HomeMy WebLinkAbout7. 2012 Annual Financial Report and Audit Presentation by Kern, DeWenter, Viere Ltd. (KDV) �.
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TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Julie Linnihan, Finance Director/City Clerk
DATE: OS/07/2013
SUBJECT: 2012 Annual Financial Report and Audit Presentation by Kern, DeWenter, Viere, Ltd. (KDV)(C)
Action Sought
Staff requests the acceptance of the 2012 audit and accompanying reports, as presented by audit staff from KDV.
Background
Audit staff from KDV conducted the annual audit process, beginning in December,2012, continuing into April,
2013. The audit results and accompanying data will be presented at the May 7th, 2013 meeting, by Steve
W ischmann, Government Audit Partner.
Included in the agenda packet are the following reports:
.Comprehensive Annual Financial Report(CAFR)
.Communications Letter
.Report on Compliance
Similar to the previous year audit, the City did not expend greater than$500,000 in federal funds, and was not
subject to the "single audit" process.
Attachments: CAFR
Comm Letter
� Report on Compliance
CITY OF SHAKOPEE, MINNESOTA
Scott County
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended
December 31, 2012
DEPARTMENT OF FINANCE
JULIE LINNIHAN, Director of Finance
MEMBER OF GOVERNMENT FINANCE OFFICERS ASSOCIATION
OF THE UNITED STATES AND CANADA
129 HOLMES STREET SOUTH
SHAKOPEE, MN 55379
(THIS PAGE LEFT BLANK 1NTENTIONALL�
CITY OF SHAKOPEE
TABLE OF CONTENTS
SECTION I
Page
INTRODUCTORY SECTION
Elected Officials and Administration................................................................................ 1
OrganizationChart............................................................................................................ 2
Letterof Transmittal......................................................................................................... 3
Certificate of Achievement for Excellence in Financial Reporting.................................. 8
SECTION II
FINANCIAL SECTION
Independent Auditor's Report........................................................................................... 9
Management's Discussion and Analysis (Unaudited) ...................................................... 13
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 to the Statement of Net Position—
GovernmentalFunds........................................................................................... 29
Statement of Revenues, Expenditures and Changes in Fund Balances—
Governmental Funds........................................................................................... 30
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities—Governmental Funds ............... 31
Statement of Revenues, Expenditures and Changes in Fund Balances—
Budget and Actual—General Fund..................................................................... 33
Statement of Net Position—Proprietary Funds..................................................... 34
Statement of Revenues, Expenses and Changes in Fund Net Position—
ProprietaryFunds................................................................................................ 35
Statement of Cash Flows—Proprietary Funds...................................................... 36
Combined Statement of Fiduciary Net Position ................................................... 38
Statement of Net Position—Component Unit ...................................................... 39
Statement of Revenues, Expenses and Changes in Fund Net Position—
ComponentUnit................................................................................................. 40
Notes to the Financial Statements............................................................................... 41
Required Supplementary Information:
Schedule of Funding Progress—Other Post Employment Benefits............................ 76
Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance—
Budget and Actual—General Fund........................................................................... 78
Combining and Individual Fund Financial Statements and Schedules:
Combining Balance Sheet—Nonmajor Governmental Funds.............................. 80
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances—Nonmajor Governmental Funds ....................................................... 86
CITY OF SHAKOPEE
TABLE OF CONTENTS
SECTION II (Continued)
Table Page
FINANCIAL SECTION
Supplementary Information: (Continued)
Combining and Individual Fund Financial Statements and Schedules: (Continued)
Schedule of Revenues, Expenditures and Changes in Fund Balance—
Budget and Actual:
TransitFund.................................................................................................... 92
Economic Development Authority Fund........................................................ 93
Combining Statement of Fund Net Position—Internal Service Funds................. 94
Combining Statement of Revenues, Expenses and Changes in Fund Net
Position—Internal Service Funds ....................................................................... 95
Combining Statement of Cash Flows—Internal Service Funds ........................... 96
Statement Fiduciary Net Position—Escrow Agency Fund................................... 97
Statement of Changes in Assets and Liabilities—Escrow Agency Fund.............. 98
SECTION III
STATISTICAL SECTION
Net Position by Component.............................................................................................. 1 104
Changes in Net Position.................................................................................................... 2 106
Fund Balances—Governmental Funds ............................................................................. 3 110
Changes in Fund Balances—Governmental Funds........................................................... 4 112
Tax Capacity and Estimated Actual Value of Taxable Property ...................................... 5 114
Direct and Overlapping Property Tax Rates..................................................................... 6 115
PrincipalTaxpayers........................................................................................................... 7 116
Property Tax Levies and Collections................................................................................ 8 117
Ratio of Outstanding Debt by Type .................................................................................. 9 118
Ratio of General Bonded Outstanding.............................................................................. 10 119
Direct and Overlapping Governmental Activities Debt.................................................... 11 121
Legal Debt Margin Information........................................................................................ 12 122
Pledged Revenue Coverage .............................................................................................. 13 124
Demographic and Economic Statistics ............................................................................. 14 125
PrincipalEmployers.......................................................................................................... 15 127
Full-Time Equivalent City Government Employees by Function/Program...................... 16 128
Operating Indicators by Function/Program....................................................................... 17 130
Capital Asset Statistics by Function/Program................................................................... 18 132
CITY OF SHAKOPEE
ELECTED OFFICIALS AND ADMINISTRATION
DECEMBER 31,2012
Elected Officials Position Term Expires
Brad Tabke Mayor December 31, 2013
Matthew Lehman Council Member December 31, 2015
Jay Whiting Council Member December 31, 2015
Steven Clay Council Member December 31, 2013
Pamela Schurman Council Member December 31, 2013
Administration
Mark H. McNeill City Administrator Appointed
Julie Linnihan Finance Director Appointed
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CITY OF SHAKOPEE
ORGANIZATION CHART
DECEMBER 31,2012
ELECTORATE
CITY COUNCIL
Planning Commission and Board of Adjusvnent and Appeals Building Code Board of Adjustment and Appeals
Police Civil Service Commission Telecommunications Advisory Commission
Park and Recreation Advisory Board Board of Review
Economic Development Authoriry-Committee(EDAC) Public Utili6es Commission
Em�ironmental Advisory Commission Historic Preservation Commission
Administration
Police Fire Public Works Recceation Finance/ Communiry
City Clerk Development
Nahual Resources
EmergencyManagement Engineering Operations Planning BuildingInspeaion
Transit
Streets/Parks Sewers
Fleet
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i April 17th,2013
To the Honorable Mayor,Members of the City Council,and Citizens of the City of Shakopee:
Minnesota Statutes require that within six months of the close of each fiscal year every city publish a
complete set of audited financial statements. This report is published to fu1fill that specific requirement for
� the fiscal year ended Decernber 31,20I2.
The City's management staff has exercised its best efforts to insure that the infonnation presented in the
,: report is complete and reliable and is based upon a comprehensive framework of interna] control that has
been established for this purpose. The costs of intemal controI should not exceed anticipated benefits and
,. therefore the object is to provide reasonable rather than absolute assurance that the financial statements are
; free from material misstatement.
� The City of Shakopee's financial statements have been audited by Kern, DeWenter, Viere, Ltd., a fiirm of
licensed certified public accountants. The goal of the independent audit was to provide reasonable
assurance that the fmancial statements of the City for the year ended December 31, 2012, are fairly
presented in confornuty with GAAP (generally accepted accounting principles). Based on the audit, the
independent auditor concluded ti�at there was reasonable basis for rendering an unqua]ified ("clean")
opinion on the City's financial statements for the year ended Decsmber 31, 2012. The independent audit
involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements; assessing the accounting principles used; si�mificant estimates made by management; as well as
evaluation of the overall financial statement presenta,tion. The independent auditor's report is presented as
the first component of the fmancial section of this report.
Management Discussion and Analysis(MD&A}immediately follows the independent auditor's report and
provides a narrative inh-oducrion, overview,and analysis to accompany the basic financial statements, 'This
letter of transrnittal is designed to comp]emw,nt the NID&A and should be read in conjunct�on with it.
Profile of the City
The City of Shakopee was incorporated far the second time in 1870 and is located approximateIy 25 miles
southwest of Minneapolis. Bounded by the Minnesota River on the north, Shakopee is in the northem part
of Scott County and is the county seat. In recent years,the City has been one of the most rapidly growing
communities in the state. The 20d0 population of the City was 20,Sb8 and the land area covered is
approximately 30 square miles, The 2010 census confirmed that the population had increased to 37,076 and
has been continuing to experience growth into the current year, with an estimated population of 37,660 in
2012. The city comprises a unique blend of residential, commcrcial and indusirial properties, which
provides a wide range of opportunities that are the result of the strong economic health of the community
and regian. Approximately 45%of the comnnunity is developed, with approximately 28%of the developeti
land as residential. However, about 23.3%of the undeveloped land is owned ar controlled by the Shakopee
Mdewakanton Sioux Community(SMSC),a federally recognized Native American Tribe. The City levies a
property tax on both real and per5ona] property located within its boundaries. The City may also by state
statute,extend its corporate limits by annexation,which historically has occurred periodically.
COMMUNI"I'Y PRIll�SINCE 1857
129 Hotmes Street South • Shakopcc,btinnesota • 55379-1351 • 952-233-9300 • E�X 952-233-3801 • k-w-w.ci.shakopee.mn.us
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Shakopee is organized in Minnesota under Plan A, which includes a City Administrator, but the City
Council retains primary decision making authority such as policy setting, adopting ardinances and budget
and staffing. The City Council has four members who serve staggered terms of four years plus the Mayor
who serves a two-year term. All council positions are non-partisan, part-time and members are elected at
large.
The City provides typical municipal services such as police and fire protection, street and infrastructure
construction, public works maintenance, parks, recreation, planning and zoning. Also provided are
utilities such as sewer and storm drainage utilities, organized refuse collection, recycling, and certain
transit services. Electric and water utilities are operated by Shakopee Public Utilities Commission which
is appointed by the City Council but which operates independently of the City of Shakopee. Economic
development and redevelopment are controlled by the Shakopee Economic Development Authority (the
Authority). The Authority is comprised of City Council members and is included as an integral part of
the City's report. The economic development activities of the both staff and Council have increased
significantly over the past year, with contacts and inquiries relating to growth and expansion of both
commercial and industrial ventures. 2013 continues to offer similar promise far business development in
several areas of the City, as well as the current upturn in residential housing construction and plat
development.
The aru�ual budget is the basis for the City's financial planning and controL The budget is prepared by Fund
(e.g., General), function (e.g., Public Works) and department (e.g., Engineering). Budget requests are
submitted in July by Department Heads. The City Administrator reviews the submittals with the Finance
Director and department heads,to determine the priaritization of specific budget requests. Presentations are
provided to the City Council during work sessions and allow for open community discussion. The City
Council is presented with a proposed budget and ta�c levy in August of each year. City Council is required
to adopt a maximum tax levy by September 15. The final tax levy and budget are adopted in December
after a public meeting, which provides the City Council and community impact information relating to both
the budget decisions and property tax levies. Final levy information is submitted to the County, for
development of the upcoming year property tax statements. Budgeting control is provided by an annual
budget resolution passed by City Council (or EDA as appropriate). Formal control is at the division level
and Council action is necessary to change budgeted amounts between divisions and/or funds. The Finance
Director or City Administrator may make changes within divisions.
Along with the operating budget,the city annually prepares a five-year capital improvement plan(CIP)that
is the basis for the long term goal of providing and maintaining a functional public facility program, that
provides the residents and businesses with infrastructure necessary for the on-going growth and
development. The capital plans are reviewed with the Council and City staff, and the funding sources and
priorities developed for the annual and future budget practices. A ten-year majar equipment list is also
annually prepared and presented to Council,the funding for this program through Internal Service fund rate
charges, determined by departmental use, replacement plans and determination of life and salvage value.
Internal Service funds are utilized for the definition and application of other charges, including
governmental buildings, park assets, and information technology. These charges are integrated into the
individual budgets of the General fund and departments that are benefitted by the activities of the progams.
The Internal Service funds continue to be reviewed and updated as the community needs and council
directives are considered during each budget cycle.
Local Economy
The City is benefitted by its' convenient location within the Twin Cities metropolitan region, direct access
to Highway 169 and proximity to other major metro roadways which provide access to major businesses
and a unique and broad variety of attractions. Bordering on Hennepin County, Shakopee is the CounTy seat
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of Scott County. The community has benefited from a decade of strong and consistent growth, and for 2012
and future years,continues to benefit from the growth of commercial,industrial and residential ventures.
In 2012, permits were issued and construction initiated on a Holiday Inn Express, which will provide
lodging for the growing and expanding recreational activities of the area, including Canterbury Park horse
racing,Valleyfair Amusement and Water Park,and historical sites, such as The Landing, providing a family
friendly learning environment for the state and region.
During 2012 the Economic Development Authority(EDA),received requests for assistance for several new
business ventures. The EDA and City Council (the members of the City Council also serve as the EDA)
reviewed and approved tax increment and t� abatement requests for several new businesses in the
community. These include the construction of a new facility for SanMar, a 580,000 square foot warehouse
and distribution facility. This business is anticipated to provide approximately 150 new jobs for the area as
well as adding new value to the property tax base. Trystar, Inc., a privately held company, will initiate
construction of a new manufacturing facility in the Dean Lakes PUDBusiness Park in Shakopee. This
project, which will serve as the administrative headquarters, manufacturing and distribution site of the
organization, will provide an estimated 120 new jobs, in the cable technology field. In the summer of 2012,
Trident Housing approached the City with a request for T�Increment Financing for the All Saints Senior
Housing project. This project, which will begin construction late spring of 2013, will provide a range of
senior living options for the area, including independent living, assisted living, and memory care living
options. The facility will provide 83 units,a common area and wellness center. The site is approximately 10
acres,and will be locate near residential neighborhoods.
The City has recently approved the Preliminary Plat of a 66 single family residential subdivision, Dakota
Crossings. This 40 acre site will provide needed construction sites far the anticipated needs of a growing
community, and also provides for additional roadway connections and access, which are vital in the
planning for a growing and mobile community.
The City has also continued to maintain and expand their commitment to the infrastructure needs of the
community. The 2012 budget initiated the discussion of an annual funding option for the Capital
Improvement Progam (CIP), as a portion of the properiy tax levy. The 2013 adopted budget provides for
the first committed funding source for the streets, infrastructure,trails,and requested projects, per the 5 year
plan. This action has laid the groundwark for the future funding needs, and allows far a consistent and
reliable revenue source for the aging infrastructure, as well as the newly planned projects, which are often
unplanned and unbudgeted,due to growth and development requests.
Local commercial industrial areas, similar to many areas of the Midwest, are experiencing strong and
consistent interest from the marketplace. The City continues to receive requests for development
information, because of a strong economic environment, as well as the availability of a skilled wark force
and available land and utility and infrastructure availability. The City has traditionally had a strong
industrial base with commerciaUindustrial property currently comprising approximately 23% of market
value and 40% of taY capacity. The City is also fortunate to have a broad base of employers and taxpayer
base, which reduces the economic risk of reliance on one ar two significant employers. Companies in the
City manufacture chemicals, food products, roofing products, glass, cardboard and electronics. Health care
and related industries continue to progess on positive trends as well benefitting from the continuing
expansion of a trained and skilled work force. As in many other areas of the Midwest, the community is
also fortunate to experience the expansion of technology based employers, which provides skilled and well-
paying jobs.At the State level,the current legislative session and governing activities are moving toward the
end of session,with the prospect of a budget ageement and a less than contentious atmosphere than in prior
sessions. This provides both the state and local economies with an assurance that last minute and game
changing legislation will not negatively impact the planning far the current and upcoming budget and
financial planning programs.
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Long-Term Financial Planning
Historically, the City has issued bonds and utilized internal funding for the planned infrastructure
replacement, expansion and additions, specific to streets, underground utilities and trail and sidewalk
expansion. A portion of the debt is funded by special assessments against benefited properties. In prior
years, the City has revised the Assessment Policy, and no longer levies special assessments for street
overlays. While this has not impacted the funding mechanisms for the majority of street projects, it does
require the identification of an alternative funding source, which has been identified as an additional
properiy ta�c levy, over the operational levy needed for the City. Recent discussions with the City Council
have involved the use of inter-fund transfers, existing fund balance position, as well as review of charges
and fees that may be applicable to the projects,and currently not tapped for future funding sources.
City Equipment needs are currently identified and funded in a manner that will not place an undue burden or
single year expense fluctuation on the taxpayers. The planned program clearly identifies the equipment
needs for current projects as well as future use, based on known and anticipated programs and mandates,
such as environmental program adjustments and possible community expansion and gowth. The 10 year
listing is presented to the City Council and public,as a part of budget planning and t�levy consideration.
Relevant Financial Policies
The City's target General Fund balance is to maintain an unassigned level between 40% (minimum) and
approximately 45% of current year expenditures. This level is to provide warking capital for cash flow,
expected decline in revenues and unforeseen expenditures such as natural disasters. Replenishing fund
balance when it falls below the target level shall be accomplished by inter-fund transfers or budgeting for
expenditures and other uses to be less than revenues or other sources over a period not to exceed three
years.
The City historically receives no local government aid (LGA) or market value homestead credit (MVHC)
from the State of Minnesota. Annual legislative actions may impact the financial position of cities that are
currently reliant on these and other revenue sources, leaving them vulnerable to the economies of the
State as a whole. As previously mentioned, the current legislative session, and legislative body as a
whole, do not indicate that the pending legislative actions will negatively impact the city and its'
operations and planning. The standard budget process, which provides for the presentation and approval
of the property tax levies for the General fund (including Economic Development), debt service and
referendum debt, will be consistent with prior year actions, as there does not appear to be any specific
changes to legislation impacting property tax rate structure, aid to cities or additional unfunded mandates.
The accounting, auditing and financial reporting policies are designed to maintain a system of financial
monitoring, control and reporting for all operations and funds in order to provide effective means of
ensuring that overall City goals and objectives will be met and to assure the City's residents and investors
that the City is well managed and fiscally sound.
The investment policy provides for conservative investing, preserving capital and maintaining adequate
liquidity for forecasted cash needs. A third party investment manager handles the majority of the portfolio
and all investments are held in a trust account.
The debt policy ensures that the City's debt; 1) does not weaken the City's financial structure; and 2)
provide limits on debt to avoid problems in servicing debt. This policy is critical for maintaining the best
possible credit rating.
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Capital policies include having expenditures forecast ahead for five to ten years and are updated annually.
Internal Service Funds for major equipment, major buildings and facilities, park asset replacement and
information technology costs stabilize the annual impact of those items to the General fund.
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 the City of Shakopee for its
Comprehensive Annual Financial Report(CAFR) far the fiscal year ended December 31, 2011. This was
the twenty eighth consecutive year that the City has received this award. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
CAFR. This report satisfied both GAAP and applicable legal requirements.
A Certificate of Achievement is valid far a period of one year only. We believe our current CAFR
continues to meet the Certificate of Achievement Prograi��'s requirements and we are submitting it to the
GFOA to determine its eligibility for another certificate.
The preparation of this report would not have been possible without the efficient and dedicated services of
the Finance Department and the entire city staff. We would like to express our appreciation to all staff
members who assisted and contributed to the preparation of this report. Credit also must be given to the
Mayor and Councilors for their unfailing support for maintaining the highest standards of professionalism
in the management of the City of Shakopee's finances.
Respectfully submitted,
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Mark McNeill Julie A.Linnihan
Administrator Finance Director
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INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members
of the City Council
City of Shakopee
Shakopee, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund and the aggregate
remaining fund information of the City of Shakopee, Minnesota, as of and for the year ended December
31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic
financial statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on t11e auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the City's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinions.
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Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund and the aggregate remaining fund information of
the City of Shakopee, Minnesota, as of December, 31 2012, and the respective changes in financial
position and, where applicable, cash flows thereof and the respective budgetary comparison of the
general fund for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Implementation of GASB 63
As discussed in Note 21 to the financial statements, the City has adopted the provisions of the
Governmental Accounting Standards Board (GASB) Statement No. 63,Financial Reporting of Deferred
Ou�ows of Resources, Deferred Inflows of Resources and Net Position.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America requi�-e that the management's
discussion and analysis and Schedule of Funding Progress for Retired Health Plan on pages 13 —24 and
page 76 respectively, 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 inquicies, 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 of Shakopee's basic financial statements. The accompanying
supplementary information as listed in the Table of Contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The accompanying supplementary information as listed in the Table of Contents are the responsibility of
management and were derived from and relates 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 supplementary information section is fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
10
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Other Information (Continued)
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 it.
Other Reporting Required by GovernmentAuditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 17, 2013
on our consideration of the City of Shakopee's internal control over financial reporting and on our tests
of its compliance with certain provision of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is 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
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with GovernmentAuditing Standards in considering the City of Shakopee's
� internal control over financial reporting and compliance.
��,,,.., Dew,��, �-� t.�P-
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 17, 2013
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(THIS PAGE LEFT BLANK INTENTIONALL�
12
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
As management of the City of Shakopee (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 year ended
December 31, 2012. 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 3 to 7 of this report.
Financial Highlights
• The assets of the City exceeded its liabilities at the close of the most recent year by$ 257.4
million (net position). Of this amount, $ 68.2 million (unrestricted net position) may be used to
meet the Ciry's ongoing obligations to citizens and creditors.
• The City's total net position increased by $ 1,731,421.
• As of the close of the current year, the City's governmental funds reported combined ending
fund balances of$ 31.7 million, increasing from the prior year. Approximately 28.7%of this
total amount, $ 9.1 million is available for spending at tl�e City's discretion (unassigned fund
balance).
• At the end of the current year, unassigned fund balance for the General Fund was $ 9.5 million,
or 50.9 %, of total General Fund expenditures.
• The City's total bonded debt increased $ 2,915,000. Refunding bonds were issued in the amount
of$ 4,865,000 which will refund two bonds in upcoming years.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3)Notes to the Financial Statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
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 private-sector business.
The Statement of Net Position presents information on all of the City's assets and liabilities, with the
difference between the two reported as net position. Over time, increases or decreases in net position
may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating.
The Statement of Activities presents information showing how the City's net position changed during
the most recent year. All changes in net position are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused employee leaves).
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,
13
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
highways and streets, economic development and recreation. The business-type activities of the City
include sewer and storm drainage utilities.
The government-wide financial statements include not only the City itself(known as the primary
government), but also two legally separate entities for which the City is financially accountable. The
component units are Shakopee Public Utilities Commission (SPUC) and the Economic Development
Authority(EDA). SPUC's financial information is reported separately from the financial information
presented for the primary government as a discretely presented component unit. The EDA, which
functions like a department of the City although it is a legally separate entity, is presented within the
City's government-wide financial statements. The City Council is the EDA Board.
The government-wide financial statements can be found on pages 26 and 27 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. All of
the funds of the City can be divided into three categories: governmental funds, proprietary funds and
fiduciary funds.
Government Funds
Government 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 year. Such
information may be useful in evaluating a City's near-term financing's 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 financing
decisions. The governmental funds Balance Sheet and the 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 30 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 General Fund, the 2004A Improvement Bond Debt Service Fund,
and the Capital Improvement Capital Project Fund. Those are considered to be major funds. Data from
the other governmental funds are combined into a single, aggregated presentation. Individual fund data
for each of these non-major governmental funds is provided in the form of combining statements
elsewhere in this report.
The City adopts an annual appropriated budget for its General Fund and two of its Special Revenue
Funds. A budgetary comparison statement has been prepared for those funds to demonstrate compliance
with the budget.
14
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
The basic governmental funds financial statements can be found on pages 28 to 31 of this report.
Proprietary Funds
The City maintains two different types of proprietary funds. 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 sewer and storm drainage operations. Internal service funds
are an accounting device used to accumulate and allocate costs internally among the City's various
functions. The City uses internal service funds to account for its fleet of vehicles and mobile equipment,
its major buildings, the replacement of park assets, information technology items and for employee
compensated absences. All of these services predominantly benefit governmental rather than business-
type functions.
Proprietary funds provide the same type of information as the government-wide financial statements.
The proprietary fund financial statements provide separate information for the sewer and storm drainage
operations, all of which are considered to be major funds of the City. Conversely, all internal service
funds are combined into a single, aggregated presentation in the proprietary fund financial statements.
Individual fund data for the internal service funds is provided in the form of combining statements
elsewhere in this report.
The basic proprietary fund financial statements can be found on pages 34 to 37 of this report.
Component Units
Component units are legally separate organizations for which the City is financially accountable. The
government-wide financial statements present information for the component units in a single column
on the Statement of Net Position. Also, some information on the Statement of Changes in Net Position
is aggregated for component units. The component units' Statements of Net Position and Statement of
Changes in Net Position provide detail for each major component unit.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government-wide financial statement because the resources of
those funds are not available to support the City's own programs.
The basic fiduciary fund financial statements can be found on page 38 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 to 73 of this report.
Other Information
In addition to the basic financial statements and accompanying notes,this report also presents certain
required suppletnentary infocmation concerning the City's progress in funding its obligation to provide
pension benefits to its employees.
15
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
The combining statements referred to earlier in connection with non-major governmental funds, internal
service funds and fiduciary funds are presented immediately following the required supplementary
information on pensions. Combining and individual fund statements and schedules can be found on
pages 80 to 98 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a City's financial position.
For the City, assets exceeded liabilities by $ 257.4 million at the close of the most recent year.
By far the largest portion of the City's net position(69.7 %)reflects its investment in capital assets (e.g.,
land,buildings and equipment); less any related debt used to acquire those assets that is still outstanding.
The City used 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 �•eported 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.
Net Position
(Expressed in Thousand)
Governir�ental Activities Busu�ess-Type Activities Total
2012 2011 2012 2011 2012 2011
Cwrent and Other Assets $ 54,141 $ 48,799 $ 34,525 $ 33,433 $ 88,666 $ 82,232
CapitalAssets 129,387 131,127 64,125 65,080 193,512 196,207
TotalAssets $ 183,528 $ 179,926 $ 98,650 $ 98,513 $ 282,178 $ 278,439
I,ong-Term Liabilities
Outstand'mg $ 18,793 $ 15,830 $ 1,089 $ 74 $ 19,882 $ 15,904
Other LiabilRies 4,807 5,428 82 1,431 4,889 6,859
TotalLiabilities $ 23,600 $ 21,258 $ 1,171 $ 1,505 $ 24,771 $ 22,763
NET PO SITION:
Invested'm Capital Assets,
Net ofRelated Debt $ 115,192 $ 114,982 $ 64,125 $ 65,080 $ 179,317 $ 180,062
Restricted 9,912 10,915 - - 9,912 10,915
Unresh-icted 34,824 32,771 33,354 31,928 68,178 64,699
TotalNetPosition $ 159,928 $ 158,668 $ 97,479 $ 97,008 $ 257,407 $ 255,676
An additional portion of the City's net position (4 %)represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net position ($ 68.2
million) may be used to meet the City's ongoing obligations to citizens and creditors.
16
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
At the end of the current year,the City was 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. The same situation held true for the prior year.
During the cucrent year,the City's net position increased by $ 1.7 million. This is a result of
conservative spending in 2012 as well as higher than anticipated property taxes and fiscal disparities.
Additionally charges for services increased due to increasing demands for public safety services and
intergovernmental revenue increased as a result of more state construction aid. The enterprise fund
activities experienced an increase in net position during 2012 with revenues increasing at a greater rate
than expenses, due to higher than anticipated usage, and lower than anticipated maintenance and
operational costs.
Changes in Net Position
(Expressed in Thousands)
Govenm�entalAcvtivrties Business-TypeActivrties Total
2012 2011 2012 2011 2012 2011
REVENLTES:
Program Revenues:
Charges far Services $ 7,574 $ 3,781 $ 5,170 $ 4,026 $ 12,744 $ 7,807
Operating Grants and
Corrtrbutions 2,107 3,606 - - 2,107 3,606
Capital Grants and
Cornrbutions 1,479 3,153 349 93 1,828 3,246
General Revenues:
Property Taxes 15,003 14,488 - - 15,003 14,488
OtherTaxes 114 161 - - 114 161
Other 558 1,032 424 758 982 1,790
Total Revenues 26,835 26,221 5,943 4,877 32,778 31,098
EXPINSES:
General Govemment 4,603 4,253 - - 4,603 4,253
Public Safety 9,431 9,237 - - 9,431 9,237
Public Works 7,083 7,094 - - 7,083 7,094
Economic Development 152 244 - - 152 244
Cuhi�re and Recreation 3,818 3,866 - - 3,818 3,866
Interest on I.ong-Term Debt 587 619 - - 587 619
Sewer - - 3,926 3,807 3,926 3,807
Storm - - 1,446 1,382 1,446 1,382
TotalE�enses 25,674 25,313 5,372 5,189 31,046 30,502
Increase(Decrease inNet
PosrtionbeforeTransfers 1,161 908 571 (312) 1,732 596
Transfers 100 100 (100) (100) - -
ChangeuiNetPosition 1,261 1,008 471 (412) 1,732 596
NET POSTION:
January 1 158,667 157,659 97,008 97,420 255,675 255,079
December 31 $ 159,928 $ 158,667 $ 97,479 $ 97,008 $ 257,407 $ 255,675
17
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
Governmental Activities
Governmental activities increased the City's net position by$ 1,260,310. The major increase was a
result of municipal state aid revenue received on prior and current year construction projects.
