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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1994 Note 7. TAX INCREMENT FINANCING REVENUE NOTES During 1991, the City entered into private development agreements for an area referred to as the Wood Pond Projects and consisted of three subdivisions. The subdivisions were housing tax increment projects in that there were extraordinary trunk sewer charges. The developers were responsible for these "special" trunk charges through assessments that were levied against the properties being developed. The special trunk assessments were as follows: - Chestnut Hills $ 205,300 Cedar Hills 234,042 Windemere Woods 106.765 Total $ 546,098 Contemplated in the development agreements was the reimbursement to each of the developers for these special trunk assessments. The vehicle used for this reimbursement is called a tax increment revenue note. These notes provide for the payment of principal and interest (8 %) up to the lessor of the principal amount of the note or 97% of available tax increment. The notes began accruing interest on December 1, 1993 with the first payment due the developers on February 1, 1995 for tax increments received during 1994. The last payment will be February 1, 2000, based on increments received during 1999. Each developer receives only the increments generated by his subdivision. Payments from available increments are applied first to accrued interest and then to principal balances. If increments received through the year 1999 are not sufficient to pay off each developer, the note will be cancelled. Any excess increments received after 1999 will be retained by the City. Included in current liabilities for the year ended December 31, 1994 is $42,284, which represents the portion of increments collected in 1994 that were payable to the developers on February 1, 1995. These payments are recorded as capital outlay as they represent a payment for sewer trunk infrastructure contributed by the developers. The outstanding prinicpal balacne as of December 31, 1994 was $546,098. 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. In a sense, these are really an obligation to assign a future and uncertain revenue sources. Note 8. DEPOSITS PAYABLE Deposits for water meters are accounted for in the City's Water Utility Fund. A summary of the 1994 changes in water meter eposits is as follows: Total deposits payable January 1, 1994 $ 80,343 Add deposits received 22,230 Total deposits payable December 31, 1994 $ 102,573 Platting and performance deposits are accounted for in the City's Expendable Trust Escrow Fund. A summary of the 1994 changes in deposits is as follows: Total deposits payable January 1, 1994 $ 195,281 Add deposits received 353,644 Less payments from deposit account 366,826 Total deposits payable December 31, 1994 $ 182,099 —20—