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2022-06-21 City Council Agenda PacketCITY OF MENDOTA HEIGHTS CITY COUNCIL AGENDA June 21, 2022 – 6:00 pm Mendota Heights City Hall 1.Call to Order 2.Roll Call 3.Pledge of Allegiance 4.Adopt Agenda 5.Consent Agenda a.Approve Minutes - City Council June 7, 2022 b.Acknowledge Minutes - Natural Resources Commission May 11, 2022 c.Acknowledge Minutes - Parks and Recreation Commission April 12, 2022 d.Acknowledge Minutes - Parks and Recreation Commission May 10, 2022 e.Approve Renewal of Massage Licenses f.Approve Appointment of Student Representatives to City Advisory Commissions g.Acknowledge the April 2022 Par 3 Financial Report h.Acknowledge May 2022 Fire Synopsis i.Approve May 2022 Treasurer’s Report j.Approve Building Activity Report May 2022 k.Approve Claims List 6.Citizen Comment Period (for items not on the agenda) *See guidelines below 7.Presentations a.City of Mendota Heights FY2021 Audit Report 8.Public Hearings Page 1 9.New and Unfinished Business a.Installation of Push Button Switches at Marie and Friendly Hills Parks Ice Rinks 10.Community Announcements 11.Council Comments 12.Adjourn Guidelines for Citizen Comment Period: The Citizen Comments section of the agenda provides an opportunity for the public to address the Council on items which are not on the agenda. All are welcome to speak. Comments should be directed to the Mayor. Comments will be limited to 5 minutes per person and topic; presentations which are longer than five minutes will need to be scheduled with the City Clerk to appear on a future City Council agenda. Comments should not be repetitious. Citizen comments may not be used to air personal attacks, to air personality grievances, to make political endorsements, or for political campaign purposes. Council members will not enter into a dialogue with citizens, nor will any decisions be made at that presentation. Questions from the Council will be for clarification only. Citizen comments will not be used as a time for problem solving or reacting to the comments made, but rather for hearing the citizen for information only. If appropriate, the Mayor may assign staff for follow up to the issues raised. Page 2 CITY OF MENDOTA HEIGHTS DAKOTA COUNTY STATE OF MINNESOTA Minutes of the Regular Meeting Held Tuesday, June 7, 2022 Pursuant to due call and notice thereof, the regular meeting of the City Council, City of Mendota Heights, Minnesota was held at 6:00 p.m. at City Hall, 1101 Victoria Curve, Mendota Heights, Minnesota. CALL TO ORDER Mayor Levine called the meeting to order at 6:00 p.m. Councilors Duggan, Paper, Mazzitello, and Miller, were also present. PLEDGE OF ALLEGIANCE Council, the audience, and staff recited the Pledge of Allegiance. AGENDA ADOPTION Mayor Levine presented the agenda for adoption. Councilor Miller moved adoption of the agenda. Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 CONSENT CALENDAR Mayor Levine presented the consent calendar and explained the procedure for discussion and approval. Councilor Duggan moved approval of the consent calendar as presented, pulling items H, I, K, L, M, and P. a.Approval of May 17, 2022 City Council Minutes b. Approval of May 16, 2022 City Council and Planning Commission Work Session Minutes c.Acknowledge March 16, 2022 Airport Relations Commission Meeting Minutes d. Acknowledge the April 26, 2022 Planning Commission Meeting Minutes e.Approve the Liquor License Renewals for the Period of July 1, 2022 through June 30, 2023 f.Approve New Massage Business License and Massage Therapist Licenses – Hush Therapeutic Massage, North Plaza Drive g.Approve Out of State Travel Authorization – National Recreation and Park Association h. Approve Resolution 2022-42 Accepting Donation to the Cliff Timm Memorial Fishing Derby i.Adopt Resolution 2022-43 Approving Amended and Restated Joint Powers Agreement with Dakota Communications Center (Dakota 911) j.Acknowledge April 2022 Fire Synopsis 5a. Page 3 k.Accept the Resignation of Sharon Deziel and Authorize the Posting of the Communications Coordinator Position l.Approve of City Clerk Hire m.Approve Joint Powers Agreement between LMRWMO and City of Mendota Heights for the Interstate Valley Creek Study n. Approve Renewal of Massage Therapist License o. Approve Resolution 2022-48 Appointing 2022 Election Judges p. Approval of Claims List Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 PULLED CONSENT AGENDA ITEMS H)APPROVE RESOLUTION 2022-42 ACCEPTING DONATION TO THE CLIFF TIMM MEMORIAL FISHING DERBY Mayor Levine acknowledged the family of Cliff Timm for the generous donation to the City. She commented that the children of the community appreciate the event which would not be possible without that contribution from the family. Councilor Mazzitello moved to adopt RESOLUTION NO. 2022-42 ACCEPTING DONATION TO THE CLIFF TIMM MEMORIAL FISHING DERBY. Councilor Miller seconded the motion. Ayes: 5 Nays: 0 I) ADOPT RESOLUTION 2022-43 APPROVING AMENDED AND RESTATED JOINT POWERS AGREEMENT WITH DAKOTA COMMUNICATION CENTER (DAKOTA 911) Councilor Duggan commented that this item is of some significance to the community to move from the existing PSAP service to Dakota 911. He noted that this will be a cost savings to the City as Dakota County will be contributing. He acknowledged the work that was necessary to bring this forward. Councilor Duggan moved to adopt RESOLUTION NO. 2022-43 APPROVING AMENDED AND RESTATED JOINT POWERS AGREEMENT WITH DAKOTA COMMUNICATIONS CENTER (DAKOTA 911). Councilor Miller seconded the motion. Further discussion: Mayor Levine thanked Councilor Duggan for his service with DCC. Ayes: 5 Nays: 0 K) ACCEPT THE RESIGNATION OF SHARON DEZIEL AND AUTHORIZE THE POSTING OF THE COMMUNICATIONS COORDINATION POSITION Page 4 Councilor Duggan commented that he has seen employees come and go and Sharon has been a very welcoming person that has worked hard to ensure the elections ran smoothly. He commented that she did a great job and acknowledged that service noting that she is retiring. Mayor Levine echoed the comments of thanks. Councilor Duggan moved to accept THE RESIGNATION OF SHARON DEZIEL AND AUTHORIZE THE POSTING OF THE COMMUNICATIONS COORDINATOR POSITION. Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 L) APPROVE OF CITY CLERK HIRE Mayor Levine commented that the new hire will begin the following day and the Council is excited to welcome her to the team. Councilor Duggan moved to approve OF CITY CLERK HIRE. Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 M) APPROVE JOINT POWERS AGREEMENT BETWEEN LWMWMO AND CITY OF MENDOTA HEIGHTS FOR THE INTERSTATE VALLEY CREEK STUDY Mayor Levine commented that it is important for residents to understand that the City is focused on water quality. Councilor Mazzitello moved to approve JOINT POWERS AGREEMENT BETWEEN LWMWMO AND CITY OF MENDOTA HEIGHTS FOR THE INTERSTATE VALLEY CREEK STUDY. Councilor Duggan seconded the motion. Ayes: 5 Nays: 0 P) APPROVAL OF CLAIMS LIST Councilor Duggan referenced page 133 and asked how the compostable bags were distributed throughout the city. Finance Director Kristen Schabacker replied that those bags are used in the organics recycling at Dakota County Park and that expense will be reimbursed by the County. Councilor Duggan asked if there is something similar at the dog park. Public Works Director Ryan Ruzek replied that the City does provide dog waste bags at the dog park but that is not reimbursed by the County. He commented that those bags are not compostable. Page 5 Councilor Duggan moved to approve OF THE CLAIMS LIST. Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 PUBLIC COMMENTS No one from the public wished to be heard. PRESENTATIONS A) MRPA AWARD OF EXCELLENCE FOR THE PAR 3 GOLF COURSE REBRANDING INITIATIVE Parks and Recreation Manager Meredith Lawrence introduced Tracy Peterson who is representing the MRPA and will be presenting the City with an award for its rebranding efforts of the Par 3. Tracy Peterson, MRPA, presented the 2021 MRPA Award of Excellence to the City of Mendota Heights for the Par 3 Community Golf Course Rebranding Initiative. Parks and Recreation Manager Meredith Lawrence commented that it has been a great process over the past five years to update the Par 3 and transform it into the facility they want it to be. She thanked the Council for supporting the goals and initiatives of the course. Councilor Duggan thanked Parks and Recreation Manager Meredith Lawrence and her team for the work they have done on the course. He noted that this is a great course to help children learn the sport. Mayor Levine commented that she was involved in this on the Parks and Recreation Commission and noted that it has been great to watch the course become what it is today. She thanked the residents that voted to keep the Par 3, rather than having that area be developed. PUBLIC HEARING A)RESOLUTION 2022-47 VACATING EASEMENTS ON MENDOTA HEIGHTS PLAZA EXPANSION SECOND ADDITION Public Works Director Ryan Ruzek explained that the Council was being asked to hold proceedings for Resolution 2022-47, a public hearing on an easement vacation commenced by petition for Mendota Plaza Expansion Second Addition. Councilor Duggan stated that it appears this is single ownership and asked if this would involve the individual property owners, such as White Pines. Public Works Director Ryan Ruzek stated that this vacation is entirely on Lot 1, Block 1 and would only apply to that lot. Councilor Duggan asked if this would be approved tonight or whether it would come back at another time. Page 6 Public Works Director Ryan Ruzek replied that this is the public hearing and therefore would be the time for the Council to take action. Councilor Duggan commented that he believed the fee to be low for the work described. Public Works Director Ryan Ruzek stated that the applicant provided all exhibits and legal descriptions, which were costs paid by the applicant. He reviewed the staff duties and noted that should be covered by the $250. Councilor Duggan asked what has changed. Public Works Director Ryan Ruzek replied that instead of three buildings that were originally planned, there will only be only building with one sanitary sewer line, therefore this would remove easements that are not needed for utilities. Councilor Mazzitello moved to open the public hearing. Councilor Miller seconded the motion. Ayes: 5 Nays: 0 There being no one coming forward to speak, Councilor Duggan moved to close the public hearing. Councilor Mazzitello seconded the motion. Councilor Duggan moved to adopt RESOLUTION NO. 2022-47 APPROVING AN EASEMENT VACATION COMMENCED BY PETITION. Councilor Mazzitello seconded the motion. Ayes: 5 Nays: 0 NEW AND UNFINISHED BUSINESS A)RESOLUTION 2022-44 APPROVING A MRCCA PERMIT TO XCEL ENERGY – SIBLEY PROPANE PLANT FACILITY – 800 SIBLEY MEMORIAL HIGHWAY Community Development Director Tim Benetti stated that the City Council is asked to consider adopting a resolution approving a Mississippi River Corridor Critical Area (MRCCA) Permit to Xcel Energy and for the property located at 800 Sibley Memorial Highway. Councilor Miller referenced the Farmdale Road area and asked the dimensional area of that work zone. Community Development Director Tim Benetti replied that the area shown in grey is about 40 feet wide. He explained the directional bore process, noting that this process is intended to minimize disruption to the area. Page 7 Councilor Miller asked if the 40-foot-wide path would be disturbed during that process. He commented that he understands that the existing path is not 40 feet wide. He asked if the theory would be that no trees would be disturbed using that process. Community Development Director Tim Benetti replied that it is correct that the path would not be disturbed if directional boring is used. He noted that a backup plan was provided in the case directional boring could not be used which would be an open trench system. He stated that if the open trench system is needed, the removed trees would be replaced. Councilor Duggan asked how deep the directional boring would be. Community Development Director Tim Benetti replied that he would prefer that Xcel answer that question. Councilor Paper asked if additional trees would be planted in the gravel pathway if there is no disruption from the directional boring. Community Development Director Tim Benetti replied that only trees removed would be replaced. Mayor Levine invited the applicant to speak. Brian Sullivan, Xcel Energy, stated that prior to the meeting they spoke with neighbors who were concerned about the backup plan. He stated that they have decided to pull the open trench option off the table at this time and move forward with directional boring. He stated that if that did not work for some reason, they would come back to the City. Councilor Duggan asked the depth of the bore. Mr. Sullivan replied that the depth would be 10 to 20 feet, explaining the arch that is followed to install the pipe. Councilor Duggan referenced the report submitted by Campos, which recommends that the propane containment double as a water quality pond and asked for details. Mr. Sullivan replied that the pond serves two functions, the first would be to contain a leak if there were one in a tank and the second would be for water quality. He stated that if there were a leak, there is a valve that could be shut on the pond that would prevent water from flowing downstream. Councilor Duggan asked the added protections that would be included to ensure safety to the community. Mr. Sullivan replied that the entire purpose of this project is to improve safety. He reviewed the safety enhancements includes in the project. Councilor Duggan asked the impact that an explosion would have. He asked where the runoff from this area would flow to. Page 8 Mr. Sullivan replied that the water currently drains to the river. He stated that they are attempting to be better neighbors and improve that process. He stated that currently a leak would go to the pond which is designed to handle most of the tank farm. He stated that there is a valve that would prevent water from traveling outside the tank farm if there is a leak. He stated that if there were a leak, they would come to the site to drain the pond and take that water/propane offsite for disposal. Mayor Levine asked if propane evaporates once it hits the air. Mr. Sullivan confirmed that it eventually does evaporate into the air. Mayor Levine asked if large quantities of propane evaporating would impact the air quality. She acknowledged that they are doing these improvements to add these safeguard measures. She stated that currently if there is a leak, that contamination would flow offsite. Councilor Duggan asked the age of the tanks. Michael McSchafer, Campos Engineering, replied that this facility was initially built in 1958/1959. He stated that many of the tanks were original to the facility. Councilor Duggan asked when those tanks were last inspected. Mr. McSchafer replied that inspections are conducted each year and provided details. Councilor Duggan asked if Campos is comfortable working with the tanks in this aged condition or whether replacement of tanks has been suggested. Mr. McSchafer stated that they executed a project in the fall/late winter where they replaced the major processing equipment. He referenced 11 tanks that have a number of tanks that will be removed from service this year due to their integrity and updated codes. He stated that in the next phase of the project to occur next year, they will complete integrity testing on the remaining tanks. Councilor Duggan commented that Xcel gets its money from its customers and therefore the residents are paying for this project, and he wants to ensure everything is working good and functioning as it should. He asked what would happen if there were an explosion and what would occur if there were a leak. Mr. McSchafer commented on the existing conditions of the site if no work is done with this project. He commented that there are problems on the site that exist that they are going to resolve with this project. He confirmed that each tank has emergency shut off valves. Councilor Duggan asked how often that system is inspected. Mr. McSchafer replied that those inspections occur quarterly. Councilor Duggan asked for details on what is described as a loading facility. Mr. McSchafer replied that the loading would be trucks coming in to place propane in the tanks for storage. Page 9 Councilor Duggan asked for details on the discharge system. Mr. McSchafer provided details on the discharge system and the improvements the pond would provide. He confirmed that Xcel does work with the Fire Department and is working with fire/water consultants as well to ensure all work is compliant with local expectations and code requirements. Mayor Levine asked if there would be concern if a large amount of propane were to evaporate into the air. Mr. McSchafer stated that Xcel has completed that report in the past, but he has not seen that report and was not tasked with that as part of this project. Councilor Mazzitello asked if Campos did the watermain plans. Mr. McSchafer stated that Campos will be doing the engineering to get the lines to the facility. He stated that the lines within the facility were done by the fire/water consultant. He confirmed that the directional boring design work was done by Campos. Councilor Mazzitello asked who owns the lots that they will be boring underneath. Community Development Director Tim Benetti replied that Xcel owns that land as well. Councilor Mazzitello reviewed his understanding of the plans for the watermain as designed. He also provided his interpretation of the open trench method, recognizing that has been pulled. Mr. McSchafer explained how that process would work, but again stated that option has been removed. Councilor Duggan asked where the staging and material storage would occur. Mr. McSchafer stated that there are two options and provided details on those two options and where materials would be stored for either option and where equipment would gain access. Public Works Director Ryan Ruzek replied that this process is not different than any other utility work. Councilor Duggan asked how prevalent odors would be in relation to the work that will be done. Mr. McSchafer replied that the work this year on the hydrocarbon systems would not impact the tanks themselves and would only involve the truck unloading that runs to the tank. He stated that the potential for odor would only occur when a truck is coupled or uncoupled. He stated that day to day there should not be odors emitting. He stated that Xcel has been working to improve this site and the conditions on site, therefore there would not be new emission sources created by this project and there should be general improvement of the existing system that is being replaced. Councilor Miller commented that he is happy that Xcel is taking option B off the table and is going to work diligently to make the directional boring work as the tree canopy provides a nice screen. He commented that the fire suppression system is very important and is it important that these upgrades are Page 10 made to the facility. He stated that these upgrades will make the plant more environmentally healthy and will make it safer as well. He stated that he appreciates the work and is excited to see the completion. Councilor Duggan referenced the assumptions from the Campos report and noted that he was worried by numbers eight and nine. He asked the size of the individual tanks. Mr. McSchafer replied that the tanks range from 30,000 to 90,000. Councilor Duggan asked the number of tanks that will be 90,000. Mr. McSchafer explained that they are not adding tanks, these tanks already exist. He stated that the five tanks in bank four are 90,000 while the remainder are 30,000. He stated that those are nameplated at 90,000. He stated that they are not ever allowed to fill them to 90,000 and can only fill them at most to 85 percent. Councilor Duggan asked the volume of the pond. Mr. McSchafer replied that is in the documents, larger than 90,000, but noted that he does not have the number in memory. Councilor Duggan asked the number of inspections that would be done throughout this process. Mr. McSchafer stated that Campos has been retained and owns a subsidiary company that will act as general contractor for the project. He noted that qualified contractors will be hired such as the fire/water contractor. He provided details on the different inspections that will be required throughout the process. Councilor Duggan commented that this is a beautiful area with homes and suggested that the applicant speak with staff to determine the appropriate hours when work is allowed. Mayor Levine commented that although this is not a public hearing, she will allow members of the public to provide input at this time. Tom Muck, 1396 Farmdale Road, commented that the neighbors had some good discussions with Xcel and was pleased to see that option B was taken away. He requested that the Council expressly condition the approval on abandoning option B at this time and should it appear necessary, the applicant would need to reapply, and notice provided to the neighbors. He stated that he would also prefer a southern access for the waterline. John Bettenburg, 1395 Farmdale Road, stated that he lives across from the path/road that is the proposed boring direction from Farmdale. He commented that there would be a way to bore from the south without removing any trees that would use an established road. He commented that many of the neighbors directly across the street from the project were not informed and therefore did not attend the public hearing. He referenced the path, that used to be a path, that kept getting wider and is now a road that a vehicle can pass down. He noted that widening makes it so that he can now see tanks which were not previously visible from his home. He hoped that the boring could be reconsidered to use the existing road. He stated that he would look forward to a revised plan, perhaps another public hearing, and continued communication Page 11 with Xcel. He commented that Xcel has not been the best neighbor, noting a dead tree that he attempted to have Xcel remove from their property and it was not removed and therefore his trees died as well. He commented that he was shocked that he did not receive notice for the last public hearing. George Sonnen 1347 Farmdale Road, agreed with his neighbor’s comments that the path was previously much smaller but has expanded over the years. He stated that when he purchased his property there was a beautiful forest view. He stated that widening the path further will destroy their views and expose more tanks. He stated that the access mentioned to the south is owned by Xcel and has already been cleared and therefore could be used for the boring rather than disrupting Farmdale. He commented on mowing that he believes the City does and the many pedestrians that use the trail. He agreed that option A is better than option B but believed the alternate access should be used for boring. Mayor Levine asked staff and the applicant to respond to questions. Mr. McSchafer replied that the path would not be widened under directional boring. He commented that with option B off the table, he does not expect any tree removal. Public Works Director Ryan Ruzek replied that he is not aware of the City doing any mowing in this area. Mr. Sullivan commented that he is unsure if Xcel mows that path. Community Development Director Tim Benetti stated that the public hearing was held by the Planning Commission on May 23rd and 101 notices were sent to residents. He commented that the Sonnen family and their neighbors were on the list of mailed notices. He stated that others mailed notice attended the hearing. He stated that the notice is also in the local newspaper, on the billboard, and other methods of advertising. He confirmed that staff does track if mail is returned undeliverable and stated that the City did not receive any returned mail. Mayor Levine referenced the concept that the boring could be done using the southern looking access as proposed by the residents. Mr. McSchafer commented that they are working with Saint Paul Regional Water Supply (SPRWS) about the fire water supply and stated that this location was chosen because of the necessary water pressure to make the system function. He stated that he cannot speak for SPRWS, but they were told to tie into the system at that location. Councilor Duggan commented that it would seem the southern access would seem closer to the larger 90,000-gallon tanks. Mr. McSchafer commented that the pump house will be placed on the northern portion of the site. He explained that they needed to have a building that fits the needed equipment and still meets the spacing requirements. He stated that their discussion has been focused on the line coming from Farmdale, but they will also have a second line coming from Sibley Memorial. Page 12 Councilor Miller stated that the past of least resistance would be to run the directional bore from Farmdale down the existing path. He asked if Xcel could plant some trees along the path further down where it starts to open up, in order to provide additional screening for residents without blocking vehicle access. Mr. Sullivan commented that during the Planning Commission they did discuss that and he agreed that Xcel would work with the neighbors to find a way to screen those views. He confirmed that they would work with the neighbors to plant some additional trees. Mayor Levine referenced a comment that a resident made related to a diseased tree and asked if there is a contact person that could be provided. Mr. Sullivan confirmed that he could provide such a contact. Councilor Duggan referenced language in the draft resolution and provided suggestions. He asked the total project cost. Mr. Sullivan estimated between $10,000,000 to $15,000,000. Councilor Mazzitello moved to adopt RESOLUTION NO. 2022-44 APPROVING A MISSISSIPPI RIVER CORRIDOR CRITICAL AREA (MRCCA) PERMIT TO XCEL ENERGY AND FOR THE PROPERTY LOCATED AT 800 SIBLEY MEMORIAL HIGHWAY WITH THE ADDITION OF TWO NEW CONDITIONS: 10) THIS APPROVAL IS FOR THE TRENCHLESS TECHNOLOGY OPTION FOR WATER CONNECTION. ANY OTHER SUCH OPTIONS OTHER THAN THE TRENCHLESS TECHNOLOGY CONNECTION WILL REQUIRE AN ADDITIONAL PERMIT APPROVAL; AND 11)THE APPLICANT WILL WORK WITH CITY STAFF ON A VEGETATION PLAN TO INCREASE SCREENING OF THE SITE FACILITIES FROM NEIGHBORING PROPERTIES IN ACCORDANCE WITH CITY PLANTING REGULATIONS AND POLICIES. Councilor Duggan seconded the motion. Ayes: 5 Nays: 0 B)RESOLUTION 2022-46 CALL FOR PUBLIC HEARING ON RIGHT-OF-WAY VACATION FOR SOMERSET VIEW Public Works Director Ryan Ruzek provided a brief background on this item. The Council was being asked to approve Resolution 2022-46 calling for a public hearing of a proposed road right-of-way vacation request by petition. Councilor Paper commented that this is a giant win as there will not be a road that goes through here. Councilor Mazzitello asked if the property owner of 1170 initiated the petition and whether that is the owner of the vacant lot as well. Public Works Director Ryan Ruzek confirmed both to be true. Page 13 Councilor Mazzitello commented that if the right-of-way were to be vacated, that would then become one large lot with nothing dividing it. Public Works Director Ryan Ruzek confirmed that would be true. He stated that there would be conditions of the vacation that the eastern lot would need to be combined with the western lot so that it did not create a landlocked lot. He stated that City staff has been in touch with the property owner about their plans for the properties. Councilor Mazzitello referenced a home that currently has access through the right-of-way and asked how that lot would access their garage if the right-of-way were vacated. Public Works Director Ryan Ruzek replied that he is not aware of a license agreement but noted that the driveway for that lot would be within the right-of-way they would receive. He noted that some of the landowners will need to resolve encroachments that would occur as a result of the vacation, such as fencing or rain gardens. Councilor Duggan moved to adopt RESOLUTION NO. 2022-46 CALLING FOR A PUBLIC HEARING ON A RIGHT-OF-WAY VACATION COMMENCED BY PETITION. Councilor Miller seconded the motion. Ayes: 5 Nays: 0 C)RESOLUTION 2022-38 ACCEPT BIDS AND AWARD CONTRACT FOR THE CENTRE POINTE STREET IMPROVEMENTS Public Works Director Ryan Ruzek provided background information on the case and stated that the Council is asked to approve Resolution 2022-38 accepting bids and awarding a contract for the Centre Pointe Street Improvement Project. Mayor Levine asked if this is the same contractor that did a previous road project for the City. Public Works Director Ryan Ruzek replied that is not the same contractor. Councilor Duggan moved to adopt RESOLUTION NO. 2022-38 ACCEPTING BIDS AND AWARDING CONTRACT FOR THE CENTRE POINTE STREET IMPROVEMENTS. Councilor Miller seconded the motion. Further discussion: Councilor Mazzitello expressed appreciation to the design team. He stated that when bids are that close to the estimate that means they are solid design plans, especially in today’s bidding climate. Ayes: 5 Nays: 0 Page 14 D)RESOLUTION 2022-45 ACCEPT BIDS AND AWARD CONTRACT FOR THE WENTWORTH PARK PAVING IMPROVEMENTS Public Works Director Ryan Ruzek explained that the Council was being asked to approve Resolution 2022-45 accepting bids and awarding a contract for the Wentworth Park Paving Improvements. Councilor Duggan moved to adopt RESOLUTION NO. 2022-45 ACCEPTING BIDS AND AWARDING CONTRACT FOR THE WENTWORTH PARK PAVING IMPROVEMENTS. Councilor Miller seconded the motion. Ayes: 5 Nays: 0 COMMUNITY ANNOUNCEMENTS City Administrator Cheryl Jacobson announced upcoming events. COUNCIL COMMENTS Councilor Duggan asked for an update on challenges to watering the golf course. City Administrator Cheryl Jacobson stated that the irrigation problem is back up and running again. Councilor Duggan referenced the minutes from the ARC meeting related to building materials and asked that staff follow up on that item. He commented that his granddaughter will be representing Minnesota in a fencing tournament in July. Councilor Paper congratulated the graduating classes of 2022 and the participants in various state tournaments. He congratulated the former Mayor Garlock, the members of staff, and other volunteers and participants that participated in the recent Scott Patrick Memorial 5k. Councilor Miller commented that Friday is the official start of summer for many kids and urged residents to watch for children out in the yards and riding their bikes. Councilor Mazzitello stated that the previous week he attended the Dakota County open house for the transportation study update and provided a brief update. He also encouraged residents and drivers to slow down and pay attention to children that will be out playing. He commented that yesterday was the 78th anniversary of D-Day which began the end of the second world war. He stated that there are not many members of that generation left, but there is a debt of gratitude owed that can never be repaid. ADJOURN Councilor Mazzitello moved to adjourn. Councilor Paper seconded the motion. Ayes: 5 Nays: 0 Page 15 Mayor Levine adjourned the meeting at 8:13 p.m. ____________________________________ Stephanie Levine Mayor ATTEST: _______________________________ Cheryl Jacobson City Administrator Page 16 CITY OF MENDOTA HEIGHTS NATURAL RESOURCES COMMISSION Wednesday, May 11, 2022- 6:00 P.M. Mendota Heights City Hall-Council Chambers 1.Call to Order – Coordinator Spreiter called the meeting to order at 6:02pm. 2.Roll Call – The following Commissioners were present: Commissioners Swank, Husbands, Tupper, Stein, Fahnhorst, McCaslin. Absent: Commissioner Quick (note she listened into the meeting). Staff present: Natural Resources Coordinator Krista Spreiter, Assistant City Administrator Kelly Torkelson, City Administrator Cheryl Jacobson, Public Works Director Ryan Ruzek. 