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2022 Annual Financial Report2022 Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2022 City of Chanhassen, Minnesota - This page intentionally left blank - CITY OF CHANHASSEN, MINNESOTA Annual Comprehensive Financial Report for the Year Ended December 31, 2022 Prepared by Finance Department CITY OF CHANHASSEN 7700 Market Blvd, PO Box 147 Chanhassen, MN 55317 - This page intentionally left blank - CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page Reference No. I. INTRODUCTORY SECTION Letter of Transmittal 3 Certificate of Achievement 9 Organization Chart 10 Elected Officials and Administration 11 II. FINANCIAL SECTION Independent Auditor's Report 15 Management's Discussion and Analysis 21 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position Statement 1 39 Statement of Activities Statement 2 40 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 42 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Statement 4 43 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement 5 44 Statement of Net Position - Proprietary Funds Statement 6 45 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds Statement 7 46 Statement of Cash Flows - Proprietary Funds Statement 8 47 Notes to Financial Statements 49 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 9 92 Schedule of Changes in the City's Total OPEB Liability and Related Ratios Statement 10 98 Schedule of Proportionate Share of Net Pension Liability - General Employees Retirement Fund Statement 11 99 Schedule of Pension Contributions - General Employees Retirement Fund Statement 12 100 Schedule of Proportionate Share of Net Pension Liability - Public Employees Police and Fire Fund Statement 13 101 Schedule of Pension Contributions - Public Employees Police and Fire Fund Statement 14 103 Schedule of Changes in the Net Pension Liability and Related Ratios - Chanhassen Fire Department Relief Association Statement 15 104 Schedule of Contributions - Chanhassen Fire Department Relief Association Statement 16 106 Notes to RSI 107 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page Reference No. Combining and Individual Nonmajor Fund Financial Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds Statement 17 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Statement 18 117 Subcombining Balance Sheet - Nonmajor Special Revenue Funds Statement 19 120 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds Statement 20 121 Subcombining Balance Sheet - Nonmajor Debt Service Funds Statement 21 124 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds Statement 22 125 Subcombining Balance Sheet - Nonmajor Capital Project Funds Statement 23 128 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds Statement 24 130 Special Revenue Funds: Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Contribution Fund Statement 25 133 Cemetery Fund Statement 26 134 CATV Statement 27 135 III. STATISTICAL SECTION (UNAUDITED) Financial Trends: Net Position by Component Table 1 140 Changes in Net Position Table 2 142 Fund Balances - Governmental Funds Table 3 146 Changes in Fund Balances - Governmental Funds Table 4 148 Revenue Capacity: Tax Capacity Value and Estimated Market Value of Taxable Property Table 5 150 Direct and Overlapping Property Tax Capacity Rates Table 6 152 Principal Property Taxpayers Table 7 153 Property Tax Levies and Collections Table 8 155 Debt Capacity: Ratios of Outstanding Debt by Type Table 9 156 Ratios of General Bonded Debt Outstanding Table 10 158 Direct and Overlapping Governmental Activities Debt Table 11 159 Legal Debt Margin Information Table 12 160 Pledged Revenue Coverage Table 13 161 CITY OF CHANHASSEN, MINNESOTA TABLE OF CONTENTS Page Reference No. Demographic and Economic: Demographic and Economic Statistics Table 14 162 Principal Employers Table 15 163 Operating Information: Full-Time Equivalent City Government Employees by Function/Program Table 16 164 Operating Indicators by Function/Program Table 17 166 Capital Asset Statistics by Function/Program Table 18 168 Combined Schedule of Indebtedness Exhibit 1 172 Debt Service Payments to Maturity: General Obligation Bonds - Governmental Activities Exhibit 2 174 General Obligation Revenue Bonds Exhibit 3 175 Schedule of Deferred Tax Levies Exhibit 4 176 IV. OTHER INFORMATION (UNAUDITED) - This page intentionally left blank - I. INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 June 28, 2023 To the Citizens of the City of Chanhassen, Honorable Mayor and City Council Members, and Ms. Laurie Hokkanen, City Manager The Annual Comprehensive Financial Report of the City of Chanhassen, Minnesota (the “City”) for the fiscal year ended December 31, 2022, is hereby submitted. The report was prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as established by the Government Accounting Standards Board and meets the requirements of the Minnesota State Auditor’s Office. This report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by Redpath and Company, LTD, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2022, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial presentation. Based upon the audit, the independent auditor concluded that there was reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended December 31, 2022, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first item in the financial section of this report. GAAP requires the management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found in the financial section of this report, immediately following the report of the independent auditors. 3 City Profile The City of Chanhassen strives to be "A Community for Life.” Our vision is that Chanhassen is a safe, welcoming community with engaged residents, abundant natural amenities, and vibrant businesses, supported by valued services that make this a community for life. Our mission is to serve the public. We do this through the delivery of reliable, cost-effective services designed to provide a safe, sustainable community. Our core values are innovation, respect, stewardship, and engagement. The City of Chanhassen, Minnesota, a suburban community located southwest of the Twin Cities metropolitan area, is situated primarily in eastern Carver County with a small portion in Hennepin County. The City encompasses an area of 22.8 square miles. Chanhassen enjoys an excellent location, with convenient access to the Minneapolis-Saint Paul metropolitan area via U.S. Highway 212, and State Highways 5 and 7. State Highways 41 and 101 provide access to the north and south. The village of Chanhassen was organized in 1896. In 1967 the village of Chanhassen and Chanhassen Township merged to become the City of Chanhassen. The City of Chanhassen operates as a statutory Plan B or Council-Manager form of government in Minnesota. Plan B cities have an elected mayor and council members with an appointed City Manager. The City Manager oversees administrative duties for the City while the Mayor and Council maintain traditional policy-making roles. With a staff of around 80 regular, full-time employees, the City of Chanhassen provides a full range of services, including police and fire protection; building inspections; construction and maintenance of highways, streets, and other infrastructure; recreational activities and cultural events; and general administrative services. The City also operates three enterprises: water, sewer, and surface water management. The City is also financially accountable for the Chanhassen Economic Development Authority (EDA), which is included in this report as a blended component unit. The Chanhassen City Council serves as the board of the EDA. The Chanhassen Fire Relief Association is a separate legal entity and accordingly is excluded from this report. Strategic Priorities The City of Chanhassen 2021-2024 Strategic Plan consists of five strategic priorities. Associated with each priority is a set of desired outcomes, key outcome indicators, and performance targets, describing expected results and how the results will be measured. The five strategic priorities (with desired outcomes) are:  Financial Sustainability o Financial stability in all funds o Financial policies guide decision making o Financial systems produce timely, accurate, and meaningful information  Asset Management o Effective utilization and protection of assets o Ability to pay for critical assets o Assets adequate to support adopted levels of service  Development and Redevelopment o Diversity in new development o Redevelopment consistent with our vision o New innovative places and spaces 4  Operational Excellence o Satisfied workforce o A competent workforce o Improved operational effectiveness, including through the use of technology and innovation  Communications o Improved understanding of City operations o Improved internal communication o Improved communication with outside organizations Annual Budget The annual budget serves as the foundation for the City of Chanhassen’s financial planning and control. The objectives of these budgetary controls are to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Chanhassen City Council. Activities of the General Fund and certain special revenue, capital project, and enterprise funds are included in the annual budget. Debt service budgetary control is established by bond sale resolution covenants. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level. Expenditures for departments or divisions that exceed appropriations are not authorized unless additional revenue sources or fund balance are identified and available. Unused appropriated expenditures lapse at year-end. The City maintains stable financial operations due to a history of conservative budgeting, maintenance of healthy reserves, and a lack of reliance on state aid. Economic Condition and Outlook The City has grown steadily since incorporating in 1967. The chart below shows population counts from the U.S. Census through 2020 and forecasts from the Metropolitan Council for 2030 and 2040: Forecasted employment and annual average wages continue to grow in the City according to the Minnesota Department of Employment and Economic Development, which surveys quarterly employment and wages in the state. Forecasted employment of 15,600 in 2020 and is expected to increase to 17,000 by 2030 and 18,400 by 2040. Average annual wages in 2021 were $63,802, up from $46,265 in 2010. Average annual unemployment is low for Chanhassen residents, coming in at 2.4% in 2021 and 1.6% in 2022. - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1970 1980 1990 2000 2010 2020 2030 2040 Chanhassen Population Census Forecast 5 The City continues to see steady building permit activity and expects to see continuous growth into the future. The Avienda Project, located near Highway 212 and Powers Boulevard is underway. The project includes a mix of high-quality detached villa homes, multi-family and senior living residential facilities, office, medical and professional services, retail, entertainment, restaurants, and hospitality. The following chart summarizes the City’s annual market value since 2003. In 2021, the City began a facilities study to evaluate the current condition and long-term replacement needs of the City’s facilities. The study evaluated current condition, maintenance planning, and future needs. Based on the facilities study results, the City is reviewing concepts for a new civic campus which would include a new City Hall, Council Chambers, Senior Center, and destination park amenities. Design for the new civic campus is expected to occur in 2023, and construction to occur in 2024 and 2025. The Lake Ann Park Preserve Project is currently in the design phase. The City Council had dedicated $1.3 million of American Rescue Plan Act (ARPA) funds for Phase I of this project. This project has several objectives, including:  Continue trails around Lake Ann to allow for an eventual loop  Preserve the land as a valued natural area in Chanhassen  Connect residents with nature, trails, and parks  Protect the ecological functioning (habitat, water quality) of the site  Celebrate Lake Ann, Lake Lucy, and this property as community amenities Chanhassen General Obligation bonds continue to maintain the highest possible rating from Standard & Poor’s Rating Services, reaffirming their confidence in the City’s financial management and its economic outlook. High bond ratings mean the City is able to sell General Obligation bonds at lower interest rates. Long-Term Financial Planning The City expanded its long-term financial planning in 2021 to prepare multi-year financial plans for each of its funds in the 2022 annual budget. The plans include projections of revenues, expenditures, fund balance, and cash balance for a minimum of five years as well as a comparison to historical actual results and the current budget. A narrative describes the fund, background, sources and uses of funds, assumptions, and challenges for the future. These plans form the foundation for making budget decisions for the City’s resources. The plans are updated each year. $- $1 $2 $3 $4 $5 $6 $7 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023BillionsEstimated Market Value 6 The City is committed to preserving the value of the City’s capital asset investment. The City prepares an annual five-year Capital Improvement Plan (CIP) for additions to and replacements of the City’s infrastructure and capital assets. The City has dedicated franchise fee revenue from electric and natural gas utilities as a funding source for the replacement of the City’s streets. The City annually adopts a five-year Capital Improvement Plan to coordinate the financing and timing of major equipment purchases and construction projects. Each year the City selects city streets for a pavement rehabilitation project. In 2022, approximately five miles of roadway were rehabilitated in the following neighborhoods: Brinker, Longacres, and Stone Creek. Improvements included a full-depth reclamation or mill and overlay, spot curb and gutter replacement, ADA improvements, and water, sewer, and stormwater management repairs. Relevant Financial Policies The City has established a comprehensive set of financial policies for use as a guideline for operations. The City’s policy for General Fund reserve balances is to maintain an unassigned fund balance at a minimum of 50% of the ensuing year’s budgeted tax levy to provide cash flow between property tax settlements. The City’s Investment Policy is designed to preserve capital while attaining a market- average yield consistent with cash flow needs. The policy prioritizes safety, liquidity, and yield in that order. The City also has adopted policies for debt, capital assets, public purpose expenditures, and purchasing. Awards 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 Chanhassen for its annual comprehensive financial report for the fiscal year ended December 31, 2021. This was the thirtieth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Acknowledgments We would like to express our appreciation to the members of the City Council for their interest and support in planning and conducting the financial operations of the City. We also want to thank the City Manager, department directors, and members of the Finance Department for their assistance in compiling the information necessary for this report. Special recognition goes to Danielle Washburn, Assistant Finance Director, for her essential contributions to the preparation of this report. Finally, we wish to acknowledge Redpath and Company, LTD for their assistance in preparing this report. Respectfully submitted, Kelly Grinnell Kelly Grinnell Finance Director 7 - This page intentionally left blank - 8 9 City of Chanhassen, Minnesota Organization Chart Citizens Administration Mayor - Council Environmental Commission Planning Commission Commission on Aging Park & RecreationPark & Recreation Commission Economic Development Authority Finance Law Enforcement & Fire Administration Public Works Community Development Parks and Recreation 10 CITY OF CHANHASSEN, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION December 31, 2022 Term Expires Mayor: Elise Ryan 12/31/2026 Council Members: 12/31/2024 12/31/2026 12/31/2024 Lucy Rehm Jerry McDonald Haley Schubert Mark von Oven 12/31/2026 City Manager: Laurie Hokkanen Appointed Assistant City Manager: Matthew Unmacht Appointed Economic Development Manager: Samantha DiMaggio Appointed Finance Director: Kelly Grinnell Appointed IT Manager: Richard Rice Appointed Fire Chief: Donald Johnson Appointed Public Works Director/City Engineer: Charles Howley Appointed Parks and Recreation Director: Jerry Ruegemer Appointed Community Development Director: Vacant Appointed 11 - This page intentionally left blank - 12 II. FINANCIAL SECTION 13 - This page intentionally left blank - 14 55 5th Street East, Suite 1400, St. Paul, MN, 55101 www.redpathcpas.com INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Chanhassen, Minnesota Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Chanhassen, Minnesota, as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City of Chanhassen, Minnesota's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Chanhassen, Minnesota, as of December 31, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Chanhassen, Minnesota and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 15 Report on Summarized Comparative Information We have previously audited the City of Chanhassen, Minnesota’s 2021 financial statements, and we expressed unmodified audit opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information in our report dated May 31, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2021 is consistent, in all material respects, with the audited financial statements from which it has been derived. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Chanhassen, Minnesota’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. 16 In performing an audit in accordance with generally accepted auditing standards and Governmental Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Chanhassen, Minnesota's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Chanhassen, Minnesota's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Change in Accounting Principle As described in Note 18 to the financial statements, the City of Chanhassen, Minnesota adopted new accounting guidance for the year ended December 31, 2022, Governmental Accounting Standards Board Statement No. 87, Leases. Our opinions are not modified with respect to this matter. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison schedule, and the schedules of OPEB and pension information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board 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 17 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Chanhassen, Minnesota's basic financial statements. The accompanying combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory, statistical, and other information sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 18 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 28, 2023 on our consideration of the City of Chanhassen, Minnesota’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 of Chanhassen, Minnesota'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 Chanhassen, Minnesota’s internal control over financial reporting and compliance. REDPATH AND COMPANY, LTD. St. Paul, Minnesota June 28, 2023 19 - This page intentionally left blank - 20 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 As management of the City of Chanhassen, 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, 2022. 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 in the introductory section of this report. Financial Highlights The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $151,628,476 (net position). Of this amount, $25,204,334 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. The City’s total net position decreased by $4,698,218. As of the close of the current fiscal year, governmental funds reported combined ending fund balances of $18,049,449. Of this amount, $1,167,396 is restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. At the end of the current fiscal year, the General Fund had a fund balance of $8,372,231. Of that amount, $91,340 was in a nonspendable form, $657,000 has been assigned, and the remaining $7,623,891 was unassigned. Total debt decreased by $2,709,616 during the current fiscal year, from $31,060,408 to $28,350,792. Please refer to the Capital Asset and Debt Administration portion of this analysis for detailed information regarding the City’s debt. Overview of the Financial Statements The management’s discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. 21 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how 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 revenues (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, parks and recreation, and community development. The business-type activities include water, sewer, and surface water management. The government-wide financial statements can be found on Statements 1 and 2 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 can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable 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 financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 22 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 The City maintains four individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the following major funds: General Fund Grant Fund PMP Pavement Management Capital TH101 Improvements – Pioneer to Flying Cloud Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for the General Fund and for the Contribution, Cemetery, and CATV special revenue funds. Budgetary comparison statements have been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on Statements 3 through 5 of this report. Proprietary funds. The City maintains three enterprise funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the following funds: •Water •Sewer •Surface Water Management The basic proprietary fund financial statements can be found on Statements 6 through 8 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 can be found following Statement 8 of this report. 23 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Other information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining and individual fund financial statements and schedules can be found on Statements 17 through 27 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. Assets plus deferred outflows of resources exceeded liabilities plus deferred inflows of resources by $151,628,476 at the close of the most recent fiscal year. The largest portion of the City’s net position ($125,288,329, or 83%) reflects its net investment in capital assets (e.g., land, buildings, machinery and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Chanhassen, Minnesota's Net Position 2022 2021 2022 2021 2022 2021 Assets: Current and other assets $31,618,730 $30,563,744 $14,145,617 $18,593,242 $45,764,347 $49,156,986 Capital assets 72,230,374 74,773,946 80,531,259 81,676,826 152,761,633 156,450,772 Total assets 103,849,104 105,337,690 94,676,876 100,270,068 198,525,980 205,607,758 Total deferred outflows of resources 3,063,136 2,444,527 744,310 516,631 3,807,446 2,961,158 Liabilities: Long-term liabilities outstanding 11,458,747 9,040,482 26,678,192 27,118,843 38,136,939 36,159,325 Other liabilities 7,591,813 7,987,711 824,143 593,753 8,415,956 8,581,464 Total liabilities 19,050,560 17,028,193 27,502,335 27,712,596 46,552,895 44,740,789 Total deferred inflows of resources 4,108,370 6,853,969 43,685 647,464 4,152,055 7,501,433 Net position: Net investment in capital assets 68,702,496 70,860,083 56,585,833 56,069,887 125,288,329 126,929,970 Restricted 1,135,813 1,020,560 - - 1,135,813 1,020,560 Unrestricted 13,915,001 12,019,412 11,289,333 16,356,752 25,204,334 28,376,164 Total net position $83,753,310 $83,900,055 $67,875,166 $72,426,639 $151,628,476 $156,326,694 Governmental Activities Business-Type Activities Totals $1,135,813 of the City’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of $25,204,334 in unrestricted net position may be used to meet ongoing obligations to citizens and creditors. 24 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 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. Governmental Activities Total net position of the governmental activities decreased $146,745 or 0.17%. The most significant components of change in net position are as follows: Net investment in capital assets decreased $2,157,587. This decrease was due to scheduled bond payments, offset by current year depreciation exceeding capital asset additions. Restricted net position increased $115,253 primarily due to an increase in amounts restricted for park improvements. Unrestricted net position increased $1,895,589 resulting from a shift in net position into this category from restricted net position. Business-Type Activities Total net position of the business-type activities decreased by $4,551,473. The primary factors contributing to the decrease were a larger percentage of personal services allocated to these funds in 2022, an increase in pension expense related to GASB 68, and significant expenses for construction maintenance projects which were not capitalized. 