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COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Department of Finance
For the Fiscal Year Ended December 31, 2018
CITY OF DULUTH, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
DECEMBER 31, 2018
i
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
Elected and Appointed Officials 6
Organizational Chart 7
Certificate of Achievement 8
FINANCIAL SECTION
Independent Auditor’s Report 9
Management’s Discussion and Analysis 12
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 22
Statement of Activities 23
Fund Financial Statements:
Balance Sheet – Governmental Funds 25
Reconciliation of Governmental Funds Balance Sheet to
the Statement of Net Position 26
Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds 27
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 28
Statement of Revenues, Expenditures, and Changes in Fund Balance –
Budget and Actual (Non-GAAP Budgetary Basis) – General Fund 29
Statement of Net Position – Proprietary Funds 30
Statement of Revenues, Expenses, and Changes in Fund Net Position –
Proprietary Funds 34
Statement of Cash Flows – Proprietary Funds 36
Statement of Fiduciary Net Position 39
Statement of Changes in Fiduciary Net Position – Other Postemployment
Benefits Trust Fund 40
Statement of Net Position – Component Units 41
Statement of Activities – Component Units 42
Notes to the Financial Statements 44
Required Supplementary Information:
Other Postemployment Benefits Plan:
Schedule of Changes in the City's Net OPEB Liability and Related Ratios 93
Schedule of Investment Returns 93
Schedule of City Contributions 94
Schedule of Proportionate Share of Net Pension Liability and Schedule of
Contributions – PERA General Employees Plan 95
Schedule of Proportionate Share of Net Pension Liability and Schedule of
Contributions – PERA Police and Fire Plan 96
Notes to the Required Supplementary Information 97
CITY OF DULUTH, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
DECEMBER 31, 2018
ii
TABLE OF CONTENTS
Page
FINANCIAL SECTION (continued)
Combining and Individual Fund Statements and Schedules:
Governmental Funds:
Combining Balance Sheet – Nonmajor Governmental Funds 102
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances – Nonmajor Governmental Funds 108
Schedule of Revenues – Estimated and Actual – General Fund 114
Schedule of Expenditures and Encumbrances –
Budget and Actual (Non-GAAP Budgetary Basis) – General Fund 117
Schedule of Expenditures/Transfers Out – General Fund 121
Proprietary Funds:
Combining Statement of Net Position – Nonmajor Enterprise Funds 124
Combining Statement of Revenues, Expenses, and Changes
in Fund Net Position – Nonmajor Enterprise Funds 125
Combining Statement of Cash Flows – Nonmajor Enterprise Funds 126
Combining Statement of Net Position Governmental Activities –
Internal Service Funds 127
Combining Statement of Revenues, Expenses, and Changes
in Fund Net Position Governmental Activities –
Internal Service Funds 128
Combining Statement of Cash Flows Governmental Activities –
Internal Service Funds 129
Fiduciary Funds:
Statement of Changes in Assets and Liabilities – Agency Funds 131
Supplementary Information
Capital Assets Used in the Operation of Governmental Funds:
Schedule by Source 132
Schedule by Function and Activity 133
Schedule of Changes by Function and Activity 134
Schedule of Changes in Long-Term Debt
Bonds and Certificates Payable 135
Notes Payable 139
Duluth Economic Development Authority
Balance Sheet 141
Statement of Revenues, Expenditures and Changes in Fund Balances 142
Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balances to the Statement of Activities 143
Duluth JPE Trust
Statement of Fiduciary Net Position 144
Statement of Changes in Fiduciary Net Position 145
Schedule of Intergovernmental Revenue 146
Federal Awards
Schedule of Expenditures of Federal Awards 149
Notes to the Schedule of Expenditures of Federal Awards 152
CITY OF DULUTH, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
DECEMBER 31, 2018
iii
TABLE OF CONTENTS
Page
STATISTICAL SECTION
Net Position by Component 155
Changes in Net Position 156
Fund Balances of Governmental Funds 160
Changes in Fund Balances of Governmental Funds 161
Assessed and Estimated Taxable Market Value of Property 163
Property Tax Rates – Direct and Overlapping Governments 164
Principal Property Taxpayers 164
Property Tax Levies and Collections 165
Net Capacity of Real Property by Category 165
Ratios of Outstanding Debt by Type 166
Ratios of Net General Obligation Bonded Debt 167
Direct and Overlapping Governmental Activities Debt 167
Legal Debt Margin Information 168
Revenue Bond Coverage 169
Demographic and Economic Statistics 171
Principal Employers 171
Full-time Equivalent City Government Employees by Function 172
Operating Indicators by Function 173
Capital Asset Statistics by Function 175
Component Unit Statistical Data 177
INTRODUCTORY
SECTION
Chief Financial Officer • Wayne Parson, CPA
(inactive)
City Auditor
• Joshua Bailey
411 West First Street • Room 107 • Duluth, Minnesota • 55802-1190
218-730-5450 • Fax: 218-730-5919
wparson@duluthmn.gov • jbailey@duluthmn.gov • www.duluthmn.gov
An Equal Opportunity Employer
May 28, 2019
To the Honorable Mayor, City Council, Administration,
and Citizens of the City of Duluth, Minnesota
State law and the City Charter mand
ate the City of Duluth have an annual audit of its financial statements. State
law requires the audit to be conducted within 180 days after fiscal year end. This report was prepared to satisfy
these requirements for the fiscal year ended December 31, 2018.
The City’s management assumes full responsibility for the completeness and reliability of the information
contained in this report and has established a comprehensive framework of internal control for that purpose.
The objective of the City’s internal controls is to provide reasonable, rather than absolute, assurance that the
financial statements are free of any material misstatement. Absolute assurance is not achievable because the
costs of internal controls should not exceed anticipated benefits.
The Minnesota Office of the State Auditor has issued an unmodified opinion on the City of Duluth’s financial
statements for the year ended December 31, 2018. The independent auditor’s report is located at the front of
the financial section of this report.
Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview, and analysis of the
basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read
in conjunction with it. The City’s MD&A can be found immediately following the report of the independent
auditors.
GOVERNMENT PROFILE
Duluth is the seat of St. Louis County, and is the largest city in the northern two-thirds of Minnesota. It is located
at the western tip of Lake Superior, and encompasses 67 square miles of land and nearly 50 square miles of
water. Situated on a hillside along Lake Superior’s north shore, Duluth is 23 miles long and eight miles wide at
its broadest point. Duluth’s population exceeds 86,000 and contributes to a market area of more than 500,000
from northern Minnesota, northwest Wisconsin, the Upper Peninsula of Michigan, and lower Ontario. Duluth
and its neighbor, Superior, Wisconsin, share the Great Lakes’ largest port and one of the largest inland seaports
in the world.
As one of only four first class cities in the state, Duluth operates under a Home Rule Charter granted by the
constitution and laws of the State of Minnesota. The city has operated under a mayor-council form of
government since 1956. The Mayor is the chief executive officer of the city, and is aided by a chief administrative
officer who is chosen by, and is responsible to the Mayor. All executive and administrative powers are vested
in the mayor, chief administrative officer, and other officers authorized by City Charter. The City Council is
comprised of nine councilors, four chosen at large and five from geographical districts. All legislative powers
are vested in the council. The mayor and councilors are subject to the control and direction of the people at all
times by the initiative, referendum and recall provisions in the City Charter.
1
The City provides a full range of governmental services including police and fire protection, street construction
and maintenance, library and recreational facilities, and public utilities for water, gas, sewer, and storm water
services. Certain economic development activities are provided through a legally separate entity, Duluth
Economic Development Authority, a discretely presented component unit of the City. The City also is financially
accountable for several legally separate entities including an airport, convention center, transit services, and
recreation area, all of which are reported separately in the City’s financial statements. Additional information
regarding these legally separate entities is provided in Note 1 to the financial statements.
The City Council is required to adopt a final budget before year end. The budget ordinance approved by the
Council establishes appropriations for the General Fund. The total of all appropriations within a department are
defined as a budget item and form the legal level of budgetary control, as defined in the budget ordinance. The
Mayor, Chief Administrative Officer, or a designee may make transfers between appropriations; however, the
total of all transfers to or from any budget item in excess of ten percent of that budget item must be approved by
the City Council. The Council may revise the budget at any time by ordinance upon recommendation of the
Administration.
LOCAL ECONOMY
Once dependent on heavy industry for its economic health, Duluth has diversified and has become a strong
regional center for shipping, tourism, education, health care, retail sales, technology, architecture, engineering
and aviation. Duluth’s unemployment averaged 2.9% for 2018, which was lower than the previous year’s average
unemployment rate of 3.8%. The total number of jobs reported to the state in 2018 peaked at 58,715.
According to the Minnesota Department of Economic Development and Employment (DEED), Duluth’s aviation
industry has grown 39% since 2007, with key anchors like Cirrus Aircraft and AAR continuing to soar, contributing
$646 million in the regional economy and directly supporting approximately 3,500 jobs in the Duluth metro area.
Cirrus Aircraft’s SF50 Vision Jet was awarded the prestigious 2017 Robert J. Collier Trophy for “the greatest
achievement in aeronautics or astronautics in America, with respect to improving the performance, efficiency,
and safety in air or space vehicles…” and is on display at the Smithsonian’s Air and Space Museum.
The Port of Duluth-Superior has been one of the backbones of the region’s economy, and has been long known
as the Great Lakes’ ”Bulk Cargo Capital.” It is the #1 tonnage port on the Great Lakes, and is the farthest-inland
freshwater seaport. The Duluth-Superior port moves an average of 35 million short tons of cargo annually,
ranking among the nation’s top 25 ports. It accommodates the maritime transportation needs of a wide range of
industries ranging from agriculture, forestry, mining and manufacturing to construction, power generation, and
passenger cruising. The Seaway Port Authority of Duluth reported that 821 ships visited the Port of Duluth-
Superior in 2018, and moved 35.9 million tons of cargo including iron ore, coal, grain, limestone, cement, salt,
wood pulp, steel, and wind turbine components, plus a variety of heavy-lift and project cargo. As the largest
tonnage port on the Great Lakes-St. Lawrence Seaway, cargo movements through the Port of Duluth-Superior
support approximately 7,881 jobs and $504.1 million in wages, and contribute over $1.4 billion to the
local/regional economy.
Duluth continues to excel in the key industry of tourism, bringing approximately 6.7 million visitors to Duluth
annually and injecting more than $957 million each year directly into the immediate area. Duluth has turned itself
into the top destination for Minnesotans as a primary getaway, according to Explore Minnesota Tourism. Duluth
offers a variety of attractions and outdoor activities, including: Canal Park, Duluth’s historic waterfront district,
which is home to the famous Aerial Lift Bridge-Minnesota’s most frequented tourist attraction, and a variety of
hotels, restaurants, and shops; the 7.5 mile Lakewalk on the shores of Lake Superior; Bayfront Festival Park-
named
the “Best Outdoor Music Venue” in the 2014 “Best of Minnesota” poll
by the Minneapolis Star Tribune-
which is a 20 acre waterfront park with a seasonal amphitheater, hosting outdoor summertime concerts and
events, and during the holiday season, the Bentleyville Tour of Lights-America’s largest free walk through holiday
light display; The Great Lakes Aquarium-a $30 million freshwater aquarium featuring more than 20 exhibits;
Spirit Mountain Ski and Recreation Area-a year round recreation area with the Midwest’s longest downhill ski
run, Nordic skiing, a snow tubing park, an RV park, and an adventure park featuring mini golf, disk golf, mountain
biking, scenic lift ride, alpine coaster ride, and a zip line. The City has 129 municipal parks encompassing over
3,264 acres, two public golf courses, zoo, and over 150 miles of trails for hikers, bicyclists, and cross country
2
skiers. Duluth’s 104 mile Traverse Mountain Biking Trail system is close to completion, and is rated as 1 of only
6 “Gold Level” Ride Centers in the world by the International Mountain Bicycling Association (IMBA). Duluth
hosts world-class special events such as Grandma’s Marathon, the 16
th
largest marathon in the United States;
and, the Bayfront Blues Fest, which attracts over 20,000 people. Duluth has been nationally recognized by
various publications and was rated by Money magazine as one of the top four Midwestern small cities, based
on livability. In 2015, Duluth was voted as America’s “Best Town” by an online poll conducted by Outside
Magazine. In 2017, Duluth was named as America’s fittest City by Fitbit; and, SmartAsset’s 2017 edition name
Duluth as the least stressed city in America. In 2018, Duluth was recognized by the New York Post as one of
the “Best 10 Christmas Cities in America.” Indeed.com ranked Duluth #1 for “US Cities Where Salaries Go
Furthest: 2018” based upon high adjusted salaries, low unemployment, and good future prospects. Lake
Superior, the city’s unique history, premier trails, natural beauty, and quality of life continue to define Duluth as
a family friendly vacation destination and place to live.
The Duluth Entertainment Convention Center (DECC) remains a leader in convention center business and
environmental stewardship. The DECC’s Executive Director Chelly Townsend continues to lead and operate the
DECC at full strength. In 2018 the DECC hosted 494 events with 46 conventions in the CitySide and the
HarborSide Convention Centers. Pioneer Hall provided space for many tradeshows, expos, sporting events and
ice for the Curling Club and the USA’s Olympic Gold Medal Curling team. The DECC Arena held numerous
events including the FIRST Robotics Competition, ice for the Northland Figure Skaters, and many exhibits and
tradeshows. Symphony Hall serves as the home to the Duluth-Superior Symphony Orchestra (DSSO) and to
the Minnesota Ballet, and held varied events such as dance competitions and recitals, the Banff Mountain Film
Festival, Martin Luther King Day, Broadway Kinky Boots, A Charlie Brown Christmas, and many conventions
keynote speakers. Bayfront Park was under the management of the DECC for the seventh year with a full roster
of events, including Bentleyville, Duluth Fourth Fest, Blues Fest, Pride Festival, Tributefest, Trampled by Turtles,
All Pints North Brewfest, and Hot Air Balloon Festival. AMSOIL Arena had its eighth successful year of
operations, and is home to the University of Minnesota-Duluth's (UMD) hockey teams. Fans supported the
National Collegiate Hockey Conference (NCHC) Men's Bulldog Hockey to their 3
rd
NCAA Championship. The
Women’s hockey competed in the Western Collegiate Hockey Conference (WCHA). The silver LEED certified
Arena featured youth and high school hockey, University commencements, Temple Shrine Circus, Old
Dominion, and Little Big Town, to name a few. The Irvin Floating Maritime Museum and Haunted Ship was
successfully moved after being anchored since 1989. The retired freighter SS William A. Irvin was relocated
from the Minnesota Slip overnight on September 21
st
/22
nd
to make room for a Great Lakes Legacy Act sediment
cleanup in the Slip. The DECC continues to focus on sustainability efforts, ongoing innovative projects, and
energy efficiency upgrades. The DECC continues to divert at least 65% of their waste from the landfill through
recycling, composting, and creating environmentally low-impact events.
According to the Minnesota Department of Employment and Economic Development (DEED), the Duluth metro
has more than 20,000 college and university students. The American Institute of Economic Research named
the Duluth metropolitan area as one of America’s best small metropolitan areas for college students in their
“Small Metro category” in its 2012 College Destinations index. The University of Minnesota, Duluth (UMD) and
the College of St. Scholastica (CSS) are regularly ranked in the top tier of Midwestern universities by U.S. News
and World Report’s “America’s Best Colleges” issue. The University of Minnesota Duluth (UMD) is a
comprehensive regional university, and had an enrollment of 11, 040 students in 2018. Undergraduate students
can choose from 15 bachelor degrees in 83 majors and 70 minors as well as five certificates. UMD also offers
graduate programs in 26 fields, 13 minors, and five certificates. The University of Minnesota Medical School and
the University of Minnesota College of Pharmacy, both have programs on the UMD campus. In addition to
offering the EdD, UMD participates in two all-university PhD programs (one of which is located primarily on the
UMD campus) and cooperates significantly in the delivery of a number of Twin Cities-based PhD programs. The
College of St. Scholastica has been called a “hidden gem” by the Washington Post in its “100 Schools to
Consider” and in 2014 was named by Money Magazine to the top third of all four-year colleges in the country,
based on graduation rates, educational quality, affordability and alumni earnings. Forbes Magazine named CSS
in its “Top Colleges” list for 2017 based on outcomes, measured by student satisfaction, post-graduate success
and academic success. CSS has 6 academic schools, and offers degrees in more than 75 undergraduate
majors, minors and pre-professionals; 12 masters, and 4 doctoral programs, with a total 2018 enrollment of
4,043 students. Lake Superior College (LSC) is a two-year community and technical college in Duluth, and is a
member of the Minnesota State Colleges and Universities System (MnSCU). LSC has a student population of
over 5,800. The college offers pre-baccalaureate majors for students interested in transferring to 4-year
3
educational institutions as well as more than 90 certificate, diploma and degree programs in career and technical
fields. LSC's Continuing Education/Customized Training division collaborates with area businesses and industry
to design specialized opportunities for entry-level and advanced education. While courses are typically offered
in traditional classroom and lab settings, LSC also offers over 150 courses via the internet, through its e-campus.
LONG-TERM FINANCIAL PLANNING
Unassigned fund balance in the General Fund (15.6 percent of total General Fund expenditures and transfers)
exceeds the policy guidelines set by the Administration and Council for budgetary and planning purposes.
According to the policy, unassigned fund balance should fall within the following range of General Fund
expenditures and transfers: 5% as a minimum, 7% as a moderate scenario, with 10% regarded as optimum.
RELEVANT FINANCIAL POLICIES
The City established a Community Investment Fund in 1994. The Fund is financed by the City’s share of
revenues generated from the operation of the Fond-du-Luth Casino administered by the Fond du Lac Band of
Lake Superior Chippewa. Investment earnings from the Community Investment Fund are dedicated to the City’s
General Fund by charter provision. All other monies appropriated from the Fund must be approved by resolution
by at least seven members of the nine-member City Council. As of December 31, 2018, the Community
Investment Fund reported a fund balance of $21.9 million.
In 2007, the City established an irrevocable trust to pre-fund the City’s other postemployment benefit liability.
Contributions totaling $28.0 million have been made to the irrevocable trust. The irrevocable trust balance
including cumulative investment earnings was $56.4 million at December 31, 2018. In November 2014, the City
adopted a policy that established a funding framework for financing annual retiree healthcare costs through both
annual appropriation and utilizing the irrevocable trust. Annual appropriation costs are capped at $9 million.
Annual retiree healthcare premium costs in excess of $9 million will be paid from the irrevocable trust. For the
year ended December 31, 2018, retiree health care premium costs of $244,470 were funded by the irrevocable
trust. City pooled investment earnings were also dedicated as an additional funding source for future
contributions to the irrevocable trust.
MAJOR INITIATIVES
The Duluth Economic Development Authority (DEDA) entered into an agreement with a developer to restore a
historic theatre complex in Duluth’s downtown waterfront district. The $30 million project is financed through a
combination of state and federal tax credits, low interest loans, and fundraising. In addition, skywalk connections
will be completed to the downtown skywalk system. Construction began in June 2016 with a grand reopening
held on February 1 2018.
In November 2017, a transportation sales tax referendum was overwhelmingly approved by voters. The new
½% sales tax, if approved by the legislature, will garner an estimated $7 million to be designated for the City’s
Street Improvement Program. Minnesota legislative approval is expected by May 2019.
Plans to create a Duluth Regional Exchange District are being finalized that will support the two regional health
care systems headquartered in downtown Duluth. Essentia Health and St. Luke’s Hospital have announced
plans for new facilities that will result in a combined investment exceeding $1 billion in downtown Duluth. This
investment will be the largest private development in Duluth’s history and will act as a catalyst for additional
development activity in the downtown area. Site work will begin in the Fall of 2019.
AWARDS AND ACKNOWLEDGMENTS
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the City of Duluth, for its comprehensive annual financial report (CAFR) for the fiscal year
4
ended December 31, 2017. This was the forty-second consecutive year that the City has received this
prestigious award. In order to be awarded a Certificate of Achievement, the City had to publish an easily
readable and efficiently organized CAFR, whose contents conform to both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current CAFR continues to
conform to the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to
determine eligibility for another certificate.
In addition, the City of Duluth also received the GFOA's Distinguished Budget Presentation Award for its annual
budget document for the year 2018. In order to qualify for the Distinguished Budget Presentation Award, a
governmental unit's budget must be judged proficient as a policy document, a financial plan, an operations guide,
and a communications device.
When looking at a report such as this CAFR, it is sometimes difficult to comprehend how much time and effort
is devoted by employees from the beginning of the audit to the final printing and distribution of the CAFR. As
the requirements and demands of financial reporting in government increase, so too must the knowledge, effort
and skills of a government's accounting staff; I wish to acknowledge the Financial Analysts in the Finance
Department who continue to meet this challenge.
Respectfully submitted, Respectfully submitted,
Wayne Parson, CPA
(inactive)
Joshua Bailey,
Chief Financial Officer City Auditor
5
DISTRICT
Mayor 2020
Emily Larson
City Council
Zack Filipovich
At large
2022
Arik Forsman
At large
2020
Noah Hobbs
At large
2020
Barb Russ
At large
2022
Gary Anderson
1
2020
Joel Sipress
2
2022
Em Westerlund
3
2020
Renee Van Nett
4
2022
Jay Fosle
5
2020
*All terms expire in January
Attorney Gunnar Johnson
Auditor Joshua Bailey
Chief Administrative Officer Noah Schuchman
Chief Financial Officer Wayne Parson
Chief of Police Michael Tusken
Clerk Chelsea Helmer
Director of Planning and Economic Development Keith Hamre
Director of Public Administration Jim Filby Williams
Director of Workforce Development Elena Foshay
Director of Public Works and Utilities James Benning
Acting Fire Chief Shawn Krizaj
ELECTED POSITIONS TERM EXPIRES *
APPOINTED POSITIO
N
ELECTED AND APPOINTED OFFICIALS
CITY OF DULUTH, MINNESOTA
6
CITY OF DULUTH ORGANIZATIONAL CHART
FireDepartment
Information
Technology
PoliceDepartment
Public
Administration
Department
PublicWorks&
Utilities
Department
Planning&Economic
Development
Department
CityCouncil
Mayor
Chief
Administrative
Officer
CityAttorney
Planning&
Development
Fire
Administration
Fire
Operations
LifeSafety
Administration
&
Investigations
Patrol
Parks&
Recreation
Human
Resources
FleetServices
Facilities
Management
CityClerk
Library
Services
Street
Maintenance
Engineering
Utility
Operations
Director's
Office
Construction
Services&
Inspection
Business&
Economic
Development
Auditor
Budget
Purchasing
Treasurer
Finance
Department
Parking
Safety&
Training
Park
Maintenance
Energy
Management
Water
Gas
Sewer
Storm
Street
Lighting
Workforce
Development
Department
7
8
FINANCIAL
SECTION
An Equal Opportunity Employer
JULIE BLAHA
STATE AUDITOR
STATE OF MINNESOTA
OFFICE OF THE STATE AUDITOR
SUITE 500
525 PARK STREET
SAINT PAUL, MN 55103-2139
(651) 296-2551 (Voice)
(651) 296-4755 (Fax)
state.auditor@state.mn.us (E-mail)
1-800-627-3529 (Relay Service)
INDEPENDENT AUDITOR’S REPORT
The Honorable Emily Larson, Mayor,
and Members of the City Council
City of Duluth, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund, and
the aggregate remaining fund information of the City of Duluth, Minnesota, as of and for the year
ended December 31, 2018, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, as listed in the table of contents. The financial
statements and related notes of the Spirit Mountain Recreation Area Authority component unit’s
activities are included as of and for the year ended April 30, 2018.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the City’s preparation and fair presentation of the financial statements in order to design
9
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining
fund information of the City of Duluth as of December 31, 2018, including the Spirit Mountain
Recreation Area Authority component unit as of April 30, 2018, and the respective changes in
financial position and, where applicable, cash flows thereof and the budgetary comparison of the
General Fund for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Emphasis of Matter – Change in Accounting Principle
As discussed in Note 1 to the financial statements, in 2018, the City adopted new accounting
guidance by implementing the provisions of Governmental Accounting Standards Board (GASB)
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions, which represents a change in accounting principles. Our opinion is not modified with
respect to this matter.
Also, as discussed in Note 1 to the financial statements, in 2018, the Duluth Economic
Development Authority, a discretely presented component unit of the City of Duluth, changed the
method of accounting for long-term receivables. Our opinion is not modified with respect to this
matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis and Required Supplementary Information as listed in the
table of contents be presented to supplement the basic financial statements. Such information,
although not part of the basic financial statements, is required by the GASB, who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management’s responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Duluth’s basic financial statements. The Introductory Section,
the Combining and Individual Fund Statements and Schedules, the Supplementary Information,
and the Statistical Section as listed in the table of contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The Combining and Individual Fund Statements and Schedules and the Supplementary
Information are the responsibility of management and were derived from and relate directly to the
underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated, in all material respects, in relation to the
basic financial statements as a whole.
The Introductory and Statistical Sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an opinion
or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our reports dated
May 28, 2019, on our consideration of the City of Duluth’s and the Duluth Economic Development
Authority component unit’s internal control over financial reporting and on our tests of their
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of these reports 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 internal control over financial reporting or on compliance. The
reports are an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City of Duluth’s and the Duluth Economic Development Authority
component unit’s internal control over financial reporting and compliance.
JULIE BLAHA GREG HIERLINGER, CPA
STATE AUDITOR DEPUTY STATE AUDITOR
May 28, 2019
M a n a g e m e n t ’ s
D i s c u s s i o n a n d A n a l y s i s
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
The City of Duluth’s Finance Department has prepared this narrative overview and analysis of the financial activities
of the City for the fiscal year ended December 31, 2018, to assist users of this report to gain a better understanding
of the City’s financial health and history. The information presented in this section should be considered in conjunction
with that presented in the letter of transmittal and the notes to the financial statements.
FINANCIAL HIGHLIGHTS
The City’s assets exceeded its liabilities at December 31, 2018, by $364.8 million; this amount is identified
as net position.
As of December 31, 2018, the City’s governmental funds reported combined ending fund balances of $80.6
million.
Restricted fund balances were $42.0 million of fund balance or 52.1%. These fund balances are not available
for appropriation because of constraints placed on the use of these funds. The remaining fund balances of
$38.6 million, or 47.9%, are unrestricted and classified as committed, assigned, or unassigned.
In 2007, the City created an irrevocable trust to pre-fund a portion of the City’s other postemployment benefits.
As of December 31, 2018, the trust reported net position totaling $56.4 million.
As of December 31, 2018, the General Fund’s unrestricted, unassigned fund balance was $13.4 million, or
15.7% of total General Fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis serves as an introduction to the City’s basic financial statements, which consist of three
components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial statements.
GOVERNMENT-WIDE FINANCIAL STATEMENTS
The government-wide financial statements are designed to give users a broad overview of the City’s finances, in a
manner similar to that of a private-sector business. The Statement of Net Position presents information on all of the
City’s assets, deferred outflows of resources, deferred inflows of resources, and liabilities, with the net difference
between the four reported as net position. Increases or decreases in net position over time may serve as a useful
indicator of whether the City’s financial position is improving or deteriorating. The Statement of Activities shows how
the City’s net position changed during the fiscal year. All changes in net position are reported as soon as the
underlying event that caused the change occurs, regardless of the timing of the related cash flows. There are
revenues and expenses reported in this statement for some items that will only result in cash flows in future fiscal
years; examples include uncollected taxes and vacation days that are earned, but not used.
Both of the government-wide financial statements distinguish between functions that are mainly supported by taxes
and intergovernmental revenues, and other functions that are intended to recover all or a significant portion of their
costs through user fees and charges. The first functions are identified in the statements as governmental activities,
while the latter functions are reported as business-type activities.
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
The City’s governmental activities include general government, public safety, public works, culture and recreation,
and urban and economic development. The City’s business-type activities include water, gas, sewer, steam and
stormwater utilities, street lighting, parking, and municipal golf courses. The government-wide financial statements
include not only the City, referred to as the primary government, but also five legally separate component units, for
which the City is financially accountable. Financial information for these component units is reported separately from
the financial information of the City, as the primary government.
Financial statements for the Duluth Economic Development Authority are included in the Supplementary Information
section of this report. Complete financial statements for the Duluth Entertainment and Convention Center Authority,
the Duluth Airport Authority, the Duluth Transit Authority, and the Spirit Mountain Recreation Area Authority can be
obtained from their respective offices, the addresses of which are provided in Note 1 of the notes to the financial
statements.
The two government-wide financial statements follow immediately after this discussion and analysis.
FUND FINANCIAL STATEMENTS
A fund is a set of related accounts that is used to control resources that have been segregated to carry on specific
activities or to attain certain objectives in accordance with special regulations, restrictions, or limitations. The City,
like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements. All City funds are divided into one of three categories: governmental funds, proprietary
funds or 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. A major difference between the government-wide financial statements and
the governmental fund financial statements is that the latter focuses on near-term inflows and outflows of spendable
resources, as well as on the balances of spendable resources available at the end of the fiscal year. This information
may be useful in evaluating the City’s near-term financing requirements.
Because the focus of governmental fund financial statements is narrower than the government-wide financial
statements, it is useful to compare information presented for governmental funds with similar information presented
for governmental activities in order to gain a better understanding of the long-term impact of the City’s near-term
financing decisions. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues,
Expenditures and Changes in Fund Balances provide reconciliation to aid in the comparison of governmental funds
with governmental activities.
The City maintains a number of individual governmental funds. Information is presented separately in the
governmental fund financial statements for the General Fund, Disaster Recovery Special Revenue Fund, and
Community Investment Trust Special Revenue Fund, all of which are considered to be major funds. Data from the
remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of
these nonmajor governmental funds are included in the combining and individual fund section of this report.
The City adopts an annual appropriated budget for its General Fund. The Statement of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual - General Fund, included in the basic financial statement section of
this report, demonstrates compliance with this budget. There are also two more detailed General Fund budgetary
schedules included in the combining and individual fund section of this report.
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
Proprietary Funds
The City maintains two different types of proprietary funds. The first type is enterprise funds, which are used to report
the same functions presented as business-type activities in the government-wide financial statements. Proprietary
fund financial statements provide the same type of information as the government-wide financial statements, only in
more detail. Information is presented separately in the proprietary fund financial statements for the Priley Drive
Parking Facility, Water, Gas, Sewer, and Steam funds, all of which are considered to be major funds. Data from the
remaining enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of
these nonmajor enterprise funds are included in the combining and individual fund section of this report.
Internal service funds are the other type of proprietary fund. Internal service funds are used to accumulate and
allocate costs internally among the City’s various functions for fleet services, self-insurance, employee medical
benefits, and compensated absences. Because these services predominantly benefit governmental functions rather
than business-type functions, they have been included with the governmental activities portion of the government-
wide financial statements. The internal service funds are combined into a single, aggregated presentation in the
proprietary fund financial statements. Individual fund data for the internal service funds are included in the combining
and individual fund section of this report.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside of the City and are not
included in the government-wide financial statements because their resources are not available to support the City's
programs. The accounting used for fiduciary funds is similar to that used for proprietary funds. The Statement of
Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position are included in the basic financial
statement section of this report, while the Statement of Changes in Assets and Liabilities for agency funds is included
in the combining and individual fund section 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.
Other Information
In addition to the basic financial statements and accompanying notes, this report also contains the combining and
individual fund statements referred to earlier in connection with nonmajor governmental, nonmajor proprietary,
internal service funds, fiduciary funds, and miscellaneous schedules. These schedules and statements follow the
notes to the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, over time net position may serve as a useful indicator of the City’s financial position. The largest
portion of the City’s net position is invested in capital assets (land, buildings, equipment, and infrastructure) less any
related debt used to acquire those assets that is still outstanding. The City uses these assets to provide services to
its citizens; therefore, these assets are not available for future spending. Although the City’s investment in capital
assets is reported net of related debt, it is important to realize that the resources needed to repay the debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the City’s net position (12.3%) represents resources that are subject to external restrictions
on how they may be used, with the largest amount set aside for debt service. The following table presents a summary
of the City’s net position at December 31 for the past two fiscal years (dollars in thousands):
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
2017 2017
2018 (Restated) 2018 (Restated) 2018 2017
Current and other assets 131,904$ 134,895$ 43,315$ 39,227$ 175,219$ 174,122$
Capital assets 296,706 289,994 292,371 284,633 589,077 574,627
Total assets 428,610$ 424,889$ 335,686$ 323,860$ 764,296$ 748,749$
Deferred outflows of resources 42,160$ 66,959$ 5,006$ 6,384$ 47,166$ 73,343$
Long-term liabilities outstanding 291,519$ 303,598$ 72,624$ 77,251$ 364,143$ 380,849$
Other liabilities 13,634 10,783 10,809 9,960 24,443 20,743
Total liabilities 305,153$ 314,381$ 83,433$ 87,211$ 388,586$ 401,592$
Deferred inflows of resources 54,624$ 71,229$ 3,407$ 4,784$ 58,031$ 76,013$
Net position:
Net investment in capital assets 249,613$ 245,733$ 240,474$ 227,779$ 490,087$ 473,512$
Restricted 42,919 46,203 2,115 2,120 45,034 48,323
Unrestricted (181,539) (185,698) 11,263 8,350 (170,276) (177,348)
Total net position 110,993$ 106,238$ 253,852$ 238,249$ 364,845$ 344,487$
Business-type
Activities
Governmental
Activities Total
Overall, the City’s net position improved in 2018. The City’s total net position increased $20.4 million, an increase of
5.9%. Net position invested in capital assets continues to increase largely due to the City's utility infrastructure
replacement and the pay down of debt associated with those capital asset additions.
In governmental activities, the decrease in total liabilities of $9.2 million was largely due to a pension liability decrease.
This decrease is associated with the City’s calculated share of the Minnesota Public Employees Retirement
Association (PERA) unfunded liability. This liability calculation is also associated with the large variances in deferred
inflows and outflows between 2018 and 2017. Changes in actuarial assumptions, differences between actual and
projected investment earnings, and other factors are reported as deferred outflows and deferred inflows, and are
amortized and expensed over several years in accordance with GASB accounting standards. Due to the large dollar
amount that can be associated with these actuarially determined calculations, it is expected that substantial changes
can occur from year to year in relation with accounting for this pension-related liability.
For business-type activities the decrease in total liabilities of $3.8 million is largely due to the spend down of revenue
related bonds and notes. Total assets increased due to utility infrastructure replacement projects.
To give users a better understanding of the sources and uses of the City’s net position, the following table presents
a summary of revenues, expenses, and changes in net position for the past two fiscal years ending December 31
(dollars in thousands):
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
2018 2017 2018 2017 2018 2017
Revenues:
Program revenues:
Charges for services 11,928$ 12,064$ 94,246$ 90,737$ 106,174$ 102,801$
Operating grants and contributions 12,019 11,759 - 104 12,019 11,863
Capital grants and contributions 12,913 11,096 5,603 2,832 18,516 13,928
General revenues:
Property taxes 30,266 27,597 751 756 31,017 28,353
Other taxes 30,518 29,276 - - 30,518 29,276
Grants and shared revenues not
restricted to specific programs 31,810 31,420 49 60 31,859 31,480
Other 1,248 4,569 186 237 1,434 4,806
Total revenues 130,702 127,781 100,835 94,726 231,537 222,507
Expenses:
General government 31,093 29,491 - - 31,093 29,491
Public safety 43,353 47,269 - - 43,353 47,269
Public works 24,997 23,999 - - 24,997 23,999
Culture and recreation 13,170 12,497 - - 13,170 12,497
Urban and economic development 13,664 15,406 - - 13,664 15,406
Interest 4,025 3,951 - - 4,025 3,951
Water - - 11,269
11,160 11,269 11,160
Gas - - 33,161 31,538 33,161 31,538
Sewer - - 16,835 16,019 16,835 16,019
Stormwater - - 3,430 3,564 3,430 3,564
Steam - - 8,185 8,299 8,185 8,299
Golf - - 1,853 1,940 1,853 1,940
Parking - - 2,980 2,749 2,980 2,749
Priley drive parking facility - - 1,254 1,267 1,254 1,267
Street lighting - - 1,910 2,123 1,910 2,123
Total expenses 130,302 132,613 80,877 78,659 211,179 211,272
Increase (decrease) in net position before
transfers 400 (4,832) 19,958 16,067 20,358 11,235
Transfers 4,355 4,145 (4,355) (4,145) - -
Increase in net position 4,755 (687) 15,603 11,922 20,358 11,235
Net position, January 1 174,562 175,249 243,665 231,743 418,227 406,992
Restatement - Note 1 (68,324) - (5,416) - (73,
740) -
Net position, January 1, restated 106,238 175,249 238,249 231,743 344,487 406,992
Net position, December 31 110,993$ 174,562$ 253,852$ 243,665$ 364,845$ 418,227$
Business-type
Activities
Governmental
Activities Total
Governmental activities revenue increased by $2.9 million in 2018. This increase is primarily due to increased
property tax revenue and increased tourism tax based sales tax collections. The 2018 property tax levy was increased
to provide additional funding for streets and fund a 10% increase in health insurance premiums. Tourism tax rates
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
were not increased, but instead the revenue increase was driven by the strong tourism industry present in the City of
Duluth. Revenues were negatively impacted by the stock market performance in 2018. The Community Investment
Trust Fund had $0.75 million in negative investment earnings as it is substantially invested in the equity market. The
business-type activities revenue increase of $6.1 million was heavily impacted by the increase in the sale of natural
gas associated with the 2018 heating season. The Steam Fund received slightly over $5 million in State of Minnesota
funding in 2018 associated with the steam upgrades being performed in conjunction with the multi-year Superior
Street reconstruction project.
Total expenses decreased $2.3 million for governmental activities. Changes in expenditures are becoming more
difficult to easily analyze at the surface level due to the impact of GASB Statements number 68 (pension liability) and
75 (post-employment benefit liability). These liabilities, and associated deferred inflows and outflows, are actuarially
determined. Changes in actuarial assumptions, investment performance, and other factors are not expensed
immediately, but instead are reported as deferred inflows and outflows and expensed over future years. The future
amortization of these deferred inflows and outflows are in the millions of dollars. In 2017 the City’s GASB 68 related
expenditures resulted in $5.3 million in additional expenditures. In 2018 GASB 68 resulted in decreased expenditures
of $2.1 million. This is a swing of $7.4 million. With the implementation of GASB 75 it is expected that expenditures
will continue to vary significantly from year-to-year. In 2018, the City experienced a 10% increase in health insurance
premiums. It is expected that health insurance costs will continue to increase based on current trends.
Business-type activities expenses increased $2.2 million. This increase is largely due to an increase in the volume of
natural gas that is resold to customers by the City’s Gas Utility. In addition, the City’s utility funds experience the
same increase in health insurance costs that the City’s governmental funds do.
$0
$5
$10
$15
$20
$25
$30
$35
Millions
RevenuebySource‐ GovernmentalActivities
2018
2017
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
FUND FINANCIAL ANALYSIS
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. This information is helpful in assessing the City’s financing requirements; fund balance may be
an especially useful measure of the net resources available for spending at the end of the fiscal year.
As of December 31, 2018, the City’s governmental funds reported combined ending fund balances of $80.6 million,
an decrease of $1.5 million from 2017. Of the total fund balance amount, $38.6 million, or 47.9%, is reported as
unrestricted fund balance, either committed, assigned, or unassigned. The unrestricted fund balance includes $23.4
million in committed funds which are formally designated by City Council resolution for specific purposes. The
Community Investment Trust Special Revenue fund makes up 93.4% of the committed fund balance. Restricted fund
balance of $42.0 million is primarily composed of funds dedicated to debt service and capital projects.
The General Fund is the main operating fund of the City. At December 31, 2018, fund balance of the General Fund
was $16.9 million, with $13.4 million, or 79.5% reported as unassigned. As a measure of the General Fund’s liquidity,
it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures.
Unassigned fund balance is 15.7% and total fund balance is 19.7% of total General Fund expenditures. The General
Fund’s fund balance increased $1.3 million in 2018. Positive sales tax revenue along with savings in personal costs
contributed to this outcome.
The Community Investment Trust Special Revenue fund balance decreased $1.2 million in 2018. This decrease was
due to the performance of the portfolio holdings in a down year for the stock market.
The Disaster Recovery Special Revenue fund balance decreased by $1.3 million in 2018. This is due to expenses
incurred, but not yet reimbursed by state and federal disaster funds. The City experienced significant storm surge
damage in both October of 2017 and October of 2018.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Millions
ExpensebyFunction‐ GovernmentalActivities
2018
2017
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
PROPRIETARY FUNDS
The City’s proprietary funds provide the same type of information found in the government-wide financial statements,
only in more detail. The following table shows the unrestricted net position for each of the City’s major proprietary
funds, as well as the change in net position for each fund during the past two fiscal years (dollars in thousands):
2018 2017 2018 2017
Priley Drive
Parking Facility 330$ 140$ (256)$ (506)$
Water (333) (812) 3,625 3,231
Gas 102 4,865 3,597 2,893
Sewer 3,289 2,659 2,824 4,156
Steam (411) (623) 4,612 602
December 31 December 31
Increase (Decrease)
Net Position
Unrestricted
Net Position
Unrestricted Net Position for the Gas fu
nd was negatively impacted by the implementation of GASB Statement 75.
The Steam Fund incurred significant capital outlay associated with the Superior Street reconstruction process. These
expenditures are funded by a State of Minnesota grant and contributed to the substantial increase in the Steam Fund
net position.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year there was a $3.0 million increase in appropriations between the original and final amended budget.
Following are the main components of the increase:
$1.6 million appropriation increase for prior year carryovers;
$0.9 million appropriation for grants, gifts and donations; and
$0.5 million appropriation for other budget allowable additions.
The carryover appropriation increase was possible due to prior year fund balance reserves. The other appropriation
increases were offset by associated revenues.
Comparison of actual results (budgetary basis) to the final modified budget disclosed the following significant
differences:
Revenues and other financing sources were over budget by $1.4 million. This favorable variance can be
attributed to higher than anticipated sales tax revenue, licensing and permit fees, and State of Minnesota
insurance premium aid.
Expenditures and transfers were under budget by $1.6 million due primarily to savings in personal costs and
other miscellaneous transfers.
CAPITAL ASSET AND DEBT ADMINISTRATION
CAPITAL ASSETS
The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2018,
was $589.1 million, net of accumulated depreciation. This investment includes land and improvements, buildings,
equipment, roads and bridges, traffic signals, and utility-related infrastructure. In 2018, the City’s total investment in
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
capital assets, net of accumulated depreciation, increased by $14.5 million. Major capital assets additions in 2018
included: seawall repairs - $6.9 million; Superior Street reconstruction - $9.3 million; and utility related infrastructure
improvements of $13.2 million. Additional information related to the City’s capital assets can be found in Note 7 of
the notes to the financial statements. The following table shows the City’s investment in capital assets, net of
accumulated depreciation at December 31 for the past two fiscal years (dollars in thousands):
2018 2017 2018 2017
Capital Assets:
Land and improvements 22,859$ 22,468$ 4,649$ 4,649$
Buildings 40,826 42,359 49,546 51,305
Equipment 9,309 10,572 20,867 16,530
Infrastructure 195,957 200,572 202,392 198,119
Construction in progress 27,755 14,023 14,917 14,030
Total 296,706$ 289,994$ 292,371$ 284,633$
Governmental
Activities
Business-type
Activities
LONG-TERM DEBT
The City had $154.6 million of bonded debt outstanding as of December 31, 2018. Of this amount, $114.4 million is
debt backed by the full faith and credit of the City. $5.2 million is special assessment debt for which the City is
obligated only to the extent that collections from special assessments are insufficient to retire the outstanding bonds.
The City has a contingent liability for the $35.1 million outstanding revenue and general obligation bonds if income
from various enterprise operations is insufficient to retire their respective bonds. Several types of revenue bonds
constitute the remainder of the City’s debt, and are secured solely by specific revenue sources. The following table
shows the City’s outstanding bonded debt for both governmental and business-type activities as of December 31 for
the past two fiscal years (dollars in thousands):
Balance Balance
12/31/18 12/31/17
Governmental Activities:
General Obligation Bonds 87,485$ 86,615$
General Obligation Tax Abatement Bonds 12,605 13,435
Special Asessment Debt with
Government Commitment 5,165 7,320
General Obligation Certificates 14,295 13,670
Total Governmental Activities Bonded Debt 119,550$ 121,040$
Business-type Activities:
Revenue and General Obligation Bonds 35,097$ 34,927$
During 2018, the City’s total bonded debt decreased by $1.3 million.
In 2018, the City issued $5.8 million of general obligation bonds, $3.8 million of general obligation certificates, and
$4.1 million in utility general obligation bonds. The City has an “Aa2" rating from Moody’s Investors Service and an
“AA” rating from Standard and Poor's.
State statutes limit the amount of general obligation debt the City can incur to no more than 2% of the market value
of taxable property in the City. The City’s current legal debt margin is $124.5 million, which is significantly higher than
CITY OF DULUTH, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2018
(unaudited)
the City’s net debt of $42.3 million. Additional information about the City’s long-term debt can be found in Note 12 of
the notes to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The final approved 2019 General Fund budget is $89.1 million. State local government aid (LGA) payments are
anticipated to supply 33.3% of General Fund revenues. State aid payments are the single biggest financing source
for the General Fund.
After nearly a decade of uncertainty in the State of Minnesota’s Local Government Aid program, the 2013 State
Legislature adopted reforms which will benefit Duluth and other cities by increasing the funding for LGA by $80 million
and revising the formula used to determine who gets aid and how much. The “need” factor will be three-tiered
depending on the population of the city with separate calculations for cities under 2,500 in population, cities between
2,500 and 10,000 in population, and cities over 10,000 in population because different factors explain variations in a
city’s revenue base for different size cities. All three formulas were derived using revenue base (levy plus aid) as a
proxy for city need. The new formula also stabilizes a city’s allocation by capping the maximum annual loss for any
city as well as distributing proportionally larger increases to cities whose current aid amount is furthest from their
unmet need. For Duluth, these changes increased LGA by $2.3 million in 2019 to $29.7 million compared to the $27.4
million received in 2011, 2012 and 2013. In 2014, 2015, 2016, 2017, and 2018 the LGA revenue was $29.0, $29.2,
$29.3, $29.3 and $29.6 million respectively.
In 2017, the City contracted with an actuary to calculate its annual required contribution for other postemployment
benefits in accordance with Governmental Accounting Standards Board (GASB) Statement No. 75. For the year
ended December 31, 2018, the City made contributions of $0.8 million to an irrevocable trust and paid out $11.1
million in retiree claims. As of December 31, 2018, the City’s net other postemployment benefits liability is $117.6
million.
Adapting to significant changes in levels of state aids, combined with inflationary tendencies in employee salaries
and benefits, including funding other postemployment benefits, continues to be a major budget challenge for the City.
REQUESTS FOR INFORMATION
This financial report is meant to provide a general overview of the City’s finances for all those with an interest in the
City’s finances. Questions concerning information provided in the report or requests for additional financial information
should be addressed to the City Auditor’s Office, 411 West First Street, Room 120, Duluth, MN 55802, or contact the
City Auditor via email at jbailey@duluthmn.gov.
B a s i c F i n a n c i a l
S t a t e m e n t s
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2018
Governmental Business-type Component
Activities Activities Total Units
Assets
Cash and cash equivalents 63,008,645$ 14,012,497$ 77,021,142$ 13,664,097$
Investments, at fair value 21,868,426 - 21,868,426 -
Assets held by trustee 6,747,253 - 6,747,253 -
Receivables, net 30,872,103 11,534,425 42,406,528 10,292,596
Due from primary government - - - 781,191
Internal balances (1,175,771) 1,175,771 - -
Due from component units 1,853,344 - 1,853,344 -
Due from other governments 8,504,536 1,981,439 10,485,975 8,480,697
Inventories 175,283 3,406,228 3,581,511 532,659
Prepaids 50,000 3,045,525 3,095,525 255,361
Restricted assets:
Cash and cash equivalents - 6,358,919 6,358,919 1,794,629
Accounts receivable - - - 83,013
Loans receivable - 1,800,352 1,800,352 -
Grants receivable - - - 3,794,691
Planning and development costs - - - 1,149,681
Capital assets (Note 7):
Non-depreciable 50,614,771 19,566,447 70,181,218 11,797,544
Depreciable, net 246,091,061 272,804,511 518,895,572 271,073,012
Total Assets 428,609,651 335,686,114 764,295,765 323,699,171
Deferred Outflows of Resources
Deferred pension obligation outflows 37,718,289 2,255,507 39,973,796 1,444,653
Deferred OPEB outflows 1,860,935 2,245,672 4,106,607 -
Deferred loss from debt refunding 2,580,820 505,172 3,085,992 -
Total Deferred Outflows of Resources 42,160,044 5,006,351 47,166,395 1,444,653
Liabilities
Accounts payable and other short-term liabilities 8,976,132 8,405,882 17,382,014 11,992,574
Accrued interest payable 1,900,278 482,064 2,382,342 1,939
Due to component units 781,191 - 781,191 -
Due to primary government - - - 1,853,828
Due to other government 342,887 1,030,284 1,373,171 55,008
Unearned revenues 1,633,320 891,222 2,524,542 1,837,200
Noncurrent liabilities (Note 12):
Due within one year 16,365,588 7,349,551 23,715,139 2,133,068
Due in more than one year 275,153,304 65,274,540 340,427,844 20,529,693
Total Liabilities 305,152,700 83,433,543 388,586,243 38,403,310
Deferred Inflows of Resources
Deferred pension obligation inflows 54,623,702 3,407,375 58,031,077 1,913,088
Net Position
Net investment in capital assets 249,612,707 240,473,773 490,086,480 272,024,540
Restricted for:
General government 5,125,705 - 5,125,705 -
Public safety 878,923 - 878,923 -
Public works - 1,506,313 1,506,313 -
Culture and recreation 2,842,338 - 2,842,338 -
Urban and economic development 6,108,252 - 6,108,252 -
Debt service 22,539,676 608,514 23,148,190 -
Capital outlay 5,425,084 - 5,425,084 9,741,090
Unrestricted (181,539,392) 11,262,947 (170,276,445) 3,061,796
Total Net Position 110,993,293$ 253,851,547$ 364,844,840$ 284,827,426$
The notes to the financial statements are an integral part of this statement.
