Howard Lake-Waverly Herald, Jan. 14, 2002

Waverly council, bank discuss where deposits should be kept

By Lynda Jensen

Finances nearly split the Waverly City Council down the middle during its meeting Tuesday.

Two members of the Citizens State Bank of Waverly, Birdie Jackson and Jim Vrchota, approached the council about its recent attempts to take several bids for certificates of deposit and move the money to other banks.

The city owns three certificates of deposit, one for $100,000 that matures in July, another $100,000 that matures in January, and a third one for $250,000 in December. A fourth certificate of deposit for $150,000 was cashed in to pay for the recent purchase of railroad property, Clerk Debbie Ryks said.

Last month, Councilor Ken Hausladen researched seven area banks to find the best rate for the city's largest investment of $250,000.

The Citizens Bank of Waverly was very close to the best rate, being .07 percent away from the highest rate of 3.17 given by the Security State Bank of Howard Lake.

During the past meeting, Hausladen and Mayor Charlie Bush pressed the council to go with the best rate and show no favor to the Waverly bank, although Councilor John Hertzog steadfastly insisted that the city call the Waverly bank to give it a chance to match it, since the two rates were so close.

Bush stressed that he felt the council should be good steward of taxpayer money, and attempt to make the bidding process free of subjective decision making.

"In this position, we have to look at the benefit to taxpayers," Bush said.

The Waverly bank matched the rate, although Jackson and Vrchota were clearly frustrated that the council was so willing to take its certificates of deposit somewhere else, when the rate was so close.

Jackson asked the council to consider the overall picture instead of just one business transaction. The city would have lost $175 by keeping its $250,000 in a local bank, she said.

Since the bank donates two percent of its pre-tax earnings to Waverly and the surrounding area ­ amounting to $20,000 in outright donations and $52,000 in staff time doing volunteer work ­ this should have been considered in the long run, Jackson said.

"We have always had a good working relationship," Jackson said of the city and bank.

The impact of having the city, which is generally the largest investor in a small community, take its money out of town and setting a precedent doing so, may be the difference between the bank staying open or closing up, Jackson said.

Having the bank close would hit the community hard, Vrchota added.

Aside from this, the council should consider the need of a local bank in light of all the development that Waverly is experiencing.

"You're being penny wise and pound foolish," Jackson said.

"What number should we use?" Bush asked Jackson, asking where the cut off should be for interest rates if the city were to favor one or the other.

"It's not my job or place to tell you," Jackson said. She indicated that Hausladen should check the Internet if the council wanted the very best rate. "Put your money in California," she said.

Hausladen has only been checking Wright County banks to get a locally competitive rate, he said.

"I want to give them (the bank) our business," Hausladen said.

Councilor Gary Olson agreed with Vrchota and Jackson, saying the city should try to stick local.

This has also been the position of Hertzog, who also wants to stay local, if the rates are close enough.

Councilor Pam Henry-Neaton said little during the debate, except to tell Jackson that the bank should come to the meetings when the CDs are renewed. "There needs to be respect," she said.

"We got on the first agenda we could," Jackson said.

After the bank representatives left, Hausladen made a motion to set an ongoing policy in place to check a minimum of six areas banks and take the lowest rate within an eighth of an interest point. Bush seconded it for the sake of discussion.

"At what point do we move (the money in the CD)?" Bush said. For the time being, the council can go on a case-by-case basis, he said.

Hausladen pointed out that the bank originally gave a less favorable rate earlier in the day before.

Bush pointed out that it was unfair to continue giving bidders a chance to re-bid a project.

Following discussion, in which Hertzog gave estimates of money saved from interest rates, the resolution died, with Hausladen voting in favor and the others voting against

"To me, $500 isn't even enough to move it," Hertzog said.

However, at some point, the council should set a policy in place about this and avoid the hassle each time, Bush said.

Hausladen did not want to set a half point precedent, since he thought this was too generous.

Hertzog made a motion to check three banks and go with the Waverly bank if it was within a half percent. All voted in favor except Hausladen.

Back to Current Stories Menu | Back to Archives List

Howard Lake-Waverly Herald & Winsted-Lester Prairie Journal
Stories | Columns | Obituaries
Community Guides | Special Topics | Cool Stuff | Search | Home Page