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2025 Popular Annual Financial ReportFY 2024 PAFR Where the Money Comes From: From property taxes to charges for services, take a look at the revenue streams that keep MonƟ cello moving forward. Your Dollars at Work: See how MonƟ cello invests in services like public safety, parks, infrastructure, and more for our community. Shopping Local Does More: Revenue from Hi-Way Liquors and the DMV supports key city projects and services. Popular Annual Financial Report Financial Year 2025 FY 2025 PAFR 2 - CITY OF MONTICELLO City Proﬁ le The City of MonƟ cello, 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 beneﬁ ts from employment opportuniƟ es in the area and a relaƟ vely low unemployment rate of 4.4%. The City provides its residents and businesses with a full range of municipal services consisƟ ng of contracted law enforcement, ﬁ re protecƟ on, the construcƟ on and maintenance of infrastructure, a community center for recreaƟ on acƟ viƟ es, park operaƟ ons and maintenance, and general administraƟ ve services. In addiƟ on, the City operates six enterprises: water, sewer, stormwater, ﬁ ber opƟ c uƟ liƟ es, a municipal liquor store, and deputy registrar (DMV). In 2025, the City’s populaƟ on was esƟ mated at 15,464 an increase of about 7% from the 2020 Census number of 14,455. The City currently occupies 8.87 square miles of land and 0.46 square miles of water, with the potenƟ al to expand to 20.8 square miles as porƟ ons of MonƟ cello Township may be annexed via the MonƟ cello Orderly Located in Wright County, Minnesota Mission Statement The mission of the City of MonƟ cello is to responsibly manage our resources to provide quality services and programs, creaƟ ng a dynamic community by building on our strengths and invesƟ ng in our future. 2025 by the Numbers 15,464 EsƟ mated PopulaƟ on 4.4% Unemployment Rate 5,695 Households $79,534 Median Household Income 37.70 City Tax Rate 88.22 Direct & Overlapping Tax Rate 4,290 School Enrollment 9,289 Registered Voters 2,638 MCC Memberships 62 Full-Time Employees 4,767 Water UƟ lity Customers 1,123 Streetlights 8.87 Square Miles (Land) 406 Fire Calls 83.2/51 Miles of Streets/Trails 30 Parks Financial Report Message Sarah Rathlisberger Finance Director The City of MonƟ cello is pleased to present its eleventh Popular Annual Financial Report (PAFR). The PAFR follows Generally Accepted AccounƟ ng Principles (GAAP) and is a condensed version of the 2025 Annual Comprehensive Financial Report (ACFR). It does not include informaƟ on on all of the City’s funds and the discretely presented Economic Development Authority (EDA) component unit. However, the full ACFR can be found on the City website at MonƟ celloMN.gov/164. Thank you for your interest in your government. Liz Lindrud Assistant Finance Director AnnexaƟ on Area agreement. FY 2025 PAFR CITY OF MONTICELLO - 3 City Structure The City operates under the mayor-council form of government on a nonparƟ san basis. The mayor is elected to serve a two-year term. Councilmembers serve four-year staggered terms, with two councilmembers elected every two years. Policymaking and legislaƟ ve authority are vested in the city council. The council is responsible for passing policies, ordinances, and resoluƟ ons. The council adopts the annual tax levy and budget. Council appointed boards, commissions and commiƩ ees usually include at least one councilmember. A council-appointed city administrator is responsible for implemenƟ ng policies and providing general operaƟ onal oversight. OrganizaƟ onal Chart CiƟ zens of MonƟ cello City Council City Administrator Boards & Commissions AdministraƟ on Development Services Finance Public Works Fire Parks, Arts & RecreaƟ on LeŌ to right: Kip ChrisƟ anson, Councilmember; Tracy Hinz, Councilmember; Lloyd Hilgart, Mayor; CharloƩ e Gabler, Councilmember; Lee MarƟ e, Councilmember. MonƟ cello City Council Name & Title E-mail Term Expiry Date Lloyd Hilgart, Mayor Lloyd.Hilgart@MonƟ celloMN.gov December 31, 2026 Kip ChrisƟ anson, Councilmember Kip.ChrisƟ anson@MonƟ celloMN.gov December 31, 2028 CharloƩ e Gabler, Councilmember CharloƩ e.Gabler@MonƟ celloMN.gov December 31, 2026 Tracy Hinz, Councilmember Tracy.Hinz@MonƟ celloMN.gov December 31, 2026 Lee MarƟ e, Councilmember Lee.MarƟ e@MonƟ celloMN.gov December 31, 2028 FY 2025 PAFR 4 - CITY OF MONTICELLO City Finances Property Taxes The City Council adopts a tax levy for the General Fund, MonƟ cello Community Center Fund, Debt Service Fund, and Capital Projects Fund. The Housing & Redevelopment Authority Levy is adopted by the Economic Development Authority and the