Expenses and Program Revenues—Governmental Activities
$io,000,000
$9,000,000
$s,000,000
��.000.000 —
$6.000.000 — -------- —
■Prosrazn Re�•enues
$5.000.000 ___ __ _ _
$4.000.000 ■Espenses
$3,000,000 ; � -_ _
$?.000.000
..
$1,000.000
$- �
-- ,., � � en
� :� ` '1 � C.) CJ
y � ^ � �
^ ✓� 3 J p �'1. '�
U � �? , � O
C7 — � ..`'i S c� ^ �
� � 7 �" "� �J t, V
U .
Revenues by Source—Governmental Activities
Other Revenues Operating Grauts
Charees for 2;% and
Services _Contributions
28°io 8°,%
'� �_
�� , � � Capital Grants
� ��� �� and
Contributions
Other Tales -- ,� `� 6°�0
0%
��
��,
Property Ta�es
56%
18
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
Business-Type Activities
Business-type activities increased the City's net position by $ 471,111. During 2011, it was determined
SPUC no longer met the criteria of a blended component unit and it was determined SPUC's funds
would be presented as discretely presented component units prospectively. Key elements of this
increase are as follows:
• Charges for services increased $ 1.1 million as the utility funds have experienced increased
revenue collections due to increased usage as well as more connection charges due to a rise in
new development.
• Expenses increased in 2012 due to higher Met Council fees, which are anticipated to continue
annually. This was offset by lower than anticipated maintenance and operational costs.
• The sewer and storm water activities will continue to experience a higher degree of expense, as
the deferral of maintenance will continue to put pressure on the funds, to meet the demands of
on-going and future development needs.
Expenses and Program Revenues—Business-Type Activities
$,�,500,000
$4,000,000 - _ _ _
_ � � �
$3,500,000 _ ����a �'� _ _
$3,000,000 _ �W.,.,, . _
$2,500,000 _ � ';, _ __ �Program
$2,000,000 - j � Re�-enues
'�� , ■Espenses
$1,500,000 � � ! ��
t I f ( �
$1,000,000 . �,; -
.;�,� �-.
$500,000 --- ,°" t � � ,��°.
'�`�
i 3. j"' rc`4��
��
Se���er Stonn
Revenues by Source—Business-Type Activities
Capital Grants
and
Contributions� ���
6%
/'
Investrnent_/ I _Char es for
Earnings - - g
�o o % Services
87°.'0
19
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds
The focus of the City's governmental funds is to provide infor�nation on near-term inflows, outflows and
balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, assigned and unassigned fund balance may serve as a useful measure of a
City's net resoucces avai(able for spending at the end of the year.
As of the end of the current year, the City's governmental funds reported combined ending fund
balances of$ 31,749,751, an increase of$ 7,706,685 in comparison with the prior year. Approximately
28.7%, ($ 9,118,687), of the total amount constitutes unassigned fund balance, which is available for
spending at the City's discretion. Approximately 28.8%, ($ 9,143,130), of the total amount constitutes
assigned fund balance, which is assigned for designated purposes. The remainder of fund balance,
($ 13,487,934), is not available for new spending because it has already been restricted or is
Non-spendable.
The General Fund is the chief operating fund of the City. At the end of the current year, fund balance of
the General Fund was $ 9,522,841. As a measure of the General Fund's liquidity, it may be useful to
compare fund balance (unassigned)to total fund expenditures. Fund balance represents 50.8%of total
General Fund expenditures.
Fund balance of the City's General Fund increased by $ 218,647 during the current year. Key factors in
this increase consist of the following:
• Before transfer fund balance of the General Fund resulted in a $ 3,076,247 increase. After the
net transfer of$ 2,857,600, fund balance increased $ 218,647. Transfers provided the necessary
funding for several significant capital infrastructure programs and projects, as well as funding for
the growing Information Technology needs of the City.
• Reimbursements for services increased in 2012, specific to services provided by Public Safety
division, for requested, specific services and events.
• Debt Service funds did not have specific levies for the 2012 budget year, and the transfers at year
end provided a needed funding source for these funds, allowing for the cash coverage for future
year bond payments
• Revenues exceeded the budget by $ 2.50 million, or 13%. Tax collections which reflect the
recent changes to the property tax classification and structure, specifically Market Value
Homestead Credit, have resulted in higher than previous year revenue collections. The 2012
revenue year reflects this positive adjustment, resulting in higher than anticipated and higher than
previous year revenue. This is a revenue source that can change annually, depending on the
adjustments to property tax classifications and structure, as addressed by the State Legislature.
Fiscal disparities, intergovernmental receipts, as well as charges for services from the component
unit provided a larger than anticipated revenue base.
• Under-spending the budget by $ 1.4 million, or 7.1%. City staff continued a trend of
conservative spending. Additionally staff vacancies that were unfilled and then filled at a lower
wage also impacted the under-budget expenditures. Anticipated budgets for utility fuel and
20
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
commodity costs were higher than experienced, allowing for many divisions to experience
expenditures under budget in 2012.
• The mild weather in 2012 impacted the expenditures specific to Public Works, as both personnel
costs and operational costs for ice control, snow plowing and street maintenance were
significantly lower than anticipated.
Proprietary funds
The City's prop�•ietary funds provide the same type of information found in the government-wide
financial statements, but in more detail.
Unrestricted net position of the enterprise funds:
Sewer Storm
Begu�ning ofYear $ 16,361 $ 15,509
Change During Year 426 947
End ofYear $ 16,787 $ 16,456
The City has undertaken several new development projects, beginning in 2012 and continuing into 2013,
which will expand both the collections of revenues for connection fees and charges for services. The
capital assets of the projects will increase the capital assets of these funds, as well as future year
depreciation charges. A portion of these projects are funded through special assessments, but a
significant portion of this is funded through the anticipated future revenues collected for services.
GENERAL FUND BUDGETARY HIGHLIGHTS
The original legally adopted budget for expenditures was $ 20,120,671 and transfers out were budgeted
at $ 0 with no budget adjustments. Actual expenditures of$ 18,694,101 were $ 1,426,570 under budget.
The variance was a result several unique events, including higher than anticipated position turnover and
the accompanying lag in replacement hiring time and lower than anticipated commodity costs.
Additionally weather related benefits such as a mild winter, and early spring resulted in Public Works
projects coming in under budget, and requiring many adjustments to planned workflow. The City was
diligent in obtaining many of the services and supplies originally budgeted for the year at a lower than
anticipated cost, such as training and training related costs, building maintenance costs and limited use
of the contingency funds which provide for unplanned events or occurrences.
The original and final adopted budgets for revenues were $ 19,268,810 and transfers in were
$ 1,072,400. Actual revenues of$ 21,770,348 were $ 2,501,538 over budget. This was a result of an
increase in collection of property taxes and fiscal disparities, as well as higher than anticipated lodging
tax. The lodging tax revenues are offset by related expenditures at a rate of 95%. Additionally the city
saw an increase in dividends from the League of Minnesota Cities Insurance Trust for both workers
compensation and property and liability coverage, as well as increased funding from the State for State
Aid Maintenance and other state aid funding sources.
21
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
The revenues received from the Electric and Water utility, component units, is recorded as a Charge for
Service, and the warm, dry weather increased revenues well beyond the anticipated budget.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for its governmental and business type activities as of
December 31, 2012, amounts to $ 179,316,358 (net of accumulated depreciation and related debt). This
investment in capital assets includes land, buildings and systems, improvement, machinery and
equipment, park facilities, roads, highways and bridges. The City's capital assets for the current year
were similar to the previous year, with an increase in construction in progress, and a decrease in related
debt.
Major capital assets events during the current year included the following:
• Main Street utility improvements,which provided for the utility replacement and resurfacing of
the Main Street area, north of Highway 101
• County State Aid Highway 21 and accompanying transportation improvements, specific to the
Southbridge Park and Ride. This road projects provided for the paving, curb, gutter, aggregate
base and other improvements for the Southbridge area of the community, a high growth and
transportation area
• County Road 69 Utility project, which provides for an intersection safety improvement area near
the Hwy. 169 exit ramp, connected to County Highway 17. This project will continue into future
years and involves multiple governmental entities
• Park expansion for several areas of the community, including the Green Meadows park
construction which is located in the Greenfield development, a residential neighborhood. This
project included a park shelter, and warming house, as well as other significant park amenities
� The 17th Ave. Sports Complex field lighting was completed in 2012, allowing for lighting at the
soccer complex for evening play, a requested park amenity
• Riverside Park construction will be delayed from the planned program of 2012, as staff continues
to determine cost to estimated budget and available funding. This project, near the residential
Riverside Bluffs subdivision is a multi-year planning and construction project
• Trail projects were undertaken for the County Road 18 area, connecting segments of existing
trails, as well as 101 trail extension, on the South portion of the 101 road way
• Several bituminous overlay projects were also undertaken in the community, to maintain the
infrastructure of the system
In the near future, the impact of planned business, commercial and residential expansions will impact
the type and funding of capital projects, as the economy in the area is experiencing upward and steady
growth and will impact planning and construction of roads,trails, parks and traffic flows and
management.
22
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
Capital Assets
(Net of Depreciation)
Expressed in Thousands
GovernmentalActiv�ies Busmess-Type Activities Total
2012 2011 2012 2011 2012 2011
Land $ 20,023 $ 19,488 $ 3,944 $ 3,944 $ 23,967 $ 23,432
ROW - - 75 75 75 75
Construction m Progress 3,841 5,300 1,289 1,745 5,130 7,045
L'me Rights - - 891 916 891 916
Infrastructure 73,708 74,817 56,597 56,886 130,305 131,703
Buiklmgs 24,634 24,230 - - 24,634 24,230
Machmery and Equipment 7,181 7,292 1,329 1,514 8,510 8,806
Total $ 129,387 $ 131,127 $64,125 $ 65,080 $ 193,512 $ 196,207
Additional information on the City's capital assets can be found in Note 6 on pages 58 to 60 of this
report.
In 2012, several projects that were "in progress"were continued and completed, as these projects often
involved the coordination with County, State and Federal entities. The status of these projects is highly
dependent on weather and the funding and staffing of cooperating entities, and will often impact the
ability of the City to complete these projects in the anticipated year.
Long-Term Debt
At the end of the current year,the City had total bonded debt outstanding of$ 19,060,000. Of this
amount, $ 5,460,000 comprises debt backed by the full faith and credit of the government and
$ 13,600,000 is special assessment debt for which the government is liable in the event of default by the
property owners subject to the assessment.
Outstanding Debt
G.O. and Revenue Bonds
Expressed in Thousands
Governmental Activities
2012 2011
G.O. Bonds $ 5,460 $ 5,905
Special Assessment Debt with
Governmental Commitment 13,600 10,240
Revenue Bonds - -
Total $ 19,060 $ 16,145
23
CITY OF SHAKOPEE
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2012
The City's total bonded debt increased by $ 2,195,000 during the current year.
Minnesota Statutes limit the amount of general obligation(G.O.) debt a government entity may issue to
a net figure of 3%of the taxable market value. The current legal debt margin for the City is $ 99
million, which is significantly in excess of the City's outstanding G.O. debt.
Additional information on the City's long-term debt can be found in Note 7 on pages 60-63 of this
report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The unemployment rate for the state was 5.0%at year-end. This is a decrease from prior years rates.
The City is continuing to benefit from the strong workforce and excellent transportation system of the
region. There are currently several business entities approaching the EDA and City Council for Tax
Increment Financing and tax abatement proposals. These business ventures will bring not only a strong
base of varied jobs to the area but enhanced tax base for the recently developed commercial and
industrial sites.
During the current year, the unassigned fund balance in the General Fund was $ 9,503,652. This can be
similarly compared to the unassigned fund balance of 2011 of$ 9,172,000. The City has maintained a
strong financial position, even with the decrease in certain revenue categories, such as permit revenue,
as the strong cash flows from other areas has been consistent.
The tax levy for 2012/2013 is increased to 15,333,223, in comparison to the prior year amount of
$ 14,837,000. This levy increase was approved to provide funding for several position that are to be
filled in the City operations, such as a Human Resources specialist,Natural Resources Coordinator,
Crime Prevention Specialist, as well as additional funding needed for the Capital Improvement fund, and
planned infrastructure activity of 2013. The upcoming year will be a major street reconstruction project
year, and only 30 %of some of the project costs are funded through special assessments which will
require a firm commitment of the Council to provide needed resources for maintenance and
improvements to the existing infrastructure.
Utility rates for the Electric and Water Enterprise Funds slightly increased in 2012. City staff will begin
review of the rates and charges related to the Sewer and Storm water funds, in 2013. The City will be
reviewing and revising many areas of the Council approved rate chart and rate schedule in upcoming
months. It has been several years since these specific areas of revenue and cash flow have been analyzed
in detail, and the coordination of the staff and council are critical in maintaining an accurate fee plan for
the many components of the City operations. The infrastructure planning and development as well as
coordination with capital programs of the City, County and SPUC, as well as coordination with private
developers and business and commercial entities will determine and drive many of the planned and
unplanned projects and expenditures in 2013.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general view of the City's finances for all those with an
interest in the City's finances. Questions concerning any of the information provided in this report or
requests for additional information should be addressed to the Finance Director, 129 Holmes St. S.,
Shakopee, Minnesota, 55379.
24
BASIC FINANCIAL STATEMENTS
25
CITY OF SHAKOPEE
STATEDZENT OF NET POSTION
December 31,2012
Governmental Business-Type
Activities Activities Total Component Unit
ASSETS
Cash and Investments(Including Cash Equivalents) $ 42,946,914 $ 32,563,019 $ 75,509,933 $ 29,226,437
Restricted Cash and Investments 4,881,561 - 4,881,561 8,979,575
Property Tax Receivable 235,011 - 235,011 -
Accounts Receivable(Net of Allowance for
UncollectibleAccounts) 438,149 - 438,149 3,532,567
InterestReceivable 186,956 141,138 328,094 41,630
Due From Other Govemments 1,181,070 1,173,841 2,354,911 63,572
Special Assessments Receivable 4,062,579 154,884 4,217,463 -
Inventories - - - 977,414
Prepaid Expenses 19,189 - 19,189 84,495
Notes Receivable 19Q000 - 190,000 -
Unamortized Debt Issue Costs - - - 438,145
Electric Plant Acquisition(Net of Accumulated
Amortization) - - - 262,104
Long-Term SAC Credits - 492,322 492,322 -
Capital Assets,Net of Accumulated
Depreciaiton(Where Applicable):
Land and Land Improvements 20,023,040 3,944,380 23,967,420 -
Right of Way - 75,000 75,000 -
Construction in Progress 3,841,256 ],288,695 5,129,951 137,942
Line Rights - 891,009 891,009 -
Infrastructure 73,707,331 56,596,735 130,304,066 -
Plant in Service - - - 72,279,728
Buildings 24,633,986 - 24,633,986 -
Machinery and Equipment 7,181,155 1,328,771 8,509,926 -
TotalAssets $ 183,528,197 $ 98,649,794 $ 282,177,991 $ 116,023,609
LIABILITIES AND NET POSTTION
Liabilities
Accounts and Contracts Payable $ 671,225 $ 24,608 $ 695,833 $ 3,539,060
Other Current Liabilities - 19,422 19,422 211,613
Due to Other Governments 540,980 521,198 1,062,178 899,586
Salaries and Benefits Payable 463,998 - 463,998 -
Deposiu Payable - - - 1,156,784
Interest Payable 277,046 - 277,046 326,369
Unearned Revenue - 492,322 492,322 -
Customer Advances - - - 134,072
Bond Principal Payable,Net:
Payable Within One Year 2,070,000 - 2,070,000 9,090,000
Payable After One Year 16,990,000 - 16,990,000 8,251,414
Compensated Absences Payable:
Payable Within One Year 784,164 31,277 815,441 -
Payable After One Year 958,423 38,226 996,649 -
Net Other Post Employment Benefits(OPEB)Obligation 844,330 43,630 887,960 -
Total Liabilities 23,600,166 1,170,683 24,77Q849 23,608,898
Net Position
Net Investment in Capital Assets 115,191,768 64,124,590 179,316,358 55,776,505
Restricted for:
Economic Development 562,959 - 562,959 -
Cable PEG Fees 66,989 - 66,989 -
Transit 1,045,340 - 1,045,340 -
Forfeiture 195,823 - 195,823 -
Debt Service 8,041,440 - 8,041,440 -
Component Units - - - 7,388,373
Unrestricted 34,823,712 33,354,521 68,178,233 29,249,833
TotalNetPosition 159,928,031 97,479,ll1 257,407,142 92,414,711
Total Liabilities and Net Position $ 183,528,197 $ 98,649,794 $ 282,177,991 $ 116,023,609
The Notes to the Financial Statements are an integal part of this statement. 26
CITY OF SHAKOPEE
STATEMEN'C OF ACTIVI"I'IES
Forthe Year Ended December31,2012
Net(Expense)Revenues
Program Revenues and Changes in Net Position
Operating Capital Grants
Charges for Grants and and Governmental Business-Type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Component Units
Governmental Activities
General Govemment $ 4,603,027 S 3,356,772 $ 705,900 S - S (540,355) $ - $ (540,355) S -
Pubiic Safety 9,430,785 1,524,158 533,282 - (7,373,345) - (7,373,345) -
Public Works 7,083,299 454,145 713,354 1,475,676 (4,440,124) - (4,440,124) -
Economic Development 152,541 16,500 15,000 3,667 (117,374) - (I ll,374) -
CulNre and Recreation 3,SI7,677 2,222,430 139,023 - (1,456,224) - (1,456,224) -
Interest on Long-Term Debt 587,384 - - (587,384) (587,384)
TotalGovemmenlalActivities 25,674,713 7,574,005 2,106,559 1,479,343 (14,514,806) (14,514,806)
Business-Type Activities
Sewer 3,926,541 3,728,189 - A6,462 - (151,890) (151,890) -
Stortn Drainage 1,445,633 1,442,394 - 302,294 - 299,055 299,055 -
TotalBusiness-TypeAaivities 5,372,174 5,170,583 - 348,756 - 147,165 147,165 -
TotalPrimaryGovemment $ 31,046,887 $ 12,744,588 $ 2,106,559 S 1,828,099 (14,514,806) 147,165 (14,367,641) -
Component Unit-SPtiC
Elec[ric $ 36,078,321 $ 40,050,172 $ - S 122,617 - - - 4,094,468
Water 4,624,441 5,395,965 1,858,647 2,63Q171
TotalComponentUnit $ 40,702,762 S 45,446,137 $ - $ 1,981,264 - - - 6,724,639
General Revenuea
Property Taxes 15,002,764 - 15,002,764 -
TaxIncremen[s 113,902 - 113,902 -
UnrestrictedlnvestmentFamings 546,681 423,946 97Q627 118,274
Crain on Sale of Asset 11,769 - 11,769 -
Transfers 100,000 (100,000)
Total General Revenues and Transfers 15,775,116 323,946 16,099,062 ll8,274
Change in Net Position 1,26Q310 471,111 1,731,421 6,842,913
Vet Position-Beginning 158,667,721 97,00$000 255,675,721 85,571,798
Net Position-Ending $ 159,928,031 $ 97,479,111 S 257,407,142 $ 92,414,711
� 'Ihe Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
BALANCE SHEET-GOVEI2.'VZVIENTAL FUNDS
December 31,2012
Debt Service Capital Project
2004A Other Total
Improvement Capital Governmental Governmental
General Fund Bonds Improvements Funds Funds
ASSETS
Cash and Investments $ 9,496,035 $ 320,951 $ 8,006,696 $ 8,771,164 $ 26,594,846
Cash with a Fiscal Agent - 1,135,000 - 3,746,561 4,881,561
Delinquent Tvices Receivable 232,968 - - 2,043 235,011
Special Assessments Receivable:
Delinquent 5,477 - 131 19,085 24,693
Defened 33,849 1,882,716 415,842 1,705,479 4,037,886
Accounts Receivable 262,978 - - 175,171 438,149
InterestReceivable 53,683 1,394 27,748 31,133 113,958
Due from Other Funds - - 383,296 - 383,296
Due From Other Governments 537,305 - 638,842 4,923 1,181,070
Prepaid Items 19,189 - - - 19,189
Total Assets $ 10,641,484 $ 3,340,061 $ 9,472,555 $ 14,455,559 $ 37,909,659
LIABILITIES AND FUND
BALANCES
Liabilities
Accounts Payable $ 305,385 $ 200 $ ll,487 $ 136,268 $ 453,340
Contracts Payable - - 5,019 19,696 24,715
Dueto OtherFunds - - - 383,296 383,296
Due to Other Governments 76,966 - 358,601 101,402 536,969
Salaries and Benefits Payable 463,998 - - - 463,998
Deferred Revenue 272,294 1,882,716 415,973 1,726,607 4,297,590
Total Liabilities 1,118,643 1,882,916 791,080 2.367,269 6,159,908
Fund Balances
Nonspendable 19,189 - - - 19,189
Restricted - 1,457,145 - 12,011,600 13,468,745
Assigned - - 8,681,475 461,655 9,143,130
Unassigned 9,503,652 - - (384,965) 9,ll8,687
Total Fund Balances 9,522,841 1,457,145 8,681,475 12,088,290 31,749,751
Total Liabilities and
Fund Balances $ 10,641,484 $ 3,340,061 $ 9,472,555 $ 14,455,559 $ 37,909,659
The Notes to the Financial Statements are an integral part of this statement. 28
CITY OF SHAKOPEE
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET POSITION- GOVERNMENTAL FUNDS
December 31, 2012
Total Fund Balances - Governmental Funds $ 31,749,751
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial
resources and,therefore, are not reported as assets in governmental funds.
Cost of Capital Assets 157,487,167
Less Accumulated Depreciation (61,657,216)
Long-term liabilities, including bonds payable, are not due and payable in
the current period and, therefore, are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
Bond Principal Payable (19,060,000)
Net OPEB Obligation (844,330)
Delinquent property taxes and assessments receivable will be collected this
year, but are not available soon enough to pay for the current period's
expenditures and, therefore, are deferred in the funds.
Property Taxes 235,011
Special Assessments 24,693
Deferred special assessments receivable are not available to pay for current
expenditures and, therefore, are deferred in the funds.
Deferred Special Assessments 4,037,886
Governmental funds do not report a liability for accrued interest
due and payable. (277,046)
Internal service funds are used by management to charge the costs of
equipment, buildings,park assets and employee benefits to individual funds.
A portion of the assets and liabilities of those funds are included in
governmental activities in the Statement of Net Position. 48,232,115
Total Net Position - Governmental Activities $ 159,928,031
The Notes to the Financial Statements are an integral part of this statement. 29
CITY OF SHAKOPEE
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-GOVERNME�'TAL FUNDS
For the Year Ended December 31,2012
Debt Service Capital Projects
2004A Other Total
Improvement Capital Govemmental Governmental
General Fund Bonds Improvements Funds Funds
REVENUES
Property Taxes $14,773,080 $ - $ - $ 254,921 $ 15,028,001
Ta�cIncrement - - - 113,902 113,902
Special Assessments 13,228 239,069 347,843 899,670 1,499,810
LicensesandPermits 1,229,184 - - 1,212,062 2,441,246
Intergovernmental 991,445 - 788,842 768,405 2,548,692
Charges for Services 4,035,921 - - 413,082 4,449,003
Fines and Forfeitures 368,167 - - 50,307 418,474
Miscellaneous 359,323 (767) 132,038 346,274 836,868
Total Revenues 21,770,348 238,302 1,268,723 4,058,623 27,335,996
EXPENDITtiRES
Current
General Government 3,112,118 - - 1,284,101 4,396,219
Public Safety 9,408,233 - - 75,766 9,483,999
Public Works 2,349,042 - - - 2,349,042
Culture and Recreation 3,792,729 - - 6,994 3,799,723
Economic Development - - - 155,692 155,692
Debt Service
Principal - 285,000 - 1,665,000 1,950,000
Interest and Other Chazges - 74,342 - 559,721 634,063
CapitalOutlay 31,979 - 1,5�1,495 580,579 2,164,053
Total Expenditures 18,694,101 359,342 1,551,495 4,327,853 24,932,791
Excess of Revenues Over
(Under)Expenditures 3,076,247 (121,040) (282,772) (269,230) 2,403,205
OTHER FINANCING SOURCES
(USES)
Bonds Issued - 1,135,000 - 3,730,000 4,865,000
Premium on Bonds Issued - - - 73,480 73,480
Transfers In 122,400 - 2,000,000 1,245,000 3,367,400
Transfers Out (2,980,000) - - (22,400) (3,002,400)
Total Other Financing
Souroes(Uses) (2,857,600) 1,135,000 2,000,000 5,026,080 5,303,480
Net Change in Fund
Balances 218,647 1,013,960 1,717,228 4,756,850 7,706,685
FUND BALANCES
BeginningofYear 9,304,194 443,185 6,964,247 7,331,440 24,043,066
End of Year $ 9,522,841 $ 1,457,145 $ 8,681,475 $ 12,088,290 $31,749,751
The Notes to the Financial Statements aze an integral part of this statement. 30
CITY OF SHAKOPEE
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTIVITIES-GOVERNMENTAL FUNDS
For the Year Ended December 31,2012
Net Change in Fund Balances-Governmental Funds $ 7,706,685
Amounts reported for governmental activities in the Statement of Activities are
different because:
Capital outlays are reported in governmental funds as expenditures. However, in the
Statement of Activities,the cost of those assets is allocated over the estimated useful
lives as depreciation expense.