3.Pledge of Allegiance – Pledge of Allegiance was recited 4.New Business a.Commission Introductions Commissioners shared introductions and discussed what about Mendota Heights natural resources they were proud of, what about Mendota Heights Natural Resources they were concerned about and what things they were excited to work on as a commission. b.Commission Orientation Assistant City Administrator Kelly Torkelson presented a commission orientation including outlining scope and charge for the commission from the city council, roles and responsibilities of the commission, open meeting law, parliamentary procedure, and data practices. c.Comprehensive Plan: Chapter 7 Overview Natural Resources Coordinator Krista Spreiter presented an overview of the comprehensive plan: Chapter 7 5.Staff Announcements Natural Resources Coordinator Spreiter: Shared that the tree sale and compost pick up is the next weekend. In addition, she shared that the City Council was going to be accepting the Natural Resources Management Plan at their upcoming meeting. The City also got a lawns to legumes grant for neighborhoods. Assistant City Administrator shared that the city was currently promoting No Mow May to support pollinators in the city and she encouraged the commission to follow the city’s social media and Friday News e-news newsletter. 6.Commission Comments None 7.Adjourn Commissioner Swank moved to adjourn the meeting at 7:45pm. The motion was seconded by Commissioner Husbands. Auxiliary aids for persons with disabilities are available at least 120 hours in advance. If a notice of less than 120 hours is received, the City of Mendota Heights will make every attempt to provide the aids. This may not, however, be possible on short notice. Please contact City Administration at 651-452-1850. Guidelines for Citizen Comment Period: The Citizen Comments section of the agenda provides an opportunity for the public to address the commission on items which are not on the agenda. All are welcome to speak. 5b. Page 17 Comments should be directed to the Chair. Comments will be limited to 5 minutes per person and topic; presentations which are longer than five minutes will need to be scheduled with the Recreation Program Coordinator to appear on a future Parks and Recreation commission agenda. Comments should not be repetitious. Citizen comments may not be used to air personal attacks, to air personality grievances, to make political endorsements, or for political campaign purposes. Commissioners will not enter into a dialogue with citizens, nor will any decisions be made at that presentation. Questions from the Commission will be for clarification only. Citizen comments will not be used as a time for problem solving or reacting to the comments made, but rather for hearing the citizen for information only. If appropriate, the Chair may assign staff for follow up to the issues raised. Page 18 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA PARKS AND RECREATION MEETING APRIL 12, 2022 The April meeting of the Mendota Heights Parks and Recreation Commission was held on Tuesday, April 12, 2022, at Mendota Heights City Hall, 1101 Victoria Curve. 1. Call to Order – Chair Bob Klepperich called the meeting to order at 6:30 p.m. 2. Roll Call – The following Commissioners were present: Chair Bob Klepperich, Commissioners: Jaffrey Blanks, Patrick Cotter, Stephanie Meyer, Michelle Muller, Dan Sherer and Amy Smith; absent: none. Student Representative Niko Hess. Staff present: Parks and Recreation Manager, Meredith Lawrence, Assistant City Administrator, Kelly Torkelson and Public Works Director, Ryan Ruzek. 3. Pledge of Allegiance The Pledge of Allegiance was recited. 4. Approval of Agenda Motion Blanks/second Meyer to approve the agenda AYES 7: NAYS 0 5.a Approval of Minutes from March 8, 2022 Regular Meeting Motion Cotter/second Smith to approve the minutes of the March 8, 2022 Parks and Recreation Commission Regular Meeting. AYES 7: NAYS 0 6. Citizen Comment Period (for items not on the agenda) None. 7.Acknowledgement of Reports Chair Klepperich read the titles of the updates (Par 3, Recreation, Park Improvement, and Bike and Pedestrian Master Plan Updates) and polled the Commissioners for questions. 7.a Par 3 Update Parks and Recreation Manager Meredith Lawrence reported that the course was opened on April 1 but was then closed a few days later because of the weather. She stated that foot golf is open, and they are still awaiting delivery of the gas carts. She reported that a junior/adult golf championship event was hosted this past weekend and was a great event. She advised of open staffing positions at the course and clubhouse. She noted that there is a backlog for the three pieces of equipment that were ordered for the course, and they are attempting to stretch the life out of the pieces being replaced. She reported that the City received the MRPA award for its marketing and communication section for the Par 3 rebranding. Commissioner Sherer asked the registration numbers for the golfing event. Ms. Lawrence replied that there were 13 teams. Commissioner Sherer asked the pay rates for the open staffing positions. 5c. Page 19 Ms. Lawrence replied that all City pay rates are public information and included in the job descriptions posted on the City website. 7.b Recreation Update Parks and Recreation Manager Meredith Lawrence provided an update on the Tour de Rec program, upcoming Kids Garage Sale, Touch a Truck event, and summer concert schedule. She noted that they are still looking for instructors for tennis and pickleball programs. The Commission expressed support and excitement for the summer concert series. Ms. Lawrence reported a budget of $25,000 for the summer concert series. She stated that they will not be using that full budget amount and anticipated about $7,000 for all the concerts. Commissioner Sherer asked if the businesses assist in the concert events. Ms. Lawrence confirmed that the businesses do want to be more involved, noting that one business is going to bring in an ice cream vendor truck for one of the nights. 7.c Parks Improvement Update Parks and Recreation Manager Meredith Lawrence provided updates on the Wentworth warming house project bidding process, the dugout project, and the Pickleball with Public Safety event at Friendly Hills. She also reviewed the balance in the park improvement fund. Commissioner Sherer asked for clarification on the fencing work. Ms. Lawrence stated that they were going include Civic Center but could not. She stated that they are adding fencing at different locations and reviewed those details. Commissioner Meyer asked if it would be better to wait on the dugout at Civic Center until the fencing could be done as well. Ms. Lawrence confirmed that Civic Center could be delayed but noted that the funding for the dugout and fencing would be different at that park. She stated that the Commission could make the decision to delay the dugout work at that park if desired. Commissioner Muller asked if the dugout projects were planned for after the season, which would provide more time to make that decision. Ms. Lawrence replied that the intent was to have the project completed during the season, but that would be dependent upon the schedule of the contractor. Commissioner Sherer asked the type of fencing repair needed at Civic Center. Ms. Lawrence replied that at this time it was just the fabric but depending upon when it is completed, additional repairs may be needed. Commissioner Cotter referenced the Wentworth project and asked if that project could be completed before the 2023 season. Public Works Director Ryan Ruzek replied that the project has to be completed by September 30th or the grant funds will need to be returned. Page 20 Commissioner Meyer asked the opinion of others related to whether the Civic Center dugouts should be delayed. Commissioner Sherer commented that the scale of a project to repair fabric on the fence is not a big project. He believed that there would be more savings received by bundling the dugout project with the other similar dugout projects. Commissioner Cotter commented that the Commission worked hard to build momentum on the dugouts and therefore he wants that to continue to move forward. 7.d Bike and Pedestrian Master Plan Update Public Works Director Ryan Ruzek stated that Mendota Heights contracted with a consultant to develop a Bike and Pedestrian Master Plan, noting that the City received grant funds to complete that project. He noted that there is an online survey and pinpoint map tool available for residents to provide input until April 28. He stated that the next phase of engagement would include booths and tables at different city events. Commissioner Sherer commented that he noticed a lot of pins on Dodd and Delaware and hoped that would encourage cooperation with the State to provide safe routes. He asked how much this work would cost. Mr. Ruzek replied that the City received a grant in the amount of $30,000 for this work with the City providing at least $5,000. He noted that the total cost was $36,000, with the City ultimately providing $6,000 of that cost. Commissioner Sherer asked the cost for all the strategic planning work the City has been doing. Ms. Lawrence commented that the strategic planning with the Commission had an estimated cost of $8,000. Student Representative Ness asked the type of outreach that is being done on social media. Mr. Ruzek replied that the survey is hosted by the consultant on Survey Monkey. He stated that the City would be happy if Student Representative Ness were to share this survey information with other students. He noted that there is a flyer with a link at the back of the packet. Commissioner Muller asked if there are opportunities for change on those County roads (Delaware and Dodd). Mr. Ruzek replied that the City Council, at its last meeting, passed support for two trails along Delaware, noting that those trails would be constructed with the street reconstruction project in 2025. He also provided options for trails along Dodd Road. Commissioner Sherer asked if the trail on Highway 55 would go on one side. Mr. Ruzek confirmed that MnDOT would be constructing a trail along one side. He stated that Dakota County is investigating the ability to construct a trail along an unused rail corridor as well. Motion Smith/second Blanks to acknowledge the staff reports. AYES 7: NAYS 0 Page 21 8.New Business 8.a Consideration of Permanent Pitching Mound at Victoria Highlands Parks and Recreation Manager Meredith Lawrence presented the consideration of a permanent pitching mound at Victoria Highlands Park. She stated that the item was initially requested by MHAA in 2021 and the Commission recommended approval with the condition that MHAA cover 50 percent of the cost. She stated that the Council directed staff to engage residents in that area and research options for a portable mound. She advised that notices were sent to neighbors within 500 feet of the park boundary on March 8th, which encouraged residents to attend this meeting to provide input. She stated that the field is primarily used for youth baseball but is also used for pickup games and general use by residents. She stated that currently a portable pitching mound is used at this park, noting that is the practice for many of the City fields although there are permanent mounds at two locations. She provided details on the temporary mound currently used at Victoria Highlands which is quite outdated. She stated that the City has not purchased temporary mounds as that is the responsibility of the user groups. She reviewed the data that was collected related to the aglime and clay mounds. She noted that the vendor did not recommend either type for this location as Victoria Highlands does not have a water source available. She stated that the vendors recommended a temporary mound and reviewed the pros and cons. She provided details on the temporary mound options and data collected from neighboring cities. She stated that staff received quotes from reputable contractors and shared that data for the different options. She noted that if a permanent or temporary mound is recommended by the Commission, funding would need to be suggested as well. She noted that staff recommends the purchase of a temporary mound for the Victoria Highlands field. Chair Klepperich stated that he prefers the term “portable” mound rather than “temporary” mound. Commissioner Smith asked the types of mounds at Civic Center and Hagstrom King. Ms. Lawrence replied that those are clay mounds. Commissioner Smith asked if there are water sources at those locations. Ms. Lawrence replied that there are not water sources at those parks. She stated that there have been concerns and complaints that those mounds are brittle because of the lack of water. Commissioner Smith asked if the trucks that water the trees could assist with the mounds. Mr. Ruzek replied that is the sewer jet truck and is not a parks vehicle, therefore he would prefer to limit the time that vehicle is used on park activities. Commissioner Smith asked if the city information includes the school district fields. Ms. Lawrence replied that the data only included city fields and not school district fields in order to provide accurate comparisons. Commissioner Sherer stated that he was surprised by the tally of fields and asked how that information was provided. Page 22 Ms. Lawrence commented that she submitted a data request to the cities and that was the information she received. Commissioner Sherer commented that Mendota Heights is unique in that it is a smaller community and has fastpitch or baseball fields, whereas many other cities have ball fields. He stated that Victoria Highlands is a baseball field, which was established in the November discussion. He stated that outfield fencing was installed, foul line fencing was installed, and the field was set up to accommodate 12-year-old baseball. He stated that each of the fields in Mendota Heights has its own purpose because of the field dimensions, while some fields can be multi-purpose. He commented that he is disappointed that a simple project like this is taking so long. He commented that the biggest downside to the portable mounds is that they can cause slipping of the pitchers. He commented that this is a baseball field, and this was a simple request by parents that devote a lot of time to teach children in the community baseball. He asked if the parents and MHAA were included in engagement to gather input from that group as well. Ms. Lawrence commented that the request did come from MHAA, but the direction of the Council was to engage the residents within 500 feet of the park. She noted that there has been email correspondence with MHAA. Commissioner Sherer stated that if the use of the field were to change, the permanent mound could be removed. He was disappointed that people had to invest this much time into this item rather than just building the mound. Chair Klepperich respects the comments and work of Commissioner Sherer but noted that he never heard that Victoria Highlands is only a dedicated baseball field as it can be used for other purposes. He agreed that the current MHAA softball commissioner has stated that there is no interest in using the field for softball at this time. Commissioner Cotter commented that within the staff report it was stated that permanent mounds were not recommended because there is not water and because of the staff time. He noted that he then heard that Civic and Hagstrom, which have permanent mounds, also do not have water. He asked how much staff time is used for those mounds. He stated that pricing will not be the deciding factor for his choice. Commissioner Sherer stated that he has taken a personal interest in Hagstrom King. He stated that when the mound dries out, a parent volunteered to bring water to the mound to maintain it. Ms. Lawrence replied that there is a water source at Civic Center as there is irrigation at the park and there is a water source at City Hall. She stated that the water source is the biggest piece in making it a success and keeping it in good condition, per the comments from the vendors. She stated that the City has received complaints that the mound at Hagstrom King is brittle and dry. She stated that the recommendation of staff was based on the input from the contractors and the lack of water source. She stated that the City did not intend to have the permanent mound at Hagstrom King, but that project was started by parents and therefore the City needed to complete it. Commissioner Cotter asked if this project could be funded through special parks funding because it is a new expenditure. Page 23 Ms. Lawrence confirmed that staff believes that could be eligible for that type of funding but would need to clarify with the City Attorney. Commissioner Muller asked for clarification on the mentioned cost-share. Ms. Lawrence stated that in the fall, the Commission recommended that the project funding be split between the City and MHAA. Commissioner Meyer asked how long the current clay mounds have been in place and whether there is maintenance performed. Mr. Ruzek assumed that the mound at Civic Center occurred with the construction of that field and estimated about ten years for the Hagstrom King mound. He commented that maintenance over the years has been lacking in terms of the mounds. Commissioner Meyer stated that she was unsure why a clay mound at this location would be treated differently than the other locations in terms of maintenance, such as covering. Mr. Ruzek replied that the existing mounds are required to be covered as well. Commissioner Sherer commented that this would be for youth baseball and would not need to be perfect. He stated that the kids in this community are playing fastpitch and baseball at neighborhood fields. He commented that most of the Commission members have kids or grandkids participating in MHAA sports and have coached or volunteered in some capacity. He believed there should be a better partnership between the City and MHAA as there was a shift towards MHAA providing the recreational sporting opportunities for the children in the community rather than the City. Commissioner Smith asked if portable mounds would be covered. Ms. Lawrence confirmed that staff would recommend covering or removing if there was a different use for the field. She confirmed that the City staff could remove the mound for a different permitted use. Commissioner Smith asked if there have been an incidents of theft of portable mounds. Ms. Lawrence replied that she is not aware of any such incidents of theft. She noted that the portable mound would be pulled and stored indoors during the winter. Commissioner Blanks asked if there were any comments related to grip for the safety of the pitchers between the permanent and portable mounds. Ms. Lawrence stated that there were no negative comments from other cities related to safety from the portable mounds. She noted that the vendors did say the portable mound would provide a more uniform surface for safety. Chair Klepperich welcomed comments from residents in attendance. Adam Crepeau, 1016 Douglas Road, stated that he is a Board member of MHAA and the current Baseball Commissioner. He thanked the Commission for its continued discussion. He stated that they see the permanent mound as an important element of the field for the 12-year- Page 24 old group that uses the field. He stated that in terms of maintenance, it is expected for all of the MHAA coaches to support the maintenance of the fields. He suspected that the majority of the maintenance effort of the mounds at Hagstrom and Civic Center is provided by MHAA parent volunteers. He did not recall any complaints related to the mound conditions. He stated that as far back as the past nine years, there has never been softball permitting requested for Victoria Highlands by MHAA and for the foreseeable future the field would continue to be used for 12- year-old baseball. He stated that MHAA uses the fields of Mendota Heights but also uses ISD 197 fields and West Saint Paul fields. He commented that although the portable mounds are portable, they are heavy. John Trosvig, 26 Somerset Road, stated that he is a parent and coach. He stated that he did watch nine-year-olds play baseball and although the portable mounds are not perfect, they do work. He stated that he had the “not-so-pleasant” task of moving a portable mound, which was not light and was not easy work. He commented on the need to properly place the mound. He noted that although the portable mounds are heavy, they could be picked up and rolled by older kids, which could create a safety hazard. He stated that he visited a lot of fields throughout the metro last year with his son’s traveling team and it would be nice to see the City fields brought up to that standard. Dan Novak, President of MHAA, commented on the lack of maintenance from the parks and recreation department. He asked if there could be an agreement for MHAA to take on responsibility of maintenance of the mounds. He stated that they could supply additional clay in the fall and water throughout the season. He stated that MHAA would take on a lot more maintenance of the fields if allowed. Ms. Lawrence commented that the brittle condition of the mound would be fixed with water. She was unsure about MHAA bringing trucks on the field, but there could be continued discussions about maintenance. She believed that the City holds itself to a good standard for maintenance of the parks. Commissioner Cotter asked if there would be a barrier to MHAA being responsible for the maintenance of the mounds. Mr. Ruzek replied that there has been poor success related to DIY improvements. He noted that he would need to speak with the City Attorney related to liability of a non-City vehicle driving in a City park. Commissioner Cotter asked if MHAA could bring buckets of water to the mound to prevent brittle conditions. Mr. Ruzek confirmed that there would not be issues with carrying buckets of clay or water onto the field. Commissioner Sherer stated that MHAA also adds water in the batter boxes. He asked the potential plan for maintenance and storage of portable mounds. Mr. Ruzek replied that he was unsure how many mounds MHAA owns. He noted that this portable mound proposed is not round and therefore could not be rolled. He stated that the City could assist in moving the mounds if there were another event, and would also install in the spring, remove in the fall, and store during the winter. Page 25 Commissioner Meyer stated that if the mound is installed in the spring and removed in the fall, what would be the difference in a portable mound rather than a permanent mound. Mr. Ruzek replied that a portable mound could be moved during the season if a user wanted to use the field for another purpose. Chair Klepperich commented that a clay mound is similar to playdough, whereas aglime mounds have no binding features and the mound ends up as a pile of dirt. He noted that rain is an issue that can impact clay mounds within a relatively short amount of time. He stated that the most effective method to deal with wet mounds would be dry clay. He noted that playing on a wet mound can damage the mound and cause injury. He stated that a portable mound would provide consistency and regular play, even though there were some opinions against that option. He stated that a clay mound would need to be serviced on a regular basis, would need water to provide proper packing, and to be covered with a tarp when not in use. Commissioner Sherer asked the timeline of each of these options in terms of availability of the portable mound and installation of that mound or a clay mound. Ms. Lawrence stated that staff cannot move forward until the Council decision is made on April 19th. She would assume that they would be behind schedule because of the timing of this item and the poor weather conditions this spring therefore she anticipated the end of May or early June for project completion of a clay mound. She noted that the project itself is fairly quick, the issue would be that it is a small project and would not receive priority over the larger projects the contractors would be working on. She stated that it appeared the portable mounds are in stock and once delivered, could be installed by public works. Motion Smith/second Muller to recommend a clay permanent mound for Victoria Highlands with half of the project cost to be provided by the City and the other half to be provided by MHAA. Further discussion: Chair Klepperich asked and received confirmation from MHAA that they would agree to pay half of the cost. AYES 6: NAYS 1 (Klepperich opposed) Chair Klepperich thanked the representatives from MHAA for attending tonight and appreciated their passion for the sports and all they do for the children in the community. 