West Point Looks to Invest

Published 10:00 am Saturday, March 30, 2024

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The city of West Point is looking into investing. At Tuesday night’s council meeting, City Manager Ed Moon recommended the city put $10 million in the Georgia Fund 1. 

The Georgia Fund 1 is an investment pool managed in trust by the Office of the State Treasurer, in which the money is invested into relatively safe and high-yield investments. 

“This is an opportunity to invest some city funds into the GF1. It’s offered by the state of Georgia to counties, municipalities, public colleges and universities boards of education, special districts, state agencies and other authorized entities as a conservative, efficient and liquid investment alternative,” Moon said. 

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Local entities must pass an electronic resolution to invest in the pool. The investments are not insured by the FDIC and FRB, which is the entity that often insures financial institutions. However, GF1 does have a AAA rating from S&P. 

“The fund started in January of 2011, with a 0.17 percent interest rate, in May of 2023 the fund was paying 5 percent…on the dollars that were invested,” Moon said.

As of January of this year, there were $33.6 billion of assets in the fund. Around 9.6 percent of entities in the fund are cities, on average cities are putting $6 million into the fund. West Point does not currently have funds in GF1. 

Moon recommended the council pass a resolution to participate in the fund and once authorized, add $10 million to it. The $10 million would come from the water and sewer funds, and the interest gained from the fund would go to the new water intake the city recently announced.

“The reason that we’re doing this is because we are looking at $16 million in debt for the water plant improvements,” Moon said. “So this will generate significant revenue for the project to support both our bond transaction and, hopefully, make our financial position look better, and it’ll be good revenue for the city as well.” 

The city manager added that putting funds in or taking them out is easily done. 

“You can put funds in today. They’re in the fund tomorrow. If you want to take the funds out today, you would have the funds back tomorrow and there’s no penalty to withdraw,” Moon said. 

Council appeared to be in favor of it, with council member Joel Finlay saying, “Why haven’t we done this sooner?”

Interest rates have increased significantly since 2022, meaning the return on GF1 for its contributors is also at its height. The council will vote on the resolution to join the fund at the next business meeting on April 8.