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— CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2007 <br />Vme <br />Note 9 CONTINGENCIES <br />Litigation - The City attorney has indicated that existing and pending lawsuits, claims and other actions in <br />which the City is a defendant are either covered by insurance; of an immaterial amount; or, in the judgment <br />of the City attorney, remotely recoverable by plaintiffs. <br />Federal and State Funds - The City receives financial assistance from federal and state governmental <br />agencies in the form of grants. The disbursement of funds received under these programs generally requires <br />compliance with the terms and conditions specified in the grant agreements and is subject to audit by the <br />grantor agencies. Any disallowed claims resulting from such audits could become a liability of the <br />applicable fund. However, in the opinion of management, any such disallowed claims will not have a <br />material effect on any of the financial statements of the individual fund types included herein or on the <br />overall fmancial position of the City at December 31, 2007. <br />Note 10 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT <br />General Obligation bond issues sold by the City are fmanced by ad valorem tax levies and special <br />assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special <br />assessments levied against the benefiting properties. When a bond issue to be financed partially or <br />completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the <br />bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate <br />years. The future tax levies are subject to cancellation when and if the City has provided alternative sources <br />— <br />of financing. The City Council is required to levy any additional taxes found necessary for full payment of <br />principal and interest. <br />These future scheduled tax levies are not shown as assets in the accompanying financial statements at <br />December 31, 2007. <br />Future scheduled tax levies for all bonds outstanding at December 31, 2007 totaled $27,694,879. <br />Note 11 DESIGNATIONS AND RESERVATIONS OF FUND EQUITY <br />At December 31, 2007, the City had designated and reserved portions of its various fund equities through <br />legal restriction and City Council authorization. Major fund equity appropriations at December 31, 2007 are <br />shown on the various balance sheets as segregations of the fund equity. A summary of such designations <br />and reservations at December 31, 2007 is as follows: <br />Governmental Activity: <br />General Fund <br />Reserved for Prepaid Items $ 181,759 <br />Designated for Cash Flow Reserve 5,356,272 <br />Improvement Bonds of 2005A <br />Reserved for Debt Retirement 510,276 <br />Area and Unit Charge <br />Reserved for Advance to Other Funds 885,825 <br />Designated for Capital Improvements 1,585,791 <br />Legacy Woods Edge Improvement Fund <br />Designated for Capital Improvements 3,245,015 <br />WNW <br />Other Nonmajor Governmental Funds <br />Reserved for Prepaid Items 1,921 <br />Reserved for Debt Retirement 3,415,126 <br />Reserved for Environmental Improvements 100,000 <br />Reserved for Long -Term Notes Receivable 225,000 <br />Designated for Recreation Purposes 100,955 <br />Designated for Capital Improvements 3,362,451 <br />50 <br />