HomeMy WebLinkAboutJune 5, 2018
Contract No. 18R024
INTERGOVERNMENTAL AGREEMENT BETWEEN THE
METROPOLITAN COUNCIL AND THE
CITY OF SHAKOPEE
THIS AGREEMENT is made and entered into by and between the Metropolitan Council (the
"Council") and the City of Shakopee (the "City"), each acting by and through its duly authorized
officers.
THE ABOVE-NAMED PARTIES hereby agree as follows:
I. GENERAL SCOPE OF AGREEMENT
The Council and the City agree to undertake a volunteer lake monitoring study in order to
provide an economical method of broadening the water quality database on lakes in the Twin Cities
Metropolitan Area.
II. SPECIFIC SCOPE OF SERVICES
2.01 Lake Monitoring Program. The City and the Council agree to jointly undertake a
volunteer lake monitoring program as specified below:
a. General Purposes of Program. The volunteer lake monitoring program involves
the use of citizen-scientist volunteers to monitor lakes in the Twin Cities
Metropolitan Area. The volunteers will collect surface water samples which will be
analyzed for total phosphorus (TP), total Kjeldahl nitrogen (TKN), and chlorophyll-a
(CLA). In addition, the volunteers will measure surface water temperature, water
transparency, and fill out a monitoring form that describes the lake and weather
conditions at the time of the monitoring event. Lakes will be visited from April
through October of 2018
the approximate intervals specified in paragraph (b) below. Each lake will be
sampled at the location as indicated on the site location map provided by the
Council. The Council will arrange for chemical analysis of the samples either
through its own laboratory or an outside laboratory.
b. Specific Lakes Involved. The following lakes and specific lake site(s) listed
belo-Assisted Lake Monitoring
Program (CAMP) in 2018.
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Lake name DNR ID# Number of Approximate Quantity of
monitoring monitoring new kits
events interval
70-0095 8 to 14 Biweekly 0
2.02 City Responsibilities. The City agrees that it will have sole responsibility for:
a. Recruiting volunteers (who have access to a boat) to monitor the lakes the
City wishes to involve in the program as listed in section 2.01(b) above.
b. Providing the Council and/or volunteers with needed lake information such
as lake bathymetric maps and access locations.
c. Paying for the laboratory analysis cost of the samples collected by volunteers
which cost is included in the amounts specified in Article III below.
d. Ensuring that the volunteers participate in the training program and follow
CAMP methods and procedures.
e. Ensuring that the volunteers fill out a monitoring form during each
monitoring event.
f. Picking up the samples and the lake monitoring forms from their volunteers
and delivering those items to the City The City
will be responsible for providing the central storage location. The central
storage location can be a Council facility, but the City will be required to
deliver the samples and monitoring forms to this facility. The samples are
required always to be frozen.
g. Storing samples until picked up by Council staff. The samples
are required always to be frozen.
h. Maintaining, storing, and restocking its monitoring kits.
i. Delivering and picking up its monitoring kits to and from their volunteers.
2.03 Council Responsibilities. The Council agrees that it will:
a. Organize the survey.
b. Provide training for the volunteers.
c. Pick up the samples and lake monitoring forms from the City
storage location and deliver them to the laboratory at approximately 2-month
intervals starting in June.
d. Review the results of the monitoring data.
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e. Prepare a final report containing the physical, chemical, and biological data
obtained during the Monitoring Period and a brief analysis of the data.
f. Provide quality control by collecting lake samples from random lakes
involved in the volunteer program. The resulting parameter values will then
be compared to the volunteers results to determine if any problems exist
involving the volunteer's monitoring activities and what should be done to
correct the problem.
g. Provide and deliver to the City the expendable monitoring items (e.g. sample
containers, labels, filters, aluminum sheets, zip-style plastic bags, and lake
monitoring forms). The expendable monitoring items will be delivered in the
weeks preceding the start of the monitoring season. The cost of the
expendable monitoring items is included in the annual participation fee.
III. COMPENSATION; METHOD OF PAYMENT
3.01 Payment to Council. For all labor performed and reimbursable expenses incurred by
the Council under this agreement during the Monitoring Period, the City agrees to pay the Council
the following amounts per lake site listed in section 2.01(b). The participation fee will be billed for
the contracted amount regardless whether the volunteer collects samples from or monitors a lake
site fewer times than the contracted quantity.
Number of Monitoring Participation Fee (excludes monitoring equipment)
events
8 to 14 $550
1 to 7 $280
For lake sites requiring monitoring equipment, the cost for a kit of monitoring equipment is
$150 per kit.
3.02 Payment Schedule. Payment of the total amount owing to the Council by the City
shall be made by October 30, 2018. An invoice specifying the amount owed by the City will be
sent under separate cover.
3.03 Additional Analyses. The total amount specified in paragraph 3.01 does not include
the cost of any additional analyses requested by the City, such as analysis of bottom samples. The
Council will carry out any such additional analyses at the request of the City and subject to the
availability of Council resources for carrying out such analyses. The Council will bill the City after
the City will promptly reimburse the Council for any such costs billed. The costs for additional
analyses are provided in Exhibit A.
3.04 Replacement of Durable Equipment. The total amount specified in paragraph 3.01
does not include the cost of replacing durable monitoring equipment, such as thermometers, Secchi
disks, filter holders, hand pumps, graduated cylinders, sampling jugs, forceps, and tote boxes. The
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Council will provide and deliver durable monitoring equipment that needs replacement upon
request from the City. The Council will bill the City for any such replaced durable monitoring
City will promptly reimburse the Council for any
such costs billed.
IV. GENERAL CONDITIONS
4.01 Period of Performance. The services of the Council will commence on April 1,
2018, and will terminate on March 30, 2019, or following work completion and payment,
whichever occurs first.
4.02 Amendments. The terms of this agreement may be changed only by mutual
agreement of the parties. Such changes will be effective only on the execution of written
amendment(s) signed by duly authorized officers of the parties to this agreement.
4.03 City Personnel. Kirby Templin, or such other person as may be designated in writing
by the City, will serve as the Cityrepresentative and will assume primary responsibility for
coordinating all services with the Council.
Kirby Templin
City of Shakopee
485 Gorman St.
Shakopee, MN 55379
4.04 Council's Contract Manager. The Council's Contract Manager for purposes of
administration of this agreement is Brian Johnson, or such other person as may be designated in
responsible for coordinating services under this agreement. However, nothing in this agreement
will be deemed to authorize the Contract Manager to execute amendments to this agreement on
behalf of the Council.
Brian Johnson
Metropolitan Council
2400 Childs Road
St. Paul, MN 55106
651-602-8743
4.05 Equal Employment Opportunity; Affirmative Action. The Council and the City
agree to comply with all applicable laws relating to nondiscrimination and affirmative action. In
particular, the Council and the City agree not to discriminate against any employee, applicant for
employment, or participant in this study because of race, color, creed, religion, national origin, sex,
marital status, status with regard to public assistance, membership or activity in a local commission,
disability, sexual orientation, or age; and further agree to take action to assure that applicants and
employees are treated equally with respect to all aspects of employment, including rates of pay,
selection for training, and other forms of compensation.
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4.06 Liability. Each party to this agreement shall be liable for the acts and omissions of
itself and its officers, employees, and agents, to the extent authorized by law. Neither party shall be
Nothing in this agreement shall be deemed to be a waiver by either party of any applicable
immunities or limits of liability including, without limitation, Minnesota Statutes, sections 3.736
(State Tort Claims) and chapter 466 (Municipal Tort Claims).
4.07 Copyright. No reports or documents produced in whole or in part under this
agreement will be the subject of an application for copyright by or on behalf of the Council or City.
4.08 Termination of Agreement. The Council and the City will both have the right to
terminate this agreement at any time and for any reason by submitting written notice of the
intention to do so to the other party at least thirty (30) days prior to the specified effective date of
such termination. In the event of such termination, the Council shall retain a pro-rata portion of the
amounts provided for in Article III, based on the number of monitoring events occurring for each
lake before termination versus the total monitoring events specified for each lake. The balance of
the amounts will be refunded by the Council to the City.
4.09 Force Majeure. The Council and the City agree that the City shall not be liable for
any delay or inability to perform this agreement, directly or indirectly caused by, or resulting from,
strikes, labor troubles, accidents, fire, flood, breakdowns, war, riot, civil commotion, lack of
material, delays of transportation, acts of God or other cause beyond reasonable control of Council
and the City.
4.10 Audits. Pursuant to Minn. Stat. Section 16C.05, Subd. 5 , the books, records,
documents, and accounting procedures and practices of Provider relative to this agreement shall be
subject to examination by the City and the State Auditor. Complete and accurate records of the
work performed pursuant to this agreement shall be kept by provider for a minimum of six (6) years
following termination of this agreement for such auditing purposes. The retention period shall be
automatically extended during the course of any administrative or judicial action involving the City
regarding matters to which the records are relevant. The retention period shall be automatically
extended until the administrative or judicial action is finally completed or until the authorized agent
of the City notifies Provider in writing that the records need no longer be kept.
4.11 Relationship of Parties and their Employees. Nothing contained in this agreement
is intended, or should be construed, to create the relationship of co-partners or a joint venture
between the Council and the City. No tenure or any employment rights including worker's
compensation, unemployment insurance, medical care, sick leave, vacation leave, severance pay,
retirement, or other benefits available to the employees of one of the parties, including
indemnification for third party personal injury/property damage claims, shall accrue to employees
of the other party solely by the fact that an employee performs services under this agreement.
4.12 Severability. If any part of this agreement is rendered void, invalid or unenforceable
such rendering shall not affect the remainder of this agreement unless it shall substantially impair
the value of the entire agreement with respect to either party. The parties agree to substitute for the
invalid provision a valid provision that most closely approximates the intent of the invalid
provision.
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IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly
authorized representatives on the dates set forth below. This agreement is effective upon final
execution by, and delivery to, both parties.
CITY OF SHAKOPEE
Date _________________ By_______________________________
Name ____________________________
Its_______________________________
METROPOLITAN COUNCIL
Date_________________ By _______________________________
Name ____________________________
Water Resources Assistant Manager
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EXHIBIT A
Metropolitan Council Environmental Services Laboratory Prices
for Additional Analyses
Parameter Laboratory Code Price
(per sample)
Nutrients (TP & TKN) NUT-AHLV $15.25
Chlorophyll CLA-TR-CS $15.50
Phosphorus P-AHLV $15.25
Chloride CL-AV $15.75
Ortho-phosphorus ORTHO-AV $15.50
Hardness HARD-AV $7.25
Alkalinity ALK-AV $13.50
Sulfate SO4-ICV $13.50
Metals (Cd, Cr, Cu, Pb, Ni, Zn) MET-MSV $36.00
Individual metal/mineral (e.g. Fe) XX-MSV $6.00 (per element)
A parameter not on this list
Contract Manager for
specific pricing.
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CITY OF SHAKOPEE, MINNESOTA
Scott County
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended
December 31, 2017
Department of Finance
Darin Nelson, Director of Finance
Melissa Schlingman, Accounting Manager
485 Gorman Street
Shakopee, MN 55379
(THIS PAGE LEFT BLANK INTENTIONALLY)
CITY OF SHAKOPEE
TABLE OF CONTENTS
SECTION I
Page
INTRODUCTORY SECTION
Elected Officials and Administration................................................................................ 1
Organization Chart ............................................................................................................ 2
Letter of Transmittal ......................................................................................................... 3
Certificate of Achievement for Excellence in Financial Reporting .................................. 10
SECTION II
FINANCIAL SECTION
Independent Auditor’s Report ........................................................................................... 11
Management’s Discussion and Analysis (Unaudited) ...................................................... 14
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ..................................................................................... 28
Statement of Activities .......................................................................................... 29
Fund Financial Statements:
Balance Sheet – Governmental Funds .................................................................. 30
Reconciliation of the Balance Sheet to the Statement of Net Position –
Governmental Funds ........................................................................................... 33
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ........................................................................................... 34
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities – Governmental Funds ............... 36
Statement of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual – General Fund ..................................................................... 37
Statement of Net Position – Proprietary Funds ..................................................... 38
Statement of Revenues, Expenses and Changes in Fund Net Position –
Proprietary Funds ................................................................................................ 39
Statement of Cash Flows – Proprietary Funds ...................................................... 40
Combined Statement of Fiduciary Net Position ................................................... 43
Statement of Net Position – Component Unit ....................................................... 44
Statement of Revenues, Expenses and Changes in Fund Net Position –
Component Unit ................................................................................................. 45
Notes to the Financial Statements ............................................................................... 47
Required Supplementary Information:
Schedule of Funding Progress – Other Post Employment Benefits ........................... 98
Schedule of City's Proportionate Share of Net Pension Liability General
Employees Retirement Fund .............................................................................. 99
Schedule of City's Proportionate Share of Net Pension Liability Public
Employees Police and Fire Retirement Fund..................................................... 100
Schedule of Component Units' Proportionate Share of Net Pension Liability
General Employees Retirement Fund ................................................................ 101
Schedule of City Contributions General Employees Retirement Fund ..................... 102
Schedule of City Contributions Public Employees Police and Fire Retirement
Fund .................................................................................................................. 103
Schedule of Component Unit Contributions General Employees Retirement Fund . 104
Schedule of Changes in the Net Pension Liability and Related Ratios –
Fire Relief Association ...................................................................................... 105
CITY OF SHAKOPEE
TABLE OF CONTENTS
SECTION II (Continued)
FINANCIAL SECTION
Required Supplementary Information: (Continued)
Schedule of City Contributions and Non Employer Contributing Entities–
Fire Relief Association ...................................................................................... 106
Notes to Required Supplementary Information .......................................................... 107
Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual – General Fund ........................................................................... 110
Combining and Individual Fund Financial Statements and Schedules:
Combining Balance Sheet – Nonmajor Governmental Funds .............................. 112
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances – Nonmajor Governmental Funds ....................................................... 118
Combining Statement of Fund Net Position – Internal Service Funds ................. 124
Combining Statement of Revenues, Expenses and Changes in Fund Net
Position – Internal Service Funds ....................................................................... 125
Combining Statement of Cash Flows – Internal Service Funds ........................... 126
Combined Statement of Fiduciary Net Position ................................................... 127
Statement of Changes in Assets and Liabilities –Agency Fund ........................... 128
SECTION III
STATISTICAL SECTION
Net Position by Component .............................................................................................. 1 134
Changes in Net Position .................................................................................................... 2 136
Fund Balances – Governmental Funds ............................................................................. 3 138
Changes in Fund Balances – Governmental Funds .......................................................... 4 140
Tax Capacity and Estimated Actual Value of Taxable Property ...................................... 5 142
Direct and Overlapping Property Tax Rates ..................................................................... 6 143
Principal Taxpayers .......................................................................................................... 7 144
Property Tax Levies and Collections ................................................................................ 8 145
Ratio of Outstanding Debt by Type .................................................................................. 9 146
Ratio of General Bonded Outstanding .............................................................................. 10 147
Direct and Overlapping Governmental Activities Debt .................................................... 11 149
Legal Debt Margin Information ........................................................................................ 12 150
Pledged Revenue Coverage .............................................................................................. 13 152
Demographic and Economic Statistics ............................................................................. 14 153
Principal Employers .......................................................................................................... 15 155
Full-Time Equivalent City Government Employees by Function/Program ..................... 16 156
Operating Indicators by Function/Program ...................................................................... 17 158
Capital Asset Statistics by Function/Program................................................................... 18 160
CITY OF SHAKOPEE
ELECTED OFFICIALS AND ADMINISTRATION
DECEMBER 31, 2017
Elected OfficialsPositionTerm Expires
William MarsMayorDecember 31, 2018
Matthew LehmanCouncil MemberDecember 31, 2020
Jay WhitingCouncil MemberDecember 31, 2020
Michael LuceCouncil MemberDecember 31, 2018
Kathleen MocolCouncil MemberDecember 31, 2018
Administration
William H. ReynoldsCity Administrator
Nathan BurkettAssistant City Administrator
Darin NelsonFinance Director
Michael KerskiDirector of Planning & Development
Jeff TatePolice Chief
Rick ColemanFire Chief
Steve LillehaugPublic Works Director/Engineer
Jamie PolleyPark and Recreation Director
CITY OF SHAKOPEE
ORGANIZATION CHART
DECEMBER 31, 2017
Electorate
City Council
Park and Recreation Advisory
Planning Commission & Board of
Board
Adjustment & Appeals
Shakopee Public Utilities
Police Civil Service Commission
Commission
Environmental Advisory
Economic Development Advisory
CommitteeCommittee
City
Administrator
Parks &
PoliceFireFinance
Engineering &
Department of
Department of
Recreation
DepartmentDepartmentDepartment
Public Works
Planning &
Administration
Department
Department
Development
HR Division
Planning
Division
IT Division
Building
Inspection
City Clerk
Division
Facility Maintenance Division
Economic
Development
May 18, 2018
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Shakopee:
The Comprehensive Annual Financial Report for the City of Shakopee, Minnesota, for the fiscal
year ended December 31, 2017, is submitted herewith:
Management assumes full responsibility for the completeness and reliability of the information
contained in this report, based upon a comprehensive framework of internal control that it has
established for this purpose. The costs of internal control should not exceed anticipated benefits
and therefore the object is to provide reasonable rather than absolute assurance that the financial
statements are free from material misstatement.
The City of Shakopee’s financial statements have been audited by Abdo Eick & Meyers LLP, a
firm of licensed certified public accountants. The goal of the independent audit is to provide
reasonable assurance that the financial statements of the city for the year ended December 31,
2017, are fairly presented in conformity with GAAP (generally accepted accounting principles).
Based on the audit, the independent auditor concluded that there is reasonable basis for rendering
an unmodified (“clean”) opinion on the city’s financial statements for the year ended December 31,
2017. The independent audit involves examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements; assessing the accounting principles used; significant
estimates made by management; as well as evaluation of the overall financial statement
presentation. The independent auditor’s report is presented as the first component of the financial
section of this report.
Management Discussion and Analysis (MD&A) immediately follows the independent auditor’s
report and provides a narrative introduction, overview, and analysis to accompany the basic
financial statements. This letter of transmittal is designed to complement the MD&A and should
be read in conjunction with it.
Profile of the City
The City of Shakopee was incorporated for the second time in 1870 and is located approximately
25 miles southwest of Minneapolis. Bound by the Minnesota River on the north, Shakopee is in
the northern part of Scott County and is the county seat. In recent years, the city has been one of
the most rapidly growing communities in the state. The 2000 population of the city was 20,568
and the land area covered is approximately 30 square miles. The 2010 census confirmed that the
population had increased to 37,076 and has been continuing to experience growth into the current
year, with an estimated population of 40,643, in 2017. The city comprises a unique blend of
residential, commercial and industrial properties, which provides a wide range of opportunities that
are the result of the strong economic health of the community and region. More than 80% of the
community is developed, with approximately 35% of the developed land as residential. The city
levies a property tax on both real and personal property located within its boundaries except for
land owned or controlled by the Shakopee Mdewakanton Sioux Community (SMSC), a Federally
recognized Native American Tribe. The city may also by state statute, extend its corporate limits
by annexation, which historically has occurred periodically. The city recently executed an orderly
annexation agreement with Jackson Township that will allow the city to actively annex certain
portions of the township.
Shakopee is organized in Minnesota under Plan A, which includes a City Administrator, but the
City Council retains primary decision-making authority such as policy setting, adopting ordinances
and budget and staffing. The City Council has four members who serve staggered terms of four
years plus the Mayor who serves a two-year term. All council positions are non-partisan, part-time
and members are elected at large. In 2019, the Mayor’s term will also become a four-year term.
The city provides typical municipal services such as police and fire protection, street and
infrastructure construction, public works maintenance, parks, recreation, planning and zoning.
Also provided are utilities such as sewer and storm drainage utilities, organized refuse collection,
and recycling. Electric and water utilities are operated by Shakopee Public Utilities Commission
which is appointed by the City Council but operates independently of the City of Shakopee.
Economic development and redevelopment are controlled by the Shakopee Economic
Development Authority (the Authority). The Authority is comprised of the Mayor and City
Council members and is included as an integral part of the city’s report. The economic
development activities of both staff and Council continue to increase from past years, as the
strong economic climate in the region has provided the city with the benefit of planned
commercial and industrial growth as well as expansion of several existing businesses and
commercial sites.
2018 activity has already confirmed that the continuation of the growth trend will carry into the
current year as the valuation of building permits for the first quarter of 2018 was $33 million
compared to a similar amount of $35 million for the same timeframe in 2017. Additionally,
2018 single-family building permits through the first quarter have already exceeded the total
number of single-family building permits for all of 2017.
The annual budget is the basis for the city’s financial planning and control. The budget is prepared
by fund (e.g., General), function (e.g., Public Works) and division (e.g., Engineering). Major
budget requests or initiatives are submitted in July by department directors. The City
Administrator reviews the submittals with the Finance Director and department directors to
determine the prioritization of specific budget requests.
The City Council is presented with a proposed budget and a maximum tax levy in September of
each year. This information succinctly details changes in the upcoming year budget, such as
changes in personnel and position structure. It also includes funding requests that are unique to the
specific budget year, the basis for the request, as well as requests for transfers and internal funding
needs, such as internal service fund reviews.
City Council is required to adopt a maximum tax levy by September 30. The final tax levy and
budget are adopted in December after a public meeting, which provides the City Council and
community impact information relating to both the budget decisions and property tax levies. Final
levy information is submitted to the County for inclusion in the development of the upcoming year
property tax statements.
Budgeting control is provided by an annual budget resolution passed by City Council. Formal
control is at the division level and Council action is necessary to change budgeted amounts
between divisions and/or funds. The Finance Director or City Administrator may make changes
within divisions.
Along with the operating budget, the city annually prepares a five-year capital improvement plan
(CIP) that is the basis for the long-term goal of providing and maintaining a functional public
facility program, that provides the residents and businesses with infrastructure necessary for the
on-going growth and development.
The capital plans have historically provided details on the infrastructure and capital equipment
projects that are funded through property tax levy, franchise taxes, special assessments, utility
funds and other intergovernmental revenue sources. These projects primarily allow for the
upgrades, expansion and coordination of transportation-based needs, as well as trails, signals and
other infrastructure improvements. The City Council also reviews and discusses the park planned
improvements that are funded through the Park Reserve fund, which provides for the use of park
and community facilities that have historically been funded through the collection of Park
Dedication fees. The capital plans are reviewed with the Council and city staff, and the funding
sources and priorities developed for the annual and future budget practices.
A five-year major equipment list is also annually prepared and presented to Council. The funding
for this program is through the Internal Service fund rate charges, which are determined by
departmental use, replacement plans and determination of the remaining life. Internal Service
funds are utilized for the definition and application of other charges, including governmental
buildings, park assets facilities, and information technology. These charges are integrated into the
individual budgets of the General fund and departments that are benefitted by the activities of the
programs. The Internal Service funds continue to be reviewed and updated as community needs
and council directives are considered during each budget cycle.
Local Economy
Shakopee is the county seat of Scott County, and it abuts the largest county in the region,
Hennepin County. Shakopee continues to benefit from its strategic location within the
metropolitan region, as well as its direct access to TH 169, which connects the city to other
major regional roadways, the MSP International Airport, and major employment centers. The
city is also at the heart of regional attractions which includes Valleyfair, Canterbury Park horse
racing track, Mystic Lake and Little Six casinos, and the Minnesota Renaissance Festival. These
and other factors have propelled the city through a period of strong and consistent growth that is
likely to continue for years to come.
In 2017, permits were issued for the construction of the following:
Hometown Bank at Hy-Vee
D.R. Horton first phase of Windermere, a major mixed-use community in the city’s West
End
Lady Bug Daycare
River Valley Montessori School
Shakopee Dental at Dean Lakes
O’Brien Dental Care downtown
Northland Concrete corporate HQ
Lennar Homes at Ridge Creek, 103 single family houses
West Vierling Apartments at Hy-Vee, 133 market rate units
Trio Apartments (Sand Companies), 100 market rate apartments, first phase of three
My Pillow corporate HQ, distribution and production
SAIA Trucking terminal
Shakopee Brew Hall – Downtown
4th and Sarazin, RTL Construction headquarters
There are several projects in final permitting for 2018. These major projects include:
Rahr Malting expansion phase two
Living Hope Church expansion
Canterbury Park - $400 million redevelopment. First phase is a 600 unit luxury
apartment building
BHS Senior Living Facility at Windermere, first phase is $35 million
The Willows at Windermere – 60 unit affordable housing development by
CommonBond
Windermere South by Dr Horton – 158 single family homes
Major Initiatives
The city’s community center and ice rink expansion and renovation project broke ground April 1,
2016. This $30.4 million project includes the construction of a new two-sheet arena, addition of an
aquatic facility, and the expansion of fitness, senior lounge, indoor playground, and child care
areas. This project is being funded through the issuance of tax abatement bonds. The final phase
of construction was completed in July of 2017. Both the community center and ice arena facilities
are experiencing a substantial uptick in patronage.
The city is also finished in August 2017 the construction of a 25,000-square foot city hall that is
adjacent to the police station. The City Hall addition creates a centralized city campus. The $10
million project is financed from a mix of internal transfers and an interfund loan. The old city
hall was subsequently demolished, and the city is looking for a private developer to complete a
major redevelopment.
The city acquired several acres along First Avenue and the river front and is working with a private
developer for a 125 unit luxury housing development with commercial that will break ground in
2019.
The city is also working on disposal of 30 acres acquired in the West End from MNDOT. Two
sites have already been sold for a Doggie Day Care and Spa and a residential treatment facility.
There are several parties interested in the remaining parcels for housing and business park.
The city went to 100% electronic submissions for building permits in April 2017 and for Planning
and Engineering permits in December 2017. This has resulted in shorter turnaround times for
building permits and has reduced applicants’ expense since printed drawings are no longer
required. Electronic submission process has also allowed for better communication and
coordination with Scott County, Shakopee Public Utilities, Charter and the State of Minnesota
(MNDOT).
The city is currently completing its 2040 Comprehensive Planning Process entitled Envision
Shakopee. Thousands of residents have participated at public meetings, special events and on line
to provide their input into the future of our community. The Plan includes land use proposals
along with a detailed vision of the future. As part of that process, the city is also retaining a
consultant to evaluate the entire Parks and Recreation system to ensure that it meets the
community’s needs while also being fiscally sustainable.
As mentioned earlier, the city also signed an orderly annexation agreement with the Jackson
Township that will allow for annexation of all but two areas of the Township over the next few
decades. The city can annex on its own 250 acres a year. The Township includes large tracts of
land that will serve as employment centers for the next several decades. The city is bringing
infrastructure to the area through the Windermere development.
Long-Term Financial Planning
Historically, the city has issued only limited debt, in the form of bonds and internal funding for
planned infrastructure projects, expansion specific to streets, underground utilities, trails and
sidewalk expansion. A portion of the long-term debt is funded by special assessments against
benefited properties. The city applies special assessments against benefitted properties at a rate
of 30% of the assessable project costs. This limited amount of special assessment revenue does
require the city to clearly define the other recognized components of the payment of project
costs. The city does not assess for overlays, which then requires funding from the tax levy or
other regional revenues sources. The City Council has recently allowed for the use of inter-fund
transfers, use of existing fund balance position, as well as review of charges and fees that may be
applicable to the projects, and currently not tapped for future funding sources.
In addition, the City Council passed an ordinance effective January 1, 2017 assessing the private
gas and electric utilities a franchise tax based on three percent of energy sales. This franchise tax
generated approximately $775,000 in 2017, with revenue dedicated to the Capital Improvement
Fund.
City capital and equipment needs are currently identified and funded in a manner that will not
place an undue burden or single year expense fluctuation on the taxpayers. The planned capital
and equipment replacement program clearly identifies the needs for current projects as well as
future use. This is based on known and anticipated programs and mandates, such as environmental
program adjustments and possible community expansion and growth. The capital and equipment
needs of the city require constant appraisal for replacement cost, life span and the assurance that
the insurance coverage is providing for the most comprehensive, yet affordable, coverage.
A Self-Insurance Internal Service Fund was created in 2016 to aid in controlling general liability
insurance costs by monitoring the premiums against deductible expenses. The long-term goal of
the fund is to eventually self-insure for non-catastrophic type of losses. The city is also
considering the move to self-insurance for employee health insurance. This move would also aid
in controlling costs and stabilizing rates for both the city and its employees. The City Council
approved a $600,000 transfer from the General Fund to the Self-Insurance Fund as a first step in
establishing the necessary reserves to move in this direction. It is anticipated that for calendar year
2019, the City will be self-insured for health insurance.
Relevant Financial Policies
The city’s target General Fund balance is to maintain an unassigned level between 40% and 45%
of expenditures. This level is to provide working capital for cash flow, expected declines in
revenues, and for unforeseen expenditures such as natural disasters, or for unforeseen but urgent
requests. Replenishing the fund balance when it falls below the target level shall be
accomplished by inter-fund transfers, or adjusting of expenditures or revenues, over a period not
to exceed three years.
The city historically receives no local government aid (LGA). Annual legislative actions may
impact the financial position of those cities that are currently reliant on these and other
government derived revenue sources, which leaves them vulnerable to the economies of the State
as a whole. As of this writing, it was not anticipated that actions by the Minnesota Legislature
would negatively impact the city and its operations and planning. The standard budget process,
which provides for the presentation and approval of the property tax levies for the General fund
(including Economic Development), debt service and referendum debt, will be consistent with
prior year actions.
The accounting, auditing and financial reporting policies are designed to maintain a system of
financial monitoring, control and reporting for all operations and funds to provide effective
means of ensuring that overall city goals and objectives will be met and to assure the city’s
residents and investors that the city is well managed and fiscally sound.
The investment policy provides for conservative investing, preserving capital and maintaining
adequate liquidity for forecasted cash needs. A third-party investment manager handles a majority
of the portfolio and all investments are held in a trust account.
The debt policy ensures that the city's debt; 1) does not weaken the city's financial structure; and
2) provides limits on debt to avoid problems in servicing debt. This policy is critical for
maintaining the best possible credit rating.
Capital policies include having expenditures forecasted ahead for five to ten years and are updated
annually. Internal Service Funds for major equipment, major buildings and facilities, park asset
replacement and information technology costs stabilize the annual impact of those items to the
General fund.
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and City Council
City of Shakopee, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the
discretely presented component units, each major fund and the aggregate remaining fund information of the City of
Shakopee, Minnesota (the City), as of and for the year ended December 31, 2017, and the related notes to the financial
statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not auditthe
financial statements of the Shakopee Public Utilities Commission,thediscretely presented component unit. Those
financial statementswere audited by other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to the amounts included for the component unit, is based solely on the report of the other auditors. We
conducted our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller
General ofthe 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the
effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
(THIS PAGE LEFT BLANK INTENTIONALLY)
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, the business-type activities, the discretely presented component units, each major
fund and the aggregate remaining fund information of the City as of December 31, 2017, and the respective changes in
financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General fund
for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and
Analysis starting on page 14 and the Schedules of Employer’s Share of the Net Pension Liability, the Schedules of
Employer’s Contributions, Schedule of Changes in the Net Pension Liability and Related Ratiosand the Schedule of
Funding Progress for Other Post-Employment Benefit Plan starting onpage 98 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements,is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the
City’s basic financial statements. The introductory section, supplementary informationand statistical section, are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The supplementary information isthe responsibility of management and wasderived from and relate directly to the
underlying accounting and other records used to prepare the basic financial statements. Such information has been
subjected to the auditing procedures appliedin the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the
supplementary information isfairly stated in all material respects in relation tothe basic financial statements as a whole.
The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of
the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 23, 2018, 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 other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an
audit performed in accordance with Government Auditing Standardsin considering the City’s internal control over financial
reporting and compliance.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 23, 2018
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
As management of the City of Shakopee (the “City”), we offer readers of the City’s financial statements
this narrative overview and analysis of the financial activities of the City for the year ended
December 31, 2017. We encourage readers to consider the information presented here in conjunction
with additional information that we have furnished in our Letter of Transmittal, which can be found on
pages 3 to 9 of this report.
Financial Highlights
The assets of the City exceeded its liabilities at the close of the most recent year by $255.1
million (net position). Of this amount, $39.1 million (unrestricted net position) may be used to
meet the City’s ongoing obligations to citizens and creditors.
The City’s total net position increased $4,262,672.
As of the close of the current year, the City’s governmental funds reported combined ending
fund balances of $21,808,434, decreasing from the prior year. Approximately 39.8 percent of
this total amount, $8.7 million is available for spending at the City’s discretion (unassigned fund
balance).
At the end of the current year, unassigned fund balance for the General Fund was $11.9 million,
or 50.3 percent, of total General Fund 2017 expenditures and 44.8 percent of the 2018 budgeted
expenditures.
The City’s total bonded debt decreased $1.6 million.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City’s basic financial
statements. The City’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) Notes to the Financial Statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City’s finances, in a manner similar to private-sector business.
The Statement of Net Position presents information on all of the City’s assets and deferred outflows of
resources and liabilities and deferred inflows of resources, with the difference between them reported as
net position. Over time, increases or decreases in net position may serve as a useful indicator of whether
the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City’s net position changed during
the most recent year. All changes in net position are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused employee leaves).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that
are intended to recover all or a significant portion of their costs through user fees and charges (business-
type activities). The governmental activities of the City include general government, public safety,
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
highways and streets, economic development and recreation. The business-type activities of the City
include sewer, storm drainage utilities and refuse.
The government-wide financial statements include not only the City itself (known as the primary
government), but also two legally separate entities for which the City is financially accountable. The
component units are Shakopee Public Utilities Commission (SPUC) and the Economic Development
Authority (EDA). SPUC’s financial information is reported separately from the financial information
presented for the primary government as a discretely presented component unit. The EDA, which
functions like a department of the City although it is a legally separate entity, is presented within the
City’s government-wide financial statements. The City Council is the EDA Board.
The government-wide financial statements can be found on pages 28 and 29 of this report.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of
the funds of the City can be divided into three categories: governmental funds, proprietary funds and
fiduciary funds.
Government Funds
Government funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at the end of the year. Such
information may be useful in evaluating a City’s near-term financing’s requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the City’s near-term financing
decisions. The governmental funds Balance Sheet and the governmental funds Statement of Revenues,
Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City maintains 24 individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures
and Changes in Fund Balances for the General Fund, Economic Development Authority Special
Revenue Fund, the Capital Improvements, Community Center and Ice Arena, City Hall and TIF District
No. 17 Capital Project Funds. Those are considered to be major funds. Data from the other
governmental funds are combined into a single, aggregated presentation. Individual fund data for each
of these non-major governmental funds is provided in the form of combining statements elsewhere in
this report.
