Comprehensive Annual Financial Report 12/31/1999

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1999 Note 10 DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 1999 as follows: Special Revenue Funds: Economic Development Fund Community Development Block Grant Debt Service Funds: Public Project Refunding Bonds of 1999C Capital Project Funds: Dedicated Parks MSA Construction 1994 Construction 1997 Construction 1998 Construction Town Center Project General Tax Increment Administrative Tax Increment Financing 1 -6 Tax Increment Financing 1 -7 Tax Increment Financing 1 -9 Tax Increment Financing 3 -1 Fund Balance Deficit :567 957 6,234 40,342 424,881 436,219 1,205,499 2,579,952 93,710 7,1184 40,536 458,497 11,896 316,270 The City intends to fund these deficits through future tax levies, special assessment levies, tax increments, transfers from other funds, and various other sources. Note 11 CONTINGENCIES Litigation - The City attorney has indicated that existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of the City attorney, remotely recoverable by plaintiffs. Federal and State Funds - The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 1999. Note 12 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. 37