CITY OF ALBERT LEA COMPREHENSIVE · Profile of the Government The City of Albert Lea, incorporated in 1878, is located at the cross roads of interstate highways I-90 and I-35. It

CITY OF ALBERT LEA ALBERT LEA, MINNESOTA

COMPREHENSIVE

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED

DECEMBER 31, 2018

PREPARED BY:

FINANCE DEPARTMENT

Member GFOA of U.S. and Canada Published June 20, 2019

City of Albert Lea, Minnesota Table of Contents

Page Introductory Section Letter of Transmittal 3 Elected Officials and Administration 7 Organizational Chart 9 GFOA Certificate of Achievement for Excellence in Financial Reporting 11 Financial Section Independent Auditor's Report 15 Management's Discussion and Analysis 19 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 34 Statement of Activities 36 Fund Financial Statements Governmental Funds

Balance Sheet 38 Reconciliation of the Balance Sheet to the Statement of Net Position 41 Statement of Revenues, Expenditures, and Changes in Fund Balances 42 Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances to the Statement of Activities 44 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual – General Fund 45 Proprietary Funds

Statement of Net Position 46 Statement of Revenues, Expenses, and Changes in Net Position 49 Statement of Cash Flows 50

Fiduciary Fund Statement of Fiduciary Net Position 52

Notes to Financial Statements 53

Required Supplementary Information Schedule of Changes in Total OPEB Liability and Related Ratios 94 Schedule of City's Proportionate Share of Net Pension Liability –

General Employees Retirement Fund 95 Schedule of City's Proportionate Share of Net Pension Liability –

Public Employees Police and Fire Retirement Fund 95 Schedule of City Contributions – General Employees Retirement Fund 97 Schedule of City Contributions – Public Employees Police and Fire Retirement Fund 97 Notes to Required Supplementary Information 98


Page Combining and Individual Fund Financial Statements and Schedules

Nonmajor Governmental Funds Combining Balance Sheet 102 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 103

Nonmajor Special Revenue Funds Combining Balance Sheet 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 108

Budgeted Special Revenue Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual

Senior Center 110 Airport Fund 111

Nonmajor Capital Projects Funds Combining Balance Sheet 112 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 116

Nonmajor Debt Service Funds Combining Balance Sheet 120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 124

General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual 128

Internal Service Funds Combining Statement of Net Position 134 Combining Statement of Revenues, Expenses, and Changes in Net Position 135 Combining Statement of Cash Flows 136

Fiduciary Fund Statement of Changes in Fiduciary Assets and Liabilities 137

Statistical Section (Unaudited) Table Page

Financial Trends Net Position by Component 1 140 Change in Net Position 2 142 Fund Balances of Governmental Funds 3 146 Changes in Fund Balances of Governmental Funds 4 148

Revenue Capacity Program Revenues by Function 5 150 Governmental Activities Tax Revenues by Source 6 152 Property Tax Levies and Collections 7 153 Certified Special Assessment Collections 8 155 Tax Capacity and Estimated Value of Taxable Property 9 156 Property Tax Rates and Tax Levies – Direct and Overlapping Governments 10 158


Statistical Section (Unaudited) (Continued) Table Page

Debt Capacity Principal Property Taxpayers 11 160 Ratios of Outstanding Debt by Type 12 162 Ratios of Net General Bonded Debt Outstanding 13 165 Legal Debt Margin Information 14 166 Computation of Direct and Overlapping Debt 15 168

Demographic and Economic Information Schedule of Water Fund Bond Coverage 16 169 Schedule of Sewer Fund Bond Coverage 17 170 Demographic Statistics 18 171

Operating Information Top 10 Water System Customers 19 173 Principal Employers 20 174 Full-Time Equivalent Employees by Function 21 176 Capital Asset Statistics by Function 22 178 Operating Indicators by Function 23 180

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INTRODUCTORY SECTION


FOR THE YEAR ENDED DECEMBER 31, 2018

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June 20, 2019 Honorable Mayor and Members of the City Council State statutes require that within six months of the close of the fiscal year the City publish a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended December 31, 2018. Management assumes full responsibility for the completeness and reliability of the information contained in this report based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. BerganKDV, Certified Public Accountants, have issued an unmodified ("clean") opinion on the City of Albert Lea's financial statements for the year ended December 31, 2018. The independent auditors' report is located at the front of the financial section of this report. Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. The analysis complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Albert Lea, incorporated in 1878, is located at the cross roads of interstate highways I-90 and I-35. It is a diversified regional industrial, agricultural, retail, medical, and tourism center. The community is historic by Minnesota standards including a downtown designated as a National Commercial Historic District, with approximately 115 buildings in the District. We are approximately 100 miles south of the Twin Cities and only ten miles from the Iowa border. We are referred to as the "land between the lakes" as we are surrounded by several beautiful lakes. Our city currently occupies over 13 square miles and serves a growing population of 18,032 (Minnesota State Demographer's Office Estimate, 2017). The City of Albert Lea is empowered to levy a property tax on both real and personal property located within its boundaries. These boundaries continue to increase through annexations as the City continues to develop. The City of Albert Lea, a charter city since 1932, operates under a council-manager form of government. Policy-making and legislative authority are vested in a governing council (Council) consisting of a mayor and six other members, all elected on a non-partisan basis. The Council appoints the manager, who in turn appoints the heads of the various departments. Council members serve four-year terms, with three members elected every two years. The mayor is elected for a four-year term. The mayor is elected at large, and the members of the Council are elected by ward.

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Profile of the Government (Continued) The City provides a full range of services. These services include police and fire protection; the construction and maintenance of streets and other infrastructure; and other recreational and cultural activities. The City also provides water and sewer services along with the operation of a transfer station. The financial reporting entity (the City) includes all the funds of the primary government (i.e., the City of Albert Lea as legally defined), as well as its component unit. The component unit is a legally separate entity for which the primary government is financially accountable. The Albert Lea Port Authority and Albert Lea Housing and Redevelopment Authority are included as a discretely presented component units. The Council is required to hold a Truth in Taxation meeting in early December of each year. Following this meeting, they are required to adopt a budget and certify their levy by December 28 of each year. This annual budget serves as the foundation for the City of Albert Lea's financial planning and control. The budget is prepared by fund, function (i.e. public works), and department (i.e. snow and ice removal). Department heads may transfer resources within a department as they see fit. Transfers between funds, however, need special approval from the Council. Local Economy While the nation, state, and region continue to rebound from one of the worst recessions in history, the local economy is continuing to experience economic stability and growth. Much of our local economy is based in agriculture, including food processing and renewable fuels, but is substantially more diversified than compared to a few decades ago. However, the City's historic downtown has experienced revitalization that is resulting in a new economic hub for the community. Improvements to water quality and other community assets are also resulting in more tourism as evidenced by multi-year increases in revenues from a local option sales tax and lodging tax. Long-Term Financial Planning In the past few years, the City has become proactive in its approach and has made changes in fund accounting, fund balance policies, and long-term planning (including a Financial Management Plan and Facilities Master Plan) that are resulting in stronger financial sustainability. The City has well-prepared itself for any possible reductions from the state or other revenue sources, which could potentially negatively impact the City's abilities to meet service demands. Due to strong long-term financial planning, the City has not raised its operating tax levy for seven consecutive years and has invested taxes from new tax base into core infrastructure needs for the community. Unrestricted fund balance in the general fund is within the recommendation by the Office of the State Auditor. It is recommended that the city maintain a balance between 30% and 50% of next year's expenditures. The City has always chosen to be quite conservative in the levels of assigned and unassigned fund balance it maintains and strives to be at a total forty-five percent of next year's expenditures in these categories. The City intends to continue that approach until it is once again maintaining fund balance levels in excess of the recommendation of the Office of the State Auditor. Included as part of the City's mission, vision, and values is the value of integrity. The City will adhere to the highest standards of fiscal responsibility and ethical conduct in a manner that inspires public confidence and trust.

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Major Initiatives The City continues to renew and upgrade its facilities, completing the addition to the Public Works Building, a new Arrivals and Departures Building at the Airport, and secured the land for a Fire Station to be constructed. In addition to that, the City continued to upgrade its infrastructure through neighborhood improvement projects. In 2018, 19 streets were rebuilt. The City also played a critical role in establishing and building local businesses through the creation of an economic development fund. Businesses include Mortarr, Pro Manufacturing, Jensen Excavating and Trucking, and Schipp's Pro Power Wash. Mortarr is particularly notable as they opened its headquarters in the Freeborn Bank Building, the flagship building along the City's downtown corridor. The building had no permanent tenant for nearly 20 years, and is now a symbol of the diversifying economy in Albert Lea. The City also began to receive statewide and national attention. With regard to the former, Albert Lea was selected as the site for the 2019 Governor's Fishing Opener, the first time the event was held on a Southern Minnesota lake since 1987. As for the latter, realtor.com ranked Albert Lea in the top 5 "Affordable Small Towns Where You'd Actually Want to Live," and USA Today chose Albert Lea among the top 50 of America's Best Cities to Live. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Albert Lea for its comprehensive annual financial report for the year ended December 31, 2017. This is the thirty-fourth consecutive year (1983-2017) that the City of Albert Lea has received this prestigious award. In order to be awarded a Certificate of Achievement, the government must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR) that satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement Program requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. I express my sincere appreciation to all the members of the Finance Department who assisted and contributed to the preparation of this report. Credit is also due to the auditing firm of BerganKDV for their valuable contributions and advice. I would also like to thank the Mayor and City Council for their continued leadership and commitment to long-term financial planning and for supporting annual operations in a responsible and progressive manner. Respectfully submitted,

Jerry Gabrielatos Acting City Manager

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City of Albert Lea, Minnesota Elected Officials and Administration

December 31, 2018

Elected Officials Position Term Expires

Vern Rasmussen Jr. Mayor December 31, 2022

Rich Murray Council Member - Ward 1 December 31, 2020

Larry Baker Council Member - Ward 2 December 31, 2022

Jason Howland Council Member - Ward 3 December 31, 2020

Reid Olson Council Member - Ward 4 December 31, 2022

Robert Rasmussen Council Member - Ward 5 December 31, 2020

Al Brooks Council Member - Ward 6 December 31, 2022

Administration Position

Chad Adams City Manager

Jerry Gabrielatos Assistant City Manager

Kristi Brutlag Finance Director

JD Carlson Director of Public Safety

Peggy Havener Library Director

Steven Jahnke Public Works Director/City Engineer

Kelly Martinez City Attorney

Mike Zelenak Human Resources Director

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FINANCIAL SECTION



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Independent Auditor's Report Honorable Mayor and Members of the City Council City of Albert Lea Albert Lea, Minnesota Report on the Financial Statements 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 Albert Lea, Minnesota, as of and for the year ended December 31, 2018, and the related notes to financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. We did not audit the financial statements of the Port Authority or the Housing Redevelopment Authority of the City of Albert Lea, which are discretely presented component units of the City. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Port Authority or the Housing Redevelopment Authority of the City of Albert Lea, which are discretely presented component units of the City. The financial statements of these entities were audited by other auditors whose reports thereon have been furnished to us and our opinion, in so far as it relates to the amounts presented for these entities, is based on the report of the other auditors. We conducted our audit 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements 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 the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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Auditor's Responsibility (Continued) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, 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, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Albert Lea, Minnesota, as of December 31, 2018, 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. Implementation of GASB 75 As discussed in Note 15 to the financial statements, the City has adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. Our opinion is not modified with respect to this matter. Other Matters 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, although not a part of the basic financial statements, is required by 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 assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Albert Lea's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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Other Matters (Continued) Other Information (Continued) The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other auditors have previously audited, the City's basic financial statements for the year ended December 31, 2017. In their report dated May 7, 2018, they expressed unmodified opinions on the respective financial statements of the governmental activities, business-type activities, discretely presented component units, each major fund, and the aggregate remaining fund information. In our opinion. The summarized comparative information presented herein as of and for the year ended December 31, 2017 is consistent in all material respects with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 19, 2019, on our consideration of the City of Albert Lea's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Albert Lea's internal control over financial reporting and compliance. Minneapolis, Minnesota June 19, 2019

sheryl.griffiths

Matt M - BKDV

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City of Albert Lea Management's Discussion and Analysis

As management of the City of Albert Lea, 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 fiscal year ended December 31, 2018. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found starting on page 3 of this report. Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows

of resources at the close of the most recent fiscal year by $139,486,548 (net position). Of this amount, $21,551,208 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors.

The net position of business-type activities decreased by $361,819 and net position of the governmental activities increased by $5,369,376. This resulted in a total net position increase of $5,007,557 for the City.

As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $34,319,574, an increase of $117,937 from the prior year.

At the end of the current fiscal year, unassigned fund balance for the General fund was $7,879,629. The City's policy is to maintain a minimum of 45% of the following year's budget in unassigned fund balance. At year end, the unassigned fund balance is 47.8% of the 2019 budgeted General fund expenditures and transfers.

Overview of the Financial Statements This discussion and analysis is 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 the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of "combining and individual fund financial statements and schedules" that further explains and supports the information in the financial statements. Figure 1 shows how the required parts of this annual report are arranged and relate to one another. In addition to these required elements, we have included a section with "combining and individual fund financial statements and schedules" that provide details about nonmajor governmental and nonmajor proprietary funds, which are added together and presented in single columns in the basic governmental financial statements and proprietary statements, respectively.

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Management's Basic Required Discussion and Financial Supplementary

Analysis Statements Information

Government- Fund Notes to the

wide Financial Financial Financial Statements Statements Statements

Summary Detail


Overview of the Financial Statements (Continued) The following chart shows how the various parts of this annual report are arranged and related to one another:

Figure 1 Required Components of the City's Annual Financial Report

Figure 2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the structure and contents of each of the statements.

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Overview of the Financial Statements (Continued)

Figure 2 Major Features of the Government-wide and Fund Financial Statements

Fund Financial Statements

Government-Wide Statements

Governmental Funds

Proprietary Funds

Fiduciary Funds

Scope Entire City government (except fiduciary funds) and the City's component units

The activities of the City that are not proprietary or fiduciary, such as police, fire and parks

Activities the City operates similar to private businesses, such as the water and sewer system

Instances in which the City administers resources on behalf of someone else, such as developers

Required financial statements

Statement of Net Position Statement of Activities

Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balances

Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows

Statement of Fiduciary Net Position

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus



Type of asset/liability information

All assets and liabilities, both financial and capital, and short-term and long-term

Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included

All assets and liabilities, both financial and capital, and short-term and long-term

All assets and liabilities, both short- term and long-term; funds do not currently contain capital assets, although they can

Type of deferred outflows/inflows of resources information

All deferred outflows/inflows of resources, regardless of when cash is received or paid

Only deferred outflows of resources expected to be used up and deferred inflows of resources that come due during the year or soon thereafter; no capital assets included



Type of inflow/out flow information

All revenues and expenses during year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

All revenues and expenses during the year, regardless of when cash is received or paid

All additions and deductions during the year, regardless of when cash is received or paid

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Overview of the Financial Statements (Continued) Government-Wide Financial Statements. The government-wide financial statements 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 and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the four 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 fiscal 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 fiscal 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 revenue (governmental activities) 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, public works, culture and recreation, community development, and interest on long-term debt. The business-type activities of the City include water, sewer, and solid waste utilities. The government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate Port Authority and Housing and Redevelopment Authority (HRA) which are backed by the full faith and credit of the City of Albert Lea. Financial information for these component units are discretely presented for the primary government. The government-wide financial statements start on page 34 of this report. 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 three categories: governmental funds, proprietary funds, and fiduciary 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 resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

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Overview of the Financial Statements (Continued) 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 statements. By doing so, readers may better understand the long-term impact by the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances (deficits) provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds, 12 of which are Debt Service 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 General fund, Fire Pension, Police Pension, Capital Improvement, TIF 5-13 Larson Manufacturing, TIF 5-15 Broadway Ridge Redevelopment and 2018 CIP Projects, all of which are considered to be major funds. 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 or schedules elsewhere in this report. The City adopts an annual appropriated budget for its General, Airport, and Senior Center Funds. A budgetary comparison statement or schedule has been provided for these funds to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 38 of this report. Proprietary Funds. The City maintains two types of proprietary funds. 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 water, sewer, and solid waste management activities. 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 its insurance operations. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for each of the enterprise funds which are considered to be major funds of the City. The basic proprietary funds financial statements start on page 46 of this report. Notes to the 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 the financial statements start on page 53 of this report.

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Overview of the Financial Statements (Continued)

Required Supplementary Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Albert Lea's share of net pension liabilities for defined benefit plans, schedule of contributions, and progress in funding its obligation to provide pension and other postemployment benefits to its employees. Required supplementary information can be found starting on page 94 of this report.

Other Information. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented following the notes to the financial statements. Combining and individual fund financial statements and schedules start on page 102 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 exceeded liabilities and deferred inflows by $139,486,548 at the close of the most recent fiscal year.

By far, the largest portion of the City's net position (67.4%) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment) less any related debt used to acquire those assets that are 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.

City of Albert Lea's Summary of Net Position

2018 2017Increase

(Decrease) 2018 2017Increase

(Decrease)Assets

Current and other assets 48,819,814$ 49,989,611$ (1,169,797) 12,817,973$ 11,997,333$ 820,640 Capital assets 72,719,267 68,487,900 4,231,367 43,059,776 44,070,345 (1,010,569)

Total assets 121,539,081 118,477,511 3,061,570 55,877,749 56,067,678 (189,929)

Deferred Outflows of ResourcesDeferred OPEB resources 97,805 - 97,805 18,156 - 18,156 Deferred pension resources 5,028,983 6,856,004 (1,827,021) 191,226 121,471 69,755

Total deferred outflows of resources 5,126,788 6,856,004 (1,729,216) 209,382 121,471 87,911

LiabilitiesOther liabilities 3,595,304 4,387,844 (792,540) 256,860 381,567 (124,707) Noncurrent liabilities 29,463,618 30,970,614 (1,506,996) 2,412,781 2,021,622 391,159

Total liabilities 33,058,922 35,358,458 (2,299,536) 2,669,641 2,403,189 266,452

Deferred Inflows of ResourcesDeferred pension resources 7,265,946 8,432,850 (1,166,904) 271,942 147,621 124,321

Net PositionNet investment in capital assets 51,854,858 47,259,002 4,595,856 42,141,720 42,939,676 (797,956) Restricted 23,938,762 24,314,972 (376,210) - - - Unrestricted 10,547,381 9,968,233 579,148 11,003,827 10,698,663 305,164

Total net position 86,341,001$ 81,542,207$ 4,798,794 53,145,547$ 53,638,339$ (492,792)

Governmental Activities Business-Type Activities

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Government-Wide Financial Analysis (Continued)

An additional portion of the City's net position (17.2%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (15.5%) may be used to meet the City's ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the City as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year.

Governmental Activities. Governmental activities increased the City's net position by $5,369,376, thereby accounting for percent of the growth in the net position of the City. Key elements of this change are as follows:

City of Albert Lea's Changes in Net Position

2018 2017Increase


(Decrease)RevenuesProgram revenues

Charges for services 1,702,432$ 1,603,327$ 99,105$ 7,593,289$ 7,389,400$ 203,889$ Operating grants and contributions 593,197 574,252 18,945 - 187 (187) Capital grants and contributions 5,026,013 4,013,023 1,012,990 18,034 35,686 (17,652)

General revenuesProperty taxes 6,413,631 6,338,750 74,881 - - - Tax increments 354,442 321,562 32,880 - - - Franchise taxes 1,787,168 1,648,034 139,134 - - - State grants and contributions not restricted to specific programs 5,410,140 5,246,746 163,394 - - - Unrestricted investment earnings 431,089 402,765 28,324 151,632 172,142 (20,510) Gain on disposal of capital assets 84,402 33,956 50,446 - - -

Total revenues 21,802,514 20,182,415 1,620,099 7,762,955 7,597,415 165,540

ExpensesGeneral government 2,169,413 2,166,561 2,852 - - - Public safety 6,983,401 6,989,633 (6,232) - - - Public works 4,012,349 3,420,520 591,829 - - - Culture and recreation 3,631,330 4,006,557 (375,227) - - - Airport 620,411 1,125,612 (505,201) - - - Community development 449,376 803,201 (353,825) - - - Interest on long-term debt 564,742 525,704 39,038 - - - Water - - - 1,904,474 1,673,215 231,259 Sewer - - - 4,118,407 3,540,898 577,509 Solid waste - - - 104,009 145,871 (41,862)

Total expenses 18,431,022 19,037,788 (606,766) 6,126,890 5,359,984 766,906

Increase in NetAssets before Transfers 3,371,492 1,144,627 2,226,865 1,636,065 2,237,431 (601,366)

Transfers - Capital Related - 652,489 (652,489) - (652,489) 652,489 Transfers 1,997,884 1,913,944 83,940 (1,997,884) (1,913,944) (83,940)

Changes in Net Position 5,369,376 3,711,060 1,658,316 (361,819) (329,002) (32,817)

Net position, January 1, as previously stated 81,542,207 77,831,147 3,711,060 53,638,339 53,967,341 (329,002) Change in Accounting Principle (570,582) - (570,582) (130,973) - (130,973) Net position, January 1, as restated 80,971,625 77,831,147 3,140,478 53,507,366 53,967,341 (459,975)

Net position, December 31 86,341,001$ 81,542,207$ 4,798,794$ 53,145,547$ 53,638,339$ (492,792)$


26


Government-Wide Financial Analysis (Continued)

Governmental Activities (Continued) Property taxes represent approximately 29.4% of total revenues in 2018 in governmental activities.

The largest revenue variance was a $163,394 increase in State grants and contributions not restricted to specific programs due largely to local government aid increasing approximately $114,000.

The largest expense variance was an increase in public works function as a result of increased salaries and benefits along with increased street maintenance, street lighting, snow/ice removal, and other operational expenditures during the year.

The following graph depicts various governmental activities and shows the revenues and expenses directly related to those activities.

GeneralGovernment

Public Safety Public WorksCulture andRecreation

AirportCommunity

DevelopmentInterest on Long-

Term Debt

Expenses $2,169,413 $6,983,401 $4,012,349 $3,631,330 $620,411 $449,376 $564,742

Program revenues 226,468 845,338 3,157,216 941,423 1,515,056 636,141 -

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

Expenses and Program Revenues - Governmental Activities

Revenues by Source – Governmental Activities

Charges for Services7.81%

Operating Grants and Contributions

2.72%

Capital Grants and Contributions

23.05%

Property Taxes29.42%

Tax Increments1.63%

Franchise Taxes8.20%

Grants and Contributions Unrestricted

24.81%

Unrestricted Investment Earnings1.98%

Sale of Capital Assets0.39%

27


Government-Wide Financial Analysis (Continued) Business-type Activities. Business-type activities decreased the City's net position by $361,819. Key elements of this decrease are as follows:

Water Sewer Solid WasteExpenses $1,904,474 $4,118,407 $104,009Program revenues 3,184,553 4,241,992 184,778

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Expenses and Program Revenues ‐ Business‐Type Activities

Charges for Services97.81%

Capital Grants and Contributions0.23%Unrestricted Investment Earnings

1.95%

Revenues by Source - Business-Type Activities

28


Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

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, unrestricted fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $34,319,574, an increase of $117,937 in comparison with the prior year. Approximately 13.6% of this total amount ($4,677,209) constitutes unassigned fund balance, which is available for spending at the City's discretion. The remainder of fund balance ($29,642,365) is not available for new spending because it is either 1) nonspendable ($1,705,724), 2) restricted ($16,951,572), 3) committed ($3,171,609), or 4) assigned ($7,813,460) for the purposes described in the fund balance section of each balance sheet.

2018 2017Increase

(Decrease)

General 9,582,270$ 10,130,332$ (548,062)$

Fire Pension 7,177,631$ 7,560,614$ (382,983)$

Police Pension 3,111,601$ 3,183,722$ (72,121)$

Capital Improvement 3,123,205$ 2,335,350$ 787,855$

TIF 5-13 Larson Manufacturing (1,590,166)$ (1,706,476)$ 116,310$

TIF 5-15 Broadway Ridge Redevelopment (1,498,421)$ (1,534,390)$ 35,969$

2018 CIP Projects 260,584$ (8,901)$ 269,485$

The TIF 5-13 Fund has a total fund balance deficit of $1,590,166. The deficit is mostly due to expenditures being greater than tax increments collected from prior years. The deficit will be funded with future tax increment revenues.

being greater than tax increments collected revenues from prior years. The deficit wil be funded with future tax increment revenues.

