2024 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024

NOTE 5 – RECEIVABLES/UNAVAILABLE REVENUE (CONTINUED)

* B. Lease Receivable (Continued) 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. 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 2038. During the year ended December 31, 202 4 , the Commission recognized $176,446 and $53,017 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 $2,229,418. C. Notes Receivable In 2003 the City entered into an agreement for a note receivable to be reimbursed for developing certain property located within the City. The project consisted of a twenty-two (22) unit residential, rental townhome development to be constructed primarily for the purpose of providing low- and moderate income housing. The term of the note is the later of December 31, 2033 or the maturity date of the Minnesota Housing Finance Agency (MHFA) first mortgage loan with respect to the project. The receivable related to the note is $200,000. D. 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 aware forgiven annually. The city may extend or reduce the repayment period based on the dollar amount of the reward. As of December 31, 2024, the balance of these loans is $217,196. There has been an allowance for doubtful accounts recorded for the same amount, as it is fully expected that these loans will be forgiven. *

72