The City adopts an annual appropriated budget for its General Fund.A budgetary comparison statement
has been prepared for the fund to demonstrate compliance with the budget.
The basic governmental funds financial statements can be found on pages 30 to 37 of this report.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Proprietary Funds
The City maintains three different types of proprietary funds. Enterprise funds are used to report the
same functions presented as business-type activities in the government-wide financial statements. The
City uses enterprise funds to account for its sewer, storm drainage and refuse operations. Internal
service funds are an accounting device used to accumulate and allocate costs internally among the City’s
various functions. The City uses internal service funds to account for its fleet of vehicles and mobile
equipment, its major buildings, the replacement of park assets, information technology items, insurance
funding and for employee compensated absences. All of these services predominantly benefit
governmental rather than business-type functions.
Proprietary funds provide the same type of information as the government-wide financial statements.
The proprietary fund financial statements provide separate information for the sewer, storm drainage and
refuse operations, all of which are considered to be major funds of the City. Conversely, all internal
service funds are combined into a single, aggregated presentation in the proprietary fund financial
statements. Individual fund data for the internal service funds is provided in the form of combining
statements elsewhere in this report.
The basic proprietary fund financial statements can be found on pages 38 to 41 of this report.
Component Units
Component units are legally separate organizations for which the City is financially accountable. The
government-wide financial statements present information for the component units in a single column
on the Statement of Net Position. Also, some information on the Statement of Changes in Net Position
is aggregated for component units. The component units’ Statements of Net Position and Statement of
Changes in Net Position provide detail for each major component unit.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government-wide financial statement because the resources of
those funds are not available to support the City’s own programs.
The basic fiduciary fund financial statements can be found on page 43 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements. The Notes to the Financial Statements can be found
on pages 47 to 96 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the City’s progress in funding its obligation to provide
pension benefits to its employees.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
The combining statements referred to earlier in connection with non-major governmental funds, internal
service funds and fiduciary funds are presented immediately following the required supplementary
information on pensions. Combining and individual fund statements and schedules can be found on
pages 112 to 129 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a City’s financial position.
For the City, assets exceeded liabilities by $255.1 million at the close of the most recent year.
By far the largest portion of the City’s net position (82.7 percent) reflects its investment in capital assets
(e.g., land, buildings, infrastructure and equipment); less any related debt used to acquire those assets
that is still outstanding.The City used these capital assets to provide services to citizens; consequently,
these assets are not available for future spending. Although the City’s investment in its capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
Net Position
(Expressed in Thousands)
Governmental ActivitiesBusiness-Type ActivitiesTotal
201720162017201620172016
Current and Other Assets$41,399$ 56,638$ 23,732$ 23,992$65,131$ 80,630
Capital Assets171,689 155,75475,547 70,099247,236 225,853
Total Assets$213,088$ 212,392$ 99,279$ 94,091$ 312,367$ 306,483
Deferred Outflows of Resources$ 11,800$ 17,410$ 181$ 199$11,981$ 17,609
Long-Term Liabilities
Outstanding$ 49,943$ 65,120$ 715$ 589$50,658$ 65,709
Other Liabilities5,959 9,795 357 268 6,316 10,063
Total Liabilities$55,902$ 74,915$1,072$ 857$56,974$ 75,772
Deferred Inflows of Resources12,141$$ 2,970$ 110$ 12,25152$$ 3,022
NET POSITION:
Net Investment in Capital Assets$ 135,442$ 128,560$ 75,547$ 70,099$ 210,989$ 198,659
Restricted6,3436,637 - - 6,343 6,637
Unrestricted15,060 16,720 22,731 23,282 37,791 40,002
Total Net Position$156,845$ 151,917$ 98,278$ 93,381$ 255,123$ 245,298
An additional portion of the City’s net position (2.5 percent) represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net position
($37.7 million) may be used to meet the City’s ongoing obligations to citizens and creditors.
At the end of the current year, the City was able to report positive balances in all three categories of net
position, both for the government as a whole, as well as for its separate governmental and business-type
activities. The same situation held true for the prior year.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
During the current year, the City’s net position increased $9.8 million. Governmental activities increased
as a result of increased tax revenue, increases in operating revenue related to permits and community
center and ice arena operations and contributed assets from outside developers during 2017. The
business-type activities increased as a result of contributed assets from outside developers during the
year. Additionally, both governmental and business-type activities recognized contributed assets from
prior years as a prior period adjustment in 2017.
Changes in Net Position
(Expressed in Thousands)
Governmental ActivitiesBusiness-Type ActivitiesTotal
201720162017201620172016
REVENUES:
Program Revenues:
Charges for Services$ 9,255$ 7,918$ 4,784$ 5,030$ 14,039$ 12,948
Operating Grants and
Contributions 2,068 2,778 1 2,069- 2,778
Capital Grants and
Contributions 3,847 2,187 2,702 183 6,549 2,370
General Revenues:
Taxes 19,229 18,016 - 19,229- 18,016
Franchise Taxes 1,252 448 - 1,252- 448
Tax Increment 1,015 465 - 1,015- 465
Other 393 546 246 291 639 837
Total Revenues 37,059 32,358 7,733 5,504 44,792 37,862
EXPENSES:
General Government 4,625 4,206 - 4,625- 4,206
Public Safety 11,981 13,281 - 11,981- 13,281
Public Works 9,696 8,594 - 9,696- 8,594
Culture and Recreation 5,359 4,653 - 5,359- 4,653
Economic Development 1,631 2,105 - 1,631- 2,105
Interest on Long-Term Debt1,113 1,191 - 1,113- 1,191
Sewer - 4,226- 3,843 4,226 3,843
Storm - 1,774- 1,849 1,774 1,849
Refuse - - 125 127 125 127
Total Expenses 34,405 34,030 6,125 5,819 40,530 39,849
Increase (Decrease in Net
Position before Transfers2,654 (1,672) 1,608 (315) 4,262 (1,987)
Transfers 27 1,272 (27) (1,272) - -
Change in Net Position2,681 (400) 1,581 (1,587) 4,262 (1,987)
NET POSTION:
January 1 151,917 152,317 93,381 94,968 245,298 247,285
Prior Period Adjustment 2,247 3,316- 5,563- -
January 1 As Restated 154,164 152,317 96,697 94,968 250,861 247,285
December 31$156,845$ 151,917$ 98,278$ 93,381$ 255,123$ 245,298
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Governmental Activities
Governmental activities increased the City’s net position by $4,927,805. The major increase was related
to developer contributed capital in 2017 which totaled approximately $2.2 million. Additionally,
increased services at the community center and ice arena with the completion of construction during
2017 increased memberships, ice rentals and admission revenues. A prior period adjustment was
recorded to recognize capital contributions from developer installed infrastructure for the years 2010
through 2016 which also increase the City’s net position at the end of 2017.
Expenses and Program Revenues – Governmental Activities
$14,000,000
$12,000,000
$10,000,000
$8,000,000
Program Revenues
Expenses
$6,000,000
$4,000,000
$2,000,000
$-
Revenues by Source – Governmental Activities
Charges for
Other Revenues
Services
1%
25%
Operating Grants
and
Contributions
6%
Capital Grants
and
Other Taxes
Contributions
3%
10%
Franchise Taxes
3%
Taxes
52%
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Business-Type Activities
Business-type activities increased the City’s net position by $4,897,424. Revenues and expenses both
increased between the current and prior year. The major increase was related to developer contributed
capital in 2017 which totaled approximately $1.9 million. A prior period adjustment of approximately
$3.3 million was recorded to recognize capital contributions from developer installed infrastructure for
the years 2010 through 2016 which also increase the City’s net position at the end of 2017. The sewer
and storm water activities will continue to experience ongoing expenses as capital investment is required
to maintain and reconstruct the City’s utilities. In addition, new development will also require
investment of the City.
Expenses and Program Revenues – Business-Type Activities
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
Program
$2,500,000
Revenues
Expenses
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
SewerStormRefuse
Revenues by Source – Business-Type Activities
Charges for
Services
62%
Capital Grants
and
Contributions
35%
Investment
Earnings
3%
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and
balances of spendable resources. Such information is useful in assessing the City’s financing
requirements. In particular, assigned and unassigned fund balance may serve as a useful measure of a
City’s net resources available for spending at the end of the year.
As of the end of the current year, the City’s governmental funds reported combined ending fund
balances of $21,808,434, a decrease of $8,857,910 in comparison with the prior year. Approximately
39.8 percent, $8,677,956, of the total amount constitutes unassigned fund balance, which is available for
spending at the City’s discretion. Approximately 33.0 percent, $7,197,290, of the total amount
constitutes assigned fund balance, which is assigned for designated purposes. The remainder of fund
balance, $5,933,188, is not available for new spending because it has already been restricted or is
non-spendable.
The General Fund is the chief operating fund of the City. At the end of the current year, fund balance of
the General Fund was $11,977,994. As a measure of the General Fund’s liquidity, it may be useful to
compare fund balance (unassigned) to total fund expenditures. Unassigned fund balance represents 50.3
percent of total General Fund expenditures or 44.8 percent of the 2018 budgeted expenditures.
Fund balance of the City’s General Fund increased by $1,216,628 during the current year. Key factors
in this increase consist of the following:
Before transfers, the fund balance of the General Fund showed a $2,766,628 increase. After the
net transfer out of $1,550,000, fund balance increased $1,216,628. Transfers provided the
necessary funding for several significant capital infrastructure programs and projects, economic
development operations as well as funding the self-insurance fund.
Overall revenues increased approximately $429,000 as a result of increased charges for services
related to increase operations at the community center and ice arena. In addition, the City
experienced increased contracted police services and engineering services related to private
development. Licenses and permit revenue also increase with the increase in private
development in 2017. Property taxes decreased in the general fund due to a designated levy for
capital improvements in 2017 and an overall decrease in the general levy in 2017 as the debt levy
increased related to specific debt issuances.
Overall expenditures increased approximately $1.7 million due to cost of living increases and
new positions added in 2017 as well as increase operational cost for the community center and
ice arena with the completion of construction.
Fund balance of the Economic Development Authority fund decreased $1,147,329. During 2017 the
City completed the majority of the downtown redevelopment project, only a small amount remains to be
completed in 2018.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Fund balance of the Capital Improvements fund increased $1,848,547. The increase was primarily
th
related to a transfer from TIF District No 17. The 4 avenue reconstruction project that took place last
year was to be funded as part of a tax increment financing project. With the first year of increment on
the TIF district in 2017 a transfer was made for approximately $1.8 million to reimburse the fund for the
prior year costs. Additionally, in 2017 the City started to receive utility franchise payment and the
designated tax levy dollars which were used for the following projects in 2017:
Street Reconstruction Projects
Bituminous Overlay
Street Lighting
Lewis Street Parking Lot
Vierling Drive Extension
Fund balance of the Community Center and Ice Arena fund decreased $6,359,240. This project began in
2015 with design work only. In 2016 bond proceeds of approximately $28 million were received to
fund this project. Much of the construction was completed in 2016, however in 2017 the remodel of the
community center and the creation of the new indoor pool was completed.
Fund balance of the City Hall fund decreased $2,965,333. This project began in 2016 and is being
funded internally. During 2017 approximately $6 million in construction was completed and the City
Hall building was opened in August 2017. Transfers from the Building Internal Service fund were
completed in 2017 as part of the designated funding related to this project.
Fund balance of TIF District No. 17 decreased $2,164,600. This fund was created in 2017. This TIF
district was created to fund the Highway 101 and Shenandoah Drive development project. The majority
of the project was completed in 2016 and funds were transferred to the Capital Improvement, Sewer and
Storm Drainage funds. This fund will be replenished with future tax increment.
Fund balance of the Non-major Governmental Funds increased $713,417. Major changes are as follows:
Revolving Loan special revenue fund decreased $125,783 due to a transfer to the Economic
Development Authority Fund for the improvement loan program.
Debt service funds decreased $104,131 due to regular bond payments offset by tax levies and
assessment revenue related to the bonds.
Park Reserve increased $637,470. During 2017 the city completed the Tahpah West baseball
fields however future project are on hold in this fund as funding levels increase.
Tree Replacement capital improvement fund increased $117,860. The city received fees related
to the blue lake wastewater treatment facility.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Proprietary funds
The City’s proprietary funds provide the same type of information found in the government-wide
financial statements, but in more detail.
Unrestricted net position of the enterprise funds (expressed in thousands):
Storm
SewerDrainageRefuse
Beginning of Year10,324$ 13,548$ (913)$
Change During Year(996) 251 122
End of Year9,328$ 13,799$ (791)$
The City has undertaken several new development projects and continues to review fees charged to make
sure costs are covering operations of the funds. A portion of these projects are funded through special
assessments, but a significant portion of this is funded through the anticipated future revenues collected
for services. The Refuse fund was created during 2014 with the City’s purchase of garbage carts. The
negative net position is anticipated to be reduced each year as service charges continue to be collected
from customers.
GENERAL FUND BUDGETARY HIGHLIGHTS
Budget amendments of $399,950 between original and final amended budget were approved during
2017. Following are the main components of the amendments:
Revenues were increased $631,100 as a result of increased licenses and permits, increased
contracted services in public safety and increased engineering services related to private
development.
Expenditures were increased $231,150. Wages and benefits were increased to account for
overtime and compensated absences expenses related to employee severance payments.
Actual expenditures of $23,673,607 were $889,843 under budget. The variances are noted below:
General government was under budget as a result of not spending contingency funds.
Public safety was under budget due to longer than expected vacancies in positions. Additionally,
the capital budget related to body cameras was not spent in 2017 as they City is still working
through the policies needed to implement this system.
Public works was under budget due to less snowplowing during 2017 resulting in decreases in
overtime, material (sand and salt) and fuel. Vacancies in filling positions and reallocations of
time as well as a sales tax refund related to gas and electric also attributed to the variance.
Park and recreation came in under budget due to unfilled positions mainly for the new indoor
pool. Park and recreation capital outlay came in over budget as a result of the capital lease
issuance related to the equipment purchase, see variance in capital outlay issuance.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Actual revenues of $26,356,474 were $1,025,924 over budget. The variances are noted below:
Property taxes came in under budget as a result of tax petitions.
Licenses and permits came in over budget on account of an increase in development and building
and conservative budgeting.
Intergovernmental revenue came in under budget due to a decrease in PERA aid related to
pensions.
Charges for services come in over budget due to increased community center admissions and
memberships and ice rentals with the completion of the construction on those facilities.
Additionally, contracted police services increased and engineering and grading fees were over
budget because of the increased development.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City’s investment in capital assets for its governmental and business type activities as of
December 31, 2017, amounts to $247,235,835 (net of accumulated depreciation). This investment in
capital assets includes land, buildings and systems, improvement, machinery and equipment, park
facilities, roads, highways and bridges.
CAPITAL ASSETS
(Net of Depreciation)
Expressed in Thousands
Governmental ActivitiesBusiness-Type ActivitiesTotal
201720162017201620172016
Land$ 21,848$21,005$ 3,797$ 3,797$ 25,645$ 2 4,802
ROW 254 254 508 508 762 7 62
Construction in Progress 2,956 29,933 715 58 3,671 2 9,991
Line Rights - - 767 792 767 7 92
Infrastructure 71,995 69,308 68,061 63,014 140,056 132,322
Buildings 60,394 24,665 - - 60,394 2 4,665
Machinery and Equipment14,242 10,589 1,699 1,930 15,941 1 2,519
Total$ 171,689$ 155,754$ 70,09975,547$ $ 247,236$ 225,853
Major capital assets events during the current year included the following:
Completion of the City hall, Community Center and Ice Arena and indoor pool at the
Community Center.
Taphah west baseball fields, playgrounds at Hiawatha and Emerald Lane and Muenchow Park
trail.
Reconstruction of streets, sanitary sewer, storm sewer and water mains on Shakopee Avenue,
Dakota Street, Vierling Drive and Whispering Oaks.
Downtown redevelopement of the plaza and gateway and Chief Sakpe statue.
Developer contributed assets of streets, sanitary sewer and storm sewer at Ridge Creek and
Windermere.
Vehicle replacements in police, fire, streets and parks.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
Additional information on the City’s capital assets can be found in Note 6 on pages 66 to 68 of this
report.
In 2017, several projects that were “in progress” were continued and completed, as these projects often
involved the coordination with County, State and Federal entities. The status of these projects is highly
dependent on weather and the funding and staffing of cooperating entities, and will often impact the
ability of the City to complete these projects in the anticipated year.
Long-Term Debt
At the end of the current year, the City had total bonded debt outstanding of $34,345,000. Of this
amount, $33,260,000 comprises debt backed by the full faith and credit of the government and
$1,085,000 is special assessment debt for which the government is liable in the event of default by the
property owners subject to the assessment.
Outstanding Debt
G.O. and Revenue Bonds
Expressed in Thousands
Governmental Activities
20172016
G.O. Bonds33,260$ $ 33,935
Special Assessment Debt with
Governmental Commitment1,085 2,095
Total$ 34,345$ 36,030
The City’s total bonded debt decreased by $1,685,000 during the current year as a result of bond
payments.
Minnesota Statutes limit the amount of general obligation (G.O.) debt a government entity may issue to
a net figure of 3 percent of the taxable market value. The current legal debt margin for the City is $88
million, which is significantly in excess of the City’s outstanding G.O. debt.
Additional information on the City’s long-term debt can be found in Note 8 on pages 70 to 72 of this
report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City is currently experiencing the construction and development of several new industrial and
residential sites. The City’s past years commercial and industrial growth has spurred the need for new
housing. The City is seeing all types of housing, from single family to multi-family and senior housing
filling this need. The diversified commercial and industrial base provides a strong base of jobs and tax
base. In turn the backfilling of housing will help support the employment needs of these businesses.
CITY OF SHAKOPEE
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2017
During the current year, the unassigned fund balance in the General Fund was $11,918,971. This can be
similarly compared to the unassigned fund balance of 2017 of $10,739,178. The City continues to
maintain a strong financial position as the economic climate and the economic diversification of the
region and the state continue to improve.
The general tax levy for 2018 is increased to $19,260,548, in comparison to the prior year amount of
$18,926,341. The levy was increased to provide needed funding for city positions, infrastructure needs
through the capital improvement fund and debt service levies. Historically only 30 percent of some of
the project costs are funded through special assessments which will require a firm commitment of the
Council to provide needed resources for maintenance, improvements and additions to the existing
infrastructure.
City staff continues to refine and coordinate multi-department development related activities. As staff
continues to refine these practices the achieved outcome will be to provide a higher level of positive
customer and development satisfaction. This past year the City moved toward 100 percent electronic
submissions for building permits. This has resulted in shorter turnaround time for applicants with
reduced costs. In addition to better coordination within city departments, this improvement has also
allowed for better communication and coordination with outside agencies.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general view of the City’s finances for all those with an
interest in the City’s finances. Questions concerning any of the information provided in this report or
requests for additional information should be addressed to the Finance Director, 485 Gorman St.,
Shakopee, Minnesota, 55379.
BASIC FINANCIAL STATEMENTS
CITY OF SHAKOPEE
STATEMENT OF NET POSITION
December 31, 2017
GovernmentalBusiness-Type
ActivitiesActivitiesTotalComponent Unit
ASSETS AND DEFERRED OUTFLOWS OF RESOURCES
Assets
Cash and Investments (Including Cash Equivalents)$ 34,167,917$ 21,104,599$ 55,272,516$ 40,894,897
Restricted Cash and Investments - - 14,977,218-
Property Tax Receivable 95,933 - 95,933 -
Accounts Receivable (Net of Allowance for Uncollectible Accounts) 558,634 45,679 604,313 4,358,801
Interest Receivable 159,557 96,724 256,281 61,559
Due From Other Governments 892,313 584,180 1,476,493 76,191
Special Assessments Receivable 4,363,204 244,200 4,607,404 -
Inventories 34,421 6,073 40,494 1,342,784
Prepaid Expenses 218,314 - 218,314 59,603
1,179,781 - 1,179,781 -
Land Held for Resale
Advances from Other Funds (Internal Balances) (1,650,000) 1,650,000 - -
Net Pension Asset 1,379,164 - 1,379,164 -
Capital Assets, Net of Accumulated Depreciation (Where Applicable):
Land and Land Improvements 21,847,814 3,796,803 25,644,617 5,097,532
Right of Way 253,904 507,746 761,650 -
Construction in Progress 2,956,383 715,159 3,671,542 2,808,158
Line Rights - 767,275 767,275 -
Infrastructure 71,994,758 68,060,969 140,055,727 -
Plant in Service - --82,349,404
Buildings 60,393,978 60,393,978- -
Machinery and Equipment 14,241,554 1,699,492 15,941,046 -
Total Assets 213,087,629 99,278,899 312,366,528 152,026,147
Deferred Outflows of Resources
Deferral on Refunding - - - 208,715
Deferred Outflows of Resources Related to Pensions 11,799,895 181,065 11,980,960 1,126,457
Total Deferred Outflows of Resources 11,799,895 181,065 11,980,960 1,335,172
$ 224,887,524$ 99,459,964$ 324,347,488$ 153,361,319
Total Assets and Deferred Outflows of Resources
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION
Liabilities
Accounts and Contracts Payable$ 1,522,766$ 246,434$ 1,769,200$ 4,770,756
Other Current Liabilities - - - 440,098
Due to Other Governments 318,314 80,740 399,054 500,700
Salaries and Benefits Payable 333,475 - 333,475 -
Deposits Payable
- - - 2,506,821
Interest Payable 496,841 - 496,841 136,820
Unearned Revenue 258,561 - 258,561 1,048
Customer Advances - - - 504,231
Bond Principal Payable, Net:
Payable Within One Year 1,995,000 - 1,995,000 7,590,000
Payable After One Year 34,374,168 34,374,168- (7,978)
Capital Lease Payable
Payable Within One Year18,788-18,788 -
Payable After One Year 46,542 - 46,542 -
Compensated Absences Payable:
Payable Within One Year 1,015,109 29,335 1,044,444 -
Payable After One Year 1,240,689 35,854 1,276,543 -
Net Other Post Employment Benefits (OPEB) Obligation 1,829,966 87,406 1,917,372 -
Net Pension Liability
12,452,080 591,908 13,043,988 4,111,253
Total Liabilities 55,902,299 1,071,677 56,973,976 20,553,749
Deferred Inflows of Resources
Deferred Inflows of Resources Related to Pensions 12,140,742 110,092 12,250,834 728,472
$ 68,043,041$ 1,181,769$ 69,224,810$ 21,282,221
Total Liabilities and Deferred Inflows of Resources
Net Position
Net Investment in Capital Assets
135,442,110 75,547,444 210,989,554 82,673,072
Restricted for:
Economic Development
356,588 - 356,588 -
SCDP Grant 10,805 - 10,805 -
Revolving Loan
138,004 - 138,004 -
Forfeiture 221,048 - 221,048 -
Debt Service
4,265,148 - 4,265,148 -
Component Units - - 12,233,577-
Capital Improvements
1,351,050 - 1,351,050 -
Unrestricted15,059,730 37,172,449
22,730,75137,790,481
Total Net Position 156,844,483 98,278,195 255,122,678 132,079,098
Total Liabilities, Deferred Inflows of Resources and Net Position$ 224,887,524$ 99,459,964$ 324,347,488$ 153,361,319
The Notes to the Financial Statements are an integral part of this statement.
---------
------
6,694
296,340303,034
2,192,796
Units
10,633,357
119,252,945121,445,741132,079,098
Component
$
$
----
6,1067,793
99,027
631,256
1,256,8855,562,557
Total1,362,0184,262,672
22,134,942
(17,872,270)
245,297,449250,860,006255,122,678
$ $
5,664,152 4,666,171 10,330,323
-------
------
6,1066,217
99,027
(26,990)
240,345219,572
Net (Expense) Revenues
1,362,0181,581,5903,315,834
93,380,77196,696,60598,278,195
and Changes in Net Position
Activities
Business-Type$ (1,979,651) (8,236,128) (4,768,017) (1,660,025) (1,477,896)
(1,112,571) (19,234,288)
19,229,300 1,251,819 1,014,774 $
-------
1,576
26,990
390,911
1,251,8191,014,7742,681,0822,246,723
(4,768,017)(1,660,025)(1,477,896)
21,915,370
19,229,300
(19,234,288)(19,234,288)
Activities
151,916,678154,163,401156,844,483
Governmental
$ 1,256,885 1,362,018
$
----
76,100
283,354
and
3,487,5473,847,0011,757,1592,701,8926,548,893
Contributions
$ (1,979,651) (8,236,128) (1,112,571) $ $
$
Capital Grants
---
---
890890
50,000
CITY OF SHAKOPEE
755,518559,864601,929
2,068,419
2,069,309
Operating
Grants and
STATEMENT OF ACTIVITIES
Contributions
$ 944,733 $ $
1,158,713 4,468,735$ 5,627,448
For the Year Ended December 31, 2017
Program Revenues
-
26,520
880,361
131,753
2,989,7702,813,9519,254,7283,380,3211,272,5064,784,5805,325,637
Services
47,412,129
14,039,30852,737,766
Charges for
$ 101,108 $
$ $
Total General Revenues, Transfers and Special Items
125,647
9,695,7895,359,2591,630,5161,112,5714,226,0271,773,6705,128,201
11,981,41642,906,69048,034,891
TaxesFranchise TaxesTax IncrementsUnrestricted Investment EarningsGain on Sale of Asset
Expenses
$ 2,544,126 $ $ $
Prior Period AdjustmentNet Position - Beginning, As RestatedNet Position - Ending
General RevenuesTransfersChange in Net PositionNet Position - Beginning
Functions/Programs
Total Governmental Activities34,404,436
Total Business-Type Activities6,125,344Total Primary Government40,529,780Total Component Unit
General Government4,624,885Public SafetyPublic WorksCulture and RecreationEconomic DevelopmentInterest on Long-Term DebtSewerStorm DrainageRefuseElectric
Water
Governmental ActivitiesBusiness-Type ActivitiesComponent Unit - SPUC
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
BALANCE SHEET - GOVERNMENTAL FUNDS
December 31, 2017
Special RevenueCapital Projects
EconomicCommunity
DevelopmentCapitalCenter & Ice
General FundAuthorityImprovementsArenaCity Hall
ASSETS
Cash and Investments 12,224,603$ 736,568$ 4,398,752$ 200,463$ -$
Delinquent Taxes Receivable95,849 12 - - -
Special Assessments Receivable:
Delinquent4,550 - 29,736 - -
Deferred20,519 - 3,154,935 - -
Accounts Receivable360,139 - 167,135 - 14,075
Interest Receivable56,712 6,801 22,713 253 -
Due from Other Funds- - 2,168,470 - -
Due From Other Governments393,111 - 497,496 - 1,529
Inventories34,421 - - - -
Prepaid Items24,602 - - - -
Land Held for Resale- 1,179,781 - - -
Total Assets13,214,506$ 1,923,162$ 10,439,237$ 200,716$ 15,604$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable343,049$ 190,879$ 428,884$ 12,499$ 19,425$
Contracts Payable712 84,289 94,376 - 94,464
Due to Other Funds--- 973,435-
Due to Other Governments179,797-138,484--
Salaries and Benefits Payable333,475----
Advance from Other Funds 1,291,394----
Unearned Revenue258,561----
Total Liabilities1,115,5941,566,562661,74412,4991,087,324
Deferred Inflows of Resources
Unavailable Revenue - Property Taxes 95,84912---
Unavailable Revenue - Special Assessments25,069 3,184,671---
Total Deferred Inflows of Resources120,918123,184,671--
Fund Balances
Nonspendable59,023----
Restricted-356,588 188,217--
Assigned- 6,592,822---
Unassigned11,918,971-- (1,071,720)-
Total Fund Balances11,977,994356,5886,592,822188,217(1,071,720)
Total Liabilities, Deferred Inflows
of Resources and Fund Balances$13,214,506$1,923,162$10,439,237$200,716$15,604
Capital Projects
OtherTotal
TIF District GovernmentalGovernmental
No. 17FundsFunds
$ 5,997,703-$ 23,558,089$
72- 95,933
-- 34,286
1,153,464- 4,328,918
9,122- 550,471
24,574- 111,053
-- 2,168,470
177- 892,313
-- 34,421
-- 24,602
-- 1,179,781
$ 7,185,112-$ 32,978,337$
$ 76,492-$ 1,071,228$
22,048- 295,889
2,164,6003,8703,141,905
-33318,314
--333,475
- 1,291,394-
--258,561
2,164,600102,4436,710,766
-7295,933
1,153,464-4,363,204
1,153,536-4,459,137
-
-59,023
-5,329,3605,874,165
604,4687,197,290
-
(2,164,600)(4,695)8,677,956
(2,164,600)5,929,13321,808,434
$ 7,185,112-$$32,978,337
(THIS PAGE LEFT BLANK INTENTIONALLY)
CITY OF SHAKOPEE
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET POSITION - GOVERNMENTAL FUNDS
December 31, 2017
Total Fund Balances - Governmental Funds21,808,434$
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported as assets in governmental funds.
Cost of Capital Assets
223,950,733
Less Accumulated Depreciation(85,253,280)
Long-term assets from pensions reported in governmental activities are not financial resources
and therefore are not reported as assets in the funds.
1,379,164
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(34,345,000)
(2,024,168)
Unamortized Bond Premium
Loan Payable-
(65,330)
Capital Lease Payable
Net OPEB Obligation(1,829,966)
(12,452,080)
Net Pension Liability
Delinquent property taxes and assessments receivable will be collected this year, but are
not available soon enough to pay for the current period's expenditures and, therefore,
are reported as unavailable revenue in the funds.
Property Taxes 95,933
34,286
Special Assessments
Deferred special assessments receivable are not available to pay for current expenditures and,
therefore, are reported as unavailable revenue in the funds.
4,328,918
Deferred Special Assessments
(496,841)
Governmental funds do not report a liability for accrued interest due and payable.
Deferred Outflows of Resources and Deferred Inflows of Resources are created as a
result of various differences related to pensions that are not recognized in the governmental
funds.
Deferred Inflows of Resources Related to Pensions(12,140,742)
Deferred Outflows of Resources Related to Pensions11,799,895
Internal service funds are used by management to charge the costs of
equipment, buildings, park assets and employee benefits to individual funds.
A portion of the assets and liabilities of those funds are included in
42,054,527
governmental activities in the Statement of Net Position.
Total Net Position - Governmental Activities156,844,483$
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Capital Projects
Special Revenue
EconomicCommunity
DevelopmentCapitalCenter & Ice
General FundAuthorityImprovementsArenaCity Hall
REVENUES
Taxes16,771,524$ 2$ 1,158,819$ -$ -$
Tax Increment- - - - -
Special Assessments3,875 - 647,838 - -
Licenses and Permits2,391,942 - - - -
Intergovernmental1,369,027 - 1,072,240 - -
Charges for Services5,653,774 20,520 - - -
Fines and Forfeitures2,719 - - - -
Miscellaneous163,613 66,540 65,969 294,976 5,304
Total Revenues26,356,474 87,062 2,944,866 294,976 5,304
EXPENDITURES
Current
General Government4,415,257 - - - -
Public Safety11,004,434 - - - -
Public Works2,973,840 - - - -
Culture and Recreation5,170,130 - - - -
Economic Development- 489,019 - - -
Debt Service
Principal-----
Interest and Other Charges16,605----
Capital Outlay93,3411,277,6263,586,7086,654,2166,191,637
Total Expenditures23,673,6071,766,6453,586,7086,654,2166,191,637
Excess of Revenues Over
(Under) Expenditures2,682,867(1,679,583)(641,842)(6,359,240)(6,186,333)
OTHER FINANCING SOURCES
(USES)
Proceeds from Sale of Capital Asset4,661----
Capital Lease Issued79,100----
Transfers In250,000961,7632,490,389-3,221,000
Transfers Out(1,800,000)(429,509)---
Total Other Financing
Sources (Uses)(1,466,239)532,2542,490,389 3,221,000-
Net Change in Fund
Balances1,216,628(1,147,329)1,848,547(6,359,240)(2,965,333)
FUND BALANCES
Beginning of Year10,761,3661,503,9174,744,2756,547,4571,893,613
End of Year$ 356,58811,977,994$$6,592,822$188,217$(1,071,720)
The Notes to the Financial Statements are an integral part of this statement.
Capital Projects
Other Total
TIF District No. GovernmentalGovernmental
17FundsFunds
$ 2,531,472- 20,461,817$
637,947376,827 1,014,774
282,060- 933,773
891,553- 3,283,495
6,528- 2,447,795
7,418- 5,681,712
239,155- 241,874
408,263- 1,004,665
5,004,396376,827 35,069,905
-- 4,415,257
34,786- 11,039,220
-- 2,973,840
58,799- 5,228,929
899,703222,351 1,611,073
1,685,000- 1,685,000
1,243,382- 1,259,987
582,732- 18,386,260
4,504,402222,351 46,599,566
499,994154,476 (11,529,661)
100,000- 104,661
-- 79,100
359,777- 7,282,929
(246,354)(2,319,076) (4,794,939)
(2,319,076)213,4232,671,751
(2,164,600)713,417(8,857,910)
5,215,716-30,666,344
$(2,164,600)$5,929,133$21,808,434
CITY OF SHAKOPEE
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Net Change in Fund Balances - Governmental Funds$(8,857,910)
Amounts reported for governmental activities in the Statement of Activities are
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 17,045,642
Depreciation Expense (5,003,769)
Loss on Disposal of Fixed Assets (544,374)
Contributed Assets 2,290,287
Principal payments on long-term debt are recognized as expenditures in the
governmental funds but as an increase in the net position in the Statement of Activities. 1,685,000
Payments on captial leases are recognized as expenditures in the governmental funds
but as an increase in the net position in the Statement of Activities. 13,770
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. 22,224
Governmental funds report the effects of bond premiums when debt is first issued, whereas these amounts
are deferred and amortized in the Statement of Activities 111,422
Proceeds from long-term debt are recognized as an other financing source in the
Capital lease issuances are recognized as an other financing source in the governmental funds but as a
decrease in net assets in the Statement of Activities. (79,100)
Certain revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Special Assessments Delinquent 29,696
Special Assessments Deferred (493,348)
OPEB obligations are recognized when paid in the government funds but recognized
when incurred in the Statement of Activities (238,600)
Delinquent receivables will be collected this year, but are not available soon enough
to pay for the current period's expenditures and, therefore, are not revenues in the funds. 19,302
Governmental funds recognized pension contributions as expenditures at the time of payment
whereas the statement of activities factors in items related to pensions on a full accrual
perspective.
