Item 3.6 Adopting the Annual Comprehensive Financial Report
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty June 22, 2026
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.6 – Financial Statements
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
X Is a strong organization that is committed to leading the community through innovative communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff are recommending that the City Council adopt a resolution adopting the annual comprehensive financial
report.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City annually prepares an Annual Comprehensive Financial Report (the Report). In accordance with Minnesota
Statutes, the financial statements within the City’s Report must be audited on an annual basis. Said audit has been
completed by BerganKDV, who reviewed the results of the audit with the City Council during a special meeting at
530PM on June 22, 2026. A short summary of each of the three documents attached is below:
The Report
This is a comprehensive document regarding the finances of the City of Otsego and is prepared by the City. The Report
includes narrative discussion, financial statements, note disclosures, statistical tables, and much more. Maybe the
most important aspect of the Report is the Independent Auditor’s Report which is issued by BerganKDV. The audit
report outlines that the City has received an Unmodified opinion, also known as a clean opinion, and is the best
opinion that can be given.
Communications Letter
This document is prepared by BerganKDV and is a blend of required communications and summary financial analysis.
This was the primary source for the discussion during the special meeting.
Reports on Internal Control and Compliance
This document contains reporting required by BerganKDV on other aspects of the City’s audit. This document contains
multiple components:
1) Report on Uniform Guidance (Single Audit)
2) Report on Government Auditing Standards
3) Report on Minnesota Legal Compliance (MN Statutes)
SUPPORTING DOCUMENTS ATTACHED:
• Communications Letter
• Reports on Internal Control and Compliance
• Annual Comprehensive Financial Report
o Note, due to the size of this document, it will only be available in electronic format.
• Resolution 2026-47
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2026-47 adopting the annual comprehensive financial report for the year ended
December 31, 2025.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 101 – General – Finance (41600)
Yes
City of Otsego
Wright County, Minnesota
Communications Letter
December 31, 2025
City of Otsego
Table of Contents
Report on Matters Identified as a Result of
the Audit of the Basic Financial Statements 1
Significant Deficiency 3
Required Communication 4
Financial Analysis 9
Emerging Issues 20
1
Report on Matters Identified as a Result of
the Audit of the Basic Financial Statements
Honorable Mayor, Members of the
City Council and Management
City of Otsego
Otsego, Minnesota
In planning and performing our audit of the financial statements of the governmental activities,
business-type activities, each major fund, and the aggregate remaining fund information of the
City of Otsego, Minnesota, as of and for the year ended December 31, 2025, 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, we considered the City's internal control over financial reporting (internal
control) as a basis for designing audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinions on the financial statements, but not for the purpose of expressing
an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an
opinion on the effectiveness of the City's internal control over financial reporting.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies
may exist that have not been identified. In addition, because of inherent limitations in internal
control, including the possibility of management override of controls, misstatements due to error, or
fraud may occur and not be detected by such controls. However, as discussed below, we identified a
certain deficiency in internal control that we consider to be a significant deficiency.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the City's basic financial statements will not
be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the
likelihood of an event occurring is either reasonably possible or probable as defined as follows:
• Reasonably possible. The chance of the future event or events occurring is more than remote
but less than likely.
• Probable. The future event or events are likely to occur.
We did not identify any deficiencies in internal control that we consider to be material weaknesses.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over
financial reporting that is less severe than a material weakness, yet important enough to merit
attention by those charged with governance. The significant deficiency identified is stated within
this letter.
2
The accompanying memorandum also includes financial analysis provided as a basis for discussion.
The matters discussed herein were considered by us during our audit and they do not modify the
opinion expressed in our Independent Auditor's Report dated June 3, 2026, on such statements.
The purpose of this communication, which is an integral part of our audit, is to describe for the
Members of the City Council and management and others within the City and state oversight agencies
the scope of our testing of internal control and the results of that testing. Accordingly, this
communication is not intended to be and should not be used for any other purpose.
St. Cloud, Minnesota
June 3, 2026
3
City of Otsego
Significant Deficiency
Lack of Segregation of Accounting Duties
The City had a lack of segregation of accounting duties due to a limited number of office employees.
Adequate segregation of accounting duties is in place when the following four areas of a transaction
have been separated: authorization, custody, recording, and reconciliation. Examples of functions
within the City that demonstrate this lack of segregation of accounting duties include, but are not
limited to, the following:
• Cash Receipts – The Accounting Clerk and Accountant have access to initiate and record
receipts. The Accounting Clerk is also responsible for depositing cash receipts. The
Accountant is also involved in the reconciliation process and has full access to the general
ledger.
• Utility Billing Process – The Utility Billing Clerk is responsible for handling customer payments,
and in the absence of the Accounting Clerk, has the access to deposit payments received.
• Disbursements – Due to small staff the City allows access to other employees to perform
disbursement related activities in order to fill in for normal roles and responsibilities in the
absences of other staff. In the absence of the Accountant, the Accounting Clerk has access to
record and cut checks and has access to blank checks.
• Financial Reporting and Journal Entry Process – The Finance Director and Accountant have full
access to the general ledger and can make adjustments without review during the monthly
and year-end financial closing process.
Management and the City Council must remain aware of this situation and management should
continually monitor internal control, including changes that occur.
4
City of Otsego
Required Communication
We have audited the basic financial statements of the governmental activities, business-type
activities, each major fund, and the aggregate remaining fund information of the City as of and for
the year ended December 31, 2025. Professional standards require that we advise you of the
following matters related to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter, our responsibility, as described by professional
standards, is to form and express opinions about whether the basic financial statements prepared by
management with your oversight are presented fairly, in all material respects, in accordance with
accounting principles generally accepted in the United States of America. Our audit of the basic
financial statements does not relieve you or management of its respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the basic financial statements are free of
material misstatement. An audit of the basic financial statements includes consideration of internal
control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the
internal control of the City solely for the purpose of determining our audit procedures and not to
provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgement, relevant to your responsibilities in overseeing the financial reporting
process. However, we are not required to design procedures for the purpose of identifying other
matters to communicate to you.
Generally accepted accounting principles provide for certain Required Supplementary Information
(RSI) to supplement the basic financial statements. Our responsibility with respect to the RSI, which
supplements the basic financial statements, is to apply certain limited procedures in accordance
with generally accepted auditing standards. However, the RSI was not audited and, because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance, we do not express an opinion or provide any assurance on the RSI.
Our responsibility for the supplementary information accompanying the basic financial statements,
as described by professional standards, is to evaluate the presentation of the supplementary
information in relation to the basic financial statements as a whole and to report on whether the
supplementary information is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
Our responsibility with respect to the other information in documents containing the audited basic
financial statements and auditor's report does not extend beyond the basic financial information
identified in the report. We have no responsibility for determining whether this other information is
properly stated. This other information was not audited, and we do not express an opinion or provide
any assurance on it.
5
City of Otsego
Required Communication
Our Responsibility in Relation to Government Auditing Standards
As communicated in our engagement letter, part of obtaining reasonable assurance about whether
the basic financial statements are free of material misstatement, we performed tests of the City's
compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of basic
financial statement amounts. However, the objective of our tests was not to provide an opinion on
compliance with such provisions.
Our Responsibility in Relation to Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance)
As communicated in our engagement letter, in accordance with the Uniform Guidance, we examined
on a test basis, evidence about the City's compliance with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Compliance Supplement applicable to
each of its major federal programs for the purpose of expressing an opinion on the City's compliance
with those requirements. While our audit provided a reasonable basis for our opinion, it did not
provide a legal determination on the City's compliance with those requirements.
In planning and performing our audit of compliance, we considered the City's internal control over
compliance with the types of requirements that could have a direct and material effect on each
major federal program to determine the auditing procedures that are appropriate in the
circumstances for the purpose of expressing an opinion on compliance for each major federal
program and to test and report on internal control over compliance in accordance with the Uniform
Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control
over compliance.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated
to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, our firm, and our network firms have
complied with all relevant ethical requirements regarding independence.
Significant Risks
We addressed the following significant risks of material misstatement identified in our planning
procedures:
• Risk of Improper Revenue Recognition – Revenue recognition is considered a fraud risk on
substantially all engagements as it is generally the largest line item impacting a City's change
in fund balance or net position.
• Risk of Misappropriation of Assets – If duties cannot be appropriately segregated within
finance department, there is a risk of misappropriation of assets.
• Risk of Management Override of Controls – Management override of internal control is
considered a risk in substantially all engagements as management may be incentivized to
produce better results.
• Pension Valuation – Net Pension Liability, Deferred Outflows of Resources Related to Pensions,
and Deferred Inflows of Resources Related to Pensions – These are generally material to the
financial statements and involve significant estimates.
6
City of Otsego
Required Communication
Significant Risks (Continued)
• Recording of Capital Assets and Related Payables – Due to the significant capital activity there
is a risk of error in recording capital assets and related payables.
• Capital Assets Valuation - Capital assets and related depreciation are material to the financial
statements and involve significant estimates.
Qualitative Aspects of the City's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of
the significant accounting policies adopted by the City is included in the notes to the basic financial
statements. There have been no initial selection of accounting policies and no changes to significant
accounting policies or their application during 2025. No matters have come to our attention that
would require us, under professional standards, to inform you about (1) the methods used to account
for significant unusual transactions and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates and Related Disclosures
Accounting estimates and related disclosures are an integral part of the basic financial statements
prepared by management and are based on management's current judgements. Those judgements
are normally based on knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the basic financial statements and because of the possibility that future events
affecting them may differ markedly from management's current judgements. The most sensitive
estimates affecting the basic financial statements relate to:
Net Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows of
Resources Related to Pensions – These balances are based on an allocation by the pension plans
using estimates based on contributions.
Depreciation – The City is currently depreciating its capital assets over their estimated useful
lives, as determined by management, using the straight-line method.
We evaluated the key factors and assumptions used to develop the accounting estimates and
determined that they are reasonable in relation to the basic financial statements taken as a whole
and in relation to the applicable opinion units.
Financial Statement Disclosures
Certain basic financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The basic financial statement
disclosures are neutral, consistent, and clear.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance
of the audit.
7
City of Otsego
Required Communication
Uncorrected and Corrected Misstatements
For the purposes of this communication, professional standards require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe are
trivial, and communicate them to the appropriate level of management. Further, professional
standards require us to also communicate the effects of uncorrected misstatements related to
prior periods on the relevant classes of transactions, account balances or disclosures, and the
basic financial statements taken as a whole and each applicable opinion unit.
Management did not identify, and we did not notify them of any uncorrected financial statement
misstatements.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. None of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the basic financial
statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting,
or auditing matter, which could be significant to the City's basic financial statements or the
auditor's report. No such disagreements arose during the course of our audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in the
management representation letter.
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management has informed us that, and to our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, significant events
or transactions that occurred during the year, operating and regulatory conditions affecting the City,
and operational plans and strategies that may affect the risks of material misstatement. None of the
matters discussed resulted in a condition to our retention as the City's auditor.
Other Information Included in Annual Reports
Pursuant to professional standards, our responsibility as auditors for other information, whether
financial or nonfinancial, included in the City's annual reports, does not extend beyond the
information identified in the audit report, and we are not required to perform any procedures to
corroborate such other information.
8
City of Otsego
Required Communication
Other Information Included in Annual Reports (Continued)
We applied certain limited procedures to the RSI that supplements the basic financial statements.
Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any
assurance on the RSI.
With respect to the supplementary information accompanying the financial statements, we made
certain inquiries of management and evaluated the form, content and methods of preparing the
information to determine that the information complies with accounting principles generally
accepted in the United States of America, the method of preparing it has not changed from the
prior period, and the information is appropriate and complete in relation to our audit of the
financial statements. We compared and reconciled the supplementary information to the
underlying accounting records used to prepare the basic financial statements or to the basic
financial statements themselves.
We were not engaged to report on the other information accompanying the basic financial
statements but are not RSI. Such information has 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 it.
Our responsibility also includes communicating to you any information which we believe is a material
misstatement of fact. Nothing came to our attention that caused us to believe that such information,
or its manner of presentation, is materially inconsistent with the information, or manner of its
presentation, appearing in the basic financial statements.
9
City of Otsego
Financial Analysis
The following pages provide graphic representation of select data pertaining to the financial position
and operations of the City for the past five years. Our analysis of each graph is presented to provide
a basis for discussion of past performance and how implementing certain changes may enhance
future performance. We suggest you view each graph and document if our analysis is consistent with
yours. A subsequent discussion of this information should be useful for planning purposes.
General Fund
The following graph summarizes the past five years of General Fund revenues, expenditures, and
fund balance. For the year ended December 31, 2025, revenues for the City's General Fund totaled
$10,229,166. This represents an increase of $1,027,135, or 11.2%, from 2024. General Fund
expenditures totaled $9,712,191 in 2025, which is an increase of $629,097 or 6.9%, from 2024.
Revenue and expenditure activity, combined with other financing sources of $478,000, resulted in an
increase in fund balance of $994,975 in 2025.
The ending General Fund balance of $6,532,427 is further broken down into spending categories;
$304,402 is for nonspendable fund balances which is made up of $102,202 of prepaid items and
$202,200 of assets held for resale. In addition, $313,682 is assigned for insurance deductibles and
$74,462 is assigned for educational programs. An amount of $90,079 is restricted for public safety
purposes. This leaves $5,749,802 available for spending on any purpose, which is considered
unassigned fund balance. The City's policy is to maintain a minimum fund balance in the General
Fund of 45.0% of the subsequent years' expenditures. The fund balance at December 31, 2025,
represents 59.3% of 2026 budgeted expenditures of $11,019,558.
2021 2022 2023 2024 2025
Total Revenues $7,805,004 $7,832,257 $8,156,341 $9,202,031 $10,229,166
Total Expenditures 6,401,090 7,107,925 7,737,399 9,083,094 9,712,191
Fund Balance 5,199,901 4,951,443 4,981,515 5,537,452 6,532,427
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
General Fund
10
City of Otsego
Financial Analysis
General Fund Revenues
Trends for each of the City's major revenue classifications over the past five years are graphically
portrayed in the bar chart below.
As stated earlier, General Fund revenues increased $1,027,135, or 11.2%, from 2024. Taxes increased
$616,357 due to an increased tax levy. Licenses and permits increased $379,693 due to more building
permits being issued in 2025. Other sources of revenue stayed relatively consistent with the prior
year.
2021 2022 2023 2024 2025
Investment Income $(48,486)$(149,701)$295,571 $274,351 $332,859
Other 86,065 117,335 87,939 75,770 92,602
Intergovernmental 88,037 107,732 575,521 213,323 148,074
Charges for Services 427,809 476,632 272,290 282,489 303,483
Licenses and Permits 2,529,588 2,123,810 1,544,769 1,868,466 2,248,159
Taxes 4,721,991 5,156,449 5,380,251 6,487,632 7,103,989
$(1,000,000)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
General Fund Revenues
11
City of Otsego
Financial Analysis
General Fund Revenues (Continued)
The allocation of revenues by source within each major classification is presented below for 2025 and
2024. The City continues to rely on tax revenue as the majority of its General Fund revenue,
accounting for 69.4% of its total revenue in 2025. Licenses and Permits increased by 1.7% due to
more building permits being issued in 2025. Other sources of revenue were fairly consistent with the
prior year.
Taxes
69.4%
Intergovernmental
1.4%
Licenses and
Permits
22.0%
Charges for
Services
3.0%
Investment
Income
3.3%
Other
0.9%
2025 General Fund Revenues
Taxes
70.5%Intergovernmental
2.3%
Licenses and
Permits
20.3%
Charges for
Services
3.1%
Investment
Income
3.0%
Other
0.8%
2024 General Fund Revenues
12
City of Otsego
Financial Analysis
General Fund Revenues Budget and Actual
The graph below outlines the budget and actual results for General Fund revenues.
Taxes Intergovernmental
Licenses and
Permits
Charges for
Services Investment Income Other
Budget $7,109,002 $209,554 $1,703,459 $244,830 $142,657 $52,600
Actual 7,103,989 148,074 2,248,159 303,483 $332,859 92,602
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
2025 General Fund Revenues
Budget and Actual
Overall, actual revenue exceeded budgeted revenue by $767,064 or 8.1%. Licenses and permits
revenue was $544,700 over budget due to actual building permit activity exceeding budgeted
assumptions for building permit activity. Investment income was over budget $190,202 due to better
than anticipated market conditions. The remaining revenue sources were consistent with budgeted
amounts.
13
City of Otsego
Financial Analysis
General Fund Expenditures
As discussed previously, total General Fund expenditures increased $629,097 or 6.9%, from 2024.
Public safety expenditures increased $260,628 due to increases in public safety contracts for law
enforcement and fire protection. Public works expenditures increased $131,165 due to increased
compost site expenditures. General government expenditures increased $123,057 due to having a full
year of staff in the finance department as well as the communication specialist being employed for
the full year. Parks and recreation expenditures increased $122,382 due to the Recreation
Coordinator being employed for the full year, as well as hiring additional seasonal maintenance
employees in 2025.
2021 2022 2023 2024 2025
General Government $1,358,500 $1,574,091 $1,678,407 $1,961,586 $2,084,643
Public Safety 2,879,409 3,080,382 3,323,208 4,040,999 4,301,627
Public Works 1,287,788 1,503,871 1,694,596 1,891,835 2,023,000
Parks and Recreation 784,145 857,852 949,400 1,098,074 1,220,456
Economic Development 91,248 91,729 91,788 90,600 82,465
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
General Fund Expenditures
14
City of Otsego
Financial Analysis
General Fund Expenditures (Continued)
The following charts illustrate the allocation of General Fund expenditures by program/function. The
allocation of total expenditures by program was consistent with the prior year.
General
Government
21.5%
Public Safety
44.3%Public Works
20.8%
Parks and
Recreation
12.6%
Economic
Development
0.8%
2025 General Fund Expenditures
General
Government
21.6%
Public Safety
44.5%
Public Works
20.8%
Parks and
Recreation
12.1%
Economic
Development
1.0%
2024 General Fund Expenditures
15
City of Otsego
Financial Analysis
General Fund Expenditures Budget and Actual
The graph below outlines the budget and actual results for General Fund expenditures.
General Government Public Safety Public Works Parks and Recreation Economic
Development
Budget $2,196,516 $4,263,499 $2,118,872 $1,250,315 $110,900
Actual $2,084,643 4,301,627 2,023,000 1,220,456 82,465
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
2025 General Fund Expeditures
Budget and Actual
Overall, actual expenditures were under budgeted amounts by $227,911, or 2.3%. General
Government had the largest variance, coming in $111,873 under budget. This variance is due to
staffing vacancies during the year. Public works expenditures were under budget by $95,872 due to
staffing vacancies during the year. The other functions were consistent with the budgeted amounts.
16
City of Otsego
Financial Analysis
Tax Capacity, Levy, and Rates
The chart below graphs the tax capacity, certified tax levy, and City tax rate for 2021 through 2025.
Comparing 2021 through 2025, the City's tax capacity has increased $15,979,371, or 70.7%, to
$38,570,629. The City's certified levy increased $1,564,445, or 20.0%, over the same time frame. As
a result, the City's tax capacity rate has decreased from 34.7% in 2021 to 24.4% in 2025. When
comparing 2024 to 2025 the chart indicates that with a levy increase of $404,109 the tax rate
increased from 23.1% to 24.4% due to a $327,266 decrease in the total tax capacity.
$7,828,425 $8,585,005 $9,330,023 $8,988,761 $9,392,870
$22,591,258
$24,852,871
$31,550,432
$38,897,895 $38,570,629
34.65%34.55%
29.57%
23.11%24.35%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2021 2022 2023 2024 2025
Tax Capacity, Levy, and Rates
Tax Levy Total Tax Capacity Tax Capacity Rate
17
City of Otsego
Financial Analysis
Water Fund
2021 2022 2023 2024 2025
Operating Revenues $2,873,324 $2,904,563 $3,517,118 $2,976,498 $3,376,042
Operating Expenses 1,854,678 2,168,129 2,341,225 2,391,611 2,423,210
Operating Income with
Depreciation 1,018,646 736,434 1,175,893 584,887 952,832
Operating Income without
Depreciation 1,722,474 1,495,022 2,058,476 1,578,051 2,054,973
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Water Fund
The Water Fund experienced operating income of $952,832 in 2025. This is the fifth consecutive year
with an operating income in the five years presented. We have also illustrated the operating income
for the past five years with depreciation, a non-cash expense, factored out of operating expenses. In
2025, the City experienced operating income of $2,054,973 with depreciation expense factored out
of operating expenses. Depreciation expense amortizes the original cost of fund capital assets over
their estimated useful lives.
In 2025, operating revenues increased $399,544, or 13.4%, while operating expenses increased just
$31,599, or 1.3%. Revenues increased due to an increase in rates and customers.
After factoring in non-operating items and capital contributions, in the form of connection fees and
developer and governmental fund contributions, and transfers, the net position in this fund increased
by $10,018,818. Unrestricted net position was $13,014,912 at December 31, 2025.
18
City of Otsego
Financial Analysis
Sewer Fund
2021 2022 2023 2024 2025
Operating Revenues $3,028,939 $3,539,069 $4,082,829 $4,476,296 $4,672,376
Operating Expenses 2,785,098 3,447,706 3,535,347 4,063,708 4,539,439
Operating Income (Loss) with Depreciation 243,841 91,363 547,482 412,588 132,937
Operating Income without Depreciation 1,310,055 1,619,767 2,124,040 2,053,544 2,092,054
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Sewer Fund
In 2025, the Sewer Fund generated an operating income for the fifth time in the five years
presented. In 2025, the Sewer Fund experienced an operating income of $132,937 with depreciation.
Operating revenues increased $196,080 or 4.4% over the prior year, while operating expenses
increased $475,731, or 11.7%. The increase in operating revenues was due to an increase in rates and
number of customers. The increase in operating expenses was due to increased depreciation
expense.
Without depreciation, operating income totaled $2,092,054. We recommend the City continue to
monitor operations and fee structures of this fund to ensure continued positive operating results.
After factoring in non-operating items, capital contributions, in the form of connection fees and
developer and governmental fund contributions, and transfers, the net position in this fund increased
$6,328,357. Unrestricted net position was $32,567,764 at December 31, 2025.
19
City of Otsego
Financial Analysis
Storm Water Fund
2021 2022 2023 2024 2025
Operating Revenues $122,200 $137,178 $143,961 $157,131 $178,098
Operating Expenses 188,245 218,612 224,368 335,501 322,940
Operating Income (Loss) with Depreciation (66,045)(81,434)(80,407)(178,370)(144,842)
Operating Income (Loss) without
Depreciation 70,273 96,782 114,369 65,905 127,739
$(200,000)
$(100,000)
$-
$100,000
$200,000
$300,000
$400,000
Storm Water Fund
The Storm Water Fund experienced an increase in operating revenues of $20,967 or 13.3% from 2024
due to an increase in rates and the number of customers. Operating expenses decreased, $12,561 or
3.7% from 2024 to 2025 due to lower engineering costs. The fund experienced an operating loss of
$144,842 in 2025. Without depreciation included in operating expenses, the fund experienced
operating income of $127,739.
After factoring in non-operating items, capital contributions from developers and governmental
funds, this fund's net position increased by $2,476,529. Unrestricted net position was $1,098,338 at
December 31, 2025.
20
City of Otsego
Emerging Issues
Executive Summary
The following is an executive summary of financial related updates to assist you in staying current on
emerging issues in accounting and finance. This summary will give you a preview of the new
standards that have been recently issued and what is on the horizon for the near future. The most
recent and significant updates include:
• Accounting Standard Update – GASB Statement No. 103 – Financial Reporting Model
Improvements
GASB has issued GASB Statement No. 103 relating to changes in financial reporting
requirements. The changes provide clarity, enhance the relevance of information, provide
more useful information for decision-making, and provide for greater comparability amongst
government entities.
• Accounting Standard Update – GASB Statement No. 104 – Disclosure of Certain Capital
Assets
GASB has issued GASB Statement No. 104 relating to capital asset disclosures. The disclosures
required by this Statement provide users of the financial statements with essential
information about certain types of capital assets.
The following are extensive summaries of the current updates. As your continued business partner,
we are committed to keeping you informed of new and emerging issues. We are happy to discuss
these issues with you further and their applicability to your City.
21
City of Otsego
Emerging Issues
Accounting Standard Update – GASB Statement No. 103 – Financial Reporting Model
Improvements
The objective of this Statement is to improve key components of the financial reporting model to
enhance its effectiveness in providing information that is essential for decision making and assessing
a government's accountability. This Statement also addresses certain application issues.
This Statement addresses 5 areas of the financial statements (1) Management's Discussion and
Analysis (MD&A), (2) Unusual or Infrequent Items, (3) Presentation of the Proprietary Fund Statement
of Revenues, Expenses, and Changes in Fund Net Position, (4) Major Component Unit Information,
and (5) Budgetary Comparison Information.
This Statement continues the requirement that the MD&A precede the basic financial statements as
part of the Required Supplementary Information (RSI). This Statement requires that the information
presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the
Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and
Long-Term Financing Activity, and (5) Currently Known Facts, Decisions, or Conditions. The
Statement stresses that detailed analyses should explain why balances and results of operations
changed, rather than stating amounts and "boilerplate" discussions.
This Statement describes unusual or infrequent items as transactions and other events that are either
unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the
inflows and outflows related to each unusual or infrequent item separately as the last presented
flow(s) of resources prior to the net change in resource flows in the government-wide, governmental
fund, and proprietary fund statements of resource flows.
This Statement requires that the proprietary fund statement of revenues, expenses, and changes in
fund net position continue to distinguish between operating and nonoperating revenues and
expenses. The Statement provides clarification regarding operating and nonoperating revenues and
expenses. Also, this Statement requires that a subtotal for operating income (loss) and noncapital
subsidies be presented before reporting other nonoperating revenues and expenses.
This Statement requires governments to present each major component unit separately in the
reporting entity's statement of net position and statement of activities if it does not reduce the
readability of the statements. If the readability of those statements would be reduced, combining
statements of major component units should be presented after the fund financial statements.
This Statement requires governments to present budgetary comparison information using a single
method of communication - RSI. Governments also are required to present (1) variances between
original and final budget amounts and (2) variances between final budget and actual amounts. An
explanation of significant variances is required to be presented in notes to RSI.
GASB Statement No. 103 is effective for fiscal years beginning after June 15, 2025. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
22
City of Otsego
Emerging Issues
Accounting Standard Update – GASB Statement No. 104 – Disclosure of Certain Capital Assets
The objective of this Statement is to provide users of government financial statements with essential
information about certain types of capital assets.
This Statement requires certain types of capital assets continue to be disclosed separately in the
capital assets note disclosures including presentation of capital assets by major class and separate
disclosure of lease assets, subscription assets, and intangible right-to-use assets.
This Statement requires additional disclosures for capital assets held for sale. A capital asset is held
for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is
probable that the sale will be finalized within one year of the financial statement date .
Governments should disclose (1) the ending balance of capital assets held for sale, with separate
disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the
carrying amount of debt for which the capital assets held for sale are pledged as collateral for each
major class of asset.
GASB Statement No. 104 is effective for fiscal years beginning after June 15, 2025. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
City of Otsego
Wright County, Minnesota
Schedule of Expenditures of Federal Awards and
Reports on Compliance in Accordance with
Government Auditing Standards, Uniform Guidance, and
Legal Compliance
December 31, 2025
City of Otsego
Table of Contents
Schedule of Expenditures of Federal Awards 1
Notes to the Schedule of Expenditures of Federal Awards
2
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards 3
Report on Compliance for each Major Federal Program and on Internal Control over
Compliance Performed in Accordance with the Uniform Guidance 5
Schedule of Findings and Questioned Costs 8
Minnesota Legal Compliance 11
1
City of Otsego
Schedule of Expenditures of Federal Awards
For the Year Ended December 31, 2025
Expenditures
Environmental Protection Agency
Direct
Congressionally Mandated Projects 66.202 2,192,360$
Passed through Minnesota Public Facility Authority
Drinking Water State Revolving Fund 66.468 2,884,462
Total Environmental Protection Agency 5,076,822
U.S. Department of the Treasury
Direct
COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 678,019
Total Federal Expenditures 5,754,841$
Federal Grantor/Pass-Through Grantor/Grant Program Title
Federal
Assistance
Listing
Number
2
City of Otsego
Notes to Schedule of Expenditures of Federal Awards
NOTE 1 – BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal
award activity of the City under programs of the federal government for the year-ended
December 31, 2025. 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.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting.
Such expenditures are recognized following the cost principles contained in the Uniform Guidance,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE 3 – PASS-THROUGH GRANT NUMBERS
All pass-through entities listed above use the same Assistance Listing numbers as the federal grantors
to identify these grants and have not assigned any additional identifying numbers.
NOTE 4 – INDIRECT COST RATE
The City did not elect to use the de minimis indirect cost rate of up to 15%, as allowed under the
Uniform Guidance.
3
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Otsego
Otsego, Minnesota
We have audited, 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 (Government Auditing Standards),
the financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Otsego, Minnesota as of and for
the year ended December 31, 2025, and the related notes to financial statements, which collectively
comprise the City's basic financial statements and have issued our report thereon dated
June 3, 2026.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal
control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City's financial statements will not be prevented, or detected and
corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
deficiencies may exist that were not identified. Given these limitations, during our audit we did not
identify any deficiencies in internal control that we consider to be material weaknesses. We did
identify a certain deficiency in internal control, described in the accompanying Schedule of Findings
and Responses that we consider to be a significant deficiency as audit finding 2025-001.
4
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards.
City's Response to the Finding
Government Auditing Standards requires the auditor to perform limited procedures on the City's
response to the finding identified in our audit is described in the accompanying Schedule of Findings
and Responses. The City's response was not subjected to the other auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
St. Cloud, Minnesota
June 3, 2026
5
Report on Compliance for each Major Federal Program
and Report on Internal Control over Compliance in Accordance with
the Uniform Guidance
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Otsego
Otsego, Minnesota
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City's compliance with the types of compliance requirements identified as
subject to audit in the U.S. Office of Management and Budget (OMB) Compliance Supplement that
could have a direct and material effect on each of the City's major federal programs for the year
ended December 31, 2025. The City's major federal programs are identified in the summary of
auditor's results section of the accompanying Schedule of Findings and Questioned Costs.
