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Minutes_Investment Oversight Advisory Commission 7 22 15 THE CITY OF Dubuque AII4meric11 a City DUBgkE r Masterpiece on the Mississippi 2007-2012-2013 TO: Members of City of Dubuque Investment Oversight Advisory Commission FROM: Paul Lassance, Investment Oversight Advisory Commission Kenneth J. TeKippe, Finance Director RE: Un-approved Minutes of the July 22, 2015 Meeting of the Investment Oversight Advisory Commission DATE: July 24, 2015 Commission members Brad Chalmers, Gary Ruden, Stephen Reisdorf, Rachael Ferraro and Paul Lassance were present. Ken TeKippe, Finance Director, Jean Nachtman, Assistant Finance Director, Tami Lansing, Finance Accountant and Ariel Swift, Finance Intern were also present. 1. The meeting began at 3:00 p.m. in Conference Room A in City Hall. 2. The oath of office was administered to reappointed commission members Rachael Ferraro and Brad Chalmers. 3. Finance Director Ken TeKippe, certified that the meeting was in compliance with the Iowa open meetings law. 4. Gary Ruden nominated Paul Lassance to continue as chairperson of the commission and Stephen Reisdorf seconded. Motion carried unanimously. 5. Paul Lassance nominated Gary Ruden as Vice Chairperson of the commission and Stephen Reisdorf seconded. Motion carried unanimously. 6. Stephen Reisdorf moved that the minutes of the April 22, 2015 meeting be approved. The motion was seconded by Gary Ruden and approved unanimously. 7. Paul Kronlage, Senior Vice President, John Gonner ,, Senior Vice President and Steve McDonough, Investment Associate of First Community Trust (FCT) distributed a handout which provided information on economic and interest rate comments, five and ten year treasury yield history, performance review, yield curve information, sector allocation and portfolio detail. Paul Kronlage indicated the firm continues to grow with $700 million (up $20 million from last year) in assets. Dale Repass retired as CEO with Chip Murray now CEO, Dale continues as Chairperson of Board. Firm does not accept deposits or make loans. Firm has added space and staff in past year. Firm continues work with East Dubuque Savings Bank, Premier Bank, DuTrac and Dupaco in Dubuque. Paul thanked the City for the investing with their firm since 2002. John Gonner's comments included: Fed officials believe fed fund rates to rise later this year, as long as positive economic indicators continue, John believes September Fed to increase rates; Federal Reserve uses their monetary policy tools for dual mandate of "full employment" and "price stability'; unemployment rate is at 5.3%, down from 6.1% a year ago and from 7.5% two years ago with Federal Reserve targeting 5.0%to 5.2%; Personal Consumption Expenditure Core Price Index (PCE) is at 1.2%, which hasn't changed much in the last two years. The Fed would like to see this at 2.0%; when interest rates rise, bond prices fall. In past periods of rising rates, cash and short term bonds were the best place to be. First Community Trust thinks it makes sense to not be so short with durations this cycle, due to the low level of short-term rates, a steep yield curve, and the moderate pace and volume of rate increases. Feds have tapered the additional bond buying program from a high of$85 million monthly to none by October 2014, and market was able to handle. Been a benefit for City's return to not have been real short in duration for investments. City's investments are primarily in non-callable bonds. Steve McDonough reviewed the return information. FCT has outperformed the index the majority of months since firm began managing the City's funds in months with positive and negative returns. The standard deviation of returns for the City are also better than the Barclay's Index. The City's account has an R-Squared of .61 since inception. John Gonner confirmed that First Community Trust is in compliance with the City' current investment policy. 8. Investment return and fee information as of June 30, 2015, for the four investment managers: Dubuque Bank and Trust, U.S. Bank, Dana Investment Advisors and First Community Trust was distributed. 9. Considerable unspent bond proceeds remain. Proceeds ($20 million) from Series 2015 A Sales Tax Increment Revenue Bond issue received recently, invested with American Trust & Savings Bank and Fidelity Bank & Trust. The City does not plan to withdraw from managed funds this year. Ken indicated Landfill continues to spend some of its reserves so Landifll is holding less CDs than a few years ago, has incurred debt, may have additional spending for anticipated projects. Discussed Upper Bee Branch project funding via Series 2015 A Bond issue, plus SRF loan and EDA and RECAT grants, with additional funding required to complete project, largest project in City history. Water and Resource Recovery Center project was the largest previous City project. Due to favorable interest rate in comparison to money market account, significant dollars continue to be held in City general checking account. Discussed the City's current bond ratings. 10. There was no communication from the public, commission, or staff to report according to Ken. 11. The next meeting of the Commission is scheduled for Wednesday, October 28, 2015, at 3:00 p.m. in Conference Room A, City Hall. A representative from Dana will be invited to the meeting. 12. Paul Lassance moved that the meeting adjourn. The motion was seconded by Gary Ruden and approved unanimously. The meeting adjourned at 3:50 p.m.