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HomeMy WebLinkAboutJune 02, 2026 - Council PacketPliaill SHAKOPE E Shakopee City Council Regular Meeting Tuesday, June 2, 2026 7:00 PM City Hall, 485 Gorman Street Vision: Shakopee is a distinctive river town with a variety of business, cultural, and recreational opportunities in a safe, welcoming, and attractive environment. Our vision is for Shakopee to continue being the place people want to live, work, and play! Mission: Our mission is to deliver high quality services essential to maintaining a safe and sustainable community. We commit to doing this cost-effectively, with integrity and transparency. 1. Call to Order 2. Roll Call 3. Pledge of Allegiance 4. Approval of Agenda 5. Consent Agenda These items are considered routine and will be enacted by one motion. There will be no separate discussion of these unless a council member or staff requests, in which event the item will be removed from the consent agenda for separate discussion & action. 5.a Private Activity Revenue Bond Policy Amendments 5.b Approval of an Off -Site Gambling Permit for Shakopee Dollars for Scholars for Rhythm on the Rails 5.c Approve Extended Construction Hours for the Old Carriage Court Corridor Improvements Project 5.d Surplus Property 5.e Extended Hours for Construction at the Shakopee Gravel Pit. 5.f Award a Contract for the Quarry Lake Erosion Restoration Project 1 5.g Award a Contract for the Boiling Springs Drainage Improvement Project 5.h Accept a Proposal from WSB for Construction Services for 2026 Private Development Projects 5.i Purchase a 2026 Utility Police Interceptor for the Police Department. 5.j Authorize Submittal of a Regional Solicitation Grant Application for Pedestrian Improvements along 10th Avenue Pedestrian 5.k Approve the Speed Limit Setting Policy 5.1 Adopt a Resolution of Support for Scott County Applications to the 2026 Metropolitan Council Regional Solicitation Program 5.m Approval of the May 19, 2026, City Council Minutes 6. Public Comment Individuals may address the City Council about any item not on the regular agenda. Speakers are requested to come to the center table, state their name and address for the clerk's record, and limit their remarks to three minutes. The City Council will not take official action on items discussed at this time, but may refer the matter to staff for a follow up report or direct that matter be scheduled on an upcoming agenda. 7. Business removed from consent agenda 8. Recess for Economic Development Authority Meeting 9. Reconvene 10. General Business 10.a 2025 Annual Comprehensive Financial Report, Audit Presentation and Review by Abdo 11. Workshop 11.a Legislative Update: Elections 12. Reports Liaison and Administration 12.a City Bill List 12.b News and Announcements 13. Other Business 2 14. Adjourn to June 16, 2026, at 7:00 pm 3 SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.a June 2, 2026 Private Activity Revenue Bond Policy Amendments Nate Reinhardt, Finance Director Action to be considered: Adopt Resolution No. R2026-085, A Resolution Amending the Private Activity Revenue Bond Policy. Motion Type: Simple Majority Background: City Council adopted Resolution No. 7318, Authorizing the Establishment of a Policy and Procedures for Issuing Private Activity Revenue Bonds on June 18, 2013. The City has been approached by a variety of end uses to issue Private Activity Revenue Bonds (conduit debt) on their behalf. Some of these uses include multi -family housing developments, senior housing developments and health care facilities. The advantage is that they are able to use the City's tax-exempt status to get more favorable bond interest rates when the bonds are sold. Conversely, the City is able to assist these businesses, while at the same time not incurring any risk or potential impact on the city's bond credit rating. Recently, the City has issued conduit bonds to benefit local entities such as St. Francis Regional Medical Center and Benedictine Health Systems (Senior Housing). To improve the process in the future, staff has created fillable forms (Exhibit A,B,C) and reviewed the policy. Proposed policy changes include updating the fees to match the current fee schedule, updating the mailing address and various clarifying language. The proposed amendments have been reviewed by the cities bond attorney, Kutak Rock and compared with current policies from a variety of cities. A redline version of the changes is attached. Recommendation: Adopt policy amendments 4 Budget Impact: The recommended amendments update the policy language to match the current fee schedule. The current fee schedule requires a non-refundable application fee of $1,000 and a bond administration fee ranging from $10,000 to $100,000 (depending on the amount of bonds to be issued). Attachments: Resolution R2026-085 Amending Private Activity Revenue Bond Financing Policy.pdf 34.19 Private Activity Revenue Bond Financing Policy (clean).pdf Exhibit A.pdf Exhibit B.pdf Exhibit C - Indemnification Letter.pdf 34.19 Private Activity Revenue Bond Financing Policy (Mark-up).pdf 5 RESOLUTION NO. R2026-085 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNNESOTA AMENDING THE PRIVATE ACTIVITY REVENUE BOND POLICY. WHEREAS, the City of Shakopee, has the authority to issue revenue bonds pursuant to Minnesota Statutes, Sections 469.152 to 469.1655, as amended (the "Industrial Development Act") and Minnesota Statues Chapter 462C, as amended (the "Housing Act"); and WHEREAS, the City Council adopted Resolution No. 7318, Authorizing the Establishment of a Policy and Procedures for Issuing Private Activity Revenue Bonds on June 18, 2013; and WHEREAS, the City of Shakopee and bond counsel have reviewed the Policy and have incorporated recommended changes. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, hereby amends the Private Activity Revenue Bond Policy. Adopted in the regular session of the City Council of the City of Shakopee, Minnesota held this 2nd day of June 2026. Mayor of the City of Shakopee ATTEST: City Clerk 1 6 SHAKOPE E PRIVATE ACTIVITY REVENUE BOND FINANCING POLICY 34.19.02.P Adopted: June 18, 2013 Amended: June 2, 2026 I. INTRODUCTION The City of Shakopee, Minnesota (the "City") has the authority to issue revenue bonds pursuant to Minnesota Statutes, Sections 469.152 through 469.1655, as amended (the "Industrial Development Act"), and Minnesota Statutes, Chapter 462C, as amended (the "Housing Act"). The City Council of the City will consider the issuance of private activity bonds (both taxable and tax- exempt) to finance the following types of projects: (1) Manufacturing/ industrial facilities; (2) Redevelopment projects; (3) Multifamily housing; (4) Health care facilities; (5) Other projects on behalf of 501(c)(3) organizations; and (6) Other projects authorized by state statutes and federal law. In extraordinary circumstances, the City Council of the City may consider and approve the issuance of private activity bonds by the Economic Development Authority for the City of Shakopee (the "EDA"). II. GENERAL REQUIREMENTS The following are the general guidelines and requirements the City will use to evaluate requests for private activity bond financing. The City has complete discretion regarding whether to issue private activity bonds and reserves the right to approve only proposals which, in the opinion of the City, meet the needs of the City and have a strong likelihood of success. All proposals for the issuance of private activity bonds must meet the following general requirements: A. Be consistent with the City's Comprehensive Plan. B. Fulfill all of the applicable federal and state requirements for the issuance of bonds. C. Comply with all applicable federal, state, regional, and City laws, including zoning and land use regulations and ordinances applicable to the project. D. The applicant agrees to use the legal services of a bond attorney designated by the City. E. The applicant for bond financing and the applicant's chosen bond underwriter, placement agent or lender shall hold the City and its respective officers, consultants, and agents harmless from any alleged or actual violations of any securities laws, state 4907-7344-1162.3 7 or federal, in connection with the issuance of bonds for the project. In addition, the City shall not be held responsible for any debt repayment of the bond issue or other costs relating to the project to be financed, should it fail financially for any reason. F. The City is to be reimbursed and held harmless for and form any out-of-pocket expenses related to the bonds including, but not limited to, legal fees, financial analyst fees, bond counsel fees, the City staffs expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. The applicant must execute a letter to the City undertaking to pay all such expenses. A form of the required letter is set forth in Exhibit C. G. If the City determines that issuance of the bonds is requested by the applicant is reasonably expected to cause governmental bonds issued by the City in that calendar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (also known as "bank qualified"), the applicant will be required to reimburse the City, at the time of issuance of the City's bonds, for any interest rate differential between bank qualified and non - bank qualified bonds, as determined by the City's municipal advisor. H. Applications for financing must be made on the forms attached to this Private Activity Revenue Bond Policy, as Exhibit A or Exhibit B, as applicable. I. The applicant must deposit all required fees on a timely basis. J. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code with respect to exterior building materials, landscaping, signage lighting, and such other aspects as the Council may consider appropriate on a case -by -case basis. K. The Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Industrial Development Act or the Housing Act will not be served by going forward with the project and its financing. III. TYPES OF PROJECTS 1. Manufacturing/ Industrial Facilities Bonds for manufacturing facilities are issued under the Industrial Development Act and either Section 144(a) or Section 141 of the Internal Revenue Code of 1986, as amended (the "Code"). In addition, the bonds are generally subject to the volume cap allocation requirements of Minnesota Statutes, Chapter 474A, as amended (the "Allocation Act"). The purpose of issuing bonds for such facilities is to encourage the development of appropriate industrial projects that will benefit the community by providing jobs and economic development, eliminating blight, and increasing property values. Manufacturing bonds are available only for "core" manufacturing projects, and only for relatively small manufacturers (cannot expect to have more than the Page 2 of 6 4907-7344-1162.3 8 maximum IRS allowable capital expenditures in the City in the six -year period surrounding issuance of the bonds). 2. Redevelopment Projects Bonds for redevelopment projects within the City may be authorized under Minnesota Statutes, Chapter 469. The purpose of issuing bonds for such purpose is to encourage the elimination of blight and increasing property values. Such bonds will be taxable unless other conditions are met. 3. Multifamily Housing Housing bonds to finance privately -owned multi -family housing facilities within the City are authorized under the Housing Act and either (a) in the case of facilities owned by 501(c)(3) entities, Section 145 of the Code or (b) in the case of facilities owned by non -501(c)(3) entities, Section 142(d) of the Code. The purpose of issuing multifamily housing bonds is to benefit the community by encouraging the availability of multifamily housing opportunities for residents of the City. The City within its sole discretion will determine whether or not to approve Housing bonds and if so, which multifamily project or projects it will finance. All affordable housing projects financed with tax-exempt bonds must comply with the restrictions set for in the Housing Act and Section 142(d) of the Code and the Treasury Regulations promulgated thereunder. 4. Health Care Facilities Health care facility revenue bonds are issued to finance hospitals, nursing homes or assisted living facilities within the City owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Industrial Development Act or the Housing Act and Section 145 of the Code. The purpose of issuing health care bonds is to benefit the community by encouraging the availability of affordable health care services for residents of the City. 5. Facilities for other 501(c)(3) Organizations Bonds may be issued to finance facilities within the City providing services that benefit the City and its residents (including, without limitation, educational services) owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Industrial Development Act or the Industrial Development Act and Section 145 of the Code. The purpose of issuing such bonds is to benefit the community by encouraging the availability of beneficial services for residents of the City. IV. DESIGN AND MAINTENANCE STANDARDS A. The project to be financed shall use building and design materials that are in compliance with applicable state and local building and licensing codes and designated maintenance standards. Page 3 of 6 4907-7344-1162.3 9 B. The design and maintenance must be compatible with other neighboring land uses, building architecture, and landscaping. V. FEES A. A non-refundable application fee of $1,000 is due at the time the application is made. This fee shall be due in the case of an application for either a new money bond issue or a refunding bond issue. This application fee is in addition to the other fees set forth below and is not a credit against said additional fees. B. A bond administration fee of the greater of $10,000 or 0.50% of the principal amount of the bonds is due at the time of closing on the bonds, subject to a maximum fee of $100,000. This fee shall be due in the case of all new money issues. C. For bonds to be issued to refund a bond issue not issued by the City and for which the bond administration fee in paragraph B was previously paid to the City, no additional bond administration fee will be required. D. For bonds to be issued to refund a bond issue previously issued by the City or its EDA, a bond administration fee of the greater of $10,000 or 0.25% of the principal amount of the refunding bonds is due at the time of closing on the bonds, subject to a maximum fee of $50,000. E. For bonds to be issued in part for refunding and in part for a new purpose, the fee set forth in C or D, as appliable, shall apply to the portion of the bonds for the refunding purpose and the fee set forth in B shall apply to the remainder, subject to a maximum aggregate fee of $100,000. F. All fees and expenses in relation to the issuance of the bonds (in addition to the foregoing application fee and bond administrative fee), including the fees of the City's bond counsel, shall be the responsibility of the applicant, regardless of whether the bonds are actually issued. G. For applications requiring an allocation of bonding authority from Minnesota Management and Budget ("MMB") pursuant to the provisions of the Allocation Act, an application, in the forms prescribed by MMB, must be submitted to MMB along with the appropriate application deposit and nonrefundable application fee due to MMB in accordance with the requirements for such application. VI. HOST APPROVAL The City will consider requests for the issuance of bonds by other political subdivisions to finance projects in the City. In these cases, the non-refundable application fee must be paid. No administrative fee is charged, except actual costs incurred by the City, including costs associated Page 4 of 6 4907-7344-1162.3 10 with a review by the City's bond counsel (if necessary), must be reimbursed. The City reserves the right to reject such requests for any reason. VII. REFUNDING BONDS Previous issuance of bonds by the City does not commit the City to the issuance of refunding bonds at a future date. Applications for the refunding of previously issued bonds will be evaluated in terms of general benefit to the City based on such factors as financial benefit to the applicant, the project's past operating history, including propelty maintenance and employment, and the applicant's future plans for operations in the City. To the extent appropriate, the provisions of this Private Activity Revenue Bond Policy shall apply to refunding bonds. It is recognized that projects previously financed may not have met the foregoing requirements applicable to new financing requests. Applications that include the refunding of previously issued bonds will be evaluated based on such factors as substantial debt service savings, removal of bonding covenants significantly impairing the financial feasibility of the project, significant rehabilitation or physical improvements of the propelty, or enhancements to the affordability of existing rents. VIII. POST -ISSUANCE COMPLIANCE The City will require that each applicant demonstrate to the City that it will comply with substantially the same procedures for post -issuance compliance that apply to City governmental bonds under the City's Post Issuance Debt Compliance Policy, approved December 1, 2009, as amended from time to time. The City may require that applicants retain a trustee and/or an independent arbitrage consultant for the term of the bonds. IX. APPLICATION PROCESS The process for obtaining bond financing is as follows: A. An application for the issuance of bonds must be submitted in the form specified by City staff along with the required application fee. Please submit applications to: Finance Director City of Shakopee 485 Gorman Street Shakopee, MN 55379 B. City staff will complete an initial review to evaluate the proposal and determine whether it qualifies for consideration for financing. C. Staff will consult with the City's bond counsel as necessary to verify the project's qualifications for financing. Page 5 of 6 4907-7344-1162.3 11 D. For bonds requiring a bond allocation from the Department prior to issuance, the proposal will be presented to the City Council for a preliminary resolution. The resolution will identify the preliminary intent of the City to issue bonds, a description of the proposed project, and the amount of bonds to be issued. Upon adoption of the preliminary resolution, the applicant, working with the City's bond counsel, shall prepare the application to be submitted by the City for a bond allocation to MMB. E. All of the bonds for new money projects described in this Private Activity Revenue Bond Policy, and certain refunding bonds, require a public hearing to be held by the City Council, preceded by publication of a notice of public hearing in the official newspaper of the City and/or a newspaper of general circulation in the City, as provided in the applicable state statute. All bonds to be issued in accordance with this Private Activity Revenue Bond Policy require the adoption of a final bond resolution approving the forms of and execution of documentation to be executed by the City. F. Bonds issued under the Housing Act require, on or prior to the date of publication of notice of the public hearing, submission of a Housing Program to the Metropolitan Council. The Housing Program must be approved by the Metropolitan Council. Bond Counsel assists in the process. G. Prior to the issuance of bonds (other than bonds issued under the Housing Act), and following the public hearing, the City must file an application for approval of the bond issue with the Minnesota Department of Employment and Economic Development ("DEED"). The application is considered routine if the proper documentation is filed including the completed application form (in the form provided by DEED), the City's preliminary or final bond resolution providing for the issuance of the bonds and stating that the proposed project furthers the purposes of the Industrial Development Act, an affidavit of publication of notice of the required public hearing and evidence that the public hearing was held, an opinion of bond counsel that the project constitutes a project under the Industrial Development Act, and a letter of preliminary intent from the applicant's chosen bond underwriter, placement agent or lender to underwrite the bond issue. DEED approval is required before issuance of the bonds. Bond counsel assists in this process. H. Until the bonds are issued, the City reserves the right to: (1) Reject applicant's choice of underwriter, trustee, paying agent, placement agent, or legal counsel. (2) Require corrections or amendments to any legal document. (3) Reject the proposal and the issuance of the bonds if the City determines, in its sole discretion, that the financing is not in furtherance of the City's goals or is otherwise unacceptable, even if preliminary approval for the proposal or any part of the proposal being separately considered has previously been given. Page 6 of 6 4907-7344-1162.3 12 Pia SHAKOPE E Exhibit A APPLICATION FOR ISSUANCE OF PRIVATE ACTIVITY BONDS (Industrial, Health Care or Other Non -Housing Non -Profit Projects) 1. APPLICANT: a. Business Name: b. Business Address: c. Primary Business Contact Name: Telephone number: Email: d. Authorized Business Representative: e. Structure: nCorporation n Partnership Ti Sole Proprietorship n LLC n Other: 2. PURPOSE OF REQUESTED FINANCING: n New Facility n Expansion n Refunding 3. ESTIMATED PROJECT COSTS: (Not required for refunding) Land Building Equipment Architectural, Engineering Costs of Issuance Capitalized Interest (including discount) Other Total Financing Requested 0.00 4. AMOUNT OF FINANCING REQUESTED: $ 5. TYPE OF FINANCING PROPOSED: a. Publicly Sold Bonds piPrivately Placed Bonds (Bonds sold to a Bank) b. Expected Term of Financing Years c. Security: nMortgage n Unsecured FlGuaranty (personal) n Guaranty (third party) n Letter of Credit n Other (specify) % ofproject costs) Page 1 of 3 13 6. BUSINESS PROFILE: (Not required for refunding) a. Job Information 1. Current number of Full Time Equivalent Employees: *Full Time Equivalent (FTE) is based on total annual hours of 2080 2. Number of New Permanent Jobs to be Created: 3. Number of Construction Jobs to be Created: 4. Number of Jobs to be Relocated: b. Length of Time in Business: c. Do you have facilities in other locations? nYes riNo If yes, where: 7. NAMES OF: a. Underwriter, Place Agent, or Lender Name: Contact Person Name: Telephone: Email: b. Corporate Counsel Name: Telephone: Email: c. Bond Counsel: Telephone: Email: 8. WHAT IS YOUR TARGET DATE FOR: a. Construction start: b. Construction completion: 9. ATTACHMENTS: Attach the following information with the application. Application is not considered complete until all documents have been received. a) Description of the project; b) Give a brief description of the nature of the business, principal products, etc; c) Preliminary sources and uses for financing project; d) Initial application fee; and e) Indemnification Letter of Agreement. Page 2 of 3 14 I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the City of Shakopee Private Activity Revenue Bond Policy, I am aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature/ Title Date NOTICE TO COMPANY: Data Practices Act The information that you supply in your application to the City of Shakopee/Shakopee EDA ("City") will be used to assess your eligibility for financial assistance. The City will not be able to process your application without this information. The Minnesota Government Data Practices Act (Minnesota Statutes, Chapter 13) governs whether the information that you are providing to the City is public or private. If financial assistance is provided for the project, the information submitted in connection with your application will become public, except for those items protected under Minnesota Statutes, Section 13.59, Subdivision 3(b) or Section 13.591, Subdivision 2. I have read the above statement, and I agree to supply the information to the City with full knowledge of the matters contained in this notice. I certify that the information submitted in connection with the application is true and accurate. Signature/ Title Date Page 3 of 3 15 Pia SHAKOPE E Exhibit B APPLICATION FOR PRIVATE ACTIVITY BONDS (Multi -Family Housing) 1. APPLICANT: a. Business Name: b. Business Address: c. Primary Business Contact Name: Telephone number: Email: 2. PROJECT INFORMATION: a. Project Name: b. Business Location: 3. RENTAL INFORMATION: Monthly Rent Units Efficiency One Bedroom Two Bedroom Three Bedroom Parking (included in rent) Parking (not included in rent) Utilities Included in Monthly Rent: 4. OPERATING EXPENSES: % of Gross (Annual) 5. TOTAL PROJECT COST: $ 6. DEVELOPER EQUITY: $ 7. DEBT SERVICE: $ 8. *HARD COSTS: $ 9. LAND VALUE: $ 10. SOFT COSTS: $ *Hard Costs are all project costs the IRS has determined to be eligible items for depreciation. 11. ANTICIPATED INTEREST RATES: 12. ANTICIPATED TERM OF DEBT: 13. If the project were conventionally financed, what interest rate would you expect to pay? Page 1 of 2 16 14. CONSTRUCTION SCHEDULE a. Anticipated construction commencement date: b. Anticipated construction completion date: 15. ATTACHMENTS: Attach the following information with the application. Application is not considered complete until all documents have been received. a) Description of the project; b) Preliminary sources and uses for financing project; c) Initial application fee; and d) Indemnification Letter of Agreement. I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the City of Shakopee Private Activity Revenue Bond Financing Policy, and I am aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature/ Title Date NOTICE TO COMPANY. Data Practices Act The information that you supply in your application to the City of Shakopee/Shakopee EDA ("City") will be used to assess your eligibility for financial assistance. The City will not be able to process your application without this information. The Minnesota Government Data Practices Act (Minnesota Statutes, Chapter 13) governs whether the information that you are providing to the City is public or private. If financial assistance is provided for the project, the information submitted in connection with your application will become public, except for those items protected under Minnesota Statutes, Section 13.59, Subdivision 3(b) or Section 13.591, Subdivision 2. I have read the above statement and I agree to supply the information to the City with full knowledge of the matters contained in this notice. I certify that the information submitted in connection with the application is true and accurate. Signature/ Title Date Page 2 of 2 17 Pia SHAKOPE E City of Shakopee 485 Gorman Street Shakopee, MN 55379 Exhibit C IDEMNIFICATION LETTER OF AGREEMENT RE: Application of for Private Activity Bond Financing by the City of Shakopee Dear Mayor and Members of the City Council: This letter of agreement is given by , a under the laws of Minnesota ("Applicant ") as required by the City of Shakopee, Minnesota in connection with its consideration of an application for private activity bond financing for the project described in the application. Applicant agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of bond financing therefore, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, if necessary, whether or not revenue bond financing is finally approved by the City, and whether or not the bonds are issued and sold. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorney fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 4. Applicant is aware of the City's application and administrative fee structure for bonds and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: Applicant Name: Signature: 18 SHAKOPE E PRIVATE ACTIVITY REVENUE BOND FINANCING POLICY 34.19.02.P Adopted: June 18, 2013 Amended: June 2, 2026 I. INTRODUCTION The City of Shakopee, Minnesota (the "City") has the authority to issue revenue bonds pursuant to Minnesota Statutes, Sections 469.152 to 169.1651 through 469.1655, as amended (the "Industrial Development Act") and Minnesota Statutes, Chapter 462C, as amended (the "Housing Act"). The City Council of the City will consider the issuance of private activity bonds (both taxable and tax-exempt) to finance the following types of projects: (1) Manufacturing/ industrial facilities; (2) Redevelopment projects; (3) Multifamily housing; (4) Health care facilities; (5) Other projects on behalf of 501(c)(3) organizations; and (6) Other projects authorized by state statutes and federal law. In extraordinary circumstances, the City Council of the City may consider and approve the issuance of private activity bonds by the Economic Development Authority for the City of Shakopee (the "EDA"). II. GENERAL REQUIREMENTS The following are the general guidelines and requirements the City will use to evaluate requests for private activity bond financing. The City has complete discretion regarding whether to issue private activity bonds and reserves the right to approve only proposals which, in the opinion of the City, meet the needs of the City and have a strong likelihood of success. All proposals for the issuance of private activity bonds must meet the following general requirements: A. Be consistent with the City's Comprehensive Plan. B. Fulfill all of the applicable federal and state requirements for the issuance of bonds. C. Comply with all applicable federal, state, regional, and City laws, including zoning and land use regulations and ordinances applicable to the project. D. The applicant agrees to use the legal services of a bond attorney designated by the City of Shakopee. 19 E. The applicant for bond financing and the applicant's chosen bond underwriter, placement agent or lender shall hold the City and its respective officers, consultants, and agents harmless from any alleged or actual violations of any securities laws, state or federal, in connection with the issuance of bonds for the project. In addition, the City shall not be held responsible for any debt repayment of the bond issue or other costs relating to the project to be financed, should it fail financially for any reason. F. The City is to be reimbursed and held harmless for and form any out-of-pocket expenses related to the bonds including, but not limited to, legal fees, financial analyst fees, bond counsel fees, the City staff's expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. The applicant must execute a letter to the City undertaking to pay all such expenses. A form of the required letter is set forth in Exhibit C. G. If the City determines that issuance of the bonds is requested by the applicant is reasonably expected to cause governmental bonds issued by the City in that calendar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (also known as "bank qualified"), the applicant will be required to reimburse the City, at the time of issuance of the City's bonds, for any interest rate differential between bank qualified and non - bank qualified bonds, as determined by the City's municipal advisor. H. Applications for financing must be made on the forms attached to this Private Activity Revenue Bond Policy, as Exhibit A or Exhibit B, as applicable. I. The applicant must deposit all required fees on a timely basis. J. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code with respect to exterior building materials, landscaping, signage lighting, and such other aspects as the Council may consider appropriate on a case -by -case basis. K. The Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Industrial Development Act or the Housing Act will not be served by going forward with the project and its financing. Ill. TYPES OF PROJECTS 1. Manufacturing/ Industrial Facilities Bonds for manufacturing facilities are issued under the Industrial Development Act and either Section 144(a) or Section 141 of the Internal Revenue Code of 1986, as amended (the "Code"). In addition, the bonds are generally subject to the volume cap allocation requirements of Minnesota Statutes, Chapter 474A, as amended kthe "Allocation Act"). The Page 2 of 7 20 purpose of issuing bonds for such facilities is to encourage the development of appropriate industrial projects that will benefit the community by providing jobs and economic development, eliminating blight, and increasing property values. Manufacturing bonds are available only for "core" manufacturing projects, and only for relatively small manufacturers (cannot expect to have more than the maximum IRS allowable capital expenditures in the City in the six -year period surrounding issuance of the bonds). 2. Redevelopment Projects Bonds for redevelopment projects within the City may be authorized under Minnesota Statutes, Chapter 469. The purpose of issuing bonds for such purpose is to encourage the elimination of blight and increasing property values. Such bonds will be taxable unless other conditions are met. 3. Multifamily Housing Housing bonds to finance privately -owned multi -family housing facilities within the City are authorized under the Housing Act and either (a) in the case of facilities owned by 501(c)(3) entities, Section 145 of the Code or (b) in the case of facilities owned by non 501(c)(3) entities, Section 142(d) of the Code. The purpose of issuing multifamily housing bonds is to benefit the community by encouraging the availability of multifamily housing opportunities for residents of the City. The City within its sole discretion will determine whether or not to approve Housing bonds and if so, which multifamily project or projects it will finance. All affordable housing projects financed with tax-exempt bonds must comply with the restrictions set for in the Housing Act and Section 142(d) of the Code and the Treasury Regulations promulgated thereunder. 4. Health Care Facilities Health care facility revenue bonds are issued to finance hospitals, nursing homes or assisted living facilities within the City owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Industrial Development Act or the Housing Act and Section 145 of the Code. The purpose of issuing health care bonds is to benefit the community by encouraging the availability of affordable health care services for residents of the City. 5. Facilities for other 501(c)(3) Organizations Bonds may be issued to finance facilities within the City providing services that benefit the City and its residents (including, without limitation, educational services) owned and operated by 501(c)(3) entities. Such bonds are issued in accordance with the Industrial Development Act or the Industrial Development Act and Section 145 of the Code. The purpose of issuing such bonds is to benefit the community by encouraging the availability of beneficial services for residents of the City. Page 3 of 7 21 IV. DESIGN AND MAINTENANCE STANDARDS A. The project to be financed shall use building and design materials that are in compliance with applicable state and local building and licensing codes and designated maintenance standards. B. The design and maintenance must be compatible with other neighboring land uses, building architecture, and landscaping. V. FEES A. A non-refundable application fee of $1,000 is due at the time the application is made. This fee shall be due in the case of an application for either a new money bond issue or a refunding bond issue. This application fee is in addition to the other fees set forth below and is not a credit against said additional fees. B. A bond administration fee of the greater of $10,000 or 0.50% of the principal amount of the bonds is due at the time of closing on the bonds, subject to a maximum fee of $50,000 $100,000. This fee shall be due in the case of all new money issues. C. For bonds to be issued to refund a bond issue not issued by the City and for which the bond administration fee in paragraph B was previously paid to the City, no additional bond administration fee will be required. D. For bonds to be issued to refund a bond issue previously issued by the City or its EDA, a bond administration fee of the greater of $10,000 or 0.25% of the principal amount of the refunding bonds is due at the time of closing on the bonds, subject to a maximum fee of $50,000. E. For bonds to be issued in part for refunding and in part for a new purpose, the fee set forth in C or D, as appliable, shall apply to the portion of the bonds for the refunding purpose and the fee set forth in B shall apply to the remainder, subject to a maximum aggregate fee of $100,000. F. All fees and expenses in relation to the issuance of the bonds (in addition to the foregoing application fee and bond administrative fee), including the fees of the City's bond counsel, shall be the responsibility of the applicant, regardless of whether the bonds are actually issued. G. For applications requiring an allocation of bonding authority from Minnesota Management and Budget ("MMB") pursuant to the provisions of Chapter 474A the Allocation Act, an application, in the forms prescribed by MMB, must be submitted to MMB along with the appropriate application deposit and nonrefundable application fee due to MMB in accordance with requirements for such application. Page 4 of 7 22 VI. HOST APPROVAL The City will consider requests for the issuance of bonds by other political subdivisions to finance projects in the City. In these cases, the non-refundable application fee must be paid. No administrative fee is charged, except actual costs incurred by the City, including costs associated with a review by the City's bond counsel (if necessary), must be reimbursed. The City reserves the right to reject such requests for any reason, including without limitation a determination by the City that such issuance by another political subdivision would impair the City's ability to issue governmental bonds as "bank qualified bonds" in that calendar year. VII. REFUNDING BONDS Previous issuance of bonds by the City does not commit the City to the issuance of refunding bonds at a future date. Applications for the refunding of previously issued bonds will be evaluated in terms of general benefit to the City based on such factors as financial benefit to the applicant, the project's past operating history, including propelty maintenance and employment, and the applicant's future plans for operations in the City. To the extent appropriate, the provisions of this Private Activity Revenue Bond Policy shall apply to refunding bonds. It is recognized that projects previously financed may not have met the foregoing requirements applicable to new financing requests. Applications that include the refunding of previously issued bonds will be evaluated based on such factors as substantial debt service savings, removal of bonding covenants significantly impairing the financial feasibility of the project, significant rehabilitation or physical improvements of the propelty, or enhancements to the affordability of existing rents. VIII. POST -ISSUANCE COMPLIANCE The City will require that each applicant demonstrate to the City that it will comply with substantially the same procedures for post -issuance compliance that apply to City governmental bonds under the City's Post Issuance Debt Compliance Policy, approved December 1, 2009, as amended from time to time. The City may require that applicants retain a trustee and/or an independent arbitrage consultant for the term of the bonds. IX. APPLICATION PROCESS The process for obtaining bond financing is as follows: Page 5 of 7 23 A. An application for the issuance of bonds must be submitted in the form specified by City staff along with the required application fee. Please submit applications to: Finance Director City of Shakopee 129 Holmes St. South Shakopee, MN 55379 485 Gorman Street Shakopee, MN 55379 B. City staff will complete an initial review to evaluate the proposal and determine whether it qualifies for consideration for financing. C. Staff will consult with the City's bond counsel as necessary to verify the project's qualifications for financing. D. For bonds requiring a bond allocation from the Department prior to issuance, the proposal will be presented to the City Council for a preliminary resolution. The resolution will identify the preliminary intent of the City to issue bonds, a description of the proposed project, and the amount of bonds to be issued. Upon adoption of the preliminary resolution, the applicant, working with the City's bond counsel, shall prepare the application to be submitted by the City for a bond allocation to MMB. E All of the bonds for new money projects described in this Private Activity Revenue Bond Policy, and certain refunding bonds, require a public hearing to be held by the City at some time after the public hearing. Housing bonds under Chapter 462C require, prior to publication of notice of the public hearing, submission of a Housing Program to the Metropolitan Council. The Housing Program must be approved by the Metropolitan Council. Following such public hearing, the City will adopt Council, preceded by publication of a notice of public hearing in the official newspaper of the City and/or a newspaper of general circulation in the City, as provided in the applicable state statute. All bonds to be issued in accordance with this Private Activity Revenue Bond Policy require the adoption of a final bond resolution approving the forms of and execution of documentation to be executed by the City and authorizing the execution of said documents and the issuance of the bonds. F. Bonds issued under the Housing Act require, on or prior to the date of publication of notice of the public hearing, submission of a Housing Program to the Metropolitan Council. The Housing Program must be approved by the Metropolitan Council. Bond Counsel assists in the process. G. Prior to the issuance of bonds (other than housing bonds issued under the Housing Act), and following the public hearing, the City must file an application for approval of the bond issue with the Minnesota Department of Employment and Economic Development ("DEED"). The application is considered routine if the proper documentation is filed including the completed application form fin the form provided by DEED), the City's Page 6 of 7 24 preliminary or final bond resolution, a preliminary bond counsel opinion, providing for the issuance of the bonds and stating that the proposed project furthers the purposes of the Industrial Development Act, an affidavit of publication of notice of the required public hearing and evidence of that the public hearing was held, an opinion of bond counsel that the project constitutes a project under the Industrial Development Act, and a letter of preliminary intent from the applicant's chosen bond underwriter, placement agent or lender to underwrite the bond issue. DEED approval is required before issuance of the bonds. Bond counsel assists in this process. H. Until the bonds are issued, the City reserves the right to: (1) Reject applicant's choice of underwriter, trustee, paying agent, placement agent, or legal counsel. (2) Require corrections or amendments to any legal document. (3) Reject the proposal and the issuance of the bonds if the City determines, in its sole discretion, that the financing is not in furtherance of the City's goals or is otherwise unacceptable, even if preliminary approval for the proposal or any part of the proposal being separately considered has previously been given. APPROVED AND ADOPTED this 18 of June, 2013 by the City Council of the City of Shakopee, Minnesota. CITY OF SHAKOPEE, MINNESOTA • Brad Tabke, Mayor ATTEST: Julie Linnihan, City Clerk Page 7 of 7 25 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.b June 2, 2026 Approval of an Off -Site Gambling Permit for Shakopee Dollars for Scholars for Rhythm on the Rails Rick Parsons Action to be considered: I move to approve Resolution R2026-090. Motion Type: Simple Majority Background: Shakopee Dollars for Scholars has applied for an off -premises permit for gambling activities at the Rhythm on the Rails event. Gambling will be in the form of pull -tabs, and will be conducted on Lewis Street, between 1st and 2nd Avenue, during Rhythm on the Rails event nights (June 17, June 24, July 8, July 15, July 22, July 29). Shakopee Dollars for Scholars currently has a gambling permit, satisfies City Code section 130.66, and is operating within the City; this off - premises permit will enable them to conduct gambling operations off their established premises and at Rhythm on the Rails. The permit will be issued by the State Gambling Control Board. When the application is made, the board requires the local unit of government pass a resolution specifically approving or denying the application. Recommendation: Approve Resolution R2026-090. Budget Impact: N/A Attachments: Resolution R2026-090 26 RESOLUTION R2026-090 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA APPROVING A PREMISES PERMIT FOR SHAKOPEE DOLLARS FOR SCHOLARS WHEREAS, the 1990 legislature adopted a law which requires municipal approval in order for the Gambling Control Board to issue or renew permits; and WHEREAS, Shakopee Dollars for Scholars is seeking an off -site gambling permit for the site on Lewis Street, between 15t and 2nd Avenue, during Rhythm on the Rails events in 2026. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA AS FOLLOWS: That the off -site gambling premises permit for the Shakopee Dollars for Scholars at Rhythm on the Rails events in 2026, located on Lewis Street, between 15t and 2nd Avenue, be approved. Adopted in regular session of the City Council of the City of Shakopee, Minnesota, held this 2nd day of June 2026. Mayor of the City of Shakopee ATTEST: City Clerk Prepared by: City of Shakopee 485 Gorman Street Shakopee, MN 55379 27 WI"LAI SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.c June 2, 2026 Approve Extended Construction Hours for the Old Carriage Court Corridor Improvements Project Alex Enyi, Project Coordinator Alex Jordan, City Engineer Action to be considered: Approve suspension of City Code Sec. 130.45, Noise Elimination and Noise Prevention, Sudb. C.4, Hourly Restrictions on Certain Operations, allowing the Old Carriage Court Corridor Improvements Project contractor, Northwest Asphalt, Inc. and their subcontractors, to perform work from 6 a.m. to 9 p.m. from Mondays though Saturdays through the end of October 2026. Motion Type: Simple Majority Background: City Code Section 130.45 restricts the hours of construction operation from 7 a.m. to 10 p.m. on weekdays, and 9 a.m. to 9 p.m. on weekends and holidays. Contractors working on the Old Carriage Court Corridor Improvements Project have requested the city extend working hours to begin work at 6 a.m. until 9 p.m. from Monday to Saturday through the end of October 2026. This extension will help meet the project deadlines. The impacts from the earlier generated noise is not anticipated to be a substantial nuisance in this area of the city for the prescribed times. If property owner complaints are received by the City, the ordinance suspension can be revoked at the discretion of the City Engineer. Upon City Council's approval, a public news release and notice would be placed in the City's local paper and on the City's website to meet the City Code requirements. Recommendation: Approve the request Budget Impact: None 28 Attachments: Extended Construction Hours Request.pdf 29 Alexander Enyi From: Sent: To: Subject: Jeremy Gylland <JGylland@nwasphalt.net> Thursday, May 14, 2026 12:16 PM Alexander Enyi Carraige Court working hours request Alex, due to the time frame completion of this project, we would request working hours be extended from 6: am to 9 pm Monday through Saturday. Thanks Jeremy Gylland Project Manager/Estimator Northwest Asphalt Inc 1451 Stagecoach RD, Shakopee, MN 55379 Cell - 952-292-8368 jgylland@nwasphalt.net 1 30 SHAKOPEE WI"LAI Shakopee City Council 5.d June 2, 2026 Agenda Item: Surplus Property Prepared by: Joe Simon, Fire Chief Reviewed by: Action to be considered: Declare one vehicle and associated loose equipment as surplus property and authorize their sale. Motion Type: Simple Majority Background: In accordance with the city's vehicle replacement policy, the 2006 Rosenbauer Spartan engine (VIN: 4S7AU2F926C052200; Apparatus ID: SK1010) has reached the end of its 20 - year service life and been replaced. Staff recommends including the truck's original and end -of -life loose equipment in the surplus sale. Recommendation: Staff recommends approval. Budget Impact: All proceeds from the surplus sale of the apparatus and associated equipment will be deposited back into the Capital Equipment Fund to support future vehicle replacements. Attachments: 31 SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.e June 2, 2026 Extended Hours for Construction at the Shakopee Gravel Pit. Michael Kerski, Planning and Development Director Michael Kerski Action to be considered: Approve Motion Type: Simple Majority Background: The former Shakopee Gravel Pit redevelopment area is anticipated to require between approximately 400,000 cubic yards and one million cubic yards of fill material. Due to the substantial volume needed, it is important to accept and stockpile suitable soils when they become available. Several upcoming roadway projects will generate excess material requiring relocation and disposal. The Minnesota Department of Transportation has indicated that certain material hauling activities will need to occur during evening and early morning hours in order to minimize traffic conflicts and disruptions to the traveling public. Contractors will utilize side -dump trucks with a typical hauling capacity of approximately 20 to 25 cubic yards per load. No grading, compaction, or active placement of materials will occur during nighttime or early morning operations. Materials delivered during these hours will be temporarily stockpiled on -site and incorporated into the project during normal daytime construction hours. Recommendation: Approve after hours construction for the former Shakopee Gravel Site from June 3 until October 1 to allow for soil delivery that is available from highway projects. Budget Impact: N/A Attachments: 32 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.f June 2, 2026 Award a Contract for the Quarry Lake Erosion Restoration Project Kirby Templin, Water Resources - Environmental Manager Alex Jordan, City Engineer Action to be considered: Adopt Resolution R2026-086, accepting bids and awarding a contract in the amount of $301,777.50 to JC Hallet Construction for the Quarry Lake Erosion Restoration Project, Storm -25-003. Motion Type: Simple Majority Background: The adopted Capital Improvement Plan (CIP) includes a project to stabilize erosion issues along the northeast and northwest corners of Quarry Lake. These areas are experiencing significant erosion impacting water quality and creating stability issues for adjacent infrastructure. On May 5, 2026, the City Council adopted Resolution R2026-069 approving plans and specifications, and authorizing bidding for the project. In accordance with Minnesota Statute Section 471.345 Uniform Municipal Contracting Law, bids were solicited and opened May 27, 2026. Eleven Bids were received and JC Hallet Construction from Lakeville, MN was the low bidder in the amount of $301,777.50 (see attached resolution for the bid tabulation summary). JC Hallet Construction has the capacity and experience for the project and is deemed a responsible bidder. Construction is anticipated to begin in September and be completed by the end of October 2026. Recommendation: Adopt Resolution R2026-086. Budget Impact: Based on the low bid amount, the updated total estimated project cost is as follows: 33 CIP ESTIMATE BASED ON BID AWARD COSTS Construction Cost $ 500,000 $ 301,777.50 Contingency $ 0 $ 15,088.88 Subtotal $ 500,000 $ 316,866.38 Eng/Admin/Legal $ 90,000 $ 70,000.00 Total Estimated Project Cost $ 590,000 $ 386,866.38 FUNDING Storm Drainage Fund $ 590,000 $ 386,866.38 Total Funding $ 590,000 $ 386,866.38 Attachments: R2026-086.docx CIP Sheet.pdf Contract.pdf 34 RESOLUTION R2026-086 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA ACCEPTING BIDS AND AWARDING A CONTRACT IN THE AMOUNT OF $301,777.50 TO JC HALLET CONSTRUCTION FOR THE QUARRY LAKE EROSION RESTORATION PROJECT WHEREAS, pursuant to an advertisement for bids for the Quarry Lake Erosion Restoration Project Storm -25-003 bids were received, opened on May 27, 2026, and tabulated according to law, and the following bids were received complying with the advertisement: Bidder Amount JC Hallet Construction $ 301,777.50 Sunram Construction, Inc. $ 388,765.00 Bituminous Roadways Inc. $ 438,352.75 McLafferty Contracting Group, LLC $ 455,409.65 Minger Construction Co. Inc. $ 506,044.50 Kusske Construction Company $ 514,480.80 Swan Companies $ 521,162.25 Clark Companies $ 559,637.50 Urban Companies $ 592,451.60 JLTheis, Inc. $ 597,588.50 JK Landscape Construction $ 666,700.00 WHEREAS, JC Hallet Construction, 23884 Logan Way, Lakeville, MN 55044, is the lowest responsible bidder for the Quarry Lake Erosion Restoration Project. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA AS FOLLOWS: 1. The appropriate City officials are hereby authorized and directed to enter into a contract with JC Hallet Construction, in the name of the City of Shakopee for the Quarry Lake Erosion Restoration Project according to the plans and specifications therefore approved by the City Council and on file in the office of the City Clerk. 2. The City Clerk is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. 3. Pursuant to Section 1.150-2(d) of the Treasury Regulations, the City Council declares its official intent to reimburse itself for the costs of the improvements from the proceeds of tax-exempt bonds. Adopted in regular session of the City Council of the City of Shakopee, Minnesota, held this 2"d day of June 2026. Mayor of the City of Shakopee ATTEST: City Clerk Prepared by: City of Shakopee 485 Gorman Street Shakopee, MN 55379 35 2026 thru 2030 Project Details Shakopee, MN Project # Project Name Storm -25-003 Quarry Lake Erosion Restoration Improvements Total Project Cost Department Category Status $590,000 Storm Drainage Fund Storm Sewer/Drainage Active Contact Type Priority Fund City Engineer Improvement 2 - Smart to do Surface Water Fund Description This project is to address erosion issues along the northeast and northwest corners of Quarry Lake. Justification The erosion issues impact water quality and create stability issues for adjacent infrastructure. Prior Expenditures 2026 2027 2028 2029 2030 Total 45,000 Construction/Maintenance 500,000 0 0 0 Prior Engineering/Administration 45,000 0 0 0 Funding Sources Total 545,000 0 0 0 0 0 0 500,000 45,000 545,000 2026 2027 2028 2029 2030 Total 45,000 Storm Drainage Fund 545,000 0 0 0 0 545,000 Total 545,000 0 0 0 0 545,000 Produced Using Plan -It CIP Software 232 36 NOTICE OF AWARD FOR QUARRY LAKE EROSION RESTORATION PROJECT NO. STORM -25-003 CITY OF SHAKOPEE, MINNESOTA TO: JC HALLET CONSTRUCTION 24881 LOGAN AVE. LAKEVILLE, MN 55044 The City of Shakopee, Minnesota, having considered the proposals submitted on May 27, 2026 for the construction of the QUARRY LAKE EROSION RESTORATION PROJECT STORM -25-003 and it appearing that your proposal is fair, equitable and to the best interest of the City, the said proposal is hereby accepted for the prices set forth therein. In accordance with the terms of the Contract Documents, you are required to execute the formal Contract Agreement and furnish the required Performance and Payment Bond within ten (10) days from the date hereof. The Bid Security submitted with your proposal will be returned upon execution of the Contract Agreement and the furnishing of the Performance and Payment Bond. In the event you should fail to execute the Contract Agreement and furnish the Performance and Payment Bond, within the time limit specified, said Bid Security will be retained by the City of Shakopee as liquidated damages for failure to accept the award and execute the necessary documents for the formation of the contract. The City is accepting Alternate No. CITY OF SHAKOPEE, MINNESOTA William H. Reynolds/ City Administrator Awarded by: Shakopee City Council June 2, 2026 Contract Amount: $301,777.50 _ Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C -I 37 CONTRACT THIS CONTRACT, made and entered into this 2 day of June , 2026 by and between JC HALLET CONSTRUCTION hereinafter called "Contractor" (a corporation organized and existing under the laws of the State of Minnesota) (a partnership consisting of created under the laws of Minnesota), and the City of Shakopee, Minnesota, a municipal corporation, hereinafter called "City." WITNESSETH: That Whereas, the Contractor has become the lowest responsible bidder for furnishing the supervision, labor, tools, equipment, materials and supplies and for constructing the following City improvements: Quarry Lake Erosion Restoration Project NOW THEREFORE, the parties to this contract agree to the following: 1. Manner for Completion The Contractor, at his own proper cost and expense, shall perform all work and furnish all supervision (needed beyond that provided by the City Engineer), labor, material, tools, supplies, machinery and other equipment necessary for the construction of the Quarry Lake Erosion Restoration Project STORM -25- 003 for the City of Shakopee, Minnesota, in a workmanlike and substantial manner, as outlined in the Plans and Specifications. 2. Due Diligence Time is of the essence in the performance of this Contract. The maintenance of a rate of progress in the work which will result in its completion in a reasonable time, is an essential feature of this Contract, and the Contractor agrees to proceed with all due diligence and care, at all times to take all precautions to insure the time of completion as defined in this Contract. The Contractor shall fully complete the work called for under the Contract in accordance with the specifications. 3. Payment The City will pay the Contractor those prices stipulated in the Contractor's Contract Proposal, which are incorporated herein by reference and made a part of this Contract, which shall constitute full and complete compensation for the contractor's work provided hereunder. The parties specifically agree and understand and the Contractor specifically waives any claim for additional compensation for any changed condition whether arising out of a physical condition at the site of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inherent in work of the character and at the location provided for in the Contract or arising as a result of any force majeur. 4. Prevailing Wages If this project is funded in whole or in part by state funds, then the wages of laborers, workers, and mechanics should be comparable to wages paid for similar work in the community as a whole, as established by the Minnesota Department of Labor and Industry. If this section applies to this project, the prevailing wage rates are attached and included in the contract documents. Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-2 38 5. Contractor's Responsibility for Subcontractors It is further agreed that Contractor shall be as fully responsible to the City for the acts and omissions of its subcontractors, and of persons either directly or indirectly employed by them, as Contractor is for the acts and omissions of persons it directly employs. Contractor shall cause appropriate provisions to be inserted in all subcontracts relating to this work, to bind all subcontractors to Contractor by all the terms herein set forth, insofar as applicable to the work of subcontractors and to give Contractor the same power regarding termination of any subcontract as the City may exercise over Contractor under any provisions of this contract. Nothing contained in this Contract shall create any contractual relation between the subcontractor and the City or between any subcontractors. 6. Payment to Subcontractors The Contractor shall pay any subcontractor within ten days of receipt of payment from the City for undisputed services provided by the subcontractor. If the Contractor fails to pay within ten days, the Contractor shall pay the subcontractor interest at the rate of one and one-half percent per month or part of month to the subcontractor on any undisputed amount not paid on time to the subcontractor, in accordance with Minn. State. Sec. 471.425, Subd. 4a. 7. City Instructions The City may declare the contract forfeited as described in the Standard Specifications should the Contractor persistently disregard instructions of the City or fail to observe or perform any provisions of this Contract. 8. Indemnity The Contractor agrees to defend, indemnify, and save the City harmless from and against all claims, suits and actions of every description, brought against the City and from all damage and costs, including attorney's and expert fees, by reason or on account of any injuries or damages received or sustained by any person or persons, or their property, by Contractor, its servants, agents or subcontractors in the construction of said work, or by any negligence or carelessness in the performance of same, or on account of any other wrongful act or omission, including breach of any provision of this Contract, of Contractor, its independent subcontractors, agents, employees, or delegates. The Contractor further agrees to indemnify the City for defense cost incurred in defending any claims, unless the City is determined to be at fault. 9. Contract Documents This Contract, together with the other documents enumerated in this paragraph, forms the Contract between the parties. These documents are as fully a part of the contract as if attached hereto or repeated herein. In the event of any conflict between those documents listed as (a) through (f), they shall govern in the order listed, with this Contract governing over all other documents. The contract documents consist of the following: a. This Contract b. All Change Orders or Addenda c. Plans and Specifications for Project STORM -25-003 d. General Utility and Street Improvement Specifications for Construction e. Shakopee Public Utility Commission Water Policy Manual f. All items listed under the Table of Contents 10. Duplicate Originals This Contract shall be executed in two copies; one (1) copy being retained by the City, one (1) to be delivered to the Contractor. Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-3 39 11. Nondiscrimination The Contractor agrees in the performance of this Contract not to discriminate on the ground or because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation or age, against any employee of Contractor or applicant for employment, and shall include a similar provision in all subcontracts let or awarded hereunder. 12. Jurisdiction This agreement and every question arising hereunder shall be construed or determined according to the laws of the State of Minnesota. CONTRACTOR CITY OF SHAKOPEE, MINNESOTA By By Mayor/Matt Lehman By By Name / Title City Administrator/William H. Reynolds Approved as to form: City Attorney Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-4 40 PERFORMANCE AND PAYMENT BOND KNOW ALL MEN BY THESE PRESENTS, that We, , as Principal, and as Surety, being a corporation certified by the Minnesota Commissioner of Insurance and authorized to act as a surety as provided in Minnesota Statutes, Section 60A.23, Subd. 5 and 574.15, are held and firmly bound unto the City of Shakopee, a Minnesota municipal corporation, hereinafter called the City, for the use of the City and to all subcontractors and persons who have furnished or shall furnish materials actually used in the performance of the hereinafter mentioned Contract, or who have performed, or shall perform, labor in the performance of or in connection with the said Contract in the penal sum of ($ ), lawful money of the United States of America, the payment of which will truly be made to the Obligees, the said Principals and the said surety, bind themselves and each of their heirs, exe- cutors, administrators, successors and assigns, jointly and severally, firmly by these presents as follows: The condition of the above obligation is such that: WHEREAS, the above bounded Principals have heretofore on the day of , 2026, entered into a written Contract, a copy of which is by reference made a part hereof, with said City, for the furnishing of all labor and equipment for the complete installation of the Quarry Lake Erosion Restoration Project STORM -25-003 said construction work to be done according to the requirements of said Contract. NOW, THEREFORE, the obligations shall remain in full force and effect unless and until the above Principals do the following: • At all times duly, promptly, and faithfully perform said Contract and any alteration in or addition to the obligations of said Principals arising thereunder (including the matter of infringement, if any, of patents), • Guarantee all work against defective workmanship and materials for a period of two (2) years from date of final acceptance by the City, • Comply with all the covenants contained in the specification drawings and other documents constituting a part of said Contract required to be performed by said Principals, • Satisfy all claims and demands for same, in the manner and within the times provided in said Contract, • Fully indemnify and save harmless the City of Shakopee from all costs and damage which the City may suffer, • Fully reimburse and repay the City all outlay and expenses which the City may incur in making good any defaults, and reasonable attorneys' fees incurred in the prosecution of or defense of any action arising out of or in connection with any such default, • Pay all people who have contracts directly with the Principals, for labor or materials, if any, included in said Contract, or any alteration in or addition thereto. Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-5 41 If the Principals fulfill the above -listed items, then this obligation may become null and void. The Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration in or addition to the terms of the Contract, the work to be performed thereunder, or specifications accompanying the same, and no forbearance on the part of either the City or the Principal, shall in any way affect its obligation in this bond or release the Principal and Surety or either of them, their heirs, executors, administrators, successors or assigns from their liability hereunder. The Surety hereby waives notice of any such change, extension of time, alteration or addition to the terms of the Contract, the work to be performed thereunder, or the specifications, or any forbearance. Signed and sealed this day of , 2026. Principal By Surety Address By Attorney -in -fact Local Agent Address Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-6 42 NOTICE TO PROCEED FOR QUARRY LAKE EROSION RESTORATION PROJECT IMPROVEMENT PROJECT NO. STORM -25-003 CITY OF SHAKOPEE, MINNESOTA TO: DATE: JC HALLET CONSTRUCTION 24881 LOGAN AVE. LAKEVILLE, MN 55044 You are hereby authorized to proceed on this date for the construction of the Quarry Lake Erosion Restoration Project STORM -25-003 for the City of Shakopee, Minnesota as set forth in detail in the Contract Documents, including Plans and Specifications. CITY OF SHAKOPEE, MINNESOTA By: Alex Jordan, PE City Engineer We have determined the following permits are required: If you will not complete your work involving these permits within the time specified thereon, you should communicate with the City Engineer, City of Shakopee, Minnesota to see if an extension is available and what you must do to obtain one. If you encounter other permits required, please communicate immediately with the same depattinent. Quarry Lake Erosion Restoration Project Project No. STORM -25-003 Project Specifications Contract C-7 43 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.g June 2, 2026 Award a Contract for the Boiling Springs Drainage Improvement Project Kirby Templin, Water Resources - Environmental Manager Alex Jordan, City Engineer Action to be considered: Adopt Resolution R2026-087, accepting bids and awarding a contract in the amount of $247,353.90 to Kurilla Contracting for the Boiling Springs Drainage Improvement Project, Storm -25-001. Motion Type: Simple Majority Background: The adopted Capital Improvement Plan (CIP) includes the Boiling Springs Area Drainage Improvement Project, Storm -25-001. The project includes construction and replacement of storm sewer infrastructure to the area located south and west of Boiling Springs Lane and east of Stagecoach Road. This is a landlocked area where there are frequent drainage issues that impact private property resulting in the need of city assistance to help protect property and mitigate potential flooding issues. The project will implement solutions to reduce: a) the need for frequent city assistance; b) risk of flooding outside of the right-of- way. On May 5, 2026, the City Council adopted Resolution R2026-070 approving plans and specifications, and authorizing bidding for the project. In accordance with Minnesota Statute Section 471.345 Uniform Municipal Contracting Law, bids were solicited and opened May 27, 2026. Six Bids were received and Kurilla Contracting from Buffalo, MN was the low bidder in the amount of $247,353.90 (see attached resolution for the bid tabulation summary). Kurilla Contracting has the capacity and experience for the project and is deemed a responsible bidder. Construction is anticipated to begin in June and will be completed by the end of August. Recommendation: Adopt Resolution R2026-087. 44 Budget Impact: Based on the low bid amount, the updated total estimated project cost is as follows: CIP ESTIMATE BASED ON BID AWARD COSTS Construction Cost $ 300,000 $ 247,353.90 Contingency $ 0 $ 12,367.70 Subtotal $ 300,000 $ 259,721.60 Eng/Admin/Legal $ 35,000 $ 75,000.00 Easement Acquisition $ 40,000 $ 56,778.64 Total Estimated Project Cost $ 375,000 $ 381,731.60 FUNDING Storm Drainage Fund $ 375,000 $ 391,500.24 Total Funding $ 375,000 $ 391,500.24 The revised final project budget exceeds the CIP amount by 4%. The additional costs will be funded by the Storm Drainage Fund which has adequate funding available through cost savings realized with the Quarry Lake Erosion Restoration Project. Attachments: R2026-087.docx CIP Sheets.pdf Contract.pdf 45 RESOLUTION R2026-087 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA ACCEPTING BIDS AND AWARDING A CONTRACT IN THE AMOUNT OF $247,353.90 TO KURILLA CONTRACTING FOR THE BOILING SPRINGS DRAINAGE IMPROVEMENT PROJECT WHEREAS, pursuant to an advertisement for bids for the Boiling Springs Drainage Improvement Project Storm -25-001 bids were received, opened on May 27, 2026, and tabulated according to law, and the following bids were received complying with the advertisement: Bidder Kurilla Contracting Boulder Creek, Inc Krueger Excavating Inc. S.M. Hentges & Sons, Inc. Kusske Construction Company Urban Companies Amount $ 247,353.90 $ 315,574.75 $ 322,499.50 $ 344,032.62 $ 357,480.80 $ 379,683.56 WHEREAS, Kurilla Contracting, 4450 MN -25, Buffalo, MN 55313, is the lowest responsible bidder for the Boiling Springs Drainage Improvement Project. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA AS FOLLOWS: 1. The appropriate City officials are hereby authorized and directed to enter into a contract with Kurilla Contracting, in the name of the City of Shakopee for the Boiling Springs Drainage Improvement Project according to the plans and specifications therefore approved by the City Council and on file in the office of the City Clerk. 2. The City Clerk is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. 3. Pursuant to Section 1.150-2(d) of the Treasury Regulations, the City Council declares its official intent to reimburse itself for the costs of the improvements from the proceeds of tax-exempt bonds. Adopted in regular session of the City Council of the City of Shakopee, Minnesota, held this 2nd day of June 2026. Mayor of the City of Shakopee ATTEST: City Clerk Prepared by: City of Shakopee 485 Gorman Street Shakopee, MN 55379 46 2025 thru 2029 Project Details Shakopee, MN Project # Project Name Storm -25-001 Boiling Springs Area Drainage Improvements Total Project Cost $375,000 Department Storm Drainage Fund Category Storm Sewer/Drainage Status Active Fund Surface Water Fund Contact City Engineer Type Improvement Priority 2 - Smart to do Accounting Code 5961/6961 Project Code SD2502 Description This project includes drainage improvements to the boiling springs area located south and west of Boiling Springs Lane and east of Stagecoach Road. Justification This is a landlocked area where there are frequent drainage and flooding issues that impact property resulting in the need of city assistance to help protect and mitigate flooding issues. The project will implement solutions to reduce the need for frequent city assistance and improve drainage and flooding. Prior Expenditures 2025 2026 2027 2028 2029 Total 40,000 Construction/Maintenance 300,000 0 0 0 0 300,000 Engineering/Administration 35,000 0 0 0 0 35,000 Funding Prior Sources Total 335,000 0 0 0 0 335,000 2025 2026 2027 2028 2029 Total 40,000 Storm Drainage Fund 335,000 0 0 0 0 335,000 Total 335,000 0 0 0 0 335,000 Budget Impact A feasibility study was completed by AE2S for this area. Produced Using Plan -It CIP Software 226 47 2025 thru 2029 Project Details Shakopee, MN Project # Project Name Storm -25-001 Boiling Springs Area Drainage Improvements Contact Department None None Storm Drainage Fund PROJECT LOCATION Produced Using Plan -It CIP Software 227 48 NOTICE OF AWARD FOR BOILING SPRINGS DRAINAGE IMPROVEMENTS PROJECT NO. STORM -25-001 CITY OF SHAKOPEE, MINNESOTA TO: KURILLA CONTRACTING 4450 MINNESOTA HWY 25 N BUFFALO, MN 55313 The City of Shakopee, Minnesota, having considered the proposals submitted on May 27, 2026 for the construction of the BOILING SPRINGS DRAINAGE IMPROVEMENTS, PROJECT STORM -25-001 and it appearing that your proposal is fair, equitable and to the best interest of the City, the said proposal is hereby accepted for the prices set forth therein. In accordance with the terms of the Contract Documents, you are required to execute the formal Contract Agreement and furnish the required Performance and Payment Bond within ten (10) days from the date hereof. The Bid Security submitted with your proposal will be returned upon execution of the Contract Agreement and the furnishing of the Performance and Payment Bond. In the event you should fail to execute the Contract Agreement and furnish the Performance and Payment Bond, within the time limit specified, said Bid Security will be retained by the City of Shakopee as liquidated damages for failure to accept the award and execute the necessary documents for the formation of the contract. The City is accepting Alternate No. CITY OF SHAKOPEE, MINNESOTA William H. Reynolds/ City Administrator Awarded by: Shakopee City Council June 2, 2026 Contract Amount: $247,353.90 Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C- I 49 CONTRACT THIS CONTRACT, made and entered into this 2 day of June , 2026 by and between KURILLA CONTRACTING hereinafter called "Contractor" (a corporation organized and existing under the laws of the State of Minnesota) (a partnership consisting of created under the laws of Minnesota), and the City of Shakopee, Minnesota, a municipal corporation, hereinafter called "City." WITNESSETH: That Whereas, the Contractor has become the lowest responsible bidder for furnishing the supervision, labor, tools, equipment, materials and supplies and for constructing the following City improvements: BOILING SPRINGS DRAINAGE IMPROVEMENTS NOW THEREFORE, the parties to this contract agree to the following: 1. Manner for Completion The Contractor, at his own proper cost and expense, shall perform all work and furnish all supervision (needed beyond that provided by the City Engineer), labor, material, tools, supplies, machinery and other equipment necessary for the construction of the Boiling Springs Drainage Improvements, Project STORM -25-001 for the City of Shakopee, Minnesota, in a workmanlike and substantial manner, as outlined in the Plans and Specifications. 2. Due Diligence Time is of the essence in the performance of this Contract. The maintenance of a rate of progress in the work which will result in its completion in a reasonable time, is an essential feature of this Contract, and the Contractor agrees to proceed with all due diligence and care, at all times to take all precautions to insure the time of completion as defined in this Contract. The Contractor shall fully complete the work called for under the Contract in accordance with the specifications. 3. Payment The City will pay the Contractor those prices stipulated in the Contractor's Contract Proposal, which are incorporated herein by reference and made a part of this Contract, which shall constitute full and complete compensation for the contractor's work provided hereunder. The parties specifically agree and understand and the Contractor specifically waives any claim for additional compensation for any changed condition whether arising out of a physical condition at the site of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inherent in work of the character and at the location provided for in the Contract or arising as a result of any force majeur. 4. Prevailing Wages If this project is funded in whole or in part by state funds, then the wages of laborers, workers, and mechanics should be comparable to wages paid for similar work in the community as a whole, as established by the Minnesota Department of Labor and Industry. If this section applies to this project, the prevailing wage rates are attached and included in the contract documents. Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-2 50 5. Contractor's Responsibility for Subcontractors It is further agreed that Contractor shall be as fully responsible to the City for the acts and omissions of its subcontractors, and of persons either directly or indirectly employed by them, as Contractor is for the acts and omissions of persons it directly employs. Contractor shall cause appropriate provisions to be inserted in all subcontracts relating to this work, to bind all subcontractors to Contractor by all the terms herein set forth, insofar as applicable to the work of subcontractors and to give Contractor the same power regarding termination of any subcontract as the City may exercise over Contractor under any provisions of this contract. Nothing contained in this Contract shall create any contractual relation between the subcontractor and the City or between any subcontractors. 6. Payment to Subcontractors The Contractor shall pay any subcontractor within ten days of receipt of payment from the City for undisputed services provided by the subcontractor. If the Contractor fails to pay within ten days, the Contractor shall pay the subcontractor interest at the rate of one and one-half percent per month or part of month to the subcontractor on any undisputed amount not paid on time to the subcontractor, in accordance with Minn. State. Sec. 471.425, Subd. 4a. 7. City Instructions The City may declare the contract forfeited as described in the Standard Specifications should the Contractor persistently disregard instructions of the City or fail to observe or perform any provisions of this Contract. 8. Indemnity The Contractor agrees to defend, indemnify, and save the City harmless from and against all claims, suits and actions of every description, brought against the City and from all damage and costs, including attorney's and expert fees, by reason or on account of any injuries or damages received or sustained by any person or persons, or their property, by Contractor, its servants, agents or subcontractors in the construction of said work, or by any negligence or carelessness in the performance of same, or on account of any other wrongful act or omission, including breach of any provision of this Contract, of Contractor, its independent subcontractors, agents, employees, or delegates. The Contractor further agrees to indemnify the City for defense cost incurred in defending any claims, unless the City is determined to be at fault. 9. Contract Documents This Contract, together with the other documents enumerated in this paragraph, forms the Contract between the parties. These documents are as fully a part of the contract as if attached hereto or repeated herein. In the event of any conflict between those documents listed as (a) through (f), they shall govern in the order listed, with this Contract governing over all other documents. The contract documents consist of the following: a. This Contract b. All Change Orders or Addenda c. Plans and Specifications for Project STORM -25-001 d. General Utility and Street Improvement Specifications for Construction e. Shakopee Public Utility Commission Water Policy Manual f. All items listed under the Table of Contents 10. Duplicate Originals This Contract shall be executed in two copies; one (1) copy being retained by the City, one (1) to be delivered to the Contractor. Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-3 51 11. Nondiscrimination The Contractor agrees in the performance of this Contract not to discriminate on the ground or because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation or age, against any employee of Contractor or applicant for employment, and shall include a similar provision in all subcontracts let or awarded hereunder. 12. Jurisdiction This agreement and every question arising hereunder shall be construed or determined according to the laws of the State of Minnesota. CONTRACTOR CITY OF SHAKOPEE, MINNESOTA By By Mayor/Matt Lehman By By Name / Title City Administrator/William H. Reynolds Approved as to form: City Attorney Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-4 52 PERFORMANCE AND PAYMENT BOND KNOW ALL MEN BY THESE PRESENTS, that We, , as Principal, and as Surety, being a corporation certified by the Minnesota Commissioner of Insurance and authorized to act as a surety as provided in Minnesota Statutes, Section 60A.23, Subd. 5 and 574.15, are held and firmly bound unto the City of Shakopee, a Minnesota municipal corporation, hereinafter called the City, for the use of the City and to all subcontractors and persons who have furnished or shall furnish materials actually used in the performance of the hereinafter mentioned Contract, or who have performed, or shall perform, labor in the performance of or in connection with the said Contract in the penal sum of ($ ), lawful money of the United States of America, the payment of which will truly be made to the Obligees, the said Principals and the said surety, bind themselves and each of their heirs, exe- cutors, administrators, successors and assigns, jointly and severally, firmly by these presents as follows: The condition of the above obligation is such that: WHEREAS, the above bounded Principals have heretofore on the day of , 2026, entered into a written Contract, a copy of which is by reference made a part hereof, with said City, for the furnishing of all labor and equipment for the complete installation of the Boiling Springs Drainage Improvements, Project STORM -25-001 said construction work to be done according to the requirements of said Contract. NOW, THEREFORE, the obligations shall remain in full force and effect unless and until the above Principals do the following: • At all times duly, promptly, and faithfully perform said Contract and any alteration in or addition to the obligations of said Principals arising thereunder (including the matter of infringement, if any, of patents), • Guarantee all work against defective workmanship and materials for a period of two (2) years from date of final acceptance by the City, • Comply with all the covenants contained in the specification drawings and other documents constituting a part of said Contract required to be performed by said Principals, • Satisfy all claims and demands for same, in the manner and within the times provided in said Contract, • Fully indemnify and save harmless the City of Shakopee from all costs and damage which the City may suffer, • Fully reimburse and repay the City all outlay and expenses which the City may incur in making good any defaults, and reasonable attorneys' fees incurred in the prosecution of or defense of any action arising out of or in connection with any such default, • Pay all people who have contracts directly with the Principals, for labor or materials, if any, included in said Contract, or any alteration in or addition thereto. Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-5 53 If the Principals fulfill the above -listed items, then this obligation may become null and void. The Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration in or addition to the terms of the Contract, the work to be performed thereunder, or specifications accompanying the same, and no forbearance on the part of either the City or the Principal, shall in any way affect its obligation in this bond or release the Principal and Surety or either of them, their heirs, executors, administrators, successors or assigns from their liability hereunder. The Surety hereby waives notice of any such change, extension of time, alteration or addition to the terms of the Contract, the work to be performed thereunder, or the specifications, or any forbearance. Signed and sealed this day of , 2026. Principal By Surety Address By Attorney -in -fact Local Agent Address Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-6 54 NOTICE TO PROCEED FOR BOILING SPRINGS DRAINAGE IMPROVEMENTS PROJECT NO. STORM -25-001 CITY OF SHAKOPEE, MINNESOTA TO: DATE: KURILLA CONTRACTING 4450 MINNESOTA HWY 25 N BUFFALO, MN 55313 You are hereby authorized to proceed on this date for the construction of the BOILING SPRINGS DRAINAGE IMPROVEMENTS, PROJECT STORM -25-001 for the City of Shakopee, Minnesota as set forth in detail in the Contract Documents, including Plans and Specifications. CITY OF SHAKOPEE, MINNESOTA By: Alex Jordan, PE City Engineer We have determined the following permits are required: If you will not complete your work involving these permits within the time specified thereon, you should communicate with the City Engineer, City of Shakopee, Minnesota to see if an extension is available and what you must do to obtain one. If you encounter other permits required, please communicate immediately with the same department. Boiling Springs Drainage Improvements Project No. STORM -25-001 Project Specifications Contract C-7 55 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.h June 2, 2026 Accept a Proposal from WSB for Construction Services for 2026 Private Development Projects Alex Jordan, City Engineer Action to be considered: Accept a proposal for professional services from WSB, LLC in the amount of $289,376.00 for construction observation and inspection services for private development improvements. Motion Type: Simple Majority Background: WSB has assisted the City since 2022 in providing construction inspection services for private development projects. WSB's scope of services in the proposal includes providing similar inspection services for the 2026 construction season. This includes an additional task of providing public tree planting oversight to ensure trees in the public right-of-way are planted and maintained consistent with the City's Forestry Manual Specifications. WSB's proposal is subject to the Master Agreement for Professional Consulting Services between the City and WSB dated August 7, 2024. Recommendation: Accept the proposal. Budget Impact: WSB's proposal to complete the construction services for the 2026 construction season is based on a not to exceed amount of $289,376.00. Funding for these services is paid for by engineering fees collected with private developments. Attachments: Shakopee Development Proposal 2026 - WSB.pdf 56 wsb May 13th, 2026 Alex Jordan, PE City Engineer City of Shakopee 485 Gorman Street Shakopee, MN 55379 RE: Shakopee 2026 Development Inspections Dear Mr. Jordan, 763.541.4800 I WSBENG.COM MINNEAPOLIS, MN SUITE 300 701 XENIA AVENUE S WSB is excited about the opportunity to present this scope of work and deliverables for construction services for the Cities Development Projects. The scope of work WSB will provide are the staff and services as necessary to meet the expected outcomes of this contract, which include the following tasks: • Construction Observation and Inspection • Tree Planting Oversight and Inspection Deliverables and responsibilities provided for each of the above tasks are described in the Project Approach/Scope of Services below. The intent of the scope is to outline the major tasks required for this project and highlight areas of importance that are needed to complete the requested services. The scope does not list all responsibilities to be performed. PROJECT UNDERSTANDING The Development projects consist of new underground utilities including sanitary, watermain and storm sewer. They also consist of street grading, curb and gutter, and paving installation. Construction is ongoing currently. PROJECT APPROACH/SCOPE OF SERVICES A. Construction Observation and Inspection WSB will provide Construction Observation and Inspection services through construction of the project and final project closeout. This task will include: • Record all construction activities daily, making a complete and accurate record of all events. • Communicate regularly with involved stakeholders to keep them informed regarding the impact of construction to the area, including neighbors, businesses, and local agencies. • Ensure construction practices and materials used on site are compliant with project specifications. • Perform daily reviews of construction signing and construction traffic control maintenance. • Communicate regularly with the Project Manager, Contractor, City, SPUC and involved stakeholders. • Perform reviews of temporary and permanent erosion control measures on the project for compliance with applicable permits and specifications. • Provide services required under this contract as necessary to accommodate the contractor's schedule and needs. 57 Mr. Alex Jordan May 13th, 2026 Page 2 • Exercise the "Authority and Duties of the Inspector" as necessary. B. Tree Planting Oversight and Inspection WSB will provide public Tree Planting Oversight and Inspection services from pre -planting to the final two-year warranty final inspection. This task will include: • Meet with Developers and/or their Landscaping representatives for pre -work meetings and attend meetings when requested by the city staff • Review plan sets to become familiar with trees planned for the development • Inspect all available tree stock on planting day, talk with planting contractor, and observe 2-3 trees planted in the development. Return to inspect each planted tree to ensure it meets project and Shakopee Forestry Manual specifications • Inventory each tree within a week after planting, using Shakopee's schema and Field Maps, using an Arrow 200 for sub -foot accuracy. o Species, condition rating, inspection date, and photo will be included • Return to each tree to perform a 2 -year warranty inspection o Update condition rating, inspection date, and attach a final photo o Recommend approval or rejection in Field Maps drop -down menu o Document all factors for rejection using Field Map drop -down menus and notes • Communicate regularly with the Project Manager, Contractors, City, and involved stakeholders. • Provide services required under this contract as necessary to accommodate the contractor's schedule and needs. PROPOSED FEE The estimated cost proposal we are providing is based on the contract documents and anticipated schedule for the work. A better understanding of the level of effort needed will be realized once the contractor presets their approach to the work. WSB will provide the services as outlined in Project Approach/Scope of Services. Our budget was developed based on our understanding of the scope and experience with the 2022 through 2025 development projects. The full Cost Estimate is provided on page 3 of this document. The estimated cost of this project is $289,376.00. All travel time is included in the estimated fee. The proposed scope and fee presented herein represents our complete understanding of the project based on site visits and work performed. If you have any questions or concerns, please feel free to contact me at (612) 360-1310. Once again, we appreciate the opportunity to submit this proposal and look forward to working with you and your staff. Sincerely, WSB Paul Kyle, PE, Director of Construction Services 58 Mr. Alex Jordan May 13th, 2026 Page 3 Attachments ACCEPTED BY: City of Shakopee By: Date: By: Date: Matt Lehman, Mayor Willaim Reynolds, City Administrator 59 W C VV3 ° $23,948.00°° $255,444.00 0 0 o N O 0 v M -..- $289,376.00 Total Hours N -, O N M 00 - Tree Inspector Kyle S. O O © O Tree Inspector Karen Z. 00 00 Project Inspector Brandon Hoff 1595 40 24 h Project Manager Trees Emily B. N N Project Manager Construction Paul Kyle 7r 7r 00 WORK TASK 0 PROJECT MANAGEMENT °Project Management (2 hours a month) CONSTRUCTION INSPECTION SERVICES Construction Inspection IIPunchlist / Final Inspection Record Plan Measurements I°Assume 29 weeks construction inspection, 5 days per week, 11 hours per day I Total Hours O N O 06 OC O Lri N O 0 N N Hourly Costs 2026 $289,376.00 00 00 bR O 7 00 00 N 69 O O O O 6R 00 00 WSB SALARY COSTS TOTAL CONSTRUCTION SERVICES PROJECT COST 0 0 00 07 ff3 TOTAL PROJECT COST WI"LAI SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.i June 2, 2026 Purchase a 2026 Utility Police Interceptor for the Police Department. Bill Egan, Public Works Director Action to be considered: Approve the purchase of a 2026 Ford utility interceptor AWD from Tenvoordee Ford, and equipment and set up from Macqueen Inc., in the amount of $54,841.19; and declare the existing vehicle as surplus. Motion Type: Simple Majority Background: On April 29th, 2026, vehicle SK1481 (38,996 miles) 2025 Ford Utility Interceptor was involved in an accident and subsequently the vehicle is a total loss. The vehicle and equipment will be purchased under State of Minnesota Contract Nos. 244262, 248318 and 264953. Vehicle purchase from Tenvoorde Ford, Inc., and set up to be performed by Macqueen, Inc., are consistent with state contract pricing. As outlined in the attached quotes, the cost of the vehicle is $45,700.44 plus an additional $9,140.75 for equipment and install totaling $54,841.19. Vehicle SK1481 deemed surplus will either be handled through a claim with the insurance company and/or sold "as is" at auction. Recommendation: Approval as requested. Budget Impact: The vehicle and equipment are funded by the Equipment Internal Service Fund or self insurance. Revenues from the sale of surplus equipment and any claim receipts from the 61 accident will be deposited into the Equipment Internal Service Fund. Attachments: Tenvoorde quote.pdf MacQueen Quote.pdf 62 Assn. Ctr # 10016 TENVOORDE FORD, INC P O BOX 1045 ST CLOUD, MN 56302 QUOTE Customer Name Address City MN ZIP Phone Qty Description 1 2026 Police Interceptor AWD K8A S 1 lAWD Ecoboost Added Factory Options 1 YZ- Oxford White 1 9W - Interior Charcoal black 1 153 - License Plate Bracket 1 51T - Spot Lamp 1 18D - Global Lock / Unlock Feature Misc Date 10/9/2025 Order No. Contract No. 244262 Unit -Price TOTAL $ 42,627.44 $ 2,679.00 $ 394.00 $ - SubTotal 42,627.44 2,679.00 394.00 45,700.44 Delivery Address if Different From Billing TOTAL $ 45,700.44 NET 30 Vehicle Pickup Location Tenvoorde Ford 185 Roosevelt Rd St. Cloud MN, Monday -Friday 8:00am-5:00pm Please Call Jade Aanenson 612-703-7789 Cell or Bob Aanenson 320-224-2808 Ce// With Any Questions Tenvoorde Ford The World's Oldest Ford Dealership 63 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-11 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total 1 MACQUEEN WARRANTY VEHICLE BUILD INCLUDES EATI LIFETIME WARRANTY 0.00 0.00 WHICH COVERS OUR INSTALLATION AND WORKSMANSHIP FOR THE LIFETIME OF THE VEHICLE UNDER NORMAL USE - ALL NEW PRODUCTS CARRY THEIR RESPECTIVE MANUFACTURERS' WARRANTIES 1 CONTACT **************************************** 0.00 0.00 NICK BENGTSON NBENGTSON@SHAKOPEEMN.GOV CELL: #952.529.1041 **************************************** 1 VEHICLE **************************************** 2026 FORD PIU - CLASS B 0.00 0.00 NEW UNIT #253 VIN #XXXXXXXX MILEAGE: XX,XXX **************************************** 1 STRIP -PRIOR LAKE STRIP EQUIPMENT FROM VEHICLE, RESTORE HEADLIGHT AND HORN FUNCTIONS PLUG HOLES 1,000.00 1,000.00 **************************************** 2025 FORD PIU (TOTALED UNIT) OLD UNIT #253 VIN #XXXXXXXX MILEAGE: XX,XXX **************************************** ITEMS TO BE REUSED FROM STRIP UNIT INTO NEW BUILD: - AXON CAMERA SYSTEM - GETAC A140 DOCK & POWER SUPPLY All EATI production sales orders will have parts and labor invoiced separately. You will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 1 64 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-I1 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total - STALKER RADAR SYSTEM - STALKER RADAR HARDWIRE CABLE - 200-0622-00 - MOTOROLA APX6500 REMOTE HEAD RADIO & CABIN SPEAKER - ANTENNEX PHANTOM ANTENNA FOR 800 RADIO - ETRAB8063 - SHARKEE 5 -IN -1 ANTENNA - BROTHER POCKETJET PRINTER AND CABLING - SETINA FRONT PARTITION - PK0419ITU20TM - SETINA REPLACEMENT SEAT & REAR PARTITION COMBO - QK0566ITU20 - SETINA WINDOW BARS - WK0514ITU20 - SETINA DUAL T -RAIL, ESMET TUFLOC SMALL LOCKHEAD, BLAC-RAC LOCKHEAD FOR 40MM & BRACKETS - GK1028, 504-000-500, & GK1223E - WHELEN CORE SYSTEM (C399, CCTL7, CV2V, & C399SP) - WHELEN WCX FST (BSFW50Z) - WHELEN WCX RST (BS50Z) - WHELEN WCX TRACERS (TCRWX5'S & TCRB50 BRACKETS) - WHELEN VERTEX FROM/FOR HEADLAMPS (VTX9D & VTX9E) - WHELEN IONS FOR REAR 3/4 WINDOWS - IONB & IONR - TOMAR STROBE POWER SUPPLY - 401-1228-PREHI - DRIVER COMPARTMENT DOME LIGHT - ECVDMLTAL00 - PRISONER AMBER DOME LIGHT - 47769 - SOUND OFF TAIL LIGHT FLASHER - ETFBSSN-P All EATI production sales orders will have parts and labor invoiced separately. You will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 2 65 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-11 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total - WESTIN/HINT CONSOLE, CUPHOLDER, AND FACEPLATES - 800-0001, 800-0050, 800-0056 - WESTIN/HINT ON DASH COMPUTER MOUNT (500-0243) - MAGNETIC MIC CLIPS X 2 AND "L" -BRACKETS - GAMBER JOHNSON PRINTER MOUNT - 7160-0430 - OPS REAR STORAGE SYSTEM - 7155-A00 PLEASE RETURN ALL OTHER STRIPPED ITEMS NOT UTILIZED IN NEW BUILD TO CUSTOMER TO BE UTILIZED FOR REPLACEMENT PARTS ON THE OTHER UNITS **************************************** 1 BK0534ITU20 SETINA PB400 VS ALUMINUM PUSH BUMPER FOR 2020+ 434.25 434.25 FORD INTERCEPTOR 1 WX2230 WHELEN WECAN X 2230 LIGHTBAR - 30' LONG, 6 676.28 676.28 LIGHTHEADS INCLUDED IN PRICE, ANGLED END CAPS ***FORWARD FACING ON PUSHBUMPER 1 I2SMD WHELEN ION DUO LINEAR SUPER LED LIGHTHEAD - 119.48 119.48 SURFACE MOUNT - DUAL COLOR RED/WHITE - RED PRIMARY - WHITE OVERRIDE ***FOR SIDE OF PUSHBUMPER 1 I2SME WHELEN ION DUO LINEAR SUPER LED LIGHTHEAD - 119.48 119.48 SURFACE MOUNT - DUAL COLOR BLUE/WHITE - BLUE PRIMARY - WHITE OVERRIDE ***FOR SIDE OF PUSHBUMPER All EATI production sales orders will have parts and labor invoiced separately. You will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 3 66 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-11 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total 2 VTXADAPT WHELEN VERTEX TWIST -IN ADAPTER KIT FOR 2020+ 9.28 18.56 FORD INTERCEPTOR UTILITY WITHOUT FRONT LIGHTING SOLUTION MPOWERS IN HEADLIGHTS - VERTEX SOLD SEPARATELY ***FOR MOUNTING VERTEX IN PREDRILLED HOLES IN HEADLAMPS 1 20.1850.C SHO-ME MICROTHIN EXTERIOR STROBE - CLEAR - WITH 261.33 261.33 15 FT CABLE - ORDER 90.6108 FLASHBACK SHIELD SEPARATELY ***MOUNTED ON PUSHBUMPER 1 SA315 WHELEN 100 WATT COMPOSITE HOUSING SIREN 238.96 238.96 SPEAKER -BRACKETS SOLD SEPARATELY 1 SAKI WHELEN SAKI SA -315 SIREN SPEAKER BRACKET - 30.74 30.74 UNIVERSAL 90 DEGREE L BRACKET FOR PUSHBUMPER APPLICATIONS 1 PT2185ITU20TM SETINA RECESSED PANEL PARTITION TRANSFER KIT, 344.25 344.25 TALL MAN, INCLUDES 2PC LOWER EXT. AND RECESSED PANEL - FOR 2020+ FORD INTERCEPTOR UTILITY 1 QT0565ITU20 SETINA REPLACEMENT SEAT TRANSFER KIT - FOR 2020+ 509.25 509.25 FORD PIU 1 PT0653ITU252ND SETINA REAR PARTITION TRANSFER KIT - 2025+ FORD 194.25 194.25 PIU 1 NMO58AU-NC NMO ANTENNA BASE WITH 17 FT CABLE WITHOUT 23.75 23.75 CONNECTOR (REPLACES BM -NC) NMO58AU-NC 1 CAT5 25 FOOT GENERIC 25 FOOT CAT5 CONNECTION CABLE - 14.95 14.95 STRAIGHT THROUGH - JACKET COLOR MAY VARY All EATI production sales orders will have parts and labor invoiced separately. You will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 4 67 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-11 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total 1 CG -X HAVIS - CHARGEGUARD PROGRAMMABLE AUTO 86.25 86.25 ON/OFF TIMER 12V NEG GROUND. PROGRAMMABLE FROM 5 SECONDS TO 18 HOURS. 