Pension Expense (1,091,356)
Internal service funds are used by management to charge the costs of certain
activities such as buildings, equipment, park assets and employee benefits to
individual funds. (See Note 2.B.) (2,227,804)
Change in Net Position - Governmental Activities 2,681,082$
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2017
BudgetVariance with
ActualFinal Budget -
FinalAmounts
OriginalOver (Under)
REVENUES
Taxes$ 16,982,20016,965,400$$16,771,524$ (210,676)
Special Assessments 12,000 6,500 3,875 (2,625)
Licenses and Permits 1,286,400 1,532,700 2,391,942 859,242
Intergovernmental 1,287,100 1,402,300 1,369,027 (33,273)
Charges for Services 4,927,600 5,229,150 5,653,774 424,624
Fines and Forfeitures 1,500 1,500 2,719 1,219
Miscellaneous Revenues:
Investment Income 135,000 150,000 118,878 (31,122)
Contributions and Donations 4,500 6,700 17,600 10,900
Rents 9,800 9,800 9,838 38
Other 73,900 9,700 17,297 7,597
Total Revenues 24,703,200 25,330,550 26,356,474 1,025,924
EXPENDITURES
Current
General Government 4,620,000 4,591,610 4,415,257 (176,353)
Public Safety 10,936,600 11,105,940 11,004,434 (101,506)
Public Works 3,372,300 3,333,470 2,973,840 (359,630)
Culture and Recreation 5,324,300 5,336,730 5,170,130 (166,600)
Debt Service: -
Interest and Other Charges 16,600- 16,605 5
Capital Outlay
Public Safety 100,000- (100,000)-
Culture and Recreation- 93,341- 93,341
Total Expenditures 24,253,200 24,484,350 23,673,607 (810,743)
Excess of Revenues Over
(Under) Expenditures 450,000 846,200 2,682,867 1,836,667
OTHER FINANCING SOURCES (USES)
Proceeds from Sale of Capital Asset - 3,750 4,661 911
Captial Lease Issued - 79,100- 79,100
Transfers In 250,000 250,000 250,000 -
Transfers Out (700,000) (700,000) (1,800,000)(1,100,000)
Total Other Financing Sources (Uses) (450,000) (446,250) (1,466,239) (1,019,989)
Net Change in Fund Balances$ 399,950-$ 1,216,628$ 816,678
FUND BALANCES
Beginning of Year 10,761,366
End of Year$11,977,994
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
December 31, 2017
Business-Type Activities - Enterprise Funds
Governmental
Activities -
Internal Service
SewerStorm DrainageRefuseTotalFunds
ASSETS
Current Assets
Cash and Investments, Including Cash Equivalents$8,348,595$12,361,761$ 20,710,356-$$11,004,071
Accounts Receivable2,98515,19627,49845,6798,163
Interest Receivable35,96661,060(302)96,72448,504
Special Assessment Receivable:
Delinquent3,208--3,208-
Deferred238,5982,394-240,992-
Due from Other Funds71,072--71,072973,435
Due from Other Governments402,690181,490-584,180-
Inventories1395,934-6,073-
Prepaid Expenses----193,712
Total Current Assets9,103,25312,627,83527,19621,758,28412,227,885
Noncurrent Assets
Advances to Other Funds, Noncurrent746,9241,650,000 2,396,924-1,291,394
Capital Assets:
Land 4,5003,792,303 3,796,803-221,876
Right of Way-507,746-507,746-
Construction in Progress627,30487,855-715,159807,837
Line Rights1,368,569- 1,368,569--
Infrastructure46,556,53447,356,691 93,913,225-3,802,176
Buildings----32,682,713
Machinery and Equipment1,894,0161,161,1221,172,0684,227,20616,245,988
Total Cost50,450,92352,905,7171,172,068104,528,70853,760,590
Less Accumulated Depreciation(14,582,166)(14,047,445)(351,653)(28,981,264)(20,769,652)
Net Capital Assets35,868,75738,858,272820,41575,547,44432,990,938
Total Noncurrent Assets36,615,68140,508,272820,41577,944,36834,282,332
Total Assets45,718,93453,136,107847,61199,702,65246,510,217
Deferred Outflows of Resources
Deferred Outflows of Resources Related to Pensions77,641103,424-181,065-
Total Assets and Deferred Outflows of Resources$45,796,575$53,239,531$847,611$99,883,717$46,510,217
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable$6,300$82,174$-$88,474155,649
Contracts Payable152,4375,523-157,960-
Due to Other Funds--71,07271,072-
Due to Other Governments65,33815,402-80,740-
Current Compensated Absences13,80115,534-29,3351,015,109
Total Current Liabilities 237,876118,63371,072427,5811,170,758
Noncurrent Liabilities
Advances from Other Funds--746,924746,9241,650,000
Compensated Absences16,86718,987-35,8541,240,689
Net OPEB Obligation43,70343,703-87,406-
Net Pension Liability253,812338,096-591,908-
Total Noncurrent Liabilities314,382400,786746,9241,462,0922,890,689
Total Liabilities552,258519,419817,9961,889,6734,061,447
Deferred Inflows of Resources
Deferred Inflows of Resources Related to Pensions47,20862,884-110,092-
Net Position
Investment in Capital Assets35,868,75738,858,272820,41575,547,44432,990,938
Unrestricted9,328,35213,798,956(790,800)22,336,5089,457,832
Total Net Position45,197,10952,657,22829,61597,883,95242,448,770
Total Liabilities, Deferred Inflows of Resources and
$45,796,575$53,239,531$847,611$46,510,217
Net Position
Adjustment to Reflect the Consolidation of Internal Service
Fund Activity Related to Enterprise Funds (See Note 2c)394,243
Total Business-Type Activities Net Position$98,278,195
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET POSITION - PROPRIETARY FUNDS
For the Year Ended December 31, 2017
Business-Type Activities - Enterprise Funds
Governmental
Activities -
Internal Service
SewerStorm DrainageRefuseTotal
Funds
OPERATING REVENUES
Charges for Services$ 3,355,853$ 1,249,927$ 104,726$ 4,710,506$ -
Rental Charges 15,520 300 - 15,820 3,230,109
Other Charges 8,536 22,000 27,027 57,563 8,977
Special Assessments 411 279 - 690 -
Total Operating Revenues 3,380,320 1,272,506 131,753 4,784,579 3,239,086
OPERATING EXPENSES
Salaries and Benefits 423,878 628,690 1,052,568- 109,879
Depreciation 843,756 823,470 117,111 1,784,337 1,940,195
Professional Services 164,008 114,150 - 278,158 13,254
Sewer Disposal Charges 2,578,133 - 2,578,133- -
Repairs and Maintenance 57,545 147,459 - 205,004 165,036
Materials and Supplies 36,787 34,596 - 71,383 256,051
Rent 24,751 25,465 - 50,216 1,088
Insurance 66,190 13,720 - 79,910 612,607
Utilities 81,231 7,548 - 88,779 -
Total Operating Expenses 4,276,279 1,795,098 117,111 6,188,488 3,098,110
Operating Income (Loss) (895,959) (522,592) 14,642 (1,403,909)140,976
NONOPERATING REVENUES
(EXPENSES)
Investment Income97,952143,151 (759) 240,344 130,534
Grants and Contributions - 890 - 890 -
Donations - - - - 60,174
Insurance Dividends - - - - 61,923
Interest Expense - - (8,536) (8,536) -
Gain (Loss) on Sale of Asset - 6,217 - 6,217 (103,085)
Total Nonoperating Revenues
(Expenses) 97,952 150,258 (9,295) 238,915 149,546
Income before Capital
Contributions and Transfers (798,007) (372,334) 5,347 (1,164,994) 290,522
Capital Contributions from Special Assessments 37,966 - - 37,966 -
Capital Contributions from Outside Developers 906,768 1,757,160 2,663,928- 14,354
Transfers In 294,338 132,709 - 427,047 600,000
Transfers Out (190,120) (263,917) - (454,037) (3,061,000)
Change in Net Position 250,945 1,253,618 5,347 1,509,910 (2,156,124)
NET POSITION
Beginning of Year 43,722,141 49,311,799 24,268 93,058,208 44,604,894
Prior Period Adjustment 1,224,023 2,091,811 3,315,834- -
Beginning of Year, Restated 44,946,16451,403,61024,26896,374,042 44,604,894
End of Year$ 45,197,109$ 52,657,228$ 29,615$ 97,883,952$ 42,448,770
Adjustment to Reflect the Consolidation of Internal Service
Fund Activity Related to Enterprise Funds (See Note 2d) 71,680
Change in Net Position - Business-Type Activities$ 1,581,590
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2017
Business-Type Activities - Enterprise Funds
Governmental
Activities -
Storm
Internal
SewerDrainageRefuseTotal
Service Funds
CASH FLOWS - OPERATING ACTIVITIES
Receipts from Customers and Users$ 3,342,415$ 1,245,372$ 104,255$ 4,692,042$ 3,237,052
Receipts from Interfund Services - - 11,717 11,717 21,053
Payments to Suppliers (2,981,859) (289,271) (3,271,130)- (1,125,567)
Payments to Employees (354,897) (493,775) (848,672)- -
Payments for Interfund Services (11,717) - - (11,717) (973,435)
Net Cash Flows - Operating
Activities (6,058) 462,326 115,972 572,240 1,159,103
CASH FLOWS - NONCAPITAL
FINANCING ACTIVITIES
Interfund Loan Issued (1,650,000)- (1,650,000)- 1,650,000
Payment Received on Interfund Loan 106,703 (106,703)- - 50,000
Interest Expense on Interfund Loan Repayment - - (8,536) (8,536) -
Insurance Dividends - - - - 61,923
Transfer from Other Funds 294,338 132,709 427,047- 600,000
Transfer to Other Funds (190,120) (263,917) (454,037)- (3,061,000)
Net Cash Flows - Noncapital
Financing Activities 210,921 (1,781,208) (115,239) (1,685,526) (699,077)
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Trunk Charges 126,754 550,160 676,914- -
45,788 1,306 --
Capital Related Special Assessments47,094
Capital Grant-
890 - 890 -
Donations - - - - 60,174
- 6,217 - 6,217 106,173
Proceeds (Loss) from Disposal of Capital Assets
Acquisition of Capital Assets (1,310,452) (619,193) (1,929,645)- (2,035,040)
Net Cash Flows - Capital and
Related Financing Activities (1,137,910) (60,620) (1,198,530)- (1,868,693)
CASH FLOWS - INVESTING ACTIVITIES
Interest Received 104,898 145,497 (733) 249,662 138,705
Net Cash Flows - Investing
Activities 104,898 145,497 (733) 249,662 138,705
(828,149) (1,234,005) (2,062,154)- (1,269,962)
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS
Beginning of Year 9,176,744 13,595,766 22,772,510- 12,274,033
$ 8,348,595$ 12,361,761$ 20,710,356-$$11,004,071
End of Year
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
(Continued)
For the Year Ended December 31, 2017
Business-Type Activities - Enterprise Funds
Governmental
Activities -
Storm
Internal
SewerDrainageRefuseTotal
Service Funds
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH
FLOWS - OPERATING ACTIVITIES
Operating Income (Loss)$ (895,959)$ (522,592)$ 14,642$ (1,403,909)$ 140,976
Adjustments to Reconcile Operating
Income (Loss) to Net Cash
Flows - Operating Activities:
Depreciation Expense 843,756 823,470 117,111 1,784,337 1,940,195
Pension Expense 63,172 126,857 190,029- -
Changes in:
Accounts Receivable (2,985) 6,804 (27,498) (23,679) (2,034)
Due from Other Funds (11,717) - - (11,717) (973,435)
Due from Other Governments (52,622) (31,096) - (83,718) -
Special Assessments 17,702 (2,842) - 14,860 -
Due to Other Governments (14,357) (4,694) - (19,051) -
Accounts and Contracts Payable 41,282 64,295 105,577- (67,435)
Inventory (139) (5,934) - (6,073) -
Prepaid Expenses - - - (10,096)-
Due to Other Funds - - 11,717 11,717 -
Compensated Absences Payable 760 3,009 - 3,769 130,932
Net OPEB Obligation 5,049 5,049 - 10,098 -
Total Adjustments 889,901 984,918 101,330 1,976,149 1,018,127
Net Cash Flows - Operating
Activities$ (6,058)$ 462,326$ 115,972$ 572,240$ 1,159,103
NONCASH INVESTING, CAPITAL AND
FINANCING ACTIVITIES
Contributions of Capital Assets from
Developers780,0141,207,000 1,987,014- 14,354
The Notes to the Financial Statements are an integral part of this statement.
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CITY OF SHAKOPEE
COMBINED STATEMENT OF FIDUCIARY NET POSITION
December 31, 2017
Total Agency
Funds
ASSETS
Current
Cash and Investments2,277,668$
49
Accounts Receivable
1,489
Interest Receivable
25,000
Due from Other Governments
6,932
Prepaids
Total Assets2,311,138$
LIABILITIES
Accounts Payable230,726$
2,041,197
Deposits Payable
39,215
Due to Other Governments
Total Liabilities2,311,138$
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF NET POSITION - COMPONENT UNIT - SPUC
December 31, 2017
ElectricWaterTotal
ASSETS
Current Assets
Cash and Investments$32,905,423$7,989,474$40,894,897
Restricted Assets:
Sinking Account544,737 544,737-
Accrued Interest Receivable50,98010,57961,559
Customer Accounts Receivable3,911,421317,7614,229,182
Allowance for Uncollectible Accounts(22,905)(11,136)(34,041)
Other Accounts Receivable114,48949,171163,660
Due from City of Shakopee60,67315,51876,191
Inventory1,311,99430,7901,342,784
Prepaid Expenses44,70214,90159,603
Total Current Assets38,921,5148,417,05847,338,572
Noncurrent Assets
Restricted Assets:
Customer Deposits Account2,453,94952,8722,506,821
Connection Account 11,690,574-11,690,574
Water Reconstruction Account 135,086-135,086
Emergency Repairs Account100,000 100,000-
Capital Assets:
Plant in Service70,029,11760,173,555130,202,672
Accumulated Depreciation(24,441,184)(18,314,552)(42,755,736)
Construction in Progress
1,241,1541,567,0042,808,158
Total Noncurrent Assets49,383,03655,304,539104,687,575
Total Assets88,304,55063,721,597152,026,147
Deferred Outflows of Resources
1,126,457
Deferred Outflows of Resources Related to Pensions844,842281,615
Unamortized loss on refunding208,715-208,715
Total Deferred Outflows of Resources1,053,557281,6151,335,172
Total Assets and Deferred Outflows of Resources$89,358,107$64,003,212$153,361,319
LIABILITIES AND NET ASSETS
Current Liabilities
Accounts Payable$4,023,152$747,604$4,770,756
Due to City of Shakopee385,612115,088500,700
Other Current Liabilities270,106169,992440,098
Total Current Liabilities 4,678,8701,032,6845,711,554
Liabilities Payable from Restricted Assets
Current Portion of Revenue Bonds7,590,000 7,590,000-
Accrued Interest Payable136,820 136,820-
Customer Deposits2,453,94952,8722,506,821
Total Liabilities Payable from Restricted Assets10,180,76952,87210,233,641
Noncurrent Liabilities
Unamortized Bond Discount(7,978)-(7,978)
Unearned Revenues1,048-1,048
Customer Advances384,837119,394504,231
Net Pension Liability3,083,4361,027,8174,111,253
Total Noncurrent Liabilities3,461,3431,147,2114,608,554
Total Liabilities18,320,9822,232,76720,553,749
Deferred Inflows of Resources Related to Pensions546,353182,119728,472
Total Liabilities and Deferred Inflows of Resources$18,867,335$2,414,886$21,282,221
Net Position
Investment in Capital Assets39,247,06543,426,00782,673,072
407,917
Restricted for Debt Service407,917-
Restricted for Connections & Reconstruction 11,825,660-11,825,660
Unrestricted30,835,7906,336,65937,172,449
Total Net Position70,490,77261,588,326132,079,098
$89,358,107$64,003,212$153,361,319
Total Liabilities and Net Position
The Notes to the Financial Statements are an integral part of this statement.
CITY OF SHAKOPEE
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET POSITION - COMPONENT UNIT - SPUC
For the Year Ended December 31, 2017
ElectricWaterTotal
$ 46,887,042 $ 5,184,201 $ 52,071,243
Operating Revenues
Operating Expenses42,540,3085,127,88847,668,196
Operating Income4,346,73456,3134,403,047
NONOPERATING REVENUES (EXPENSES)
Rentals and Miscellaneous435,087215,809650,896
Interdepartmental Rent from Water90,000-90,000
Investment Income215,22281,118296,340
Interest Expense(348,580)(313)(348,893)
Amortization of Debt Issuance Costs and
Loss on Refunding(17,802) - (17,802)
Gain(Loss) on Disposition of Property6,694(74,373)(67,679)
Total Nonoperating Revenues (Expenses)380,621222,241602,862
Income Before Contributions and Transfers4,727,355278,5545,005,909
Capital Contributions1,158,713 4,468,735 5,627,448
Change in Net Position5,886,068 4,747,289 10,633,357
NET POSITION
Beginning of Year 54,648,24164,604,704 119,252,945
Prior Period Adjustment 2,192,796- 2,192,796
Beginning of Year, as Restated 56,841,03764,604,704 121,445,741
End of Year$ 61,588,32670,490,772$ 132,079,098$
The Notes to the Financial Statements are an integral part of this statement.
(THIS PAGE LEFT BLANK INTENTIONALLY)
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Shakopee is a statutory city governed by an elected mayor and four council members. The
accompanying financial statements present the government entities for which the government is
considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds,
organizations, institutions, agencies, departments and offices that are not legally separate from such.
Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the financial statements of the City because of the
significance of their operational or financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of
the organization’s governing body and it is able to impose its will on the organization by significantly
influencing the programs, projects, activities or level of services performed or provided by the
organization or there is a potential for the organization to provide specific financial benefits to or impose
specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, certain organizations have been
defined and are presented in this report as follows:
Blended Component Unit – Reported as if they were part of the City.
Discretely Presented Component Unit – Entails reporting the component unit financial data in
statements separate from the financial date of the City.
Joint Ventures and Jointly Governed Organizations – The relationship of the City with the entity is
disclosed.
For each of the categories above, the specific entities are identified as follows:
1. Blended Component Unit
The Shakopee Economic Development Authority (EDA) was organized to promote development,
improve housing and reduce blighted areas in the City. It is included by reason of the City Council
having final approval for Shakopee EDA actions and the Shakopee EDA Board being comprised
entirely of City Council Members. City staff handles Shakopee EDA activity including Shakopee
EDA funds and the City approves Shakopee EDA tax levies and bonding activity. Therefore, the
City has financial oversight for Shakopee EDA activities. The City also has operational
responsibility of the EDA.
The activity of the Shakopee EDA is shown in the Shakopee EDA Special Revenue Fund in the
City’s financial statements. No separate financial statements for the Shakopee EDA are issued. For
any information desired beyond what is presented in this report, contact the Finance Director for the
City of Shakopee at 129 Holmes Street South, Shakopee, Minnesota 55379-1351.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
2. Discretely Presented Component Unit
The electric and water utilities of the Shakopee Public Utilities Commission (SPUC) are self-
supporting entities and collectively comprise separate enterprise funds of the City of Shakopee (the
“City”). The utility provides electric and water operations to properties within the City as well as
electric distribution to certain other areas outside of the City. The utility accounts for the costs of
electric and water operations on a continuing basis and is managed by the SPUC. The SPUC Board
consists of five members who serve three year consecutive terms. SPUC is presented as a discretely
presented component unit because of the nature and significance of its relationship with the primary
government. Separate financial statements are included in this report for the SPUC Funds to
emphasize that it is legally separate from the City. Based on its relationship with the City, it would
be misleading to exclude SPUC as a component unit. It is this criterion that results in SPUC being
reported as a discretely presented component unit. The complete financial statements can be
obtained from the Shakopee Public Utility Commission, 225 Sarazin Street, Shakopee, Minnesota
55379.
3. Joint Ventures and Jointly Governed Organizations
Local Government Information Systems
Local Government Information Systems (LOGIS) is a joint venture of approximately 44
governmental entities that provides computerized data processing and support services to its
members. Legally separate, the City does not appoint a voting majority of the Board and LOGIS is
fiscally independent of the City. During 2017, the City paid $416,103 to LOGIS for services
provided which is included in expenditures of the General Fund. Financial statements are available
by contacting LOGIS, 5750 Duluth Street, Golden Valley, Minnesota 55422-4036.
4. Other Organizations
Shakopee Volunteer Fire Department Relief Association
The Shakopee Volunteer Fire Department Relief Association (the “Association”) is organized as a
nonprofit organization, legally separate from the City, by its members to provide pensions and other
benefits to such members in accordance with Minnesota Statutes. It is not a component unit of the City
because the Board of Directors is appointed by the membership of the Association and not by the City
Council. The financial oversight of the City is limited to approval authority for amending the
Association bylaws when the change results in an increase in the pension benefit level requiring an
increased City contribution. The Association has the authority to levy its own taxes for pensions and
deficits and would continue to exist for its members if the City was dissolved. Because the Association
is fiscally independent of the City, the financial statements of the Association have not been included
within the City’s reporting entity.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. The fiduciary funds are
only reported in the Statement of Fiduciary Net Position at the fund financial statement level.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Interest on general long-term debt is considered an indirect expense and
is reported separately in the Statement of Activities. Program revenues include 1) charges to customers
or applicants who purchase, use or directly benefit from goods, services or privileges provided by a
given function or segment and 2) grants and contributions that are restricted to meeting the operational
or capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues. Internally dedicated
revenues are reported as general revenues rather than program revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in
the fund financial statements.
The Escrow Agency Fund is presented in the fiduciary fund financial statements. Since, by definition,
these assets are being held for the benefit of a third party (other local governments, private parties, etc.)
and cannot be used to address activities or obligations of the City, this Fund is not incorporated into the
government-wide statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
The Agency Funds report only assets and liabilities and have no measurement focus, but do use the
accrual basis of accounting to recognize receivables and payables.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the
City considers revenues to be available if they are collected within 60 days of the end of the current
period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
However, debt service expenditures, as well as expenditures related to compensated absences and claims
and judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses and interest associated with the current period are all
considered to be susceptible to accrual and so have been recognized as revenues of the current period.
Only the portion of special assessments receivable due within the current period is considered to be
susceptible to accrual as revenue of the current period. All other revenue items are considered to be
measurable and available only when cash is received by the City.
Description of Funds:
Major Governmental Funds:
General Fund – This Fund is the City’s primary operating fund. It accounts for all financial resources
of the general City, except those required to be accounted for in another fund.
Economic Development Authority Special Revenue Fund – This Fund accounts for development,
improve housing and reduce blighted areas of the City. Taxes, grants and contributions are the
dedicated funding sources.
Capital Improvements Capital Project Fund – This Fund accounts for the capital projects of the City
not accounted for in separate capital funds.
Community Center & Ice Arena Capital Project Fund – This Fund accounts for the construction
costs associated with the construction of the community center and ice arena.
City Hall Capital Project Fund – This Fund accounts for the construction costs associated with the
construction of the city hall.
TIF District No. 17 Capital Project Fund – This Fund accounts for tax increment financing district
number 17- Highway 101 and Shenandoah Drive development project.
Proprietary Funds:
Sewer Fund – This Fund accounts for operations of the City’s sewer utility.
Storm Drainage Fund – This Fund accounts for the activities of the City’s storm drainage utility.
Refuse Fund – This Fund accounts for operations associated with the City’s garbage carts and
recycling operations.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Description of Funds: (Continued)
Internal Service Funds:
Equipment Fund – This Fund accounts for the City’s acquisition of larger pieces of equipment.
Buildings Fund – This Fund accounts for the City’s funds accumulated for construction,
improvement or major repairs of major public buildings.
Park Assets Fund – This Fund accounts for the City’s funds accumulated for the replacement of park
assets.
Employee Benefits Fund – This Fund accounts for the City’s funds accumulated for compensated
absences and OPEB.
Information and Technology Fund – This Fund accounts for the City’s funds accumulated for
information technology resources.
Self Insurance Fund –This Fund is used to account for all revenues and expenses associated with
premiums, deductibles and claims for general liability and workers compensation policy through
LMCIT.
The City’s internal service funds are allocated between governmental and business-type activities and
are combined, as allocated in Note 2, with the respective governmental activities and business-type
activities in the government-wide financial statements.
Fiduciary Funds:
Escrow Agency Fund – This Fund accounts for the monies held for specific purposes for individuals,
private organizations, other government units and other funds. Escrows are held on behalf of
builders and developers, for security deposits and police evidence deposits.
Holiday Lighting Agency Fund – This Fund accounts for the monies held for holiday lighting.
Southwest Metro Drug Task Force Agency Fund – This Fund accounts for the activity related to the
task force held by the City in a strictly custodial capacity.
Component Unit Funds:
Electric Fund – This Fund accounts for the operations of the SPUC’s electric utility.
Water Fund – This Fund accounts for the operations of the SPUC’s water utility.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments, where the amounts are reasonably
equivalent in value to the interfund services provided and other charges between the City’s utility
function and various other functions of the City. Elimination of these charges would distort the direct
costs and program revenues reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operations.The principal operating revenues of
the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise
funds include the cost of sales and services, administrative expenses and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities and Net Position or Equity
1. Deposits and Investments
Cash and investments include balances from all funds that are combined and invested to the extent
available in various securities as authorized by state law. Earnings from the pooled investments are
allocated to the individual funds based on the average of month-end cash and investment balances.
All funds of the City are included in the pooled investments with the exclusion of the 2017A bond
proceeds which is included in the non-pooled investments.
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and highly
liquid debt instruments purchased with original maturities of three months or less from the date of
acquisition.
Certain investments for the City and Component Unit are reported at fair value as disclosed in Note
4. The City and Component Unit categorizes its fair value measurements within the fair value
hierarchy established by generally accepted accounting principles. The Hierarchy is based on the
valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active
markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are
significant unobservable inputs.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
1. Deposits and Investments (Continued)
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and
instrumentalities, shares of investment companies whose only investments are in the aforementioned
securities, obligations of the State of Minnesota or its municipalities, bankers’ acceptances, future
contracts, repurchase and reverse repurchase agreements and commercial paper of the highest
quality with a maturity of no longer than 270 days and in the Minnesota Municipal Money Market
Fund.
In accordance with GASB Statement No. 79, the Minnesota Municipal Investment Pool securities
are valued at amortized cost, which approximates fair value. There are no restrictions or limitations
on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a
minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a
penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is
required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date
of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses,
and other costs attributable to the early redemption.
2. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the
end of the year are referred to as “advances to/from other funds”. All other outstanding balances
between funds are reported as “due to/from other funds”. Any residual balances outstanding
between the governmental activities and business-type activities are reported in the government-
wide financial statements as “interfund balances”.
All trade and property tax receivables are shown at a gross amount since both are assessable to the
property taxes and are collectible upon the sale of the property.
The City levies its property tax for the subsequent year during the month of December. December
28 is the last day the City can certify a tax levy to the County Auditor for collection the following
year. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date.
The property tax is recorded as revenue when it becomes measurable and available. Scott County is
the collecting agency for the levy and remits the collections to the City three times a year. The tax
levy notice is mailed in March with the first half of the payment due on May 15 and the second half
due on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes
receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the applicable
tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The
County Auditor also collects all special assessments, except for certain prepayments paid directly to
the City.
The County Auditor submits the list of taxes and special assessments to be collected on each parcel
of property to the County Treasurer in January of each year.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
3. Inventory, Prepaid Items and Other Assets
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both government-wide and fund financial statements. Prepaid expenditures of
governmental funds are reported using the consumption method and recorded as
expenditures/expenses at the time of consumption.
Inventories of enterprise funds are valued at average cost using the first in, first out (FIFO) method.
Inventory in the governmental funds are recorded as an expenditure when consumed rather than
when purchased.
Other assets include unamortized debt issuance costs, the Emergency Repairs Account and the asset
and related amortization relating to the Electric Plant Acquisition.
4. Land Held for Resale
Land is acquired by the City for subsequent resale for redevelopment purposes. Land held for resale
is reported as an asset at the lower of cost or estimated realized value in the fund that acquired it.
5. Restricted Assets
Certain cash and investments in the component units are classified as restricted. The Electric Fund
has monies restricted for customer deposits and debt service. The Water Fund has monies restricted
for water production and trunk distribution facility acquisition, based on trunk and connection fees
collected from users, construction projects and debt service.
6. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
sidewalks and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are defined by the City,
excluding the component unit, as assets with an initial, individual cost of more than $10,000 and an
estimated useful life in excess of two years. Capital assets for the component unit are defined as
assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of
one year. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets lives are not capitalized.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
6. Capital Assets (Continued)
Property, plant and equipment of the City are depreciated using the straight-line method over the
following estimated useful lives.
AssetsYears
Buildings30-50
Park Buildings30
Building Improvements25
Light Vehicles4-10
Machinery and Equipment4-20
Utility Distribution System50-75
Infrastructure30-50
Fire Trucks20-25
7. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element represents a consumption
of net position that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditure) until that time. The City has one item that qualifies for reporting in
this category. The City and Component Unit present deferred outflows of resources on the Statement
of Net Position for the deferred charge related to pensions. The Component Unit also has one item
that qualifies for reporting in this category. It is the deferred charge on refunding reported in the
statement of net position- component unit - SPUC. A deferred charge on refunding results from the
difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred
and amortized over the shorter of the life of the refunded or refunding debt. The City presents
deferred outflows of resources on the Statements of Net Position for deferred outflows of resources
related to pensions. Deferred outflows of resources related to pensions results from the net effect of
the change in proportionate share, the difference between projected and actual investments earnings
and employer contributions paid to PERA and the firefighters relief association subsequent to the
measurement date.
In addition to liabilities, the statement of financial position and fund financial statements will
sometimes report a separate section for deferred inflows of resources. This separate financial
statement element, deferred inflows of resources, represents an acquisition of net position that
applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until
that time. The City only has one type of item, which arises only under the modified accrual basis of
accounting that qualifies for reporting in this category. Accordingly, the item is reported only in the
governmental funds balance sheet as unavailable revenue.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
7. Deferred Outflows/Inflows of Resources (Continued)
The governmental funds report unavailable revenues from two sources: property taxes and special
assessments. These amounts are deferred and recognized as an inflow of resources in the period
that the amounts become available.
The City presents deferred inflows of resources on the Statements of Net Position for deferred
inflows of resources related to pensions. Deferred inflows of resources related to pensions results
from the net difference between projected and actual earnings on plan investments, changes in
proportionate share and the differences between expected and actual economic experience.
8. Compensated Absences
Vacation and sick leave benefits are recorded as expenditures in the Employee Benefits Internal
Service Fund and governmental funds when the obligations have matured and are expected to be
liquidated with expendable financial resources. City employees earn vacation time based on years
of City service. Employees who have 0 to 15 years of employment may accumulate no more than
240 hours. Employees who have 16 or more years of service may accumulate no more than 360
hours of vacation leave. Upon termination, employees will receive compensation for all unused
vacation. Employees earn sick leave and may accumulate to a maximum of 960 hours. The City
compensates employees who leave municipal service at the rate of 45% up to 15 years of service.
After 15 years of service, employees who leave are compensated at the rate of 55% plus 2% for
each year of service beyond 15 years up to 75% of unused sick leave.
9. Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the applicable
governmental activities, business-type activities or proprietary fund type Statement of Net Position.
Enterprise fund bond premiums and discounts, are deferred and amortized over the life of the bonds
using the effective interest method. Bonds payable are reported net of the applicable bond premium
or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is reported
as other financing sources. Premiums received on debt issuances are reported as other financing
sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as expenditures.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
10. Pensions
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and
pension expense, information about the fiduciary net position of the Public Employees Retirement
Association (PERA) and the relief association and additions to/deductions from PERA's and the
relief association's fiduciary net position have been determined on the same basis as they are
reported by PERA and the relief association except that PERA's fiscal year end is June 30. For this
purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments
and refunds are recognized when due and payable in accordance with the benefit terms. Investments
are reported at fair value.
11. Fund Equity
a.Classification
In the fund financial statements, governmental funds report fund classifications that comprise a
hierarchy based primarily on the extent to which the City is bound to honor constraints on the
specific purpose for which amounts in those funds can be spent. Non-spendable fund balances
include amounts that cannot be spent because they are not in spendable form. Amounts that are
restricted to specific purposes either by a) constraints placed on the use of resources by creditors,
grantors, contributors, or laws or regulations of other governments or b) imposed by law through
enabling legislation are classified as restricted fund balances. Amounts that can only be used for
specific purposes pursuant to constraints imposed by the City Council (highest level of decision
making authority) through resolution are classified as committed fund balances. Amounts that
are constrained by the City’s intent to be used for specific purposes but are neither restricted nor
committed are classified as assigned fund balances. Assignments are made by the City’s Finance
Director based on the City Council’s direction. Positive unassigned fund balance represents fund
balance that has not been assigned to other funds and that has not been restricted, committed or
assigned to a specific purpose in the General Fund. For governmental funds other than the
General Fund, if expenditures incurred for specific purposes exceed the amounts that are
restricted, committed, or assigned to those purposes, it may be necessary to report a negative
unassigned fund balance in that fund. The City’s policy is to consider unrestricted fund balance
to be spent by City Council action, appropriations or emergency situations.
The City applies restricted resources first when expenditures are incurred for purposes for which
either restricted or unrestricted (committed, assigned and unassigned) are available. Similarly,
within unrestricted fund balance, committed amounts are reduced first followed by assigned and
then unassigned amounts when expenditures are incurred for purposes for which amounts in any
of the unrestricted fund balance classifications could be used.
b.Minimum Fund Balance
The City’s target General Fund balance is to maintain an unassigned level between 40%
(minimum) and 45% of budgeted expenditures. This level is to provide working capital for cash
flow, expected decline in revenues and unforeseen expenditures such as natural disasters.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
11. Fund Equity
b.Minimum Fund Balance
Replenishing fund balance when it falls below the target level shall be accomplished by interfund
transfers or budgeting for expenditures and other uses to be less than revenues or other sources
over a period not to exceed three years.
12. Net Position
Net position represents the difference between assets and deferred outflows and liabilities and
deferred inflows in the government-wide financial statements. Net investment in capital assets
consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any
long-term debt used to build or acquire the capital assets. Net position is reported as restricted in the
government-wide financial statement when there are limitations on their use through external
restrictions imposed by creditors, grantors or laws or regulations of other governments.
13. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Estimates also affect the reported amounts of revenue and
expenditures/expense during the reporting period. Actual results could differ from those estimates.
NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
A. Explanation of Certain Differences between the Governmental Fund Balance Sheet and the
Government-Wide Statement of Net Position
The governmental fund Balance Sheet includes reconciliation between fund balance – total
governmental funds and net position – governmental activities as reported in the government-wide
Statement of Net Position. One element of that reconciliation explains that “Internal Service Funds are
used by management to charge the costs of providing certain services for the City.”
