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CITY OF ELK RIVER
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />YEAR ENDING DECEMBER 31, 2016
<br />Financial assets and liabilities recorded on the combined statements of financial position
<br />are categorized based on the inputs to the valuation techniques as follows:
<br />Level 1 — Financial assets and liabilities are valued using inputs that are unadjusted
<br />quoted prices in active markets accessible at the measurement date of identical financial
<br />assets and liabilities.
<br />NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)
<br />D. Investments (Continued)
<br />Level 2 — Financial assets and liabilities are valued based on quoted prices for similar
<br />assets or inputs that are observable, either directly or indirectly, for substantially the full
<br />term through corroboration with observable market data.
<br />Level 3 — Financial assets and liabilities are valued using pricing inputs which are
<br />unobservable for the asset, inputs that reflect the reporting entity's own assumptions
<br />about the assumptions market participants would use in pricing the asset.
<br />Investment Type Level Level Level Total
<br />U.S. Treasuries with Maturities at Purchase of Greater Than 1 Year $ 20,951 $ - $ $ 20,951
<br />Negotiable Certificates of Deposit with Maturities at Purchase
<br />of Greater Than 1 Year 10,243,800 10,243,800
<br />Federal National Mortgage Association 12,864,776 - 12,864,776
<br />Federal Farm Credit Bank Bond 500,630 500,630
<br />Municipal Bonds 17,804,343 17,804,343
<br />Total Investments Measured at Fair Value 13,386,357 24,507,666 $ 41,434,500
<br />Investments Measured at Amortized Cost 4,809,188
<br />Total Investments 46, 243, 688
<br />NOTE 4 NOTES RECEIVABLE
<br />The City has made several business subsidy loans to local businesses, some of which were
<br />funded with grant proceeds received from the state and federal governments. The terms of
<br />repayment vary with each loan and will be repaid over a period of ten years. Under the
<br />terms of the grant agreement, the City retains the grant repayments. Notes receivable of
<br />$596,074 in the Revolving Loan fund and $301,512 in the State DEED fund are outstanding
<br />at December 31, 2016.
<br />In 2015, the City issued a $1,288,589 long-term note receivable related to the sale of
<br />property to a developer under an abatement agreement. The note shall be payable in
<br />semiannual installments as tax abatement revenues are received, commencing on August
<br />1, 2017, and maturing February 1, 2037. A note receivable of $1,288,589 in the
<br />Development Fund is outstanding at December 31, 2016.
<br />In 2006, the HRA issued a loan to a developer to assist in the financing of a housing
<br />development for the benefit of low and moderate income residents which was funded with
<br />state grant proceeds. Repayment of the loan is deferred for 30 years, payable in one lump
<br />sum at an interest rate of one percent. Notes receivable of $400,000 in the HRA is
<br />outstanding at December 31, 2016.
<br />(51)
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