Comprehensive Annual Financial Report 12/31/2011

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2011 Note 15 RISK MANAGEMENT (CONTINUED) Property and casualty insurance is provided through a pooled self - insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policies. These amounts are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 16 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds and Commercial Revenue Notes 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, 2011, two series of Industrial Revenue Bonds were outstanding with aggregate remaining principal balances of $765,000 and $400,000, respectively, and one series of Commercial Revenue Notes was outstanding with an aggregate remaining principal balance of $2,610,679. Note 17 LEASE COMMITMENT The City of Lino Lakes entered into an agreement dated December 8, 1997 to lease space within the City Hall complex to the Independent School District No. 12 (ISD 12). The lease term has been renewed as of July 1, 2009 and continues through June 30, 2011 and requires payments of $110 per square foot over the lease term for a total of $300,000. Effective February 14, 2011, the lease was further renewed through June 30, 2012 and requires two payments of $60,000 semi annually. The prorated carrying value of the building being leased is as follows: Building $ 929,970 Less: Accumulated Depreciation (371,988) Net $ 557,982 Note 18 JOINT VENTURES Fire 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. 55