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2023 Annual Financial ReportAnnual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2023 City of Chanhassen, Minnesota THIS PAGE IS LEFT BLANK INTENTIONALLY CITY OF CHANHASSEN, MINNESOTA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023 PREPARED BY FINANCE DEPARTMENT Member of the Government Finance Officers Association of the United States and Canada THIS PAGE IS LEFT BLANK INTENTIONALLY City of Chanhassen, Minnesota Annual Comprehensive Financial Report Table of Contents For the Year Ended December 31, 2023 Introductory Section Page No. Letter of Transmittal from Finance Director 11 Certificate of Achievement for Excellence in Financial Reporting 16 Organization Chart 17 Elected and Appointed Officials 18 Financial Section Independent Auditor's Report 21 Management's Discussion and Analysis 25 Basic Financial Statements Government -wide Financial Statements Statement of Net Position 41 Statement of Activities 42 Fund Financial Statements Governmental Funds Balance Sheet 46 Reconciliation of the Balance Sheet to the Statement of Net Position 47 Statement of Revenues, Expenditures and Changes in Fund Balances 48 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 49 General Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 51 Proprietary Funds Statement of Net Position 52 Statement of Revenues, Expenses and Changes in Net Position 55 Statement of Cash Flows 56 Notes to the Financial Statements 59 Required Supplementary Information Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability - General Employees Retirement Fund 96 Schedule of Employer's Public Employees Retirement Association Contributions - General Employees Retirement Fund 96 Notes to the Required Supplementary Information - General Employees Retirement Fund 97 Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability - Public Employees Police and Fire Fund 99 Schedule of Employer's Public Employees Retirement Association Contributions - Public Employees Police and Fire Fund 99 Notes to the Required Supplementary Information - Public Employees Police and Fire Fund 100 Schedule of Changes in the Fire Relief Association's Net Pension Liability (Asset) and Related Ratios 102 Notes the Required Supplementary Information - Fire Relief Association 103 Schedule of Employer's Fire Relief Association's Contributions 104 Schedule of Changes in the City's Total OPEB Liability and Related Ratios 104 5 THIS PAGE IS LEFT BLANK INTENTIONALLY City of Chanhassen, Minnesota Annual Comprehensive Financial Report Table of Contents (Continued) For the Year Ended December 31, 2023 Page No. Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 109 Nonmajor Special Revenue Funds Combining Balance Sheet 112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 113 Debt Service Funds Combining Balance Sheet 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 117 Nonmajor Capital Projects Funds Combining Balance Sheet 120 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 122 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 125 Charitable Gambling Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 130 Cemetery Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 131 Cable Television Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 132 Table No. Page No. Statistical Section (Unaudited) Financial Trends Net Position by Component 1 136 Changes in Net Position 2 138 Fund Balances of Governmental Funds 3 142 Changes in Fund Balances of Governmental Funds 4 144 Revenue Capacity Tax Capacity and Estimated Market Value of Property 5 146 Property Tax Rates - Direct and Overlapping Governments 6 148 Principal Property Taxpayers 7 149 Property Tax Levies and Tax Collections 8 151 Debt Capacity Ratios of Outstanding Debt by Type 9 152 Ratios of General Bonded Debt Outstanding 10 154 Computation of Direct and Overlapping Debt 11 157 Legal Debt Margin Information 12 158 Pledged -revenue Coverage 13 160 Demographic and Economic Information Demographic and Economic Statistics 14 161 Principal Employers 15 162 Operating Information Full-time Equivalent City Government Employees by Function 16 164 Operating Indicators by Function 17 166 Capital Asset Statistics by Function 18 168 7 THIS PAGE IS LEFT BLANK INTENTIONALLY INTRODUCTORY SECTION CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 THIS PAGE IS LEFT BLANK INTENTIONALLY 10 CITY OF CHANHASSEN Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow May 17, 2024 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, 2023, 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 Abdo, 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, 2023, 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, 2023, 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. PH 952.227.1100 • www.d.chanhassen.mn.us • FX 952.2211110 7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317 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 about 85 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 12 0 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, debt service, capital project, and enterprise funds are included in the annual budget. 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: Chanhassen Population 40,000 35,000 30,000 25,000 20,000 15,000 10,000 ' 5,000 11 ' 1970 1980 1990 2000 2010 2020 2030 2040 ■ Census ■ Forecast 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 2022 were $73,372, up from $46,265 in 2010. Average annual unemployment is low for Chanhassen residents, coming in at 1.9% in 2022 and 2.3% in 2023. 13 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 2012. Estimated Market Value $7 $6 $5 c g $4 $3 $2 $1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 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 moving forward with replacment of the existing City Hall and Senior Center building. The new civic campus will include a new City Hall, Council Chambers, Senior Center, and destination park amenities, such as a playround, splash pad, pickleball courts, park rental facility, bandshell, and several other features. Construction of the new City Hall will start in the summer of 2024 and is expected to finish in summer 2025. The existing City Hall will then be demolished and construction of the park amenities will occur, with completion expected by July 2026, in time for the City's 4' of July festivities. The City plans to issue Capital Improvement Bonds in 2024 for construction of the new Civic Campus. The Lake Ann Park Preserve Project is currently in the construction phase. The City Council has dedicated about $2.6 million of American Rescue Plan Act (ARPA) funds for 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. 14 The City is committed to preserving the value of the City's capital asset investment. 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 2023, approximately five miles of roadway were rehabilitated in the following areas: Curry Farms/Mulberry/Creek Run Trail, Lake Susan West, Mission Hills, Saddlebrook, Ches Mar, and Bramble. 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, 2022. This was the 3I't 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 Abdo for their assistance in preparing this report. Respectfully submitted, 9&66,t Odee Kelly Grinnell Finance Director 15 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Chanhassen Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2022 Executive Director/CEO 16 z a--+ U City Council City Attorney City Manager City Commissions Administration Community Development Finance Fire Law Enforcement Public Works Parks & Recreation City of Chanhassen, Minnesota Elected and Appointed Officials For the Year Ended December 31, 2023 ELECTED Name Title Elise Ryan Josh Kimber Jerry McDonald Haley Schubert Mark von Oven Name Laurie Hokkanen Matthew Unmacht Samantha DiMaggio Kelly Grinnell Charles Howley Donald Johnson Jerry Ruegemer Richard Rice Eric Maass Mayor Council Member Council Member Council Member Council Member APPOINTED Title City Manager Assistant City Manager Economic Development Manager Finance Director Public Works Director/City Engineer Fire Chief Parks and Recreation Director IT Manager Planning Director Term Expires 12/31 /26 12/31 /24 12/31 /26 12/31 /24 12/31 /26 FINANCIAL SECTION CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 19 THIS PAGE IS LEFT BLANK INTENTIONALLY 20 A 10�1 R%o A 0 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Chanhassen, Minnesota Opinions A;rdosolution's C'y We have audited the accompanying financial statements of each major fund of the governmental activities, business -type activates, each major fund and the aggregate remaining fund information of the City of Chanhassen, Minnesota (the City), as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise the City's 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 as of December 31, 2023, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity 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 and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 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'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. Lighting the path forward 21 In performing an audit in accordance with generally accepted auditing standards and Government 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'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'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. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis starting on page 25 and the schedule of Employer's Share of the Net Pension Liability, the schedule of Employer's Contributions, the related note disclosures, the Schedule of Changes in Net Pension Liability (Asset) and Related Ratios, and the Schedule of Changes in the City's OPEB Liability and Related Ratios, starting on page 96 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 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's basic financial statements. The accompanying combining and individual 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 related 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 accompanying combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Abdo Sol utions.com 22 Other Information Management is responsible for the other information in the annual report. The other information comprises the introductory section and statistical section but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statement 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 17, 2024, on our consideration of the City'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 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's internal control over financial reporting and compliance. Abdo Minneapolis, Minnesota May 17, 2024 AbdoSolutions.com 23 THIS PAGE IS LEFT BLANK INTENTIONALLY 24 Management's Discussion and Analysis 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, 2023. Financial Highlights • The assets and deferred outflows or resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year as shown in the summary of net position on the following pages. The unrestricted amount of net position may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position increased as shown in the summary of changes in net position table on the following pages. The increase this year was due to an increase in operating grants and contributions, an increase in property tax revenues, and higher investment earnings. • For the current fiscal year, the City's governmental funds fund balances are shown in the Financial Analysis of the City's Funds section of the MD&A. The total fund balance increased in comparison with the prior year. This increase was primarily due to state aid and positive budget variances. The total of assigned and unassigned as shown in the governmental fund balance table is available for spending at the City's discretion. • The unassigned fund balance in the General fund as shown in the financial analysis of the City's funds section increased from prior year due to positive budget variances for revenues and expenditures. • The City's total bonded debt decreased during the fiscal year. The decrease was a result of scheduled bond principal payments. 25 Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of combining and individual fund financial statements and schedules that further explains and supports the information in the financial statements. Figure 1 shows how the required parts of this annual report are arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual fund financial statements and schedules that provide details about nonmajor governmental funds, which are added together and presented in single columns in the basic financial statements. Figure 1 Required Components of the City's Annual Financial Report Management's Basic Required Discussion and Financial Supplementary Analysis Statements Information Govemment- wide Financial Statements Summary ............................. Fund Notes to the Financial Financial Statements Statements Detail 26 Figure 2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the structure and contents of each of the statements. Figure 2 Major Features of the Government -wide and Fund Financial Statements Fund Financial Statements Government -wide Governmental Funds Proprietary Funds Statements Scope Entire City government The activities of the City that Activities the City operates (except fiduciary funds) are not proprietary or similar to private and the City's component fiduciary, such as businesses, such as the units administrative, fire and parks water and sewer system Required financial • Statement of Net • Balance Sheet • Statements of Net statements Position • Statement of Revenues, Position • Statement of Activities Expenditures, and . Statements of Changes in Fund Balances Revenues, Expenses and Changes in Fund Net Position • Statements of Cash Flows Accounting basis and Accrual accounting and Modified accrual accounting Accrual accounting and measurement focus economic resources focus and current financial economic resources focus resources focus Type of asset/liability All assets and liabilities, Only assets expected to be All assets and liabilities, information both financial and capital, used up and liabilities that both financial and capital, and short-term and long- come due during the year or and short-term and long- term soon thereafter; no capital term assets included Type of deferred All deferred Only deferred outflows of All deferred outflows/inflows of outflows/inflows of resources expected to be outflows/inflows of resources information resources, regardless of used up and deferred inflows resources, regardless of when cash is received or of resources that come due when cash is received or paid during the year or soon paid thereafter; no capital assets included Type of in flow/out All revenues and expenses Revenues for which cash is All revenues and expenses flow information during year, regardless of received during or soon after during the year, regardless when cash is received or the end of the year; of when cash is received or paid expenditures when goods or paid services have been received and payment is due during the year or soon thereafter Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent 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). 27 Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works (streets and highways), culture and recreation, community development, and interest on long-term debt. The business -type activities of the City include water, sewer, and surface water management. The government -wide financial statements start on page 41 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 government, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact by the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual 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 General fund, Grant fund, and Pavement Management Program fund, which are considered to be major funds. Data from the other governmental funds is presented as nonmajor. The City adopts an annual appropriated budget for its General fund and Nonmajor Special Revenue funds. A budgetary comparison statement has been provided for the General fund to demonstrate compliance with this budget. The basic governmental fund financial statements start on page 46 of this report. Proprietary Funds. Proprietary funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water, sewer, and surface water management operations. 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 each of the enterprise funds which are considered to be major funds of the City. The basic proprietary fund financial statements start on page 52 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements start on page 59 of this report. Supplementary Information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City's progress in funding its obligation to provide pension benefits and other post -employment benefits to its employees. Required supplementary information can be found on page 96 of this report. Other Information. The combining statements referred to earlier in connection with nonmajor governmental funds is presented following the notes to the financial statements. Combining and individual fund statements and schedules start on page 108 of this report. W-1 Government -wide Financial Analysis As noted earlier, net position may serve overtime as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources at the close of the most recent fiscal year. A portion of the City's net position reflects its investment in capital assets (e.g., land, buildings, infrastructure, 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's Summary of Net Position Governmental Activities Business -type Activities Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Assets Current and other assets $ 33,191,131 $ 31,618,730 $ 1,572,401 $ 13,496,336 $ 14,145,617 $ (649,281) Capital assets 72,533,901 72,230,374 303,527 79,102,235 80,531,259 (1,429,024) Total Assets 105,725,032 103,849,104 1,875,928 92,598,571 94,676,876 (2,078,305) Deferred Outflows of Resources Deferred other postemployment benefit resources 77,330 1,940 75,390 12,911 393 12,518 Deferred pension resources 2,695,101 3,061,196 (366,095) 586,895 743,917 (157,022) Total Deferred Outflows of Resources 2,772,431 3,063,136 (290,705) 599,806 744,310 (144,504) Liabilities Noncurrent liabilities outstanding 8,887,524 11,458,747 (2,571,223) 2,853,950 26,678,192 (23,824,242) Other liabilities 8,421,811 7,591,813 829,998 22,552,600 824,143 21,728,457 Total Liabilities 17,309,335 19,050,560 (1,741,225) 25,406,550 27,502,335 (2,095,785) Deferrred Inflows of Resources Deferred other postemployment benefit resources 59,689 55,481 4,208 9,966 11,211 (1,245) Deferred pension resources 2,676,175 395,946 2,280,229 173,263 32,474 140,789 Deferred lease resources 3,471,066 3,656,943 (185,877) - - - Total Deferred Inflows of Resources 6,206,930 4,108,370 2,098,560 183,229 43,685 139,544 Net Position Net investment in capital assets 67,404,190 68,702,496 (1,298,306) 56,649,651 56,585,833 63,818 Restricted 2,858,088 1,135,813 1,722,275 - - - Unrestricted 14,718,920 13,915,001 803,919 10,958,947 11,289,333 (330,386) Total Net Position Net Position as a Percent of Total Net investment in capital assets Restricted Unrestricted Total $ 84,981,198 $ 83,753,310 $ 1,227,888 $ 67,608,598 $ 67,875,166 $ (L 568) 79.3 i 82.0 i 83.8 i 83.4 i 3.4 1.4 - - 17.3 16.6 16.2 16.6 100.0 i 100.0 i 100.0 i 100.0 i An additional portion of the City's net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position for governmental activities and the net investment in capital assets for business -type activities. 