Minutes_Investment Oversight Commission 2 4 10
TO:
Members of City of Dubuque Investment Oversight Advisory Commission
FROM:
Kenneth J. TeKippe, Finance Director
RE:
Un-approved Minutes of the January 27, 2010 Meeting of the Investment
Oversight Advisory Commission
DATE:
February 4, 2010
Commission members Steve Reisdorf, Hiram Melendez, Virgil Blocker, Brad Chalmers
and Gary Ruden were present. Ken TeKippe, Finance Director, Jean Nachtman,
Assistant Finance Director and Tami Lansing, Accountant, were also present.
1. The meeting was called to order at 3:00 p.m. in Conference Room A in City Hall by
Chairperson Steve Reisdorf. Finance Director Ken TeKippe, certified that the
meeting was in compliance with the Iowa open meetings law.
2. Virgil Blocker moved that the minutes of the October 28, 2009 meeting be
approved as written. The motion was seconded by Hiram Melendez and approved
unanimously.
3. Mr. Andrew Douglas, Senior Vice President – Chief Investment Officer, Wealth
Management Group, Mr. Stephen Smart, Vice President – Investment Officer and
Ms. Rita McCarthy, Vice President – Senior Wealth Advisor of Dubuque Bank and
Trust provided a handout with strategic outlook, total return analysis, 2009 returns,
cash flow summary and holdings.
Andrew indicated that Kim Grant and William Zaleski are no longer with the bank
and Stephen and Rita have assumed responsibility. Stephen has 30 years
experience working with fixed assets. Returns beat indexes for past year. In mid-
year switched to straight treasuries with duration at 2.88 vs. 3.40 in index, half year
shorter than last year. Bank buys investments in round lots which provides better
execution and cost savings if over $1,000,000 acquired, trade electronically and
direct.
Stephen indicated that our portfolio is fairly simple which is good, plan to stick with
treasuries not with investment in agencies, don’t use floaters, rates projected to
rise perhaps .50% within a year (Feds did not raise rates at today’s meeting).
The Vanguard GNMA Fund has an expense ratio of .22% and is a several billion
dollar fund.
Andrew confirmed that Dubuque Bank and Trust is in compliance with the City’s
current investment policy.
4. The Commission reviewed the December 2009 quarterly investment reports
prepared by the Finance Department. The City has continued to invest new funds
or maturing investments in the high yield savings accounts and some Certificates
of Deposit (approximately 6 month maturities). Recent interest rates for certificates
of deposit acquired have been in the .40-.60% range. Minimal interest continues
from local banks for accepting City funds. Rates for investing recent $14 million
bond proceeds is .60%.
5. Ken distributed investment return information from the four investment managers:
Dubuque Bank and Trust, U.S. Bank, Dana Investment Advisors and First
Community Trust. Also distributed a recap of manager/ custodian annual fees
based on December 31, 2009, market values. Consensus was to request 1, 3, 5
and 10 year investment returns from managers.
Ken TeKippe indicated City currently has considerable unspent bond proceeds for
a number of borrowings, largest being new downtown parking ramp. In addition,
borrowings continue through the State of Iowa Revolving Loan Fund for a number
of projects. Interest rates were in low 3% range for recent bond issues. SRF loans
require City spending funds for projects and seeking reimbursement.
Ken indicated that City did not withdraw funds from the investment managers since
the last meeting and there are no plans to withdraw or add to funds during next few
months.
Distributed a proposed fee schedule from managers after the recent solicitation for
input. After lengthy discussion, consensus was to recommend a letter be sent to
verify their continued interest if fee set at 35 points for first $5 million and 30 points
for funds over $5 million for all managers. Motion by Hiram Melendez and
seconded by Virgil Blocker and approved unanimously. Emphasize the type of
investments allowed, recent low returns and encourage monthly payment of their
fees. The size of investment for managers was discussed with a reallocation to be
considered at a future meeting along with discussion on custodian fees.
6. Steve Reisdorf made a motion to accept change in investment policy to move
“8.1.8 Municipal securities approved by Municipal Security Rulemaking Board
(MSRB)” from allowed to prohibited investments 8.2.6 to comply with State of Iowa
laws. Gary Ruden seconded and approved unanimously.
7. There was no communication from the public, commission or staff to report
according to Ken.
8. The next meeting of the Commission is scheduled for Wednesday, April 28, 2010,
at 3:00 p.m. in City Hall. A representative from U.S. Bank will be invited to the
meeting.
9. Virgil Blocker moved that the meeting adjourn. The motion was seconded by Gary
Ruden and approved unanimously. The meeting adjourned at 4:40 p.m.