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CITY Oi ROSE4ILLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS (CONTIN�EO) ,�ECEMBEft 31, 198i NOSe 19 Deferred Compensaiion Ptan The City otfers its employees a deferred compensation plan estahLished in accordance with InternaL Revenue Code Section 457. The plan, avaiLahLe to aLL employees, permits them to deter a poriion of their salary untiL future years. 7he deferred compensation is not avaitable to empLoyees untiL termination, retirement, death or unforeseeabte emergency. ALL amouMs ofi mmpensation deferred under the pLan, atl property and rights property purchased with those amounts, and aLl income attributable to those amouMs, or rights are (until paid or made available to the employee or other 6eneficiary) soLely the property and rights of the City, su6ject onLy to the cLaims of the City's generat creditors. PartScipants' rights under the pLan are equaL to those ot the City in an amount equal to the fair market vaLue of the deferred account for each pariicipant. �. It is the opinion of the City's Legat counset that the City has no lia6iLity for Losses under the plan �� but does have the duty of due care that woutd be required of an ordinary prudent investor. The Lity �� betieves that it is unLikeLy that it will use the assets to satisfy the daims of generat creditors in the future. PLan assets of 5402,148 at Decem6er 31, 1987 are shown in the financiaL s[atement as a"Deposits with Trustees" in the agency funds with a corresponding credit to deposits payahLe. Note 20 - Litioation The City had the usuaL and customary types of miscellaneous claims pending at year end, mostLy of a minor nature, and usually all covered 6y insurance wrried for that purpose. The City atso carries personaL injury insurance against suits tor false arrest, Libet, slander, violation of privacy, wrongful entry, etc., which suits can arise from enforcement of the city code and generat laws. In the opinion of the City Attorney's office, any tia6iLity to the City at year end woutd be immaterial. Note 21 - Subsequent Events On March 1, 1988, the City sold 84.5 mittion general o6tigation improvement honds. The 6onds are due in annual instatlments of 8150,000 - 8495,000 through March 1, 2003; at a net interest rate of 6.59%. -50-