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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 (CONTINUED)
<br /> C. Investments (Continued)
<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 /> 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 10 years. Under the terms
<br /> of the grant agreement, the City retains the grant repayments. Notes receivable of$596,074
<br /> in the Revolving Loan fund and $301,512 in the State DEED fund are outstanding at
<br /> 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
<br /> August 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 1%. Notes receivable of $400,000 in the HRA is outstanding at
<br /> December 31, 2016.
<br /> In 2015, the HRA issued loans to applicants under the rehabilitation loan program. The
<br /> terms of each loan vary and are payable over five to 15 years with rates from 1.25% to
<br /> 3.25%. Notes receivable of$131,802 in the HRA are outstanding at December 31, 2016.
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