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CITY OF ELK RIVER
<br /> NOTES TO BASIC FINANCIAL STATEMENTS
<br /> YEAR ENDING DECEMBER 31, 2016
<br /> NOTE 3 DEPOSITS AND INVESTMENTS
<br /> A. Components of Cash and Investments
<br /> Cash and investments are presented in the financial statements as follows:
<br /> Primary Component Total Primary
<br /> Statement of Net Position Government Unit-HRA Gov and CU
<br /> Cash and Investments $ 53,247,375 $ $ 53,247,375
<br /> Restricted Cash and Investments 997,660 997,660
<br /> Cash and Investments Held by Trustee 9,284,303 9,284,303
<br /> Cash and Investments-Discrete CU - 1,289,705 1,289,705
<br /> Statement of Fiduciary Net Position
<br /> Cash and Investments-Agency Funds 205,969 - 205,969
<br /> Total $ 63,735,307 $ 1,289,705 $ 65,025,012
<br /> B. Deposits
<br /> In accordance with applicable Minnesota Statutes, the City maintains deposits at depository
<br /> banks authorized by the City Council, including checking accounts and certificates of
<br /> deposit. The following is considered the most significant risk associated with deposits:
<br /> Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank
<br /> failure, the City's deposits may be lost. Minnesota Statutes require that all deposits be
<br /> protected by federal deposit insurance, corporate surety bond, or collateral. The fair value
<br /> of collateral pledged must equal 110% of the deposits not covered by federal deposit
<br /> insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes,
<br /> and bonds; issues of U.S. government agencies; general obligations rated "A" or better;
<br /> revenue obligations rated "AX or better; irrevocable standard letters of credit issued by the
<br /> Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that
<br /> securities pledged as collateral be held in safekeeping in a restricted account at the Federal
<br /> Reserve Bank or in an account at a trust department of a commercial bank or other
<br /> financial institution that is not owned or controlled by the financial institution furnishing the
<br /> collateral.
<br /> The City (including Elk River Municipal Utilities) has an investment policy in place to
<br /> address custodial credit risk for deposits, stating all deposits and investments must be in
<br /> compliance with Minnesota Statutes 118A, with collateralization levels of 110% of the
<br /> market value of the principal and accrued interest.
<br /> At year-end, the carrying amount of the City's deposits was $17,491,619 while the balance
<br /> on the bank records was $17,643,205. At December 31, 2016, all deposits were fully
<br /> covered by federal depository insurance, surety bonds, or by collateral held by the City's
<br /> agent in the City's name.
<br /> At year-end, the carrying amount of deposits for the HRA, a discretely presented
<br /> component unit, was $1,289,705 and the bank balance was $1,289,705. At December 31,
<br /> 2016, all deposits were fully covered by federal depository insurance, surety bonds, or by
<br /> collateral held by the City's agent in the City's name.
<br /> (48)
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