City Council. The levies for taxes payable in 2025 were $14,616,000 which is $1,091,000 (8.1%) higher than the 2024 levies of $13,525,000. The city’s esƟ mated market value of all properƟ es within the city grew from $2.72 billion to $2.92 billion in 2025 (for taxes payable in 2026). ResidenƟ al properƟ es saw a 2.94% decrease, commercial properƟ es saw an 3.05% increase, apartments experienced a 3.17% increase in market value and Xcel saw a 10.2% increase. Governmental Revenues & Expenditures Revenues The most signiﬁ cant revenue source for governmental acƟ viƟ es is property taxes at 50%. Charges for services accounts for 18% of revenues, most of which is generated by the Community Center. Capital grants & contribuƟ ons (18%) include special assessments and revenues from other sources restricted to capital asset acquisiƟ on. Expenditures Public works expenditures are the most signiﬁ cant, followed by recreaƟ on & culture, and public safety. Public works includes engineering, streets, ice & snow removal, shop & garage, and street lighƟ ng. RecreaƟ on & culture includes parks, cemetery, senior center, and community center expenditures. Public safety includes building inspecƟ ons, ﬁ re department and law enforcement. FY 2025 PAFR CITY OF MONTICELLO - 5 General Fund Revenues: Where the Money Comes From For 2025, the City had budgeted for property taxes to be 71% of the year’s General Fund revenue. However, property taxes made up 66% of the City’s actual revenue in 2025. The City esƟ mates the remaining non-tax revenue sources, like license and permit fees, conservaƟ vely, since these can vary year to year. Actual revenues totaled $14,005,347 compared to a budgeted $13,181,000. 2025 Budgeted vs Actual Revenue • Budgeted Revenue: $13,181,000 • Actual Revenue: $14,005,347 • Actual revenue was 107% of budgeted amount. 13% Charges for Services 66% Property Taxes 5% Intergovernmental 6% Licenses and Permits10% Other Revenue Breakdown FY 2025 PAFR 6 - CITY OF MONTICELLO General Fund Expenditures: How the Money is Spent In 2025, total General Fund expenditures were $13,232,228, which was $57,228 higher than the budgeted amount of $13,175,000. The largest budget variances were in the public works ($307,470 under budget) and general government ($173,730 over budget). Public Works expenditures were lower than anƟ cipated due to the mild winter, which reduced street maintenance and street lighƟ ng costs. The general government variance was due to higher solar producƟ on expenses, which are off set by corresponding solar producƟ on rebate revenues. 2025 Budgeted vs Actual Expenditures • Budgeted Expenditures: $13,175,000 • Actual Expenditures: $13,232,228 • Actual expenditures were 100% of the budget. 31% Public Safety 24% General Government 18% Parks, Arts & RecreaƟ on 7% SanitaƟ on20% Public Works Expenditure Breakdown FY 2025 PAFR CITY OF MONTICELLO - 7 Other Governmental Funds Governmental Funds The governmental funds operate on the modiﬁ ed accrual basis of accounƟ ng and include various fund types including: • General fund - accounts for all ﬁ nancial resources except those accounted for in another fund. • Special revenue funds - account for revenues restricted by law or administraƟ ve acƟ on for speciﬁ c purposes. • Debt service funds - account for the acƟ vity related to long-term debt principal, interest, and related costs. • Capital project funds - account for the acquisiƟ on or construcƟ on of major governmental capital faciliƟ es. Community Center Special Revenue Fund The MonƟ cello Community Center (MCC) is a full-service facility with ameniƟ es including gym memberships, ﬁ tness classes, climbing wall, aquaƟ cs, supervised indoor play, concessions, room rentals, and more. The MCC hosts various events including a weekly summer Farmers Market, Movies in the Park, and Music on the Mississippi concert series. Revenues are mostly comprised of charges to members and users. Some funding comes from a tax levy. Charges for services increased $85,839 (6.8%), and expenditures increased $126,357 (5.8%) in 2025. MonƟ cello’s special revenue funds also include the Small CiƟ es Development Program (SCDP) and Cemetery funds. Discretely Presented Component Unit A discretely presented component unit is a related, but disƟ nct, enƟ ty which is reported in the city’s ﬁ nancial report separately from the ﬁ nancial data of the primary government. The Economic Development Authority (EDA) Fund in MonƟ cello is one such component unit. One of the EDA’s primary focuses is improving MonƟ cello’s original downtown. The EDA Fund also accounts for the City’s tax increment ﬁ nancing (TIF) districts, acts