01-24-2022 Council Packet - Laserfiche WebLink

Home Browse Search

City of Orono, Minnesota Notes to the Financial Statements December 31, 2020 Note 6: Other Information B. Contingencies Tax Increment Financing Districts 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. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial statements. The City has entered into “pay as you go” Tax Increment Financing notes within its TIF districts. These notes are payable only to the extent of the increment received. As a result, they are a commitment within the district but they have not met the criteria to be reported as a liability on the statement of net position. C. Flexible Benefit Plan The City offers a flexible benefit plan (the Plan). The Plan is a “cafeteria plan” under §125 of the Internal Revenue Code (IRC). All employees who meet the eligibility requirements may participate in the Plan. To be eligible, an employee must be at least 20 years of age and be regularly scheduled to work more than 20 hours per week. Eligible employees can elect to participate by contributing pre-tax dollars withheld from payroll checks to the Plan for healthcare and dependent care benefits. Payments are made from the Plan to participating employees upon submitting a request for reimbursement of eligible expenses actually incurred by the participant. All assets of the Plan are held and administered by an independent contract administrator for child care and medical expense reimbursements, and by the City for health insurance premiums. All activity of the Plan is included in the financial statements as part of the General Fund and enterprise funds as employee benefits. All property of the Plan and income attributable to that property is solely the property of the City, subject to the claims of the City’s general creditors. Participants’ rights under the Plan are equal to those of general creditors of the City in an amount equal to the eligible healthcare and dependent care expenses incurred by the participants. The City believes it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. D. Conditional State Grant In 2005, as a part of the City’s acquisition of Big Island Park, the City was awarded a grant from the state of Minnesota in the amount of $2,000,000. The grant is repayable to the state if the property is not maintained for low -impact recreation and conservation use. E. Police Services Contracts As of December 31, 2019, the City of Orono had severa l contracts to provide police services to neighboring cities. The most significant of those was a contract with the city of Mound, which the City entered into as of January 1, 2013 and which extends 10 years to December 31, 2022. The contract also included annual payments from the city of Mound starting at $1,545,000 in 2013 and increasing between 1%-5% each year through the end of the contract. The City also has a contract with the cities of Minnetonka Beach and Spring Park to furnish law enforcement serv ices to each respective city. The original contract term ended December 31, 2012 and includes the option to verbally extend it each year for an additional one-year period. The contract has been extended each year through 2020.