HomeMy WebLinkAbout13.F.1. Awarding Sale of General Obligation Improvement Bonds-Res. No. 6792
J 3. ~ J.
CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Awarding Sale of 2008A Improvement Bonds
DATE: July 25, 2008
Introduction
Council action is needed to award the sale of 2008A Improvement
Bonds.
Background
The attached resolution was prepared by bond counsel to award the
sale of improvement bonds series 2008A. The resolution needs to
be adopted at the August 6th Council meeting to complete the bond
sale. It is expected that Springsted will bring completed
resolutions to the council meeting.
Springsted will make the presentation to Council of the results
of the sale.
Action
Offer Resolution No. 6792 A Resolution Awarding The Sale Of
$2,170,000 General Obligation Improvement Bonds Series 2008A,
Fixing Their Form and Specifications; Directing Their Execution
And Delivery; and Providing For Their Payment, and move its
adoption.
GreJiLxland
Finance Director
H:\finance\cash\bonds\
Extract of Minutes of Meeting
of the City Council of the City of
Shakopee, Scott County, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Shakopee, Minnesota, was duly held in the City Hall in said City on Wednesday, August 6,
2008, commencing at 7:00 P.M.
The following members were present:
and the following were absent:
*** *** ***
The Mayor announced that the next order of business was consideration of the proposals
which had been received for the purchase of the City's approximately $2,170,000 General
Obligation Improvement Bonds, Series 2008A.
The City Administrator presented a tabulation of the proposals that had been received in
the manner specified in the Terms of Proposal for the Bonds. The proposals were as set forth in
EXHIBIT A attached.
After due consideration of the proposals, Member then
introduced the following resolution, and moved its adoption:
RESOLUTION NO. 6792
A RESOLUTION AWARDING THE SALE OF $2,170,000
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A
FIXING THEIR FORM AND SPECIFICATIONS;
DIRECTING THEIR EXECUTION AND DELIVERY;
AND PROVIDING FOR THEIR PAYMENT
BE IT RESOLVED By the City Council of the City of Shakopee, Scott County,
Minnesota (the "City") as follows:
Section 1. Sale of Bonds.
1.01. Award to the Purchaser and Interest Rates. The proposal of
(the "Purchaser") to purchase
$ General Obligation Improvement Bonds, Series 2008A (the "Bonds") of
the City described in the Terms of Proposal thereof is hereby found and determined to be a
reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of
$ plus accrued interest to date of delivery, for Bonds bearing interest as follows:
Year of Interest Year of Interest
Maturity Rate Maturity Rate
2010 2015
2011 2016
2012 2017
2013 2018
2014 2019
True interest cost:
1.02. Purchase Contract. The sum of $ , being the amount proposed by the
Purchaser in excess of $2,151,555, shall be credited to the Debt Service Fund hereinafter created,
or deposited in the Construction Fund hereinafter created, as determined by the City's City
Administrator, in consultation with the City's financial advisor. The City Finance Director is
directed to retain the good faith check of the Purchaser, pending completion of the sale of the
Bonds, and to return the good faith checks of the unsuccessful proposers. The Mayor and City
Administrator are directed to execute a contract with the Purchaser on behalf of the City.
1.03. Terms and Principal Amounts of the Bonds. The City will forthwith issue and sell
the Bonds pursuant to Minnesota Statutes, Chapter 429 (the "Act") in the total principal amount
of$ , originally dated Septeml,Jer 1, 2008, in the deno.mination of $5,000 each or
any integral multiple thereof, numbered No. R-l, upward, bearing interest as above set forth, and
maturing serially on February 1 without option of prior payment in the years and amounts as
follows:
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Year Amount Year Amount
2010 2015
2011 2016
2012 2017
2013 2018
2014 2019
1.04. Term Bonds. To be completed if Term Bonds are requested by the Purchaser.
Section 2. Registration and Payment.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The
interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by
check or draft issued by the Registrar described herein.
2.02. Dates: Interest Payment Dates. Each Bond will be dated as of the last interest
payment date preceding the date of authentication to which interest on the Bond has been paid
or made available for payment, unless (i) the date of authentication is an interest payment date
to which interest has been paid or made available for payment, in which case the Bond will be
dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest
payment date, in which case the Bond will be dated as of the date of original issue. The interest
on the Bonds is payable on February 1 and August 1 of each year, commencing August 1, 2009,
to the registered owners of record thereof as of the close of business on the fifteenth day of the
immediately preceding month, whether or not that day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating
agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of
the City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar must keep at its principal corporate trust office a
bond register in which the Registrar provides for the registration of ownership of Bonds
and the registration of transfers and exchanges of Bonds entitled to be registered,
transferred or exchanged.
(b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed
by the registered owner thereof or accompanied by a written instrument of transfer, in
form satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will
authenticate and deliver, in the name of the designated transferee or transferees, one or
more new Bonds of a like aggregate principal amount and maturity, as requested by the
transferor. The Registrar may, however, close the books for registration of any transfer
after the fifteenth day of the month preceding each interest payment date and until that
interest payment date.
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(c) Exchange of Bonds. When Bonds are surrendered by the registered owner
for exchange the Registrar will authenticate and deliver one or more new Bonds of a like
aggregate principal amount and maturity as requested by the registered owner or the
owner's attorney in writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange will be
promptly cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is
satisfied that the endorsement on the Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar will incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person
in whose name a Bond is registered in the bond register as the absolute owner of the
Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on
account of, the principal of and interest on the Bond and for all other purposes and
payments so made to registered owner or upon the owner's order will be valid and
effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or
sums so paid.
(g) Taxes. Fees and Charges. The Registrar may impose a charge upon the
owner thereof for a transfer or exchange of Bonds, sufficient to reimburse the Registrar
for any tax, fee or other governmental charge required to be paid with respect to the
transfer or exchange.
(h) Mutilated. Lost. Stolen or Destroyed Bonds. If a Bond becomes mutilated
or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount,
number, maturity date and tenor in exchange and substitution for and upon cancellation
of the mutilated Bond or in lieu of and in substitution for a Bond destroyed, stolen or lost,
upon the payment of the reasonable expenses and charges of the Registrar in connection
therewith; and, in the case of a Bond destroyed, stolen or 10st, upon filing with the
Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of
the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or
indemnity in form, substance and amount satisfactory to it and as provided by law, in
which both the City and the Registrar must be named as obligees. Bonds so surrendered
to the Registrar will be cancelled by the Registrar and evidence of such cancellation must
be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured
or been called for redemption in accordance with its terms it is not necessary to issue a
new Bond prior to payment.
2.04. Appointment of Initial Registrar. The City appoints U.S. Bank National
Association, St. Paul, Minnesota, as the initial Registrar. The Mayor and the City Administrator
are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon
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merger or consolidation of the Registrar with another corporation, ifthe resulting corporation is a
bank or trust company authorized by law to conduct such business, the resulting corporation is
authorized to act as successor Registrar. The City agrees to pay the reasonable and customary
charges of the Registrar for the services performed. The City reserves the right to remove the
Registrar upon 30 days' notice and upon the appointment of a successor Registrar, in which event
the predecessor Registrar must deliver all cash and Bonds in its possession to the successor
Registrar and must deliver the bond register to the successor Registrar. On or before each
principal or interest due date, without further order of this Council, the City Finance Director
must transmit to the Registrar monies sufficient for the payment of all principal and interest then
due.
2.05. Execution. Authentication and Delivery. The Bonds will be prepared under the
direction of the City Administrator and executed on behalf of the City by the signatures of the
Mayor and the City Administrator, provided that those signatures may be printed, engraved or
lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose
signature appears on the Bonds ceases to be such officer before the delivery of a Bond, that
signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the
officer had remained in office until delivery. Notwithstanding such execution, a Bond will not
be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution
unless and until a certificate of authentication on the Bond has been duly executed by the manual
signature of an authorized representative of the Registrar. Certificates of authentication on
different Bonds need not be signed by the same representative. The executed certificate of
authentication on a Bond is conclusive evidence that it has been authenticated and delivered
under this Resolution. When the Bonds have been so prepared, executed and authenticated, the
City Administrator will deliver the same to the Purchaser upon payment of the purchase price in
accordance with the contract of sale heretofore made and executed, and the Purchaser is not
obligated to see to the application of the purchase price.
2.06. Temporary Bonds. The City may elect to deliver in lieu of printed definitive
Bonds one or more typewritten temporary Bonds in substantially the form set forth in Section 3
with such changes as may be necessary to reflect more than one maturity in a single temporary
bond. Upon the execution and delivery of definitive Bonds the temporary Bonds will be
exchanged therefor and cancelled.
Section 3. Form of Bond.
3.01. Execution of the Bonds. The Bonds will be printed or typewritten in substantially
the following form:
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No.R- $
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SCOTT
CITY OF SHAKOPEE
GENERAL OBLIGATION IMPROVEMENT BOND, SERIES 2008A
Date of
Rate Maturity Original Issue CUSIP
February 1, 20_ September 1, 2008
Registered Owner: Cede & Co.
The City of Shakopee, Minnesota, a dilly organized and existing municipal corporation in
Scott County, Minnesota (the "City"), acknowledges itself to be indebted and for value received
hereby promises to pay to the Registered Owner specified above or registered assigns, the
principal sum of $ on the maturity date specified above, without option of prior
payment, with interest thereon from the date hereof at the annual rate specified above, payable
February 1 and August 1 in each year, commencing August 1,2009, to the person in whose name
this Bond is registered at the close of business on the fifteenth day (whether or not a business
day) of the immediately preceding month. The interest hereon and, upon presentation and
surrender hereof, the principal hereof are payable in lawful money of the United States of
America by check or draft by U.S. Bank National Association, St. Paul, Minnesota, as Bond
Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor
under the Resolution described herein. For the prompt and full payment of such principal and
interest as the same respectively become due, the full faith and credit and taxing powers of the
City have been and are hereby irrevocably pledged.i;;;:(;
The City Council has designated the issue of Bonds of which this Bond forms a part as
"qualified tax exempt obligations" within the meaning of Section 265(b )(3) of the Internal
Revenue Code of 1986, as amended (the "Code") relating to disallowance of interest expense for
financial institutions and within the $10 million limit allowed by the Code for the calendar year
of issue.
This Bond is one of an issue in the aggregate principal amount of $ all of
like original issue date and tenor, except as to number, maturity date, and interest rate, all issued
pursuant to a resolution adopted by the City Council on August 6, 2008 (the "Resolution"), for
the purpose of providing money to defray the expenses incurred and to be incurred in making
local improvements, pursuant to and in full conformity with the Constitution and laws of the
State of Minnesota, including Minnesota Statutes, Chapter 429, and the principal hereof and
interest hereon are payable from special assessments against property specially benefited by local
improvements and from ad valorem taxes for the City's share of the cost of the improvements, as
set forth in the Resolution to which reference is made for a full statement of rights and powers
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thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of
this Bond and the City Council has obligated itself to levy additional ad valorem taxes on all
taxable property in the City in the event of any deficiency in special assessments and taxes
pledged, which additional taxes may be levied without limitation as to rate or amount. The
Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any
integral multiple thereof of single maturities.
As provided in the Resolution and subject to certain limitations set forth therein, this
Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by
the registered owner hereof in person or by the owner's attorney duly authorized in writing, upon
surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar,
duly executed by the registered owner or the owner's attorney; and may also be surrendered in
exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City
will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of
the same aggregate principal amount, bearing interest at the same rate and maturing on the same
date, subject to reimbursement for any tax, fee or governmental charge required to be paid with
respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose
of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will
be affected by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota, to be
done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in
order to make it a valid and binding general obligation of the City in accordance with its terms,
have been done, do exist, have happened and have been performed as so required, and that the
issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or
statutory limitation of indebtedness.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit
under the Resolution until the Certificate of Authentication hereon has been executed by the
Bond Registrar by manual signature of one of its authorized representatives.
IN WITNESS WHEREOF, the City of Shakopee, Scott County, Minnesota, by its City
Council, has caused this Bond to be executed on its.behalfby the facsimile or manual signatures
of the Mayor and City Administrator and has caused this Bond to be dated as of the date set forth
below.
Dated:
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CITY OF SHAKOPEE, MINNESOTA
(Facsimile ) (Facsimile )
City Administrator Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Resolution mentioned within.
U.S. BANK NATIONAL ASSOCIATION
By
Authorized Representative
The following abbreviations, when used in the inscription on the face of this Bond, will
be constructed as though they were written out in full according to applicable laws or
regulations:
TEN COM -- as tenants UNIF GIFT MIN ACT Custodian
In common (Cust) (Minor)
TEN ENT -- as tenants under Uniform Gifts or
by entireties Transfers to Minors
IT TEN -- as joint tenants with
right of survivorship and Act. . . . . . '. . . . . .
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
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ASSIGNMENT
For value received, the undersigned hereby sells, asSIgnS and transfers unto
the within Bond and all rights thereunder, and
does hereby irrevocably constitute and appoint attorney to
transfer the said Bond on the books kept for registration of the within Bond, with full power of
substitution in the premises.
Dated:
Notice: The assignor's signature to this assignment must correspond with the name
as it appears upon the face of the within Bond in every particular, without
alteration or any change whatever.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signatures Program ("MSP")
or other such "signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange
Act of 1934, as amended.
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the assignee requested below is provided.
Name and Address:
(Include information for all joint owners if this
Bond is held by joint account.)
Please insert social security or other
identifYing number of assignee
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PROVISIONS AS TO REGISTRATION
The ownership of the principal of and interest on the within Bond has been registered on
the books of the Registrar in the name of the person last noted below.
Signature of
Date of Registration Registered Owner Officer of Registrar
Cede & Co.
Federal ill #13-2555119
3.02. Approving Legal Opinion. The City Administrator is directed to obtain a copy of
the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis,
Minnesota, which is to be complete except as to dating thereof and to cause the opinion to be
printed on or accompany each Bond.
Section 4. Payment: Security; Pledges and Covenants.
4.01. Debt Service Fund. (a) The Bonds are payable from the Improvement Bonds,
Series 2008ADebtService Fund (the "Debt Service Fund") hereby created, and the proceeds of
general taxes hereinafter levied (the "Taxes"), and special assessments (the "Assessments")
levied or to be levied for the Improvements described in the resolution authorizing the sale of the
Bonds are hereby pledged to the Debt Service Fund. If a payment of principal or interest on the
Bonds becomes due when there is not sufficient money in the Debt Service Fund to pay the
same, the City Finance Director is directed to pay such principal or interest from the general fund
of the City, and the general fund will be reimbursed for those advances out of the proceeds of
Assessments and Taxes when collected. There is appropriated to the Debt Service Fund (i)
capitalized interest funded from Bond proceeds, if any, (ii) any amount over the minimum
purchase price paid by the Purchaser, to the extent designated for deposit in the Debt Service
Fund in accordance with Section 1.02 and (iii) the accrued interest paid by the Purchaser upon
closing and delivery of the Bonds, if any.
(b) Construction Fund. The proceeds of the Bonds, less the appropriations made in
paragraph (a), together with any other funds appropriated for the Improvements and Assessments
and Taxes collected during the construction of the Improvements will be deposited in a separate
construction fund (which may contain separate accounts for each Improvement) (the
"Construction Fund") to be used solely to defray expenses of the Improvements and the payment
of principal and interest on the Bonds prior to the completion and payment of all costs of the
Improvement. (Upon approval by the City Council, any balance remaining in the construction
fund after completion of the Improvements may be used to pay the cost in whole or in part of any
other improvement instituted pursuant to the Act.) When the Improvements are completed and
the cost thereof paid, the Construction Fund is to be closed and subsequent collections of
Assessments and Taxes for the Improvements are to be deposited in the Debt Service Fund.
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4.02. City Covenants. It is hereby determined that the Improvements will directly and
indirectly benefit abutting property, and the City hereby covenants with the holders from time to
time of the Bonds as follows:
(a) The City has caused or will cause the Assessments for the Improvements
to be promptly levied so that the first installment will be collectible not later than 2009
and will take all steps necessary to assure prompt collection, and the levy of the
Assessments is hereby authorized. The City Council will cause to be taken with due
diligence all further actions that are required for the construction of each Improvement
financed wholly or partly from the proceeds of the Bonds, and will take all further actions
necessary for the final and valid levy of the Assessments and the appropriation of any
other funds needed to pay the Bonds and interest thereon when due.
(b) In the event of any current or anticipated deficiency in Assessments and
Taxes, the City Council will levy additional ad valorem taxes in the amount ofthe current
or anticipated deficiency.
(c) The City will keep complete and accurate books and records showing:
receipts and disbursements in connection with the Improvements, Assessments and Taxes
levied therefor and other funds appropriated for their payment, collections thereof and
disbursements therefrom, monies on hand and, the balance of unpaid Assessments.
(d) The City will cause its books and records to be audited at least annually
and will furnish copies of such audit reports to any interested person upon request.
4.03. Pledge of Tax Levv. It is determined that at least 20% of the cost of the
Improvements will be specially assessed against benefited properties. For the purpose of paying
the principal of and interest on the Bonds, there is levied a direct annual irrepealable ad valorem
tax upon all of the taxable property in the City, which will be spread upon the tax rolls and
collected with and as part of other general taxes of the City. The Taxes will be credited to the
Debt Service Fund above provided and will be in the years'and amounts as provided in Exhibit B
attached hereto.
4.04. Certification to County Auditor as to Debt Service Fund Amount. It is hereby
determined that the estimated collections of Assessments and the foregoing Taxes will produce
at least five percent in excess of the amount needed to meet when due the principal and interest
payments on the Bonds. The tax levy herein provided is irrepealable until all of the Bonds are
paid, provided that at the time the City makes its annual tax levies the City Administrator may
certify to the County Auditor of Scott County the amount available in the Debt Service Fund to
pay principal and interest due during the ensuing year, and the County Auditor will thereupon
reduce the levy collectible during such year by the amount so certified.
4.05. County Auditor Certificate as to Registration. The City Administrator is authorized
and directed to file a certified copy of this resolution with the County Auditor of Scott County
and to obtain the certificate required by Minnesota Statutes, Section 475.63.
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Section 5. Authentication of Transcript.
5.01. City Proceedings and Records. The officers of the City are authorized and directed
to prepare and furnish to the Purchaser and to the attorneys approving the Bonds, certified copies
of proceedings and records of the City relating to the Bonds and to the financial condition and
affairs of the City, and such other certificates, affidavits and transcripts as may be required to
show the facts within their knowledge or as shown by the books and records in their custody and
under their control, relating to the validity and marketability of the Bonds, and such instruments,
including any heretofore furnished, may be deemed representations of the City as to the facts
stated therein.
5.02. Certification as to Official Statement. The Mayor, Administrator and Finance
Director are authorized and directed to certify that they have examined the Official Statement
prepared and circulated in connection with the issuance and sale of the Bonds and that to the best
of their knowledge and belief the Official Statement is a complete and accurate representation of
the facts and representations made therein as of the date of the Official Statement.
Section 6. Tax Covenant.
6.01. Tax-Exempt Bonds. The City covenants and agrees with the holders from time to
time of the Bonds that it will not take or permit to be taken by any of its officers, employees or
agents any action which would cause the interest on the Bonds to become subject to taxation
under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or
cause its officers, employees or agents to take, all affirmative action within its power that may be
necessary to ensure that such interest will not become subject to taxation under the Code and
applicable Treasury Regulations, as presently existing or as hereafter amended and made
applicable to the Bonds.
6.02. No Rebate Required. (a) The City will comply with requirements necessary
under the Code to establish and maintain the exclusion from gross income of the interest on the
Bonds under Section 103 of the Code, including without limitation requirements relating to
temporary periods for investments, limitations on amounts invested at a yield greater than the
yield on the Bonds, and the rebate of excess investment earnings to the United States, if the
Bonds (together with other obligations reasonably expected to be issued in calendar year 2008)
exceed the small-issuer exception amount of $5,000,000. . .. .
(b) For purposes of qualifying for the small-issuer exception to the federal arbitrage
rebate requirements, the City finds, determines and declares that the aggregate face amount of all
tax-exempt bonds (other than private activity bonds) issued by the City (and all subordinate
entities of the City) during the calendar year in which the Bonds are issued is not reasonably
expected to exceed $5,000,000, within the meaning of Section 148(:t)(4)(D) of the Code.
6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of
the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the
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Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of
the Code.
6.04. Qualified Tax-Exempt Obligations. In order to qualify the Bonds as "qualified
tax -exempt obligations" within the meaning of Section 265(b )(3) of the Code, the City makes the
following factual statements and representations:
(a) the Bonds are not "private activity bonds" as defined in Section 141 of the
Code;
(b) the City hereby designates . the Bonds as "qualified tax-exempt
obligations" for purposes of Section 265(b )(3) ofthe Code;
(c) the reasonably anticipated amount of tax-exempt obligations (other than
any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by
the City (and all subordinate entities of the City) during calendar year 2007 will not
exceed $10,000,000; and
(d) not more than $10,000,000 of obligations issued by the City during
calendar year 2008 have been designated for purposes of Section 265(b)(3) of the Code.
6.05. Procedural Requirements. The City will use its best efforts to comply with any
federal procedural requirements which may apply in order to effectuate the designations made by
this section.
Section 7. Book-Entry System; Limited Obligation of City.
7.01. DTC. The Bonds will be initially issued in the form of a separate single
typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.03
hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration
rtlpo.ks kept by the Bond Registrar in the name of Cede & Co., as nominee for The Depositol'Y'''''
Trust Company, New York, New York, and its successors and assigns ("DTC"). Except as
provided in this section, all of the outstanding Bonds will be registered in the registration books
kept by the Bond Registrar in the name of Cede & Co., as nominee ofDTC.
7.02. Participants. With respect to Bonds registered in the registration books kept by
the Bond Registrar in the name of Cede & Co., as nominee ofDTC, the City, the Bond Registrar
and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and
other financial institutions from time to time for which DTC holds Bonds as securities depository
(participants) or to any other person on behalf of which a Participant holds an interest in the
Bonds, including but not limited to any responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any Participant or any other person (other than a
registered owner of Bonds, as shown by the registration books kept by the Bond Registrar,) of
any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to
any Participant or any other person, other than a registered owner of Bonds, of any amount with
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respect to principal of, premium, if any, or interest on the Bonds. The City, the Bond Registrar
and the Paying Agent may treat and consider the person in whose name each Bond is registered
in the registration books kept by the Bond Registrar as the holder and absolute owner of such
Bond for the purpose of payment of principal, premium and interest with respect to such Bond,
for the purpose of registering transfers with respect to such Bonds, and for all other purposes.
The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or
on the order of the respective registered owners, as shown in the registration books kept by the
Bond Registrar, and all such payments will be valid and effectual to fully satisfy and discharge
the City's obligations with respect to payment of principal of, premium, if any, or interest on the
Bonds to the extent of the sum or sums so paid. No person other than a registered owner of
Bonds, as shown in the registration books kept by the Bond Registrar, will receive a certificated
Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City
Administrator of a written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., the words "Cede & Co.," will refer to such new nominee of
DTC; and upon receipt of such a notice, the City Administrator will promptly deliver a copy of
the same to the Bond Registrar and Paying Agent.
7.03. Representation Letter. The City has heretofore executed and delivered to DTC a
Blanket Issuer Letter of Representations (Representation Letter) which shall govern payment of
principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds.
Any Paying Agent or Bond Registrar subsequently appointed by the City with respect to the
Bonds will agree to take all action necessary for all representations of the City in the
Representation letter with respect to the Bond Registrar and Paying Agent, respectively, to be
complied with at all times.
7.04. Transfers Outside Book-Entry System. In the event the City, by resolution offl?,e
City Council, determines that it is in the best interests of the persons having beneficial interests
in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon
DTC will notify the Participants, of the availability through DTC of Bond certificates. In such
event the City will issue, transfer and exchange Bond certificates as requested by DTC and any
other registered owners in accordance with the provisions of this Resolution. DTC may
determine to discontinue providing its services with respect to the Bonds at any time by giving
notice to the City and discharging its responsibilities with respect thereto under applicable law.
In such event, if no successor securities depository is appointed, the City will issue and the Bond
Registrar will authenticate Bond certificates in accordance with this resolution and the provisions
hereof will apply to the transfer, exchange and method of payment thereof.
