Financial Report of City of Brighton, Colorado for the Year Ended December 31, 2020, Study notes of Accounting

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CITY OF BRIGHTON, COLORADO

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 20 20

Prepared By the Finance Department

CITY OF BRIGHTON, COLORADO

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE OF CONTENTS

Page

INTRODUCTORY SECTION

LETTER OF TRANSMITTAL ............................................................................................................... 2

C ERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING ............................................... 7

CITY OFFICALS ................................................................................................................................ 8

CITY ORGANIZATIONAL CHART ........................................................................................................... 9

FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT ............................................................................................. 12

MANAGEMENT’S DISCUSSION AND ANALYSIS ..................................................................... 15

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

Statement of Net Position ...................................................................................................... 26

Statement of Activities ........................................................................................................... 27 FUND FINANCIAL STATEMENTS

Balance Sheet – Governmental Funds ................................................................................ 28

Reconciliation of the Balance Sheet of Governmental Funds to Statement of Net Position .................................................................................................. 29

Statement of Revenues, Expenditures, and Changes in Fund Balances ....................... 30

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..................... 31

Statement of Net Position – Proprietary Funds.................................................................... 32

Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds................................................................................................................. 33

Statement of Cash Flows – Proprietary Funds ..................................................................... 34

Component Units—Combining Balance Sheet ................................................................. 35 Component Units—Combining Statement of Revenues, Expenditures, and Changes in Fund Balance .................................................................................... 36

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NOTES TO THE BASIC FINANCIAL STATEMENTS ..................................................................... 38

REQUIRED SUPPLEMENTARY INFORMATION

General Fund--Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual ................................................................................. 62

Schedule of Employer’s Proportionate Share of the Net Pension (Asset) ..................... 63

Schedule of Employer Contributions ................................................................................... 64

SUPPLEMENTARY INFORMATION

Non-Major Governmental Funds—Description ................................................................. 66

Non-Major Governmental Funds—Combining Balance Sheet ....................................... 67

Non-Major Governmental Funds—Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................... 68 Landscaping Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual ........................................................................ 69 Lottery Reserve Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual ........................................................................ 70 Cemetery Fund Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget and Actual ........................................................................ 71 Highway Fund Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget and Actual ........................................................................ 72 Lodging Fund Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget and Actual ........................................................................ 73 Impact Fees Fund Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget and Actual ........................................................................ 74 Cemetery Perpetual Care Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual .............................................. 75 Capital Improvement Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual .............................................. 76 Parks and Recreation Capital Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual .............................................. 77 Water Fund—Schedule of Revenues, Expenses and Changes in Fund Net Position—Budget and Actual (Non US GAAP Basis) ............................ 78 Waste Water Fund—Schedule of Revenues, Expenses and Changes in Fund Net Position—Budget and Actual (Non US GAAP Basis) ............................ 79 Storm Drainage Fund—Schedule of Revenues, Expenses and Changes in Fund Net Position—Budget and Actual (Non US GAAP Basis) ............................ 80 Internal Service Funds – Description .................................................................................... 81 Internal Service Funds—Combining Statement of Net Position ...................................... 82

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Introductory Section

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anchors the City's small town identity and its original neighborhoods, The City currently occupies 21 square miles and serves a population of approximately 41,468.

The completion of E-470 from 1-76 to 1-25 linked Brighton both to 1-25 and the southern Denver business area and technical center. The link advanced the "Brighton Corridor" for improved access to the entire Denver Metropolitan area. Brighton has excellent transportation access including being located only 16 miles from Denver International Airport, and is served by two rail lines, State Highway 85 and Interstate 76. Coast-to-coast truck routes are available utilizing 1- with its connections to 1-70 and using Highway 85 to link to 1-80.

Brighton is empowered to levy sales, use, and lodging taxes within its boundaries. In 2020, the mill levy for property tax remained at 6.65 mills upon each dollar of the total valuation of assessment for all taxable property within the City. The 2020 property taxes collected were based on the net assessed valuation for the City of Brighton, as certified by the Adams and Weld County Assessors, which was $510,990,970 and $37,356,403 respectively. The City also is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time.