29 Governmental Activities. Governmental activities increased the City's net position as shown below in the summary of changes in net position. Key elements of this increase are shown in the table below. City of Chanhassen's Changes in Net Position Governmental Activities Business -type Activities Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Revenues Program Revenues Charges for services $ 3,642,164 $ 2,931,203 $ 710,961 $ 10,999,440 $ 9,749,237 $ 1,250,203 Operating grants and contributions 4,556,281 2,552,195 2,004,086 46,458 47,850 (1,392) Capital grants and contributions 1,693,875 3,881,530 (2,187,655) 1,853,961 4,090,784 (2,236,823) General Revenues Taxes Property taxes 13,409,631 12,644,286 765,345 - - Tax increment 282,067 279,283 2,784 Franchise fees 2,045,767 2,036,470 9,297 Grants and contributions not restricted to specific programs 390,075 170,656 219,419 - - Unrestricted investment earnings 1,054,685 (824,062) 1,878,747 540,984 (434,818) 975,802 Other general revenues 126,114 - 126,114 - - Gain on sale of capital assets 164,746 155,654 9,092 - - Total Revenues 27,365,405 23,827,215 3,538,190 13,440,843 13,453,053 (12,210) Expenses General government 4,326,016 3,537,796 788,220 Public safety 5,825,937 4,396,715 1,429,222 Public works 10,646,546 11,350,075 (703,529) Culture and recreation 4,252,161 3,432,625 819,536 Community development 868,229 850,151 18,078 Interest on long-term debt 218,628 71,680 146,948 - - Water - - 5,782,514 7,301,583 (1,519,069) Sewer 5,359,316 6,548,611 (1,189,295) Surface water management - - - 2,565,581 4,489,250 (1,923,669) Total Expenses 26,137,517 23,639,042 2,498,475 13,707,411 18,339,444 (4,632,033) Increase (decrease) in net position before transfers 1,227,888 188,173 1,039,715 (266,568) (4,886,391) 4,619,823 Transfers - (334,918) 334,918 334,918 (334,918) Change in net position 1,227,888 (146,745) 1,374,633 (266,568) (4,551,473) 4,284,905 Net Position, January 1 83,753,310 83,900,055 (146,745) 67,875,166 72,426,639 (4,551,473) Net Position, December 31 $ 84,981,198 $ 83,753,310 $ 1,227,888 $ 67,608,598 $ 67,875,166 $ (266,568) 30 The following graph depicts various governmental activities and shows the revenue and expenses directly related to those activities. Expenses and Program Revenue - Governmental Activities $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 General Government Taxes 57.5% III L,_K_, - Public Safety Public Works Culture and Community Interest on Recreation Development Long-term Debt Expense Program Revenues Revenue by Source - Governmental Activities Charges for Other Services Operating Grants 4.9%1 13.4% \ I and Contributions _ 16.6% Capital Grants and .Contributions 6.2% Grants and Contributions Unrestricted 1.4% 31 Expense by Program - Governmental Activities Community Interest on Long - Development term Debt General Culture and 3 2°�° 0.8°i° Recreation _\ Government Public Safety 21.3% PUDIIC VVOrKS 38.9% Business -type Activities. Business -type activities decreased the City's net position as noted in the table above. Key elements of the changes are listed below: • Revenues in the business -type activities decreased mainly due to a decrease in capital grants and contributions for the year since there was a smaller amount of contributed assets for water, sewer, and surface water management. $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Expenses and Program Revenues - Business -type Activities Water Sewer Expenses Program Revenues Surface Water Management 32 Revenue by Source - Business -type Activities Operating Grants and Contribut -�- 0.3 % Capital Grants and Other Contributions 4 no/. Charges for Services 81.9% Expenses by Program - Business -type Activities Surface Water Management 9.4% 1 'ater 1.0% 33 Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Pavement Other General Grant Mgmt Prgm Governmental Prior Year Increase/ Fund Fund (PMP) Funds Total Total (Decrease) Fund Balances Nonspendable $ 63,227 $ $ $ 15,400 $ 78,627 $ 91,340 $ (12,713) Restricted - 1,193,139 1,691,720 2,884,859 1,167,396 1,717,463 Committed - - 344,647 344,647 - 344,647 Assigned 797,600 3,312,577 3,799,795 7,909,972 9,260,977 (1,351,005) Unassigned 8,011,272 - (1,002,175) 7,009,097 7,529,736 (520,639) Total Fund Balances $ 8,872,099 $ 1,193,139 $ 3,312,577 $ 4,849,387 $ 18,227,202 $ 18,049,449 $ 177,753 As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances as shown above. Additional information on the City's fund balances can be found in Note 1 starting on page 66 of this report. The General fund is the chief operating fund of the City. At the end of the current year, the fund balance of the General fund is shown in the table above. As a measure of the General fund's liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. The total unassigned fund balance percent of total fund expenditures is shown in the chart below along with total fund balance as a percentage of total expenditures. Current Year Prior Year Increase/ Ending Balance Ending Balance (Decrease) General Fund Fund Balances Nonspendable $ 63,227 $ 91,340 $ (28,113) Assigned 797,600 657,000 140,600 Unassigned 8,011,272 7,623,891 387,381 Total General Fund Balances $ 8,872,099 $ 8,372,231 $ 499,868 General Fund expenditures Unassigned as a percent of expenditures Total Fund Balance as a percent of expenditures Other governmental fund analysis is shown below: 14,087,518 12,658,415 56.9% 60.2% 63.0% 66.1 % December 31, December 31, 2023 2022 Increase/ (Decrease) Grant fund $ 1,193,139 $ (69,452) $ 1,262,591 The Grant fund balance increased during the year mainly due to the receipt of Public Safety Aid from the State of Minnesota. Pavement Management Program (PMP) fund $ 3,312,577 $ 4,319,679 $ (1,007,102) The Pavement Management Program (PMP) fund balance decreased during the year due to capital expenditures. These expenditures were associated with construction costs relating to the City's ongoing projects as part of the Pavement Management Program. 34 Proprietary Funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Net position of the City's proprietary funds is as follows: Ending Ending Net Position Net Position 2023 2022 Increase/ (Decrease) Water $ 35,087,132 $ 34,737,970 $ 349,162 The increase is primarily attributed to the charges for services and the capital contributions from connection fees during the year. Sewer $ 16,615,145 $ 17,372,908 $ (757,763) The decrease is primarily attributed to the operating loss during the year. Surface Water Management The increase is primarily attributed to capital contributions. General Fund Budgetary Highlights Revenues Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers in Transfer out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 $ 15,906,321 $ 15,764,288 $ 142,033 Final Budgeted Actual Variance with Amounts Amounts Final Budget $ 14,163,070 $ 14,577,386 $ 414,316 14,343,070 14,087,518 (255,552) (180,000) 489,868 669,868 180,000 180,000 - (170,000) (170,000) - 10,000 10,000 - (170,000) 499,868 669,868 8,372,231 8,372,231 - $ 8,202,231 $ 8,872,099 $ 669,868 The City's General fund budget was not amended during the year as shown above. Actual revenues were over the final budget and expenditures were under the final budget amounts as shown above. 35 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, 2023, is shown below in the schedule of capital assets (net of depreciation). This investment in capital assets includes land, structures, improvements, machinery and equipment, park facilities, and roads. Additional information on the City's capital assets can be found in Note 4 starting on page 70 of this report. Land Permanent easements Construction in progress Buildings and structures Right to use lease assets Machinery and equipment Other improvements Infrastructure Total Percent increase (decrease) City of Chanhassen's Capital Assets (Net of Depreciation/Amortization) Governmental Activities Business -type Activities Increase Increase 2023 2022 (Decrease) 2023 2022 (Decrease) $ 19,915,918 $ 19,915,918 $ $ 2,116,335 $ 2,116,335 $ 2,826,748 2,826,748 7,088,204 7,088,204 3,826,559 577,143 3,249,416 3,126,181 5,483,666 (2,357,485) 12,919,348 13,538,163 (618,815) 22,643,399 23,093,551 (450,152) 597,153 220,498 376,655 35,759 25,846 9,913 3,560,772 3,436,361 124,411 1,208,861 787,489 421,372 6,795,537 7,025,377 (229,840) 42,883,496 41,936,168 947,328 22,091,866 24,690,166 (2,598,300) $ 72,533,901 $ 72,230,374 $ 303,527 $ 79,102,235 $ 80,531,259 $ (1,429,024) 0.4% -1.8% Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding consisting solely of general obligation debt as noted in the table below. While all of the City's bonds have revenue streams, they are all backed by the full faith and credit of the City. The City leases multiple vehicles from Enterprise Rent -a -Car. As of December 31, 2023, the City had 26 outstanding vehicle leases, 16 of which were entered into during 2023. City of Chanhassen's Outstanding Debt Governmental Activities Business -type Activities Increase Increase 2023 2022 Decrease 2023 2022 Decrease General Obligation Bonds $ 3,015,000 $ 3,400,000 $ (385,000) $ $ - $ General Obligation Revenue Bonds - - 21,275,000 23,120,000 (1,845,000) Bond Premium 111,893 127,878 (15,985) 894,245 1,012,877 (118,632) Lease Payable 614,439 221,761 392,678 37,140 26,136 11,004 Total $ 3,741,332 $ 3,749,639 $ (8,307) $ 22,206,385 $ 24,159,013 $ (1,952,628) Percent increase (decrease) -0.2% -8.1 % The City's total debt decreased during the current fiscal year. The key factor in the decrease was scheduled bond principal payments. Additional information on the City's long-term debt can be found in Note 8 starting on page 74 of this report. 36 Economic Factors and Next Year's Budget and Rates The City's elected officials considered many factors when setting the fiscal year 2024 budget, rates, and fees. These considerations included, but are not limited to, the following: • The City participates in several long-term planning processes that align with the City's budget process. The strategic plan and comprehensive plan form the basis for the City's operating and capital budgets. • The City will use the remaining allocation of American Rescue Plan Act (ARPA) funds for construction of the Lake Ann Park Preserve Project. • High inflation rates continue to impact several budget line items for 2024. • The City's contract with the County Sheriff for policing services increased nearly 12.6 percent from 2023 due to the approved union contract. • The 2024 budget includes one new full-time firefighter. Over the last several years the City has shifted to staffing with more full-time firefighters, however paid -on -call firefighters will continue to be an integral part of the department as both work together on weekend and overnight shifts. • The budget maintains planned, modest annual increases in funding levels for transportation/routine road maintenance, pavement management/street reconstruction, trail maintenance, and capital equipment. • The City's goal is to maintain road conditions in the City to achieve a stable score of 70 on the Pavement Condition Index (PCI). • The City contracted for a utility rate study analysis to determine rates for 2023 and beyond given the increased capital and operating costs for each utility. The 2024 rates from the study are incorporated into the utility fund budgets. The City's adopted budget for 2024 includes a property tax levy of $14,455,000, which is a 7.37 percent increase over the previous year. The City's growth in tax capacity was approximately 4.2 percent and the tax rate increased approximately 3.7 percent, from 20.20 percent to 20.94 percent. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, City of Chanhassen, 7700 Market Boulevard, P.O. Box 147, Chanhassen, Minnesota 55317. 37 THIS PAGE IS LEFT BLANK INTENTIONALLY GOVERNMENT -WIDE FINANCIAL STATEMENTS CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 39 THIS PAGE IS LEFT BLANK INTENTIONALLY 40 City of Chanhassen, Minnesota Statement of Net Position December 31, 2023 Assets Cash and investments Receivables Accounts Accrued interest Taxes Leases Special assessments Due from other governments Inventories Prepaid items Capital assets Land and construction in progress Depreciable assets (net of accumulated depreciation and amortization) Total Assets Deferred Outflows of Resources Deferred pension resources Deferred other postemployment benefit resources Total Deferred Outflows of Resources Liabilities Accounts and contracts payable Accrued salaries Accrued interest payable Due to other governments Deposits payable Unearned revenue Noncurrent liabilities Due within one year Long-term liabilities Due in more than one year Long-term liabilities Other postemployment benefits liability Net pension liability Total Liabilities Deferred Inflows of Resources Deferred pension resources Deferred other postemployment benefit resources Deferred lease resources Total Deferred Inflows of Resources Net Position Net investment in capital assets Restricted for Park improvements Tax increments Public safety Debt service Communications Unrestricted Total Net Position Governmental Business -type Activities Activities Total $ 24,270,340 $ 11,992,838 $ 36,263,178 654,554 953,692 1,608,246 118,690 60,698 179,388 119,190 - 119,190 3,471,066 - 3,471,066 2,683,032 241,560 2,924,592 1,795,632 55,082 1,850,714 - 192,434 192,434 78,627 32 78,659 26,569,225 12,330,720 38,899,945 45,964,676 66,771,515 112,736,191 105,725,032 92,598,571 198,323,603 2,695,101 586,895 3,281,996 77,330 12,911 90,241 2,772,431 599,806 3,372,237 2,952,999 136,601 26,771 357,410 2,080,432 2,399,320 933,991 3,934,988 219,074 4,267,749 17,309,335 617,792 44,652 274,224 95,748 1,230 1,820,304 20,669,693 36,577 1,846,330 25,406,550 3,570,791 181,253 300,995 453,158 2,080,432 2,400,550 2,754,295 24,604,681 255,651 6,114,079 42,715,885 2,676,175 173,263 2,849,438 59,689 9,966 69,655 3,471,066 - 3,471,066 6,206,930 183,229 6,390,159 67,404,190 56,649,651 124,053,841 848,781 - 848,781 39,192 - 39,192 1,252,418 - 1,252,418 673,860 - 673,860 43,837 - 43,837 14,718,920 10,958,947 25,677,867 S 84,981,198 S 67,608,598 8152,589,796 The notes to the financial statements are an integral part of this statement. 41 City of Chanhassen, Minnesota Statement of Activities For the Year Ended December 31, 2023 Program Revenues Operating Capital Charges For Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental activities General government $ 4,326,016 $ 952,621 $ 1,134,967 $ 8,730 Public safety 5,825,937 1,556,441 562,872 - Public works 10,646,546 81,253 2,834,610 1,685,145 Culture and recreation 4,252,161 1,007,606 23,832 - Community development 868,229 44,243 - - Interest on long-term debt 218,628 - - - Total Governmental Activities 26,137,517 3,642,164 4,556,281 1,693,875 Business -type Activities Water 5,782,514 5,193,977 5,794 680,763 Sewer 5,359,316 3,998,048 - 332,038 Surface water management 2,565,581 1,807,415 40,664 841,160 Total Business -type Activities 13,707,411 10,999,440 46,458 1,853,961 Total Governmental and $ 39,844,928 $ 14,641,604 $ 4,602,739 $ 3,547,836 Business -type Activities General Revenues Taxes Property taxes, levied for general purposes Tax increments Franchise fees Grants and contributions not restricted to specific programs Unrestricted investment earnings Other general revenues Gain on sale of capital assets Total General Revenues Change in Net Position Net Position - January 1 Net Position - December 31 The notes to the financial statements are an integral part of this statement. 42 Net (Expenses) Revenues and Changes in Net Position Primary Government Governmental Business -type Activities Activities Total $ (2,229,698) $ - $ (2,229,698) (3,706,624) - (3,706,624) (6,045,538) - (6,045,538) (3,220,723) - (3,220,723) (823,986) - (823,986) (218,628) - (218,628) (16,245,197) - (16,245,197) - 98,020 98,020 - (1,029,230) (1,029,230) - 123,658 123,658 - (807,552) (807,552) (16,245,197) (807,552) (17,052,749) 13,409,631 - 13,409,631 282,067 - 282,067 2,045,767 - 2,045,767 390,075 - 390,075 1,054,685 540,984 1,595,669 126,114 - 126,114 164,746 - 164,746 17,473,085 540,984 18,014,069 1,227,888 (266,568) 961,320 83,753,310 67,875,166 151,628,476 $ 84,981,198 $ 67,608,598 $152,589,796 The notes to the financial statements are an integral part of this statement. 43 THIS PAGE IS LEFT BLANK INTENTIONALLY 44 FUND FINANCIAL STATEMENTS CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 45 Assets Cash and investments Receivables Accounts Accrued interest Taxes Leases Special assessments Interfund loan Due from other governments Prepaid items Total Assets Liabilities Accounts payable Accrued salaries payable Contracts payable Due to other governments Due to other funds Deposits payable Unearned revenue Total Liabilities Deferred Inflows of Resources Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - special assessments Deferred lease resources Total Deferred Inflows of Resources Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances City of Chanhassen, Minnesota Balance Sheet Governmental Funds December 31, 2023 212 General Grant Fund $ 10,542,960 $ 3,524,535 601 Pavement Mgmt Prgm (PMP) $ 3,615,782 Other Governmental Funds Total $ 6,587,063 $ 24,270,340 79,594 - 476,230 98,730 654,554 56,339 13,830 17,586 30,935 118,690 105,690 - 4,565 8,935 119,190 3,471,066 - - 3,471,066 555 2,366,034 316,443 2,683,032 851,263 - - 851,263 137,522 1,418,324 239,786 1,795,632 63,227 - 15,400 78,627 $ 15,308,216 $ 3,538,365 $ 7,898,521 $ 7,297,292 $ 34,042,394 $ 338,895 $ $ 570,279 $ 1,104,173 $ 2,013,347 136,601 - - 136,601 - 774,305 165,347 939,652 317,236 29,495 10,679 357,410 - - 851,263 851,263 2,080,432 - - 2,080,432 49,765 2,345,226 4,329 - 2,399,320 2,922,929 2,345,226 1,378,408 2,131,462 8,778,025 - - 844,201 - 844,201 41,567 - - 41,567 555 2,363,335 316,443 2,680,333 3,471,066 - - 3,471,066 3,513,188 3,207,536 316,443 7,037,167 63,227 - - 15,400 78,627 - 1,193,139 1,691,720 2,884,859 - - - 344,647 344,647 797,600 3,312,577 3,799,795 7,909,972 8,011,272 - - (1,002,175) 7,009,097 8,872,099 1,193,139 3,312,577 4,849,387 18,227,202 $ 15,308,216 $ 3,538,365 $ 7,898,521 $ 7,297,292 $ 34,042,394 The notes to the financial statements are an integral part of this statement. 46 City of Chanhassen, Minnesota Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds December 31, 2023 Amounts reported for the governmental activities in the statement of net position are different because Total Fund Balances - Governmental Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Cost of capital assets Less accumulated depreciation Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of Bond principal payable Unamortized premiums on bonds Project financing Leases payable Compensated absences payable Other postemployment benefits payable Pension liability Some receivables are not available soon enough to pay for the current period's expenditures, and therefore are reported as unavailable in the funds. Property taxes receivable Special assessments receivable Intergovernmental Governmental funds do not report long-term amounts related to pensions and other post -employment benefits. Deferred outflows of pension resources Deferred inflows of pension resources Deferred outflows of OPEB resources Deferred inflows of OPEB resources Governmental funds do not report a liability for accrued interest until due and payable. Total Net Position - Governmental Activities $ 18,227,202 203,727,401 (131,193,500) (3,015,000) (111,893) (448,727) (614,439) (678,920) (219,074) (4,267,749) 41,567 2,680,333 844,201 2,695,101 (2,676,175) 77,330 (59,689) (26,771) $ 84,981,198 The notes to the financial statements are an integral part of this statement. 47 Revenues Taxes Tax increments Licenses and permits Intergovernmental Charges for services Franchise fees Fines and forfeits Special assessments Investment earnings Miscellaneous Total Revenues Expenditures Current General government Public safety Public works Culture and recreation Community development Capital outlay General government Public safety Public works Culture and recreation Community development Debt service Principal Interest and other charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Sale of capital assets Transfers in Issuance of leases Transfers out Total Other Financing Sources (Uses) Net Changes in Fund Balances Fund Balances, January 1 Fund Balances, December 31 City of Chanhassen, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2023 601 PMP Pavement 212 Management General Grant Fund Capital Other Governmental Funds Total $ 10,689,452 $ - $ 918,000 $ 1,796,000 $ 13,403,452 - - - 282,067 282,067 1,528,524 - - 424,099 1,952,623 521,586 1,513,590 578,749 1,412,480 4,026,405 1,026,121 - - 1,900 1,028,021 143,187 - 1,902,580 - 2,045,767 76,295 - - - 76,295 - - 1,310,047 8,730 1,318,777 467,266 127,624 187,861 272,330 1,055,081 124,955 - - 163,706 288,661 14,577,386 1,641,214 4,897,237 4,361,312 25,477,149 3,342,084 - 162,839 3,504,923 4,820,264 - - 4,820,264 2,521,038 - - 2,521,038 2,752,491 - - 2,752,491 651,641 - - 651,641 - - 1,496,187 1,496,187 - - - 304,133 304,133 - - 5,759,339 2,320,349 8,079,688 - - - 830,158 830,158 - - - 273,621 273,621 - - 145,000 595,208 740,208 - - - 125,527 125,527 14,087,518 - 5,904,339 6,108,022 26,099,879 489,868 1,641,214 (1,007,102) (1,746,710) (622,730) - - - 293,907 293,907 180,000 - - 613,623 793,623 - - - 506,576 506,576 (170,000) (378,623) - (245,000) (793,623) 10,000 (378,623) - 1,169,106 800,483 499,868 1,262,591 (1,007,102) (577,604) 177,753 8,372,231 (69,452) 4,319,679 5,426,991 18,049,449 $ 8,872,099 $ 1,193,139 $ 3,312,577 $ 4,849,387 $ 18,227,202 The notes to the financial statements are an integral part of this statement. 48 City of Chanhassen, Minnesota Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Governmental Funds For the Year Ended December 31, 2023 Amounts reported for governmental activities in the statement of activities are different because Total Net Change in Fund Balances $ 177,753 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. This is the amount by which capital outlays exceeded depreciation in the current period. Depreciation expense (4,423,346) Capital outlays 4,856,034 Governmental funds report a gain (loss) on sale of capital assets to the extent of cash exchanged, whereas the disposition of the assets book value is included in the total gain (loss) in the statement of activities. Disposals (978,785) Depreciation on disposals 849,624 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of 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 effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Principal repayments on bonds 385,000 Principal repayments on leases 113,898 Principal repayments on project financing 241,310 Leases issued (506,576) Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. 4,812 Governmental funds report debt issuance premiums and discounts as an other financing source or use at the time of issuance. Premiums and discounts are reported as an unamortized asset or liability in the city-wide financial statements. Amortization of bond premiums and discount 15,985 Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Special assessments 374,278 Property taxes (4,486) Intergovernmental 844,201 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. Compensated absences and other postemployment benefit payable 76,301 Long-term pension activity is not reported in governmental funds. Pension expense (801,056) Direct aid contributions 2,941 Change in Net Position - Governmental Activities $ 1,227,888 The notes to the financial statements are an integral part of this statement. 