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10-14-08
Chair Scott Bronson 1245 W. Highway 96 Committee Gieske Members Maurice �R EI HILLS Arden Hills, MN 55112 _" _� 651.792.7800 II) Ai Hilgers Jeff JohnsonArden Hills www.ci.arden-hills.mn.us James Ostlund Council Liaison Financial Planning and Stan Harpstead Analysis Committee October 14, 2008 City Vision A strong community that values our unique environment, our fiscal soundness, and our tradition as a desirable city in which to live, work, and play. Agenda Regular Committee Meeting Convenes 6:00 PM Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. August 12, 2008 Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Identity Theft Prevention Program (Red Flags Rule) B. Review Investment Portfolio and Investment Policy C. November Meeting changed to Wednesday, November 12, 2008 (Due to Veteran's Day) 4. REPORTS A. Report from the City Council B. Financial Planning and Analysis Committee Comments and Requests 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. • • MINUTES -- R EN HILLS ` 111 du' 6 FINANCIAL PLANNING &ANALYSIS COMMITTEE 1 Tuesday, October 14, 2008 6:00 P.M. / Council Chambers, Arden Hills City Hall ./ , 2) h_' CAL L MEETING TO ORDER AND ROLL CALL )i 4" r ' ...................................................... \\\ V,,,,,,),,, :.„„„,,„,,„,,„,:::. ..,.::„„„;!„,„,,,,,,,,,„,„,„,„,„,,.„„,„,.:....... The meeting was called to order by Scott Bronsont.!0 p iicil Lia s :::<:: >: :>4. iiui a MEMBERS PRESENT: Scott Bronson; Stan Il:" dad �u �y<Jef�,,,..,.,,,,,,, , Maurice Gieske; Jim Ostlund nd MEMB ERS NOT PRESENT : Al Hilg ers OTHERS PRESENT: Sue Iverson Finance Director=' oe ,Accountin Analyst; Pang Silseth, Accounting Clerk; Arlene Mitchell, Communieatio mittee Member Call to Order 1. APPROVAL OF THE AGENDA Motioned: Maurice Gieske Seconded: Jim Ostlund • 2. APPROVAL OF August 008 MINUTES. Motioned: Jim Ostlund Seconded: Maurice Gieske< 3. UNFINISHED AND NE U S ......................... ........................ .......................... ......................... A. Identity« .ft<:PreventioProgram<..Red Flags Rule) • a ; it tor;I crson reviewed back round on the Identity Theft g n other cities and 11 •ri ``'�om liance requirements 'eventiori Pray' ' ai` s;we as p 1policies. Gieske eked if the FPAC members can be held liable if someone's identity is stolen. PA',:members will not be liable as the City's employees a<:and committee ment1N s are covered by the League of MN Cities. Pang ` `'' changes to > 15;eth reviewed the; i �s procedures. The Committee suggested g . be maatde;;and will r iew. B. Review< t t atria 'Portfolio and Investment Policy ............................: ........................... .......................... ......................... ....................... Next time t e in estment policy is changed, look to remove section 11, titled "Exemption" 'on page 6. The committee requested a presentation from a 4M represenative on the security of the 4M Fund. The committee also strongly encourages further diversification. f rice,41e� -+^'� -4--Q '� e � biu -- +- i h�sari' Jr W' � to�cn� [�ca V k . • City of Arden Hills 1245 West Highway 96•Arden Hills Minnesota 55112 Phone 651.792.7800•Fax 651.634.5137 www.ci.arden-hills.mn.us MINUTES Dw HILLS • 4. REPORTS A. Report from the City Council Mayor Harpstead updated the committee on previous Council actions and activities. Fi ial Pl i and An ys. Comm;; •Oe. m`u :;•`; equ t que d r qu a r re rts oft e fials. NEXT MEETING—Wednesday,November 12, 2008 (due to Veteran's 5. ADJOURNMENT Motioned: Jeff Johnson Seconded: Jim Ostlund Scott Bronson,Chair Susan K Iverson,Finance Director • • • City of Arden Hills 1245 West Highway 96•Arden Hills Minnesota 55112 Phone 651.792.7800•Fax 651.634.5137 www.ci.arden-hills.mn.us Chair Scott Bronson 1245 W. Highway 96 ill Committee Members �R E1 HILLS Arden Hills, MN 55112 Maurice Gieske _'�� 651.792.7800 Al Hilgers www.ci.arden-hills.mn.us Jeff Johnson Arden Hills James Ostlund Council Liaison Financial Planning and Stan Harpstead Analysis Committee August 12, 2008 City Vision A strong community that values our unique environment, our fiscal soundness, and our tradition as a desirable city in which to live, work, and play. _ Agenda Regular Committee Meeting Convenes 6:00 PM Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. July 8, 2008 Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Capital Improvement Plan B. Business Subsidy Policy i4. REPORTS A. Report from the City Council B. Financial Planning and Analysis Committee Comments and Requests 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. • MINUTES BEN HILLS • FINANCIAL PLANNING & ANALYSIS COMMITTEE Tuesday, August 12, 2008 6:00 P.M. Council Chambers, Arden Hills City Hall CALL MEETING TO ORDER AND ROLL CALL The meeting was called to order by Scott Bronson at 6:05 p.m. MEMBERS PRESENT: Scott Bronson; Stan Harpstead, Council Liaison; Jeff Johnson; Maurice Gieske; Jim Ostlund MEMBERS NOT PRESENT: Al Hilgers OTHERS PRESENT: Sue Iverson, Finance Director; �aniel Jordet, City of Brooklyn Center; Joe Rueb, Accounting Analyst; Arlene Mitc Communication Committee Member Call to Order 1. APPROVAL OF THE AGENDA Motioned: Jim Ostlund Seconded: Maurice Gieske 2. APPROVAL OF July 8, 20 Motioned: Maurice Giesk Seconded: Jim Ostlund 3. UNFINISHED AND a B ,N SS A. Captial Improve It P1, ,:� Daniel Jordet, City o ooklyn Center, gave a presentation on Captial Improvement Plans. Jordet provided a handout containing the slides from his presentation. The city must have a capital plan if planning on selling bonds. B. Business Subsidy Policy St. Louis Park's Business Subsidy Policy was provided for further discussion. Harpstead recommended that the statute numbers in section 1.2 are verified with Jerry Filla or Steve B. It was recommended to remove the fees from the Business Subsidy Policy and include them in the fees schedule. Listing fees on the fee schedule slimplifies the fee changing process. • City of Arden Hills 1245 West Highway 96•Arden Hills Minnesota 55112 Phone 651.792.7800•Fax 651.634.5137 www.ci.arden-hills.mn.us MINUTES EN HILLS • 4. REPORTS A. Report from the City Council Mayor Harpstead updated the committee on previous Council actions and activities. B. Financial Planning and Analysis Committee Comments and Requests Need to figure out whose term is up in December 2008 and if they want to re-apply. NEXT MEETING — To Be Determined as our next regular meeting falls on the Primary Election day. 5. ADJOURNMENT Motioned: Jeff Johnson Seconded: Maurice Gieske Scott Bronson,Chair - san K.Iverson,Finance Director IV City of Arden Hills 1245 West Highway 96•Arden Hills Minnesota 55112 Phone 651.792.7800•Fax 651.634.5137 www.ci.arden-hi Ils.mn.us • -iIN HILLS MEMORANDUM DATE: October 10, 2008 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director *\3j SUBJECT: Red Flags Rule—Identity Theft Prevention Program BACKGROUND: The Red Flags Rule of the Fair and Accurate Credit Transactions Act of 2003 (FACTA)requires all utilities to have an Identity Theft Prevention Program developed and in place by November 1, 2008. • Originally this act was intended for financial organizations and private sector businesses. Municipal utilities are subject to this as a direct result of one of the sources that someone can establish identity and residence. For example, if you do not have a valid photo ID and wish to register to vote—you can use a current utility bill with a due date within 30 days of the election as proof of residency. DISCUSSION: The Minnesota Municipal Utilities Association (MMUA) and the League of Minnesota Cities (LMC)have been working together to help municipal utilities establish this program. I attended a training seminar at the LMC on Wednesday, October 8, 2008. The MMUA has been working with other state organizations in collaboration to develop templates and guidelines for implementation. They have made their materials available free of charge. These materials have been developed by attorneys and the LMC has sought out Opinions from the Minnesota Department of Administration on Data Practices issues. While the original act was intended for private sector boards and committees, it is not required for public sector councils to adopt the program; a senior level manager of the organization may approve the program. The LMC has sought an Opinion from the Minnesota Department of Administration and this document does not have to be made public as it is a matter of security. • Memo • Red Flags Rule 2 Compliance steps include 1) Assign a program administrator, 2)Appoint a Privacy Committee, 3) Develop an Identity Theft Prevention Program, 4)Approve the program by November 1, 2008, and 5)Update the program as needed. To fulfill these requirements, the Finance Director will be appointed as the program administrator, the Financial Planning and Analysis Committee along with the Accounting Clerk will be appointed as the Privacy Committee, and the City Administrator will approve the program as a senior level of management in the City. As the Privacy Committee, the Financial Planning and Analysis Committee and the Accounting Clerk will need to develop the Identity Theft Prevention Program and customize it for our use. The Accounting Clerk processes all the utility billing for the City and will be in attendance at our meeting to work with the committee. I have provided the templates developed by the MMUA and some examples that have been adopted by other utilities. We must note that it may not be necessary to use certain Identity Theft prevention techniques included in the template, as the examples in the template are taken nearly directly from the FTC provided information. We must determine what items to specifically include or exclude and which sections we need to expand. For example,we do not check credit reports, so we would want to eliminate that category; however,we may want to expand the "Prevent and Mitigate Identity Theft"sections. Our Accounting Clerk, Pang Silseth • will be better able to describe our system and then discuss with you how we should customize this program for our use. Another thing to keep in mind is that we do not want to start collecting data. Information on all utility bills except "electric bills" is public data. We do not want to start another source of information that is available to be used in identity theft. It was also brought to our attention that we may want to stay vague in our items so that we do not create liabilities for ourselves by stating that we will perform certain activities on a regular basis. I will briefly go over the attached power point presentation and our Accounting Clerk will go over the process for establishing a utility billing account and how they are maintained. We will they move on to modify the attached template for our use. RECOMMENDED ACTION: Develop an Identity Theft Prevention Program for the City of Arden Hills. #ilNIi/ AnI11111110.1V Minnesota Municipal Utilities Association • MEMORANDUM To: All MMUA Member Utilities From: Bill Black, Government Relations Representative Date: Aug 29, 2008 Re: Red Flags Rule guidance for municipal utilities On August 4, MMUA sent a memo to all member utilities alerting them to an upcoming deadline set by the Federal Trade Commission(FTC)by which all utilities would be required to have an Identity Theft Prevention Program developed and in place. MMUA is committed to helping all member utilities meet that federal requirement. What to do: 1) Go to: http://www.mmua.org. • 2) Download the Identity Theft Prevention Program Template provided by MMUA.