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CITY OF ST. ANTHONY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2022 Another element of that reconciliation states that “the issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of principal of the long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.” The details of this $887,438 difference are as follows: Debt issued or incurred: Issuance of general obligation bonds ($2,385,000) Premium on issued bonds (15,093) Principal repayments 3,170,000 Change in accrued interest payable 928 Amortization of bond premium 116,603 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities.$887,438 W. LEASE RECEIVABLE The City's lease receivable is measured at the present value of lease payments expected to be received during the lease term. Under the lease agreement, the entity may receive additional variable lease payments that are dependent upon the lessee's revenue/the lessee's usage levels. These variable payments are excluded from the lease receivable. A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the commencement of the lease in an amount equal to the initial recording of the lease receivable, and is recognized as revenue over the lease term. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal at least 110% of deposits not covered by insurance or bonds. Securities pledged as collateral are required to be held in safekeeping by the City or in a financial institution other than that furnishing the collateral. Minnesota Statue 118A.03 identifies allowable forms of collateral. Custodial Credit Risk – Deposits: Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. As of December 31, 2022, the bank balance of the City’s deposits was covered by federal depository insurance, however, the City also held $520,908 of cash with its investment custodians that was not covered by federal depository insurance or supplementary collateral. 54