1 LABOR -PRIOR LAKE LABOR CHARGE FOR SERVICES PERFORMED OUTSIDE 4,250.00 4,250.00 OF STATE CONTRACT SCOPE OF WORK 1 EX-MISC SUPPLY STANDARD SHOP SUPPLIES FEE FOR GENERAL 200.00 200.00 INSTALLATION AND WIRING MATERIALS 1 PA MIC DRIVER DOOR -O 1.5 LABOR -PRIOR LAKE GOVERNMENT FLEET LABOR RATE FOR SERVICES 150.00 225.00 PRIMARY PA MIC INSTALLED IN DRIVER DOOR 225.00 1 POWER DISTRIBUTION 1 46985 CIRCUIT BREAKER - 100AMP - MANUAL RESET - 32.67 32.67 MANUAL TRIP 1 46096 POWER DISTRIBUTION MODULE - 2 FUSED OUTPUTS - 20.17 20.17 J -CASE FUSE HOLDER WITH STUD INPUTS AND OUTPUTS 1 46095 POWER DISTRIBUTION - 2 J -CASE FUSE HOLDER - 1 40.66 40.66 SWITCHED OUTPUT - 1 CONSTANT OUTPUT - WITH STUD INPUT/OUTPUTS - INCLUDES 2 FUSES AND INPUT PLUG KIT 2 5046 BLUE SEA ST BLADE COMPACT FUSE BLOCK - NO 34.54 69.08 GROUND DISTRO - 8 CIRCUTS - 100A MAX PER BLOCK, 30A MAX PER CIRCUIT - WITH COVER 1 5045 BLUE SEA ST BLADE COMPACT FUSE BLOCK - NO 24.34 24.34 GROUND DISTRO - 4 CIRCUITS - 100A MAX PER BLOCK, 30A MAX PER CIRCUIT - WITH COVER 1 2300 BLUE SEA 10 GANG BUS BAR WITH COVER 16.08 16.08 1 7870 BLUE SEA BLACK LABEL SET - EMERGENCY VEHICLES. 34.97 34.97 24 E - HARNESS EATI CUSTOM WIRING HARNESS 6.50 156.00 All EATI production sales orders will have parts and labor invoiced separately. You will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 5 68 2755 Geneva Avenue North Oakdale, MN 55128 651-765-2657 orders@eatimn.com Name / Address SHAKOPEE POLICE DEPARTMENT ATTN: NICK BENGSTON 485 GORMAN STREET SHAKOPEE, MN 55379 USA Quote Date Quote # 5/26/2026 MP052626-I1 Ship To MACQUEEN PRIOR LAKE ATTN: SHAKOPEE PD 16980 WELCOME AVE. PRIOR LAKE, MN 55372 USA P.O. No. Account # Terms Rep Quote Valid Until FOB 2026 PIU - UNIT #253 Net 30 MCP 6/30/2026 ORIGIN Qty Item Description Price Total POWER DISTRIBUTION - WIRE HARNESS, BREAKER, FUSE BLOCKS, BUSBAR.. 393.97 1 SHIPPING AND HANDLING SHIPPING AND HANDLING CHARGES FOR ABOVE TO BE 0.00 0.00 ADDED AT TIME OF SHIPPING, FOB ORIGIN All EATI production sales orders will have parts and labor invoiced separately. You Total $9,140.75 will receive an invoice for your parts once they are received and ready for the build. If you would like to turn this quote into an order, please notify your sales rep ASAP. Page 6 69 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.j June 2, 2026 Authorize Submittal of a Regional Solicitation Grant Application for Pedestrian Improvements along 10th Avenue Pedestrian Alex Jordan, City Engineer Action to be considered: Adopt Resolution R2026-089, approving an application to the 2026 Metropolitan Council Regional Solicitation Grant program. Motion Type: Simple Majority Background: The Metropolitan Council Regional Solicitation Program is a competitive federal transportation funding program administered by the Metropolitan Council for the seven - county Twin Cities metropolitan area. Through the solicitation process, federal transportation funds are awarded to projects that improve regional mobility, safety, bicycle and pedestrian connectivity, roadway operations, and freight movement. Projects are evaluated based on criteria including safety, equity, multimodal access, regional significance, and cost effectiveness. The Metropolitan Council is currently accepting grant applications for the 2026 Regional Solicitation. This round of solicitation is for funding availability between 2027 and 2029 for the Active Transportation funding category. City staff have reviewed the Qualifying Requirements for eligible projects to meet the grant requirements. The current adopted Capital Improvement Plan includes the reconstruction of 10th Avenue in 2028 and 2029 between Harrison Street and Marschall Road (CH 17). The City completed a Safe Routes to School Design Assistance Study in 2025 that recommended pedestrian safety improvements along 10th Avenue, including construction of a pedestrian trail along the north side of 10th Avenue. These improvements are expected to lead to a competitive project in the Local Pedestrian Facilities - Active Transportation category of the grant solicitation. City staff are recommending City Council authorization to submit this project for the 2026 Regional Solicitation Grant program. 70 Recommendation: Adopt Resolution R2026-089. Budget Impact: No local match is required for the Local Pedestrian Facilities - Active Transportation category. If successful, the proposed trail improvements would be completed with the planned roadway reconstruction project and any additional costs above the grant funding would be recommended to be programmed in the 2027-2031 Capital Improvement Plan and paid for from the Capital Improvement Fund. Attachments: RESOLUTION R2026-089.docx 71 RESOLUTION R2026-089 RESOLUTION AUTHORIZING CITY TO SUBMIT APPLICATION TO THE METROPOLITAN COUNCIL FOR 2026 REGIONAL SOLICITATION GRANT PROGRAM WHEREAS, the City Council of the City of Shakopee supports the application made for the 10th Avenue Pedestrian Improvement Project to the Metropolitan Council for the 2026 Regional Solicitation Local Pedestrian Facilities — Active Transportation category. WHEREAS, the 10th Avenue Improvement Project is included in the City's adopted Capital Improvement Plan, and WHEREAS, the grant opportunity will help close the funding gap and allow the City to implement necessary multimodal transportation safety improvements. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA AS FOLLOWS: if the City of Shakopee is awarded a grant by the Metropolitan Council, the City of Shakopee agrees to accept the award and may enter into an agreement with the Metropolitan Council for the above referenced project. The City of Shakopee will comply with all applicable laws, requirements and regulations as stated in the grant agreement. Adopted in regular session of the City Council of the City of Shakopee, Minnesota, held this 2nd day of June 2026. Mayor of the City of Shakopee ATTEST: City Clerk Prepared by: City of Shakopee 485 Gorman Street Shakopee, MN 55379 72 SHAKOPEE WILLA! Shakopee City Council 5.k June 2, 2026 Agenda Item: Approve the Speed Limit Setting Policy Prepared by: Alex Jordan, City Engineer Reviewed by: Action to be considered: Approve the Speed Limit Setting Policy. Motion Type: Approve Background: The City of Shakopee is committed to providing a safe and comfortable transportation system for all users, including motorists, pedestrians, and bicyclists. Establishing appropriate speed limits is a key component in supporting safe roadway operations, as operating speed is directly related to both crash risk and crash severity. In 2019, Minnesota Statutes were updated to provide cities with the authority to establish regulatory speed limits on city -owned roadways without requiring a Minnesota Department of Transportation (MnDOT) speed study. This change allows cities to set speed limits based on local safety and engineering considerations, provided that a consistent and well -documented process is followed. In addition, the 11th Edition of the Minnesota Manual on Uniform Traffic Control Devices (MnMUTCD), adopted in October 2025, provides guidance to support cities in establishing a process for setting speed limits on city streets. Prior to this legislative change, speed limits were established either through statutory provisions or through MnDOT speed studies, which considered a range of factors but primarily relied on observed 85th percentile operating speeds (speed at which 85 percent of users were traveling at or below). Many agencies are now adopting a "Safe Systems Approach" to setting speed limits, as it places greater emphasis on factors beyond the observed 85th percentile speed. Therefore, the purpose of this policy is to establish a consistent and uniform process for evaluating and implementing speed limit changes on City -owned roadways. This policy generally applies to collector and arterial streets and is intended to support the use of engineering judgement in conjunction with statutory requirements and current best practices. 73 This policy is not intended to apply to citywide speed limit changes; rather, it establishes a consistent process for evaluating and implementing speed limit changes on city -owned roadways in response to conditions such as: • Roadway reconstruction or restriping projects • Safety improvement projects • Changes in roadway function or land use • Identified operational or safety concerns Modified speed limits implemented under this policy will be posted in accordance with state law, ensuring the public is clearly informed of the speed limit. If approved, engineering speed studies will be completed to evaluate the appropriate speed limits for the following roadways: • Marystown Road between 17th Avenue and Vierling Drive - currently under reconstruction • Eagle Creek Boulevard between CH 17 (Marschall Road) and CH 83 (Canterbury Road) - roadway will be restriped from four to three lanes in early June to improve safety Recommendation: Approve the Speed Limit Setting Policy as requested. Budget Impact: None. If speed limit changes are implemented, the cost of the signage will be included in the specific project budget for the improvements associated with the speed limit changes. Attachments: 260602_Speed Limit Setting Policy.pdf 74 SHAKOPE E PIDliall SPEED LIMIT SETTING POLICY Adopted: June 2, 2026 Amended: POLICY CONTENTS I. PURPOSE AND BACKGROUND 1 II. AUTHORITY 2 III. DOCUMENTATION REQUIREMENTS 2 IV. WHEN APPLICABLE 2 V. PUBLIC NOTIFICATION 3 VI. APPENDIX 4 I. PURPOSE AND BACKGROUND The City of Shakopee is committed to providing a safe and comfortable transportation system for all users, including motorists, pedestrians, and bicyclists. Establishing appropriate speed limits is a key component in supporting safe roadway operations, as operating speed is directly related to both crash risk and crash severity. In 2019, Minnesota Statutes were updated to provide cities with the authority to establish regulatory speed limits on city -owned roadways without requiring a Minnesota Department of Transportation (MnDOT) speed study. This change allows cities to set speed limits based on local safety and engineering considerations, provided that a consistent and well -documented process is followed. In addition, the 11th Edition of the Minnesota Manual on Uniform Traffic Control Devices (MnMUTCD), adopted in October 2025, provides guidance to support cities in establishing a process for setting speed limits on city streets. Prior to this legislative change, speed limits were established either through statutory provisions (see Appendix) or through MnDOT speed studies, which considered a range of factors but primarily relied on observed 85th percentile operating speeds (speed at which 85 percent of users were traveling at or below). Many agencies are now adopting a "Safe Systems Approach" to setting speed limits, as it places greater emphasis on factors beyond the observed 85th percentile speed. Therefore, the purpose of this policy is to establish a consistent and uniform process for evaluating and implementing speed limit changes on City -owned roadways. This policy generally applies to collector and arterial streets and is intended to support the use of engineering judgement in conjunction with statutory requirements and current best practices. 75 II. AUTHORITY The City Engineer is authorized to establish, modify, and document regulatory speed limits on City -owned roadways in accordance with this policy and state and federal requirements. III. DOCUMENTATION REQUIREMENTS Speed limit changes shall be supported by an engineering analysis appropriate to the roadway and/or proposed modification. The analysis should consider relevant factors consistent with Minnesota Statutes §169.14, Subd. 5h and MnMUTCD guidance (Section 2B.21), both provided in the Appendix, as well as national guidance and best practices. The following factors shall be considered, as identified in MnMUTCD Section 2B.21: a) Roadway environment (such as roadside development, number and frequency of driveways and access points, and land use), functional classification, public transit volume and location or frequency of stops, parking practices, and pedestrian and bicycle facilities and activity; b) Roadway characteristics (such as lane widths, shoulder condition, grade, alignment, median type, and sight distance); c) Geographic context (such as an urban district, rural town center, non -urbanized rural area, or suburban area), and multi -modal trip generation; d) Reported crash experience for at least a 12 -month period; e) Speed distribution of free -flowing vehicles including the pace, median (50th - percentile), and 85th -percentile speeds; and f) A review of past speed studies to identify any trends in operating speeds. The final determination of an appropriate speed limit shall be based on engineering judgement, considering the totality of conditions and factors documented in the analysis and consistent with a Safe Systems Approach. IV. WHEN APPLICABLE This policy is not intended to apply to citywide speed limit changes; rather, it establishes a consistent process for evaluating and implementing speed limit changes on city -owned roadways in response to conditions such as: Roadway reconstruction or restriping projects Safety improvement projects Changes in roadway function or land use Identified operational or safety concerns Page 2 of 5 76 V. PUBLIC NOTIFICATION This policy has been adopted following the City's policy adoption process, which included public notification requirements and City Council action. Modified speed limits implemented under this policy will be posted in accordance with state law, ensuring the public is clearly informed of the speed limit. Page 3 of 5 77 VI. APPENDIX • Minnesota Statutes §169.14, Subd. 2 — Statutory Speed Limits • Minnesota Statutes §169.14, Subd. 5h — Speed Limits on City Streets (as established in 2019) • MnMUTCD (Section 2B.21) — Speed Limit Signs and Plaques Page 4 of 5 78 Minnesota Statute §169.14 establishes statutory speed limits and provides the framework for local road authorities to establish and modify speed limits under various conditions, including general statutory limits (Subd. 2), city authority for speed limit changes (Subd. 5h), and additional provisions for specific contexts (see Subd. 5a). Minnesota Statutes §169.14, Subd. 2 - Statutory Speed Limits Subd. 2. Speed limits. (a) Where no special hazard exists the following speeds shall be lawful, but any speeds in excess of such limits shall be prima facie evidence that the speed is not reasonable or prudent and that it is unlawful; except that the speed limit within any municipality shall be a maximum limit and any speed in excess thereof shall be unlawful: (1) 30 miles per hour in an urban district; (2) 65 miles per hour on non -interstate expressways, as defined in section 160.02, subdivision 18b, and non -interstate freeways, as defined in section 160.02, subdivision 19; (3) 55 miles per hour in locations other than those specified in this section; (4) 70 miles per hour on interstate highways outside the limits of any urbanized area with a population ofgreater than 50,000 as defined by order of the commissioner of transportation; (5) 65 miles per hour on interstate highways inside the limits of any urbanized area with a population ofgreater than 50,000 as defined by order of the commissioner of transportation; (6) ten miles per hour in alleys; (7) 25 miles per hour in residential roadways if adopted by the road authority having jurisdiction over the residential roadway; and (8) 35 miles per hour in rural residential district if adopted by the road authority having jurisdiction over the rural residential district Minnesota Statutes §169.14, Subd. 5h — Speed Limits on City Streets (as established in 2019) A city may establish speed limits for city streets under the city's jurisdiction other than the limits provided in subdivision 2 without conducting an engineering and traffic investigation. This subdivision does not apply to town roads, county highways, or trunk highways in the city. A city that establishes speed limits pursuant to this section must implement speed limit changes in a consistent and understandable manner. The city must erect appropriate signs to display the speed limit A city that uses the authority under this subdivision must develop procedures to set speed limits based on the city's safety, engineering, and traffic analysis. At a minimum, the safety, engineering, and traffic analysis must consider national urban speed limit guidance and studies, local traffic crashes, and methods to effectively communicate the change to the public. Page 5 of 5 79 Minnesota MUTCD 11th Edition October 2025 SPEED LIMIT SIGNS AND PLAQUES (Sections 2B.21 -2B.25) Section 2B.21 Speed Limit Sign (R2-1) Support: 01 In general, the maximum speed limits applicable to rural and urban roads are established: A. Statutorily — a maximum speed limit applicable to a particular class of road, such as freeways or city streets, that is established by State law; or B. As speed zones — based on engineering studies. 02 State statutory limits might restrict the maximum speed limit that can be established on a particular road, notwithstanding what an engineering study might indicate. 02.1 Minnesota Statute 169.14 sets forth the processes to establish speed zones and speed limits on all roadways and alleys in the state. 03 Agencies with designated authorities to set speed limits, which include States, and sometimes local jurisdictions, can establish non -statutory speed limits or designate reduced speed zones using an engineering study. Setting appropriate speed limits is especially important to ensure safety for all road users in varying types of contexts, particularly on roadways where adjacent land use suggests that trips could be served by varied modes. These situations include urban and suburban non -freeway arterials or rural arterials that serve as main streets in smaller communities, consistent with the context classifications of urban core, urban, suburban, and rural towns found in "A Policy on Geometric Design of Highways and Streets," 2018 Edition, AASHTO. When setting a speed limit, a range of factors such as land -use context, pedestrian and bicyclist activity, crash history, intersection spacing, driveway density, roadway geometry, roadside conditions, roadway functional classification, traffic volume, and observed speeds can influence the speed limit determined in the engineering study. The engineering study will determine which of the recommended factors will prevail in setting the speed limit. 04 Jurisdictions can use speed limit setting tools and methods such as expert systems and those consistent with the safe system approach as part of the required engineering study for a non -statutory speed limit. As speed limit setting tools vary, jurisdictions need to be aware of their limitations and advantages, possible variation between the tools and the need to explore gaps or weaknesses of tools, and weigh the output accordingly in consideration of setting speed limits. 05 To achieve desired operating speeds, agencies often implement other speed management strategies concurrently with setting speed limits, such as traffic calming measures, geometric design features, speed safety cameras, and increased enforcement. Standard: 06 Speed zones (other than statutory speed limits) shall only be established on the basis of an engineering study that has been performed in accordance with traffic engineering practices. The engineering study shall consider the roadway context. Guidance: 07 Among the factors that should be considered when conducting an engineering study for establishing or reevaluating speed limits within speed zones are the following: A. Roadway environment (such as roadside development, number and frequency of driveways and access points, and land use), functional classification, public transit volume and location or frequency of stops, parking practices, and pedestrian and bicycle facilities and activity; B. Roadway characteristics (such as lane widths, shoulder condition, grade, alignment, median type, and sight distance); C. Geographic context (such as an urban district, rural town center, non -urbanized rural area, or suburban area), and multi -modal trip generation; D. Reported crash experience for at least a 12 -month period; E. Speed distribution of free flowing vehicles including the pace, median (50th -percentile), and 85th - percentile speeds; and E. A review of past speed studies to identify any trends in operating speeds. 08 When the 85th -percentile speed is appreciably greater than the posted speed limit, and the roadway context does not support setting a higher speed limit, the engineering study should consider whether changes to geometric features, enforcement, and/or other speed -reduction countermeasures might improve compliance with the posted speed limit. A similar approach should be used if the results of past speed studies indicate that the 85th -percentile speed has consistently increased. os On urban and suburban arterials, and on rural arterials that serve as main streets through developed areas of communities, the 85th -percentile speed should not be used to set speed limits without consideration of all factors described in Paragraph 7 of this Section. Page 2B-21 80 Minnesota MUTCD 11th Edition October 2025 io On a freeway, expressway, or rural highway (outside urbanized locations or conditions), the speed limit that is posted within a speed zone should be within 5 mph of the 85th -percentile speed of free flowing motor -vehicle traffic under the following conditions: A. All factors described in Paragraph 7 of this Section have been considered and determined to be non - mitigating, and B. The measures described in Paragraph 8 of this Section have been considered to the extent practicable. 11 State and local agencies should conduct engineering studies to reevaluate non -statutory speed limits on segments of their roadways that have undergone significant changes since the last review (such as changes to roadway context, the addition or elimination of parking or driveways, changes in the number of travel lanes, changes in the configuration of bicycle lanes, changes to road geometries, changes in traffic control signal coordination, or significant changes in traffic volumes). 12 Speed studies for signalized intersection approaches should be taken outside the influence area of the traffic control signal, which is generally considered to be approximately 1/2 mile, to avoid obtaining skewed results for the speed distribution. If the signal spacing is less than 1 mile, the speed study should be at approximately the middle of the segment. Standard: 13 The Speed Limit (R2-1) sign (see Figure 2B-3) shall display the limit established by law, ordinance, regulation, or as adopted by the authorized agency based on an engineering study. The speed limits displayed shall be in multiples of 5 mph. 14 Speed Limit (R2-1) signs, indicating speed limits for which posting is required by law, shall be located at the points of change from one speed limit to another. 15 At the downstream end of the section to which a particular speed limit applies, a Speed Limit sign showing the next speed limit shall be installed. is Speed Limit signs indicating the statutory speed limits shall be installed at entrances to the State and, where appropriate, at jurisdictional boundaries in urban areas. Guidance: 17 Additional Speed Limit signs should be installed beyond interchanges and major intersections and at other locations where it is necessary to remind road users of the speed limit that is applicable. Support: 19(m) The "ITE Traffic Control Devices Handbook" contains information on the spacing of speed limit signs. Option: 19 If a jurisdiction has a policy of installing Speed Limit signs in accordance with statutory requirements only on the streets that enter a city, neighborhood, or residential area to indicate the speed limit that is applicable to the entire city, neighborhood, or residential area unless otherwise posted, a CITYWIDE (R2-5aP), NEIGHBORHOOD (R2-5bP), or RESIDENTIAL (R2-5cP) plaque may be mounted above the Speed Limit sign and an UNLESS OTHERWISE POSTED (R2 -5P) plaque may be mounted below the Speed Limit sign (see Figure 2B-3). Option: 19.1 When a speed limit is reduced for a bridge, a BRIDGE (W16-X4P) plaque may be mounted above the Speed Limit (R2-1) sign. Support: 20 Section 2C.40 contains information about the use of speed zone signs to inform road users of a reduced or variable speed zone to provide advance notice to comply with the posted speed limit ahead. Option: 21 If a W3 -5b sign is posted to provide notice of a variable speed zone, an END VARIABLE SPEED LIMIT (R2-13) sign (see Figure 2B-3) may be installed at the downstream end of the zone to provide notice to road users of the termination of the speed zone. Standard: 22 If a W3 -5c sign is posted to provide notice of a truck speed zone, an END TRUCK SPEED LIMIT (R2-14) sign (see Figure 2B-3) shall be installed at the downstream end of the zone to provide notice to road users of the termination of the speed zone. 22.1 A speed limit sign shall not be used to warn road users of an advisory speed for a roadway condition. Guidance: 28 (M) An advisory speed plaque (see Section 2C.59) mounted below a warning sign should be used to warn road users of an advisory speed for a roadway condition. Page 2B-22 81 WI"LAI SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 5.1 June 2, 2026 Adopt a Resolution of Support for Scott County Applications to the 2026 Metropolitan Council Regional Solicitation Program Alex Jordan, City Engineer Action to be considered: Adopt Resolution R2026-088, Supporting Scott County's Applications to the 2026 Metropolitan Council Regional Solicitation Program. Motion Type: Simple Majority Background: The Metropolitan Council Regional Solicitation Program is a competitive federal transportation funding program administered by the Metropolitan Council for the seven - county Twin Cities metropolitan area. Through the solicitation process, federal transportation funds are awarded to projects that improve regional mobility, safety, bicycle and pedestrian connectivity, roadway operations, and freight movement. Projects are evaluated based on criteria including safety, equity, multimodal access, regional significance, and cost effectiveness. Scott County is preparing applications for the 2026 Regional Solicitation Program for the following transportation improvement projects located within or serving the City of Shakopee: • County Highway (CH) 14 Trail from Trunk Highway (TH) 169 to CH 17 • CH 78 Trail from TH 169 to CH 79 • CH 15/CH 78 Roundabout • CH 15/CH 14 Roundabout The proposed trail projects would enhance regional pedestrian and bicycle connectivity and improve multimodal transportation opportunities within the community. The proposed roundabout projects are intended to improve intersection safety, traffic operations, and long-term mobility along key county transportation corridors. As part of the application process, Scott County has requested resolutions of support from local partner agencies. Adoption of the proposed resolution would formally 82 demonstrate the City of Shakopee's support for Scott County's funding applications and acknowledge the local and regional transportation benefits associated with the proposed projects. Recommendation: Adopt R2026-088 Budget Impact: None. Adoption of the resolution does not commit the City to providing financial contributions for the proposed projects at this time. Attachments: Resolution R2026-088.docx 83 RESOLUTION R2026-088 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA SUPPORTING SCOTT COUNTY'S APPLICATIONS TO THE 2026 METROPOLITAN COUNCIL REGOINAL SOLICITATION PROGRAM WHEREAS, Scott County is preparing applications to the Metropolitan Council's 2026 Regional Solicitation Program for transportation improvements within and serving the City of Shakopee; and WHEREAS, the proposed projects are intended to improve multimodal transportation connectivity, safety, traffic operations, and regional mobility within Scott County and the City of Shakopee; and WHEREAS, the City of Shakopee recognizes the regional significance and local benefits associated with these transportation investments; and WHEREAS, the City of Shakopee desires to demonstrate its support for Scott County's applications for federal transportation funding through the Metropolitan Council Regional Solicitation Program for the following projects: • CH 14 Trail from TH 169 to CH 17; • CH 78 Trail from TH 169 to CH 79; • CH 15/CH 78 Roundabout; and • CH 15/CH 14 Roundabout. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA AS FOLLOWS: 1. The City of Shakopee hereby supports Scott County's applications to the 2026 Metropolitan Council Regional Solicitation Program for the projects identified above. 2. The City of Shakopee finds that these projects will enhance transportation safety, improve pedestrian and bicycle connectivity, support economic development, and improve the efficiency and reliability of the regional transportation network. 3. City staff are authorized to provide reasonable coordination and cooperation with Scott County in support of the application process, as appropriate. Adopted in regular session of the City Council of the City of Shakopee, Minnesota, held this 2nd day of June 2026. Matt Lehman, Mayor of the City of Shakopee ATTEST: Richard Parsons, City Clerk Prepared by: City of Shakopee 485 Gorman Street, Shakopee, MN 55379 84 SHAKOPEE Shakopee City Council 5.m June 2, 2026 Agenda Item: Approval of the May 19, 2026, City Council Minutes Prepared by: Rick Parsons Reviewed by: Action to be considered: Approve the May 19, 2026, City Council minutes Motion Type: Simple Majority Background: N/A Recommendation: Approve the May 19, 2026, City Council minutes. Budget Impact: N/A Attachments: City Council Minutes 05-19-2026 85 SHAKOPEE City Council City Hall 485 Gorman Street Shakopee, MN, 55379 Tuesday, May 19, 2026 7:00 p.m. Vision: Shakopee is a place where people want to be! A distinctive river town, with a multitude of business, cultural and recreational opportunities in a safe, welcoming, and attractive environment for residents and visitors. Mission: Our mission is to deliver high quality services essential to maintaining a safe and sustainable community. We commit to doing this cost-effectively, with integrity and transparency. 1) Call to Order 2) Roll Call PRESENT: Mayor Lehman, Council Member Contreras, Council Member Whiting, Council Member DuLaney, and Council Member Lara ABSENT: None. ALSO PRESENT: None. 3) Pledge of Allegiance 4) Approval of Agenda Council Member Whiting made a motion to approve of agenda, second by Council Member DuLaney and the motion passed. 5 - 0 5) Consent Agenda 5.a) Monthly Financial Review - April 2026 1,86 5.b) Monetary Limits on Tort Liability for League of Minnesota Cities Insurance Trust 5.c) Approve the Special Event and Temporary Liquor Licenses for Rhythm on the Rails 2026 5.d) 2026 Annual Roadway Pavement Markings Project 5.e) Walmart Foundation's Spark Good Local Grants Program Application &t Award 5.f) Approve a Utility Facilities Easement and Pond Maintenance Agreements with KWS Seed 5.g) Award Contract for the Shenandoah Drive and Schenian Street Intersection Improvements 5.h) Accept Xcel Energy's Community Benefit Contribution Donation 5.i) Surplus Property 5.j) Award of Bid on Police Department Boiler Replacement 5.k) Approve a Consumption and Display Permit for Angels LLC. dba Taqueria Don Ramon. 5.l) Approve a Gambling Premises Permit for the Shakopee Rotary 5.m) Approval of the May 5, 2026, City Council Minutes 5.n) Approve a Cooperative Agreement Amendment with Shakopee Public Schools for the Safe Routes to School Infrastructure Improvements 5.o) Approve an Agreement with MnDOT for the Safe Routes to School Infrastructure Grant 5.p) Award low bid contract to Building Restoration for Masonry Restoration at Schroeder House - (pulled for separate consideration) 5.q) Approve the Liquor License Renewals for 2026-2027 5.r) Authorize Submittal of a Railroad Crossing Elimination Grant Application - (pulled for separate consideration) 5.$) Scott County Multi -Hazard Mitigation Plan (2026) 5.t) Ordinance O2026-013 amending the Entertainment Overlay Zone to include additional properties. Council Member Whiting made a motion to approve the consent business with the modification of pulling item 5.p and 5.r for separate consideration, second by Council Member Contreras and the motion passed. 5 - 0 6) Public Comment 7) Business removed from consent agenda 5.p) Award low bid contract to Building Restoration for Masonry Restoration at Schroeder House Council Member Whiting made a motion to approve contract with Building Restoration Corporation for $126,314 plus $10,000 contingency and an additional $3,500 to Brick Works Supply for Glengery matching replacement bricks, second by Council Member Contreras and the motion passed. 3 - 2 Nays: Mayor Lehman, Council Member DuLaney 5.r) Authorize Submittal of a Railroad Crossing Elimination Grant Application Council Member DuLaney made a motion to approve Resolution R2026- 082, approving an application to the Federal Railroad Administration for the Railroad Crossing Elimination Program and approving a state funded program for IIJA Discretionary Grant Assistance, and accept a proposal from SRF Consulting, Inc. for preparation of the grant application, second by Council Member Lara. Council Member Whiting made a motion to call the question, second by Council Member DuLaney and the motion failed. 2 - 3 Nays: Mayor Lehman, Council Member Contreras, Council Member Lara The main motion failed 2-3. Nays: Mayor Lehman, Council Member Contreras, Council Member Lara 8) General Business 8.a) Fire Department 2025 Year in Review Informational only. 8.b) Donation for Sauna and Scholarship Fund in Honor of Xavier Gillen Council Member Lara made a motion to approve a donation in the amount of $12,500 from the Gillen family, given in honor of Xavier Gillen, to support operations and improvements at the Shakopee Community Center, second by Council Member Contreras and the motion passed. 5 - 0 9) Workshop 9.a) Long-term financial plan Informational only. 10) Reports 10.a) City Bill List 10.b) News and Announcements 11) Other Business 12) Adjourn to June 2, 2026, at 7:00 pm Council Member Contreras made a motion to adjourn to June 2, 2026, at 7:00 pm, second by Council Member DuLaney and the motion passed. 5 - 0 SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 10.a June 2, 2026 2025 Annual Comprehensive Financial Report, Audit Presentation and Review by Abdo Nate Reinhardt, Finance Director Action to be considered: Accept the 2025 audit and accompanying reports, as presented by the audit staff from Abdo. Motion Type: Informational only Background: Annually the City of Shakopee's financial staff and Abdo's audit staff undertake an extensive audit process of City financial information. The City received an unmodified opinion, which is commonly referred to as a "clean audit opinion." This means that, in the auditor's opinion, the financial statements conform with applicable accounting standards. In addition to formulating an opinion on the City's financial statements, the auditors reviewed the City's internal controls, legal compliance and financial management practices. Those results were included in the special purpose report which is issued under a separate cover. Overall, the information in the 2025 Annual Comprehensive Financial Report continues to show the City is in excellent financial condition and should continue to monitor itself to ensure its continued fiscal good health. The audit results, Annual Comprehensive Financial Report, and accompanying data will be presented and discussed at the June 2, 2026 meeting by Bonnie Schwieger, Partner with Abdo. Recommendation: Accept the 2025 Annual Comprehensive Financial Report as presented. 90 Budget Impact: The 2025 financial report conveys the fiscal condition of the City as of December 31, 2025 and lays the groundwork for understanding the financial resources available to the city when planning for the future. Attachments: 2025 City of Shakopee ACFR- FINAL.pdf 2025 FINAL Executive Governance Summmary.pdf 2025 FINAL Other Required Reports.pdf 2025 FINAL Audit Presentation.pdf 91 Annual COMPREHENSIVE FINANCIAL REPORT For the fiscal year ended December 31, 2025 Ribbon cutting at the newly renovated Sandventure Aquatic Park, June 2025. SHAKOPEE INNOVATING. ENTERTAINING. THRIVING. City of Shakopeel485 485 Gorman St., Shakopee, MN 55379 952-233-9300 I www.ShakopeeMN.gov 92 CITY OF SHAKOPEE, MINNESOTA Scott County ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended December 31, 2025 Department of Finance Nathan Reinhardt, Director of Finance Melissa Schlingman, Accounting Manager 485 Gominan Street Shakopee, MN 55379 93 CITY OF SHAKOPEE ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2025 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 11 SECTION II FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis 16 Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Position 32 Statement of Activities 34 Fund Financial Statements: Balance Sheet — Governmental Funds 36 Reconciliation of the Balance Sheet to the Statement of Net Position — Governmental Funds 37 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 38 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities — Governmental Funds 39 Statement of Net Position — Proprietary Funds 40 Statement of Revenues, Expenses and Changes in Net Position — Proprietary Funds 41 Statement of Cash Flows — Proprietary Funds 42 Statement of Fiduciary Net Position 44 Statement of Changes in Fiduciary Net Position 45 Notes to the Financial Statements 46 94 CITY OF SHAKOPEE ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2025 TABLE OF CONTENTS (CONTINUED) SECTION II (Continued) FINANCIAL SECTION Required Supplementary Information: Schedule of City's Proportionate Share of Net Pension Liability General Employees Retirement Fund 106 Schedule of City's Proportionate Share of Net Pension Liability Public Employees Police and Fire Retirement Fund 107 Schedule of Component Units' Proportionate Share of Net Pension Liability General Employees Retirement Fund 108 Schedule of City Contributions General Employees Retirement Fund 109 Schedule of City Contributions Public Employees Police and Fire Retirement Fund 110 Schedule of Component Unit Contributions General Employees Retirement Fund 111 Schedule of Changes in the City's OPEB Liability and Related Ratios 112 Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual — General Fund 114 Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual — Economic Development Authority Special Revenue Fund 115 Notes to Required Supplementary Information 116 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund 126 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds 128 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 134 Combining Statement of Net Position — Internal Service Funds 140 Combining Statement of Revenues, Expenses and Changes in Net Position — Internal Service Funds 141 Combining Statement of Cash Flows — Internal Service Funds 142 95 CITY OF SHAKOPEE ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2025 TABLE OF CONTENTS (CONTINUED) SECTION III STATISTICAL SECTION Financial Trends: Net Position by Component 1 146 Changes in Net Position 2 148 Fund Balances — Governmental Funds 3 150 Changes in Fund Balances — Governmental Funds 4 152 Revenue Capacity: Tax Capacity and Estimated Actual Value of Taxable Property 5 155 Direct and Overlapping Property Tax Rates 6 156 Principal Taxpayers 7 157 Property Tax Levies and Collections 8 158 Debt Capacity: Ratio of Outstanding Debt by Type 9 159 Ratio of General Bonded Outstanding 10 160 Direct and Overlapping Governmental Activities Debt 11 161 Legal Debt Margin Information 12 162 Demographic and Economic Information: Demographic and Economic Statistics 13 164 Principal Employers 14 165 Operating Information: Full -Time Equivalent City Government Employees by Function/Program 15 166 Operating Indicators by Function/Program 16 168 Capital Asset Statistics by Function/Program 17 170 96 CITY OF SHAKOPEE ELECTED OFFICIALS AND ADMINISTRATION DECEMBER 31, 2025 Elected Officials Matthew Lehman Angelica Contreras Jim DuLaney Jesse Lara Jay Whiting Administration William H. Reynolds Chelsea Petersen Nathan Reinhardt Michael Kerski Jeff Tate Joe Simon Alex Jordan Bill Egan Kelsi McNutt Position Mayor Council Member Council Member Council Member Council Member City Administrator Assistant City Administrator Finance Director Director of Planning & Development Police Chief Fire Chief City Engineer Public Works Director Park and Recreation Director Term Expires December 31, 2026 December 31, 2026 December 31, 2026 December 31, 2028 December 31, 2028 97 CITY OF SHAKOPEE ORGANIZATION CHART DECEMBER 31, 2025 Gtizens City Coun i I Planning Commission/Board of Adjustments and Appeals Shakopee Public Utilities {SPU7 Police Civil Service Commission City Administrator Department of Administrations (Asst city Admin) Communications Department I -R Division IT Division --1 City Clerk i _ Facility Maintenance Division Grant&Special Project Coordinator Finance Department Police Department Fire Department Directs of Planning & Developing -it Engineering Department —I Flaming Division Building Inspection Division JEconomic ll Development Public Works Department Park& Recreation Department Street Maintenance Division HParks Maintenance Division —{ Fleet Division d sanitary Sewer Division Storm Drainage Division 98 SHAKOPEE May 19, 2026 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Shakopee: The Annual Comprehensive Financial Report for the City of Shakopee, Minnesota, for the fiscal year ended December 31, 2025, 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, 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, 2025, 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, 2025. 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 2020 census confirmed that the population had increased to 43,698 and is expected to continue to grow to 53,000 in 2030. 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. 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 INNOVATING. ENTERTAINING. THRIVING. City of Shakopee 1485 Gorman St., Shakopee, MN 55379 I Phone: 952-233-9300 I Fax: 952-233-3801 I www.ShakopeeMN.gov 99 its corporate limits by annexation, which historically has occurred periodically. The city has an executed an orderly annexation agreement with Jackson Township that will allow the city to actively annex certain portions of the township as market forces dictate. 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 plus the Mayor who serve staggered terms of four years. All council positions are non-partisan, part-time and members are elected at large. The city provides typical municipal services such as police and fire protection, street and infrastructure construction, public works maintenance, parks, recreation, planning and zoning. Also provided are utilities such as sewer and stone 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. 2026 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 2026 was $47.8 million. Included in the first quarter 2026 valuation is 83 single-family home building permits. This number is expected to increase as additional phases of existing housing developments come online in 2026. 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 Safety) and division (e.g., Fire). 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. The 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 100 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. An annual budget is adopted for the General Fund and Economic Development Authority funds. 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 detailed five-year capital improvement plan (CIP), 15 year capital improvement schedule, and a long-term financial plan. These documents are the basis for the long-term goal of providing and maintaining a functional public facility program, that provides the residents and businesses with infrastructure and equipment necessary for the on -going growth and development. The capital plans have historically provided details on the infrastructure projects and capital equipment that are funded through property tax levy, franchise taxes, special assessments, utility user -fees and other intergovernmental revenue sources. These projects primarily allow for the upgrade, 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 Development 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. The city also maintains several internal service funds including equipment, park assets, information technology, buildings and self-insurance. 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. These charges are integrated into the individual budgets of the General fund and departments that are benefitted by the activities of the programs. Funds are accumulated over time to ensure adequate funding is available when equipment and facilities are scheduled to be replaced. 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 include ValleyFair, Canterbury Park horse racing track, Mystic Lake Amphitheater, 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. 