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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2024 <br />Note 15 COMMITMENTS AND CONTINGENCIES <br />A. LITIGATION <br />The City has been named in a lawsuit pertaining to development. The matter is inactive discovery. The <br />City denies any liability and is defending its interests in the litigation. At this time, the outcome or any <br />potential loss cannot be reasonably estimated, although any potential loss is expected to be covered by <br />insurance. <br />B. FEDERAL AND STATE FUNDS <br />The City receives financial assistance from federal and state governmental agencies in the form of grants. <br />The disbursement of funds received under these programs generally requires compliance with the terms and <br />conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any <br />disallowed claims resulting from such audits could become a liability of the applicable fund. However, in <br />the opinion of 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 financial position of the <br />City at December 31, 2024. <br />C. COMMITTED CONTRACTS <br />At December 31, 2024, the City had commitments of $25,179,862 for uncompleted construction contracts. <br />Note 16 RISK MANAGEMENT <br />The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets, errors and <br />omissions, injuries to employees and natural disasters. <br />Workers compensation coverage is provided through a pooled self-insurance program through the League of <br />Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to <br />supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers <br />Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not <br />subject to a deductible. The City's workers compensation coverage is retrospectively rated. With this type of <br />coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if <br />any, is considered immaterial and not recorded until received or paid. <br />Property and casualty insurance is provided through a pooled self-insurance program through the LMCIT. The City <br />pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the <br />LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City <br />retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policies. <br />These amounts are considered immaterial to the financial statements. <br />The City continues to carry commercial insurance for all other risks of loss, including disability and employee health <br />insurance. <br />There were no significant reductions in insurance from the previous year or settlements in excess of insurance <br />coverage for any of the past three fiscal years. <br />84 <br />