Primary Government
CITY OF DULUTH, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2018
Operating Capital
Charges for Grants and Grants and
Functions/Programs
Expenses Services Contributions Contributions
Primary Government:
Governmental activities:
General government 31,093,037$ 5,869,145$ 305,505$ 2,638$
Public safety 43,352,480 2,023,574 3,098,360 362,699
Public works 24,997,278 82,235 1,911,135 8,840,493
Culture and recreation 13,169,901 1,270,730 1,008,362 3,039,675
Urban and economic development 13,664,386 2,682,020 5,695,731 667,482
Interest 4,025,051 - - -
Total Governmental Activities 130,302,133 11,927,704 12,019,093 12,912,987
Business-type activities:
Water 11,268,976 14,910,171 - 13,266
Gas 33,160,799 39,182,666 - 87,700
Sewer 16,835,052 19,709,102 - -
Stormwater 3,430,458 5,283,440 - -
Steam 8,185,310 7,880,094 - 5,095,641
Golf 1,853,157 1,692,369 - -
Parking 2,980,182 3,740,640 - 406,214
Priley Drive parking facility 1,254,483 457,088 - -
Street lighting 1,909,552 1,390,572 - -
Total Business-type Activities 80,877,969 94,246,142 - 5,602,821
Total Primary Government 211,180,102$ 106,173,846$ 12,019,093$ 18,515,808$
Component units:
Duluth Economic Development Authority 6,477,722$ 2,731,315$ 1,743,764$ -$
Duluth Entertainment and Convention
Center Authority 14,777,685
8,834,319 - 200,000
Duluth Airport Authority 14,825,063 6,342,691 - 9,533,827
Duluth Transit Authority 23,540,824 2,992,124 14,087,635 11,715,937
Spirit Mountain Recreation Area Authority 6,470,494 5,188,782 - 493,970
Total Component Units 66,091,788$ 26,089,231$ 15,831,399$ 21,943,734$
(continued)
The notes to the financial statements are an integral part of this statement.
Program Revenues
CITY OF DULUTH, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2018
Governmental Business-type Component
Functions/Programs
Activities Activities Total Units
Primary Government:
Governmental activities:
General government (24,915,749)$ -$ (24,915,749)$ -$
Public safety (37,867,847) - (37,867,847) -
Public works (14,163,415) - (14,163,415) -
Culture and recreation (7,851,134) - (7,851,134) -
Urban and economic development (4,619,153) - (4,619,153) -
Interest (4,025,051) - (4,025,051) -
Total Governmental Activities (93,442,349) - (93,442,349) -
Business-type activities:
Water - 3,654,461 3,654,461 -
Gas - 6,109,567 6,109,567 -
Sewer - 2,874,050 2,874,050 -
Stormwater - 1,852,982 1,852,982 -
Steam - 4,790,425 4,790,425 -
Golf - (160,788) (160,788) -
Parking - 1,166,672 1,166,672 -
Priley Drive parking facility - (797,395) (797,395) -
Street lighting - (518,980) (518,980) -
Total Business-type Activities - 18,970,994 18,970,994 -
Total Primary Government (93,442,349) 18,970,994 (74,471,355) -
Component units:
Duluth Economic Development Authority - - - (2,002,643)
Duluth Entertainment and Convention
Center Authority -
- - (5,743,366)
Duluth Airport Authority - - - 1,051,455
Duluth Transit Authority - - - 5,254,872
Spirit Mountain Recreation Area Authority - - - (787,742)
Total Component Units - - - (2,227,424)
General Revenues:
Property taxes 30,265,657 751,231 31,016,888 4,242,881
Sales taxes 26,267,168 - 26,267,168 1,818,754
Franchise taxes 3,997,060 - 3,997,060 -
Other taxes 254,096 - 254,096 -
Grants and shared revenues not restricted
to specific programs 31,810,084 48,567 31,858,651 -
Investment income (440,856) 43,383 (397,473) 215,812
Gain on sale or disposition of capital assets - 81,868 81,868 -
Miscellaneous
1,689,582 61,272 1,750,854 1,059,464
Transfers 4,354,903 (4,354,903) - -
Total General Revenues and Transfers 98,197,694 (3,368,582) 94,829,112 7,336,911
Change in Net Position 4,755,345 15,602,412 20,357,757 5,109,487
Net Position - Beginning, as restated (Note 1) 106,237,948 238,249,135 344,487,083 279,717,939
Net Position - Ending 110,993,293$ 253,851,547$ 364,844,840$ 284,827,426$
The notes to the financial statements are an integral part of this statement.
Net (Expense) Revenue and
Changes in Net Position
Primary Government
CITY OF DULUTH, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2018
General
Disaster
Recovery
Community
Investment
Trust
Other
Governmental
Funds
Total
Governmental
Funds
Asset
s
Cash and cash equivalent
s
11,312,600$ -$ -$ 46,586,291$ 57,898,891$
Investments, at fair value
- - 21,868,42
6
- 21,868,42
6
Receivables, ne
t
Taxes
3,619,113 - - 1,358,539 4,977,652
Accounts
551,219 - - 250,121 801,340
Assessments
984,811 - - 2,910,811 3,895,622
Loans
1,802,242 - - 4,070,294 5,872,536
Due from other funds
271,018 - - 941,824 1,212,842
Due from component units
1,210,113 - - 636,231 1,846,344
Interfund loan receivables
4,273,107 - - - 4,273,107
Due from other government
s
642,808 3,805,158 - 4,056,570 8,504,536
Total Assets
24,667,031$ 3,805,158$ 21,868,42
6
$ 60,810,681$ 111,151,29
6
$
Liabilities
Accounts payable
2,040,592 1,354 - 579,574 2,621,520
Contracts payable
69,799 985,696 - 3,286,078 4,341,573
Due to other funds
354,005 - - 867,365 1,221,370
Due to component units
- - - 781,191 781,191
Interfund loan payabl
e
- 465,075 - 950,231 1,415,306
Due to other government
s
35,898 - - 283,915 319,813
Accrued salaries payable
1,801,531 - - 33,239 1,834,770
Unearned revenu
e
112,420 1,073,980 - 446,920 1,633,320
Total Liabilities
4,414,24
5
2,526,10
5
- 7,228,513 14,168,86
3
Deferred Inflows of Resource
s
Unavailable revenu
e
3,367,021 3,751,030 - 9,258,562 16,376,61
3
Fund Balance
s
Restricted
184,891 - - 41,801,54
3
41,986,434
Committed
41,996 - 21,868,42
6
1,488,628 23,399,050
Assigned
3,236,770 - - 1,691,541 4,928,311
Unassigned
13,422,10
8
(2,471,977) - (658,106) 10,292,02
5
Total Fund Balance
s
16,885,76
5
(2,471,977) 21,868,42
6
44,323,60
6
80,605,820
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
24,667,031$ 3,805,158$ 21,868,426$ 60,810,681$ 111,151,296$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2018
Fund Balance--total governmental funds 80,605,820$
Amounts reported for governmental activities in the statement of net position
are different because:
Capital assets used in governmental activities are not financial resources,
and therefore are not reported in the funds. The cost of the assets is
$531,170,724, and the accumulated depreciation is $234,727,468. 296,443,256
Other long-term assets are not available to pay for current-period expenditures,
and therefore are deferred in the funds. 31,617,435
Deferred outlows of resources and deferred inflows of resources are created as a
result of various differences related to pensions and debt refunding that are not
recognized in the governmental funds.
Deferred pension obligation outflows 37,527,468
Deferred OPEB outflows 1,860,935
Deferred loss from debt refunding 2,580,820
Deferred pension obligation inflows (54,335,430)
(12,366,207)
Internal service funds are used by management to charge the costs of fleet
services, group health insurance, loss control activities, and vacation benefits
payable to individual funds. The assets and liabilities of the internal service
funds are included in governmental activities in the statement of net position
for $5,101,505 less $3,859,439 attributed to business-type activities. 1,242,066
Long-term liabilities, including bonds payable, are not due and payable in the
current period, and therefore are not reported in the funds. Long-term
liabilities at year-end consist of:
Bonds and notes payable 129,834,234
Other post employment benefits 114,007,746
Pension liability 40,806,819
Interest accrued on long-term debt 1,900,278
(286,549,077)
Net position of governmental activities 110,993,293$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
General
Disaster
Recovery
C
ommun
i
ty
Investment
Trust
O
t
h
er
Governmental
Funds
T
ota
l
Governmental
Funds
Revenues
Taxes
Property taxes
16,315,960$ -$ -$ 14,002,905$ 30,318,865$
Sales taxes
14,094,409 - - 12,172,758 26,267,167
Other taxes
4,239,671 - - 11,486 4,251,157
Licenses and permits
1,930,727 - - 122,648 2,053,375
Intergovernmental revenues
34,453,489 499,257 - 21,924,341 56,877,087
Charges for services
5,583,614 - - 993,055 6,576,669
Fines and forfeits
524,415 - - 79,942 604,357
Special assessments
474,241 - - 1,131,096 1,605,337
Investment income
(35,189) 5,582 (757,719) 228,178 (559,148)
Miscellaneous revenues
1,461,901 - - 4,676,424 6,138,325
Total Revenues
79,043,238 504,839 (757,719) 55,342,833 134,133,191
Expenditures
Current
General government
26,044,353 - - 2,286,530 28,330,883
Public safety
39,675,021 - - 1,877,310 41,552,331
Public works
12,283,655 - -
2,942,744 15,226,399
Culture and recreation
4,525,475 1,756,249 - 4,248,310 10,530,034
Urban and economic development
3,145,266 - - 10,492,027 13,637,293
Debt service
Principal retirement
- - - 11,172,000 11,172,000
Interest and fiscal fees
- - -
4,487,446 4,487,446
Bond issuance costs
- - - 163,704 163,704
Capital outlay
Capital outlay
9,999 - - 25,096,739 25,106,738
Total Expenditures
85,683,769 1,756,249 - 62,766,810 150,206,828
Excess (Deficiency) of Revenues Over
(Under) Expenditures
(6,640,531) (1,251,410) (757,719) (7,423,977) (16,073,637)
Other Financing Sources (Uses)
Issuance of bonds
- - - 9,645,000 9,645,000
Premium on issuance of bonds
- - - 553,787 553,787
Transfers in
8,113,221 - - 13,639,074 21,752,295
Transfers out
(193,728) - (529,225) (16,674,439) (17,397,392)
Total Other Financing Sources (Uses)
7,919,493 - (529,225) 7,163,422 14,553,690
Net Change in Fund Balances
1,278,962 (1,251,410)
(1,286,944) (260,555) (1,519,947)
Fund Balances - January 1, 2018
15,606,803 (1,220,567) 23,155,370 44,584,161 82,125,767
Fund Balances - December 31, 201
8
16,885,765$ (2,471,977)$ 21,868,426$ 44,323,606$ 80,605,820$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2018
Net change in fund balances - total governmental funds (1,519,947)$
Amounts reported for governmental activities in the statement of
activities are different because:
Government funds report capital outlays as expenditures. However, in
the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense. In the current
period, these amounts are:
Capital outlay 23,517,946
Depreciation expense (16,757,903)
Excess of capital outlay over depreciation expense 6,760,043
Internal service funds are used by management to charge the costs of certain
activities to individual funds. The net revenue of $(676,684) from internal
funds less ($30,906) attributed to business-type activities is reported with
governmental activities. (645,778)
Bond proceeds provide current financial resources to governmental funds;
however, issuing debt increases long-term liabilities in the statement of
net position. In the current period, proceeds were received from:
Bonds issued, including a bond premium of $553,787 (10,198,787)
Repayment of long-term debt is reported as an expenditure in governmental
funds, but the repayment reduces long-term liabilities in the statement of
net position. In the current year, these amounts consist of:
Bond principal retirement 11,210,328
Because some revenues will not be collected for several months after the
City's fiscal year ends, they are not considered "available" revenues and are
deferred in the governmental funds. Unavailable revenues decreased by this
amount this year. (2,644,128)
Some items reported in the statement of activities do not require the use of
current financial resources and therefore are not reported as expenditures
in governmental funds. These activities consist of:
Net increase in accrued interest (25,618)
Decrease in net other post employment benefits payable 464,789
Decrease in pension obligation 2,077,425
Decrease in loans receivable (1,374,699)
Amortization of deferred loss on debt refunding (171,104)
Amortization of bond premiums 822,821
Total additional expenditures 1,793,614
Change in net position of governmental activities
The notes to the financial statements are an integral part of this statement.
4,755,345$
CITY OF DULUTH, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Actual t
o
Actual Amount
s
Modified Budget
Budgeted Amounts (Budgetary Basis) Favorable
Original Final (Note 2) (Unfavorable)
Revenues
Taxes 34,186,500$ 34,186,500$ 34,650,040$ 463,540$
Licenses and permits 1,638,100 1,638,100 1,930,727 292,627
Intergovernmental revenues 33,653,000 34,173,992 34,453,489 279,497
Charges for services 5,598,600 5,598,600 5,583,614 (14,986)
Fines and forfeits 522,800 522,800 524,415 1,615
Special assessments 438,900 517,400 474,241 (43,159)
Investment income - - (35,189) (35,189)
Miscellaneous revenues 937,200 1,457,589 1,461,901 4,312
Total revenues 76,975,100 78,094,981 79,043,238 948,257
Expenditures
Current
General government 26,612,300 28,441,859 27,476,433 965,426
Public safety 39,079,600 39,924,445 39,685,230 239,215
Public works 12,522,300 12,603,294 12,292,140 311,154
Culture and recreation 4,599,600 4,602,672 4,525,475 77,197
Urban and economic development 3,135,600 3,251,893 3,191,261 60,632
Total expenditures 85,949,400 88,824,163 87,170,539 1,653,624
Excess (deficiency) of revenues over
expenditures (8,974,300) (10,729,182) (8,127,301) 2,601,881
Other Financing Sources (Uses)
Transfers in 7,348,300 7,660,361 8,113,221 452,860
Transfers out - (185,000) (193,728) (8,728)
Fund balance reserves 1,626,000 1,626,000 -
(1,626,000)
Total other financing sources (uses) 8,974,300 9,101,361 7,919,493 (1,181,868)
Net change in fund balance -
budgetary basis - (1,627,821) (207,808) 1,420,013
Net adjustments to reflect operations in
accordance with generally accepted
accounting principles - - 1,486,770 1,486,770
Net change in fund balance -
GAAP basis - (1,627,821) 1,278,962 2,906,783$
Fund Balance - January 1, 2018 15,606,803 15,606,803 15,606,803
Fund Balance - December 31, 2018 15,606,803$ 13,978,982$ 16,885,765$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2018
Priley Drive
Parking
Facility Water Gas Sewer
Assets
Current assets
Cash and cash equivalents 430,094$ 1,988,044$ 1,883,624$ 2,642,256$
Restricted cash and cash equivalents
Customer deposits - 90,136 2,754,100 -
Construction - 2,548,378 - 608,514
Loans - - 357,791 -
Restricted assets held by trustee - - - -
Receivables, net
Accounts 27,382 1,379,935 5,610,111 2,014,765
Restricted loans - - 387,573 -
Assessments - 26,790 1,454 24,460
Due from other funds - 10,794 8,942 5,302
Due from component units - - - -
Interfund loan receivable - - 2,597,498 -
Due from other governments - 324 108 731
Inventories - 1,438,636 1,287,082 105,992
Prepaids - - 489,328 1,279,453
Total current assets 457,476 7,483,037 15,377,611 6,681,473
Noncurrent assets
Assessments receivable - 92,236 5,604 100,277
Restricted loans receivable - - 1,384,378 -
Capital assets, net 19,434,657 63,306,320 56,690,345 96,527,374
Total noncurrent assets 19,434,657 63,398,556 58,080,327 96,627,651
Total Assets 19,892,133 70,881,593
73,457,938
103,309,124
Deferred Outflows of Resources
Deferred loss from debt refunding - - 1,375 52,092
Deferred pension obligation outflows - 635,588 874,541 378,718
Deferred OPEB outflows - 671,232 860,316 457,219
Total Deferred Outflows of Resources - 1,306,820 1,736,232 888,029
Liabilities
Current liabilities
Accounts payable 4,373 369,354 2,588,736 36,550
Contracts payable - 12,121 313,423 126,918
Claims payable - - - -
Notes payable - 866,000 - 1,404,000
Leases payable - 245,846 225,358 211,700
Due to other funds - 20,047 21,328 22,875
Interfund loan payable - - - -
Due to other governments - 90,716 106,424 808,420
Accrued interest payable 123,092 79,395 29,493 109,392
Accrued salaries payable - 96,316 136,054 56,898
Compensated absences - 236,462 356,372 145,446
Unearned revenue - 45,411 712,590 53,066
Deposits - 10,000 2,799,125 -
Revenue bonds payable 300,541 99,000 505,000 1,001,000
Total current liabilities 428,006 2,170,668 7,793,903 3,976,265
(continued)
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2018
Priley Drive
Parking
Facility Water Gas Sewer
Business-type Activities - Enterprise Funds
Noncurrent liabilities
Notes payable - 5,696,000 - 7,508,000
Loans payable - - - -
Claims payable - - - -
Interfund loan payable - - - -
Leases payable - 1,228,023 1,125,688 1,057,465
Pension liability - 3,002,049 4,130,684 1,788,787
Net other postemployment benefits payable - 1,744,674 4,379,221 -
Revenue bonds payable 12,146,934 4,443,018 2,919 2,863,886
Total noncurrent liabilities 12,146,934 16,113,764 9,638,512 13,218,138
Total Liabilities 12,574,940 18,284,432 17,432,415 17,194,403
Deferred Inflows of Resources
Deferred pension obligation inflows - 960,177 1,321,160 572,127
Net Position
Net investment in capital assets 6,987,182 53,276,811 54,832,755 82,533,415
Restricted for health insurance trust - - - -
Restricted for special accounts - - - 608,514
Restricted for loans - - 1,506,313 -
Unrestricted 330,011 (333,007) 101,527 3,288,694
Total Net Position 7,317,193$ 52,943,804$ 56,440,595$ 86,430,623$
(continued)
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2018
Steam
Other
Enterprise
Funds
Total
Enterprise
Funds
G
overnmen
t
a
l
Activities -
Internal Service
Funds
Assets
Current assets
Cash and cash equivalents -$ 7,068,479$ 14,012,497$ 5,109,754$
Restricted cash and cash equivalents
Customer deposits - - 2,844,236 -
Construction - - 3,156,892 -
Loans - - 357,791 -
Restricted assets held by trustee - - - 6,747,253
Receivables, net
Accounts 1,428,935 797,107 11,258,235 84,131
Restricted loans - - 387,573 -
Assessments - 25,369 78,073 -
Due from other funds 22,140 5,456 52,634 372,775
Due from component units - - - 7,000
Interfund loan receivable - - 2,597,498 -
Due from other governments 1,953,732 26,544 1,981,439 -
Inventories 437,856 136,662 3,406,228 175,283
Prepaids 32,325 1,244,419 3,045,525 50,000
Total current assets 3,874,988 9,304,036 43,178,621 12,546,196
Noncurrent assets
Assessments receivable - - 198,117 -
Restricted loans receivable 28,401 - 1,412,779 -
Capital assets, net 15,234,217 41,178,045 292,370,958 262,576
Total noncurrent assets 15,262,618 41,178,045 293,981,854 262,576
Total Assets 19,137,606
50,482,081
337,160,475 12,808,772
Deferred Outflows of Resources
Deferred loss from debt refunding 85,000 366,705 505,172 -
Deferred pension obligation outflows - 366,660 2,255,507 190,821
Deferred OPEB outflows - 256,905 2,245,672
-
Total Deferred Outflows of Resources 85,000 990,270 5,006,351 190,821
Liabilities
Current liabilities
Accounts payable 305,020 200,871 3,504,904 134,810
Contracts payable 1,024,005 234,367 1,710,834 12,074
Claims payable - - - 1,895,459
Notes payable - - 2,270,000 -
Leases payable - - 682,904 -
Due to other funds 296,019 12,920 373,189 43,692
Interfund loan payable 2,597,498 813,113 3,410,611 494,688
Due to other governments 23,578 1,146 1,030,284 23,074
Accrued interest payable 68,670 72,022 482,064 -
Accrued salaries payable - 60,298 349,566 31,385
Compensated absences - 157,826 896,106 3,110,129
Unearned revenue - 80,155 891,222 -
Deposits - 31,453 2,840,578 -
Revenue bonds payable 655,000 940,000 3,500,541 -
Total current liabilities 4,969,790 2,604,171 21,942,803 5,745,311
(continued)
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2018
Steam
Other
Enterprise
Funds
Total
Enterprise
Funds
G
overnmen
t
a
l
Activities -
Internal Service
Funds
Business-type Activities - Enterprise Funds
Noncurrent liabilities
Notes payable - - 13,204,000 -
Loans payable - 62,485 62,485 -
Claims payable - - - 963,207
Interfund loan payable - 1,550,000 1,550,000 -
Leases payable - - 3,411,176 -
Pension liability - 1,731,835 10,653,355 901,298
Net other postemployment benefits payable - - 6,123,895 -
Revenue bonds payable 5,738,470 6,624,402 31,819,629 -
Total noncurrent liabilities 5,738,470 9,968,722 66,824,540 1,864,505
Total Liabilities 10,708,260 12,572,893 88,767,343 7,609,816
Deferred Inflows of Resources
Deferred pension obligation inflows - 553,911 3,407,375 288,272
Net Position
Net investment in capital assets 8,925,747 33,917,863 240,473,773 262,576
Restricted for health insurance trust - - - 5,125,705
Restricted for special accounts - - 608,514 -
Restricted for loans - - 1,506,313 -
Unrestricted (411,401) 4,427,684 7,403,508 (286,776)
Total Net Position 8,514,346$ 38,345,547$ 249,992,108$ 5,101,505$
Amounts reported for business-type activities in the statement of net position
are different because of the consolidation of internal service fund activities
related to enterprise funds. 3,859,439
Net position of business-type activities 253,851,547$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Priley Drive
Parking Facility Water Gas Sewer
Operating Revenues
Sales
-$ -$ 37,427,929$ -$
Charges for services
457,088 14,743,178 956,165 19,456,525
Fines and forfeits
- - - -
Miscellaneous revenues
- 181,977 893,479 262,142
Total Operating Revenues
457,088 14,925,155 39,277,573 19,718,667
Operating Expenses
Cost of sales and services
- - 20,731,398 -
Personal services
- 5,474,970 7,663,533 3,449,054
Supplies
- 949,507 998,774 254,180
Utilities
27,594 1,321,655 41,158 140,612
Other services and charges
206,254 1,509,245 2,109,311 10,667,786
Depreciation
520,571 1,818,410 1,491,899 1,994,665
Medical and insurance
- - - -
Total Operating Expenses
754,419 11,073,787 33,036,073 16,506,297
Operating Income (Loss)
(297,331) 3,851,368 6,241,500 3,212,370
Nonoperating Revenues (Expenses)
Property taxes
- - - -
Investment income
(1,597) (34,007) (20,943) (3,277)
Intergovernmental revenue
-
16,919 23,365 8,283
Gain (loss) on sale or disposition of capital assets
- 36,379 27,917 17,572
Interest and fiscal fees
(500,064) (252,071) (58,802) (303,362)
Total Nonoperating Revenues (Expenses)
(501,661) (232,780) (28,463) (280,784)
Income (Loss) Before Contributions and Transfers
(798,992) 3,618,588 6,213,037 2,931,586
Capital contributions
- 13,266 87,700 (704)
Transfers in
543,427
144,300 14,900 7,450
Transfers out
- (151,482) (2,718,189) (114,776)
Change in Net Position
(255,565) 3,624,672 3,597,448 2,823,556
Total Net Position - January 1, 2018, as restated
(Note 1)
7,572,758 49,319,132 52,843,147 83,607,067
Total Net Position - December 31, 2018
7,317,193$ 52,943,804$ 56,440,595$ 86,430,623$
(continued)
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Steam
Other
Enterprise
Funds
Total
Enterprise
Funds
Governmental
Activities - Internal
Service Funds
Operating Revenues
Sales
-$ 512,783$ 37,940,712$ 2,085,914$
Charges for services
7,447,633 10,641,142 53,701,731 22,457,439
Fines and forfeits
- 744,676 744,676 -
Miscellaneous revenues
432,461 250,779 2,020,838 1,055,585
Total Operating Revenues
7,880,094 12,149,380 94,407,957 25,598,938
Operating Expenses
Cost of sales and services
- 238,408 20,969,806 1,965,134
Personal services
- 3,099,221 19,686,778 5,379,133
Supplies
2,917,194 413,916 5,533,571 42,540
Utilities
409,569 849,608 2,790,196 34,437
Other services and charges
3,434,712 4,035,120 21,962,428 2,931,260
Depreciation
1,235,611 1,298,860 8,360,016 64,934
Medical and insurance
- - - 15,982,311
Total Operating Expenses
7,997,086 9,935,133 79,302,795 26,399,749
Operating Income (Loss)
(116,992) 2,214,247 15,105,162 (800,811)
Nonoperating Revenues (Expenses)
Property taxes
- 751,231 751,231 -
Investment income
2,986 (323) (57,161) 118,292
Intergovernmental revenue
- - 48,567 5,835
Gain (loss) on sale or disposition of capital assets
(7,102) - 74,766 -
Interest and fiscal fees
(201,463) (220,699) (1,536,461) -
Total Nonoperating Revenues (Expenses)
(205,579) 530,209 (719,058) 124,127
Income (Loss) Before Contributions and Transfers
(322,571) 2,744,456 14,386,104 (676,684)
Capital contributions
5,095,641 406,214 5,602,117 -
Transfers in
- 32,188 742,265 -
Transfers out
(161,101) (1,951,620) (5,097,168) -
Change in Net Position
4,611,969 1,231,238 15,633,318 (676,684)
Total Net Position - January 1, 2018, as restated
(Note 1)
3,902,377 37,114,309 234,358,790 5,778,189
Total Net Position - December 31, 2018
8,514,346$ 38,345,547$ 249,992,108$ 5,101,505$
Amounts reported in business-type activities in the statement
of activities are different because:
Change in net position 15,633,318$
Adjustment to reflect the consolidation of internal service
fund activities related to enterprise funds (30,906)
Change in net position of business-type activities 15,602,412$
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Priley Drive
Parking
Facility Water Gas Sewer
Cash Flows from Operating Activities
Cash received from customers 481,445$ 14,907,386$ 40,792,855$ 19,545,259$
Cash paid to suppliers (236,157) (3,876,339) (23,580,618) (11,013,765)
Cash paid to employees - (5,833,971) (8,021,100) (3,455,357)
Other operating revenues - 55,944 377,813 231,177
Net cash provided (used) by operating activities 245,288 5,253,020 9,568,950 5,307,314
Cash Flows from Noncapital Financing Activities
Transfers from other funds 543,427 144,300 14,900 7,450
Transfers to other funds - (151,482) (2,718,189) (114,776)
Property taxes - - - -
Operating grants - 16,919 28,949 8,283
Interfund financing - (376,543) (1,101,715) 1,495,782
Net cash provided (used) by noncapital financing activities 543,427 (366,806) (3,776,055) 1,396,739
Cash Flows from Capital and Related
Financing Activities
Capital grants and contributions - 28,893 88,283 541,684
Issuance of revenue bonds and notes - 4,010,287 - 122,314
Principal paid on bonds, notes and capitalized leases - (1,671,493) (697,055) (2,982,024)
Interest paid on bonds, notes and capitalized leases (575,335) (166,698) (87,749) (322,495)
Sale of capital assets - 31,960 25,316 21,322
Acquisition or construction of capital assets - (2,548,416) (3,596,112) (2,358,553)
Net cash provided (used) by capital
and related financing activities (575,335) (315,467) (4,267,317) (4,977,752)
Cash Flows from Investing Activities
Investment earnings (1,596) (34,007)
(20,943) (3,277)
Net increase (decrease) in cash and cash equivalents 211,784 4,536,740 1,504,635 1,723,024
Cash and cash equivalents - January 1, 2018 218,310 89,818 3,490,880 1,527,746
Cash and cash equivalents - December 31, 2018 430,094$ 4,626,558$ 4,995,515$ 3,250,770$
Reconciliation of operating income to net cash
provided (used) by operating activities:
Net operating income (loss) (297,331)$ 3,851,368$ 6,241,500$ 3,212,370$
Adjustments to reconcile net operating income(loss) to net
cash provided (used) by operating activities:
Depreciation 520,571 1,818,410 1,491,899 1,994,665
Change in assets and liabilities:
Decrease (increase) in receivables 24,357 66,413
1,346,930 86,779
Decrease (increase) in inventories - (249,953) (110,821) (25,325)
Decrease (increase) in prepaids (2,309) - (149,278) 339,232
Decrease
(
increase
)
in deferred pension obli
g
ation outflows - 1,000,706 1,278,406 532,694
Decrease (increase) in OPEB outflows - (671,232) - (457,219)
Increase (decrease) in payables - 511,373 613,583 67,337
Increase (decrease) in unearned revenues - 2,517 34,682 2,471
Increase
(
decrease
)
in deferred pension obli
g
ation inflows - (404,836) (474,850) (188,182)
Increase (decrease) in pension liability - (671,746) (703,101) (257,508)
Total adjustments 542,619 1,401,652 3,327,450 2,094,944
Net cash provided (used) by operating activities 245,288$ 5,253,020$ 9,568,950$ 5,307,314$
(continued)
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Governmental
Activities -
Other Total Internal
Enterprise Enterprise Service
Steam Funds Funds Funds
Cash Flows from Operating Activities
Cash received from customers 7,602,338$ 12,020,667$ 95,349,950$ 25,495,846$
Cash paid to suppliers (6,952,154) (5,606,944) (51,265,977) (20,584,744)
Cash paid to employees - (3,298,883) (20,609,311) (5,379,329)
Other operating revenues 69,725 223,310 957,969 1,675
Net cash provided (used) by operating activities 719,909 3,338,150 24,432,631 (466,552)
Cash Flows from Noncapital Financing Activities
Transfers from other funds - 32,188 742,265 -
Transfers to other funds (161,101) (1,951,620) (5,097,168) -
Property taxes - 749,710 749,710 -
Operating grants - - 54,151 5,835
Interfund financing (17,524) 110,862 110,862 (87,989)
Net cash provided (used) by noncapital financing activities (178,625) (1,058,860) (3,440,180) (82,154)
Cash Flows from Capital and Related
Financing Activities
Capital grants and contributions 4,438,700 406,214 5,503,774 -
Issuance of revenue bonds and notes - - 4,132,601 -
Principal paid on bonds, notes and capitalized leases (650,000) (1,036,548) (7,037,120) -
Interest paid on bonds, notes and capitalized leases (171,265) (235,900) (1,559,442) -
Sale of capital assets - - 78,598 -
Acquisition or construction of capital assets (4,767,595) (1,978,961) (15,249,637) (16,850)
Net cash provided (used) by capital
and related financing activities (1,150,160) (2,845,195) (14,131,226) (16,850)
Cash Flows from Investing Activities
Investment earnings
2,986 (323) (57,160) 118,292
Net increase (decrease) in cash and cash equivalents (605,890) (566,228) 6,804,065 (447,264)
Cash and cash equivalents - January 1, 2018 605,890 7,634,707 13,567,351 12,304,271
Cash and cash equivalents - December 31, 2018 -$ 7,068,479$ 20,371,416$ 11,857,007$
Reconciliation of operating income to net cash
provided (used) by operating activities:
Net operating income (loss) (116,992)$ 2,214,247$ 15,105,162$ (800,811)$
Adjustments to reconcile net operating income(loss) to net
cash provided (used) by operating activities:
Depreciation 1,235,611 1,298,860 8,360,016
64,934
Change in assets and liabilities:
Decrease (increase) in receivables (195,866) 91,907 1,420,520 (108,349)
Decrease (increase) in inventories (26,426) (16,340) (428,865) 95,314
Decrease (increase) in prepaids (32,325) 247,420 402,740 -
Decrease
(
increase
)
in deferred pension obli
g
ation outflows - 667,375 3,479,181 311,270
Decrease (increase) in OPEB outflows - (256,905) (1,385,356) -
Increase (decrease) in payables (144,093) (31,059) 1,017,141 327,663
Increase (decrease) in unearned revenues - 21,103 60,773 -
Increase
(
decrease
)
in deferred pension obli
g
ation inflows - (308,690) (1,376,558) (130,578)
Increase (decrease) in pension liability - (589,768) (2,222,123) (225,995)
Total adjustments 836,901 1,123,903 9,327,469 334,259
Net cash provided (used) by operating activities 719,909$ 3,338,150$ 24,432,631$ (466,552)$
(continued)
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
CITY OF DULUTH, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Noncash Investing, Capital and Financing Activities
Water
Capital contributions are reported net of timing differences totaling $15,627 due to receivables.
Gas
Capital contributions are reported net of timing differences totaling $583 due to receivables.
Sewer
Capital contributions are reported net of timing differences totaling $540,980 due to receivables.
Steam
Capital contributions are reported net of timing differences totaling ($656,941) due to receivables.
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION
DECEMBER 31, 2018
Other
Postemployment
Benefits Agency
Trust Fund Fund
Assets
Cash and cash equivalents 40,429$ 2,698,525$
Receivables:
Loans - 330,489
Accounts receivable 297,136 -
Investments, at fair value:
Fixed income pool 15,718,629 -
Equity pool 40,348,499 -
Total Assets 56,404,693 3,029,014$
Liabilities
Accounts payable -$ 920$
Due to agency - 3,028,094
Total Liabilities - 3,029,014$
Net Position Restricted for postemployment benefits
other than pensions 56,404,693$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
OTHER POSTEMPLOYMENT BENEFITS TRUST FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Additions
Employer Contributions 11,678,484$
Investment earnings:
Interest and dividends 1,329,415
Net decrease in fair value of investments (3,170,583)
Less investment expenses (3,853)
Net investment earnings (1,845,021)
Total Additions 9,833,463
Deductions
Benefits 11,145,909
Net increase in net position (1,312,446)
Net Position - January 1, 2018 57,717,139
Net Position - December 31, 2018 56,404,693$
The notes to the financial statements are an integral part of this statement.
Net Position restricted for postemployment benefits other
than pensions
CITY OF DULUTH, MINNESOTA
STATEMENT OF NET POSITION
COMPONENT UNITS
DECEMBER 31, 2018
Duluth Spirit
Duluth Entertainment Mountain
Economic and Convention Duluth Duluth Recreation
Development Center Airport Transit Area
Authority Authority Authority Authority Authority Totals
Assets
Cash and cash equivalents 6,256,068$ 1,243,814$ 939,507$ 4,905,618$ 319,090$ 13,664,097$
Receivables, net:
Taxes 9,278 - - 10,268 - 19,546
Accounts 30,164 1,176,645 548,462 134,049 481,540 2,370,860
Loans 7,685,470 - - - - 7,685,470
Grants - - 216,720 - - 216,720
Due from primary government - 781,191 - - - 781,191
Due from other governments - - - 8,480,697 - 8,480,697
Inventories - 187,468 16,774 221,873 106,544 532,659
Prepaids - 54,286 48,957 151,989 129 255,361
Restricted assets:
Cash and cash equivalents - 1,650,629 144,000 - - 1,794,629
Accounts receivable - 9,895 73,118 - - 83,013
Grants receivable - - 3,794,691 - - 3,794,691
Planning and development costs - - 1,127,305 - 22,376 1,149,681
Capital assets, net:
Non-depreciable 4,047,931
905,601
4,065,601 222,367 2,556,044 11,797,544
Depreciable 9,743,608 82,357,562 116,090,092 47,284,420 15,597,330 271,073,012
Total Assets 27,772,519 88,367,091 127,065,227 61,411,281 19,083,053 323,699,171
Deferred Outflows of Resources
Deferred pension obligation outflows - 682,469 220,954 - 541,230 1,444,653
Liabilities
Accounts payable and other
short-term liabilities 215,578 529,639 155,233 8,566,897 320,754 9,788,101
Contracts payable -
- 558,886 - - 558,886
Accrued interest payable - - - - 1,939 1,939
Due to primary government 637,417 7,396 82 1,325 1,207,608 1,853,828
Due to other government 32,237 - - - 22,771 55,008
Unearned revenue - 871,667 62,745 106,177 796,611 1,837,200
Deposits - 1,645,587 - - - 1,645,587
Non-current liabilities:
Due within one year - 124,563 1,093,483 603,777 311,245 2,133,068
Due in more than one year - 4,995,027 12,725,500 - 2,809,166 20,529,693
Total Liabilities 885,232 8,173,879 14,595,929 9,278,176 5,470,094 38,403,310
Deferred Inflows of Resources
Deferred pension obligation inflows
- 1,055,179 344,808 - 513,101 1,913,088
Net Position
Net investment in capital assets 13,599,039 83,263,163 110,795,137 47,506,787 16,860,414 272,024,540
Restricted for:
Capital projects 5,868,946 - - 3,872,144 - 9,741,090
Unrestricted 7,419,302 (3,442,661) 1,550,307 754,174 (3,219,326)
3,061,796
Total Net Position 26,887,287$ 79,820,502$ 112,345,444$ 52,133,105$ 13,641,088$ 284,827,426$
The notes to the financial statements are an integral part of this statement.
CITY OF DULUTH, MINNESOTA
STATEMENT OF ACTIVITIES
COMPONENT UNITS
FOR THE YEAR ENDED DECEMBER 31, 2018
Operating Capital
Charges for Grants and Grants and
Functions/Programs
Expenses Services Contributions Contributions
Duluth Economic Development Authority
Governmental activities:
Economic development 6,477,722$ 2,731,315$ 1,743,764$ -$
Duluth Entertainment and Convention
Center Authority
Business-type activities:
Entertainment and convention facility 14,777,685 8,834,319 - 200,000
Duluth Airport Authority
Business-type activities:
Airport facility 14,825,063 6,342,691 - 9,533,827
Duluth Transit Authority
Business-type activities:
Public transportation 23,540,824 2,992,124 14,087,635 11,715,937
Spirit Mountain Recreation Area Authority
Business-type activities:
Ski hill operations 6,470,494 5,188,782 - 493,970
Total Component Units 66,091,788$ 26,089,231$ 15,831,399$ 21,943,734$
(continued)
The notes to the financial statements are an integral part of this statement.
Program Revenues
CITY OF DULUTH, MINNESOTA
STATEMENT OF ACTIVITIES
COMPONENT UNITS
FOR THE YEAR ENDED DECEMBER 31, 2018
Duluth Spirit
Duluth Entertainment Mountain
Economic and Convention Duluth Duluth Recreation
Development Center Airport Transit Area
Functions/Programs
Authority Authority Authority Authority Authority Totals
Duluth Economic Development Authority
Governmental activities:
Economic development (2,002,643)$ -$ -$ -$ -$ (2,002,643)$
Duluth Entertainment and Convention
Center Authority
Business-type activities:
Entertainment and convention facility - (5,743,366) - - - (5,743,366)
Duluth Airport Authority
Business-type activities:
Airport facility - - 1,051,455 - - 1,051,455
Duluth Transit Authority
Business-type activities:
Public transportation - - - 5,254,872 - 5,254,872
Spirit Mountain Recreation Area Authority
Business-type activities:
Ski hill operations - - - - (787,742) (787,742)
Total Component Units (2,227,424)
General Revenues:
Property taxes 2,750,981 - - 1,491,900 - 4,242,881
Sales taxes - 1,818,754 - - - 1,818,754
Investment income 56,022 28,262 41,796 89,732 - 215,812
Miscellaneous 374,715 513,510 - - 171,239 1,059,464
Total General Revenues and Transfers 3,181,718 2,360,526 41,796 1,581,632 171,239 7,336,911
Change in Net Position 1,179,075 (3,382,840) 1,093,251 6,836,504 (616,503) 5,109,487
Net Position - Beginning,
as restated (Note 1) 25,708,212 83,203,342 111,252,193 45,296,601 14,257,591 279,717,939
Net Position - Ending 26,887,287$
79,820,502$ 112,345,444$ 52,133,105$ 13,641,088$ 284,827,426$
The notes to the financial statements are an integral part of this statement.
Net (Expense) Revenue and Changes in Net Position
N o t e s t o t h e
F i n a n c i a l S t a t e m e n t s
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
Note
Page
1 Summary of Significant Accounting Policies
46
Reporting Entity
46
Discretely Presented Component Units
46
Government-Wide and Fund Financial Statements
47
Measurement Focus, Basis of Accounting, and
Financial Statement Presentation
47
Cash and Cash Equivalents
49
Assets Held by Trustee
49
Receivables and Payables
49
Deferred Outflows/Inflows of Resources
50
Inventories and Prepaid Items
50
Restricted Assets
50
Capital Assets
51
Compensated Absences
51
Long-Term Obligations
51
Fund Equity
52
Reclassifications
52
Use of Estimates
52
Pensions
52
Change in Accounting Principles
53
2 Stewardship, Compliance, and Accountability
54
Budgetary Information
54
Federal Audit Requirements
54
Deficit Fund Equity
54
3 Deposits and Investments
55
Deposits
55
Investments
55
4 Property Taxes
59
5 Receivables
59
6 Deferred Inflows of Resources
59
7 Capital Assets
60
Primary Government
60
Component Units
61
8 Purchase and Construction Commitments
62
Disaster Damage Repair Commitments
62
9 Risk Management
62
10 Lease Obligations
63
Operating Leases
63
Noncancelable Operating Leases
63
Capital Leases
64
11 Short-Term Debt
64
12 Long-Term Debt
65
Changes in Long-Term Liabilities
65
Debt Requirements and Sources of Repayments
66
Debt Limit
69
Refunding Bond Issues
70
Bonds/Certificates and Notes Payable – By Issue
72
GUIDE TO NOTES
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
Note
Page
13 Fund Equity
75
14 Interfund Assets/Liabilities/Transfers
76
Due To/From Other Funds
76
Due To/From Primary Government/Component Units
76
Interfund Loan Receivables/Payables
77
Interfund Transfers
78
15 Pension Plans
79
Plan Description
79
Benefits Provided
79
Contributions
80
Pension Costs
80
Actuarial Assumptions
82
Discount Rate
83
Changes in Actuarial Assumptions
83
Pension Liability Sensitivity
83
Pension Plan Fiduciary Net Position
84
Defined Contribution Plan
84
Component Units' Pension Information
84
16 Other Postemployment Benefits
85
Plan Description
85
Funding Policy
85
Investments
85
Net OPEB Liability of the City
86
Changes in the Net OPEB Liability
86
Actuarial Methods and Assumptions
86
OPEB Expense and Deferred Outflows and Deferred Inflows
of Resources Related to OPEB
88
Trust Fund
88
Defined Contribution OPEB Plan
88
17 Segment Information
89
Condensed Statement of Net Position
89
Condensed Statement of Revenues, Expenses, and
Changes in Net Position
89
Condensed Statement of Cash Flows
90
18 Summary Disclosure of Significant Contingencies
90
Lake Superior Center
90
Tax Increment Districts
90
Federally Assisted Programs – Compliance Audits
90
Related Organization
90
Minneapolis-Duluth/Superior Passenger Rail Alliance
91
Tax Increment Assistance
91
Conduit Debt Obligations
92
19 Tax Abatement
92
GUIDE TO NOTES (continued)
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTIT
Y
DISCRETELY PRESENTED COMPONENT UNIT
S
Duluth Economic Develo
p
ment Authorit
y
Duluth Transit Authorit
y
411 West First Street Room 402 2402 West Michi
g
an Street
Duluth, MN 55802 Duluth, MN 55806
Duluth Entertainment and Convention Center Authorit
y
S
p
irit Mountain Recreation Area Authorit
y
350 South Fifth Avenue West 9500 S
p
irit Mountain Place
Duluth, MN 55802 Duluth, MN 55810
Duluth Air
p
ort Authorit
y
Duluth International Air
p
ort
4701 Grinden Drive
Duluth, MN 55811
The City of Duluth was first incorporated in 1870. The City has operated under the Mayor-Council form of
government since 1956, with five council members elected from geographical districts and four members
elected at-lar
g
e. The term of office of the Ma
y
or and Council members is four
y
ears.
The accounting policies of the City and its component units conform to generally accepted accounting
principles. Accounting policies of the component units are disclosed with those of the City. Any differences or
additional
p
olicies are identified b
y
each com
p
onent unit.
For financial reporting purposes, the City has included all funds, organizations, agencies, boards, commissions,
and authorities, and has considered all potential component units for which the City is financially accountable,
and other organizations for which the nature and significance of their relationship with the City are such that
exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental
Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial
accountability. These criteria include appointing a voting majority of an organization's governing body and (1)
the ability of the City to impose its will on that organization, or (2) the potential for the organization to provide
s
p
ecific financial benefits to
,
or im
p
ose s
p
ecific financial burdens on the Cit
y
.
As required by generally accepted accounting principles, the financial statements in this report present the City,
the primary government, and its five component units: the Duluth Economic Development Authority (DEDA), the
Duluth Entertainment and Convention Center Authority (DECC), the Duluth Airport Authority, the Duluth Transit
Authority, and the Spirit Mountain Recreation Area Authority. The component units are included as part of the
City's reporting entity because of the significance of their operational or financial relationships with the City.
Each component unit has a December 31 year-end, except for the Spirit Mountain Recreation Area Authority,
which has an A
p
ril 30
y
ear-end.
The governing board of each component unit is appointed by the Mayor and approved by the City Council,
except for the DECC, which has seven City appointees and four directors appointed by the Governor of
Minnesota. Three of the seven board members of DEDA must be Cit
y
Councilors.
The Council approves the budget of each component unit. The Council also approves the issuance and funding
of debt for each component unit. The Council currently provides an annual subsidy to the DECC and the Spirit
Mountain Recreation Area Authority. For the Duluth Transit Authority, the Council approves rate changes and
approves an annual tax levy to finance operating and capital needs. The Council must approve any expenditure
greater than $100,000 for DEDA.
Combining statements for the City's component units are presented in the basic financial statements section of
this report. Financial statements for DEDA are included as schedules in the supplementary information section
of this report. Complete financial statements for each of the other component units can be obtained from their
respective offices at the following addresses:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Cit
y
re
p
orts the followin
g
ma
j
or
g
overnmental funds:
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include 1) charges to those 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
p
ro
p
erl
y
included amon
g
p
ro
g
ram revenues are re
p
orted as
g
eneral revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even
though the latter are excluded from the government-wide financial statements. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
General Fund
The City's primary operating fund. It accounts for all financial transactions not
accounted for in another fund.
The government-wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the nonfiduciary activities of the primary government and its component units. For
the most part, the effect of interfund activity has been removed from these statements. Exceptions include
payments-in-lieu of taxes and payments for utilities between the General Fund and various enterprise funds.
Governmental activities, which are supported mostly by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on user fees and charges. The
financial data of the City's component units is discretely presented in a separate column in the combined
financial statements to em
p
hasize that the
y
are le
g
all
y
se
p
arate from the Cit
y
.
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. The agency
fund type has no measurement focus. 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
eli
g
ibilit
y
re
q
uirements im
p
osed b
y
the
p
rovider have been met.
Property taxes, sales and excise taxes, franchise taxes, special assessments, licenses, charges for services,
and interest associated with the current fiscal period are all considered to be susceptible to accrual and have
been recognized as revenues of the current fiscal period. All other revenue items are considered to be
measurable and available only when cash is received by the government.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATIO
N
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. The City considers revenues to be available if they
are collected within 45 days of the end of the current fiscal year. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when
p
a
y
ment is due.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
The Cit
y
re
p
orts the followin
g
ma
j
or
p
ro
p
rietar
y
funds:
A
dditionall
y
, the Cit
y
re
p
orts the followin
g
fund t
yp
es:
These funds account for fleet services, insurance coverage for property,
casualty, liability, workers' compensation, medical and dental claims, and
compensated absences, provided to other departments, employees, authorities
of the Cit
y
, or to other
g
overnmental units, on a cost reimbursement basis.
Internal Service Funds
Sewer Enterprise Fund
This fund accounts for the operation and maintenance of the sanitary sewer
s
y
stem.
Disaster Recovery
Special Revenue Fund
This fund was established to account for grants and aids associated with the 500
-
year flood event in June 2012, and continues to be used for subsequent
disasters.
Community Investment
Trust Fund
This fund accounts for the City’s share of revenues that were received from the
operation of the Fond du Luth Casino, in accordance with an agreement with the
Fond du Lac Band of Lake Superior Chippewa. Monies are to be used to finance
future capital improvements of the City, with investment earnings of the fund to
be transferred annuall
y
to the General Fund.
Gas Enterprise Fund
This fund accounts for the distribution of natural gas, as well as inspection,
maintenance and servicin
g
of customer
g
as utilization e
q
ui
p
ment.