8.b 2021 Parks, Recreation, and Par 3 Annual Review Parks and Recreation Manager Meredith Lawrence presented the Parks, Recreation and Par 3 annual report. Commissioner Sherer commented that it appears the City is partnering with neighboring communities on some of the programs and asked for details on how that works. Ms. Lawrence replied that the City has an agreement with the other cities for joint programming and provided details on that process. She noted that it has been a huge benefit to have those partnerships as Mendota Heights does not have the facilities to provide those programs. Commissioner Sherer asked if there is a sense of the participation that will be in the adult softball. Ms. Lawrence replied that a few teams have backed out this year due to injuries, vacations, or other reasons. She noted that there are eight teams confirmed at this time. Page 26 Commissioner Sherer commented that a contributing factor in the decline in adult softball and golf has been the shift to parent volunteer organizations providing youth sporting activities. Ms. Lawrence noted that golf participation has increased for Mendota Heights which is a benefit for the Par 3. Commissioner Sherer stated that the increase in golf may have also been linked to other sports being canceled during COVID-19. Commissioner Smith asked if merchandise can be purchase at the clubhouse. Ms. Lawrence replied that merchandise is available for purchase but stated that clothing is not currently available onsite for purchase. Commissioner Blanks asked if there is a goal for operating surplus at the golf course. Ms. Lawrence stated that the previous goal had been to break even, as the course had previously lost about $10,000 to $20,000 each year. She stated that her goal is to turn a profit each year in order to fund future capital improvement costs. Student Representative Hess asked for more details on the youth programming for the course. Ms. Lawrence replied that the junior/adult golf tournament was new this year and they are also adding a “Glow Golf ” event for teens this fall. She noted that more junior programs were added relating to camps, clinics, and leagues. She welcomed any additional suggestions. Chair Klepperich commented that the report was well done. 8.c Adopt-a-Park Program Presentation Assistant City Administrator Kelly Torkelson stated that staff is in the process of finalizing a volunteer policy and program that would help to facilitate and encourage volunteers throughout the community. She stated that the concept of an “Adopt-a-Park” program has come up as a suggestion of the Commission and is something used by other cities. She stated that staff has put together service descriptions for all of the activities that could be completed by volunteers and noted that citizens have the option to also submit their own suggestions for volunteer activities. She reviewed the items that would be applicable to an Adopt-a-Park program. Commissioner Cotter asked if there has been input from other communities that have an Adopt- a-Park program related to the length of commitment. Assistant City Administrator Kelly Torkelson stated that the “Adopt-a-Highway” program requires a significant commitment, but also includes a sign advertising that service. She noted that signage recognizes not only the person or group providing the service, but the program itself. Commissioner Cotter believed the commitment to Adopt-a-Park program should be at minimum one or two years. Assistant City Administrator Kelly Torkelson commented that many cities have a standard commitment of two years. Page 27 Commissioner Cotter stated that he would support two years as the minimum commitment. He stated that in terms of recognition he supports all three options within the staff report. He noted that signage would not need to be elaborate as the person or group adopting the park could change in two years. He stated that all of the forms of recognition did not seem costly or difficult to implement and would provide benefit. Commissioner Meyer stated based on previous discussions on this topic, she believes this should start as a one-year pilot program at one park. She stated that Marie Park had previously been proposed for a pilot as there were many interested neighbors. She stated that in terms of recognition or signage, perhaps there is a small sign at the park stating the neighborhood has adopted the park. She stated that a small celebration could be held at the end of the year and then the data collected from that pilot could help to guide the formal program going forward. She stated that Commissioners should also make a commitment to attend volunteer activities. Assistant City Administrator Kelly Torkelson stated that in terms of administering the program, there is not much difference in staff time to running a pilot program or full program. She stated that there has been interest from different groups and therefore did not want to create an issue with fairness in only selecting one for a pilot. She stated that there could still be a one-year period to review and make amendments to the program if necessary. She confirmed that there has been interest from different residents/groups. Ms. Lawrence advised of different groups that already complete clean-up in parks or have expressed interest in doing so. Commissioner Sherer asked if previous volunteer clean-up activities in the park have coordinated around Earth Day. Mr. Ruzek stated that some of those events have coincided with the City’s clean-up day which has not been active for the past two years. He stated that there is an Earth Day activity scheduled for April 23rd and he provided details on that event. Commissioner Sherer asked if there would be an intent to replace the clean-up day with this Adopt-a-Park program. Assistant City Administrator Kelly Torkelson stated that while there has been interest in the program, she would doubt that the program would fill the first year. She hoped that momentum would grow as the program moves forward. Chair Klepperich stated that it appears there is support for the program. He agreed that there should be a recognition program but noted those decisions could occur at a later time. Assistant City Administrator Kelly Torkelson confirmed the consensus of the Commission that the commitment to begin the program should include a one-year commitment. She stated that any residents or groups interested in participating should contact City staff. Motion Cotter/second Smith to support an Adopt-a-Park program with a requirement to adopt the park for a one year period and the program should be open to any groups or residents that want to participate; this should be brought back to the Commission to discuss recognition opportunities. Page 28 Further discussion: Commissioner Meyer asked if a group wanted to run a one-time event, would they still be able to complete that park clean-up in an adopted park. Assistant City Administrator Kelly Torkelson stated that the intent would be to direct people to opportunities rather than allowing a clean-up event in a park already sponsored. She noted that different groups could sign up to complete different activities within the same park, such as clean-up and landscaping. AYES 7: NAYS 0 9.Unfinished Business 9.a Community Engagement Outreach Update Parks and Recreation Manager Meredith Lawrence stated that information was included in the packet related to community engagement outreach. She stated that at the last meeting the Commission identified community groups they would be speaking to and assigned members to reach out to the groups in order to identify the contact person and group availability. The members of the Commission provided an update on the progress they have made with their assigned groups. It was noted that it would be helpful to supply the questions to the groups ahead of the meetings with them in order for more thoughtful responses to be provided. It was noted that this item will be on the agenda for the next meeting as well. 9.b Park and Recreation Strategic Planning Update Parks and Recreation Manager Meredith Lawrence provided an update on the items within the park and recreation strategic planning item. She noted an upcoming worksession with the City Council on April 25. 10.Staff Announcements Parks and Recreation Manager Meredith Lawrence shared the following announcements: •Kids Garage Sale on April 30 •Available staff positions are listed on the City website •Fields are still closed because of the wet conditions •Other events can be found on the City’s website 11. Student Representative Update Student Representative Hess commented that he has noticed a lot of bicyclists out in the warmer weather, along with walkers. The path at Friendly Hills is in rough shape. Mr. Ruzek commented that trail maintenance at that park is not included in the maintenance list. He stated that he did notice a similar comment in the outreach from the past week. Chair Klepperich commented that Student Representative Hess is an appreciated member of the Commission. 12. Commission Comments and Park Updates Commissioner Smith •The trail near the ice rink at Friendly Hills is washing away •Pickleball nets have been installed and people are using the courts at Friendly Hills Page 29 •The dog park is being used even with the muddy conditions Commissioner Cotter •No update Commissioner Blanks •Has noticed more people outside •He enjoys the basketball hoop and adjustable height level Commissioner Sherer •The area in front of the playground was beat up a bit from the spring thaw at Hagstrom King •Received a request for a small trail connection from Hampshire Drive into Hagstrom King •Agreed that the adjustable basketball hoops are a great amenity enjoyed by the community Commissioner Meyer •Thanked City staff for their hard work clearing trails throughout the winter •Received two questions on whether street sweeping has been completed Mr. Ruzek replied that street sweeping was tentatively scheduled to begin the following day but has been pushed back to April 18th because of the weather. Commissioner Muller •Kensington Park has been quiet •Rogers Lake receives a lot of traffic and noted that she plans to pick up a clean-up kit as she has noticed much more trash in that park Chair Klepperich •Visited Ivy Hills and noted that a new net is needed for the volleyball/tennis area •One of the new apartment projects will add more than $200,000 to the parks fund •Ribbon cutting at Friendly Hills on April 21st at 5:30 p.m. •The City installed temporary fencing at Friendly Hills on the baseball field 13. Adjourn Motion Meyer/Second Blanks to adjourn the meeting at 9:02 PM AYES 7: NAYS 0 Minutes drafted by: Amanda Staple TimeSaver Off Site Secretarial, Inc. Page 30 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA PARKS AND RECREATION MEETING MAY 10, 2022 The May meeting of the Mendota Heights Parks and Recreation Commission was held on Tuesday, May 10, 2022, at Mendota Heights City Hall, 1101 Victoria Curve. 1.Call to Order – Chair Bob Klepperich called the meeting to order at 6:30 p.m. 2. Roll Call – The following Commissioners were present: Chair Bob Klepperich, Commissioners: Jaffrey Blanks, Patrick Cotter (arrival-7:20 p.m.), and Michelle Muller; absent: Commissioner Stephanie Meyer, Dan Sherer, Amy Smith, and Student Representative Niko Hess. Staff present: Parks and Recreation Manager, Meredith Lawrence, Recreation Program Coordinator Matt Colwell and Public Works Director, Ryan Ruzek. 3. Pledge of Allegiance The Pledge of Allegiance was recited. Chair Klepperich commented that the Commission does not have a quorum present at the meeting. Parks and Recreation Manager Meredith Lawrence explained that because the Commission does not have a quorum, they cannot take formal action. She noted that one member that is currently absent may come to the meeting late, and if that were to occur, the Commission could then take action as it would have four members. 4. Approval of Agenda No action could be taken. 5.a Approval of Minutes from April 12, 2022 Regular Meeting No action could be taken. 6. Introduction of Matt Colwell, Recreation Program Coordinator Parks and Recreation Manager Meredith Lawrence introduced the new Recreation Program Coordinator, Matt Colwell. She provided background information on his education and experience related to parks and recreation. She stated that they are excited to have him join the team and reviewed the duties he will handle. Recreation Program Coordinator Matt Colwell stated that he loves parks and recreation and introduced himself to the group. He commented that he is happy to be here and excited to be a member of the team. Chair Klepperich welcomed the new addition to staff. 7. Citizen Comment Period (for items not on the agenda) None. 8.Acknowledgement of Reports 5d. Page 31 Chair Klepperich read the titles of the three updates (Par 3, Recreation, and Park Improvement Updates) and polled the Commissioners for questions. 8.a Par 3 Update Parks and Recreation Manager Meredith Lawrence reported that although the course was open in April, the weather was unpredictable. She stated that they look forward to a more consistent and busier month in May. She reported that the turf is in good condition and provided an update on planned maintenance activities. She also provided an update on the estimated date the ordered maintenance equipment would be received. 8.b Recreation Update Recreation Program Coordinator Matt Colwell provided an update on recent recreational programs and events and highlighted upcoming recreational programing opportunities. 8.c Parks Improvement Update Parks and Recreation Manager Meredith Lawrence provided an update on the Wentworth warming house project, noting that the bids were high, and the Council rejected the bids with the intention to rebid in January 2023. She provided an update on the dugout projects, playground mulch, the permanent pitching mound that was approved and installed at Victoria Highlands, and Friendly Hills tennis court resurfacing. Commissioner Blanks referenced the Wentworth warming house project and the gap between the bid and project estimate. Public W orks Director Ryan Ruzek stated that staff did anticipate there would be some higher costs because of the cost for materials and labor at this time, but because the bids were so much higher, they rejected the bids and will rebid at a time when it is believed lower bids will be received. He stated that when it comes closer to the winter season, they will review options for users. Commissioner Muller referenced the pitching mound and asked what was determined for the MHAA contribution. Ms. Lawrence replied that the City Council directed the City to purchase the mound with its funds and for MHAA to provide a donation to the City equal to 50 percent of the cost. Chair Klepperich asked to make changes to the agenda to consider 10.b as the next item and then postpone Item 10.c, Schedule Parks Tour, to the June agenda when more members are present. Ms. Lawrence asked and received confirmation that the intention would then be to hold the parks tour in July. 10. Unfinished Business 10.b Park and Recreation Strategic Planning Update Parks and Recreation Manager Meredith Lawrence provided her monthly update on progress made towards the strategic plan items. She recognized the great progress they have made on the goals. 9.New Business Page 32 9.a 2023 Budget Recommendation and Prioritization Chair Klepperich stated that he reviewed the items identified within the Capital Improvement Plan (CIP) and asked the Commission to provide input. He stated that during his review he identified items that should be in 2023, 2024, and beyond. He referenced the item related to parks security, noting the opportunity for outside funding. He stated that if that could be funded from an outside source, he would support that item in 2023. Commissioner Blanks stated that his priority would be the skate park. He stated there are other smaller projects that could be done relatively easily. He commented he does like the dugout covers as that is a project that could be done easily and therefore could be moved to 2023. He commented that he would place Valley View Heights playground replacement for 2023. Chair Klepperich stated that he would think the Commission could recommend these items, but they may not be included because of funding constraints. Commissioner Muller stated that she strongly agrees with replacing the skate park in 2023. She noted that a lot of people put time and effort into planning that element. She recognized that this list exceed the available budget and therefore would focus on the skate park and Wentworth warming house projects. She stated that she would place those items above a playground replacement. She suggested that the dugout covers and fencing at Ivy Hills be placed more under the “want” category as she did not believe that field was used for games. Chair Klepperich commented that he feels that the baseball side of recreation has been well funded within the budget and the Commission should focus on other recreational priorities. He agreed that the warming house is a priority. He stated that as a member of the skate park committee, he agrees that should also be a priority. He commented that the Wentworth tennis courts are also in need of repair and should be a priority. He believed the Valley playground could wait a year. Ms. Lawrence stated that staff has been attempting to add funds to the parks maintenance budget each year in order to complete field work on the baseball fields. Chair Klepperich recognized that the shelter at Rogers Lake is in need of work. Ms. Lawrence commented that the request has been submitted from residents that use the park a lot. She commented on the issues with the facility and a request for bathrooms but noted that would have a higher cost. She commented that staff could provide more details on that project. Chair Klepperich asked if there is a water line at the park. Public W orks Director Ryan Ruzek replied that there is a sewer line, but the closest water line would be in Wagon Wheel Trail. Commissioner Blanks asked if the thought is to rank the projects and the Council would select those from the list, or whether the Council would review the estimated cost and approve a budget, then directing the Commission to work within that budget. Ms. Lawrence replied that the intention was to create a prioritized list to bring to the Council. She recognized that the CIP list is large and therefore she would like to prioritize into high, medium and low ranking items. She noted that this discussion can continue at the June meeting when more members are present. She stated that she would add the discussion from Page 33 tonight into the packet for the next meeting to allow the next discussion to begin from that point. She confirmed that she could send out the list to each Commission member to review and provide their prioritized list prior to the next meeting as well. Commissioner Muller commented that in her mind it would make sense to complete all projects within a park and then move on to another park. She stated that the packet included a five-year outlook but asked if there is a longer vision, such as 15 years. She noted that information would help her understand the impact of pushing projects back. Ms. Lawrence stated that the Mayor has requested a 15-year CIP for parks, therefore staff is working on that document. She noted that it will not be a complete or final document as things arise that are unforeseen and trends come up, such as pickleball. She provided input on the different methods of park improvement, focusing on one park, or spreading improvements throughout the system. Commissioner Blanks asked if the parks listed for playground replacement have been added because they are nearing the 15-year mark or whether resident complaints have been received. Ms. Lawrence provided an update on the process used by the City. She noted that monthly safety inspections are completed by staff and maintenance needs are tracked. She stated that Valley View Heights was supposed to be replaced in 2022 because of its age but was pushed to 2023. She noted that if playgrounds continue to be pushed back it will create a ripple effect with more playgrounds needing replacement. She stated that there are parks that have received playground replacement, but the swings were not replaced, therefore some sets of swings may need to be replaced. She stated that sometimes maintenance projects need to be prioritized above new features in order to maintain the infrastructure and work within the budget. 10.Unfinished Business (Continued) 10.a Community Engagement and Outreach Update Parks and Recreation Manager Meredith Lawrence stated that at the March meeting the need for community engagement was identified and using that input she developed a list of goals related to community input. She stated that the list of groups was provided in the packet along with the Commission members assigned to solicit input from those groups. She reviewed the information that was included in the packet for Commission members to use as a guide for their engagement meetings. She noted that it is recommended that the Commission complete these engagement opportunities in pairs. Chair Klepperich commended Commissioner Meyer for the great job she did putting this together. He stated that he has no issues with the materials as proposed. Commissioner Blanks suggested combining the PTA meetings for a PAN meeting which includes the lead people from different PTA groups which would allow for those Commission members to pair together. He commented that the Linden Apartment group is great and willing to work around the schedules of the Commission members and noted that he would follow up with the Commission member assigned to the other apartment group in hopes of pairing. He stated that the Rotary is also very accommodating to schedules and is excited to work with the Commission on this opportunity. Commissioner Muller asked if the PTA groups would still meet during the summer. Page 34 Commissioner Blanks stated that initially they had planned to meet in May, but the Commission was not ready. He stated that he will reach out to schedule a meeting. Chair Klepperich stated that the Foundation meets quarterly and therefore he will reach out to schedule that. He stated that Commissioner Meyer was going to get a head start by talking to people at the dog park and may be looking for someone to go with as well. 10.c Schedule Parks Tour Item postponed to June. 11.Staff Announcements Parks and Recreation Manager Meredith Lawrence shared the following announcements: •Tennis instructors and assistants are needed for the tennis programming. •“Touch a Truck’ Event will be held this Saturday from 10:00 a.m. to noon at Mendakota Park. •Other events can be found on the City’s website. 12. Student Representative Update None. 13. Commission Comments and Park Updates Commissioner Cotter arrived. Commissioner Muller •Welcomed the new staff member •The Par 3 looks to be in great condition •Mendota Carnival will be held Friday night with the “Touch a Truck” event on Saturday Commissioner Blanks •The parks look great, and he has received compliments on the covered dugouts at Mendakota •Valley Park is well-visited with bikers and hikers. He received a question requesting that the picnic table be resurfaced •Received comments from residents in neighboring communities that visit Mendota Heights parks because of the accessible basketball hoops Chair Klepperich •Noted a comment he passed on to staff related to a picnic table at Valley View Heights •Ivy Hills looks to be in good condition, and it is a quiet park during the week Commissioner Cotter •Wentworth Park is receiving a lot of use and was glad to see it on the list for woodchips •Commented on the baseball activity at Civic Center Park •It is great to see the great condition and use of the parks 14. Adjourn The meeting adjourned at 7:26 PM. Page 35 Minutes drafted by: Amanda Staple TimeSaver Off Site Secretarial, Inc. Page 36 Request for City Council Action DATE: June 21, 2022 TO: Mayor, City Council, and City Administrator FROM: Christine Lusian, City Clerk SUBJECT: Massage Licenses INTRODUCTION Approve a massage establishment and massage therapist license. BACKGROUND The applicants listed below have completed application requirements and paid the associated license fees for the period July 1, 2022 through June 30, 2023. Background investigations are complete with no negative findings. •Massage Establishment:Green Lotus & Healing Center •Massage Therapist: Cindy Messer RECOMMENDATION Approve a 1) massage establishment license for Green Lotus & Healing Center and 2) massage therapist license for Cindy Messer for the period July 1, 2022 through June 30, 2023. 5e. Page 37 Page 38 Request for City Council Action DATE: June 21, 2022 TO: Mayor and City Council FROM: Cheryl Jacobson, City Administrator SUBJECT: Appointment of Student Representatives to Commissions INTRODUCTION The City Council is asked to approve the appointment of Meg Murphy as Student Representative to the Parks and Recreation Commission and Stella Byrnes as Student Representative to the Natural Resource Commission. BACKGROUND The Student Representative to the City Commissions serves in an advisory capacity and is a communication link for ideas, observations, concerns, satisfactions and questions to the Commission. The student representative is non-voting member of the Commission and the position is open to Mendota Heights residents attending high school (grades 9-12) public, private or online/home school students. Preference is given to students in grades 10 or 11 (during the 2022-2023 school year). To fill the vacancy, staff solicited interest from local students. Two applications were received and Parks and Recreation Manager Meredith Lawrence and Natural Resource Coordinator Krista Spreiter met with the students on June 14, 2022 to discuss the positions. Staff is recommending the appointment of Meg Murphy to serve as Student Representative to the Parks and Recreation Commission. Meg will be a Junior at the Convent of the Visitation this fall and is a resident of Mendota Heights. She is actively involved in volunteering for Dorothy Day and in her church community. She participates on her school Debate Team and on the Nordic and Track/Field Teams. In her application Meg wrote, “I strive to promote inclusive and fair opinions. It’s an honor that students are considered for a non-voting role. I want to learn from the City Commission members and create a forum where my informed voice may be shared. I love my community.” Staff is recommending the appointment of Stella Byrnes to serve as Student Representative to the Natural Resource Commission. Stella will be a Junior at the Convent of the Visitation this fall and is a resident of Mendota Heights. Stella is active outdoors and participates in extended camping and wilderness trips to the Boundary Waters and Superior Hiking Trail. This Summer she will be 5f. Page 39 participating in a multi-day hiking kayaking trip around the Apostle Islands. Stella wrote in her application, “This opportunity is a great way to become an active member of the community. As a teenager it is important to begin gaining knowledge about what goes on behind the scenes to create the community that we have, and build skills of my own so I can have a positive impact on communities I am a part of now and in the future.” If approved, Meg and Stella’s terms will go through this upcoming school year, ending May 31, 2023. The opportunity for reappointment would be reviewed in the Spring, prior to the end of the term. BUDGET IMPACT None. ACTION RECOMMENDED Staff recommends the appointment of Meg Murphy to serve as Student Representative to the Parks and Recreation Commission, with a term ending May 31, 2023 and Stella Byrnes to serve as Student Representative to the Natural Resource Commission, with a term ending May 31, 2023. ACTION REQUIRED If City Council concurs, it should by motion, approve the appointment of Meg Murphy to serve as Student Representative to the Parks and Recreation Commission, with a term ending May 31, 2023 and Stella Byrnes to serve as Student Representative to the Natural Resource Commission, with a term ending May 31, 2023. Page 40 Request for City Council Action DATE: June 21, 2022 TO: Mayor, City Council and City Administrator FROM: Meredith Lawrence, Parks and Recreation Manager SUBJECT: April Par 3 Financial Report INTRODUCTION The City Council is asked to acknowledge the April Par 3 Financial Report. BACKGROUND Attached is the April Par 3 Financial Report. In the month of April, the course had a total of 896 rounds of golf played. In April, the Par 3 had a total of $14,528 for monthly revenue totals. The 2022 year-to-date revenue total including April is $56,578. The course’s April expenditures totaled $20,896. The year-to-date expenditure total is $35,349. As of now the course is showing a $21,229 operating surplus. It is important to note that the course took in a large number of recreation program and league registrations in March and April for Summer programming. This means that revenue has been received but staffing costs have not been paid. RECOMMENDATION Staff recommends that the Mendota Heights City Council acknowledge the April Par 3 Financial Report. ACTION REQUIRED If the Council concurs, it should, by motion acknowledge the April Par 3 Financial Report. 