Minutes_Investment Oversight Advisory Commission 4 26 17 THE CITY OF Dubuque
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Masterpiece on the Mississippi 2007-2012-2013
TO: Members of City of Dubuque Investment Oversight Advisory Commission
FROM: Paul Lassance, Investment Oversight Advisory Commission
Jean Nachtman, Finance Director
RE: Un-approved Minutes of the April 26, 2017, Meeting of the Investment
Oversight Advisory Commission and Chairman's Quarterly Report
DATE: April 26, 2017
Commission members; Rachel Ferrero; Paul Lassance; Steve Reisdorf; Gary Ruden
and Franz Becker; and City staff, Jean Nachtman, Finance Director; Tami Lansing,
Assistant Finance Director and Arielle Swift, Accountant.
1. The meeting was called to order at 3:01 p.m. in Conference Room A in City Hall by
Chairperson Paul Lassance. Finance Director Jean Nachtman, certified that the
meeting was in compliance with the Iowa open meetings law.
2. The oath of office was administered to newly appointed commission member Franz
Becker.
3. Gary Ruden moved that the minutes of the January 25, 2017, meeting be approved.
The motion was seconded by Rachel Ferrero and approved unanimously.
4. Mike Maloney, Senior Portfolio Manager, and Craig Dana, Vice President &
Relationship Manager presented for US Bank.
Mike reviewed the status of the City's portfolio and noted that the City's performance
for the 1St quarter of 2017 was at 1.40%, with a projected annual income of$96,309.
Current yield to maturity is at 1.69%. Cash represents only 2% of the portfolio. The
remaining 98% portfolio is made up of 20 government backed agencies, and 5
certificates of deposits (CDs are at or below the $250,000 FDIC insurance threshold
and are invested in Iowa banks). Mike noted that 18% of the portfolio is coming due
this year and he plans on investing it out 3-4 years to take advantage of the
increasing interest rates. He intends to keep the overall portfolio duration within 2.5
years range.
The outlook is continued slow U.S. economy growth at about 2%. Expectation is
that the Federal Reserve will increase interest rates two more times this year. He
expects the economy to stay robust depending on what comes out of the Trump
administration tax reforms and anticipated increase in the equity market, should
increase returns in the fixed market. Any potential benefits of new fiscal policies will
not likely be noticed until 2018. There is a tight labor market that should lead to
wage growth. Inflation pressures could arise next year with higher demand
prospects coupled with recent oil price gains. Mike's opinion is that the Fed is
hoping for a little inflation to take the pressure off the monetary authority. The
market has been stable and resilient even through the last Fed rate increases.
There has been a slowing of called bonds. Bonds cannot be reborrowed at a lower
rate. There is also a material decrease in mortgage pay offs.
Craig Dana noted that US Bank does offer custodial services that would be included
in their current management fees. They cannot discount management fees for not
using the custodial service. The City's investment policy stipulates that the
custodian cannot also be a manager.
5. Jean reported on current cash standings. With increased interest from local banks,
excess funds will begin to shift out the DB&T Money Market account into a laddered
CD approach. Finance is currently investigating the possibility returning funds drawn
from the managed accounts in 2016. An analysis is being completed of the cash
flow needs during summer construction. A decision will be made on the allocation of
funds back to the managers, if cash availability supports the return.
6. The Commission reviewed the March 2017 quarterly investment reports.
7. Paul Lassance and Steve Reisdorf were both contacted by the Telegraph Herald to
comment on the City's current debt load. An article regarding the City's debt and
spending was published in the March 26, 2017 edition of the Telegraph Herald.
8. The next meeting of the Commission is scheduled for Wednesday, July 26, 2017 at
3:00 p.m. A representative from First Community Trust will be invited to the
meeting.
9. Steven Reisdorf moved that the meeting adjourn. The motion was seconded by
Rachel Ferrero, and approved unanimously. The meeting adjourned at 3:40 p.m.