49 THIS PAGE IS LEFT BLANK INTENTIONALLY 50 City of Chanhassen, Minnesota Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended December 31, 2023 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 10,749,000 $ 10,749,000 $ 10,689,452 $ (59,548) Franchise fees 154,000 154,000 143,187 (10,813) Licenses and permits 1,579,475 1,579,475 1,528,524 (50,951) Intergovernmental 447,795 447,795 521,586 73,791 Charges for services 961,900 961,900 1,026,121 64,221 Fines and forfeits 75,000 75,000 76,295 1,295 Investment earnings 140,000 140,000 467,266 327,266 Miscellaneous 55,900 55,900 124,955 69,055 Total Revenues 14,163,070 14,163,070 14,577,386 414,316 Expenditures Current General government Public safety Public works Culture and recreation Community development Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 3,325,973 3,325,973 3,342,084 (16,111) 5,116,961 5,116,961 4,820,264 296,697 2,603,669 2,603,669 2,521,038 82,631 2,684,850 2,684,850 2,752,491 (67,641) 611,617 611,617 651,641 (40,024) 14,343,070 14,343,070 14,087,518 255,552 (180,000) (180,000) 489,868 669,868 180,000 180,000 180,000 - (170,000) (170,000) (170,000) - 10,000 10,000 10,000 - (170,000) (170,000) 499,868 669,868 8,372,231 8,372,231 8,372,231 - $ 8,202,231 $ 8,202,231 $ 8,872,099 $ 669,868 The notes to the financial statements are an integral part of this statement. 51 City of Chanhassen, Minnesota Statement of Net Position Proprietary Funds December 31, 2023 Assets Current Assets Cash and investments Receivables Accounts Accrued interest Special assessments Due from other funds Due from other governments Inventory Prepaid expenses Total Current Assets Noncurrent Assets Special assessments Capital assets Land Land improvements Construction in progress Improvements Leased equipment Buildings Machinery and equipment Less accumulated depreciation/amortization Total Capital Assets (Net of Accumulated Depreciation/Amortization) Total Assets Deferred Outflows of Resources Deferred other postemployment benefit resources Deferred pension resources Total deferred outflows of resources Total Assets and Deferred Outflows of Resources Liabilities Current Liabilities Accounts payable Contracts payable Accrued salaries Accrued interest payable Unearned revenue Due to other governments Due to other funds Lease liability - current Bonds payable - current Compensated absences payable - current Total Current Liabilities Water Business -type Activities - Enterprise Funds Sewer Surface Water Management Totals $ 6,113,338 $ 5,874,424 $ 5,076 $ 11,992,838 326,708 377,711 249,273 953,692 30,768 29,434 496 60,698 140,544 - - 140,544 85,000 - - 85,000 3,438 1,710 49,934 55,082 192,434 - - 192,434 16 9 7 32 6,892,246 6,283,288 304,786 13,480,320 79,569 21,447 - 101,016 1,370,974 145,550 599,811 2,116,335 2,433,426 2,327,389 2,327,389 7,088,204 758,794 1,132,563 1,234,824 3,126,181 56,658,433 36,920,878 34,202,564 127,781,875 24,450 24,450 - 48,900 28,189,035 - - 28,189,035 907,216 964,608 776,651 2,648,475 (41,299,571) (29,127,417) (21,469,782) (91,896,770) 49,042,757 12,388,021 17,671,457 79,102,235 56,014,572 18,692,756 17,976,243 92,683,571 7,281 3,668 1,962 12,911 185,618 172,495 228,782 586,895 192,899 176,163 230,744 599,806 $ 56,207,471 $ 18,868,919 $ 18,206,987 $ 93,283,377 $ 68,130 $ 64,808 $ 84,062 $ 217,000 92,564 62,029 246,199 400,792 16,330 12,627 15,695 44,652 249,745 14,146 10,333 274,224 - - 1,230 1,230 1,281 57,275 37,192 95,748 - - 85,000 85,000 5,709 5,709 - 11,418 1,470,000 165,000 120,000 1,755,000 20,250 15,386 18,250 53,886 1,924,009 396,980 617,961 2,938,950 The notes to the financial statements are an integral part of this statement. 52 City of Chanhassen, Minnesota Statement of Net Position (Continued) Proprietary Funds December 31, 2023 Noncurrent Liabilities Compensated absences Lease liability Bonds payable Net OPEB obligation Net pension liability Total Noncurrent Liabilities Total Liabilities Deferred Inflows of Resources Deferred other postemployment benefit resources Deferred pension resources Total deferred inflows of resources Net Position Net investment in capital assets Unrestricted Total Net Position Total Liabilities, Deferred Inflows of Resources and Net Position Water Business -type Activities - Enterprise Funds Sewer Surface Water Management Total $ 86,328 $ 65,595 $ 77,803 $ 229,726 12,861 12,861 - 25,722 18,367,422 1,181,204 865,619 20,414,245 20,626 10,392 5,559 36,577 614,419 538,118 693,793 1,846,330 19,101,656 1,808,170 1,642,774 22,552,600 21,025,665 2,205,150 2,260,735 25,491,550 5,620 2,832 1,514 9,966 89,054 45,792 38,417 173,263 94,674 48,624 39,931 183,229 29,186,765 11,023,247 16,439,639 56,649,651 5,900,367 5,591,898 (533,318) 10,958,947 35,087,132 16,615,145 15,906,321 67,608,598 $ 56,207,471 $ 18,868,919 $ 18,206,987 $ 93,283,377 The notes to the financial statements are an integral part of this statement. 53 THIS PAGE IS LEFT BLANK INTENTIONALLY 54 Operating Revenues Charges for services Intergovernmental Total Operating Revenues Operating Expenses Salaries and benefits Materials and Supplies Professional services Utilities Insurance Repairs and maintenance Depreciation Other Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses) Investment income Refunds and reimbursements Interest expense and fiscal charges Total Nonoperating Revenues(Expenses) Income (Loss) Before Contributions and Transfers Capital Contributions Contributions of capital assets Intergovernmental Connection charges Transfers In Transfers Out Change in Net Position Net Position, January 1 Net Position, December 31 City of Chanhassen, Minnesota Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2023 Business -type Activities - Enterprise Funds Surface Water Water Sewer Management Total $ 5,191,436 $ 3,991,372 $ 1,804,577 $ 10,987,385 5,794 - 40,664 46,458 5,197,230 3,991,372 1,845,241 11,033,843 1,128,987 750,566 951,969 2,831,522 340,047 83,625 46,366 470,038 149,580 2,849,190 300,043 3,298,813 414,702 60,352 - 475,054 20,000 20,000 7,500 47,500 913,708 464,500 127,255 1,505,463 1,915,911 923,644 933,433 3,772,988 385,280 185,310 184,705 755,295 5,268,215 5,337,187 2,551,271 13,156,673 (70,985) (1,345,815) (706,030) (2,122,830) 256,565 276,890 7,529 540,984 2,541 6,676 2,838 12,055 (514,299) (22,129) (14,310) (550,738) (255,193) 261,437 (3,943) 2,301 (326,178) (1,084,378) (709,973) (2,120,529) - 26,239 - 66,173 680,763 239,626 (5,423) (5,423) 129,460 155,699 - 66,173 711,700 1,632,089 10,846 10,846 - (10,846) 349,162 (757,763) 142,033 (266,568) 34,737,970 17,372,908 15,764,288 67,875,166 $ 35,087,132 $ 16,615,145 $ 15,906,321 $ 67,608,598 The notes to the financial statements are an integral part of this statement. 55 Cash Flows from Operating Activities Receipts from customers and users Payments to suppliers Payments to employees Net Cash Provided (Used) by Operating Activities Cash Flows from Noncapital Financing Activities Receipts (payments) from (to) other funds Transfers in Transfers out Net Cash Provided (Used) by Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities Acquisition of capital assets Connection charges Intergovernmental revenue Principal paid on bonds Principal paid on leases Interest and fiscal charges Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities Interest received from investments Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, January 1 Cash and Cash Equivalents, December 31 City of Chanhassen, Minnesota Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2023 Water Business -type Activities - Enterprise Funds Sewer Surface Water Management Total $ 5,495,667 $ 4,383,917 $ 1,924,410 $ 11,803,994 (2,159,798) (3,572,439) (707,234) (6,439,471) (1,131,395) (759,680) (841,986) (2,733,061) 2,204,474 51,798 375,190 2,631,462 (279,356) - 85,000 (194,356) 10,846 10,846 (5,423) (5,423) - (10,846) (284,779) (5,423) 95,846 (194,356) (228,929) (117,028) (1,902,246) (2,248,203) 680,763 239,626 711,700 1,632,089 - 66,173 - 66,173 (1,502,500) (227,500) (115,000) (1,845,000) (4,522) (4,523) (9,045) (626,667) (38,933) (26,684) (692,284) (1,681,855) (82,185) (1,332,230) (3,096,270) 259,281 277,902 17,074 554,257 497,121 242,092 (844,120) (104,907) 5,616,217 5,632,332 849,196 12,097,745 $ 6.113.338 $ 5,874,424 $ 5,076 $ 11,992,838 The notes to the financial statements are an integral part of this statement. 56 City of Chanhassen, Minnesota Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended December 31, 2023 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) By Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Miscellaneous revenue (Increase) decrease in assets/deferred outflows of resources Accounts receivable Due from other governments Special Assessments Inventory Prepaid items Deferred pension resources Deferred other post employment benefits Increase (decrease) in liabilities/deferred inflows of resources Due to other governments Accounts payable Contracts payable Salaries payable Compensated absences payable Other postemployment benefits payable Deferred pension resources Deferred post employment benefits Net pension liability Net Cash Provided (Used) by Operating Activities Supplemental Schedule of Noncash Capital and Related Financing Activities Amortization of bond discounts Purchase of capital assets on account Contributions of capital assets Assets acquired through a lease Disposal of capital assets Water Business -type Activities - Enterprise Funds Sewer Surface Water Management Total (70,985) $ (1,345,815) $ (706,030) $ (2,122,830) 1,915,911 923,644 933,433 3,772,988 2,541 6,676 2,838 12,055 320,693 358,508 84,222 763,423 (1,945) 48,808 (7,891) 38,972 (22,852) (21,447) (44,299) 31,559 - - 31,559 6,795 5,284 3,289 15,368 75,940 35,253 45,829 157,022 (7,110) (3,537) (1,871) (12,518) (4,419) - 6,936 2,517 (7,228) 30,643 34,989 58,404 36,812 54,611 (86,579) 4,844 108 1,515 165,450 167,073 (8,021) (10,099) (15,067) (33,187) 8,263 939 (986) 8,216 77,636 36,723 26,430 140,789 733 (905) (1,073) (1,245) (149,957) (69,003) (108,729) (327,689) $ 2,204,474 $ 51,798 $ 375,190 $ 2,631,462 $ 93,328 $ 14,368 $ 10,936 $ 118,632 166,179 166,179 26,239 129,460 5,699 10,025 10,024 - 20.049 $ 22,107 $ 22,107 $ $ 44,214 The notes to the financial statements are an integral part of this statement. 57 THIS PAGE IS LEFT BLANK INTENTIONALLY WE City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies A. Reporting Entity The City of Chanhassen, Minnesota (the City) was incorporated in 1967 and operates under the State of Minnesota Statutory Plan B form of government. The governing body consist 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. 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 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 City 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. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 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. 59 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current 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, franchise taxes, licenses 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. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are measurable and become available. Non -exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non - exchange transactions must also be available before it can be recognized. Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) 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 accounts for the revenues and expenditures related to federal and state financial assistance programs. The Pavement Management Program (PMP) 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, annual tax levy, and franchise fees. 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. As a general rule the effect of interfund activity has been eliminated from government -wide financial statements. Exceptions to this general rule are payments -in -lieu of taxes and other charges between the City's water and sewer function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds 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. Deposits and Investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. The proprietary funds' portion in the government -wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of the statement of cash flows. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. 61 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) The City may also invest idle funds as authorized by Minnesota statutes, as follows: 1. Direct obligations or obligations guaranteed by the United States or its agencies. 2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less. 3. General obligations of a state or local government with taxing powers which is rated "A" or better; revenue obligations rated "AA" or better. 4. General obligations of the Minnesota Housing Finance Agency rated "A" or better. 5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55. 6. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. 7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less. 8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions qualified as a "depository' by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker -dealers. 9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency. Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the shares. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City has the following recurring fair value measurements as of December 31, 2023: • US government agency securities of $7,452,977 are valued using quoted market prices (Level 1 inputs) • Municipal securities of $10,895,698 are valued using quoted market prices (Level 2 inputs) • Brokered certificates of deposit of $7,357,579 are valued using a matrix pricing model (Level 2 inputs) 62 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) Investment Policy The City's investment policy incorporates Minnesota statutes as described above which reduces the City's exposure to credit, custodial credit and interest rate risks. Specific risk information for the City is as follows: • Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota statutes and the City's investment policy limit the City's investments to the list above. • Custodial Credit Risk. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City's investment policy does not address custodial credit risk but typically limits its exposure by purchasing insured or registered investments. • Concentration of Credit Risk. Concentration of credit risk is the risk of loss 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). • Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will 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. They 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. E. Property Taxes The City Council annually adopts a tax levy in December and certifies it to the County for collection the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County Treasurer and tax settlements are made to the City during January, July and December each year. Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a deferred inflow of resources for taxes not received within 60 days after year end in the fund financial statements. F. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. The City annually certifies delinquent utility accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts established. G. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivable upon certification to the County. Special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All governmental special assessments receivable are offset by deferred inflows of resources in the fund financial statements. 63 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) H. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non -current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Inventories and Prepaid Items Inventories of materials and supplies are recorded at cost, which approximates market, using the first in, first out (FIFO) method. Inventories consist of expendable supplies held for consumption. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. J. Lease Receivable The City's lease receivable is measured at the present value of lease payments expected to be received during the lease term. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized on a straight-line basis over the term of the lease. K. Capital Assets 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 two years. As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. In the case of donations, the City values these capital assets at the estimated fair value of the item at the date of its donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Property, plant and equipment of the City are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and structures 10 - 30 Machinery and equipment (including software) 3 - 10 Drainage systems 30 Water and sewer lines 30 Streets 30 Trails 25 Sidewalks 25 Other improvements 10 - 25 Temporary easements 2 64 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) L. Deferred Outflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. Accordingly, the items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year pension/OPEB contributions made subsequent to the measurement dates. 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. The General fund is typically used to liquidate governmental compensated absences. N. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/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. The General fund is typically used to liquidate the governmental net pension liability. The total pension expense for the General Employee Plan, Police and Fire Plan, PEDCP, and Chanhassen Fire Relief Association is as follows: GERF PEPFF PEDCP FRA Total City's proportionate share $ 883,394 $ 601,126 $ 2,474 $ 141,870 $ 1,628,864 Proportionate share of State's contribution 567 (2,118) - (1,551) Total pension expense $ 883,961 $ 599,008 $ 2,474 $ 141,870 $ 1,627,313 0. Long-term Obligations In the government -wide financial statements, long-term debt is reported as a liability in the statement of net position. The recognition of bond premiums and discounts are delayed and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as an expense in the period incurred. In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 65 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) P. Deferred Inflows of Resources In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under a modified accrual basis of accounting, that qualifies as needing to be reported in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from three sources: property taxes, special assessments, and intergovernmental revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Furthermore, the City has additional items which qualify for reporting in this category on the statement of net position. The items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position and results from actuarial calculations involving net differences between projected and actual earnings on plan investments and changes in proportions. Furthermore, the City reports deferred lease resources related to cell tower leases and is recorded under GASB 87, which is reported in the governmental funds and the statement of net position. Q. Fund Balance In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These classifications are defined as follows: Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of the City Council, which is the City's highest level of decision -making authority. Committed amounts cannot be used for any other purpose unless the City Council modifies or rescinds the commitment by resolution. Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established by the City Council itself or by an official to which the governing body delegates the authority. The City Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City Manager and/or Finance Director. Unassigned -The residual classification for the General fund and also 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. 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. City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) R. Net Position In the government -wide financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net position is displayed in three components: a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b. Restricted net position - Consists of net position balances restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. c. Unrestricted net position -All other net position balances that do not meet the definition of "restricted" or "net investment in capital assets". When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Note 2: Stewardship, Compliance and Accountability A. Budgetary Information An annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America for the General fund and for the Charitable Gambling, Cemetery and Cable TV Special Revenue funds. The City does not budget for the Grant major special revenue fund as it is not legally required to do so. All annual appropriations lapse at fiscal year-end. The City does not use encumbrance accounting. The City Council adopts budgets prior to January 1. The budgets are prepared by fund, function, and activities. The budgets are adopted on a basis consistent with generally accepted accounting principles and all appropriations lapse at the end of the budget year to the extent that they have not been expended. The expenditures appropriated in the budget resolution may not legally exceed estimated revenues available from various sources. 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. Formal budgetary integration is employed as a management control device during the year. Budget revisions between functions or activities may be made by the City Manager. Budget revisions at the fund level are authorized by the City Council in accordance with the City Charter at the request of the City Manager. The legal level of budgetary control is therefore at the fund level. There were no budget amendments made in 2023 in the General fund and the Special Revenue funds. All budget amendments are approved based on unanticipated expenditures and revenues encountered during the year. B. Deficit Fund Balance As of December 31, 2023, the following funds reported deficit fund balance: Fund Nonmajor Civic Campus Lake Place Senior Apt TIF #12 Amount 975,263 26,912 The deficits are expected to be eliminated with future revenues related to tax collections, transfers from other funds, and bond proceeds related to the civic campus project. 