I would like to call this International Falls Special City Council meeting to order on Monday, June 23rd. Year is 2025, 5:31 p.m. Uh, please rise and we will say the pledge.
I pledge algiance to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all.
[Music] It can be noted for the record that all members of the council are present this evening. We can move to new business. Have several items on the agenda this evening. The first would like to invite
our city engineer Jason Fiser forward with his recommendation for a mill and overlay which I will let you explain. Jason. Sure. Thank you. uh council counselors or mayor counselors. Um we did uh have a
bid opening today for the uh Steenberg edition and the library and city hall parking lot. Um we only had one bidder and he was over the engineer's estimate. Um
the the bid was for one $1,340,98.75. Um, part of the reason why was we did include some additional work. Um, and we also are looking to replace the stairs outside the building officials door there from that ramp that's there now.
So, and those things added to the cost of this project. Uh, we even though it was over engineer's estimate, we are comfortable with this bid. Um, part of it is the shorter time frame that they have trying to get it done this summer yet. And um
so to cover the overages, we do have some um in the next project that we that we're going to be looking at um was under budget. It came in under budget and we're going to save some of the tax sales tax dollars that we could apply towards this project to cover the
shortfall. Um, okay. So, that that would be our recommendation is that we do award this project. So, thank you uh Jason. And just for a moment,
oftentimes the council receives this information rather late. So, I want to make sure that uh before no matter what we do with the project moving forward that we take our time,
that we fully understand where we're at with it. I would like to ask it appears even though we have not addressed it on the next item of new business that the
next project comes in significantly under budget. Um so before we potentially vote on the first item, maybe you could address that. Yeah. um for the 9inth Street project um and the
lead service line projects on Fifth and Sixth Street. Uh that project did come out. I should pull up to get the numbers. Sorry. So yes, uh that that project did come in significantly under budget or under
engineer's estimate. Um, and it came in at 6,993,36845. Uh, which was comparable to the other bids we received. They were all all within that uh that range. So, we feel
comfortable with that bid. And, um, part of the funding for that project was sales tax. and we and we have other funding set up, but but we'll be able to use some of the sales tax dollars that we had budgeted for this project that we
won't need to use now for this project to help offset the cost of the additional cost for the parking lot and Steenberg edition. Thank you. And I know you'll probably have to explain that again, but I just um wanted to get it on the record that
with the first item with the mill and overlay and the parking lots being over budget that there's more to the story later on with that. Would like to ask the council for input. So it's not going to change no with the
two projects total then we're not going to change what we already have put aside for the projects correct it's just so we'll be switching some correct one the other yeah shift the pro the funding around a little bit um but yeah it'll
still it'll all total both projects will come in a little under what we originally estimated as far is open for discussion. If there's no further discussion, a motion can be made. I we move ahead with Stenberg. We
have a motion by councelor Buller to award this recommendation. I'll second it. A second by councelor Holden to support councelor Buller. Discussion is open again. question. I I I I'll vote yes. Item one
is approved unanimously. Thank you. Moving on. New business. Item two. Uh again with Mr. Fiser, our city engineer, with his recommendation and explanation of the Ninth Street projects.
Yes. The Ninth Street project is the the reconstruction project from 3rd to 11th and then it's a bike trail from uh along that whole corridor and going to 14th. So um this is a project that we were
able to get some uh assistance on. So, we did get a $ 1.5 million grant uh from the state of Minnesota uh for this uh for the bike trail portion of this project and for the the street project portion. So, um yes, the introduced
estimate was 8,900,2 926,380 and the bid price came in at the low bidder was 6,993 36845. So, uh, we'd recommend awarding the
project to Wagner Construction. So, and this includes not just Ninth Street, but it does include doing some lead service lines, a project that we had bid last year, and the bids were higher than we anticipated. So, we incorporated that work and we did get better pricing. So,
and many sources and uses to this project that Yes. Um, councelor Buller, is the grant that we have for the lead service lines in this cost? Yes. Yes. The that grant will help
offset the cost of the fifth and sixth street projects that those lead service lines plus the lead service lines along 9inth Street and some of the um service lines from the water man to the to the
curb stop. So, and this probably won't take care of all of our related service lines, but there is more money after this grant is used. Correct. Currently, there is. Yeah. Yes. Supposed to be for five years, I think, if I remember right. And I think the feds went to 10 years. But anyway, yeah. I just want to
make sure that we that we're that everybody's aware of that that that is also for lead service lines. Thank you. Yep. and part of the bundling of these services for the lead service lines that we weren't able to do
that I assume the mobilization all those economies of scale played into they did yes so this was it was a successful for us to do that comments or concerns from council There's no comments or concerns. Is
there support uh to move forward with it? I'll make that motion to move forward with Ninth Street. Second. Thank you, councilors Buller and Wagner with a motion and support for moving ahead with this recommendation for Ninth Street.
Any discussion? question. I I I'll vote yes. This carries unanimously. Thank you. Thank you. Next on this evening's agenda
is our 2024 audit presentation by Ryan Schmidt of Schlunner Wener and Co. Every year our municipality has its books audited
and this evening the results will be presented uh by Ryan. Ryan, can you hear us this evening? I sure can. Can you hear me? Okay. Can everyone hear uh Ryan? Okay.
