Management Report and Recommendations 12/31/1998

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Honorable Mayor and Members of the City Council City of Link Lakes Page 21 Area and Unit Charge Fund On January 11, 1988 the City Council approved Resolution 1 -88 which established the Area and Unit Charge Fund for the City. The purpose of this fund is to collect various area and unit charges to be used to meet debt payments. Before October 1 of each year, the City estimates the required transfer needed to meet debt payments for the subsequent year. In December, these estimated amounts are transferred to the various debt funds. We recommend that the City continue to closely monitor actual versus projected area and unit assessment collections to assure that debt payment requirements will be met. Designations of balances required for debt service is necessary to define discretionary construction balances available to the City. The financing plan for the following bond issues have pledged area and unit charges for the repayment of debt service: • Improvement Refunding Bonds of 1992A • Improvement Refunding Bonds of 1996A • Water Revenue Bonds of 1992B • Water Revenue Bonds of 1996B _ The Improvement Bonds of 1992A have future scheduled property tax levies totaling $2,153,602. However, the City charter prohibits the City from making a levy on this bond issue. The City has used area and unit charges in lieu of tax levies to repay these bonds. The Water Revenue Bonds of 1992B have future debt service requirements totaling $1,265,741 (principal and interest). The City annually transfers amounts from the Area and Unit Charge Fund to the Water Fund sufficient to cover the debt services of the 1992B Bonds. During 1998 revenues were sufficient in the Water Fund to cover the debt service requirements and a transfer was not required. It is the City's intention to repay the Water Revenue Bonds of 1992B and 1996B with revenues of the Water Fund. If revenues are not sufficient to meet the debt requirements funds will be transferred from the Area and Unit Charge Fund.