25 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 City of Chanhassen, Minnesota's Changes in Net Position 2022 2021 2022 2021 2022 2021 Revenues: Program revenues: Charges for services $4,967,673 $5,603,524 $9,749,237 $9,312,636 $14,716,910 $14,916,160 Operating grants and contributions 2,552,195 6,047,214 47,850 38,380 2,600,045 6,085,594 Capital grants and contributions 3,881,530 4,683,258 4,090,784 8,513,319 7,972,314 13,196,577 General revenues: General property taxes 12,644,286 12,075,260 - - 12,644,286 12,075,260 Tax increment collections 279,283 279,653 - - 279,283 279,653 Grants and contributions not restricted to specific programs 170,656 311 - - 170,656 311 Unrestricted investment earnings (loss)(824,062) (22,856) (434,818) (78,079) (1,258,880) (100,935) Gain on sale of capital assets 155,654 84,387 - - 155,654 84,387 Total revenues 23,827,215 28,750,751 13,453,053 17,786,256 37,280,268 46,537,007 Expenses: General government 3,537,796 3,545,101 - - 3,537,796 3,545,101 Public safety 4,396,715 4,055,112 - - 4,396,715 4,055,112 Public works 11,350,075 17,282,830 - - 11,350,075 17,282,830 Parks and recreation 3,432,625 2,957,867 - - 3,432,625 2,957,867 Community development 850,151 814,146 - - 850,151 814,146 Interest and fees on long-term debt 71,680 72,195 - - 71,680 72,195 Water - - 7,301,583 5,245,018 7,301,583 5,245,018 Sewer - - 6,548,611 5,025,866 6,548,611 5,025,866 Surface water management - - 4,489,250 2,541,714 4,489,250 2,541,714 Total expenses 23,639,042 28,727,251 18,339,444 12,812,598 41,978,486 41,539,849 Increase (decrease) in net position before transfers 188,173 23,500 (4,886,391) 4,973,658 (4,698,218) 4,997,158 Transfers (334,918) (185,794) 334,918 185,794 - - Change in net position (146,745) (162,294) (4,551,473) 5,159,452 (4,698,218) 4,997,158 Net position - beginning 83,900,055 84,062,349 72,426,639 67,267,187 156,326,694 151,329,536 Net position - ending $83,753,310 $83,900,055 $67,875,166 $72,426,639 $151,628,476 $156,326,694 Governmental Activities Business-Type Activities Totals 26 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Governmental Activities Revenues Revenues for the governmental activities decreased by $4,923,536, or 17%. This decrease is largely due to a decrease in operating grants and contributions related to lower reimbursements related to the Highway 101 construction project. Loss on investments was higher in 2022 due to the decrease in fair value of investments as a result of the increase in interest rates in 2022. ($2,000,000) $ - $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2021 2022 Governmental Activities Revenues Property taxes Charges for services Operating grants and contributions Capital grants and contributions Investment earnings (loss) Other income 27 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Expenses Expenses for governmental activities decreased by $5,088,209 or 18%. This decrease was largely due to lower construction costs related to the Highway 101 construction project. $ - $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2021 2022 Governmental Activities Expenses General government Public safety Public works Parks and recreation Community development Interest on long-term debt 28 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Business-Type Activities Revenues Revenues for the business-type activities decreased by $4,333,203, or 24%. The decrease was primarily due to a decrease in connection charges and contributions of capital assets. Loss on investments was higher in 2022 due to the decrease in fair value of investments as a result of the increase in interest rates in 2022. ($1,000,000) $ - $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2021 2022 Business-Type Activities Revenue Charges for services Operating grants and contributions Capital grants and contributions Investment loss 29 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Expenses Expenses for business-type activities increased by $5,526,846, or 43%. Expenses for all three of the enterprises were higher, primarily due to a larger percentage of personal services allocated to these funds and a significant amount spent on construction maintenance projects. $ - $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2021 2022 Business-Type Activities Expenses Water Sewer Surface water management 30 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Financial Analysis of the Government's Funds Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, 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. At the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $18,049,449. Approximately 6% of this amount ($1,167,396) constitutes fund balance restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. Of the remaining fund balance, $91,340 is for prepaid items and thus is nonspendable, $9,260,977 has been assigned, and $7,529,736 is unassigned. The General Fund balance increased by $382,716 in 2022. The increase was primarily due to higher than expected permit revenues and an increase in personal services expenditures allocated to the enterprise funds. The Grant Fund balance decreased by $69,452 due to the decrease in the fair value of investments as a result of the increase in interest rates in 2022. The PMP Pavement Management Capital fund balance increased by $1,061,522. The increase was due to a large amount of special assessment payments for construction projects and intergovernmental grants and aids for construction projects. The TH101 Improvements – Pioneer to Flying Cloud fund balance decreased by $7,334 in 2022 due to the decrease in the fair value of investments. Total nonmajor special revenue fund balance decreased by $155,988. The decrease was largely in the CATV fund resulting from the use of reserve funds for higher than expected current expenditures. Total nonmajor debt service fund balance decreased by $53,684. The decrease was primarily due to the decrease in the fair value of investments as a result of the increase in interest rates in 2022. Total nonmajor capital project fund balance increased by $47,610. The increase was primarily due to not spending all of the current year revenue received from transfers, property tax levy, and park dedication fees. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. 31 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 The unrestricted net position in the respective proprietary funds is $5,017,889 (Water), $5,802,608 (Sewer), and $468,836 (Surface Water Management). Net position in the Water Fund decreased by $1,530,754. The decrease was due primarily to high construction project expenses and a loss on the disposal of capital assets related to the removal of vacated drainage and utility easements. Net position in the Sewer Fund decreased by $1,351,116. The decrease was due primarily to high construction project expenses and a loss on the disposal of capital assets related to the removal of vacated drainage and utility easements. Net position in the Surface Water Management Fund decreased by $1,669,603. The decrease was due primarily to high construction project expenses and a loss on the disposal of capital assets related to the removal of vacated drainage and utility easements. Budgetary Highlights General Fund There were no amendments to the General Fund budget during 2022. Budgetary Variances – Revenues The negative General Fund revenue variance of $69,415 was primarily due to the decrease in the fair value of investments as a result of the increase in interest rates in 2022, which was offset by other revenue increases. Budgetary Variances – Expenditures Expenditures for the General Fund were $542,131 lower than budgeted. This was primarily due to personal services being under budget from employee turnover, vacant positions, and higher wage allocations to the enterprise funds. 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, 2022, amounts to $152,761,633 (net of accumulated depreciation and amortization). This investment in capital assets includes land, easements, right-to-use leased assets, buildings, infrastructure, machinery, and equipment. 32 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 City of Chanhassen, Minnesota’s Capital Assets (Net of Depreciation/Amortization) Beginning Ending Balance Increase Decrease Balance Governmental activities: Capital assets not being depreciated: Land $19,914,318 $1,600 $ - $19,915,918 Permanent easements 2,616,723 210,025 - 2,826,748 Construction in progress 476,476 285,423 184,756 577,143 Total capital assets not being depreciated 23,007,517 497,048 184,756 23,319,809 Capital assets being depreciated/amortized: Buildings and structures 24,812,815 58,882 18,713 24,852,984 Temporary easements 4,762,253 - 1,325,383 3,436,870 Right to use leased assets -243,263 -243,263 Machinery and equipment 9,719,312 628,163 419,867 9,927,608 Other improvements 12,492,365 218,462 128,090 12,582,737 Infrastructure 124,223,467 1,300,854 37,440 125,486,881 Total capital assets being depreciated/amortized 176,010,212 2,449,624 1,929,493 176,530,343 Less accumulated depreciation/amortization for: Buildings and structures 10,703,315 619,930 8,424 11,314,821 Temporary easements 4,101,378 660,875 1,325,383 3,436,870 Right to use leased assets -22,765 -22,765 Machinery and equipment 6,268,333 498,566 275,652 6,491,247 Other improvements 5,198,919 486,531 128,090 5,557,360 Infrastructure 97,971,838 2,862,317 37,440 100,796,715 Total accumulated depreciation/amortization 124,243,783 5,150,984 1,774,989 127,619,778 Governmental activities capital assets - net $74,773,946 ($2,204,312) $339,260 $72,230,374 Beginning Ending Balance Increase Decrease Balance Business-type activities: Capital assets not being depreciated: Land $2,109,835 $6,500 $ - $2,116,335 Permanent easements 7,248,009 1,951,695 2,111,500 7,088,204 Construction in progress 4,789,458 1,030,365 336,157 5,483,666 Total capital assets not being depreciated 14,147,302 2,988,560 2,447,657 14,688,205 Capital assets being depreciated/amortized: Buildings and structures 28,077,578 - - 28,077,578 Right to use leased assets -28,852 -28,852 Machinery and equipment 2,064,807 167,768 113,376 2,119,199 Other improvements 121,882,059 1,906,107 2,741 123,785,425 Total capital assets being depreciated/amortized 152,024,444 2,102,727 116,117 154,011,054 Less accumulated depreciation/amortization for: Buildings and structures 4,422,417 561,610 -4,984,027 Right to use leased assets -3,006 -3,006 Machinery and equipment 1,259,127 140,373 67,790 1,331,710 Other improvements 78,813,376 3,038,624 2,743 81,849,257 Total accumulated depreciation/amortization 84,494,920 3,743,613 70,533 88,168,000 Business-type activities capital assets - net 81,676,826 1,347,674 2,493,241 80,531,259 Total capital assets - net $156,450,772 ($856,638) $2,832,501 $152,761,633 Additional information on the City’s capital assets can be found in Note 6. 33 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Governmental Activities Capital Assets. There was a decrease in capital assets due to the reduction in depreciable assets since current year depreciation expense exceeded current year additions. Business-Type Activities Capital Assets. There was a decrease in capital assets mainly due to the removal of vacated drainage and utility easements. Long-term liabilities. At the end of the current fiscal year, the City had total bonds payable outstanding of $27,660,755, a decrease of $2,564,616 from 2021. The balance of the bonds payable outstanding is comprised of $3,400,000 in general obligation bonds, $23,120,000 of revenue bonds which financed capital investments for the water, sewer, and surface water management operations, and unamortized bond premiums of $1,140,755. Additional long-term liabilities in the amount of $690,037 for project financing and $1,079,561 for compensated absences were also outstanding at the end of 2022. City of Chanhassen, Minnesota’s Outstanding Liabilities 2022 2021 2022 2021 2022 2021 General obligation bonds $3,400,000 $3,770,000 $ - $ - $3,400,000 $3,770,000 Revenue bonds - - 23,120,000 25,180,000 23,120,000 25,180,000 Unamortized bond premiums 127,878 143,863 1,012,877 1,131,508 1,140,755 1,275,371 Project financing 690,037 835,037 - - 690,037 835,037 Compensated absences 762,762 747,455 316,799 182,346 1,079,561 929,801 Total $4,980,677 $5,496,355 $24,449,676 $26,493,854 $29,430,353 $31,990,209 TotalsBusiness-Type ActivitiesGovernmental Activities As the financial statements will indicate, the City maintained strong financial reserves and continues its practice of utilizing multiple long-term financial planning documents. The City of Chanhassen is one of approximately 25 communities in the State of Minnesota to have an AAA bond rating from Standard & Poor’s. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of the total estimated market value. The current debt limitation for the City is $151,246,689. Of the City's outstanding debt, $3,527,878 is applicable to the statutory limitation. Additional information on the City’s long-term liabilities can be found in Note 7. 34 CITY OF CHANHASSEN, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2022 Requests for Information. This financial report is designed to provide a general overview of the City of Chanhassen, Minnesota’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 7700 Market Boulevard, P.O. Box 147, Chanhassen, Minnesota 55317. 35 - This page intentionally left blank - 36 BASIC FINANCIAL STATEMENTS 37 - This page intentionally left blank - 38 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF NET POSITION Statement 1 December 31, 2022 With Comparative Totals For December 31, 2021 Governmental Business-Type Activities Activities 2022 2021 Assets: $22,550,857 $12,097,745 $34,648,602 $38,322,734 109,932 73,972 183,904 90,980 1,857,516 94,055 1,951,571 2,270,248 716,902 1,820,359 2,537,261 2,142,092 131,087 -131,087 217,155 91,340 15,400 106,740 83,180 -223,993 223,993 356,330 194,356 (194,356) - - 3,656,943 -3,656,943 3,704,663 2,309,797 14,449 2,324,246 1,969,604 Cash and investments Accrued interest receivable Due from other governmental units Accounts receivable - net Property taxes receivable Prepaid items Inventories - at cost Internal balances Leases receivable Special assessments receivable Capital assets (net of accumulated depreciation/amortization) Nondepreciable 23,319,809 14,688,205 38,008,014 37,154,819 Depreciable 48,910,565 65,843,054 114,753,619 119,295,953 Total assets 103,849,104 94,676,876 198,525,980 205,607,758 Deferred outflows of resources: Related to other post-employment benefits 1,940 393 2,333 20,930 Related to pensions 3,061,196 743,917 3,805,113 2,940,228 Total deferred outflows of resources 3,063,136 744,310 3,807,446 2,961,158 Liabilities: Accounts payable 1,082,281 158,596 1,240,877 1,368,908 Due to other governmental units 204,536 93,232 297,768 222,011 Salaries payable 135,175 43,757 178,932 160,832 Contracts payable 806,197 229,770 1,035,967 2,066,462 Escrow deposits payable 2,541,506 -2,541,506 2,857,935 Accrued interest payable 31,583 297,138 328,721 357,755 Unearned revenue 2,790,535 1,650 2,792,185 1,547,561 Lease liability - due within one year 52,702 6,348 59,050 - Lease liability - due in more than one year 169,059 19,788 188,847 - Compensated absences payable - due within one year 170,890 70,977 241,867 113,252 Compensated absences payable - due in more than one year 591,872 245,822 837,694 816,549 Other post-employment benefits payable - due in more than one year 140,351 28,361 168,712 179,490 Project financing - due within one year 241,310 -241,310 145,000 Project financing - due in more than one year 448,727 -448,727 690,037 Bonds payable - due within one year 385,000 1,845,000 2,230,000 2,430,000 Bonds payable - due in more than one year 3,142,878 22,287,877 25,430,755 27,795,371 Net pension liability - due in more than one year 6,115,958 2,174,019 8,289,977 3,989,626 Total liabilities 19,050,560 27,502,335 46,552,895 44,740,789 Deferred inflows of resources: Related to leases 3,656,943 -3,656,943 3,704,663 Related to other post-employment benefits 55,481 11,211 66,692 70,184 Related to pensions 395,946 32,474 428,420 3,726,586 Total deferred inflows of resources 4,108,370 43,685 4,152,055 7,501,433 Net position: Net investment in capital assets 68,702,496 56,585,833 125,288,329 126,929,970 Restricted for: Debt service 618,646 -618,646 594,203 Park improvements 422,568 -422,568 321,161 Tax increment 24,580 - 24,580 12,970 Public safety 26,182 - 26,182 48,389 Communications 43,837 - 43,837 43,837 Unrestricted 13,915,001 11,289,333 25,204,334 28,376,164 Total net position $83,753,310 $67,875,166 $151,628,476 $156,326,694 Totals The accompanying notes are an integral part of these financial statements. 39 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 Program Revenues Charges For Functions/Programs Expenses Services Primary government: Governmental activities: General government $3,537,796 $2,519,478 Public safety 4,396,715 1,555,525 Public works 11,350,075 210,555 Parks and recreation 3,432,625 648,730 Community development 850,151 33,385 Interest and fees on long-term debt 71,680 - Total governmental activities 23,639,042 4,967,673 Business-type activities: Water 7,301,583 4,485,402 Sewer 6,548,611 3,699,835 Surface water management 4,489,250 1,564,000 Total business-type activities 18,339,444 9,749,237 Total primary government $41,978,486 $14,716,910 The accompanying notes are an integral part of these financial statements. 40 Statement 2 Operating Capital Grants and Grants and Governmental Business-Type Contributions Contributions Activities Activities 2022 2021 $129,319 $ - ($888,999) $ - ($888,999) ($1,109,562) 553,329 - (2,287,861) - (2,287,861) (1,460,093) 1,849,512 3,881,530 (5,408,478) - (5,408,478) (6,610,381) 20,035 - (2,763,860) - (2,763,860) (2,342,938) - - (816,766) - (816,766) (798,086) - - (71,680) - (71,680) (72,195) 2,552,195 3,881,530 (12,237,644) 0 (12,237,644) (12,393,255) 1,880 1,348,297 - (1,466,004) (1,466,004) 2,710,120 - 1,702,549 - (1,146,227) (1,146,227) 980,173 45,970 1,039,938 - (1,839,342) (1,839,342) 1,361,444 47,850 4,090,784 0 (4,451,573) (4,451,573) 5,051,737 $2,600,045 $7,972,314 (12,237,644) (4,451,573) (16,689,217) (7,341,518) General revenues: General property taxes 12,644,286 - 12,644,286 12,075,260 Tax increment collections 279,283 - 279,283 279,653 Grants and contributions not restricted to specific programs 170,656 - 170,656 311 Unrestricted investment earnings (loss) (824,062) (434,818) (1,258,880) (100,935) Gain on sale of capital assets 155,654 - 155,654 84,387 Transfers (334,918) 334,918 - - Total general revenues and transfers 12,090,899 (99,900) 11,990,999 12,338,676 Change in net position (146,745) (4,551,473) (4,698,218) 4,997,158 Net position - January 1 83,900,055 72,426,639 156,326,694 151,329,536 Net position - December 31 $83,753,310 $67,875,166 $151,628,476 $156,326,694 Program Revenues Net (Expense) Revenue and Changes in Net Position Totals The accompanying notes are an integral part of these financial statements. 41 CITY OF CHANHASSEN, MINNESOTA BALANCE SHEET Statement 3 GOVERNMENTAL FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 601 PMP 605 TH101 Pavement Improvements - Other Management Pioneer to Governmental General Fund 212 Grant Fund Capital Flying Cloud Funds Assets:2022 2021 Cash and investments $11,101,672 $2,639,818 $3,237,348 $47,077 $5,524,942 $22,550,857 $21,285,717 Accrued interest receivable 57,847 14,579 8,590 115 28,801 109,932 52,352 Due from other governmental units 165,367 - 1,450,458 241,691 - 1,857,516 2,256,079 Due from other funds - - - - - - 7,425 Accounts receivable - net 56,851 - 471,624 - 188,427 716,902 643,508 Property taxes receivable 117,279 - 5,036 - 8,772 131,087 217,155 Prepaid items 91,340 - - - - 91,340 70,643 Interfund loan receivable 25,000 - - - 194,356 219,356 383,971 Leases receivable 3,656,943 - - - - 3,656,943 3,704,663 Special assessments receivable 1,281 - 1,989,300 - 319,216 2,309,797 1,949,656 Total assets $15,273,580 $2,654,397 $7,162,356 $288,883 $6,264,514 $31,643,730 $30,571,169 Liabilities: Accounts payable $291,813 $ - $185,710 $46,726 $558,032 $1,082,281 $1,229,075 Due to other governmental units 164,362 - 29,495 - 10,679 204,536 153,860 Escrow deposits payable 2,541,506 - - - - 2,541,506 2,857,935 Due to other funds - - - - - - 7,425 Salaries payable 133,147 - - - 2,028 135,175 134,987 Contracts payable - - 641,472 164,725 - 806,197 2,029,835 Interfund loan payable - - - - 25,000 25,000 - Unearned revenue 66,244 2,723,849 442 - - 2,790,535 1,545,811 Total liabilities 3,197,072 2,723,849 857,119 211,451 595,739 7,585,230 7,958,928 Deferred inflows of resources: Unavailable revenue 47,334 - 1,985,558 - 319,216 2,352,108 2,063,519 Related to leases 3,656,943 - - - - 3,656,943 3,704,663 Total deferred inflows of resources 3,704,277 - 1,985,558 - 319,216 6,009,051 5,768,182 Fund balance: Nonspendable 91,340 - - - - 91,340 70,643 Restricted - - - - 1,167,396 1,167,396 1,056,768 Assigned 657,000 - 4,319,679 77,432 4,206,866 9,260,977 7,819,511 Unassigned 7,623,891 (69,452) - - (24,703) 7,529,736 7,897,137 Total fund balance 8,372,231 (69,452) 4,319,679 77,432 5,349,559 18,049,449 16,844,059 Total liabilities, deferred inflows of resources, and fund balance $15,273,580 $2,654,397 $7,162,356 $288,883 $6,264,514 $31,643,730 $30,571,169 Fund balance reported above $18,049,449 $16,844,059 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.72,230,374 74,773,946 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailabe revenue in the funds.2,352,108 2,063,519 Long-term liabilities, including related deferred outflows and inflows of resources, are not due and payable in the current period and, therefore, are not reported in the funds (see Note 1V). (8,878,621) (9,781,469) Net position of governmental activities (Statement 1)$83,753,310 $83,900,055 Total Governmental Funds The accompanying notes are an integral part of these financial statements. 42 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND Statement 4 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 601 PMP 605 TH101 Pavement Improvements - Other Management Pioneer to Governmental General Fund 212 Grant Fund Capital Flying Cloud Funds Revenues:2022 2021 General property taxes $10,245,765 $ - $900,000 $ - $1,568,330 $12,714,095 $12,046,658 Tax increment collections - - - - 279,283 279,283 279,653 Licenses and permits 1,556,723 - - - 127,855 1,684,578 2,608,294 Intergovernmental 496,037 260,000 1,604,033 1,338,452 - 3,698,522 6,883,846 Franchise fees - - 1,880,520 - 155,950 2,036,470 2,019,812 Special assessments - - 1,098,027 - - 1,098,027 987,431 Charges for services 686,462 - - - 7,450 693,912 535,608 Fines and forfeits 69,173 - - - - 69,173 78,673 Investment earnings (loss) (401,261) (69,452) (144,794) (7,334) (201,221) (824,062) (22,856) Contributions and donations 20,785 - - - 57,471 78,256 84,736 Refunds and reimbursements 79,355 - 12,500 - 11,193 103,048 84,915 Other 378,092 - - - 2,400 380,492 275,432 Total revenues 13,131,131 190,548 5,350,286 1,331,118 2,008,711 22,011,794 25,862,202 Expenditures: Current: General government 2,839,873 100,000 - - 321,557 3,261,430 3,452,273 Public safety 4,344,716 - - - 190,867 4,535,583 3,858,508 Public works 2,373,389 - 3,778,452 1,309,404 390,519 7,851,764 3,207,828 Parks and recreation 2,446,503 - - - 2,065 2,448,568 2,247,485 Community development 595,052 - - - 269,525 864,577 886,104 Capital outlay: General government 58,882 - - - 33,170 92,052 - Public safety - - - - 214,019 214,019 - Public works - - 597,687 29,048 339,321 966,056 9,195,898 Parks and recreation - - - - 340,984 340,984 1,183,802 Debt service: Principal - - 145,000 - 391,502 536,502 360,000 Interest and paying agent fees - - - - 92,290 92,290 92,680 Total expenditures 12,658,415 100,000 4,521,139 1,338,452 2,585,819 21,203,825 24,484,578 Revenues over (under) expenditures 472,716 90,548 829,147 (7,334) (577,108) 807,969 1,377,624 Other financing sources (uses): Sale of capital assets - - - - 154,158 154,158 84,983 Issuance of leases - - - - 243,263 243,263 - Project financing issued - - - - - - 288,929 Transfers in 160,000 - 232,375 - 250,000 642,375 - Transfers out (250,000) (160,000) - - (232,375) (642,375) (185,794) Total other financing sources (uses) (90,000) (160,000) 232,375 - 415,046 397,421 188,118 Net change in fund balance 382,716 (69,452) 1,061,522 (7,334) (162,062) 1,205,390 1,565,742 Fund balance - January 1 7,989,515 - 3,258,157 84,766 5,511,621 16,844,059 15,278,317 Fund balance - December 31 $8,372,231 ($69,452) $4,319,679 $77,432 $5,349,559 $18,049,449 $16,844,059 Total Governmental Funds The accompanying notes are an integral part of these financial statements. 43 CITY OF CHANHASSEN, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES,Statement 5 EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 2022 2021 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds (Statement 4) $1,205,390 $1,565,742 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay 1,613,111 1,723,700 Depreciation expense (5,150,984) (6,637,170) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase (decrease) net position. Developer contributed infrastructure 1,327,723 2,219,378 Transfer of capital assets to Enterprise Funds (334,918) - Gain (loss) on disposal/trade-ins of capital assets 1,496 (596) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in delinquent property taxes (69,809) 28,602 Change in deferred and delinquent special assessments 358,398 544,735 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effects of bond premiums when the debt is first issued, whereas amounts are deferred and amortized over the life of the debt in the statement of activities. Issuance of leases (243,263) - Project financing issued - (288,929) Repayment of principal 536,502 360,000 Amortization of bond premiums 15,985 15,985 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the statement of activities include the effects of the changes in these expense accruals as follows: Change in compensated absences payable (15,307) (65,174) Change in other post employment benefits payable (22,876) (1,405) Change in accrued interest payable 4,625 4,500 Governmental funds report pension contributions as expenditures, however, pension expense is reported in the statement of activities. This is the amount by which pension expense differed from pension contributions. 627,182 368,338 Change in net position of governmental activities (Statement 2) ($146,745) ($162,294) The accompanying notes are an integral part of these financial statements. 