This fund accounts for the collection, treatment, and distribution of water.
Water Enter
p
rise Fund
Priley Drive Parking
Facilit
y
Enter
p
rise Fund
This fund accounts for the construction, operation, and maintenance of the
p
arkin
g
ram
p
located at 410 West First Street.
Agency Fund
Trust Fund
This fund accounts for an irrevocable trust established for funding other
postemployment benefits for eligible retired employees under a single-employer
defined benefit
p
lan.
Steam Enterprise Fund
This fund accounts for assets held by the City as an agent for the Duluth 1200
Loan Fund.
This fund accounts for the generation and distribution of steam in the downtown
area.
The City's financial statements are prepared in accordance with generally accepted accounting principles
(GAAP) as of and for the year ended December 31, 2018. GASB is responsible for establishing GAAP for state
and local governments through its pronouncements (statements and interpretations). The more significant
accounting policies established in GAAP and used by the City are discussed below.
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 enterprise funds and
internal service funds are charges to customers and participants for sales and services. Operating expenses for
enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are reported as
nono
p
eratin
g
revenues and ex
p
enses.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
CASH AND CASH EQUIVALENTS
A
SSETS HELD BY TRUSTE
E
RECEIVABLES AND PAYABLE
S
Loans receivable include both the current and long-term portions of loans issued by the City. Business
development loans are reported in both special revenue and agency funds. Most of these loans receivable are
reported as an asset in the amount of loan proceeds disbursed. However, some loans, depending on their
original funding source, report unavailable revenue equal to the loan amount, and recognize revenue when
principal payments are received. Loans made at terms where the stated interest rate is significantly less than
prevailing market interest rates are reported as an asset at the present value of the loan. Low interest home
energy loans accounted for in the Gas Enterprise Fund, report a loan receivable and a contract payable in the
amount of the loan a
g
reement.
Amounts due from individuals, organizations, or other governmental units are recorded as receivables at year-
end. These amounts include charges for services rendered, or for goods and material provided by the City,
including amounts for unbilled services. Receivables are shown net of an allowance for uncollectible accounts
where applicable. Receivables are also recognized for property taxes, sales and excise taxes, loans,
assessments, accrued interest, and inter
g
overnmental
g
rants.
Taxes and tax increments receivable consist of uncollected taxes levied and payable in prior years, net of
allowance for uncollectible taxes. These receivables are deferred to indicate they are not available to finance
ex
p
enditures of the current fiscal
p
eriod.
Assessments receivable include current, delinquent, and deferred assessments for garbage service, razings,
administration fines, as well as for street and utility improvements. Because the City requires all property owners
to contract for garbage collection, the City assesses property owners for unpaid garbage bills, as a service to
the licensed garbage haulers. These assessments are reported in the General Fund. The amount reported by
the garbage haulers as unpaid is set up as a receivable and the revenue is deferred. As payments are received,
a payable to the contractor is set up. Any unpaid assessments at year-end are certified to St. Louis County for
payment with the following year's property taxes. Revenue is recognized for any penalties and interest the
Count
y
collects on the Cit
y
's behalf.
These assets are funds held pursuant to a self-insurance trust a
g
reement.
Available cash balances from all funds are pooled and invested in accordance with Minnesota statutes. Each
fund's share of the pool is shown on the financial statements as "Cash and Cash Equivalents." For reporting
purposes, petty cash and change funds are also considered cash and cash equivalents. For proprietary fund-
type statement of cash flows, all highly liquid investments (including restricted assets) with a maturity of three
months or less when
p
urchased
,
are considered to be cash e
q
uivalents. Investments are stated at fair value.
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 the
y
are needed.
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year is reported as interfund loans receivable/payable. All other outstanding balances between funds are
reported as "due to/from other funds." Any residual balances outstanding between the governmental activities
and business-type activities are reported in the government-wide financial statements as internal balances.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
INVENTORIES AND PREPAID ITEM
S
RESTRICTED ASSETS
In addition to assets, the statement of financial position reports a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditure) until then. Currently, the City has three items that qualify for reporting in this
cate
g
or
y
: deferred amounts from debt refundin
g
, deferred
p
ension obli
g
ations, and OPEB obli
g
ations.
In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of
resources. This separate financial statement element, deferred inflows of resources, represents an acquisition
of net position that applies to a future period(s) and so will not be recognized as an inflow of resources
(revenue) until that time. The City has two types of items that qualify for reporting in this category: unavailable
revenue and deferred pension obligations. These amounts are recognized as an inflow of resources in the
period that the amounts become available.
The inventories of the enterprise funds consist of expendable supplies held for consumption. Fuel, chemicals,
and service department inventories are priced at the lower of cost or market using the first-in, first-out method
and are based on an annual physical inventory. Other materials and supplies are on a perpetual inventory
system and are priced using the moving average method. The inventory of the internal service funds consists of
materials and su
pp
lies which are on a
p
er
p
etual inventor
y
s
y
stem and are
p
riced usin
g
the movin
g
avera
g
e
The inventories of the Duluth Entertainment and Convention Center Authority and the Spirit Mountain
Recreation Area Authority component units consist of merchandise held for resale and are based on a physical
inventor
y
and
p
riced at the lower of cost or market usin
g
the first-in
,
first-out method.
The inventory of the Duluth Airport Authority component unit consists of materials and supplies held for
consum
p
tion. The
y
are
p
riced at the lower of cost or market on a first-in, first-out method.
Assessments for street improvements are reported in a governmental fund, and revenues are deferred until the
collections are received. Assessments for utility improvements are reported in proprietary funds.
Restricted assets consist of customer deposits, employee flexible benefits plan, sewer surcharges, bond
monies s
p
ecified for construction, and monies restricted for the
p
a
y
ment of bond
p
rinci
p
al and interest.
The City Council has authorized the Department of Public Works and Utilities to enter into cooperative
a
g
reements for the
p
ur
p
ose of
p
urchasin
g
and storin
g
natural
g
as for future use.
The inventory of the Duluth Transit Authority component unit consists of materials, supplies, and fuel. The diesel
fuel and gasoline inventories are based on perpetual records and priced using the moving average method. The
materials and supplies inventory is also based on perpetual records but priced at cost using the first-in, first-out
method.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
CAPITAL ASSETS
A
ssets Years
Buildin
g
s 10-75
E
q
ui
p
ment 5-40
Infrastructure 10-75
COMPENSATED ABSENCES
LONG-TERM OBLIGATIONS
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities, and proprietary fund type statements of net position. Bond premiums and discounts are
amortized over the life of the bonds.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period. The face amount of debt issued is reported as other financing
sources. Premiums received on debt issuances are reported as other financing sources, while discounts on
debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual
debt
p
roceeds received
,
are re
p
orted as debt service ex
p
enditures.
A liability for unused vacation is reported in an internal service fund and the governmental activities column of
the government-wide statement of net position for employees paid from governmental funds. All other liabilities
for employees' unused vacation is recognized in the fund from which they are paid.
Sick leave is recorded as an expenditure or expense when paid. Employees are granted from 18 to 120 days of
sick leave each year, depending on their union bargaining unit. Employees are not compensated for unused
sick leave. Any contingent liability for unused sick leave has not been determined and is not recognized in the
financial statements.
Property, plant, and equipment is depreciated using the straight-line method over the following estimated useful
lives:
Employees are granted from 5 to 35 vacation days per year depending on their years of service and union
bargaining unit. Depending on bargaining unit, varying amounts of vacation may be accumulated and carried
over to the succeedin
g
y
ear.
The cost of normal maintenance and repairs that does not add to the value of the asset or materially extend an
asset's life is not ca
p
italized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred
during the construction phase of capital assets of business-type activities is included as part of the capitalized
value of the assets constructed.
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, trails,
and similar items) are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of
more than $5,000 for equipment, $50,000 for buildings and infrastructure, and all property which has an
estimated useful life in excess of five years. Such assets are recorded at historical cost or estimated historical
cost if
p
urchased or constructed. Donated ca
p
ital assets are recorded at ac
q
uisition value.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
FUND EQUIT
Y
RECLASSIFICATIONS
USE OF ESTIMATE
S
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
p
a
y
able in accordance with the benefit terms. Plan investments are re
p
orted at fair value.
Restricted - amounts to be used for specific purposes as determined by enabling legislation or imposed by
g
rantors or debt covenants.
In the fund financial statements,
g
overnmental funds report the followin
g
fund balance classifications:
Committed - amounts to be used for specific purposes as determined by Council resolution. The City's formal
actions, or board resolutions, are the highest decision making level and remain binding unless removed in the
same manner.
Assigned - amounts intended to be used for certain purposes as determined by Council resolution or by joint
action by the Chief Administrative Officer and Chief Financial Officer pursuant to the City’s Fund Balance
Re
p
ortin
g
and Governmental Fund T
yp
e Definitions Polic
y
.
Unassigned - residual balances in the General Fund that have not been restricted, committed or assigned.
Other governmental funds may report a negative unassigned fund balance should the total of nonspendable,
restricted
,
and committed fund balances exceed the total net resources of the fund.
It is the City's policy to use restricted resources first and then unrestricted resources as needed. When
unrestricted resources are available for use, it is the City's policy to use resources in the following order; first
committed, then assigned, and finally unassigned. Fund balance commitments may be established, modified, or
rescinded b
y
Council resolution.
Several account balances were reclassified for the year ended December 31, 2018, as previously reported.
These reclassifications were required for the comparability to the current year's financial statements and must
be considered when com
p
arin
g
the financial statements of this re
p
ort with those of
p
rior re
p
orts.
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Nonspendable - amounts that cannot be spent because they are not in spendable form or that are legally or
contractuall
y
re
q
uired to be maintained intact.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(
continued
)
Governmental Business-t
yp
e Com
p
onent
Statement of Activities
A
ctivities
A
ctivities Units
Net Position, January 1, 2018, as previously reported 174,562,057$ 243,664,588$ 281,961,082$
Change in accounting principles (68,324,109) (5,415,453) (2,243,143)
Net Position, January 1, 2018, as restated 106,237,948$ 238,249,135$ 279,717,939$
Amount
Net Position, January 1, 2018, as previously reported 239,774,243$
Change in accounting principles (5,415,453)
Net Position, January 1, 2018, as restated 234,358,790$
Amount
Fund Balance, January 1, 2018, as previously reported 6,732,027$
Change in accounting principles (3,651,758)
Fund Balance, January 1, 2018, as restated 3,080,269$
CHANGE IN ACCOUNTING PRINCIPLES
The above restatement had the followin
g
impact on previousl
y
reported balances.
Statement of Revenues, Expenses, and Changes in Fund
Balances - Duluth Economic Development Authority
Statement of Revenues, Expenses, and Changes in Fund
Net Position - Proprietary Funds
During the year ended December 31, 2018 the City changed its accounting for long-term loans receivable in the
DEDA Loan Programs fund. This change is due to clarifying guidance from GASB regarding long-term
receivables and is based on guidance found in GASB Statement 65, Items Previously Reported as Assets and
Liabilities. The long-term portion of loans receivable was removed from fund balance and is now reported as a
deferred inflow of resources.
During the year ended December 31, 2018, the City adopted new accounting guidance by implementing the
provisions of GASB Statement 75. GASB Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions, replaces the requirements of Statements No. 45, Accounting
and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions , as amended, and
No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans . GASB Statement No.
75 changes the amount employers reports as OPEB expense and defers some allocations of expenses to future
years as deferred outflows or inflows of resources. This statement also requires additional note disclosures and
schedules in the required supplementary information.
The above restatement had the followin
g
impact on previousl
y
reported balances.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
2.
BUDGETARY INFORMATION
FEDERAL AUDIT REQUIREMENTS
DEFICIT FUND EQUIT
Y
The Single Audit Act requires the City to have a single, independent audit of its financial operations, including
compliance with certain provisions of federal law and regulations. This audit requirement was complied with for
fiscal year ended December 31, 2018. An auditor's report on compliance and internal accounting control will be
issued at a later date.
The following special revenue funds had deficit fund balances due to grants earned but not received within 45
days of the end of the current fiscal year: Disaster Recovery - $2,471,977, Home Investment Partnerships
Program - $27,559, and Senior Employment - $7. These deficits will be eliminated upon receipt of the grant funds.
The Lake Superior Zoo deficit fund balance of $410,992 will be eliminated through operational changes and
efficiencies.
The Special Assessment capital project fund had a deficit fund balance of $219,548 at the end of the current
fiscal
y
ear which will be eliminated throu
g
h future financin
g
and
g
rant receipts
.
The following internal service funds had deficit net positions at the end of the current fiscal year which will be
eliminated throu
g
h future char
g
es: Emplo
y
ee Vacation Compensation - $20,626 and Fleet Services - $911,805
The Golf enterprise fund had a deficit net position of $1,050,903 at the end of the current fiscal year which will be
eliminated through operational changes and efficiencies.
STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
The budget is adopted on a basis consistent with generally accepted accounting principles, except that
encumbrances are treated as budgeted expenditures in the year in which the commitment to purchase is made,
and new ca
p
ital leases are not bud
g
eted.
By mid-September, the Mayor must submit a proposed budget to the City Council for its consideration and
approval. The Council meets with the various operating departments and component units to review their budget
requests. In December, a public hearing is held to discuss the proposed tax levy and budget. The Council must
then ado
p
t a final bud
g
et before
y
ear-end
.
The budget ordinance approved by the Council establishes appropriations for the General Fund. The total of all
appropriations within a department are defined as a budget item and form the legal level of budgetary control, as
defined in the budget ordinance. The Mayor, Chief Administrative Officer, or a designee may make transfers
between appropriations. However, the total of all transfers to or from any budget item in excess of 10% of that
budget item must be approved by the City Council. The budget ordinance allows the budget to be increased for
reimbursements received for damages or repairs to city property or work done for others and not anticipated in
the original budget. It also allows for grants accepted by city council resolution to be added to the budget. Finally,
the budget ordinance requires that use of the General Fund's fund balance that has been assigned in a prior year
must be approved by the Council if used for a purpose other than what had been specified. The Council may
revise the budget at any time by ordinance upon recommendation of the Administration.
Encumbrance accounting is used in governmental funds. Encumbered appropriations for purchase orders or
contracts are carried over into the following year, while the unencumbered appropriations lapse at the end of the
year. Outstanding encumbrances at year-end are reported as either an assigned or a restricted fund balance,
since the
y
do not constitute ex
p
enditures or liabilities
.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
3. DEPOSITS AND INVESTMENT
S
Reconciliation of Cit
y
's total cash and investments to the basic financial statements follows
:
Government-wide Statement of Net Position
Governmental Activities
Cash and cash e
q
uivalent
s
63,008,645$
Investments, at fair value 21,868,426
A
ssets held b
y
truste
e
6,747,253
Business-t
yp
e Activitie
s
Cash and cash e
q
uivalent
s
14,012,497
Cash and cash e
q
uivalents - restricted asset
s
6,358,919
Discrete Com
p
onent Unit
s
Cash and cash e
q
uivalent
s
13,664,097
Cash and cash e
q
uivalents - restricted asset
s
1,794,629
Statement of Fiduciar
y
Net Position
Cash and cash e
q
uivalent
s
2,738,954
Investments, at fair value 56,067,128
Total Cash and Investment
s
186,260,548$
DEPOSITS
INVESTMENTS
Minnesota Statutes § 118A.02 and § 118A.04 authorize the City to deposit its cash and to invest in
certificates of deposit in financial institutions designated by the City Council. The market value of collateral
pledged shall be at least ten percent more than the amount on deposit plus accrued interest at the close of
the financial institution's bankin
g
da
y
, not covered b
y
insurance or bonds.
Authorized collateral includes treasury bills, notes and bonds; issues of United States government
agencies; general obligations rated "A" or better; revenue obligations rated "AA" or better; irrevocable
standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota
statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the
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 b
y
the financial institution furnishin
g
the collateral
.
Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a financial institution
failure, the City's deposits may not be returned to it. It is the City's policy to obtain pledged collateral for all
deposits in excess of FDIC insurance. As of December 31, 2018, deposits with financial institutions were
full
y
insured or collateralized b
y
securities held in the Cit
y
's name.
Minnesota Statutes § 118A.04 and § 118A.05 authorize the following types of securities available to the
Cit
y
for investment:
1) governmental bonds, notes, bills, mortgages (excluding high-risk mortgage-backed securities defined in
Minnesota Statute § 118A.04 subdivision 6), and other securities, which are direct obligations or are
guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations
created b
y
an act of Con
g
ress.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
3. DEPOSITS AND INVESTMENT
S
(
continued
)
(1) a financial institution qualified as a "depository" of public funds of the government entity;
(2) any other financial institution which is a member of the Federal Reserve System and whose
combined capital and surplus equals or exceeds $10,000,000;
(3) a primary reporting dealer in United States government securities to the Federal Reserve Bank of
New York; or
(4) a securities broker-dealer licensed pursuant to chapter 80A, or an affiliate of it, regulated by the
Securities and Exchange Commission and maintaining a combined capital and surplus of $40,000,000
or more
,
exclusive of subordinated debt.
Reverse agreements may only be entered into for a period of 90 days or less and only to meet short-term
cash flow needs. In no event may reverse repurchase agreements be entered into for the purpose of
g
eneratin
g
cash for investments, exce
p
t as stated in Minnesota Statute
§
118A.05, subdivision 3
.
7) securities lending agreements, including custody agreements, may be entered into with a financial
institution meeting the qualifications of Minnesota Statute § 118A.05, subdivision 2, clause (1) or (2), and
having an office in Minnesota. Securities lending transactions may be entered into with entities meeting the
qualifications of Minnesota Statute § 118A.05, subdivision 2, and the collateral for such transactions shall
be restricted to the securities described in Minnesota Statutes § 118A.04 and § 118A.05.
(3) shares of an investment company which is registered under the Federal Investment Company Act
of 1940, and which holds itself out as a money market fund meeting the conditions of rule 2a-7 of the
Securities and Exchange Commission and is rated in one of the two highest rating categories for
mone
y
market funds b
y
at least one nationall
y
reco
g
nized statistical ratin
g
or
g
anization; or
8) agreements or contracts for:
(1) shares of a Minnesota joint powers investment trust whose investments are restricted to securities
described in Minnesota Statutes § 118A.04 and § 118A.05, subdivision 2;
(2) units of a short-term investment fund established and administered pursuant to regulation 9 of the
Office of the Comptroller of the Currency, in which investments are restricted to securities described in
Minnesota Statutes
§
118A.04 and
§
118A.05;
(4) shares of an investment company which is registered under the Federal Investment Company Act
of 1940, and whose shares are registered under the Federal Securities Act of 1933, as long as the
investment company's fund receives the highest credit rating and is rated in one of the two highest risk
rating categories by at least one nationally recognized statistical rating organization and is invested in
financial instruments with a final maturity no longer than 13 months.
2) any security which is (1) a general obligation of any state or local government with taxing powers which
is rated "A" or better by a national bond rating service; (2) a security which is a revenue obligation of any
state or local government which is rated "AA" or better by a national bond rating service; and (3) a general
obligation of the Minnesota Housing Finance Agency which is a moral obligation of the State of Minnesota
and is rated "A" or better b
y
a national bond ratin
g
a
g
enc
y.
3) commercial paper issued by United States corporations or their Canadian subsidiaries that is rated in
the highest quality category by at least two nationally recognized rating agencies and matures in 270 days
or less.
4) time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers'
acce
p
tances of United States banks.
5) in general obligation temporary bonds of the same governmental entity issued under Minnesota
Statutes § 429.091, subdivision 7, § 469.178, subdivision 5, or § 475.61, subdivision 6.
6) repurchase agreements consisting of collateral allowable in Minnesota Statute § 118A.04, and reverse
repurchase agreements may be entered into with any of the following entities:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
3. DEPOSITS AND INVESTMENT
S
(
continued
)
A
t December 31, 2018, the Cit
y
had the followin
g
investments
:
Investment Typ
e
Fair Value Less than 1 yea
r
1-5 year
s
Over 5 Years
U.S. Government A
g
enc
y
Securitie
s
67,018,484$ 59,086,695$ 7,931,789$ -$
Ne
g
otiable Certificates of De
p
osi
t
15,453,848 2,212,599 13,241,249 -
Munici
p
al Bond
s
11,295,093 2,824,275 7,960,168 510,650
Mutual Funds
89,100,074 89,100,074 - -
Total Investments
182,867,499 153,223,643$ 29,133,206$ 510,650$
De
p
osits
3,393,049
Total De
p
osits and Investment
s
186,260,548$
The Cit
y
's ex
p
osure to credit risk as of December 31, 2018, is as follows:
Fair Value
A
A
A
4,977,517$
A
A+ 69,594,553
AA
3,248,707
A
A- 492,800
A
aa 11,164,520
Mutual Funds 77,935,554
Ne
g
otiable Certificates of De
p
osi
t
15,453,848
Total 182,867,499$
S & P Rating
Moody's Rating
Not Rated
Custodial Credit Risk. The 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. As of December 31, 2018, none of the
Cit
y
's investments were sub
j
ect to custodial credit risk.
Credit Risk. Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to
the holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. It is the City's policy to invest only in securities that meet the ratings
re
q
uirements set b
y
state statute.
9) agreements or contracts for a guaranteed investment contract may be entered into if they are issued or
guaranteed by United States commercial banks, domestic branches of foreign banks, United States
insurance companies, or their Canadian subsidiaries. The credit quality of the issuer's or guarantor's short-
and long-term unsecured debt must be rated in one of the two highest categories by a nationally
recognized rating agency. Should the issuer's or guarantor's credit quality be down-graded below "A", the
g
overnment entit
y
must have withdrawal ri
g
hts.
Interest Rate Risk. Interest rate risk is the risk that changes in the market interest rates will adversely
affect the fair value of an investment. The City minimizes its exposure to interest rate risk by limiting the
investment horizon to either seven or ten
y
ears de
p
endin
g
on the investment ob
j
ective
.
Component Units are included in the City's cash and investment pool. The component units do not have
separately identifiable deposits or investments in the City's pool and, therefore, are aggregated with the
Cit
y
in the note disclosure.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
3. DEPOSITS AND INVESTMENT
S
(
continued
)
Issue
r
Re
p
orted Amoun
t
Federal Home Loan Ban
k
47,065,976$
A
t December 31, 2018, the Cit
y
of Duluth had the followin
g
recurrin
g
fair value measurements
.
Investments By Fair Value Level 12/31/2018 Level 1 Level 2 Level 3
U.S. Government A
g
enc
y
Securitie
s
67,018,484$ 5,849,979$ 61,168,505$ -$
Ne
g
otiable Certificates of De
p
osi
t
15,453,848 - 15,453,848 -
Munici
p
al Bond
s
11,295,093 - 11,295,093 -
Total Investments by Fair Value
93,767,425 5,849,979$ 87,917,446$ -$
Investments Measured at Net Asset
Value
(
NAV
)
Mutual Funds
11,164,520
Total Investments b
y
Fair Valu
e
and Measured at NA
V
104,931,945
De
p
osits
3,393,049
State Board of Investment Funds
77,935,554
Total Deposits and Investments
186,260,548$
Level 1: Quoted prices for identical investments in active markets;
The City also holds $15,923,000 in the Internal Equity Pool, $5,945,420 in the Internal Fixed Pool, and $6
in the Cash Pool, with the State Board of Investment, an external investment pool, related to the City's
Community Investment Trust Fund. The fair value of the investment is the fair value per share of the
underlying portfolio. The City invests in this pool, in accordance with Minnesota Statute § 11A.235, due to
the increased investment authority and historical rates of return on investments.
Level 2: Observable inputs other than quoted market prices; and,
Level 3: Unobservable inputs.
Fair Value Measurements Using:
Debt securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active
markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued
using a matrix pricing technique. Matrix pricing is used to value securities based on the securities'
relationshi
p
to benchmark
q
uoted
p
rices.
The mutual funds are liquid assets the City holds in addition to cash to ensure adequate cash flow for
operating activities.
The City holds $40,348,499 in the Internal Equity Pool and $15,718,629 in the Internal Fixed Pool, with the
State Board of Investment, an external investment pool, related to the City's Other Postemployment
Benefits Trust Fund. The fair value of the investment is the fair value per share of the underlying portfolio.
Pursuant to Minnesota Statute § 353.95, the City may only redeem these funds for the use of
postemployment benefits. The City invests in this pool due to the increased investment authority, historical
rates of return on investments, and the reduction of the postemployment benefit liability recorded in its
financial statements.
Concentration of Credit Risk. The concentration of credit risk is the risk of loss that may be caused by the
City's investment in a single issuer. It is the City's policy that United States government and agency
securities can be held without limit. Other investments in a single security type or with a single financial
institution shall not exceed 50% of the City's total investment portfolio. The City limits its commercial paper
holdings to a maximum of $5,000,000 in any issuer. Investments in any one issuer that represent 5% or
more of the City's investments are as follows:
Fair Value of Investment. The City of Duluth measures and records its investments using fair value
measurement guidelines established by generally accepted accounting principles. These guidelines
reco
g
nize a three-tiered fair value hierarch
y
, as follows
:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
4. PROPERTY TAXE
S
5. RECEIVABLES
Water
122,821$
Gas
490,886
Sewer
214,372
Steam
31,087
Nonmajor
85,945
Total Uncollectible
945,111$
6. DEFERRED INFLOWS OF RESOURCES
General
Assessments
984,811$
Grants
163,234
Loans
1,802,242
Taxes
416,734
Disaster Recovery
Grants
3,751,030
Nonmajor
Assessments
2,910,811
Grants
2,194,259
Loans
3,824,618
Taxes
328,874
Total for Governmental Fund
s
16,376,613$
Governmental funds report deferred inflows of resources in connection with receivables for revenues that are
not considered to be available to liquidate liabilities of the current period. The following schedule shows the
detail of deferred inflows of resources at December 31, 2018:
Receivables, net of uncollectible amounts, are reported in the governmental, proprietary, and fiduciary
financial statements for goods and services, taxes, assessments, loans, grants, and interest. The amount of
delinquent assessments included for the current fiscal year is $319,117. The uncollectible amounts related to
the revenues of the Cit
y
's utilit
y
enter
p
rise funds at December 31, 2018, are as follows
:
Property tax levies are set by the City Council in December each year and certified to St. Louis County for
collection in the following year. In Minnesota, counties act as collection agents for all property taxes. The
County spreads all levies over assessable property. Such taxes become a lien on January 1 and are
recorded as receivables by the City at that date. Revenues are accrued and recognized in the year
collectible
,
net of delin
q
uencies.
Property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. The County is
required to distribute collections to the City three times each year. Taxes which remain unpaid at year-end
are delinquent. Collections made by the County through the end of the year and remitted to the City within 45
days after year-end are recognized as revenue and the remainder is deferred. The current year collection
rate at December 31
,
2018
,
was 98.2%.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
7. CAPITAL ASSETS
PRIMARY GOVERNMENT
Beginning
Balance
Increases Decreases
Ending
Balance
Governmental activities:
Ca
p
ital assets, not bein
g
de
p
reciated:
Land and land im
p
rovement
s
22,467,642$ 391,679$ -$ 22,859,321$
Construction in
p
ro
g
res
s
14,023,177 21,723,621 7,991,348 27,755,450
Total capital assets, not being depreciated 36,490,819 22,115,300 7,991,348 50,614,771
Ca
p
ital assets, bein
g
de
p
reciated:
Buildin
g
s 87,320,193 1,862,406 - 89,182,599
E
q
ui
p
men
t
38,715,306 2,087,305 1,210,456 39,592,155
Infrastructure 347,724,125 5,570,555 - 353,294,680
Total ca
p
ital assets bein
g
de
p
reciate
d
473,759,624 9,520,266 1,210,456 482,069,434
Less accumulated de
p
reciation for:
Buildin
g
s 44,960,984 3,395,993 - 48,356,977
E
q
ui
p
men
t
28,143,196 3,304,466 1,164,934 30,282,728
Infrastructure 147,152,390 10,186,278 - 157,338,668
Total accumulated de
p
reciation
*
220,256,570 16,886,737 1,164,934 235,978,373
Total ca
p
ital assets, bein
g
de
p
reciated, ne
t
253,503,054
(
7,366,471
)
45,522 246,091,061
Governmental activities capital assets, net 289,993,873$ 14,748,829$ 8,036,870$ 296,705,832$
Business-t
yp
e activities:
Ca
p
ital assets, not bein
g
de
p
reciated:
Land and land im
p
rovement
s
4,649,458$ -$ -$ 4,649,458$
Construction in
p
ro
g
res
s
14,030,086 13,175,754 12,288,852 14,916,988
Total ca
p
ital assets, not bein
g
de
p
reciate
d
18,679,544 13,175,754 12,288,852 19,566,446
Ca
p
ital assets, bein
g
de
p
reciated:
Buildin
g
s 83,354,294 - - 83,354,294
E
q
ui
p
men
t
49,437,557 7,147,824 394,132 56,191,249
Infrastructure 257,476,172 8,070,338 18,060 265,528,450
Total ca
p
ital assets, bein
g
de
p
reciate
d
390,268,023 15,218,162 412,192 405,073,993
Less accumulated de
p
reciation for:
Buildin
g
s 32,049,201 1,758,521 - 33,807,722
E
q
ui
p
men
t
32,908,491 2,809,710 394,132 35,324,069
Infrastructure 59,356,861 3,791,787 10,958 63,137,690
Total accumulated de
p
reciatio
n
124,314,553 8,360,018 405,090 132,269,481
Total ca
p
ital assets, bein
g
de
p
reciated, ne
t
265,953,470 6,858,144 7,102 272,804,512
Business-type activities capital assets, net 284,633,014$ 20,033,898$ 12,295,954$ 292,370,958$
Capital asset activity for the year ended December 31, 2018, was as follows:
* Accumulated depreciation on assets transfered from business-type activities to governmental activities was
$63,900.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
7. CAPITAL ASSETS
(
continued
)
Governmental activities:
General
g
overnmen
t
1,495,033$
Public Safet
y
2,278,502
Public works, includin
g
de
p
reciation of
g
eneral infrastructure asset
s
10,738,347
Culture and recreation 2,103,260
Urban and economic develo
p
men
t
142,761
Ca
p
ital assets held b
y
the
g
overnment's internal service funds ar
e
char
g
ed to the various functions based on their usa
g
e of the asset
s
64,934
Total de
p
reciation ex
p
ense -
g
overnmental activitie
s
16,822,837$
Business-t
yp
e activities:
Parkin
g
560,434$
Prile
y
Drive Parkin
g
Facilit
y
520,571
Water 1,818,410
Gas 1,491,899
Sewe
r
1,994,665
Golf 94,342
Stormwater 414,418
Steam 1,235,612
Street Lighting 229,667
Total de
p
reciation ex
p
ense - business-t
yp
e activities 8,360,018$
COMPONENT UNITS
Beginning
Balance
Increases Decreases
Ending
Balance
Ca
p
ital assets, not bein
g
de
p
reciated:
Land and land im
p
rovement
s
11,211,743$ 127,041$ 437,907$ 10,900,877$
Construction in
p
ro
g
res
s
1,537,805 9,873,730 10,514,868 896,667
Total ca
p
ital assets, not bein
g
de
p
reciate
d
12,749,548 10,000,771 10,952,775 11,797,544
Ca
p
ital assets, bein
g
de
p
reciated:
Buildin
g
s 320,243,587 781,871 - 321,025,458
E
q
ui
p
men
t
75,234,855 14,085,671 335,967 88,984,559
Infrastructure 118,094,963 9,673,288 - 127,768,251
Othe
r
843,955 251,183 - 1,095,138
Total ca
p
ital assets bein
g
de
p
reciate
d
514,417,360 24,792,013 335,967 538,873,406
Less accumulated de
p
reciation for:
Buildin
g
s 119,869,475 10,068,598 - 129,938,073
E
q
ui
p
men
t
54,111,956 4,976,988 278,372 58,810,572
Infrastructure 71,705,817 6,701,932 1,195 78,406,554
Othe
r
579,882 65,313 - 645,195
Total accumulated de
p
reciatio
n
246,267,130 21,812,831 279,567 267,800,394
Total ca
p
ital assets, bein
g
de
p
reciated, ne
t
268,150,230 2,979,182 56,400 271,073,012
Com
p
onent unit ca
p
ital assets, ne
t
280,899,778$ 12,979,953$ 11,009,175$ 282,870,556$
De
p
reciation ex
p
ense was char
g
ed to com
p
onent units as follows
:
Duluth Economic Develo
p
ment Authorit
y
996,479$
Duluth Entertainment and Convention Center Authorit
y
3,690,839
Duluth Air
p
ort Authorit
y
10,003,489
Duluth Transit Authorit
y
5,834,629
S
p
irit Mountain Recreation Area Authorit
y
1,287,395
Total de
p
reciation ex
p
ense - com
p
onent units 21,812,831$
Depreciation expense was charged to functions/programs of the primary government as follows:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
8. PURCHASE AND CONSTRUCTION COMMITMENTS
Amount
General 1,487,917$
Disaster Recovery 551,178
Other Governmental Funds 32,301,407
Total Purchase Commitments 34,340,502$
DISASTER DAMAGE REPAIR COMMITMENT
S
9. RISK MANAGEMEN
T
At December 31, 2018, the City had construction commitments of approximately $4,412,017 for various
utility improvements. The Duluth Airport Authority component unit had construction commitments of
$13,746,468 for airport improvements. Funding for these future expenditures or expenses will be available
from federal and state grants, municipal state aid construction funds, tax levies, bond proceeds, and special
assessments.
At December 31, 2018, the City had purchase commitments represented by open encumbrances. These
are included as part of fund balance as follows:
Fund
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; employee health and dental; and natural disasters.
The Self-Insurance Fund, an internal service fund, was established for the reporting of all risk management
except for employee health and dental. All risk, except for building property insurance and small losses by
various funds, is assumed. No actuarial process is used to establish an estimate of the present cost of the
exposure to future liability, and consequently no actuarially established amount is reserved for property
replacement and continuance of operations. Contributions to the property insurance pool are determined by
an insurance market cost comparison, and in this sense they reflect actuarial experience of insurance
carriers. The City also purchases commercial property insurance to insure for fire and related damage for
certain buildings limited to the buildings estimated value. There were no significant reductions in insurance
coverage from the previous year. There were no settlements that exceeded insurance coverage for each of
the past three years.
The self-insurance for workers' compensation covers up to $500,000 per single loss occurrence. At that
point, the City is covered for losses by the Workers' Compensation Reinsurance Association (WCRA), an
organization created by Minnesota statutes in 1979 to implement a mandatory program of reinsurance for
workers' compensation liability risks in the State of Minnesota for losses occurring on or after October 1,
1979. The WCRA provides full indemnification for the City for claims arising under Minnesota Statute 176 in
excess of the $500,000 retention limit.
The City incurred significant damage to its shoreline infrastructure due to three unprecedented storm surges
in October 2017, April 2018, and again in October 2018. The City submitted a request for federal and state
aid for repair work which is estimated to be $30 million as of December 31, 2018.
The accrued liability for workers' compensation is estimated by the benefits administrator at the time an
injury or illness is reported. Interest cost is not included in the estimate. The estimated liability for general
liability matters is accrued if the City determines settlement is probable, based on a case-by-case
evaluation. The estimated liability is based on the requirements of Governmental Accounting Standards
Board Statement No. 10 which requires that a liability for claims be reported if information prior to the
issuance of the financial statements indicates that it is probable that a liability has been incurred at the date
of the financial statements and the amount of the loss can be reasonably estimated.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
9. RISK MANAGEMEN
T
(
continued
)
Liability
January 1
Claims and
Changes in
Estimates
Less Claims
Payments
Liability
December 31
2017 861,598$ 1,025,621 785,497 1,101,722$
2018 1,101,722$ 547,801 479,747 1,169,776$
Liability
January 1
Claims and
Changes in
Estimates
Less Claims
Payments
Liability
December 31
2017 1,272,366$ 10,136,407 9,979,950 1,428,823$
2018 1,428,823$ 11,445,161 11,185,094 1,688,890$
10. LEASE OBLIGATIONS
OPERATING LEASES
Type of Property
Governmental
A
ctivities
Component
Units
Impound lot 3,724$ -$
Land & right-of-way 24,868 58,783
Buildings 523,999 -
Equipment 675,568 4,500
Total Expense 1,228,159$ 63,283$
NONCANCELABLE OPERATING LEASES
Future minimum lease payments under operating leases, which are not reflected in these financial
statements, consist of the following at December 31, 2018:
Claims incurred but not reported have been considered in the sense that management's experience has
shown that they do not affect the predictions. An actuary was not used in determining the liabilities, but
actuarial guidelines were used. The estimated liability for claims payable at year end is present valued at
5%. In addition, the City Attorney estimated settlements to be $28,840 for various claims and cases which
are considered reasonably possible losses to the City. Considerable prejudgment interest liability is not
considered by the City Attorney in making a liability estimate. The amount of these estimated liabilities is not
reflected in the financial statements. Changes in the balances of the self-insurance fund's liability during
2017 and 2018 were as follows:
The Group Health Fund, an internal service fund, was established for the payment of employee medical and
dental claims. The City pays Delta Dental of Minnesota, HealthPartners, and ClearScript an administrative
fee to process dental, medical, and prescription drug claims, respectively. The City assumes all risk, except
that which is covered by a medical stop-loss policy purchased from HealthPartners. The stop-loss policy
has an individual limit of $750,000 and an aggregate limit of 120% of projected claims for the year. Claims,
expenditures, and liabilities are reported when it is probable that a loss has occurred and the amount of that
loss can be reasonably estimated. These losses include an estimate of claims that have occurred but have
not been reported. The estimated liability is based on the requirements of Governmental Accounting
Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior
to the issuance of the financial statements indicates that it is probable that a liability has been incurred at
the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in
the balances of the Group Health Fund's liability during 2017 and 2018 were as follows:
The City and its component units are committed under various operating leases for small tracts of land or
pipe right-of-way, parking facilities and equipment. The following is a summary of the approximate operating
lease expense for 2018:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
10. LEASE OBLIGATIONS
(
continued
)
Year Ending
December 31
Governmental
A
ctivities
Component
Units
2019 19,974$ 58,783$
2020 19,974 58,783
2021 19,973 58,783
2022 1,000 58,783
2023 1,000 58,783
2024-2028 5,000 293,918
2029-2033 5,000 293,918
2034-2038 5,000 293,918
2039-2043 5,000 235,136
2044-2048 5,000 -
2049-2053 5,000 -
2054-2058 5,000 -
2059-2063 2,000 -
Total minimum
p
a
y
ments re
q
uired 98,921$ 1,410,805$
CAPITAL LEASES
Type of Property
Business-Type
A
ctivities
Component
Units
E
q
ui
p
ment 9,377,739$ 3,453,731$
Less: Accumulated amortization
(
5,939,235
)
(
1,535,463
)
Total Ex
p
ense 3,438,504$ 1,918,268$
Minimum future lease
p
a
y
ments are:
Year Ending
December 31
Business-Type
A
ctivities
Component
Units
2019 831,660$ 257,348$
2020 831,661 242,711
2021 831,660 213,208
2022 831,660 213,208
2023 831,661 213,208
2024-2028 415,830 320,034
Total minimum lease
p
a
y
ments 4,574,132 1,459,717
Less: Im
p
uted interest
(
480,052
)
(
166,757
)
Present value of minimum lease
p
a
y
ments 4,094,080$ 1,292,960$
11. SHORT-TERM DEBT
Balance
01/01/18
Additions Deductions
Balance
12/31/18
91,919$ - 37,752 54,167$
Short-term debt activity for the year ended December 31, 2018, follows:
Duluth Economic Development
Authority
Accounts Payable
Represents temporary financing obtained from the Duluth 1200 Fund for public costs associated with the
Cirrus Design Corporation expansion project at the Duluth International Airport; to be repaid through tax
abatement agreements, tax increment financing, and building rent receipts.
Component unit subleases of noncancelable operating leases provide for future minimum rentals to be
received totaling $1,410,805 at December 31, 2018.
Capitalized leases for the City and its component units at December 31, 2018, consist of the following
capital assets shown at original costs as summarized below:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
CHANGES IN LONG-TERM LIABILITIES
Lon
g
-term liabilit
y
activit
y
for the
y
ear ended December 31, 2018, follows
:
Balance
01/01/18
Additions Deletions
Balance
12/31/18
Due Within
One Yea
r
Governmental Activities:
Bonds Pa
y
able:
General Obli
g
ation Bond
s
86,615,000$ 5,760,000$ 4,890,000$ 87,485,000$ 5,155,000$
General Obli
g
ation - Ta
x
A
batemen
t
13,435,000 - 830,000 12,605,000 835,000
S
p
ecial Assessment Debt with
Government Commitmen
t
7,320,000 - 2,155,000 5,165,000 2,040,000
General Obli
g
ation Certificates 13,670,000 3,885,000 3,260,000 14,295,000 3,315,000
A
dd Deferred Amounts:
For Bond Premiums 7,917,268 553,788 822,822 7,648,234 -
General Obli
g
ation Publi
c
Facilities Authorit
y
Note
s
27,000 - 27,000 - -
Revenue Notes 2,646,000 - 10,000 2,636,000 15,000
Ca
p
ital Leases Pa
y
abl
e
38,328 - 38,328 - -
Pension Liabilit
y
53,713,918 - 12,005,801 41,708,117 -
Com
p
ensated Absence
s
3,073,754 3,280,587 3,244,212 3,110,129 3,110,129
Claims and Jud
g
ment
s
2,530,545 11,992,962 11,664,841 2,858,666 1,895,459
Net Other Postem
p
lo
y
men
t
Benefits Pa
y
abl
e
112,611,600 1,396,146 - 114,007,746 -
Total Governmental Lon
g
-Term
Liabilities 303,598,413$ 26,868,483$ 38,948,004$ 291,518,892$ 16,365,588$
Business-T
yp
e Activities:
Bonds Pa
y
able:
Revenue and General
Obli
g
ation Bond
s
34,927,007$ 4,050,000$ 3,879,532$ 35,097,475$ 3,500,541$
A
dd Deferred Amounts:
For Bond Premiums 270,165 38,231 85,701 222,695 -
General Obli
g
ation Publi
c
Facilities Authorit
y
Note
s
18,048,383 - 2,574,383 15,474,000 2,270,000
Ca
p
ital Leases Pa
y
abl
e
4,751,820 - 657,740 4,094,080 682,904
Loans Pa
y
abl
e
112,489 - 50,004 62,485 -
Pension Liabilit
y
12,875,478 - 2,222,123 10,653,355 -
Com
p
ensated Absence
s
886,483 1,051,588 1,041,965 896,106 896,106
Net Other Postem
p
lo
y
men
t
Benefits Pa
y
abl
e
5,379,005 744,890 - 6,123,895
Total Business-T
yp
e Lon
g
-Term
Liabilities 77,250,830$ 5,884,709$ 10,511,448$ 72,624,091$ 7,349,551$
Com
p
onent Unit Activities:
Duluth Entertainment and
Convention Center Authorit
y
Com
p
ensated Absence
s
215,291$ 155,434$ 186,164$ 184,561$ 124,563$
Pension Liabilit
y
3,977,191 - 681,923 3,295,268 -
Net Other Postem
p
lo
y
ment
Benefits Pa
y
abl
e
1,751,338 - 111,577 1,639,761 -
Duluth Transit Authorit
y
Com
p
ensated Absence
s
578,396 603,777 578,396 603,777 603,777
(
continued
)
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Balance
01/01/18
Additions Deletions
Balance
12/31/18
Due Within
One Yea
r
Duluth Air
p
ort Authorit
y
Notes Pa
y
abl
e
103,232 - 67,321 35,911 35,911
Loans Pa
y
abl
e
10,272,223 - 911,667 9,360,556 936,667
Com
p
ensated Absence
s
111,982 118,592 109,669 120,905 120,905
Unearned Revenu
e
417,228 - 18,625 398,603 -
Pension Liabilit
y
1,295,939 - 258,540 1,037,399 -
Net Other Postem
p
lo
y
men
t
Benefits Pa
y
abl
e
2,719,833 145,776 - 2,865,609 -
S
p
irit Mountain Recreation Are
a
A
uthorit
y
Ca
p
ital Leases 1,527,599 - 234,639 1,292,960 207,455
Pension Liabilit
y
2,021,757 - 298,096 1,723,661 -
Com
p
ensated Absence
s
99,314 103,790 99,314 103,790 103,790
Total Com
p
onent Unit Lon
g
-Ter
m
Liabilities 25,091,323$ 1,127,369$ 3,555,931$ 22,662,761$ 2,133,068$
DEBT REQUIREMENTS AND SOURCES OF REPAYMENTS
Governmental Activities Lon
g
-Term Deb
t
General Obli
g
ation Bonds and Certificate Covenant
s
Year Ending
December 31 Interest Principal Interest Principal Interest Principal
2019 3,426,005 5,155,000 408,928 3,315,000 315,194 835,000
2020 3,282,586 5,120,000 343,750 3,310,000 298,294 855,000
2021 3,119,371 5,285,000 241,750 2,930,000 281,044 870,000
2022 2,946,864 5,305,000 148,175 2,310,000 263,444 890,000
2023 2,769,295 5,355,000 74,075 1,585,000 244,166 905,000
2024-2028 10,729,015 29,485,000 21,125 845,000 952,690 4,875,000
2029-2033 4,192,626 27,235,000 - - 94,155 3,375,000
2034-2035 112,735 4,545,000 - - - -
Total 30,578,497$ 87,485,000$ 1,237,803$ 14,295,000$ 2,448,987$ 12,605,000$
United States De
p
artment of Housin
g
and Urban Develo
p
ment Revenue Notes
Deferred tax levies are provided for in the general obligation bond and certificate covenants. Minnesota state laws
require these levies to be 5% in excess of bond and certificate principal and interest maturities. They are not
repealable in nature and can only be modified as they relate to current levies, and then only upon certification to the
County Auditor that funds are available to pay current maturities in whole or in part. Revenues derived from these
levies are recorded in the debt service fund for the payment of principal and interest on the general obligation bonds
and certificates.
The general obligation tax abatement bonds are payable from tax abatement collections. However, the City is
contin
g
entl
y
liable for
p
a
y
ments of
p
rinci
p
al and interest.
General obligation annual debt service requirements to maturity follow:
General Obligation
General Obligation Bonds General Obligation Certificates Tax Abatement
During 2005, $7,876,000 revenue notes were issued for the Fifth Street Redevelopment Project. Repayment of the
notes shall be from tax credit equity participation amounts, surplus cash, tax savings, anticipated tax increment
financing, interest reserve account and additional funds previously paid by the developer and held by the City.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Year Ending
December 31
Interest Principal
2019 151,151 15,000
2020 150,333 15,000
2021 149,507 15,000
2022 148,671 20,000
2023 147,547 20,000
2024-2025 291,122 2,551,000
Total 1,038,331$ 2,636,000$
S
p
ecial Assessment Bond
s
Year Ending
December 31 Interest Principal
2019 142,385 2,040,000
2020 85,925 1,505,000
2021 43,525 975,000
2022 16,600 460,000
2023 3,700 185,000
Total 292,135$ 5,165,000$
Other Debt
Business-t
yp
e Activities Lon
g
-Term Deb
t
Revenue and General Obli
g
ation Bond
s
General Obli
g
ation Public Facilities Authorit
y
Notes
The City has pledged it's full faith and credit taxing powers of the City irrevocably for the payment of principal and
interest when due on such notes, as well as all net revenues to be derived from time to time from the operation of
the munici
p
al sewer or water utilities.
Annual debt service requirements to maturity to fund special assessment bonds.
Special Assessment Bonds
Governmental activities compensated absences and net other postemployment benefit obligations are liquidated
p
rimaril
y
throu
g
h the General Fund.
The City has a contingent liability against it's full faith and credit to the extent that income from the Water, Gas,
Steam, Sewer, Stormwater, and Parking operations is insufficient to retire their respective general obligation
revenue bonds.
Annual debt service requirement to maturity for the outstanding notes follow:
United States Dept. of Housing and
Urban Development Revenue Notes
The City has a contingent liability against its full faith and credit on $5,165,000 of special assessment bonds. The
general credit of the City is obligated only to the extent that collections from special assessments are insufficient to
retire outstanding bonds.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Year Ending
December 31 Interest Principal Interest Principal
2019 1,039,718 3,500,541 190,141 2,270,000
2020 980,161 3,248,257 162,078 2,123,000
2021 900,157 3,000,307 135,533 2,149,000
2022 823,576 2,757,843 108,649 2,090,000
2023 748,402 2,520,886 82,260 1,908,000
2024-2028 2,717,682 9,224,280 121,217 4,606,000
2029-2033 1,779,629 3,834,116 3,280 328,000
2034-2038 1,098,326 3,149,800 - -
2039-2043 460,253 3,861,445 - -
Total 10,547,904$ 35,097,475$ 803,158$ 15,474,000$
Com
p
onent Unit Lon
g
-Term Deb
t
Duluth Air
p
ort Authorit
y
Notes and Loans Pa
y
able
Year Ending
December 31 Interest Principal
2019 1,589$ 35,911$
The City issued $3,400,000 General Obligation Airport Improvement Bonds, dated December 18, 2013, on behalf of
the Authority. Proceeds of the bonds will be used as a local match of federal and state grants to fund a new
terminal facility, parking ramp, access road and aprons. The Authority entered into a loan agreement with the City
requirin
g
the Authorit
y
to make loan pa
y
ments to the Cit
y
to fund debt pa
y
ments on the bonds.
