Management Report and Recommendations 12/31/1990

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City of Lino Lakes, Minnesota Management Report, Page 26 — — account for the proceeds of specific revenue sources (other than expendable trusts or for major capital projects) that are legally restricted to expenditure for specified purposes. SPECIAL REVENUE FUND The financial statements for the City's Special Revenue Fund are presented in Statements 8 and 9 of the 1990 Annual Financial Report. Special Revenue Funds are a type of governmental fund to During 1990, the City adopted Resolution 33 -90 which authorized the City to establish an — Economic Development Authority (EDA) pursuant to Minnesota Statutes sections 469.00 through 469.108. The EDA was established with specific powers and obligations to promote and to provide incentives for economic development within the City of Lino Lakes. The financial activity of the EDA has been reported in the City's Annual Financial Report in accordance with the National Council on Governmental Accounting Statement No. 3, Defining the Governmental Reporting Entity. Statement No. 3 requires inclusion of the EDA due to the City Council having oversight responsibility of the EDA's activities. As of December 31, 1990, the EDA had a deficit fund balance of $9,336. We recommend that the City determine a financing source for this deficit and transfer the required funds in 1991. DEBT SERVICE FUNDS The combining financial statements for the Debt Service Funds are presented in Statements 10 and 11 of the 1990 Annual Financial Report. Debt Service Funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and principal on debt (other than Enterprise Fund debt). Debt Service Funds may have one or a combination of the following revenue sources pledged to retire debt as follows: • Property Taxes. Primarily for general City benefit projects such as parks and municipal buildings. Property taxes may also be used to fund special assessment bonds which are not fully assessed. • Tax Increments. Pledged exclusively for tax increment/economic development districts. • Capitalized Interest Portion of Bond Proceeds. After the sale of bonds, the project may not produce revenue (tax increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference considered in the form of capitalized interest.