as the Housing & Redevelopment Authority, and assists commercial and industrial businesses interested in calling MonƟ cello home. FY 2025 PAFR 8 - CITY OF MONTICELLO Enterprise Funds Enterprise Funds account for the City’s uƟ liƟ es (water, sewer, stormwater, ﬁ ber opƟ cs) as well as liquor and DMV operaƟ ons, which are funded like businesses by relying on fees and charges for revenue to cover expenses. UƟ liƟ es MonƟ cello’s water, wastewater (sewer) and stormwater uƟ liƟ es serve approximately 4,800 residenƟ al, commercial and industrial accounts. The City’s water storage capacity is 2.55 million gallons and is supplied by a system of 5 wells. Water Fund Water rates increased 10% in 2025 in preparaƟ on for the need to fund a new water treatment plant. In 2025 water revenues were $2,308,930, increasing $202,837 from 2024. Total operaƟ ng expenses (excluding depreciaƟ on) were $991,940, decreasing by $53,434 compared to 2024. Sewer Fund Sewer rates increased 2.5% in 2025. ContribuƟ ng to sewer revenues increasing $205,138 to $3,367,698. Total operaƟ ng expenses (excluding depreciaƟ on) were $2,273,577, an increase of $448,069 from 2024. Stormwater Fund The stormwater fee is based on 1 drainage unit per residence and 7 drainage units per impervious acre for non-residenƟ al properƟ es. This fee remained at $4.75 in 2025. The stormwater revenues decreased by $641 to $664,885 in 2025. Total operaƟ ng expenses (excluding depreciaƟ on) were $212,868, an increase of $10,292 from 2024. FY 2025 PAFR CITY OF MONTICELLO - 9 Enterprise Funds Community Enterprise Funds Hi-Way Liquors Hi-Way Liquors operaƟ ons are accounted for in the Liquor enterprise fund. The liquor store is conveniently located along the west side of State Hwy 25 near the only Mississippi River crossing within approximately 25 miles. The excellent locaƟ on and experienced management team combined to achieve the 18th highest gross sales out of the 176 municipally run liquor stores in Minnesota in 2023. (2024 report not yet available). The store’s overall gross proﬁ t margin is roughly 28%. Proﬁ ts generated from the liquor store support various city projects. Liquor and related product sales were $6,337,632. In 2025, Hi-Way Liquors added THC beverages to address changing liquor consumpƟ on trends. The net posiƟ on increased $669,453 in 2025. No transfers were made out of the liquor store fund in 2025. Stop in for friendly service and a great selecƟ on of beer, wine, liquor, and more! Deputy Registrar (Department of Motor Vehicles) MonƟ cello’s Department of Motor Vehicles (DMV) operaƟ ons are reﬂ ected in the Deputy Registrar enterprise fund. In 2025, the DMV showed a decrease in net posiƟ on of $49,468. $502,000 in proﬁ ts were used to help fund the new play structure at West Bridge Park. The number of transacƟ ons processed increased 9.3%, and net revenue per transacƟ on decreased by 23% from 2024. The DMV provides the following services: • $20 fast track Ɵ tle transfers (Ɵ tle received within 3 business days). • Duplicate Ɵ tles printed in-house same day. • Duplicate driver’s license (change of address or lost). • All of your DNR needs including ﬁ shing & hunƟ ng licenses and boat transfers. • Notary services and more! FY 2025 PAFR 10 - CITY OF MONTICELLO What We Own 2025 Major Projects & Purchases Capital Assets The total for 2025 capital assets is $130,809,409. Below is a list of all major projects and purchases that occurred in 2025. • Bertram Chain of Lakes Phase 2 Improvements • 7th Street Retaining Wall & Sidewalk Improvement • School Boulevard IntersecƟ on Improvements • West Bridge Park playground equipment • SNOW Wolf Loader • Roof replacements for the wastewater treatment plant, parks barn, and DMV • 2 trucks for parks, 1 truck for uƟ liƟ es, 1 truck for building inspecƟ ons • Can-Am Defender and trailer for the ﬁ re department • Line marking kit • Fiber installaƟ on for Meadwbrook 1st, Country Club 4th and ﬁ ber relocaƟ on at Bertram • Skid Steer • Towmaster Paver Trailer • City Hall Printer Long-Term Financial Planning The City has developed a Capital Improvement Plan (CIP), which is a ﬁ ve-year forecast of the City’s facility, equipment, and infrastructure needs. Items in the ﬁ rst year of the CIP are incorporated into the annual budget. Items in the later years are less certain, but are idenƟ ﬁ ed for long-term planning. A long term ﬁ nancial planning model was created in 2022, which is updated annually. Both the City’s debt load and annual debt service property tax levy are evaluated for large projects requiring debt issuance. Current year revenues, grants and one-Ɵ me use of reserves