101 The City's taxable market value is $8.70 billion for taxes payable 2026, which is an increase of $412 million or 5.0 percent from last year. New construction accounted for $238 million of the increase in value. Residential housing makes up 45.8% of the 2026 tax capacity base. For the valuation used to calculate the 2026 property tax statements, the median value home in the City of Shakopee is $361,300 compared to $350,700 in the previous valuation. The following projects are expected to begin construction in the near future or are currently under construction in the City: Business Development • St. Francis Ambulatory Surgery Center — A 43,600 sq. ft. outpatient surgery building, operated by Tria Orthopedics, opened. • Boardwalk Kitchen & Bar opened at 1125 Shenandoah Drive, Shakopee. The 6,000 sq. ft. restaurant includes a trackside dining space on an 18,000 sq. ft. patio along Canterbury Park racetrack, and a 10,000 sq.ft. Hall for concerts or events. • Mystic Lake Amphitheater construction continued through 2025 and is scheduled to open in June 2026. This is Minnesota's largest outdoor constructed music venue with 19,000 capacity. • Leann Chin - opened in an existing building near the intersection of Highway 169 and Mystic Lake Dr. • A 28,700 SF multi -tenant office building at 2941 Winners Cir Dr, near Canterbury Park was completed and includes the headquarters for Danny's Construction and offices for Edward Jones. • Mr. Pig's Smokery and OG Zaza pizza and Discover Strength opened in a new building March 2025 at 2875 Winners Circle Drive. • Shakopee Gravel Pit- 140 -acres owned by Shakopee Gravel, Inc. & M. Hawkins is proposed to have 155 Single-family, 110 attached townhomes, 74 detached townhomes, up to 534 apartments, 174,000 sq. ft. of commercial space and approximately. 24 acres of open space along with a water treatment facility owned and operated by Shakopee Public Utilities. The site is located South of 17th Ave E and West of Mystic Lake Dr. The Hawkins property was purchased by the utility in April 2026. Overall private development is estimated at over $500 million. • Shakopee Public Utilities Substation- At the intersection of Hansen Ave and Maras St. The conditional use permit has been approved. • Southern Valley Alliance- A completed 4,000 sq. ft. office building along Holmes St S and 3rd Ave E. • Legacy Central Senior Apartments, 125 6th Ave. E., and the CDA, 100 5th Ave. E., opened a new complex in 2025 along with new offices for the CDA. • Valvoline Instant Oil Change- Located near the intersection of Highway 18 and Highway 21, an approximate 2,000 sq. ft. building for a 3 bay oil change facility is under construction. • GN Resound — opened its North American headquarters on Dean Lakes Blvd. in a 218,437 sq. ft. building (former Shutterfly). The facility employs more than 600 people and includes manufacturing, marketing, research and development and distribution. 102, • Chick-fil-A purchased the former Best Buy building at 8100 Old Carriage Court and demolished the existing building. They have submitted plans for a new restaurant along with an adjacent Panda Express. Both will be under construction in 2026. • McDonalds submitted preliminary plans for a new restaurant at 8108 Old Carriage Court. They plan on being under construction in 2026 • Good Day Car Wash began construction on a new facility at 8140 Old Carriage Court and plans to open in the summer of 2026. • Discount Tire at 8150 Old Carriage Court has proposed an addition to its building for construction in 2026. • Holiday Station stores, 1605 Windermere Way, opened in 2025. • Valleyfair continued to invest in their amusement park, adding new rides and updated restaurant/food service buildings. • Fremont Industries at 4400 Valley Industrial Drive is proposing to demolish its existing building and construct a two-phase complex to modernize its facilities in Shakopee. • Canterbury Park entered into a Letter of Intent to develop a limited -service hotel on the trackside property adjacent to the Boardwalk. Construction is planned for 2026. • Canterbury Park in cooperation with the City of Shakopee's Economic Development Authority is developing plans for the 28 acres south of the Mystic Lake Amphitheater. Plans include housing, additional entertainment uses, retail, hotels and public uses. An EAW is planned for 2026 with construction starting in 2027. Residential Development • Windermere South 5th & 6th Addition — 158 single family lots, and 43 single family lots, were constructed., north of CSAH 78, west of Zumbro Ave. and east of CR 69/Old Brick Yard Road. • Highview Park- South of 130th Street (CSAH 78) and along Zumbro Avenue, overall 601 lot development is currently under construction, with 295 single family and twin home residential subdivision including the first five phases by D.R. Horton already constructed. • Gateway Townhomes — 42 units, located between Lincoln Street, Vierling Drive W and Taylor Street were approved. • Moraine Addition- Scott County Community Development Agency has begun construction on three new Community Land Trust homes in a 10 -lot single family subdivision. • Palomino Trail - A Pulte Homes single-family residential development west of Windermere Way along 17th Avenue, is under construction with 83 new homes. Located south of Highway 169 and west of Marystown Road. This development includes a city trail along the northside of the project on bluff land owned by the city. • Valley Crest — 175 single family homes on 56 acres, are under construction by M/I Homes, west of Mystic Lake Drive S and north and south of Thrush St. The last lots should be completed in 2026. • Summerland Place. 588 residential units (300 apartments, 104 Villa Lots, 116 single family lots, 68 townhomes) is largely complete with a few remaining lots. • Prairie Pointe, a 40 -unit multifamily complex for those facing homelessness was completed in late 2025. 103 • Richland Court, an eight (8) lot single family residential subdivision off County Road 79, north of CSAH 78, was approved and site work has commenced. • Bluff View — a 247 -lot single family development located west of Palomino Trail, developed by Summergate/D.R. Horton. This development includes the continuation of the public trail extending from the Palomino Trail subdivision along the city bluff land. • Greenview — a 198 lot single family development by Lennar, located south of Highview Park, west of Marystown Road and east of Zumbro Avenue, has received annexation, MUSA, PUD and preliminary plat approval and should break ground in 2026. • Arbor Bluff — approval of the third phase of Lennar development south of Valley View Road occurred, with construction of the first two -phases well under way. This development includes a wood chip trail along a natural stream, and a blacktop trail thru the bluff area of this development. • Countryside 3rd — a 17 lot single family development of Donnay Homes has begun construction — located on Lusitano Street, south of 17th Avenue and east of Marystown Road. • Elliana Estates — construction has begun on this 31 lot single family residential development by One Ten Ten Homes, located along Mystic Lake Drive, north of Valley View Road. Public: • SandVenture in Lions Park was opened including a new building that houses Tommy's Malt Shop, changing rooms and showers, offices and a community space. The existing pool was reconstructed with new amenities including a boardwalk and new liner. • Jackson Commons was completed. This new multi -use park includes a custom-themed playground, mountain bike trails, training course, boardwalk and tails. As part of the park development, a pedestrian tunnel was installed under CSAH 78, allowing all residents in the area to access the new park. • Work began on the designs for the reconstruction of the bank of the Minnesota River that will include riverbank armoring and new public access points, reconstruction of the marina for canoe and kayak access, a sculpture garden, lookouts, new trails and parking. • Construction was completed on Killarney Hills including a new playground and wildflower garden. • Designs for Valley Crest Park were completed and playground equipment purchased with construction to be completed in 2026. • Construction was completed on Marystown Dog Park including both a large and small dog skills park. • A new roundabout was completed at Marystown Road and Hwy 169. It is the first phase of a total of three that will be constructed along Marystown with work to be completed in 2026. • Shakopee opened its Social District that includes downtown and Canterbury, allowing patrons using a special cup to take alcohol from establishments into the public streets. 104 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. City capital and equipment needs are culTently identified and funded in a manner that will not place an undue burden or single year expense fluctuation on the taxpayers. The planned CIP 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. Annually the City develops a 15 -year CIP, which is a schedule of planned projects and funding sources that extend past the more detailed five-year CIP. The document increases transparency, project coordination and financial planning of future projects. The City also prepares a Long- term Financial Plan annually that includes trend analysis and ten-year General Fund projections, which allows for a view on city finances from a wider perspective. These documents are reviewed and discussed with the City Council and included as part of the adopted five-year CIP. Relevant Financial Policies The city's target General Fund balance is to maintain an unassigned level between 35% and 50% 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 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. The finance department manages 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. 105, 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 and taxpayers. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Shakopee for its Annual Comprehensive Financial Report for the fiscal year ended December 31, 2024. This was the 40`h consecutive year that the city has received this award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the Finance Department, Accounting Manager Melissa Schlingman, and the entire city staff. We express appreciation to those staff members who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor and City Councilors for their support in maintaining the highest standards of professionalism in the management of the City of Shakopee's finances. Respectfully submitted, A William H. Reynolds Nathan J. Reinhardt City Administrator Finance Director 106 Executive Director/CEO GD Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Shakopee Minnesota For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2024 107 (THIS PAGE LEFT BLANK INTENTIONALLY) 108 Ab o INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Shakopee, Minnesota Opinions AbdoSolutions.com 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, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the City as of December 31, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of Shakopee Public Utilities Commission, as of December 31, 2025, and the respective changes in financial position, and where applicable, cash flows thereof for the year then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Shakopee Public Utilities Commission is based solely on the report of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. Lighting the path forward 109 In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. 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 16 and the Schedules of Employer's Share of the Net Pension Liability, the Schedules of Employer's Contributions, the Schedule of Changes in the Other Post -Employment Benefit Liability and Related Ratios and the Budgetary Comparison Schedules starting on page 106 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board 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. Supplementary Information Our audit was conducted for the purpose of forming opinion on the financial statements that collectively comprise the City's basic financial statements. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and related directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. AbdoSolutions.com 110 Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 19, 2026, 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Abdo Minneapolis, Minnesota May 19, 2026 AbdoSolutions.com 111 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Governmental Activities Governmental activities increased the City's net position by $17.9 million. Contributing factors to this increase are related to intergovernmental revenues, engineering fee revenues, building permit revenues, increased investment earnings and contributed assets from outside developers. Expenditures increased due to wage adjustments, contracted engineering services, fee revenue, an increase in full time firefighters and attorney costs related to prosecution services. Expenses and Program Revenues — Governmental Activities $20,000,000 $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 $- Public Safety Public works 0 Conservation and Natural Resources 0 E o tn. o o Q Revenues by Source — Governmental Activities Other Revenues 5% Charges for Services 25% Other Taxes 1% Tax Increment 4% Franchise Taxes 2% Operating Grants and Contributions 4% Capital Grants and Contributions 23% Taxes 36% • Program Revenues • Expenses 112, CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Business -Type Activities Business -type activities increased the City's net position by $11 million. The increase in net position was primarily the result from increased investment income and developer contributed capital. Contributions totaled approximately $8.4 million, related to sewer and storm water infrastructure in various developments throughout the city. 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 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Sewer Storm Refuse Revenues by Source — Business -Type Activities Operating Grants and Contributions Other Income 1% 6% Charges for Services 37% Capital Grants and Contributions 56% • Program Revenues • Expenses 113 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 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 28 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, and the Economic Development Authority Special Revenue Funds, and the Capital Improvement and TIF District No. 18 Canterbury Commons 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 nonmajor 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. Budgetary comparison statements have been prepared for the fund to demonstrate compliance with the budget. The basic governmental funds financial statements can be found on pages 36 to 39 of this report. 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 40 to 43 of this report. 114 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 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 pages 44 to 45 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. The complete financial statements can be obtained from Shakopee Public Utility. 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 46 to 103 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. These can be found on pages 106 to 123 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 126 to 142 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 and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $372.0 million at the close of the most recent year. 115, CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 By far the largest portion of the City's net position $302.6 million (81.3 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 Activities Business -Type Activities Total 2025 2024 2025 2024 2025 2024 Current and Other Assets $ 76,024 $ 76,077 $ 27,636 $ 24,825 $ 103,660 $ 100,902 Capital Assets 222,089 210,565 120,700 113,122 342,789 323,687 Total Assets $ 298,113 $ 286,642 $ 148,336 $ 137,947 $ 446,449 $ 424,589 Deferred Outflows of Resources Long -Term Liabilities Outstanding Other Liabilities Total Liabilities Deferred Inflows of Resources 11,818 13,250 137 140 11,955 13,390 $ 58,298 $ 60,792 $ 579 $ 549 $ 58,877 $ 61,341 11,167 13,444 341 957 11,508 14,401 $ 69,465 $ 74,236 $ 920 $ 1,506 $ 70,385 $ 75,742 15,757 18,834 255 299 16,012 19,133 NET POSITION: Net Investment in Capital Assets $ 181,429 $ 163,879 $ 121,183 $ 112,592 $ 302,612 $ 276,471 Restricted 13,650 14,849 - - 13,650 14,849 Unrestricted 29,630 28,094 26,115 23,690 55,745 51,784 Total Net Position $ 224,709 $ 206,822 $ 147,298 $ 136,282 $ 372,007 $ 343,104 An additional portion of the City's net position 13.7 million (3.7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position $55.7 million (15.0 percent) 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. 116, CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 During the current year, the City's net position increased $28.9 million. Capital assets increased by $19.1 million, which included developer contributed assets of $16.0 million. Long-term liabilities decreased by $2.5 million primarily as a result of bond payments of $2.5 million. Deferred inflows of resources decreased by $3.1 million primarily as a result of a decrease in pension deferred inflows of resources. The impacts to the pension plans are related to investment earnings, changes to plan provisions and changes to actuarial assumptions. Changes in Net Position (Expressed in Thousands) Governmental Activities Business -Type Activities Total 2025 2024 2025 2024 2025 2024 REVENUES: Program Revenues: Charges for Services $ 18,207 $ 15,768 $ 6,792 $ 7,489 $ 24,999 $ 23,257 Operating Grants and Contributions 3,049 2,700 123 115 3,172 2,815 Capital Grants and Contributions 16,677 7,994 10,331 6,308 27,008 14,302 General Revenues: Property Taxes 26,705 25,947 - - 26,705 25,947 Franchise Taxes 1,570 1,295 - - 1,570 1,295 Tax Increment 2,835 2,266 - - 2,835 2,266 Other 4,095 3,774 1,138 840 5,233 4,614 Total Revenues 73,138 59,744 18,384 14,752 91,522 74,496 EXPENSES: General Government Public Safety Public Works Culture and Recreation Natural Resources Economic Development Interest on Long -Term Debt Sewer Storm Refuse Total Expenses Increase (Decrease) in Net Position before Transfers 6,633 6,513 - - 6,633 6,513 18,374 19,675 - - 18,374 19,675 17,950 16,177 - - 17,950 16,177 7,413 6,588 - - 7,413 6,588 59 44 - - 59 44 2,858 2,866 - - 2,858 2,866 1,433 1,406 - - 1,433 1,406 - 5,259 5,134 5,259 5,134 - 2,640 2,328 2,640 2,328 - - 1 - 1 54,720 53,269 7,899 7,463 62,619 60,732 18,418 6,475 10,485 7,289 28,903 13,764 Transfers (531) 553 531 (553) - Change in Net Position NET POSITION: January 1 December 31 17,887 7,028 11,016 6,736 28,903 13,764 206,822 199,794 136,282 129,546 343,104 329,340 $ 224,709 $ 206,822 $ 147,298 $ 136,282 $ 372,007 $ 343,104 117 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Governmental Activities Governmental activities increased the City's net position by $17.9 million. Contributing factors to this increase are related to intergovernmental revenues, engineering fee revenues, building permit revenues, increased investment earnings and contributed assets from outside developers. Expenditures increased due to wage adjustments, contracted engineering services, fee revenue, an increase in full time firefighters and attorney costs related to prosecution services. Expenses and Program Revenues — Governmental Activities $20,000,000 $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 $- Public Safety Public works C 5) Conservation and Natural Resources 0 E o tn. o o o Q Revenues by Source — Governmental Activities Other Revenues 5% Charges for Services 25% Other Taxes 1% Tax Increment 4% Franchise Taxes 2% Operating Grants and Contributions 4% Capital Grants and Contributions 23% Taxes 36% • Program Revenues • Expenses 118 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Business -Type Activities Business -type activities increased the City's net position by $11 million. The increase in net position was primarily the result from increased investment income and developer contributed capital. Contributions totaled approximately $8.4 million, related to sewer and storm water infrastructure in various developments throughout the city. 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 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Sewer Storm Refuse Revenues by Source — Business -Type Activities Operating Grants and Contributions Other Income 1% 6% Charges for Services 37% Capital Grants and Contributions 56% • Program Revenues • Expenses 119 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 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 $38,464,694, a decrease of $1,256,038 in comparison with the prior year. Approximately 28.9 percent, $11,114,916, of the total amount constitutes unassigned fund balance, which is available for spending at the City's discretion. Approximately 30.3 percent, $11,654,746, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. Approximately 4.7 percent, $1,824,000, of the total amount constitutes committed fund balance through formal action of the City Council. The remainder of fund balance, $13,871,032, is not available for new spending because it has already been restricted or is non - spendable. Following is a discussion of the major governmental funds: 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 $25,773,508. 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 57.0 percent of total General Fund expenditures or 53.6 percent of the 2026 budgeted expenditures. The City's fund balance policy is to maintain an unassigned fund balance in the General Fund of 35 to 50 percent of budgeted expenditures, as a result a transfer of $2,325,000 was approved to adjust the assigned fund balance accordingly. The transfers went to the Park Development Fund for the riverbank stabilization project and the Buildings Internal Service Fund for future fire station 2 remodeling. The remaining unassigned fund balance exceeding 50% of the subsequent year's expenditure budget will be carried forward its use will be determined during the 2027 budget process. Fund balance of the City's General Fund increased by $2,252,268 during the current year, primarily as a result of revenues exceeding budgeted expectations. Overall General Fund revenues increased $2,880,417 in comparison to last year as a result of taxes, charges for services, intergovernmental revenue and investment income. As mentioned in the previous paragraph, the City did a one time transfer of $2,325,000 to capital project and internal service funds to help offset future expenses of those funds. Overall General Fund expenditures increased by $2,822,742 due to cost of living increases plus market value adjustment related to unions, additional public safety employees and engineering services for developer projects. The largest operational increase of $1,122,984 was in public safety. 120. CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 The Economic Development Authority Fund (EDA) had a fund balance increase after transfers of $936,723. The EDA had transfers totaling $178,051 from TIF District No. 18 Canterbury Commons related to the River City Centre improvements. The Capital Improvement Fund had a fund balance decrease of $2,283,156. In 2025, the City invested $9,747,728 in infrastructure including approximately $5.6 million in pavement reconstruction/bituminous overlay projects, approximately $2.8 million on the Marystown road project and approximately $0.7 million on downtown improvements. The TIF District No. 18 Canterbury Commons fund had a fund balance decrease of $1,574,403. The fund had a transfers to the EDA for River City Centre improvements and the debt funds for TIF debt totaling $1,462,400. In 2025, the City invested approximately $1,324,000 in infrastructure including CSAH 83 expansion, Eagle Creek Boulevard and traffic signal improvements. 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 Sewer Drainage Refuse Beginning of Year $ 7,049 $ 15,834 $ (34) Change During Year 1,036 1,247 91 End of Year $ 8,085 $ 17,081 $ 57 The City has undertaken several new development projects and completed a study in past years to ensure fees charged 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. Revenue from service charges have increased from an increase in the number of customers as well as rate increases. The Refuse fund was created during 2014 with the City's purchase of garbage carts. The negative net position was reduced each year with collection of cart fees from the contracted garbage hauler. The net position became positive in 2025. GENERAL FUND BUDGETARY HIGHLIGHTS Budget amendments totaling an additional $567,900 of revenues and $1,072,900 of expenditures between original and final amended budget were approved during 2025. On the following page are the main components of the amendments. 121 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 • Intergovernmental revenues was increased $80,000 for MnDot Safe Road Zones Grant and $130,000 for the MN DNR shade tree grant program. Additionally charges for services increased $90,000 for the West End AUAR and $267,900 for engineering construction inspection services. • The expenditure budget adjustments of $1,702,900 included increases in expenditures related to the revenue adjustments noted above and capital purchases of modular barriers, inspection vehicle, security cameras, irrigation upgrades and fire extinguisher training and training props. Actual revenues of $43,857,573 were $4,486,373 over budget. The significant variances are noted below: • Licenses and permits came in over budget on account of an influx of development and conservative budgeting. • Intergovernmental revenue came in over budget due to an increase in fire aid, police aid and public safety grants received during the year. • Charges for services came in over budget as a result of an increases in development resulting in increased engineering service fees. Additionally conduit debt fees were received in 2025. • Investment income came in over budget, as a result of an increase in interest earnings and an unrealized gain from the market value of investments. • Taxes came in under budget as a result of tax petitions during the year. Actual expenditures of $40,456,440 were $295,760 under budget. The significant variances are noted below: • General government came in under budget due to not spending all of the unallocated budget which is for special items that arise during the year as well as vacancies in the clerks office during the year. • Public safety came in over budget overall. Police came in over budget due to the additional liability recorded for future compensated absences with the new union contract settlement and pension expenses related to PERA as well as receiving a public safety partnership grant for wellness in police which was not budgeted for and increased training. Fire came in under budget due to unfilled positions during the year with staff turnover. • Public works was under budget as a result of staffing vacancies in the public works, less overtime in engineering. Salt and fuel related to less winter events than anticipated. • Culture and recreation were over budget due to leasing new fitness equipment for the community center. Utility costs came in under budget for the year. 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, 2025, amounts to $342,788,984 (net of accumulated depreciation and accumulated amortization). This investment in capital assets includes land, buildings and systems, improvement, machinery and equipment, park facilities, roads, highways and bridges, lease equipment and software. 122, CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Capital Assets (Net of Depreciation) Expressed in Thousands Governmental Activities Business -Type Activities Total Land ROW Construction in Progress Line Rights Infrastructure Buildings Machinery and Equipment Subscription -Based Information Technology Asset (SBITA) Lease Equipment Total 2025 2024 $ 27,927 1,333 11,356 99,816 60,578 20,073 417 589 2025 2024 $ 26,020 $ 1,333 18,036 92,932 54,170 17,223 379 472 2025 2024 3,797 $ 3,797 $ 31,724 $ 29,817 533 508 1,866 1,841 617 3,481 11,973 21,517 569 594 569 594 113,505 103,058 213,321 195,990 - - 60,578 54,170 1,651 1,684 21,724 18,907 28 445 379 589 472 $ 222,089 $ 210,565 $ 120,700 $ 113,122 $ 342,789 $ 323,687 Major capital assets events during the current year included the following: • Developer contributed assets of streets, sanitary sewer and storm sewer at Arbor Bluff 2nd, Palomino Trail, Highview Park 4th, Bluff View, Elliana Estates, Canterbury Roadways and Colburn Drive Extension. • Construction on Marystown Road/TH169 started at the end of 2025 with construction continuing through 2026. • The City completed the major renovation of Sand Venture, the City owned outdoor sand bottom pool in spring of 2025. • Parks updates including Marystown Dog park, Killarney Hills park, Stan park tennis court, Scenic Heights pickleball courts and trails, Jackson Commons park, Greenview playground, Valley Crest park, Miracle field at Tahpah park, and Windermere Bluff park improvements. • Storm improvements at CSAH 83, Lewis Street and 2nd Avenue, Boiling Springs and Stagecoach road including adding a vaisala weather station during 2025. • SCADA Extensions continue to be worked on in 2025 with completion expected in 2026. • Street reconstruction and mill and overlay projects throughout the city and trail work at Stagecoach Road, McGuire Circle and Sunset Court, Holmes Street and Lewis and 2nd Street along with Valley View Trail. • Fire station 2 remodel started in 2025 with completion expected in 2026 to create and improve living spaces for full time firefighters. • Downtown improvements are being completed in phases with phase one completed and phase 2 substantially completed in 2025. • Vehicle and equipment replacements in police, fire, engineering, inspections, streets, park, sewer and storm. Additional information on the City's capital assets can be found in Note 6 on pages 71 to 73 of this report. 123 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 Long -Term Debt At the end of the current year, the City had total bonded debt outstanding of $40,673,000. The full amount is debt backed by the full faith and credit of the government. Outstanding Debt General Obligation Bonds Expressed in Thousands Bond Payable Lease Liability SBITA Liability Total Governmental Activities Business -Type Activities Total 2025 2024 2025 2024 2025 2024 40,673 43,428 - - 40,673 43,428 475 360 - - 475 360 293 270 21,038 - 21,331 270 $ 41,441 $ 44,058 $ 21,038 $ - $ 62,479 $ 44,058 The City's total outstanding bonded debt decreased by $2,754,600 during the current year. The City retired $2,585,000 in principal and did not issue any additional bonded debt. The lease and SBITA liabilities increased in 2025 due to new leases of equipment and software. Minnesota Statutes limit the amount of general obligation (G.O.) debt a government entity may issue to a net figure of three percent of the taxable market value. The current legal debt margin for the City is $229.4 million, which is significantly in excess of the City's outstanding G.O. debt. The City maintains an "AA+" debt rating from S&P Global Ratings. Additional information on the City's long-term debt can be found in Note 8 on pages 75 to 78 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In December 2025, the unemployment rate in Shakopee was 3.7%, which is an increase of 1.3% from 2.4% from a year ago. This compares favorably to the state's December unemployment rate of 4.3% and the national rate of 4.1%. The City's taxable market value is $8.7 billion for taxes payable 2026, which is an increase of $412 million or 5.0 percent from the previous year. New construction accounted for $238.0 million of the increase in value. The City is currently experiencing the construction and development of several new industrial, commercial 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. The 2026 City property tax levy is increasing by $1,470,430 to $28,214,480. Despite the levy increase the tax rate will see a minimal change as a result of new growth and increasing existing property market value. 124 CITY OF SHAKOPEE MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2025 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. 125, (THIS PAGE LEFT BLANK INTENTIONALLY) 126 BASIC FINANCIAL STATEMENTS 127 CITY OF SHAKOPEE STATEMENT OF NET POSITION December 31, 2025 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Cash and Investments (Including Cash Equivalents) Restricted Cash and Investments Property Tax Receivable Accounts Receivable (Net of Allowance for Uncollectible Accounts) Interest Receivable Due From Other Governments Special Assessments Receivable Lease Receivable Inventories Prepaid Expenses Land Held for Resale Advances from Other Funds (Internal Balances) Capital Assets, Net of Accumulated Depreciation and Amortization (Where Applicable): Land and Land Improvements Right of Way Construction in Progress Line Rights Infrastructure Buildings Machinery and Equipment Subscription -Based Information Technology Asset Lease Equipment (Intangible Right to Use Asset) Total Assets Deferred Outflows of Resources Deferred Outflows of Resources Related to Pensions Deferred Outflows of Resources Related to OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Primary Government Governmental Activities Business -Type Activities $ 67,938,069 $ 23,025,176 173,682 1,266,296 506,174 5,207,231 1,225,135 1,571,840 36,203 495,460 186,502 (2,583,012) 27,927,387 1,332,928 11,356,150 99,815,911 60,577,451 20,072,854 417,186 588,925 298,112,372 10,444,291 1,373,884 11,818,175 238,085 173,255 652,483 961,634 2,750 2,583,012 3,796,803 533,146 616,560 569,273 113,505,261 1,650,864 28,285 148,336,587 81,652 55,272 136,924 Total $ 90,963,245 173,682 1,504,381 679,429 5,859,714 2,186,769 1,571,840 38,953 495,460 186,502 31,724,190 1,866.074 11,972,710 569,273 213,321,172 60,577,451 21,723,718 445,471 588,925 446,448,959 10,525,943 1,429,156 11,955,099 Component Unit Shakopee Public Utility $ 74,124,817 21,839,848 5,666,468 513,654 204,502 3,518,360 4,097,201 209,785 9,148,582 4,718,060 116,338,887 27,340,238 1,303,365 269,023,767 563,064 563,064 $ 309,930,547 $ 148,473,511 $ 458,404,058 $ 269,586,831 The Notes to the Financial Statements are an integral part of this statement. 128 CITY OF SHAKOPEE STATEMENT OF NET POSITION (Continued) December 31, 2025 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Accounts and Contracts Payable Other Current Liabilities Due to Other Governments Salaries and Benefits Payable Deposits Payable Interest Payable Unearned Revenue Customer Advances Bond Principal Payable, Net: Payable Within One Year Payable After One Year Lease Liability Payable Within One Year Payable After One Year SB1TA Liability Payable Within One Year Payable After One Year Compensated Absences Payable: Payable Within One Year Payable After One Year OPEB Liability: Payable Within One Year Payable After One Year Net Pension Liability: Payable After One Year Total Liabilities Deferred Inflows of Resources Regulatory Collections to Cover Future Costs Deferred Inflows of Resources Related to Leases Deferred Inflows of Resources Related to Pensions Deferred Inflows of Resources Related to OPEB Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Net Position Net Investment in Capital Assets Restricted for: Economic Development DARE Public Safety Fund Opioids Settlement Forfeiture Debt Service Component Units Water and Electric Capital Improvements Unrestricted Total Net Position Primary Government Governmental Activities $ 1,850,734 531,807 1,226,762 6,830,017 485,654 241,147 2,690,000 37,983,431 187,906 286,816 190,402 103,082 1,783,995 2,180,439 167,333 2,963,846 9,760,957 69,464,328 1,437,865 13,254,356 1,065,234 15,757,455 85,221,783 181,429,247 4,324,948 2,035 358,164 243,867 58,004 3,653,083 5,009,895 29,629,521 224,708,764 Business -Type Activities $ 154,214 187,413 10,271 10,767 48,513 59,295 6,732 119,236 324,303 920,744 212,033 42,854 254,887 1,175,631 121,183,098 26,114,782 147,297,880 Total $ 2,004,948 719,220 1,226,762 6,830,017 485,654 241,147 2,690,000 37,983,431 187,906 286,816 200,673 113.849 1.832,508 2,239,734 174,065 3,083,082 10,085,260 70,385,072 1,437,865 13,466,389 1,108,088 16,012,342 86,397,414 302,612,345 4,324,948 2,035 358,164 243,867 58,004 3,653,083 5,009,895 55,744,303 372,006,644 Component Unit Shakopee Public Utility 4,944,963 232,241 535,267 1,718,490 1,560,637 308,707 566,452 255,910 884,079 2,180,765 13,187,511 504,566 3,376,560 1,574,119 5,455,245 18,642,756 158,720,708 21,739,848 70,483,519 250,944,075 Total Liabilities, Deferred Inflows of Resources and Net Position $ 309,930,547 $ 148,473,511 $ 458,404,058 $ 269,586,831 The Notes to the Financial Statements are an integral part of this statement. 129 CITY OF SHAKOPEE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2025 Program Revenues Operating Charges for Grants and Functions/Programs Expenses Services Contributions Primary Government: Governmental Activities General Government $ 6,633,088 $ 4,539,106 $ 318,963 Public Safety 18,373,489 6,399,733 1,587,433 Public Works 17,949,661 3,285,297 963,016 Culture and Recreation 7,413,354 3,044,602 29,476 Conservation and Natural Resources 59,457 - 150,000 Economic Development 2,858,371 938,033 Interest on Long -Term Debt 1,432,623 Total Governmental Activities 54,720,043 18,206,771 3,048,888 Business -Type Activities Sewer Storm Drainage Refuse Total Business -Type Activities 5,258,511 5,146,600 2,640,488 1,555,970 - 90,000 7,898,999 122,976 6,792,570 122,976 Total Primary Government $ 62,619,042 $ 24,999,341 $ 3,171,864 Component Unit: Shakopee Public Utility Electric Water Total Component Unit $ 58,108,498 $ 63,086,366 $ 7,956,487 9,469,092 $ 66,064,985 $ 72,555,458 $ General Revenues Property Taxes Lodging Tax Franchise Taxes Tax Increments Unrestricted Investment Earnings Gain on Sale of Asset Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning Net Position - Ending The Notes to the Financial Statements are an integral part of this statement. 130 Program Revenues Capital Grants and Contributions $ 49,313 13,661,239 2,966,237 16,676,789 4,059,438 6,271,276 10,330,714 $ 27,007,503 $ 1,093,048 9,908,161 $ 11,001,209 Net (Expense) Revenues and Changes in Net Position Primary Government Governmental Activities Business -Type Activities $ (1,725,706) $ (10,386,323) (40,109) (1,373,039) 90,543 (1,920,338) (1,432,623) (16,787,595) (16,787,595) 26,705,378 498,100 1,569,830 2,834,625 3,597,285 (530,728) 34,674,490 17,886,895 206,821,869 Total - $ (1,725,706) - (10,386,323) - (40,109) - (1,373,039) - 90,543 - (1,920,338) - (1,432,623) 3,947,527 5,309,734 90,000 9,347,261 9,347,261 1,138,154 530,728 1,668,882 11,016,143 136,281,737 (16,787,595) 3,947,527 5,309,734 90,000 9,347,261 (7,440,334) 26,705,378 498,100 1,569,830 2,834,625 4,735,439 36,343,372 28,903,038 343,103,606 Component Unit Shakopee Public Utility $ - 6,070,916 11,420,766 17,491,682 4,157,547 24,302 4,181,849 21,673,531 229,270, 544 $ 224,708,764 $ 147,297,880 $ 372,006,644 $ 250,944,075 131 CITY OF SHAKOPEE BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2025 ASSETS Cash and Investments Delinquent Taxes Receivable Special Assessments Receivable: Delinquent Deferred Accounts Receivable Interest Receivable Lease Receivable Due from Other Funds Due from Other Governments Advance to Other Funds Inventories Prepaid Items Land Held for Resale Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts Payable Due to Other Funds Deposits Payable Due to Other Governments Salaries and Benefits Payable Advance from Other Funds Unearned Revenue Total Liabilities Deferred Inflows of Resources Unavailable Revenue - Property Taxes Unavailable Revenue - Special Assessments Deferred Inflow of Resources Related to Leases Unavailable Revenue- Intergovernmental Total Deferred Inflows of Resources Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Special Revenue Economic Development General Fund Authority Capital Projects Capital Improvement TIF District No. 18 Canterbury Commons $ 31,670,048 $ 304,306 $ 3,534,444 $ 170,446 3,236 663 24,888 422,583 215,592 348,850 332,891 1.873,715 36,203 245,192 24,459 1,222,990 109,921 18,625 3,739,061 4,252 186,502 2,330 601,319 486,690 37,263 391,517 4,654,214 4,056,806 Other Governmental Funds Total Governmental Funds - $ 10,226,729 $ 45,735,527 320,932 869 22,674 573,261 36,091 53,016 151,319 1,147 173,682 25,667 1,199,468 1,266,296 330,330 1,571,840 501,438 5,157,918 9,669,582 36,203 250,591 186,502 $ 35,341,071 $ 5,613,352 $ 13,764,583 $ 321,801 $ 11,064,237 $ 66,105,044 $ 327,983 $ 71,374 $ 6,796,854 33,163 517,214 7,608 1,226,762 205,914 35,233 9,074,727 147,378 170,446 3,236 25,551 - 296,839 1,141,026 492,836 1,144,262 333,406 1,824,000 550,000 23,066,102 25,773,508 4,252 4,317,460 4,321,712 653,125 $ 286,636 391,517 2,839 $ 473,531 $ 1,812,649 109,921 501,438 6,830,017 177 527,838 1,226,762 7,795,867 3,686,727 11,482,594 241,147 655,964 8,474,020 4,270,356 22,622,445 603,649 2,181,223 2,784,872 564,435 9,759,312 (8,152,219) 10,323,747 (8,152,219) 595,935 595,935 173,682 1,225,135 1,437,865 2,181,223 5,017,905 1,147 338,805 8,650,332 13,532,227 1,824,000 1,345,434 11,654,746 (3,798,967) 11,114,916 6,197,946 38,464,694 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 35,341,071 $ 5,613,352 $ 13,764,583 $ 321,801 $ 11,064,237 $ 66,105,044 The Notes to the Financial Statements are an integral part of this statement. 132 CITY OF SHAKOPEE RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION - GOVERNMENTAL FUNDS December 31, 2025 Total Fund Balances - Governmental Funds $ 38,464,694 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 Less Accumulated Depreciation Lease Equipment Less Accumulated Amortization SBITA Equipment Less Accumulated Amortization 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 Unamortized Bond Premium Lease Liability SBITA Liability Net OPEB Obligation 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 Special Assessments Deferred special assessments receivable are not available to pay for current expenditures and, therefore, are reported as unavailable revenue in the funds. Deferred Special Assessments Governmental funds do not report a liability for accrued interest due and payable. Intergovernmental receivable are not available to pay current -period expenditures and therefore, are unavailable in the funds. Deferred Outflows of Resources and Deferred Inflows of Resources are created as a result of various differences related to pensions and OPEB that are not recognized in the governmental funds. Deferred Inflows of Resources Related to Pensions Deferred Outflows of Resources Related to Pensions Deferred Inflows of Resources Related to OPEB Deferred Outflows of Resources Related to OPEB Internal service funds are used by management to charge the costs of equipment, buildings, park assets and employee benefits to individual funds. A portion of the assets and liabilities of those funds are included in governmental activities in the Statement of Net Position. 318,583,489 (137,744,536) 722,074 (248,136) 132,464 (72,883) (38,895,000) (1,778,431) (398,271) (21,262) (3,131,179) (9,760,957) 173,682 25,667 1,199,468 (485,654) 2,181,223 (13,254,356) 10,444,291 (1,065,234) 1,373,884 58,263,727 Total Net Position - Governmental Activities $ 224,708,764 The Notes to the Financial Statements are an integral part of this statement. 133 CITY OF SHAKOPEE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2025 Special Revenue Capital Projects Economic TIE District Other Total Development Capital No. 18 Governmental Governmental General Fund Authority Improvement Canterbury Funds Funds REVENUES Taxes Tax Increment Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Investment Income Total Revenues EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Conservation and Natural Resources Economic Development Debt Service Principal Interest and Other Charges Capital Outlay Total Expenditures $22,953,317 $ 488,517 $ 2,422,788 $ 2,835,781 $ 28,700,403 - - 2,167,481 667,144 2,834,625 26,770 - 176,762 109,790 313,322 5,424,471 6,325 - 2,741,625 8,172,421 6,493,218 - 4,111,243 903,196 11.507,657 6,931,476 754,929 7,877 7,694,282 349,538 - 294,507 644,045 171,565 176,779 368,181 215,650 932,175 1,507,218 203,421 383,598 (1) 339,839 2.434,075 43,857,573 1,629,971 7,462,572 2,167,480 8,115,409 63,233,005 5,836,131 19,567,909 8,3 32,729 5,693,154 118,780 16,828 890,909 742,871 66,820 128,428 517.274 6.353.405 118,607 19,686,516 976,828 9,309,557 5,693,154 59,457 59,457 524,738 1,334,429 2,657,793 2,776,573 306,618 1,327,344 1,650,790 9,747,728 1,906,045 5,512,587 18,185,697 40,456,440 871,299 9,747,728 2,279,483 11,694,628 65,049,578 Excess of Revenues Over (Under) Expenditures 3,401,133 758,672 (2,285,156) (112,003) (3,579,219) (1,816,573) OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Asset Lease Issued Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year 12,476 273,059 890,600 (2,325,000) (1,148,865) - - 12,476 - - 273,059 178,051 2,000 3,134,349 4.205,000 - (1,462,400) (142,600) (3,930,000) 178,051 2,000 (1,462,400) 2,991,749 560,535 2,252,268 936,723 (2,283,156) (1,574,403) (587,470) (1,256,038) 23,521,240 3,384,989 12,606,903 (6,577,816) 6,785,416 39,720,732 $25,773,508 $ 4,321,712 $ 10,323,747 $ (8,152,219) $ 6,197,946 $ 38,464,694 The Notes to the Financial Statements are an integral part of this statement. 134 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, 2025 Net Change in Fund Balances - Governmental Funds $ (1,256,038) Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Capital Outlays Depreciation Expense Loss on Disposal of Capital Assets Contributed Assets Lease Equipment Amortization Expense on Leases SBITA Equipment Amortization Expense on SBITA Equipment The issuance of long term debt provides current financial resources to governmental funds, while the repayment of principal of long term debt consumes the current financial resources of the governmental funds. Neither transaction, however has any effect on net position. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The amounts below are the effects of these differences in the treatment of long-term debt Principal Payments on Debt Leases Principal Payments on Leases Principal Payments on Subscription Payable Net Adjustment to Interest Payable Amortization of Bond Premium 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 Special Assessments Deferred Intergovernmental 11,789,721 (7,544,157) (264,434) 7,576,099 273,059 (148,735) 46,540 (51,929) 2,585,000 (273,059) 158,166 33,407 48,551 169,616 (206,026) 53,901 1,242,488 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. 72,905 The reduction of some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Pension Expense OPEB Obligations 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.) 1,252,815 (137,321) 2,466,326 Change in Net Position - Governmental Activities $ 17,886,895 The Notes to the Financial Statements are an integral part of this statement. 135 CITY OF SHAKOPEE STATEMENT OF NET POSITION - PROPRIETARY FUNDS December 31, 2025 Business -Type Activities - Enterprise Funds ASSETS Current Assets Cash and Investments, Including Cash Equivalents Accounts Receivable Interest Receivable Special Assessment Receivable: Delinquent Deferred Due from Other Governments Inventories Prepaid Expenses Total Current Assets Sewer Storm Drainage Refuse Total Governmental Activities - Internal Service Funds $ 7.286.765 $ 14,789,841 S 56,273 $ 22,132,879 $ 23,094,839 24,552 213,533 - 238,085 - 52,755 120,059 441 173,255 175,844 - 130 - 130 - 958,979 2,525 - 961,504 - 407,656 244,827 - 652,483 49,313 336 2,414 - 2,750 - - - - - 244,869 8,731,043 15,373,329 56,714 24,161,086 23,564,865 Noncurrent Assets Advances to Other Funds, Noncurrent - 2,583,012 - 2,583,012 - Capital Assets: Land 4,500 3,792,303 - 3,796,803 221,876 Right of Way - 533,146 - 533,146 - Construction in Progress 146,045 470,515 - 616,560 1,276,531 Line Rights 1,368,569 - - 1,368,569 - Infrastmcuue 73,440,348 79,954,891 - 153,395,239 5,974,463 Buildings - - - - 40,816,969 Machinery and Equipment 2.256,248 1,598,669 - 3,854.917 22,988,003 Lease Equipment - - - - 190,408 Subscription -Based Technology Information Assets (SBITA) - 31,821 - 31.821 593,767 Total Cost 77,215,710 86,381,345 - 163,597,055 72,062,097 Less Accumulated Depreciation and Amortization (21,506,948) (21,389,915) - (42,896.863) (31,345,777) Net Capital Assets 55,708,762 64,991,430 - 120,700,192 40,716,320 Total Noncurrent Assets 55,708,762 67,574,442 - 123,283,204 40,716,320 Total Assets 64,439.805 82,947,771 56,714 147.444,290 64,281,185 Deferred Outflows of Resources Deferred Outflows of Resources Related to Pensions Deferred Outflows of Resources Related to OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources LIABILITIES AND NET POSITION Current Liabilities Accounts Payable Due to Other Governments Current Compensated Absences Current Lease Liability Current SBITA Liability Current OPEB Liability Total Current Liabilities Noncurrent Liabilities Advance from Other Funds Compensated Absences Lease Liability SBITA Liability OPEB Liability Net Pension Liability Total Noncurrent Liabilities Total Liabilities Deferred inflows of Resources Deferred Inflows of Resources Related to Pensions Defend Inflows of Resources Related to OPEB 35,055 46,597 27.636 27,636 62,691 74,233 81,652 55,272 136,924 - $ 64,502,496 $ 83,022,004 S 56,714 $ 147,581,214 $ 64,281,185 $ 19,037 $ 135,177 S 156,867 30,546 31,923 16,590 10,271 3,366 3,366 211,193 195,950 39,018 20,277 59,618 139,231 237,867 275,734 449,060 471,684 10,767 59,618 185,072 $ 154,214 $ 38,085 187,413 3,969 48,513 1,783,995 30,028 10,271 177,707 6,732 - 407,143 2,033,784 59,295 10,767 119,236 324,303 513,601 3,091,377 920.744 5,125,161 770,000 2,180,439 46,423 94,515 91,031 121,002 - 212,033 21,427 21,427 - 42,854 Total Deferred Inflows of Resources 112,458 Net Position Net Investment in Capital Assets Unrestricted Total Net Position Total Liabilities, Deferred Inflows of Resources and Net Position 142,429 - 254,887 55,856,028 65,327,070 8,084,950 17,080,821 63,940,978 121,183,098 41,149,739 56,714 25,222,485 18,006,285 82,407,891 56,714 $ 64,502,496 $ 83,022,004 S 56,714 146,405,583 59,156,024 Adjustment to Reflect the Consolidation of Internal Service Fund Activity Related to Enterprise Funds (See Note 2c) 892,297 Total Business -Type Activities Net Position $ 147,297,880 $ 64,281,185 The Notes to the Financial Statements are an integral part of this statement. 