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Interest grabs city's attention |
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Thursday, 28 January 2010 |
By WILLIAM LANEY
Managing Editor
With proceeds from the Hauss-Helms fund earning less than $1,000 in interest, members of a Wapa-koneta City Council intend to research investment avenues to increase the fund’s interest income.
Councilor-at-large Wilbur Wells, who chairs the Finance Committee, said his committee members’ intent is to earn additional interest income to help the city’s recreation programs.
“Right now, the committee is working on trying to find a more lucrative investment vehicle for that money because the interest rate we are getting on that money is very low,” Wells said after Wednesday’s Finance Committee meeting. “We are looking around and checking our options to see where that money can be moved to earn a higher interest rate and therefore a greater amount of interest income.”
Wells said committee member intend to look for ways to grow other funds as well by looking at interest-bearing accounts in which to place money saved by the city — for example such as money set aside in a fund to purchase fire trucks or police cruisers.
He said if the account is insured they should be able to deposit funds into that bank.
In 2009, the Recreation Department Trust Fund account earned 0.1 percent interest, Wells said which resulted in a “huge drop in revenue to the Recreation Department Fund.”
Wapakoneta 1st Ward Councilor Jim Neumeier, who is a member of the
Finance Committee and chair of the Parks and
Recreation Committee, developed a chart to show the revenue the principal, which is $726,963 as of Dec. 31, would make at various interest rates offered at area banks and nationally known banks.
Wells explained the investing of city funds requires the adherence to strict state and federal guidelines so investing this money may not be as easy as a person depositing money into a bank’s certificate of deposit (CD) program.
He said he also realizes the national economy is affecting interest rates, but he would like to see the money placed in an account earning a greater amount of interest.
Wells explained city administrators believed when the trust fund was created the approximately $700,000 would earn between $25,000 and $40,000 per year, depending on the interest rate and based on previous earnings. The interest income would be used to help subsidize recreational funds collected through a 1-mill property tax levy, which generates approximately $110,000 each year, and to be used to grow the trust fund.
Hauss-Helms Fund generated between $30,000 and $40,000 each year through dividends paid by the Telephone Service Co. to the fund through stock Besse Hauss-Helms donated to the city. When TSC sold to Hanson Communications Inc., the stock was sold and approximately $2 million placed in the fund, with $1.3 million of that amount used to build the Wapakoneta WaterPark.
Money from the Hauss-Helms Fund, now a city trust fund, can only be used for capital improvements.
“The question I have is with the amount being transferred from the Recreation Department Fund to the water park and where that money is coming from — from the tax levy or interest revenue,” Wells said. “I want to know because I do not want to start eating at that principal set aside in the trust fund.
“The Finance Committee will likely review the Recreation Department Fund again when we have more answers and more finite numbers regarding revenue and expenses,” he said. “Next week we intend to go over the General Fund so reviewing the Recreation Department spreadsheet will likely come at a future meeting.”
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Last Updated ( Friday, 29 January 2010 )
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