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NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED) <br />Credit risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations <br />guaranteed by the United States or its agencies; general obligations rated "A" or better; revenue <br />obligations rated "AA" or better; general obligations of the Minnesota Housing Finance Agency rated <br />"A" or better; commercial paper issued by the United States corporations or their Canadian subsidiaries, <br />rated of the highest quality category by at least two nationally recognized rating agencies, and maturing <br />in 270 days or less; time deposits that are fully insured by the Federal Deposit Insurance Corporation <br />or bankers acceptances of the United States banks and Guaranteed Investment Contracts guaranteed by <br />a United States commercial bank or domestic branch of a foreign bank, or a United States insurance <br />company, or their Canadian subsidiary, and with a credit quality in one of the top two highest categories <br />by a nationally recognized rating agency. The City's investment policies do not further address credit <br />risk. <br />Concentration risk — This is the risk associated with investing a significant portion of the City's <br />investment (considered 5 percent or more) in the securities of a single issuer, excluding United States <br />guaranteed investments (such as Treasuries), investment pools and mutual funds. The City's <br />investment policies do not limit the concentration of investments. At year end, the City's investment <br />portfolio included 23% concentration in Federal Home Loan Banks and 6% in Federal National <br />Mortgage Association. <br />Interest rate risk — This is the risk of potential variability in the fair value of fixed rate investments <br />resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the <br />greater the risk). The City does not have an investment policy limiting the duration of investments. <br />NOTE 3 — INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS <br />A. Short -Term Interfund Receivables/Payables <br />Individual interfund due from and to other funds at year-end were as follows: <br />Receivable Fund <br />Major Governmental Fund <br />Public Improvement Revolving <br />Fund Capital Project Fund <br />Major Governmental Fund <br />Public Improvement Revolving Fund <br />Capital Project Fund <br />Nonmajor Governmental Fund <br />Economic Development Authority <br />Special Revenue Fund <br />Nonmajor Governmental Fund <br />State -Aid Construction <br />Capital Project Fund <br />able Fund <br />Amount <br />Major Governmental Fund $ 46,284 <br />Public Improving Revolving The COR <br />Fund Capital Project Fund <br />Nonmajor Governmental Fund 270,116 <br />Center Street Fund <br />Capital Project Fund <br />Nonmajor Governmental Fund 18,450 <br />RALF Funded Project Fund <br />Capital Project Fund <br />Nonmajor Governmental Fund 425,757 <br />2012 Riverdale Drive <br />Capital Project Fund <br />$ 760,607 <br />These internal loans were utilized for cash flow purposes. <br />Page 73 <br />