136 CITY OF SHAKOPEE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS For the Year Ended December 31, 2025 Business -Type Activities - Enterprise Funds OPERATING REVENUES Charges for Services Rental Charges Other Charges Special Assessments Total Operating Revenues OPERATING EXPENSES Salaries and Benefits Depreciation Professional Services Sewer Disposal Charges Repairs and Maintenance Materials and Supplies Rent Insurance Utilities Total Operating Expenses Operating Income (Loss) N ON OPERATIN G REVENUES (EXPENSES) Investment Income (Loss) Grants and Contributions Interest Expense Gain (Loss) on Sale of Asset Total Nonoperating Revenues (Expenses) Income before Capital Contributions and Transfers Capital Grants and Contribution Capital Contributions from Special Assessments Capital Contributions from Outside Developers Capital Contributions (to)/from Governmental Funds Transfers In Transfers Out Change in Net Position NET POSITION Beginning of Year End of Year Sewer $ 5,143,954 2,646 Storm Drainage Refuse Total $ 1,482,813 70,645 2,512 5,146,600 1,555,970 531,422 632,378 1,100,571 1,236,227 291,436 166,671 3,168,852 - 34,644 501,120 61,078 33,979 33,500 29,900 37,600 7,800 30.181 13,523 5,289,284 2,621,598 (142,684) (1,065,628) Governmental Activities - Internal Service Funds $ 90,000 $ 6,716,767 $ 2,646 5,514,774 70,645 42,307 2,512 - 90,000 6,792,570 5,557,081 90,000 1,163,800 2,336,798 2,531,662 458,107 291,977 3,168,852 - 535,764 102,717 95,057 411,498 63,400 - 45,400 875,211 43,704 - 7,910,882 4,213,065 (1,118,312) 1,344,016 346,497 790,723 934 1,138,154 1,163,210 122,976 - 122,976 (371) - (371) (25,337) 7,000 (46,449) - (39,449) (285,781) 353,497 866,879 934 1,221,310 852,092 210,813 (198,749) 90,934 102,998 2,196,108 100,000 - 100,000 49,313 142,848 - - 142,848 3,916,590 6,171,276 - 10,087,866 557,920 372,808 - 930,728 147,608 - - - - 475,000 (200,000) (200,000) - (400,000) (350,000) 4,628,171 6,245,335 90,934 10,964,440 2,518,029 59,312,807 76,162,556 (34,220) 135,441,143 56,637,995 $ 63,940,978 $ 82,407,891 $ 56,714 $ 146,405,583 $ 59,156,024 Adjustment to Reflect the Consolidation of Internal Service Fund Activity Related to Enterprise Funds (See Note 2d) 51,703 Governmental Activities Contribution Revenue Reported Above Transfers In of Capital Assets from Governmental Activities (930,728) 930,728 Change in Net Position - Business -Type Activities $ 11,016,143 The Notes to the Financial Statements are an integral part of this statement. 137 CITY OF SHAKOPEE STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended December 31, 2025 Business -Type Activities - Enterprise Funds CASH FLOWS - OPERATING ACTIVITIES Receipts from Customers and Users Receipts from Interfund Services Payments to Suppliers Payments to Employees Net Cash Flows - Operating Activities CASH FLOWS - NONCAPITAL FINANCING ACTIVITIES Payment Received (Paid) on Interfund Loan Grants for Operating Purposes Receipts from Interfund Services Payments for Interfund Services Interest Paid on Interfund Loan Transfer from Other Funds Transfer to Other Funds Net Cash Flows - Noncapital Financing Activities CASH FLOWS - CAPITAL AND RELATED FINANCING ACTIVITIES Trunk Charges Capital Related Special Assessments Capital Grant Principal paid on Leases and SBTTA Proceeds from Disposal of Capital Assets Acquisition of Capital Assets Net Cash Flows - Capital and Related Financing Activities CASH FLOWS - INVESTING ACTIVITIES Interest Received (Loss) Net Cash Flows - Investing Activities Net Change in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS Beginning of Year End of Year Sewer Storm Drainage Refuse Governmental Activities - Internal Total Service Funds $ 5,175,235 $ 1,190,753 $ 90,000 $ 6,455,988 $ 5,546,270 - - - 355,349 (3,797,069) (724,612) - (4,521,681) (1,756,575) (513,717) (681,694) - (1,195,411) 864,449 (215,553) 90,000 738,896 4,145,044 33,984 237,615 122,976 (371) (200,000) (200,000) (33,984) 237,615 (110,000) 122,976 33,984 (33,984) (371) (11,000) 475,000 (400,000) (350,000) (166,016) 160,220 (33,984) (39,780) 4,000 384,752 1,237,987 142,848 - 100,000 (10,783) 7,000 98,000 (446,919) (688,861) 87,681 736,343 335,258 765,359 1,622,739 142,848 100,000 49,313 (10,783) (211,647) 105,000 100,830 (1,135,780) (3,144,818) 824,024 (3,206,322) 257 1,100,874 1,132,802 335,258 765,359 257 1,100,874 1,132,802 1,121,372 1,446,369 56,273 2,624,014 2,075,524 6,165,393 13,343,472 - 19,508,865 21,019,315 $ 7,286,765 $ 14,789,841 $ 56,273 $ 22,132,879 $ 23,094,839 The Notes to the Financial Statements are an inteD-al part of this statement. 138 CITY OF SHAKOPEE STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2025 Business -Type Activities - Enterprise Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS - OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows - Operating Activities: Depreciation/Amortization Expense Pension Expense Changes in: Accounts Receivable Due from Other Governments Special Assessments Due to Other Governments Accounts and Contracts Payable Inventory Prepaid Expenses Compensated Absences Payable Net OPEB Obligation Total Adjustments Net Cash Flows - Operating Activities NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Contributions of Capital Assets from Developers Transfer of Capital Assets Acquisition of Capital Assets on Account Issuance of SBITA Right -to -use Assets Issuance of SBITA Liability Sewer Governmental Activities - Storm Internal Drainage Refuse Total Service Funds $ (142,684) $ (1,065,628) $ 90,000 $ (1,118,312) $ 1,344,016 1,100,571 1,236,227 (12,961) (60,258) (21,253) (211,454) (42,083) (153,507) 91,971 (256) (119,514) (104) (20,240) 28,270 (24) 215 28,851 9,127 1,815 1,815 1,007,133 850,075 2,336,798 2,531,662 (73,219) (232,707) 38,502 (195,590) (49,313) 91,715 (119,618) 3,711 8,030 (81,775) 191 - 2,892 37,978 355,349 3,630 - 1,857,208 2,801,028 $ 864,449 $ (215,553) $ 90,000 $ 738,896 $ 4,145,044 $ 3,531,838 $ 4,933,289 $ 557,920 372,808 (147,266) (356,678) 31,821 (31,821) $ 8,465,127 $ 930,728 147,608 (503,944) (782,092) 31,821 228,631 (31,821) (228,631) The Notes to the Financial Statements are an integral part of this statement. 139 CITY OF SHAKOPEE STATEMENT OF FIDUCIARY NET POSITION December 31, 2025 Custodial Fund Southwest Metro Drug Task Force ASSETS Cash and Investments $ 31,091 NET POSITION Restricted for Task Force $ 31,091 The Notes to the Financial Statements are an integral part of this statement. 140 CITY OF SHAKOPEE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION For the Year Ended December 31, 2025 Custodial Fund Southwest Metro Drug Task Force Additions Forfeitures Total Additions $ 31,091 31,091 Net Increase (Decrease) in Fiduciary Net Position 31,091 NET POSITION Net Position, January 1 Net Position, December 31 $ 31,091 The Notes to the Financial Statements are an integral part of this statement. 141 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 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. The City 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 485 Gorman St., Shakopee, Minnesota 55379. 142 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 57 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 2025, the City paid $476,590 to LOGIS for services provided which is included in expenditures of the General Fund and Information and Technology Internal Service Fund. Financial statements are available by contacting LOGIS, 5750 Duluth Street, Golden Valley, Minnesota 55422. NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 143 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government -Wide and Fund Financial Statements (Continued) 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 South West Metro Task Force 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 Custodial Funds report using the economic resources measurement focus and the accrual basis of accounting. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 144 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) 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. It also accounts for the River City Centre tenants. Taxes, grants lease revenue and contributions are the dedicated funding sources. Capital Improvement Capital Project Fund — This Fund accounts for the capital projects of the City not accounted for in separate capital funds. TIF District No. 18 Canterbury Commons Capital Project Fund — This Fund accounts for tax increment financing district number 18- Canterbury Commons 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. Internal Service Funds: Equipment Fund — This Fund accounts for the City's funds accumulated for the 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. 145, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Description of Funds: (Continued) Internal Service Funds: (Continued) 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 Fund: Southwest Metro Drug Task Force Custodial 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. 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. 146, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position 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. The City and Component Unit'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 valued using matrix pricing model; Level 3 inputs are significant unobservable inputs. Minnesota Statutes authorizes the City and Component Unit 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. 147 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 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 30 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. 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 the Emergency Repairs Account and the asset and related amortization relating to the Electric Plant Acquisition. 148 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 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 are classified as restricted. The Component Unit Electric Fund has monies restricted for customer deposits and debt service. The Component Unit 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 equipment and vehicles of more than $25,000 and an estimated useful life in excess of three years. Capital assets related to projects are capitalized if more than $50,000 and a useful life in excess of three years. Capital assets for the component unit are defined as assets with an initial, individual cost of more than $3,000 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. Intangible right to use assets are recorded at the value of the lease liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs. 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. Property, plant and equipment of the City are depreciated using the straight-line method over the following estimated useful lives. Intangible right to use assets are depreciated over the life of the lease. 149 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 6. Capital Assets (Continued) Assets Years Buildings Park Buildings Building Improvements Machinery and Equipment Electrical Utility Distribution System Water Utility Distribution System Utility General Equipment Infrastructure Fire Trucks Lease Equipment Subscription -Based Information Technology Asset 7. Deferred Outflows/Inflows of Resources 50 30 25 4-20 10-40 20-75 4-40 30-75 10-25 shorter of useful life or lease term shorter of useful life or subscription term 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 assets 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 two items that qualify for reporting in this category. The City presents deferred outflows of resources on the Statement of Net Position for the deferred charge related to pensions and other postemployment benefit resources. The Commission has one item that qualifies related to pensions. Accordingly, the items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year pension contributions and OPEB contributions made subsequent to the measurement dates. 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 assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The governmental funds report unavailable revenues from three sources: property taxes, special assessments, and intergovernmental revenue. The City recognizes a deferred lease receivable under both the modified accrual and full accrual basis. Resources received in advance is reported in both the governmental fund financial statements and within the government -wide financial statements. This item are reported for amounts that have been received before time requirements are met, but after all other eligibility requirements have been met. The Commission presents deferred inflows of resources related to pensions, leases receivable and regulatory collections. 150. CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE l - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 7. Deferred Outflows/Inflows of Resources (Continued) The City presents deferred inflows of resources on the Statements of Net Position for deferred inflows of resources related to pensions and other postemployment benefit resources. 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. S. 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. The liability for compensated absences reported in the government -wide and proprietary fund statements consists of unpaid, accumulated annual vacation, sick and compensatory balances. The liability has been calculated using the vesting method, in which leave amounts for employees eligible to receive termination payments and used sick leave during the year are included and an additional liability for nonvested leave that the employer considers more likely than not that the nonvested leave will be used. The current portion of this liability is based on an estimate of the cost during the upcoming year. Under the City's personnel policy and union contracts, City employees are granted vacation and sick in varying amounts based on their length of service. Certain employees are also granted compensatory time. Vacation accruals for full-time employees vary from 10-30 days per year based on years of service. Sick leave accrual is 12 days per year. The City compensates employees who leave municipal service in varying amounts based on their length of service. 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. 151 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 10. Leases The City determines if an arrangement is a lease at inception. Lessee leases are included in Right -to -use lease assets (lease assets) and lease liabilities in the statement of net position. Lessor leases are included in lease receivables and deferred inflow of resources in the statement of net position and fund financial statements. Lease receivables represent the City's claim to receive lease payments over the lease term, as specified in the contract, in an exchange or exchange -like transaction. Lease receivables are recognized at commencement date based on the present value of expected lease payments over the lease term, reduced by any provision for estimated uncollectible amounts. Interest revenue is recognized ratably over the contract term. Deferred inflows of resources related to leases are recognized at the commencement date based on the initial measurement of the lease receivable, plus any payments received from the lessee at or before the commencement of the lease term that relate to future periods, less any lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term. The deferred inflows related to leases are recognized as lease revenue in a systematic and rational manner over the lease term. Lease assets represent the City's control of the right to use an underlying asset for the lease term, as specified in the contract, in an exchange or exchange -like transaction. Lease assets are recognized at the commencement date based on the initial measurement of the lease liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs. Leased assets are defined by the City, excluding the component unit, as assets with an initial, individual cost of more than $25,000 and terms greater than one year for leases starting after 1/1/2025. Lease assets are amortized in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset. Lease liabilities represent the City's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the commencement date based on the net present value of expected lease payments over the lease term, less any lease incentives. Interest expense is recognized ratably over the contract term. The City has elected to recognize payments received for short-term leases with a lease term of 12 months or less as revenue as the payments are received. These leases are not included as lease receivables or deferred inflows on the statements of net position and fund financial statements. The individual lease contracts do not provide information about the discount rate implicit in the lease. Therefore, the Entity has elected to use their incremental borrowing rate to calculate the present value of expected lease payments. 152 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 11. Subscription Based Information Technology Arrangements (SBITA) The City determines if an arrangement is a SBITA at inception. SBITA's are included in Right -to -use subscription assets (SBITA assets) and SBITA liabilities in the statement of net position. SBITA assets represent the City's control of the right to use an underlying asset for the subscription term, as specified in the contract, in an exchange or exchange -like transaction. SBITA assets are recognized at the commencement date based on the initial measurement of the subscription liability, plus any payments made at, or before, the commencement of the subscription term and certain direct costs. SBITA assets are defined by the City, excluding the component unit, as assets with an initial, individual cost of more than $25,000 and terms greater than one year for SBITA assets beginning after 1/1/2025. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying asset. SBITA liabilities represent the City's obligation to make lease payments arising from the subscription. SBITA liabilities are recognized at the commencement date based on the net present value of expected subscription payments over the subscription term, less any subscription incentives. Interest expense is recognized ratably over the contract term. The individual subscription contracts do not provide information about the discount rate implicit in the subscription. Therefore, the City has elected to use their incremental borrowing rate to calculate the present value of expected subscription payments. 12. 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 additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The General fund is typically used to liquidate governmental pension liability. 13. Other Postemployment Benefits Under Minnesota statute 471.61, subdivision 2b, public employers must allow retirees and their dependents to continue coverage indefinitely in an employer -sponsored health care plan, under the following conditions: 1) Retirees must be receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in a group plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees are able to add dependent coverage during open enrollment period or qualifying life event prior to retirement. All premiums are funded on a pay-as-you-go basis. The liability was determined, in accordance with GASB Statement No. 75, at December 31, 2023. The General fund is typically used to liquidate governmental other postemployment benefits payable. The City has no assets accumulated in a trust that meets the criteria in GASB 75. 153 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 14. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources in the government -wide financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization, 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. 15. 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. 154 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position (Continued) 16. Fund Balance 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 orb) 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 or by City Council expressing its intent. 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 35% (minimum) and 50% of the ensuing year's budgeted expenditures. This level is to provide working capital for cash flow, expected decline in revenues and unforeseen expenditures such as natural disasters. Replenishing fund balance when it falls below the target level shall be accomplished by interfund transfers or budgeting for expenditures and other uses to be less than revenues or other sources over a period not to exceed three years. Annually the City Council will decide what to do with the General Fund unassigned fund balance that exceeds 50% of the ensuing year's expenditure budget. Any excess fund balance transfers will not be used as a funding source for ongoing recurring expenditures. 155, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 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 $ 59,156,024 Less Portion Loss Related to Business -Type Activities (892,297) Net Adjustment to Increase Fund Balance- Total Governmental Funds to Arrive at Net Position- Governmental Activities $ 58,263,727 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 $ 2,518,029 Less the Net of Indirect Revenues and Expense (51,703) Net Adjustment to Decrease Net Change in Fund Balances - Total Government Funds to Arrive at Changes in Net position of Government Activities $ 2,466,326 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 Year $ 892,297 156, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) D. Explanation of Certain Differences between the Proprietary Fund Statements of Revenues, Expenses, and Changes in 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 Activities NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annually appropriated budgets are adopted for the General Fund and EDA. 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. $ 51,703 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 and EDA. 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 in December by the City Council. Budgeted expenditure appropriations lapse at year-end. 157 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED) B. Deficit Net Position and Fund Balance The TIF District No. 18 Canterbury Commons capital project fund had a negative fund balance of $8,152,219 on December 31, 2025 as a result of construction on River City Centre and roads in the Canterbury district. Future tax increment revenues are anticipated to eliminate this deficit. The TIF District No. 19 Riverfront capital project fund had a negative fund balance of $1,543,117 on December 31, 2025 as a result of public infrastructure costs. Future tax increment revenues are anticipated to eliminate this deficit. The TIF District No. 20 Enclave capital project fund had a negative fund balance of $2,144,580 on December 31, 2025 as a result of lot improvements at the former city hall site. Future tax increment revenue is anticipated to eliminate this deficit. The Former Gravel Pit capital project fund had a negative fund balance of $111,270 on December 31, 2025 as a result of TIF district in planning phase. Future tax increment revenue is anticipated to eliminate this deficit. The Employee Benefits internal service fund had a negative net position of $1,176,777 on December 31, 2025. This deficit has been in place for many years and is not expected to be resolved. Management's position is that the cash balance should be sufficient enough to cover the current compensated absences and not necessarily the noncurrent portion of compensated absences. NOTE 4 — DEPOSITS AND INVESTMENTS A. Deposits In accordance with applicable Minnesota Statutes, the City and the Component Unit maintains deposits at depository banks authorized by the City Council and the Commissioners. Custodial Credit Risk: 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 Statutes 118.03 for an amount exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage. As of December 31, 2025, the City and Commission's bank balances were not exposed to custodial credit risk because they were insured through Federal Deposit Insurance Corporation (FDIC), National Credit Union Association (NCUA) and properly collateralized with securities held by the pledging financial institutions' trust departments or agents in the City's name. 158 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED) A. Deposits (Continued) As of December 31, 2025, the City had the following deposits: City Deposits Component Unit Deposits $ 3,402,808 20,939,711 Total Deposits $ 24,342,519 B. Investments As of December 31, 2025, the City held the following investments: Pooled Investments: Certificate of Deposit Money Market Fund Agencies FFCB FAMC FHLB FHLMC FNMA Agencies- Mortgage Backed FHLMC FNMA SBA Municipal Bond US Treasury Notes Total Investments Value $ 19,265,785 3,823,078 8,344,176 609,558 12,078,538 1,904,184 3,246,386 317,991 3,950,527 244,495 21,272,351 12,532,919 Years to Maturity Less than One Year $ 5,907,565 3,823,078 594,954 4,667,899 2,044 3,042,026 4,645,415 1-5 Years $ 13,358,220 4,376,880 609,558 4,592,222 998,080 3,246,386 182,717 583,288 244,495 12,425,703 7,095,504 Moody's 5-10 Years 10-15 Years Concentration Rating 3,372,342 2,818,417 906,104 133,230 3,268,821 5,804,622 792,000 98,418 $ 87,589,988 $ 22,682,981 $ 47,713,053 $ 17,095,536 $ 98,418 As of December 31, 2025, the component units had the following investments: Pooled Investments: 4M Fund 4M Plus Fund Money Market Fund Municipal Bonds Commercial Paper US Treasuries US Agencies Total Investments Years to Maturity Less than Value One Year 1-5 Years $ 2,720,292 $ 2,720292 $ 9,378,888 9,378,888 378,213 378,213 - 976,071 150,731 825,340 4,450,795 4,450,795 - 51,484,501 18,130,459 33,354,042 5,634,194 837,666 4,689,087 21.99% NR 4.36% NR 9.53% AAA 0.70% AAA 13.79% AAA 2.17% AAA 3.71% AAA 0.36% AAA 4.51% AAA 0.28% AAA 24.29% AAA-AA3 14.31% NR Moody's 5-10 Years 10-15 Years Concentration Rating $ $ 107,441 $ 75,022,954 $ 36,047,044 9 38,868,469 $ 107,441 $ 3.64% NR 12.50% NR 0.50% NR 1.30% AA 5.93% N/A 68.62% N/A 7.51% AAA 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. 159 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) 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, 2025, 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. 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. 160. CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) 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 (excluding securities backed by the U.S. government). • 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 30% of the aggregate investment portfolio, at the time of investment. • 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, 2025 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, 2025. 161 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) The City has the following recurring fair value measurements as of December 31, 2025: Fair Value Measurement Using Value Level 1 Level 2 Level 3 Investments at Fair Value: Certificate of Deposit $ 19,265,785 $ - $ 19,265,785 $ Agencies FFCB 8,344,176 - 8,344,176 FAMC 609,558 - 609,558 FHLB 12,078,538 - 12,078,538 FHLMC 2,222,175 - 2,222,175 FNMA 7,196,913 - 7,196,913 SBA 244,495 - 244,495 Municipal Bond 21,272,351 - 21,272,351 US Treasury Notes 12,532,919 12,532,919 Total/Subtotal 83,766,910 $ 12,532,919 $ 71,233,991 $ Investments at Amortized Cost: Money Market Fund 3,823,078 Total $ 87,589,988 The Commission has the following recurring fair value measurements as of December 31, 2025: Fair Value Measurement Using Value Level 1 Investments at Fair Value: Agencies $ 5,634,194 $ Municipal Bond 976,071 US Treasury Notes 51,484,501 51,484,501 Level 2 Level 3 $ 5,634,194 $ - 976,071 - Total/Subtotal 58,094,766 $ 51,484,501 $ 6,610,265 $ Investments at Amortized Cost: 4M 2,720,292 4M Plus 9,378,888 Commercial Paper 4,450,795 Money Market Fund 378,213 Total $ 75,022,954 162 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED) B. Investments (Continued) 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. The following is a summary of total deposits and investments as of December 31, 2025: City Deposits Component Unit Deposits City Investments Component Unit Investments City Petty Cash Component Unit Petty Cash $ 3,402,808 20,939,711 87,589,988 75,022,954 1,540 2,000 Total Deposits and Investments $ 186,959,001 Deposits and investments are presented in the December 31, 2025 basic financial statements as follows: Primary Fiduciary Component Government Funds Unit Total Statement of Net Position: Cash and Investments Restricted Cash and Investments $ 90,963,245 $ 31,091 $ 74,124,817 $ 165,119,153 21,839,848 21,839,848 Total $ 90,963,245 $ 31,091 $ 95,964,665 $ 186,959,001 NOTE 5 — RECEIVABLES/UNAVAILABLE REVENUE A. Taxes, Assessments, Notes Receivable, Intergovernmental Revenue 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: General Fund Economic Development Authority Capital Improvement Nonmajor Funds Total Delinquent Delinquent Deferred Property Special Special Intergovernmental Taxes Assessments Assessments Revenue Total $ 170,446 $ 3,236 663 24,888 $ - $ 195,997 2,330 601,319 22,674 573,261 3,236 2,181,223 2,784,872 595,935 $ 173,682 $ 25,667 $ 1,199,468 $ 2,181,223 $ 3,580,040 163 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 5 - RECEIVABLES/UNAVAILABLE REVENUE (CONTINUED) B. Lease Receivable As of December 31, 2025 the City had the following lease receivable: Description Shakopee Cell Towers Ice Arena Dryland Room River City Centre Sand Venture Current Year Other Issue Discount Inflow of Payments Balance at Date Rate Resources Received Year End 01/01/22 04/01/22 08/01/22 10/01/24 1.80% 1.30% 0.44%-1.80% 4.08% $ 13,421 $ 25,688 395,252 5,436 $ 22.5,978 32,668 1,222,990 90,204 $ 1,571,840 Under the Shakopee cell tower lease, the vendor pays the city $962 per month for 2 months for operating cell tower leases in the City of Shakopee. Each February lease payments increase 4% until the final payment on January 2040. Each term is 5 years and if cancelled must be cancelled prior to the start of the term. Under the Shakopee Ice Arena Dryland Room lease, the orthopedic vendor pays the city $2,000 per month for twelve months in exchange for operating its business within a 6,100 square foot space in the dryland room of the Ice Arena building. The monthly rent increases 2.5% per year for an additional four years. The lessee makes an additional variable payment equal to 5 percent of gross sales of all unlicensed athletic training services not to exceed $6,000. Under the Ice Arena Skate School lease, the vendor pays the City $1,160 per month for twelve months in exchange for use of 3 rooms within the Ice Arena building. The monthly rent increases 2.5% per year until the lease ends on January 1, 2026. The lessee makes an additional variable payment equal to hourly ice time based on enrollment ranging from $200 per hour up to $225 per hour. Additionally variable payments ranging from $5,500 to $14,000 per month are received based on enrollment for the use of ice. Under the SandVenture lease, the retail vendor operates its business within a 3,333 square foot unit. The city is paid 6% of gross receipts with a minimum payment of $40,000 paid annually and a maximum of $60,000. Minimum and maximums increase yearly by CPI. Rent payments are not due until the lease hold improvements of $100,000 have been paid back with due rent. The lease ends September 2029. The River City Centre leases were purchased by the EDA as of August 2022. All current tenants became tenants of the city at that time. There are a total of 13 units in the space. Rent is paid by all tenants to operate their business within their designated unit of the River City Centre building. The space is the retail/commercial space on the first floors of building A and B of River City Centre. 164 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 5 - RECEIVABLES/UNAVAILABLE REVENUE (CONTINUED) B. Lease Receivable (Continued) Under the River City Center Building lease: * The mortgage vendor operates its business within a 1,855 square foot unit. The payment terms vary over the life of the lease. The city is paid nothing for the first four months increased to $1,314 per month for six months while the tenant is getting set up. After the introductory rate, the city is then paid $2,630 per month for twelve months increasing 3% every twelve months for 36 additional months. The lease ends May 2027. * The insurance vendor operates its business within a 1,883 square foot unit. The payment terms vary over the life of the lease. The city is paid $2,197 per month for five months while the tenant is getting set up. After the introductory rate, the city is then paid $2,275 per month for twelve months increasing 3% every twelve months for 60 additional months. The lease ends December 2028. * The retail space vendor operates its business within a 2,170 square foot unit. The payment terms vary over the life of the lease. The city is paid nothing for the first three months increased to $3,255 per month for 12 months. Rent is increased 50 cents per square feet every 12 months after the initial 12 month period for 48 additional months. The lease ends April 2030. * The retail vendor operates its business within a 1,993 square foot unit. The payment terms vary over the life of the lease. The city is paid $3,322 per month for twelve months increasing 2.5%, 2.44%, 2.38% and 2.33% every twelve months for 48 additional months. The lease ends August 2028. * The restaurant vendor operates its business within a 1,608 square foot unit. The city is paid $2,948 per month for the first four months. Every December rent is increased 2-3% based on the lease terms for the remaining 108 months. The lease ends November 2031. * The retail vendor operates its business within a 1,732 square foot unit. The city is paid nothing for the first three months while the tenant is getting set up. Rent is then $2,454 per month for eight months. Each July rent is increased 3% per month for 36 months. There is one last 3% increase to finish out the remaining 16 months of the lease. The lease ends October 2027. * The hospitality vendor operates its business within a 1,470 square foot unit. The city is paid $1,600 per month for 12 months. Rent is then increased to $1,650 for the next 24 months and $1,715 for the following 24 months. The lease ends April 2028. * The medical vendor operates its business within a 1,470 square foot unit. The city is paid $2,328 per month for 24 months. Rent is then increased to $2,389 for the next 24 months and $2,450 for the final 12 months. The lease ends June 2028. * The service industry vendor operates its business within a 1,290 square foot unit. The city is paid $2,150 per month for 12 months. Rent is then increased 2.5% per year for a total of 5 years. The lease ends February 2029. 165, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 5 - RECEIVABLES/UNAVAILABLE REVENUE (CONTINUED) B. Lease Receivable (Continued) * The health care vendor operates its business within a 4,427 square foot unit. The city is paid $7,009 per month for twelve months increasing 2.6% per year until the end of the lease. The lease ends November 2029. The Commission, acting as lessor, leases water tower space for cellular services under long-term, non - cancelable lease agreements. The leases expire at various dates through 2052. During the year ended December 31, 2025, the Commission recognized $135,813 and $54,859 in lease revenue and interest revenue, respectively, pursuant to these contracts. Certain leases provided for increases in future minimum annual rental payments of either 3 or 4 percent. Total commissions lease receivable at year end is $3,518,360. C. Forgivable Loan The Economic Development Authority (EDA) offers a commercial exterior improvement program which is used to encourage property owners to maintain and invest in their properties in order to promote economic growth. The program offers up to 50 percent of project costs for eligible improvements as a no -interest forgivable loan. Forgiveness of the loan takes place over a five-year period with 20 percent of the award forgiven annually. The city may extend or reduce the repayment period based on the dollar amount of the award. As of December 31, 2025, the balance of these loans is $180,397. There has been an allowance for doubtful accounts recorded for the same amount, as it is fully expected that these loans will be forgiven. 166, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 6 - CAPITAL ASSETS Governmental capital asset activity for the year ended December 31, 2025 was as follows: Beginning Balance Ending (Restated) Increases Decreases Balance Governmental Activities: Capital Assets not being Depreciated/Amortized: Land Right -Of -Way Construction in Progress Total Capital Assets not being Depreciated/Amortized Capital Assets being Depreciated/ Amortized: Buildings Infrastructure Machinery and Equipment Lease Equipment (Intangible Right to Use Asset) Subscription -Based Information Technology Software Total Capital Assets being Depreciated/Amortized Less Accumulated Depreciation/ Amortization: Buildings Infrastructure Machinery and Equipment Lease Equipment (Intangible Right to Use Asset) Subscription -Based Information Technology Software Total Accumulated Depreciation/ Amortization Total Capital Assets being Depreciated/ Amortized, Net $ 26,020,170 $ 1,907,217 $ $ 27,927,387 1,332,928 - 1,332,928 18,036,356 8,018,465 14,698,671 11,356,150 45,389,454 9,925,682 14,698,671 40, 616, 465 77,494,156 8,189,404 85,683,560 215,535,420 13,106,623 - 228,642,043 31,062,543 4,877,109 1,020,389 34,919,263 736,472 299,716 123,625 912,563 614,342 274,987 163,098 726,231 325,442,933 26,747,839 1,307,112 350,883,660 23,324,661 1,781,448 25,106,109 122,603,620 6,222,512 - 128,826,132 13,839,334 1,852,427 845,352 14,846,409 264,398 182,865 123,625 323,638 235,324 236,818 163,097 309,045 160,267,337 10,276,070 165,175,596 16,471,769 1,132,074 169,411,333 175,038 181,472,327 Governmental Activities Capital Assets, Net $210,565,050 $ 26,397,451 $ 14,873,709 $222,088,792 167 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 6 - CAPITAL ASSETS (CONTINUED) Depreciation/amortization expense was charged to functions/programs of the City as follows: Governmental Activities: General Government Public Safety Public Works Parks and Recreation Economic Development Total Depreciation/Amortization Expense- Governmental Activities $ 582,133 898,084 6,393,785 2,232,847 169,221 $10,276,070 Business -type capital asset activity for the year ended December 31, 2025 was as follows: Business -Type Activities: Capital Assets not being Depreciated: Land Right -Of -Way Construction in Progress Total Capital Assets not being Depreciated Capital Assets being Depreciated: Line Rights Plant in Service Machinery and Equipment Subscription -Based Information Technology Software Total Capital Assets being Depreciated Less Accumulated Depreciation for: Line Rights Plant in Service Machinery and Equipment Subscription -Based Information Technology Software Total Accumulated Depreciation Total Capital Assets being Depreciated, Net Beginning Balance Increases $ 3,796,803 $ 507,746 3,481,315 25,400 557,179 7,785,864 582,579 1,368,569 140,827,507 3,856,938 12,567,732 237,345 31,821 146,053,014 12,836,898 774,563 37,769,615 2,172,773 24,733 2,120,363 188,166 3,536 40,716,951 2,336,798 105,336,063 10,500,100 Decreases Ending Balance $ $ 3,796,803 533,146 3,421,934 616,560 3,421,934 4,946,509 1,368,569 153,395,239 239,366 3,854,917 31,821 239,366 158,650,546 799,296 39,889,978 156,886 2,204,053 3,536 156,886 42,896,863 82,480 115,753,683 Business -Type Activities Capital Assets, Net $113,121,927 $ 11,082,679 $ 3,504,414 $120,700,192 168 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 6 - CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to functions/programs of the City as follows: Business -Type Activities: Sanitary Sewer Storm Drainage Total Depreciation Expense- Business -Type Activities $ 1,100,571 1,236,227 $ 2,336,798 Component unit capital asset activity for the year ended December 31, 2025 was as follows: Component Unit Capital Assets not being Depreciated: Land and Land Rights Construction in Progress Total Capital Assets not being Depreciated Capital Assets being Depreciated/ Amortized: Infrastructure Equipment Subscription -Based Information Technology Software Total Capital Assets being Depreciated Less Accumulated Depreciation/ Amortization: Infrastructure Equipment Subscription -Based Information Technology Software Total Accumulated Depreciation/ Amortization Total Capital Assets being Depreciated/Amortized, Net Beginning Ending Balance Increases Decreases Balance $ 9,148,582 $ - $ - $ 9,148,582 5,993,408 9,476,816 10,752,164 4,718,060 15,141,990 9,476,816 10,752,164 13,866,642 158,428,774 14,140,691 5,228,943 167,340,522 46,651,146 5,791,368 272,120 52,170,394 1,893,803 135,565 2,029,368 206,973,723 20,067,624 5,501,063 221,540,284 63,669,951 6,122,324 5,483,711 64,308,564 10,778,860 744,367 - 11,523,227 220,721 505,282 726,003 74,669,532 7,371,973 132,304,191 12,695,651 5,483,711 76,557,794 17,352 144,982,490 Governmental Activities Capital Assets, Net $147,446,181 $ 22,172,467 $ 10,769,516 $158,849,132 Depreciation expense was charged to functions/programs of the Component Unit as follows: Component Units: Electric Water Total Depreciation Expense- Component Unit Activities $ 4,042,649 3,329,324 $ 7,371,973 169 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 7 - SUBSCRIPTION -BASED INFORMATION TECHNOLOGY ARRANGEMENTS (SBITA) The City has entered into subscription -based information technology arrangements (SBITAs) involving: • Document management software • Information technology security software • Cloud backup services software • Public safety software • Registration and management software The total of the City's subscription assets are recorded at a cost of $726,231, less accumulated amortization of $309,045. 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. Tax increment bonds are paid from tax increments derived from increases in the taxable valuation of property within a redevelopment area in the City. Debt service on improvement bonds is covered by special assessment 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 payment each year. G.O. bonds currently outstanding are on the following page. 170. CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 8 - LONG-TERM DEBT (CONTINUED) B. Components of Long -Term Liabilities Issue Interest Original Final Principal Due Within Date Rates Issue Maturity Outstanding One Year Governmental Activities: Bonds Payable: G.O. Tax Abatement Bonds 2016A G.O. Tax Increment Bonds: 2019A 2020A 2022A G.O. Improvement Bonds: 2022A Total Bonds Unamortized Premiums Lease Payable SBITA Payable Compensated Absences Total Governmental Activities Business -Type Activities SBITA Payable Compensated Absences Total Business -Type Activities Component Unit: SBITA Payable Compensated Absences Total Component Unit Long -Term Liabili. 01/21/16 3.00%-5.00% 29,500,000 02/01/36 $ 19,635,000 $ 1,495,000 10/17/19 2.25%-5.00% 4,220,000 02/01/36 3,315,000 255,000 07/02/20 2.00%-4.00% 8,165,000 02/01/37 6,890,000 460,000 05/19/22 3.00% 5,910,000 08/01/41 5,755,000 80,000 05/19/22 3.00% 4,090,000 02/01/33 3,300,000 400,000 38,895,000 2,690,000 1,778,431 - 474,722 187,906 293,484 190,402 3,964,434 1,783,995 $ 45,406,071 $ 4,852,303 $ 21,038 $ 10,271 107,808 48,513 $ 128,846 $ 58,784 $ 875,159 $ 308,707 1,139,989 255,910 $ 2,015.148 $ 128,846 Tax abatement bonds listed above were issued to finance acquisition and construction of capital facilities. Improvement bonds provided the financing for street construction projects. Tax increment bonds provided the financing for the construction of streets and utilities related to a redevelopment area in the City. For the most part, the General Fund and the Employee Benefits Internal Service Fund are typically used to liquidate governmental compensated absences payable. 