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2025.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States (Government
Auditing Standards); and the audit 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). Our responsibilities under those standards and the Uniform Guidance are
further described in the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in
accordance with relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on
compliance for each major federal program. Our audit does not provide a legal determination of the
City's compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements
applicable to the City's federal programs.
6
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the City's compliance based on our audit. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always
detect material noncompliance when it exists. The risk of not detecting material noncompliance
resulting from fraud is higher than for that resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material, if there
is a substantial likelihood that, individually or in the aggregate, it would influence the judgment
made by a reasonable user of the report on compliance about the City's compliance with the
requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the City's compliance with the compliance
requirements referred to above and performing such other procedures as we considered
necessary in the circumstances.
• Obtain an understanding of the City's internal control over compliance relevant to the audit in
order to design audit procedures that are appropriate in the circumstances and to test and
report on internal control over compliance in accordance with the Uniform Guidance, but not
for the purpose of expressing an opinion on the effectiveness of the City of Otsego's internal
control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and any significant deficiencies and material
weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely
basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance , yet
important enough to merit attention by those charged with governance.
7
Report on Internal Control over Compliance (Continued)
Our consideration of internal control over compliance was for the limited purpose described in
Auditor's Responsibilities for the Audit of Compliance section and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal
control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements
of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Otsego,
Minnesota as of and for the year ended December 31, 2025, and the related notes to the basic
financial statements, which collectively comprise the City's basic financial statements. We issued our
report thereon dated June 3, 2026, which contained unmodified opinions on those financial
statements. Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the basic financial statements. The accompanying Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2
U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and is also not a required
part of the financial statements. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
basic financial statements. The information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States
of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
St. Cloud, Minnesota
June 3, 2026
8
City of Otsego
Schedule of Findings and Questioned Costs
SECTION I – SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued:
We issued an unmodified opinion on
the fair presentation of the financial
statements of the governmental
activities, business-type activities,
each major fund, and the aggregate
remaining fund information in
accordance with accounting principles
generally accepted in the United States
of America (GAAP).
Internal control over financial reporting:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? Yes, Audit Finding 2025-001
Noncompliance material to financial statements noted? No
Federal Awards
Type of auditor's report issued on compliance for major
programs: Unmodified
Internal control over major programs:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None reported
Any audit findings disclosed that are required to
be reported in accordance with 2 CFR 200.516(a)? No
Identification of Major Programs
Assistance Listing No.: 66.202
Name of Federal Program or Cluster: Congressionally Mandated Projects
Assistance Listing No.: 66.468
Name of Federal Program or Cluster: Drinking Water State Revolving Fund
Dollar threshold used to distinguish between type A
and type B programs: $1,000,000
Auditee qualified as low risk auditee? No
9
City of Otsego
Schedule of Findings and Questioned Costs
SECTION II – FINANCIAL STATEMENT FINDING
Audit Finding 2025-001
Criteria:
Internal control that supports the City's ability to initiate record, process and report financial data
consistent with the assertions of management in the financial statements requires adequate
segregation of accounting duties.
Condition:
The City had a lack of segregation of accounting duties due to a limited number of office employees.
Adequate segregation of accounting duties is in place when the following four areas of a transaction
have been separated: authorization, custody, recording, and reconciliation. Examples of functions
within the City that demonstrate this lack of segregation of accounting duties include, but are not
limited to, the following:
1. Cash Receipts – The Accounting Clerk and Accountant have access to initiate and record
receipts. The Accounting Clerk is also responsible for depositing cash receipts. The
Accountant is also involved in the reconciliation process and has full access to the general
ledger.
2. Utility Billing Process – The Utility Billing Clerk is responsible for handling customer payments,
and in the absence of the Accounting Clerk, has the access to deposit payments received.
3. Disbursements – Due to small staff the City allows access to other employees to perform
disbursement related activities in order to fill in for normal roles and responsibilities in the
absences of other staff. In the absence of the Accountant, the Accounting Clerk has access to
record and cut checks and has access to blank checks.
4. Financial Reporting and Journal Entry Process – The Finance Director and Accountant have full
access to the general ledger and can make adjustments without review during the monthly
and year-end financial closing process.
Context:
This finding impacts the internal control for all significant accounting functions.
Cause:
There are a limited number of office employees.
Effect or Potential Effect:
The lack of adequate segregation of accounting duties could adversely affect the City's ability to
initiate, record, process, and report financial data consistent with the assertions of management in
the financial statements.
Recommendation:
Continue to review the accounting system, including changes that may occur. Implement segregation
whenever practical.
10
City of Otsego
Schedule of Findings and Questioned Costs
SECTION II – FINANCIAL STATEMENT FINDING (CONTINUED)
Audit Finding 2025-001 (Continued)
Views of Responsible Officials:
The City is aware of the limited segregation of duties as a result of our limited number of staffing.
The City is committed to an environment with strong internal controls and is constantly evaluating
the system and implementation of compensating controls when available.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
None
SECTION IV – PRIOR YEAR FINDINGS AND QUESTIONED COSTS
None
11
Minnesota Legal Compliance
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Otsego
Otsego, Minnesota
We have audited, 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, the financial statements of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining
fund information of the City of Otsego, Minnesota as of and for the year ended December 31, 2025,
and the related notes to basic financial statements, and have issued our report thereon dated
June 3, 2026.
In connection with our audit, nothing came to our attention that caused us to believe that the City
failed to comply with the provisions of contracting – bid laws, depositories of public funds and public
investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous
provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for
Cities, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they
relate to accounting matters. However, our audit was not directed primarily toward obtaining
knowledge of such noncompliance. Accordingly, had we performed additional procedures, other
matters may have come to our attention regarding the City's noncompliance with the above
referenced provisions, insofar as they relate to accounting matters.
The purpose of this report is solely to describe the scope of our testing of compliance and the results
of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not
suitable for any other purpose.
St. Cloud, Minnesota
June 3, 2026
Annual Comprehensive Financial Report
For the Year Ended December 31, 2025
Carrick’s Landing Improvements (Constructed in 2025)
City of Otsego, Minnesota
Annual Comprehensive Financial Report
For the Year Ended
December 31, 2025
Adam Flaherty
City Administrator
Prepared by:
Finance Department
Member of the:
Government Finance Officers’ Association
of the United States and Canada
CITY OF OTSEGO, MINNESOTA
TABLE OF CONTENTS
Page No.
INTRODUCTORY SECTION
Letter of Transmittal 1
Elected Officials and Administration 7
Organizational Chart 8
Certificate of Achievement 9
FINANCIAL SECTION
Independent Auditor's Report 11
Management's Discussion and Analysis 14
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 28
Statement of Activities 29
Fund Financial Statements
Governmental Funds
Balance Sheet 30
Reconciliation of the Balance Sheet of the Governmental Funds
to the Statement of Net Position 33
Statement of Revenues, Expenditures and Changes in Fund Balances 34
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of the Governmental Funds to the Statement of Activities 36
Statement of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
General Fund 37
Proprietary Funds
Statement of Net Position 38
Statement of Revenues, Expenses and Changes in Net Position 39
Statement of Cash Flows 40
Notes to the Financial Statements 41
Required Supplementary Information
Schedule of City's Proportionate Share of Net Pension Liability 71
Schedule of City's Contributions 72
Notes to Required Supplementary Information 73
Combining and Individual Fund Statements and Schedules
Governmental Funds
Nonmajor Governmental Funds
Combining Balance Sheet 80
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 81
Nonmajor Special Revenue Funds
Combining Balance Sheet 84
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 86
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
Tax Increment District No. 1 Fund 88
Tax Increment District No. 3 Fund 89
Tax Increment District No. 4 Fund 90
Nonmajor Capital Projects Funds
Combining Balance Sheet 92
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 94
CITY OF OTSEGO, MINNESOTA
TABLE OF CONTENTS
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
General Fund 96
Debt Service Fund by Account
Combining Balance Sheet 102
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 103
Schedule of Revenues, Expenditures and Changes in Fund Balances: Budget-to-Actual
Series 2018A 104
Series 2020A 105
Series 2024A 106
STATISTICAL SECTION (UNAUDITED)
Financial Trends
Net Position by Component 108
Changes in Net Position 110
Governmental Activities Tax Revenue by Source 117
Fund Balances of Governmental Funds 118
Changes in Fund Balances of Governmental Funds 120
Revenue Capacity
Estimated Actual Value, Taxable Market Value and Tax Capacity of Taxable Property 122
Tax Capacity of Real Estate & Personal Property 124
Property Tax Rates - Direct and Overlapping Governments 125
Principal Property Taxpayers 126
Property Tax Levies and Collections 127
Debt Capacity
Ratios of Outstanding Debt by Type 128
Ratios of General Bonded Debt Outstanding 129
Computation of Direct and Overlapping Governmental Activities Debt 131
Legal Debt Margin Information 132
Pledged Revenue Coverage 134
Demographic and Economic Information
Demographic and Economic Statistics 135
Principal Employment Sectors 136
Operating Information
Full-Time City Government Positions by Function 137
Operating Indicators by Function 138
Capital Asset Statistics by Function 140
This page has been left blank intentionally.
June 4, 2026
To the Honorable Mayor, Members of the City Council, and Residents of the City of Otsego.
TransmiƩed herewith is the Annual Comprehensive Financial Report of the City of Otsego for the fiscal year
ended December 31, 2025.
Responsibility for both the accuracy of the data and the completeness and fairness of the presentaƟon,
including all disclosures, rests with the management of the City following the policies and procedures specified
by the City’s system of internal control. Because the cost of internal controls should not exceed anƟcipated
benefits, the objecƟve is to provide reasonable, rather than absolute, assurance that the financial statements
are free of any material misstatements.
To the best of our knowledge and belief, the enclosed data is accurate, in all material respects, and is reported
in a manner designed to present fairly the financial posiƟon and results of operaƟons of the various funds of
the City. All disclosures deemed necessary to enable the reader to gain an understanding of the City’s financial
acƟviƟes have been included.
Minnesota Statutes require that the financial statements of the City be audited annually by the State Auditor,
or a CerƟfied Public Accountant selected by the City Council. These financial statements have been audited by
BerganKDV (the Auditors). The Auditors expressed an unmodified opinion on the financial statements, and
their opinion leƩer is included as the first component within the financial secƟon of this report.
The Auditors have also issued several other reports on compliance with Government AudiƟng Standards and
Minnesota Legal Compliance. These reports have been issued under separate cover.
AccounƟng principles generally accepted in the United States of America require that management provide a
narraƟve introducƟon, overview, and analysis to accompany the basic financial statements in the form of a
Management’s Discussion and Analysis (MD&A). This leƩer of transmiƩal is designed to complement the
MD&A and should be read in conjuncƟon with it. The City’s MD&A can be found immediately following the
report of the independent auditors.
PROFILE OF THE CITY
The first town site in Otsego was originally plaƩed in 1857 in what was once known as the Big Woods, heavily
laden with deciduous trees, and interspersed with rivers, ponds, and prairies. The first seƩlers to the area
were of European descent, seƩling in the area in 1852. On April 5, 1858, Otsego Township was established.
The area remained a township unƟl 1990 when it was incorporated into the City of Otsego to serve its
residents more fully and to manage growth.
1
Otsego is located at the confluence of the Mississippi and Crow Rivers approximately thirty miles northwest of
Minneapolis. The Mississippi River runs along the northern and eastern borders of the City and the Crow River
runs along the southern border in the far eastern part of the City unƟl it enters the Mississippi River.
The City, located in the northeast corner of Wright County and covers an area of about 30.5 square miles. The
State Demographer’s most recent populaƟon esƟmate was 23,790, compared with 19,966 from the 2020 US
Census. Otsego is both the largest and fastest growing city in Wright County and outpaces growth in
neighboring ciƟes outside Wright County.
The City operates under the “OpƟonal Plan A” form of government as defined in Minnesota Statutes. Under
this plan, the government of the City is directed by a City Council consisƟng of an elected mayor and four
elected councilmembers at large. The City Council exercises legislaƟve authority and determines all maƩers of
policy. The City Council appoints personnel responsible for the proper administraƟon of all affairs relaƟng to
the City. The Mayor and Councilmembers serve four-year terms with two Councilmembers elected to four-
year terms every two years. The Mayor is also elected to a four-year term.
The City of Otsego Economic Development Authority (EDA) is a legally separate enƟty from the City. Although
legally separate, the EDA is reported as if it were part of the City as the EDA Board of Commissioners are made
up of the Mayor and four Councilmembers. The City has operaƟonal responsibility over the EDA, with this
criterion resulƟng in the EDA being reported as a blended component unit of the City, and separate financial
statements are not prepared for the EDA.
The City provides its residents and businesses with a full range of municipal services consisƟng of the
construcƟon & maintenance of public streets, pedestrian trails, park and athleƟc faciliƟes, recreaƟonal
opportuniƟes, access to the Mississippi River, and general administraƟve services. The City services also
provide public uƟliƟes including water, sanitary sewer and storm water services accounted for in enterprise
funds. Police protecƟon has been provided since the City’s incorporaƟon through an agreement with the
Wright County Sheriff’s Department which provides 50 hours of service every day. Fire suppression and
emergency response services are provided through agreements with the neighboring ciƟes of Albertville, Elk
River, and Rogers, with each agreement having geographical boundaries based upon response Ɵmes.
Financial planning and control for the City of Otsego are based on the annual OperaƟng Budget and the ten-
year Capital Improvement Plan. Under Minnesota Statutes, a preliminary property tax levy must be adopted
by the City Council no later than September 30th of each year for the ensuing year’s collecƟon. This
establishes a maximum levy that may subsequently be lowered but may not be increased at the Ɵme of final
adopƟon. A ceiling on the increase of the annual property tax levy is established from Ɵme to Ɵme by the
Minnesota Legislature. Such a limit was not in place for taxes payable 2025 and 2026.
EffecƟve establishment of this levy means that a preliminary operaƟng budget must be prepared. The City
Administrator, with the assistance of the Finance Director and management staff, prepares such a budget each
year and presents it along with the preliminary levy for City Council review. The City Council is required to
adopt a final tax levy and annual budget each December for the subsequent year, which begins on January 1.
Departments may make transfers of appropriaƟons within their department. However, transfers of budget
appropriaƟons between departments need authorizaƟon of the City Administrator. The legal level of budgetary
control is at the fund level, so any appropriaƟon transfers between funds need the approval of the City
Council.
2
In addiƟon, a Capital Improvement Plan covering a ten-year period is reviewed and revised during the annual
budget process. This includes projects for which the City may issue debt and/or assess porƟons of the cost to
adjacent or benefiƟng property owners. Because there are limited funds available each year and the City does
not wish to issue excessive amounts of debt, these projects are reviewed and reprioriƟzed each year.
ECONOMIC CONDITION
Otsego conƟnues to experience strong residenƟal and commercial growth due to its ideal locaƟon. The City is
30 miles from downtown Minneapolis, the center of the Twin CiƟes metropolitan area and has excellent
transportaƟon access with Interstate 94 and State Highway 101. The City maintains a Comprehensive Plan
document for land use and development to manage and encourage growth.
The residenƟal growth can be expressed with the 280 new residenƟal construcƟon permits issued during 2025.
The average number of new residenƟal construcƟon permits over the past five years is 298. The latest
esƟmates developed by the City show total households at 8,356 or a growth of 50 percent over the past ten
years.
While most of the new housing in the community are single family homes, Phase 2 of the River’s Edge
Apartments complex conƟnued construcƟon during 2025, and Phase 2 of the Village Apartments complex
iniƟated construcƟon in 2025, adding a combined 157 addiƟonal market-rate rental apartment units to the
City.
The City is expecƟng this trend in residenƟal housing growth to conƟnue in accordance with the City’s
Comprehensive Plan with a populaƟon forecast of more than 30,000 by the year 2030. Housing developers
conƟnually obtain new parcels of land, submit applicaƟons for development, complete the final plat approval
process through the Planning Commission and City Council, and ulƟmately develop new housing.
The taxable market value of property within the City for taxes payable 2026 is $3,822,392,070, the highest in
Wright County. Comparing this data point to 2016, there has been an increase in taxable market value of
property within the City of 215%, reflecƟng the growth in the community. The change from taxes payable 2025
was an increase of 7.51%, the result of stable increases in assessed valuaƟon of exisƟng residenƟal properƟes
within the City and from new construcƟon. According to data from the Wright County Assessor’s Office, there
was approximately $101 million of value added for new residenƟal, commercial, and industrial development.
The City’s tax rate for payable 2026 is 26.664, an increase of 9.49% compared to the previous year. Taking a
longer-term view, the City’s tax rate in 2016 was 37.921, a decrease of 29.69%, illustraƟng the City’s ability to
manage growth of the property tax levy when compared to the growth in taxable market value.
As the City has conƟnued to grow over the years, commercial development has paced well behind residenƟal
and industrial sectors. In the past few years, the City is beginning to see a shiŌ in this trend with numerous
commercial development projects. The City had a busy year in 2025, with completed projects including R&L
Carriers, Michels Office Expansion, O2B Kids Daycare, Everbrook Academy, and ChrisƟan Brothers AutomoƟve.
AddiƟonal commercial and industrial projects iniƟated in 2025 are nearing compleƟon and should be open for
service during 2026 including Condo Suites of Otsego, Les Schwab Tires, ParƟcle Control, ACG Industrial
Condos, an Xcel Energy Electrical SubstaƟon, and Costco. The City approved addiƟonal projects that have not
broken ground but are expected to begin construcƟon in 2026 including Foss Swim School and a Wright-
Hennepin Electrical SubstaƟon.
3
The City has several development applicaƟons which have been submiƩed for staff reports and will proceed to
the Planning Commission and City Council, indicaƟng that commercial and industrial growth will conƟnue
throughout 2026 and beyond. AddiƟonally, the City is working closely with Independent School District No.
728 on future planning efforts for potenƟal school faciliƟes within the City to address capacity constraints.
Minnesota Statutes and the City’s Business Subsidy Policy provide the authority for the City to enter into
certain agreements for economic development purposes. This policy outlines economic development goals
that provide public purpose including creaƟon or retenƟon of employment opportuniƟes, transportaƟon and
uƟlity improvements, eliminaƟon of blight, growing taxable market value, and other development goals
established by the City Council. The City has two types of acƟve economic development agreements including
tax abatements and tax increment financing.
The tax abatement program provided for investment in public infrastructure within the City that created an
opportunity for mixed use development that but for this public investment, would not have been feasible. This
program has provided for a 357% growth in taxable market value over the past six years for the development
property, has created employment opportuniƟes, and commercial development providing goods and services
for the community.
The tax increment financing program provided for investment in public and private infrastructure within the
City. This program has created affordable senior housing, industrial development providing employment
opportuniƟes, and eliminaƟon of blight by removal of a private wastewater treatment facility and
redevelopment into mulƟfamily housing, mini-storage, and future commercial development opportuniƟes.
LONG-TERM FINANCIAL PLANNING
The City has adopted and annually updates a ten-year Capital Improvement Plan (CIP) to facilitate the growth
and maintenance of public infrastructure, community faciliƟes and capital equipment. Projects in the CIP
demonstrate the importance of developing long-range financial planning strategies to facilitate the growth and
prosperity of the City. The process assists with both short- and long-range financial planning needs by:
PrioriƟzing capital projects and equipment acquisiƟons
EsƟmaƟng resource needs and related cash flows
IdenƟfying adequate and sustainable funding sources
MAJOR INITIATIVES
With all the growth that has been experienced in Otsego, the City has idenƟfied the need to expand our future
planning and has illustrated this by developing a Strategic Plan. Within this Plan, the City has developed a
pracƟcal vision of what Otsego should be in three to five years. The following list outlines the City’s strategic
direcƟons with certain examples of iniƟaƟves that have been accomplished in 2025 or set as goals in 2026.
PosiƟoning for Growth.
ConƟnued ConstrucƟon of the Wellhouse No. 4 Water Treatment Facility
IniƟated ConstrucƟon of the City’s First Fire StaƟon Facility
ConƟnued Design Phases of Future Drinking Water Wells & Treatment FaciliƟes
Completed ConstrucƟon of a Public Works Cold Storage Facility
4
Empowering the OrganizaƟon.
Ongoing Administrator & Department group discussions
Improved Internal CommunicaƟons with Full-Time Advancement of CommunicaƟons Specialist
Implemented Quarterly MeeƟngs of Supervisory Staff to Align ImplementaƟon of Policies
ConƟnued One-on-One Supervisor and Employee Discussion Sessions
ConƟnued annual all-employee team building and training session
Engaging Stakeholders.
Increased CollaboraƟon and AƩendance at Chamber of Commerce Events
Conducted a Community Survey Obtaining Feedback on City Services
ParƟcipaƟon in the Office of the State Auditors Performance Measures Program
Prairie Park Phase 1 Improvements Project Community Survey
Ongoing collaboraƟon with School District to plan for school capaciƟes
Obtained County, State, and Federal Grant Funding for City Projects
In addiƟon to the City’s Strategic Plan, the City Council expressed interest in the establishment of an annual
goal-seƫng process to further complement the Strategic Plan. This first Ɵme endeavor included mulƟple
working sessions of the City Council, mulƟple surveys amongst elected officials and City staff, and culminated
in the development of the following 2026 goals.
ImplemenƟng Fire Code and Emergency Planning
Complete Drinking Water Improvements
Increase Community Engagement and Trust
Improve Project and Process CommunicaƟons
ConƟnue Community EducaƟon of Municipal OperaƟons
Undertake Future Facility and Site Planning
IdenƟfy Federal and State Funding OpportuniƟes
Explore Public and Private Partnerships
These will help guide decision-making, prioriƟze resources, and conƟnue building a strong future for our
community. These goals focus on public safety, infrastructure improvements, transparent communicaƟon,
community engagement, and long-term planning. Throughout the year, the City will work toward achieving
these objecƟves while conƟnuing to provide high-quality services and responsible stewardship of public
resources.
RELEVANT FINANCIAL POLICIES
The City Council has approved a fund balance policy that established the minimum fund balance requirements
of the General Fund at forty-five percent of the subsequent year’s budgeted expenditures. The policy also
includes the annual review of the fund balance reserves of all other funds and the criteria for the use of
reserves. Reserve balances are reviewed annually as part of the budget/financial planning process and at the
Ɵme the Capital Improvement Plan is approved by the City Council.
The financial management staff of the City of Otsego have developed and implemented internal controls
designed to protect the City’s assets from loss, abuse, theŌ, or other misappropriaƟon. These controls provide
reasonable assurance of the safety of the City’s assets while recognizing that management esƟmates and
judgements as to the cost of such controls are also important to deriving maximum benefit from these
controls.
5
Policies relaƟng to investment of City funds, billing and collecƟon of public uƟlity charges, management of
long-term debt, purchasing, fund balances and general accounƟng procedures have been developed. In
addiƟon, goals and objecƟves have been established for internal and external financial reporƟng and for long-
term financial planning strategies.
FINANCIAL REPORTING AWARD
The Government Finance Officers AssociaƟon of the United States and Canada (GFOA) awarded a CerƟficate of
Achievement for Excellence in Financial ReporƟng to the City of Otsego for its Annual Comprehensive Financial
Report for the fiscal year ended December 31, 2024. This was the 13 th consecuƟve year that the City has
achieved this presƟgious award.
To be awarded a CerƟficate of Achievement, the City had to publish an easily readable and efficiently organized
annual comprehensive financial report that saƟsfied both accounƟng principles generally accepted in the
United States and applicable federal, state and local legal requirements.
A CerƟficate of Achievement is valid for a period of one year. It is expected that the 2025 Annual
Comprehensive Financial Report conƟnues to meet the CerƟficate of Achievement program requirements, and
it will be submiƩed to the GFOA to determine eligibility for another CerƟficate.
ACKNOWLEDGEMENTS
The preparaƟon of this report would not have been possible without the skill, effort, and dedicaƟon of the
City’s staff. Further, the City Council’s support to promote and sustain the highest standards of professionalism
in the financial management of the City of Otsego is acknowledged and appreciated.
Respecƞully submiƩed,
Adam Flaherty
City Administrator & Finance Director
6
CITY OF OTSEGO, MINNESOTA
ELECTED OFFICIALS AND ADMINISTRATION
ELECTED OFFICIALS
Name Position Term Expires
Jessica Stockamp Mayor December 31, 2028
Tina Goede Council Member December 31, 2026
Ryan Dunlap Council Member December 31, 2026
Michelle Lund Council Member December 31, 2028
Corey Tanner Council Member December 31, 2028
ADMINISTRATION
Name Position
Audra Etzel City Clerk
Adam Flaherty City Administrator & Finance Director
Sabrina Hille Assistant City Administrator & Human Resources
Kevin Lamson Street Operations Manager
Nick Jacobs Parks & Recreation Director
Kurt Neidermeier Public Utilities Manager
David Kendall City Attorney
Daniel Licht City Planner
Ron Wagner City Engineer
7
Cus
Titl
e of
this
Sm
art
CITY COUNCIL
ADVISORY
COMMISSIONS
Planning
Parks & Recreation
Public Safety
Heritage
Preservation
CITY ATTORNEY CITY
ADMINISTRATOR
CITY CLERK
Communications
Elections
Records Retention
FINANCE DIRECTOR
Accounting, Budget
& Reporting
Utility Billing
Information
Technology
ASSISTANT CITY
ADMINISTRATOR
Human Resources
Customer Service
Communications
FIRE CHIEF
Emergency
Management
Fire Protection
PARKS &
RECREATION
DIRECTOR
Recreation
Programming
Parks Maintenance
Prairie Center
STREET
OPERATIONS
MANAGER
Streets
Maintenance
Fleet Maintenance
Storm Water Utility
UTILITY MANAGER
Water Utility
Sanitary Sewer
Utility
PROFESSIONAL
SERVICES
Planning & Zoning
Engineering
Building Safety
8
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Otsego
Minnesota
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2024
Executive Director/CEO
9
This page has been left blank intentionally.
10
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Otsego
Otsego, Minnesota
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Otsego,
Minnesota, as of and for the year ended December 31, 2025, and the related notes to basic financial
statements, which collectively comprise the City's basic financial statements as listed in the Table of
Contents.
In our opinion, the accompanying financial statements referred to in the first paragraph present
fairly, in all material respects, the respective financial position of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the
City of Otsego, Minnesota, as of December 31, 2025, and the respective changes in financial position
and, where applicable, cash flows thereof and the respective budgetary comparison for the General
Fund for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of the City of Otsego
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements
relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
The City of Otsego's management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the United
States of America, and for the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the
City of Otsego's ability to continue as a going concern for twelve months beyond the financial
statement date, including any currently known information that may raise substantial doubt shortly
thereafter.
11
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Misstatements are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City of Otsego's internal control. Accordingly, no such
opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of
the financial statements.
• Conclude whether, in our judgment, there are conditions or events considered in the
aggregate, that raise substantial doubt about the City of Otsego's ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, which follows this report letter, and Required Supplementary
Information as listed in the Table of Contents be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board (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.
12
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Otsego's basic financial statements. The accompanying combining
and individual fund statements and schedules identified in the Table of Contents are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the accompanying combining and individual fund statements and schedules are fairly stated,
in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Annual Comprehensive Financial
Report. The other information comprises the introductory and statistical sections but does not
include the basic financial statements and our auditor's report thereon. Our opinions on the basic
financial statements do not cover the other information, and we do not express an opinion or any
form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially
misstated. If, based on the work performed, we conclude that an uncorrected material misstatement
of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
June 3, 2026, on our consideration of the City of Otsego's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is solely to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing ,
and not to provide an opinion on the effectiveness of internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City of Otsego's internal control over financial reporting and
compliance.
St. Cloud, Minnesota
June 3, 2026
13
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
As management of the City of Otsego, Minnesota, (the City), we offer readers of the City's financial statements this narrative overview and
analysis of the financial activities of the City for the fiscal year ended December 31, 2025. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found
on pages 1-6 of this report.
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the
most recent fiscal year by $224,671,225 (net position). Of this amount, $76,640,058 (unrestricted net position) may be used to meet
the City's ongoing obligations to citizens and creditors.
• The City's total net position increased by $29,094,447 (14.88%) from the previous year. The net position of the governmental
activities increased $10,270,743 (12.18%). The increase is primarily attributable to the investment in public assets and infrastructure
by the City and developers in the community. This infrastructure consists of buildings, streets, trail systems and park additions. The
business type activities increased $18,823,704 (16.91%) due to a combination of connection fees to the City's public utility system,
and similar to the governmental activities, the investment in public assets and infrastructure.
• As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $43,589,418,
which is a decrease of $7,811,181 (15.20%) from the previous year. Of the total fund balance, the unassigned portion is $5,749,802,
which is free from any internal or external constraints upon its use.
• The General fund has a fund balance of $6,532,427 at the close of the current fiscal year. During 2025, the fund balance increased
$994,975 (17.97%) from the previous year. The increase in fund balance was the result of revenues exceeding expenditures and a transfer
of funds. There is $304,402 (4.66%) of fund balance that is nonspendable, which is a combination of prepaid items and land held for resale.
The remaining fund balance is either restricted, $90,079 (1.38%), assigned, $388,144 (5.94%), or is unassigned, $5,749,802 (88.02%).
• The City issued $845,955 of General Obligation Water Revenue Notes to finance the construction of the Wellhouse No. 4 Water
Treatment Improvement Project. At year-end the City's total oustanding bonded debt decreased by $136,474 (0.19%).
14
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Overview of the Financial Statements
The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City's basic
financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes
to the financial statements. This report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-Wide Financial Statements: The government-wide financial statements are designed to provide readers with a
broad overview of the City's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets, liabilities and deferred inflows/outflows of resources,
with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of
whether the City's overall financial position is stable, improving or deteriorating.
