06-13-2022 City Council Packet - Laserfiche WebLink

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2021 C. INVESTMENT RISKS Custodial Credit Risk — Investments — For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City's investment policy requires its brokers be licensed with the appropriate federal and state agencies. A minimum capital requirement of $5,000,000 and at least five years of operation is mandatory. Investments in securities are held by the City's broker -dealers. The securities at each broker -dealer are insured $500,000 through SIPC. Each broker -dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker - dealer's accounts. Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City's policy to minimize interest rate risk includes investing primarily in short-term securities and structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations. Credit Risk — Credit risk is the risk than an issuer of an investment will not fulfill its obligation to the holder of the investment. The City's policy to minimize credit risk includes limiting investing funds to those allowable under Minnesota Statute 118A, annually appointing all financial institutions where investments are held, and diversifying the investment portfolio. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Concentration of Credit Risk — Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issuer. The City places no limit on the amount it may invest in any one issuer. At December 31, 2021, no individual investments exceeded 5% of the City's total investment portfolio. Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2021 are as follows: Property Special Taxes Assessments Receivable Receivable Total Major Funds: General Fund $29,134 $ - $29,134 G.O. Improvement Note of 2009A - 2,150,712 2,150,712 G.O. Improvement Bonds of 2016B - 2,994,379 2,994,379 Area and Unit Charge - 2,044,809 2,044,809 Nonmajor Funds - 1,515,668 1,515,668 Total $29,134 $8,705,568 $8,734,702 55