Due diligence or micro-management? 
by Brian Wilson
The Star News
October 29, 2009 —  The Medford City Council is split down the middle when it comes to how much of a free hand their financial consultant should have.
Alderman split three to three at Tuesday's committee of the whole meeting on a motion to set a $2 million cap on the amount of city's investments being managed by BBE Community Investment Partners and leave the current process of approving investment options the way it is now and review the issue in a year.
Alderman Arlene Parent supported the cap saying “The ink on the first investment is barely dry” and questioning why the city was looking at changing things six weeks after approving hiring the consultant. She said the city meets every week and that with the agendas posted to include potential action on investment options it would be a matter of calling a special council meeting after a committee of the whole meeting if the decision had to be made right away. Also supporting the cap were JoAnn Simek and Pat DeChatelets.
Alderman Mike Riggle took the opposite approach saying the city hired the consultant to do a job and that they should not attempt to micromanage him and tie his hands. “It is our due diligence to let him do his thing,” he said. Riggle supported the city staff recommendation which would have BBE solicit certificate of deposit rates for investment options and give them to the city treasurer who would then give them to the mayor and/or city coordinator for review and authorization to make the investment.
Currently, the investment options go to the full council for that body to make the decision. Under the proposal presented by mayor Mike Wellner, the council would receive updates every three months on the investments and be told where city money was invested as changes were made.
Riggle opposed capping the money and said if anything the city should give more money to the consultant to invest and make more money for the city. Riggle said he is all for doing business in Medford when possible but noted the city earlier in the meeting approved going with an insurance agent based in Rhinelander and had no qualms about that and questioned how many on council kept all their own financial dealings with Medford banks. Clem Johnson and Peggy Kraschnewski joined Riggle in opposing the proposed cap.
City coordinator John Fales, clarified that the primary reason for going with the consultant was not to get the best interest rates, but rather was to increase security for city finances. The federal government insures deposits up to a set amount and a state pool provides additional protection beyond that. Beyond the deposit insurance, large investors can seek collateralization from financial institutions. However, Fales is concerned that not enough collateralization has been done in regard to the approximately $9 million in funds the city has invested at local financial institutions. He explained that if one of the banks were to go under, the city would be at a loss for the portion not secured.
One of the issues the city faces is that because collateralization costs the banks money, additional security comes at a cost of lower interest rates. The goal of the investment strategy employed by the consultant is to spread the money around enough so that it falls below the deposit insurance thresholds.
“I think we are cutting off our feet and our hands and everything else in between,” said Mayor Mike Wellner about the proposed cap. He questioned if the city council was ever going to not choose the bank with the best interest rate and opposed what he sees as micromanaging the financial consultant's job.
In the end, with a three to three tie vote, the issue goes to next week's city council meeting without a recommendation. Aldermen Mike Bub and Greg Knight were absent.
In other business, the council:
´ Recommended adding 18 cents to the recycling and solid waste fee charged by city for 2010. Earlier this year, the city approved raising the rates, but in typing up the resolution the wrong rates were used. Under the new rates, the cost will go from $14.72 per month in 2009 to $15.24 in 2010 for those over 62 and from $15.73 per month in 2009 to $16.25 per month in 2010.
´ Recommended approving a parade permit for an escort for The Wall that Heals when it arrives in Medford on either November 9 or 10. The parade will go along Hwy 13 from the south city limits to Clark Street and stop at Medford Area Middle School where the traveling replica of the Vietnam Veterans Memorial will be displayed.
´ Recommended switching to League Mutual Insurance Company for the city's auto, machinery, crime, general liability, law enforcement, public officials, and workers compensation insurance at a combined cost of $89,174. In 2009, the city's premiums totaled $116,826 after a dividend from Wausau Insurance Company was factored in. This year, the city sought rates from both Liberty Mutual (formerly Wausau Insurance) and the League Mutual. The League Mutual insurance agent the city is working with is based in Rhinelander.
´ Recommended hiring Elk River Assessments for a new three-year contract to maintain the city's assessment rolls. The cost will be $15,000 for 2010, $16,000 for 2011 and $16,000 in 2012 for maintenance only or a complete revaluation at a cost of $45,000. Fales said he felt the city would not need to do a revaluation in 2012 because they would be within the compliance period for assessment versus equalized value ratio.
´ Recommended changes to the City of Medford Recreation Commission bylaws. The changes were the result of a 45-minute discussion at the last commission meeting. The major change with the bylaws is clarification for membership in the group and ability to request funds. Under the changes any group requesting funding must meet one of the following criteria: Volunteer-run organization where officers, coaches and organizers are not paid; the Frances L. Simek Memorial Library; or a non-profit 501c(3) organization.

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