2015 Monticello MN PAFRPhone: 763-295-2711
Fax: 763.295.4404 www.ci.monticello.mn.us
City of Monticello
505 Walnut Street, Suite 1
Monticello, MN 55362
fortheyearendedDecember 31, 2015
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Financial Report Message
We are pleased to present the city of Monticello first Popular Annual Financial
Report (PAFR). The PAFR is a condensed version of the 2015 Comprehensive
Annual Financial Report (CAFR), and as such, does not include information on
all the city's 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
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 easy−to−read
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
The city of Monticello, organized as a municipality
in 1856, has the Mississippi River has 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 the relatively low
unemployment rate of 3.7%.
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, liquor store,
deputy registrar (DMV) and a fiber optics utility.
Contact Us!
There are many ways to
connect:
Phone 763.271.3200
www.ci.monticello.mn.us
Facebook – Monticello MN
Community
Inside:
Organization & outlook…..2
Major projects/initiatives...3
Fund accounting………….4
General Fund……………..5
Special revenue funds:
Community Center and
EDA…………………......6
All governmental funds….7
Debt management……….7
Enterprise funds…………8
Tax levy………………….11
Financial Awards
The city has received the
following awards from the
Government Finance
Officers Association
(GFOA).
Certificate of Achievement
for Excellence in Financial
Reporting for the city’s
Comprehensive Annual
Financial Report (CAFR):
Years 2012 – 2014
Distinguished Budget
Presentation Award: Years
2013 – 2015
Each award is valid for one
year.
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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.
Τhe City Council includes:
Mayor Brian Stumpf bstumpf@ci.monticello.mn.us
Councilmember Tom Perrault tom.perrault@ci.monticello.mn.us
Councilmember Glen Posusta glenray53@gmail.com
Councilmember Charlotte Gabler charlottegabler@msn.com
Councilmember Lloyd Hilgart lhil763@aol.com
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 for
providing general operational
oversight.
Pictured: Tom Perrault, Lloyd Hilgart, Brian Stumpf, Charlotte Gabler, and Glen Posusta
Economic Outlook
The city of Monticello continues to grow! In 2015, the city issued 38 permits for
new homes, compared to 69 in 2014, 49 in 2013, and 22 in 2012. However, the
number of buildable lots is declining. At the end of 2015, the city had fewer than
100 lots available for single−family homes.
For 2015, the city's population is estimated at 13,136, up 377, or about 3%, 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.
Τhe city's estimated market value of all properties within the city grew from
$1.51 billion to $1.71 billion at the end of 2015. Xcel improvements at its nuclear
power plant and increases in market values were the primary contributors to the
increase. Valued at $18.2 million, the city issued a new multi-family building
permit with 200+ apartment units. Construction for this permit started in 2016.
City Departments and
Staff
Administration
City Administrator
-Jeff O’Neill
City Clerk
-Jennifer Schreiber
Human Resources
-Tracy Ergen
Communications
-Rachel Leonard
Planning
Community
Development Director
-Angela Schumann
Building Official
-John Rued
Building Inspector
-Ron Hackenmueller
Finance
Finance Director
-Wayne Oberg
Finance Manager
-Sarah Rathlisberger
DMV Manager
-Carolyn Granger
Liquor Store Manager
-Randall Johnsen
Public Works
Street Superintendent
-Tom Moores
Utilities Superintendent
-Matt Theisen
Park Superintendent
-Tom Pawelk
Fire
Fire Chief
-Daryl Gilles
Community Center
MCC Director
-Kathleen Baltos
Operations Manager
-Sara Cahill
Event Coordinator
-Trish Menth
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Major Projects and Initiatives
2015 Major Projects and Initiatives
•Enhanced an unparalleled system of parks, trails and recreational facilities with land acquisition
for the Bertram Chain of Lakes regional park and improvements to the neighborhood park in
Hunter’s Crossings.
•Through land acquisition and public improvement projects, continued the implementation of the
downtown redevelopment plan providing for a downtown area that combines a successful commercial
district, community identity and heritage, and connection to the Mississippi River.
•Substantially completed a wastewater treatment project, including a new aerator for lowering energy
costs and a screw press providing more options for dealing with bio-solid waste.
•Started a wastewater treatment plant phosphorous reduction project, which includes replacement of
two digester covers. This project is expected to be fully completed by 2017.
Future Projects and Initiatives
•Acquire more park land at Bertram Chain of Lakes with financing from Minnesota Legacy grants and
Wright County. The city will make the minimal improvements in 2016 to satisfy grant funding
requirements, but is exploring alternatives for greater park buildout in 2017 or 2018.
