2019 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2019

NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED) B. Deficit Net Position and Fund Balance The Economic Development Authority special revenue fund had a negative fund balance of $255,097 on December 31, 2019 as a result of partial construction costs to install utilities and streets in EDA land held for resale. Anticipated land sales in this area are expected to recover this deficit. The TIF District No. 17 Amazon capital project fund had a negative fund balance of $1,426,745 on December 31, 2019 as a result of street improvements costs. Tax increment revenue over the next seven years is anticipated to eliminate this deficit. The TIF District No. 19 Riverfront capital project fund had a negative fund balance of $428,906 on December 31, 2019 as a result of property acquisition costs. Developer reimbursment at the time of closing is anticipated to eliminate this deficit. The Employee Benefits internal service fund had a negative net position of $1,422,577 on December 31, 2019. 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. The TIF District No. 20 Enclave capital project fund had a negative fund balance of $40,923 on December 31, 2019 as a result of lot improvements at the old city hall site. Tax increment revenue is anticipated to eliminate this deficit. 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 Statues 118.03 for an amount exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage. As of December 31, 2019, the City and Commission’s bank balances were not exposed to custodial credit risk because they were insured through Federal Deposit Insurance Corporation (FDIC) and properly collateralized with securities held by the pledging financial institutions’ trust departments or agents in the City’s name. NOTE 4 – DEPOSITS AND INVESTMENTS

As of December 31, 2019, the City had the following deposits:

City Deposits Component Unit Deposits

$

2,911,176 12,672,972

Total Deposits

15,584,148 $

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