If the economy improves, the board could decide to invest even more money.
By SHERRI L. SHAULIS
VINDICATOR TRUMBULL STAFF
NILES -- Moving money to a new bank could earn the city more than $40,000 a year, officials say.
The city's reinvestment board -- Mayor Ralph A. Infante, Auditor Neil A. Buccino and Treasurer Richard Bullock -- agreed to invest $2 million from the city's light department in two certificates of deposit at First Place Bank.
With guaranteed interest rates of a little more than 2 1/2 percent for 22 months, the investments could earn as much as $22,000 each per year.
All interest earned will be placed in the general fund, which covers daily operations of the city, Bullock said.
"Those were the best rates we found for the time we wanted to invest," he said. "The rates were even higher than a two-year CD."
Niles, one of the few communities in Trumbull County not facing financial difficulties, has roughly $20 million in the general fund and $10 million in the light department's fund available for investment.
Infante said the decision was made to invest money from the light department and leave the general fund where it is.
"We use that too often," he said, adding it's better for the city to have access to that money in order to run the city.
Infante said that though city officials have gotten some flak over having excess money in the general and light department funds, many people don't realize the city lost money in investments in the past.
In 2000, Niles earned $1 million in interest on investments with Star Ohio banks; by last year, the figure dropped to about $370,000.
Those losses prompted the city to advertise earlier this year for financial institutions in the state willing to offer better rates.
Last month, the city added Merrill Lynch Westford Centre and Lytle and Company Questar Capital Corp. to its list of available banks. First Place was already on the list, Bullock said.
He added that the city could opt to invest even more money with any of the banks in the future, but economic stability will be the determining factor.
"We're always open to investing more," Bullock said. "But with the economy the way it is, we are better off leaving the general fund alone because that money can be easily switched around; it's liquid and easy to get to. If the economy improves the way people say it will and the rates go up, we could invest more."