•Explore avenues to improve delivery of all city services, including those provided by the city-
owned telecommunication utility.
•Levy of a new HRA property tax to support redevelopment expenditures. This levy is limited
to .0185% of the city’s taxable valuation.
•Construct the city’s final core street project, which is east of trunk highway 25 and north of I-94.
•Construct the improvements at the intersection of trunk highway 25 and county highway 75. This project
improves traffic flow through the addition of turn lanes.
•Construct the intersection improvements at the corner of Seventh Street and trunk highway
25. The installation of a cemetery retaining wall along Seventh Street will improve traffic flow
through this intersection.
•Acquire land and right-of-way needed for the Fallon Avenue bridge over I-94 and the 95th
Street extension.
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.
LONG-TERM FINANCIAL
PLANNING
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Fund Accounting
The city accounts for services and projects in different categories of funds.
Governmental Funds
General Fund
This is the primary fund for the city. It accounts for revenues and expenditures associated with the general
operations of the city that are not required to be accounted for in separate funds, and includes items such as
parks and public works. Additional information can be found on page five of this report.
Special Revenue Funds
These funds account for the proceeds of specific revenue sources that are restricted or committed for
specific purposes. The city's two largest special revenue funds are the Monticello Community Center (MCC)
Fund and the Economic Development Authority Fund. See page six for more information.
Capital Project Funds
These funds account for the financial resources used for the construction and/or acquisition of capital assets
(i.e. land, buildings, streets, parks, etc.).
Debt Service Funds
These funds account for the financial resources used for the repayment of debt associated with the
construction and/or acquisition of capital assets.
Proprietary Funds
Enterprise Funds
The city currently has five enterprise funds: Water Fund, Sewage Fund, Liquor Fund, Deputy Registrar
(DMV) Fund, and Fiber Optics Fund. These funds are operated and accounted for much like a business.
Pages eight through ten provide additional information on these funds.
Internal Service Funds
These funds are used to account for the financing of centralized services to city departments on a cost-
reimbursement basis. Operating revenues in these funds are expenditures in other funds.
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General Fund
The chart below shows General Fund revenues and expenditures for the last four years. After a dip in 2013,
revenues increased in 2014 and 2015 along with increases in the tax levy and building permit activity.
Expenditures rose with additional public safety and recreation & culture spending in 2015. The city also
implemented a paid-time-off (PTO) leave system in 2015 with accumulated sick leave payouts to most non-
union employees.
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 45% 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
was $4,873,494 at the end of 2015.
The chart to the right shows 2015
revenues by category. Property taxes
continue to be the primary revenue
source. The percentage of total
revenue from property taxes is 79%
for 2015, while budgeted property
taxes comprise 81% of total revenue.
Why? Other revenue sources are
estimated more conservatively.
Excluding other sources, total 2015
revenues were $7,637,646, compared
to a budgeted $7,246,000. Building
permit revenue and insurance
dividends contributed to the excess.
In the chart to the left, General Fund
expenditures are distributed by
function. Excluding other uses, 2015
total expenditures were $6,715,369--
$366,561 less than the budgeted
$7,081,930. The variance is largely
due to position vacancies and vigilant
budget management, paricularly in the
Public Works Department. The city
implemented a new paid-time-off
(PTO) policy by paying out sickleave
balances for nonunion employees,
which reduced the 2015 variance.
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Monticello Community Center Fund
The chart below shows revenues, expenditures and transfers, and fund balance for the Monticello
Community Center for the last four years. Revenues were $2,795,307 in 2015, nearly 3% greater than
2014. Expenditures and transfers increased slightly to $2,606,689, less than 1%, in 2015. The assigned
fund balance increased to $629,442 at the end of 2015. Since the city does not receive its first tax
settlement until June, a portion of the assigned fund balance is used for cash flow purposes. The
remaining fund balance will be used for future facility maintenance, such as roof replacement, parking lot
sealcoating, and remodeling.
