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City treasurer reports investments outpacing bond interest; staff to brief council quarterly
Summary
City Treasurer Casey Hunsaker told the North Ogden City Council that the city’s portfolio is earning more than the interest the city pays on its outstanding bonds, producing a small positive arbitrage. He recommended continuing to monitor rates and brought quarterly performance figures.
City Treasurer Casey Hunsaker told the North Ogden City Council on a quarterly investment update that the city’s portfolio is currently earning more interest than the city pays on its tax‑exempt bonds, producing a modest positive arbitrage.
Hunsaker said the city invested $5,000,000 about 18 months earlier through METR public investments and participates in the state Public Treasurers’ Investment Fund (PTIF). "We've accrued $126,003 of interest" in the METR account and an unrealized gain of $83,280, Hunsaker said, representing a rate of return for that holding of about 4.186 percent and a weighted average maturity of roughly 2.5 years. He said the PTIF balance for the city was $24,585,351.30 and that the fund earned roughly $2,257,069.01 over the last fiscal year on the city’s PTIF balance.
Hunsaker contrasted those returns with the city’s outstanding bond tranches for the building, noting the Series 2021 tranche carried an interest rate near 0.9 percent and Series 2022 at about 2.6 percent. He told the council that in May the city paid about $95,000 in combined bond interest, while the general fund balance would have earned about $145,359.43 in interest at current rates: "Having that debt right now is making us money because we're not paying too high of an interest rate," Hunsaker said.
Council members asked procedural questions about payment timing and whether the May payment was interest only; Hunsaker clarified that the city pays interest in May and principal plus interest in November. He also summarized forecaster expectations that the federal funds rate could fall modestly later in the year, which would narrow the spread between investment yields and borrowing costs.
The treasurer said staff will continue quarterly reporting so council can assess whether prepaying principal or other actions are warranted as maturities and market conditions change.
The presentation covered realized and unrealized returns, maturity profiles, and comparisons between METR holdings and PTIF performance; Hunsaker recommended continued monitoring rather than an immediate change to debt strategy.
Ending: Hunsaker said he will return in three months with another quarterly update and to report on any material shifts in market or portfolio performance.
