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NOTE 17 — INDUSTRIAL AND HOUSING DEVELOPMENT REVENUE BONDS From time to time, the City has issued Industrial Revenue Bonds and Housing Development 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, 2003, there was one series of Industrial Revenue Bonds outstanding and one Housing Development Revenue Bond outstanding with aggregate principal amounts payable of $3,228,797 and $3,000,000, respectively. NOTE 18 — COMMITMENTS AND CONTINGENCIES A. Commitments for Construction At December 31, 2003, the City is committed to various construction contracts for the improvement of city property. The City's remaining commitment under these contracts is $145,079. B. Federal and State Revenue Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. C. Legal Claims The City has the usual and customary type of miscellaneous legal claims pending at year -end. Although the outcome of these lawsuits is not presently determinable, the City's management believes that the City will not incur any material monetary loss resulting from these claims. No loss has been recorded on the City's financial statements relating to these claims. D. Centralized Law Enforcement Records System The City has entered into an agreement with the County of Anoka, and the following cities located within the county: Anoka, Blaine, Circle Pines, Centerville, Columbia Heights, Coon Rapids, Fridley, Lexington, Lino Lakes, St. Francis (including Bethel), and Spring Lake Park. The purpose of this agreement is to provide for the joint financing of a centralized law enforcement records system and to provide for the sharing of the ongoing costs of the system. Under the terms of the agreement, the City has committed to pay the County of Anoka approximately 5% of the combined total shared costs of the participating entities annually beginning in fiscal year 2000 for a period of four years.