Net Position of the Internal Service Funds$42,448,770
Less Portion Loss Related to Business-Type Activities(394,243)
Net Adjusmtent to Increase Fund Balance- Total Governmental
Funds to Arrive at Net Position- Governmental Activities$42,054,527
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
B. Explanation of Certain Differences between the Governmental Fund Statements of
Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide
Statement of Activities
Another element of that reconciliation states that “Internal Service Funds are used by management to
charge the costs of providing various services for the City.” The details of this difference are as follows:
Change in Net Position of the Internal Service Fund$(2,156,124)
Less the Net of Indirect Revenues and Expense(71,680)
Net Adjustment to Decrease Net Change in Fund Balances - Total
Government Funds to Arrive at Changes in Net position of
Government Activities$(2,227,804)
C. Explanation of Certain Differences between the Proprietary Fund Statements of Net
Position and the Government-Wide Statement of Net Position
The proprietary fund Statement of Net Position includes reconciliation between net position – total
enterprise funds and net position of business-type activities as reported in the government-wide
Statement of Net Position. The description of the sole reconciliation is “adjustment to reflect the
consolidation of internal service fund activities related to enterprise funds.” The details are as follows:
Internal Payable Representing Costs less than Charges to
Business- Type Activities- Current Year394,243$
D. Explanation of Certain Differences between the Proprietary Fund Statements of
Revenues, Expenses, and Changes in Fund Net Position and the Government-Wide
Statement of Activities
Another element of that reconciliation states that “Internal Service Funds are used by management to
charge the costs of providing various services for the City.” The details of this difference are as follows:
Net adjustment to Increase Net Change in Fund Balances- Total
Enterprise Funds to Arrive at Changes in Net Position of
Business- Type Activities71,680$
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America. Annually appropriated budgets are adopted for the General Fund.
Budgeted amounts present the originally adopted budget and final amended budget approved by the City
Council. The City does not use encumbrances. Budgeted expenditure appropriations lapse at year-end.
1.In August of each year, City staff submits to the City Council, a proposed operating budget for
the year commencing the following January 1. The operating budget includes proposed
expenditures and the means of financing them for the upcoming year.
2.Public hearings are conducted to obtain taxpayer comments.
3.The budget is legally enacted through passage of a resolution after obtaining taxpayer comments.
4.Expenditures may not legally exceed budgeted appropriations at the division level. The division
level expenditures are presented in the schedule of revenues, expenditures and changes in fund
balances – budget and actual – general fund.No fund’s budget can be increased without City
Council approval. The City Council may authorize transfer of budgeted amounts between
divisions within any fund. Management may amend budgets within a division level, so long as
the total division budget is not changed.
5.An annual budget is adopted for the General Fund. Annual appropriated budgets are not adopted
for Debt Service Funds because effective budgetary control is alternatively achieved through
bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished
through the use of project controls and budgets are not adopted.
6.Budgeted amounts are as originally adopted and as amended by the City Council. Budgeted
expenditure appropriations lapse at year-end
NOTE 4 – DEPOSITS AND INVESTMENTS
A. Deposits
In accordance with applicable Minnesota Statutes, the City and the Component Unit maintains deposits
at depository banks authorized by the City Council and the Commissioners.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 4 – DEPOSITS AND INVESTMENTS
A. Deposits (Continued)
Custodial Credit Risk: This is the risk that an issuer or other counterparty to an investment will not
fulfill its obligation to the holder of the investment. Minnesota Statutes 118A.04 and 188A.05 limit
investments that are in the top two ratings issued by nationally recognized statistical rating
organizations. The City’s investment policy references Minnesota Statutes and further limits the types
of investments that the City is allowed to invest in. The Commission has a deposit policy that requires
the Commission’s deposits to be collateralized as required by Minnesota Statues 118.03 for an amount
exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage. As of December 31, 2017, the
City and Commission’s bank balances were not exposed to custodial credit risk because they were
insured through Federal Deposit Insurance Corporation (FDIC) and properly collateralized with
securities held by the pledging financial institutions’ trust departments or agents in the City’s name.
As of December 31, 2017, the City had the following deposits:
City Deposits$195,382
Component Unit Deposits10,753,924
Total Deposits$10,949,306
B. Investments
As of December 31, 2017, the City held the following investments:
Years to Maturity
Less thanMoody's
Fair ValueOne Year1-5 Years5-10 Years10-15 YearsConcentrationRating
Pooled Investments:
Certificate of Deposit6,193,760$ $2,492,922$3,700,838$ -$ 10.84%NR-
Commercial Paper4,494,773 4,494,773 - - 7.86%NR-
Money Market Fund160,728 160,728 - - 0.28%NR-
Mortgage
FHLB 3,497,5893,497,589 - - 6.12%AAA-
FHLMC 3,685,112 2,087,6196,752 176,261 1,414,4806.45%AAA
FNMA 3,719,776 11,768 544,731 3,163,277- 6.51%NR
Municipal Bond12,753,207 321,59510,985,4111,446,201 22.32%AAA-BAA1-
US Treasury Notes22,644,478 2,986,94219,657,536 - 39.62%AAA-
Non-Pooled Investments:
Money Market Fund200,463 200,463 - - 100.00%NR-
Total Investments57,349,886$ $ 36,976,13514,173,532$ 1,622,462$$4,577,757
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 4 – DEPOSITS AND INVESTMENTS
B. Investments (Continued)
As of December 31, 2017, the component units had the following investments:
Years to Maturity
Less than
Fair ValueOne Year1-5 YearsConcentrationRating
US Agencies7,605,740$ 324,742$ 7,280,998$ 16.86%AAA
U.S. Treasuries10,872,871 8,017,776 2,855,095 24.11%AAA
4M Fund26,607,36126,607,361 -58.96%N/A
Money Market Fund30,519 30,519 -0.07%N/A
Total$45,116,491$34,980,398$10,136,093100.00%
The City’s investment policy, which covers all funds except the component units, addresses the
following risks. The City’s component units also have a formal policy to address the following risks.
Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its
obligation to the holder of the investment. Minnesota Statutes 118A.04 and 188A.05 limit investments
that are in the top two ratings issued by nationally recognized statistical rating organizations. The City’s
investment policy references Minnesota Statutes and further limits the types of investments that the City
is allowed to invest in. The Commission’s policy states to ensure safety, it is the policy of the Shakopee
Public Utilities Commission that when Considering an investment, all depositories under consideration
be cross-checked against existing investments to make certain that funds in excess of insurance limits
are not made in the same institution unless collateralized as outlined below. Furthermore, the Shakopee
Public Utilities Commission will approve all financial institutions, brokers, and advisers with which the
Shakopee Public Utilities Commission will do business.
Custodial Credit Risk – Investments: For an investment, this is the risk that in the event of the failure of
the counterparty, the City will not be able to recover the value of its investments or collateral securities
that are in the possession of an outside party.The City’s investment policy states all securities
purchased, including appropriate collateral, shall be placed with an independent third party for custodial
safekeeping. The Commission’s policy states they will minimize risk by only purchasing investments
that are held in safekeeping with a Federal Reserve bank, United States Bank with corporate trust
powers, a primary reporting dealer to the Federal Reserve Bank of New York, or a broker dealer having
its principal executive office in Minnesota and that designated brokers have insurance through the SIPC
(Securities Investor Protection Corporation). As of December 31, 2017, all investments of the City and
the component units were insured, registered and held by the City or its agent and in the City’s name, or
by the SPUC and in the SPUC’s name.
Interest Rate Risk: This is the risk that changes in market interest rates will adversely affect the fair
value of an investment. The City’s policy states the investment portfolio shall be designed with the
objective of attaining a market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. To the extent possible, the City shall
attempt to match its investments in short-term operating funds with anticipated cash flow requirements.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 4 – DEPOSITS AND INVESTMENTS
B. Investments (Continued)
Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than
ten years from the date of purchase. Long-term funds shall not be invested in securities exceeding 10
years in modified duration, at time of purchase. The Commission’s policy states that will minimize
interest rate risk by structuring the investment portfolio so that securities mature to meet cash
requirements for ongoing operation, thereby avoiding the need to sell securities on the open market prior
to maturity.
Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a
single issuer. According to the City’s investment policy, the aggregate investment portfolio shall be
diversified by:
Limiting investments to avoid over concentration in securities from a specific issuer or business
sector.
Limiting investments in securities that have higher credit risks.
Investing in securities with varying maturities.
Continuously investing a portion of the portfolio in readily available funds, such as Local
Government Investment Pools (LGIP), money market funds or repurchase agreements to ensure
appropriate liquidity is maintained in order to meet ongoing obligations.
Having all investments, other than those in direct obligations or agencies of the United States,
secured by collateral or repurchase agreements, shall not exceed 50% of the aggregate
investment portfolio. Mortgage backed securities shall not exceed 35% of the aggregate
investment portfolio, at the time of investment (i.e., commercial paper or bankers’ acceptance).
Limiting investments in any one corporation to 5% of the aggregate investment portfolio.
The Commission’s policy states they will minimize risk by only purchasing investments that are held in
safekeeping with the Federal Reserve bank, United States Bank with corporate trust powers, a primary
reporting dealer to the Federal Reserve Bank of New York, or a broker dealer having its principal
executive office in Minnesota and that designated brokers have insurance through a SIPC (Securities
Investor Protection Corporation). As of December 31, 2017, the City held investments that exceeded 5%
of its total investments for all funds as noted in the table on the previous page. The component units’
investments noted in the table above exceeded 5% of its total investments as of December 31, 2017.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 4 – DEPOSITS AND INVESTMENTS
B. Investments (Continued)
The City has the following recurring fair value measurements as of December 31, 2017:
Fair Value Measurement Using
Fair ValueLevel 1Level 2Level 3
Investments at Fair Value:
Certificate of Deposit6,193,760$ $ 6,193,760-$ $ -
Commercial Paper 4,494,773 4,494,773- -
Mortgage
FHLB 3,497,589 3,497,589- -
FHLMC 3,685,112 3,685,112- -
FNMA 3,719,776 3,719,776- -
Municipal Bond 12,753,207 12,753,207- -
US Treasury Notes 22,644,478 22,644,478 - -
Total/Subtotal 56,988,695$ 22,644,478$ 34,344,217$ -
Investments at Amortized Cost:
Money Market Fund 361,191
Total$ 57,349,886
Publicly traded assets are valued in accordance with market quotation or valuation methods from
services believed by our broker to be reliable. Assets, which are not publicly traded, may reflect values
from other external sources or special valuations prepared by our broker. Assets for which a current
value is not available may be reflected as not valued, at par value, or at a nominal value of $1.00.
18,509,130 of $45,116,491 of the Component Unit’s investments at December 31, 2017 are valued using
a quoted market prices (Level 2 inputs). $26,607,361 are investments at amortized cost.
The following is a summary of total deposits and investments as of December 31, 2017:
Deposits (Note 3.A.)$10,949,306
City Investments57,349,886
Component Unit Investments45,116,491
City Petty Cash4,916
Component Unit Petty Cash1,700
Total Deposits and Investments$113,422,299
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 4 – DEPOSITS AND INVESTMENTS
B. Investments (Continued)
Deposits and investments are presented in the December 31, 2017 basic financial statements as follows:
CityComponent
FundsUnitsTotal
Statement of Net Position:
Cash and Investments55,272,516$ 40,894,897$ 96,167,413$
Restricted Assets- 14,977,218 14,977,218
Statement of Fiduciary Net Position:
Cash and Investments 2,277,668 2,277,668-
Total$57,550,184$ 113,422,29955,872,115$
NOTE 5 – RECEIVABLES/UNAVAILABLE REVENUE
A. Taxes and Assessments
Governmental funds report unavailable revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. Governmental funds also defer
revenue recognition in connection with resources that have been received, but not yet earned. At the end
of the current year, the various components of unavailable revenue reported in the governmental funds
were as follows:
DelinquentDelinquentDeferred
PropertySpecialSpecial
TaxesAssessmentsAssessmentsTotal
General Fund95,849$ $ 4,550$ 20,519$ 120,918
Economic Development Authority 12 - - 12
- - - -
Capital Improvements 29,736- 3,154,9353,184,671
- - - -
Nonmajor Funds 72 - 1,153,4641,153,536
Total$ 34,28695,933$ 4,328,918$4,459,137$
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 6 – CAPITAL ASSETS
Governmental capital asset activity for the year ended December 31, 2017 was as follows:
Beginning Prior PeriodBeginning Ending
BalanceAdjustmentBalance, RestatedIncreasesDecreasesBalance
Governmental Activities:
Capital Assets not being
Depreciated:
Land$ 21,004,655$ 21,004,655-$$ 1,378,159$ 535,000$21,847,814
Right-Of-Way 253,904 253,904- - 253,904-
Construction in Progress 29,933,034 29,933,034- 2,841,19429,817,8452,956,383
Total Capital Assets
not being Depreciated51,191,593 51,191,593- 4,219,35330,352,84525,058,101
Capital Assets being
Depreciated:
Buildings 38,189,415 38,189,415- 36,806,3131,910,17573,085,553
Infrastructure149,064,1132,457,500151,521,613 5,326,741 156,848,354-
Machinery and Equipment18,622,869 18,622,869- 5,005,675 909,22922,719,315
Total Capital Assets
being Depreciated205,876,3972,457,500208,333,897 47,138,7292,819,404252,653,222
Less Accumulated
Depreciation for:
Buildings 13,524,176 13,524,176- 875,0011,707,60212,691,575
Infrastructure 79,755,891 210,77779,966,668 4,886,928 84,853,596-
Machinery and Equipment 8,033,982 8,033,982- 1,182,036 738,2578,477,761
Total Accumulated
Depreciation101,314,049 210,777101,524,826 6,943,9652,445,859106,022,932
Total Capital Assets being
Depreciated, Net104,562,3482,246,723106,809,071 40,194,764 373,545146,630,290
Go
vernmental Activities Capital
Assets, Net$ 2,246,723155,753,941$$ 44,414,117158,000,664$ $30,726,390$171,688,391
Depreciation expense was charged to functions/programs of the City as follows:
Governmental Activities:
General Government154,400$
Public Safety 712,535
Public Works 5,082,049
Parks and Recreation 994,981
Total Depreciation Expense - Governmental Activities$6,943,965
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 6 – CAPITAL ASSETS
Business-type capital asset activity for the year ended December 31, 2017 was as follows:
Beginning Prior PeriodBeginning Ending
BalanceAdjustmentBalance, RestatedIncreasesDecreasesBalance
Business-Type Activities:
Capital Assets not being
Depreciated:
Land 3,796,803$ $ 3,796,803-$ $ -$ 3,796,803-$
Right-Of-Way 507,746 507,746- - 507,746-
Construction in Progress 58,296 58,296- 666,850 9,987 715,159
Total Capital Assets
not being Depreciated 4,362,845 4,362,845- 666,850 9,987 5,019,708
Capital Assets being Depreciated:
Line Rights 1,368,569 1,368,569- - 1,368,569-
Plant in Service 87,306,6403,416,38190,723,021 3,190,204 93,913,225-
Machinery and Equipment 4,090,323 4,090,323- 261,900 125,017 4,227,206
Total Capital Assets
being Depreciated 92,765,5323,416,38196,181,913 3,452,104 125,017 99,509,000
Less Accumulated
Depreciation for:
Line Rights 576,561 576,561 24,733 601,294-
Plant in Service 24,292,098 100,54724,392,645 1,459,611 25,852,256-
Machinery and Equipment 2,160,430 2,160,430- 385,592 18,308 2,527,714
Total Accumulated
Depreciation 27,029,089 100,54727,129,636 1,869,936 18,308 28,981,264
Total Capital Assets being
Depreciated, Net 65,736,4433,315,83469,052,277 1,582,168 106,709 70,527,736
Business-Type Activities Capital
Assets, Net$ 70,099,288$ 73,415,1223,315,834$ 2,249,018$ 116,696$ $ 75,547,444
Depreciation expense was charged to functions/programs of the City as follows:
Business-Type Activities:
Sanitary Sewer$843,756
Storm Drainage909,069
Refuse117,111
Total Depreciation Expense - Business-Type Activities$1,869,936
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 6 – CAPITAL ASSETS
Component unit capital asset activity for the year ended December 31, 2017 was as follows:
Beginning Prior PeriodBeginning Ending
BalanceAdjustmentBalance, RestatedIncreasesDecreasesBalance
Component Unit Capital Assets
not being Depreciated:
Land and Land Rights$ 5,097,532$ 5,097,532-$$ -$ 5,097,532-$
Construction in Progress 8,268,479 8,268,479- 4,560,23810,020,559 2,808,158
Total Capital Assets
not being Depreciated13,366,011 13,366,011- 4,560,23810,020,559 7,905,690
Capital Assets being Depreciated:
Distribution 96,694,742 2,307,752 99,002,494 11,285,238 215,845110,071,887
General 14,414,295 14,414,295- 673,487 54,529 15,033,253
Total Capital Assets
being Depreciated 111,109,037 2,307,752 11,958,725113,416,789 270,374125,105,140
Less Accumulated Depreciation39,396,099 114,956 39,511,055 3,374,546 129,865 42,755,736
Total Capital Assets being
Depreciated, Net 2,192,79671,712,938 73,905,734 8,584,179 140,509 82,349,404
Component Unit Capital Assets, Net85,078,949$ $ 2,192,796$ 13,144,41787,271,745$ $ $90,255,09410,161,068
Depreciation expense was charged to functions/programs of the component units as follows:
Component Units:
Electric$2,055,840
Water1,318,706
Total Depreciation Expense - Component Units3,374,546$
NOTE 7 – LEASES
A.Operating Leases
The government leases office equipment under noncancelable operating leases.Total costs for such
leases were $30,555 for the year ended December 31, 2017. The future minimum lease payments for
these leases are as follows:
Year Ending Dec. 31Amount
2018$40,740
2019$40,740
2020$40,740
2021$10,185
Total$ 132,405
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 7 – LEASES
B.Capital Leases
The government has entered into a lease agreement as lessee for financing the community center weight
equipment with a down payment of $1,845. This lease agreement qualifies as a capital lease for
accounting purposes and, therefore have been recorded at the present value of its future minimum lease
payment as of the inception date.
The asset acquired through a capital lease is as follows:
Asset:
Machinery and Equipment79,100$
Less: Accumulated Depreciation -
Total$ 79,100
The future minimum lease obligation and the net present value of the minimum lease payments as of
December 31, 2017, were as follows:
Governmental
Year Ending Dec. 31Activities
201822,140$
201922,140
202022,140
20215,535
Total Minimum Lease Payments71,955
Less: Amount Representing Interest(6,625)
Present Value of Minimum Lease Payments65,330$
NOTE 8 –LONG-TERM DEBT
A. General Obligation Bonds
The City issues general obligation (G.O.) bonds to provide for financing tax increment projects, street
improvements and construction of government buildings. Debt service is covered respectively by tax
increments and special assessments against benefited properties with any shortfalls being paid from
general taxes.
G.O. bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally
are issued as serial bonds with equal debt service payments each year. G.O. bonds currently outstanding
are shown on the following page.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 8 –LONG-TERM DEBT
B. Revenue Bonds
The Commission issues Revenue Bonds for electric and water activity. Debt service is covered through
the revenue producing activities of these funds.
C. Components of Long-Term Liabilities
IssueInterestOriginalFinalPrincipalDue Within
DateRatesIssueMaturityOutstandingOne Year
Governmental Activities:
G.O. Bonds:
G.O. Improvement Bonds:
2007B09/01/074.00%1,445,000 02/01/18155,000$ 155,000$
2008A09/01/083.50%-4.00%2,170,000 02/01/19425,000 210,000
2010A08/01/100.50%-2.90%1,555,000 02/01/21505,000 135,000
G.O. Building Refunding Bonds 2012A06/14/121.50%-2.125%4,865,000 02/01/253,760,000 455,000
G.O. Tax Abatement Bonds 2016A01/21/163.00%-5.00%29,500,000 02/01/3629,500,000 1,040,000
Total G.O. Bonds 34,345,000 1,995,000
Unamortized Premiums 2,024,168 -
Capital Lease 65,330 18,788
Compensated Absences 2,255,798 1,015,109
Total Governmental
Activities$38,624,966$ 3,010,109
Business-Type Activities
Compensated Absences$ 65,189$ 29,335
Component Unit Long-Term Liabilities:
Utility Revenue Bonds:
Series 2006A Crossover Refunding Bonds11/21/064.125%-4.375%10,570,000 02/01/307,590,000$ $ 7,590,000
Unamortized Discounts (7,978) -
Total Component Unit Long-Term Liabilities$ 7,582,022$ 7,590,000
Long-term bonded indebtedness listed above were issued to finance acquisition and construction of
capital facilities or to refinance (refund) previous bond issues. For the most part, the General Fund and
the Employee Benefits Internal Service Fund are typically used to liquidate governmental compensated
absences payable. The Sewer and Storm Drainage funds are typically used to liquidate business type
compensated absences payable.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 8 – LONG-TERM DEBT
D. Changes in Long-Term Liabilities
Long-term liability information for the year ended December 31, 2017 was as follows.
BeginningEndingDue Within
BalanceAdditionsReductionsBalanceOne Year
Governmental Activities:
Bonds Payable$36,030,000$ 1,685,000-$ $34,345,000$ 1,995,000
Unamortized Premiums 2,135,590 111,422- 2,024,168 -
Capital Lease - 79,100 13,770 65,330 18,788
Compensated Absences 2,124,866 1,250,875 1,119,943 2,255,798 1,015,109
Total Governmental Activities40,290,456$ $ 1,329,975$ 2,930,135$38,690,296$3,028,897
Business-Type Activities
Compensated Absences$ 61,420$ 41,339$ 37,570$ 65,189$ 29,335
Component Unit Activites:
G.O. Utility Revenue Bonds$ 8,015,000$ 425,000-$ $7,590,000$ 7,590,000
Unamortized Discounts (8,598) - (620) (7,978) -
Total Component Unit Activites8,006,402$ $ 424,380-$ $7,582,022$7,590,000
E. Governmental Activity G.O. Bonds
Debt service to maturity for outstanding G.O. bonds is as follows:
Year EndingGovernmental Bonds
December 31,PrincipalInterestTotal
2018$ 1,995,000$ 1,163,474$ 3,158,474
2019 1,910,000 1,086,0582,996,058
2020 1,750,000 1,012,6442,762,644
2021 1,760,000 941,1612,701,161
2022 1,745,000 868,6562,613,656
2023-2027 8,615,000 3,380,38111,995,381
2028-2032 8,660,000 1,864,35610,524,356
2033-2036 7,910,000 492,3358,402,335
Total $ 10,809,06534,345,000$ 45,154,065$
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 8 – LONG-TERM DEBT
F.Component Unit Revenue Bonds
Debt service to maturity for outstanding revenue bonds is as follows:
Year EndingUtility Revenue Bonds
December 31,PrincipalInterestTotal
2018
$ 164,1847,590,000$ 7,754,184$
NOTE 9 – CONDUIT DEBT OBLIGATIONS
Conduit debt obligations are certain limited obligation revenue bonds or similar debt instruments issued
for the express purpose of providing capital financing for a specific third party. The City has issued
various revenue bonds to provide funding to private-sector entities for projects deemed to be in the
public interest. Although these bonds bear the name of the City, the City has no obligation for such debt
beyond the resources provided by related leases or loans. Accordingly, the bonds are not reported as
liabilities in the financial statements of the City.
As of December 31, 2017, the following conduit debt was outstanding:
Date of Original Amount Balance
ProjectIssueof IssueOutstanding
Scott County CDA Housing Development 07/15/06905,000$ 51,563$
2006D Refunding- River City Center Project
Scott County CDA Housing Development 04/26/125,885,000 4,955,000
2012A Refunding- North Ridge Court Redevelopment
Scott County CDA Housing Development12/01/132,330,000 1,835,000
2013A Refunding- River City Center Project
Scott County CDA Housing Development12/01/131,220,000 1,145,000
2013E Refunding- River City Center Project
Benedictine Health System Obligated Group12/01/139,485,000 7,149,789
Health Care and Housing Facilities Revenue Refunding
Note Series 2013A
Benedictine Health System Obligated Group12/01/139,575,000 8,132,759
Health Care and Housing Facilities Revenue Refunding
Note Series 2013B
St. Francis Regional Medical Center06/18/1441,865,000 38,215,000
Health Care Facilities Revenue Refunding Bond Series
2014
Total$61,484,111
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 10 – INTERFUND ASSETS/LIABILITIES
The composition of interfund balances as of December 31, 2017 is as follows:
Receivable FundPayable FundAmount
Capital Improvement FundTIF District No. 17$2,164,600
Capital Improvement FundNonmajor Governmental Funds3,870
Internal Service FundCity Hall 973,435
Sewer FundRefuse Fund71,072
Total3,212,977$
The due from/due to other funds balance represents borrowing to eliminate a cash deficit. This will be
repaid as funds are available.
NOTE 11 – ADVANCE FROM/TO OTHER FUNDS
The composition of advance from/to other funds as of December 31, 2017 is as follows:
Receivable FundPayable FundAmount
Sewer FundRefuse Fund$ 746,924
Internal Service FundEconomic Development Authority1,291,394
Storm Drainage FundInternal Service Fund 1,650,000
Total3,688,318$
The advance between the Sewer Fund and Refuse Fund represents a long term interfund loan which was
used to purchase garbage carts. This will be repaid over 10 years with revenue collected for cart usage
at rate of 1% interest. The advance between the Internal Service fund and Economic Development
Authority Fund represents two interfund loans. The first is a long term interfund loan which was used to
purchase property, this will be repaid over 10 years with proceeds from the sale of land or tax levy at
rate of 0% interest. The second represents a long term interfund loan which was used to purchase land
which will be resold. This will be repaid once the parcels are sold or developed at rate of 0% interest.
The advance between the Storm Drainage Fund and the Internal Service fund represents a long term
interfund loan which was used as a financing source related to the building of the new city hall building.
This will be repaid over 15 years with rent collection at rate of 1.25% interest.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 12 – INTERFUND TRANSFERS
Transfer InTransfer Out
Governmental Funds:
General Fund (1) (2) (6) (11)
$ 1,800,000250,000$
Economic Development Authority (2) (3) (5) (7) (9) 429,509961,763
Capital Improvements (3) (8) (10) 2,490,389-
City Hall (6) 3,221,000-
TIF District No. 17 (8) 2,319,076-
Other Governmental Funds (3) (4) (7) (9) (10) 359,777246,354
Total Governmental Funds7,282,9294,794,939
Proprietary Funds:
Sewer (1) (5) (8) (294,338)-
Storm Drainage (1) (3) (8) (132,709)-
Total Proprietary Funds (427,047)-
Internal Service Funds:
Buildings (4) (6) 3,061,000-
Self Insurance (11) 600,000-
Total Internal Service Funds600,0003,061,000
Total$7,882,929$7,428,892
(1)Annual transfer to finance General Fund
(2)Annual transfer to fund operations and downtown capital project
(3)Annual transfer to fund infrastructure projects (Lewis Street Parking Lot and Alley and
the 4th Avenue Reconstruction)
(4)Annual transfer for bond payment
(5)Transfer sewer access connection credit funds to Economic Development Authority as
business subsidies
(6)Transfer to City Hall Fund for city hall construction
(7)Transfer from the Revolving Loan Fund for Anchor Glass MIF Loan
(8)Transfer to reimburse funds for 4th Avenue Reconstruction project which will be funded
with tax increment
(9)Transfer to close Property Acquisition Fund to Economic Development Authority Fund
Transfer to close bond funds as the final payment made during the year
(10)
(11)Transfer to provide self insurance funding
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
The city participates in various pension plans.Total pension expense for the year ended December 31,
2017 was $1,327,053. The components of pension expense are noted in the following plan summaries.
Public Employees' Retirement Association
A. Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit pension plans
administered by PERA. PERA's defined benefit pension plans are established and administered in
accordance with Minnesota Statutes, Chapters 353 ad 356. PERA's defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan (General Employees Plan (accounted for in the General
Employees Fund))
All full-time and certain part-time employees of the City are covered by the General Employees Plan.
General Employees Plan members belong to either the Coordinated Plan or the Basic Plan. Coordinated
Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was
closed to new members in 1967. All new members must participate in the Coordinated Plan.
Public Employees Police and Fire Plan (Police and Fire Plan (accounted for in the Police and Fire
Fund))
The Police and Fire Plan, originally established for police officers and firefighters not covered by a local
relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999,
the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association
that elected to merge with and transfer assets and administration to PERA.
B.Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute and can only be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are
given 2.5 percent increases. Members in plans that have not exceeded 90 percent funded, or have fallen
below 80 percent, are given one percent increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply
to active plan participants. Vested, terminated employees who are entitled to benefits but are not
receiving them yet are bound by the provisions in effect at the time they last terminated their public
service.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
Public Employees' Retirement Association (Continued)
B. Benefits Provided (Continued)
General Employees Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for any five successive
years of allowable service, age and years of credit at termination of service. Two methods are used to
compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the
higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under
Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of
the first ten years of service and 2.7 percent for each remaining year. The annuity accrual rate for a
Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent
for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for
Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For
members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90
and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is
the age for unreduced Social Security benefits capped at 66.
Police and Fire Plan Benefits
Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2015,
vest on a prorated basis from 50 percent after five years up to 100 percent after ten years of credited
service. Benefits for Police and Fire Plan members first hired after June 30, 2015, vest on a prorated
basis from 50 percent after ten years up to 100 percent after twenty years of credited service. The
annuity accrual rate is 3 percent of average salary for each year of service. For Police and Fire Plan
members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of
service equal at least 90.
C.Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution
rates can only be modified by the state legislature.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
C.Contributions (Continued)
General Employees Fund Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.50
percent, respectively, of their annual covered salary in calendar year 2017. The City was required to
contribute 11.78 percent of pay for Basic Plan members and 7.50 percent for Coordinated Plan members
in calendar year 2017. The City's contributions to the General Employees Fund for the year ended
December 31, 2017, was $499,333. The City's contributions were equal to the required contributions as
set by state statute. The Commission's contributions to the General Employees Fund for the year ended
December 31, 2017, was $315,791. The Commission's contributions were equal to the required
contributions as set by state statute.
Police and Fire Fund Contributions
Plan members were required to contribute 10.8 percent of their annual covered salary in calendar year
2017. The City was required to contribute 16.20 percent of pay for Police and Fire Fund members in
calendar year 2017. The City's contributions to the Police and Fire Fund for the year ended December
31, 2017, was $788,803. The City's contributions were equal to the required contributions as set by state
statute.
D.Pension Costs
General Employees Fund Pension Costs
At December 31, 2017, the City reported a liability of $6,549,916 for its proportionate share of the
General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due
to the State of Minnesota's contribution of $6 million to the fund in 2017. The State of Minnesota is
considered a non-employer contributing entity and the State's contribution meets the definition of a
special funding situation. The State of Minnesota's proportionate share of the net pension liability
associated with the City totaled $82,350. The net pension liability was measured as of June 30, 2017,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportion of the net pension liability was based on the City's
contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2016, through June 30, 2017, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2017, the City's proportion share was 0.1026 percent,
which was an increase of 0.0093 percent from its proportion measured as of June 30, 2016.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
For the year ended December 31, 2017, the City recognized pension expense of $1,024,203 for its
proportionate share of General Employees Fund's pension expense. In addition, the City recognized an
additional $2,378 as pension expense (and grant revenue) for its proportionate share of the State of
Minnesota's contribution of $6 million to the General Employees Fund.
At December 31, 2017, the City reported its proportionate share of the General Employees Plan's
deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the
measurement date, related to pensions from the sources as follows.
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience217,355$ 422,524$
Changes in actuarial assumptions1,097,432 656,630
Difference between projected and actual investment earnings- 853
Changes in proportion433,037 138,237
Contributions paid to PERA subsequent to the measurement date255,796 -
Total2,003,620$ 1,218,244$
Deferred outflows of resources totaling $255,796 related to pensions resulting from City contributions to
General Employees Fund subsequent to the measurement date will be recognized as a reduction of the
net pension liability in the year ended December 31, 2018. Other amounts reported as deferred outflows
and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ending Pension Expense
December 31,Amount
2018$357,982
2019438,683
202010,946
2021(278,031)
Total$529,580
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs
At December 31, 2017, the City reported a liability of $6,494,072 for its proportionate share of the
Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2017,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportion of the net pension liability was based on the City's
contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2016, through June 30, 2017, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2017, the City's proportion share was 0.4810 percent which
was an increase of 0.0130 percent from its proportion measured as of June 30, 2016. The City also
recognized $43,290 for the year ended December 31, 2017 as revenue and an offsetting reduction of net
pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the
Police and Fire Fund. Legislation passed in 2013 required the State of Minnesota to begin contributing
$9 million to the Police and Fire Fund each year, starting in fiscal year 2014.
For the year ended December 31, 2017, the City recognized pension expense of $809,166 for its
proportionate share of the Police and Fire Fund's pension expense.
At December 31, 2017, the City reported its proportionate share of the Police and Fire Plan's deferred
outflows of resources and deferred inflows of resources, and its contributions subsequent to the
measurement date, from the following sources:
Deferred
Outflows of Deferred Inflows
Resourcesof Resources
Differences between expected and actual economic experience149,574$ 1,716,907$
Changes in actuarial assumptions8,515,634 9,219,972
Difference between projected and actual investment earnings45,914 -
Changes in proportion304,470 28,713
Contributions paid to PEPFF subsequent to the measurement date405,777 -
Total9,421,369$ 10,965,592$
Deferred outflows of resources totaling $405,777 related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2018. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense on the following page.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Year EndingPension Expense
December 31, Amount
2018$194,712
2019194,712
2020(94,030)
2021(469,339)
2022(1,776,055)
Total$(1,950,000)
Component Unit’s General Employees Fund Pension Costs
At December 31, 2017, the Commission reported a liability of $4,111,253 for its proportionate share of
the General Employees Fund's net pension liability. The Commission's net pension liability reflected a
reduction due to the State of Minnesota's contribution of $6 million to the fund in 2017. The State of
Minnesota is considered a non-employer contributing entity and the State's contribution meets the
definition of a special funding situation. The State of Minnesota's proportionate share of the net pension
liability associated with the Commission totaled $51,656. The net pension liability was measured as of
June 30, 2017, and the total pension liability used to calculate the net pension liability was determined
by an actuarial valuation as of that date. The Commission's proportion of the net pension liability was
based on the Commission's contributions received by PERA during the measurement period for
employer payroll paid dates from July 1, 2016, through June 30, 2017, relative to the total employer
contributions received from all of PERA's participating employers. At June 30, 2017, the Commission's
proportion share was 0.0644 percent, which was an increase of 0.0023 percent from its proportion
measured as of June 30, 2016.