provide pay-as-you-go ﬁ nancing for smaller projects. Projects in Process: • Ditch 33 Improvements • Water Treatment Plant ConstrucƟ on • CSAH West UƟ lity Expansion • CSAH 39 Trail ConstrucƟ on • Public Works Facility Design • Bertram Chain of Lakes Pickleball Courts • Fall Avenue ReconstrucƟ on • Block 51 Parking Expansion • Library Parking Lot • MonƟ cello Community Center Envelope Improvements FY 2025 PAFR CITY OF MONTICELLO - 11 The City’s debt includes general obligaƟ on (G.O.) bonds issued to fund major capital projects such as infrastructure improvements, as well as G.O. revenue bonds and a Public FaciliƟ es Authority (PFA) G.O. Sewer Revenue Note used to ﬁ nance upgrades to the wastewater treatment plant. Except when aligning the Ɵ ming of necessary public investments with private development, the City plans to issue debt only for large, non- recurring projects, such as construcƟ on of a new City facility. Projects such as street overlays or equipment purchases are considered recurring in nature and are funded through current resources like grants or the capital tax levy. The remaining porƟ on of the debt reﬂ ects the City’s liabiliƟ es related to employee beneﬁ ts. As of the end of 2025, the City’s total outstanding long-term liabiliƟ es amounted to $16,651,783. What We Owe Debt Service & Capital Projects Fund The City has one combined debt service fund made up of six sub- funds for the various governmental debt issuances outstanding. The fund balance is restricted for repayment of debt. The Capital Projects Fund and the Bertram Chain of Lakes Sales Tax Fund are the two major capital project funds of the City. The Capital Projects Fund accounts for the majority of governmental buildings and infrastructure projects, some of which are detailed on page 10. The Bertram Chain of Lakes Sales Tax fund accounts for the improvements funded by the Local Sales Tax that was implemented in 2025. The nonmajor capital projects funds include street lighƟ ng improvement, park & pathway improvement (closed into the Capital Projects Fund at the end of 2025), and park dedicaƟ on. MonƟ cello Bond RaƟ ng In 2023, Moody’s upgraded the City’s bond raƟ ng to Aa3. An Aa3 is a high grade. A high bond raƟ ng is important because it results in lower interest costs when issuing debt. The amount of bonds outstanding at year-end 2025 was $12,865,000 compared to the 2024 year-end amount of $15,340,000. The City did not issue any debt in 2025, but does plan to in 2026 for the construcƟ on of the water treatment plant and public works facility. The City of MonƟ cello received a high bond raƟ ng of Aa3 by Moody’s in 2023. Aa3 Bond RaƟ ng FY 2025 PAFR 12 - CITY OF MONTICELLO Largest Taxpayer, Employers, and Customers Among local taxpayers, none is larger or more impacƞ ul in MonƟ cello than Xcel Energy (Xcel), also known as Northern States Power (NSP). The company operates a nuclear power plant located inside MonƟ cello’s western boundary. The company has made two uprate improvements in the last ﬁ Ō een years, absorbing a larger share of the City’s property tax levy. Xcel’s share of the taxes paid increased from 40% to 62% and back down to 38% in that Ɵ me. Consequently, the City of MonƟ cello has one of the lower tax capacity rates in Wright County. Xcel’s Nuclear GeneraƟ ng Plant used to be MonƟ cello’s largest employer, but ISD #882 recently surpassed Xcel to become the largest employer with 684 emplyees. InteresƟ ngly, neither the school district nor the nuclear plant are MonƟ cello’s largest uƟ lity customer. Cargill Kitchen SoluƟ ons operates a plant in downtown MonƟ cello that produces further-processed egg products used in breakfast products for restaurants and food manufacturers. Due to the type of producƟ on process, Cargill generates $494,335 or 13.8% of the sewer uƟ lity operaƟ ng revenue and $152,209 or 5.8% of the water uƟ lity revenue. Taxes: Property and Sales Property Taxes Who gets your property tax dollar? Your tax dollar is divided between four governmental authoriƟ es. MonƟ cello collects 42 cents of every tax dollar for municipal services. The remaining porƟ ons are divided among Wright County, Independent School District (ISD) #882, and the Economic Development Authority (EDA). Local Sales Tax In November 2024, residents voted to pass a 0.5% Local Sales Tax to fund improvements at the Bertram Chain of Lakes Regional AthleƟ c Park. The tax applies to the same items and services as the general state sales tax. Items such as groceries, prescripƟ on and over-the-counter medicaƟ ons, baby products and clothing are exempt from the sales tax. The local sales tax took eff