The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All
changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g. uncollected taxes, special assessments and earned but unused personal time off).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion
of their costs through user fees and charges (business-type activities). The governmental activities of the City include: general
government, public safety, public works, culture & recreation, economic development, and interest on long-term debt.
The business- type activities of the City include: water utility, sanitary sewer utility and storm water utility.
The government-wide financial statements can be found on pages 28 through 29 of this report.
Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements. The funds of the City can be divided into two
categories: governmental funds and proprietary funds.
15
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental
fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable
resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare
the information presented for governmental funds with similar information presented for governmental activities in the
government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term
financial decisions. Both the governmental funds balance sheet and governmental funds statement of revenues, expenditures, and
changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City maintains 21 individual governmental funds. Information is presented separately in the governmental funds balance sheet
and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the following: General fund, the Debt
Service fund, the Pavement Management fund, the Fire Station Facility fund, and the Development & Builder Escrow fund, 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 is provided in the form of combining statements or schedules,
elsewhere in this report.
The City adopts an annual appropriated budget for the General Fund, the Debt Service Fund, Tax Increment District No. 1, Tax Increment
District No. 3, and Tax Increment District No. 4 special revenue funds. A budgetary comparison statement has been provided in the basic
financial statements for the General fund.
The basic governmental fund financial statements can be found on pages 30 through 37 of this report.
Proprietary Funds: Proprietary funds provide similar information to the government-wide financial statements, but in more
detail. The City maintains one type of proprietary fund.
Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for its water, sanitary sewer and storm water utilities. All of the City's
enterprise funds are considered to be major funds, and separate information is provided for each of them in the basic financial
statements.
The basic proprietary fund financial statements can be found on pages 38 through 40 of this report.
Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages
41 through 70 of this report.
Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information in relation to the City's net pension liability. The schedules and related notes can be found on
pages 71 through 77 of this report.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following
the required supplementary information. Combining statements can be found on pages 80 through 106 of this report.
16
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City,
assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $224,671,225 at the close of
the most recent fiscal year.
The largest portion of the City's net position ($138,565,437 or 61.67%) reflects its investment in capital assets, which includes: land,
infrastructure, buildings, and machinery & equipment, less any related debt used to acquire those assets that is still outstanding.
The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
2025 2024 2025 2024 2025 2024
Current Assets 54,037,867$ 58,517,167$ 49,818,673$ 46,682,395$ 103,856,540$ 105,199,562$
Capital Assets 71,065,516 53,383,378 136,514,514 120,748,653 207,580,030 174,132,031
Total Assets 125,103,383 111,900,545 186,333,187 167,431,048 311,436,570 279,331,593
Deferred Outflows of Resources 431,084 420,433 174,011 154,624 605,095 575,057
Long-term Liabilities 20,713,436 21,283,087 47,425,974 47,476,921 68,139,410 68,760,008
Other Liabilities 9,709,022 6,030,883 6,630,019 7,491,258 16,339,041 13,522,141
Total Liabilities 30,422,458 27,313,970 54,055,993 54,968,179 84,478,451 82,282,149
Deferred Inflows of Resources 549,449 715,191 2,342,540 1,332,532 2,891,989 2,047,723
Net Investment in Capital Assets 55,137,786 51,935,165 83,427,651 66,582,746 138,565,437 118,517,911
Restricted 9,465,730 10,258,004 - - 9,465,730 10,258,004
Unrestricted 29,959,044 22,098,648 46,681,014 44,702,215 76,640,058 66,800,863
Total Net Position 94,562,560$ 84,291,817$ 130,108,665$ 111,284,961$ 224,671,225$ 195,576,778$
At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the
government as a whole, as well as for its separate governmental and business-type activities.
A portion of the City’s net position (4.21%) represents resources that are subject to external restrictions on how they may be used.
The unrestricted portion (34.11%) may be used to meet the City's ongoing obligations to citizens and creditors.
The governmental activities experienced a decrease in current assets, primarily due to a declining balance of cash with fiscal agent as the
Fire Station Facility continues progress and draw requests are made to pay for project expenditures. An increase of capital assets is the result
of capital projects such as the Fire Station Facility, the Cold Storage Building, road improvement projects, and investments in parks such as
Carrick's Landing Improvements. A decrease in long-term liabilities is due to continued scheduled debt service payments on outstanding debt
obligations. Other liabilities increased with additional capital projects ongoing resulting in increased accounts payables, and with continued
development and builder projects in the City, the deposits payables amounts increased from the prior year.
The business-type activites had an increase in current assets that were the result of increases in due from other governments for grant funds
on the Wellhouse No. 4 Water Treatment Improvement Project and also from an increase in lease receivables, the result of an extension of
an existing antenna lease on Water Tower No. 1. Capital assets increased significantly with the ongoing investment in water treatment
infrastructure at Wellhouse No. 4, Wellhouse No. 3, and the South-Central Water Treatment facility. The West Wastewater Treatment
facility also was substantially completed during the year, contributing to the increase in capital assets. Long-term liabilities decreased slightly
compared to the previous year, and other liabilities decreased primarily due to fewer accounts payables on capital projects.
CITY OF OTSEGO - SUMMARY OF NET POSITION
Governmental Activities Business-type Activities Total
17
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
2025 2024 2025 2024 2025 2024
Program Revenues
Charges for Services 2,987,040$ 2,817,638$ 8,388,734$ 7,722,174$ 11,375,774$ 10,539,812$
Operating Grants and Contributions 583,449 540,778 - - 583,449 540,778
Capital Grants and Contributions 7,030,460 6,408,502 17,012,912 19,225,556 24,043,372 25,634,058
General Revenues
Property Taxes 9,402,381 9,022,265 - - 9,402,381 9,022,265
Tax Increment 605,202 497,951 - - 605,202 497,951
Franchise Taxes 1,049,817 1,043,896 - - 1,049,817 1,043,896
Grants and Contributions not
Restricted to Specific Programs 114,507 162,084 - - 114,507 162,084
Unrestricted Investment Earnings 2,378,320 1,653,036 2,026,629 1,871,352 4,404,949 3,524,388
Other General Revenues 103,658 6,775 11,500 12,000 115,158 18,775
Total Revenues 24,254,834 22,152,925 27,439,775 28,831,082 51,694,609 50,984,007
Expenses
General Government 2,293,273 2,156,382 - - 2,293,273 2,156,382
Public Safety 4,411,327 4,064,326 - - 4,411,327 4,064,326
Public Works 4,459,867 4,394,198 - - 4,459,867 4,394,198
Culture and Recreation 1,905,038 1,790,561 - - 1,905,038 1,790,561
Economic Development 600,947 591,967 - - 600,947 591,967
Interest on Long-term Debt 738,098 429,496 - - 738,098 429,496
Water Utility - - 2,434,927 2,432,113 2,434,927 2,432,113
Sanitary Sewer Utility - - 5,433,745 4,701,984 5,433,745 4,701,984
Storm Water Utility - - 322,940 335,501 322,940 335,501
Total Expenses 14,408,550 13,426,930 8,191,612 7,469,598 22,600,162 20,896,528
Increase Before Transfers 9,846,284 8,725,995 19,248,163 21,361,484 29,094,447 30,087,479
Transfers 478,000 427,000 (478,000) (427,000) - -
Transfers - Capital Assets (53,541) (291,400) 53,541 291,400 - -
Change in Net Position 10,270,743 8,861,595 18,823,704 21,225,884 29,094,447 30,087,479
Net Position - January 1 84,291,817 75,430,222 111,284,961 90,059,077 195,576,778 165,489,299
Net Position - December 31 94,562,560$ 84,291,817$ 130,108,665$ 111,284,961$ 224,671,225$ 195,576,778$
CITY OF OTSEGO - CHANGES IN NET POSITION
Governmental Activities Business-type Activities Total
18
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Governmental Activities
Governmental activities resulted in an increase of the City's net position by $10,270,743. Key elements of this change is as follows:
• Revenues within the governmental activities increased by $2,101,909 (9.49%) from the previous year. The biggest increase in revenues
was the result of unrestricted investment earnings (43.88%), with interest earned on cash with fiscal agent balances being a primary
reason. Revenues for capital grants and contributions increased compared to the prior year with additional development activity resulting
in more fees related to the new development. The property tax and tax increment revenue amounts increased from the prior year as a
result of an increased levy amount approved by the City Council to support growing operations and long-term capital planning. The charges
for services revenue increased from the prior year as a result of additional building permit activity during the year.
• Expenses within the governmental activities increased $981,620 (7.31%) compared to the previous year. All functions experienced
increases from the prior year, with the biggest increase being interest on long-term debt function, as interest payments initiated on the
2024A Series bond. The public safety function was the next largest, result of contracted public safety costs and continued development
of the Otsego Fire Department.
Below are specific graphs which provide comparisons of the governmental activities revenues and expenses:
12.32%; Charges for
Services
2.41%; Operating Grants28.99%; Capital Grants
38.74%; Property Taxes 2.50%; Tax Increment
4.33%; Franchise Taxes
0.47%; Unrestricted
Grants & Contributions
9.81%; Investment
Earnings
0.43%; Sales of Capital
Assets
Revenues by Source
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
General
Government
Public Safety Public Works Culture &
Recreation
Economic
Development
Interest on Long-
Term Debt
Function Expenses vs. Program Revenues
Expense Program Revenue
19
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Business-type Activities
Business-type activities resulted in an increase of net position by $18,823,704. Key elements of this change are as follows:
• Revenues decreased by $1,391,307 (4.83%) when compared to the previous year. The primary reason for the decrease was the result
of less capital grants and contributions which are tied to specific capital projects and the funding sources for each of them. Charges for
services increased from the prior year with continued development that creates new customers for each of the three utility systems.
• Expenses increased by $722,014 (9.67%) when compared to the previous year. The increase was primarily within the Sanitary Sewer
Utility with the majority of that resulting from the West Wastewater Treatment Facility being operational during the year resulting in
increased utilities costs for operation and increased depreciation costs for the facility. The Water Utility fund was nearly stable with an
increase of only $2,814 (0.12%) and the Storm Water Utility fund decreased by $12,561 (3.74%) as operations fluctuate from year-to-year.
• Revenues exceeding expenses is attributable to the new development within the City. Charges for services are adequately covering
the expenses, with capital grants and contributions resulting in the increase and will provide for future debt service and capital projects.
Below are specific graphs which provide comparisons of the business-type activities revenues and expenses:
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
Water Utility Sanitary Sewer Utility Storm Water Utility
Function Expenses vs. Program Revenues
Expense Program Revenue
Charges for Services
30.57%
Capital Grants
62.00%Sales of Capital Assets
0.04%
Investment Earnings
7.39%
Revenues by Source
20
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Financial Analysis of the Government's Funds
Governmental Funds: The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned
fund balance may serve as useful measure of a government's net resources available at the end of the fiscal year.
At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $43,589,418, which
is a decrease of $7,811,181 (15.2%) from the previous year. The unassigned fund balance, which is not subject to internal or
external constraints upon its use, $5,749,802 (13.19% of total).
Major Funds
The General fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance is $6,532,427, an
increase of $994,975 (17.97%). The increase in fund balance was the result of revenues exceeding expenditures by $516,975 and from other
financing sources in the amount of $478,000 from interfund transfers. Assets of the General fund increased by $1,046,317, with the majority
of the increase in cash and investments and interest receivable being a secondary factor of the increase. Liabilities increased $38,887 with
accounts payables and accrued salaries payables being the reason for the increase. As a measure of the General fund's liquidity, it may be
useful to compare both unassigned and total fund balance, to total fund expenditures. The unassigned fund balance, which is $5,749,802,
represents 59.20% of the current year General fund expenditures. Total General fund balance represents 67.26% of those same expenditures.
The Debt Service fund has a total fund balance of $1,365,150 at the end of the year, a decrease of $517,202 (27.48%) from the previous
year. The primary reason for the decrease of fund balance was the continued debt service payments. During the year, the fund
had $480,000 of principal payments.
The Pavement Management fund has a fund balance of $7,293,169 at the end of the year, an increase of $1,153,043 (18.78%) from the
previous year. Expenditures for the year totaled $1,404,879 which were for the annual pavement preservation projects including mill
and overlay, crack filling, fog sealing, asphalt patching, paint striping, and micro-surfacing.
The Fire Station Facility fund has a fund balance of $6,968,272 at the end of year, a decrease of $10,841,869 (60.87%). The fund
has a restricted fund balance of $6,652,610 (95.47%) and represents unspent bond proceeds for the Fire Station Facility Project. The
remaining fund balance of $315,662 (4.53%) is assigned. Expenditures during the year were $11,407,146 as the project broke ground in
June 2025 and is expected to be completed in June 2026.
The Development & Builders Escrow fund has no fund balance. Assets and liabilities of the fund increased $1,935,342 (64.90%) as a result
of increased deposits payable for ongoing commercial, industrial, and housing development within the City. Revenues and expenditures of the
fund decreased $229,333 (37.31%) compared to the prior year.
Proprietary Funds: The City's proprietary funds provide the same type of information presented as business-type activities
found in the government-wide financial statements, but in more detail.
The enterprise funds have a combined ending net position of $130,108,665, an increase of $18,823,704 (16.91%). There are two
components to net position in the enterprise funds, unrestricted ($46,681,014 or 35.88%) and net investment in capital assets
($83,427,651 or 64.12%). As a measure of liquidity, the unrestricted net position amounts to 640.73% of the current year operating
expenses. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's
business-type activities.
21
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Below is a graph with comparative amounts for each fund balance component for fiscal years 2023, 2024 and 2025:
The City's Unassigned fund balance is currently $5,749,802, and represents 13.19% of total governmental fund balance. The
City also has four other components of fund balance, including Nonspendable (0.70%), Restricted (36.51%), Committed (0.93%) and
Assigned (48.67%).
• Nonspendable fund balance represents the amount of assets the City has invested in prepaid items and land assets held for resale. This
fund balance component can largely fluctuate with the timing of certain payments (e.g. insurance premiums) and the net realizable
value of the land assets being held by the City for future resale.
• The City's restricted fund balance is the result of external constraints placed upon it. The source of that constraint includes debt
service, park development, affordable housing programs, lawful gambling, public safety, and tax increments. The increase in 2024 was the
result of bond proceeds issued for the construction of the Fire Station Facility. The balance decreased in the current year as
the project has progressed towards completion.
• The committed fund balances are within the City's special revenue funds for Street Lighting and Revolving Loans. This fund balance
component has remained consistent over the past three years.
• Assigned fund balances are primarily associated with the City's capital project funds. The fund balance in this component is the result
of the City accumulating resources for future capital improvement projects and capital equipment purchases. This fund balance
component has remained consistent over the past three years.
A more detailed breakdown of the fund balance components can be found in the basic financial statements and accompanying
financial statement footnotes.
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
Nonspendable Restricted Committed Assigned Unassigned
Governmental Fund Balance Components
2023 2024 2025
22
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
General Fund Budgetary Highlights
During the year, there were no amendments to the General fund budget. The budgeted revenues, expenditures, and other financing sources
resulted in no change in fund balance. Actual results for the fiscal year were an increase of $994,975 (17.97%). The key elements of this
change are as follows:
• Actual revenues exceeded the budget by $767,064 (8.11%). The largest revenue variance was provided by licenses and permits which
were over budget by $544,700. This variance was the result of building permit activity exceeding assumptions used during the budget
development process. Investment earnings exceeded budget by $190,202 the result of increased cash and investment balances in the fund
and better than expected rates of return and market value adjustments. Other notable revenues over budget include charges for services
with ties to development activity in the City and miscellanous revenues which were over budget by $33,193. Notable revenue sources that
were under budget included intergovernmental which was less than budgeted by $61,480. This variance was largely expected with the
budget allocation of public safety aid received in 2023, and classified as restricted fund balance. Another revenue source under budget
was franchise taxes, less than budgeted by $14,848. This revenue source has been on a declining trend over the last few years as
consumers shift their sources for television from legacy utilities to new streaming options not subject to this franchise tax.
• Actual expenditures were less than budget by $227,911 (2.29%). The largest variance was within the general government function, which
was under budget by $105,620. Each department within this function were under budget, with human resource being the largest variance,
the result of staffing vacancies during the year. The public works function was the next most significant variance, being $93,807
under budget. Staffing vacancies within the street and fleet maintenance department were the primary factor to the variance, with
multiple other departments also being under budget. The public safety function was over budget by $29,822, a combination of
fire protection personal services and building inspection contract payments. The other function over budget was capital outlay for public
safety which was the result of the purchase and install of the radios for the emergency service vehicles.
• Transfers in were as budgeted, and represent annual contributions from the Water and Sanitary Sewer utility funds that help
manage the property tax levy.
The ending unassigned fund balance of the General fund ($5,749,802) represents 52.18% of the adopted 2026 budget.
23
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Capital Asset and Debt Administration
Capital Assets: The City's investment in capital assets for its governmental and business-type activities at the end of the current
year, amounts to $207,580,030 (net of accumulated depreciation). This investment in capital assets includes: land, buildings, street and
utility infrastructure, parks equipment, trails, machinery and equipment and construction in progress. The City's investment in
capital assets increased $33,447,999 (19.21%) from the previous year.
Major capital asset events during the current year included the following:
• The City updated its machinery & equipment fleet with several new pieces of equipment. The City maintains a ten-year capital
improvement plan budget which schedules equipment and vehicle replacements and additions.
• The City completed construction of a Cold Storage facility during 2025. This facility will provide additional storage for the City's
equipment and vehicles.
• The City received contributed infrastructure from housing developers. These assets include: streets, trail systems, and public utility
infrastructure. These assets are paid for and installed by the developer, are inspected by the City Engineer to City standards, and are
later accepted by the City, who is responsible for future maintenance and replacement.
• The City completed construction of the West Wastewater Treatment Facility Expansion which will increase the treatment capacity of
the west sewer system. The project will also bring the treatment processes to the most current technologies available in order to
meet current and future regulatory requirements. An additional component of the project included the construction of an Administration
building that will provide staff workspaces, vehicle storage, and customer service accessibility.
• The City initiated several drinking water system projects, that include South Central Water Treatment Facility, Wellhouse No. 4 Water
Treatment Improvements, and Wellhouse No. 3 Water Treatment Improvements, Watermain Extensions and Looping Projects, and
Well No. 12. These projects increase capacity, system redundancy, and quality for the drinking water system.
• The City started construction on the Fire Station Facility, which will provide a great resource to the City for fire and
emergency service needs.
• The City completed construction of Carrick's Landing Improvements which provides additional parks and river access amenities to
the Mississippi River. A master plan was developed for Prairie Park, with phasing and implementation of the plan slated for
consideration by the City Council in future years.
2025 2024 2025 2024 2025 2024
Land 4,281,931$ 4,278,161$ 1,854,040$ 1,047,903$ 6,135,971$ 5,326,064$
Construction in Progress 14,379,270 3,445,500 8,382,619 39,268,175 22,761,889 42,713,675
Buildings and Improvements 4,916,164 3,791,743 55,741,718 15,673,670 60,657,882 19,465,413
Land Improvements 4,764,344 3,647,757 186,994 197,635 4,951,338 3,845,392
Machinery and Equipment 3,262,846 1,901,900 1,679,014 1,483,944 4,941,860 3,385,844
Infrastructure 39,460,961 36,318,317 68,670,129 63,077,326 108,131,090 99,395,643
71,065,516$ 53,383,378$ 136,514,514$ 120,748,653$ 207,580,030$ 174,132,031$
Additional information on the City’s capital assets can be found in Note 2 (C) on pages 54 through 55 of this report.
CITY OF OTSEGO - CAPITAL ASSETS
(net of depreciation)
Governmental Activities Business-type Activities Total
24
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Long-Term Debt: At the end of the current year, the City had outstanding long-term bonded debt of $70,119,153.
2025 2024 2025 2024 2025 2024
General Obligation Bonds 2,115,000$ 2,595,000$ -$ -$ 2,115,000$ 2,595,000$
Lease Revenue Bonds 16,900,000 16,900,000 - - 16,900,000 16,900,000
Notes from Direct Borrowings - - 45,454,153 42,900,627 45,454,153 42,900,627
General Obligation Revenue Bonds - - 5,650,000 7,860,000 5,650,000 7,860,000
Unamortized Premiums 1,105,500 1,195,915 433,282 693,924 1,538,782 1,889,839
Compensated Absences 178,431 164,416 56,848 49,284 235,279 213,700
Total 20,298,931$ 20,855,331$ 51,594,283$ 51,503,835$ 71,893,214$ 72,359,166$
Revenue streams for the repayment of the outstanding debt liabilities include: lease revenues, special assessments upon benefitting properties,
fees from new connections to the water and sanitary sewer utility systems, and property tax levies. Should any of these sources of revenues
prove inadequate, all outstanding bonds are backed by the full faith and credit of the City.
In December 2025, the City issued $845,955 of General Obligation PFA Revenue Note, Series 2025 for the purpose of financing the eligible
projects costs of the Drinking Water State Revolving Fund project of updating and expanding water filtration equipment as Wellhouse No. 4
for removal of iron, manganese, and radium. The aggregate principal amount of the loan disbursed and outstanding will bear interest at the
rate of 1.609 percent per annum accruing from and after the date of the Note, which is December 10, 2025, through the date on which no
principal of the loan remains unpaid and all accrued interest and servicing fees have been paid.
Outstanding debt decreased by $136,474 (0.19%) during the year, net of scheduled principal payments of $4,843,000 during the year.
The City long term bond rating of AA+ was affirmed during the prior year, with a stable outlook, and the EDA received a long term bond rating
of AA with a stable outlook, each from Standard & Poor's Rating Services.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The
current debt limitation for the City is $106,662,501, with $18,557,065 in debt outstanding that is applicable to the limit.
Additional information on the City’s long-term debt can be found in Note 2 (E) on pages 57 through 60 of this report.
CITY OF OTSEGO - OUTSTANDING DEBT
Governmental Activities Business-type Activities Total
25
CITY OF OTSEGO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2025
Economic Factors and Next Year's Budget and Rates
The following economic factors were identified by the City as potentially having an impact on the financial future of the City, and
were considered in preparation of the 2025 operating budgets and capital improvement plans.
• The Taxable Market Value of real estate and personal property within the City increased 7.51% for taxes payable 2026. This
increase is driven by both new construction activity within the City as well as market driven valuation increases.
• New construction in the residential sector continues within the City. During 2025, the City issued 280 building permits for new
residential construction, which brings the five year average to 298. The City also continues to see builders final platting new developments
for future years construction.
• Development of commercial and industrial properties was strong during 2025 with multiple completed development projects. The
City has approved several additional commercial and industrial developments that have will intiate construction in 2026.
• The City initated construction of the first fire station within the City conducting a groundbreaking in June 2025 with the facility expected
to be completed in June 2026. This facility will house fire apparatus, equipment, and staffing for the Otsego Fire Department to become
operational in January 2027.
• The City continued construction of the Wellhouse No. 4 Water Treatment Improvements Project, the first water treatment facility
within the City. In continuing efforts to improve drinking water in the community and to meet current and future health guidelines, the
City has initiated design phases of the Wellhouse No. 3 Water Treatment Improvements Project and the South-Central Water Treatment
Facility that will meet community expectations and provide capacity into the future for continued growth.
• The City continues to expand upon and make improvements to the Capital Improvement Plan (CIP). The adopted CIP for 2025
plans for capital purchasing ten years into the future. These long range planning efforts assure that the City is always looking into the
future and that the City is adequately planning from a financial resources standpoint.
Requests for Information
This financial report is designed to provide a general overview of the City of Otsego's finances for all those with an interest in the
government's finances. Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the: Finance Director, 13400 90th Street NE, Otsego, MN 55330.
26
This page has been left blank intentionally.
27
CITY OF OTSEGO, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2025
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and Investments 41,466,316$ 39,608,283$ 81,074,599$
Cash with Fiscal Agent 9,616,152 - 9,616,152
Receivables
Interest 411,077 - 411,077
Accounts 299,004 1,006,892 1,305,896
Taxes 172,369 - 172,369
Special Assessments 1,164,808 1,241,100 2,405,908
Leases - 2,041,870 2,041,870
Due from Other Governments 603,739 5,794,008 6,397,747
Land Held for Resale 202,200 - 202,200
Prepaid Items 102,202 126,520 228,722
Capital Assets
Nondepreciable 18,661,201 10,236,659 28,897,860
Depreciable, Net of Accumulated Depreciation 52,404,315 126,277,855 178,682,170
Total Assets 125,103,383 186,333,187 311,436,570
DEFERRED OUTFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 431,084 174,011 605,095
Total Deferred Outflows of Resources 431,084 174,011 605,095
LIABILITIES
Accounts Payable 2,754,664 1,549,802 4,304,466
Deposits Payable 4,901,749 - 4,901,749
Due to Other Governments 11,365 26,907 38,272
Accrued Salaries Payable 100,156 39,933 140,089
Accrued Interest Payable 343,023 470,737 813,760
Unearned Revenue 1,085,222 - 1,085,222
Compensated Absences Payable
Due Within One Year 17,843 5,685 23,528
Due in More than One Year 160,588 51,163 211,751
Bonds Payable
Due Within One Year 495,000 2,295,000 2,790,000
Due in More than One Year 19,625,500 3,788,282 23,413,782
Notes from Direct Borrowings
Due Within One Year - 2,241,955 2,241,955
Due in More than One Year - 43,212,198 43,212,198
General Employees Retirement Plan Net Pension Payable
Due in More than One Year 927,348 374,331 1,301,679
Total Liabilities 30,422,458 54,055,993 84,478,451
DEFERRED INFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 549,449 221,789 771,238
Antenna Rental Leases - 2,041,870 2,041,870
Deferred Gain on Refunding - 78,881 78,881
Total Deferred Inflows of Resources 549,449 2,342,540 2,891,989
NET POSITION
Net Investment in Capital Assets 55,137,786 83,427,651 138,565,437
Restricted
Debt Service 1,563,435 - 1,563,435
Lawful Gambling Programs 189,077 - 189,077
Affordable Housing 129,300 - 129,300
Tax Increment Financing 458,674 - 458,674
Park Development 6,569,371 - 6,569,371
Public Safety 555,873 - 555,873
Unrestricted 29,959,044 46,681,014 76,640,058
Total Net Position 94,562,560$ 130,108,665$ 224,671,225$
The notes to the financial statements are an integral part of this statement.
28
CITY OF OTSEGO, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2025
Program Revenues Net (Expense) Revenue and Changes in Net Position
Operating Capital
Charges For Grants and Grants and Governmental Business-Type
FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Total
Government Activities
General Government 2,293,273$ 482,526$ 19,952$ -$ (1,790,795)$ -$ (1,790,795)$
Public Safety 4,411,327 2,287,127 119,701 678,019 (1,326,480) - (1,326,480)
Public Works 4,459,867 93,853 399,510 5,013,163 1,046,659 - 1,046,659
Culture and Recreation 1,905,038 123,534 20,500 1,339,278 (421,726) - (421,726)
Economic Development 600,947 - 23,786 - (577,161) - (577,161)
Interest on Long-Term Debt 738,098 - - - (738,098) - (738,098)
Total Government Activities 14,408,550 2,987,040 583,449 7,030,460 (3,807,601) - (3,807,601)
Business-Type Activities
Water Utility 2,434,927 3,524,907 - 8,601,727 - 9,691,707 9,691,707
Sanitary Sewer Utility 5,433,745 4,685,729 - 5,874,600 - 5,126,584 5,126,584
Storm Water Utility 322,940 178,098 - 2,536,585 - 2,391,743 2,391,743
Total Business-Type Activities 8,191,612 8,388,734 - 17,012,912 - 17,210,034 17,210,034
Total 22,600,162$ 11,375,774$ 583,449$ 24,043,372$ (3,807,601) 17,210,034 13,402,433
General Revenues
Property Taxes 9,402,381 - 9,402,381
Tax Increments 605,202 - 605,202
Franchise Taxes 1,049,817 - 1,049,817
Grants and Contributions Not
Restricted to Specific Programs 114,507 - 114,507
Unrestricted Investment Earnings 2,378,320 2,026,629 4,404,949
Gain on Disposal of Capital Assets 103,658 11,500 115,158
Transfers 478,000 (478,000) -
Transfers - Capital Assets (53,541) 53,541 -
Total General Revenues and Transfers 14,078,344 1,613,670 15,692,014
Change in Net Position 10,270,743 18,823,704 29,094,447
Net Position - January 1 84,291,817 111,284,961 195,576,778
Net Position - December 31 94,562,560$ 130,108,665$ 224,671,225$
The notes to the financial statements are an integral part of this statement.
29
CITY OF OTSEGO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2025
Debt
General Service
ASSETS
Cash and Investments 5,972,830$ 967,469$
Cash with Fiscal Agent - 398,265
Receivables
Interest 411,077 -
Accounts 12,754 -
Taxes
Current 66,662 -
Delinquent 105,707 -
Special Assessments
Current - 166
Deferred 3,089 540,965
Delinquent 1,471 343
Due from Other Governments 3,844 -
Land Held for Resale 202,200 -
Prepaid Items 102,202 -
Total Assets 6,881,836 1,907,208
LIABILITIES
Accounts Payable 121,506 750
Accrued Salaries Payable 100,156 -
Deposits Payable - -
Due to Other Governments 11,326 -
Unearned Revenue - -
Total Liabilities 232,988 750
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 105,707 -
Unavailable Revenue - Special Assessments 4,560 541,308
Unavailable Revenue - Accounts Receivable 6,154 -
Unavailable Revenue - Intergovernmental - -
Total Deferred Inflows of Resources 116,421 541,308
FUND BALANCES
Nonspendable 304,402 -
Restricted 90,079 1,365,150
Committed - -
Assigned 388,144 -
Unassigned 5,749,802 -
Total Fund Balances 6,532,427 1,365,150
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 6,881,836$ 1,907,208$
The notes to the financial statements are an integral part of this statement.