44 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF NET POSITION Statement 6 PROPRIETARY FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 Water Sewer Surface Water Management 2022 2021 Assets: Current assets: Cash and cash equivalents $5,616,217 $5,632,332 $849,196 $12,097,745 $17,037,017 Accrued interest receivable 33,484 30,447 10,041 73,972 38,628 Due from other governmental units 1,494 50,518 42,043 94,055 14,169 Accounts receivable - net 750,645 736,219 333,495 1,820,359 1,498,584 Prepaid items 6,811 5,293 3,296 15,400 12,537 Water meter inventory 223,993 - - 223,993 356,330 Special assessments receivable 14,449 - - 14,449 19,948 Total current assets 6,647,093 6,454,809 1,238,071 14,339,973 18,977,213 Noncurrent assets: Capital assets: Nondepreciable 7,000,831 3,551,497 4,135,877 14,688,205 14,147,302 Depreciable 83,204,219 37,832,757 32,974,078 154,011,054 152,024,444 Total capital assets 90,205,050 41,384,254 37,109,955 168,699,259 166,171,746 Less: Allowance for depreciation/amortization (39,405,769) (28,225,882) (20,536,349) (88,168,000) (84,494,920) Net capital assets 50,799,281 13,158,372 16,573,606 80,531,259 81,676,826 Total assets 57,446,374 19,613,181 17,811,677 94,871,232 100,654,039 Deferred outflows of resources: Related to other post-employment benefits 171 131 91 393 5,282 Related to pensions 261,558 207,748 274,611 743,917 511,349 Total deferred outflows of resources 261,729 207,879 274,702 744,310 516,631 Liabilities: Current liabilities: Accounts payable 75,358 34,165 49,073 158,596 139,833 Due to other governmental units 5,700 57,275 30,257 93,232 68,151 Salaries payable 16,221 11,112 16,424 43,757 25,845 Contracts payable 55,752 7,418 166,600 229,770 36,627 Accrued interest payable 268,785 16,582 11,771 297,138 321,547 Unearned revenue - - 1,650 1,650 1,750 Interfund loan payable - due within one year 194,356 - - 194,356 193,970 Lease liability - due within one year 3,174 3,174 - 6,348 - Compensated absences payable - due within one year 25,675 20,406 24,896 70,977 22,210 Bonds payable - due within one year 1,502,500 227,500 115,000 1,845,000 2,060,000 Total current liabilities 2,147,521 377,632 415,671 2,940,824 2,869,933 Noncurrent liabilities: Interfund loan payable - - - - 190,001 Lease liability 9,894 9,894 - 19,788 - Compensated absences payable 88,924 70,674 86,224 245,822 160,136 Other post employment benefits 12,363 9,453 6,545 28,361 45,298 Bonds payable 19,930,750 1,360,572 996,555 22,287,877 24,251,508 Net pension liability 764,376 607,121 802,522 2,174,019 579,691 Total noncurrent liabilities 20,806,307 2,057,714 1,891,846 24,755,867 25,226,634 Total liabilities 22,953,828 2,435,346 2,307,517 27,696,691 28,096,567 Deferred inflows of resources: Related to other post-employment benefits 4,887 3,737 2,587 11,211 17,712 Related to pensions 11,418 9,069 11,987 32,474 629,752 16,305 12,806 14,574 43,685 647,464 Net position: Net investment in capital assets 29,720,081 11,570,300 15,295,452 56,585,833 56,069,887 Unrestricted 5,017,889 5,802,608 468,836 11,289,333 16,356,752 Total net position $34,737,970 $17,372,908 $15,764,288 $67,875,166 $72,426,639 Totals The accompanying notes are an integral part of these financial statements. 45 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND Statement 7 CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 Water Sewer Surface Water Management 2022 2021 Operating revenues: Charges for services $4,329,116 $3,629,771 $1,535,661 $9,494,548 $9,058,022 Penalties and other 121,531 60,969 26,071 208,571 236,322 Intergovernmental 1,880 - 45,970 47,850 38,380 Total operating revenues 4,452,527 3,690,740 1,607,702 9,750,969 9,332,724 Operating expenses: Personal services 1,102,319 753,585 1,133,561 2,989,465 1,631,853 Pension expense related to GASB 68 217,980 161,553 384,949 764,482 (1,761) Materials and supplies 491,615 97,910 47,073 636,598 449,270 Contractual services: MCES - 2,616,768 - 2,616,768 2,476,920 Other 1,418,690 1,074,695 1,121,995 3,615,380 1,485,761 Repairs and maintenance 905,657 217,146 153,808 1,276,611 2,329,051 Depreciation/amortization 1,908,914 908,359 926,340 3,743,613 3,771,283 Total operating expenses 6,045,175 5,830,016 3,767,726 15,642,917 12,142,377 Operating income (loss)(1,592,648) (2,139,276) (2,160,024) (5,891,948) (2,809,653) Nonoperating revenues (expenses): Investment earnings (loss)(141,213) (237,939) (55,666) (434,818) (78,079) Refunds and reimbursements 34,755 9,095 2,268 46,118 18,292 Interest and fiscal charges (564,141) (26,539) (17,760) (608,440) (670,221) Gain (loss) on disposal of capital assets (692,267) (692,056) (703,764) (2,088,087) - Total nonoperating revenues (expenses) (1,362,866) (947,439) (774,922) (3,085,227) (730,008) Income before contributions and transfers (2,955,514) (3,086,715) (2,934,946) (8,977,175) (3,539,661) Contributions and transfers: Transfers in - - - - 185,794 Capital contributions: Contributions of capital assets 1,013,940 1,422,182 1,092,025 3,528,147 5,697,073 Intergovernmental - 50,000 37,745 87,745 - Special assessments 1,174 - - 1,174 6,024 Connection charges 409,646 263,417 135,573 808,636 2,810,222 Total contributions and transfers 1,424,760 1,735,599 1,265,343 4,425,702 8,699,113 Change in net position (1,530,754) (1,351,116) (1,669,603) (4,551,473) 5,159,452 Net position - January 1 36,268,724 18,724,024 17,433,891 72,426,639 67,267,187 Net position - December 31 $34,737,970 $17,372,908 $15,764,288 $67,875,166 $72,426,639 Capital Transfers - Contributions Net Amounts reported above $4,425,702 $ - Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from governmental activities (334,918) 334,918 Amounts reported on the statement of activities $4,090,784 $334,918 Totals The accompanying notes are an integral part of these financial statements. 46 CITY OF CHANHASSEN, MINNESOTA STATEMENT OF CASH FLOWS Statement 8 PROPRIETARY FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 Water Sewer Surface Water Management 2022 2021 Cash flows from operating activities: Receipts from customers and users $4,284,680 $3,529,807 $1,534,721 $9,349,208 $9,495,192 Payment to suppliers (2,674,060) (3,999,241) (1,254,283) (7,927,584) (6,966,389) Payment to employees (1,073,661) (733,106) (1,066,794) (2,873,561) (1,753,171) Miscellaneous revenue 34,755 9,095 2,268 46,118 18,292 Net cash flows provided by (used for) operating activities 571,714 (1,193,445) (784,088) (1,405,819) 793,924 Cash flows from noncapital financing activities: Transfers in - - - - 185,794 Interfund loan payable - (payments) (189,615) - - (189,615) (193,593) Net cash flows used by (used for) noncapital financing activities (189,615) 0 0 (189,615) (7,799) Cash flows from capital and related financing activities: Acquisition of capital assets (130,050) (81,434) (751,050) (962,534) (2,257,071) Connection charges 409,646 263,417 135,573 808,636 2,810,222 Intergovernmental revenue - 50,000 37,745 87,745 - Special assessment collections 6,673 - - 6,673 15,436 Principal paid on bonds (1,820,000) (125,000) (115,000) (2,060,000) (2,105,000) Principal paid on leases (1,358) (1,358) - (2,716) - Interest and fiscal charges (679,311) (42,035) (30,134) (751,480) (857,728) Net cash flows used by capital and related financing activities (2,214,400) 63,590 (722,866) (2,873,676) (2,394,141) Cash flows from investing activities: Investment earnings (158,544) (251,185) (60,433) (470,162) (41,893) Net increase (decrease) in cash and cash equivalents (1,990,845) (1,381,040) (1,567,387) (4,939,272) (1,649,909) Cash and cash equivalents - January 1 7,607,062 7,013,372 2,416,583 17,037,017 18,686,926 Cash and cash equivalents - December 31 $5,616,217 $5,632,332 $849,196 $12,097,745 $17,037,017 Reconciliation of operating loss to net cash provided (used) by operating activities: Operating loss ($1,592,648) ($2,139,276) ($2,160,024) ($5,891,948) ($2,809,653) Adjustments to reconcile operating loss to net cash flows from operating activities: Miscellaneous revenue 34,755 9,095 2,268 46,118 18,292 Depreciation/amortization 1,908,914 908,359 926,340 3,743,613 3,771,283 Changes in assets and liabilities, deferred outflows and inflows: Decrease (increase) in receivables (167,847) (160,933) (72,881) (401,661) 160,718 Decrease (increase) in prepaid items (1,402) (1,270) (191) (2,863) 43,110 Decrease (increase) in inventory 132,337 - - 132,337 (261,881) Decrease (increase) in deferred outflows of resources (30,991) (32,975) (163,713) (227,679) (440,041) Increase (decrease) in payables 10,967 8,548 68,784 88,299 (19,780) Increase (decrease) in unearned revenue - - (100) (100) 575 Increase (decrease) in other post employment benefits (7,415) (6,922) (2,600) (16,937) 2,996 Increase (decrease) in compensated absences payable 36,785 28,287 69,381 134,453 (22,687) Increase (decrease) in net pension liability 519,154 400,228 674,946 1,594,328 (253,623) Increase (decrease) in deferred inflows of resources (270,895) (206,586) (126,298) (603,779) 604,615 Total adjustments 2,164,362 945,831 1,375,936 4,486,129 3,603,577 Net cash flows provided by (used in) operating activities $571,714 ($1,193,445) ($784,088) ($1,405,819) $793,924 Noncash investing, capital and financing activities: Contributions of capital assets $1,013,940 $1,422,182 $1,092,025 $3,528,147 $5,697,073 Capital assets acquired via lease $14,426 $14,426 $0 $28,852 $0 Totals The accompanying notes are an integral part of these financial statements. 47 - This page intentionally left blank - 48 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Chanhassen (the City) was incorporated in 1967 and operates under the State of Minnesota Statutory Plan B form of government. The governing body consists of a five-member City council elected by voters of the City. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accounting principles generally accepted in the United States of America, the financial statements of the reporting entity should include those of the City (the primary government) and its component units. The component unit discussed below is included in the City’s reporting entity because of the significance of its operational or financial relationships with the City. COMPONENT UNITS The City has one component unit, the Economic Development Authority (EDA). The financial statements of the EDA are included as a blended component unit because its governing body is substantively the same as the City Council, the City is in a relationship of financial burden with the EDA, and because management of the City have operational responsibilities for the EDA. Separate financial statements for the EDA are not prepared. JOINTLY GOVERNED ORGANIZATIONS Southwest Transit Commission. The City, in conjunction with the Cities of Eden Prairie and Chaska, established the Southwest Transit Commission (the Commission). The purpose of the Commission is to provide public transit service for the three cities. The Commission’s board is composed of two commissioners from each of the cities. JOINT POWERS AGREEMENT Pursuant to a joint powers agreement dated April 14, 1994, the City and Independent School District No. 112 (ISD No. 112) jointly constructed the Chanhassen Recreation Center and Bluff Creek Elementary. The City entered into a revised joint powers agreement with ISD No. 112 in 2022 to provide for the mutual long-term use of the facility. According to the terms of the agreement, which expires in 2093, the City reimburses ISD No. 112 24% of the cost to operate and maintain the facility. 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 primary government and its component units. 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. 49 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 The statement of activities demonstrates the degree to which the direct expenses of a given function or business-type activity, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. 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 business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general 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 City reports the following major governmental funds: The General 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. The Grant Fund (212) accounts for the revenues and expenditures related to federal and state financial assistance programs. The PMP Pavement Management Capital (601) fund accounts for the City’s street reconstruction and other significant street maintenance projects. Individual property owners pay a portion of the cost of the annual project with assessments and the City funds its portion with the reserves created in this fund, an annual tax levy, and franchise fees. The TH101 Improvements – Pioneer to Flying Cloud (605) fund accounts for the funding sources and costs of the Trunk Highway 101 improvement project, which includes widening of the highway between Pioneer Trail and Flying Cloud Drive, sanitary sewer and water extension, storm sewer improvements, pedestrian/bicycle trails, and a pedestrian bridge. The City reports the following major proprietary funds: The Water Fund accounts for the water service charges which are used to finance the water system operating expenses. The Sewer Fund accounts for the sewer service charges which are used to finance the sanitary sewer system operating expenses. The Surface Water Management Fund accounts for the surface water charges which are used to finance the surface water system operating expenses. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 50 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 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 all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal 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. Property taxes, special assessments, intergovernmental revenues, charges for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal 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. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures, or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 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 water, sewer, and surface water management enterprise funds are charges to customers for sales and services. Operating expenses for enterprise 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. D. BUDGETS Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund and for the Contribution, Cemetery, and CATV Special Revenue Funds. Budgeted amounts are reported as originally adopted, or as amended by the City Council. Budgeted expenditure appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash management. 51 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 E. LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution. 4. Management may authorize transfer of budgeted amounts between departments within any fund. All budget amendments between funds must be approved by the City Council. The legal level of budgetary control is at the fund level. Budgetary monitoring, by departments or divisions and by category, is required by City policy. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund and for the Contribution, Cemetery, and CATV Special Revenue Funds. Formal budgetary integration is not employed for Debt Service Funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. The following is a listing of funds whose expenditures exceeded budgeted appropriations: Budgeted Actual Expenditures in Expenditures Expenditures Excess of Budget Contribution Special Revenue Fund $50,000 $77,956 ($27,956) Revenues in excess of budget and fund balance were used to cover the expenditures in excess of budget. F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Investments are stated at fair value. Investment income is allocated monthly to individual funds on the basis of the fund’s average cash balance. For purposes of the statement of cash flows, the Proprietary Funds consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the Proprietary Fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. G. RECEIVABLES Property taxes and special assessment receivables have been reported net of estimated uncollectible accounts (See Note 1 H and I). Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. 52 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Leases receivable are measured at the present value of lease payments expected to be received during the lease term. A deferred inflow of resources is reported in relation to leases receivable. The deferred inflow of resources is recorded at the commencement of the lease in an amount equal to the initial measurement of the lease receivable and is recognized as revenue over the lease term. H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the county in December of each year for collection in the following year. The county is responsible for billing and collecting all property taxes for itself, the City, the local school district, and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the county and remitted to the City on or before July 15 and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The county possesses this authority. For government-wide financial statements, the City recognizes property tax revenue in the period for which taxes were levied. Uncollectible property taxes are not material and have not been reported. For government fund financial statements, the City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes received by the City in July, December, and January are recognized as revenue for the current year. Taxes collected by the county by December 31 (remitted to the City the following January) are classified as due from county taxes receivable. Taxes not collected by the county by December 31 are classified as delinquent. The portion of delinquent taxes not collected by the City in January are fully offset by deferred inflows of resources because they are not available to finance current expenditures. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per Minnesota State Statute 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with state statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. 53 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments become delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties, and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to Minnesota state statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. For government-wide financial statements, the City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. For government fund financial statements, revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the county and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred inflows of resources. J. INVENTORIES The original cost of materials and supplies are recorded as expenditures at the time of purchase for governmental funds. These funds do not maintain material amounts of inventories. Inventories of the Proprietary Funds are stated at cost, which approximates market, using the first-in, first- out (FIFO) method. K. PREPAID ITEMS Certain prepayments 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 reported using the consumption method and recorded as expenditures/expenses at the time of consumption. L. CAPITAL ASSETS Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, trails, sidewalks, and similar items), right to use leased assets, and intangible assets such as easements and computer software, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. 54 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Capital assets are depreciated/amortized using the straight-line method over the following estimated useful lives: Buildings and structures 20 – 50 years Machinery and equipment (including software) 3 – 30 years Drainage systems 30 years Water and sewer lines 30 years Streets 25 – 50 years Trails 15 years Sidewalks 25 years Other improvements 7 – 40 years Temporary easements 2 years M. COMPENSATED ABSENCES The City compensates all employees upon termination for unused vacation, sick, and PTO hours up to a maximum based upon length of service. The City compensates nonexempt employees for unused comp time. All vacation, PTO, and comp time is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is vested as severance pay. N. 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, if material, are amortized over the life of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts 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. O. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to future periods and so it will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports deferred outflows of resources related to other post-employment benefits and pensions in the government-wide Statement of Net Position and the Statement of Net Position for the proprietary funds. In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net assets that applies to future periods, and therefore, it will not be recognized as an inflow of resources (revenue) until that time. The City reports deferred inflows of resources related to other post-employment benefits and pensions in the government-wide Statement of Net Position and the Statement of Net Position for the proprietary funds, and reports deferred inflows of resources related to leases in the government-wide Statement of Net 55 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Position and the Balance Sheet for the governmental funds. The City also has an item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the Balance Sheet for the governmental funds. The governmental funds report unavailable revenues from the following sources: property taxes, special assessments, and other revenue not collected within 60 days from year-end. P.FUND BALANCE CLASSIFICATIONS In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable - consists of amounts that are not in spendable form, such as prepaid items. Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions. Committed - consists of internally imposed constraints. These constraints are established by Resolution of City Council, and committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by resolution. Assigned - consists of internally imposed constraints for the specific purpose of the City’s intended use. Pursuant to the City’s Fund Balance Policy, the City Manager or Finance Director are authorized to assign fund balance that reflects the City’s intended use of those funds. Unassigned - is the residual classification for the General Fund and also reflects negative residual amounts in other funds. When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, and then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. The exception to this is the Park Acquisition and Development Fund (410), where it is the City’s policy to use resources in the following order: 1) assigned, 2) committed, and 3) restricted. Q.INTERFUND TRANSACTIONS During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Interfund services provided and used are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund. Short-term interfund loans are classified as “due to/from other funds.” Long- term interfund loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” All other interfund transactions are reported as transfers. 56 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 R. USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. S. COMPARATIVE TOTALS The basic financial statements, required supplementary information, and combining and individual fund financial statements and schedules include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with GAAP. Accordingly, such information should be read in conjunction with the government’s financial statements for the year ended December 31, 2021, from which the summarized information was derived. T. RECLASSIFICATIONS Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation. U. PENSION PLANS COST SHARING MULTIPLE – EMPLOYER PLANS For purposes of measuring the net pension liability, deferred outflows and inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA), and additions to and deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA, 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. SINGLE EMPLOYER PLAN For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Chanhassen Fire Department Relief Association (Relief) and additions to/deductions from the Relief’s fiduciary net position have been determined on the same basis as they were reported by the Relief. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 57 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 V.RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The governmental fund balance sheet includes a reconciliation between fund balances – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that “long-term liabilities, including related deferred outflows and inflows of resources, are not due and payable in the current period and, therefore, are not reported in the funds.” The details of this ($8,878,621) difference are as follows: Bonds payable ($3,400,000) Unamortized bond premium (127,878) Project financing (690,037) Accrued interest payable (31,583) Lease liability (221,761) Compensated absences payable (762,762) Other post-employment benefits payable (140,351) Net pension liability (6,115,958) Deferred outflows of resources related to pensions 3,061,196 Deferred inflows of resources related to pensions (395,946) Deferred outflows of resources related to OPEB 1,940 Deferred inflows of resources related to OPEB (55,481) Net adjustment to decrease fund balances - total governmental funds to arrive at net pos ition - governmental activities ($8,878,621) Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council. All such banks are members of the Federal Reserve System. Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds, or collateral protect all City deposits. The City has no additional deposit policies addressing custodial credit risk. Minnesota Statutes require that all City deposits be protected by insurance, surety bonds, or collateral. The fair value of collateral pledged must equal at least 110% of deposits not covered by insurance or bonds. Securities pledged as collateral are required to be held in safekeeping by the City or in a financial institution other than that furnishing the collateral. Minnesota Statute section 118.A.03 identifies allowable forms of collateral. At December 31, 2022, the bank balance of the City’s deposits with financial institutions was $1,508,225 and the carrying amount was $1,422,594. All deposits were covered by federal depository insurance or by collateral pledged and held in the City’s name. 58 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 B. INVESTMENTS As of December 31, 2022, the City had the following investments and maturities: Fair Less Investment Type Rating Value Than 1 1-5 6-10 Money market Not rated $7,255,669 $7,255,669 $ - $ - Brokered certificates of deposit Not rated 6,816,876 725,255 6,091,621 - Municipal bonds (1) 12,125,931 1,898,133 7,362,334 2,865,464 Federal National Mortgage Assn. Notes Aaa 1,399,789 - - 1,399,789 Federal Home Loan Mortgage Corp. Notes Aaa 1,394,402 - 1,394,402 - Federal Home Loan Bank Notes Aaa 2,047,352 687,897 1,359,455 - Federal Farm Credit Bank Aaa 1,460,012 975,482 484,530 - U.S. Treasuries Aaa 725,342 491,700 233,642 - Total $33,225,373 $12,034,136 $16,925,984 $4,265,253 (1) $5,921,024 are rated Aaa/AAA, $2,456,410 Total investments $33,225,373 are rated Aa1/AA+, $3,194,361 are rated Deposits 1,422,594 Aa2/AA and $554,136 are rated A1/A+Petty cash 635 Total cash and investments $34,648,602 Classifications above are by maturity date. Some investments listed above have call dates that occur in less than one year. Investment Maturities (in Years) The City categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy has three levels. Level 1 investments are valued using inputs that are based on quoted prices in active markets for identical assets. Level 2 investments are valued using inputs that are based on quoted prices for similar assets or inputs that are observable, either directly or indirectly. Level 3 investments are valued using inputs that are unobservable. The City has the following recurring fair value measurements as of December 31, 2022: Investment Type 12/31/2022 Level 1 Level 2 Level 3 Investments at fair value: Brokered certificates of deposit $6,816,876 $ - $6,816,876 $ - Municipal bonds 12,125,931 - 12,125,931 - Federal National Mortgage Assn. Notes 1,399,789 - 1,399,789 - Federal Home Loan Mortgage Corp. Notes 1,394,402 - 1,394,402 - Federal Home Loan Bank Notes 2,047,352 - 2,047,352 - Federal Farm Credit Bank 1,460,012 - 1,460,012 - U.S. Treasuries 725,342 725,342 - - Total/subtotal 25,969,704 $725,342 $25,244,362 $0 Investments not categorized: Money market 7,255,669 Total $33,225,373 Fair Value Measurement Using 59 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 C. INVESTMENT RISKS Custodial credit risk – investments – For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City’s investment policy requires the City’s security broker/dealers to provide audited financial statements, proof of NASD certification, proof of state registration, and certification of having read, understood and agreement to comply with the City’s investment policy. Investments in securities are held by the City’s broker-dealer of which $500,000 per broker is insured through SIPC. Each broker-dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker-dealer’s accounts. Interest rate risk – Interest rate risk is the risk that changes in interest rates of debt investments could adversely affect the fair value of an investment. The City’s investment policy requires the City to diversify its investment portfolio to eliminate the risk of loss resulting from over concentration of assets in a specific maturity. The policy also states the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonable. Credit risk – Credit risk is the risk that an issuer or other counterparty to an investment will be unable to fulfill its obligation to the holder of the investment. State law limits investments to commercial paper to those rated in the highest quality category by at least two nationally recognized rating agencies; in any security of the State of Minnesota or any of its municipalities which is rated “A” or better by a national bond rating service for general obligation and rated “AA” or better for a revenue obligation; a general obligation of the Minnesota Housing Finance Agency to those rated “A” or better by a national bond rating agency; mutual funds or money market funds whose investments are restricted to securities described in MS 118A.04. The City’s investment policy does not place further restrictions on investment options. Concentration of credit risk – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government’s investment in a single issuer. The City’s investment policy states investments shall be diversified by limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities). Investments in a single issuer exceeding 5% of the City’s overall investment portfolio are in various holdings as follows: Federal Home Loan Bank Notes 6% 60 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2022, are as follows: Delinquent Special Property Assessments Leases Taxes Receivable Receivable Total Major Funds: General $18,964 $ - $3,469,561 $3,488,525 PMP Pavement Management Capital - 1,648,250 - 1,648,250 Water - 10,891 - 10,891 Nonmajor Funds - 319,216 - 319,216 $18,964 $1,978,357 $3,469,561 $5,466,882 Note 4 LEASES RECEIVABLE The City leases space on its water towers for cellular tower antenna sites. The leases are non-cancellable for a period of five years, with one to four renewal periods of five years each at the lessee’s option. The City considers the likelihood of these options being exercised to be greater than 50%. The agreements call for annual lease payments of $28,196 to $39,731, with increases of 2% to 3% per year. The lease receivables are measured at the present value of the future minimum lease payments expected to be received during the lease term at a discount rate of 3% which is based on the rate available to finance equipment over the same time periods. At December 31, 2022, the City recorded $3,656,943 in lease receivables and deferred inflows of resources for these arrangements. Lease-related inflows of resources (e.g. lease revenue) recognized during the year ended December 31, 2022, was $286,929. Of this amount, $91,737 was interest revenue. No other variable lease payments were received. Note 5 UNAVAILABLE REVENUE Governmental funds report deferred inflows of resources in connection with receivables of revenues that are not considered to be available to liquidate liabilities of the current period. At December 31, 2022, the various components of unavailable revenue were as follows: PMP Pavement General Management Nonmajor Fund Capital Funds Total Delinquent property taxes receivable $46,053 $ - $ - $46,053 Special assessments not yet due 1,281 1,985,558 319,216 2,306,055 Total unavailable revenue $47,334 $1,985,558 $319,216 $2,352,108 Major Funds 61 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 6 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2022, was as follows: Beginning Ending Balance Additions Deletions Balance Governmental activities: Capital assets not being depreciated: Land $19,914,318 $1,600 $ - $19,915,918 Permanent easements 2,616,723 210,025 - 2,826,748 Construction in progress 476,476 285,423 184,756 577,143 Total capital assets not being depreciated 23,007,517 497,048 184,756 23,319,809 Capital assets being depreciated/amortized: Buildings and structures 24,812,815 58,882 18,713 24,852,984 Temporary easements 4,762,253 - 1,325,383 3,436,870 Right to use leased assets - 243,263 - 243,263 Machinery and equipment 9,719,312 628,163 419,867 9,927,608 Other improvements 12,492,365 218,462 128,090 12,582,737 Infrastructure 124,223,467 1,300,854 37,440 125,486,881 Total capital assets being depreciated/amortized 176,010,212 2,449,624 1,929,493 176,530,343 Less accumulated depreciation/amortization for: Buildings and structures 10,703,315 619,930 8,424 11,314,821 Temporary easements 4,101,378 660,875 1,325,383 3,436,870 Right to use leased assets - 22,765 - 22,765 Machinery and equipment 6,268,333 498,566 275,652 6,491,247 Other improvements 5,198,919 486,531 128,090 5,557,360 Infrastructure 97,971,838 2,862,317 37,440 100,796,715 Total accumulated depreciation/amortization 124,243,783 5,150,984 1,774,989 127,619,778 Governmental activities capital assets - net $74,773,946 ($2,204,312) $339,260 $72,230,374 Beginning Ending Balance Additions Deletions Balance Business-type activities: Capital assets not being depreciated: Land $2,109,835 $6,500 $ - $2,116,335 Permanent easements 7,248,009 1,951,695 2,111,500 7,088,204 Construction in progress 4,789,458 1,030,365 336,157 5,483,666 Total capital assets not being depreciated 14,147,302 2,988,560 2,447,657 14,688,205 Capital assets being depreciated/amortized: Buildings and structures 28,077,578 - - 28,077,578 Right to use leased assets - 28,852 - 28,852 Machinery and equipment 2,064,807 167,768 113,376 2,119,199 Other improvements 121,882,059 1,906,107 2,741 123,785,425 Total capital assets being depreciated/amortized 152,024,444 2,102,727 116,117 154,011,054 Less accumulated depreciation/amortization for: Buildings and structures 4,422,417 561,610 - 4,984,027 Right to use leased assets - 3,006 - 3,006 Machinery and equipment 1,259,127 140,373 67,790 1,331,710 Other improvements 78,813,376 3,038,624 2,743 81,849,257 Total accumulated depreciation/amortization 84,494,920 3,743,613 70,533 88,168,000 Business-type activities capital assets - net 81,676,826 1,347,674 2,493,241 80,531,259 Total capital assets - net $156,450,772 ($856,638) $2,832,501 $152,761,633 62 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Depreciation/amortization expense was charged to functions/programs of the City as follows: Governmental activities: General government $298,211 Public safety 223,738 Public works 3,605,468 Parks and recreation 1,023,567 Total depreciation/amortization expense - governmental activities $5,150,984 Business-type activities: Water $1,908,914 Sewer 908,359 Surface water management 926,340 Total depreciation/amortization expense - business-type activities $3,743,613 Note 7 LONG-TERM LIABILITIES The City issues long-term debt to provide funds for the acquisition and construction of major capital facilities. The City’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. GOVERNMENTAL ACTIVITIES As of December 31, 2022, the governmental activities long-term liabilities of the City consisted of the following: Final Authorized Issue Maturity Interest And Outstanding Date Date Rate Issued 12/31/2022 General Long-Term Debt: General Obligation Bonds: G.O. Bonds, Series 2016A 3/3/2016 2/1/2030 2.00% - 3.00% $4,805,000 $3,400,000 Bond premium 239,773 127,878 Total general obligation bonds 5,044,773 3,527,878 Project financing N/A 690,037 Compensated absences payable N/A 762,762 Total - governmental activities $5,044,773 $4,980,677 63 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 BUSINESS-TYPE ACTIVITIES As of December 31, 2022, the business-type activities long-term liabilities of the City consisted of the following: Final Authorized Issue Maturity Interest And Outstanding Date Date Rate Issued 12/31/2022 G.O. Revenue Bonds: Water Revenue Bonds, Series 2011B 10/6/2011 2/1/2025 2.00% - 3.00% $3,720,000 $1,665,000 Water and Sewer Revenue Bonds, Series 2012A 11/15/2012 2/1/2023 1.00% - 1.55% 1,245,000 135,000 Water Revenue Bonds, Series 2016A 3/3/2016 2/1/2026 2.00% - 3.00% 1,565,000 675,000 Water Revenue Bonds, Series 2016B 12/29/2016 2/1/2042 3.50% - 4.00% 3,630,000 3,630,000 Water Revenue Bonds, Series 2017A 2/1/2017 2/1/2038 2.00% - 4.00% 10,000,000 8,990,000 Water Revenue Bonds, Series 2018A 3/15/2018 2/1/2030 3.00% - 4.00% 3,595,000 2,530,000 Water, Sewer, and Surface Water Revenue Bonds, Series 2020A 4/2/2020 2/1/2031 2.00% - 3.00% 6,220,000 5,495,000 Bond premium 1,626,772 1,012,877 Total G.O. revenue bonds 31,601,772 24,132,877 Compensated absences payable N/A 316,799 Total - business-type activities $31,601,772 $24,449,676 GOVERNMENTAL ACTIVITIES Annual debt service requirements to maturity for the governmental activities long-term liabilities are as follows: Year Ending December 31, Principal Interest 2023 $385,000 $70,025 2024 395,000 58,325 2025 410,000 48,300 2026 420,000 40,000 2027 430,000 31,500 2028 440,000 22,800 2029 455,000 13,850 2030 465,000 4,650 Total $3,400,000 $289,450 General Obligation Bonds It is not practicable to determine the specific year for payment of long-term accrued compensated absences. 64 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 BUSINESS-TYPE ACTIVITIES Annual debt service requirements to maturity for the business-type long-term debt are as follows: Year Ending G.O. Revenue Bonds December 31, Principal Interest 2023 $1,845,000 $685,634 2024 1,755,000 631,013 2025 1,810,000 576,763 2026 1,275,000 530,538 2027 1,550,000 488,188 2028 1,600,000 440,938 2029 1,650,000 395,563 2030 1,690,000 352,263 2031 1,150,000 315,488 2032 690,000 290,288 2033 715,000 269,213 2034 735,000 247,463 2035 755,000 225,113 2036 780,000 202,088 2037 800,000 176,388 2038 830,000 147,863 2039 825,000 118,900 2040 855,000 88,431 2041 885,000 54,700 2042 925,000 18,500 Total $23,120,000 $6,255,335 It is not practicable to determine the specific year for payment of long-term accrued compensated absences. 65 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2022, was as follows: Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities: General obligation bonds $3,770,000 $ - $370,000 $3,400,000 $385,000 Bond premium 143,863 - 15,985 127,878 - Project financing 835,037 - 145,000 690,037 241,310 Compensated absences*747,455 15,307 - 762,762 170,890 Total governmental activity long-term liabilities $5,496,355 $15,307 $530,985 $4,980,677 $797,200 Business-type activities: G.O. revenue bonds $25,180,000 $ - $2,060,000 $23,120,000 $1,845,000 Bond premium 1,131,508 - 118,631 1,012,877 - Compensated absences*182,346 134,453 - 316,799 70,977 Total business-type activity long-term liabilities $26,493,854 $134,453 $2,178,631 $24,449,676 $1,915,977 *The change in compensated absences is presented as a net change. All long-term bonded indebtedness outstanding at December 31, 2022, is backed by the full faith and credit of the City. General Obligation Revenue Bonds are serviced by the Sewer, Water and Surface Water Management Enterprise Funds and are carried as debt of those funds. NONEXCHANGE FINANCIAL GUARANTEE OF DEBT On August 1, 2014, the Carver County Community Development Agency (CDA), a legally separate entity from the City, issued $2,110,000 of Housing Development Refunding Bonds, Series 2014 and $2,370,000 of Taxable Housing Development and Refunding Bonds, Series 2014T. The proceeds were used to refund a portion of prior bonds and to fund certain capital improvements of the Centennial Hill Apartments, which are located within the City. In accordance with Minnesota Statutes Section 469.034, Subd. 2, the City has pledged its full faith and credit and taxing powers to the payment of debt service on the Series 2014 and Series 2014T bonds. In the event that the Carver County CDA is unable to pay the debt service on the bonds due to insufficient housing revenues and cash reserves, the City is obligated to pay the debt service. The City’s guarantee extends until the bonds have fully matured, which is scheduled to occur in 2034. The total amount of outstanding guaranteed debt, including interest, at December 31, 2022, is $3,762,649. The City’s management does not expect the City will be required to make any debt service payments towards these bonds. Accordingly, the bonds are not reflected in the financial statements of the City. 66 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 PROJECT FINANCING The City has a Joint Powers Agreement with Carver County for the Lyman Boulevard - Phase 3 project, and a Joint Powers Agreement with Carver County for a pedestrian trail to the Arboretum. The City is paying its share of these projects at 0% interest according to the following schedule: Year Ending December 31, Lyman Blvd Ped Trail Total 2023 $145,000 $96,310 $241,310 2024 145,000 96,310 241,310 2025 111,108 96,309 207,417 Total $401,108 $288,929 $690,037 REVENUE PLEDGED Future revenue pledged for the payment of long-term debt is as follows: Percent of Debt service Remaining Principal Pledged Use of Total as a % of Term of Principal and Interest Revenue Bond Issue Proceeds Type Debt Service net revenues Pledge and Interest Paid Received 2016A Refunding bonds Refunding of 2008A bonds Property taxes 100% n/a 2019 - 2030 $3,689,450 $451,350 $483,840 2011A Water Revenue bonds Water infrastructure improvements Water charges 100% 5.7% 2012 - 2021 $ - $277,956 $4,860,293 - refunded the 2005B bonds 2011B Water Revenue bonds Water infrastructure improvements Water charges 100% 11.8% 2012 - 2024 $1,741,125 $572,675 $4,860,293 - refunded the 2005B bonds 2012A Water & Sewer Revenue Purchase of meter reading equipment Water and 100% 1.6% 2013 - 2022 $136,046 $133,003 $8,551,033 bonds sewer charges 2016A Water Revenue bonds Water infrastructure improvements Water charges 100% 4.0% 2016 - 2025 $705,650 $179,200 $4,450,647 2016B Water Revenue bonds West Water Treatment Plant Water charges 100% 2.8% 2017 - 2041 $6,119,889 $138,238 $4,860,293 2017A Water Revenue bonds West Water Treatment Plant Water charges 100% 9.1% 2018 - 2038 $11,721,750 $440,250 $4,860,293 2018A Water Revenue bonds West Water Treatment Plant Water charges 100% 7.3% 2019 - 2030 $2,845,300 $356,400 $4,860,293 Water, sewer, 2020A Water, Sewer, & Surface Water, Sewer, and Surface Water and surface 100% 7.0% 2021 - 2031 $6,105,575 $704,700 $10,112,765 Water Revenue bonds Infrastructure improvements water charges Revenue Pledged Current Year 67 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 8 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General obligation bond issues sold by the City are financed by ad valorem tax levies. Special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2022. Future scheduled tax levies for all bonds outstanding at December 31, 2022, totaled $3,429,878. Note 9 LEASE LIABILITY As of December 31, 2022, the City had ten outstanding vehicle leases, all of which were entered into during 2022. Each lease requires 48 monthly payments ranging from $546 to $858. The lease liability is measured at discount rates ranging from 10.0% to 13.3% as stated in the lease agreements. As a result of the leases, the City has recorded right to use leased assets with a net book value of $246,344 as of December 31, 2022. Details of this amount are presented in Note 6. Lease liability activity for the year ended December 31, 2022, was as follows: Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities $ - $243,263 $21,502 $221,761 $52,702 Business-type activities - 28,852 2,716 26,136 6,348 Total lease liability $0 $272,115 $24,218 $247,897 $59,050 Scheduled lease payments are as follows: Year Ending December 31, Principal Interest Principal Interest 2023 $52,702 $22,070 $6,348 $2,419 2024 58,840 15,925 7,040 1,727 2025 65,705 9,060 7,807 960 2026 44,514 1,962 4,941 173 Total $221,761 $49,017 $26,136 $5,279 Lease Liability Lease Liability Governmental Activities Business-type Activities 68 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 10 DEFINED BENEFIT PENSION PLANS A.PLAN DESCRIPTION The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (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. 1. General Employees Retirement Fund (GERF) All full-time (with the exception of employees covered by PEPFF) and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2. Public Employees Police and Fire Fund (PEPFF) The PEPFF, 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 PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to PERA. B.BENEFITS PROVIDED PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 1.GERF Benefits 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 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 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 Plan 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. 69 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50% of the cost-of-living adjustment (COLA) announced by the Social Security Administration (SSA), with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 2. PEPFF Benefits Benefits for PEPFF 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 PEPFF 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 PEPFF members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The postretirement increase will be fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. C. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions Coordinated Plan members were required to contribute 6.50% of their annual covered salary in fiscal year 2022 and the City was required to contribute 7.50% for Coordinated Plan members. The City’s contributions to the GERF for the year ended December 31, 2022, were $477,007. The City’s contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Police and Fire Plan members were required to contribute 11.80% of their annual covered salary in fiscal year 2022 and the City was required to contribute 17.70% for Police and Fire Plan members. The City’s contributions to the PEPFF for the year ended December 31, 2022, were $86,742. The City’s contributions were equal to the required contributions as set by state statute. 70 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 D. PENSION COSTS 1. GERF Pension Costs At December 31, 2022, the City reported a liability of $6,573,627 for its proportionate share of GERF’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million. The State of Minnesota is considered a non-employer contributing entity and the state’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $192,870. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2021, through June 30, 2022, relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.0830% at the end of the measurement period and 0.0768% for the beginning of the period. City’s proportionate share of the net pension liability $6,573,627 State of Minnesota’s proportionate share of the net pension liability associated with the City 192,870 Total $6,766,497 For the year ended December 31, 2022, the City recognized pension expense of $967,769 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $28,819 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the GERF. At December 31, 2022, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $54,908 $70,456 Changes in actuarial assumptions 1,487,731 27,735 Difference between projected and actual investment earnings 120,643 - Changes in proportion 344,337 - Contributions paid to PERA subsequent to the measurement date 241,774 - Total $2,249,393 $98,191 71 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 The $241,774 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, 2023. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending Pension December 31,Expense 2023 $713,199 2024 721,120 2025 (119,377) 2026 594,486 Thereafter - 2. PEPFF Pension Costs At December 31, 2022, the City reported a liability of $1,388,162 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2021, through June 30, 2022, relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.0319% at the end of the measurement period and 0.0220% for the beginning of the period. The State of Minnesota also contributed $18 million to PEPFF during the plan fiscal year ended June 30, 2022. The contribution consisted of $9 million in direct state aid that does meet the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The direct state aid was paid on October 1, 2021. Thereafter, by October 1 of each year, the state will pay $9 million to the PEPFF until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental state aid will continue until the fund is 90% funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90% funded, whichever occurs later. The State of Minnesota is included as a non-employer contributing entity in the PEPFF Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9 million in direct state aid. PEPFF employers need to recognize their proportionate share of the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2022, the City recognized pension expense of $46,762 for its proportionate share of the Police and Fire Plan’s pension expense. The City recognized an additional $11,765 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $9 million to the PEPFF. 72 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City recognized $2,871 for the year ended December 31, 2022 as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the Police and Fire Fund. At December 31, 2022, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $86,086 $ - Changes in actuarial assumptions 817,147 10,268 Net collective between projected and actual investment earnings 22,744 - Changes in proportion 227,043 7,442 Contributions paid to PERA subsequent to the measurement date 48,455 - Total $1,201,475 $17,710 The $48,455 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, 2023. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as outflows: Year Ending Pension December 31,Expense 2023 $317,665 2024 204,594 2025 174,884 2026 303,901 2027 134,266 Thereafter - $1,135,311 The net pension liability will be liquidated by the general, water, sewer, and surface water management funds. 73 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2022, actuarial valuation was determined using an individual entry-age normal actuarial cost method and the following actuarial assumptions: Inflation 2.25% per year Investment Rate of Return 6.50% The long-term investment rate of return is based on a review of inflation and investment return assumptions from a number of national investment consulting firms. The review provided a range of investment return rates deemed to be reasonable by the actuary. An investment return of 6.50% was deemed to be within that range of reasonableness for financial reporting purposes. Benefit increases after retirement are assumed to be 1.25% for the GERF. The PEPFF benefit increase is fixed at 1.00% per year and that increase was used in the valuation. Salary growth assumptions in the GERF range in annual increments from 10.25% after one year of service to 3.0% after 27 years of service. In the PEPFF, salary growth assumptions range from 11.75% after one year of service to 3.0% after 24 years of service. Mortality rates for GERF were based on the Pub-2010 General Employee Mortality Table. Mortality rates for PEPFF were based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA’s experience. Actuarial assumptions for GERF are reviewed every four years. The most recent four-year experience study for GERF was completed in 2019. The assumption changes were adopted by the Board and become effective with the July 1, 2020, actuarial valuation. The most recent four-year experience study for PEPFF was completed in 2020 and adopted by the Board and became effective with the July 1, 2021, actuarial valuation. The following changes in actuarial assumptions and plan provisions occurred in 2022: General Employees Fund Changes in Actuarial Assumptions:  The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. Police and Fire Fund Changes in Actuarial Assumptions:  The single discount rate was changed from 6.50% to 5.40%.  The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 74 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 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: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic Equity 33.5% 5.10% International Equity 16.5% 5.30% Fixed Income 25% 0.75% Private Markets 25% 5.90% Total 100% F. DISCOUNT RATE The discount rate for the GERF used to measure the total pension liability in 2022 was 6.5%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the GERF 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. In the PEPFF, the fiduciary net position was projected to be available to make all projected future benefit payments of current plan members through June 30, 2060. Beginning in fiscal year ended June 30, 2061, projected benefit payments exceed the funds' projected fiduciary net position. Benefit payments projected after were discounted at the municipal bond rate of 3.69% (based on the weekly rate closest to but not later than the measurement date of the Fidelity "20-Year Municipal GO AA Index"). The resulting equivalent single discount rate of 5.40% for the PEPFF was determined to give approximately the same present value of projected benefits when applied to all years of projected benefits as the present value of projected benefits using 6.5% applied to all years of projected benefits through the point of asset depletion and 3.69% thereafter. 