67 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Deposits and Investments Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and investments may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The fair value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, with the exception of irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral pledged equal to 100 percent of the deposits not covered by insurance or bonds. Authorized collateral in lieu of a corporate surety bond includes: • United States government Treasury bills, Treasury notes, Treasury bonds; • Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; • General obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; • General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; • Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's Corporation; and • Time deposits that are fully insured by any federal agency. Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection should be approved by the government entity. Investments are carried at fair value. Investment and dividend income are recognized as revenue when earned. At year end, the City's carrying amount of deposits was $1,919,580 and the bank balance was $1,915,177. Of the bank balance, $250,000 was covered by federal depository insurance and the remaining was covered by collateral in the City's name. a*.] City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 3: Deposits and Investments (Continued) Investments As of December 31, 2023, the City had the following investments that are insured or registered, or securities held by the City or its agent in the City's name. Credit Segmented Quality/ Time Types of Investments Ratings (1) Distribution (2) Pooled Investments at Amortized Costs Brokered money market N/A Less than 1 year Fair Value Measurement Using Amount Level Level $ 8,636,709 $ - $ Non -pooled Investments at Fair Value U.S. government agency securities N/A Less than 1 year 1,704,428 1,704,428 U.S. government agency securities N/A 1 to 3 years 1,433,745 1,433,745 U.S. government agency securities N/A More than 3 years 4,314,804 4,314,804 - Municipal securities A+ Less than 1 year 298,488 - 298,488 Municipal securities AA- More than 3 years 451,840 451,840 Municipal securities AA Less than 1 year 149,696 149,696 Municipal securities AA 1 to 3 years 661,517 661,517 Municipal securities AA More than 3 years 493,430 493,430 Municipal securities AA+ 1 to 3 years 1,001,176 1,001,176 Municipal securities AA+ More than 3 years 846,760 846,760 Municipal securities AAA Less than 1 year 1,476,310 1,476,310 Municipal securities AAA 1 to 3 years 2,627,350 2,627,350 Municipal securities AAA More than 3 years 2,889,131 2,889,131 Brokered certificates of deposit N/A Less than 1 year 2,189,766 2,189,766 Brokered certificates of deposit N/A 1 to 3 years 4,118,332 4,118,332 Brokered certificates of deposit N/A More than 3 years 1,049,481 - 1,049,481 Total Investments $ 34,342,963 $ 7,452,977 $ 18,253,277 (1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk. (2) Interest rate risk is disclosed using the segmented time distribution method. N/A Indicates not applicable or available. A reconciliation of cash and investments as shown on the statement of net position for the City follows: Primary Government Deposits $ 1,919,580 Investments 34,342,963 Petty Cash 635 Total $ 36,263,178 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 4: Capital Assets Capital asset activity for the year ended December 31, 2023 was as follows: Governmental Activities Capital Assets not being Depreciated Land Permanent easements Construction in progress Total Capital Assets not being Depreciated Capital Assets, being Depreciated/Amortized Buildings and structures Temporary easements Right to use lease assets Machinery and equipment Other improvements Infrastructure Total Capital Assets being Depreciated/Amortized Less Accumulated Depreciation/Amortization for Buildings and structures Temporary easements Right to use lease assets Machinery and equipment Other improvements Infrastructure Total Accumulated Depreciation/Amortization Total Capital Assets being Depreciated/Amortized, Net Governmental Activities Capital Assets, Net Beginning Ending Balance Increases Decreases Balance $ 19,915,918 $ $ $ 19,915,918 2,826,748 2,826,748 577,143 3,335,466 (86,050) 3,826,559 23,319,809 3,335,466 (86,050) 26,569,225 24,852,984 - 24,852,984 3,436,870 - 3,436,870 243,263 506,576 749,839 9,927,608 749,047 (894,042) 9,782,613 12,582,737 264,945 (84,743) 12,762,939 125,486,881 86,050 125,572,931 176,530,343 1,606,618 (978,785) 177,158,176 (11,314,821) (618,815) (11,933,636) (3,436,870) (3,436,870) (22,765) (129,921) - (152,686) (6,491,247) (495,475) 764,881 (6,221,841) (5,557,360) (494,785) 84,743 (5,967,402) (100,796,715) (2,684,350) - (103,481,065) (127,619,778) (4,423,346) 849,624 (131,193,500) 48,910,565 (2,816,728) (129,161) 45,964,676 $ 72,230,374 $ 518,738 $ (215.211) $ 72,533,901 70 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 4: Capital Assets (Continued) Business -type Activities Capital Assets not being Depreciated Land Permanent easements Construction in progress Total Capital Assets not being Depreciated Capital Assets being Depreciated/Amortized Buildings and structures Right to use lease assets Machinery and equipment Other improvements Total Capital Assets being Depreciated/Amortized Less Accumulated Depreciation/Amortization for Buildings and structures Right to use lease assets Machinery and equipment Other improvements Total Accumulated Depreciation/Amortization Total Capital Assets being Depreciated/Amortized, Net Business -type Activities Capital Assets, Net Beginning Ending Balance Increases Decreases Balance $ 2,116,335 $ - $ - $ 2,116,335 7,088,204 - - 7,088,204 5,483,666 867,459 (3,224,944) 3,126,181 14,688,205 867,459 (3,224,944) 12,330,720 28,077,578 111,458 - 28,189,036 28,852 20,049 - 48,901 2,119,199 579,231 (49,957) 2,648,473 123,785,425 3,996,450 - 127,781,875 154,011,054 4,707,188 (49,957) 158,668,285 (4,984,027) (561,610) - (5,545,637) (3,006) (10,136) - (13,142) (1,331,710) (152,120) 44,218 (1,439,612) (81,849,257) (3,049,122) - (84,898,379) (88,168,000) (3,772,988) 44,218 (91,896,770) 65,843,054 934,200 (5,739) 66,771,515 $ 80,531,259 $ 1,801,659 $ (3,230,683) $ 79,102,235 Depreciation/amortization expense was charged to functions/programs of the City as follows: Governmental Activities General government $ 306,292 Public safety 262,319 Public works 2,802,774 Culture and recreation 1,051,961 Total Depreciation/Amortization Expense - Governmental Activities $ 4,423,346 Business -type Activities Water $ 1,915,911 Sewer 923,644 Surface water management 933,433 Total Depreciation/Amortization Expense - Business -type Activities $ 3,772,988 71 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 5: Construction Commitments The City has active construction projects as of December 31, 2023. The projects include various street and road improvements and public facilities projects. At year end, the City's commitments with contractors are as follows: Project Trail Improvement Project Galpin Blvd Improvements 2021 Street Rehab Project 20-05 2023 Street Rehab Project 23-01 Hwy 101-Pioneer to Flying Cloud - Construction Lift Station #3 Forcemain 2023 Pond Maintenance Project Total Spent -to -Date Remaining Commitment $ 180,659 $ 18,586 - 15,238,447 4,836,007 335,094 5,003,508 51,477 16,534,742 482,819 238,555 236,732 $ 26,554,916 $ 16,601,710 Note 6: Interfund Receivables, Payables, and Transfers The composition of interfund balances as of December 31, 2023 are as follows: Receivable Fund Due from/to other Funds Governmental General Business -type Water Total Due from/to other Funds Payable Fund Amount Governmental Nonmajor governmental $ 851,263 Business -type Surface Water Management 85,000 $ 936,263 All interfund loan balances represent a transfer of funds to cover a cash deficit with the exception of $26,263 that was made from the General Fund to provide initial funding for the Lake Place Senior Apartment TIF district in 2022. The composition of interfund transfers for the year ended December 31, 2023 is as follows: Fund Transfers Out General Grant Other Governmental Funds Water Sewer Transfers in Surface Water General Management 135,000 - 45,000 - - 5,423 - 5,423 Other Governmental Funds Total $ 170,000 $ 170,000 243,623 378,623 200,000 245,000 - 5,423 - 5,423 Total $ 180,000 $ 10,846 $ 613,623 _$ 804,469 72 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 6: Interfund Receivables, Payables, and Transfers (Continued) During the year, transfers were used for the following: • Budgeted transfer of $170,000 from the General fund to the Park Renovation fund for playground replacement. • Budgeted transfer of $45,000 from the Cable TV fund to the General to fund as reimbursement for communication expenses. • Transfer below budgeted amount from Grant fund to the Park Development fund in the amount of $243,623 for Lake Ann Preserve Project actual costs for the year. • Transfer of $135,000 from the Grant fund to the General fund for budgeted wage and benefit expenses. • Transfer of $200,000 from the Capital Equipment/Vehicle fund to the Capital Facilities fund to cover capital expenses. • Transfers of $5,423 from both the Water and Sewer funds to the Surface Water Management fund for track mats. Note 7: Lease 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 varying annual lease payments with increases of 2% to 4% 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, 2023, the City recorded $3,471,066 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, 2023 was $330,287. Of this amount, $107,747 was interest revenue. No other variable lease payments were received. 73 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Long-term Liabilities General Obligation Improvement Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both general government and proprietary activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general obligation bonds have been issued to refund both general obligation and revenue bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the City. The G.O. Improvement Bonds have been issued to finance improvements. They will be repaid with special assessment collections and ad valorem tax levies. General obligation bonds currently outstanding are as follows: Description G.O. Bonds, Series 2016A Authorized and Issued Interest Rate Issue Date $ 4,805,000 2.00 - 3.00 % 03/03/16 Maturity Balance at Date Year End 02/01 /30 $ 3,015,000 Annual debt service requirements to maturity for general obligation improvement bonds are as follows: Year Ending December 31, Governmental Activities Principal Interest Total 2024 $ 395,000 $ 58,325 $ 453,325 2025 410,000 48,300 458,300 2026 420,000 40,000 460,000 2027 430,000 31,500 461,500 2028 440,000 22,800 462,800 2029 - 2030 920,000 18,500 938,500 Total $ 3,015,000 $ 219,425 $ 3,234,425 General Obligation Revenue Bonds The following bonds will be repaid solely from revenue derived from the activities of the fund. They are backed by the full faith and credit of the City. Annual net operating revenues, principal and interest payments, and the percentage of revenue required to cover principal and interest payments are as follows: Net Operating Revenues Principal and Interest Percentage of Revenues Water Sewer $ 5,197,230 $ 3,991,372 2,129,167 266,433 41% 7% Surface Water Management 1,845,241 141,684 8% 74 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Long-term Liabilities (Continued) The components of the general obligation revenues bonds are as follows: Authorized Interest Issue Maturity Description and Issued Rate Date Date G.O. Water Revenue Refunding Bonds, Series 2011 B $ 3,720,000 2.00 - 3.00 % 10/06/11 02/01 /25 G.O. Water Revenue Bonds, Series 2016A 1,565,000 2.00 - 3.00 03/03/16 02/01/26 G.O. Water Revenue Bonds, Series 2016B 3,630,000 3.50 - 4.00 12/29/16 02/01 /42 G.0 Water Revenue Bonds, Series, 2017A 10,000,000 2.00 - 4.00 02/01 /17 02/01 /38 G.O. Water Revenue Bonds, Series 2018A 3,595,000 3.00 - 4.00 03/15/18 02/01 /30 G.O. Water Revenue Bonds, Series 2020A 3,415,000 2.00 - 3.00 04/02/20 02/01/31 G.O. Sewer Revenue Bonds, Series 2020A 1,540,000 2.00 - 3.00 04/02/20 02/01/31 G.O. Surface Water Revenue Bonds, Series 2020A 1,265,000 2.00 - 3.00 04/02/20 02/01/31 Total G.O. Revenue Bonds Annual debt service requirements to maturity for general obligation revenue bonds are as follows: Year Ending December 31, 2024 2025 2026 2027 2028 2029 - 2033 2034 - 2038 2039 - 2042 Total Balance at $ 1,130,000 510,000 3,630,000 8,830,000 2,245,000 2,750,000 1,260,000 920,000 $ 21,275,000 Business -type Activities Principal Interest Total $ 1,755,000 $ 631,013 $ 2,386,013 1,810,000 576,763 2,386,763 1,275,000 530,538 1,805,538 1,550,000 488,188 2,038,188 1,600,000 440,938 2,040,938 5,895,000 1,622,813 7,517,813 3,900,000 998,913 4,898,913 3,490,000 280,531 3,770,531 $ 21,275,000 $ 5,569,697 $ 26,844,697 75 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Long-term Liabilities (Continued) 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, 2024 2025 Total Lease Payable Lease agreements are summarized as follows: Lyman Pedestrian Boulevard Trail Total $ 145,000 $ 96,310 $ 241,310 111,108 96,309 207,417 $ 256,108 $ 192,619 $ 448,727 Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental activities $ 221,761 $ 506,576 $ (113,898) $ 614,439 $ 168,685 Business -type activities 26,136 20,049 (9,045) 37,140 11,418 Total lease liability $ 247,897 $ 526,625 $ (122,943) $ 651,579 $ 180,103 The City leases multiple vehicles from Enterprise Rent -a -Car. As of December 31, 2023, the City had 26 outstanding vehicle leases, 16 of which were entered into during 2023. Each lease requires 48 monthly payments ranging from $432 to $858. The leases are all under a master lease agreement with individual schedules for each vehicle. The lease liability is measured at discount rates ranging from 10.0% to 13.3% as stated in the lease agreements. Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending Governmental Activities December 31, Principal Interest Total Business -type Activities Principal Interest Total 2024 $ 168,686 $ 57,071 $ 225,757 $ 11,418 $ 3,545 $ 14,963 2025 189,864 39,687 229,551 12,733 2,231 14,964 2026 185,225 20,044 205,269 10,481 830 11,311 2027 70,664 2,896 73,560 2,508 75 2,583 Total $ 614,439 $ 119,698 $ 734,137 $ 37,140 $ 6,681 $ 43,821 76 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Long-term Liabilities (Continued) Changes in Long-term Liabilities During the year ended December 31, 2023, the following changes occurred in long-term liabilities: Governmental Activities Bonds Payable General obligation bonds Bond premium Project financing Lease payable Compensated absences* Governmental Activity Long-term Liabilities Business -type Activities Bonds Payable G.O. revenue bonds Bond premium Lease payable Compensated absences* Business -type Activity Long-term Liabilities Beginning Ending Due Within Balance Increases Decreases Balance One Year $ 3,400,000 $ - $ (385,000) $ 3,015,000 $ 395,000 127,878 - (15,985) 111,893 - 690,037 - (241,310) 448,727 241,310 221,761 506,576 (113,898) 614,439 168,685 762,762 - (83,842) 678,920 128,996 $ 5,202,438 $ 506,576 $ (840,035) $ 4,868,979 $ 933,991 $ 23,120,000 $ - $ (1,845,000) $ 21,275,000 $ 1,755,000 1,012,877 - (118,632) 894,245 - 26,136 20,049 (9,045) 37,140 11,418 316,799 - (33,187) 283,612 53,886 $ 24,475,812 $ 20,049 $ (2,005,864) $ 22,489,997 $ 1,820,304 *The change in compensated absences is presented as a net change. 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, 2023, is $3,444,724. 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. 77 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 8: Long-term Liabilities (Continued) Conduit Debt Obligations The City of Chanhassen has issued revenue bonds 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 private -sector entity served by the bond issuance. Neither the City of Chanhassen or the State of Minnesota, or any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2023, there was one bond outstanding with Presbyterian Homes with a principal amount of $5,549,815. Project Name Presbyterian Homes, Series 2014B Note 9: Components of Fund Balance Authorized Issue Maturity Balance at and Issued Date Date Year End $ 9,300,000 June 2014 2034 $ 5,549,815 At December 31, 2023, portions of the City's fund balance are not available for appropriation due to not being in spendable form (nonspendable), legal restrictions (restricted), City Council action (committed), policy and/or intent (assigned), and available for spending (unassigned). The following is a summary of the components of fund balance: Pavement Other General Grant Mangement Governmental Fund Fund Program (PMP) Funds Totals Nonspendable Prepaid items $ 63,227 $ $ $ 15,400 $ 78,627 Restricted for Debt service $ - $ $ $ 700,631 $ 700,631 Tax increment 39,192 39,192 Capital projects 848,781 848,781 Communications 43,837 43,837 Public safety 1,193,139 59,279 1,252,418 Total Restricted $ $ 1,193,139 $ $ 1,691,720 $ 2,884,859 Commited for Cemetery $ $ $ $ 64,598 $ 64,598 Cable TV 280,049 280,049 Total Committed $ $ $ $ 344,647 $ 344,647 Assigned for Payout of compensated absences for retirement $ 150,000 $ $ $ $ 150,000 Laserfiche records scanning 100,000 100,000 Planning -Chanhassen Bluffs Sports Complex 75,000 75,000 BS&A business license module 17,600 17,600 Lake Ann Park Preserve 275,000 275,000 Fire department hardware/ software 100,000 100,000 Health insurance premiums 30,000 30,000 Tree/planning contracting 50,000 50,000 Capital improvements - 3,312,577 2,736,498 6,049,075 Debt service reserve - - 1,063,297 1,063,297 Total Assigned $ 797,600 $ $ 3,312,577 $ 3,799,795 $ 7,909,972 Unassigned $ 8,011,272 $ $ - $ (1,002,175) $ 7,009,097 City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide 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. General Employees Retirement Plan All full-time and certain part-time employees of the City are covered by the General Employees Plan. General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. Public Employees Police and Fire Plan The Police and Fire Plan, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. B. Benefits Provided PERA provides retirement, disability and death benefits. Benefit provisions are established by state statute and can only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. General Employee Plan Benefits General Employees Plan benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent for average salary for all years of service. For members hired prior to July 1, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989 normal retirement age is the age for unreduced Social Security benefits capped at 66. Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. 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. In 2023, legislation repealed the statute delaying increases for members retiring before full retirement age. 79 City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) Police and Fire Plan Benefits Benefits for Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50 percent after five years up to 100 percent after ten years of credited service. Benefits for Police and Fire Plan members first hired after June 30, 2014 vest on a prorated basis from 50 percent after ten years up to 100 percent after twenty years of credited service. The annuity accrual rate is 3 percent of average salary for each year of service. For Police and Fire Plan members who were first hired prior to July 1,1989, a full annuity is available when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. The postretirement increase is fixed at 1 percent. