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<br />. CITY OF ARDEN HILLS <br /> MEM:IOOIOUM <br /> DATE: August 28, 1992 <br /> TO: @ Mayor and City Council <br /> FRCK: Terry Post, city Accountant <br /> SUB.J>>::T : Authorization to Release Collateral <br /> The city has required Norwest Bank to ple::lge securities in the amolll1t of <br /> $1,000,000, on it's behalf, at the Federal Reserve Bank of Minneapolis. <br /> 'Ihe rationale f= requiring this amolll1t of collateral was to have <br /> protection above and beyond the FDIC $100,000 level for tax settlement <br /> checks and saving a=unt l:alances. <br /> 'Ihe City no longer has a savings a=unt with the bank and is now <br /> depositing tax settlement checks directly into a goverrnnent securities <br /> lIIOney market a=mt. The City maintains average cash l:alances in it's <br /> general checking a=mt well below the FDIC $100,000 insurance level. <br />. More inportantly, Norwest Bank began changing fees for it's ple::lged <br /> collateral during fourth quarter of 1991. These bank fees are =sting <br /> the City about $5,000 per year. <br /> ~ON <br /> 'Ihe amount of collateral ple::lged appears excessive. 'Ihe exposure for <br /> loss to the City in the event of a bank failure appears to be <br /> nonexistent given the FDIC $100,000 insurance mnbrella limit. In <br /> addition, the continued payment of unbudgeted collateral fees does not <br /> seem to be a prudent use of General Fund financial resources. 'Ibis <br /> matter has been diSl"'tssed with the City's external auditor, Al:xio, Abdo & <br /> Eick, and they have no audit objection to releasing the collateral. <br /> REOUESl'EDACrION <br /> If Council con=s, they should pass a motion under consent to approve <br /> the release of $1,000,000 in collateral being held on the City's behalf <br /> frCllll Norwest Bank. <br /> TP:rk <br />. <br />