Council, yes, we can, Ryan. Thank you. Okay, perfect. Sounds good. Well, I'm going to share my screen here. Um, as in the past, I do have a PowerPoint presentation to walk through. Um, I believe the the audited Oh, let's
see here. Yeah. Can can you see my my screen? Yes. Okay, perfect. So, the the audited financial statements themselves are, you know, over a 100 pages long. So, I like to use a PowerPoint presentation here to kind of summarize things in more of a
graphical format and and go through a little bit of a trend analysis over the years and kind of hit the high points. So, I'm going to walk through that now. And if there's any questions along the way, I mean, certainly feel free to interrupt me or, you know, raise your, you know, flag me down or whatever if I
don't hear you and, you know, we can we can address those as they come up. So, all right. So moving into the first slide here, I always like to start out just with a little bit of a reminder and a discussion about what exactly the
audit is. You know, what what are we do doing during an audit? What is the purpose of the audit? Um and in a nutshell, you know, the purpose of the audit is for us to review your financial information from throughout the past
year 2024 and look at this information in the form of the financial statements and then express an opinion over whether or not we feel that those financial statements are accurate. So how do we go about doing this? Well, essentially every number in the financial
statements, all of that information, you know, it all comes from somewhere and it comes from various accounts and and transactional detail within the accounting system. So, what we do is we drill down into that transaction level detail and we look at, you know, the
individual receipts and dispersements and and the supporting documentation that's behind all of those transactions. And that could be invoices, bank statements, you know, payroll records, uh, reports from the state showing the funding that the city received, you
know, that sort of thing. And, and we look at that supporting documentation in order to verify the accuracy of all this activity, which then allows us to express an opinion on the financial statements as a whole. So, the opinion that we've given you this year is what's called an unmodified opinion. That is a
clean opinion, and that's what you're hoping to achieve. So in a nutshell, yes, you got that clean opinion. Um the next slide here, you know, this is basically just some other required communications about the audit itself and and how the process went. you know, if if there were
problems during the audit with us having difficulty getting the information we needed or if we saw anything unusual in terms of counting transactions or just anything, you know, concerning with the process itself, this is where we would tell you about it. In fact, there's a
requirement that we do tell you about it. Um, but as you can see, the audit actually did go very smoothly. Um both Emma and Betty, you know, working with them, they they put a lot of effort into preparing for the audit. They're very responsive. They provide everything we
need, everything we request. Um and and we didn't come across anything unusual in terms of accounting policies or transactions or or anything concerning along those lines. So everything there was normal and and good. Now, as part of the audit process, we do
also look at your processes and procedures that are behind the numbers. So, we refer to this often times as internal controls. Um, so basically, what controls are there in place to make sure that things go the way they're supposed to go? You know, ideally, we
live in a world of checks and balances, especially within the accounting world. Um, and we take a little bit of time during the audit and we do look at the controls that are in place. You know, we look at how are invoices and payments approved and how does the accounting system document journal entries and how
do those get approved and you know, how does all of this activity flow through into the accounting system and then eventually get reconciled to the bank statement. Um so um you know as we review these we we have some internal control related items here that we need
to report in the financial statements and most of these are pretty standard. Um so the the first three that I'm going to mention here are basically the I'll call them the big three that we see with just about every city your size. Um and the first of these would be audit
adjustments. Um, so this is essentially because during the audit process, we assist with quite a few year-end adjustments. And what I mean by year-end adjustments is that, you know, during the year, you're basically recording your cash receipts and dispersements and
and keeping that accurate and uptodate on more of a cash basis. And then in the financials at the end of the year, well, there's certain ways that we have to report things to make it comply with GAAP generally accepted accounting principles. So, some of this means that
we have to record year-end balances for things like long-term debt. You know, what are the balances? What are what do you have for capital assets? What do you have for accounts receivable, acred payroll? You know, some some of these balance sheet items. Um so that's the vast majority of the adjustments the the
corrections that we post during the audit are just for these cash to acrruel adjustments. Now the next category here um under internal controls this would be uh lack of segregation of duties and this is by far the most
common finding that we give out um because with a city your size it's it's nearly impossible to get away from this finding unless you basically outsource your entire accounting function which is very very costly. Um, but basically what this is saying is that because there's
only, you know, a handful of people that are involved with the accounting process, you're not able to fully segregate every piece of the accounting processes to different people and have all the checks and balances in place that a perfect world scenario would
entail. Um, so it's it's something to be aware of. You know, we we've never come across anything that's, you know, raised any concerns with us. We've never seen any unusual activity. we do have a requirement to put this in the report simply because of the size of the city
and and the number of people involved with the process. And then at the bottom in that same category, we have um just a a reminder that we do prepare the financial statements for the city and we're a third party. So, whenever there's not an
internal CPA, you know, or somebody um somebody internally preparing those financials, there's theoretically a heightened risk that maybe a missing disclosure could go unnoticed or there could be some sort of error in the financials that wasn't identified.
