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<br /> - <br />. CITY OF ARDEN HILIB <br /> MEH:ImNDUM <br /> DATE: August 28, 1992 <br /> iU: @ Mayor and city Council <br /> FRCM: Terry Post, City 1lcoountant <br /> stJElJD:)T : Authorization to Release Collateral <br /> The city has required Norwest Bank to pledge securities in the am::Rlllt of <br /> $1,000,000, on it's behalf, at the Federal Reserve Bank of Minneapolis. <br /> The rationale for requiring this amount of collateral was to have <br /> protection above and beyorxJ. the FDIC $100, 000 level for tax settlement <br /> checks and saving a=mt balances. <br /> The City no longer has a savings a=mt with the bank and is rKM <br /> depositing tax settlement checks directly into a goverrunent securities <br /> money market account. The City maintains average cash balances in it's <br /> general checking a=mt well below the FDIC $100,000 insurance level. <br />. More i1rqx>rtantly, Norwest Bank began changing fees for it's pledged <br /> collateral during fourth quarter of 1991. These bank fees are costing <br /> the city about $5,000 per year. <br /> RECX::MMENDATION <br /> The amount of collateral pledged appears excessive. The 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 umbrella limit. In <br /> addition, the continued payment of unb.Jdgeted collateral fees does not <br /> seem to be a prudent use of General Fund financial resources. This <br /> matter has been clisc'lssed with the city's external audit=, Al:do, Ab:lo & <br /> Eick, and they have no audit objection to releasing the collateral. <br /> RIDUESrED ACTION <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 I <br /> from Norwest Bank. .~ <br /> , <br /> TP:rk <br /> . <br /> ~ <br /> , <br />. ! <br /> ~. <br /> I <br /> i <br /> . <br /> ! <br /> , <br />