Annual debt service requirements to maturity of the business-type activities follow:
Revenue and General Obligation Public
The City issued $7,650,000 General Obligation Airport Improvement Bonds, dated May 24, 2012, on behalf of the
Authority. Proceeds of the bonds will be used as a local match of federal and state grants to fund a new terminal
facility, parking ramp, access road and aprons. The Authority entered into a loan agreement with the City requiring
the Authorit
y
to make loan pa
y
ments to the Cit
y
to fund debt pa
y
ments on the bonds.
Facilities Authority Notes
Airport Facility Revenue Note
The City issued $2,855,000 General Obligation Airport Improvement Bonds, dated November 5, 2015, on behalf of
the Authority. Proceeds of the bonds will be used to finance hanger improvements. The Authority entered into a
loan agreement with the City requiring the Authority to make loan payments to the City to fund debt payments on
the bonds.
The Authority obtained a loan from the Minnesota Investment Fund. Proceeds from the loan have been used to
remedy soil conditions on Duluth Airport Authority property. The Authority has agreed to make payments when due
on the loan in the total amount of $400,000. Payments are due in 180 monthly installments of $2,222 from February
2006 to Januar
y
2021. There is no interest char
g
ed on this loan
.
On November 1, 2005, the Authority issued an Airport Facility Revenue Note, Series 2005A to finance the lease
buyout of the Authority's fixed base operator. The principal of the note is $35,911, payable in semi-annual payments
on June 1 and December 1 each year, commencing June 1, 2007, and until final maturity on June 1, 2019, with an
annual interest rate of 8.85%.
The annual requirements to service the debt follow:
General Obligation Bonds
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
DEBT LIMIT
SCHEDULE OF BONDED INDEBTEDNESS
A
moun
t
Issue Date Outstanding
Total
Governmental Activities:
General Obli
g
ation Bonds Pa
y
able
:
A
ir
p
ark Im
p
rovemen
t
09/01/2004 165,000$
A
erial Lift Brid
g
e Im
p
rovemen
t
08/07/2008 170,000
Ca
p
ital Im
p
rovemen
t
12/17/2009 1,660,000
Ca
p
ital Im
p
rovement - Law Enforcement Cente
r
12/17/2009 11,905,000
Ca
p
ital Im
p
rovement 11/23/2010 715,000
Ca
p
ital Im
p
rovemen
t
11/29/2011 815,000
A
ir
p
ort Im
p
rovemen
t
05/24/2012 5,380,000
A
ir
p
ort Im
p
rovemen
t
12/18/2013 2,955,000
Ca
p
ital Im
p
rovement 12/18/2013 1,135,000
Ca
p
ital Im
p
rovement - Lakewal
k
12/18/2013 1,135,000
Wade Stadium Im
p
rovement 10/30/2014 1,960,000
S
p
irit Mountain Im
p
rovemen
t
10/30/2014 1,905,000
Ca
p
ital Im
p
rovemen
t
10/30/2014 810,000
Ca
p
ital Im
p
rovemen
t
11/05/2015 1,325,000
A
ir
p
ort Im
p
rovemen
t
11/05/2015 2,565,000
Ca
p
ital Im
p
rovement - 1/2 & 1/2 11/05/2015 11,075,000
Duluth Entertainment and Convention Center Im
p
rovement
Refundin
g
03/22/2016 33,470,000
Ca
p
ital Im
p
rovement 11/09/2016 1,035,000
Ca
p
ital Im
p
rovement 11/21/2017 1,545,000
Ca
p
ital Im
p
rovement - Seawall 02/14/2018 4,450,000
Ca
p
ital Im
p
rovement 09/27/2018 1,310,000
Total General Obli
g
ation Bonds Pa
y
abl
e
87,485,000$
General Obli
g
ation Tax Abatement:
S
p
irit Mountain Tax Abatement Bond
s
02/23/2012 5,235,000
GO Tax Abatement
(
Cirrus
)
03/22/2016 7,370,000 12,605,000
S
p
ecial Assessment Debt with
Government Commitmen
t
6 issues 5,165,000 5,165,000
General Lon
g
-Term Debt Certificates Pa
y
able
:
General Obli
g
ation Certificates Pa
y
abl
e
6 issues 14,295,000 14,295,000
Total Governmental Activities Deb
t
119,550,000
Business-type Activities Debt:
Revenue and General Obli
g
ation Bonds Pa
y
able
:
Parkin
g
Fund 1 issue 6,985,000
Prile
y
Drive Parkin
g
Facilit
y
1 issue 12,447,475
Water Fund 3 issues 4,490,000
Gas Fund 1 issues 505,000
Steam Fund 2 issues 6,345,000
Sewer Fund 6 issues 3,775,000
Stormwater Fund 1 issue 550,000
Total Revenue and General Obli
g
ation Bonds Pa
y
able 35,097,475
Total Business-t
yp
e Activities Deb
t
35,097,475
Total Bonds Pa
y
abl
e
154,647,475
(
continued
)
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Issue Date
A
mount
Outstanding
Total
Deductions Allowable:
A
ir
p
ark Im
p
rovemen
t
09/01/2004 165,000
A
ir
p
ort Im
p
rovemen
t
05/24/2012 5,380,000
S
p
irit Mountain Tax Abatement Bond
s
02/23/2012 5,235,000
A
ir
p
ort Im
p
rovemen
t
12/18/2013 2,955,000
Wade Stadium Im
p
rovement 10/30/2014 1,960,000
S
p
irit Mountain Im
p
rovemen
t
10/30/2014 1,905,000
A
ir
p
ort Im
p
rovemen
t
11/05/2015 2,565,000
Ca
p
ital Im
p
rovement 1/2 & 1/2 11/05/2015 11,075,000
Duluth Entertainment and Convention Center Authorit
y
Refundin
g
03/22/2016 33,470,000
GO Tax Abatement
(
Cirrus
)
03/22/2016 7,370,000
S
p
ecial Assessmen
t
5,165,000
Parkin
g
Fund 6,985,000
Prile
y
Drive Parkin
g
Facilit
y
12,447,475
Water Fund 4,490,000
Gas Fund 505,000
Steam Fund 6,345,000
Sewer Fund 3,775,000
Stormwater Fund 550,000
Total Deductions Allowabl
e
112,342,475
Net Deb
t
42,305,000$
Le
g
al Debt Mar
g
in for Duluth
Taxable Market Value
(
6,224,187,356 X 2%
)
124,483,747$
General Percen
t
A
moun
t
Obligation Chargeabl
e
Chargeabl
e
Deb
t
to Cit
y
to Cit
y
Inde
p
endent School District 70
9
47,100,000$ 87.89% 41,395,703$
Inde
p
endent School District 70
4
26,505,000 6.26% 1,658,456
St. Louis Count
y
145,215,000 37.17% 53,978,515
97,032,674$
REFUNDING BOND ISSUES
Current Refundin
g
Bonds
A
dvance Refundin
g
Bond
s
Overlapping Debt to Duluth
Unit
A current refunding occurs when the refunded bonds are retired within 90 days after the refunding issue is sold. No
current refundin
g
bonds were issued in 2018.
When the City issues an advance refunding bond, an escrow account is established from the proceeds. Amounts in
the escrow account are invested in special obligations of the United States Treasury or other obligations of the
United States or its agencies, which mature in such amounts and at such times to be available to meet the refunded
bonds' principal and interest requirements. Actuarial services, necessary to insure the adequacy of the escrow
accounts to provide timely payment of the debt service for which the escrow accounts are obligated, have been
p
erformed b
y
a certified
p
ublic accountin
g
firm.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Included in the Cit
y
's bonded debt are the followin
g
refundin
g
issues
:
Issue Date Issue Amoun
t
Balance
Governmental Activities:
Current Refundin
g
Bonds:
General Obli
g
ation Im
p
rovemen
t
11/23/2010 1,205,000$ 92,600$
Street Im
p
rovemen
t
11/27/2012 6,905,000 2,190,000
General Obli
g
ation Im
p
rovemen
t
10/30/2014 865,000 360,000
Street Im
p
rovemen
t
11/05/2015 2,630,000 1,900,000
A
dvance Refundin
g
Bonds:
General Obli
g
ation Im
p
rovemen
t
11/23/2010 1,135,000 87,400
Duluth Entertainment and Convention Cente
r
03/22/2016
Im
p
rovement Refundin
g
33,470,000 33,470,000
Total Governmental Activitie
s
46,210,000$ 38,100,000$
Business-t
yp
e Activities:
Current Refundin
g
Bonds:
Gas Utilit
y
Revenue and General Obli
g
ation 11/29/2011 3,125,000 505,000
Steam Utilit
y
Revenue and General Obli
g
ation 11/27/2012 5,475,000 2,330,000
Water Utilit
y
Revenue and General Obli
g
ation 11/05/2015 515,000 350,000
Sewer Utilit
y
Revenue and General Obli
g
ation 11/05/2015 1,110,000 820,000
Sewer Utilit
y
Revenue and General Obli
g
ation 11/05/2015 350,000 240,000
Stormwater Utilit
y
Revenue and General Obli
g
ation 11/05/2015 790,000 550,000
A
dvance Refundin
g
Bonds:
Sewer Utilit
y
Revenue and General Obli
g
ation 11/29/2011 2,265,000 680,000
Sewer Utilit
y
Revenue and General Obli
g
ation 11/27/2012 2,000,000 895,000
Parkin
g
Im
p
rovements 11/27/2012 10,270,000 6,985,000
Total Business-t
yp
e Activitie
s
25,900,000$ 13,355,000$
All advance refunded bonds have been paid in full.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
BONDS/CERTIFICATES AND NOTES PAYABLE - BY ISSU
E
BONDS AND CERTIFICATES BY ISSU
E
Issue Final Authorized
Date Maturity and Issued Outstanding
Governmental Activities:
General Obligation Bonds Payabl
e
General Obligation
Airpark Improvemen
t
2.00 to 4.20% 02/01; 08/01 09-01-04 02-01-20 945,000$ 165,000$
Aerial Lift Bridge Improvemen
t
3.00 to 4.30% 02/01; 08/01 08-07-08 02-01-19 1,475,000 170,000
Capital Improvemen
t
2.50 to 4.00% 02/01; 08/01 12-17-09 02-01-20 7,085,000 1,660,000
Capital Improvement - Law Enforcement
Center
5.00 to 6.00% 02/01; 08/01 12-17-09 02-01-32 11,905,000 11,905,000
Capital Improvemen
t
2.00 to 3.00% 02/01; 08/01 11-23-10 02-01-21 2,175,000 715,000
Capital Improvemen
t
3.00% 02/01; 08/01 11-29-11 02-01-22 1,870,000 815,000
Airport Improvemen
t
2.00 to 3.25% 02/01; 08/01 05-24-12 02-01-28 7,650,000 5,380,000
Airport Improvemen
t
1.55 to 4.38% 02/01; 08/01 12-18-13 02-01-29 3,400,000 2,955,000
Capital Improvemen
t
2.00 to 3.00% 02/01; 08/01 12-18-13 02-01-24 1,795,000 1,135,000
Capital Improvement - Lakewal
k
2.50 to 4.00% 02/01; 08/01 12-18-13 02-01-29 1,460,000 1,135,000
Wade Stadium Improvemen
t
3.00 to 3.70% 02/01; 08/01 10-30-14 02-01-30 2,330,000 1,960,000
Spirit Mountain Improvemen
t
2.00 to 3.40% 02/01; 08/01 10-30-14 02-01-35 2,150,000 1,905,000
Capital Improvemen
t
2.00 to 2.50% 02/01; 08/01 10-30-14 02-01-25 1,115,000 810,000
Capital Improvemen
t
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-26 1,615,000 1,325,000
Airport Improvemen
t
3.00 to 3.70% 02/01; 08/01 11-05-15 02-01-31 2,855,000 2,565,000
Capital Improvement - 1/2 & 1/2 3.00 to 3.80% 02/01; 08/01 11-05-15 02-01-32 13,520,000 11,075,000
Duluth Entertainment and Convention
Center Improvement Refunding
3.00 to 5.00% 02/01; 08/01 03-22-16 02-01-34 33,470,000 33,470,000
Capital Improvemen
t
4.00% 02/01; 08/01 11-09-16 02-01-27 1,135,000 1,035,000
Capital Improvemen
t
3.00% 02/01; 08/01 11-21-17 02-01-28 1,545,000 1,545,000
Capital Improvement - Seawall 3.00% 02/01; 08/01 02-14-18 02-01-34 4,450,000 4,450,000
Capital Improvemen
t
5.00% 02/01; 08/01 10-17-18 02-01-29 1,310,000 1,310,000
Total General Obligation 105,255,00
0
87,485,000
General Obligation -Tax Abatemen
t
Spirit Mountain Tax Abatement Bond
s
2.00 to 3.00% 02/01; 08/01 02-23-12 02-01-30 7,055,000 5,235,000
GO Tax Abatement (Cirrus
)
1.00 to 3.15% 02/01; 08/01 03-22-16 02-01-32 7,820,000 7,370,000
Total General Obligation - Tax Abatemen
t
14,875,000 12,605,000
Special Assessment Debt with Government
Commitment
General Obligation Improvemen
t
4.00% 02/01; 08/01 09-07-06 02-01-21 1,985,000 535,000
General Obligation Improvement Refundin
g
2.25 to 2.40% 02/01; 08/01 11-23-10 02-01-19 1,205,000 92,600
General Obligation Improvement Refundin
g
2.25 to 2.40% 02/01; 08/01 11-23-10 02-01-19 1,135,000 87,400
Street Improvement Refundin
g
2.00 to 3.00% 02/01; 08/01 11-27-12 02-01-21 6,905,000 2,190,000
General Obligation Improvement Refundin
g
1.50 to 2.00% 02/01; 08/01 10-30-14 02-01-20 865,000 360,000
Street Improvement Refundin
g
4.00% 02/01; 08/01 11-05-15 02-01-23 2,630,000 1,900,000
Total Special Assessment Debt with
Government Commitment
14,725,000 5,165,000
General Obligation Certificates Payable
Equipmen
t
2.00% 02/01; 08/01 12-18-13 02-01-19 3,835,000 800,000
Equipmen
t
1.50 to 2.00% 02/01; 08/01 10-30-14 02-01-20 2,460,000 1,010,000
Equipmen
t
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-21 3,325,000 2,055,000
Equipmen
t
4.00% 02/01; 08/01 11-09-16 02-01-22 3,565,000 2,930,000
Equipmen
t
3.00 to 4.00% 02/01; 08/01 11-21-17 02-01-23 3,615,000 3,615,000
Equipmen
t
3.00 to 5.00% 02/01; 08/01 09-27-18 02-01-24 3,885,000 3,885,000
Total General Obligation Certificates Payabl
e
20,685,000 14,295,000
Total Governmental Activities 155,540,00
0
$ 119,550,00
0
$
Bonds, certificates, and notes payable at December 31, 2018, are composed of the following individual issues:
Interest Rate and Dates
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
Issue Final Authorized
Date Maturity and Issued Outstanding
Business-type Activities:
Revenue and General Obligation Bonds
Payable
Parking Fund
Parking Improvement Tax Increment
Refunding
1.00 to 2.75% 02/01; 08/01 11-27-12 02-01-26 10,270,000$ 6,985,000$
Priley Drive Parking Facilit
y
Parking Improvement Tax Incremen
t
4.00% 04/01; 10/01 05-15-14 04-01-44 11,500,000 12,447,47
5
Water Fund
Water Utility Revenue and General
Obligation
2.00 to 4.00% 02/01; 08/01 02-19-09 02-01-24 196,000 90,000
Water Utility Revenue and General
Obligation Refunding
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-22 515,000 350,000
Water Utility Revenue and General
Obligation
3.00 to 3.38% 02/01; 08/01 09-27-18 02-01-34 4,050,000 4,050,000
Total Water Fund 4,761,000 4,490,000
Gas Fund
Gas Utility Revenue and General
Obligation Refunding
3.00 to 4.00% 02/01; 08/01 11-29-11 02-01-19 3,125,000 505,000
Steam Fund
Steam Utility Revenue and General
Obligation Refunding
1.00 to 2.13% 02/01; 08/01 11-27-12 02-01-22 5,475,000 2,330,000
Steam Utility Revenue and General
Obligation
3.00 to 3.20% 02/01; 08/01 11-05-15 02-01-27 4,015,000 4,015,000
Total Steam Fund 9,490,000 6,345,000
Sewer Fund
Sewer Utility Revenue and General
Obligation
2.00 to 4.00% 02/01; 08/01 02-19-09 02-01-24 1,444,000 660,000
Sewer Utility Revenue and General
Obligation
2.00 to 4.00% 02/01; 08/01 12-17-09 02-01-25 905,000 480,000
Sewer Utility Revenue and General
Obligation Refunding
1.00 to 3.00% 02/01; 08/01 11-29-11 02-01-20 2,265,000 680,000
Sewer Utility Revenue and General
Obligation Refunding
2.00% 02/01; 08/01 11-27-12 02-01-20 2,000,000 895,000
Sewer Utility Revenue and General
Obligation Refunding
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-23 1,110,000 820,000
Sewer Utility Revenue and General
Obligation Refunding
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-22 350,000 240,000
Total Sewer Fund 8,074,000 3,775,000
Stormwater Fund
Stormwater Utility Revenue and General
Obligation Refunding
2.00 to 3.00% 02/01; 08/01 11-05-15 02-01-22 790,000 550,000
Total Business-type Activities 48,010,000$ 35,097,47
5
$
Interest Rate and Dates
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
12. LONG-TERM DEBT
(
continued
)
NOTES PAYABLE BY ISSU
E
Issue Final Authorized
Date Maturity and Issued Outstanding
Governmental Activities:
Revenue Not
e
U.S. Dept. of Housing and Urban
Development
5.23 to 5.77% 01/22; 07/22 08-01-05 08-01-25 7,876,000 2,636,000
Total Governmental Activities 7,876,000$ 2,636,000$
Business-type Activities:
General Obligation:
Water Fund
Public Facilities Authority Note 1.077% 02/20; 08/20 10-28-09 08-20-19 1,668,813 174,000
Public Facilities Authority Note 1.258% 02/20; 08/20 07-28-10 08-20-25 1,293,200 624,000
Public Facilities Authority Note 1.076% 02/20; 08/20 12-07-10 08-20-25 3,344,131 1,673,000
Public Facilities Authority Note 1.221% 02/20; 08/20 11-18-11 08-20-26 1,221,631 654,000
Public Facilities Authority Note 1.000% 02/20; 08/20 02-25-14 08-20-29 4,778,806 3,437,000
Total Water Fund 12,306,581 6,562,000
Sewer Fund
Public Facilities Authority Note 1.150% 02/20; 08/20 07-12-07 08-20-22 1,973,033 616,000
Public Facilities Authority Note 1.969% 02/20; 08/20 08-20-09 08-20-24 796,835 354,000
Public Facilities Authority Note 2.017% 02/20; 08/20 11-25-09 08-20-24 2,414,150 1,106,000
Public Facilities Authority Note 1.258% 02/20; 08/20 07-28-10 08-20-25 3,753,059 1,840,000
Public Facilities Authority Note 1.258% 02/20; 08/20 07-28-10 08-20-25 8,504,224 4,105,000
Public Facilities Authority Note 1.000% 02/20; 08/20 11-18-11 08-20-21 279,117 82,000
Public Facilities Authority Note 1.000% 02/20; 08/20 11-30-11 08-20-21 265,418 85,000
Public Facilities Authority Note 1.000% 02/20; 08/20 11-18-11 08-20-21 278,149 91,000
Public Facilities Authority Note 1.000% 02/20; 08/20 09-10-12 08-20-22 476,537 192,000
Public Facilities Authority Note 1.000% 02/20; 08/20 10-29-14 08-20-24 860,847 441,000
Total Sewer Fund 19,601,36
9
8,912,000
Total Business-type Activities 31,907,950$ 15,474,000$
Component Units:
Duluth Airport Authorit
y
Revenue Not
e
8.85% 06/01;12/01 11-01-05 06-01-19 497,379 35,911
Total Component Unit
s
497,379$ 35,911$
Interest Rate and Dates
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
13. FUND EQUITY
General Fund
Disaster
Recovery
Community
Investment
Trust
Other
Governmental
Funds
Total
Fund Balance
Fund Balances:
Spendable:
Restricted for:
Forfeitures 184,891$ -$ -$ 253,674$ 438,565$
Capital Pro
j
ects - - - 13,533,254 13,533,254
Communit
y
Developmen
t
- - - 751,598 751,598
Emplo
y
men
t
- - - 257,254 257,254
Parks and Recreation - - - 1,663,788 1,663,788
Public Access Television - - - 565,056 565,056
Public Safet
y
- - - 384,927 384,927
Public Works - - - 741,505 741,505
Economic Development - - - 862,382 862,382
Library
- - - 560,307 560,307
Tourism - - - 883,622 883,622
Debt Service - - - 21,344,176 21,344,176
Committed for:
General Governmen
t
- - - 502,192 502,192
Communit
y
Investmen
t
- - 21,868,426 - 21,868,426
Ener
gy
Pro
g
ram - - - 154,063 154,063
Municipal Arts - - - 167,919 167,919
Parks and Recreation - - - 437,494 437,494
Public Safet
y
41,996 - - 226,960 268,956
Assi
g
ned to:
General Governmen
t
57,080 - - - 57,080
Public Safet
y
1,375,210 - - - 1,375,210
Public Works 1,758,485 - - - 1,758,485
Economic Development 45,995 - - 5,456 51,451
Capital Pro
j
ects - - - 1,686,085 1,686,085
Unassigned 13,422,108 (2,471,977) - (658,106) 10,292,025
Total Fund Balances
16,885,765$
(
2,471,977
)
$ 21,868,426$ 44,323,606$ 80,605,820$
For governmental funds, fund balance is classified as nonspendable, restricted, committed, assigned and/or
unassigned based primarily on the extent to which the City is bound to observe constraints imposed upon the
use of the resources. Fund balance classifications as of December 31, 2018, are as follows:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
14. INTERFUND ASSETS/LIABILITIES/TRANSFERS
DUE TO/FROM OTHER FUNDS
Due from Fund Due to Fund Amount
General Fund Water Enterprise 4,419$
Gas Enterprise 7,707
Steam Enterprise 20,072
Nonmajor Governmental Funds 16,796
Internal Service Funds 305,011
Water Enterprise
Nonmajor Governmental Funds
3,151
Internal Service Funds 16,896
Gas Enterprise Nonmajor Governmental Funds 2,761
Internal Service Funds 18,567
Sewer Enterprise Nonmajor Governmental Funds 2,941
Internal Service Funds 19,934
Steam Enterprise Nonmajor Governmental Funds 292,914
Internal Service Funds 3,105
Nonmajor Governmental Funds
General Fund
241,237
Water Enterprise 6,375
Gas Enterprise 1,235
Sewer Enterprise 5,302
Nonmajor Governmental Funds 607,631
Nonmajor Enterprise Funds 5,456
Internal Service Funds 129
Nonmajor Enterprise Funds Steam Enterprise 2,068
Nonmajor Governmental Funds
1,719
Internal Service Funds 9,133
Internal Service Funds General Fund 29,781
Nonmajor Governmental Funds 13,911
Total
(1,2,3)
1,638,251$
Due from other funds, reported in Balance Sheet - Governmental Funds 1,212,842$
Statement of Net Position - Proprietary Funds:
Business-type Activities - Enterprise Funds 52,634
Governmental Activities - Internal Service Funds 372,775
Total
1,638,251$
DUE TO/FROM PRIMARY GOVERNMENT/COMPONENT UNIT
S
Due to/from the primary government and component unit results from the time lag between the date that (1)
goods or services are provided or reimbursable expenditures occur, (2) transactions are recorded in the
accounting systems, and (3) payments between the primary government and component units are made; or
(4) a budgetary authorized line of credit by the primary government to the component unit; or (5) a
budgetary authorized lending agreement by the primary government to the component unit. Balances as
shown below are reported on the Government-wide Statement of Net Position. Balances are for December
31, 2018, with the exception of the Spirit Mountain Recreation Authority, whose fiscal year ended April 30,
2018.
The outstanding balances between funds results mainly from the time lag between the dates that (1)
interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are
recorded in the accounting system, and (3) payments between funds are made. Balances at December 31,
2018 are:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
14. INTERFUND ASSETS/LIABILITIES/TRANSFERS
(
continued
)
Receivable Entity Payable Entity
Amount
Primar
y
Government: Component Unit:
General Fund
Duluth Transit Authority
(1,2,3)
1,325$
Spirit Mountain Recreation Area Authority
(4)
1,200,000
Duluth Airport Authority
(1,2,3)
82
Duluth Entertainment and Convention
Center Authority
(1,2,3)
289
Duluth Economic Development Authority
(1,2,3)
8,417
Nonmajor Governmental Funds Duluth Entertainment and Convention
Center Authority
(1,2,3)
7,107
Spirit Mountain Recreation Area Authority
(1,2,3)
7,124
Duluth Economic Development Authority
(1,2,3,5)
622,000
Internal Service Funds
Duluth Economic Development Authority
(1,2,3)
7,000
Total Due From Component Units 1,853,344$
Total Due To Primary Government 1,853,828$
Deduct Spirit Mountain Recreation Area Authority balance at April 30, 2018 (1,207,608)
Add Spirit Mountain Recreation Area Authority balance at December 31, 2018 1,207,124
Total Due From Component Units
1,853,344$
Component Unit: Primary Government:
Duluth Entertainment and
Convention Center Authority
Nonmajor Governmental Funds 781,191$
Total Due From Primary Government 781,191$
Total Due To Component Units 781,191$
INTERFUND LOAN RECEIVABLES/PAYABLES
Receivable Fund
Amount
General Fund 4,273,107$
Gas Enterprise Fund 2,597,498
Total 6,870,605$
Payable Fund
Disaster Recovery Fund
465,075$
Steam Enterprise Fund 2,597,498
Nonmajor Governmental Funds 950,231
Nonmajor Enterprise Funds 2,363,113
Internal Service Funds 494,688
Total
6,870,605$
Interfund loan balances are a result of temporary interfund financing at year-end to cover deficit cash
balances within the various funds. Balances on December 31, 2018 are:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
14. INTERFUND ASSETS/LIABILITIES/TRANSFERS
(
continued
)
INTERFUND TRANSFERS
Transfer to, reported in fund: Transfer from, reported in fund: Amount
General Fund Community Investment Trust
(1)
529,225$
Water Enterprise
(1)
151,482
Gas Enterprise
(1,2)
2,643,189
Sewer Enterprise
(1)
114,776
Steam Enterprise
(2)
161,101
Nonmajor Governmental Funds
(1)
2,599,078
Nonmajor Enterprise Funds
(1,3)
1,914,370
Priley Drive Parking Facility
Enterprise Fund
Nonmajor Governmental Funds
(1) 543,427
Water Enterprise Nonmajor Governmental Funds
(1)
135,000
Nonmajor Enterprise Funds
(1)
9,300
Gas Enterprise Nonmajor Enterprise Funds
(1)
14,900
Sewer Enterprise Nonmajor Enterprise Funds
(1)
7,450
Nonmajor Governmental Funds General Fund
(1)
193,728
Gas Enterprise
(1)
75,000
Nonmajor Governmental Funds
(1)
13,370,346
Nonmajor Enterprise Funds Nonmajor Governmental Funds
(1)
26,588
Nonmajor Enterprise Funds
(1)
5,600
Total
22,494,560$
Statement of Revenues, Expenditures, and
Transfers out, reported in: Change in Fund Balances:
Governmental Funds
17,397,392$
Statement of Revenues, Expenditures, and
Change in Fund Net Position:
Business-type Activities - Enterprise Funds
5,097,168
Total
22,494,560$
The City reports transfers between many of its funds to move revenues from the fund in which they are
collected to the fund required to expend them, including: (1) debt service payments, participation in
projects, and reimbursements of expenditures; and (2) payments in lieu of taxes from enterprise funds; or
(3) to distribute budgetary authorized revenues to finance programs the government must account for in
other funds. Interfund transfers for the year ended December 31, 2018, are as follows:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS
PLAN DESCRIPTION
BENEFITS PROVIDED
All full-time and certain part-time employees of the City of Duluth are covered by defined benefit pension
plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers
the General Employees Retirement Plan (the General Employees Plan) and the Public Employees Police and
Fire Plan (the Police and Fire Plan), which are cost-sharing, multiple-employer retirement plans. These plans
are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA’s
defined benefit
p
ension
p
lans are tax
q
ualified
p
lans under Section 401
(
a
)
of the Internal Revenue Code.
The General Employees Plan (accounted for in the General Employees Fund) has multiple benefit structures
with members belonging to the Coordinated Plan, the Basic Plan, or the Minneapolis Employees Retirement
Fund. Coordinated Plan members are covered by Social Security, and Basic Plan and Minneapolis
Employees Retirement Fund members are not. The Basic Plan was closed to new members in 1967. The
Minneapolis Employees Retirement Fund was closed to new members during 1978 and merged into the
General Employees Plan in 2015. All new members must participate in the Coordinated Plan, for which
benefits vest after five years of credited service. No City employees belong to the Minneapolis Employees
Retirement Fund.
Police officers, firefighters, and peace officers who qualify for membership by statute are covered by the
Police and Fire Plan (accounted for in the Police and Fire Fund). For members first hired after June 30, 2010,
but before July 1, 2014, benefits vest on a prorated basis starting with 50% after 5 years and increasing 10%
for each year of service until fully vested after 10 years. Benefits for members first hired after June 30, 2014,
vest on a prorated basis from 50% after 10 years and increasing 5% for each year of service until fully vested
after 20
y
ears.
The benefit provisions stated in the following paragraph of this section are current provisions and apply to
active plan participants. Vested, terminated employees who are entitled to benefits but are not yet receiving
them are bound by the provisions in effect at the time they last terminated their public service.
PERA provides retirement benefits as well as disability benefits to members and benefits to survivors upon
death of eligible members. Benefit provisions are established by state statute and can be modified only by the
state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to
the funding ratio of the plan. General Employees Plan and Police and Fire Plan benefit recipients receive a
future annual 1.0% for the post-retirement benefit increase. If the funding ratio reaches 90% for two
consecutive years, the benefit increase will be 2.5%. If, after reverting to a 2.5% benefit increase, the funding
ratio declines to less than 80% for one year or less than 85% for two consecutive years, the benefit increase
will decrease to 1.0%.
Benefits are based on a member’s highest average salary for any 60 consecutive months of allowable
service, age, and years of credit at termination of service. In the General Employees Plan, two methods are
used to compute benefits for Coordinated Plan members. Members hired prior to July 1, 1989, receive the
higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method
1, the annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10
years of service and 1.7% of average salary for each remaining year. Under Method 2, the annuity accrual
rate is 1.7% for Coordinated Plan members for each year of service. Only Method 2 is used for members
hired after June 30, 1989. For Police and Fire Plan members, the annuity accrual rate is 3.0% of average
salar
y
for each
y
ear of service.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS
(
continued
)
CONTRIBUTIONS
General Employees Plan - Coordinated Plan Members 7.50%
Police and Fire Plan 16.20%
2018 2017 2016
General Employees Fund 2,697,667$ 2,678,076$ 2,446,675$
Police and Fire Fund 3,790,774 3,843,171 3,615,941
Total 6,488,441$ 6,521,247$ 6,062,616$
PENSION COSTS
General Employees Fund
$ 28,963,967
950,024
Total $ 29,913,991
The contributions are equal to the contractually required contributions as set by state statute.
At December 31, 2018, the City reported a liability of $28,963,967 for its proportionate share of the General
Employees Plan’s net pension liability. The net pension liability was measured as of June 30, 2018, and the
total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of
that date. The City’s proportion of the net pension liability was based on the City’s contributions received by
PERA during the measurement period for employer payroll paid dates from July 1, 2017, through June 30,
2018, relative to the total employer contributions received from all of PERA’s participating employers. At June
30, 2018, the City’s proportion was 0.5221%. It was 0.5543% measured as of June 30, 2017. The City
recognized pension expense of $2,241,832 for its proportionate share of the General Employees Plan’s
p
ension ex
p
ense.
The City also recognized $221,544 as revenue, which results in a reduction of the net pension liability, for its
proportionate share of the State of Minnesota’s contribution to the General Employees Plan, which qualifies
as a special funding situation. Legislation required the State of Minnesota to contribute $16 million to the
General Employees Plan for the fiscal years ended June 30, 2018 and 2019, and $6 million thereafter,
throu
g
h the calendar
y
ear 2031.
associated with the City
State of Minnesota’s proportionate share of the net pension liability
The City’s contributions for the year ended December 31, 2018, to the pension plans were:
For General Retirement Plan 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. For Police and Fire
Plan, normal retirement age is 55, and for members who were hired prior to July 1, 1989, a full annuity is
available when age plus years of service equal 90. Disability benefits are available for vested members and
are based on years of service and average high-five salary.
Pension benefits are funded from member and employer contributions and income from the investment of
fund assets. Rates for employer and employee contributions are set by Minnesota Statutes, Chapter 353.
These statutes are established and amended by the state legislature. General Employees Plan members
were required to contribute 6.5% of their annual covered salary in 2018. Police and Fire Plan members were
required to contribute 10.8% of their annual covered salar
y
in 2018.
In 2018, the City was required to contribute the following percentages of annual covered salary:
The employee and employer contribution rates did not change from the previous year.
City's proportionate share of the net pension liability
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS (continued)
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between expected and actual economic experience
$ 811,791 $ 850,579
Changes in actuarial assumptions
2,785,870 3,391,796
Difference between projected and actual investment earnings
- 3,166,215
Changes in proportion
1,161,089 1,855,263
Contributions paid to PERA subsequent to the measurement date
1,373,443 -
Total
$ 6,132,193 $ 9,263,853
Year Ended
December 31
Pension
Expense
Amount
2019
673,489$
2020
(1,622,722)
2021
(2,951,343)
2022
(604,527)
Police and Fire Fund
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between expected and actual economic experience
$ 971,864 $ 6,022,641
Changes in actuarial assumptions
30,704,305 36,221,463
Difference between projected and actual investment earnings
- 4,954,199
Changes in proportion
278,378 1,568,921
Contributions paid to PERA subsequent to the measurement date
1,887,056 -
Total
$ 33,841,603 $ 48,767,224
The $1,373,443 reported as deferred outflows of resources related to pensions resulting from contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year
ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to
pensions will be recognized in pension expense as follows:
At December 31, 2018, the City reported a liability of $23,397,505 for its proportionate share of the Police and
Fire Plan’s net pension liability. The net pension liability was measured as of June 30, 2018, and the total
pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that
date. The City’s proportion of the net pension liability was based on the City’s contributions received by PERA
during the measurement period for employer payroll paid dates from July 1, 2017, through June 30, 2018,
relative to the total employer contributions received from all of PERA’s participating employers. At June 30,
2018, the City’s proportion was 2.1951%. It was 2.311% measured as of June 30, 2017. The City recognized
p
ension ex
p
ense of $2,227,925 for its
p
ro
p
ortionate share of the Police and Fire Plan’s
p
ension ex
p
ense.
The City also recognized $197,559 as revenue, which results in a reduction of the net pension liability, for its
proportionate share of the State of Minnesota’s on-behalf contribution to the Police and Fire Plan. Legislation
requires the State of Minnesota to contribute $9 million to the Police and Fire Plan each year, starting in fiscal
y
ear 2014, until the plan is 90% funded
.
The City reported its proportionate share of the Police and Fire Plan’s deferred outflows of resources and
deferred inflows of resources related to
p
ensions from the followin
g
sources:
The City reported its proportionate share of the General Employees Plan’s deferred outflows of resources and
deferred inflows of resources related to
p
ensions from the followin
g
sources:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS (continued)
Year Ended
December 31
Pension
Expense
Amount
2019
(776,557)$
2020
(1,899,049)
2021
(3,698,531)
2022
(10,100,595)
2023
(337,945)
A
CTUARIAL ASSUMPTIONS
Inflation 2.50% per yea
r
A
ctive member payroll growth 3.25% per yea
r
Investment rate of return 7.50%
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
Domestic stocks 36% 5.10%
International stocks
17% 5.30%
Bonds 20% 0.75%
A
lternative assets 25% 5.90%
Cash 2% 0.00%
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
arithmetic real rates of return for each major asset class are summarized in the following table:
The long-term expected rate of return on pension plan investments is 7.50%. The State Board of Investment,
which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term
expected rate of return on a regular basis using a building-block method in which best-estimate ranges of
ex
p
ected future rates of return are develo
p
ed for each ma
j
or asset class.
The total pension liability in the June 30, 2018, actuarial valuation was determined using the individual entry-
a
g
e normal actuarial cost method and the followin
g
additional actuarial assum
p
tions
:
The $1,887,056 reported as deferred outflows of resources related to pensions resulting from contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year
ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to
pensions will be reco
g
nized in pension expense as follows
:
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants for all plans were based on RP-2014 tables for males or females, as appropriate,
with slight adjustments. Cost of living benefit increases for retirees are assumed to be 1.25% for the General
Employees Plan. For the Police and Fire Plan, cost of living benefit increases for retirees are 1.00% as set by
state statute.
Actuarial assumptions used in the June 30, 2018, valuation were based on the results of actuarial experience
studies. The experience study for the General Employees Plan was dated June 30, 2015. The experience
study for the Police and Fire Plan was dated August 30, 2016. Economic assumptions were updated in 2017
based on a review of inflation and investment return assum
p
tions.
The total pension expense for all plans recognized by the City for the year ended December 31, 2018, was
$4,469,757.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS
(
continued
)
DISCOUNT RATE
CHANGES IN ACTUARIAL ASSUMPTIONS
PENSION LIABILITY SENSITIVIT
Y
The following changes in actuarial assumptions occurred in 2018:
General Employees Plan
The discount rate used to measure the total pension liability was 7.5% in 2018, which remained consistent
with 2017. The projection of cash flows used to determine the discount rate assumed that employee and
employer contributions will be made at the rate specified in statute. Based on that assumption, the fiduciary
net position of the General Employees Plan and the Police and Fire Plan were projected to be available to
make all projected future benefit payments of current active and inactive employees. 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.
The following presents the City’s proportionate share of the net pension liability calculated using the discount
rate previously disclosed, as well as what the City’s proportionate share of the net pension liability would be if
it were calculated using a discount rate 1.0 percentage point lower or 1.0 percentage point higher than the
current discount rate:
Police and Fire Plan
• The mortality projection scale was changed from MP-2015 to MP-2017.
• The assumed benefit increase rate was changed from 1.0% per year through 2044 and 2.50 percent per
y
ear thereafter, to 1.25% per
y
ear.
• The mortality projection scale was changed from MP-2016 to MP-2017.
• Post-retirement benefit increases changed to 1.0% for all years, with no trigger.
• An end date of July 1, 2048 was added to the existing $9.0 million state contribution. Additionally, annual
state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter, until the plan
reaches 100% fundin
g
, or Jul
y
1, 2048, if earlier
.
• Member contributions were changed effective January 1, 2019 and January 1, 2020 from 10.8% to 11.3%
and 11.8% of pay, respectively. Employer contributions were changed effective January 1, 2019 and January
1, 2020 from 16.2% to 16.95% and 17.7% of pay, respectively. Interest credited on member contributions
decreased from 4.0% to 3.0%, beginning July 1, 2018.
• Deferred augmentation was changed to 0.0%, effective January 1, 2019. Augmentation that has already
accrued for deferred members will still apply.
• Actuarial e
q
uivalent factors were u
p
dated to reflect revised mortalit
y
and interest assum
p
tions
.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
15. PENSION PLANS
(
continued
)
Discoun
t
Rate
Net Pension
Liability
Discoun
t
Rate
Net Pension
Liability
1.0% Decrease 6.5% 47,070,155$ 6.5% 50,165,718$
Curren
t
7.5% 28,963,967 7.5% 23,397,505
1.0% Increase 8.5% 14,017,826 8.5% 1,261,304
PENSION PLAN FIDUCIARY NET POSITION
DEFINED CONTRIBUTION PLAN
Employe
e
Employe
r
Contribution amoun
t
6,745$ 6,745$
Percentage of covered payrol
l
5.0% 5.0%
COMPONENT UNITS' PENSION INFORMATION
The Duluth Transit Authority has no employees. Personnel services are provided through a management
agreement with ATE Management and Service Company, Inc. Detailed information concerning the
management agreement is presented in its publicly available 2018 annual report.
Proportionate Share of the
Qualified employees of the Duluth Entertainment and Convention Center Authority, Duluth Airport Authority,
and Spirit Mountain Recreation Area Authority belong to PERA. Contributions were made by the above
component units to PERA's Coordinated and Basic Plans in amounts required by state statutes. The PERA
Coordinated and Basic Plans are the same pension plans available to City employees. Detailed information
concerning each component unit's pension plan is presented in its publicly available 2018 annual report.
Police and Fire PlanGeneral Employees Plan
Total contributions by dollar amount and percentage of covered payroll made by the City during the year
ended December 31, 2018, were:
Detailed information about the 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; by writing to PERA at 60 Empire Drive, Suite 200, St. Paul,
Minnesota 55103-2088; or b
y
callin
g
(
651
)
296-7460 or 1-800-652-9026.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative
expenses. For those qualified personnel who elect to participate, Minnesota Statutes, § 353D.03 specifies
plan provisions, including the employee and employer contribution rates. An eligible elected official who
decides to participate contributes 5.0% of salary, which is matched by the employer. Employee and employer
contributions are combined and used to purchase shares in one or more of the seven accounts of the
Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2.0% of employer
contributions and 0.25% of the assets in each member account annually.
Certain elected officials of the City are covered by the Public Employees Defined Contribution Plan, a multiple
-
employer deferred compensation plan administered by PERA. The plan is established and administered in
accordance with Minnesota Statutes, Chapter 353D, which may be amended by the state legislature. The
plan is a tax qualified plan under Section 401(a) of the Internal Revenue Code, and all contributions by or on
behalf of em
p
lo
y
ees are tax deferred until time of withdrawal.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
16. OTHER POSTEMPLOYMENT BENEFITS
PLAN DESCRIPTION
FUNDING POLIC
Y
INVESTMENTS
Asset Class Target Allocation
MN SBI Non-Retirement Bond Fund 30%
MN SBI Non-Retirement Equity Fund 70%
Total 100%
Investment policy – The City’s OPEB irrevocable trust fund is managed by the City of Duluth. All OPEB funds
are invested with the Minnesota State Board of Investment (SBI). It is the policy of the City to pursue an
investment strategy that reduces risk through the diversification of the portfolio. The City’s target asset
allocation as of December 31, 2018 is:
Rate of return – For the year ended December 31, 2018, the annual money-weighed return on investments,
net of investment expense, was (3.16%). The money-weighed return expresses investment performance, net
of investment ex
p
ense, ad
j
usted for the chan
g
in
g
amounts actuall
y
invested.
The City provides postemployment health insurance and life insurance benefits for certain eligible retired
employees and their spouses under a single-employer defined benefit plan. Eligible employees are
employees with a hire date prior to January 1, 2007. Employees must retire on or after January 1, 1983, and
be eligible for retirement or disability benefits from the Public Employees Retirement Association. The extent
of the benefit provided depends on the union contract and the date of hire. Effective January 1, 2010, retirees
are provided the same benefits as are provided to active employees. Since the premium is a blended rate
determined on the entire active and retiree
p
o
p
ulation, the retirees are receivin
g
an im
p
licit rate subsid
y
.
The health benefits are provided through the City's Joint Powers Enterprise Trust. The life insurance benefits
are paid directly by the fund from which the employee retires, and recorded as a deduction in the Statement of
Fiduciary Net Position for the Other Postemployment Benefits Trust Fund, under GASB 74. A separate report
is not issued for the plan. The authority to provide these benefits is established in Minnesota Statute §
471.617.
As of December 31, 2018, there were 1,158 retirees receiving health benefits from the City's health plan and
788 active emplo
y
ees covered under the plan.
The City has historically funded these liabilities on a pay-as-you go basis. Union contracts govern the
premiums contributed by the City and the retirees. For eligible retirees, the City pays a portion of the premium
ranging from 25%-100% depending on the years of service. Retirees pay the remaining portion of the
premium. Premiums are paid to the Joint Powers Enterprise Trust which accounts for the activity of the plan.
Premiums are intended to cover the cost of providing benefits to retirees on a pay-as-you go basis. For the
y
ear ended December 31, 2018, the Cit
y
contributed $9,244,470 and retirees contributed $186,372.
In July 2007, the City established an Other Postemployment Benefits (OPEB) irrevocable trust and began
prefunding a portion of the OPEB liability. Contributions of $777,045 were made to the irrevocable trust in
2018.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
16. OTHER POSTEMPLOYMENT BENEFITS (continued)
NET OPEB LIABILITY OF THE CIT
Y
Total OPEB liability 174,016,061$
Plan fiduciary net position (56,404,693)
City’s net OPEB liability 117,611,368$
32.4%
CHANGES IN THE NET OPEB LIABILITY
Total OPEB
Liability (a)
Plan Fiduciary
Net Position (b)
Net OBEB
Liability (a-b)
Balance at 1/1/18 172,600,053$ 57,717,139$ 114,882,914$
Changes for the year:
Service cost 2,952,513 - 2,952,513
Interest 9,609,404 - 9,609,404
Contributions - employer - 11,678,484 (11,678,484)
Net investment income - (1,841,168) 1,841,168
Benefit payments (11,145,909) (11,145,909) -
Administrative expense - (3,853) 3,853
Net change 1,416,008 (1,312,446) 2,728,454
Balance at 12/31/18 174,016,061$ 56,404,693$ 117,611,368$
ACTUARIAL METHODS AND ASSUMPTIONS
Plan fiduciary net position as a percentage of the total
OPEB liabilit
y
In the January 1, 2017, actuarial valuation, the individual entry age normal as a level percentage of payroll
actuarial cost method was used. Market value was the method used to determine the actuarial value of plan
assets. The actuarial assumptions included a 5.7% investment rate of return which is based on the expected
long-term investment returns on plan assets. The price inflation rate was 2.2%. The salary increases rate is
based on the 3.5% salary scale. The annual healthcare cost trend rate is 10.0% initially, reduced
incrementally to an ultimate rate of 5.0% after ten years.
Increase (Decrease)
The components of the net OPEB liability of the City at December 31, 2018, were as follows:
The expected long-term rate projections of benefits for financial reporting purposes are based on the
substantive plan (as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques
that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial
value of the assets, consistent with the lon
g
-term
p
ers
p
ective of the calculations.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
16. OTHER POSTEMPLOYMENT BENEFITS (continued)
Long-Term
Expected Real
Rate of Return
0.9%
4.8%
5.7%
Single Equivalent Interest Rate (SEIR)
Long-Term Expected Rate of Return 5.7%
Municipal Bond Index Rate* 3.7%
N/A
Single Equivalent Interest Rate 5.7%
* Source: S&P Municipal Bond 20 Year High Grade Rate Index
1% Decrease Discount Rate 1% Increase
(4.7%) (5.7%) (6.7%)
Net OPEB liability (asset) 141,340,265$ 117,611,368$ 98,748,032$
The discount rate is the single rate that reflects (1) the long-term expected rate of return on OPEB plan
investments that are expected to be used to finance the payment of benefits, to the extent that the OPEB
plan's fiduciary net position is projected to be sufficient to make projected benefit payments and OPEB plan
assets are expected to be invested using a strategy to achieve that return, and (2) a yield or index rate for 20-
year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent
quality on another scale), to the extent that the conditions for use of the long-term expected rate of return are
not met.
Fiscal Year in which Fiduciary Net Position is
Projected to be Depleted
Sensitivity of the net OPEB liability to changes in the discount rate. The following presents the net OPEB
liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount
rate that is 1-
p
ercenta
g
e-
p
oint lower or 1-
p
ercenta
g
e-
p
oint hi
g
her than the current discount rate:
Domestic Equity
Domestic Fixed Income
Mortality rates were based on the Society of Actuaries RPH-2014 Adjust to 2006 Total Dataset Headcount-
wei
g
hted Mortalit
y
pro
j
ect with Scale MP-2016.
The projection of cash flows used to determine the discount rate assumed that City contributions will be made
at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's
fiduciary net position was projected to be available to make all projected OPEB payments for current active
and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was
applied to all periods of projected benefit payments to determine the total OPEB liability.
Asset allocations fluctuate due to market performance, however, the targeted OPEB asset allocation is as
described below. The City's objective in selecting the expected long-term rate of return on assets is to
estimate the single rate of return that reflects the historical returns, future expectations for each asset class,
and the asset mix of the plan assets. The estimates of arithmetic real rates of return of each major asset class
included in the target asset allocation are:
Asset Classes
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
16. OTHER POSTEMPLOYMENT BENEFITS (continued)
1% Decrease
Healthcare
Cost Trend
Rate
1% Increase
(9.0% decrease
to 4.0%)
(10.0% decrease
to 5.0%)
(11.0% decrease
to 6.0%)
Net OPEB liability (asset) 98,233,112$ 117,611,368$ 141,923,738$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
$ 4,106,607 $ -
Yea
r
Amount
2019 $
(
1,026,653
)
2020
(
1,026,653
)
2021
(
1,026,653
)
2022
(
1,026,648
)
TRUST FUND
DEFINED CONTRIBUTION OPEB PLAN
For the year ended December 31, 2018, the City recognized OPEB expenses of $426,000.
The financial statements are prepared using accrual basis accounting. Contributions to the plan are
recognized when due and the City has made a formal commitment to provide the contributions. The fair value
of investments are determined b
y
the Minnesota State Board of Investment.
