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CITY OF LINO LAKES, MINNESOTA
<br />NOTES TO FINANCIAL STATEMENTS
<br />December 31, 2006
<br />Note 4 CITY INDEBTEDNESS (CONTINUED)
<br />Public Project Revenue Bonds and Civic Complex Lease Revenue Bonds — These bonds were issued by the
<br />Economic Development Authority (EDA) of Lino Lakes for the purpose of financing the construction of
<br />public facilities. Pursuant to Minnesota Statutes and a lease purchase contract between the EDA and the
<br />City of Lino Lakes, a Trust Indenture between the EDA and a regional bank has been established for the
<br />purpose of financing payment of these bonds. The City has pledged rental payments in amounts equal to
<br />the debt service requirements and plans to annually appropriate City funds available for this purpose. As
<br />required by bond covenant, a reserve account has been established with a trustee, which is to be used to pay
<br />principal and interest on the bonds in the event that other available resources are inadequate to do so.
<br />On November 1, 2006 the City issued $2,990,000 of General Obligation Capital Improvement Plan
<br />Refunding Bonds, Series 2006E. The proceeds were used on December 1, 2006 to prepay a portion of the
<br />February 1, 2010 sinking fund payment and the February 1, 2011 through February 1, 2019 sinking fund
<br />payments (representing a portion of the February 1, 2011 term bond, and all of the February 1, 2013 and
<br />February 1, 2019 term bonds) of the Lino Lakes Economic Development Authority's Lease Revenue Bonds,
<br />Series 1998A. This partial refunding reduced the City's total future debt service payments by approximately
<br />$353,728, and resulted in a present value savings of approximately $237,273.
<br />On November 1, 2006 the City issued $1,740,000 of General Obligation Water Revenue Refunding Bonds,
<br />Series 2006F. The proceeds will be used to prepay the February 1, 2008 through February 1, 2012
<br />maturities of the City's General Obligation Water Revenue Bonds, Series 1996B. This "crossover
<br />refunding" reduced the City's total future debt service payments by approximately $73,160, and resulted in a
<br />present value savings of approximately $75,521.
<br />Liability for Compensated Absences — This liability represents vested benefits earned by governmental fund
<br />employees through the end of the year which will be paid or used in future periods. For the governmental
<br />activities, compensated absences are generally liquidated by the general fund. The liability for Proprietary
<br />Fund employees is included in the accrued liabilities of those funds.
<br />Note 5 LEGAL DEBT MARGIN
<br />The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable
<br />principally from property taxes. The City of Lino Lakes' legal debt margin for 2006 is computed as
<br />follows:
<br />Market value
<br />Applicable percentage
<br />Debt Limit
<br />12/31/06
<br />$ 1,734,317,800
<br />2.0%
<br />34,686,356
<br />Amount of debt applicable to debt limit:
<br />Total bonded debt 25,557,000
<br />Less: Special assessment bonds (13,940,000)
<br />Public project revenue bonds (385,000)
<br />Tax abatement bonds (2,460,000)
<br />Utility revenue bonds (570,000)
<br />Revenue bonds (3,870,000)
<br />Total debt applicable to debt limit 4,332,000
<br />Legal debt margin $ 30,354,356
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