* 3) Assign a Program Administrator(Utility Manager or delegate). 4) Program Administrator: Appoint and lead an Identity Theft Prevention Committee including at least two additional responsible individuals (e.g., administrative director or information technician at your utility or the Administrator, Data Practices Compliance Officer or Attorney for your city). 5) Committee: Discuss and customize the program template to fit your utility's size and administrative practices following guidance provided on the following two pages. * MMUA thanks Municipal Electric Utilities of Wisconsin for its assistance in 411 developing the program template provided by MMUA. 3025 Harbor Lane North•Suite 400•Plymouth, MN 55447-5142-763.551.1230-800.422.0119(MN)•Fax 763.551.0459•www.mmua.org • GUIDANCE FOR COMPLYING WITH THE RED FLAGS RULE Adoption of an Identity Theft Prevention Program Your Identity Theft Prevention Program must be approved by either your governing commission or council OR BY A DESIGNATED EMPLOYEE AT A SENIOR LEVEL OF MANAGEMENT by November 1, 2008. The Federal Trade Commission will not be checking individual utilities to see if this deadline is met,however, so failure to meet it should not be considered urgent. Having a well thought-out program in place in the near future is preferred to incorporating a pro-forma plan"for the books." Customizing a template for your utility • The template provided by MMUA should be modified as necessary to fit your utility. You may also find useful information in the document"Identity Theft and Municipal Utilities"provided by MMUA through its website. The Red Flags Rule is meant to prevent"Identity Theft" as the Rule defines it—fraud using another person's identifying information. While the theft of customer identification information may lead to "Identity Theft," information theft itself is not the focus of the Rule. Also keep in mind that the Federal Trade Commission created this rule particularly with banks, credit card providers and large private utilities in mind. While significant, the types of fraud encountered at utilities,particularly smaller utilities, are more limited in nature. (See MMUA's "Identity Theft and Municipal Utilities.") Note that some smaller utilities may not find it necessary to use certain Identity Theft prevention techniques included in the template, such as requiring photo ID for new accounts. While the Red Flags categories and Red Flags themselves in the template are examples taken nearly directly from FTC-provided information, your utility must determine the specific items to include, exclude or expand upon within each section. For instance, if you do not check credit reports, the first category under"Identification of Red Flags" may be eliminated altogether. Your utility may find it useful to expand certain sections of the template. For example, the"Prevent and Mitigate Identity Theft"section may be drafted to show a range of • possible responses to Red Flag detections and identify one or more persons who will be responsible within your utility for determining what response is appropriate depending Page 2 of 3 upon circumstances. If the Utility receives notice that its system has been compromised . such that a customer's personal information has become accessible,the Utility would likely, at a minimum,notify the customer and change passwords. If the Utility receives notice that a person has provided inaccurate identification information,the appropriate response may be to close the account and contact law enforcement. (See MMUA's "Identity Theft and Municipal Utilities" for further illustration.) Other relevant laws As you implement your utility's program, it may be useful to find out more about certain laws that could potentially affect it,particularly these: Federal Privacy Act—Prohibits all federal, state and local government agencies from denying an individual any right,benefit or privilege provided by law because of such individual's refusal to disclose his or her social security number. (5 U.S.C. §552a note.) Minnesota's Government Data Practices law—Requires government entities to appoint or designate an employee of the government entity to act as its data practices compliance official and categorizes municipal electric utility individual customer information as "private data" and business or other entity customer data as"nonpublic." (Minn. Stat. Ch. 13.) • Minnesota's Safe at Home Program—Provides people who are at particular risk of certain abuse and harassment dangers with an alternative address and mail forwarding service for their protection. (Minn. Stat. Ch. 5B.) Page 3 of 3 I,ii 11144 Minnesota Municipal Utilities Association • "IDENTITY THEFT" AND MUNICIPAL UTILITIES Identity Theft and Red Flags Rule requirements The Red Flags Rule implements portions of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Section 111 of FACTA defines"Identity Theft" as "fraud committed using the identifying information of another person." Under the Red Flags Rule, every financial institution and "creditor"(defined below) is required to establish an Identity Theft Prevention Program tailored to its size, complexity and the nature of its operation. The program must contain reasonable policies and procedures to: • Identify relevant Red Flags for new and existing "covered accounts" (defined below) and incorporate those Red Flags into the Program; • Detect Red Flags that have been incorporated into the Program; • Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and • Ensure the Program is updated periodically to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft. The Rule requires the Program to be approved by "a designated employee at the level of senior management." Definitions related to municipal utilities According to the Rule, a municipal utility is a creditor subject to the Rule requirements. Accounts maintained by a municipal utility that are covered by the Rule are all the individual utility service accounts held by customers of the utility whether residential, commercial or industrial. The Rule defines creditors to "include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they,too, are to be considered creditors." • 3025 Harbor Lane North•Suite 400•Plymouth, MN 55447-5142•763.551.1230.800.422.0119(MN)•Fax 763.551.0459•www.mmua.org • Under the Rule, a"covered account" is: • Any account the Utility offers or maintains primarily for personal, family or household purposes, that involves multiple payments or transactions; and • Any other account the Utility offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the Utility from Identity Theft. "Identifying information" is defined under the Rule as "any name or number that may be used, alone or in conjunction with any other information, to identify a specific person." It specifically includes all of the items listed below. • Name • Address • Telephone number • Social security number • Date of birth • Government issued driver's license or identification number • Alien registration number • Government passport number • Employer or taxpayer identification number • Unique electronic identification number • Computer's Internet Protocol address • Routing code The tables on the following two pages are intended as tools to assist your Identity Theft Prevention Committee in identifying specific Red Flags and procedures at your utility for incorporation into your utility employee training and, as desired, your written Identity Theft Prevention Program. The items in each table may be used to generate discussion about Identity Theft threats and prevention and ought to be modified, expanded or refined as necessary. • Page 2 of 4 • "IDENTITY THEFT" (FRAUD) TYPE 1 -NEW ACCOUNTS O Establishing utility service using another person's identity Why would someone do it? • The perpetrator defaulted on a past utility account or other account and so would not be eligible for service under his or her own name. • The perpetrator intends to establish fraudulent proof of residency in order to commit fraud elsewhere. Red flag: Detect whether fraud is Prevent or mitigate being attempted or detected fraud: committed: ID picture doesn't match Request additional ID Do not open account person ID information doesn't match Request additional ID Do not open account person ID does not look authentic Request additional ID Do not open account ID looks doctored Request additional ID Do not open account Using a suspicious name Request additional ID Do not open account 11/ Applicant requests that bill Verify that customer is Do not open account be sent to address different connected to billing from where service is address (But be aware of received the state's"Safe at Home" program) Account for a residential Obtain credit report on the Do not open account address established under individual business name (to avoid using own bad name) Credit report contains fraud This may be an automatic Notify Program warning, credit freeze notice fraud detection Red Flag Administrator; If or active duty alert warranted, notify law enforcement Bill payment made under Request proof of residence Close account name other than that on (other bills, etc.) utility account Other? Other? Other? • Page 3 of 4 III "IDENTITY THEFT" (FRAUD) TYPE 2 -EXISTING ACCOUNTS 0 Continuing utility service under a another customer's name after he or she moves out Why would someone do it? • The perpetrator wants to avoid paying for service. • The perpetrator defaulted on a past utility account or other account and so would not be eligible for service under his or her own name. Red flag: Detect whether fraud is Mitigate detected fraud: being committed: Non-payment of previously Call customer phone Discontinue service; close current account number on file account Utility service utilized after Call customer phone Discontinue service; close known move-out with no number on file account change of customer notice received by utility Bill payment made under a Call customer phone Discontinue service; close name other than name on number on file account utility account IIII Other? Other? Other? • Page 4 of 4 • ISSN 1551-8450—Volume 17, Issue 37—September 15,2008 Utilities scramble on FTC identity-theft rule Water utilities and AWWA are scrambling to get up to speed on a Federal Trade Commission rule that includes water utilities among financial entities that must have a written plan by Nov. 1 describing how they will identify and respond to "red flags" that indicate identity theft involving customer accounts. Pavneet Singh, attorney in the FTC's Division of Privacy and Identity Protection, said the FTC sent out a business alert in October 2007 and published notice of the joint final