06-20-07 FPAC Minutes - Laserfiche WebLink

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• City of Sauk Rapids Investment Policy Purpose The purpose of this policy is to establish specific guidelines the City of Sauk Rapids will use in the investment of City funds. It will be the responsibility of the Finance Director or City Administrator to invest City funds in order to attain a market rate of return while preserving and protecting the capital in the overall portfolio. Investments will be made,based on statutory constraints, in safe, low risk investments. Scope The Finance Director is responsible for the investing of all funds in the custody of the City, including, but not necessarily limited to, the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, Agency Funds, and various Housing and Redevelopment Funds. Prudence The standard of judgement to be used by investment officials shall be the "prudent investor", and shall be applied in the context of managing the overall portfolio. Persons acting in accordance with this policy and with MN Statute 118A, and exercising prudent judgement and due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that reasonable action is taken in a timely manner to control adverse • developments and unexpected deviations are reported to the City Council as soon as possible. Objective There are three main objectives of all investment activities that are prioritized as follows: Safety Safety of principal is the foremost objective of the City. Each investment transaction shall seek to first insure that capital losses are avoided. The objective will be to mitigate credit risk and interest rate risk. Credit Risk is the risk of loss due to failure of the security issuer or backer. Interest Rate Risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. Liquidity The investment portfolio shall remain sufficiently liquid to meet all cash operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Yield The investment portfolio of the City of Sauk Rapids shall be designed to attain a market-average rate of return through budgetary and economic cycles, taking into consideration the city's investment risk constraints, cash flow characteristics of the portfolio and prudent investment principles.