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District seeks board approval to use Ehlers and Ampersand to manage $145 million referendum proceeds
Summary
District staff recommended partnering with Ehlers and Ampersand to manage proceeds of a passed $145 million referendum, citing interest-earning strategy, arbitrage management and tiered CD placements; staff estimated interest earnings around $9.5–10 million under current assumptions.
District finance staff asked the board to approve Ehlers and Ampersand as partners to manage the proceeds from a $145 million referendum passed in November, describing a tiered investment strategy to maximize interest while managing potential arbitrage rebate obligations to the federal government.
Recommendation and rationale: Mr. Crumley told the board the referendum dollars will be spent over multiple years as construction and related purchases proceed and that the district should use a combined strategy: Ampersand to place short-term CDs and Ehlers to manage treasury or tax-exempt placements and in-house arbitrage calculations. He said Ellers (Ehlers) and Ampersand proposed a partnership to combine strengths in treasuries and the CD market.
Arbitrage and expected earnings: Staff explained federal arbitrage rules may require some rebate to the federal government if interest earnings exceed certain thresholds. Using a working assumption of a 3% arbitrage threshold, staff estimated interest earnings of about $9.5–10.0 million; staff emphasized the final amount depends on market conditions and draw schedules tied to the construction timeline.
Account structure and vendor payments: District staff said Ehlers would hold the primary account and coordinate with Ampersand to place CDs; the district declined Ampersand’s vendor-payment service and said it will cut vendor checks itself. Staff also noted some fees for placement are baked into interest yields and would reduce arbitrage-eligible returns.
Board questions and follow-up: Board members asked how accounts would be structured and whether fees would reduce earnings; staff said fees are considered as part of the overall management approach and are factored into rebate projections. The board was asked to approve Ehlers and Ampersand at the next meeting to finalize the arrangement.
Ending: The board asked staff to bring a formal approval at the next board meeting; staff said a draw schedule from the construction manager will guide monthly placements and the choice of instruments as the projects move forward.
