|
Elk River Municipal Utilities
<br />Elk River, Minnesota
<br />Notes to the Financial Statements
<br />December 31, 2022
<br />Note 2: Detailed Notes on All Funds (Continued)
<br />The investments of the Utilities are subject to the following risks:
<br />• Credit Risk. Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings
<br />are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota
<br />statutes and the Utilities' investment policy limit the Utilities' investments to the list on page 30 of the notes.
<br />• Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the
<br />counterparty to a transaction, a government will not be able to recover the value of investment or collateral
<br />securities that are in the possession of an outside party. According to their investment policy the Utilities'
<br />portfolio maturities shall be staggered to avoid undue concentration of assets with one broker -dealer or financial
<br />institution.
<br />Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a
<br />single issuer. According to their investment policy the Utilities' portfolio maturities shall be staggered to avoid
<br />undue concentration of assets in any one type of instrument. As of December 31, 2022 the Utilities has invested
<br />5.0 percent or more of its total investment portfolio in the following issuers: Capital One National Association VA
<br />US (11.6 percent), Bank of China (7.1 percent), Morgan Stanley Bank UT US (6.6 percent), Popular Bank NY US
<br />(6.4 percent), New York Community Bank US (6.3 percent) Goldman Sachs Bank NY US (6.2 percent) Texas
<br />Exchange Bank TX US (6.2 percent), Institution for SV MA US (6.1 percent), Beal Bank Plano TX US (6.1 percent),
<br />Sallie Mae Bank UT US (6.0 percent), BMO Harris Bank NA IL US (6.0 percent), JPMorgan Chase Bank OH US (5.9
<br />percent), Celtic Bank UT US (5.7 percent), Ally Bank UT US (5.3 percent) and Comenity Bank DE US (5.0 percent).
<br />• Interest Rate Risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment.
<br />According to their investment policy the Utilities' will stagger maturities to avoid undue concentration of assets at
<br />a specific maturity sector.
<br />B. Lease Receivable
<br />The Utilities has multiple leases with Verizon and Sprint that allows them to place antennas on water towers. The lease
<br />payments increase yearly. As of December 31, 2022, the Utilities' receivable balance was $5,231,837. This is partially
<br />offset with deferred inflow of lease resources.
<br />Lease
<br />Receivable
<br />Interest
<br />Authorized
<br />Interest
<br />Issue
<br />Maturity
<br />Balance at
<br />Receivable at
<br />Balance at
<br />Description
<br />and Issued
<br />Rate
<br />Date
<br />Date
<br />Year End
<br />Year End
<br />Year End
<br />Sprint Lease on Johnson St.
<br />$ 741,068
<br />1.41 i
<br />06/01/10
<br />05/31/35
<br />$ 696,334
<br />$ 5,748
<br />$ 702,082
<br />Sprint Lease on Gary St.
<br />694,752
<br />1.41
<br />06/01 /10
<br />05/31 /35
<br />652,814
<br />5,388
<br />658,202
<br />Sprint Lease on Auburn St.
<br />694,752
<br />1.41
<br />06/01 /10
<br />05/31 /35
<br />652,814
<br />5,388
<br />658,202
<br />Verizon Lease on Johnson St.
<br />837,781
<br />1.60
<br />09/01 /14
<br />08/31 /39
<br />805,646
<br />4,279
<br />809,925
<br />Verizon Lease on Auburn St.
<br />909,094
<br />1.70
<br />01/01/17
<br />12/31/42
<br />872,594
<br />14,950
<br />887,544
<br />Verizon Lease on Freeport St.
<br />724,310
<br />1.78
<br />10/01 /20
<br />09/30/45
<br />702,825
<br />3,132
<br />705,957
<br />Verizon Lease on Gary St.
<br />837,781
<br />1.59
<br />09/01 /14
<br />08/31 /39
<br />805,646
<br />4,279
<br />809,925
<br />Total Lease Receivable
<br />$ 5, 331,837
<br />36
<br />119
<br />
|