2021 Annual Comprehensive Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2021

NOTE 19 – RISK MANAGEMENT

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 $2,000,000 for universal umbrella coverage. Property coverage is at approximately $111,000,000. The City has entered into four 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. NOTE 20 – TAX ABATEMENT AGREEMENT 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 $50,000 and is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. Under each agreement, the City and developer agree on an amount of development costs to be reimbursed to the developer by the City though tax revenues from the additional taxable value of the property generated by the development (tax abatement). The tax abatement agreements are as follows: Datacard Abatement was established in 2014. Datacard is the world’s largest issuer of protected, personalized ID cards, credentials, and credit cards. The City of Shakopee awarded an eleven-year economic development property tax abatement, ending in 2024, which required the creation of 100 new full time jobs in Shakopee. The first year of disbursement occurred in 2014. The total City abatement awarded was $334,869 with an annual maximum award of $36,195. The total county abatement awarded was $324,324 with an annual maximum award of $35,055. During the year ended December 31, 2021, the total disbursed was $35,626 with $18,098 from Scott County and $17,528 from the City. The 2nd half payment of $35,624 is currently being held by the City, pending the resolution of a tax appeal.

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