Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 2, 1991 TAG: 9104020612
SECTION: VIRGINIA PAGE: B1 EDITION: EVENING
SOURCE: JOEL TURNER MUNICIPAL WRITER
DATELINE: LENGTH: Medium
He's got so much in the bank he needs someone to help him invest it. At one point in the past year, shortly after real estate taxes had been collected, he had $44 million to invest temporarily.
Peters is Roanoke's city treasurer. He takes care of taxpayers' money, including funds that sometimes are not needed for a month or two to pay bills and other expenses.
This includes tax collections, bond money for unfinished building projects, idle sewer and water funds and money in other accounts.
City officials have decided to seek proposals from outside investment managers to handle temporary investments. The fee could be based on the amount invested by the manager or a flat amount. The investment manager would be responsible only for the temporary investment of city funds, and would not overlap with Joel Schlanger's duties as finance director or his overall supervision of city finances.
The funds available for temporary investment can vary widely, depending on the time of the year. The balance for the different accounts dipped to $21 million at one point in the past year. It is the highest immediately after tax collection deadlines, such as this week when the city will take in $16 million in real estate taxes.
Schlanger helps Peters invest the money for differing periods - ranging from overnight to as long as a year - until it is needed. "Our two offices work well together," Schlanger said, adding they cooperate closely to try to make the most on investments.
In fact, they earned $2.8 million by investing city money last year. But changing banking and financial conditions are making their job tougher, Peters said.
Interest rates on short-term investments have dropped more than 4 percent in the past two years. And the number of banks and other financial institutions eligible to accept investments of public funds have decreased because of mergers.
"We made a pretty good amount in the past year, but we think we could make it more if we had higher-interest rates locked in for a longer period," Peters said.
If the city had access to more-advanced computers and someone with training and knowledge in investments who could devote full time to the job, Peters said, it could take better advantage of rising and falling interest rates and broader investment opportunities.
Peters and Schlanger have looked into the possibility of creating a new position that would be responsible for temporary investments, but they have concluded the city should hire a professional money manager for the job.
The cost for the salary, fringe benefits, computer equipment, software and other expenses for a new full-time position to invest idle funds could be up to $100,000, Peters said.
"With the budget situation being what it is, and the city trying to hold the line on jobs, we did not think it would be considered favorably to create a new position this year," he said.
The city pension system, which has more than $100 million in assets, has used money managers to oversee its investments for nearly a decade and has been satisfied with the result, Schlanger said.
City Council has also revised the city code so officials can invest idle funds in a broader range of securities. Schlanger said this should also help increase investment income.
by CNB