2020 Comprehensive Annual Financial Report

CITY OF SHAKOPEE

MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2020

Long-Term Debt

At the end of the current year, the City had total bonded debt outstanding of $41,075,000. Of this amount, $40,985,000 comprises debt backed by the full faith and credit of the government and $90,000 is special assessment debt for which the government is liable in the event of default by the property owners subject to the assessment.

Outstanding Debt G.O. and Revenue Bonds Expressed in Thousands

Governmental Activities

Business-Type Activities

Total

2020

2019

2020

2019

2020

2019

G.O. Bonds

$

40,985

$

34,425

$

-

$

-

$

40,985

$

34,425

Special Assessment Debt with Governmental Commitment

90

235

- -

- -

90

235

-

-

-

Total

$

41,075

$

34,660

$

-

$

-

$

41,075

$

34,660

The City’s total outstanding bonded debt increased by $6,415,000 during the current year. The City retired $1,750,000 in principal in 2020 and issued $8,165,000 General Obligation Tax Increment Bonds 2020A to fund infrastructure improvements. 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 $112.6 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 70 to 72 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

The COVID-19 outbreak in the United States still continues to cause business disruption into 2021. With vaccine rollouts and approved governmental funding the total financial impact is still uncertain but moving in the right direction. In December 2020, the unemployment rate in Shakopee was 6.1%, up 3.3% from a year ago. The large jump in unemployment is due to layoffs with workforce changes due to the Covid-19 outbreak. This compares favorably to the state’s December unemployment rate of 6.2% and the national rate of 8.1%. . The City's taxable market value is $5.6 billion for taxes payable 2021, which is an increase of $501 million or 9.9 percent from the previous year. New construction accounted for $116 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. In turn, the backfilling of housing will help support the employment needs of these businesses.

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