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��f INFORMATION <br /> Elk Memorandum <br /> River <br /> To: Mayor and Council Members <br /> From: Tim Simon, Finance Director <br /> Date: January 21, 2014 <br /> Subject: Quarterly Investment Report (October thru December,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 December 31, 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 finance staff makes sure the city is sufficiently liquid by continually updating our <br /> forecast on the anticipated cash flow needs over the next five-year time horizon. We also <br /> build in a reserve balance in case of unexpected expenditures; these funds are maintained in <br /> money market accounts. We anticipate we will have two large tax settlements each year, <br /> along with the regularly scheduled debt service payments. <br /> POWERED sr <br /> IN'Af U R E <br />