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University Heights moves operating account to Hillsbank, authorizes investment option
Summary
The City Council voted unanimously to move the city’s operating account to Hills Bank and approved a resolution allowing possible participation in the Iowa Public Agency Investment Trust, with councilmembers urging diversification and caution because such investments are not FDIC insured.
The University Heights City Council on April 14 voted unanimously to transfer its operating account to Hills Bank and approved a separate resolution to allow the city to participate in the Iowa Public Agency Investment Trust (IPA) when staff determines it is prudent.
City Treasurer John said Hills Bank offered a competitive yield: the bank’s quote was 0.25 percentage points below the federal funds rate in effect at the time, which John said would amount to roughly a 3.5% yield on funds placed in the operating account compared with essentially zero interest at the current bank. "We reached out to local institutions and Hills Bank came in very strong on that offer," John said.
The council adopted the motion to move the operating account after Treasurer John, City Administrator Troy and staff described the move as limited to operating funds only, not reserves or all city funds. John said staff would return with a formal reserve-minimum recommendation after tax season to calibrate how much the city should keep liquid in the operating account.
Separately, the council approved Resolution 2610 to add IPA as an option for investing city funds if and when staff judges it appropriate. Troy emphasized IPA is a distinct entity from a previously discredited state trust referenced by residents and stressed the resolution does not commit the city to invest: "This simply adds the option for the city to participate when we believe it's prudent," he said.
Councilmembers voiced support for both moves while urging caution. Councilmember Nick said he favored keeping money with local banks and noted the importance of diversification and limits on exposure because accounts placed through pooled investments are not FDIC insured. "We need to stay diversified and be careful with how much we commit," Nick said.
The motion to move the operating account to Hills Bank passed on a council motion and second with a unanimous voice vote. Resolution 2610 passed on a 5–0 roll-call vote.