171 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 8 - LONG-TERM DEBT (CONTINUED) C. Lease Payable Description Total Lease Interest Liability Rate Issue Date Payment Terms Payment Amount Fire Fitness Equipment $ 4,577 10.43% 7/1/2022 48 months $671 Monthly Postage Machines 7,426 4.92% 12/1/2023 63 months $212 Monthly Body Cameras 156,033 4.37% 10/1/2023 60 months $79,718 Yearly Fleet Cameras 51,376 4.37% 10/1/2023 60 months $27,023 Yearly City Cameras 17,729 3.64% 11/27/2024 24 months $18,000 Yearly Cardio Equipment 212,506 10.07% 5/5/2025 60 months $6,191 Monthly IT Fiber Infrastructure 25,075 4.92% 9/1/2025 60 months $500 Monthly $ 474,722 Current Year Additional Outflows The fitness equipment was leased at the Fire Depait'tient beginning 7/1/2022 for a term of 48 months at a fixed interest rate of 10.43%. The lease can be renewed for an additional 30 day renewal but the City does not anticipate renewing for an additional term and the equipment will be returned. The postage machines lease includes two machines, one at city hall and one at the police station beginning 12/1/2023 for a term of 63 months at a fixed interest rate of 4.92%. The lease can be renewed monthly at the end of the term but the City does not anticipate renewing for an additional term and the equipment will be returned. The body and fleet cameras were leased at the Police Department beginning 10/1/2023 for a term of 60 months at a fixed interest rate of 4.37%. The equipment will be returned at the end of the lease. The city cameras were leased at the Police Department beginning 11/27/2024 for a term of 24 months after first installation which took 8 months at a fixed interest rate of 3.64%. The equipment will be returned at the end of the lease. The cardio equipment was leased at the Community Center. The lease is for 60 months. The lease can be renewed for an additional 30 day renewal but the City does not anticipate renewing for an additional term and the equipment will be returned. The interest rate on the lease is 10.07%. The information technology fiber infrastructure were leased at the Fire Station beginning 9/1/2025 for a term of 60 months at a fixed interest rate of 4.92%. The lease is for the use of the fiber lines. At the end of the service terms the use will be terminated. D. SBITA Liability $726,231 has been recorded by the City as intangible right -to -use software arrangements in the funds noted below as capital assets. Due to the implementation of GASB Statement No. 96, these arrangements for software noted below met the criteria of a SBITA; thus, requiring it to be recorded by the City as intangible assets and a SBITA liability. These assets will be amortized over the lease terms noted below since the software will be replaced at the end of the arrangement term and replaced with upgraded software. There are no residual value guarantees in the arrangement provisions. The term ends are noted on the following page. 172 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 8 - LONG-TERM DEBT (CONTINUED) D. SBITA Liability Description EKOS Clear Polco Microsoft Vmware Revize Laserfiche ESRI Vaisala Total SBITA Liability 1,261 17,116 2,885 87,240 6,342 24,911 72,734 80,995 21,038 $ 314,522 Term End Term End Year 32 months 2026 3 years 2027 3 years 2027 3 years 2027 3 years 2027 5 years 2029 3 years 2028 3 years 2028 3 years 2028 Fund Accounted General Fund General Fund General Fund IT IS Fund IT IS Fund IT IS Fund IT IS Fund IT IS Fund Storm Fund The commission recorded SBITA assets of $2,029,368 as of December 31, 2025. The SBITA assets consist of an accounting and HR information system. Management is reasonably certain that the period covered by the SBITA arrangement will end in 2033. The future subscription payments under SBITA agreements totals $875,159. E. Changes in Long -Term Liabilities Long-term liability information for the year ended December 31, 2025 was as follows. Governmental Activities: Bonds Payable Unamortized Premiums Lease Payable SBITA Payable Compensated Absences Total Governmental Activities Business -Type Activities SBITA Payable Compensated Absences Total Business -Type Activities Component Unit Activities: SBITA Payable Compensated Absences Total Component Unit Activities Beginning Balance Ending Additions Reductions Balance Due Within One Year $ 41,480,000 $ - $ 2,585,000 $ 38,895,000 $ 2,690,000 1,948,047 - 169,616 1,778,431 360,115 299,349 184,742 474,722 187,906 269,725 228,630 204,871 293,484 190,402 3,609,085 2,361,243 2,005,894 3,964,434 1,783,995 $ 47,666,972 $ 2,889,222 $ 5,150,123 $ 45,406,071 $ 4,852,303 $ 31,821 $ 10,783 $ 21,038 $ 10,271 69,830 97,641 59,663 107,808 48,513 $ 69,830 $ 129,462 $ 69,830 $ 128,846 $ 58,784 $ 1,042,788 $ 135,565 $ 303,194 $ 875,159 $ 308,707 1,044,493 95,496 1,139,989 $ 255,910 $ 2,087,281 $ 231,061 $ 303,194 $ 2,015,148 $ 564,617 173 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 8 - LONG-TERM DEBT (CONTINUED) F. Minimum Debt Payments for Bonds, Leases and SBITAs Debt service to maturity for outstanding G.O. bonds, lease payables and SBITA payables are as follows: Year Ending December 31, 2026 2027 2028 2029 2030 2031-2035 2036-2040 2041 Governmental Bonds Principal Interest Total $ 2,690,000 $ 1,115,644 $ 3,805,644 2,805,000 1,000,493 3,805,493 2,905,000 899,444 3,804,444 2,990,000 805,968 3,795,968 3,080,000 716,519 3,796,519 15,645,000 2,291,236 17,936,236 7,580,000 615,760 8,195,760 1,200,000 18,000 1,218,000 Total $ 38,895,000 $ 7,463,064 $ 46,358,064 Year Ending December 31, Governmental Lease Payable Principal Interest Total 2026 $ 187,906 $ 25,335 $ 213,241 2027 176,496 14,024 190,520 2028 77,556 5,895 83,451 2029 28,820 1,311 30,131 2030 3,944 73 4,017 Total Year Ending December 31, $ 474,722 $ 46,638 $ 521,360 Governmental SBITA Payable Principal Interest Total 2026 $ 190,402 $ 8,238 $ 198,640 2027 94,386 2,602 96,988 2028 8,696 205 8,901 Total Year Ending December 31, $ 293,484 $ 11,045 $ 304,529 Business -Type SBITA Payable Principal Interest Total 2026 $ 10,271 $ 883 $ 11,154 2027 10,767 387 1 1,1 54 Total $ 21,038 $ 1,270 $ 22,308 174 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 9 - NON -EXCHANGE FINANCIAL GUARANTEE The Scott County Community Development Agency (CDA) issued its Governmental Refunding Bonds (City of Shakopee, Minnesota — General Obligation), Series 2012D (Northridge Project), on November 24, 2020, in the original aggregate principal amount of $4,000,000 (the "Series 2012B Bonds"). The Series 2020B Bonds are secured the net revenues of the housing component of the Project and a pledge of the full faith and credit of the City. The Series 2020B Bonds are currently outstanding in the principal amount of $2,870,000 and mature on February 1, 2034. If housing lease revenues are insufficient to pay the principal of and interest on the Series 2020B Bonds, the City may be called upon to levy ad valorem taxes. To date, no funds of the City have been used to pay principal of or interest on the 2020B Bonds. NOTE 10 — 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, 2025, the following conduit debt was outstanding: Project St. Francis Regional Medical Center Health Care Facilities Revenue Bond Series 2025 Benedictine Health System Obligated Group Senior Housing Revenue Refunding Bonds Series 2025 Date of Issue Original Amount of Issue Balance Outstanding 11/24/25 $ 70,000,000 $ 70,000,000 10/30/25 $ 54,520,000 Total NOTE 11— INTERFUND ASSETS/LIABILITIES The composition of interfund balances as of December 31, 2025 is as follows: Receivable Fund Payable Fund 54,520,000 $ 124,520,000 Amount Other Governmental Fund Economic Development Authority Fund $ 109,921 Capital Improvement Fund TIF District No. 18 Canterbury Commons 391,517 Total $ 501,438 The due from/due to other funds balance represents borrowing to eliminate a cash deficit. This will be repaid as funds are available. 175 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 12 — ADVANCE FROM/TO OTHER FUNDS The composition of advance from/to other funds as of December 31, 2025 is as follows: (1) (2) (3) (4) (5) (6) Receivable Fund General Fund Economic Development Authority Capital Improvement Fund Storm Drainage Fund General Fund Storm Drainage Fund Payable Fund Nonmajor Governmental Funds TIF District No. 18 Canterbury Commons TIF District No. 18 Canterbury Commons Internal Service Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Amount $ 1,543,117 3,739,061 4,056,806 770,000 330,598 1,813,012 Total $ 12,252,594 (1) The advance represents a long term interfund loan related to the TIF District No. 19 Riverfront agreement to be repaid over 25 years with Tax Increment Financing at a rate of 4% interest. (2) The advance represents a long term interfund loan related to the TIF District No. 18 Canterbury agreement to be repaid over 25 years with Tax Increment Financing at a rate of 5% interest. (3) The advance represents a long term interfund loan related to the TIF District No. 18 Canterbury agreement to be repaid over 25 years with Tax Increment Financing at a rate of 4% interest. (4) The advance is 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. (5) The advance related to the TIF District No. 20 Old City Hall agreement (Enclave). This will be repaid over 25 years with Tax Increment Financing at a rate of 4% interest. (6) The advance related to the TIF District No. 20 Old City Hall agreement (Enclave). This will be repaid over 25 years with Tax Increment Financing at a rate of 3% interest. 176, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 13 - INTERFUND TRANSFERS Transfer In Transfer Out Governmental Funds: General Fund (1) (3) (6) Economic Development Authority (4) Capital Improvement (2) TIF District No. 18 Canterbury Commons (4) (5) Other Governmental Funds (2) (3) (5) (6) Total Governmental Funds Proprietary Funds: Sewer (1) Storm Drainage (1) Total Proprietary Funds Internal Service Funds: Buildings (6) Self Insurance (1) Total Internal Service Funds $ 890,600 $ 2,325,000 178,051 - 2,000 - - 1,462,400 3,134,349 142,600 4,205,000 3,930,000 200,000 200,000 - 400,000 475,000 350,000 475,000 350,000 Total $ 4,680,000 $ 4,680,000 (1) Annual transfer to finance General Fund indirect costs. (2) Transfer Minnesota Historical Society grant funds for archeological investigation. (3) Transfer of Public Safety funds for new patrol officers. (4) Transfer of River City Centre Project costs for reimbursement from future tax increment. (5) Transfer of increment for debt service payment on tax increment bond. (6) Transfer of available fund balance for future capital projects. 177 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS The City participates in various pension plans. Total pension expense for the year ended December 31, 2025 was $1,340,177. The components of pension expense are noted in the following plan summaries. Public Employees' Retirement Association (PERA) A. Plan Description The City participates in the following cost -sharing multiple -employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). These plan provisions are established and administered according to Minnesota Statutes chapters 353, 353D, 353E, 353G, and 356. Minnesota Statutes chapter 356 defines each plan's financial reporting requirements. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. 1. General Employees Retirement Plan Membership in the General Plan includes employees of counties, cities, townships, schools in non -certified positions, and other governmental entities whose revenues are derived from taxation, fees, or assessments. Plan membership is required for any employee who is expected to earn more than $425 in a month, unless the employee meets exclusion criteria. 2. Public Employees Police and Fire Plan Membership in the Police & Fire Plan includes full-time, licensed police officers and firefighters who meet the membership criteria defined in Minnesota Statutes section 353.64 and who are not earning service credit in any other PERA retirement plan or a local relief association for the same service. Employers can provide Police & Fire Plan coverage for part-time positions and certain other public safety positions by submitting a resolution adopted by the entity's governing body. The resolution must state that the position meets plan requirements. B. Benefits Provided PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits, but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. When a member is "vested," they have earned enough service credit to receive a lifetime monthly benefit after leaving public service and reaching an eligible retirement age. Members who retire at or over their Social Security full retirement age with at least one year of service qualify for a retirement benefit. 178 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) 1. General Employees Plan Benefits General Employees Plan requires three years of service to vest. Benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for General Plan members. Members hired prior to July 1, 1989, receive the higher of the Step or Level formulas. Only the Level formula is used for members hired after June 30, 1989. Under the Step formula, General Plan members receive 1.2% of the highest average salary for each of the first 10 years of service and 1.7% for each additional year. Under the Level formula, General Plan members receive 1.7% of highest average salary for all years of service. For members hired prior to July 1, 1989 a full retirement benefit is available when age plus years of service equal 90 and normal retirement age is 65. Members can receive a reduced retirement benefit as early as age 55 if they have three or more years of service. Early retirement benefits are reduced by .25% for each month under age 65. Members with 30 or more years of service can retire at any age with a reduction of .25% for each month the member is younger than age 62. The Level formula allows General Plan members to receive a full retirement benefit at age 65 if they were first hired before July 1, 1989 or at age 66 if they were hired on or after July 1, 1989. Early retirement begins at age 55 with an actuarial reduction applied to the benefit. Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50% of the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. The 2025 annual increase was 1.25%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a prorated increase. 179 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) B. Benefits Provided (Continued) 2. Police and Fire Plan Benefits Benefits for Police and Fire Plan members hired before July 1, 2010, are vested after three years of service. Members hired on or after July 1, 2010, are 50% vested after five years of service and 100% vested after ten years. After five years, vesting increase by 10% each full year of service until members are 100% vested after ten years. Police and Fire Plan members receive 3% of highest average salary for all years of service. Police and Fire Plan members receive a full retirement benefit when they are age 55 and vested, or when their age plus their years of service equals 90 or greater if they were first hired before July 1, 1989. Early retirement starts at age 50, and early retirement benefits are reduced by 0.417% each month members are younger than age 55. Benefit increases are provided to benefit recipients each January. The postretirement increase is fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a prorated increase. C. Contributions Minnesota Statutes chapters 353, 353E, 353G, and 356 set the rates for employer and employee contributions. Contribution rates can only be modified by the state Legislature. 1. General Employees Fund Contributions General Plan members were required to contribute 6.50% of their annual covered salary in fiscal year 2025 and the city was required to contribute 7.50% for General Plan members. The City's contributions to the General Employees Fund for the year ended December 31, 2025, was $833,232. 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, 2025, was $417,048. The Commission's contributions were equal to the required contributions as set by state statute. 2. Police and Fire Fund Contributions Police and Fire Plan members were required to contribute 11.80% of their annual covered salary in fiscal year 2024 and the City was required to contribute 17.7% for Police and Fire Plan members. The City's contributions to the Police and Fire Fund for the year ended December 31, 2025, was $1,580,869. The City's contributions were equal to the required contributions as set by state statute. 180. CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs 1. General Employees Fund Pension Costs At December 31, 2025 the City reported a liability of $3,822,240 for its proportionate share of the General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million. The State of Minnesota is considered a non -employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $92,204. City's proportionate share of the net pension liability State of Minnesota's proportionate share of the net pension liability associated with the City $ 3,822,240 92,204 Total $ 3,914,444 The net pension liability was measured as of June 30, 2025, 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 proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2024 through June 30, 2025 relative to the total employer contributions received from all of PERA's participating employers. The City's proportion was 0.1153%, which was an increase of 0.0005% at the end of the measurement period and 0.1148% for the beginning of the period. For the year ended December 31, 2025, the City recognized pension expense of $145,235 for its proportionate share of General Employees Plan's pension expense. In addition, the City recognized an additional $14,143 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. 181 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) 1. General Employees Fund Pension Costs (Continued) At December 31, 2025, the City reported its proportionate share of the General Employees Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the following sources: Differences between expected and actual experience Changes in actuarial assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion Employer contributions subsequent to the measurement date Deferred Outflows of Resources $ 364,176 92,094 68,514 437,578 Deferred Inflows of Resources 879,484 1,520,906 98,638 $ 962,362 $ 2,499,028 The $437,578 reported as deferred outflows of resources 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, 2026. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2026 2027 2028 2029 Pension Expense Amount $ (497,454) (689,316) (515,782) (271,692) Total $ (1,974,244) 182 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) 2. Police and Fire Fund Pension (PEPFF) Costs At December 31, 2025 the City reported a liability of $6,263,020 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2025, 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 proportionate share of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2024 through June 30, 2025 relative to the total employer contributions received from all of PERA's participating employers. The City's proportionate share was 0.5345% at the end of the measurement period and 0.4683% for the beginning of the period. The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2025. The contribution consisted of $9 million in direct state aid that meets the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state aid was paid on October 1, 2024. The direct state aid payment will increase by $17.7 million which was paid on October 1, 2025. Thereafter, by October 1 of each year, the state will pay $26.7 million to the Police and Fire Fund until the fund is 110% funded for a minimum of three consecutive years (on an actuarial value of assets basis). The $9 million in supplemental state aid will continue until the fund and the State Patrol Plan (administered by the Minnesota State Retirement System) are 100% funded for three consecutive years (on an actuarial value of assets basis). The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $217,107. City's proportionate share of the net pension liability State of Minnesota's proportionate share of the net pension liability associated with the City $ 6,263,020 217,107 Total $ 6,480,127 For the year ended December 31, 2025, the City recognized pension expense of $1,128,255 for its proportionate share of the Police and Fire Plan's pension expense. The City recognized $105,047 as grant revenue and pension expense for its proportionate share of the State of Minnesota's contribution of $9 million to the Police and Fire special funding situation. 183 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) 2. Police and Fire Fund Pension (PEPFF) Costs (Continued) The State of Minnesota is not included as a non -employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in supplemental state aid because this contribution was not considered to meet the definition of a special funding situation. The City recognized $48,109 for the year ended December 31, 2025 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. At December 31, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes in actuarial assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion Employer contributions subsequent to the measurement date Deferred Outflows of Resources Deferred Inflows of Resources $ 2,893,714 $ - 4,749,377 7,847,302 1,070,076 850,414 2,795,273 324,786 $ 9,563,581 $ 10,967,361 The $850,414 reported as deferred outflows of resources 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, 2026. 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 December 31, 2026 2027 2028 2029 2030 Pension Expense Amount $ 1,568,067 (1,221,143) (2,954,346) (902) 354,130 Total $ (2,254,194) 184 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) 3. Component Unit's General Employees Fund Pension Costs At December 31, 2025, the Commission reported a liability of $2,180,765 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 $16 million. The State of Minnesota is considered a non -employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the Commission totaled $52,607. The net pension liability was measured as of June 30, 2025, 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, 2024, through June 30, 2025, relative to the total employer contributions received from all of PERA's participating employers. The Commission's proportion share was 0.0658% at the end of the measurement period and 0.0677% for the beginning of the period. Commissions' proportionate share of the net pension liability State of Minnesota's proportionate share of the net pension liability associated with the Commission $ 2,180,765 52,607 Total $ 2,233,372 For the year ended December 31, 2025, the Commission recognized pension expense of $50,899 for its proportionate share of General Employees Fund's pension expense. In addition, the Commission recognized an $10,529 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. At December 31, 2025, the Commission reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes in actuarial assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion Employer contributions subsequent to the measurement date Deferred Outflows of Resources $ 207,779 52,544 71,687 231,054 $ 563,064 Deferred Inflows of Resources 501,787 867,747 204,585 $ 1,574,119 185, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) 3. Component Unit's General Employees Fund Pension Costs (Continued) $231,054 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, 2026. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending December 31, 2026 2027 2028 2029 Pension Expense Amount $ (261,634) (499,065) (326,399) (155,011) Total $ (1,242,109) E. Long -Term Expected Rate of Investment The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity International Equity Fixed Income Private Markets Target Allocation 33.5% 16.5% 25.0% 25.0% Total 100.0% Long -Term Expected Real Rate of Return 5.10% 5.30% 0.75% 5.90% 186 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Assumptions The total pension liability for each of the cost -sharing defined benefit plans was determined by an actuarial valuation as of June 30, 2025, using the entry age normal actuarial cost method. The long-term rate of return on pension plan investments used to determine the total liability is 7%. The 7% assumption is based on a review of inflation and investment return assumptions from a number of national investment consulting firms. The review provided a range of investment return rates considered reasonable by the actuary. An investment return of 7% is within that range. Inflation is assumed to be 2.25% for the General Employees Plan, Police & Fire Plan, and the Correctional Plan. Benefit increases after retirement are assumed to be 1.50% for the General Employees Plan, 1% for the Police & Fire Plan, and 2% for the Correctional Plan. Salary growth assumptions in the General Employees Plan range in annual increments from 11.5% after one year of service to 3% after 27 years of service. In the Police & Fire Plan, salary growth assumptions range in annual increments from 10.75% after one year of service to 3% after 23 years of service. In the Correctional Plan, salary growth assumptions range in annual increment from 8% after one year of service to 3% after 19 years of service. Mortality rates for the General Employees Plan are based on the Pub -2010 General Employee Mortality Table. Mortality rates for the Police & Fire Plan are based on the Pub -2010 Public Safety Employee Mortality tables. The tables are adjusted slightly to fit PERA's experience. Actuarial assumptions for the General Employees Plan are reviewed every four years. The General Employees Plan was last reviewed in 2022. The assumption changes were adopted by the board and became effective with the July 1, 2023 actuarial valuation. The Police & Fire Plan are reviewed in 2024. The assumption changes were adopted by the board and became effective with the July 1, 2025 actuarial valuation. 187 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Assumptions (Continued) The following changes in actuarial assumptions and plan provisions occurred in 2025: General Employees Fund Changes in Actuarial Assumptions • Rates of merit and seniority were adjusted, resulting in slightly higher rates. • Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2 members. • Minor increase in assumed withdrawals for males and females. • Lower rates of disability. • Continued use of Pub -2010 general mortality table with slight rate adjustments as recommended in the most recent experience study. • Minor changes to form of payment assumptions for male and female retirees. • Minor changes to assumptions made with respect to missing participant data. Changes in Plan Provisions • The workers' compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated to reflect the changes in assumptions. Police and Fire Fund Changes in Actuarial Assumptions • Assumed rates of salary increases were reduced slightly. • Assumed rates of retirement were adjusted, resulting in an overall increase in unreduced (full) retirements and an overall increase in reduced (early) retirements. • Assumed rates of withdrawal were modified; the new rates will increase predicted terminations, especially in the first few years of employment. • Assumed rates of disabled retirement were significantly increased, especially for ages over age 30. • Continued used of Pub -2010 Public Safety Mortality Table with rates adjusted to better fit observed experience. • Percent married assumption for female retirees lowered from 70% to 65%. • Minor changes were made to form of payment assumptions for retirees. • Minor changes were made to assumptions made with respect to missing participant data. • The combined service annuity load changed from 33% to 13% for vested, terminated members and from 2% to 38% for non -vested, terminated members. 188 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) F. Actuarial Assumptions (Continued) Police and Fire Fund (Continued) Changes in Plan Provisions • The period of time needed for benefit recipients to receive their first benefit increase was reduced by one year (from 36 months to 24 months for a full increase). • The January 1, 2026 benefit increase changed from 1% to 3%; subsequent January 1 increases will be 1%. • The threshold to end the $9 million annual state aid contribution changed from the earlier of July 1, 2048 or 90% funded for both PERA Police & Fire and MSRS State Patrol for three consecutive years to 100% funded for both PERA Police & Fire and MSRS State Patrol for three consecutive years (on an actuarial value of assets basis). • The threshold to end the additional $9 million annual state aid contribution changed from the earlier of July 1, 20248 or 100% funded for a minimum of three consecutive years to 110% funded for a minimum of three consecutive years (on an actuarial value of assets basis). • An additional $17.7 million in direct state aid will be paid annually each October 1 beginning October 1, 2025 through June 30, 2048. • Joint and survivor actuarial equivalent factors were updated to reflect changes in assumptions. G. Discount Rate The discount rate used to measure the total pension liability in 2025 was 7.0%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees, Police and Fire, and Correctional Plans were projected to be available to make all projected future benefit payments of current plan members. 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. 189 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) H. Pension Liability Sensitivity The following presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: City's proportionate share of the General Employees Fund net pension liability Commission's proportionate share of the General Employees Fund net pension liability City's proportionate share of the Police and Fire Fund net pension liability I. Pension Plan Fiduciary Net Position 1% Decrease in Discount Rate (6%) $ 9,283,621 $ 5,296,736 1% Decrease in Discount Rate (6%) $ 16,410,439 Discount Rate (7%) $ 3,822,240 $ 2,180,765 Discount Rate (7%) $ 6,263,020 1% Increase in Discount Rate (8%) $ (608,169) $ (346,989) 1% Increase in Discount Rate (8%) $ (2,069,613) 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. J. 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. 190. CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 14 - PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) J. Public Employees Defined Contribution Plan (Defined Contribution Plan) (Continued) Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D and 356, 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 contributions 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 (0.25 percent) of the assets in each member's account annually. Total contributions made by the City during fiscal year 2025 were: Contribution Amount Percentage of Covered Payroll Employee Employer Employee Employer Required Rate $ 2,675 $ 2,675 5% 5% 5% NOTE 15 — POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) 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. The City has no assets accumulated in a trust that meets the criteria in GASB 75. At December 31, 2025, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefit payments Active employees waiving coverage Active plan members 12 18 145 Total plan members 175 191 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 15 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) 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 ended December 31, 2025, the City's average contribution rate was 19.03 percent of covered -employee payroll. For the year 2025, the City contributed $105,096 to the Plan. C. 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. The City's total OPEB liability of $3,257,147 was measured as of December 31, 2024, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of December 31, 2023. The total OPEB liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount Rate 4.08% Expected Long -Term Investment Return N/A 20 -Year Municipal Bond Yield 4.08% Inflation Rate 2.50% Medical Trend Rate 6.90% in 2024 gradually decreasing over several decades to an ultimate rate of 3.9% in 2075 and later years The Actuarial Standards Board provides coordinated guidance for measuring pension and retiree group benefit obligations through a series of Actuarial Standards of Practice (ASOPs). ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, requires that the actuary disclose the rationale used in selecting each non -prescribed economic assumption and any changes to non -prescribed economic assumptions. All non -prescribed economic assumptions are summarized below. 192, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 15 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) C. Actuarial Methods and Assumptions (Continued) The discount rate used to measure the total OPEB liability was 4.08 percent. Per GASB guidance, the single rate that produces the same present value of expected benefit payments as (1) the expected long-term rate of return on plan assets during the period when projected assets are sufficient to pay future retiree benefits, and (2) the 20 -year municipal bond rate after assets are projected to be exhausted. The Fidelity 20 - Year Municipal GO AA Index is used because it meets the GASB requirements and is based on a large amount of municipal security data. Mortality rates were based on the current actuarial assumptions for the pension plan in which the current or future retiree participates. The inflation rate used to measure the OPEB liability was 2.5 percent. Based on analysis of historical Consumer Price Index for All Urban Consumers (CPI -U) and 30 -year Treasury Inflation -Protected Securities (TIPS) data, the Federal Open Market Committee target inflation rate, and the 2021 Survey of Capital Market Assumptions produced by Horizon Actuarial Services. Annual salary increases were based on the most recently disclosed assumption for the pension plan in which the employee participates. D. Changes in the Total OPEB Liability Total OPEB Liability Balances at December 31, 2024 Changes for the Year: Service cost Interest Differences between expected and actual experience Changes in assumptions or other inputs Benefit payments Net Changes Balances at December 31, 2025 $ 3,200,481 182,823 124,614 3,376 (98,348) (155,799) 56,666 $ 3,257,147 Since the prior measurement date, the following benefit terms changed: • The discount rate was changed from 3.77% as of 12/31/2023 to 4.08% as of 12/31/2024 based on updated 20 -year municipal bond rates as of each measurement date. 193 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 15 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) E. Sensitivity of the Total OPEB Liability The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1 -percentage point lower (3.08 percent) or 1 - percentage -point higher (5.08 percent) than the current discount rate: 1% Decrease (3.08%) Current (4.08%) 1% Increase (5.08%) $ 3,588,701 $ 3,257,147 $ 2,964,599 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a Healthcare Cost Trend Rates that is 1 -percentage point lower (5.90 percent decreasing to 2.90 percent) or 1 -percentage -point higher (7.90 percent decreasing to 4.90 percent) than the current discount rate: 1% Decrease (5.9% Healthcare Cost Trend Rates 1% Increase (7.9% Decreasing to 2.9%) (6.9% Decreasing to 3.9%) Decreasing to 4.9%) $ 2,854,685 $ 3,257,147 $ 3,734,915 F. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended December 31, 2025, the City recognized OPEB expense of $140,951. At December 31, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Changes in actuarial assumptions Differences between expected and actual experience Contributions to OPEB subsequent to the measurement date Deferred Deferred Outflows of Inflows of Resources Resources $ 926,775 $ 442,016 346,582 666,072 155,799 - $ 1,429,156 $ 1,108,088 Deferred outflows of resources totaling $155,799 related to pensions resulting from the City's contributions to OPEB subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended December 31, 2026. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense on the following page. 194 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 15 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) F. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Year Ending December 31, 2026 2027 2028 2029 2030 Thereafter OPEB Expense Amount $ 10,723 6,883 5,455 (7,013) (33,391) 182,612 Total $ 165,269 NOTE 16 — FUND BALANCE DETAIL Fund balances are classified as follows to reflect the limitations and restrictions of the respective funds. Nonspendable: Prepaid Items Inventories Leases Total Nonspendable Restricted: Forfeitures Opioids Settlement Public Safety Fund DARE Economic Development Debt Service Capital Improvements Total Restricted Committed: Building Permits Assigned: Fire Department Staffing Shakopee Government Television Capital Improvements Total Assigned Unassigned General Fund Economic Development Authority Capital Improvement $ 245,192 $ 4,252 $ 36,203 52,011 333,406 1,824,000 550,000 4,252 4,317,460 4,317,460 564,435 564,435 9,759,312 550,000 9,759,312 TIF District No. 18 Canterbury Commons 23,066,102 (8,152,219) Other Governmental Funds Total $ 1,147 $ 250,591 36,203 52,011 1,147 338,805 58,004 58,004 243,867 243,867 358,164 358,164 2,035 2,035 4,317,460 3,542,802 3,542,802 4,445,460 5,009,895 8,650,332 13,532,227 54,856 1,290,578 1,824,000 550,000 54,856 11,049,890 1,345,434 11,654,746 (3,798,967) 11,114,916 Total Fund Balance $ 25,773,508 $ 4,321,712 $ 10,323,747 $ (8,152,219) $ 6,197,946 $ 38,464,694 195 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 17 - COMMITMENTS The City has the following construction commitments at December 31, 2025. Project Consulting- SRF Consulting Canterbury Commons Internal Roadways Jackson Commons Park 2025 SCADA Improvement Arbor Bluff Stream Stabilization Old Carriage Road Roundabout 2025 Downtown Lighting Phase II Marystown Road Corridor Improvements NOTE 18 — RISK MANAGEMENT Project Authorization $ 1,416,936 4,000,444 368,529 299,988 429,619 376,140 643,186 7,253,428 Work Completed $ 1,001,419 3,807,463 359,699 89,996 334,990 336,756 584,603 2,349,105 12/31/2025 Commitment $ 415,517 192,981 8,830 209,992 94,629 39,384 58,583 4,904,323 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 range from $10,000 to $75,000 and is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. Through the pool, the City is subject to reassessment but due to reserves and reinsurance contracts, the likelihood is very low. The policy limits through the pool included $2,000,000 aggregate for liability, $2,000,000 for automobile coverage, $1,000,000 faithful performance employee bonding and $1,000,000 for universal umbrella coverage. Property coverage is approximately $147,000,000. 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 through tax revenues from the additional taxable value of the property generated by the development (tax abatement). 196, CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 19 - TAX ABATEMENT AGREEMENT (CONTINUED) The tax abatement agreements are as follows: • KEB Abatement was established in 2019. KEB America, LLC is a leading manufacturer or automation products. The City of Shakopee awarded a nine-year economic development property tax abatement, ending in 2029, which required the creation of 98 full-time equivalent new jobs in Shakopee. The total City abatement awarded was $289,263. The first year of disbursement occurred in 2022. During the year ended December 31, 2025, the total disbursed was $41,037. • Cherne Abatement was established in 2020. Cherne Industries Incorporated is a manufacturer of mechanical plugs, deflection gauges, testing equipment, tools and accessories for residential, commercial, and industrial piping systems. The City of Shakopee awarded a nine-year economic development property tax abatement, ending in 2031, which required the creation of 20 full-time equivalent new jobs in Shakopee and the relocation of 115 full-time equivalent jobs to Shakopee. The total City abatement awarded was $459,494. The first year of disbursement occurred in 2023. During the year ended December 31, 2025, the total disbursed was $48,567. • Sam's East Abatement was established in 2023, for tenant improvements for a new logistics center for Sam's Club. The City of Shakopee awarded a ten-year economic development property tax abatement, ending in 2034, which required the creation of 130 full-time equivalent new jobs in Shakopee of no less than $21.00 with the average wage of $24.00 per hour. The total City abatement awarded was $286,591. The first year of disbursement occurred in 2025. During the year ended December 31, 2025, the total disbursed was $25,077. NOTE 20 - TAX INCREMENT FINANCING The City has entered into five Tax Increment Financing (TIF) 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 through 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. 197 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 20 - TAX INCREMENT FINANCING (CONTINUED) During the year ended December 31, 2025, the City generated $2,833,755 in tax increment revenue. TIF District No. 15 was established in 2015 for the purpose of establishing a housing unit. Trident/All Saints Senior Living is 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, 2025, the City generated $150,824 of tax increment revenue. As of December 31, 2023 the pay -as -you go balance was paid off and future increment received by the district must be used for qualified affordable housing projects. TIF District No. 18 was established in 2018 to aid in redeveloping the horse racetrack area known as Canterbury Commons with new and improved public infrastructure. This is a multi -year, three phase project that will entail eliminating blighted properties and in turn provide a mix of housing and other commercial and industrial redevelopment. Under the agreement, $39,970,331 of public infrastructure costs will be reimbursed through tax increment to a combination of the City of Shakopee and the Developer over the duration of 25 years. During the year ended December 31, 2025, the City generated $2,167,481 of tax increment revenue, which a significant portion was placed in a debt service fund for debt service payments and $582,257 was disbursed to the developer. As of December 31, 2025, the City had bonds outstanding of $15,960,000, an interfund loan of $2,109,628, and developer had certified $16,037,396 of eligible expenses. TIF District No. 19 was established in 2018 to aid in redeveloping property located in the downtown area along the riverfront. The developer, Gaughan Shakopee LLC purchased four properties from the City at an agreed upon amount of $1,000,000 and develop approximately 125 market -rate luxury apartment units including underground parking and 3,500 sq. feet of commercial space. Under the agreement, the developer will reimburse the city's $1,228,600 (primarily for land acquisition) with 22.3% of future tax increment. The remaining increment will be directed towards reimbursement of developer costs up to a principal amount of $2,811,700 over the course of 25 years. The district was created in 2018 and was certified to the State of Minnesota in 2019. During the year ended December 31, 2025, the City generated $269,886 of tax increment revenue and made a payment of $188,731. The remaining unpaid pay -as -you go balance at year end was $3,660,228. TIF District No. 20 was established in 2018 to aid in redeveloping the old downtown city hall location. The developer, Enclave Development, LLC is developing approximately 80 market -rate apartment units, including underground parking, and approximately 1,500 square feet of commercial space including all site improvements. Under the agreement, a redevelopment grant in the amount of $2,132,400 will be issued to the developer. The city will collect 100% of the future increment over the course of the next 25 years to repay the redevelopment grant. The district was created in 2018 and was certified to the State of Minnesota in 2019. During the year ended December 31, 2025, the City generated $208,067 of tax increment revenue. 198 CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025 NOTE 20 - TAX INCREMENT FINANCING (CONTINUED) TIF District No. 21 was established in 2018 as a soils condition district to facilitate development of certain property by removing or remediating hazardous substances, pollution or contaminants within the city. Under the agreement, the developer, Shakopee Crossings Limited Partnership, will be reimbursed up to $1,387,388 of soil remediation costs and will be reimbursed through tax increment collections over the next 20 years. The district was created in 2018 and was certified to the State of Minnesota in 2019. During the year ended December 31, 2025, the City generated $38,367 of tax increment revenue and made payments of $34,530. The remaining unpaid pay -as -you go balance at year end was $1,662,786. 199 (THIS PAGE LEFT BLANK INTENTIONALLY) 200 REQUIRED SUPPLEMENTARY INFORMATION 201 CITY OF SHAKOPEE SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND City's Proportionate City's Plan State's Share of the Net Proportionate Fiduciary Proportionate Pension Liability and Share of the Net Position City's City's Share of the the State's Net Pension as a Proportion Proportionate Net Pension Proportionate Share Liability as a Percentage of the Net Share of the Liability of the Net Pension City's Percentage of of the Total For the Fiscal Pension Net Pension Associated Liability Associated Covered Covered Pension Year Ended Liability Liability with the City with the City Payroll Payroll Liability June 30, 2025 0.1153% $ 3,822,240 $ 92,204 $ 3,914,444 $ 10,446,101 36.59% 90.80% June 30, 2024 0.1148% 4,242,718 109,708 4,352,426 9,708,017 43.70% 89.10% June 30, 2023 0.1133% 6,335,609 174,766 6,510,375 9,013,258 70.29% 83.10% June 30, 2022 0.1199% 9,496,121 278,364 9,774,485 8,977,932 105.77% 76.67% June 30, 2021 0.1142% 4,876,852 148,945 5,025,797 8,222,977 59.31% 87.00% June 30, 2020 0.1108% 6,642,966 204,816 6,847,782 7,893,394 84.16% 79.00% June 30, 2019 0.1062°A 5,871,560 182,492 6,054,052 7,502,811 78.26% 80.20% June 30, 2018 0.1045% 5,797,232 190,111 5,987,343 7,014,843 82.64% 79.50% June 30, 2017 0.1026% 6,549,916 82,350 6,632,266 6,194,557 105.74% 75.90% June 30, 2016 0.0933% 7,575,497 7,575,497 6,246,667 121.27% 68.91% 202 CITY OF SHAKOPEE SCHEDULE OF CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS PUBLIC EMPLOYEES POLICE AND FIRE RETIREMENT FUND City's Proportionate City's Plan State's Share of the Net Proportionate Fiduciary Proportionate Pension Liability and Share of the Net Position City's City's Share of the the State's Net Pension as a Proportion Proportionate Net Pension Proportionate Share Liability as a Percentage of the Net Share of the Liability of the Net Pension City's Percentage of of the Total For the Fiscal Pension Net Pension Associated Liability Associated Covered Covered Pension Year Ended Liability Liability with the City with the City Payroll Payroll Liability June 30, 2025 0.5345% $ 6,263,020 $ 217,107 $ 6,480,127 $ 8,112,583 77.20% 91.80% June 30, 2024 0.4683% 6,160,699 234,843 6,395,542 6,484,423 95.01% 90.20% June 30, 2023 0.4749% 8,200,906 330,319 8,531,225 6,235,796 131.51% 86.50% June 30, 2022 0.4987% 21,701,454 947,883 22,649,337 6,057,666 358.25% 70.53% June 30, 2021 0.4727% 3,648,743 164,053 3,812,796 5,709,197 63.91% 93.70% June 30, 2020 0.4977% 6,560,219 6,560,219 5,619,672 116.74% 89.30% June 30, 2019 0.5126% 5,457,145 5,457,145 5,531,821 98.65% 88.80% June 30, 2018 0.4810% 5,126,965 5,126,965 5,069,010 101.14% 85.40% June 30, 2017 0.4810% 6,494,072 6,494,072 4,642,761 139.88% 63.88% June 30, 2016 0.4680% 18,781,654 18,781,654 4,827,360 389.07% 86.61% 203 CITY OF SHAKOPEE SCHEDULE OF COMPONENT UNIT'S PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND Component Unit's State's Share of the Net Unit's Plan Proportionate Pension Liability and Proportionate Fiduciary Component Component Share of the the State's Share of the Net Position Unit's Unit's Net Pension Proportionate Share Net Pension as a Proportion Proportionate Liability of the Net Pension Component Liability as a Percentage of the Net Share of the Associated with Liability Associated Unit's Percentage of of the Total For the Fiscal Pension Net Pension the Component with the Component Covered Covered Pension Year Ended Liability Liability Unit Unit Payroll Payroll Liability June 30, 2025 0.0658% $ 2,180,765 $ 52,607 $ 2,233,372 $ 6,141,055 35.51% 90.80% June 30, 2024 0.0677% 2,502,508 64,710 2,567,218 5,863,021 42.68% 89.10% June 30, 2023 0.0716% 4,003,792 110,260 4,114,052 5,478,816 73.08% 83.10% June 30, 2022 0.0668% 5,290,582 155,198 5,445,780 5,009,118 105.62% 76.67% June 30, 2021 0.0634% 2,707,464 82,761 2,790,225 4,553,229 59.46% 87.00% June 30, 2020 0.0678% 4,064,920 125,364 4,190,284 3,516,627 115.59% 79.00A June 30, 2019 0.0639% 3,532,888 109,829 3,642,717 4,522,507 78.12% 80.20% June 30, 2018 0.0645% 3,578,196 117,344 3,695,540 4,333,280 82.57% 79.50% June 30, 2017 0.0644% 4,111,253 51,656 4,162,909 4,145,653 99.17% 75.90% June 30, 2016 0.0621% 5,042,212 65,842 5,108,054 3,854,427 130.82% 68.91% 204 CITY OF SHAKOPEE SCHEDULE OF CITY CONTRIBUTIONS LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND Contributions in Relation to Statutorily the Statutorily Contribution Contributions as For the Fiscal Required Required Deficiency City's Covered a percentage of Year Ended Contribution Contributions (Excess) Payroll Covered Payroll December 31, 2025 $ 833,232 $ 833,232 $ - $ 11,109,762 7.5% December 31, 2024 760,715 760,715 10,142,865 7.5% December 31, 2023 697,384 697,384 9,298,458 7.5% December 31, 2022 675,864 675,864 9,011,525 7.5% December 31, 2021 643,525 643,525 8,580,333 7.5% December 31, 2020 607,487 607,487 8,099,830 7.5% December 31, 2019 577,643 577,643 7,701,906 7.5% December 31, 2018 544,381 544,381 7,258,413 7.5% December 31, 2017 499,333 499,333 6,657,773 7.5% December 31, 2016 459,555 459,555 6,127,400 7.5% 205 CITY OF SHAKOPEE SCHEDULE OF CITY CONTRIBUTIONS LAST 10 YEARS PUBLIC EMPLOYEES POLICE AND FIRE RETIREMENT FUND Contributions in Relation to Statutorily the Statutorily Contribution Contributions as For the Fiscal Required Required Deficiency City's Covered a percentage of Year Ended Contribution Contributions (Excess) Payroll Covered Payroll December 31, 2025 $ 1,580,869 $ 1,580,869 $ - $ 8,931,461 17.70% December 31, 2024 1,296,505 1,296,505 7,324,889 17.70% December 31, 2023 1,103,809 1,103,809 6,236,212 17.70% December 31, 2022 1,084,634 1,084,634 6,127,876 17.70% December 31, 2021 1,044,257 1,044,257 5,899,757 17.70% December 31, 2020 974,737 974,737 5,750,663 16.95% December 31, 2019 947,168 947,168 5,588,012 16.95% December 31, 2018 851,625 851,625 5,256,945 16.20% December 31, 2017 788,803 788,803 4,869,154 16.20% December 31, 2016 761,951 761,951 4,703,401 16.20% 206 CITY OF SHAKOPEE SCHEDULE OF COMPONENT UNIT CONTRIBUTIONS LAST 10 YEARS GENERAL EMPLOYEES RETIREMENT FUND Contributions in Relation to Statutorily the Statutorily Contribution Contributions as For the Fiscal Required Required Deficiency City's Covered a percentage of Year Ended Contribution Contributions (Excess) Payroll Covered Payroll December 31, 2025 $ 446,999 $ 446,999 $ - $ 5,959,987 7.5% December 31, 2024 429,682 429,682 5,729,093 7.5% December 31, 2023 417,048 417,048 5,560,640 7.5% December 31, 2022 401,135 401,135 5,348,467 7.5% December 31, 2021 359,999 359,999 4,799,987 7.5% December 31, 2020 360,080 360,080 4,801,067 7.5% December 31, 2019 350,018 350,018 4,666,907 7.5% December 31, 2018 339,188 339,188 4,522,507 7.5% December 31, 2017 315,791 315,791 4,210,547 7.5% December 31, 2016 299,473 299,473 3,992,973 7.5% 207 CITY OF SHAKOPEE SCHEDULE OF CHANGES IN THE CITY'S OPEB LIABILITY AND RELATED RATIOS Total OPEB Liability Service cost Interest Changes of benefit terms Differenced between expected and actual experience Changes of assumptions Benefit payments Net change in total OPEB liability Total OPEB liability- beginning Total OPEB liability- ending Covered Employee Payroll City's Total OPEB Liability as a Percentage of Covered Employee Payroll 2018 $ 143,652 79,747 81,560 (72,637) 232,322 1,985,761 2019 $ 164,694 77,453 (69,528) (85,589) 87,030 2,218,083 2020 $ 162,381 89,919 2021 $ 212,676 80,808 135,664 (11,389) 164,630 215,072 (87,621) (88,559) 464,973 2,305,113 408,608 2,770,086 $ 2,218,083 $ 2,305,113 $ 2,770,086 $ 3,178,694 $ 12,533,653 $ 12,472,516 $ 12,982,682 $ 13,704,330 17.70% Note: No Assets are accumulated in a trust to pay related benefits. 