The City has established an OPEB irrevocable trust to prefund a portion of the OPEB liability.
Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the
net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using
healthcare cost 79 trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current
healthcare cost trend rates:
For the year ended December 31, 2018, the City recognized OPEB expenses of $1,382,005. At December 31,
2018
,
the Cit
y
re
p
orted deferred outflows of resources related to OPEB from the followin
g
sources:
OPEB EXPENSE AND DEFERRED OUTFLOWS AND DEFERRED INFLOWS OF RESOURCES RELATED
TO OPEB
Balances at
December 31, 2018
In accordance with union bargaining agreements and effective January 1, 2008, the City provided a defined
contribution postemployment benefit in the form of a minimum 1.0% contribution of each full-time, permanent,
active employee's salary into a postemployment health care savings account known as the Minnesota Health
Care Savings Plan administered by the Minnesota State Retirement System. An additional lump sum deposit
of up to $12,000 per employee will be made depending on the union contract and the date of hire.
Net difference between projected and actual earnings on
investments
Amounts reported as deferred outflows of resources related to OPEB will be recognized in OPEB expense as
follows:
Source
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
17. SEGMENT INFORMATION
CONDENSED STATEMENT OF NET POSITION
Parking Stormwater
Assets
Current assets 3,924,873$ 3,402,625$
Due from other funds - 5,456
Capital assets 19,028,775 17,873,785
Total Assets 22,953,648 21,281,866
Deferred Outflows of Resources 411,832 510,423
Liabilities
Current liabilities 959,742 579,632
Due to other funds 2,867 8,526
Noncurrent liabilities 6,397,398 1,637,585
Total Liabilities 7,360,007 2,225,743
Deferred Inflows of Resources 68,174 382,987
Net Position
Net investment in capital assets 12,401,231 17,303,632
Unrestricted 3,536,068 1,879,927
Total Net Position 15,937,299$ 19,183,559$
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Parking Stormwater
Operating revenues (expenses)
Charges (pledged against bonds) 3,742,298$ 5,285,795$
Depreciation expense (560,433) (414,418)
Other operating expenses (2,208,341) (2,989,079)
Operating income 973,524 1,882,298
Nonoperating revenues (expenses)
Investment earnings 1,411 (4,817)
Interest expense (211,408) (9,291)
Capital contributions 406,214 -
Transfers in - 5,600
Transfers out (1,386,300) (528,070)
Change in net position (216,559) 1,345,720
Beginning net position 16,153,858 17,837,839
Endin
g
net position 15,937,299$ 19,183,559$
The City has issued revenue bonds for each of the following nonmajor enterprise funds: Parking, which
accounts for the municipal parking ramps, lots, and meters; and Stormwater, which operates the stormwater
sewer collection system. Summary financial information for each of these funds for fiscal year ended
December 31, 2018, is
p
resented below:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
17. SEGMENT INFORMATION
(
continued
)
CONDENSED STATEMENT OF CASH FLOWS
Parking Stormwater
Net cash provided (used) by
Operating activities
1,510,684$ 2,172,268$
Noncapital financing activities
(1,386,300) (522,470)
Capital and related financing activities
(678,914) (1,024,637)
Investing activities
1,411 (4,817)
Net increase (decrease)
(553,119) 620,344
Beginning cash and cash equivalents
4,369,597 889,030
Ending cash and cash equivalents
3,816,478$ 1,509,374$
18. SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES
LAKE SUPERIOR CENTER
TAX INCREMENT DISTRICTS
FEDERALLY ASSISTED PROGRAMS - COMPLIANCE AUDITS
RELATED ORGANIZATION
The Duluth Housing and Redevelopment Authority is a legally separate organization from the City with its
own rights and powers. Although the Mayor of the City appoints all Authority Board members, there is no
financial accountabilit
y
necessar
y
for includin
g
this or
g
anization as a com
p
onent unit of the Cit
y
.
The City and Duluth Economic Development Authority (DEDA) entered into agreements with the Lake
Superior Center Authority (LSCA) to provide a portion of the funding for the design and construction of the
Great Lakes Aquarium at the Lake Superior Center Project. The funding provided by the City and DEDA
includes grants and loans which were financed internally and by the issuance of debt to be repaid from
tourism taxes. LSCA is a public corporation created by the Minnesota Legislature. The project was financed
by State, City, DEDA, and private contributions. The project is owned by LSCA and is operated by Lake
Su
p
erior Center Inc., a
p
rivate non
p
rofit cor
p
oration. The Great Lakes A
q
uarium o
p
ened Jul
y
29, 2000.
In order to obtain State funding, the City guaranteed that any operating deficits will be funded from non-state
sources, and DEDA guaranteed that it would provide sufficient funds necessary to complete construction of
the project. In 2004, the City approved the creation of a revolving $250,000 cash management fund.
Amounts drawn from the fund are to be repaid annually by October 1st.
Tax increment districts are subject to review by the Minnesota Office of the State Auditor. Unallowable use
of tax increments could result in a liability of the City. Management is not aware of any instances of
noncompliance with tax increment regulations which would have a material effect on the financial
statements.
The City has received significant financial assistance from numerous federal governmental agencies in the
form of grants and entitlements. The disbursement of funds received under these generally require
compliance with terms and conditions specified in the grant agreements and are subject to audit by grantor
agencies. Any disallowed claims resulting from such audits could become a liability of the City. However, in
the opinion of management, liabilities resulting from disallowed claims, if any, will not have a material effect
on the Cit
y
's financial
p
osition at December 31, 2018.
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
18. SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES
(
continued
)
MINNEAPOLIS-DULUTH/SUPERIOR PASSENGER RAIL ALLIANCE
Total Assets 13,898$
Total Liabilities 5,413
Total Net Position 8,485
Total Revenues 71,415
Total Expenditures 68,153
Change in Net Position 3,262
TAX INCREMENT ASSISTANCE
Maximum
Assistance
2018 Tax
Rebate
A & L Renaissance 167,742$ 165,835$
Augusta Building 268,321$ 55,872$
Bluestone Commons 9,896,864$ 320,567$
Central Hillside Development, LLP 228,866$ 16,348$
Garfield Business Park, LLC 611,069$ 21,627$
Harbor Bay 2,480,966$ 177,567$
NorShore Theatre, LLC 1,573,442$ 121,470$
NorShore Theatre, LLC 460,722$ 79,855$
Sherman Associates Hotel/Condominium 5,000,000$ 151,837$
Pier B, LLC 3,460,605$ 377,376$
Kenwood Village, LLC 2,862,500$ 126,598$
Related party transactions are limited to payments by the City on various contracts for services entered into
with the Authority. The City made payments on various contracts totaling $628,097 to the Duluth Housing
and Redevelo
p
ment Authorit
y
in 2018.
The City, along with several other governmental entities, formed the Minneapolis-Duluth/Superior Passenger
Rail Alliance on February 1, 2008, under a Joint Powers Agreement in accordance with Minnesota Statues §
471.59, 398A.04, and 398A.06. The Alliance is governed by a nine-member Board composed of one elected
official selected by each party represented in the Alliance, as well as an additional member from the Mille
Lacs Band of Ojibwe. Each party contributes funds consistent with the annual budget and cost sharing
formula. The Board is organized with a chair and a vice chair elected each year. The St. Louis and Lake
County Regional Railroad Authority serves as the fiscal agent. Its purpose is to collaboratively discuss,
study, plan for, promote, and facilitate the development of intercity passenger rail transportation between the
Twin Cities Metropolitan and Twin Ports areas. The passenger rail line has been given the title of the
Northern Lights Express (NLX).
A summary of the financial information of the Minneapolis-Duluth/Superior Passenger Rail Alliance for the
Government-wide financial statements for December 31, 2018 was:
Separate financial information can be obtained from the St. Louis and Lake County Regional Railroad
Authority.
The Duluth Economic Development Authority is committed to provide tax increment assistance pursuant to
development agreements for housing projects. The assistance is provided in the form of an annual tax
rebate to developers. The annual tax rebate is contingent upon payment of annual property taxes by the
developer. The assistance for each project is limited in amount based on both the scope of the project and
the life of the tax increment district. The tax increment assistance does not result in debt proceeds and does
not meet the definition of debt. A summary of the maximum tax increment assistance to be provided as of
December 31
,
2018
,
follows:
Notes
CITY OF DULUTH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2018
18. SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES
(
continued
)
CONDUIT DEBT OBLIGATIONS
Entity Series Issued Principal
Health Care Facilities (Aftenro) 2006 2,620,000$ 2,021,979$
St. Luke's Hospital 2012 81,595,000$ 71,785,000$
Duluth Regional Care Center, Inc 2012A 1,040,800$ 143,038$
Benedictine Health Center 2013 5,750,000$ 4,535,387$
Benedictine Health Center 2014 4,000,000$ 3,743,883$
Health Sciences Education Facility Corp (Scholastica) 2015A 10,000,000$ 8,876,752$
Health Sciences Education Facility Corp (Scholastica) 2015B 6,600,000$ 5,834,112$
Ikonics 2016 3,415,000$ 3,053,072$
Cambia Hills 2018 26,500,000$ 26,500,000$
Essentia Health (SMDC) 2018A 682,285,000$ 682,285,000$
St Luke's Hospital 2018A 19,750,000$ 19,750,000$
St Luke's Hospital 2018B 19,750,000$ 19,750,000$
19. TAX ABATEMEN
T
The City has entered into a property tax agreement with a real estate developer for constructing residential
rental units, pursuant to Minnesota Statutes § 469.1812 through 469.1815, which allows local governments
to grant property tax abatements not to exceed the larger of 10% of net tax capacity or $200,000. The tax
abatement is effective for taxes payable in 2021 and continues for fifteen years. The City’s abatement will
not exceed a total aggregate amount of $400,000.
The City has entered into a property tax agreement with a real estate developer for constructing residential
rental units, pursuant to Minnesota Statutes § 469.1812 through 469.1815, which allows local governments
to grant property tax abatements not to exceed the larger of 10% of net tax capacity or $200,000. The tax
abatement is effective for taxes payable in 2018 and continues for fifteen years. The City’s abatement will
not exceed $9,179 per year and a total aggregate amount of $250,000.
The City has entered into a property tax agreement with a commercial aviation services business for
operating a heavy aircraft maintenance, repair, and overhaul facility, pursuant to Minnesota Statutes §
469.1812 through 469.1815, which allows local governments to grant property tax abatements not to exceed
the larger of 10% of net tax capacity or $200,000. The tax abatement is effective for taxes payable in 2017
and continues for seven years. 100% of the city property taxes collected are eligible for abatement if
em
p
lo
y
ment covenants are met.
The City has entered into a property tax agreement with a real estate developer for constructing residential
rental units, pursuant to Minnesota Statutes § 469.1812 through 469.1815, which allows local governments
to grant property tax abatements not to exceed the larger of 10% of net tax capacity or $200,000. The tax
abatement is effective for taxes payable in 2019 and continues for twenty years. The City’s abatement will
not exceed a total aggregate amount of $278,000.
The City and Duluth Economic Development Authority (DEDA) have issued Industrial Revenue Bonds to
provide financial assistance to private sector entities for the acquisition and construction of industrial and
commercial facilities deemed to be in the public interest. The bonds are secured by the property financed
through a series of loan agreements and are payable solely from the revenues of the entities. Neither the
City, DEDA nor the State are obligated in any manner for repayment of the bonds. Accordingly, the bonds
are not reported as liabilities in the accompanying financial statements. Bonds issued and outstanding as of
December 31, 2018, are as follows:
Notes
R e q u i r e d S u p p l e m e n t a r y
I n f o r m a t i o n
CITY OF DULUTH, MINNESOTA
OTHER POSTEMPLOYMENT BENEFITS PLAN (OPEB)
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS AND
SCHEDULE OF INVESTMENT RETURNS
DECEMBER 31, 2018
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS
2017 2018
Total OPEB liability
Service cost 2,933,971$ 2,952,513$
Interest 9,412,409 9,609,404
Benefit payments (9,747,296) (11,145,909)
Net change in total OPEB liability 2,599,084 1,416,008
Total OPEB liability - beginning 170,000,969 172,600,053
Total OPEB liability - ending (a) 172,600,053$ 174,016,061$
Plan fiduciary net position
Contributions - employer 10,222,267$ 11,678,484$
Net investment income 8,178,671 (1,841,168)
Benefit payments (9,747,296) (11,145,909)
Administrative expense - (3,853)
Net change in plan fiduciary net position 8,653,642 (1,312,446)
Plan fiduciary net position - beginning 49,063,497 57,717,139
Plan fiduciary net position - ending (b) 57,717,139$ 56,404,693$
City's net OPEB liability - ending (a-b) 114,882,914$ 117,611,368$
Plan fiduciary net position as a percentage of the
total OPEB liability
33.4% 32.4%
Covered-employee payroll 51,597,031$ 51,597,031$
City's net OPEB liability as a percentage of
covered-employee payroll
222.7% 227.9%
SCHEDULE OF INVESTMENT RETURNS
2017 2018
Annual money-weighted rate of return, net of
investment expense
16.7% -3.2%
The notes to the required supplementary information are an integral part of this schedule.
These schedules are intended to show information for ten years. Additional years will be displayed as they become
available.
CITY OF DULUTH, MINNESOTA
OTHER POSTEMPLOYMENT BENEFITS PLAN (OPEB) TRUST
SCHEDULE OF CITY CONTRIBUTIONS
DECEMBER 31, 2018
2017 2018
Actuarially determined contribution
11,456,261$ 10,536,980$
Contributions in relation to the
actuarially determined contribution
10,222,267 11,678,484
Contribution deficiency (excess)
(1,233,994)$ 1,141,504$
Covered-employee payroll
51,597,031$ 51,597,031$
Contributions as a percentage of
covered-employee payroll
19.8% 22.6%
Notes to Schedule:
Valuation date
1/1/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method Level dollar amount
Amortization period 30 year period
Asset valuation method Market value
Inflation
2.2%
Healthcare cost trend rates
Salary increases
3.5%
Investment rate of return
5.7%
Retirement age
Mortality
Morbidity
Pre-65: 2.5% per pear; Post 65: 1.0% per year
The notes to the required supplementary information are an integral part of this schedule.
Based on actuary's experience with plans of a similar size, plan design,
workforce composition, and discussions with the City
SOA RPH-2014 Adjust to 2006 Total Dataset Headcount-weighted Mortality
project with Scale MP-2016
10.0% initially, reduced incrementally to an ultimate rate of 5.0% after ten
years
This schedule is intended to show information for ten years. Additional years will be displayed as they become
available.
Individual Entry Age Normal as a level percentage of payroll
CITY OF DULUTH, MINNESOTA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND
SCHEDULE OF CONTRIBUTIONS
PERA GENERAL EMPLOYEES PLAN
DECEMBER 31, 2018
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY *
(LAST TEN YEARS**)
Fiscal Year
Ending***
Employer's
Proportionate
Share
(Percentage)
of the Net
Pension
Liability
(Asset)
Employer's
Proportionate
Share
(Amount) of
the Net
Pension
Liability
(Asset) (a)
State's
Proportionate
Share
(Amount) of
the Net
Pension
Liability
Associated
with the City
(b)
Employer's
Proportionate
Share of the
Net Pension
Liability and
the State's
Proportionate
Share of the
Net Pension
Liability
Associated
with the City
(a+b)
Employer's
Covered-
Employee
Payroll
(c)
Employer's
Proportionate
Share of the
Net Pension
Liability
(Asset) as a
Percentage of
its Covered-
Employee
Payroll
(a+b)/c
Plan
Fiduciary
Net Position
as a
Percentage
of the Total
Pension
Liability
2018 0.5221% 28,963,967$ 950,024$ 29,913,991$ 35,092,853$ 85.24% 79.50%
2017 0.5543% 35,388,146$ 444,931$ 35,833,077$ 35,707,680$ 100.35% 75.90%
2016 0.5257% 42,684,23
3
$ 557,508$ 43,241,741$ 32,622,33
3
$ 132.55% 68.91%
2015 0.5499% 28,498,672$ -$ 28,498,672$ 32,321,183$ 88.17% 78.19%
SCHEDULE OF CONTRIBUTIONS
(LAST TEN YEARS *)
Fiscal Year
Ending **
Statutorily
Required
Contribution
(a)
Contributions
in Relation to
the Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess)
(a-b)
Covered-
Employee
Payroll
(d)
Contributions
as a
Percentage
of Covered-
Employee
Payroll
(b/d)
2018 2,697,667$ 2,697,667$ -$ 35,968,893$ 7.50%
2017 2,678,076$ 2,678,076$ -$ 34,694,027$ 7.72%
2016 2,446,67
5
$ 2,446,67
5
$ -$ 33,753,18
7
$ 7.25%
2015 2,514,167$ 2,514,167$ -$ 33,522,227$ 7.50%
The notes to the required supplementary information are an integral part of this schedule.
** The fiscal year for the Schedule of Contributions should be the employer's fiscal year end, i.e., June 30 or December 31 for most
PERA employers.
* Option to provide RSI for ten years at transition or to provide RSI prospectively.
*** The year reported for this schedule coincides with the measurement date used for the NPL.
* This schedule is for Employers in the General Employees Plan to report their proportionate share of the State of Minnesota's
contributions to the General Employees Fund on their behalf.
** Schedule is to be provided prospectively beginning with the employer's fiscal year ended June 30, 2015, or after.
CITY OF DULUTH, MINNESOTA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND
SCHEDULE OF CONTRIBUTIONS
PERA POLICE AND FIRE PLAN
DECEMBER, 31, 2018
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY
(LAST TEN YEARS*)
Fiscal Year
Ending**
Employer's
Proportionate
Share
(Percentage) of
the Net Pension
Liability (Asset)
Employer's
Proportionate
Share (Amount) of
the Net Pension
Liability (Asset) (a)
Employer's
Covered-
Employee
Payroll (b)
Employer's
Proportionate Share
of the Net Pension
Liability (Asset) as a
Percentage of its
Covered-Employee
Payroll (a/b)
Plan Fiduciary
Net Position as
a Percentage of
the Total
Pension Liability
2018 2.195% 23,397,505$ 23,134,636$ 101.14% 88.80%
2017 2.311% 31,201,250$ 23,723,278$ 131.52% 85.40%
2016 2.317% 92,985,242$ 22,320,623$ 416.59% 63.88%
2015 2.268% 25,769,787$ 20,780,650$ 124.01% 86.61%
* Schedule is to be provided prospectively beginning with the employer's fiscal year ended June 30, 2015, or after.
** The year reported for this schedule coincides with the measurement date used for the NPL
.
SCHEDULE OF CONTRIBUTIONS
(LAST TEN YEARS*)
Fiscal Year
Ending**
Statutorily
Required
Contribution
(a)
Contributions in
Relation to the
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess)
(a-b)
Covered-Employee
Payroll (d)
Contributions as
a Percentage of
Covered-
Employee
Payroll (b/d)
2018 3,790,774$ 3,790,774$ -$ 23,399,840$ 16.20%
2017 3,843,171$ 3,843,171$ -$ 22,831,389$ 16.83%
2016 3,615,941$ 3,615,941$ -$ 22,874,383$ 15.81%
2015 3,557,651$ 3,557,651$ -$ 21,960,809$ 16.20%
* Option to provide RSI for ten years at transition or to provide RSI prospectively.
The notes to the required supplementary information are an integral part of this schedule.
** The fiscal year for the Schedule of Contributions should be the employer's fiscal year end, i.e., June 30 or December 31
for most PERA employers.
CITY OF DULUTH, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2018
2018
2017
2016
EMPLOYER CONTRIBUTIONS TO OTHER POSTEMPLOYMENT BENEFITS
In 2007, the City established an irrevocable trust, pursuant to Minnesota Statute § 471.6145 to prefund a portion of the
liability of the plan. These funds are reported in the Other Postemployment Benefits Trust Fund and are included in the
actuarial valuation.
OTHER POSTEMPLOYMENT BENEFITS FUNDED STATUS
In 2018, the City of Duluth implemented Governmental Accounting Standards Board (GASB) Statement No. 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. See Note 16 in the notes to
the financial statements for additional information regarding the City's other postemployment benefits.
There have been no changes to benefits or assumptions.
• Minneapolis Employees Retirement Fund plan provisions change the employer supplemental contribution to $21
million in PERA’s calendar years 2017 and 2019 and returns to $31 million through calendar year 2031. The state’s
required contribution is $16 million in PERA’s fiscal years 2018 and 2019 and returns to $6 million annually through
calendar
y
ear 2031.
DEFINED BENEFIT PENSION PLANS - CHANGES IN SIGNIFICANT PLAN PROVISION, ACTUARIAL METHODS
AND ASSUMPTIONS
The following changes were reflected in the valuation performed on behalf of the Public Employees Retirement
Association for the fiscal
y
ear June 30:
General Employees Plan
• The Combined Service Annuity (CSA) loads were changed from 0.8% for active members and 60% for vested and
non-vested deferred members. The revised CSA loads are now 0.0% for active member liability, 15% for vested
deferred member liability, and 3.0% for non-vested deferred member liability.
• The assumed post-retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year
through 2044 and 2.5% per year thereafter.
• The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year
thereafter, to 1.0% for all future years.
• The assumed investment rate was changed from 7.9% to 7.5%. The single discount rate was also changed from 7.9%
to 7.5%.
• Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed payroll growth
and inflation were decreased by 0.25%. Payroll growth was reduced from 3.5% to 3.25%. Inflation was reduced from
2.75
%
to 2.5
%
.
• The mortality projection scale was changed from MP-2015 to MP-2017.
• The assumed benefit increase rate was changed from 1.0% per year through 2044 and 2.5% per year thereafter, to
1.25%
p
er
y
ear.
CITY OF DULUTH, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2018
2018
2017
• The assumed percentage of female members electing joint and survivor annuities was increased.
• The assumed post-retirement benefit increase rate was changed from 1.0% for all years to 1.0% per year through
2064 and 2.5% thereafter.
• The single discount rate was changed from 5.6% per annum to 7.5% per annum.
Police and Fire Plan
• The assumed salary increases were changed as recommended in the June 30, 2016, experience study. The net effect
is proposed rates that average 0.34% lower than the previous rates.
• The assumed rates of retirement were changed, resulting in fewer retirements.
• The CSA load was 30% for vested and non-vested, deferred members. The CSA has been changed to 33% for vested
members and 2.0% 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 chan
g
ed from the RP-2000 disabled mortalit
y
table to the mortalit
y
table assumed for health
y
retirees.
• Member contributions were changed effective January 1, 2019 and January 1, 2020 from 10.8% to 11.3% and 11.8%
of pay, respectively. Employer contributions were changed effective January 1, 2019 and January 1, 2020 from 16.2%
to 16.95% and 17.7% of pay, respectively. Interest credited on member contributions decreased from 4.0% to 3.0%,
beginning July 1, 2018.
• Deferred augmentation was changed to 0.0%, effective January 1, 2019. Augmentation that has already accrued for
deferred members will still apply.
• Actuarial e
q
uivalent factors were u
p
dated to reflect revised mortalit
y
and interest assum
p
tions.
• The mortality projection scale was changed from MP-2016 to MP-2017.
• Post-retirement benefit increases changed to 1.0% for all years, with no trigger.
• An end date of July 1, 2048 was added to the existing $9.0 million state contribution. Additionally, annual state aid will
equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter, until the plan reaches 100% funding, or
Jul
y
1, 2048, if earlier.
• The assumed termination rates were decreased to 3.0% for the first three years of service. Rates beyond the select
period of three years were adjusted, resulting in more expected terminations overall.
• The assumed percentage of married female members was decreased from 65% to 60%.
• The 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
y
ears older than females.
CITY OF DULUTH, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2018
2016
Police and Fire Plan (continued)
• The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% per year
thereafter, to 1.0% for all future years.
• The assumed investment rate was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to
5.6%.
• The assumed payroll growth and inflation were decreased by 0.25%. Payroll growth was reduced from 3.5% to 3.25%.
Inflation was reduced from 2.75% to 2.5%.
C o m b i n i n g a n d I n d i v i d u a l
F u n d S t a t e m e n t s a n d
S c h e d u l e s
G o v e r n m e n t a l F u n d s
CITY OF DULUTH, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
SPECIAL REVENUE FUNDS
Special Revenue Funds account for the specific financial resources (other than special assessments, expendable
trusts, or other major capital projects) that are restricted to expenditures for specified purposes.
Lake Superior Zoo – to account for revenues earned from the operations of the Lake Superior Zoo which are to be
used to offset operating costs incurred by the Arrowhead Zoological Society in managing Zoo operations.
Parks – to account for a tax levy dedicated for parks and recreation facilities, recreation activities, and implementation
of the Duluth parks and recreation master plan.
Special Projects – to account for monies received as fees, donations, or grants, which are to be expended for a
specific purpose or project.
Police Grant Programs – to account for grant monies received from the U.S. Department of Justice and Minnesota
Department of Public Safety for various police programs.
Recovery Loan Program – to account for grant monies received from the Minnesota Department of Employment
and Economic Development for the establishment of an economic development loan program.
Bayfront Festival Park – to account for fees earned from the operations of the Festival Park, which are to be used
for capital maintenance and improvements to the Park.
Library Special Accounts – to account for all special gifts, donations, and trusts designated for the purchase of
books, equipment, or projects for the library.
Economic Development – to account for various grants and loans to be used for the development and revitalization
of the City’s economy.
Energy Management – to account for excess home energy funds, utility rebates, grants, and a portion of energy
savings used for managing energy in city facilities and the Cities for Climate Protection Program.
Tourism Tax – to account for the collection of food and beverage and hotel-motel excise taxes, and disbursement
of funds for tourism-related activities as dictated by state statutes and City ordinances.
Public Facility and Program – to account for the collection, administration, and disbursement of 5% of the net profits
derived from lawful gambling, with such funds to be administered by a Lawful Gambling Commission.
Home Investment Partnerships Program – to account for grant monies received from the U.S. Department of
Housing and Urban Development for the furtherance of a single-family housing rehabilitation program and various
other housing-related projects.
Community Development – to account for grant monies and Section 108 loan funds received from the U.S.
Department of Housing and Urban Development. These monies are to be expended on projects considered
necessary for the renewal and revitalization of the City.
Workforce Development – to account for monies received through the Minnesota Department of Employment and
Economic Development and St. Louis County to provide job training and employment opportunities for economically
disadvantaged, unemployed and underemployed persons.
Senior Employment – to account for monies received from the Minnesota Department
of Employment and Economic
Development and the National Council of Senior Citizens under Title V of the Older Americans Act to provide useful
part-time employment for lo
w-income elderly and to improve community services.
100
CITY OF DULUTH, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
SPECIAL REVENUE FUNDS (continued)
Street System Maintenance Utility – to account for monies received for street system maintenance utility fees from
residential, commercial, and industrial properties, used to fund existing street improvement debt, enhanced
maintenance, and street reconstruction.
Public Arts – to account for the proceeds of various fund-raising activities sponsored by the Duluth Public Arts
Commission, to be used for art in public places and art projects.
DEBT SERVICE FUNDS
Debt Service Funds account for the accumulation of resources for, and the payment of, long-term principal, interest
and related costs.
DECC Revenue – to account for food and beverage tax revenues and DECC pledged revenues dedicated towards
repayment of bonds issued to finance the expansion of the DECC.
General Obligation – to account for accumulation of resources for, and payment of, general obligation bonds, notes
and certificates.
Special Assessment Debt Service – to account for the resources accumulated and payments made for the principal
and interest on long-term special assessment debt.
Street Improvement Debt Service – to account for accumulation of resources for, and the payment of, general
obligation bonds issued for financing the City’s Street Improvement Program.
Tax Increment – to account for the collection and distribution of tax increment proceeds associated with City Tax
Increment Financing (TIF) districts.
CAPITAL PROJECTS FUNDS
Capital Projects Funds account for financial resources to be used for the acquisition, construction or improvement of
capital facilities other than those financed by enterprise funds.
Capital Equipment – to account for bond proceeds and other revenues used for purchase of equipment.
Special Assessment – to account for improvements which are financed by special assessments.
Permanent Improvement – to account for capital improvements financed by sources other than assessments.
Street Improvement Program – to account for improvements to be made as part of the City’s Street Improvement
Program.
Capital Improvement – to account for capital improvements that are financed by issuance of debt.
Tourism and Recreational Projects – Capital project fund established to account for bond proceeds for tourism and
recreational projects along the St. Louis River Corridor.
101
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Lake Superior
Zoo Parks
Special
Projects
Police Grant
Programs
Recovery
Loan Program
Assets
Cash and cash equivalents
-$ 1,658,202$ 1,631,739$ 918,746$ 247,430$
Receivables, net
Taxes
- 97,018 - - -
Accounts
- 5,849 71,033 9,758 -
Assessments
- - 87,503 - -
Loans
300,000 - - - 820,664
Due from other funds
- 2,588 9,106 - -
Due from component units
- - 14,231 - 622,000
Due from other governments
169,028 114,290 75,166 474,525 -
Total Assets
469,028$ 1,877,947$ 1,888,778$ 1,403,029$ 1,690,094$
Liabilities
Accounts payable
140 17,662 5,010 217,160 -
Contracts payable
11,088 164,475 15,385 485,362 -
Due to other funds
- - 15,580 97,268 -
Due to component units
- - - - -
Interfund loan payable
519,764
- - - -
Due to other governments
- 7,571 - 3,186 252,724
Accrued salaries payable
- 15,140 - - -
Unearned revenue
- 5 163,706 8,548 -
Total Liabilities
530,992 204,853 199,681
811,524 252,724
Deferred Inflows of Resources
Unavailable revenue
349,028 70,449 92,633 - 574,988
Fund Balances
Restricted
- 1,602,645 612,152 591,505 862,382
Committed
- - 984,312 - -
Assigned
- - - - -
Unassigned
(410,992) - - - -
Total Fund Balances
(410,992) 1,602,645 1,596,464 591,505 862,382
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
469,028$ 1,877,947$ 1,888,778$ 1,403,029$ 1,690,094$
(continued)
Special Revenue Funds
102
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Assets
Cash and cash equivalents
Receivables, net
Taxes
Accounts
Assessments
Loans
Due from other funds
Due from component units
Due from other governments
Total Assets
Liabilities
Accounts payable
Contracts payable
Due to other funds
Due to component units
Interfund loan payable
Due to other governments
Accrued salaries payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Bayfront
Festival Park
Library
Special
Accounts
Economic
Development
Energy
Management Tourism Tax
187,434$ 576,040$ 6,047$ 149,428$ 520,692$
- - - - 880,157
- 394 - - -
- - - - -
- - - - -
- - - 6,587 -
- - - - -
- - 5,551 - 122,621
187,434$ 576,434$ 11,598$ 156,015$ 1,523,470$
5,100 15,590 - 156 -
- - - - 63,788
- - 591 - 576,060
- - - - -
-
-
- - -
- 537 - - -
- - - 1,796 -
- - - - -
5,100 16,127 591 1,952 639,848
-
- 5,551 - -
- 560,307 - - 883,622
182,334 - - 154,063 -
- - 5,456 - -
- - - - -
182,334 560,307 5,456 154,063 883,622
187,434$ 576,434$ 11,598$ 156,015$ 1,523,470$
(continued)
Special Revenue Funds
103
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Assets
Cash and cash equivalents
Receivables, net
Taxes
Accounts
Assessments
Loans
Due from other funds
Due from component units
Due from other governments
Total Assets
Liabilities
Accounts payable
Contracts payable
Due to other funds
Due to component units
Interfund loan payable
Due to other governments
Accrued salaries payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Public Facility
and Program
Home
Investment
Partnerships
Program
Community
Development
Workforce
Development
Senior
Employment
60,180$ -$ 1,107,628$ 242,863$ -$
963 - - - -
- - 943 2,518 22,207
- - - - -
- 334,837 2,614,793 - -
- 19,892 4,751 18,067 10,966
- - - - -
- 226,985 452,890 82,933 24,115
61,143$ 581,714$ 4,181,005$ 346,381$ 57,288$
- - 87,931 26,077 -
- 39,387 355,583 4,318 -
- 6,144 35,368 20,535 18
- - - -
-
- 158,617 - - 57,259
- - 16,674 - -
- - - 16,303 -
- 62,690 153,044 7,452
-
- 266,838 648,600 74,685 57,277
- 342,435 2,780,807 14,442 18
61,143 - 751,598 257,254 -
- - - - -
- - - - -
- (27,559) - - (7)
61,143 (27,559) 751,598 257,254 (7)
61,143$ 581,714$ 4,181,005$ 346,381$ 57,288$
(continued)
Special Revenue Funds
104
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Assets
Cash and cash equivalents
Receivables, net
Taxes
Accounts
Assessments
Loans
Due from other funds
Due from component units
Due from other governments
Total Assets
Liabilities
Accounts payable
Contracts payable
Due to other funds
Due to component units
Interfund loan payable
Due to other governments
Accrued salaries payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Street System
Maintenance
Utility Public Arts
DECC
Revenue
General
Obligation
Special
Assessment
Debt Service
704,730$ 167,919$ 4,402,130$ 13,779,235$ 527,427$
110,673 - - 259,116 -
- - - - -
- - - - 724,574
- - - - -
- - 554,392 - -
- - - - -
- - - - 36,952
815,403$ 167,919$ 4,956,522$ 14,038,351$ 1,288,953$
- - - 2,060 5,485
- - - - -
- - - - 33,568
- - 781,191 - -
-
- - - -
1,230 - - - -
- - - - -
- - - - -
1,230 - 781,191 2,060
39,053
72,668 - - 184,316 724,574
741,505 - 4,175,331 13,851,975 525,326
- 167,919 - - -
- - - - -
- - - - -
741,505 167,919 4,175,331 13,851,975 525,326
815,403$ 167,919$ 4,956,522$ 14,038,351$ 1,288,953$
(continued)
Special Revenue Funds Debt Service Funds
105
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Assets
Cash and cash equivalents
Receivables, net
Taxes
Accounts
Assessments
Loans
Due from other funds
Due from component units
Due from other governments
Total Assets
Liabilities
Accounts payable
Contracts payable
Due to other funds
Due to component units
Interfund loan payable
Due to other governments
Accrued salaries payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Debt Service
Funds
Street
Improvement
Debt Service
Capital
Equipment
Special
Assessment
Permanent
Improvement
2,790,276$ 3,565,753$ -$ 1,559,631$
- - - 10,612
- - - 119,919
371,426 - 352,794 -
- - - -
1,268 - 671 303,038
- - - -
- - - 1,902,728
3,162,970$ 3,565,753$ 353,465$ 3,895,928$
- 168,507 - -
- 20,614 - 1,012,693
- 4,730 5,628 71,372
- - - -
- - 214,591 -
- - - 1,993
- -
-
-
- - - -
- 193,851 220,219 1,086,058
371,426 - 352,794 1,579,133
2,791,544 3,371,902 - 1,230,737
- - - -
- - - -
- - (219,548) -
2,791,544 3,371,902 (219,548) 1,230,737
3,162,970$ 3,565,753$ 353,465$ 3,895,928$
(continued)
Capital Projects Funds
106
CITY OF DULUTH, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2018
Assets
Cash and cash equivalents
Receivables, net
Taxes
Accounts
Assessments
Loans
Due from other funds
Due from component units
Due from other governments
Total Assets
Liabilities
Accounts payable
Contracts payable
Due to other funds
Due to component units
Interfund loan payable
Due to other governments
Accrued salaries payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
Street
Improvement
Program
Capital
Improvement
Tourism and
Recreational
Projects
Total Nonmajor
Governmental
Funds
1,771,639$ 1,038,417$ 8,972,705$ 46,586,291$
- - - 1,358,539
- - 17,500 250,121
1,374,514 - - 2,910,811
- - - 4,070,294
10,498 - - 941,824
- - - 636,231
- 349,685 19,101 4,056,570
3,156,651$ 1,388,102$ 9,009,306$ 60,810,681$
- 27,696 1,000 579,574
96,052 559,101 458,232 3,286,078
- 503 - 867,365
- - - 781,191
- - - 950,231
- - - 283,915
- -
-
33,239
- - 51,475 446,920
96,052 587,300 510,707 7,228,513
1,374,514 349,685 19,101 9,258,562
- 451,117 8,479,498 41,801,543
- - - 1,488,628
1,686,085
- - 1,691,541
- - - (658,106)
1,686,085 451,117 8,479,498 44,323,606
3,156,651$ 1,388,102$ 9,009,306$ 60,810,681$
Capital Projects Funds
107
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Lake Superior
Zoo Parks
Special
Projects
Police Grant
Programs
Recovery
Loan Program
Revenues
Taxes
Property taxes
-$ 2,599,941$ -$ -$ -$
Sales taxes
- - - - -
Other taxes
- - - - -
Licenses and permits
- 72,339 50,309 - -
Intergovernmental revenues
160,000 795,079 733,393 1,871,184 -
Charges for services
837,393 78,276 77,386 - -
Fines and forfeits
- - 15,348 64,594 -
Special assessments
- - - - -
Investment income
- 314 (2,198) (427) (163)
Miscellaneous revenues
31,524 70,871 1,070,082 14,001 -
Total Revenues
1,028,917 3,616,820 1,944,320 1,949,352 (163)
Expenditures
Current
General government
- - 208,863 - -
Public safety
- - 648,338 850,773 -
Public works
- - - - -
Culture and recreation
1,555,937 2,174,952 64,896 - -
Urban and economic development
- - - - 4,784
Debt service
Principal retirement
- - - - -
Interest and fiscal fees
- - - -
-
Bond issuance costs
- - - - -
Capital outlay
Capital outlay
- 615,476 242,631 446,496 -
Total Expenditures
1,555,937 2,790,428 1,164,728 1,297,269 4,784
Excess (Deficiency) of Revenues Over
(Under) Expenditures
(527,020) 826,392 779,592 652,083 (4,947)
Other Financing Sources (Uses)
Issuance of bonds
- - - - -
Premium on issuance of bonds
- - - - -
Transfers in
510,000 82,345 - - -
Transfers out
- (763,000) (431,430) (1,087,028) -
Total Other Financing Sources (Uses)
510,000 (680,655) (431,430) (1,087,028)
-
Net Change in Fund Balances
(17,020) 145,737 348,162 (434,945) (4,947)
Fund Balances - January 1, 2018
(393,972) 1,456,908 1,248,302 1,026,450 867,329
Fund Balances - December 31, 201
8
(410,992)$ 1,602,645$ 1,596,464$ 591,505$ 862,382$
(continued)
Special Revenue Funds
108
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Revenues
Taxes
Property taxes
Sales taxes
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeits
Special assessments
Investment income
Miscellaneous revenues
Total Revenues
Expenditures
Current
General government
Public safety
Public works
Culture and recreation
Urban and economic development
Debt service
Principal retirement
Interest and fiscal fees
Bond issuance costs
Capital outlay
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses)
Issuance of bonds
Premium on issuance of bonds
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - January 1, 2018
Fund Balances - December 31, 201
8
Bayfront
Festival Park
Library
Special
Accounts
Economic
Development
Energy
Management Tourism Tax
-$ -$ -$ -$ -$
- - - - 12,172,758
- - - - -
- - - - -
- - 97,737 - -
- - - - -
- - - - -
- - - - -
4 (109) 117 1,083 (1,384)
40,715 81,226 18,616 31,498 -
40,719 81,117 116,470 32,581 12,171,374
- - - 248,655 -
- - - - -
- - - - -
3,500 118,144 - - -
- - 121,937
- 3,606,352
- - - - -
- - - - -
- - - - -
57,331 - - - -
60,831
118,144 121,937 248,655 3,606,352
(20,112) (37,027) (5,467) (216,074) 8,565,022
- - - - -
- - - - -
- - - 83,728 -
- - - (26,588) (8,259,215)
- - - 57,140 (8,259,215)
(20,112) (37,027) (5,467) (158,934) 305,807
202,446 597,334 10,923 312,997 577,815
182,334$ 560,307$ 5,456$ 154,063$ 883,622$
(continued)
Special Revenue Funds
109
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Revenues
Taxes
Property taxes
Sales taxes
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeits
Special assessments
Investment income
Miscellaneous revenues
Total Revenues
Expenditures
Current
General government
Public safety
Public works
Culture and recreation
Urban and economic development
Debt service
Principal retirement
Interest and fiscal fees
Bond issuance costs
Capital outlay
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses)
Issuance of bonds
Premium on issuance of bonds
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - January 1, 2018
Fund Balances - December 31, 201
8
Public Facility
and Program
Home
Investment
Partnerships
Program
Community
Development
Workforce
Development
Senior
Employment
-$ -$ -$ -$ -$
- - - - -
11,486 - - - -
- - - - -
- 581,139 2,918,813 2,062,218 426,068
- - - - -
- - - - -
- - - - -
(106) 185 15,155 (495) -
- - 203,893 274,871 -
11,380 581,324 3,137,861 2,336,594 426,068
- - - - -
- - - - -
- - - - -
- - - - -
-
520,035 2,709,559 2,336,351 411,318
- - 10,000 - -
- - 151,690 - -
- - - - -
- -
- - -
- 520,035 2,871,249 2,336,351 411,318
11,380 61,289 266,612 243 14,750
- - - - -
- - - - -
- - - - -
- - (45,000) (3,144) (14,770)
- - (45,000) (3,144) (14,770)
11,380 61,289 221,612 (2,901) (20)
49,763 (88,848) 529,986 260,155 13
61,143$ (27,559)$ 751,598$ 257,254$ (7)$
(continued)
Special Revenue Funds
110
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Revenues
Taxes
Property taxes
Sales taxes
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeits
Special assessments
Investment income
Miscellaneous revenues
Total Revenues
Expenditures
Current
General government
Public safety
Public works
Culture and recreation
Urban and economic development
Debt service
Principal retirement
Interest and fiscal fees
Bond issuance costs
Capital outlay
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses)
Issuance of bonds
Premium on issuance of bonds
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - January 1, 2018
Fund Balances - December 31, 201
8
Street System
Maintenance
Utility Public Arts
DECC
Revenue
General
Obligation
Special
Assessment
Debt Service
3,747,339$ -$ -$ 6,774,123$ -$
- - - - -
- - - - -
- - - - -
9,000 - - 223,038 -
- - - - -
- - - - -
- - - - 387,976
(1,980) (118) (6,943) (10,110) 2,146
1,013 - - 1,883,862 -
3,755,372 (118) (6,943) 8,870,913 390,122
- - - 37,102 -
- - - - -
611,399 - - - -
- 5,285 - - -
- -
781,191 - -
- - - 8,980,000 722,000
- - - 4,126,510 42,771
- - - - -
- - -
- -
611,399 5,285 781,191 13,143,612 764,771
3,143,973 (5,403) (788,134) (4,272,699) (374,649)
- - - - -
- - - - -
9,606 15,000 3,802,278 4,645,107 -
(2,889,010) - (2,370,517) - -
(2,879,404) 15,000 1,431,761 4,645,107 -
264,569 9,597 643,627 372,408 (374,649)
