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NOTE 13 — TAX INCREMENT FINANCING REVENUE NOTES (CONTINUED) These notes provide for the payment of principal, equal to the developer's costs, plus interest at various rates. In each case, payments on the loans will be made at the lesser of the note payment or the actual net tax increment received (or a reduced percentage received in certain cases) during specific years as stated in the agreement. Payments are first applied to accrued interest and then to principal balances. The notes are cancelled at the end of the agreement term, whether or not they have been repaid. Any additional tax increments received in years following the term are retained by the City. The outstanding principal balance as of December 31, 2015 for all of these agreements was $3,258,927. This amount is not included in long-term debt because of the nature of these notes in that repayment is required only if sufficient tax increments are received. The City's position is that these are obligations to assign future and uncertain revenue sources and these obligations are not actual debt in substance. NOTE 14 — DEPOSITS PAYABLE Platting and performance deposits are accounted for in the City's Agency Fund. A summary of the 2015 changes in deposits is as follows: Total deposits payable at January 1, 2015 Add deposits received Less payments from deposit account $ 477,099 1,736,297 (479,319) Total deposits payable at December 31, 2015 $ 1,734,077 NOTE 15 — INDUSTRIAL AND LEASE REVENUE BONDS From time to time, the City has issued Industrial Revenue Bonds and Lease Revenue Bonds to provide financial assistance to private sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issuance. Neither the City, the state of Minnesota, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2015, there was one series of Industrial Revenue Bonds and one Lease Revenue Bond outstanding with aggregate principal amounts payable of $2,300,000 and $10,400,000 respectively. NOTE 16 — COMMITMENTS AND CONTINGENCIES A. Commitments for Construction At December 31, 2015, the City is committed to various construction contracts for the improvement of city property. The City's remaining commitment under these contracts is $562,294. The City has resources available to cover these commitments. 89