7.05. Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC,
payments with respect to principal of, premium, if any, and interest on the Bond and notices with
respect to the Bond will be made and given; respectively in the manner provided in DTC's
Operational Arrangements, as set forth in the Representation Letter.
14
Section 8. Continuing Disclosure.
8.01. City Compliance with Provisions of Continuing Disclosure Certificate. The City
hereby covenants and agrees that it will comply with and carry out all of the provisions of the
Continuing Disclosure Certificate. Notwithstanding any other provision of this Resolution,
failure of the City to comply with the Continuing Disclosure Certificate is not to be considered
an event of default with respect to the Bonds; however, any Bondholder may take such actions as
may be necessary and appropriate, including seeking mandate or specific performance by court
order, to cause the City to comply with its obligations under this section.
8.02. Execution of Continuing Disclosure Certificate. "Continuing Disclosure
Certificate" means that certain Continuing Disclosure Certificate executed by the Mayor and
City Administrator and dated the date of issuance and delivery of the Bonds, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
Section 9. Defeasance. When all Bonds and all interest thereon, have been discharged
as provided in this section, all pledges, covenants and other rights granted by this resolution to the
holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the
prompt and full payment of the principal of and interest on the Bonds will remain in full force and
effect. The City may discharge all Bonds which are due on any date by depositing with the
Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should
not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum
sufficient for the payment thereof in full with interest accrued to the date of such deposit.
Adopted in regular session of the City Council of the City of Shakopee, held this 6th day of
August, 2008.
Mayor of the City or Shakopee
ATTEST:
City Clerk
(The remainder of this page is intentionally left blank.)
15
The motion for the adoption of the foregoing resolution was duly seconded by Member
, and upon vote being taken thereon, the following voted in favor
thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
16
STATE OF MINNESOTA )
)
COUNTY OF SCOTT ) SS.
)
CITY OF SHAKOPEE )
I, the undersigned, being the duly qualified and acting City Clerk of the City of
Shakopee, Scott County, Minnesota, do hereby certify that I have carefully compared the
attached and foregoing extract of minutes of a regular meeting of the City Council of the City
held on August 6, 2008 with the original minutes on file in my office and the extract is a full,
true and correct copy of the minutes insofar as they relate to the issuance and sale of
$ General Obligation Improvement Bonds, Series 2008A of the City.
WITNESS My hand officially as such City Clerk and the corporate seal of the City this
day of ,2008.
City Clerk
Shakopee, Minnesota
(SEAL)
336995vl (JAB)
SH155-202
STATE OF MINNESOTA COUNTY AUDITOR'S
CERTIFICATE AS TO
COUNTY OF SCOTT TAX LEVY AND
REGISTRATION
I, the undersigned County Auditor of Scott County, Minnesota, hereby certify that a
certified copy of a resolution adopted by the governing body of the City of Shakopee, Minnesota,
on August 6, 2008, levying taxes for the payment of $ General Obligation
Improvement Bonds, Series 2008A, of said municipality dated September 1, 2008, has been filed
in my office and said bonds have been entered on the register of obligations in my office and that
such tax has been levied as required by law.
WITNESS Myhand and official seal this day of ,2008.
County Auditor
Scott County, Minnesota
(SEAL)
Deputy
EXHIBIT B
TAX LEVY SCHEDULE
YEAR * TAX LEVY
$
* Year tax levy collected.
B-1
OFFICIAL STATEMENT DATED JULY 23,2008
Rating: Requested from Moody's
NEW ISSUE Investors Service
In the opinion of Kennedy & Graven, Chartered, Bond Counsel, under existing laws, regulations, rulings and decisions, assuming compliance
with the covenants set forth in the Resolution awarding the sale of the Bonds, the interest on the Bonds is not includable in the gross income of
the owners thereof for federal income tax purposes or in taxable n€!t income of individuals, estates or trusts for Minnesota income tax purposes,
and is not a preference item for purposes of the computation of the federal alternative minimum tax or the computation of Minnesota alternative
minimum tax imposed on individuals, trusts and estates. Interest on the Bonds is includable in the calculation of certain federal and Minnesota
taxes imposed on corporations. (See "Tax Exemption" herein.)
$2,170,000*
4." City of Shakopee, Minnesota
General Obligation Improvement Bonds, Series 2008A
(Book Entry Only)
Dated date: September 1, 2008 Interest Due: Each February 1 and August 1,
commencing August 1, 2009
The Bonds will mature February 1 as follows:
2010 $365,000 2012 $190,000 2014 $195,000 2016 $200,000 2018 $210,000
2011 $190,000 2013 $195,000 2015 $200,000 2017 $210,000 2019 $215,000
Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term
bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest
to the date of redemption and must conform to the maturity schedule set forth above.
The Bonds will not be subject to payment in advance of their respective stated maturity dates.
The Bonds will be general obligations of the City for which the City pledges its full faith and credit and power to levy
direct general ad valorem taxes. In addition, the City will pledge special assessments against benefited properties.
The proceeds will be used to finance various improvement projects within the City.
Proposals must be for not less than $2,151,555 plus accrued interest on the total principal amount of the Bonds.
Proposals must be accompanied by a good faith deposit in the form of a certified or cashier's check or a Financial
Surety Bond in the amount of $21,700, payable to the order of the City. Proposals shall specify rates in integral
multiples of 5/100 or 1/8 of 1 %. Rates are not required to be in level or ascending order; however, the rate for any
maturity cannot be more than 1 % lower than the highest rate of any of the preceding maturities. The Bonds will be
awarded on the basis of True Interest Cost (TIC).
The City will designate the Bonds as "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended. The Bonds will not be subject to the alternative minimum tax for individuals.
The Bonds will be issued as fully registered Bonds without coupons and, when issued, will be registered in the name
of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository for the
Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral
multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased.
(See "Book Entry System" herein.) U.S. Bank National Association, St. Paul, Minnesota will serve as registrar
(the "Registrar") for the Bonds. The Bonds will be available for delivery at DTC on or about September 4, 2008.
* Preliminary; subject to change.
PROPOSALS RECEIVED: August 6, 2008 (Wednesday) until 10:30 A.M., Central Time
AWARD: August 6, 2008 (Wednesday) at 7:00 P.M., Central Time
FJ Springsted Further information may be obtained from SPRINGSTED
Incorporated, Financial Advisor to the City, 380 Jackson Street,
Suite 300, Saint Paul, Minnesota 55101-2887 (651) 223-3000.
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission,
this document, as the same may be supplemented or corrected by the Issuer from time to time
(collectively, the "Official Statement"), may be treated as an Official Statement with respect to
the Obligations described herein that is deemed final as of the date hereof (or of any such
supplement or correction) by the Issuer, except for the omission of certain information referred
to in the succeeding paragraph.
The Official Statement, when further supplemented by an addendum or addenda specifying the
maturity dates, principal amounts and interest rates of the Obligations, together with any other
information required by law, shall constitute a "Final Official Statement" of the Issuer with
respect to the Obligations, as that term is defined in Rule 15c2-12. Any such addendum shall,
on and after the date thereof, be fully incorporated herein and made a part hereof by reference.
By awarding the Obligations to any underwriter or underwriting syndicate submitting a Proposal
therefor, the Issuer agrees that, no more than seven business days after the date of such
award, it shall provide without cost to the senior managing underwriter of the syndicate to which
the Obligations are awarded copies of the Official Statement and the addendum or addenda
described in the preceding paragraph in the amount specified in the Terms of Proposal.
The Issuer designates the senior managing underwriter of the syndicate to which the
Obligations are awarded as its agent for purposes of distributing copies of the Final Official
Statement to each Participating Underwriter. Any underwriter delivering a Proposal with respect
to the Obligations agrees thereby that if its bid is accepted by the Issuer (i) it shall accept such
designation and (ii) it shall enter into a contractual relationship with all Participating
Underwriters of the Obligations for purposes of assuring the receipt by each such Participating
Underwriter of the Final Official Statement.
No dealer, broker, salesman or other person has been authorized by the Issuer to give any
information or to make any representations with respect to the Obligations, other than as
contained in the Official Statement or the Final Official Statement, and if given or made, such
other information or representations must not be relied upon as having been authorized by the
Issuer. Certain information contained in the Official Statement and the Final Official Statement
may have been obtained from sources other than records of the Issuer and, while believed to
be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND
EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL
STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE
OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE
UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE THEREOF.
References herein to laws, rules, regulations, resolutions, agreements, reports and other
documents do not purport to be comprehensive or definitive. All references to such documents
are qualified in their entirety by reference to the particular document, the full text of which may
contain qualifications of and exceptions to statements made herein. Where full texts of
documents prepared by or on behalf of the Issuer have not been included as appendices to the
Official Statement or the Final Official Statement, they will be furnished on request.
Any CUSIP numbers for the Obligations included in the Final Official Statement are prOVided for
convenience of the owners and prospective investors. The CUSIP numbers for the Obligations
have been assigned by an organization unaffiliated with the Issuer. The Issuer is not
responsible for the selection of the CUSIP numbers and makes no representation as to the
accuracy thereof as printed on the Obligations or as set forth in the Final Official Statement. No
assurance can be given that the CUSIP numbers for the Obligations will remain the same after
the date of issuance and delivery of the Obligations.
TABLE OF CONTENTS
PaQe(s)
Terms of Proposal .......................... ...... ........................................................................... j-iv
..
Introductory Statement........ ....................... ................................. ............ ....... ........ .......... 1
Continuing Disclosure..................... ............................................................. ........ ........ ..... 1
The Bonds......................... ............... ...... ......... .......... ............................... ...... .................. 2
Authority and Purpose....................... ._................................... .......................................... 4
Security and Financing................................................................. ......... ........................... 4
Future Financing..................... ....... ...................................................... ............................. 5
Litigation................................................ .................................. ......... ................................ 5
Legality....................................................... ............................... .... ..................... .............. 5
Tax Exemption.............................................................. ........... ... .......... ............................ 5
Bank-Qualified Tax-Exempt Obligations............................................. .............................. 6
Rating ....................... ..... ...... ......... ... ............................ ...... ..... ..... ..... ................................ 6
Financial Advisor......................................................... ............ ............................ ............. 7
Certification................................................................................................................. ...... 7
City Property Values..................................... ......... ................. ........................ .................. 8
City Indebtedness............... ............................ .............. ............. ............................ ...... ..... 9
City Tax Rates, Levies and Collections ........................ ......................... ......... .......... ......... 14
Funds on Hand............................ ................................................................ ...... ............... 15
City Investments........................ ................................... .................................................... 15
General Information Concerning the City................ ............ ................. ............... .............. 16
Governmental Organization and Services................................................... ...................... 18
Proposed Form of Legal Opinion ............... ............................................ ........ ......... Appendix I
Continuing Disclosure Certificate ........ ... ................... ..... .... ..... .......... ...................... Appendix "
Summary of Tax Levies, Payment Provisions, and
Minnesota Real Property Valuation ...................................................................... Appendix III
Excerpt of 2007 Annual Financial Statements ........................................................ Appendix IV
THE CITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE
ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS:
TERMS OF PROPOSAL
$2,170,000 *
CITY OF SHAKOPEE, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A
(BOOK ENTRY ONLY)
Proposals for the Bonds will be received on Wednesday, August 6, 2008, until 10:30 A.M.,
Central Time, at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint
Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award
of the Bonds will be by the City Council at 7:00 P.M., Central Time, of the same day.
SUBMISSION OF PROPOSALS
Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the
time of sale specified above. All bidders are advised that each Proposal shall be deemed to
constitute a contract between the bidder and the City to purchase the Bonds regardless of the
manner in which the Proposal is submitted.
(a) Sealed BiddinQ. Proposals may be submitted in a sealed envelope or by fax
(651) 223-3046 to Springsted. Signed Proposals, without final price or coupons, may be
submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting
to Springsted the final Proposal price and coupons, by telephone (651) 223-3000 or fax
(651) 223-3046 for inclusion in the submitted Proposal.
OR
(b) Electronic BiddinQ. Notice is hereby given that electronic proposals will be received via
PARITy'l9. For purposes of the electronic bidding process, the time as maintained by PARITY@
shall constitute the official time with respect to all Bids submitted to PARI,-y@. Each bidder
shall be solely responsible for making necessary arrangements to access PARIT~ for
purposes of submitting its electronic Bid in a timely manner and in compliance with the
requirements of the Terms of Proposal. Neither the City, its agents nor PARI,-y@ shall have
any duty or obligation to undertake registration to bid for any prospective bidder or to provide or
ensure electronic access to any qualified prospective bidder, and neither the City, its agents nor
PARI,-y@ shall be responsible for a bidder's failure to register to bid or for any failure in the
proper operation of, or have any liability for any delays or interruptions of or any damages
caused by the services of PARIty@. The City is using the services of PARIJYl' s~ as a
communication mechanism to conduct the electronic bidding for the Bonds, and PARI is not
an agent of the City.
If any provisions of this Terms of Proposal conflict with information provided by PARITYilll, this
Terms of Proposal shall control. Further information about PARITY@, including any fee
charged, may be obtained from:
PARIW, 1359 Broadway, 2nd Floor, New York, New York 10018
Customer Support: (212) 849-5000
. Preliminary; subject to change.
- i -
DETAILS OF THE BONDS
The Bonds will be dated September 1, 2008, as the date of original issue, and will bear interest
payable on February 1 and August 1 of each year, commencing August 1, 2009. Interest will
be computed on the basis of a 360-day year of twelve 3D-day months.
The Bonds will mature February 1 in the years and amounts* as follows:
2010 $365,000 2013 $195,000 2016 $200,000 2018 $210,000
2011 $190,000 2014 $195,000 2017 $210,000 2019 $215,000
2012 $190,000 2015 $200,000
* The City reserves the right, after proposals are opened and prior to award, to increase or reduce the
principal amount of the Bonds offered for sale. Any such increase or reduction will be made in
multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is
increased or reduced, any premium offered or any discount taken by the successful bidder will be
increased or reduced by a percentage equal to the percentage by which the principal amount of the
Bonds is increased or reduced. .
Proposals for the Bonds may contain a maturity schedule providing for a combination of serial
bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption
at a price of par plus accrued interest to the date of redemption and must conform to the
maturity schedule set forth above. In order to designate term bonds, the proposal must specify
"Years of Term Maturities" in the spaces provided on the Proposal Form.
BOOK ENTRY SYSTEM
The Bonds will be issued by means of a book entry system with no physical distribution of
Bonds made to the public. The Bonds will be issued in fully registered form and one Bond,
representing the aggregate principal amount of the Bonds maturing in each year, will be
registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
New York, New York, which will act as securities depository of the Bonds. Individual purchases
of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single
maturity through book entries made on the books and records of OTC and its participants.
Principal and interest are payable by the registrar to OTC or its nominee as registered owner of
the Bonds. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants will be the responsibility of such participants and other nominees of beneficial
owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the
Bonds with DTC.
REGISTRAR
The City will name the registrar, which shall be subject to applicable SEC regulations. The City
will pay for the services of the registrar.
OPTIONAL REDEMPTION
The Bonds will not be subject to payment in advance of their respective stated maturity dates.
SECURITY AND PURPOSE
The Bonds will be general obligations of the City for which the City will pledge its full faith and
credit and power to levy direct general ad valorem taxes. In addition, the City will pledge
special assessments against benefited properties. The proceeds will be used to finance
various improvement projects within the City.
- ii -
TYPE OF PROPOSALS
Proposals shall be for not less than $2,151,555 cmd accrued interest on the total principal
amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in
the form of a certified or cashier's check or a Financial Surety Bond in the amount of $21,700,
payable to the order of the City. If a check is used, it must accompany the proposal. If a
Financial Surety Bond is used, it must be from an insurance company licensed to issue such a
bond in the State of Minnesota, and preapproved by the City. Such bond must be submitted to
Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must
identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the
Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is
required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's
check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central
Time, on the next business day following the award. If such Deposit is not received by that
time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement.
The Deposit received from the purchaser, the amount of which will be deducted at settlement,
will be deposited by the City and no interest will accrue to the purchaser. In the event the
purchaser fails to comply with the accepted proposal, said amount will be retained by the City.
No proposal can be withdrawn or amended after the time set for receiving proposals unless the
meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to
another date without award of the Bonds having been made. Rates shall be in integral
multiples of 5/100 or 1/8 of 1%. Rates are not required to be in level or ascending order;
however, the rate for any maturity cannot be more than 1 % lower than the highest rate of any of
the preceding maturities. Bonds of the same maturity shall bear a single rate from the date of
the Bonds to the date of maturity. No conditional proposals will be accepted.
AWARD
The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true
interest cost (TIC) basis. The City's computation of the interest rate of each proposal, in
accordance with customary practice, will be controlling.
The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of
matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals
without cause, and (iii) reject any proposal that the City determines to have failed to comply with
the terms herein.
BOND INSURANCE AT PURCHASER'S OPTION
If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment
therefor at the option of the underwriter, the purchase of any such insurance policy or the
issuance of any such commitment shall be at the sole option and expense of the purchaser of
the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of
insurance shall be paid by the purchaser, except that, if the City has requested and received a
rating on the Bonds from a rating agency, the City will pay that rating fee. Any other rating
agency fees shall be the responsibility of the purchaser.
Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the
purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on
the Bonds.
CUSIP NUMBERS
If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the
Bonds, but neither the failure to print such numbers on any Bond nor any error with respect
thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the
Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers
shall be paid by the purchaser.
- iii -
SETTLEMENT
Within 40 days following the date of their award, the Bonds will be delivered without cost to the
purchaser through DTC in New York, New York. Delivery will be subject to receipt by the
purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis,
Minnesota, and of customary closing papers, including a no~litigation certificate. On the date of
settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be
received at the offices of the City or its designee not later than 12:00 Noon, Central Time.
Unless compliance with the terms of payment for the Bonds has been made impossible by
action of the City, or its agents, the purchaser shall be liable to the City for any loss suffered by
the City by reason of the purchaser's non-compliance with said terms for payment.
CONTINUING DISCLOSURE
In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution
awarding sale of the Bonds, to provide annual reports and notices of certain events. A
description of this undertaking is set forth in the Official Statement. The purchaser's obligation
to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or
prior to delivery of the Bonds.
OFFICIAL STATEMENT
The City has authorized the preparation of an Official Statement containing pertinent
information relative to the Bonds, and said Official Statement will serve as a nearly final Official
Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission.
For copies of the Official Statement or for any additional information prior to sale, any
prospective purchaser is referred to the Financial Advisor to the City, Springsted Incorporated,
380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) 223-3000.
The Official Statement, when further supplemented by an addendum or addenda specifying the .
maturity dates, principal amounts and interest rates of the Bonds, together with any other
information required by law, shall constitute a "Final Official Statement" of the City with respect
to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any
underwriter or underwriting syndicate submitting a proposal therefor, the City agrees that, no
more than seven business days after the date of such award, it shall provide without cost to the
senior managing underwriter of the syndicate to which the Bonds are awarded 85 copies of the
Official Statement and the addendum or addenda described above. The City designates the
senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for
purposes of distributing copies of the Final Official Statement to each Participating Underwriter.
Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its
proposal is accepted by the City (i) it shall accept such designation and (ii) it shall enter into a
contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring
the receipt by each such Participating Underwriter of the Final Official Statement.
Dated July 1, 2008 BY ORDER OF THE CITY COUNCIL
1st Judy Cox
City Clerk
- iv-
OFFICIAL STATEMENT
$2,170,000*
CITY OF SHAKOPEE, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A
(BOOK ENTRY ONL Y)
INTRODUCTORY STATEMENT
This Official Statement contains certain information relating to the City of Shakopee, Minnesota
(the "City" or the "Issuer") and its issuance of $2,170,000' General Obligation Improvement
Bonds, Series 2008A (the "Bonds", the "Obligations" or the "Issue"). The Bonds are general
obligations of the City for which the City pledges its full faith and credit and power to levy direct
general ad valorem taxes. In addition, the City will pledge special assessments against
benefited properties.
Inquiries may be directed to Mr. Gregg Voxland, Finance DirectorlTreasurer, City of Shakopee,
129 South Holmes Street, Shakopee, Minnesota 55379, by telephoning (952) 233-9326, or via
email at gvoxland@cLshakopee.mn.us. Inquiries may also be made to Springsted
Incorporated, 380 Jackson Street, Suite 300, S1. Paul, Minnesota 55101-2887, or by
telephoning (651) 223-3000. If information of a specific legal nature is desired, requests may
be directed to Kennedy & Graven, Chartered, Bond Counsel, 470 U.S. Bank Plaza,
Minneapolis, Minnesota 55402, or by telephoning (612) 337-9300.
CONTINUING DISCLOSURE
In order to assist the Underwriters in complying with SEC Rule 15c2-12 promulgated by the
Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934, as the
same may be amended from time to time, and official interpretations thereof (the "Rule"),
pursuant to the Award Resolution, the City has entered into an undertaking (the "Undertaking")
for the benefit of holders including beneficial owners of the Bonds to provide certain financial
information and operating data relating to the City to certain information repositories annually,
and to provide notices of the occurrence of certain events enumerated in the Rule to certain
information repositories or the Municipal Securities Rulemaking Board and to any state
information depository. The specific nature of the Undertaking, as well as the information to be
contained in the annual report or the notices of material events are set forth in the Continuing
Disclosure Certificate to be executed and delivered by the City at the time the Bonds are
delivered in substantially the form attached hereto as Appendix II.
The City has never failed to comply in all material respects with any previous undertakings
under the Rule to provide annual reports or notices of material events. A failure by the City to
comply with the Undertaking will not constitute an event of default on the Bonds (although
.
The City reserves the right, after proposals are opened and prior to award, to increase or reduce the
principal amount of the Bonds offered for sale. Any such increase or reduction will be made in
multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased
or reduced, any premium offered or any discount taken by the successful bidder will be increased or
reduced by a percentage equal to the percentage by which the principal amount of the Bonds is
increased or reduced.
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holders will have any available remedy at law or in equity). Nevertheless, such a failure must
be reported in accordance with the Rule and must be considered by any broker, dealer or
municipal securities dealer before recommending the purchase or sale of the Bonds in the
secondary market. Consequently, such a failure may adversely affect the transferability and
liquidity of the Bonds and their market price.
THE BONDS
General Description
The Bonds are dated as of September 1, 2008 and will mature in the amounts and on the dates
shown on the front cover of this Official Statement. The Bonds are being issued in book entry
form. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing
August 1, 2009. Interest on the Bonds will be payable to the holder (initially Cede & Co.)
registered on the books of the Registrar as of the fifteenth day of the calendar month next
preceding such interest payment date. Principal of and interest on the Bonds will be paid as
described in the section herein entitled "Book Entry System." U.S. Bank National Association,
St. Paul, Minnesota will serve as Registrar for the Bonds. The City will pay for registration
services.
Optional Redemption
The Bonds will not be subject to payment in advance of their respective stated maturity dates.
Book Entry System
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository
for the Obligations. The Obligations will be issued as fully-registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by
an authorized representative of DTC. One fully-registered certificate will be issued for each
maturity of the Obligations, each in the aggregate principal amount of such maturity, and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for securities
that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade
settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of
The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number
of Direct Participants of DTC and members of the National Securities Clearing Corporation and
Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is
owned by the users of its regulated subsidiaries. Access to the DTC system is also available to
others such as securities brokers and dealers, banks, trust companies and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The DTC Rules applicable to its Participants
are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com and www.dtc.orq.
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Purchases of Obligations under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Obligations on DTC's records. The ownership
interest of each actual purchaser of each Obligation ("Beneficial . Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements
of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Obligations are to be
accomplished by entries made on the books of Direct and Indirect Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Obligations, except in the event that use of the book-entry system for
the Obligations is discontinued.
To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may
be requested by an authorized representative of DTC. The deposit of Obligations with DTC and
their registration in the name of Cede & Co. or such other DTC nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts
such Obligations are credited, which mayor may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations
may wish to take certain steps to augment the transmission to them of notices of significant
events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed
amendments to the Obligations documents. For example, Beneficial Owners of the Obligations
may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to
obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of the
notices be provided directly to them.
Redemption notices are required to be sent to DTC. If less than all of the Obligations within a
maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to
the Obligations unless authorized by a Direct Participant in accordance with DTC's procedures.
Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer or Bond Registrar as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts the Obligations are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
Payment of principal, interest, and redemption premium, if any, on the Obligations will be made
to Cede & Co. or such other nominee as may be requested by an authorized representative of
DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and
corresponding detail information from the Issuer or its agent on the payable date in accordance
with their respective holdings shown on DTC's records. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC (nor its nominee), the Bond
Registrar, or the Issuer, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, interest, and redemption premium, if any, to Cede &
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Co. (or such other nominee as may be requested by an authorized representative of DTC) is
the responsibility of the Bond Registrar, Issuer, or the Issuer's agent. Disbursement of such
payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Obligations purchased or tendered,
through its Participant, to Trustee, and shall effect delivery of such Obligations by causing the
Direct Participant to transfer the Participant's interest in the Obligations, on DTC's records, to
Trustee. The requirement for physical delivery of Obligations in connection with an optional
tender or a mandatory purchase will be deemed satisfied when the ownership rights in the
Obligations are transferred by Direct Participants on DTC's records and followed by a book-
entry credit of tendered Obligations to Trustee's DTC account.
DTC may discontinue providing its services as securities depository with respect to the
Obligations at any time by giving reasonable notice to the Issuer or its agent. Under such
circumstances, in the event that a successor securities depository is not obtained, certificates
are required to be printed and delivered.
The Issuer may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, certificates will be printed and
delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been
obtained from sources that the Issuer believes to be reliable, but the Issuer takes no
responsibility for the accuracy thereof.
AUTHORITY AND PURPOSE
The Bonds are being issued pursuant to Minnesota Statutes, Chapters 429 and 475. Proceeds
of the Bonds, along with available City funds and prepaid assessments, will be used to finance
various improvement projects within the City. The composition of the Bonds is as follows:
Project Costs $2,717,984
Less: Available City Funds (231,960)
Prepaid Assessments (362,444 )
Plus: Costs of Issuance 27,975
AllowaQce for Discount Bidding 18,445
Total Bond Issue $2,170,000
SECURITY AND FINANCING
The Bonds will be general obligations of the City for which the City will pledge its full faith and
credit and power to levy direct general ad valorem taxes. In addition, the City will pledge
special assessments against benefited properties. Special assessments in the principal
amount of $1 ,373,660 are expected to be filed on or about October 17, 2008. Of that amount,
the City expects to receive $362,444 in prepayments which have been used to reduce the
borrowing amount. The assessments will be spread over terms of one and ten years, with
equal annual payments of principal. Interest will be charged on the unpaid balance at a rate of
1.50% over the true interest rate on the Bonds.
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,.,.,..-
The City is expected to make its first levy for the Bonds in 2008 for collection in 2009. Each
year's collections of special assessments and taxes, if collected in full, will be sufficient to pay
105% of the interest due on August 1 in the year of collection arid the principal and interest due
on February 1 of the following year.
FUTURE FINANCING
The City does not anticipate any additional borrowing within the next 90 days.
LITIGATION
The City is not aware of any threatened or pending litigation affecting the validity of the Bonds
or the City's ability to meet its financial obligations.
LEGALITY
The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of
Minneapolis, Minnesota as Bond Counsel. Kennedy & Graven also serves as City Attorney.
Bond Counsel has not participated in the preparation of this Official Statement and will not pass
upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor
attempted to examine or verify, any of the financial or statistical statements, or data contained
in this Official Statement and will express no opinion with respect thereto. A legal opinion in
substantially the form set out as Appendix I to this Official Statement will be delivered at closing.
TAX EXEMPTION
In the opinion of Bond Counsel, under existing statutes, regulations, rulings and decisions, interest
on the Bonds is not includable in the "gross income" of the owners thereof for purposes of federal
income taxation and is not includable in net taxable income of individuals, estates or trusts for
purposes of State of Minnesota income taxation, but is subject to State of Minnesota franchise
taxes measured by income that are imposed upon corporations and financial institutions.
Noncompliance following the issuance of the Bonds with certain requirements of the Internal
Revenue Code of 1986, as amended, (the "Code") and covenants of the bond resolution may
result in the inclusion of interest on the Bonds in gross income (for federal tax purposes) and
net taxable income for State of Minnesota tax purposes of the owners thereof. No provision
has been made for redemption of the Bonds, or for an increase in the interest rate on the
Bonds, in the event that interest on the Bonds becomes SUbject to United States or State of
Minnesota income taxation.
The Code imposes an alternative minimum tax with respect to individuals and corporations on
alternative minimum taxable income. Interest on the Bonds will not be treated as a preference
item in calculating alternative minimum taxable income. The Code provides, however, that a
portion of the adjusted current earnings of a corporation not otherwise included in the minimum
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tax base would be included for purposes of calculating the alternative minimum tax that may be
imposed with respect to corporations. Adjusted current earnings include income received that
is otherwise exempt from taxation such as interest on the Bonds.
The Code provides that in the case of an insurance company subject to the tax imposed by
Section 831 of the Code, the amount which otherwise would be taken into account as "losses
incurred" under Section 832(b)(5) shall be reduced by an amount equal to 15% of the interest
on the Bonds that is received or accrued during the taxable year.
Interest on the Bonds may be included in the income of a foreign corporation for purposes of
the branch profits tax imposed by Section 884 of the Code. Under certain circumstances,
interest on the Bonds may be subject to the tax on "excess net passive income" of
Subchapter S corporations imposed by Section 1375 of the Code.
The above is not a comprehensive list of all federal tax consequences which may arise from the
receipt of interest on the Bonds. The receipt of interest on the Bonds may otherwise affect the
federal or State income tax liability of the recipient based on the particular taxes to which the
recipient is subject and the particular tax status of other items or deductions. Bond Counsel
expresses no opinion regarding any such consequences. All prospective purchasers of the
Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax
considerations for, purchasing or holding the Bonds.
BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS
The City will designate the Bonds as "qualified tax-exempt obligations" for purposes of Section
265(b)(3) of the Code relating to the ability of financial institutions to deduct from income for
federal income tax purposes, interest expense that is allocable to carrying and acquiring
tax-exempt obligations.
RATING
Application for a rating of the Bonds has been made to Moody's Investors Service ("Moody's"),
7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York. If a rating is
assigned, it will reflect only the opinion of Moody's. Any explanation of the significance of the
rating may be obtained only from Moody's.
There is no assurance that a rating, if assigned, will continue for any given period of time, or
that such rating will not be revised or withdrawn if, in the judgment of Moody's, circumstances
so warrant. A revision or withdrawal of the rating may have an adverse effect on the market
price of the Bonds.
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FINANCIAL ADVISOR
The City has retained Springsted Incorporated, Public Sector Advisors, of St. Paul, Minnesota,
as financial advisor (the "Financial Advisor") in connection with the issuance of the Bonds. In
preparing the Official Statement, the Financial Advisor has relied upon governmental officials,
and other sources, who have access to relevant data to provide accurate information for the
Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to
independently verify the accuracy of such information. The Financial Advisor is not a public
accounting firm and has not been engaged by the City to compile, review, examine or audit any
information in the Official Statement in accordance with accounting standards. The Financial
Advisor is an independent advisory firm and is not engaged in the business of underwriting,
trading or distributing municipal securities or other publiC securities and therefore will not
participate in the underwriting of the Bonds.
CERTIFICATION
The City has authorized the distribution of this Official Statement for use in connection with the
initial sale of the Bonds. As of the date of the settlement of the Bonds, the Purchaser will be
furnished with a certificate signed by the appropriate officers of the City. The certificate will
state that as of the date of the Official Statement, the Official Statement did not and does not as
of the date of the certificate contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(The Balance of This Page Has Been Intentionally Left Blank)
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CITY PROPERTY VALUES
2007 Indicated Market Value of Taxable Property: $4,323,999,431*
* Indicated market value is calculated by dividing the City's taxable market value of $3,800,795,500 by
the 2006 sales ratio of 87.9% for the City as determined by the State Department of Revenue.
(2007 sales ratios are not yet available)
2007 Taxable Net Tax Capacity: $43,851,703
2007 Net Tax Capacity $46,110,112
Less: Captured Tax Increment Tax Capacity (411,490)
Contribution to Fiscal Disparities (5,407,471)
Plus: Distribution from Fiscal Disparities 3.560,552
2007 Taxable Net Tax Capacity $43,851,703
2007 Taxable Net Tax Capacity by Class of Property
Real Estate:
Residential Homestead $25,805,239 58.9%
Commercial/Industrial, Public Utility,
and Railroad* 13,215,114 30.1
Residential Non-Homestead 4,136,839 9.4
Agricultural and Seasonal/Recreational 408,541 0.9
Personal Property 285,970 ~
Total $43,851,703 100.0%
* Reflects adjustments for fiscal disparities and captured tax increment tax capacity.
Trend of Values
Indicated Taxable Taxable Net
Market Value(a) Market Value Tax Capacity(b)
2007 $4,323,999,431 $3,800,795,500 $43,851,703
2006 3,889,693,515 3,419,040,600 39,164,767
2005 3,297,635,099 2,987,657,400 34,470,585
2004 2,945,805,660 2,654,170,900 30,211,233
2003 2,613,735,574 2,255,653,800 25,626,029
(a) Indicated market values are calculated by dividing the City's taxable market value by the sales ratio
determined for the City each year by the State Department of Revenue.
(b) See Appendix /II for an explanation of taxable net tax capacity and the Minnesota property tax system.
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Ten of the largest Taxpayers in the City
2007 Net
Taxpayer Type of Property Tax Capacity
First Industrial Limited Partnership Residential/Commercial $ 599,026
Xcel Energy Utility 532,876
Shakopee Crossings Limited Partnership Residential/Commercial 436,954
Rahr Malting Co. Malting Company 408,370
Seagate Technology Inc. Computer Hardware 399,250
Certain Teed Products Corp. Industrial 397,522
Inland Shak Valley Marketplace Commercial 388,392
Cedar Fair Limited Partnership Valleyfair Amusement Park 358,348
Ryan Companies US Inc. Commercialllndustrial 329,094
Canterbury Park Holding Corporation Commercial/Industrial 314,748
Total $4,164,580*
* Represents 9.5% of the City's 2007 taxable net tax capacity.
CITY INDEBTEDNESS
legal Debt limit*
Legal Debt Limit (3% of Taxable Market Value) $114,023,865
Less: Outstanding Debt Subject to Limit (7,165,000)
Legal Debt Margin at May 31, 2008 $106,858,865
* Beginning with issues having a settlement date after June 30, 2008, State statutes have increased the
legal debt limit from 2% to 3% of the City's taxable market value. The legal debt margin is referred to
statutorily as the "Net Debt Limit" and permits debt to be offset by debt service funds and current
revenues which are applicable to the payment of debt in the current fiscal year. To conservatively
state the legal debt margin, no such offset has been used to increase the margin as shown above.
General Obligation Debt Supported by Taxes*
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 5-31-08
5-1-04 $2,275,000 Fire Station Refunding 2-1-2017 $1,780,000
11-1-04 6,000,000 Capital Improvement (Public Works) 2-1-2025 5,385,000
Total $7,165,000
* These issues are subject to the statutory debt limit.
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General Obligation Debt Supported by Taxes and/or Special Assessments
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 5-31-08
11-1-97 $1,805,000 Local Improvements 2-1-2009 $ 70,000
12-1-98 2,375,000 Local Improvements 2-1-2010 390,000
10-1-00 2,560,000 Local Improvements 2-1-2011 705,000
2-1-02 1,185,000 Local Improvements 2-1-2012 540,000
7-1-02 3,750,000 Local Improvements 2-1-2013 1,010,000
6-1-03 2,215,000 Local Improvements 2-1-2014 925,000
5-1-04 4,225,000 Local Improvements 2-1-2025 3,035,000
11-1-04 2,570,000 Local Improvements 2-1-2015 1,770,000
7-1-06 3,440,000 Local Improvements 2-1-2017 3,130,000
2-1-07 1,370,000 Local Improvements 2-1-2017 1 ,260,000
9-1-07 1,445,000 Local Improvements 2-1-2018 1,445,000
9-1-08 2,170,000 Local Improvements (this Issue) 2-1-2019 2,170,000
Total $16,450,000
General Obligation Debt Supported by Revenues
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 5-31-08
9-1-03 $6,640,000 Northridge Apartments 2-1-2034 $ 6,315,000(a)
7-15-06 3,360,000 River City Centre-Housing
Refunding 2-1-2027 3,110,000(b)
7-15-06 905,000 River City Centre-Retail Refunding
(Taxable) 2-1-2018 805,000(b)
7-15-06 1,125,000 River City Centre-Retail Refunding 2-1-2024 1 ,225,000(b)
Total $11,455,000
(a) These bonds were sold by the Scott County Community Development Agency (the "CDA") to finance
a senior housing project in the City. The bonds are being repaid from project revenues and a portion
of the CDA s special benefits tax. The bonds are a general obligation of both Scott County and the
City.
(b) These issues were sold by the CDA to finance a combination housing and retail project located in the
City. These issues are being repaid from revenues of the project and tax increment collections.
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Revenue Debt*
Principal
Date Original Final Outstanding
of Issue Amount Purpose Maturity As of 5-31-08
12-1-99 $ 9,850,000 Utility Improvements 2-1-2009 $ 145,000
6-1-01 12,000,000 Utility Improvements 2-1-2009 275,000
5-1-03 3,385,000 Utility Improvements Refunding 8-1-2018 2,650,000
10-1-04 9,830,000 Utility Improvements Refunding 2-1-2028 9,505,000
11-1-06 10,570,000 Utility Improvements Refunding 2-1-2030 10,570.000
Total $23,145,000
* These issues were sold by the Shakopee Public Utilities Commission to finance capital improvements,
replacements and additions to the electric and water utilities comprising the Shakopee Public Utilities.
Annual Calendar Year Debt Service Payments Including This Issue
G.O. Debt Supported
G.O. Debt by Taxes and/or
Supported bv Taxes Special Assessments
Principal Principal
Year Principal & Interest Principal & Interest(a)
2008 (at5-31) (Paid) $ 137,571.89 (Paid) $ 298,719.59
2009 $ 410,000 678,993.78 $ 2,250,000 2,826,779.19
2010 415,000 671,618.78 2,515,000 3,011,308.77
2011 435,000 678,683.78 1,940,000 2,354,352.52
2012 445,000 674,568.78 1,820,000 2,164,152.52
2013 460,000 674,323.15 1,785,000 2,062,129.39
2014 475,000 671,982.52 1,555,000 1,769,325.01
2015 500,000 677,482.52 1,330,000 1,488,656.26
2016 515,000 672,182.52 980,000 1,093,106.26
2017 530,000 666,170.02 970,000 1,044,466.26
2018 320,000 439,057.52 460,000 505,962.51
2019 335,000 440,957.52 310,000 340,352.51
2020 345,000 437,141.89 90,000 111,987.51
2021 360,000 437,466.26 90,000 108,050.01
2022 380,000 441,831.26 90,000 104,056.26
2023 395,000 440,362.51 90,000 100,006.26
2024 415,000 442,890.63 90,000 95,956.26
2025 430,000 439,406.25 85,000 86,965.63
Total $7, 165,000(b) $9,722,691.58 $16,450,000(e) $19,566,332.72
(a) Includes the Bonds at an assumed average annual interest rate of 3. 70%.
(b) 62.9% of this debt will be retired within ten years.
(e) 94.9% of this debt will be retired within ten years.
I
I
I
I
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Annual Calendar Year Debt Service Payments Including This Issue (Continued)
GoO. Debt Supported
by Revenues Revenue Debt
Principal Principal
Year Principal & Interest Principal & Interest
2008 (at 5-31) (Paid) $ 265,014.38 $ 200,000 $ 979,558.78
2009 $ 260,000 785,038.76 710,000 1,963,252.54
2010 280,000 794,422.51 765,000 1,700,921.90
2011 295,000 797,715.01 780,000 1,687,231.90
2012 310,000 800,051.26 830,000 1,706,541.27
2013 335,000 811,217.51 825,000 . 1,669,511.90
2014 350,000 811,283.76 875,000 1,686,04;3.78
2015 450,000 893,055.01 890,000 1,662,912.53
2016 475,000 896,316.26 950,000 1,683,412.53
2017 505,000 903,025.63 985,000 1,376,675.03
2018 520,000 894,188.75 1,015,000 1,663,790.03
2019 550,000 900,282.50 1,035,000 1,635,431.28
2020 575,000 900,170.00 1,130,000 1,685,550.03
2021 605,000 903,510.00 1,175,000 1,681,975.03
2022 645,000 914,950.00 1,220,000 1,676,081.28
2023 670,000 909,565.00 1,275,000 1,677,609.40
2024 555,000 766,128.75 1,350,000 1,695,531.26
2025 495,000 681,690.00 1,400,000 1,684,875.00
2026 515,000 678,132.50 1,450,000 1,671,515.63
2027 540,000 678,451.25 1 ,430,000 1,587,515.63
2028 310,000 428,267.50 1,365,000 1,460,468.75
2029 325,000 427,625.00 725,000 774,328.13
2030 340,000 426,000.00 765,000 781,734.38
2031 360,000 428,500.00
2032 380,000 430,000.00
2033 395,000 425,625.00
2034 415,000 425,375.00
Total $11,455,000(a) $18,975,601.34 $23,145,OOO(b) $35,792,467.99
(a) 33.0% of this debt will be retired within ten years.
(b) 33.7% of this debt will be retired within ten years.
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Summary of Direct Debt Including This Issue
Less: Debt Net
Gross Debt Service Funds(a) Direct Debt
GoO. Debt Supported by Taxes $ 7,165,000 $ (279,888) $ 6,885,112
GoO. Debt Supported by Taxes
and/or Special Assessments 16,450,000 (3,861 ,185) 12,588,815
G.O. Debt Supported by Revenues 11,455,000 (b) 11,455,000
Revenue Debt 23,145,000 (c) 23,145,000
(a) Debt service funds are as of May 31, 2008 and include moneys to pay both principal and interest.
(b) Paid from revenues held by the Scott County CDA.
(c) Moneys from the City's various enterprise funds are transferred to the debt service funds only as
required.
Indirect General Obligation Debt
Debt Applicable to
2007 Taxable G.O. Debt Tax Capacity in City
Taxinq Unit Net Tax Capacity As of 5-31-08(a) Percent Amount
Scott County $ 162,140,251 $ 73,550,000 27.1% $ 19,932,050
ISO No. 720 (Shakopee) 49,838,385 158,250,000 85.2 134,829,000
ISD No. 191 (Burnsville-
Eagan-Savage) 71,177,611 77,895,000 2.0 1,557,900
Metropolitan Council 3,594,085,267 21,645,000(b) 1.2 259,740
Metropolitan Transit 2,807,278,163 194,335,000(c) 1.6 3,109,360
Total $159,688,050
(a) Excludes general obligation tax and aid certificates, general obligation debt supported by revenues
and revenue debt. Includes annual appropriation lease obligations.
(b) Excludes general obligation debt supported by sewer system revenues, 911 user fees, and housing
rental payments. Includes certificates of participation.
(c) Includes lease revenue bonds, subject to annual appropriation, issued by the Bloomington Port
Authority for constructing and equipping a transit station and parking ramp.
Debt Ratios*
G.O. Net G.O. Indirect &
Direct Debt Net Direct Debt
2007 Indicated Market Value ($4,323,999,431) 0.45% 4.14%
Per Capita (30,971 - 2006 Metropolitan Council Estimate) $629 $5,785
* Excludes general obligation debt supported by revenues and revenue debt.
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CITY TAX RATES, LEVIES AND COLLECTIONS
Tax Capacity Rates for a City Resident in
Independent School District No. 720 (Shakopee)
2007/08
For
2003/04 2004/05 2005/06 2006/07 Total Debt Only
Scott County 36.635% 35.361% 34.107% 33.140% 32.646% 8.549%
City of Shakopee(a) 32.433 31.115 30.974 31.939 31.925 2.028
ISO No. 720 (Shakopee )(b) 21.517 25.215 27.789 27.132 26.103 22.238
Special Districts(c) 5.197 4.660 4.578 4.434 4.642 0.543
Total 95.782% 96.351 % 97.448% 96.645% 95.316% 33.358%
(a) The City also has a 2007/08 tax rate of 0.00537% spread on the market value of property in support of
debt service.
(b) Independent School District No. 720 (Shakopee) also has a 2007/08 tax rate of O. 11359% spread on
the market value of property in support of an excess operating levy.
(c) Special districts include the Shakopee Economic Development Authority, Scott County Community
Development Agency, Metropolitan Council, Metropolitan Transit, Mosquito Control, and the Lower
Minnesota Watershed District.
NOTE: Property taxes are determined by multiplying the net tax capacity by the tax capacity rate, plus
multiplying the referendum market value by the market value rate. This table does not include
the market value based rates. See Appendix 11/.
Tax Levies and Collections
Collected During Collected
Collection Year as of 12-31-07
Levy/Collect Net Levy* Amount Percent Amount Percent
2007/08 $13,701,849 (In Process of Collection)
2006/07 12,103,656 $11,853,798 97.9% $11,948,358 98.7%
2005/06 10,399,773 10,157,926 97.7 10,350,050 99.5
2004/05 9,137,144 8,997,115 98.5 9,131,471 99.9
2003/04 8,046,291 7,846,952 97.5 8,044,289 99.9
"''''''.
* The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy
is the basis for computing the tax capacity rates. See Appendix 11/.
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FUNDS ON HAND
As of May 31,2008
Fund Cash and Investments
General $ 3,862,939
Special Revenue 4,222,153
Debt Service:
G.O. Tax Levy 279,888
G.O. Special Assessment 3,861,185
Capital Projects 8,043,773
Enterprise 26,376,095*
Internal Service 8,018,649
Trust and Agency 2.767.737
Total $57,432,419
* Excludes Shakopee Public Utilities Commission cash and investments.
CITY INVESTMENTS
Safety of principal is the foremost objective of the City's investment program. Investments shall
be undertaken in a manner that seeks to ensure the preservation of capital in the overall
portfolio. The objective will be to mitigate credit risk and interest rate risk.
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that
may be reasonably anticipated. This is accomplished by structuring the portfolio so that
securities mature concurrent with cash needs to meet anticipated demands (static liquidity).
Furthermore, since all possible cash demands can not be anticipated, the portfolio should
consist largely of securities with active secondary or resale markets (dynamic liquidity).
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. Return on investment is of least importance compared to the safety and
liquidity objectives described above. The core of investments are limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being assumed.
As of May 31, 2008, the market value of the City's investments, excluding the Shakopee Public
Utilities Commission investments, totaled $57,736,363, including treasury securities purchased
at a discount and accruing interest. Of the City's total investments, approximately 24% of the
investments will mature in less than one year (including government mutual funds and money
market funds) and 36% will mature in one to five years.
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GENERAL INFORMATION CONCERNING THE CITY
The City is located in northeastern Scott County, approximately 25 miles southwest of the City
of Minneapolis. The City is the Scott County seat and is part of the Minneapolis/St. Paul
seven-county metropolitan area. The Minnesota River forms the City's northern boundary. The
City encompasses an area of 29 square miles, since having annexed 340 acres in Jackson
Township in November 2006. The City's population has been increasing rapidly in recent years,
as shown below.
U.S. Census
Year Population Percent Increase
2006 30,971 * 50.6%
2000 20,568 75.2
1990 11 ,739 18.1
1980 9,941 44.6
1970 6,876 ---
* Metropolitan Council estimate.
Major Employers in the City
Approximate
Number
Employer Product/Service of Employees
Valleyfair Amusement Park 1,600(a)
Seagate Technology Inc. Computer Equipment Manufacturing 1,200
Canterbury Park Horse Racing 1,100
Independent School District No. 720 Education 947
S1. Francis Regional Medical Center Health Care 900
Scott County County Government 713
Northstar Auto Auction Motor Vehicle Sales 332
American Color (formerly Shakopee
Valley Printing) Printing Company 287
Anchor Glass Container Corp. Glass Container Manufacturing 282
City of Shakopee City Government 251 (b)
T oro Company Turf Care Products 249
Women's Correctional Facility Women's Prison 244
CertainTeed Corp. Asphalt Shingles Manufacturing 237
Silgan Containers Corp. Metal Cans 150
Shakopee Friendship Manor Corp. Nursing Home 100
(a) Number indicates seasonal peak.
(b) Includes full- and part-time employees.
Source: Telephone survey of individual employers, May 2008.