75 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 G.PENSION LIABILITY SENSITIVITY The following presents the City’s proportionate share of the net pension liability, 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 one percentage point lower or one percentage point higher than the current discount rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate City's Proportionate share of the GERF net pension liability $10,383,389 $6,573,627 $3,449,035 City's Proportionate share of the PEPFF net pension liability $2,100,805 $1,388,162 $812,033 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 at www.mnpera.org. I.PENSION EXPENSE Pension expense recognized by the City for the year ended December 31, 2022, is as follows: GERF $996,588 PEPFF 58,527 Fire Relief (note 11)(99,385) Total $955,730 76 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 11 SINGLE EMPLOYER PENSION PLAN A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Chanhassen Fire Department Relief Association (the Relief Association) and additions to/deductions from the Relief Association’s fiduciary net position have been determined on the same basis as they were reported by the Relief Association. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. B. PLAN DESCRIPTION All members of the Chanhassen Fire Department are covered by a defined benefit pension plan administered by the Relief Association. The Plan is a single employer retirement plan and is established and administered in accordance with Minnesota Statute, Chapter 69. C. BENEFITS PROVIDED Twenty-Year Service Pension Prior to April 1997, each member who is at least 50 years of age, has retired from the Fire Department, has served at least twenty years of active service with such department before retirement, and has been a member of the Relief Association in good standing at least ten years prior to such retirement shall be entitled to receive either a monthly lifetime service pension or a defined benefit lump sum pension. After April 1997, each member shall be entitled to receive a defined benefit lump sum pension. Monthly service pensions shall be $410 per month. Defined benefit service pension per year of service shall be $7,500. The maximum service pension shall not exceed the maximum service pension amount permitted under the flexible service pension maximums pursuant to Minnesota Statute Section 424A.02, Subdivision 3. Members who choose the lump sum receive no additional interest accrual. 77 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Ten Year Service But Less Than Twenty Year Service Each member who is at least 50 years of age; who has retired from the Fire Department; who has served at least five years of active service with such department before retirement but has not served at least 20 years of active service; and, who has been a member of the Relief Association in good standing at least ten years prior to such retirement, shall be entitled to either a pro-rated monthly service pension or a pro-rated lump sum service pension based on the percentages in the following table: For Duty of: more than but less than 5 years 6 years 40% 6744 7848 8952 91056 10 11 60 11 12 64 12 13 68 13 14 72 14 15 76 15 16 80 16 17 84 17 18 88 18 19 92 19 20 96 20 100 The payment amount will be calculated by using the amount payable per year of service in effect at the time of such early retirement, multiplied by the number of accumulated years of service, multiplied by the appropriate percentage as defined above. During the time a member is on early-vested pension, he or she will not be eligible for disability benefits. Survivors Benefit Prior to April 1997, if any active vested or deferred member dies leaving an eligible surviving spouse, they shall receive a monthly pension for a guaranteed fifteen year period. After April 1997, an eligible surviving spouse shall receive a lump sum payment calculated in accordance with the by-laws. If there is no surviving spouse, then the deceased member’s designated beneficiary or their estate would receive the payment. A surviving spouse of a member receiving a monthly pension shall receive 50% of the member’s monthly benefit, based on the date of death. 78 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Permanent Disability If any member of the Relief Association contracts sickness or injury, which incapacitates the member from attending to their business, from causes outside or within their line of duty, and a physician’s report shows that the member is unable to perform their duties, then they are entitled to their full accrued lump sum benefit, payable immediately. Temporary Disability Any member of the Relief Association who becomes temporarily incapacitated from attending to their business due to illness of injury, sustained in the performance of such business, and is unable to work for a period of one week or longer, shall be paid a benefit of $5 per day for a period of no longer than 120 days in any one fiscal year, providing the member is under the care of a physician or doctor during this period. Death Benefit Upon the death of any active or deferred member, the beneficiaries of the deceased member shall be paid a death benefit in an amount equivalent to the accrued service pension. D. EMPLOYEES COVERED BY BENEFIT TERMS As of the December 31, 2021, actuarial valuation, the following employees were covered by the benefit terms: Retirees and beneficiaries currently receiving benefits 4 Retired members entitled to benefits but have not received them 28 Active members: Fully vested (20 years or more) 2 Partially vested (5 years to 19 years) 20 Non-vested (less than 5 years) 10 Total 64 E. CONTRIBUTIONS Minnesota Statutes Section 424A.092 specifies minimum support rates required on an annual basis. The minimum support rates from the municipality and from State Aid are determined as the amount required to meet the normal cost plus amortizing any existing prior service costs over a ten-year period. The significant actuarial assumptions used to compute the municipal support are not the same as those used to compute the accrued pension liability. The Relief Association is comprised of volunteers; therefore, there are no payroll expenditures (i.e., there are no covered payroll percentage calculations). During the year ending December 31, 2022, contributions totaling $273,374 ($230,794 from the State of Minnesota and $42,580 from the City) were made to the Relief Association in accordance with Minnesota State Statute requirements. During the year ending December 31, 2021, contributions totaling $211,227 ($211,227 from the State of Minnesota and $0 from the City) were made to the Relief Association in accordance with Minnesota State Statute requirements. 79 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 F. ACTUARIAL METHOD AND SIGNIFICANT ASSUMPTIONS The total pension liability was determined by an actuarial valuation as of December 31, 2021 using the following actuarial assumptions, applied to all periods in the measurement: Valuation date 12/31/2021 Measurement date (assets and funded status)12/31/2021 Actuarial cost method Entry Age Normal Amortization method Level dollar Closed 20-year period Asset valuation method Market Value Actuarial assumptions: Investment rate of return 5% Projected salary increases N/A Includes inflation at 3% Cost-of-living adjustments 3% Age of service retirement The later of the age 50 and 20 years of service Post-retirement benefit increases None Mortality assumptions were determined using the following tables:  Healthy – PubS-2010 Mortality with generational improvements projected beginning in 2010 based on SOA Scale MP-2021  Disabled – PubS-2010 Mortality with generational improvements projected beginning in 2010 based on SOA Scale MP-2021 The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These expected real rates of return are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. For each major asset class that is included in the pension plan’s target asset allocation as of December 31, 2021, these best estimates are summarized in the following table: Target Long-Term Expected Asset Class Allocation Real Rate of Return Stock and mutual funds 60% 5.2% Fixed income 30% 0.6% Other 5% 0.6% Cash 5% 0.0% 100% 80 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 G. DISCOUNT RATES The discount rate used to measure the total pension liability was 5%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pensions plans fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the plan’s long-term expected return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. H. CHANGES IN THE NET PENSION LIABILITY The City’s net pension liability was measured using a one-year lookback as of December 31, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2021. Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balance at December 31, 2020 $3,320,179 $2,780,075 $540,104 Changes for the year: Service cost 154,968 - 154,968 Interest 161,407 - 161,407 Changes in benefit terms - - - Differences between expected and actual experience (126,365) - (126,365) Changes of assumptions 233 - 233 Contributions - employer - - - On behalf contributions - State of MN - 211,227 (211,227) Contributions - employee - - - Net investment income - 231,675 (231,675) Benefit payments, including refunds of employee contributions (494,030) (494,030) - Administrative expense - (19,800) 19,800 Other changes - (20,943) 20,943 Net changes (303,787) (91,871) (211,916) Balance at December 31, 2021 $3,016,392 $2,688,204 $328,188 Increase (Decrease) 81 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 I.PENSION LIABILITY SENSITIVITY The following presents the net pension liability of the Relief Association, calculated using the discount rate of 5.0%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.0%) or 1-percentage-point higher (6.0%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (4.0%) (5.0%) (6.0%) Net pension liability $507,100 $328,188 $164,539 J.PENSION PLAN FIDUCIARY NET POSITION Detailed information about the pension plan’s fiduciary net position is available in the separately issued Relief Association financial report. That report may be obtained by writing to Chanhassen Fire Department Relief Association, P.O. Box 147, Chanhassen, Minnesota, 55317. K.PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RLEATED TO PENSIONS For the year ended December 31, 2022, the City recognized pension expense of ($99,385), including $211,227 as pension expense (and grant revenue) for the State of Minnesota’s on-behalf contribution to the plan. At December 31, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $45,810 $126,393 Changes in actuarial assumptions 35,061 576 Difference between projected and actual investment earnings - 185,550 Contributions subsequent to the measurement date 273,374 - Total $354,245 $312,519 82 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 The $273,374 reported as deferred outflows of resources resulting from City contributions subsequent to the Relief Association’s measurement date will be recognized as a reduction to the net pension liability in the City’s year ended December 31, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ending Pension December 31,Expense 2023 ($57,997) 2024 (106,762) 2025 (46,841) 2026 (20,048) 2027 - Thereafter - Note 12 OTHER POST-EMPLOYMENT BENEFITS (OPEB) A. PLAN DESCRIPTION In addition to providing the pension benefits described in Note 10 and 11, the City provides post- employment health care benefits (as defined in paragraph B) for retired employees through a single- employer defined benefit plan. The City’s OPEB plan is administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a, and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The Plan does not issue a separate report. B. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Employees who satisfy the rule of 80 or attain age 55 and have completed 10 years of service at termination can immediately commence medical benefits. Retirees may obtain dependent coverage while the participating retiree is under age 65. Covered spouses may continue coverage after the retiree’s death. The surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching age 65, Medicare becomes the primary insurer and the City’s plan becomes secondary. 83 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 C. PARTICIPANTS As of the January 1, 2022, actuarial valuation date, participants consisted of: Active employees receiving benefits 78 Inactive employees currently receiving or entitled to receive benefits 2 Total 80 D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY The City’s total OPEB liability of $168,712 was measured as of December 31, 2022, and was determined by an actuarial valuation as of January 1, 2022. Changes in the total OPEB liability during 2022 were: Balance - beginning of year $179,490 Changes for the year: Service cost 18,755 Interest 4,381 Changes of benefit terms - Differences between expected and actual experience (9,225) Changes in assumptions (17,614) Benefit payments (7,075) Net changes (10,778) Balance - end of year $168,712 The OPEB liability is liquidated by the General fund, Water fund, Sewer fund, and Surface Water Management fund. E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS The total OPEB liability in the January 1, 2022, actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 2.25% Salary increases Based on the most recent disclosed assumptions for the pension plan in which the employee participates. Discount rate 4.31% Investment rate of return 2.53% Healthcare cost trend rates 7.5% for 2022 decreasing to ultimate rate of 4.5% in 2029 and beyond Retirees' share of benefit-related costs 100% Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return was based on the 20-year AA rated municipal bond rate as of December 31, 2022, obtained from the Bond Buyer G.O. 20-year Bond Municipal Bond Index. 84 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Mortality rates were based on the SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2020 for active and retirees and SOA Pub-2010 Continuing Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2021 for surviving spouses. 20% of employees are assumed to elect spousal coverage at retirement. Husbands are assumed to be three years older than wives. Actual spousal coverage and age is used for retirees. F. SENSITIVITY OF THE TOTAL OPEB LIABILITY TO CHANGES IN THE DISCOUNT RATE 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 a discount rate that is 1% lower (3.31%) or 1% higher (5.31%) than the current discount rate: 1% Decrease Discount Rate 1% Increase (3.31%) (4.31%) (5.31%) Total OPEB liability $177,045 $168,712 $160,812 G. SENSITIVITY OF THE TOTAL OPEB LIABILITY TO CHANGES IN THE HEALTHCARE COST TREND RATES 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 (6.5% decreasing to 3.5%) or 1% higher (8.5% decreasing to 5.50%) than the current healthcare cost trend rates: Healthcare Cost 1% Decrease Trend Rates 1% Increase (6.5% decreasing to 3.5%)(7.5% decreasing to 4.5%)(8.5% decreasing to 5.50%) Total OPEB liability $156,061 $168,712 $183,148 H. OPEB EXPENSE AND DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES RELATED TO OPEB For the year ended December 31, 2022, the City recognized $4,327 of OPEB expense. At December 31, 2022, the City reported deferred outflows and inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - $66,692 Changes in actuarial assumptions 2,333 - Total $2,333 $66,692 85 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB December 31,Expense 2023 ($11,733) 2024 (11,733) 2025 (11,733) 2026 (11,737) 2027 (10,917) Thereafter (6,506) Note 13 INTERFUND LOANS AND TRANSFERS Amounts reported as interfund loan receivable/payable at December 31, 2022, are as follows: Interfund Interfund Loan Receivable Loan Payable Major Funds: General Fund $25,000 $ - Water Fund - 194,356 Nonmajor Funds 194,356 25,000 Total $219,356 $219,356 During 2015, the City adopted resolution 2015-15 authorizing an interfund loan to finance construction of Well #15. The Water Fund borrowed $700,000 from the PMP Pavement Management Capital fund and $700,000 from the Capital Equipment Replacement Fund. The loan is being repaid at an interest rate of 2.5% over eight years. Payments during years 2016-2019 were made to the PMP Pavement Management Capital fund and payments during years 2020-2023 are being made to the Capital Replacement Fund. There were $189,615 of repayments in 2022 and $194,356 is expected to be repaid in 2023. During 2022, a $25,000 interfund loan was made from the General Fund to provide initial funding for the Lake Place Senior Apartment TIF district. No amounts are expected to be repaid in 2023. Interfund transfers made during 2022 are summarized as follows: Transfers In Transfers Out Major Funds: General Fund $160,000 $250,000 Grant Fund - 160,000 PMP Pavement Mgmt. Capital 232,375 - Nonmajor Funds 250,000 232,375 Total $642,375 $642,375 86 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 14 CONDUIT DEBT From time to time, the City has issued conduit debt to provide financial assistance to private-sector entities for the acquisition and construction of facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2022, the outstanding conduit debt is as follows: Bonds Original 12/31/2022 Maturity Project Name Issued Principal Principal Date Presbyterian Homes, Series 2014B 06/14 $9,300,000 $5,995,071 2034 Note 15 DEFICIT FUND BALANCES At December 31, 2022, the Grant Fund had a deficit in the amount of $69,452. The deficit will be eliminated by future investment earnings. At December 31, 2022, the Lake Place Senior apartment TIF 12 fund had a deficit in the amount of $24,703. The deficit will be eliminated by future tax increment receipts. Note 16 COMMITMENTS AND CONTINGENCIES A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City continues to carry commercial insurance for risks of loss, including workers compensation, property and general liability and employee health and accident insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. B. LITIGATION Existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City’s management, are remotely recoverable by plaintiffs. C. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2022. 87 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 D. TAX ABATEMENTS – PAY-AS-YOU-GO TAX INCREMENT The City occasionally provides tax abatements pursuant to Minnesota Statutes Sections 469.174 to 469.1794 (Tax Increment Financing) through a pay-as-you-go note program. Tax increment financing (TIF) can be used to encourage private development, redevelopment, renovation and renewal, growth in low-to-moderate-income housing, and economic development within the City. TIF captures the increase in tax capacity and property taxes from development or redevelopment to provide funding for the related project. The City has one tax increment district, which has an outstanding pay-as-you-go revenue note. The note is not a general obligation of the City and is payable solely from available tax increments. Accordingly, the note is not reflected in the financial statements of the City. Details of the pay-as-you-go revenue note is as follows: Tax Increment Revenue Note (Frontier Redevelopment) – issued in 2020 in the principal sum of $1,300,000 with an interest rate of 5.0% per annum. Principal and interest payments shall be paid commencing August 1, 2020, and each February 1 and August 1 thereafter to and including February 1, 2045. Payments are payable solely from tax increments, which shall mean 95% of the tax increments derived from the tax increment property and received by the City. The payment reimburses the developer for street, utilities, right-of-way, land acquisition, and other public improvements. The City shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final payment on February 1, 2045. Current year abatement (TIF note payments) amounted to $265,319. At December 31, 2022, the principal amount outstanding on the note was $813,812. E. COMMITTED CONTRACTS At December 31, 2022, the City had commitments of $2,363,028 for uncompleted construction contracts. 88 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 17 FUND BALANCE A.CLASSIFICATIONS Definitions of fund balance classifications are included in Note 1P. At December 31, 2022, a summary of the governmental fund balance classifications are as follows: PMP TH101 Pavement Improvements - Other General Grant Management Pioneer to Governmental Fund Fund Capital Flying Cloud Funds Total Nonspendable: Prepaid items $91,340 $ - $ - $ - $ - $91,340 Restricted for: Debt service - - - - 650,229 650,229 Park improvements - - - - 422,568 422,568 Tax Increment - - - - 24,580 24,580 CATV - public education - - - - 43,837 43,837 Public safety - fire - - - - 26,182 26,182 Total restricted 0 0 0 0 1,167,396 1,167,396 Assigned for: Payout of compensated absences for retirement 150,000 - - - - 150,000 Staffing and organizational assessment study 66,000 - - - - 66,000 Playground equipment 170,000 - - - - 170,000 Laserfiche records scanning 100,000 - - - - 100,000 Lobbying 40,000 - - - - 40,000 Radio encryption 81,000 - - - - 81,000 Planning-Chanhassen Bluffs Sports Complex 50,000 - - - - 50,000 Capital improvements - - 4,319,679 77,432 2,693,850 7,090,961 Cable communications - - - - 349,741 349,741 Cemetery operations - - - - 60,083 60,083 Debt service reserve - - - - 1,103,192 1,103,192 Total assigned 657,000 0 4,319,679 77,432 4,206,866 9,260,977 Unassigned 7,623,891 (69,452) - - (24,703) 7,529,736 Total $8,372,231 ($69,452) $4,319,679 $77,432 $5,349,559 $18,049,449 B.MINIMUM UNASSIGNED FUND BALANCE POLICY The City Council has formally adopted a policy regarding the minimum unassigned fund balance for the General Fund. The most significant revenue source of the General Fund is property taxes. This revenue source is received in two installments during the year – June and December. As such, it is the City’s goal to begin each fiscal year with sufficient working capital to fund operations between each semi-annual receipt of property taxes. The City’s fund balance policy states the year end General Fund balance shall be sufficient to cover 50% of the property taxes budgeted to be received during the following year. At December 31, 2022, the fund balance of the General Fund exceeded this level. 89 CITY OF CHANHASSEN, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Note 18 ADOPTION OF NEW ACCOUNTING STANDARD The City implemented GASB Statement No. 87, Leases for the year ended December 31, 2022. As a result, a lease receivable and deferred inflow of resources are reported on the Statement of Net Position and the Balance Sheet – Governmental Funds. In addition, a right to use leased asset and lease liability are reported on the Statement of Net Position and the Statement of Net Position – Proprietary Funds. In accordance with GASB 87, prior year comparative columns have also been restated. However, the City had no material lease liabilities outstanding at any point during 2021. Note 19 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Board (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2022. Statement No. 96 Subscription – Based Information Technology Arrangements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2022. Statement No. 99 Omnibus 2022. The provisions of this Statement contain multiple effective dates, the first being for reporting periods beginning after June 15, 2022. Statement No. 100 Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62. The provisions of this Statement are effective for reporting periods beginning after June 15, 2023. The effect these standards may have on future financial statements is not determinable at this time. 90 REQUIRED SUPPLEMENTARY INFORMATION 91 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues: General property taxes $10,194,746 $10,194,746 $10,245,765 $51,019 $9,483,858 Licenses and permits: Licenses - general government 3,100 3,100 2,375 (725) 2,500 Licenses - public safety 93,500 93,500 104,963 11,463 91,248 Permits - public safety 1,191,000 1,191,000 1,376,140 185,140 2,103,829 Permits - public works 36,500 36,500 58,025 21,525 58,442 Permits - community development 17,500 17,500 15,220 (2,280) 16,060 Total licenses and permits 1,341,600 1,341,600 1,556,723 215,123 2,272,079 Intergovernmental: Federal - parks and recreation - - - - 994 State aid - parks and recreation - - - - 790 State aid - police - public safety 135,000 135,000 142,005 7,005 146,841 State aid - fire - public safety 200,000 200,000 233,815 33,815 227,443 Other 215,000 215,000 120,217 (94,783) 9,562 Total intergovernmental 550,000 550,000 496,037 (53,963) 385,630 Charges for services: General government 76,000 76,000 75,553 (447) 692 Public safety 3,000 3,000 1,200 (1,800) 1,059 Public works 110,800 110,800 81,054 (29,746) 112,694 Parks and recreation 400,700 400,700 510,510 109,810 385,651 Community development 32,000 32,000 18,145 (13,855) 23,612 Total charges for services 622,500 622,500 686,462 63,962 523,708 Fines and forfeits: Public safety 76,500 76,500 69,173 (7,327) 78,673 Investment earnings (loss) 60,000 60,000 (401,261) (461,261) 15,664 Contributions and donations: General government - - 500 500 500 Public safety - - 250 250 - Parks and recreation 25,000 25,000 20,035 (4,965) 21,093 Total contributions and donations 25,000 25,000 20,785 (4,215) 21,593 Refunds and reimbursements: General government 5,000 5,000 9,268 4,268 6,591 Public safety 12,500 12,500 1,819 (10,681) 1,582 Public works 42,500 42,500 58,628 16,128 44,803 Parks and recreation 1,000 1,000 9,620 8,620 - Community development - - 20 20 40 Total refunds and reimbursements 61,000 61,000 79,355 18,355 53,016 Other: General government 262,500 262,500 375,862 113,362 263,883 Public safety 6,700 6,700 2,230 (4,470) 6,949 Total other 269,200 269,200 378,092 108,892 270,832 Total revenues 13,200,546 13,200,546 13,131,131 (69,415) 13,105,053 2022 Budgeted Amounts See accompanying notes to the required supplementary information. 