For the year ended December 31, 2017, the Commission recognized pension expense of $595,842 for its
proportionate share of General Employees Fund's pension expense. In addition, the Commission
recognized an additional $1,492 as pension expense (and grant revenue) for its proportionate share of the
State of Minnesota's contribution of $6 million to the General Employees Fund.
At December 31, 2017, the Commission reported its proportionate share of General Employees Fund's
deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the
measurement date, from the following sources on the subsequent page.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Deferred
Outflows of Deferred Inflows
Resourcesof Resources
Differences between expected and actual economic experience135,494$ 253,909$
Changes in actuarial assumptions658,180 412,155
Difference between projected and actual investment earnings- 2,515
Changes in proportion173,747 59,893
Contributions paid to PERA subsequent to the measurement date159,036 -
Total1,126,457$ 728,472$
$159,036 reported as deferred outflows of resources related to pensions resulting from Commission
contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2018. Other amounts reported as deferred outflows and inflows
of resources related to pensions will be recognized in pension expense on the following page.
Year Ending Pension Expense
December 31,Amount
2018$ 169,266
2019 282,114
2020 (37,917)
2021 (174,514)
Total$ 238,949
E. Actuarial Assumptions
The total pension liability in the June 30, 2017, actuarial valuation was determined using the entry age
normal actuarial cost method and the following actuarial assumptions:
Inflation2.50%Per Year
Active member payroll growth3.25%Per Year
Investment rate of return7.50%
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
E. Actuarial Assumptions (Continued)
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants were based on RP-2014 tables for all plans for males or females, as
appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases for
retirees are assumed to be 1 percent per year for the General Employees Fund through 2044 and Police
and Fire Plan through 2064 and then 2.5 percent thereafter for both plans.
Actuarial assumptions used in the June 30, 2017, valuation were based on the results of actuarial
experience studies. The most recent four-year experience study in the General Employees Plan was
completed in 2015. The most recent five-year experience study for Police and Fire Plan was completed
in 2016.
The following changes in actuarial assumptions occurred in 2017:
General Employees Fund
The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and
60 percent for vested and non-vested deferred members. The revised CSA loads are now 0.0 percent
for active member liability, 15.0 percent for vested deferred member liability and 3.0 percent for
non-vested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all
years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter.
Police and Fire Fund
Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The
net effect is proposed rates that average 0.34 percent lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred
members. The CSA has been changed to 33 percent for vested members and 2 percent for non-
vested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully generational
table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by
a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-2016.
The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality
table to the mortality tables assumed for healthy retirees.
Assumed termination rates were decreased to 3.0 percent for the first three years of service. Rates
beyond the select period of three years were adjusted, resulting in more expected terminations
overall.
Assumed percentage of married female members was decreased from 65 percent to 60 percent.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
E. Actuarial Assumptions (Continued)
Police and Fire Fund (Continued)
Assumed age difference was changed from separate assumptions for male members (wives assumed
to be three years younger) and female members (husbands assumed to be four years older) to the
assumption that males are two years older than females.
The assumed percentage of female members electing joint and survivor annuities was increased.
The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years to
1.00 percent per year through 2064 and 2.50 percent thereafter.
The single discount rate was changed from 5.6 percent to 7.5 percent.
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness of the long-term expected rate of return on a regular basis using a building-block method
in which best-estimate ranges of expected future rates of return are developed for each major asset class.
These ranges are combined to produce an expected long-term rate of return by weighting the expected
future rates of return by the target asset allocation percentages. The target allocation and best estimates
of geometric real rates of return for each major asset class are summarized in the table below.
Target Long-Term Expected
Asset ClassAllocationReal Rate of Return
Domestic Equity39.00%5.10%
International Equity19.00%5.30%
Fixed Income20.00%7.50%
Real Estate and Alternatives20.00%5.90%
Cash and Equivalents2.00%0.00%
Total100.00%
F. Discount Rate
The discount rate used to measure the total pension liability in 2017 was 7.5 percent, a reduction from
the 7.9 percent used in 2016. The projection of cash flows used to determine the discount rate assumed
that contributions from Plan members and employers will be made at rates set in Minnesota Statutes.
Based on those assumptions, the fiduciary net position of the General Employees Fund and the Police
and Fire Plan was projected to be available to make all projected future benefit payments of current Plan
members. Therefore, the long-term expected rate of return on pension plan investments was applied to
all periods of projected benefit payments to determine the total pension liability.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
G. Pension Liability Sensitivity
The following table presents the City's proportionate share of the net pension liability for all plans it
participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what
the City's proportionate share of the net pension liability would be if it were calculated using a discount
rate 1 percentage point lower or 1 percentage point higher than the current discount rate:
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
(6.5%)(7.5%)(8.5%)
City's proportionate share of the General
Employees Fund net pension liability$10,159,407$6,579,916$3,594,893
Commission's proportionate share of the
General Employees Fund net pension liability6,376,860$$4,111,253$2,256,443
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
(6.5%)(7.5%)(8.5%)
City's proportionate share of the Police
and Fire Fund net pension liability$12,230,233$6,494,072$1,758,555
H.Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in a separately-issued
PERA financial report that includes financial statements and required supplementary information. That
report may be obtained on the Internet at www.mnpera.org.
Public Employees Defined Contribution Plan (Defined Contribution Plan)
Four Council Members of the City are covered the Defined Contribution Plan, a multiple-employer
deferred compensation plan administered by PERA. The Defined Contribution Plan is a tax qualified
plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of
employees are tax deferred until time of withdrawal.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 –PENSION PLANS
Public Employees' Retirement Association (Continued)
H.Pension Plan Fiduciary Net Position (Continued)
The defined contribution plan consists of individual accounts paying a lump-sum benefit, plan benefits
depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses,
therefore, there is no future liability to the employer. Minnesota Statutes, Chapter 353D.03, specifies
plan provisions, including the employee and employer contribution rates for those qualified personnel
who elect to participate. An eligible elected official who decides to participate contributes five percent
of salary which is matched by the elected official's employer. For ambulance service personnel,
employer contributions are determined by the employer, and for salaried employees must be a fixed
percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or
period of alert duty. Employees who are paid for their services may elect to make member contributions
in an amount not to exceed the employer share. Employer and employee contributions are combined and
used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment
Fund. For administering the plan, PERA receives two percent of employer contributions and twenty-five
hundredths of one percent (.0025) of the assets in each member's account annually.
Pension expense for the year is equal to contributions made. Total contributions made by the City during
fiscal year 2017 were:
Contribution AmountPercentage of Covered Payroll
EmployeeEmployerEmployeeEmployerRequired Rate
$ 2,3932,393$ 5%5%5%
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association
A.Plan Description
The Shakopee Firefighter'sRelief Association is the administrator of a single employer defined benefit
pension plan established to provide benefits for members of the Shakopee Fire Department per
Minnesota State Statutes.
The Association issues a publicly available financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to Shakopee Fire Relief
Association, 485 Gorman Street, Shakopee, Minnesota 55379 or by calling 952-233-9570.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
B.Benefits Provided
Volunteer firefighters of the City are members of the Shakopee Fire Fighter'sRelief Association. Full
retirement benefits are payable to members who have reached age 50 and have completed 20 years of
service for lump sum service pension. Partial benefits are payable to members who have reached 50 and
have completed 5 years of service. Disability benefits and widow and children's survivor benefits are
also payable to members or their beneficiaries based upon requirements set forth in the bylaws.
These benefit provisions and all other requirements areconsistent with enabling state statutes.
C. Employees Covered by Benefit Terms
At December 31, 2016, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits0
Inactive employees entitled to but not yet receiving benefits20
Active Employees42
Total62
D. Contributions.
Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis. The
minimum support rates from the municipality and from State aids are determined as the amount required
to meet the normal cost plus amortizing any existing prior service costs over a ten year period. The
City's obligation is the financial requirement for the year less state aids. Any additional payments by the
City shall be used to amortize the unfunded liability of the relief association. The Association is
comprised of volunteers: therefore, there are no payroll expenditures (i.e. there are no covered payroll
percentage calculations). During the year, the City recognized as revenue and as an expenditure an on
behalf payment of $246,910 made by the State of Minnesota for the Relief Association.
E. Net Pension Liability
The City's net pension liability was measured as of December 31, 2016, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
E. Net Pension Liability (Continued)
Actuarial assumptions.
The total pension liability in the December 31, 2016, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.75 %
Salary increase 0.00 %, average, including inflation
Investment rate of return 5.75 %, net of pensions plan investment expense:
including inflation
The Association is comprised of volunteers; therefore, there are no salary increases.
The value of death benefits is similar to the value of the retirement pension. Because of low retirement
ages, the plan assumes no pre-retirement mortality. Post-retirement mortality does not apply as the
benefit structure and form of payment do not reflect lifetime benefits.
The long-term return on assets has been set based on the plan's target investment allocation along with
long-term return expectations by asset class. When there is sufficient historical evidence of market
outperformance, historical average returns may be considered. Best estimates of arithmetic real rates of
return for each major asset class included in the pension plan's target asset allocation as of the
measurement date are summarized in the table below.
Target Long-Term Expected
Asset ClassAllocationReal Rate of Return
Domestic Equity40.00%5.39%
International Equity15.00%5.20%
Fixed Income30.00%1.98%
Real Estate and Alternatives15.00%4.25%
Cash and Equivalents0.00%79.00%
Total100.00%
Discount rate.
The discount rate used to measure the total pension liability was 5.75 %. Assets were projected using
expected benefit payments and expected asset returns. Expected benefit payments by year were
discounted using the expected asset return assumption for years in which the assets were sufficient to
pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are
discounted at the municipal bond rate. The equivalent single rate is the discount rate.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
F. Changes in the Net Pension Liability
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
LiabilityNet PositionLiability
(a)(b)(a) - (b)
$4,032,080$5,149,186$ (1,117,106)
Balances at January 1, 2016
Changes for the year
Service Cost 151,879 151,879-
Interest 247,134 247,134-
Difference between expected and actual
experience (75,511) - (75,511)
Changes of assumptions 31,553 - 31,553
Contributions- State and Local 247,910- (247,910)
Net Investment Income 385,789- (385,789)
Benefit Payments, including refunds of
employee contributions (130,106) (130,106) -
Administrative Expense (16,676)- 16,676
Net Changes$ 224,949$ 486,917$ (261,968)
$4,257,029$5,636,103$ (1,379,074)
Balances at December 31, 2016
Sensitivity of the net pension liability to changes in the discount rate. The following presents the net
pension liability of the City, calculated using the discount rate disclosed on the proceeding page, as well
as what the City's net pension liability would be if it were calculated using a discount rate that is 1-
percentage point lower or 1 percentage point higher than the current discount rate:
1% Decrease in Current1% Increase in
Discount RateDiscount RateDiscount Rate
(4.75%)(5.75%)(6.75%)
City's proportionate share of
the Relief net pension asset1,248,325$ 1,379,074$ 1,502,552$
Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position
is available in the separately issued relief association financial report.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 13 – PENSION PLANS
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
G. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended December 31, 2016, the City recognized pension expense of negative $48,171. At
December 31, 2016, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred
Outflows of Deferred Inflows
Resourcesof Resources
Contributions paid subsequent to the measurement date250,336$ -$
Difference between expected and actual liability- 66,998
Changes in assumptions27,996 -
Net Difference Between Projected and Actual Earnings on
Pension Plan Investments277,639 -
Total555,971$ 66,998$
$250,336 reported as deferred outflows of resources related to pensions resulting from State contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year
ended December 31, 2017.Amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ending Pension Expense
December 31,Amount
2018$ 91,985
2019 91,986
2020 95,074
2021 (21,230)
2022 (4,956)
Thereafter (14,222)
Total$ 238,637
H. Payable to the Pension Plan
At December 31, 2017, the City reported a payable of $0 for the outstanding amount of contributions to
the pension plan required for the year ended December 31, 2017.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 14 – POST EMPLOYMENT HEALTH BENEFITS PLAN
A. Plan Description
The City provides a single-employer defined benefit health care plan to eligible retirees and their
spouses. The plan offers medical coverage administered by Medica. It is the City’s policy to
periodically review its medical coverage and to obtain requests for proposals in order to provide the
most favorable benefits and premiums for City employees and retirees.
B. Funding Policy
Retirees and their spouses contribute to the health care plan at the same rate as City employees. This
results in the retirees receiving an implicit rate subsidy. Contribution requirements are established by
the City, based on the contract terms with Medica. The required contributions are based on projected
pay-as-you-go financing requirements. For the year 2017, the City contributed $69,193 to the plan. As
of January 1, 2017, there were five retirees and three disabled officers receiving health benefits from the
City’s health plan. For the most part, the General Fund and the Employee Benefits Internal Service
Fund are typically used to liquidate net other post employment benefit obligations.
C. Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC)
of the City, an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period
not to exceed 30 years. The following table shows the components of the City’s annual OPEB cost of
the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation to
the plan.
ARC$ 350,215
Interest on Net OPEB Obligation 58,404
Adjustment to ARC (90,728)
Annual OPEB Cost (Expense) 317,891
Contribution Made (69,193)
Increase in Net OPEB Obligation 248,698
Net OPEB Obligation - Beginning of Year1,668,674
Net OPEB Obligation - End of Year$ 1,917,372
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2017 was as shown on the following page.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 14 – POST EMPLOYMENT HEALTH BENEFITS PLAN
C. Annual OPEB Cost and Net OPEB Obligation
Percentage of
Fiscal YearAnnual OPEBEmployerAnnual OPEBNet OPEB
EndCostContributionCost ContributedObligation
12/31/17317,891$ 69,193$ 22%1,917,372$
12/31/16310,227 53,193 17%1,668,674
12/31/15237,322 69,166 29%1,411,640
D. Funded Status and Funding Progress
As of January 1, 2016, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $2,629,107 and the actuarial value of assets was
$0, resulting in an unfunded actuarial accrued liability (UAAL) of $2,629,107. The covered payroll
(annual payroll of active employees covered by the plan) was 12,403,330 and the ratio of the UAAL to
the covered payroll was 21.2%.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality and the health care cost trend. Amounts determined regarding the funded status
of the plan and the ARC of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
The Schedule of Funding Progress – Other Post Employment Benefits, presented as required
supplementary information following the Notes to the Financial Statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
E. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the
long-term perspective of the calculations.
In the January 1, 2017 actuarial valuation, the projected unit credit actuarial cost method was used. The
actuarial assumptions included a 3.5 % discount rate, which is based on the investment yield expected to
finance benefits depending on whether the plan is funded in a separate trust (about 7.0% to 8.5%, long-
term, similar to a pension plan) or unfunded (3.5% to 5.0%, shorter-term, based on City’s general
assets). The City currently does not fund this benefit. At the actuarial valuation date, the annual health
care cost trend rate was calculated to be 3.2% initially, increased incrementally to an ultimate rate of
5.3% after five years. Both rates included a 2.75% inflation assumption. The UAAL is being amortized
as a level percentage of payroll on an open basis. The remaining amortization period at December 31,
2017 was 29 years.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 15 – SEGMENT INFORMATION
The City maintains three enterprise funds that account for the sewer, storm drainage and refuse utilities.
The City considers each of its enterprise funds to be a segment. Since the required segment information
is already included in the City’s proprietary funds’ Balance Sheet and Statement of Revenues, Expenses
and Changes in Fund Net Position balances, this information has not been repeated in the Notes to the
Financial Statements.
NOTE 16 – FUND BALANCE DETAIL
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
EconomicCommunity Other
GeneralDevelopmentCapitalCenter/ IceTIF DistrictGovernmental
FundAuthorityImprovementsArenaCity HallNo. 17FundsTotal
Nonspendable:
Prepaid Items$59,023$ -$ -$ -$ -$ -$ 59,023-$
Restricted:
Forfeitures- - - - - -221,048221,048
SCDP Grant- - - - - -10,80510,805
Revolving Loans- - - - - -138,004138,004
Economic Development - 356,588 - - - - 356,588-
Debt Service- - - - - -3,608,4533,608,453
Capital Improvements- - - 188,217 - -1,351,0501,539,267
Total Restricted - 356,588 - 188,217 - -5,329,3605,874,165
Assigned:
Telecommunications- - - - - -74,13974,139
Capital Improvements- - 6,592,822 - - -530,3297,123,151
Total Assigned- - 6,592,822 - - -604,4687,197,290
Unassigned:11,918,971 - - -(1,071,720)(2,164,600)(4,695)8,677,956
Total Fund Balance11,977,994$ 356,588$$ 6,592,822$ 188,217$ (2,164,600)(1,071,720)$ 5,929,133$$21,808,434
NOTE 17 – COMMITTMENTS
ProjectWork 12/31/2017
AuthorizationCompletedCommitment
2016 Sanitary Sewer Lateral Pipe Rehabilitation$ 524,980$ 397,682$ 127,298
Whispering Oaks 644,014 573,454 70,560
Vierling Drive Extension 321,713 294,012 27,701
2 Pumper Trucks 1,235,674 498,566 737,108
Quarry Lake Park Phase 2 63,800 22,803 40,997
Downtown 2,011,261 1,839,957 171,304
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 18 – RISK MANAGEMENT
The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance
Trust (LMCIT) with other cities in the state which is a public entity risk pool currently operating as a
common risk management and insurance program. The City pays an annual premium to the LMCIT for
its insurance coverage. The LMCIT is self-sustaining through member premiums and reinsures through
commercial companies for excess claims. The City is covered through the pool for any claims incurred
but unreported, however, retains risk for the deductible portion of its insurance policies. The amount of
these deductibles ranges from $10,000 to $50,000 and is considered immaterial to the financial
statements.
There were no significant reductions in insurance from the previous year or settlements in excess of
insurance coverage for any of the past three years.
Through the pool, the City is subject to reassessment but due to reserves and reinsurance contracts, the
likelihood is very low. The policy limits through the pool included $3,000,000 aggregate for liability,
$2,000,000 for automobile coverage, $1,000,000 faithful performance employee bonding and
$2,000,000 for universal umbrella coverage. Property coverage is at approximately $79,000,000.
NOTE 19 – TAX ABATEMENT AGREEMENT
The City has entered into three Tax Abatement Financing agreements which meet the criteria for
disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement
Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The
City entered into these agreements for the purpose of economic development.
Under each agreement, the City and developer agree on an amount of development costs to be
reimbursed to the developer by the City though tax revenues from the additional taxable value of the
property generated by the development (tax abatement).
The tax abatement agreements are as follows:
Datacard Abatement was established in 2014. Entrust Datacard is the world’s largest issuer of
protected, personalized ID cards, credentials, and credit cards. The City of Shakopee awarded an
eleven-year economic development property tax abatement, ending in 2024, which required the
creation of 100 new full time jobs in Shakopee. The first year of disbursement occurred in 2014.
The total city abatement awarded was $334,869 with an annual maximum award of $36,195. The
total county abatement awarded was $324,324 with an annual maximum award of $35,055.
During the year ended December 31, 2017, the total disbursed was $67,203 with $32,416 from
Scott County and $34,787 from the City.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 19 – TAX ABATEMENT AGREEMENT
Emerson Abatement was established in 2013. Rosemount Emerson Process Managementis a
leading supplier of process management products and solutions, including control valves,
regulators, transmitters, analyzers, and automation systems. The City of Shakopee awarded a
nine-year economic development property tax abatement, ending in 2023, which required the
creation of 154 new full-time jobs in Shakopee. The first year of disbursement occurred in 2016.
The total city abatement awarded was $590,496. The total county abatement awarded was
$570,608 with an annual maximum award of $64,401. During the year ended December 31,
2017, the total disbursed was $109,647 with $52,890 from Scott County and $56,757 from the
City.
Shutterfly Abatement was established in 2014. Shutterfly, Inc. is an Internet-based social
expression and personal publishing service that was founded in December of 1999. The City of
Shakopee awarded a nine-year economic development property tax abatement, ending in 2024,
which required the creation of 258 new jobs in Shakopee. The first year of disbursement
occurred in 2017. The total city abatement awarded was $758,771 with an annual maximum
award of $89,431. The total county abatement awarded was $734,898 with an annual maximum
award of $86,615. The 2017 disbursement amount was reduced by 11% due to Shutterfly not
meeting their job creation goal of 258 new jobs. They created 230 which left them 28 jobs short
or 11% short of their goal, therefor the annual award was reduced to reflect the shortage. The
abatement was awarded from the City and Scott County. During the year ended December 31,
2017, the total disbursed was $131,376 with $63,370 from Scott County and $68,006 from the
City.
NOTE 20 TAX INCREMENT FINANCING
The City has entered into five Tax Increment Financing agreements which meet the criteria for
disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement
Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The
City entered into these agreements for the purpose of economic development.
Under each agreement, the City and developer agree on an amount of development costs to be
reimbursed to the developer by the City though tax revenues from the additional taxable value of the
property generated by the development (tax increment). A "pay-as-you-go" is established for this
amount, on which the City makes payments for a fixed period of time with available tax increment
revenue after deducting for certain administrative costs.
During the year ended December 31, 2017, the City generated $1,014,773 in tax increment revenue and
made $803,465 in payments to developers.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 20 TAX INCREMENT FINANCING
TIF District No. 10 was established in 1996 for the purpose of establishing multifamily rental
housing. River City Centre is 52-units of multifamily rental housing owned and operated by the
Scott County Community Development Authority (CDA). Under this agreement, up to
$2,115,000 in development costs would be reimbursed over twenty-five years with the final year
being 2024. During the year ended December 31, 2017, the City generated $55,246 of tax
increment revenue and made payments of $49,721. The available balance at year end was
$1,195,000.
TIF District No. 14 was established in 2015 as an economic development TIF. J&J
Minneapolis/SanMar is a wholesale apparel and accessories distribution company. This TIF
required the creation of 150 new full time jobs in Shakopee. The first year of disbursement
occurred in 2016 and the final year will be in 2024. Under this agreement, up to $2,000,000 of
development costs will be reimbursed through tax increment over a 9 year period. During the
year ended December 31, 2017, the City generated $315,985 of tax increment revenue and made
payments on the pay-as-you-go note of $284,387. The available balance at year end was
$1,503,422.
TIF District No. 15 was established in 2015 for the purpose of establishing a housing unit.
Trident/All Saints Senior Livingis an 80-unit senior community providing assisted living,
memory care, and care suites with 20% of the units being affordable to persons of low and
moderate income. Under the agreement, up to $1,000,000 of development costs will be
reimbursed through tax increment over a 25 year period. During the year ended
December 31, 2017, the City generated $154,345 of tax increment revenue and made payments
of $138,910. The available balance at year end was $816,345.
TIF District No.16 was established in 2015 for the construction of a facility. Rahr Malting
Company produces and distributes malt and industry related brewing supplies. Under the
agreement, up to $1,883,086 of development costs will be reimbursed through tax increment
over a 9 year period. During the year ended December 31, 2017, the City generated $112,371 of
tax increment revenue and made payments of $109,000. The available balance at year end was
$1,774,087.
TIF District No.17 was established in 2016 to upgrade the roads surrounding the expansion of
Amazon.com. The total amount authorized was $5,698,326 with 40.7% ($2,319,076) of these
funds going to the City of Shakopee and 59.3% ($3,379,250) going to Scott County. Under the
agreement, up to $5,698,326 of development costs will be reimbursed through tax increment
over a 9 year period to the City and County. During the year ended December 31, 2017, the City
generated $376,827 of tax increment revenue and made payments of $221,447 to the County and
$151,988 to the City. The available balance at year end was $3,157,803 for the County and
$2,167,088 for the City.
CITY OF SHAKOPEE
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 21 – PRIOR PERIOD ADJUSTMENT
A prior period adjustment of $5,562,557 was made to recognize capital contributions from developer
installed infrastructure for the years ending 2010 through 2016. The prior period adjustment reflects
additions to capital assets in the Sewer fund, Storm Drainage fund, and governmental activities in the
amount of $1,224,023, $2,091,811, and $2,246,723, respectively. A prior period adjustment was made
for the commission during 2017 to account for contributed capital that had not been previously
recognized in prior years. The result of the prior period adjustment increased the beginning net position
in the component unit water fund by $2,192,796.
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SHAKOPEE
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
December 31, 2017
ActuarialUAAL as a
ActuarialAccrued LiabilityUnfundedPercentage of
ActuarialValue of (AAL) -AALFunded CoveredCovered
ValuationAssetsEntry Age(UAAL)RatioPayrollPayroll
Date(a)(b)(b-a)(a/b)(c)((b-a)/c)
01/01/08$ 1,887,961-$ $ 0.0%6,652,6691,887,961$28.4%
01/01/09*- 1,887,961 1,887,9610.0%6,652,669 28.4%
01/01/10 1,483,810- 1,483,8100.0%7,154,161 20.7%
01/01/11*- 1,483,810 1,483,8100.0%7,154,161 20.7%
01/01/12*- 1,483,810 1,483,8100.0%7,154,161 20.7%
01/01/13 1,938,082- 1,938,0820.0%8,738,120 22.2%
01/01/14*- 1,938,082 1,938,0820.0%8,738,120 22.2%
01/01/15*- 1,938,082 1,938,0820.0%8,738,120 22.2%
01/01/16 2,629,107- 2,629,1070.0%12,403,330 21.2%
01/01/17*- 2,629,107 2,629,1070.0%12,403,330 21.2%
* Because an actuarial valuation is beingperformed once every three years, the amounts for
the 01/01/08 and 01/01/09, and the 01/01/10, 01/01/11 and 01/01/12,and the 01/01/13, 01/01/14
and 01/01/15, and the 01/01/16 and 01/01/17 valuation are the same.
CITY OF SHAKOPEE
SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY
LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND
City's
City's Proportionate
Proportionate Plan
State's Share of the Net
Proportionate Pension Liability Share of the Fiduciary Net
City'sCity's Share of the and the State's Net Pension Position as a
Proportion Proportionate Net Pension Proportionate Share City'sLiability as a Percentage of
of the Net Share of the Liability of the Net Pension Covered- Percentage of the Total
For the Fiscal
Pension Net Pension AssociatedLiability Associated Employeeits Covered Pension
Year Ended
Liability Liabilitywith the Citywith the CityPayrollPayroll Liability
June 30, 20170.1026%6,549,916$ 82,350$ 6,632,266 6,194,560 105.74%75.90%
June 30, 20160.0933%7,575,497 98,919 7,674,416 5,790,920 130.82%68.91%
June 30, 20150.0930%4,819,743 - 4,819,743 5,373,627 89.69%78.19%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY
LAST 10 YEARS PUBLIC EMPLOYEES POLICE AND FIRE RETIREMENT FUND
y
City's Cit
Proportioy's Proportionate Plan Fiduciary
portionate City's
n of the ProShare of the Net Net Position as a
ge of the
NetShare of the Covered- Pension Liability as Percenta
For the Fiscal PensionNet Pension Employeea Percentage of its Total Pension
Year Ended LiabilityLiabilityPayrollCovered Payroll Liability
June 30, 20170.4810%6,494,072$ 4,642,759$ 139.88%85.40%
June 30, 20160.4680%18,781,654 4,511,556 416.30%63.88%
June 30, 20150.4720%5,363,024 4,199,481 127.71%86.61%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF COMPONENT UNIT'S PROPORTIONATE SHARE OF NET PENSION LIABILITY
LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND
City's Proportionate City'sPlan
State's Share of the Net Proportionate Fiduciary
Proportionate Pension Liability Share of the Net Position
City'sCity's Share of the and the State's Net Pension as a
Proportion Proportionate Net Pension Proportionate Share City's Liability as a Percentage
of the Net Share of the Liability of the Net Pension Covered- Percentage of of the Total
For the Fiscal
Pension Net Pension Associated Liability Associated Employee its Covered Pension
Year Ended
Liability Liabilitywith the Citywith the CityPayrollPayroll Liability
June 30, 20170.0644%4,111,253$ 51,656$ 4,162,909$ 4,145,653$ 99.17%75.90%
June 30, 20160.0621%5,042,212 65,842 5,108,054 3,854,427 130.82%68.91%
June 30, 20150.0608%3,150,972 - 3,150,972 3,516,627 89.60%78.19%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF CITY CONTRIBUTIONS
LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND
Contributions Contributions
in Relation to as a Percentage
Statutorilythe StatutorilyContribution City's Covered- of Covered
For the Fiscal Required RequiredDeficiency EmployeeEmployee
Year Ended ContributionContributions(Excess)PayrollPayroll
December 31, 2017499,333$ 499,333 - 6,657,773 7.50%
December 31, 2016459,555 459,555 - 6,127,400 7.50%
December 31, 2015416,647 416,647 - 5,555,293 7.50%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF CITY CONTRIBUTIONS
LAST 10 YEARS PUBLIC EMPLOYEES POLICE AND FIRE RETIREMENT FUND
Contributions Contributions
in Relation to as a Percentage
Statutorilythe Statutorily Contribution City's Covered- of Covered
For the Fiscal RequiredRequired DeficiencyEmployeeEmployee
Year Ended ContributionContributions(Excess)PayrollPayroll
December 31, 2017788,803$ 788,803$ -$ 4,869,154$ 16.20%
December 31, 2016761,951 761,951 - 4,703,401 16.20%
December 31, 2015720,513 720,513 - 4,447,611 16.20%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF COMPONENT UNIT CONTRIBUTIONS
LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND
Contributions Contributions
in Relation to as a Percentage
of Covered
Statutorily the Statutorily Contribution City's Covered-
For the Fiscal Required RequiredDeficiency Employee Employee
Year Ended ContributionContributions(Excess)PayrollPayroll
December 31, 2017315,791$ $ 315,791$ 4,210,547-$ 7.50%
December 31, 2016299,473 299,473 3,992,973- 7.50%
December 31, 2015273,227 273,227 3,643,027- 7.50%
* Schedule is to be provided prospectively beginning with the City's fiscal year ended June 30, 2015, or after.
CITY OF SHAKOPEE
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS - FIRE RELIEF ASSOCIATION
201420152016
Total Pension Liability (TPL)
Service cost$ 135,715$ 139,447$151,879
Interest 224,377 228,231 247,134
Differenced between expected and actual experience - (75,511)-
Changes of assumptions - 31,553-
Changes of benefit terms - - -
Benefit payments, including refunds or member contributions(599,181) (130,106)-
Net change in total pension liability(239,089) 367,678 224,949
Beginning of year$3,903,491$ 3,664,402$4,032,080
End of year$3,664,402$ 4,032,080$4,257,029
Plan Fiduciary Net Pension (FNP)
Contributions - employer$ 341,036$ 244,626$247,910
Contributions - employee - - -
Net investment income 315,532 (268,069) 385,789
Benefit payments, including refunds of member contributions(599,181) (130,106)-
Administrative expense (10,897) (9,761) (16,676)
Other - - -
Net change in plan fiduciary net position 46,490 (33,204) 486,917
Beginning of year5,135,900 5,182,390 5,149,186
End of year$5,182,390$ 5,149,186$5,636,103
$ (1,117,106)(1,517,988)$ (1,379,074)$
Net Pension Liability (NPL)
Plan fiduciary net position as a percentage of the total pension liability141.4%127.7%132.4%
Covered employee payrolln/an/an/a
Net pension liability as a percentage of covered payrolln/an/an/a
The City implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended
December 31, 2015. The schedules within the Required Supplementary Information section required a ten-year
presentation, but does not require retroactive reporting. Information prior to 2014 is not available. Additional years will
be reported as they become available.
CITY OF SHAKOPEE
SCHEDULE OF CITY CONTRIBUTIONS AND NON-EMPLOYER
CONTRIBUTING ENTITIES - FIRE RELIEF ASSOCIATION
Contributions
as a Percentage
Actuarial Actual Contribution Covered of Covered
For the Fiscal Year Employee
Determined Contributions Deficiency 2% State Employee
Ended ContributionPaid(Excess)AidPayrollPayroll
December 31, 2016-$ -$ -$ 246,910$ n/an/a
December 31, 2015- - - 244,626 n/an/a
December 31, 2014113,868 113,868 - 227,168 n/an/a
The Association implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended
December 31, 2015. The schedules within the Required Supplementary Information section required a ten-year presentation, but does
not require retroactive reporting. Information prior to 2014 is not available. Additional years will be reported as they become
available.
CITY OF SHAKOPEE
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
GENERAL EMPLOYEES FUND
2017 Changes
Changes in actuarial assumptions
The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members
and 60 percent for vested and non-vested deferred members. The revised CSA loads are now 0.0
percent for active member liability, 15.0 percent for vested deferred member liability and 3.0
percent for non-vested deferred member liability. The assumed post-retirement benefit increase
rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044 and
2.5 percent per year thereafter.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2035 and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
was changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June 30, 2016. The
assumed future salary increases, payroll growth, the inflation were decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Plan Provisions
On January 1, 2016, the Minneapolis Employees Retirement Fund was merged into the General
Employees Fund, which increased the total pension liability by $1.1 billion and increased the
fiduciary plan net position by $892 million. Upon consolidation, state and employer
contributions were revised.
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030
and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year thereafter.
CITY OF SHAKOPEE
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
POLICE AND FIRE FUND
2017 Changes
Changes in actuarial assumptions
Assumed salary increases were changed as recommended in the June 30, 2016 experience study.
The net effect is proposed rates that average 0.34 percent lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred
members. The CSA has been changed to 33 percent for vested members and 2 percent for non-
vested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully generational
table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted
by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP-
2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled
mortality table to the mortality tables assumed for healthy retirees.
Assumed termination rates were decreased to 3.0 percent for the first three years of service.
Rates beyond the select period of three years were adjusted, resulting in more expected
terminations overall.
Assumed percentage of married female members was decreased from 65 percent to 60 percent.
Assumed age difference was changed from separate assumptions for male members (wives
assumed to be three years younger) and female members (husbands assumed to be four years
older) to the assumption that males are two years older than females.
The assumed percentage of female members electing joint and survivor annuities was increased.
The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years to
1.00 percent per year through 2064 and 2.50 percent thereafter.
The single discount rate was changed from 5.6 percent to 7.5 percent.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037
and 2.5% thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
changed from 7.9% to 5.6%.
The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Plan Provisions
The post-retirement benefit increase to be paid after attainment of the 90% funding threshold was
changed, from inflation up to 2.5%, to a fixed rate of 2.5%.
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030
and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year thereafter.
