Annual Financial Report 12/31/1984

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1984 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued SPECIAL ASSESSMENT REVENUE RECOGNITION - Continued The City recognizes special assessment revenue when it becomes both measurable and available to finance bonded debt. In practice, special assessment prin- cipal is recognized as revenue in the year when the assessment rolls are tablu- lated and adopted by the City Council, and when it is available to finance the related bond issue principal. Special assessment interest is recognized as revenue in the year due, which generally corresponds to the period it is actually earned. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is deter- mined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, after a State statute determined number of years, the property is subject to tax - forfeit sale and the first pro- ceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Accordingly, no allowance for potentially uncollec- tible assessments has been provided. ESTIMATED UNCOLLECTIBLE ASSESSMENTS The bonds of the 1974 Improvement Special Assessment Fund were retired in 1981 and the remaining assets were transferred to the General Fund. These assets included $27,938 of delinquent assessments receivable. Because of the uncer- tainty of the timing of collection, these assessments do not meet the revenue recognition criteria of being both measurable and available. As a result, an allowance for uncollectible assessments of $27,938 was established at the time of transfer to the General Fund. During 1982, $18,142 of these assessments were collected and the allowance was reduced to $9,796 at December 31, 1982. No collections on these assessments took place in 1983 or 1984. In 1984, it was determined that no further collections would take place and therefore, $9,796 of tax forfeit assessments were eliminated. Note 2 - DEFERRED AD VALOREM TAX LEVIES SPECIAL ASSESSMENT BOND ISSUES Certain special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessment levies against the benefiting properties. When a bond issue to be financed partially or wholly by ad valorem tax levies is sold, specific annual amounts of such levies are stated in the bond resolution and the County auditor is notified and instructed to levy these taxes over the appropriate years._ These future tax levies are subject to cancellation when and if the City has provided alternative financing. Alternatively, the City Council is required to levy any additional taxes found necessary for the full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 1984 nor 1983 in accordance with generally accepted accounting principles. Revenue from these tax levies is recognized annually as explained under "Property Tax Revenue Recognition ".