92 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures: General government: Legislative: Current: Personal services $32,924 $32,924 $33,749 ($825) $48,547 Operating expenses 59,133 59,133 88,190 (29,057) 78,883 Total legislative 92,057 92,057 121,939 (29,882) 127,430 Administrative office: Current: Personal services 453,292 453,292 449,855 3,437 525,362 Operating expenses 76,400 76,400 130,213 (53,813) 105,168 Total administrative office 529,692 529,692 580,068 (50,376) 630,530 Finance: Current: Personal services 299,963 299,963 277,172 22,791 328,422 Operating expenses 50,199 50,199 38,430 11,769 43,425 Total finance 350,162 350,162 315,602 34,560 371,847 Election: Current: Personal services 26,000 26,000 23,042 2,958 - Operating expenses 22,000 22,000 24,781 (2,781) 13,264 Total election 48,000 48,000 47,823 177 13,264 Legal: Current: Operating expenses 210,000 210,000 212,623 (2,623) 200,938 Property assessment: Current: Operating expenses 175,000 175,000 174,492 508 177,554 M.I.S.: Current: Personal services 259,500 259,500 244,566 14,934 217,213 Operating expenses 444,800 444,800 349,340 95,460 346,040 Total M.I.S. 704,300 704,300 593,906 110,394 563,253 City hall: Current: Personal services 56,300 56,300 57,575 (1,275) 95,920 Operating expenses 355,700 355,700 358,925 (3,225) 315,310 Capital outlay - - 58,882 (58,882) - Total City hall 412,000 412,000 475,382 (63,382) 411,230 Library: Current: Operating expenses 124,600 124,600 130,492 (5,892) 134,140 Total library 124,600 124,600 130,492 (5,892) 134,140 2022 Budgeted Amounts See accompanying notes to the required supplementary information. 93 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures: (continued) General government: (continued) Economic development: Current: Personal services $141,238 $141,238 $56,118 $85,120 $ - Operating expenses 8,762 8,762 4,714 4,048 - Total economic development 150,000 150,000 60,832 89,168 - Communication: Current: Personal services 159,357 159,357 154,345 5,012 - Operating expenses 27,800 27,800 31,251 (3,451) - Total communication 187,157 187,157 185,596 1,561 - Total general government 2,982,968 2,982,968 2,898,755 84,213 2,630,186 Public safety: Police: Current: Operating expenses 2,000,100 2,000,100 1,870,532 129,568 1,777,166 Total police 2,000,100 2,000,100 1,870,532 129,568 1,777,166 Fire department: Current: Personal services 1,365,041 1,365,041 1,340,124 24,917 1,052,988 Operating expenses 220,200 220,200 237,277 (17,077) 187,083 Total fire department 1,585,241 1,585,241 1,577,401 7,840 1,240,071 Code enforcement: Current: Personal services 961,418 961,418 843,822 117,596 750,244 Operating expenses 16,000 16,000 48,090 (32,090) 13,885 Total code enforcement 977,418 977,418 891,912 85,506 764,129 Community Service: Current: Personal services - - - - 36,910 Operating expenses 3,900 3,900 4,871 (971) 4,051 Total community service 3,900 3,900 4,871 (971) 40,961 Total public safety 4,566,659 4,566,659 4,344,716 221,943 3,822,327 2022 Budgeted Amounts See accompanying notes to the required supplementary information. 94 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures: (continued) Public works: Engineering: Current: Personal services $508,856 $508,856 $502,904 $5,952 $696,017 Operating expenses 19,000 19,000 3,931 15,069 36,344 Total engineering 527,856 527,856 506,835 21,021 732,361 G.I.S: Current: Personal services 66,795 66,795 66,525 270 - Operating expenses 16,350 16,350 11,293 5,057 - Total G.I.S 83,145 83,145 77,818 5,327 - Street maintenance: Current: Personal services 757,887 757,887 491,944 265,943 931,095 Operating expenses 153,200 153,200 159,001 (5,801) 161,464 Total street maintenance 911,087 911,087 650,945 260,142 1,092,559 Street lighting: Current: Operating expenses 405,500 405,500 483,595 (78,095) 380,273 Total street lighting 405,500 405,500 483,595 (78,095) 380,273 Fleet department: Current: Personal services 267,000 267,000 265,798 1,202 334,526 Operating expenses 406,536 406,536 180,772 225,764 196,333 Total fleet department 673,536 673,536 446,570 226,966 530,859 Public works operation: Current: Personal services 96,255 96,255 98,639 (2,384) - Operating expenses - - 108,987 (108,987) - Total public works operation 96,255 96,255 207,626 (111,371) - Total public works 2,697,379 2,697,379 2,373,389 323,990 2,736,052 2022 Budgeted Amounts See accompanying notes to the required supplementary information. 95 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 5 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures: (continued) Parks and recreation: Parks and recreation commission: Current: Operating expenses $ - $ - $ - $ - $322 Parks and recreation administration: Current: Personal services 164,361 164,361 164,691 (330) 194,668 Operating expenses 8,300 8,300 13,755 (5,455) 4,852 Total parks and recreation administration 172,661 172,661 178,446 (5,785) 199,520 Recreation center: Current: Personal services 230,973 230,973 256,652 (25,679) 213,208 Operating expenses 114,700 114,700 136,835 (22,135) 95,925 Total recreation center 345,673 345,673 393,487 (47,814) 309,133 Senior center: Current: Personal services $95,240 $95,240 $93,126 $2,114 $86,437 Operating expenses 37,130 37,130 47,680 (10,550) 29,721 Total senior center 132,370 132,370 140,806 (8,436) 116,158 Recreation programs: Current: Personal services 280,402 280,402 284,271 (3,869) 186,432 Operating expenses 136,570 136,570 155,906 (19,336) 124,606 Total recreation programs 416,972 416,972 440,177 (23,205) 311,038 Self-supporting programs: Current: Personal services 1,083 1,083 727 356 14,162 Operating expenses 39,013 39,013 13,757 25,256 10,527 Total self-supporting programs 40,096 40,096 14,484 25,612 24,689 Lake Ann Park operations: Current: Personal services 11,330 11,330 13,418 (2,088) 9,050 Operating expenses 58,800 58,800 67,641 (8,841) 57,905 Total Lake Ann Park operations 70,130 70,130 81,059 (10,929) 66,955 Park maintenance: Current: Personal services 938,618 938,618 904,092 34,526 839,566 Operating expenses 212,000 212,000 261,942 (49,942) 196,629 Total park maintenance 1,150,618 1,150,618 1,166,034 (15,416) 1,036,195 Recreation sports: Current: Personal services 24,239 24,239 25,839 (1,600) 15,811 Operating expenses 13,200 13,200 6,171 7,029 5,319 Total recreation sports 37,439 37,439 32,010 5,429 21,130 Total parks and recreation 2,365,959 2,365,959 2,446,503 (80,544) 2,085,140 2022 Budgeted Amounts See accompanying notes to the required supplementary information. 96 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 6 of 6 For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures: (continued) Community development: Planning commission: Current: Operating expenses $ - $ - $ - $ - $1,617 Planning administration: Current: Personal services 568,481 568,481 568,624 (143) 549,476 Operating expenses 14,100 14,100 26,172 (12,072) 8,037 Total planning administration 582,581 582,581 594,796 (12,215) 557,513 Commission on aging: Current: Personal services - - - - 31,101 Operating expenses 5,000 5,000 256 4,744 368 Total commission on aging 5,000 5,000 256 4,744 31,469 Total community development 587,581 587,581 595,052 (7,471) 590,599 Total expenditures 13,200,546 13,200,546 12,658,415 542,131 11,864,304 Revenues over expenditures - - 472,716 472,716 1,240,749 Other financing sources (uses): Transfers in - - 160,000 (160,000) - Transfers out (250,000) (250,000) (250,000) - - Total other financing sources (250,000) (250,000) (90,000) (160,000) - Net change in fund balance ($250,000) ($250,000) 382,716 312,716 1,240,749 Fund balance - January 1 7,989,515 6,748,766 Fund balance - December 31 $8,372,231 7,989,515 Budgeted Amounts 2022 See accompanying notes to the required supplementary information. 97 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 SCHEDULE OF CHANGES IN THE CITY'S TOTAL OPEB LIABILITY AND RELATED RATIOS Last Ten Fiscal Years 2018 2019 2020 2021 2022 Total OPEB liability: Service cost $14,388 $13,547 $13,504 $15,307 $18,755 Interest 7,032 8,738 5,463 3,785 4,381 Changes of benefit terms - - - - - Differences between expected and actual experience - (82,370) (12,888) (6,405) (9,225) Changes in assumptions (7,402) 16,736 9,168 8,015 (17,614) Benefit payments (9,869) - (3,343) (8,835) (7,075) Net change in total OPEB liability 4,149 (43,349) 11,904 11,867 (10,778) Total OPEB liability - beginning 194,919 199,068 155,719 167,623 179,490 Total OPEB liability - ending $199,068 $155,719 $167,623 $179,490 168,712 Covered-employee payroll $5,151,178 $5,270,695 $5,270,695 $6,422,681 $6,720,515 Total OPEB liability as a percentage of covered-employee payroll 3.9% 3.0% 3.2% 2.8% 2.5% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2018, and is intended to show a ten year trend. Additional years will be added as they become available. No assets are accumulated in a trust that meet the criteria in paragraph 4 of GASB Statement No. 75 to pay related benefits. See accompanying notes to the required supplementary information. 98 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY - GENERAL EMPLOYEES RETIREMENT FUND Last Ten Fiscal Years City's Plan State's Proportionate Fiduciary Proportionate Share of the Net Net City's City's Share Pension Liability City's Position Proportionate Proportionate (Amount) and the State's Proportionate as a Share Share of the Net Proportionate Share of the Net Percentage (Percentage) (Amount) Pension Share of the Net Pension Liability of the Measurement Fiscal Year of the of the Net Liability Pension Liability as a Percentage Total Date Ending Net Pension Pension Associated Associated with Covered of its Covered Pension June 30 December 31 Liability Liability (a) with City (b) City (a+b) Payroll (c) Payroll ((a+b)/c) Liability 2015 2015 0.0791% $4,099,373 $ - $4,099,373 $4,651,703 88.1%78.2% 2016 2016 0.0759% 6,162,704 80,496 6,243,200 4,708,444 132.6% 68.9% 2017 2017 0.0751% 4,794,334 60,265 4,854,599 4,836,519 100.4% 75.9% 2018 2018 0.0760% 4,216,168 138,310 4,354,478 5,110,253 85.2%79.5% 2019 2019 0.0727% 4,019,420 124,828 4,144,248 5,143,989 80.6%80.2% 2020 2020 0.0741% 4,442,634 137,022 4,579,656 5,283,373 86.7%79.1% 2021 2021 0.0768% 3,279,704 100,098 3,379,802 5,527,150 61.1%87.0% 2022 2022 0.0830% 6,573,627 192,870 6,766,497 6,220,584 108.8% 76.7% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015, and is intended to show a ten year trend. Additional years will be reported as they become available. No assets are accumulated in a trust that meet the criteria of GASB codification P22.101 or P52.101 to pay related benefits. See accompanying notes to the required supplementary information. 99 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 12 SCHEDULE OF PENSION CONTRIBUTIONS - GENERAL EMPLOYEES RETIREMENT FUND Last Ten Fiscal Years Statutorily Contributions in Contribution Contributions as a Fiscal Year Required Relation to the Deficiency Covered Percentage of Ending Contribution Statutorily Required (Excess) Payroll Covered-Employee December 31 (a)Contribution (b)(a-b)(c)Payroll (b/c) 2015 $346,881 $346,881 $ - $4,625,080 7.50% 2016 358,611 358,611 - 4,781,489 7.50% 2017 371,824 371,824 - 4,957,652 7.50% 2018 383,686 383,686 - 5,115,814 7.50% 2019 390,082 390,082 - 5,201,071 7.50% 2020 409,847 409,847 - 5,464,626 7.50% 2021 438,328 438,328 - 5,844,364 7.50% 2022 477,007 477,007 - 6,360,066 7.50% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015, and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 100 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 13 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY - PUBLIC EMPLOYEES POLICE AND FIRE FUND Last Ten Fiscal Years City's Plan State's Proportionate Fiduciary Proportionate Share of the Net Net City's City's Share Pension Liability City's Position Proportionate Proportionate (Amount) and the State's Proportionate as a Share Share of the Net Proportionate Share of the Net Percentage (Percentage) (Amount) Pension Share of the Net Pension Liability of the Measurement Fiscal Year of the of the Net Liability Pension Liability as a Percentage Total Date Ending Net Pension Pension Associated Associated with Covered of its Covered Pension June 30 December 31 Liability Liability (a) with City (b) City (a+b) Payroll (c) Payroll ((a+b)/c) Liability 2015 2015 0.0200% $227,247 $ - $227,247 $180,370 126.0% 86.6% 2016 2016 0.0190%762,503 - 762,503 186,408 409.1% 63.9% 2017 2017 0.0190%256,523 - 256,523 194,526 131.9% 85.4% 2018 2018 0.0193%205,718 - 205,718 203,653 101.0% 88.8% 2019 2019 0.0205%218,243 - 218,243 216,056 101.0% 89.3% 2020 2020 0.0200%263,621 137,022 400,643 225,631 177.6% 87.2% 2021 2021 0.0220%169,817 7,638 177,455 260,290 68.2%93.7% 2022 2022 0.0319% 1,388,162 60,654 1,448,816 387,508 373.9% 70.5% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015, and is intended to show a ten year trend. Additional years will be reported as they become available. No assets are accumulated in a trust that meet the criteria of GASB codification P22.101 or P52.101 to pay related benefits. See accompanying notes to the required supplementary information. 101 - This page intentionally left blank - 102 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 14 SCHEDULE OF PENSION CONTRIBUTIONS - PUBLIC EMPLOYEES POLICE AND FIRE FUND Last Ten Fiscal Years Statutorily Contributions in Contribution Contributions as a Fiscal Year Required Relation to the Deficiency Covered Percentage of Ending Contribution Statutorily Required (Excess) Payroll Covered December 31 (a)Contribution (b)(a-b)(c)Payroll (b/c) 2015 $29,647 $29,647 $ - $183,006 16.20% 2016 30,790 30,790 - 190,064 16.20% 2017 32,612 32,612 - 201,307 16.20% 2018 33,511 33,511 - 206,857 16.20% 2019 37,761 37,761 - 222,780 16.95% 2020 40,530 40,530 - 228,980 17.70% 2021 55,996 55,996 - 316,363 17.70% 2022 86,742 86,742 - 490,067 17.70% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015, and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 103 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS - CHANHASSEN FIRE DEPARTMENT RELIEF ASSOCIATION LAST TEN FISCAL YEARS Fiscal year ending December 31, 2015 December 31, 2016 December 31, 2017 Measurement date December 31, 2015 December 31, 2016 December 31, 2017 Total pension liability: Service cost $86,369 $88,924 $88,924 Interest 118,909 128,235 127,729 Changes of benefit terms 279,202 - 212,120 Differences between expected and actual experience (5,328) - 5,145 Changes of assumptions - (203) 231,636 Benefit payments, including refunds of employee contributions (470,743) (113,883) (340,243) Net change in total pension liability 8,409 103,073 325,311 Total pension liability - beginning 2,524,303 2,532,712 2,635,785 Total pension liability - ending (a)$2,532,712 $2,635,785 $2,961,096 Plan fiduciary net position: Contributions - employer $37,571 $ - $ - Contributions - State of Minnesota 177,784 177,831 181,554 Contributions - employee - - - Net investment income (105,958)158,581 306,593 Benefit payments, including refunds of employee contributions (470,743)(113,883)(340,243) Administrative expense (7,225)(16,972)(14,875) Other changes - 500 29,900 Net change in plan fiduciary net position (368,571)206,057 162,929 Plan fiduciary net position - beginning 2,276,084 1,907,513 2,113,570 Plan fiduciary net position - ending (b)$1,907,513 $2,113,570 $2,276,499 Net pension liability - ending (a) - (b)$625,199 $522,215 $684,597 Plan fiduciary net position as a percentage of the total pension liability 75.3%80.2%76.9% Covered payroll*NA NA NA Net pension liability as a percentage of covered payroll*Not applicable Not applicable Not applicable *The Chanhassen Fire Department Relief Association is comprised of volunteers, therefore there are no payroll expenditures. Beginning in 2021, The City's net pension liability was measured using a one-year lookback option. GASB 68 was implemented in 2015. Information prior to 2015 is not available. See accompanying notes to the required supplementary information. 104 Statement 15 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2020 December 31, 2021 $143,922 $143,922 $150,695 $150,695 $154,968 149,836 154,784 156,622 156,622 161,407 - - - - - - (79,049) 76,350 76,350 (126,365) (1,074) (902) 58,144 58,144 233 (216,595) (170,835) (206,737) (206,737) (494,030) 76,089 47,920 235,074 235,074 (303,787) 2,961,096 3,037,185 3,085,105 3,085,105 3,320,179 $3,037,185 $3,085,105 $3,320,179 $3,320,179 $3,016,392 $54,749 $47,399 $31,957 $31,957 $ - 184,695 190,045 203,495 203,495 211,227 - - - - - (130,928) 328,474 237,593 237,593 231,675 (216,595) (170,835) (206,737) (206,737) (494,030) (17,350) (16,386) (16,000) (16,000) (19,800) - - - - (20,943) (125,429) 378,697 250,308 250,308 (91,871) 2,276,499 2,151,070 2,529,767 2,529,767 2,780,075 $2,151,070 $2,529,767 $2,780,075 $2,780,075 $2,688,204 $886,115 $555,338 $540,104 $540,104 $328,188 70.8% 82.0% 83.7% 83.7% 89.1% NA NA NA NA NA Not applicable Not applicable Not applicable Not applicable Not applicable See accompanying notes to the required supplementary information. 105 CITY OF CHANHASSEN, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 16 SCHEDULE OF CONTRIBUTIONS - CHANHASSEN FIRE DEPARTMENT RELIEF ASSOCIATION Last Ten Fiscal Years Actuarially Contribution Contributions Fiscal Year Determined Deficiency as a Percentage Ending Contribution Employer State of MN (Excess) Covered of Covered December 31 (a) Contributions (b) Contributions (c) (a-b-c) Payroll Payroll 2015 $142,501 $37,571 $177,784 ($72,854) * * 2016 171,760 - 177,831 (6,071) * * 2017 171,760 - 181,554 (9,794) * * 2018 236,444 54,749 184,695 (3,000) * * 2019 236,444 47,399 190,045 (1,000) * * 2020 233,452 31,957 203,495 (2,000) * * 2021 233,452 31,957 203,495 (2,000) * * 2022 233,452 - 211,227 22,225 * * *The Chanhassen Fire Department Relief Association is comprised of volunteers, therefore, there are no payroll expenditures. (i.e., there are no covered payroll amounts or percentage calculations.) Beginning in 2021, The City's net pension liability was measured using a one-year lookback option. GASB 68 was implemented in 2015. Information prior to 2015 is not available. Contributions in Relation to the Actuarially Determined Contribution See accompanying notes to the required supplementary information. 106 CITY OF CHANHASSEN, MINNESOTA NOTES TO RSI December 31, 2022 A. LEGAL COMPLIANCE – BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. B. PENSION INFORMATION PERA – General Employees Retirement Fund 2022 Changes in Actuarial Assumptions: The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021 Changes in Actuarial Assumptions: The investment return and single discount rates were changed from 7.50% to 6.50% for financial reporting purposes. The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2020 Changes in Actuarial Assumptions: The price inflation assumption was decreased from 2.50% to 2.25%. The payroll growth assumption was decreased from 3.25% to 3.00%. Assumed salary increase rates were decreased 0.25% and assumed rates of retirement were changed resulting in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination and disability were also changed. Base mortality tables were changed from RP-2014 tables to Pub-2010 tables, with adjustments. The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. The assumed spouse age difference was changed from two years older for females to one year older. The assumed number of married male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. 2020 Changes in Plan Provisions: Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020. 2019 Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2017 to MP-2018. 2019 Changes in the Plan Provisions The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 Changes 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 2.50% per year thereafter to 1.25% per year. 107 CITY OF CHANHASSEN, MINNESOTA NOTES TO RSI December 31, 2022 2017 Changes in Actuarial Assumptions:  The Combined Service Annuity (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, 15.0% for vested deferred member liability and 3.0% 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 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, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. PERA – Public Employees Police and Fire Fund 2022 Changes in Actuarial Assumptions:  The single discount rate changed from 6.50% to 5.4%.  The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021 Changes in Actuarial Assumptions:  The investment return and single discount rates were changed from 7.50% to 6.50% for financial reporting purposes.  The inflation assumption was changed from 2.50% to 2.25%.  The payroll growth assumption was changed from 3.25% to 3.00%.  The base mortality tables for healthy annuitants, disabled annuitants and employees were changed from RP-2014 tables to Pub-2010 Public Safety Mortality tables. The mortality improvement scale was changed from MP-2019 to MN-2020.  Assumed salary increase and retirement rates were modified as recommended in the July 14, 2020 experience study. The changes result in a decrease in gross salary increase rates, slightly more unreduced retirements and fewer assumed early retirements.  Assumed rates of withdrawal were changed from select and ultimate rates to service-based rates. The changes result in more assumed terminations.  Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities.  Assumed percent married for active female members was changed from 60% to 70%. 2020 Changes in Actuarial Assumptions:  The mortality projection scale was changed from MP-2018 to MP-2019. 2019 Changes in Actuarial Assumptions:  The mortality projection scale was changed from MP-2017 to MP-2018. 2018 Changes in Actuarial Assumptions:  The mortality projection scale was changed from MP-2016 to MP-2017. 108 CITY OF CHANHASSEN, MINNESOTA NOTES TO RSI December 31, 2022 2017 Changes in Actuarial Assumptions:  The single discount rate was changed from 5.6% to 7.5%.  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 Combined Service Annuity (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 3.0% 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 1.00% for all years to 1.00% per year through 2064 and 2.50% thereafter. 2016 Changes in Actuarial Assumptions:  The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 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 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. Single Employer – Fire Relief Association Valuation date – actuarially determined contribution rates are calculated as of January 1 every other year, which is the same date as the beginning of the fiscal year beginning in which contributions are reported. 2022 Changes in Actuarial Assumptions:  The mortality table used to measure funding liability has been changed from SOA Public Safety-2010 Mortality with MP 2020 Generational to SOA Public Safety-2010 Mortality with MP 2021 Generational. This resulted in a small increase in liability and decrease normal cost. 2020 Changes in Actuarial Assumptions:  The mortality assumption was updated from the PubS-2010 Mortality Table Projected Generationally from 2010 with the MP-2019 Mortality Improvement Scale to the PubS-2010 Mortality Table Projected Generationally from 2010 with the MP-2020 Mortality Improvement Scale. 109 CITY OF CHANHASSEN, MINNESOTA NOTES TO RSI December 31, 2022 2019 Changes in Actuarial Assumptions:  The mortality table used to measure funding liability has been changed from RP -2014 Sex Distinct Blue Collar Mortality with generational improvements beginning in 2006 (based on assumptions developed from the 2017 Social Security Trustees Report) to PubS-2010 Mortality with generational improvements projected beginning in 2010 based on SOA Scale MP-2019. 2018 Changes in Actuarial Assumptions:  Mortality assumptions were determined using the RP-2014 Blue Collar Mortality with fully generational improvements from 2006 based on assumptions from the Social Security Administration’s 2018 trustees report.  The mortality improvement scale used to measure liability has been changed from an improvement scale based on assumptions developed from the 2017 Social Security Trustees Report to an improvement scaled based on assumptions developed from the 2018 Social Security trustees Report. The base table (RP-2014 Blue Collar) and year in which improvements began (2006) remained unchanged. This results in a decrease in liability and service cost. 2017 Changes in Actuarial Assumptions:  The mortality improvement scale has been changed from an improvement scale based on assumptions developed from the 2016 Social Security Trustees Report to an improvement scale based on assumptions developed from the 2017 Social Security Trustees Report.  Disability rates have changed from 0.03% at age 20, grading to 0.33% at age 50 to Class 1 1985 Disability Rates.  The lump sum benefit accrual amount has been projected to increase by 9.27% every three years (3% compounded each year). 2016 Changes in Actuarial Assumptions:  As of December 31, 2016, the mortality assumption was changed to the RP-2014 Blue Collar Mortality with fully generational improvements from 2006 based on assumptions from the Social Security Administration’s 2016 trustees report. Details can be obtained from the financial reports of the Fire Relief Association. C. OPEB INFORMATION No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 to pay related benefits. 110 COMBINING AND INDIVIDUAL NONMAJOR FUND FINANCIAL STATEMENTS AND SCHEDULES 111 - This page intentionally left blank - 112 NONMAJOR GOVERNMENTAL FUNDS 113 - This page intentionally left blank - 114 SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on general long-term debt. CAPITAL PROJECT FUNDS The Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). 