5g. Page 41 MONTHLY EXPENDITURE REPORT APRIL 2022 MENDOTA HEIGHTS PAR 3 BUDGET TO ACTUAL REPORT APRIL 2022 (33.33% OF YEAR) April REVENUES April YTD YTD YTD BUDGET 2022 2022 %2021 GREENS, LEAGUE & TOURN FEES $110,000 $10,126 $10,126 9.21%$25,055 RECREATION PROGRAMS $40,000 $3,497 $45,548 113.87%$38,810 CONCESSIONS $19,000 $897 $897 4.72%$1,369 SUNDRY REVENUE $0 $8 $8 0.00%$1,022 INTEREST $450 $0 $0 0.00%$0 INSURANCE CLAIM $0 $0 $0 0.00%$0 PAR 3 FUND REVENUE TOTAL $169,450 $14,528 $56,578 33.39%$66,256 EXPENDITURES April YTD YTD YTD BUDGET 2022 2022 %2021 CLUBHOUSE SALARIES $34,300 $2,499 $2,499 7.29%$5,045 ADMINISTRATIVE SALARIES $25,807 $1,660 $5,373 20.82%$6,950 FICA/PERA $10,768 $663 $1,196 11.11%$1,830 MEDICAL INSURANCE $6,851 $571 $2,284 33.33%$2,218 U/E & W/C INSURANCE $3,100 $0 $1,059 34.15%$1,100 RENTALS $4,750 $0 $0 0.00%$100 UTILITIES $12,555 $815 $3,218 25.63%$2,939 PROFESSIONAL FEES - AUDIT $2,900 $0 $0 0.00%$0 PROF FEES - CONSULTING FEES $1,100 $0 $0 0.00%$0 PROF FEES - GROUNDS MGMT $7,050 $0 $0 0.00%$0 PROF FEES - GROUNDS WAGES $22,000 $1,005 $1,005 4.57%$2,844 PROF FEES - TREE MAINTENANCE $1,500 $2,800 $2,800 0.00%$0 ADVERTISING/NEWSLETTER $0 $0 $0 0.00%$0 LIABILITY/AUTO INSURANCE $4,800 $0 $3,885 80.94%$3,997 OPERATING COSTS/SUPPLIES $7,850 $1,378 $1,485 18.91%$2,938 FUEL $1,750 $0 $133 7.59%$188 REPAIRS & MAINTENANCE $47,500 $6,268 $6,505 13.70%$10,456 SUNDRY/DUES/MILEAGE/CLOTHING $5,500 $1,363 $1,969 35.79%$3,407 CONTINGENCY $0 $0 $0 0.00%$0 ONLINE REG & CREDIT CARD FEES $7,475 $1,875 $1,939 25.94%$297 PAR 3 EXPENDITURES TOTAL $207,556 $20,896 $35,349 17.03%$44,309 6/9/2022 Page 42 Request for City Council Action DATE: June 21, 2022 TO: Mayor, City Council, and City Administrator FROM: Scott Goldenstein, Assistant Fire Chief SUBJECT: May 2022 Fire Synopsis COMMENT: Fire Calls: 44 In May, the Fire Department was paged for service a total of 44 times. Types of calls: Fires: 4 During the month of May, the Mendota Heights Fire Department responded to two vehicle fires. One of the vehicle fires was due to a roll over and the occupants were extricated by a passerby. The department also responded to a dumpster fire at a hotel and to a Christmas tree being burned in a fire pit (which does not qualify as a 3’ x 3’ or smaller rec fire)!! Medical/Extrication: 5 Three calls were medical in nature, and two calls were for vehicle accidents. Hazardous Situations: 5 Calls that were coded as hazardous situations included; three for power lines that were down, one for a fuel leak, and one for a carbon monoxide call during May. Service Call: 1 The fire department was paged for a water rescue, but a neighbor assisted the victim with their pontoon and getting the person to shore. False Alarms/System Malfunctions: 13 In May, there were nine unintentional trips of the alarm system, three calls were coded as system malfunctions, and one call was for a water flow due to a forklift hitting a sprinkler head. Good Intent: 5 Four calls in May, were for the smell of natural gas in the area that the fire department investigated. In addition, one call was for a bad smell in the area that ended up being due to a resident pumping out a pool that had been unused for several years in advance of the pool cleaners coming the next day. Mendota Heights 39 calls Lilydale 0 call(s) Mendota 1 call(s) Sunfish Lake 2 call(s) Other 2 call(s) Total: 44 calls 5h. Page 43 Dispatched and Cancelled En route: 9 Nine times the station was paged out but cancelled en route before arrival. Mutual/Auto-Aid Other: 2 Twice in May, we were paged out on auto aid to South Metro Fire, in both cases we were cancelled before our arrival. May Trainings May 11 18:30 MANDATORY 3 (Option 1 of 3) Rescue Equipment This drill was a hands on drill using multiple staged vehicles and allowed for the use of hydraulic and miscellaneous hand tools for stabilizing and going through vehicle extrication scenarios. May 12 07:00 MANDATORY 3 (Option 2 of 3) Rescue Equipment This drill was a hands on drill using multiple staged vehicles and allowed for the use of hydraulic and miscellaneous hand tools for stabilizing and going through vehicle extrication scenarios. May 18 18:30 Mandatory 4 (Option 1 of 3) Driving This drill occurred off-site and had multiple driving stations going over multiple driving skills. May 23 18:30 Water Rescue This drill was held at Rogers Lake and was dedicated to the deployment of the inflatable water/ice rescue apparatus and launching it onto the lake. May 24 07:00 Water Rescue This drill was held at Rogers Lake and was dedicated to the deployment of the inflatable water/ice rescue apparatus and launching it onto the lake. Page 44 Number of Calls 44 Total Calls for Year:147 FIRE ALARMS DISPATCHED:NUMBER STRUCTURE CONTENTS MISC.TOTALS TO DATE ACTUAL FIRES Structure - MH Commercial $0 Structure - MH Residential $605,400 Structure - Contract Areas $0 Cooking Fire - confined $0 Vehicle - MH 2 $10,000 $10,100 Vehicle - Contract Areas $0 Grass/Brush/No Value MH Grass/Brush/No Value Contract TOTAL MONTHLY FIRE LOSSES Other Fire 2 OVERPRESSURE RUPTURE $10,000 $0 $0 Excessive heat, scorch burns MEDICAL Emergency Medical/Assist 3 Vehicle accident w/ no injuries 2 Extrication ALL FIRES, ALL AREAS (MONTH)$10,000 Medical, other HAZARDOUS SITUATION $0 Spills/Leaks 1 Carbon Monoxide Incident 1 Power line down 3 Arcing, shorting $605,500 Hazardous, Other SERVICE CALL Smoke or odor removal $0 Assist Police or other agency Service Call, other 1 GOOD INTENT Good Intent Dispatched & Cancelled 9 Current To Date Last Year Smoke Scare 39 117 94 HazMat release investigation 5 0 8 8 Good Intent, Other 1 2 5 FALSE ALARMS 2 7 3 False Alarm 2 13 13 Malfunction 3 Unintentional 9 Total:44 147 123 False Alarm, other 1 MUTUAL AID 2 FIRE MARSHAL'S TIME FOR MONTH Total Calls 44 Inspections Investigations WORK PERFORMED Hours To Date Last Year Re-Inspection Fire Calls 597.5 1994.5 1900.5 Meetings 11 350.5 140.5 Meetings Training 295 1234 1929 Special Activity 66.75 339.25 232.5 Administration Fire Marshal 148.5 241.5 Plan Review/Training TOTALS 970.25 4066.75 4444 TOTAL:0 Mendota Heights Only Structure/Contents Mendota Heights Only Miscellaneous Mendota Heights Total Loss to Date Contract Areas Loss to Date Lilydale Mendota Sunfish Lake Other MENDOTA HEIGHTS FIRE DEPARTMENT MAY 2022 MONTHLY REPORT FIRE LOSS TOTALS LOCATION OF FIRE ALARMS Mendota Heights Page 45 Page 46 5i.Page 47 Page 48 6/9/2022 Mendota Heights Building Activity Report Mike Andrejka, Building Official May 1, 2022 thru May 31, 2022 January 1, 2022 thru May 31, 2022 January 1, 2021 thru May 31, 2021 January 1, 2020 thru May 31, 2020 Building Permit No.Valuation Fee Collected Building Permit No.Valuation Fee Collected Building Permit No.Valuation Fee Collected Building Permit No.Valuation Fee Collected SFD 1 800,000.00$ $8,178.64 SFD 4 3,181,110.00$ $32,464.15 SFD 4 2,825,750.00$ $29,653.81 SFD 2 795,000.00$ 9,377.78$ Apartment 0 -$ $0.00 Apartment 0 -$ $0.00 Apartment 0 -$ $0.00 Apartment 0 -$ -$ Townhouse 0 -$ $0.00 Townhouse 0 -$ $0.00 Townhouse 2 1,000,000.00$ $8,641.88 Townhouse 0 -$ -$ Condo 0 -$ $0.00 Condo 0 -$ $0.00 Condo 0 -$ $0.00 Condo 0 -$ -$ Misc 65 1,764,974.82$ 19,470.05$ Misc 195 5,423,441.48$ 71,164.08$ Misc 241 9,491,808.84$ 97,453.96$ Misc 155 2,593,777.28$ 33,143.91$ Commercial 9 1,785,500.00$ $16,851.57 Commercial 36 3,942,628.12$ $45,970.95 Commercial 25 4,259,210.35$ $39,880.07 Commercial 21 633,775.00$ 8,027.25$ Sub Total 75 4,350,474.82$ 44,500.26$ Sub Total 235 12,547,179.60$ 149,599.18$ Sub Total 272 17,576,769.19$ 175,629.72$ Sub Total 178 4,022,552.28$ 50,548.94$ Trade Permit No.Valuation Fee Collected Trade Permit No.Valuation Fee Collected Trade Permit No.Valuation Fee Collected Trade Permit No.Valuation Fee Collected Plumbing 19 $1,619.00 Plumbing 105 $11,078.08 Plumbing 110 $10,177.00 Plumbing 91 8,123.70$ Water 0 $0.00 Water 0 $0.00 Water 0 $0.00 Water 0 -$ Sewer 4 $300.00 Sewer 12 $900.00 Sewer 13 $975.00 Sewer 8 600.00$ Mechanical 32 $7,071.04 Mechanical 144 397.00$ $18,250.00 Mechanical 168 $15,828.55 Mechanical 105 9,264.82$ Sub Total 55 8,990.04$ Sub Total 261 30,228.08$ Sub Total 291 $26,980.55 Sub Total 204 17,988.52$ License No.Valuation Fee Collected Licenses No.Valuation Fee Collected Licenses No.Valuation Fee Collected Licenses No.Valuation Fee Collected Contractor 0 $0.00 Contractor 0 $0.00 Contractor 0 $0.00 Contractor 0 -$ Total 130 4,350,474.82$ 53,490.30$ Total 496 12,547,179.60$ 179,827.26$ Total 563 17,576,769.19$ 202,610.27$ Total 382 4,022,552.28$ 68,537.46$ NOTE: All fee amounts exclude SAC, WAC and State Surcharge. Amounts shown will reflect only permit, plan review fee and valuation totals 5j. Page 49 Page 50 5k.Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Request for City Council Acton DATE: June 21, 2022 TO: Mayor, City Council and City Administrator FROM: Kristen Schabacker, Finance Director SUBJECT: 2021 Audit Presentation BACKGROUND BerganKDV has completed the audit for 2021. The reports for 2021 are the Annual Report & Basic Financial Statements and the Communications Letter. These reports are included in your packet. Matt Mayer from KDV will be presenting the Annual Audit Report for 2021. BUDGET IMPACT There is no budget impact. RECOMMENDATION Accept the review and ask any questions you may have. 7a. Page 65 City of Mendota Heights Dakota County, Minnesota Communications Letter December 31, 2021 Page 66 City of Mendota Heights Table of Contents Report on Matters Identified as a Result of the Audit of the Basic Financial Statements 1 Material Weakness 3 Required Communication 4 Financial Analysis 8 Emerging Issue 17 Page 67 1 Report on Matters Identified as a Result of the Audit of the Basic Financial Statements Honorable Mayor, Members of the City Council and Management City of Mendota Heights Mendota Heights, Minnesota In planning and performing our audit of the basic financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Mendota Heights, Minnesota, as of and for the year ended December 31, 2021, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that have not been identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error, or fraud may occur and not be detected by such controls. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the City's basic financial statements will not be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the likelihood of an event occurring is either reasonably possible or probable as defined as follows:  Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely.  Probable. The future event or events are likely to occur. The material weakness identified is stated within this letter. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Page 68 2 The accompanying memorandum also includes financial analysis provided as a basis for discussion. The matters discussed herein were considered by us during our audit and they do not modify the opinion expressed in our Independent Auditor's Report dated June 2, 2022, on such statements. This communication, which is an integral part of our audit, is intended solely for the information and use of management, the City Council, others within the City and state oversight agencies and is not intended to be, and should not be, used by anyone other than these specified parties. Minneapolis, Minnesota June 2, 2022 Page 69 3 City of Mendota Heights Material Weakness Lack of Segregation of Accounting Duties The City had a lack of segregation of accounting duties due to a limited number of office employees. The lack of adequate segregation of accounting duties could adversely affect the City's ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. This lack of segregation of accounting duties can be demonstrated in the following areas, which is not intended to be an all-inclusive list:  The Finance Director has the ability to receipt City service revenue, prepares the deposit receipts, is responsible for coding, and prepares the Treasurer's report for the City Council.  The Utility Billing Clerk enters consumption into the utility billing system, prepares and reviews utility bills, applies payments to customer accounts, and has the ability to make adjustments to customer accounts.  The Finance Director performs year-end reconciliations and prepares closing entries without review. In addition to having responsibilities in the cycles listed above, the City's Finance Director has full general ledger access and the ability to write and post journal entries. While we believe this access is necessary to efficiently perform the financial duties required, this access allows the ability to override many of the controls and segregation the City has in place. The City has implemented certain controls to mitigate the risk due to the lack of segregation of accounting duties, including but not limited to reviewing adjustments to customer accounts before they are posted, having a non-finance employee prepare bank reconciliations and review of all journal entries. However, due to the number of staff needed to properly segregate all of the accounting duties, the cost of obtaining desirable segregation of accounting duties can often exceed benefits which could be derived. However, management and the City Council must remain aware of this situation and should continually monitor the accounting system, including changes that occur. We recommend that the City review the internal control process to ensure segregation or independent review be implemented whenever practical and cost effective. Page 70 4 City of Mendota Heights Required Communication We have audited the basic financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended December 31, 2021. Professional standards require that we advise you of the following matters related to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express opinions about whether the basic financial statements prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the basic financial statements does not relieve you or management of its respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the basic financial statements are free of material misstatement. An audit of the basic financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgement, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Generally accepted accounting principles provide for certain Required Supplementary Information (RSI) to supplement the basic financial statements. Our responsibility with respect to the RSI, which supplements the basic financial statements, is to apply certain limited procedures in accordance with generally accepted auditing standards. However, the RSI was not audited and, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance, we do not express an opinion or provide any assurance on the RSI. Our responsibility for the supplementary information accompanying the basic financial statements, as described by professional standards, is to evaluate the presentation of the supplementary information in relation to the basic financial statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. Page 71 5 City of Mendota Heights Required Communication Significant Risks Identified We have identified the following significant risks of material misstatement:  Risk of Improper Revenue Recognition – Revenue recognition is considered a fraud risk on substantially all engagements as it is generally the largest line item impacting a City's change in fund balance or net position.  Risk of Misappropriation of Assets – Misappropriation of Assets is considered a risk in substantially all engagements as assets may be misappropriated due to fraud or error.  Risk of Management Override of Controls – Management override of internal control is considered a risk in substantially all engagements as management may be incentivized to produce better results. Qualitative Aspects of the City's Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in the notes to financial statements. There have been no initial selection of accounting policies and no changes to significant accounting policies or their application during 2021. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the basic financial statements prepared by management and are based on management's current judgements. Those judgements are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the basic financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgements. The most sensitive estimates affecting the basic financial statements related to: Depreciation – The City is currently depreciating its capital assets over their estimated useful lives, as determined by management, using the straight-line method. Expense Allocation – Certain expenses are allocated to functions based on an estimate of the benefit to that particular function. Examples are salaries, benefits, insurance, and supplies. Total Other Post Employment Benefits (OPEB) Liability, Deferred Outflows of Resources Related to OPEB, and Deferred Inflows of Resources Related to OPEB – These balances are based on an actuarial study using the estimates of future obligations of the City for post employment benefits. Net Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows of Resources Related to Pensions – These balances are based on an allocation by the pension plans using estimates based on contributions. Page 72 6 City of Mendota Heights Required Communication Qualitative Aspects of Significant Accounting Practices (Continued) Significant Accounting Estimates (Continued) We evaluated the key factors and assumptions used to develop the accounting estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Financial Statement Disclosures Certain basic financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The basic financial statement disclosures are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For the purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effects of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the basic financial statements taken as a whole and each applicable opinion unit. Management did not identify and we did not notify them of any uncorrected financial statement misstatements In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. None of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the basic financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City's financial statements or the auditor's report. No such disagreements arose during the course of our audit. Representations Requested from Management We have requested certain written representations from management, which are included in the management representation letter. Management's Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management has informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Page 73 7 City of Mendota Heights Required Communication Other Significant Matters, Findings, or Issues In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the City, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City's auditor. Other Information Included in Annual Reports Pursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the City's annual reports, does not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. We applied certain limited procedures to the RSI that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the basic financial statements or to the basic financial statements themselves. Page 74 City of Mendota Heights Financial Analysis 8 The following pages provide graphic representation of select data pertaining to the financial position and operations of the City for the past four years. Our analysis of each graph is presented to provide a basis for discussion of past performance and how implementing certain changes may enhance future performance. We suggest you view each graph and document if our analysis is consistent with yours. A subsequent discussion of this information should be useful for planning purposes. General Fund Revenues The General Fund revenues for the past five years are depicted in the following graph. 2017 2018 2019 2020 2021 Other $412,770 $352,191 $509,614 $412,446 $328,838 Charges for Services 621,308 643,095 716,877 677,925 736,356 Intergovernmental 424,268 469,417 529,235 1,435,730 521,938 Licenses and Permits 633,846 515,103 480,249 405,376 619,710 Taxes and Assessments 6,653,433 7,237,908 7,509,301 7,959,743 8,243,823 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 General Fund Revenues General Fund revenue decreased $440,555, or 4.1%, during the year, from $10,891,220 in 2020 to $10,450,665 in 2021. The largest fluctuation occurred in Intergovernmental, which decreased $913,792 due to the City receiving CARES grant funding in 2020. Taxes and assessments increased $284,080 due to an increase in the amount of taxes levied in 2021. Other revenue decreased $83,608 due to a decreased amount of interest received on investments related to worsening market conditions in 2021. License and permit revenue increased $214,334 due to an increased number of building permits. All other revenue sources were consistent with the prior year. Page 75 City of Mendota Heights Financial Analysis 9 General Fund Revenues (Continued) Taxes and Assessments 79% Licenses and Permits 6% Intergovernmental 5% Charges for Services 7% Other 3% 2021 General Fund Revenues Taxes and Assessments 73% Licenses and Permits 4%Intergovernmental 13% Charges for Services 6% Other 4% 2020 General Fund Revenues Page 76 City of Mendota Heights Financial Analysis 10 General Fund Expenditures The General Fund expenditures for the past five years are depicted in the following graph. 2017 2018 2019 2020 2021 Capital Outlay $32,869 $19,330 $- $2,478 $54,611 General Government 1,516,906 1,609,931 1,676,334 1,890,278 1,757,792 Public Works 2,184,378 2,464,014 2,645,909 2,632,290 2,795,095 Public Safety 3,879,402 4,151,895 4,607,105 4,885,438 5,034,195 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 General Fund Expenditures General Fund expenditures increased $231,209, or 2.5%, from $9,410,484 in 2020 to $9,641,693 in 2021. Public works increased the most from 2020, increasing $162,805, or 6.2%. This increase is due to cost of living adjustments as well as increased repair and maintenance costs. Public safety increased $148,757, or 3.0% due to cost of living adjustments. General government expenditures decreased $132,486, or 7.0% due to CARES grant expenditures in 2020. All other functions were consistent with the amount expended in the prior year. Page 77 City of Mendota Heights Financial Analysis 11 General Fund Expenditures (Continued) General Government 18% Public Safety 52% Public Works 29%Capital Outlay 1% 2021 General Fund Expenditures General Government 20% Public Safety 52% Public Works 28%Capital Outlay Less than 1% 2020 General Fund Expenditures Page 78 City of Mendota Heights Financial Analysis 12 General Fund Expenditures (Continued) The table below presents a comparison of budget and actual General Fund revenues and expenditures by function. In total, the fund's expenditures were $395,943, or 3.9%, under budgeted expenditures of $10,037,636. The fund's revenue was $460,579, or 4.6%, over budgeted revenues of $9,990,086. Public Safety expenditures were under budget by $306,891. This was due to the police staffing turnover causing vacancies and variations in personnel levels. Public works expenditures were $110,482 under budget due to using less road salt than anticipated. All other functions were consistent with the budgeted amounts. Licenses and permits revenue was $290,510 over budget due to budgeting conservatively. Other revenue was over budget by $80,538 due to the City not budgeting for cable franchise fees, donations, and insurance claims. Additionally, the City had a conservative budget for interest income, fines, and forfeitures. Variance Original and Final Budget - Final Budget Amounts Over (Under) Revenues Taxes and assessments 8,189,068$ 8,243,823$ 54,755$ Licenses and permits 329,200 619,710 290,510 Intergovernmental 493,570 521,938 28,368 Charges for services 729,948 736,356 6,408 Other 248,300 328,838 80,538 Total revenues 9,990,086 10,450,665 460,579 Expenditures General government 1,790,973 1,757,792 (33,181) Public safety 5,341,086 5,034,195 (306,891) Public works 2,905,577 2,795,095 (110,482) Capital outlay - 54,611 54,611 Total expenditures 10,037,636 9,641,693 (395,943) Other financing sources (uses) Transfers in 47,550 72,689 25,139 Transfers out - (216,955) (216,955) Total other financing sources (uses) 47,550 (144,266) (191,816) Net change in fund balances -$ 664,706$ 664,706$ Page 79 City of Mendota Heights Financial Analysis 13 General Fund Operations The bar chart below highlights General Fund results for the last five years. 80% 100% 120% $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2017 2018 2019 2020 2021 Revenues $8,745,625 $9,217,714 $9,745,276 $10,891,220 $10,450,665 Expenditures 7,613,555 8,245,170 8,929,348 9,410,484 9,641,693 Fund Balance 8,087,498 8,836,600 9,352,885 10,684,511 11,349,217 Fund Balance as a Percent of the Year's Expenditures 106%107%105%114%118% General Fund Operations As shown in the chart, the City's fund balance increased to its highest point in the five years presented. The amount of fund balance as a percentage of the current year's expenditures has increased steadily since 2017. In 2017, the City implemented a policy in accordance with GASB 54 whereby the General Fund's unassigned fund balance is at least 75% of the subsequent year's budgeted expenditures. As of December 31, 2021, the City's unassigned General Fund balance of $10,995,660 was 106% of 2022 budgeted expenditures. Page 80 City of Mendota Heights Financial Analysis 14 Tax Capacity, Levy, and Rates The chart below graphs the tax capacity, certified tax levy, and City tax rate for 2017 through 2021. The tax capacity is based on total tax capacity, prior to adjustments for captured Tax Increment Financing (TIF) and fiscal disparities. The certified tax levy amount is also prior to fiscal disparity adjustments. With improving market values, the City's tax capacity increased from 2017 to 2021 by $6,478,726 or 28.9%. In 2021, the City's tax capacity increased $1,672,115. $22,381,347 $23,623,069 $25,020,902 $27,187,958 $28,860,073 $7,743,370 $8,348,491 $9,435,150 $10,048,724 $10,482,617 37.49%37.83%39.29%38.32%37.85% 0.00% 4.00% 8.00% 12.00% 16.00% 20.00% 24.00% 28.00% 32.00% 36.00% 40.00% 44.00% 48.00% 52.00% 56.00% 60.00% 64.00% 68.00% $- $2,500,000 $5,000,000 $7,500,000 $10,000,000 $12,500,000 $15,000,000 $17,500,000 $20,000,000 $22,500,000 $25,000,000 $27,500,000 $30,000,000 $32,500,000 2017 2018 2019 2020 2021 Tax Capacity, Levy, and Rates* Total Tax Capacity Certified Tax Levy Tax Capacity Rate * Property tax data was obtained from the League of Minnesota Cities Property Tax Data Tables for 2017 (www.lmc.org). 2018-2021 data obtained from Dakota County. Page 81 City of Mendota Heights Financial Analysis 15 Enterprise Funds Sewer Utility Fund The following graph presents a five-year history of the Sewer Utility Fund. Due to the nature and cost of Sewer Utility Fund assets, it is often difficult to establish sewer rates that are sufficient to cover the current year's use of the assets represented by depreciation expense. Ideally, Sewer Utility Fund revenues should cover all operating expenses, including depreciation. The Sewer Utility Fund had an operating income of $112,326, which included recognition of $202,087 of depreciation expense. Revenues exceeded expenses in four of the five years presented. Net position of the fund increased $335,100 after factoring in nonoperating revenues, and net transfers. 2017 2018 2019 2020 2021 Charges for Services $1,749,743 $2,012,107 $2,045,839 $2,317,640 $2,386,252 Operating Expenses 1,930,921 1,954,960 2,001,963 2,024,291 2,273,926 Operating Income (Loss)(181,178) 57,147 43,876 293,349 112,326 Operating Income (Loss) Excluding Depreciation (6,704)240,509 230,990 494,261 314,413 $(250,000) $250,000 $750,000 $1,250,000 $1,750,000 $2,250,000 $2,750,000 Sewer Fund Page 82 City of Mendota Heights Financial Analysis 16 Enterprise Funds (Continued) Storm Water Fund The Storm Water Fund had operating income of $177,964, which included recognition of depreciation expense of $54,444. Net position increased $317,255 in 2021 after factoring in nonoperating revenues and transfers out. The fund has shown operating income for all years presented. $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2017 2018 2019 2020 2021 Charges for Services $456,503 $501,173 $507,769 $578,799 $582,537 Operating Expenses 255,338 285,058 275,606 225,841 404,573 Operating Income (Loss)201,165 216,115 232,163 352,958 177,964 Operating Income (Loss) Excluding Depreciation 244,029 268,841 279,127 404,241 232,408 Storm Water Fund Page 83 City of Mendota Heights Emerging Issue 17 Executive Summary The following is an executive summary of financial and business related updates to assist you in staying current on emerging issues in accounting and finance. This summary will give you a preview of the new standards that have been recently issued and what is on the horizon for the near future. The most recent and significant update includes:  Accounting Standard Update – GASB Statement No. 87 – Leases – GASB has issued GASB Statement No. 87 relating to accounting and financial reporting for leases. This new statement establishes a single model for lease accounting based on the principle that leases are financing of the right to use an underlying asset. The following is an extensive summary of the current update. As your continued business partner, we are committed to keeping you informed of new and emerging issues. We are happy to discuss this issue with you further and its applicability to your City. Accounting Standard Update – GASB Statement No. 87 – Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments' basic financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. A lease is defined as a contract that conveys control of the right to use another entity's nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this Statement. A short-term lease is defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract. Page 84 City of Mendota Heights Emerging Issue 18 Accounting Standard Update – GASB Statement No. 87 – Leases (Continued) A lessee should recognize a lease liability and a lease asset at the commencement of the lease term, unless the lease is a short-term lease or it transfers ownership of the underlying asset. The lease liability should be measured at the present value of payments expected to be made during the lease term (less any lease incentives). The lease asset should be measured at the amount of the initial measurement of the lease liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs. A lessee should reduce the lease liability as payments are made and recognize an outflow of resources (for example, expense) for interest on the liability. The lessee should amortize the lease asset in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset. The notes to basic financial statements should include a description of leasing arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be made. A lessor should recognize a lease receivable and a deferred inflow of resources at the commencement of the lease term, with certain exceptions for leases of assets held as investments, certain regulated leases, short-term leases, and leases that transfer ownership of the underlying asset. A lessor should not derecognize the asset underlying the lease. The lease receivable should be measured at the present value of lease payments expected to be received during the lease term. The deferred inflow of resources should be measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods. A lessor should recognize interest revenue on the lease receivable and an inflow of resources (for example, revenue) from the deferred inflows of resources in a systematic and rational manner over the term of the lease. The notes to basic financial statements should include a description of leasing arrangements and the total amount of inflows of resources recognized from leases. GASB Statement No. 87 is effective for reporting periods beginning after June 15, 2021. Information provided above was obtained from www.gasb.org. Page 85 City of Mendota Heights Annual Report and Basic Financial Statements December 31, 2021 Page 86 City of Mendota Heights Table of Contents Elected Officials and Administration 1 Independent Auditor's Report 2 Management's Discussion and Analysis 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 16 Statement of Activities 17 Fund Financial Statements Balance Sheet – Governmental Funds 18 Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds 21 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities – Governmental Funds 24 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 25 Statement of Net Position – Proprietary Funds 26 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds 27 Statement of Cash Flows – Proprietary Funds 28 Notes to Basic Financial Statements 29 Required Supplementary Information Schedule of Changes in Total OPEB Liability and Related Ratios 64 Schedule of City's Proportionate Share of Net Pension Liability General Employees Retirement Fund 65 Schedule of City's Proportionate Share of Net Pension Liability Public Employees Police and Fire Retirement Fund 65 Schedule of City Contributions General Employees Retirement Fund 66 Schedule of City Contributions Public Employees Police and Fire Retirement Fund 66 Notes to Required Supplementary Information 67 Supplementary Information Combining Balance Sheet – Nonmajor Governmental Funds 76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 80 Combining Statement of Net Position – Internal Service Funds 85 Combining Statement of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 86 Page 87 City of Mendota Heights Table of Contents Supplementary Information (Continued) Combining Statement of Cash Flows – Internal Service Funds 87 Detailed Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 88 Minnesota Legal Compliance 91 Page 88 1 City of Mendota Heights