The URL can be used to link to this page

2019 Monticello MN PAFRN i h� Tv t . +L�n'i '}. �hld , 47 ayy� fi R1 sTWAA ��yMR, , Financial � �� m-� �� mm w��m m��m�� Message The City of Monticello is pleased to present its fifth Popular Annual Financial Report (PAFR). The PAFR is a condensed version of the 2019 Comprehensive Annual Financial Report (CAFR), and as such, does not include information on all the city's funds. The report focuses onselect major governnoenta|funds(Genena|,[nrnnounity[enter,andEconomic Development Authority) and the city's enterprise funds. The CAFRisadetailed account ofthe city's financial statements, notes, schedules, and statistics. The CAFRwas prepared in conformance with Generally Accepted Accounting Principles (GAAP), audited by Malloy, Montague, Karnowski, Radosevich, & Co. P.A. (MMKR), and received an unmodified (clean) opinion. A copy of the CAFR can be found on the city's website at This report provides asummary ofthe financial position ofthe city and shows where revenues come from tnoperate 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 ofthe city inasimplified and easy -to -read format. Definitions totechnical language can befound inthe section titled N/hotDoes /tAll Mcon?on page 12. Thank you for your interest inyour government. Please feel free tosend any questions orcomments onthe PAFRtn sa,l- E4W-,-� 911MOTIMIN-WINM M, The city operates under the mayor -council form ofgovernment nnanonpartisan basis. The mayor iselected tnserve atwo-year term. Counci|noembersserve four-year staggered terms, with two counci|mennberselected every two years. Po|icymakingand legislative authority are vested inthe city council. The council isresponsible for passing policies, ordinances, and resolutions. The council adopts the annual tax levy and budget. Council appointed boards, commissions and committees usually include atleast one counci|nnember.A council -appointed city administrator is responsible for implementing policies and providing general operational oversight. The mission ofthe city ofMonticello is — toresponsibly use our resources to ~ ----�~--- provide quality services and pD0g7@0Ms that foster a dynamic c0mDlUOitv rooted in history and preparing for avibrant future. City Organizational rga~=at~oal Struct0re im Brian Stumpf Lloyd Hilgart ri•rano • -• • -•. • _Mm wrens 1=0 I1 A ro Mrsvomans 111 .. 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 1-94 corridor in Wright County. The city benefits from employment opportunities in the area and a fairly low unemployment rate of 3.5%. The city provides its residents and businesses with a full range of municipal services consisting of law enforcement (contracted) and fire protection, the construction and maintenance of streets and other infrastructure, a community center for recreation activities, park operations and maintenance, and general administrative services. In addition, the city operates six enterprises: water, sewage, stormwater, and fiber optics utilities, liquor store, and deputy registrar (DMV). The city of Monticello continues to grow. In 2019, the city issued 56 permits for new homes. New plats in 2019 offset new home construction with 102 lots available for single-family homes. For 2019, the city's population was estimated at 13,782, an increase of about 8%, 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 may be annexed through an orderly annexation agreement. LOW 1 1 , # • 1 The Statement of Net Position presents information on the city's assets and deferred outflows of resources, less 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. Current and other assets Capital assets Total assets Deferred outflows of resources Long-term liabilities Other liabilities Total liabilities Deferred inflows of resources Net position Net investment in capital assets Restricted Unrestricted Total net position 2019 2018 Change $ 64,510,192 $ 57,482,763 $ 7,027,429 113, 539, 814 111,128,481 2,411, 333 178,050,006 168,611,244 9,438,762 393,665 707,457 (313,792) 36,701,389 32,170,967 4,530,422 2,772,900 2,734,647 38,253 39,474,289 34,905,614 4,568,675 5,473,458 5,311,755 161,703 82,816,413 82,768,194 48,219 8,690,172 9,649,085 (958,913) 41,989,339 36,684,053 5,305,286 $133, 495, 924 $129,101,332 $ 4,394,592 Change in net position 4,394,592 3,141,523 The Statement of Activities presents information showing how the city's net position changed during the most recent fiscal year. 4 City of Monticello, Minnesota 2019 2018 Change Revenues $ 32,500,261 $ 30,860,326 $1,639,935 Expenses 28,105,669 27,718,803 386,866 Change in net position 4,394,592 3,141,523 1,253,069 Net position, January 1 129,101,332 125,959,809 3,141,523 Net position, December 31 $ 133,495,924 $ 129,101,332 $4,394,592 to Revenues by Source - Governmental Activities Investment for