476,936 158,322 3,531,704 13,479,567 899,975
741,505$ 167,919$ 4,175,331$ 13,851,975$ 525,326$
(continued)
Special Revenue Funds Debt Service Funds
111
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Revenues
Taxes
Property taxes
Sales taxes
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeits
Special assessments
Investment income
Miscellaneous revenues
Total Revenues
Expenditures
Current
General government
Public safety
Public works
Culture and recreation
Urban and economic development
Debt service
Principal retirement
Interest and fiscal fees
Bond issuance costs
Capital outlay
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses)
Issuance of bonds
Premium on issuance of bonds
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - January 1, 2018
Fund Balances - December 31, 201
8
Street
Improvement
Debt Service Tax Increment
Capital
Equipment
Special
Assessment
Permanent
Improvement
-$ 603,809$ -$ -$ 277,693$
- - - - -
- - - - -
- - - - -
- - - - 9,181,198
- - - - -
- - - - -
174,465 - - 57,016 -
1,111 - 19,599 - (10,814)
- - 1,800 - 483,254
175,576 603,809 21,399 57,016 9,931,331
- - - - -
- - - - -
- - - - 1,721,791
- - - - -
- 500 -
- -
1,460,000 - - - -
166,475 - - - -
- - 34,128 - -
- - 3,049,706 -
8,488,307
1,626,475 500 3,083,834 - 10,210,098
(1,450,899) 603,309 (3,062,435) 57,016 (278,767)
- - 3,885,000 - -
- - 245,676 - -
1,033,556 - - - 633,541
- (601,810) (2,310) - (9,606)
1,033,556 (601,810) 4,128,366 - 623,935
(417,343) 1,499 1,065,931 57,016 345,168
3,208,887 (1,499) 2,305,971 (276,564) 885,569
2,791,544$ -$ 3,371,902$ (219,548)$ 1,230,737$
(continued)
Debt Service Funds Capital Projects Funds
112
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Revenues
Taxes
Property taxes
Sales taxes
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeits
Special assessments
Investment income
Miscellaneous revenues
Total Revenues
Expenditures
Current
General government
Public safety
Public works
Culture and recreation
Urban and economic development
Debt service
Principal retirement
Interest and fiscal fees
Bond issuance costs
Capital outlay
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues Over
(Under) Expenditures
Other Financing Sources (Uses)
Issuance of bonds
Premium on issuance of bonds
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - January 1, 2018
Fund Balances - December 31, 201
8
Street
Improvement
Program
Capital
Improvement
Tourism and
Recreational
Projects
Total Nonmajor
Governmental
Funds
-$ -$ -$ 14,002,905$
- - - 12,172,758
- - - 11,486
- - - 122,648
- 1,940,094 925,380 21,924,341
- - - 993,055
- - - 79,942
511,639 - - 1,131,096
(4,568) 60,613 167,266 228,178
- - 469,198 4,676,424
507,071 2,000,707 1,561,844 55,342,833
- 1,791,910 - 2,286,530
- 378,199 - 1,877,310
- 609,554 - 2,942,744
- 44,115 281,481 4,248,310
- - - 10,492,027
- - - 11,172,000
- - - 4,487,446
-
129,576 - 163,704
1,305,047 7,605,001 3,286,744 25,096,739
1,305,047 10,558,355 3,568,225 62,766,810
(797,976) (8,557,648) (2,006,381) (7,423,977)
- 5,760,000 - 9,645,000
-
308,111 - 553,787
1,285,913 755,000 783,000 13,639,074
- (71,011) (100,000) (16,674,439)
1,285,913 6,752,100 683,000 7,163,422
487,937 (1,805,548) (1,323,381) (260,555)
1,198,148 2,256,665 9,802,879 44,584,161
1,686,085$ 451,117$ 8,479,498$ 44,323,606$
Capital Projects Funds
113
CITY OF DULUTH, MINNESOTA
SCHEDULE OF REVENUES - ESTIMATED AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Actual to
Modified
Budget
Original Modified Favorable
Budget Budget Actual (Unfavorable)
Taxes:
General propert
y
Current 16,220,400$ 16,220,400$ 16,070,029$ (150,371)$
Delinquent 150,000 150,000 179,832 29,832
Mobile home 59,700 59,700 66,099 6,399
Forfeited tax sale apportionment 19,400 19,400 16,400 (3,000)
Franchise 4,046,700 4,046,700 3,997,061 (49,639)
Sales taxes 13,586,600 13,586,600 14,094,409 507,809
Charitable gambling 20,000 20,000 22,363 2,363
Othe
r
83,700 83,700 203,847 120,147
Total Taxes 34,186,500 34,186,500 34,650,040 463,540
Licenses and Permits:
Liquor and non-intoxicating liquo
r
509,000 509,000 553,572 44,572
Health 25,000 25,000 29,296 4,296
Police protective 32,500 32,500 36,253 3,753
A
musement 1,000 1,000 1,292 292
Manufacturing and merchandising 39,200 39,200 47,910 8,710
Othe
r
1,031,400 1,031,400 1,262,404 231,004
Total Licenses and Permits 1,638,100 1,638,100 1,930,727 292,627
Intergovernmental revenues:
Shared revenues
Local government aid 29,646,000 29,646,000 29,645,975 (25)
PERA aid 124,400 124,400 124,428 28
Insurance premium 1,820,000 1,820,000 2,039,452 219,452
PERA contribution - 419,103 419,103 -
State grants
Minnesota Library Information Network 5,000 5,000 4,661 (339)
Fifty-Percent Reimbursement Safety Grant - - 5,000 5,000
Cross country ski trail 11,000 11,000 11,000 -
Snowmobile trail 13,900 13,900 14,662 762
Post training reimbursement 50,000 50,000 134,938 84,938
Bulletproof vests - 4,943 16,143 11,200
Market value credit - - 230 230
MSA street maintenance Allotment 1,533,400 1,533,400 1,533,400 -
Federal grants
A
lcohol, Tobacco, and Firearms - Training
A
ssistance - 20,617 20,617 -
Crime Victim Assistance - 55,769 - (55,769)
Bulletproof Vest Partnership Program - 20,560 17,637 (2,923)
Other grants
St. Louis Count
y
143,500 143,500 138,411 (5,089)
Payments in lieu of taxes -
Housing and Redevelopment Authorit
y
57,400 57,400 66,012 8,612
Independent School District #709 248,400 248,400 261,820 13,420
Total Intergovernmental Revenues 33,653,000 34,173,992 34,453,489 279,497
(continued)
114
CITY OF DULUTH, MINNESOTA
SCHEDULE OF REVENUES - ESTIMATED AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Actual to
Modified
Budget
Original Modified Favorable
Budget Budget Actual (Unfavorable)
Charges for Services:
Departmental fees and services
Fire 6,400 6,400 6,350 (50)
Police 82,000 82,000 77,792 (4,208)
Engineering 353,000 353,000 163,728 (189,272)
Building inspection services 2,138,900 2,138,900 2,306,229 167,329
A
ttorney services 4,000 4,000 4,300 300
Information technology services 5,800 5,800 16,623 10,823
Grant administration services 69,000 69,000 81,088 12,088
Hydrant maintenance services 30,000 30,000 30,000 -
A
ssessment fees 60,600 60,600 42,982 (17,618)
Other services - - 120 120
Departmental sales
Copier and microfilm prints 23,300 23,300 21,300 (2,000)
Print and plan sales 100 100 454 354
Book sales 100 100 48 (52)
Share of general expenses
Stormwate
r
149,400 149,400 149,400 -
Sewe
r
204,600 204,600 204,600 -
Steam 50,900 50,900 50,900 -
Duluth Entertainment and Convention
Center Authorit
y
13,700 13,700 13,700 -
Duluth Transit Authorit
y
10,300 10,300 10,300 -
Duluth Airport Authorit
y
45,200 45,200 45,200 -
Duluth Economic Development Authorit
y
365,000 365,000 365,000 -
Water and Gas 773,700 773,700 773,700 -
Fleet Services 135,900 135,900 135,900 -
Golf 18,800 18,800 18,800 -
Group Health 353,300 353,300 360,500 7,200
Self-Insurance 457,500 457,500 457,500 -
Spirit Mountain Recreation Area Authorit
y
37,700 37,700 37,700 -
Parking 136,400 136,400 136,400 -
Street Lighting 50,500 50,500 50,500 -
Priley Drive Parking Facilit
y
22,500 22,500 22,500 -
Total Charges for Services 5,598,600 5,598,600 5,583,614 (14,986)
Fines and Forfeits:
Library fines 72,000 72,000 57,864 (14,136)
Parking fines 21,600 21,600 46,432 24,832
Court fees 427,200 427,200 364,024 (63,176)
License penalties 2,000 2,000 5,909 3,909
Felony forfeitures - - 50,186 50,186
Total Fines and Forfeits 522,800 522,800 524,415 1,615
Special Assessments 438,900 517,400 474,241 (43,159)
Investment Income:
Fair value adjustment - - (35,189) (35,189)
Total Investment Income - - (35,189) (35,189)
(continued)
115
CITY OF DULUTH, MINNESOTA
SCHEDULE OF REVENUES - ESTIMATED AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Actual to
Modified
Budget
Original Modified Favorable
Budget Budget Actual (Unfavorable)
Miscellaneous Revenues:
Commission and concessions 13,700 13,700 8,095 (5,605)
Payments in lieu of taxes 16,000 16,000 16,086 86
Fond du Luth proceeds 150,000 150,000 150,000 -
Police auction proceeds - - 6,425 6,425
Rent and lease 531,000 531,000 502,654 (28,346)
Damage claims - - 230 230
Sale of equipment - 5,925 49,977 44,052
Sale of land - - 3,596 3,596
Sale of scrap 6,000 6,000 14,137 8,137
Surcharge retainage 1,400 1,400 1,464 64
Refunds and reimbursements 147,900 521,251 601,528 80,277
Gifts and donations - 141,113 9,026 (132,087)
Interest temporary loans - - 18,850 18,850
Miscellaneous sales and services 71,200 71,200 79,833 8,633
Total Miscellaneous Revenues 937,200 1,457,589 1,461,901 4,312
Total Revenues 76,975,100 78,094,981 79,043,238 948,257
Ot
her Financing Sources:
Transfers in:
Parks Fund - 25,000 25,000 -
Special
Projects 174,500 241,507 294,085 52,578
Duluth Police Grant Programs 688,500 908,554 1,087,028 178,474
Community Investment Trust 425,000 425,000 529,225 104,225
Tourism Taxes 1,085,000 1,085,000 1,116,668 31,668
Workforce Development - - 3,144 3,144
Senior Programs - - 14,770 14,770
Tax Increment - - 58,383 58,383
Parking Fund 1,336,300 1,336,300 1,386,300 50,000
Wate
r
219,600 219,600 151,482 (68,118)
Gas 2,564,200 2,564,200 2,643,189 78,989
Sewe
r
157,300 157,300 114,776 (42,524)
Stormwate
r
545,100 545,100 528,070 (17,030)
Steam 152,800 152,800 161,101 8,301
Total Other Financing Sources 7,348,300 7,660,361 8,113,221 452,860
Fund Balance Reserves:
Fire Department 730,500 730,500 - (730,500)
Com Solar Program 895,500 895,500 - (895,500)
Total Fund Balance Reserves 1,626,000 1,626,000 - (1,626,000)
Total Revenues and Other Financing
Sources 85,949,400
$
87,381,342
$
87,156,459
$
(224,883)
$
Reconciliation:
Original budget as approved by Duluth City Council 85,949,400$
A
djustments made in accordance with budget ordinance provisions:
Grants, gifts, and donations 953,864
Ordinance allowable 478,078
Total adjustments 1,431,942
Modified budget as reported above 87,381,342
$
116
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES AND ENCUMBRANCES -
BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Budget Actual
Favorable
Original Modified Note Expended Encumbered Totals (Unfavorable)
Legislative and Executive
City Council
Personal services - salaries 124,200$ 124,200$ 124,200$ -$ 124,200$ -$
Personal services - benefits 11,600 11,600 9,532 - 9,532 2,068
Other expenditure
s
68,700 68,700 52,197 - 52,197 16,503
Total City Council 204,500 204,500 185,929 - 185,929 18,571
Mayor's Offic
e
Personal services - salaries 313,900 316,479 1 308,768 - 308,768 7,711
Personal services - benefits 150,000 146,021 1 119,569 - 119,569 26,452
Other expenditure
s
14,600 17,190 1,4 17,105 - 17,105 85
Total Mayor's Offic
e
478,500 479,690 445,442 - 445,442 34,248
Chief Administrative Office
r
Personal services - salaries 225,400 226,689 1 262,565 - 262,565 (35,876)
Personal services - benefits 113,400 112,111 1 110,696 - 110,696 1,415
Other expenditure
s
10,600 10,600 7,643 - 7,643 2,957
Total Chief Administrative Office
r
349,400 349,400 380,904 - 380,904 (31,504)
Attorney and Human Right
s
Personal services - salaries 1,577,600 1,597,239 1,3 1,597,121 - 1,597,121 118
Personal services - benefits 537,700 533,830 1,3 537,719 - 537,719 (3,889)
Other expenditure
s
41,100 105,100 1 73,452 18,841 92,293 12,807
Total Attorney and Human Right
s
2,156,400 2,236,169 2,208,292 18,841 2,227,133 9,036
Total Legislative and Executive 3,188,800 3,269,759 3,220,567 18,841 3,239,408 30,351
Public Administration
Human Resources
Personal services - salaries 731,300 744,646 1 717,270 - 717,270 27,376
Personal services - benefits 337,700 324,354 1 303,509 - 303,509 20,845
Other expenditure
s
74,500 74,500 52,663 - 52,663 21,837
Total Human Resources 1,143,500 1,143,500 1,073,442 - 1,073,442 70,058
Information Technolog
y
Personal services - salaries 1,642,200 1,623,900 1 1,569,159 - 1,569,159 54,741
Personal services - benefits 684,500 662,800 1 632,217 - 632,217 30,583
Other expenditure
s
866,200 866,200 839,975 30,517 870,492 (4,292)
Total Information Technolog
y
3,192,900 3,152,900 3,041,351 30,517 3,071,868 81,032
Clerk
Personal services - salaries 533,600 536,773 1 528,209 - 528,209 8,564
Personal services - benefits 223,300 221,300 1 189,705 - 189,705 31,595
Other expenditure
s
52,500 54,694 1 54,594 - 54,594 100
Total Cler
k
809,400 812,767 772,508 - 772,508 40,259
Park Maintenance
Personal services - salaries 1,581,100 1,609,467 1 1,542,952 - 1,542,952 66,515
Personal services - benefits 659,800 621,433 1 592,044 - 592,044 29,389
Other expenditure
s
849,500 871,689 2 854,447 - 854,447 17,242
Total Park Maintenance 3,090,400 3,102,589 2,989,443 - 2,989,443 113,146
Library Service
s
Personal services - salaries 2,683,200 2,755,069 1 2,754,961 - 2,754,961 108
Personal services - benefits 1,238,900 1,119,931 1 1,049,097 - 1,049,097 70,834
Other expenditure
s
677,500 694,600 1 688,345 - 688,345 6,255
Total Library Service
s
4,599,600 4,569,600 4,492,403 - 4,492,403 77,197
(continued)
117
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES AND ENCUMBRANCES -
BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Budget Actual
Favorable
Original Modified Note Expended Encumbered Totals (Unfavorable)
Public Administration (continued)
Facilities Management
Personal services - salaries 1,451,400 1,477,536 1 1,480,958 - 1,480,958 (3,422)
Personal services - benefits 719,500 699,777 1 650,354 - 650,354 49,423
Other expenditure
s
2,043,200 2,190,426 1,2 2,218,490 - 2,218,490 (28,064)
Capital outla
y
40,000 - - - - -
Total Facilities Management 4,254,100 4,367,739 4,349,802 - 4,349,802 17,937
Total Public Administration 17,089,900 17,149,095 16,718,949 30,517 16,749,466 399,629
Finance
Budget
Personal services - salaries 292,600 298,036 1 294,210 - 294,210 3,826
Personal services - benefits 124,500 121,921 1 121,840 - 121,840 81
Other expenditure
s
27,100 24,243 1 3,162 - 3,162 21,081
Total Budge
t
444,200 444,200 419,212 - 419,212 24,988
Audito
r
Personal services - salaries 708,500 758,098 1 736,391 - 736,391 21,707
Personal services - benefits 309,100 329,458 1 319,087 - 319,087 10,371
Other expenditure
s
325,100 325,100 285,045 - 285,045 40,055
Total Audito
r
1,342,700 1,412,656 1,340,523 - 1,340,523 72,133
Purchasing
Personal services - salaries 142,000 142,000 141,281 - 141,281 719
Personal services - benefits 80,900 80,900 79,454 - 79,454 1,446
Other expenditure
s
5,700 5,700 2,253 - 2,253 3,447
Total Purchasing 228,600 228,600 222,988 - 222,988 5,612
Treasure
r
Personal services - salaries 464,600 430,474 1 403,510 - 403,510 26,964
Personal services - benefits 243,700 207,870 1 186,481 - 186,481 21,389
Other expenditure
s
14,000 14,000 10,558 - 10,558 3,442
Total Treasure
r
722,300 652,344 600,549 - 600,549 51,795
Total Finance 2,737,800 2,737,800 2,583,272 - 2,583,272 154,528
Planning and Construction Services
Planning and Development
Personal services - salaries 500,100 521,229 1 509,069 - 509,069 12,160
Personal services - benefits 212,900 197,791 1 201,014 - 201,014 (3,223)
Other expenditure
s
56,400 88,839 1,2,4 63,173 20,990 84,163 4,676
Total Planning and
Development 769,400 807,859 773,256 20,990 794,246 13,613
Construction Services and Inspection
Personal services - salaries 1,081,000 1,099,366 1 1,098,489 - 1,098,489 877
Personal services - benefits 487,300 457,914 1 454,384 - 454,384 3,530
Other expenditure
s
146,900 202,239 2,4 153,489 25,005 178,494 23,745
Total Construction Services and
Inspection 1,715,200 1,759,519 1,706,362 25,005 1,731,367 28,152
Total Planning and Construction
Services 2,484,600 2,567,378 2,479,618 45,995 2,525,613 41,765
(continued)
118
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES AND ENCUMBRANCES -
BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Budget Actual
Favorable
Original Modified Note Expended Encumbered Totals (Unfavorable)
Business and Community Developmen
t
Personal services - salaries 444,700 451,147 1 455,814 - 455,814 (4,667)
Personal services - benefits 188,000 181,553 1 162,459 - 162,459 19,094
Other expenditure
s
18,300 18,300 13,860 - 13,860 4,440
Total Business and Communit
y
Development 651,000 651,000 632,133 - 632,133 18,867
Fire
Administration
Personal services - salaries 326,500 333,120 1 346,975 - 346,975 (13,855)
Personal services - benefits 120,300 115,897 1 129,434 - 129,434 (13,537)
Other expenditure
s
59,000 59,000 57,444 - 57,444 1,556
Total Administration 505,800 508,017 533,853 - 533,853 (25,836)
Operations
Personal services - salaries 10,419,200 10,624,745 1,3,4 10,584,628 - 10,584,628 40,117
Personal services - benefits 4,485,200 4,346,920 1,4 4,341,320 - 4,341,320 5,600
Other expenditure
s
601,900 614,800 1,4 573,882 - 573,882 40,918
Total Operations 15,506,300 15,586,465 15,499,830 - 15,499,830 86,635
Life Safet
y
Personal services - salaries 757,300 765,036 1 762,699 - 762,699 2,337
Personal services - benefits 352,100 344,364 1 347,991 - 347,991 (3,627)
Other expenditure
s
54,700 62,901 1,3 62,876 - 62,876 25
Total Life Safet
y
1,164,100 1,172,301 1,173,566 - 1,173,566 (1,265)
Total Fire 17,176,200 17,266,783 17,207,249 - 17,207,249 59,534
Police
Administration and Investigation
Personal services - salaries 14,199,300 14,690,288 1,3,4 14,714,305 - 14,714,305 (24,017)
Personal services - benefits 6,269,400 6,119,033 1,3 6,152,081 - 6,152,081 (33,048)
Other expenditure
s
1,434,700 1,361,682 1,3,4 1,296,910 210 1,297,120 64,562
Capital Outla
y
- - 9,999 - 9,999 (9,999)
Total Administration and
Investigation 21,903,400 22,171,003 22,173,295 210 22,173,505 (2,502)
Police Special Accounts
Other expenditure
s
- 267,446 2,3 85,263 - 85,263 182,183
Total Police 21,903,400 22,438,449 22,258,558 210 22,258,768 179,681
Public Works and Utilities
Public Works Director's Office
Personal services - salaries 42,100 72,887 1 74,076 - 74,076 (1,189)
Personal services - benefits 11,000 26,587 1 25,686 - 25,686 901
Other expenditure
s
800 800 862 - 862 (62)
Total Public Works Director's
Office 53,900 100,274 100,624 - 100,624 (350)
Street Maintenance
Personal services - salaries 2,697,300 2,741,744 1 2,778,266 - 2,778,266 (36,522)
Personal services - benefits 1,270,700 1,179,882 1 1,123,937 - 1,123,937 55,945
Other expenditure
s
3,555,600 3,569,727 2 3,374,358 - 3,374,358 195,369
Total Street Maintenance 7,523,600 7,491,353 7,276,561 - 7,276,561 214,792
(continued)
119
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES AND ENCUMBRANCES -
BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Budget Actual
Favorable
Original Modified Note Expended Encumbered Totals (Unfavorable)
Public Works and Utilities (continued)
Engineering
Personal services - salaries 1,234,100 1,256,271 1 1,301,238 - 1,301,238 (44,967)
Personal services - benefits 470,300 448,129 1 462,737 - 462,737 (14,608)
Other expenditure
s
150,000 150,000 98,374 8,485 106,859 43,141
Total Engineering 1,854,400 1,854,400 1,862,349 8,485 1,870,834 (16,434)
Total Public Works and Utilities 9,431,900 9,446,027 9,239,534 8,485 9,248,019 198,008
Transfers and Other Functions:
Business improvement district 300,000 378,500 4 378,233 - 378,233 267
Public access television 182,000 182,000 182,000 - 182,000 -
State sales tax administration 120,000 120,000 103,346 - 103,346 16,654
Capital program 895,500 2,375,677 1,2,3 1,000,677 1,375,000 2,375,677 -
Benefits administration 100,000 111,100 1 78,684 - 78,684 32,416
Retiree insurance 7,399,100 7,622,304 4 7,615,562 - 7,615,562 6,742
Self-insurance 1,200,000 1,200,000 1,200,000 - 1,200,000 -
PERA contribution - 419,103 3 419,103 - 419,103 -
Transfers and accruals 500,000 395,000 1 31,425 - 31,425 363,575
Other functions 589,200 679,188 1,2 528,587 7,722 536,309 142,879
Total Transfers and Other
Functions 11,285,800 13,482,872 11,537,617 1,382,722 12,920,339 562,533
Total Expenditures and
Encumbrances 85,949,400$ 89,009,163$ 85,877,497$ 1,486,770$ 87,364,267$ 1,644,896$
Reconciliation:
Original budget as approved b
y
Duluth City Council 85,949,400$
Adjustments made in accordance with
Budget Ordinance
Note 1
- Departmental transfers made in accordance with budget ordinance.
Note 2
1,627,821 Encumbrance, contract, reserve, or designation carryovers from prior year.
Note 3
953,864 Grants, gifts, and donations in accordance with budget ordinance.
Note 4
478,078 Other allowable additions made in accordance with budget ordinance.
3,059,763
Modified budget as reported above 89,009,163$
120
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES/TRANSFERS OUT
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Personal Personal
Services Services Othe
r
Capital Total
Salaries Benefits Expenditures Outla
y
Transfers Actual
General Government:
Legislative and Executiv
e
City Council 124,200$ 9,532$ 52,197$ -$ -$ 185,929$
Mayor's Office 308,768 119,569 17,105 - - 445,442
Chief Administrative Officer 262,565 110,696 7,643 - - 380,904
Attorney and Human Rights 1,597,121 537,719 73,452 - - 2,208,292
Total Legislative and Executiv
e
2,292,654 777,516 150,397 - - 3,220,567
Public Administration
Human Resources 717,270 303,509 52,663 - - 1,073,442
Information Technology 1,569,159 632,217 839,975 - - 3,041,351
Clerk 528,209 189,705 54,594 - - 772,508
Facilities Management 1,480,958 650,354 2,218,490 - - 4,349,802
Other Functions 31,425 818,018 2,381,097 - 193,728 3,424,268
Total Public Administration 4,327,021 2,593,803 5,546,819 - 193,728 12,661,371
Finance
Budget 294,210 121,840 3,162 - - 419,212
Auditor 736,391 319,087 285,045 - - 1,340,523
Purchasing 141,281 79,454 2,253 - - 222,988
Treasurer 403,510 186,481 10,558 - - 600,549
Total Finance 1,575,392 706,862 301,018 - - 2,583,272
Benefits
Flexible Benefits - 78,684 - - - 78,684
Retiree Insurance - 7,615,562 - - - 7,615,562
PERA Contribution - 78,625 - - - 78,625
Total Benefits - 7,772,871 - - - 7,772,871
Total General Governmen
t
8,195,067 11,851,052 5,998,234 - 193,728 26,238,081
Public Safety:
Fire
Administration 346,975 129,434 57,444 - - 533,853
Operations 10,584,628 4,341,320 573,882 - - 15,499,830
Life Safety 762,699 347,991 62,876 - - 1,173,566
Total Fire 11,694,302 4,818,745 694,202 - - 17,207,249
Police
Administration and Investigation 14,714,305 6,152,081 1,296,910 9,999 - 22,173,295
Police Special Accounts - - 85,263 - - 85,263
Total Police 14,714,305 6,152,081 1,382,173 9,999 - 22,258,558
Benefits
PERA Contribution - 219,213 - - - 219,213
Total Public Safet
y
26,408,607 11,190,039 2,076,375 9,999 - 39,685,020
(continued)
121
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES/TRANSFERS OUT
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2018
Personal Personal
Services Services Othe
r
Capital Total
Salaries Benefits Expenditures Outla
y
Transfers Actual
Public Works:
Public Administration
Park Maintenance 1,542,952 592,044 854,447 - - 2,989,443
Public Works
Public Works Director Office 74,076 25,686 862 - - 100,624
Street Maintenance 2,778,266 1,123,937 3,374,358 - - 7,276,561
Engineering 1,301,238 462,737 98,374 - - 1,862,349
Total Public Works 4,153,580 1,612,360 3,473,594 - - 9,239,534
Benefits
PERA Contribution - 54,678 - - - 54,678
Total Public Works 5,696,532 2,259,082 4,328,041 - - 12,283,655
Culture and Recreation:
Public Administration
Library Services 2,754,961 1,049,097 688,345 - - 4,492,403
Benefits
PERA Contribution - 33,072 - - - 33,072
Total Culture and Recreation 2,754,961 1,082,169 688,345 - - 4,525,475
Urban and Economic Development:
Planning and Construction Services
Planning and Development 509,069 201,014 63,173 - - 773,256
Construction Services and Inspection 1,098,489 454,384 153,489 - - 1,706,362
Total Planning and Construction
Services 1,607,558 655,398 216,662
- - 2,479,618
Business and Community Developmen
t
Business and Community Developmen
t
455,814 162,459 13,860 - - 632,133
Total Business and Community
Development 455,814 162,459 13,860 - - 632,133
Benefits
PERA Contribution - 33,515 - - - 33,515
Total Urban and Economic Development 2,063,372 851,372 230,522 - - 3,145,266
Total Expenditures/Transfers Out 45,118,539$ 27,233,714$ 13,321,517$ 9,999$ 193,728$ 85,877,497$
122
P r o p r i e t a r y F u n d s
CITY OF DULUTH, MINNESOTA
NONMAJOR PROPRIETARY FUNDS
DECEMBER 31, 2018
ENTERPRISE FUNDS
Enterprise funds account for operations that are financed and managed in a manner similar to private business
enterprises– where the intent of the governing body is that the costs (including depreciation expense) of providing
goods or services to the general public on a continuing basis be financed or recovered through user charges.
Golf – to account for the operations of Enger Park and Lester Park, the City's two municipal 27-hole golf courses.
Parking – to account for the operation and maintenance of municipal parking ramps, municipal lots, and parking
meters.
Stormwater – to account for the operation and maintenance of the storm water sewer collection system.
Street Lighting – to account for the operation, maintenance and improvement of the City's street lighting and traffic
signal systems.
INTERNAL SERVICE FUNDS
Internal Service Funds account for the financing of goods or services provided by one department to other
departments or authorities of the City, or to other governmental units, on a cost reimbursement basis.
Self-Insurance – to account for the payment of sundry insurance premiums and loss control activities, as well as the
settlement of various claims, judgments and lawsuits against the City.
Group Health – to account for the collection of premiums and the payment of dental and health care costs for
employees of the City and various outside agencies.
Employee Vacation Compensation – to account for the funding and liability for governmental funds compensated
absences and associated benefits.
Fleet Services – to account for the costs associated with the maintenance and operation of the City's fleet of vehicles
and equipment, including fuel usage, and to charge such costs back to the various City departments which own and
use these assets.
123
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF NET POSITION
NONMAJOR ENTERPRISE FUNDS
DECEMBER 31, 2018
Golf Parking Stormwater
Street
Lighting
Total
Nonmajor
Enterprise
Funds
Assets
Current assets
Cash and cash equivalents
-$ 3,816,478$ 1,509,374$ 1,742,627$ 7,068,479$
Receivables, ne
t
Accounts
821 108,395 519,192 168,699 797,107
Assessments
- - 25,369 - 25,369
Due from other funds
- - 5,456 - 5,456
Due from other governments
- - - 26,544 26,544
Inventories
28,791 - 107,871 - 136,662
Prepaids
3,600 - 1,240,819 - 1,244,419
Total current assets
33,212 3,924,873 3,408,081 1,937,870 9,304,036
Noncurrent assets
Capital assets, net
1,449,363 19,028,775 17,873,785 2,826,122 41,178,045
Total noncurrent assets
1,449,363 19,028,775 17,873,785 2,826,122 41,178,045
Total Assets
1,482,575 22,953,648 21,281,866 4,763,992 50,482,081
Deferred Outflows of Resources
Deferred loss from debt refunding
- 366,705 - - 366,705
Deferred pension obligation outflow
s
- 45,127 253,518 68,015 366,660
Deferred OPEB outflows
- - 256,905 - 256,905
Total Deferred Outflows of Resources
- 411,832 510,423 68,015 990,270
Liabilities
Current liabilities
Accounts payable
19,244 23,094 88,880 69,653 200,871
Contracts payable
- 9,934 189,946 34,487 234,367
Due to other funds
- 2,867 8,526 1,527 12,920
Interfund loan payabl
e
813,113 - - - 813,113
Due to other governments
203 100 843 - 1,146
Accrued interest payable
- 65,744 6,278 - 72,022
Accrued salaries payable
- 11,030 40,012 9,256 60,298
Compensated absences
- 30,833 112,099 14,894 157,826
Unearned revenu
e
56,980 9,007 11,574 2,594 80,155
Deposits
31,453 - - - 31,453
Revenue bonds payabl
e
- 810,000 130,000 - 940,000
Total current liabilities
920,993 962,609 588,158 132,411 2,604,171
Noncurrent liabilities
Loans payable
62,485 - - - 62,485
Interfund loan payabl
e
1,550,000 - - - 1,550,000
Pension liability
- 213,149 1,197,432 321,254 1,731,835
Revenue bonds payabl
e
- 6,184,249 440,153 - 6,624,402
Total noncurrent liabilities
1,612,485 6,397,398 1,637,585 321,254 9,968,722
Total Liabilities
2,533,478 7,360,007 2,225,743 453,665 12,572,893
Deferred Inflows of Resources
Deferred pension obligation inflow
s
- 68,174 382,987 102,750 553,911
Net Position
Net investment in capital assets
1,386,878 12,401,231 17,303,632 2,826,122 33,917,863
Unrestricted
(2,437,781) 3,536,068 1,879,927 1,449,470 4,427,684
Total Net Position
(1,050,903)$ 15,937,299$ 19,183,559$ 4,275,592$ 38,345,547$
124
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Golf Parking Stormwater
Street
Lighting
Total
Nonmajor
Enterprise
Funds
Operating Revenues
Sales
512,783$ -$ -$ -$ 512,783$
Charges for services
1,179,033 2,835,602 5,245,031 1,381,476 10,641,142
Fines and forfeits
- 744,676 - - 744,676
Miscellaneous revenues
553 162,020 40,764 47,442 250,779
Total Operating Revenues
1,692,369 3,742,298 5,285,795 1,428,918 12,149,380
Operating Expenses
Cost of sales and services
238,408 - - - 238,408
Personal services
- 517,341 2,031,300 550,580 3,099,221
Supplies
- 47,973 229,749 136,194 413,916
Utilities
- 154,893 24,264 670,451 849,608
Other services and charges
1,520,407 1,488,134 703,766 322,813 4,035,120
Depreciation
94,342 560,433 414,418 229,667 1,298,860
Total Operating Expenses
1,853,157 2,768,774 3,403,497 1,909,705 9,935,133
Operating Income (Loss)
(160,788) 973,524 1,882,298 (480,787) 2,214,247
Nonoperating Revenues (Expenses)
Property taxes
-
- - 751,231 751,231
Investment income
- 1,411 (4,817) 3,083 (323)
Interest and fiscal fees
- (211,408) (9,291) - (220,699)
Total Nonoperating Revenues (Expenses) - (209,997) (14,108) 754,314 530,209
Income (Loss) Before Contributions and
Transfers
(160,788)
763,527 1,868,190 273,527 2,744,456
Capital contributions
- 406,214 - - 406,214
Transfers in
- - 5,600 26,588 32,188
Transfers out
- (1,386,300) (528,070) (37,250) (1,951,620)
Change in Net Position
(160,788) (216,559) 1,345,720 262,865 1,231,238
Total Net Position - January 1, 2018, as
restated (Note 1)
(890,115) 16,153,858 17,837,839 4,012,727 37,114,309
Total Net Position - December 31, 201
8
(1,050,903)$ 15,937,299$ 19,183,559$ 4,275,592$ 38,345,547$
125
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Total
Nonmajor
Street Enterprise
Golf Parking Stormwater Lighting Funds
Cash Flows from Operating Activities
Cash received from customers 1,704,559$ 3,643,314$ 5,272,638$ 1,400,156$ 12,020,667$
Cash paid to suppliers (1,765,417) (1,723,907) (940,474) (1,177,146) (5,606,944)
Cash paid to employees - (570,743) (2,188,453) (539,687) (3,298,883)
Other operating revenues - 162,020 28,557 32,733 223,310
Net cash provided (used) by operating activities (60,858) 1,510,684 2,172,268 (283,944) 3,338,150
Cash Flows from Noncapital Financing Activities
Transfers from other funds - - 5,600 26,588 32,188
Transfers to other funds - (1,386,300) (528,070) (37,250) (1,951,620)
Property taxes - - - 749,710 749,710
Interfund financing 110,862 - - - 110,862
Net cash provided (used) by noncapital financing
activities 110,862 (1,386,300) (522,470) 739,048 (1,058,860)
Cash Flows from Capital and Related
Financing Activities
Capital grants and contributions - 406,214 - - 406,214
Principal paid on bonds, notes and capitalized
leases - (795,000) (241,548) - (1,036,548)
Interest paid on bonds, notes and capitalized
leases (50,004) (167,592) (18,304) - (235,900)
Acquisition or construction of capital assets - (122,536) (764,785) (1,091,640) (1,978,961)
Net cash provided (used) by capital
and related financing activities (50,004) (678,914) (1,024,637) (1,091,640) (2,845,195)
Cash Flows from Investing Activities
Investment earnings -
1,411 (4,817) 3,083 (323)
Net increase (decrease) in cash and cash
equivalents - (553,119) 620,344 (633,453) (566,228)
Cash and cash equivalents - January 1, 2018 - 4,369,597 889,030 2,376,080 7,634,707
Cash and cash equivalents - December 31, 2018 -$ 3,816,478$ 1,509,374$ 1,742,627$ 7,068,479$
Reconciliation of operating income to net cash
provided (used) by operating activities:
Net operating income (loss) (160,788)$
973,524$ 1,882,298$ (480,787)$ 2,214,247$
Adjustments to reconcile net operating income(loss)
to net cash provided (used) by operating activities:
Depreciation 94,342 560,433 414,418 229,667 1,298,860
Change in assets and liabilities:
Decrease (increase) in receivables (751) 54,029 30,074 8,555 91,907
Decrease (increase) in inventories 3,968 - (20,308) - (16,340)
Decrease (increase) in prepaids (767) - 248,187 - 247,420
Decrease (increase) in deferred pension obligation
outflows - 101,632 467,485 98,258 667,375
Decrease (increase) in OPEB outflows - - (256,905) - (256,905)
Increase (decrease) in payables (9,803) (17,338) 47,645 (51,563) (31,059)
Increase (decrease) in unearned revenues 12,941 9,007 (787) (58) 21,103
Increase (decrease) in deferred pension obligation
inflows - (54,253) (218,481) (35,956) (308,690)
Increase (decrease) in pension liability - (116,350) (421,358) (52,060) (589,768)
Total adjustments 99,930 537,160 289,970 196,843 1,123,903
Net cash provided (used) by operating activities
(60,858)$ 1,510,684$ 2,172,268$ (283,944)$ 3,338,150$
126
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF NET POSITION
GOVERNMENTAL ACTIVITIES - INTERNAL SERVICE FUNDS
DECEMBER 31, 2018
Self-Insurance Group Health
Employee
Vacation
Compensation Fleet Services
Total
Governmental
Activities -
Internal
Service Funds
Assets
Current assets
Cash and cash equivalents
2,147,364$ -$ 2,962,390$ -$ 5,109,754$
Restricted cash and cash equivalents
Restricted assets held by trustee
- 6,747,253 - - 6,747,253
Receivables, net
Accounts
- 84,065 - 66 84,131
Due from other funds
- - 47,483 325,292 372,775
Due from component units
7,000 - - - 7,000
Inventories
- - - 175,283 175,283
Prepaids
50,000 - - - 50,000
Total current assets
2,204,364 6,831,318 3,009,873 500,641 12,546,196
Noncurrent assets
Capital assets, net
- - - 262,576 262,576
Total noncurrent assets
- - - 262,576 262,576
Total Assets
2,204,364 6,831,318 3,009,873 763,217 12,808,772
Deferred Outflows of Resources
Deferred pension obligation outflows
15,250 - - 175,571 190,821
Liabilities
Current liabilities
Accounts payable
4,220
2,285 - 128,305 134,810
Contracts payable
11,908 - - 166 12,074
Claims payable
206,569 1,688,890 - - 1,895,459
Due to other funds
- - 13,911 29,781 43,692
Interfund loan payable
-
14,438 - 480,250 494,688
Due to other governments
23,074 - - - 23,074
Accrued salaries payable
2,392 - - 28,993 31,385
Compensated absences
4,942 - 3,016,588 88,599 3,110,129
Total current liabilities
253,105 1,705,613 3,030,499 756,094 5,745,311
Noncurrent liabilities
Claims payable
963,207 - - - 963,207
Pension liability
72,032 - - 829,266 901,298
Total noncurrent liabilities
1,035,239 - - 829,266 1,864,505
Total Liabilities
1,288,344 1,705,613 3,030,499 1,585,360 7,609,816
Deferred Inflows of Resources
Deferred pension obligation inflows
23,039 - - 265,233 288,272
Net Position
Net investment in capital assets
-
- - 262,576 262,576
Restricted for health insurance trust
- 5,125,705 - - 5,125,705
Unrestricted
908,231 - (20,626) (1,174,381) (286,776)
Total Net Position
908,231$ 5,125,705$ (20,626)$ (911,805)$ 5,101,505$
127
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
GOVERNMENTAL ACTIVITIES - INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Self-Insurance Group Health
Employee
Vacation
Compensation Fleet Services
Total
Governmental
Activities -
Internal
Service Funds
Operating Revenues
Sales
-$ -$ -$ 2,085,914$ 2,085,914$
Charges for services
1,565,120 15,685,339 3,244,212 1,962,768 22,457,439
Miscellaneous revenues
416,107 637,803 - 1,675 1,055,585
Total Operating Revenues
1,981,227 16,323,142 3,244,212 4,050,357 25,598,938
Operating Expenses
Cost of sales and services
- - - 1,965,134 1,965,134
Personal services
591,165 - 3,244,212 1,543,756 5,379,133
Supplies
4,259 - - 38,281 42,540
Utilities
- - - 34,437 34,437
Other services and charges
976,067 1,570,275 - 384,918 2,931,260
Depreciation
- - - 64,934 64,934
Medical and insurance
679,975 15,302,336 - - 15,982,311
Total Operating Expenses
2,251,466 16,872,611 3,244,212 4,031,460 26,399,749
Operating Income (Loss)
(270,239) (549,469) - 18,897 (800,811)
Nonoperating Revenues (Expenses)
Investment income
1,511
118,191 (1,410) - 118,292
Intergovernmental revenue
- - - 5,835 5,835
Total Nonoperating Revenues (Expenses) 1,511 118,191 (1,410) 5,835 124,127
Change in Net Position
(268,728) (431,278) (1,410) 24,732 (676,684)
Total Net Position - January 1, 2018
1,176,959 5,556,983 (19,216) (936,537)
5,778,189
Total Net Position - December 31, 201
8
908,231$ 5,125,705$ (20,626)$ (911,805)$ 5,101,505$
128
CITY OF DULUTH, MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
GOVERNMENTAL ACTIVITIES - INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Total
Governmental
Activities -
Employee Internal
Self- Group Vacation Fleet Service
Insurance Health Compensation Services Funds
Cash Flows from Operating Activities
Cash received from customers 1,974,227$ 16,329,697$ 3,173,881$ 4,018,041$ 25,495,846$
Cash paid to suppliers (1,591,787) (16,649,472) - (2,343,485) (20,584,744)
Cash paid to employees (589,919) - (3,210,641) (1,578,769) (5,379,329)
Other operating revenues - - - 1,675 1,675
Net cash provided (used) by operating activities (207,479) (319,775) (36,760) 97,462 (466,552)
Cash Flows from Noncapital Financing Activities
Operating grants - - - 5,835 5,835
Interfund financing - (1,542) - (86,447) (87,989)
Net cash provided (used) by noncapital financing activities - (1,542) - (80,612) (82,154)
Cash Flows from Capital and
Related Financing Activities
Acquisition or construction of capital assets - - - (16,850) (16,850)
Net cash provided (used) by capital
and related financing activities - - - (16,850) (16,850)
Cash Flows from Investing Activities
Investment earnings 1,511 118,191 (1,410) - 118,292
Net increase (decrease) in cash and cash equivalents (205,968) (203,126) (38,170) - (447,264)
Cash and cash equivalents - January 1, 2018 2,353,332 6,950,379 3,000,560 - 12,304,271
Cash and cash equivalents - December 31, 2018 2,147,364$ 6,747,253$ 2,962,390$ -$ 11,857,007$
Reconciliation of operating income to net cash
provided (used) by operating activities:
Net operating income (loss) (270,239)$ (549,469)$ -$ 18,897$
(800,811)$
Adjustments to reconcile net operating income(loss)
to net cash provided (used) by operating activities:
Depreciation - - - 64,934 64,934
Change in assets and liabilities:
Decrease (increase) in receivables (7,000) 6,555 (47,483) (60,421) (108,349)
Decrease (increase) in inventories - - - 95,314 95,314
Decrease
(
increase
)
in deferred pension obli
g
ation outflows 22,994 - - 288,276 311,270
Increase (decrease) in payables 69,463 223,139 10,723 24,338 327,663
Increase (decrease) in deferred pension obligation inflows (8,864) - - (121,714) (130,578)
Increase (decrease) in pension liability (13,833) - - (212,162) (225,995)
Total adjustments 62,760 229,694 (36,760) 78,565 334,259
Net cash provided (used) by operating activities (207,479)$ (319,775)$ (36,760)$ 97,462$ (466,552)$
129
F i d u c i a r y F u n d s
CITY OF DULUTH, MINNESOTA
FIDUCIARY FUNDS
AGENCY FUNDS
DECEMBER 31, 2018
AGENCY FUNDS
Agency Funds account for assets held by the City as an agent for private organizations and another governmental
unit.
Duluth 1200 Fund – to account for monies received from various sources for the establishment of a venture capital
fund managed by an independent non-profit corporation.
130
CITY OF DULUTH, MINNESOTA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Balance Balance
01/01/18 Additions Deductions 12/31/18
DULUTH 1200 FUND
Assets
Cash and cash equivalents 2,753,166$ 252,466$ 307,107$ 2,698,525$
Loans receivable 243,584 256,458 169,553 330,489
Total Assets 2,996,750$ 508,924$ 476,660$ 3,029,014$
Liabilities
Accounts payable 1,568$ 269,501$ 270,149$ 920$
Due to agency 2,995,182 83,587 50,675 3,028,094
Total Liabilties 2,996,750$ 353,088$ 320,824$ 3,029,014$
131
S u p p l e m e n t a r y
I n f o r m a t i o n
CITY OF DULUTH, MINNESOTA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY SOURCE*
DECEMBER 31, 2018
Governmental Funds Capital Assets:
Land and land improvements 22,859,321$
Buildings 88,294,093
Equipment 38,967,180
Infrastructure 353,294,680
Construction in Progress 27,755,450
Total Governmental Funds Capital Assets 531,170,724$
Investments in Governmental Funds Capital Assets:
General fund 10,223,286$
Special revenue fund 30,272,020
Capital projects fund 488,683,438
Donations 1,991,980
Total Governmental Funds Capital Assets 531,170,724$
* This schedule presents only the capital asset balances related to governmental funds.
A
ccordingly, the
capital assets reported in internal service funds are excluded from the above amounts. Generally, the
capital assets of internal service funds are included as governmental activities in the statement of net
position.
132
CITY OF DULUTH, MINNESOTA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY*
DECEMBER 31, 2018
Land and
Land Construction
Improvements Buildings Equipment Infrastructure in Progress Total
Function and Activit
y
General Government
Legislative and Executive -$ -$ 6,319$ -$ -$ 6,319$
Public Administration - - 487,215 - - 487,215
Management Information Systems - - 3,910,055 - - 3,910,055
Facilities Management 1,636,325 15,948,728 1,901,671 14,390,994 6,873,772 40,751,490
Finance - - 346,748 - - 346,748
Total General Government 1,636,325 15,948,728 6,652,008 14,390,994 6,873,772 45,501,827
Public Safety
Fire 83,006 3,114,984 11,417,743 - - 14,615,733
Police 2,000 16,627,233 4,922,342 562,251 - 22,113,826
Total Public Safety 85,006 19,742,217 16,340,085 562,251 - 36,729,559
Public Works
Street Construction - - - 329,058,049 13,853,618 342,911,667
Maintenance Operations 54,434 1,258,642 14,130,858 60,403 - 15,504,337
Engineering 5,145,615 2,278,447 266,084 3,553,552 - 11,243,698
Total Public Works 5,200,049 3,537,089 14,396,942 332,672,004 13,853,618 369,659,702
Culture and Recreation
Libraries 51,585 7,545,987 154,982 -
- 7,752,554
Parks and Recreation 12,839,443 40,423,042 880,382 5,669,431 7,028,060 66,840,358
Total Culture and Recreation 12,891,028 47,969,029 1,035,364 5,669,431 7,028,060 74,592,912
Urban and Economic Development
Planning and Construction
Services 3,046,913 1,097,030 542,781 - - 4,686,724
Total Governmental Funds
Capital Assets 22,859,321$ 88,294,093$
38,967,180$ 353,294,680$ 27,755,450$ 531,170,724$
* This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal
service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental
activities in the statement of net position.
133
CITY OF DULUTH, MINNESOTA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY*
FOR THE YEAR ENDED DECEMBER 31, 2018
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
01/01/18 Additions Deductions 12/31/18
Function and Activit
y
General Government
Legislative and Executive 6,319$ -$ -$ 6,319$
Public Administration 508,647 - 21,432 487,215
Management Information Systems 3,901,116 8,939 - 3,910,055
Facilities Management 37,130,482 7,528,393 3,907,385 40,751,490
Finance 325,708 21,040 - 346,748
Total General Government 41,872,272 7,558,372 3,928,817 45,501,827
Public Safet
y
Fire 14,415,760 221,562 21,589 14,615,733
Police 22,324,486 273,632 484,292 22,113,826
Total Public Safety 36,740,246 495,194 505,881 36,729,559
Public Works
Street Construction 332,800,013 13,410,297 3,298,643 342,911,667
Maintenance Operations 14,741,850 1,367,516 605,029 15,504,337
Engineering 7,292,665 3,951,033 - 11,243,698
Total Public Works 354,834,528 18,728,846 3,903,672 369,659,702
Culture and Recreation
Libraries 7,752,554 - - 7,752,554
Parks and Recreation 62,899,871 4,757,578 817,091 66,840,358
Total Culture and Recreation 70,652,425 4,757,578 817,091 74,592,912
Urban and Economic Development
Planning and Construction Services 4,660,563 47,154 20,993 4,686,724
Total Governmental Funds Capital Assets 508,760,034$ 31,587,144$ 9,176,454$ 531,170,724$
* This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets
reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal
service funds are included as governmental activities in the statement of net position.