The 2018 CIP Project Fund is a major capital project fund. The increase in fund balance of $269,485 is mainly due to intergovernmental revenues as well as bond proceeds from the 2018A bond issuance.

Fund Balance December 31,

Major Funds

The General Fund is the chief operating fund of the City. The General Fund had a decrease in fund balance of $548,062. The fund transferred out $2,221,000 during the year, mostly for capital projects and debt service.

The Fire Pension Fund holds investments restricted for public safety expenditures. The decrease is due to current and capital expenditures in excess of investment earnings.

The Police Pension Fund holds investments restricted for public safety expenditures. The decrease is due to current and capital expenditures in excess of investment earnings.

The Capital Improvement Fund has a total fund balance of $3,123,205 and increased $787,855 from 2017. The increase in fund balance is mainly due to transfers in from other funds.

29


Financial Analysis of the Government's Funds (Continued) Proprietary Funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the enterprise funds at the end of the year amounted to $11,605,481. The total decrease in net position for the funds was $326,328. General Fund Budgetary Highlights The City's General fund budget was not amended during the year. The budget called for no change in fund balance. The General fund had an actual decrease of $548,062 in 2018. Some of the larger variances are as follows: Revenues were over budget by $305,230 which is mostly attributed to license and permit revenues

and tax revenue being over budget by $190,077 and $128,629, respectively. Expenditures were under budget by $397,208 primarily due to the culture and recreation and public safety functions being under budget by $224,093 and $137,122, respectively.

Transfers out were over budget by $1,250,000 due to the Council approved transfers for the Economic Development and Housing Development funds and contributions supporting projects.

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, 2018, amounts to $115,779,042 (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements, machinery and equipment, park facilities, roads, highways and bridges. Major capital asset events during the current fiscal year included the following: Public works building addition

Purchase of a freightliner

Various street improvement projects Various sidewalk projects

Purchase of several new vehicles

30


Capital Asset and Debt Administration (Continued)

City of Albert Lea's Capital Assets (Net of Accumulated Depreciation)

2018 2017Increase


(Decrease)

Land 6,625,088$ 6,625,088$ -$ 300,463$ 300,463$ -$ Construction in progress 5,117,306 6,942,856 1,825,550 294,907 2,030,362 1,735,455 Buildings 7,519,393 6,802,404 (716,989) 18,227,805 17,990,396 (237,409) Improvements other than buildings 47,479,910 42,321,173 (5,158,737) 23,138,388 22,710,337 (428,051) Equipment 5,977,570 5,796,379 (181,191) 1,098,212 1,038,787 (59,425)

Total 72,719,267$ 68,487,900$ (4,231,367)$ 43,059,775$ 44,070,345$ 1,010,570$


Additional information on the City's capital assets can be found in Note 7 starting on page 66 of this report. Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $21,703,856. While all of the City's bonds have revenue streams, they are also all backed by the full faith and credit of the City.

City of Albert Lea's Outstanding Debt

2018 2017Increase


(Decrease)

PRI Assessment Bonds 19,940,000$ 20,180,000$ 240,000$ -$ -$ -$ Equipment certificate 660,000 805,000 145,000 185,000 220,000 35,000 Notes payable 178,856 192,731 13,875 - - - Revenue Bonds - - - 740,000 920,000 180,000

Total 20,778,856$ 21,177,731$ 398,875$ 925,000$ 1,140,000$ 215,000$


The City's bond rating is AA- from Standards and Poor's. Additional information on the City's long-term debt can be found in Note 8 starting on page 69 of this report. Economic Factors and Next Year's Budgets and Rates The City approved a balanced budget for 2019.

The City's General fund property tax levy remained at the same level for 2019, 2018, 2017, 2016,

and 2015.

The City updates annually a long-range financial plan to use as a tool for managing the City's tax levy, tax rate and debt load.

31


Economic Factors and Next Year's Budgets and Rates (Continued) The City water rates and sewer rates for 2015, 2016, 2017, and 2018 to ensure sufficient cash for

upcoming capital projects as well as reaching a sufficient fund balance.

The City's tax base increased 5.0% for the 2019 tax calculation. The tax rate for 2019 decreased 4.6% due to the increase in the net tax capacity and no change in the tax levy.

The City is projected to receive an additional $189,148 in Local Government Aid for 2020. The City is in a stable position with an unassigned fund balance in the General Fund of 47.8% of the 2019 budgeted expenses at the end of 2018.

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 City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the finance department, City of Albert Lea, 221 East Clark Street, Albert Lea, Minnesota 56007.

32

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33

BASIC FINANCIAL STATEMENTS

Primary Government

Governmental Activities

Business-Type Activities Total Port Authority

Housing Redevelopment

AuthorityAssets

Cash and investments 33,987,307$ 11,476,608$ 45,463,915$ 1,591,121$ 542,616$ Restricted cash - - - - 61,184 Taxes receivable 248,249 - 248,249 - - Accounts receivable 484,256 1,181,442 1,665,698 5,464 24,058 Interest receivable 189,315 - 189,315 1,436 - Loans receivable 1,844,059 64,970 1,909,029 1,542,518 - Contract for deed receivable - - - 344,738 - Special assessments receivable 8,774,852 468,675 9,243,527 - - Due from other governments 1,526,312 - 1,526,312 - 112,259 Due from primary government - - - 1,523,891 - Internal balances 581,017 (581,017) - - - Inventory 23,359 101,096 124,455 - 1,478 Property held for resale - - - 4,300,680 - Prepaid items 1,161,088 - 1,161,088 6,304 18,791 Patronage equity - 106,199 106,199 2,257 - Capital assets not being depreciated

Land 6,625,088 300,463 6,925,551 262,933 177,998 Construction in progress 5,117,306 294,907 5,412,213 - 36,184

Capital assets being depreciatedBuildings and structures 19,229,163 36,117,982 55,347,145 9,668,185 6,720,225 Improvements other than buildings 81,193,815 40,442,036 121,635,851 - 2,231,886 Equipment 15,492,474 3,661,080 19,153,554 - 389,841 Less accumulated depreciation (54,938,579) (37,756,693) (92,695,272) (4,594,483) (6,707,603)

Total assets 121,539,081 55,877,748 177,416,829 14,655,044 3,608,917

Deferred Outflows of ResourcesDeferred outflows of resources related to OPEB 97,805 18,156 115,961 - - Deferred outflows of resources related to pensions 5,028,983 191,226 5,220,209 - -

Total deferred outflows of resources 5,126,788 209,382 5,336,170 - -

Total assets and deferred outflows of resources 126,665,869$ 56,087,130$ 182,752,999$ 14,655,044$ 3,608,917$

See notes to financial statements. 34

Component Units

City of Albert LeaStatement of Net Position

December 31, 2018

Primary Government




AuthorityLiabilities

Accounts payable 873,198$ 161,263$ 1,034,461$ 100,218$ 6,428$ Salaries and benefits payable 402,361 60,209 462,570 2,665 - Deposits payable 89,559 10,300 99,859 - 33,256 Contracts payable 280,362 - 280,362 106,441 - Due to other governments 192,968 11,642 204,610 21,452 19,752 Due to component unit 1,523,892 - 1,523,892 Interest payable 232,964 13,446 246,410 9,973 52 Net bonds payable

Payable within one year 2,795,000 215,000 3,010,000 - - Payable after one year 17,890,553 703,055 18,593,608 - -

Notes payablePayable within one year 15,156 - 15,156 - - Payable after one year 163,700 - 163,700 - -

Notes and mortgages payablePayable within one year - - - 159,843 1,955 Payable after one year - - - 4,870,927 347,582

Compensated absences payablePayable within one year 744,043 109,598 853,641 - 13,615 Payable after one year 351,262 93,734 444,996 2,180 10,238

Net pension liability 6,102,964 1,031,324 7,134,288 - - Total OPEB liability 1,400,940 260,070 1,661,010 - -

Total liabilities 33,058,922 2,669,641 35,728,563 5,273,699 440,207

Deferred Inflows of ResourcesDeferred inflows of resources related to pensions 7,265,946 271,942 7,537,888 - - Property taxes levied for subsequent years - - - - 81,750

Total deferred inflows of resources 7,265,946 271,942 7,537,888 - 81,750

Net PositionNet investment in capital assets 51,854,858 42,141,720 93,996,578 1,741,941 2,498,994Restricted 23,938,762 - 23,938,762 - 24,429 Unrestricted 10,547,381 11,003,827 21,551,208 7,639,404 563,537

Total net position 86,341,001 53,145,547 139,486,548 9,381,345 3,086,960

Total liabilities, deferred inflows of resources, and net position 126,665,869$ 56,087,130$ 182,752,999$ 14,655,044$ 3,608,917$

35

Component Units

City of Albert LeaStatement of Net Position

December 31, 2018

Program Revenues

ExpensesCharges for

Services

Operating Grants and

Contributions

Capital Grants and

ContributionsPrimary government

Governmental activitiesGeneral government 2,169,413$ 165,619$ 25,163$ 35,686$ Public safety 6,983,401 536,283 306,246 2,809 Public works 4,012,349 235,689 261,788 2,659,739 Culture and recreation 3,631,330 599,705 - 341,718 Community development 449,376 125,364 - 510,777 Airport 620,411 39,772 - 1,475,284 Interest on long-term debt 564,742 - - -

Total governmental activities 18,431,022 1,702,432 593,197 5,026,013

Business-type activitiesWater 1,904,474 3,172,833 - 11,720 Sewer 4,118,407 4,236,478 - 5,514 Solid waste 104,009 183,978 - 800

Total business-type activities 6,126,890 7,593,289 - 18,034

Total primary governmental 24,557,912$ 9,295,721$ 593,197$ 5,044,047$

Component UnitsPort Authority 1,440,515 757,448 22,837 - Housing Redevelopment Authority 1,897,177 1,670,615 - 36,184

Total component units 3,337,692 2,428,063 22,837 36,184

General revenuesProperty taxesFranchise feesTax incrementsUnrestricted investment incomeGrants and contributions not restricted to specific programsGain on sale of assets

TransfersTotal general revenues and transfers

Change in net position

Net position - beginning, as previously statedChange in accounting principle (See Note 14)Net position - beginning, as restated

Net position - ending


Functions/Programs

City of Albert LeaStatement of Activities

Year Ended December 31, 2018




Authority

(1,942,945)$ -$ (1,942,945)$ -$ -$ (6,138,063) - (6,138,063) - -

(855,133) - (855,133) - - (2,689,907) - (2,689,907) - -

186,765 - 186,765 - - 894,645 - 894,645 - -

(564,742) - (564,742) - - (11,109,380) - (11,109,380) - -

- 1,280,079 1,280,079 - - - 123,585 123,585 - - - 80,769 80,769 - - - 1,484,433 1,484,433 - -

(11,109,380) 1,484,433 (9,624,947) - -

(660,230) - - (190,378)

(660,230) (190,378)

6,413,631 - 6,413,631 - - 1,787,168 - 1,787,168 - -

354,442 - 354,442 - - 431,089 151,632 582,721 32,405 6

5,410,140 - 5,410,140 - - 84,402 - 84,402 132 -

1,997,884 (1,997,884) - - - 16,478,756 (1,846,252) 14,632,504 32,537 6

5,369,376 (361,819) 5,007,557 (627,693) (190,372)

81,542,207 53,638,339 135,180,546 10,009,038 3,277,332 (570,582) (130,973) (701,555) - -

80,971,625 53,507,366 134,478,991 10,009,038 3,277,332

86,341,001$ 53,145,547$ 139,486,548$ 9,381,345$ 3,086,960$

37

Primary Government Component UnitsNet (Expense) Revenues and Changes in Net Position

Debt Service

General (101)Fire Pension

(250)Police Pension

(251)2015 G.O.

Bonds (312)Assets

Cash and investments 7,960,889$ 7,174,138$ 3,107,596$ 978,876$ Taxes receivable 246,586 - - - Accounts receivable 431,748 - - - Interest receivable 80,903 7,915 6,525 - Loans receivable - - - - Special assessment receivable 235,249 - - 2,268,763 Due from other funds - - - - Due from other governments 5,622 - - - Advances to other funds 1,574,277 - - - Inventory 23,359 - - - Prepaid items 105,005 - - -

Total assets 10,663,638$ 7,182,053$ 3,114,121$ 3,247,639$

LiabilitiesAccounts payable 297,231$ 4,422$ 2,520$ -$ Salaries and benefits payable 399,634 - - - Deposits payable 75,809 - - - Contracts payable - - - - Due to other funds - - - - Due to other governments 119,294 - - - Advances from other funds - - - - Advances from component unit - - - -

Total liabilities 891,968 4,422 2,520 -

Deferred Inflows of ResourcesUnavailable revenue - property taxes 182,669 - - - Unavailable revenue - special assessments 6,731 - - 2,265,956

Total deferred inflows of resources 189,400 - - 2,265,956

Fund BalancesNonspendable 1,702,641 - - - Restricted - 7,177,631 3,111,601 981,683 Committed - - - - Assigned - - - - Unassigned 7,879,629 - - -

Total fund balances 9,582,270 7,177,631 3,111,601 981,683

Total liabilities, deferred inflows of resources, and fund balances 10,663,638$ 7,182,053$ 3,114,121$ 3,247,639$


Special Revenue

City of Albert LeaBalance Sheet - Governmental Funds

December 31, 2018

Capital Improvement

(401)

TIF 5-13 Larson

Manufacturing (422)

TIF 5-15 Broadway

Ridge Redevelopment

(423)2018 CIP

Projects (488)

Nonmajor Governmental

Funds

Total Governmental

Funds

3,053,145$ 55,775$ -$ 277$ 10,861,073$ 33,191,769$ - - 1,663 - - 248,249 - - - - 52,508 484,256 - - - - 93,972 189,315 - - - - 1,844,059 1,844,059

1,277,546 - - - 4,993,294 8,774,852 190,572 - - - - 190,572

- - - 521,784 998,906 1,526,312 - - - - - 1,574,277 - - - - - 23,359 - - - - 3,083 108,088

4,521,263$ 55,775$ 1,663$ 522,061$ 18,846,895$ 48,155,108$

109,619$ -$ -$ 67,263$ 391,562$ 872,617$ - - - - 2,727 402,361

8,750 - - - 5,000 89,559 2,143 - - 87,958 190,261 280,362

- - - 106,256 84,316 190,572 - 55,837 - - 17,837 192,968 - 66,212 1,498,895 - 29,807 1,594,914 - 1,523,892 - - - 1,523,892

120,512 1,645,941 1,498,895 261,477 721,510 5,147,245

- - 1,189 - - 183,858 1,277,546 - - - 4,954,198 8,504,431 1,277,546 - 1,189 - 4,954,198 8,688,289

- - - - 3,083 1,705,724 - - - - 5,680,657 16,951,572 - - - - 3,171,609 3,171,609

3,123,205 - - 260,584 4,429,671 7,813,460 - (1,590,166) (1,498,421) - (113,833) 4,677,209

3,123,205 (1,590,166) (1,498,421) 260,584 13,171,187 34,319,574

4,521,263$ 55,775$ 1,663$ 522,061$ 18,846,895$ 48,155,108$

39

Capital Projects

40

City of Albert LeaReconciliation of the Balance Sheet to

the Statement of Net Position - Governmental FundsDecember 31, 2018

Total fund balances - governmental funds 34,319,574$

are different because:

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 127,657,846 Less accumulated depreciation (54,938,579)

Prepaid expenses which are expensed in the governmental funds are capitalized and amortized in the government-wide financial statements. 1,053,000

Long-term liabilities, including bonds payable, are not due and payable inthe current period and, therefore, are not reported as liabilities in the funds.Long-term liabilities at year-end consist of:

Bond principal payable (20,600,000) Unamortized bond premiums/discounts (85,553) Notes payable (178,856) Compensated absences payable (1,095,305) Total OPEB liability (1,400,940) Net pension liability (6,102,964)

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 183,858

Deferred outflows of resources and deferred inflows of resources arecreated as a result of various differences related to pensions and OPEB that arenot recognized in the governmental funds.

Deferred inflows of resources related to pensions (7,265,946) Deferred outflows of resources related to pensions 5,028,983 Deferred outflows of resources related to OPEB 97,805

Revenues in the Statement of Activities that do not provide currentfinancial resources are not reported as revenues in the funds.

Deferred special assessments 8,504,431

Governmental funds do not report a liability for accrued interest on long-term debt until due and payable. (232,964)

Internal service funds are used by management to charge the costof services to individual funds. The assets and liabilitiesare included in the governmental activities Statement of Net Position. 1,396,611

86,341,001$


Amounts reported for governmental activities in the Statement of Net Position

Total net position - governmental activities

Debt Service

General (101)Fire Pension

(250)Police Pension

(251)2015 G.O.

Bonds (312)Revenues

Taxes 6,634,082$ -$ -$ 225,532$ Special assessments 13,351 - - 301,967 Licenses and permits 328,177 - - - Intergovernmental 6,292,795 - - - Charges for services 966,777 - - - Fines and forfeitures 85,626 - - - Miscellaneous

Investment income 72,171 118,859 56,346 10,457 Contributions and donations 3,849 - - - Other 50,656 - - -

Total revenues 14,447,484 118,859 56,346 537,956

ExpendituresCurrent

General government 1,951,182 - - - Public safety 6,235,514 430,154 98,024 - Public works 2,830,263 - - - Culture and recreation 3,313,585 - - - Community development 204,508 - - - Airport - - - -

Debt servicePrincipal 13,875 - - 350,000 Interest and other charges - - - 123,879

Capital outlayGeneral government - - - - Public safety - 71,688 30,443 - Public works 28,055 - - - Culture and recreation 28,398 - - - Community development 50 - - - Airport - - - -

Total expenditures 14,605,430 501,842 128,467 473,879

Excess of revenues over (under) expenditures (157,946) (382,983) (72,121) 64,077

Other Financing Sources (Uses)Proceeds from sale of capital asset - - - - Issuance of debt - - - - Bond premium - - - - Transfers in 1,830,884 - - - Transfers out (2,221,000) - - -

Total other financing sources (uses) (390,116) - - -

Net change in fund balances (548,062) (382,983) (72,121) 64,077

Fund BalancesBeginning of year 10,130,332 7,560,614 3,183,722 917,606

End of year 9,582,270$ 7,177,631$ 3,111,601$ 981,683$

See notes to financial statements 42

Special Revenue

City of Albert LeaStatement of Revenues, Expenditures, and

Changes in Fund Balances - Governmental FundsYear Ended December 31, 2018

Capital Improvement

(401)

TIF 5-13 Larson Manufacturing

(422)

TIF 5-15 Broadway Ridge Redevelopment

(423)2018 CIP

Projects (488)

Nonmajor Governmental

Funds

Total Governmental

Funds

-$ 123,860$ 38,112$ -$ 1,519,946$ 8,541,532$ - - - - 1,386,909 1,702,227 - - - - - 328,177 - - - 852,919 2,406,051 9,551,765 - - - - 89,869 1,056,646 - - - - 19,674 105,300

28,591 - - 11,108 123,097 420,629 - - - - 48,418 52,267

107 - - - 164,181 214,944 28,698 123,860 38,112 864,027 5,758,145 21,973,487

- - - - 45,980 1,997,162 - - - - 7,983 6,771,675

25,825 - - 235,755 55,273 3,147,116 - - - - 157,697 3,471,282 - 7,550 2,143 - 86,894 301,095 - - - - 205,596 205,596

- - - - 2,465,000 2,828,875 - - - 58,035 389,395 571,309

- - - - 17,114 17,114 - - - - 216,510 318,641

246,962 - - 2,721,158 1,732,767 4,728,942 - - - - 234,746 263,144 - - - - 148,231 148,281 - - - - 1,641,607 1,641,607

272,787 7,550 2,143 3,014,948 7,404,793 26,411,839

(244,089) 116,310 35,969 (2,150,921) (1,646,648) (4,438,352)

- - - - 88,996 88,996 - - - 2,386,867 43,133 2,430,000 - - - 49,409 - 49,409

1,031,944 - - 8,902 2,742,344 5,614,074 - - - (24,772) (1,380,418) (3,626,190)

1,031,944 - - 2,420,406 1,494,055 4,556,289

787,855 116,310 35,969 269,485 (152,593) 117,937

2,335,350 (1,706,476) (1,534,390) (8,901) 13,323,780 34,201,637

3,123,205$ (1,590,166)$ (1,498,421)$ 260,584$ 13,171,187$ 34,319,574$

43

Capital Projects

117,937$

are different because:

Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over theestimated useful lives as depreciation expense.

Capital outlays 7,633,605 Depreciation expense (3,397,644) Loss on disposal of capital assets (4,594)

Prepaid expenses which are expensed in the governmental funds are capitalized and amortized in the government-wide financial statements.

Amortization of prepaid lease (27,000)

Some expenses are recognized as paid in the governmental funds but recognized as the expense is incurred in the Statement of Activities.

Compensated absences payable (18,911) Total other post employment benefits (OPEB) liability (120,556)

Principal payments on long-term debt are recognized as expenditures in the governmental funds but as an increase in the net position in the Statement of Activities.

Bond principal payments 2,815,000 Loan payments 13,875

Governmental funds report the effects of bond premiums and discountswhen debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. (34,386)

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 theinterest accrues, regardless of when it is due. (8,456)

Proceeds from long-term debt are recognized as another financing source in the governmental funds but have no impact on the changes in net position in the Statement of Activities. (2,430,000)

Governmental funds recognize pension contributions as expenditures at thetime of payment whereas the Statement of Activities factors in items related topensions on a full accrual perspective.

Pension expense 1,290,244

Internal service funds are used by management to charge the costs of certain activities to individualfunds. The net revenue (loss) of internal service funds are reported with governmental activities. (119,419)

Certain revenues are recognized as soon as they are earned. Under the modified accrualbasis of accounting certain revenues cannot be recognized until they are availableto liquidate liabilities of the current period.

