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City of Elk River
<br />Notes to Basic Financial Statements
<br />NOTE 17 — OTHER INFORMATION
<br />A. Territorial Acquisition Agreement
<br />In 2015, the Utilities entered into an agreement to transfer ownership of electric plant and electric
<br />service to customers in eight designated areas receiving service from Connexus Energy. Specific
<br />payment terms have been negotiated for five years, and if any of the eight areas are not acquired within
<br />this timeframe, the payment terms may be renegotiated. In 2019, the Utilities acquired the final service
<br />areas.
<br />The agreed cost of property purchased from Connexus Energy is net book value, integration expenses,
<br />and a loss of revenue payment. The loss of revenue payment for each area acquired is based on a
<br />formula outlined in the agreement, payable for the subsequent ten years after initial purchase.
<br />The Utilities acquired designated service area one in 2015 for $877,807, service area two in 2016 for
<br />$663,586, service areas three and four in 2017 for $276,776, service areas five and six in 2018 for
<br />$298,736 and service areas seven and eight in 2019 for $78,457. The loss of revenue payments made
<br />were $411,157 in 2017, $570,725 in 2018, $751,860 in 2019, $834,185 in 2020, $857,538 in 2021,
<br />$924,187 in 2022, and $940,467 in 2023. All amounts paid are included in property and equipment, and
<br />loss of revenue payments are included in intangible assets.
<br />B. Joint Ventures
<br />The City has agreements with government and other entities which provide reduced costs, better service,
<br />and additional benefits to the participants. In 2007, the City and neighboring municipalities formed the
<br />Sherburne/Wright Cable Communications Commission (the Commission). The purpose of the
<br />organization is to monitor the operation and activities of cable communications of the member
<br />municipalities. The Commission also provides coordination, administration, and enforcement of the
<br />franchises for the cable communication system. The City has no ongoing financial interest or
<br />responsibility with regards to the Cable Commission. Financial statements for the Commission can be
<br />obtained by writing to: Sherburne/Wright Cable Communications Commission at 444 Cedar Street,
<br />Suite 950, St. Paul, Minnesota 55101.
<br />C. Segment Information
<br />The City maintains six enterprise funds that account for the municipal liquor operations, garbage
<br />collections, sewer, storm water, water, and electric utilities. The City considers each of its enterprise
<br />funds to be a segment. Since the required segment information is already included in the City's
<br />proprietary funds' balance sheet and statement of revenues, expenses, and changes in net position
<br />balance, this information has not been repeated in the notes to the basic financial statements.
<br />NOTE 18 — NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
<br />GASB Statement No. 96, Subscription -Based Information Technology Arrangements establishes that a
<br />Subscription -Based Information Technology Arrangement (SBITA) results in a right -to -use subscription
<br />asset and a corresponding liability. Under this statement, a governmental entity generally should
<br />recognize a right -to -use subscription asset — an intangible asset — and a corresponding subscription
<br />liability. This statement will be effective for the year ending December 31, 2023.
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