Earning one per cent or less on its investments is simply not cutting the mustard for the Town of Huntsville. Huntsville Council at its November 23 meeting agreed to move forward with another investment tool for greater returns.
“Under the Municipal Act the Town has very limited options when making investments. The Town must not just act reasonably, but is legislated as to which type of investments is allowable. AMO (Association of Municipalities of Ontario) set up a program in 1993 to allow municipalities to ‘co-mingle’ investments with the Ontario Public Sector. Currently the earnings on investments with this program are higher than amounts being earned on deposit accounts,” states a report by Huntsville Treasurer Julia Finch.
Her report adds that traditionally the Town has earned ‘reasonable’ interest with GICs, but that has changed. “In today’s market the interest earned on GICs is less than the rates being earned on our deposits (less than 1 per cent). Alternative investments need to be explored to ensure that the Town is earning a sufficient return on investments,” she adds.
Finch used as an example cemetery funds held in trust by the Town in 2014. Her report states that as of December 31 of that same year, the Town earned an estimated $12,225 in interest or 1.95 per cent on $628,377.
“The funds that are held by the Town in trust must be held in perpetuity, however, interest earned on these funds may be used for operation costs relating to the cemeteries. Interest is budgeted each year in the cemetery budget and is used to offset the tax impact,” reads Finch’s report.
Huntsville Mayor Scott Aitchison referred to AMO’s program as vehicle where smaller municipalities with limited money to invest can invest in a fund of some heft so they can generate better returns.
He said he thinks the fund is sitting at an estimated $700 million in investments and is made up of “quite a broad range in municipalities and sizes that are able to participate and help each other out at the same time.”
Aitchison said Finch is investigating other monies that could also be invested under AMO’s fund.
So we may actually wind up being able to invest even more money into that fund – one more minor little tool we can use to help generate more revenue and build our reserves up and spend more money on roads. Roads, roads, roads.
Mayor Scott Aitchison
Huntsville CAO Denise Corry said a more comprehensive report on investment strategies for the Town will be presented to council by the Treasurer. She said an initial report on cemetery reserve funds was presented to council because the GICs they’re in are coming due.
“Those GICs aren’t worth the paper they’re printed on,” noted Aitchison.
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