115 CITY OF CHANHASSEN, MINNESOTA COMBINING BALANCE SHEET Statement 17 NONMAJOR GOVERNMENTAL FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 Special Debt Capital Revenue Service Project 2022 2021 Assets: Cash and investments $434,819 $2,124,299 $2,965,824 $5,524,942 $7,240,403 Accrued interest receivable 2,303 10,993 15,505 28,801 17,224 Due from other governmental units - - - - 1,284 Accounts receivable - net 48,732 -139,695 188,427 154,066 Property taxes receivable -2,705 6,067 8,772 12,098 Prepaid items - - - - 690 Interfund loan receivable - - 194,356 194,356 383,971 Special assessments receivable -319,216 -319,216 319,216 Total assets $485,854 $2,457,213 $3,321,447 $6,264,514 $8,128,952 Liabilities: Accounts payable $3,983 $384,576 $169,473 $558,032 $718,472 Due to other governmental units - - 10,679 10,679 128,247 Due to other funds - - - - 7,425 Salaries payable 2,028 - - 2,028 2,047 Interfund loan payable - - 25,000 25,000 - Unearned revenue - - - - 1,441,924 Total liabilities 6,011 384,576 205,152 595,739 2,298,115 Deferred inflows of resources: Unavailable revenue -319,216 -319,216 319,216 Fund balance: Nonspendable - - - - 690 Restricted 70,019 650,229 447,148 1,167,396 1,056,768 Assigned 409,824 1,103,192 2,693,850 4,206,866 4,476,588 Unassigned - - (24,703) (24,703) (22,425) Total fund balance 479,843 1,753,421 3,116,295 5,349,559 5,511,621 Total liabilities, deferred inflows of resources, and fund balance $485,854 $2,457,213 $3,321,447 $6,264,514 $8,128,952 Total Nonmajor Governmental Funds 116 CITY OF CHANHASSEN, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 18 CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 Special Debt Capital Revenue Service Project 2022 2021 Revenues: General property taxes $ - $483,840 $1,084,490 $1,568,330 $1,632,800 Tax increment collections - 279,283 279,283 279,653 Licenses and permits - - 127,855 127,855 336,215 Intergovernmental - - - - 298,264 Franchise fees 155,950 - - 155,950 162,120 Special assessments - - - - 332 Charges for services 7,450 - - 7,450 11,900 Investment earnings (loss)(21,594) (72,739) (106,888) (201,221) (25,643) Contributions and donations 57,471 - - 57,471 63,143 Refunds and reimbursements - - 11,193 11,193 31,899 Other - - 2,400 2,400 4,600 Total revenues 199,277 411,101 1,398,333 2,008,711 2,795,283 Expenditures: Current: General government 277,309 13,045 31,203 321,557 823,375 Public safety 44,694 - 146,173 190,867 36,685 Public works - - 390,519 390,519 304,590 Parks and recreation - - 2,065 2,065 160,553 Community development - - 269,525 269,525 295,505 Capital outlay: General government - - 33,170 33,170 - Public safety 33,262 - 180,757 214,019 - Public works - - 339,321 339,321 - Parks and recreation - - 340,984 340,984 1,183,802 Debt service: Principal - 370,000 21,502 391,502 360,000 Interest and paying agent fees - 81,740 10,550 92,290 92,680 Total expenditures 355,265 464,785 1,765,769 2,585,819 3,257,190 Revenues over (under) expenditures (155,988) (53,684) (367,436) (577,108) (461,907) Other financing sources (uses): Sale of capital assets - - 154,158 154,158 84,983 Isssuance of leases - - 243,263 243,263 - Project financing issued - - - - 288,929 Transfers in - - 250,000 250,000 - Transfers out - - (232,375) (232,375) (185,794) Total other financing sources (uses) - - 415,046 415,046 188,118 Net change in fund balance (155,988) (53,684)47,610 (162,062) (273,789) Fund balance - January 1 635,831 1,807,105 3,068,685 5,511,621 5,785,410 Fund balance - December 31 $479,843 $1,753,421 $3,116,295 $5,349,559 $5,511,621 Total Nonmajor Governmental Funds 117 - This page intentionally left blank - 118 NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds are established to account for taxes and other revenues set aside for a particular purpose. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the related liability is incurred. Contribution Fund – This fund accounts for the proceeds that the City receives from charitable gambling. The City collects 10% of the net proceeds from a pull-tab operation in the City. By state statute, the fund may only be used for equipment and training for the City’s fire department. Cemetery Fund – The City owns and operates a municipal cemetery. In 2014, improvements were made to add approximately 300 additional plots. This fund accounts for all plot fees and maintenance going forward. Cemetery operations had previously been accounted for within the City’s General Fund. CATV Fund – Under the terms of the franchise agreement with Mediacom, the City is to receive 5% of the revenues derived from cable television sales within the City. These monies are dedicated solely to improving public broadcasting capabilities, studio improvements, and other capital expenditures improving the overall cable system. 119 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 19 NONMAJOR SPECIAL REVENUE FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 201 Contribution Fund 202 Cemetery Fund 210 CATV Fund 2022 2021 Assets: Cash and investments $19,697 $59,770 $355,352 $434,819 $1,993,001 Accrued interest receivable 100 313 1,890 2,303 1,794 Due from other governmental units - - - - 249 Accounts receivable - net 9,796 - 38,936 48,732 86,068 Prepaid items - - - - 690 Total assets $29,593 $60,083 $396,178 $485,854 $2,081,802 Liabilities: Accounts payable $3,411 $ - $572 $3,983 $2,000 Salaries payable - - 2,028 2,028 2,047 Unearned revenue - - - - 1,441,924 Total liabilities 3,411 - 2,600 6,011 1,445,971 Fund balance: Nonspendable - - - - 690 Restricted 26,182 - 43,837 70,019 92,226 Assigned - 60,083 349,741 409,824 542,915 Total fund balance 26,182 60,083 393,578 479,843 635,831 Total liabilities and fund balance $29,593 $60,083 $396,178 $485,854 $2,081,802 Total Nonmajor Special Revenue Funds 120 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES Statement 20 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 201 Contribution Fund 202 Cemetery Fund 210 CATV Fund 2022 2021 Revenues: Franchise fees $ - $ - $155,950 $155,950 $162,120 Charges for services - 7,450 - 7,450 11,900 Investment earnings (loss) (1,722) (3,048) (16,824) (21,594) (3,687) Contributions and donations 57,471 - - 57,471 63,143 Refunds and reimbursements - - - - 249 Total revenues 55,749 4,402 139,126 199,277 233,725 Expenditures: Current: General government - 25,256 252,053 277,309 223,866 Public safety 44,694 - - 44,694 36,685 Capital outlay: Public safety 33,262 - - 33,262 - Total expenditures 77,956 25,256 252,053 355,265 260,551 Revenues over (under) expenditures (22,207) (20,854) (112,927) (155,988) (26,826) Fund balance - January 1 48,389 80,937 506,505 635,831 662,657 Fund balance - December 31 $26,182 $60,083 $393,578 $479,843 $635,831 Total Nonmajor Special Revenue Funds 121 - This page intentionally left blank - 122 NONMAJOR DEBT SERVICE FUNDS Debt Service Funds are maintained on the modified accrual basis of accounting for revenues from taxes and other sources set aside for the payment of the debt obligations of the City. Principal and interest on the general long-term debt is recognized when due. Permanent Revolving Debt – This fund is used to account for excess resources from matured bond issues. General Obligation Bond Funds – These funds are used to account for the accumulation of resources for payment of general obligation bonds or other general indebtedness and the interest thereon. 123 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 21 NONMAJOR DEBT SERVICE FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 300 Permanent Revolving Debt 368 2009A G.O. Refunding Bonds 370 2016A G.O. Refunding Bonds 2022 2021 Assets: Cash and investments $678,527 $801,556 $644,216 $2,124,299 $2,198,869 Accrued interest receivable 3,511 4,174 3,308 10,993 6,782 Property taxes receivable - - 2,705 2,705 3,554 Special assessments receivable 8,094 311,122 - 319,216 319,216 Total assets $690,132 $1,116,852 $650,229 $2,457,213 $2,528,421 Liabilities: Accounts payable $4,326 $380,250 $ - $384,576 $402,100 Deferred inflows of resources: Unavailable revenue 8,094 311,122 - 319,216 319,216 Fund balance: Restricted - - 650,229 650,229 630,411 Assigned 677,712 425,480 - 1,103,192 1,176,694 Total fund balance 677,712 425,480 650,229 1,753,421 1,807,105 Total liabilities, deferred inflows of resources, and fund balance $690,132 $1,116,852 $650,229 $2,457,213 $2,528,421 Total Nonmajor Debt Service Funds 124 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 22 CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 300 Permanent Revolving Debt 368 2009A G.O. Refunding Bonds 370 2016A G.O. Refunding Bonds 2022 2021 Revenues: General property taxes $ - $ - $483,840 $483,840 $479,800 Special assessments - - - - 332 Investment earnings (loss)(28,544) (32,408) (11,787) (72,739) (13,938) Total revenues (28,544) (32,408) 472,053 411,101 466,194 Expenditures: Current: General government 12,550 - 495 13,045 26,951 Debt service: Principal - - 370,000 370,000 360,000 Interest and paying agent fees - - 81,740 81,740 92,680 Total expenditures 12,550 - 452,235 464,785 479,631 Revenues over (under) expenditures (41,094) (32,408)19,818 (53,684) (13,437) Other financing sources (uses): Transfers out - - - - (185,794) Net change in fund balance (41,094) (32,408)19,818 (53,684) (199,231) Fund balance - January 1 718,806 457,888 630,411 1,807,105 2,006,336 Fund balance - December 31 $677,712 $425,480 $650,229 $1,753,421 $1,807,105 Total Nonmajor Debt Service Funds 125 - This page intentionally left blank - 126 NONMAJOR CAPITAL PROJECT FUNDS Capital Project Funds are used to account for the construction and financing of large capital projects. Revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which they are incurred. Most capital projects are singular in purpose and their revenues/expenditures cannot be used for subsidizing any other operating fund. In each of these cases, bonds or other revenues received can only be used for these specific activities. The following Capital Project Funds differ in that several of the expenditure categories represent recurring types of costs, i.e., personal services, repair and maintenance of utilities, and/or recurring land improvements. 400 Capital Replacement Fund – Accounts for the City’s annual equipment purchases not related to the City’s enterprise funds. The fund currently does include a property tax levy to support the annual purchases. 401 Park Renovation Fund – Accounts for replacement or repair of major park equipment/infrastructure, including playgrounds, picnic shelters, hockey rinks, bridges, fences, walls, etc. The maintenance and replacement schedule is an ongoing endeavor that will be updated as new investments are made or aging structures are removed. 402 Facilities Capital Fund – Accounts for the City’s expenditures related to the City’s facilities, except for those related to the enterprise funds. The fund currently does include a property tax levy to support projects. 410 Park Acquisition and Development – Accounts for park dedication fees as required by the City ordinance and Minnesota State Statute. These funds are then utilized to finance park and trail improvements identified in the park and recreation section of the City’s comprehensive plan. 413 Transit Station Assessment Fund – Accounts for the interfund loan from the Water Fund to fund costs associated with the redevelopment of the Dinner Theater Transit Station in TIF #10, and for the repayment of the special assessment to repay those costs. The fund was closed in 2022. 420 Transportation Infrastructure Management – Accounts for sealcoating and other maintenance costs on local streets. 480 TIF #11 – Accounts for tax increment financing for the downtown district, TIF #11 – Frontier Development #2. 481 TIF #12 – Accounts for tax increment financing for TIF #12 – Lake Place Senior Apt. 603 Lyman Blvd Improvements – Accounts for the street and utility improvement of Lyman Blvd. This fund was closed in 2022. 127 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2022 With Comparative Totals For December 31, 2021 400 Capital 401 Park 402 Facilites Replacement Fund Renovation Fund Capital Fund Assets: Cash and investments $1,234,225 $261,858 $104,729 Accrued interest receivable 6,392 1,486 559 Due from other governmental units - - - Accounts receivable - net 139,695 - - Property taxes receivable 3,161 - 699 Interfund loan receivable 194,356 - - Total assets $1,577,829 $263,344 $105,987 Liabilities: Accounts payable $11,376 $14,130 $7,356 Due to other governmental units - - - Due to other funds - - - Interfund loan payable - - - Total liabilities 11,376 14,130 7,356 Fund balance: Restricted - - - Assigned 1,566,453 249,214 98,631 Unassigned - - - Total fund balance 1,566,453 249,214 98,631 Total liabilities and fund balance $1,577,829 $263,344 $105,987 128 Statement 23 410 Park 420 Transportation 480 Frontier 481 Lake Acquisition and Infrastructure Development #2 Place Senior Apt Total Nonmajor Development Management TIF #11 TIF #12 2022 2021 $434,606 $773,684 $156,425 $297 $2,965,824 $3,048,533 2,263 3,990 815 - 15,505 8,648 - - - - - 1,035 - - - - 139,695 67,998 - 2,207 - - 6,067 8,544 - - - - 194,356 383,971 $436,869 $779,881 $157,240 $297 $3,321,447 $3,518,729 $3,622 $329 $132,660 $ - $169,473 $314,372 10,679 - - - 10,679 128,247 - - - - - 7,425 - - - 25,000 25,000 - 14,301 329 132,660 25,000 205,152 450,044 422,568 - 24,580 - 447,148 334,131 - 779,552 - - 2,693,850 2,756,979 - - - (24,703) (24,703) (22,425) 422,568 779,552 24,580 (24,703) 3,116,295 3,068,685 $436,869 $779,881 $157,240 $297 $3,321,447 $3,518,729 Capital Project Funds 129 CITY OF CHANHASSEN, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2022 With Comparative Totals For The Year Ended December 31, 2021 410 Park 400 Capital 401 Park 402 Facilites Acquisition and Replacement Fund Renovation Fund Capital Fund Development Revenues: General property taxes $565,000 $ - $125,000 $ - Tax increment collections - - - - Licenses and permits 255 - - 127,600 Intergovernmental - - - - Investment earnings (loss) (35,565) (5,540) (442) (15,644) Refunds and reimbursements 10,100 - - 1,000 Other 2,400 - - - Total revenues 542,190 (5,540) 124,558 112,956 Expenditures: Current: General government 31,203 - - - Public safety 130,466 - 15,707 - Public works 26,264 - - - Parks and recreation - 2,065 - - Community development - - - - Capital outlay: General government 33,170 - - - Public safety 180,757 - - - Public works 329,101 - 10,220 - Parks and recreation 139,138 190,297 - 11,549 Debt service: Principal 21,502 - - - Interest and paying agent fees 10,550 - - - Total expenditures 902,151 192,362 25,927 11,549 Revenues over (under) expenditures (359,961)(197,902)98,631 101,407 Other financing sources (uses): Sale of capital assets 154,158 - - - Issuance of leases 243,263 - - - Project financing issued - - - - Transfers in - 250,000 - - Transfers out - - - - Total other financing sources (uses)397,421 250,000 - - Net change in fund balance 37,460 52,098 98,631 101,407 Fund balance - January 1 1,528,993 197,116 - 321,161 Fund balance - December 31 $1,566,453 $249,214 $98,631 $422,568 130 Statement 24 413 Transit Station 420 Transportation 480 Frontier 481 Lake 603 Lyman Assessment Infrastructure Development #2 Place Senior Apt Boulevard Fund Management TIF #11 TIF #12 Improvements 2022 2021 $ - $394,490 $ - $ - $ - $1,084,490 $1,153,000 - - 279,283 - - 279,283 $279,653 - - - - - 127,855 336,215 - - - - - - 298,264 (3,978)(39,925)(426) - (5,368)(106,888)(8,018) - 93 - - - 11,193 31,650 - - - - - 2,400 4,600 (3,978)354,658 278,857 - (5,368)1,398,333 2,095,364 - - - - - 31,203 572,558 - - - - - 146,173 - - 364,255 - - - 390,519 304,590 - - - - - 2,065 160,553 - - 267,247 2,278 - 269,525 295,505 - - - - - 33,170 - - - - - - 180,757 - - - - - - 339,321 - - - - - - 340,984 1,183,802 - - - - - 21,502 - - - - - - 10,550 - - 364,255 267,247 2,278 - 1,765,769 2,517,008 (3,978)(9,597)11,610 (2,278)(5,368)(367,436)(421,644) - - - - - 154,158 84,983 - - - - - 243,263 - - - - - - - 288,929 - - - - - 250,000 - (98,924) - - - (133,451)(232,375) - (98,924) - - - (133,451)415,046 373,912 (102,902)(9,597)11,610 (2,278)(138,819)47,610 (47,732) 102,902 789,149 12,970 (22,425)138,819 3,068,685 3,116,417 $0 $779,552 $24,580 ($24,703)$0 $3,116,295 $3,068,685 Total Nonmajor Capital Project Funds 131 - This page intentionally left blank - 132 CITY OF CHANHASSEN, MINNESOTA SPECIAL REVENUE FUND - CONTRIBUTION FUND Statement 25 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues: Investment earnings (loss)$ - $ - ($1,722) ($1,722)($197) Contributions and donations 50,000 50,000 57,471 7,471 63,143 Total revenues 50,000 50,000 55,749 5,749 62,946 Expenditures: Current: Public safety:50,000 50,000 44,694 5,306 36,685 Capital outlay - - 33,262 (33,262) - Total expenditures 50,000 50,000 77,956 (27,956)36,685 Revenues over (under) expenditures $0 $0 (22,207) ($22,207) $26,261 Fund balance - January 1 48,389 22,128 Fund balance - December 31 $26,182 $48,389 2022 Budgeted Amounts 133 CITY OF CHANHASSEN, MINNESOTA SPECIAL REVENUE FUND - CEMETERY FUND Statement 26 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues: Charges for services $8,000 $8,000 $7,450 ($550) $11,900 Investment earnings (loss)500 500 (3,048)(3,548)(488) Total revenues 8,500 8,500 4,402 (4,098) 11,412 Expenditures: Current: General government: Personal services 5,125 5,125 5,125 - - Operating expenses 2,500 2,500 20,131 (17,631)1,330 Capital Outlay 25,000 25,000 - 25,000 - Total expenditures 32,625 32,625 25,256 7,369 1,330 Revenues over (under) expenditures ($24,125) ($24,125) (20,854) $3,271 10,082 Fund balance - January 1 80,937 70,855 Fund balance - December 31 $60,083 $80,937 2022 Budgeted Amounts 134 CITY OF CHANHASSEN, MINNESOTA SPECIAL REVENUE FUND - CATV Statement 27 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For The Year Ended December 31, 2022 With Comparative Actual Amounts For The Year Ended December 31, 2021 2021 Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues: Intergovernmental $8,500 $8,500 $ - ($8,500) $ - Franchise fees 175,000 175,000 155,950 (19,050) 162,120 Investment earnings (loss)5,000 5,000 (16,824) (21,824)(3,002) Refunds and reimbursements - - - - 249 Total revenues 188,500 188,500 139,126 (49,374) 159,367 Expenditures: Current: General government: Personal services 130,106 130,106 124,457 5,649 127,338 Operating expenses 176,800 176,800 127,596 49,204 95,198 Total expenditures 306,906 306,906 252,053 54,853 222,536 Revenues over (under) expenditures ($118,406) ($118,406) (112,927)$5,479 (63,169) Fund balance - January 1 506,505 569,674 Fund balance - December 31 $393,578 $506,505 2022 Budgeted Amounts 135 - This page intentionally left blank - 136 III. STATISTICAL SECTION (UNAUDITED) 137 - This page intentionally left blank - 138 III. STATISTICAL SECTION (UNAUDITED) This part of the City of Chanhassen’s Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City of Chanhassen’s overall financial health. Contents Table Number Financial Trends These tables contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Tables 1-4 Revenue Capacity These tables contain information to help the reader assess the City’s most significant local revenue source, the property tax. Tables 5-8 Debt Capacity These tables present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Tables 9-13 Demographic and Economic These tables offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Tables 14-15 Operating Information These tables contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Tables 16-18 Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive financial reports for the relevant year. 139 CITY OF CHANHASSEN, MINNESOTA NET POSITION BY COMPONENT Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 Governmental activities: Net investment in capital assets $71,260,946 $71,867,072 $71,225,523 $72,588,940 Restricted: Debt service 6,595,927 3,441,810 3,455,172 1,390,127 Park improvements 1,714,972 1,751,739 1,896,923 1,505,784 Tax increment purposes 1,347,593 965,809 475,357 399,178 Other purposes 165,838 176,089 154,810 164,751 Unrestricted 13,724,705 13,877,772 9,510,105 10,221,704 Total governmental activities net position $94,809,981 $92,080,291 $86,717,890 $86,270,484 Business-type activities: Net investment in capital assets $52,541,451 $54,111,608 $55,704,478 $57,478,975 Unrestricted 11,391,338 10,467,201 10,032,731 10,516,316 Total business-type activities net position $63,932,789 $64,578,809 $65,737,209 $67,995,291 Primary government: Net investment in capital assets $123,802,397 $125,978,680 $126,930,001 $130,067,915 Restricted: Debt service 6,595,927 3,441,810 3,455,172 1,390,127 Park improvements 1,714,972 1,751,739 1,896,923 1,505,784 Tax increment purposes 1,347,593 965,809 475,357 399,178 Other purposes 165,838 176,089 154,810 164,751 Unrestricted 25,116,043 24,344,973 19,542,836 20,738,020 Total primary government net position $158,742,770 $156,659,100 $152,455,099 $154,265,775 Note: GASB 68 was implemented in 2015. Net position was restated for 2014 to reflect the reporting of net pension liability and pension related deferred outflows of resources. Net position for years prior to 2014 was not restated. 140 Table 1 2017 2018 2019 2020 2021 2022 $70,255,784 $71,053,355 $72,986,179 $73,063,927 $70,860,083 $68,702,496 1,400,411 1,189,447 1,283,606 564,714 594,203 618,646 1,716,043 1,224,509 1,537,790 991,872 321,161 422,568 - - - 6,668 12,970 24,580 153,633 135,024 61,995 65,965 92,226 70,019 10,028,355 8,781,660 8,360,013 9,369,203 12,019,412 13,915,001 $83,554,226 $82,383,995 $84,229,583 $84,062,349 $83,900,055 $83,753,310 $57,212,106 $56,195,385 $54,469,960 $55,526,666 $56,069,887 $56,585,833 10,126,315 12,342,280 13,557,181 11,740,521 16,356,752 11,289,333 $67,338,421 $68,537,665 $68,027,141 $67,267,187 $72,426,639 $67,875,166 $127,467,890 $127,248,740 $127,456,139 $128,590,593 $126,929,970 $125,288,329 1,400,411 1,189,447 1,283,606 564,714 594,203 618,646 1,716,043 1,224,509 1,537,790 991,872 321,161 422,568 - - - 6,668 12,970 24,580 153,633 135,024 61,995 65,965 92,226 70,019 20,154,670 21,123,940 21,917,194 21,109,724 28,376,164 25,204,334 $150,892,647 $150,921,660 $152,256,724 $151,329,536 $156,326,694 $151,628,476 141 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 Expenses Governmental activities: General government $2,630,405 $3,099,004 $2,775,663 $2,887,111 Public safety 3,313,694 3,416,088 3,826,376 3,973,031 Public works 14,224,453 9,604,525 11,153,322 7,591,530 Parks and recreation 2,919,183 3,062,592 2,952,985 3,278,139 Community development 523,651 1,043,848 527,268 689,448 Interest on long-term debt 588,352 465,935 409,676 493,746 Total governmental activities expenses 24,199,738 20,691,992 21,645,290 18,913,005 Business-type activities: Water 4,702,686 3,347,965 3,290,265 4,422,789 Sewer 3,548,200 3,171,696 3,297,128 3,254,619 Surface water management 1,334,173 1,491,763 1,328,144 1,388,979 Total business-type activities expenses 9,585,059 8,011,424 7,915,537 9,066,387 Total primary government expenses $33,784,797 $28,703,416 $29,560,827 $27,979,392 Program revenues Governmental activities: Charges for services: Licenses and permits $2,113,770 $1,691,634 $1,565,900 $1,653,858 Charges for services 1,396,068 1,149,372 1,153,779 1,209,882 Franchise fees - - - - Fines and forfeits 99,984 100,516 117,189 114,367 Operating grants and contributions 472,298 532,337 823,943 735,840 Capital grants and contributions 10,718,999 3,296,748 5,812,825 3,705,857 Total governmental activities program revenues 14,801,119 6,770,607 9,473,636 7,419,804 Business-type activities: Charges for services: Water 2,829,226 2,573,027 2,611,895 2,717,285 Sewer 2,358,854 2,472,536 2,525,731 2,619,882 Surface water management 615,896 639,087 668,971 684,199 Operating grants and contributions 63,112 210,857 45,130 72,007 Capital grants and contributions 2,852,437 2,633,793 3,140,823 5,199,139 Total business-type activities program revenues 8,719,525 8,529,300 8,992,550 11,292,512 Total primary government program revenues $23,520,644 $15,299,907 $18,466,186 $18,712,316 142 Table 2 Page 1 of 2 2017 2018 2019 2020 2021 2022 $3,230,517 $3,291,465 $2,968,604 $3,503,418 $3,545,101 $3,537,796 3,969,540 3,819,890 4,045,361 3,975,838 4,055,112 4,396,715 8,161,048 7,225,531 9,808,088 25,142,224 17,282,830 11,350,075 3,227,236 3,158,725 3,275,021 2,704,009 2,957,867 3,432,625 918,962 589,570 535,700 754,205 814,146 850,151 408,273 173,323 132,327 107,993 72,195 71,680 19,915,576 18,258,504 20,765,101 36,187,687 28,727,251 23,639,042 3,866,810 4,567,874 5,842,506 4,908,477 5,245,018 7,301,583 3,746,880 4,122,804 3,879,581 4,312,195 5,025,866 6,548,611 1,538,468 1,634,475 1,918,378 1,694,090 2,541,714 4,489,250 9,152,158 10,325,153 11,640,465 10,914,762 12,812,598 18,339,444 $29,067,734 $28,583,657 $32,405,566 $47,102,449 $41,539,849 $41,978,486 $1,641,140 $2,289,052 $2,047,190 $1,574,780 $2,608,294 $1,684,578 1,257,486 1,203,187 1,090,985 918,148 896,745 1,177,452 - - - 1,826,255 2,019,812 2,036,470 128,394 95,351 89,989 73,800 78,673 69,173 902,871 948,912 2,770,655 14,970,473 6,047,214 2,552,195 2,425,333 1,669,995 4,716,702 4,066,959 4,683,258 3,881,530 6,355,224 6,206,497 10,715,521 23,430,415 16,333,996 11,401,398 2,921,936 3,121,292 3,108,307 3,533,939 4,384,603 4,485,402 2,764,674 3,034,207 3,144,282 3,260,080 3,469,282 3,699,835 709,508 764,930 998,832 1,083,833 1,458,751 1,564,000 45,109 44,604 460,905 39,552 38,380 47,850 1,678,595 3,965,466 3,108,377 2,084,681 8,513,319 4,090,784 8,119,822 10,930,499 10,820,703 10,002,085 17,864,335 13,887,871 $14,475,046 $17,136,996 $21,536,224 $33,432,500 $34,198,331 $25,289,269 143 CITY OF CHANHASSEN, MINNESOTA CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 Net (expense) revenue: Governmental activities ($9,398,619) ($13,921,385) ($12,171,654) ($11,493,201) Business-type activities (865,534) 517,876 1,077,013 2,226,125 Total primary government net (expense) revenue (10,264,153) (13,403,509) (11,094,641) (9,267,076) General revenues and other changes in net position: Governmental activities: Property taxes 10,059,324 10,482,273 10,536,216 10,643,917 Tax increment collections 545,906 307,940 200,338 111,761 Grants and contributions not restricted to specific programs 19,941 19,736 21,679 19,754 Unrestricted investment earnings (14,764) 183,602 176,731 156,202 Gain on sale of capital assets 37,720 191,755 66,248 41,129 Transfers 307,596 6,389 (612,078) 73,032 Total governmental activities 10,955,723 11,191,695 10,389,134 11,045,795 Business-type activities: Unrestricted investment earnings (776) 134,533 132,406 79,765 Gain on sale of capital assets - - 57,510 25,224 Transfers (307,596)(6,389) 612,078 (73,032) Total business-type activities (308,372) 128,144 801,994 31,957 Total primary government $10,647,351 $11,319,839 $11,191,128 $11,077,752 Change in net assets: Governmental activities $1,557,104 ($2,729,690) ($1,782,520)($447,406) Business-type activities (1,173,906) 646,020 1,879,007 2,258,082 Total primary government $383,198 ($2,083,670) $96,487 $1,810,676 144 Table 2 Page 2 of 2 2017 2018 2019 2020 2021 2022 ($13,560,352) ($12,052,007) ($10,049,580) ($12,757,272) ($12,393,255) ($12,237,644) (1,032,336) 605,346 (819,762) (912,677) 5,051,737 (4,451,573) (14,592,688) (11,446,661) (10,869,342) (13,669,949) (7,341,518) (16,689,217) 10,826,116 