So, those are kind of the common three. Um no concerns in in my mind related to those since they are so common and there's not much of a way to get around them. Now the the next one that's noted here, this is a new one we added this year. Um this relates to inner fund
borrowings. Um so in particular this relates to the issue with the ambulance fund and the growing deficit in that fund and the fact that it is borrowing from um from the rest of the city essentially from the general fund in order to finance that deficit. Um and
the the reason that this is flagged as a as a finding in the report is that um you know it is being accounted for currently as a borrowing an amount that's being borrowed um indicating the intention to repay you know so if it's
borrowing from the general fund and there's inherently the intention that it's going to be repaid but if there's not actually a a plan in place or a means of facilitating that repayment well then then we've got a concern with the way that things are being presented. Um, but that's that's all I'm going to
say about that one for now. Um, because I do have some slides that are coming up in a little while later in the presentation here where we can take a look at the ambulance fund in a little bit greater detail. All right, next slide here. Um, just a quick thing on our review of your
compliance with Minnesota statutes. Um, since you know, every every city that's audited in the state of Minnesota, the state gives out checklists that cover all of the different statutes that we need to take a look at during the audits and basically make sure you're complying with the legal requirements in these
areas. So, how do you go about contracting contracting and bidding? Um, where do you keep your funds? You know, do you have appropriate investments? Any conflicts of interest, so on and so forth. Um, we didn't have any issues, nothing. Nothing. we came across looked
um looked like a compliance issue to us. So all clean there. All right, with that we'll move into the numbers a bit here and we'll start looking at the general fund. So the next few slides here focus just on the general fund. Um really big picture for
starters here. Um this is the uh revenues and expenditures each year in the blue and the red over the past five years. And then we do have the budget tacked onto the right hand side there as well. Um so really big picture comparison to budget. Uh revenues did
exceed budgeted amounts in the general fund by about $665,000. Um then expenditures also exceeded budgeted amounts by about 1.3 million. Now, what I'll point out is this little note I have at the bottom saying that um
this actually does include expenses that are grossed up by about $300,000. And and what I mean by that is that there's some budgetary differences sometimes between how we need to present some things in the financial statements
versus how your budget gets set up. and we haven't adjusted your budget to fully align with some of these adjustments that we need to make at the end of the year. So the example in this scenario is that you had leases. You had new leases that got executed during the year and
there was a new standard that came out a few years back where basically whenever you're leasing a piece of equipment, we need to account for it just as though the city actually issued debt and then made a purchase and then you're and then you're paying off that debt over the
term of the lease. So because of that, we need to record an expense for that entire lease upfront. And then there's also a corresponding um other other source. That's this this other line item here in that table at the bottom. Um
that's that's like an other revenue that's offsetting. And that's almost as if you've got like the bond proceeds, then you record the full expense right up front. Um so that that is causing a bit of this budgetary difference here. So the actual difference would be closer
to about a million dollars. The next couple pages here break out these same revenues and expenses into a little bit greater detail. So we'll jump into those. So uh this next page here takes a look at those same revenues from the general
fund um but now broken out into smaller categories. So we have um taxes, intergovernmental revenues, charges for services, investment income, and then licenses, permits, miscellaneous, etc. Um really, I mean across the board, very
close to budget in most of these categories on the revenue side of things. Um the the biggest areas where you did have a difference would be under investment income where you were overbudget about 290,000. Um and then in this final kind of
miscellaneous category um here you had insurance proceeds of about 163,000 during the year for the band shell fire and that's where those insurance proceeds fell. Now the next page here takes a same
layout but a look at the uh general fund expenditures and once again broken out into smaller categories. Um so just moving left to right here I'll touch on each of these briefly. Um general
government here you were over budgeted amounts by about 239,000. Um most of this related to the costs related to that band shell demolition um along with some other repairs and service costs.
Uh the next category here public safety. here you were you were relatively close to budget in the in the grand scheme of things. Um I don't have the exact difference maybe 115,000. Um but this also does partially tie in with uh the um capital or the other
expenditures category here. You know this gets back to where we reallocate some things on the audit side a little bit sometimes. um you know there there's leasing costs that we like I said we need to treat those leases as though you've issued debt and you're paying for
debt um and so when those lease payments are made most of them are budgeted under this public safety category um but then over under other expenditures well we we have a debt service line item in your financial statements and that's where that fell. So, you almost need to take a
look at those two in combination um because the the lease and costs were budgeted for but um we reallocated them over into the other expenditures category. Uh next category here, public works. Um here this was over budget by about
360,000. um looked like that was mostly due to landfill closeout costs of about 260,000 and then various road repairs and maintenance etc. Um parks and wreck pretty close to
budget same with airport actually slightly under budget on the airport. Um other expenditures I I talked about here a little bit. Um basically the difference here is just due to those leasing costs that we reallocated.
Um and then capital outlay. Uh this this is related to that um the new leases that I mentioned where um on two two slides ago where when you issue a new lease you record all that expense upfront. Um so I actually wouldn't even
consider that to be a real budgetary difference just because that's just one of these things where we need to record it a certain way in order to comply with GAAP. Um and it doesn't quite line up with your budget. Okay, so move on to the next slide here.
Um, every year we spend a little bit of time looking at this ratio. Um, still focusing just on the general fund here. And this is looking at the unrestricted portion of your fund balance as a percentage of your annual budgeted
expenditures. Um so this is a a good ratio to keep an eye on um because you know over time the the expenses of the city grow and and you know the size of the city changes and um the amount of essentially
reserves fund balance that you want to have on hand. Well that that should grow accordingly um as those changes happen. So you you do have a policy in place to um have this ratio be at about 50% of your
budgeted operating expenditures. Um so when you when you take that unassigned portion of your fund balance and divide it by your budgeted expenditures for the year, you're you're shooting for at least 50%. Um you can see we've had a little bit of a downward trend in recent
years and this is at about 50 just over 50% calculated the way we have it calculated here. Um I will say if you were to calculate this based on actual expenditures rather than budgeted expenditures then then it dips a little
and you will be below the 50%. Um so you know it uh makes a little bit of a difference how you calculate this. Ryan, do you have that number for actuals? Yep, I do. It's at 43. Thank you. Yep.
All right. Next slide here. Uh we're going to move away from the general fund for a minute and talk about some of your other funds that that are considered major funds in the financial statements. And and basically a fund is considered major if it just has, you know, either
larger balances or more activity flowing through it. I'm not going to go through all of the city city's funds because the city has many funds and and uh you know just in the interest of time but looking at the major funds here uh here we have the EDA general fund and the sales tax
fund both presented a little graph on the left and then the the numbers feeding that graph on the right hand side. Um the EDA general fund here uh revenues essentially consist of the lease revenues coming coming through from the federal government for the
Voyagers National Park facility. And then these leasing revenues are almost entirely just passed along to the VNP debt service fund and the Voyagers National Park operating fund. And that's how you finance that debt and the
operations of Voyagers National Park. Um, so overall after that revenue and those transfers out, you did have an increase in fund balance here of about $367,000 the year. The sales tax fund um here, your
revenues essentially just sales tax proceeds. And then the other sources and uses category here that is once again transfers out to other funds. um that was entirely transfers to the 2020A debt
service fund um which is being financed by these sales tax proceeds. So overall we did have an increase in fund balance there of about 413,000 for the year. The next slide shows the uh cash in both
of those funds over the past five years. You can see the sales tax fund has been steadily rising. The the uh sales tax proceeds that have been coming through have been exceeding the project and debt service requirements.
