Grand Forks tweaks investment plan to save money for Alerus Center work

Grand Forks city officials agreed on a marginally riskier investment strategy for a city portfolio that, they hope, will be able to outstrip inflation and leave enough money for future repairs to the Alerus Center.

City Council members on Monday voted unanimously to adopt a more lenient policy by which city administrators will invest the money in a portfolio the city keeps for the Alerus Center. About $8.5 million in that portfolio is invested in federally-backed securities and a certificate of deposit with Bremer Bank, according to city staff. Another $2 million is yet to be invested.

The city enacted a sales tax to repay the bonds it issued to build the Alerus Center, but the money generated by that tax outstrips the money the city owes each year on the bonds. Some of that surplus goes toward yearly maintenance, and the rest has been moved into the center’s investment account. City administrators plan to add $2 million to the portfolio this year and another $2 million in 2022, according to Finance Director Maureen Storstad.

The new policy stipulates that the city will invest 75% of the money it puts into that account in the way it has thus far. The remaining 25% is set to go to investments with a modestly greater risk than its existing ones, such as the S&P 500 and index funds. North Dakota law limits the city to investments in bonds backed by the federal government, federally insured certificates of deposit, and other low-risk investments, but the city’s attorneys believe their authority as a home-rule city gives them the leeway to make investments beyond those.

The new strategy, plus continually setting aside surplus money each year, could mean the portfolio’s balance could swell from the reported $10.5 million there thus far to an estimated $45.73 million in 2029. That’s the same year the sales tax expires, and, the plan goes, money in the portfolio would pay for future long-term maintenance projects through 2064.

“I think it’s a really prudent thing to do,” Mayor Brandon Bochenski said. “It’s setting us up well for the future so whoever’s sitting in our seats will have a lot easier decisions to make.”

In related news, council members

• Voted to pay a further $1 million toward the city’s “old” pension plan, of which city staff whose first day on the job predates Jan. 1, 1996, are a part. The move means Grand Forks is set to pay approximately $4.5 million to that plan this year. It’s an effort to chip away at the total cost contracted actuaries believe the city will ultimately have to pay to the plan’s users, according to city staff.
• Agreed to settle a class-action opioid lawsuit with McKesson, Cardinal Health and other distributors, plus Jannssen Pharmaceuticals and Johnson & Johnson, its parent company. The city initially joined the class action suit on its own, and Monday’s vote means it’ll move under the banner of the North Dakota state government. Whatever money results from the settlement would be paid to the city via the state government, and Grand Forks staffers are still working on an agreement with the state that would determine how much the city would receive.
• Agreed to divvy up the former site of West Elementary, a longstanding school that Grand Forks Public Schools officials

  voted to permanently close in March

  and sell in September. The school was

  demolished earlier this month

  . Developers plan to turn the site into space for 11 single-family homes.