Property taxes 13,709 Special assessments (354,028)

5,369,376$


Change in net position - governmental activities

Total net change in fund balances - governmental funds

Amounts reported for governmental activities in the Statement of Activities

Expenditures, and Changes in Fund Balances to the

City of Albert LeaReconciliation of the Statement of Revenues,

Statement of Activities - Governmental FundsYear Ended December 31, 2018

City of Albert LeaStatement of Revenues, Expenditures, and

Changes in Fund Balances - Budget and Actual - General Fund


Original FinalActual

AmountsRevenues

Taxes 6,505,453$ 6,505,453$ 6,634,082$ 128,629$ Special assessments 10,200 10,200 13,351 3,151 Licenses and permits 269,650 269,650 328,177 58,527 Intergovernmental revenue 6,282,986 6,282,986 6,292,795 9,809 Charges for services 776,700 776,700 966,777 190,077 Fines and forfeitures 100,000 100,000 85,626 (14,374) Miscellaneous revenues 197,265 197,265 126,676 (70,589)

Total revenues 14,142,254 14,142,254 14,447,484 305,230

ExpendituresCurrent

General government 2,009,365 2,009,365 1,951,182 (58,183) Public safety 6,372,636 6,372,636 6,235,514 (137,122) Public works 2,847,609 2,847,609 2,830,263 (17,346) Culture and recreation 3,537,678 3,537,678 3,313,585 (224,093) Community development 201,350 201,350 204,508 3,158

Debt servicePrincipal - - 13,875 13,875

Capital outlayPublic works 21,000 21,000 28,055 7,055 Culture and recreation 13,000 13,000 28,398 15,398 Community development - - 50 50

Total expenditures 15,002,638 15,002,638 14,605,430 (397,208)

Excess of revenues over (under) expenditures (860,384) (860,384) (157,946) 702,438

Other Financing Sources (Uses)Proceeds from sale of capital asset 500 500 - (500) Transfers in 1,830,884 1,830,884 1,830,884 - Transfers out (971,000) (971,000) (2,221,000) (1,250,000)

Total other financing sources (uses) 860,384 860,384 (390,116) (1,250,500)

Net change in fund balances -$ -$ (548,062) (548,062)$

Fund BalancesBeginning of year 10,130,332

End of year 9,582,270$


Variance with Final Budget - Over (Under)

Budgeted Amounts

GovernmentalActivities -

Water (601) Sewer (602)Solid Waste

(603) TotalInternal Service

FundsAssetsCurrent assets

Cash and investments 1,101,086$ 10,282,433$ 93,089$ 11,476,608$ 795,538$ Accounts receivable 498,263 683,059 120 1,181,442 - Special assessment receivable - 93,059 - 93,059 - Inventory 101,096 - - 101,096 -

Total current assets 1,700,445 11,058,551 93,209 12,852,205 795,538

Noncurrent assetsAdvances to other funds - 20,637 - 20,637 - Special assessment receivable 278,794 96,822 - 375,616 - Loans receivable - 64,970 - 64,970 - Patronage Equity - 104,692 1,507 106,199 - Capital assets

Land 73,500 146,892 80,071 300,463 - Buildings and structures 3,082,494 33,002,488 33,000 36,117,982 - Equipment 489,776 3,159,681 11,623 3,661,080 - Improvements other than buildings 14,381,149 26,060,887 - 40,442,036 - Construction in progress 141,030 153,877 - 294,907 -

Total capital assets 18,167,949 62,523,825 124,694 80,816,468 - Less accumulated depreciation (7,098,062) (30,623,652) (34,979) (37,756,693) -

Net capital assets 11,069,887 31,900,173 89,715 43,059,775 - Total noncurrent assets 11,348,681 32,187,294 91,222 43,627,197 -

Total assets 13,049,126 43,245,845 184,431 56,479,402 795,538

Deferred Outflows of ResourcesDeferred outflows of resources related to OPEB 7,334 10,822 - 18,156 - Deferred outflows of resources related to pensions 74,385 115,044 1,797 191,226 -

Total deferred outflows of resources 81,719 125,866 1,797 209,382 -

Total assets and deferred outflows of resources 13,130,845$ 43,371,711$ 186,228$ 56,688,784$ 795,538$

46

City of Albert LeaStatement of Net Position - Proprietary Funds

December 31, 2018

Business-Type Activities - Enterprise Funds




FundsLiabilitiesCurrent liabilities

Accounts payable 34,102$ 121,225$ 5,936$ 161,263$ 581$ Salaries and benefits payable 20,521 39,079 609 60,209 - Deposits payable 10,300 - - 10,300 - Interest payable 13,446 - - 13,446 - Due to other governments - 11,163 479 11,642 - Bonds payable due within one year 215,000 - - 215,000 - Current compensated absences 53,717 55,881 - 109,598 -

Total current liabilities 347,086 227,348 7,024 581,458 581

Noncurrent liabilitiesCompensated absences 28,419 65,315 - 93,734 - Bonds payable 703,055 - - 703,055 - Total OPEB liability 105,055 155,015 - 260,070 - Net pension liability 401,173 620,459 9,692 1,031,324 -

Total noncurrent liabilities 1,237,702 840,789 9,692 2,088,183 - Total liabilities 1,584,788 1,068,137 16,716 2,669,641 581

Deferred Inflows of ResourcesDeferred inflows of resources related to pensions 105,782 163,604 2,556 271,942 -

Net PositionNet investment in capital assets 10,151,832 31,900,173 89,715 42,141,720 - Unrestricted 1,288,443 10,239,797 77,241 11,605,481 794,957

Total net position 11,440,275 42,139,970 166,956 53,747,201 794,957

Total liabilities, deferred inflows of resources, and net position 13,130,845$ 43,371,711$ 186,228$ 56,688,784$ 795,538$

Adjustment to reflect the consolidationof internal service fund activitiesrelated to enterprise funds (601,654)

Net position of business-type activities 53,145,547$



48



(603) TotalsInternal Service

FundsOperating Revenues

Charges for services 3,120,669$ 4,213,234$ 143,682$ 7,477,585$ -$ Miscellaneous - - - - 21,518

Total operating revenues 3,120,669 4,213,234 143,682 7,477,585 21,518

Operating ExpensesPersonnel services 970,843 1,482,865 14,718 2,468,426 - Materials and supplies 237,385 224,545 3,398 465,328 - Repairs and maintenance 72,150 202,825 402 275,377 - Other services and charges 121,825 292,032 82,611 496,468 200,533 Utilities 139,228 671,926 1,923 813,077 - Depreciation 312,845 1,221,160 775 1,534,780 -

Total operating expenses 1,854,276 4,095,353 103,827 6,053,456 200,533

Operating income (loss) 1,266,393 117,881 39,855 1,424,129 (179,015)

Nonoperating Revenues (Expenses)Investment income 16,592 133,565 1,475 151,632 10,460 Intergovernmental 10,000 - - 10,000 3,645 Interest and other charges (37,943) - - (37,943) - Antenna lease revenue 38,012 - - 38,012 - Other income - 17,732 41,096 58,828 -

Total nonoperating revenues 26,661 151,297 42,571 220,529 14,105

Income (loss) before capital contributions and transfers 1,293,054 269,178 82,426 1,644,658 (164,910)

Capital Contributions 15,872 11,026 - 26,898 - Transfers In - - - - 10,000 Transfers Out (821,619) (1,100,669) (75,596) (1,997,884) -

Change in net position 487,307 (820,465) 6,830 (326,328) (154,910)

Net PositionBeginning of year, as previously stated 11,003,321 43,037,914 163,267 54,204,502 949,867

Change in accounting principle (See Note 14) (50,353) (77,479) (3,141) (130,973) -

Beginning of year, as restated 10,952,968 42,960,435 160,126 54,073,529 949,867

End of year 11,440,275$ 42,139,970$ 166,956$ 53,747,201$ 794,957$

Adjustment to reflect the consolidationof internal service fund activitiesrelated to enterprise funds (35,491)

Change in net position of business-type activities (361,819)$



City of Albert LeaStatement of Revenues, Expenses, and Changes

in Net Position - Proprietary FundsYear Ended December 31, 2018




FundsCash Flows - Operating Activities

Receipts from customers and users 3,130,128$ 4,189,831$ 158,982$ 7,478,941$ -$ Payments to suppliers (586,611) (1,485,280) (90,171) (2,162,062) 457 Payments to employees (785,738) (1,139,749) (27,825) (1,953,312) - Other operating receipts - - - - 29,823

Net cash flows - operating activities 1,757,779 1,564,802 40,986 3,363,567 30,280

Cash Flows - Noncapital Financing Activities

Intergovernmental revenue 10,000 - - 10,000 3,645 Antenna lease revenue 38,012 - - 38,012 - Borrowing (payments) on interfund balances - (3,644) - (3,644) - Transfer from other funds - - - - 10,000 Transfer to other funds (821,619) (1,100,669) (75,596) (1,997,884) -

Net cash flows - noncapital financing activities (773,607) (1,104,313) (75,596) (1,953,516) 13,645

Cash Flows - Capital and Related Financing Activities

Special assessments received 18,372 41,737 - 60,109 - Connection charges collected 14,156 - - 14,156 - Principal paid on debt (212,614) - - (212,614) - Interest paid on debt (40,664) - - (40,664) - Other income - 17,732 41,096 58,828 - Acquisition of capital assets (167,926) (356,284) - (524,210) -

Net cash flows - capital and related financing activities (388,676) (296,815) 41,096 (644,395) -

Cash Flows - Investing ActivitiesLoans - (64,970) - (64,970) - Interest and dividends received 16,592 169,290 1,582 187,464 10,460

Net cash flows - investing activities 16,592 104,320 1,582 122,494 10,460

Net change in cash and cash equivalents 612,088 267,994 8,068 888,150 54,385

Cash and Cash Equivalents488,998 10,014,439 85,021 10,588,458 741,153

1,101,086$ 10,282,433$ 93,089$ 11,476,608$ 795,538$


City of Albert LeaStatement of Cash Flows - Proprietary Funds



December 31

January 1


Water (601)Sewage

Disposal (602)Solid Waste Management Total

Internal Service Funds

Reconciliation of Operating Income (Loss) to Net Cash Flows - Operating Activities

Operating income (loss) 1,266,393$ 117,881$ 39,855$ 1,424,129$ (179,015)$ Adjustments to reconcile operating

income (loss) to net cash flows -operating activities

Depreciation expense 312,845 1,221,160 775 1,534,780 - Net pension liability expense 213,725 366,206 (6,498) 573,433 - Accounts receivable 9,459 (29,163) 2,905 (16,799) 8,305 Due from other governments - 5,760 12,395 18,155 - Prepaid items - - - - 206,657 Inventory 16,078 - - 16,078 - Accounts payable (19,737) (105,115) (2,316) (127,168) (5,667) Deposits payable (300) - - (300) - Due to other governmental units (12,064) 11,163 479 (422) - Salaries payable (4,756) 10,759 (99) 5,904 - OPEB expense (6,640) (16,389) (6,510) (29,539) - Compensated absences payable (17,224) (17,460) - (34,684) -

Total adjustments 491,386 1,446,921 1,131 1,939,438 209,295

Net cash flows - operating activities 1,757,779$ 1,564,802$ 40,986$ 3,363,567$ 30,280$

Supplemental Schedule of NoncashCapital and Related Financing Activities

Amortization of bond discounts 2,386$ -$ -$ 2,386$ -$



Agency FundAssets

Taxes receivable 364,982$

LiabilitiesDue to other governments 364,982$


City of Albert LeaStatement of Fiduciary Net Position

December 31, 2018Fiduciary Fund

53

City of Albert Lea Notes to Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Albert Lea (the City) was incorporated by passage of an act by the Legislature of the State of Minnesota and ratified by an election of the voters of the City. The incorporation of the City was effective April 1, 1878, with the adoption of the first Charter. The area of the City on incorporation was 1.2 square miles and the first census of 1880 showed a population of 3,365. The Charter established a Mayor-City Council form of government. The governing body consists of six elected City Council members and a mayor. The City Manager administers policies and coordinates the activities of the City. The heads of the various departments, formed to provide various services, are under the direct supervision of the City Manager. The financial statements present the City and its component units. The City includes all funds, account groups, 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. The accompanying financial statements present the City and its component units (The Port Authority of the City of Albert Lea and the Housing Redevelopment of the City of Albert Lea), entities for which the governments is considered financially accountable. Discretely Presented Component Unit The Port Authority of the City is governed by seven commissioners who are appointed by the Albert Lea City Council. The City is considered financially accountable for the Port Authority because the City Council approves their annual budget. The Port Authority is governed by seven board members, two of which are City Council members and five are residents. It is this criterion that results in the Port Authority being reported as a discretely presented component unit. Separately issued financial statements for the year ended December 31, 2018, are available upon request from the City Manager of the City at 221 East Clark Street, Albert Lea, MN. Discretely Presented Component Unit The Housing and Redevelopment Authority (HRA) of the City is governed by nine board members, one of which is a member of the City Council. The City is considered financially accountable for the HRA because the City Council approves their annual tax levy. There is a financial benefit and burden to the City and due to the nature and significance of its relationship results in the HRA being reported as a discretely presented component unit. The HRA has a year-end of March 31. Separately issued financial statements are available upon request from the City Manager of the City at 221 East Clark Street, Albert Lea, MN.

54


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. The fiduciary funds are only reported in the statement of fiduciary net position and the statement of changes in fiduciary net position at the fund financial statement level. 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 Agency Fund is presented in the fiduciary fund financial statements. Since, by definition, these assets are being held for the benefit of a third party (other local governments, private parties, etc.) and cannot be used to address activities or obligations of the City, the Fund is not incorporated into the government-wide statements. 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 and fiduciary 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 is due.

55


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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 City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

Fire Pension Fund – This fund accounts for the City's fire department monies received from the State in prior years for overfunded pensions and restricted to be used for public safety expenditures.

Police Pension Fund – This fund accounts for the City's police department monies received from the State in prior years for overfunded pensions and restricted to be used for public safety expenditures. 2015 G.O. Bonds Debt Service Fund – This fund accounts for the resources accumulated and payments made for principal and interest on this bond issue. Capital Improvement Capital Project Fund – This fund was established to account for monies related to capital improvement assessments.

TIF 5-13 Larson Manufacturing Capital Project Fund – This fund was established to account for tax increment financing activities relative to property acquisition public improvement, and site improvements to assist with development within the district. TIF 5-15 Broadway Ridge Redevelopment Capital Project Fund – This fund was established to account for tax increment financing activities relative to property acquisition public improvement, and site improvements to assist with development within the district. 2018 CIP Projects Capital Project Fund – This fund was established to account for the capital project activity related to 2018 projects.

Proprietary Funds:

Water Fund – This fund accounts for the water service charges which are used to finance the water system operating expenses.

56


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Description of Funds: (Continued) Proprietary Funds: (Continued)

Sewer Fund – This fund accounts for the sewer service charges which are used to finance the sanitary sewer system operating expenses.

Solid Waste Fund – This fund accounts for the income and expenses in the operation of the transfer station at the landfill site.

Additionally, the City reports the following fund types:

Internal Service Funds – These funds account for insurance services provided to other departments or agencies of the City, or to other governments, on a cost reimbursement basis.

Fiduciary Fund – This fund account for sales tax in a trustee capacity or as an agent on behalf of others.

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 of the City's Internal Service Funds are charges to customers for sales and services. The City also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for 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, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed.

57


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity

1. Deposits and Investments Cash and investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the individual funds based on the average of month-end cash and investment balances. 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. 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.

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 Council annually adopts a tax levy and certifies it to the County in December for collection in the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County and tax settlements are made to the City during January, June, and November each year. 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. Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund receivables are also included for services provided in 2018. The City annually certifies delinquent accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts established.

58


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity

(Continued) 2. Receivables and Payables (Continued) Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivable upon certification to the County. Special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All governmental special assessments receivable are offset by a deferred inflow of resources in the fund financial statements unless related to unpaid charges and are due within one year. 3. Inventory and 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. Inventory is valued at cost using the first in, first out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Property held for resale consists of property that the Port Authority component unit holds for resale. Properties held for resale are reported as an asset at the lower of cost or estimated fair value.

4. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, 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 cost of more than $5,000 and an estimated useful life in excess of two years. In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City chose to include all items previously accounted for. The City had already accounted for its prior infrastructure at historical cost for the initial reporting of these assets. As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. In the case of donations the City values these capital assets at acquisition value of the item at the date of its donation. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

59



(Continued)

4. Capital Assets (Continued) Property, plant and equipment of the City are depreciated using the straight-line method over the following useful lives:

Buildings and structures 25-40Improvements other than buildings 15-40Machinery and equipment 5-20Vehicles 3-20Infrastructure 20-50Land Improvements 5-60

Classification Years

5. 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 position 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 has two items that qualify for reporting in this category. The City presents deferred outflows of resources on the Statement 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 position 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 City presents deferred inflows of resources on the Governmental Fund Balance Sheet as unavailable revenue. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. 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 Statement of Net Position for deferred inflows of resources related to pensions for various estimate differences that will be amortized and recognized over future years. 6. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and sick pay is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General fund is typically used to liquidate governmental compensated absences.

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(Continued) 7. 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 effective interest method. 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.

8. 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. 9. Patronage Equity The enterprise funds purchase electrical power from a cooperative which grants yearly patronage capital credit allocations to its customers. Capital credits represent the customer's share of ownership in the cooperative. They are held by the cooperative until retired by action of the cooperative's board of directors, at which time the customer will receive a capital credit refund check. Capital credit allocations are recognized in the year that they are received.

10. Fund Balance In the fund financial statements, governmental funds report various levels of spending constraints.

Nonspendable Fund Balances – These are amounts that cannot be spent because they are not in

spendable form as they are legally or contractually required to be maintained intact and include prepaid items, inventory, and advances to other funds.

Restricted Fund Balances – These are subject to externally enforceable legal restrictions.

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(Continued) 10. Fund Balance (Continued)

Committed Fund Balances – The government's highest level of decision making authority is the

City Council. The formal action to establish or modify a commitment is made through resolution. Committed amounts cannot be used for any other purpose unless the City Council modifies or rescinds the commitment by resolution.

Assigned Fund Balances – Amounts constrained for specific purposes that are internally

imposed. In governmental funds other than the General Fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. The City Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City Manager.

Minimum Fund Balance Policy – The City has formally adopted a fund balance policy for the

General Fund. The City's policy is to maintain a minimum unassigned fund balance of 45% of budgeted operating expenditures for cash-flow timing needs.

NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Deficit Fund Balances The following funds had fund equity deficits at December 31, 2018:

Amount

Major Capital ProjectsTIF 5-13 Larson Manufacturing 1,590,166$ TIF 5-15 Broadway Ridge Redevelopment 1,498,421

Nonmajor Capital ProjectsTIF 9-1 Port Authority Building 938 TIF 5-24 St Johns Housing 9,170 TIF 2-21 Pro Trucking 4,990 TIF 5-25 Zumbro 20,637 Stables Area Project 58,518 2017 CIP Projects 253 2019 CIP Projects 6,562 2021 CIP Projects 12,765

Fund

The deficits will be funded with future transfers and tax increment revenue.

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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 in the financial statements as "cash and investments". For purposes of identifying risk of investing public funds, the balances and related restrictions are summarized as follows. A. Deposits Custodial Credit Risk – Deposits: This is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City has a policy that requires the District's deposits be collateralized as required by Minnesota Statutes for an amount exceeding FDIC, SAIF, BIF, or FCUA coverage. As of December 31, 2018, the City's bank balance of $6,318 was not exposed to custodial credit risk because it was insured and fully collateralized by federal depository insurance. The book balance as of December 31, 2018, was $6,318 for deposits. Discretely Presented Component Units At March 31, 2018 the HRA's carrying amount of deposits was $603,800 and the bank balance was $638,016, of which $354,081 was covered by federal depository insurance and the remaining balance was covered by securities held by the pledging financial institution's agent in the HRA's name. There was $33,257 in cash - tenant security deposits, which is included in the carrying amount of deposits. At December 31, 2018, the Port Authority had $1,591,121 of deposits all of which were covered with federal depository insurance or collateral pledged by the various banks held in safekeeping of the United Bankers Bank in the Port Authority's name. B. Investments

Credit Fair Less than Greater thanRating Value One Year 1-3 Years 3 Years

Brokered certificates of deposit N/A 10,241,947$ 5,183,522$ 4,351,271$ 707,154$ Government securities AA+ 22,812,544 7,227,967 9,972,759 5,611,818 U.S. treasury obligations N/A 2,440,807 - - 2,440,807 Money market accounts N/A 9,959,569 9,959,569 - -

Total 45,454,867$ 22,371,058$ 14,324,030$ 8,759,779$

Investment Maturities

Investment Type

Concentration Risk: Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. As of December 31, 2018, the City had not invested 5% or more of its total investment portfolio in one single issuer.

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NOTE 3 – DEPOSITS AND INVESTMENTS B. Investments (Continued) Credit Risk: Credit risk is the risk that an issuer to an investment will not fulfill its obligation. State law limits investments in state and local securities and commercial paper to those with specified rating by nationally recognized rating agencies. The City of Albert Lea further limits its investments to not allow any investments in state and local securities and commercial paper. U.S. treasury obligations are not considered to have credit risk. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market value interest rates. The City's investment policy states that not more than 20% of the City's unrestricted unreserved funds may be invested in obligations with maturities in excess of one year. The City's investment policy does not address a method of computation to be used. The City's investments include callable investments. For the weighted average maturity calculations, the City assumes that its callable investments will not be called. Custodial Credit Risk – Investments: For an investment, this is the risk 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 typically limits its exposure by purchasing insured or registered investments. The City has the following recurring fair value measurements as of December 31, 2018:

U.S. treasury obligations and government securities of $25,253,351 are valued using a quoted market prices (Level 1 inputs)

Brokered certificates of deposit of $10,241,947 are valued using a matrix pricing model (Level 2 inputs)

Summary of cash deposits and investments as of December 31, 2018, were as follows:

Deposits 6,318$ 603,800$ 1,591,121$ 2,201,239$ Investments 45,454,867 - - 45,454,867 Petty cash 2,730 - - 2,730

Total deposits and investments 45,463,915$ 603,800$ 1,591,121$ 47,658,836$

Primary Government

Component Unit Port Authority

Component Unit HRA Total

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NOTE 3 – DEPOSITS AND INVESTMENTS B. Investments (Continued) Deposits and investments are presented in the December 31, 2018, basic financial statements as follows:

Statement of Net PositionCash and investments $45,463,915 542,616$ 1,591,121$ $47,597,652Restricted cash - 61,184 - 61,184

Total deposits and investments 45,463,915$ 603,800$ 1,591,121$ 47,658,836$

Primary Government

Component Unit HRA

Component Unit Port Authority Total

NOTE 4 – LOANS RECEIVABLE/CONTRACT FOR DEED The City operates an economic revolving loan fund. The purpose of this fund is to issue loans that serve as gap financing to projects whose purpose it is to create economic development within the City. The funds that are available for these loans originated as grants from the state or federal government. The total balance of these loans at December 31, 2018 was $1,909,029. The total balance has maturities of one to twenty years with interest ranging from 0 to 3%. The City provided $500,000 in financing to Pickerel Park Association in February, 2000. The term of the loan is for 30 years. The interest rate is 1% per annum deferred for 30 years to be paid in a lump sum along with the principal at the end of the loan term. The balance on this loan at December 31, 2018 is $500,000. Accrued interest at December 31, 2018 is $93,972. The Port Authority provided $5,000 in financing to a borrower in December, 2001. The term of loan is for 30 years. The interest rate is 1% per annum deferred for 30 years to be paid in a lump sum along with principal at the end of the loan term. The balance of this loan was paid off in full during the year ended December 31, 2018. The Port Authority provided $1,078,893 in financing to a borrower in April, 2018. The term of loan is for 25 years. There is no interest rate related to this loan. The balance of this loan at December 31, 2018 is $1,042,518. The Port Authority entered into a $500,000 contract for deed on December 1, 2012, for an industrial building and land located at 2220 Myers Road. The contract for deed is to be repaid monthly at 5% interest beginning January 1, 2013. The contract for deed matures on December 1, 2027. The balance of this contract for deed is $344,738 at December 31, 2018.

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NOTE 5 – INTERFUND ASSETS/LIABILITIES At December 31, 2018, interfund balances for the City were as follows:

AmountDue From/To Other FundsCapital Improvement Fund 2018 CIP Projects 106,256$

Nonmajor Governmental Funds 84,316 Total due from/to other funds 190,572$

Advance From/To Other FundsGeneral Fund TIF 5-13 Larson Manufacturing Fund 66,212$

TIF 5-15 Broadway Ridge Fund 1,498,895 Nonmajor Governmental Funds 9,170

Sewage Disposal Fund Nonmajor Governmental Funds 20,637 Total advance from/to other funds 1,594,914$

Payable FundReceivable Fund

The General Fund made advances to several tax increment financing funds rather than have those funds issuing bonds. These advances will be repaid over time through increment from the tax levies. The nonmajor governmental funds have interfund receivables for deficit cash balances. NOTE 6 – INTERFUND TRANSFERS Transfers during the year ended December 31, 2018, were as follows:

Non-major InternalCapital 2018 CIP Governmental Service

General Improvement Projects Funds Funds Total

Transfers out

General -$ 150,000$ -$ 2,061,000$ 10,000$ 2,221,000$ 2018 CIP projects - - - 24,772 - 24,772 Non-major governmental funds - 881,944 8,902 489,572 - 1,380,418 Water 744,619 - - 77,000 - 821,619 Sewer 1,025,669 - - 75,000 - 1,100,669 Solid waste 60,596 - - 15,000 - 75,596

Total 1,830,884$ 1,031,944$ 8,902$ 2,742,344$ 10,000$ $5,624,074

Transfers In

Throughout the course of the year, the City has to make occasional interfund transfers. These transfers are usually approved so that the fund receiving the money can continue to operate. One time budgeted transfers were made to close completed projects and fund capital improvements.

