Hattiesburg is considering hiring an investment firm to be sure it's making the most money it can off of its cash reserves and leftover money from bond sales.
"Our proposal is that you allow our firm to work in connection with the city clerk and the chief financial officer to work with any cash reserves the city may have from month to month and year to year on your fiscal year, as well as any surplus funds that are derived from the sale of bonds," said Jeff Wilson, president and managing partner at Trinity Capital Companies. "That works two ways: if there's surplus after the bond has been fully funded and closed, as well as holding those funds until they're needed by the project for which they have been sold."
Wilson said the idea is to have someone constantly managing the city's funds be sure they are receiving the greatest market return.
"You need to expect reports from us that show you are getting above market returns, returns on the city's money that's better than you could do yourself," he said. "The arithmetic has to work."
Wilson said his company works with IHL, along with cities like Ridgeland and Laurel. Mayor DuPree said he's seen the success those cities have had, and hopes Hattiesburg could be the same.
"Ridgeland, they started this with Jeff a few years ago, and they have an excess 45 percent of their general fund budget in reserve by doing this process," DuPree said. "This investing doesn't cost us. I mean, it's using the money we already have, and that's the unique thing about this. We're using monies we already have instead of investing in something that's so speculative that you may lose it."
Wilson said, "We started with Laurel where they had a municipal reserve account of a little less than $1 million, and we have grown the municipal reserve account in 10 years to about $1.8 million, just by holding the income they've generated. When they issue bonds, we'll hold those bonds until the project funds are called. They'll issue bonds for street work. We hold the bonds until the contractor needs to be paid. We then transfer the bonds that way. Laurel now has approximately $20 million with us after starting with $1 million. "
Wilson said the money saved by the city could reduce its operating expenses and possibly provide money for something like extra technology or staff.
"It's important for you to realize you're leaving money on the table," Wilson said. "By taking zero risk, you can increase that cash flow to the city. Because the state mandates the items you can and cannot use to invest, if you do not use those items, you're wasting time and losing money."