rules and guidelines in the Federal Register last Nov. 9 noting that compliance is mandatory by Nov. 1, 2008. "We have been trying to work with various trade associations to get the word out about the rule," Singh said, adding that she hadn't yet contacted AWWA's Government Affairs office but • intended to do so soon. "It will be great to have a contact in the water industry," she said. The FTC, which has enforcement responsibility for this amendment to the Fair and Accurate Credit Transactions Act of 2003, is still working on the rule's compliance guide, which Singh thought would be out before the Nov. 1 deadline. That guide will be useful to utilities trying to put their plans together, she said. The agency has been trying to clarify that the definition of"credit" and "creditor" is broader than just financial institutions, she said. Adding examples of consumer accounts such as "mortgage loan, automobile loan, margin account,cell phone account, utility account,checking account, or savings account" was one way to do that, she explained, noting that "utilities" were not as prominently mentioned in the proposal published in the Federal Register July 18, 2006, as they are in the final rule. The definition of"credit" and "creditor" — language from the Equal Credit Opportunity Act —applies to any entity that allows a consumer to open an account and get services and be billed after the fact, she said. It would not apply if the consumer were required to pay in advance of getting service. The written identity-theft "red flag" program must address how the organization will look for and respond to signs of identity theft. The purpose is the detection,prevention and mitigation of identify theft,beginning with the requirement of proof of identity before an account is established, as required by the US Patriot Act. • Business AI r e t Federal Trade Commission • Bureau of Consumer Protection • Division of Consumer&Business Education New 'Red Flag' Requirements for Financial Institutions and Creditors Will Help Fight Identity Theft Identity thieves use people's personally identifying information to open new accounts and misuse existing accounts, creating havoc for consumers and businesses. Financial institutions and creditors soon will be required to implement a program to detect, prevent, and mitigate instances of identity theft. The Federal Trade Commission(FTC), the federal bank regulatory agencies, and the National Credit Union Administration(NCUA) have issued regulations (the Red Flags Rules) requiring financial institutions and creditors to develop and implement written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions (FACT) Act of 2003. The programs must be in place by November 1, 2008, and must provide for the identification, detection, and response to patterns, practices, or specific activities — known as "red flags" — that could indicate identity theft. •WHO MUST COMPLY WITH THE RED FLAGS RULES? The Red Flags Rules apply to "financial institutions" and "creditors" with "covered accounts." Under the Rules, a financial institution is defined as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other entity that holds a "transaction account" belonging to a consumer. Most of these institutions are regulated by the Federal bank regulatory agencies and the NCUA. Financial institutions under the FTC's jurisdiction include state- chartered credit unions and certain other entities that hold consumer transaction accounts. A transaction account is a deposit or other account from which the owner makes payments or transfers. Transaction accounts include checking accounts, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts. A creditor is any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit. Accepting credit cards as a form of payment does not in and of itself make an entity a creditor. Creditors include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they, too, are to be considered - creditors. Most creditors, except for those regulated by the Federal bank regulatory agencies and the NCUA, come under the jurisdiction of the FTC. A covered account is an account used mostly for personal, family, or household purposes, and that involves multiple payments or transactions. Covered accounts include credit card accounts, mortgage Sloans, automobile loans, margin accounts, cell phone accounts, utility accounts, checking accounts, and savings accounts. A covered account is also an account for which there is a foreseeable risk of identity theft - for example, small business or sole proprietorship accounts. 4- 2007 Minnesota Statutes 1337 GENERAL NONPUBLIC DATA. Subdivision 1. Definitions. As used in this section, the following terms have the meanings given them. (a) "Security information" means government data the disclosure of which would be likely to substantially jeopardize the security of information, possessions, individuals or property against theft, tampering, improper use, attempted escape, illegal disclosure, trespass, or physical injury. "Security information" includes crime prevention block maps and lists of volunteers who participate in community crime prevention programs and their home addresses and telephone numbers. (b) "Trade secret information" means government data, including a formula, pattern, compilation, program, device, method, technique or process (1) that was supplied by the affected individual or organization, (2) that is the subject of efforts by the individual or organization that are reasonable under the circumstances to maintain its secrecy, and (3) that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (c) "Labor relations information" means management positions on economic and noneconomic items that have not been presented during the collective bargaining process or interest arbitration, including information specifically collected or created to prepare the • management position. (d) "Parking space leasing data" means the following government data on an applicant for, or lessee of, a parking space: residence address, home telephone number, beginning and ending work hours, place of employment, work telephone number, and location of the parking space. Subd. 2. Classification. The following government data is classified as nonpublic data with regard to data not on individuals, pursuant to section 13.02, subdivision 9, and as private data with regard to data on individuals, pursuant to section 13.02, subdivision 12: Security information; trade secret information; sealed absentee ballots prior to opening by an election judge; sealed bids, including the number of bids received, prior to the opening of the bids; parking space leasing data; and labor relations information, provided that specific labor relations information which relates to a specific labor organization is classified as protected nonpublic data pursuant to section 13.02, subdivision 13. Subd. 3. Data dissemination. (a) Crime prevention block maps and names, home addresses, and telephone numbers of volunteers who participate in community crime prevention programs may be disseminated to volunteers participating in crime prevention programs. The location of a National Night Out event is public data. 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PROGRAM ADOPTION The [Utility Name] ("Utility")developed this Identity Theft Prevention Program ("Program")pursuant to the Federal Trade Commission's Red Flags Rule("Rule"), which implements Section 114 of the Fair and Accurate Credit Transactions Act of 2003. 16 C. F. R. § 681.2. This Program was developed with oversight and approval of the [Program Administrator (defined below) OR Utility Commission OR City Council]. After consideration of the size and complexity of the Utility's operations and account systems, and the nature and scope of the Utility's activities, the [Program Administrator OR Utility Commission OR City Council] determined that this Program was appropriate for the [Utility Name], and therefore approved this Program on , 2008. II. PROGRAM PURPOSE AND DEFINITIONS A. Fulfilling requirements of the Red Flags Rule Under the Red Flag Rule, every financial institution and creditor is required to establish an "Identity Theft Prevention Program"tailored to its size, complexity and the nature of its operation. Each program must contain reasonable policies and procedures to: 1. Identify relevant Red Flags for new and existing covered accounts and incorporate those Red Flags into the Program; 2. Detect Red Flags that have been incorporated into the Program; 3. Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and 4. Ensure the Program is updated periodically, to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft. B. Red Flags Rule definitions used in this Program The Red Flags Rule defines "Identity Theft"as "fraud committed using the identifying information of another person"and a"Red Flag" as "a pattern, practice, or specific activity that indicates the possible existence of Identity Theft." According to the Rule, a municipal utility is a creditor subject to the Rule requirements. The Rule defines creditors "to include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they,too, are to be considered creditors." All the Utility's accounts that are individual utility service accounts held by customers of the utility whether residential, commercial or industrial are covered by the Rule. Under the Rule, a "covered account" is: • 2 1. Any account the Utility offers or maintains primarily for personal, family or household • purposes,that involves multiple payments or transactions; and 2. Any other account the Utility offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the Utility from Identity Theft. "Identifying information"is defined under the Rule as "any name or number that may be used, alone or in conjunction with any other information, to identify a specific person," including: name, address, telephone number, social security number, date of birth, government issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number, unique electronic identification number, computer's Internet Protocol address,or routing code. III. IDENTIFICATION OF RED FLAGS. In order to identify relevant Red Flags, the Utility considers the types of accounts that it offers and maintains,the methods it provides to open its accounts,the methods it provides to access its accounts, and its previous experiences with Identity Theft. The Utility identifies the following red flags, in each of the listed categories: A. Notifications and Warnings From Credit Reporting Agencies • Red Flags 1) Report of fraud accompanying a credit report; 2)Notice or report from a credit agency of a credit freeze on a customer or applicant; 3)Notice or report from a credit agency of an active duty alert for an applicant; and 4) Indication from a credit report of activity that is inconsistent with a customer's usual pattern or activity. B. Suspicious Documents Red Flags 1. Identification document or card that appears to be forged, altered or inauthentic; 2. Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document; 3. Other document with information that is not consistent with existing customer information (such as if a person's signature on a check appears forged); and 4. Application for service that appears to have been altered or forged. • 3 • C. Suspicious Personal Identifying Information Red Flags 1. Identifying information presented that is inconsistent with other information the customer provides(example: inconsistent birth dates); 2. Identifying information presented that is inconsistent with other sources of information (for instance, an address not matching an address on a credit report); 3. Identifying information presented that is the same as information shown on other applications that were found to be fraudulent; 4. Identifying information presented that is consistent with fraudulent activity(such as an invalid phone number or fictitious billing address); 5. Social security number presented that is the same as one given by another customer; 6. An address or phone number presented that is the same as that of another person; 7. A person fails to provide complete personal identifying information on an application when reminded to do so (however,by law social security numbers must not be required); and 8. A person's identifying information is not consistent with the information that is on file for the customer. D. Suspicious Account Activity or Unusual Use of Account Red Flags 1. Change of address for an account followed by a request to change the account holder's name; 2. Payments stop on an otherwise consistently up-to-date account; 3. Account used in a way that is not consistent with prior use(example: very high activity); 4. Mail sent to the account holder is repeatedly returned as undeliverable; 5. Notice to the Utility that a customer is not receiving mail sent by the Utility; 6. Notice to the Utility that an account has unauthorized activity; 7. Breach in the Utility's computer system security; and 8. Unauthorized access to or use of customer account information. E. Alerts from Others Red Flag 1. Notice to the Utility from a customer, identity theft victim, law enforcement or other person that it has opened or is maintaining a fraudulent account for a person engaged in Identity Theft. I 4 • IV. DETECTING RED FLAGS. A. New Accounts In order to detect any of the Red Flags identified above associated with the opening of a new account,Utility personnel will take the following steps to obtain and verify the identity of the person opening the account: Detect 1. Require certain identifying information such as name, date of birth,residential or business address, principal place of business for an entity, driver's license or other identification; 2. Verify the customer's identity(for instance,review a driver's license or other identification card); 3. Review documentation showing the existence of a business entity; and 4. Independently contact the customer. B. Existing Accounts In order to detect any of the Red Flags identified above for an existing account, Utility personnel will take the following steps to monitor transactions with an account: • Detect 1. Verify the identification of customers if they request information (in person, via telephone, via facsimile, via email); 2. Verify the validity of requests to change billing addresses; and 3. Verify changes in banking information given for billing and payment purposes. V. PREVENTING AND MITIGATING IDENTITY THEFT In the event Utility personnel detect any identified Red Flags, such personnel shall take one or more of the following steps, depending on the degree of risk posed by the Red Flag: Prevent and Mitigate 1. Continue to monitor an account for evidence of Identity Theft; 2. Contact the customer; 3. Change any passwords or other security devices that permit access to accounts; 4. Not open a new account; 5. Close an existing account; 6. Reopen an account with a new number; • 7. Notify the Program Administrator for determination of the appropriate step(s)to take; 5 8. Notify law enforcement; or 11111 9. Determine that no response is warranted under the particular circumstances. Protect customer identifying information In order to further prevent the likelihood of Identity Theft occurring with respect to Utility accounts,the Utility will take the following steps with respect to its internal operating procedures to protect customer identifying information: 1. Ensure that its website is secure or provide clear notice that the website is not secure; 2. Ensure complete and secure destruction of paper documents and computer files containing customer information; 3. Ensure that office computers are password protected and that computer screens lock after a set period of time; 4. Keep offices clear of papers containing customer information; 5. Request only the last 4 digits of social security numbers (if any); 6. Ensure computer virus protection is up to date; and 7. Require and keep only the kinds of customer information that are necessary for utility purposes. VI. PROGRAM UPDATES The Program Administrator will periodically review and update this Program to reflect changes in risks to customers and the soundness of the Utility from Identity Theft. In doing so, the Program Administrator will consider the Utility's experiences with Identity Theft situations, changes in Identity Theft methods, changes in Identity Theft detection and prevention methods, and changes in the Utility's business arrangements with other entities. After considering these factors, the Program Administrator will determine whether changes to the Program, including the listing of Red Flags, are warranted. If warranted, the Program Administrator will update the Program or present the [Utility Commission OR City Council]with his or her recommended changes and the [Utility Commission OR City Council] will make a determination of whether to accept, modify or reject those changes to the Program. VII. PROGRAM ADMINISTRATION. A. Oversight Responsibility for developing, implementing and updating this Program lies with an Identity Theft Committee for the Utility. The Committee is headed by a Program Administrator who may be the head of the Utility or his or her appointee. Two or more other individuals appointed by the head of the Utility or the Program Administrator comprise the remainder of the committee membership. The Program Administrator will be responsible for the Program 6 administration, for ensuring appropriate training of Utility staff on the Program, for reviewing ID any staff reports regarding the detection of Red Flags and the steps for preventing and mitigating Identity Theft, determining which steps of prevention and mitigation should be taken in particular circumstances and considering periodic changes to the Program. B. Staff Training and Reports Utility staff responsible for implementing the Program shall be trained either by or under the direction of the Program Administrator in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected. (The Utility may include in its Program how often training is to occur. The Program may also require staff to provide reports to the Program Administrator on incidents of Identity Theft, the Utility's compliance with the Program and the effectiveness of the Program.) C. Service Provider Arrangements In the event the Utility engages a service provider to perform an activity in connection with one or more accounts, the Utility will take the following steps to ensure the service provider performs its activity in accordance with reasonable policies and procedures designed to detect, prevent, and mitigate the risk of Identity Theft. 1. Require,by contract, that service providers have such policies and procedures in place; and • 2. Require, by contract, that service providers review the Utility's Program and report any Red Flags to the Program Administrator. D. Non-disclosure of Specific Practices (This provision is not required by the Rule, but municipal utilities may find it useful.) For the effectiveness of this Identity Theft Prevention Program, knowledge about specific Red Flag identification, detection,mitigation and prevention practices must be limited to the Identity Theft Committee who developed this Program and to those employees with a need to know them. Any documents that may have been produced or are produced in order to develop or implement this program that list or describe such specific practices and the information those documents contain are considered "security information"as defined in Minnesota Statutes Section 13.37 and are unavailable to the public because disclosure of them would be likely to substantially jeopardized the security of information against improper use, that use being to circumvent the Utility's Identity Theft prevention efforts in order to facilitate the commission of Identity Theft. • 7 City of Zumbrota Identity Theft Prevention Program Effective beginning November 1, 2008 • • . I. PROGRAM ADOPTION The City of Zumbrota("City")developed this Identity Theft Prevention Program ("Program")pursuant to the Federal Trade Commission's Red Flags Rule ("Rule"),which implements Section 114 of the Fair and Accurate Credit Transactions Act of 2003. 16 C. F. R. § 681.2. This Program was developed with oversight and approval of the Program Administrator (defined below). After consideration of the size and complexity of the City's operations and account systems, and the nature and scope of the City's activities,the Program Administrator determined that this Program was appropriate for the City of Zumbrota, and therefore approved this Program on November 1, 2008. II. PROGRAM PURPOSE AND DEFINITIONS A. Fulfilling requirements of the Red Flags Rule Under the Red Flag Rule, every financial institution and creditor is required to establish an "Identity Theft Prevention Program"tailored to its size, complexity and the nature of its operation. Each program must contain reasonable policies and procedures to: 1. Identify relevant Red Flags for new and existing covered accounts and incorporate those Red Flags into the Program; 2. Detect Red Flags that have been incorporated into the Program; • 3. Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and 4. Ensure the Program is updated periodically, to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft. B. Red Flags Rule definitions used in this Program The Red Flags Rule defines "Identity Theft" as "fraud committed using the identifying information of another person" and a"Red Flag" as a pattern, practice, or specific activity that indicates the possible existence of Identity Theft. According to the Rule, a municipal utility is a creditor subject to the Rule requirements. The Rule defines creditors "to include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services,they, too, are to be considered creditors." All the City's utility accounts that are individual utility service accounts held by customers of the utility whether residential, commercial or industrial are covered by the Rule. Under the Rule, a "covered account" is: 1. Any account the Utility offers or maintains primarily for personal, family or household • purposes, that involves multiple payments or transactions; and 2 2. Any other account the Utility offers or maintains for which there is a reasonably • foreseeable risk to customers or to the safety and soundness of the Utility from Identity Theft. "Identifying information"is defined under the Rule as "any name or number that may be used, alone or in conjunction with any other information,to identify a specific person,"including: name, address, telephone number, social security number, date of birth, government issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number, unique electronic identification number, computer's Internet Protocol address, or routing code. IDENTIFICATION OF RED FLAGS. In order to identify relevant Red Flags, the City considers the types of accounts that it offers and maintains, the methods it provides to open its accounts, the methods it provides to access its accounts, and its previous experiences with Identity Theft. The City identifies the following red flags, in each of the listed categories: A. Suspicious Documents 410 Red Flags y l I. Identification document or card that appears to be forged, altered or inauthentic; 'C 2. Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document; and 3. Other document with information that is not consistent with existing customer information (such as if a person's signature on a check appears forged). B. Suspicious Personal Identifying Information Red Flags 1. Identifying information presented that is inconsistent with other information the customer provides (example: inconsistent birth dates); 2. Identifying information presented that is the same as information shown on other applications that were found to be fraudulent; 3. Identifying information presented that is consistent with fraudulent activity(such as an invalid phone number or fictitious billing address); 4. An address or phone number presented that is the same as that of another person; and 5. A person's identifying information is not consistent with the information that is on file 4, for the customer. 3 • C. Suspicious Account Activity or Unusual Use of Account Red Flags 1. Change of address for an account followed by a request to change the account holder's name; 2. Payments stop on an otherwise consistently up-to-date account; 3. Account used in a way that is not consistent with prior use(example: very high activity); 4. Mail sent to the account holder is repeatedly returned as undeliverable; 5. Notice to the City that a customer is not receiving mail sent by the City; 6. Notice to the City that an account has unauthorized activity; 7. Breach in the City's computer system security; and 8. Unauthorized access to or use of customer account information. D. Alerts from Others Red Flag 1. Notice to the City from a customer, identity theft victim, law enforcement or other person that it has opened or is maintaining a fraudulent account for a person engaged in Identity Theft. L__-7 IV. DETECTING RED FLAGS. A. New Accounts In order to detect any of the Red Flags identified above associated with the opening of a new account, City personnel will take the following steps to obtain and verify the identity of the person opening the account: Detect 1. Require certain identifying information such as name,residential or business address, principal place of business for an entity, or other identification; and 2. Review documentation showing the existence of a business entity. • 4 • B. Existing Accounts In order to detect any of the Red Flags identified above for an existing account, City personnel will take the following steps to monitor transactions with an account: Detect 1. Verify the identification of customers if they request information(in person,via telephone, via facsimile, via email); 2. Verify the validity of requests to change billing addresses; and 3. Verify changes in banking information given for billing and payment purposes. V. PREVENTING AND MITIGATING IDENTITY THEFT In the event City personnel detect any identified Red Flags, such personnel shall take one or more of the following steps, depending on the degree of risk posed by the Red Flag: Prevent and Mitigate 1. Continue to monitor an account for evidence of Identity Theft; 2. Contact the customer; 3. Not open a new account; • 4. Close an existing account; 5. Reopen an account with a new number; 6. Notify the Program Administrator for determination of the appropriate step(s) to take; 7. Notify law enforcement; or 8. Determine that no response is warranted under the particular circumstances. Protect customer identifying information In order to further prevent the likelihood of identity theft occurring with respect to Utility accounts, the City will take the following steps with respect to its internal operating procedures to protect customer identifying information: 1. Ensure that its website is secure or provide clear notice that the website is not secure; 2. Ensure complete and secure destruction of paper documents and computer files containing customer information; 3. Ensure that office computers are password protected and that computer screens lock after a set period of time; 4. Ensure computer virus protection is up to date; and 5. Require and keep only the kinds of customer information that are necessary for City purposes. • 5 • VI. PROGRAM UPDATES This Program will be periodically reviewed and updated to reflect changes in risks to customers and the soundness of the Utility from Identity Theft. Whenever changing billing methods, changing customer data collection, or violation trends indicate a possible need for revision, the Program Administrator will consider the City's experiences with Identity Theft situation, changes in Identity Theft methods, changes in Identity Theft detection and prevention methods, changes in types of accounts the City maintains and changes in the City's business arrangements with other entities. After considering these factors, the Program Administrator will determine whether changes to the Program, including the listing of Red Flags, are warranted. If warranted, the Program Administrator will update the Program or present the Committee with his or her recommended changes and the Committee will make a determination of whether to accept, modify or reject those changes to the Program. VII. PROGRAM ADMINISTRATION. A. Oversight Responsibility for developing, implementing and updating this Program lies with an Identity Theft Committee for the City. The Committee is headed by a Program Administrator who may be the head of the City or his or her appointee. Two or more other individuals appointed by the head of the City or the Program Administrator comprise the remainder of the committee membership. The Program Administrator will be responsible for the Program administration, for ensuring appropriate training of City staff on the Program, for reviewing any staff reports regarding the detection of Red Flags and the steps for preventing and mitigating Identity Theft, determining which steps of prevention and mitigation should be taken in particular circumstances and considering periodic changes to the Program. B. Staff Training and Reports City staff responsible for implementing the Program shall be trained either by or under the direction of the Program Administrator in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected. • 6 • C. Service Provider Arrangements In the event the City engages a service provider to perform an activity in connection with one or more accounts,the City will take the following steps to ensure the service provider performs its activity in accordance with reasonable policies and procedures designed to detect, prevent, and mitigate the risk of Identity Theft. 1. Require, by contract, that service providers have such policies and procedures in place; and 2. Require, by contract, that service providers review the City's Program and report any Red Flags to the Program Administrator. • 111 FACT Act Identity Theft Prevention Program am Summary IDFederal regulations require the City of Eden Prairie ("City") to establish an Identity Theft Prevention Program ("Program"), designed to detect, prevent, and mitigate identity theft. The Program must include the identification of Red Flags that are relevant to the City's customer accounts, the detection of Red Flags, and the mitigation of and/or response to detected Red Flags. The following Program is to be administered by the FACT Act Officer, which is designated as the Finance Manager of the City. rThe FACT Act Officer shall see that the appropriate personnel receive training to properly implement the Program. - - _ i - .. . - .. . . . • _ _ _. . - . . ► • •: - • . inally, the FACT Act Officer shall periodically reassess the City's risks of identity theft and the ability of Program to address that identity theft and, if necessary, modify the Program. I. Definitions A "Red Flag" means a pattern, practice, or specific activity that indicates the possible existence of identity theft. Al A "covered account" means a continuing relationship established by a person for personal, family, household or business purposes that involves or is designed to permit multiple payments or transactions. "Identity Theft" means a fraud committed or attempted using the identifying information of another person without authority. "Service provider"means a third party that provides a service directly to, or behalf of the City. II. Identifying Relevant Red Flags The City will consider the following risk factors in identifying relevant Red Flags for its covered accounts, as appropriate: 1. The types of covered accounts it offers or maintains; 2. The methods it provides to open its covered accounts; 3. The methods it provides to access its covered accounts; and 4. Its previous experiences with identity theft. The City will incorporate Red Flags from sources such as: 1. Incidents of identity theft that the City has experienced; 2. Methods of identity theft that the City has identified that reflect changes in identity theft risks; and, • 3. Applicable supervisory guidance. The Categories of Red Flags will include but are not limited to: 1. The presentation of suspicious documents; • 2. The presentation of suspicious personal identifying information, such as a suspicious address change; 3. The unusual use of, or other suspicious activity related to, a covered account; and, 4. Notice from customers, victims of identity theft, law enforcement authorities, or other persons regarding possible identity theft in connection with covered accounts. Red Flags that the City will consider are included in Section VII of this Identity Theft Prevention Program. This list will be updated with new Red Flags as they are detected by the City over time. III. Detecting Red Flags The City will incorporate procedures for the detection of Red Flags in connection with the opening of new accounts by: 1. Obtaining identifying information of a person prior to opening an account. 