Comprehensive Annual Financial Report 12/31/2005

Home Search

CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 15 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Workers compensation coverage is provided through a pooled self - insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City's workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. 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 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, 2005, two series of Industrial Revenue Bonds were outstanding with aggregate remaining principal balances of $1,625,000 and $2,800,000, respectively. 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 continues through June 30, 2009 and requires payments of $110 per square foot over the lease term for a total of $1,200,000. The schedule of remaining payments is as follows: Amount 2006 $ 112,500 2007 112,500 2008 112,500 2009 75,000 Total $ 412,500 52