ect April 1, 2025, and the ﬁ rst revenues were received by the City in July. Along with the sales tax, the City conƟ nues to seek grants and other funding opportuniƟ es to maximize the impact of the tax revenue. FY 2025 PAFR CITY OF MONTICELLO - 13 Financial Awards The Government Finance Offi cers AssociaƟ on (GFOA), with more than 35,000 professionals, is dedicated to enhancing and promoƟ ng the professional management of governments for the public beneﬁ t. Since 1906, the GFOA has been accomplishing this mission by idenƟ fying and developing the highest quality ﬁ nancial policies and pracƟ ces and promoƟ ng them to the public through educaƟ on, training, and leadership. The GFOA has established several highly regarded professional recogniƟ on programs to encourage state and local governments of all types and sizes to improve the quality of their ﬁ nancial management and to recognize their achievement. Each award is valid for one year. The City of MonƟ cello has received the following awards: Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Monticello Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2024 Executive Director/CEO Government Finance Officers Association Award for Outstanding Achievement in Popular Annual Financial Reporting Presented to City of Monticello Minnesota For its Annual Financial Report For the Fiscal Year Ended December 31, 2024 Executive Director/CEO PRESENTED TO City of Monticello Minnesota For the Fiscal Year Beginning January 01, 2026 Executive Director GOVERNMENT FINANCE OFFICERS ASSOCIATION Distinguished Budget Presentation Award DisƟ nguished Budget PresentaƟ on Award 2009—2026 Annual Comprehensive Financial Report 2009—2024 Popular Annual Financial Report 2015—2024 FY 2025 PAFR 14 - CITY OF MONTICELLO Glossary of AccounƟ ng Terms Assigned funds: Amounts set aside by the City for speciﬁ c purposes that are not restricted or commiƩ ed. CommiƩ ed funds: Amounts that can only be used for a speciﬁ c pur- pose by resoluƟ on of the City Council. Current and other assets: Resources with present service capacity that the city controls such as cash or near cash items that can be used to liquidate liabiliƟ es due within a year. Capital assets: Nonﬁ nancial assets that have an iniƟ al useful life of more than one year and are used in providing services for the city and its residents. Deferred inﬂ ows of resources: Represent an acquisiƟ on of net assets that applies to future periods (inﬂ ow of resources during the year). Deferred ouƞ lows of resources: Represent a consumpƟ on of net assets that applies to future periods (ouƞ low of resources during the year). Fund: A grouping of accounts segregated for a speciﬁ c purpose. General fund: The main operaƟ ng fund for the city. Long-term liabiliƟ es: ObligaƟ ons of the city including items such as bonds, loans, compensated absences, pension liabiliƟ es and other city obligaƟ ons, typically due beyond the current reporƟ ng period. Modiﬁ ed accrual basis of accounƟ ng: The method of accounƟ ng where revenues are not recognized unƟ l they are both measurable and available. Expenditures are recognized in the period when the liability is liquidated rather than incurred. Net investment in capital assets: Consists of capital assets, net of accumulated depreciaƟ on, reduced by any outstanding debt aƩ ributable to acquire capital assets, including accounts payable at year end. Nonspendable funds: Resources not in a spendable form, such as prepaid items. Other liabiliƟ es: Present obligaƟ ons of the city that it has liƩ le or no discreƟ on to avoid. Restricted funds: Funds to be used for an externally-imposed purpose. Restricted net posiƟ on: Consists of net posiƟ on with limitaƟ ons imposed on its use through external restricƟ ons imposed by creditors, grantors, or other governments. Statement of acƟ viƟ es: Presents informaƟ on showing how the city’s net posiƟ on changed during the reporƟ ng year. Statement of net posiƟ on: Presents informaƟ on on the city’s assets and deferred ouƞ lows of resources, less liabiliƟ es and deferred inﬂ ows of resources, with the diff erence reported as net posiƟ on. Over Ɵ me, increases or decreases in net posiƟ on may serve as an indicator of whether the ﬁ nancial posiƟ on of the city is improving or deterioraƟ ng. Tax capacity rate: A result of dividing the property tax levy by the taxable value of properƟ es in a jurisdicƟ on. Unassigned funds: The remaining balance in the General fund or negaƟ ve balance in any other fund. Unrestricted net posiƟ on: Includes all other net posiƟ on that does not meet the deﬁ niƟ on of “restricted” or “net investment in capital assets.