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NOTE 7 – CAPITAL ASSETS Primary Government Capital asset activity for the year ended December 31, 2018, was as follows:

Beginning EndingBalance Increases Decreases Balance

Governmental activitiesCapital assets not being depreciated

Land 6,625,088$ -$ -$ 6,625,088$ Construction in progress 6,942,856 6,080,787 (7,906,337) 5,117,306

Total capital assets not being depreciated 13,567,944 6,080,787 (7,906,337) 11,742,394

Capital assets being depreciatedBuildings and structures 18,040,997 1,188,166 - 19,229,163 Improvements other than buildings 74,126,157 7,067,658 - 81,193,815 Equipment 15,071,469 1,203,331 (782,326) 15,492,474

Total capital assets being depreciated 107,238,623 9,459,155 (782,326) 115,915,452

Less accumulated depreciation forBuildings and structures (11,238,593) (471,177) - (11,709,770) Improvements other than buildings (31,804,984) (1,908,921) - (33,713,905) Equipment (9,275,090) (1,017,546) 777,732 (9,514,904)

Total accumulated depreciation (52,318,667) (3,397,644) 777,732 (54,938,579)

Total capital assets being depreciated, net 54,919,956 6,061,511 (4,594) 60,976,873

Governmental activities capital assets, net 68,487,900$ 12,142,298$ (7,910,931)$ 72,719,267$

Depreciation expense was charged to functions/programs of the governmental activities as follows: Governmental activities

General government 201,639$ Public safety 367,303 Public works 1,776,658 Culture and recreation 556,467 Airport 495,577

Total depreciation expense - governmental activities 3,397,644$

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NOTE 7 – CAPITAL ASSETS (CONTINUED)


Business-type activitiesCapital assets not being depreciated

Land 300,463$ -$ -$ 300,463$ Construction in progress 2,030,362 305,778 (2,041,233) 294,907

Total capital assets not being depreciated 2,330,825 305,778 (2,041,233) 595,370

Capital assets being depreciatedBuildings and structures 35,117,982 1,000,000 - 36,117,982 Improvements other than buildings 39,400,803 1,041,233 - 40,442,036 Machinery and equipment 3,469,736 218,432 (27,088) 3,661,080

Total capital assets being depreciated 77,988,521 2,259,665 (27,088) 80,221,098

Less accumulated depreciation forBuildings and structures (17,127,586) (762,591) - (17,890,177) Improvements other than buildings (16,690,466) (613,182) - (17,303,648) Machinery and equipment (2,430,949) (159,007) 27,088 (2,562,868)

Total accumulated depreciation (36,249,001) (1,534,780) 27,088 (37,756,693)

Total capital assets being depreciated, net 41,739,520 724,885 - 42,464,405

Business-type activities capital assets, net 44,070,345$ 1,030,663$ (2,041,233)$ 43,059,775$

Depreciation expense was charged to functions/programs of the business-type activities as follows: Business-type activities

Water 312,845$ Sewer 1,221,160 Solid waste management 775

Total depreciation expense - business-type activities 1,534,780$

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NOTE 7 – CAPITAL ASSETS (CONTINUED) Discretely Presented Component Units Capital asset activity for the Port Authority for the year ended December 31, 2018, was as follows:


Capital assets not being depreciatedLand 262,933$ -$ -$ 262,933$ Construction in progress 3,125,956 - (3,125,956) -

Total capital assets not being depreciated 3,388,889 - (3,125,956) 262,933

Capital assets being depreciatedBuildings and structures 6,679,567 4,067,607 (1,078,989) 9,668,185

Less accumulated depreciation forBuildings and structures (4,295,426) (299,057) - (4,594,483)

Total capital assets being depreciated, net 2,384,141 3,768,550 (1,078,989) 5,073,702

Business-type activities capital assets, net 5,773,030$ 3,768,550$ (4,204,945)$ 5,336,635$

Depreciation expense was charged to functions/programs of the Port Authority as follows: Business-type activities

Port Authority 299,057$

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NOTE 7 – CAPITAL ASSETS (CONTINUED) Capital asset activity for the HRA for the year ended March 31, 2018, was as follows:


Capital assets not being depreciatedLand 177,998$ -$ -$ 177,998$ Construction in progress - 36,184 - 36,184

Total capital assets not being depreciated 177,998 36,184 - 214,182

Capital assets being depreciatedBuildings and structures 6,720,225 - - 6,720,225 Improvements other than buildings 2,231,886 - - 2,231,886 Machinery and equipment 389,841 - - 389,841

Total capital assets being depreciated 9,341,952 - - 9,341,952

Less accumulated depreciation forBuildings and structures (4,534,522) (112,428) - (4,646,950) Improvements other than buildings (1,586,743) (80,841) - (1,667,584) Machinery and equipment (391,227) (1,842) - (393,069)

Total accumulated depreciation (6,512,492) (195,111) - (6,707,603)

Total capital assets being depreciated, net 2,829,460 (195,111) - 2,634,349

Business-type activities capital assets, net 3,007,458$ (158,927)$ -$ 2,848,531$

Depreciation expense was charged to functions/programs of the HRA as follows: Business-type activities

Housing and Redevelopment 195,111$

NOTE 8 – LONG-TERM DEBT A. General Obligation Bonds The City issues general obligation (G.O.) bonds to provide for the construction of major capital improvements having a relatively long life. They are payable from special assessments levied and collected on local improvements to property and are backed by the full faith and credit of the City.

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NOTE 8 – LONG-TERM DEBT (CONTINUED) B. Components of Long-Term Liabilities Primary Government

Issue Interest Original Final BalanceDate Rates Issue Maturity End of Year

Governmental activitiesSpecial Assessment Bonds

G.O. Improvement Bonds, Series 2009A 07/15/09 3.125%-3.25% 2,840,000$ 02/01/19 330,000$ G.O. Improvement Bonds, Series 2010A 07/15/10 3.125%-4.00% 3,260,000 02/01/26 1,050,000 G.O. Improvement Bonds, Series 2011A 06/01/11 2.25%-2.75% 970,000 02/01/22 255,000 G.O. Improvement Bonds, Series 2012A 07/01/12 1.10%-2.15% 2,215,000 02/01/23 940,000 G.O. Improvement Bonds, Series 2013A 09/18/13 2.00%-2.85% 5,335,000 02/01/24 3,245,000 G.O. Bonds, Series 2014B 09/09/14 2.00%-2.50% 3,720,000 02/01/25 2,110,000 G.O. Bonds, Series 2015A 07/16/15 3.00%-4.00% 4,345,000 02/01/21 3,665,000 G.O. Bonds, Series 2015A - TIF Portion 07/16/15 3.00%-4.00% 555,000 02/01/36 420,000 G.O. Bonds, Series 2016A 08/02/16 2.00% 3,510,000 02/01/27 3,220,000 G.O. Bonds, Series 2017A 08/17/17 3.00% 2,275,000 02/01/28 2,275,000 G.O. Bonds, Series 2018A 06/28/18 2.78% 2,430,000 02/01/28 2,430,000

Equipment CertificatesG.O. Equipment Certificate, Series 2014A 01/16/14 1.15%-2.625% 970,000 02/01/23 600,000 G.O. Equipment Certificate, Series 2014B 09/09/14 2.00% 150,000 02/01/20 60,000

Subtotal bonds payable 20,600,000

Loan payableAlbert Lea Township Fire Department 2017 0.00% 209,800 2030 178,856

Unamortized bond premium/discount payable 85,533 Compensated absences payable 1,095,305

Total governmental activities 21,959,694

Business-type activitiesRevenue Bonds

G.O. Revenue Bonds Series 2007B 07/01/07 4.25%-4.40% 1,040,000$ 02/01/23 415,000$ G.O. Revenue Bonds Series 2010B 07/15/10 2.80%-3.25% 1,080,000 08/01/21 325,000

Equipment CertificatesG.O. Equipment Certificate, Series 2014A 01/16/14 1.15%-2.625% 315,000 02/01/23 185,000

Subtotal bonds payable 925,000

Unamortized bond premium/discount payable (6,945) Compensated absences payable 203,332

Total business-type activities 1,121,387 Total all long-term liabilities 23,081,081$

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NOTE 8 – LONG-TERM DEBT (CONTINUED)

C. Components of Long-Term Liabilities

Discretely Presented Component Units

The HRA had the following notes and mortgages that were issued to finance the purchase of rental property and will be repaid with revenue from the property.

Issue Interest Original Final BalanceDate Rates Issue Maturity End of Year

MHFA PARIF Note 02/20/09 0.00% 120,000$ 02/20/39 120,000$ USDA Rural Development Loan 02/20/09 4.00% 43,806 02/26/30 29,537 MHFA POHP Note 03/23/11 0.00% 200,000 03/23/31 200,000

Total notes and mortgages payable 349,537$

The Port Authority received financing from a local lender for the construction of a spec building in the ALEDA Industrial Park in the amount of $1,643,014, at 5.5% interest, payable in equal monthly installments of $11,363 through August 2019. This loan also requires the Port Authority to meet certain covenants. As of December 31, 2018, the Port Authority is in compliance with their debt covenants.

D. Changes in Long-Term Liabilities

Long-term liability activity for the year ended December 31, 2018, was as follows:

Primary Government

Beginning Ending Due WithinBalance Additions Reductions Balance One Year

Governmental activitiesBonds payable

G.O. bonds 20,180,000$ 2,430,000$ (2,670,000)$ 19,940,000$ 2,650,000$ Bond premiums 53,417 49,409 (15,573) 87,253 - Bond discounts (2,250) - 550 (1,700) -

G.O. equipment certificates 805,000 - (145,000) 660,000 145,000 Total bonds payable 21,036,167 2,479,409 (2,830,023) 20,685,553 2,795,000

Loans payable 192,731 - (13,875) 178,856 15,156

Compensated absences payable 1,076,394 751,670 (732,759) 1,095,305 744,043

Governmental activity long-term liabilities 22,305,292$ 3,231,079$ (3,576,657)$ 21,959,714$ 3,554,199$

Business-type activitiesBonds payable

G.O. bonds 920,000$ -$ (180,000)$ 740,000$ 180,000$ Bond discounts (9,331) - 2,386 (6,945) -

G.O. equipment certificates 220,000 - (35,000) 185,000 35,000 Total bonds payable 1,130,669 - (212,614) 918,055 215,000

Compensated absences payable 238,016 53,400 (88,084) 203,332 109,598

Business-type activities long-term liabilities 1,368,685$ 53,400$ (300,698)$ 1,121,387$ 324,598$

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NOTE 8 – LONG-TERM DEBT (CONTINUED) D. Changes in Long-Term Liabilities (Continued) Discretely Presented Component Units Long-term liability activity for the HRA for the year ended March 31, 2018 was as follows:


Business-type activitiesNotes and mortgages payable 351,402$ -$ (1,885)$ 349,517$ 1,955$ Compensated absences payable 21,101 22,987 (20,235) 23,853 13,615

Business-type activities long-term liabilities 372,503$ 22,987$ (22,120)$ 373,370$ 15,570$

Long-term liability activity for the Port Authority for the year ended December 31, 2018 was as follows:


Business-type activitiesNotes payable 2,712,475$ 1,961,202$ (142,907)$ 4,530,770$ 159,843$ Obligation to return Pickerel Park

loan principle to the City of Albert Lea - 500,000 - 500,000 - Compensated absences payable 9,427 3,844 (11,091) 2,180 -

Business-type activities long-term liabilities 2,721,902$ 2,465,046$ (153,998)$ 5,032,950$ 159,843$

E. Minimum Debt Payments Minimum annual principal and interest payments required to retire long-term liabilities: Primary Government

Year Ending December 31, Principal Interest Principal Interest

2019 2,650,000$ 444,615$ 145,000$ 12,883$ 2020 2,590,000 380,793 145,000 10,356 2021 2,570,000 323,614 120,000 7,703 2022 2,315,000 267,706 120,000 4,912 2023 2,265,000 212,864 130,000 1,706

2024-2028 6,430,000 484,191 - - 2029-2033 775,000 115,388 - - 2034-2036 345,000 19,780 - -

Total 19,940,000$ 2,248,951$ 660,000$ 37,560$

Governmental ActivitiesG.O. Bonds G.O. Equipment Certificates

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NOTE 8 – LONG-TERM DEBT (CONTINUED) D. Minimum Debt Payments (Continued)

Year Ending December 31, Principal Interest Principal Interest Principal Interest

2019 15,156$ -$ 180,000$ 26,683$ 35,000$ 3,713$ 2020 15,000 - 190,000 20,200 35,000 3,126 2021 15,000 - 195,000 13,145 35,000 2,426 2022 15,000 - 85,000 5,830 40,000 1,550 2023 15,000 - 90,000 1,980 40,000 525

2024-2028 75,000 - - - - - 2029-2030 28,699 - - - - -

Total 178,855$ -$ 740,000$ 67,838$ 185,000$ 11,340$

Business-Type ActivitiesG.O. Equipment Certificates

Governmental ActivitiesLoan Payable G.O. Revenue Bonds

Discretely Presented Component Units Annual debt service requirements to maturity for the HRA notes and mortgages payable are as follows:

Year EndingMarch 31, Principal Interest

2019 1,955$ 1,131$ 2020 2,035 1,052 2021 2,118 969 2022 2,204 882 2023 2,294 793

2024-2028 12,951 2,482 2029-2031 205,980 225 2038-2039 120,000 -

Total 349,537$ 7,534$

Notes and Mortgages PayableBusiness-Type Activities

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NOTE 8 – LONG-TERM DEBT (CONTINUED) E. Minimum Debt Payments (Continued) Annual debt service requirements to maturity for the Port Authority notes payable are as follows:

Year EndingMarch 31, Principal Interest

2019 159,843$ 215,960$ 2020 165,690 213,248 2021 174,990 203,948 2022 184,170 194,768 2023 193,835 185,103

2024-2028 3,652,242 1,727,582 2029-2030 500,000 -

Total 5,030,770$ 2,740,609$

Business-Type ActivitiesNotes Payable

F. Operating Lease Obligations The City entered into an agreement with Freeborn County on December 20, 2007, whereby the City made five annual payments of $270,000 beginning in 2008 in exchange for a 50 year lease for their portion of the Government Center. This lease expires December 19, 2057. The City entered into an agreement with Western Star Lodge #26, A.F. & A.M. of Minnesota on May 2, 1980, whereby Western Star Lodge sold to the City of Albert Lea their building in exchange for a 50 year lease on the third floor of the building for their exclusive use as compensation for the building. This lease expires April 30, 2030. Discretely Component Unit (Port Authority) - Leases The Port Authority leases a 60,000 square foot industrial building located at 2510 Y. H. Hanson Drive. The Port Authority receives $135,000 annually for three years under the terms of a lease agreement. This lease will run through December 31, 2019. The Port Authority leases an industrial building located at 590 14th Street. For 2017, a 12-month lease was signed, with base rent set at $14,322.68 per month. This lease expired on March 31, 2018, and was then replaced by $24,000 a month for the new building built by the Port Authority in 2017 and 2018. This new lease will run through February 28, 2023. The Port Authority leases the middle 24,000 square feet of an industrial building located at 2105 Myers Road. The Port Authority receives $6,000 monthly per the terms of the lease agreement which expired on July 31, 2015. The lease was renewed for a 45 month period at the same terms through April 30, 2019.

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NOTE 8 – LONG-TERM DEBT (CONTINUED) F. Operating Lease Obligations (Continued) The Port Authority leases parking space located at 2105 Myers Road. The Port Authority receives $6,000 annually as per the terms of the current lease agreement which expires on December 31, 2022. The lease provides for an option to purchase this property following the expiration of the lease. The Port Authority also leases the northern 24,000 square feet of an industrial building located at 804 14th Street. The Port Authority receives $104,700 annually as per the terms of the current seven-year lease agreement which is June 1, 2012 through April 30, 2019. These leases are accounted for as operating leases. Annual commitments on long-term leases are as follows:

Year EndingDecember 31,

2019 409,180$ 2020 342,600 2021 207,600 2022 207,600 2023 201,600

Thereafter 1,800,000

Total 3,168,580$

All capital assets in the Port Authority are available for lease at December 31, 2018. Total cost of these assets is $9,931,118, with related accumulated depreciation of $4,594,483.

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NOTE 9 –FUND BALANCE Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective funds.

Major Funds

Capital Project

Special Revenue Funds Debt Service Funds

TIF 5-13

General Fire Police 2015 G.O. Larson

Fund Pension Pension Bonds Manufacturing

Fund balances

Nonspendable

Inventory 23,359$ -$ -$ -$ -$

Prepaid items 105,005 - - - -

Advances to other funds 1,574,277 - - - -

Total nonspendable 1,702,641 - - - -

Restricted

Fire and police operations - 7,177,631 3,111,601 - -

Capital improvements - - - - -

Airport improvements - - - - -

Economic development - - - - -

Debt service - - - 981,683 -

Total restricted - 7,177,631 3,111,601 981,683 -

Committed

Community development - - - - -

Economic development loans - - - - -

Total committed - - - - -

Assigned

Capital improvements - - - - -

Building maintenance - - - - -

Total assigned - - - - -

Unassigned 7,879,629 - - - (1,590,166)

Total fund balances 9,582,270$ 7,177,631$ 3,111,601$ 981,683$ (1,590,166)$

Major Funds

77


NOTE 9 –FUND BALANCE

Major TIF 5-15 Nonmajor

Building Broadway Ridge 2018 CIP Governmental

Replacement Redevelopment Projects Funds Total

Fund balances

Nonspendable

Inventory -$ -$ -$ -$ 23,359$

Prepaid items - - - 3,083 108,088

Advances to other funds - - - - 1,574,277

Total nonspendable - - - 3,083 1,705,724

Restricted

Fire and police operations - - - - 10,289,232

Capital improvements - - - 152,985 152,985

Airport improvements - - - 304,803 304,803

Economic development - - - 765,347 765,347

Debt service - - - 4,457,522 5,439,205

Total restricted - - - 5,680,657 16,951,572

Committed

Community development - - - 1,365,372 1,365,372

Economic development loans - - - 1,806,237 1,806,237

Total committed - - - 3,171,609 3,171,609

Assigned

Capital improvements - - 260,584 3,336,089 6,719,878

Building maintenance - - - 1,093,582 1,093,582

Total assigned - - 260,584 4,429,671 7,813,460

Unassigned - (1,498,421) - (113,833) 4,677,209

Total fund balances -$ (1,498,421)$ 260,584$ 13,168,104$ 34,319,574$

Capital Project Funds

Major Funds

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 from the previous year or settlements in excess of insurance coverage for any of the past three years.

78


NOTE 10 – RISK MANAGEMENT Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. NOTE 11 – PENSION PLANS The City participates in various pension plans, total pension expense for the year ended December 31, 2018 was $216,748. The components of pension expense are noted in the following plan summaries. The General Fund and Water and Sewer 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 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Plan (General Employees Plan, accounted for in the General Employees Fund) 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 (Police and Fire Plan, accounted for in the Police and Fire Fund) 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 a local relief association 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.

79


NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) General Employees Plan Benefits General Employees Plan benefits are based on a member's highest average salary for any five 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 ten 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. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. If the General Employees Plan is at least 90% funded for two consecutive years, benefit recipients are given a 2.5% increase. If the plan has not exceeded 90% funded, or have fallen below 80%, benefit recipients are given a 1% increase. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30, will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as of June 30, will receive a pro rata increase. 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 ten 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 ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For Police and Fire Plan 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. Police and Fire Plan benefit recipients receive a future annual 1.0% increase. An annual adjustment will equal 2.5% any time the plan exceeds a 90% funded ratio for two consecutive years. If the adjustment is increased to 2.5% and the funded ratio falls below 80% for one year or 85% for two consecutive years, the post-retirement benefit increase will be lowered to 1%. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as of June 30 will receive a pro rata increase. For retirements after May 31, 2014, the first increase will be delayed two years.

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NOTE 11 – PENSION PLANS (CONTINUED)

Public Employees' Retirement Association (Continued)

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 2018. The City was required to contribute 7.5% for Coordinated Plan members in calendar year 2018. The City's contributions to the General Employees Fund for the year ended December 31, 2018, were $378,743. The City's contributions were equal to the required contributions as set by state statute.

Police and Fire Fund Contributions

Plan members were required to contribute 10.8% of their annual covered salary and the City was required to contribute 16.20% of pay for members in fiscal year 2018. The City's contributions to the Police and Fire Fund for the year ended December 31, 2018, were $495,809. 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, 2018, the City reported a liability of $4,083,026 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 to the fund in 2018. 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 $133,906. The net pension liability was measured as of June 30, 2018, 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 proportion 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, 2017, through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion share was 0.0736%, which was an increase of 0.0016% from its proportion measured as of June 30, 2017.

City's proportionate share of the net pension liability 4,083,026$

State of Minnesota's proportionate share of the net pension liability associated with the City 133,906

Total 4,216,932$

81


NOTE 11 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs General Employees Fund Pension Costs For the year ended December 31, 2018, the City recognized pension expense of $(18,408) for its proportionate share of General Employees Plan's pension expense. Included in the amount, the City recognized $31,226 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.

At December 31, 2018, 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 105,827$ 117,628$ Changes in actuarial assumptions 385,261 451,946 Difference between projected and actual investment earnings - 403,482 Changes in proportion 76,608 103,566 Contributions paid to PERA subsequent to the measurement date 189,371 -

Total 757,067$ 1,076,622$

Deferred Outflows of Resources

Deferred Inflows of Resources

$189,371 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, 2019. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending Pension ExpenseDecember 31, Amount

2019 83,245$ 2020 (205,521) 2021 (301,431) 2022 (85,219)

Total (508,926)$

82

City of Albert Lea

Notes to Financial Statements NOTE 11 –PENSION PLANS Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs At December 31, 2018, the City reported a liability of $3,077,245 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2018, 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 proportion 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, 2017, through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion was 0.2887%, which was a decrease of 0.0053% from its proportion measured as of June 30, 2017. The City also recognized $25,983 for the year ended December 31, 2018, 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. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year, starting in fiscal year 2014. For the year ended December 31, 2018, the City recognized pension expense of $233,356 for its proportionate share of the Police and Fire Fund pension expense. At December 31, 2018, 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 below and on the following page.

Differences between expected and actual economic experience 125,349$ 806,463$ Changes in actuarial assumptions 4,068,288 4,611,382 Difference between projected and actual investment earnings - 607,576 Changes in proportion 21,600 435,845 Contributions paid to PERA subsequent to the measurement date 247,905 -

Total 4,463,142$ 6,461,266$

Deferred Outflows of Resources

Deferred Inflows of Resources

83


NOTE 11 –PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs (Continued) $247,905 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, 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending Pension ExpenseDecember 31, Amount

2019 (104,333)$ 2020 (258,748) 2021 (510,653) 2022 (1,350,224) 2023 (22,071)

Total (2,246,029)$

E. Actuarial Assumptions The total pension liability in the June 30, 2018, actuarial valuation was determined using the entry age normal actuarial cost method and the following actuarial assumptions:

Inflation 2.50 % Per yearActive member payroll growth 3.25 % Per yearInvestment rate of return 7.50 %

Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25% per year for the General Employees Plan, 1.0% per year for the Police and Fire Plan, and 2.0% per year for the Correctional Plan.

84


NOTE 11 –PENSION PLANS (CONTINUED)

Public Employees' Retirement Association (Continued)

E. Actuarial Assumptions (Continued) Actuarial assumptions used in the June 30, 2018, valuation were based on the results of actuarial experience studies. The most recent six-year experience study in the General Employees Plan was completed in 2015. The most recent four-year experience study for Police and Fire Plan was completed in 2016. The five-year experience study for the Correctional Plan, prepared by a former actuary, was completed in 2012. The mortality assumption for the Correctional Plan is based on the Police and Fire Plan experience study completed in 2016. Economic assumptions were updated in 2017 based on a review of inflation and investment return assumptions.

The following changes in actuarial assumptions occurred in 2018:

General Employees Fund 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.

Police and Fire Fund The mortality projection scale was changed from MP-2016 to MP-2017. As set by statute, the assumed post-retirement benefit increase was changed from 1.0% per year

through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger.

