2018 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2018

Long-Term Debt At the end of the current year, the City had total bonded debt outstanding of $32,350,000. Of this amount, $31,765,000 comprises debt backed by the full faith and credit of the government and $585,000 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

2018

2017

2018

2017

2018

2017

G.O. Bonds

$

31,765

33,260 $

$

-

$

-

31,765 $

33,260 $

Special Assessment Debt with Governmental Commitment

585

1,085

-

-

585

1,085

Total

$

32,350

34,345 $

$

-

$

-

32,350 $

34,345 $

The City’s total bonded debt decreased by $1,995,000 during the current year as a result of bond payments. Minnesota Statutes limit the amount of general obligation (G.O.) debt a government entity may issue to a net figure of 3 percent of the taxable market value. The current legal debt margin for the City is $99 million, which is significantly in excess of the City’s outstanding G.O. debt. Additional information on the City’s long-term debt can be found in Note 8 on pages 69 to 71 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City is currently experiencing the construction and development of several new industrial 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. As previously mentioned, the unassigned fund balance in the General Fund increased from $11,918,971 in 2017 to $12,250,660 in 2018, which equates to 45 percent of the 2019 expenditure budget. This increase in unassigned fund balance is after transferring $2.19 million out of the General Fund at yearend in order to maintain an unassigned fund balance of 40 to 45 percent of next year’s expenditure budget. The transfers out of the General Fund are excess revenues over expenditures as a result of strong building permits and recreational revenues related to the refurbished community center and ice arena. These transfers out will be used for one-time future capital expenditures within various capital project funds.

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