Capital Outlays 1,957,893
Depreciation Expense (4,424,788)
Loss on Disposal of Fixed Assets (12,274)
Contributed Assets 535,000
Principal payments on long-term debt are recognized as expenditures in the
governmental funds but as an increase in the net position in the Statement of Activities. 1,950,000
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 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. (26,801)
Certain revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Special Assessments (1,264,363)
OPEB obligations are recognized when paid in the government funds but recognized
when incurred in the Statement of Activities (146,227)
Delinquent and deferred receivables will be collected this year,but are not
available soon enough to pay for the current period's expenditures and,therefore,
are not revenues in the funds. (25,237)
Internal service funds are used by management to charge the costs of certain
activities such as buildings, equipment,park assets and employee benefits to
individual funds. (See Note 2.B.) (124,578)
Change in Net Position-Governmental Activities $ 1,260,310
The Notes to the Financial Statements are an integral part of this statement. 31
(THIS PAGE LEFT BLANK INTENTIONALLY)
32
CITY OF SHAKOPEE
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-
BUDGET AND ACTUAL-GENERAL FUND
For the Year Ended December 31,2012
Variance with
Original and Actual Final Budget-
Final Budget Amounts Over (Under)
REVENUES
PropertyTaxes $ 13,407,920 $ 14,773,080 $ 1,365,160
Special Assessments 13,000 13,228 228
Licenses and Permits 1,275,300 1,229,184 (46,116)
Intergovernmental 749,560 991,445 241,885
Charges for Services 3,040,630 4,035,921 995,291
Fines and Forfeitures 436,000 368,167 (67,833)
Miscellaneous Revenues:
Investment Income 275,000 89,975 (185,025)
Contributions and Donations 3,000 24,860 21,860
Rents 4,400 7,436 3,036
Other 64,000 237,052 173,052
Total Revenues 19,268,810 21,770,348 2,501,538
EXPENDITURES
Current
General Government 3,497,307 3,112,118 (385,189)
Public Safety 9,667,231 9,408,233 (258,998)
Public Works 2,868,352 2,349,042 (519,310)
Parks and Recreation 3,992,281 3,792,729 (199,552)
Capital Outlay
General Government 5,500 5,290 (210)
Public Safety 80,000 - (80,000)
Public Works 10,000 26,689 16,689
Total Expenditures 20,120,671 18,694,1 O 1 (1,426,570)
Excess of Revenues Over
(Under)Expenditures (851,861) 3,076,247 3,928,108
OTHER FINANCING SOURCES(USES)
Transfers In 1,072,400 122,400 (950,000)
Transfers Out - (2,980,000) (2,980,000)
Total Other Financing Sources
(Uses) 1,072,400 (2,857,600) (3,930,000)
Net Change in Fund Balances $ 220,539 218,647 $ (1,892)
FUND BALANCES
Beginning of Year 9,304,194
End of Year $ 9,522,841
The Notes to the Financial Statements are an integral part of this statement. 33
CITY OF SHAKOPEE
STATEMENT OF NET POSITION-PROPRIETARY FUNDS
December 31,2012
Business-Type Activities-Enterprise Funds
Governmental
Activities-
Storm Intemal
Sewer Drainage Total Service Funds
ASSETS
Current Assets
Cash and Investments,Including Cash Equivalents $ 16,403,968 $ 16,047,835 $ 32,451,803 $16,463,284
InterestReceivable 71,488 69,650 141,138 72,998
Special Assessment Receivable:
Delinquent 16,538 259 16,797 -
Deferred 138,011 76 138,087 -
Notes Receivable,Current - - - 95,000
Due from Other Govemments 752,462 421,379 1,173,841 -
TotalCurrentAssets 17,382,467 16,539,199 33,921,666 16,631,282
Noncurrent Assets
Long-Term SAC Credits 492,322 - 492,322 -
Notes Receivable,Noncurrent - - - 95,000
Capital Assets:
Land 4,500 3,939,880 3,944,380 -
Right of Way - 75,000 75,000 -
Construction in Progress 508,110 780,585 1,288,695 150,752
Line Rigltts 1,368,569 - 1,368,569 -
Infrastructure 37,794,904 37,881,387 75,676,291 2,923,925
Buildings - - - 34,795,354
Machinery and Equipment 1,815,659 806,550 2,622,209 12,253,573
Total Cost 41,491,742 43,483,402 84,975,144 50,123,604
Less Accumulated Depreciation (10,631,213) (10,219,341) (20,850,554) (16,566,787)
Net Capital Assets 30,860,529 33,264,061 64,124,590 33,556,817
TotalNoncurrentAssets 31,352,851 33,264,061 64,616,912 33,6�1,817
Total Assets $48,735,318 $49,803,260 $ 98,538,578 $50,283,099
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable $ 8,179 $ 16,428 $ 24,607 $ 193,170
Contracts Payable 9,944 9,478 19,422 -
Due to Other Govemments 505,326 15,873 521,199 4,011
Cuaent Compensated Absences 22,526 8,751 31,277 784,164
Total Current Liabilities 545,975 50,530 596,505 981,345
Noncurrent Liabilities
Uneamed Revenue 492,322 - 492,322 -
Compensated Absences 27,531 10,695 38,226 958,423
Net OPEB Obligation 21,815 21,815 43,630 -
TotalNoncurzentLiabilities 541,668 32,510 574,178 958,423
Total Liabilities 1,087,643 83,040 1,170,683 1,939,768
Net Position
Net Investment in Capital Assets 30,860,529 33,264,061 64,124,590 33,556,817
Unrestricted 16,787,146 16,456,159 33,243,305 14,786,514
Total Net Position 47,647,675 49,720,220 97,367,895 48,343,331
Total Liabilities and Net Position $48,735,318 $49,803,260 $50,283,099
Adjustment to Reflect the Consolidation of Internal Service
Fund Activiry Related to Enterprise Funds(See Note 2c) 111,216
Total Business-Type Activities Net Position $ 97,479,111
The Notes to the Financial Statements are an integral part of this statement. 34
CITY OF SHAKOPEE
STATEA4ENT OF REVENUES,EXPENSES AND CHANGES
IN Fti�'D NET POSITION-PROPRIETARY FUNDS
For the Year Ended December 31,2012
Business-Type Activities-Enterprise Funds
Governmental
Activities-
Internal Service
Sewer Storm Drainage Total Funds
OPERATING REVENiJES
Charges for Services $ 3,730,226 $ 1,037,427 $ 4,767,653 $ -
Rental and Other Chazges - - - 2,063,140
TotalOperatingRevenues 3,730,226 1,037,427 4,767,653 2,063,140
OPERATInG EXPENSES
Salaries and Benefits 293,925 453,613 747,538 123,495
Depreciation 730,107 685,645 1,415,752 1,683,317
Professional Services 86,850 65,821 152,671 9,554
Sewer Disposal Charges 2,348,064 - 2,348,064 -
Repairs and Maintenance 90,267 136,666 226,933 32,022
Materials and Supplies 27,203 50,533 77,736 274,501
Rent 37,703 55,445 93,148 -
Insurance 26,563 23,243 49,806 -
Utilities 312,587 1,395 313,982 -
TotalOperatingExpenses 3,953,269 1,472,361 5,425,630 2,122,889
Operating Loss (223,043) (434,934) (657,977) (59,749)
NONOPERATING REVENUES
(EXPENSES)
Investment Income 214,615 209,331 423,946 238,191
Special Assessments 15,025 340 15,365 -
Grants and Contributions - 290,020 290,020 -
Loss on Sale of Asset - - - 11,769
Other Income (U,062) 404,627 387,565 -
Total Nonoperating Revenues
(Expenses) 212,578 904,318 1,ll6,896 249,960
Income before Capital
Contributions and Transfers (10,465) 469,384 458,919 190,211
Capital Contributions 46,462 12,274 58,736 3,667
Transfers In - - - 200,000
Transfers Out (50,000) (50,000) (100,000) (465,000)
Change in Net Position (14,003) 431,658 417,655 (71,122)
NET POSITION
Beginning of Year 47,661,678 49,288,562 96,950,240 48,414,453
End of Year $ 47,647,675 $ 49,720,220 97,367,895 $ 48,343,331
Adjustment to Reflect the Consolidation of Internal Service
Fund Activity Related to Enterprise Funds(See Note 2d) 53,456
Change in Net Position-Business-Type Activities $ 471,111
The Notes to the Financial Statements are an integral part of this statement. 35
CITY OF SHAKOPEE
STATEMENT OF CASH FLOWS-PROPRIETARY FUNDS
For the Year Ended December 31,2012
Business-Type Activities-Enterprise Funds
Governmental
Activities-
Storm Internal
Sewer Drainage Total Service Funds
CASH FLOWS-OPERATING ACTIVITIES
Receipts from Customers and Users $ 3,288,131 $ 1,034,434 $ 4,322,565 $ 2,063,140
Payments to Suppliers (2,460,694) (329,381) (2,790,075) (476,398)
Payments to Employees (289,393) (450,462) (739,855) (84,806)
Net Cash Flows-Operating
Activities 538,044 254,591 792,635 1,501,936
CASH FLOWS-NONCAPITAL
FINANCING ACTIVITIES
Transfer from Other Funds - - - 200,000
Transferto OtherFunds (50,000) (50,000) (100,000) (465,000)
Net Cash Flows-Noncapital
Financing Activities (50,000) (50,000) (100,000) (265,000)
CASH FLOWS-CAPITAL AND RELATED
FINANCING ACTIVITIES
Trunk Charges (17,062) 404,627 387,565 -
Capital Related Special Assessments 47,032 - 47,032 -
Intergovernmental Capital Grant - - - -
Proceeds from Disposal of Capital Assets - - - 248,485
Acquisition of Capital Assets (289,564) (158,434) (447,998) (1,977,737)
Net Cash Flows-Capital and
Related Financing Activiries (259,594) 246,193 (13,401) (1,729,252)
CASH FLOWS-INVESTING ACTIVITIES
Payment Received for Notes Receivable - - - 90,000
Interest and Dividends Received 207,132 202,296 409,428 230,814
Net Cash Flows-Investing
Activities 207,132 202,296 409,428 320,814
Net Change in Cash and Cash Equivalents 435,582 653,080 1,088,662 (171,502)
CASH AND CASH EQUIVALENTS
Beginning of Year 15,968,386 15,394,755 31,363,141 16,634,786
End of Year $16,403,968 $16,047,835 $32,451,803 $ 16,463,284
The Notes to the Financial Statements are an integral part of this statement. 36
CITY OF SHAKOPEE
STATEMENT OF CASH FLOWS-PROPRIETARY FUNDS
For the Year Ended December 31,2012
(Continued)
Business-Type Activities-Enterprise Funds
Governmental
Activities-
Storm Internal
Sewer Drainage Total Service Funds
RECONCILIATION OF OPERATING
INCOME(LOSS)TO NET CASH FLOWS-
OPERATING ACTNITIES
Operating Loss $ (223,043) $ (434,934) $ (657,977) $ (59,749)
Adjustments to Reconcile Operating
Income(Loss)to Net Cash Flows-
Operating Activities:
Depreciation and Amortization Expense 730,107 685,645 1,415,752 1,683,317
Change in Assets and Liabilities:
Accounts Receivable,Net (442,095) (3,541) (445,636) -
Special Assessments Receivable - 548 548 -
Due to Other Governments 505,326 15,873 521,199 24
Accounts Payable (46,727) (18,917) (65,644) (160,345)
Contracts Payable 9,944 6,766 16,710 -
Compensated Absences Payable 846 (535) 311 38,689
Net OPEB Obligation 3,686 3,686 7,372 -
Total Adjustments 761,087 689,525 1,450,612 1,561,685
Net Cash Flows-
Operating Activities $ 538,044 $ 254.591 $ 792,635 $ 1,501,936
NONCASH INVESTING,CAPITAL AND
FINANCING ACTIVITIES
Recognition of Sewer Access Capacity
Credits as Asset and Unearned Revenue $ 814,837 $ - $ 814,837 $ -
Contribution of Capital Asset 46,462 12,558 59,020 3,667
The Notes to the Financial Statements are an integral part of this statement. 37
CITY OF SHAKOPEE
COMBINED STATEMENT OF FIDUCIARY NET POSITION
December 31,2012
Total Agency
Funds
ASSETS
Cash and Investments $ 1,481,090
Receivables:
Interest Receivable 3,119
Due from Other Governments 50,033
Total Assets $ 1,534,242
LIABILITIES
Accounts Payable $ 677,467
Due to Other Governments 21,380
Deposits Payable 835,395
Total Liabilities $ 1,534,242
The Notes to the Financial Statements are an integral part of this statement. 38
CITY OF SHAKOPEE
STATEMENT OF NET POSITION-CONIPONErT UNTT-SPUC
December 31,2012
Enterprise Funds
Electric Water Total
ASSETS
Current Assets
Cash and Investments $ 24,383,802 $ 4,842,635 $ 29,226,437
Restricted Assets:
Sinking Account 838,266 28,938 867,204
Accrued Interest Receivable 33,659 7,971 41,630
Customer Accounts Receivable 3,264;380 292,640 3,557,020
Allowance for Uncollectible Accounts (45,282) (12,805) (58,087)
Other Accounts Receivable 7;337 26,297 33,634
Due from City of Shakopee 48,155 15,417 63,572
Inventory 941,357 36,057 977,414
PrepaidExpenses 63,371 21,124 84,495
Total Current Assets 29,535,045 5,258,274 34,793,319
Noncurrent Assets
Restricted Assets:
Customer Deposits Account 1,148,735 8,049 1,156,784
Connection Account - 5,986,987 5,986,987
Water Reconstruction Account - 868,600 868,600
Emergency Repairs Account 100,000 - 100,000
Capital Assets:
Plant in Service 53,094,177 47,578,086 100,672,263
Accumulated Depreciation (15,750,607) (12,641,928) (28,392,535)
ConstructioninProgress 101,328 36,614 137,942
Other Assets:
Unamortized Debt Issuance Costs 421,067 17,078 438,145
Electric Plant Acquisition,Net 262,104 - 262,104
Total Noncurrent Assets 39,376,804 41,853,486 81,230,290
Total Assets $ 68,911,849 $ 47,111,760 $116,023,609
LLIBILITIES AND NET ASSETS
Current Liabilities
Accounts Payable $ 3,102,129 $ 436,931 $ 3,539,060
Due to City of Shakopee 61,390 838,196 899,586
Other Current Liabilities 146,629 64,984 211,613
Current Portion of Revenue Bonds 7,820,000 680,000 8,500,000
Total Current Liabilities 11,130,148 2,020,111 13,150,259
Liabilities Payable from Restricted Assets
Cunent Portion of Revenue Bonds 572,000 18,000 590,000
Accrued Interest Payable 313,932 12,437 326,369
CustomerDeposits 1,148,735 8,049 1,156,784
Total Liabilities Payable from Restricted Assets 2,034,667 38,486 2,073,153
Noncurrent Liabilities
Revenue Bonds 9,195,000 - 9,195,000
Unamortized Loss on Refunding (887,542) (56,044) (943,586)
Customer Advances 75,246 58,826 134,072
Total Noncurrent Liabilities 8,382,704 2,782 8,385,486
Total Liabilities 21,547,519 2,061,379 23,608,898
Net Position
Investment in Capital Assets 21,428,611 34,347,894 55,776,505
Restricted 524,334 6,864,039 7,388,373
Unrestricted 25,411,385 3,838,448 29,249,833
Total Net Position 47,364,330 45,050,381 92,414,7ll
Total Liabilities and Net Position $ 68,911,849 $ 47,111,760 $1]6,023,609
The Notes to the Financial Statements are an integral part of these statements. 39
CITY OF SHAKOPEE
STATEMENT OF REVENUES,EXPENSES AND CHANGES
IN FUND NET POSITION-COMPONENT UNIT-SPUC
For the Year Ended December 31,2012
Enterprise Funds
Electric Water Total
Operating Revenues $39,732,240 $ 5,287,076 $45,019,316
Operating Expenses
Operation,Customer and Administrative 32,179,990 2,426,214 34,606,204
Depreciation of Capital Assets 1,707,314 1,109,321 2,816,635
Depreciation of Plant Acquisition 23,141 - 23,141
Amortization of Plant Acquisition 63,004 - 63,004
Total Operating Expenses 33,973,449 3,535,535 37,508,984
Operating Income 5,758,791 1,751,541 7,510,332
NONOPERATING REVENUES(EXPENSES)
Rentals and Miscellaneous 227,932 99,551 327,483
Interdepartmental Rent from Water 90,000 - 90,000
Investment Income 102,323 15,951 118,274
Interest Expense (757,491) (29,917) (787,408)
Amortization of Debt Issuance Costs and
Loss on Refunding (81,168) (4,718) (85,886)
Gain(Loss)on Disposition of Property (965) 9,338 8,373
Total Nonoperating Revenues(Expenses) (419,369) 90,205 (329,164)
Income Before Contributions and Transfers 5,339,422 1,841,746 7,181,168
Capital Contributions 122,617 1,858,647 1,981,264
Transfers to Municipality (1,265,248) (1,054,271) (2,319,519)
Change in Net Assets 4,196,791 2,646,122 6,842,913
NET ASSETS
Beginning of Year 43,167,539 42,404,259 85,571,798
End of Year $47,364,330 $45,050,381 $92,414,7ll
The Notes to the Financial Statements are an integral part of these statements. 40
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Shakopee is a statutory city governed by an elected mayor and four council members. The
accompanying financial statements present the government entities for which the government is
considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds,
organizations, institutions, agencies, departments and offices that are not legally separate from such.
Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the 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 it 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.
As a result of applying the component unit definition criteria above, certain organizations have been
defined and are presented in this report as follows:
Blended Component Unit—Reported as if they were part of the City.
Discretely Presented Component Unit—Entails reporting the component unit financial data in
statements separate from the financial date of the City.
Joint Ventures and Jointly Governed Organizations—The relationship of the City with the entity is
disclosed.
For each of the categories above, the specific entities are identified as follows:
1. Blended Component Unit
The Shakopee Economic Development Authority(EDA)was organized to promote development,
improve housing and reduce blighted areas in the City. It is included by reason of the City Council
having final approval for Shakopee EDA actions and the Shakopee EDA Board being comprised
entirely of City Council Members. City staff handles Shakopee EDA activity including Shakopee
EDA funds and the City approves Shakopee EDA tax levies and bonding activity. Therefore,the
City has financial oversight for Shakopee EDA activities.
The activity of the Shakopee EDA is shown in the Shakopee EDA Special Revenue Fund in the
Ciry's financial statements. No separate financial statements for the Shakopee EDA are issued. For
any information desired beyond what is presented in this report, contact the Finance Director for the
City of Shakopee at 129 Holmes Street South, Shakopee, Minnesota 55379-1351.
41
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
2. Discretely Presented Component Unit
The electric and water utilities of the Shakopee Public Utilities Commission (SPUC) are self-
supporting entities and collectively comprise separate enterprise funds of the City of Shakopee (the
"City"). The utility provides electric and water operations to properties within the City as well as
electric distribution to certain other areas outside of the City. The utility accounts for the costs of
electric and water operations on a continuing basis and is managed by the SPUC. The SPUC Board
consists of five members who serve three year consecutive terms. Separate financial statements are
included in this report for the SPUC Funds to emphasize that it is legally separate from the City. The
water and electric funds are presented as enterprise funds. The complete financial statements can be
obtained from the Shakopee Public Utility Commission, 225 Sarazin Street, Shakopee, Minnesota
55379.
3. Joint Ventures and Jointly Governed Organizations
Local Government Information Systems
Local Government Information Systems (LOGIS) is a joint venture of approximately 44
governmental entities that provides computerized data processing and support services to its
members. Legally separate, the City does not appoint a voting majority of the Board and LOGIS is
fiscally independent of the City. During 2012, the City paid $ 125,845 to LOGIS for services
provided which is included in expenditures of the General Fund. Financial statements are available
by contacting LOGIS, 5750 Duluth Street, Golden Valley, Minnesota 55422-4036.
Scott Joint Prosecution Association
Scott Joint Prosecution Association(SJPA) is a joint venture of approximately seven cities that
provides legal prosecution and support services to its members. Legally separate, the City does not
appoint a voting majority of the Board of Directors and the SJPA is fiscally independent of the City.
During 2012, the City paid $ 382,417 to the SJPA for services provided which is included in
expenditures of the General Fund. Financial statements are available by contacting the SJPA, 200
Fourth Avenue West, Shakopee, Minnesota 55379.
42
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
4. Other Organizations
Shakopee Volunteer Fire Department Relief Association
The Shakopee Volunteer Fire Department Relief Association (the "Association") is organized as a
nonprofit organization, legally separate from the City, by its members to provide pensions and other
benefits to such members in accordance with Minnesota Statutes. It is not a component unit of the City
because the Board of Directors is appointed by the membership of the Association and not by the City
Council. The financial oversight of the City is limited to approval authority for amending the
Association bylaws when the change results in an increase in the pension benefit level requiring an
increased City contribution. The Association has the authority to levy its own taxes for pensions and
deficits and would continue to exist for its members if the City was dissolved. Because the Association
is fiscally independent of the City, the financial statements of the Association have not been included
within the City's ceporting entity.
B. Government-Wide and Fund Financial Statements
The government-wide �nancial statements (i.e.,the Statement of Net Position and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. The fiduciary funds are
only reported in the Statement of Fiduciary Net Position at the fund financial statement level.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Interest on general long-term debt is considered an indirect expense and
is reported separately in the Statement of Activities. Program revenues include 1) charges to customers
or applicants who purchase, use or directly benefit from goods, services or privileges provided by a
given function or segment and 2) grants and contributions that are restricted to meeting the operational
or capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues. Internally dedicated
revenues are reported as general revenues rather than program 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.
The Escrow Agency Fund is presented in the fiduciary fund financial statements. Since, by definition,
these assets are being held for the benefit of a third party(other local governments,private parties, etc.)
and cannot be used to address activities or obligations of the City,this Fund is not incorporated into the
government-wide statements.
43
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. Properry taXes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
The Agency Funds report only assets and liabilities and have no measurement focus, but do use the
accrual basis of accounting to recognize receivables and payables.
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
period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences and claims
and judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses and interest associated with the current period are all
considered to be susceptible to accrual and so have been recognized as revenues of the current period.
Only the portion of special assessments receivable due within the current period is considered to be
susceptible to accrual as revenue of the current period. All other revenue items are considered to be
measurable and available only when cash is received by the City.
Description of Funds:
Major Governmental Funds:
General Fund—This Fund is the City's primary operating fund. It accounts for all financial resources
of the general City, except those required to be accounted for in another fund.
2004A Improvement Bonds Debt Service Fund—This Fund accounts for resources accumulated and
payments made for principal and interest on this bond issue.
Capital Improvements Capital Project Fund—This Fund accounts for the capital projects of the City
not accounted for in separate capital funds.
Proprietary Funds:
Sewer Fund—This Fund accounts foc operations of the City's sewer utility.
Storm Drainage Fund—This Fund accounts for the activities of the City's storm drainage utiliry.
44
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation (Continued)
Description of Funds: (Continued)
Internal Service Funds:
Equipment Fund—This Fund accounts for the City's acquisition of larger pieces of equipment.
Building Fund—This Fund accounts for the City's funds accumulated for construction, improvement
or major repairs of major public buildings.
Park Assets Fund—This Fund accounts for the City's funds accumulated for the replacement of park
assets.
Employee Benefits Fund—This Fund accotmts for the City's funds accumulated for compensated
absences and OPEB.
Information Technology—This Fund accounts for the City's funds accumulated for infocmation
technology resources.
The City's internal service funds are allocated between governmental and business-type activities and
are combined, as allocated in Note 2,with the respective governmental activities and business-type
activities in the government-wide financial statements.
Fiduciary Funds:
Escrow Agency Fund—This Fund accounts for the monies held for specific purposes for individuals,
private organizations, other government units and other funds. Escrows are held on behalf of
builders and developers, for security deposits and police evidence deposits.
Southwest Metro Drug Task Force Agency Fund—This Fund accounts for the activity related to the
task force held by the City in a strictly custodial capacity.
Component Unit Funds:
Electric Fund—This Fund accounts for the operations of the SPUC's electric utility.
Water Fund—This Fund accounts for the operations of the SPUC's water utility.
45
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation (Continued)
As a general rule,the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments, where the amounts are reasonably
equivalent in value to the interfund services provided and other charges between the City's utility
function and various other functions of the City. Elimination of these charges would distort the direct
costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of
the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise
funds include the cost of sales and services, administrative expenses and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets,Liabilities and Net Position or Equity
1. Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and highly
liquid debt instruments purchased with original maturities of three months or less from the date of
acquisition. Investments are stated at fair value.
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and
instrumentalities, shares of investment companies whose only investments are in the aforementioned
securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future
contracts, repurchase and reverse repurchase agreements and commercial paper of the highest quality
with a maturity of no longer than 270 days and in the Minnesota Municipal Money Market Fund.
The Minnesota Municipal Money Market Fund is an external investment pool not registered with the
Securities Exchange Commission (SEC)that follows the same regulatory rules of the SEC under
Rule 2.a.7. The fair value of the position in the pool is the same as the value of the pool shares.
The City's investment policy for all funds except the component units addresses custodial credit risk
for deposits. The policy also addresses credit risk, interest rate risk, concentration of credit risk and
custodial credit risk for investments. The City's component units also have a formal policy to
address all of these risks except custodial credit risk for investments.
46
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets,Liabilities and Net Position or Equity (Continued)
1. Deposits and Investments (Continued)
Custodial Credit Risk—Deposits: This is the risk that in the event of a bank failure,the City's
deposits may not be returned to it. Minnesota Statutes require all deposits be protected by federal
deposit insurance, corporate surety bonds or collateral. The market value of collateral pledged must
equal 110% of deposits not covered by Federal Deposit Insurance Corporation (FDIC) insurance or
corporate surety bonds and letters of credit. The City and component unit's investment policies state
deposits must be collateralized in order to comply with Minnesota Statutes.
Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its
obligation to the holder of the investment. Minnesota Statutes 118A.04 and 188A.05 limit
investments that are in the top two ratings issued by nationally recognized statistical rating
organizations. The City's investment policy references Minnesota Statutes and further limits the
types of investments that the City is allowed to invest in. The component unit's investment policy
also defines suitable and authorized investments and related minimum ratings.
Interest Rate Risk: This is the risk that changes in market interest rates will adversely affect the fair
value of an investment. The City's policy states the investment portfolio shall be designed with the
objective of attaining a market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. To the extent possible, the City shall
attempt to match its investments in short-term operating funds with anticipated cash flow
requirements. Unless matched to a specific cash flow, the City will not directly invest in securities
maturing more than ten years from the date of purchase. Long-term funds shall not be invested in
securities exceeding 10 years in modified duration, at time of purchase. The investment policy for
the City's Electric and Water Enterprise Funds (Shakopee Public Utilities Com�nission) addresses
this risk by requiring holding of securities to maturity(subject to certain exceptions) and]imiting
maturity constraints to a relatively short duration.
Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in
a single issuer. According to the Ciry's investment policy, the aggregate investment portfolio shall
be diversified by:
• Limiting investments to avoid over concentration in securities from a specific issuer or
business sector.
• Limiting investments in securities that have higher credit risks.
• Investing in securities with varying maturities.
• Continuously investing a portion of the portfolio in readily available funds, such as Local
Government Investment Pools (LGIP), money market funds or repurchase agreements to
ensure appropriate liquidity is maintained in order to meet ongoing obligations.
47
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
1. Deposits and Investments (Continued)
• Having all investments, other than those in direct obligations or agencies of the United States,
secured by collateral or repurchase agreements, shall not exceed 50%of the aggregate
investment portfolio. Mortgage backed securities shall not exceed 35% of the aggregate
investment portfolio, at the time of investment(i.e., commercial paper or bankers'
acceptance).
• Limiting investments in any one corporation to 5%of the aggregate investment portfolio.
The investment policy for the City's Electric and Water Enterpcise Funds (Shakopee Public Utilities
Commission) defines suitable and authorized investments and related minimum ratings as well as
application of prudent person standards in construction of portfolio management and diversification.
Custodial Credit Risk—Investments: For an investment,this is the risk that in the event of the
failure of the counterparty,the City will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party. The City's investment policy states
all securities purchased, including appropriate collateral, shall be placed with an independent third
party for custodial safekeeping.
2. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the
end of the year are referred to as "advances to/fram other funds". All other outstanding balances
betweei� funds are reported as "due to/from other funds". Any residual balances outstanding between
the governmental activities and business-type activities are reported in the government-wide
financial statements as"interfund balances".
All trade and property tax receivables are shown at a gross amount since both are assessable to the
property taxes and are collectible upon the sale of the property.
The City levies its property tax for the subsequent year during the month of December. December 28
is the last day the City can certify a tax levy to the County Auditor for collection the following year.
Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. The
property tax is recorded as revenue when it becomes measurable and available. Scott County is the
collecting agency for the levy and remits the collections to the City three times a year. The tax levy
notice is mailed in March with the first half of the payment due on May 15 and the second half due
on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes
receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the applicable
tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The
County Auditor also collects all special assessments, except for certain prepayments paid directly to
the City.
48
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets,Liabilities and Net Position or Equity (Continued)
2. Receivables and Payables (Continued)
The County Auditor submits the list of taxes and special assessments to be collected on each parcel
of property to the County Treasurer in January of each year.
3. Inventory, Prepaid Items and Other Assets
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. Other assets include
unamortized debt issuance costs for the Electric and Water Enterprise Funds (Shakopee Public
Utilities Commission). Prepaid expenditures of governmental funds are reported using the
consumption method and recorded as expenditures/expenses at the time of consumption.
Inventories of enterprise funds are valued at average cost using the first in, first out(FIFO) method.
Inventory in the governmental funds is recorded as an expenditure when consumed rather than when
purchased.
4. Restricted Assets
Certain cash and investments in the component units are classified as restricted. The Electric Fund
has monies restricted for customer deposits and debt service. The Water Fund has monies restricted
for water production and trunk distribution facility acquisition, based on trunk and connection fees
collected from users, construction projects and debt service.
5. Capital Assets
Capital assets,which include property,plant, equipment and infrastructure assets (e.g., roads,
sidewalks and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are defined by the City,
excluding the component unit, as assets with an initial, individual cost of more than $ 10,000 and an
estimated useful life in excess of two years. Capital assets for the component unit are defined as
assets with an initial, individual cost of more than $ 1,000 and an estimated useful life in excess of
one year. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation.
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.
49
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets,Liabilities and Net Position or Equity (Continued)
5. Capital Assets (Continued)
Property,plant and equipment of the City are depreciated using the straight-line method over the
following estimated useful lives.
Assets Years
Buildings 30-50
Park Buildings 30
Building Improvements 25
Light Vehicles 4-10
Machinery and Equipment 4-20
Utility Distribution System 50-75
Infrastructure 30-50
Fire Trucks 20-25
6. Compensated Absences
Vacation and sick leave benefits are recorded as expenditures in the Employee Benefits Internal
Service Fund and governmental funds when the obligations have matured and are expected to be
liquidated with expendable financial resources. City employees earn vacation time based on years
of City service. Employees who have 0 to 15 years of employment may accumulate no more than
240 hours. Employees who have 16 or more years of service may accumulate no more than 360
hours of vacation leave. Upon termination, employees will receive compensation for all unused
vacation. Employees earn sick leave and may accumulate to a maximum of 960 hours. The City
compensates employees who leave municipal service at the rate of 45%up to 15 years of service.
