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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2020 Note 15 TAX INCREMENT DISTRICTS The City is the administrating authority for four tax increment districts. 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. Management has indicated that they are not aware of any instances of noncompliance which could have a material effect on the financial statements. The following table reflects values at December 31, 2020: TIF 1-5 TIF 1-11 TIF 1-12 Cottage TIF 1-10 Woods Clearwater Homesteads Panattoni Edge Creek Authorizing law M.S. 469 M.S. 469 M.S. 469 M.S. 469 Year established 1994 2004 2005 2017 Final year of district 2022 2023 2031 2026 Net tax capacity: Original $128 $15,869 $21,032 $21,416 Current (payable 2019)* 40,398 243,818 224,749 371,626 Captured - retained $40,270 $227,949 $203,717 $350,210 *Numbers for pay-year 2020 are not available The City provides tax abatements pursuant to Minnesota Statutes 469.174 to 469.1794 (Tax Increment Financing) through a pay-as-you-go note program. Tax increment financing (TIF) can be used to encourage private development, redevelopment, renovation and renewal, growth in low to moderate income housing, and economic development within the City. TIF captures the increase in tax capacity and property taxes from development or redevelopment to provide funding for the related project. TIF District 1-12 has an outstanding pay-as-you-go revenue note. Tax Increment Revenue Note Series 2017 was issued in the principal sum of $1,200,000. The note is not a general obligation of the City and is payable solely from available tax increments. Accordingly, the note is not reflected in the financial statements of the City. Principal payments are due August 1st and February 1st and are equal to 80% of the Tax Increment revenues collected in the preceding six months. Current year payments on the note totaled $204,186 and the outstanding balance at December 31, 2020 was $781,637. Note 16 COMMITMENTS AND CONTINGENCIES A. LITIGATION Existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance, of an immaterial amount, or, in the judgment of the City’s management, remotely recoverable by plaintiffs. 80