Um and then the EA general fund that that's increased uh the past couple years as well up to a balance of about 960,000. Okay. The next couple funds we'll look at here um the municipal state aid fund and then the permanent improvement fund.
So these are both capital project funds that are used to finance various capital project activities. Um looking at the MSA fund first here you had capital outlay expenditures for the year about $310,000.
Um that was for a project on 7th Street and 2nd Avenue. And then this increased your deficit here by about $279,000. Um, so you did have a negative fund balance here of about $897,000
for the year. Um, so so similar to how I mentioned for the ambulance fund that we'll look at, um, you you got a deficit in this fund balance and it's essentially borrowing from another fund of the city. Um, this MSA fund is set up as borrowing from the capital outlay
fund. Um, and the distinct difference here in my mind between this fund and the and the ambulance fund is that there is a dedicated revenue source for the MSA fund. Um, so there's an annual appropriation from the state of
Minnesota. Um, you know, I forget exactly how much it is right off hand. Maybe somewhere in the ballpark of $300,000. I I forget the exact amount, but there is an annual appropriation to the city. Um and you know if if allowed
to accumulate that will pay off this deficit over time. The permanent improvement fund. Um here you had about $2.5 million of capital outlay expenditures for various projects. Um a lot of them water and
sewer related. Uh you have the whiff station number seven, tank 2 rehab, 17th street water man, fifth street storm sewer, etc. Um and then the the revenues here are mostly from taxes. And then this year you had some county reimbursements that came through for one
of those projects, too. And then you also had an $800,000 transfer into this fund from uh $400,000 for both the water and sewer funds. Um I believe the the idea there was that so much of these expenses were related to those water and
sewer projects that that was the reimbursement for that share of those projects. So overall you had a decrease in fund balance here of about $47,000 for the year. And I just have a little note here that
um you know the the rest of the funds if you wanted to look at those in detail, page 95 in the financial statements. All right. And then uh the cash trend for both of those two funds over the past five years. Um you can see with the significant capital outlay that you've
had over the last couple years, both of those have been decreasing. um permanent fund cash is down to a balance of about 518,000 and then the municipal state aid fund uh is at a deficit and borrowing roughly
$900,000 from the capital outlay fund. Okay, so the next slide here, um, you know, I we've so far we've only been looking at governmental funds and this slide here kind of looks at the fund balances of all of the governmental funds wrapped together as a whole. Um,
and and so this excludes water and sewer funds. You know, when I say governmental, I mean funds that are being financed mostly by property taxes, state aids, special assessments, you know, thing things along those lines. Whereas water and sewer, those are supposed to be more self- sustaining.
Those are proprietary, those are separate. Um, so looking at your governmental funds here in aggregate, just the fund balances, um, you know, there's a few different categories of fund balance. This is basically like your equity, you know, your assets minus your liabilities. Um,
but but looking at fund balance, there's restricted portions. you know, like the sales tax fund, for example, I believe under statute that's restricted for certain capital projects. Um, or um, you know, the Voyagers National Park. I think there's some escros in there that
are set aside and formally restricted for a specific purpose. And then there's the unrestricted portion um in the blue which a portion of this is unassigned and free for day-to-day use. But a lot of this unrestricted portion is
allocated out to other funds. you know, the the permanent improvement fund or the capital outlay fund or, you know, the capital outlay water and sewer fund or the EDA fund, you know, so so this isn't all what I would say free for day-to-day use, but it it has been set
aside at a certain level of city discretion um or or you know, it is um part some of it is completely unassigned and unrestricted. But I thought it was useful to maybe take a look at things big picture. the restricted portion
versus the unrestricted and just kind of look at that trend over the past five years. Um, you can see it has been decreasing in aggregate. Um, you're you're at about 12 million overall. I would say about half of that is formally
restricted whereas the other half is either committed, assigned or unassigned um and spread across various funds. Okay. So, with that, we'll move into the ambulance fund. I've got a few slides here to talk about that. I think it's
the same the same ones I've presented the past couple years, kind of looking at the trend of what we've got going here. Um, this first slide is looking at the fund balance trend over the past five years, the ambulance fund. Um, can see it's it's had its ups and downs here
a little bit. um but it is on a downward trend and you'll see that more so when we look at um the well I I guess I'm not sure I have a slide here that shows cash but the cash is is been borrowing greater amounts from the general fund as
well. So anyway the the fund balance deficit here did increase by 267,000 for the year. Um, so the fund balance deficit is at about 1.3 million and the cash that's being borrowed from the general fund is at about 1.6 million at
the end of the year. Now the next slide here takes a look at the revenues and the expenditures in in the ambulance fund um over the past five years and kind of helps give you an idea of why that fund balance is dropping. Um
2023 was a little bit of the the outlier here because I think there was some extra state aid that came through and then also a county funding payment. Um but this year uh we were back to having revenues that were below our expenses
for the year. Um and as a result your fund balance decrease. And then this is that slide where I like to show the general fund fund balance again, that same ratio we looked at several slides back. Um, and we look at
that fund balance percentage, but we look at it if the ambulance fund can't actually repay that cash. Um, so you know, just just as a reminder, fund balance is your assets minus your
liabilities. So assets isn't just cash. Assets would be you know cash or receivables or um you know different prepaids maybe you know different sorts of assets and one of those assets in the
general fund is a receivable for the amount that's due from the ambulance fund that reimbursement. So so that's factoring into your overall fund balance calculation. And if we pull out that receivable because we decide that actually the ambulance fund can't repay
this, so this receivable doesn't exist, then that drops your fund balance in the general fund. I I mean, if if you pull out the whole 1.6 million, it it drops it considerably. So this this is kind of a a worst case scenario slide here. You know, if nothing was repayable um and
and you wrote off the whole ambulance fund receivable, this would be where the general funds fund balance ratio with land at the end of the year. Um so you'd be at about 27% which is of course um lower than than
what you're looking for based on your policy. Okay. So we'll move on to the water fund. Uh we've got a a few more slides here. Um so this now as I mentioned the water funds are are enterprise funds or are proprietary funds. Water fund and
sewer are both uh set up to operate a little more independently and and their their accounting is a little different. You know this this the accounting in the water and sewer funds takes more of a long-term approach. If you look at their financials it's um it includes capital assets and long-term debt and you know
all of these more non-current items. Um but we're just going to focus on operations here. Um so the graph here is looking at your operating revenues versus your operating expenses over the past five years. Um and then that course so that corresponds to the the top half
of the table down below. Um so just a comparison to last year operating revenues were up about $44,000. So pretty flat. And operating expenses were up about $136,000. Now the non-operating activity really
mostly relates to capital asset related things. Um so the the non-operating revenues and transfers, it's actually you recognizing some of these assets from from construction projects that were being tracked in your other funds and then the project gets wrapped up and
then well that was a water related asset. So so now we put it into the water fund and we record a revenue even though it's not really a cash type activity. Um, and then and then the non-operating expenses and transfers out. Well, that's along the similar
lines. You making transfers out to other funds to help finance some of these capital project things. Um, and there's some other things factored in there, too. But on a net basis, you had an overall increase in your net position for the year of about 184,000.