I
-16-
labor Force Data
June 2008 June 2007
Civilian Unemployment Civilian Unemployment
Labor Force Rate Labor Force Rate
City of Shakopee 20,253 5.1% 20,126 3.9%
Scott County 73,578 4.9 73,314 3.9
Minneapolis/St. Paul MSA 1,861,736 5.1 1,859,434 4.4
State of Minnesota 2,965,810 5.3 2,957,495 4.5
Source: Minnesota Department of Employment and Economic Development. 2008 data are preliminary.
City-Issued Building Permits
Total Permits New Sinqle Familv Homes
Number Value Number Value
2008 (to 5-31) 337 $ 23,302,116 32 $ 8,586,547
2007 1,194 86,698,306 138 38,719,897
2006 1,131 125,677,330 223 57,995,337
2005 1,512 224,302,132 352 84,367,302
2004 1,639 198,362,382 396 97,880,471
2003 1,744 191,634,443 384 79,508,416
2002 1,310 149,473,123 260 55,243,745
2001 1 ,469 158,959,090 442 93,043,662
2000 1 ,473 187,734,526 458 85,480,390
1999 1,057 216,139,070 385 54,807,169
Recent Development
The City's residential growth is continuing, but the rate has slowed considerably in 2006 and
2007. Approximately 16 lots were approved in 2007, 214 lots/units were approved in 2006,
700 new lots were approved in 2005, and 737 lots were approved in 2004.
A comprehensive plan for the City was adopted in 1999. This document guides the City's
growth and development for the next 20 years. Areas covered in the plan include zoning, future
utility facilities, transportation issues, and parks and trails. The plan was approved by the
Metropolitan Council in March of 2002. Another update is currently being prepared.
Ryan Companies is developing a 270+ acre, $185 million mixed-use site (Valley Green
Business Park with a housing component) at Highway 169 and County Road 83. Within that
development, a new Slumberland store has opened.
The City completed an $8 million public utilities commission service center in 2004. The
Shakopee school district completed construction of a new elementary school (Eagle Creek
Elementary School) which opened in the fall of 2007 along with the new high school. A new
county jail has also been built in the City. S1. Francis Medical Center completed a $44 million
expansion in 2006 and has also constructed an addition for clinic expansion. In 2007, new
service buildings for the Aquatic Park, Soccer Complex and Huber Park opened. The City has
opened a new 500-car parking lot for transit riders with a building to follow.
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Financial Institutions
Citizens State Bank of Shakopee is a full-service bank located in the City. Branches of Voyager
Bank, Wells Fargo Bank National Association, KleinBank, Prime Security Bank, TCF National
Bank, Paragon Bank, BNC National Bank and M & I Bank are also located in the City.
Health Care Facilities
S1. Francis Regional Medical Center, a general and acute care hospital with 93 beds and
16 infant bassinets, is located in the City. The Center has a medical $taff of approximately
400 active or affiliated physicians. The Center's total full-and part-time employment is
approximately 900.
Also located in the City are Shakopee Friendship Manor, an 80-bed nursing home, and
S1. Gertrude's Health Center, a 75-bed nursing home.
Source: http://www.hea/th.state.mn.us/divs/fpc/directory/fpcdir.htm/.
Education
Most City residents are part of Independent School District No. 720 (Shakopee); a small
percentage of City residents are within the boundaries of Independent School District No. 191
(Burnsville-Eagan-Savage ). Independent School District No. 720 had a 2007/08 enrollment
(grades kindergarten through 12) of approximately 6,277 students and has approximately
947 employees.
Shakopee Area Catholic School provides parochial education for grades kindergarten through
eight. The school had a 2007/08 enrollment of approximately 725 students. Living Hope
Lutheran School has 105 students in grades kindergarten through four.
Source: http://cfl.state.mn.us/datactrl.
GOVERNMENTAL ORGANIZATION AND SERVICES
Organization
Shakopee was incorporated as a City in 1870 and became a statutory city in April 1975. The
City has a Mayor-Council form of government, with the Mayor elected to a two-year term of
office and the four Council members elected to overlapping four-year terms. The present
Mayor and Council members are as shown below:
Expiration of Term
John Schmitt Mayor December 31, 2009
Steven Clay Council Member December 31, 2009
Patrick Heitzman Council Member December 31,2011
Terry Joos Council Member December 31, 2009
Matt Lehman Council Member December 31, 2011
- 18-
The City's chief administrative officer is the City Administrator who is appointed by the City
Council. Mr. Mark McNeill was appointed to this position in July of 1996. Prior to that,
Mr. McNeill was the City Administrator in Mason City, Iowa for two years and in Savage,
Minnesota for ten years. Mr. McNeill holds a B.A. degree in political science and a master's
degree in public affairs.
Mr. Gregg M. Voxland, the City's Finance DirectorlTreasurer, has been with the City since
1978. Mr. Voxland previously worked for the City of Anoka, Minnesota, and holds a
B.A. degree in business and accounting. Ms. Judith S. Cox is the City Clerk.
The City has 251 employees with 167 full-time and 84 part-time employees.
Services
Police and fire protection for the City is provided by the Police Department, which is authorized
to staff up to 47 full-time officers. The City has a paid on-call Fire Department authorized to
staff up to 54 members. The City has a class 5 rating for insurance purposes.
The Shakopee Public Utilities Commission is the governing body of the electric utility and
responsible for the management, operation and maintenance of the municipal water system
and electrical distribution system. The electric system purchases power from Minnesota
Municipal Power Agency (MMPA) and has 15,436 metered customers. The Commission is
composed of five members appointed by the City Council to three-year terms. The Commission
makes an annual contribution in lieu of taxes to the City. The Commission has placed a fourth
electrical substation into operation to serve the growing load in the industrial area and has
completed and occupied a new Service Center.
Municipal water and sewer services are provided for all developed areas of the City. Water is
supplied by 13 wells and stored in a two million gallon standpipe, a 1.5 million gallon elevated
tank, two 500,000 gallon elevated tanks, and two 2.5 million gallon in-ground tanks. The water
system has a pumping capacity of 12,000 gallons per minute; average demand is estimated to
be 3.7 million gallons per day, while peak demand reaches 15.0 million gallons per day.
Interceptor sewer lines and wastewater treatment plants in the seven-county metropolitan area
are under the jurisdiction of the Metropolitan Council's Environmental Services ("MCES").
MCES finances its operations through user charges based on volume.
Employee Pensions
All full-time and certain part-time employees of the City of Shakopee are covered by defined
benefit pension plans administered by the Public Employees Retirement Association of
Minnesota (PERA). PERA administers the Public Employers Retirement Fund (PERF) and the
Public Employees Police and Fire Fund (PEPFF) which are cost-sharing multiple-employer
retirement plans. PERF members belong to either the Coordinated Plan or the Basic Plan.
Coordinated members are covered by Social Security and Basic members are not. All new
members must participate in the Coordinated Plan. All police officers who qualify for
membership by statute are covered by the PEPFF. The City's contributions to the PERF for the
years ended December 31, 2007, 2006 and 2005 were $452,967, $410,849, and $353,029,
respectively. The City's contributions to the PEPFF for the years ending December 31, 2007,
2006, and 2005 were $359,836, $278,056, and $209,661, respectively.
The City contributes to the Shakopee Fire Department Relief Association, a single-employer
public employee retirement system that acts as a common investment and administrator for the
City's volunteer fire fighters. Required and actual employer contributions to the plan in 2007
were $210,301.
-19-
General Fund Budget Summary
2006 2007 2008
Actual Actual Budaet
Revenues:
Property Taxes $ 9,471,595 $ 11,569,002 $ 12,979,410
Special Assessments 6,597 5,405 2,000
Licenses & Permits 1,644,172 973,658 820,000
Intergovernmental 506,240 590,438 344,000
Charges for Services 1,294,733 1,090,018 607,650
Fines and Forfeitures 374,807 451,418 430,000
Miscellaneous 452,508 586,137 405.000
Total Revenues $ 13,750,652 $ 15,266,076 $ 15,588,060
Expenditures:
General Government 2,897,832 3,121,509 3,517,150
Public Safety 7,067,620 8,283,702 7,777,570
Public Works 2,386,623 2,609,674 3,591,450
Culture and Recreation 1 ,337,112 1,496,678 1,982,290
Miscellaneous 173,063 618,244 181 ,000
Total Expenditures $ 13,862,250 $ 16,129,807 $ 17,049,460
Excess Revenues
Over (Under) Expenditures (111,598) (863,731) (1,461,400)
Other Financing Sources (Uses)
Other Sources 1,589,679 1,906,811 1,740,000
Other Uses (1,312,589) (1,180,181 ) (1,171,010)
Total Other Financing Sources (Uses) $ 277,090 $ 726,630 568,990
Net Change in Fund Balances $ 165,492 $ (137,101 ) $ (892,410)
Fund Balance - Beginning $ 9,679,142 $ 9,844,634 $ 9,707,533
Fund Balance - Ending $ 9,844,634 $ 9,707,533 $ 8,815,123 I
I
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APPENDIX I
PROPOSED FORM OF LEGAL OPINION
Kennedy 470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis MN 55402
&
Graven (612) 337-9300 telephone
(612) 337-9310 fax
http://www.kennedV-2raven.com
CHARTERED
$
General Obligation Improvement
Bonds, Series 2008A
City of Shakopee
Scott County, Minnesota
We have acted as bond counsel to the City of Shakopee, Scott County, Minnesota
(the "Issuer") in connection with the issuance by the Issuer of its General Obligation
Improvement Bonds, Series 2008A, (the "Bonds"), originally dated as of September 1, 2008,
I and issued in the original aggregate principal amount of $ . In such capacity and for
I the purpose of rendering this opinion we have examined certified copies of certain proceedings,
certifications and other documents, and applicable laws as we have deemed necessary.
Regarding questions of fact material to this opinion, we have relied on certified proceedings and
other certifications of public officials and other documents furnished to us without undertaking to
verify the same by independent investigation. Under existing laws, regulations, rulings and
decisions in effect on the date hereof, and based on the foregoing we are of the opinion that:
1. The Bonds have been duly authorized and executed, and are valid and binding
general obligations of the Issuer, enforceable in accordance with their terms.
2. The principal of and interest on the Bonds are payable from special assessments
levied or to be levied on property specially benefited by local improvements and ad valorem
taxes for the Issuer's share of the cost of the improvements, but if necessary for the payment
thereof additional ad valorem taxes are required by law to be levied on all taxable property of the
Issuer, which taxes are not subject to any limitation as to rate or amount.
3. Interest on the Bonds is excludable from gross income of the recipient for federal
income tax purposes and, to the same extent, is excludable from taxable net income of
individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item
for purposes of the computation of the federal alternative minimum tax, or the computation of
the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However,
such interest is taken into account in determining adjusted current earnings for the purpose of
computing the federal alternative minimum tax imposed on certain corporations and is subject to
Minnesota franchise taxes on corporations (including financial institutions) measured by income
and the alternative minimum tax base. The opinion set forth in this paragraph is subject to the
condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as
1-1
amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest
thereon be, or continue to be, excludable from gross income for federal income tax purposes and
from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to
comply with all such requirements. Failure to comply with certain of such requirements may
cause interest on the Bonds to be included in gross income for federal income tax purposes and
taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the
Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds
other than as expressly set forth herein.
4. The rights of the owners of the Bonds and the enforceability of the Bonds may be
limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting
creditor's rights generally and by equitable principles, whether considered at law or in equity.
We have not been asked and have not undertaken to review the accuracy, completeness or
sufficiency of the Official Statement or other offering material relating to the Bonds, and
accordingly we express no opinion with respect thereto.
This opinion is given as of the date hereof and we assume no obligation to update,
revise, or supplement this opinion to reflect any facts or circumstances that may hereafter
come to our attention or any changes in law that may hereafter occur.
Dated , 2008 at Minneapolis, Minnesota.
I
1
1-2
APPENDIX II
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by
the City of Shakopee, Minnesota (the "Issuer") in connection with the issuance of $
General Obligation Improvement Bonds, Series 2008A (the "Bonds"). The Bonds are being issued
pursuant to an authorizing resolution adopted by the City Council of the Issuer on July 1, 2008 and
an award resolution adopted by the City Council of the Issuer on August 6, 2008 (collectively, the
"Resolutions") and delivered to the Purchaser(s) on the date hereof. Pursuant to the Resolutions,
the Issuer has covenanted and agreed to provide continuing disclosure of certain financial
information and operating data and timely notices of the occurrence of certain events. In addition,
the Issuer hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the Issuer for the benefit of the Holders (defined herein) of the Bonds in
order to assist the Participating Underwriters (defined herein) in complying with SEe Rule 15c2-
12(b)(5). This Disclosure Certificate, together with the Resolutions, constitutes the written
agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule.
Section 2. Definitions. In addition to the defined terms set forth in the Resolutions,
which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in
this Section, the following capitalized terms shall have the following meanings:
"Annual Report" means any annual report provided by the Issuer pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"Audited Financial Statements" means the Issuer's annual financial statements, prepared in
accordance with generally accepted accounting principles ("GAAP") for Governmental Units as
Prescribed by the Governmental Accounting Standards Board ("GASB").
"Fiscal Year" means the fiscal year of the Issuer.
"Final Official Statement" means the deemed final official statement dated July 23, 2008
plus the addendum thereto which together constitute the final official statement delivered in
connection with the Bonds, which is available from the MSRB.
"Holder" means the person in whose name a security is registered or a beneficial owner of
such a security.
"Issuer" means the City of Shakopee, Minnesota which is the obligated person with respect
to the Bonds.
"Material Event" means any of the events listed in Section 5(a) of this Disclosure
Certificate.
"MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street,
Suite 600, Alexandria, V A 22314.
11-1
''NRMSIR'' means any nationally recognized municipal securities information repository as
recognized from time to time by the SEC for purposes of the Rule.
"Participating Underwriter" means any of the original underwriter( s) of the Bonds
(including the Purchaser(s)) required to comply with the Rule in connection with the offering of the
Bonds.
"Repository" means each NRMSIR and each SID, if any.
"Rule" means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities
Exchange Act of 1934, as the same may be amended from time to time, and including written
interpretations thereof by the SEe.
"SEC" means Securities and Exchange Commission.
"SID" means any public or private repository or entity designated by the State of Minnesota
as a state information depository for the purpose of the Rule. As of the date of this Certificate, there
is no SID.
Section 3. Provision of Annual Financial Information and Audited Financial Statements.
(a) The Issuer shall provide, as soon as available, but not later than 12 months after the
end of the Fiscal Year commencing with the year that ends December 31, 2008,
each Repository with an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a
single document or as separate documents comprising a package, and may cross-
reference other information as provided in Section 4 of this Disclosure Certificate;
provided that the Audited Financial Statements of the Issuer may be submitted
separately from the balance of the Annual Report and will be submitted as soon as
available.
(b) If the Issuer is unable or fails to provide to the Repositories an Annual Report by the
date required in subsection (a), the Issuer shall send a notice of that fact to the
Repositories and the MSRB.
(c) The Issuer shall determine each year prior to the date for providing the Annual
Report the name and address of each Repository.
Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or
incorporate by reference the following sections of the Final Official Statement:
1. City Property Values
2. City Indebtedness
3. City Tax Rates, Levies and Collections
Any filing under this Disclosure Certificate may be made solely by transmitting such filing
to the Texas Municipal Advisory Council (the "MAC") as provided at
http://www.disclosureusa.org unless the SEC has withdrawn the interpretive advice in its letter to
the MAC dated September 7, 2004.
11-2
In addition to the items listed above, the Annual Report shall include Audited Financial
Statements submitted in accordance with Section 3 ofthis Disclosure Certificate.
Any or all of the items listed above may be incorporated by reference from other documents,
including official statements of debt issues of the Issuer or related public entities, which have been
submitted to each of the Repositories or the SEC. If the document incorporated by reference is a
final official statement, it must also be available from the MSRB. The Issuer shall clearly identify
each such other document so incorporated by reference.
Section 5. Reporting of Material Events.
(a) This Section 5 shall govern the giving of notices of the occurrence of any of the
following events if material with respect to the Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax -exempt status of the
security;
7. Modifications to rights of security holders;
8. Bond calls;
9. Defeasances;
10. Release, substitution or sale of property securing repayment ofthe securities;
and
II. Rating changes.
(b) Whenever the Issuer obtains knowledge of the occurrence of a Material Event, the
Issuer shall promptly file a notice of such occurrence with either all NRMSIRs or
with the MSRB and with any SID. Notwithstanding the foregoing, notice of
Material Events described in subsections (a)(8) and (9) need not be given under this
subsection any earlier than the notice (if any) of the underlying event is given to
Holders of affected Bonds pursuant to the Resolutions.
(c) Unless otherwise required by law and subject to technical and economic feasibility,
the Issuer shall employ such methods of information transmission as shall be
requested or recommended by the designated recipients of the Issuer's information.
11-3
Section 6. Termination of Reporting Obligation. The Issuer's obligations under the
Resolutions and this Disclosure Certificate shall terminate upon the legal defeasance, or upon the
redemption or payment in full of all the Bonds.
Section 7. Agent. The Issuer may, from time to time, appoint or engage a
dissemination agent to assist it in carrying out its obligations under the Resolutions and this
Disclosure Certificate, and may discharge any such agent, with or without appointing a successor
dissemination agent.
Section 8. Amendment: Waiver. Notwithstanding any other provision of the
Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any
provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported
by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver
would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions
constituting the Undertaking and this Disclosure Certificate, or any provision hereof, shall be null
and void in the event that the Issuer delivers to each then existing NRMSIR and the SID, if any, an
opinion of nationally recognized bond counsel to the effect that those portions of the Rule which
require the Resolution[ s] and this Disclosure Certificate are invalid, have been repealed
retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions and this
Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only
upon the delivery by the Issuer to each then existing NRMSIR and the SID, if any, of the proposed
amendment and an opinion of nationally recognized bond counsel to the effect that such
amendment, and giving effect thereto, will not adversely affect the compliance of the Resolutions
and this Disclosure Certificate and by the Issuer with the Rule.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Material Event,
in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include
any information in any Annual Report or notice of occurrence of a Material Event in addition to
that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation
under this Certificate to update such information or include it in any future Annual Report or notice
of occurrence of a Material Event.
Section 10. Default. In the event of a failure of the Issuer to comply with any provision
of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary
and appropriate, including seeking mandamus or specific performance by court order, to cause the
Issuer to comply with its obligations under the Resolutions and this Disclosure Certificate. A
default under this Disclosure Certificate shall not be deemed an event of default with respect to the
Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer
to comply with this Disclosure Certificate shall be an action to compel performance.
Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall
create no rights in any other person or entity.
11-4
IN WITNESS WHEREOF, we have executed this Certificate in our official capacities effective the
day of , 2008.
CITY OF SHAKOPEE, MINNESOTA
Mayor
City Administrator
11-5
APPENDIX III
SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND
MINNESOTA REAL PROPERTY V ALUA TION
(effective through levy year 2007/payable year 2008)
Following is a summary of certain statutory provisions effective through levy year 2007/payable
year 2008 relative to tax levy procedures, tax payment and credit procedures, and the .
mechanics of real property valuation. The summary does not purport to be inclusive of all such
provisions or of the specific provisions discussed, and is qualified by reference to the complete
text of applicable statutes, rules and regulations of the State of Minnesota.
Property Valuations (Chapter 273, Minnesota Statutes)
Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by
statute, be appraised at least once every five years as of January 2 of the year of appraisal.
With certain exceptions, all property is valued at its market value, which is the value the
assessor determines to be the price the property to be fairly worth, and which is referred to as
the "Estimated Market Value."
Limitation of Market Value Increases. Minn. Stat., Sec. 273.11, Subdivision 1 a, was amended
in 2005. For assessment years 2005 and 2006, the amount of the increase shall not exceed
the greater of (1) 15% of the value in the preceding assessment, or (2) 25% of the difference
between the current assessment and the preceding assessment. For assessment year 2007,
the amount of the increase shall not exceed the greater of (1) 15% of the value in the preceding
assessment, or (2) 33% of the difference between the current assessment and the preceding
assessment. For assessment year 2008, the amount of increase shall not exceed the greater
of (1) 15% of the value in the preceding assessment or (2) 50% of the difference between the
current assessment and the preceding assessment.
Taxable Market Value. The Taxable Market Value is the value that property taxes are based
on, after all reductions, limitations, exemptions and deferrals. It is also the value used to
calculate a municipality's legal debt limit.
Indicated Market Value. The Indicated Market Value is determined by dividing the Taxable
Market Value of a given year by the same year's sales ratio determined by the State
Department of Revenue. The Indicated Market Value serves to eliminate disparities between
individual assessors and equalize property values statewide.
Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied,
extended and collected. The Net Tax Capacity is computed by applying the class rate
percentages specific to each type of property classification against the Taxable Market Value.
Class rate percentages vary depending on the type of property as shown on the last page of
this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax
Capacity represent a basic element of the State's property tax relief system and are subject to
annual revisions by the State Legislature.
Property taxes are determined by multiplying the Net Tax Capacity by the tax capacity rate, plus
multiplying the referendum market value by the market value rate.
111-1
Property Tax Payments and Delinquencies
(Chapters 275, 276, 277, 279-282 and 549, Minnesota Statutes)
Ad valorem property taxes levied by local governments in Minnesota are extended and
collected by the various counties within the State. Each taxing jurisdiction is required to certify
the annual tax levy to the county auditor within five (5) working days after December 20 of the
year preceding the collection year. A listing of property taxes due is prepared by the county
auditor and turned over to the county treasurer on or before the first business day in March.
"
The county treasurer is responsible for collecting all property taxes within the county. Real
estate and personal property tax statements are mailed out by March 31. One-half (1/2) of the
taxes on real property is due on or before May 15. The remainder is due on or before
October 15. Real property taxes not paid by their due date are assessed a penalty that,
depending on the type of property, increases from 2% to 4% on the day after the due date. In
the case of the first installment of real property taxes due May 15, the penalty increases to 4%
or 8% on June 1. Thereafter, an additional 1 % penalty shall accrue each month through
October 1 of the collection year for unpaid real property taxes. In the case of the second
installment of real property taxes due October 15, the penalty increases to 6% or 8% on
November 1 and increases again to 8% or 12% on December 1. Personal property taxes
remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the
unpaid tax. However, personal property that is owned by a tax-exempt entity, but is treated as
taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties
as real property.
On the first business day of January of the year following collection all delinquencies are
subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are
filed for a tax lien judgment with the district court. By March 20 the county auditor files a
publication of legal action and a mailing of notice of action to delinquent parties. Those
property interests not responding to th.is notice have judgment entered for the amount of the
delinquency and associated penalties. The amount of the judgment is subject to a variable
interest determined annually by the Department of Revenue, and equal to the adjusted prime.
rate charged by banks but in no event is the rate less than 10% or more than 14%.
Property owners subject to a tax lien judgment generally have five years (5) in the case of all
property located outside of cities or in the case of residential homestead, agricultural
homestead and seasonal residential recreational property located within cities or three (3) years
with respect to other types of property to redeem the property. After expiration of the
redemption period, unredeemed properties are declared tax forfeit with title held in trust by the
State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof,
then sells those properties not claimed for a public purpose at auction. The net proceeds of the
sale are first dedicated to the satisfaction of outstanding special assessments on the parcel,
with any remaining balance in most cases being divided on the following basis: county - 40%;
town or city - 20%; and school district - 40%.
Property Tax Credits (Chapter 273, Minnesota Statutes)
In addition to adjusting the taxable value for various property types, primary elements of
Minnesota's property tax relief system are: property tax levy reduction aids; the circuit breaker
credit, which relates property taxes to income and provides relief on a sliding income scale; and
targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The
circuit breaker credit and targeted credits are reimbursed to the taxpayer upon application by
the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid,
equalization aid, county program aid and disparity reduction aid.
111-2
Levy Limitations for Counties and Cities (Chapter 366)
The 2008 Legislature enacted provisions to establish levy limitations for taxes levied
for collection in 2009,2010 and 2011. Basically, levy increases for cities over 2,500 population
and for counties are limited to its levy aid base or levy limit base for collection in the prior
year, (1) plus the lesser of 3.9 percent or the percentage growth in the implicit price
deflator, (2) plus an adjustment for population increases and (3) plus increases in taxable
market value due to new construction of certain class 3 property (commercial/industrial).