Charges 8o, A Revenues by Source - Business -Type Activities Capital grants & contributions 11 /. Investment earnings 3% Expenses by Use - Governmental Activities Recreation & Fiber 1E IMA Expenses by Use - Business -Type Activities Denutv Registrar st & fiscal iages 5% General overnment 12% Sewage Utility 24% Duality V. 9 + Completed the Fallon Avenue overpass project + Completed the Chelsea Road Utility& Street Improvement project + Began construction of a new fire station + Began Phase l of park improvements at Bertram Chain of Lakes Regional Athletic Park + Completed HVAC upgrades & installed a new vvatem|ide atthe Community Center + Installation nfco|unnbahunnatRiverside Cemetery * Installation offiber service inthe Carlisle Village 6"'& Featherstonem4 developments * Purchased various pieces of equipment: 0 DMV courier vehicle 0 Fire, streets & water utility trucks 0 Sewer fund mule utility vehicle 0 Streets tractor & parks track loader � 2D2Ostreet improvement project invarious neighborhoods: 0 Cardinal Hills 0 Meadows, Ba|bou|Estates, O,Anders VVi|henn * 2O2Dchip seal project * Continue work on, and complete, the following projects started in2O18and 2019: 0 Walnut Street improvements 0 Broadway & Was h|ngton Street pedestrian improvements 0 20l88'2U19(Mississippi Shores) pedestrian improvements The city has also developed a Capital Improvement Program I 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 tnplan. In 2020, the city will look to expand its long-term financial plan to help with better forecasting for the future. Both the city's debt load and annual debt service property tax levy are evaluated for large projects requiring debt issuance. The city's long-term liabilities outstanding atthe end ofthe 281g totaled $36.7 million. The amount nfbonds outstanding atyear-end 2Ol9was $32,97O,OU0 compared tothe 2018year-end amount of $28,233,000. The city plans to issue approximately $2,200,000 in General Obligation (G.O.) bonds in 2020 to finance the G.O.2020 Street Improvement project. The chart below excludes the Minnesota Public Facilities Authority (MPFA) loans payable. Debt Outstanding (201G-2030) Ic $20 ------------------------------------------------------- 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Afund is a grouping of accounts segregated for e specific purpose. Street reconstruction and improvement projects contributed tolarge expenditure increases in2O16,2O17,and 2U1O.|n2019,the city made asignificant amount ofprogress onconstruction ofenew fire station atlO3Chelsea Road. The project will becompleted in2O2O. 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 account for revenues restricted by law or administrative action for specific purposes. * Debt service funds account 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. The chart below shows General fund revenues and expenditures for the last five years. Revenues have increased every year with higher tax levies, and charges for services increased in 2017 with the implementation of new garbage charge. Expenditures rose in 2018 mostly due to wage increases, including the hiring of an engineer -public works director, which had been vacant, and a fire marshal -emergency management coordinator, which was a new position. Fund balance = (Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources) The chart tnthe right shows 2O19revenues bv category, excluding other financing sources. Property taxes continue tnbethe primary revenue source, making up7496nfactual revenues, while budgeted property taxes were 78%ofbudgeted revenues. Why? Non -tax revenue sources are more conservatively estimated. Revenues for 2Ul9 totaled $9,232,996,compared toabudgeted <8,561,0OO.Building permit revenue exceeded budget by$18U,4U9(53%). Charges for services, intergovernmental, and other (notably investment earnings & insurance dividends) also contributed to the positive revenue variance. Public safety 30 Pub" lie works Gqeneral_--�— Sanitation government -Recreation and 7% 21 % cult re Fund balance can fall into five different classifications page.shown at the bottom of this The city's policy is to maintain a year-end fund balance of 75% 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 2Ol9year-end unassigned fund balance is $6,542,111. 2019 General Fund Expenditures by Function In the chart tothe left, General fund expenditures are distributed by function. The total expenditures were $8,269,524,which was $316,476 below the budgeted $8,586,UOU.Low fuel costs and hiring an engineer internally resulted in public works expenditures $170,591 (7%) less than budgeted. Recreation and culture expenditures were also under budget by$65,154(5Y6).