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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2018 <br />NOTE 7: LONGTERM 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 />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 30% and 12% of <br />revenues from the Sewer and 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. <br />53 <br />