SUPPLEMENTARY INFORMATION
CITY OF SHAKOPEE
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2017
Variance with
Final Budget -
BudgetActual
OriginalFinalAmountsOver (Under)
REVENUES
Taxes
General Property$ 14,187,200$ 14,191,000$ 14,056,725$ (134,275)
Fiscal Disparities 2,015,700 2,015,700 1,894,576 (121,124)
Lodging 350,000 350,000 364,114 14,114
Franchise 397,000 417,000 445,280 28,280
Aggregate 15,500 8,500 10,829 2,329
Total Taxes 16,965,400 16,982,200 16,771,524 (210,676)
Special Assessments 12,000 6,500 3,875 (2,625)
Licenses and Permits 1,286,400 1,532,700 2,391,942 859,242
Intergovernmental Revenues
Federal Grants 17,000 20,000 22,210 2,210
PERA Aid 18,100 18,100 18,170 70
Police Aid 344,900 398,100 398,172 72
Fire Aid 241,600 250,300 250,336 36
State Grants 665,500 715,800 664,809 (50,991)
Other Grants and Aids - - 15,330 15,330
Total Intergovernmental Revenues 1,287,100 1,402,300 1,369,027 (33,273)
Charges for Services
General Government 2,035,900 2,166,000 2,337,434 171,434
Public Safety 734,100 796,600 865,075 68,475
Public Works 484,500 599,800 744,440 144,640
Parks and Recreation1,673,1001,666,7501,706,825 40,075
Total Charges for Services 4,927,600 5,229,150 5,653,774 424,624
Fines and Forfeitures 1,500 1,500 2,719 1,219
Miscellaneous Revenues
Investment Income 135,000 150,000 118,878 (31,122)
Contributions and Donations 4,500 6,700 17,600 10,900
Rents 9,800 9,800 9,838 38
Other 73,900 9,700 17,297 7,597
Total Miscellaneous Revenues 223,200 176,200 163,613 (12,587)
Total Revenues 24,703,200 25,330,550 26,356,474 1,025,924
EXPENDITURES
General Government
Current:
Mayor and Council$ 197,900$ 179,670$ 173,658$ (6,012)
Administration1,707,0001,676,9801,619,391 (57,589)
City Clerk 318,000 305,150 291,285 (13,865)
Finance 1,207,900 1,215,670 1,237,510 21,840
Planning 586,800 625,170 681,744 56,574
Government Buildings 384,800 372,720 384,050 11,330
Unallocated 217,600 216,250 27,619 (188,631)
Total General Government 4,620,000 4,591,610 4,415,257 (176,353)
CITY OF SHAKOPEE
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2017
Variance with
Final Budget -
BudgetActual
OriginalFinalAmountsOver (Under)
EXPENDITURES (Continued)
Public Safety
Current:
Police7,980,0008,124,0008,027,247 (96,753)
Fire2,160,4002,169,1002,148,623 (20,477)
Building Inspection 796,200 812,840 828,564 15,724
Capital Outlay - 100,000 (100,000)-
Total Public Safety 10,936,600 11,205,940 11,004,434 (201,506)
Public Works
Current:
Engineering786,200770,450676,594 (93,856)
Streets 2,151,100 2,118,960 1,882,592 (236,368)
Shop 435,000 444,060 414,654 (29,406)
Total Public Works 3,372,300 3,333,470 2,973,840 (359,630)
Culture and Recreation
Current:
Park Maintenance1,936,3001,934,7201,875,269 (59,451)
Natural Resources198,000163,840183,121 19,281
Recreation3,190,0003,238,1703,111,740(126,430)
Capital Outlay - - 93,341 93,341
Total Parks and Recreation 5,324,300 5,336,730 5,263,471 (73,259)
Debt Service
Interest and Other Charges - 16,600 16,605 5
Total Debt Service - 16,600 16,605 5
Total Expenditures 24,253,200 24,484,350 23,673,607 (810,743)
Excess of Revenues Over (Under)
Expenditures 450,000 846,200 2,682,867 1,836,667
OTHER FINANCING SOURCES (USES)
Proceeds from Sale of Capital Asset - 3,750 4,661 911
Captial Lease Issued - - 79,100 79,100
Transfers In 250,000 250,000 250,000 -
Transfers Out (700,000) (700,000) (1,800,000) (1,100,000)
Total Other Financing Sources (Uses)(450,000)(446,250) (1,466,239) (1,019,989)
$ -$ 399,950 1,216,628$ 816,678
Net Change in Fund Balances
FUND BALANCES
10,761,366
Beginning of Year
$ 11,977,994
End of Year
CITY OF SHAKOPEE
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2017
Special Revenue
ForfeituresTelecommunicationSCDP Grant
ASSETS
Cash and Investments 223,488$ 66,682$ 10,759$
Delinquent Taxes Receivable- - -
Special Assessments Receivable:
Deferred- - -
Accounts Receivable- 7,173 -
Interest Receivable953 284 46
Due From Other Governments- - -
Total Assets224,441$ 74,139$ 10,805$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable3,393$ -$ -$
Contracts Payable- - -
Due to Other Funds- - -
Due to Other Governments- - -
Total Liabilities3,393 - -
Deferred Inflows of Resources
Unavailable Revenue - Property Taxes - - -
Unavailable Revenue - Special Assessments- - -
Total Deferred Inflows of Resources- - -
Fund Balances
Restricted for:
Special Revenue221,048 - 10,805
Debt Service- - -
Capital Projects- - -
Assigned- 74,139 -
Unassigned- - -
Total Fund Balances221,048 74,139 10,805
Total Liabilities, Deferred Inflows
of Resources and Fund Balances224,441$ 74,139$ 10,805$
Special RevenueDebt Service
2007B2008A2010A2012A
ImprovementImprovementImprovementRefunding
Revolving LoanTotal BondsBondsBondsBonds
$138,004$438,933$164,986$267,267$ 1,678,455197,357$
-- - 72 - -
-- - 50,332 45,864 1,057,268
7,173- - - - -
1,283- 703 1,139 841 7,155
-- - 177 - -
$138,004$447,389$165,689$318,987$ 2,742,878244,062$
$ 3,393-$ 275$ 275$ 275$ 275$
-- - - - -
-- - - - -
-- - - - -
3,393- 275 275 275 275
-- - 72--
- -- 50,332 45,864 1,057,268
-- - 50,404 45,864 1,057,268
369,857138,004 - - - -
-- 165,414 268,308 197,923 1,685,335
-- - - - -
74,139- - - - -
-- - - - -
443,996138,004 165,414 268,308 197,923 1,685,335
$ 447,389138,004$ 165,689$ 318,987$ 244,062$ 2,742,878$
CITY OF SHAKOPEE
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
December 31, 2017
Debt ServiceCapital Projects
2016A Tax
Abatement BondTotalPark Reserve
ASSETS
Cash and Investments 1,286,267$ 3,594,332$ 1,313,980$
Delinquent Taxes Receivable- 72 -
Special Assessments Receivable:
Deferred- 1,153,464 -
Accounts Receivable- - 1,949
Interest Receivable5,481 15,319 5,601
Due From Other Governments- 177 -
Total Assets1,291,748$ 4,763,364$ 1,321,530$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable275$ 1,375$ 70,899$
Contracts Payable- - 22,048
Due to Other Funds- - -
Due to Other Governments- - 33
Total Liabilities275 1,375 92,980
Deferred Inflows of Resources
Unavailable Revenue - Property Taxes - 72 -
Unavailable Revenue - Special Assessments- 1,153,464 -
Total Deferred Inflows of Resources- 1,153,536 -
Fund Balances
Restricted for:
Special Revenue- - -
Debt Service1,291,473 3,608,453 -
Capital Projects- - 1,228,550
Assigned- - -
Unassigned- - -
Total Fund Balances1,291,473 3,608,453 1,228,550
Total Liabilities, Deferred Inflows
of Resources and Fund Balances1,291,748$$4,763,364
$1,321,530
Capital Projects
TIF District No. TIF District No.TIF District No.TIF District Road Expansion
101415No. 16DedicationLions Park
$ 85,627-$ 35,024$ 1,849$ 95,162$ 22,000$
-- - - - -
-- - - - -
-- - - - -
-- - - 406 -
-- - - - -
$ 85,627-$ 35,024$ 1,849$ 95,568$ 22,000$
$ -825$ -$ -$ -$ -$
-- - - - -
3,870 -- - - -
-- - - - -
4,695 -- - - -
-- - - - -
------
------
------
------
-85,62735,0241,849--
----95,56822,000
(4,695)-----
(4,695)85,62735,0241,84995,56822,000
$-$85,627$35,024$1,849$95,568$22,000
CITY OF SHAKOPEE
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
December 31, 2017
Capital Projects
Tree
ReplacementSealcoatTotal
ASSETS
Cash and Investments 299,913$ 110,883$ 1,964,438$
Delinquent Taxes Receivable- - -
Special Assessments Receivable:
Deferred- - -
Accounts Receivable- - 1,949
Interest Receivable1,492 473 7,972
Due From Other Governments- - -
Total Assets301,405$ 111,356$ 1,974,359$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable- - 71,724$
Contracts Payable- - 22,048
Due to Other Funds- - 3,870
Due to Other Governments- - 33
Total Liabilities- - 97,675
Deferred Inflows of Resources
Unavailable Revenue - Property Taxes - - -
Unavailable Revenue - Special Assessments- - -
Total Deferred Inflows of Resources- - -
Fund Balances
Restricted for:
Special Revenue- - -
Debt Service- - -
Capital Projects- - 1,351,050
Assigned301,405 111,356 530,329
Unassigned- - (4,695)
Total Fund Balances301,405 111,356 1,876,684
Total Liabilities, Deferred Inflows
of Resources and Fund Balances301,405$ 111,356$$1,974,359
Total
Governmental
Funds
$5,997,703
72
1,153,464
9,122
24,574
177
$7,185,112
$76,492
22,048
3,870
33
102,443
72
1,153,464
1,153,536
369,857
3,608,453
1,351,050
604,468
(4,695)
5,929,133
$7,185,112
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - NON MAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Special Revenue
Revolving
ForfeituresTelecommunicationSCDP GrantLoan
REVENUES
Taxes-$ 32,720$ -$ -$
Tax Increment- - - -
Special Assessments- - - -
Licenses and Permits- - - -
Intergovernmental- - - -
Charges for Services- - - -
Fines and Forfeitures56,355 - - -
Miscellaneous10,500 - 6,000 -
Investment Income2,014 733 71 4,217
Total Revenues68,869 33,453 6,071 4,217
EXPENDITURES
Current
Public Safety34,786 - - -
Culture and Recreation- - - -
Economic Development- - - -
Debt Service
Principal- - - -
Interest and Other Charges- - - -
Capital Outlay 30,109- - -
Total Expenditures34,786 30,109 - -
Excess of Revenues Over
(Under) Expenditures 3,34434,0836,071
4,217
OTHER FINANCING SOURCES (USES)
Proceeds from Sale of Capital Asset----
Transfers In----
Transfers Out-- (130,000)-
Total Other Financing
Sources (Uses)-- (130,000)-
Net Change in Fund Balances34,0833,3446,071(125,783)
FUND BALANCES
Beginning of Year186,96570,7954,734263,787
End of Year$221,048$74,139$10,805$138,004
Special RevenueDebt Service
2004B2006A2007A2007B2008A
RefundingImprovementImprovementImprovementImprovement
TotalBondsBondsBondsBondsBonds
$ -32,720$ -$ -$ 92,471$ 148,800$
-- - - - -
-- - - 9,136 56,033
-- - - - -
-- - - - -
-- - - - -
-56,355 - - - -
-16,500 - - - -
6987,035 1,254 509 829 920
698112,610 1,254 509 102,436 205,753
-34,786 - - - -
-- - - - -
--- -- -
225,000- 360,000 150,000 155,000 210,000
4,613- 7,200 3,000 13,025 24,975
-30,109 - - - -
229,61364,895 367,200 153,000 168,025 234,975
(228,915)47,715 (365,946) (152,491) (65,589) (29,222)
-- - - - -
2,859- - - - 16,918
(130,000) (16,918)- (4,934) - (2,859)
(130,000) (16,918)2,859 (4,934) - 14,059
(226,056)(82,285) (382,864) (157,425) (65,589) (15,163)
226,056526,281 382,864 157,425 231,003 283,471
$ -443,996$ -$ -$ 165,414$ 268,308$
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - NON MAJOR GOVERNMENTAL FUNDS
(Continued)
For the Year Ended December 31, 2017
Debt Service
2010A2012A2016A Tax
ImprovementRefundingAbatement
BondsBondsBondTotal
REVENUES
Taxes107,145$ -$ 1,842,110$ 2,190,526$
Tax Increment- - - -
Special Assessments25,637 191,254 - 282,060
Licenses and Permits- - - -
Intergovernmental- - - -
Charges for Services- - - -
Fines and Forfeitures- - - -
Miscellaneous- - - -
Investment Income869 14,689 (3,994) 15,774
Total Revenues133,651 205,943 1,838,116 2,488,360
EXPENDITURES
Current
Public Safety- - - -
Culture and Recreation- - - -
Economic Development- - - -
Debt Service
Principal135,000 450,000 - 1,685,000
Interest and Other Charges15,438 83,000 1,091,306 1,242,557
Capital Outlay -- - -
Total Expenditures150,438533,000
1,091,3062,927,557
Excess of Revenues Over
(Under) Expenditures
(327,057)(16,787) 746,810 (439,197)
OTHER FINANCING SOURCES (USES)
Proceeds from Sale of Capital Asset- - - -
Transfers In- 340,000 - 359,777
Transfers Out- - - (24,711)
Total Other Financing
Sources (Uses)- 340,000 - 335,066
Net Change in Fund Balances(16,787) 12,943 746,810 (104,131)
FUND BALANCES
Beginning of Year214,7101,672,392 3,712,584544,663
End of Year$197,923$1,685,335$ 3,608,4531,291,473$
Capital Projects
Property
AcquisitionTIF District TIF District No.TIF District Datacard
Park ReserveFundNo. 1014No. 15Abatement
$ --$ -$ -$ -$ 67,203$
-- 55,246 315,985 154,345 -
-- - - - -
-891,553 - - - -
-- - - - -
-2,221 - - - -
-- - - - -
-288,133 - - - -
3,4608,186 (67) 450 167 -
3,4601,190,093 55,179 316,435 154,512 67,203
-- - - - -
-- - - - -
5,491- 50,447 285,285 139,73267,203
-- -- - -
-- 825 - - -
-552,623 - - - -
5,491552,623 51,272 285,285 139,732 67,203
(2,031)637,470 3,907 31,150 14,780 -
100,000- - - - -
-- - - - -
(66,643)- - - - -
33,357- - - - -
31,326637,470 3,907 31,150 14,780 -
(31,326)591,080 (8,602) 54,477 20,244 -
$ -1,228,550$ (4,695)$ 85,627$ 35,024$ -$
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - NON MAJOR GOVERNMENTAL FUNDS
(Continued)
For the Year Ended December 31, 2017
Capital Projects
TIF District Road Expansion Tree
No. 16DedicationLions ParkReplacement
REVENUES
Taxes-$ -$ -$ -$
Tax Increment112,371 - - -
Special Assessments- - - -
Licenses and Permits- - - -
Intergovernmental- - - 6,528
Charges for Services- - - 5,197
Fines and Forfeitures- - - 182,800
Miscellaneous- - 22,000 6,425
Investment Income- 977 - 709
Total Revenues112,371 977 22,000 201,659
EXPENDITURES
Current
Public Safety- - - -
Culture and Recreation- - - 58,799
Economic Development110,522 - - -
Debt Service
Principal- - - -
Interest and Other Charges- - - -
Capital Outlay -- - -
Total Expenditures110,522 - - 58,799
Excess of Revenues Over
(Under) Expenditures1,84922,000142,860
977
OTHER FINANCING SOURCES (USES)
Proceeds from Sale of Capital Asset----
Transfers In----
Transfers Out---(25,000)
Total Other Financing
Sources (Uses)---(25,000)
Net Change in Fund Balances1,84997722,000117,860
FUND BALANCES
Beginning of Year-94,591-183,545
End of Year$1,849$95,568$22,000$301,405
Capital Projects
Total Other
Governmental
SealcoatTotalFunds
$-$308,226$2,531,472
-637,947637,947
--282,060
-891,553891,553
-6,5286,528
-7,4187,418
-182,800239,155
37,740354,298370,798
77414,65637,465
38,5142,403,4265,004,396
--34,786
-58,79958,799
-899,703899,703
- 1,685,000-
-8251,243,382
-552,623582,732
1,511,950-4,504,402
38,514891,476499,994
-100,000100,000
--359,777
-(91,643)(246,354)
-8,357213,423
38,514899,833713,417
72,842976,8515,215,716
$111,356$1,876,684$5,929,133
CITY OF SHAKOPEE
COMBINING STATEMENT OF FUND NET POSITION -
INTERNAL SERVICE FUNDS
December 31, 2017
Information
Employeeand
EquipmentBuildingsPark AssetBenefitsTechnologySelf InsuranceTotal
ASSETS
Current Assets
Cash and Investments, Including
Cash Equivalents3,800,619$ 1,998,611$ 2,208,888$ 1,074,070$ 704,753$ 1,217,130$ 11,004,071$
Accounts Receivable8,163 - - - - - 8,163
Interest Receivable16,201 12,671 9,417 4,579 3,005 2,631 48,504
Due from Other Funds- 973,435 - - - - 973,435
Prepaid Expenses- - - - - 193,712 193,712
Total Current Assets3,824,983 2,984,717 2,218,305 1,078,649 707,758 1,413,473 12,227,885
Noncurrent Assets
Advances to Other Funds, Noncurrent941,394 350,000 - - - - 1,291,394
Capital Assets:
Land - - 221,876 - - - 221,876
Construction in Progress498,566 - 111,584 - 197,687 - 807,837
Infrastructure- 210,141 3,592,035 - - - 3,802,176
Buildings- 29,386,619 3,296,094 - - - 32,682,713
237,322 16,245,988-
Machinery and Equipment11,442,653 189,5394,376,474-
Total Cost11,941,21929,786,29911,598,063 435,009- 53,760,590-
Less Accumulated Depreciation(5,045,447)(10,872,740)(4,645,600) (205,865)- (20,769,652)-
Net Capital Assets6,895,77218,913,5596,952,463 229,144- 32,990,938-
Total Noncurrent Assets7,837,16619,263,5596,952,463 229,144- 34,282,332-
Total Assets$ 22,248,27611,662,149$ 9,170,768$$1,078,649$936,902$1,413,473$46,510,217
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable$11,600$2,710$24,075$ 114,988-$$2,276$155,649
Current Compensated Absences-- 1,015,109-- 1,015,109-
Total Current Liabilities11,6002,71024,0751,015,109114,9882,2761,170,758
Noncurrent Liabilities
Advances from Other Funds 1,650,000---- 1,650,000-
Compensated Absences-- 1,240,689-- 1,240,689-
Total Noncurrent Liabilities 1,650,000- 1,240,689-- 2,890,689-
Total Liabilities11,6001,652,71024,0752,255,798114,9882,2764,061,447
Net Position
229,144 32,990,938-
Investment in Capital Assets6,895,77218,913,5596,952,463-
Unrestricted4,754,7771,682,0072,194,230(1,177,149)592,7701,411,1979,457,832
Total Net Position11,650,54920,595,5669,146,693(1,177,149)821,9141,411,19742,448,770
Total Liabilities and
Net Position$ 22,248,27611,662,149$ 9,170,768$$1,078,649$936,902$1,413,473$46,510,217
CITY OF SHAKOPEE
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS -
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2017
Information
EmployeeandSelf
EquipmentBuildingsPark AssetBenefitsTechnologyInsuranceTotal
OPERATING REVENUES
Rental Charges787,800$ 558,400$ $ 657,600$ - $ 381,800$ 844,509$3,230,109
Other Charges8,163814 - - - - 8,977
Total Operating Revenues795,963559,214 657,600 - 381,800 844,5093,239,086
OPERATING EXPENSES
Salaries and Benefits-- - 109,879 - - 109,879
Depreciation819,721702,957 399,832 - 17,685 - 1,940,195
Professional Services 12,260- 701- 293 - 13,254
Repairs and Maintenance- - 95,254 - 27,940 41,842165,036
Materials and Supplies20,705654 12,287 - 222,405 - 256,051
Rent- - 1,088- - - 1,088
Insurance-- - - - 612,607612,607
Total Operating Expenses840,426715,871 509,162109,879 268,323 654,4493,098,110
(44,463)(156,657)148,438(109,879) 113,477 190,060140,976
Operating Income (Loss)
NONOPERATING REVENUES
(EXPENSES)
Investment Income46,71843,642 19,73510,705 7,208 2,526130,534
Donations- - 60,174- - - 60,174
Insurance Dividends-- - - - 61,92361,923
Gain (Loss) on Sale of Asset97,738(202,574)(6,685)- - 8,436(103,085)
Total Nonoperating Revenues
(Expenses)144,456(158,932) 73,22410,705 7,208 72,885149,546
Income (Loss) before Capital
Contributions and Transfers99,993(315,589) 221,662(99,174) 120,685 262,945290,522
Capital Contributions from Outside Developers- - 14,354- - - 14,354
Transfers In-- - - - 600,000600,000
Transfers Out (3,061,000)- - - - - (3,061,000)
Change in Net Position99,993(3,376,589) 236,016(99,174) 120,685 862,945(2,156,124)
NET POSITION
Beginning of Year11,550,55623,972,155 8,910,677(1,077,975) 701,229 548,25244,604,894
r$ 20,595,56611,650,549$ $ 9,146,693$ (1,177,149)$ 821,914$ 1,411,197$42,448,770
End of Yea
CITY OF SHAKOPEE
COMBINING STATEMENT OF CASH FLOWS -
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2017
Information
Employeeand
EquipmentBuildingsPark AssetBenefitsTechnologySelf InsuranceTotal
CASH FLOWS - OPERATING ACTIVITIES
Receipts from Customers and Users787,800$ $ 559,214$ 657,600$ -$ 381,800$ 850,638$ 3,237,052
Receipts from Interfund Services - - - 21,053 - - 21,053
Payments to Suppliers (152,270) (10,204) (128,620) - (166,583) (667,890) (1,125,567)
Payments for Interfund Services (973,435)- - - - (973,435)-
Net Cash Flows - Operating
Activities 635,530 (424,425) 528,980 21,053 215,217 182,748 1,159,103
CASH FLOWS - NONCAPITAL
FINANCING ACTIVITIES
Interfund Loan Issued - 1,650,000 - - - 1,650,000-
Payment Received on Interfund Loan - 50,000 - - - - 50,000
Insurance Dividends - - - - - 61,923 61,923
Transfer from Other Funds - - - - 600,000- 600,000
Transfer to Other Funds (3,061,000)- - - - (3,061,000)-
Net Cash Flows - Noncapital
Financing Activities (1,361,000)- - - 661,923- (699,077)
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Donations- - 60,174 - - - 60,174
Proceeds (Loss) from Disposal of Capital Assets 97,737 - - - - 8,436 106,173
Acquisition of Capital Assets (1,494,872) (130,321) (212,160) - (197,687) (2,035,040)-
Net Cash Flows - Capital and
Related Financing Activities (1,397,135) (130,321) (151,986) - (197,687) 8,436 (1,868,693)
CASH FLOWS - INVESTING ACTIVITIES
Interest Received 51,473 48,929 18,742 10,966 7,362 1,233 138,705
Net Cash Flows - Investing
Activities 51,473 48,929 18,742 10,966 7,362 1,233 138,705
Net Change in Cash and Cash Equivalents (710,132) (1,866,817) 395,736 32,019 24,892 854,340 (1,269,962)
CASH AND CASH EQUIVALENTS
Beginning of Year 4,510,751 3,865,428 1,813,152 1,042,051 679,861 362,790 12,274,033
$ 3,800,619$1,998,611$ 2,208,888$ 1,074,070$ 704,753$ 1,217,130$ 11,004,071
End of Year
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH
FLOWS - OPERATING ACTIVITIES
Operating Income (Loss)$ (44,463)$ (156,657)$ 148,438$ (109,879)$ 113,477$ 190,060$ 140,976
Adjustments to Reconcile Operating
Income (Loss) to Net Cash
Flows - Operating Activities:
Depreciation Expense 819,721 702,957 399,832 - 17,685 1,940,195-
Changes in:
Accounts Receivable(8,163) - - - - 6,129 (2,034)
Due from Other Funds (973,435)- - - - (973,435)-
Accounts and Contracts Payable (131,565) 2,710 (19,290) - 84,055 (3,345) (67,435)
Prepaid Expenses - - - - (10,096)- (10,096)
Compensated Absences Payable - - - 130,932 - 130,932-
Total Adjustments 679,993 (267,768) 380,542 130,932 101,740 (7,312) 1,018,127
Net Cash Flows - Operating
Activities$ 635,530$ (424,425)$ 528,980$ 21,053$ 215,217$ 182,748$ 1,159,103
NONCASH INVESTING, CAPITAL AND
FINANCING ACTIVITIES
Contributions of Capital Assets from the
Municipality and Developers$ -$ -$ 14,354$ -$ -$ -$ 14,354
CITY OF SHAKOPEE
COMBINED STATEMENT OF FIDUCIARY NET POSITION
December 31, 2017
Southwest
Holiday Metro Drug
EscrowLighting Task Force Total Agency
Agency FundAgency FundAgency FundFunds
ASSETS
Current
Cash and Investments1,925,440$ 355$ 351,873$ 2,277,668$
- - 49 49
Accounts Receivable
- - 1,489 1,489
Interest Receivable
- - 25,000 25,000
Due from Other Governments
- - 6,932 6,932
Prepaids
Total Assets1,925,440$ 355$ 385,343$ 2,311,138$
LIABILITIES
$ - $ - $ 230,726
Accounts Payable$230,726
1,925,440 355 115,402 2,041,197
Deposits Payable
- - 39,215 39,215
Due to Other Governments
Total Liabilities1,925,440$ 355$ 385,343$ 2,311,138$
CITY OF SHAKOPEE
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES -
AGENCY FUNDS
For the Year Ended December 31, 2017
Escrow Agency Fund
Balance at Balance at
December 31, December 31,
2016AdditionsDeductions2017
ASSETS
Current
Cash and Investments2,779,900$ 1,176,888$$2,031,348$1,925,440
LIABILITIES
Deposits Payable$2,779,900$1,176,888$2,031,348$1,925,440
Holiday Lighting Agency Fund
Balance at Balance at
December 31, December 31,
2016AdditionsDeductions2017
ASSETS
Current
Cash and Investments$36$319$-$355
LIABILITIES
Deposits Payable$36$319$-$355
Southwest Metro Drug Task Force Agency Fund
Balance at Balance at
December 31, December 31,
2016AdditionsDeductions2017
ASSETS
Current
Cash and Investments$376,128$341,501$365,756$351,873
- 49 - 49
Accounts Receivable
- 1,489 - 1,489
Interest Receivable
91,644 - 66,644 25,000
Due from Other Governments
9,152 - 2,220 6,932
Prepaids
Total Assets$476,924$343,039$434,620$385,343
LIABILITIES
$ 378,410 $ 253,192 $ 400,876 230,726
Accounts Payable
59,204 89,811 33,613 115,402
Deposits Payable
39,310 36 131 39,215
Due to Other Governments
Total Liabilities$476,924$343,039$434,620$385,343
CITY OF SHAKOPEE
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES -
AGENCY FUNDS
For the Year Ended December 31, 2017
Total Agency Funds
Balance at Balance at
December 31, December 31,
2016AdditionsDeductions2017
ASSETS
Current
Cash and Investments$3,156,064$1,518,708$2,397,104$2,277,668
- 49 - 49
Accounts Receivable
- 1,489 - 1,489
Interest Receivable
91,644 - 66,644 25,000
Due from Other Governments
9,152 - 2,220 6,932
Prepaids
Total Assets$3,256,860$1,520,246$2,465,968$2,311,138
LIABILITIES
$ 378,410 $ 253,192 $ 400,876 $ 230,726
Accounts Payable
2,839,140 1,267,018 2,064,961 2,041,197
Deposits Payable
39,310 36 131 39,215
Due to Other Governments
Total Liabilities$3,256,860$1,520,246$2,465,968$2,311,138
(THIS PAGE LEFT BLANK INTENTIONALLY)
STATISTICAL SECTION
(THIS PAGE LEFT BLANK INTENTIONALLY)
CITY OF SHAKOPEE
STATISTICAL SECTION
December 31, 2017
This part of the City’s Comprehensive Annual Financial Report (CAFR) presents detailed information
for placing in context and understanding what the information shown in the financial statements, note
disclosures and required supplementary information reveals about the City’s overall financial health.
CONTENTSPage
Financial Trends132
These schedules show trend information to help the reader understand how the City’s
financial performance and well being have changed over time.
140
Revenue Capacity
Portrayed is information to help the reader assess the City’s most important local revenue
source, the property tax.
Debt Capacity144
These schedules present information to help the reader assess the affordability of the City’s
current levels of outstanding debt and the City’s ability to issue additional debt in the future.
Demographic and Economic Information151
Shown are demographic and economic indicators to help the reader understand the
environment within which the City’s financial activities take place.
154
Operating Information
These schedules shown service and infrastructure data to help the reader understand how
the information in the City’s financial report relates to the services the City provides and the
Source: Unless noted otherwise, the information in these schedules is from the CAFR for the relevant
year.
CITY OF SHAKOPEE
NET POSITION BY COMPONENT
Years 2008 Through 2017
2008200920102011
Governmental Activities:
Net Investment in Capital Assets112,909,793$ 112,097,148$ 111,905,152$ 114,981,955$
Restricted21,915,945 16,518,865 1,844,129 10,914,439
Unrestricted22,086,771 28,832,576 43,910,102 32,771,327
Total Governmental
Activities Net Position$ 157,448,589156,912,509$ 157,659,383$ 158,667,721$
Business-Type Activities:
Net Investment in Capital Assets115,124,238$ 114,331,216$ 115,064,968$ 65,080,070$
Restricted1,756,369 3,574,612 4,889,050 -
Unrestricted49,366,581 55,595,594 59,014,070 31,927,930
Total Business-Type
Activities Net Position$ 173,501,422166,247,188$ 178,968,088$ 97,008,000$
Primary Government:
Net Investment in Capital Assets228,034,031$ 226,428,364$ 226,970,120$ 180,062,025$
Restricted23,672,314 20,093,477 6,733,179 10,914,439
Unrestricted71,453,352 84,428,170 102,924,172 64,699,257
Total Primary
Government Net Position$ 330,950,011323,159,697$ 336,627,471$ 255,675,721$
From 2008-2010, the SPUC Funds, Water and Electric Enterprise Funds, were reported as a blended component unit of the
City. In 2011, SPUC funds have been presented as discretely presented component units as it no longer met the criteria for
blending.
The City implemented GASB Statement No. 68 and GASB Statement No. 71 in 2015. Years prior to 2015 have not been
restated.
Table 1
201220132014201520162017
$ 118,166,525115,191,768$ 117,980,552$ 120,831,029$ 128,559,527$ 135,442,110$
10,454,2389,912,551 7,103,581 7,547,490 6,637,391 6,342,643
30,642,44334,823,712 35,302,035 23,939,064 16,719,760 15,059,730
$ 159,263,206159,928,031$ 160,386,168$ 152,317,583$ 151,916,678$ 156,844,483$
$ 65,181,46564,124,590$ 67,831,099$ 68,986,369$ 70,099,288$ 75,547,444$
-- - - - -
31,183,90433,354,521 28,485,814 25,981,542 23,281,483 22,730,751
$ 96,365,36997,479,111$ 96,316,913$ 94,967,911$ 93,380,771$ 98,278,195$
$ 183,347,990179,316,358$ 185,811,651$ 189,817,398$ 198,658,815$ 210,989,554$
10,454,2389,912,551 7,103,581 7,547,490 6,637,391 6,342,643
61,826,34768,178,233 63,787,849 49,920,606 40,001,243 37,790,481
$ 255,628,575257,407,142$ 256,703,081$ 247,285,494$ 245,297,449$ 255,122,678$
CITY OF SHAKOPEE
CHANGES IN NET POSITION
Years 2008 Through 2017
200820092010201120122013
EXPENSES:
Governmental Activities:
General Government$ 3,388,2683,514,573$ 3,042,918$ 4,252,887$ 4,603,027$ 4,704,956$
Public Safety 8,528,4138,346,104 9,123,316 9,236,767 9,430,785 9,868,702
Public Works8,099,384 7,860,080 8,397,874 7,094,047 7,083,299 7,578,493
Culture and Recreation3,637,527 3,859,670 3,765,660 3,866,307 3,817,677 4,020,974
Economic Development 522,074316,566427,169244,361 152,541338,907
Other 1,040,0441,033,999 784,824 619,099 587,384 573,949
Total Governmental Activities Expenses 24,993,04125,153,661 25,541,761 25,313,468 25,674,713 27,085,981
Business-Type Activities:
Electric36,186,676 30,140,842 32,700,410 - - -
Water 3,316,1023,461,261 3,293,079 - - -
Sewer 3,398,1173,308,759 3,685,417 3,807,322 3,926,541 4,096,504
Storm1,435,376 1,264,261 1,792,749 1,382,391 1,445,633 1,641,438
Refuse- - - - - -
Total Business-Type Activities Expenses44,392,072 38,119,322 41,471,655 5,189,713 5,372,174 5,737,942
Total Primary Government Expenses69,545,733$ 63,112,363$ 67,013,416$ 30,503,181$ 31,046,887$ 32,823,923$
PROGRAM REVENUES:
Governmental Activities:
Charges for Services:
General Government$ 257,211$319,066$289,390$343,169$ 2,966,953$2,647,951
Public Safety 1,677,7721,506,680 1,716,573 1,503,188 1,524,158 1,701,875
Public Works2,354,276 1,342,173 941,224 478,788 454,145 688,286
Culture and Recreation1,295,772 1,013,044 1,039,820 1,071,482 2,222,430 2,012,436
Economic Development -- - 7,100 16,500 18,000
Operating Grants and Contributions1,660,191 1,485,124 2,943,857 3,606,089 2,106,559 1,894,436
Capital Grants and Contributions1,825,124 1,241,884 952,450 3,152,881 1,479,343 689,424
Total Governmental Activities
Program Revenues 8,899,2547,079,0637,883,31410,162,697 10,770,0889,652,408
Business-Type Activities:
Charges for Services:
Electric38,732,70134,272,09936,872,008- --
Water3,390,3093,605,4984,417,498- --
Sewer2,556,2993,485,8823,508,9472,941,753 3,728,189 3,004,826
Storm1,379,8211,405,5601,281,9861,083,878 1,442,394 1,720,653
Refuse- - - - - -
Operating Grants and Contributions- - 6,415 - - -
Capital Grants and Contributions1,007,5191,879,5301,661,00193,810348,7567,780
Total Business-Type Activities
Program Revenues47,066,649 44,648,569 47,747,855 4,119,441 5,519,339 4,733,259
Total Primary Government
Program Revenues55,965,903$ 51,727,632$ 55,631,169$ 14,282,138$ 16,289,427$ 14,385,667$
Net (Expense) Revenue:
Governmental Activities$ (17,913,978)(16,254,407)$ (17,658,447)$ (15,150,771)$ (14,904,625)$ (17,433,573)$
Business-Type Activities2,674,5776,529,2476,276,200(1,070,272) 147,165 (1,004,683)
Total Primary Government Net Expense(13,579,830)$ (11,384,731)$ (11,382,247)$ (16,221,043)$ (14,757,460)$ (18,438,256)$
GENERAL REVENUES AND OTHER
CHANGES IN NET POSITION:
Governmental Activities:
Taxes:
Property14,200,833$ 14,676,518$ 14,229,111$ 14,487,805$ 15,002,764$ 15,795,777$
Franchise349,048361,615363,296378,011389,819399,496
Other388,935151,956147,561160,884113,902113,796
Unrestricted Investment Earnings1,941,3351,323,2301,039,8671,032,409546,68140,589
Gain on Disposal of Assets56,45337,162-- 11,769256,600
Special Item -- - - - -
Transfers1,297,9881,899,5772,089,406100,000100,000162,490
Total Governmental Activities18,234,59218,450,05817,869,24116,159,109 16,164,935 16,768,748
Business-Type Activities:
Investment Earnings3,128,7411,336,9791,279,872758,182423,94653,431
Gain on Disposal of Assets - - - - -
-
Transfers(1,297,988)(1,899,577)(2,089,406)(100,000)(100,000)(162,490)
Total Business-Type Activities1,830,753(562,598)(809,534)658,182 323,946(109,059)
Total Primary Government$ 17,887,46020,065,345$ 17,059,707$ 16,817,291$ 16,488,881$ 16,659,689$
Change in Net Position:
Government Activities$ 536,0801,980,185$ 210,794$ 1,008,338$ 1,260,310$ (664,825)$
Business-Type Activities4,505,3305,966,6495,466,666(412,090) 471,111 (1,113,742)
Total Primary Government$ 6,502,7296,485,515$ 5,677,460$ 596,248$ 1,731,421$ (1,778,567)$
From 2007-2010, the SPUC funds, Water and Electric Enterprise Funds, were reported as a blended component unit of the City. In 2011, SPUC Funds have been presented as
discretely presented component units as it no longer met the criteria for blending.
