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<br /> <br />City of Elk River <br />REQUEST FOR COUNCIL ACTION <br />Agenda Section Meeting Date <br />Administration Februa 5,2007 <br />Item Description <br />Consider Amendin Investment Polic <br /> <br />Item Number <br /> <br />5.3. <br />Prepared by <br />Tim Simon, Finance Director <br />Reviewed by <br /> <br />Introduction <br />The City adopted the investment policy on April 28, 1997. The City Council is asked to amend the <br />attached resolution regarding the City investment policy based on staff recommendations. <br /> <br />Discussion <br />The current City investment policy generally follows the Government Finance Officers Association <br />(GFOA) recommended practices in addition to all state and local statutes governing public investments. <br />However, there have been some recommended additions/clarifications to the policy by both the GFOA <br />and the Office of the State Auditor. Staff recommends the following amendments to the investment <br />policy. <br /> <br />1) 8.0 (E) - Commercial paper is a short-term investment primarily used by corporations to finance <br />receivables. State statutes require that commercial paper be rated in the highest quality category by at <br />least two national recognized rating agencies and matures in 270 days or less. This amendment would <br />provide clarity to our investment policy and the City's investment brokers. <br />2) 10 - Custodial credit risk is the risk ofloss associated with the counter-party's failure. Unlike deposits <br />at local banks, which provide pledged collateral to eliminate custodial credit risk, brokers typically <br />purchase the security to hold it. Unless the broker has Securities Investor Protection Corporation <br />(SIPC) insurance, the investments will be susceptible to custodial credit risk. This amendment would <br />require brokers to hold the investment only to the extent there is SIPC and excess SIPC coverage <br />available. <br />3) 14.0 - Periodic reporting of investments provides for a "best management practice" of informing and <br />providing information on City investments. <br /> <br />Financial Impact <br />None <br /> <br />Attachments <br />· Amended investment policy <br /> <br />C: \Documents and Settings \tallard\Local Settings \ Temporary Internet Files \ OLKF\Investment Policy Update. doc <br />