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I CITY OF ORONO. MINNESOTA <br />Notes to Financial Statements (continued) <br />December 31, 1996 <br />I i i <br />NOTE 5 - LONG-TERM DEBT (CONTINUED) <br />2. General Long-Term Debt and Proprietary Fund Debt <br />• Refunding Bonds - In December 1995, the City issued $1,910,000 of General Obligation <br />Refunding Bonds of 1995 to advance refund $360,000 of the City ’s General Obligation <br />Improvement Bonds of 1985 on December 31,1995, and to advance refund $1,550,000 of the <br />City ’s General Obligation Water and Sewer Revenue Bonds of 1989 on February 1. 1996. <br />This refunding issue does not stipulate the restriction of assets in the Enterprise Funds as had <br />been required by the original bond issue. <br />This advance refunding was undertaken to reduce total debt service and resulted in a total <br />savings of $189,023 with a combined present value savings at issuance of $168,262. Under <br />GASB Statement No. 23, when governmental entity refunds proprietary fund debt, the <br />difference between the book value of the old debt and the amount required to retire the debt <br />should be accounted for as a deferral and not be reported on the fund’s operating sutement. <br />The City evaluated the requirements of GASB Statement No. 23 in relation to this refunding <br />and determined that the amount to be deferred and amortized was insignificant and, therefore, <br />expensed the entire amount during 1996. <br />E. mtimate Responsibility for Debt <br />Long-term debt is backed by the fuU faith and credit of the City, except the Public Facilities Revenue <br />Bonds of 1991. <br />F. Resources to Meet Future Debt Requirements <br />* Amounts Available for Long-Term Debt - Available fund balance designated or reserved for <br />repayment of long-term debt includes: <br />General Fund $ 151,520 <br />Debt Service Funds 1,604,920 <br />$ 1.756,440 <br />® Amount to be Provided in the General Long-Term Debt Account Group - This amount <br />represents fiimre revenue to be generated for debt payments, generally including deferred tax <br />levies, special assessment fund transfers, and interest earnings. Deferred tax levies scheduled to <br />be placed on the tax rolls, as needed, total $185,000 at December 31, 1996. <br />»« <br />b I <br />t ■ * <br />-42-