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. C. Contributions Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. General Employees Fund Contributions Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2023 and the City was required to contribute 7.50 percent for Coordinated Plan members. The City's contributions to the General Employees Fund for the years ending December 31, 2023, 2022 and 2021 were $490,256, $477,007 and $438,328, respectively. The City's contributions were equal to the required contributions for each year as set by state statute. Police and Fire Fund Contributions Police and Fire Plan members were required to contribute 11.80 percent of their annual covered salary in fiscal year 2023 and the City was required to contribute 17.70 percent for Police and Fire Plan members. The City's contributions to the Police and Fire Fund for the years ending December 31, 2023, 2022 and 2021 were $135,550, $86,742 and $55,996, respectively. The City's contributions were equal to the required contributions for each year as set by state statute. :I City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) D. Pension Costs General Employees Fund Pension Costs At December 31, 2023, the City reported a liability of $4,579,756 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million. The State of Minnesota is considered a non -employer contributing entity and the state's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $126,161. The net pension liability was measured as of June 30, 2023, 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, 2022 through June 30, 2023 relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.0819 percent at the end of the measurement period and 0.083 percent for the beginning of the period. City Proportionate Share of the Net Pension Liability $ 4,579,756 State of Minnesota's Proportionate Share of the Net Pension Liability Associated with the City 126,161 Total $ 4,705,917 For the year ended December 31, 2023, the City recognized pension expense of $883,394 for its proportionate share of the General Employees Plan's pension expense. In addition, the City recognized $567 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2023, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences Between Expected and Actual Economic Experience Changes in Actuarial Assumptions Net Difference Between Projected and Actual Investment Earnings Changes in Proportion Contributions Paid to PERA Subsequent to the Measurement Date Total Deferred Deferred Outflows Inflows of Resources of Resources $ 150,886 $ 697,469 66,192 243,647 29,585 1,264,821 56,038 43,560 $ 1,158,194 $ 1,394,004 E1 City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) The $243,647 reported as deferred outflows of resources related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2024 2025 2026 2027 Police and Fire Fund Pension Costs $ 163,043 (648,406) 114,806 (108,900) At December 31, 2023, the City reported a liability of $873,796 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2023, 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, 2022 through June 30, 2023, relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.0506 percent at the end of the measurement period and 0.0319 percent for the beginning of the period. The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2023. The contribution consisted of $9 million in direct state aid that does meet the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state was paid on October 1, 2022. Thereafter, by October 1 of each year, the state will pay $9 million to the Police and Fire Fund until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental state aid will continue until the fund is 90 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent funded, whichever occurs later. The State of Minnesota is included as a non -employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota's pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2023, the City recognized pension expense of $601,126 for its proportionate share of the Police and Fire Plan's pension expense. In addition, the City recognized an additional-$2,118 as pension expense (grant revenue) for its proportionate share of the State of Minnesota's contribution of $9 million to the Police and Fire Fund. The State of Minnesota is not included as a non -employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City recognized $4,554 for the year ended December 31, 2023 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. M. City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) At December 31, 2023, the City reported its proportionate share of the Police and Fire Plan's deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences Between Expected and Actual Economic Experience $ 195,313 Changes in Actuarial Assumptions 571,852 Net Difference Between Projected and Actual Investment Earnings 9,686 Changes in Proportion 592,891 Contributions Paid to PERA Subsequent to the Measurement Date 66,505 1,225,042 2,827 Total $ 1,436,247 $ 1,227,869 The $66,504 reported as deferred outflows of resources related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: 2024 $ 97,713 2025 83,087 2026 168,323 2027 9,544 2028 (216,794) E. Long-term Expected Return on Investment The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Long-term Target Expected Real Asset Class Allocation Rate of Return Domestic Equity 33.5 % 5.10 % International Equity 16.5 5.30 Fixed Income 25.0 0.75 Private Markets 25.0 5.90 Total 100.0 % W City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) F. Actuarial Assumptions The total pension liability in the June 30, 2023, actuarial valuation was determined using an individual entry -age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 7.0 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of return investment return rates deemed to be reasonable by the actuary. An investment return of 7.0 percent was deemed to be within that range of reasonableness for financial reporting purposes. Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and Fire Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan and 1.00 percent for the Police and Fire Plan. Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.0 percent after 27 years of service. In the Police and Fire Plan, salary growth assumptions range from 11.75 percent after one year of service to 3.0 percent after 24 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates for the Police and Fire Plan is based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA's experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience study for the General Employees Plan was completed in 2022. The assumption changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was adopted by the Board and became effective with the July 1, 2021 actuarial valuation. The following changes in actuarial assumptions and plan provisions occurred in 2023: General Employees Fund Changes in Actuarial Assumptions - The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent. Changes in Plan Provisions - An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023. - The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years of allowable service. - The benefit increase delay for early retirements on or after January 1, 2024, was eliminated. - A one-time, non -compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024. E� City of Chanhassen Notes to the Financial Statements December 31, 2023 Note 10: Defined Benefit Pension Plans - Statewide (Continued) Police and Fire Fund Changes in Actuarial Assumptions - The investment return assumption was changed from 6.5 percent to 7.0 percent. - The single discount rate changed from 5.4 percent to 7.0 percent. Changes in Plan Provisions - An additional one-time direct state aid contribution of $19.4 million will be contributed to the Plan on October 1, 2023. - The vesting requirement for new hires after June 30, 2014 was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50 percent vesting after five years increasing incrementally to 100 percent after 10 years. - A one-time, non -compounding benefit increase of 3.0 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. - Psychological treatment is required effective July 1, 2023 prior to approval for a duty disability benefit for a psychological condition relating to the member's occupation. - The total and permanent duty disability benefit was increased, effective July 1, 2023. G. Discount Rate The discount rate used to measure the total pension liability in 2023 was 7.0 percent. 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 General Employees and Police and Fire Funds were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. H. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: 1 Percent 1 Percent Decrease (6.0%) Current (7.0%) Increase (8.0%) General Employees Fund $ 8,101,957 $ 4,579,756 $ 1,682,613 Police and Fire Fund 1,733,716 873,796 166,827 I. Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in a separately -issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. M. City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note l l : Defined Benefit Pension Plans -Fire Relief Association A. Plan Description All members of the City of Chanhassen Fire Department (the Department) are covered by a defined benefit plan administered by the City of Chanhassen Fire Department Relief Association (the Association). As of December 31, 2022, the plan covered 32 active firefighters and 4 vested terminated firefighters whose pension benefits are deferred. The plan is a single employer retirement plan and is established and administered in accordance with Minnesota Statute, Chapter 69. The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the Department's membership. Funding for the Association is derived from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (chapter 261 as amended by chapter 509 of Minnesota statutes 1980). Funds are also derived from investment income. B. 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 pensions per year of service shall be $7,500. The maximum service pension shall not exceed the maximum service pension amount permitted under the flexible pension maximums pursuant to Minnesota Statute Section 424A.02, Subdivision 3. Member who choose the lump sum receive no additional interest accrual. 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: More Than but Less Than 5 years 6 years 40% 6 7 44 7 8 48 8 9 52 9 10 56 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 M. City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note l l : Defined Benefit Pension Plans -Fire Relief Association (Continued) 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. 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. C. Contributions Minnesota statutes, chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes and voluntary City contributions (if applicable). The State of Minnesota contributed $230,795 of fire state aid to the plan on behalf of the City Fire Department for the year ended December 31, 2022, which was recorded as a revenue. Required employer contributions are calculated annually based on statutory provisions. The City's statutorily -required contributions to the plan for the year ended December 31, 2022 were $42,580. The City's contributions were equal to the required contributions as set by state statute. The City made no voluntary contributions to the plan. The firefighter has no obligation to contribute to the plan. City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note l l : Defined Benefit Pension Plans -Fire Relief Association (Continued) D. Pension Costs At December 31, 2023, the City reported a net pension liability (asset) of $660,527 for the Volunteer Firefighter Fund. The net pension liability (asset) was measured as of December 31, 2022. The following table presents the changes in net pension liability (asset) during the year: Beginning Balance January 1, 2022 Changes for the Year Service cost Interest Contributions - state and local Contributions - member Net investment income Benefit payments Administrative expense Total Net Changes Ending Balance December 31, 2022 Total Plan Net Pension Fiduciary Pension Liability Net Position Liability (Asset) (a) (b) (a-b) $ 3,016,392 $ 2,688,204 $ 328,188 127,784 - 127,784 143,544 - 143,544 - 42,580 (42,580) - 230,795 (230,795) - (323,036) 323,036 (546,601) (546,601) - - (11,350) 11,350 (275,273) (607,612) 332,339 $ 2,741,119 $ 2,080,592 $ 660,527 For the year ended December 31, 2023, the City recognized pension expense $141,870. At December 31, 2023, the City reported its deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, to the plan from the following sources: Differences Between Expected and Actual Experience Changes in Actuarial Assumptions Net Difference Between Projected and Actual Earnings on Plan Investments Contributions to Plan Subsequent to the Measurement Date Total Deferred Deferred Outflows Inflows of Resources of Resources $ 30,540 $ 78,992 23,374 182 360,266 148,391 273,375 - $ 687,555 $ 227,565 :: City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note l l : Defined Benefit Pension Plans -Fire Relief Association (Continued) Deferred outflows of resources totaling $273,375 related to pensions resulting from the City's contributions to the plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows of resources related to the plan will be recognized in pension expense as follows: 2024 $ (16,696) 2025 43,225 2026 70,018 2027 90,068 E. Actuarial Assumptions The total pension liability at December 31, 2023 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Inflation Rate Investment Rate of Return Discount Rate F. Discount Rate 3.00% 5.00% 5.00% The discount rate used to measure the total pension liability was 5.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability Sensitivity The following presents the City's net pension liability (asset) for the plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's net pension liability (asset) would be if it were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate: Defined Benefit Plan 1 Percent Decrease (4.0%) 839,065 Current (5.0%) $ 660,527 1 Percent Increase (6.0%) 497,266 E-111 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 11: Defined Benefit Pension Plans -Fire Relief Association (Continued) H. Asset Allocation The long-term expected rate of return on pension plan investments was set based on the plan's target investment allocation along with long-term return expectations by asset class. All economic assumptions were based on input from various published sources and projected future financial data available. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Target Expected Real Asset Class Allocation Rate of Return Stock & Mutual Funds 60.00 % 5.20 % Fixed Income 30.00 0.60 Other 5.00 0.60 Cash 5.00 - Total 100.00 % I. Pension Plan Fiduciary Net Position The Association issues a publicly available financial report. The report may be obtained by writing to the Chanhassen Firefighters Relief Association, PO Box 97, 7610 Laredo Drive, Chanhassen, MN 55317. Note 12: Postemployment Benefits Other than Pensions A. Plan Description The City operates a single -employer retiree benefit plan ("the Plan") that provides health, life, and dental insurance to eligible employees and their families through the City's health insurance plan. The full cost of the benefits is covered by the plan. Benefit and eligibility provisions are established through negotiations between the City and various unions representing City employees and are renegotiated at the end of each agreement. The Plan does not issue a publicly available report and is not administered through a trust or equivalent arrangement and thus there are no assets accumulated in a GASB-compliant trust. At December 31, 2023, the following employee were covered by the benefit terms: Inactive Plan Members or Beneficiaries Currently Receiving Benefit Payments Active Plan Members Total Plan Members 3 84 87 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 12: Postemployment Benefits Other than Pensions (Continued) 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 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 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. C. Actuarial Methods and Assumptions The City's total OPEB liability of $255,651 was measured as of December 31, 2023, and was determined by an actuarial valuation as of January 1, 2024. The total OPEB liability in the January 1, 2024 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount Rate 4.00% Expected Long-term Investment Return N/A 20-year Municipal Bond Yield 4.00% Inflation Rate 3.00% Medical Trend Rate 8.0% in 2023, trending down 0.5% every year after to an ultimate rate of 4.5% The discount rate used to measure the total OPEB liability was 4.00 percent. Assets were projected using expected benefit payments and expected asset returns. Expected benefit payments by year were discounted using the expected asset return assumption for years in which the assets were sufficient to pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are discounted at the 20-year municipal bond rate. The equivalent single rate is the discount rate. Mortality assumptions are set to reflect general population trends based upon Pub-2010 Mortality tables and the most recent generational projected scale MP-2021. The actuarial assumptions used in the January 1, 2024 valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. 91 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 12: Postemployment Benefits Other than Pensions (Continued) D. Changes in the Total OPEB Liability Total OPEB Liability (a) Balances at December 31, 2022 $ 168,712 Changes for the Year: Service cost 14,008 Interest 7,514 Differences between expected and actual experience 68,691 Changes in assumptions 13,672 Benefit payments (16,946) Net Changes 86,939 Balances at December 31, 2023 $ 255,651 Since the prior measurement date, the following assumptions changed: • The discount rate changed from 4.31 % to 4.00%. • Health care cost trend rate changed from 7.50% decreasing to 4.50% to 8.00% decreasing to 4.50%. Since the prior measurement date, the following benefit terms changed: • None noted for 2023. E. OPEB Liability Sensitivity 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-percentage point lower (3.00 percent) or 1-percentage point higher (5.00 percent) than the current discount rate: 1 Percent Decrease (3.00%) $ 269,099 Current (4.00%) $ 255,651 1 Percent Increase (5.00%) $ 243,057 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 Healthcare Cost Trend Rate that is 1-percengage point lower (7.00 percent decreasing to 3.50 percent) or 1-percentage point higher (9.00 percent decreasing to 5.50 percent) than the current cost trend rate: Health Care 1 Percent Decrease Trend Rates (7.00% decreasing to 3.50%) (8.00% decreasing to 4.50%) 9 238,692 $ 255,651 1 Percent Increase (9.00% decreasing to 5.50%) 275,138 92 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 12: Postemployment Benefits Other than Pensions (Continued) F. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2023, the City recognized OPEB expense of $18,940. At December 31, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual experience $ 61,059 $ 53,975 Changes in Actuarial Assumptions 29,182 15,680 Total $ 90,241 $ 69,655 Deferred outflows of resources related to OPEB resulting from the City's contributions to OPEB subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended December 31, 2024. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: 2024 $ (2,582) 2025 (2,582) 2026 (2,582) 2027 (1,766) 2028 5,999 Thereafter (17,073) Note 13: Other Information A. Legal Debt Margin In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of three percent of the market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and therefore, excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax increments. B. 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 for which the City carries insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. 93 City of Chanhassen, Minnesota Notes to the Financial Statements December 31, 2023 Note 13: Other Information (Continued) C. Tax Abatements 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 two tax increment districts, which have outstanding pay-as-you-go revenue notes. The notes are not a general obligation of the City and is payable solely from available tax increments. Accordingly, the notes are not reflected in the financial statements of the City. Details of the pay-as-you-go revenue notes are 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) amount to $242,497. At December 31, 2023, the principal amount outstanding on the note was $492,390. Tax Increment Revenue Note (Lakes at Chanhassen LLC) - issued in 2023 in the principal sum of $3,065,000 with no interest. Principal and interest payments shall be paid commencing August 1, 2023, and each February 1 and August 1 thereafter to and including February 1, 2042. Payments are payable solely from tax increments, which shall mean 90% of the tax increments derived from the tax increment property and received by the City. The payment reimburses the developer for the construction of affordable housing. 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, 2042. 94 REQUIRED SUPPLEMENTARY INFORMATION CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 95 City of Chanhassen, Minnesota Required Supplementary Information For the Year Ended December 31, 2023 Schedule of Employer's Share of PERA Net Pension Liability - General Employees Fund City's State's Proportionate Proportionate Share of the City's Share of Net Pension Proportionate the Net Pension Liability as a Plan Fiduciary City's Share of Liability City's Percentage of Net Position Fiscal Proportion of the Net Pension Associated with Covered Covered as a Percentage Year the Net Pension Liability the City Total Payroll Payroll of the Total Ending Liability (a) (b) (a+b) (c) ((a+b)/c) Pension Liability 06/30/23 0.0819 % $ 4,579,756 $ 126,161 $ 4,705,917 $ 7,953,077 57.6 % 83.1 % 06/30/22 0.0830 6,573,627 192,870 6,766,497 6,220,584 108.8 76.7 06/30/21 0.0768 3,279,704 100,098 3,379,802 5,527,150 61.1 87.0 06/30/20 0.0741 4,442,634 137,022 4,579,656 5,283,373 86.7 79.1 06/30/19 0.0727 4,019,420 124,828 4,144,248 5,143,989 80.6 80.2 06/30/18 0.0760 4,216,168 138,310 4,354,478 5,110,253 85.2 79.5 06/30/17 0.0751 4,794,334 60,265 4,854,599 4,836,519 100.4 75.9 06/30/16 0.0759 6,162,704 80,496 6,243,200 4,708,444 132.6 68.9 06/30/15 0.0791 4,099,373 - 4,099,373 4,651,703 88.1 78.2 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Employer's PERA Contributions - General Employees Fund Year Ending Statutorily Required Contribution (a) Contributions in Relation to the Statutorily Required Contribution (b) Contribution Deficiency (Excess) (a-b) City's Covered Payroll (c) Contributions as a Percentage of Covered Payroll (b/c) 12/31 /23 $ 490,256 $ 490,256 $ - $ 6,536,751 7.5 % 12/31 /22 477,007 477,007 - 6,360,066 7.5 12/31 /21 438,328 438,328 - 5,844,364 7.5 12/31 /20 409,847 409,847 - 5,464,626 7.5 12/31/19 390,082 390,082 - 5,201,071 7.5 12/31 /18 383,686 383,686 - 5,115,814 7.5 12/31/17 371,824 371,824 - 4,957,652 7.5 12/31/16 358,611 358,611 - 4,781,489 7.5 12/31 /15 346,881 346,881 - 4,625,080 7.5 Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - General Employees Fund Changes in Actuarial Assumptions 2023 - The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent. 2022 - The mortality improvement scale was changed from MP-2020 to Scale MP-2021. 2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. 2020 - 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 changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25% less than previous rates. Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter. Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP- 2014 disabled annuitant mortality table to the PUB-2010 General/Teacher disabled annuitant mortality table, with adjustments. The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. The assumed spouse age difference was changed from two years older for females to one year older. The assumed number of married male new retirees electing the 100% Joint & 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. 