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Town of Ulster gives supervisor fiscal options

by Crispin Kott
September 7, 2022
in Politics & Government
0
Town of Ulster Supervisor Jim Quigley. (Photo by Dion Ogust)

The Town of Ulster last week pre-approved a handful of investment options to give Supervisor James E. Quigley III the authority to make the most out of municipal money. 

During a workshop meeting held on Thursday, September 1, the Town Board voted unanimously to open an investment account with the Bank of Greene County to allow the town to take advantage of rising interest rates after an historically low period that began during the early stages of the COVID-19 pandemic in the spring of 2020. Interest rates began to rise again a few months ago, and according to the Board of Governors of the Federal Reserve System had nearly reached pre-pandemic levels at almost 2.5 percent last month. 

“It was next to zero for a long time,” said Quigley in an interview with Hudson Valley One. “Which meant that there was very little opportunity in the marketplace for the community to earn interest. Over the last four months in particular, there has been dramatic increases in the rates of interest in the discount rate. And there are projections in the financial markets of about five-and-a-half more points worth of adjustments.”

Quigley said the expectation is that the discount rate will increase by another 1.5 percent, giving the town increased earning opportunities for its surplus, or temporary, cash holdings. Opening the new Bank of Greene County investment account allows the town greater flexibility than they currently have because it gives them the ability to lock in interest rates on a 90-day term. 

“I did several years ago explore the possibility of setting up another account that would give us the ability to invest our money for a fixed term that was longer than the options offered by the bank, but it, it became too cumbersome,” Quigley said. 

The Town Board also authorized the supervisor to invest funds in a pair of cooperative investment systems, New York Cooperative Liquid Assets Securities System (NYCLASS) and New York Liquid Asset Fund (NYLAF). Both cooperatives are made up of municipal governments, school districts, and county governments, who pool their funds. The Town of Ulster could invest with either, could invest with both, or could even invest with neither. Opening the doors, Quigley said, allows the town to make the wisest, most prudent choice at the time they’re ready to invest. 

“NYCLASS gives us the ability to basically have a day-to-day depository relationship,” Quigley said. “And NYLAF offers the same day-to-day deposit option, but they also offer options that would range between a fixed term of one month at a fixed rate of interest through 12 months at a different rate of interest. So what we’re trying to do is lay the groundwork for flexibility here at the town to have these accounts authorized and prepared to be set up, so when the point in time comes and the rates of interest increase to a point that we believe that they’re going to be high, we would extend our term, our duration of our investment.”

Quigley added that NYCLASS and NYLAF both give investors opportunities that traditional banks do not. 

“The banks are limited in their structures,” Quigley said. “They have to make money. NYCLASS and NYLAF are both cooperatives: They’re run by an advisor, but they’re run for the benefit of the members. So therefore they have more flexibility, and they also have a bigger pool of assets where they can handle the custody issues more economically.” 

Under New York State law, the bank acts as a custodian for municipal transactions. 

“We put our deposits in a bank and we exceed the FDIC insurance level, the bank, the depository institution, is to provide us collateral that protects the municipality’s interest should they go belly up. And do that by depositing certain securities with a trustee, and that trustee sends me a letter every month saying in of these, these listed securities and they collateralize your deposit. This is required under state law. So when you take that requirement and translate it into a cooperative investment type structure, they have more transactions to be able to spread the cost of that trustee relationship over.”

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Crispin Kott

Crispin Kott was born in Chicago, raised in New York and has called everywhere from San Francisco to Los Angeles to Atlanta home. A music historian and failed drummer, he’s written for numerous print and online publications and has shared with his son Ian and daughter Marguerite a love of reading, writing and record collecting.

 Crispin Kott is the co-author of the Rock and Roll Explorer Guide to New York City (Globe Pequot Press, June 2018), the Little Book of Rock and Roll Wisdom (Lyons Press, October 2018), and the Rock and Roll Explorer Guide to San Francisco and the Bay Area (Globe Pequot Press, May 2021).

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