INFORMATION #2 07-13-2017 - Laserfiche WebLink

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II NV To: Mayor and City Council Memorandum From: Lori Ziemer, Finance Director Date: July 17, 2017 Subject: Quarterly Investment Report (April —June, 2017) Introduction Information The purpose of this report is to update the City Council on the status of the various investments the city maintains. This report is as of June30, 2017. Background The investment policy was originally adopted in April, 1998, with subsequent modifications in 2007 and 2014. The policy complies with state statutes and generally follows the Government Finance Officers Association (GFOA) model. The investment goals for the City of Elk River are passive in nature due to the allowable investments permitted under state statutes. The city has four objectives for investing, in order of importance, they are; 1) safety of principal, 2) liquidity, 3) return on investment, and 4) maintaining the public trust. This means we are focused on not losing on the original investment, having sufficient funds on hand to meet ongoing operating cash needs, getting a market rate of return, and not purchasing speculative investments. State statutes limit the city's ability to invest in many risky types of investments. The city is generally limited to federal and state government obligations or agencies backed by them. The city can invest in short-term commercial paper (highly rated), certificates of deposit or money market accounts (with collateralization if in excess of FDIC insurance amounts), and the rated debt of local governments. The city does not purchase stocks or mutual funds. The city intends to hold investments until maturity, which means we will get the rate of return for which we invest our funds. Our goal is not to extend our maturities beyond 10 years unless we are matching cash flow to a specific debt service payment. The finance staff makes sure the city is sufficiently liquid by continually updating our forecast on the anticipated cash flow needs over the next five-year time horizon. We also build in a reserve balance in case of unexpected expenditures; these funds are maintained in r�RrERFR TURREr INiA