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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2022 <br />B. LEASES RECEIVABLE <br />The City leases a portion of its water towers for cellular tower antenna sites. These leases are non- <br />cancelable for a period of 5 years, with two to four renewal periods of 5 years each at the lessee's <br />option. The City considers the likelihood of these options being exercised to be greater than 50%. The <br />agreements call for monthly lease payments between $1,855 and $3,528, with increases of either 4% <br />annually or 7.5% upon exercising renewal options. The lease receivables are measured at the present <br />value of the future minimum lease payments expected to be received during the lease term at a discount <br />rate of 5% which is based on the rate available to finance equipment over the same time periods. <br />The City leases space within its City Hall Complex to New Creations Child Care and Learning Center. <br />The lease expires June 30, 2029, however, effective August 1, 2024 the City has the option to terminate <br />the lease with at least 12 months written notice. The City considers the likelihood of cancelling the <br />lease agreement to be less than 50%. The agreement calls for monthly lease payments of $6,785, with <br />annual increases of 3% through the end of the lease term. There are no renewal options stated in the <br />lease agreement. The lease receivable is measured at the present value of the future minimum lease <br />payments expected to be received during the lease term at a discount rate of 5% which is based on the <br />rate available to finance equipment over the same time periods. <br />At December 31, 2022 the entity recorded $1,924,147 in lease receivables and deferred inflows of <br />resources for these arrangements. <br />Total revenue recognized in relation to these leases is as follows: <br />2022 <br />Amortization of lease-related deferred inflows: <br />Antenna leases $58,566 <br />City Hall Complex lease 60,904 <br />Total revenue recognized resulting from deferred inflow amortization 119,470 <br />Interest revenue 99,500 <br />Common area maintenance charges 28,000 <br />Total revenue recognized in relation to leased assets 246,970 <br />58