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AGENDA ITEM – 1C MEMORANDUM DATE: September 17, 2018 TO: Honorable Mayor and City Councilmembers Dave Perrault, City Administrator FROM: Gayle Bauman, Finance Director SUBJECT: Investment Policy Review Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A Council Should Consider Review and provide feedback on the City’s Investment Policy. Background The City’s Investment Policy was revised in 2007 and then again in 2009. In 2009, representatives from various financial organizations commented on the policy. The only major change made at that time was limiting the investment duration to ten years. Discussion The City must at a minimum be in accordance with Minnesota Statutes Chapter 118A and amendments thereto. The City’s Investment Policy is slightly more restrictive than the statute. Safety of principal is the foremost objective while yield is of lower importance so the City won’t see the high returns generated by high risk investments. It should be noted that 11. Exemption is an important provision to have in the policy. This protects the City from having to sell an investment early and potentially lose money if it falls below the guidelines of this policy. Just because an investment drops in value, doesn’t mean you can’t carry it to maturity. One area that may inhibit a future investment opportunity is 7. Concentration of Risk. The City has been holding steady at about $10 million in total investments. To be on the safe side, this means that no more than $450,000 can be invested in any one security. This concentration of risk provision is a good provision to have in the policy and it isn’t affecting our investment opportunities at the current time because most of our purchases have been Certificates of Deposits which are limited to $250,000. No changes to the policy are recommended at this time. Attachments A. Investment Policy B. MN Statute 118A.04 and 118A.05 C. August 31, 2018 investment schedule