The City implemented GASB Statement No. 68 and GASB Statement No. 71 in 2015. Years prior to 2015 have not been restated.
Table 2
2014201520162017
$ 4,237,6475,514,412$ 4,205,975$ 4,624,885$
10,582,35410,543,861 13,281,715 11,981,416
8,552,09610,667,275 8,593,885 9,695,789
4,355,4534,250,557 4,653,362 5,359,259
2,603,7411,593,968 2,104,584 1,630,516
274,960453,696 1,190,824 1,112,571
30,606,25133,023,769 34,030,345 34,404,436
-- - -
-- - -
3,824,0263,777,866 3,843,232 4,226,027
1,726,1491,924,853 1,848,768 1,773,670
127,781- 127,034 125,647
5,677,9565,702,719 5,819,034 6,125,344
$ 36,284,20738,726,488$ 39,849,379$ 40,529,780$
$ 2,486,0422,751,336$ 2,410,321$ 2,544,126$
2,146,8401,879,209 2,744,824 2,989,770
704,687693,647 746,086 880,361
2,140,0711,827,046 1,760,925 2,813,951
24,00018,000 256,312 26,520
2,509,9862,880,493 2,777,982 2,068,419
6,668,5311,735,5432,187,039 3,847,001
16,718,262 11,747,169 12,883,489 15,170,148
- - --
- - --
2,916,192 2,829,981 3,292,166 3,380,321
1,211,793 1,765,679 1,632,218 1,272,506
72,167 103,637 105,309 131,753
- - - 890
496,65565,844183,1422,701,892
4,696,807 4,765,141 5,212,835 7,487,362
$ 21,415,069$ 16,512,310$ 18,096,324$ 22,657,510
$ (16,305,507)$ (18,859,082)$ (21,146,856)$ (19,234,288)
(1,005,912) (912,815) (606,199) 1,362,018
$ (17,311,419)$ (19,771,897)$ (21,753,055)$ (17,872,270)
$ 16,446,631$ 16,807,367$ 18,015,507$ 19,229,300
404,312418,545448,0231,251,819
216,441406,571464,6321,014,774
727,619452,281495,804390,911
52,674 87,819 50,1321,576
- 496,484 --
(419,208)(634,070)1,271,85326,990
17,428,469 18,034,997 20,745,951 21,915,370
538,248349,776289,001240,345
- 17,438 1,911 6,217
419,208(496,484)(1,271,853) (26,990)
957,456 (129,270) (980,941)219,572
$18,385,925$ 17,905,727$19,765,010$ 22,134,942
$ 1,122,962$ (824,085)$ (400,905)$ 2,681,082
(48,456) (1,042,085) (1,587,140) 1,581,590
$ 1,074,506$ (1,866,170)$ (1,988,045)$ 4,262,672
CITY OF SHAKOPEE
FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2008200920102011
General Fund:
Nonspendable:
Prepaids-$ -$ 149,940$ 131,447$
Reserved1,126,074 799,276 - -
Restricted for:
BATC Litigation- - 218,032 -
Committed to:
Working Capital- - 345,820 -
Unreserved8,733,528 10,703,004 - -
Unassigned- - 8,323,938 9,172,747
Total General Fund9,859,602$ 11,502,280$ 9,037,730$ 9,304,194$
All Other Governmental Funds
Reserved:
Special Revenue Funds2,738,909$ 2,677,290$ -$ -$
Debt Service Funds- - - -
Capital Projects Funds4,873,440 4,185,059 - -
Restricted for:
Forfeitures- - 189,112 208,518
Transit- - 1,158,355 1,237,762
SCDP Grant- - 55,743 22,462
Revolving Loans- - 143,023 249,147
Economic Development- - 447,319 497,775
Debt Service- - 5,127,697 4,625,946
Capital Improvements- - 2,203,238 958,195
Committed to:
Working Capital- - 345,820 -
Transit- -463,470-
Revolving Loans--100,000-
Economic Development--20,930-
Park Projects- 1,785,164--
Capital Improvements- 3,616,689--
2008 Projects--190,431-
2009 Projects--14,876-
2010 Projects--131,398-
Fire Station 2- 2,476,886--
Assigned to:
Telecomminication--49,19245,681
Capital Improvements-- 6,964,247-
Capital Projects Funds---413,228
Unreserved
Special Revenue Funds1,130,452---
Debt Service Funds7,658,2897,504,770--
Capital Projects Funds1,994,8122,453,383--
Unassigned- (116,803)-(484,089)
Governmental Funds$18,395,902$16,820,502$18,402,540$14,738,872
Note: GASB Statement No. 54 was implemented in 2010.
Only 2010-2017 are reported in compliance with GASB Statement No. 54. 2008-2009 are reported as previously stated.
Table 3
201220132014201520162017
$ 16,44019,189$ 13,949$ 21,573$ 22,188$ 59,023$
-- - - - -
-- - - - -
-- - - - -
-- - - - -
9,076,5499,503,652 9,824,097 9,818,537 10,739,178 11,918,971
$ 9,092,9899,522,841$ 9,838,046$ 9,840,110$ 10,761,366$ 11,977,994$
$ --$ -$ -$ -$ -$
-- - - - -
-- - - - -
180,696195,823 174,580 180,555 186,965 221,048
941,4691,045,340 635,247 - - -
4,54622,447 4,627 4,683 4,734 10,805
253,065252,639 257,601 260,865 263,787 138,004
562,959685,671361,569 1,503,917674,910 356,588
8,678,6809,574,198 7,053,086 3,085,157 3,712,584 3,608,453
1,882,2311,815,339 1,634,954 1,425,798 7,213,258 1,539,267
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
-- - - - -
54,49966,989 76,342 108,627 70,795 74,139
5,753,6698,681,475 5,630,178 6,130,1944,744,2756,592,822
394,666 228,059176,398 1,505,595 2,244,591 530,329
-- - - - -
-- - - - -
-- - - - -
(1,716)(384,965) (7,316) (1,715,102) (39,928) (3,241,015)
$ 18,609,20822,226,910$ 16,048,927$ 11,661,282$ 19,904,978$ 9,830,440$
CITY OF SHAKOPEE
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2008200920102011
REVENUES:
Taxes$ 14,992,05114,437,766$ 14,385,788$$14,699,066
Special Assessments1,879,9741,810,511 1,404,088 1,475,324
Licenses and Permits1,221,9391,492,746 1,338,111 1,281,150
Intergovernmental2,702,9931,811,668 2,924,161 3,941,830
Charges for Service2,209,2691,808,865 2,202,524 3,958,237
Fines and Forfeits442,626428,662 549,543 411,211
Miscellaneous2,028,5291,503,722 1,255,038 705,969
Total Revenues24,923,09623,848,225 26,472,78724,059,253
EXPENDITURES:
General Government3,517,9573,331,193 2,960,233 4,004,684
Police8,462,2888,604,704 9,012,567 9,460,824
Public Works3,628,9543,591,049 3,902,622 2,602,104
Culture and Recreation4,101,1753,898,844 4,075,919 3,902,386
Economic Development522,074316,566 270,915 247,591
Debt Service:
Principal3,280,0002,660,000 3,800,000 2,565,000
Interest and Other Charges1,077,7111,077,325 833,245 658,265
Capital Outlay3,300,9421,797,299 2,812,488 6,301,406
Total Expenditures27,891,10125,276,980 29,742,26027,667,989
Excess of Revenues
Under Expenditures(2,968,005) (1,428,755)(3,608,736) (3,269,473)
OTHER FINANCING SOURCES
(USES):
Bonds Issued 2,170,000 - 1,555,000 -
Sale of Assets-- 6,000 -
Premium on Bonds Issued 16,741 - - -
Capital Lease Issued - - - -
Transfers In 4,605,693 4,958,133 13,199,807 2,968,919
Transfers Out (2,224,692) (3,462,100)(12,380,403) (2,750,830)
Special Items - - - -
Total Other Financing Sources
(Uses)4,567,7421,496,033 2,380,404 218,089
Net Change in Fund Balance$1,599,737$67,278$ (3,051,384)(1,228,332)$
Debt Service as a Percentage of
Noncapital Expenditures17%16%18%14%
Table 4
201220132014201520162017
$ 15,851,56015,141,903$ 16,798,542$ 17,225,535$ 18,549,468$ 21,476,591$
930,3311,499,810 2,673,132 1,157,405 1,615,161 933,773
2,441,246 2,349,945 2,318,4472,989,0383,146,818 3,283,495
2,548,692 1,857,803 4,743,0143,427,1303,619,810 2,447,795
4,449,003 4,583,551 4,683,7224,479,8454,759,244 5,681,712
418,474 381,470 429,021171,856104,943 241,874
836,868 189,717 675,643604,816877,108 1,004,665
27,335,996 26,144,377 32,321,52130,055,62532,672,552 35,069,905
4,396,219 4,495,662 5,225,4833,864,3374,016,871 4,415,257
9,483,999 9,731,407 10,193,49610,209,73910,643,342 11,039,220
2,349,042 2,631,154 2,829,8463,036,2843,061,172 2,973,840
3,799,723 3,771,068 3,981,9993,891,5424,269,211 5,228,929
155,692 340,904 1,595,6282,352,6212,092,337 1,611,073
1,950,000 2,070,000 3,160,0005,615,0001,685,000 1,685,000
634,063618,695504,460365,898864,4941,259,987
2,164,053 6,883,191 7,245,1575,461,60732,159,412 18,386,260
24,932,791 30,542,081 34,736,06934,797,02858,791,839 46,599,566
2,403,205 (4,397,704) (2,414,548)(4,741,403) (11,529,661)(26,119,287)
4,865,000 - - - 29,500,000 -
- 150 314 - 9,134 104,661
73,480 - - - 2,237,727 -
- - - - - 79,100
3,367,400 4,890,809 3,531,038 6,135,344 6,916,355 7,282,929
(3,002,400) (4,540,809) (2,932,028) (5,145,452) (3,378,977) (4,794,939)
- - - (634,070) - -
5,303,480 350,150 599,324355,82235,284,239 2,671,751
$ 7,706,685$(4,047,554)$(1,815,224)$(4,385,581)$9,164,952$(8,857,910)
11%11%12%20%9%10%
CITY OF SHAKOPEE
Table 5
TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
Taxable Tax
EstimatedCapacity as a
lLess:Less NetNet TaxableTotalTaxablePercentage of
Commercia
FiscalResidentialIndustrialOtherTax IncrementFiscalTaxDirectMarketEstimated
YearPropertyPropertyPropertyPropertyDisparitiesCapacityTax RateValueMarket Value
200829,942,07815,426,355 7 41,679411,490 1,846,91943,851,703 0.319253,800,795,5001.15%
200929,805,97116,088,685 1 ,319,935156,799 1,862,71545,195,077 0.326303,850,591,2001.17%
201027,805,06916,459,872 1 ,279,807151,914 1,584,55243,808,282 0.337103,710,814,0561.18%
201124,652,93218,351,835 1 ,304,688161,430 1,630,52242,517,503 0.347313,570,069,5001.19%
201223,180,07317,956,273 8 52,512155,002 1,740,44740,093,409 0.366553,347,179,8001.20%
201322,824,26317,577,547 5 76,049107,928 1,707,61739,162,314 0.419963,064,695,7001.28%
201422,782,37217,580,049 5 89,717214,592 1,961,30738,776,239 0.414373,206,518,7001.21%
201526,419,95918,769,230 6 25,872408,172 1,918,87443,488,015 0.378623,629,757,2001.20%
201627,838,93920,111,657 6 70,839384,578 1,857,60546,379,252 0.379023,844,106,8001.21%
201728,199,40923,224,857 6 08,016827,765 2,015,78549,188,732 0.385224,034,313,2001.22%
r
Source: Scott County Audito
CITY OF SHAKOPEE
Table 6
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
General
City Direct Rate
Obligation
ShakopeeDebt Service
FiscalOperatingDebt ServiceTotal DirectSchoolScottOtherMarket Value
rRateRateRateDistrictCountyJurisdictionsRate
Yea
2008 0.29874 0.02051 0.31925 0.26103 0.046420.32646 0.00537
2009 0.30401 0.02229 0.32630 0.27274 0.049600.32684 0.00651
2010 0.32152 0.01558 0.33710 0.29050 0.049800.33240 0.00651
2011 0.32996 0.01735 0.34731 0.31182 0.050200.35541 0.00342
2012 0.34005 0.02650 0.36655 0.35512 0.056100.38802 0.00345
2013 0.41996 - 0.41996 0.39715 0.057010.40674 0.00467
2014 0.39305 0.02131 0.41437 0.36963 0.055690.39720 0.00524
2015 0.35235 0.02626 0.37862 0.35578 0.051690.36638 0.00536
2016 0.34757 0.03145 0.37902 0.53478 0.051290.36175 0.00605
2016 0.26948 0.11574 0.38522 0.49282 0.049790.35896 -
Sources: Scott County Auditor and League of Minnesota Cities Reports
CITY OF SHAKOPEE
Table 7
PRINCIPAL TAXPAYERS
Current Year and Nine Years Ago
20172008
PercentagePercentage
2016/17 of Total2007/08 of Total
Tax Cap.Tax Cap. Tax Cap.Tax Cap.
TaxpayerType of BusinessValueRankValueValueRankValue
Excel EnergyElectrical Generation$ 663,78811.35%$ 532,87611.32%
AmazonDistribution 579,25021.18%
Rahr MaltingGrain Processing 544,35531.11% 408,37031.01%
J & J Minneapolis LLCManufacturing 470,10040.96%
Liberty Properties LPDistribution 469,75050.95%
SeagateManufacturing/Research 439,25060.89% 399,25040.99%
Lothenbach PropertiesWarehouse/Manufacturing 431,25070.88%
St. Francis RMCHealth Care 430,90080.88%
Rosemount IncManufacturing 430,47090.88%
Kin LLCWarehouse/Manufacturing 429,250100.87%
Shakopee Crossing LTDRetail 436,95421.08%
CertainteedManufacturing 397,52250.99%
Shakopee Valley MarketRetail388,39260.96%
ValleyfairAmusement Park 358,34870.89%
First Industrial LPWarehouse 350,57480.87%
Ryan CompaniesProperty Management 329,09490.82%
Canterbury ParkHorse Racing 314,748100.78%
$ 4,888,3639.95%$ 3,916,1289.71%
Source: Scott County Auditor
CITY OF SHAKOPEE
Table 8
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Ratio of
Accumulated
PercentageDelinquent
CollectionsPercentageCollectionsof TotalAccumulatedTaxes to
YearTaxof Currentof Levyof PriorTotalCollectionsDelinquent Current
CollectedLevyYears TaxesCollectedYears TaxesCollectionsTo Tax LevyTaxesYears Taxes
200814,222,007$ 13,661,366$ 96%$ 208,470$13,869,83698%483,317$ 3.40%
200914,983,677 14,457,37896% 157,92014,615,29898% 319,7402.13%
201014,918,665 13,971,35694% 55,02014,026,37694% 310,6242.08%
201114,837,438 14,019,83194% 278,98114,298,81296% 260,2481.75%
201214,837,438 14,553,41798% 188,75014,742,16799% 235,0111.58%
201315,483,223 15,109,59998% 279,48515,389,08499% 293,0251.89%
201416,312,179 16,177,46399% -16,177,46399% 157,5550.97%
201516,773,267 16,351,70097% -16,351,70097% 145,9580.87%
201617,610,195 17,316,07498% 41,14017,357,21499% 76,6310.44%
201718,926,341 18,628,20198% -18,628,20198% 95,9330.51%
Source: Scott County Auditor
1. The above data does not include tax increment districts.
2. The State of Minnesota cancelled $ 243,439 in 2008, $ 511,956 in 2009, $ 558,860 in 2010 and $ 595,572 in 2011 of
annual aid payments to the City that were part of the tax levy.
CITY OF SHAKOPEE
Table 9
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities
e
Business-typ
SpecialActivitiesTotalPercentage
FiscalG.O.AssessmentCapitalRevenue Primaryof PersonalPer
YearBondsBondsLeasesBondsGovernmentIncomeCapita
20087,165,000$ 16,450,000$ $ -$ 56,840,00033,225,000$ 4.1%1,689
20096,755,000 14,200,000 -22,235,00043,190,0004.1%1,276
20106,340,00012,370,000 -21,470,00040,180,0003.4%1,084
20115,905,00010,240,000 - -16,145,0001.3%428
201210,325,0008,735,000 - -19,060,0001.6%504
20139,865,0007,125,000 - -16,990,0001.4%446
20149,390,0004,440,000 - -13,830,0001.1%353
20155,100,0003,115,000 - -8,215,0000.7%208
201636,070,5902,095,000 - -38,165,5902.9%948
201735,284,1681,085,00065,330 -36,434,4982.7%886
Details regarding the city's outstanding debt can be found in the notes to the financial statements. See Table 14 for
Sources:
income and population data.
Note: From 2008-2010, the SPUC Funds, Water and Electric Enterprise Funds, were reported as a blended component unit of
the City. In 2011, SPUC Funds have been presented as discretely presented component units as it no longer met the criteria for
blending.
CITY OF SHAKOPEE
Table 10
RATIOS OF GENERAL BONDED OUTSTANDING
Last Ten Fiscal Years
Percentage ofPercentage of
Actual TaxableTotal
fPerPersonal
FiscalG.O.Value o
YearBondsPropertyCapitaIncome
20087,165,000$ 0.19% 2130.52%
20096,755,0000.18% 1990.65%
20106,340,0000.17% 1710.54%
20115,905,0000.17% 1570.49%
201210,325,0000.31% 2730.86%
20139,865,0000.32% 2590.81%
20149,390,0000.29% 2400.75%
20155,100,0000.14% 1290.40%
201636,070,5900.94% 8962.74%
201735,284,1680.87% 8582.63%
Sources:
1. Metropolitan Council estimated for population. 2008-2009 populations are the City's estimate.
2. Scott County Auditor
3. Details regarding the city's outstanding debt can be found in the notes to the financial statements.
(THIS PAGE LEFT BLANK INTENTIONALLY)
CITY OF SHAKOPEE
Table 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
December 31, 2017
PercentageAmount
ApplicableApplicable
fTo City of
G.O.To City o
DebtShakopee (1)Shakopee
Direct Debt:
City of Shakopee$ 100.0%36,369,16836,369,168$
Overlapping Debt:
Independent School District No. 720199,410,00079.4%158,262,052
Independent School District No. 191202,205,0003.2%6,384,622
Scott County52,465,00026.0%13,647,567
Metropolitan Council (2)188,620,6141.2%2,253,898
Total Overlapping Debt:642,700,614180,548,139
Total Direct and Overlapping Debt$ 216,917,307679,069,782$
Source:
Scott County and Dakota County Taxation Department
Metropolitan Council
Note: Overlapping governments are those that coincide, at least in part, with geographic boundaries of
the City. This schedule estimates the portion of the outstanding debt of those overlapping governments
that is borne by the residents and businesses of the City. This process recognizes that, when
considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the
residents and businesses should be taken into account. However, this does not imply that every
taxpayer is a resident, and therefore responsible for repaying the debt of each government.
(1) The percentage of overlapping debt is estimated using net tax capacity. Applicable percentages
were estimated by determining the portion of net tax capacity that is within the City's boundaries and
dividing it by total net tax capacity for each entity.
(2) Excludes general obligation debt supported by wastewater revenues and housing rental payments.
Includes certificates of participation.
CITY OF SHAKOPEE
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2008200920102011
Market Value (Taxable)$3,800,795,500$3,850,591,200$3,710,814,056$3,570,069,500
Debt Limit - Percent of
Market Value (Note A) 114,023,865 115,517,736 107,102,085 107,102,085
Amount of Debt Applicable
to Debt Limit:
G.O. Bonds 7,165,000 6,755,000 6,340,000 5,905,000
Available in Debt Service Funds (847,608) (837,100) (786,306) (826,957)
Total Debt Applicable
to Debt Limit 6,317,392 5,917,900 5,553,694 5,078,043
Legal Debt Margin$ 107,706,473$109,599,836$101,548,391$102,024,042
NOTE (A):
M.S.A. Section 475.53 (Limit on Net Debt)
Subdivision 1. Generally, except of otherwise provided in Sections 475.51 to 475.75, no municipality, except a
school district or a city of the first class, shall incur or be subject to a net debt in excess of 2%
(3% starting 2008) of the market value of taxable property in the municipality."
NOTE (B):
M.S.A. Section 475.51 Definitions: Subdivision 4. "Net debt" means the amount remaining after deduction
from its gross debt the aggregate of the principal of the following:
(1) Obligations issued for improvements which are payable wholly or partly from the proceeds of special
assessments levied upon property specially benefited thereby, including those which are general obligations
of the municipality issuing them, if the municipality is entitled to reimbursement in whole or in part from
the proceeds of the special assessments.
(2) Warrants or orders having no definite or fixed maturity.
(3) Obligations payable wholly from the income of revenue-producing conveniences.
(4) Obligations issued to create or maintain a permanent improvement revolving fund.
(5) Obligation issued for the acquisition, and betterment of public waterworks systems, and public lighting,
heating or power systems and on any combination thereof or for any other public convenience from
which a revenue is or may be derived.
(6) Amount of all money and the face value of all securities held as a sinking fund for the extinguishment
of obligations other than those deductible under this subdivision.
M.S.A. Section 469.178, subdivision 1. (tax increment bonds) "... The bonds are not included for purposes
of computing the net debt of any municipality."
Table 12
201220132014201520162017
$ 3,064,695,7003,347,179,800$ 3,206,518,700$$3,629,757,200$3,844,106,800$4,034,313,200
100,415,394 91,940,871 96,195,561 108,892,716 115,323,204 121,029,396
10,325,000 9,865,000 9,390,000 5,100,000 33,935,000 35,284,168
(4,974,768) (4,836,597) (4,833,096) (1,511,502) (2,443,111) (2,976,808)
5,350,232 5,028,403 4,556,904 3,588,498 31,491,889 32,307,360
$ 95,065,162$ 86,912,468$91,638,657$105,304,218$83,831,315$88,722,036
CITY OF SHAKOPEE
Table 13
PLEDGED REVENUE COVERAGE
Last Ten Fiscal Years
Utility Bonds
UtilityLess:Net
FiscalServiceOperatingAvailableDebt Service
YearChargesExpenseRevenuePrincipalInterestCoverage
200845,499,791$ $ 38,689,351$6,810,440$ 670,000$ 1,523,198 3.11
200942,437,910 33,009,500 9,428,410 710,000 1,012,874 5.47
201045,586,795 36,375,440 9,211,355 765,000 939,426 5.40
2011 - - - - - -
2012 - - - - - -
2013 - - - - - -
2014 - - - - - -
2015 - - - - - -
2016 - - - - - -
2017 - - - - - -
1. Operating expense excludes depreciation and amortization.
Note: From 2008-2010, the SPUC Funds, Water and Electric Enterprise Funds,were reported
as a blended component unit of the City. In 2011, SPUC Funds have been presented as
discretely presented component units as it no longer met the criteria for blending.
CITY OF SHAKOPEE
Table 14
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
FiscalSchool UnemploymentTotalPer CapitaPersonal
YearPopulation (1)Enrollment (2)Rate (3)EmploymentIncome (3)Income (4)
200833,6607,163 6.3% 18,967$ 31,900$ 1,375,044,660
200933,860 7,4657.4% 18,728 30,900 1,046,274,000
201037,076 7,8146.5% 19,933 31,700 1,175,309,200
201137,721 8,1155.2% 20,449 32,017 1,207,713,257
201237,841 8,3924.6% 20,926 31,628 1,196,835,148
201338,120 8,4523.8% 21,233 31,829 1,213,321,480
201439,144 8,6983.6% 21,439 32,174 1,259,419,056
201539,523 8,9393.0% 21,877 31,965 1,263,352,695
201640,254 8,9273.2% 21,571 32,704 1,316,466,816
201741,143 9,0362.6% 27,156 32,662 1,343,812,666
Source:1. 2010 is the official census figure. 2008-2009, 2011-2017 are the City's estimate.
2. Shakopee School District, SACS, Bloomington Lutheran
3. Minnesota Department of Employment and Economic Development
4. Per capita income times population
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CITY OF SHAKOPEE
Table 15
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
20172008
Total Total
CityCity
TaxpayerType of BusinessEmployeesRankEmploymentEmployeesRankEmployment
AmazonDistribution2,00019.14%
Valley FairAmusement Park1,60027.31%1,60018.56%
School District No. 720Education 1,11235.08% 94745.07%
St. Francis RMCHealth Care93244.26%90054.82%
EmersonManufacturing87454.00%
Canterbury ParkHorse Racing 86663.96% 1,10035.89%
Entrust DatacardManufacturing82073.75%
Imagine Print SolutionsPrinting77883.56%
SeagateManufacturing/Research 66093.02% 1,20026.42%
Scott CountyGovernment627102.87%71363.82%
Northstar Auto AuctionAuto Auction 33271.78%
American Color - SVPPrinting28781.54%
Anchor GlassManufacturing28291.51%
City of ShakopeeGovernment 251101.34%
10,26946.95% 7,07940.75%
Total Employment 2 7,156 1 8,967
Source: Minnesota Department of Employment and Economic Development.
CITY OF SHAKOPEE
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
Last Ten Fiscal Years
20082009201020112012
General Government:
Administration 5 5 5 5 6
k 4 4 4 4 3
City Cler
Finance 3 3 3 3 4
Planning 5 5 5 5 5
Facilities Maintenance 7 6 6 6 4
y 2 2 2 2 2
Information Technolog
Public Safety:
Police:
Licensed 47 47 47 50 49
Other 6 6 6 6 7
Fire:
Full time 2 3 3 3 3
Paid On Call 48 44 44 42 44
Building Inspection 6 5 5 5 5
Public Works:
Engineering 7 7 7 7 7
Street 13 13 13 13 13
Shop 3 3 3 4 3
Park and Recreation:
Park Maintenance 8 8 8 8 8
Natural Resources - - - - -
Recreation 7 7 7 7 7
Economic Development:
EDA - - - - -
Total 173 168 168 170 170
Source: City departments
Table 16
20132014201520162017
7 8 6 8 9
3 3 3 3 3
4 4 4 4 4
5 5 5 5 6
4 4 3 3 3
2 2 4 5 5
47 47 48 48 51
10 10 11 11 12
7 7 7 7 8
44 43 43 43 46
5 5 4 5 5
7 8 8 8 9
13 14 14 14 14
3 4 4 4 4
8 9 9 9 9
1 2 2 1 -
7 7 9 1215
1 1 1 1 1
178 183 185 191 204
CITY OF SHAKOPEE
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2008200920102011
General Government
Planning
Number of Case Files 68 35 33 24
Number of Plats Filed 2 2 1 2
Number of Acres Platted 50 34 6 68
Public Safety
Police
Arrests 1,881 1,913 1,962 1,666
Citations 4,058 6,127 5,528 5,647
Calls for Service 19,057 17,909 17,831 17,852
Fire
Calls for Service 538 517 557 600
Building Inspection
Building Permits Issued 1,019 1,102 1,083 1,881
Number of Inspections 5,946 9,726 8,048 8,004
Single Family Homes Permitted 94 314 160 118
Public Works
Street
Miles of Roadway 154 154 154 154
Park and Recreation
Park Maintenance
Acres Maintained 933 933 933 933
Recreation
Program Participants 11,410 10,377 13,001 13,157
Community Center Members 613 823 873 955
Community Center Admissions 100,397 109,257 117,336 120,667
Ice Rental Hours 1,449 1,374 1,429 1,354
Source: City departments
Table 17
201220132014201520162017
47 49 45 75 50 59
5 8 7 9 7 10
89 99 68 335 79 169
1,798 1,387 1,524 2,121 1,543 1,338
5,636 5,656 4,934 5,510 4,396 3,569
18,349 17,822 17,846 19,357 21,117 21,632
617 584 730 745 792 808
1,413 1,066 1,519 1,054 1,030 1,145
8,191 7,408 7,854 6,835 6,659 6,301
97 66 61 50 45 33
154 154 156 156 156 156
933 933 1,015 1,402 1,402 1,402
13,104 15,854 18,540 19,788 23,700 41,289
998 1,043 2,116 2,024 2,463 6,231
128,929 140,778 113,772 114,158 200,297
124,124
1,420 1,446 1,477 1,589 1,773 2,870
CITY OF SHAKOPEE
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
20082009201020112012
Police:
Stations11111
Patrol Zones44444
Patrol Units1515151515
Fire Stations22222
Street:
Miles of Roadway154154154154154
Traffic Signals2627272729
Parks:
Acres933933933933933
Ball Fields4949525456
Playgrounds2424242626
Source: City Departments
Table 18
20132014201520162017
11111
44443
1515151516
22222
154156156156156
2930303030
9331,0151,4021,4021,402
5656565657
2627272727
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Management Letter
City of Shakopee
Shakopee, Minnesota
For the Year Ended
December 31, 2017
May 23, 2018
Management, Honorable Mayor and City Council
City of Shakopee, Minnesota
We have audited the financial statements the governmental activities, the business-type activities, the discretely
presented component units, each major fund and the aggregate remaining fund information oftheCity of Shakopee, (the
City)for the year ended December 31, 2017. Professional standards require that we provide you with information about
our responsibilities under generally accepted auditing standardsandGovernment Auditing Standards, as well as certain
information related to the planned scope and timing of our audit. We have communicatedsuch information in our letter to
you dated November 7, 2017.Professional standards also require that we communicate to you the following information
related to our audit.
Our Responsibility under Auditing Standards Generally Accepted in the United States of America, Government
Auditing Standards
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions
about whether the financial statements prepared by management with your oversight are fairly presented, in all material
respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the
financial statements does not relieve you or management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial
statements are free of material misstatement. As part of our audit, we considered the internal control over financial
reporting (internal control) of the City. Such considerations were solely for the purpose of determining our audit
procedures and not to provide any assuranceconcerning such internal control. We are responsible for communicating
significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing
the financial reporting process. However, we are not required to design procedures specifically to identify such matters.
Significant Audit Findings
In planning and performing our audit of the financial statements, we considered the City's internal control over financial
reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness
of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Adeficiency in internal controlexists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely
basis. A material weaknessis a deficiency, or a combination of deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected on a timely basis. Asignificant deficiencyis a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough tomerit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies.
Given these limitations, during our audit we identified one deficiency described as 2017-001 in internal controls that we
consider to be a material weakness. However, material weaknesses may exist that have not been identified.
2
2017-001Prior Period Adjustment
Condition:A prior period adjustment of $5,562,557 was made to recognize capital contributions from
developerinstalled infrastructure for the years ending 2010 through 2016.
Criteria:When developers install infrastructure, the City should accept and record the contributed
infrastructure as capital assets.
Cause:Unknown.
Effect:The prior year capital assets and net position was understated.
Recommendation:We recommend management review the current process for monitoring developments and
implement aprocess to record and track the contributed capital assets. The City Council should
also accept the developer contributed infrastructure as completed and approved by the City
Engineer.
Management Response:
Staff discovered this oversight prior to this year’s audit and worked with our auditors to ensure the appropriate prior period
adjustment was recognized. Both finance and engineering staff agree that future developer installed infrastructure will be
brought forward to the City Council for official acceptance once the infrastructure is completed and accepted by the City
Engineer. City Council acceptance will trigger action within the finance department to ensure appropriate accounting of
developer contributed infrastructure.
Complianceand Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of
our audit. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the
City’s compliance with those requirements. We noted noinstances of noncompliance or other matter that arerequired to
be reported under Government Auditing Standardsor Minnesota Statutes.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting
policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted
and the application ofexisting policies were not changed during the year ended December 31, 2017.We noted no
transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All
significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management’s knowledge and experience about past and current events and assumptions about future events. Certain
accounting estimates are particularly sensitive because of their significance to the financial statements and because of the
possibility that future events affecting them may differ significantly from those expected. The most sensitiveestimates
affecting the financial statements were depreciation on capital assets, allocation of payroll, other postemployment benefits
payableand the liability for the City’s pension.
Management’s estimate of depreciation is based on estimated useful lives of the assets. Depreciation is
calculated using the straight-line method.
Management’s estimate of its OPEB liability is based on several factors including, but not limited
to, anticipated retirement age for active employees, life expectancy, turnover, and healthcare cost
trend rate.