|norder tocomply with the city's fund balance policy, $1,45O,O4Owas transferred out tnthe Capital Projects and Central Equipment funds causing anoverall decrease inGeneral fund balance. The Monticello Community Center (MCC) is a full-service facility with amenities including gym memberships, fitness classes, climbing wall, aquatics, child 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 nfcharges tnmembers and users. Some funding comes from a tax levy. The year-end fund balance decreased in 2019 because HVAC and energy conservation improvements for the building. 1111111 111�1111 111111 1111liq Monticello's special revenue funds include Small Cities Development Program (5[DP),cemetery, and [D8G-rcvita|ization. In addition, Monticello has an Economic Development Authority (EDA) Fund. One of the EDA's primary focuses is improving MnnticeUo's original downtown. Properties have been acquired in preparation for future area improvements. The EDA has also completed improvements along Walnut and Broadway Streets and continues to pursue opportunities for new and expanding businesses inthe city. Debt Service & Capital Project Funds The city has one combined debt service fund made up of eight sub -funds for the various governmental debt issuances outstanding. The fund balance is restricted for repayment of debt. The 2010A GO Improvement bonds were redeemed early in 2019. A partial early redemption of the 2011A Refunding bonds is occurring in 2020. Details about the city's general obligation debt came befound onpage 5. The Capital Projects fund is the only major capital project fund of the city. This fund accounts for the majority of governmental buildings and infrastructure projects some of which are detailed on page 4. The nonm jorcapita| projects funds include improvements for storm sewer (closed to a new Water Quality enterprise fund created in 2019), street lighting, and park& pathway dedication. ��B��~�� ~�"��°��~~=° K4nnticeUc/s Department of Motor Vehicles (DK4\) operations are reflected in the Deputy Registrar enterprise fund. The transition toK4NLARSin20l7created achallenge in learning e new system, but K4onticeUn's DMV adapted well. Due tothe difficult transition, the DMV received aone-time grant from the State ofMinnesota in2019of$l65,387. K4NLAKSvvi|| be replaced by new computer system in two phases estimated for November of2O2Uand October of2UZ1. The large increase in2O19revenues reflects the grant from the State, but also includes increased charges for services. The number oftransactions processed increased 17.l96and income per transaction increased by3.9Y6from 2018. The DK4Vprovides the following services: * New! The DMV can process some driver's license renewals. Standard driver's license only; nochanges 10 the license other than height orweight. Hi -Way Liquors operations are accounted for the inthe Liquor enterprise fund. The liquor store isconveniently located along the west side nfState Hwy 25near the only Mississippi River crossing within approximately 25 miles. The excellent location and experienced management team combine toachieve the l3 m highest gross sales out nfthe 190municipally run liquor stores inMinnesota in3018. The store's overall gross profit margin is roughly 26%. Profits generated from the liquor store support various city projects. The liquor store also transfers money to the Fiber Optics fund, asneeded. Sales continue 10grow, reaching $6 million in2019for the second year inarow due tnorganic The large decrease innet position isdue toa$2.1K4transfer to the Park & Pathways fund for the Phase 1 of improvements atthe Bertram Chain nfLakes (8COUregional park. Stop intoday for friendly service and agreat selection of beer, wine, liquor, and more! $1.0 $0.8 � m).4 ILF $0.2 � 2017 2018 2019 amoperatingnevenueoammoperatingcxpenses --ohang*m^etposition * Driver's license updates ifyou lost itorneed tnchange your address. * All ofyour DNR needs! Fishing & hunting licenses, boat transfers, and more. * Registering your vehicle ortransferring your title. If you lost your title, we can process duplicate in house for $J0.5O. 10 City of Monticello, Minnesota Tax Levy Information 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 2019 was $10,310,000, which is $440,000 (4.5%) higher than the 2018 levy of $9,870,000. Most residents experienced an increase in their 2019 property taxes as property values rebounded, reducing the homestead value exclusion. Xcel Energy's valuation was reduced, causing more of the tax burden to shift to the residential taxpayers. The 2015 improvements Xcel made to its plant 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. Property Tax Levy and Tax Capacity Rate 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 five 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. The only other revenue source that comprises more than 5% of budgeted General fund total revenues is charges for services at 7.2%. However, actual revenues for licenses and permits and charges for services each made up roughly 6% of 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 user fees (memberships, activity fees, rental charges, etc.) Additionally, the MCC fund receives a portion of the tax levy for operations. Wllho pots your property tax dollar? 