2. Such identifying information may include, among others, the use of the customer's name and address 1. The City will continue to detect Red Flags for existing accounts by monitoring transactions for suspicious activity. • IV. Responding to Red Flags The City will document an appropriate response to each Red Flag the City has detected, commensurate with the degree of risk posed. In determining an appropriate response, the City will consider factors that may heighten the risk of identity theft. Those factors include unauthorized access to a customer's account records or notification that a customer has provided information to someone fraudulently or to a fraudulent website. Appropriate responses may include the following: 1. Monitoring a covered account for evidence of identity theft; 2. Contacting the customer; 3. Changing any passwords, security codes, or other security devices that permit access to a covered account; 4. Reopening a covered account with a new account number; 5. Not opening a new covered account; 6. Closing an existing covered account; 7. Not attempting to collect on a covered account or not selling a covered account to a debt collector; 8. Notifying the Attorney General of the State of Minnesota; or, 9. Determining that no response is warranted under the particular circumstances. • V. Methods for Administering the Program The City Council is ultimately responsible for the Identity Theft Prevention Program. The FACT Act Officer is responsible for the day-to-day administration and oversight of the Program. The FACT Act Officer is expected to: 1. Assign specific responsibility for the Program's implementation; 2. Review, prepare and provide at least annually, reports on the City's compliance with the Identity Theft Prevention compliance program, the effectiveness of the policy and procedures, significant incidents involving identity theft and the City's response; and recommendations for material changes to the Program; 3. Obtain from the City Council approval of changes to the procedures and approval of policy as necessary to address changing identity theft risks; 4. Train appropriate staff in the detection of Red Flags and the responsive steps to be taken when a Red Flag is detected; and, 5. Whenever the City engages a service provider to perform an activity in connection with one or more accounts, the FACT Act Officer will ensure that the activity of the service provider is conducted in accordance with reasonable policies and procedures designed to detect, prevent, • and mitigate the risk of identity theft. For example, the City could require the service provider by contract to have policies and procedures to detect relevant Red Flags that may arise in the performance of the service provider's activities, and either report the Red Flags to the City, or to take appropriate steps to prevent or mitigate identity theft. VI. Updating the Program The City will update the Program (including the Red Flags determined to be relevant) periodically to reflect changes in risks to customers or to the safety and soundness of the City from identity theft, based on factors such as: 1. The experiences of the City with identity theft; 2. Changes in methods of identity theft; 3. Changes in methods to detect,prevent, and mitigate identity theft; 4. Changes in the types of accounts that the City offers or maintains; and, 5. Changes in the business arrangements of the City, including joint ventures, and service provider or service provider arrangements. VII. Identity Theft Prevention Program Red Flags 411 The City's Identity Theft Prevention Program will include but not be limited to the following Red Flags,which shall be updated as necessary and determined by the FACT Act Officer: Suspicious Documents 1. Documents provided for identification appear to have been altered or forged. • 2. Information in the document is not consistent with information previously provided by the person when opening a new account. 3. An application appears to have been altered or forged, or gives the appearance of having been destroyed and reassembled. Suspicious Personal Identifying Information 1. Personal identifying information provided by the customer is not consistent with other personal identifying information provided by the customer. 2. Personal identifying information provided is associated with known fraudulent activity as indicated by internal or third-party sources used by the City. For example: a. The address on an application is the same as the address provided on a fraudulent application; or b. The phone number on an application is the same as the number provided on a fraudulent application. Unusual Use of, or Suspicious Activity Related to, the Covered Account • 1. The City is notified by a customer, a victim of identity theft, a law enforcement authority, or any other person that it has opened a fraudulent account for a person engaged in identity theft 2. Mail sent to the customer is returned repeatedly as undeliverable although transactions continue to be conducted in connection with the customer's covered account. 3. The City is notified that the customer is not receiving account statements. 4. The City is notified of unauthorized charges or transactions in connection with a customer's covered account VIII. Specific Program Elements and Confidentiality For the effectiveness of Identity Theft prevention Programs, the federal regulations envision a degree of confidentiality regarding the City's specific practices relating to Identity Theft detection, prevention and mitigation. Therefore, under this Program, knowledge of such specific practices are to be limited to appropriate City employees who need to know them for purposes of preventing Identity Theft. Because this Program is to be adopted by a public body and thus publicly available, it would be counterproductive to list these specific practices here. Therefore, only the Program's general red flag detection, implementation and prevention practices are listed in this document. • P:\Home\1606.087\Documents\Identity Theft Prevention Program-draft-09 16 2008.doc • New Ulm Public Utilities Commission Identity Theft Prevention Program Effective beginning November 1, 2008 • I. PROGRAM ADOPTION The New Ulm Public Utilities Commission ("NUPUC" or"Utility")developed this Identity Theft Prevention Program("Program")pursuant to the Federal Trade Commission's Red Flags Rule ("Rule"),which implements Section 114 of the Fair and Accurate Credit Transactions Act of 2003. 16 C. F. R. § 681.2. This Program was developed with oversight and approval of the Program Administrator(defined in VII. A.) and the New Ulm Public Utilities Commission. After consideration of the size and complexity of the Utility's operations and account systems, and the nature and scope of the Utility's activities, the Program Administrator determined that this Program was appropriate for the Utility, and; the program was subsequently approved by the NUPUC on September 23, 2008. II. PROGRAM PURPOSE AND DEFINITIONS A. Fulfilling requirements of the Red Flags Rule Under the Red Flag Rule, every financial institution and creditor is required to establish an "Identity Theft Prevention Program"tailored to its size, complexity and the nature of its operation. Each program must contain reasonable policies and procedures to: 1. Identify relevant Red Flags for new and existing covered accounts and incorporate those Red Flags into the Program; • 2. Detect Red Flags that have been incorporated into the Program; 3. Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and 4. Ensure the Program is updated periodically,to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft. B. Red Flags Rule definitions used in this Program The Red Flags Rule defines"Identity Theft" as"fraud committed using the identifying information of another person"and a"Red Flag" as a pattern,practice, or specific activity that indicates the possible existence of Identity Theft. According to the Rule, a municipal utility is a creditor subject to the Rule requirements. The Rule defines creditors "to include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they, too, are to be considered creditors." All the NUPUC's accounts that are individual utility service accounts held by customers of the utility whether residential, commercial or industrial are covered by the Rule. Under the Rule, a "covered account" is: 2 • 1. Any account the NUPUC offers or maintains primarily for personal, family or household purposes, that involves multiple payments or transactions; and 2. Any other account the NUPUC offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the NUPUC from Identity Theft. "Identifying information"is defined under the Rule as "any name or number that may be used, alone or in conjunction with any other information,to identify a specific person," including: name, address, telephone number, social security number, date of birth, government issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number, unique electronic identification number, computer's Internet Protocol address,or routing code. III. IDENTIFICATION OF RED FLAGS. In order to identify relevant Red Flags, the NUPUC considers the types of accounts that it offers and maintains, the methods it provides to open its accounts,the methods it provides to access its accounts, and its previous experiences with Identity Theft. The Utility identifies the following red flags, in each of the listed categories: A. Suspicious Documents Red Flags 1. Identification document or card that appears to be forged, altered or inauthentic; 2. Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document; 3. Other document with information that is not consistent with existing customer information(such as if a person's signature on a check appears forged); and 4. Application for service that appears to have been altered or forged. B. Suspicious Personal Identifying Information Red Flags 1. Identifying information presented that is inconsistent with other information the customer provides (example: inconsistent phone numbers); 2. Identifying information presented that is inconsistent with other sources of information (for instance, a last name that does not match); 3. Identifying information presented that is the same as information shown on other applications that were found to be fraudulent; 4. Identifying information presented that is consistent with fraudulent activity (such as an • invalid phone number or fictitious billing address); 3 5. An address or phone number presented that is the same as that of another person; • 6. A person fails to provide complete personal identifying information on an application when reminded to do so (however,by law social security numbers must not be required and at this time we do not ask for social security); and 7. A person's identifying information is not consistent with the information that is on file for the customer. C. Suspicious Account Activity or Unusual Use of Account Red Flags 1. Change of address for an account followed by a request to change the account holder's name; 2. Payments stop on an otherwise consistently up-to-date account; 3. Account used in a way that is not consistent with prior use(example: very high activity); 4. Mail sent to the account holder is repeatedly returned as undeliverable; 5. Notice to the Utility that a customer is not receiving mail sent by the Utility; 6. Notice to the Utility that an