3
Management’s estimate of its pension liability is based on several factors including, but not limited to, anticipated
investment return rate, retirement age for active employees, life expectancy, salary increasesand form of annuity
payment upon retirement.
We evaluated the key factors and assumptions used to develop these estimatesin determining that they are reasonable
in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent,
and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than
those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such
misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken as a whole.
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated May 23, 2018.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting,
reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to reportthat no such disagreements arose during the course of our
audit.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar
to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the
City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements,
our professional standards require the consulting accountant to check with us to determine that the consultant has all the
relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal
course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the required supplementary information (RSI) (Management’s Discussion and
Analysis, the Schedules of Employer’s Share ofthe Net Pension Liability, the Schedules of Employer’s Contributions,
Schedule of changes in the Net Pension Liability and Related Ratiosand the Schedule of Funding Progress for Other
Post-Employment Benefits Plan), which is information that supplements the basic financial statements. Our procedures
consisted of inquiries of management regarding the methods of preparing the information and comparing the information
for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or
provide any assurance on the RSI.
4
We were engaged to report on the supplementary information (combining and individual fund financial statementsand
schedules), which accompany the financial statements but are not RSI. With respect to this supplementary information,
we made certain inquiries of management and evaluated the form, content, and methods of preparingthe information to
determine that the information complies with accounting principles generally accepted in the United States of America, the
method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation
to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory or statistical sections, which accompany the financial statements but
are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or
provide any assurance on them.
Financial Position and Results of Operations
Our principal observations and recommendations are summarized below.These recommendations resulted from our
observations made in connection with our audit of the City’s financial statements for the year ended December 31, 2017.
General Fund
The General fund is used to account for resources traditionally associated with government, which are not required legally
or by sound financialmanagement to be accounted for in another fund.The General fund balance increased $1,216,628
from2016.Thetotalunassignedfund balance of $11,918,971is 44.8percentof the 2018 budgeted expendituresless
transfers.We recommend that the fund balance be maintained at a level sufficient to fund operations until the major
revenue sources are received in June. The City’s target General Fund balance is to maintain an unassigned level
between 40% and 45% of budgeted expenditures.The City’s ending fund balance is within these levels.
The purposes and benefits of a fund balance are as follows:
Expenditures are incurred somewhat evenly throughout the year.However, property tax and state aid revenues
are not receiveduntil the second half of the year.An adequate fund balance will provide the cash flow required to
finance the governmental fund expenditures.
The City is vulnerable to legislative actions at the State and Federal level.The State continually adjusts thelocal
government aidformula. An adequate fund balance will provide a temporary buffer against aid adjustments and
levy limits.
Expenditures not anticipated at the time the annual budget was adopted may need immediate City Council action.
These would include capital outlay, replacement, lawsuits and other items.An adequate fund balance will provide
the financing needed for such expenditures.
A strong fund balance will assist the City in maintainingand or improvingits bond rating.The result will be better
interest rates in future bond sales.
5
A table summarizing the General fund balance in relation to budget follows:
Fund
Balance
Unassigned Original
as a Percent
Fund BalanceBudgetGeneral Fund
of Budget
YearDecember 31,YearBudget
2013$9,076,5492014$21,862,325 %41.5
20149,824,097201521,867,16744.9
20159,818,537201622,827,02343.0
201610,739,178201724,253,20044.3
201711,918,971201826,595,90044.8
Fund Balance as a Percent of Next Year’s Budget Less Transfers
$30,000,000
$26,595,900
$24,253,200
$25,000,000
$22,827,023
$21,867,167
$21,862,325
$20,000,000
$15,000,000
$10,000,000
44.8%
44.3%
44.9%43.0%
41.5%
$5,000,000
$-
201320142015201620172018
Unassigned Fund BalanceBudget
6
A summary of activity compared to budget is presented below:
Final
BudgetedActualVariance with
AmountsAmountsFinal Budget
Revenues$25,330,550$26,356,474$1,025,924
Expenditures24,484,35023,673,607(810,743)
Excess (Deficiency) of Revenues
Over (Under) Expenditures846,2002,682,8671,836,667
Other Financing Sources (Uses)
Sale of capital assets3,7504,661911
Capital Lease Issued-79,10079,100
Transfers in250,000250,000-
Transfers out(700,000)(1,800,000)(1,100,000)
Total Other Financing Sources (Uses)(446,250)(1,466,239)(1,019,989)
Net Change in Fund Balances$399,9501,216,628$816,678
Fund Balances, January 110,761,366
Fund Balances, December 31$11,977,994
Revenues were $1,025,924over budget. The largest areas over budget were licenses and permits andcharges
for servicesover budget by $859,242 and $424,624, respectively.
Expenditures were under budget by $810,743.The largest area under budget was Public Works by $359,630.
7
A comparison for the last three yearsGeneral fund revenues by source follows:
2017
Percent of
2017
SourceTotal
201520162017Per Capita
Taxes$16,160,075$17,022,204$16,771,524 %62.80$408
Licenses and Permits2,023,4362,564,7292,391,9429.0058
Intergovernmental1,356,7331,344,2791,369,0275.1033
Charges for Services4,452,4154,750,5145,653,77421.20137
Fines and Forfeits7,09311,2132,719--
Special Assessments12,04315,8183,875--
Miscellaneous319,491218,734163,6130.604
Sale of Capital Assets-9,1344,661--
Capital Lease Issued--79,1000.302
Transfers In250,000250,000250,0001.006
Total Revenues and
Other Financing Sources$24,581,286$26,186,625$26,690,235 %100.0$648
The General Fund revenues summarized above are presented graphically as follows:
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
2015 2016 2017
TaxesLicenses and PermitsIntergovernmentalCharges for ServicesOther
8
A more detailed comparison of expenditures and transfers for the last three years is as follows:
2017
Percent of
2017
ProgramTotal
201520162017Per Capita
Current
General government$3,861,312$3,999,953$4,415,257 %17.3$107
Public safety10,150,41610,585,89911,004,43443.2267
Public works3,036,2843,061,1722,973,84011.772
Culture and recreation3,889,0784,232,1675,170,13020.3126
Total Current20,937,09021,879,19123,563,66192.5572
Capital Outlay126,66637,42393,3410.42
Debt Service--16,6050.1-
Transfers Out3,515,4663,348,7551,800,0007.044
Total Expenditures
and Transfers$24,579,222$25,265,369$25,473,607 %100.0$618
The expenditures and transfers summarized above are presented graphically as follows:
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
201520162017
General government Public safety Public works
Culture and recreationOther Transfers Out
9
Special Revenue Funds
Special revenue funds receive revenue from specific sources and expenditures are for specific purposes. A summary of
the special revenue funds and fund balances is shown below:
Fund Balances, December 31,
Increase
Fund
20172016(Decrease)
Major
Economic Development Authority $356,588$1,503,917$(1,147,329)
Nonmajor
Forfeitures221,048186,96534,083
Telecommunication74,13970,7953,344
SCDP Grant10,8054,7346,071
Revolving Loan138,004263,787(125,783)
Total$800,584$2,030,198$(1,229,614)
Each of the special revenue funds have positive fund balances at year end and have been able to support their respective
activities.
The Economic Development Authority decreased by$1,147,329 due to the downtown redevelopment project.
Internal Service Funds
Internal Service Fundsare used to accumulate and allocate costs internally among the City’s various functions. The City’s
internal service funds are allocated between governmental and business-type activities and are combine with the
respective governmental activities and business-type activities in the government-wide financial statements.
Net Position, December 31,
Increase
Fund
20172016(Decrease)
Internal Service Funds
Equipment$11,650,549$11,550,556$99,993
Buildings20,595,56623,972,155(3,376,589)
Park Assets9,146,6938,910,677236,016
Employee Benefits(1,177,149)(1,077,975)(99,174)
Information and Technology821,914701,229120,685
Self Insurance1,411,197548,252862,945
Total$42,448,770$44,604,894$(2,156,124)
The Buildings Fund decreased in net positiondue to funding for the City Hall construction project which is accounted for in
a separate capital projects fund.The classification of net position consists of $32,990,938 investment in capital assets and
$9,457,832 unrestricted.
10
Capital Projects Funds
The following funds, with fund balances included, comprise the capital projects fund type:
Fund Balances, December 31,
Increase
Fund
20172016(Decrease)
Major
Capital Improvements$6,592,822$4,744,275$1,848,547
Community Center & Ice Area188,2176,547,457(6,359,240)
City Hall(1,071,720)1,893,613(2,965,333)
TIF District No. 17(2,164,600)-(2,164,600)
Nonmajor
Park Reserve1,228,550591,080637,470
TIF District No. 10(4,695)(8,602)3,907
TIF District No. 1485,62754,47731,150
TIF District No. 1535,02420,24414,780
TIF District No. 161,849-1,849
Road Expansion Dedication95,56894,591977
Lions Park22,000-22,000
Tree Replacement301,405183,545117,860
Sealcoat111,35672,84238,514
Property Acquisition Fund-(31,326)31,326
Total$5,421,403$14,162,196$(8,740,793)
The City has three funds with ending deficit fund balances.We understand these are planned deficits and are expected to
be eliminated in the future. We recommend the City continue to evaluate the status of each fund annually to ensure
appropriate progress is being achieved.
A summary of the restricted and assigned fund balances follows:
Capital Project Fund Balance by Classification
Assigned,82.23%
Restricted,17.77%
11
Debt ServiceFunds
Debt Service funds are a type of governmental fund to account for the accumulation of resources for the payment of
interest and principal on debt (other than enterprise fund debt).
Debt Service funds may have one or a combination of the following revenue sources pledged to retire debt as follows:
Property taxes - Primarily for general City benefit projects such as parks and municipal buildings.Property taxes
may also be used to fund special assessment bonds which are not fully assessed.
Tax increments - Pledged exclusively for tax increment/economic development districts.
Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax
increments or special assessments) for a period of one to two years.Bonds are issued with this timing difference
considered in the form of capitalized interest.
Special assessments - Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows:
Residual project proceeds from the related capital projects fund
Investment earnings
State or federal grants
Transfers from other funds
All Debt Service funds with the total assets and debt remaining tobe paid are shown below:
December 31, 2017
Final
Total TotalBondsMaturity
Debt Description
FundCashAssetsOutstandingDate
2/1/2018
30392007B Improvement Bonds$164,986$165,689$155,000
2/1/2019
30412008A Improvement Bonds267,267318,987425,000
2/1/2021
30422010A Improvement Bonds197,357244,062505,000
2/1/2025
30432012A Refunding Bonds1,678,4552,742,8783,760,000
2/1/2036
30442016A Tax Abatement Bond1,286,2671,291,74829,500,000
Total$3,594,332$4,763,364$34,345,000
12
The next 10 years ofprincipal and interest payments are as follows:
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
2018201920202021202220232024202520262027
PrincipalInterest
13
Enterprise Funds
Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business
enterprises-where the intent is that the costs of providing goods or services to the general public on a continuing basis be
financed or recovered primarily through user charges. The results of the operations in terms of cash flow and the
breakdown of the cash balances for the past four years are as follows:
SewerCash Flows
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
Operating costsDebt paymentsOperating receipts
SewerCash Balances
$14,000,000
$12,729,450
$12,000,000
$11,167,716
$10,000,000
$9,176,744
$8,348,595
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
2014201520162017
SAC
Unrestricted
Minimum target balance (6 months operating costs + debt service + 10% of accumulated
depreciation)
14
Storm DrainageFundCash Flows
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
Operating costsOperating receipts
Storm DrainageFundCash Balances
$18,000,000
$15,493,729
$15,371,971
$16,000,000
$13,595,766
$14,000,000
$12,361,761
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
2014201520162017
Unrestricted
Minimum target balance (6 months operating costs + debt service + 10% of accumulated
depreciation)
15
The Refuse fund was created during 2014 with the City’s purchase of garbage carts. Thenegative unrestricted net
position is anticipated to be reduced each year as service charges continue to be collectedfrom customers.
RefuseFundCash Flows
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$-
$-
$-
$-
$-
2014201520162017
Minimum target balance (following year debt service plus 50% of operating costs)
Annual revenue generated to repay initial purchase of recycling carts with an advance from the sewer fund. Outstanding
advance at December 31, 2017 is $746,924.
16
Ratio Analysis
The following captures a few ratios from the City’s financial statements that give some additional information for trend and
peer group analysis. The peer group average is derived from information we have requested from the Office of the State
nd
Auditor. Different peer group averages are used for Cities of the 2class (population 20,000 - 100,000). The peer group
comparable cities is compiled from the following cities: Maplewood, Coon Rapids, Lakeville, Roseville, Blaine, St. Louis
Park, Golden Valley, Inver Grove Heights, Burnsville and Savage. The majority of these ratios facilitate the use of
economic resources focus and accrual basis of accounting at the government-wide level. A combination of solvency
(ability to pay its long-term obligations), funding (comparison of financial amounts and economic indicators to measure
changes in financial capacity over time) and common-size (comparison of financial data with other cities regardless of
size) ratios are shown below.
Ratio
CalculationSource2014201520162017
Debt to AssetsTotal liabilities/total assetsGovernment-wide8%9%25%18%
21%26%34%N/A
26%31%37%
Debt Per CapitaBonded debt/populationGovernment-wide$353$208$948$884
$1,311$1,286$1,274N/A
$1,557$1,499$1,389
Taxes Per CapitaTax revenues/populationGovernment-wide$436$446$470$522
$518$532$523N/A
$576$589$590
Current Expenditures Per CapitaGovernmental fund currentGovernmental funds$609$591$598$614
expenditures/population$722$658$642N/A
$602$653$601
Capital Expenditures Per CapitaGovernmental fund capitalGovernmental funds$185$138$799$447
$262$277$288N/A
outlay/population
$262$272$326
Capital Assets % Left to Net capital assets/Government-wide59%57%61%62%
60%61%60%N/A
Depreciate - Governmentalgross capital assets
60%63%63%
Capital Assets % Left to Net capital assets/Government-wide74%73%72%72%
61%61%58%N/A
Depreciate - Business-typegross capital assets
58%59%59%
Represents the City of Shakopee
Peer Group Ratio
Comparable Cities Group
17
Debt-to-Assets Leverage Ratio (Solvency Ratio)
The debt-to-assets leverage ratio is a comparison of a City’s total liabilities to its total assets or the percentage of total
assets that are provided by creditors. It indicates the degree to which the City’s assets are financed through borrowings
and other long-term obligations (i.e. a ratio of 50 percent would indicate half of the assets are financed with outstanding
debt).
Bonded Debt per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total bonded debt by the population of the City and represents the amount
of bonded debt obligation for each citizen of the City at the end of the year. The higher the amount, the more resources
are needed in the future to retire these obligations through taxes, assessments or user fees.
Taxes per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total tax revenues by the population of the City and represents the amount
of taxes for each citizen of the City for the year. The higher this amount is, the more reliant the City is on taxes to fund its
operations.
Current Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total current governmental expenditures by the population of the City and
represents the amount of governmental expenditures for each citizen of the City during the year. Since this is generally
based on ongoing expenditures, we would expect consistent annual per capita results.
Capital Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total governmental capital outlay expenditures by the population of the City
and represents the amount of capital expenditures for each citizen of the City during the year. Since projects are not
always recurring, the per capita amount will fluctuate from year to year.
Capital Assets Percentage (Common-size Ratio)
This percentage represents the percent of governmental or business-type capital assets that are left to be depreciated.
The lower this percentage, the older the City’s capital assets are and may need major repairs or replacements in the near
future. A higher percentage may indicate newer assets being constructed or purchased and may coincide with higher debt
ratios or bonded debt per capita.
18
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact
(1)
on futureCity financial statements:
GASB Statement No. 75 - Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pension
Summary
The primary objective of this Statement is to improve accounting and financial reporting by state and local governments
for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information
provided by state and local governmental employers about financial support for OPEB that is provided by other entities.
This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial
reporting for all postemploymentbenefits (pensions and OPEB) with regard to providing decision-useful information,
supporting assessments of accountability and interperiod equity, and creating additional transparency.
This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and
Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans
Other than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans.
The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of
state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities,
deferred outflowsof resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this
Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount
projected benefit payments to their actuarial present value, and attribute that present value to periods of employee
service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are
addressed.
In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined
benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose
employees are provided with defined contribution OPEB. This Statement alsoaddresses certain circumstances in which a
nonemployer entity provides financial support for OPEB of employees of another entity.
In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans
through which the benefits are provided are administered through trusts that meet the following criteria:
Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those
contributions are irrevocable.
OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.
OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, the
OPEB plan administrator, and the plan members.
Effective Date
This Statement is effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve the decision-usefulness of information in employer and governmental
nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod
equity by requiring recognition of the entire OPEB liability and a more comprehensive measure of OPEB expense.
Decision-usefulness and accountability also will be enhanced through new note disclosures and required supplementary
information, as follows:
More robust disclosures of assumptions will allow for better informed assessments of the
reasonableness of OPEB measurements.
Explanations of how and why the OPEB liability changed from year to year will improve
transparency.
19
Future Accounting Standard Changes(Continued)
The summary OPEB liability information, including ratios, will offer an indication of the extent to which the total
OPEB liability is covered by resources held by the OPEB plan, if any.
For employers that provide benefits through OPEB plans that are administered through trusts that meet the
specified criteria, the contribution schedules will provide measures to evaluate decisions related to contributions.
The consistency, comparability, and transparency of the information reported by employers and governmental
nonemployer contributing entities about OPEB transactions will be improved by requiring:
The use of a discount rate that considers the availability of the OPEB plan’s fiduciary net position associated with
the OPEB of current active and inactive employees and the investment horizon of those resources, rather than
utilizing only the long-term expected rate of return regardless of whether the OPEB plan’s fiduciary net position is
projected to be sufficient to make projected benefit payments and is expected to be invested using a strategy to
achieve that return.
A single method of attributing the actuarial present value of projected benefit payments to periods of employee
service, rather than allowing a choice among six methods with additional variations.
Immediate recognition in OPEB expense, rather than a choice of recognition periods, of the effects of changes of
benefit terms.
Recognition of OPEB expense that incorporates deferred outflows of resources and deferred inflows of resources
related to OPEB over a defined, closed period, rather than a choice between an open or closed period.
GASB Statement No. 83 -Certain Asset Retirement Obligations
Summary
This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a
legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal
obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability
based on the guidance in this Statement.
This Statement establishes criteria for determining the timing and pattern of recognition of a liabilityand a corresponding
deferred outflow of resources for AROs. This Statement requires that recognition occur when the liability is both incurred
and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of
external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a
government to perform asset retirement activities. Laws and regulations may require governments to take specific actions
to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning
nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets
may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing
into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed
into operation, or acquiring a tangible capital asset that has an existing ARO.
This Statement requires the measurement of an ARO to be based on the best estimate of the current value of outlays
expected to be incurred. The best estimate should include probability weighting of all potential outcomes, when such
information is available or can be obtained at reasonable cost. If probability weighting is not feasible at reasonable cost,
the most likely amount should be used. This Statement requires that a deferred outflow of resources associated with an
ARO be measured at the amount of the corresponding liability upon initial measurement.
This Statement requires the current value of a government's AROs to be adjusted for the effects of general inflation or
deflation at least annually. In addition, it requires a government to evaluate all relevant factors at least annually to
determine whether the effects of one or more of the factors are expected to significantly change the estimated asset
retirement outlays. A government should remeasure an ARO only when the result of the evaluation indicates there is a
significant change in the estimated outlays. The deferred outflows of resources should be reduced and
recognized as outflows of resources (for example, as an expense) in a systematicand rational manner
over the estimated useful life of the tangible capital asset.
20
Future Accounting Standard Changes (Continued)
A government may have a minority share (less than 50 percent) of ownership interest in a jointly owned tangible capital
asset in which a nongovernmental entity is the majority owner and reports its ARO in accordance with the guidance of
another recognized accounting standards setter. Additionally, a government may have a minority share of ownership
interest in a jointly owned tangible capital asset in which no joint owner has a majority ownership, and a nongovernmental
joint owner that has operational responsibility for the jointly owned tangible capital asset reports the associated ARO in
accordance with the guidance of another recognized accounting standards setter. In both situations, the government's
minority share of an ARO should be reported using the measurement produced by the nongovernmental majority owner or
the nongovernmental minority owner that has operational responsibility, without adjustment to conform to the liability
measurement and recognition requirements of this Statement.
In some cases, governments are legally required to provide funding or other financial assurance for their performance of
asset retirement activities. This Statement requires disclosure of how those funding and assurance requirements are
being met by a government, as well as the amount of any assets restricted for payment of the government's AROs, if not
separately displayed in the financial statements.
This Statement also requires disclosure of information about the nature of a government's AROs, the methods and
assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible
capital assets. If an ARO (or portions thereof) has been incurred by a government but is not yet recognized because it is
not reasonably estimable, the government is required to disclose that fact and the reasons therefor. This Statement
requires similar disclosures for a government's minority shares of AROs.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Earlier application is
encouraged.
How the Changes in This Statement Will Improve Financial Reporting
This Statement will enhance comparability of financial statements among governments by establishing uniform criteria for
governments to recognize and measure certain AROs, including obligations that may not have been previously reported.
This Statement also will enhance the decision-usefulness of the information provided to financial statement users by
requiringdisclosures related to those AROs.
GASB Statement No. 84 -Fiduciary Activities
Summary
The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and
financial reporting purposes and how those activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the
criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries
with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and
postemployment benefit arrangements that are fiduciary activities.
An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with
activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary
net position. An exception to that requirement is provided for a business-type activity that normally expects to hold
custodial assets for three months or less.
This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee
benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds
generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria.
21
Future Accounting Standard Changes (Continued)
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary government, should
combine its information with its component units that are fiduciary component units and aggregate that combined
information with the primary government’s fiduciary funds.
This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has
occurred that compels the government to disburse fiduciary resources. Events that compel a government to disburse
fiduciary resources occur when a demand for the resources has been made or when no further action, approval, or
condition is required to be taken or met by the beneficiary to release the assets.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will enhance consistency and comparability by (1) establishing specific criteria for
identifying activities that should be reported as fiduciary activities and (2) clarifying whether and how business-type
activities should report their fiduciary activities. Greaterconsistency and comparability enhances the value provided by the
information reported in financial statements for assessing government accountability and stewardship.
GASB Statement No. 85 -Omnibus 2017
Summary
The objective of this Statement is to address practice issues that have been identified during implementation and
application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending
component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other
postemployment benefits \[OPEB\]). Specifically, this Statement addresses the following topics:
Blending a component unit in circumstances in which the primary government is a business-type activity that
reports in a single column for financial statement presentation
Reporting amounts previously reported as goodwill and “negative” goodwill
Classifying real estate held by insurance entities
Measuring certain money market investments and participating interest-earning investment contracts at amortized
cost
Timing of the measurement of pension or OPEB liabilities and expenditures recognizedin financial statements
prepared using the current financial resources measurement focus
Recognizing on-behalf payments for pensions or OPEB in employer financial statements
Presenting payroll-related measures in required supplementary information forpurposes of reporting by OPEB
plans and employers that provide OPEB
Classifying employer-paid member contributions for OPEB
Simplifying certain aspects of the alternative measurement method for OPEB
Accounting and financial reporting for OPEB provided through certain multiple-employer defined benefit OPEB
plans.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after June 15, 2017.
Earlier application is encouraged.
22
Future Accounting Standard Changes (Continued)
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will enhance consistency in the application of accounting and financial reporting
requirements. Consistent reporting will improve the usefulness of information for users of state and local government
financial statements.
GASB Statement No. 86 -Certain Debt Extinguishment Issues
Summary
The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance
defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only
existing resources - resources other thanthe proceeds of refunding debt - are placed in an irrevocable trust for the sole
purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on
debt that is extinguished and notes to financial statements for debt that is defeased in substance.
Effective Date
The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. Earlier application is
encouraged.
How the Changes in This Statement Will Improve Accounting and Financial Reporting
The requirements of this Statement will increase consistency in accounting and financial reporting for debt
extinguishments by establishing uniform guidance for derecognizing debt that is defeased in substance, regardless of how
cash and other monetary assets placed in an irrevocable trust for thepurpose of extinguishing that debt were acquired.
The requirements of this Statement also will enhance consistency in financial reporting of prepaid insurance related to
debt that has been extinguished. In addition, this Statement will enhance the decision-usefulness of information in notes
to financial statements regarding debt that has been defeased in substance.
GASB Statement No. 87 -Leases
Summary
The objective of this Statement is to better meet the information needs of financial statement usersby improving
accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’
financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified
as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of
the contract. It establishes a single model for lease accounting based on the foundational principle that leases are
financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability
and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow
of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.
Effective Date and Transition
The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. Earlier
application is encouraged.
Leases should be recognized and measured using the facts and circumstances that exist at the beginning of the period of
implementation (or, if applied to earlier periods, the beginning of the earliest period restated). However, lessors shouldnot
restate the assets underlying their existing sales-type or direct financing leases. Any residual assets for those leases
become the carrying values of the underlying assets.
23
Future Accounting Standard Changes (Continued)
How the Changes in This Statement Will Improve Accounting and Financial Reporting
This Statement will increase the usefulness of governments’ financial statements by requiring reporting of certain lease
liabilities that currently are not reported. It will enhance comparability of financial statements among governments by
requiring lessees and lessors to report leases under a single model. This Statement also will enhance the decision-
usefulness of the information provided to financial statement users by requiring notes to financial statements related to the
timing, significance, and purpose of a government’s leasing arrangements.
(1)
Note. From GASB Pronouncements Summaries. Copyright 2017 by the Financial Accounting Foundation, 401 Merritt 7,
Norwalk, CT 06856, USA, and is reproduced with permission.
* * * * *
Restriction on Use
This communication is intended solely for the information and use of the City Council, management andthe Minnesota
Office of the State Auditor and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the
accounting records and related data. The comments and recommendations in the report are purely constructive in nature,
and should be read in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free tocontact us at your
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation
extended to us by your staff.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 23, 2018
24
Other Required Reports
City of Shakopee
Shakopee, Minnesota
For the Year Ended
December 31, 2017
City of Shakopee, Minnesota
Other Required Reports
Table of Contents
For the Year Ended December 31, 2017
Page No.
Other Required Reports
Independent Auditor’s Report
on Minnesota Legal Compliance3
Independent Auditor’s Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on
anAudit of Financial StatementsPerformed in Accordance
with Government Auditing Standards4
Schedule of Findingand Response6
2
INDEPENDENT AUDITOR’S REPORT
ONMINNESOTA LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Shakopee, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America, and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States the financial statements ofthe governmental activities, the business-type activities, the discretely
presented component units, each major fund and the aggregate remaining fund information of the City of Shakopee,
Minnesota (the City) as of and for the year ended December31,2017, and the related notes to the financial statements,
and have issued our report thereon datedMay 23, 2018.
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statute
§6.65, contains seven categories of compliance to be tested: contracting and bidding,deposits and investments, conflicts
of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our
audit considered all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the
provisions of the Minnesota Legal Compliance Audit Guide for Cities.However, our audit was not directed primarily
toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters
may have come to our attention regarding the City’s noncompliance with the above referenced provisions.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and
not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 23, 2018
3
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROLOVER FINANCIAL
REPORTING AND ON COMPLIANCE ANDOTHER MATTERS BASED ON
AN AUDIT OF FINANCIAL STATEMENTSPERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and City Council
City ofShakopee, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of
the United States, the financial statementsof the governmental activities, the business-type activities, the discretely
presented component units, each major fund and the aggregate remaining fund information of the City of Shakopee,
Minnesota (the City), as of and for the year endedDecember31,2017,and the related notes to the financial statements,
which collectively comprise the City’s basic financial statements, and have issued our report thereon datedMay 23, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial
reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness
of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Adeficiency in internal controlexists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely
basis. A material weaknessis a deficiency, or a combination of deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected on a timely basis. Asignificant deficiencyis a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficienciesand
therefore, material weaknesses or significant deficiencies may exist that were not identified.We did identify a certain
deficiencyin internal control, described in the accompanying schedule of finding and responsethat we consider to be
material weaknessesnoted as finding 2017-001.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, andgrant
agreements, noncompliance with which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed noinstances of noncompliance or other
matters that are required to be reported under Government Auditing Standards.
The City’s Responseto the Finding
The City’s response to the finding identified in our audit isdescribed in the accompanying schedule of finding and
response. The City’s response isnot subjected to the auditing procedures applied in the audit of the financial statements
and, accordingly, we express no opinion on it.
4
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results
of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This
report is an integral part of an audit performed in accordance with Government Auditing Standardsin considering the
City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota
May 23, 2018
5
City of Shakopee, Minnesota
Other Required Reports
Schedule of Finding and Response
For the Year Ended December 31, 2017
FindingDescription
2017-001Prior Period Adjustment
Condition:A prior period adjustment of $5,562,557 was made to recognize capital contributions from
developerinstalled infrastructure for the years ending 2010 through 2016.
Criteria:When developers install infrastructure, the City should accept and record the contributed
infrastructure as capital assets.
Cause:Unknown.
Effect:The prior year capital assets and net position was understated.
Recommendation:We recommend management review the current process for monitoring developments and
implement a process to record and track the contributed capital assets. The City Council should
also accept the developer contributed infrastructure as completed and approved by the City
Engineer.
Management Response:
Staff discovered this oversight prior to this year’s audit and worked with our auditors to ensure the appropriate prior period
adjustment was recognized. Both finance and engineering staff agree that future developer installed infrastructure will be
brought forward to the City Council for official acceptance once the infrastructure is completed and accepted by the City
Engineer. City Council acceptance will trigger action within the finance department to ensure appropriate accounting of
developer contributed infrastructure.
6
From:Ross Butterfield
To:William Mars;Lori Hensen;Diane Stefanick
Subject:Northstar Search & Rescue
Date:Monday, May 07, 2018 12:40:28 AM
Good morning, Mayor Mars and Clerk Hensen
My name is Ross Butterfield, I am the Deputy Chief with Northstar Search & Rescue.I was asked to
provide the city with a short synopsis of who Northstar Search and Rescue is.Well, we provide nationally
certified K9's and search & rescue personnel to assist law enforcement agencies with locating missing
people across Minnesota and the five-state area.Our non-profit 501c3 charitable organization, was
founded in1989 and is based in Golden Valley, Minnesota.And, our members come from all walks of life,
but primarily are from law enforcement, Fire, EMS and the Military.
Northstar Search and Rescue is highly respected and is one of the most used search and rescue teams
in the five-state area, averaging about a call per week for our services.This past week alone, we
responded to four calls in Minnesota and Wisconsin. Being the only search and rescue team in the five-
state area that is licensed by the state of Minnesota as a Medical Response Unit (license 8636), we are
also capable of assisting in medical emergencies.
One of our newest partnerships is with the Three Rivers Park Police we will train and respond with them
to missing person calls across their 26 parks and park reserves.One of these parks called the Landing is
located in your city.We also could potentially respond to your city in the event of a missing person if
requested by the Shakopee Police, the Sherriff's Office, the BCA or the FBI.
We do not charge for our services, and it means we are a resource that’s 100% FREE to use by law
enforcement agencies. Our team is funded by charitable donations and charitable gambling, which is the
reason for our contact today.
We were contacted by one of your local businesses to provide charitable gambling at their bar in
Shakopee. The Bar is the Muddy Cow located at 1244 Canterbury Road near the horse race track.
Northstar SAR would like to come before the city council and introduce ourselves.Also, we are seeking
city approval at the next city council meeting on 5/15/2018 to conduct charitable gambling at this
establishment.We would appreciate it if you could send us any city forms that we would need to fill out.
We already have a state gambling license and this year have donated $7,500 dollars to several Police
Explorer and a crime prevention funds in the area.
The Muddy Cow has signed all of the state contract paperwork with us and our next step is city approval.
Please feel free to check out our website at; www.northstarsar.com
Thank you for your time and attention.
Ross Butterfield & K9 Bosco
Deputy Chief
Northstar Search & Rescue
612-554-6598
rbutterfield01@gmail.com
Diane Stefanick & K9 Shiloh
Chief
Northstar Search & Rescue
763-443-7263
diane.stefanick@gmail.com
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(4,416)
(97,094)(96,429)
(750,453)(150,370)(687,499)(271,065)(165,969)(941,069)(398,475)(382,827)(201,050)(782,422)
2017
Actual
(3,669,311)(1,159,345)(1,324,495)
(11,082,289)
June YTD
6%1%
50%40%35%20%35%46%39%35%44%41%36%38%33%34%
36%
Used
Percent
(83,874)
(264,215)(550,516)(310,359)(451,801)(485,075)(289,236)(118,903)(213,268)
Budget
Balance
(1,098,043)(1,007,670)(5,224,277)(1,582,728)(1,366,585)(1,371,528)(2,509,151)
Remaining
(16,927,230)
(7,297)(3,032)
(85,426)
2018
YTD
(737,257)(141,185)(258,030)(297,884)(264,041)(837,472)(358,799)(332,525)(776,615)(174,964)(688,772)
Actual
(3,400,023)(1,305,349)(9,668,670)
00000000000000000
2018
June
Actual
2018
YTD
(169,300)(405,400)(848,400)(574,400)(810,600)(817,600)(464,200)(126,200)(216,300)
Budget
CITY OF SHAKOPEE
(1,835,300)(1,265,700)(8,624,300)(2,420,200)(2,143,200)(2,060,300)(3,814,500)
Monthly Financial Report
(26,595,900)
Varies more than 10% than budget positivelyVaries more than 10% than budget negativelyWithin 10% of budget
io
Di
vis
01000 - GENERAL FUND EXPENDITURES: 11 - MAYOR & COUNCIL 12 - ADMINISTRATION 13 - CITY CLERK 15 - FINANCE 17 - COMMUNITY DEVELOPMENT 18 -
FACILITIES 31 - POLICE DEPARTMENT 32 - FIRE 33 - INSPECTION-BLDG-PLMBG-HTG 41 - ENGINEERING 42 - STREET MAINTENANCE 44 - FLEET 46 -
PARK MAINTENANCE 66 - NATURAL RESOURCES 67 - RECREATION 91 - UNALLOCATED TOTAL EXPENDITURES
Key
Funds transferred electronically May 16, 2018 to June 5, 2018
PAYROLL$ 661,218.14
FIT/FICA$ 193,420.09
STATE INCOME TAX$ 43,230.54
PERA$ 185,483.11
HEALTH CARE SAVINGS$ 32,255.31
HEALTH SAVINGS ACCT$ 17,658.19
NATIONWIDE DEF COMP$ 24,984.95
ICMA DEFERRED COMP$ 3,376.68
MSRS$ 7,974.63
FSA$ 5,703.59
MN WAGE LEVY$ 144.23
Total$ 1,175,449.46