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INFORMATION <br /> City of <br /> Elk <br /> Awft <br /> River MEMORANDUM <br /> TO: Mayor and Council Members <br /> FROM: Tim Simon, Finance Director <br /> DATE: April 15, 2013 <br /> SUBJECT: Quarterly Investment Report (January thru March, 2013) <br /> INTRODUCTION <br /> The purpose of this report is to update the City Council on the status of the various <br /> investments that the city maintains. This report is as of March 28,2013. <br /> BACKGROUND <br /> The City Council adopted the original investment policy on April 28, 1998,with subsequent <br /> modifications on February 5,2007. The policy generally follows the Government Finance <br /> Officers Association (GFOA) model and does comply with state statutes. <br /> The investment goals for the City of Elk River are passive in nature due to the allowable <br /> investments permitted under State Statutes. The city has four objectives for investing. In <br /> order of importance,they are safety of principal,liquidity,return on investment, and <br /> maintaining the public trust. This means we are focused on not losing on the original <br /> investment,having sufficient funds on hand to meet ongoing operating cash needs,getting a <br /> market rate of return, and not purchasing speculative investments. <br /> State statutes limit the city's ability to invest in many risky types of investments. The city <br /> does not purchase stocks or mutual funds. The city is generally limited to federal and state <br /> government obligations or agencies backed by them. The city can invest in short-term <br /> commercial paper (highly rated), Certificates of Deposit or money market accounts (with <br /> collateralization if in excess of FDIC insurance amounts),and the rated debt of local <br /> governments. <br /> The city intends to hold investments until maturity,which means we will get the rate of <br /> return for which we invest our funds. Our goal is not to extend our maturities beyond five <br /> years unless we are matching cash flow to a specific debt service payment. <br /> The city makes sure we are sufficiently liquid by continually updating our forecast on the <br /> anticipated cash flow needs over the next five-year time horizon. We also build in a reserve <br /> balance in case of unexpected expenditures;these funds are maintained in money market <br /> P I N E R I I R 1 <br /> NATUREI <br />