. Certain property tax levies are authorized outside of the new overall levy limitations
("special levies"). Special levies can be made outside of levy limits for multiple purposes
.~. including, but not limited to, bonded indebtedness, certificates of indebtedness, tax or aid
.~ anticipation certificates of indebtedness, and to provide for the bonded indebtedness portion of
.
payments made to another political subdivision of the State of Minnesota. In order to receive
approval for any special levy claims outside of the overall levy limitation, requests for
such special levies must be submitted to the Commissioner of Revenue by the date specified in
the year in which the levy is to be made for collection in the following year. The Commissioner
of Revenue has the authority to approve, reduce, or deny a special levy request.
Final adjustments to all levies must be made by the Department of Revenue on or before
December 10.
Debt Limitations
All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory
"net debt" limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is
defined as the amount remaining after deducting from gross debt the amount of current
revenues that are applicable within the current fiscal year to the payment of any debt and the
aggregate of the principal of the following:
1. Obligations issued for improvements that are payable wholly or partially from the
proceeds of special assessments levied upon benefited property.
2. Warrants or orders having no definite or fixed maturity.
3. Obligations payable wholly from the income from revenue producing conveniences.
4. Obligations issued to create or maintain a permanent improvement revolving fund.
5. Obligations issued for the acquisition and betterment of public waterworks systems,
and public lighting, heating or power systems, and any combination thereof, or for any
other public convenience from which revenue is or may be derived.
6. Certain debt service loans and capital loans made to school districts.
7. Certain obligations to repay loans.
j
, 8. Obligations specifically excluded under the provisions of law authorizing their
issuance.
I 9. Certain obligations to pay pension fund liabilities.
10. Debt service funds for the payment of principal and interest on obligations other than
those described above.
11. Obligations issued to pay judgments against the municipality.
111-3
Levies for General Obligation Debt
(Sections 475.61 and 475.74, Minnesota Statutes)
Any municipality that issues general obligation debt must, at the time of issuance, certify levies
to the county auditor of the county(ies) within which the municipality is situated. Such levies
shall be in an amount that if collected in full will, together with estimates of other revenues
pledged for payment of the obligations, produce at least five percent in excess of the amount
needed to pay principal and interest when due. Notwithstanding any other limitations upon the
ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for
payment of general obligation indebtedness is without limitation as to rate or amount.
I,
c........
Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) !r
"Fiscal Disparities Law" ,
The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as
"Fiscal Disparities," was first implemented for taxes payable in 1975. Forty percent of the
increase in commercial-industrial (including public utility and railroad) net tax capacity valuation
since 1971 in each assessment district in the Minneapolis/St. Paul seven-county metropolitan
area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott,
excluding the City of New Prague, and Washington Counties) is contributed to an area-wide tax
base. A distribution index, based on the factors of population and real property market value
per capita, is employed in determining what proportion of the net tax capacity value in the area-
wide tax base shall be distributed back to each assessment district.
(The Balance of This Page Has Been Intentionally Left Blank)
Ie
7*
,
111-4
STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE {TMV} TO
NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS
Local Tax Local Tax Local Tax Local Tax Local Tax
Payable Payable Payable Payable Payable
Property Type 2004 2005 2006 2007 2008
Residential Homestead (1a)
Up to $500,000 1.00% 1.00% 1.00% 1.00% 1.00%
Over $500,000 1.25% 1.25% 1.25% 1.25% 1.25%
J
Residential Non-homestead
Single Unit
I Up to $500,000 1.00% 1.00% 1.00% 1.00% 1.00%
Over $500,000 1.25% 1.25% 1.25% 1.25% 1.25%
1-3 unit and undeveloped land (4b1) 1.25% 1.25% 1.25% 1.25% 1.25%
Market Rate Apartments
Regular (4b1) 1.25% 1.25% 1.250% 1.25% 1.25%
Low-Income (4d) 1 1 0.751 0.75% 1 0.75%1
- -
Commercial/Industrial/Public Utility (3a)
Up to $150,000 1.50% 1.50% 1.50% 1.50% 1.50%
Over $150,000 2.00% 2.00% 2.00% 2.00% 2.00%
Electric Generation Machinery 2.00% 2.00% 2.00% 2.00% 2.00%
Commercial Seasonal Residential
Homestead Resorts (1 c)
Up to $500,000 1.00% 1.00% 1.00% 0.55% 0.55%
$500,000 - $2,200,000 1.25% 1.25% 1.25% 1.00% 1.00%
Over $2,200,000 1.25% 1.25% 1.25% 1.25% 1.25%
Seasonal Resorts (4c)
Up to $500,000 1.00% 1.00% 1.00% 1.00% 1.00%
Over $500,000 1.25% 1.25% 1.25% 1.25% 1.25%
Seasonal Recreational Residential (4c1) 1.00%2 1.00%2 1.00%2 1.00%23
Up to $500,000 1.00%
Over $500,000 1.25% 1.25%2 1.25%2 1.25%,2 1.25%23
Disabled Homestead (1 b)
Up to $32,000 0.45% 0.45% 0.45% 0.45% 0.45%
$32,000 to $500,000 1.00% 1.00% 1.00% 1.00% 1.00%
Over $500,000 1.25% 1.25% 1.25% 1.25% 1.25%
Agricultural Land & Buildings
Homestead
Up to $500,000 1.00% 1.00%2 1.00%2 1.00%2 1.00%
Over $500,000 1.00% 1.00%2 1.00%2 1.00%2 1.25%
Remainder of Farm
Up to $790,0004 0.55% 0.55%2 0.55%2 0.55%2 0.55%3
Over $790,0004 1.00% 1.00%2 1.00%2 1.00%2 1.00%3
Non-homestead 1.00% 1.00%2 1.00%2 1.00%2 1.00%3
.
1 Classification abolished for pay 2004 and pay 2005, and re-established at a rate of 0.75% in pay 2006 and
thereafter.
r ~ Subject to the State General Property Tax.
4 Exempt from referendum market value tax.
Increased from $690,000 in payable 2007.
111-5
APPENDIX IV
EXCERPT OF 2007 ANNUAL FINANCIAL STATI;MENTS
The City's financial statements are audited annually by an independent certified public
accounting firm in conformance with generally accepted accounting principles. Excerpts of the
audited financial statements for the fiscal year ending December 31,2007 are presented here.
The reader should be aware that the complete financial statements may contain additional
information which may interpret, explain or modify the data presented here.
, The City has been awarded the Certificate of Achievement for Excellence in Financial Reporting
by the Government Finance Officers Association of the United States and Canada (GFOA) for
its comprehensive annual financial report (CAFR) for the years. ended December 31, 1984
, through December 31, 2006. The Certificate of Achievement is the highest form of recognition
for excellence in state and local government financial reporting.
In order to be awarded a Certificate of Achievement, a government unit must publish an easily
readable and efficiently organized comprehensive annual financial report, whose contents
conform to program standards. Such CAFR must satisfy both generally accepted accounting
principles and applicable legal requirements. A Certificate of Achievement is valid for a period
of one year only.
A Certificate of Achievement is valid for a period of one year only. The City believes its CAFR
continues to conform to the Certificate of Achievement Program requirements and has
submitted its CAFR for the 2007 Fiscal Year to GFOA.
.
IV-1
K-DV
Ezpen adltiu. When rou need it....
INDEPENDENT AUDITORS' REPORT
June 27, 2008
Honorable Mayor and Members .
of the City Council
City ofSbakopce
Shakopee, Minnesota
,
We have: audited the acc:ompanying fiDancial statements of the governmental activities, the
business-type activities, each major fimd, the aggregate remaining fimd information and fiduciary
activities of the CityofShakopee, Minnesota, asofand forthc year ended December 31, 2007,
which collectively comprise the City's basic financial statements as Iistcd in the Table of
Contents. These financial statements are the responsibility ofthc City's DlllDage:ment. Our
responsibility is to express opiDions on these fiDanc:ial statements based OD our audit. We did Dot
audit the Elc:ctric Fund and Water Fund fiDancial statements of the Shakopce Public Utilities
Commission which rqn-esent 53% and 91 %, respectively, of the assets and operating revenues of
the Enterprise Funds. Those statements were audited by other auditors whose: report thereon has
been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts
included for the Shakopee Public Utilities Commission, is based solely upon the report of the
other auditors.
We conducted our audit in accordance with U.S. gc:neraJlYacl:epted auditing standards and the
standards applicable to financi.al audits contained in Government Auditing Slandards 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 of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe our audit provides a reasonable basis for
our opinions.
In our opiDion, based on our audit and the report of other auditors, the financial statements
referred to above present fairly, in all material respc:cts, the respective financial position of the
governmental activities, the business-type activities, each major fimd, the aggregate remaining
fimd information and fiduciary fimd iDfonnation of the City ofShakopee, Minnesota, as of
December 31, 2007, and the respective changes in financial position and cash flows, where
applicable, thereof and the respective budgetary comparison for the General Fund for the year
then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Guvemment Auditi1lg Standards, we have also issued our report dated
June 27,2008, on our consideration of the City's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and othermatters. The pmpose oftbat report is to dcscn"bc the scope of our testing
of internal control over financial xeporting and the results of that testing, and not to provide an
opinion on the internal control over fiDancial reporting or on compliance. That report is an
integral part of an audit pc:rfonned in accordance with Guvernmenl Auditing Standards and
should be considered in assessing the results of our audit.
The Management's Discussion and Analysis, which follows this report letter, is not a required
part of the basic financial statements but is supplementaIy information required by U.S. generally
accepted accounting principles. We have applied certain limited procedures, which consisted
principally of iDquiries of management regarding the methods ofmeasurem.ent and presentation
of the required supplementary information. However, we did not audit the infonnation and
express no opinion on it
Our audit was conducted for the purpose of forming opinions on the financial statements that ,
collectively comprise the City's basic financial statements. The information identified in the
Table of Contents as Combining and Individual Fund Statements and Schedules is presented for
purposes of additional analysis and is not a required part of the basic financial statcments. This
infonnation has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The information identified in the Table of Contents as the Introductory and Statistical Sections
are presented for purposes of additional analysis and are not a required part of the basic financial
statements of the City. This information has not been subjected to the audit procedures applied
in the audit of the basic fulancial statements and, accordingly, we express no opinion on it.
~.D<.{j.J......-k., V~, CI,P.
KERN, DEWENTER, VlERE, LTD.
Minneapolis, Minnesota
IV-2
CITY OF SHAKOPEE .
Scott County, Minnesota
STATEMENT OF NET ASSETS
December 31,2007
Govemmental Business-Type
Activities Activities Total
ASSETS:
Cash and Investments ~ 36,943,773 S 43.012,442 S 79,956,215
. Restricted Accounts - 12,900,206 12,900,206
Receivables:
Property Tax Receivable 331,315 . 331,315
Accounts Receivable (Net of Allowance for
Uncollectible Accounts) 695,814 4,126,289 4,822, 103
Interest Receivable 253,902 367,261 621,163
Notes Receivable 831,436 . 831,436
Special Assessments Receivable 8,345,861 275,337 8,621,198
Due fTom Other Funds (Internal Balances) 109,964 (109,964) .
Ad~ces to Other Funds (Intemal Balances) (2,000,000) 2,000,000 .
Inventories - 924,663 924,663
Prepaid Expenses 111 ,258 88,784 200,042
Unamortized Debt Issue Costs - 984,401 984,401
Electric Plant Acquisition (Net of Accumulated Amortization) - 1,061,076 1,061,076
Capital Assets not being Depreciated:
Land 19,271,560 6,088,241 25,359,801
Construction in PrOgress 187,868 1,206,959 1,394,827
Capital Assets being Depreciated:
Infrastructure 124,544,337 - 124,544,337
Plant in Service - 158,339,152 158,339,152
Buildings 32,812,022 - 32,812,022
Machinery and Equipment 12,012,076 1,682,349 13,694.425
Less Accumulated Depreciation (50,568,447) (32,173,331) (82,741,778)
Total Assets S 183,882,739 $ 200,773,865 $ 384,656.604
LlABILITrES AND NET ASSETS:
Liabilities:
Accounts Payable $ 1,599,893 $ 4,379,768 S 5,979,661
Contracts Payable 400,668 47,877 448,545
Due to Other Governments 213,264 - 213,264
Salaries and Benefits Payable 302,367 - 302,367
Deposits Payable . 875,033 875,033
Interest Payable 418,825 631,278 1,050,103
Unearned Revenue . 100,778 100,778
Customer AdYaDces - 23,295 23,295
Bond Principal Payable:
Payable Within One YeaT 3.280,000 670,000 3,950,000
Payable After One YeaT 21,445,000 32.254,440 53,699,440
Compensated Absences Payable:
Payable Within One YeaT 730,000 22,088 752,088
, Payable After One Year 560,398 27,450 587,848
T ota! Liabilities 28,950,415 39,032,007 67,982,422
Net Assets:
Invested in Capital Assets, Net of Related Debt 113,534,416 114,546,218 228,080,634
Restricted for:
Special Revenue 2,489,775 . 2,489,775
Debt Service 7,522,614 1,026,351 8,54&,965
Capital Projects 3,068,948 - 3,068,948
Unrestricted 28,316,571 46,169,289 74,485,860
Total Net Assets 154,932,324 161,741,858 316,674,182
Total Liabilities and Net Assets S 183,882,739 S 200,773,865 $ 384,656,604
The Notes to the F'mancial Statements are an integral part of this statement.
IV-3
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IV-4
CITY OF SHAKOPEE
Scott County, Minnesota
BALANCESHEET-GOVERNMENTALFUNDS
December 31,2007
Other Total
Governmental Governmental
, General Fund Funds Funds
ASSETS:
Cash and Investments
, (Including Cash Equivalents) $10,116,870 $19,605,842 $ 29,722,712
Taxes Receivable - Delinquent . 322,173 9,142 331,315
Special Assessments Receivable:
Delinquent 7,861 15,715 23,576
Deferred 34,916 8,287,369 8,322,285
Accounts Receivable 469,900 225,914 695,814
Interest Receivable 51,896 149,075 200,97]
Due from Other Funds 166,131 310,246 476,377
Notes Receivable - 271,436 271,436
Prepaid Items 111,258 - 111,258
Total Assets $11,281,005 $ 28,874,739 $ 40,155,744
LIABILITIES AND FUND BALANCES:
Liabilities:
Accounts Payable $ 906,154 $ 686,373 $ 1,592,527
Contracts Payable - 397,768 397,768
Due to Other Funds - 316,875 316,875
Due to Other Governments - 213,264 213,264
.
Advances from Other Funds - 2,000,000 2,000,000
Salaries and Benefits Payable 302,367 - 302,367
Deferred Revenue 364,951 8,312.225 8,677,176
Total Liabilities 1,573,472 11.926,505 13,499,977
Fund Balances:
Reserved for:
Special Revenue - 2,489,775 2,489,775
Capital Projects - - 3,849,703 3,849,703
Prepaid Items 111,258 - 111,258
Building Pennits and Activities 1,699,392 - 1,699,392
. Unreserved, Reported in:
General Fund - Undesignated 7,896,883 - 7,896,883
Special Revenue - Undesignated - 993,555 993,555
Debt Service - Undesignated - 7,941,439 7,941,439
Capital Projects - Undesignated - 1,673,762 1,673,762
Total Fund Balances 9,707,533 ] 6,948,234 26,655,767
Total Liabilities and
Fund Balances $ 11,281,005 $28,874,739 $40,155,744
The Notes to the Financial Statements are an integral part of this statement.
IV-5
CITY OF SHAKOPEE
Scott County, Minnesota
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDS
December 31, 2007
Total Fund Balances - Governmental Funds $ 26,655,767 ,
Amounts reported for governmental activities in the Statement of Net Assets
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 151,265,745
Less Accumulated Depreciation (41,655,955)
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 (24,725,000)
Delinquent property taxes 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 331,315
Special Assessrnents 23,576
Deferred special assessments receivable are not available to pay for current
expenditures and, therefore, are deferred in the funds.
Deferred Special Assessments 8,322,285
Governmental funds do not report a liability for accrued interest
due and payable. (418,825)
Internal service fimds are used by management to charge the costs of
equipment buildings to individual funds. A portion of the assets and liabilities
of those funds are included in governmental activities in the Statement of .
Net Assets. 35,133,416
.
Total Net Assets - Governmental Activities $ 154,932,324
The Notes to the Financial Statements are an integral part oftbis statement.
IV-6
N
CITY OF SHAKOPEE
Scott County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
"
Other Total
. Governmental Governmental
General Fund Funds Funds
REVENUES:
Property Taxes $ 11,569,002 $ 1,146.353 $ 12,715,355
Tax Increments - 369.240 369,240
Special Assessments 5,405 2,296,155 2,301,560
Licenses and Permits 973.658 404.912 1.378,570
Intergovernmental 590,438 1,950.146 2,540.584
Charges for Services 1,090,018 999,357 2,089,375
Fines and Forfeitures 451,418 49.810 501.228
Miscellaneous 586,137 1.736,618 2,322,755
Total Revenues 15,266,076 8,952,591 24,218,667
EXPENDITURES:
Current:
General Government 3,1.21.509 358,416 3,479,925
I Public Safety 8,283,702 58,315 8,342,017
! Public Works 2,609,674 1,159,817 3,769,491
Culture and Recreation 1.496,678 2,154,861 3,651,5:19
Debt Service:
Principal - 3,110,000 3,110,000
Interest and Other Charges - 1,025,868 1,025,868
Capital Outlay 618,244 6,669,789 7,288,033
Total Expenditures 16,129,807 14,537,066 30,666,873
Excess of Revenues
Under Expenditures (863,731) (5,584,475) (6,448,206)
OTHER FINANCING SOURCES (USES):
Proceeds from Sale of Capital Asset 17,700 - 17,700
Bonds Issued - 2,815,000 2,815,000
Premium on Bonds Issued - 9,956 9.956
. Transfers In 1,889,111 2,522,170 4,411,281
Transfers Out (1,180,181) (1,008,152) (2,188,333)
Total Other Financing Sources (Uses) 726,630 4,338,974 5,065,604
.
Net Change in Fund Balances (137,101) (1,245,501) (1,382,602)
FUND BALANCES:
Beginning of Year 9,844,634 18,193,735 28,038,369
-
End of Year $ 9,707,533 $ 16,948,234 $ 26,655,767
The Notes to the Financial Statements are an integral part of this statement.
IV-7
CITY OF SHAKOPEE
Scott County, Minnesota
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTMTIES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
.
Total Net Change in Fund Balances - Governmental Funds $(1,382,602)
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 5,525,213
Depreciation Expense (5,045,943)
Loss on Disposal of Fixed Assets (7,149,931)
Principal payments on long-term debt are recognized as expenditures in the
governmental funds but as an increase in the net assets in the Statement of Activities. 3,110,000
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. (16,265)
Proceeds from long-term debt are recognized as an other financing source in the
governmental funds but as a decrease in net assets in the Statement of Activities.
Bonds Payable (2,815,000)
Certain revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Special Assessments (425,781)
Delinquent and deferred receivables will be collected this year, but are not I
available soon enough to pay for the current period's expenditures and,
therefore, are not revenues in the funds. 51,999
.
Internal service funds are used by management to charge the costs of certain
activities such as buildings and equipment, to individual funds. This amount
represents the change in net assets of the Internal Service Funds, which all is
reported with governmental activities. 1,155,177
Change in Net Assets - Governmental Activities $(6,993,133)
The Notes to the Financial Statements are an integral part of this statement
IV-8
CITY OF SHAKOPEE
Scott County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-
BUDGET AND ACTUAL - GENERAL FUND
For the Year Eoded December 31, 2007
Variance with
. Budgeted Amounts Actual Final Budget -
Original Final AmOlDlts Over (Under)
REVENUES:
. Property Taxes:
General Property Taxes $ 10,386,700 $ 10,386,700 $ 10,456,643 $ 69,943
Fiscal Disparities 955,800 955,800 906,165 (49,635)
Lodging Tax 210,000 210,000 200,682 (9,318)
Tax Increments - - (1,571) (1,571)
Aggregate Tax 8,000 8,000 7,083 (911)
Total Property Taxes 11,560,500 11,560,500 11,569,002 &,502
Special Assessments 2,000 2,000 5,405 3,405
Licenses and Pennits 1,504,700 1,504,700 973,658 (531,042)
Intergovernmental Revenues:
Federal Grants 13,000 153,860 228,340 74,480
PERA Aid - 5,960 18,170 12,210
Police Aid 240,960 225,000 295,743 70,743
Other Grants and Aids 8,000 18,000 48,185 30,185
I Total Intergovernmental Revenues 261,960 402,820 590,438 187,618
I
Charges for Services:
General Government 372,800 372,800 126,788 (246,012)
Public Safety 356,000 356,000 326,001 (29,999)
Public Works 830,000 830,000 637,229 (192,771)
Total Charges for Services 1,558,800 1,558,800 1,090,018 (468,782)
Fines and Forfeitures 280,000 280,000 451,418 111,418
Miscellaneous Revenues:
Investment Income 220,000 220,000 523,673 303,673
Rents 2,000 2,000 142 0,858)
Other 61,500 61,500 62,322 822
Total Miscellaneous Revenues 283,500 283,500 586,137 302,637
Total Revenues 15,451,460 15,592,320 15,266,076 (326,244)
.
EXPENDITURES:
General Government:
Mayor and Council 198,090 215,260 161,415 (53,845)
Administration 487,750 577,800 466,898 (110,902)
City Clerk 314,790 323,270 300,736 (22,534)
Finance 748,780 760,360 710,906 (49,454)
Legal 486,300 486,300 520,091 33,791
Planning 511,350 503,850 459,383 (44,467)
Government Buildings 351,190 258,960 265,018 6,058
Information Teclmology 282,090 273,170 277,247 4,077
Total General Government 3,380,340 3,398,970 3,161,694 (237,276)
The Notes to the Financial Statements are an integral part of this statement
IV-9
CITY OF SHAKOPEE
Scott County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-
BUDGET AND ACTUAL- GENERAL FUND
For the Year Ended December 31, 2007
Variance with .
Budgeted Amounts. Actual Final Budget-
Original Final Amounts Over (Under)
EXPENDITURES: .
Public Safety:
Police "$ 5.719.500 $ 5,726,700 $ 5,708.373 $ (18.327)
Fire 1,954,050 2,101,230 2.062,925 (38.305)
Building Inspection 857,930 949,870 945,197 (4,673)
Total Public Safety 8,531,480 8.m,SOO 8,716,495 (61,305)
Public Works:
Streets and Highways:
Engineering 968,340 976,840 817,438 (159,402)
Streets 1,705,860 1.743.170 1,607,730 (135.440)
Shop 65,250 57,630 207.179 149,549
Total Public Works 2,739.450 2,m,640 2,632,347 (145,293)
Park and Recreation:
Park Maintenance 1,315.260 1,346.180 1,217,790 (128,390)
Natural Resources 118,830 122.820 122,593 (227)
Library/Congregate Dining 309,460 309,460 278,888 (30,572)
Total Park and Recreation 1,743,550 1,778,460 1,619,271 (159,189)
Miscellaneous 150,000 89,810 - (89,810)
Total Expenditures 16,544,820 16,822,680 16,129,807 (692,873)
Excess of Revenues Over
(Under) Expenditures (1,093,360) (1,230,360) (863,731) 366,629
OTHER FINANCING SOURCES (USES):
Proceeds from Sale of Capital Asset - - 17,700 17,700
Transfers In 1,609,730 1,639,730 1.889,111 249,381
Transfers Out 0,178,770) 0,185,160) (1,180,181) 4,979
Total Other Financing Sources (Uses) 430,960 454,570 726,630 272,060
Net Change in Fund Balances $ (662,400) $ (775,790) (137,101) $ 638,689
.
FUND BALANCE:
Beginning of Year 9,844,634
.
End of Year $ 9,707,533
The Notes to the Financial Statements are an integral part of this statement.
IV-10
CITY OF SHAKOPEE
Scott County, Minnesota
STATEMENT OF NET ASSETs- PROPRIETARY FUNDS
December 31, 1007
Business- Type Activities - Enterprise Funds
GovernmenlZ]
Activities .
]nternal Service
Electric Water Sewer Stonn Dlllinage Total Funds
ASSETS:
, Current Assets:
Cash and Cash Equivalents $ 6.091.173 $ 843,246 $ 2,551,906 $ 2,943,094 $ 12,429,419 $ ],500.487
Investments 6.787,661 3,034,800 9,641,312 11,119,250 30,583.023 5,720.574
Restricted Accounts 789.945 45,937 . - 835,882 .