Elected Officials and Administration December 31, 2021 Elected Officials Position Term Expires Stephanie Levine Mayor December 31, 2022 Joel Paper Council Member December 31, 2024 Jay Miller Council Member December 31, 2024 Ultan Duggan Council Member December 31, 2022 John Mazzitello Council Member December 31, 2022 Administration Cheryl Jacobson City Administrator Appointed Lorri Smith City Clerk Appointed Kristen Schabacker Finance Director Appointed Page 89 2 Independent Auditor's Report Honorable Mayor and Members of the City Council City of Mendota Heights Mendota Heights, Minnesota Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Mendota Heights, Minnesota, as of and for the year ended December 31, 2021, and the related notes to financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Mendota Heights, Minnesota, as of December 31, 2021, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Mendota Heights and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements The City of Mendota Heights's management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Mendota Height's ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Page 90 3 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of Mendota Heights' internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City of Mendota Heights' ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, which follows this report letter, and Required Supplementary information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB), who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any currently known information that may raise substantial doubt shortly thereafter. Page 91 4 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Mendota Heights' basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Minneapolis, Minnesota June 2, 2022 Page 92 City of Mendota Heights Management’s Discussion and Analysis 5 As management of the City of Mendota Heights, Minnesota (the “City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the year ended December 31, 2021. FINANCIAL AND DEVELOPMENT HIGHLIGHTS The assets and deferred outflows of resources of the City exceeded liabilities and deferred inflows of resources at the close of the most recent year by $53,555,373 (net position). Of this amount, $14,426,622 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors. The City’s total net position increased by $2,955,571. Governmental activities resulted in an increase of net position of $2,303,216. Business activities had net position increase of $652,355. As of the close of the current year, the City’s governmental funds reported a combined ending fund balance of $20,426,459, an increase of $554,312 from the prior year. At the end of the year the General Fund had an unassigned fund balance of $10,995,660, or 114.05% of total General Fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements on pages 16 and 17 are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, 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 Statement of Activities presents information showing how the City’s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) and from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, and public works. The business-type activities of the City include sewer and storm water. Page 93 City of Mendota Heights Management’s Discussion and Analysis 6 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: Governmental Funds and Proprietary Funds. Governmental Funds Governmental Funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resource, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating a government’s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statement. By doing so, readers may better understand the long-term impact of the City’s near-term financial decisions. Both the Governmental Fund Balance Sheet and Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains four individual major governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the following major funds:  General Fund  Special Assessments Debt Service Fund  Street Capital Projects Fund  American Rescue Plan Act Fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 18 through 25 of this report. Proprietary Funds The City maintains two enterprise funds and two internal service funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its sewer and storm water operations. Page 94 City of Mendota Heights Management’s Discussion and Analysis 7 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Proprietary Funds (Continued) Proprietary Funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the following funds: Enterprise Funds  Sewer Utility Fund  Storm Water Utility Fund Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for compensated absences and city hall functions. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 26 through 28 of this report. Notes to Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to basic financial statements can be found on pages 29 through 61 of this report. Other Information The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 76 through 87 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $53,555,373 at the close of the most recent year. Page 95 City of Mendota Heights Management’s Discussion and Analysis 8 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) The largest portion of the City’s net position ($33,776,470 or 63.07%) reflects its investment in capital assets (e.g. land, buildings, machinery and equipment, sewer main lines and storm sewers and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Net Position 2021 2020 2021 2020 2021 2020 Assets Current and other assets 25,671,612$ 24,377,556$ 2,406,743$ 1,686,982$ 28,078,355$ 26,064,538$ Capital assets 40,712,380 41,437,497 15,060,474 14,703,576 55,772,854 56,141,073 Deferred outflows of resources related to pensions and OPEB 3,502,928 1,528,215 65,522 12,341 3,568,450 1,540,556 Total assets and deferred outflows of resources 69,886,920$ 67,343,268$ 17,532,739$ 16,402,899$ 87,419,659$ 83,746,167$ Liabilities Long-term liabilities outstanding 24,834,269$ 25,897,048$ 104,073$ 139,283$ 24,938,342$ 26,036,331$ Other liabilities 4,002,693 5,489,222 558,012 116,877 4,560,705 5,606,099 Deferred inflows of resources related to pensions 4,287,667 1,497,923 77,572 6,012 4,365,239 1,503,935 Total liabilities and deferred inflows of resources 33,124,629$ 32,884,193$ 739,657$ 262,172$ 33,864,286$ 33,146,365$ Net Position Net investment in capital assets 18,715,996$ 18,529,032$ 15,060,474$ 14,703,576$ 33,776,470$ 33,232,608$ Restricted 5,352,281 6,400,389 - - 5,352,281 6,400,389 Unrestricted 12,694,014 9,529,654 1,732,608 1,437,151 14,426,622 10,966,805 Total net position 36,762,291$ 34,459,075$ 16,793,082$ 16,140,727$ 53,555,373$ 50,599,802$ Governmental Activities Business-Type Activities Totals A portion of the of the City’s net position ($5,352,281) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($14,426,622) may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Page 96 City of Mendota Heights Management’s Discussion and Analysis 9 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Governmental Activities Governmental activities increased the City’s net position by $2,303,216. Key elements of this increase are as follows: City’s Changes in Net Position 2021 2020 2021 2020 2021 2020 Revenues Program revenues Charges for services 2,156,689$ 2,141,606$ 2,983,508$ 2,906,916$ 5,140,197$ 5,048,522$ Operating grants and contributions 907,269 1,942,370 - - 907,269 1,942,370 Capital grants and contributions 1,701,832 3,327,642 - - 1,701,832 3,327,642 General revenues Taxes 10,511,686 10,052,157 - - 10,511,686 10,052,157 Tax Increment 151,674 15,656 - - 151,674 15,656 Unrestricted investment earnings (45,576) 204,638 (2,922) 18,881 (48,498) 223,519 Gain on sale of asset - - (187) 11,167 (187) 11,167 Total revenues 15,383,574 17,684,069 2,980,399 2,936,964 18,363,973 20,621,033 Expenses General government 2,148,828 2,608,370 - - 2,148,828 2,608,370 Public safety 4,844,510 5,022,012 - - 4,844,510 5,022,012 Public works 5,037,045 4,402,320 - - 5,037,045 4,402,320 Economic Development 139,444 15,244 - - 139,444 15,244 Interest on long-term debt 560,076 626,171 - - 560,076 626,171 Sewer - - 2,273,926 2,024,291 2,273,926 2,024,291 Storm water - - 404,573 225,841 404,573 225,841 Total expenses 12,729,903 12,674,117 2,678,499 2,250,132 15,408,402 14,924,249 Increase (decrease) in net position before transfers 2,653,671 5,009,952 301,900 686,832 2,955,571 5,696,784 Transfers (350,455) 77,918 350,455 (77,918)- - Increase (decrease) in net position 2,303,216 5,087,870 652,355 608,914 2,955,571 5,696,784 Net position - beginning 34,459,075 29,371,205 16,140,727 15,531,813 50,599,802 44,903,018 Net position - ending 36,762,291$ 34,459,075$ 16,793,082$ 16,140,727$ 53,555,373$ 50,599,802$ Governmental Activities Business-Type Activities Totals Page 97 City of Mendota Heights Management’s Discussion and Analysis 10 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Governmental Activities (Continued) Below are specific graphs which provide comparisons of the governmental activities revenues and expenditures: Charges for Services 14%Operating Grants and Contributions 6% Capital Grants and Contributions 11% Taxes 69% Unrestricted Investment Earnings 0% Governmental Activities - Revenues General Government 18% Public Safety 38% Public Works 40%Interest and Fees on Long-Term Debt 4% Governmental Activities - Expenses Page 98 City of Mendota Heights Management’s Discussion and Analysis 11 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Business-Type Activities Business-type activities increased net position by $652,355. Below are graphs showing the business-type activities revenue and expense comparisons: Charges for Services 100% Unrestricted Investment Earnings 0% Business-Type Activities - Revenues Sewer 85% Storm Water 15% Business-Type Activities - Expenses Page 99 City of Mendota Heights Management’s Discussion and Analysis 12 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the year. At the end of the current year, the City’s governmental funds reported combined ending fund balances of $20,426,459. Nonspendable fund balances are already allocated for prepaid items ($333,457) and inventory ($25,632). Approximately 30.42% ($6,212,781) constitutes restricted fund balance. Restricted fund balance would include Debt Service, Special Park, and Street Light District Funds, all of which have specific uses for the funds they receive. The City also has a committed fund balance of $1,083,904. This represents fund balance that is to be used for the water system, Par 3 Golf Course and civil defense needs. The City has assigned fund balance of $2,272,770 (11.13%). This number represents the fund balances for the various reserve accounts. The remaining category of fund balance is the unassigned fund balance. The City has $10,497,915 of unassigned fund balance which is approximately 51.39% of the combined governmental fund balance at December 31, 2021. The General Fund increased by $664,706 in 2021. Revenues were greater than anticipated and expenditures were lower than budgeted amounts. The Special Assessments Debt Service Fund decreased by $1,289,538 in 2021. This fund accounted for debt service payments for prior street improvement projects that were financed through the issuance of bonds. This fund paid off the 2012A GO Improvement Bonds on February 1, 2021. This fund also held bond proceeds that will be used to pay off the GO Improvement Bonds of 2013A on February 1, 2022. The Street Capital Project Fund increased by $205,918. This fund accounted for the costs and resources associated with the Ivy Falls East street project. The American Rescue Plan Act Fund decreased by $1,500. This fund will account for the spending of the American Rescue Plan Act monies. The Ridge Place Sewer project costs are identified to have a portion of those costs paid out of this fund. The nonmajor governmental funds increased by $974,726. These funds received revenues from water surcharges, Par 3 Golf Course, and park dedication fees. Nonmajor funds account for the Special Park, Civil Defense, Par 3 Golf Course, and Street Light District activity. The City also has nonmajor funds for future purchases of equipment, facility needs and minor infrastructure projects. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The unrestricted net position in the respective Proprietary Funds are sewer $1,263,192 and storm water $469,416. The Sewer Utility Fund had an increase in net position in 2021 of $335,100 and the Storm Water Utility Fund had an increase in net position in 2021 of $317,255. Page 100 City of Mendota Heights Management’s Discussion and Analysis 13 BUDGETARY HIGHLIGHTS General Fund The General Fund budget was not amended during 2021. During the year, revenues exceeded budgeted estimates by $460,579, while expenditures were less than anticipated by $395,943. The General Fund experienced greater than budgeted revenues in most categories. The City received higher than budgeted amounts for licenses and permits. Miscellaneous revenue exceeded budgeted amounts, in part due to the City’s conservative philosophy used when budgeting for revenues that are not consistent from year to year. The General Fund expenditures were lower than budgeted. All three functions saw spending that was less than budgeted amounts. The Public Safety function expenditures were less than what was budgeted, primarily due to a number of vacant employee positions. This function resulted in a majority of the under budget spending. Overall, the General Fund balance increased by $664,706, an increase of approximately 6.22%. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental and business type activities as of December 31, 2021, amounts to $55,772,854 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment, sewer main lines and storm sewers and infrastructure. Capital Assets (Net of Depreciation) 2021 2020 2021 2020 2021 2020 Land 8,790,170$ 8,790,170$ -$ -$ 8,790,170$ 8,790,170$ Construction in progress 1,436,410 11,126,332 235,513 - 1,671,923 11,126,332 Buildings and structures 8,346,408 1,014,613 - - 8,346,408 1,014,613 Machinery and equipment 2,748,817 2,272,902 292,763 321,985 3,041,580 2,594,887 Other improvements 969,135 1,011,350 - - 969,135 1,011,350 Sewer main lines and Storm sewers - - 14,532,198 14,381,591 14,532,198 14,381,591 Infrastructure 18,421,440 17,222,130 - - 18,421,440 17,222,130 Total capital assets 40,712,380$ 41,437,497$ 15,060,474$ 14,703,576$ 55,772,854$ 56,141,073$ Governmental Activities Business-Type Activities Totals Additional information on the City’s capital assets can be found in Note 5. Page 101 City of Mendota Heights Management’s Discussion and Analysis 14 CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) Long-Term Debt At the end of the current year, the City had total long-term debt outstanding of $22,530,000, a decrease of $1,335,000 from 2020. $22,530,000 for general obligation (G.O.) improvement debt which is supported in part by special assessments. Outstanding Debt G.O. Improvement Bonds, G.O. Bonds and Revenue Bonds: 2021 2020 G.O. Improvement Bonds 15,440,000$ 16,200,000$ G.O. Bonds 7,090,000 7,665,000 Total 22,530,000$ 23,865,000$ Governmental Activities The City maintains a AAA rating from Standard & Poor’s. Minnesota Statutes limit the amount of G.O. debt a Minnesota city may issue to 2% of total estimated market value. The current debt limitation for the City is $49,989,089. Of the City’s outstanding debt, $7,090,000 is counted within the statutory limitation. Additional information on the City’s long-term debt can be found in Note 6. Economic Factors and Next Year’s Budgets and Rates In 2021, the taxable market value for the City was $2,499,454,451. This represents an increase of 3.80% from 2020. The City is expecting an increase in taxable market value for 2022. These factors were considered in preparing the City’s budget for 2022. Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, 1101 Victoria Curve, Mendota Heights, Minnesota 55118. Page 102 15 BASIC FINANCIAL STATEMENTS Page 103 See notes to basic financial statements. 16 City of Mendota Heights Statement of Net Position December 31, 2021 Governmental Activities Business-Type Activities Total Assets Cash and investments (including cash equivalents)21,523,476$ 1,277,162$ 22,800,638$ Property tax receivable 87,773 - 87,773 Accounts receivable 31,800 737,138 768,938 Interest receivable 16,127 735 16,862 Due from other governments 1,796,479 3,023 1,799,502 Internal balances (220,757) 220,757 - Special assessments receivable Delinquent 3,821 4,875 8,696 Deferred 1,968,528 26,822 1,995,350 Inventories 25,632 - 25,632 Prepaid items 342,633 136,231 478,864 Land held for resale 96,100 - 96,100 Capital assets (net of accumulated depreciation) Land and improvements 8,790,170 - 8,790,170 Construction in progress 1,436,410 235,513 1,671,923 Capital assets being depreciated Infrastructure 18,421,440 14,532,198 32,953,638 Buildings and structures 8,346,408 - 8,346,408 Other improvements 969,135 - 969,135 Machinery and equipment 2,748,817 292,763 3,041,580 Total assets 66,383,992 17,467,217 83,851,209 Deferred Outflows of Resources Deferred outflows of resources related to pensions 3,296,276 65,219 3,361,495 Deferred outflows of resources related to OPEB 206,652 303 206,955 Total deferred outflows of resources 3,502,928 65,522 3,568,450 Total assets and deferred outflows of resources 69,886,920$ 17,532,739$ 87,419,659$ Liabilities Accounts and contracts payable 489,083$ 439,903$ 928,986$ Deposits payable - 74,275 74,275 Due to other governments 34,792 10,239 45,031 Salaries and benefits payable 214,629 7,208 221,837 Interest payable 235,160 - 235,160 Developers' escrow deposits 19,181 - 19,181 Unearned revenue 399,037 - 399,037 Bond principal payable Payable within one year 2,170,000 - 2,170,000 Payable after one year 21,316,384 - 21,316,384 Compensated absences payable Payable within one year 440,811 26,387 467,198 Payable after one year 253,503 14,020 267,523 Total other post employment benefits (OPEB) payable 784,380 6,224 790,604 Net pension liability 2,480,002 83,829 2,563,831 Total liabilities 28,836,962 662,085 29,499,047 Deferred Inflows of Resources Deferred inflows of resources related to pensions 4,275,476 77,230 4,352,706 Deferred inflows of resources related to OPEB 12,191 342 12,533 Total deferred inflows of resources 4,287,667 77,572 4,365,239 Net Position Net investment in capital assets 18,715,996 15,060,474 33,776,470 Restricted for Debt service 4,629,672 - 4,629,672 Street light maintenance 56,879 - 56,879 Park dedication 665,730 - 665,730 Unrestricted 12,694,014 1,732,608 14,426,622 Total net position 36,762,291 16,793,082 53,555,373 Total liabilities, deferred inflows of resources, and net position 69,886,920$ 17,532,739$ 87,419,659$ Page 104 See notes to basic financial statements. 17 Program RevenuesExpensesCharges for ServicesOperating Grants and ContributionsCapital Grants and ContributionsGovernmental ActivitiesBusiness-Type ActivitiesTotalGovernmental activitiesGeneral government 2,148,785$ 255,154$ 290,171$ -$ (1,603,460)$ -$ (1,603,460)$ Public safety 4,844,510 754,167 450,813 - (3,639,530) - (3,639,530) Public works 5,037,088 1,147,368 166,285 1,701,832 (2,021,603) - (2,021,603) Economic development 139,444 - - - (139,444) - (139,444) Interest on long-term debt 560,076 - - - (560,076) - (560,076) Total governmental activities 12,729,903 2,156,689 907,269 1,701,832 (7,964,113) - (7,964,113) Business-type activitiesSewer 2,273,926 2,400,971 - - - 127,045 127,045 Storm water 404,573 582,537 - - - 177,964 177,964 Total business-type activities 2,678,499 2,983,508 - - - 305,009 305,009 Total governmental and business-type activities 15,408,402$ 5,140,197$ 907,269$ 1,701,832$ (7,964,113) 305,009 (7,659,104) General revenuesProperty taxes 10,511,686 - 10,511,686 Tax increments151,674 - 151,674 Unrestricted investment earnings(45,576) (2,922) (48,498) Gain on sale of asset- (187) (187) Total general revenues10,617,784 (3,109) 10,614,675 Transfers(350,455) 350,455 - Change in net position2,303,216 652,355 2,955,571 Net position - beginning34,459,075 16,140,727 50,599,802 Net position - ending36,762,291$ 16,793,082$ 53,555,373$ Functions/ProgramsNet (Expense) Revenues and Changes in Net PositionCity of Mendota HeightsStatement of Activities Year Ended December 31, 2021Page 105 See notes to basic financial statements. 18 December 31, 2021 Capital Projects General Fund Special Assessments Debt Service Street Capital Projects Assets Cash and investments (including cash equivalents) 11,066,490$ 3,478,438$ 156,087$ Taxes receivable - delinquent 69,134 10,429 - Special assessments receivable Delinquent 610 3,211 - Deferred 13,370 1,809,297 135,023 Accounts receivable 8,806 - - Interest receivable 5,731 2,169 457 Due from other funds - - - Due from other governments 331,150 50,757 1,270,183 Inventories 25,632 - - Prepaid items 327,925 - - Land held for resale - - - Total assets 11,848,848$ 5,354,301$ 1,561,750$ Liabilities Accounts and contracts payable 152,482$ -$ 221,512$ Due to other funds - - - Due to other governments 34,051 - - Salaries and benefits payable 210,803 - - Developers' escrow deposits 19,181 - - Compensated absences - - - Unearned revenue - - - Total liabilities 416,517 - 221,512 Deferred Inflows of Resources Unavailable revenue - property taxes 69,134 10,429 - Unavailable revenue - grants - - 1,263,047 Unavailable revenue - special assessments 13,980 1,812,508 135,023 Total deferred inflows of resources 83,114 1,822,937 1,398,070 Fund Balances Nonspendable 353,557 - - Restricted - 3,531,364 - Committed - - - Assigned - - - Unassigned 10,995,660 - (57,832) Total fund balances 11,349,217 3,531,364 (57,832) Total liabilities, deferred inflows of resources, and fund balances 11,848,848$ 5,354,301$ 1,561,750$ City of Mendota Heights Balance Sheet - Governmental Funds Page 106 19 Special Revenue American Rescue Plan Act Other Governmental Funds Total Governmental Funds 617,917$ 5,484,318$ 20,803,250$ - 8,210 87,773 - - 3,821 - 10,838 1,968,528 - 11,426 20,232 377 7,314 16,048 - 502,095 502,095 - 144,389 1,796,479 - - 25,632 - 5,532 333,457 - 96,100 96,100 618,294$ 6,270,222$ 25,653,415$ -$ 115,089$ 489,083$ 220,757 502,095 722,852 - 653 34,704 - 627 211,430 - - 19,181 - - - 399,037 - 399,037 619,794 618,464 1,876,287 - 8,210 87,773 - 27,500 1,290,547 - 10,838 1,972,349 - 46,548 3,350,669 - 5,532 359,089 - 2,681,417 6,212,781 - 1,083,904 1,083,904 - 2,272,770 2,272,770 (1,500) (438,413) 10,497,915 (1,500) 5,605,210 20,426,459 618,294$ 6,270,222$ 25,653,415$ Page 107 20 (THIS PAGE LEFT BLANK INTENTIONALLY) Page 108 See notes to basic financial statements. 21 City of Mendota Heights Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Funds December 31, 2021 Total fund balances - governmental funds 20,426,459$ Capital assets used in governmental activities are not current financial resources and, therefore, are not reported as assets in governmental funds. Cost of capital assets 70,799,341 Less accumulated depreciation (30,688,033) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: General obligation (G.O.) bond principal payable (22,530,000) Unamortized bond premium (956,384) OPEB payable (779,829) Net pension liability (2,439,579) Deferred outflows of resources and deferred inflows of resources are created as a result of various differences related to pensions and OPEB that are not recognized in the governmental funds. Deferred inflows of resources related to pensions (4,238,235) Deferred outflows of resources related to pensions 3,264,827 Deferred outflows of resources related to OPEB 206,431 Deferred inflows of resources related to OPEB (11,941) Delinquent receivables will be collected in subsequent years, but are not available soon enough to pay for the current period's expenditures and, therefore, are deferred in the funds. Property taxes 87,773 Special assessments 3,821 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Deferred special assessments 1,968,528 Deferred grants 1,290,547 Governmental funds do not report a liability for accrued interest until due and payable.(235,160) Internal service funds are used by management to charge the cost of engineering, compensated absences and City Hall expenses to individual funds. The net position of the funds are considered governmental and included in the government-wide Statement of Net Position. 593,725 36,762,291$ Total net position - governmental activities Amounts reported for governmental activities in the Statement of Net Position are different because: Page 109 See notes to basic financial statements. 22 Capital Projects General Fund Special Assessments Debt Service Street Capital Projects Revenues Property taxes 8,243,823$ 1,307,200$ -$ Tax increments - - - Special assessments - 387,753 275,891 Licenses and permits 619,710 - - Intergovernmental 521,938 - - Charges for services 736,356 - 144,376 Fines and forfeitures 93,400 702 - Miscellaneous revenue Investment income (22,807) (8,695) (1,811) Other 258,245 - - Total revenues 10,450,665 1,686,960 418,456 Expenditures Current General government 1,757,749 - - Public safety 5,034,195 - - Public works 2,795,138 - - Economic development - - - Debt service Principal - 1,105,000 - Interest and other charges - 424,290 - Capital outlay General government - - - Public safety 25,322 - - Public works 29,289 - 1,397,046 Total expenditures 9,641,693 1,529,290 1,397,046 Excess of revenues over (under) expenditures 808,972 157,670 (978,590) Other Financing Sources (Uses) Issuance of debt - 2,420,000 - Bond premium - 211,327 - Refunded debt payment - (2,075,000) - Transfers in 72,689 - 1,206,940 Transfers out (216,955) (2,003,535) (22,432) Total other financing sources (uses) (144,266) (1,447,208) 1,184,508 Net change in fund balances 664,706 (1,289,538) 205,918 Fund Balances Beginning of year 10,684,511 4,820,902 (263,750) End of year 11,349,217$ 3,531,364$ (57,832)$ City of Mendota Heights Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended December 31, 2021 Page 110 23 Special Revenue American Rescue Plan Act Other Governmental Funds Total Governmental Funds -$ 946,391$ 10,497,414$ - 151,674 151,674 - - 663,644 - - 619,710 220,757 297,021 1,039,716 - 404,489 1,285,221 - 21 94,123 (1,500) (10,446) (45,259) - 224,267 482,512 219,257 2,013,417 14,788,755 - 88,384 1,846,133 - - 5,034,195 - 317,281 3,112,419 - 139,444 139,444 - 575,000 1,680,000 - 244,816 669,106 - 27,257 27,257 - 53,919 79,241 - 742,338 2,168,673 - 2,188,439 14,756,468 219,257 (175,022) 32,287 - - 2,420,000 - - 211,327 - - (2,075,000) - 1,632,278 2,911,907 (220,757) (482,530) (2,946,209) (220,757) 1,149,748 522,025 (1,500) 974,726 554,312 - 4,630,484 19,872,147 (1,500)$ 5,605,210$ 20,426,459$ Page 111 See notes to basic financial statements. 24 554,312$ Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital outlays 1,965,377 Depreciation expense (2,334,493) Loss on disposal of capital assets (3,341) Assets contributed to enterprise funds (316,153) Governmental funds recognized pension contributions as expenditures at the time of payment whereas the Statement of Activities factors in items related to pensions on a full accrual perspective. 518,441 OPEB are not reported as expenditures in the governmental funds because they do not require the use of current financial resources; instead, they are expensed in the Statement of Activities. 99,475 Principal payments on long-term debt are recognized as expenditures in the governmental funds but have no effect on net position in the Statement of Activities. 1,680,000 Refunding bond payments are recognized as other financing uses in the governmental funds but as an increase in net assets in the Statement of Activities. 2,075,000 Premiums on the issuance of long-term debt provide current financial resources to governmental funds and have no effect on net position. These amounts are reported in the governmental funds as an other financing source and constitute long-term liabilities in the Statement of Net Position. (211,327) Premiums are recognized when debt is issued in the governmental funds but amortized over the life of the debt in the Statement of Activities. 93,408 Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. 15,622 Proceeds from long-term debt are recognized as an other financing source in the governmental funds but have no effect on net position in the Statement of Activities. Bonds payable (2,420,000) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 595,136 Activities of the internal service funds are presented separately from the governmental funds. However, the functions, from a government-wide perspective, are governmental. (8,241) 2,303,216$ Change in net position - governmental activities Net change in fund balances - governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: City of Mendota Heights Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities - Governmental Funds Year Ended December 31, 2021 Page 112 See notes to basic financial statements. 25 Budget and Actual - General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund Year Ended December 31, 2021 Budgeted Amounts Variance with Original Actual and Final Amounts Revenues Property taxes 8,189,068$ 8,243,823$ 54,755$ Licenses and permits 329,200 619,710 290,510 Intergovernmental 493,570 521,938 28,368 Charges for services 729,948 736,356 6,408 Fines and forfeitures 103,300 93,400 (9,900) Miscellaneous revenues Investment income 30,000 (22,807) (52,807) Other 115,000 258,245 143,245 Total revenues 9,990,086 10,450,665 460,579 Expenditures Current General government 1,790,973 1,757,749 (33,224) Public safety 5,341,086 5,034,195 (306,891) Public works 2,905,577 2,795,138 (110,439) Capital outlay Public safety - 25,322 25,322 Public works - 29,289 29,289 Total expenditures 10,037,636 9,641,693 (395,943) Excess of revenues over (under) expenditures (47,550) 808,972 856,522 Other Financing Sources (Uses) Transfers in 47,550 72,689 25,139 Transfers out - (216,955) (216,955) Total other financing sources (uses)47,550 (144,266) (191,816) Net change in fund balance -$ 664,706 664,706$ Fund Balance Beginning of year 10,684,511 End of year 11,349,217$ Final Budget - Over (Under) Page 113 See notes to basic financial statements. 