2004 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) D. Contingent Liabilities College Football Hall of Fame Or)erations The City's General Fund has advanced a total of $1,750,000 to the College Football Hall of Fame Fund in various amounts during the years from 1996 to 1999. The City has always recognized that these advances would be repaid from excess operating revenues of the Hall of Fame. No payment schedule has been established. Beginning with 1996, the first full year of operations, through 2000, the Hall of Fame financial statements show net losses ranging from $521,345 to $1,481,657. During 2001, the City turned over the operations of the Hall of Fame to the National Football Founda- tion and College Football Hall of Fame, Inc. (NFF). The interim agreement authorizing the NFF to operate the Hall of Fame shows that NFF has contributed $1,900,000 to cover operating deficits of the Hall of Fame during the period prior to December 31, 2000. The interim agreement is in effect until December 31, 2005. At that time, the NFF can terminate their participation in the operations and the City shall reimburse the NFF the full amount of the NFF contri- butions towards operations. The reimbursement will be made in five annual installments beginning December 31, 2005. If the NFF elects to continue their participation, then the City will resume oper- ating the Hall of Fame as it had done from 1996 to 2001. The $1,900,000 contingent liability to the NFF is not recognized on the financial statements. Proiect Future The Common Council approved Resolution 3037 -02 in which the City pledges support to Project Future through the year 2006. Project Future promotes the City for economic development purposes. The City has committed $110,000 for each year from 2003 through 2006 contingent upon the fiscal condition of the City. Lawsuits There are several lawsuits pending in which the City is involved. The City is in settlement phase on two of the lawsuits and the City Attorney estimates that the potential damages against the City may exceed $2,100,000 on these two. The other lawsuits are at various stages of court proceedings. During 2005, money the City paid to a third party administrator for the payment of employee medical claims was not used to pay those claims. Law enforcement agencies are investigating this matter. The City has filed suit against the administrator to recover these funds. The City estimates the loss to be $1,057,000 and has fled a claim with its insurance carrier which may cover the loss. Any loss not recovered by the City will be the responsibility of the City and the City may be responsible for the payment of these medical claims. E. Conduit Debt Obligation From time to time, the primary government has issued industrial 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 primary government, the State, nor any political subdivision thereof is obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. 51