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-45- NOTE 9 – TAX ABATEMENT AGREEMENTS (CONTINUED) The City is authorized to create a tax increment financing plan under Minnesota Statutes, Chapter 469.175. The criteria that must be met under the statute are that, in the opinion of the municipality: • The proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected ta x increments for the maximum duration of the district permitted by the plan. The requirements of this item do not apply if the district is a housing district; • The tax increment financing plan conforms to the general plan for the development or redevelopment of the municipality as a whole; and • The tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the municipality as a whole, for the development or redevelopment of the project by private enterprise. NOTE 10 – COMMITMENTS AND CONTINGENCIES A. Risk Management The City is exposed to various risks of loss related to torts : theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carrie s insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk-sharing pool with other governmental units. The City pays an annual premium to the LMCIT for its workers’ compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. There were no significant reductions in insurance from the previous year or settled claims in excess of insurance coverage for any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred, but not reported. The City’s management is not aware of any incurred, but unreported claims. B. Litigation The city attorney has indicated that 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 attorney, remotely recoverable by plaintiffs. No loss has been recorded on the City’s financial statements relating to these claims.