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The City of Skagway's investment policy is in the process of going through a significant change.
Just how significant is still up to the Skagway City Council, which has drafted an ordinance that, if passed, will expand investment opportunities from a current portfolio of municipal and corporate bonds toward a more diversified portfolio that includes a percentage of stocks, mutual funds and other equities.
The city is looking for public input on new language in the ordinance that sets caps for how much can be invested and where.
At a work session on Jan. 7, the council as a whole marked up the ordinance, which was first introduced in December. The mark-up was presented on Jan. 17.
Because of the ordinance's impact on city finances, the council wants to have a third reading in early February as well. Public hearings will take place at both meetings.
At stake is how the city will invest its multi-million dollar nest egg. As of November 2001, the city had $5.5 million in investments and $2.6 million in cash on hand, said City Manager Bob Ward. Most of the $5.5 million is in government bonds managed by Wells Fargo, with one corporate bond managed by U.S. Bank. None is invested in stocks or mutual funds.
The city began considering a change in its investment strategy last year when Wells Fargo acquired National Bank of Alaska. Ward said there was a valid perception in the Alaska investment community that Skagway was loyal to NBA, which was founded in Skagway. But after the merger other investment firms started calling.
In addition to major names like Salomon Smith Barney, one of these interested parties was former Mayor and City Manager Skip Elliott, who started a financial consulting firm in Juneau last year. The council invited Elliott, along with representatives from Wells Fargo and U.S. Bank, to a Finance Committee work session last month.
Ward said the council heard investment strategies from all three to get a "broad spectrum of all the interest out there." For example, he said, U.S. Bank advised for the current strategy of bonds only, Elliott advised going more into stocks and equities, and Wells Fargo fell somewhere in between. Ward stressed that the three representatives would "have to get in line" with the other interested parties after the city prepares a Request For Proposals for managing its investments.