Minutes_Investment Oversight Advisory Commission 10 24 12Masterpiece on the Mississippi
Dubuque
2007
TO: Members of City of Dubuque Investment Oversight Advisory Commission
FROM: Paul Lassance, Investment Oversight Advisory Commission
Ken TeKippe, Finance Director
RE: Un- approved Minutes of the October 24, 2012 Meeting of the Investment
Oversight Advisory Commission and Chairman's Quarterly Report
DATE: November 1, 2012
1. Commission members Paul Lassance, Gary Ruden and Brad Chalmers were
present. Ken TeKippe, Finance Director, and Jean Nachtman, Assistant Finance
Director were also present.
2. The meeting was called to order at 3:00 p.m. in Conference Room II in City Hall
Annex by Paul Lassance. Finance Director Ken TeKippe certified that the
meeting was in compliance with the Iowa open meetings law.
3. Gary Ruden moved that the minutes of the July 25, 2012, meeting be approved.
The motion was seconded by Brad Chalmers and approved unanimously
4. Joe Veranth of Dana Investment Advisors provided a handout with information on
the portfolio performance and allocation, yield curve, economic update and
current holdings. Year -to -date total return (gross fees) for our portfolio is 1.86%
well ahead of the three month Treasury Index (.07 %) and one year Treasury
Index (.18 %). The effective bond duration is 0.56 years and the average months
to coupon reset is 6.34. Dana has continued to increase investing in Treasury
Inflation- Protected Securities (TIPS). TIPS are government- issued bonds that
provide a hedge against inflation and provide liquidity. Currently 20% of the
portfolio is invested in TIPS and Joe indicated that may increase to 25% in TIPS.
The average annual total returns since inception of account in 1989 is 5.06%
versus the three month Treasury Index returns (3.51 %) and one year Treasury
Index returns (4.30 %), have outperformed benchmarks with low risk.
In the past, Dana focused on 1 -2 year duration for investments whereas other
managers focus on a bit longer duration, perhaps 3 -5 years.
Joe provided the following comments on the fixed income market: Treasury
yields are now back close to even for the year on healthier stock returns and
increasing commodity prices, U.S. fiscal flexibility is low, housing and
unemployment complicate monetary policy, driving the Fed to keep monetary
policy loose, fed has now reinforced `zero' interest rate policy for the next three
years and Fed has stated inflation is the lesser evil. GDP growth for second
quarter dropped to 1.25 %, only two quarters over 2.60% growth since recession
ended. Corporations are still holding cash and paying down debt. Housing
recovery should help the economy.
Dana firm manages approximately $3.7 billion, within approximately 60% in fixed
investments utilizing four strategies.
Joe confirmed that Dana is in compliance with the City's current investment
policy.
5. Ken distributed investment return information for September 30, 2012, from the
four investment managers: Dubuque Bank and Trust (DB &T), U.S. Bank, Dana
Investment Advisors and First Community Trust. Also distributed a recap of
manager/ custodian annual fees based on September 30, 2012 market values,
all managers currently use same fee schedule. Information on interest rates for
the two high yield savings accounts was also distributed.
The Commission reviewed the September 2012 quarterly reports prepared by
Tami Lansing. Ken indicated that the City continues to use a high yield savings
account option versus certificates of deposit. The accounts at DB &T and EDSB
continue to provide rates slightly higher than the six month CD bids. CDs for
excess funds of Dubuque Metropolitan Area Solid Waste Agency are bid. This
allows for continued monitoring of CD rates and also provides investment
opportunities to local financial institutions. Continues to be little interest by local
financial institutions in providing bids for certificate of deposit (Dubuque Bank and
Trust and American Trust and Savings Bank normally always bid). It was
requested that the interest rate and maturity on the U.S. Treasury obligation held
in the Debt Service Reserve Fund for Port Ramp be detailed in future reports.
Additional bonds will be sold on November 5, 2012 with the proceeds to the City
in late November. Hopefully there will be interest by a number of local banks to
invest.
The City recently received $10.5 million from property taxes collected by county
in September and distributed in October. Approximately $1.6 million represents
TIF payments with funds used to pay TIF debt or rebated to property owners.
6. There was no communication from the public, commission or staff to report
according to Ken.
7. Rick Runde, Finance Officer with Archdiocese of Dubuque, has applied for the
open position on the Iowa Oversight Advisory Commission. Rick's experience
and background should be beneficial to the committee and City.
8. The next meeting of the Commission is scheduled for Wednesday, January 23
2013, at 3:00 p.m. in City Hall. A representative from Dubuque Bank and Trust
will be invited to the meeting.
9. Brad Chalmers moved that the meeting adjourn. The motion was seconded by
Gary Ruden and approved unanimously. The meeting adjourned at 4:20 p.m.