account has unauthorized activity; 7. Breach in the Utility's computer system security; and 8. Unauthorized access to or use of customer account information. • D. Alerts from Others Red Flag 1. Notice to the Utility from a customer, identity theft victim, law enforcement or other person that it suspects another person has opened and NUPUC is maintaining a fraudulent account for a person engaged in Identity Theft. IV. DETECTING RED FLAGS. A. New Accounts In order to detect any of the Red Flags identified above associated with the opening of a new account,Utility personnel will take the following steps to obtain and verify the identity of the person opening the account: Detect 1. Require certain identifying information such as name,residential or business address, principal place of business for an entity, driver's license or other identification; S 4 2. Verify the customer's identity(for instance, review a driver's license or other IPidentification card); B. Existing Accounts In order to detect any of the Red Flags identified above for an existing account,Utility personnel will take the following steps to monitor transactions with an account: Detect 1. Verify the validity of requests to change billing addresses; and 2. Verify changes in banking information given for billing and payment purposes. V. PREVENTING AND MITIGATING IDENTITY THEFT In the event Utility personnel detect any identified Red Flags, such personnel shall take one or more of the following steps, depending on the degree of risk posed by the Red Flag: Prevent and Mitigate 1. Continue to monitor an account for evidence of Identity Theft; • 2. Contact the customer; 3. Change any passwords or other security devices that permit access to accounts; 4. Not open a new account; 5. Close an existing account; 6. Reopen an account with a new number; 7. Notify the Program Administrator for determination of the appropriate step(s) to take; 8. Notify law enforcement; or 9. Determine that no response is warranted under the particular circumstances. Protect customer identifying information In order to further prevent the likelihood of identity theft occurring with respect to Utility accounts, the Utility will take the following steps with respect to its internal operating procedures to protect customer identifying information: 1. Ensure complete and secure destruction of paper documents and computer files containing customer information; 2. Ensure that office computers are password protected and that computer screens lock after a set period of time; 3. Keep offices clear of papers containing customer information; • 4. Ensure computer virus protection is up to date; and 5 • 5. Require and keep only the kinds of customer information that are necessary for utility purposes. VI. PROGRAM UPDATES This Program will be periodically reviewed and updated to reflect changes in risks to customers and the soundness of the Utility from Identity Theft. At least one time per year, the Program Administrator will consider the Utility's experiences with Identity Theft situations, changes in Identity Theft methods, changes in Identity Theft detection and prevention methods, changes in types of accounts the NUPUC maintains and changes in the NUPUC's business arrangements with other entities. After considering these factors, the Program Administrator will determine whether changes to the Program, including the listing of Red Flags, are warranted. If warranted, the Program Administrator will update the Program and communicate these changes to the NUPUC for approval. VII. PROGRAM ADMINISTRATION. A. Oversight Responsibility for developing, implementing and updating this Program lies with an Identity Theft Committee for the NUPUC. The Committee is headed by a Program Administrator • who is the Finance Director\City Clerk-Treasurer. Two or more other individuals appointed by the Program Administrator comprise the remainder of the committee membership. The Program Administrator will be responsible for the Program administration, for ensuring appropriate training of Utility staff on the Program, for reviewing any staff reports regarding the detection of Red Flags and the steps for preventing and mitigating Identity Theft, determining which steps of prevention and mitigation should be taken in particular circumstances and considering periodic changes to the Program. B. Staff Training and Reports tAt 1D I/la Utility staff responsible for implementing the Program shall be trained either by or under the direction of the Program Administrator in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected. When an instance of identity theft is detected, the staff member(s) involved shall prepare a narrative of what occurred and the steps taken in the process of resolving the problem. C. Service Provider Arrangements In the event the Utility engages a third party service provider to perform an activity in • connection with one or more accounts, the Utility will take the following steps to ensure the 6 service provider performs its activity in accordance with reasonable policies and procedures 0 designed to detect,prevent, and mitigate the risk of Identity Theft. 1. Require by contract the service provider have such policies and procedures in place; and 2. Require by contract that service providers review the NUPUC's Program and report any Red Flags to the Program Administrator. 40 I 7 • /S.kDEN jiILLS MEMORANDUM DATE: October 10, 2008 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director SUBJECT: Investment Portfolio and Investment Policy Annually, the City Investment Policy should be reviewed. I have provided a copy of the Investment Policy and the quarterly investment portfolio's for 2008 for your review. I have also included the 3rd quarter financial summaries of the City for your information. Please remember that the City is on the cash basis of accounting during the year and most of the revenues are received from taxes twice a year. The second half of those payments will come in December. • \\Metro-inet\ArdenHills\Admin\Committees\FPAC\10-14-08 Investments-Financials.doc • 'ART HILLS CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA FINANCIAL POLICIES- INVESTMENT POLICY 1. Purpose It is the policy of the City to invest public funds in a manner which maximizes return and provides maximum security in preserving and protecting funds while meeting the daily cash flow demands and conforming to all applicable federal, state and/or local statutes government the investment of public funds. 2, Standards of Care A. Prudence—The standard of prudence to be used shall be the"prudent person" standard and shall be applied in the context of managing an overall portfolio. • Individuals acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried our in accordance with the terms of this policy. The"prudent person"standard states that, "Investments shall be made with judgment and care,.under circumstances then prevailing,which persons of prudence, discretion and intelligence exercise in the management of their own affairs,not for speculation,but for investment,considering the probable safety of their capital as well as the probable income to be derived." B. Ethics and Conflicts of Interest—Employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program,or that could impair their ability to make impartial decisions. Employees shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any person financial/investment positions that could be related to the performance of the investment portfolio. Employees shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City. • 1 C. Delegation of Authority—Authority to manage the investment portfolio is granted 1111 to the City's Finance Director/Treasurer,who shall act in accordance with established procedures and internal controls for the operation of the investment portfolio consistent with this investment policy. No person may engage in an investment transaction except as provided under the terms of this policy. The Finance Director shall be responsible for all transactions undertaken and shall establish a system of control. Each transaction will be acknowledged in writing by one of the following officials within 48 hours: 1) City Administrator 2) Mayor or Acting Mayor 3. Investment Objectives The City will invest idle funds based on the following objectives: A. Safety—The primary objective is the preservation of capital and the safeguarding of public funds by mitigating credit and interest rate risk. a. Credit Risk—The City will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer. b. Interest Rate Risk—The City will minimize interest rate risk, which is the risk that the market value of securities in the portfolio • will fall due to changes in the market interest rates. B. Term—Investments will be scheduled to cover all expenditures. Investments will not be longer than one year for cash flow and all excess funds may be invested for longer than one year. C. Liquidity—The portfolio shall remain liquid to meet all 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. Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist of securities with active secondary or resale markets. Alternatively, a portion of the portfolio may be placed in money market mutual funds or government investment pools which offer same-day liquidity for short-term funds. D. Yield—The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles,taking into account the investment risk constraints and liquidity needs. The benchmark to be used will be the 4M Plus Fund annual rate of return. Return on investment is of secondary importance compared to the safety and liquidity objectives. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative 2 to the risk being assumed. Securities shall generally be held until • maturity. 4. Pooling of Funds The City will consolidate (pool)cash and reserves balances from all funds, except for those legally restricted by statutes,to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. 5. Authorized Investments The City of Arden Hills will invest only in securities authorized by Minnesota Statute §118A.04 and §118A.05. 1. Governmental bonds,notes,bills,mortgages and other securities,which are direct obligations or are guaranteed or insured issues of the United States,its agencies, its instrumentalities, or organizations created by an act of Congress,excluding mortgage-backed securities defined as"high risk" (as defined below) or in certificates of deposit secured by letters of credit issued by Federal Home Loan Banks. High risk mortgage-backed securities are as follows: A) interest—only or principal—only mortgage-backed securities, B) any mortgage derivative security that: a) has an expected average life greater than ten years, b) has an expected average life that: i) will extend by more than four years as the result of an immediate and sustained parallel shift in the yield curve of plus 300 basis points: or ii) will shorten by more than six years as the result of an immediate and sustained parallel shift in the yield curve of minus 300 basis points: or c) will have an estimated change in price of more than 17 percent as the result of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. 