134
CITY OF DULUTH, MINNESOTA
SCHEDULE OF BONDS AND CERTIFICATES PAYABLE
FOR THE YEAR DECEMBER 31, 2018
Issue Issue Final Jan 1
Amount Date Maturity Balance
Governmental Activities:
General Obligation Bonds Payable
General Obligation
Airpark Improvement 945,000$ 9/1/2004 2/1/2020 245,000$
Aerial Lift Bridge Improvement 1,475,000 8/7/2008 2/1/2019 335,000
Duluth Entertainment and Convention Center Improvement 40,635,000 8/7/2008 2/1/2034 805,000
Capital Improvement 1,600,000 12/9/2008 2/1/2018 210,000
Capital Improvement 7,085,000 12/17/2009 2/1/2020 2,540,000
Capital Improvement - Law Enforcement Center 11,905,000 12/17/2009 2/1/2032 11,905,000
Capital Improvement 2,175,000 11/23/2010 2/1/2021 940,000
Capital Improvement 1,870,000 11/29/2011 2/1/2022 1,005,000
Airport Improvement 7,650,000 5/24/2012 2/1/2028 5,850,000
Airport Improvement 3,400,000 12/18/2013 2/1/2029 3,180,000
Capital Improvement 1,795,000 12/18/2013 2/1/2024 1,305,000
Capital Improvement - Lakewalk 1,460,000 12/18/2013 2/1/2029 1,220,000
Wade Stadium Improvement 2,330,000 10/30/2014 2/1/2030 2,095,000
Spirit Mountain Improvement 2,150,000 10/30/2014 2/1/2035 1,995,000
Capital Improvement 1,115,000 10/30/2014 2/1/2025 915,000
Capital Improvement 1,615,000 11/5/2015 2/1/2026 1,475,000
Airport Improvement 2,855,000 11/5/2015 2/1/2031 2,725,000
Capital Improvement - 1/2 & 1/2 13,520,000 11/5/2015 2/1/2032 11,720,000
Duluth Entertainment and Convention Center Improvement
Refundin
g
33,470,000 3/22/2016 2/1/2034 33,470,000
Capital Improvement 1,135,000 11/9/2016 2/1/2027 1,135,000
Capital Improvement 1,545,000 11/21/2017 2/1/2028 1,545,000
Capital Improvement - Seawall 4,450,000 2/14/2018 2/1/2034 -
Capital Improvement 1,310,000 9/27/2018 2/1/2029 -
Total General Obligation 86,615,000$
General Obligation - Tax Abatement
Spirit Mountain Tax Abatement Bonds 7,055,000$ 2/23/2012 2/1/2030 5,615,000$
GO Tax Abatement (Cirrus) 7,820,000 3/22/2016 2/1/2032 7,820,000
Total General Obligation - Tax Abatement 13,435,000$
Total General Obligation Bonds Payable 100,050,000$
Special Assessment Debt with Government Commitment
General Obligation Improvement 1,985,000$ 9/7/2006 2/1/2021 700,000$
General Obligation Improvement Refunding 1,205,000 11/23/2010 2/1/2019 275,425
General Obligation Improvement Refunding 1,135,000 11/23/2010 2/1/2019 259,575
Street Improvement Refunding 6,905,000 11/27/2012 2/1/2021 3,265,000
General Obligation Improvement Refunding 865,000 10/30/2014 2/1/2020 535,000
Street Improvement Refunding 2,630,000 11/5/2015 2/1/2023 2,285,000
Total Special Assessment Debt with Government
Commitment 7,320,000$
General Obligation Certificates Payable
Equipment 3,275,000$ 11/27/2012 2/1/2018 695,000$
Equipment 3,835,000 12/18/2013 2/1/2019 1,585,000
Equipment 2,460,000 10/30/2014 2/1/2020 1,505,000
Equipment 3,325,000 11/5/2015 2/1/2021 2,705,000
Equipment 3,565,000 11/9/2016 2/1/2022 3,565,000
Equipment 3,615,000 11/21/2017 2/1/2023 3,615,000
Equipment 3,885,000 9/27/2018 2/1/2024 -
Total General Obligation Certificates Payable 13,670,000$
Total Governmental Activities Bonds and Certificates
Payable 121,040,000$
(continued)
135
CITY OF DULUTH, MINNESOTA
SCHEDULE OF BONDS AND CERTIFICATES PAYABLE
FOR THE YEAR DECEMBER 31, 2018
Dec 31 Principal Interest
Issued Retired Balance Due in 2019 Due in 2019
Governmental Activities:
General Obligation Bonds Payable
General Obligation
Airpark Improvement -$ 80,000$ 165,000$ 80,000$ 5,230$
Aerial Lift Bridge Improvement - 165,000 170,000 170,000 3,655
Duluth Entertainment and Convention Center Improvement - 805,000 - - -
Capital Improvement - 210,000 - - -
Capital Improvement - 880,000 1,660,000 905,000 48,300
Capital Improvement - Law Enforcement Center - - 11,905,000 - 682,282
Capital Improvement - 225,000 715,000 230,000 18,000
Capital Improvement - 190,000 815,000 195,000 21,525
Airport Improvement - 470,000 5,380,000 485,000 136,731
Airport Improvement - 225,000 2,955,000 225,000 108,259
Capital Improvement - 170,000 1,135,000 175,000 31,425
Capital Improvement - Lakewalk - 85,000 1,135,000 85,000 39,987
Wade Stadium Improvement - 135,000 1,960,000 140,000 61,725
Spirit Mountain Improvement - 90,000 1,905,000 90,000 54,500
Capital Improvement - 105,000 810,000 110,000 16,462
Capital Improvement - 150,000 1,325,000 155,000 26,919
Airport Improvement -
160,000 2,565,000 165,000 79,863
Capital Improvement - 1/2 & 1/2 - 645,000 11,075,000 655,000 351,770
Duluth Entertainment and Convention Center Improvement
Refunding
- - 33,470,000 840,000 1,473,700
Capital Improvement - 100,000 1,035,000 100,000 39,400
Capital Improvement -
- 1,545,000 125,000 44,475
Capital Improvement - Seawall 4,450,000 - 4,450,000 225,000 130,125
Capital Improvement 1,310,000 - 1,310,000 - 51,672
Total General Obligation 5,760,000$ 4,890,000$ 87,485,000$ 5,155,000$ 3,426,005$
General Obligation - Tax Abatement
Spirit Mountain Tax Abatement Bonds -$ 380,000$ 5,235,000$ 385,000$ 127,669$
GO Tax Abatement (Cirrus) - 450,000 7,370,000 450,000 187,525
Total General Obligation - Tax Abatement -$ 830,000$ 12,605,000$ 835,000$ 315,194$
Total General Obligation Bonds Payable 5,760,000$ 5,720,000$ 100,090,000$ 5,990,000$ 3,741,199$
Special Assessment Debt with Government Commitment
General Obligation Improvement -$ 165,000$ 535,000$ 170,000$ 18,000$
General Obligation Improvement Refunding - 182,825 92,600 92,600 1,112
General Obligation Improvement Refunding - 172,175 87,400 87,400 1,048
Street Improvement Refunding - 1,075,000 2,190,000 1,110,000 49,050
General Obligation Improvement Refunding - 175,000 360,000 180,000 5,175
Street Improvement Refunding - 385,000 1,900,000 400,000 68,000
Total Special Assessment Debt with Government
Commitment -$ 2,155,000$ 5,165,000$ 2,040,000$ 142,385$
General Obligation Certificates Payable
Equipment -$ 695,000$ -$ -$ -$
Equipment - 785,000 800,000 800,000 8,000
Equipment - 495,000 1,010,000 500,000 14,575
Equipment - 650,000 2,055,000 665,000 51,675
Equipment - 635,000 2,930,000 690,000 103,400
Equipment - - 3,615,000 660,000 113,300
Equipment 3,885,000 - 3,885,000 - 117,978
Total General Obligation Certificates Payable 3,885,000$ 3,260,000$ 14,295,000$ 3,315,000$ 408,928$
Total Governmental Activities Bonds and Certificates
Payable 9,645,000$ 11,135,000$ 119,550,000$ 11,345,000$ 4,292,512$
(continued)
136
CITY OF DULUTH, MINNESOTA
SCHEDULE OF BONDS AND CERTIFICATES PAYABLE
FOR THE YEAR DECEMBER 31, 2018
Issue Issue Final Jan 1
Amount Date Maturity Balance
Business-type Activities:
Revenue and General Obligation Bonds Payable
Parking Fund
Parking Improvement Tax Increment Refunding 10,270,000$ 11/27/2012 2/1/2026 7,780,000$
Priley Drive Parking Facility
Parking Improvement Tax Increment (Note 1) 11,500,000$ 5/15/2014 4/1/2044 12,522,008$
Water Fund
Water Utility Revenue and General Obligation 196,000$ 2/19/2009 2/1/2024 103,000$
Water Utility Revenue and General Obligation Refunding 1,625,000 11/23/2010 2/1/2018 250,851
Water Utility Revenue and General Obligation Refunding 515,000 11/5/2015 2/1/2022 435,000
Water Utility Revenue and General Obligation 4,050,000 9/27/2018 2/1/2034 -
Total Water Fund 788,851$
Gas Fund
Gas Utility Revenue and General Obligation Refunding 3,125,000$ 11/29/2011 2/1/2019 985,000$
Steam Fund
Steam Utility Revenue and General Obligation Refunding 5,475,000$ 11/27/2012 2/1/2022 2,980,000$
Steam Utility Revenue and General Obligation 4,015,000 11/5/2015 2/1/2027 4,015,000
Total Steam Fund 6,995,000$
Sewer Fund
Sewer Utility Revenue and General Obligation 1,444,000$ 2/19/2009 2/1/2024 757,000$
Sewer Utility Revenue and General Obligation 905,000 12/17/2009 2/1/2025 540,000
Sewer Utility Revenue and General Obligation Refunding 2,025,000 11/23/2010 2/1/2018 312,599
Sewer Utility Revenue and General Obligation Refunding 2,265,000 11/29/2011 2/1/2020 1,005,000
Sewer Utility Revenue and General Obligation Refunding 2,000,000 11/27/2012 2/1/2020 1,185,000
Sewer Utility Revenue and General Obligation Refunding 1,110,000 11/5/2015 2/1/2023 970,000
Sewer Utility Revenue and General Obligation Refunding 350,000 11/5/2015 2/1/2022 295,000
Total Sewer Fund 5,064,599$
Stormwater Fund
Stormwater Utility Revenue and General Obligation
Refunding 755,000$ 11/23/2010 2/1/2018 116,549$
Stormwater Utility Revenue and General Obligation
Refunding 790,000 11/5/2015 2/1/2022 675,000
Total Stormwater Fund 791,549$
Total Business-type Activities Bonds Payable 34,927,007$
(
continued
)
Note 1: Issue amount does not include capitalized interest of $1,020,017
137
CITY OF DULUTH, MINNESOTA
SCHEDULE OF BONDS AND CERTIFICATES PAYABLE
FOR THE YEAR DECEMBER 31, 2018
Dec 31 Principal Interest
Issued Retired Balance Due in 2019 Due in 2019
Business-type Activities:
Revenue and General Obligation Bonds Payable
Parking Fund
Parking Improvement Tax Increment Refunding -$ 795,000$ 6,985,000$ 810,000$ 151,069$
Priley Drive Parking Facility
Parking Improvement Tax Increment -$ 74,533$ 12,447,475$ 300,541$ 494,682$
Water Fund
Water Utility Revenue and General Obligation -$ 13,000$ 90,000$ 14,000$ 3,103$
Water Utility Revenue and General Obligation Refunding - 250,851 - - -
Water Utility Revenue and General Obligation Refunding - 85,000 350,000 85,000 8,800
Water Utility Revenue and General Obligation 4,050,000 - 4,050,000 - 98,404
Total Water Fund 4,050,000$ 348,851$ 4,490,000$ 99,000$ 110,307$
Gas Fund
Gas Utility Revenue and General Obligation Refunding -$ 480,000$ 505,000$ 505,000$ 10,100$
Steam Fund
Steam Utility Revenue and General Obligation Refunding -$ 650,000$ 2,330,000$ 655,000$ 38,625$
Steam Utility Revenue and General Obligation - - 4,015,000 - 122,388
Total Steam Fund -$ 650,000$ 6,345,000$ 655,000$ 161,013$
Sewer Fund
Sewer Utility Revenue and General Obligation -$ 97,000$ 660,000$ 101,000$ 22,772$
Sewer Utility Revenue and General Obligation - 60,000 480,000 60,000 18,000
Sewer Utility Revenue and General Obligation Refunding - 312,599 - - -
Sewer Utility Revenue and General Obligation Refunding - 325,000 680,000 335,000 15,375
Sewer Utility Revenue and General Obligation Refunding
- 290,000 895,000 290,000 15,000
Sewer Utility Revenue and General Obligation Refunding - 150,000 820,000 155,000 21,500
Sewer Utility Revenue and General Obligation Refunding - 55,000 240,000 60,000 6,000
Total Sewer Fund -$ 1,289,599$ 3,775,000$ 1,001,000$ 98,647$
Stormwater Fund
Stormwater Utility Revenue and General Obligation
Refunding -$ 116,549$ -$ -$ -$
Stormwater Utility Revenue and General Obligation
Refunding - 125,000 550,000 130,000 13,900
Total Stormwater Fund -$ 241,549$ 550,000$ 130,000$ 13,900$
Total Business-type Activities Bonds Payable 4,050,000$ 3,879,532$ 35,097,475$ 3,500,541$ 1,039,718$
138
CITY OF DULUTH, MINNESOTA
SCHEDULE OF NOTES PAYABLE
DECEMBER 31, 2018
Issue Issue Final Jan. 1
Amount Date Maturity Balance
Governmental Activities:
General Obligation
Public Facilities Authority Note 364,195$ 8/8/2002 8/20/2018 27,000$
Revenue Note
U.S. Dept. of Housing and Urban Development 7,876,000$ 8/1/2005 8/1/2025 2,646,000$
Total Governmental Activities 2,673,000$
Business-type Activities:
General Obligation
Water Fund -
Public Facilities Authority Note 870,000$ 8/25/2003 8/20/2018 70,856$
Public Facilities Authority Note 1,971,532 7/23/2004 8/20/2018 158,000
Public Facilities Authority Note 1,668,813 10/28/2009 8/20/2019 346,000
Public Facilities Authority Note 1,293,200 7/28/2010 8/20/2025 709,000
Public Facilities Authority Note 3,344,131 12/7/2010 8/20/2025 1,902,000
Public Facilities Authority Note 1,221,631 11/18/2011 8/20/2026 731,000
Public Facilities Authority Note 4,778,806 2/25/2014 8/20/2029 3,731,000
Total Water Fund 7,647,856$
Sewer Fund -
Public Facilities Authority Note 100,000$ 8/25/2003 8/20/2018 8,144$
Public Facilities Authority Note 1,179,115 12/12/2003 8/20/2018 93,000
Public Facilities Authority Note 1,973,033 7/12/2007 8/20/2022 766,000
Public Facilities Authority Note 796,835 8/20/2009 8/20/2024 409,000
Public Facilities Authority Note 2,414,150 11/25/2009 8/20/2024 1,278,000
Public Facilities Authority Note 3,753,059 7/28/2010 8/20/2025 2,090,000
Public Facilities Authority Note 8,504,224 7/28/2010 8/20/2025 4,663,000
Public Facilities Authority Note 279,117 11/18/2011 8/20/2021 108,000
Public Facilities Authority Note 265,418 11/30/2011 8/20/2021 113,000
Public Facilities Authority Note 278,149 11/18/2011 8/20/2021 121,000
Public Facilities Authority Note 476,537 9/10/2012 8/20/2022 239,000
Public Facilities Authority Note 860,847 10/29/2014 8/20/2024 512,383
Total Sewer Fund 10,400,527$
Total Business-type Activities 18,048,383$
Component Unit:
Duluth Airport Authority
Revenue Note 497,379$ 11/1/2005 6/1/2019 103,232$
(continued)
139
CITY OF DULUTH, MINNESOTA
SCHEDULE OF NOTES PAYABLE
DECEMBER 31, 2018
Dec 31 Principal Interest
Issued Retired Balance Due in 2019 Due in 2019
Governmental Activities:
General Obligation
Public Facilities Authority Note -$ 27,000$ -$ -$ -$
Revenue Note
U.S. Dept. of Housing and Urban Development -$ 10,000$ 2,636,000$ 15,000$ 151,151$
Total Governmental Activities -$ 37,000$ 2,636,000$ 15,000$ 151,151$
Business-type Activities:
General Obligation
Water Fund -
Public Facilities Authority Note -$ 70,856$ -$ -$ -$
Public Facilities Authority Note - 158,000 - - -
Public Facilities Authority Note - 172,000 174,000 174,000 1,874
Public Facilities Authority Note - 85,000 624,000 86,000 7,850
Public Facilities Authority Note - 229,000 1,673,000 231,000 18,001
Public Facilities Authority Note - 77,000 654,000 78,000 7,986
Public Facilities Authority Note - 294,000 3,437,000 297,000 34,370
Total Water Fund -$ 1,085,856$ 6,562,000$ 866,000$ 70,081$
Sewer Fund -
Public Facilities Authority Note -$ 8,144$ -$ -$ -$
Public Facilities Authority Note - 93,000 - - -
Public Facilities Authority Note - 150,000 616,000 151,000 7,084
Public Facilities Authority Note - 55,000 354,000 56,000 6,970
Public Facilities Authority Note -
172,000 1,106,000 175,000 22,308
Public Facilities Authority Note - 250,000 1,840,000 253,000 23,147
Public Facilities Authority Note - 558,000 4,105,000 565,000 51,641
Public Facilities Authority Note - 26,000 82,000 27,000 820
Public Facilities Authority Note - 28,000 85,000 28,000 850
Public Facilities Authority Note - 30,000 91,000 30,000 910
Public Facilities Authority Note - 47,000 192,000 47,000 1,920
Public Facilities Authority Note - 71,383 441,000 72,000 4,410
Total Sewer Fund -$ 1,488,527$ 8,912,000$ 1,404,000$ 120,060$
Total Business-type Activities -$ 2,574,383$ 15,474,000$ 2,270,000$ 190,141$
Component Unit:
Duluth Airport Authority
Revenue Note -$ 67,321$ 35,911$ 35,911$ 1,589$
140
CITY OF DULUTH, MINNESOTA
BALANCE SHEET
DULUTH ECONOMIC DEVELOPMENT AUTHORITY
COMPONENT UNIT - GOVERNMENTAL FUNDS
DECEMBER 31, 2018
General Loan Debt Capital
Operating Programs Service Projects Total
Assets
Cash and cash equivalents 3,303,119$ 101,581$ 820,142$ 2,031,226$ 6,256,068$
Taxes receivable, net - - 9,278 - 9,278
Accounts receivable, net 30,164 - - - 30,164
Loans receivable, net 728,103 3,633,230 - 3,711,325 8,072,658
Due from other funds 222,166 - - 727,782 949,948
Capital assets held for resale 192,500 - - - 192,500
Total Assets 4,476,052$ 3,734,811$ 829,420$ 6,470,333$ 15,510,616$
Liabilities
Accounts payable 90,142$ -$ 63,048$ 154$ 153,344$
Contracts payable 62,234 - - - 62,234
Due to other funds - - 727,782 222,166 949,948
Due to primary government 629,000 - - 8,417 637,417
Due to other governments 10,404 - 21,833 - 32,237
Total Liabilities 791,780 - 812,663 230,737 1,835,180
Deferred Inflows of Resource
s
Unavailable revenue 728,103 3,633,230 9,278 3,711,325 8,081,936
Fund Balances
Nonspendable 192,500 - - - 192,500
Restricted - - 7,479 2,528,271 2,535,750
Assigned - 101,581 - - 101,581
Unassigned 2,763,669 - - - 2,763,669
Total Fund Balances 2,956,169 101,581 7,479 2,528,271 5,593,500
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances 4,476,052$ 3,734,811$ 829,420$ 6,470,333$
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources, and therefore
are not reported in the funds. 13,599,039
Other long-term assets are not available to pay for current-period expenditures, and therefore
are deferred in the funds. 7,694,529
Other assets that are not available to pay for current period expenditures, and therefore
are not reported in the funds. 219
Net position of governmental activities 26,887,287$
141
CITY OF DULUTH, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURS, AND CHANGES IN FUND BALANCES
DULUTH ECONOMIC DEVELOPMENT AUTHORITY
COMPONENT UNIT - GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
General Loan Debt Capital
Operating Programs Service Projects Total
Revenues
Taxes
Tax increments -$ -$ 2,770,948$ -$ 2,770,948$
Intergovernmental revenues
State of Minnesota grants 1,743,764 - - - 1,743,764
Charges for services
Parking meters 586,470 - - - 586,470
Building rent 460,160 - - - 460,160
Other 1,684,685 - - - 1,684,685
Miscellaneous revenues
Earnings on investments 12,504 1,485 9,246 32,787 56,022
Interest - 4,362 - - 4,362
Other 335,869 18,528 - - 354,397
Total Revenues 4,823,452 24,375 2,780,194 32,787 7,660,808
Expenditures
Current
Urban and economic development
Other services and charges - - - 27,450 27,450
Economic development projects 2,899,940 - 430,993 50,000 3,380,933
Capital outlay
Urban and economic development
Land 124,241 - - - 124,241
Debt service
Principal retirement - - 453,477 - 453,477
Interest and fiscal fees - - 1,161,476 - 1,161,476
Total Expenditures 3,024,181 - 2,045,946 77,450
5,147,577
Excess of Revenues Over (Under) Expenditures 1,799,271 24,375 734,248 (44,663) 2,513,231
Other Financing Sources (Uses)
Transfers in
DEDA Capital Projects 108,806 - - - 108,806
DEDA Debt Service - - - 735,389 735,389
Total Transfers In 108,806 - - 735,389 844,195
Transfers out
DEDA General Operating - - - (108,806) (108,806)
DEDA Capital Projects - - (735,389) - (735,389)
Total Transfers Out - - (735,389) (108,806) (844,195)
Total Other Financing Sources (Uses) 108,806 - (735,389) 626,583 -
Excess of Revenues and Other Sources Over
(Under) Expenditures and Other Uses 1,908,077 24,375 (1,141) 581,920 2,513,231
Fund Balances
Fund Balance - January 1, 2018, as restated
(see Note 1) 1,048,092 77,206 8,620 1,946,351 3,080,269
Fund Balance - December 31, 2018 2,956,169$ 101,581$ 7,479$ 2,528,271$ 5,593,500$
142
CITY OF DULUTH, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
DULUTH ECONOMIC DEVELOPMENT AUTHORITY
COMPONENT UNITS - GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Net change in fund balances - total governmental funds 2,513,231$
Amounts reported for governmental activities in the statement of
activities are different because:
Government funds report capital outlays as expenditures. However, in
the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense. This is the amount
by which depreciation exceeded capital outlays in the current period. (872,238)
In the statement of activities, only the gain on the sale of property
is reported, whereas in the governmental funds, the proceeds from
the sale increase financial resources. Thus, the change in net assets
differs from the change in fund balance by the cost of the land sold. (437,907)
Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds. Also,
some revenues provide current financial resources to governmental
funds but do not have any effect on net position. This amount is the net
effect of these differences. (24,011)
Change in net position of governmental activities 1,179,075$
143
DULUTH JPE TRUST
STATEMENT OF FIDUCIARY NET POSITION
DECEMBER 31, 2018
Health Dental JPE
Fund Fund Trust Total
Assets
Investments:
Money market 1,514,447$ 84,349$ 1,598,796$
US government treasury securities 3,651,374 199,598 3,850,972
US government agency securities 1,247,316 50,169 1,297,485
Receivables:
Other 70,414 13,651 84,065
Total assets 6,483,551$ 347,767$ 6,831,318$
Liabilities
Claims payable 1,596,944$ 91,946$ 1,688,890$
Accounts payable 16,723 - 16,723
Total liabilities 1,613,667$ 91,946$ 1,705,613$
Net Position
Held in trust 4,869,884$ 255,821$ 5,125,705$
144
DULUTH JPE TRUST
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2018
Health Dental JPE
Fund Fund Trust Total
Additions
Health premiums:
Active employees 16,024,662$ -$ 16,024,662$
Inactive employees 9,669,851 - 9,669,851
Dental premiums - 892,265 892,265
Refunds and reimbursements:
Prescription drug rebates 384,932 - 384,932
Flexible benefit forfeitures - - -
Health Partners shared savings 252,871 - 252,871
Investment earnings 112,963 5,228 118,191
Total additions 26,445,279 897,493 27,342,772
Deductions
Medical and drug claims:
Active employees 14,071,591 - 14,071,591
Inactive employees 7,334,815 - 7,334,815
Medical insurance - medicare supplement 3,972,163 - 3,972,163
Dental claims - 825,206 825,206
Administrative fees:
Health Partners 802,784 - 802,784
Delta Dental - 61,333 61,333
City of Duluth 360,500 - 360,500
Trust services 19,379 899 20,278
Consulting services 93,882 - 93,882
Wellness activities 25,955 - 25,955
Patient centered outcomes research fee 3,864 - 3,864
Stop loss insurance 198,680 - 198,680
Miscellaneous 2,999 - 2,999
Total deductions 26,886,612 887,438 27,774,050
Change in Net Position (441,333) 10,055 (431,278)
Net Position - January 1, 2018 5,311,217 245,766 5,556,983
Net Position - December 31, 2018 4,869,884$ 255,821$ 5,125,705$
145
CITY OF DULUTH, MINNESOTA
SCHEDULE OF INTERGOVERNMENTAL REVENUE
FOR THE YEAR ENDED DECEMBER 31, 2018
Special Debt Capital Proprietary and
General Revenue Service Projects Internal Service
Fund Funds Funds Funds Funds Totals
Shared Revenue:
State of Minnesota
Local Government Aid 29,645,975$ -$ -$ -$ -$ 29,645,975$
PERA Aid 124,428 - - - 54,402 178,830
PERA Contribution 419,103 - - - - 419,103
Insurance Premium 2,039,452 - - - - 2,039,452
Total Shared Revenue 32,228,958 - - - 54,402 32,283,360
State Grants:
State of Minnesota, Department of
Education
Minnesota Librar
y
Information Network 4,661 - - - - 4,661
Emplo
y
ment and Economic Development
Dislocated Workers - 98,228 - - - 98,228
Re
g
ional Industr
y
Sector Grant - 40,000 - - - 40,000
Women's Economic Securit
y
Act - 28,602 - - - 28,602
Workforce Housin
g
Development Pro
g
ram - 120,000 - - - 120,000
Workforce Housin
g
Grant Pro
g
ram - 30,001 - - - 30,001
Youth Pro
g
ram - 255,802 - - - 255,802
Employment and Economic
Development Total - 572,633 - - - 572,633
Labor and Industr
y
Safet
y
Grant Pro
j
ect 5,000 9,000 - - - 14,000
Natural Resources
Conservation Partners Legacy
Grant Program
- 380,000 - 254,567 - 634,567
Cross Countr
y
Ski Trail 11,000 - - - - 11,000
Lake Superior Zoo - 160,000 - - - 160,000
Minnesota Flood Relief 2012 - 357,483 - - - 357,483
Parks Le
g
ac
y
Grant - 183,107 - - - 183,107
Re
g
ional Trail Pro
g
ram - - - 196,890 - 196,890
Snowmobile Trail 14,662 - - - - 14,662
Natural Resources Total 25,662 1,080,590 - 451,457 - 1,557,709
Peace Officers Board
Post Trainin
g
Reimbursement 134,938 - - - - 134,938
Public Safet
y
Bulletproof Vests 16,143 - - - - 16,143
Communit
y
Justice Reinvestment Grant - 93,545 - - - 93,545
Crime Victim Services Prosecutorial 2018 - 6,307 - - - 6,307
Financial Crimes Task Force - 7,402 - - - 7,402
Firefi
g
hter Education Reimbursement - 32,015 - - - 32,015
HAZMAT Re
g
ional Response Team - 448,657 - - - 448,657
MN Anti-Heroin Task Force Pro
g
ram - 25,822 - - - 25,822
State of Minnesota Disaster Funds - 54,458 - - - 54,458
Violent Crime Enforcement Team - 410,000 - - - 410,000
Public Safet
y
Total 16,143 1,078,206 - - - 1,094,349
(
continued
)
146
CITY OF DULUTH, MINNESOTA
SCHEDULE OF INTERGOVERNMENTAL REVENUE
FOR THE YEAR ENDED DECEMBER 31, 2018
Special Debt Capital Proprietary and
General Revenue Service Projects Internal Service
Fund Funds Funds Funds Funds Totals
Pollution Control A
g
enc
y
Minnesota Slip Dock Wall Reconstruction
and SS William Irvin Removal - - - 1,940,094 - 1,940,094
Revenue
Market Value Credit 230 - - - - 230
Transportation
MSA Street Construction Allotment - - - 6,768,755 - 6,768,755
MSA Street Maintenance Allotment 1,533,400 - - - - 1,533,400
Transportation Total 1,533,400 - - 6,768,755 - 8,302,155
Total State Grants 1,720,034 2,740,429 - 9,160,306 - 13,620,769
Other Grants:
St. Louis Count
y
Job Trainin
g
Services - 943,380 - - - 943,380
Other 138,411 - - 49,803 - 188,214
St. Louis Count
y
Total 138,411 943,380 - 49,803 - 1,131,594
Duluth Seawa
y
Port Authorit
y
- - - 68,985 - 68,985
Duluth Transit Authorit
y
- 101,329 - - - 101,329
Housin
g
and Redevelopment Authorit
y
66,012 315,770 - - - 381,782
Independent School District #709 261,820 - - - - 261,820
Total Other Grants 466,243 1,360,479 - 118,788 - 1,945,510
Federal Grants:
Federal, Department of
Ag
riculture
Coo
p
erative Forestr
y
Assistance
- 1,745 - - - 1,745
Forest Health Protection
- 65,000 - - - 65,000
Urban and Community Forestry
Program
- 8,402 - - - 8,402
Agriculture Total - 75,147 - - - 75,147
Commerce
Coastal Zone Mana
g
ement Grant - 100,000 - 81,275 - 181,275
Corporation for National and Communit
y
Service
Social Innovation Fund - 18,579 - - - 18,579
Education
Rehabilitation Services Vocational
Rehabilitation Grants to States - 7,665 - - - 7,665
Environmental Protection A
g
enc
y
Brownfields Assessment and
Cleanup Cooperative - 97,737 - - - 97,737
Great Lakes Pro
g
ram - 144,898 - - - 144,898
Environmental Protection Agency Total - 242,635 - - - 242,635
Homeland Securit
y
A
ssistance to Firefi
g
hters Grant - 40,870 - - - 40,870
Emergency Management Performance
Grants - 16,258 - - - 16,258
FEMA Disaster Assistance - 988 - - - 988
Port Securit
y
Grant Pro
g
ram - 139,661 - - - 139,661
Operation Stone
g
arden Grant Pro
g
ram - 34,242 - - - 34,242
Homeland Securit
y
Total - 232,019 - - - 232,019
(
continued
)
147
CITY OF DULUTH, MINNESOTA
SCHEDULE OF INTERGOVERNMENTAL REVENUE
FOR THE YEAR ENDED DECEMBER 31, 2018
Special Debt Capital Proprietary and
General Revenue Service Projects Internal Service
Fund Funds Funds Funds Funds Totals
Housin
g
and Urban Development
Communit
y
Development Block Grant - 2,162,508 - - - 2,162,508
Emer
g
enc
y
Solutions Grant Pro
g
ram - 266,686 - - - 266,686
Home Investment Partnerships Pro
g
ram - 581,139 - - - 581,139
Lead-Based Paint Hazard Control
Grant Pro
g
ram - 152,337 - - - 152,337
Housin
g
and Urban Development Total - 3,162,670 - - - 3,162,670
Justice
ATF (Alcohol Tobacco Firearms)
Task Force 20,617 - - - - 20,617
Bulletproof Vest Partnership Pro
g
ram 17,637 - - - - 17,637
Crime Victim Services Prosecutorial 2018 - 34,772 - - - 34,772
Edward Br
y
ne Memorial Formula Grant - 18,615 - - - 18,615
Grants to Encoura
g
e Arrest Policies - 112,617 - - - 112,617
National Sexual Assault Kit Initiative - 581,532 - - - 581,532
Justice Total 38,254 747,536 - - - 785,790
Labor
WIA Dislocated Workers Formula Grant - 87,468 - - - 87,468
Senior Communit
y
Service Emplo
y
ment - 426,068 - - - 426,068
Temporar
y
Assistance to Need
y
Families - 937 - - - 937
Workforce Investment Act - 581,557 - - - 581,557
Labor Total - 1,096,030 - - - 1,096,030
Transportation
Hi
g
hwa
y
Plannin
g
and Construction - - - 2,293,655 - 2,293,655
Interagency Hazardous Materials
Public Sector - 18,066 - - - 18,066
NHTSA: DWI Officers - 105,904 - - - 105,904
Recreational Trails Pro
g
ram - - - 392,648 - 392,648
Toward Zero Deaths Law
Enforcement Grant - 246,729 - - - 246,729
Transportation Total - 370,699 - 2,686,303 - 3,057,002
Total Federal Grants 38,254 6,052,980 - 2,767,578 - 8,858,812
Other Federal:
Treasur
y
Build America Interest Rebate - - 223,038 - - 223,038
Total Intergovernmental Revenue 34,453,489$ 10,153,888$ 223,038$ 12,046,672$ 54,402$ 56,931,489$
148
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Federal Grantor Federal
Pass-Through Agency Pass-Through CFDA Passed Through
Grant Program Title Grant Numbers Number to Subrecipients
U.S. Department of Agriculture
Direct
Cooperative Forestry Assistance 10.664 $ 1,745 $ -
Passed Through Minnesota Department of Natural Resources
Urban and Community Forestry Program 140175 10.675 14,492 -
Passed Through Minnesota Department of Agriculture
Forest Health Protection JPA-133100 10.680 65,000 -
Total U.S. Department of Agriculture $ 81,237 $ -
U.S. Department of Commerce
Passed Through Minnesota Department of Natural Resources
Coastal Zone Management Administration Awards 16-306A 11.419 $ 107,819 $ -
U.S. Department of Housing and Urban Development
Direct
CDBG - Entitlement Grants Cluster
Community Development Block
Grants/Entitlement Grants 14.218 $ 2,042,424 $ 1,417,390
(Total expenditures for CDBG - Entitlement Grants Cluster $2,042,424)
Emergency Solutions Grant Program 14.231 269,014 240,837
Home Investment Partnerships Program 14.239 520,035 484,020
Lead-Based Paint Hazard Control in
Privately-Owned Housing 14.900 104,713 104,713
Total U.S. Department of Housing and Urban Development $ 2,936,186 $ 2,246,960
U.S. Department of Justice
Direct
Grants to Encourage Arrest Policies and Enforcement
of Protection Orders Program 16.590 $ 112,617 $ -
Bulletproof Vest Partnership Program 16.607 18,584 -
Edward Byrne Memorial Justice Assistance
Grant Program 16.738 18,615 -
National Sexual Assault Kit Initiative 16.833 587,136 -
Comprehensive Opioid Abuse Site-Based Program 16.838 2,444 -
Passed Through ATF Northern Minnesota Task Force
Alcohol, Tobacco, and Firearms -
Training Assistance 18-STP-238-AFF 16.012 20,617 -
Passed through the Minnesota Department of Public Safety
Crime Victim Assistance A-CVSP-2018-DULUTHAO-00031 16.575 34,772 -
Total U.S. Department of Justice $ 794,785 $ -
U.S. Department of Labor
Passed Through Senior Service America, Inc.
Senior Community Service Employment Program 116 17.235 $ 312,008$ -
(Total Senior Community Service Employment Program 17.235 $426,088)
Passed Through Minnesota Department of Employment and
Economic Development
Senior Community Service Employment Program 8045100 17.235 57,932 -
Senior Community Service Employment Program 9045100 17.235 56,148 -
(Total Senior Community Service Employment Program 17.235 $426,088)
Workforce Investment Act (WIA) Cluster
WIA/WIOA Adult Program 6043100 17.258 5,794 -
WIA/WIOA Adult Program 7043100 17.258 180,827 -
WIA/WIOA Adult Program 8043100 17.258 15,694 -
Total CFDA # 17.258 202,315 -
(continued
)
The notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.
Expenditures
149
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Federal Grantor Federal
Pass-Through Agency Pass-Through CFDA Passed Through
Grant Program Title Grant Numbers Number to SubrecipientsExpenditures
(U.S. Department of Labor)
WIA/WIOA Youth Activities 6043600 17.259 781 -
WIA/WIOA Youth Activities 6043601 17.259 2,561 -
WIA/WIOA Youth Activities 7043600 17.259 225,309 -
WIA/WIOA Youth Activities 8043600 17.259 150,697 -
Total CFDA # 17.259 379,348 -
WIOA National Dislocated Worker Grants/WIA
National Emergency Grants 5047200 17.277 15,734
WIA/WIOA Dislocated Worker Formula Grants 6048000 17.278 2,008 -
WIA/WIOA Dislocated Worker Formula Grants 6048001 17.278 1,561 -
WIA/WIOA Dislocated Worker Formula Grants 7048000 17.278 62,226 -
WIA/WIOA Dislocated Worker Formula Grants 8048000 17.278 5,962 -
Total CFDA # 17.278 71,757 -
Passed Through Minnesota Workforce Council Association
WIA/WIOA Dislocated Worker Formula Grants 7025302 17.278 8,271 -
(Total expenditures for Workforce Investment Act (WIA) Cluster $661,691)
Total U.S. Department of Labor
$
1,103,513
$
-
U.S. Department of Transportation
Passed Through Minnesota Department of Transportation
Highway Planning and Construction Cluster
Highway Planning and Construction 99887 20.205 $ 793,506 $ -
Highway Planning and Construction 1029940 20.205 1,653,635 -
Highway Planning and Construction 118-090-023 20.205 48,362 -
Total CFDA # 20.205 2,495,503 -
Passed Through Minnesota Department of Natural Resources
Highway Planning and Construction Cluster
Recreational Trails Program TRAL022 20.219 219,336 -
Recreational Trails Program TRAL023 20.219 111,748 -
Total CFDA # 20.219 331,084 -
(Total expenditures for Highway Planning and Construction Cluster $2,826,587)
Passed Through Minnesota Department of Public Safety
Highway Safety Cluster
State and Community Highway Safety A-ENFRC18-2018-DULUTHPD-001 20.600 25,820 -
State and Community Highway Safety A-ENFRC19-2019-DULUTHPD-037 20.600 951 -
Total CFDA # 20.600 26,771 -
Minimum Penalties for Repeat Offenders for Driving
While Intoxicated A-ENFRC18-2018-DULUTHPD-001 20.608 147,926 -
Minimum Penalties for Repeat Offenders for Driving
While Intoxicated A-ENFRC-19-2019-DULUTHPD-037 20.608 48,608 -
Minimum Penalties for Repeat Offenders for Driving
While Intoxicated A-OFFICR18-2018-DULUTHPD-002 20.608 17,873 -
Minimum Penalties for Repeat Offenders for Driving
While Intoxicated A-OFFICR19-2019-DULUTHPD-003 20.608 53,082 -
Total CFDA # 20.608 267,489 -
Highway Safety Cluster
National Priority Safety Programs A-ENFRC18-2018-DULUTHPD-001 20.616 23,423 -
National Priority Safety Programs A-OFFICR18-2018-DULUTHPD-002 20.616 8,803 -
National Priority Safety Programs A-OFFICR19-2019-DULUTHPD-003 20.616 26,145 -
Total CFDA # 20.616 58,371 -
(Total expenditures for Highway Safety Cluster $85,142)
Passed through Minnesota Department of Homeland
Security and Emergency Management
Interagency Hazardous Materials Public Sector
Training and Planning Grants A-HMEP-2017-DULUTHFD-012 20.703 18,066 -
Total U.S. Department of Transportation $ 3,197,284 $ -
(continued)
The notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.
150
CITY OF DULUTH, MINNESOTA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Federal Grantor Federal
Pass-Through Agency Pass-Through CFDA Passed Through
Grant Program Title Grant Numbers Number to SubrecipientsExpenditures
U.S. Department of the Treasury
Direct
Equitable Sharing 21.016 $ 423,309 $ -
U.S. Environmental Protection Agency
Direct
Great Lakes Program 66.469 $ 144,898 $ -
Brownfields Assessment and Cleanup Cooperative
Agreements 66.818 103,288 -
Total U.S. Environmental Protection Agency $ 248,186 $ -
U.S. Department of Education
Passed through Minnesota Department of Employment and
Economic Development
Rehabilitation Services Vocational Rehabilitation
Grants to States
7047300 84.126 $ 7,665 $ -
Corporation for National and Community Service
Passed Through SOAR Career Solutions
Social Innovation Fund 15SIHMN001 94.019 $ 13,634 $ -
U.S. Department of Homeland Security
Direct
Assistance to Firefighters Grant 97.044 $ 40,870 $ -
Port Security Grant Program 97.056 142,379 -
Passed Through Minnesota Department of Public Safety
Disaster Grants - Public Assistance
(Presidentially Declared Disasters) FEMA-4069-DR-MN 97.036 (4,156) -
Disaster Grants - Public Assistance
(Presidentially Declared Disasters) FEMA-4414-DR-MN 97.036 165,539 -
Total CFDA # 97.036 161,383
Emergency Management Performance Grants A-EMPG-2017-DULUTHCI-00022 97.042 13,042 -
Passed Through St. Louis County
Homeland Security Grant Program A-OPSG-2016-STLOUICO-007 97.067 34,242 -
Total U.S. Department of Homeland Security $ 391,916 $ -
Total Federal Awards $ 9,305,53
4
$ 2,246,960
The notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule
.
151
CITY OF DULUTH, MINNESOTA
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2018
1. Reporting Entity
2. Basis of Presentation
3. Summary of Significant Accounting Policies
4. Reconciliation to Schedule of Intergovernmental Revenues
Federal grant revenue per Schedule of Intergovernmental Revenues 8,858,812$
Expenditures of Revolving Loan Fund
Community Development Block Grant
s
79,739
Expenditures of Equitable Sharing Fund
s
423,309
Grants received more than 45 days after year-end, unavailable in 2018
Urban and Community Forestry Progra
m
6,091
Brownfields Assessment and Cleanup Cooperative Agreements 5,551
Bulletproof Vest Partnership Program 3,494
Community Development Block Grant
s
157,102
Disaster Grants - Public Assistanc
e
1,927,353
Emergency Solutions Grant Progra
m
8,994
Highway Planning and Constructio
n
368,896
Home Investment Partnerships Progra
m
7,597
Recreational Trails Program 19,101
Senior Community Service Employment Progra
m
18
WIA/WIOA Dislocated Worker Formula Grant 8,288
WIOA Adult Program 1,081
WIOA National Dislocated Worker Grants/WIA National
Emergency Grant
s
6
WIOA Youth Program 7
Unavailable in 2017, recognized as revenue in 2018
Coastal Zone Management Administration Awards (73,456)
Community Development Block Grant
s
(356,844)
Disaster Grants - Public Assistanc
e
(1,766,958)
Emergency Solutions Grant Progra
m
(6,664)
Highway Planning and Construction (165,529)
Home Investment Partnerships Progra
m
(68,702)
Lead-Based Paint Hazard Control in Privately-Owned Housing (41,387)
Local Law Enforcement Block Grant Progra
m
(13,722)
Recreational Trails Program (80,664)
Social Innovative Fund (4,945)
Expenditures reported on the schedule are reported on the modified accrual basis of accounting. Such expenditures are
recognized following. as applicable, either the cost principles contained in OMB Circular A-87, Cost Principles for State,
Local and Indian Tribe Governments , or the cost principles contained in the Uniform Guidance, wherein certain types of
expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the schedule represent
adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The
City has elected not to use the 10% de minimus indirect cost rate allowed under the Uniform Guidance.
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City under
programs of the federal government for the year ended December 31, 2018. The information in this schedule is
presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) .
Because the schedule presents only a selected portion of the operations of the City, it is not intended to, and does not
present the financial position, changes in net position, or cash flows of the City.
The Schedule of Expenditures of Federal Awards presents the activities of federal award programs expended by the City
of Duluth. It does not include $8,737,558 and $11,912,328 in federal awards expended by the Duluth Airport Authority
and Duluth Transit Authority, respectively, component units of the City, which had a separate single audits. The City's
reporting entity is defined in Note 1 to the financial statements.
152
CITY OF DULUTH, MINNESOTA
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2018
Temporary Assistance for Needy Families (937)
WIOA Adult Program (384)
WIOA Youth Program (598)
Timing Differences Between Expenditures and Related Reimbursements 10,885
Expenditures Per Schedule of Expenditures of Federal Awards
9,305,534$
153
STATISTICAL
SECTION
Financial Trends - Pages 155-161
Revenue Capacity - Pages 163-165
Debt Capacity - Pages 166-169
Demographic and Economic Information - Page 171
Operating Information - Pages 172-177
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.
These schedules offer demographic and economic indicators to help the reader understand
the environment within which the government's financial activities take place.
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.
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial
reports for the relevant year.
STATISTICAL SECTION
This part of the City of Duluth's comprehensive annual 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.
Guide to Statistical Section
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.
These schedules contain information to help the reader assess the government's most
significant local revenue source, the property tax.
154
CITY OF DULUTH, MINNESOTA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2009
2010 2011 2012 2013
Governmental activities
Net investment in capital assets 202,558,996$ 197,355,610$ 213,619,166$ 209,484,876$ 210,631,129$
Restricted 23,345,567 22,294,675 43,113,335 36,781,284 40,778,013
Unrestricted * 53,057,668
9,970,184 (22,596,696) (21,202,511) (27,519,849)
Total governmental activities net position 278,962,231$ 229,620,469$ 234,135,805$ 225,063,649$ 223,889,293$
Business-type activities
Net investment in capital assets 117,943,713$ 136,180,485$ 150,333,747$ 158,415,070$ 168,290,764$
Restricted 2,088,446 2,108,171 1,998,139 1,864,068 1,877,950
Unrestricted * 24,767,225
22,771,757 21,865,404 24,618,744 26,878,191
Total business-type activities net position 144,799,384$ 161,060,413$ 174,197,290$ 184,897,882$ 197,046,905$
Primary government
Net investment in capital assets 320,502,709 333,536,095 363,952,913 367,899,946 378,921,893
Restricted 25,434,013 24,402,846 45,111,474 38,645,352 42,655,963
Unrestricted * 77,824,893
32,741,941 (731,292) 3,416,233 (641,658)
Total primary government net position 423,761,615$ 390,680,882$ 408,333,095$ 409,961,531$ 420,936,198$
Fiscal Year
2014
2015 2016 2017 2018
Governmental activities
Net investment in capital assets 235,177,972$ 242,346,774$ 242,875,012$ 245,733,061$ 249,612,707$
Restricted 46,063,716 43,143,639 45,703,757 46,203,035 42,919,978
Unrestricted * (45,926,755)
(100,062,238) (113,329,374) (117,374,039) (181,539,392)
Total governmental activities net position 235,314,933$ 185,428,175$ 175,249,395$ 174,562,057$ 110,993,293$
Business-type activities
Net investment in capital assets 182,656,056$ 204,789,234$ 218,517,664$ 227,778,536$ 240,473,773$
Restricted 2,881,659 2,892,969 2,072,379 2,119,974 2,114,827
Unrestricted * 28,779,936
14,843,438 11,153,671 13,766,078 11,262,947
Total business-type activities net position 214,317,651$ 222,525,641$ 231,743,714$ 243,664,588$ 253,851,547$
Primary government
Net investment in capital assets 417,834,028 447,136,008 461,392,676 473,511,597 490,086,480
Restricted 48,945,375 46,036,608 47,776,136 48,323,009 45,034,805
Unrestricted * (17,146,819)
(85,218,800) (102,175,703) (103,607,961) (170,276,445)
Total primary government net position 449,632,584$ 407,953,816$ 406,993,109$ 418,226,645$ 364,844,840$
* Implemented GASB Statement No. 68 January 1, 2015 which required restatement of Unrestricted Net Position.
Source: Statement of Net Position Unaudited
155
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2009
2010 2011 2012 2013
Expenses
Governmental activities:
General government 35,376,090$ 36,014,153$ 38,577,305$ 40,761,298$ 24,455,977$
Public safety 36,397,795 38,100,958 37,895,850 38,190,780 39,860,955
Public works 7,616,214 13,657,626 9,040,308 12,320,891 26,286,454
Culture and recreation 24,655,278 25,434,289 7,986,366 15,125,570 11,872,741
Urban and economic development 15,722,245 14,549,117 15,446,838 13,275,120 14,922,283
Interest 5,175,178
5,409,679 4,692,654 4,907,447 4,535,639
Total governmental activities expenses 124,942,800 133,165,822 113,639,321 124,581,106 121,934,049
Business-type activities:
Water 10,717,468 10,810,875 11,218,488 10,243,435 11,015,475
Gas 38,462,243 35,800,001 36,217,536 30,351,746 35,174,140
Sewer 17,569,046 16,259,669 17,291,803 18,216,008 17,882,780
Stormwater 3,308,604 3,333,875 3,474,137 3,447,389 3,581,689
Steam district #1 5,994,665 6,258,368 6,974,162 7,083,477 7,692,984
Steam district #2 9,031,530 - - - -
Golf 1,895,162 2,006,633 2,056,166 2,192,560 2,059,673
Parking 1,881,852 1,957,414 1,939,941 2,923,741 2,901,617
Priley Drive parking facility - - - - -
Street lighting 1,391,981
1,557,525 1,480,674 1,583,897 1,545,598
Total business-type activities expenses 90,252,551 77,984,360 80,652,907 76,042,253 81,853,956
Total primary government expenses 215,195,351$ 211,150,182$ 194,292,228$ 200,623,359$ 203,788,005$
Program Revenues
Governmental activities:
Charges for services:
General government 4,514,042$ 4,619,911$ 4,673,037$ 4,415,328$ 4,675,590$
Public safety 2,555,541 3,330,905 2,975,998 2,925,524 1,948,070
Public works 349,364 369,068 370,237 394,422 111,061
Culture and recreation 1,108,600 1,297,370 1,273,472 1,082,261 1,332,448
Urban and economic development 525,437 280,880 310,839 347,895 2,816,814
Operating grants and contributions 11,846,124 14,164,865 15,685,467 13,668,138 13,309,497
Capital grants and contributions 7,095,416
17,075,628 13,067,199 12,230,295 17,878,748
Total governmental activities program revenues 27,994,524 41,138,627 38,356,249 35,063,863 42,072,228
Business-type activities:
Charges for services:
Water 11,961,915 12,024,675 11,743,510 13,911,617 14,866,657
Gas 46,419,426 39,882,397 41,415,145 34,071,373 40,587,986
Sewer 20,320,378 20,347,330 20,040,992 20,350,506 20,535,669
Stormwater 5,222,917 4,730,608 4,632,541 4,798,166 4,750,421
Steam district #1 6,152,268 6,617,346 7,169,021 7,239,203 7,858,968
Steam district #2 8,384,720 - - - -
Golf 1,945,446 1,967,401 1,872,577 1,926,929 1,738,980
Parking 2,524,682 2,563,215 2,567,703 3,185,152 3,777,759
Priley Drive parking facility - - - - -
Street lighting 1,271,623 1,270,118 1,894,038 2,272,395 2,147,449
Operating grants and contributions - - - - 60,699
Capital grants and contributions 3,836,174
9,104,643 5,135,700 3,366,852 2,812,199
Total business-type activities program revenues 108,039,549 98,507,733 96,471,227 91,122,193 99,136,787
Total primary government program revenues 136,034,073$ 139,646,360$ 134,827,476$ 126,186,056$ 141,209,015$
(continued)
156
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2009
2010 2011 2012 2013
Net (expense)/revenue
Governmental activities (96,948,276)$ (92,027,195)$ (75,283,072)$ (89,517,243)$ (79,861,821)$
Business-type activities 17,786,998
20,523,373 15,818,320 15,079,940 17,282,831
Total primary government net expense (79,161,278)$ (71,503,822)$ (59,464,752)$ (74,437,303)$ (62,578,990)$
General Revenues and Other Changes in
Net Position
Governmental activities:
General Revenues:
Property taxes 18,125,284$ 16,001,873$ 16,718,385$ 21,379,384$ 21,924,954$
Market value credit aid 1,147,029 33,675 34,071 9,759 -
Sales taxes 18,009,914 19,252,407 20,071,454 20,888,940 20,388,588
Franchise taxes 1,889,796 1,917,379 1,922,796 1,928,149 1,958,297
Other taxes 684,088 97,549 159,416 141,927 134,580
Casino shared revenues 5,963,162 6,258,727 2,096,800 579,478 -
Grants and shared revenues not restricted to
specific programs 31,498,519 29,130,992 29,154,013 29,148,898 29,401,345
Investment income 4,034,753 2,307,506 2,934,301 506,168 (1,632,312)
Gain on sale or disposition of capital assets 84,278 19,174 169,695 19,124 550,473
Miscellaneous 1,031,930 13,584 1,157,996 1,172,063 2,694,159
Extraordinary items - - - - -
Transfers 7,839,803
4,552,145 5,379,481 4,671,197 4,714,434
Total governmental activities 90,308,556 79,585,011 79,798,408 80,445,087 80,134,518
Business-type activities:
General Revenues:
Property taxes - - - - -
Grants and shared revenues not restricted to
specific programs - - 48,567 51,272 48,566
Investment income 320,540 282,545 349,471 184,954 33,206
Gain on sale or disposition of capital assets 112,447 7,256 - 55,623 (4,983)
Miscellaneous - - 2,300,000 - 69,099
Extraordinary items (5,441,237) - - - -
Transfers (7,839,803)
(4,552,145) (5,379,481) (4,671,197) (4,714,434)
Total business-type activities (12,848,053) (4,262,344) (2,681,443) (4,379,348) (4,568,546)
Total primary government 77,460,503$ 75,322,667$ 77,116,965$ 76,065,739$ 75,565,972$
Change in Net Position
Governmental activities (6,639,720)$ (12,442,184)$ 4,515,336$ (9,072,156)$ 272,697$
Business-type activities 4,938,945
16,261,029 13,136,877 10,700,592 12,714,285
Total primary government (1,700,775)$ 3,818,845$ 17,652,213$ 1,628,436$ 12,986,982$
Source: Statement of Activities (continued)
157
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2014
2015 2016 2017 2018
Expenses
Governmental activities:
General government 27,045,420$ 26,652,865$ 28,487,636$ 29,490,639$ 31,093,037$
Public safety 40,104,416 40,798,398 55,526,260 47,268,796 43,352,480
Public works 21,622,112 22,230,628 25,219,128 23,999,112 24,997,278
Culture and recreation 11,584,949 18,319,587 10,407,695 12,497,000 13,169,901
Urban and economic development 14,294,290 14,265,141 17,688,597 15,406,291 13,664,386
Interest 4,338,915
4,619,216 4,543,299 3,951,480 4,025,051
Total governmental activities expenses 118,990,102 126,885,835 141,872,615 132,613,318 130,302,133
Business-type activities:
Water 11,255,835 10,187,477 10,997,029 11,159,899 11,268,976
Gas 49,131,965 29,262,281 27,526,208 31,537,930 33,160,799
Sewer 16,963,128 16,284,112 16,034,063 16,018,954 16,835,052
Stormwater 3,701,827 3,764,611 4,208,833 3,564,421 3,430,458
Steam district #1 7,254,245 7,666,582 8,364,984 8,298,624 8,185,310
Steam district #2 - - - - -
Golf 2,020,655 2,309,016 2,068,650 1,940,477 1,853,157
Parking 2,701,445 2,550,028 2,630,605 2,748,883 2,980,182
Priley Drive parking facility - - 768,011 1,266,511 1,254,483
Street lighting 1,910,875
1,914,331 2,307,565 2,123,129 1,909,552
Total business-type activities expenses 94,939,975 73,938,438 74,905,948 78,658,828 80,877,969
Total primary government expenses 213,930,077$ 200,824,273$ 216,778,563$ 211,272,146$ 211,180,102$
Program Revenues
Governmental activities:
Charges for services:
General government 5,018,181$ 4,854,823$ 4,934,248$ 5,706,995$ 5,869,145$
Public safety 1,501,647 1,562,794 1,698,161 2,869,629 2,023,574
Public works 1,320,130 2,801,089 2,723,412 56,549 82,235
Culture and recreation 1,299,671 1,310,840 1,182,738 1,247,455 1,270,730
Urban and economic development 3,383,810 3,095,554 2,655,700 2,183,548 2,682,020
Operating grants and contributions 11,487,629 10,096,446 12,402,217 11,758,737 12,019,093
Capital grants and contributions 19,388,699
19,174,980 15,968,844 11,096,107 12,912,987
Total governmental activities program revenues 43,399,767 42,896,526 41,565,320 34,919,020 36,859,784
Business-type activities:
Charges for services:
Water 14,529,002 14,426,316 14,479,884 14,428,987 14,910,171
Gas 58,291,132 35,495,409 31,209,095 36,122,015 39,182,666
Sewer 19,493,753 19,973,712 19,527,000 19,538,573 19,709,102
Stormwater 4,624,063 4,754,516 5,243,461 5,298,272 5,283,440
Steam district #1 6,820,043 6,725,164 7,064,402 7,712,154 7,880,094
Steam district #2 - - - - -
Golf 1,734,534 1,931,016 1,822,938 1,730,447 1,692,369
Parking 4,207,977 4,516,797 4,552,144 4,060,636 3,740,640
Priley Drive parking facility - - 339,417 446,597 457,088
Street lighting 2,146,270 1,922,930 1,501,926 1,399,669 1,390,572
Operating grants and contributions 76,493 - 164,101 104,170 -
Capital grants and contributions 4,597,404
8,380,978 2,251,332 2,832,186 5,602,821
Total business-type activities program revenues 116,520,671 98,126,838 88,155,700 93,673,706 99,848,963
Total primary government program revenues 159,920,438$ 141,023,364$ 129,721,020$ 128,592,726$ 136,708,747$
(continued)
158
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2014
2015 2016 2017 2018
Net (expense)/revenue
Governmental activities (75,590,335)$ (83,989,309)$ (100,307,295)$ (97,694,298)$ (93,442,349)$
Business-type activities 21,580,696
24,188,400 13,249,752 15,014,878 18,970,994
Total primary government net expense (54,009,639)$ (59,800,909)$ (87,057,543)$ (82,679,420)$ (74,471,355)$
General Revenues and Other Changes in
Net Position
Governmental activities:
General Revenues:
Property taxes 22,146,676$ 22,405,560$ 23,587,371$ 27,596,775$ 30,265,657$
Market value credit aid - - - - -
Sales taxes 22,031,014 24,305,293 24,585,124 25,188,254 26,267,168
Franchise taxes 2,013,126 2,008,194 1,998,457 3,883,316 3,997,060
Other taxes 622,015 255,491 198,546 204,587 254,096
Casino shared revenues - - - - -
Grants and shared revenues not restricted to
specific programs 30,995,305 31,232,887 31,345,365 31,420,457 31,810,084
Investment income 2,148,194 328,502 1,805,404 3,571,853 (440,856)
Gain on sale or disposition of capital assets 54,776 - - - -
Miscellaneous 1,996,119 1,323,545 1,726,300 997,006 1,689,582
Extraordinary items - (13,264,958) - - -
Transfers 5,008,750
6,336,860 4,881,948 4,144,712 4,354,903
Total governmental activities 87,015,975 74,931,374 90,128,515 97,006,960 98,197,694
Business-type activities:
General Revenues:
Property taxes - 220,293 647,013 756,037 751,231
Grants and shared revenues not restricted to
specific programs 48,566 48,566 48,566 59,826 48,567
Investment income 468,471 124,243 99,045 86,837 43,383
Gain on sale or disposition of capital assets 58,974 79,246 2,220 57,913 81,868
Miscellaneous 122,789 56,606 53,425 90,095 61,272
Extraordinary items - - - - -
Transfers (5,008,750)
(6,336,860) (4,881,948) (4,144,712) (4,354,903)
Total business-type activities (4,309,950) (5,807,906) (4,031,679) (3,094,004) (3,368,582)
Total primary government 82,706,025$ 69,123,468$ 86,096,836$ 93,912,956$ 94,829,112$
Change in Net Position
Governmental activities 11,425,640$ (9,057,935)$ (10,178,780)$ (687,338)$ 4,755,345$
Business-type activities 17,270,746
18,380,494 9,218,073 11,920,874 15,602,412
Total primary government 28,696,386$ 9,322,559$ (960,707)$ 11,233,536$ 20,357,757$
Unaudited
159
Stats
CITY OF DULUTH, MINNESOTA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
2009
2010 2011* 2012 2013
General fund
Reserved 436,860$ 368,134$ -$ -$ -$
Unreserved 1,962,587 5,579,282 - - -
Nonspendable* - - 138,012 431,795 414,309
Restricted* - - 120,766 97,811 75,741
Committed* - - - 9,067 13,454
Assigned* - - 332,997 583,777 821,114
Unassigned* -
- 7,664,417 7,587,726 7,746,042
Total general fund 2,399,447$ 5,947,416$ 8,256,192$ 8,710,176$ 9,070,660$
All other governmental funds
Reserved 17,658,025$ 22,178,725$ -$ -$ -$
Unreserved, reported in:
Special revenue funds 55,293,268 38,712,371 - - -
Debt service funds 12,384,602 13,496,346 - - -
Capital projects funds 45,990,283 10,263,175 - - -
Restricted* - - 36,801,571 29,787,935 31,790,209
Committed* - - 144,721 294,971 18,095,100
Assigned* - - 27,983,067 23,258,693 576,094
Unassigned* -
- (255,786) (2,995,479) (5,512,643)
Total all other governmental funds 131,326,178$ 84,650,617$ 64,673,573$ 50,346,120$ 44,948,760$
Fiscal Year
2014
2015 2016 2017 2018
General fund
Reserved -$ -$ -$ -$
Unreserved - - - -
Nonspendable* 258,535 - - -
Restricted* 91,324 95,801 85,776 99,766 184,891
Committed* 13,129 21,781 32,075 36,242 41,996
Assigned* 1,634,029 2,132,059 1,616,063 2,280,311 3,236,770
Unassigned* 9,320,545
11,624,121 11,634,076 13,190,484 13,422,108
Total general fund 11,317,562$ 13,873,762$ 13,367,990$ 15,606,803$ 16,885,765$
All other governmental funds
Reserved -$ -$ -$ -$ -$
Unreserved, reported in:
Special revenue funds - - - - -
Debt service funds - - - - -
Capital projects funds - - - - -
Restricted* 31,233,325 44,269,018 45,235,185 42,708,250 41,801,543
Committed* 19,705,618 19,846,164 21,707,282 24,583,093 23,357,054
Assigned* 445,627 389,344 824,467 1,209,071 1,691,541
Unassigned* (4,232,523)
(8,155,193) (2,101,580) (1,981,450) (3,130,083)
Total all other governmental funds 47,152,047$ 56,349,333$ 65,665,354$ 66,518,964$ 63,720,055$
*GASB Statement No. 54 changed fund balance classifications in 2011.
