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CITY OF ELK RIVER, MINNESOTA
<br />NOTES TO FINANCIAL STATEMENTS
<br />DECEMBER 31, 2011
<br />Note 3: DETAILED NOTES ON ALL FUNDS — CONTINUED
<br />The tax increment bonds are used to finance land acquisition and other public costs to facilitate development within
<br />the tax increment district. The bonds are payable from tax increment revenues generated by existing and new
<br />development within the district. In addition, the bonds are general obligations of the City and are backed by its full
<br />faith and credit.
<br />The certificates of indebtedness were used to finance the purchase of capital equipment. The certificates were
<br />general obligations backed by the full faith and credit of the City.
<br />For the governmental activities, the City also entered into a contract for deed to finance the acquisition of park property.
<br />Compensated absences and other postemployment benefits are generally liquidated through the General fund.
<br />For the business -type activities, the general obligation revenue bonds were issued to finance capital improvements. The
<br />bonds are payable from future revenues pledged fi•orn the Sewer and Water funds and are backed by the full faith and
<br />credit of the City. Annual principal and interest payments on the bonds are expected to require about 13 and 33 percent
<br />of revenues from the Sewer and Water funds, respectively. For 2011, principal and interest paid and total customer
<br />revenues for the Sewer fund were $197,115 and $1,495,350, respectively. For 2011, principal and interest paid and total
<br />customer revenues for the Water fund were $601,603 and $1,832,817, respectively.
<br />The revenue bonds were issued to finance the acquisition and construction of major capital facilities. They will be repaid
<br />from future revenues pledged from the Municipal Liquor and Electric funds, Annual principal and interest payment on
<br />the bonds are expected to require about 11 and 3 percent of revenues from the Municipal Liquor and Electric funds,
<br />respectively. For 2011, principal and interest paid and total customer revenues for the Municipal Liquor fund were
<br />$186,225 and $1,760,240, respectively. For 2011, principal and interest paid and total customer revenues for the Electric
<br />fund were $808,945 and $28,583,986, respectively.
<br />The City also issued a promissory note to provide for the construction of a landfill gas generator. The note is to be paid
<br />from revenue of the system and is secured by the facility,
<br />G. Fund Balance Classification
<br />At December 31, 2011, a summary of the governmental fund balance classifications are as follows:
<br />Other
<br />General Improvement Governmental
<br />Fund Projects Funds Total .
<br />Nonspendable:
<br />Prepaid items $ - $ - $ 57,870 $ 57,870
<br />Restricted for:
<br />Debt service $ - $ - $ 2,928,263 $ 2,928,263
<br />Landfill mitigation - - 886,105 886,105
<br />Economic development - - 2,091,329 2,091,329
<br />Insurance benefits 20,390 - 22,850 43,240
<br />Law enforcement - - 13,821 13,821
<br />Total restricted $ 20,390 $ - $ 5,942,368 $ 5,962,758
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