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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br /> <br /> <br /> <br />(63) <br /> <br />NOTE 12 TAX ABATEMENTS <br />The City of Little Canada has established a tax abatement program pursuant to Minnesota <br />Statutes, Sections 469.1812 through 469.1815. As part of the City’s program the City enters <br />into agreements through the use of tax increment financing districts under Minnesota <br />Statutes 469.174 to 469.179 (the Tax Increment Act). Under these statutes the City annually <br />abates taxes collected above the district’s base tax capacity which is established during <br />adoption of the tax increment district. These agreements are established to foster economic <br />development and redevelopment through creating jobs, removing blight, and providing <br />affordable housing. <br /> <br />For fiscal year ended December 31, 2022, the City has one agreement established under <br />Minnesota Statutes Section 469.174 to 469.179 in the form of a pay-as-you-go note with an <br />apartment complex. This agreement resulted in property taxes totaling $252,896 being <br />abated in 2022. <br /> <br />NOTE 13 COMMITMENTS AND CONTINGENT LIABILITIES <br />A. Litigation <br />The City has indicated that existing and pending lawsuits, claims and other actions in <br />which the City is a defendant are either covered by insurance; of an immaterial amount; <br />or, in the judgment of the City, remotely recoverable by plaintiffs. <br /> <br />B. Federal and State Funds <br />The City receives financial assistance from federal and state governmental agencies in <br />the form of grants. The disbursement of funds received under these programs generally <br />requires compliance with the terms and conditions specified in the grant agreements and <br />are subject to audit by the grantor agencies. Any disallowed claims resulting from such <br />audits could become a liability of the applicable fund. However, in the opinion of <br />management, any such disallowed claims will not have a material effect on any of the <br />financial statements of the individual fund types included herein or on the overall <br />financial position of the City at December 31, 2022. <br /> <br />C. Tax Increment Districts <br />The City’s tax increment districts are subject to review by the State of Minnesota Office <br />of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could <br />become a liability of the applicable fund. Management has indicated that they are not <br />aware of any instances of noncompliance which would have a material effect on the <br />financial statements.