$-
$1.0
$2.0
$3.0
$4.0
$5.0
2012 2013 2014 2015Millions
Revenues Expenditures Year-End Assigned Fund Balance
Economic Development Authority (EDA) Fund
The EDA Fund is a special revenue fund with three core areas: general operations, commercial loans, and
tax increment financing (TIF) district management. General operations are the broad EDA activities not
restricted to the other two core areas. TIF districts generate tax increments, which are used for the specific
purposes of each district. There are some exceptions depending on the district type and when the district
was created. The chart below shows revenues, expenditures and transfers, and fund balance for the EDA
for the last four years. Reflecting lower tax increments and investment earnings, revenues and transfers in
were $888,298 in 2015, nearly 19% less than 2014. With the markdowns in land held for resale values
offset by a decrease in transfers out, expenditures and other uses decreased less than 1% to $1,237,107
in 2015. The assigned fund balance decreased by less than 1% to $2,003,498 at the end of 2015
$-
$0.5
$1.0
$1.5
$2.0
$2.5
2012 2013 2014 2015Millions
Revenues Expenditures Year-End Assigned Fund Balance
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All Governmental Fund Revenues and Expenditures
The chart to the left display total
governmental revenues and
expenditures for the past four
years. In years 2012 through
2014, reserves were used to
retire debt and finance capital
asset acquisitions. In 2105
revenues moved upward with
increases in intergovernmental
revenues, property taxes, and
licenses and permits.
Debt Management
The city has issued debt periodically to pay for capital projects, such as street and utility construction projects.
Additionally, the city has issued debt (2014) to settle with telecommunication bondholders, purchase capital
equipment and refund prior bond issues.
In 2015, Moody’s affirmed the city's A2 bond rating when the city issued $2,605,000 in
bonds for 2015 and 2016 street projects. 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 2015 was $25,123,268, compared to the 2014 year-end
amount of $27,267,000. The chart below provides a glimpse of the current debt load, excluding the
Minnesota Public Facilities Authority note payable for wastewater treatment plant improvements.
A2
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Enterprise Funds
Summary of 2015 Actual Results
Water Sewage Liquor Fiber Optics DMV
Fund Fund Fund Fund Fund
Charges for Services/Sales 1,126,718$2,083,122$5,493,925$1,642,403$535,931$
Operating Expenses 591,416 1,479,157 4,724,209 2,010,010 315,501
Deprectiation 513,814 1,103,397 46,923 419,782 3,185
Operating Income/Loss 21,488 (499,432)722,793 (787,389)217,245
Nonoperating Revenues (Expenses)58,572 37,755 3,015 (103,592)6,678
CapitalContributions 268,329 1,186,651 ---
Transfers In/Out (790,958)(1,510,087)(450,000)450,000 -
Change in Net Position (442,569)$(785,113)$275,808$(440,981)$223,923$
Cash and Investments at Year-End 4,406,268$2,200,605$671,717$341,721$598,017$
Water Fund
Water revenues are highly dependent on irrigation during dry years. Although the city has some of the lowest
water rates in the region, recent rate increases may be curtailing some consumption. Transfers to debt service
funds over the last four years have helped offset declines in impact fees collected from developers. Capital
contributions in 2014 and 2015 were primarily impact fees.
Actual Actual Actual Actual
Water Utility 2012 2013 2014 2015
Charges for Services/Sales 1,334,445$1,239,083$1,117,226$1,126,718$
OperatingExpenses 591,766 489,862 571,296 591,416
Deprectiation 527,023 520,014 514,710 513,814
OperatingIncome/Loss 215,656 229,207 31,220 21,488
NonoperatingRevenues (Expenses)166,123 (58,209)199,910 58,572
Capital Contributions 499,158 -81,291 268,329
Transfers In/(Out)(207,219)(413,500)(631,560)(790,958)
Change inNet Position 673,718$(242,502)$(319,139)$(442,569)$
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Sewage Fund
Sewage revenues are minimally impacted by dry or wet years because of winter averaging for residential
customers. Winter averaging utilizes winter month water consumption to calculate summer sewage bills. The
city has raised sewage rates consistently over time to minimize the annual operating loss. But residents and
businesses still enjoy some of the lowest sewage rates in the region. Similar to the Water Fund, transfers to
debt services offset declines in impact fees collected from developers. Capital contributions in 2014 and 2015
are comprised of impact fees.
Actual Actual Actual Actual
Sewage Utility 2012 2013 2014 2015
Charges for Services/Sales 1,875,351$2,006,718$2,081,660$2,083,122$
OperatingExpenses 1,352,952 1,276,416 1,570,197 1,479,157
Deprectiation 1,105,980 1,107,508 1,106,532 1,103,397
OperatingIncome/Loss (583,581)(377,206)(595,069)(499,432)
NonoperatingRevenues (Expenses)90,064 (130,806)75,256 37,755
Capital Contributions 1,178,550 -407,337 1,186,651
Transfers In/(Out)--(1,690,672)(1,510,087)
Change inNet Position 685,033$(508,012)$(1,803,148)$(785,113)$
Sewage Gallons Treated(millions)408 392 435 417
Liquor Fund
The city’s municipal liquor store, Hi-Ways Liquors, continues to see sales growth. The well-led and
knowledgeable staff nearly cracked $5.5 million in sales for 2015—more than 6% above 2014. Monticello’s
liquor store consistently scores in the top 5 state-wide for municipal sales in cities with one store. The store
also sponsors two well-attended wine tasting events each year at the Monticello Community Center.
