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VIEW <br />City of Lino Lakes, Minnesota <br />Management Report <br />Gas Utility <br />The current franchise agreement provides a revenue source to the City of Lino Lakes. Key <br />features of the new agreement are as follows: <br />1. Tenn: January 1, 1987 through March 31, 2012. <br />2. Revenue to the City of Lino Lakes based on 7% of sales except for interruptible sales <br />which are based on 3 %. <br />3. Cancelable by the City of Circle Pines commencing on January 1, 1992. The City of <br />Lino Lakes has the right to cancel the franchise agreement through the purchase of this <br />system beginning on January 1, 1992. <br />4. Right to inspect the financial/accounting records to verify revenue calculations. <br />5. Revenue began accruing on January 1, 1987. Revenue will be received four and one- <br />half months after the year end (i.e., first receipt was in May, 1988). <br />.. 6. The City has the right to purchase the system at stated terms beginning on January 1, <br />1992. <br />The City received $42,495 in 1997 which represents the 1996 share of earnings. Earnings <br />from inception of the new agreement total $269,446. Financial uncertainties facing metropolitan <br />cities require diversity of revenue sources to assure adequate funding of operations without <br />severe property tax increases. <br />