ROY -- The city council unanimously approved a policy to invest idle funds from the city's general fund balance in certificate deposit accounts at local financial institutions.
The decision comes after several banks approached the city to start investing funds, said Finance Director Cathy Spencer, who suggested the council study the idea.
The maximum amount the city would invest would be 20 percent of the lowest amount of cash on hand. For example, if the city had $10 million, it could take $2 million of that for investments.
"It would be right around the $2 million range," Spencer said.
The city will start with certificate deposit accounts at local banks. Councilman Dave Tafoya wondered who the decision makers would be and how involved the council would be.
Spencer said she would report to the council on a quarterly basis how the funds were doing and what was being done with the money.
She and City Manager Chris Davis would work on the process together.
There is definitely a safety net, because the city can't get CDs in more than $100,000 increments, officials said.
Councilman John Cordova wanted to make sure the city would diversify and spread the money around.
"We would not take it and invest all in once place," Spencer said. The investments will be with several financial institutions, not just one bank.
Tafoya said many people think investing in stocks is risky, but these investments would be safe and earn money for the city. Roy currently uses the state's investment policy, but now officials believe the city could earn more money with private institutions.
"It may be that someone (else) has a great rate of interest," Spencer said.
Mayor Joe Ritchie said that in a recent audit, the city's auditors, Wiggins and Company, said the city is one of the best financially managed cities in the state.
"That is not going to change," Ritchie said.
"It will just add to it," Tafoya said.
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