Minutes_Investment Oversight Adivsory Commission
TO:
Members of City of Dubuque Investment Oversight Advisory Commission
FROM:
Kenneth J. TeKippe, Finance Director
RE:
Un-approved Minutes of the April 28, 2010 Meeting of the Investment
Oversight Advisory Commission
DATE:
April 29, 2010
Commission members Steve Reisdorf, Brad Chalmers, Gary Ruden and Virgil Blocker
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 3:05 p.m. in Conference Room A in City Hall by
Chairperson Stephen 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 January 27, 2010 meeting be
approved. The motion was seconded by Gary Ruden and approved unanimously.
3. Representatives from U.S. Bank did not attend the meeting as scheduled due to a
misunderstanding relative to the date. A follow up meeting will be requested with
U.S. Bank at the Investment Oversight Advisory Commission quarterly meeting
July 28, 2010 or perhaps a special meeting in the next couple weeks.
4. Ken distributed investment return information for March 31, 2010, 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 March 31, 2010 market values and new rates.
5. The Commission reviewed the March 2010 quarterly investment reports prepared
by Finance. The City has continued to invest new funds or maturing investments
in the high yield savings accounts and limited Certificates of Deposit
(approximately 6 month maturities) for the Dubuque Metropolitan Area Solid Waste
Agency. Recent interest rates for certificates of deposit acquired have been in the
.20-.40% range. The City recently received $8.8 million of property tax revenue
proceeds.
The City of Dubuque General Obligation Bond rating by Moody’s Investors Service
has recently been increased from Aa2 to Aa1. This change is due to all major
credit rating services moving to rate municipal debt based on the likelihood of
default, which is the standard used for corporate debt. Moody’s recalibrated its
municipal ratings to a global scale. The change is not considered an upgrade, but
a restatement of ratings due to the unification of the corporate and municipal
scales. The intent is to provide a better indication of credit risk by applying uniform
criteria to both municipal and corporate credits, rather than a sub-scale of only
municipal credits. The result is that most municipal credit ratings will be restated
one to two steps higher than previously indicated due to the direct comparison to
all other credits rather than municipal credits only.
Ken indicated the primary unspent bond proceeds are for the new parking ramp
being constructed adjacent to the main fire station on Central Avenue. Funding for
an upcoming major project includes a Water Pollution Control Plant construction
upgrade. Bids are expected in late May with the funding being State Revolving
Fund (SRF) Loan which reflects 3% interest, .25% administrative fee and a 1%
one-time loan origination fee. A portion of the SRF borrowing will be Build America
Bonds which reduces the interest rate 35% from 3% to 1.95%. Currently the limit
is $20 million for an individual city for clean water borrowing. However, the City
has requested to increase the limit or reallocating drinking water borrowings to take
advantage of the lower interest rate.
6. All four investment managers have agreed to a revised investment fee schedule.
The fee schedule will be .35% on the first $5,000,000 of assets managed and .30%
on assets managed over $5,000,000 beginning April 1, 2010. In addition,
managers can charge fees monthly as opposed to quarterly.
7. Considerable discussion on the possible reallocation of funds managed by the
individual managers. A recap of three possible scenarios was distributed along
with new fees. As a result of the returns and length of time that First Community
Trust has managed funds, it was decided to increase their managed funds to $5
million. A motion by Virgil Blocker and seconded by Gary Ruden to withdraw funds
on a proportionate basis from the other three managers based on March 31, 2010
market values was approved unanimously. The managers will be allowed time to
accumulate cash to transfer to First Community Trust.
8. Brad Chalmers indicated the City could possibly further reduce combined
investment/custodian fees considerably with the use of an alternative manager(s).
The City would still have separation of management and custodian to comply with
our investment policy. The issue will be reviewed at a future meeting.
9. There was no communication from the public, commission or staff to report
according to Ken.
10. The next meeting of the Commission is scheduled for Wednesday, July 28, 2010,
at 3:00 p.m. in City Hall. A representative from First Community Trust will be
invited to the meeting.
11. Gary Ruden moved that the meeting adjourn. The motion was seconded by Virgil
Blocker and approved unanimously. The meeting adjourned at 3:55 p.m.