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City Council Study Session Minutes • March 13, 2001 Page 8 1 d. Investment Report. 2 Lynn Trausen, Ehlers, reviewed the City's investment report with the Council. She noted the 3 rate of return was roughly 1.08% higher than the average rate of return on treasuries. Ms. 4 Trausen explained the unrealized loss of market value on the portfolio as being a small 5 proportion of loss to the net book value. She reviewed the distribution of the net book value over 6 the next 30 years and the analysis of investment by type. 7 Ms. Trausen explained the distribution of bonds by broker and brokerage houses. She suggested 8 the City diversify the composition of bonds among brokerage houses as Dain Rauscher holds 9 73% of the total portfolio at this time. 10 Ms. Trausen recommended the City encourage competition by obtaining quotes on short-term 11 investments. She added that the City should consider consolidating money market accounts into 12 the higher yielding 4M accounts. Ms. Trausen also recommended developing short term and 13 long term cash flow forecast along with long term operating and capital needs. 14 Councilmember Horst questioned if investing cash in the short term would increase the level of 15 risk for the City. Ms. Trausen stated the risk level would not be increased as a Commercial 16 Paper has a higher level of return than money markets. She noted State law regulates short-term 0 investments to eliminate the level of high risk. 18 Councilmember Horst asked if the bank relations were established with Firstar for any particular 19 reason. Mr. Larson indicated the City has had a great working relationship with Firstar over the 20 years and noted the interest they gain on our funds covers some of the fees that are waived. 21 Councilmember Thuesen asked for Mr. Larson's thoughts on these recommendations. Mr. 22 Larson commended Ehlers for their work on this report. He noted he was in agreement with the 23 diversification recommendation to benefit the City. 24 Councilmember Hodson thanked Mr. Larson for his 12 years of service to the City. Mayor 25 Cavanaugh concurred. He asked that this document be put into policy for approval by the 26 Council. 27 e. Financial Development Proposal. 28 Jim Prosser reviewed the key financial strategies for the City of St. Anthony. He suggested the 29 Council hold several workshop meetings to discuss the City's financial goals and objectives. Mr. 30 Prosser indicated through these meetings the Council would review"Financial Foundations" 31 relating to city capital and operating funds, impacts of growth on tax rates, service levels, 32 operating budgets and capital needs. He explained the Council would also identify funding 33 alternatives, prioritize projects in the general fund and draft strategies for the City's future capital 0 and operating financing needs.