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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2008 <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 fmancing the construction of public <br />facilities. Pursuant to Minnesota Statutes and a lease purchase contract between the EDA and the City of Lino Lakes, <br />a Trust Indenture between the EDA and a regional bank has been established for the purpose of financing payment of <br />these bonds. The City has pledged rental payments in amounts equal to the debt service requirements and plans to <br />annually appropriate City funds available for this purpose. As required by bond covenant, a reserve account has been <br />established with a trustee, which is to be used to pay principal and interest on the bonds in the event that other <br />available resources are inadequate to do so. <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 2008 is computed as follows: <br />12/31/08 <br />Market value $ 2,021,961,000 <br />Applicable percentage 3.0% <br />Debt Limit 60,658,830 <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 />24,079,000 <br />(11,365,000) <br />(185,000) <br />(2,460,000) <br />(520,000) <br />(4,215,000) <br />(1,530,000) <br />3,804,000 <br />$ 56,854,830 <br />