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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2009 <br />Note 4 CITY INDEBTEDNESS (CONTINUED) <br />Public Project Revenue Bonds and Civic Complex Lease Revenue Bonds — These bonds were issued by the <br />Economic Development Authority (EDA) of Lino Lakes for the purpose of financing the construction of public <br />facilities. Pursuant to Minnesota Statutes and a lease purchase contract between the EDA and the City of Lino <br />Lakes, a Trust Indenture between the EDA and a regional bank has been established for the purpose of financing <br />payment of these bonds. The City has pledged rental payments in amounts equal to the debt service requirements <br />and plans to annually appropriate City funds available for this purpose. As required by bond covenant, a reserve <br />account has been established with a trustee, which is to be used to pay principal and interest on the bonds in the <br />event that other available resources are inadequate to do so. <br />In December 2009, the City of Lino Lakes has 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 <br />Highway 14 (Main Street) and I -35E Interchange County Project. <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 2009 is computed as follows: <br />12/31/09 <br />Market value $ 2,134,558,200 <br />Applicable percentage 3.0% <br />Debt Limit 64,036,746 <br />Amount of debt applicable to debt limit: <br />Total bonded debt <br />Less: Special assessment bonds <br />Public project revenue bonds <br />Tax abatement bonds <br />Utility revenue bonds <br />Tax increment financing bonds <br />Revenue bonds <br />Total debt applicable to debt limit <br />Legal debt margin <br />49 <br />22,147,000 <br />(10,265,000) <br />(90,000) <br />(2,460,000) <br />(470,000) <br />(4,050,000) <br />(1,170,000) <br />3,642,000 <br />$ 60,394,746 <br />