18.48% 21.34% 23.19% 208 2022 2023 2024 2025 $ 248,127 67,656 (755,344) (471,095) (88,083) (998,739) 3,178,694 $ 2,179,955 $ 14,047,001 $ 129,364 41,687 3,690 (420,608) (87,485) (333,352) 2,179,955 $ 1,846,603 $ 15,240,076 $ 90,290 75,723 1,105,067 217,187 (134,389) 1,353,878 1,846,603 $ 182,823 124,614 3,376 (98,348) (155,799) 56,666 3,200,481 $ 3,200,481 $ 3,257,147 $ 15,822,251 $ 15,822,251 15.52% 12.12% 20.23% 20.59% 209 CITY OF SHAKOPEE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2025 Variance with Variance with Original Final Budget - Budget - Over Over (Under) Budget Amounts (Under) Final Actual Actual Original Final Budget Amounts Amounts REVENUES Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Revenues: Investment Income Contributions and Donations Rents Other Total Revenues EXPENDITURES Current General Government Public Safety Public Works Culture and Recreation Debt Service: Principal Interest and Other Charges Capital Outlay Public Safety Public Works Culture and Recreation Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Asset Lease Issued Transfers In Transfers Out $ 23,446,450 $ 23,446,450 $ - $ 22,953,317 $ (493,133) 17,000 17,000 - 26,770 9,770 3,810,750 3,810,750 - 5,424,471 1,613,721 5,430,000 5,640,000 210,000 6,493,218 853,218 5,236,800 5,594,700 357,900 6,931,476 1,336,776 325,200 325,200 - 349,538 24,338 475,000 475,000 38,000 38,000 600 600 23,500 23,500 38,803,300 39,371,200 567,900 1,507,218 16,153 525 154,887 1,032,218 (21,847) (75) 131,387 43,857,573 4,486,373 6,167,570 6,257,570 90,000 5,836,131 (421,439) 19,386,190 19,418,690 32,500 19,567,909 149,219 8,398,550 8,876,450 477,900 8,332,729 (543,721) 5,558,990 5,558,990 - 5,693,154 134,164 118,780 118,780 16,828 16,828 168,000 599,500 431,500 578,447 (21,053) - 26,000 26,000 23,500 (2,500) - 15,000 15,000 288,962 273,962 39,679,300 40,752,200 1,072,900 40,456,440 (295,760) (876,000) 876,000 (1,381,000) (505,000) 876,000 Total Other Financing Sources (Uses) 876,000 876,000 Net Change in Fund Balances FUND BALANCES Beginning of Year 23,521,240 3,401,133 4,782,133 12,476 273,059 890,600 (2,325,000) 12,476 273,059 14,600 (2,325,000) (1,148,865) (2,024,865) $ $ (505,000) $ (505,000) 2,252,268 $ 2,757,268 End of Year $ 25,773,508 210 CITY OF SHAKOPEE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ECONOMIC DEVELOPMENT AUTHORITY For the Year Ended December 31, 2025 Budget Variance with Amounts Actual Final Budget - Final Amounts Over (Under) REVENUES Taxes Licenses and Permits Charges for Services Miscellaneous Revenues: Investment Income Other Total Revenues EXPENDITURES Current Economic Development Capital Outlay Economic Development Total Expenditures $ 500,000 $ 488,517 $ (11,483) - 6,325 6,325 774,000 754,929 (19,071) 1,000 1,275,000 894,000 203,421 176,779 202,421 176,779 1,629,971 354,971 742,871 (151,129) 128,428 128,428 894,000 871,299 (22,701) Excess of Revenues Over Expenditures 381,000 758,672 377,672 OTHER FINANCING SOURCES/ (USES) Transfers In - Net Change in Fund Balances FUND BALANCES Beginning of Year 3,384,989 178,051 178,051 $ 381,000 936,723 $ 555,723 End of Year $ 4,321,712 211 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION GENERAL EMPLOYEES FUND 2025 Changes Changes in Plan Provisions • The post -retirement benefit increase formula changed to 100% of the Social Security annual increase, between 1% and 1.75% , beginning January 1, 2026. If the funded ratio (on a market value of assets basis) is less than 85% for the last two consecutive annual valuations or is less than 80% in the most recent actuarial valuation, the maximum is reduced to 1.5%. Previously, the benefit increase was 50% of the Social Security annual increase, between 1% and 1.5%. • The 1% additional employer contribution is eliminated when the plan reaches 98% funded status (on an actuarial value of assets basis); this contribution was previously scheduled to stop when the plan reached 100% funded status. Changes in Actuarial Assumptions • The combined service annuity loading factors increased from 15% to 19% for vested terminated members and from 3% to 44% for non -vested, terminated members. • The assumed post -retirement benefit increase changed from 1.25% to 1.5%. 2024 Changes Changes in Plan Provisions • The workers' compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated to reflect the changes in assumptions Changes in Actuarial Assumptions • Rates of merit and seniority were adjusted, resulting in slightly higher rates. • Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2 members. • Minor increase in assumed withdrawals for males and females. • Lower rates of disability. • Continued use of Pub -2010 general mortality table with slight rate adjustments as recommended in the most recent experience study. • Minor changes to form of payment assumptions for male and female retirees. • Minor changes to assumptions made with respect to missing participant data. 2023 Changes Changes in Plan Provisions • An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023. • The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years of allowable service. • The benefit increase delay for early retirements on or after January 1, 2024, was eliminated. • A one-time, non -compounding benefit increase of 2.5 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024. Changes in Actuarial Assumptions • The investment return assumption and single discount rate were changed from 6.5 percent to 7.00 percent. 2022 Changes Changes in Actuarial Assumptions • The mortality improvement scale was changed from Scale MP -2020 to Scale MP -2021. 212, NOTES TO REQUIRED SUPPLEMENTARY INFORMATION GENERAL EMPLOYEES FUND (Continued) 2021 Changes Changes in Actuarial Assumptions • The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The mortality improvement scale was changed from Scale MP -2019 to Scale MP -2020. 2020 Changes Changes in Plan Provisions • Augmentation for current privatized members was reduced to 2.0 percent for the period July 1, 2020, through December 31, 2023, and 0.0 percent after. Augmentation was eliminated for privatizations occurring after June 30, 2020. Changes in Actuarial Assumptions • The price inflation assumption was decreased from 2.50 percent to 2.25 percent. • The payroll growth assumption was decreased from 3.25 percent to 3.00 percent. • Assumed salary increase rates were changed as recommended in the June 30, 2019, experience study. The net effect is assumed rates that average 0.25 percent less than previous rates. • Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. • Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter. • Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females. • The base mortality table for healthy annuitants and employees was changed from the RP -2014 table to the Pub -2010 General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP -2014 disabled annuitant mortality table to the PUB -2010 General/Teacher disabled annuitant mortality table, with adjustments. • The mortality improvement scale was changed from Scale MP -2018 to Scale MP -2019. • The assumed spouse age difference was changed from two years older for females to one year older. • The assumed number of married male new retirees electing the 100 percent Joint & Survivor option changed from 35 percent to 45 percent. The assumed number of married female new retirees electing the 100 percent Joint & Survivor option changed from 15 percent to 30 percent. The corresponding number of married new retirees electing the Life annuity option was adjusted accordingly. 2019 Changes Changes in Plan Provisions • The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Changes in Actuarial Assumptions • The mortality projection scale was changed from MP -2017 to MP -2018. 213 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION GENERAL EMPLOYEES FUND (Continued) 2018 Changes Changes in Plan Provisions • The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024. • Interest credited on member contributions decreased from 4 percent to 3 percent, beginning July 1, 2018. • Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. • Contribution stabilizer provisions were repealed. • Annual increases were changed from 1 percent per year with a provision to increase to 2.5 percent upon attainment of 90 percent funding ratio to 50 percent of the Social Security Cost -of Living Adjustment, not less than 1 percent and not more than 1.5 percent, beginning January 1, 2019. • For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors. • Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions. Changes in Actuarial Assumptions • The mortality projection scale was changed from MP -2015 to MP -2017. The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. 2017 Changes Changes in Plan Provisions • The State's contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018 and $6.0 million thereafter. • The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State's contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031. Changes in Actuarial Assumptions • The combined service annuity (CSA) loads were changed from 0.80 percent for active members and 60 percent for vested and non -vested deferred members. The revised CSA load are now 0 percent for active member liability, 15 percent for vested deferred member liability, and 3 percent for non -vested deferred member liability. • The assumed annual increase rate was changed for 1 percent per year for all years to 1 percent per year through 2044 and 2.50 percent per year thereafter. 2016 Changes Changes in Actuarial Assumptions • The assumed annual increase rate was changed from 1 percent per year through 2035 and 2.50 percent per year thereafter to 1 percent per year for all years. • The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 7.50 percent. • Other assumptions were changed pursuant to the experience study June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation. 214 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION POLICE AND FIRE FUND 2025 Changes • Assumed rates of salary increases were reduced slightly. • Assumed rates of retirement were adjusted, resulting in an overall increase in unreduced (full) retirements and an overall increase in reduced (early) retirements. • Assumed rates of withdrawal were modified; the new rates will increase predicted terminations, especially in the first few years of employment. • Assumed rates of disabled retirement were significantly increased, especially for ages over age 30. • Continued used of Pub -2010 Public Safety Mortality Table with rates adjusted to better fit observed experience. • Percent married assumption for female retirees lowered from 70% to 65%. • Minor changes were made to form of payment assumptions for retirees. • Minor changes were made to assumptions made with respect to missing participant data. • The combined service annuity load changed from 33% to 13% for vested, terminated members and from 2% to 38% for non -vested, terminated members. Changes in Plan Provisions • The period of time needed for benefit recipients to receive their first benefit increase was reduced by one year (from 36 months to 24 months for a full increase). • The January 1, 2026 benefit increase changed from 1% to 3%; subsequent January 1 increases will be 1%. • The threshold to end the $9 million annual state aid contribution changed from the earlier of July 1, 2048 or 90% funded for both PERA Police & Fire and MSRS State Patrol for three consecutive years to 100% funded for both PERA Police & Fire and MSRS State Patrol for three consecutive years (on an actuarial value of assets basis). • The threshold to end the additional $9 million annual state aid contribution changed from the earlier of July 1, 20248 or 100% funded for a minimum of three consecutive years to 110% funded for a minimum of three consecutive years (on an actuarial value of assets basis). • An additional $17.7 million in direct state aid will be paid annually each October 1 beginning October 1, 2025 through June 30, 2048. • Joint and survivor actuarial equivalent factors were updated to reflect changes in assumptions. 2024 Changes Changes in Plan Provisions • The State contribution of $9.0 million per year will continue until the earlier of 1) both the Police & Fire Plan and the State Patrol Retirement Fund attain 90 percent funded status for three consecutive years (on an actuarial value of assets basis) or 2) July 1, 2048. The contribution was previously due to expire after attaining a 90 percent funded status for one year. • The additional $9.0 million contribution will continue until the Police & Fire Plan is fully funded for a minimum of three consecutive years on an actuarial value of assets basis, or July 1, 2048, whichever is earlier. This contribution was previously due to expire upon attainment of fully funded status on an actuarial value of assets basis for one year (or July 1, 2048 if earlier). 215, NOTES TO REQUIRED SUPPLEMENTARY INFORMATION POLICE AND FIRE FUND (Continued) 2023 Changes Changes in Actuarial Assumptions • The investment return assumption was changed from 6.5 percent to 7.00 percent. • The single discount rate changed from 5.4 percent to 7.0 percent. Changes in Plan Provisions • Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023. • Vesting requirement for new hires after June 30, 2014, was changed from a graded 20 -year vesting schedule to a graded 10 -year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100% after 10 years. • A one-time, non -compounding benefit increase of 3.0 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. • Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a psychological condition relating to the member's occupation. • The total and permanent duty disability benefit was increased, effective July 1, 2023. 2022 Changes Changes in Actuarial Assumptions • The mortality improvement scale was changed from Scale MP -2020 to Scale MP -2021. The single discount rate changed from 6.5% to 5.4%. 2021 Changes Changes in Actuarial Assumptions • The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. • The inflation assumption was changed from 2.50 percent to 2.25 percent. • The payroll growth assumption was changed from 3.25 percent to 3.00 percent. • The base mortality table for healthy annuitants and employees was changed from the RP -2014 table to the Pub -2010 Public Safety Mortality table. The mortality improvement scale was changed from MP -2019 to MN -2020. • The base mortality table for disabled annuitants was changed from the RP -2014 healthy annuitant mortality table (with future mortality improvement according to Scale MP -2019) to the Pub -2010 Public Safety disabled annuitant mortality table (with future mortality improvement according to Scale MP -2020). • Assumed rates of salary increase were modified as recommended in the July 14, 2020, experience study. The overall impact is a decrease in gross salary increase rates. • Assumed rates of retirement were changed as recommended in the July 14, 2020, experience study. The changes result in slightly more unreduced retirements and fewer assumed early retirements. • Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes result in more assumed terminations. • Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. • Assumed percent married for active female members was changed from 60 percent to 70 percent. Minor changes to form of payment assumptions were applied. 2020 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP -2018 to MP -2019. 216, NOTES TO REQUIRED SUPPLEMENTARY INFORMATION POLICE AND FIRE FUND (Continued) 2019 Changes Changes in Actuarial Assumptions • The mortality projection scale was changed from MP -2017 to MP -2018. 2018 Changes Changes in Plan Provisions • Annual increases were changed to 1.00 percent for all years, with no trigger. • An end date of July 1, 2048, was added to the existing $9 million state contribution. • New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9 million thereafter until the 1 • Member contributions were changed from 10.8 percent to 11.3 percent of pay, effective January 1, 2019, and 1 • Employer contributions were changed from 16.2 percent to 16.95 percent of pay, effective January 1, 2019, and 17.7 percent of pay, effective January 1, 2020. • Interest credited on member contributions decreased from 4 percent to 3 percent, beginning July 1, 2018. • Deferred augmentation was changed to 0 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Changes in Actuarial Assumptions • The mortality projection scale was changed from MP -2016 to MP -2017. 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. 217 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION POLICE AND FIRE FUND (Continued) 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. OTHER POST EMPLOYMENT BENEFITS 2025 Changes Assumption changes: • The discount rate was changed from 3.77% as of 12/31/2023 to 4.08% as of 12/31/2024 based on updated 20 - year municipal bond rates as of each measurement date. 2024 Changes Assumption changes: • The discount rate was changed from 4.05% as of 12/31/2022 to 3.77% as of 12/31/2023 based on updated 20 - year municipal bond rates as of each measurement date. 2023 Changes Assumption changes: • The discount rate was changed from 1.84% as of 12/31/2021 to 4.05% as of 12/31/2022 based on updated 20 - year municipal bond rates as of each measurement date. 2022 Changes Assumption changes: • The discount rate was changed from 2.00% as of 12/31/2020 to 1.84% as of 12/31/2021 based on updated 20 - year municipal bond rates as of each measurement date. • The inflation assumption changed from 2.50% to 2.25% based on an updated historical analysis of inflation rates and forward looking market expectations. • The payroll growth rate changed from 3.25% as of 12/31/2020 to 3.00% as of 12/31/2021 based on an updated historical analysis of inflation rates and forward looking market expectations. 2021 Changes Assumption changes: • The discount rate was changed from 2.75% as of 12/31/2019 to 2.00% as of 12/31/2020 based on updated 20 - year municipal bond rates as of each measurement date. 2020 Changes Assumption changes: • The discount rate was changed from 3.71% as of 12/31/2018 to 2.75% as of 12/31/2019 based on updated 20 - year municipal bond rates as of each measurement date. 2019 Changes Assumption changes: • The discount rate was changed from 3.31% as of 12/31/2017 to 3.71% as of 12/31/2018 based on updated 20 - year municipal bond rates as of each measurement date. 218 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION OTHER POST EMPLOYMENT BENEFITS (CONTINUED) 2018 Changes Assumption changes: • The discount rate was changed from 3.81% as of 12/31/2016 to 3.31% as of 12/31/2017 based on updated 20 - year municipal bond rates as of each measurement date. 2017 Changes Assumption changes: • The discount rate was changed from 3.50% to 3.81% based on updated measurement dates and GASB 75 requirements. • Healthcare trend rates were reset to reflect updated cost increase expectations, including an adjustment to reflect the impact of the Affordable Care Act's Excise Tax on high -cost health insurance plans. • Medical per capita claims costs were updated to reflect recent experience and new plan offerings. • Withdrawal, retirement, mortality and salary increase rates were updated from the rates used in the 7/1/2015 PERA General and Police & Fire Employees Retirement Plan to the rates used in the 7/1/2018 valuation. • The percent of future regular retirees assumed to elect coverage at retirement changed from 50% to 30% to reflect recent plan experience. • The inflation assumption changed from 2.75% to 2.50% based on an updated historical analysis of inflation rates and forward looking market expectations. BUDGETARY COMPARISON SCHEDULES A. Legal Level of Budgetary Compliance Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. B. Summary of Significant Budget Amendments • Intergovernmental revenues was increased $80,000 for MnDot Safe Road Zones Grant and $130,000 for the MN DNR shade tree grant program. Additionally charges for services increased $90,000 for the West End AUAR and $267,900 for engineering construction inspection services. • The expenditure budget adjustments of $1,702,900 included increases in expenditures related to the revenue adjustments noted above and capital purchases of modular barriers, inspection vehicle, security cameras, irrigation upgrades and fire extinguisher training and training props. C. Summary of Significant Budget Variances • Licenses and permits came in over budget on account of an influx of development and conservative budgeting. • Intergovernmental revenue came in over budget due to an increase in fire aid, police aid and public safety grants received during the year. • Charges for services came in over budget as a result of an increases in development resulting in increased engineering service fees. Additionally conduit debt fees were received in 2025. • Investment income came in over budget, as a result of an increase in interest earnings and an unrealized gain from the market value of investments. 219 (THIS PAGE LEFT BLANK INTENTIONALLY) 220 SUPPLEMENTARY INFORMATION 221 CITY OF SHAKOPEE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2025 Variance with Variance with Original Budget - Final Budget - Budget Amounts Over (Under) Actual Over (Under) Original Final Final Budget Amounts Actual Amounts REVENUES Taxes General Property Fiscal Disparities Franchise Aggregate Total Taxes Special Assessments Licenses and Permits Intergovernmental Revenues Federal Grants Police Aid Fire Aid State Grants Other Grants and Aids Total Intergovernmental Revenues Charges for Services General Government Public Safety Public Works Parks and Recreation Total Charges for Services Fines and Forfeitures Miscellaneous Revenues Investment Income Contributions and Donations Rents Other Total Miscellaneous Revenues Total Revenues EXPENDITURES General Government Current: Mayor and Council Administration City Clerk Finance Planning Government Buildings Unallocated Total General Government Public Safety Current: Police Fire Building Inspection Capital Outlay Total Public Safety $ 20,766,450 $ 20,766,450 $ 2,317,000 2,317,000 363,000 363,000 23,446,450 23,446,450 17,000 17,000 3,810,750 3,810,750 16,000 16,000 580,000 580,000 345,000 345,000 837,000 1,047,000 3,652,000 3,652,000 5,430.000 5,640,000 127,000 217,000 1,151,400 1,151,400 1,093,700 1,361,600 2,864,700 2,864,700 5,236,800 5,594,700 325,200 325,200 475,000 475,000 38,000 38,000 600 600 23,500 23,500 537,100 537,100 38,803,300 39,371,200 205,900 205,900 2,726,280 2,726,280 480,700 480,700 1,166,950 1,166,950 765,540 855,540 694,300 694,300 127,900 127,900 6,167,570 6,257,570 12,948,990 12,948,990 4,373,100 4,405,600 2,064,100 2,064,100 168,000 599,500 19.554,190 20,018,190 $ 20,517,356 $ (249,094) 2,117,107 (199,893) 316,624 (46,376) 2,230 2,230 22,953,317 (493,133) 26,770 9,770 5,424,471 1,613,721 187,933 171,933 693,148 113,148 533,494 188,494 210,000 1,280.949 233,949 3,797.694 145,694 210,000 6,493,218 853,218 90,000 267,900 357,900 567,900 466,614 249,614 1,165,023 13,623 2,330,522 968,922 2,969,317 104,617 6,931,476 1,336,776 349,538 24,338 1,507,218 1,032,218 16,153 (21,847) 525 (75) 154,887 131,387 1,678,783 1,141,683 43,857,573 4,486,373 177.321 (28,579) 2,742,298 16,018 398,085 (82,615) 1,123,941 (43,009) 90,000 804,882 (50,658) 580,694 (113,606) 8,910 (118,990) 90,000 5,836,131 (421,439) 32,500 431,500 464,000 20,146,356 128,166 13,395,393 446,403 4,136,489 (269,111) 2,082,567 18,467 531,907 (67,593) 222 CITY OF SHAKOPEE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND (Continued) For the Year Ended December 31, 2025 Variance with Variance with Original Budget - Final Budget - Budget Amounts Over (Under) Actual Over (Under) Original Final Final Budget Amounts Actual Amounts EXPENDITURES (Continued) Public Works Current: Engineering Streets Shop Park Maintenance Capital Outlay Total Public Works Culture and Recreation Current: Recreation Capital Outlay Total Parks and Recreation Debt Service Principal Interest and Other Charges Total Debt Service Total Expenditures Excess of Revenues Over (Under) OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Asset Lease Issued Transfers In Transfers Out Total Other Financing Sources (Uses) $ 1,430,500 $ 1,778,400 $ 347,900 $ 1,574,852 $ (203,548) 2,846,050 2,846,050 2,687,401 (158,649) 607,800 607,800 520,045 (87,755) 3,514,200 3,644,200 130,000 3,550,431 (93,769) - 26,000 26,000 23,500 (2,500) 8,398,550 8,902,450 503,900 5,558,990 5,558,990 5,558,990 15,000 8,356,229 (546,221) 5,693,154 15,000 288,962 5,573,990 15,000 134,164 273,962 5,982,116 408,126 118.780 118,780 16.828 16,828 135,608 135,608 39,679,300 40,752,200 1,072,900 40,456,440 (295,760) (876,000) (1,381,000) (505,000) 3,401,133 4,782,133 876,000 876,000 876,000 876,000 Net Change in Fund Balances $ - $ (505,000) $ (505,000) 12,476 273,059 890,600 (2,325,000) (1,148,865) (2,024,865) 12,476 273,059 14,600 (2,325,000) 2,252,268 $ 2,757,268 FUND BALANCES Beginning of Year 23,521,240 End of Year $ 25,773,508 223 CITY OF SHAKOPEE COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2025 Special Revenue Shakopee Government Forfeiture DARE Television ASSETS Cash and Investments Special Assessments Receivable: Delinquent Deferred Accounts Receivable Interest Receivable Due from Other Governments Prepaid Items Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts Payable Due to Other Funds Due to Other Governments Advance from Other Funds Total Liabilities Deferred Inflows of Resources Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources Fund Balances Nonspendable Restricted for: Special Revenue Debt Service Capital Projects Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 58,097 $ 2,926 $ 50,113 457 7,200 395 1,147 $ 58,554 $ 2,926 $ 58,855 $ 550 $ 891 $ 2,852 550 891 2,852 58,004 58,004 1,147 2,035 - 54,856 2,035 56,003 $ 58,554 $ 2,926 $ 58,855 224 Special Revenue Debt Service Opioids Public Safety Lodging Tax Settlement Funds Total 2016A GO Tax 2019A Tax Abatement Increment Bonds Bonds $ $ 243,867 $ 358,164 $ 713,167 $ 1,577,449 $ 317,575 25,631 32,831 - 852 12,376 2,491 1,147 - $ 25,631 $ 243,867 $ 358,164 $ 747,997 $ 1,589,825 $ 320,066 $ 25,631 $ - $ $ 29,924 $ - $ 25,631 29,924 - 1,147 - 243,867 358,164 662,070 - - - 1,589,825 - 54,856 - 320,066 243,867 358,164 718,073 1,589,825 320,066 $ 25,631 $ 243,867 $ 358,164 $ 747,997 $ 1,589,825 $ 320,066 225 CITY OF SHAKOPEE COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS (Continued) December 31, 2025 Debt Service 2020A Tax 2022A GO Tax 2022A GO Increment Increment Improvement Bonds Revenue Bond Bond ASSETS Cash and Investments Special Assessments Receivable: Delinquent Deferred Accounts Receivable Interest Receivable Due from Other Governments Prepaid Items Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts Payable Due to Other Funds Due to Other Governments Advance from Other Funds Total Liabilities Deferred Inflows of Resources Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources Fund Balances Nonspendable Restricted for: Special Revenue Debt Service Capital Projects Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 580,263 $ 175,694 $ 862,933 22,674 573,261 4,554 1,378 6,770 1,319 $ 584,817 $ 177,072 $ 1,466,957 584,817 584,817 $ $ 595,935 595,935 177,072 871,022 177,072 871,022 $ 584,817 $ 177,072 $ 1,466,957 226 Debt Service Capital Projects Total T1F District No. Park 15 All Sams East Former Gravel TIF District No. Development Saints/Trident Abatement Pit 19 Riverfront $ 3,513,914 $ 4,511,924 $ 345,049 $ 3,618 $ 22,674 - 573,261 - 360 27,569 20,877 1,319 - - $ 960 $ 4,138,737 $ 4,533,161 $ 345,049 $ 3,618 $ $ 438,198 177 - $ 960 960 $ - $ 1,349 $ 960 - 109,921 438,375 960 595,935 - 595,935 - 3,542,802 4,094,786 3,542,802 4,094,786 344,089 3,618 344,089 3,618 1,543,117 111,270 1,544,077 (111,270) (1,543,117) (111,270) (1,543,117) $ 4,138,737 $ 4,533,161 $ 345,049 $ 3,618 $ - $ 960 227 CITY OF SHAKOPEE COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS (Continued) December 31, 2025 Capital Projects TIF District No. Road TIF District No. 21 Shakopee Expansion 20 Enclave Crossing Dedication ASSETS Cash and Investments Special Assessments Receivable: Delinquent Deferred Accounts Receivable Interest Receivable Due from Other Governments Prepaid Items Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts Payable Due to Other Funds Due to Other Governments Advance from Other Funds Total Liabilities Deferred Inflows of Resources Unavailable Revenue - Special Assessments Total Deferred Inflows of Resources Fund Balances Nonspendable Restricted for: Special Revenue Debt Service Capital Projects Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 210 $ 3,927 $ 295,844 $ 210 $ 3,927 $ 295,844 $ 1,180 $ 960 $ 2,143,610 2,144,790 960 - 2,967 (2,144,580) (2,144,580) 295,844 2,967 295,844 $ 210 $ 3,927 $ 295,844 228 Capital Projects Tree Replacement Seal Coat Total Total Governmental Funds $ 471,945 $ 366,171 $ 5,999,648 $ 10,226,729 - - 22,674 - - 573,261 2,900 - 3,260 36,091 3,718 - 24,595 53,016 150,000 - 150,000 151,319 - - - 1,147 $ 628,563 $ 366,171 $ 6,177,503 $ 11,064,237 $ $ - $ 443,607 $ 473,531 - 109,921 109,921 - 177 177 - 3,686,727 3,686,727 4,240,432 4,270,356 595,935 595,935 1,147 - - 662,070 - - 3,542,802 - 4,445,460 4,445,460 628,563 366,171 1,290,578 1,345,434 - (3,798,967) (3,798,967) 628,563 366,171 1,937,071 6,197,946 $ 628,563 $ 366,171 $ 6,177,503 $ 11,064,237 229 CITY OF SHAKOPEE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONIVIAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2025 Special Revenue Shakopee Government Lodging Opioids Forfeiture DARE Television Tax Settlement REVENUES Taxes Tax Increment Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Investment Income Total Revenues $ - $ - $ 30,418 $ 498,100 $ 23,856 1,235 138 - 3,457 - 4,443 27,451 1,235 63,816 34,861 498,100 63,816 EXPENDITURES Current General Government - - 19,174 498,100 Public Safety 33,380 1,116 84,111 Public Works - - Conservation and Natural Resources - - Economic Development - - Debt Service Principal - - Interest and Other Charges - Capital Outlay - - 56,965 Total Expenditures 33,380 1,116 76,139 498,100 84,111 Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year End of Year (5,929) 119 (41,278) (20,295) (5,929) 119 (41,278) (20,295) 63,933 1,916 97,281 - 264,162 $ 58,004 $ 2,035 $ 56,003 $ $ 243,867 230 Special Revenue Debt Service Local Public Safety Affordable Funds Housing Aid Total 2016A GO Tax 2019A Tax 2020A Tax Abatement Increment Increment Bonds Bonds Bonds $ $ $ 528,518 $ 2,189,000 $ $ - 15,147 552,366 552,366 - 15,147 552,366 88,907 15,285 7,900 40,782 7,353 13,338 1,192,976 2,229,782 7,353 13,338 517,274 118,607 764,694 764,694 72,793 72,793 1,425,000 245,000 440,000 6,925 6,925 673,881 101,963 191,100 21,330 78,295 - - - 101,048 764,694 (85,901) (212,328) 1,558,588 2,098,881 (365,612) 130,901 346,963 631,100 (339,610) (617,762) 350,940 642,761 (140,600) (140,600) - (140,600) (140,600) (226,501) (212,328) 584,665 212,328 (506,212) 130,901 1,224,285 1,458,924 350,940 642,761 11,330 24,999 308,736 559,818 $ 358,164 $ $ 718,073 $ 1,589,825 $ 320,066 $ 584,817 231 CITY OF SHAKOPEE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONIVIAJOR GOVERNMENTAL FUNDS (Continued) For the Year Ended December 31, 2025 Debt Service Capital Projects REVENUES Taxes Tax Increment Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Investment Income Total Revenues EXPENDITURES Current General Government Public Safety Public Works Conservation and Natural Resources Economic Development Debt Service Principal Interest and Other Charges Capital Outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year 2022A GO Tax 2022A GO Increment Improvement Revenue Bond Bond Total Park Development $ $ $ 2,189,000 $ - 1,905 109,790 109,790 - 2,741,625 200,830 4,417 44,694 13,133 108,072 202,223 1,905 154,484 2,406,862 3,162,228 80,000 395,000 2,585,000 - 174,950 105,450 1,247,344 - - - - 5,407,292 254,950 500,450 3,832,344 5,407,292 (253,045) (345,966) 290,648 290,648 (1,425,482) (2,245,064) 1,284,349 1,850,000 1,284,349 1,850,000 37,603 (345,966) (141,133) (395,064) 139,469 1,216,988 3,683,935 4,489,850 End of Year $ 177,072 $ 871,022 $ 3,542,802 $ 4,094,786 232 Capital Projects TIF District TIF District No. No. 15 All TIF District No. TIF District No. 21 Shakopee KEB Cherne Sams East Saints/Trident 19 Riverfront 20 Enclave Crossing Abatement Abatement Abatement $ - $ - $ - $ - $ 41,037 $ 48,567 $ 28,659 150,824 269,886 208,067 38,367 - - 36 150,824 269,886 208,067 2,358 253,780 5,746 73,075 2,358 253,780 78,821 148,466 148,466 16,106 129,246 16,106 129,246 195,623 (1,559,223) 38,367 41,037 48,567 28,695 36,903 41,037 48,567 25,077 48,567 25,077 36,903 41,037 1,464 - 3,618 1,464 - 3,618 (2,273,826) 1,503 $ 344,089 $ (1,543,117) $ (2,144,580) $ 2,967 $ $ 3,618 233 CITY OF SHAKOPEE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONIVIAJOR GOVERNMENTAL FUNDS (Continued) For the Year Ended December 31, 2025 Capital Projects REVENUES Taxes Tax Increment Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Investment Income Total Revenues EXPENDITURES Current General Government Public Safety Public Works Conservation and Natural Resources Economic Development Debt Service Principal Interest and Other Charges Capital Outlay Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year Former Gravel Road Expansion Tree Pit Dedication Replacement 111,270 $ $ 27,000 111,270 27,000 (111,270) (27,000) Seal Coat - $ 150,000 3,460 205,600 21,608 187,232 380,668 187,232 212,134 59,457 - 59,457 212,134 321,211 (24,902) (2,000) - (2,000) - (111,270) (27,000) 319,211 (24,902) 322,844 309,352 391,073 End of Year $ (111,270) $ 295,844 $ 628,563 $ 366,171 234 Capital Projects Total Total Other Governmental Funds $ 118,263 $ 2,835,781 667,144 667,144 109,790 2,741,625 2,741,625 350,830 903,196 7,877 7,877 205,600 294,507 200,365 215,650 223,867 339,839 4,515,571 8,115,409 517,274 118,607 212,134 976,828 59,457 59,457 524,738 524,738 2,657,793 73,075 1,327,344 5,434,292 5,512,587 6,303,696 11,694,628 (1,788,125) (3,579,219) 1,850,000 3,134,349 (2,000) (142,600) 1,848,000 2,991,749 59,875 (587,470) 1,877,196 6,785,416 $ 1,937,071 $ 6,197,946 235 CITY OF SHAKOPEE COMBINING STATEMENT OF NET POSITION - INTERNAL SERVICE FUNDS December 31, 2025 Information Employee and Equipment Buildings Park Asset Benefits Technology Self Insurance Total ASSETS Current Assets Cash and Investments, Including Cash Equivalents Interest Receivable Due from Other Governments Prepaid Expenses Total Current Assets Noncurrent Assets Capital Assets: Land Construction in Progress Infrastructure Buildings Machinery and Equipment Lease Equipment Subscription -Based Technology Information Assets (SBITA) Total Cost Less Accumulated Depreciation and Amortization Net Capital Assets Total Noncurrent Assets Total Assets LIABILITIES AND NET POSITION Current Liabilities Accounts Payable Due to Other Governments Current Compensated Absences Current Lease Liability Current SBITA Liability Total Current Liabilities $ 7,340,487 $ 5,052,217 $ 3,004,397 $ 2,768,724 $ 1,241,810 $ 3,687,204 $23,094,839 57,919 37,016 23,905 18,933 9,512 28,559 175,844 49,313 - - 49,313 - 23,713 221,156 244,869 7,398,406 5,138,546 3,028,302 2,787,657 1,275,035 3,936,919 23,564,865 1,209,747 66,784 1,221,626 37,415,665 15,477,327 2,051,818 163,832 221,876 4,692,806 3,401,304 5,303,132 60,031 155,726 26,656 221,876 1,276,531 5,974,463 40,816,969 22,988,003 190,488 593,767 593,767 16,850,906 40,755,893 13,619,118 836,180 72,062,097 (7,682,550) (15,938,816) (7,394,822) (329,589) (31,345,777) 9,168,356 24,817,077 6,224,296 506,591 40,716,320 9,168,356 24,817,077 6,224,296 506,591 40,716,320 $16,566,762 $29,955,623 $ 9,252,598 $ 2,787,657 $ 1,781,626 $ 3,936,919 $64,281,185 25,128 $ 23,632 $ 25,128 23,632 Noncurrent Liabilities Advance from Other Funds 770,000 Compensated Absences - Lease Liability 26,248 SBITA Liability - Total Noncurrent Liabilities 26,248 770,000 Total Liabilities 51,376 793,632 Net Position Net Investment in Capital Assets Unrestricted Total Net Position 9,305,948 7,209,438 16,515,386 25,391,090 6,243,407 3,770,901 3,009,191 29,161,991 9,252,598 $ $ 9,147 $ 5,306 $ 38,085 3,969 - 3,969 1,783,995 - 1,783,995 4,900 30,028 177,707 177,707 1,783,995 195,723 2,180,439 2,180,439 3,964,434 310,413 5,306 5,125,161 20,175 94,515 5,306 2,033,784 770,000 2,180,439 46,423 94,515 114,690 3,091,377 209,294 - 41,149,739 (1,176,777) 1,261,919 (1,176,777) 1,471,213 3,931,613 18,006,285 3,931,613 59,156,024 Total Liabilities and Net Position $16,566,762 $29,955,623 $ 9,252,598 $ 2,787,657 $ 1,781,626 $ 3,936,919 $64,281,185 236 CITY OF SHAKOPEE COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - INTERNAL SERVICE FUNDS For the Year Ended December 31, 2025 Information Employee and Self Equipment Buildings Park Asset Benefits Technology Insurance Total OPERATING REVENUES Rental Charges Other Charges Total Operating Revenues $ 1,699,300 $ 1,428,000 $ 669,100 $ 2,605 - 1,699,300 1,430,605 669,100 OPERATING EXPENSES Depreciation 1,014,085 809,505 451,862 Professional Services 131,344 5,855 Repairs and Maintenance 77,756 - Materials and Supplies 19,546 33,361 45,962 Insurance - - - Total Operating Expenses 1,033,631 1,051,966 503,679 Operating Income (Loss) 665,669 378,639 165,421 NONOPERATING REVENUES (EXPENSES) Investment Income (Loss) Interest Expense Gain (Loss) on Sale of Asset Total Nonoperating Revenues (Expenses) 389,036 235,609 148,492 (2,967) (11,000) - (33,804) (133,610) (90,463) 131,539 $ 655,000 $ 1,063,374 $ 5,514,774 39,702 42,307 655,000 1,103,076 5,557,081 256,210 - 2,531,662 71,896 82,882 291,977 17,820 7,141 102,717 312,629 - 411,498 - 875,211 875,211 658,555 965,234 4,213,065 (3,555) 137,842 1,344,016 63,426 (11,370) (26,904) 195,108 (1,000) 1,163,210 (25,337) (285,781) 352,265 90,999 58,029 131,539 25,152 194,108 852,092 Income (Loss) before Capital Contributions and Transfers 1,017,934 469,638 223,450 131,539 21,597 331,950 2,196,108 Capital Grants and Contribution 49,313 - - 49,313 Capital Contributions to Governmental Fund: 86,801 60,807 - - 147,608 Transfers In 475,000 - - 475,000 Transfers Out - - (350,000) (350,000) Change in Net Position 1,104,735 1,054,758 223,450 131,539 21,597 (18,050) 2,518,029 NET POSITION Beginning of Year 15,410,651 28,107,233 9,029,148 (1,308,316) 1,449,616 3,949,663 56,637,995 End of Year $16,515,386 $29,161,991 $ 9,252,598 $ (1,176,777) $ L471,213 $ 3,931,613 $59,156,024 237 CITY OF SHAKOPEE COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS For the Year Ended December 31, 2025 Information Employee and Equipment Buildings Park Asset Benefits Technology Self Insurance Total CASH FLOWS - OPERATING ACTIVITIES Receipts from Customers and Users Receipts from Interfund Services Payments to Suppliers Net Cash Flows - Operating Activities CASH FLOWS- NONCAPITAL FINANCING ACTIVITIES Payment Paid on Interfund Loan Interest Paid on Interfund Loan Transfer from Other Funds Transfer to Other Funds Net Cash Flows - Noncapital Financing Activities $ 1,699,300 $1,399,255 $ 669,100 $ - $ 655,000 $ 1,123,615 $ 5,546,270 355,349 355,349 (19,546) (242,461) (52,557) (432,290) (1,009,721) (1,756,575) 1,679,754 1,156,794 616,543 (110,000) (11,000) 475,000 354,000 CASH FLOWS - CAPITAL AND RELATED FINANCING ACTIVITIES Intergovernmental Capital Grant 49,313 Principal paid on Leases and SBITA (27,022) Proceeds from Disposal of Capital Assets 99,113 Acquisition of Capital Assets (2,233,575) (865,557) (44,686) Net Cash Flows - Capital and Related Financing Activities (2,161,484) (816,244) (44,686) CASH FLOWS - INVESTING ACTIVITIES Interest Received (Loss) Net. Cash Flows - Investing Activities Net Change in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS Beginning of Year End of Year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS - OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Flows - Operating Activities: Depreciation/Amortization Expense Changes in: Accounts Receivable Due from Other Governments Due to Other Governments Accounts and Contracts Payable Prepaid Expenses Compensated Absences Payable Total Adjustments Net Cash Flows - Operating Activities NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Transfer of Capital Assets Acquisition of Capital Assets on Account Issuance of SBITA Right -to -use Assets Issuance of SBITA Liability 355,349 222,710 (184,625) 1,717 (182.908) 113,894 4,145,044 (350,000) (110,000) (11,000) 475,000 (350,000) (350,000) 4,000 (1,000) 49,313 (211,647) 100,830 (3,144, 818) (1,000) (3,206,322) 382,321 223,862 141,214 131,502 61,413 192,490 1,132,802 382,321 223,862 141,214 131,502 61,413 192,490 1,132,802 (99,409) 918,412 713,071 486,851 101,215 (44,616) 2,075,524 7,439,896 4,133,805 2,291,326 2,281,873 1,140,595 3,731,820 21,019,315 $ 7,340,487 $ 5,052, 17 $ 3,004,397 $ 2,768,724 $ 1,241,810 $ 3,687,204 $ 23,094,839 $ 665,669 $ 378,639 $ 165,421 $ $ (3,555) $ 137,842 $ 1,344,016 1,014,085 809,505 451,862 1,014,085 17.963 (49,313) (740) 778,155 451,122 355,349 355,349 226,265 256.210 2,531,662 3,711 (27,863) (5,793) 20.539 38,502 (49,313) 3,711 (53,172) (81,775) 8,685 2,892 355,349 (23,948) 2,801,028 $ 1,679,754 $1,156,794 $ 616,543 $ 355,349 $ 222,710 $ 113,894 $ 4,145,044 $ 86,801 $ 60,807 $ - $ $ $ $ 147,608 (188,968) (574,013) (19,111) (782,092) 228,631 228,631 (228,631) (228,631) 238 STATISTICAL SECTION 239 (THIS PAGE LEFT BLANK INTENTIONALLY) 240 CITY OF SHAKOPEE STATISTICAL SECTION December 31, 2025 This part of the City's Annual Comprehensive Financial Report (ACFR) presents detailed information for placing in context and understanding what the information shown in the financial statements, note disclosures and required supplementary information reveals about the City's overall financial health. CONTENTS Financial Trends Page 146 These schedules show trend information to help the reader understand how the City's financial performance and well being have changed over time. Revenue Capacity 155 Portrayed is information to help the reader assess the City's most important local revenue source, the property tax. Debt Capacity 159 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information 164 Shown are demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 166 These schedules shown service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Source: Unless noted otherwise, the information in these schedules is from the ACFR for the relevant year. 241 CITY OF SHAKOPEE NET POSITION BY COMPONENT Last Ten Fiscal Years Governmental Activities: Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position Business -Type Activities: 2016 2017 $ 128,559,527 6,637,391 16,719,760 $ 135,442,110 6,342,643 15,059,730 2018 2019 $ 137,799,457 7,136,534 16,107,363 $ 139,359,387 6,774,024 21,218,968 $ 151,916,678 $ 156,844,483 $ 161,043,354 $ 167,352,379 Net Investment in Capital Assets $ 70,099,288 $ 75,547,444 $ 78,642,426 $ 83,567,240 Unrestricted 23,281,483 22,730,751 22,999,131 23,939,802 Total Business -Type Activities Net Position $ 93,380,771 $ 98,278,195 $ 101,641,557 $ 107,507,042 Primary Government: Net Investment in Capital Assets $ 198,658,815 $ 210,989,554 $ 216,441,883 $ 222,926,627 Restricted 6,637,391 6,342,643 7,136,534 6,774,024 Unrestricted 40,001,243 37,790,481 39,106,494 45,158,770 Total Primary Government Net Position $ 245,297,449 $ 255,122,678 $ 262,684,911 $ 274,859,421 242 Table 1 2020 2021 2022 2023 2024 2025 $ 135,476,194 $ 143,607,647 $ 137,816,027 $ 149,909,918 $ 163,878,931 $ 181,429,247 8,205,757 7,048,301 10,374,081 15,377,348 14,848,954 13,649,996 20,525,616 31,134,716 37,683,599 34,506,708 28,093,984 29,629,521 $ 164,207,567 $ 181,790,664 $ 185,873,707 $ 199,793,974 $ 206,821,869 $ 224,708,764 $ 88,975,174 $ 96,269,258 $ 105,103,994 $ 107,638,120 $ 112,591,908 $ 121,183,098 23,629,333 23,449,836 18,780,330 21,907,858 23,689,829 26,114,782 $ 112,604,507 $ 119,719,094 $ 123,884,324 $ 129,545,978 $ 136,281,737 $ 147,297,880 $ 224,451,368 $ 239,876,905 $ 242,920,021 $ 257,548,038 $ 276,470,839 $ 302,612,345 8,205,757 7,048,301 10,374,081 15,377,348 14,848,954 13,649,996 44,154,949 54,584,552 56,463,929 56,414,566 51,783,813 55,744,303 $ 276,812,074 $ 301,509,758 $ 309,758,031 $ 329,339,952 $ 343,103,606 $ 372,006,644 243 CITY OF SHAKOPEE CHANGES IN NET POSITION Last Ten Fiscal Years EXPENSES: Governmental Activities: General Government Public Safety Public Works Culture and Recreation Conservation and Natural Resources Economic Development Other Total Governmental Activities Expenses Business -Type Activities: Sewer Storm Refuse Total Business -Type Activities Expenses Total Primary Government Expenses PROGRAM REVENUES: Governmental Activities: Charges for Services: General Government Public Safety Public Works Culture and Recreation Conservation and Natural Resources Economic Development Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues Business -Type Activities: Charges for Services: Sewer Storm Refuse Operating Grants and Contributions Capital Grants and Contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues Net (Expense) Revenue: Governmental Activities Business -Type Activities Total Primary Government Net Expense 2016 2017 2018 2019 2020 $ 4,205,975 $ 4.624,885 $ 5,267,652 $ 5,372,566 $ 5,366,469 13,281,715 11.981,416 11, 376,216 12, 921,133 13,246,236 8,593,885 9,695,789 12,431,309 12,681,165 13,862,381 4,653,362 5.359,259 4,953,434 5,171,408 4,445,956 - - 87,555 169,247 24,223 2,104,584 1,630,516 3,069,377 3,271,933 5,927,106 1,190,824 1,112,571 1,009,230 666,405 1,214,033 34,030,345 34,404,436 38,194,773 40,253,857 44,086,404 3,843,232 4,226,027 3,968,897 4,216,061 4,496,890 1,848,768 1,773,670 1,685,266 1,785,7 89 1,759,785 127,034 12 5, 647 124,579 123,513 122,766 5,819,034 6,125,344 5,778,742 6,125,363 6,379,441 $ 39,849,379 $ 40,529,780 $ 43,973,515 $ 46,379,220 $ 50,465,845 $ 2,410,321 $ 2,544,126 $ 2,811,252 $ 2,738,342 $ 2,584,666 2,744,824 2,989,770 3,225,764 5,386,489 4,036,947 746,086 880,361 1,033,398 1,325,631 978,043 1,760,925 2,813,951 4,167,615 3,847,457 1,712,607 52,384 3,683 - 256,312 26,520 113,908 311,737 146,145 2,777,982 2,068,419 2,036,547 1,881,409 4,774,564 2,187,039 3.847,001 5,061,933 6,527,458 4,498,321 12,883,489 15.170,148 18,502,801 22,022,206 18,731,293 3,292,166 3,380,321 3,682,569 4,222,236 4,056,714 1,632,218 1,272,506 1,230,592 1,304,738 1,337,694 105,309 131,753 104,638 137,824 139,826 - 890 - - 183,142 2,701,892 4,233,507 5,213,883 1,679,881 5,212,835 7,487,362 9,251,306 10,878,681 7,214,115 $ 18,096,324 $ 22,657,510 $ 27,754,107 $ 32,900,887 $ 25,945,408 $ (21,146,856) $ (19,234,288) $ (19,691,972) $ (18,231,651) $ (25,355,111) (606,199) 1,362,018 3,472,564 4,753,318 834,674 $ (21,753,055) $ (17,872,270) $ (16,219,408) $ (13,478,333) $ (24,520,437) GENERAL REVENUES AND OTHER CHANGES IN NET POSITION: Governmental Activities: Taxes: Property $ 18,015,507 $ 19,229,300 $ 20,005,373 $ 19,416,202 $ 20,703,562 Franchise 448,023 1,251.819 1,343,650 1,305,556 1,157,614 Other 464,632 1,014,774 1,657,231 2,405,929 2,533,400 Unrestricted Investment Eamings 495,804 390,911 508,812 1,464,670 1,371,386 Gain on Disposal of Assets 50,132 1,576 14,588 165,784 57,627 Transfers 1,271,853 26,990 436,480 (217,465) (3,613,290) Total Governmental Activities 20,745,951 21,915,370 23,966,134 24,540,676 22,210,299 Business -Type Activities: Investment Earnings (Loss) Gain on Disposal of Assets Transfers Total Business -Type Activities Total Primary Government Change in Net Position: Government Activities Business -Type Activities Total Primary Government 289,001 340,345 318,501 812,204 649,501 1,911 6,217 1,875 82,498 - (1,271,853) (26,990) (436,480) 217,465 3,613,290 (980,941) 319,572 (116,104) 1,112,167 4,262,791 $ 19,765,010 $ 22,234,942 $ 23,850,030 $ 25,652,843 $ 26,473,090 $ (400,905) $ 2,681,082 $ 4,274,162 $ 6,309,025 (1,587,140) 1,681,590 3,356,460 5,865,485 $ (1,988,045) $ 4,362,672 $ 7,630,622 $ 12,174,510 $ (3,144,812) 5,097,465 1,952,653 In 2018 the City reported Conservation and Natural Resources separately from Culture and Recreation. Prior years have not been restated. hi 2020 Conservation and Natural Resources was combined with Public Works. 