City to pursue more aggressive investments

August 5, 2011

By Tim Pfarr

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The City Council voted at its July 5 meeting to invest its extra money more aggressively than it has in the past, switching from Bank of America to KeyBank for the task.

The council will likely decide this month what it will invest in, but City Manager Rob Wyman said it would likely invest in government-backed treasury bonds.

The choice to depart from Bank of America came down to poor service, Wyman said.

By banking and investing with KeyBank, the city will get a discount on its investment broker fees.

As is, the city earns about $18,000 in interest each year by keeping its money in the state’s Local Government Investment Pool, which Wyman said is very low for the amount of money invested, about $7.5 million.

“You could be making hundreds of thousands of dollars a year just on that,” he said, comparing the city’s conservative investment practices to more aggressive, private investment practices.

There is a slight increase in risk by making the change, as the city would lose money if the federal government defaulted on its bond indebtedness. It’s much more likely the new investments will yield interest of about three times what the city is collecting through the investment pool, Wyman said.

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