Audit for Fiscal Year Ending June 30, 2017

CITY OF SPENCER NOTES TO FINANCIAL STATEMENTS - Continued JUNE 30, 2017

13. LANDFILL CLOSURE/POST CLOSURE CARE COSTS - Continued

Also, pursuant to Chapter 567-113.14 of the Iowa Administrative Code (lAC), since the estimated closure and post closure care costs are not fully funded, the City is required to demonstrate financial assurance for the unfunded costs. The City has adopted the dedicated fund financial assurance mechanism. Under this mechanism, the City must certify the following to the Iowa Department of Natural Resources: • The fund is dedicated by local government statute as a reserve fund. • Payments into the fund are made annually over a pay-in period of ten years or the permitted life of the landfill, whichever is shorter. • Annual deposits to the fund are determined by the following formula:

NP = CE - CB Y NP = next payment CE = total required financial assurance CB = current balance of the fund Y = number of years remaining in the pay-in period

Chapter 567-113.14(8) of the lAC allows a government to choose the dedicated fund mechanism to demonstrate financial assurance and use the accounts established to satisfy the closure and postclosure care account reqUirements. Accordingly, the City is not required to establish closure and postclosure accounts in addition to the accounts established to comply with the dedicated fund financial assurance mechanism.

14. DEVELOPMENT AGREEMENTS

The City has entered into various development agreement for construction. Under these agreements, the City has agreed to pay the developers an amount not to exceed $7,794,600, subject to annual appropriation by the City Council. The agreements require up to ten annual payments, provided the developer is in compliance with the terms of the agreement. During the year ended June 30, 2017, the City rebated $316,299 of incremental property tax to the developers. At June 30,2017, the remaining balances to be paid on the agreements totaled $6,983,084.

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