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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2023 49 NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued) 2.A. CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) • Custodial credit risk is the risk that in the event of a failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City’s investment policy requires its brokers to be licensed with the appropriate federal and state agencies. A minimum capital requirement of $10,000,000 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 $500,000 through SIPC. Each broker- dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker-dealer’s accounts. • Concentration of Credit Risk is the risk associated with the magnitude of the City’s investments (considered five percent or more) in the investments of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s investment policy allows no more than 5 percent of the overall portfolio to be invested in a single issuer, except for the securities of the U.S. Government, or a maximum of 25 percent with any individual counter party in an external investment pool. At December 31, 2023, the City did not have a significant concentration of credit risk. • Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City’s investment policy states that extended maturities may be utilized to take advantage of higher yields; however no more than 25 percent of total investments should extend beyond five years and in no circumstance should any extend beyond ten years. The City’s investment portfolio is structured so that securities mature to meet cash requirements for ongoing operations. Deposits and Investments Summary A reconciliation of cash and investments as shown on the Statements of Net Position for the City follows: 2.B. LEASE RECEIVABLES The City has executed various arrangements under which the City leases property to external parties. A summary of the pertinent terms for these leasing arrangements, as well as the corresponding lease receivables, is presented below: Carrying Amount of Deposits 27,383,623$ Investments 16,537,353 Total 43,920,976$ Government-wide Cash, Cash Equivalents, and Investments 43,920,976$ Governmental Activities Original Total Annual Interest Maturity Remaining Description Amount Lease Payment Rate(s)Date Amount Wireless Site Lease 58,510$ $20,441 3.25%12/31/2024 20,140$ Wireless Site Lease 548,874 $2,500 - $55,902 5.50%11/30/2047 548,855 Wireless Site Lease 696,030 $27,987 - $55,425 3.25%6/30/2043 664,780 Land Lease 400,078 $21,012 - $31,847 3.25%12/31/2043 383,005 Total Governmental Activities Lease Receivables 1,616,780$