26 City of Mendota Heights Statement of Net Position - Proprietary Funds December 31, 2021 Sewer Utility Storm Water Utility Total Internal Service Funds Assets Current assets Cash and investments 647,070$ 630,092$ 1,277,162$ 720,226$ Special assessment receivable Delinquent 4,875 - 4,875 - Deferred 26,822 - 26,822 - Accounts receivable 590,734 146,404 737,138 11,568 Interest receivable 344 391 735 79 Due from other funds 220,757 - 220,757 - Due from other governments 3,023 - 3,023 - Prepaid expenses 136,231 - 136,231 9,176 Total current assets 1,629,856 776,887 2,406,743 741,049 Noncurrent assets Capital assets not being depreciated Land - - - 25,000 Construction in progress 235,513 - 235,513 - Capital assets being depreciated Buildings - - - 2,279,024 Sewer main lines and storm sewers 15,309,669 5,444,394 20,754,063 - Improvements other than buildings - - - 40,781 Machinery and equipment 476,246 - 476,246 66,969 Total capital assets 16,021,428 5,444,394 21,465,822 2,411,774 Less accumulated depreciation (5,754,695) (650,653) (6,405,348) (1,810,702) Net capital assets 10,266,733 4,793,741 15,060,474 601,072 Total assets 11,896,589 5,570,628 17,467,217 1,342,121 Deferred Outflows of Resources Deferred outflows of resources related to pensions 54,825 10,394 65,219 31,449 Deferred outflows of resources related to OPEB 255 48 303 221 Total deferred outflows of resources 55,080 10,442 65,522 31,670 Total assets and deferred outflows of resources 11,951,669$ 5,581,070$ 17,532,739$ 1,373,791$ Liabilities and Net Position Current liabilities Accounts and contracts payable 225,136$ 214,767$ 439,903$ -$ Developers' escrow deposits - 74,275 74,275 - Salaries and benefits payable 6,179 1,029 7,208 3,199 Due to other governments 9,099 1,140 10,239 88 Noncurrent liabilities due within one year 26,387 - 26,387 440,811 Total current liabilities 266,801 291,211 558,012 444,098 Noncurrent liabilities Compensated absences 40,407 - 40,407 694,314 OPEB payable 5,244 980 6,224 4,551 Net pension liability 70,469 13,360 83,829 40,423 Less amount due within one year (26,387) - (26,387) (440,811) Total noncurrent liabilities 89,733 14,340 104,073 298,477 Total liabilities 356,534 305,551 662,085 742,575 Deferred Inflows of Resources Deferred inflows of resources related to OPEB 288 54 342 250 Deferred inflows of resources related to pensions 64,922 12,308 77,230 37,241 Total deferred inflows of resources 65,210 12,362 77,572 37,491 Net Position Investment in capital assets 10,266,733 4,793,741 15,060,474 601,072 Unrestricted 1,263,192 469,416 1,732,608 (7,347) Total net position 11,529,925 5,263,157 16,793,082 593,725 Total liabilities, deferred inflows of resources, and net position 11,951,669$ 5,581,070$ 17,532,739$ 1,373,791$ Page 114 See notes to basic financial statements. 27 Sewer Utility Storm Water Utility Total Internal Service Funds Operating revenues Charges for services 2,386,252$ 582,537$ 2,968,789$ 216,940$ Operating expenses Wages and salaries 161,989 23,424 185,413 70,199 Employee benefits 50,211 5,759 55,970 33,340 Materials and supplies 20,368 - 20,368 - Repairs and maintenance 130,143 216,189 346,332 - Professional services 45,782 73,424 119,206 4,192 Insurance 8,416 - 8,416 5,759 Utilities 28,955 - 28,955 38,106 Depreciation 202,087 54,444 256,531 36,506 Travel 11 - 11 - Miscellaneous 158,239 31,333 189,572 36,762 Sewer charges - MCES 1,467,725 - 1,467,725 - Total operating expenses 2,273,926 404,573 2,678,499 224,864 Operating income (loss) 112,326 177,964 290,290 (7,924) Nonoperating revenues (expenses) Investment income (1,365) (1,557) (2,922) (317) Fines and forfeitures 276 - 276 - Special assessments 4,394 - 4,394 - Gain on sale of asset (187) - (187) - Other income 10,049 - 10,049 - Total nonoperating revenues 13,167 (1,557) 11,610 (317) Change in net position before capital contributions and transfers 125,493 176,407 301,900 (8,241) Capital contributions - 316,153 316,153 - Transfers in 220,757 - 220,757 - Transfers out (11,150) (175,305) (186,455) - Change in net position 335,100 317,255 652,355 (8,241) Net position Beginning of year 11,194,825 4,945,902 16,140,727 601,966 End of year 11,529,925$ 5,263,157$ 16,793,082$ 593,725$ Net change in the net position reported above 652,355$ Amounts reported for business-type activities in the Statement of Activities are different because: Transfers in of capital assets from governmental activities 316,153 Contribution revenue reported above (316,153) Change in net position of business-type activities 652,355$ Year Ended December 31, 2021 City of Mendota Heights Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds Page 115 See notes to basic financial statements. 28 Sewer Utility Storm Water Utility Total Internal Service Funds Cash Flows - Operating Activities Receipts from customers and users 2,395,249$ 581,083$ 2,976,332$ 216,940$ Payments to suppliers (1,633,183) (114,427) (1,747,610) (102,308) Payments to employees (218,848) (30,949) (249,797) (60,420) Miscellaneous revenue 4,356 - 4,356 - Net cash flows - operating activities 547,574 435,707 983,281 54,212 Cash Flows - Noncapital Financing Activities Transfer from other funds 220,757 - 220,757 - Transfer to other funds (11,150) (175,305) (186,455) - Due from other funds (220,757) - (220,757) - Net cash flows - noncapital financing activities (11,150) (175,305) (186,455) - Cash Flows - Capital and Related Financing Activities Acquisition of capital assets (297,461) - (297,461) - Cash Flows - Investing Activities Interest and dividends received (1,232) (1,318) (2,550) (257) Net change in cash and cash equivalents 237,731 259,084 496,815 53,955 Cash and Cash Equivalents Beginning of year 409,339 371,008 780,347 666,271 End of year 647,070$ 630,092$ 1,277,162$ 720,226$ Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities Operating income (loss) 112,326$ 177,964$ 290,290$ (7,924)$ Adjustments to reconcile operating income (loss) to net cash flows - operating activities Operating activities Miscellaneous revenue 4,356 - 4,356 - Depreciation expense 202,087 54,444 256,531 36,506 Accounts receivable 7,547 (1,454) 6,093 - Due from other governments 1,450 - 1,450 - Prepaid items 259 - 259 (339) Developers' excrow deposits - 29,125 29,125 - Accounts and contracts payable 220,322 176,254 396,576 (17,142) Due to other governmental units 5,875 1,140 7,015 (8) Salaries payable 2,107 128 2,235 283 OPEB payable 185 55 240 222 Pension related items (11,798) (1,949) (13,747) (5,504) Compensated absences payable 2,858 - 2,858 48,118 Total adjustments 435,248 257,743 692,991 62,136 Net cash flows - operating activities 547,574$ 435,707$ 983,281$ 54,212$ Noncash Investing, Capital, and Financing Activities Contributions of capital assets -$ 316,153$ 316,153$ -$ City of Mendota Heights Statement of Cash Flows - Proprietary Funds Year Ended December 31, 2021 Page 116 29 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Mendota Heights is a statutory city governed by an elected mayor and four council members. The accompanying financial statements present the government entities for which the government is considered to be financially accountable. The financial statements present the City and its component units. The City includes all funds, organizations, institutions, agencies, departments, and offices that are not legally separate from such. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's governing body and it is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on, the City. As a result of applying the component unit definition criteria above, the City has no component units. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Interest on general long-term debt is considered an indirect expense and is reported separately in the Statement of Activities. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Internally dedicated revenues are reported as general revenues rather than program revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The Internal Service Funds are presented in the internal service fund financial statements. Because the principal user of internal services is the City's governmental activities, the financial statements of the Internal Service Fund is consolidated into the governmental column when presented in the government- wide financial statements. The cost of these services is reported in the appropriate functional activity. Page 117 30 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment matures. Property taxes, franchise taxes, licenses, and interest associated with the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current period. Only the portion of special assessments receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. Description of Funds: Major Governmental Funds: General Fund – This fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Assessments Debt Service Fund – This fund receives all special assessment payments and is dedicated for the repayment of debt incurred on a specific project. Street Capital Projects Fund – This fund is used to account for the proceeds and disbursements of funds for street improvement expenditures. American Rescue Plan Act Fund – This fund is used to account for the proceeds and disbursements associated with the American Rescue Plan Act. Proprietary Funds: Sewer Utility Fund – This fund is used to account for the City's sewer utility. Storm Water Utility Fund – This fund is used to account for the City's storm water utility. Page 118 31 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Description of Funds: (Continued) Additional Fund Types: Internal Service Funds – These funds account for the financing of goods or services provided by one department to other departments of the City on a cost-reimbursement basis. The City's Internal Service Funds account for compensated absences and City Hall expenses. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City's utility functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's Enterprise Funds and Internal Service Funds are charges to customers for sales and services. Operating expenses for the Enterprise Funds and Internal Service Funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, the City uses restricted resources first, then unrestricted resources as they are needed. Further, the City applies unrestricted funds in this order if various levels of unrestricted fund balances exist: committed, assigned, and unassigned. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity 1. Deposits and Investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Investments for the City are reported at fair value. Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies, and instrumentalities, shares of investment companies whose only investments are in the aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days and in the Minnesota Municipal Investment Pool. Minnesota Statutes requires all deposits made by cities with financial institutions to be collateralized in an amount equal to 110% of deposits in excess of Federal Deposit Insurance Corporation (FDIC) insurance. Page 119 32 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 1. Deposits and Investments (Continued) Certain investments for the City are reported at fair value as disclosed in Note 3. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The Hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. 2. Receivables and Payables All trade and property tax receivables are shown at a gross amount since both are assessable to the property taxes and are collectible upon the sale of the property. The City levies its property tax for the subsequent year during the month of December. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. The property tax is recorded as revenue when it becomes measurable and available. Dakota County is the collecting agency for the levy and remits the collections to the City three times a year. The tax levy notice is mailed in March with the first half of the payment due on May 15 and the second half due on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. The County Auditor prepares the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor submits the list of taxes and special assessments to be collected on each parcel of property to the County Treasurer in January of each year. 3. Inventories Inventories are valued at cost, which approximates market, using the first in, first out (FIFO) method. Inventory consists of expendable supplies held for consumption. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Inventory – land held for resale represents land owned by the City with the intent to sell to developers. This land is recorded at the lesser of historical cost or expected net realizable value. 4. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are recorded as an expenditure at the time of consumption. Page 120 33 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 5. Capital Assets Capital assets, which include property, plant, equipment, intangible, and infrastructure assets (e.g., roads, sidewalks, easements, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000, and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Property, plant, and equipment of the City are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 15-100 Other improvements 10-40 Machinery and equipment 3-25 Infrastructure 30-100 6. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City presents deferred outflows of resources on the Statements of Net Position for deferred outflows of resources related to pensions and OPEB for various estimate differences that will be amortized and recognized over future years. In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for reporting in this category. The governmental funds report unavailable revenues from three sources: property taxes, special assessments, and grants. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City presents deferred inflows of resources on the Statements of Net Position for deferred inflows of resources related to pensions and OPEB for various estimate differences that will be amortized and recognized over future years. Page 121 34 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 7. Compensated Absences\Severance The City allows employees to accrue vacation based on years of service to carry over to the next year. Accrued vacation shall be used in the year following the year which said time is earned and any time accrued will be paid out at termination. At the end of the year the vacation balance cannot exceed 200 hours. All permanent full-time employees accrue personal leave at the rate of 4 hours per month, to a maximum of 320 hours. Any balances in excess of 320 hours will be converted to cash compensation or additional vacation time at a ratio of 50%. All compensated absences pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured as a result of employee termination or similar circumstances. These liabilities are paid by the governmental fund the employee provided most of its service to. The unused vacation and sick leave of the proprietary funds is included in accrued liabilities of the respective fund. 8. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and the relief association and additions to/deductions from PERA's and the relief association's fiduciary net position have been determined on the same basis as they are reported by PERA and the relief association except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Page 122 35 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity (Continued) 10. Fund Equity a. Classification In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in those funds can be spent.  Nonspendable Fund Balance – These are amounts that cannot be spent because they are not in spendable form or they are legally or contractually required to be maintained intact.  Restricted Fund Balance – These are amounts that are restricted to specific purposes either by a) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulations of other governments or b) imposed by law through constitutional provisions or enabling legislation.  Committed Fund Balance – These are amounts that can only be used for specific purposes pursuant to constraints imposed by the City Council (highest level of decision making authority) through resolution.  Assigned Fund Balance – These are amounts that are constrained by the City's intent to be used for specific purposes but are neither restricted nor committed. Assignments are made by the City's Administrator or Finance Director based on the City Council's direction.  Unassigned Fund Balance – These are residual amounts in the General Fund not reported in any other classification. The General Fund is the only fund that can report a positive unassigned fund balance. Other funds would report a negative unassigned fund balance should the total of nonspendable, restricted and committed fund balances exceed the total net resources of that fund. b. Minimum Fund Balance The City will strive to maintain a General Fund unassigned fund balance of 75% of the following year's budgeted operating expenditures. 11. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenditures/expense during the reporting period. Actual results could differ from those estimates. Page 123 36 City of Mendota Heights Notes to Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Budgetary Information The City Council adopts an annual budget for the General Fund and certain special revenue and capital project funds. The American Rescue Plan Act special revenue fund is not budgeted for. The amounts shown in the financial statements as "budget" represent the original budgeted amount and all revisions made during the year. The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator prepares and presents to the City Council a proposed operating budget for the year commencing the following January 1. The operating budget included proposed expenditures and means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The City Council deliberates on and adopts the budget on a basis consistent with accounting principles generally accepted in the United States of America and legally enacts the budget by passage of a resolution. 4. Formal budgetary integration is employed as a management control device during the year. 5. The City Council must approve any budget appropriation transfers between departments and any increases in budget appropriations to the extent actual revenues exceed estimated revenues. 6. Reported budget amounts are as originally adopted or as amended by City Council approved supplemental appropriations and budget transfers. Annual appropriations lapse at year-end. No revisions were made to the budgets during the year. NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Deficit Fund Balances The following funds had deficit fund balances at December 31, 2021: Street Capital Projects 57,832$ American Rescue Plan Act 1,500 Other Nonmajor Capital Projects Fund Special Assessment Capital Project 344,403 Fire Hall Remodel 94,010 NOTE 3 – DEPOSITS AND INVESTMENTS Cash balances of the City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed on the financial statements as "cash and cash equivalents" or "investments." For purposes of identifying risk of investing public funds, the balances and related restrictions are summarized below. A. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council. Page 124 37 City of Mendota Heights Notes to Basic Financial Statements NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) A. Deposits (Continued) In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council. Custodial Credit Risks – Deposits: For deposits, this is the risk that in the event of bank failure, the City's deposits may not be returned to it. The City addresses custodial credit risk by having the authority from the City Council to maintain deposits with various financial institutions that are members of the Federal Reserve System. The City's policy states all deposits must be collateralized in compliance with Minnesota Statutes 118A. As of December 31, 2021, the City's bank balance was not exposed to custodial credit risk because it was insured through the Federal Deposit Insurance Corporation (FDIC) and fully collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. As of December 31, 2021, the City had deposits as follows: Checking 198,941$ Certificates of deposit 14,287 Total deposits 213,228$ B. Investments As of December 31, 2021, the City had the following investments: Fair Credit Value Less Than 1 - 5 Investment Type Ratings 12/31/21 1 Year Years Negotiable CD's NR 4,252,781$ 1,513,050$ 2,739,731$ US Government Securities AAA 2,576,227 - 2,576,227 Money Market Funds NR 15,757,502 15,757,502 - Total 22,586,510$ 17,270,552$ 5,315,958$ Investment Maturities Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments in commercial paper and corporate bonds to be in the top two ratings issued by nationally recognized statistical rating organizations. The City's investment policy addresses credit quality by allowing the City to invest only in instruments permitted by Minnesota Statutes 118A.04-05. Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. The City's policy states the City will attempt to diversify its investments according to type and maturity. The policy states the portfolio will contain both short-term and long-term investments and will attempt to match its investments with anticipated cash flow requirements. Page 125 38 City of Mendota Heights Notes to Basic Financial Statements NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) Custodial Credit Risk – Investments: For an investment, this is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's investment policy states that to ensure safety when considering an investment it is verified to make certain funds in excess of insurance are not made at the same institution. The City's brokers carry SIPC and private insurance to cover the City's investment holdings; however, given the size of the City's portfolio in relation to the insurance, it is unlikely the City would receive the full value of their investments upon default of the counterparty. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy states the City will hold investments with laddered maturities so that funds become available on a regular schedule. The City has the following recurring fair value measurements as of December 31, 2021:  $1,897,421of investments are valued using calculated Net Asset Value (Level 1 inputs)  $20,689,089 of investments are valued using a matrix pricing model (Level 2 inputs) C. Deposits and Investments The following is a summary of total deposits and investments: Deposits (Note 3. A.)213,228$ Investments (Note 3.B.)22,586,510 Petty cash 900 Total cash and investments 22,800,638$ Deposits and investments are presented in the December 31, 2021, basic financial statements as follows: Statement of Net Position Cash and investments 22,800,638$ Page 126 39 City of Mendota Heights Notes to Basic Financial Statements NOTE 4 – INTERFUND ACTIVITIES A. Interfund Receivables and Payable The following is a summary of the City's due to/due from other funds at December 31, 2021: Fund Due to Due from Reason Special assessment capital project 320,500$ -$ Cash deficit Sewer utility 220,757 - Project costs Fire hall remodel 181,595 Cash deficit Pre-1998 Non-Increment - 181,595 Cash deficit American Rescue Plan - 220,757 Project costs Water tower capital project - 320,500 Cash deficit Total 722,852$ 722,852$ The balances above will be repaid as financing becomes available. B. Interfund Transfers The composition of interfund transfers as of December 31, 2021, was as follows: Transfers In Street Other Capital Governmental Sewer General Projects Funds Utility Total Transfers out General -$ -$ 216,955$ -$ 216,955$ Special assessments debt service 22,250 1,041,285 940,000 - 2,003,535 Street capital projects - - 22,432 22,432 American rescue plan - - - 220,757 220,757 Other governmental funds 29,639 - 452,891 - 482,530 Sewer utility 11,150 - - - 11,150 Storm Water Utility 9,650 165,655 - - 175,305 Total 72,689$ 1,206,940$ 1,632,278$ 220,757$ 3,132,664$ The purpose of the above transfers is to distribute bond proceeds and to provide funding for capital improvement projects, capital outlay, and operating purposes. Page 127 40 City of Mendota Heights Notes to Basic Financial Statements NOTE 5 – CAPITAL ASSETS Capital asset activity for the year ended December 31, 2021, was as follows: Balance Increases Decreases Balance Governmental activities Capital assets not being depreciated Land and improvements 8,790,170$ -$ -$ 8,790,170$ Construction in progress 11,126,332 1,311,557 11,001,479 1,436,410 Total capital assets not being depreciated 19,916,502 1,311,557 11,001,479 10,226,580 Capital assets being depreciated Buildings and structures 4,865,683 7,666,345 - 12,532,028 Machinery and equipment 6,265,431 830,954 216,173 6,880,212 Other improvements 2,886,721 40,034 6,900 2,919,855 Infrastructure 37,850,627 2,801,813 - 40,652,440 Total capital assets being depreciated 51,868,462 11,339,146 223,073 62,984,535 Less accumulated depreciation for Buildings and structures 3,851,070 334,550 - 4,185,620 Machinery and equipment 3,992,529 351,698 212,832 4,131,395 Other improvements 1,875,371 82,249 6,900 1,950,720 Infrastructure 20,628,497 1,602,502 - 22,230,999 Total accumulated depreciation 30,347,467 2,370,999 219,732 32,498,734 Total capital assets being depreciated, net 21,520,995 8,968,147 3,341 30,485,801 Governmental activities capital assets, net 41,437,497$ 10,279,704$ 11,004,820$ 40,712,381$ Page 128 41 City of Mendota Heights Notes to Basic Financial Statements NOTE 5 – CAPITAL ASSETS (CONTINUED) Beginning Ending Balance Increases Decreases Balance Business-type activities Capital assets not being depreciated Construction in progress -$ 235,513$ -$ 235,513$ Capital assets being depreciated Machinery and equipment 477,497 - 1,251 476,246 Sewer main lines and storm sewers 20,375,962 378,101 - 20,754,063 Total capital assets being depreciated 20,853,459 378,101 1,251 21,230,309 Less accumulated depreciation for Machinery and equipment 155,512 29,035 1,064 183,483 Sewer main lines and storm sewers 5,994,369 227,496 - 6,221,865 Total accumulated depreciation 6,149,881 256,531 1,064 6,405,348 Total capital assets being depreciated, net 14,703,578 121,570 187 14,824,961 Business-type activities capital assets, net 14,703,578$ 357,083$ 187$ 15,060,474$ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities General government 152,585$ Public safety 359,376 Public works 1,822,532 Internal service funds 36,506 Total depreciation expense - governmental activities 2,370,999$ Business-type activities Sewer utility 202,087$ Storm water utility 54,444 Total depreciation expense - business-type activities 256,531$ Page 129 42 City of Mendota Heights Notes to Basic Financial Statements NOTE 6 – LONG-TERM DEBT A. G.O. Bonds The City issues G.O. bonds to provide for financing street improvements, major capital equipment purchases and utility improvements. Debt service is funded through property taxes, special assessments, and utility charges. G.O. bonds are direct obligations and pledge the full faith and credit of the City. B. Components of Long-Term Liabilities Interest Original Final Principal Due Within Rates Issue Maturity Outstanding One Year Long-term liabilities Government activities G.O. Improvement Bonds, including Refunding Bonds G.O. Improvement Bonds of 2013 2.00%-4.00% 1,685,000$ 02/01/34 945,000$ 945,000$ G.O. Improvement Bonds, Series 2014A 0.85%-3.40% 1,030,000 02/01/35 635,000 75,000 G.O. Refunding Bond, Series 2014B 1.50%-3.00% 885,000 02/01/27 420,000 70,000 G.O Improvement Bonds 2015A .90%-3.00% 1,200,000 02/01/36 890,000 75,000 G.O. Refunding Bond, Series 2015C 2.00%-2.50% 1,995,000 02/01/28 1,155,000 160,000 G.O. Reconstruction Bonds, Series 2016A 1.00%-2.50% 1,020,000 02/01/37 790,000 80,000 G.O. Improvement Bonds of 2017A 2.00%-2.50% 1,340,000 02/01/30 1,165,000 125,000 G.O. Improvement Bonds of 2018A 3.00%-4.00% 1,080,000 02/01/30 985,000 105,000 G.O. Improvement Bonds of 2019A 2.00%-3.00% 3,035,000 02/01/31 2,740,000 375,000 G.O. Improvement Bonds of 2020A 1.20%-2.00% 3,295,000 02/01/32 3,295,000 160,000 G.O. Improvement Bonds of 2021A 2.00%-3.00% 2,420,000 02/01/34 2,420,000 - Total improvement bonds 15,440,000 2,170,000 G.O. Bonds, including refunding bonds G.O. Refunding Bonds 2015B 2.00%-3.00% 1,475,000 02/01/23 450,000 220,000 G.O. Capital Improvement Plan Bonds 3.00%-4.00% 7,000,000 02/01/35 6,640,000 375,000 Total G.O. Bonds 7,090,000 595,000 Net Premium on Bonds 956,384 - Compensated absences payable 694,314 440,811 Total governmental activities 24,180,698 3,205,811 Business-type activities Compensated absences payable 40,407 26,387 Total all long-term liabilities 24,221,105$ 3,232,198$ Long-term bonded indebtedness listed above were issued to finance acquisition and construction of capital facilities or to refinance (refund) previous bond issues. Debt Service Funds will be used to pay general government principal and interest liabilities. The General Fund and Sewer Utility Fund will pay for the corresponding compensated absence liability. Page 130 43 City of Mendota Heights Notes to Basic Financial Statements NOTE 6 – LONG-TERM DEBT (CONTINUED) C. Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2021, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Bonds payable G.O. Improvements Bonds 16,200,000$ 2,420,000$ 3,180,000$ 15,440,000$ 2,170,000$ G.O. Bonds 7,665,000 - 575,000 7,090,000 595,000 Unamortized premium 838,465 211,327 93,408 956,384 - Compensated absences payable 646,196 503,222 455,104 694,314 440,811 Total governmental activities 25,349,661 3,134,549 4,303,512 24,180,698 3,205,811 Business-type activities Compensated absences payable 37,549 26,119 23,261 40,407 26,387 Total government 25,387,210$ 3,160,668$ 4,326,773$ 24,221,105$ 3,232,198$ D. Long-Term Debt The annual requirements to amortize all bonded debt outstanding follows: Year Ending December 31, Principal Interest Total Principal Interest Total 2022 2,170,000$ 331,062$ 2,501,062$ 595,000$ 222,150$ 817,150$ 2023 1,475,000 304,211 1,779,211 620,000 200,100 820,100 2024 1,625,000 266,385 1,891,385 405,000 180,750 585,750 2025 1,650,000 224,913 1,874,913 420,000 164,250 584,250 2026 1,495,000 184,343 1,679,343 435,000 147,150 582,150 2027-2031 6,075,000 415,924 6,490,924 2,410,000 515,550 2,925,550 2032-2036 925,000 45,477 970,477 2,205,000 134,775 2,339,775 2037 25,000 312 25,312 - - - Total 15,440,000$ 1,772,627$ 17,212,627$ 7,090,000$ 1,564,725$ 8,654,725$ Governmental Activities G.O. BondsImprovement Bonds In November 2020, the City issued $3,295,000 of General Obligation Refunding Bonds Series 2020A. A portion of the proceeds of this issue were used to redeem the 2022 through 2032 maturities of the City's 2012A G.O Bonds on February 1. 2021. These refunding transactions will reduce the City's total future debt service payments by $350,743 and result in present value savings of $325,581. In November 2021, the City issued $2,420,000 of General Obligation Refunding Bonds Series 2020A. A portion of the proceeds of this issue will be used to redeem the 2023 through 2034 maturities of the City's 2013A G.O Bonds on February 1. 2022. These refunding transactions will reduce the City's total future debt service payments by $110,198 and result in present value savings of $345,614. Page 131 44 City of Mendota Heights Notes to Basic Financial Statements NOTE 7 – OPERATING LEASE The City leases 10 squad cars under a noncancelable operating lease. The following is a schedule by years of future minimum payments required under the leases as of December 31, 2021: Year Ending December 31, 2022 49,219$ 2023 40,866 Total 90,085$ NOTE 8 – CONDUIT DEBT From time-to-time, the City has issued Industrial Development and Housing Mortgage Revenue Bonds in accordance with the Minnesota Municipal Industrial Development Act. These obligations are issued to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The obligations are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the obligations, ownership of the acquired facilities transfers to the private-sector entity served by the debt issuance. Neither the City, the State of Minnesota, nor any political subdivision thereof, is obligated in any manner for the repayment of the obligations. Accordingly, the Bonds are not reported as liabilities in the accompanying financial statements. The aggregate amount of all conduit debt obligations outstanding as of December 31, 2021, was $15,508,559. Page 132 45 City of Mendota Heights Notes to Basic Financial Statements NOTE 9 – FUND BALANCE DETAIL Fund equity balances are classified below to reflect the limitations and restrictions of the respective Funds. Special Street Ameican Other General Assessment Capital Rescue Plan Governmental Fund Debt Service Projects Act Funds Total Nonspendable Inventories 25,632$ -$ -$ -$ -$ 25,632$ Prepaid items 327,925 - - - 5,532 333,457 Restricted Park dedication fees - - - - 665,730 665,730 Street light maintenance - - - - 55,959 55,959 Debt service - 3,531,364 - - 1,955,699 5,487,063 Tax increment financing - - - - 4,029 4,029 Committed Water system maintenance - - - - 816,055 816,055 Par 3 golf course - - - - 107,323 107,323 Emergency preparedness and civil defense - - - - 160,526 160,526 Assigned Capital projects - - - - 2,272,770 2,272,770 Unassigned 10,995,660 - (57,832) (1,500) (438,413) 10,497,915 Total 11,349,217$ 3,531,364$ (57,832)$ (1,500)$ 5,605,210$ 20,426,459$ NOTE 10 – RISK MANAGEMENT The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT) with other cities in the state which is a public entity risk pool currently operating as a common risk management and insurance program. The City pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance or settlements in excess of insurance coverage for any of the past three years. Workers compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to LMCIT. For workers compensation, the City is not subject to a deductible. The City's workers compensation coverage is not retrospectively rated. However, the actual premium is adjusted based on audited payroll amounts. NOTE 11 – PENSION PLANS The City participates in various pension plans. Total pension expense for the year ended December 31, 2021, was $18,280. The components of pension expense are noted in the following plan summaries. Page 133 46 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) The General Fund and Sewer and Stormwater Funds typically liquidate the liability related to the pensions. Public Employees' Retirement Association A. Plan Description The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by PERA. PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 ad 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. Public Employees Police and Fire Plan The Police and Fire Plan, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire Plan also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. General Employees Plan Benefits General Employees Plan benefits are based on a member's highest average salary for any 5 successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for a Coordinated members is 1.2% for each of the first 10 years of service and 1.7% for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7% for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Page 134 47 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) General Employees Plan Benefits (Continued) Benefit increases are provided to benefit recipients each January. Beginning in 2019, the postretirement increase is equal to 50% of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. Police and Fire Plan Benefits Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after 10 years of credited service. Benefits for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis from 50% after 10 years up to 100% after 20 years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For Police and Fire Plan members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The postretirement increase is fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6.5% of their annual covered salary in calendar year 2021 and the City was required to contribute 7.5% for Coordinated Plan members. The City's contributions to the General Employees Fund for the year ended December 31, 2021, were $178,657. The City's contributions were equal to the required contributions as set by state statute. Page 135 48 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) C. Contributions (Continued) Police and Fire Fund Contributions Police and Fire Plan members were required to contribute 11.8% of their annual covered salary in fiscal year 2021 and the City was required to contribute 17.7% for Police and Fire Plan members. The City's contributions to the Police and Fire Fund for the year ended December 31, 2021, were $349,826. The City's contributions were equal to the required contributions as set by state statute. D. Pension Costs General Employees Fund Pension Costs At December 31, 2021, the City reported a liability of $1,362,273 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million. The State of Minnesota is considered a non- employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $41,634. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2020, through June 30, 2021, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.0319% at the end of the measurement period and 0.0296% for the beginning of the period. City's proportionate share of the net pension liability 1,362,273$ State of Minnesota's proportionate share of the net pension liability associated with the City 41,634 Total 1,403,907$ For the year ended December 31, 2021, the City recognized pension expense of $62,303 for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $3,359 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. Page 136 49 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) General Employees Fund Pension Costs (Continued) At December 31, 2021, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the following sources: Differences between expected and actual economic experience 7,635$ 41,342$ Changes in actuarial assumptions 831,777 27,811 Net collective difference between projected and actual investment earnings - 1,185,878 Changes in proportion 131,113 - Contributions paid to PERA subsequent to the measurement date 89,328 - Total 1,059,853$ 1,255,031$ Deferred Outflows of Resources Deferred Inflows of Resources The $89,328 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2022. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Pension Expense Amount (1,511)$ 18,262 20,532 (321,789) Total (284,506)$ 2023 Year Ending December 31, 2022 2024 2025 Page 137 50 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs At December 31, 2021, the City reported a liability of $1,201,558 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2020, through June 30, 2021, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.1575% at the end of the measurement period and 0.1686% for the beginning of the period. The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2021. The contribution consisted of $9 million in direct state aid that does meet the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state aid was paid on October 1, 2020. Thereafter, by October 1 of each year, the State will pay $9 million to the Police and Fire Fund until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental state aid will continue until the fund is 90% funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90% funded, whichever occurs later. Strong asset returns for the fiscal year ended 2021 will accelerate the phasing out of these state contributions, although it is not anticipated that they will be phased out during the fiscal year ended 2022. The State of Minnesota is included as a non-employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota's pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2021, the City recognized pension expense of ($44,023) for its proportionate share of the Police and Fire Plan's pension expense. Included in this amount, the City recognized $9,955 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $9 million to the Police and Fire Fund. The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City also recognized $14,175 for the year ended December 31, 2021, as revenue and an offsetting reduction of the net pension liability for its proportionate share of the State of Minnesota's on-behalf contributions to the Police and Fire Fund. At December 31, 2021, the City reported its proportionate share of the Police and Fire Plan's deferred outflows of resources and deferred inflows of resources related to pensions from the sources on the following page. Page 138 51 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs (Continued) Differences between expected and actual economic experience 235,426$ -$ Changes in actuarial assumptions 1,786,810 641,040 Net collective difference between projected and actual investment earnings - 2,301,267 Changes in proportion 104,493 155,368 Contributions paid to PERA subsequent to the measurement date 174,913 - Total 2,301,642$ 3,097,675$ Deferred Outflows of Resources Deferred Inflows of Resources The $174,913 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2022. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Pension Year Ending Expense December 31,Amount 2022 (804,237)$ 2023 (135,052) 2024 (141,543) 2025 (256,890) 2026 366,776 Total (970,946)$ Page 139 52 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) E. Long-Term Expected Return on Investment The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Domestic equity 33.5 %5.10 % International equity 16.5 5.30 Fixed income 25.0 0.75 Private markets 25.0 5.90 Total 100.0 % Target Allocation Long-Term Asset Class F. Actuarial Assumptions The total pension liability in the June 30, 2021, actuarial valuation was determined using an individual entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 6.5%. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 6.5% was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25% for the General Employees Plan and 2.25% for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25% for the General Employees. The Police and Fire Plan benefit increase is fixed at 1% per year and that increase was used in the valuation. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25% after one year of service to 3.0% after 29 years of service and 6.0% per year thereafter. In the Police and Fire Plan, salary growth assumptions range from 11.75% after one year of service to 3.0% after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA's experience. Page 140 53 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Assumptions (Continued) Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2019. The assumption changes were adopted by the Board and became effective with the July 1, 2020, actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was completed in 2020 and was adopted by the Board and became effective with the July 1, 2021, actuarial valuation. The following changes in actuarial assumptions and plan provisions occurred in 2021: General Employees Fund Changes in Actuarial Assumptions  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The mortality improvement scale was changed from scale MP-2019 to scale MP-2020. Changes in Plan Provisions  There have been no changes since the previous valuation. Police and Fire Fund Changes in Actuarial Assumptions  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The inflation assumption was changed from 2.5% to 2.25%.  The payroll growth assumption was changed from 3.25% to 3.0%.  The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety mortality table. The mortality improvement scale was changed from MP-2019 to MP-2020.  The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to scale MP-2019) to the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to scale MP-2020).  Assumed rates of salary increase were modified as recommended in the July 14, 2020, experience study. The overall impact is a decrease in gross salary increase rates.  Assumed rates of retirement were changed as recommended in the July 14, 2020, experience study. The changes resulted in slightly more unreduced retirements and fewer assumed early retirements.  Assumed rates of withdrawal were changed from select and ultimate rates to service-based rates. The changes resulted in more assumed terminations.  Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates resulted in more projected disabilities. Page 141 54 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Assumptions (Continued) Police and Fire Fund (Continued) Changes in Actuarial Assumptions (Continued)  Assumed percent married for active female members was changed from 60% to 70%. Minor changes to form of payment assumptions were applied. Changes in Plan Provisions  There have been no changes since the previous valuation. G. Discount Rate The discount rate used to measure the total pension liability in 2021 was 6.5%. The projection of cash flows used to determine the discount rate assumed that contributions from Plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net positions of the General Employees Fund and the Police and Fire Fund were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. H. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: 1% Decrease in Current 1% Increase in City's proportionate share of the General Employees Fund net pension liability 2,778,341$ 1,362,273$ 200,302$ 1% Decrease in Current 1% Increase in City's proportionate share of the Police and Fire Fund net pension liability 3,845,572$ 1,201,558$ (965,878)$ Discount Rate (6.5%) Discount Rate (7.5%) Discount Rate (8.5%) Discount Rate (6.5%) Discount Rate (7.5%) Discount Rate (8.5%) Page 142 55 City of Mendota Heights Notes to Basic Financial Statements NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) I. Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. Defined Contribution Pension Plan – Volunteer Fire Fighter's Relief Association The Mendota Heights Firefighter's Relief Association is the administrator of a single employer defined benefit pension plan established to provide benefits for members of the Mendota Heights Fire Department per Minnesota State Statutes. The Association issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Mendota Heights Firefighter's Association, 2121 Dodd Road Mendota Heights, Minnesota 55120 or by calling 651-249- 7640. The City contributes to the Mendota Heights Volunteer Fire Department Relief Association (the "Association") that provides pension benefits to its members under a single employer defined contribution plan. Since fire department members are volunteers, contributions to the Association are not based on payroll but rather on years of active service. All active firefighters may apply for membership in the Association and shall become a member immediately upon approval by the Board of Trustees. Under an Annual Contribution Agreement, the City's contribution to the Association is determined by multiplying $5,000 by the number of years of active service completed by members of the Association for the plan year, prorated by months for members who did not complete a full year of active service. The City also contributes a portion of the Association's administrative fees each year. For 2021, the total contribution was $168,750. Required and actual employer contributions to the plan during 2020 were $168,750. In addition, the City passes through state aid allocated to the plan in accordance with state statutes. For 2021, the state aid was $117,133. Members of the Association are not allowed to make voluntary contributions to the plan. Members are not vested in their accounts until they attain 10 years of active service, at which time they become 60% vested. Thereafter, the vested portion of their accounts increases by 4% annually until they achieve 100% vesting after having served for 20 years. Plan provisions were established and may only be amended by amendments to the Association bylaws which require a majority vote by the Board of Trustees. Page 143 56 City of Mendota Heights Notes to Basic Financial Statements NOTE 12 – POST EMPLOYMENT HEALTH CARE PLAN A. Plan Description The City provides a single-employer defined benefit healthcare plan to eligible retirees (as required by Minnesota Statue 471.61) and police or firefighters disabled in the line of duty (as required by Minnesota Statute 299A.465). The required contributions are based on projected pay-as-you-go financing requirements. As of December 31, 2020, there were 13 retirees participating in the City's healthcare plan. B. Benefits Provided Retirees and their spouses contribute to the healthcare plan at the same rate as City employees. This results in the retirees receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the contract terms with Blue Cross Blue Shield and Delta Dental. C. Contributions The City makes direct subsidy payments towards retiree health insurance premiums. For the year 2021, the City contributed $132,841. D. Members As of December 31, 2020, the following were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 13 Active employees 40 Total 53 E. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2020, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Page 144 57 City of Mendota Heights Notes to Basic Financial Statements NOTE 12 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) E. Actuarial Assumptions (Continued) Investment rate of return 2.00%, net of investment expense Inflation 2.50% Healthcare cost trend increases Mortality assumption Pub-2010 Public Retirement Plans Headcount-Weighted Mortality Tables (General, Safety) with MP-2019 Generational Improvement Scale Key Methods and Assumptions Used in Valuation of Total OPEB Liability 6.25% initially, grading to 5% over five years and then to 4.00% over the next 48 years The actuarial assumptions used in the January 1, 2020, valuation were based on the results of an actuarial experience study for the period January 1, 2019 – January 1, 2020. The discount rate used to measure the total OPEB liability was 2.00% based on 20 year municipal G.O. Bonds. Page 145 58 City of Mendota Heights Notes to Basic Financial Statements NOTE 12 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) F. Total OPEB Liability The City's total OPEB liability of $790,604 was measured as of January 1, 2021, and was determined by an actuarial valuation as of that date. Total OPEB Liability Balance at January 1, 2020 842,740$ Changes for the year Service cost 20,191 Interest 23,267 Changes of assumptions 26,487 Benefit payments (122,081) Net changes (52,136) Balance at January 1, 2021 790,604$ Changes of assumptions and other inputs reflect a change in the discount rate from 2.90% in 2020 to 2.00% in 2021. G. OPEB Liability Sensitivity The following presents the City's total OPEB liability calculated using the discount rate of 2.00% as well as the liability measured using 1% lower and 1% higher than the current discount rate. 1% decrease Current 1% increase (1.00%)(2.00%)(3.00%) 824,991$ 790,604$ 758,268$ Total OPEB Liability/(Asset) The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower and 1% higher than the current healthcare cost trend rates. Page 146 59 City of Mendota Heights Notes to Basic Financial Statements NOTE 12 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) G. OPEB Liability Sensitivity (Continued) 1% decrease Current 1% increase 747,210$ 790,604$ 839,123$ Total OPEB Liability/(Asset) (5.25% decreasing to 3.0%) (6.25% decreasing to 4.0%) (7.25% decreasing to 5.0%) H. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2021, the City recognized OPEB expense of $50,906. At December 31, 2021, the Distract reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Liability losses 17,136$ -$ Assumption changes 45,897 12,532 Subsequent contributions 143,921 - Total 206,954$ 12,532$ Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Expense Amount 7,448$ 7,448 7,448 7,448 7,451 13,258 50,501$ Thereafter Total Year Ending December 31, 2022 2023 2024 2025 2026 Page 147 60 City of Mendota Heights Notes to Basic Financial Statements NOTE 13 – JOINT VENTURES A. Dakota Communications Center The City is a member of the Dakota Communication Center (DCC). The DCC was created by a joint powers agreement between Dakota County and several cities. Its purposes include the establishment, operation, and maintenance of joint law enforcement, fire, EMS and other emergency communications systems. Members are obligated to pay their proportional share of operating and capital expenditures on an annual basis. The City paid $261,204 for 2021. Members do not maintain an equity interest other than if the DCC were to terminate. Withdrawing members forfeit any interest in the DCC. Information regarding the DCC can be obtained at the website www.mn-dcc.org. B. Local Government Information Systems Association (LOGIS) The consortium of approximately 30 government entities provides computerized data processing and support services to its members. LOGIS is a legally separate entity; the entities appoint a voting majority of its board, and the consortium is fiscally independent of the City. For 2021, the City paid $191,077 for computer application support and computer hardware for the City's network. Complete financial statements of the consortium may be obtained at the LOGIS offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422. NOTE 14 – CONTINGENCIES The City has various claims and litigation that arise in the normal course of business. The City has evaluated the impact of these items for the December 31, 2021, financial statements and determined they do not have a material effect on financial position or changes in financial position. NOTE 15 – COMMITED CONTRACTS At December 31, 2021, the City had commitments of $605,796 for uncompleted construction contracts. NOTE 16 – TAX INCREMENT FINANCING The City has entered into Tax Increment Financing agreements which meet the criteria for disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The City entered into this agreement for the purpose of redevelopment. Under these agreements, the City and developer agree on an amount of development costs to be reimbursed to the developer by the City though tax revenues from the additional taxable value of the property generated by the development (tax increment). A "pay-as-you-go" note is established for this amount, on which the City makes payments for a fixed period of time with available tax increment revenue after deducting for certain administrative costs. During the year ended December 31, 2021, the City generated $151,674 in tax increment revenue and made $136,506 in payments to developers. Page 148 61 City of Mendota Heights Notes to Basic Financial Statements NOTE 17 – NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 87, Leases establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. This statement will be effective for the year ending December 31, 2022. Page 149 62 (THIS PAGE LEFT BLANK INTENTIONALLY) Page 150 63 REQUIRED SUPPLEMENTARY INFORMATION Page 151 See notes to required supplementary information. 64 December 31, December 31, December 31, December 31, 2021 2020 2019 2018 Total OPEB Liability Service cost 20,191$ 17,009$ 22,733$ 24,002$ Interest 23,267 31,249 30,230 31,883 Differenced between expected and actual experience - 22,848 - - Changes of assumptions 26,487 30,297 (20,053) - Benefit payments (122,081) (126,784) (115,317) (94,257) Net change in total OPEB liability (52,136) (25,381) (82,407) (38,372) Beginning of year 842,740 868,121 950,528 988,900 Total OPEB Liability 790,604$ 842,740$ 868,121$ 950,528$ 3,469,012$ 3,359,818$ 3,460,084$ 3,359,305$ 22.79% 25.08%25.09% 28.30% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. Covered-employee payroll City of Mendota Heights Schedule of Changes in Total OPEB Liability and Related Ratios Total OPEB liability as a percentage of covered-employee payroll Page 152 See notes to required supplementary information. 65 City's Covered Payroll 2015 0.0322% 1,668,771$ -$ 1,668,771$ 1,859,307$ 89.75% 78.19% 2016 0.0315% 2,557,644 33,392 2,591,036 1,954,600 130.85% 68.91% 2017 0.0290% 1,851,341 23,303 1,874,644 1,870,160 98.99% 75.90% 2018 0.0281% 1,558,873 51,096 1,609,969 1,887,853 82.57% 79.53% 2019 0.0291% 1,608,874 49,998 1,658,872 2,058,880 78.14% 80.23% 2020 0.0296% 1,774,655 54,701 1,829,356 2,113,013 83.99% 79.06% 2021 0.0319% 1,362,273 41,634 1,403,907 2,294,880 59.36% 87.00% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. For Fiscal Year Ended June 30, City's Proportion of the Net Pension Liability (Asset) City's Proportionate Share of the Net Pension Liability (Asset) State's Proportionate Share (Amount) of the Net Pension Liability Associated with the City City's Proportionate Share of the Net Pension Liablility and the State's Proportionate Share of the Net Pension Liablility Associated with the City City's Covered Payroll City's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 2015 0.1530% 1,738,438$ N/A 1,738,438$ 1,359,920 127.8% 86.61% 2016 0.1550% 6,220,420 N/A 6,220,420 1,496,272 415.7% 63.88% 2017 0.1500% 2,011,679 N/A 2,011,679 1,543,389 130.3%85.43% 2018 0.1527% 1,613,882 N/A 1,613,882 1,609,556 100.3% 88.84% 2019 0.1643% 1,726,959 N/A 1,726,959 1,733,152 99.6% 89.26% 2020 0.1686% 2,207,154 52,363$ 2,259,517 1,902,465 116.0% 87.19% 2021 0.1575% 1,201,558 54,662 1,256,220 1,902,228 63.2% 93.66% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. City of Mendota Heights Schedule of City's Proportionate Share of Net Pension Liability Last Ten Years Schedule of City's Proportionate Share General Employees Retirement Fund City's Proportionate Share (Percentage) of the Net Pension Liability (Asset) City's Proportionate Share (Amount) of the Net Pension Liability (Asset) City's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Last Ten Years For Fiscal Year Ended June 30, State's Proportionate Share (Amount) of the Net Pension Liability Associated with the City City's Proportionate Share of the Net Pension Liablility and the State's Proportionate Share of the Net Pension Liablility Associated with the City Public Employees Police and Fire Retirement Fund of Net Pension Liability Page 153 See notes to required supplementary information. 66 2015 149,420$ 149,420$ -$ 1,992,267$ 7.50% 2016 139,806 139,806 - 1,864,080 7.50% 2017 137,806 137,806 - 1,837,413 7.50% 2018 146,272 146,272 - 1,950,293 7.50% 2019 157,416 157,416 - 2,098,880 7.50% 2020 166,196 166,196 - 2,215,947 7.50% 2021 178,657 178,657 - 2,382,093 7.50% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. 2015 237,655$ 237,655$ -$ 1,467,006$ 16.20% 2016 245,917 245,917 - 1,518,006 16.20% 2017 251,584 251,584 - 1,552,988 16.20% 2018 266,168 266,168 - 1,643,012 16.20% 2019 311,718 311,718 - 1,839,044 16.95% 2020 344,654 344,654 - 1,947,198 17.70% 2021 349,826 349,826 - 1,976,418 17.70% Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available. City of Mendota Heights Schedule of City Contributions - General Employees Retirement Fund Last Ten Years Contribution Deficiency (Excess) City's Covered Payroll Last Ten Years Contributions as a Percentage of Covered Payroll Statutorily Required Contribution Statutorily Required Contribution Contributions in Relation to the Statutorily Required Contributions Contribution Deficiency (Excess) Contributions in Relation to the Statutorily Required Contributions Fiscal Year Ending December 31, City's Covered Payroll Contributions as a Percentage of Covered Payroll Schedule of City Contributions - Public Employees Police and Fire Retirement Fund Fiscal Year Ending December 31, Page 154 City of Mendota Heights Notes to Required Supplementary Information 67 General Employees Fund 2021 Changes Changes in Actuarial Assumptions  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The mortality improvement scale was changed from scale MP-2019 to scale MP-2020. Changes in Plan Provisions  There have been no changes since the prior valuation. 