5.2. SR 06-19-2006 - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I CITY OF ELK RNER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of$141,070. Assets held with the escrow agent total $1,633,679 at December 31, 2005. Note 4. OTHER INFORMATION A. 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 for which the City carries insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. B. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the government expects such amounts, if any, to be immaterial. C. Territorial Acquisition Agreement The Utilities has entered into an agreement to transfer ownership of electric plant and electric service to customers in certain areas currently receiving electric service from Connexus Energy. The cost of property purchased from Connexus Energy will be net book value. The Utilities will also pay for loss of revenue for each area acquired based on a formula outlined in the agreement. In addition, the Utilities will compensate Connexus Energy for the loss of revenue from the future sale of electricity to electric customers in the areas acquired from Connexus Energy for a period often years from the date of sale of each individual area. During 2005 and 2004, the Utilities paid $324,824 and $333,787, respectively, under this agreement, including $19,039 and $185,933 in 2005 and 2004, respectively, for loss of revenues. All amounts paid are included in property and equipment. 52