06/05/2006 Council Packet - Laserfiche WebLink

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 4 CITY INDEBTEDNESS (CONTINUED) Public Project Revenue Bonds and Civic Complex Lease Revenue Bonds — These bonds were issued by the Economic Development Authority (EDA) of Lino Lakes for the purpose of financing the construction of public facilities. Pursuant to Minnesota Statutes and a lease purchase contract between the EDA and the City of Lino Lakes, a Trust Indenture between the EDA and a regional bank has been established for the purpose of financing payment of these bonds. The City has pledged rental payments in amounts equal to the debt service requirements and plans to annually appropriate City funds available for this purpose. As required by bond covenant, a reserve account has been established with a trustee, which is to be used to pay principal and interest on the bonds in the event that other available resources are inadequate to do so. On November 1, 2005 the City issued $3,755,000 of General Obligation Improvement Refunding Bonds, Series 2005B. The proceeds will be used to refund, in advance of their stated maturities, the 2007 through 2015 maturities of the City's 1998A General Obligation Improvement and 1998B General Obligation Improvement Bonds totaling $3,880,000. This "crossover refunding" reduced the City's total future debt service payments by approximately $203,995, and resulted in a present value savings of approximately $175,876. Liability for Compensated Absences — This liability represents vested benefits earned by governmental fund employees through the end of the year which will be paid or used in future periods. For the governmental activities, compensated absences are generally liquidated by the general fund. The liability for Proprietary Fund employees is included in the accrued liabilities of those funds. Note 5 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Lino Lakes' legal debt margin for 2005 computed as follows: Market value Applicable percentage Debt Limit Amount of debt applicable to debt limit: Total bonded debt Less: Special assessment bonds Public project revenue bonds Revenue bonds Total debt applicable to debt limit Legal debt margin 47 12/31/05 $ 1,534,933,700 2.0% 30,698,674 27,165,000 (19,405,000) (490,000) (2,425,000) 4,845,000 $ 25,853,674