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non -vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for non -vested deferred member liability. The assumed post -retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter. 2016 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. 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 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 2015 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter. 97 City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - General Employees Fund (Continued) Chanaes in Plan Provisions 2023 - An additional one-time direct state aid contribution of $170.1 million will be contributed to the plan on October 1, 2023. The vesting period of those hired after June 30, 2010 was changed from five years of allowable service to three years of allowable service. The benefit increase delay for early retirements on or after January 1, 2024 was eliminated. A one-time, non -compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024. 2022 - There were no changes in plan provisions since the previous valuation 2021 - There were no changes in plan provisions since the previous valuation 2020 - 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 - 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 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Contribution stabilizer provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 -The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000 thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The state's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. 2016 - There were no changes in plan provisions since the previous valuation. 2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer contributions were revised. .; City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Schedule of Employer's Share of PERA Net Pension Liability - Police and Fire Fund City's State's Proportionate Proportionate Share of the City's Share of Net Pension Proportionate the Net Pension Liability as a Plan Fiduciary City's Share of Liability City's Percentage of Net Position Fiscal Proportion of the Net Pension Associated with Covered Covered as a Percentage Year the Net Pension Liability the City Total Payroll Payroll of the Total Ending Liability (a) (b) (a+b) (c) ((a+b)/c) Pension Liability 06/30/23 0.0506 % $ 873,796 $ 35,172 $ 908,968 $ 1,274,564 68.6 % 86.5 % 06/30/22 0.0319 1,388,162 60,654 1,448,816 387,508 358.2 70.5 06/30/21 0.0220 169,817 7,638 177,455 260,290 65.2 93.7 06/30/20 0.0200 263,621 137,022 400,643 225,631 116.8 87.2 06/30/19 0.0205 218,243 - 218,243 216,056 101.0 89.3 06/30/18 0.0193 205,718 205,718 203,653 101.0 88.8 06/30/17 0.0190 256,523 256,523 194,526 131.9 85.4 06/30/16 0.0190 762,503 762,503 186,408 409.1 63.9 06/30/15 0.0200 227,247 227,247 180,370 126.0 86.6 Note: Schedule is intended to show a 10-year trend. Additional years will be reported as they become available. Schedule of Employer's Share of PERA Contributions - Police and Fire Fund Contributions in Relation to the Statutorily Statutorily Contribution City's Contributions as Required Required Deficiency Covered a Percentage of Year Contribution Contribution (Excess) Payroll Covered Payroll Ending (a) (b) (a-b) (c) (b/c) 12/31 /23 $ 135,550 $ 135,550 $ - $ 765,817 17.7 % 12/31 /22 86,742 86,742 - 490,067 17.7 12/31 /21 55,996 55,996 - 316,363 17.7 12/31 /20 40,530 40,530 - 228,980 17.7 12/31 /19 37,761 37,761 - 222,780 16.9 12/31 /18 33,511 33,511 - 206,857 16.2 12/31/17 32,612 32,612 - 201,307 16.2 12/31 /16 30,790 30,790 190,064 16.2 12/31 /15 29,647 29,647 183,006 16.2 Note: Schedule is intended to show a 10-year trend. Additional years will be reported as they become available. City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Police and Fire Fund Chanaes in Actuarial Assumptions 2023 - The investment return assumption was changed from 6.5 percent to 7.00 percent. The single discount rate changed from 5.4 percent to 7.0 percent. 2022 - The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. The single discount rate changed from 6.50 percent to 5.40 percent. 2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The inflation assumption was changed from 2.50 percent to 2.25 percent. The payroll growth assumption was changed from 3.25 percent to 3.00 percent. The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010 Public Safety Mortality table. The mortality improvement scale was changed from MP-2019 to MN-2020. The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with future mortality improvement according to Scale MP-2019) to the Pub- 2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to Scale MP-2020). Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall impact is a decrease in gross salary increase rates. Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes 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 percent to 70 percent. Minor changes to form of payment assumptions were applied. 2020 - The mortality projection scale was changed from MP-2018 to MP-2019. 2019 - The mortality projection scale was changed from MP-2017 to MP-2018. 2018 - The mortality projection scale was changed from MP-2016 to MP-2017. 2017 - Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The Combined Service Annuity (CSA) load was 30 percent for vested and non -vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent 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 percent 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 percent to 60 percent. 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 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.6 percent to 7.5 percent. 2016 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2037 and 2.5 percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 5.6 percent. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 100 City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information - Police and Fire Fund (Continued) 2015 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5 percent per year thereafter to 1.0 percent per year through 2037 and 2.5 percent per year thereafter. Chanaes in Plan Provisions 2023 - Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023. Vesting requirement for new hires after June 30, 2014, was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100% after 10 years. A one- time, non -compounding benefit increase of 3.0 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a psychological condition relating to the member's occupation. The total and permanent duty disability benefit was increased, effective July 1, 2023. 2022 - There were no changes in plan provisions since the previous valuation. 2021 - There were no changes in plan provisions since the previous valuation. 2020 - There were no changes in plan provisions since the previous valuation. 2019 - There were no changes in plan provisions since the previous valuation. 2018 - As set by statute, the assumed post -retirement benefit increase was changed from 1.0 percent per year through 2064 and 2.5 percent per year, thereafter, to 1.0 percent for all years, with no trigger. An end date of July 1, 2048 was added to the existing $9.0 million state contribution. New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan reaches 100 percent funding, or July 1, 2048, if earlier. Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019 and 11.80 percent of pay, effective January 1, 2020. Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019 and 17.70 percent of pay, effective January 1, 2020. Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. 2017 - Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The combined service annuity (CSA) load was 30.00 percent for vested and non -vested, deferred members. The CSA has been changed to 33.00 percent for vested members and 2.00 percent 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 3.00 percent 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 65.00 percent to 60.00 percent. 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 postretirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year through 2064 and 2.50 percent thereafter. The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum. 2016 - There were no changes in plan provisions since the previous valuation. 2015 - The post -retirement benefit increase to be paid after attainment of the 90 percent funding threshold was changed, from inflation up to 2.5 percent, to a fixed rate of 2.5 percent. 101 City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Schedule of Changes in the Fire Relief Association's Net Pension Liability (Asset) and Related Ratios Total Pension Liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability - January 1 Total Pension Liability- December 31 (A) Plan Fiduciary Net Position Contributions - employer Contributions - state Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - January 1 Plan Fiduciary Net Position - December 31 (B) Fire Relief's Net Pension Liability (Asset) - December 31 (A-B) Plan Fiduciary Net Position As a Percentage 2023 2022 2021 2020 2019 2018 2017 2016 2015 (Fire Relief (Fire Relief (Fire Relief (Fire Relief (Fire Relief (Fire Relief (Fire Relief (Fire Relief (Fire Relief Report Report Report Report Report Report Report Report Report Date 2022) Date 2021) Date 2020 Date 2020 Date 2019 Date 2018 Date 2017 Date 2016 Date 2015 $ 127,784 $ 154,968 $ 150,695 $ 150,695 $ 143,922 $ 143,922 $ 88,924 $ 88,924 $ 86,369 143,544 161,407 156,622 156,622 154,784 149,836 127,729 128,235 118,909 212,120 - 279,202 - (126,365) 76,350 76,350 (79,049) - 5,145 - (5,328) 233 58,144 58,144 (902) (1,074) 231,636 (203) 546,601 494,030 206,737 206,737 170,835 216,595 340,243 113,883 470,743 (275,273) (303,787) 235,074 235,074 47,920 76,089 325,311 103,073 8,409 3,016,392 3,320,179 3,085,105 3,085,105 3,037,185 2,961,096 2,635,785 2,532,712 2,524,303 $ 2,741,119 $ 3,016,392 $ 3,320,179 $ 3,320,179 $ 3,085,105 $ 3,037,185 $ 2,961,096 $ 2,635,785 $ 2,532,712 $ 42,580 $ - $ 31,957 $ 31,957 $ 47,399 $ 54,749 $ - $ - $ 37,571 230,795 211,227 203,495 203,495 190,045 184,695 181,554 177,831 177,784 (323,036) 231,675 237,593 237,593 328,474 (130,928) 306,593 158,581 (105,958) (546,601) (494,030) (206,737) (206,737) (170,835) (216,595) (340,243) (113,883) (470,743) (11,350) (19,800) (16,000) (16,000) (16,386) (17,350) (14,875) (16,972) 9,225) 20,943 29,900 500 - (607,612) (91,871) 250,308 250,308 378,697 (125,429) 162,929 206,057 (368,571) 2,688,204 2,780,075 2,529,767 2,529,767 2,151,070 2,276,499 2,113,570 1,907,513 2,276,084 $ 2,080,592 $ 2,688,204 $ 2,780,075 $ 2,780,075 $ 2,529,767 $ 2,151,070 $ 2,276,499 $ 2,113,570 $ 1,907,513 $ 660,527 $ 228,188 $ 440,104 $ 440,104 $ 555,338 $ 886,115 $ 884,597 $ 222,215 $ 225,199 Of the Total Pension Liability (B/A) 75.90% 89.12°% 83.73% 83.73% 82.00% 70.82% 76.88% 80.19% 75.32% Covered -Employee Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A Fire Relief's Net Pension Liability (Asset) as a Percentage of Covered -Employee Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A Beginning in 2021, the City's net pension liability was measured using a one-year lookback option. 102 City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Notes to the Required Supplementary Information — Fire Relief Association Changes in Actuarial Assumptions 2023 - No changes since prior report. 2022 - The mortality table used to measure funding liability has been changed from SOA Public Safety-2010 Mortality with the MP-2019 Mortality Improvement Scale to the PubS-2010 Mortality Table Projected Generationally from 2010 with the MP-2020 Mortality Improvement Scale. 2020 - 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. 2019 - 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 - 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 - 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 - 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. 103 City of Chanhassen, Minnesota Required Supplementary Information (Continued) For the Year Ended December 31, 2023 Schedule of Employer's Fire Relief Association Contributions Year Ending Actuarial Determined Contribution (a) Employer State of MN Contributions Contributions (b) (c) Contribution Deficiency (Excess) (a-b-c) 12/31 /23 $ 190,629 $ 42,580 $ 190,629 (42,580) 12/31/22 233,452 - 211,227 22,225 12/31/21 233,452 31,957 203,495 (2,000) 12/31/20 233,452 31,957 203,495 (2,000) 12/31/19 236,444 47,399 190,045 (1,000) 12/31 /18 236,444 54,749 184,695 (3,000) 12/31 /17 171,760 - 181,554 (9,794) 12/31 /16 171,760 - 177,831 (6,071) 12/31 /15 142,501 37,571 177,784 (72,854) Beginning in 2021, the City's net pension liability was measured using a one-year lookback option. Note: Schedule is intended to show a 10-year trend. Additional years will be reported as they become available. Schedule of Changes in the City's Total OPEB Liability and Related Ratios Total OPEB Liability Service cost Interest Differences between expected and actual experience Changes in assumptions Benefit payments Net Change in Total OPEB Liability Total OPEB Liability - Beginning Total OPEB Liability- Ending Covered -Employee Payroll City's total OPEB liability as a percentage of covered -employee payroll 2023 2022 2021 2020 2019 2018 $ 14,008 $ 18,755 $ 15,307 $ 13,504 $ 13,547 $ 14,388 7,514 4,381 3,785 5,463 8,738 7,032 68,691 (9,225) (6,405) (12,888) (82,370) - 13,672 (17,614) 8,015 9,168 16,736 (7,402) (16,946) (7,075) (8,835) (3,343) - (9,869) 86,939 (10,778) 11,867 11,904 (43,349) 4,149 168,712 179,490 167,623 155,719 199,068 194,919 $ 255,651 $ 168,712 $ 179,490 $ 167,623 $ 155,719 $ 999,068 $ 7,499,619 $ 6,720,515 $ 6,422,681 $ 5,270,695 $ 5,270,695 $ 5,151,178 3.4 % 2.5 % 2.8 % 3.2 % 3.0 % 3.9 Note: Schedule is intended to show a 10-year trend. Additional years will be reported 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. 104 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF CHANHASSEN CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 105 THIS PAGE IS LEFT BLANK INTENTIONALLY 106 SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted or committed 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). 107 City of Chanhassen, Minnesota Nonmajor Governmental Funds Combining Balance Sheet December 31, 2023 Assets Cash and investments Receivables Accounts Accrued interest Taxes Special assessments Due from other governments Prepaid items Total Assets Liabilities Accounts payable Contracts payable Due to other governments Due to other funds Total Liabilities Deferred Inflows of Resources Unavailable revenue - special assessments Fund Balances Nonspendable Restricted for Communications Public safety Debt service Capital projects Tax increments Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances Special Debt Capital Revenue Service Projects Total $ 439,525 $ 2,250,918 $ 3,896,620 $ 6,587,063 9,683 - 89,047 98,730 2,159 10,860 17,916 30,935 - 2,400 6,535 8,935 - 316,443 - 316,443 - - 239,786 239,786 - - 15,400 15,400 $ 451,367 $ 2,580,621 $ 4,265,304 $ 7,297,292 $ 3,604 $ 500,250 $ 600,319 $ 1,104,173 - - 165,347 165,347 - - 10,679 10,679 - - 851,263 851,263 3,604 500,250 1,627,608 2,131,462 - 316,443 - 316,443 - - 15,400 15,400 43,837 - - 43,837 59,279 - - 59,279 - 700,631 - 700,631 - - 848,781 848,781 - - 39,192 39,192 344,647 - - 344,647 - 1,063,297 2,736,498 3,799,795 - - (1,002,175) (1,002,175) 447,763 1,763,928 2,637,696 4,849,387 $ 451,367 $ 2,580,621 $ 4,265,304 $ 7,297,292 Wil Revenues Taxes Tax increments Licenses and permits Intergovernmental Charges for services Special assessments Investment earnings Miscellaneous Contributions and donations Refunds and reimbursements Other Total Revenues Expenditures Current General government Public safety Culture and recreation Capital outlay General government Public safety Public works Culture and recreation Community development Debt service Principal Interest and other charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures City of Chanhassen, Minnesota Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2023 Special Debt Revenue Service Capital Projects Total $ - $ 482,000 $ 1,314,000 $ 1,796,000 - 282,067 282,067 - - 424,099 424,099 - 1,412,480 1,412,480 1,900 - - 1,900 - 8,730 - 8,730 21,766 95,551 155,013 272,330 63,828 - - 63,828 - - 91,478 91,478 - - 8,400 8,400 87,494 586,281 3,687,537 4,361,312 42,489 120,350 - 162,839 - - 1,496,187 1,496,187 32,085 - 272,048 304,133 - - 2,320,349 2,320,349 - - 830,158 830,158 - - 273,621 273,621 - 385,000 210,208 595,208 - 70,424 55,103 125,527 74,574 575,774 5,457,674 6,108,022 12,920 10,507 (1,770,137) (1,746,710) Other Financing Sources (Uses) Sale of capital assets - Transfers in - Issuance of leases - Transfers out (45,000) Total Other Financing Sources (Uses) (45,000) 293,907 293,907 613,623 613,623 506,576 506,576 (200,000) (245,000) 1,214,106 1,169,106 Net Change in Fund Balances (32,080) 10,507 (556,031) (577,604) Fund Balances, January 1 479,843 1,753,421 3,193,727 5,426,991 Fund Balances, December 31 $ 447,763 $ 1,763,928 $ 2,637,696 $ 4,849,387 109 THIS PAGE IS LEFT BLANK INTENTIONALLY 110 NONMAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. Charitable Gambling Fund - This fund accounts for the proceeds that the City receives from charitable gambling. The City collects 10% of the net profits from lawful gambling within City boundaries. Per state statute, the fund is used for equipment and training for the City's fire department. Cemetery Fund - The City owns and operates a municipal cemetery. This fund accounts for all plot fees and maintenance of the cemetery. Cable TV Fund - The City has had a franchise agreement with Mediacom for several years. Cable franchise fees were accounted for in this fund until 2023, when they were moved to the General Fund. The City previously collected PEG fees from Mediacom. The remaining PEG fees balance in this fund are restricted solely to improving public broadcasting capabilities, studio improvements, and other capital expenditures improving the overall cable system. The assigned fund balance in this fund is used for other communications operating and capital expenditures. 111 City of Chanhassen, Minnesota Nonmajor Special Revenue Funds Combining Balance Sheet December 31, 2023 201 202 Charitable Gambling Cemetery Assets Cash and investments $ 50,800 $ 64,283 Receivables Accounts 9,683 - Accrued interest 255 315 Total Assets Liabilities Accounts payable Fund Balances Restricted for Communications Public safety Committed Total Fund Balances Total Liabilities and Fund Balances 210 Cable TV Total $ 324,442 $ 439,525 - 9,683 1,589 2,159 $ 60,738 $ 64,598 $ 326,031 $ 451,367 $ 1,459 $ - $ 2,145 $ 3,604 - - 43,837 43,837 59,279 - - 59,279 - 64,598 280,049 344,647 59,279 64,598 323,886 447,763 $ 60,738 $ 64,598 $ 326,031 $ 451,367 112 Revenues Charges for services Investment earnings Miscellaneous revenues Contributions Total Revenues Expenditures Current General government Capital outlay Public safety Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers out Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 City of Chanhassen, Minnesota Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2023 201 202 210 Charitable Gambling Cemetery Cable TV Total $ - $ 1,900 $ - $ 1,900 1,979 2,944 16,843 21,766 63,203 625 - 63,828 65,182 5,469 16,843 87,494 32,085 32,085 954 41,535 42,489 - - 32,085 954 41,535 74,574 33,097 4,515 (24,692) 12,920 - - (45,000) (45,000) 33,097 4,515 (69,692) (32,080) 26,182 60,083 393,578 479,843 $ 59,279 $ 64,598 $ 323,886 $ 447,763 113 THIS PAGE IS LEFT BLANK INTENTIONALLY 114 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. 115 City of Chanhassen, Minnesota Debt Service Funds Combining Balance Sheet December 31, 2023 Assets Cash and investments Receivables Accrued interest Taxes Special assessments Total Assets Liabilities Accounts payable Deferred Inflows of Resources Unavailable revenue - special assessments Fund Balances Restricted for debt service Assigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances 300 368 370 2009A G.O. 2016A G.O. Permanent Refunding Refunding Revolving Debt Bonds Bonds Total $ 715,766 $ 840,238 $ 694,914 $ 2,250,918 3,470 4,073 3,317 10,860 - - 2,400 2,400 5,321 311,122 - 316,443 $ 724,557 $ 1,155,433 $ 700,631 $ 2,580,621 $ - $ 500,250 $ - $ 500,250 5,321 311,122 - 316,443 - - 700,631 700,631 719,236 344,061 - 1,063,297 719,236 344,061 700,631 1,763,928 $ 724,557 $ 1,155,433 $ 700,631 $ 2,580,621 116 City of Chanhassen, Minnesota Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2023 300 368 370 2009A G.O. 2016A G.O. Permanent Refunding Refunding Revolving Debt Bonds Bonds Total Revenues Property taxes $ - $ - $ 482,000 $ 482,000 Special assessments 8,730 - - 8,730 Investment earnings 32,794 38,581 24,176 95,551 Miscellaneous - - - - Total Revenues 41,524 38,581 506,176 586,281 Expenditures Current General government - 120,000 350 120,350 Debt service Principal - - 385,000 385,000 Interest and other - - 70,424 70,424 Total Expenditures - 120,000 455,774 575,774 Net Change in Fund Balances 41,524 (81,419) 50,402 10,507 Fund Balances, January 1 677,712 425,480 650,229 1,753,421 Fund Balances, December 31 $ 719,236 $ 344,061 $ 700,631 $ 1,763,928 117 THIS PAGE IS LEFT BLANK INTENTIONALLY 118 NONMAJOR CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by enterprise funds. 400 Capital Equipment/Vehicle 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 Capital Facilities 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 Development Fund - 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. 414 Civic Campus Fund - Accounts for the City's expenditures related to the City's Civic Campus project. The fund opened in 2023 when expenditures for the project began. 420 Transportation Infrastructure Management - Accounts for trail construction and certain maintenance costs of local streets such as sealcoating, patching, and inspections. 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. 