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City of Redwood City 6.1.D. - Page 109 <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2016 <br />NOTE 15 — LITIGATION AND CONTINGENT LIABILITIES <br />The City generally follows the practice of recording liabilities resulting from claims and legal actions only <br />when they become fixed or determinable in amount. <br />The City is involved in various lawsuits. Although the outcome of these lawsuits is not presently <br />determinable, it is the opinion of management and legal counsel, that the resolution of these matters will <br />not have a material adverse effect on the City's financial statements. In the opinion of the City Attorney, the <br />City has adequate legal defenses and/or reserves to cover such liability if it does arise. <br />The City has received various state and federal funds for specific purposes that are subject to review and <br />audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms <br />of the grants, it is believed that any required reimbursement will not be material. <br />NOTE 16 — CONSTRUCTION, OTHER SIGNIFICANT COMMITMENTS AND ENCUMBRANCES <br />As of June 30, 2016, the City has the following significant commitments: <br />$40,577 — Construction services related to the meter system upgrade project <br />$1,894,500 — Construction services related to the Bair Island storm water pump station project <br />$563,960 — Construction services related to the recycled water project <br />$2,708,000 — Construction services related to sewer improvement projects <br />Purchase orders are issued throughout the fiscal year to encumber the budgets in the governmental <br />funds. Following are the outstanding encumbrances as of June 30, 2016: <br />Major Funds: $ <br />General Fund 981,142 <br />Capital Outlay Fund 1,755,832 <br />Total Major Funds 2,736,974 <br />Non -Major Funds 4,923,024 <br />Total Encumbrances 7,659,998 <br />82 <br />