Brighton operates under the council-manager form of government. Policy-making and legislative authority are vested in a council consisting of the Mayor, and eight Council Members. The City is divided into four wards, each ward having two representatives on Council. The Mayor Pro-Tern is a serving Council Member elected by the Council itself. Council members serve for four-year terms, which are staggered. The Mayor is elected at large every four years.

The financial statements, schedules and statistical tables contained in this report include all funds under the control of the City Council including component units. For the year 2020, the City Council was responsible for passing resolutions, adopting the annual budget and appropriations resolutions, appointing advisory board and commission members, and hiring the City Manager, City Attorney, Municipal Judge, and Liquor Hearing Officer. The City Manager is responsible for implementing the policies and ordinances of the Council, overseeing the day-to-day City operations, and appointing department directors and other staff members.

Brighton provides services that include, but are not limited to the following: police protection, construction and maintenance of highways, streets and street lighting, recreational activities, parks and athletic fields, adult recreation center, cultural events, volunteer services, planning and zoning, general administrative services, economic/re-development, code enforcement, animal control, municipal courts, public information, government access channel, business development, historic preservation, cemetery, building permits, youth services and public utilities which include water, sewer and storm drainage services. Fire protection and library services are not provided by the City but are provided by the Brighton Fire Rescue District and Anythink Brighton, a Rangeview Libraries District affiliate.

Brighton is financially accountable for a legally separate urban renewal authority and a legally separate cultural arts commission, both of which are reported as discretely presented component units within the City of Brighton's financial statements. Additional information on these legally separate entities can be found in the notes to the financial statements,

Brighton's budget is planned on a calendar year basis as required by Article X of the Charter. The budget presents a complete financial plan for all estimated revenues, other financing sources,

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expenditures, and other financing uses. This annual budget serves as the foundation for the City

of Brighton's financial planning and control. The entire budget document is posted at

www.briqhtonco.gov.

The legal level of budgetary control (Le. the level at which expenditures may not legally exceed

appropriations) is the fund level. Budgets for capital projects lapse at the end of the fiscal year.

MAJOR INITIATIVES - In 2020 the City made significant progress on its Strategic Plan initiatives

including:

• (^) Facilitating strategic, supportable infrastructure. City Council continued its l 0-year street

maintenance program, approved replacement of aged water pipelines in the core of the

City, and funded the installation of the new Baseline Road Water Pipeline which will provide

critical redundancy to the City's water distribution system. The City also moved beyond the

concept phase for its new water treatment plant, and completed pilot testing of different

water filtration systems to help select the primary water treatment medium for the new plant.

The water treatment plant, which is now in the design phase, will help the City to meet its water

processing needs as it grows over the next several decades.

• (^) Developing strong local employment opportunities. This goal was tested significantly by the

COVID-19 pandemic and the changing economic landscape. Keeping the lights on and the

doors open for local businesses became a top priority for the City as public health mandates

limited occupants and forced closures. Over an eight month period the City launched several

grant programs for businesses including rent and mortgage assistance, utility assistance, and

assistance in securing PPE. In total, the City awarded over $1.4M in public assistance to

businesses to deal with the COVID-19 pandemic.

• (^) Maintaining a safe, active, engaged community. Like the previous initiative, this is one that

was greatly impacted by COVID-19. With schools and businesses forced to close and large

gatherings banned, the City had to pivot quickly to reconfigure large events and community

outreach programs. The Police Department's Youth Services program, which normally sees

officers connecting with at-risk youth is schools, moved to checking in with students at their

homes and in community spaces. Events such as the 4th^ of July and Festival of Lights were

reworked as socially distanced events where residents could partake in the festivities from their

very own neighborhood.

