2020 Comprehensive Annual Financial Report

Valuation technique North Carolina Department of State Treasurer’s OPEB Trust and LEOSSA Trust investments are measured using the market approach: using prices and other relevant information generated by market transaction involving identical or comparable assets or liabilities.

a. Hedging Derivative Instruments Objective of the Interest Rate Swaps

As a means to convert variable rate obligations to synthetic fixed rate obligations to reduce the overall variable rate exposure of the City, the City entered into an interest rate swap agreement with Bank of America Merrill Lynch in October 2002, in connection with its $5,700,000 Series 1998 Variable Rate General Obligation Bonds. The intention of the swap was to effectively change the City’s interest rate on the bonds to a synthetic fixed rate of 3.46%. The bonds and the related swap

agreement matured on April 1, 2020. B. Long-Term Notes Receivable

The City entered into an agreement with Duke Power Company, effective July 1, 1991, which authorized the discontinuance of transit services provided by Duke Transit in Greensboro, pursuant to a franchise agreement scheduled to expire on July 1, 2028. In exchange, the City is to receive $55,500,000 in 37 equal annual installments of $1,500,000 from Duke Power Company with the first installment on July 1, 1991 and the final installment on July 1, 2027, to assist in financing operations of the Greensboro Transit Advisory Commission. The annual payment is secured by a First and Refunding Mortgage Bond issued by Duke Power Company to the City. The present value of the note receivable as of June 30, 2020 is $8,317,680. Interest income of $2,937,888 will be recognized by the effective yield method over the remaining 7-year term of the note, based on an imputed interest rate of 8.95%. Terms of certain of the notes receivable of the Redevelopment Commission are such that principal and interest may be forgiven upon meeting certain conditions. In addition, corresponding revenue was not recognized at the government-wide financial statement level because the loans were not considered substantially collectible.

37s