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CITY OF CENTERVILLE, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />FOR THE YEAR ENDEDDECEMBER 31, 2010 <br />Note 6: OTHER INFORMATION <br /> <br />A.Risk management <br /> <br /> <br />The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and <br />omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains <br />insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing <br />pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers <br />compensation and property and casualty insurance. The LMCIT is self sustaining through member premiums and <br />will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded <br />the City’s coverage in any of the past three fiscal years. <br /> <br />Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably <br />estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The <br />City’s management is not aware of any incurred but not reported claims. <br /> <br />B.Legal debt margin <br /> <br />In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of 3 percent of the <br />market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and, therefore, <br />excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax increments. The <br />market value of taxable property is $342,844,400, which leaves a debt margin of $10,285,332. The City has no <br />outstanding debt against this limit. <br /> <br />C.Tax increment districts <br /> <br />The City is the administering authority for tax increment financing district No.1-6. The district is a redevelopment <br />district established in 2005. The property in the district is tax exempt, therefore there is no tax capacity. <br /> <br />The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). <br />Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has <br />indicated that they are not aware of any instances of noncompliance which would have a material effect on the <br />financial statements. <br /> <br />D.Subsequent event <br /> <br />On April 14, 2011, the City issued $2,760,000 of G.O. Improvement Refunding Bonds, series 2011A, refunding the <br />G.O. Improvement Bonds, Series 2004B and the G.O. Improvement Bonds, Series 2007A. <br /> <br /> <br />Note 7: COMMITMENTSAND CONTINGENCIES <br /> <br /> <br />In 1997, the City entered into a Joint Powers agreement with the Anoka County Housing and Redevelopment Authority <br />(ACHRA) to provide senior housing within the City. The ACHRA has issued $1,290,000 of Housing Development <br />Revenue Bonds to provide for construction costs of the project. The City has reserved $71,631 in the Sewer enterprise <br />fund in accordance with the agreement with ACHRA. This amount is to be used in the event revenue is not sufficient to <br />cover operating expenses and debt service. The City would also be liable for any deficit above the amount reserved. This <br />commitment expired on December 31, 2010. No expenses were incurred relating to the commitment in 2010. <br /> <br /> <br /> <br /> <br /> <br />-68- <br /> <br />