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 stocks 36 % 5.10 %International stocks 17 5.30Bonds 20 0.75Alternative assets 25 5.90Cash 2 0.00

Total 100 %

Asset Class

Long-Term Expected Real Rate of ReturnTarget Allocation

85


NOTE 11 –PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Discount Rate The discount rate used to measure the total pension liability in 2018 was 7.5%. 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 those assumptions, the fiduciary net position of the General Employees Fund and the Police and Fire Fund was 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. G. Pension Liability Sensitivity The following table 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 1% Increase in

City's proportionate share of the General Employees Fund net pension liability 6,635,440$ 4,083,026$ 1,976,081$

1% Decrease in 1% Increase in

City's proportionate share of the Police and Fire Fund net pension liability 6,571,822$ 3,051,262$ 139,904$

Discount Rate (6.5%)






H. 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.

86


NOTE 11 –PENSION PLANS (CONTINUED) Public Employees Defined Contribution Plan (Defined Contribution Plan) H. Pension Plan Fiduciary Net Position (Continued) Three council members of the City of Albert Lea are covered by the Defined Contribution Plan, a multiple-employer deferred compensation plan administered by PERA. The Defined Contribution Plan is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5% of salary which is matched by the elected official's employer. For ambulance service personnel, employer contributions are determined by the employer, and for salaried employees must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2% of employer contributions and twenty-five hundredths of 1% (.0025) of the assets in each member's account annually. Pension expense for the year is equal to contributions made. Total contributions made by the City during fiscal year 2018 were:

Contribution Amount Percentage of Covered PayrollEmployee Employer Employee Employer Required Rate

1,800$ 1,800$ 5% 5% 5%

NOTE 12 – BUDGETARY INFORMATION The City prepares a budget for the General Fund, Airport Fund, and Senior Center Fund on the modified accrual basis of accounting. Annual appropriated budgets are adopted for these funds only. Any modification in the adopted budget can be made upon request of and approval by the City Council. All annual appropriations lapse at fiscal year-end. Project-length financial plans are adopted for all capital projects funds. Budgets are not prepared for the Fire Pension or Police Pension fund since they are not legally required to prepare them. On or before July 1 of each year, all agencies of the City submit requests for appropriation to the City Manager so that a budget may be presented. The budget is prepared for the General fund by function and activity and also includes information on the preceding two fiscal years, current year estimates of expenditures and requested appropriations for the next fiscal year.

87


NOTE 12 – BUDGETARY INFORMATION (Continued) The proposed budget is presented to the City Council for review at their last meeting in August. The City Council holds public hearings and may add to, subtract from or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues as estimated by the City Manager. The City Council must adopt the annual budget by December 28 of each year. Expenditures may not legally exceed budgeted appropriations at the total level for each function or activity. Management cannot amend the adopted budget, but must request the City Council to transfer funds between functions or activities or adopt supplemental appropriations when the need arises. There were no budget amendments in 2018. NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN A. Plan Description The City's defined benefit OPEB plan provides a single-employer defined benefit health care plan to eligible retirees. No assets are acclimated in a trust. B. Benefits Provided The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the City's group health insurance plan, which covers both active and retired members. C. Contributions The City of Albert Lea does not contribute to the cost of premiums for eligible retired plan members and their spouses. Because the actual cost for retirees is higher than the average per-person premium for the entire group, the difference gives rise to an implicit rate subsidy. The City pays the difference between the actual and apparent cost. The General Fund typically has been used to liquidate the other postemployment benefit obligation in prior years. For the year 2018, the City contributed $26,610 to the plan. D. Members As of December 31, 2016, the following were covered by the benefit terms: Active employees electing coverage 114Actives waiving coverage 6Retirees electing coverage 2

Total 122

88


NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) E. Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of December 31, 2017, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Discount rate 3.31%Inflation 2.75%Healthcare cost trend increases

Mortality assumption Based on the RP-2014 mortality tables with projected mortality improvements based on scale MP-2015 for General Employees and RP-2000 for Police and Fire, and other adjustments.

Key Methods and Assumptions Used in Valuation of Total OPEB Liability

6.90% for FY2018, gradually decreasing over several decades to an ultimate rate of 4.40% in FY2075 and later years.

The discount rate used to measure the total OPEB liability was 3.31% based on 20-year municipal bond rates.

89


NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) F. Total OPEB Liability The City's total OPEB liability of $1,661,010 was measured as of December 31, 2017, and was determined by an actuarial valuation as of that date. Changes in the total OPEB liability are as follows:

Total OPEB

Liability

Balances at December 31, 2017 1,454,032$

Changes for the yearService cost 72,138 Interest 57,640 Changes of assumptions 103,810 Benefit payments (26,610)

Net changes 206,978

Balances at December 31, 2018 1,661,010$

Changes of assumptions and other inputs reflect a change in the discount rate from 3.81% in 2016 to 3.31% in 2017. The General Fund typically liquidate the Liability related to OPEB. G. OPEB Liability Sensitivity The following presents the City's total OPEB liability calculated using the discount rate of 3.31% as well as the liability measured using 1% lower and 1% higher than the current discount rate.

1% decrease Current 1% increase2.31% 3.31% 4.31%

1,900,525$ 1,661,010$ 1,462,474$

Total OPEB Liability

90


NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) G. OPEB Liability Sensitivity (Continued) 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.

1% decrease Current 1% increase

1,417,711$ 1,661,010$ 1,960,986$

Total OPEB Liability

(5.9% decreasing to 3.4%)



H. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2018, the City recognized OPEB expense of $144,236. At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred DeferredOutflows of Inflows of Resources Resources

Changes of assumptions 89,352$ -$ Contributions between measurement date and reporting date 26,609 -

Total 115,961$ -$

91


NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED) H. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) $26,609 reported as deferred outflows of resources related to OPEB resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended December 31, 2019. Other amounts reported as deferred outflows of resources related to OPEB will be recognized in pension expense as follows:

Year EndingDecember 31, Total

2019 14,458$ 2020 14,458 2021 14,458 2022 14,458 2023 14,458

Thereafter 17,062

Total 89,352$

NOTE 14 – COMMITMENTS AND CONTINGENCIES The City has in process various multi-year construction projects which were not completed in the current fiscal year. As of December 31, 2018, outstanding commitments for these multi-year projects total approximately $245,675. The Port Authority receives financial assistance from federal and state governmental agencies in the form of grants and loans. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. In 2018, management of the Port Authority recorded a liability to acknowledge an obligation to repay the City of Albert Lea the principal amount of a loan receivable from a housing entity. NOTE 15 – CHANGE IN ACCOUNTING PRINCIPLE For the year ended December 31, 2018, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This resulted in an adjustment to the beginning net position on the Statement of Activities of $570,582 for governmental activities and $130,973 for business-type activities to add to the beginning total OPEB liability. The water, sewer, and solid waste management enterprise funds were affected by amounts of $50,353, $77,479, and $3,141, respectively.

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NOTE 16 – NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 83, Certain Asset Retirement Obligations establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for Asset Retirement Obligations (AROs). This statement requires that recognition occur when the liability is both incurred and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a government to perform asset retirement activities. Laws and regulations may require governments to take specific actions to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed into operation, or acquiring a tangible capital asset that has an existing ARO. This statement will be effective for the year ending December 31, 2019. GASB Statement No. 84, Fiduciary Activities establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. This statement will be effective for the year ending December 31, 2019. 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, 2020. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements improves the information that is disclosed in the notes to the financial statements. It also clarifies which liabilities governments should include when disclosing information related to debt. This statement will be effective for the year ending December 31, 2019. GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and simplifies accounting for interest cost incurred before the end of a construction period. This statement will be effective for the year ending December 31, 2020.

GASB Statement No. 90, Majority Equity Interests improves the consistency and comparability of reporting a government's majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. This statement will be effective for the year ending December 31, 2019.

93

REQUIRED SUPPLEMENTARY INFORMATION

December 31, 2018Total OPEB Liability

Service cost 72,138$ Interest 57,640 Changes of assumptions 103,810 Benefit payments (26,610)

Net change in total OPEB liability 206,978

Beginning of year 1,454,032

End of year 1,661,010$

7,792,837$

21.31%

Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.

94

City of Albert LeaSchedule of Changes in Total OPEB Liability

and Related Ratios

Covered payroll

Net OPEB liability as a percentage of covered payroll

City's Covered Payroll

2015 0.0785% 4,068,278$ -$ 4,068,278$ 5,031,160$ 80.86% 78.19%2016 0.0727% 5,902,880 23,003 5,925,883 4,508,507 130.93% 68.91%2017 0.0720% 4,596,432 57,791 4,654,223 4,641,964 99.02% 75.90%2018 0.0736% 4,083,026 31,226 4,114,252 4,943,653 82.59% 79.53%


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) City's Covered

Payroll


(Asset) as a Percentage of its Covered Payroll

Plan Fiduciary Net Position as a

Percentage of the Total Pension

Liability

2015 0.3120% 3,545,050$ 2,851,421$ 124.33% 86.61%2016 0.3070% 12,320,444 2,961,198 416.06% 63.88%2017 0.2940% 3,969,350 3,022,082 131.34% 85.43%2018 0.2887% 3,077,245 3,042,562 101.14% 88.84%


95

City of Albert LeaSchedule of City's Proportionate Share

of Net Pension Liability - General Employees Retirement FundLast Ten Years*

of Net Pension Liability - Public Employees Police and Fire Retirement FundLast Ten Years*

City's Proportionate Share of the Net

Pension Liablility and the State's Proportionate

Share of the Net Pension Liablility

Associated with the CityFor Fiscal Year Ended June 30,

City's Proportionate Share (Percentage) of the Net Pension Liability (Asset)

City's Proportionate Share (Amount) of

the Net Pension Liability (Asset)

State's Proportionate Share (Amount) of the Net

Pension Liability Associated with the

City


(Asset) as a Percentage of its Covered Payroll

Plan Fiduciary Net Position as a

Percentage of the Total Pension

Liability

Schedule of City's Proportionate Share

96

2015 376,725$ 376,725$ -$ 5,023,000$ 7.50%2016 396,870 396,870 - 5,291,600 7.50%2017 390,596 390,596 - 5,207,947 7.50%2018 378,743 378,743 - 5,049,907 7.50%


2015 483,547$ 483,547$ -$ 2,984,858$ 16.20%2016 547,054 547,054 - 3,376,877 16.20%2017 583,424 583,424 - 3,601,383 16.20%2018 495,809 495,809 - 3,060,549 16.20%


97

City of Albert LeaSchedule of City Contributions -

General Employees Retirement FundLast Ten Years*

Schedule of City Contributions -Public Employees Police and Fire Retirement Fund

Contribution Deficiency (Excess) City's Covered Payroll

Contributions as a Percentage of Covered

PayrollStatutorily Required

Contribution

Contributions in Relation to the Statutorily Required

ContributionsFiscal Year Ending

December 31,

Last Ten Years*

Fiscal Year Ending December 31,

Statutorily Required Contribution

Contributions in Relation to the Statutorily Required

ContributionsContribution Deficiency

(Excess) City's Covered Payroll

Contributions as a Percentage of Covered

Payroll

City of Albert Lea Notes to Required Supplementary Information

98

GENERAL EMPLOYEES FUND 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.

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.

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.

2015 Changes 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.

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.


99

POLICE AND FIRE FUND 2018 Changes Changes in Actuarial Assumptions

The mortality projection scale was changed from MP-2016 to MP-2017. As set by statute, the assumed post-retirement benefit increase was changed from 1.0% per year

through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger. 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. 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 assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation.

2015 Changes 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%.


100

POLICE AND FIRE FUND (CONTINUED) 2015 Changes (Continued) 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.

101

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

Special Revenue

Capital Projects Debt Service

Total Nonmajor

Governmental Funds

AssetsCash and investments 1,493,348$ 4,949,299$ 4,418,426$ 10,861,073$ Accounts receivable - 52,508 - 52,508 Interest receivable 93,972 - - 93,972 Loans receivable 1,844,059 - - 1,844,059 Special assessment receivable - - 4,993,294 4,993,294 Due from other governments 918,675 80,231 - 998,906 Prepaid items 3,083 - - 3,083

Total assets 4,353,137$ 5,082,038$ 9,411,720$ 18,846,895$

LiabilitiesAccounts payable 54,289$ 337,273$ -$ 391,562$ Salaries and benefits payable 2,727 - - 2,727 Deposits payable 5,000 - - 5,000 Contracts payable 99,087 91,174 - 190,261 Due to other funds - 84,316 - 84,316 Due to other governments - 17,837 - 17,837 Advances from other funds - 29,807 - 29,807

Total liabilities 161,103 560,407 - 721,510

Deferred Inflows of ResourcesUnavailable revenue - special assessments - - 4,954,198 4,954,198

Fund BalancesNonspendable 3,083 - - 3,083 Restricted 1,017,342 205,793 4,457,522 5,680,657 Committed 3,171,609 - - 3,171,609 Assigned - 4,429,671 - 4,429,671 Unassigned - (113,833) - (113,833)

Total fund balances 4,192,034 4,521,631 4,457,522 13,171,187

Total liabilities, deferred inflows of resources, and fund balances 4,353,137$ 5,082,038$ 9,411,720$ 18,846,895$

102

City of Albert LeaNonmajor Governmental Funds

Combining Balance SheetDecember 31, 2018

Special Revenue

Capital Projects Debt Service

Total Nonmajor Governmental

FundsRevenues

Taxes -$ 193,161$ 1,326,785$ 1,519,946$ Special assessments - - 1,386,909 1,386,909 Intergovernmental 1,986,061 419,990 - 2,406,051 Charges for services 89,869 - - 89,869 Fines and forfeitures 19,674 - - 19,674 Miscellaneous

Investment income 5,185 63,325 54,587 123,097 Contributions and donations 1,710 46,708 - 48,418 Other 102,430 61,751 - 164,181

Total revenues 2,204,929 784,935 2,768,281 5,758,145

ExpendituresCurrent

General government 9,140 36,840 - 45,980 Public safety 7,983 - - 7,983 Public works - 55,273 - 55,273 Culture and recreation 157,697 - - 157,697 Community development 54,100 32,794 - 86,894 Airport 205,596 - - 205,596

Debt servicePrincipal - 75,000 2,390,000 2,465,000 Interest and other charges - 15,305 374,090 389,395

Capital outlayGeneral government - 17,114 - 17,114 Public safety - 216,510 - 216,510 Public works - 1,732,767 - 1,732,767 Culture and recreation - 234,746 - 234,746 Community development - 148,231 - 148,231 Airport 1,641,607 - - 1,641,607

Total expenditures 2,076,123 2,564,580 2,764,090 7,404,793

Excess of revenues over (under) expenditures 128,806 (1,779,645) 4,191 (1,646,648)

Other Financing SourcesProceeds from sale of capital asset 10,000 78,996 - 88,996 Issuance of debt - - 43,133 43,133 Transfers in 756,000 1,498,217 488,127 2,742,344 Transfers out - (917,062) (463,356) (1,380,418)

Total other financing sources 766,000 660,151 67,904 1,494,055

Net change in fund balances 894,806 (1,119,494) 72,095 (152,593)

Fund BalancesBeginning of year 3,297,228 5,641,125 4,385,427 13,323,780

End of year 4,192,034$ 4,521,631$ 4,457,522$ 13,171,187$

103

City of Albert LeaNonmajor Governmental Funds

Combining Statement of Revenues, Expenditures, and Changes in Fund BalancesYear Ended December 31, 2018

104

105

City of Albert Lea Governmental Funds

Nonmajor Special Revenue Funds Special revenue funds are established to account for specific revenue or other sources that are designated for financing particular functions or activities as required by deferral regulations, Minnesota Statute, City charter provisions, local ordinances, or specific grant agreements. Most of the special revenue funds are related to specific federal and state housing programs or grants for specific activities. Nonmajor Capital Projects Funds Capital project funds are established to account for the resources used for the acquisition of capital facilities and infrastructure for the City with the exception of those financed by the enterprise funds. Debt Service Funds The Debt Service funds are established to account for the collection of ad valorem taxes; special assessments and tax increment revenue transfers as well as the payment of principal and interest of general long-term debt.

Proprietary Funds Internal Service Funds Internal Service Funds are established to finance and account for services and/or commodities furnished by a designed program to other programs within the City. Revenue to these funds is derived from charges to user departments in various operational funds of the City.

Police Forfeitures

(201)Small Cities

Program (202)

Economic Development

Revolving (203, 204)

Small Cities - 2016 Grant

(206)Assets

Cash and investments 118,778$ 48,450$ 407,178$ -$ Interest receivable - - - - Loans receivable - - 1,399,059 - Due from other governments - - - 10,777 Prepaid items - - - -

Total assets 118,778$ 48,450$ 1,806,237$ 10,777$

LiabilitiesAccounts payable 211$ -$ -$ 10,777$ Salaries and benefits payable - - - - Deposits payable - - - - Contracts payable - - - -

Total liabilities 211 - - 10,777

Fund BalancesNonspendable - - - - Restricted 118,567 - - - Committed - 48,450 1,806,237 -

Total fund balances 118,567 48,450 1,806,237 -

Total liabilities and fund balances 118,778$ 48,450$ 1,806,237$ 10,777$

106

City of Albert LeaNonmajor Special Revenue Funds

Combining Balance SheetDecember 31, 2018

Special Revenue

1999 Small Cities Grant

(207)Senior Center

(210) Airport (225)Vitality Project

(226)


(230)

Housing Development

(232)

Total Nonmajor Special Revenue

Funds

-$ 143,742$ 35,433$ 6,531$ 533,236$ 200,000$ 1,493,348$ 93,972 - - - - - 93,972

- - - - 445,000 - 1,844,059 500,000 - 407,898 - - - 918,675

- 3,083 - - - - 3,083

593,972$ 146,825$ 443,331$ 6,531$ 978,236$ 200,000$ 4,353,137$

-$ 3,860$ 39,441$ -$ -$ -$ 54,289 - 2,727 - - - - 2,727 - - - - 5,000 - 5,000 - - 99,087 - - - 99,087 - 6,587 138,528 - 5,000 - 161,103

- 3,083 - - - - 3,083 593,972 - 304,803 - - - 1,017,342

- 137,155 - 6,531 973,236 200,000 3,171,609 593,972 140,238 304,803 6,531 973,236 200,000 4,192,034

593,972$ 146,825$ 443,331$ 6,531$ 978,236$ 200,000$ 4,353,137$

107

Special Revenue

Police Forfeitures

(201)Small Cities

Program (202)


Revolving (203, 204)

Small Cities - 2016 Grant

(206)Revenues

Intergovernmental -$ -$ -$ 10,777$ Charges for services - - - - Fines and forfeitures 19,674 - - - Miscellaneous

Investment income - - - - Contributions and donations - - - - Other - - 6,861 -

Total revenues 19,674 - 6,861 10,777

ExpendituresCurrent

General government 9,140 - - - Public safety 7,983 - - - Culture and recreation - - - - Community development - 8 2,370 10,777 Airport - - - -

Capital outlayAirport - - - -

Total expenditures 17,123 8 2,370 10,777

Excess of revenues over (under) expenditures 2,551 (8) 4,491 -

Other Financing SourcesProceeds from sale of capital asset - - - - Transfers in - - - -

Total other financing sources - - - -

Net change in fund balances 2,551 (8) 4,491 -

Fund BalancesBeginning of year 116,016 48,458 1,801,746 -

End of year 118,567$ 48,450$ 1,806,237$ -$

108

City of Albert LeaNonmajor Special Revenue Funds


Special Revenue

1999 Small Cities Grant

(207)Senior Center

(210) Airport (225)Vitality Project

(226)


(230)

Housing Development

(232)

Total Nonmajor

Special Revenue Funds

500,000$ -$ 1,475,284$ -$ -$ -$ 1,986,061$ - 50,097 39,772 - - - 89,869 - - - - - - 19,674

- 1,642 (231) 80 3,694 - 5,185 - 1,710 - - - - 1,710

93,972 166 944 - 487 - 102,430 593,972 53,615 1,515,769 80 4,181 - 2,204,929

- - - - - - 9,140 - - - - - - 7,983 - 157,697 - - - - 157,697 - - - - 40,945 - 54,100 - - 205,596 - - - 205,596

- - 1,641,607 - - - 1,641,607 - 157,697 1,847,203 - 40,945 - 2,076,123

593,972 (104,082) (331,434) 80 (36,764) - 128,806

- - - - 10,000 - 10,000 - 85,000 71,000 - 400,000 200,000 756,000 - 85,000 71,000 - 410,000 200,000 766,000

593,972 (19,082) (260,434) 80 373,236 200,000 894,806

- 159,320 565,237 6,451 600,000 - 3,297,228

593,972$ 140,238$ 304,803$ 6,531$ 973,236$ 200,000$ 4,192,034$

109

Special Revenue

City of Albert LeaSchedule of Revenues, Expenditures, and

Changes in Fund Balances - Budget and Actual

Senior Center Special Revenue FundYear Ended December 31, 2018

With Comparative Actual Amounts for the Year Ended December 31, 2017

2017


AmountsActual

AmountsRevenues

Charges for services 65,500$ 65,500$ 50,097$ (15,403)$ 54,234$ Investment income 2,000 2,000 1,642 (358) 2,441 Contributions and donations 2,000 2,000 1,710 (290) 2,300 Other 500 500 166 (334) 131

Total revenues 70,000 70,000 53,615 (16,385) 59,106

ExpendituresCurrent

Culture and recreation 189,503 189,503 157,697 (31,806) 165,771

Excess of revenues over(under) expenditures (119,503) (119,503) (104,082) 15,421 (106,665)

Other Financing SourcesTransfers in 85,000 85,000 85,000 - 85,000

Net change in fund balances (34,503)$ (34,503)$ (19,082) 15,421$ (21,665)

Fund BalancesBeginning of year 159,320 180,985

End of year 140,238$ 159,320$

110

Budgeted Amounts Variance with Final Budget - Over (Under)

2018

City of Albert LeaSchedule of Revenues, Expenditures, and

Changes in Fund Balances - Budget and Actual

Airport Special Revenue FundYear Ended December 31, 2018


2017


AmountsActual

AmountsRevenues

Intergovernmental 80,000$ 80,000$ 1,475,284$ 1,395,284$ 476,391$ Charges for services 40,000 40,000 39,772 (228) 41,981 Investment income - - (231) (231) 1,588 Other - - 944 944 -

Total revenues 120,000 120,000 1,515,769 1,395,769 519,960

ExpendituresCurrent

Airport 121,912 121,912 205,596 83,684 208,363 Capital ooutlay

Airport 1,500 1,500 1,641,607 1,640,107 418,181 Total expenditures 123,412 123,412 1,847,203 1,723,791 626,544

Excess of revenues under expenditures (3,412) (3,412) (331,434) (328,022) (106,584)

Other Financing SourcesTransfers in 71,000 71,000 71,000 - 485,000

Net change in fund balances 67,588$ 67,588$ (260,434) (328,022)$ 378,416

Fund BalancesBeginning of year 565,237 186,821

End of year 304,803$ 565,237$

111


2018

Broadway Ridge Renewal

Grant (227)

Capital Project Donations (404, 405)

Building Maintenance

(406)Downtown

Projects (408)Assets

Cash and investments 411,316$ -$ 1,177,857$ 41,480$ Accounts receivable - 52,508 - - Due from other governments - - - -

Total assets 411,316$ 52,508$ 1,177,857$ 41,480$

LiabilitiesAccounts payable 6,766$ 497$ 84,275$ -$ Contracts payable - - - - Due to other funds - 17,593 - - Due to other governments - - - - Advances from other funds - - - -

Total liabilities 6,766 18,090 84,275 -

Fund BalancesRestricted - 34,418 - - Assigned 404,550 - 1,093,582 41,480 Unassigned - - - -

Total fund balances 404,550 34,418 1,093,582 41,480

Total liabilities and fund balances 411,316$ 52,508$ 1,177,857$ 41,480$

112

Combining Balance Sheet -December 31, 2018

Capital Projects

City of Albert LeaNonmajor Capital Projects Funds

Continued

Storm Water Projects (409)

TIF 5-12 Mrs. Gerry's (427)

TIF 6-1 Newbury

Development (428)

TIF 9-1 Port Authority Bldg

(429)

TIF 5-24 St. Johns Housing

(431)TIF 2-21 Pro

Trucking (433)

350,000$ 149,635$ 21,740$ 16,899$ 80,231$ 1,920$ - - - - - - - - - - - -

350,000$ 149,635$ 21,740$ 16,899$ 80,231$ 1,920$

-$ -$ -$ -$ 80,231$ 6,910$ - - - - - - - - - - - - - - - 17,837 - - - - - - 9,170 - - - - 17,837 89,401 6,910

- 149,635 21,740 - - - 350,000 - - - - -

- - - (938) (9,170) (4,990) 350,000 149,635 21,740 (938) (9,170) (4,990)

350,000$ 149,635$ 21,740$ 16,899$ 80,231$ 1,920$

Capital Projects

113

Continued

TIF 5-25 Zumbro (434)