Now, the sewer fund, um, same layout here. Operating revenues compared to last year increased about $83,000. Operating expenses were also, uh, up by about $256,000. A lot of this was due to increased uh,
charges from the Cooching Area Sanitary District. And then the non-operating activity, same explanation that I just talked about on the on the water fund, mostly related to capital project type activity and recognizing assets and things along
those lines. Um, so because of the the large assets that were recognized when they were transferred back into the sewer fund, you did have quite the increase in net position here. Um but the increase just from operations which um you know is maybe a better thing to
focus on is 207,000. And then the next page just shows the cash in both of these funds over the past five years. Um and and with the capital purchases and the transfers out to capital project funds, I would say
that's what's accounting for the decreases in cash here. past couple years those those investments into the the infrastructure um because you know looking at these most years if you look at operations on the last two slides oper operations are positive you know
you have positive operating income it's just the amount that you're outlaying into these capital assets that's causing the cash balance itself to decrease. Okay. And then the next uh couple slides here just look at everything wrapped together as a whole. Just the the total
citywide all of the funds, every fund we just talked about plus the the non- major ones, all of them wrapped together. And here we have the overall citywide assets. So this has um long-term items, too. Now, this is this is basically broken out between current
assets, things that are more liquid like cash and uh receivables and more short-term things versus your capital assets, you know, your roads, your infrastructure, equipment, etc. Um, and you can see the overall you've had
you've had increases in your assets. Um but uh a lot of that increase is attribut attributable to amounts that have been put into infrastructure and and roads and so on. Next page, same layout, but looking at
overall citywide liabilities. Um so I would say for starters, let's just ignore the uh the green and the the purple there in particular. And looking at the just the red and the blue pretty flat over the past few years. Um pretty
pretty consistent. Um the the reason I say ignore the the purple in particular. So OPED that's that's green is green is OPED. That's your other postemployment benefits. Basically it's like projected liabilities for post-employment benefits
for retired employees. Um and then and then the pension liability that's the states the you know parah their statewide pension plan they project their future overall unfunded liability. They come up with a large a large number
in the billions and then they allocate a portion of that out to every city and they have you record it on your financial statements. You you could pay it off even if you wanted to. So it's it's in my mind it shouldn't be recorded. Um but um we're required to
record it. But that's why on the next slide um I like to exclude those um I guess I I don't say it here, but I I I believe this does exclude those pension liabilities since they jump around quite a bit. And this is just looking at assets from two slides ago versus the
liabilities from the last slide and then on a net basis um just the the difference between the two over the past 5 years. So you can see um with everything considered all those non-current assets and debt and capital infrastructure you do have an upward
trend over the past five years. And then finally just two slides here showing future debt payments. Um so this is the first one here is for governmental funds. This is your taxable lease revenue bonds. Um which is essentially your Voyagers National Park.
Um and then your sales tax uh bonds as well. So both of these have de dedicated funding sources. Um but this is the principal and interest amounts that are due each year until the payoff of the the debt. And then same thing here for uh your
business type activities or your essentially your water fund. Um, this graph does look a little odd, but it's basically because there's just one lump sum payment due in 2025 and then that's, you know, based on debt that's outstanding currently, you know, at the
end of the year. Um, not including any future issuances that may be being discussed. So, I know that's a lot of information. Um, any questions? Anything you want to circle back to? from the council. Any questions for
Ryan? Ryan, I have one if you don't mind. Yep. which is there's a slide that you produced if the ambulance receivable is uncollectible, but does that illustration
use budgeted or actual in terms of the unrestricted fund balance calculation? Yeah, that's that that uses budgeted. So that's that's the kinder approach I will say to calculating that ratio. Um, so if
you were to use actual, I think it drops it down to somewhere around 23%. Somewhere in that ballpark, thank you. Yeah. Questions from council. No more questions at this time, Ryan.
Okay. Okay. Well, I will stop sharing my screen. Um, but if any questions do come up later, I mean, my my contact information is is on that last slide and certainly feel free to reach out. Thank you, Ryan. Excuse me. Thank you.
