Minutes_Investment Oversight Advisory Commission 1 28 15 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
Kenneth J. TeKippe, Finance Director
RE: Un-approved Minutes of the January 28, 2015 Meeting of the Investment
Oversight Advisory Commission and Chairman's Quarterly Report
DATE: February 3, 2015
Commission members Paul Lassance, Steve Reisdorf, 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 4:05 p.m. in Conference Room A in City Hall by
Chairperson Paul Lassance. Finance Director Ken TeKippe, certified that the
meeting was in compliance with the Iowa open meetings law.
2. Steve Reisdorf moved that the minutes of the October 22, 2014 meeting be
approved as written. The motion was seconded by Gary Ruden and approved
unanimously.
3. Andrew Douglas, Senior Vice President, Chief Investment Officer and Tom
Stricker, Wealth Advisor of Dubuque Bank and Trust attended the meeting. Tom is
now the point of contact for our account since Rita McCarthy retired. A handout
was provided with information on 2014 returns, holdings, annual account review
and other information.
Andrew disclosed their current invest strategy for the account: maintain a short
duration exposure vs. the market to limit potential losses once rates rise, refrain
from chasing capital gains in long-dated bonds as yields reach historic lows and
looking to add attractive callable agency paper to boost portfolio yields.
In reviewing 2014 results, long-term rates fell substantially in 2014 with the 10-year
Treasury yield declining from 3.03% to 2.17%. Meanwhile, short-term rates rose
with the 2-year Treasury note increasing from 0.38% to 0.67%. These rate moves
lead to low returns in the portfolio vs. the Intermediate Government Index. Falling
long-term rates boosted gains in long-dated bonds, while rising short-term rates
limited returns in short-dated bonds. The portfolio was concentrated in short-dated
paper, so missed the rally in longer-dated bonds.
A large holding in portfolio matures in October, will determine at that time the
investment vehicle(s) to acquire. Project 3-3.5% GDP growth in next year.
Andrew confirmed that Dubuque Bank and Trust is in compliance with the City's
current investment policy and the bank's appreciation of the City's business.
4. The Commission reviewed the December 2014 quarterly investment reports
prepared by Tami Lansing. Considerable unspent bond proceeds remain
(approximately $46 million) as projects taking time to complete and proceeds from
two recent bond issues received in past quarter. CDs for excess funds of Dubuque
Metropolitan Area Solid Waste Agency continue to be bid. This allows for
monitoring of CD rates and also provides investment opportunities to local financial
institutions.
The City recently borrowed approximately $27 million as part of Series 2014B
and Series 2014C. American Trust and Savings Bank provided the best interest
rate for investing the funds until spent. Dubuque Bank and Trust was the only
other bank that bid on investing these funds.
Dubuque Metropolitan Area Solid Waste Agency (DMASWA) recently borrowed
$4.5 million through the County. The proceeds will be transferred to the City in the
next couple months to invest and pay for capital projects at the landfill. Anticipate
spending all the funds in 2015. This is the first landfill borrowing in years.
5. Tami distributed investment return and fees information for the four investment
managers: Dubuque Bank and Trust, U.S. Bank through December 31 , 2014,
Dana Investment Advisors and First Community Trust. The returns of gross fees
for the past ten years will be provided to the individual managers and committee
members with the minutes from today's meeting.
6. One investment manager acquired a small number of bank certificates of deposits
from out of state banks, but not through the CDARS program. The City external
auditors reported on the investment as it did not comply with state code. The
investment did not put City money at any risk (CDs were covered by FDIC limit of
$250,000). All the certificates have been liquidated with no loss of principal.
7. There was no communication from the public, commission or staff to report
according to Ken.
8. Ken mentioned that an opening has remained on the commission for a few months
due to a move outside the City by a commissioner. The City Clerk's Office has the
opening posted on City website, a board in City Hall and occasionally runs on
Channel 8. Finance staff and committee members asked to keep the open
position in mind to help retain a potential candidate.
9. The next meeting of the Commission is scheduled for Wednesday, April 22, 2015,
at 3:00 p.m. A representative from U.S. Bank will be invited to the meeting.
10. Gary Ruden moved that the meeting adjourn. The motion was seconded by Steve
Reisdorf and approved unanimously. The meeting adjourned at 4:40 p.m.