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rr-- FEB m 8 19911 Bou 91 F,� JE 707 INTEREST RATE PAID ON DEPOSITS Utility Services Director Terry Pinto commented from the following memo dated February 2, 1994: DATE: February 2, 1994 TO: JAMES E. CHANDLER COUNTY ADMINISTRATOR FROM: TERRANCE.G. PINT DIRECTOR OF UTI SERVICES PREPARED HARRY E. ASHER AND STAFFED ASSISTANT DIRECT4TILITYUSERVICES BY: SUBJECT: INTEREST RATE PAID ON DEPOSITS BACKGROUND The County established its current interest rate paid on deposits in the amount of 6% per annum with the adoption of Resolution 91-31. A resolution of Indian River County, Florida adopting rates, fees and charges for the Department of Utility Services, pursuant to the authority of Ordinance No. 91=9, effective April 1, 1991. ANALYSIS The current interest rate of 6% is greater than the interest earned on this account. This could automatically cause a deficit in the account if the interest rate is lowered. The Department has reviewed the current savings interest yields locally (attached)and these rates have dropped significantly at the present time. The Department proposes to change the rate from the current rate of 6% per annum (0.5% per month) to 2.5% per annum (0.2083$ per month). This rate was evaluated based on the current money market rates of 2.31%. RECOMMENDATION The staff of the Department of Utility Services recommends approval of the attached resolution changing this interest rate paid on customer deposits to 2.5% per annum. Commissioner Macht asked if the proposed rate is linked to the Federal interest rates. OMB Director Joe Baird reported that the rate is comparable to the rate being paid locally on money market funds or short-term certificates of deposit. Commissioner Adams noticed that the previous rate was in effect since 1991, and she wondered if the rates should be reviewed more frequently. Commissioner Macht pointed out that the rate could be adjusted any time there is a significant change in short-term interest rates. 28