That concludes our 2024 audit presentation. I don't believe formal action needs to be taken for item three, but we will move on under new business to item four,
which would be to approve the 2024 annual audit uh as prepared by Schlenner Wer and Co. I'll move second. I'll second volume. motion by um councilors Kaylor and
seconded by Wagner. I don't know that uh well there's room for discussion. I don't know that it necessarily means much on how one votes, but um
until we're going to take some type of step forward with corrective action on some of these different topics, I'm my feelings are that that's should be where the discussion heads whether it's
the middle of the year or not. The real picture is getting more murky and clear by the day. So, um we certainly can continue doing business like we have, but we can't do it forever and that's only my opinion.
So, is there any other discussion? question. I I I I I'll vote yes and the audit is approved
unanimously. Thank you. That is the last item on this evening's agenda. Is there any other business to come before the council? Seeing no further business, uh we do have several community members um in
attendance. So I would like to invite if there's any comment uh we would allow that and subject to uh the usual five minutes. [Music] Hi, my name is Alan Cruz, 8741 East
Abyspo Avenue, Mesa, Arizona. Um, came before the council a couple weeks ago to let you know that I'm contemplating bringing my business here. Um, the reason that this is important, um, and again, I'm originally from here.
I was born here, raised here is, you know, the thing that I found interesting about the report is he said that revenue covers your budget. Except my concern is is that for many, many
years, decades, your revenue to determine on what you can or cannot afford has been supported by 25 to 30% of free cash from the state. that instead of utilizing those funds to
help correct the issues and fix the need for the sizable amount of LG that we that we receive, we use it as an offset to our way of life. And so
we, for example, you've approved approved like an $18 million budget this year, but your budget is supported by $4.5 million from the state, which if LGA stopped immediately, which
we all know that it can happen, if it stops immediately, you have a a 30% shortfall. Yet this city predominantly well before you and through it continues to operate as if
this money is going to come in. Now this community is not the only one that has this issue. You know the the discussion around LGA, you know, the the mayor of Elely was stated in the paper is saying that it's lifeblood for the community of
Elely. Well, that shouldn't be the that shouldn't be the across the board way of thinking about it. It should be the stuff that allows you to pull out of the hole that you're in to set some things right.
If you had been operating without L with LGA as more of a growth fund versus a let's keep things going the way they've been over the last let's say 10 or 20 years. How many homes can, you know, 30,
40, $50 million built? How much can it afford to, you know, keep a hospital here? What kind of legal can you force on the county for both St. Louis and Cooch
to give you guys the special taxing taxing district for you guys to be able to pay for the ambulance service which is the easiest quickest way of dealing with that fund issue which I still don't understand why that isn't a thing.
Now I'm not saying that that's because you guys haven't done it or or because they're being obstructionists. I'm just saying is is that I'd be fighting tooth and nail because the the taxpayers of this city, you guys included, have been funding the the ambulance service for a
county and then some. Like I would think that that would be some sort of an equal protection clause issue for taxation without representation for these for these people because they're paying to offset someone else's uh critical services.
You haven't even threatened to cut off those services in a as counter to state law to try to get this to be moved. And this isn't just a this council at this time dealing with it. This is years and years and years and I totally understand
that. But with the kind of businesses that this community needs to find to bring in the kind of jobs and and and personnel and people under the age of, you know, 50, 40 that
have families growing to grow this community once more. There are hundreds and hundreds of houses that have to be dealt with. There's the infrastructure that goes along with that. The Seni city engineer
would probably go apoplelectic and have a heart attack considering it, but those are the things that aren't being discussed. And if they are being discussed, the public sure as hell don't know about it. I'm seriously considering bringing my
business here. I want to see change. I think that there is plenty of citizens in this city and in this region that also want to see the same thing. But it is up to you guys on whether you're going to be able to make the radical
decisions to make the change or it's going to be the same, you know, same day, different year uh for business as usual. Except here's the issue. Your time is up. So, as is mine is
something has to be done and I'm hoping that uh that you guys will take this seriously and if we have to cut if we have to take it if we have to take it we will to be able to move forward. Can I answer some of his Oh, sure. Is that
okay to talk to you? Yeah, absolutely. Okay. So when I first got on the council here, I saw what the ambulance um amount of money that you know we were paying out and everything and it wasn't
the fault of any administration fact at all. So we decided to try to get a taxing district. Mhm. We spent a ton of hours trying to get the county to help us. Reineer
St. Louis County cuz we're hauling in St. Louis County, too. Yep. The number one priority for this council and the council before was to get that fixed, but we were like
talking to a cement wall. We went meeting after meeting after meeting and no help. And that's not the only place that International Falls is um doing the
favoritism to the people by the library is another one. We pay for all the library. The city of International Falls, not the county, right? And we don't get help from them either. The list I could write you a list, right?
So, when I got on this thing, you know, I knew I saw the red in the ambulance. Mhm. But I just want you to know, and I'm glad you want to come here. Okay. I say that to you. I hope you do.
