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Investments: <br />The City will continue to experience lower investment income as a result of lower rates most likely <br />through 2014 and into 2015. Bond rates did spike in the 3`d quarter by as much as 130 —140 basis <br />points but have settled 30 — 40 basis points recently and are still 100 basis points higher than the <br />2nd quarter. Investment income for 2013 is $208,118 compared with $325,174 for the same period <br />in 2012. Our portfolio for September 30, 2013 was $25,852,682 compared with $28,533,657 for <br />2012. 1 have attached the September 301h investment inventory summary. <br />Treasury Securities <br />2013 <br />2012 <br />2 year <br />.37 <br />.27 <br />5 year <br />1.41 <br />.69 <br />10 year <br />2.64 <br />1.68 <br />Jumbo Cert. of Dep. <br />1 year <br />.35 <br />.25 <br />The Federal Open Market Committee (FOMC) has maintained the current discount rate at 0% to <br />.25%. There will be a new Federal Reserve Chair in 2014 and speculation is that the FOMC will <br />continue to be accommodative. (Continue low rates and stimulative actions) They have indicated <br />that they will keep rates low into 2015. Credit continues to be tight and is still a concern for small <br />businesses. There is some concern regarding the federal budget and debt ceiling. The Federal <br />Reserve is currently buying approximately 85 billion in government bonds and mortgages per <br />month until economic numbers improve. <br />State unemployment as of August 31 st was 5.1 % state-wide compared to national unemployment <br />of 7.2%. Ramsey County unemployment stands at 5.0%. Economists see the national number <br />declining slightly in 2014 and into 2015. The State number has been about 2% below the national <br />rate. The job market continues to lag as uncertainty at the federal level continues to hinder <br />business investment and growth. The spike in interest rates has slowed the mortgage and refi <br />market <br />Finance Department Operations — 4th quarter: <br />Finance staff will be busy during the fourth quarter finalizing the 2014 budget which will culminate <br />with a truth -in -taxation hearing in November and adoption of the 2014 budget and tax levy in <br />December. Delinquent utility bills, administrative offense fines, diseased tree charges and unpaid <br />property charges were presented to the Council for certification and will be sent to the County at <br />the end of November. Staff is currently working on our insurance policy renewal and we will begin <br />preparations for the annual financial audit. <br />Respectfully Submitted, <br />Mark Beer, Finance w ector <br />