10,877,849 10,996,831 11,745,709 12,075,260 12,644,286 - - - 236,485 279,653 279,283 19,753 19,755 20,009 - 311 170,656 164,393 258,456 491,345 368,168 (22,856) (824,062) 38,254 45,244 103,976 - 84,387 155,654 (204,422) (319,528) 283,007 239,676 (185,794) (334,918) 10,844,094 10,881,776 11,895,168 12,590,038 12,230,961 12,090,899 171,044 263,802 548,747 390,604 (78,079) (434,818) - 10,568 43,498 1,795 - - 204,422 319,528 (283,007) (239,676) 185,794 334,918 375,466 593,898 309,238 152,723 107,715 (99,900) $11,219,560 $11,475,674 $12,204,406 $12,742,761 $12,338,676 $11,990,999 ($2,716,258) ($1,170,231) $1,845,588 ($167,234) ($162,294) ($146,745) (656,870) 1,199,244 (510,524) (759,954) 5,159,452 (4,551,473) ($3,373,128) $29,013 $1,335,064 ($927,188) $4,997,158 ($4,698,218) 145 CITY OF CHANHASSEN, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2013 2014 2015 2016 General Fund: Nonspendable $16,741 $58,333 $72,114 $25,832 Assigned - - - - Unassigned 5,274,584 5,550,732 5,258,232 5,286,880 Total General Fund $5,291,325 $5,609,065 $5,330,346 $5,312,712 All other governmental funds: Nonspendable $1,327,068 $1,289,575 $1,253,705 $ - Restricted 9,181,230 5,724,419 5,824,354 8,673,981 Assigned 6,366,292 5,951,507 5,586,353 7,806,958 Unassigned (559,515) (475,352) (372,509) (264,772) Total all other governmental funds $16,315,075 $12,490,149 $12,291,903 $16,216,167 146 Table 3 2017 2018 2019 2020 2021 2022 $81,032 $87,067 $82,265 $63,775 $69,953 $91,340 - - - - - 657,000 5,307,088 5,667,626 5,255,804 6,684,991 7,919,562 7,623,891 $5,388,120 $5,754,693 $5,338,069 $6,748,766 $7,989,515 $8,372,231 $990,723 $9,326 $8,781 $49,690 $690 $ - 8,458,576 2,618,680 2,944,091 1,669,927 1,056,768 1,167,396 6,602,135 6,414,882 6,657,125 6,809,934 7,819,511 8,553,977 (154,506)(24,491)(570) - (22,425)(44,155) $15,896,928 $9,018,397 $9,609,427 $8,529,551 $8,854,544 $9,677,218 147 CITY OF CHANHASSEN, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years 2012 2013 2014 2015 2016 Revenues: General property taxes $10,143,011 $10,176,483 $10,489,350 $10,529,994 $10,640,315 Tax increment collections 533,011 545,906 307,940 200,338 111,761 Licenses and permits 1,595,358 2,113,770 1,691,634 1,565,900 1,653,858 Intergovernmental 2,151,785 7,971,339 2,553,062 4,897,139 974,917 Franchise fees - - - - - Special assessments 1,667,881 3,193,078 854,966 1,664,424 820,026 Charges for services 880,920 907,414 798,578 799,543 846,540 Fines and forfeits 119,997 99,984 100,516 117,189 114,367 Investment income 173,523 (14,764) 183,602 176,731 156,202 Contributions and donations 36,893 33,159 66,918 78,175 60,802 Refunds and reimbursements 253,030 235,363 77,871 85,955 150,093 Other 264,038 259,703 265,119 267,622 276,067 Total revenues 17,819,447 25,521,435 17,389,556 20,383,010 15,804,948 Expenditures: Current: General government 2,326,490 2,274,640 2,350,437 2,391,195 2,479,271 Public safety 3,013,980 3,179,446 3,258,363 3,431,541 3,713,146 Public works 3,726,158 10,628,140 5,352,221 7,537,376 3,961,016 Parks and recreation 2,154,714 2,002,604 2,164,703 2,068,532 2,256,314 Community development 621,295 522,538 1,034,047 515,382 659,276 Capital outlay: General government 75,226 87,707 34,080 - 62,713 Public safety 39,314 74,144 23,980 122,143 314,004 Public works 3,502,371 2,482,728 2,894,237 2,566,867 459,142 Parks and recreation 1,310,366 627,214 485,107 476,323 1,153,763 Debt service: Principal 5,100,000 1,590,000 4,190,000 1,810,000 1,795,000 Interest and paying agent fees 814,621 599,487 518,722 439,470 483,533 Developer assistance 21,108 - - - - Total expenditures 22,705,643 24,068,648 22,305,897 21,358,829 17,337,178 Revenues over (under) expenditures (4,886,196)1,452,787 (4,916,341)(975,819)(1,532,230) Other financing sources (uses): Bonds issued - - - - 4,805,000 Project financing - - - - - Issuance of leases - - - - - Bond premium (discount) - - - - 239,773 Transfers in 1,203,031 888,711 1,783,719 2,158,844 1,347,883 Transfers out (48,881)(43,988)(676,095)(1,701,005)(1,044,114) Sale of capital assets - - 301,531 41,015 90,318 Special item - sale of public works building 1,475,000 - - - - Total other financing sources (uses)2,629,150 844,723 1,409,155 498,854 5,438,860 Net change in fund balance ($2,257,046) $2,297,510 ($3,507,186)($476,965) $3,906,630 Debt service as a percentage of noncapital expenditures 33.3%10.5%25.0%12.4%14.8% Debt service as percentage of total expenditures 26.0%9.1%21.1%10.5%13.1% 148 Table 4 2017 2018 2019 2020 2021 2022 $10,820,682 $10,856,842 $10,960,876 $11,800,538 $12,046,658 $12,714,095 - - - 236,485 279,653 279,283 1,641,140 2,289,052 2,047,190 1,574,780 2,608,294 1,684,578 2,149,875 2,019,215 6,294,417 18,569,329 6,883,846 3,698,522 - - - 1,826,255 2,019,812 2,036,470 842,523 600,056 727,026 464,373 987,431 1,098,027 838,498 820,745 808,010 546,809 535,608 693,912 128,394 95,351 89,989 73,800 78,673 69,173 164,393 258,456 491,345 368,168 (22,856) (824,062) 73,734 70,339 70,202 56,101 84,736 78,256 174,853 156,920 73,468 88,945 84,915 103,048 264,114 225,522 209,507 263,202 275,432 380,492 17,098,206 17,392,498 21,772,030 35,868,785 25,862,202 22,011,794 2,871,267 2,835,108 2,644,661 3,361,771 3,452,273 3,261,430 3,602,897 3,593,877 3,802,544 3,786,905 3,858,508 4,535,583 4,617,523 3,847,782 6,041,417 20,127,051 3,207,828 7,851,764 2,395,554 2,326,272 2,418,229 1,854,471 2,247,485 2,448,568 940,000 610,368 567,461 803,234 886,104 864,577 30,838 22,133 110,044 833,034 - 92,052 2,950 1,169,952 701,818 387,528 - 214,019 2,595,012 2,315,068 4,959,997 4,938,481 9,195,898 966,056 376,992 1,316,908 797,124 1,121,223 1,183,802 340,984 670,000 5,985,000 720,000 1,585,000 360,000 536,502 433,925 295,294 157,312 143,970 92,680 92,290 - - - - - - 18,536,958 24,317,762 22,920,607 38,942,668 24,484,578 21,203,825 (1,438,752) (6,925,264) (1,148,577) (3,073,883) 1,377,624 807,969 - - - - - - - - - 546,108 288,929 - - - - - - 243,263 - - - - - - 1,924,157 6,724,164 2,153,197 2,852,877 - 642,375 (748,522) (6,369,316) (855,912) (40,724) (185,794) (642,375) 19,286 58,458 25,698 46,443 84,983 154,158 - - - - - - 1,194,921 413,306 1,322,983 3,404,704 188,118 397,421 ($243,831) ($6,511,958) $174,406 $330,821 $1,565,742 $1,205,390 7.1% 32.2% 5.4% 5.5% 2.0% 3.2% 6.0% 25.8% 3.8% 4.4% 1.8% 3.0% 149 CITY OF CHANHASSEN, MINNESOTA TAX CAPACITY VALUE AND ESTIMATED MARKET VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years Fiscal Year Commercial/ Total Ended Residential Industrial All Tax December 31, Property Agricultural Property Other Capacity 2013 26,970,557$ 105,160$ 8,927,095$ 541,612$ 36,544,424$ 2014 28,725,937 132,728 8,984,174 613,105 38,455,944 2015 32,778,287 153,500 9,205,053 620,620 42,757,460 2016 33,790,483 222,144 9,508,063 669,890 44,190,580 2017 34,470,607 278,224 9,910,242 764,420 45,423,493 2018 36,545,419 296,153 10,317,456 869,646 48,028,674 2019 39,891,179 191,360 10,897,809 896,937 51,877,285 2020 42,947,538 135,300 11,666,538 886,150 55,635,526 2021 43,933,317 133,667 12,245,999 935,227 57,248,210 2022 45,814,017 125,056 12,596,386 600,978 59,136,437 Sources: Carver County Taxpayer Services and Hennepin County 150 Table 5 Captured Tax Capacity on Fiscal Adjusted City Estimated Tax Capacity Tax Increment Disparity Tax Capacity Direct Tax Market as a Percent District Contribution Value Rate Value of EMV (435,999)$ (1,804,630)$ 34,303,795$ 28.42838 3,118,066,700$ 1.10% (252,884) (1,971,928) 36,231,132 27.23862 3,294,605,000 1.10% (267,337) (1,896,611) 40,593,512 24.63317 3,686,777,200 1.10% (103,638) (2,119,400) 41,967,542 24.25249 3,802,904,100 1.10% - (2,055,461) 43,368,032 23.85464 3,899,829,200 1.11% - (2,009,509) 46,019,165 22.66614 4,112,577,100 1.12% - (2,001,778) 49,875,507 21.10456 4,444,627,000 1.12% (248,355) (2,077,771) 53,309,400 21.17559 4,749,987,200 1.12% (294,955) (2,261,018) 54,692,237 22.11399 4,868,292,100 1.12% (299,262) (2,268,028) 56,569,147 22.41520 5,041,556,300 1.12% 151 CITY OF CHANHASSEN, MINNESOTA DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Table 6 Last Ten Fiscal Years Fiscal Operational Debt City School Carver Year and Capital Service Total District #112 County Other Total Tax capacity rates (per $100 of adjusted tax capacity value) 2013 23.635 4.793 28.428 45.319 46.115 6.603 126.467 2014 22.708 4.531 27.239 44.917 45.211 6.873 124.239 2015 21.532 3.101 24.633 39.120 40.488 6.270 110.512 2016 21.314 2.938 24.252 39.245 38.880 6.417 108.795 2017 21.536 2.317 23.853 37.005 38.851 6.565 106.274 2018 20.731 1.935 22.666 33.837 37.436 6.537 100.476 2019 19.314 1.791 21.105 33.631 36.488 6.368 97.592 2020 19.484 1.692 21.176 33.006 35.179 6.101 95.463 2021 21.235 0.879 22.114 32.327 34.634 5.981 95.056 2022 21.559 0.856 22.415 31.220 34.170 5.747 93.552 Source: Carver County Taxpayer Services (1)The City Direct Rate is the Urban Based Rate, not including market value levies. City Direct Rate(1)Overlapping Rates 152 CITY OF CHANHASSEN, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Table 7 Current Year and Nine Years Ago Percentage Percentage Taxable of Total City Taxable of Total City Capacity Capacity Capacity Capacity Taxpayer Value Rank Value Value Rank Value LFT Real Estate Company Inc $864,780 1 1.5% - Istar Minnesota LLC 569,434 2 1.0% $349,042 2 1.0% IPX West Village Station LLC 449,892 3 0.8% - Rosemount Inc 375,972 4 0.7% 309,044 3 0.9% Lake Susan Apartment Homes LLC 348,033 5 0.6% - Chanhassen Frontier LLC 311,018 6 0.5% - Centerpoint Energy Minnegasco 301,572 7 0.5% - Mission Hills Sr Housing Owner LLC 271,640 8 0.5% - 8610 LLP 265,966 9 0.5% - Market Square Assoc LTD Ptrsh 231,180 10 0.4% - IRET Properties - 367,250 1 1.1% Northern States Power Co - 267,522 4 0.8% LTF Real Estate VRDN I LLC - 239,902 5 0.7% LTF Real Estate MP II LLC - 204,916 6 0.6% Park Avenue Lofts LLC - 200,654 7 0.6% DRF Chanhassen Medical Bldg - 194,888 8 0.6% PHM/Chanhassen Inc - 194,659 9 0.6% Target Corporation T-0862 - 190,114 10 0.5% Total $3,989,487 7.0% $2,517,991 7.2% Total All Property $57,069,313 $34,797,923 Source: Carver County Taxpayer Services 20132022 153 - This page intentionally left blank - 154 CITY OF CHANHASSEN, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 8 Last Ten Fiscal Years Fiscal Taxes Collections Year Levied in Ended For The Percentage Subsequent Percentage December 31, Fiscal Year Amount of Levy Years Amount of Levy 2013 10,195,890$ 10,105,393$ 99.1% 20,236$ 10,125,629$ 99.3% 2014 10,334,140 10,269,518 99.4% 28,614 10,298,132 99.7% 2015 10,484,021 10,446,765 99.6% 26,753 10,473,518 99.9% 2016 10,629,621 10,564,815 99.4% 49,076 10,613,892 99.9% 2017 10,795,121 10,718,876 99.3% 21,473 10,740,349 99.5% 2018 10,913,868 10,834,344 99.3% 35,060 10,869,405 99.6% 2019 11,019,868 10,924,102 99.1% 78,511 11,002,613 99.8% 2020 11,741,368 11,656,656 99.3% 52,907 11,709,563 99.7% 2021 12,066,700 12,013,536 99.6% 72,357 12,085,582 100.2% (1) 2022 12,663,076 12,614,877 99.6% - 12,614,877 99.6% Source: City Finance Department (1) The percentage of levy collected for taxes levied for fiscal year 2021 exceeds 100% due to receipt of a Green Acres Payback of approximately $23,260. Fiscal Year of the Levy Collected Within The Total Collections to Date 155 CITY OF CHANHASSEN, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years General General Fiscal Obligation Revenue Tax Increment Improvement Year Bonds Bonds Bonds Bonds 2013 $10,155,000 - $705,000 $5,220,000 2014 9,550,000 - 635,000 1,705,000 2015 8,925,000 - - 1,155,000 2016 13,313,788 - - - 2017 12,627,803 - - - 2018 6,626,818 - - - 2019 5,890,833 - - - 2020 4,289,848 - - - 2021 3,913,863 - - - 2022 3,527,878 - - - Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1)The City has a Joint Powers Agreement with Carver County for the Lyman Boulevard-Phase 3 project and the pedestrian trail to the Arboretum. The City is paying its portion of those projects to Carver County through 2025 at 0% interest. (2)Information pertaining to Chanhassen Personal Income is not available, information for Carver County was included instead. (a) Information not available Governmental Activities 156 Table 9 Business-Type Bonded Debt Activities Per Total Carver County Other G.O. Revenue Debt Personal Debt(1)Bonds Total Debt Per Capita Income(2) - $16,324,287 $32,404,287 $1,353 0.6% - 10,045,261 21,935,261 899 0.4% - 9,256,235 19,336,235 784 0.3% - 13,926,719 27,240,507 1,092 0.4% - 23,379,318 36,007,121 1,425 0.5% - 25,671,988 32,298,806 1,238 0.4% - 23,755,499 29,646,332 1,125 0.4% 546,108 28,535,933 33,371,889 1,228 0.4% 835,037 26,311,508 31,060,408 1,182 0.4% 690,037 24,132,877 28,350,792 1,081 (a) 157 CITY OF CHANHASSEN, MINNESOTA RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 10 Last Ten Fiscal Years Net General General G.O. Tax G.O. G.O. Total General Less Amounts Net General Percentage Obligation Fiscal Obligation Increment Improvement Revenue Obligation Restricted for Obligation of Tax Bonded Debt Year Bonds Bonds Bonds Bonds Bonded Debt Debt Service Bonded Debt Capacity Per Capita 2013 10,155,000$ 705,000$ 5,220,000$ 16,324,287$ 32,404,287$ 10,266,366$ 22,137,921$ 63.62% 924$ 2014 9,550,000 635,000 1,705,000 10,045,261 21,935,261 3,441,810 18,493,451 50.09% 758 2015 8,925,000 - 1,155,000 9,256,235 19,336,235 3,455,171 15,881,063 38.60% 644 2016 13,313,788 - - 13,926,719 27,240,507 6,418,913 20,821,594 48.72% 834 2017 12,627,803 - - 23,379,318 36,007,121 6,413,214 29,593,907 67.23% 1,171 2018 6,626,818 - - 25,671,988 32,298,806 1,189,446 31,109,360 66.81% 1,192 2019 5,890,833 - - 23,755,499 29,646,332 1,283,606 28,362,727 56.31% 1,076 2020 4,289,848 - - 28,535,933 32,825,781 564,713 32,261,067 60.00% 1,187 2021 3,913,863 - - 26,311,508 30,225,371 594,203 29,631,168 53.63% 1,128 2022 3,527,878 - - 24,132,877 27,660,755 618,646 27,042,110 47.38% 1,031 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 158 CITY OF CHANHASSEN, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Table 11 December 31, 2022 Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable*Debt Direct debt: City of Chanhassen(1) (2)$4,217,915 100.00% $4,217,915 Overlapping debt: Eastern Carver County School District 146,024,000 35.80% 52,276,592 Eden Prairie Independent School District 89,222,670 1.03% 918,994 Carver County 8,980,000 30.33% 2,723,634 Hennepin County 1,018,886,023 0.06% 611,332 Hennepin Suburban Park District 47,650,901 0.08%38,121 Hennepin Regional Railroad Authority 85,464,798 0.06%51,279 Metropolitan Council 83,059,397 0.03%24,918 Subtotal - overlapping debt 1,479,287,789 56,644,869 Total direct and overlapping debt $1,483,505,704 $60,862,784 (1)Excludes debt related to the City's business-type activities. (2)The City has a Joint Powers Agreement with Carver County for the Lyman Boulevard-Phase 3 project and the pedestrian trail to the Arboretum. Included in this total is the amount the City is paying for its share of those projects to Carver County through 2025 at 0% interest. 159 CITY OF CHANHASSEN, MINNESOTA LEGAL DEBT MARGIN INFORMATION Table 12 Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2022 Market value $5,041,556,300 Applicable percentage 3% Debt limit 151,246,689 Debt applicable to limit: Total bonded debt 27,660,755 Less: Special assessment bonds - Tax increment bonds - Enterprise Fund debt (24,132,877) Less: Cash and investments in G.O. Bond Debt Service Fund (644,216) 2,883,662 Legal debt margin $148,363,027 Legal Debt Margin Calculation for Fiscal Years 2013 Through 2022 Net Debt Net Debt Legal Percent of Debt Applicable Fiscal Debt Applicable to Debt Applicable to to Limit Year Population Limit Limit Margin Debt Limit Per Capita 2013 23,954 93,542,001$ 8,705,958$ 84,836,043$ 9.31% 363$ 2014 24,388 98,838,150 8,030,953 90,807,197 8.13% 329 2015 24,655 110,603,316 7,346,583 103,256,733 6.64% 298 2016 24,951 114,087,123 6,721,445 107,365,678 5.89% 269 2017 25,273 116,994,876 6,048,333 110,946,543 5.17% 239 2018 26,088 123,377,313 5,377,482 117,999,832 4.36% 206 2019 26,335 133,338,810 4,555,132 128,783,678 3.42% 173 2020 27,170 142,499,616 3,686,297 138,813,319 2.59% 136 2021 26,271 146,048,763 3,288,043 142,760,720 2.25% 125 2022 26,237 151,246,689 2,883,662 148,363,027 1.91% 110 160 CITY OF CHANHASSEN, MINNESOTA PLEDGED REVENUE COVERAGE Table 13 Last Ten Fiscal Years Special Fiscal Assessment Year Collections Principal Interest Coverage 2013 2,174,645$ 200,000$ 159,600$ 6.047 2014 119,060 3,515,000 103,875 0.033 2015 751,995 550,000 42,900 1.268 2016 6,298 1,155,000 26,175 0.005 2017 - - - - 2018 - - - - 2019 - - - - 2020 - - - - 2021 - - - - 2022 - - - - Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Improvement bonds with a designated revenue source of special assessments were paid off in 2016. Improvement Bonds Debt Service 161 CITY OF CHANHASSEN, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 14 Last Ten Fiscal Years Chanhassen Carver County Carver County Carver County Fiscal Chanhassen Unemployment Unemployment Personal Income Per Capita Year Population(1)Rate(2)Rate(2)(thousands)(3)Personal Income(3) 2013 23,954 4.1%4.4%$5,702,419 $59,538 2014 24,388 3.4%3.7%6,118,607 62,686 2015 24,655 2.9%3.2%6,420,876 64,878 2016 24,951 2.9%3.3%6,610,589 65,565 2017 25,273 2.9%2.9%7,029,904 68,495 2018 26,088 2.5%2.5%7,421,903 71,228 2019 26,355 2.5%2.8%7,806,837 73,785 2020 27,170 5.1%5.2%8,168,471 76,137 2021 26,271 2.7%3.0%8,751,120 80,562 2022 26,237 1.9%2.2%(a)(a) Sources:(1)Federal Census Data and Chanhassen Planning Department (2)State of Minnesota, Department of Employment and Economic Development (3)U.S. Department of Commerce, Bureau of Economic Analysis (a) Information not available Note: Information pertaining to Chanhassen Personal Income and Per Capita Personal Income is not available, information for Carver County was included instead. 162 CITY OF CHANHASSEN, MINNESOTA PRINCIPAL EMPLOYERS Table 15 Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Employer Employees Rank Employment(1)Employees Rank Employment(1) Lifetime Fitness 1,171 1 23.5% 899 3 16.4% Instant Web Companies 718 2 14.4% 1,043 2 19.0% The Bernard Group 686 3 13.8% - Rosemount Inc 550 4 11.1% 1,667 1 30.4% Eastern Carver County Schools 464 5 9.3% 350 5 6.4% Chanhassen Dinner Theatres 350 6 7.0% 252 7 4.6% General Mills 344 7 6.9% 300 6 5.5% RR Donnelley 275 8 5.5% 368 4 6.7% Target 225 9 4.5% - Minnesota Landscape Arboretum 192 10 3.9% 242 8 4.4% Byerly's -180 9 3.3% Exlar Corporation -180 9 3.3% Total 4,975 5,481 Source: Survey by City Administration and Finance Departments. Note: This does not purport to be a comprehensive list and is based on available data obtained through a survey of individual employers. Some employers do not respond to inquiries for employment data. (1)The statistic for total City employment is not available, therefore the percentage represents the percentage of the top ten listed. 2022 2013 163 CITY OF CHANHASSEN, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Function/Program 2013 2014 2015 2016 General government 13 13 13 13 Public safety 10 10 10 10 Public works 28 28 28 29 Parks & recreation 11 11 11 12 Community development 5 5 5 6 Total 67 67 67 70 Source: City Finance Department Full-Time Equivalent Employees as of December 31, 164 Table 16 2017 2018 2019 2020 2021 2022 13 13 13 13 15 17 10 10 9 9 11 13 31 31 31 32 32 33 13 13 13 14 14 13 666665 73 73 72 74 78 81 Full-Time Equivalent Employees as of December 31, 165 CITY OF CHANHASSEN, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years Function/Program 2013 2014 2015 2016 Building: Total permits issued 3,201 3,076 3,266 2,891 Total estimated value $89,370,069 $80,591,941 $82,145,483 $73,881,121 Election: Registered voters 16,916 16,344 16,344 17,769 Fire: Average number of employees 45 45 45 45 General government: Area of city - square miles 22.87 22.88 22.88 22.88 Average number of permanent full-time employees (excluding fire department) 67 67 67 70 Police: Average number of employees 15 15 15 15 Number of crimes - MNCJRS(1)748 838 870 313 Number of crimes - NIBRS(1) - - - 472 Water: Number of customers 7,953 8,075 8,195 8,254 Daily average consumption - gallons 2,876,383 2,542,413 2,495,868 2,565,905 Plant capacity - gallons 8,550,000 8,550,000 8,550,000 8,550,000 Source: Various City Departments (1)Crime statistics in Minnesota had been reported for the last forty years utilizing Minnesota's Criminal Justice Reporting System (MNCJRS). The Federal Bureau of Investigations has mandated that all states become National Incident Based Reporting System (NIBRS) compliant by 2019. The Carver County Sheriff's Office transitioned to NIBRS June 1, 2016. Fiscal Year 166 Table 17 2017 2018 2019 2020 2021 2022 2,981 3,085 3,259 4,528 6,072 3,936 $82,430,550 $136,016,287 $103,902,405 $87,160,588 $160,438,828 $87,812,422 17,769 17,480 17,480 19,245 19,245 19,182 45 45 45 45 41 37 22.88 22.88 22.88 22.88 22.88 22.88 73 73 72 74 78 81 15 15 15 15 15 15 - - - - - - 737 698 692 796 758 740 8,312 8,407 8,481 8,539 8,608 8,689 2,624,486 2,888,586 2,247,455 2,677,163 3,040,992 2,953,945 8,550,000 17,100,000 17,100,000 17,100,000 17,100,000 17,100,000 Fiscal Year 167 CITY OF CHANHASSEN, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years Function/Program 2013 2014 2015 2016 Fire: Number of stations 2222 Parks and recreation: Acres of parks 401 405 405 405 Acres of open space 503 503 503 503 Number of shelter buildings 4444 Number of picnic shelters 6 7 13 15 Number of playgrounds 27 27 27 27 Number of swimming beaches 5555 Number of tennis courts 15 15 15 15 Number of outdoor pickleball courts 3666 Police: Number of stations 1111 Public works: Miles of streets 113.5 113.7 113.9 116.5 Miles of sidewalks 31.9 32.0 32.0 34.0 Miles of trails 58.6 59.2 59.9 62.4 Sewer: Miles of storm sewers 76.5 77.0 78.8 84.3 Miles of sanitary sewers 124.3 124.5 125.3 128.2 Number of lift stations 31 31 31 31 Water: Miles of watermains 139.1 139.3 140.6 145.5 Number of wells 12 12 12 13 Source: Various City Departments Fiscal Year 168 Table 18 2017 2018 2019 2020 2021 2022 22222 2 466 466 466 466 466 466 528 528 628 628 628 628 44444 4 18 21 21 21 21 21 27 27 28 28 28 28 55555 5 16 16 16 16 16 16 10 10 10 10 10 10 11111 1 116.5 117.0 117.1 117.3 117.3 118.1 34.0 34.0 34.0 34.0 34.0 34.1 62.4 65.0 66.4 68.7 69.1 69.1 84.5 86.8 86.9 87.7 88.7 89.7 128.2 128.6 128.8 129.0 129.7 131.5 31 31 31 31 31 32 145.5 148.8 148.9 149.7 150.1 151.0 13 13 13 13 13 13 Fiscal Year 169 - This page intentionally left blank - 170 IV. OTHER INFORMATION (UNAUDITED) 171 CITY OF CHANHASSEN, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2022 Final Interest Issue Maturity Bonded indebtedness: Rates Date Date General obligation bonds: G.O. Bonds, Series 2016A 2.00%-3.00% 03/03/16 02/01/30 Total general obligation bonds Enterprise Fund debt: G.O. Water Revenue Bonds, Series 2011A 0.30%-2.15% 10/06/11 02/01/22 G.O. Water Revenue Refunding Bonds, Series 2011B 2.00%-3.00% 10/06/11 02/01/25 G.O. Water and Sewer Revenue Bonds, Series 2012A 1.00%-1.55% 11/15/12 02/01/23 G.O. Water Revenue Bonds, Series 2016A 2.00%-3.00% 03/03/16 02/01/26 G.O. Water Revenue Bonds, Series 2016B 3.50%-4.00% 12/29/16 02/01/42 G.O. Water Revenue Bonds, Series 2017A 2.00%-4.00% 02/01/17 02/01/38 G.O. Water Revenue Bonds, Series 2018A 3.00%-4.00% 03/15/18 02/01/30 G.O. Water, Sewer, and Surface Water Revenue Bonds, Series 2020A 2.00% - 3.00% 4/2/2020 2/1/2031 Total Enterprise Fund debt Total City bonded indebtedness 172 Exhibit 1 Payable Payable Principal Original January 1, December 31, Due in Issue Payments 2022 Issued Payments 2022 2023 $4,805,000 $1,035,000 $3,770,000 $ -$370,000 $3,400,000 $385,000 4,805,000 1,035,000 3,770,000 0 370,000 3,400,000 385,000 5,920,000 5,645,000 275,000 -275,000 - - 3,720,000 1,540,000 2,180,000 -515,000 1,665,000 535,000 1,245,000 980,000 265,000 -130,000 135,000 135,000 1,565,000 730,000 835,000 -160,000 675,000 165,000 3,630,000 -3,630,000 - - 3,630,000 - 10,000,000 855,000 9,145,000 -155,000 8,990,000 160,000 3,595,000 -2,805,000 -275,000 2,530,000 285,000 - - 6,045,000 -550,000 5,495,000 565,000 29,675,000 9,750,000 25,180,000 0 2,060,000 23,120,000 1,845,000 $34,480,000 $10,785,000 $28,950,000 $ - $2,430,000 $26,520,000 $2,230,000 Prior Years 2022 173 CITY OF CHANHASSEN, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY Exhibit 2 GENERAL OBLIGATION BONDS - GOVERNMENTAL ACTIVITIES December 31, 2022 G.O. Bonds, Series 2016A Bonds payable $3,400,000 Future interest payable 289,450 $3,689,450 Payments to maturity: 2023 $455,025 2024 453,325 2025 458,300 2026 460,000 2027 461,500 2028 462,800 2029 468,850 2030 469,650 $3,689,450 174 CITY OF CHANHASSEN, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY Exhibit 3 GENERAL OBLIGATION REVENUE BONDS December 31, 2022 G.O. Water, G.O. Water G.O. Water & G.O. Water G.O. Water G.O. Water G.O. Water Sewer & Surface Revenue Sewer Revenue Revenue Revenue Revenue Revenue Water Revenue Bonds, Series Bonds, Series Bonds, Series Bonds, Series Bonds, Series Bonds, Series Bonds, Series 2011B 2012A 2016A 2016B 2017A 2018A 2020A Total Bonds payable $1,665,000 $135,000 $675,000 $3,630,000 $8,990,000 $2,530,000 $5,495,000 $23,120,000 Future interest payable 76,125 1,046 30,650 2,489,889 2,731,750 315,300 610,575 6,255,335 $1,741,125 $136,046 $705,650 $6,119,889 $11,721,750 $2,845,300 $6,105,575 $29,375,335 Payments to maturity: 2023 $576,925 $136,046 $179,325 $138,238 $440,500 $356,625 $702,975 $2,530,634 2024 580,575 - 174,375 138,238 434,100 357,925 700,800 2,386,013 2025 583,625 - 175,200 138,238 432,600 354,000 703,100 2,386,763 2026 - - 176,750 138,238 430,900 354,850 704,800 1,805,538 2027 - - - 138,238 843,575 355,400 700,975 2,038,188 2028 - - - 138,238 845,425 355,650 701,625 2,040,938 2029 - - - 138,238 846,675 355,600 705,050 2,045,563 2030 - - - 138,238 847,325 355,250 701,450 2,042,263 2031 - - - 138,238 842,450 - 484,800 1,465,488 2032 - - - 138,238 842,050 - - 980,288 2033 - - - 138,238 845,975 - - 984,213 2034 - - - 138,238 844,225 - - 982,463 2035 - - - 138,238 841,875 - - 980,113 2036 - - - 138,238 843,850 - - 982,088 2037 - - - 138,238 838,150 - - 976,388 2038 - - - 275,788 702,075 - - 977,863 2039 - - - 943,900 - - - 943,900 2040 - - - 943,431 - - - 943,431 2041 - - - 939,700 - - - 939,700 2042 - - - 943,500 - - - 943,500 $1,741,125 $136,046 $705,650 $6,119,889 $11,721,750 $2,845,300 6,105,575 $29,375,335 175 CITY OF CHANHASSEN, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES Exhibit 4 December 31, 2022 G.O. Capital Years of Improvement Levy/ Plan Bonds Collection of 2008A 2022/2023 $482,213 2023/2024 485,520 2024/2025 487,410 2025/2026 489,090 2026/2027 490,560 2027/2028 497,070 2028/2029 498,015 $3,429,878 176