After 15 years of service, employees who leave are compensated at the rate of 55%plus 2% for each
year of service beyond 15 years up to 75% of unused sick leave.
7. 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.
Enterprise fund bond premiums and discounts, as well as issuance costs, are deferred and amortized
over the life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as deferred charges and
amortized over the term of the related debt.
50
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
7. Long-Term Obligations (Continued)
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 expenditures.
8. Fund Equity
a. Classification
In the fund financial statements, governmental funds report fund classifications that comprise a
hierarchy based primarily on the extent to which the City is bond to honor constraints on the
specific purpose for which amounts in those funds can be spent. Non-spendable fund balances
include amounts that cannot be spent because they are not in spendable form. Amounts that are
restricted to specific purposes either by a) constraints placed on the use of resources by creditors,
grantors, contributors, or laws or regulations of other governments or b) imposed by law through
enabling legislation are classified as restricted fund balances. Amounts that can only be used for
specific purposes pursuant to constraints imposed by the City Council (highest level of decision
making authority)through resolution are classified as committed fund balances. Amounts that
are constrained by the City's intent to be used for specific purposes but are neither restricted nor
committed are classified as assigned fund balances. Assignments are made by the City's Finance
Director based on the City Council's direction. Unassigned fund balance represents fund
balance that has not been assigned to other funds and that has not been restricted, committed or
assigned to a specific purpose in the General Fund. The City's policy is to consider unrestricted
fund balance to be spent by City Council action, appropriations or emergency situations.
The City applies restricted resources first when expenditures are incurred for purposes for which
either restricted or unrestricted (committed, assigned and unassigned) are available. Similarly,
within unrestricted fund balance, committed amounts are reduced first followed by assigned and
then unassigned amounts when expenditures are incurred for purposes for which amounts in any
of the unrestricted fund balance classifications could be used.
b. Minimum Fund Balance
The City's target General Fund balance is to maintain an unassigned level between 40%
(minimum) and 45%of current year expenditures. This level is to provide working capital for
cash flow, expected decline in revenues and unforeseen expenditures such as natural disasters.
Replenishing fund balance when it falls below the target level shall be accomplished by
interfund transfers or budgeting for expenditures and other uses to be less than revenues or other
sources over a period not to exceed three years.
51
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets,Liabilities and Net Position or Equity(Continued)
9. Net Position
Net position represents the difference between assets and liabilities in the government-wide financial
statements. Net investment in capital assets consists of capital assets, net of accumulated
depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the
capital assets. Net position is reported as restricted in the government-wide financial statement
when there are limitations on their use through external restrictions imposed by creditors, grantors or
laws or regulations of other governments.
10. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Estimates also affect the reported amounts of revenue and
expenditures/expense during the reporting period. Actual results could differ from those estimates.
NOTE 2—RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
A. Explanation of Certain Differences between the Governmental Fund Balance Sheet and the
Government-Wide Statement of Net Position
The governmental fund Balance Sheet includes reconciliation between fund balance—total
governmental funds and net position—governmental activities as reported in the government-wide
Statement of Net Position. One element of that reconciliation explains that"Internal Service Funds are
used by management to charge the costs of providing certain services for the City."
Net Position of the Internal Service Funds $ 48,343,331
Less Portion of of Loss Related to Business-Type Activities (111,216)
Net Adjustment to Increase Fund Balance-Total Governmental
Funds to Arrive at Net Position-Governmental Activities $ 48,232,I 15
52
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 2—RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
B. Explanation of Certain Differences between the Governmental Fund Statements of
Revenues,Expenditures, and Changes in Fund Balances and the Government-Wide
Statement of Activities
Another element of that reconciliation states that"Internal Service Funds are used by management to
charge the costs of providing various services for the City." The details of this difference are as follows:
Change in Net Position of the Internal Service Fund $ (71,122)
Less the Net of Indirect Revenues and Expense (53,456)
Net Adjustment to Decrease Net Chan�e in Fund Balances-Total
Governmental Funds to Arrive at Changes in Net Position of
Governmental Activities $ (124,578)
C. Explanation of Certain Differences between the Proprietary Fund Statements of Net
Position and the Government-Wide Statement of Net Position
The proprietary fund Statement of Net Position includes reconciliation between net position—total
enterprise funds and net position of business-type activities as reported in the government-wide
Statement of Net Position. The description of the sole reconciliation is "adjustment to reflect the
consolidation of internal service fund activities related to enterprise funds." The details of this
$ 117,182 are as follows:
Internal Payable Representii�g Costs less than Charges to
Business-Type Activities-Current Year $ 1 l 1,216
D. Explanation of Certain Differences between the Proprietary Fund Statements of
Revenues, Expenses, and Changes in Fund Net Position and the Government-Wide
Statement of Activities
Net Adjustment to Increase Net Change in Fund Balances-Total
Enterprise Funds to Arrive at Cllanges in Net Position of
Business-Type Activities $ 53,456
53
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 3—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America.. Annually appropriated budgets are adopted for the General Fund and the Shakopee
EDA and Transit Special Revenue Funds.
Budgeted amounts present the originally adopted budget and final amended budget approved by the City
Council. The City does not use encumbrances. Budgeted expenditure appropriations lapse at year-end.
1. In August of each year, City staff submits to the City Council, a proposed operating budget for
the year commencing the following January 1. The operating budget includes proposed
expenditures and the means of financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted through passage of a resolution after obtaining taxpayer comments.
4. Expenditures may not legally exceed budgeted appropriations at the division level. No fund's
budget can be increased without City Council approval. The City Council may authorize transfer
of budgeted amounts between divisions within any fund. Management may amend budgets
within a division level, so long as the total division budget is not changed.
S. Annual budgets are adopted for the General and applicable Special Revenue Funds. Annual
appropriated budgets are not adopted for Debt Service Funds because effective budgetary control
is alternatively achieved through bond indenture provisions. Budgetary control for Capital
Projects Funds is accomplished through the use of project controls and budgets are not adopted.
6. Budgeted amounts are as originally adopted or as amended by the City Council. Individual
amendments were not material in relation to the original amounts budgeted, except for transfers
in the General, Telecommunication and Recreation Funds.
NOTE 4—DEPOSITS AND INVESTMENTS
A. Deposits
In accordance with applicable Minnesota Statutes,the City and the Component Unit maintains deposits
at depository banks authorized by the City Council and the Commissioners.
Custodial Credit Risk: As of December 31, 2012,the City and Commission's bank balances were not
exposed to custodial credit risk because they were insured through Federal Deposit Insurance
Corporation (FDIC) and properly collateralized with securities held by the pledging financial
institutions' trust departments or agents in the City's name.
54
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 4—DEPOSITS AND INVESTMENTS
A. Deposits (Continued)
As of December 31, 2012, the City had the following deposits:
City Deposits $ 1,136,852
Component Unit Deposits 8,251,017
Total Deposits $ 9,387,869
B. Investments
As of December 31, 2012,the City held the following investments:
Modified
Duration Moody's
Fair Value (Years) Rating Concentration
4M 4,483 N/A Aaa O.O l%
4M Plus 998 N/A Aaa 0.00%
Certificate of Deposit 9,349,237 1.78 NR 12.33%
Commercial Paper 3,650,798 0.38 NR 4.81%
Money Market Fund 3,077,868 N/A NR 4.06%
Mortgage 0.00%
FAMC 675,510 4.30 AA1 0.89°/a
FFCB 2,864,151 2.65 AA1 3.78%
FHLB 17,952,575 3.48 Aaa 23.67%
FHLMC 7,889,325 6.91 Aaa 10.40%
FNMA 1,296,109 5.05 NR 1.71%
GNMA 38,608 1.44 NR 0.05%
Municipal Bond 11,575,752 3.77 AAA-A1 15.26%
US Treasury Notes 17,477,595 1.19 Aaa 23.04%
TotalInvestments $ 75,853,009 3.43
Cash with fiscal agent totaled $ 4,881,561 at December 31, 2012 and consisted of U.S. Treasury State
and Local Government series time deposits with a modified duration of 1.09 years.
55
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 4—DEPOSITS AND INVESTMENTS
B. Investments (Continued)
As of December 31, 2012,the component units had the following investments:
Years to Maturity
Less than
Rating Fair Value One Year 1-5 Years
U.S.Agencies AAA $ 13,495,183 $ 5,403,803 $ 8,091,380
U.S. Treasuries AAA 5,847,026 5,847,026 -
4M Fund N/A 10,500,021 10,500,021 -
Money Market Fund N/A 111,065 111,065 -
Total $ 29,953,295 $ 21,861,915 $ 8,091,380
Custodial Credit Risk—Investments: As of December 31, 2012, all investments of the City and the
component units were insured, registered and held by the City or its agent and in the City's name, or by
the SPUC and in the SPUC's name.
Concentration of Credit Risk: As of December 31, 2012, the City held investments that exceeded 5%of
its total investments for all funds as noted in the table on the previous page.
The component units' investments in FHLB, FNMA and FHLMC also exceeded 5%of the total
investments of those funds at December 31, 2012.
The following is a summary of total deposits and investments as of December 31, 2012:
Deposits (Note 3.A.) $ 9,387,869
City Investments 75,853,009
City Investment with Fiscal Agent 4,881,561
Component Unit Investments 29,953,295
Petty Cash 2,862
Total Deposits and Investments $ 120,078,596
56
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 4—DEPOSITS AND INVESTMENTS
B. Investments (Continued)
Deposits and investments axe presented in the December 31, 2012 basic financial statements as follows:
City Component
Funds iJnits Total
Statement of Net Position:
Cash and Investments $ 75,509,933 $ 29,226,437 $ 104,736,370
Cash with Fiscal Agent 4,881,561 - 4,881,561
Restricted Assets - 8,979,575 8,979,575
Statement of Fiduciary Net Assets:
Cash and Invest�nents l,481,090 - 1,481,090
Total $ 81,872,584 � 38,206,012 $ 120,078,596
NOTE 5—RECEIVABLES/DEFERRED REVENUE
A. Taxes and Assessments
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. Governmental funds also defer
revenue recognition in connection with resources that have been received, but not yet earned. At the end
of the current year, the various components of deferred revenue reported in the governmental funds were
as follows:
Delinquent Delinquent Deferred
Property Special Special
Taxes Assessments Assessments Total
General Fund $ 232,968 $ 5,477 $ 33,849 $ 272,294
2004A Improvement Bonds - - 1,882,716 1,882,716
CapitalImprovements - 131 415,842 415,973
Nonmajor Funds 2,043 19,085 1,705,479 1,726,607
Total $ 235,011 $ 24,693 $ 4,037,886 $ 4,297,590
B. Notes Receivable
The Equipment Internal Service Fund has a note receivable with the Scott County HRA that originated
in 1998 as a result of the River City Centre Development Project. This note has an interest rate of 6.75%
and will be paid in full in February 2014. At December 31, 2012,the note's balance was $ 190,000.
During 2012, $ 90,000 of principal and $ 15,863 of interest was paid.
57
CITY OF SHAKOPEE
� NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 6—CAPITAL ASSETS
Governmental capital asset activity for the year ended December 31, 2012 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets not being
Depreciated:
Land $ 19,488,040 $ 535,000 $ - $ 20,023,040
Construction in Progress 5,300,319 2,825,366 4,284,429 3,841,256
Total Capital Assets
not being Depreciated 24,788,359 3,360,366 4,284,429 23,864,296
Capital Assets being
Depreciated:
Buildings 33,742,981 1,244,165 - 34,987,146
Infrastructure 131,609,457 3,298,672 - 134,908,129
Machinery and Equipment 13,473,561 885,445 507,806 13,851,200
Total Capital Assets
being Depreciated 178,825,999 5,428,282 507,806 183,746,475
Less Accumulated
Depreciation for:
Buildings 9,512,778 840,382 - 10,353,160
Infrastructure 56,792,568 4,408,230 - 61,200,798
Machinery and Equipment 6,182,057 859,493 371,505 6,670,045
Total Accumulated
Depreciation 72,487,403 6,108,105 371,505 78,224,003
Total Capital Assets being
Depreciated,Net 106,338,596 (679,823) 136,301 105,522,472
Governmental Activities Capital
Assets,Net $ 131,126,955 $ 2,680,543 $ 4,420,730 $ 129,386,768
Depreciation expense was charged to functions/programs of the City as follows:
Governmental Activities:
General Government $ 229,796
Public Safety 591,660
Public Works 4,618,810
Parks and Recreation 667,839
Total Depreciation Expense-Governmental Activities $ 6,108,105
58
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 6—CAPITAL ASSETS
Business-type capital asset activity for the year ended December 31, 2012 was as follows:
Beginning Euding
Balance increases Decreases Balance
Business-Type Activities:
Capital Assets not being
Depreciated:
Land $ 3,944,380 $ - $ - $ 3,944,380
Right-0f-Way 75,000 - - 75,000
Construction in Progress 1,745,002 421,205 877,512 1,288,695
Total Capital Assets
not being Depreciated 5,764,382 421,205 877,512 5,308,075
Capital Assets beina Depreciated:
Line Rights 1,368,569 - - 1,368,569
Plant in Service 74,740,857 935,434 - 75,676,291
Machinery and Equipment 2,664,378 190,528 232,697 2,622,209
�I'otal Capital Assets
being Depreciated 78,773,804 1,125,962 232,697 79,667,069
Less Accumulated
Depreciation for:
Line Rights 452,759 24,801 - 477,560
Plant in Seivice 17,855,089 1,224,467 - 19,079,556
Machinery and Equipment 1,150,268 166,484 23,314 1,293,438
Total Accumulated
Depreciation 19,458,116 1,415,752 23,314 20,850,554
Total Capital Assets being
Depreciated,Net 59,315,688 (289,790) 209,383 58,816,515
Business-Type Activities Capital
Assets,Net $ 65,080,070 $ 131,415 $ 1,086,895 $ 64,124,590
Depreciation expense was charged to functions/programs of the City as follows:
Business-Type Activities:
Sanitary Sewer $ 730,107
Storin Drainage 685,645
Total Depreciation Expense-Business-Type Activities $ 1,415,752
59
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 6—CAPITAL ASSETS
Component unit capital asset activity for the year ended December 31, 2012 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Component Unit Capital Assets
not being Depreciated:
Land and Land Rights $ 5,097,532 $ - $ - $ 5,097,532
Construction in Progress 6,179 1,576,026 1,444,263 137,942
Total Capital Assets
not being Depreciated 5,103,7ll 1,576,026 1,444,263 5,235,474
Capital Assets being Depreciated:
Distribution 80,372,004 2,152,729 288,658 82,236,075
General 13,071,772 303,187 36,303 13,338,656
Total Capital Assets
being Depreciated 93,443,776 2,455,916 324,961 95,574,731
Less Accumulated Depreciation 25,710,299 2,816,635 134,399 28,392,535
Total Capital Assets being
Depreciated,Net 67,733,477 (360,719) 190,562 67,182,196
Component Unit Capital Assets,Net $ 72,837,188 $ 1,215,307 $ 1,634,825 $ 72,417,670
Depreciation expense was charged to functions/programs of the component units as follows:
Component Units:
Electric $ 1,707,314
Water 1,109,321
Total Depreciation Expense-Component Units $ 2,816,635
NOTE 7—LONG-TERM DEBT
A. General Obligation Bonds
The City issues general obligation (G.O.) bonds to provide for financing tax increment projects, street
improvements and construction of government buildings. Debt service is covered respectively by tax
increments and special assessments against benefited properties with any shortfalls being paid from
general taxes.
G.O. bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally
are issued as serial bonds with equal debt service payments each year. G.O. bonds currently outstanding
are shown on the following page.
60
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 7—LONGTERM DEBT
B. Revenue Bonds
The Commission issues Revenue Bonds for electric and water activity. Debt service is covered through
the revenue producing activities of these funds.
C. Components of Long-Term Liabilities
Issue Interest Original Final Principal Due Within
Date Rates Issue Maturity Outstanding One Yeaz
Govemmental Activities:
G.O.Bonds:
G.O.Improvement Bonds:
2004A OS/01/04 2.25%-4.10% $ 4,225,000 02/O1/25 � 1,665,000 S 280,000
2004C 11/01/04 3.00%-4.00% 2,570,000 02/O1/15 770,000 255,000
2006A 07/01/06 4.00% 3,440,000 02/O1/17 1,820,000 350,000
2007A 02/O1/07 4.00% 1,370,000 02/O1/17 825,000 205,000
2007B 09/O1/07 4.00% 1,445,000 02/O1/18 895,000 140,000
2008A 09i01/08 3.50%-4.00% 2,170,000 02/O1/19 1,425,000 195,000
2010A 08i01/10 0.50%-2.90% 1,555,000 02/O1/21 1,335,000 185,000
G.O.Building Refunding
Bonds 2004B OS/Ol/04 2.25%-4.00% 2,275,000 02/01/17 1,055,000 195,000
G.O.Capital Improvement
Bonds 2004D 11/O1/04 2.50%-420% 6,000,000 02/O1/25 4,405,000 265,000
G.O.Building Refunding
Bonds 2012A 06/14/12 1.50%-2.125% 4,865,000 02/O1/25 4,865,000 -
Total G.O.Bonds ]9,060,000 2,070,000
CompensatedAbsences 1,742,587 784,164
Total Govemmental
Activities $ 20,802,587 $ 2,854,164
Business-Type Activities
Compensated Absences $ 69,503 $ 31,277
Component Unit Long-Term Liabilities:
Utility Revenue Bonds:
Series 2004 Refunding Bonds 10/O1/04 3.50°/a-4.50% 9,83Q000 OS/O1/28 $ 8,725,000 $ 8,725,000
Series 2006A Crossover Refunding Bonds 11/21/06 4.125%-4375% 10,570,000 02/O1/30 9,56Q000 365,000
Total Bonds 18,285,000 9,090,000
Unamortized Loss on Refunding (943,586) (59,493)
Total Component Unit Long-Term Liabilities $ ]7,341,414 $ 9,030,507
Long-term bonded indebtedness listed above were issued to finance acquisition and construction of
capital facilities or to refinance (refund)previous bond issues.
61
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 7—LONG-TERM DEBT
D. Changes in Long-Term Liabilities
Long-term liability information for the year ended December 31, 2012 was as follows.
Beginning Ending Due Within
Bala��ce Additions Reductions Bala��ce One Year
Governmental Activities:
Bonds Payable $ 16,145,000 $ 4,865,000 $ 1,950,000 $ 19,060,000 $ 2,070,000
Compensated Absences ],703,898 1,034,437 995,748 1,742.587 784,164
"I'otal Governmental Activities $ 17,848,898 $ �,899,�137 $ 2,945,748 $ 20,802,587 $ 2,8�4,164
Business-Type Activities
CompensatedAbsences $ 69,192 $ 43,024 $ 42,713 $ 69,503 $ 31,277
Component Unit Activites:
G.O.Utility Revenue Bonds $ 18,88�,000 $ - $ 600,000 $ 18,285,000 $ 9,090,000
Unamortized Loss on Refunding (1,003,079) - (59,493) (943,586) (59,493)
Total Component Unit AcCivites $ 17,881,921 $ - � �40,�07 $ 17_341,414 $ 9,030,�07
The General Fund, Employee Benefits Internal Service Fund and Sewer and Storm Drainage Enterprise
Funds typically liquidate the liability related to compensated absences.
E. Governmental Activity G.O. Bonds
Debt service to maturity for outstanding G.O. bonds is as follows:
Year Ending Governmental Bonds
December 31, Principal Interest Total
2013 $ 2,070,000 $ 613,348 $ 2,683,348
2014 2,050,000 524,746 2,574,746
2015 2,230,000 447,828 2,677,828
2016 2,075,000 374,155 2,449,155
2017 2,085,000 304,783 2,389,783
2018-2022 5,605,000 877,069 6,482,069
2023-2027 2,945,000 145,286 3,090,286
Total $ 19,060,000 $ 3,287,215 $ 22,347,215
62
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 7—LONG-TERM DEBT
F. Component Unit Revenue Bonds
Debt service to maturity for outstanding revenue bonds is as follows:
Year Ending Utility Revenue Bonds
December 31, Principal Interest Total
2013 $ 9,090,000 $ 771,821 $ 9,861,821
2014 380,000 387,269 767,269
2015 390,000 371,388 761,388
2016 410,000 354,888 764,888
2017 425,000 337,400 762,400
2018-2022 2,405,000 1,394,386 3,799,386
2023-2027 3,005,000 816,579 3,821,579
2028-2030 2,180,000 146,342 2,326,342
Total $ 18,285,000 $ 4,580,073 $ 22,865,073
G. Refunding
In June 2012,the City issued $ 4,865,000 G.O. Improvement Refunding Bonds to refund G.O. Bonds,
Series 2004A, maturing in years 2015 through 2025 and G.O. Bonds, Series 2004D, maturing in years
2015 through 2025. The net proceeds of$ 4,951,424 were deposited with an escrow agent to provide for
the payment of the principal maturities at the call date of the refunded bonds and for the interest on the
refunding bonds through the call date. The City is responsible for the principal and interest payments on
the remaining refunded bond issues through the call date. The call date for the refunded bonds is
February 1, 2015. The refunding resulted in reduction of future debt service payments of$442,330 and
a net present value savings of$ 387,886.
Component Unit Refunding
On February l, 2013,the Shakopee Public Utilities exercised its call option to fully redeem the series
2004 Refunding Bonds in the amount of$ 8,725,000.
63
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 8—CONDUIT DEBT OBLIGATIONS
Conduit debt obligations are certain limited obligation revenue bonds or similar debt 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
beyond the resources provided by related leases or loans. Accordingly,the bonds are not reported as
liabilities in the financial statements of the City.
As of December 31, 2012, the following conduit debt was outstanding:
Date of Original Amount Balance
Project Issue of Issue Retired Outstanding
St. Francis RMC 10/06/04 $ 52,520,000 $ 405,000 $ 49,060,000
St. Francis RMC 12/23/87 8,000,000 580,000 3,215,000
St. Gertrudes 09/30/10 5,675,000 15,249 5,659,751
Total $ 57,934,751
NOTE 9—PLEDGING AGREEMENTS
The City has pledged its taxing authority to back certain revenue bonds issued by the Scott County
Community Development Agency(CDA), formally known as the Scott County Housing and
Redevelopment Authority(HRA), for the Blocks 3 and 4 redevelopment project in downtown Shakopee.
Refunding bonds were issued during 2006 to advance refund the 1997A, 1997D and 1997E Series Bonds
on their call dates. The 1997D Series Bonds were called on September l, 2006 and the 1997A and
1997E Series Bonds were called on February 1, 2008.
• Scott County CDA Housing Development Refunding Revenue Bonds, Series 2006A, the amount
is $ 3,260,000 and payments are scheduled from February 1, 2007 to 2027, with interest ranging
from 4.25%to 4.50%.
� Scott County CDA Housing Development Refunding Revenue Bonds, Series 2006D, the amount
is $ 905,000 and payments are scheduled from February 1, 2007 to 2018,with interest ranging
from 5.70%to 6.25%.
• Scott County CDA Housing Development Refunding Revenue Bonds, Series 2006E, the amount
is $ 1,225,000 and payments are scheduled from February 1, 2018 to 2024,with interest ranging
from 4.50%to 4.70%.
64
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 9—PLEDGING AGREEMENTS
The City has pledged its taxing authority to back a series of revenue bonds issued by the Scott County
CDA for the North Ridge Court Redevelopment Project in downtown Shakopee. The issue is:
• Scott County CDA Housing Development Revenue Bonds, Series 2003,the amount is
$ 6,640,000 and payments are scheduled from February 1, 2006 to 2034,with interest ranging
from 2.00%to 5.00%.
The City and the Shakopee EDA have a development agreement for costs related to an Imagine! Print
Solutions, formally known as Challenge Printing, facility moving to Shakopee. The Shakopee EDA
issued a Taxable Tax Increment Revenue Note in the amount of$ 513,900 in support of development
costs for the Imagine! Print Solutions Project. Imagine! Print Solutions is the holder of the note. The
Shakopee EDA is liable only to the extent of the tax increment received from the Imagine! Print
Solutions property. The interest on the note is 6.00%. Payments are scheduled semiannually from
August 1, 2006 to February 1, 2015.
The City and the Shakopee EDA have a development agreement for costs related to Open Systems
Facility located in Shakopee. The Shakopee EDA issued a Taxable Tax Increment Revenue Note in the
amount of$ 125,000 in support of development costs for the Open Systems Project. Open Systems is
the holder of the note. The Shakopee EDA is liable only to the extent of the tax increment received from
the Open Systems property. The interest on the note is 6.00%. Payments are scheduled semiannually
from August 1, 2007 to February l, 2014.
NOTE 10—INTERFUND ASSETS/LIABILITIES
The composition of interfund balances as of December 31, 2012 is as follows:
Recievable Fund Payable Fund Amount
Capital Improvements Nonmajor Governmental Funds $ 383,296
The due from/due to other funds balance represents borrowing to eliminate a cash deficit. This will be
repaid as funds are available.
65
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 11 —INTERFUND TRANSFERS
Transfer In
Other internal
General Capital Governmental Service
Fund Improvements Funds Fund Total
Transfers Out:
General Fund $ - $ 2,000,000 $ 780,000 $ 200,000 $ 2,980,000
Other Governmental Funds 22,400 - - - 22,400
Sewer Fund 50,000 - - - 50,000
Storm Drainage Fund 50,000 - - - 50,000
intecnal Service Fund - - 465,000 - 465,000
Total $ 122,400 $ 2,000,000 $ 1,245,000 $ 200,000 $ 3,567,400
Transfers were made according to budgets for operating purposes, to finance projects and for the
cancellation of the debt service levy.
NOTE 12—RISK MANAGEMENT
The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance
Trust(LMCIT) with other cities in the state which is 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 far excess claims. The City is covered through the pool for any claims incurred
but unreported, however,retains risk for the deductible portion of its insurance policies. The amount of
these deductibles ranges from $ 2,500 to $ 5,000 and is considered immaterial to the financial
statements.
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.
Through the pool, the City is subject to reassessment but due to reserves and reinsurance contracts, the
likelihood is very low. The policy limits through the pool included $ 2,000,000 aggregate for liability,
$ 1,500,000 for automobile coverage, $ 500,000 faithful performance employee bonding and
$ 1,000,000 for universal umbrella coverage. Property coverage is at approximately$ 91,000,000.
66
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 13— DEFINED BENEFIT PENSION PLANS—STATE-WIDE
Public Employees' Retirement Association
A. Plan Description
All full-time and certain part-time employees of the City are covered by defined benefit plans
administered by the Public Employees' Retirement Association of Minnesota(PERA). PERA
administers the General Employees' Retirement Fund (GERF) and the Public Employees' Police and
Fire Fund(PEPFF),which are cost-sharing, multiple-employer retirement plans. These Plans are
established and administered in accordance with Minnesota Statutes Chapters 353 and 356.
GERF members belong to either the Coordinated or Basic Plan. Coordinated Plan members are covered
by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership are
covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors
upon death of eligible members. Benefits are established by state statute and vest after three years of
credited service. The defined retirement benefits are based on a member's highest average salary for any
five successive years of allowable service, age and years of credit at termination of service.
Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The
retiring member receives the higher of a step-rate benefit accrual formula(Method 1) or a level accrual
formula(Method 2). Under Method l,the annuity accrual rate for a Basic Plan member is 2.2%of
average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity
accrual rate for a Coordinated Plan member is 1.2%of average salary for each of the first 10 years and
1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7%of average salary for
Basic Plan members and 1.7%for Coordinated Plan members for each year of service. For PEPFF
members,the annuity accrual rate is 3.0% for each year of service. For all GERF and PEPFF members
hired prior to July 1, 1989,whose annuity is calculated using Method l, a full annuity is available when
age plus years of service equa190. Normal retirement age is 55 for PEPFF members and 65 for Basic
and Coordinated Plan members hired prior to July l, 1989. Normal retirement age is the age for
unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1,
1989. A reduced retirement annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life annuity is a
lifetime annuity that ceases upon the death of the retiree—no survivor annuity is payable. There are also
various types of joint and survivor annuity options available which will be payable over joint lives.
Members may also leave their contributions in the Fund upon termination of public service in order to
qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to
members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply
to active Plan participants. Vested, terminated employees who are entitled to benefits but are not yet
receiving them are bound by the provisions in effect at the time they last terminated their public service.
67
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 13—DEFINED BENEFIT PENSION PLANS—STATE-WIDE
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
PERA issues a publicly available financial report that includes financial statements and required
supplementary information for GERF and PEPFF. That report may be obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Empire Drive, #200, St. Paul, Minnesota 55103-2088 or by
calling (651) 296-7460 or(800) 652-9026.
B. Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These Statutes
are established and amended by the State Legislature. The City makes annual contributions to the
pension plans equal to the amount required by state statutes. GERF Basic Plan members and
Coordinated Plan members were required to contribute 9.1% and 6.25%, respectively, of their annual
covered salary in 2012. PEPFF members were required to contribute 9.6%of their annual covered salary
in 2012. In 2012, the City was required to contribute the following percentages of annual covered
payroll: 11.78%for Basic Plan members, 7.25%for Coordinated Plan members and 14.4% for PEPFF
members. The City's contributions to the Public Employees' Retirement Fund for the yeacs ending
December 31, 2012, 2011 and 2010 were $ 349,790, $ 353,579 and $ 549,973, respectively. The City's
contributions to the PEPFF for the years ending December 31, 2012, 20ll and 2010 were $ 529,799,
$ 500,257, and $ 475,396, respectively. The City's contributions were equal to the contractually
required contributions for each year as set by state statute.
NOTE 14—DEFINED CONTRIBUTION PLAN—STATE-WIDE
Four Council Membecs of the City are covered by the Public Employees' Defined Contribution Plan
(PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a tax
qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of
employees are tax deferred until time of withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less
administrative expenses. Minnesota Statutes Chapter 353D.03 specifies the employee and employer
contribution rates for those qualified personnel who elect to participate. An eligible elected official who
decides to participate contributes 5% of salary which is matched by the elected official's employer.
Employer and employee contributions are combined and used to purchase shares in one or more of the
seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA
receives 2% of employer contributions and four-tenths of 1%of the assets in each member's account
annually.
Total contributions made by the City during year 2012 were:
Contribution Amount Percentage of Covered Payroll Required
Employee Employer Employee Employer Rates
$ 1,400 $ 1,400 5% 5% 5%
68
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 15—DEFINED BENEFIT PENSION PLAN—SHAKOPEE VOLUNTEER FIRE
RELIEF ASSOCIATION
A. Plan Description
The Shakopee Fire Relief Association(the"Association") is the administrator of a single employer
defined benefit pension plan established to provide benefits for members of the Shakopee Fire
Department.
The Association provides retirement and disability benefits to members, and benefits to survivors upon
the death of eligible members. Benefits are established in accordance with Minnesota Statutes. The
defined retirement benefits are based on a member's years of service. Benefit provisions can be
amended by the Association within the parameters provided by Minnesota Statutes.
The Association issues a publicly available financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to Shakopee Fire Relief
Association, 129 Holmes Street South, Shakopee, Minnesota 55379.
B. Funding Policy
Minnesota Statutes Chapter 69.772 specifies minimum support rates required on an annual basis. The
minimum support rates from the municipality and from state aid are determined as the amount required
to meet the normal cost plus amortizing any existing prior service costs over a 10 year period. Actuarial
valuations are not required for the Association as the Association follows Minnesota Statutes for the
valuation calculation. The City has decided to make an annual contribution in addition to state aid
received for pension cost. The Association is comprised of volunteers; therefore, there are no payroll
expenditures (i.e., there are no covered payroll percentage calculations).
Contributions totaling$ 298,118 ($ 152,677 City of Shakopee and $ 145,441 State of Minnesota)were
made in accordance with contribution requirements as of December 31, 2012. These contributions were
entirely for normal service cost.
The City's annual pension cost for the current year and related information is as follows:
Valuation Date December 31, 2012
Actuarial Cost Method Entry Age Normal
Amortization Method Level annual dollar closed
Remaining Amortization Period:
Normal Cost 20 years
Prior Service Cost 10 years
Asset Valuation Method Market
Actuarial Assumptions:
Investment Rate of Return 5%
Projected Salary Increases N/A
Includes Inflation at N/A
Cost of Living Adjustments None
69
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE 15—DEFINED BENEFIT PENSION PLAN—SHAKOPEE VOLUNTEER FIRE
RELIEF ASSOCIATION
B. Funding Policy (Continued)
Annual Percentage Net
Pension of APC Pension
Year Ended Cost(APC) Contributed Obligation
12/31/10 $ 339,752 100% $ -
12/31/11 351,976 100% -
12/31/12 152,677 100% -
Statutory Statutory Funded
Valuation Value of Accrued (Unfunded) Funded
Date Assets Liability(SAL) SAL Ratio
12/31/10 $ 3,690,248 $ 4,507,908 $ (817,660) 81.9%
12/31/ll 3,974,012 4,480,608 (506,596) 88.7%
12/31/12 4,634,023 4,832,549 (198,526) 95.9%
The Association is comprised of volunteers; therefore,there are no payroll expenditures (i.e.,there are
no covered payroll amounts or percentage calculations).
NOTE 16—POST EMPLOYMENT HEALTH BENEFITS PLAN
A. Plan Description
The City provides a single-employer defined benefit health care plan to eligible retirees and their
spouses. The plan offers medical coverage administered by Medica. It is the City's policy to
periodically review its medical coverage and to obtain requests for proposals in order to provide the most
favorable benefits and premiums for City employees and retirees.
B. Funding Policy
Retirees and their spouses contribute to the health care plan at the same rate as City employees. This
results in the retirees receiving an implicit rate subsidy. Contribution requirements are established by the
City, based on the contract terms with Medica. The required contributions are based on projected
pay-as-you-go financing requirements. For the year 2012,the City contributed $ 23,595 to the plan. As
of January 1, 2012,there were seven retirees and two disabled officers receiving health benefits from the
City's hea(th plan.
70
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 16—POST EMPLOYMENT HEALTH BENEFITS PLAN
C. Annual OPEB Cost and Net OPEB Obligation
The City's annual OPEB cost(expense) is calculated based on the annual required contribution (ARC)
of the City, an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period
not to exceed 30 years. The following table shows the components of the City's annual OPEB cost of
the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to
the plan.
ARC $ 220,284
Interest on Net OPEB Obligation 29,374
Adjustment to ARC (42,468)
Annual OPEB Cost(Expense) 207,190
Contribution Made (53,591)
Increase in Net OPEB Obligation 153,599
Net OPEB Obligation - Beginning of Year 734,361
Net OPEB Obligation-End of Year $ 887,960
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2012 was as follows:
Percentage of
Fiscal Year Annual OPEB Employer Annual OPEB Net OPEB
End Cost Contribution Cost Contributed Obligation
12/31/12 $ 207,190 $ 53,591 26% $ 887,960
12/31/11 200,980 45,723 23% 734,361
12/31/10 170,040 27,020 16% 579,104
D. Funded Status and Funding Progress
As of January 1, 2010, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $ 1,483,810 and the actuarial value of assets was
$ 0, resulting in an unfunded actuarial accrued liability(UAAL) of$ 1,483,810. The covered payroll
(annual payroll of active employees covered by the plan) was $ 7,154,161 and the ratio of the UAAL to
the covered payroll was 20.7%.
71
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 16—POST EMPLOYMENT HEALTH BENEFITS PLAN
D. Funded Status and Funding Progress (Continued)
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality and the health care cost trend. Amounts determined regarding the funded status
of the plan and the ARC of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
The Schedule of Funding Progress—Other Post Employment Benefits, presented as required
supplementary information following the Notes to the Financial Statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time relative
to the actuarial accrued liabilities for benefits.
E. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing of benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the
long-term perspective of the calculations.
In the January l, 2010 actuarial valuation, the projected unit credit actuarial cost method was used. The
actuarial assumptions included a 4.0 % discount rate, which is based on the investment yield expected to
finance benefits depending on whether the plan is funded in a separate trust(about 7.0°/o to 8.5%, long-
term, similar to a pension plan) or unfunded(3.5%to 5.0%, shorter-term, based on City's general
assets). The City currently does not fund this benefit. At the actuarial valuation date,the annual health
care cost trend rate was calculated to be 10% initially, reduced incrementally to an ultimate rate of 5%
after five years. The UAAL is being amortized as a level percentage of payroll on an open basis. The
remaining amortization period at January 1, 2010 was 30 years.
NOTE 17—SEGMENT INFORMATION
The City maintains two enterprise funds that account for the sewer and storm drainage utilities. The City
considers each of its enterprise funds to be a segment. Since the required segment information is already
included in the City's proprietary funds' Balance Sheet and Statement of Revenues, Expenses and
Changes in Fund Net Position balances,this information has not been repeated in the Notes to the
Financial Statements.
72
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2012
NOTE 18—FUND BALANCE DETAIL
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
2004A Other
General Improvement Capital Governmental
Fund Bonds Improvements Funds Total
Nonspendable:
Prepaid Items $ 19,189 $ - $ - $ - $ 19,189
Restricted:
Forfeitures - - - 195,823 195,823
Transit - - - 1,045,340 1,045,340
SCDP Grant - - - 22,447 22,447
Revolving Loans - - - 252,639 252,639
Economic Development - - - 562,959 562,959
Debt Service - 1,457,145 - 8,117,053 9,574,198
CapitalImprovements - - - 1,815,339 1,815,339
Total Restricted - 1,457,145 - 12,011,600 13,468,745
Assigned:
Telecommunications - - - 66,989 66,989
CapitalImprovements - - 8,681,475 394,666 9,076,141
TotalAssigned - - 8,681,475 461,655 9,143,130
Unassigned 9,503,652 - - (384,965) 9,118,687
Total Fund Balance $ 9,522,841 $ 1,457,145 $ 8,681,475 $ 12,088,290 $ 31,749,751
NOTE 19—SUBSEQUENT EVENTS
The City has evaluated subsequent events through April 17, 2013,the date which the financial
statements were available to be issued.
NOTE 20—COMMITTMENTS
Project Work 12/31/12
Authorization Completed Commitment
2012 Bituminous Overlay $ 694,987 $ 669,244 $ 25,743
Upper Valley Drainageway 194,725 189,562 5,163
Fire Station#2 2,380,661 2,376,557 4,104
NOTE 21—CHANGE IN ACCOUNTING PRINCIPLE
For the year ended December 31, 2012,the City implemented GASB Statement No. 63. This
implementation resulted in the establishment of categories outside of assets and liabilities titled deferred
outflows and deferred inflows. The Statement also retitled Net Assets as Net Position.
73
(THIS PAGE LEFT BLANK INTENTIONALLY)
74
REQUIRED SUPPLEMENTARY INFORMATION
75
CITY OF SHAKOPEE
SCHEDULE OF FUNDING PROGRESS-OTHER POST EMPLOYMENT BENEFITS
December 31,2012
Actuarial
Accrued Liability UAAL as a
Actuarial (AAL)- Unfunded Percentage of
Actuarial Value of Projected AAL Funded Covered Covered
Valuation Assets Unit Credit (UAAL) Ratio Payroll Payroll
Date (a) (b) (b-a) (a/b) (c) ((b-a)/c)
O1/O1/08 $ - $ 1,887,961 $ 1,887,961 0.0% $ 6,652,669 28.4%
O1/O1/09 * - 1,887,961 1,887,961 0.0% 6,652,669 28.4%
O1/O1/10 - 1,483,810 1,483,810 0.0% 7,154,161 20.7%
O1/O1/11 * - 1,483,810 1,483,810 0.0% 7,154,161 20.7%
O1/O1/12 * - 1,483,810 1,483,810 0.0% 7,154,161 20.7%
* Because an actuarial valuation is being performed once every thre years,the amounts for
the O1/O1/08 and O1/Ol/09,and the O1/O1/10,O1/O1/ll and O1/O1/12 valuations are the same.
76
SUPPLEMENTARY INFORMATION
77
CITY OF SHAKOPEE
Scott County,Minnesota
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-
BUDGET AND ACTUAL-GENERAL FUND
For the Year Ended December 31,2012
Variance with
Variance with
Original and Actual Final Budget-
Final Budget Amounts Over(Under)
REVENUES
Property Taxes
General Property Taxes $ 11,585,400 $ 12,845,292 $ 1,259,892
Fiscal Disparities 1,630,520 1,676,669 46,149
LodgingTax 180,000 230,131 50,131
Tax Increments - 5,086 5,086
Aggregate Tax 12,000 15,902 3,902
Total Property Taxes 13,407,920 14,773,080 1,365,160
Special Assessments 13,000 13,228 228
Licenses and Permits 1,275,300 1,229,184 (46,116)
Intergovernmental Revenues
Federal Grants 5,000 23,941 18,941
PERA Aid 11,930 18,170 6,240
Police Aid 300,000 291,264 (8,736)
Fire Aid - 159,441 159,441
State Grants 424,630 477,966 53,336
Other Grants and Aids 8,000 20,663 12,663
Total Intergovernmental Revenues 749,560 991,445 241,885
Charges for Services
General Government 1,304,180 2,180,012 875,832
Public Safety 394,200 447,008 52,808
Public Works 283,200 357,048 73,848
PazksandRecreation 1,059,050 1,051,853 (7,197)
Totai Charges for Services 3,040,630 4,035,921 995,291
Fines and Forfeitures 436,000 368,167 (67,833)
Miscellaneous Revenues
Investment Income 275,000 89,975 (185,025)
Contributions and Donations 3,000 24,860 21,860
Rents 4,400 7,436 3,036
Other 64,000 237,052 173,052
Total Miscellaneous Revenues 346,400 359,323 12,923
Total Revenues 19,268,810 21,770,348 2,501,538
EXPENDITtiRES
General Government
Current:
Mayor and Council 190,729 154,341 (36,388)
Administration 1,013,687 894,981 (118,706)
City Clerk 352,722 257,832 (94,890)
Finance 837,605 843,134 5,529
Legal - 28,319 28,319
Planning 448,481 430,182 (18,299)
Government Buildings 429,083 392,087 (36,996)
Unallocated 225,000 111,242 (113,758)
CapitalOutlay 5,500 5,290 (210)
Total General Govemment 3,502,807 3,117,408 (385,399)
78
CITY OF SHAKOPEE
Scott County,biinnesota
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES 1N FUND BALANCES-
BUDGET AND ACTUAL-GENERAL FUND
For the Year Ended December 31,2012
(Conrinued)
Variance with
Original and Actual Final Budget-
Final Budget Amounts Over(Under)
EXPENDITliRES
Public Safety
Police $ 7,131,987 $ 6,836,268 $ (295,719)
Fire 1,816,277 1,872,288 56,011
Building Inspection 718,967 699,677 (19,290)
CapitalOutlay 80,000 - (80,000)
Total Public Safety 9,747,231 9,408,233 (338,998)
Public Works
Current:
Streets and Highways:
Engineering 661,179 498,876 (162,303)
Streets 2,112,394 1,817,001 (295,393)
Shop 94,779 33,165 (61,614)
CapitalOutlay 10,000 26,689 16,689
Total Public Works 2,878,352 2,375,731 (502,621)
Parks and Recreation
Current:
Parks and Recreation:
ParkMaintenance 1,581,162 1,574,169 (6,993)
Natural Resources 45,214 24,998 (20,216)
Library/Congregate Dining - 1,081 1,081
Recreation 2,365,905 2,192,481 (173,424)
Total Parks and Recreation 3,992,281 3,792,729 (199,552)
TotalExpenditures 20,120,671 18,694,101 (1,426,570)
Excess of Revenues Over
(Under)Expenditures (851,861) 3,076,247 3,928,108
OTHER FINANCING SOURCES(USES)
Transfers In 1,072,400 122,400 (950,000)
Transfers Out - (2,980,000) (2,980,000)
Total Other Financing Sources
(Uses) 1,072,400 (2,857,600) (3,930,000)
Net Change in Fund Balances $ 220,539 218,647 $ (1,892)
FU\D BALANCES
Beginning of Year 9,304,194
End ofYear $ 9,522,841
79
CITY OF SHAKOPEE
COMBINING BALANCE SHEET-
NONMAJOR GOVERNMENTAL FUNDS
December 31,2012
Special Revenue
Forfeiture Transit Telecommunication SCDP Grant
ASSETS
Cash and Investments $ 197,848 $ 1,089,306 $ 58,629 $ 22,350
Cash with Fiscal Agent - - - -
Taxes Receivable-Delinquent - - - -
Special Assessments Receivable:
Delinquent - - - -
Defened - - - -
Accounts Receivable 2,415 144,516 8,105 -
Interest Receivable 896 4,781 255 97
Due From Other Governments 420 - - -
Total Assets $ 201,579 $ 1,238,603 $ 66,989 $ 22,447
LIABILITIES AND FUND
BALANCES
Liabilities
Accounts Payable $ 5,392 $ 92,357 $ - $ -
Contracts Payable - - - -
Due to Other Funds - - - -
Due to Other Govemments 364 100,906 - -
Deferred Revenue - - - -
Total Liabilities 5,756 193,263 - -
Fund Balances
Restricted for:
Special Revenue 195,823 1,045,340 - 22,447
Debt Service - - - -
Capital Projects - - - -
Assigned - - 66,989 -
Unassigned - - - -
Total Fund Balances 195,823 1,045,340 66,989 22,447
Total Liabilities and
Fund Balances $ 201,579 $ 1,238,603 $ 66,989 $ 22,447
80
Special Revenue Debt Service
Economic 2004B 2004C 2004D
Revolving Development Refunding Improvement Building
Loan Authority Total Bonds Bonds Bonds
$ 251,546 $ 561,077 $ 2,180,756 $ 397,489 $ 643,103 $ 492,395
- - - - - 3,730,000
- 35 35 2,008 - -
- - - - 322,756 -
- - 155,036 - - -
1,093 2,138 9,260 1,074 2,359 115
- - 420 1,058 784 -
$ 252,639 $ 563,250 $ 2,345,507 $ 401,629 $ 969,002 $ 4,222,510
$ - $ 256 $ 98,005 $ 200 $ 200 $ 200
- - 101,270 - - -
- 35 35 2,008 322,756 -
- 291 199,310 2,208 322,956 200
252,639 562,959 2,079,208 - - -
- - - 399,421 646,046 4,222,310
- - 66,989 - - -
252,639 562,959 2,146,197 399,421 646,046 4,222,310
$ 252,639 $ 563,250 $ 2,345,507 $ 401,629 $ 969,002 $ 4,222,510
81
CITY OF SHAKOPEE
COMBINING BALANCE SHEET-
NONMAJOR GOVERNMENTAL FUNDS
December 31,2012
Debt Service
2006A 2007A 2007B 2008A
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds
ASSETS
Cash and Investments $ 771,132 $ 565,256 $ 381,657 $ 364,749
Cash with Fiscal Agent - - - -
Taxes Receivable-Delinquent - - - -
Special Assessments Receivable:
Delinquent 172 15,423 - 715
Defened 165,552 388,358 56,620 390,890
Accounts Receivable - - - -
Interest Receivable 2,480 2,021 1,441 1,585
Due From Other Governments - - 108 -
Total Assets $ 939,336 $ 971,058 $ 439,826 $ 757,939
LIABILITTES AND FUND
BALANCES
Liabilities
AccountsPayable $ 201 $ 201 $ 200 $ 200
Contracts Payable - - - -
Due to Other Funds - - - -
Due to Other Governments - - - -
Deferred Revenue 165,724 403,781 56,620 391,605
Total Liabilities 165,925 403,982 56,820 391,80�
Fund Balances
Restricted for:
Special Revenue - - - -
Debt Service 773,411 567,076 383,006 366,134
Capital Projects - - - -
Assigned - - - -
Unassigned - - - -
Total Fund Balances 773,411 567,076 383,006 366,134
Total Liabilities and
Fund Balances $ 939,336 $ 971,058 $ 439,826 $ 757,939
82
Debt Service Capital Projects
2010A
Improvement 2011A&2012
Bonds Bond Total Park Reserve TIF No. 10 Seal Coat
$ 405,776 $ 332,188 $ 4,353,745 $ 1,784,620 $ 20,165 $ 11,038
- 16,561 3,746,561 - - -
- - 2,008 - - -
2,542 233 19,085 - - -
234,578 146,725 1,705,479 - - -
- - - 20,135 - -
1,328 1,443 13,846 7,732 88 48
1,916 637 4,503 - - -
$ 646,140 $ 497,787 $ 9,845,227 $ 1,812,487 $ 20,253 $ 11,086
$ 200 $ - $ 1,602 $ 2,157 $ 19,975 $ -
- - - 132 - -
237,120 146,958 1,726,572 - - -
237,320 146,958 1,728,174 2,289 19,975 -
408,820 350,829 8,117,053 - - -
- - - 1,810,198 278 -
- - - - - 11,086
408,820 350,829 8,117,053 1,810,198 278 11,086
$ 646,140 $ 497,787 $ 9,845,227 $ 1,812,487 $ 20,253 $ 11,086
83
CITY OF SHAKOPEE
COMBINING BALANCE SHEET-
NONMAJOR GOVERNMENTAL FUND5
December 31,2012
Capital Projects
Tree Replacement Lions Park TIF No. 12 TIF No. 13
ASSETS
Cash and Investments $ 61,149 $ 14,137 $ 426 $ 18,882
Cash with Fiscal Agent - -
Ta�ces Receivable-Delinquent - - - -
Special Assessments Receivable:
Delinquent - - - -
Deferred - - - -
Accounts Receivable - - - -
Interest Receivable 266 61 2 82
Due From Other Governments - - - -
Total Assets $ 61,415 $ 14,198 $ 428 $ 18,964
LIABILITIES AND FUND
BALANCES
Liabilities
Accounts Payable $ - $ - $ 427 $ 14,102
Contracts Payable - - - -
Due to Other Funds - - - -
Due to Other Governments - - - -
Deferred Revenue - - - -
Total Liabilities - - 427 14,102
Fund Balances
Restricted for:
Special Revenue $ - $ - - -
Debt Service - - - -
Capital Projects - - 1 4,862
Assigned 61,415 14,198 -
Unassigned - - -
Total Fund Balances 61,415 14,198 1 4,862
Total Liabilities and
FundBalances $ 61,415 $ 14,198 $ 428 $ 18,964
84
Capital Projects
Total
Road Expansion Fire Station 2 Governmental
Dedication 2010 Projects Construction 2011 Projects Total Funds
$ 79,714 $ 129,652 $ 116,880 $ - $ 2,236,663 $ 8,771,164
- 3,746,561
- - - - - 2,043
- - - - - 19,085
- - - - - 1,705,479
- - - - 20,135 175,171
346 563 508 (1,669) 8,027 31,133
- - - - - 4,923
$ 80,060 $ 130,215 $ 117,388 $ (1,669) $ 2,264,825 $ 14,455,559
$ - $ - $ - $ - 36,661 $ 136,268
- - 19,696 - 19,696 19,696
- - - 383,296 383,296 383,296
- - - - ]32 101,402
- - - - - 1,726,607
- - 19,696 383,296 439,785 2,367,269
- - - - - 2,079,208
- - - - - 8,117,053
- - - - 1,815,339 1,815,339
80,060 130,215 97,692 - 394,666 461,655
- - - (384,965) (384,965) (384,965)
80,060 130,215 97,692 (384,965) 1,825,040 12,088,290
$ 80,060 $ 130,215 $ ll7,388 $ (1,669) $ 2,264,825 $ 14,455,559
85
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES,EXPE:VDITURES AND CHANGES
IN EUND BALANCES-NON�iAJOR GOVERNNiENTAL FUNDS
For the Year Ended December 31,2012
Special Revenue
Forfeiture Transit Telecommunication SCDP Grant
REVENUES
Property Taxes $ - $ - $ - $ -
Tax Increments - - - -
Special Assessments - - - -
Licenses and Permits - - 35,366 -
Intergovernmental:
State Grants - 687,018 - -
Other Grants and Aids - - - -
Chazges for Services - 404,351 - -
Fines and Forfeitures 50,307 - - -
Miscellaneous:
Investment Income 2,825 10,925 1,123 (15)
Contributions and Donations - - - -
Other 9,939 - 10,395 -
Total Revenues 63,071 1,102,294 46,884 (15)
EXPENDITURES
Current
General Government - 1,283,516 585 -
Public Safety 75,766 - - -
Culture and Recreation - - - -
Economic Development - - - -
Debt Service
Principal - - - -
Interest and Other Charges - - - -
Capital Outlay
General Government - - 24,991 -
Public Safety - - - -
Public Works - - - -
Pazk and Recreation - - - -
Total Expenditures 75,766 1,283,516 25,576 -
Excess of Revenues Over
(Under)Expendihues (12,695) (181,222) 21,308 (15)
OTAER FINANCING SOURCES(USES)
Bonds Issued - - - -
Premium on Bonds Issued - - - -
Transfers In - - - -
Transfers Out - (11,200) - -
Total Other Financing
Sources(Uses) - (1],200) - -
Net Change in Fund Balances (12,695) (192,422) 21,308 (15)
FUND BALANCES
Beginning of Year 208,518 1,237,762 45,681 22,462
End of Year $ 195,823 $ 1,045,340 $ 66,989 $ 22,447
86
Special Revenue Debt Service
Economic 2004B 2004C
Development Refunding Improvement 2004D Building
Revolving Loan Authority Total Bonds Bonds Bonds
$ - $ 27 $ 27 $ 119,444 $ - $ -
- - - - 109,053 -
- 10,500 45,866 - - -
- - 687,018 - - -
- 15,000 15,000 - - -
- 6,000 410,351 - - -
- - 50,307 - - -
3,563 7,604 26,025 2,907 3,758 3,255
- - 20,334 - - -
3,563 39,131 1,254,928 122,351 112,811 3,255
- - 1,284,101 - - -
- - 75,766 - - -
- 42,747 42,747 - - -
- - - 190,000 250,000 255,000
71 - 71 45,651 34,213 185,181
- - 24,991 - - -
71 42,747 1,427,676 235,651 284,213 440,181
3,492 (3,616) (172,748) (113,300) (171,402) (436,926)
- - - - - 3,730,000
- 80,000 80,000 150,000 100,000 465,000
- (ll,200) (22,400) - - -
- 68,800 57,600 150,000 100,000 4,195,000
3,492 65,184 (115,148) 36,700 (71,402) 3,758,074
249,147 497,775 2,261,345 362,721 717,448 464,236
$ 252,639 $ 562,959 $ 2,146,197 $ 399,421 $ 646,046 $ 4,222,310
87
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES
IN FUND BALANCES-NONMAJOR GOVERNMENTAL FtiNDS
For the Year Ended December 31,2012
Debt Service
2006A 2007A 2007B 2008A
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds
REVENUES
Property TaYes $ - $ - $ - $ -
Tax Increments - - - -
Special Assessments 80,937 444,493 23,505 133,482
