Comprehensive Annual Financial Report 12/31/1998

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1998 Note 18 LEASE COMMITMENT The City of Lino Lakes entered into a lease agreement dated December 8, 1997 whereby the City constructed a facility on property it already owned. Upon completion, this facility was leased to the Independent School District No. 12 (ISD 12), the tenant, in January 1999 and will continue until June 30, 2009. The tenant's payments are $110 per square foot per year for a total of $1,200,000 over the term of the lease. The schedule of remaining payments is as follows: 1999 $ 112,500 2000 112,500 2001 112,500 2002 112,500 2003 112,500 thereafter 637,500 $1,200,000 Note 19 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds to provide financial assistance to private- sector entities for the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 1998, two series of Industrial Revenue Bonds were outstanding with aggregate remaining principal balances of $5,600,000 and $2,910,000, respectively. Note 20 JOINT FIRE VENTURE The Centennial Fire District (the District) was established under a joint powers agreement between the City of Lino Lakes and two other cities. The general purpose of the District is to provide fire protection services including, but not limited to, fire prevention, firefighting and rescue service. Each member city is entitled to appoint two commissioners to the District's Board. Each calendar year each participating city shall pay to the District its share of the total operating and capital budget in accordance with a funding formula contained in Section VII of the joint powers agreement. The funding formula takes into account each city's average number of calls, population, and total market value. During 1998, the City of Lino Lakes' contributions to the District were as follows: Operating $ 271,847 Capital 64,700 $ 336,547 Separate financial statements of the District can be obtained by contacting the District. The unaudited condensed financial statements of the District as of December 31, 1997 (1998 information is not yet available) are as follows: Total assets $ 1,182,387 Total liabilities 6,230 Total equity 1,176,157 Total operating revenue 512,425 Total operating expenses 348,891 54