07-08-1996 Council Packet - Laserfiche WebLink

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CITY OF ORONO, MINNESOTA Notes to Financial Statements (continued) December 31, 1995 NOTE 5 - LONG-TERM DEBT (CONTINUED) D. Descriptions and Restrictions of Long-Term Debt 1. General LvT>g-Tenn Debt General Obl<;^ation Bonds - These bonds were issued to finance various improvements and will be repaid from taxes and special assessments. Public Facilities Bonds of 1991 - These bonds were issued by the Housing and Redevelopment Authority of Orono for the purpose of financing the construction of facilities for a City meeting hall. City offices, police offices, detention and processing, public works office space, storage, maintenance, and repair of machinery and equipment, and a cold storage building. Pursuant to Minnesota Statutes § 469.103a, lease-purchase contracts between the Authority and the City and a Trust Indenture between the Authority and American National Bank and Trust Company have been established. The bonds are special obligations of the City as issuer and owner of the land and buildings. The City has pledged rental payments in amounts equal to the debt service requirements and plans to annually appropriate City funds available for this purpose. As required by bond covenant, a reserve account has been established with a trustee which is to be used to pay principal and interest on the bonds in the event that other available resources are inadequate to do so. In addition, Minnesota Statutes § 475.50, Subd. 5(e) allows cities to make a special levy (outside of levy limits) to pay principal and interest on bonds of another political subdivision. The Minnesota Department of Revenue has determined that because a Housing and Redevelopment Authority is a political subdivision of the state, a levy to pay principal and interest on the bonds would be outside the City's levy limits. Vacation and Severance Benefits Payable - This liability represents vested benefits earned by employees other than Proprietary Fund employees through the end of the year (other than the cun^nt portion paid within 60 days), which will be paid or used in future periods. The liability for Proprietary Fund employees is included in the accrued liabilities of those funds. 2. Proprietary Fund Debt G.O. Water and Sewer Revenue Bonds of 1989 - These bonds were issued to finance improvements to the water and sewer systems and will be repaid from net revenues of the water and sewer systems, connection charges, and special assessments levied against benefitted propjerties. Under the resolution authorizing the sale of the bonds, the City is required to have in a water and sewer bond restricted cash account an amount not less than the total amount of the principal and interest on the bonds due and payable the following year. Amounts credited to the water and sewer account are to be used only for payment of principal and interest on the bonds. Net revenues of the water and sewer systems after payment of operation and maintenance expenses are available to be credited to the water and sewer bond account as required. Unspent bond proceeds received are restricted for debt service or construction in the Water and Sewer Operating Enterprise Funds. 1 I 1 1 1 I * i f 1 -43-