PW Facility Phase One

(480)Stables Area Project (486)

2017 CIP Projects (487)

AssetsCash and investments -$ 72,436$ -$ -$ Accounts receivable - - - - Due from other governments - - - 80,231

Total assets -$ 72,436$ -$ 80,231$

LiabilitiesAccounts payable -$ -$ 30,176$ 36,130$ Contracts payable - 72,436 - 18,738 Due to other funds - - 28,342 25,616 Due to other governments - - - - Advances from other funds 20,637 - - -

Total liabilities 20,637 72,436 58,518 80,484

Fund BalancesRestricted - - - - Assigned - - - - Unassigned (20,637) - (58,518) (253)

Total fund balances (20,637) - (58,518) (253)

Total liabilities and fund balances -$ 72,436$ -$ 80,231$

114

Capital Projects

Combining Balance Sheet -December 31, 2018




Vehicles and Equipment

(701)

Computer Equipment

(702)

Total Nonmajor

Capital Projects Funds

-$ -$ 2,319,318$ 306,467$ 4,949,299$ - - - - 52,508 - - - - 80,231

-$ -$ 2,319,318$ 306,467$ 5,082,038$

6,562$ -$ 80,084$ 5,642$ 337,273$ - - - - 91,174 - 12,765 - - 84,316 - - - - 17,837 - - - - 29,807

6,562 12,765 80,084 5,642 560,407

- - - - 205,793 - - 2,239,234 300,825 4,429,671

(6,562) (12,765) - - (113,833) (6,562) (12,765) 2,239,234 300,825 4,521,631

-$ -$ 2,319,318$ 306,467$ 5,082,038$

115

Capital Projects

Broadway Ridge Renewal

Grant (227)

Capital Project Donations (404, 405)

Building Maintenance

(406)Downtown

Projects (408)Revenues

Tax increment -$ -$ -$ -$ Intergovernmental - - - - Miscellaneous

Investment income 5,066 - 13,858 526 Contributions and donations - 46,708 - - Other 10,000 48,598 - -

Total revenues 15,066 95,306 13,858 526

ExpendituresCurrent

General government - - - - Public works - - - - Community development 32,794 - - -

Debt servicePrincipal - - - - Interest and other charges - - - -

Capital outlayGeneral government - - 17,114 - Public safety - - - - Public works - - 72,591 - Culture and recreation - 91,607 125,384 - Community development - - - -

Total expenditures 32,794 91,607 215,089 -

Excess of revenues over (under) expenditures (17,728) 3,699 (201,231) 526

Other Financing Sources (Uses)Proceeds from sale of capital asset - - - - Transfers in 25,000 - 176,217 - Transfers out - - - -

Total other financing sources (uses) 25,000 - 176,217 -

Net change in fund balances 7,272 3,699 (25,014) 526

Fund balancesBeginning of year 397,278 30,719 1,118,596 40,954

End of year 404,550$ 34,418$ 1,093,582$ 41,480$

116


Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Year Ended December 31, 2018

Capital Projects

Continued

Storm Water Projects (409)

TIF 5-12 Mrs. Gerry's (427)

TIF 6-1 Newbury

Development (428)

TIF 9-1 Port Authority Bldg

(429)

TIF 5-24 St. Johns Housing

(431)TIF 2-21 Pro

Trucking (433)

-$ 52,872$ -$ 37,552$ 87,383$ 15,354$ - - - - - -

- - - - - - - - - - - - - - - - - - - 52,872 - 37,552 87,383 15,354

- - - - - - - - - - - - - - - - - -

- 75,000 - - - - - 14,625 - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - 2,295 - 36,864 85,303 20,805 - 91,920 - 36,864 85,303 20,805

- (39,048) - 688 2,080 (5,451)

- - - - - - 350,000 - - - - -

- - - - - - 350,000 - - - - -

350,000 (39,048) - 688 2,080 (5,451)

- 188,683 21,740 (1,626) (11,250) 461

350,000$ 149,635$ 21,740$ (938)$ (9,170)$ (4,990)$

Capital Projects

117

Continued

TIF 5-25 Zumbro (434)

Lakeview Boulevard

(443)

Broadway Avenue

Streetscape (444)

PW Facility Phase One

(480)Revenues

Tax increment -$ -$ -$ -$ Intergovernmental - 291,773 47,986 - Miscellaneous

Investment income - 6,099 2,872 1,195 Contributions and donations - - - - Other - - - -

Total revenues - 297,872 50,858 1,195

ExpendituresCurrent

General government - - - - Public works - - - - Community development - - - -

Debt servicePrincipal - - - - Interest and other charges 680 - - -

Capital outlayGeneral government - - - - Public safety - - - - Public works - 964 - 454,060 Culture and recreation - - - - Community development 2,964 - - -

Total expenditures 3,644 964 - 454,060

Excess of revenues over (under) expenditures (3,644) 296,908 50,858 (452,865)

Other Financing Sources (Uses)Proceeds from sale of capital asset - - - - Transfers in - - - - Transfers out - (452,058) (210,026) (26,217)

Total other financing sources (uses) - (452,058) (210,026) (26,217)

Net change in fund balances (3,644) (155,150) (159,168) (479,082)

Fund balancesBeginning of year (16,993) 155,150 159,168 479,082

End of year (20,637)$ -$ -$ -$



118

Capital Projects

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -

Stables Area Project (486)




Vehicles and Equipment

(701)

Computer Equipment

(702)

Total Nonmajor

Capital Projects Funds

-$ -$ -$ -$ -$ -$ 193,161$ - 80,231 - - - - 419,990

- 2,986 - - 26,866 3,857 63,325 - - - - - - 46,708 - - - - 3,153 - 61,751 - 83,217 - - 30,019 3,857 784,935

- - - - - 36,840 36,840 24,617 11,329 6,562 12,765 - - 55,273

- - - - - - 32,794

- - - - - - 75,000 - - - - - - 15,305

- - - - - - 17,114 - - - - 216,510 - 216,510

25,000 316,673 - - 863,479 - 1,732,767 - - - - 17,755 - 234,746 - - - - - - 148,231

49,617 328,002 6,562 12,765 1,097,744 36,840 2,564,580

(49,617) (244,785) (6,562) (12,765) (1,067,725) (32,983) (1,779,645)

- - - - 78,996 - 78,996 - - - - 947,000 - 1,498,217

(8,901) (219,860) - - - - (917,062) (8,901) (219,860) - - 1,025,996 - 660,151

(58,518) (464,645) (6,562) (12,765) (41,729) (32,983) (1,119,494)

- 464,392 - - 2,280,963 333,808 5,641,125

(58,518)$ (253)$ (6,562)$ (12,765)$ 2,239,234$ 300,825$ 4,521,631$

119

Capital Projects

Debt Service Reserve (301)

PIR Bonds Series 2007A

(304)


(305)


(306)Assets

Cash and investments 1,539,994$ -$ -$ -$ Special assessment receivable 707,761 70,034 39,381 573,874

Total assets 2,247,755$ 70,034$ 39,381$ 573,874$

Deferred Inflows of ResourcesUnavailable revenue - special assessments 704,020$ 69,623$ 38,173$ 573,330$

Fund BalancesRestricted 1,543,735 411 1,208 544

Total deferred inflows of resources and fund balances 2,247,755$ 70,034$ 39,381$ 573,874$

120

City of Albert LeaNonmajor Debt Service Funds

Combining Balance Sheet December 31, 2018

Debt Service

Continued


(307)


(308)


(309)

2014A G.O. Equipment Certificate

(310)

PIR and Refunding

Bonds Series 2014B (311)

2016 G.O. Bonds (313)

2017 G.O. Bonds (314)

-$ -$ 601,092$ 152,018$ 58,621$ 943,698$ 692,445$ 92,863 380,108 660,090 - 419,594 760,592 596,011

92,863$ 380,108$ 1,261,182$ 152,018$ 478,215$ 1,704,290$ 1,288,456$

90,069$ 378,633$ 652,559$ -$ 418,013$ 752,711$ 584,081$

2,794 1,475 608,623 152,018 60,202 951,579 704,375

92,863$ 380,108$ 1,261,182$ 152,018$ 478,215$ 1,704,290$ 1,288,456$

121

Debt Service

122

Continued

Debt Service

2018 G.O. Bonds (315)

Total Nonmajor Debt Service Funds

AssetsCash and investments 430,558$ 4,418,426$ Special assessment receivable 692,986 4,993,294

Total assets 1,123,544$ 9,411,720$

Deferred Inflows of ResourcesUnavailable revenue - special assessments 692,986$ 4,954,198$

Fund BalancesRestricted 430,558 4,457,522

Total deferred inflows of resources and fund balances 1,123,544$ 9,411,720$

123


Combining Balance Sheet December 31, 2018

Debt Service Reserve (301)


(304)


(305)


(306)Revenues

Taxes -$ -$ 224,956$ 108,918$ Special assessments 114,026 38,901 53,432 69,851 Miscellaneous

Investment income 25,220 - - - Total revenues 139,246 38,901 278,388 178,769

ExpendituresDebt service

Debt servicePrincipal - 215,000 325,000 155,000 Interest and other charges 316 4,831 16,619 39,654

Total expenditures 316 219,831 341,619 194,654

Excess of revenues over (under) expenditures 138,930 (180,930) (63,231) (15,885)

Other Financing Sources (Uses)Issuance of debt - - - - Transfers in - 180,550 63,232 16,429 Transfers out (463,356) - - -

Total other financing sources (uses) (463,356) 180,550 63,232 16,429

Net change in fund balances (324,426) (380) 1 544

Fund BalancesBeginning of year 1,868,161 791 1,207 -

End of year 1,543,735$ 411$ 1,208$ 544$

124



Debt Service

Continued


(307)


(308)


(309)

2014A G.O. Equipment Certificate

(310)

PIR and Refunding

Bonds Series 2014B (311)

2016 G.O. Bonds (313)

2017 G.O. Bonds (314)

33,143$ 100,777$ 360,760$ 134,237$ 6,733$ 213,864$ 143,397$ 31,839 78,139 143,362 - 187,059 183,831 128,411

- - 5,337 1,355 - 10,087 7,993 64,982 178,916 509,459 135,592 193,792 407,782 279,801

60,000 245,000 500,000 115,000 485,000 290,000 - 8,204 18,891 86,416 13,981 51,079 68,091 66,008

68,204 263,891 586,416 128,981 536,079 358,091 66,008

(3,222) (84,975) (76,957) 6,611 (342,287) 49,691 213,793

- - - - - - - 4,086 9,058 - - 190,000 - -

- - - - - - - 4,086 9,058 - - 190,000 - -

864 (75,917) (76,957) 6,611 (152,287) 49,691 213,793

1,930 77,392 685,580 145,407 212,489 901,888 490,582

2,794$ 1,475$ 608,623$ 152,018$ 60,202$ 951,579$ 704,375$

Debt Service

125

126

Continued

Debt Service

2018 G.O. Bonds (315)

Total Nonmajor Debt Service

FundsRevenues

Taxes -$ 1,326,785 Special assessments 358,058 1,386,909 Miscellaneous

Investment income 4,595 54,587 Total revenues 362,653 2,768,281

ExpendituresDebt service

Debt servicePrincipal - 2,390,000 Interest and other charges - 374,090

Total expenditures - 2,764,090

Excess of revenues over (under) expenditures 362,653 4,191

Other Financing Sources (Uses)Issuance of debt 43,133 43,133 Transfers in 24,772 488,127 Transfers out - (463,356)

Total other financing sources (uses) 67,905 67,904

Net change in fund balances 430,558 72,095

Fund BalancesBeginning of year - 4,385,427

End of year 430,558$ 4,457,522$

127



2017


AmountsActual

AmountsRevenues

TaxesProperty taxes 4,893,953$ 4,893,953$ 4,835,330$ (58,623)$ 4,702,156$ Franchise fees 1,600,000 1,600,000 1,787,168 187,168 1,648,034 Lodging 11,500 11,500 11,584 84 11,859

Total taxes 6,505,453 6,505,453 6,634,082 128,629 6,362,049

Special Assessments 10,200 10,200 13,351 3,151 3,444

Licenses and permits 269,650 269,650 328,177 58,527 296,467

Intergovernmental revenueLocal government aid 5,360,451 5,360,451 5,360,456 5 5,246,381 Other intergovernmental 922,535 922,535 932,339 9,804 882,122

Total intergovernmental revenue 6,282,986 6,282,986 6,292,795 9,809 6,128,503

Charges for services 776,700 776,700 966,777 190,077 781,710

Fines and forfeitures 100,000 100,000 85,626 (14,374) 100,315

Miscellaneous revenuesInvestment income 130,000 130,000 72,171 (57,829) 140,844 Contributions and donations 7,500 7,500 3,849 (3,651) 12,691 Other 59,765 59,765 50,656 (9,109) 68,262

Total miscellaneous revenues 197,265 197,265 126,676 (70,589) 221,797

Total revenues 14,142,254 14,142,254 14,447,484 305,230 13,894,285

ExpendituresCurrent

General governmentCity Council

Personnel services 65,180 65,180 64,637 (543) 64,283 Supplies 2,250 2,250 1,117 (1,133) 1,214 Other services and charges 87,875 87,875 101,913 14,038 83,547

Total city council 155,305 155,305 167,667 12,362 149,044

City ManagerPersonnel services 397,929 397,929 395,744 (2,185) 371,334 Supplies 2,000 2,000 989 (1,011) 4,937 Other services and charges 49,730 49,730 27,253 (22,477) 35,259

Total City Manager 449,659 449,659 423,986 (25,673) 411,530

City ClerkPersonnel services 97,508 97,508 95,183 (2,325) 107,272 Supplies 870 870 440 (430) 1,309 Other services and charges 18,405 18,405 16,030 (2,375) 15,461

Total City Clerk 116,783 116,783 111,653 (5,130) 124,042

128

2018Variance with Final Budget - Over (Under)

Budgeted Amounts

General Fund


City of Albert Lea

Schedule of Revenues, Expenditures, and Changes in Fund Balances -

Budget and ActualYear Ended December 31, 2018

Continued

2017


AmountsActual

AmountsExpenditures (Continued)Current (continued)

General government (continued)Elections

Personnel services 20,000$ 20,000$ 22,685$ 2,685$ -$ Supplies 10,600 10,600 9,020 (1,580) - Other services and charges 1,900 1,900 2,251 351 -

Total elections 32,500 32,500 33,956 1,456 -

FinancePersonnel services 383,342 383,342 359,374 (23,968) 333,677 Supplies 9,250 9,250 6,575 (2,675) 5,861 Other services and charges 85,730 85,730 81,690 (4,040) 95,054

Total finance 478,322 478,322 447,639 (30,683) 434,592

City AttorneyPersonnel services 237,389 237,389 183,329 (54,060) 237,141 Supplies 900 900 1,234 334 741 Other services and charges 44,830 44,830 106,006 61,176 62,177

Total City Attorney 283,119 283,119 290,569 7,450 300,059

Personnel administrationPersonnel services 164,607 164,607 172,224 7,617 163,211 Supplies 250 250 38 (212) 80 Other services and charges 46,110 46,110 39,988 (6,122) 51,539

Total personnel administration 210,967 210,967 212,250 1,283 214,830

City centerPersonnel services - - 8,849 8,849 - Supplies 13,600 13,600 13,600 - 4,335 Other services and charges 117,100 117,100 129,188 12,088 123,921

Total City center 130,700 130,700 151,637 20,937 128,256

CommunicationsPersonnel services 76,320 76,320 75,807 (513) 72,656 Supplies 15,350 15,350 12,131 (3,219) 13,050 Other services and charges 8,500 8,500 5,544 (2,956) 7,285

Total communications 100,170 100,170 93,482 (6,688) 92,991

Information technologySupplies 3,000 3,000 4,491 1,491 693 Other services and charges 48,840 48,840 13,852 (34,988) 39,313

Total information technology 51,840 51,840 18,343 (33,497) 40,006

Total general government 2,009,365 2,009,365 1,951,182 (58,183) 1,895,350

129


General FundCity of Albert Lea


Budget and Actual

2018Budgeted Amounts Variance with

Final Budget - Over (Under)


Continued

2017


AmountsActual


Public safetyPolice

Personnel services 3,179,924$ 3,179,924$ 3,028,525$ (151,399)$ 2,904,561$ Supplies 128,500 128,500 102,811 (25,689) 111,057 Other services and charges 333,830 333,830 358,949 25,119 527,412

Total police 3,642,254 3,642,254 3,490,285 (151,969) 3,543,030

FirePersonnel services 1,852,684 1,852,684 1,922,258 69,574 1,864,478 Supplies 105,650 105,650 88,771 (16,879) 90,417 Other services and charges 121,960 121,960 88,299 (33,661) 92,378

Total fire 2,080,294 2,080,294 2,099,328 19,034 2,047,273

Inspection servicesPersonnel services 317,338 317,338 315,048 (2,290) 258,582 Supplies 16,500 16,500 11,671 (4,829) 13,767 Other services and charges 110,471 110,471 130,046 19,575 23,364

Total inspection services 444,309 444,309 456,765 12,456 295,713

Community servicesPersonnel services 174,059 174,059 167,859 (6,200) 160,288 Supplies 5,600 5,600 4,141 (1,459) 4,891 Other services and charges 26,120 26,120 17,136 (8,984) 16,771

Total community services 205,779 205,779 189,136 (16,643) 181,950

Total public safety 6,372,636 6,372,636 6,235,514 (137,122) 6,067,966

Public worksEngineering

Personnel services 610,582 610,582 612,079 1,497 541,942 Supplies 10,525 10,525 7,049 (3,476) 8,107 Other services and charges 32,150 32,150 24,835 (7,315) 19,024

Total engineering 653,257 653,257 643,963 (9,294) 569,073

Street maintenancePersonnel services 512,417 512,417 499,779 (12,638) 460,301 Supplies 368,500 368,500 286,265 (82,235) 249,626 Other services and charges 96,350 96,350 100,974 4,624 90,483

Total street maintenance 977,267 977,267 887,018 (90,249) 800,410

Snow and ice removalPersonnel services 294,224 294,224 310,028 15,804 270,515 Supplies 97,000 97,000 170,789 73,789 97,869 Other services and charges 12,740 12,740 4,477 (8,263) 10,996

Total snow and ice removal 403,964 403,964 485,294 81,330 379,380

130



Year Ended December 31, 2018With Comparative Actual Amounts for the Year Ended December 31, 2017

General FundCity of Albert Lea


Budget and Actual

Continued

2017


AmountsActual


Public works (continued)Storm drainagePersonnel services 131,729$ 131,729$ 128,850$ (2,879)$ 120,617$ Supplies 41,800 41,800 25,368 (16,432) 30,524 Other services and charges 85,790 85,790 105,036 19,246 62,977

Total storm drainage 259,319 259,319 259,254 (65) 214,118

Street lightingSupplies 32,000 32,000 35,184 3,184 10,896 Other services and charges 245,000 245,000 251,250 6,250 225,657

Total street lighting 277,000 277,000 286,434 9,434 236,553

City garagePersonnel services 192,727 192,727 174,463 (18,264) 172,734 Supplies 36,215 36,215 32,123 (4,092) 25,059 Other services and charges 47,860 47,860 61,714 13,854 36,972

Total City garage 276,802 276,802 268,300 (8,502) 234,765

Total public works 2,847,609 2,847,609 2,830,263 (17,346) 2,434,299

Culture and recreationRecreation administration

Personnel services 226,698 226,698 225,168 (1,530) 194,249 Supplies 8,100 8,100 3,860 (4,240) 5,762 Other services and charges 19,060 19,060 15,625 (3,435) 17,092

Total recreation administration 253,858 253,858 244,653 (9,205) 217,103

ArenaPersonnel services 282,940 282,940 266,337 (16,603) 287,078 Supplies 42,800 42,800 34,099 (8,701) 37,168 Other services and charges 181,840 181,840 179,924 (1,916) 167,486

Total arena 507,580 507,580 480,360 (27,220) 491,732

Swimming poolPersonnel services 126,340 126,340 144,755 18,415 127,540 Supplies 31,900 31,900 25,981 (5,919) 23,582 Other services and charges 37,300 37,300 31,883 (5,417) 29,769

Total swimming pool 195,540 195,540 202,619 7,079 180,891

Park and recreation programsPersonnel services 43,453 43,453 56,868 13,415 47,517 Supplies 14,100 14,100 28,089 13,989 10,301 Other services and charges 16,550 16,550 11,625 (4,925) 13,148

Total park and recreation programs 74,103 74,103 96,582 22,479 70,966

131

City of Albert LeaGeneral Fund






Continued

2017


AmountsActual


Culture and recreation (continued)Theater

Supplies 4,000$ 4,000$ 443$ (3,557)$ 648$ Other services and charges 27,460 27,460 22,955 (4,505) 21,150

Total theater 31,460 31,460 23,398 (8,062) 21,798

ParksPersonnel services 846,560 846,560 825,655 (20,905) 811,131 Supplies 196,200 196,200 171,827 (24,373) 186,567 Other services and charges 160,500 160,500 131,684 (28,816) 135,161

Total parks 1,203,260 1,203,260 1,129,166 (74,094) 1,132,859

ForestryPersonnel services 100,581 100,581 95,901 (4,680) 94,774 Supplies 27,200 27,200 24,232 (2,968) 14,908 Other services and charges 28,650 28,650 18,718 (9,932) 23,664

Total forestry 156,431 156,431 138,851 (17,580) 133,346

LibraryPersonnel services 886,691 886,691 745,201 (141,490) 746,970 Supplies 134,100 134,100 158,399 24,299 141,403 Other services and charges 94,655 94,655 94,356 (299) 67,285

Total library 1,115,446 1,115,446 997,956 (117,490) 955,658

Total culture and recreation 3,537,678 3,537,678 3,313,585 (224,093) 3,204,353

Community developmentCommunity development services

Supplies 750 750 562 (188) 409 Other services and charges 114,800 114,800 99,710 (15,090) 136,454

Total community development services 115,550 115,550 100,272 (15,278) 136,863

Property acquisitionsOther services and charges 35,900 35,900 43,622 7,722 29,044

Total property acquisitions 35,900 35,900 43,622 7,722 29,044

Economic developmentSupplies - - - - 75 Other services and charges 49,900 49,900 60,614 10,714 61,847

Total economic development 49,900 49,900 60,614 10,714 61,922

Total community development 201,350 201,350 204,508 3,158 227,829

Total current expenditures 14,968,638 14,968,638 14,535,052 (433,586) 13,829,797

132






2018

2017


AmountsActual

AmountsExpenditures (Continued)Debt Service

Principal -$ -$ 13,875$ 13,875$ 14,510$

Capital outlayPublic safety - - - - 5,502 Public works 21,000 21,000 28,055 7,055 - Culture and recreation 13,000 13,000 28,398 15,398 23,627 Community development - - 50 50 -

Total capital outlay 34,000 34,000 56,503 22,503 29,129

Total expenditures 15,002,638 15,002,638 14,605,430 (397,208) 13,873,436

Excess of revenues over (under) expenditures (860,384) (860,384) (157,946) 702,438 20,849

Other Financing Sources (Uses)Proceeds from sale of capital asset 500 500 - (500) - Transfers in 1,830,884 1,830,884 1,830,884 - 1,713,930 Transfers out (971,000) (971,000) (2,221,000) (1,250,000) (4,439,347)

Total other financing sources (uses) 860,384 860,384 (390,116) (1,250,500) (2,725,417)

Net change in fund balances -$ -$ (548,062) (548,062)$ (2,704,568)

Fund BalancesBeginning of year 10,130,332 12,834,900

End of year 9,582,270$ 10,130,332$

133







Health/Workers Comp Insurance

(703)

Property Liability

Insurance (704) TotalAssets

Cash and investments 550,033$ 245,505$ 795,538$

LiabilitiesAccounts payable 507$ 74$ 581$

Net PositionUnrestricted 549,526$ 245,431$ 794,957$

134

City of Albert LeaInternal Service Funds

Combining Statement of Net PositionDecember 31, 2018


(703)

Property Liability

Insurance (704) Total

Operating revenuesMiscellaneous 9,705$ 11,813$ 21,518$

Operating expensesOther services and charges 160,585 39,948 200,533

Operating loss (150,880) (28,135) (179,015)

Nonoperating revenuesInvestment income 7,462 2,998 10,460 Miscellaneous revenue 3,645 - 3,645

Total nonoperating revenues 11,107 2,998 14,105

Loss before transfers (139,773) (25,137) (164,910)

Transfers in 10,000 - 10,000

Change in net position (129,773) (25,137) (154,910)

Net positionJanuary 1 679,299 270,568 949,867

December 31 549,526$ 245,431$ 794,957$

135

City of Albert LeaInternal Service Funds

Combining Statement of Revenues, Expenses, andChanges in Net Position



(703)

Property/ Liability

Insurance (705) TotalCash Flows - Operating Activities

Payments to suppliers 40,331$ (39,874)$ 457$ Other operating receipts 18,010 11,813 29,823

Net cash flows - operating activities 58,341 (28,061) 30,280

Cash Flows - Noncapital Financing activities

Intergovernmental receipts 3,645 - 3,645 Transfer from other funds 10,000 - 10,000

Net cash flows - noncapital financing activities 13,645 - 13,645

Cash Flows - Investing ActivitiesInterest received 7,462 2,998 10,460

Net change in cash and cash equivalents 79,448 (25,063) 54,385

Cash and Cash Equivalents, January 1January 1 470,585 270,568 741,153

December 31 550,033$ 245,505$ 795,538$

Reconciliation of Operating Loss to Net Cash Flows - Operating Activities

Operating loss (150,880)$ (28,135)$ (179,015)$ Adjustments to reconcile operating

loss to net cash flows -operating activities

Accounts receivable 8,305 - 8,305 Prepaid items 206,657 - 206,657 Accounts payable (5,741) 74 (5,667)

Total adjustments 209,221 74 209,295 Net cash flows -

operating activities 58,341$ (28,061)$ 30,280$

136

City of Albert Lea

Combining Statement of Cash FlowsYear Ended December 31, 2018

Internal Service Funds

Balance 12/31/17 Additions Deletions

Balance 12/31/18

Sales Tax Agency Fund

AssetsTaxes receivable $ 357,683 1,443,379$ (1,436,080)$ $ 364,982

LiabilitiesDue to other governments $ 357,683 $ 1,443,379 $ (1,436,080) $ 364,982

137

City of Albert Lea

Statement of Changes in Assets and LiabilitiesDecember 31, 2018

Fiduciary Fund

138

139

STATISTICAL SECTION (UNAUDITED)



City of Albert Lea, MinnesotaStatistical Section (Unaudited)

Net Position by ComponentLast Ten Fiscal Years

2009 2010 2011 2012Governmental Activities

Net investment in capital assets 24,875,411$ 28,832,835$ 33,024,190$ 36,422,895$ Restricted 11,133,724 17,440,064 17,055,998 17,785,097 Unrestricted 22,870,353 18,531,196 21,111,353 20,076,182

Total governmental activities net position 58,879,488$ 64,804,095$ 71,191,541$ 74,284,174$

Business-Type ActivitiesNet investment in capital assets 39,072,364$ 40,401,057$ 39,757,094$ 39,407,822$ Unrestricted 9,606,137 9,500,425 11,084,277 12,200,119

Total business-type activities net position 48,678,501$ 49,901,482$ 50,841,371$ 51,607,941$

Total Primary GovernmentNet investment in capital assets 63,947,775$ 69,233,892$ 72,781,284$ 75,830,717$ Restricted 11,133,724 17,440,064 17,055,998 17,785,097 Unrestricted 32,476,490 28,031,621 32,195,630 32,276,301

Total primary government 107,557,989$ 114,705,577$ 122,032,912$ 125,892,115$

Note: The City implemented GASB Statement No. 68 and GASB Statement No. 71 in 2015.Years prior to 2015 have not been restated.