Licenses and Permits - - - -
Intergovernmental:
State Grants - - - -
Other Grants and Aids - - - -
Charges for Services - - - -
Fines and Forfeitures - - - -
Miscellaneous:
Investment Income 1,442 7,227 2,981 1,508
Contributions and Donations - - - -
Other - - - -
Total Revenues 82,379 451,720 26,486 134,990
EXPENDITURES
Current
General Government - - - -
Public Safety - - - -
Culture and Recreation - - - -
Economic Development - - - -
Debt Service
Principal 340,000 105,000 145,000 190,000
Interest and Other Charges 80,233 35,731 39,249 58,988
Capital OuUay
General Government - - - -
Public Safety - - - -
Public Works - - - -
Park and Recreation - - - -
Total Expenditures 420,233 140,731 184,249 248,988
Excess of Revenues Over
(Under)Expenditures (337,854) 310,989 (157,763) (113,998)
OTHER FINANCING SOURCES(USES)
Bonds Issued - - - -
Premium on Bonds Issued - - - -
Transfers In 200,000 100,000 50,000 -
Transfers Out - - - -
Total Other Financing
Sources(Uses) 200,000 100,000 50,000 -
Net Change in Fund Balances (137,854) 410,989 (107,763) (113,998)
FUND BALANCES
Beginning of Year 911,265 156,087 490,769 480,132
End of Year $ 773,411 $ 567,076 $ 383,006 $ 366,134
88
Debt Service Capital Projects
2010A
Improvement 2011A&2012 Tree
Bonds Bond Total Seal Coat Pazk Reserve TIF No. 10 Replacement
$ 135,450 $ - $ 254,894 $ - $ - $ - $ -
- - - - - 39,950 -
65,578 42,622 899,670 - - - -
- - - - 1,166,196 - -
- - - - 2,731 - -
4,626 8,194 35,898 189 29,477 (54) 1,047
- - - 10,897 60,000 - 60,368
205,654 50,816 1,190,462 11,086 1,258,404 39,896 61,415
- - - - 6,994 - -
- - - - - 39,986 -
190,000 - 1,665,000 - - - -
25,490 54,914 559,650 - - - -
- - - - 394,405 - -
215,490 54,914 2,224,650 - 401,399 39,986 -
(9,836) (4,098) (1,034,188) 11,086 857,005 (90) 61,415
- - 3,730,000 - - - -
- 73,480 73,480 - - - -
100,000 - 1,165,000 - - - -
100,000 73,480 4,968,480 - - - -
90,164 69,382 3,934,292 11,086 857,005 (90) 61,415
318,656 281,447 4,182,761 - 953,193 368 -
$ 408,820 $ 350,829 $ 8,117,053 $ 11,086 $ 1,810,198 $ 278 $ 61,415
89
CITY OF SHAKOPEE
COMBINING STATEMEYT OF REVENUES,EXPENDITURES AND CHANGES
IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31,2012
Capital Projects
Road
Expansion
TIF No. 12 Lions Park TIF No. 13 Dedication
REVENUES
Properry TaYes $ - $ - $ - $ -
Tax Increments 42,614 - 31,338 -
Special Assessments - - - -
Licenses and Permits - - - -
Intergovernmental:
State Grants - - - -
Other Grants and Aids - - - -
Charges for Services - - - -
Fines and Forfeitures - - - -
Miscellaneous:
Investment Income (762) 242 (2) 1,366
Contributions and Donations - 13,956 - 78,694
Other - - - -
Total Revenues 41,852 14,198 31,336 80,060
EXPENDITURES
Current
General Government - - - -
Public Safety - - - -
Culture and Recreation - - - -
Economic Development 42,632 - 30,327 -
Debt Service
Principal - - - -
Interest and Other Charges - - - -
Capital Outlay
General Govemment - - - -
Public Safety - - - -
Public Works - - - -
Park and Recreation - - - -
Total Expenditures 42,632 - 30,327 -
Excess of Revenues Over
(Under)Expenditures (780) 14,198 1,009 80,060
OTHER FINANCING SOURCES(USES)
Bonds Issued - - - -
Premium on Bonds Issued - - - -
Transfers In - - - -
Transfers Out - - - -
Total Other Financing
Sources(Uses) - - - -
Net Change in Fund Balances (780) 14,198 1,009 80,060
FUND BALAI�CES
Beginning of Year 781 - 3,853 -
End of Year $ 1 $ 14,198 $ 4,862 $ 80,060
90
Capital Projects
Total Other
Fire Station 2 Governmental
2010 Projects Construction 2011 Projects Total Funds
$ - $ - $ - $ - $ 254,921
- - - 113,902 113,902
- - - - 899,670
- - - 1,166,196 1,212,062
- - 66,387 66,387 753,405
- - - - 15,000
- - - 2,731 413,082
- - - - 50,307
1,344 (1,417) 8,672 40,102 102,025
- - - 223,915 223,915
- - - - 20,334
1,344 (1,417) 75,059 1,613,233 4,058,623
- - - - 1,284,101
- - - - 75,766
- - - 6,994 6,994
- - - ]12,945 155,692
- - - - 1,665,000
- - - - 559,721
- - - - 24,991
- 185,248 - 185,248 185,248
- - (24,065) (24,065) (24,065)
- - - 394,405 394,405
- 185,248 (24,065) 675,527 4,327,853
1,344 (186,665) 99,124 937,706 (269,230)
- - - - 3,730,000
- - - - 73,480
- - - - 1,245,000
- - - - (22,400)
- - - - 5,026,080
1,344 (186,665) 99,124 937,706 4,756,850
128,871 284,357 (484,089) 887,334 7,331,440
$ 130,215 $ 97,692 $ (384,965) $ 1,825,040 $ 12,088,290
91
CITY OF SHAKOPEE
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL -
TRANSIT FUND
For the Year Ended December 31,2012
Original Variance with
And Final Actual Final Budget-
Budget Amounts Over (Under)
REVENUES
Intergovernmental Revenue
State Grants $ 719,140 $ 687,018 $ (32,122)
Charges for Services
General Government 237,700 404,351 166,651
Miscellaneous Revenues
Investment Income 42,000 10,925 (31,075)
Total Revenues 998,840 1,102,294 103,454
EXPENDITURES
Current:
General Government 1,240,547 1,283,516 42,969
Excess of Revenues Over
(Under) Expenditures (241,707) (181,222) 60,485
OTHER FINANCING USES
Transfers Out (11,200) (11,200) -
Net Change in Fund Balance $ (252,907) (192,422) $ 60,485
FUND BALANCE
Beginning of Year 1,237,762
End of Year $ 1,045,340
92
CITY OF SHAKOPEE
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES
IN FUND BALANCE- BUDGET AND ACTUAL-
ECONOMIC DEVELOPMENT AUTHORITY FUND
For the Year Ended December 31,2012
Original Variance with
And Final Actual Final Budget-
Budget Amounts Over(Under)
REVENUES
Property Taxes
Property Taxes $ 80,000 $ 27 $ (79,973)
Licenses and Permits - 10,500 10,500
Intergovernmental Revenue:
Other Grants and Aids - 15,000 15,000
Charges for Services:
General Government - 6,000 6,000
Miscellaneous Revenues
Investment Income 10,000 7,604 (2,396)
Total Revenues 90,000 39,131 (50,869)
EXPENDITURES
Economic Development
Current 41,989 42,747 758
Excess of Revenues Over
(Under)Expenditures 48,011 (3,616) (51,627)
OTHER FINANCING SOURCES (USES)
Transfers In - 80,000 80,000
Transfers Out (11,200) (11,200) -
Total Other Financing Sources
(Uses) (ll,200) 68,800 80,000
Net Change in Fund Balance $ 36,811 65,184 $ 28,373
FUND BALANCE
Beginning of Year 497,775
End of Year $ 562,959
93
CITY OF SHAKOPEE
COMBINING STATEMENT OF FUND NET POSITION-
INTERNAL SERVICE FLNDS
December 31,2012
Governmental Activities-Internal Service Funds
n ormation
Employee and
Equipment Buildings Park Assets Benefits Technology Total
ASSETS
Current Assets
Cash and Investments,Including
Cash Equivalents $ 7,073,775 $ 6,007,379 $1,630,637 $ 1,408,232 $ 343,261 $ 16,463,284
interestReceivable 31,028 28,125 6,671 6,118 1,056 72,998
Notes Receivable,Current Portion 95,000 - - - - 95,000
Total Current Assets 7,199,803 6,035,504 1,637,308 1,414,350 344,317 16,631,282
Noncurrent Assets
Notes Receivable 95,000 - - - - 95,000
Capital Assets:
Construction in Progress - 150,752 - - - 150,752
Buildings - 31,603,795 3,191,559 - - 34,795,354
Infrastructure - - 2,923,925 - - 2,923,925
Machinery and Equipment 8,470,946 135,700 3,486,925 - 160,002 12,253,573
Total Cost 8,470,946 31,890,247 9,602,409 - 160,002 50,123,604
Less Accumulated Depreciation (4,289,409) (9,299,595) (2,934,136) - (43,647) (16,566,787)
Net Capital Assets 4,181,537 22,590,652 6,668,273 - 116,355 33,556,817
Total Noncurrent Assets 4,276,537 22,590,652 6,668,273 - 116,355 33,651,817
Total Assets $ 11,476,340 $28,626,156 $8,305,581 $ 1,414,350 $ 460,672 $ 50,283,099
LIABILITIES AND�ET POSITION
Current Liabilities
Accounts Payable $ 111,961 $ 77,621 $ - $ - $ 3,588 $ 193,170
Due to Other Governments 3,987 - - - 24 4,011
Current Compensated Absences - - - 784,164 - 784,164
Total Current Liabilities 115,948 77,621 - 784,164 3,612 981,345
Noncurrent Liabilities
Compensated Absences - - - 958,423 - 958,423
Total Liabilities 115,948 77,621 - 1,742,587 3,612 1,939,768
Net Position
Investment in Capital Assets 4,181,537 22,590,652 6,668,273 - 116,355 33,556,817
Unrestricted 7,178,855 5,957,883 1,637,308 (328,237) 340,705 14,786,514
Total Net Position 11,360,392 28,548,535 8,305,581 (328,237) 457,060 48,343,331
Total Liabilities and
Net Position $ 11,476,340 $28,626,156 $8,305,581 $ 1,414,350 $ 460,672 $ 50,283,099
94
CITY OF SHAKOPEE
C014BINING STATEMENT OF REVENUES,EXPENSES
AND CHANGES IN FUND NET ASSETS-
INTERNAL SERVICE FUNDS
For the Year Ended December 31,2012
Govemmental Activities-Intemal Service Funds
In ormation
Employee and
Equipment Buildings Pazk Assets Benefits Technology Total
OPERATING REVENUES
Rental Charges $ 634,280 $ 664,616 $ 483,744 $ - $ 275,500 $ 2,058,140
Other Charges - - 5,000 - - 5,000
Total Operating Revenues 634,280 664,616 488,744 - 275,500 2,063,140
OPERATING EXPENSES
Employee Benefits - - - 123,495 - 123,495
Materials and Supplies 16 114,441 - - 160,044 274,501
Repairs and Maintenance - 24,365 - - 7,657 32,022
Professional Services - 669 - - 8,885 9,554
Depreciation 548,708 735,476 359,050 - 40,083 1,683,317
TotalOperatingEapenses 548,724 874,951 359,050 123,495 216,669 2,122,889
Operating Income(Loss) 85,556 (210,335) 129,694 (123,495) 58,831 (59,749)
NONOPERATING REVENUES
Investment Income 120,824 70,031 27,951 16,956 2,429 238,191
Gain(Loss)on Disposal of Assets 11,769 - - - - 11,769
Total Nonoperating Revenues 132,593 7Q031 27,951 16,956 2,429 249,960
Income(Loss)before Capital
Contributions and Transfers 218,149 (140,304) 157,645 (106,539) 61,260 190,211
Capital Contributions - - 3,667 - - 3,667
Transfers In - - 100,000 - 100,000 200,000
Transfers Out - (465,000) - - - (465,000)
Change in Net Position 218,149 (605,304) 261,312 (106,539) 161,260 (71,122)
NET POSITION
BeginningofYear 11,142,243 29,153,839 8,044,269 (221,698) 295,800 48,414,453
End of Year $11,360,392 $28,548,535 $8,305,581 $ (328,237) $ 457,060 $48,343,331
95
CITY OF SHAKOPEE
COMBINING STATEMENT OF CASH FLOWS-
INTER'VAL SERVICE FUNDS
For the Year Ended December 31,2012
Inf'ortnation
Employee and
Equipment Buildings Pazk Assets Benefits Technology Total
CASH FLOWS-OPERATING ACTIVITIES
Receipts from Customers and Users $ 634,280 $ 664,616 $ 488,744 $ - $ 275,500 $ 2,063,140
Payments to Suppliers (16) (134,454) - - (341,928) (476,398)
Payments to Employees - - - (84,806) (84,806)
Net Cash Flows-Operating
Activities 634,264 530,162 488,744 (84,806) (66,428) 1,501,936
CASH FLOWS-NONCAPITAL
FINANCING ACTIVITIES
Transfer from Other Funds - - 100,000 - 100,000 200,000
Transfer ta Other Funds - (465,000) - - (465,000)
Net Cash Flows-Noncapital
Fi�ancing Activities - (465,000) 1OQ000 - 100,000 (265,000)
CASH FLOWS-CAPITAL AND RELATED
FINANCING ACTIVTCIES
Proceeds from Disposal of Capital Assets 248,485 - - - - 248,485
Acquisition of Capital Assets (69Q914) (1,240,744) (46,079) - (1,977,737)
Net Cash Flows-Capital and
Related Financing Activities (442,429) (1,240,744) (46,079) - - (],729,252)
CASH FLO�'VS-INVESTING ACTIVITIES
Payment Received for Notes Receivable 90,000 - - - - 90,000
InterestReceived ll5,075 71,483 24,915 ]6,957 2,384 23Q814
Net Cash Flows-Investing
Activities 205,075 71,483 24,915 16,957 2,384 32Q814
Net Change in Cash and Cash Equivalents 396,910 (1,104,099) 567,580 (67,849) 35,956 (171,502)
CASH AND CASH EQUIVALENTS
Beginning of Year 6,676,865 7,111,478 1,063,057 1,476,08] 307,305 16,634,786
End of Year S 7,073,775 $6,007.379 $1,630.637 $1,408,232 �, 343,261 $ 16,463,284
RECONCILIATION OF OPERATING
INCOME(LOSS)TO NET CASH
FLOWS-OPERATING ACTIVITIES
Operating Income(Loss) $ 85,556 $ (210,335) $ 129,694 $ (123,495) $ 58,831 $ (59,749)
Adjustments to Reconcile Operating
Income(Loss)to Net Cash
Flows-Operating Activities:
Depreciation Expense 548,708 735,476 359,050 - 40,083 1,683,317
Changes in:
Due to Other Govemments - 24 24
Accounts Payable - 5,021 - - (165,366) (160,345)
Compensated Absences Payable - - - 38,689 38,689
TotalAdjustments 548,708 74Q497 359,050 38,689 (125,259) 1,561,685
Net Cash Flows-Operating
Activities $ 634,264 $ 530,162 $ 488,744 $ (84,806) $ (66,428) $ 1,501,936
NONCASH INVESTI�i'G,CAPITAL A\D
FINA\CING ACTIVTTIES
Contributions of Capital Assets from the
Municipality and Developers � - $ - $ 3,667 $ - $ - $ 3,667
96
CITY OF SHAKOPEE
COMBINED STATEMENT OF FIDUCIARY NET POSITION
December 31,2012
Escrow Agency Southwest Metro Total Agency
Fund Drug Task Force Funds
ASSETS
Cash and Investments $ 749,973 $ 731,117 $ 1,481,090
Interest Receivable - 3,119 3,ll9
Due from Other Governments - 50,033 50,033
Total Assets $ 749,973 $ 784,269 $ 1,534,242
LIABILITIES
Accounts Payable $ - $ 677,467 $ 677,467
Due to Other Governments - 21,380 21,380
Deposits Payable 749,973 85,422 835,395
Total Liabilities $ 749,973 $ 784,269 $ 1,534,242
97
CITY OF SHAKOPEE
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES-
AGENCY FUNDS
For the Year Ended December 31,2012
Escrow Agency Fund
Balance at Balance at
December 31, December 31,
2011 Additions Deductions 2012
ASSETS
Current
Cash and Investments $ 1,563,629 $ 568,505 $ 1,382,161 $ 749,973
LIABILITIES
Accounts Payable $ 2,777 $ - $ 2,777 $ -
Deposits Payable 1,560,852 568,505 1,379,384 749,973
Total Liabilities $ 1,563,629 $ 568,505 $ 1,382,161 $ 749,973
Southwest Metro Drug Task Force Agency Fund
Balance at Balance at
December 31, December 31,
2011 Additions Deductions 2012
ASSETS
Current
Cash and Investments $ 715,778 $ 428,607 $ 413,268 $ 731,117
Receivables:
Accounts Receivable 9,379 - 9,379 -
Interest Receivable 2,790 329 - 3,ll9
Due from Other Governments 39,128 10,905 - 50,033
Total Assets $ 767,075 $ 439,841 $ 422,647 $ 784,269
LIABILITIES
Accounts Payable $ 680,278 $ 359,150 $ 361,961 677,467
Due to Other Governments - 21,380 - 21,380
Deposits Payable 86,797 59,311 60,686 85,422
Total Liabilities $ 767,075 $ 439,841 $ 422,647 $ 784,269
98
CITY OF SHAKOPEE
Scott County, Minnesota
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES-
AGENCY FUNDS
For the Year Ended December 31,2012
Total Agency Funds
Balance at Balance at
December 31, December 31,
2011 Additions Deductions 2012
ASSETS
Current
Cash and Investments $ 2,279,407 $ 997,112 $ 1,795,429 $ 1,481,090
Receivables:
Accounts Receivable 9,379 - 9,379 -
Interest Receivable 2,790 329 - 3,119
Due from Other Governments 39,128 10,905 - 50,033
Total Assets $ 2,330,704 $ 1,008,346 $ 1,804,808 $ 1,534,242
LIABILITIES
Accounts Payable $ 683,055 $ 359,150 $ 364,738 $ 677,467
Due to Other Governments - 21,380 - 21,380
Deposits Payable 1,647,649 627,816 1,440,070 835,395
Total Liabilities $ 2,330,704 $ 1,008,346 $ 1,804,808 $ 1,534,242
99
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100
STATISTICAL SECTION
101
(THIS PAGE LEFT BLANK INTENTIONALL�
102
CITY OF SHAKOPEE
STATISTICAL SECTION
December 31,2012
This part of the City's Comprehensive Annual Financial Report(CAFR)presents detailed information for
placing in context and understanding what the information shown in the financial statements,note
disclosures and required supplementary information reveals about the City's overall financial health.
CONTENTS Page
Financial Trends 104
These schedules show trend information to help the reader
understand how the City's financial performance and
well being have changed over time.
Revenue Capacity 114
Portrayed is information to help the reader assess the
City's most important local revenue source,the property tax.
Debt Capacity 118
These schedules present information to help the reader assess
the affordability of the City's current levels of outstanding
debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information 125
Shown are demographic and economic indicators to help the
reader understand the environment within which the City's
financial activities take place.
Operating Information 128
These schedules shown service and infrastructure data to
help the reader understand how the information in the City's
financial report relates to the services the City provides
and the activities it performs.
Source: Unless noted otherwise,the information in these schedules is from the CAFR for the relevant
year.
103
CITY OF SHAKOPEE
NET POSITION BY COMPONENT
Years 2003 Through 2012
2003 2004 2005 2006
Governmental Activities:
Invested in Capital Assets,
Net of Related Debt $ 94,388,758 $ 90,281,410 $ ll 1,237,672 $ 119,661,761
Restricted 15,231,314 29,731,412 21,638,112 12,998,982
Unrestricted 15,241,647 21,214,073 21,845,121 29,264,714
Total Governmental
Activities Net Position $ 124,861,719 $ 141,226,895 $ 154,720,905 $ 161,925,457
Business-Type Activities:
Invested in Capital Assets,
Net of Related Debt $ 81,725,264 $ 89,415,817 $ 99,140,973 $ 109,337,014
Restricted 978,371 1,867,077 2,232,469 880,069
Unrestricted 38,234,063 37.354,576 41,291,469 42,400,797
Total Business-Type
Activities Net Position $ 120,937,698 $ 128,637,470 $ 142,664,911 $ 152,617,880
Primary Government:
Invested in Capital Assets,
Net of Related Debt $ 176,114,022 $ 179,697,227 $ 210,378,645 $ 228,998,775
Restricted 16,209,685 31,598,489 23,870,581 13,879,051
Unrestricted 53,475,710 58,568,649 63,136,590 71,665,511
Total Primary
Government Net Position $ 245,799,417 $ 269,864,365 $ 297,385,816 $ 314,543,337
From 2003-2010,the SPUC Funds,Water and Electric Enterprise Funds,were reported as a
blended component unit of the City. In 2011,SPUC funds have been presented as discretely
presented component units as it no longer met the criteria for blending.
104
Table 1
2007 2008 2009 2010 2011 2012
$ 113,534,056 $ 112,909,793 $ 112,097,148 $ 111,905,152 $ 114,981,955 $ 115,191,768
13,081,337 21,915,945 16,518,865 1,844,129 10,914,439 9,912,551
28,316,931 22,086,771 28,832,576 43,910,102 32,771,327 34,823,712
$ 154,932,324 $ 156,912,509 $ 157,448,589 $ 157,659,383 $ 158,667,721 $ 159,928,031
$ 114,546,218 $ 115,124,238 $ 114,331,216 $ 115,064,968 $ 65,080,070 $ 64,124,590
1,026,351 1,756,369 3,574,612 4,889,050 - -
46,169,289 49,366,581 55,595,594 59,014,070 31,927,930 33,354,521
$ 161,741,858 $ 166,247,188 $ 173,501,422 $ 178,968,088 $ 97,008,000 $ 97,479,111
$ 228,080,274 $ 228,034,031 $ 226,428,364 $ 226,970,120 $ 180,062,025 $ 179,316,358
14,107,688 23,672,314 20,093,477 6,733,179 10,914,439 9,912,551
74,486,220 71,453,352 84,428,170 102,924,172 64,699,257 68,178,233
$ 316,674,182 $ 323,159,697 $ 330,950,011 $ 336,627,471 $ 255,675,721 $ 257,407,142
105
CITY OF SHAKOPEE
CHANGES IN NET POSITION
Years 2003 Through 2012
2003 2004 2005 2006
EXPENSES:
Governmental Activities:
General Government $ 2,761,210 $ 3,135,421 $ 2,563,526 $ 3,161,106
Public Safety 4,995,127 5,461,190 6,190,689 6,856,485
Public Works 3,673,623 6,036,920 8,298,258 6,798,917
Culture and Recreation 894,321 2,150,765 3,664,944 4,653,240
Economic Development 683,035 360,167 314,858 333,462
Other 668,531 861,864 924,270 896,110
Total Governmental Activities Expenses 13,675,847 18,006,327 21,956,545 22,699,320
Business-Type Activities:
Electric 17,634,004 19,820,900 23,378,764 29,169,297
Water 2,337,860 2,723,003 2,460,977 2,949,990
Sewer 1,835,242 2,009,468 2,349,047 2,786,234
Storm 800,092 941,842 999,849 1,523,343
Total Business-Type Activities Expenses 24,159,722 25,495,213 29,188,637 36,428,864
TotalPrimaryGovernmentExpenses $ 37,835,569 $ 43,501,540 $ 51,145,182 $ 59,128,184
PROGRAM REVENUES:
Governmental Activities:
Charges for Services:
General Government $ 1,706,644 $ 3,591,641 $ 791,504 $ 714,105
Public Safety 2,408,012 3,446,465 3,462,283 2,063,023
Public Works 3,691,149 4,534,285 2,668,728 2,986,495
Culture and Recreation 1,330,062 1,497,853 1,826,847 1,676,630
Economic Development - - - -
Operating Grants and Contributions 2,622,953 4,303,581 3,646,605 1,653,238
Capital Grants and Contributions 11,009 - 8,666,283 6,116,366
Total Governmental Activities
Program Revenues 11,769,829 17,373,825 21,062,250 15,209,857
Business-Type Activities:
Charges for Services:
Electric 19,733,990 22,161,542 27,425,921 31,906,714
Water 2,569,848 2,349,505 2,627,084 3,127,207
Sewer 2,827,777 3,078,191 2,971,601 3,471,984
Storm 1,947,139 1,806,974 1,937,430 1,859,912
Recreation 758,124 - - -
Operating Grants and Contributions 2,345 - - -
Capital Grants and Contributions 8,800,811 10,844,269 10,913,464 6,174,786
Total Business-Type Activities
Program Revenues 36,640,034 40,240,481 45,875,500 46,540,603
Total Primary Government
Program Revenues $ 48,409,863 $ 57,614,306 $ 66,937,750 $ 61,750,460
Net(Expense)Revenue:
Governmental Activities $ (1,906,018) $ (632,502) $ (894,295) $ (7,489,463)
Business-Type Activities 12,480,312 14,745,268 16,686,863 10,111,739
Total Primary Government Net Expense $ 10,574,294 $ 14,112,766 $ 15,792,568 $ 2,622,276
106
Table 2
2007 2008 2009 2010 2011 2012
$ 3,543,980 $ 3,514,573 $ 3,388,268 $ 3,042,918 $ 4,252,887 $ 4,603,027
8,301,075 8,346,104 8,528,413 9,123,316 9,236,767 9,430,785
15,264,606 8,099,384 7,860,080 8,397,874 7,094,047 7,083,299
5,323,087 3,637,527 3,859,670 3,765,660 3,866,307 3,817,677
363,805 522,074 316,566 427,169 244,361 152,541
1,042,133 1,033,999 1,040,044 784,824 619,099 587,384
33,838,686 25,153,661 24,993,041 25,541,761 25,313,468 25,674,713
34,710,974 36,186,676 30,140,842 32,700,410 - -
3,332,132 3,461,261 3,316,102 3,293,079 - -
2,938,955 3,308,759 3,398,117 3,685,417 3,807,322 3,926,541
1,352,078 1,435,376 1,264,261 1,792,749 1,382,391 1,445,633
42,334,139 44,392,072 38,119,322 41,471,655 5,189,713 5,372,174
$ 76,172,825 $ 69,545,733 $ 63,112,363 $ 67,013,416 $ 30,503,181 $ 31,046,887
$ 583,247 $ 606,259 $ 680,681 $ 652,686 $ 721,180 $ 3,356,772
1,650,235 1,506,680 1,677,772 1,716,573 1,503,188 1,524,158
2,615,402 2,354,276 1,342,173 941,224 478,788 454,145
1,086,750 1,295,772 1,013,044 1,039,820 1,071,482 2,222,430
- - - - 7,100 16,500
1,943,805 1,660,191 1,485,124 2,943,857 3,606,089 2,106,559
2,463,129 1,825,124 1,241,884 952,450 3,152,881 1,479,343
10,342,568 9,248,302 7,440,678 8,246,610 10,540,708 11,159,907
37,407,565 38,732,701 34,272,099 36,872,008 - -
3,525,140 3,390,309 3,605,498 4,417,498 - -
2,806,371 2,556,299 3,485,882 3,508,947 2,941,753 3,728,189
1,505,247 1,379,821 1,405,560 1,281,986 1,083,878 1,442,394
- - - 6,415 - -
4,138,977 1,007,519 1,879,530 1,661,001 93,810 348,756
49,383,300 47,066,649 44,648,569 47,747,855 4,119,441 5,519,339
$ 59,725,868 $ 56,314,951 $ 52,089,247 $ 55,994,465 $ 14,660,149 $ 16,679,246
$ (23,496,118) $ (15,905,359) $ (17,552,363) $ (17,295,151) $ (14,772,760) $ (14,514,806)
7,049,161 2,674,577 6,529,247 6,276,200 (1,070,272) 147,165
$ (16,446,957) $ (13,230,782) $ (11,023,116) $ (11,018,951) $ (15,843,032) $ (14,367,641)
107
CITY OF SHAKOPEE
CHANGES IN POSITION
Years 2003 Through 2012
2003 2004 2005 2006
GENERAL REVENUES AND OTHER
CHANGES IN NET ASSETS:
Governmental Activities:
Taxes:
Property Ta�ces $ 7,995,002 $ 7,842,043 $ 9,341,977 $ 10,547,177
Other Ta�ces 507,706 364,211 314,858 336,648
Unrestricted Investment Earnings 550,705 740,612 951,795 1,661,257
Gain on Disposal of Assets 69,623 294,833 746,340 2,700
Enterprise Fund Reclassed to
Special Revenue - 5,539,108 1,658,132 -
Transfers 443,651 2,215,871 1,375,203 2,146,233
Total Governmental Activities 9,566,687 16,996,678 14,388,305 14,694,015
Business-Type Activities:
Investment Earnings 942,040 709,483 870,714 1,973,715
Gain on Disposal of Assets 9,260 - 409,918 13,749
SpecialItem - (5,539,108) (1,658,132) -
Transfers (443,651) (2,215,871) (1,375,203) (2,146,233)
Total Business-Type Activities 507,649 (7,045,496) (1,752,703) (158,769)
Total Primary Government $ 10,074,336 $ 9,951,182 $ 12,635,602 $ 14,535,246
Change in Net Position:
GovernmentActivities $ 7,660,669 $ 16,364,176 $ 13,494,010 $ 7,204,552
Business-Type Activities 12,987,961 7,699,772 14,934,160 9,952,970
Total Primary Government $ 20,648,630 $ 24,063,948 $ 28,428,170 $ 17,157,522
From 2003-2010,the SPUC funds,Water and Electric Enterprise Funds,were reported as a blended component
unit of the City. In 201 l,SPUC Funds have been presented as discretely presented component units as it
no longer met the criteria for biending.