244 Table 2 2021 2022 2023 2024 2025 $ 5,476,971 $ 5,988,737 $ 5,910,579 $ 6,512,719 $ 6,633,088 12,373,811 15.638,770 17,962,160 19,674,720 18,373,489 13,880,078 14,572,3 86 16,038,602 16,177,262 17,949,661 5,173,536 5.943,934 6,039,360 6,587,521 7,413,354 72,748 55,165 44,604 44,160 59,457 3,051,908 5,002,819 3,769,340 2,866,321 2,858,371 1,169,247 1,272,813 1,530,985 1,406,349 1,432,623 41,198,299 48,474,624 51,295,630 53,269,052 54,720,043 4,394,259 4,339,366 4,556,318 5,133,671 5,258,511 1,918,958 1,777,363 2,114,125 2,327,621 2,640,488 121,379 354,854 2,134 1,067 - 6,434,596 6,471,583 6,672,577 7,462,359 7,898,999 $ 47,632,895 $ 54,946,207 $ 57,968,207 $ 60,731,411 $ 62,619,042 $ 2,890,048 $ 3,991,541 $ 4,510,359 $ 4,167,583 $ 4,539,106 5,271,207 6,983,904 7,381,574 6,699,301 6,399,733 1,850,883 1,034,275 1,726,122 1,338,235 3,285,297 2,330,335 2,478,388 2,917,350 2,606,354 3,044,602 529,395 1,117,947 956,511 938,033 7,554,897 2,203,489 2,037,280 2,699,761 3,048,888 13,015,138 11,105,707 12,585,365 7,993,788 16,676,789 32,912,508 28.326,699 32,275,997 26,461,533 37,932,448 4,377,349 4,781,238 5,146,171 5,912,682 5,146,600 1,296,199 1,403,523 1,457,255 1,486,426 1,555,970 131,240 98,350 90,000 90,000 90,000 1,724 81,409 114,780 122,976 7,999,749 4,094,910 4,863,274 6,307,680 10,330,714 13,804,537 10,379,745 11,638,109 13,911,568 17,246,260 $ 46,717,045 $ 38,706,444 $ 43,914,106 $ 40,373,101 $ 55,178,708 (8,285,791) $ (20,147,925) $ (19,019,633) $ (26,807,519) $ (16,787,595) 7,369,941 3,908,162 4,965,532 6,449,209 9,347,261 (915,850) $ (16,239,763) $ (14,054,101) $ (20,358,310) $ (7,440,334) $ 21,724,568 $ 23,060,873 $ 24,220,022 $ 25,946,932 $ 26,705,378 1,312,325 1,706,284 1,570,945 1,295,303 1,569,830 3,021,589 2,957,522 3,503,803 2,738,508 3,332,725 (355,723) (2,638,052) 3,457,281 3,301,707 3,597,285 51,932 - - - - 114,197 (855,659) 187,849 552,964 (530,728) 25,868,888 24.230,968 32,939,900 33,835,414 34,674,490 (91,157) (648,591) 880,481 839,514 1,138,154 3,490 - (114,197) 855,659 (187,849) (552,964) 530,728 (205,354) 207,068 696,122 286,550 1,668,882 $ 25,663,534 $ 24,438,036 $ 33,636,022 $ 34,121,964 $ 36,343,372 $ 17,583,097 $ 4,083,043 $ 13,920,267 $ 7,027,895 $ 17,886,895 7,164,587 4,115,230 5,661,654 6,735,759 11,016,143 $ 24,747,684 $ 8,198,273 $ 19,581,921 $ 13,763,654 $ 28,903,038 245 CITY OF SHAKOPEE FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years General Fund: Nonspendable: Prepaids Inventories Notes Receivable Leases Committed to: Building Permits Assigned SandVenture Public Safety Building Offical Modular Vehicle Barriers Fire Department Staffing Unassigned Total General Fund All Other Governmental Funds Nonspendable: Prepaids Restricted for: Forfeitures DARE SCDP Grant Opioids Settlement Public Safety Revolving Loans Local Affordable Housing Aid Economic Development Debt Service Capital Improvements Assigned to: Telecommunication Capital Improvements Capital Projects Funds Unassigned Total all Other Governmental Funds 2016 $ 22,188 2017 $ 24,602 34,421 10,739,178 11,918,971 2018 $ 25,613 43,171 12,250,660 2019 $ 125,172 29,944 1,588,000 14,136,227 $ 10,761,366 $ 11,977,994 $ 12,319,444 $ 15,879,343 186,965 4,734 263,787 1,503,917 3,712,584 7,213,258 70,795 4,744,275 2,244,591 (39,928) 221,048 10,805 138,004 356,588 3,608,453 1,539,267 74,139 6,592,822 530,329 (3,241,015) $ 3,801 195,322 18,368 73,004 3,207,099 3,166,302 76,698 6,423,824 516,211 (2,823,436) $ 1,401 172,971 18,368 3,147,055 3,902,170 109,472 5,771,223 720,445 (2,151,671) $ 19,904,978 $ 9,830,440 $ 10,857,193 $ 11,691,434 246 Table 3 2020 2021 2022 2023 2024 2025 $ 108,547 $ 167,407 $ 185,827 $ 261,826 $ 259,365 $ 245,192 29,682 30,157 32,531 33,696 35,999 36,203 - 200,000 200,000 6,727 16,206 27,650 52,011 1,104,000 1,430,000 2,333,000 2,650,000 2,225,000 1,824,000 200,000 200,000 200,000 65,000 375,000 550,000 14,891,656 16,144,333 17,247,211 18,462,750 20,333,226 23,066,102 $ 16,133,885 $ 17,771,897 $ 20,005,296 $ 22,024,478 $ 23,521,240 $ 25,773,508 $ 120 $ 24,831 $ 5,877 $ 4,664 $ 3,872 $ 5,399 158,179 181,269 121,712 101,381 62,240 58,004 - 5,305 1,916 2,035 18,368 18,368 18,368 18,368 125,048 156,085 264,162 243,867 1,622,547 584,665 358,164 212,328 1,022,360 1,380,179 1,300,084 2,407,888 3,384,294 4,317,460 4,332,924 1,747,005 2,547,833 3,293,094 3,683,935 3,542,802 5,709,910 5,249,748 9,387,453 7,808,038 4,686,976 5,009,895 124,018 46,300 68,084 83,875 95,797 54,856 5,363,301 5,691,414 10,777,601 12,697,207 12,606,903 9,759,312 743,188 4,491,480 3,930,285 1,001,688 1,023,269 1,290,578 (4,665,559) (4,665,559) (4,532,260) (6,337,057) (10,410,865) (11,951,186) $ 12,806,809 $ 14,165,035 $ 23,750,085 $ 22,863,083 $ 16,199,492 $ 12,691,186 247 CITY OF SHAKOPEE CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last Ten Fiscal Years 2016 2017 2018 2019 REVENUES: Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Service Fines and Forfeits Miscellaneous Total Revenues EXPENDITURES: General Government Police Public Works Culture and Recreation Conservation and Natural Resources Economic Development Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess of Revenues Under Expenditures OTHER FINANCING SOURCES (USES): Bonds Issued Sale of Assets Premium on Bonds Issued SBITA Issued Lease Issued Transfers In Transfers Out Total Other Financing Sources (Uses) $ 18,549,468 $ 21,476,591 $22,999,326 $ 23,139,620 1,615,161 933,773 984,158 835,345 3,146,818 3,283,495 4,361,054 5,912,112 5,730,576 4,695,847 5,028,349 5,358,921 2,648,478 3,433,660 4,410,024 4,906,607 104,943 241,874 95,821 83,957 877,108 1,004,665 589,865 1,493,245 32,672,552 35,069,905 38,468,597 41,729,807 4,016,871 4,415,257 5,047,823 5,130,038 10,643,342 11,039,220 11,692,533 12,849,532 3,061,172 2,973,840 5,634,985 5,824,268 4,269,211 5,228,929 3,598,591 3,885,624 - - 89,488 169,959 2,092,337 1,611,073 2,848,426 2,510,329 1,685,000 1,685,000 1,995,000 1,910,000 864,494 1,259,987 1,171,990 1,096,743 32,159,412 18,386,260 5,928,038 9,047,340 58,791,839 46,599,566 38,006,874 42,423,833 (26,119,287) (11,529,661) 461,723 (694,026) 29,500,000 - 9,134 104,661 2,237,727 - 79,100 6,916,355 7,282,929 4,038,516 (3,378,977) (4,794,939) (3,132,036) 35,284,239 2,671,751 4,220,000 579 267,587 1,125,289 (525,289) 906,480 5,088,166 Net Change in Fund Balance $ 9,164,952 $ (8,857,910) $ 1,368,203 $ 4,394,140 Debt Service as a Percentage of Noncapital Expenditures 9% 10% 9% 8% In 2018 the City reported Conservation and Natural Resources separately from Culture and Recreation. Prior years have not been restated. In 2020 the City reported Conservation and Natural Resources as part of Public Works. 248 Table 4 2020 2021 2022 2023 2024 2025 $ 24,370,324 $ 26,058,683 $ 27,707,122 $ 29,282,848 $ 30,024,424 $ 31,535,028 990,509 1,398,860 893,686 1,312,090 618,928 313,322 3,923,439 8,129,101 9,353,506 10,183,808 7,453,141 8,172,421 8,491,711 9,773,799 9,326,423 12,735,936 7,278,178 11,507,657 3,035,482 5,023,786 4,440,351 5,961,270 5,883,690 7,694,282 21,379 53,386 475,364 415,715 502,117 644,045 2,394,550 1,210,039 (1,024,585) 3,419,982 2,732,008 3,366,250 43,227,394 51,647,654 51,171,867 63,311,649 54,492,486 63,233,005 5,241,568 5,390,005 5,606,228 5,779,713 6,358,310 6,353,405 13,577,981 14,359,463 15,368,123 16,649,938 18,646,838 19,686,516 6,579,242 7,086,627 7,670,005 7,618,981 7,864,261 9,309,557 3,559,908 4,190,443 4,835,898 5,017,325 5,198,428 5,693,154 25,557 79,244 36,727 43,040 44,160 59,457 5,819,029 2,847,578 2,834,350 2,356,434 1,338,321 1,334,429 1,750,000 3,680,000 1,475,000 2,032,025 2,710,189 2,776,573 1,171,363 1,397,438 1,287,695 1,771,030 1,624,173 1,650,790 13,690,958 9,657,226 10,979,692 19,081,220 15,392,386 18,185,697 51,415,606 48,688,024 50,093,718 60,349,706 59,177,066 65,049,578 (8,188,212) 2,959,630 1,078,149 2,961,943 (4,684,580) (1,816,573) 8,165,000 10,000,000 10,284 984 14,416 6,338 12,476 832,845 117,582 - - - 29,297 75,155 26,242 386,652 36,258 273,059 3,226,176 6,331,732 2,277,547 9,374,633 3,853,428 4,205,000 (2,676,176) (6,099,632) (1,877,547) (11,634,761) (4,453,428) (3,930,000) 9,558,129 232,100 10,544,808 (1,829,763) (482,249) 560,535 $ 1,369,917 $ 3,191,730 $ 11,622,957 $ 1,132,180 $ (5,166,829) $ (1,256,038) 7% 12% 6% 8% 9% 8% 249 (THIS PAGE LEFT BLANK INTENTIONALLY) 250 CITY OF SHAKOPEE Table 5 TAX CAPACITY AND TAXABLE MARKET VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years Tax Less: Capacity as a Commercial Less: Fiscal Net Adjusted Total Taxable Percentage of Fiscal Residential Industrial Other Tax Increment Disparity Tax Direct Market Taxable Year Property (a) Property Property (b) Property Contribution (c) Capacity (d) Tax Rate Value Market Value 2016 $ 27,838,939 $ 20,111,657 $ 670,839 $ 384,578 $ 2,409,936 $ 45,826,921 0.37902 $ 3,843,037,400 1.19% 2017 28,199,409 23,224,857 608,016 827,765 2,219,811 48,984,706 0.38522 4,034,313,200 1.21% 2018 30,219,157 25,188,979 1,108,269 1,330,932 3,647,951 51,537,522 0.37212 4,341,199,500 1.19% 2019 32,113,022 27,026,224 1,084,001 1,657,341 3,923,222 54,642,684 0.34943 4,613,605,800 1.18% 2020 35,763,301 29,170,963 1,106,038 1,953,037 4,269,143 59,818,122 0.33965 5,063,434,500 1.18% 2021 38,756,283 32,123,467 1,819,208 2,554,354 5,102,644 65,041,960 0.32105 5,537,836,867 1.17% 2022 42,796,326 34,709,876 1,410,279 2,749,307 6,139,141 70,028,033 0.32111 6,044,797,135 1.16% 2023 54,133,179 36,878,916 1,255,486 3,393,736 6,235,453 82,638,392 0.28585 7,215,756,805 1.15% 2024 55,770,305 45,054,143 1,275,678 2,862,355 6,665,042 92,617,135 0.27402 7,782,044,997 1.19% 2025 58,384,797 49,343,003 1,133,322 3,842,380 9,447,423 96,423,957 0.27768 8,285,219,487 1.16% Source: Scott County Assesor/Auditor By State Statute, property taxes are calculated and collected based on the prior year's assessor market value. (a) Includes single-family homes, townhouses, apartments and residential vacant land. (b) includes personal property, agricultural, railroad and utility classifications. (c) Figure represents fiscal disparities contribution net of fiscal disparities distribution. The City of Shakopee is a net contributor. (d) Figure represents total tax capacity less net fiscal disparities. Note that total direct tax rate in the next column is calculated based on total tax capacity less fiscal disparities contribution and less tax capacity in TIF districts. 251 CITY OF SHAKOPEE Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years City Direct Rate General Obligation Shakopee Debt Service Fiscal Operating Debt Service Total Direct School Scott Other Market Value Year Rate Rate Rate District County Jurisdictions Rate 2016 0.36710 0.01192 0.37902 0.53478 0.36175 0.05129 0.00605 2017 0.34063 0.04458 0.38522 0.49282 0.35896 0.04979 - 2018 0.32993 0.04219 0.37212 0.52141 0.35114 0.05732 - 2019 0.30976 0.03968 0.34943 0.52934 0.33841 0.06466 - 2020 0.30319 0.03646 0.33965 0.50558 0.32718 0.03154 - 2021 0.28762 0.03343 0.32105 0.33722 0.31025 0.04767 - 2022 0.28985 0.03126 0.32111 0.33444 0.30492 0.05025 - 2023 0.25789 0.02796 0.28585 0.30003 0.26578 0.04369 - 2024 0.24916 0.02485 0.27402 0.28602 0.26228 0.04576 - 2025 0.25495 0.02273 0.27768 0.27361 0.26977 0.04765 - Sources: Scott County Auditor 252 CITY OF SHAKOPEE Table 7 PRINCIPAL TAXPAYERS Current Year and Nine Years Ago 2025 2016 Percentage Percentage 2024/25 of Total Net 2015/16 of Total Adj. Tax Cap. Adj. Tax Tax Cap. Tax Cap. Taxpayer Type of Business Value* Rank Cap. Value Value Rank Value MCP Shakopee LLC Distribution $ 1,227,034 1 1.27% GEP X Addison LLC Apartments 834,621 2 0.87% Rahr Malting Grain Processing 738,869 3 0.77% $ 443,141 3 0.96% Stag Industrial Holdings LLC Warehouse/Manufacturing 680,722 4 0.71% Shakkin LLC Warehouse/Manufacturing 677,478 5 0.70% 399,250 7 0.86% J & J Minneapolis LLC Manufacturing 667,327 6 0.69% 449,000 2 0.97% Soutwest Logistics Center, LLC Distribution 645,847 7 0.67% IDP Dean Lakes B1 LLC Warehouse/Manufacturing 609,471 8 0.63% Seagate Technology LLC Manufacturing/Research 571,537 9 0.59% 419,250 5 0.90% Lothenbach Properties Warehouse/Manufacturing 570,896 10 0.59% 399,250 7 0.86% Xcel Energy Electrical Generation 631,975 1 1.36% Liberty Properties LP Distribution 432,750 4 0.93% Rosemount Inc Manufacturing 399,470 6 0.86% St. Francis RMC Health Care 374,500 9 0.81% Certainteed Manufacturing 365,250 10 0.79% $ 7,223,802 7.49% Source: Scott County Auditor $ 4,313,836 9.30% *Current year values are ranked by Adjusted Net Tax Capacity value, which are adjusted for tax increment and fiscal disparities. Values for the nine year comparison are ranked by Net Tax Capacity value and not adjusted for tax increment and fiscal disparities 253 CITY OF SHAKOPEE Table 8 PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Ratio of Accumulated Percentage Delinquent Collections Percentage Collections of Total Accumulated Taxes to Year Tax of Current of Levy of Prior Total Collections Delinquent Current Collected Levy Years Taxes Collected Years Taxes Collections To Tax Levy Taxes Years Taxes 2016 $ 17,610,195 $ 17,316,074 98.33% $ 41,140 $ 17,357,214 98.56% $ 76,631 0.44% 2017 18,926,341 18,628,201 98.42% - 18,628,201 98.42% 95,933 0.51% 2018 19,610,548 19,198,990 97.90% 43,706 19,242,696 98.12% 102,862 0.52% 2019 19,580,500 18,992,066 96.99% 61,887 19,053,953 97.31% 90,928 0.46% 2020 20,730,500 20,227,478 97.57% 57,390 20,284,868 97.85% 115,180 0.56% 2021 21,367,800 21,116,697 98.82% 163,802 21,280,499 99.59% 114,979 0.54% 2022 22,986,000 22,273,905 96.90% 215,912 22,489,817 97.84% 132,536 0.58% 2023 24,392,000 23,552,819 96.56% 336,147 23,888,966 97.94% 144,458 0.59% 2024 25,973,000 25,345,904 97.59% 427,906 25,773,810 99.23% 100,777 0.39% 2025 27,244,050 26,292,482 96.51% 161,878 26,454,360 97.10% 173,682 0.64% Source: Scott County Auditor 1. The above data does not include tax increment districts. 254 CITY OF SHAKOPEE Table 9 RATIO OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Governmental Activities Business -type General Tax Activities Total Percentage Fiscal Obligation Increment Improvememt SBITA Lease SBITA Primary of Personal Per Year Bonds Bonds Bonds Liability Liability Liability Government Income Capita 2016 $ 36,070,590 $ - $ 2,095,000 $ - $ - $ $ 38,165,590 2.9% 948 2017 35,284,168 - 1,085.000 - 65,330 36,434,498 2.7% 886 2018 33,677,746 - 585.000 - 46,542 34,309,288 2.5% 826 2019 32,006,324 4,220,000 235.000 - 26,616 36,487,940 2.5% 857 2020 31,097,636 12,385,000 90.000 - 5,481 43,578,117 2.8% 997 2021 26,588,480 13,142,512 - 39,730,992 2.3% 871 2022 25,212,058 18,859,032 4,136.189 - 113,803 48,321,082 2.6% 1,051 2023 23,770,636 18,174,099 4,132,928 121,483 569,207 46.768,353 2.5% 1,016 2024 22,304,213 17,389,166 3,734,668 269,725 360,115 44.057,887 2.0% 944 2025 20,767,790 16,569,233 3,336,408 293,484 474,722 21,038 41.462,675 1.9% 889 Sources: Details regarding the city's outstanding debt can be found in the notes to the financial statements. See Table 13 for income and population data. 255 CITY OF SHAKOPEE Table 10 RATIOS OF GENERAL BONDED OUTSTANDING Last Ten Fiscal Years Fiscal Y ear General Obligation Bonds Tax Increment Bonds 2016 $ 36,070,590 $ 2017 35,284,168 2018 33,677,746 2019 32,006,324 2020 31,097,636 2021 26,588,480 2022 25,212,058 2023 23,770,636 2024 22,304,213 2025 20,767,790 4,220,000 12,385,000 13,142,512 18,859,032 18,174,099 17,389,166 16,569,233 Improvememt Bonds $ 2,095,000 1,085,000 585,000 235,000 90,000 4,136,189 4,132,928 3,734,668 3,336,408 Total Bonds $ 38,165,590 36,369,168 34,262,746 36,461,324 43,572,636 39,730,992 48,207,279 46,077,663 43,428.047 40,673,431 Less: Available in Debt Service $ 4,875,714 4,265,148 3,207,099 3,147,055 4,332,924 1,239,273 2,231,462 3,470,018 3,825,555 3,653,083 Net General Bonded Debt Outstanding Sources: 1. Metropolitan Council estimated for population. 2. Scott County Auditor 3. Details regarding the city's outstanding debt can be found in the notes to the financial statements. $ 33,289,876 32,104,020 31,055,647 33,314,269 39,239,712 38,491,719 45,975,817 42,607,645 39,602,492 37,020,348 Percentage of Percentage Actual Taxable of Total Value of Per Personal Property Capita Income 0.99% $ 827 2.90% 0.90% 780 2.71% 0.79% 748 2.48% 0.79% 782 2.55% 0.86% 898 2.80% 0.72% 844 2.30% 0.80% 1,000 2.57% 0.64% 926 2.43% 0.56% 849 1.97% 0.49% 793 1.84% 256 CITY OF SHAKOPEE Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2025 Percentage Amount Applicable Applicable Long -Term To City of To City of Debt Shakopee (1) Shakopee Direct Debt: City of Shakopee Overlapping Debt: Independent School District No. 720 Independent School District No. 191 Scott County Metropolitan Council (2) Total Overlapping Debt: Total Direct and Overlapping Debt $ 41,462,675 100.0% $ 41,462,675 107,629,567 89,550,000 87,970,000 235,750,000 97.8% 105,246,875 5.6% 5,010,715 33.1% 29,117,353 1.7% 3,938,351 520,899,567 143,313,294 $ 562,362,242 $ 184,775,969 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, leases and subscription liabilites. 257 CITY OF SHAKOPEE LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years 2016 2017 2018 2019 Market Value (Taxable) $ 3,844,106,800 $ 4,034,313,200 $ 4,342,662,600 $ 4,613,605,800 Debt Limit - Percent of Market Value (Note A) Amount of Debt Applicable to Debt Limit: General Obligation Bonds Available in Debt Service Funds Total Debt Applicable to Debt Limit 115,323,204 121,029,396 130,279,878 138,408,174 36,070,590 35,284,168 33,677,746 32,006,324 (2,443,111) (3,102,308) (2,750,395) (2,729,462) 33,627,479 32,181,860 30,927,351 29,276,862 Legal Debt Margin $ 81,695,725 $ 88,847,536 $ 99,352,527 $ 109,131,312 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 3% 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. (7) All other obligations which under the provisions of law authorizing their issuance are not to be included in computing the net debt of the municipality. NOTE (C): 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." 258 Table 12 2020 2021 2022 2023 2024 2025 $ 5,063,670,900 $ 5,540,321,100 $ 6,044,797,135 $ 7,215,756,805 $ 7,782,044,997 $ 8,285,219,487 151,910,127 166,209,633 181,343,914 216,472,704 233,461,350 248,556,585 31,097,636 26,588,480 25,212,058 23,770,636 22,304,213 20,767,790 (2,760,690) (3,644,630) (1,233,474) (1,344,662) (1,458,924) (1,589,825) 28,336,946 22,943,850 23,978,584 22,425,974 20,845,289 19,177,965 $ 123,573,181 $ 143,265,783 $ 157,365,330 $ 194,046,730 $ 212,616,061 $ 229,378,620 259 CITY OF SHAKOPEE Table 13 DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years Fiscal School Unemployment Total Per Capita Personal Year Population (1) Enrollment (2) Rate (3) Employment (3) Income (4) Income (5) 2016 40,254 8,927 3.2% 21,571 $ 32,704 $ 1,316,466,816 2017 41,143 9,036 2.6% 27,156 32,662 1,343,812,666 2018 41,519 8,636 2.4% 25,930 33,300 1,382,582,700 2019 42,595 8,807 2.8% 27,427 33,631 1,432,512,445 2020 43,698 8,665 6.1% 22,051 35,607 1,555,954,686 2021 45,593 8,572 2.3% 22,417 37,857 1,726,014,201 2022 45,961 8,573 2.2% 23,773 40,748 1,872,818,828 2023 46,037 8,286 2.3% 23,510 41,261 1,899,532,657 2024 46,660 8,354 2.4% 23,485 47,238 2,204,125,080 2025 46,660 * 8,509 3.7% 26,858 47,444 2,213,737,040 Source: 1. Met Council estimates and 2020 is the official census number. 2. Shakopee School District, SACS, Bloomington Lutheran 3. Minnesota Department of Employment and Economic Development Local Area Statistics 4. Census estimates 5. Per capita income times population * 2025 estimated population is not yet available. 260 CITY OF SHAKOPEE Table 14 PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2025 2016 Total Total (1) City City Taxpayer Type of Business Employees Rank Employment Employees Rank Employment Amazon Distribution 2,200 1 9.81% 2,000 1 9.27% Valley Fair Amusement Park 1,721 (a) 2 7.68% 1,600 2 7.42% Emerson Manufacturing 1,461 (b) 3 6.52% 504 10 2.34% School District No. 720 Education 1,295 (b) 4 5.78% 1,055 3 4.89% Cyberpower Systems Manufacturing 1,160 5 5.17% Datacard Manufacturing 1,000 (b) 6 4.46% 820 7 3.80% St. Francis RMC Health Care 979 7 4.37% 875 5 4.06% Scott County Government 865 (b) 8 3.86% 638 9 2.96% Imagine Print Solutions Printing 877 9 3.91% 823 6 3.82% Canterbury Park Horse Racing 700 10 3.12% 877 4 4.07% Seagate Manufacturing/Research 775 8 3.59% 12,258 54.68% 9,967 46.22% Total Employment (2) 26,858 21,571 Source: (1) D&B Hoovers, https://app.dnbhoovers.com/, and a December 2025 best efforts contact of individual employers. This does not purport to be a comprehensive list. Some employers do not respond to inquiries. (2) Minnesota Depait tent of Employment and Economic Development Local Area Statistics (a) At seasonal peak (b) Includes full and part-time and seasonal employees. 261 CITY OF SHAKOPEE FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years 2016 2017 2018 2019 2020 General Government: Administration City Clerk Finance Planning Facilities Maintenance Information Technology Public Safety: Police: Licensed Other Fire: Full time Building Inspection Public Works: Engineering Street and Utility Shop Park and Recreation: Park Maintenance Natural Resources Recreation Economic Development: EDA Total Source: City departments 8 8 9 9 9 3 3 3 3 3 4 4 4 4 4 6 5 6 5 5 3 3 2 2 2 5 5 5 5 5 48 47 50 50 50 10 11 12 12 12 7 7 8 8 8 5 5 5 7 7 8 8 9 10 11 15 15 15 15 16 3 3 3 3 3 9 9 9 9 11 1 1 - - - 10 13 15 16 16 1 1 1 1 1 146 148 156 159 163 262 Table 15 2021 2022 2023 2024 2025 9 9 10 10 10 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5 2 2 2 2 2 5 5 5 5 5 50 50 50 52 52 12 12 12 12 12 8 8 11 14 15 8 8 9 9 10 11 10 10 10 9 16 16 16 16 16 3 3 3 3 3 11 11 12 12 12 18 18 18 19 19 1 1 1 1 1 166 165 171 177 178 263 CITY OF SHAKOPEE OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years 2016 2017 2018 2019 General Government Planning Number of Case Files Number of Plats Filed Number of Acres Platted Public Safety Police Arrests Citations Calls for Service Fire Calls for Service Building Inspection Building Permits Issued Number of Inspections Single Family Homes Permitted Public Works Street Miles of Roadway 50 59 72 83 7 10 11 9 79 169 161 131 1,543 1,338 1,741 1,683 4,396 3,569 3,470 3,391 21,117 21,632 21,916 22,910 792 808 914 957 1,030 1,145 1,274 1,158 6,659 6,301 8,350 9,507 45 33 76 140 156 156 156.5 161.2 Park and Recreation Park Maintenance Acres Maintained 783 783 783 783 Recreation Program Participants 23,700 41,289 25,559 20,811 Community Center Memberships Sold N/A N/A 1,880 1,992 Community Center Admissions N/A N/A N/A N/A Ice Rental Hours 1,773 2,870 3,158 3,410 Sand Venture Admissions N/A N/A 20,867 20,913 Source: City departments 264 Table 16 2020 2021 2022 2023 2024 2025 59 49 63 11 11 12 305 294 206 55 8 156 47 15 253 46 8 228 1,206 1,574 1,258 1,122 1,046 1,552 2,278 2,552 2,699 2,846 2,715 3,706 22,137 22,591 22,423 22,358 22,661 24,228 1,146 1,544 1,732 1,728 1,938 2,012 1,611 1,686 3,331 2,534 2,021 1,600 11,191 11,195 15,482 16,793 16,279 14,494 165 202 203 132 271 263 163.0 165.9 170.5 173.6 178.2 183.0 783 765 765 765 765 843 6,508 25,244 28,287 33,889 39,817 44,183 1,704 1,408 1,417 1,496 1,548 1,548 N/A N/A 42,329 47,070 45,491 40,757 2,134 7,518 6,875 7,704 8,287 8,131 CLOSED 30,674 27,568 32,568 CLOSED 29,633 265 CITY OF SHAKOPEE CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years 2016 2017 2018 2019 2020 Police: Stations Patrol Zones Patrol Units Fire Stations Street: Miles of Roadway Traffic Signals 1 1 1 1 1 4 3 3 3 3 15 16 16 16 16 2 2 2 2 2 156 156 157 161 163 30 30 30 30 30 Parks: Acres 783 783 783 783 783 Ball Fields/Sports Fields 56 57 57 57 57 Playgrounds 27 27 27 27 27 Source: City departments * Number updated to include all field types not just baseball fields in 2022. 266 Table 17 2021 2022 2023 2024 2025 1 1 1 1 1 3 3 3 3 3 16 16 16 16 17 2 2 2 2 2 166 171 174 178 183 30 30 30 30 30 765 765 765 765 843 57 94* 94* 94* 94* 27 29 31 30 33 267 (THIS PAGE LEFT BLANK INTENTIONALLY) 268 Executive Governance Summary City of Shakopee Shakopee, Minnesota For the year ended December 31, 2025 A"o Lighting the path forward 5201 Eden Avenue, Ste 250 Edina, MN 55436 P 952.835.9090 100 Warren Street, Ste 600 Mankato, MN 56001 P 507.625.2727 14500 N Northsight Blvd, Ste 321 Scottsdale, AZ 85260 P 480.864.5579 269 Ab o May 19, 2026 Management, Honorable Mayor and City Council City of Shakopee, Minnesota AbdoSolutions.com 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 of the City of Shakopee, (the City) for the year ended December 31, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Governmental Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 02, 2026. Professional standards also require that we communicate to you the following information related to our audit. 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) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards or Uniform Guidance. Lighting the path forward 2 270 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. The City did change accounting policies in 2025 related to capital assets, leases and subscription -based information -technology arrangements (SBITA). 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 sensitive estimates affecting the financial statements were depreciation on capital assets, allocation of payroll, compensated absences, lease balances, other postemployment benefits payable and 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. • 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 increases and form of annuity payment upon retirement. • Management's estimate of its lease liability, lease assets, lease receivables and related deferred inflows and SBITA liability and SBITA assets and are based on several factors including, but not limited to, estimated incremental borrowing rates. • Management's estimate of certain payables related to construction projects are based on certain assumptions including contract estimates and project completeness. • Management's estimate of future compensated absences usage is based on historical usage data. We evaluated the key factors and assumptions used to develop these estimates in 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 Representations We have requested certain representations from management that are included in the management representation letter dated May 19, 2026. AbdoSolutions.com 3 271 Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management 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 of the Net Pension Liability, the Schedules of Employer's Contributions, Schedule of Changes in the Other Post -Employment Benefits Liability and Related Ratios and the Budgetary Comparison Schedules), 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. We were engaged to report on the supplementary information (combining and individual fund financial statements and 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 preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the 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. Future Accounting Standard Changes The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future -City financial statements: GASB Statement No. 103 - Financial Reporting Model Improvements Effective: 12/31/2026 GASB Statement No. 104 - Disclosure of Certain Capital Assets Effective: 12/31/2026 Further information on upcoming GASB pronouncements. AbdoSolutions.com 0 4 272 * * * * * Restriction on Use The purpose of this communication is solely for the information and use of the City Council, management and the 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 to contact 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 Minneapolis, Minnesota May 19, 2026 AbdoSolutions.com 0 5 273 Other Required Reports City of Shakopee Shakopee, Minnesota For the year ended December 31, 2025 A"o Lighting the path forward 5201 Eden Avenue, Ste 250 Edina, MN 55436 P 952.835.9090 100 Warren Street, Ste 600 Mankato, MN 56001 P 507.625.2727 14500 N Northsight Blvd, Ste 321 Scottsdale, AZ 85260 P 480.864.5579 274 City of Shakopee, Minnesota Other Required Reports Table of Contents For the Year Ended December 31, 2025 Page No. Other Required Reports Independent Auditor's Report on Minnesota Legal Compliance Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Federal Financial Award Programs Independent Auditor's Report on Compliance for Each Major Program and on Internal Control over Compliance Required by The Uniform Guidance Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs 4 5 8 11 12 13 2 275 OTHER REQUIRED REPORTS CITY OF SHAKOPEE SHAKOPEE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2025 3 276 Ab A o INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and City Council City of Shakopee, Minnesota AbdoSolutions.com We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States the financial statements of the governmental activities, the business -type activities, 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, 2025, and the related notes to the financial statements, and have issued our report thereon dated May 19, 2026. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City's noncompliance with the above referenced provisions, insofar as they relate to accounting matters. This report is intended solely for the information and use of those charged with governance and management of the City and the State Auditor and is not intended to be, and should not be, used by anyone other than these specified parties. Abdo Minneapolis, Minnesota May 19, 2026 Lighting the path forward 4 277 Ab o INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Shakopee, Minnesota AbdoSolutions.com 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 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, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 19, 2026. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Lighting the path forward 5 278 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Abdo Minneapolis, Minnesota May 19, 2026 6 279 FEDERAL FINANCIAL AWARD PROGRAMS CITY OF SHAKOPEE SHAKOPEE, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2025 7 280 Ab o INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Honorable Mayor and City Council City of Shakopee, Minnesota Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program AbdoSolutions.com We have audited the City of Shakopee, Minnesota (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2025. The City's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2025. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City 's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City's federal programs. Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City 's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major federal program as a whole. Lighting the path tom—, 8 281 In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. AbdoSolutions.com 0 9 282 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 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, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated May 19, 2026, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Abdo Minneapolis, Minnesota May 19, 2026 AbdoSolutions.com 10 283 City of Shakopee, Minnesota Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2025 Funding Source Federal Domestic Administering Assistance Department Number Program Name/Number Bulletproof Vest Partnership Department of Justice Direct 16.607 Program U.S. Department of Transportation U.S. Department of Transportation U.S. Department of Energy Minnesota Department State and Community Highway of Transportation 20.600 Safety Minnesota Department of Transportation Direct U.S. Department of Minnesota Department Transportation of Transportation Total Highway Safety Cluster Minimum Penalties for Repeat Offenders for Driving While 20.608 Intoxicated Passed Program through to Expenditures Subrecipients $ 7,368 $ 98,872 44,273 98,872 44,273 181,294 55,328 Energy Efficiency and Conservation 81.128 Block Grant Program (EECBG) 49,313 20.205 Highway Planning and Construction 1,770,479 - Total $ 2,107,326 $ 99,601 11 284 City of Shakopee, Minnesota Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2025 Note 1: Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs of City of Shakopee, Minnesota (the City). The City's reporting entity is defined in Note 1A to the City's financial statements. The information in this schedule is presented in accordance with the requirement of the Uniform Guidance, Audits of States, Local Governments, and Non -Profit Organizations. All Federal awards received directly from Federal agencies as well as Federal awards passed through other government agencies are included on the schedule. Note 2: Summary of Significant Accounting Policies for Expenditures Expenditures reported on this schedule are reported on the modified accrual basis of accounting. Note 3: Pass -through Entity Identifying Numbers Pass -through entity identifying numbers are presented where available. Note 4: Sub recipients Of the federal expenditures presented in the Schedule, the City provided federal awards to subrecipients as follows: Amount Provided to Subrecipients Minimum Penalties for State and Community Repeat Offenders for Program Title Highway Safety Driving While Intoxicated Federal AL Number 20.600 20.608 Subrecipients: Scott County Savage New Prague Belle Plaine Jordan Elko New Market Prior Lake 8,149 $ 11,201 7,018 7,119 3,237 7,549 8,207 20,321 2,459 21,636 707 634 1,364 Total $ 44,273 $ 55,328 Note 5: Indirect Cost Rate During the year ended December 31, 2025, the City did not elect to use the 10 percent de Minimis indirect cost rate. 12 285 City of Shakopee, Minnesota Schedule of Findings and Questioned Costs For the Year Ended December 31, 2025 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued Internal control over financial reporting Material weaknesses identified? Significant deficiencies identified not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major programs Material weaknesses identified? Significant deficiencies identified not considered to be material weaknesses? Type of auditor's report issued on compliance for major programs Any audit findings disclosed that are required to be reported in accordance with 2CFR section 200.516(a)? Identification of Major Programs/Projects Highway Planning and Construction Dollar threshold used to distinguish between Type A and Type B Programs Auditee qualified as low -risk auditee? Section II - Financial Statement Findings None Section III - Major Federal Award Findings and Questioned Costs Unmodified No None reported No No None reported Unmodified No CFDA No. 20.205 $ 1,000,000 No There are no significant deficiencies, material weaknesses, or instances of noncompliance including questioned costs that are required to be reported in accordance with the Uniform Guidance. Section IV - Schedule of Prior Year Audit Findings None Other Issues A Corrective Action Plan is not required because there were no findings required to be reported under the Federal Single Audit Act. 13 286 sal a) F ' ca u} V O ca u" • ClaNI) LO Introduction u) L -0 o c co u) L.L -o = C c 4) a) (/) 4) .o—c��E E� >o" O o o o�O w La c_c.$ > < D OOW Pq Audit Results M- - w CL -w rnrx co ID rnw J c COCI 0 o. 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N O • c 'Q N f0 U w • ■ M N N ■ General Fund Debt Service Funds cpqv N M N O N Taxes Per Capita F N N N M N M 6) N M O N N N N {/} (/) (!} N N CO N CO 1/40 O 'O 'O N {/} <I> <I> O O O O O O O O N O O O� O N 0 CO Class 2 Cities Cities in Scott County - City of Shakopee i N 1.0 N CO N N N N o\ VO O N cC N N 0 N M aN' o° 6, co 7 N N‘71 - M g 0 0 0 o a O O O O O O O O O O O O O 6 OIn r N Class 2 Cities Cities in Scott County - City of Shakopee Note: Taxes per capita includes property taxes, lodging taxes, franchise taxes, and tax increment revenue cpqv cc 0 LIJ z o' z 2 a LL W a W 41.99% 39.16% 40.26% 5.03% 4.37% 4.58% 4.77% 33.44% 30.00% 28.60% 27.36% ° � 6� N CO N N CO LO N g cr O CO 32.11% 28.59% 27.40% 27.77% 7 V> O N .7i- (-NI I M N O N N N N ' o 0 0 0 o a a o a J O O O O O O O O O O ) 0 0 0 0 0 0 0 0 0 0 J O W O VD O ' O N O O • Class 2 Cities City Tax Rate ■Special Tax Rate School Tax Rate County Tax Rate City Tax Rate cpqv ■ co cc C I z 4—) W 0 A ` z W Q C LL W a W Y * Class 2 Cities: 20,001 — 100,000 0 a a, V a) a co 0 V! 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SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 11.a June 2, 2026 Legislative Update: Elections Rick Parsons Action to be considered: Informational only. Motion Type: Informational only Background: The 2026 legislative session created many changes to Minnesota elections law. A majority of the changes were minor process modifications and clarifications, but HF 4240, an election omnibus bill signed into law at the end of the legislative session, made significant modifications to the absentee voting process. As a city that has administered absentee voting for the past 5 years, this change has an impact on the city. HF 4240 requires that the City of Shakopee and Scott County come to an agreement about the administration of absentee voting by June 12, 2026. The city may choose to administer the full 46 days of absentee voting, or instead administer 18 days of absentee voting immediately before the election (commonly referred to as the direct balloting period). If the city proceeds to opt out of the full 46 -day period and administer the 18 -day direct balloting period instead, the county will take over administration of the first 28 days of absentee voting. Absentee Background: The state of Minnesota opened absentee voting to all eligible voters in 2014, and allowed counties to delegate absentee voting administration to cities. Shakopee, Prior Lake, and Savage were delegated absentee voting by Scott County and were responsible for administering the absentee process starting with the 2020 election cycle. The county maintained oversight of mail -in and UACAVA absentee voting, and operated an absentee polling location in Jordan. To comply with the new requirement, Shakopee opened an absentee voting location at City Hall. Absentee voting starts 46 days before election day and is broken into two distinct time periods. The first time period is the first 28 days of absentee (commonly referred to as "absentee"); the second time period is the following 18 days before the election, called 307 the direct balloting period. When a ballot is received in the first 28 days, it is stored in a secure location until it is time to open and count the ballot. If a ballot is received in the 18 -day direct balloting period, the voter puts the ballot directly into the tabulator and the vote is counted. Both processes are technical and require significant training, coordination, and resources to execute properly. Current Trends: Absentee voting sees low utilization for the first 28 days, but a significant increase in utilization in the subsequent 18 days during direct balloting. Possible explanations for this are that voter participation increases as elections draw nearer, and that voters appreciate their ballot being counted the moment they complete it during direct balloting. General elections see higher rates of absentee voting, and primary elections see very little. 2024 Election Numbers General: • 28 -Day Absentee Period: 1,076 ballots (4.6% of total vote) • 18 -Day Direct Balloting Period: 4,906 ballots (21% of total vote) • Total Absentee Period (28 -day + 18 -day): 9,233 ballots (39% of total vote) • Total Votes: 23,484 *absentee period numbers reflect voter turnout at the Shakopee City Hall absentee polling location only. The county absentee polling location received ballots not reflected in 28 -day and 18 -day period numbers above.* Primary: • 28 -Day Absentee Period: 34 ballots (1.6% of total vote) • 18 -Day Direct Balloting Period: 92 ballots (4% of total vote) • Total Absentee Period (28 -day + 18 -day): 294 ballots (14% of total vote) • Total Votes: 2,171 *absentee period numbers reflect voter turnout at the Shakopee City Hall absentee polling location only. The county absentee polling location received ballots not reflected in 28 -day and 18 -day period numbers above. * Cost Considerations: If the anticipated election judge costs of the 2026 election cycle are applied to the 2024 voting numbers, the approximate city cost per vote during the upcoming 28 -day absentee period are as follows: • General Election: $11.10 per vote • Primary Election: $271.76 per vote Please note that these numbers are subject to change depending on the election judge staffing levels required. Cost estimates displayed above are based on 4 election judges working in the absentee room during the primary, and 5 election judges working in the general. Staff time, overtime, and facility costs are not calculated into these estimates. 308 Implications: If the city proceeds to administer 18 days of direct ballot absentee voting and return the initial 28 -day absentee period to the county, there will be some operational changes. The city will not operate an absentee polling center for the first 28 days, and will not need to commit the staff, resources, and funding to support absentee voting until the 18 -day period starts. The estimated cost savings for the 2026 election cycle is approximately $21,180 in election judge costs, not including city staff time dedicated to supervising the absentee voting process and absentee ballot board. Impact to Voters: Currently, voters may participate in the election by: • Election Day Voting • Voting Absentee (46 to 18 days prior to election) o Mail -in Ballot o In -Person Absentee at City Hall and County Public Works Building O Direct Balloting (starts 18 days prior to election) O Health Care Facility Voting With the city changing to 18 -day absentee, voters may participate in the election in the same ways as before, with the exception that 28 -day absentee voting will be done exclusively at the County's Public Works Building in Jordan (600 Country Trail E, Jordan) and not be offered at City Hall. Direct balloting will remain unchanged and the city will open a polling location for direct balloting 18 days before the election. The cities of Prior Lake and Savage are both anticipated to move from 46 days of absentee voting to 18 days of absentee voting. This will make the Scott County's Public Works Building a universal location for early absentee voting in Scott County. Recommendation: No formal action required by City Council. Staff recommends the city proceed to move from 46 days of absentee voting to 18 days of absentee voting. This recommendation is made because of: • Low utilization of the first 28 days of absentee. • Improved efficiency in having one centralized early absentee location at a county facility. • Voters have many voting options and will still be able to vote absentee in the 28 -day absentee period. • Cost savings for the city. 309 Budget Impact: Approximate cost savings of $21,180 in election judge costs. There will also be significant savings in staff time, and minor savings in the reduction of the use of city facilities. Attachments: Legislative Update: Elections Presentation 310 June 2, 2024 cn 0 V -o CU w O � `— 0 a) a) ro o u • V c 4) .O a) > V .L� a) > c to a) 2 a) J • . N O N a) 4-0 0 as a resu CD C a) O V •, O L) Q - s- a) O •c c L au O u (D O c -O O O E u co o •- V N c CO G V • LCD C E O C O 0 a) a) a) 0 CD .— a) • V cu a3 O a) N N � ' V U Q) I _a • z H z zt H,4„. E 0 � r 8 o5,° zogi HF 4240 Summary of Changes: cu u o }. • v) v) UCU -0.03 CU via1 O CU 73 U a) O) Os - C �O I lb L (J 81545 Q,,,3 til (t5 >_, -g cuu 2 >„— O O uCU f,a) 1)ti) -O "-0 ra act O C CU 42 (II lij O cn S N 75 C •— cn _CD CU .— v).— 700 n 03 cu to O 2O cn L � LU • . 00 O +� O > cu 0 a) >:co -� O u00 t/1 cp N • 7 N —O O a, O O-0ca 4-1 "� O ocua� - "� U �.�DO o O jLnOoszu +_+ .—f3 • V . CM C O ^W, W �C W (I) Cn a) 4-O > a) F CB 0 - co O a--+ .+7j0 > N CU 40 C a) co a) CU Q O a) a--+ CO a--+ (n O L co CD 0 (/) a) .. -C C 4 O N • ki m • Scott County delegated absentee voting administration to the cities in 2020. Absentee voting period starts 46 days before election day. Direct balloting period starts 18 days before election day. • • I Absentee Voting I Direct Balloting Absentee Voting Election Day [ CO O Z 7r (Ni A O C cio a --r V • 0 to 4U 4U a--+ C CU .. O a; CU CU C O a) a i C Must be submitted O 4J ro a) 11:1 O -O N (73-o - (1) i.•_ _O 00 0 CU v— i O V a) W a) bA -c O I— /N� }, J • W O cu O \V 0) _0 _ o O . S 2 cut o c O U - UA = d) -0 C N c O O ° +-, c6 O O 'M • U co o O ▪ a) O + — oa)•. c- 6 • i o_ m >, 4) V) c6 _o c cn D E Q ) 0D = 03 O N C bA >.} c O co M co co N w a iii a) O > a) a) 4J c a) Q c'3 i- . ^ ^ 0 O c. W I— • N .4 ... `.. co CD O N Cr) O w r.. .. O) I- Q) co O > op to . N- � O c C5 •- CO 1- U N 4-,N > 0 • • Election Day a) bA -c O CU c \V /Cl) 1L CU c -a N +� U cB a) to -o cN co O CD 0.0 U co C � � cr) ,4a72 N O Ca i a) > a) Q Dm c 00 n Ca L O O a) O a) E U) a) a-' N 4-0 • r 0) 4J O a) 4-0 a) co • O W 1. O) M .. .. cn L— >, a) -O > co on N c }' •— L- O •— CO ) CT) > 0 Election Day 4—, VI 0 V \O Tuj t/1 -0 V C te a. J +� c N O Cocu -a .0 CO CO ca -0 ca CO •4J tv � W Q N V c C C 0 V a) w 0 V CU w ca E CL a) O 71- * o_ O � N71- 71- o M • •• 0 -OO N V > ih Election Judge numbers subject to variation depending on demand. DI C t u O) C 0 4- t 4-0 C 0 4J a) 0. O v) 0 V 4-, u N cL) 1O m Z•% co 0b O s U 0 0 u 2 C N s. 0 u E u s_ C O Direct Balloting Absentee Voting Election Day Mi I E w M .O4.Q a ' 0 Z u RS O -c J LA I CO N - N C — +-7. TO CI) .+' _ O 'n 5 CO ai ai as Ln LJ V) Op E O U 0 C • Absentee Po c 15 m IA .V Ta a L I- C i 0 = O o +a V 6 0 U V) LA Starting July 24, 2026 Starting June 26, 2026 0 V a1 aJ s • tan a, CU a.I •— O 0 L L � O c� N L a) O O •: 9 • a) O E u U a_ 4J O O 4J O V) ca c6 I 4o U 4J ca (1c) b�0 C a) to O a) = > - Ca Q >, C m CD ca a) c O m 0 o) cn Q .C_ N • tto W • • C O U (1) O 4J O Q co b�A O ca m U) 0 • • t absentee will be located at Cti ca 00 a) E a) ..a) O +•1 —O O Ca `� a) 4--+ e ca CD O >0 O +-' U O CO a) 0_ J 4 U J }' (12 U O a) CU Cn N � O E co.i 17, Q CU >C C)0 ra E 2 o) 0 .— N N co • 2 cn�' tm f6 Q fa (J o O O) v; lJ v O I- cm N 0 C) +-0 UM •V C a) - N 0 E 4-▪ 0 L L- W CU > c,) o —Q C ICU N O, EC • •gin • •> 4-0 V) V -0 N C C v �O O •� C �s CU Ou COo C C5)CO .. a--+ (I) . V LE N C) O 0_ LA CJ Q LA N O7:3 co vl coa 'V - — V 0_ N cn aC C V •O a) i x N O 'E E a-+ c� q- ra *+7J >Q W E C). c QO •. 0 • c/1 a--+ C ro a V ° 03 fa _ ; a--+ C — v N (75 �� can .- L 1—V (D a) CL `i= ���6 aUw 01 ro CD C a--+ Q) v O O ._ O ro cn U G) cn E O r i Q) C I— O }' +' _a o rc5 6) ty) cu > —0 CU 0 Jate--+ C O N O a) c VI 0 C ca v) cu v a: O -a .— C +,N V 03 C V N ,N O U O te-+ N fa CU Z °— (la v) 00 -o E O O 0 N E •• N +-1 8 m, CU s `� v)� (II O dJ 0) V al c6 •V 0_ O i W V 28 CU 00 ▪ Q Lf) CU c O ca O -O V ra a) O CD ro ▪ .ro l) E V O o) O +a •cu c cu- > = t O' O cu — _o rt5 Q •_ • •_ 4 J V_ N N _Q o E •§ O W S E Vocu �° Cr) F > a WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 12.a June 2, 2026 City Bill List Becky Smith, Accounting Specialist Action to be considered: Review of City Bill List Motion Type: Informational only Background: The City Bill has been provided to the City Council. Recommendation: Review of City Bill List Budget Impact: N/A Attachments: 325 WILLA! SHAKOPEE Agenda Item: Prepared by: Reviewed by: Shakopee City Council 12.b June 2, 2026 News and Announcements Rick Parsons Action to be considered: No action, item is informational only. Motion Type: Informational only Background: Announcements and Upcoming Events: • SandVenture Season Opening: O SandVenture will be opening for the season on June 5. Come out and enjoy some fun in the sun at SandVenture this summer! • Annual Picnic with Police: o Save the date for the annual Picnic with Police from 5-8 pm Monday, June 8, at Huber Park. Join Shakopee police and other community leaders for a free picnic dinner, games, activities, and a night of family -friendly fun! No registration necessary. • Rhythm on the Rails O Rhythm on the Rails begins with their first concert of the season on Wednesday, June 17, from 6:00 - 9:00 pm. Rhythm on the Rails is a free six - week outdoor concert series that takes place on Wednesday nights in June and July. The event is held on Lewis Street in downtown Shakopee. • Lions Park Parking Lot Improvements O The Lions Park Parking Lot will undergo improvements during the summer of 2026. Construction began on Monday June 1st and will continue throughout the summer. The project includes expanding parking capacity, resurfacing the Sandventure Parking Lot and reconstructing the parking lot adjacent to the splash pad. During each phase of construction, parking will be available in the other parking lots that are not under active construction. Access throughout the park will be maintained at all times. • Eagle Creek Boulevard Seal Coating o Weather permitting, on June 8th and 9th Eagle Creek Boulevard between 326 Marschall Road and Canterbury Road will be seal coated. During this roadway maintenance, traffic will be reduced to one lane in each direction. Access to business, homes, driveways and side streets will remain open outside of short temporary restrictions. A work zone speed limit will be posted for the safety of workers, residents, businesses, and the traveling public. Motorists are encouraged to plan ahead, use caution when traveling through the work zone, and consider alternate routes whenever possible to help reduce congestion and delays. Recommendation: Please review the information on upcoming news and announcements. Budget Impact: N/A. Attachments: 327