30
Fire Development Other
Pavement Station & Builder Nonmajor Total
Management Facility Escrows Governmental Governmental
7,048,396$ -$ 4,917,541$ 22,560,080$ 41,466,316$
- 9,217,887 - - 9,616,152
- - - - 411,077
259,976 - - 26,274 299,004
- - - - 66,662
- - - - 105,707
1,210 - - - 1,376
412,394 - - 202,105 1,158,553
2,538 - - 527 4,879
18,407 - - 581,488 603,739
- - - - 202,200
- - - - 102,202
7,742,921 9,217,887 4,917,541 23,370,474 54,037,867
34,820 2,249,615 15,792 332,181 2,754,664
- - - - 100,156
- - 4,901,749 - 4,901,749
- - - 39 11,365
- - - 1,085,222 1,085,222
34,820 2,249,615 4,917,541 1,417,442 8,853,156
- - - - 105,707
414,932 - - 202,632 1,163,432
- - - - 6,154
- - - 320,000 320,000
414,932 - - 522,632 1,595,293
- - - - 304,402
- 6,652,610 - 7,807,396 15,915,235
- - - 405,996 405,996
7,293,169 315,662 - 13,217,008 21,213,983
- - - - 5,749,802
7,293,169 6,968,272 - 21,430,400 43,589,418
7,742,921$ 9,217,887$ 4,917,541$ 23,370,474$ 54,037,867$
31
This page has been left blank intentionally.
32
CITY OF OTSEGO, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET POSITION
DECEMBER 31, 2025
Fund Balances - Governmental Funds 43,589,418$
Amounts reported for the governmental activities within the statement
of net position are different because:
Capital assets used in governmental activities are not financial resources,
and therefore, are not reported as assets in governmental funds.
Cost of Capital Assets 97,271,608
Accumulated Depreciation (26,206,092)
Long-term liabilities, including bonds payable, are not due and payable in the
current period, and therefore, are not reported as liabilities in governmental funds.
Bonds Payable (19,015,000)
Unamortized Premium on Bonds Payable (1,105,500)
Accrued Interest Payable (343,023)
Compensated Absences Payable (178,431)
General Employees Retirement Plan Net Pension Payable (927,348)
Some receivables are not available soon enough to pay for the current period's
expenditures, and therefore, are unavailable in governmental funds.
Delinquent Property Taxes Receivable 105,707
Special Assessments Receivable 1,163,432
Accounts Receivable 6,154
Due from Other Governments 320,000
Deferred resources from pensions reported in governmental activities are not
financial resources and are not payable in the current period, therefore are not
reported in governmental funds.
GERF Pension Deferred Outflows of Resources 431,084
GERF Pension Deferred Inflows of Resources (549,449)
Total Net Position - Governmental Activities 94,562,560$
The notes to the financial statements are an integral part of this statement.
33
CITY OF OTSEGO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Debt
General Service
REVENUES
Property Taxes 7,001,837$ 290,308$
Tax Increments - -
Franchise Taxes 102,152 -
Licenses and Permits 2,248,159 -
Intergovernmental 148,074 -
Charges for Services 303,483 -
Special Assessments 4,941 172,430
Fines and Forfeitures 38,968 -
Investment Earnings (net) 332,859 23,115
Miscellaneous 48,693 -
Total Revenues 10,229,166 485,853
EXPENDITURES
Current
General Government 2,050,796 -
Public Safety 4,284,321 -
Public Works 2,015,065 -
Culture and Recreation 1,210,742 -
Economic Development 82,465 -
Capital Outlay
General Government 33,847 -
Public Safety 17,306 -
Public Works 7,935 -
Culture and Recreation 9,714 -
Debt Service
Principal - 480,000
Interest - 521,315
Fiscal Agent Fees - 1,740
Total Expenditures 9,712,191 1,003,055
Excess (Deficiency) of Revenues
Over (Under) Expenditures 516,975 (517,202)
OTHER FINANCING SOURCES
Transfers In 478,000 -
Sales of Capital Assets - -
Total Other Financing Sources 478,000 -
Net Change in Fund Balance 994,975 (517,202)
Fund Balance - January 1 5,537,452 1,882,352
Fund Balance - December 31 6,532,427$ 1,365,150$
The notes to the financial statements are an integral part of this statement.
34
Fire Development Other
Pavement Station & Builder Nonmajor Total
Management Facility Escrows Governmental Governmental
800,000$ -$ -$ 1,302,562$ 9,394,707$
- - - 605,202 605,202
947,665 - - - 1,049,817
- - - - 2,248,159
399,510 - - 2,113,234 2,660,818
- - 385,335 1,058,107 1,746,925
71,522 - - 33,369 282,262
- - - - 38,968
339,225 565,277 - 1,117,844 2,378,320
- - - 171,211 219,904
2,557,922 565,277 385,335 6,401,529 20,625,082
- - - - 2,050,796
- - - - 4,284,321
- - - - 2,015,065
- - - - 1,210,742
- - - 518,482 600,947
- - 113,544 252,554 399,945
- 11,407,146 - 808,594 12,233,046
1,404,879 - 271,791 2,095,112 3,779,717
- - - 1,430,573 1,440,287
- - - - 480,000
- - - - 521,315
- - - - 1,740
1,404,879 11,407,146 385,335 5,105,315 29,017,921
1,153,043 (10,841,869) - 1,296,214 (8,392,839)
- - - - 478,000
- - - 103,658 103,658
- - - 103,658 581,658
1,153,043 (10,841,869) - 1,399,872 (7,811,181)
6,140,126 17,810,141 - 20,030,528 51,400,599
7,293,169$ 6,968,272$ -$ 21,430,400$ 43,589,418$
35
CITY OF OTSEGO, 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, 2025
Total Net Change in Fund Balances - Governmental Funds (7,811,181)$
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of
activities the cost of those assets is allocated over their estimated useful lives as depreciation.
Capital Outlays 16,834,809
Depreciation Expense (2,517,645)
Assets Contributed by Developers 3,422,765
Contributions of capital assets to the proprietary funds decrease net position in the statement of
activities, but do not appear in the governmental funds because they are not financial resources. (53,541)
In the statement of activities, only the gain on the sale of capital assets is reported. However,
in the governmental funds, the proceeds from the sale increase financial resources. Thus the
change in net position differs from the change in fund balance by the cost of the capital assets sold. (4,250)
The repayment of principal of long-term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net position.
Principal Repayments 480,000
Interest on long-term debt in the statement of activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities; however,
interest expense is recognized as the interest accrues, regardless of when it is due. (215,043)
Certain revenues are recognized as soon as they are earned. Under the modified accrual
basis of accounting, certain revenues cannot be recognized until they are available to
liquidate liabilities of the current period.
Property Taxes 7,674
Charges for Services 6,154
Special Assessments (230,499)
Intergovernmental 320,000
In the statement of activities, personnel expenses are recognized as they are accrued, however
these expenses do not consume current financial resources, and under the modified accrual
basis of accounting, are not reported in the governmental funds until they are due.
Compensated Absences (14,015)
GERF Pension 45,515
Change in Net Position - Governmental Activities 10,270,743$
The notes to the financial statements are an integral part of this statement.
36
CITY OF OTSEGO, MINNESOTA
GENERAL FUND - STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 6,992,002$ 7,001,837$ 9,835$
Franchise Taxes 117,000 102,152 (14,848)
Licenses and Permits 1,703,459 2,248,159 544,700
Intergovernmental 209,554 148,074 (61,480)
Charges for Services 244,830 303,483 58,653
Special Assessments 3,500 4,941 1,441
Fines and Forfeitures 33,600 38,968 5,368
Investment Earnings (net) 142,657 332,859 190,202
Miscellaneous 15,500 48,693 33,193
Total Revenues 9,462,102 10,229,166 767,064
EXPENDITURES
Current
General Government 2,156,416 2,050,796 (105,620)
Public Safety 4,254,499 4,284,321 29,822
Public Works 2,108,872 2,015,065 (93,807)
Culture and Recreation 1,240,315 1,210,742 (29,573)
Economic Development 110,900 82,465 (28,435)
Capital Outlay
General Government 40,100 33,847 (6,253)
Public Safety 9,000 17,306 8,306
Public Works 10,000 7,935 (2,065)
Culture and Recreation 10,000 9,714 (286)
Total Expenditures 9,940,102 9,712,191 (227,911)
Excess (Deficiency) of Revenues
Over (Under) Expenditures (478,000) 516,975 994,975
OTHER FINANCING SOURCES
Transfers In 478,000 478,000 -
Net Change in Fund Balance - 994,975 994,975
Fund Balance - January 1 5,537,452 5,537,452 -
Fund Balance - December 31 5,537,452$ 6,532,427$ 994,975$
The notes to the financial statements are an integral part of this statement.
37
CITY OF OTSEGO, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2025
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
ASSETS
Current Assets
Cash and Cash Equivalents 6,760,550$ 31,801,069$ 1,046,664$ 39,608,283$
Receivables
Accounts 316,036 680,071 10,785 1,006,892
Special Assessments
Current - - 987 987
Delinquent 213 - 1,649 1,862
Due from Other Governments 5,691,137 102,871 - 5,794,008
Prepaid Items 26,657 99,750 113 126,520
Total Current Assets 12,794,593 32,683,761 1,060,198 46,538,552
Noncurrent Assets
Receivables
Leases 2,041,870 - - 2,041,870
Special Assessments
Deferred 435,233 764,134 38,884 1,238,251
Capital Assets
Land 1,311,329 542,711 - 1,854,040
Buildings and Building Improvements 431,412 57,329,013 - 57,760,425
Land Improvements 212,810 - - 212,810
Machinery and Equipment 697,117 2,475,210 32,200 3,204,527
Infrastructure 41,332,848 44,115,180 12,752,294 98,200,322
Construction in Progress 8,189,360 193,259 - 8,382,619
Total Capital Assets 52,174,876 104,655,373 12,784,494 169,614,743
Less: Accumulated Depreciation (11,316,269) (20,381,476) (1,402,484) (33,100,229)
Net Capital Assets 40,858,607 84,273,897 11,382,010 136,514,514
Total Noncurrent Assets 43,335,710 85,038,031 11,420,894 139,794,635
Total Assets 56,130,303 117,721,792 12,481,092 186,333,187
DEFERRED OUTFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 43,503 130,508 - 174,011
LIABILITIES
Current Liabilities
Accounts Payable 1,413,065 135,993 744 1,549,802
Due to Other Governments 26,907 - - 26,907
Accrued Salaries Payable 9,983 29,950 - 39,933
Accrued Interest Payable 32,336 438,401 - 470,737
Bonds Payable 995,800 1,299,200 - 2,295,000
Notes from Direct Borrowings 40,955 2,201,000 - 2,241,955
Compensated Absences Payable 1,421 4,264 - 5,685
Total Current Liabilities 2,520,467 4,108,808 744 6,630,019
Noncurrent Liabilities
Bonds Payable (net)3,631,518 156,764 - 3,788,282
Notes from Direct Borrowings 533,760 42,678,438 - 43,212,198
Compensated Absences Payable 12,791 38,372 - 51,163
General Employees Retirement Plan Net Pension Payable 93,583 280,748 - 374,331
Total Noncurrent Liabilities 4,271,652 43,154,322 - 47,425,974
Total Liabilities 6,792,119 47,263,130 744 54,055,993
DEFERRED INFLOWS OF RESOURCES
General Employees Retirement Plan Pension Resources 55,447 166,342 - 221,789
Antenna Rental Leases 2,041,870 - - 2,041,870
Deferred Gain on Refunding 28,397 50,484 - 78,881
Total Deferred Inflows of Resources 2,125,714 216,826 - 2,342,540
NET POSITION
Net Investment in Capital Assets 34,241,061 37,804,580 11,382,010 83,427,651
Unrestricted 13,014,912 32,567,764 1,098,338 46,681,014
Total Net Position 47,255,973$ 70,372,344$ 12,480,348$ 130,108,665$
The notes to the financial statements are an integral part of this statement.
38
CITY OF OTSEGO, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
OPERATING REVENUES
Charges for Services 3,376,042$ 4,672,376$ 178,098$ 8,226,516$
OPERATING EXPENSES
Personal Services 359,721 1,078,007 13,273 1,451,001
Supplies 447,177 508,097 13,795 969,069
Insurance 32,081 92,196 38 124,315
Utilities 146,669 520,141 - 666,810
Services and Other Charges 335,421 381,881 23,253 740,555
Depreciation 1,102,141 1,959,117 272,581 3,333,839
Total Operating Expenses 2,423,210 4,539,439 322,940 7,285,589
Operating Income (Loss) 952,832 132,937 (144,842) 940,927
NONOPERATING REVENUES (EXPENSES)
Antenna Rental 98,642 - - 98,642
Investment Earnings (net) 443,736 1,551,648 31,245 2,026,629
Sales of Capital Assets 2,875 8,625 - 11,500
Miscellaneous Revenue 50,223 13,353 - 63,576
Interest and Fiscal Agent Fees (11,717) (894,306) - (906,023)
Total Nonoperating Revenues (Expenses) 583,759 679,320 31,245 1,294,324
Income (Loss) Before Capital Contributions and Transfers 1,536,591 812,257 (113,597) 2,235,251
Capital Contributions - Intergovernmental Grants 5,076,422 - - 5,076,422
Capital Contributions - Connection Fees 1,888,781 3,980,916 - 5,869,697
Capital Contributions - Developer Assets 1,636,524 1,893,684 2,536,585 6,066,793
Capital Contributions - Governmental Funds - - 53,541 53,541
Transfers Out (119,500) (358,500) - (478,000)
Change in Net Position 10,018,818 6,328,357 2,476,529 18,823,704
Net Position - January 1 37,237,155 64,043,987 10,003,819 111,284,961
Net Position - December 31 47,255,973$ 70,372,344$ 12,480,348$ 130,108,665$
The notes to the financial statements are an integral part of this statement.
39
CITY OF OTSEGO, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Sanitary Storm
Water Sewer Water Total
Utility Utility Utility Enterprise
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers and Users 3,273,378$ 4,666,490$ 173,134$ 8,113,002$
Other Operating Receipts 108,866 13,353 - 122,219
Payments to Suppliers (960,719) (1,554,033) (37,876) (2,552,628)
Payments to Employees (350,235) (1,049,544) (13,273) (1,413,052)
Net Cash Flows Provided by Operating Activities 2,071,290 2,076,266 121,985 4,269,541
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers Out (119,500) (358,500) - (478,000)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition and Construction of Capital Assets (7,188,867) (6,873,545) - (14,062,412)
Principal Paid on Revenue Bonds (962,000) (1,248,000) - (2,210,000)
Interest Paid on Revenue Bonds (149,002) (110,337) - (259,339)
Note Proceeds from Direct Borrowings - 7,082,412 - 7,082,412
Principal Paid on Direct Borrowings - (2,153,000) - (2,153,000)
Interest Paid on Direct Borrowings - (909,879) - (909,879)
Sales of Capital Assets 2,875 8,625 - 11,500
Connection Fees 1,943,144 4,181,821 - 6,124,965
Net Cash Flows Provided (Used) by Capital and Related Financing Activities (6,353,850) (21,903) - (6,375,753)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on Investments 443,736 1,551,648 31,245 2,026,629
Net Increase (Decrease) in Cash and Cash Equivalents (3,958,324) 3,247,511 153,230 (557,583)
Cash and Cash Equivalents - January 1 10,718,874 28,553,558 893,434 40,165,866
Cash and Cash Equivalents - December 31 6,760,550$ 31,801,069$ 1,046,664$ 39,608,283$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Operating Income (Loss) 952,832$ 132,937$ (144,842)$ 940,927$
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Flows Provided by Operating Activities:
Depreciation 1,102,141 1,959,117 272,581 3,333,839
GERF Pension Activity 5,195 15,588 - 20,783
Other Income Related to Operations 148,865 13,353 - 162,218
(Increase) Decrease in Assets & Deferred Outflows of Resources:
Accounts Receivable (57,692) (6,113) 4 (63,801)
Special Assessments (44,972) - (4,968) (49,940)
Due from Other Governments (39,999) 227 - (39,772)
Prepaid Items 3,238 (21,095) (113) (17,970)
Increase (Decrease) in Liabilities & Deferred Inflows of Resources
Accounts Payable (5,893) (30,623) (677) (37,193)
Due to Other Governments 3,284 - - 3,284
Accrued Salaries Payable 2,400 7,202 - 9,602
Compensated Absences Payable 1,891 5,673 - 7,564
Net Cash Flows Provided by Operating Activities 2,071,290$ 2,076,266$ 121,985$ 4,269,541$
NONCASH FINANCING ACTIVITIES
Amortization of Premium and Deferred Gains on Bonds Payable 132,274$ 207,251$ -$ 339,525$
Acquisition of Capital Assets on Account 1,387,116$ 83,431$ -$ 1,470,547$
Contribution of Capital Assets - Developer 1,636,524$ 1,893,684$ 2,536,585$ 6,066,793$
Contribution of Capital Assets - Governmental Funds -$ -$ 53,541$ 53,541$
The notes to the financial statements are an integral part of this statement.
40
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY
The City of Otsego, Minnesota (the City) was incorporated in 1990 after being an established township since 1858. The
City operates under the "Optional Plan A" form of government, as defined in Minnesota statutes. The governing body
of the City (City Council) consists of an elected Mayor, and four elected Council members, all of which are elected at-large
and serve four year staggered terms. The City Council exercises legislative authority and determines all matters of policy.
The financial statements of the City have been prepared in accordance with accounting principles generally accepted in
the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards
Board (GASB).
The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally
separate from the City. Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the basic financial statements of the City because of the significance of
their operational or financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of the organization's
governing body and is able to impose its will on the organization by significantly influencing the programs, projects,
activities, or level of services performed or provided by the organization, or there is a potential for the organization to
provide specific financial benefits to, or impose specific financial burdens on, the City.
Blended component units, although legally separate, are, in substance, part of the government’s operations. A blended
component unit is reported as if it were a fund of the City throughout the year. It is included at both the government-wide
and fund financial reporting levels.
A description of the City’s blended component unit follows:
The City of Otsego Economic Development Authority (EDA) – The City of Otsego EDA is a legal entity separate
from the City. Although legally separate, the City of Otsego EDA is reported as if it were part of the primary government
because the Board of Commissioners is made up of the Mayor and four Council members and the City has operational
responsibility over the City of Otsego EDA. It is this criterion that results in the EDA being reported as a blended
component unit within the primary government. Separate financial statements are not prepared for the City of Otsego EDA.
41
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report
information on all activities of the City and its component units. Governmental activities, which normally are supported
by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant
extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment 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 customers or applicants who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes
and other items not included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special
assessments are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60
days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, compensated absences, as well as expenditures related to claims and
judgements, are recorded only when payment is due.
Property taxes, franchise taxes, special assessments, intergovernmental revenues, charges for services and interest associated
with the current fiscal year are all considered to be susceptible to accrual and so have been recognized as revenues of the
current fiscal year. Only the portion of special assessments receivable due within the current fiscal year is considered to be
susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available
only when cash is received by the City.
42
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
The City reports the following major governmental funds:
General Fund - This is the City's primary operating fund, and accounts for all of the general financial resources of
the City, except those required to be accounted for in another fund. Most of the current day-to-day operations of the
City are financed from this fund.
Debt Service Fund - This fund is used to account for the collection of property taxes, special assessments and other
resources which are used to repay the principal and interest on debt issued for various improvements in the City.
Pavement Management Fund - This fund was established to provide funds and to account for the expenditure of
such funds, for costs associated with the City's street maintenance and replacement plan adopted annually within the
Capital Improvement Plan. Annual projects may include: fog & seal coating, crack filling, paint striping, patching and
asphalt overlays.
Fire Station Facility Fund - This fund was established to receipt the proceeds of debt issuance and
to account for the expenditure of funds for the construction of the Fire Station Facility.
Development & Builder Escrows Fund - This fund was established to receipt funds and to account for expenditure
of such funds, for costs associated within residential, commercial, and industrial developments within the City.
The City reports the following major enterprise funds:
Water Utility Fund - This fund accounts for the operations of the public water utility system. The resources
accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used
to pay for the operational costs of pumping and distributing water to the system customers. The fund also accumulates
resources to finance certain capital improvements and to pay the debt service associated with the water utility.
Sanitary Sewer Utility Fund - This fund accounts for the operations of the public sewer utility system. The resources
accumulated are primarily from system user charges and system connection fees. The accumulated funds are then used
to pay for the operational costs of collection and treatment of sewage from the system. The fund also accumulates
resources to finance certain capital improvements and to pay the debt service associated with the sewer utility.
Storm Water Utility Fund - This fund accounts for the operations of the storm water collection system. The resources
accumulated are primarily from system user charges and property taxes. The accumulated funds are then used to pay
for the operational costs of collection and treatment of surface water runoff that does not require treatment.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this general rule are transactions between the City's utility functions and various other functions of the City.
Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from non-operating 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 are charges to customers for sales and services.
Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenue and expenses.
43
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
D. DEPOSITS AND INVESTMENTS
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and investments with a maturity of
three months or less when from the date of acquisition. All of the deposits and investments allocated to the proprietary funds
are considered to meet this criteria.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized
investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds.
Minnesota statute §118A.04 governs the investment of public funds and outlines the allowable investment types. The City's
investment policy is more restrictive than statute, and authorizes the City to invest in the following:
a] Securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its
instrumentalities, or organizations created by an act of Congress.
b] Shares of investment companies registered under the Federal Securities Act of 1940, and received the highest credit
rating and is rated in one of the two highest categories by at least one nationally recognized statistical rating agency.
c] Obligations of any state or local government with taxing powers rated "A" for general obligations or with a rating of
"AA" or better for revenue backed obligations, with the ratings being provided by a national bond rating service.
d] Commercial paper issued by a United States corporation or their Canadian subsidiaries that is rated in the highest quality
by at least two nationally recognized rating agencies.
e] Time deposits that are fully insured by the Federal Deposit Insurance Corporation or the National Credit Union
Administration.
Certain investments for the City are reported at fair value as disclosed in Note 3 (A). The City categorizes its fair value
measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based
on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for
identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.
In accordance with Governmental Accounting Standards Board (GASB) Statement No. 79, the Minnesota Municipal
Investment Pool (4M) securities are valued at amortized cost, which approximates fair value. There are no restrictions or
limitations on withdrawals from the 4M Liquid Asset Fund. Amounts invested in the 4M Plus must be deposited for a minimum
of 14 days. Withdrawals made prior to the 14-day requirement will be subject to a penalty equal to 7 days interest on the
amount withdrawn. Term Series investments are designed to be held to maturity. If an investment made in a Term Series is
withdrawn prior to the maturity date of that Series, seven days notice of redemption is required, and a penalty will likely be
assessed.
44
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
E. RECEIVABLES AND PAYABLES
Accounts Receivable
Receivables include amounts billed for services provided by the City before year-end. Receivables within the enterprise
funds do include unbilled charges for services provided from the middle of December to the end of the year, as the City
bills for those services mid-month. The City currently has not established an allowance for doubtful accounts for either
trade or utility charge receivables. The City annually certifies unpaid trade and utility charge receivable to Wright County
for collection in the following year, and is the primary factor in reporting the receivables at a gross amount, rather than
net of allowance.
Leases
The City is a lessor for several noncancellable leases. The City recognizes a lease receivable and a deferred inflow of
resources in the government-wide and proprietary fund financial statements.
At the commencement of a lease, the City measures the lease receivable at the present value of payments expected to be
received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments
receive. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease
payments received at or before the lease commencement date. Subsquently, the deferred inflow of resources is recognized
as revenue over the life of the lease term in a systematic and rational manner.
Key estimates and judgements include how the City determines: 1) the discount rate, 2) the lease term, 3) lease receipts,
and 4) the amortization. The City determines the discount rate for leases based on the applicable State and Local Government
Securities (SLGS) rate. The lease term includes the noncancellable period of the lease. Lease receipts included in the
measurement of the lease receivable is composed of fixed payments from the lessee.
Property Taxes
The City Council annually adopts a property tax levy and certifies it to Wright County in December. The County allocates
this levy across taxable properties in the City based on valuations assessed in the prior year. These taxes become an
enforceable lien against the property on January 1st, and are recorded as receivables by the City as of that date.
Tax statements are generated and mailed by the County to the respective taxpayers, with half of the total due on May 15th
and the second half due on October 15th. The County is also the collecting agency, and remits the amounts collected to the
City with primary settlements in June and December, and a minor settlement in January.
Property taxes that are unpaid as of December 31st, are then classified as delinquent. Delinquent taxes receivable include
the past six years of uncollected taxes and are fully offset by a deferred inflow of resources for those collections not
received within 60 days of year-end in the governmental fund financial statements.
Special Assessments
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the County. Special assessments have been offset by a
deferred inflow of resources for those collections not received within 60 days after year end in the governmental fund
financial statements.
45
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Interfund Receivables and Payables
During the course of operations, numerous transactions occur between individual funds for goods provided or services
rendered. Short-term interfund loans are classified as “due to/from other funds.” All short-term interfund receivables and
payables at December 31, 2025 are planned to be eliminated in 2026. Long-term interfund loans are classified as
“advances 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".
F. PREPAID ITEMS
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both
government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as
expenditures/expenses at the time of consumption rather than when purchased.
G. ASSETS HELD FOR RESALE
Assets held for resale represent various parcels of land that are currently owned by the City with the intent to sell in the future
to create economic development activity within the City. The assets are reported at their net realizable value in the General
fund. During the year ended December 31, 2025, management has reviewed the reported values of the assets.
H. CAPITAL ASSETS
Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items),
and intangible assets such as easements and computer software, are reported in the applicable governmental or business-type
activities columns in the government-wide financial statements and the proprietary fund financial statements. Capital assets are
defined by the City as assets with an initial, individual cost in excess of the amounts in the table below and with an estimated
useful life in excess of three years. All land assets are recorded by the City with no assigned cost threshold. Such assets are
recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
acquisition value at the date of donation.
Land $ 10,000
Infrastructure 100,000
Buildings and Building Improvements 100,000
Land Improvements 50,000
Machinery and Equipment 25,000
Group Asset Purchases 100,000
All Other Assets (and Intangible Assets) 25,000
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not
capitalized.
Capital assets of the City, are depreciated using the straight line method over the following estimated useful lives:
Infrastructure 15 - 40 years
Buildings and Building Improvements 7 - 40 years
Land Improvements 15 - 20 years
Machinery and Equipment 5 - 15 years
46
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
I. DEFERRED OUTFLOWS OF RESOURCES
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets
that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The
City presents deferred outflows of resources on the Statement of Net Position for deferred outflows of resources related to
pensions for various estimate differences that will be amortized and recognized over future years.
J. COMPENSATED ABSENCES
It is the City's policy to permit employees to accumulate earned but unused personal time-off (PTO) benefits. All PTO pay is
accrued when incurred in the government-wide and proprietary fund financial statements. The liability consists of leave that has
not yet been used that is attributable to services already rendered, accumulates, and is more likely than not to be used for time
off, or otherwise paid in cash or settled through noncash means. A liability for these amounts is reported in governmental fund
financial statements only if they have matured, for example, as a result of an employee retirement or resignation. The General
fund is typically used to liquidate the compensated absences payable for governmental activities.
K. LONG TERM OBLIGATIONS
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and
other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or
proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using
the straight line method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance
costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on
debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
L. PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources, and
pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and
additions to or deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by
PERA except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer
payroll paid dates and benefit payments, and refunds are recognized when due and payable in accordance with the benefit
terms. Investments are reported at fair value. The General fund is typically used to liquidate the net pension liability for
governmental activities. The Water Utility and Sanitary Sewer Utility funds would be used to liquidate the net pension liability
for business-type activities.
47
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
M. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
In June 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 75, Accounting and Financial
Reporting for Postemployment Benefits Other Than Pensions. The primary objective of this Statement was to improve
accounting and financial reporting for postemployment benefits other than pensions (OPEB). The City has no plans that would
result in an OPEB liability and, therefore, the City anticipates it will not incur any future explicit or implicit OPEB costs for its
employees, and therefore, no liability will be recorded.
N. SUBSCRIPTION BASED INFORMATION TECHNOLOGY ARRANGEMENTS
In May 2020, the Governmental Accounting Standards Board (GASB) issued Statement No. 96, Subscription Based Information
Technology Arrangements (SBITA). The primary objective of this Statement was to improve accounting and financial reporting
of SBITA's by providing uniform guidance that will result in greater consistency in practice. The City has no SBITA's that would
result in an intangible asset and corresponding subscription liability.
N. DEFERRED INFLOWS OF RESOURCES
In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element represents an acquisition of net assets that applies to future
periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has three types of items
which qualify for reporting in this category. One item, unavailable revenue, which arises only under a modified accrual basis
of accounting, therefore, is reported only in the governmental funds balance sheet. The governmental funds report unavailable
revenue from sources such as: accounts receivables, property taxes, special assessments, and intergovernmental grants not
collected within 60 days of year-end. The first item presented by the City are deferred inflows of resources on the statement
of net position for deferred inflows of resources related to pensions for various estimate differences that will be amortized and
recognized over future years. The second item presented by the City on the government-wide statement of net position and on the
proprietary funds statement of net position are deferred inflows of resources related to a deferred gain on a refunding bond
issuance which will be amortized over the remaining life of the debt issuance. The third item, Antenna Rental Leases, is
reported in both the government-wide and proprietary funds statements of net position.
48
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
O. FUND BALANCE / NET POSITION
Fund Balance – In governmental fund types, the difference between assets and deferred outflows of resources less
liabilities and deferred inflows of resources is called fund balance. In the City's governmental fund financial statements,
governmental funds report fund balance in classifications that disclose restraints for which amounts in those funds can be
spent. These classifications are as follows:
Nonspendable – consists of amounts that are not in spendable form or are required to be maintained intact.
Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or
contributors; or constraints imposed by state statutory provisions.
Committed – consists of internally imposed constraints. These constraints are imposed by formal action (resolution)
of the City Council, which is the highest level of decision making authority.
Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is
the City’s intended use. These constraints are established by the City Council or, pursuant to council resolution, the
City Administrator or the Finance Director.
Unassigned – is the residual classification for the General fund and also reflects negative residual amounts in other
funds.
When committed, assigned, or unassigned resources are available for an allowable use, it is the City’s policy to use
resources in the following order; 1) committed, 2) assigned, and 3) unassigned.
