Annual Financial Report 12/31/1992

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1992 Page 6 of 19 J. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funding are completely offset by deferred revenues. 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 determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds 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. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. K. INVENTORIES Inventories in the Enterprise Fund for the year ended December 31, 1991 are valued at cost, which approximates market, using the first in/first st out (FIFO) method. As of December 31, 1992 the City's Enterprise Fund did not have any material amounts of inventories of goods and supplies. The costs of governmental fund type inventories are recorded as expenditures when consumed rather than when purchased. L. FIXED ASSETS GENERAL FIXED ASSETS General fixed assets are recorded as expenditures of the Governmental Funds at the time of purchase. Such assets are capitalized at historical cost or estimated historical cost in the General Fixed Asset Account Group. Public Domain ( "infrastructure ") general fixed assets consisting of roads, bridges, curbs, gutters, streets, sidewalks, drainage systems and lighting systems are excluded from general fixed assets as these assets are immovable and of value only to the City. Gifts or contributions are recorded in general fixed assets at fair market value at the time received. No depreciation has been provided on general fixed assets. The City does not maintain detailed records nor accounting controls over general fixed assets. The amounts presented in the financial statements represent partial accumulations of historical accounting records without regard to physical listings.