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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2011 <br />Note 4 CITY INDEBTEDNESS (CONTINUED) <br />In December 2009, the City of Lino Lakes entered into a joint powers agreement for a note payable with Anoka <br />County for $4,260,000. The note payable with Anoka county is for the reconstruction of County State Aid Highway <br />14 (Main Street) and I -35E Interchange County Project. During 2011, the note payable balance was reduced by <br />Anoka County due to lower than expected project costs. The amount of the note payable was reduced from <br />$4,260,000 to $3,695,000. <br />Liability for Compensated Absences — This liability represents vested benefits earned by governmental fund <br />employees through the end of the year which will be paid or used in future periods. For the governmental activities, <br />compensated absences are generally liquidated by the general fund. The liability for Proprietary Fund employees is <br />included in the accrued liabilities of those funds. <br />Note 5 LEGAL DEBT MARGIN <br />The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally <br />from property taxes. The City of Lino Lakes' legal debt margin for 2011 is computed as follows: <br />Market value <br />Applicable percentage <br />Debt Limit <br />12/31/11 <br />$ 1,804,121,500 <br />3.0% <br />54,123,645 <br />Amount of debt applicable to debt limit: <br />Total bonded debt 17,811,000 <br />Less: Special assessment bonds (7,985,000) <br />Tax abatement bonds (2,430,000) <br />Utility revenue bonds (370,000) <br />Tax increment financing bonds (3,660,000) <br />Revenue bonds (405,000) <br />Total debt applicable to debt limit 2,961,000 <br />Legal debt margin $ 51,162,645 <br />49 <br />