5.5. SR 06-02-2008 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED ' The special assessment bonds are used to finance assessable improvements within the City. The bonds are payable primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds ' are genera] obligations of the City and are backed by its full faith and credit. The tax increment bonds are used to finance land acquisition and other public costs to facilitate development within the tax increment district. The bonds are payable from tax increment revenues generated by existing and new ' development within the district. In addition, Che bonds are general obligations ofthe City and are backed by its full faith and credit. ' The certificates of indebtedness are used to finance the purchase of capital equipment. The certificates are general obligations backed by the full faith and credit of the City. For the governmental activities, compensated absences are generally liquidated through the Genera] fund. ' For the business-type activities, the general obligation revenue bonds are used to finance the acquisition and construction of major capital facilities and the certificates of indebtedness are used to tnance the purchase of equipment. The bonds ' and certificates are payable from net revenues of the beneficing enterprise fund but are backed by the full faith and credit of the City. The City also issued a promissory noCe to provide for the construction of a landfill gas generator. The note is to be paid from revenue of the system and is secured by the facility. ' The HRA entered into a contract for deed for the purchase of property for subsequent resale for redevelopment purposes. ' 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 govemmental 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). "I'he 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. The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. The City's management is not aware of any instances of noncompliance which would have a material effect on the financial statements. ' S7