Crestwood officials to move forward with implementation of new cash investment policy

Staff report

Crestwood will move ahead with the implementation of a cash investment policy.

The Board of Aldermen voted unanimously April 12 to proceed with a draft policy prepared by Finance Officer Greg Kremer and last week voiced no objection to a revised policy incorporating a handful of minor changes.

The policy “outlines the scope, general objectives, the types of acceptable investment vehicles, and the manner in which future investment activities will be managed,” Kremer wrote in a memo. “The focus will be to maximize the return on the City’s cash balances while minimizing risk and maintaining liquidity.”

Crestwood had an estimated $2.8 million in cash as of March 31, with roughly $248,000 set aside in a certificate of deposit, Kremer said at the April 12 board meeting.

The policy is meant to be “a guideline for city staff to follow in structuring the investment portfolio, formulating investment strategies, and making investment decisions. The policy clarifies the roles and responsibilities, establishes parameters for permissible investments, and sets forth principles of portfolio diversification,” according to the document.

Safety, liquidity and yield are the primary objectives of the city’s investment activities, according to the policy.

The document states Crestwood will work to minimize credit risk by pre-qualifying the financial institutions, brokers, intermediaries and advisers the city will do business with and by diversifying its portfolio.

The city will structure its portfolio “so that securities mature to meet cash requirements for ongoing operations” and invest its operating funds in short-term securities to mitigate interest-rate risk.

The policy authorizes the city to invest in U.S. Treasury securities, repurchase agreements and certificates of deposit but prohibits such activities as borrowing funds for investment purposes and using structured notes or derivatives.

Crestwood’s investment program will be managed by the city administrator, who can designate the finance officer as the city’s investment officer, according to the policy.

The finance officer is allowed to delegate duties to an “external money manager” but “cannot delegate authority or fiduciary responsibility,” the policy states.

The finance officer will review the policy annually and present any recommended changes to the Board of Aldermen.

In other business last week, the board received the city’s first-quarter financial report.

Crestwood took in $2,967,470 in revenue and spent $3,104,966 through March 31, a total fund balance reduction of $137,496.

The city reported $3,163,530 in revenues and $3,503,689 in expenditures during the first quarter of 2010, a total fund balance reduction of $340,159.

Total sales-tax revenue for the first quarter was $1,520,539, or nearly $188,000 less than the $1,708,221 in total sales-tax revenue reported during the first quarter of 2010.

Expenditures were higher last year at this time due to a roughly $101,000 expense for improvements to Sanders Park and a roughly $311,000 final payment made on the city’s Proposition S annual appropriation note, according to Kremer.

Aldermen last week also voted unanimously to enter into an agreement with the Crestwood-Sunset Hills Rotary Club for the construction of a pavilion in Whitecliff Park, in line with the club’s 50th anniversary this year.

Under the approved agreement, the Rotary Club will pay up to $15,000 for materials, and the city will pay for labor costs and for material to install a new concrete slab at the site.

Specifically, the Rotary Club has offered to purchase a 24-foot-by-36-foot pavilion from RCP Shelters Inc. for $13,810, Director of Public Services/Acting City Administrator Jim Eckrich wrote in a memo to the mayor and board.

The Rotary Club also would pay for a placard to place on the structure upon completion indicating that it was purchased by the club, he wrote.

Eckrich estimated the city’s cost for the project will be $14,500, including $4,500 for concrete, $5,000 for concrete labor and $5,000 for pavilion construction.

The cost would be paid out of the capital improvement fund as part of the funds allocated to the Public Works Department, he stated.

The facility would replace the deck currently situated between the Aquatic Center and the softball field, Eckrich wrote.

“That deck was previously shaded by a large tree, which was damaged during a storm in 2008 and had to be removed,” he stated. “Since the removal of the tree, the deck is no longer shaded and not a desirable picnic location during the hot summer months.”