2024 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024

The City has entered into two 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 19 – TAX ABATEMENT AGREEMENT 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). 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, 2024, the total disbursed was $43,375. KEB Abatement was established in 2019. KEB America, LLC is a leading manufacturer of 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, 2024, the total disbursed was $41,431. 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 though tax revenues from the additional taxable value of the property generated by the development (tax increment). A "pay-as-you-go" is established for this amount, on which the City makes payments for a fixed period of time with available tax increment revenue after deducting for certain administrative costs. NOTE 20 – TAX INCREMENT FINANCING The tax abatement agreements are as follows:

103