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<br />CITY OF CENTERVILLE, MINNESOTA <br />NOTES TO 1HE FINANCIAL STATEMENTS <br />DECEMBER 31, 2005 <br /> <br />Note 6: OTHER INFORMATION <br /> <br />A. Risk Management <br /> <br />The City is exposed to various risks of loss related to torts; theft ot: damage to and destruction of assets; errors <br />and 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 <br />sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMcIT for <br />its workers compensation and property and casualty insurance. The LMCIT is self sustaining through member <br />premiums and will reinsure for claimS above a prescribed dollar amount for each insurance event. Settled claimS <br />have not exceeded 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). <br />The 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 2 percent of <br />the market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and, <br />therefore, excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax <br />increments. The City does not have any debt subject to the 2 percent limit <br /> <br />Note 7: COMMITMENTS <br /> <br />In 1997, the City entered into a Joint Powers agreement with the Anoka County Housing and Redevelopment <br />Authority (ACHRA) to provide senior housing within the City. The ACHRA has issued $1,290,000 of Housing <br />Development Revenue Bonds to provide for construction costs of the project The City has reserved $71,631 in the <br />Sewer enterprise fund in accordance with the agreement with ACHRA. This amount is to be used in the event revenue <br />is not sufficient to cover operating expenses and debt service. The City would also be liable for any deficit above the <br />amount reserved. This commitment exists until December 31, 2012. No expenses were incurred relating to the <br />commitment in 2005. <br /> <br />-36- <br />