The City has formally adopted a fund balance policy for the General Fund. The policy establishes a year-end target
fund balance amount of 45% of the next year’s operating budget for cash flow needs.
Net Position – For government-wide reporting as well as in proprietary funds, the difference between assets and deferred
outflows of resources less liabilities and deferred inflows of resources is called net position. Net position can be displayed
in the three following classifications:
Net Investment in Capital Assets – consists of capital assets, net of accumulated depreciation, and further reduced by
the outstanding balance of any long-term debt used to build or acquire the respective capital assets.
Restricted – reported when there are limitations of use through external restrictions imposed by creditors, grantors,
or laws and regulations of other governments.
Unrestricted – all remaining net position is reported in this classification.
When both restricted and unrestricted net position are available for an allowable use, it is the government’s policy to
use restricted resources first, then unrestricted resources as they are needed.
49
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
P. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (GAAP), requires management to make estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Actual results could differ from such estimates.
Q. BUDGETARY INFORMATION
An annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of
America (GAAP) for the General fund, the Series 2018A, the Series 2020A, and the Series 2024A Debt Service funds, Tax
Increment District No. 1, Tax Increment District No. 3, and Tax Increment District No. 4 special revenue funds. All annual
appropriations lapse at year-end. The City does not use encumbrance accounting.
In June of each year, General fund departments submit requests for appropriations to the City Administrator so that a budget
may be prepared. The requested budget appropriations are presented and reviewed with the City Council. The proposed
General fund budget and preliminary property tax levy must be certified to Wright County prior to September 30. The City
Council holds public hearings and a final budget is adopted in early December, with the final property tax levy required to be
certified to Wright County prior to the end of December.
The appropriated budget is prepared by fund and department. The City's department heads are authorized to make transfers of
budgeted appropriations within a department. Any transfers of appropriations between a department needs authorization of the
City Administrator. The legal level of budgetary control is at the fund level, so any appropriations transfers between funds
needs the approval of the City Council. There were no transfers of budgeted appropriations or budget amendments during
the year.
50
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
NOTE 2 DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the
City Council. All such depositories are members of the Federal Reserve System.
Minnesota Statutes require that all City deposits with financial institutions be protected by federal deposit insurance, corporate
surety bonds or collateral. The fair value of collateral pledged must equal 110% of the deposits not covered by insurance
or bonds. Minnesota Statutes require that all securities pledged as collateral be placed 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 by the financial institution furnishing the collateral.
At year-end, the City's carrying amount of deposits was $731,036, and a bank balance of $2,587,041.
Custodial credit risk for the City's deposits would arise in the event of a bank failure, where the City's deposits may not be
returned to it. As of year-end, the City's bank balance was not exposed to custodial credit risk because it was insured and fully
collateralized with securities held by the pledging financial institution's trust department or agent in the City's name.
As of December 31, 2025 the City had the following investments:
Fair Value < 1 1 - 3 3 - 5
Negotiable Certificates of Deposit 19,778,088$ 7,299,860$ 8,552,651$ 3,925,577$
U.S. Government Agency Securities 30,736,482 5,311,434 12,764,471 12,660,577
Municipal Bonds 14,160,159 2,228,707 6,390,961 5,540,491
External Investment Pool 15,620,374 15,620,374 - -
Brokered Money Market Accounts 47,860 47,860 - -
Total 80,342,963$ 30,508,235$ 27,708,083$ 22,126,645$
The external investment pool and brokered money market investments are valued at amortized cost. The City's investments in
Negotiable Certificates of Deposit, U.S. Government Agency Securities, and Municipal Bonds have recurring fair value
measurements using a matrix pricing model (level 2 input). The City's investments in U.S. Treasuries are valued using a quoted
market price (level 1 input).
Investment Maturities (In Years)
Investment Type
51
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
As of December 31, 2025, the City's investments in U.S. Government Agency Securities and Municipal Bonds carried the
following ratings as well as their respective concentration percentage when compared to the total investment portfolio. An
indication of "NR" in the ratings below mean that the respective rating organization has not provided a rating on the respective
investment.
Moody's S & P Fair Portfolio
Rating Rating Value Concentration %
U.S. Government Agency Securities
Federal Farm Credit Bank (FFCB) Aa1 AA+ 5,446,737$ 6.78%
Federal Home Loan Bank (FHLB) Aa1 AA+ 11,184,195 13.92%
Federal Home Loan Mortgage Corporation (FHLMC) Aa1 AA+ 4,373,606 5.44%
Federal National Mortgage Association (FNMA) Aa1 AA+ 1,521,811 1.89%
Treasury Note Aa1 NR 8,210,133 10.22%
Total 30,736,482$ 38.26%
Municipal Bonds
Shakopee School District, MN Aa1 NR 748,268 0.93%
City of New York, NY Aa2 AA 984,970 1.23%
State of California Aa2 AA-495,470 0.62%
Canutillo School District, TX Aaa NR 534,449 0.67%
Town of Wilmington, MA NR AAA 484,245 0.60%
Multnomah County School District, TX Aa2 AA 723,428 0.90%
Sunnyvale School District, CA NR AAA 362,565 0.45%
State of Mississippi Aa2 AA 970,570 1.21%
City of Richmond, VA Aa1 AA+694,491 0.86%
City of Medford, OR NR AA- 1,167,577 1.45%
Glendale School District, CA Aa1 NR 686,558 0.85%
State of Arkansas Aa1 AA+507,520 0.63%
Ford County School District, KS A1 NR 504,432 0.63%
City of Frisco, TX Aaa AAA 368,808 0.46%
State of Hawaii Aa2 AA+312,609 0.39%
Dane County, WI NR AAA 504,240 0.63%
Town of Stratford, CT A2 AA 460,980 0.57%
State of Texas Aaa AAA 494,195 0.62%
San Jose Evergreen College, CA Aaa AA+441,336 0.55%
Yosemite Communitey College, CA Aa2 NR 482,920 0.60%
State of Connecticut Aa2 AA-490,161 0.61%
Carter County, TN Aa3 NR 456,950 0.57%
Nashville Davidson County, TN Aa2 AA+529,380 0.66%
City of Charlotte, NC Aaa AAA 754,037 0.94%
Total 14,160,159$ 17.62%
The following is a summary of cash deposits and investments as of December 31, 2025 and presented in the basic financial
statements in the Statement of Net Position:
Deposits 731,036$
Investments 80,342,963
Petty Cash and Change Funds 600
Total 81,074,599$
Investment Type
52
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
The following is a summary of total deposits and investments as of December 31, 2025 and presented in the basic financial
statements in the Statement of Net Position:
Cash and Investments 81,074,599$
Cash with Fiscal Agent 9,616,152
Total 90,690,751$
Interest Rate Risk – This is the risk that the fair values of the securities in the City's investment portfolio would decrease
due to changes in market interest rates. The City identifies interest rate risk within the second and fourth objectives of the City's
investment policy, which are liquidity and return on investment. The City attempts to limit its exposure to interest rate risk by
keeping the investment portfolio sufficiently liquid to meet cash flow requirements, while still attempting to obtain a reasonable
return on investment. The City also addresses interest rate risk by attempting to create proportions in the maturities of the City's
investment portfolio which places longer term investments higher on the yield curve than those shorter term investments.
Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota
Statutes limits allowable investments to those that are in the top two ratings issued by nationally recognized statistical rating
organizations. The City's investment policy also addresses credit risk by further limiting investments to the list provided
within Note 1-D.
Concentration of Credit Risk – This is the risk of loss attributed to the magnitude of the City's investment in any single issuer.
The first objective of the City's investment policy is safety. To obtain this objective, diversification is to be considered in the
type of investment, maturity and the issuer of the respective investments. Each of the City's certificates of deposit are
purchased in amounts not exceeding federal deposit insurance. The tables above outline the concentrations of the City's other
investment types, including U.S. Government Agency Securities and Municipal Bonds.
More than 5 percent of the City's investments are in Federal Farm Credit Bank (FFCB), Federal Home Loan Bank (FHLB),
and Federal Home Loan Mortgage Corporation (FHLMC). These investments are 6.78 percent, 13.92 percent, and 5.44 percent
respectively, of the City's total investments.
Custodial Credit Risk – This is the risk that in the event of the failure of a counterparty to an investment, the City will not be
able to recover the value of an investment or collateral securities that are in possession of an outside party. In accordance with
the City's investment policy, all investment securities shall be held by a single safekeeping agent in the name of the City.
B. LEASE RECEIVABLE
The City has implemented GASB 87 effective December 31, 2022 and has recognized a Lease Receivable and respective
Deferred Inflow of Resources in the amount of $2,041,870. Leases included in the lease receivable are the leased space above
Water Towers No. 1 and No. 3 to several communication companies. Lease terms are as follows:
2025 Lease 2025 Lease
Revenue Receivable
T-Mobile 37,629$ 835,350$ Four Terms of 5-Years
Earthlink 17,073 31,105 Three Terms of 5-Years
Verizon Wireless 43,940 1,175,415 Four Terms of 5-Years
Adjustment Factor
Annual Lease
Options
Renewal
Lessee
4%
4%
4%
53
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2025 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets, not Being Depreciated:
Land 4,278,161$ 3,770$ -$ 4,281,931$
Construction in Progress 3,445,500 15,740,644 (4,806,874) 14,379,270
Total Capital Assets, not Being Depreciated 7,723,661 15,744,414 (4,806,874) 18,661,201
Capital Assets, Being Depreciated:
Buildings and Building Improvements 6,680,801 1,290,803 - 7,971,604
Land Improvements 7,826,703 1,435,315 - 9,262,018
Machinery and Equipment 5,443,249 1,883,775 (274,190) 7,052,834
Infrastructure 49,667,351 4,656,600 - 54,323,951
Total Capital Assets, Being Depreciated 69,618,104 9,266,493 (274,190) 78,610,407
Less Accumulated Depreciation for:
Buildings and Building Improvements 2,889,058 166,382 - 3,055,440
Land Improvements 4,178,946 318,728 - 4,497,674
Machinery and Equipment 3,541,349 518,579 (269,940) 3,789,988
Infrastructure 13,349,034 1,513,956 - 14,862,990
Total Accumulated Depreciation 23,958,387 2,517,645 (269,940) 26,206,092
Total Capital Assets Being Depreciated - Net 45,659,717 6,748,848 (4,250) 52,404,315
Governmental Activities Capital Assets - Net 53,383,378$ 22,493,262$ (4,811,124)$ 71,065,516$
Depreciation expense was charged to the functions of the City as follows:
Governmental Activities:
General Government 53,971$
Public Safety 77,918
Public Works 1,880,164
Culture and Recreation 505,592
Total Depreciation Expense - Governmental Activities 2,517,645$
54
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities:
Capital Assets, not Being Depreciated:
Land 1,047,903$ 806,137$ -$ 1,854,040$
Construction in progress 39,268,175 11,816,833 (42,702,389) 8,382,619
Total Capital Assets, not Being Depreciated 40,316,078 12,622,970 (42,702,389) 10,236,659
Capital Assets, Being Depreciated:
Buildings and Building Improvements 16,993,066 40,767,359 - 57,760,425
Land Improvements 212,810 - - 212,810
Machinery and Equipment 2,760,070 468,978 (24,521) 3,204,527
Infrastructure 90,257,540 7,942,782 - 98,200,322
Total Capital Assets, Being Depreciated 110,223,486 49,179,119 (24,521) 159,378,084
Less Accumulated Depreciation for:
Buildings and Building Improvements 1,319,396 699,311 - 2,018,707
Land Improvements 15,175 10,641 - 25,816
Machinery and Equipment 1,276,126 273,908 (24,521) 1,525,513
Infrastructure 27,180,214 2,349,979 - 29,530,193
Total Accumulated Depreciation 29,790,911 3,333,839 (24,521) 33,100,229
Total Capital Assets Being Depreciated - Net 80,432,575 45,845,280 - 126,277,855
Business-type Activities Capital Assets - Net 120,748,653$ 58,468,250$ (42,702,389)$ 136,514,514$
Depreciation expense was charged to the functions of the City as follows:
Business-type Activities:
Water Utility 1,102,141$
Sanitary Sewer Utility 1,959,117
Storm Water Utility 272,581
Total Depreciation Expense - Business-type Activities 3,333,839$
55
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
D. CONSTRUCTION COMMITMENTS
At December 31, 2025 the City had construction project contracts in progress. The commitments related to remaining contract
balances are summarized as follows:
Contract Remaining
Amount Commitment
Major Governmental Funds:
Fire Station Facility
Fire Station 14,083,184$ 4,050,152$
Nonmajor Governmental Funds:
Park Development
Parrish Avenue Trail Improvement 278,826 15,227
Major Proprietary Funds:
Water Utility
Wellhouse No. 4 Water Treatment 6,967,081 2,261,730
Well No. 12 539,620 539,620
South Central Wellfield 1,243,093 1,243,093
Sanitary Sewer Utility
Lift Station #4 Improvements 838,425 838,425
Total 23,950,229$ 8,948,247$
E. INTERFUND TRANSFERS
Transfers between funds made during the year ended December 31, 2025 were as follows:
Transfer In Transfer Out
Major Governmental Funds:
General 478,000$ -$
Total Governmental Funds 478,000 -
Major Proprietary Funds:
Water Utility - 119,500
Sanitary Sewer Utility - 358,500
Total Proprietary Funds - 478,000
Total All Funds 478,000$ 478,000$
Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by
another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally
authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2025, the following
transfers were made between funds:
• The Water Utility and Sanitary Sewer Utility funds transferred $119,500 and $358,500 respectively to the General
fund as an annual contribution to help manage the property tax levy.
Fund & Project
Fund
56
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
F. LONG-TERM DEBT
Governmental Activities
The City has issued general obligation bonds to provide funding for the construction of governmental activities infrastructure
for street improvements. General obligation bonds have also been issued to refinance previously issued bonds to achieve
interest rate savings. These bond issues are backed by the full faith and credit of the City. Debt service on these issues
is provided through the collection of property taxes and special assessments. At the end of the current year, there are
assets accumulated in the amount of $1,508,943 to meet future debt service requirements. Included within those assets
are $343 of delinquent special assessments receivable, of which collection is uncertain.
The Economic Development Authority has issued lease revenue bonds to provide funding for the construction of the
Fire & Emergency Services Facility. Debt service on this issue is provided through a lease agreement between the EDA
and the City. The City can source the lease payments to the EDA with any available resources, and expects that property
taxes will be the primary source. At the end of the current year, there are assets accumulated of $398,265 to meet future
debt service requirements.
Final
Interest Issue Maturity Original Payable
Rates Date Date Issue 12/31/25
General Obligation Bonds:
Improvement Bonds, Series 2018A 3.00 - 3.13% 7/11/2018 2/1/2034 2,305,000$ 1,190,000$
Refunding Bonds 2020A 1.03 - 1.11% 11/17/2020 2/1/2028 2,950,000 925,000
Lease Revenue Bonds:
EDA Lease Revenue Bonds 2024A 4.00 - 5.00% 12/9/2024 2/1/2046 16,900,000 16,900,000
Total - Bonded Indebtedness 22,155,000$ 19,015,000
Other Liabilities:
Unamortized Premium on Issuance of Bonds 1,105,500
Compensated Absences Payable 178,431
Total Governmental Activities 20,298,931$
Annual debt service requirements to maturity for governmental activities long-term indebtedness are as follows:
Principal Interest Principal Interest
495,000$ 64,081$ -$ 750,300$
525,000 45,756 525,000 737,175
540,000 26,606 550,000 710,300
225,000 13,531 575,000 682,175
60,000 6,256 605,000 652,675
270,000 17,147 3,515,000 2,765,625
- - 4,455,000 1,813,300
- - 5,450,000 807,400
- - 1,225,000 24,500
2,115,000$ 173,377$ 16,900,000$ 8,943,450$
2031 - 2035
Governmental ActivitiesGovernmental Activities
General Obligation Bonds
2036 - 2040
Total
Lease Revenue Bonds
2028
2029
2030
Year Ending
December 31
2026
2027
2041 - 2045
2046 - 2047
57
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Business-type Activities
The City issued general obligation bonds to provide funding for the acquisition and construction of major capital facilities
and construction of infrastructure in the business-type activities. All long-term indebtedness outstanding is backed by the
full faith and credit of the City. Bonds in the business-type activities will be retired with the net revenues of the Water and
Sanitary Sewer funds. (Net revenues are defined as the excess of gross revenues and earnings over the normal, reasonable
and current costs of operating and maintenance). In the event that a deficiency exists because of inadequate net revenues
at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are
available. At the end of the current year, the Water and Sanitary Sewer funds provided net revenues of $6,955,466, which
accounts for a debt-service coverage ratio of 125.73%.
Final
Interest Maturity Original Payable
Rates Date Date Issue 12/31/25
General Obligation Bonds:
Revenue Bonds, Series 2019A 4.00 - 4.00% 12/19/2019 12/1/2026 3,525,000$ 1,485,000$
Revenue Bonds, Series 2021A 1.00 - 3.00% 9/23/2021 2/1/2037 4,345,000 3,620,000
Revenue Bonds, Series 2021B 5.00 - 5.00% 9/23/2021 12/1/2026 7,390,000 545,000
Note from Direct Borrowing:
G.O. PFA Revenue Note, 2020 1.16% 4/27/2020 8/20/2040 17,199,866 13,251,000
G.O. PFA Revenue Note, 2023 2.84% 11/9/2023 8/20/2043 34,045,359 31,628,438
G.O. PFA Revenue Note, 2025 1.61% 12/10/2025 8/20/2035 845,955 574,715
Sub-Total 67,351,180$ 51,104,153
Other Liabilities:
Unamortized Premium on Issuance of Bonds 433,282
Compensated Absences Payable 56,848
Total Business-type Activities 51,594,283$
58
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Annual debt service requirements to maturity for business-type activities long-term indebtedness are as follows:
Principal Interest Principal Interest
2,295,000$ 152,280$ 2,241,955$ 1,058,013$
275,000 57,530 2,334,000 1,028,328
285,000 49,130 2,385,000 976,851
290,000 40,505 2,438,000 924,106
300,000 34,655 2,492,000 870,029
1,550,000 122,873 13,319,000 3,490,355
655,000 13,150 14,392,000 1,934,898
- - 6,518,000 374,082
5,650,000$ 470,123$ 46,119,955$ 10,656,662$
In November 2023, the City issued $34,045,359 of General Obligation PFA Revenue Note, Series 2023 for the purpose of
financing the eligible projects costs of the Clean Water State Revolving Fund project to improve treatment and for expansion
of the West Wastewater Treatment Facility. The aggregate principal amount of the loan disbursed and outstanding will bear
interest at the rate of 2.843 percent per annum accruing from and after the date of the Note, which is November 9, 2023,
through the date on which no principal of the loan remains unpaid and all accrued interest and servicing fees have been paid.
In December 2025, the City issued $845,955 of General Obligation PFA Revenue Note, Series 2025 for the purpose of
financing the eligible projects costs of the Drinking Water State Revolving Fund project of updating and expanding water
filtration equipment at Wellhouse No. 4 for removal of iron, manganese, and radium. The aggregate principal amount of the
loan disbursed and outstanding will bear interest at the rate of 1.609 percent per annum accruing from and after the date of
the Note, which is December 10, 2025, through the date on which no principal of the loan remains unpaid and all accrued
interest and servicing fees have been paid.
The annual debt service requirements to maturity presented are based on the final projected costs and debt authorized by
the Minnesota Public Facilities Authority. The balance of the debt represents costs incurred through December 31, 2025.
2041 - 2044
Business-type Activities
General Obligation Bonds
Total
Business-type Activities
2027
2028
2029
2030
Year Ending Note from Direct Borrowing
December 31
2026
2036 - 2040
2031 - 2035
59
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2025 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
General Obligation Bonds 2,595,000$ -$ (480,000)$ 2,115,000$ 495,000$
Lease Revenue Bonds 16,900,000 - - 16,900,000 -
Unamortized Bond Premium 1,195,915 - (90,415) 1,105,500 -
Compensated Absences 164,416 241,923 (227,908) 178,431 17,843
Total - Governmental 20,855,331 241,923 (798,323) 20,298,931 512,843
Business-type Activities:
General Obligation Bonds 7,860,000 - (2,210,000) 5,650,000 2,295,000
Notes from Direct Borrowings 42,900,627 4,706,526 (2,153,000) 45,454,153 2,241,955
Unamortized Bond Premium 693,924 - (260,642) 433,282 -
Compensated Absences 49,284 97,128 (89,564) 56,848 5,685
Total - Business-type 51,503,835 4,803,654 (4,713,206) 51,594,283 4,542,640
Total Long-Term Liabilities 72,359,166$ 5,045,577$ (5,511,529)$ 71,893,214$ 5,055,483$
60
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
G. CONDUIT DEBT OBLIGATIONS
Conduit debt obligations are certain limited-obligation revenue bonds or similar instruments issued for the express purpose of
providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private
sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no
obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City.
As of December 31, 2025, the City's conduit debt consisted of the following:
Guardian Angels Senior Services
Revenue Bonds, Series 2017 27,020,000$
Kaleidoscope Charter School
Revenue Bonds, Series 2014A 12,985,000
H. TAX ABATEMENTS
The City has entered into certain agreements for economic development purposes to either attract new businesses or retain
existing business operations within the City. The authority for the City to enter into such agreements comes from Minnesota
Statute §469. The City further has an established Business Subsidy Policy that provides evaluation criteria for any business
subsidy requests. As of December 31, 2025, the City has entered into two types of agreements.
Property Tax Abatements
For the year ended December 31, 2025, the City abated property taxes totaling $87,436. Details of each agreement and
the abatement for the current year are as follows:
• The City has entered into a tax abatement agreement with Wright County in order to finance the cost of Parkview
Avenue and 88th Street improvements which facilitated the Parkview Retail development. The agreement outlines
that the City will use tax abatement financing in an amount not to exceed $950,000 to reimburse the costs of the public
improvements. Wright County will use tax abatement financing in an amount not to exceed $400,000 to reimburse the
City for a portion of the costs of the public improvements. This abatement began with taxes payable 2022. For the current
year, Wright County provided an abatement in the amount of $93,318. At the end of the current year, the total abatement
from Wright County totals $279,865.
61
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Tax Increment Financing
For the year ended December 31, 2025, the Tax Increment Financing Districts within the City generated increment in the
amount of $605,202 and payments to the developers in the amount of $508,113. Details of each agreement are as follows:
• Tax Increment Financing District No. 1 was established in 2015 for the purpose of promoting industrial development
on a parcel owned by the City which had been obtained through the tax forfeiture process. The parcel would not have
been developed but-for tax increment financing given the existing special assessments and the extraordinary amount
of soil improvements. Under the agreement, up to $694,487 of costs incurred by the developer will be reimbursed
through a tax increment revenue note, payable beginning in 2018 and concluding in 2027. Payments on the tax
increment revenue note are only made to the extent of increment generated by the district. For 2025, this tax increment
financing district generated increment in the amount of $102,850 and payments to the developer in the amount of $85,899.
• Tax Increment Financing District No. 3 was established in 2017 for the purpose of facilitating the development of a
142 unit senior housing facility, consisting of independent living, assisted living and memory care. The tax increment
district is a housing district, and is intended for occupancy, in part, by persons or families of low and moderate income.
In order to qualify as a housing district, the senior housing facility is required to provide at least 20% of the residential
units to persons whose incomes do not exceed 50% of the County median income. By providing the affordable housing,
the City believes that such a project was in the best interests of the City and its residents and agreed to reimburse the
developer the lesser of $2,389,400 or the costs of the site improvements actually incurred. The reimbursements will be
made through a tax increment revenue note, payable beginning in 2020 and concluding in 2047. Payments of the tax
increment revenue note are only made to the extent of increment generated by the district. For 2025, this tax increment
financing district generated increment in the amount of $245,355 and payments to the developer in the amount
of $200,071.
• Tax Increment Financing District No. 4 was established in 2018 for the purpose of facilitating the redevelopment of an
existing site including the decommissioning of a private wastewater treatment facility. The redevelopment of this site
will facilitate the construction of 164 units of market-rate multifamily housing, a mini-storage facility, and will create
shovel ready sites for approximately 15,000 square feet of future commercial retail development. The City determined
this development will ultimately preserve and enhance the tax base, redevelop sub-standard areas and provide
employment opportunities within the City that would not reasonably be expected to occur solely through private
investment within the forseeable future. Under the agreement, up to $3,359,685 of costs incurred by the developer will
be reimbursed through a tax increment revenue note, payable beginning in 2021 and concluding in 2046. Payments on
the tax increment revenue note are only made to the extent of increment generated by the district. For 2025, this tax
increment financing district generated increment in the amount of $256,997 and payments to the developer in the
amount of $222,143.
62
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
I. FUND BALANCE / NET POSITION
Net position reported in the government-wide statement of net position at December 31, 2025 include the following:
Governmental Activities
Net Investment in Capital Assets:
Cost of Capital Assets 97,271,608$
Less: Accumulated Depreciation (26,206,092)
Less: Related Long-Term Debt Outstanding (20,120,500)
Add: Unspent Bond Proceeds 6,652,610
Less: Acquisition of Capital Assets on Account (2,459,840)
Total Net Investment in Capital Assets 55,137,786
Restricted for Debt Service
Fund Balance - Governmental Fund Financial Statements 1,365,150
Add: Unavailable Revenue - Special Assessments 541,308
Less: Accrued Interest Payable (343,023)
Total Restricted for Debt Service 1,563,435
Restricted for Lawful Gambling Programs 189,077
Restricted for Affordable Housing Programs 129,300
Restricted for Tax Increment Financing 458,674
Restricted for Park Development
Fund Balance - Governmental Fund Financial Statements 6,564,551
Add: Unavailable Revenue - Special Assessments 4,820
Total Restricted for Park Development 6,569,371
Restricted for Public Safety 555,873
Unrestricted 29,959,044
Total Governmental Activities Net Position 94,562,560$
63
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
Business-type Activities
Net Investment in Capital Assets:
Cost of Capital Assets 169,614,743$
Less: Accumulated Depreciation (33,100,229)
Less: Related Long-Term Debt Outstanding (51,537,435)
Less: Acquisition of Capital Assets on Account (1,470,547)
Less: Deferred Gain on Refunding (78,881)
Total Net Investment in Capital Assets 83,427,651
Unrestricted 46,681,014
Total Business-type Activities Net Position 130,108,665$
Aggregated funds balances reported in the governmental funds balance sheet at December 31, 2025 include the following:
Governmental Funds
Nonspendable Restricted Committed Assigned
General Fund
Prepaid Items 102,202$ -$ -$ -$
Assets Held for Resale 202,200 - - -
Public Safety - 90,079 - -
Insurance Deductibles - - - 313,682
Educational Programs - - - 74,462
Debt Service
Debt Service - 1,365,150 - -
Pavement Management
City Buildings & Infrastructure - - - 7,293,169
Fire Station Facility
City Buildings & Infrastructure - 6,652,610 - 315,662
Nonmajor Governmental Funds
Lawful Gambling Programs - 189,077 - -
Tax Increment Financing - 458,674 - -
Affordable Housing - 129,300 - -
Street Light Replacement - - 83,064 -
Business Development Loans - - 322,932 -
Park Development - 6,564,551 - -
Public Safety - 465,794 - -
City Buildings & Infrastructure - - - 11,187,684
City Vehicles & Equipment - - - 859,981
City Parks & Trails - - - 1,169,343
Total Fund Balances 304,402$ 15,915,235$ 405,996$ 21,213,983$
64
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
NOTE 3 RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions and natural disasters.
Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public
entity risk pool currently operating as a common risk management and insurance program. The City pays an annual
premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through member premiums and reinsures
through commercial companies for excess claims. The City is covered through the pool for any claims incurred but
unreported, however, retains risk for the deductible portions of the insurance policies. The amount of those deductibles is
considered immaterial to the financial statements.
Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The respective
insurance policy is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is
known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. This
coverage is not subject to a deductible.
There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for
any of the past three years.
The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of
these claims will have a material impact on the City’s financial condition or results of operations.
65
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
NOTE 4 PENSION PLAN
Public Employee's Retirement Association
A. PLAN DESCRIPTION
The City participates in the following cost-sharing multiple-employer defined benefit pension plan administered by the
Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan
Membership in the General Plan includes employees of counties, cities, townships, certain school positions, and other
government entities whose revenues are derived from taxation, fees, or assessments. All full-time and certain part-time
employees of the City are covered by the General Employees Plan.
B. BENEFITS PROVIDED
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be
modified by the state Legislature. Vested, terminated employees who are entitled to benefits, but are not receiving them
yet are bound by the provisions in effect at the time they last terminated their public service. When a member is vested, they
have earned enough service credit to receive a lifetime monthly benefit after leaving public service and reaching an eligible
retirement age. Members who retire at or over their Social Security full retirement age with at least one year of service
qualify for a retirement benefit.
General Employees Plan Benefits
General Employees Plan requires three years of service to vest. Benefits are based on a member's highest average salary
for any five successive years of allowable service, age, and years of credit at termination or service. Two methods are used
to compute benefits for PERA's General Plan members. Members hired prior to July 1, 1989, receive the higher of Step or
Level formulas. Only the Level formula is used for members hired after June 30, 1989. Under the Step formula, General
Plan members receive 1.2 percent of the highest average salary for each of the first ten years of service, and 1.7 percent
for each additional year. Under the Level formula, General Plan members receive 1.7 percent of the highest average salary
for all years of service. For members hired prior to July 1, 1989, a full retirement benefit is available when age plus years of
service equal 90 and normal retirement age is 65. Members can receive a reduced requirement benefit as early as age 55
if they have three or more years of service. Early retirement benefits are reduced by 0.25 percent for each month under
age 65. Members with thirty or more years of service can retire at any age with a reduction of 0.25 percent for each month
the member is younger than age 62. The Level formula allows General Plan members to receive a full retirement benefit
at age 65 if they were hired before July 1, 1989 or at age 66 if they were hired after July 1, 1989. Early retirement begins
at age 55 with an actuarial reduction applied to the benefit.
Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of
the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a
maximum of 1.5 percent. The 2025 annual increase was 1.25 percent. Recipients that have been receiving the annuity or
benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase.
Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the
effective date of the increase will receive a reduced or prorated increase.
66
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
C. CONTRIBUTIONS
Minnesota Statutes Chapters 353 and 356 sets the rates for employer and employee contributions. Contribution rates can
only be modified by the state Legislature.
General Employees Fund Contributions
General Plan members were required to contribute 6.5 percent of their annual covered salary in fiscal year 2025, and
the City was required to contribute 7.5 percent for General Plan members. The City's contributions to the General
Employees Fund for years ended December 31, 2025, 2024 and 2023 were $277,549, $250,343, and $189,626. The City's
contributions were equal to the required contributions as set by state statute.
D. PENSION COSTS
General Employees Fund Pension Costs
At December 31, 2025, the City reported a liability of $1,301,679 for its proportionate share of the General Employees
Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution
of $16 million. The State of Minnesota is considered a non-employer contributing entity and the State's contribution meets
the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability
associated with the City totaled $31,401.
City's proportionate share of the net pension liability 1,301,679$
State of Minnesota's proportionate of the net pension liability
associated with the City 31,401
Total 1,333,080$
The net pension liability was measured as of June 30, 2025, and the total pension liability used to calculate the net pension
was determined by an actuarial valuation as of that date. The City's proportionate share of the net pension liability was
based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2024 through June 30, 2025, relative to the total employer contributions received from all of PERA's participating
employers. The City's proportionate share was 0.0393 percent at the end of the measurement period and 0.0348 percent
for the beginning of the period.
For the year ended December 31, 2025, the City recognized pension expense of $248,001 for its proportionate share of the
General Employees Plan's pension expense. Included in the amount, the City recognized $4,816 as pension expense
(and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General
Employees Fund.
67
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
At December 31, 2025, the City reported its proportionate share of the General Employees Plan's deferred outflows of
resources and deferred inflows of resources, related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences Between Expected and Actual Economic Experience 112,021$ -$
Changes in Actuarial Assumptions 31,363 232,662
Net Difference Between Projected and Actual Investment Earnings - 538,576
Changes in Proportion 322,936 -
Contributions Paid Subsequent to the Measurement Date 138,775 -
Totals 605,095$ 771,238$
Deferred outflows totaling $138,775 related to pensions resulting from the City's contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2026.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in
pension expense as follows:
Year Pension
Ended Expense
December 31,Amount
2026 (1,943)$
2027 (86,110)
2028 (124,340)
2029 (92,525)
2030 -
Thereafter -
Total (304,918)$
E. LONG-TERM EXPECTED RETURN ON INVESTMENT
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a
regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected
future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term
rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation
and best estimates of geometric real rates of return for each major asset class are summarized in the following table:
Target
Allocation Long-Term
Domestic Equity 33.50% 5.10%
International Equity 16.50% 5.30%
Fixed Income 25.00% 0.75%
Private Markets 25.00% 5.90%
Total 100.00%
Description
Asset Class
68
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
F. ACTUARIAL ASSUMPTIONS
The total pension liability of the cost-sharing defined benefit plan was determined by an actuarial valuation as of June 30, 2025,
using the entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used to determine the
total liability is 7 percent. The 7 percent assumption is based on review of inflation and investment return assumptions from a
number of national investment consulting firms. The review provided a range of investment return rates considered reasonable
by the actuary. An investment return of 7 percent is within that range.
Inflation is assumed to be 2.25 percent and benefit increases after retirement are assumed to be 1.5 percent.
Salary growth assumptions range in annual increments from 11.5 percent after one year of service to 3.0 percent after 27
years of service.
Mortality rates are based on the Pub-2010 General Employee Mortality Table, adjusted slightly to fit PERA's experience.
Actuarial assumptions are reviewed every four years. The most recent four-year experience study was last reviewed in 2022.
The assumption changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2025:
Changes in Actuarial Assumptions:
• The combined service annuity loading factors increased from 15% to 19% for vested terminated members and from
3% to 44 for non-vested terminated members. The assumed post-retirment benefit incrase changed from 1.25% to 1.5%
Changes in Plan Provisions:
• The post-retirement benefit increase formula changed to 100% of the Social Security annual increase, between 1% and
1.75%, beginning January 1, 2026. If the funded ratio (on a market value of assets basis) is less than 85% for the last
two consecutive annual valuations or is less than 80% in the most recent actuarial valuation, the maximum is reduced to
1.5%. Previously, the benefit increase was 50% of the Social Security annual increase, between 1% and 1.5%.
• The 1% additional employer contribution is elminated when the plan reaches 98% funded status (on an actuarial value
of assets basis); this contribution was previously scheduled to stop when the plan reached 100% funded status.
69
CITY OF OTSEGO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
G. DISCOUNT RATE
The discount rate used to measure the total pension liability in 2025 was 7 percent. The projection of cash flows used to
determine the discount rate assumed that contributions from Plan members and employers will be made at rates set in
Minnesota Statutes. Based on these assumptions, the fiduciary net positions of the General Employees Fund was projected to
be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension
liability.
H. PENSION LIABILITY SENSITIVITY
The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using
the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability
would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current rate.
6.00% 7.00% 8.00%
One Point Current One Point
Decrease Rate Increase
General Employees Fund 3,161,579$ 1,301,679$ (207,115)$
I. PENSION PLAN FIDUCIARY NET POSITION
Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial report
that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org.
NOTE 5 NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
The Governmental Accounting Standards Board recently approved the following statements which were not implemented in
these financial statements. The effect these standards may have on future financial statements has not been determined.
• Statement No. 103, Financial Reporting Model Improvements
The changes required by this Statement provide clarity, enhance the relevance of information, provide more useful
information for decision making, and provide for greater comparability amongst government entities. This Statement
will be effective for the year ending December 31, 2026.
• Statement No. 104, Disclosure of Certain Capital Assets
The disclosures required by this Statement provide users of the financial statements with essential information about
certain types of capital assets. This Statement will be effective for the year ending December 31, 2026.
City's Proportionate Share
of the Net Pension Liability
70
CITY OF OTSEGO, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS)
SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY
GENERAL EMPLOYEE'S RETIREMENT FUND
City's
Proportionate ($)
Share of the Net
Pension Liability City's
State's and the State's Proportionate (%)
City's City's Proportionate (S) Proportionate ($)Share of Net Plan Fiduciary
Proportionate (%) Proportionate ($) Share of the Net Share of the Net Pension Liability Net Position
Fiscal Share of Share of Pension Liability Pension Liability City's Compared With as a Percentage
Year Net Pension Net Pension Associated With Associated With Covered Covered of the Total
Ending Liability Liability the City the City Payroll Payroll Pension Liability
June 30, 2025 0.0393% 1,301,679$ 31,401$ 1,333,080$ 3,415,618$ 38.11%90.78%
June 30, 2024 0.0348% 1,286,582 33,268 1,319,850 2,945,420 43.68%89.10%
June 30, 2023 0.0284% 1,588,096 43,804 1,631,900 2,261,121 70.23%83.10%
June 30, 2022 0.0274% 2,170,089 63,613 2,233,702 2,051,891 105.76%76.70%
June 30, 2021 0.0252% 1,076,153 32,902 1,109,055 1,813,749 59.33%87.00%
June 30, 2020 0.0247% 1,480,878 45,554 1,526,432 1,745,138 84.86%79.10%
June 30, 2019 0.0218% 1,205,273 37,332 1,242,605 1,531,014 78.72%80.20%
June 30, 2018 0.0215% 1,192,732 39,115 1,231,847 1,365,460 87.35%79.50%
June 30, 2017 0.0215% 1,372,546 17,254 1,389,800 1,332,687 102.99%75.89%
June 30, 2016 0.0198% 1,607,662 20,935 1,628,597 1,136,013 141.52%68.91%
71
CITY OF OTSEGO, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS)
SCHEDULE OF CITY'S CONTRIBUTIONS
GENERAL EMPLOYEE'S RETIREMENT FUND
Contributions
in Relation to Contributions
Statutorily Statutorily Contribution City's as a Percentage
Year Required Required (Excess) Covered of Covered
Ending Contributions Contributions Deficiency Payroll Payroll
December 31, 2025 277,549$ 277,549$ -$ 3,700,655$ 7.50%
December 31, 2024 250,343 250,343 - 3,337,910 7.50%
December 31, 2023 189,626 189,626 - 2,528,348 7.50%
December 31, 2022 161,169 161,169 - 2,148,921 7.50%
December 31, 2021 142,796 142,796 - 1,903,947 7.50%
December 31, 2020 133,158 133,158 - 1,775,440 7.50%
December 31, 2019 120,583 120,583 - 1,607,772 7.50%
December 31, 2018 110,473 110,473 - 1,472,972 7.50%
December 31, 2017 98,542 98,542 - 1,313,896 7.50%
December 31, 2016 96,567 96,567 - 1,287,564 7.50%
72
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2025
NOTE 1 GENERAL EMPLOYEES FUND
CHANGES FOR 2025
Changes in Actuarial Assumptions
• The combined service annuity loading factors increased from 15% to 19% for vested terminated members and
from 3% to 44% for non-vested, terminated members.
• The assumed post-retirement benefit increase changed from 1.25% to 1.5%.
Changes in Plan Provisions
• The post-retirement benefit increase formula changed to 100% of the Social Security annual increase, between
1% and 1.75%, beginning January 1, 2026. If the funded ratio (on a market value of assets basis) is less than 85%
for the last two consecutive annual valuations or is less than 80% in the most recent actuarial valuation, the
maximum is reduced to 1.5%. Previously, the benefit increase was 50% of the Social Security annual increase,
between 1% and 1.5%.
• The 1% additional employer contribution is eliminated when the plan reaches 98% funded status (on an actuarial
value of assets basis); this contribution was previously scheduled to stop when the plan reached 100%
funded status.
CHANGES FOR 2024
Changes in Actuarial Assumptions
• Rates of merit and seniority were adjusted, resulting in slightly higher rates.
• Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements; slight
adjustments to Rule of 90 retirement rates; and slight adjustments to early retirement rates for Tier 1 and 2 members.
• Minor increase in assumed withdrawals for males and females.
• Lower rates of disability.
• Continued use of Pub-2010 general mortality table with slight rate adjustments as recommended in the most
recent experience study.
• Minor changes to form of payment assumptions for male and female retirees.
• Minor changes to assumptions made with respect to missing participant data.
Changes in Plan Provisions
• The workers compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated
to reflect the changes in assumptions.
73
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2025
CHANGES FOR 2023
Changes in Actuarial Assumptions
• The investment return assumption and single discount rate were changed from 6.5 percent to 7.0 percent.
Changes in Plan Provisions
• An additional one-time direct state aid contribution of $170.1 million was contributed to the Plan on October 1, 2023.
• The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three
years of allowable service.
• The benefit increase delay for early retirements on or after January 1, 2024, was eliminated.
• A one-time, non-compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable
in a lump sum for calendar year 2024 by March 31, 2024.
CHANGES FOR 2022
Changes in Actuarial Assumptions
• The mortality improvement scale was changed from scale MP-2020 to scale MP-2021.
Changes in Plan Provisions
• There have been no changes since the previous valuation.
CHANGES FOR 2021
Changes in Actuarial Assumptions
• The investment return and single discount rates were changed from 7.5 percent to 6.5 percent for financial reporting.
• The mortality improvement scale was changed from scale MP-2019 to scale MP-2020.
Changes in Plan Provisions
• There have been no changes since the previous valuation.
74
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2025
CHANGES FOR 2020
Changes in Actuarial Assumptions
• The price inflation assumption was decreased from 2.5 percent to 2.25 percent.
• The payroll growth assumption was decreased from 3.25 percent to 3.0 percent.
• Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net
effect is assumed rates that average 0.25 percent less than previous rates.
• Assumed rates of retirement were changed as recommended in the June 30, 2019, experience study. The changes
result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.
• Assumed rates of termination were changes as recommended in the June 30, 2019, experience study. The new rates
are based on service and are generally lower than previous rates for years 2-5 and slightly higher thereafter.
• Assumed rates of disability were changed as recommended in the June 30, 2019, experience study. The change results
in fewer predicted disability retirements for males and females.
• The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010
General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the
RP-2014 disabled annuitant mortality table to the Pub-2010 General/Teacher disabled annuitant mortality table, with
adjustments.
• The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.
• The assumed spouse age difference was changed from two years older for females to one year older.
• The assumed number of married male new retirees electing the 100% Joint and Survivor option changed from 35
percent to 45 percent. The assumed number of married female new retirees electing the 100% Joint and Survivor
option changed from 15 percent to 30 percent. The corresponding number of married new retirees electing the Life
annuity option was adjusted accordingly.
Changes in Plan Provisions
• Augmentation for current privatized members was reduced to 2.0 percent for the period July 1, 2020 through
December 31, 2023, and 0.0 percent thereafter. Augmentation was eliminated for privatizations occurring after
June 30, 2020.
75
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2025
CHANGES FOR 2019
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions
• The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per
year. The State's special funding contribution was changed prospectively, requiring $16.0 million per year through 2031.
CHANGES FOR 2018
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2015 to MP-2017.
• The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2044 and 2.50
percent per year thereafter to 1.25 percent per year.
Changes in Plan Provisions
• The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019,
resulting in actuarial equivalence after June 30, 2024.
• Interest credited on member contributions decreased from 4.0 percent to 3.0 percent, beginning July 1, 2018.
• Deferred augmentation was changed to 0.0 percent, effective January 1, 2019. Augmentation that has already accrued
for deferred members will still apply.
• Contribution stabilizer provisions were repealed.
• Annual increases were changed from 1.0 percent per year with a provision to increase to 2.5 percent
upon attainment of 90.0 percent funding ratio to 50.0 percent of the Social Security Cost of Living Adjustment,
not less than 1.0 percent and not more than 1.5 percent, beginning January 1, 2019.
• For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal
retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors.
• Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
76
CITY OF OTSEGO, MINNESOTA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2025
CHANGES FOR 2017
Changes in Actuarial Assumptions
• The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60 percent for
both vested and non-vested deferred members. The revised CSA loads are now 0.00 percent for active member liability,
15 percent for vested deferred member liability, and 3.00 percent for non-vested deferred member liability.
• The annual benefit increase rate was changed from 1.00 percent per year for all years to 1.00 percent
per year through 2044, and 2.50% percent thereafter.
Changes in Plan Provisions
• The State's contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018, and
$6.0 million thereafter.
• The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21.0 million
to $31.0 million in calendar years 2019 to 2031. The State's contribution changed from $16.0 million to $6.0 million
in calendar years 2019 to 2031.
CHANGES FOR 2016
Changes in Actuarial Assumptions
• The assumed post-retirement benefit increase was changed from 1.00% per year through 2035 and 2.50% per year
thereafter to 1.00% per year for all future years.
• The assumed investment return was changed from 7.90% to 7.50%. The single discount rate was changed
from 7.90% to 7.50%.
• Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary
increases and payroll growth were decreased by 0.25% to 3.25%. Inflation was decreased 0.25% to 2.50%.
Changes in Plan Provisions
• There have been no changes since the prior valuation.
77
This page has been left blank intentionally.
78
This page has been left blank intentionally.
79
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2025
Total
Special Capital Nonmajor
Revenue Project Governmental
ASSETS
Cash and Investments 1,184,567$ 21,375,513$ 22,560,080$
Receivables
Accounts 13,774 12,500 26,274
Special Assessments
Deferred 12,821 189,284 202,105
Delinquent - 527 527
Due from Other Governments - 581,488 581,488
Total Assets 1,211,162 22,159,312 23,370,474
LIABILITIES
Accounts Payable 15,255 316,926 332,181
Due to Other Governments 39 - 39
Unearned Revenue - 1,085,222 1,085,222
Total Liabilities 15,294 1,402,148 1,417,442
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments 12,821 189,811 202,632
Unavailable Revenue - Intergovernmental - 320,000 320,000
Total Deferred Inflows of Resources 12,821 509,811 522,632
FUND BALANCES
Restricted
Lawful Gambling Programs 189,077 - 189,077
Tax Increment Financing 458,674 - 458,674
Affordable Housing 129,300 - 129,300
Park Development - 6,564,551 6,564,551
Public Safety - 465,794 465,794
Committed
Street Light Replacement 83,064 - 83,064
Business Development Loans 322,932 - 322,932
Assigned
City Buildings & Infrastructure - 11,187,684 11,187,684
City Vehicles & Equipment - 859,981 859,981
City Parks & Trails - 1,169,343 1,169,343
Total Fund Balances 1,183,047 20,247,353 21,430,400
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 1,211,162$ 22,159,312$ 23,370,474$
80
CITY OF OTSEGO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Total
Special Capital Nonmajor
Revenue Project Governmental
REVENUES
Property Taxes -$ 1,302,562$ 1,302,562$
Tax Increments 605,202 - 605,202
Intergovernmental 23,786 2,089,448 2,113,234
Charges for Services - 1,058,107 1,058,107
Special Assessments 3,532 29,837 33,369
Investment Earnings (net) 36,247 1,081,597 1,117,844
Miscellaneous 57,393 113,818 171,211
Total Revenues 726,160 5,675,369 6,401,529
EXPENDITURES
Current
Economic Development 518,482 - 518,482
Capital Outlay
General Government - 252,554 252,554
Public Safety 75,910 732,684 808,594
Public Works - 2,095,112 2,095,112
Culture and Recreation - 1,430,573 1,430,573
Total Expenditures 594,392 4,510,923 5,105,315
Excess of Revenues
Over Expenditures 131,768 1,164,446 1,296,214
OTHER FINANCING SOURCES
Sales of Capital Assets - 103,658 103,658
Net Change in Fund Balance 131,768 1,268,104 1,399,872
Fund Balance - January 1 1,051,279 18,979,249 20,030,528
Fund Balance - December 31 1,183,047$ 20,247,353$ 21,430,400$
81
This page has been left blank intentionally.
82
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
A special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted or
committed to expenditure for specified purposes other than debt service or capital projects.
Lawful Gambling
This fund was established to account for contributions from not-for-profit organizations who are conducting
licensed lawful gambling activities within the City. The contributions, which are based on 10% of net profits, are
restricted expenditures only for purposes outlined in Minnesota Statute.
Street Lighting
This fund accounts for the electrical service, maintenance, repair and replacement of street lights within the City's
above standard street-lighting district for commercially developed areas. The primary funding source of the fund
is generated through charges for services imposed upon the benefitting properties in the district.
Revolving Loans
This fund was established to provide for economic development subsidies and loans to be provided to business
entities in the City through the City's Economic Development Authority (EDA).
Tax Increment District No. 1 - Great River Centre
This fund was established to account for the collection of tax increment generated revenues for parcels within the
District. The District encompasses two parcels in the Great River Centre commercial and industrial area. The
increment generated is used for specific economic development incentives within the District.
Tax Increment District No. 3 - Riverview Landing
This fund was established to account for the collection of tax increment generated revenues for parcels within the
District. The District is a housing district and is located in the Waterfront East development area. The increment
generated is used to provide 20% of the residential units to persons or families of low and moderate income.
Tax Increment District No. 4 - Riverbend North
This fund was established to account for the collection of tax increment generated revenues for parcels within the
District. The District is a redevelopment district and includes four parcels within the Riverbend North plat, located
near CSAH 42 and Highway 101. The increment generated is used to redevelop the existing site, including the
decommissioning of a private wasterwater facility, construciton of multifamily housing, a mini-storage facility and
and site preparations to accomodate approximately 15,000 square feet of future commercial development.
83
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2025
Lawful Street Revolving
Gambling Lighting Loans
ASSETS
Cash and Investments 190,597$ 83,064$ 452,232$
Receivables
Accounts 13,774 - -
Special Assessments
Deferred - 12,821 -
Total Assets 204,371 95,885 452,232
LIABILITIES
Accounts Payable 15,255 - -
Due to Other Governments 39 - -
Total liabilities 15,294 - -
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments - 12,821 -
FUND BALANCES
Restricted
Lawful Gambling Programs 189,077 - -
Tax Increment Financing - - -
Affordable Housing - - 129,300
Committed
Street Light Replacement - 83,064 -
Business Development Loans - - 322,932
Total Fund Balances 189,077 83,064 452,232
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 204,371$ 95,885$ 452,232$
84
Total
Nonmajor
Tax Increment Tax Increment Tax Increment Special
District No. 1 District No. 3 District No. 4 Revenue
87,477$ 211,111$ 160,086$ 1,184,567$
- - - 13,774
- - - 12,821
87,477 211,111 160,086 1,211,162
- - - 15,255
- - - 39
- - - 15,294
- - - 12,821
- - - 189,077
87,477 211,111 160,086 458,674
- - - 129,300
- - - 83,064
- - - 322,932
87,477 211,111 160,086 1,183,047
87,477$ 211,111$ 160,086$ 1,211,162$
85
CITY OF OTSEGO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Lawful Street Revolving
Gambling Lighting Loans
REVENUES
Tax Increments -$ -$ -$
Intergovernmental - - 23,786
Special Assessments - 3,532 -
Investment Earnings (net)10,869 3,925 21,453
Miscellaneous 57,393 - -
Total Revenues 68,262 7,457 45,239
EXPENDITURES
Current
Economic Development - - -
Capital Outlay
Public Safety 75,910 - -
Total Expenditures 75,910 - -
Net Change in Fund Balance (7,648) 7,457 45,239
Fund Balance - January 1 196,725 75,607 406,993
Fund Balance - December 31 189,077$ 83,064$ 452,232$
86
Total
Nonmajor
Tax Increment Tax Increment Tax Increment Special
District No. 1 District No. 3 District No. 4 Revenue
102,850$ 245,355$ 256,997$ 605,202$
- - - 23,786
- - - 3,532
- - - 36,247
- - - 57,393
102,850 245,355 256,997 726,160
89,174 203,435 225,873 518,482
- - - 75,910
89,174 203,435 225,873 594,392
13,676 41,920 31,124 131,768
73,801 169,191 128,962 1,051,279
87,477$ 211,111$ 160,086$ 1,183,047$
87
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
TAX INCREMENT DISTRICT NO. 1 - SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 103,542$ 102,850$ (692)$
EXPENDITURES
Current
Economic Development
Personal Services 900 1,476 576
Services and Other Charges 87,711 87,698 (13)
Total Expenditures 88,611 89,174 563
Net Change in Fund Balance 14,931 13,676 (1,255)
Fund Balance - January 1 73,801 73,801 -
Fund Balance - December 31 88,732$ 87,477$ (1,255)$
88
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
TAX INCREMENT DISTRICT NO. 3 - SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 247,007$ 245,355$ (1,652)$
EXPENDITURES
Current
Economic Development
Personal Services 1,100 1,566 466
Services and Other Charges 202,315 201,869 (446)
Total Expenditures 203,415 203,435 20
Net Change in Fund Balance 43,592 41,920 (1,672)
Fund Balance - January 1 169,191 169,191 -
Fund Balance - December 31 212,783$ 211,111$ (1,672)$
89
CITY OF OTSEGO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
TAX INCREMENT DISTRICT NO. 4 - SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Tax Increments 259,052$ 256,997$ (2,055)$
EXPENDITURES
Current
Economic Development
Personal Services 1,200 1,931 731
Services and Other Charges 225,016 223,942 (1,074)
Total Expenditures 226,216 225,873 (343)
Net Change in Fund Balance 32,836 31,124 (1,712)
Fund Balance - January 1 128,962 128,962 -
Fund Balance - December 31 161,798$ 160,086$ (1,712)$
90
CITY OF OTSEGO, MINNESOTA
NONMAJOR CAPITAL PROJECTS FUNDS
Capital projects funds are used to account for and report financial resources that are restricted, committed, or
assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other
capital assets.
Trails Management
This fund was established to provide funds and to account for the expenditure of such funds, for costs associated
with the City's trail maintenance plan adopted annually within the Capital Improvement Plan. Annual projects will
typically include: crack filling, patching and seal coating.
Park Development
This fund was established to accumulate funds that will be used to provide for the acquisition and construction of
new park sites, buildings and facilities throughout our growing City.
Parks Capital Equipment
This fund was established to accumulate funds for major maintenance and future replacement of equipment within
the City's park system.
Revolving Capital Equipment
This fund was established to provide funds and to account for the expenditure of such funds, for costs associated
with the replacement of capital equipment, most significantly the City's machinery and vehicle fleet.
Fire Reserve
This fund was established to accumulate funds that will be used to finance the costs associated with the future
construction of a fire department building and the capital equipment that will be housed within.
Municipal State-Aid (MSA) for Construction
This fund was established to account for the State allotment of construction aid. The source of the State funding is
provided for through collection of gasoline taxes. The funds accumulated are used on transportation related
construction projects.
Watershed Districts
This fund was established to provide funds and to account for the expenditure of such funds, for costs associated
with the maintenance of major water drainage system ditches throughout the City.
Capital Improvements
This fund was established to accumulate resources that may be used to internally finance future City projects.
City Buildings & Property Maintenance
This fund was established to provide funds and to account for the expenditure of such funds, for costs associated
with the maintenance of and improvements to City buildings and properties.
Fire Capital Equipment
This fund was established to provide funds and to account for the expenditure of such funds, for costs associated
with the replacement of capital equipment of the City's Fire Department and Fire Station Facility.
