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• •CITY OF ORONO, MINNESOTA <br />Notes to Financial Statements (continued) <br />December 31,1996 <br />• t <br />»t <br />NOTE 5 - LONG-TERM DEBT (CONTINUED) <br />D. Descriptions and Restrictions of Long-Term Debt <br />1. General Long-Term Debt <br />* General Obligation Bonds - These bonds were issued to finance various improvements and <br />will be repaid from taxes and special assessments. <br />** Public Facilities Bonds of 1991 - These bonds were issued by the Housing and Redevelop­ <br />ment Authority of Orono for the purpose of financing the construction of facilities for a City <br />meeting hall. City offices, police offices, detention and processing, public works office space, <br />storage, maintenance, and repair of machinery and equipment, aiid a cold storage building. <br />Pursuant to Minnesota Statutes § 469.103a, lease-purchase contracts between the Authority and <br />the City and a Trust Indenture between the Authority and American National Bank and Trust <br />Company have been established. The bonds are special obligations of the City as issuer and <br />owner of the land and buildings. The City has pledged rental payments in amounts equal to <br />the debt service requirements and plans to annually appropriate City funds available for this <br />purpose. As required by bond covenant, a reserve account has been established with a trustee <br />which is to be used to pay principal and interest on the bonds in the event that other available <br />resources are inadequate to do so. In addition, Minnesota Statutes § 475.50, Subd. 5(e) allows <br />cities to make a special levy (outside of levy limits) to pay principal and interest on bonds of <br />another political subdivision. The Minnesota Department of Revenue has determined that <br />because a Housing and Redevelopment Authority is a political subdivision of the state, a levy <br />to pay principal and interest on the bonds would be outside the City’s levy limits. <br />^ Vacation and Severance Benefits Payable - This liability represents vested benefits earned <br />by employees other than Proprietary Fund employees through the end of the year (other than <br />the current portion paid within 60 days), which will be paid or used in fuhire periods. The <br />liability for Proprietary Fund employees is included in the accrued liabilities of those funds. <br />♦ <br />r <br />1 n <br />h‘ <br />I 4 <br />-41- <br />r .>-v»