2019 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE

MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2019

Long-Term Debt At the end of the current year, the City had total bonded debt outstanding of $34,660,000. Of this amount, $34,425,000 comprises debt backed by the full faith and credit of the government and $235,000 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

2019

2018

2019

2018

2019

2018

G.O. Bonds

$

34,425

$

31,765

$

-

$

-

$

34,425

$

31,765

Special Assessment Debt with Governmental Commitment

235

585

-

-

235

585

Total

$

34,660

$

32,350

$

-

$

-

$

34,660

$

32,350

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The COVID-19 outbreak in the United States has caused business disruption through mandated and voluntary closings of many businesses. The City of Shakopee, itself temporarily closed facilities including City Hall, Community Center and Ice Arena. While the disruption is currently expected to be temporary, there is uncertainty around the financial impact it may have. In December 2019, the unemployment rate in Shakopee was 2.8%, up 0.4% from a year ago. This compares favorably to the state’s December unemployment rate of 3.6% and the national rate of 3.8%. Over the last three years, the city’s estimated market value has increased $1.2 billion to more than $6 billion. New construction accounts for $244 million of 20 percent of this increase. 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. 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 $99.4 million, which is significantly in excess of the City’s outstanding G.O. debt. The City maintains an “Aa1” debt rating from Moody’s Investors Service. Additional information on the City’s long-term debt can be found in Note 8 on pages 69 to 71 of this report. The City’s total outstanding bonded debt increased by $2,310,000 during the current year. The City retired $1,910,000 in principal in 2019 and issued $4,220,000 General Obligation Tax Increment Bonds 2019A to fund infrastructure improvements.

24