Minutes_Investment Oversight Advisory Commission 7 26 18 Copyrighted
August 6, 2018
City of Dubuque Consent Items # 1.
ITEM TITLE: Minutes and Reports Submitted
SUMMARY: City Council Proceedings of 7/23, 7/30; Housing
Commission of 7/11; Housing Commission Work Session
of 7/10; Human Rights Commission of 6/11 ; Investment
Oversight Advisory Commission of 7/26; Library Board of
Trustees of 5/24; Zoning Board of Adjustment of 7/26;
Proof of Publication for City Council Proceedings of 7/2,
7/9; Proof of Publication for List of Claims and Summary of
Revenues for Month Ending 6/30
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File
ATTACHMENTS:
Description Type
City Council Proceedings of 7/16/18 Supporting Documentation
City Council Proceedings of 7/23/18 Supporting Documentation
Housing Commission Minutes of 7/10/18 Supporting Documentation
Human Rights Commission Minutes of 7/11/18 Supporting Documentation
InvestmentOversightAdvisory Commission Minutesof Supporting Documentation
7/26/18
Library Board of Trustees of 5/24/18 Supporting Documentation
Zoning Board of Adjustment Minutes of 5/24/18 Supporting Documentation
Proof of Publication for City Council Proceedings of Supporting Documentation
7/2/18
Proof of Publication for City Council Proceedings of Supporting Documentation
7/9/18
Proof of Publication for List of Claims/Summary of Supporting Documentation
Revenues for ME 6/30/18
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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 July 26, 2018, Meeting of the Investment Oversight Advisory
Commission and Chairman's Quarterly Report
DATE: July 26, 2018
Commission members; Paul Lassance, Franz Becker, Gary Ruden, Steve Reisdorf and City staff, Jean
Nachtman, Finance Director; Tami Lansing, Assistant Finance Director.
1. The meeting was called to order at 3:03 p.m. in Conference Room A in City Hall by Chairperson
Paul Lassance. Finance Director Jean Nachtman, certified thatthe meeting was in compliance
with the lowa open meetings law.
2. Franz Becker moved that the minutes of the April 25, 2018, meeting be approved. The motion
was seconded by Paul Lassance and approved unanimously.
3. The oath of office was administered to reappointed commission member Franz Becker.
4. Gary Ruden nominated Paul Lassance to continue as Chairperson of the commission and Steve
Reisdorf seconded. Motion carried unanimously.
5. Paul Lassance nominated Franz Becker as Vice Chairperson of the commission and Steve
Reisdorf seconded. Motion carried unanimously.
6. Paul Kronlage and John J. Gonner, CFA, Senior Vice President attended for First Community
Trust. A handout was provided with information on 2018 returns, annual account review and
other information.
John Gonner reviewed the state of the economy, as that is the driving factor for interest rates.
Job Openings and Labor Turnover Survey (JOLTS) shows more job openings than workers
available and the quits rate (voluntary terminations -indication of market confidence) is at a
17year high. The Duke/CFO Magazine Business Outlook showed hiring plans are at a 14-year
high. However, wage inflation is not reflecting current conditions. The theory is more higher
earning, older employees are leaving the workforce and being replaced by younger lower paid
employees. Second quarter GDP is expected to exceed 4%. However, without an increase in
the work force, the increase in GDP cannot be sustain. 6cpectation will be lower for future
quarters.
The yield curve continues flat. Although Fed has raised rates for two quarters, the longer-term
bonds rates are not reflecting the change. If lower term rates continue to climb, as expected, and
longer-term rates remain stagnate, the curve will eventually invert. An inverted yield curve usually
proceeds a recession. Economists are talking about the recession of 2020. The city's portfolio
has no equity exposure in a recession. The international appeal of long term US Treasuries and
the Federal Reserves large portfolio acquired during quantitative easing, though tapering, may
still be exerting pressure to keep long term rates lower. In the last two years the yield curve has
increased 200°k, from less than 50 basis points to just under 300 basis points.
The economy is now in the 2"d longest economic expansion (108 months) in history and appears
on track to beat the longest (120 months) that ended in March 2001 . Although the growth in this
expansion is modest in terms prior expansions, that could be why it has continued so long. It is
easier to walk long distances than to run. The economy is riding the wave of tax cuts and other
economic stimuluses that are usually implemented in weaker economies.
The City's current portfolio is made up of 80°k bullet agency with 2-3 year maturities, lessening
the City's exposure to a drop in value due to increasing interest rates. Only 8°k of the portfolio is
in callable bonds. The remaining is in non-callable securities. As bonds mature the proceeds
are reinvested in high income bonds. The average duration is 1 .915 years, average maturity is
2.109 years. Current yield is 1 .64°k and yield to maturity is 2.55°k. The City's portfolio
outpertormed the benchmark 80°k of the time in negative earnings periods. This is indicative of
the safety of the portfolio. The portfolio also out performed the benchmark 50°k of the time in
positive earnings periods.
John confirmed that the investments are in compliance with the City investment policy.
7. Jean reported on current cash standings. The City continues to ladder CD maturities to meet
operations. Vibrant Community Credit Union has requested to be added as a bidder for CD's.
The depository resolution will be updated at the August 6, 2018 City Council Meeting.
8. The Commission reviewed the June 2018 quarterly investment reports.
9. There was no communication from the public, commission or staff to report according to Jean.
10.The next meeting of the Commission is scheduled for Wednesday, October 24, 2018 at 3:00 p.m.
A representative from DANA will be invited to the meeting.
11 .Gary Ruden moved that the meeting adjourn. The motion was seconded by Franz Becker and
approved unanimously. The meeting adjourned at 3:57 p.m.