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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2023 <br /> <br /> <br /> <br /> <br />C. INVESTMENT RISKS <br /> <br />Custodial Credit Risk – Investments – For investments in securities, custodial credit risk is the risk that in the event of <br />failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that <br />are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by <br />securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The <br />City’s investment policy requires its brokers be licensed with the appropriate federal and state agencies. A minimum <br />capital requirement of $5,000,000 and at least five years of operation is mandatory. Investments in securities are held by <br />the City’s broker-dealers. The securities at each broker-dealer are insured $500,000 through SIPC. Each broker-dealer <br />has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits <br />applied to all of the broker-dealer’s accounts. <br /> <br />Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an <br />investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in <br />market interest rates. The City’s policy to minimize interest rate risk includes investing primarily in short-term securities <br />and structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations. <br /> <br />Credit Risk – Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the <br />investment. The City’s policy to minimize credit risk includes limiting investing funds to those allowable under <br />Minnesota Statute 118A, annually appointing all financial institutions where investments are held, and diversifying the <br />investment portfolio. This is measured by the assignment of a rating by a nationally recognized statistical rating <br />organization. <br /> <br />Concentration of Credit Risk – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a <br />government’s investment in a single issuer. The City places no limit on the amount it may invest in any one issuer. At <br />December 31, 2023, no individual investments exceeded 5% of the City’s total investment portfolio. <br /> <br /> <br />Note 3 RECEIVABLES <br /> <br />A. LONG-TERM RECEIVABLES <br /> <br />Significant receivable balances not expected to be collected within one year of December 31, 2023 are as follows: <br /> <br />Property Special <br />Taxes Assessments Leases <br />Receivable Receivable Receivable Total <br />Major Funds: <br /> General Fund $35,100 $ - $417,664 $452,764 <br /> G.O. Improvement Note of 2009A - 1,487,483 - 1,487,483 <br /> Area and Unit Trunk - 1,142,414 - 1,142,414 <br />Nonmajor Funds - 1,012,436 1,165,914 2,178,350 <br /> Total $35,100 $3,642,333 $1,583,578 $5,261,011 <br /> <br />56 <br />63