605 TH101 Improvements - Accounts for the City's expenditures related to TH101 Improvements. 119 Assets Cash and investments Receivables Accounts Accrued interest Taxes Due from other governments Prepaid items Total Assets Liabilities Accounts payable Contracts payable Due to other governments Due to other funds Total Liabilities Fund Balances City of Chanhassen, Minnesota Nonmajor Capital Projects Funds Combining Balance Sheet December 31, 2023 400 401 402 Capital Equipment/ Park Capital 410 414 Park Civic Development Campus $ 1,368,023 $ 168,942 $ 312,982 $ 861,342 $ 2,201 89,047 - - - - 6,606 828 1,491 3,119 - 3,059 - 771 - - - - - 69 - 15,400 - - - - $ 1,482,135 $ 169,770 $ 315,244 $ 864,530 $ 2,201 $ 17,997 $ - $ 107,810 $ 5,070 $ 152,464 - - - 10,679 - - - - - 825,000 17,997 - 107,810 15,749 977,464 Nonspendable 15,400 - - - - Restricted for Capital projects - - - 848,781 - Tax increments - - - - - Assigned for Capital projects 1,448,738 169,770 207,434 - - Unassigned - - - - (975,263) Total Fund Balances 1,464,138 169,770 207,434 848,781 (975,263) Total Liabilities and Fund Balances $ 1,482,135 $ 169,770 $ 315,244 $ 864,530 $ 2,201 120 420 480 481 605 Transportation Frontier Lake Place Infrastructure Development Senior Apt TH101 Management TIF #11 TIF #12 Improvements Total $ 1,002,917 $ 159,667 $ 11,365 $ 9,181 $ 3,896,620 - - - - 89,047 4,877 774 49 172 17,916 2,705 - - - 6,535 - 239,717 239,786 - - - 15,400 $ 1,010,499 $ 160,441 $ 11,414 $ 249,070 $ 4,265,304 $ 180,659 $ 121,249 $ 12,063 $ 3,007 $ 600,319 - - - 165,347 165,347 - - 10,679 - 26,263 851,263 180,659 121,249 38,326 168,354 1,627,608 15,400 - 848,781 - 39,192 - 39,192 829,840 - 80,716 2,736,498 - - (26,912) (1,002,175) 829,840 39,192 (26,912) 80,716 2,637,696 $ 1,010,499 $ 160,441 $ 11,414 $ 249,070 $ 4,265,304 121 Revenues Taxes General property Tax increment Intergovernmental Other Licenses and permits Investment earnings Miscellaneous Refunds and reimbursements Other Total Revenues Expenditures Capital outlay General government Public safety Public works Culture and recreation Community development Debt service Principal Interest and other charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Sale of capital assets Transfers in Issuance of leases Transfers out Total Other Financing Sources (Uses) Net Changes in Fund Balances Fund Balances, January 1 Fund Balances, December 31 City of Chanhassen, Minnesota Nonmajor Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended December 31, 2023 400 401 402 Capital Equipment/ Park Capital Vehicle Renovation Facilities 410 414 Park Civic Development Campus $ 615,000 $ $ 155,000 $ $ - - 424,099 66,789 6,712 8,219 23,704 16,758 - - 74,720 3,400 5,000 - - 701,947 11,712 163,219 522,523 520,924 - - - 975,263 42,540 229,508 - 371,809 - - - 300,471 261,156 24,908 243,623 113,898 96,310 55,103 - - - - 1,404,745 261,156 254,416 339,933 975,263 (702,798) (249,444) (91,197) 182,590 (975,263) 293,907 - - - - 170,000 200,000 243,623 506,576 - - - (200,000) - - 600,483 170,000 200,000 243,623 (102,315) (79,444) 108,803 426,213 (975,263) 1,566,453 249,214 98,631 422,568 $ 1,464,138 $ 169,770 $ 207,434 $ 848,781 $ (975,263) 122 420 480 481 605 Transportation Frontier Lake Place Infrastructure Development Senior Apt TH101 Management TIF #11 TIF #12 Improvements Total $ 544,000 $ - $ - $ $ 1,314,000 - 255,261 26,806 282,067 - - 1,412,480 1,412,480 - - - - 424,099 42,348 3,767 190 3,284 155,013 - - - - 91,478 - - - - 8,400 586,348 259,028 26,996 1,415,764 3,687,537 - - - - 1,496,187 - - 272,048 536,060 1,412,480 2,320,349 - - - - 830,158 244,416 29,205 273,621 - - 210,208 - - - - 55,103 536,0 00 244,416 29,205 1,412,480 5,457,674 50,288 14,612 (2,209) 3,284 (1,770,137) 293,907 613,623 506,576 (200,000) - - 1,214,106 50,288 14,612 (2,209) 3,284 (556,031) 779,552 24,580 (24,703) 77,432 3,193,727 $ 829,840 $ 39,192 $ (26,912) $ 80,716 $ 2,637,696 123 THIS PAGE IS LEFT BLANK INTENTIONALLY 124 City of Chanhassen, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued on the Following Pages) For the Year Ended December 31, 2023 (With Comparative Actual Amounts for the Year Ended December 31, 2022) Revenues Taxes General property Franchise fees Cable franchise fee Licenses and permits General government Public safety Public works Community development Total licenses and permits Intergovernmental Federal Grants State Local performance aid Fire aid Police aid County Other county grants Local Miscellaneous Total intergovernmental Charges for services General government Public safety Public works Culture and recreation Community development Total charges for services Fines and forfeitures Investment earnings (loss) Miscellaneous revenues Contributions and donations Refunds and reimbursements Other Total miscellaneous Total revenues 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts $ 10,749,000 $ 10,749,000 $ 10,689,452 $ (59,548) $ 10,245,765 154,000 154,000 143,187 (10,813) - 2,450 2,450 2,250 (200) 2,375 1,506,025 1,506,025 1,464,355 (41,670) 1,481,103 58,500 58,500 43,204 (15,296) 58,025 12,500 12,500 18,715 6,215 15,220 1,579,475 1,579,475 1,528,524 (50,951) 1,556,723 - - 14 14 22,196 - - 3,624 3,624 - 237,795 237,795 274,005 36,210 233,815 150,000 150,000 165,460 15,460 142,005 - - 7,500 7,500 4,409 60,000 60,000 70,983 10,983 93,612 447,795 447,795 521,586 73,791 496,037 385,400 385,400 405,564 20,164 439,683 3,000 3,000 4,650 11650 1,200 100,100 100,100 23,220 (76,880) 81,054 452,900 452,900 567,159 114,259 510,510 20,500 20,500 25,528 5,028 18,145 961,900 961,900 1,026,121 64,221 1,050,592 75,000 75,000 76,295 1,295 69,173 140,000 140,000 467,266 327,266 (401,256) 26,100 26,100 24,032 (2,068) 20,785 23,800 23,800 77,362 53,562 79,355 6,000 6,000 23,561 17,561 13,962 55,900 55,900 124,955 69,055 114,102 14,163,070 14,163,070 14,577,386 414,316 13,131,136 125 City of Chanhassen, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2023 (With Comparative Actual Amounts for the Year Ended December 31, 2022) Expenditures Current General government City council Personnel services Other services and charges Total city council Administration Personnel services Supplies Other services and charges Total administration Finance Personnel services Supplies Other services and charges Total finance Elections Personnel services Supplies Other services and charges Total elections Contracted central services Other services and charges Total contracted central services Information technology Personnel services Supplies Other services and charges Total information technology City hall Personnel services Supplies Other services and charges Total city hall Library Supplies Other services and charges Total library 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts $ 35,214 $ 35,214 $ 36,908 $ (1,694) $ 33,750 62,800 62,800 96,707 (33,907) 88,190 98,014 98,014 133,615 (35,601) 121,940 495,752 495,752 460,932 34,820 449,856 35,000 35,000 58,246 (23,246) 876 139,819 139,819 153,252 (13,433) 129,337 670,571 670,571 672,430 (1,859) 580,069 301,406 301,406 299,998 1,408 277,172 100 100 240 (140) 331 47,407 47,407 47,070 337 38,099 348,913 348,913 347,308 1,605 315,602 - - - - 23,042 - - - - 1,727 14,000 14,000 12,089 1,911 23,054 14,000 14,000 12,089 1,911 47,823 399,000 399,000 386,210 12,790 387,115 399,000 399,000 386,210 12,790 387,115 260,013 260,013 261,182 (1,169) 244,567 322,404 322,404 292,241 30,163 252,379 127,230 127,230 142,269 (15,039) 96,961 709,647 709,647 695,692 13,955 593,907 69,714 69,714 59,285 10,429 57,576 18,500 18,500 5,101 13,399 54,961 299,800 299,800 293,347 6,453 362,847 388,014 388,014 357,733 30,281 475,384 1,500 1,500 73 1,427 92 131,600 131,600 211,563 (79,963) 130,400 133,100 133,100 211,636 (78,536) 130,492 126 City of Chanhassen, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2023 (With Comparative Actual Amounts for the Year Ended December 31, 2022) 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures (Continued) Current (continued) General government (continued) Economic development Personnel services $ 167,484 $ 167,484 $ 165,739 $ 1,745 $ 56,118 Supplies 500 500 - 500 1,600 Other services and charges 11,262 11,262 5,755 5,507 3,114 Total economic development 179,246 179,246 171,494 7,752 60,832 Communication Personnel services 281,430 281,430 271,792 9,638 154,346 Supplies 57,188 57,188 41,745 15,443 - Other services and charges 46,850 46,850 40,340 6,510 31,251 Total communication 385,468 385,468 353,877 31,591 185,597 Total general government 3,325,973 3,325,973 3,342,084 (16,111) 2,898,761 Public Safety Law enforcement Supplies 1,500 1,500 217 1,283 150 Other services and charges 2,168,272 2,168,272 2,060,478 107,794 1,870,532 Total law enforcement 2,169,772 2,169,772 2,060,695 109,077 1,870,682 Fire department Personnel services 1,741,204 1,741,204 1,613,717 127,487 1,340,124 Supplies 82,000 82,000 83,065 (1,065) 78,060 Other services and charges 174,320 174,320 139,469 34,851 159,067 Total fire department 1,997,524 1,997,524 1,836,251 161,273 1,577,251 Building permits & inspection Personnel services 875,145 875,145 869,316 5,829 843,823 Supplies 4,500 4,500 3,816 684 2,588 Other services and charges 70,020 70,020 50,186 19,834 45,502 Total building permits & inspection 949,665 949,665 923,318 26,347 891,913 Community service Supplies - - - - 270 Other services and charges 4,601 Total community service - - - - 4,871 Total public safety 5,116,961 5,116,961 4,820,264 296,697 4,344,717 Public works Engineering Personnel services 558,774 558,774 559,907 (1,133) 502,904 Supplies 9,000 9,000 22,862 (13,862) 7,107 Other services and charges 7,300 7,300 12,450 (5,150) (3,176) Total engineering 575,074 575,074 595,219 (20,145) 506,835 127 City of Chanhassen, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2023 (With Comparative Actual Amounts for the Year Ended December 31, 2022) 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts Expenditures (Continued) Current (continued) Public works (continued) G.I.S. Personnel services $ 70,300 $ 70,300 $ 69,935 $ 365 $ 66,525 Supplies 2,500 2,500 2,500 - 17,116 Other services and charges 21,160 21,160 16,894 4,266 (5,823) Total G.I.S. 93,960 93,960 89,329 4,631 77,818 Street maintenance Personnel services 622,268 622,268 538,650 83,618 491,944 Supplies 133,000 133,000 230,858 (97,858) 125,401 Other services and charges 27,100 27,100 38,273 (11,173) 33,600 Total street maintenance 782,368 782,368 807,781 (25,413) 650,945 Street lighting Supplies 50,000 50,000 4,263 45,737 30,616 Other services and charges 445,500 445,500 428,467 17,033 452,979 Total street lighting 495,500 495,500 432,730 62,770 483,595 Fleet maintenance Personnel services 278,973 278,973 280,561 (1,588) 265,798 Supplies 183,100 183,100 155,256 27,844 164,922 Other services and charges 17,800 17,800 5,980 11,820 15,850 Total fleet maintenance 479,873 479,873 441,797 38,076 446,570 Public works operations Personnel services 105,004 105,004 102,602 2,402 98,639 Supplies 1,100 1,100 755 345 1,270 Other services and charges 70,790 70,790 50,825 19,965 107,718 Total public works operations 176,894 176,894 154,182 22,712 207,627 Total public works 2,603,669 2,603,669 2,521,038 82,631 2,373,390 Culture and recreation Park administration Personnel services 173,719 173,719 175,979 (2,260) 164,691 Supplies 204 204 139 65 406 Other services and charges 8,956 8,956 6,325 2,631 13,349 Total parks administration 182,879 182,879 182,443 436 178,446 Recreation center Personnel services 288,396 288,396 312,751 (24,355) 282,491 Supplies 35,450 35,450 17,504 17,946 16,128 Other services and charges 122,463 122,463 147,484 (25,021) 126,878 Total recreation center 446,309 446,309 477,739 (31,430) 425,497 Senior center Personnel services 100,378 100,378 99,842 536 93,126 Supplies 3,400 3,400 6,988 (3,588) 6,081 Other services and charges 42,110 42,110 41,996 114 41,855 Total senior center 145,888 145,888 148,826 (2,938) 141,062 128 City of Chanhassen, Minnesota General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Continued) For the Year Ended December 31, 2023 (With Comparative Actual Amounts for the Year Ended December 31, 2022) Expenditures (Continued) Current (continued) Culture and recreation (continued) Recreation programs Personnel services Supplies Other services and charges Total recreation programs Lake Ann Park Personnel services Supplies Other services and charges Total Lake Ann Park operations Park maintenance Personnel services Supplies Other services and charges Total park maintenance Total culture and recreation Community development Planning administration Personnel services Supplies Other services and charges Total planning administration Total community development Total current Total expenditures Excess (deficiency) of revenues Over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts $ 306,742 $ 306,742 $ 296,922 $ 9,820 $ 284,998 28,950 28,950 30,840 (1,890) 28,430 151,525 151,525 160,184 (8,659) 141,233 487,217 487,217 487,946 (729) 454,661 14,084 14,084 12,510 1,574 13,418 16,700 16,700 22,728 (6,028) 14,820 57,850 57,850 59,886 (2,036) 52,821 88,634 88,634 95,124 (6,490) 81,059 1,016,773 1,016,773 979,416 37,357 904,092 99,000 99,000 129,545 (30,545) 110,302 218,150 218,150 251,452 (33,302) 151,640 1,333,923 1,333,923 1,360,413 (26,490) 1,166,034 2,684,850 2,684,850 2,752,491 (67,641) 2,446,759 595,617 595,617 581,271 14,346 568,624 400 400 192 208 68 15,600 15,600 70,178 (54,578) 26,104 611,617 611,617 651,641 (40,024) 594,796 611,617 611,617 651,641 (40,024) 594,796 14,343,070 14,343,070 14,087,518 255,552 12,658,423 14,343,070 14,343,070 14,087,518 255,552 12,658,423 (180,000) (180,000) 489,868 669,868 472,713 180,000 180,000 180,000 - 160,000 (170,000) (170,000) (170,000) (250,000) 10,000 10,000 10,000 (90,000) (170,000) (170,000) 499,868 669,868 382,713 8,372,231 8,372,231 8,372,231 - 7,989,518 $ 8,202,231 $ 8,202,231 $ 8,872,099 $ 669,868 $ 8,372,231 129 City of Chanhassen, Minnesota Charitable Gambling Fund Budgeted Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Year Ended December 31, 2023 (With Comparative Totals for December 31, 2022) 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts Revenues Investment earnings $ - $ - $ 1,979 $ 1,979 $ (1,723) Miscellaneous revenues 50,000 50,000 63,203 13,203 57,471 Total Revenues 50,000 50,000 65,182 15,182 55,748 Expenditures Current Public safety Capital outlay Public safety Total Expenditures Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 4,622 50,000 50,000 32,085 17,915 73,333 50,000 50,000 32,085 17,915 77,955 - - 33,097 33,097 (22,207) 26,182 26,182 26,182 - 48,389 $ 26,182 $ 26,182 $ 59,279 $ 33,097 $ 26,182 130 City of Chanhassen, Minnesota Cemetery Fund Budgeted Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Year Ended December 31, 2023 (With Comparative Totals for December 31, 2022) Revenues Charges for services Investment earnings (loss) Miscellaneous revenues Total Revenues Expenditures Current General government Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts $ 1,000 $ 1,000 $ 1,900 $ 900 $ 7,450 500 500 2,944 2,444 (3,048) 7,000 7,000 625 (6,375) - 8,500 8,500 5,469 (3,031) 4,402 29,000 29,000 954 28,046 25,256 (20,500) (20,500) 4,515 25,015 (20,854) 60,083 60,083 60,083 - 80,937 $ 39,583 $ 39,583 $ 64,598 $ 25,015 $ 60,083 131 City of Chanhassen, Minnesota Cable Television Fund Budgeted Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual For the Year Ended December 31, 2023 (With Comparative Totals for December 31, 2022) Revenues Franchise taxes Investment earnings (loss) Total Revenues Expenditures Current General government Capital outlay General government Total Expenditures Deficiency of Revenues Under Expenditures Other Financing Sources (Uses) Transfers out Net Change in Fund Balances Fund Balances, January 1 Fund Balances, December 31 2023 2022 Budgeted Amounts Actual Variance with Actual Original Final Amounts Final Budget Amounts $ - $ - $ - $ - $ 155,950 7,598 7,598 16,843 9,245 (16,824) 7,598 7,598 16,843 9,245 139,126 40,000 40,000 41,535 (1,535) 252,053 10,000 10,000 - 10,000 - 50,000 50,000 41,535 8,465 252,053 (42,402) (42,402) (24,692) 17,710 (112,927) (45,000) (45,000) (45,000) - (87,402) (87,402) (69,692) 17,710 (112,927) 393,578 393,578 393,578 - 506,505 $ 306,176 $ 306,176 $ 323,886 $ 17,710 $ 393,578 132 STATISTICAL SECTION (UNAUDITED) CHANHASSEN, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2023 133 THIS PAGE IS LEFT BLANK INTENTIONALLY 134 STATISTICAL SECTION (UNAUDITED) This part of the City'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 government's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed overtime. Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. 135 City of Chanhassen, Minnesota Statistical Section (Unaudited) Net Position by Component Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 Governmental Activities Net investment in capital assets $ 71,867,072 $ 71,225,523 $ 72,588,940 $ 70,255,784 Restricted 6,335,447 5,982,262 3,459,840 3,270,087 Unrestricted 13,877,772 9,510,105 10,221,704 10,028,355 Total Governmental Activities Net Position $ 92,080,291 $ 86,717,890 $ 86,270,484 $ 83,554,226 Business -type Activities Net investment in capital assets $ 54,111,608 $ 55,704,478 $ 57,478,975 $ 57,212,106 Unrestricted 10,467,201 10,032,731 10,516,316 10,126,315 Total Business -type Activities Net Position $ 64,578,809 $ 65,737,209 $ 67,995,291 $ 67,338,421 Total Primary Government Net investment in capital assets $ 125,978,680 $ 126,930,001 $ 130,067,915 $ 127,467,890 Restricted 6,335,447 5,982,262 3,459,840 3,270,087 Unrestricted 24,344,973 19,542,836 20,738,020 20,154,670 Total Primary Government $ 156,659,100 $ 152,455,099 $ 154,265,775 $ 150,892,647 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. 136 Table 1 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 71,053,355 $ 72,986,179 $ 73,063,927 $ 70,860,083 $ 68,702,496 $ 67,404,190 2,548,980 2,883,391 1,629,219 1,020,560 1,135,813 2,858,088 8,781,660 8,360,013 9,369,203 12,019,412 13,915,001 14,718,920 $ 82,383,995 $ 84,229,583 $ 84,062,349 $ 83,900,055 $ 83,753,310 $ 84,981,198 $ 56,195,385 $ 54,469,960 $ 55,526,666 $ 56,069,887 $ 56,585,833 $ 56,649,651 12,342,280 13, 557,181 11,740, 521 16,353,752 11,289,333 10,958,947 $ 68,537,665 $ 68,027,141 $ 67,267,187 $ 72,423,639 $ 67,875,166 $ 67,608,598 $ 127,248,740 $ 127,456,139 $ 128,590,593 $ 126,929,970 $ 125,288,329 $ 124,053,841 2,548,980 2,883,391 1,629,219 1,020,560 1,135,813 2,858,088 21,123,940 21,917,194 21,109,724 28,373,164 25,204,334 25,677,867 $ 150,921,660 $ 152,256,724 $ 151,329,536 $ 156,323,694 $ 151,628,476 $ 152,589,796 137 City of Chanhassen, Minnesota Statistical Section (Unaudited) Changes in Net Position (Continued on the Following Pages) Last Ten Fiscal Years (Accrual Basis of Accounting) Expenses Governmental Activities General government Public safety Public works Culture and recreation Community development Interest on long-term debt Total Governmental Activities Expenses Business -type Activities Water Sewer Surface water management Total Business -type Activities Expenses Total Expenses Program Revenues Governmental Activities Charges for services General government Public safety Public works Culture and recreation Community development Operating grants and contributions Capital grants and contributions Total Governmental Activities Program Revenue Business -type Activities Charges for services Water Sewer Surface water management Operating grants and contributions Capital grants and contributions Total Business -type Activities Program Revenue Total Program Revenues Fiscal Year 2014 2015 2016 2017 $ 3,099,004 3,416,088 9,604,525 3,062,592 1,043,848 465,935 20,691,992 3,347,965 3,171,696 1,491,763 8,011,424 $ 28,703,416 $ 489,237 1,327,733 236,838 847,773 39,941 532,337 3,296,748 $ 2,775,663 3,826,376 11,153,322 2,952,985 527,268 409,676 21,645,290 3,290,265 3,297,128 1,328,144 7,915,537 $ 29,560,827 $ 486,141 1,370,829 218,686 724,533 36,679 823,943 5,812,825 $ 2,887,111 3,973,031 7,591,530 3,278,139 689,448 493,746 18,913,005 4,422,789 3,254,619 1,388,979 9,066,387 $ 27,979,392 $ 508,067 1,219,943 253,468 968,122 28,507 735,840 3,705,857 $ 3,230,517 3,969,540 8,161,048 3,227,236 918,962 408,273 19,915,576 3,866,810 3,746,880 1,538,468 9,152,158 $ 29,067,734 $ 481,125 1,289,794 329,129 891,390 35,582 902,871 2,425,333 6,770,607 9,473,636 7,419,804 6,355,224 2,573,027 2,472,536 639,087 210,857 2,633,793 8,529,300 $ 15,299,907 2,611,895 2,525,731 668,971 45,130 3,140,823 8,992,550 $ 18,466,186 2,717,285 2,619,882 684,199 72,007 5,199,139 11,292,512 $ 18,712,316 2,921,936 2,764,674 709,508 45,109 1,678,595 8,119,822 $ 14,475,046 138 Table 2 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 3,291,465 $ 2,968,604 $ 3,503,418 3,819,890 4,045,361 3,975,838 7,225,531 9,808,088 25,142,224 3,158,725 3,275,021 2,704,009 589,570 535,700 754,205 173,323 132,327 107,993 18,258,504 20,765,101 36,187,687 4,567,874 5,842,506 4,908,477 4,122,804 3,879,581 4,312,195 1,634,475 1,918,378 1,694,090 10,325,153 11,640,465 10,914,762 $ 28,583,657 $ 32,405,566 $ 47,102,449 $ 3,545,101 $ 3,537,796 $ 4,326,016 4,055,112 4,396,715 5,825,937 17,282,830 11,350,075 10,646,546 2,957,867 3,432,625 4,252,161 814,146 850,151 868,229 72,195 71,680 218,628 28,727,251 23,639,042 26,137,517 5,245,018 7,301,583 5,782,514 5,025,866 6,548,611 5,359,316 2,541,714 4,489,250 2,565,581 12,812,598 18,339,444 13,707,411 $ 41,539,849 $ 41,978,486 $ 39,844,928 $ 559,077 $ 320,681 $ 426,339 $ 394,576 $ 483,008 $ 952,621 1,752,643 1,474,555 1,550,768 2,283,340 1,555,525 1,556,441 144,963 140,753 396,649 275,801 210,555 81,253 1,098,679 1,078,128 162,546 613,935 648,730 1,007,606 32,228 28,866 30,426 16,060 33,385 44,243 948,912 2,770,655 14,970,473 6,047,214 2,552,195 4,556,281 1,669,995 4,716,702 4,066,959 4,683,258 3,881,530 1,693,875 6,206,497 10,530,340 21,604,160 14,314,184 9,364,928 9,892,320 3,121,292 3,108,307 3,533,939 4,384,603 4,485,402 5,193,977 3,034,207 3,144,282 3,260,080 3,469,282 3,699,835 3,998,048 764,930 998,832 1,083,833 1,458,751 1,564,000 1,807,415 44,604 460,905 39,552 38,380 47850 46,458 3,965,466 3,108,377 2,084,681 8,513,319 4,090:784 1,853,961 10,930,499 10,820,703 10,002,085 17,864,335 13,887,871 12,899,859 $ 17,136,996 $ 21,351,043 $ 31,606,245 $ 32,178,519 $ 23,252,799 $ 22,792,179 139 City of Chanhassen, Minnesota Statistical Section (Unaudited) Changes in Net Position (Continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 Net (Expenses) Revenues Governmental activities $ (13,921,385) $ (12,171,654) $ (11,493,201) $ (13,560,352) Business -type activities 517,876 1,077,013 2,226,125 (1,032,336) Total Primary Government $ (13,403,509) $ (11,094,641) $ (9,267,076) $ (14,592,688) General Revenues and Other Changes in Net Position Governmental Activities Taxes Property taxes $ 10,482,273 Tax increments 307,940 Franchise fees - Grants and contributions not $ 10,536,216 $ 10,643,917 200,338 111,761 $ 10,826,116 restricted to specific programs 19,736 21,679 19,754 19,753 Unrestricted investment earnings (loss) 183,602 176,731 156,202 164,393 Sale of capital assets 191,755 66,248 41,129 38,254 Other general revenues - - - - Transfers 6,389 (612,078) 73,032 (204,422) Total Governmental Activities 11,191,695 10,389,134 11,045,795 10,844,094 Business -type Activities Unrestricted investment earnings Sale of capital assets Other general revenues Transfers Total Business -type Activities Total Primary Government Change in Net Position Governmental activities Business -type activities Total Primary Government 134,533 132,406 79,765 171,044 - 57,510 25,224 - (6,389) 612,078 (73,032) 204,422 128,144 801,994 31,957 375,466 $ 11,319,839 $ 11,191,128 $ 11,077,752 $ 11,219,560 $ (2,729,690) $ (1,782,520) $ (447,406) $ (2,716,258) 646,020 1,879,007 2,258,082 (656,870) $ (2,083,670) $ 96,487 $ 1,810,676 $ (3,373,128) 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. 