. Accounts Receivable 3.222.673 228,201 490,711 234,331 4,175.916 .
Allowance: for Uncollectible Accounts (34,903 ) (14.724) . - (49,627) .
In~t Receivab]e 104,423 32.648 107,691 108.232 352.994 52,931
Speeial Assessmem Receivable, Cunent . . 30,593 - 30,593 .
Notes Receivable, Cwrent . , - - - 55.000
Due from Other Funds 1.779.610 10.886 42,45D 7.088 1,840.034 ,
Advances to Other Funds. Cunent . , 350.000 - 350.000 .
InvClltories 891,&45 32,818 . - n4,663 .
P~aid Expenses 66.588 22,196 - - 88,784 -
Total Cwrcnt Assets 19.699.015 4.236.008 13.214.663 14,411.995 51.561.681 7,328.992
Noncum:nt Assets:
Resvictcd Accounts 11,155,646 808.,678 . - 11,964,324 -
Other Accounts 100.000 . . - 100.000 -
InlerCSt Receivable . - 14.267 , - - 14.267 -
Special Assessment Receivable, Noncum:nt , . 244,744 . 244,744 .
Notes Receivable. Noncunent . . . . . 505,000
Advances to Other Funds. Nonc=t . - 1.650,000 - 1,650,000 .
Unamortized Debt Issue Costs 924.175 60.226 - - 984.401 .
Electric Plant Acquisition (Nel of Amortizarion) 1,061,076 . . . 1.061,076
Capital Assets:
l.anc:I 4,811.952 892,333 4,500 379.456 6.088.241 -
Plant in Service 37,176,485 43,519,426 37,630,229 40,013,012 158,339,152 29,725.095
Machinery and Equipmenl - , 1.232.949 449.400 1,682.349 7,832.223
Consrruction in Progress 820.03D 386.929 . - 1.206.959 4.800
Total Cost 42,808.467 44.798,688 38,867,678 40,841,868 167,316.701 37.562.118
Less Accumulated Depreciation (8.912,892) {8.609.560) (7.123.744) (7,527.135) (32.173.331 ) (8,912,492)
Net Capital Assets 33.895,575 36.189.128 31.743.934 33.314.733 135.143.370 28.649.626
Total Noncurrent Assets 47.136.472 37.072.299 33.638.678 33.314,733 151.162.182 29,154.626
Total Assets $66.83S.487 $41.308.307 $46.853.341 S 47.726.728 $102.723,863 $ 36.483.618
LJABIUIlES AND NET ASSEtS:
Current Liabilities:
Accounts Payable $ 3.239,824 S 915.848 S 70,787 $ 153,309 S 4,379.768 $ 7,366
Contracts Payable - - 47.030 847 47,m 2.900
Due 10 Other Funds 111.031 1,804.996 23,085 10,886 1,949,998 49,538
Current Compensated Absences - - 15.000 7,088 22.088 730.000
Liabilities Payable from Restricted Accounts:
Current Ponion of Revenue Bonds 573.600 96.400 , - 670.000 .
Accrilcd Interest Payable 599,008 32,270 , - 631,278 -
Customer Deposits 875.033 - - - 875,033 -
Total Current Liabilities 5,398,496 2.849.514 155,902 172.130 8.576,042 789.804
Noncurrent Liabilities:
. Deferred Revenue 17.657 83.121 100,778
- - -
Customer Advances 23,295 - . - 23,295 -
Compensated Absences - - 27,450 . 27.450 560,398
Revenue Bonds (Net of Unamortized Bond Premium and
UnamoltilCd Loss on Advance Refunding) 30.594.173 1.660,267 - . 32.254.440 -
Total Noncurrent lJabilities 30,635,125 1,743.388 27.450 . 32.405.963 560,398
Total Liabilities 36,033.621 4.592,902 183.352 172.130 40.982.005 1.350,202
Net Assets:
Invested in Capital Assets, Net ofRclatcd Debt 14.994,864 34,492,687 31.743.934 33,314,733 114,546,218 28.649.626
Restricted 189.739 836,612 - , 1.026.351 -
Unrestricted 15.617.263 1.386.106 14.926.055 14.239.865 46.169.289 6.483.790
Total Net Assets 30.801.866 36.715.405 46.669.989 47,554,598 ]61.741.858 35,133.416
Total Liabilities and Net Assets $66.835.487 $41,308,307 $46.853.341 S 47.726.728 $202,723.863 S 36.483.618
the Notes to the Financial Slalements an: an integntl part of this stalemenL
IV-11
CITY OF SHAKOPEE
Scott County, Minnesota I
STATEMENT OF REVENUES. EXPENSES AND CHANGES
IN FUND NET ASSETS - PROPRIETARY FUNDS
For the Year Ended December 31, :Z007
Business- T ype Activities - Enterprise Funds
Govemmen1al
Activities -
Internal Service .
Electric WatJ:r Sewer Storm DIainage Total Funds
OPERATING REVENUES:
Charges for Services $37,178,581 $ 3,474,059 $ 2,773,051 $ 1).50,779 $ 44,676,470 $ -
Rental and Other CbaIges 2,519,811 .
- - - . -
Other Revenues - - - 15,579 15.579 .
Total OpeJating Revenues 37,178,58 I 3,474,059 2,773,051 1.266.358 44,692,049 2,519,811
OPERATING EXPENSES:
Operations and Maintemmce 31,729,774 2,048,235 2,273,410 592,995 36,644,414 .
Depreciation 1,323,061 1,194,185 665,545 759,083 3,941,874 1,230,807
Amortization 63,003 - - - 63,003 -
Employee Benefits - - - - - 642,483
Total OpeJating Expeoses 33,115,838 3,242,420 2,938,955 1,352,078 40,649,291 1,873,290
Operating Income (Loss) 4,062,743 231,639 (165,904) (as,720) 4,042,758 646,521
NONOPERATING REVENUES (EXPENSES):
Investmenl Income 1,017,132 343,469 952,391 872,871 3,185,863 466,994
Special Assessments - - 29,764 - 29,764 -
Interest Expense (1,495,726) (79,199) - - (1,574,925) -
Gain on Disposal of Assets - - - - - 4,928
Amortization of Debt Issue Costs and
Loss on Refunding (99,410) (10,513) - - (109,923) -
Other Income 228,984 51,081 33,320 238,889 552,274 -
Total Nonoperating Revenues (Expenses) (349,020) 304,838 1,015,475 1,111,760 2,083,053 471,922
Income before Capital
ContrIbutioDS and Transfers 3,713,723 536,477 849,571 1,026,040 6,125,81 I 1,118,443
Capital Contributions 312,813 934,1l5 3,280,993 693,194 5,221,1 IS 36,734
Transfers Out (l,080,962) (704,809) (245.892) (191.285) (2,222,948) -
Change in Net Assets 2,945,574 765,783 3,884,672 1,527,949 9,123,978 1,155,177
NET ASSETS:
Beginning of Year 'l:l ,856,292 35.949,622 42,785,317 46,026,649 152,617,880 33,978,239
End of Year $30,801,866 $36,715,405 $46,669,989 $ 47,554,598 $161,741,858 $ 35,133,416
.
The Notes to the Fmancial Statements are an integIal part of this statement
IV-12
CITY OF SHAKOPEE
Scott County, M"mnesota
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2007
Business~ Type Activities - Enterprise Funds
Governmental
Activities -
StolIll Intema1
. Electric Water Sewer Drainage Total Service Funds
CASH FLOWS - OPERATING AC'I1VlTIES:
Receipts from Customexs and Users $37,043,261 $3,382,217 $2,662,986 $ 1,241,780 $44,330,244 S 2,519,811
Payments to Suppliers (29,921,990) (1,391,085) (2,085,129) (222,687) (33,620,891) (383,265)
. Paymcms to Employees (1,707,843) fT12,877) (117,953) (210,191) (2,808,864) (608,645)
Payments for Interfund Services - - (47,411) (8,9OO} (56,311) 49,538
Net Cash Plows - Operating Activities 5,413,428 1,218,255 412,493 800,002 7,844,178 1,sn,439
CASH FLOWS - NONCAPITAL
FINANCING Acnvrrms:
Cash Implicitly Financed to (from) Other Funds (483,661) 483,661 - - - -
Advances to Other Funds - - (42,450) (7,088) (49,538) -
TI3DSferto Other Funds (1,080.9622 (704,809) (245,892) (191,285) (2,222,948) -
Net Cash Flows - Noncapital
Financing Activities (1,564,623) (221,148) ('288,342) 098.373) (2,272,486) -
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES:
Principal Paid on Debt (546,800) (93,200) - - (640,000) -
Interest Paid on Debt (1,301.803) (80,453) - - (1,382,256) -
Capital Contlibutions 278,528 3,324 - - 281,852 -
Installation Fees - 58,375 . - 58,375 -
Connection Charges - 793,342 - . 793,342 -
Trunk Charges - 39,383 33,320 238,889 311,592 -
Capital Related Special Assessments - - 60,357 - 60,357 -
Interftmd Loan for Capital Acquisition - - (2,000,000) - (2,000,000) -
Proceeds from Disposal of Capital Assets - - - - - 191,524
Acquisition of Capital Assets (1,392,492) (1,894,242) (1,378,709) (n,669) (4,743, II 2) 0.628,985)
Net Cash Flows - Capital and Related
Financing Activities (2,962.567) 0,173,471) (3,285.032) 161,220 (7,259,850) (1,437,461)
CASH FLOWS - INVESTING AC11VlTIES:
Proceeds (Purchases) ofInvestmenlS (524,752) 35,628 2,860,409 (288,219) 2,083,066 (488,050)
Payment Received for Notes Receivable - - - - - 55,000
Interest and Dividends Received 982,222 335,467 971,053 865,855 3,154,597 464,026
Net Cash Flows - Investing Activities 457,470 371,095 3,831,462 sn,636 5,237,663 30,976
Net Change in Cash and Cash Equivalents 1,343,708 194,131 670,581 1,340,485 3,549,505 170,954
CASH AND CASH EQUIVALENTS:
January 1 4,747,465 648,515 1,881,325 1,602,609 8,879,914 1,329,533
, December 31 $ 6,09I.173 $ 843.246 $2,551.906 $ 2.943.094 $12,429.419 $ 1.500.487
RECONCILIA nON OF CASH AND CASH
EQUIVALENTS TO THE STATEMENT OF
NET ASSETS:
Restricted AccounlS $11,945,591 $ 854,615 $ - $ - $12,800,206 S -
Other Accounts 100,000 - . - 100,000 -
Cash and Investments 12,878,834 3,878,046 12,193,218 14.062,344 43,012.442 7,221,061
Subtotal 24,924,425 4,732,661 12,193,218 14,062,344 55,912,648 7,221,061
Less Long-Term mvesttnenlS 18,833,252 3,889,415 9,641,312 11,119.250 43,483,229 5,720,574
Cash and Cash Equivalents $ 6,091,173 $ 843.246 $2,551.906 $ 2,943.094 $12.429,419 $ 1,500,487
The Notes to the Financial Statements are an integral part oftbis statemenL
IV-13
CITY OF SBAKOPEE
Stott Connty, Minnesota
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, Z007
Business- Type Activities - Enterprise Funds
Governmental
Activities -
StolDl Internal
Electtic Water Sewer Drainage Total Service Funds
RECONCILIATION OF OPERATING
(lNCOME) LOSS TO NET CASH FLOWS-
OPERATING ACTIVITIES: .
Operating Income (Loss) S 4.062.743 $ 231.639 $ (165.904) $ (85.720) $ 4,042,758 $ 646,521
Adjustments to Reconcile Operating Income
(Loss) to Net Cash Flows - Opemting Ac\ivi1ies:
Miscellaneous Revenue 22&,984 51,081 - - 280,065 -
Depreciation and Amortization Expense 1,386,064 1,194,185 665,545 759,083 4,004,877 1,230.807
Change in Assets and Liabilities:
Accounts Receivable (369,381) 39,215 (110.065) (24,578) (464,809) -
Due from Other Funds (2,856) 25,196 - - 22,340 -
PIepaid Items (20,341) (4,211) - - (24,552) - I
Invcntory (88,052) (2,]78) - - (90,230) -
Accounts Payable 233.106 (30,652) (14,647) 143,987 33],794 (367,217)
Conttacts Payable - - 19.440 (1,844) 17,596 (16,048)
Customer Deposits 12,924 - - - 12,924 -
Defem:d Revenue (4,991) (207 ,334) - - (212,325) -
Due to Other Funds {18,867} (86,999) (24,326) 1,986 (128,206) 49,538
Compensated Absences Payable - - 42,450 7,088 49,538 -
Other Liabilities (5.905) 8,313 - - 2.408 33.838
Total Adjus1ments 1.350.685 986,616 578,397 885.722 3,801,420 930.918
Net Cash Flows -
OpeIating Activities $ 5.413.428 $1.218.255 $ 412.493 $ 800.002 $ 7.844.178 $ 1,577,439
NONCASH INVESTING, CAPITAL AND
FINANCING ACTIVITIES:
Con1ributions of Capital Assets from t::he
Municipality and Developers $ 10,233 $ 39,691 $3,280,993 $ 693,194 $ 4,024,111 $ 36,734
Pun:hases of Capital Assets OD Accou.:Dt - - - - - (29,214)
Other Disposals and TnmsfetS of Capital Assets - - - (26,219) (26,219) (422,390)
Other Disposals and TI3I1SfetS of Accumulated
Depreciation - - - 2,619 2,619 235,794
Capital Asset Trade-Ins - - - 23,600 23,600 -
.
The Notes to the FiDancia! Statements are an integral part of this statement.
IV-14
.
CITY OF SHAKOPEE
Scott County, Minnesota
STATEl\1ENT OF FIDUCIARY NET ASSETS
December 31,2007
Escrow
. Agency Fund
ASSETS:
. Cash and Investments
(Including Cash Equivalents) $ 1,333,877
LIABILITIES:
Deposits Payable $ 1,333,877
.
The Notes to the Financial Statements are an integral part of this statement.
IV-15
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2007
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity A. Reponing Entity (Continued)
The City of Shakopee Is a statutoI)' city governed by an elected mayor and four council members. 2. Joint Venture. and Jointly Governed Organ~atlons
The accompanying financial statements present the government entities for which the City is
considered to bo financially accountable. . Local Government Information Systems
The financial statements preaent the City and its component units. The City includes all funds. Local Government Infonnatlon Systems (LOOlS) is a joint venture of Ilpproxlmately 28
orgllllizatioD8, institutions, agencies, departments and offices that are not legally separate fium governmental entitles that provides computerlzed data processing and support services to Its
such. Component units are legally separate organizations for which the elected officials oftbe members. Legally separate, the City does not appoint a voting majority of tile Board and
City are financially accountable and are Included within the financial statements oCthe City LOGIS is fiscally independent oCthe City. Dunng 2007, the City paid $ 198,939 to LOGIS
because oCthe significance oflheir operstional or financial relationships with the City. for services provided which is inc~uded in expenditures of the General Fund. Financial
The City is considered financially accountable for a component unit Ifit appoints a voting statements arc available by contacting LOOIS, 5750 Duluth Street, Golden Valley, MilUlesota
< 55422-4036.
, majority of the organization's governing body and it is able to impose its will on the organization Scott Joint Prosecution Association
-.>. by significantly influencing the programs, projects, activities or level of services perfonned or
0) provided by the orgllllizatlon, or there is a potential Cor the orgllllization to provide specific
financial benefits to or impose specific financial burdens on, the City. Scott Joint Prosecution Association (SJPA) is a joint venture of approximately five cities that
provides legal prosecution and support services to its members. Legally separate, the City
All a result of applying the component unit definition criteria above, certain organizations have docs not appoint a voting majority oCthe Board and SJPA is fiscally independent of the City.
been defined and are presented In this report as follows: During 2007, the City paid $ 372,415 to SJPA Cor services provided which is included in
Blended Component Unit - Reported as If they were part oCthe City expenditures of the General Fund. Financial statements arc available by contacting SJPA,
200 Fourth Avenue Wesl, Shakopee, MiMosota 55379.
Joint Ventures and Joinlly Governed Organizations - The relationship oCthe City with the 3. Otber Organization.
entity is disclosed
For each of the categories above. the specific entities are identified as follows: Sbakopee Fire Relief Association
1. Blended Component Unit The Shakopee Fire Relief Association (the "Association'') is organized as a nonprofit
organization by its members to provide tensions and other benefits to ita mentbers in
The Shakopee Economic Development Authority (BDA) was organized to promote accordance with Minnesota Statutes. It s not a component unit of the City because the Board of
Directors is appointed by the membershJp. The financial oversight of the City Is limited to
development, improve housing and reduce blighted areas in the Clly. It is included by reason approval authority for amending the Allsociation bylaws when the change resulls in an Increase
of the City Council having final approval for Shakopee BDA actions and the Shakopee BDA In the pension benefit level requiring an Increased City conbibution. The Association has the
Board being comprised entirely of City Council Members. City staff handles Sbakopce BDA authority to levy Its own taxes for pensions and deficits and would continue to exist for its
activity including Shakopee BOA funds and the City approves Shakopec BOA tax levies and members If the City was dissolved.' .
bonding activity. Therefore, the City has Cmancial oversight for Shakopee EDA activities.
The activity of the Shskopee BDA Is shown In t~e Shakopee EDA - Special Revenue Fund in
the City's financial statements. No separate financial statements for the Shakopee BDA are
issued. For any infonnation desired beyond what is presented In this report, conlact the
Finance Director Cor the City of Shako pee at 129 Holmes Street South, Shakop.ee, MilUlesota
55379.1351.
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CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 1007 December 31, 2007
NOTE 1 - SUMMARY OF SIGNIFlCANT ACCOUNTING POLICIES NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
B. Government-Wide and Fund FInancial Stalements C. Measurement Focus, Basis or Accounting and Financial Statement Prellentatlon
The govenunent.wide financial statements (i.e., Ihe Statement oCNet Assets and the Statement (Contloued)
of Activities) report infonnation on all oflhe non fiduciary activities oflhe City. The fiduciary Govenunental fund financial statements are reported using the CWTent financial resources
funds are only reported In Ihe Slatement of Fiduciary Nel Assets and Ihe Statement of Changes measurement focus and Ihe modified lICCrual basis of accolUlting. Revenues are recognized as
in Fiduciary Net Assets at Ihe fund llnanclal statement level. Governmenlal activilies, which soon as they arc both measurable 8/Id avallabl!:. Revenues are considered to be available when
nonnally arc supported by taxcs and intergovenunental revenues, are reported separalely from they are collectible within the cUlTent period or soon enough Ihereafter to pay liabilities of the
business-type activities, which rely to a significant extent on fees and charges for support. CWTent period. For this pwpose,the City considers revenues to bo available If they are collected
The Statement of Activities demonstrates the degree to which the direct expenses of a given within 60 days ofthn end of the CWTent fiscal period. Expenditures generally are recorded when
a liability is incwred, as Wlder accrual accoWlling. However, debt service expenditures, as well
function or segment are offset by program revenues. Direct expenscs are those that are clearly as expenditures related to claims andjudlll1lents, are recorded only when paymentis due.
identillable with a specific function or segment. Interest on generallong-tenn debt Is considered
< an indirect expense and Is reported separately In the Statement of Activities. Program revenues Property taxes, franchise taxes, licenses and interest associated with the eWTent fiscal period arc
include I) charges to customers or applicants who purchase, use or directly benefit from goods, all considered to be susceptible to accrual and so have been recognized as revenues of the
I serviccs or privileges provided by a given function or segment and 2) grants and contributions CWTent fiscal period, Only the portion of special assessments receivable due within the cUlTent
.......
...... that are restricted to meeting .be operational or capital requirements of a particular function or fiscal period is considered to be susceptible to accrual as revenue of the current period. All
segment. Taxes and other items not properly Included among program revenues are reported other revenue items are considered to be measurable and available only when cash is received
instead as genera] rcvenues. Internally dedicated revenues are reported as general revenues by the City.
rather than program revenues.
Separatc financial statements are provided for governmental funds and proprietary funds. Mllior Dellcr/ptloD of Funds:
"individual governmental funds and major individual enterprise funds are reported as separate Major Governmental Fund:
colwnns in the fund tinancial statements.
The City's Agency Fund Is presented bt the fiduciary fund financial statements. Since, by General FWld - Thia Fund is the City's primary operating fund. It accounts for all financial
rcsources orthe general City, except those r-equired to be accowued for in anodler fund.
definition, these assets are being held for the benefit of a third party (other loca] governments,
private parties, etc.) and cannot be used to address aclivities or obligations of the City, this Fund Major Proprietary Funds:
is not Incorporated into the government-wide slatements. Electric Fund - This Fund accolUlts for the operations of the City's electric utility.
C. Measurement Focus, Basis of Accountlnll and Flnanclal Statement Presentation Water Fund - This 'Fund accounts for the operations of the City's water utility.
The govcnunent.wide fin8/lcialstatements are reported using the economic resources Sewer Fund - This Fund accounts for operallons of the City's sewer utility.
measurement focus and the accrual basis of accounting, as are the proprietary fund financisl
statements. Revenues are recnrded when earned and expenses are recorded when a liability is Stonn Drainage Fund - This Fund accolUlts for the activities of the Ci~y's storm drainage
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues operations.
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 City's Agency Fund reports only assets and liabilities and has nn measurement focus, but
does use the accrual basis of accounting to recognize receivables and payables.
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, MinneSota Scott County, Mlnneaota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation C. Measurement Focus, Buls of Accounting and Financial Statement Presentation
(Continued) (Continued)
Description of Funds: (Contlnned) When bolh resbicted and unrestricted reaoun:es are available for use, it is the City's policy to use
Internal Service Funds: resbicted resources first, then unrestricted resources as they are needed,
Equipment Fund - This Fund accounts for the City's acquisition oflarger pieces uf D. Asselll, Llabllltlu and Net Assets or Equity
equipment. 1. Deposits and Iilveatmenlll
Building Fund - This Fund accounts for the City's ftmds accumulated for construction, The City's cash and cash equivalents are consIdered to be cash un hand, demand deposits and
~ improvement ur major repairs uf major public buildings. . highly liquid debt instruments purchased with original maturities ofthree months or less from
the date of acquisition.
~ Employee Benefits Fund - This Fund accounts for the City's funds accumulated for Minnesota Statutes authorizes the City to invest in obligations of the U.S: Treasury, agencies
OJ compensated absences.
and instnunentalitiea, shares oflnveslment companies whose only inveslments are In the
Fiduciary Fund: aforementioned securities, obligations oflhe State of Minnesota or its municipalities,
bankers' acceptances, future contracts, repurchase and reverse repurchase agreements and
Escrow Agency Fund - This Fund accounts for the monies held for specific purposes for conunercial paper of the highest quality with a maturity of no longer thlUl270 days and in the
individuals, private organizations, other government un/ts and other ftmds. Escrows may be Minnesota Municipal Inveslment Pool. Inveslmentslllll stated at fair value.
held on behalf of builders and developers, for security deposits and police evidence deposits. The Minnesota Municipal Investment Pool Is an external inveslment pool not registered with
Private-sedtor standards of accounting and financial reporting Issued prior to December I, 1989, the Securities Exchange Conunission (SEC) that follows the same regulatory rules of the
generally are followed in both the government-wide and proprietary ftmd financial statements to SEe Wtder Rule 2.8.7. The fair value oflbe position in the pool is the same as the value of
the extent that Utose standards do not conflict with or contradict guidance of the Governmental the pool shares.