108
Table 2(Continued)
2007 2008 2009 2010 2011 2012
$ 12,767,354 $ 14,200,833 $ 14,676,518 $ 14,229,111 $ 14,487,805 $ 15,002,764
369,240 388,935 151,956 147,561 160,884 113,902
2,232,717 1,941,335 1,323,230 1,039,867 1,032,409 546,681
22,628 56,453 37,162 - - 11,769
1,111,046 1,297,988 1,899,577 2,089,406 100,000 100,000
16,502,985 17,885,544 18,088,443 17,505,945 15,781,098 15,775,116
3,185,863 3,128,741 1,336,979 1,279,872 758,182 423,946
(1,111,046) (1,297,988) (1,899,577) (2,089,406) (100,000) (100,000)
2,074,817 1,830,753 (562,598) (809,534) 658,182 323,946
$ 18,577,802 $ 19,716,297 $ 17,525,845 $ 16,696,411 $ 16,439,280 $ 16,099,062
$ (6,993,133) $ 1,98Q185 $ 536,080 $ 210,794 $ 1,008,338 $ 1,260,310
9,123,978 4,505,330 5,966,649 5,466,666 (412,090) 471,111
$ 2,130,845 $ 6,485,515 $ 6,502,729 $ 5,677,460 $ 596,248 $ 1,731,421
109
CITY OF SHAKOPEE
Table 3
FUND BALANCES-GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2003 2004 2005 2006
General Fund:
Nonspendable:
Prepaids $ - $ - $ - $ -
Reserved 79,003 13,586 16,465 1,490,157
Restricted for:
BATC Litigation - - - -
Committed to:
Working Capital - - - -
Unreserved 5,565,816 '7,233,268 9,662,677 8,354,477
Unassigned - - - -
Total General Fund $ 5,644,819 $ 7,246,854 $ 9,679,142 $ 9,844,634
All Other Governmental Funds
Reserved:
Special Revenue Funds $ 1,778,684 $ 2,232,061 $ 2,861,564 $ 3,386,721
Debt Service Funds 6,369,303 10,837,684 9,236,020 7,930,114
Capital Projects Funds 7,088,887 17,088,803 9,915,610 8,082,799
Restricted for:
Forfeitures - - - -
Transit - - - -
Telecomminication - - - -
SCDP Grant - - - -
Revolving Loans - - - -
Economic Development - - - -
Debt Service - - - -
Capital Improvements - - - -
Committed to:
Working Capital - - - -
Transit - - - -
Revolving Loans - - - -
Economic Development - - - -
Park Projects - - - -
Capital Improvements - - - -
2008 Projects - - - -
2009 Projects - - - -
2010 Projects - - - -
Fire Station 2 - - - -
Assigned to:
Capital Improvements - - - -
Capital Projects Funds - - - -
Telecomminication - - - -
Unreserved
Special Revenue Funds - (4,971) - -
Debt Service Funds - - - -
Capital Projects Funds (705,537) (28,081) (1,833,937) (1,205,899)
Unassigned - - - -
Total all Other
Governmental Funds $ 14,531,337 $ 30,125,496 $ 20,179,257 $ 18,193,735
Note: GASB Statement No.54 was implemented in 2010.
Only 2010-2012 are repor[ed in compliance with GASB Statement No.54. 2003-2009 are reported as previously stated.
110
Table 3(Continued)
2007 2008 2009 2010 2011 2012
$ - $ - $ - 149,940 131,447 19,189
1,810,650 1,126,074 799,276 - - -
- - - 218,032 - -
- - - 345,820 - -
7,896,883 8,733,528 10,703,004 - - -
- - - 8,323,938 9,172,747 9,503,652
$ 9,707,533 $ 9,859,602 $ 11,502,280 $ 9,037,730 $ 9,304,194 $ 9,522,841
$ 2,489,775 $ 2,738,909 $ 2,677,290 $ - $ - $ -
3,849,703 4,873,440 4,185,059 - - -
- - - 189,112 208,518 195,823
- - - 1,158,355 1,237,762 1,045,340
- - - 49,192 45,681 -
- - - 55,743 22,462 22,447
- - - 143,023 249,147 252,639
- - - 447,319 497,775 562,959
- - - 5,127,697 4,625,946 9,574,198
- - - 2,203,238 958,195 1,815,339
- - - 345,820 - -
- - - 463,470 - -
- - - 100,000 - -
- - - 20.930 - -
- - - 1,785,164 - -
- - - 3,616,689 - -
- - - 190,431 - -
- - - 14,876 - -
- - - 131,398 - -
- - - 2,476,886 - -
- - - - 6,964,247 8,681,475
- - - - 413,228 394,666
- - - - - 66,989
993,555 1,130,452 - - - -
7,941,439 7,658,289 7,504,770 - - -
1,673,762 1,994,812 2,453,383 - - -
- - - (116,803) (484,089) (384,965)
$ 16,948,234 $ 18,395,902 $ 16,820,502 $ 18,402,540 $ 14,738,872 $ 22,226,910
111
CITY OF SHAKOPEE
Table 4
CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2003 2004 2005 2006
REVENUES:
Taxes $ 7,991,699 $ 8,207,254 $ 9,621,721 $ 10,815,367
Special Assessments 3,158,560 3,175,161 2,564,470 1,751,871
Licenses and Permits 4,748,457 4,173,804 4,444,491 2,675,935
Intergovernmental 2,612,877 4,162,581 3,646,605 2,877,245
Charges for Service 1,537,412 2,382,405 2,455,171 2,290,996
Fines and Forfeits 275,583 288,492 322,579 422,850
Miscellaneous 605,947 766,614 1,159,536 1,979,419
Total Revenues 20,930,535 23,156,311 24,214,573 22,813,683
EXPENDITURES:
General Government 3,192,768 3,486,029 3,120,544 3,149,717
Police 3,148,785 3,698,352 4,159,724 4,842,268
Fire 975,656 1,141,700 1,194,610 1,481,327
Protective Inspection 645,030 690,920 855,864 829,526
Public Works 2,221,004 2,564,662 3,003,554 3,095,392
Culture and Recreation 669,570 2,489,749 2,792,590 3,453,545
Economic Development - - - -
Miscellaneous 317,167 - - -
Debt Service:
Principal 3,720,000 1,775,000 1,845,000 3,055,000
Interest and Other Charges 717,098 701,976 1,106,324 1,195,618
CapitalOutlay 5,532,652 7,432,575 14,058,508 10,650,449
Total Expenditures 21,139,730 23,980,963 32,136,718 31,752,842
Excess of Revenues
Under Expenditures (209,195) (824,652) (7,922,145) (8,939,159)
OTHER FINANCING SOURCES
(USES):
Bonds Issued 2,215,567 15,070,000 - 3,440,000
Sale of Assets 41,761 299,183 753,024 2,700
Premium on Bonds Issued - - - 20,275
Refunded Bond Escrow - - (2,190,000) -
Transfers In 1,732,872 5,963,741 3,374,566 6,683,532
Transfers Out (2,289,221) (3,312,078) (1,529,396) (3,354,364)
Total Other Financing Sources
(Uses) 1,700,979 18,020,846 408,194 6,792,143
Net Change in Fund Balance $ 1,491,784 $ 17,196,194 $(7,513,951) $ (2,147,016)
Debt Service as a Percentage of
Noncapital Expenditures 33% 15% 19% 21%
112
Table 4(Continued)
2007 2008 2009 2010 2011 2012
$ 13,084,595 $14,437,766 $ 14,992,051 $ 14,385,788 $ 14,699,066 $ 15,141,903
2,301,560 1,879,974 1,810,511 1,404,088 1,475,324 1,499,810
1,378,570 1,221,939 1,492,746 1,338,111 1,281,150 2,441,246
2,540,584 2,702,993 1,811,668 2,924,161 3,941,830 2,548,692
2,089,375 2,209,269 1,808,865 2,202,524 3,958,237 4,449,003
501,228 442,626 428,662 549,543 411,211 418,474
2,322,755 2,028,529 1,503,722 1,255,038 705,969 836,868
24,218,667 24,923,096 23,848,225 24,059,253 26,472,787 27,335,996
3,479,925 3,517,957 3,331,193 2,960,233 4,004,684 4,396,219
5,562,945 5,818,091 6,038,687 6,361,621 6,705,512 6,912,036
1,833,876 1,857,482 1,796,134 1,866,037 2,028,186 1,872,289
945,196 786,715 769,883 784,909 727,126 699,674
3,769,491 3,628,954 3,591,049 3,902,622 2,602,104 2,349,042
3,651,539 4,101,175 3,898,844 4,075,919 3,902,386 3,799,723
- 522,074 316,566 270,915 247,591 155,692
3,110,000 3,280,000 2,660,000 3,800,000 2,565,000 1,950,000
1,025,868 1,077,711 1,077,325 833,245 658,265 634,063
7,288,033 3,300,942 1,797,299 2,812,488 6,301,406 2,164,053
30,666,873 27,891,101 25,276,980 27,667,989 29,742,260 24,932,791
(6,448,206) (2,968,005) (1,428,755) (3,608,736) (3,269,473) 2,403,205
2,815,000 2,170,000 - 1,555,000 - 4,865,000
17,700 - - 6,000 - -
9,956 16,741 - - - 73,480
4,411,281 4,605,693 4,958,133 13,199,807 2,968,919 3,367,400
(2,188,333) (2,224,692) (3,462,100) (12,380,403) (2,750,830) (3,002,400)
5,065,604 4,567,742 1,496,033 2,380,404 218,089 5,303,480
$ (1,382,602) $ 1,599,737 $ 67,278 $ (1,228,332) $ (3,051,384) $ 7,706,685
16% 17% 16% 18% 14% 11%
113
CITY OF SHAKOPEE
Table 5
TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
Taxable Tax
Estimated Capacity as a
Commercial Less Less Net Net Ta�cable Total Taxable Percentage of
Fiscal Residential Industrial Other TvcIncrement Fiscal Tax Direct Mazket Estimated
Year Property Property Property Property Disparities Capacity Tax Rate Value Mazket Value
2003 $13,89Q536 $1Q452,944 5 589,540 $ 497,860 $2,035,749 $22,399,411 0.33939 $2,062,115,200 1.09%
2004 16,721,302 10,609,240 913,912 497,255 2,121,170 25,626,029 032433 2,464,564,300 1.04%
2005 20,394,086 11,749,438 528,300 327,963 2,132,628 3Q211,233 031115 2,654,161,900 1.14%
2006 23,162,320 12,710,783 565,215 352,543 1,615,190 34,470,585 030974 2,987,657,400 1.15%
2007 26,817,616 14,013,644 675,479 378,593 1,963,379 39,164,767 031939 3,419,040,600 1.15%
2008 29,942,078 15,426,355 741,679 411,490 1,846,919 43,851,703 031925 3,800,795,500 1.15%
2009 29,805,971 16,088,685 1,319,935 156,799 1,862,715 45,195,077 032630 3,85Q591,200 117%
2010 27,805,069 16,459,872 1,279,807 151,914 1,584,552 43,808,282 033710 3,710,814,056 1.18%
2011 24,652,932 18,351,835 1,304,688 161,430 1,630,522 42,517,503 0.34731 3,570,069,500 1.19%
2012 23,180,073 17,956,273 852,512 155,002 1,740,447 40,093,409 0.36655 3,347,179,800 120%
Source:Scott County Auditor
114
CITY OF SHAKOPEE
Table 6
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
City Direct Rate General
Obligation
Shakopee Debt Service
Fiscal Operating Debt Service Total Direct School Scott Other Market Value
Year Rate Rate Rate District County Jurisdictions Rate
2003 0.33172 0.00767 0.33939 0.24168 0.38554 0.05685 0.01393
2004 0.31131 0.01302 0.32433 0.21517 0.36635 0.04123 0.01189
2005 0.29855 0.01260 0.31115 0.25215 0.35361 0.04660 0.00969
2006 0.28996 0.01978 0.30974 0.27789 0.34974 0.04578 0.00848
2007 0.29822 0.02117 0.31939 0.27132 033140 0.04434 0.00728
2008 0.29874 0.02051 0.31925 0.26103 0.32646 0.04642 0.00537
2009 0.30401 0.02229 0.32630 0.27274 0.32684 0.04960 0.00651
2010 0.32152 0.01558 0.33710 0.29050 0.33240 0.04980 0.00651
2011 0.32996 0.01735 0.34731 0.31182 0.35541 0.05020 0.00342
2012 0.34005 0.02650 0.36655 0.35512 0.38802 0.05610 0.00345
Sources: Scott County Auditor and Leauge of Minnesota Cities Reports
115
CITY OF SHAKOPEE
Table 7
PRINCIPAL TAXPAYERS
Current Year and Nine Years Ago
2012 2003
Percentage Percentage
2011/12 of Total 2002/03 of Total
Tvc Cap. Tax Cap. Tax Cap. Tax Cap.
Taxpayer Type of Business Value Rank Value Value Rank Value
Excel Energy Electrical Generation 537,082 1 134% $ 372,190 4 1.49%
Rahr Malting Grain Processing 407,838 2 1.02% 316,160 5 1.27%
Seagate Manufacturing/Reseazch 399,250 3 1.00°/o 739,250 2 2,96%
St.Francis RMC Health Care 358,500 4 0.89%
Shakopee Crossing LTD Retail 357,420 5 0.89%
Ryan Companies Property Management 332,700 6 0.83%
Canterbury Park Horse Racing 324,236 7 0.81%
Certainteed Manufacturing 319,250 8 0.80%
Shakopee Valley Mazket Retail 315,750 9 0.79%
Walmart Retail 315,250 ]0 0.79%
ADC Telecommunications Electronics 740,108 1 2.97%
OIRE Property Management 411,328 3 1.65%
KMaR Warehouse Warehouse/Distribution Center 285,404 6 1.14%
Principal Mutual Mortgage Financial 266,918 7 1.07%
1000 Valley Drive Warehouse 261,250 8 1.05%
Valley Fair Amusement Park 256,032 9 1.03°/a
First Industrial LP Wazehouse 178,206 10 0.71%
$3,667,276 9.16% $ 3,826,846 1534%
Source: Scott CounTy Auditor
116
CITY OF SHAKOPEE
Table 8
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Ratio of
Accumulated
Percentage Delinquent
Collections Percentage Collections of Total Accumulated Taxes to
Year Ta� of Current of Levy of Prior Total Collections Delinquent Current
Collected Levy Years Taxes Collected Years TaYes Collections To Tax Levy TaYes Yeazs Ta�ces
2003 $ 7,889,018 $ 7,191,567 91% $ 47,055 $ 7,238,622 92% $ 79,710 1.01%
2004 8,625,695 7,878,618 91% (86,619) 7,791,999 90% 175,774 2.04%
2005 9,703,206 9,025,261 93% 67,187 9,092,448 94% 164,517 1.70%
2006 10,951,917 9,945,490 91% 38,986 9,984,476 91% 279,316 2.55%
2007 12,745,449 12,418,768 97% 91,200 12,509,968 98°/a 331,315 2.60%
2008 14,222,007 13,661,366 96% 208,470 13,869,836 98% 483,317 3.40%
2009 14,983,677 14,457,378 96% 1�7,920 14,615,298 98% 319,740 2.13%
2010 14,918,665 13,971,356 94% 55,020 14,026,376 94% 310,624 2.08%
2011 14,837,438 14,019,831 94% 278,981 14,298,812 96% 260,248 1J5%
2012 14,837,438 14,553,417 98% 188,750 14,742,167 99% 235,011 1.58%
Source:Scott County Auditor
1. The above data does not include tax increment districts.
2. The State of Minnesota cancelled$561,000 in 2003 to 2006,$243,439 in 2008,$511,956 in 2009,$558,860 in 2010 and$595,572 of
annual aid payments to the City that were part of the ta�c levy.
117
CITY OF SHAKOPEE
Table 9
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities
G.O.Revenue Business-type
Tax Special Activities Total Percentage
Fiscal G.O. Increment Assessment Revenue Primary of Personal Per
Year Bonds Bonds Bonds Bonds Government Income Capita
2003 $ 2,445,000 $ - $ 13,060,000 $ 25,215,000 $ 40,720,000 5.0% 1,631
2004 10,595,000 - 18,205,000 25,515,000 54,315,000 5.5% 1,879
2005 8,275,000 - 16,360,000 24,750,000 49,385,000 4.4% 1,593
2006 7,950,000 - 17,070,000 34,535,000 59,555,000 4.9% 1,816
2007 7,560,000 - 17,165,000 33,895,000 58,620,000 4.5% 1,752
2008 7,165,000 - 16,450,000 33,225,000 56,840,000 4.1% 1,689
2009 6,755,000 - 14,200,000 22,235,000 43,190,000 4.1% 1,276
2010 6,340,000 - 12,370,000 21,470,000 40,180,000 3.4% 1,084
2011 5,905,000 - 10,240,000 - 16,145,000 1.3% 428
2012 10,325,000 - 8,735,000 - 19,060,000 1.6% 504
Sources: See Table 14 far income and population data.
Note:From 2003-2010,the SPUC Funds,Water and Electric Enterprise Funds,were reported as a blended
component unit of the City. In 2011,SPUC Funds have been presented as discretely presented component
units as it no longer met the criteria for blending.
118
CITY OF SHAKOPEE
Table 10
RATIOS OF GENERAL BONDED OUTSTANDING
Last Ten Fiscal Years
Percentage of Percentage of
Actual Taxable Total
Fiscal G.O. Value of Per Personal
Year Bonds Property Capita Income
2003 $ 2,445,000 0.12% 98 0.30%
2004 10,595,000 0.43% 366 1.07%
2005 8,275,000 0.31% 267 0.76%
2006 7,950,000 0.27% 242 0.65%
2007 7,560,000 0.22% 226 0.61%
2008 7,165,000 0.19% 213 0.52%
2009 6,755,000 0.18% 199 0.65%
2010 6,340,000 0.17% 171 0.54%
2011 5,905,000 0.17% 157 0.49%
2012 10,325,000 0.31% 273 0.86%
Sources:
1. Metropolitan Council estimated for population.
2005-2009 populations are the City's estimate.
2. Scott County Auditor
119
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120
CITY OF SHAKOPEE
Table 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
December 31,2012
Percentage Amount
Applicable Applicable
G.O. To City of To City of
Debt Shakopee(1) Shakopee
Direct Debt:
City of Shakopee $ 19,060,000 100.0% $ 19,060,000
Overlapping Debt:
Independent School DistrictNo. 720 176,155,000 85.0% 149,731,750
Independent School District No. 191 113,620,000 6.8% 7,726,160
Scott County 96,795,000 29.4% 28,457,730
Metropolitan Council 1,724,988,995 1.0% 18,060,635
Total Overlapping Debt: 2,111,558,995 203,976,275
Total Direct and Overlapping Debt $2,130,618,995 $ 223,036,275
Source: Scott County Auditor
Dakota County Auditor
Metropolitan Council
Note: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the
City. This 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 government.
(1)The percentage of overlapping debt is estimated using tax capacity. Applicable percentages were
estimated by determining the portion of Scott County's tax capacity that is within the City's boundaries and
dividing it by Scott County's total taY capacity.
121
CITY OF SHAKOPEE
Table 12
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2003 2004 2005 2006
Market Value(Taxable) $ 2>062,115,200 $ 2,464,564,300 $ 2,654,161,900 $ 2,987,657,400
Debt Limit-Percent of
Market Value(Note A) 41,242,304 49,291,286 53,083,238 59,753,148
Amount of Debt Applicable
to Debt Limit:
G.O.Bonds 2,445,000 10,595,000 8,275,000 7,950,000
Available in Debt Service
Funds (297,657) (2,539,292) (1,155,148) (810,494)
Total Debt Applicable
toDebtLimit 2,147,343 8,055,708 7,119,852 7,139,506
Legal Debt Margin $ 39,094,961 $ 41,235,578 $ 45,963,386 $ 52,613,642
NOTE(A):
M.S.A.Section 475.53(Limit on Net Debt)
Subdivision 1.Generally,except of otherwise provided in Sections 475.51 to 475.75,no municipality,except a
school district or a city of the first class,shall incur or be subject to a net debt in excess of 2%
(3%starting 2008)of the market value of taxable property in the municipality."
NOTE(B):
M.S.A. Section 475.51 Definitions: Subdivision 4."Net debt"means the amount remaining after deduction
from its gross debt the aggregate of the principal of the following:
(1) Obligations issued for improvements which are payable wholly or partly from the proceeds of special
assessments levied upon property specially benefited thereby,including those which are general obligations
of the municipality issuing them,if the municipality is entitled to reimbursement in whole or in part from
the proceeds of the special assessments.
(2) Warrants or orders having no definite or fixed maturity.
(3) Obligations payable wholly from the income of revenue-producing conveniences.
(4) Obligations issued to create or maintain a permanent improvement revolving fund.
(5) Obligation issued for the acquisition,and betterment of public waterworks systems,and public lighting,
heating or power systems and on any combination thereof or for any other public convenience from
which a revenue is or may be derived.
(6) Amount of all money and the face value of all securities held as a sinking fund for the extinguishment
of obligations other than those deductible under this subdivision.
M.S.A. Section 469.178,subdivision 1.(tax increment bonds)"...The bonds are not included for purposes
of computing the net debt of any municipality.
122
Table 12(Continued)
2007 2008 2009 2010 2011 2012
$3,419,040,600 $3,800,795,500 $3,850,591,200 $ 3,710,814,056 $3,570,069,500 $3,347,179,800
68,380,812 114,023,865 115,517,736 107,102,085 107,102,085 l OQ415,394
7,560,000 7,165,000 6,755,000 6,340,000 5,905,000 10,325,000
(834,155) (847,608) (837,100) (786,306) (826,957) (4,623,939)
6,725,845 6,317,392 5,917,900 5,553,694 5,078,043 5,701,061
$ 61,654,967 $ 107,706,473 $ 109,599,836 $ 101,548,391 $ 102,024,042 $ 94,714,333
123
CITY OF SHAKOPEE
Table 13
PLEDGED REVENUE COVERAGE
Last Ten Fiscal Years
Utility Bonds
Utility Less: Net
Fiscal Service Operating Available Debt Service
Year Charges Expense Revenue Principal Interest Coverage
2003 $ 22,871,121 $ 17,585,831 $ 5,285,290 $ 580,000 $ 1,348,883 2.74
2004 25,473,439 19,778,149 5,695,290 640,000 1,307,626 2.92
2005 33,841,730 25,821,489 8,020,241 765,000 1,074,487 4.36
2006 38,445,403 31,436,969 7,008,434 785,000 1,174,711 3.58
2007 44,692,049 36,644,414 8,047,635 640,000 1,574,925 3.63
2008 45,499,791 38,689,351 6,810,440 670,000 1,523,198 3.11
2009 42,437,910 33,009,500 9,428,410 710,000 1,012,874 5.47
2010 45,586,795 36,375,440 9,211,355 765,000 939,426 5.40
2011 - - - - - -
2012 - - - - - -
l. Operating expense excludes depreciation and amortization.
Note: From 2003-2010,the SPUC Funds, Water and Electric Enterprise Funds,were reported
as a blended component unit of the City. In 2011, SPUC Funds have been presented as
discretely presented component units as it no longer met the criteria for blending.
124
CITY OF SHAKOPEE
Table 14
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
Fiscal School Unemployment Total Per Capita Personal
Year Population(1) Enrollment(2) Rate(3) Employment Income(4) Income(5)
2003 24,967 4,790 4.3% 15,887 $ 32,760 $ 817,918,920
2004 28,913 5,121 3.9% 16,213 34,284 991,253,292
2005 31,000 6,247 3.6% 16,192 35,956 1,114,636,000
2006 32,800 6,643 3.7% 17,787 37,023 1,214,354,400
2007 33,460 6,905 4.6% 18,225 39,042 1,306,345,320
2008 33,660 7,163 6.7% 18,688 31,900 1,375,044,660
2009 33,860 7,465 7.8°/a 18,926 30,900 1,046,274,000
2010 37,076 7,814 7.0% 18,771 31,700 1,175,309,200
2011 37,721 8,115 4.6% 20,718 32,017 1,207,713,257
2012 37,841 8,392 5.0% 19,971 31,628 1,196,835,148
Source: 1. Metropolitan Council population estimates except for 2010 which is the official
census figure. 2005-2009,2011-2012 are the City's estimate.
2. Shakopee School District,SACS,Bloomington Lutheran
3. Minnesota Department of Employment and Economic Development
4. Bureau of Economic Analysis and MET Council Community Profile Dad
5. Per capita income times population
125
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126
CITY OF SHAKOPEE
Table 15
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2012 2003
Total Total
City Ciry
Taxpayer Type of Business Employees Rank Employment Employees Rank Employment
Valley Fair Amusement Park 1,600 1 8.01% 1,200 2 7.55%
Seagate Manufacturing/Research 1,595 2 7.99% 1,100 3 6.92%
School District No.720 Education 1,090 3 5.46% 390 8 2.45%
St.Francis RMC Health Care 1,000 4 5.01% 363 9 228%
Canterbury Pazk Horse Racing 750 5 3.76%
ScottCounty Government 700 6 3.51% 430 4 2.71%
Northstaz Auto Auction Auto Auction 350 7 1.75%
Anchor Glass Manufacturing 279 8 1.40%
Minnesota Conectional Facilities Government 259 9 1.30%
TORO Manufacturing 240 10 120%
ADC Manufacturing 1,400 1 8.81%
Kmart Distribution Center 424 5 2.67%
Shakopee Valley Printing Printing 415 6 2.61%
American Color-SVP Printing 415 7 2.61%
CertainTeed Roofing Manufacturing 300 10 1.89%
7,863 39.39% 6,437 40.50%
Total Employment 19,971 15,887
Source: Minnesota Department of Employment and Economic Development.
127
CITY OF SHAKOPEE
Table 16
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2003 2004 2005 2006 2007
General Government:
Administration 6 6 6 6 5
City Clerk 4 4 4 4 4
Finance 3 3 3 3 3
Planning 6 5 5 5 5
Facilities Maintenance 1 4 4 6 6
Information Technology 1 2 2 2 2
Public Safety:
Police:
Licensed 34 40 42 45 46
Other 7 7 9 7 7
Fire:
Full time - - - - 1
Paid On Call 50 50 50 48 48
Building Inspection 7 8 8 8 7
Public Works:
Engineering 9 9 9 9 7
Street 9 11 12 12 12
Shop 3 3 3 3 3
Park and Recreation:
Park Maintenance 7 7 7 7 8
Recreation 8 8 10 10 10
Total 155 167 174 175 174
Source: City departments
128
Table 16(Continued)
2008 2009 2010 2011 2012
5 5 5 5 6
4 4 4 4 3
3 3 3 3 4
5 5 5 5 5
7 6 6 6 4
2 2 2 2 2
47 47 47 50 49
6 6 6 6 7
2 3 3 3 3
48 44 44 42 44
6 5 5 5 5
7 7 7 7 7
13 13 13 13 13
3 3 3 4 3
8 8 8 8 8
7 7 7 7 7
173 168 168 170 170
129
CITY OF SHAKOPEE
Table 17
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2003 2004 2005 2006 2007
General Government
Planning
Number of Case Files 127 109 120 91 67
Number of Plats Filed 11 9 7 10 3
Number of Acres Platted 385 238 321 155 38
Public Safety
Police
Arrests 1,147 1,248 1,451 1,770 2,199
Citations 3,129 3,802 3,843 4,970 6,073
Calls for Service 14,799 16,062 17,363 18,333 19,606
Fire
Calls for Service 482 479 539 494 609
Building Inspection
Building Permits Issued 1,744 1,638 1,512 1,131 1,194
Number of Inspections 15,016 14,535 15,175 9,671 8,174
Single Family Homes Permitted 384 396 352 223 138
Public Works
Street
Miles of Roadway 138 114 123 153 154
Park and Recreation
Park Maintenance
Acres Maintained 671 760 925 930 930
Recreation
Program Participants 10,194 9,693 9,842 9,928 10,847
Community Center Members 556 541 516 578 597
Community Center Admissions 77,014 75,018 77,543 91,776 100,044
Source: City departments
130
Table 17(Continued)
2008 2009 2010 2011 2012
68 35 33 24 47
2 2 1 2 5
50 34 6 68 89
1,881 1,913 1,962 1,666 1,798
4,058 6,127 5,528 5,647 5,636
19,057 17,909 17,831 17,852 18,349
538 517 557 600 617
1,019 1,102 1,083 1,881 1,413
5,946 9,726 8,048 8,004 8,191
94 314 160 118 97
154 154 154 154 154
933 933 933 933 933
11,410 10,377 13,001 13,157 13,104
613 823 2,534 3,682 4,009
100,397 109,257 117,336 120,667 128,929
131
CITY OF SHAKOPEE
Table 18
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2003 2004 2005 2006 2007
Police:
Stations 1 1 1 1 1
Patrol Zones 4 4 4 4 4
Patrol Units 12 13 13 15 15
Fire Stations 2 2 2 2 2
Street:
Miles of Roadway 138 114 123 153 154
Traffic Signals 23 25 25 25 25
Parks:
Acres 671 760 925 1,015 1,015
Ball Fields 42 46 46 47 47
Playgrounds 13 13 13 18 22
Source: City Departments
132
Table 18 (Continued)
2008 2009 2010 2011 2012
1 1 1 1 1
4 4 4 4 4
15 15 15 15 15
2 2 2 2 2
154 154 154 154 154
26 27 27 27 29
1,019 1,024 1,024 1,024 1,048
49 49 52 54 56
24 24 24 26 26
133
CITY OF SHAKOPEE
Scott County, Minnesota
COMMUNICATIONS LETTER
For the Year Ended December 31,2012
CITY OF SHAKOPEE
TABLE OF CONTENTS
REPORT ON MATTERS IDENTIFIED AS A RESULT OF
THE AUDIT OF THE FINANCIAL STATEMENTS............................................................... 1
SIGNIFICANTDEFICIENCY....................................................................................................... 3
DEFICIENCIES............................................................................................................................... 4
REQUIREDCOMMUNICATION................................................................................................ 5
FINANCIALANALYSIS................................................................................................................ 8
Expert udvice. When you neea it."'