140 Table 2 Fiscal Year 2018 2019 2020 2021 2022 2023 $ (12,052,007) $ (10,234,761) $ (14,583,527) $ (14,413,067) $ (14,274,114) $ (16,245,197) 605,346 (819,762) (912,677) 5,051,737 (4,451,573) (807,552) $ (11,446,661) $ (11,054,523) $ (15,496,204) $ (9,361,330) $ (18,725,687) $ (17,052,749) $ 10,877,849 $ 10,996,831 $ 11,745,709 $ 12,075,260 $ 12,644,286 $ 13,409,631 - - 236,485 279,653 279,283 282,067 - 185,181 1,826,255 2,019,812 2,036,470 2,045,767 19,755 20,009 - 311 170656 390,075 258,456 491,345 368,168 (22,856) (824:062) 1,054,685 45,244 103,976 - 84,387 155,654 164,746 - - - - - 126,114 (319,528) 283,007 239,676 (185,794) (334,918) - 10,881,776 12,080,349 14,416,293 14,250,773 14,127,369 17,473,085 263,802 548,747 390,604 (78,079) (434,818) 540,984 10,568 43,498 1,795 - - - 319,528 (283,007) (239,676) 185,794 334,918 - 593,898 309,238 152,723 107,715 (99,900) 540,984 $ 11,475,674 $ 12,389,587 $ 14,569,016 $ 14,358,488 $ 14,027,469 $ 18,014,069 $ (1,170,231) $ 1,845,588 $ (167,234) $ (162,294) $ (146,745) $ 1,227,888 1,199,244 (510,524) (759,954) 5,159,452 (4,551,473) (266,568) $ 29,013 $ 1,335,064 $ (927,188) $ 4,997,158 $ (4,698,218) $ 961,320 141 City of Chanhassen, Minnesota Statistical Section (Unaudited) Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 General Fund Nonspendable $ 58,333 $ 72,114 $ 25,832 $ 81,032 Assigned - - - - Unassigned 5,550,732 5,258,232 5,286,880 5,307,088 Total General Fund $ 5,609,065 $ 5,330,346 $ 5,312,712 $ 5,388,120 All other Governmental Funds Nonspendable $ 1,289,575 $ 1,253,705 $ - $ 990,723 Restricted 5,724,419 5,824,354 8,673,981 8,458,576 Committed - - - - Assigned 5,951,507 5,586,353 7,806,958 6,602,135 Unassigned (475,352) (372,509) (264,772) (154,506) Total all other Governmental Funds $ 12,490,149 $ 12,291,903 $ 16,216,167 $ 15,896,928 142 Table 3 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 87,067 $ 82,265 $ 63,775 $ 69,953 $ 91,340 $ 63,227 - - - - 657,000 797,600 5,667,626 5,255,804 6,684,991 7,919,562 7,623,891 8,011,272 $ 5,754,693 $ 5,338,069 $ 6,748,766 $ 7,989,515 $ 8,372,231 $ 8,872,099 $ 9,326 $ 8,781 $ 49,690 $ 690 $ - $ 15,400 2,618,680 2,944,091 1,669,927 1,056,768 1,167,396 2,884,859 - - - - - 344,647 6,414,882 6,657,125 6,809,934 7,819,511 8,603,977 7,112,372 (24,491) (570) - (22,425) (94,155) (1,002,175) $ 9,018,397 $ 9,609,427 $ 8,529,551 $ 8,854,544 $ 9,677,218 $ 9,355,103 143 City of Chanhassen, Minnesota Statistical Section (Unaudited) Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 Revenues Taxes $ 10,489,350 $ 10,529,994 $ 10,640,315 $ 10,820,682 Tax increment 307,940 200,338 111,761 - Licenses and permits 1,691,634 1,565,900 1,653,858 1,641,140 Intergovernmental 2,553,062 4,897,139 974,917 2,149,875 Charges for services 798,578 799,543 846,540 838,498 Franchise fees - - - - Fines and forfeits 100,516 117,189 114,367 128,394 Special assessments 854,966 1,664,424 820,026 842,523 Investment earnings 183,602 176,731 156,202 164,393 Miscellaneous 409,908 431,752 486,962 512,701 Total Revenues 17,389,556 20,383,010 15,804,948 17,098,206 Expenditures General government 2,350,437 2,391,195 2,479,271 2,871,267 Public safety 3,258,363 3,431,541 3,713,146 3,602,897 Public works 5,352,221 7,537,376 3,961,016 4,617,523 Culture and recreation 2,164,703 2,068,532 2,256,314 2,395,554 Community development 1,034,047 515,382 659,276 940,000 Capital outlay 3,437,404 3,165,333 1,989,622 3,005,792 Debt service Principal 4,190,000 1,810,000 1,795,000 670,000 Interest and fiscal charges 518,722 439,470 483,533 433,925 Total Expenditures 22,305,897 21,358,829 17,337,178 18,536,958 Deficiency of Revenues Under Expenditures (4,916,341) (975,819) (1,532,230) (1,438,752) Other Financing Sources (Uses) Bond issued - - 4,805,000 - Project financing - - - - Leases issued - - - - Loans issued - - - - Premium on bonds issued - - 239,773 - Sale of capital assets 301,531 41,015 90,318 19,286 Transfer in 1,783,719 2,158,844 1,347,883 1,924,157 Transfer out (676,095) (1,701,005) (1,044,114) (748,522) Total Other Financing Sources (Uses) 1,409,155 498,854 5,438,860 1,194,921 Net Change in Fund Balances $ (3,507,186) $ (476, 65) $ 3,906,630 $ (243,831) Debt Service as a Percentage of Noncapital Expenditures 24.96% 12.36% 14.85% 7.11 % 144 Table 4 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 10,856,842 $ 10,960,876 $ 11,800,538 $ 12,046,658 $ 12,714,095 $ 13,403,452 - - 236,485 279,653 279,283 282,067 2,289,052 2,047,190 1,574,780 2,608,294 1,684,578 1,952,623 2,019,215 6,294,417 18,569,329 6,883,846 3,698,522 4,026,405 820,745 808,010 546,809 535,608 693,912 1,028,021 - - 1,826,255 2,019,812 2,036,470 2,045,767 95,351 89,989 73,800 78,673 69,173 76,295 600,056 727,026 464,373 987,431 1,098,027 1,318,777 258,456 491,345 368,168 (22,856) (824,062) 1,055,081 452,781 353,177 408,248 445,083 561,796 288,661 17,392,498 21,772,030 35,868,785 25,862,202 22,011,794 25,477,149 2,835,108 2,644,661 3,361,771 3,452,273 3,261,430 3,504,923 3,593,877 3,802,544 3,786,905 3,858,508 4,535,583 4,820,264 3,847,782 6,041,417 20,127,051 3,207,828 7,851,764 2,521,038 2,326,272 2,418,229 1,854,471 2,247,485 2,448,568 2,752,491 610,368 567,461 803,234 886,104 864,577 651,641 4,824,061 6,568,983 7,280,266 10,379,700 1,613,111 10,983,787 5,985,000 720,000 1,585,000 360,000 536,502 740,208 295,294 157,312 143,970 92,680 92,290 125,527 24,317,762 22,920,607 38,942,668 24,484,578 21,203,825 26,099,879 (6,925,264) (1,148,577) (3,073,883) 1,377,624 807,969 (622,730) - - 546,108 288,929 243,263 506,576 58,458 25,698 46,443 84,983 154,158 293,907 6,724,164 2,153,197 2,852,877 - 642,375 793,623 (6,369,316) (855,912) (40,724) (185,794) (642,375) (793,623) 413,306 1,322,983 3,404,704 188,118 397,421 800,483 $ (6.511.95L $ 174,406 $ 330,821 $ 1,565,742 $ 1,205,390 $ 177,753 32.22% 5.37% 5.46% 3.21 % 3.21 % 5.73% 145 City of Chanhassen, Minnesota Statistical Section (Unaudited) Tax Capacity and Estimated Market Value of Property Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 Tax Capacity Residential property $ 28,725,937 $ 32,778,287 $ 33,790,483 $ 34,470,607 Agricultural 132,728 153,500 222,144 278,224 Commercial/Industrial property 8,984,174 9,205,053 9,508,063 9,910,242 All other 613,105 620,620 669,890 764,420 Total Tax Capacity 38,455,944 42,757,460 44,190,580 45,423,493 Captured tax capacity on tax increment district (252,884) (267,337) (103,638) - Fiscal disparity contribution (1,971,928) (1,896,611) (2,119,400) (2,055,461) Adjusted Tax Capacity $ 36,231,132 $ 40,593,512 $ 41,967,542 $ 43,368,032 City direct tax rate 27.23862 24.63317 24.25249 23.85464 Estimated market value $ 3,294,605,000 $ 3,686,777,200 $ 3,802,904,100 $ 3,899,829,200 Tax Capacity as a Percent of EMV 1.10% 1.10% 1.10% 1.11 % Source: Carver County Taxpayer Services and Hennepin County 146 Table 5 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 36,545,419 $ 39,891,179 $ 42,947,538 $ 43,933,317 $ 45,814,017 $ 54,661,795 296,153 191,360 135,300 133,667 125,056 138,075 10,317,456 10,897,809 11,666,538 12,245,999 12,596,386 13,760,724 869,646 896,937 886,150 935,227 600,978 601,659 48,028,674 51,877,285 55,635,526 57,248,210 59,136,437 69,162,253 - - (248,355) (294,955) (299,262) (343,924) (2,009,509) (2,001,778) (2,077,771) (2,261,018) (2,268,028) (2,440,367) $ 46,019,165 $ 49,875,507 $ 53,309,400 $ 54,692,237 $ 56,569,147 $ 66,377,962 22.66614 21.10456 21.17559 22.11399 22.41520 20.19532 $ 4,112,577,100 $ 4,444,627,000 $ 4,749,987,200 $ 4,868,292,100 $ 5,041,556,300 $ 5,886,580,500 1.12% 1.12% 1.12% 1.12% 1.12% 1.13% 147 City of Chanhassen, Minnesota Statistical Section (Unaudited) Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years Table 6 Fiscal Year City Direct Rate* Overlapping Governments Direct & Ended Operational Debt City School Carver Overlapping December 31 and Capital Service Total District #112 County Other Total 2014 22.708 % 4.531 % 27.239 % 44.917 % 45.211 % 6.873 % 124.240 % 2015 21.532 3.101 24.633 39.120 40.488 6.270 110.511 2016 21.314 2.938 24.252 39.245 38.880 6.417 108.794 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 95.462 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 2023 19.472 0.723 20.195 27.747 29.267 5.012 82.221 Source: Carver County Taxpayer Services *The City Direct Rate is the Urban Based Rate, not including market value levies. 148 Taxpayer LIFT Real Estate Company Inc Istar Minnesota LLC IPX West Village Station LLC Rosemount Inc Lake Susan Apartment Homes LLC Centerpoint Energy Minnegasco Chanhassen Frontier LLC Mission Hills Sr Housing Owner LLC 8610 LLP PHM/Chanhassen Inc IRET Properties Northern States Power Co LTF Real Estate VRDN I LLC LTF Real Estate MP II LLC DRF Chanhassen Medical Bldg Target Corporation T-0862 City of Chanhassen, Minnesota Statistical Section (Unaudited) Principal Property Taxpayers Current Year and Ten Years Ago Table 7 2023 2014 Taxable Percentage of Taxable Percentage of Capacity Total City Capacity Total City Value Rank Capacity Value Value Rank Capacity Value $ 909,614 1 1.4 % 669,166 2 1.0 $ 388,016 1 1.1 % 450,218 3 0.7 441,576 4 0.7 312,586 3 0.8 390,080 5 0.6 342,226 6 0.5 176,442 10 0.5 320,441 7 0.5 275,003 8 0.4 274,682 9 0.4 267,663 10 0.4 202,266 7 0.5 - 369,504 2 1.0 265,464 4 0.7 239,202 5 0.6 204,916 6 0.6 194,888 8 0.5 194 422 9 0.5 Total S 4,340,669 Total All Property S 66,702,097 Source: Carver County Taxpayer Services 6.5 % $ 2,547,706 6.9 % $ 36,823,088 149 THIS PAGE IS LEFT BLANK INTENTIONALLY 150 City of Chanhassen, Minnesota Statistical Section (Unaudited) Property Tax Levies and Tax Collections Last Ten Fiscal Years Collection Percentage Collections Fiscal Total of Current of Levy in Subsequent Total Year Levy Year's Levy Collected Years Collections 2014 $ 10,334,140 $ 10,269,518 99.4 % $ 28,614 $ 10,298,132 2015 10,484,021 10,446,765 99.6 26,753 10,473,518 2016 10,629,621 10,564,815 99.4 49,076 10,613,891 2017 10,795,121 10,718,876 99.3 21,473 10,740,349 2018 10,913,868 10,834,344 99.3 35,060 10,869,404 2019 11,019,868 10,924,102 99.1 78,511 11,002,613 2020 11,741,368 11,656,656 99.3 52,907 11,709,563 2021 12,066,700 12,013,536 99.6 72,357 12,085,893 2022 12,663,076 12,614,877 99.6 16,995 12,631,872 2023 13,463,000 13,397,330 99.5 - 13,397,330 Source: City Finance Department *The percentage of levy collected for taxes levied in fiscal year 2021 exceeds 100% due to receipt of a Green Acres Payback of approximately $23,260. Table 8 Percentage of Levy Collected To Date 99.7 % 99.9 99.9 99.5 99.6 99.8 99.7 100.2 99.8 99.5 151 City of Chanhassen, Minnesota Statistical Section (Unaudited) Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General Tax General Fiscal Obligation Revenue Increment Improvement Lease Other Year Bonds Bonds Bonds Bonds Obligations Debt (1) 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 - - - - 546,108 2021 3,913,863 - - - - 835,037 2022 3,527,878 - - - 221,761 690,037 2023 3,126,893 - - - 614,439 448,727 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 152 Table 9 Business -type Activities G.O. Total Percentage Revenue Lease Primary of Personal Per Bonds Obligations Government Income (2) Capita $ 10,045,261 $ - $ 21,935,261 0.60 % $ 899 9,256,235 - 19,336,235 0.40 784 13,926,719 - 27,240,507 0.30 1,092 23,379,318 - 36,007,121 0.40 1,425 25,671,988 - 32,298,806 0.50 1,238 23,755,499 - 29,646,332 0.40 1,125 28,535,933 - 33,371,889 0.40 1,228 26,311,508 - 31,060,408 0.40 1,182 24,132,877 26,136 28,598,689 0.30 1,081 22,169,245 37,140 26,396,444 (a) 977 153 City of Chanhassen, Minnesota Statistical Section (Unaudited) Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years General G.O. Tax G.O. G.O. Fiscal Obligation Increment Improvement Revenue Year Bonds Bonds Bonds Bonds 2014 $ 9,550,000 $ 635,000 $ 1,705,000 $ 10,045,261 2015 8,925,000 - 1,155,000 9,256,235 2016 13,313,788 - - 13,926,719 2017 12,627,803 - - 23,379,318 2018 6,626,818 - - 25,671,988 2019 5,890,833 - - 23,755,499 2020 4,289,848 - - 28,535,933 2021 3,913,863 - - 26,311,508 2022 3,527,878 - - 24,132,877 2023 3,126,893 - - 22,169,245 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Total General Obligation Bonded Debt $ 21,935,261 19,336,235 27,240,507 36,007,121 32,298,806 29,646,332 32,825,781 30,225,371 27,660,755 25,296,138 154 Table 10 Net General Less Amounts Net General Percentage Obligation Restricted for Obligation of Tax Bonded Debt Debt Service Bonded Debt Capacity Per Capita $ (3,441,810) $ 18,493,451 50.09% $ 758 (3,455,171) 15,881,064 38.60% 644 (6,418,913) 20,821,594 48.72% 834 (6,413,214) 29,593,907 67.23% 1,171 (1,189,446) 31,109,360 66.81% 1,192 (1,283,606) 28,362,726 56.31% 1,076 (564,713) 32,261,068 60.00% 1,187 (594,203) 29,631,168 53.63% 1,128 (618,646) 27,042,109 47.38% 1,031 (673,860) 24,622,278 37.09% 912 155 THIS PAGE IS LEFT BLANK INTENTIONALLY 156 City of Chanhassen, Minnesota Statistical Section (Unaudited) Computation of Direct and Overlapping Debt December 31, 2023 Debt Outstanding Direct Debt City of Chanhassen (1)(2) $ 4,190,059 Overlapping Debt Eastern Carver County School District 135,594,000 Eden Prairie Independent School District 98,606,125 Carver County 7,045,000 Hennepin County 1,056,334,526 Hennepin Suburban Park District 49,655,074 Hennepin Regional Railroad Authority 80,622,443 Metropolitan Council 89,723,130 Total Overlapping Debt 1,517,580,298 Total Direct and Overlapping Debt $ 1,521,770,357 (1) Excludes debt related to the City's business -type activities. Estimated Percentage Applicable Table 11 Estimated Share of Overlapping Debt 100.00 % $ 4,190,059 34.74 1.04 29.32 0.06 0.08 0.06 0.03 65.33 % 47,105,356 1,025,504 2,065,594 633,801 39,724 48,373 26,917 50,945,269 $ 55,135,328 (2) The City has a Joint Powers Agreement 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. 157 City of Chanhassen, Minnesota Statistical Section (Unaudited) Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 Population 24,388 24,655 24,951 25,273 Debt Limit $ 98,838,150 $ 110,603,316 $ 114,087,123 $ 116,994,876 Total Net Debt Applicable to Limit 8,030,953 7,346,583 6,721,445 6,048,333 Legal Debt Margin $ 90,807,197 $ 103,256,733 $ 107,365,678 $ 110,946,543 Total Net Debt Applicable to the Limit as a Percentage of Debt Limit Total Net Debt Applicable to Limit per Capita $ Legal Debt Margin Calculation for Fiscal Year Estimated Taxable Market Value Debt Limit (3% of Taxable Market Value) Debt Applicable to Limit Total Bonded Debt Less Special Assessment Bonds Tax Increment Bonds Enterprise Fund Debt Less Cash and investments in G.O. Bond Debt Service Fund Total Net Debt Applicable to Limit Legal Debt Margin 8.13% 329 $ 6.64% 5.89% 5.17% 298 $ 269 $ 239 158 Table 12 Fiscal Year 2018 2019 2020 2021 2022 2023 26,088 26,335 27,170 26,271 26,237 27,005 $ 123,377,313 $ 133,338,810 $ 142,499,616 $ 146,048,763 $ 151,246,689 $ 176,597,415 5,377,482 4,555,132 3,686,297 3,288,043 2,883,662 2,431,979 $ 117,999,831 $ 128,783,678 $ 138,813,319 $ 142,760,720 $ 148,363,027 $ 174,165,436 4.36% 3.42% 2.59% 2.25% 1.91 % 1.38% $ 206 $ 173 $ 136 $ 125 $ 110 $ 90 5.886.580.500 S 176,597,415 $ 25,296,138 (22,169,245) (694,914) 2,431,979 $ 174,165,436 159 City of Chanhassen, Minnesota Statistical Section (Unaudited) Pledged -revenue Coverage Last Ten Fiscal Years Table 13 Improvement Bonds Special Fiscal Assessment Debt Service Year Collections Principal Interest Coverage 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 - - - - 2023 - - - - 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. 160 City of Chanhassen, Minnesota Table 14 Statistical Section (Unaudited) Demographic and Economic Statistics 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 (3) (thousands)(4) Personal Income 2014 24,388 3.4 % 3.7 % $ 6,041,180 $ 61,892 2015 24,655 2.9 3.2 6,376,686 64,431 2016 24,951 2.9 3.3 6,539,351 64,858 2017 25,273 2.9 2.9 6,990,605 68,112 2018 26,088 2.5 2.5 7,383,477 70,859 2019 26,355 2.5 2.8 7,752,624 73,273 2020 27,170 5.1 5.3 8,126,250 75,745 2021 26,271 2.6 3.0 9,022,210 82,905 2022 26,237 1.8 2.1 9,583,434 87,095 2023 27,005 2.2 2.4 (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. 161 City of Chanhassen, Minnesota Statistical Section (Unaudited) Principal Employers Current Year and Nine Years Ago Number Employer of Employees Lifetime Fitness The Bernard Group Instant Web Companies Rosemount Inc Eastern Carver County Schools Chanhassen Dinner Theatres General Mills RR Donnelley Target Minnesota Landscape Arboretum Exlar Corporation Total Source: Survey by City Administration and Finance Departments. 2023 Percent of Total City Rank Employment (1) 1,191 1 23.8 % 741 2 14.8 718 3 14.4 593 4 11.9 420 5 8.4 350 6 7.0 344 7 6.9 242 8 4.8 218 9 4.4 185 10 3.7 5,002 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. 100.0 % 162 Table 15 2014 Percent of Number Total City of Employees Rank Employment (1) 1,166 2 20.8 % 1,120 3 19.9 1,376 1 24.5 410 4 7.3 237 8 4.2 300 6 5.3 382 5 6.8 175 10 3.1 240 7 4.3 210 9 3.7 5,616 100.0 % 163 City of Chanhassen, Minnesota Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Function 2014 2015 2016 2017 General Government 13 13 13 13 Public Safety 10 10 10 10 Public Works 28 28 29 31 Culture and Recreation 11 11 12 13 Community Development 5 5 6 6 Total 67 67 70 73 Source: City Finance Department 164 Table 16 2018 2019 2020 2021 2022 2023 13 13 13 15 17 17 10 9 9 11 14 17 31 31 32 32 33 33 13 13 14 14 13 13 6 6 6 6 5 5 73 72 74 78 82 85 165 City of Chanhassen, Minnesota Operating Indicators by Function Last Ten Fiscal Years Function/Program 2014 2015 2016 2017 Building Total permits issued 3,076 3,266 2,891 2,981 Total estimated value $ 80,591,941 $ 82,145,483 $ 73,881,121 $ 82,430,550 Election Registered voters 16,344 16,344 17,769 17,769 Fire Average number of employees 45 45 45 45 General government Area of city - square miles 22.88 22.88 22.88 22.88 Average number of permanent full-time employees (excluding fire department) 67 67 70 73 Police Average number of employees 15 15 15 15 Number of crimes - MNCJRS (1) 838 870 313 - Number of crimes - NIBRS (1) - - 472 737 Water Number of customers 8,075 8,195 8,254 8,312 Daily average consumption - gallons 2,542,413 2,495,868 2,565,905 2,624,486 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 Investigation 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. 166 Table 17 2018 2019 2020 2021 2022 2023 3,085 3,259 4,528 6,072 3,936 3,439 $ 136,016,287 $ 103,902,405 $ 87,160,588 $ 160,438,828 $ 87,812,422 $ 90,564,997 17,480 17,480 19,245 19,245 19,182 19,182 45 45 45 41 37 30 22.88 22.88 22.88 22.88 22.88 22.88 73 72 74 78 82 85 15 15 15 15 15 15 698 692 796 758 740 526 8,407 8,481 8,539 8,608 8,689 8,732 2,888,586 2,247,455 2,677,163 3,040,992 2,953,945 3,087,597 17,100,000 17,100,000 17,100,000 17,100,000 17,100,000 17,100,000 167 City of Chanhassen, Minnesota Capital Asset Statistics by Function Last Ten Fiscal Years Function/Program 2014 2015 Fire Number of stations 2 Culture and Recreation Acres of parks 384 Acres of open space 568 Number of shelter buildings 4 Number of picnic shelters 7 Number of playgrounds 27 Number of swimming beaches 5 Number of tennis courts 15 Number of outdoor pickleball courts 6 Police Number of stations 1 Public works Miles of streets 114.5 1 Miles of sidewalks 34.7 Miles of trails 56.7 Sewer Miles of storm sewers 74.2 Miles of sanitary sewers 123.3 1 Number of lift stations 31 Water Miles of watermains 140.8 1 Number of wells 12 Source: Various City Departments 2016 2017 2 2 2 384 384 445 568 568 593 4 4 4 13 15 18 27 27 27 5 5 5 15 15 16 6 6 10 1 1 1 14.7 117.3 117.3 34.7 36.7 36.7 57.4 59.9 59.9 76.0 81.5 81.7 24.1 127.0 127.0 31 31 31 42.1 147.0 147.0 12 13 13 Table 18 2018 2019 2020 2021 2022 2023 2 2 2 2 2 1 445 445 445 445 445 445 593 693 693 693 693 693 4 4 4 4 4 4 21 21 21 21 21 21 27 28 28 28 28 28 5 5 5 5 5 5 16 16 16 16 16 16 10 10 10 10 10 10 1 1 1 1 1 1 117.8 117.9 118.1 118.1 118.9 118.9 36.7 36.7 36.7 36.7 36.8 36.8 62.5 63.9 66.2 66.6 66.6 68.9 84.0 84.1 84.9 85.9 86.9 87.4 127.4 127.5 127.7 128.4 130.3 130.3 31 31 31 31 32 32 150.2 150.4 151.1 151.6 152.5 154.7 13 13 13 13 13 13 169