The Homer City Council is considering an ordinance that will end its contract with a company hired to invest money saved in the city’s Permanent Fund.
The Permanent Fund was created in 2006 to hold settlement money awarded for the Exxon Valdez Oil Spill. In 2010 the city was awarded $1.1 million for the spill. According to Homer Finance Director John Li the fund is now worth close to $2 million.
Homer Mayor Beth Wythe says that money must be used in a very specific way.
“Part of the investment is designed to earn revenues that feed into growing the fund and the other part of the fund is designed to earn revenues that can be allocated to specific expenditures or the general fund,” said Wythe.
But, a city memo says the fund isn’t earning much revenue. Homer officials say the fund’s current performance isn’t good enough to justify paying U.S. Bank to manage it.
“We were paying them fees to do that for us. We feel that can happen in house with no additional expense to us. So the intention was purely to bring the management in house,” said Wythe.
Finance Director Li estimates the city pays U.S. Bank about $15,000 per year.
If the ordinance passes the city council will create a plan that specifies who on the city staff will be in charge of the fund.
City council will discuss the ordinance again at its January 25th meeting.
Quinton Chandler is a reporter at KTOO in Juneau.