In the schedule below, cost-of-goods sold is included in operating expenses. The decline in transfers to the
Fiber Optics Fund reflects increased stability in the city’s telecommunications operations. All transfers from
this fund were to the Fiber Optic Fund.
Actual Actual Actual Actual
Liquor Store 2012 2013 2014 2015
Charges for Services/Sales 4,854,798$5,086,611$5,166,066$5,493,925$
OperatingExpenses 4,250,615 4,410,456 4,524,342 4,724,209
Deprectiation 51,440 47,141 46,922 46,923
OperatingIncome/Loss 552,743 629,014 594,802 722,793
NonoperatingRevenues (Expenses)(9,333)(8,283)13,381 3,015
Transfers In/(Out)(3,500,000)(650,000)(600,000)(450,000)
Change in Net Position (2,956,590)$(29,269)$8,183$275,808$
Annual Sales Growth Percentage 4.1%4.1%2.4%6.3%
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Deputy Registrar (DMV) Fund
The Deputy Registrar (DMV) Fund enjoyed its best year ever. Both transactions and revenues reached
significant milestones in 2015. The well-trained and pleasant staff of the DMV processed over 70,000
transactions in 2015, topping its previous high of 67,462. In addition, DMV revenues exceeded $500,000 for
the first time. DMV provides the following services: Department of Natural Resources licenses, game and fish
licenses, change of address and replacement driver’s licenses, motor vehicle title processing and licenses.
Growth in market share and operating income per transaction demonstrate the DMV’s commitment to
providing excellent customer service.
Actual Actual Actual Actual
Deputy Registrar (DMV)2012 2013 2014 2015
Charges for Services/Sales 455,293$456,384$497,798$535,931$
OperatingExpenses 282,258 289,296 299,524 315,501
Deprectiation -4,842 3,185 3,185
OperatingIncome 173,035 162,246 195,089 217,245
Nonoperating Revenues (Expenses)12,105 (2,188)10,736 6,678
Transfers In/(Out)(325,000)(75,000)(50,000)-
Change inNet Position (139,860)$85,058$155,825$223,923$
Annual Transactions 62,999 62,420 67,462 72,135
% of State-Wide Transactions 1.10%1.09%1.13%1.21%
Operatingincome per transaction $2.75 $2.60 $2.89 $3.01
Fiber Optics Fund
Compared with past years, the Fiber Optics Fund realized a relatively stable year. Indeed, the operating
budget, which uses modified accrual accounting, required considerably less than the $450,000 subsidy it
received from the Liquor Fund in 2015. Depreciation is a non-cash expense. Add depreciation to the operating
loss and you get a rough approximation of the cash required by operations. Operating expenses in 2015 also
included nearly $37,000 in write-offs to non-customer related receivables booked in prior years.
Actual Actual Actual Actual
Fiber Optics 2012 2013 2014 2015
Charges for Services/Sales 1,794,144$1,621,662$1,761,978$1,642,403$
OperatingExpenses 2,964,200 2,893,612 2,368,154 2,010,010
Deprectiation 416,091 410,818 442,930 419,782
OperatingIncome/Loss (1,586,147)(1,682,768)(1,049,106)(787,389)
NonoperatingRevenues (Expenses) (1,853,087)(1,937,546)(96,014)(103,592)
GainonDebt Extinguishment --20,990,451 -
Transfers In/(Out)4,450,000 860,000 6,383,732 450,000
Change inNet Position 1,010,766$(2,760,314)$26,229,063$(440,981)$
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Tax Levy
The City Council adopts a tax levy for the General Fund, Monticello Community Center Fund and Debt Service
Fund. The levy for taxes payable in 2015 was $8,535,000--$385,000 (4.7) higher than the 2014 levy of $8,150,000.
However, most residents and businesses experienced a sharp drop in their property taxes in 2015. Why? Xcel
increased its nuclear power generating capacity in 2013. That uprate reached the tax rolls for 2015. Similarly, an
Xcel uprate in 2011 reached the tax rolls in 2013.
The chart to the left displays the
property tax levy using the left
scale (green bars) and the tax
capacityrate using the rightscale
(red line). The city has increased
the levy the last two years to
compensate for the drop in the
tax capacityrates 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 get
over 80% its 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. As it is,
Monticello property owners pay
more tax dollars to the county
than to city coffers. Indeed,
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
residential refuse and recycling
services.