Accounting Standards Board (OASB). Oovernments also have the option of foilowlng The City's inveslment policy for all funds except the Elecbic and Water Enterprise Funds
subsequent private-sector guidance for their business.type activities and enterprise funds, subject
10 this same limitation. The City has elected not to follow subsequent private-sector guidance. (Shakopee Public Utilities Commission) addresses custodial credit risk for deposits. The
As a general rule, the effect of interftmd activity has been eliminated Horn the government-wide policy also addresses credit risk, interest rate risk and concentration of credit risk. The City's
Elecbie and Water Enterprise Funds (Shakopee Public UtiJilies Conunissicn) do not have a
financial statements. Exceptions to this general rule are payments, where the amounts ara fonnat policy to address any of these risks.
reasonably equivalent in value to the interftmd services provided and other charges between the Custodial Credit Risk - Deposits: In the case of deposits, this is the risk that in the avent of a
City's utility ftmction and various other ftmctions of the City. Elimination of these charges
would distort the dJrect costs and program revenues reported for the various ftmctions concerned. bank failure, the City's deposits may not be returned to it. Minneso/a S/atu/e.r require all
deposits be protected by federal deposit Insurance, corporate surety bonds or collateral. The
Proprietary funds distinguish operating revenues and expenses from nonoperating items. market value of collateral pledged must ~UaIIIO% of deposits not covered by Federal
Operating revenues and expenses generally result from providing services and producing and Deposit Insurance Corporation (FDIC) or onds. The City's deposit and investment policy
delivering goods in connection with a proprietary fund's principal ongoing operations. The states deposits must be collateralized in order to comply with M/nnesota Statutes.
principal operating revenues of the enterprise ftmds are charges to customers for sales and
services. Operating expenses for enterprise ftmds 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 ~venues and expenses.
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CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL ST ATEMENT~ NOTES TO THE FlNANCIAL STATEMENTS
December 31, 2007 Deeember 31, 2007
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, L1ablUtles and Net Assets or Equity (Continued) D. Assets, LlablllCles and Net Assets or Equity (Continued)
1. Deposits and Jnvestmenu (Continued) 1. Deposits and Investments (Conllnued)
Credit Risk: Credit risk Is the risk that an issuer or other coWlterparty to an investment will Coneentration of Credit Risk: Concentration of credit risk is the risk ofJoss that may be
not fulf1l1its obligation to the holder of the investment. This Is measured by the assigmnent caused by the City's investment in a single issuer. According to the City's invcstment policy,
ora rating by a nationally recognized statistical rating organlution. The City's Investment the aggregate Investment portfolio shall be diversified by:
policy slates that the City will minimize credit risk, the risk ofloss due to failure oCtbe Limiting investments to avoid over concentration in securities from a specific issuer
security issuer or backer, by: .
or business seclor.
. Limiting investments 10 the safest types of securities. . Limiting investrnents In securities that have higher credit risks.
. prequalifyln~ the financial institutions, brokers/dealers, intermediaries and advisors . Investing In securities with varying maturities.
with which e City will do business. . . Continuously investing a portion of the portfolio in readily available funds, such as
e;:: . Diversifyinr. the invesbnellt portfolio so the potelltiallosses 011 individual securities Local Government Investrnent Pools (LGIP), money market funds or repurchase
will be min mlzed. agreements to ensure appropriate liquidity Is maintained In order to meet ongoing
~ obligations.
(Q Interest Rate Risk: This Is the risk that changes in market Interest rates will adversely affect
. Alllnvesbnents, other than those in direct obligations or agencies oflhe United
the fair value of an investment. The policy states the City will minimize the risk the market States, secured by collateral or repurchase agreements, shall not exceed 50% of the
value of securities in the portfolio will fall due to changes In interest rates by: aggregate Invesbnent portfolio. Mortgage backed seeurities shall not exceed 35% of
Structuring the short-teon invesbnent portfolio so securities mature to meet cash the aggregate investment portfolio, at the time of investment (i.e., commercial paper
. or bankers' acceptance).
requirements for ongoing operations, thereby avoiding the need to sell securities on . Limiting Investments in anyone corporation to 10% of the aggregate investment
the open market prior to maturity. portfolio Wld 5% oCthe corporation's assets.
. Investing short-teon funds primarily in short-teon securities, money market mutual
funds or similar Investrnent pools. Custodlal Credit Risk - Invesbnents: For an investment, this is the risk that in the event of
. Evaluating the long-teon Investment portfolio against an agreed upon benclunark that the failure of the cOWlterparty, the City will not be able to recover the value oC ils investments
meets the risk tolerances of the City and Its invesbnent policy. that are in the possession of an outside party.
To the extent possible, the City shall attempt to match itS investments in short.teon operating 2. Receivables and Payables
funds with anticipated cash flow requirements. Unless matched to a specific cash flow, the
City will not directly invest in seeurities maturing more than five years from the date of Activity between funds that are representative oflendinglborrowing arrangements
purchase or In accordance with state and local statutes and ordinances. The City shall adopt a outstanding at the end of the fiscal year are reCerred to as "advances to/from other funds", All
maximum weighted average maturity of three yearn (or these funds. Long-teon fimds shall other outstanding balances between funds aro reported as "due to/from other funds". Nay
not be invested in securities exceeding 10 years In modified duration, at time of purchase. residual balances outstanding between the governmental activities and business.type
activities are reported in the government-wide financial slatements as "Interfund baIWlces".
All property taxes receivable are shown at a gross amoWlt since it is assessable and is
collectible upon tbe saie oCthe property.
CITY OF SHAKOPEE CITY OF SHAKO PEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 3J, 2007 December 31, 2007
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued) D. Assets, Liabilities aod Net Assets or Equity (Contlnue~)
2. Receivables and Payables (Continued) 5. Capital Assets
The City levies its property tax for ihe subsequent year during the month of December. ~apital assels, 'Yhi.ch i~clude property, pl~t, equipm~nt and infrastructure a9gets (e.g., roads,
December 28 is the last day the City can certifY a tax levy to the County Auditor for SIdewalks and sImilar Items), are reported In the applicable governmental or business-type
collection the following year. Such taxes become a lien on lanullI}' 1 and are recorded as activities columns in the govenunent-wide financial statements. Capital assets are defined by
receivables by the City at that date. The property tax is recorded a8 revenue when it becomes the City as assets with an initial, individual cost of more than $ 5,000 and an estimated useful
measurable and available. Scott County IS the collectin~ agency for the levy and remits the life in excess of one year. Such assets arc recorded at historical cost or estimated historical
collections to the City three times a year. Taxes not co ected as of December 31 each year costlC purchased or constructed. Donated capital assets aie recorded at estimated Cair market
are shown a8 delinquent taxes receivable. value atlhe dale of donation.
-;=: The County Auditor prepares the tax list for all taxable property in the City, applying the The costs of nonnal maintenance and repairs that do not add 10 the value of the assel or
applicable tax rate to tho tax capacity of individual properties, to wrive at the actual tax for materially extend assets lives are not capitalized. .
I\J each property. The County Auditor also collects all special assessments, except for certain
0 prepayments paid directly to the City. Property. plant and equipment ofthe City ore depreciated using the straight-line method over
the following estimated useful lives.
The County Audilor submits the list of tlllles and special assessments to be collected on each Assets Years
parcel of property to the County Treasurer in lanuary of each year.
3. Inventory, Prepaid Items and Other Assets Buildings 30.50
Certain payments 10 vendors reflect cosls applicable to futuro accounling periOdS and are Park Buildings 30
Building Improvements 25
recorded as prepaid items in both government.wlde and fund financial slalements. Orher Light Vehicles 4-10
assets include unamortized debt Issue costs for the Blectric and Water Bnterprise Funds.
Also Included is the unamortized cost of buying capacity in a sewer inceptor owned by Machinery and Equipment 4-20
Metropolitan Council- Environmental Services. Utility Distribution System 10.50
Infrastructure 30;50
Inventories of enlerprise funds are valued at average cost using the first in, firsl out (FIFO)
method. Inventories of govenunenlalfunds are not recorded at year.end on the Balance 6. Compensated Absences
Sheets because they accwnulate insignlflcantlnventories
4. RestrIcted Assets yacatlon an~ sick leave benefils are recorded as expenditu~es in the Employee Benefils
I~temal service fund and govenunental funds when the obligations are expected to be
Certain cash and investments in the enterprise funds are classified as restricted. The B1eclric liquidated .with e~pendable financial resources. City employees earn vacation time based on
Fund has monies restricted for customer deposits, emergency 8ystem repairs, constrUction years of City service. Bmployees who have 0 to IS years of employment may accumulate no
more Ihan 240 hours. Bmplolees who have 16 or more years of service may accumulate no
projects and debt service. The Water Fund has monies restricted for water production and more than 360 hours ofvacallon leave. Upon tennination, employees will receive
trunk distribution facility acquisition, based on trunk and connection fees collected from co,?pensation for unused vacation. Employees earn sick leave at a rate of3.69 hours per pay
users, construction projects and debt service. . period and may accwnulate IttQ a maximum of960 hours. The City compen9ates
employees who leave municipal service at the rate of 45% plus 2% for each year of service
beyond IS years up 10 75% of unused sick leave up to a maximum of 960 hours.
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CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott Connty, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31,2007 December 31, 2007
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. 'Assets, Llabllllles and Net Assets or Equity (Continued) D. Assc"', Liabilities and Net Assets or Equity (Continued)
6. Compensated Absences (Continued) 10. Use of Estimates
nle General Fund and Employee Benefits Internal service fund typically liquidate the The preparation of financlalststements in conformity with U.S. generally accepted
compensated absences liability. accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
7. Long-Term Obligations the date of the financial statements. Estimates also affect the reported amounts of revenue
In the government-wide financial statements and proprietary fund types in the fund financial and expenditures/expense during the reporting period. Actual results could dilTer from those
estimates.
statements, long.tenn debt and other long.tenn obligations arc reported as liabilities in the
applicable governmental activities, business-type acllvllles or proprietary fund type Statement NOTE 2- STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
< of Net Assets. EDtelJlrise 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 A. Budgetary Information
I payable are reported net of the applicable bond premium or discount. Bond issuance costs
I\) are reported as deferred charges and amortized over the term of the related debt. Budgets are adopted on a basis consistent with U.S. generally accepted accounting,principles.
->. Annually appropriated budgets arc adopted for the General Fund and the Shakopee BOA. Transit,
In the fund financial statements, governmental fund types recognize bond premiums and Teleconununlcatlons and Recreation Special Revenue Funds. The Forfeiture Fund is not required
discounts, as well as bond issuance costs, during tho current period. The face amount of debt to have a budget adcpted. All activity 10 this Fund is at the discretion of the Chief of Police.
issued is reported as o!her financing sources. Premiums received on debt Issuances are Budgeted amounts present the originally adopted budget and final amended budget approved by
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 the City COlUlcll. The City does not use encumbrances. Budgeted expenditure appropriations
received, are reported as dcbt service expenditures. lapse at year end. .
8. Fund Equity 1. In August of each year, City stalTsubmits to tho City Council, a proposed operating
In the fund.fmancialstatements, governmental funds report reservations offund balance for budget for tha1iscal year conunencing the following January 1. The operatmg bUdget
amounts that are not available for appropriation or are legally restricted by outside parties for includes proposed expenditures and .the means of financing tltem for the upcoming year.
use for a specific /cUlposo. Designations of fund balance represent tentative management 2. Public hearings are conducted to obtain taxpayer comments.
plans that are sub ect to change.
9. Net Assets 3. The budget is legally enacted through passage of a resolution after obtaining taxpayer
comments.
Net sssels represent the difference between assets and liabilities in tho government-wide 4. Budgets for the General and Spedal Revenue Funds are adopted on a basis consistent
financial statements. Net assets Invested in capital assets, net of related debt consists of with U.S. generally accepted accounting principles.
capital assela, net of accwnulated depreciation, reduced by the outstanding balance of any
long-tcnn debt used to build or acquiro the capital assets. Net assets are reported as restricted S. Expenditures may not legally exceed budgeted appropriations at the division level. No
in the government.wide financial slatement when there are limitations on their use through fund's budget can be increased without City Council approval. The City Council may
external restrictions Imposed by creditors, grantors or laws or regulations of other authorize transfer OfbUd~ted amounts between divisions wilhin any fund. Management
governments. may amend budgets with a division level, so long as the total division budget is not
changed.
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Mlnneaota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STA'fEMENTS
December 31, 2007 December 31, 2007
NOTE 2 - STEW ARDSOIP, COMPLIANCE AND ACCOUNTABILITY NOTE 3 - DEPOSITS AND INVESTMENTS
A. Budgetary Information (Continued) A. Deposits (Continued)
6. Annual appropriated budgets are adopted for the General and applicable Special Revenue As ofDccember 31, 2007, the City had the following deposits:
Funds. Annual appropriated budgets are not adopted for Debt Service Funds because
effective budgetary control is alternatively IIChleved through bond Indenture provisions. Deposits (All Funds but the Electric and $ 43,412
Budgetary control for Capital Projects Funds is accomplished through the use of project Water Enterprise Funds)
controls and fonnal appropriated budgets arc not adopted. Deposits (Electric and Water Enterprise Funds) 1,778,669
---~
7. Budgeted amounts are as originally adopted or as amended by the City Council. Total Deposits $ 1.822,081
Individual amendments were not material In relation to the original amounts budgeted,
except for licenses and permit revenue in the General Fund. B. Short- Tenn Investments
-;:: B. Deficit Fund Equity As of December 31, 2007, the City had the following short.teon invesbnents Corall funds,
I\.) Capital Projects Funds: excluding the Electric and Water Enterprise Funds (Shakopee Public Utilities Commission).
I\.) Park Reserve $ 0,783,739) Weighted
2008 Projects (56,130) Average Moody's
The deficit fund balances in the Capital Projects Funds are a result of ongoing construction which Fair Value. Maturity (Yeara) Rating
is periodically reimbursed by transfers from other funds and bond proceeds. Agency Bonds:
FHLB $ 2,000,620 4.21 Au
NOTE 3 - DEPOSITS AND INVESTMENTS FHLMC 998,300 4.97 Au
Mortgage Bonds:
A, Deposits FNMA 2,028,760 8.98 Aaa
Conunercial Paper 1,992,640 0.08 P-l
In accordance with applicable Minnesota Statutes, the City maintains deposits at depository Money Market Funds 5,541,306 N/A NR
banks authorized by tho City Council.
Custodial Credit Risk - Deposits: As of December 31, 2007, the City's bank balances were not Total Short-Term Investments $ 12,561,626
exposed to custodial credit risk because thoy were insured through FDIC and properly
collateralized with securities held by the pledging financisllnslltution's trust department or agent
in the City's name.
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CITY OF SIIAKOPEE CITY OF SHAKOPEE
Scoll Couuty, Miuucsota Scott County, Minnesota
NOTES TO TilE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, Z007 December 31, 2007
NOTE 3 - DEPOSITS AND INVESTMENTS NOTE 3 - DEPOSITS AND INVESTMENTS
C. Long-Term Investments C. Long-Term Iove.stmeots (Continued)
As of December 31 2007 the City had the following long-term investments for all funds, Custodial Credit Risk -Invc,o;tments: As of December 31, 2007, all investments oflhe Cilyand
excluding the Elect;ic and Water Enterprise Funds (Shakopee Public Utilities Commission). the Electric and Water Enterprise Funds (Shakopee Public Utilities Commission) were insured,
Modified registered and held by the City or its agent and in the City's name.
Duration Moody's Credit Risk: In accordance with the City's investment policy, the City is invested In securities
Fair Value (Veala) Rating with high mtings. Investments In govemment bonds arc mted Aaa, Aal, Aa2, AI, A1 and A3.
U.S. Treasury Notes $ 698,709 5.89 Aaa Investments in commercial paper have a credit mting ofP-t and the money market funds do not
have credit ratings. The City's Electric and Water Enterprise Funds investments iu U.S. Agcncy
Agency Donds: 2,515,903 2.82 Aaa Securities have ratings by Moody's Investors Service ranging from unrated to Aaa,
FFCD
FHLD 7,951,800 1.01 Aaa Concentration of Credit Risk: As of Decemher 31, 2007, the City's investments exceeding 5% of
< FIILMC 4,040,598 1.43 Aaa
FNMA 1,645,010 I.1t Aaa the City's lotal inveshnents for all funds excluding the Electric and Water Enterprise Funds
I (Shakopee Public Ulilities Commission) were as follows.
N Agency S'ep'Up Bondo:
W FIlLMC 508,320 1.05 Au
FNMA 360,171 0.83 Aaa Percentage of
Mortga8e Bond.: . Issuer Investment Typo Ponfollo
CMO 5,458,823 2.26 Aaa
FHLMC 5,853,531 3.38 Aaa Federai Home Loan Bank (FHLB) U.S. Agencies 15.4%
FNMA 5.361,943 3.35 Aaa Federal Home Loan Mortgage Corporation (FHLMC) U.S. Agencies 25.1%
ONMA 409,738 2.11 Au Federal Nalional Mortgage Association (FNMA) U.S. Agencies 24.9%
Municipal Bonds 5,t21,664 1.85 (Aaa.A3)
Commercial Paper 5,520,118 0.17 PI The City's Electric and Water Enterprise Funds invc,o;lments in FHLB, FNMA and FHLMC also
Money Market Funds 408,616 NfA NR exceeded S% ofthe total investments of those funds at December 31, 2007.
Total Long-Term Inve.tment. 51,921.004 1.81 The following is a summary oCtotal deposits and investments as of December 31, 2007:
TOlallnve"ments $ 64.488.630 Deposits (Note 3.A.)
S 1,822,081
As of December 31, 2007, the City's Electric and Water Enterprise Funds (Shakopee Public Investments (All Funds but the Electric and
Utilities Commission) had the following investments. Water Enterprise Funds) 64,488,630
lnveslment M,turltlu Investments (Electric and Water Enterprise Funds) 27,878,417
F,lr Less IhM 1.5 6010 More th,n Petty Cash 1,170
Investment Type Value One Vear VCiIl -Y!!!!.... 10 Ve'lI Total Deposits and Investments
$ 94,190,298
u.s. Treasuries $ 12,819.093 $ 552.270 $ 12,266,823 $ $
U.S. Agencle. 12,209,343 3,413,426 8,195,911 .
Il.ternallnve.lment Pool. 2,849,981 2,849,98\ . . .
--
rotallnvestments $ 27,878,411 $ 6,815,617 $ 21,062,140 ..L.:.. ~
CITY OF SIIAKOPEE CITY OF SHAKOPEE
Scott County, Mtnnesota Scott County. Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31. Z007 December 31. Z007
NOTE 3 - D.EPOSITS AND INVESTMENTS NOTE 5- CApiTAL ASSETS
C. Long-Term Investments (Continued) Capital asset activity for the year ended December 31, 2007 was as follows:
Deposits and invcstmcnts lItC classified in the Deccmber 31, 2007 financial statements as Beghmlng Ending
follows: Bal~ Increases Decreasel Balance
Governmental Activities:
Statement ofNel Assels: S 79,956;215 Capital Assets not belag
Cash and Investments Depre<:lated:
Restricted and Ollier Accounts 12,900,206 Land S 19,832,201 S 5,939 S 566,580 S 19,271,560
ConsllUclion in Progress 1,859,230 187,868 1,859,230 187,868
Statement ofr-iduclary Net Assets 1,333,877 Tola1 Capital Asseta
not being Depreciated 21.691,431 1931807 2,425,810 19.459,428
Total Cash and lnvestmcnlB S 94,190,298 Capital Assets being
< Depreciated:
I NOTE 4 - RECEIY ABLES Buildings 31,173,154 1,689,757 50,889 32,812,022
I\)
~ 1n1ias1lUclure 126.163,148 4,080,443 5,699.254 124,544,337
Govenunental timds report deferred revenue in conneclion with receivables for revenues Ihalllte Machinery and I!quipment 1I ,231 ,832 I ,226.922 446.618 12.012,076
not considered 10 be available to liquidate liabilities of the cunent period. Govenunental funds Total Capital Assets
also defer revcnue recognition in connection with resources that have been received, but not yet being Depreciated 168.568.134 6.997,122 6,196.821 169.368.435
earned. At the end of the cunent fiscal year, the various components of deferred revenue
reported in the governmental timds were 88 follows: Less Ae<:umulated
Delinquent Delinquent Deferred Depreciation for:
Buildings 5.379,971 796.922 39,013 6,137,880
Property Special Special 1n1ias1lUclure 36,151,982 4.707,152 997,813 39.861,321
Taxes Assessments Assessments Tolal Macbinery and Equipment 4,045,85 I 772,675 249,280 4,569,246
Total Accumulated
General Fund $ 322,173 $ 7,861 S 34,916 S 364,950 Depr..:lalion 45,577.804 6,276,749 1.286. t 06 50,568.447
Nonmajor Funds 9,142 15,715 8,287.369 8,312,226 .
Total Capital Assets being
Total S 331,315 S 23,576 S 8.322,285 $ 8,677,176 Depreciated, Net 122.990.330 720.373 4,910.7lS tt8.799,988
Govenunental Activities Capital
Assets, Net S t44.681.761 S 914.180 S 7.336,525 $138.259.416
. . . . -- ~ ------~ -- ----------.::..~
. . - -
.
CITY OF SHAKOPEE CITY OF SRAKOPEE
Scott County, Mlunesota Scott County, MlnneBota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2001
NOTE 5 - CAPIT.u. ASSETS NOTE 5 - CAPITAL ASSETS
BegiJUling Bndlng Depreciation expellBa was charged to functions/programs of tho City as follows:
Balance Increases Decreases Balance
Business-Type Activities: Governmental Activities:
Capllal AsselS not being General Government $ 247,119
Depreciated: Public Safety 488,817
Land $ 6,082,364 $ 5,877 $ - $ 6,088,241 Public Works 5,036,764
Construction in Progress 1.369.834 983.433 1.146.30g 1,206.959 Patk and Recreation 504.049
Total Capital AsselS
not being Depreciated 7.452.198 989.310 1.146.308 7.295.200 Total Depreciation Bxpense . Governmental Activities $ 6.276.749
Capital Assets being Depreciated: Buslness- Type Activities:
Plant in Service 149,120,057 9,349,605 130,510 158,339,152
~ Machinery and Equipment 747,128 96t,44O 26.219 1.682.349 Blectric $ 1,323,061
Total Capital Assets Water 1,194,1.85
N being Depreciated 149.867.185 10.311.045 156.729 160.021.501 Sanitary Sewer 665;545
01 Stonn Drainage 759.083
Less Accumulated
Depreciation {or: Total Depreciation Bxpense - Business-Type Activities $ 3.941.874
Plant in Service 26.6t 7.821 4,836,374 . 31,454,195
Machinery and Bquipment 324.867 396.889 2,620 719,136 NOTE 6 - LONG-1ERM DEBT
Total Accwnulaled
Depreciation 26.942.688 5,233.263 2.620 32.t73.331 A. General Obllgatlou Bonds
Total Capital Assets being The City issues General Obligation (G.O.) Bonds to provide for financing tax Increment projects
Depreciated, Net 122.924.497 5.077.782 154.109 127.848,170 and street improvements. Debt service is covered respectively by ta.x increments 8I1d special
Ilusiness-Type Activities Capital assessments agaillBt benefited properties with 8I1Y shortfalls being paid from general taxes.
Assets, Net $ 130.376.695 $6.067.092 $1.300.417 $135.143.370 G.O. Bonds are direct obligations and pledge the full faith and credit of the City. These Bonds
generally ate issued as Serial Bonds With equal debt service payments each year. GoO. Bonds
Of the $ 5,233,263 increase in depreciation, $ 1,291,389 is accwnulated depreciation on assets currently outstanding are shown on the following page.
that were contributed to the Sewer Fund from the Met Council. B. Revenue Bonds
The City Issued Revenue Bonds for electric and water activity.
Debt serviell is covered through the revenue producing activities of these funds.
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, Z007
NOTE 6 - LONG-TERM DEBT NOTE 6 - LONG-TERM DEBT
C, Components of Long-Term Liabilities C. Componenu of Long-Term Llabllltlet (Continued)
wue Inleresl Origin.' Fin.' Prin,ipal Due Wilhin It.lue Interesl Origlnal Pinal Prin.lp,1 Duo Wilhln
~ Rates wuo Maturity Outstanding Ono Vea, ~ Rates Issue ...M!.!Jui.!.L OUlStaQdjna Ono Vea,
Governmental AcUvities: Bu.lne,,-1)pe A.tlylll..:
0.0. Bonds: Royenuo Bonds:
0.0. Improyoment Bonds: UlIIily Reyenuo Bonds 1999 12106/99 s.oO% $ 9,850,000 08/01118 S 275,000 S 130,000
1996A 12101/96 4.6%-4.8% S 2,SSS,000 02101/08 S I SO,OOO S 150,000 Ulilily Rev..,ue Bonds 2001 06101/01 4.2S%.5.12% 12,000,000 02101130 10,820,000 26S,OOO
1997B 1II0Sl97 4.40%-4.7S% 1,805,000 02101/09 175,000 t05,ooo Utility RoCUndlns Reyenue
1998B 12101/98 4.0%-4.4% 2,375,000 02/01/10 585,000 19S,ooo Bonds 2oo3A 05/01103 2.2S%.4.4S'" 3,31S,000 08/01118 2,6S0,000 2QO,000
2000A 09119/00 4.4S%.4.95% 2,560,000 02101111 945,000 240,000 Utility Rer.mding Rovenuo
2002A 0210 1102 3.0%-4.3% 1,185,000 02101112 670,000 130,000 Bonds 2004A 10/01104 3.S%-4.S% 9,830,000 to/01l18 9,S80,ooo 15,000
2002B 07/01/02 2.0%-4.1% 3,7S0,OOO 02/01113 1,72S,OOO 71 S,Ooo Utility Rol\indlng Royonu.
