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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br />When committed, assigned or unassigned resources are available for use, it is the City's policy to use <br />resources in the following order: I) committed 2) assigned and 3) unassigned. <br />The City formally adopted a fund balances policy for the general fund. The policy establishes an <br />unassigned fund balance range of 40% -50% of general fund operating expenditures. <br />R. USE OF ESTIMATES <br />Note2 <br />The preparation of financial statements in accordance with generally accepted accounting principles <br />(GAAP) requires management to make estimates that affect amounts reported in the financial <br />statements during the reporting period. Actual results could differ from such estimates. <br />DEPOSITS AND INVESTMENTS <br />A. DEPOSITS <br />In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized <br />by the City Council, all of which are members of the Federal Reserve System. <br />Custodial Credit Risk -Custodial credit risk is the risk that in the event of a bank failure, the City's <br />deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds or collateral <br />protect all City deposits. The market value of collateral pledged must equal 110% of deposits not <br />covered by insurance or bonds. The City has no additional deposit policies addressing custodial credit <br />risk. At December 31, 2017, the bank balance of the City's deposits was insured by the FDIC or <br />covered by pledged collateral held in the City's name. <br />Minnesota Statutes require that securities pledged as cQllateral be held in safekeeping by the City <br />Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral <br />includes the following: <br />a) United States government treasury bills, treasury notes, treasury bonds; <br />b) Issues of United States government agencies and instrumentalities as quoted by a recognized <br />industry quotation service available to the government entity; <br />c) General obligation securities of any state or local government with taxing powers which is rated <br />"A" or better by a national bond rating service, or revenue obligation securities of any state or local <br />government with taxing powers which is rated "AA" or better by a national bond rating service; <br />d) General obligation securities of a local government with taxing powers may be pledged as <br />collateral against funds deposited by that same local government entity; <br />e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality <br />accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's <br />Investors Service, Inc. or Standard & Poor's Corporation; and <br />t) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. <br />At December 31, 2017, the carrying amount of the City's deposits with financial institutions was <br />$257,836. <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br />B. INVESTMENTS <br />Minnesota Statutes authorize the City to invest in the following: <br />a) Direct obligations or obligations guaranteed by the United States or its agencies, its <br />instrumentalities, or organizations created by an act of congress, excluding mortgage-backed <br />securities defined as high risk. <br />b) Shares of invesbnent companies registered under the Federal Invesbnent Company Act of 1940 and <br />whose only invesbnents are in securities described in (a) above, general obligation tax-exempt <br />securities, or repurchase or reverse repurchase agreements. <br />c) State and local securities as follows: <br />I) any security which is a general obligation of any state or local government with taxing powers <br />which is rated "A" or better by a national bond rating service; <br />2) any security which is a revenue obligation of any state or local government with taxing powers <br />which is rated "AA" or better by a national bond rating service; and <br />3) a general obligation of the Minnesota Housing Finance Agency which is a moral obligation of <br />the State of Minnesota and is rated "A" or better by a national bond rating agency. <br />d) Bankers acceptance of United States banks. <br />e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the <br />highest quality, and maturing in 270 days or less. <br />t) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve <br />System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government <br />securities to the Federal Reserve Bank of New York; certain Minnesota securities broker-dealers; <br />or, a bank qualified as a depositor. <br />g) General obligation temporary bonds of the same governmental entity issued under section 429.091, <br />subdivision 7; 469 .178, subdivision 5; or 4 75 .61, subdivision 6. 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