140

Fiscal Year

Table 1

2013 2014 2015 2016 2017 2018

38,902,147$ 38,238,312$ 42,082,378$ 42,945,205$ 47,259,002$ 51,854,858$ 18,709,908 19,579,069 21,453,540 24,221,520 24,314,972 23,938,762 19,933,951 21,295,560 12,533,192 10,664,422 9,968,233 10,547,381

77,546,006$ 79,112,941$ 76,069,110$ 77,831,147$ 81,542,207$ 86,341,001$

38,308,602$ 39,407,245$ 39,661,982$ 42,729,009$ 42,939,676$ 42,141,720$ 12,562,117 12,802,989 12,613,332 11,238,332 10,698,663 11,003,827

50,870,719$ 52,210,234$ 52,275,314$ 53,967,341$ 53,638,339$ 53,145,547$

77,210,749$ 77,645,557$ 81,744,360$ 85,674,214$ 90,198,678$ 93,996,578$ 18,709,908 19,579,069 21,453,540 24,221,520 24,314,972 23,938,762 32,496,068 34,098,549 25,146,524 21,902,754 20,666,896 21,551,208

128,416,725$ 131,323,175$ 128,344,424$ 131,798,488$ 135,180,546$ 139,486,548$

141

Fiscal Year


Changes in Net PositionLast Ten Fiscal Years

(Accrual Basis of Accounting)

2009 2010 2011 2012Expenses

Governmental activitiesGeneral government 1,966,733$ 2,008,144$ 1,926,712$ 1,808,099$ Public safety 5,408,550 5,405,858 6,439,772 5,738,188 Public works 3,805,920 4,193,100 3,415,753 3,611,704 Culture and recreation 3,500,866 3,068,019 3,691,049 3,760,834 Airport - - - - Community development 307,048 567,042 335,129 931,118 Interest on long-term debt 339,329 367,208 355,546 343,828

Total governmental activities expenses 15,328,446 15,609,371 16,163,961 16,193,771

Business-type activitiesWater 1,806,236 1,736,795 1,668,695 1,856,750 Sewer 3,572,505 3,806,597 3,758,711 3,702,369 Solid waste 389,145 474,319 186,934 172,647 Parking maintenance district 33,941 51,585 36,912 29,649

Total business-type activities expenses 5,801,827 6,069,296 5,651,252 5,761,415

Total expenses 21,130,273$ 21,678,667$ 21,815,213$ 21,955,186$

Program RevenuesGovernmental activities

Charges for servicesGeneral government 350,379$ 513,692$ 170,666$ 164,696$ Culture and recreation 444,343 487,119 403,813 398,473 Other activities 441,028 761,785 516,079 599,438

Operating grants and contributions 1,260,091 862,239 2,342,509 783,030 Capital grants and contributions 4,663,347 7,808,059 6,520,439 5,378,484

Total governmental activities program revenue 7,159,188 10,432,894 9,953,506 7,324,121

Business-type activitiesCharges for services

Water 1,712,050 1,792,367 1,894,512 1,991,866 Sewer 3,613,011 3,673,489 3,674,956 3,721,968 Other activities 119,185 185,665 217,172 198,120

Operating grants and contributions 42,403 332,176 - - Capital grants and contributions 858,547 - 69,681 7,000


Total program revenues 13,504,384 16,416,591 15,809,827 13,243,075

142

Fiscal Year

Table 2

2013 2014 2015 2016 2017 2018

1,946,733$ 2,066,221$ 1,735,013$ 2,062,534$ 2,166,561$ 2,169,413$ 6,127,434 6,282,002 6,051,784 7,793,711 6,989,633 6,983,401 3,695,469 4,116,428 4,186,823 3,448,159 3,420,520 4,012,349 3,792,532 3,709,010 3,694,414 3,614,932 4,006,557 3,631,330

562,700 608,770 546,100 578,473 1,125,612 620,411 295,666 405,733 506,248 1,135,736 803,201 449,376 342,006 433,078 432,617 501,753 525,704 564,742

16,762,540 17,621,242 17,152,999 19,135,298 19,037,788 18,431,022

1,931,472 1,845,736 1,628,018 1,674,260 1,673,215 1,904,474 3,477,519 3,520,744 3,677,161 3,603,255 3,540,898 4,118,407

140,180 109,784 130,506 140,752 145,871 104,009 12,258 24,636 11,368 10,861 - -

5,561,429 5,500,900 5,447,053 5,429,128 5,359,984 6,126,890

22,323,969$ 23,122,142$ 22,600,052$ 24,564,426$ 24,397,772$ 24,557,912$

126,519$ 131,199$ 91,998$ 100,449$ 140,139$ 165,619$ 540,628 659,180 547,688 593,500 672,198 599,705 671,474 948,089 896,380 955,216 790,990 937,108 766,247 551,154 604,428 613,416 574,252 593,197

5,685,443 2,353,280 5,239,394 4,749,991 4,013,023 5,026,013

7,790,311 4,642,902 7,379,888 7,012,572 6,190,602 7,321,642

2,150,345 2,363,536 2,538,061 2,778,218 2,979,526 3,172,833 3,753,107 4,465,989 4,534,385 4,230,589 4,250,258 4,236,478

256,524 215,350 178,641 164,168 159,616 183,978 - - - 2,620 187 -

209,670 37,807 192,197 59,774 35,686 18,034

6,369,646 7,082,682 7,443,284 7,235,369 7,425,273 7,611,323

14,159,957 11,725,584 14,823,172 14,247,941 13,615,875 14,932,965

143

Fiscal Year


Changes in Net Position (Continued)Last Ten Fiscal Years


2009 2010 2011 2012Net (Expenses) Revenues

Governmental activities (8,169,258)$ (5,176,477)$ (6,210,455)$ (8,869,650)$ Business-type activities 543,369 (85,599) 205,069 157,539

Total primary government (7,625,889)$ (5,262,076)$ (6,005,386)$ (8,712,111)$

General Revenues and Other Changes in Net Position

Governmental activitiesTaxes

Property taxes - general purposes 4,358,198$ 4,490,654$ 4,738,668$ 5,226,320$ Property taxes - debt service 212,703 213,077 157,348 139,638 Tax increments - - - - Franchise and lodging taxes 1,551,764 1,603,173 1,708,025 1,499,375 Unrestricted grants and contributions 5,576,634 5,076,420 4,876,678 4,754,646

Unrestricted investment earnings 174,965 535,222 395,112 141,885 Sale of capital assets - - - - Miscellaneous - - 536,230 549,710 Transfers - capital related - - - - Transfers 31,279 (817,462) 185,840 (349,291)


Business-type activitiesUnrestricted investment earnings (276,100) 491,118 920,660 260,040 Sale of capital assets - - - - Transfers - capital related - - - - Transfers (31,279) 817,462 (185,840) 349,291

Total business-type activities expenses (307,379) 1,308,580 734,820 609,331


Change in Net PositionGovernmental activities 3,736,285$ 5,924,607$ 6,387,446$ 3,092,633$ Business-type activities 235,990 1,222,981 939,889 766,870


144

Fiscal Year

Table 2

2013 2014 2015 2016 2017 2018

(8,972,229)$ (12,978,340)$ (9,773,111)$ (12,122,726)$ (12,847,186)$ (11,109,380)$ 808,217 1,581,782 1,996,231 1,806,241 2,065,289 1,484,433

(8,164,012)$ (11,396,558)$ (7,776,880)$ (10,316,485)$ (10,781,897)$ (9,624,947)$

4,814,108$ 4,764,012$ 4,859,193$ 4,790,563$ 4,938,679$ 4,849,730$ 705,172 1,073,458 1,200,097 1,398,161 1,388,212 1,552,317 157,535 265,279 133,114 125,907 321,562 354,442

1,485,581 1,512,332 1,465,245 1,603,182 1,659,893 1,798,752 4,730,810 5,169,457 5,252,535 5,316,055 5,246,746 5,410,140 (643,608) 765,231 400,659 347,736 402,765 431,089

77,571 8,159 51,070 56,707 33,956 84,402 12,185 - - - - -

- (883,473) - (1,435,368) 652,489 - 1,083,819 1,870,820 1,503,063 1,681,820 1,913,944 1,997,884

12,423,173 14,545,275 14,864,976 13,884,763 16,558,246 16,478,756

(444,170) 744,898 96,193 132,238 172,142 151,632 4,600 - - - - -

- 883,473 - 1,435,368 (652,489) - (1,083,819) (1,870,820) (1,503,063) (1,681,820) (1,913,944) (1,997,884)

(1,523,389) (242,449) (1,406,870) (114,214) (2,394,291) (1,846,252)

10,899,784$ 14,302,826$ 13,458,106$ 13,770,549$ 14,163,955$ 14,632,504$

3,450,944$ 1,566,935$ 5,091,865$ 1,762,037$ 3,711,060$ 5,369,376$ (715,172) 1,339,333 589,361 1,692,027 (329,002) (361,819)

2,735,772$ 2,906,268$ 5,681,226$ 3,454,064$ 3,382,058$ 5,007,557$

145

Fiscal Year


Fund Balances of Governmental FundsLast Ten Fiscal Years

(Modified Accrual Basis of Accounting)

2009 2010 2011 2012General Fund

Nonspendable -$ -$ 5,148,018$ 4,401,159$ Restricted - - 10,981,017 11,010,489 Committed - - 234,210 222,378 Assigned - - 3,812,781 3,849,973 Unassigned - - 3,037,183 4,238,006 Reserved 15,682,913 15,510,521 - - Unreserved 6,525,453 7,160,920 - -

Total general fund 22,208,366$ 22,671,441$ 23,213,209$ 23,722,005$

All other governmental fundsNonspendable -$ -$ -$ -$ Restricted - - 1,758,765 2,158,048 Committed - - 2,077,444 1,889,501 Assigned - - 3,800,395 1,915,613 Unassigned - - (4,672,328) (3,957,235) Reserved 2,686,594 2,940,964 - - Unreserved, reported in

Special revenue funds (2,543,276) (2,145,430) - - Debt service funds - - - - Capital projects funds 1,558,434 1,551,621 - -

Total all other governmental funds 1,701,752$ 2,347,155$ 2,964,276$ 2,005,927$

Note: Fiscal Year 2011 was the first year of implementing GASB Statement No. 54.

146

Fiscal Year

Table 3

2013 2014 2015 2016 2017 2018

4,428,587$ 1,919,712$ 1,899,194$ 1,804,829$ 1,731,572$ 1,702,641$ 10,368,737 - - - - -

- - 1,875,000 1,875,000 - - 31,592 - - - - -

7,826,600 10,614,235 8,407,722 9,155,071 8,398,760 7,879,629 - - - - - - - - - - - -

22,655,516$ 12,533,947$ 12,181,916$ 12,834,900$ 10,130,332$ 9,582,270$

6,149$ 7,938$ 19,968$ 7,415$ 4,927$ 3,083$ 2,720,232 14,344,702 16,579,219 16,391,488 16,965,298 16,951,572 1,886,386 2,133,007 2,102,482 2,037,501 2,615,975 3,171,609 2,326,744 6,400,714 6,827,722 6,812,232 7,764,741 7,813,460

(3,860,652) (3,545,810) (3,529,262) (3,766,025) (3,279,636) (3,202,420) - - - - - -

- - - - - - - - - - - - - - - - - -

3,078,859$ 19,340,551$ 22,000,129$ 21,482,611$ 24,071,305$ 24,737,304$

147

Fiscal Year


Changes in Fund Balances of Governmental FundsLast Ten Fiscal Years

(Modified Accrual Basis of Accounting)

2009 2010 2011 2012Revenues

Taxes 6,053,527$ 6,280,236$ 6,613,493$ 6,949,680$ Licenses and permits 255,225 367,608 258,844 310,939 Intergovernmental 9,804,032 11,933,162 12,122,957 9,251,480 Charges for services 628,731 630,028 566,901 630,883 Fines and forfeits 102,272 94,861 112,642 92,059 Special assessments 1,010,440 940,455 1,026,651 1,248,749 Interest on investments 339,929 699,839 369,006 133,976 Interest on loans 29,186 30,023 18,838 20,200 Miscellaneous 1,296,218 1,086,508 760,327 743,269

Total revenues 19,519,560 22,062,720 21,849,659 19,381,235

ExpendituresGeneral government 1,465,044 1,567,430 1,521,118 1,649,431 Public safety 5,595,645 5,248,017 5,451,398 5,564,899 Public works 2,271,977 2,433,395 2,344,413 2,251,711 Culture and recreation 3,650,784 2,922,874 2,972,404 2,903,431 Airport - - - - Community development 216,107 641,584 328,963 514,945 Miscellaneous 689,425 250,230 255,190 324,413 Capital outlay 5,199,101 9,018,438 7,440,625 7,427,969 Debt service

Principal 1,823,342 691,974 1,184,483 1,234,483 Interest and fiscal charges 335,405 393,969 387,683 386,540

Total expenditures 21,246,830 23,167,911 21,886,277 22,257,822

Deficiency of revenues under expenditures (1,727,270) (1,105,191) (36,618) (2,876,587)

Other financing sources (uses)Bond issued 2,882,416 749,004 970,000 2,215,000 Refunding bond issued - - - - Principal paid on refunded bonds - - - - Premium on bonds issued 28,807 (764,004) - - Sale of capital assets - 3,684 39,667 11,745 Capital contributions - 22,082 - - Contribution for senior center - - - - Payment to refunding agent - (1,140,000) - - Proceeds from sale of capital assets - 3,260,000 - - Transfer out (702,628) 82,903 (653,075) (1,527,443) Transfer in 687,628 - 838,915 1,727,732

Total other financing sources (uses) 2,896,223 2,213,669 1,195,507 2,427,034

Net change in fund balances 1,168,953$ 1,108,478$ 1,158,889$ (449,553)$

Debt service as a percentage of non capital expenditures 13.45% 7.67% 10.88% 10.93%

148

Fiscal Year

Table 4

2013 2014 2015 2016 2017 2018

7,138,718$ 7,635,725$ 7,663,371$ 7,957,791$ 8,286,427$ 8,541,532$ 275,418 312,958 342,797 280,282 296,467 328,177

8,527,227 6,861,436 9,739,172 6,886,655 8,481,280 9,551,765 901,680 917,164 830,200 1,028,636 877,925 1,056,646 91,531 98,138 100,990 97,655 100,315 105,300

1,404,829 1,562,614 1,696,849 1,659,298 1,725,872 1,702,227 (643,670) 764,369 392,003 331,854 387,807 413,355

15,417 11,128 5,408 1,078 1,827 7,761 421,429 225,975 234,395 282,580 468,774 266,724

18,132,579 18,389,507 21,005,185 18,525,829 20,626,694 21,973,487

1,684,862 1,868,185 1,701,942 1,859,435 1,930,519 1,997,162 5,592,068 6,119,229 5,849,404 6,016,086 6,333,491 6,771,675 2,206,692 2,809,929 2,635,489 2,468,244 2,437,700 3,147,116 3,129,911 3,205,489 3,356,548 3,282,690 3,374,156 3,471,282

- 130,705 136,980 306,591 227,124 205,596 257,726 306,163 193,453 416,995 731,839 301,095

- - - - - - 8,501,482 3,729,085 8,786,119 6,612,275 6,758,610 7,117,729

1,429,483 1,619,483 2,114,000 2,400,000 2,639,510 2,828,875 333,284 439,025 382,836 508,374 532,519 571,309

23,135,508 20,227,293 25,156,771 23,870,690 24,965,468 26,411,839

(5,002,929) (1,837,786) (4,151,586) (5,344,861) (4,338,774) (4,438,352)

5,335,000 3,005,000 4,900,000 3,510,000 2,275,000 2,430,000 - 1,835,000 - - - - - (1,835,000) - - - - - - - - - 49,409 - 8,159 51,070 56,707 33,956 88,996 - - - - - - - 202,396 - - - - - - - 209,800 - - - - - - - -

(1,732,979) (11,211,407) (4,121,500) (1,821,366) (4,919,775) (3,626,190) 1,521,078 13,082,227 5,649,563 3,525,186 6,833,719 5,614,074

5,123,099 5,086,375 6,479,133 5,480,327 4,222,900 4,556,289

120,170$ 3,248,589$ 2,327,547$ 135,466$ (115,874)$ 117,937$

11.85% 12.44% 15.19% 17.15% 17.51% 19.22%

149

Fiscal Year


Program Revenues by FunctionLast Ten Fiscal Years


2009 2010 2011 2012Program Revenues

Governmental activitiesCharges for services

General government 350,379$ 513,692$ 173,666$ 164,696$ Culture and recreation 444,343 487,119 403,813 398,473 Other activities 441,028 761,785 516,079 599,438

Operating grants and contributions 1,260,091 862,239 2,342,509 783,030 Capital grants and contributions 4,663,347 7,808,059 6,520,439 5,378,484


Business-type activitiesCharges for services

Water 1,712,050 1,792,367 1,894,512 1,991,866 Sewer 3,613,011 3,673,489 3,674,656 3,721,968 Other Activities 119,185 185,665 217,172 198,120

Operating grants and contributions 42,403 332,176 - - Capital grants and contributions 858,547 - 69,681 7,000

Total business-type activities program revenue 6,345,196 5,983,697 5,856,021 5,918,954

Total program revenues 13,504,384$ 16,416,591$ 15,812,527$ 13,243,075$

ExpensesGovernmental activities

General government 1,966,733$ 2,008,144$ 1,926,712$ 1,808,099$ Public safety 5,408,550 5,405,858 6,439,772 5,738,188 Public works 3,805,920 4,193,100 3,415,753 3,611,704 Culture and recreation 3,500,866 3,068,019 3,691,049 3,760,834 Airport - - - - Community development 307,048 567,042 335,129 931,118 Interest on long-term debt 339,329 367,208 355,546 343,828


Business-type activitiesWater 1,806,236 1,736,795 1,668,695 1,856,750 Sewer 3,572,505 3,806,597 3,758,711 3,702,369 Solid waste 389,145 474,319 186,934 172,947 Parking 33,941 51,585 36,912 29,649

Total business-type activities expenses 5,801,827 6,069,296 5,651,252 5,761,715

Total expenses 21,130,273$ 21,678,667$ 21,815,213$ 21,955,486$

150

Fiscal Year

Table 5

2013 2014 2015 2016 2017 2018

126,519$ 131,199$ 91,998$ 100,449$ 140,139$ 165,619$ 540,628 659,180 547,688 593,500 672,198 599,705 671,474 948,089 896,380 955,216 790,990 937,108 766,247 551,154 604,428 613,416 574,252 593,197

5,685,443 2,353,280 5,239,394 4,749,991 4,013,023 5,026,013

7,790,311 4,642,902 7,379,888 7,012,572 6,190,602 7,321,642

2,150,345 2,363,536 2,538,061 2,778,218 2,979,526 3,172,833 3,753,107 4,465,989 4,534,385 4,230,589 4,250,258 4,236,478

256,524 215,350 178,641 164,168 159,616 183,978 - - - 2,620 187 -

209,670 37,807 192,197 59,774 35,686 18,034

6,369,646 7,082,682 7,443,284 7,235,369 7,425,273 7,611,323

14,159,957$ 11,725,584$ 14,823,172$ 14,247,941$ 13,615,875$ 14,932,965$

1,946,733$ 2,066,221$ 1,735,013$ 2,062,534$ 2,166,561$ 2,169,413$ 6,127,434 6,282,002 6,051,784 7,793,711 6,989,633 6,983,401 3,695,469 4,116,428 4,186,823 3,448,159 3,420,520 4,012,349 3,792,532 3,709,010 3,694,414 3,614,932 4,006,557 3,631,330

562,700 608,770 546,100 578,473 1,125,612 620,411 295,666 405,733 506,248 1,135,736 803,201 449,376 342,006 433,078 432,617 501,753 525,704 564,742

16,762,540 17,621,242 17,152,999 19,135,298 19,037,788 18,431,022

1,931,472 1,845,736 1,628,018 1,674,260 1,673,215 1,904,474 3,477,519 3,520,744 3,677,161 3,603,255 3,540,898 4,118,407

140,180 109,784 130,506 140,752 145,871 104,009 12,258 24,363 11,368 10,861 - -

5,561,429 5,500,627 5,447,053 5,429,128 5,359,984 6,126,890

22,323,969$ 23,121,869$ 22,600,052$ 24,564,426$ 24,397,772$ 24,557,912$

151

Fiscal Year


Governmental Activities Tax Revenues by SourceLast Ten Fiscal Years

Table 6Fiscal Property Franchise Lodging OtherYear Taxes Taxes Taxes Taxes Total

2009 4,501,763$ 1,390,549$ 161,215$ -$ 6,053,527$ 2010 4,490,654 1,412,236 190,937 213,077 6,306,904 2011 4,729,216 1,540,143 167,882 157,348 6,594,589 2012 5,141,973 1,341,867 157,508 139,638 6,780,986 2013 5,538,047 1,472,616 12,965 157,535 7,181,163 2014 5,816,826 1,501,681 10,651 265,279 7,594,437 2015 6,053,568 1,454,231 11,014 133,114 7,651,927 2016 6,188,724 1,591,773 11,409 125,907 7,917,813 2017 6,326,891 1,648,034 11,859 321,562 8,308,346 2018 6,387,647 1,787,168 11,584 355,133 8,541,532

152

Sources of Data: Included General fund, Special Revenue funds Capital Project funds, and Debt Service funds.


