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Honorable Mayor and Members of the City Council
<br />City of Link Lakes
<br />Page 16
<br />DEBT SERVICE FUNDS
<br />The combining financial statements for the debt service funds are presented in Statements 11 and 12
<br />of the 1998 Annual Financial Report. Debt service funds are a type of govemmental fund to account for
<br />the accumulation of resources for the payment of principal and interest on general obligation debt
<br />(other than enterprise fund debt). Debt service funds may have one or a combination of revenue
<br />sources pledged to retire debt including property taxes, tax increments, special assessments and area
<br />and unit charges.
<br />The diverse nature of the type of debt included in the same fund type requires careful analysis to
<br />determine the adequacy of the fund balance and projected fund balance. The following schedule
<br />extracts information from Exhibits 1, 2 and 3 of the 1998 Annual Financial Report to assist in this
<br />analysis. The following schedule compares outstanding debt with assets pledged for debt retirement.
<br />This comparison provides a means to judge (at least on a preliminary basis) the financial position of
<br />each debt service fund.
<br />— December 31, 1998 Remaining Scheduled Final
<br />Fund Deferred Debt Service Property Maturity
<br />Fund Description Balance Revenue Total Scheduled Taxes Date
<br />- General Debt:
<br />1996 Equipment Certificates $ 7,452 $ 745 $ 8,197 $ 79,500 $ 83,475 12/31/99
<br />1997 Equipment Certificates 6,731 831 7,562 163,500 171,675 12/31/00
<br />1998 Equipment Certificates - - - 338,066 344,505 12/31/01
<br />90A Public Project Revenue Bonds 226,304 1,084 227,388 1,473,670 1,458,165 2/1/10
<br />Lease Revenue Bonds of 1998 486,758 - 486,758 8,971,541 8,146,086 2/1/19
<br />727 245 2 660 729,905_ 11,026,277 10,203,906
<br />s
<br />Special Assessment Debt:
<br />Improvement Bonds of 1992A 23,217 54,977 78,194 3,220,798 2,153,602 2/1/06
<br />Improvement Bonds of 1996A 975,151 1,282,012 2,257,163 5,247,730 - 2/1/07
<br />Improvement Bonds of 1998A 262,956 8,427 271,383 6,208,925 - 2/1/15
<br />Improvement Bonds of 1998B 649 - 649 2,947,572 2,459,223 2/1/15
<br />1 261 973 1 345 416 2,607,389 _ 17,625 025 4,612,825
<br />Note: deferred revenue in the above table does not include the future scheduled "interest portion" of the
<br />adopted assessment rolls. The 1992A and 1996A Improvement Bonds also include a pledge from the
<br />Area and Unit Fund that has not been included above.
<br />The above table provides a means for the monitoring the status of the debt service funds. For the
<br />— General Debt funded solely by property taxes it appears that there are adequate planned levies to retire
<br />the debt when the future lease revenues received from the school district are included.
<br />�- For the Special Assessment Debt it is apparent that the planned special assessment rolls for the 1998
<br />series bonds have not yet been adopted. This is frequently the case where assessment rolls are
<br />adopted at the completion of the project. This could lead to a two to four year timing difference from the
<br />issuance to the first collection of special assessments. We recommend that staff monitor the projects
<br />funded with the 1998 series bonds to make certain that all assessment rolls are adopted timely and as
<br />planned
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