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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1997 <br />The City recognizes property tax revenue when it becomes both measurable and available to fmance <br />expenditures of the current period. In practice, current and delinquent taxes and State credits received <br />by the City in July, December and the following January are recognized as revenue for the current <br />year. Taxes and credits not received at the year end are classified as delinquent and due from County <br />taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by <br />deferred revenue because it is not available to finance current expenditures. <br />The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal <br />Disparities Formula) per State Statute 473F. This statute provides a means of spreading a portion of <br />the taxable valuation of commercial/industrial real property to various taxing authorities within the <br />defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property <br />valuation growth since 1971. Property taxes paid to the City through this formula for 1997 and 1996 <br />totaled $422,449 and $386,911 respectively. Receipt of property taxes from this "fiscal disparities <br />pool" does not increase or decrease total tax revenue. <br />J. SPECIAL ASSESSMENT REVENUE RECOGNITION <br />Special assessments are levied against benefited properties for the cost or a portion of the cost of <br />special assessment improvement projects in accordance with State Statutes. These assessments are <br />collectible by the City over a term of years usually consistent with the term of the related bond issue. <br />Collection of annual installments (including interest) is handled by the County Auditor in the same <br />manner as property taxes. Property owners are allowed to (and often do) prepay future installments <br />without interest or prepayment penalties. <br />Revenue from special assessments is recognized by the City when it becomes measurable and <br />available to fmance expenditures of the current fiscal period. In practice, current and delinquent <br />special assessments received by the City are recognized as revenue for the current year. Special <br />assessments are collected by the County and remitted by December 31 (remitted to the City the <br />following January) and are also recognized as revenue for the current year. All remaining delinquent, <br />deferred and special deferred assessments receivable in governmental funding are completely offset by <br />deferred revenues. <br />Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that <br />property until full payment is made or the amount is determined to be excessive by the City Council or <br />court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit <br />sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the <br />City in payment of delinquent special assessments. Generally, the City will collect the full amount of <br />its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a <br />property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or <br />seasonal recreational land in which event the property is subject to such sale after five years. <br />K. INVENTORIES <br />The original cost of materials and supplies has been recorded as expenditures /expenses at the time of <br />purchase of both the Governmental and Proprietary Funds. These funds do not maintain material <br />amounts of materials and supplies. <br />36 <br />