Property Tax Levies and CollectionsLast Ten Fiscal Years

Table 7Collections Collectionsof Current of Prior

Fiscal Year Total Tax Year's Taxes Year's Taxes TotalEnded Levy for During Fiscal During Fiscal Collections

December 31 Fiscal Year Period Period To Date

2009 4,294,703$ 4,079,163$ 94.98 % 215,540$ 4,294,703$ 100.00 %2010 4,693,625 4,541,318 96.76 152,307 4,693,625 100.00 2011 4,900,880 4,747,104 96.86 138,898 4,886,002 99.70 2012 5,381,024 5,247,720 97.52 98,642 5,346,362 99.36 2013 5,463,342 5,338,030 97.71 102,717 5,440,747 99.59 2014 5,831,420 5,704,581 97.82 93,025 5,797,606 99.42 2015 5,958,550 5,879,780 98.68 81,865 5,961,645 100.05 2016 6,156,614 6,086,218 98.86 45,946 6,132,164 99.60 2017 6,236,269 6,210,749 99.59 68,570 6,279,319 100.69 2018 6,310,770 6,276,755 99.46 - 6,276,755 99.46

Source of Data: Includes General fund and Debt Service funds.

153

Period To Date

Percentage of Levy Percentage

Collected of LevyDuring Fiscal Collected

154


Certified Special Assessment CollectionsLast Ten Fiscal Years

Table 8Total

Fiscal Year Current Current Outstanding PrepaymentEnded Assessments Assessments Delinquent of

December 31 Due Collected Assessments Assessments

2009 856,276$ 698,219$ 81.54 % -$ 130,777$ 2010 1,198,099 1,166,952 97.40 509 287,276 2011 1,000,004 999,097 99.91 488 74,108 2012 1,108,933 1,028,504 92.75 468 160,668 2013 1,000,204 937,653 93.75 364 355,235 2014 1,309,516 1,242,078 94.85 212 426,843 2015 1,425,096 1,366,041 95.86 16,800 308,792 2016 1,710,255 1,635,221 95.61 16,686 495,935 2017 1,341,595 1,225,577 91.35 34,508 277,776 2018 1,389,166 963,186 69.34 216,867 360,006

Source of Data: Debt service and Capital Projects fund financial statements.Note: Certified assessments only.

155

PercentCollected

Fiscal Year

Year Ended Tax Estimated Tax EstimatedDecember 31, Capacity Market Value Capacity Market Value

2009 10,714,121$ 923,725,900$ 293,772$ 14,773,500$ 2010 10,843,061 903,502,400 331,583 16,666,200 2011 10,622,304 881,269,900 367,579 18,466,000 2012 9,100,487 740,672,600 384,349 19,304,500 2013 8,955,136 860,451,700 403,057 20,239,900 2014 9,298,274 863,696,800 479,886 24,044,800 2015 9,341,540 864,984,200 533,759 26,775,000 2016 9,705,164 897,229,600 447,095 22,441,800 2017 9,711,367 901,900,200 306,371 15,368,100 2018 10,206,037 950,539,500 310,773 15,588,200

Source: Freeborn County Auditor/Treasurer.

156


Note: Property in the City is reassessed each year. Property is assessed at estimated actual market value, therefore, the assessed values are equal to actual value.

Tax Capacity and Estimated Value of Taxable PropertyLast Ten Fiscal Years

Real Property Personal Property

Table 9

Tax EstimatedCapacity Market Value

11,007,893$ 938,499,400$ 1.17 % 44.179 %11,174,644 920,168,600 1.21 46.05910,989,883 899,735,900 1.22 49.1639,484,836 759,977,100 1.25 57.1259,358,193 880,691,600 1.06 60.6329,778,160 887,741,600 1.10 62.0509,875,299 891,759,200 1.11 63.216

10,152,259 919,671,400 1.10 64.32210,017,738 917,268,300 1.09 63.08710,516,810 966,127,700 1.09 64.866

157

TotalDirect Rate

Capacity to

Market Value

TotalPercent of Tax

Estimated

Fiscal Year

EndedDecember 31,

2009 42.048 % 0.803 % 1.328 % 44.179 %2010 42.139 0.760 3.160 46.0592011 44.037 0.749 4.377 49.1632012 50.489 0.901 5.734 57.1252013 52.809 0.927 6.896 60.6322014 50.918 0.878 10.254 62.0502015 50.795 0.000 12.421 63.2162016 50.025 0.000 14.297 64.3222017 48.137 0.000 14.950 63.0872018 48.910 0.000 15.956 64.866

Source: Freeborn County Auditor/Treasurer.Note: Tax rates are per $1,000 of tax capacity. Tax capacity is equal to market value multiplied by the applicable class rate for the type of property that is being taxed.

158

Rate


Property Tax Rates and Tax Levies - Direct and Overlapping GovernmentsLast Ten Fiscal Years

Direct Government

OperatingRate

Cap ImpBondsRate

PIR BondsRate

Total

Table 10

25.633 % 58.857 % 1.436 % 130.105 %24.491 56.812 1.383 128.74525.848 57.512 1.368 133.89128.931 62.642 1.481 150.17928.730 59.514 1.996 150.87224.930 48.653 2.439 138.07224.948 48.598 2.401 139.16324.842 53.931 2.419 145.51425.241 55.084 2.357 145.76927.113 59.057 3.257 154.293

159

SchoolDistrict County

Overlapping GovernmentsDirect and

OverlappingTotal

SpecialDistrict

TaxableBusiness Type Market Value Rank

Freeborn Mower Electric Co-op Utility 8,004,800$ 1Wal-mart Real Estate Business Retail 7,184,000 2Larson Manufacturing Company Manufacturing 6,453,400 3Pratt Properties II, LLC Corrugated Box 5,996,900 4Continental Albert Lea LLP Warehouse 5,411,200 5Minnesota Energy Resources Utility 4,968,600 6Geraldine B Vogt Trust Manufacturing 4,669,500 7Albert Lea Port Authority Economic Development 4,393,400 8Home Depot USA Retail 4,200,700 9ITC Midwest, LLC Utility 4,174,700 10Interstate Power Company UtilityMCB Properties, Ltd Corrugated BoxCarrington Family Trust Commercial Land and BuildingsTrails Truck and Travel Plaza Travel CenterE. Family C Office ParkStreaters, Inc. Store Fixtures

Total 55,457,200$

Source: Freeborn County Auditor/Treasurer.Ranking Based on Tax Capacity.

160

Taxpayer


2018

Principal Property TaxpayersCurrent Year and Nine Years Ago

Table 11

MarketValue Rank

0.95 %0.86 5,861,500$ 2 0.62 %0.77 0.72 0.65 5,793,100 3 0.62 0.59 0.56 0.52 3,979,800 8 0.42 0.50 3,654,000 6 0.39 0.50

16,667,600 1 1.78 5,635,900 4 0.60 4,282,900 5 0.60 3,466,700 7 0.37 3,728,200 9 0.40 2,798,000 10 0.30

6.61 % 55,867,700$ 6.10 %

161

Valuation

2018

Valuation

2019Percentage of Percentage ofTotal Market Total Market

GeneralObligation G.O. Special

Fiscal Armory Tax Increment Notes Equipment Assessment

Year Bonds Bonds Payable Certificates Bonds (2)

2009 -$ -$ 204,000$ -$ 9,700,000$ 2010 - - 201,933 - 11,299,413 2011 - - 157,450 - 11,113,916 2012 - - 112,967 - 12,129,170 2013 - - 68,483 - 16,069,063 2014 - - 24,000 1,120,000 16,370,013 2015 - - - 1,075,000 19,217,067 2016 - - - 940,000 20,454,119 2017 - - - 805,000 20,231,167 2018 - - - 660,000 20,025,553

(2) Presented net of original issuance discounts and premiums.

162


Ratios of Outstanding Debt by TypeLast Ten Fiscal Years


Note: Details regarding the City's outstanding debt can be found in the Notes to Financial Statements.

(1) Personal income and population data can be found in the demographic statistics on Table 18 of the statistical section.

Table 12

G.O. SewerG.O. Water Revenue Total

Revenue Equipment Refunding Primary Per

Bonds (2) Certificates Bonds Government Capita (1)

2,115,000$ - 180,000$ 12,199,000$ 1.94 % 675 1,989,164 - - 13,490,510 2.29 747 1,851,444 - - 13,122,810 1.95 728 1,703,748 - - 13,945,885 1.98 775 1,556,132 - - 17,693,678 2.37 985 1,411,124 315,000$ - 19,240,137 2.71 1,071 1,252,353 290,000 - 21,834,420 3.01 1,217 1,078,284 255,000 - 22,727,403 3.17 1,270

910,669 220,000 - 22,166,836 2.92 1,228 733,055 185,000 - 21,603,608 2.75 1,198

163

Business Type Activities

Percentageof Personal

Income

164


Ratios of Net General Bonded Debt OutstandingLast Ten Fiscal Years

Table 13

Ratio on NetBonded Net Bonded

Fiscal Gross Less Debt Net Debt to Debt perYear Bonded Debt (1) Service Funds (2) Bonded Debt Capacity (3) Capita (3)

2009 12,026,043$ (5,759,744)$ 6,266,299$ 56.93% 347$ 2010 13,288,577 (6,415,201) 6,873,376 61.51% 381 2011 12,965,360 (6,213,701) 6,751,659 61.44% 375 2012 13,832,918 (6,683,448) 7,149,470 75.38% 397 2013 17,625,195 (8,020,978) 9,604,217 102.63% 535 2014 19,216,137 (8,246,744) 10,969,393 112.18% 611 2015 21,834,420 (8,408,322) 13,426,098 135.96% 748 2016 22,727,403 (11,673,438) 11,053,965 108.88% 618 2017 22,166,836 (12,652,707) 9,514,129 94.97% 527 2018 21,603,608 (11,677,676) 9,925,932 94.38% 550

(1) Presented net of original issuance discounts and premiums.(2) This is the amount restricted for debt service premiums.(3) See Table 9 for tax capacity and Table 18 for population.

165


Legal Debt Margin InformationLast Ten Fiscal Years

2009 2010 2011 2012

Debt Limit 18,770,000$ 27,605,058$ 26,992,077$ 22,799,313$

Total net debt applicable to limit - - - -

Legal debt margin 18,770,000$ 27,605,058$ 26,992,077$ 22,799,313$

Total net debt applicable to the limit asa percentage of debt limit - - - -

Legal Debt Margin Calculation for Fiscal Year

Estimated Taxable Market Value

Debt Limit (2% of taxable market value, 3% after 2008)

Legal Debt Margin

Note A: Under State of Minnesota law, the City of Albert Lea outstanding general obligation debt shouldnot exceed 3% of the market value of taxable property. By law, the general obligation debt subject to thelimitation may be offset by amounts set aside for the extinguishment of those obligations.

166

Fiscal Year

Table 14

2013 2014 2015 2016 2017 2018

26,420,748$ 26,632,248$ 26,752,776$ 27,590,142$ 27,518,049$ 26,752,776$

- 1,190,858 1,163,189 944,521 879,593 692,982

26,420,748$ 25,441,390$ 25,589,587$ 26,645,621$ 26,638,456$ 26,059,794$

- 4.47% 4.35% 3.42% 3.20% 2.59%

891,759,200$

26,752,776$

26,752,776$

167

Fiscal Year

Table 15

City of Net Debt Albert Lea's

Outstanding Share of the DebtJurisdictionDirect

City of Albert Lea 21,702,731$ 100.00 % 21,702,731$

OverlappingSchool District #241 50,575,888 56.32 2,848,434,012 County of Freeborn 12,120,000 28.76 348,571,200

Total overlapping debt 3,197,005,212

Total direct and overlapping debt 3,218,707,943$

Source: Assessed value data used to estimate applicable percentages provided by Freeborn County Auditor/Treasurer debt outstanding data provided by Freeborn County.

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City of Albert Lea. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Albert Lea. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government.

The percentage of overlapping debt applicable is estimated using taxable assessed property values.Applicable percentages were estimates by determining the portion of the county's taxable assessed value that is within the government's boundaries and dividing it by the county's total taxable value.

168

PercentageApplicable to

City of Albert Lea


Computation of Direct and Overlapping Debt


Schedule of Water Fund Bond CoverageLast Ten Fiscal Years

Net RevenueFiscal Gross Operating Available for Year Revenue Expense Debt Service Principal Interest Total

2009 1,714,617$ 1,483,421$ 231,196$ 120,000$ 99,005$ 219,005$ 1.06 %

2010 1,794,078 1,385,948 408,130 120,000 100,649 220,649 1.852011 1,895,015 1,351,890 543,125 140,000 60,796 200,796 2.702012 1,992,778 1,490,998 501,780 150,000 58,993 208,993 2.402013 2,121,488 1,513,354 608,134 150,000 56,698 206,698 2.942014 2,334,575 1,524,685 809,890 155,000 54,972 209,972 3.862015 2,510,268 1,301,217 1,209,051 185,000 54,059 239,059 5.062016 2,729,257 1,344,681 1,384,576 205,000 54,362 259,362 5.342017 2,929,831 1,347,363 1,582,468 205,000 44,249 249,249 6.352018 3,120,669 1,541,431 1,579,238 215,000 34,284 249,284 6.34

Gross revenues include all revenues from operations and interest.Operating expense includes the cost of operations excluding depreciation expense.

Debt Service Requirements

Table 16

Coverage

169


Schedule of Sewer Fund Bond CoverageLast Ten Fiscal Years

Net RevenueFiscal Gross Operating Available for Year Revenue Expense Debt Service Principal Interest Total

2009 3,334,015$ 2,762,791$ 571,224$ 170,000$ 9,705$ 179,705$ 3.18 %

2010 4,161,002 2,857,000 1,304,002 180,000 4,410 184,410 7.072011 4,594,893 2,812,776 1,782,117 - - - 100.002012 3,981,004 2,668,165 1,312,839 - - - 100.002013 3,308,937 2,473,664 835,273 - - - 100.002014 4,465,898 2,495,649 1,970,249 - - - 100.002015 4,534,385 2,564,397 1,969,988 - - - 100.002016 4,230,589 2,462,142 1,768,447 - - - 100.002017 4,250,258 2,361,015 1,889,243 - - - 100.002018 4,213,234 2,874,193 1,339,041 - - - 100.00

Gross revenues include all revenues from operations.Operating expense includes the cost of operations excluding depreciation expense.

Debt Service RequirementsCoverage

Table 17

170

Table 18

Personal Median Household SchoolYear Population (1) Income (2) Income (3) Enrollment (4)

2009 18,061 629,227,179$ 34,839$ 3,239 8.7 %2010 18,061 589,800,016 32,656 3,293 6.92011 18,016 674,104,672 37,417 3,311 5.92012 17,994 702,701,688 39,052 3,277 6.02013 17,957 745,484,855 41,515 3,294 5.72014 17,957 710,666,232 39,576 3,217 4.52015 17,945 724,511,430 40,374 3,323 4.72016 17,899 716,622,263 40,037 3,397 3.32017 18,045 760,199,760 42,128 3,423 4.72018 18,032 784,969,024 43,532 3,535 3.9

Source: (1) State demographer estimate.(2) Estimation: Calculated (population multiplied by per capita personal income).(3) US Census Bureau.(4) Minnesota Department of Education (Student Data).(5) MN Workforce Center (Freeborn County).

UnemploymentRate (5)

171


Demographic StatisticsLast Ten Fiscal Years

172

Table 19

Consumption in Cubic Feetfor 12 months ended 12/31/18

Cargill Meat Solution Corporation Industrial 11,638,155 11.2 %Mrs. Gerry's Kitchen Industrial 7,031,420 6.8 Hormel Albert Lea Select Foods Industrial 5,583,892 5.4 Ventura Foods LLC Industrial 3,401,335 3.3 Stoney Creek Estates MHP, LLC Mobile Home Park 1,554,411 1.5 Mayo Clinic Health Systems Albert Lea Clinic/Hospital 1,439,894 1.4 Prairie Resources/Zumbro River Industrial 1,087,617 1.1 Albert Lea Electro Plating Inc Industrial 1,010,154 1.0 Trails Travel Plaza Inc Industrial 933,430 0.9 AmTech Ingredients, LLC Industrial 914,170 0.9

Note: One hundred cubic feet equates to approximately 748 gallons.Source: City utility data.

Percent of Total

Consumption

173


Top 10 Water System Customers(by Units of Consumption as of December 31, 2018)

2018

NumberBusiness Type of Employees

Mayo Clinic Health Systems - Albert Lea Medical 1200Albert Lea Area Schools Education (Pre K-12) 938Albert Lea Select Foods Pork Processing 500Good Samaritan Center Nursing Home, Assisted Living 350Freeborn County County Government 323Cargill Incorporated Agribusiness 320St. John's Lutheran Home Nursing Home, Assisted Living 300Wal-Mart Discount retail 285Lou-Rich, Inc Manufacturing 250Innovance Inc Holding Company (non-bank) 240Schweigert Foods Food Processing -Hy-Vee Food Store Grocery -

Total 4706

Source: 2018 bond documents.

174

Employer


Principal EmployersCurrent Year and Nine Years Ago

Table 20

NumberRank of Employees Rank

1 11.72 % 1133 1 10.85 %2 9.16 491 2 4.70 3 4.88 275 7 2.63 4 3.42 272 8 2.60 5 3.16 270 9 2.59 6 3.13 7 2.93 298 6 2.85 8 2.78 260 10 2.49 9 2.44 10 2.34 300 5 2.87 - - 315 3 3.02 - - 310 4 2.97

45.97 % 3924 37.57 %

175

Employee

2018

Employee

2019Percent of Percent of Total City Total City

2009 2010 2011 2012FunctionGeneral Government

Administration 3.00 2.00 2.00 1.00 Human resources 1.00 1.00 1.00 1.00 Finance 5.65 5.45 5.45 6.45 Legal 2.00 2.00 2.00 2.00 Public information 1.00 1.00 1.00 1.00

PoliceSworn officers 29.00 27.00 28.00 27.00 Other 12.75 12.10 12.10 14.60

Fire and InspectionFire 17.00 16.00 16.00 15.50 Inspection 3.00 3.00 3.00 3.00

Public WorksEngineering 5.50 5.50 5.40 5.40 Street and garage 15.00 13.00 13.00 12.00 Water 10.00 10.00 10.00 10.00 Sewer 13.50 13.50 13.50 13.50 Solid waste management 1.00 1.00 1.00 1.00

Parks and RecreationRecreation 2.85 2.85 2.85 2.85 Swimming 0.15 0.15 0.15 0.15 Senior citizen center 1.40 1.40 1.20 1.20 Arena 3.63 4.00 4.00 3.00 Theater 0.88 - - - Parks 8.67 7.67 7.67 8.00

Library 11.00 9.80 9.90 10.30 Community Development 2.00 2.00 2.00 2.00

Total employees 151.48 140.67 141.22 140.95

Source: 2017 Budget.

176

Fiscal Year

City of Albert Lea, MinnesotaStatistical Section (unaudited)

Full-Time Equivalent Employees by FunctionLast Ten Fiscal Years

Table 21

2013 2014 2015 2016 2017 2018

4.00 4.00 4.00 4.00 4.00 4.00 1.00 1.00 1.50 1.50 1.50 1.50 5.00 5.00 4.50 4.00 4.50 4.50 2.00 2.00 2.00 2.00 2.00 2.00 1.00 1.00 1.00 1.00 1.00 1.00

26.00 26.00 26.50 26.50 26.50 26.50 14.60 14.60 2.50 2.50 2.90 2.90

16.50 16.50 16.50 16.50 16.50 16.50 3.00 3.00 3.00 3.00 4.00 4.00

5.40 5.40 5.40 5.40 5.40 5.40 12.00 12.00 12.00 12.00 12.34 12.59 10.00 10.00 9.00 9.00 9.33 9.58 13.50 13.50 13.50 13.50 13.83 14.08

1.00 1.00 1.00 1.00 1.00 1.00

2.85 2.85 2.85 2.85 2.85 2.35 0.15 0.15 0.15 0.15 0.15 0.15 1.20 1.20 1.50 1.50 1.50 1.50 3.00 3.00 3.00 3.00 3.00 2.50

- - - - - - 8.00 8.00 8.00 8.00 8.00 9.25

10.30 10.30 11.50 12.70 12.70 13.70 - - - - - -

140.50 140.50 129.40 130.10 133.00 135.00

177

Fiscal Year

2009 2010 2011FunctionPolice

Stations 1 1 1Patrol units 18 18 18

Fire Station 1 1 1Streets

Streets (miles) 131.62 131.81 137.63Streetlights 1,829 1,847 1,847

Parks and RecreationArena 1 1 1Civic theater 1 1 1Senior citizen center 1 1 1Softball fields 5 5 5Swimming pools 1 1 1Splash pad - - - Tennis courts 3 3 3Parks acreage 432 432 432Parks 44 44 44

WaterStorage capacity (millions of gallons) 2.4 2.4 2.4Watermains (miles) 112.14 112.35 114.34Pumping plants 4 4 4Fire hydrants 1,143 1,143 1,156

SewerSanitary sewers (miles) 107.55 108.46 109.7Storm sewers (miles) 55.79 56.18 57.48Maximum daily treatment capacity (millions of gallons) 12.5 12.5 12.5

178

Fiscal Year


Capital Asset Statistics by FunctionLast Ten Fiscal Years

Table 22

2012 2013 2014 2015 2016 2017 2018

1 1 1 1 1 1 118 18 18 18 18 18 18

1 1 1 1 1 1 1

138.22 138.22 138.22 138.22 138.22 138.22 138.221,847 1,847 1,862 1,862 1,862 1,862 1,862

1 1 1 1 1 1 11 1 1 1 1 1 11 1 1 1 1 1 15 5 5 5 5 5 51 1 1 1 1 1 1- - - - - 1 13 3 3 3 3 3 3

432 432 432 432 432 432 43244 44 44 44 44 44 44

2.4 2.4 2.4 2.4 2.4 2.4 2.4115.06 115.78 115.78 115.78 115.78 115.78 115.78

4 4 4 4 4 4 41,156 1,156 1,156 1,156 1,156 1,156 1,156

109.73 109.73 109.73 109.73 109.73 109.73 109.7358.28 58.59 58.59 58.59 58.59 58.59 58.59

12.5 12.5 12.5 12.5 12.5 12.5 12.5

179

Fiscal Year

2009 2010 2011 2012

PoliceClass I crimes 365 320 468 517 Class II crimes 760 649 799 735

FireNumber of calls answered 709 637 677 711 Inspections 254 162 189 207

Highways and StreetsStreet resurfacing (miles) 4.4 4.7 3.97 2.89

Culture and recreationBoat dock permits 263 256 250 212 Park facility rentals 383 334 304 336

WaterNew connections 18 51 9 11 Watermain breaks 25 30 23 32 Average daily consumptions

(thousand of gallons) 2,696 3,110 2,915 3,068 Wastewater

Average daily sewage treatment (thousand of gallons) 3,678 4,370 4,918 2,781

180

Fiscal Year


Operating Indicators by FunctionLast Ten Fiscal Years

Table 23

2013 2014 2015 2016 2017 2018

500 426 406 347 433 496 648 644 599 571 372 624

700 803 2,084 2,143 2,091 2,271 195 195 388 437 395 610

3.11 5.52 1.43 5.19 3.35 4.51

249 242 257 265 262 266 331 331 341 311 343 340

17 11 17 19 10 20 38 46 28 26 39 59

3,075 3,208 3,073 2,930 2,853 2,753

3,683 3,718 3,615 4,376 3,654 3,630

181

Fiscal Year

Documents

CITY OF ALBERT LEA COMPREHENSIVE · Profile of the Government The City of Albert Lea, incorporated in 1878, is located at the cross roads of interstate highways I-90 and I-35. It