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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />53 <br />NOTE 7: LONG-TERM DEBT – CONTINUED <br />A.Components of Long-term Debt (Continued) <br />For the governmental activities, bonds payable can be summarized in the following categories: <br />The general obligation bonds were used to construct a recreation facility, a public safety facility, and a public works <br />facility. The recreation facility is leased to the YMCA, which has pledged to pay one-third of the bonds outstanding. <br />The bonds are general obligations of the City and are backed by its full faith and credit. <br />The special assessment bonds were used to finance assessable street improvements within the City. The bonds are <br />payable primarily from special assessments levied against properties benefited by the improvements. In addition, the <br />bonds are general obligations of the City and are backed by its full faith and credit. <br />In 2013 the EDA issued $9,685,000 G.O. Refunding Bonds, Series 2013A. The bonds bear an average coupon rate of <br />2.2% and were used to call $9,225,000 of the outstanding principal of the EDA G.O. Bonds, Series 2007D on February <br />1, 2017. As a result of the refunding issue, the EDA will have saved $1,001,112 in debt service payments and achieved <br />an economic gain (the present value of the difference between the old and the new debt service) of $795,866. <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 from 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 32% and 13% of <br />revenues from the Sewer, Water funds, respectively. <br />The revenue bonds were issued to finance the acquisition and construction of major capital facilities and are to be repaid <br />from future revenues pledged from the Electric fund. Annual principal and interest payment on the bonds require about <br />3% of revenues from the Electric fund. <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.