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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1998 <br />Note 11 CONTINGENCIES <br />Litigation - The City attorney has indicated that existing and pending lawsuits, claims and other actions in <br />which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment of <br />the City attorney, remotely recoverable by plaintiffs. <br />Federal and State Funds - The City receives financial assistance from fbderal and state governmental agencies <br />in the form of grants. The disbursement of funds received under these programs generally requires <br />compliance with the terms and conditions specified in the grant agreements and is subject to audit by the <br />grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable <br />fund. However, in the opinion of management, any such disallowed claims will not have a material effect on <br />any of the financial statements of the individual fund types included herein or on the overall financial position <br />of the City at December 31, 1998. <br />Note 12 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT <br />General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment <br />bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments <br />levied against the benefiting properties. When a bond issue to be financed partially or completely by ad <br />valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the <br />County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies <br />are subject to cancellation when and if the City has provided alternative sources of financing. The City <br />Council is required to levy any additional taxes found necessary for full payment of principal and interest. <br />These future scheduled tax levies are not shown as assets in the accompanying financial statements at <br />December 31, 1998 and 1997. <br />Future scheduled tax levies for all bonds outstanding at December 31, 1998 totaled $14,816,731. <br />50 <br />