Vernon Hills seeks alternatives to grow investments

Vernon Hills is broadening its investment strategy to get more bang from its bucks.

Finance Director Larry Nakrin has suggested and the village board agreed to put some of its money in brokered certificates of deposit to produce a better yield.

With the sharp drop in returns on government agency bonds, such as treasuries, Nakrin suggested that brokered CDs, which are issued by various banks, could provide a “reasonable” alternative.

“Some of the traditional rules of what makes sense have just kind of gone by the wayside,” he said.

Nakrin identified seven banks in Delaware, New York and Utah, whose two- to three-year CDs are yielding between 0.85 percent and 1.25 percent. Current rates for more traditional investments, such as Federal Home Loan Bank notes, currently are at 0.50 percent or 0.60 percent, he said.

“You’d have to go out five years at this point to get 1 percent,” he said.

On Wednesday, Nakrin said he bought three, $250,000 CDs that mature in three years. Two paid 1.1 percent and a third was 1.15 percent.

The board had authorized the purchase of seven CDs totaling $1.75 million. When purchased, the certificates are federally insured up to $250,000.

The proceeds are delivered to what is known as a custody account held at U.S. Bank under a master agreement negotiated by the Illinois State Treasurer’s office, Nakrin said.

Nakrin said the seven banks being considered by the village were rated superior by IDC Financial Publishing, Inc., a bank rating service. He said he will screen more banks to determine their financial strength in search of better rates.

In separate financial business, the village’s general fund, which is used for most expenses, decreased by about $292,000 to $20.24 million, Nakrin reported earlier this week. Several non-routine payments, such as nearly $100,700 for the new consolidated dispatch center equipment and maintenance, contributed to the decline.

Regarding revenues, Vernon Hills in March received nearly $1.1 million in sales tax, the largest March receipt in village history, Nakrin reported. The amount, after the required rebate to CDW, was more than 9 percent higher than the same month last year and nearly 14 percent ahead of 2010.