2019 Property Tax Levy 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, administration, and economic development. The city's estimated market value of all properties within the city grew from $1.97 billion to $2.05 billion at the end of 2019. While Xcel Energy's nuclear power plant saw a decrease in market value, residential and other commercial properties had increases in market values causing an overall increase. ... • :� � •; � tit r "^� � � As taxpayers go, none is larger in Monticello than Xcel Energy (Xcel). The company operates a nuclear power plant located inside Monticello's western boundary. The company has made two uprate improvements in the last six years, absorbing a larger share of the city's property tax levy. Xcel's share of the levy has increased from 48% to 61% in the last five years. That is nearly a 44% increase to Xcel. Consequently, the city has the lowest tax capacity rate in Wright County. City of Monticello Employees 2015 600 2016 576 2017 500 2018 350 2019 Estimated Market Value $722,993,700 $795,994,000 $848,843,600 $895,655,200 $815,065,100 Net Tax Capacity $ 14,453,109 $ 15,913,229 $ 16,970,092 $ 17,906,151 $ 16,294,278 Tax Capacity Rate 35.737 35.552 34.188 33.426 35.459 NSP Property Tax Paid $ 5,165,108 $ 5,657,471 $ 5,801,735 $ 5,985,310 $ 5,777,788 Total City Tax Levy $ 8,535,000 $ 9,205,000 $ 9,430,000 $ 9,870,000 $ 10,310,000 NSP % of Total City Tax Levy 61% 61% 62% 61% 56% Xcel Energy is the largest employer, too. With 600 employees, Xcel edges out the largest governmental employer, Independent School District 882. Neither Xcel nor the school district are Monticello's largest utility customer, however. Cargill Kitchen Solutions generates $482,215 or 19.7% of the sewage utility operating revenue and $89,510 or 6.9% 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) 600 ISD No. 882 (Monticello) 576 CentraCare Medical Center (New River) 500 Cargill Kitchen Solutions (Sunny Fresh) 350 Wal-Mart Supercenter 300 City of Monticello 202 Home Depot 150 Target 150 Ultra Machine Corporation 140 Cub Foods 100 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 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 Deferred outflows of resources are 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. Modified accrual basis of accounting is the method of accounting 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. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets. Other liabilities are present obligations of the city to sacrifice resources that it has little or no discretion to avoid. 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 includes all other net position that does not meet the definition of "restricted" or "net investment in capital assets. 12 City of Monticello, Minnesota New Community -Create -if Vision & Values Adopted Monticello 2U4OVision + Plan isaproject focu»ednnthefuture of our community. Earlier this year vve completed the first step inthe process with the adoption ofanew Monticello Vision. Drafting the Vision relied onsignificant public participation. VVe wanted the people who live, work, and recreate here to help us look 10the future. The work included contributions from advisory committees aswell ashundreds nfpeople from the greater Monticello area. Initially, the public helped usidentify the issues shaping our city over the next 2Oyears. Then the consultant guided usthrough prioritizing these issues and developing scenarios tomaximize opportunities and address challenges. After refining the document with more public feedback, the city received afinal draft nfthe community vision. |tincluded a Vision Statement, Values, and Preferred Growth Scenario. This document was adopted bythe City Council nnFebruary 24, 2020. Now it's launching us into the next phase of Monti 2040 — updates to the Comprehensive Plan (more info on page 8). Thank you toeveryone who participated! Your voices guided the creation nfadocument that's the foundation ofour future, You can see the full Monticello 2O40Vision Document at: Monticello Value Statements A network of parks, open spaces and trail connections that provide recreational opportunities. A diversified and strong local economy competitive at regional, state, and national levels. A healthy community focused on physical and mental health and wellness of its residents. A respected school and education system serving the A thriving arts and culture scene that reflects community creativity and supports a sense of place.