2. Obligations of the United States or its agencies under a repurchase agreement if the margin agreement under the repurchase agreement is 101 percent and with any of the following institutions: A) a bank qualified as depository of public funds, B) any national or state bank in the United States which is a member of the Federal Reserve System and whose combined capital and surplus equals or • exceeds $10,000,000, 3 C) a primary reporting dealer in the United States government securities to 110 the Federal Reserve Bank of New York, D) a securities broker/dealer having its principal executive office in Minnesota, licensed pursuant to Minnesota Statues Chapter 80A, or an affiliate of it,regulated by the Securities and Exchange Commission and maintaining a combined capital and surplus of$40,000,000 or more, exclusive of subordinated debt. 3. State and local government obligation as follows: A) an obligation of the State of Minnesota or any of its municipalities: a) that have taxing power, and b) are rated "A"or better by a national bond rating service. B) obligation of other state and local governments: a) that have taxing power, and b) are rated "A"or better by a national bond rating service. C) general obligations of the Minnesota Housing Finance Agency that are rated "A"or better by a national bond rating service. D) general obligations of housing finance agencies of other states, provided: a) they include a moral obligation of the state, and b) they are rated "A" or better by a national bond rating service, E) general revenue obligation of any agency or authority of the State of Minnesota other than those found in C or D above(Housing Finance • Agency)that are rated "AA"or better by a national bond rating service. 4. Certificates of deposit at state and federally chartered banks and savings and loan associations. All investments made under this subsection shall be limited to the amount of Federal Deposit Insurance Corporation or the manner set forth in Minnesota statute §118A.05. The certificate of deposit should be in the form of a discounted security maturing in the amount not to exceed the insurance coverage or in the amount so that at any time the face amount together with any accrued interest does not exceed the insurance coverage. 5. Banker's Acceptances of United States Corporation or their Canadian subsidiaries that are rated "Al"by Moody's Investors Service and/or Pl by Standard and Poor's Corporation and matures in 270 days or less. Banker's Acceptances can only be purchased if the yield is greater than the United States Treasury obligations or Federal Agency issues. 6. Commercial Paper issued by United States corporations or their Canadian subsidiaries that are rated "Al"by Moody's Investors Service and/or"P1"by Standard and Poor's Corporation and matures in 270 days or less. 7. Money Market Funds consisting of United States Treasury Obligations and/or Federal Agency Issues. • 4 8. The City will not purchase securities that are considered highly sensitive. A highly sensitive investment is a debt instrument with contract terms that make the investment's fair value highly sensitive to interest rate changes. Examples include range notes and index amortizing notes, step-up notes and bonds, variable-rate investments with coupon multipliers,and coupons that vary inversely with a benchmark index. 9. The City will not purchase securities that could expose the City to foreign currency risk. 10. The City will not purchase derivatives. 6. Safekeeping and Custody Investments may be held in safekeeping with: 1. Any Federal Reserve Bank, 2. Any bank authorized under the laws of the United States or any state to exercise corporate trust powers,including but not limited to the bank from which the investment is purchased, 3. A primary reporting dealer in the United States government securities to the Federal Reserve Bank of New York, or 411 4. A securities broker-dealer having its principal executive office in Minnesota, Licensed pursuant to Minnesota Statutes Chapter 80A, or an affiliate of it, regulated by the securities and exchange commission and maintaining a combined capital and surplus of$40,000,000 or more,exclusive of subordinated debt. The City's ownership of all securities in which the fund is invested should be evidenced by written acknowledgments identifying the securities by: A. The names of issuers, B. The maturity dates, C. The interest rates, D. Any serial numbers or other distinguishing marks. The City shall not invest in securities that are both uninsured and not registered in the name of the City and are held by either: A. The counterparty or B. The counterparty's trust department or agent,but not in the name of the City. The Finance Director shall establish a system of internal controls, which shall be reviewed with the independent auditor of the City. The controls shall be designed to prevent the 5 • • loss of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets,or imprudent actions by employees and officers of the City. 7. Concentration of Credit Risk No more than 5%of the overall portfolio may be invested in the securities of a single issuer, except for the securities of the U.S. Government,or a maximum of 25%with any individual counter party in an external investment pool. 8. Investment Depositories and Authorized Dealers Annually, the City Council will designate by resolution depositories, security dealers and financial institutions authorized to provide banking and investment services to the City. Prior to completing an.initial transaction each year with a broker/dealer,the City shall provide to the broker/dealer a copy of the City's Investment Policy and a copy of the Notification to Broker and Certification by Broker as required by Minnesota Statutes Chapter 80A. The broker/dealer must sign and return the Notification to Broker and Certification by Broker and agree to handle the City's account in accordance with the City's Investment Policy and provide a copy of their broker's insurance coverage for their firm. 410 9. Investment Earnings Interest earnings will be credited to the source of the invested funds at the end of each month based on the average daily cash balances during the month. Market value adjustments and interest accruals will be allocated at the end of the fiscal year based on the average cash balances during the fiscal year. 10. Reporting and Review A listing of the City's investment portfolio shall be included in the financial report to the City Council at the end of each fiscal quarter. The list should include date of purchase and maturity, type of investment, firm invested at, yield, interest rate, and comparison to the benchmark set forth in this policy. 11. Exemption Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirement of this policy. Upon maturity, if funds are re-invested the new securities must conform to this policy. 6 • 12. Review and Approval The investment policy shall be formally approved and adopted by resolution the City Council and any future changes to the policy must be approved by the City Council. Approval by the City Council the 30 y of July, 2007. July 30, 2007 Stanley . Harpstead, Mayor Date \c\V64 July 30, 2007 Michelle A. Wolfe, City Administrator Date • FEB 25'08 Ari 9 55 7 0 m W.00 O S O !!! : : !; ; .- or1. 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C=C EEEEEEEEEE LLL,�� uuuuuuuu uuu r r c < - o u a o 0 0 0 0 0 0 0 0 0 m n n eovaaaaa3n3. 000 cnincncntncncncntnio 333 3333333333333__ _ c'n ) The financial crisis and city hall Page 1 of 2 • 0 la LEAGUE 4FC IT E BULLETIN MWN£SOTA CITIES ONLINE EDITION The financial crisis and city hall Issue 27 Published: October 8,2008 By Jim Miller As the financial crisis in our economy widens,cities across the state and nation are feeling the impacts.Not surprisingly, uncertainty has accompanied the situation. With credit markets tightening, for example,many cities have found it difficult, if not impossible,to sell bonds. This has been especially true for cities intending to place large issues,those above $15 million. That is because large institutional buyers such as Lehman Brothers have been the traditional market for large issues; many of those firms either no longer exist or are unable or unwilling to purchase bonds, at least for the time being. Cities hoping to sell smaller bond issues face a somewhat different problem. Financial advisors to cities indicate that only those smaller issues that have an attractive rating are being sold. Unrated or lower quality bonds are not faring well. Many smaller cities, of course, don't sell bonds, but borrow directly from local banks. Unfortunately, it appears that many smaller banks are also having liquidity problems,which may make this option less viable for some cities. Cities are also concerned about their investments. While high grade commercial paper has always been seen as a safe investment, cities may want to limit exposure in that area.Being as liquid as possible in the short term, given the state of the economy and the state's potentially growing deficit,makes sense. This may be an ideal time for the city to ask its financial advisor to review its portfolio to ensure current investments are appropriate for this market. Also, even though the FDIC insurance limits have recently been increased, it is well to remember that liquidity is as important as security. Having all of the city's funds in one bank,even if insured, could create cash flow problems for the city if the bank fails. It would likely be some time before the FDIC made good on the loss, and in the meantime,the city would be without its money. Cities should also be aware that banks, just like bond issues, are rated;your financial advisor may be able to help you assess the likelihood of potential problems before they occur. Now would also be a very good time to review the investment portfolio of the fire relief association. Because relief associations have wider discretion in types of permissible investments,they may also be at greater risk. For those cities with defined benefit retirement plans for firefighters,the city must make up deficiencies if state aid payments and fund earnings are inadequate to make pension payments. Cities should not panic,but they should also not rest on assumptions made years ago. Reviewing the city's current financial situation, possibly deferring new debt until markets stabilize, and talking with business leaders in the city are all sound strategies for minimizing surprises and providing maximum flexibility if they do occur. For more information,contact Jim Miller,LMC, at jmiller@Imc.org or(651) 281-1205. http://web.lmc.org/bulletin/story.cfm?id=2108&title_id=1 10/8/2008 , The financial crisis and city hall Page 2 of 2 • LMC Board Editor: Designer: Executive Director: of Directors Claudia Hoffacker Jason Little Jim Miller Copyright©2008 League of Minnesota Cities 145 University Ave.West,St.Paul,MN 55103 Phone:651-281-1200 1 Toll Free: 1-800-925-1122 Fax:651-281-1299(TDD:651-281-1290 Return to Home • • http://web.lmc.org/bulletin/story.cfm?id=2108&title_id=1 10/8/2008