Council reviews $80 million in investments for state report
Jan 26, 2017 04:22PM ● Published by Kelly Cannon
In total, Draper City has $80,793,000 in cash investments dispersed among 15 accounts. (Draper City)
The Draper City Council reviewed the city’s investments before sending the report to the state treasurer’s office. The Utah Money Management Act requires each municipality to submit a report on its investments every six months. The council reviewed the report during its study session on Jan. 17.
The report was compiled by a city accountant Lourdes Ramos, in replace of the former city treasurer Steven Guy who passed away in December.
“She’s been acting as the temporary treasurer for the city since Steve passed away,” said Bob Wylie, the finance director for Draper. “She’s the one who prepared this.”
In total, the city has $80,793,000 in cash dispersed through 15 different accounts. Wylie explained to the council how the money was broken up among the accounts.
The city’s main checking account is with Wells Fargo. As of December 2016, the city held $1.6 million in the account.
The city recently started a new investment with Morton Advisors.
“This is the new investment advisors that the city contracted with. The city went out last summer and got them on board as our advisors,” Wylie said. “Right now, we have $10 million invested with them.”
The Morton Advisors account has an interest rate of 1.47 percent. This is a larger percentage interest rate than the two public treasury investment fund accounts, which are managed by the state. Both PTIF accounts have an interest rate of only 1.14 percent. The two accounts have a combined $67 million: the RDA account has about $12 million and the general account has about $55 million.
“You can see we’re getting a little bit better of a return with the Morton Advisors. We’re going to build up that balance a little bit more and shifting it from the PTIF into the Morton Advisors,” Wylie said.
Councilman William Rappleye asked Wylie if the investments with Morton Advisors were a higher risk investment in order to yield the higher interest rate. Wylie said they weren’t. Rather, they were primarily government securities.
“We meet with them quarterly and they produce our investment page. A lot of them are in government securities but they also buy the bonds,” Wylie said. “We can still pull that out in a day. It’s still liquid enough we can do that.”
Wylie went on to explain only six advisors are regulated with the state and are allowed to handle these types of investments. Morton Advisors is one of the larger of these advisors that handle municipalities.
Draper has eight accounts with US Bank for the purpose of making monthly bond payments. Wylie explained US Bank functions as the trustee for the bonds.
“We send them (the payments). They hold it until the payments are due,” Wylie said.
The city also has two certificates of deposits (CDs). One is with the Bank of American Fork for $250,000 at a 0.4 percent interest. The other is with Home Savings Bank for $254,000 at 1 percent interest.
“When those renew, we just take the interest out of that,” Wylie said.
Draper retains an old minimal account with Bank of American Fork for $2,000.