< 2003A 07/01103 2.0%.3.0% 2,21S,000 02101114 1,110,000 185.000 Bonds 2006A 11101106 4.12S%....375% IO,S70,Ooo 02101130 10.570.000
2004A OS/OI/04 2.2S%-4.tO% 4,225,000 02101/25 3,530,000 495,000 Total Royenuo Bonds 33,895.000 610,000
I 0.0. Building Rel\lnding
I\) Bonds 20048 05/01/04 2.2S%....00% 2,275,000 02/01111 1,945,000 165,000 Comp....ted Abs..... 49,538 ~
0) 0.0. Improyoment Bond.
2004C 1lI01/04 3.00/0-4.0% 2,570,000 02l0111S 2,020,000 250,000 Total Busin....Typo
0.0. Capltallmproyem.nt A.tivltl.. S 33.944.538 ~
Bonds 2004D 11101104 2.5%-4.2% 6,000,000 02101/25 5,615,000 230,000
G.O.lmproyoment Bonds Long'lenn bonded indebledness listed on Ihe previous page were issued 10 finance acquisition
2oo6A 01/01/06 4.00% 3,440,000 02101117 3,440,000 310,000 and construction of cBpitBI fucililies or to refinance (refund) previous bond issues.
GoO. Improyement Bond.
2001A 02101/01 4.00% 1,370,000 02101/17 1.370,000 110,000 On November 1, 2006,Ihe Shakopec Public Utilities Commission issued:5 10,570,000 Public
0.0. Improyement Bonds Utilities Crossover Refunding Revenue Bonds, Series 2006A, to crossover refund $ 10,280,000 of
20070 09/01/07 4.00% 1,445,000 02101118 ',44S.000 the $ 10,820,000 currently outstanding of the $ 12,000,000 Shakopee Public Urilitles Revenue
Tol.1 0.0. Dond. 24,725,000 3,280,000 Bonds, Series 2001 on February 1,2009.
Comp.nsaled Abs.nces t,290,398 730,000
TolalOoYCllU1lental
Acdviri.. S 26.01S.398 S 4.010.000
. - . . ~. ~ ----- --
. . .
.,
CITY OF SIIAKOPEE CITY OF SHAKOPEE
Scott County, Mlnnelota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2007
NOTE 6 - LONG.TERM DEBT NOTE6-LON~TERMDEBT
D. Cbanges In Long-Term LIabilities F. Buslnels-Type Activity Revenue Bonds
Long.lerm liability lnfonnation for the year ended December 31, 2007 was as follows. Debl service to maturity for outstanding revenue bonds is as follows:
Beginning Ending Year Bnded
BaJ&llce Additions ReducUons Balance December 31, Principal Interest Total
Governmental Aclivili~;
Bonds Payable: 2008 $ 670,000 $ 1.053,048 $ 1.723,048
0.0. Bonds $ 25,020,000 $ 2,815,000 $ 3,110,000 $ 24,725,000 2009 71 0,000 1,251.898 1,961,898
Compensated Absences 1.256.559 636.642 602.803 I .290.398 2010 1.055.000 1.443,241 2,498.241
Total Governmental Acliviliu $ 26.276.559 $ 3.451.642 S 3.712.803 S 26.015398 2011 1,080,000 1,401,393 2,481,393
< 2012 1,145,000 1,357,015 2,502,015
I Business-Type Activities: 2013-2017 6,340.000 6,0\1,929 12,351.929
N Revenue Bonds $ 34,535.000 $ . S 640.000 S 33.895.000 2018.2022 7.890,000 4,416,350 12,306,350
~ Bond Premiwn 53.435 . 4.323 49,112 2023-2027 9.910,000 2.386,953 12,296,953
Defmed Refunding Costs (t,073,066) . (53.394) (1,019,672) 2028-2032 5,095,000 338,088 5,433,088
Compensated Absences 167.318 117.780 49.538
Total Business-Type Acllvltles $ 33.515.369 S 167.318 S 708.709 $ 32.924.440 Total . $33,895.000 $19,659.915 $53.554,915
The General Fund, Recrealion and l!mployee Benefit Internal Service Funds and Sewer and NOTE 7 - CONDUIT DEBT OBLIGATIONS
Slonn Drainage Bnlerprise Funds typically Iiquidale the liability relaled 10 compensated
absences. Conduit debl obligations are certain limited obligallon revenue bonds or similar debl instruments
E. Governmental A~lIvlty G.O. Bonds Issued for the express purpose of providing capital financing for a specific third pBl1y. Tho Cily
has issued various revenue bonda to provide fimding 10 privalo-seclor enlllles for projects
Debt service 10 maturity for outstanding 0.0. Bonds is as follows: deemed 10 be in the public Inleresl. Allhough these bonds bear tho namo of the City, Iho City has
no obligalion for such debt beyond tho resources provided by relaled leases or loans.
Year Ended Accordingly, the bonds are not reported as lIabilllies in Ihe fmancial stalements oflhe City.
December 31. Principal Inter..t Total As of December 31, 2007. the following conduit debl was outslanding:
2008 $ 3.280.000 $ 912.463 $ 4.192.463 Date of Original Amount Balance
2009 2.660,000 785.257 3.445,257 Project Issue oflssue Relired OulslandinR
2010 2.565.000 691,384 3.256.384
2011 2,185,000 604,079 2,789,079 St. Francis RMC 10/06/04 $ 52,520,000
2012 2,075,000 52S,022 2,600,022 $ 2.000,000 $ 50.520,000
2013.2017 8,100.000 I,S97.660 9,697,660 St. Francis RMC 12/23/87 8,000,000 2,735,000 5,265.000
2018-2022 2,35S,OOO S97.075 2.952.075
2023.2027 I .50S.000 105.S37 1.610.537 Total S 55.785.000
Total $24.725.000 $S.818.477 $30.543.477
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, M1nnll8ota Scott County, Mlnneaola
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2007
NOTE 8 - PLEDGING AGREEMENTS NOTE 8 - PLEDGING AGREEMENTS
The City has pledged Its taxing authority to back certain revenuo bonds issued by the Scott , The City and the Shakopee BOA have a development agreement for costs related to an Imaginel
County Community Development Agency (COA), fonnally known as the Scott County Housing Print Solutions, fonnally known as Challenge Printing, facility moving to Shakopee. The
and Redevelopment Authority (liRA), for the Blocks 3 and 4 redevelopment project in Shakopee BOA issued a Taxable Tax mcrement Revenue Note in the amount ofS S 13,900 in
downtown Shakopee. Refimding bonds were issued during 2006 to advance refimd the 1997 A, support of development cosls for the Imaglnel Print Solutions project. Imaginel Print Solutions
19970 and 1997E Series Bonds on their call dales. The 19970 Series Bonds were called on is the holder ofthe note. The Shakopee BOA Is liable only to the extent of the tax increment
September 1,2006 and Ihe 1997A and 19!nB Series Bonds were callable on FebrulU}' 1,2008. . recoived from thlllmaginel Print Solulions property. Tho inlerest on Ihe note is 6.0%. Payments
The outstanding issues at December 3 I, 2007 were: are scheduled semiannually from August 1,200610 FebrulU}' I, 20lS.
. Scott County COA Housing Development Refimding Revenue Bonds, Series 2006A, Ihe The City and Ihe Shakopee BDA have a development agreement for costs related 10 Open
amount is $ 3,260,000 and payments are scheduled from FebrulU}' 1,2007 to 2027, with Systems faeltlty located in Shakopee. 0 The Shakopee BDA issued a Taxable Tax Increment
interest ranging from 4.25% to 4.5%. Revenue Note in the amount of$ 12S,OOO in support of development cosls for the Open Systems
Project. Open Systems is tho holder of the noto. Tho Shakopee BDA is liable only to the extent
< . Scolt County CDA Housing Development Rofimding Revenuo Bonds, Series 20060, the of the tax increment received from the Open Systems property. The interest on the note is 6.0%.
amount Is S 925,000 and payments are scheduled from FebrulU}' I, 2007 to 2016, with Payments are scheduled semiannualty from August I, 200710 FebrulU}' 1,2014.
, interest ranging from 5.7% to 6.25%.
'"
CO NOTE 9 -INTERFUND ASSETSILIABIL1TIES
. Scott County COA Housing Development Refimding Revenue Bonds, Series 2006B, the
amount is $I,24S,OOO and payments are scheduled from FebrulU}' 1,2018 to 2023, with The composilion of interfund balances as of December 31, 2007 is as follows:
inlcresl ranging from 4.S% to 4.7%.
Receivable FlDld Payable Fund Amount
. Scott COWlty COA Housing Development Revenue Bonds, Series 1997 A, the original
amount is $ 3,220,000 and payments are scheduled from FebrulU}' I, 2002 10 the call date Oenml FlDld Norunajor Oovernmental Funds $ 55.100
ofFebrulU}' I, 2008, with inlerest ranging from 4.10% to 5.38%. Oeneral Fund Electric FlDld 111,031
Scott County CDA Taxable Tax Increment Development Revenue Bonds, Series I 997E, Nonmajor Govenunental Foods Nomnajor Governmental Funds 261,775
. Nomnajor Governmental Foods Water Fund 48,471
the original amount is $ 1,170,000 andpaymenl is scheduled for the call date on Electric Food Waler Fund 1,756,525
FebrulU}' 1,2008, with interest at 5.38%. Electric Food Sewer Fund 23,085
The City has pledged its taxing authority to back a series of revenue bonds issued by the Scott Water Fund Slonn Drainage Fund 10,886
Sewer FWld Nonrnejor Govenunental Funds 2,000,000
~oWl!y COA for the North Ridge Court Redevelopment Project in downtown Shakopee. The Sewer FlDld Emplo~ Benefits Inlernal Service FWld 42,450
Issue IS:
Slonn Drainage Fund Employee Benefits Internal Service FWld -.1~
. Scott County CDA Housing Development Revenue Bonds, Series 2003, the amounl is Total
$ 6,690,000 and payments are scheduled from FebrulU}' 1,2006 to 2034, with interesl $ 4.316.411
ranging from 2.00% to 5.00%. The due from/due to other funds balances generally represent borrowing to resolve deficit cash
The City and the Shakopee EDA have a development agreement for costs related to a Seagate balances and billing expenses. The $ 2,000,000 balance r;:!iresents an advanco from the Sewer
facility moving to Shakopee. The Shakopee BOA issued B Taxable Tax mcrcment Revenue Note Fund to the Park ReselVe Fund which witl be repaid aecor ing to the anlortizaticn schedule.
in the amount on 4,572,725 in support of develo~ment costs for the Seagale Project. Seagate is
the holder ofthe nole. The Shakopee BOA Is Iiab e only to Ihe extent of the tax increment
received from the Seagate property. The interesl on the note is 7.5%. Payments are scheduled
semiannually from August 1,200010 February 1,2009.
o' . . . - . ~-- .-- -
. ~ ,
. .
CITY OF SHAKOPEE CITY OF SBAKOPEE
Scott County, Minnesota Scott Couaty, Mlautlot.
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007 December 31, 2007
NOTE 10-INTERFVND TRANSFERS NOTE 11- FUND EQUITYINET ASSETS
Transfer In The government.wide Statement of Net Asse14 and the proprietary tUnd financial slatemenls
Nonmajor divide net assels into the following components: nel assets Invested in capital assets, nel of
General Govenunenlat related debt, restricted net asseta and unreatricted net assels. Restricted net ass cIs are required to
Fund . Funds Total be reported when external parties mandate their restriction. .
TrMsfer Out: NOTE 12 - RISK MANAGEMENT
General Fund $ - $ 1,180,181 $ 1,I80,t81
Norunajor Governmental Funds 36.900 971,252 I,008,1S2 The City is exposed 10 various risks oftosa related to tortsi theft of, damage to and destruction of
Electrio Fund 1,080,962 . 1,080,962 assets; errora and omissions and natural disasters for which the City carries insurance policies
Waler Fund 704,809 . 704,809 through a risk tOOl from the League of MiJUlesota Cities Insurance Trust. The City retains risk
Sewer Fund 18,400 227,492 245,892 for the deducli 10 portiollS oftbe insurance policies. The amount of these deductibles ranges
Storm Drainsge Fund 48.040 143.245 191,285 from S 2,500 to S 5,000. There were no significant reductlollS In insurance from the previous
< Total $ 1.889.111 S 2.522.170 $ 4.41 t.28t year or settlements In excess of Insurance coverage for any ofthe past five years.
I
I\) General Fund transfers in the amount of$ 1,108,770 were mode to the Recreallon Fund for 11trough the pool, the City is subject to reassessment but due to reserves and reinsurance
<0 contracts, the likelihood is very low. The policy limits through the pool included S 1,000,000
operating purposes and $ 71,411 to the Shakopce BD~ Fund for tax abatements. aggregate for lIabllity, $ 1,000,000 for automobile c:overage, $ 100,000 faithful performance
Transfcrs in the amount ofs 430,047 were made from the Public Works Building Capital employee bonding and S 1,000,000 for universal umbrella c:overage. Property coverage Is at
Projects Fund to the 20040 Improvement Bonds Debt Service Fund to close out the Public approximately $ 76,000,000.
Works Building Capital Projects Fund. Trwlsfers in the amount ofs 92,261 were made from tho NOTE 13 - DEmEO BENEFIT PENSION PLANS - STATEWIDE
West Dean's Lake Capital Projects Fund to the 2004A Improvement Bonds Debt Service Fund to
clos" the West Dean's Lake Capital Project Fund. A transfer in the amount ofs 3,505 was made Public Employees' Retirement A.soelaUOD
from the 2003 Projects Capitol Projects Fund to the 2003A Improvement Bonds Debt Servlco
Fund to close the 2003 Capital Projects Fund. Other transfers between norunajor governmental All full-time and certain part-lime employees of the City ore covered by defined benefit pension
funds were made for operating purposes. plMs administered by the Public Employees' Rellrement Associstion of MilUlesota (PERA).
Transfers from the business-typo tUnds were made to assist with financing of various actlvitiesln PERA administers the Public Employees' Retirement Fund (pBRF) and the Public Employees'
Police and Fire Fund (PEPFF) which are cost-sharing, multiplc.cmployer retirement pions.
the recipient funds. These Plans are established and administered in accordance with Minnesota Statutes Chapters
353 and 356.
NOTE 11 - FUND EQUITY/NET ASSETS
PERF members belong to eilher the Coordinated Plan or the Basic Plan. Coordinated Plan
Fund equity or net assets are the residual or net assets of a given fund. Fund equity Is what is left members are covered ~ soelalseeurity and B88lo Plan members are not. All new members must
over when the total liabilities of a fund ore deducted from its total assets. Governmental funds participate in the Coor nated Plan. All police offic"rs, firefighters and peace officers who
refer to a fund's net sssets as fund balance. The government-wide Slatement of Net Assets and qualifY for membership by statute are covered by the PEPFF.
the City's proprietary tUnd fmancial statements refer to a fund's residual aSsels as net assets. PERA provides retirement benefits as well as disability benefits to members, and benefits to
Governmental tUnd balance Is divided into three major categories: reserved, designated and survivors upon doath of elircble members. Benefits are established by state statute, and vest after
Wllcserved. ReservatiollS of governmental fund balance are used to quantifY the amount of a three ye~ of credited serv ceo The defined retirement benefits are based on a member's highest
fund's net assets that 8re not available to meet the cUllent financial needs of the City. average 8alary for any five successive years of allowable servlc", ag" and years of credit at
Designations are used to indlcato a future use has been identified for net assets that are available termination of service.
for current financial needs. Finally, unreserved fund balance is a measure of a governmental
fund's net resources available for cUllent financial np",".
CITY OF SHAKOPEE CITY OF SHAKOPEE
Scott County, Minnesota Scott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
Deumber 31, 2007 December 31, 2007
NOTE 13 - J>EFINED BENEFIT PENSION PLANS - STATEWIDE NOTE 13 - DEFINED BENEFIT PENSION PLANS -, STATEWIDE
Public Employees' Retirement Association (Continued) Public Employees' Retlremeut Assoclatlou (ConCluued)
A. Piau DescrlplloD (CoDtlnued) B. Fuudlug Polley
Two methods are used to compute benefits for PERA's Coordinsted Plan and Basic Plan Minnesota Statutes Chapter 3S3 aets the rates for employer and employeo contributions. These
members. The retiring member receives the higher of a step.rato benefit accrual fonnula Statutes are established and amended by the state legislature. The City makes annual
(Method I) or a level accrual fonnula (Method 2). Under Method 1, the annuity accrual rate for contributions to the pension plans equslto the amoWlt required by stale statutes. PERF Basio
a Baslo Plan momberis 2.2% ofavemge salary for esch of the first 10 years of service and 2.7% Plan members and Coordinated Plan members were required to contribute 9.10% and 5.7S%,
for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of respectively, of their 8!1I1ual oovered salary In 2007. Contribution rates in the Coordinated Plan
average salary for each of the fUlltlO years and 1.7% for each remaining year. Under Method 2, will increase In 2008 to 6.0%.. PBPFF members were required to contribute 7.8% of their annual
the annuity accrual rate is 2.7% ofaverage salary for Basic Plan members and 1.7% for covered salary in 2007. That rate will increase to 8.6% in 2008. The City is required to
Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF
-;:: rate is 3.0% for each year ofservico. For all PERF and PBPFF members hired prior to July I, members, 6.25% for Coordinated Plan PERF members and 11.7% for PBPPF members.
1989, whose annuity Is calculated using Method I, a full annuity is availablo when age plus yeatS Employer contribution rates for the Coordinated Plan and PBPFF will increase to 6.5% and
eN of service equal 90. Nonnal retirement age Is 5S for PBPFF members and 65 for Basio Plan and 12.9%, respectively, effective January I, 2008. The City's contributiol1B to the PERF for the
0 Coordinated Plan members hired prior to July I, 1989. Normal retirement age for wueduced years ending December 31,2007, 2006 and 2005 were $ 4S2,967, $ 410,849 and S 353,029,
social security benefito is capped at 66 for Coordinated Plan members hired on or after July 1. respectively. The City's contributions to tbe PBPFF for the years ending December 31, 2007,
1989. A reduced retirement annuity is also available to eligible members seeking early 2006 and 2005 were $ 3S9,836, $ 278,056 and $ 209,661, respectively. The City's contributions
retirement. were equal to the contractually required contribulions for each year as set by slate statute.
There are differentlypes of annuities available to members upon retirement. A single-life C. Shakopee Voluuteer Fire ReUef Assoclatlou
annuity is a lifetime aMuity that ceases upon the death of the retiree--no survivor annuity is The City contributes to the Shakopee VolWlteer Fire DepllJtment Relief Association (the
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 "Associatiou") that provides pension benefits to its members WIder a defined benefit plan. Since
termination of public service in order to qualifY for a deferred annuity at retirement age. Refunds fire department members are volWlteers, contributions to the Association are not based on
of contributions are available at any time to members who leave public service. but before payroll, but rather on years of active service. All active firefighters may apply for membership in
retirement benefits begin. the Association and shall become a member immediatety upon approval by the Board of
Trustees.
The benefit provisions stated in the previous paragraphs of this section are current provisions and The City's contribution to the Association is detennined by multiplying $ 7,500 by the number of
apply to active Plan participants. Vested, temUnated employees who are entitled to benefits but
are not yet receiving them are bound by the provisions in effect at the time Ihey last lennlnated years of active service completed by members oflhe Association for the plan year, prorated by
their public service. months for members who did not complete a full year of active service. Required and actual
employer contributions to the plan during 2007 were $ 210,301. Members oftbe Association are
PERA issues a publicly available financial report that includes financial statements and required not allowed to make volWltary contributions to the Plan.
supplementary infonnation for PERF and PEPFF. That report may be obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Bmplre Drive, Suite 200, 51. Paul, MiMesota D. Post Retirement Benefits
55103.2088 or by calling (651) 296.7460 or (800) 652.9026.
City employeea are eligible to participate in COBRA provisions after severing employment or
Minnesota Statutes Chapter 488 after retirement. which allows employees to continue coverage on
the City's health insurance plan under certain provisions. Currently, the City has eight fonner
employees/dependents participating WIder the Minnesota Starutes Chapter 488 provision and four
disabled attbe end of 2007. The participants pay for the premium under the above provisions.
. , .I.
.
CITY OF SHAKOPEE
Seott County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 14 - CONTINGENT LIABILITIES AND COMMITMENTS
The City is a currently a defendant in litigation with a developer concerning platting issues.
Although the outcome of this lawsuit is not presently determinable, the resolution in not expected
to have a material adverse effect on the financial condition of the City.
There are various uncompleted construction contracts as of year-end totaling approximately
$ 1,385,998 for work yet to be done. Completed work is reflected in the financial statements,
work yet to be done is not.
NOTE 15-SEGMENTINFORMATION
The City maintains four enterprise funds that account for the electric, water, 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 Net Assets balances, this infonnation has
not been repeated in the notes to the basic financial statements.
f
.
IV-31
Springsted Incorporated
380 Jackson Street, Suite300
FJ Springsted Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
Email: advisors@springsted.com
www.springsted.com
$2,170,000*
CITY OF SHAKOPEE, MINNESOTA
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2008A
(BOOK ENTRY ONLY)
AWARD: CRONIN & COMPANY, INC.
WELLS FARGO BROKERAGE SERVICES, LLC
SALE: August 6, 2008 Moody's Rating: Aa3
Interest Net Interest True Interest
Bidder Rates Price Cost Rate
CRONIN & COMPANY, INC. 3.50% 2010-2013 $2,186,741.15 $456,743.22 3.6812%
WELLS FARGO BROKERAGE 3.75% 2014-2015
SERVICES, LLC 4.00% 2016-2019
UBS SECURITIES LLC 3.00% 2010-2011 $2,165,987.67 $456,641.50 3.6983%
3.25% 2012-2014
3.50% 2015
3.75% 2016
4.00% 2017-2019
M&I BANK 3.50% 2010-2013 $2,190,264.35 $464,667.94 3.7393%
4.00% 2014-2018
4.25% 2019
NORTHLAND SECURITIES 3.00% 2010-2011 $2,174,564.30 $465,624.24 3.7633%
BERNARDI SECURITIES, 3.25% 2012
INCORPORATED 3.50% 2013
3.75% 2014
4.00% 2015-2019
PIPER JAFFRAY& CO. 3.50% 2010-2012 $2, 17~8,095.50 $469,673.77 3.7968%
3.625% 2013
3.75% 2014
4.00% 2015-2019
(Continued)
Public Sector Advisors
Interest Net Interest True Interest
Bidder Rates Price Cost Rate
UMB BANK, N.A. 2.60% 2010 $2,151,555.00 $472,042.50 3.8395%
2.90% 2011
3.20% 2012
3.30% 2013
3.45% 2014
3.65% 2015
3.75% 2016
3.90% 2017
4.00% 2018
4.05% 2019
SUNTRUST ROBINSON 4.00% 2010-2019 $2,179,799.05 $481,967.62 3.9019%
HUMPHREY, INC.
FIRST TRUST PORTFOLIOS L.P.
STEPHENS, INC.
--------------------------------------------------------..--------------------------------------------------------------------------------..---------------.......-----
REOFFERING SCHEDULE OF THE PURCHASER
Rate Year Yield
3.50% 2010 2.30%
3.50% 2011 2.75%
3.50% 2012 3.00%
3.50% 2013 3.15%
3.75% 2014 3.35%
3.75% 2015 3.50%
4.00% 2016 3.65%
4.00% 2017 3.80%
4.00% 2018 3.90%
4.00% 2019 Par
BBI: 4.74%
Average Maturity: 5.666 Years
* Subsequent to bid opening, the issue size was not changed.