TOWER- After years of effort, the city of Tower’s Gundersen Trust Fund has received court approval for the transfer of its assets to the Duluth-Superior Area Community Foundation (DSACF).
“It’s done,” said Gundersen Trust treasurer Steve Wilson, who helped lead the effort. The change will generate a steady and predictable source of revenue to continue the mission of the original trust. While the trusts attorney has a little more work to complete, Wilson said the process should be fully complete within a couple months.
The Gundersen Trust was formed back in 1992, with proceeds of the sale of forest lands donated to the city by Martin and Elizabeth Gundersen. Annual proceeds from the trust were to support the city, with 75-percent going to the city’s general fund, and the rest donated for community education and recreation in the city’s forest lands.
In recent years, the money earned by the trust’s almost million-dollar nest egg barely covered the annual expenses for legal and accounting services because it was required to invest in specific types of government-backed funds which were paying well below one-percent in interest.
Once the fund is invested with the DSACF, the city will receive an annual payment, which will vary year-to-year but is expected to be around 3.5 - 5 percent of the value of the fund. Mark Danielson, from the DSACF, told the board last fall that this year’s distribution of assets that the DSACF oversees is expected to be between 3.5 - 4.5-percent. The fund also includes a $258,000 tax bond that was issued by the city back in 2015, to pay some of the expenses of the harbor project. The city will continue to pay back that bond to the DSACF.
The city’s Gundersen Trust Board will need to be dissolved, said Wilson, since they are no longer in charge of the trust’s investments. In its place, the city will be appointing a committee that will set up the guidelines, criteria, and process for awarding funding from the new fund’s proceeds. It is expected that 75-percent will still go to the city’s general fund, but the remaining 25-percent will be used for community grants. While the Gundersen Trust limited donations for community education and recreation in the city’s forest lands, the new committee will have the option of widening the qualifications so the fund can benefit other Tower-area nonprofits as well.
“The committee gets to do the fun stuff,” said Wilson.
The Gundersen Trust Board considered three different proposals from community trusts, as well as one from a local bank, that were interested in managing the trust’s money. DSACF was chosen because it had the lowest management fees, as well as a proven track record for managing similar funds.
Grants will be awarded at least once a year, but the city may have the option of awarding grants more often.