REPORT ON MATTERS IDENTIFIED AS A RESULT OF
THE AUDIT OF THE FINANCIAL STATEMENTS
Honorable Mayor and Members
of the City Council
City of Shakopee
Shakopee, Minnesota
In planning and performing our audit of the financial statements of the City of Shakopee, Minnesota, as
of and for the year ended December 31, 2012, in accordance with auditing standards generally accepted
in the United States of America and GovernmentAuditing Standards, we considered the City's internal
control over financial reporting (internal control) as a basis for designing our auditing procedures that
are appropriate in the circumstances for the purpose of expressing our opinion 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.
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 deficiencies, significant
deficiencies or material weaknesses and,therefore, material weaknesses or significant deficiencies may
exist that were not identified. However, as discussed below, we identified certain deficiencies in
internal control that we consider to be significant deficiencies.
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 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 ar detected and corrected on a timely basis.
A significant deficiency is a deficiency, or 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. A significant deficiency is identified within this letter.
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 April 17, 2013, on such statements.
During our audit, we also became aware of matter which we believe represent opportunities for
strengthening internal control and operating efficiently and those are also included within this letter.
1
D�
This communication is intended solely for the information and use of management,the City Council,
others within the City and state oversight agencies and is not intended to be and should not be used by
anyone other than these specified parties.
��(�,,, Dcw,��, V-� t.�P.
KERN, DEWENTER, VIERE, LTD.
Bloomington, Minnesota
April 17, 2013
2
CITY OF SHAKOPEE
SIGNIFICANT DEFICIENCY
December 31, 2012
LACK OF SEGREGATION OF ACCOUNTING DUTIES
Adequate segregation of accounting duties is in place when the four areas of a transaction have been
separated: authorization, custody, recording and reconciliation. During 2012,the City did not have
sufficient staff to segregate the duties listed above. Specific areas where this is a lack of internal
controls includes (but is not all-inclusive):
Payroll
The Payroll Clerk processes payroll, posts payroll to the general ledger, issues direct deposits,
prepares the payroll taxes, initiates transfers for payment of payroll, prepares all W-2s and maintains
all data files as well as the payroll program.
Cash Receipts
Deposits at City Hall—The front desk personnel receives money, codes the revenue and prepares
bank deposits. The Accountant reconciles cash and posts all deposits into the general ledger.
Deposits at Recreation Center—One employee is able to receipt money and prepare the bank
deposit.
Cash Disbursements
The Accountant enters invoices, matches purchase orders to invoices and prepares checks for
payment.
Management is aware of this condition and has taken certain steps to compensate for the lack of
segregation but due to the small staff needed to handle all of the accounting duties, the costs of obtaining
desirable segregation of accounting duties often exceeds benefits which could be derived. However,
management must remain aware of this situation and should continually monitor the accounting system,
including changes that occur.
3
CITY OF SHAKOPEE
DEFICIENCIES
December 31,2012
IMPROVE ICE ARENA RECEIPTING INTERNAL CONTROL
During our audit, we analyzed the receipts collection process of the ice arena and found the process to
be decentralized from the City's regular receipting process. Currently, the City employs an Ice Arena
Manager who collects and records funds and also maintains copies of signed ice rental contracts and a
list of payers, creating a segregation of duties incompatibility.
Areas where controls could be implemented include:
• Segregate duties so that employees are not able to receipt money, prepare reconciliations and
prepare the deposit
• Have an employee independent of collecting the cash maintain and create the billing contracts to
ensure that all the contracts are being billed and the revenue is being deposited by the City
• Check ice arena schedules to contracts to ensure that all ice time is being billed
To improve internal control over the ice arena receipting process and to prevent potential omissions and
errors, we recommend the City implement additional oversight procedures to ensure the accuracy and
completeness of ice arena receipts.
IMPROVE COMMUNITY CENTER RECEIPTING INTERNAL CONTROL
During our audit, we analyzed the receipts collection process of the community center and also found
the process to be decentralized from the City's regular receipting process. Currently,the City
employees who collect and record funds, remit payments to the Community Center Manager who
maintains all ledgers and prepares deposits, creating a segregation of duties incompatibility.
Areas where controls could be implemented include:
• Include support for deposits from the Teen Center
• Ensure all cash collected is processed through the cash register
• Segregate duties so that employees are not able to receipt money, prepare reconciliations and
prepare the deposit
To improve internal control over the community center receipting process and to prevent potential
omissions and errors, we recommend the City implement additional oversight procedures to ensure the
accuracy and completeness of community center receipts.
FOLLOW CITY COUNCIL APPROVED FEE SCHEDULE
During the audit, collections of building permit fees were reviewed and compared to the current City
Counci] approved fee schedule. Of the 10 building permits tested, three instances were noted where the
fee charged was not in accordance with the approved fee schedule.
We recommend the City's inspection department employees follow the City Council approved fee
schedule for all calculations of permits and other building related fees. The current language in the City
Fee Schedule may need to be refined to more clearly define the fees and charges to be applied to
building inspection services.
4
CITY OF SHAKOPEE
REQUIRED COMMUNICATION
December 31, 2012
We have audited the basic financial statements of the City for the year ended December 31, 2012, and
have issued our report dated April 17, 2013. Professional standards require that we provide you with the
following information related to our audit.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN
THE UNITED STATES OF AMERICA AND GOVERNMENTAUDITING STANDARDS
As stated in our engagement letter, our responsibility, as described by professional standards, is to
express an opinion about whether the financial statements prepared by management with your oversight
are fairly presented, in all material respects, in conformity with accounting principles generally accepted
in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities. Our responsibiliry is to plan and perform our audit to obtain
reasonable, but not absolute, assurance that the financial statements are free of material misstatement.
As part of our audit, we considered the internal control of the City. Such considerations were solely for
the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control. We are responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial reporting
process. However, we are not required to design procedures specifically to identify such matters.
As part of obtaining reasonable assurance about whether the City's financial statements are free of
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.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously communicated to you.
QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES
Management is responsible far the selection and use of appropriate accounting policies. In accordance
with the terms of our engagement letter, we will advise management about the appropriateness of
accounting policies and their application. The significant accounting policies used by the City are
described in Note 1 to the financial statements. We noted no transactions entered into during the year
for which there is a lack of authoritative guidance or consensus. There were no significant transactions
that have been recognized in the financial statements in a different period than when the transaction
occurred.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's 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
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were
as listed on the following p�ge.
5
CITY OF SHAKOPEE
REQUIRED COMMUNICATION
December 31, 2012
QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES
Depreciation—The City is currently depreciating its capital assets over their estimated useful lives,
as determined by management, using the straight-line method.
Expense/Expenditure Allocation—The City is currently allocating certain costs among the programs
and supporting services benefited. The costs are allocated based on management's estimates.
Net Other Post Employment Benefits (OPEB) Obligation—This liability is based on an actuarial
study using estimates of future obligations of the City for post employment benefits.
We evaluated the key factors and assumptions used to develop the above estimates in determining they
are reasonable in relation to the financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent and clear.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no difficulties in dealing with management in performing and completing our audit.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Consistent with prior years, the City does not amortize bond issuance costs. This uncorrected
misstatement was not material to the financial statements.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this letter,professional standards define a disagreement with management as a financial
accounting, reporting or auditing matter, whether or not resolved to our satisfaction that could be
significant to the financial statements or the auditor's report. We are pleased to report that no such
disagreements arose during the course of our audit.
MANAGEMENT REPRESENTATIONS
We requested certain representations from management which were provided to us in the management
representation letter.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a"second opinion" on certain situations. If a consultation involves
application of an accounting principle to the City's financial statements or a determination of the type of
auditor's opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. We are
not aware of any consultations by the City's management with other accountants during the course of
our audit.
6
CITY OF SHAKOPEE
REQUIRED COMMUNICATION
December 31,2012
OTHER ISSUES
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL
STATEMENTS
We have not reviewed, and it is our understanding, that no other published documents exist that contain
audited financial statement information, for which we are currently auditing. As stated in our
engagement letter, if you publish or reproduce the financial statements or make reference to our Firm
name in relation to such documents, you agree to provide us with a copy of the final reproduced material
for our approval before it is distributed.
7
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31, 2012
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.
GENERAL FUND OPERATIONS OF THE CITY
For the year ended December 31, 2012, revenues exceeded expenditures and transfers out and increased
the fund balance by approximately $ 218,000.
General Fund
sza,000,000
$2QOOQ006 �- � -- � - - �-
$16,OOQOOU � -- - -
$12,OOQ000 - - - -- ----
$8,000,000
$4,000,000 -� -
?>a.
$ Z008 'OOO '_010 ?O77 20I3
_ .____- — I __. __._..__ -- —
■Revenues $U,A73,0-1? 517,07�,G39 519,589,535 S�Q956,396 $21,770,313
�Expenditures 16,289,022 16,030,691 18,724,835 18,674,938 18,694,1O1
m Fund Balance 9,859,602 11,502,280 9,037,730 9,304,194 9,522,841
General Fund Revenues/Expenditures
Per Capita
$�oo
$600 - - ------— ------ � �-- -- - $577
�5(�
$50$ - :.. _____
$48? .5�,�� �$A84 $497 S.19� Sd96
$500 54i6 " .
$400 -
$300
$200
$100 --
$- - 7—_
2003 2009 2010 2011 _°UL'
■Rc�enucs �E.epcndiWrcs
* 2010 updated for change in accounting principle for component unit reporting
8
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
GENERAL FUND OPERATIONS OF THE CITY
For the 2012 operating year, the City Council provided a budget that would increase the General Fund
balance by $ 220,539. Revenues exceed expectations and expenditures were 7.1%under budget. At
year-end, expenditures and transfers out exceeded revenues and transfers in by only $ 1,892.
Budget Actual Variance
Revenues:
Taxes and Assessments $ 13,420,920 $ 14,786,308 $ 1,365,388
Licenses and Permits 1,275,300 1,221,469 (53,831)
Intergovernmental 749,560 991,445 241,885
Charges for Services 3,040,630 4,016,255 975,625
Fines and Forfeitures 436,000 368,167 (67,833)
Miscellaneous Revenues 346,400 386,704 40,304
Total Revenues $ 19,268,810 $ 21,770,348 $ 2,501,538
Expenditures:
General Government $ 3,502,807 $ 3,117,408 $ (385,399)
Public Safety 9,747,231 9,408,233 (338,998)
Public Works 2,878,352 2,375,731 (502,621)
Parks and Recreation 3,992,281 3,792,729 (199,552)
Total Expenditures $ 20,120,671 $ 18,694,101 $ (1,426,570)
Transfers In $ 1,072,400 $ 122,400 $ (950,000)
Transfers Out - (2,980,000) (2,980,000)
Net Transfers 1,072,400 (2,857,600) (3,930,000)
Change in Fund Balance $ 220,539 $ 218,647 $ (1,892)
Significant revenue budget variances are a result of receiving more in property taxes than anticipated,
state fire aid, and higher than expected charges for services for services with Shakopee Public Utilities
Commission (SPUC).
All functions of the expenditures were under budget. General government was under budget due to
switching janitorial services from employees to contracted services, as well as employee changes in
health insurance plans. Public Safety was under budget due to open positions during the year. Public
Works spent more time working on projects that were charged out to other funds. Parks and Recreation
had less participation than anticipated causing a decrease in supplies and instructors needed.
9
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
GENEI2AL FUND OPERATIONS OF THE CITY
�Unreserved/Unassigned Fund Balance as a Percent of Expenditures
�o�ra
16��io
6o�ro
50% '.54% ��
.,
�;49°/a I 51%
40% 44%
30%
20%
]0%
0%
2008 2009 2010 2011 2012
The City's target General Fund balance is an unassigned level between 40% (minimum) and 45%of
current year expenditures. This level is to provide working capital for cash flow, eXpected decline in
revenues and unforeseen expenditures such as natural disasters. Replenishing the fund balance when it
falls below the target level shall be accomplished by interfund transfers or budgeting for expenditures
and other uses to be less than revenues or other sources over a period not to exceed three years. For the
year-ended December 31, 2012,the City exceeded their policy, maintaining an unassigned fund balance
of 51%.
10
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
GENERAL FUND REVENUES
The City's revenue in the General Fund has increased each of the last five years. During 2012, revenue
in the General Fund exceeded the budget by $ 2,500,000 and exceeded the prior year revenue by
$ 813,000, increasing from $ 20,956,396 to $ 21,770,348. The major increases in the 2012 revenue were
in property taxes, intergovernmental and charges for services. Property taxes increased due to keeping
the EDA levy in the general fund and then transferring it to the EDA fund, as well as the change in
Market Value Credit(MVC) at the state level. In 2012,the state eliminated the MVC,which caused the
whole of the levy to be levied upon the City instead of being reduced by the MVC state aid. In 20l l, the
state unalloted the City's portion of MVC in the amount of approximately $595,000. Intergovernmental
increased due to a change in the recording of the state fire aid. Charges for services increased due to the
electrical fund transfer due to increased usage.
During 2012, property taxes represented 68%of the total General Fund revenues. Charges for services
represented the second largest component at 18%.
General Fund Revenues
$24,000,000
$21,000,000
$18,000,000 ;��.���� ���,�'�
$15,000,000
., .n,:.. ,�::;
$12,000,000
$9,000,000
$6,000,000
$3,000,000
$ 2008 2009 2010 20ll 2012
■Miscellaneous $484,110 $416,023 $418,654 $397,477 $359,323
�Charges for Services 1,093,250 804,536 3,028,330 3,879,113 4,035,921
❑Fines and Forfeitures 366,618 364,895 423,746 357,249 368,167
mLicenses and Permits 691,415 1,122,619 1,303,904 1,225,560 1,229,184
�Intergovemmental 361,412 593,647 828,906 796,076 991,445
■Taxes and Assessments 12,881,242 13,772,919 13,585,995 14,300,921 14,786,308
11
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
TAX LEVY, CAPACITY AND RATES
The 2012 levy includes the General Fund and debt service levies. The tax levy is then reduced by fiscal
disparity credit that is received in the form of state aid. Disparity aid is reported as tax revenue and
reduces the amount of property tax revenue levied upon the City.
Taxable Tax Capacity and Certified Levy
$45,000,000
$4Q000,000
$35,000,000 �
'
.
$30,000,000 �� � �
$25,000,000
$20,000,000 —-
$15,000,000 — �
$10,000,000 -- -
$5,000,000
(
$- 2004 2009 62010 2011 '012
■TarableTaxCapacity $4Q291,149 $4Q934,72�� $38,952,163 $37,680,>87 53�,402,744
aCertified Levy 14,222,007 14,983,677 14,715,299 14,717,367 14,717,435
* Tax capacity values and levy obtained from the League of Minnesota Cities.
12
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
TAX LEVY, CAPACITY AND RATES
As illustrated below and on the prior page, the tax capacity of the City decreased $ 4.8 million, or
12.i%, since 2008. The City's property tax levy increased 3.5%, or$495,428, in the same time frame.
With the levy increasing and tax capacity declining, the tax rate increased from 31.930% in 2008 to
36.660% in 2012. The state average tax rate for Minnesota cities was 46.260%for 2012.
Tax Capacity Rate
40.000
'36.660
I�34.730 �,..._..--'•
35.000 - - �33.710
'31.930 32.630 _ _ _
30.000
25.000 _ - _ -
20.000
15.000
10.000 -- _ ___
5.000
0.000
2008 2009 2010 2011 2012
* Tax rates obtained from the League of Minnesota Cities.
13
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
GENERAL FUND
In 2012,total General Fund expenditures increased $ l 9,163, or less than 1%, from $ 18,674,938 in
2011 to $ 18,694,l Ol in 2012. General government increased approximately $ 342,000 as a result of
expensing more of the Information Technology Internal Service Fund in the prior year, adding staffing
positions that had been vacant, and repair work that needed to be done. Public works decreased
$ 253,850 as a result of expensing their time to projects through-out the year instead of the general fund.
All of the functions were under their budgets.
2012 General Fund Expenditures
General Govemment
Recreation� � 17%
20%
�
<y
�
� �
Public Works `�
l3%
\
\
�`.Public Safety
50%
2011 General Fund Expenditures
General Govemment
Recreation ]5%
21%
}.` t�"
f l�}'
��
� s,
� �
Public Works�
14%
�"�'°
`'�.;„� ;�:.
�Public Safety
48%
14
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
ENTERPRISE FUNDS
The City has two enterprise funds. The following charts compare the segment information and retained
earnings of all the enterprise funds for the last five years.
SewerFund
$5,000,000 ---------- ---
_i
$4,000,000
��;
$3,OOQ000 - -- — —
p';s
"{
$2,000,000 �;. - — — —
t"
si,000,000 - - --,
�>_
�� �*��� ,
�,
$- - —
s�t,000,000j znos aoo�� z�no zan zniz
■OperaUngAecen�es 52,��2,56�1 $3J43,04� $3,d60,974 $2,936,1�� 53,730,226
�OpecatingEzpenses 3,30d,759 3,398,117 3683,1G8 3,836,202 3,953,269
OOpecetinglncome(Loss) (762,195) 45,927 (222,191) (90QOi8) (223,OJ3)
■Change in Net Assels 6l 1,20G 6U3,882 301,4?9 (�52J,858) ($1J,003)
Storm Drainage Fund�
az,000,000 _—_- ,
si,soo,000
— — -- --'�
si 000,000 - - - - --.
asoo,000 — - - - - -
s- _
$(500,000) -- �—�- — � — ---
$(1,000,000) y008 2009 20t0 2011 2012
■SeniceCharges $1,2G5,37J $1.32�).566 SL187,229 $995855 $1037,4D
�OpzratingExpenses 1,435,376 1,2GJ,261 1,787,295 1,411,271 1,472,361
�OperatingLncome(Loss) (17q002) 5G,30i (6W,UG6) (41?,41G) (434,93J)
6ChangeinNetAssets 70G,206 G73,GlR 29Q132 55,008 431,658
During 2012, the Sewer and Storm Drainage Funds both had operating losses. This is the fourth time in
the past five years the Funds reported an operating loss. This is primarily due to the depreciation
expense in both Funds.
15
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
DEBT SERVICE
The following charts illustrate debt service requirements through 2027 and bonded debt for the last five
years.
Debt Service Schedule
(Five Year Increments)
�ia,000,000 —_ _._ _._ _ __--�
$13,000,000
$12,000,000 �
$11,000,000
$1Q000,000
$9,000,000 '
$8,000,000 '
$7,000,000 '
$6,000,000
$5,000,000
$4,000,000
$3,000,000 �� I
$Z,OOQ000 �
I
$I,000,000
$- �
20L3-2017 2018-2032 2023-2027
� �G.O.BondPrincipal �Interest �
�onded General Obligation Debt
$3QOOQ000 --...._..._—..—____ _ ..
�
$25,OOQ000 �
i
— � �
$20,000,000 I$�,G�8,289 �
— — ——
�
$7,504,770 �
S5,L7,697
$15,00Q000 — — �$1,625,94G
IS9,999,769
�515,2>6.711
sio,000,000 � -- a��� — — �
$13,45U,2�0 $13,583,303
$11,519,051
�$9,OGQ231
$S,OOQ000 — -- —
$- T_ _
2UOS 2009 3010 2011 2U1?
I ■Gross Bonded Deb[ ■Debt$eruice Fund Balance �Net Bonded Debt I
16
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31, 2012
ADDITIONAL INFORMATION
Minnesota Median City Bond Ratings
40%
36°/a
35%
30°/a
�26%
25%
20%
20%
15%
10% 8%
6"��
5%
2% oo�0 1°/a
0%
Aaa Aal Aa2* Aa3 A1 A2 A3 Baal
* Denotes City's Rating
Information obtained from Moody's Bond Ratings for Minnesota Median Cities
17
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
ADDITIONAL INFORMATION
The following information shows 2011 per capita data for the City in comparison to three other cities
similar in size and/or operations (Cities of Savage, Chanhassen and Chaska [the "Cities"]). This
information is based on the population estimates listed below. Information for 2012 is not yet available.
When analyzing this information, keep in mind that each of the Cities is unique in its operations.
,
Shakopee 37,076 168
Savage 26,911 149
Chanhassen 22,952 68
Chaska 23,770 181
The graph below shows the total General Fund revenues and expenditures per capita, as well as General
Fund tax revenues per capita for the various Cities.
2011 General Fund
Revenues and Expenditures Per Capita
$600 �
$�00 - —
$400
$300 - — ___—_
$200 ——
$100 — —
$0 -
�I�otal E�pen�liwr�s �I olal I:evenucs I a�Rz��enu��
■Shakopee $49� $556 $379
0 Savage 404 444 3�3
■Chanhassen 401 419 302
■Chaska 417 433 168
* Population, revenues and expenditures obtained from 2011 Comprehensive Annual Financial
Report(CAFR) for all Cities
18
CITY OF SHAKOPEE
FINANCIAL ANALYSIS
December 31,2012
ADDITIONAL INFORMATION
The following graphs show the General Fund expenditures by function per capita for the various Cities.
20ll General Fund
Expenditures Per Capita
�zso
$zoo —__ _
$�so --
$�oo -- -
�,
�so -
�o *�s���; �� _ -
Ge�eral Go�cmment Publi�Safety Public U�orks Recreallon
----- - -____ ._._
■Shakopee S?5 $?49 �,69 SIG^
OSaoage 72 192 76 4�
■Chanhassen 8l 123 98 81
■Chaska 135 162 100 19
2011 Per Capita Information
Governmental Funds
sa,000
$3,500
�3,000
$2,500
$2,000
$1,500
$1,000 '�r.� -- �- --
$500 — �s' „��� - —� -
a:,. �r
.�. � �'. „x�_, .
�-,
$0 �. : _ . _ .. .
OuUi in hn U,I� � Total Rc�enu��" l�as Re�enucs* Capital Outlay
■Shakopee 54?3 $702 $385 $167
e Savage 2,255 9l9 549 197
■Chanhassen 982 726 42l 113
■Chaska 1,433 860 440 109
* Data obtained from 2011 Comprehensive Annual Financial Report(CAFR) for all Cities
19
CITY OF SHAKOPEE
Scott County, Minnesota
REPORTS ON COMPLIANCE WITH
GOVERNMENT A UDITING STANDARDS
AND MINNESOTA LEGAL COMPLIANCE
For the Year Ended December 31, 2012
CITY OF SHAKOPEE
TABLE OF CONTENTS
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.................................................................... 1
REPORT ON LEGAL COMPLIANCE........................................................................................ 3
SCHEDULE OF FINDING AND RESPONSE ON INTERNAL CONTROL .......................... 4
E;z�erC urlvice. Whe�n you �ieed it.'^;
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 A UDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members
of the City Council
City of Shakopee
Shakopee, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in UovernmentAuditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, the aggregate discretely presented component unit, each major
fund, and the aggregate remaining fund information of the City of Shakopee, Minnesota as of and for the
year ended December 31, 2012,and the related notes to the financial statements, which collectively
comprise the City's basic financial statements, and have issued our report thereon dated April 17, 2013.
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 entity's financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficieney 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. However, material
weaknesses may exist that have not been identified. We did identify certain deficiencies in internal
control, described in the accompanying Schedule of Finding and Response on Internal Controls that we
consider to be significant deficiencies, listed as audit finding 10-01.
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 Findings
The City's response to the findings identified in our audit are described in the accompanying Schedule
of Finding and Response on Internal Control. The City's response was not subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
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 result of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance. This report is an integral part of an audit performed in
accordance with GovernmentAuditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
��(�.w., De(.v,��, V-�, (.hP_
KERN, DEWENTER, VIERE, LTD.
Bloomington, Minnesota
April 17, 2013
1
£-,xpert ndi,ice. L��}ten yoti neerl it.',,
REPORT ON LEGAL COMPLIANCE
Honorable Mayor and Members
of the City Council
City of Shakopee
Shakopee, Minnesota
We have audited the financial statements of the governmental activities,the business-type activities, the
discreetly presented component unit, each major fund and the aggregate remaining fund information of
the City of Shakopee, Minnesota, for the year ended December 31, 2012, which collectively comprise
the City's basic financial statements and have issued our report thereon dated April 17, 2013.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions,
promulgated by the State Auditor pursuant to Minnesota Statutes Sec. 6.65. Accordingly,the audit
included such tests of the accounting records and such other auditing procedures as we considered
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers seven categories of
compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public
indebtedness, claims and disbursements, miscellaneous provisions and Tax Increment Financing. Our
study included all of the listed categories.
The results of our tests indicate that for the items tested,the City complied with the material terms and
conditions of applicable legal provisions.
This report is intended solely for the information and use of the City Council, management and the
Office of the State Auditor, and is not intended to be and shou(d not be used by anyone other than those
specified parties.
��,�,,,,, D�w,��, �-� c.�.
KERN, DEWENTER, VIERE, LTD.
Bloomington, Minnesota
April 17, 2013
2
CITY OF SHAKOPEE
SCHEDULE OF FINDING AND RESPONSE ON INTERNAL CONTROL
December 31,2012
AUDIT FINDING 10-1: LACK OF SEGREGATION OF ACCOUNTING DUTIES
Adequate segregation of accounting duties is in place when the four areas of a transaction have been
separated: authorization, custody, recording and reconciliation. During 2012, the City did not have
sufficient staff to segregate the duties listed above. Specific areas where this is a lack of internal
controls includes (but is not all-inclusive):
Payroll
The Payroll Clerk processes payroll, posts payroll to the general ledger, issues direct deposits,
prepares the payroll taxes, initiates transfers for payment of payroll, prepares all W-2s and maintains
all data files as well as the payroll program.
Cash Receipts
Deposits at City Hall—The front desk personnel receives money, codes the revenue and prepares
bank deposits. The Accountant reconciles cash and posts all deposits into the general ledger.
Deposits at Recreation Center—One employee is able to receipt money and prepare the bank
deposit.
Cash Disbursements
The Accountant enters invoices, matches purchase orders to invoices and prepares checks for
payment.
Management is aware of this condition and has taken certain steps to compensate for the lack of
segregation but due to the small staff needed to handle all of the accounting duties, the costs of obtaining
desirable segregation of accounting duties often exceeds benefits which could be derived. However,
management must remain aware of this situation and should continually monitor the accounting system,
including changes that occur.
Management's Response:
The auditors recognize that with the City's limited number of employees, this will most likely remain as
a significant deficiency. The City continues to analyze personnel responsibilities in an attempt to
provide for enhanced controls and to mitigate control risks.
3
5/7/2013
�., � I�( ��
� .,
� �
:=' 1d���
� �:
, �.
City of Shakopee
�
Steve Wischmann,CPN
',��`�� A;:d':?ar�rer
.s »�, •
r
�
F�I)\
��++ Audit Process
• Planning
• Fieldwork
• Draft CAFR
• Final Reports
• Board Presentation
I�l)\
�� Independent Auditor's Report
• Unqualified Opinion on the Basic Financial Statements
• Comprehensive Annual Financial Report(CAFR)also reviewed
for GFOA Certificate of Achievement for Excellence in
Financial Reporting
1
5/7/2013
hi��
�� Minnesota Legal Compliance
• Gompliance audrt basad on the Minnesota Legal Compliance Aud�it Guide for Local
Governments covers sevan areas of compliance-.
❑ Deposits ana Inves[ments
❑ Confllcis N In�eres�
❑ Public IMebtetlness
❑ CmtrxGrg arW BlOding
❑ Claims and Dlsbursemants
J Miscellaneous Prohsims
J T�Incremm�Financing
• No f�inding5
����
�a+ GAS Report
Report on GovernmentAUditing Standards Findings:
• Lack of Segregation of Accounting Duties-SD
• Improve Ice Arena Receipting Internal Controls-D
• Improve Community Center Receipting Intemal Controls-D
• Follow City Council Approved Fee Schedule-D
��)�
Ceral Faad
/� w�.�.
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wtt.
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2
5/7/2013
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General Fund Performance
� ,
, �� °, �°�1�,
�;�;��.;�,.::,,�.
k�p�otlnun�.:
�mw � f I
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lexl qx m� Y IX
Y
1\I�\
�� Transit Fund - Budget and Actual
Total Revenues
• Budgeted:$998,840
• Actual:$1,102,294
Total Expenditures and Other Financing Uses
• Budgeted:$1.251.747
• Actual:S 1,294,716
Net change in fund balance
• Budgeted:($252.907)
• Actual:($192.422)
Fund balance at beginning of the yeai was$1,237,762
Fund balance at the end of the year is 5 1.045,340
3
5/7/2013
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5/7/2013
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Questions?
Steve Wischmanq CPA
320-650-0217
swischmann@kdv.com
8