But we tried. We tried. We tried. I don't know how many meetings. There were meetings when maybe you're going to 1215 meetings. Not all for that, but if you added them up for the month, it was like 12 15 meetings per month as a city
councelor. Councelor Holden, what I will tell you is is that and this is the same thing that I I said the last time I was here is you have to tell us you you guys have to tell us that you guys are running
into brick walls. Well, we are because this group I've watched over the last 5, 6 months, we can fill a room. This community can fill a room. Mhm. But if they don't know that the county is the problem, how can how can you how how how
can they help you that way? Um I I want to So anyway, I I don't mean to take up time, but I would just say is that if that's what you're doing, let us know cuz there's a lot of people that just don't know, okay? because it it it makes me feel good that you guys have been
going at it and maybe even, you know, bashing your face into a wall, but at least you're bashing. I we need to know that and I appreciate that. That's what's going We all sat down here and the mayor before the current mayor asked us what our number one priority was. You
can ask Walt, you can ask Tim, you can ask Pete. Our new mayor wasn't here yet. Mhm. The number one priority was to get the ambulance thing fixed, but we got no help at all. None. And we're hauling all
over the county. Import these citizens to go to work for you, sir. They will. I want to I I don't want to No, you're going to I'd like you to stay up there. Oh. Um, I want to interject some history into this and I will some of the things that councelor
Holden mentioned I I agree with and supporting our ambulance is certainly one of them, but some of the the history of it I was actually discussing with our lobbyist who is former Representative Ecklund was
that back when we went to ALS service Um the county proudly told us then that they would not entertain that idea. Um we immediately started losing money and that's how the city kept their books. That's how we still keep our
books and we're still having the same problem. I can say with confidence the city of Raineer is not interested in joining a joint powers taxing district to support the ambulance. Um, if that's
changed, it's been recent. I do not think in the most recent discussions um, with certain county board members uh, that they're interested in doing that. They have offered some other things
towards the ambulance. Um, and so we have continued to run that service. Um, and no, so one is that puts us in an interesting spot. Mhm. Maybe
they don't care. It could be a myriad of things, but one thing I want to point out um in support of the ambulance is when we talk about Rineer as a municipality because it's the only one close by or the county that
we reside in in Cooching is I want to make sure that we're not making the argument that we're owed for the entire ambulance. No, because their portion of it for sure because we're not even accounting for our own portion that's
lost borne on our own service to our own citizens. Uh we will have $2.5 million of ambulance debt by the end of 2026. Uh that estimation is on the city fund balance worksheets. It's subject to
change. A healthy portion of that is ours that we've never accounted for. Sure. And so going forward, we're going to have an ambulance deficit as long as we continue on with this service. And I
know from talking to to Ryan, our auditor, that it's been um discussed about using municipal levy tax dollars to subsidize the ambulance service. And I know that hasn't been popular,
but nobody's coming in to bail us out in the of the debt that we're already in. And so that's going to be levy dollars that um you know, likely lend to a payoff for sure. But there's been an
argument um you know I think made by the auditor that he's been warning us about this situation and it's it's where things are. Um I with
the LGA because I feel these are two really good topics that you bring up. LGA was created as an equitable distribution program so that it evened out the disparity in communities with
different tax capacities which um is why we get a lot of LGA is for a few different reasons but one because we don't have the tax capacities that other towns our size do. Correct. Um, so if we didn't have it, we would
have to levy that born on our own citizens, uh, which would be detrimental, which why it was created. Two or three years ago, we received a half a million dollar annual increase in the appropriation. Um, we didn't put any of it towards the
ambulance. um you know I so I just want to touch because I think the question is going to keep coming up whether you are sitting up here or not. Um the I know that from hearing from the citizens and I'd be
curious for the council the ambulance uh is important. Uh I I hear that every day from our citizens and I I know councelor Holden does, but right now we're footing the whole bill and we're not even accounting for the
portion that that we're providing. Right. So, well, it'd be a lot easier for you guys to budget accordingly if you were only budgeting for what's actually international falls expenses. And there's some options going forward that I would like to suggest as well um
in time. So, thank you. So, anyway, just use this city, gentlemen. Use this city. They're not just here to come and bark at you guys. They can bark at others as well for the betterment of this city. Utilize them. They're ready to go to
work. Thanks, guys. Thank you. Good evening. Hi Sharon Ball, 120 Cedar Road. I have one question and then I have a statement to read.
My question is when you guys decided to take this loan out for 11,000 11,700,000 or 800,000 last time we had a meeting. Was there a bond loan that was coming due that you had to pay? So, you had to
pass that through in order to pay that bond loan because you didn't have the money to pay for it. Yes or no? Well, there wasn't any debt due. Well, there w there was a $772,000
water bond due September 1st. Okay. So, did we have the money to pay for that? I don't know. Um, that's that's a little trickier question than I know that sounds black and white. I I don't know. I think the better
question would have been could we have come up with the money to pay it off and I assume that we could. We budgeted for that in 2025. We were anticipating paying that out one way or another. Okay. So, you're telling me there that was all there.
There were budgeted dollars in the 2000. So, I'm going to go ahead and make my statement to you. Um, I have waited patiently, and this has nothing to do with this, but this has to do with the systemic problems that go on in this council. And I've watched it for
about 28 years. Okay? I have waited patiently for someone, anyone on this council, to do the right thing regarding the name calling that occurred in this chamber on February 18th, 2025. and not one person on the
panel has even tried to investigate what happened by sending that video out to an expert. That tells me it's because you either don't care or you don't want to take the responsibility. Okay. So, that said, I
kind of think of things from a criminal justice philosophy since that's been what I've studied my whole life. Um, so I use the analogy of a tree.
You've destroyed certain branches of that tree and therefore you're tainting the whole tree. Okay? You have destroyed trust. You have destroyed respect for
your citizens. You don't take responsibility. And you have all the power. So who is the per? You're destroying this city. Okay.
