10-24-2016 Council Packet - Laserfiche WebLink

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2015 Note 15 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. Workers compensation coverage is provided through a pooled self-insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City's workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered inunaterial and not recorded until received or paid. Property and casualty insurance is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policies. These amounts are considered inunaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 16 PROPERTY UNDER LEASE AGREEMENT The City entered into an agreement to lease space within the City Hall Complex to New Creations Child Care and Learning Center, LLC. The lease is dated July I, 2014 and continues through June 30, 2019. The lease requires escalating annual lease payments of between $5.94 and $8.65 per square foot over the lease term, for a total of $330,904. Property under operating lease and held for lease consist of the following: Building Less: Accumulated Depreciation Net $ 929,970 (495,984) $ 433,986 Approximate futore minimum lease payments receivable under the noncancelable operating lease are as follows: Year Endinll December 31, Amount 2016 $ 72,889 2017 75,617 2018 77,901 2019 39,522 $ 265,929 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2015 Note 17 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds and Commercial Revenue Notes to provide financial assistance to private-sector entities fur the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31,2015, one series of Industrial Revenue Bonds was outstanding with an aggregate remaining principal balance of $300,000, and one series of Commercial Revenue Notes was outstanding with an aggregate remaining principal balance of $1,648,987. Note 18 JOINT VENTURES !i!:!l The Centennial Fire District (the District) was established under a joint powers agreement between the City ofLino Lakes and two other cities. The general purpose of the District is to provide fire protection services including, but not limited to, fire prevention, firefighting and rescue service. Each member city is entitled to appoint two commissioners to the District's Board. Each calendar year, participating cities are to pay the District its share of the total operating and capital budget in accordance with a funding formula contained in Section VII of the joint powers agreement. The funding formula takes into account each city's average number of calls, population, and total market value. During 2015, the City ofLino Lakes' contributions to the District were as follows: Operating $ 508,394 The audited financial statements of the District as of December 31, 2015 can be reviewed upon request of the Centennial Fire District. In January 2014 the City Council voted to start the process to withdraw from the District which will be effective January 27, 2016. The City created their own department which operations started in January 2016. Anoka County The City of Lino Lakes has a joint powers agreement with Anoka County for the reconstruction of County State Aid Highway 14 (Main Street) and I-35E Interchange County Project. IV-32