91
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
DECEMBER 31, 2025
Parks Revolving
Trails Park Capital Capital
Management Development Equipment Equipment
ASSETS
Cash and Investments 235,124$ 6,345,622$ 930,330$ 1,023,530$
Receivables
Accounts - - 12,500 -
Special Assessments
Deferred - 4,820 - -
Delinquent - - - -
Due from Other Governments - 581,488 - -
Total Assets 235,124 6,931,930 942,830 1,023,530
LIABILITIES
Accounts Payable - 42,559 8,611 169,861
Unearned Revenue - - - -
Total Liabilities - 42,559 8,611 169,861
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments - 4,820 - -
Unavailable Revenue - Intergovernmental - 320,000 - -
Total Deferred Inflows of Resources - 324,820 - -
FUND BALANCES
Restricted
Park Development - 6,564,551 - -
Public Safety - - - -
Assigned
City Buildings & Infrastructure - - - -
City Vehicles & Equipment - - - 853,669
City Parks & Trails 235,124 - 934,219 -
Total Fund Balances 235,124 6,564,551 934,219 853,669
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 235,124$ 6,931,930$ 942,830$ 1,023,530$
92
Total
City Buildings Fire Nonmajor
Fire MSA Watershed Capital & Property Capital Capital
Reserve Construction Districts Improvements Maintenance Equipment Projects
4,555,744$ 371,710$ 2,730,971$ 5,150,343$ 25,827$ 6,312$ 21,375,513$
- - - - - - 12,500
- - 5,521 178,943 - - 189,284
- - - 527 - - 527
- - - - - - 581,488
4,555,744 371,710 2,736,492 5,329,813 25,827 6,312 22,159,312
- - - 95,895 - - 316,926
1,085,222 - - - - - 1,085,222
1,085,222 - - 95,895 - - 1,402,148
- - 5,521 179,470 - - 189,811
- - - - - - 320,000
- - 5,521 179,470 - - 509,811
- - - - - - 6,564,551
465,794 - - - - - 465,794
3,004,728 371,710 2,730,971 5,054,448 25,827 - 11,187,684
- - - - - 6,312 859,981
- - - - - - 1,169,343
3,470,522 371,710 2,730,971 5,054,448 25,827 6,312 20,247,353
4,555,744$ 371,710$ 2,736,492$ 5,329,813$ 25,827$ 6,312$ 22,159,312$
93
CITY OF OTSEGO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECT FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2025
Parks Revolving
Trails Park Capital Capital
Management Development Equipment Equipment
REVENUES
Property Taxes 76,000$ -$ 425,000$ 587,937$
Intergovernmental - 261,488 - -
Charges for Services - 755,380 - -
Special Assessments - 2,410 - -
Investment Earnings (net)10,840 340,307 34,295 36,234
Miscellaneous - 8,000 12,500 -
Total Revenues 86,840 1,367,585 471,795 624,171
EXPENDITURES
Capital Outlay
General Government - - - -
Public Safety - - - -
Public Works - - - 572,448
Culture and Recreation 70,000 1,205,451 60,289 79,550
Total Expenditures 70,000 1,205,451 60,289 651,998
Excess (Deficiency) of Revenues
Over (Under) Expenditures 16,840 162,134 411,506 (27,827)
OTHER FINANCING SOURCES
Sales of Capital Assets - - - 103,658
Net Change in Fund Balance 16,840 162,134 411,506 75,831
Fund Balance (Deficit) - January 1 218,284 6,402,417 522,713 777,838
Fund Balance - December 31 235,124$ 6,564,551$ 934,219$ 853,669$
94
Total
City Buildings Fire Nonmajor
Fire MSA Watershed Capital & Property Capital Capital
Reserve Construction Districts Improvements Maintenance Equipment Projects
-$ -$ -$ 87,436$ 120,000$ 6,189$ 1,302,562$
678,019 1,109,458 - 40,483 - - 2,089,448
- - 302,727 - - - 1,058,107
- - 2,761 24,666 - - 29,837
215,513 23,947 139,306 281,032 - 123 1,081,597
- - - 93,318 - - 113,818
893,532 1,133,405 444,794 526,935 120,000 6,312 5,675,369
- - - 25,200 227,354 - 252,554
680,223 - - 52,461 - - 732,684
- - 66,288 1,456,376 - - 2,095,112
- - - 15,283 - - 1,430,573
680,223 - 66,288 1,549,320 227,354 - 4,510,923
213,309 1,133,405 378,506 (1,022,385) (107,354) 6,312 1,164,446
- - - - - - 103,658
213,309 1,133,405 378,506 (1,022,385) (107,354) 6,312 1,268,104
3,257,213 (761,695) 2,352,465 6,076,833 133,181 - 18,979,249
3,470,522$ 371,710$ 2,730,971$ 5,054,448$ 25,827$ 6,312$ 20,247,353$
95
CITY OF OTSEGO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 1 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
(With Comparative Actual Amounts for the Year Ended December 31, 2024)
2024
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
REVENUES
Property Taxes
Current 6,930,002$ 6,928,382$ (1,620)$ 6,296,543$
Delinquent 60,000 70,411 10,411 74,054
Penalties and interest 2,000 3,044 1,044 2,693
Total Property Taxes 6,992,002 7,001,837 9,835 6,373,290
Franchise Taxes 117,000 102,152 (14,848) 114,342
Licenses and Permits
Business Licenses 42,550 36,517 (6,033) 45,496
Rental Licenses 42,400 44,035 1,635 46,670
Other Licenses 3,000 1,850 (1,150) 2,990
Right of Way Permits 60,000 72,000 12,000 50,400
Building Permits 1,542,509 2,078,872 536,363 1,711,960
Other Permits 13,000 14,885 1,885 10,950
Total Licenses and Permits 1,703,459 2,248,159 544,700 1,868,466
Intergovernmental
State
Local Government Aid - - - 73,598
Police Aid 111,000 119,701 8,701 111,191
Other Aid & Grants 98,554 28,373 (70,181) 28,534
Total Intergovernmental 209,554 148,074 (61,480) 213,323
Charges for Services
General Government 64,520 92,250 27,730 97,750
Public Works 78,750 93,853 15,103 82,148
Culture and Recreation 101,560 117,380 15,820 102,591
Total Charges for Services 244,830 303,483 58,653 282,489
Special Assessments 3,500 4,941 1,441 5,733
Fines and Forfeitures 33,600 38,968 5,368 40,982
Investment Earnings (net)142,657 332,859 190,202 274,351
Miscellaneous
Refunds and Reimbursements 10,000 27,550 17,550 21,541
Contributions and Donations 500 13,670 13,170 914
Other 5,000 7,473 2,473 6,600
Total Miscellaneous 15,500 48,693 33,193 29,055
Total Revenues 9,462,102 10,229,166 767,064 9,202,031
2025
96
CITY OF OTSEGO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 2 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
(With Comparative Actual Amounts for the Year Ended December 31, 2024)
2024
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES
General Government
City Council
Personal Services 33,422 34,574 1,152 34,634
Supplies 375 139 (236) 115
Services and Other Charges 80,502 53,365 (27,137) 53,633
Total 114,299 88,078 (26,221) 88,382
City Administrator
Personal Services 243,728 235,001 (8,727) 222,542
Supplies 400 432 32 470
Services and Other Charges 7,847 7,376 (471) 7,019
Total 251,975 242,809 (9,166) 230,031
Administration
Personal Services 361,489 364,192 2,703 325,449
Supplies 8,150 4,149 (4,001) 7,626
Services and Other Charges 43,563 32,145 (11,418) 68,121
Total 413,202 400,486 (12,716) 401,196
Elections
Personal Services - 255 255 56,544
Supplies 1,000 24 (976) 7,057
Services and Other Charges 2,600 2,600 - 3,592
Total 3,600 2,879 (721) 67,193
Assessing
Services and Other Charges 165,735 164,295 (1,440) 162,700
Finance
Personal Services 339,489 325,660 (13,829) 229,835
Supplies 1,150 535 (615) 782
Services and Other Charges 77,939 66,157 (11,782) 62,935
Total 418,578 392,352 (26,226) 293,552
Information Technology
Personal Services 137,366 143,503 6,137 122,632
Supplies 5,550 2,847 (2,703) 1,280
Services and Other Charges 48,527 42,698 (5,829) 64,270
Total 191,443 189,048 (2,395) 188,182
Legal
Services and Other Charges 37,950 38,233 283 40,750
Human Resources
Personal Services 162,519 134,602 (27,917) 149,057
Supplies 200 145 (55) 60
Services and Other Charges 42,410 36,205 (6,205) 32,785
Total 205,129 170,952 (34,177) 181,902
2025
97
CITY OF OTSEGO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 3 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
(With Comparative Actual Amounts for the Year Ended December 31, 2024)
2024
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
General Government (Continued)
Communications
Personal Services 80,884 84,863 3,979 48,661
Supplies 50 122 72 -
Services and Other Charges 57,083 49,790 (7,293) 747
Total 138,017 134,775 (3,242) 49,408
Prairie Center
Supplies 5,000 7,476 2,476 6,840
Services and Other Charges 57,991 55,337 (2,654) 44,608
Total 62,991 62,813 (178) 51,448
City Hall & Public Works Garage
Supplies 9,000 9,694 694 7,917
Services and Other Charges 138,940 135,012 (3,928) 150,000
Total 147,940 144,706 (3,234) 157,917
Old Town Hall
Services and Other Charges 5,557 5,856 299 4,410
Insurance Deductibles
Services and Other Charges - 13,514 13,514 12,118
Total General Government 2,156,416 2,050,796 (105,620) 1,929,189
Public Safety
Police Services
Services and Other Charges 2,043,000 2,045,868 2,868 2,063,959
Public Safety Commission
Personal Services 1,920 1,180 (740) 680
Supplies 500 728 228 1,582
Total 2,420 1,908 (512) 2,262
Fire Protection
Personal Services 196,490 215,753 19,263 185,769
Supplies 9,050 5,793 (3,257) 3,887
Services and Other Charges 1,388,215 1,384,567 (3,648) 1,209,884
Total 1,593,755 1,606,113 12,358 1,399,540
Building Inspections
Personal Services 196,124 195,295 (829) 175,292
Supplies 6,600 3,856 (2,744) 3,663
Services and Other Charges 373,825 409,053 35,228 365,919
Total 576,549 608,204 31,655 544,874
2025
98
CITY OF OTSEGO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 4 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
(With Comparative Actual Amounts for the Year Ended December 31, 2024)
2024
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
Public Safety (Continued)
Emergency Management
Supplies 4,000 426 (3,574) 976
Services and Other Charges 12,775 5,784 (6,991) 4,365
Total 16,775 6,210 (10,565) 5,341
Animal Control
Services and Other Charges 22,000 16,018 (5,982) 21,812
Total Public Safety 4,254,499 4,284,321 29,822 4,037,788
Public Works
Streets Maintenance
Personal Services 951,818 930,754 (21,064) 867,133
Supplies 228,395 191,764 (36,631) 201,470
Services and Other Charges 137,450 209,768 72,318 111,898
Total 1,317,663 1,332,286 14,623 1,180,501
Engineering
Services and Other Charges 100,320 92,669 (7,651) 71,772
Street Lighting
Services and Other Charges 184,520 192,995 8,475 178,473
Fleet Management
Personal Services 219,239 163,765 (55,474) 201,226
Supplies 238,477 194,146 (44,331) 192,645
Services and Other Charges 48,653 39,204 (9,449) 43,350
Total 506,369 397,115 (109,254) 437,221
Total Public Works 2,108,872 2,015,065 (93,807) 1,867,967
Culture and Recreation
Parks Maintenance
Personal Services 605,989 602,120 (3,869) 540,108
Supplies 103,000 100,508 (2,492) 93,208
Services and Other Charges 155,666 156,572 906 135,008
Total 864,655 859,200 (5,455) 768,324
Recreation
Personal Services 270,672 261,627 (9,045) 226,894
Supplies 22,650 16,408 (6,242) 20,761
Services and Other Charges 77,238 71,102 (6,136) 70,883
Total 370,560 349,137 (21,423) 318,538
Parks and Recreation Commission
Personal Services 1,920 800 (1,120) 330
Supplies 500 216 (284) 93
Total 2,420 1,016 (1,404) 423
2025
99
CITY OF OTSEGO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND Page 5 of 5
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
(With Comparative Actual Amounts for the Year Ended December 31, 2024)
2024
Variance with
Original Final Budget -
and Final Actual Over Actual
Budget Amounts (Under) Amounts
EXPENDITURES (CONTINUED)
Culture and Recreation (Continued)
Heritage Preservation Commission
Personal Services 1,680 740 (940) 400
Supplies 500 85 (415) 69
Services and Other Charges 500 564 64 589
Total 2,680 1,389 (1,291) 1,058
Total Culture and Recreation 1,240,315 1,210,742 (29,573) 1,088,343
Economic Development
Planning Commission
Personal Services 3,000 1,380 (1,620) 1,260
Supplies 500 12 (488) -
Total 3,500 1,392 (2,108) 1,260
Planning
Services and Other Charges 90,640 74,677 (15,963) 84,397
Economic Development
Personal Services 500 125 (375) 261
Supplies 100 - (100) -
Services and Other Charges 16,160 6,271 (9,889) 4,682
Total 16,760 6,396 (10,364) 4,943
Total Economic Development 110,900 82,465 (28,435) 90,600
Capital Outlay
General Government 40,100 33,847 (6,253) 32,397
Public Safety 9,000 17,306 8,306 3,211
Public Works 10,000 7,935 (2,065) 23,868
Culture and Recreation 10,000 9,714 (286) 9,731
Total 69,100 68,802 (298) 69,207
Total Expenditures 9,940,102 9,712,191 (227,911) 9,083,094
Excess (Deficiency) of Revenues
Over (Under) Expenditures (478,000) 516,975 994,975 118,937
OTHER FINANCING SOURCES
Transfers In 478,000 478,000 - 427,000
Sales of Capital Assets - - - 10,000
Total Other Financing Sources 478,000 478,000 - 437,000
Net Change in Fund Balance - 994,975 994,975 555,937
Fund Balance - January 1 5,537,452 5,537,452 - 4,981,515
Fund Balance - December 31 5,537,452$ 6,532,427$ 994,975$ 5,537,452$
2025
100
This page has been left blank intentionally.
101
CITY OF OTSEGO, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUND BY ACCOUNT
DECEMBER 31, 2025
Total
Series Series Series Debt
2018A 2020A 2024A Service
ASSETS
Cash and Investments 404,097$ 563,372$ -$ 967,469$
Cash with Fiscal Agent - - 398,265 398,265
Receivables
Special Assessments
Current 166 - - 166
Deferred 492,900 48,065 - 540,965
Delinquent 343 - - 343
Total Assets 897,506 611,437 398,265 1,907,208
LIABILITIES
Accounts Payable 250 250 250 750
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Special Assessments 493,243 48,065 - 541,308
FUND BALANCES
Restricted 404,013 563,122 398,015 1,365,150
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 897,506$ 611,437$ 398,265$ 1,907,208$
102
CITY OF OTSEGO, MINNESOTA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
DEBT SERVICE FUND BY ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 2025
Total
Series Series Series Debt
2018A 2020A 2024A Service
REVENUES
Property Taxes 104,308$ 186,000$ -$ 290,308$
Special Assessments 119,114 53,316 - 172,430
Investment Earnings (net) - - 23,115 23,115
Total Revenues 223,422 239,316 23,115 485,853
EXPENDITURES
Debt Service
Principal 200,000 280,000 - 480,000
Interest 38,956 42,600 439,759 521,315
Fiscal Agent Fees 745 745 250 1,740
Total Expenditures 239,701 323,345 440,009 1,003,055
Net Change in Fund Balance (16,279) (84,029) (416,894) (517,202)
Fund Balance - January 1 420,292 647,151 814,909 1,882,352
Fund Balance - December 31 404,013$ 563,122$ 398,015$ 1,365,150$
103
CITY OF OTSEGO, MINNESOTA
DEBT SERVICE FUND - SERIES 2018A
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 104,308$ 104,308$ -$
Special Assessments 116,063 119,114 3,051
Total Revenues 220,371 223,422 3,051
EXPENDITURES
Debt Service
Principal 200,000 200,000 -
Interest 38,956 38,956 -
Fiscal Agent Fees 500 745 245
Total Expenditures 239,456 239,701 245
Net Change in Fund Balance (19,085) (16,279) 2,806
Fund Balance - January 1 420,292 420,292 -
Fund Balance - December 31 401,207$ 404,013$ 2,806$
104
CITY OF OTSEGO, MINNESOTA
DEBT SERVICE FUND - SERIES 2020A
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Property Taxes 186,000$ 186,000$ -$
Special Assessments 52,270 53,316 1,046
Total Revenues 238,270 239,316 1,046
EXPENDITURES
Debt Service
Principal 280,000 280,000 -
Interest 42,600 42,600 -
Fiscal Agent Fees 500 745 245
Total Expenditures 323,100 323,345 245
Net Change in Fund Balance (84,830) (84,029) 801
Fund Balance - January 1 647,151 647,151 -
Fund Balance - December 31 562,321$ 563,122$ 801$
105
CITY OF OTSEGO, MINNESOTA
DEBT SERVICE FUND - SERIES 2024A
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2025
Variance with
Original Final Budget -
and Final Actual Over
Budget Amounts (Under)
REVENUES
Investment Earnings (net) -$ 23,115$ 23,115$
EXPENDITURES
Debt Service
Interest 439,759 439,759 -
Fiscal Agent Fees 2,500 250 (2,250)
Total Expenditures 442,259 440,009 (2,250)
Net Change in Fund Balance (442,259) (416,894) 25,365
Fund Balance - January 1 814,909 814,909 -
Fund Balance - December 31 372,650$ 398,015$ 25,365$
106
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
This part of the City of Otsego's annual comprehensive financial report (ACFR) presents detailed
information as a context for understanding what the financial statements, note disclosures, and
required supplementary information say about the City's overall financial health.Page No.
Financial Trends 108
These tables contain trend information to help the reader understand how the City's
financial performance and well-being have changed over time.
Revenue Capacity 122
These tables contain information to help the reader assess the City's most significant
local revenue source, the property tax.
Debt Capacity 128
These tables present information to help the reader assess the affordability of the City's
current level of outstanding debt and the City's ability to issue debt in the future.
Demographic and Economic Information 135
These tables offer demographic and economic indicators to help the reader understand
the environment within which the City's financial activities take place.
Operating Information 137
These tables contain service and infrastructure data to help the reader understand how
the information in the City's financial report relates to services the City provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these tables is derived from the report for each respective year.
107
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
NET POSITION BY COMPONENT
Last Ten Fiscal Years
(accrual basis of accounting)
2016 2017 2018 2019
Governmental Activities
Net Investment in Capital Assets 19,103,702$ 21,496,582$ 25,330,507$ 31,373,524$
Restricted 4,292,589 4,973,536 6,929,688 7,658,124
Unrestricted 10,745,858 13,338,398 13,626,318 11,357,968
Total Governmental Activities Net Position 34,142,149$ 39,808,516$ 45,886,513$ 50,389,616$
Business-type activities
Net Investment in Capital Assets 15,889,294$ 20,504,751$ 24,701,888$ 31,344,999$
Unrestricted 15,248,794 15,679,356 18,287,811 18,919,363
Total Business-type Activities Net Position 31,138,088$ 36,184,107$ 42,989,699$ 50,264,362$
Primary Government
Net Investment in Capital Assets 34,992,996$ 42,001,333$ 50,032,395$ 62,718,523$
Restricted 4,292,589 4,973,536 6,929,688 7,658,124
Unrestricted 25,994,652 29,017,754 31,914,129 30,277,331
Total Primary Government Net Position 65,280,237$ 75,992,623$ 88,876,212$ 100,653,978$
Sources: The data for this table has been extracted from the respective years report.
108
Table 1
2020 2021 2022 2023 2024 2025
34,622,760$ 39,104,289$ 40,938,214$ 44,222,133$ 51,935,165$ 55,137,786$
7,445,422 7,661,049 8,427,066 9,937,633 10,258,004 9,465,730
13,214,418 16,552,822 19,748,485 21,270,456 22,098,648 29,959,044
55,282,600$ 63,318,160$ 69,113,765$ 75,430,222$ 84,291,817$ 94,562,560$
36,563,803$ 43,581,750$ 47,080,808$ 50,937,723$ 66,582,746$ 83,427,651$
24,166,085 28,340,412 33,253,596 39,121,354 44,702,215 46,681,014
60,729,888$ 71,922,162$ 80,334,404$ 90,059,077$ 111,284,961$ 130,108,665$
71,186,563$ 82,686,039$ 88,019,022$ 95,159,856$ 118,517,911$ 138,565,437$
7,445,422 7,661,049 8,427,066 9,937,633 10,258,004 9,465,730
37,380,503 44,893,234 53,002,081 60,391,810 66,800,863 76,640,058
116,012,488$ 135,240,322$ 149,448,169$ 165,489,299$ 195,576,778$ 224,671,225$
109
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED ON THE FOLLOWING PAGES
Last Ten Fiscal Years
(accrual basis of accounting)
2016 2017 2018 2019
GOVERNMENTAL ACTIVITIES
Expenses
General Government 1,376,793$ 1,085,554$ 1,228,607$ 1,383,291$
Public Safety 1,846,459 1,906,843 2,207,699 2,411,751
Public Works 3,389,909 2,618,584 3,348,200 3,387,481
Culture and Recreation 847,553 1,013,252 1,095,151 1,177,721
Economic Development 302,296 365,768 223,175 741,705
Interest on Long-term Debt 223,938 197,282 276,423 212,402
Total Expenses 7,986,948 7,187,283 8,379,255 9,314,351
Program Revenues
Charges for Services
General Government 81,876 100,125 118,219 639,077
Public Safety 1,677,788 1,384,626 1,698,522 1,726,367
Public Works 656,570 805,248 942,042 127,176
Culture and Recreation 59,236 67,112 80,047 71,553
Operating Grants and Contributions 248,910 261,814 328,410 319,332
Capital Grants and Contributions 4,437,611 3,957,672 5,800,583 3,361,497
Total Program Revenues 7,161,991 6,576,597 8,967,823 6,245,002
Net (Expense) / Revenue (824,957) (610,686) 588,568 (3,069,349)
General Revenues and Transfers
Taxes
Property 4,963,787 5,572,250 6,078,341 6,681,989
Tax Increments - - 96,938 97,419
Franchise Taxes 131,229 135,652 139,161 137,510
Unrestricted Grants and Contributions 255,951 231,683 191,570 162,120
Investment Earnings (net)82,385 124,052 263,784 754,079
Gain on Disposal of Capital Assets 31,160 38,373 37,563 47,362
Transfers 186,755 195,686 207,840 212,869
Transfers - Capital Assets (162,876) (20,643) (1,525,768) (520,896)
Total General Revenues and Transfers 5,488,391 6,277,053 5,489,429 7,572,452
Change in Net Position 4,663,434$ 5,666,367$ 6,077,997$ 4,503,103$
110
Table 2
Page 1 of 3
2020 2021 2022 2023 2024 2025
1,616,634$ 1,509,107$ 1,849,685$ 1,838,849$ 2,156,382$ 2,293,273$
2,683,103 2,889,365 3,101,633 3,378,313 4,064,326 4,411,327
4,967,363 4,101,313 4,559,629 4,761,125 4,394,198 4,459,867
1,151,569 1,240,142 1,396,260 1,541,099 1,790,561 1,905,038
889,173 503,411 499,481 429,054 591,967 600,947
247,702 125,168 92,945 67,854 429,496 738,098
11,555,544 10,368,506 11,499,633 12,016,294 13,426,930 14,408,550
651,770 889,736 937,238 477,051 718,151 482,526
2,552,748 2,557,049 2,156,222 1,579,278 1,909,448 2,287,127
174,321 308,739 164,533 68,259 87,448 93,853
22,852 81,610 114,375 112,866 102,591 123,534
366,461 415,173 399,743 924,558 540,778 583,449
3,212,230 5,838,257 4,631,372 3,133,926 6,408,502 7,030,460
6,980,382 10,090,564 8,403,483 6,295,938 9,766,918 10,600,949
(4,575,162) (277,942) (3,096,150) (5,720,356) (3,660,012) (3,807,601)
7,170,868 7,718,135 8,583,996 9,177,125 9,022,265 9,402,381
275,445 311,971 436,817 491,535 497,951 605,202
132,137 129,467 345,108 1,026,846 1,043,896 1,049,817
1,411,685 64,729 152,452 111,798 162,084 114,507
625,964 (191,523) (870,574) 1,242,417 1,653,036 2,378,320
- 40,000 11,956 822 6,775 103,658
262,369 243,100 293,500 322,750 427,000 478,000
(410,322) (2,377) (61,500) (336,480) (291,400) (53,541)
9,468,146 8,313,502 8,891,755 12,036,813 12,521,607 14,078,344
4,892,984$ 8,035,560$ 5,795,605$ 6,316,457$ 8,861,595$ 10,270,743$
111
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last Ten Fiscal Years
(accrual basis of accounting)
2016 2017 2018 2019
BUSINESS-TYPE ACTIVITIES
Expenses
Water Utility 1,276,338$ 1,377,537$ 1,468,485$ 1,729,938$
Sanitary Sewer Utility 2,480,519 2,477,995 2,561,070 2,600,436
Storm Water Utility 42,342 62,172 71,040 123,163
Total Expenses 3,799,199 3,917,704 4,100,595 4,453,537
Program Revenues
Charges for Services
Water Utility 1,334,442 1,529,127 1,754,947 1,734,090
Sanitary Sewer Utility 1,601,172 1,744,067 1,932,885 2,254,688
Storm Water Utility 75,932 94,919 104,916 109,372
Operating Grants and Contributions - - - -
Capital Grants and Contributions 4,766,947 5,591,332 5,500,794 6,543,224
Total Program Revenues 7,778,493 8,959,445 9,293,542 10,641,374
Net (Expense) / Revenue 3,979,294 5,041,741 5,192,947 6,187,837
General Revenues and Transfers
Property Taxes 25,000 25,000 26,000 30,000
Investment Earnings (net) 129,442 154,321 260,833 748,799
Gain on Disposal of Capital Assets - - 7,884 -
Transfers (186,755) (195,686) (207,840) (212,869)
Transfers - Capital Assets 162,876 20,643 1,525,768 520,896
Total General Revenues and Transfers 130,563 4,278 1,612,645 1,086,826
Change in Net Position 4,109,857$ 5,046,019$ 6,805,592$ 7,274,663$
112
Table 2
Page 2 of 3
2020 2021 2022 2023 2024 2025
1,443,522$ 2,150,216$ 2,311,989$ 2,434,158$ 2,432,113$ 2,434,927$
2,739,519 3,257,261 4,084,200 4,590,454 4,701,984 5,433,745
138,985 188,245 218,612 224,368 335,501 322,940
4,322,026 5,595,722 6,614,801 7,248,980 7,469,598 8,191,612
2,108,577 2,982,786 3,020,259 3,643,209 3,083,184 3,524,907
2,473,673 3,048,707 3,543,804 4,165,010 4,480,718 4,685,729
120,579 122,200 137,178 143,961 158,272 178,098
2,157 - - - - -
9,214,377 11,066,329 9,754,695 6,264,410 19,225,556 17,012,912
13,919,363 17,220,022 16,455,936 14,216,590 26,947,730 25,401,646
9,597,337 11,624,300 9,841,135 6,967,610 19,478,132 17,210,034
32,000 34,000 36,000 38,000 - -
688,236 (225,303) (1,232,893) 2,704,796 1,871,352 2,026,629
- - - 537 12,000 11,500
(262,369) (243,100) (293,500) (322,750) (427,000) (478,000)
410,322 2,377 61,500 336,480 291,400 53,541
868,189 (432,026) (1,428,893) 2,757,063 1,747,752 1,613,670
10,465,526$ 11,192,274$ 8,412,242$ 9,724,673$ 21,225,884$ 18,823,704$
113
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN NET POSITION - CONTINUED
Last Ten Fiscal Years
(accrual basis of accounting)
2016 2017 2018 2019
TOTAL PRIMARY GOVERNMENT
Expenses
Governmental Activities 7,986,948$ 7,187,283$ 8,379,255$ 9,314,351$
Business-type Activities 3,799,199 3,917,704 4,100,595 4,453,537
Total Expenses 11,786,147 11,104,987 12,479,850 13,767,888
Program Revenues
Governmental Activities 7,161,991 6,576,597 8,967,823 6,245,002
Business-type Activities 7,778,493 8,959,445 9,293,542 10,641,374
Total Program Revenues 14,940,484 15,536,042 18,261,365 16,886,376
Net (Expense) / Revenue 3,154,337 4,431,055 5,781,515 3,118,488
General Revenues and Transfers
Governmental Activities 5,488,391 6,277,053 5,489,429 7,572,452
Business-type Activities 130,563 4,278 1,612,645 1,086,826
Total General Revenues and Transfers 5,618,954 6,281,331 7,102,074 8,659,278
Change in Net Position 8,773,291$ 10,712,386$ 12,883,589$ 11,777,766$
Sources: The data for this table has been extracted from the respective years report.
114
Table 2
Page 3 of 3
2020 2021 2022 2023 2024 2025
11,555,544$ 10,368,506$ 11,499,633$ 12,016,294$ 13,426,930$ 14,408,550$
4,322,026 5,595,722 6,614,801 7,248,980 7,469,598 8,191,612
15,877,570 15,964,228 18,114,434 19,265,274 20,896,528 22,600,162
6,980,382 10,090,564 8,403,483 6,295,938 9,766,918 10,600,949
13,919,363 17,220,022 16,455,936 14,216,590 26,947,730 25,401,646
20,899,745 27,310,586 24,859,419 20,512,528 36,714,648 36,002,595
5,022,175 11,346,358 6,744,985 1,247,254 15,818,120 13,402,433
9,468,146 8,313,502 8,891,755 12,036,813 12,521,607 14,078,344
868,189 (432,026) (1,428,893) 2,757,063 1,747,752 1,613,670
10,336,335 7,881,476 7,462,862 14,793,876 14,269,359 15,692,014
15,358,510$ 19,227,834$ 14,207,847$ 16,041,130$ 30,087,479$ 29,094,447$
115
This page has been left blank intentionally.
116
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3
Last Ten Fiscal Years
(accrual basis of accounting)
Property Tax Franchise
Taxes Increments Taxes Total
2016 4,963,787$ -$ 131,229$ 5,095,016$
2017 5,572,250 - 135,652 5,707,902
2018 6,078,341 96,938 139,161 6,314,440
2019 6,681,989 97,419 137,510 6,916,918
2020 7,170,868 275,445 132,137 7,578,450
2021 7,718,135 311,971 129,467 8,159,573
2022 8,583,996 436,817 345,108 9,365,921
2023 9,177,125 491,535 1,026,846 10,695,506
2024 9,022,265 497,951 1,043,896 10,564,112
2025 9,402,381 605,202 1,049,817 11,057,400
Sources: The data for this table has been extracted from the respective years report.
117
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
2016 2017 2018 2019
General Fund
Nonspendable 110,973$ 317,197$ 320,887$ 323,124$
Restricted - - - -
Assigned 192,408 205,257 205,449 223,740
Unassigned 3,342,821 3,368,191 3,587,331 3,772,946
Total General Fund 3,646,202$ 3,890,645$ 4,113,667$ 4,319,810$
All Other Governmental Funds
Nonspendable 2,000$ 1,325$ 650$ -$
Restricted 1,931,757 3,290,750 4,167,765 5,226,784
Committed 419,829 474,863 448,699 438,676
Assigned 7,221,257 9,098,697 10,526,550 11,492,028
Unassigned (281,273) (355,150) (1,790,236) (4,463,532)
Total All Other Governmental Funds 9,293,570$ 12,510,485$ 13,353,428$ 12,693,956$
Sources: The data for this table has been extracted from the respective years report.
118
Table 4
2020 2021 2022 2023 2024 2025
334,946$ 354,473$ 323,790$ 338,076$ 351,229$ 304,402$
- - - 465,819 180,133 90,079
242,785 272,801 327,332 342,861 363,807 388,144
5,410,002 4,572,627 4,300,321 3,834,759 4,642,283 5,749,802
5,987,733$ 5,199,901$ 4,951,443$ 4,981,515$ 5,537,452$ 6,532,427$
-$ -$ -$ -$ -$ -$
5,472,554 6,469,893 7,463,695 8,676,288 27,234,897 15,825,156
484,582 347,417 335,939 347,330 377,086 405,996
11,401,232 14,913,054 17,558,426 18,460,603 19,012,859 20,825,839
(4,235,228) (3,523,065) (2,654,023) (1,765,724) (761,695) -
13,123,140$ 18,207,299$ 22,704,037$ 25,718,497$ 45,863,147$ 37,056,991$
119
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(modified accrual basis of accounting)
2016 2017 2018 2019
Revenues
Property Taxes 4,960,518$ 5,595,120$ 6,084,051$ 6,662,307$
Tax Increments - - 96,938 97,419
Franchise Taxes 131,229 135,652 139,161 137,510
Licenses and Permits 1,661,565 1,363,384 1,672,906 1,699,879
Intergovernmental 2,111,727 1,093,154 2,339,286 1,801,414
Charges for Services 1,274,578 2,129,514 2,328,991 2,130,542
Special Assessments 575,155 734,522 508,865 586,109
Fines and Forfeitures 16,223 21,092 25,616 26,488
Investment Earnings (net) 82,385 124,052 263,784 754,079
Miscellaneous 119,732 294,909 233,946 141,533
Total Revenues 10,933,112 11,491,399 13,693,544 14,037,280
Expenditures
General Government 1,233,680 1,072,195 1,182,959 1,313,178
Public Safety 1,807,985 1,886,661 2,168,187 2,379,440
Public Works 1,019,946 1,066,349 1,205,464 1,683,958
Culture and Recreation 534,122 587,739 654,786 710,406
Economic Development 196,534 195,716 223,175 265,498
Capital Outlay 4,349,555 2,160,857 8,422,796 7,001,285
Debt Service
Principal 1,210,000 1,125,000 1,160,000 1,185,000
Interest 233,498 206,748 182,875 230,217
Bond Issuance & Fiscal Agent Fee's 3,362 3,267 74,512 2,874
Total Expenditures 10,588,682 8,304,532 15,274,754 14,771,856
Excess (Deficiency) of Revenues
Over (Under) Expenditures 344,430 3,186,867 (1,581,210) (734,576)
Other Financing Sources (Uses)
Transfers In 648,087 1,278,609 1,397,210 1,274,595
Issuance of Debt - - 2,305,000 -
Premium on Issuance of Debt - - 58,475 -
Sales of Capital Assets 31,160 78,805 75,860 68,378
Payment to Refunded Bond Escrow Agent - - - -
Transfers Out (461,332) (1,082,923) (1,189,370) (1,061,726)
Total Other Financing Sources (Uses)217,915 274,491 2,647,175 281,247
Net Change in Fund Balances 562,345$ 3,461,358$ 1,065,965$ (453,329)$
Debt Service as a Percentage of
Noncapital Expenditures 18.40%19.32%16.69%15.85%
Sources: The data for this table has been extracted from the respective years report.
