6.3 SR 06-05-2023 - Laserfiche WebLink

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City of Elk River Notes to Basic Financial Statements NOTE 14 — COMMITMENTS AND CONTINGENCIES (CONTINUED) B. Contingent Liabilities (Continued) The City's tax increment districts are subject to review by the state of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. The City's management is not aware of any instances of noncompliance which would have a material effect on the financial statements. NOTE 15 — TAX ABATEMENTS The City of Elk River has established a tax abatement program pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815. As part of the City's program the City enters into agreements through the use of tax increment financing districts under Minnesota Statutes Section 469.174 to 469.179 (the Tax Increment Act). Under these statutes, the City annually abates taxes collected above the district's base tax capacity which is established during adoption of the tax increment district. These agreements are established to foster economic development and redevelopment through creating jobs, removing blight, and providing affordable housing. For fiscal year ending December 31, 2022, the City has four agreements established under Minnesota Statutes Section 469.174 to 469.179 which resulted in property taxes totaling $333,757 being abated. Individual abatement payments which constituted more than 1% of the City's 2022 tax levy include: • A pay-as-you-go note resulting in an abatement amount of $165,085, for a financial institution. As part of the City's tax abatement program, the City also enters into agreements with local businesses in the form of business subsidy agreements established under Minnesota Statutes Section 116J.993 through 116J.995. These agreements must meet a public purpose which may include, but may not be limited to, increasing the tax base. In 2021, the City of Elk River had four business subsidy agreements in place which resulted in property taxes totaling $94,212 being abated. Individual agreements which result in taxes abated in excess of 1% of the City's total tax levy would be disclosed individually. There were no such payments made in 2022 in excess of this amount. NOTE 16 — CONDUIT DEBT From time -to -time, the City has issued revenue bonds to provide financial assistance to private -sector entities for the acquisition and construction of industrial and commercial, multi -family and educational facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payment received from the benefited entity. Neither the City, the state, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2022, there was one series of revenue bonds outstanding, with a principal payable amount of $2,840,000. 97