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NOTE 16—COMMITMENTS AND CONTINGENCIES (CONTINUED) <br /> B. Federal and State Revenue <br /> Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment. <br /> Any disallowed claims, including amounts already collected, may constitute a liability of the applicable <br /> funds. The amount,if any,of claims which may be disallowed by the grantor agencies cannot be determined <br /> at this time,although the City expects such amounts,if any,to be immaterial. <br /> C. Legal Claims <br /> The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although <br /> the outcome of these lawsuits is not presently determinable, the City's management believes that the City <br /> will not incur any material monetary loss resulting from these claims. No loss has been recorded on the <br /> City's financial statements relating to these claims. <br /> D. Tax Increment Districts <br /> The City's tax increment districts are subject to review by the state of Minnesota Office of the State Auditor <br /> (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. <br /> Management has indicated that they are not aware of any instances of noncompliance which would have a <br /> material effect on the financial statements. <br /> NOTE 17—OPERATING LEASE <br /> The City is the lessor of an operating lease. In February 2010,the City of Ramsey entered into a five-year <br /> agreement to lease approximately 2200 square feet of office space on the ground floor of the Ramsey <br /> Municipal Center to Anoka County for the operation of a license center. As part of the original lease,the <br /> tenant may extend the contract for three (3) five (5)year terms. Anoka County authorized a five (5) year <br /> extension in March 2015. The cost of the leased spaced is included in the total municipal center building <br /> cost of$12,856,588,of which$2,313,947 has been depreciated to date. These amounts are recorded in the <br /> City's capital assets. The City of Ramsey collected $45,902 in lease revenue for the fiscal year ended <br /> December 31, 2015. The following is an estimate of the future lease payments: <br /> Year Ending December 31, Lease Payments <br /> 2016 $ 46,970 <br /> 2017 47,909 <br /> 2018 48,867 <br /> 2019 49,845 <br /> January 1 -June 30,2020 25,169 <br /> Total $ 218,760 <br /> Lease payments may increase each year based on the increase in the Consumer Price Index —U.S. City <br /> Averages for ALL Urban Consumers as published by the Bureau of Labor Statistics of the United States <br /> Department of Labor for Urban Wage Earners and Clerical Workers for All Items (CPI-W). <br /> 90 <br />