• (^) Promoting financial responsibility. In 2020, City Council directed staff to develop a plan for

using $1 .5M in one-time oil and gas revenues. With Covid-19 hitting early in the year, staff was

able to put together a plan for these funds that would allow Council to plug pandemic-related

revenue gaps and continue progress on major capital projects such as the widening of Bridge

Street. Additionally, the pandemic forced the City to take a hard look at its day-to-day

operations in light of a reduced revenue outlook. After months of work and collaboration

between departments to find ways to work more efficiently and effectively, the City was

ultimately able to balance its budget without laying off a single employee.

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As with most Colorado Front Range communities, water availability is a major component of

economic growth in Brighton. To ensure that adequate water supplies are available, the City

continues to manage its resources through water conservation and acquisition.

FOR THE FUTURE

COVID-19 and resulting public health mandates created a downturn in Brighton's economy in

2020. Economic improvement began in late summer of 2020 as Brighton residents and businesses

showed their resiliency and continued drive for innovative ways to reach customers. The City

Council reacted quickly at the start of the pandemic to create a low-interest business support

loan program and offered multiple grants throughout the year to support local businesses through

the shut-down.

Brighton City Council has continued its commitment to expanding both the employment base

and range of retail opportunities by funding and working in cooperation with the Brighton

Economic Development Corporation (BEDC), Brighton Urban Renewal Authority (BURA), Brighton

Housing Authority (BHA), Adams County Economic Development (ACED) and Upstate Colorado

Economic Development.

AWARDS AND ACKNOWLEDGEMENTS

The Government Finance Officers Association of the United States and Canada (GFOA) awarded

a Certificate of Achievement for Excellence in Financial Reporting to Brighton for its

comprehensive annual financial report for the year ended December 31, 2019. In order to be

awarded a Certificate of Achievement, a government must publish an easily readable and

efficiently organized comprehensive annual financial report. This report must satisfy both generally

accepted accounting principles and applicable legal requirements. A Certificate of

Achievement is valid for a period of one year only. We believe that our current comprehensive

annual financial report continues to meet the Certificate of Achievement Program's requirements

and we are submitting it to GFOA to determine its eligibility for another certificate.

The preparation of this 2020 Comprehensive Annual Financial Report was made possible by the

dedicated service of the entire Finance Department. Credit also must be given to the Mayor and

the City Council for their unfailing support to maintain the highest standards of professionalism and

in the development of effective policies relating to the City's Finances.

Respectfully submitted,

;?�-<:f�o�

Jane Bois DiSessa

City Manager

Maria Ostrom, CPA

Finance Director

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Government Finance Officers Association

Certificate of

Achievement

for Excellence

in Financial

Reporting

Presented to

City of Brighton

Colorado

For its Comprehensive Annual Financial Report For the Fiscal Year Ended

December 31, 2019

Executive Director/CEO

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City of Brighton Residents

City Council

City Attorney (^) City Manager Presiding Municipal Judge

Finance

Police

Utilities

Deputy City Manager

Community Development

Parks & Recreation

Public Works

Assistant City Manager

Internal Services &

Innovation

Assistant City Manager

Economic Development &

Community Engagement

General Services

Facilities

Human Resources

Information Technology

Municipal Court

City Clerk

Economic Development

Brighton Urban Renewal Authority*

Brighton Housing Authority*

Communications & Engagement

Organizational Chart

*Component Units. Appropriations not included in the City’s Budget Book.

Brighton Cultural Arts Commisssion*

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To the City Council City of Brighton, Colorado

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Brighton, Colorado (the “City”), as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Brighton, Colorado, as of December 31, 2020, 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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

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 opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards 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, including omissions, 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 generally accepted auditing standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

Certified P ublic Accountants &Management Consultants

1221 W. Mineral Avenue, Suite 202 Littleton, CO 80120

303-734- 303-795- www.HaynieCPAs.com

An Association of Independent Accounting Firms^12

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and pension schedules, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, component unit financial statements and schedules, statistical section and Local Highway Finance Report are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements schedules, component unit financial statements and schedules, and the Local Highway Finance Report are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules, and component unit financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Littleton, Colorado

May 3, 2021

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