Okay. So I watched and documented at least three incidences in which you've thrown the IFPD under the bus. You've thrown me under the bus. I've watched you throw other people under the bus. Every time that you don't want to take responsibility for something, you cover
your butts and you throw somebody else under the butt. I mean, under the bus. And I'm going to be doing some work on this on my Facebook page, Tik Tok, Instagram, every social media site that I have available to me. And
there, what I've already put on there has got over 15,000 views. So, there are people interested in what you're doing. Okay? calling me that name. I want I would like somebody
to have the balls to say it to my face, but you won't. And in the past, you know, you don't allow me to get on agenda because there's censorship. Now, since you have
your new charter, all of you have to decide that you like the topic somebody is going to talk about. And if it's uncomfortable for you, you just don't allow them to get on the agenda. So, you give them their five minutes and then you kick them out. And yet, I watch other people get up here and you let
them talk and encourage them to talk because it's what you want to hear. You don't want to hear what you don't want to hear. So, that was my main point. I wanted to know if anybody had the balls to say anything
to my face to admit who said that on the video because I'll tell you what, I'm ready to have it sent out. And if that's my time, stay tuned. I invite all of you to go on to my
Facebook page because I'm going to be hitting so many things that you're not telling people and I'm going to expose this can council and I'm going to work so that you don't get elected next time because you don't
deserve to be on this panel and shame on you for not having the balls to teleport. Thank you, Miss Ball. I got to go to work, Mr. Mayor. Hello. Good evening. My name is Joe Caner and I'm from 1607
13th Avenue West. Apparent there was a decision made by the city works to use the dirt and clay around the water treatment plant and use it to cover the dump. Was this dirt clay
built with FEMA money to protect the plant during flooding and possibly future flooding? My understanding is that the material was hauled here from southern Minnesota
in the order to get the right type of soil for a brim. I was told that the reason given to much time to mow uh but they still have to mow the area
anyways. and now the plant isn't protected. Are these the type of decisions that could cost us more money in the long run? This would be a good question to ask. Uh
if we're maybe after all the storms we're having with flooding going on in 2022, I believe it was and you know are we got
a brim and then we don't have it right now. Are we going to be protected or city water going to be protected or not? Well, thank you for the question in a couple different answers and then I'll
probably invite uh Ted Bro, our director of public works up. I think you're referring to there was a levy or a dyke or whatever a burm built around the water plant at one time which um was not it was
temporary in nature. So because it was not engineered and it was in an emergency setting there was no warranty from the powers that be meaning the federal government or FEMA because they it was temporary in nature. So, it was
not there was no point in leaving it stay. I guess um as to where the fill was hauled or any of those things, I would um I would relay that. But my belief is that some of it did end up for
surface material or closure of the city's demolition landfill. Um now I'm looking at Jason and Ted that in the new water treatment rehabilitation. I think that there is some things that
are being addressed in regard to a future flood. One would be the raw water intake gate that does not currently function. Uh one of the issues during the flood of 22 3 years ago, hard to believe it's been that long.
um was that when the surface level of the water becomes high enough, it then gravitates into the water plant and when you can't shut the manual shut off in that system, the water plant could be
inundated even if it was protected with a dyke. So, it's a bit more complex. Um Jason or Ted I with the rehabilitation is there a plan to build another is it term levy or dyke I don't know what it
is the burn that was built in 2022 was built by the Army Corps of Engineers and part of the deal was it had to be removed since it was not certified it had to be removed within 30 days of the flood
event being removed. The clay was hauled was found and dug up within two miles of the water plant. So, it didn't come from out of town. It was it was it was less than 2 miles
away, but we were required by the Army Corps to remove it within 30 days of the flood event. We chose to FEMA paid to have the clear removed. We
had it stored by the demo site, which the city had never budgeted any money to close the demo site. So, it made sense to use that material to cap the demo site. Now, as far as new burn, I'm working with USDA to try and get
funding. We are putting some things in place to mechanically control water that comes into the plant gravity. The Army Corps is also another option, but to get funding from them for a new
burn, it would take up to 10 years. Thank you, Ted. 10 years. Pardon? I mean, do we I mean, 10 years is a long time and in our floods that we've had in the past are less than 10 years apart.
And this is going to be something that we'll need to have to do before that 10 years and be able to protect our water treatment plant. That's that's where I'm kind of going
with this. Thank you. We uh certainly want to make sure that your concerns are heard and want to get the right information out to the residents. Sure. Of the community. Um so, thank you. Okay.
If there's no further comment at this time and no further business to come before the council, I'm going to adjourn the meeting. Thank you, Emma. So, first of all, I want to thank Ryan Schmidt, who was online until I booted
him. He was unfortunately still sh uh screen sharing, so um had to kind of eject him from the meeting. But I did want to formally thank Ryan for his audit presentation. He and his entire team were a pleasure to work with. Um, we're very fortunate to have such a
knowledgeable group of CPAs that oversee our audit every year. Um, Ryan brings a lot of knowledge and leadership to his team in the specialized accounting field of municipal finance. Um, so I really wanted to formally thank Ryan and his
his team over at Schlenerw. Um, but what I primarily wanted to address is a concern that I've seen circulating for a while now. There have been both insinuations, both spoken and unspoken, that public funds were somehow
misappropriated or that improper accounting practices have been taking place. And I want to reiterate that the audit found no such wrongdoing. And continuing to suggest otherwise or allowing that impression to stand uncorrected is not just misleading, but
it's harmful. When the record isn't corrected, it fuels a narrative that's not based in fact. There is a kind of rhetoric that undermines public trust. It spreads suspicion where there is no evidence. It veers into a very dangerous territory, whether that's the intention
or not. This kind of rhetoric and propaganda undermines confidence in local government finance. It misinforms the community and it risks damaging damaging reputations without cause. We owe it to the public to deal in facts, not insinuations. Transparency is critical, but so is accountability for
how we speak about our community and those who serve it. Um, I just want to formally thank the council for your commitment to honest, respectful dialogue with regards to our city finances. I hope with everything that everyone heard today that it'll put some of these rumors and false insinuations to rest. When we know better, we do
better as a community. And I hope that now people have heard the same information from a third party which um over at Schlenner winter we can move forward and stop the spread of misinformation. Thank you. Thank you Emma.
Um I would like to add to that briefly that um I would agree with you Emma. Um, I have talked to Ryan and about that topic and for
those of us that are elected that if we were aware that there was uh some instance of of misuse or wrongdoing, it would immediately become uh something that we would have to act on. And I have
reiterated u whether I've been questioned or not uh by constituents or anyone there else that I'm not aware of that and the audit has uh once again uh revealed a clean opinion.
So, I would just like to echo that that if there's any concerns, um they would be about ultimately what is the council's authority and how funds may be spent, but certainly there's been no findings. So, Emma, thank you. That's
a good input um and to the council. So, is there any more business at this time to come forward? Have a good evening everyone. This meeting is adjourned.