. The company has made two uprate
improvements in the last five years, absorbing a larger share of the city’s property tax levy. Xcel’s share of the levy
has increased from 53% to 62% in the last five years. That is an almost 17% increase to NSP. Consequently, the
city has the lowest tax capacity rate in Wright County.
Xcel Energy is the largest employer, too. With 700 employees, Xcel edges out the largest governmental employer,
Independent School District 882. Neither Xcel nor the school district are Monticello’s largest utility customer. Cargill
Kitchen Solutions generates $391,239 or 16% of the sewage utility operating revenue and $83,107 or 6% of the
water utility revenue. Cargill operates a plant that produces further-processed egg products in the breakfast
category for restaurants and food manufacturers.
Employer Employees
Xcel Energy (Northern States) 700
ISD No. 882 (Monticello) 576
CentraCare Medical Center (New River) 500
Cargill Kitchen Solutions (Sunny Fresh) 433
Wal-Mart Supercenter 325
City of Monticello 188
Cub Foods 180
Ultra Machine Corporation 173
Home Depot 160
Target 150
City of Monticello 2013 2014 2015 2016 2017
Estimated Market Value 495,349,400$ 464,619,100$ 722,993,700$ 795,994,000$ 848,843,600$
Net Tax Capacity 9,901,516$ 9,285,841$ 14,453,109$ 15,913,229$ 16,970,092$
Tax Capacity Rate 42.262 44.709 35.737 35.552 34.187
NSP Property Tax Paid 4,184,579$ 4,151,607$ 5,165,108$ 5,657,471$ 5,801,565$
Total City Tax Levy 7,900,000$ 8,150,000$ 8,535,000$ 9,205,000$ 9,430,000$
NSP % of Total City Tax Levy 53% 51% 61% 61% 62%