120
Table 5
2020 2021 2022 2023 2024 2025
7,141,972$ 7,715,949$ 8,563,236$ 9,179,680$ 9,026,051$ 9,394,707$
275,445 311,971 436,817 490,045 499,441 605,202
132,137 129,467 345,108 1,026,846 1,043,896 1,049,817
2,532,789 2,529,588 2,123,810 1,544,769 1,868,466 2,248,159
2,541,072 1,073,889 1,284,581 2,325,208 2,040,609 2,660,818
1,994,941 2,717,128 2,788,497 1,193,537 2,204,555 1,746,925
457,606 927,749 376,755 377,125 350,340 282,262
19,959 27,461 31,812 32,109 40,982 38,968
625,964 (191,523) (870,574) 1,242,417 1,653,036 2,378,320
149,472 221,998 197,499 228,315 169,142 219,904
15,871,357 15,463,677 15,277,541 17,640,051 18,896,518 20,625,082
1,479,856 1,465,403 1,679,038 1,767,226 1,929,189 2,050,796
2,667,435 2,874,479 3,080,382 3,318,255 4,037,788 4,284,321
1,640,892 1,934,040 2,086,883 1,955,380 1,867,967 2,015,065
695,747 779,820 851,357 942,485 1,088,343 1,210,742
889,173 503,411 499,481 429,054 591,967 600,947
5,137,983 2,379,157 2,331,797 5,701,144 6,089,490 17,852,995
1,330,000 1,360,000 660,000 685,000 460,000 480,000
222,250 153,062 144,431 119,406 98,406 521,315
65,483 1,078 1,348 1,678 380,570 1,740
14,128,819 11,450,450 11,334,717 14,919,628 16,543,720 29,017,921
1,742,538 4,013,227 3,942,824 2,720,423 2,352,798 (8,392,839)
2,465,348 2,677,946 1,646,807 1,099,621 2,427,000 478,000
2,950,000 - - - 16,900,000 -
312,200 - - - 1,004,014 -
- 40,000 11,956 1,359 16,775 103,658
(3,170,000) - - - - -
(2,202,979) (2,434,846) (1,353,307) (776,871) (2,000,000) -
354,569 283,100 305,456 324,109 18,347,789 581,658
2,097,107$ 4,296,327$ 4,248,280$ 3,044,532$ 20,700,587$ (7,811,181)$
13.82%15.17%7.97%7.60%4.77%8.22%
121
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
ESTIMATED ACTUAL VALUE, TAXABLE MARKET VALUE AND TAX CAPACITY OF TAXABLE PROPERTY
Last Ten Fiscal Years
2016 2017 2018 2019
Estimated Actual Value 1,340,579,000$ 1,473,986,500$ 1,644,926,700$ 1,837,875,900$
Taxable Market Value
Real Estate 1,195,720,700$ 1,327,925,100$ 1,490,919,200$ 1,666,323,700$
Personal Property 16,476,000 20,388,300 23,397,400 29,560,400
Total Taxable Market Value 1,212,196,700$ 1,348,313,400$ 1,514,316,600$ 1,695,884,100$
Taxable Market Value as a Percentage
of Estimated Actual Value 90.42%91.47%92.06%92.27%
Tax Capacity
Real Estate 12,909,476$ 14,465,922$ 16,228,630$ 18,029,678$
Personal Property 328,948 407,194 467,378 578,862
Net Tax Capacity for Direct Rate 13,238,424$ 14,873,116$ 16,696,008$ 18,608,540$
Net Tax Capacity as a Percentage
of Estimated Actual Value 0.99%1.01%1.02%1.01%
Property Tax Levies
General Revenues 4,380,206$ 4,974,745$ 5,448,302$ 5,975,816$
Debt Service 640,000 655,000 655,000 734,293
Total Property Taxes Levied 5,020,206$ 5,629,745$ 6,103,302$ 6,710,109$
Tax Rates
General Revenues 33.087 33.448 32.632 32.114
Debt Service 4.834 4.404 3.923 3.946
Total Direct Tax Rate 37.921 37.852 36.555 36.060
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
122
Table 6
2020 2021 2022 2023 2024 2025
2,043,966,400$ 2,237,499,800$ 2,467,755,200$ 3,083,366,800$ 3,741,502,600$ 3,761,460,900$
1,864,979,200$ 2,054,871,100$ 2,285,619,500$ 2,918,108,912$ 3,578,280,843$ 3,522,813,995$
27,109,100 32,555,900 29,522,200 33,008,100 30,069,000 32,602,700
1,892,088,300$ 2,087,427,000$ 2,315,141,700$ 2,951,117,012$ 3,608,349,843$ 3,555,416,695$
92.57%93.29%93.82%95.71%96.44%94.52%
19,955,742$ 21,940,788$ 24,263,079$ 30,890,994$ 38,297,340$ 37,919,400$
541,536 650,470 589,792 659,438 600,555 651,229
20,497,278$ 22,591,258$ 24,852,871$ 31,550,432$ 38,897,895$ 38,570,629$
1.00%1.01%1.01%1.02%1.04%1.03%
6,447,491$ 7,078,874$ 8,037,818$ 8,785,607$ 8,689,617$ 9,102,562$
746,758 749,551 547,187 544,416 299,144 290,308
7,194,249$ 7,828,425$ 8,585,005$ 9,330,023$ 8,988,761$ 9,392,870$
31.455 31.335 32.342 27.846 22.340 23.600
3.643 3.318 2.202 1.726 0.769 0.753
35.099 34.653 34.544 29.572 23.109 24.352
123
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
TAX CAPACITY OF REAL ESTATE & PERSONAL PROPERTY Table 7
Last Ten Fiscal Years
Non Commercial Personal
Homestead Homestead & Industrial Agricultural Property Other Total
2016 8,878,089$ 1,183,843$ 2,166,341$ 627,666$ 328,948$ 53,537$ 13,238,424$
67.06%8.94% 16.36%4.74%2.48%0.40% 100.00%
2017 9,942,548 1,232,700 2,627,164 597,483 407,194 66,027 14,873,116
66.85%8.29% 17.66%4.02%2.74%0.44% 100.00%
2018 11,298,428 1,276,749 2,981,199 612,928 467,378 59,326 16,696,008
67.67%7.65% 17.86%3.67%2.80%0.36% 100.00%
2019 12,807,798 1,481,672 3,017,858 667,248 578,862 55,102 18,608,540
68.83%7.96% 16.22%3.59%3.11%0.30% 100.00%
2020 14,392,621 1,899,299 2,935,016 670,618 541,536 58,188 20,497,278
70.22%9.27% 14.32%3.27%2.64%0.28% 100.00%
2021 16,107,001 1,982,727 3,121,710 665,277 650,470 64,073 22,591,258
71.30%8.78% 13.82%2.94%2.88%0.28% 100.00%
2022 17,987,127 2,273,760 3,269,738 666,662 589,792 65,792 24,852,871
72.37%9.15% 13.16%2.68%2.37%0.26% 100.00%
2023 22,782,140 3,569,387 3,728,910 740,756 659,438 69,801 31,550,432
72.21% 11.31% 11.82%2.35%2.09%0.22% 100.00%
2024 28,057,398 4,367,770 4,889,481 887,817 600,555 94,874 38,897,895
72.13% 11.23% 12.57%2.28%1.54%0.24% 100.00%
2025 26,709,365 4,555,002 5,681,207 973,624 651,229 202 38,570,629
69.25% 11.81% 14.73%2.52%1.69%0.00% 100.00%
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
Residential
124
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS
Last Ten Fiscal Years Table 8
General Debt School School School School School School
Revenues Service Total District 728 District 882 District 885 County District 728 District 882 District 885
2016 33.087 4.834 37.921 39.266 20.587 49.102 39.970 117.157 98.478 126.993
2017 33.448 4.404 37.852 36.659 16.242 46.893 39.599 114.110 93.693 124.344
2018 32.632 3.923 36.555 36.137 15.621 47.950 39.946 112.638 92.122 124.451
2019 32.114 3.946 36.060 32.865 16.972 47.104 44.273 113.198 97.305 127.437
2020 31.455 3.643 35.099 34.371 15.865 45.280 44.421 113.891 95.385 124.800
2021 31.335 3.318 34.653 31.717 15.390 44.216 43.719 110.089 93.762 122.588
2022 32.342 2.202 34.543 30.889 15.459 42.438 43.751 109.183 93.753 120.732
2023 27.846 1.726 29.572 26.605 12.871 35.456 37.848 94.025 80.291 102.876
2024 22.340 0.769 23.109 23.924 13.525 32.282 33.737 80.770 70.371 89.128
2025 23.600 0.753 24.352 25.252 13.632 35.663 35.563 85.167 73.547 95.578
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
Overlapping Rates Total Direct & OverlappingDirect Rates
125
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL PROPERTY TAXPAYERS Table 9
Current Year and Nine Years Ago
2025 2016
Percentage of Percentage of
Net Tax Total Tax Net Tax Total Tax
Taxpayer Classification Capacity Rank Capacity Value Capacity Rank Capacity Value
Exeter 6651 Queens LLC Industrial 791,882$ 1 2.05%
Centerpoint Energy Utility 589,928 2 1.53%
Endeavor Investments XII LLC Industrial 523,575 3 1.36%
Exeter 6701 Queens LLC Industrial 426,678 4 1.11%
Exeter 6301 Queens LLC Industrial 392,464 5 1.02%
Wagner Spray Tech Corp Industrial 317,014 6 0.82%
Evans Park Inc Apartments 296,294 7 0.77%
R Schultz Exchange LLC Apartments 279,456 8 0.72%
Target Corporation Commercial 247,694 9 0.64% 207,250 2 1.57%
Otsego Apartments LLC Apartments 223,948 10 0.58%
Duke Realty Ltd Partnership Industrial 764,963 1 5.78%
Minnegasco Inc Utility 184,220 3 1.39%
Elk Inn Partners Commercial 109,250 4 0.83%
Wright-Hennepin Co-Op Electric Utility 91,295 5 0.69%
Apex Business Center LLC Industrial 73,924 6 0.56%
21st Century Bank Commercial 49,602 7 0.37%
GCI Capital Inc Commercial 46,676 8 0.35%
Minnwest Bank Central Commercial 45,250 9 0.34%
Darkenwald's Riverbend Co LLC MFG Home Park 40,734 10 0.31%
Totals 4,088,933$ 10.60%1,613,164$ 12.19%
Sources: The data for this table has been provided by the Wright County Auditor / Treasurer's Office.
126
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PROPERTY TAX LEVIES AND COLLECTIONS Table 10
Last Ten Fiscal Years
Collected within the
Certified Fiscal Year of the Levy Collections in Total Collections to Date
Property Percentage Subsequent Percentage
Tax Levy Amount of Levy Years Amount to Date
2016 5,020,206$ 4,979,508$ 99.19% 40,698$ 5,020,206$ 100.00%
2017 5,629,745 5,606,101 99.58% 23,644 5,629,745 100.00%
2018 6,103,302 6,084,700 99.70% 18,602 6,103,302 100.00%
2019 6,710,109 6,670,163 99.40% 39,946 6,710,109 100.00%
2020 7,194,249 7,134,792 99.17% 53,482 7,188,274 99.92%
2021 7,828,425 7,764,474 99.18% 62,196 7,826,670 99.98%
2022 8,585,005 8,506,576 99.09% 74,589 8,581,165 99.96%
2023 9,330,023 9,256,266 99.21% 67,020 9,323,286 99.93%
2024 8,988,761 8,919,625 99.23% 55,183 8,974,808 99.84%
2025 9,392,870 9,319,423 99.22% - 9,319,423 99.22%
Sources: The data for this table has been provided by Wright County and from City financial maintenance documents.
Note: The components of the Certified Property Tax Levy can be viewed in table 6 of the statistical section.
127
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
RATIOS OF OUTSTANDING DEBT BY TYPE Table 11
Last Ten Fiscal Years
General Lease General Notes Percentage
Obligation Equipment Revenue Obligation from Direct Total of Personal Per
Bonds Certificates Bonds Revenue Bonds Borrowings Debt Income Capita
2016 8,380,857$ 130,000$ -$ 26,448,820$ -$ 34,959,677$ 4.68% 2,182$
2017 7,293,686 85,000 - 24,334,937 - 31,713,623 3.95% 1,910
2018 8,534,989 40,000 - 22,126,056 - 30,701,045 3.53% 1,772
2019 7,378,641 - - 17,515,267 - 24,893,908 2.62% 1,373
2020 6,129,492 - - 15,026,658 9,438,936 30,595,086 2.70% 1,532
2021 4,719,716 - - 16,735,843 16,305,983 37,761,542 2.92% 1,774
2022 4,017,111 - - 40,370,203 15,696,489 60,083,803 4.67% 2,646
2023 3,289,506 - - 11,149,563 35,586,609 50,025,678 3.31% 2,163
2024 2,786,901 - 17,904,014 8,553,924 42,900,627 72,145,466 4.56% 3,033
2025 2,264,296 - 17,856,204 6,083,282 45,454,153 71,657,935 4.49% 2,927
Sources: The data for this table has been provided from City financial maintenance documents.
Note: More detailed information for Population and Personal Income can be viewed in table 16 of the statistical section.
Business-Type ActivitesGovernmental Activities
128
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 12
Last Ten Fiscal Years
Business-Type
Activities Total Percentage of
General General General Less: Amounts Net General Estimated
Obligation Equipment Obligation Bonded Debt Restricted to Obligation Actual Value Per
Bonds Certificates Revenue Bonds Outstanding Debt Service Debt of Property Capita
2016 8,380,857$ 130,000$ 26,448,820$ 34,959,677$ 4,292,589$ 30,667,088$ 2.29% 1,914$
2017 7,293,686 85,000 24,334,937 31,713,623 3,596,348 28,117,275 1.91% 1,693
2018 8,534,989 40,000 22,126,056 30,701,045 4,484,680 26,216,365 1.59% 1,513
2019 7,378,641 - 17,515,267 24,893,908 3,979,190 20,914,718 1.14% 1,154
2020 6,129,492 - 15,026,658 21,156,150 3,076,069 18,080,081 0.88% 906
2021 4,719,716 - 16,735,843 21,455,559 2,362,735 19,092,824 0.85% 897
2022 4,017,111 - 40,370,203 44,387,314 2,137,694 42,249,620 1.71% 1,861
2023 3,289,506 - 11,149,563 14,439,069 1,931,847 12,507,222 0.41% 541
2024 2,786,901 - 8,553,924 11,340,825 2,528,237 8,812,588 0.24% 370
2025 2,264,296 - 6,083,282 8,347,578 1,563,435 6,784,143 0.18% 277
Sources: The data for this table has been provided from City financial maintenance documents.
Note: More detailed information for Population can be viewed in table 16 of the statistical section.
Note: More detailed information for Estimated Property Values can be viewed in table 6 of the statistical section.
Governmental Activities
129
This page has been left blank intentionally.
130
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
COMPUTATION OF DIRECT AND OVERLAPPING Table 13
GOVERNMENTAL ACTIVITIES DEBT
DECEMBER 31, 2025
Estimated Estimated Share
Debt Percentage of Overlapping
Governmental Unit Outstanding Applicable Debt
Overlapping Debt:
School Districts:
No. 728 - Elk River 280,715,000$ 21.90% 61,476,585$
No. 882 - Monticello 36,085,000 4.60% 1,659,910
No. 885 - St. Michael-Albertville 101,070,000 6.13% 6,195,591
Wright County 111,845,000 13.68% 15,300,396
Total Overlapping Debt 529,715,000$ 84,632,482
City of Otsego Direct Debt 20,120,500
Total Direct and Overlapping Debt 104,752,982$
Sources: The majority of the data for this table has been provided by Wright County Auditor / Treasurer's Office.
Sources: The remaining data for this table was provided by School District No. 728.
Note: More detailed information for the City's outstanding debt can be viewed in table 11 of the statistical section.
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of
the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt
burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a
resident, and therefore responsible for repaying the debt, of each overlapping government.
Note: The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated
by determining the portion of each entity's tax capacity that is within the City's boundaries, and dividing it by the entity's
total tax capacity.
131
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2016 2017 2018 2019
Taxable Market Value 1,212,196,700$ 1,348,313,400$ 1,514,316,600$ 1,695,884,100$
Debt Limit Percentage 3.00% 3.00% 3.00% 3.00%
Debt Limit 36,365,901 40,449,402 45,429,498 50,876,523
Total Net Debt Applicable to Limit 30,667,088 28,117,275 26,216,365 20,914,718
Legal Debt Margin 5,698,813$ 12,332,127$ 19,213,133$ 29,961,805$
Total Net Debt Applicable to the Limit
as a Percentage of Debt Limit 84.33%69.51%57.71%41.11%
Sources: The data for this table has been provided by Wright County and from City financial maintenance documents.
Note: Minnesota Statute 475.53 provides that no municipality shall incur or be subject to a net debt in excess of
three percent of the estimated market value of taxable property in the municipality.
132
Table 14
2020 2021 2022 2023 2024 2025
1,892,088,300$ 2,087,427,000$ 2,315,141,700$ 2,951,117,012$ 3,608,349,843$ 3,555,416,695$
3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
56,762,649 62,622,810 69,454,251 88,533,510 108,250,495 106,662,501
18,080,081 19,092,824 42,249,620 12,507,222 8,812,588 6,784,143
38,682,568$ 43,529,986$ 27,204,631$ 76,026,288$ 99,437,907$ 99,878,358$
31.85% 30.49% 60.83% 14.13% 8.14% 6.36%
133
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PLEDGED-REVENUE COVERAGE Table 15
Last Ten Fiscal Years
Water and Water and
Sanitary Sewer Sanitary Sewer Less: Net
Utility Connection Operating Available Debt Service
Charges Charges Expenses Revenue Principal Interest Coverage
2016 2,857,174$ 3,662,097$ 2,831,346$ 3,687,925$ 2,000,000$ 1,007,725$ 122.62%
2017 3,197,486 3,577,039 2,973,383 3,801,142 2,035,000 967,815 126.59%
2018 3,588,031 4,195,354 3,229,493 4,553,892 2,130,000 886,043 150.99%
2019 3,872,764 4,930,688 3,544,713 5,258,739 4,531,906 883,087 97.11%
2020 4,482,841 7,428,178 3,704,373 8,206,646 2,335,000 603,612 279.27%
2021 5,902,263 6,380,178 4,639,776 7,642,665 2,469,779 791,745 234.33%
2022 6,443,632 7,131,721 5,615,835 7,959,518 3,128,000 1,045,956 190.69%
2023 7,599,947 4,281,034 5,876,572 6,004,409 29,820,278 1,572,433 19.13%
2024 7,452,794 6,453,331 6,455,319 7,450,806 3,803,359 819,255 161.18%
2025 8,048,418 5,869,697 6,962,649 6,955,466 4,363,000 1,169,218 125.73%
Sources: The data for this table has been provided from City financial maintenance documents.
Note: The debt service coverage ratio in 2023 varied significantly from prior years due to the repayment of $26,215,000 of Series 2022A bonds.
General Obligation Revenue Bonds
134
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
DEMOGRAPHIC AND ECONOMIC STATISTICS Table 16
Last Ten Fiscal Years
School Enrollments
Per Capita No. 885
No. of Personal Personal Unemployment Median No. 728 No. 882 St. Michael
Population Households Income Income Rate Age Elk River Monticello Albertville
2016 16,019 5,580 746,373,267$ 46,593$ 3.9%33.2 13,219 4,094 6,286
2017 16,605 5,787 803,366,505 48,381 3.6%34.3 13,461 4,168 6,335
2018 17,323 5,975 869,285,463 50,181 3.1%34.7 13,670 4,125 6,463
2019 18,130 6,254 949,341,190 52,363 3.3%34.3 13,921 4,201 6,557
2020 19,966 6,743 1,132,132,098 56,703 5.6%33.7 13,464 4,072 6,366
2021 21,289 7,190 1,292,817,103 60,727 3.4%34.7 13,847 4,166 6,653
2022 22,705 7,599 1,285,685,288 62,263 2.5%34.6 14,152 4,241 6,670
2023 23,132 7,909 1,509,154,812 65,241 2.9%34.4 14,352 4,138 6,696
2024 23,790 8,117 1,583,795,460 66,574 3.8%34.9 14,577 4,013 6,795
2025 24,483 8,356 1,597,300,622 65,241 3.0%34.4 14,785 4,045 6,840
Sources: Population - Minnesota State Demographer (2016-2019 and 2021-2024); U.S. Census Bureau (2020); Estimated by City (2025)
Households - Minnesota State Demographer (2016-2024); Estimated by City (2025)
Personal Income - Calculated by the City
Per Capita Personal Income - US Department of Commerce; Bureau of Economic Analysis
Unemployment Rate - Minnesota Department of Employment and Economic Development
Median Age - US Department of Commerce, Bureau of the Census
School Enrollment - Minnesota Department of Education
Note: Some data was not yet available for 2025. In those instances, 2024 data was shown for the current year.
135
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
PRINCIPAL EMPLOYMENT SECTORS Table 17
Current Year and Nine Years Ago
Percentage of Percentage of
Total City Total City
Employment Industry Employees Rank Employment Employees Rank Employment
Education & Health Services 1,462 1 33.51% 1,609 1 45.29%
Trade, Transportation & Utilities 929 2 21.29% 670 2 18.86%
Construction 609 3 13.96% 272 4 7.66%
Leisure and Hospitality 474 4 10.86% 437 3 12.30%
Professional & Business Services 343 5 7.86% 212 5 5.97%
Other Services 118 6 2.70% 71 6 2.00%
Public Administration 50 7 1.15% 34 7 0.96%
Totals 3,985 91.34% 3,305 93.02%
Sources: The data for this table has been provided from the Minnesota Department of Employment and Economic Development.
Note: Due to data privacy within the State, data for principal employers of the City is not available. Given this limitation, the
City determined it was appropriate to provide data regarding employment industry data. The City felt that this data would still
provide the user information to understand the degree to which the City's economy is or is not dependent on a certain
employment sector.
2025 2016
136
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 18
Last Ten Fiscal Years
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General Government
Administration 3.5 3.6 3.6 3.6 4.0 4.0 4.2 4.2 5.5 5.5
Finance 3.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0
Total General Government 6.5 6.6 6.6 6.6 7.0 7.0 8.2 8.2 9.5 9.5
Public Safety
Fire - - - - - - - 1.0 1.0 1.0
Building Inspections 1.5 1.5 1.8 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Total Public Safety 1.5 1.5 1.8 2.0 2.0 2.0 2.0 3.0 3.0 3.0
Public Works
Street Maintenance 6.9 6.9 6.9 7.8 7.8 7.8 8.4 8.8 8.9 8.9
Mechanic 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0
Total Public Works 7.9 7.9 7.9 8.8 8.8 8.8 9.4 10.8 10.9 10.9
Culture and Recreation
Parks Maintenance 3.5 3.5 3.9 4.4 4.4 4.4 4.5 5.2 5.8 5.8
Recreation 1.4 1.4 1.6 1.5 2.0 1.5 1.5 1.6 1.9 2.3
Total Culture and Recreation 4.9 4.9 5.5 5.9 6.4 5.9 6.0 6.8 7.7 8.1
Public Utilities
Water Utility 1.3 1.3 1.4 1.5 1.8 1.8 2.2 2.3 2.6 3.0
Sanitary Sewer Utility 3.7 3.7 4.1 4.5 5.4 5.4 6.5 6.9 7.7 9.1
Total Public Utilities 5.0 5.0 5.5 6.0 7.2 7.2 8.7 9.2 10.3 12.2
Total 25.8 25.9 27.3 29.3 31.4 30.9 34.3 38.0 41.4 43.6
Sources: The data for this table has been provided from City financial maintenance documents.
137
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
OPERATING INDICATORS BY FUNCTION
Last Ten Fiscal Years
Function 2016 2017 2018 2019
Administration
Rental Licenses Issued 387 351 329 332
Code Enforcement Citations 41 30 68 18
Registered Voters 9,324 9,754
Actual Votes Tallied 7,362 6,228
Police
Total Calls for Service 3,619 4,310 4,279 4,484
Fire
Calls - Albertville Department 93 129 131 164
Calls - Elk River Department 80 92 96 105
Calls - Rogers Department 15 12 27 26
Building Inspections
Number of Permits - All Types 968 722 1,147 1,173
New Homes Constructed 219 210 300 300
Public Works
Miles of Streets Constructed 2.59 3.93 7.80 4.68
Miles of Streets Reconstructed 0.35 1.80 5.30 -
Snow Plowing Events 16 22 37 21
Culture and Recreation
Parks Acres Maintained 190.3 160.0 160.0 160.0
Prairie Festival Attendance 5,000 4,000 4,800 6,450
Recreation Programs Offered 100 127 231 153
Recreation Programs Participants 12,662 17,341 20,885 18,500
Water Utility
Connections 3,155 3,278 3,748 4,014
Gallons Delivered 393,795,210 491,484,000 427,795,004 491,074,000
Sanitary Sewer Utility
Average Daily Gallons Treated 600,000 627,000 673,000 738,000
Sources: The data for this table has been provided by each respective City department.
138
Table 19
2020 2021 2022 2023 2024 2025
300 297 334 351 345 362
37 42 51 64 46 10
13,081 13,895 15,197
11,389 9,402 13,727
4,145 3,783 3,696 3,917 3,889 4,209
158 204 209 257 300 354
92 110 96 109 101 145
28 59 93 71 89 114
1,791 1,856 1,826 2,172 1,882 1,592
403 435 317 221 239 280
1.47 3.83 2.83 0.56 2.14 1.08
0.78 0.76 2.28 3.79 3.90 -
11 19 32 12 11 15
173.0 175.0 175.0 175.0 177.0 177.0
- 6,850 8,000 11,000 7,000 11,500
52 161 177 186 177 189
5,359 16,936 23,397 24,383 29,189 26,935
4,335 4,445 5,100 5,295 5,373 5,878
632,552,814 787,182,348 765,960,269 904,558,000 728,579,000 800,664,713
798,000 840,000 900,000 983,000 1,023,437 1,004,000
139
CITY OF OTSEGO, MINNESOTA
STATISTICAL SECTION (UNAUDITED)
CAPITAL ASSET STATISTICS BY FUNCTION
Last Ten Fiscal Years
Function 2016 2017 2018 2019
Public Safety
Fire Department Vehicles - - - -
Building Safety Vehicles 1 1 1 1
Public Works
Street Miles (MSA) 120.88 124.81 131.00 131.00
Heavy Duty Trucks 8 8 9 9
Light Duty Vehicles 15 17 17 16
Tractors & Grading Equipment 8 8 7 7
Culture and Recreation
Trail Miles 21.13 25.11 25.60 27.95
Number of Parks 11 12 14 14
Playgrounds 8 9 10 10
Park Shelters 10 10 12 13
Ball Fields 6 6 6 6
Soccer Fields 3 3 3 3
Basketball Courts 5 5 6 6
Tennis Courts 8 8 8 8
Pickleball Courts
Outdoor Ice Rinks 1 1 1 1
Mowing Equipment 5 6 6 6
Water Utility
Water Towers 3 3 3 3
Wells 8 8 8 7
Miles of Water Main 77 79 83 87
Hydrants 846 871 923 975
Water Valves 1,841 1,881 1,983 2,106
Sanitary Sewer Utility
Treatment Facilities 2 2 2 2
Lift Stations 10 10 10 10
Miles of Sanitary Sewer Lines 76 80 82 86
Manholes 1,480 1,524 1,594 1,730
Miles of Sanitary Forcemain 20 20 21 21
Sources: The data for this table has been provided by each respective City department.
140
Table 20
2020 2021 2022 2023 2024 2025
- - - 1 1 4
2 2 2 3 3 3
134.41 138.31 142.00 142.26 144.65 144.65
9 10 11 11 13 14
19 16 17 20 27 25
6 7 6 8 9 9
38.31 42.00 43.40 43.51 35.80 45.50
14 14 14 14 15 15
14 14 14 14 15 15
13 16 16 16 18 18
7 7 7 7 7 7
3 3 3 3 3 3
7 6 6 5 5 5
8 7 7 7 6 6
4 4 4 4
1 2 3 3 3 3
6 7 6 6 6 6
3 3 4 4 4 4
9 9 10 10 10 10
90 94 93 96 77 110
1,014 1,066 1,197 1,222 1,284 1,331
2,360 2,287 2,673 2,726 2,728 2,827
2 2 2 2 2 2
10 10 10 10 10 10
97 103.7 104.8 104.8 77.0 79.2
1,774 1,814 2,071 2,092 2,123 2,237
21 27 27 27 24 24
141
This page has been left blank intentionally.
142
1
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2026-47
ADOPTING THE ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2025
WHEREAS, the City annually prepares an Annual Comprehensive Financial Report (ACFR); and
WHEREAS, the ACFR contains the financial statements for the City of Otsego which have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the
Governmental Accounting Standards Board (GASB); and
WHEREAS, the financial statements have been subjected to a statutorily required audit, which has been conducted by
BerganKDV, an independent CPA firm; and
WHEREAS, BerganKDV opined that the financial statements present fairly, in all material respects, the respective financial
position of the City of Otsego for the year ended December 31, 2025; and
WHEREAS, said ACFR and the documents summarizing the audit process have been distributed to and discussed with the City
Council on June 22, 2026.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. That the Annual Comprehensive Financial Report (ACFR) for the City of Otsego for the year ended December 31, 2025,
and all supporting documentation, is hereby adopted as the official financial record for said fiscal year.
ADOPTED by the Otsego City Council this 22nd day of June, 2026.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
__________________________________
Jessica L. Stockamp, Mayor
ATTEST:
__________________________________
Audra J. Etzel, City Clerk