2020 Changes Changes in Actuarial Assumptions  The price inflation assumption was decreased from 2.5% to 2.25%.  The payroll growth assumption was decreased from 3.25% to 3.0%.  Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net effect is assumed rates that average 0.25% less than previous rates.  Assumed rates of retirement were changed as recommended in the June 30, 2019, experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.  Assumed rates of termination were changes as recommended in the June 30, 2019, experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter.  Assumed rates of disability were changed as recommended in the June 30, 2019, experience study. The change results in fewer predicted disability retirements for males and females.  The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-2014 disabled annuitant mortality table to the Pub-2010 General/Teacher disabled annuitant mortality table, with adjustments.  The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.  The assumed spouse age difference was changed from two years older for females to one year older.  The assumed number of married male new retirees electing the 100% Joint and Survivor option changed from 35% to 45%. The assumed number of married female new retires electing the 100% Joint and Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. Changes in Plan Provisions  Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023, and 0.0% thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2017 to MP-2018. Page 155 City of Mendota Heights Notes to Required Supplementary Information 68 General Employees Fund (Continued) 2019 Changes (Continued) Changes in Plan Provisions  The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2015 to MP-2017.  The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year thereafter to 1.25% per year. Changes in Plan Provisions  The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024.  Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1, 2018.  Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply.  Contribution stabilizer provisions were repealed.  Postretirement benefit increases were changed from 1.00% per year with a provision to increase to 2.50% upon attainment of 90.00% funding ratio to 50.00% of the Social Security Cost of Living Adjustment, not less than 1.00% and not more than 1.50%, beginning January 1, 2019.  For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors.  Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 Changes Changes in Actuarial Assumptions  The CSA loads were changed from 0.8% for active members and 60% for vested and non-vested deferred members. The revised CSA loads are now 0.0% for active member liability, 15% for vested deferred member liability and 3% for non-vested deferred member liability.  The assumed post-retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year through 2044 and 2.5% per year thereafter. Changes in Plan Provisions  The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter.  The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. Page 156 City of Mendota Heights Notes to Required Supplementary Information 69 General Employees Fund (Continued) 2016 Changes Changes in Actuarial Assumptions  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years.  The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%.  Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, the inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Changes in Plan Provisions  There have been no changes since the prior valuation. 2015 Changes Changes in Actuarial Assumptions  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030 and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year thereafter. Changes in Plan Provisions  On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised; the State's contribution of $6.0 million, which meets the special funding situation definition, was due September 2015. Page 157 City of Mendota Heights Notes to Required Supplementary Information 70 Police and Fire Fund 2021 Changes Changes in Actuarial Assumptions  The investment return and single discount rates were changed from 7.5% to 6.5% for financial reporting purposes.  The inflation assumption was changed from 2.5% to 2.25%.  The payroll growth assumption was changed from 3.25% to 3.0%.  The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety mortality table. The mortality improvement scale was changed from MP-2019 to MP-2020.  The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to scale MP-2019) to the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to scale MP-2020).  Assumed rates of salary increase were modified as recommended in the July 14, 2020, experience study. The overall impact is a decrease in gross salary increase rates.  Assumed rates of retirement were changed as recommended in the July 14, 2020, experience study. The changes resulted in slightly more unreduced retirements and fewer assumed early retirements.  Assumed rates of withdrawal were changed from select and ultimate rates to service-based rates. The changes resulted in more assumed terminations.  Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates resulted in more projected disabilities.  Assumed percent married for active female members was changed from 60% to 70%. Minor changes to form of payment assumptions were applied. Changes in Plan Provisions  There have been no changes since the prior valuation. 2020 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2018 to MP-2019. Changes in Plan Provisions  There have been no changes since the prior valuation. 2019 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions  There have been no changes since the prior valuation. 2018 Changes Changes in Actuarial Assumptions  The mortality projection scale was changed from MP-2016 to MP-2017. Page 158 City of Mendota Heights Notes to Required Supplementary Information 71 Police and Fire Fund (Continued) 2018 Changes (Continued) Changes in Plan Provisions  Postretirement benefit increases were changed to 1.00% for all years, with no trigger.  An end date of July 1, 2048 was added to the existing $9.0 million state contribution.  New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100% funding, or July 1, 2048, if earlier.  Member contributions were changed from 10.80% to 11.30% of pay, effective January 1, 2019 and 11.80% of pay, effective January 1, 2020.  Employer contributions were changed from 16.20% to 16.95% of pay, effective January 1, 2019 and 17.70% of pay, effective January 1, 2020.  Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1, 2018.  Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply.  Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 Changes Changes in Actuarial Assumptions  Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34% lower than the previous rates.  Assumed rates of retirement were changed, resulting in fewer retirements.  The CSA load was 30% for vested and non-vested deferred members. The CSA has been changed to 33% for vested members and 2% for non-vested members.  The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP- 2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees.  Assumed termination rates were decreased to 3% for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall.  Assumed percentage of married female members was decreased from 65% to 60%.  Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females.  The assumed percentage of female members electing Joint and Survivor annuities was increased.  The assumed post-retirement benefit increase rate was changed from 1% for all years to 1% per year through 2064 and 2.5% thereafter.  The single discount rate was changed from 5.6% per annum to 7.5% per annum. Changes in Plan Provisions  There have been no changes since the prior valuation. Page 159 City of Mendota Heights Notes to Required Supplementary Information 72 Police and Fire Fund (Continued) 2016 Changes Changes in Actuarial Assumptions  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% thereafter to 1.0% per year for all future years.  The assumed investment return was changed from 7.9% to 7.5%. The single discount rate changed from 7.9% to 5.6%.  The single discount rate changed from 7.90% to 5.60%.  The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Changes in Plan Provisions  There have been no changes since the prior valuation. 2015 Changes Changes in Actuarial Assumptions  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030 and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year thereafter. Changes in Plan Provisions  The post-retirement benefit increase to be paid after attainment of the 90% funding threshold was changed, from inflation up to 2.5%, to a fixed rate of 2.5%. Page 160 City of Mendota Heights Notes to Required Supplementary Information 73 OPEB 2021 Changes Changes in Actuarial Assumptions  The discount rate decreased from 2.90% in 2020 to 2.00% in 2021. 2020 Changes Changes in Actuarial Assumptions  The discount rate decreased from 3.80% in 2019 to 2.90% in 2020.  The healthcare trend rates, mortality tables, and salary increase rates were updated. 2019 Changes Changes in Actuarial Assumptions  The discount rate increased from 3.30% in 2018 to 3.80% in 2019.  The healthcare trend rates, mortality tables, and salary increase rates were updated. 2018 Changes Changes in Actuarial Assumptions  The discount rate decreased from 4.00% in 2017 to 3.30% in 2018. There are no assets accumulated in a trust. Page 161 74 (THIS PAGE LEFT BLANK INTENTIONALLY) Page 162 75 SUPPLEMENTARY INFORMATION Page 163 76 Water Revenue Special Park Civil Defense Street Lighting Assets Cash and investments 812,666$ 671,110$ 159,863$ 46,848$ Taxes receivable - delinquent - - 213 920 Special assessments receivable Deferred - - - - Accounts receivable - - - - Interest receivable 460 450 92 23 Due from other funds - - - - Due from other governments 2,929 - 570 9,088 Prepaid items - - - - Land held for resale - - - - Total assets 816,055$ 671,560$ 160,738$ 56,879$ Liabilities Accounts and contracts payable -$ 5,830$ -$ -$ Due to other funds - - - - Due to other governments - - - - Salaries and benefits payable - - - Total liabilities - 5,830 - - Deferred Inflows of Resources Unavailable revenue - property taxes - - 213 920 Unavailable revenue - grants - - - - Unavailable revenue - special assessments - - (1) - Total deferred inflows of resources - - 212 920 Fund Balances Nonspendable - - - - Restricted - 665,730 - 55,959 Committed 816,055 - 160,526 - Assigned - - - - Unassigned - - - - Total fund balances 816,055 665,730 160,526 55,959 Total liabilities, deferred inflows of resources, and fund balances 816,055$ 671,560$ 160,738$ 56,879$ December 31, 2021 Special Revenue City of Mendota Heights Combining Balance Sheet - Nonmajor Governmental Funds Page 164 77 Par 3 Golf Course Police Forfeiture Fund Par 3 G.O. Bonds Equipment Certficates Fire Station Bonds Fire Truck Equipment Certificate 110,534$ 21,811$ 403,126$ 43,726$ 531,141$ 935,661$ - - 1,918 18 4,948 - - - - - - - 56 - - - - - 47 - 160 27 132 4,580 - - - - - - - - 1,173 5 14,157 - 5,532 - - - - - - - - - - - 116,169$ 21,811$ 406,377$ 43,776$ 550,378$ 940,241$ 2,034$ -$ -$ -$ -$ -$ - - - - - - 653 - - - - - 627 - - - - - 3,314 - - - - - - - 1,918 18 4,948 - - - - - - - - - - - - - 1,918 18 4,948 5,532 - - - - - - 21,811 404,459 43,758 545,430 940,241 107,323 - - - - - - - - - - - - - - - - - 112,855 21,811 404,459 43,758 545,430 940,241 116,169$ 21,811$ 406,377$ 43,776$ 550,378$ 940,241$ Special Revenue Debt Service Page 165 78 Equipment Replacement Reserve Infrastructure Reserve Facility Reserve Water Tower Capital Project Assets Cash and investments 468,521$ 64,266$ 362,467$ 401,691$ Taxes receivable - delinquent 35 15 - - Special assessments receivable Deferred - - - - Accounts receivable - - - - Interest receivable 21 41 233 421 Due from other funds - - - 320,500 Due from other governments 6 2 - - Prepaid items - - - - Land held for resale - - - - Total assets 468,583$ 64,324$ 362,700$ 722,612$ Liabilities Accounts and contracts payable -$ -$-$-$ Due to other funds -- -- Due to other governments -- -- Salaries and benefits payable -- -- Total liabilities - - - - Deferred Inflows of Resources Unavailable revenue - property taxes 35 15 - - Unavailable revenue - grants - - - - Unavailable revenue - special assessments -1 - - Total deferred inflows of resources 35 16 - - Fund Balances Nonspendable - - - - Restricted - - - - Committed - - - - Assigned 468,548 64,308 362,700 722,612 Unassigned - - - - Total fund balances 468,548 64,308 362,700 722,612 Total liabilities, deferred inflows of resources, and fund balances 468,583$ 64,324$ 362,700$ 722,612$ Capital Projects City of Mendota Heights Combining Balance Sheet - Nonmajor Governmental Funds December 31, 2021 Page 166 79 Pilot Knob Improvement Pre-1998 Non- Increment Special Assessment Capital Project TIF District No. 2 Fire Hall Remodel Total Nonmajor Governmental Funds 33,993$ 344,620$ -$ 72,274$ -$ 5,484,318$ - - - - 143 8,210 - - 10,838 - - 10,838 - 338 11,032 - - 11,426 12 538 69 8 - 7,314 - 181,595 - - - 502,095 - 27,500 1,374 - 87,585 144,389 - - - - - 5,532 - 96,100 - - - 96,100 34,005$ 650,691$ 23,313$ 72,282$ 87,728$ 6,270,222$ 2,257$ 337$ 36,378$ 68,253$ -$ 115,089$ - - 320,500 - 181,595 502,095 - - - - - 653 - - - - - 627 2,257 337 356,878 68,253 181,595 618,464 - - - - 143 8,210 - 27,500 - - - 27,500 - - 10,838 - - 10,838 - 27,500 10,838 - 143 46,548 - - - - - 5,532 - - - 4,029 - 2,681,417 - - - - - 1,083,904 31,748 622,854 - - - 2,272,770 - - (344,403) - (94,010) (438,413) 31,748 622,854 (344,403) 4,029 (94,010) 5,605,210 34,005$ 650,691$ 23,313$ 72,282$ 87,728$ 6,270,222$ Capital Projects Page 167 80 Water Revenue Special Park Civil Defense Revenues Property taxes -$ -$ 25,047$ Tax increments - - - Intergovernmental - - - Charges for services 150,035 - - Fines and forfeitures - - 1 Miscellaneous Investment income (1,834) (1,793) (363) Other - 21,290 - Total revenues 148,201 19,497 24,685 Expenditures Current General government - - 12,503 Public safety - - - Public works - 44,413 - Economic development - - - Debt service Principal - - - Interest and other charges - - - Capital outlay General government - - - Public safety - - - Public works 6,035 133,004 - Total expenditures 6,035 177,417 12,503 Excess of revenues over (under) expenditures 142,166 (157,920) 12,182 Other Financing Sources (Uses) Transfers in - 60,000 - Transfers out (3,000) (1,500) - Total other financing sources (uses)(3,000) 58,500 - Net change in fund balances 139,166 (99,420) 12,182 Fund Balances Beginning of year 676,889 765,150 148,344 End of year 816,055$ 665,730$ 160,526$ City of Mendota Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2021 Special Revenue Page 168 81 Street Lighting Par 3 Golf Course Police Forfeiture Fund Par 3 G.O. Bonds Equipment Certficates 50,823$ -$ -$ 245,010$ 5$ - - - - - - - - - - - 242,564 - - - - - - - - (90) (185) - (634) (108) - 3,771 1,000 - - 50,733 246,150 1,000 244,376 (103) 29,647 - - - - - - - - - - 215,020 - - - - - - - - - - - 215,000 - - - - 16,125 - - - - - - - - - - - - 17,135 - - - 29,647 232,155 - 231,125 - 21,086 13,995 1,000 13,251 (103) - 17,135 20,811 - - - - - - - - 17,135 20,811 - - 21,086 31,130 21,811 13,251 (103) 34,873 81,725 - 391,208 43,861 55,959$ 112,855$ 21,811$ 404,459$ 43,758$ Debt ServiceSpecial Revenue Page 169 82 Capital Projects Fire Station Bonds Fire Truck Equipment Certificate Equipment Replacement Reserve Revenues Property taxes 625,487$ -$ 7$ Tax increments - - - Intergovernmental - - - Charges for services - - - Fines and forfeitures 20 - - Miscellaneous Investment income (526) 282 (83) Other - - - Total revenues 624,981 282 (76) Expenditures Current General government - - - Public safety - - - Public works - - 26,648 Economic development - - - Debt service Principal 360,000 - - Interest and other charges 227,125 41 - Capital outlay General government - - - Public safety - - 25,545 Public works - - 545,251 Total expenditures 587,125 41 597,444 Excess of revenues over (under) expenditures 37,856 241 (597,520) Other Financing Sources (Uses) Transfers in - 940,000 571,900 Transfers out - - - Total other financing sources (uses)- 940,000 571,900 Net change in fund balances 37,856 940,241 (25,620) Fund Balances Beginning of year 507,574 - 494,168 End of year 545,430$ 940,241$ 468,548$ Debt Service City of Mendota Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2021 Page 170 83 Infrastructure Reserve Facility Reserve Water Tower Capital Project Pilot Knob Improvement Pre-1998 Non-Increment Special Assessment Capital Project 3$ -$ -$ -$ -$ -$ - - - - - - 72,471 - - 40,050 184,500 - - - - - 11,890 - - - - - - - (164) (927) (1,678) (49) (2,142) (276) - - 71,476 1,500 37,646 - 72,310 (927) 69,798 41,501 231,894 (276) - - - 10,712 35,522 - - - - - - - 3,450 27,750 - - - - - - - - - - - - - - - - - - - - - - - - - - 27,257 - - - - - - - - - - - - 40,913 3,450 27,750 - 10,712 62,779 40,913 68,860 (28,677) 69,798 30,789 169,115 (41,189) - - - - - 22,432 - - - - (478,030) - - - - - (478,030) 22,432 68,860 (28,677) 69,798 30,789 (308,915) (18,757) (4,552) 391,377 652,814 959 931,769 (325,646) 64,308$ 362,700$ 722,612$ 31,748$ 622,854$ (344,403)$ Capital Projects Page 171 84 TIF District No. 2 Fire Hall Remodel Total Other Governmental Funds Revenues Property taxes -$ 9$ 946,391$ Tax increments 151,674 - 151,674 Intergovernmental - - 297,021 Charges for services - - 404,489 Fines and forfeitures - - 21 Miscellaneous Investment income (32) 156 (10,446) Other - 87,584 224,267 Total revenues 151,642 87,749 2,013,417 Expenditures Current General government - - 88,384 Public safety - - - Public works - - 317,281 Economic development 139,444 - 139,444 Debt service Principal - - 575,000 Interest and other charges - 1,525 244,816 Capital outlay General government - - 27,257 Public safety - 28,374 53,919 Public works - - 742,338 Total expenditures 139,444 29,899 2,188,439 Excess of revenues over (under) expenditures 12,198 57,850 (175,022) Other Financing Sources (Uses) Transfers in - - 1,632,278 Transfers out - - (482,530) Total other financing sources (uses) - - 1,149,748 Net change in fund balances 12,198 57,850 974,726 Fund Balances Beginning of year (8,169) (151,860) 4,630,484 End of year 4,029$ (94,010)$ 5,605,210$ City of Mendota Heights Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Year Ended December 31, 2021 Capital Projects U Page 172 85 Compensated Absences City Hall Sinking Fund Total Assets Current assets Cash and investments (including cash equivalents) 677,923$ 42,303$ 720,226$ Accounts receivable - 11,568 11,568 Interest receivable - 79 79 Prepaid expenses - 9,176 9,176 Total current assets 677,923 63,126 741,049 Noncurrent assets Capital assets Land - 25,000 25,000 Buildings - 2,279,024 2,279,024 Improvements other than buildings - 40,781 40,781 Machinery and equipment - 66,969 66,969 Total capital assets - 2,411,774 2,411,774 Less accumulated depreciation - (1,810,702) (1,810,702) Net capital assets - 601,072 601,072 Total assets 677,923 664,198 1,342,121 Deferred Outflows of Resources Deferred outflows of resources related to OPEB - 221 221 Deferred outflows of resources related to pensions - 31,449 31,449 Total deferred outflows of resources - 31,670 31,670 Total assets and deferred outflows of resources 677,923$ 695,868$ 1,373,791$ Liabilities Current liabilities Salaries and benefits payable -$ 3,199$ 3,199$ Due to other governments - 88 88 Noncurrent liabilities due within one year 433,578 7,233 440,811 Total current liabilities 433,578 10,520 444,098 Noncurrent liabilities Compensated absences 677,923 16,391 694,314 OPEB payable - 4,551 4,551 Net pension liability - 40,423 40,423 Less amount due within one year (433,578) (7,233)(440,811) Total noncurrent liabilities 244,345 54,132 298,477 Total liabilities 677,923 64,652 742,575 Deferred Inflows of Resources Deferred inflows of resources related to OPEB - 250 250 Deferred inflows of resources related to pensions - 37,241 37,241 Total deferred inflows of resources - 37,491 37,491 Net Position Investment in capital assets - 601,072 601,072 Unrestricted - (7,347)(7,347) Total net position - 593,725 593,725 Total liabilities, deferred inflows of resources, and net position 677,923$ 695,868$ 1,373,791$ December 31, 2021 Combining Statement of Net Position - Internal Service Funds City of Mendota Heights Page 173 86 City of Mendota Heights Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds Year Ended December 31, 2021 City Hall Sinking Fund Total Operating revenues Charges for services 216,940$ 216,940$ Operating expenses Wages and salaries 70,199 70,199 Employee benefits 33,340 33,340 Professional services 4,192 4,192 Insurance 5,759 5,759 Utilities 38,106 38,106 Depreciation 36,506 36,506 Miscellaneous 36,762 36,762 Total operating expenses 224,864 224,864 Operating loss (7,924) (7,924) Nonoperating revenues Investment income (317)(317) Change in net position (8,241) (8,241) Net position Beginning of year 601,966 601,966 End of year 593,725$ 593,725$ Page 174 87 Compensated Absences City Hall Sinking Fund Total Cash Flows - Operating Activities Receipts from customers and users -$ 216,940$ 216,940$ Payments to suppliers - (102,308) (102,308) Payments to employees 48,847 (109,267) (60,420) Net cash flows - operating activities 48,847 5,365 54,212 Cash Flows - Investing Activities Interest and dividends received - (257) (257) Net change in cash and cash equivalents 48,847 5,108 53,955 Cash and Cash Equivalents Beginning of year 629,076 37,195 666,271 End of year 677,923$ 42,303$ 720,226$ Reconciliation of Operating Loss to Net Cash Flows - Operating Activities Operating loss -$ (7,924)$ (7,924)$ Adjustments to reconcile operating Loss to net cash flows - Operating activities Depreciation expense - 36,506 36,506 Prepaid items - (339) (339) Accounts payable - (17,142) (17,142) Due to other governmental units - (8) (8) Salaries payable - 283 283 OPEB payable - 222 222 Pension related items - (5,504) (5,504) Compensated absences payable 48,847 (729) 48,118 Total adjustments 48,847 13,289 62,136 Net cash flows - operating activities 48,847$ 5,365$ 54,212$ City of Mendota Heights Combining Statement of Cash Flows - Internal Service Funds Year Ended December 31, 2021 Page 175 88 Budgeted Amounts Variance with Original Actual and Final Amounts Revenues Property taxes 8,189,068$ 8,243,823$ 54,755$ Licenses and permits 329,200 619,710 290,510 Intergovernmental revenue State grants and aids PERA aid 9,070 - (9,070) Fire aid 106,000 117,133 11,133 Police aid 145,000 174,659 29,659 Other grants and aids 233,500 230,146 (3,354) Total intergovernmental revenue 493,570 521,938 28,368 Charges for services 729,948 736,356 6,408 Fines and forfeitures 103,300 93,400 (9,900) Miscellaneous revenues Investment income 30,000 (22,807) (52,807) Other 115,000 258,245 143,245 Total miscellaneous revenues 145,000 235,438 90,438 Total revenues 9,990,086 10,450,665 460,579 Expenditures General government Mayor and council Salaries and benefits 24,386 24,514 128 Contracted services 23,200 23,100 (100) Administration and finance Salaries and benefits 873,390 890,020 16,630 Materials and supplies 18,500 16,658 (1,842) Contracted services 359,850 381,548 21,698 City of Mendota Heights Detailed Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Final budget - over (under) General Fund Year Ended December 31, 2021 Page 176 89 Budgeted Amounts Variance with Original Actual Final budget - And final Amounts Over (under) Expenditures (Continued) General government (continued) Elections Salaries and benefits 40,319$ 38,370$ (1,949)$ Materials and supplies 4,133 1,142 (2,991) Information technology Materials and supplies 100,500 18,395 (82,105) Contracted services 106,130 145,169 39,039 Planning and zoning Salaries and benefits 156,465 156,504 39 Materials and supplies 4,500 1,006 (3,494) Contracted services 48,000 43,129 (4,871) Recycling Materials and supplies - 1 1 Contracted services 31,600 2,825 (28,775) Miscellaneous Contracted services - 15,368 15,368 Total general government 1,790,973 1,757,749 (33,224) Public safety Police protection Salaries and benefits 3,497,503 3,269,623 (227,880) Materials and supplies 216,500 191,349 (25,151) Contracted services 787,177 741,587 (45,590) Capital outlay - 25,322 25,322 Fire protection Salaries and benefits 329,729 323,312 (6,417) Materials and supplies 103,500 104,834 1,334 Contracted services 406,677 403,490 (3,187) Total public safety 5,341,086 5,059,517 (281,569) General Fund Year Ended December 31, 2021 (Continued) Detailed Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - City of Mendota Heights Page 177 90 Budgeted Amounts Variance with Original Actual Final budget - And final Amounts Over (under) Expenditures (Continued) Public works Code enforcement Materials and supplies 2,750$ 3,277$ 527$ Contracted services 115,875 116,205 330 Street maintenance Salaries and benefits 1,118,427 1,121,515 3,088 Materials and supplies 146,550 105,912 (40,638) Contracted services 505,308 398,239 (107,069) Capital outlay -29,289 29,289 Parks Salaries and benefits 589,738 619,408 29,670 Materials and supplies 237,000 201,444 (35,556) Contracted services 189,929 229,138 39,209 Total public works 2,905,577 2,824,427 (81,150) Total expenditures 10,037,636 9,641,693 (395,943) Excess of revenues over (under) expenditures (47,550) 808,972 856,522 Other Financing Sources (Uses) Transfer in 47,550 72,689 25,139 Transfer out -(216,955)(216,955) Total other financing sources (uses)47,550 (144,266) (191,816) Net change in fund balance -$ 664,706 664,706$ Fund Balance Beginning of year 10,684,511 End of year 11,349,217$ Year Ended December 31, 2021 (Continued) Detailed Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund City of Mendota Heights Page 178 91 Minnesota Legal Compliance Independent Auditor's Report Honorable Mayor and Members of the City Council City of Mendota Heights Mendota Heights, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Mendota Heights, Minnesota as of and for the year ended December 31, 2021, and the related notes to financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated June 2, 2022. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions, insofar as they relate to accounting matters. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. Minneapolis, Minnesota June 2, 2022 Page 179 Page 180 Request for City Council Action DATE: June 21, 2022 TO: Mayor, City Council, and City Administrator FROM: Meredith Lawrence, Parks and Recreation Manager SUBJECT: Consideration of the Installation of Push Button Light Switches at the Ice Rinks INTRODUCTION The Parks and Recreation Commission has recommended the installation of user activated light switches at the Marie and Friendly Hills ice rinks. BACKGROUND Rink lights at Marie and Friendly Hills Parks, when used for pickleball play and ice rink use into the evening, are controlled by timers. These timers automatically turn the lights on and off based on a schedule established by city Public Works staff. The schedule considers sunset times and is adjusted for the season/time of the year. While considering the use of lights for pickleball play, residents expressed concern about the amount of time that lights were on but facilities weren’t actually being used by skaters or pickleball players. DISCUSSION City staff researched the use of user activated light switches to address resident concerns, light pollution, energy use and staffing shortages. A number of cities, in order to address similar concerns and challenges have installed user activated light switches at outdoor rinks and recreation facilities. The switches are easy to use and provide the opportunity for users to turn on (but not turn off) the lights when using the courts/rinks. Once activated by a user, the rink lights remain on for a predetermined amount of time. Currently, lights are available by timer control and are programmed to turn on when the pickleball nets are installed, typically in late March/early April depending on the weather. Depending on sunset times, lights are on daily until 9:00 pm. To account for sunset times and longer daylight hours, lights are not used from approximately April 30 to August 18. During the winter skating months, lights are generally on from 4:00 to 9:00 pm. With the push button switches, users will determine when the lights are actually on. When activated, lights would remain on for 60-minutes and then shut off. Users will be responsible for turning the lights back on. System power will be controlled by a schedule established by city 9a. Page 181 Public Works staff and available until 9:00pm during winter skating season and spring/fall pickleball seasons. The use of user activated switches may result in a different experience for park/rink users and neighboring residents. The change in lighting of the rinks to an “on-demand” system may result in reduced use of the rinks during the evening as some users may not believe that lighting is available. Additionally, for times when the switches are used, lights may be turning on and off more consistently, which could be more problematic for neighboring residents than the lights being constantly on. To explain the changes, staff would develop instructions and signage for each park to educate users of the availability of the push button light switches. BUDGET IMPACT The cost for installation of the push button light switches is $1,375 per rink. This project was not included in the FY2022 budget. If approved, the costs will be paid for from the Parks Department budget. Additional modifications are recommended, such as converting the Marie Park rink lights to LED in order to maximize light switch use. Costs for converting the lights is currently being obtained. ACTION RECOMMENDED The Parks and Recreation Commission recommended approval (7-0) to install user activated light switches at Marie and Friendly Hills ice rinks. ACTION REQUESTED If City Council concurs, it should, by motion, approve the installation of push button light switches at the Marie and Friendly Hills ice rinks. Page 182