Source: Balance Sheet - Governmental Funds Unaudited
160
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
2009
2010 2011 2012 2013
Revenues
Taxes:
Property taxes 17,859,578$ 15,953,934$ 16,581,461$ 21,336,285$ 21,913,489$
Sales taxes 18,009,914 19,252,407 20,071,454 20,888,940 20,388,588
Other taxes 2,573,884 2,014,928 2,082,212 2,070,076 2,092,877
Licenses and permits 1,149,265 1,182,044 1,407,951 1,625,826 1,863,333
Intergovernmental revenues 50,047,221 55,756,919 56,211,950 49,469,851 55,451,614
Charges for services 6,348,063 6,902,683 6,453,510 5,891,728 6,441,338
Fines and forfeits 1,770,427 1,791,604 1,579,021 1,075,167 699,846
Special assessments 2,948,975 2,741,754 2,837,628 2,884,597 2,328,821
Investment income 3,691,734 2,051,772 2,669,071 430,056 (1,675,875)
Miscellaneous revenues 6,321,696
3,285,276 3,956,649 4,124,685 4,521,654
Total revenues 110,720,757 110,933,321 113,850,907 109,797,211 114,025,685
Expenditures
General government 32,743,783 32,628,277 33,469,098 34,625,147 22,290,793
Public safety 36,718,739 33,901,872 34,606,780 36,476,109 35,035,481
Public works 1,872,986 7,164,216 2,081,437 6,046,513 19,397,379
Culture and recreation 6,095,879 6,570,834 6,865,686 7,761,926 9,469,074
Urban and economic development 14,059,428 14,177,365 15,251,986 20,203,006 17,762,959
Debt service
Principal retirement 12,354,000 10,254,000 11,395,000 13,045,000 8,655,000
Interest and fiscal fees 5,264,029 5,441,345 4,989,456 5,097,486 4,673,854
Bond issuance costs 442,358 140,135 80,184 280,600 203,741
Capital outlay 36,274,174
37,344,799 33,452,857 23,247,154 17,169,385
Total expenditures 145,825,376 147,622,843 142,192,484 146,782,941 134,657,666
Excess of revenues over (under)
expenditures (35,104,619)
(36,689,522) (28,341,577) (36,985,730) (20,631,981)
Other financing sources (uses)
Issuance of bonds 21,560,000 4,470,000 4,965,000 17,980,000 10,490,000
Proceeds from refundings 2,150,000 4,190,000 - 6,905,000 -
Premium on issuance of bonds 578,200 109,851 138,232 868,419 271,507
Payment to refunded bond escrow agent (2,150,000) (4,155,250) - (7,363,043) -
Transfers in 37,591,473 26,903,985 23,957,020 19,166,548 16,753,906
Transfers out (29,787,535)
(22,207,637) (18,386,943) (14,444,663) (11,988,958)
Total other financing sources (uses) 29,942,138 9,310,949 10,673,309 23,112,261 15,526,455
Net change in fund balances (5,162,481)$ (27,378,573)$ (17,668,268)$ (13,873,469)$ (5,105,526)$
Debt service as a percentage of
noncapital expenditures 13.7% 12.3% 14.8% 14.0% 11.4%
General Governmental includes Capital Projects Fund.
Source: Statement of Revenues, Expenditures, and Changes in Fund Balances (continued)
161
Stats
CITY OF DULUTH, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
2014
2015 2016 2017 2018
Revenues
Taxes:
Property taxes 22,118,257$ 22,549,109$ 23,671,256$ 27,606,911$ 30,318,865$
Sales taxes 22,031,014 24,305,293 24,585,124 25,188,254 26,267,167
Other taxes 2,635,141 2,263,685 2,197,003 4,087,903 4,251,157
Licenses and permits 1,737,068 1,783,741 1,786,472 1,759,507 2,053,375
Intergovernmental revenues 57,455,627 55,941,414 60,343,948 51,353,893 56,877,087
Charges for services 7,987,527 9,289,681 8,510,151 6,171,005 6,576,669
Fines and forfeits 709,213 652,033 719,928 1,906,404 604,357
Special assessments 2,458,912 1,983,776 2,095,202 1,752,933 1,605,337
Investment income 2,022,447 230,692 1,740,987 3,527,779 (559,148)
Miscellaneous revenues 4,304,525
5,326,755 5,980,771 4,809,871 6,138,325
Total revenues 123,459,731 124,326,179 131,630,842 128,164,460 134,133,191
Expenditures
General government 23,174,447 24,004,445 24,378,741 24,722,755 28,330,883
Public safety 35,512,569 37,150,741 38,524,220 39,263,288 41,552,331
Public works 12,536,734 14,388,357 14,515,792 13,194,918 15,226,399
Culture and recreation 9,645,981 15,954,443 9,117,853 9,779,866 10,530,034
Urban and economic development 13,858,327 16,906,657 24,913,908 15,022,941 13,637,293
Debt service
Principal retirement 11,350,000 10,501,000 9,531,000 13,271,000 11,172,000
Interest and fiscal fees 4,600,843 4,577,976 4,422,939 4,603,199 4,487,446
Bond issuance costs 223,753 361,424 595,689 91,522 163,704
Capital outlay 21,355,037
16,962,641 15,016,363 14,753,506 25,106,738
Total expenditures 132,257,691 140,807,684 141,016,505 134,702,995 150,206,828
Excess of revenues over (under)
expenditures (8,797,960)
(16,481,505) (9,385,663) (6,538,535) (16,073,637)
Other financing sources (uses)
Issuance of bonds 8,055,000 21,315,000 12,520,000 5,160,000 9,645,000
Proceeds from refundings 865,000 2,630,000 33,470,000 - -
Premium on issuance of bonds 153,373 799,031 7,185,320 326,247 553,787
Payment to refunded bond escrow agent (865,000) (2,845,900) (39,861,356) - -
Transfers in 16,540,403 19,136,245 22,385,436 21,369,040 21,752,295
Transfers out (11,500,627)
(12,799,385) (17,503,488) (17,224,328) (17,397,392)
Total other financing sources (uses) 13,248,149 28,234,991 18,195,912 9,630,959 14,553,690
Net change in fund balances 4,450,189$ 11,753,486$ 8,810,249$ 3,092,424$ (1,519,947)$
Debt service as a percentage of
noncapital expenditures 14.1% 12.1% 11.0% 14.7% 12.4%
Unaudited
162
Stats
CITY OF DULUTH, MINNESOTA
ASSESSED AND ESTIMATED TAXABLE MARKET VALUE OF PROPERTY
LAST TEN FISCAL YEARS
Fiscal Real Estate
Year Residential Commercial
Ended Estimated Estimated
December 31 Market Value Tax Capacity Market Value Tax Capacity
2009 4,596,572,476 46,544,301 1,006,191,824 18,391,705
2010 4,545,577,900 46,457,611 1,041,761,700 19,131,580
2011 4,391,758,200 44,888,003 1,026,682,900 18,853,813
2012 4,399,683,300 40,350,188 1,033,199,600 19,007,636
2013 4,276,314,100 40,087,613 1,057,616,100 19,632,127
2014 4,338,067,800 39,838,986 1,113,116,900 20,463,377
2015 4,441,627,300 40,989,014 1,144,647,100 21,018,612
2016 4,561,213,000 42,373,863 1,202,773,500 22,169,916
2017 4,694,140,900 44,079,263 1,297,252,450 23,998,224
2018 4,662,466,600 45,369,851 1,423,489,056 26,075,238
Fiscal Personal Property
Year Residential Commercial
Ended Estimated Estimated
December 31 Market Value Tax Capacity Market Value Tax Capacity
2009 28,487,600 283,617 75,268,900 1,435,838
2010 30,139,300 307,525 78,621,200 1,447,720
2011 28,363,500 284,857 84,724,000 1,551,297
2012 28,591,200 208,707 107,565,700 1,966,342
2013 29,300,100 217,752 109,785,500 2,011,293
2014 28,448,100 221,073 104,465,800 1,906,608
2015 33,827,800 276,580 105,380,900 1,937,051
2016 33,899,000 271,921 105,806,200 1,961,029
2017 33,802,700 271,921 99,447,550 1,815,452
2018 33,771,200 271,796 104,460,500 1,919,504
Percentage
Fiscal of Total Tax
Year Total Capacity to
Ended Estimated Total Estimated Tax
December 31 Market Value Tax Capacity Market Value Rate
2009 5,706,520,800 66,655,461 1.17% 0.25403
2010 5,696,100,100 67,344,436 1.18% 0.26331
2011 5,531,528,600 65,577,970 1.19% 0.27956
2012 5,569,039,800 61,532,873 1.10% 0.31597
2013 5,473,015,800 61,948,785 1.13% 0.33198
2014 5,584,098,600 62,430,044 1.12% 0.32338
2015 5,725,483,100 64,221,257 1.12% 0.32509
2016 5,903,691,700 66,776,729 1.13% 0.33378
2017 6,124,643,600
70,164,860 1.15% 0.37568
2018 6,224,187,356 73,636,389 1.18% 0.39701
Unaudited
163
Stats
CITY OF DULUTH, MINNESOTA
PROPERTY TAX RATES AND PRINCIPAL PROPERTY TAXPAYERS
PROPERTY TAX RATES
*
DIRECT AND OVERLAPPING GOVERNMENT
S
LAST TEN FISCAL YEARS
Total Direct
&
Fiscal Cit
y
Overlapping Rates Overlapping
Yea
r
Operations Debt Service Total Direc
t
Schools Count
y
Special Rates
2009 0.16193 0.09210 0.25403 0.20940 0.57645 0.06497 1.10485
2010 0.18050 0.08281 0.26331 0.20971 0.55365 0.05654 1.08321
2011 0.18686 0.09270 0.27956 0.23373 0.56011 0.05829 1.13169
2012 0.21847 0.09750 0.31597 0.27706 0.62325 0.05975 1.27603
2013 0.22411 0.10787 0.33198 0.32886 0.63885 0.06180 1.36149
2014 0.23152 0.09186 0.32338 0.34314 0.63613 0.06319 1.36584
2015 0.23089 0.09420 0.32509 0.34108 0.64457 0.06216 1.37290
2016 0.24322 0.09056 0.33378 0.31825 0.61443 0.06193 1.32839
2017 0.28416 0.09152 0.37568 0.29516 0.65056 0.06049 1.38189
2018 0.30848 0.08853 0.39701 0.28598 0.65286 0.06040 1.39625
* Tax Capacity Rate (per $1 of Tax Capacity Value)
Source: St. Louis County web site Unaudited
PRINCIPAL PROPERTY TAXPAYER
S
CURRENT AND NINE YEARS AGO
2018 2009
Percentage Percentage
of Total of Total
Estimated Estimated Estimated Estimated
Market Market Market Market
Taxpaye
r
Type of Busines
s
V
alue Ran
k
V
alue
V
alue Ran
k
V
alue
Allete (Minnesota Power) Electric utility 145,648,500 1 2.34% 125,570,580 1 2.20%
Essentia Health (SMDC) Healthcare & hospital 110,949,500 2 1.78% 46,851,800 2 0.82%
Simon Property, Inc. Shopping mall 52,790,900 3 0.85% 45,779,200 3 0.80%
D M & I R Railroad Railroad 37,484,100 4 0.60%
Ascena Retail Group Lease administration 34,758,500 5 0.56%
Burlington Northern Railroad 21,116,500 6 0.34%
Hall Equities Group Real estate development 18,855,700 7 0.30%
St. Luke's Hospital Healthcare & hospital 18,139,100 8 0.29%
NewPage (StoraEnso) Paper mill 18,099,100 9 0.29% 22,419,100 5 0.39%
Tech Village Office & tech building 17,738,800 10 0.28% 10,879,700 9 0.19%
Sherman Associates Real estate development 39,143,800 4 0.69%
IRET Properties Property management 22,356,600 6 0.39%
ZMC Hotels Hotels 14,155,500 7 0.25%
US Bank Bank & office building 11,293,000 8 0.20%
Centro Properties Group Real estate investment 10,662,300 10 0.19%
475,580,700$ 7.63% 349,111,580$ 6.12%
Source: St. Louis County Assessor Unaudited
164
Stats
CITY OF DULUTH, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
AND NET CAPACITY OF REAL PROPERTY BY CATEGORY 2018
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Fiscal
Year Net Tax 1 Collections in
Ended Levy for Subsequent
December 31 Fiscal Year Amount % of Levy Years Amount % of Levy
2009 14,366,814 13,790,094 96.0% 418,529 14,208,623 98.9%
2010 16,050,825 15,531,833 96.8% 411,885 15,943,718 99.3%
2011 16,648,242 16,102,214 96.7% 382,016 16,484,230 99.0%
2012 21,403,582 20,835,227 97.3% 400,831 21,236,058 99.2%
2013 21,966,088 21,396,584 97.4% 445,759 21,842,343 99.4%
2014 22,040,149 21,498,351 97.5% 325,436 21,823,787 99.0%
2015 22,686,100 22,310,465 98.3% 277,846 22,588,311 99.6%
2016 24,233,053 23,842,607 98.4% 197,564 24,040,171 99.2%
2017 28,039,466 27,593,516 98.4% 172,368 27,765,884 99.0%
2018 30,649,272 30,083,315 98.2% - 30,083,315 98.2%
1 Net tax levy is equal to the gross tax levy less state property tax aids. Unaudited
NET CAPACITY OF REAL PROPERTY BY CATEGORY
TAXES PAYABLE IN 2018
% of Total
Real Estate Only
Net Tax Capacity Net Tax Capacity
Residential 30,360,133$ 42.50%
Non-Homestead Residential 15,009,718 21.01%
Commercial/Industrial 23,258,653 32.55%
Agricultural 18,890 0.03%
Public Utility 1,384,960 1.94%
Railroad 1,189,120 1.66%
Seasonal/Recreational 223,615 0.31%
Total 71,445,089$ 100.00%
Collected within the
Fiscal Year of the Levy Total Collections to Date
165
Stats
CITY OF DULUTH, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(amounts expressed in thousands, except per capita amount)
Governmental Activities
Special
General Assessment
General Obligation Tax Tax Increment Lease Debt with General
Fiscal Obligation Abatement Revenue Revenue Government Obligation
Year
Bonds Bonds Bonds Bonds Commitment Certificates
2009 76,699 310 135 995 41,106 8,065
2010 ** 75,449 310 - 860 36,011 8,920
2011 74,561 285 - 715 29,569 10,275
2012 76,927 7,315 - 565 23,943 11,300
2013 80,754 7,290 - 415 20,901 12,625
2014 82,936 6,705 - - 16,814 12,340
2015 97,340 6,350 - - 13,080 12,670
2016 91,300 13,805 - - 10,765 13,250
2017 86,615 13,435 - - 7,320 13,670
2018 87,485 12,605 - - 5,165 14,295
Governmental Activities Business Activities
Deferred
Deferred Revenue and Revenue and Amount
Amount and General and General for Bond
Fiscal for Bond Obligation Capital Revenue Obligation Discounts/
Year
Premium Notes Leases Bonds Bonds Premiums
2009 1,042 3,415 114 420 54,505 (16)
2010 ** 989 3,171 70 285 47,900 67
2011 938 3,086 24 145 44,005 127
2012 1,612 2,996 - - 41,045 608
2013 1,579 2,896 - - 37,305 505
2014 1,419 2,791 - - 44,343 401
2015 1,910 2,735 110 - 42,760 496
2016 8,418 2,704 75 - 39,222 377
2017 7,917 2,673 38 - 34,927 270
2018 7,648 2,636 - - 35,097 223
Business Activities
General Total Percentage
Fiscal Obligation Capital Primary of Personal Per
Year
Notes Leases Government Income* Capita*
2009 5,906 9,120 201,816 8.83% 2,360
2010 ** 10,766 8,725 193,523 8.56% 2,243
2011 20,562 8,672 192,964 8.30% 2,237
2012 23,084 8,041 197,436 8.34% 2,290
2013 21,904 7,385 193,559 7.71% 2,247
2014 24,581 6,704 199,034 7.64% 2,308
2015 23,034 5,995 206,480 7.47% 2,398
2016 20,519 5,385 205,820 7.60% 2,385
2017 18,048 4,752 189,665 6.85% 2,204
2018 15,474 4,094 184,722 6.47% 2,146
*See the Schedule of Demographic and Economic Statistics for personal income and population data.
**In 2010, Duluth Economic Development Authority became a discretely presented component unit. Unaudited
166
Stats
CITY OF DULUTH, MINNESOTA
RATIOS OF NET GENERAL OBLIGATION BONDED DEBT AND
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
RATIOS OF NET GENERAL OBLIGATION BONDED DEBT
LAST TEN FISCAL YEARS
Less Percent of
Gross Debt Net Net Bonded Net Bonded
Fiscal Bonded Service Bonded Debt to Debt per
Year
Population Tax Capacity Debt Funds Debt Tax Capacity per Capita
2009 85,530 66,655,461 85,074,118 18,612,250 66,461,868 99.71% 777.06
2010* 86,265 67,344,436 84,679,118 19,144,190 65,534,928 97.31% 759.69
2011 86,277 65,577,970 86,059,378 18,629,920 67,429,458 102.82% 781.55
2012 86,200 61,532,873 97,154,314 17,742,090 79,412,224 129.06% 921.26
2013 86,128 61,948,785 102,247,605 19,802,762 82,444,843 133.09% 957.24
2014 86,238 62,430,044 103,399,159 22,948,537 80,450,622 128.87% 932.89
2015 86,110 64,221,257 118,269,847 19,496,773 98,773,074 153.80% 1,147.06
2016 86,293 66,776,729 126,772,630 22,581,641 104,190,989 156.03% 1,207.41
2017 86,066 70,164,860 121,637,268 7,639,067 113,998,201 162.47% 1,324.54
2018 86,066 73,636,389 122,033,234 21,344,176 100,689,058 136.74% 1,169.91
Note: Gross bonded debt consists of general long-term debt bonds payable as reported on the Statement of Net Position.
Specifically excluded are special assessment and enterprise bond issues for which the city is contingently liable.
Tax increment revenue bonds are not included.
*In 2010, Duluth Economic Development Authority became a discretely presented component unit.
Unaudited
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF DECEMBER 31, 2018
General Percent Amount
Obligation Chargeable Chargeable
Governmental Unit
Debt to City to City
Independent School District 709 $47,100,000 87.89% 41,395,703$
Independent School District 704 26,505,000 6.26% 1,658,456
St. Louis County 145,215,000 37.17% 53,978,515
Subtotal, overlapping debt 97,032,674
City of Duluth direct debt 122,186,000
Total direct and overlapping debt 219,218,674$
The overlapping debt chargeable to the City is based upon the taxable net tax capacity in the City as a
percentage of the total taxable net tax capacity of the overlapping governmental unit.
Unaudited
167
Stats
CITY OF DULUTH, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Fiscal Year
2009
2010 2011 2012 2013
Taxable market value 5,706,520,800$ 5,696,100,100$ 5,531,528,600$ 5,569,039,800$ 5,473,015,800$
Legal debt limit % 2% 2% 2% 2% 2%
Legal debt limi
t
114,130,41
6
$ 113,922,00
2
$ 110,630,57
2
$ 111,380,79
6
$ 109,460,31
6
$
Debt applicable to limit:
Total bonds payable 182,235,000$ 169,735,000$ 159,554,999$ 161,095,000$ 159,290,002$
Less: Deductions allowable (141,965,882) (128,955,882) (117,723,976) (123,073,029) (118,746,296)
Total net debt applicable to limi
t
40,269,11
8
$ 40,779,11
8
$ 41,831,02
3
$ 38,021,971$ 40,543,70
6
$
Total net debt applicable to the limit
as a percentage of debt limit 35.28% 35.80% 37.81% 34.14% 37.04%
Fiscal Year
2014
2015 2016 2017 2018
Taxable market value 5,584,098,600$ 5,725,483,100$ 5,903,691,700$ 6,124,643,600$ 6,224,187,356$
Legal debt limit % 2% 2% 2% 2% 2%
Legal debt limi
t
111,681,97
2
$ 114,509,66
2
$ 118,073,83
4
$ 122,492,87
2
$ 124,483,74
7
$
Debt applicable to limit:
Total bonds payable 163,138,242$ 172,200,045$ 168,342,029$ 155,967,007$ 154,647,475$
Less: Deductions allowable (123,892,674) (133,220,045) (129,827,029) (117,767,007) (112,342,475)
Total net debt applicable to limi
t
39,245,56
8
$ 38,980,000$ 38,515,000$ 38,200,000$ 42,305,000$
Total net debt applicable to the limit
as a percentage of debt limit 35.14% 34.04% 32.62% 31.19% 33.98%
Unaudited
168
Stats
CITY OF DULUTH, MINNESOTA
REVENUE BOND COVERAGE
LAST TEN FISCAL YEARS
Net Revenue
Direct Available
Fiscal Gross Operating for Debt
Y
ea
r
Revenue (1) Expenses (2) Service Principal Interest Total Coverage
2009 11,997,431 9,250,685 2,746,746 460,000 157,856 617,856 4.45
2010 12,045,133 9,275,099 2,770,034 186,000 94,605 280,605 9.87
2011 11,747,715 9,395,019 2,352,696 399,428 97,166 496,594 4.74
2012 13,928,511 8,897,762 5,030,749 427,028 85,385 512,413 9.82
2013 14,892,290 9,394,544 5,497,746 433,873 73,085 506,958 10.84
2014 14,555,607 9,529,831 5,025,776 451,251 60,371 511,622 9.82
2015 14,440,052 8,528,252 5,911,800 388,095 33,951 422,046 14.01
2016 14,494,396 9,008,318 5,486,078 336,473 27,326 363,799 15.08
2017 14,443,317 9,286,000 5,157,317 348,851 17,833 366,684 14.06
2018 14,891,148 9,255,377 5,635,771 99,000 110,307 209,307 26.93
2009 46,526,246 36,939,946 9,586,300 652,000 341,269 993,269 9.65
2010 39,970,909 34,319,333 5,651,576 821,000 255,813 1,076,813 5.25
2011 41,552,067 34,549,583 7,002,484 855,957 305,411 1,161,368 6.03
2012 34,148,624 28,790,209 5,358,415 857,980 185,574 1,043,554 5.13
2013 40,611,707 33,701,058 6,910,649
896,020 161,825 1,057,845 6.53
2014 58,554,131 47,699,256 10,854,875 922,972 136,104 1,059,076 10.25
2015 35,584,151 27,708,531 7,875,620 869,955 84,237 954,192 8.25
2016 31,767,073 25,294,510 6,472,563 902,931 55,294 958,225 6.75
2017 36,217,772 29,677,464 6,540,308
480,000 29,800 509,800 12.83
2018 39,256,630 31,544,174 7,712,456 505,000 10,100 515,100 14.97
2009 20,344,639 15,900,214 4,444,425 1,274,000 567,498 1,841,498 2.41
2010 20,388,169 14,482,465 5,905,704 1,008,000 482,913 1,490,913 3.96
2011 20,130,587 15,215,558 4,915,029 1,317,776 404,300 1,722,076 2.85
2012 20,387,041 15,946,629 4,440,412 1,390,440 324,927 1,715,367 2.59
2013 20,541,361 16,013,024 4,528,337 1,454,699 296,240 1,750,939 2.59
2014 19,545,030 14,653,139 4,891,891 1,506,941 257,061 1,764,002 2.77
2015 19,986,777 13,852,969 6,133,808 1,177,256 179,515 1,356,771 4.52
2016 20,670,314 13,608,142 7,062,172 1,357,475 159,416 1,516,891 4.66
2017 19,543,095 13,717,618 5,825,477 1,289,599 127,358 1,416,957 4.11
2018 19,715,390 14,511,632 5,203,758 1,001,000 98,648 1,099,648 4.73
2009 5,187,017 2,862,787 2,324,230 179,000 96,730 275,730 8.43
2010 4,734,525 2,845,983 1,888,542 95,000 67,887 162,887 11.59
2011 4,672,485 2,868,448 1,804,037 196,839 68,295 265,134 6.80
2012 4,820,629 2,897,725 1,922,904 204,552 62,297 266,849 7.21
2013 4,755,764 3,059,690 1,696,074 210,409 56,115 266,524 6.36
2014 4,670,074 3,248,954 1,421,120 218,837 49,690 268,527 5.29
2015 4,767,610 3,291,078 1,476,532 109,694 22,700 132,394 11.15
2016 5,253,324 3,670,639 1,582,685 228,121 24,001 252,122 6.28
2017 5,293,060 3,141,177 2,151,883 241,549 18,184 259,733 8.28
2018 5,280,978 2,989,079 2,291,899 130,000 13,900 143,900 15.93
(continued)
Debt Service Requirements
WATER REVENUE BOND
GAS REVENUE BOND
SEWER REVENUE BOND
STORMWATER REVENUE BOND
169
Stats
CITY OF DULUTH, MINNESOTA
REVENUE BOND COVERAGE
LAST TEN FISCAL YEARS
Net Revenue
Direct Available
Fiscal Gross Operating for Debt
Y
ea
r
Revenue (1) Expenses (2) Service Principal Interest Total Coverage
2009 6,152,268 4,784,338 1,367,930 500,000 280,645 780,645 1.75
2010 6,497,846 5,032,398 1,465,448 515,000 260,912 775,912 1.89
2011 7,169,515 5,712,409 1,457,106 495,000 241,246 736,246 1.98
2012 7,239,954 5,867,609 1,372,345 - 52,148 52,148 26.32
2013 7,847,524 6,547,268 1,300,256 600,000 73,940 673,940 1.93
2014 6,861,228 6,060,699 800,529 625,000 67,815 692,815 1.16
2015 6,728,330 6,230,054 498,276 635,000 151,946 786,946 0.63
2016 7,069,377 6,896,627 172,750 635,000 177,553 812,553 0.21
2017 7,712,154 6,845,368 866,786 650,000 170,315 820,315 1.06
2018 7,883,080 6,761,475 1,121,605 655,000 161,013 816,013 1.37
2009 1,945,535 1,723,055 222,480 135,000 15,210 150,210 1.48
2010 1,967,418 1,858,207 109,211 140,000 10,620 150,620 0.73
2011 1,872,594 1,789,906 82,688 145,000 5,510 150,510 0.55
2009 2,592,185 693,301 1,898,884 745,000 692,013 1,437,013 1.32
2010 2,610,111 789,126 1,820,985
790,000 657,056 1,447,056 1.26
2011 2,645,997 800,256 1,845,741 825,000 620,263 1,445,263 1.28
2012 3,216,205 1,860,989 1,355,216 860,000 211,266 1,071,266 1.27
2013 3,780,214 2,085,827 1,694,387 1,045,000 234,363 1,279,363 1.32
2014 4,286,789 1,983,869 2,302,920
1,130,000 201,694 1,331,694 1.73
2015 4,513,311 1,789,669 2,723,642 780,000 186,819 966,819 2.82
2016 4,563,427 1,850,051 2,713,376 785,000 178,994 963,994 2.81
2017 4,054,780 1,971,083 2,083,697 795,000 167,119 962,119 2.17
2018 3,743,709 2,208,341 1,535,368 810,000 151,069 961,069 1.60
Notes:
(1) Includes operating revenue and interest earnings.
(2) Includes operating expenses, excluding depreciation.
(3) Golf revenue bond was retired in 2012.
Unaudited
STEAM DISTRICT #1 REVENUE BOND
GOLF REVENUE BOND (3)
PARKING REVENUE BOND
Debt Service Requirements
170
Stats
CITY OF DULUTH, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS AND
PRINCIPAL EMPLOYERS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Total Per Capita
Fiscal Personal Personal School Unemployment
Year
Population Income Income Enrollment Rate
2009 85,530 2,286,461,687 26,733 9,195 7.7%
2010 86,265 2,260,614,999 26,205 8,780 7.6%
2011 86,277 2,324,435,029 26,942 8,815 7.1%
2012 86,200 2,368,110,337 27,472 8,686 6.0%
2013 86,128 2,510,223,601 29,145 8,517 5.4%
2014 86,238 2,605,207,475 30,210 8,517 4.8%
2015 86,110 2,763,072,824 32,088 8,353 3.4%
2016 86,293 2,709,298,125 31,396 8,115 4.1%
2017 86,066 2,770,534,310 32,191 8,067 3.8%
2018 86,066 * 2,854,793,339 * 33,170 8,515 2.9%
Data sources:
The population fi
g
ures are estimates of the US Census Bureau.
Total personal income is from the Minnesota Department of Employment and Economic Development's website.
The school enrollment figures were provided by the Duluth School District.
The unemployment rates were provided by the Minnesota Department of Employment and Economic Development.
*Estimates
Unaudited
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2018 2009
Percentage Percentage
of Total City of Total City
Employer
Type of Business Employees Rank Employment Employees Rank Employment
Essentia Health (SMDC) Healthcare / hospital 6,569 1 11.11% 4,693 1 8.03%
St. Luke's Hospital Healthcare / hospital 2,051 2 3.47% 1,515 4 2.59%
St. Louis County Government 1,956 3 3.31% 1,301 6 2.23%
University of Minnesota - Duluth Education 1,635 4 2.77% 1,700 2 2.91%
Independent School District No. 709 Education 1,426 5 2.41% 1,426 5 2.44%
Allete (Minnesota Power) Electric utility 1,314 6 2.22% 1,245 7 2.13%
Duluth Air National Guard Base Military 1,068 7 1.81% 1,068 8 1.83%
Cirrus Design Aviation 1,000 8 1.69%
United Health Care Insurance 999 9 1.69% 1,634 3 2.80%
City of Duluth Government 854 10 1.44% 822 10 1.41%
US Government Government 850 9 1.45%
18,872 31.92% 16,254 27.82%
Source: Northland Connection's website.
Total city employment is from the Minnesota Department of Employment & Economic Development's website. Unaudited
171
Stats
CITY OF DULUTH, MINNESOTA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
Full-time Equivalent Employees as of December 31
2009
2010 2011 2012 2013
Function:
General government 107.20 114.40 113.90 115.90 125.75
Public safety
Police 182.00 187.00 185.00 185.00 178.50
Fire 134.00 140.00 140.00 138.00 141.00
Public works 100.20 123.80 118.60 106.60 87.10
Culture and recreation
Parks and recreation 7.50 7.50 7.50 9.00 10.00
Library 47.30 43.50 43.50 48.50 49.00
Urban and economic development 56.00 59.00 62.50 61.50 60.25
Water & Gas 120.50 124.80 128.20 131.00 133.00
Sewer 38.60 38.40 38.40 39.20 40.20
Stormwater 21.10 24.20 24.20 26.00 26.00
Parking 4.00 4.00 3.00 3.00 8.00
Street lighting 4.00 4.00 5.00 5.00 5.00
Total 822.40 870.60 869.80 868.70 863.80
Full-time Equivalent Employees as of December 31
2014
2015 2016 2017 2018
Function:
General government 127.65 131.65 132.40 133.00 126.50
Public safety
Police 178.50 178.50 180.50 184.14 182.14
Fire 142.00 143.00 144.50 146.50 146.50
Public works 85.90 85.05 86.25 86.50 82.95
Culture and recreation
Parks and recreation 10.00 9.75 11.75 11.95 11.70
Library 49.00 46.50 46.50 46.70 46.70
Urban and economic development 59.53 55.50 54.05 54.05 50.64
Water & Gas 132.60 128.65 129.15 134.75 134.75
Sewer 39.33 36.93 35.80 33.15 34.65
Stormwater 25.52 26.87 27.30 25.85 23.15
Parking 8.00 8.00 9.00 9.00 9.00
Street lighting 5.10 5.10 5.10 5.10 5.10
Total 863.13 855.50 862.30 870.69 853.78
Source: City of Duluth Budget Office Unaudited
172
Stats
CITY OF DULUTH, MINNESOTA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2009
2010 2011 2012 2013
Function:
Police
Criminal offences 11,071 10,540 11,278 9,924 10,828
Cleared by arrest 4,393 4,436 4,231 3,785 4,473
Traffic violations 2,153 5,241 9,746 9,499 11,152
Parking violations 54,953 56,292 51,991 46,492 51,361
Fire
Number of calls answered 9,319 8,484 9,262 9,857 10,816
Number of inspections conducted 1,200 1,200 1,200 1,200 1,200
Public works
Construction permits:
Permits issued 2,362 2,026 1,700 2,325 2,054
Estimated cost of construction during year 113,965,408$ 238,186,019$ 173,357,959$ 104,841,877$ 137,097,967$
Culture and recreation
Parks and recreation department
Participation in special events 42,858 48,896 15,436 18,129 40,045
Participation in recreation 36,217 31,905 39,839 35,681 27,393
Zoo regular customers 91,606 102,986 93,705 71,842 58,306
Library
Registered borrowers 47,662 46,592 47,965 50,171 50,491
Items in collection* 620,941 620,101 463,418 457,999 467,050
Items loaned 881,268 929,161 902,221 953,270 959,432
Library visits 362,719 380,982 376,817 460,918 484,917
Internet uses 43,907 62,379 66,394 89,070 106,662
Reference/research questions answered** 67,460 80,678 79,443 90,155 84,838
Water
Meters in service 27,950 30,317 29,069 28,082 28,051
Average number of gallons treated per month 516,805,833 481,950,833 461,125,000 468,170,000 433,795,000
Water pumped - million cubic feet 829.10 773.10 739.80 756.10 695.90
Water sold - million cubic feet 658.00 665.50 589.60
644.40 605.95
Daily average consumption in gallons 16,973,333 15,844,958 15,160,274 13,206,643 12,418,716
Gas
Meters in service 26,148 26,668 26,693 27,542 27,452
MMBTU sold 4,804,897 4,617,923 5,184,800 4,528,009 5,355,988
Sewer
Number of service connections 28,845 28,845 28,845 27,250 27,956
Daily average treatment in gallons 13,740,000 14,859,000 13,284,575 12,137,000 12,843,000
Stormwater
Cleaning storm sewer pipe (in feet) 23,358 14,734 14,750 230,165 31,658
Steam District #1
Steam sold (in 1,000 lbs) 441,808 403,085 409,295 379,257 394,762
Golf
Season passes 863 823 810 803 695
Daily tickets 33,815 32,252 32,101 35,121 31,401
Carts 11,128 10,670 12,553 14,751 14,019
Rounds played 80,987 79,430 75,480 84,740
63,196
* Note: Prior to 2009, only cataloged items were included in the Library's "Items in collection."
** Note: Beginning in 2009, only actual reference questions are included in the Library's "Reference questions answered."
In prior years, directional questions were also included.
Sources: Various government departments (continued)
173
Stats
CITY OF DULUTH, MINNESOTA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2014
2015 2016 2017 2018
Function:
Police
Criminal offences 9,472 10,262 10,447 10,561 10,437
Cleared by arrest 4,070 4,081 4,062 3,802 3,267
Traffic violations 9,307 8,525 6,819 5,196 5,421
Parking violations 55,097 50,647 55,226 34,437 31,934
Fire
Number of calls answered 11,114 12,231 12,799 13,239 13,255
Number of inspections conducted 1,200 1,200 1,200 7,490 7,367
Public works
Construction permits:
Permits issued 2,030 1,896 2,085 2,071 1,882
Estimated cost of construction during year 182,409,369$ 160,884,495$ 108,815,274$ 92,039,794$ 120,632,556$
Culture and recreation
Parks and recreation department
Participation in special events 30,749 23,122 49,125 67,300 62,925
Participation in recreation 28,304 22,586 31,555 25,210 27,197
Zoo regular customers 65,270 64,071 76,316 81,538 78,439
Library
Registered borrowers 48,147 47,086 45,424 42,674 51,636
Items in collection* 456,753 444,790 435,385 424,304 419,907
Items loaned 923,063 927,389 848,293 871,704 847,237
Library visits 492,106 474,982 461,403 475,363 426,082
Internet uses 118,825 109,965 92,656 90,489 81,685
Reference/research questions answered** 89,232 77,896 59,321 71,253 59,579
Water
Meters in service 28,131 28,134 28,134 28,243 28,345
Average number of gallons treated per month 433,676,667 431,616,667 415,642,500 408,434,167 388,512,500
Water pumped - million cubic feet 695.74 692.4 666.8 655.2 623.3
Water sold - million cubic feet 591.00 589.8 565.6
568.4 561.9
Daily average consumption in gallons 14,257,863 14,190,136 11,590,274 11,648,560 12,773,013
Gas
Meters in service 26,585 26,896 28,540 28,712 28,957
MMBTU sold 5,679,683 4,885,371 4,770,804 5,218,978 5,063,708
Sewer
Number of service connections 27,956 27,963 27,985 27,993 28,030
Daily average treatment in gallons 14,257,000 13,000,530 13,729,690 14,355,390 12,093,510
Stormwater
Cleaning storm sewer pipe (in feet) 2,700 3,330 20,017 107,965 125,776
Steam District #1
Steam sold (in 1,000 lbs) 300,669 332,830 313,408 305,465 345,262
Golf
Season passes 644 795 731 436 462
Daily tickets 28,860 46,700 38,894 34,358 39,661
Carts 15,056 42,606 39,846 28,555 25,048
Rounds played 60,172 81,082 75,544 67,657
60,988
* Note: Prior to 2009, only cataloged items were included in the Library's "Items in collection."
** Note: Beginning in 2009, only actual reference questions are included in the Library's "Reference questions answered."
In prior years, directional questions were also included.
Sources: Various government departments Unaudited
174
Stats
CITY OF DULUTH, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2009
2010 2011 2012 2013
Function:
Police
Patrol units 91 96 94 93 93
Fire
Fire stations 9 9 9 8 8
Public works
Miles of streets and alleys:
Milles of streets - paved 476.30 469.00 470.23 470.43 470.49
Miles of streets - unpaved 73.11 48.02 48.02 48.02 47.96
Miles of sidewalk 382.56 277.00 409.00 409.90 410.98
Number of street lights:
Ornamental lamps (no. of bulbs) 3,930 3,930 3,930 3,930 3,930
Overhead street lamps 3,657 3,665 3,665 3,665 3,665
Culture and recreation
Parks and recreation department
Number of parks 145 127 127 128 128
Park acreage 11,880 15,255 15,255 12,000 12,000
Number of ski hills 2 2 2 2 2
Number of municipal tennis courts 15 17 17 17 17
Community clubs/field houses operated 22 22 22 21 21
Number of athletic fields 57 57 57 57 57
Number of hiking trails 13 13 14 14 14
Library department
Libraries/branches 3 3 3 3 3
Water
Miles of water mains 414.59 424.10
426.30
426.74 428.30
Number of hydrants 2,506 2,535 2,583 2,597 2,671
Maximum daily capacity of plant in gallons 32,000,000 32,000,000 32,000,000 32,000,000 32,000,000
Gas
Miles of gas mains 506.00 512.40 511.00 520.00 527.00
Sewer
Miles of sanitary sewers 444.00 392.00 382.00 406.20 398.00
Stormwater
Miles of storm sewers 431.00 431.00 431.00 431.00 443.00
Steam District #1
Miles of line 11.00
11.00 11.00 11.00 11.00
Golf
Number of municipal golf courses 2 2 2 2 2
Sources: Various government departments. (continued)
175
Stats
CITY OF DULUTH, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2014
2015 2016 2017 2018
Function:
Police
Patrol units 93 93 97 102 123
Fire
Fire stations 8 8 8 8 8
Public works
Miles of streets and alleys:
Milles of streets - paved 472.51 473.80 475.77 475.74 475.77
Miles of streets - unpaved 47.96 47.96 47.96 47.96 47.96
Miles of sidewalk 410.98 410.98 411.08 352.00 352.13
Number of street lights:
Ornamental lamps (no. of bulbs) 3,930 3,930 3,940 3,930 3,809
Overhead street lamps 3,665 3,665 3,665 3,665 3,665
Culture and recreation
Parks and recreation department
Number of parks 128 128 129 129 129
Park acreage 12,000 12,000 12,000 12,000 12,000
Number of ski hills 2 2 2 2 2
Number of municipal tennis courts 19 19 17 17 17
Community clubs/field houses operated 19 19 19 19 18
Number of athletic fields 57 57 48 48 48
Number of hiking trails 14 14 14 14 14
Library department
Libraries/branches 3 3 3 3 3
Water
Miles of water mains 429.50 430.40
428.30
428.40 429.40
Number of hydrants 2,677 2,688 2,699 2,708 2,717
Maximum daily capacity of plant in gallons 32,000,000 32,000,000 32,000,000 32,000,000 32,000,000
Gas
Miles of gas mains 534.70 534.10 538.20 544.40 548.10
Sewer
Miles of sanitary sewers 402.00 395.30 397.60 398.80 398.10
Stormwater
Miles of storm sewers 435.00 398.07 404.56 412.00 413.00
Steam District #1
Miles of line 11.00
11.00 11.00 11.00 11.00
Golf
Number of municipal golf courses 2 2 2 2 2
Sources: Various government departments. Unaudited
176
Stats
CITY OF DULUTH, MINNESOTA
COMPONENT UNIT STATISTICAL DATA
LAST TEN FISCAL YEARS
Fiscal Year
2009
2010 2011 2012 2013
COMPONENT UNITS
Duluth Entertainment and Convention
Center Authority (DECC)
Number of events 536 690 510 515 471
Number of conventions 48 49 46 45 51
Duluth Airport Authority
Number of passengers 257,561 306,330 295,212 322,208 313,839
Duluth Transit Authority
Number of buses 67 66 66 66 66
Number of routes 18 18 19 20 19
Number of passengers 3,173,485 3,171,087 3,264,479 3,278,682 3,195,020
Service area (square miles) 143 143 143 143 143
Spirit Mountain Recreation Area
Authority
Skier visits 153,287 144,579 155,450 130,013 136,990
Season passes 8,123 7,728 7,835 6,915 6,773
Fiscal Year
2014
2015 2016 2017 2018
COMPONENT UNITS
Duluth Entertainment and Convention
Center Authority (DECC)
Number of events 516 519 506 510 494
Number of conventions 45 52 47 45 46
Duluth Airport Authority
Number of passengers 310,893 266,500 251,459 244,839 275,969
Duluth Transit Authority
Number of buses 67 66 67 67 75
Number of routes 19 19 20 23 23
Number of passengers 3,107,305 2,850,000 2,804,000 2,786,000 2,760,000
Service area (square miles) 143 143 143 143 143
Spirit Mountain Recreation Area
Authority
Skier visits 140,017 95,401 89,483 78,739 46,963
Season passes 6,728 5,697 4,275 3,386 4,970
Unaudited
177
Stats
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