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Elk River Municipal Utilities <br />Elk River, Minnesota <br />Notes to the Financial Statements <br />December 31, 2024 <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, 2024 the Utilities has no <br />individual issuers invested in 5.0 percent or more of its total investment portfolio. <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 Sprint and Verizon that allows them to place antennas on water towers. The lease <br />payments increase yearly. As of December 31, 2024, the Utilities' lease and interest receivable balance was $4,772,914. <br />The lease receivable is partially offset with deferred inflow of lease resources. <br />Lease <br />Receivable Interest <br />Authorized Interest Issue Maturity Balance at Receivable at Balance at <br />Description and Issued Rate Date Date Year End Year End Year End <br />Sprint Lease on Johnson St. <br />$ 741,068 <br />1.41 % <br />06/01/10 <br />05/31/35 <br />$ 611,347 <br />$ 5,046 $ <br />616,393 <br />Sprint Lease on Gary St. <br />694,752 <br />1.41 <br />06/01 /10 <br />05/31 /35 <br />573,138 <br />4,731 <br />577,869 <br />Sprint Lease on Auburn St. <br />694,752 <br />1.41 <br />06/01 /10 <br />05/31 /35 <br />573,138 <br />4,731 <br />577,869 <br />Verizon Lease on Johnson St. <br />837,781 <br />1.60 <br />09/01/14 <br />08/31/39 <br />743,869 <br />3,950 <br />747,819 <br />Verizon Lease on Gary St. <br />837,781 <br />1.59 <br />09/01/14 <br />08/31/39 <br />743,869 <br />3,950 <br />747,819 <br />Verizon Lease on Auburn St. <br />909,094 <br />1.70 <br />01/01/17 <br />12/31/42 <br />824,663 <br />14,129 <br />838,792 <br />Verizon Lease on Freeport St. <br />724,310 <br />1.78 <br />10/01 /20 <br />09/30/45 <br />663,396 <br />2,957 <br />666,353 <br />Total Lease Receivable <br />$ 4,772,914 <br />37 <br />100 <br />