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City of Elk River
<br />Notes to Basic Financial Statements
<br />NOTE 3 — DEPOSITS AND INVESTMENTS
<br />Cash balances of the City's funds are combined (pooled) and invested to the extent available in various
<br />investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed in
<br />the financial statements as "cash and investments". For purposes of identifying risk of investing public
<br />funds, the balances and related restrictions are summarized as follows.
<br />A. Deposits
<br />Custodial Credit Risk — Deposits: This is the risk that in the event of a bank failure, the City's deposits
<br />may not be returned to it. The City (including Elk River Municipal Utilities) has an investment policy in
<br />place to 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 market value of
<br />the principal and accrued interest. As of December 31, 2021, the City's bank balance of $32,369,479
<br />was not exposed to custodial credit risk because it was insured and fully collateralized by federal
<br />depository insurance. The book balance as of December 31, 2021 was $32,897,773.
<br />Discretely Presented Component Unit
<br />As of December 31, 2021, the HRA's bank balance of $775,500 was not exposed to custodial credit risk
<br />because it was fully collateralized. The HRA's book balance of all deposits at December 31, 2021,
<br />totaled $775,500.
<br />B. Investments
<br />Investment Maturities
<br />Credit
<br />Fair
<br />Less than
<br />Greater than
<br />Investment Type
<br />Rating
<br />Value
<br />One Year
<br />1-5 Years
<br />5 Years
<br />No Maturity
<br />U.S. treasury obligations
<br />N/A
<br />$ 7,081,830
<br />$ 7,081,830
<br />$ -
<br />$ -
<br />$
<br />Negotiable certificates of deposit
<br />N/A
<br />7,207,966
<br />1,180,748
<br />5,543,065
<br />484,153
<br />Municipal bonds
<br />AA to AAA
<br />34,651,559
<br />3,350,111
<br />15,352,888
<br />15,948,560
<br />-
<br />UBS Select Prime Institutional Money Market
<br />N/A
<br />8,255,690
<br />-
<br />-
<br />-
<br />8,255,690
<br />Minnesota Municipal Money Market (4M Fund)
<br />N/A
<br />11,186,265
<br />-
<br />-
<br />11,186,265
<br />Other money market funds
<br />N/A
<br />998,261
<br />998,261
<br />-
<br />-
<br />Total
<br />$ 69,381,571
<br />$ 12,610,950
<br />$ 20,895,953
<br />$ 16,432,713
<br />$ 19,441,955
<br />Concentration Risk: This is the risk associated with investing a significant portion of the City's
<br />investment (considered 5% or more) in the securities of a single issuer and no more than 50% of the
<br />City's total investment portfolio may be invested in certificates of deposit or commercial paper. As of
<br />December 31, 2021, the City had invested 5% or more of its total investment portfolio in one single
<br />issuer, the Minnesota Municipal Money Market (4M Fund).
<br />Credit Risk: Credit risk is the risk that an issuer to an investment will not fulfill its obligation. State law
<br />limits investments in state and local securities and commercial paper to those with specified rating by
<br />nationally recognized rating agencies. U.S. treasury obligations are not considered to have credit risk.
<br />The City's investment policy does not further limit the ratings of their investments.
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