TOWER— Members of the Gunderson Trust are trying to figure out how to make nearly a million dollars in assets provide some form of return for the city of Tower. The trust, which once provided as much as $35,000 annually to the city when interest rates were higher, has barely paid its bills for auditing and other minor expenses the past several years.
It’s a victim of low interest rates for federally-backed bonds and CDs, along with years of minimal oversight under the city’s previous administration.
Yet, as members of the board are discovering, picking up the pieces and adjusting the trust’s investment strategy is complicated by a lack of information. “It’s been a black hole of record-keeping,” said board member Steve Wilson during a trust board meeting last week.
City officials have been trying to assemble relevant documents, many of which were only available in court records in Virginia. Even bank statements were unavailable to the board as of last week, since the city hasn’t retained those records for years and the minimal financial records that are available raise as many questions as they answer.
The most recent report from the Gunderson treasurer, produced earlier this year, shows large deposits to the trust, of as much as $420,000 in one case, yet available city bank records show no corresponding transfers from city accounts, so the source of such large transfers remains a mystery.
Even the nature of the trust itself remains unclear. Mayor Orlyn Kringstad noted a five-year old story in the Timberjay that reported on discussion at a Gunderson Trust meeting suggesting that the trust had been converted to a 501c3 nonprofit. Yet Kringstad said he could find no record that the trust had ever been incorporated in Minnesota and he could find no bylaws.
The trust board has maintained officers for years, yet Kringstad noted that the trust’s founding documents say nothing about officers and there were no job descriptions for those positions.
City officials are now trying to address that, as the trust board’s meeting packet included job descriptions for board chair, vice chair, secretary, and treasurer.
The board, which is supposed to be comprised of seven members, also took steps to replenish its depleted ranks. With only four current members, following the resignation of Eric Norberg, the board approved a motion to recommend the council appoint John Burgess to fill one of the vacancies.
The board also discussed how to improve the rate of return on the trust’s assets, which total approximately $990,000. Board member Steve Wilson had suggested that the trust hire a management group that would likely generate significantly higher returns. For nearly a decade, the trust has generated returns of less than one percent, most of which has to be retained under the trust’s rules to keep pace with inflation.
Kringstad agreed with the need for more professional oversight and he reported on his conversation with a representative of the Duluth-Superior Area Community Foundation, which manages small trusts for other communities in northeastern Minnesota and northern Wisconsin. Kringstad noted that since 1992, the trust had donated $279,168 to the city’s general fund, plus an additional $55,624 to the city’s forestry fund and $37,222 to local community education. At its peak in 2003, the trust generated investment gains of as much as $46,000 a year, but the trust has generated almost nothing in recent years.
Yet, board members were unsure how effective a management firm might be, given some of the limitations of the Gunderson Trust’s investment requirements. Even those requirements are unclear, however, so the board appointed Kringstad and Wilson to a subcommittee to obtain more information on investment possibilities and to consult with legal counsel on the current limitations on the types of investments the trust can make. They’ll report back on their findings at the trust’s next board meeting, set for Dec. 17.