What do you do with $26.8 million in proceeds from a bond issue deposited in a bank and not drawing interest? The Pratt County Commission and Pratt Regional Medical Center (PRMC) have hopefully found an answer to that problem.

The funds originated as a result of a half-cent sales tax issue passed by the citizens of Pratt County to remodel and construct a hospital facility in Pratt County. Piper Jaffray sold the bonds as a result of this passage and PRMC's proposed annual payment starting at $1.0 million and increasing by two-percent annually. If the sales tax and PRMC's annual payment are not sufficient to make the bond payments, the liability will fall back on the citizens of Pratt County as a tax increase, since the county owns the facility, according to Pratt County Commissioner Dwight Adams, who signed the agreement on behalf of the county.

The two entities have approved an investment advisory agreement with Piper Jaffray Investment Management LLC, a Delaware limited liability company, to manage those funds on behalf of the citizens of Pratt County. Piper Jaffray will charge two-tenths of one-percent calculated on the aggregate average daily balance (as a percent of assets) based upon third party asset valuations. This would amount to $53,600 as an annual charge for the first year.

Pratt County Counselor Robert Schmisseur indicated both local entities party to the agreement did not want to manage and invest the bond funds themselves. Piper Jaffray shall have the funds deposited in an investment account held by Commerce Bank, Kansas City, Mo., or such other bank or trust company, which agrees to follow pertinent regulations, as may hereafter be designated by the county and PRMC. At no time will Piper Jaffray have custody or physical control of the assets or cash in the investment account. All brokerage fees and commissions are to be paid out of the investment account. Piper Jaffray will exercise reasonable care in the selection and monitoring of brokers, dealers, or banks, giving reasonable consideration to commission rates and ability to execute transactions in a manner, which is in the best interest to PRMC and Pratt County.

"They (Piper Jaffray) are expensive, but they do a good job," said Schmisseur.

Uninvested cash held in the investment account may be automatically invested on a daily or periodic basis (as applicable) in money market mutual funds, or money market accounts. All such investments, according to Schmisseur, must be insured by federal regulations for security. Additionally, Schmisseur stated that investments would be staggered, so that funds for construction payments could be made in a timely manner.

The agreement is governed by, and construed in accordance with the laws of the state of Minnesota, and any disputes, which might arise, will be settled in the jurisdiction of the courts in Hemnepin County, Minn.