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The city expects to make between $175,000 and $200,000 in interest annually by moving some of its funds to the local government investment pool, an investment fund available to local communities in the state.

According to a March 19 memo to the City Council from Cambridge Finance Director Perry Peregoy, this plan is part of an effort to “streamline administrative tasks and benefit from a broader suite of treasury services and capital market opportunities.” The memo the city would like to put “idle” funds, or money available for investment, into the Maryland Local Government Investment Pool to increase interest income.

Peregoy said about $8 to $10 million of its current deposits in five different financial institutions could be considered “idle.”

During a Cambridge City Council meeting March 24, the council authorized moving that money into the fund. Peregoy said at the meeting that the local government investment pool offers the highest interest rate the city can earn with minimal risk.

“It’s really what I would refer to as almost as risk-less an investment as you can find in today’s environment,” he said.

Peregoy said the city is currently making about 2.5% interest on all it’s money. He said the local government investment pool is currently offering a 4.4% interest rate.

Cambridge City Manager Glenn Steckman said with interest rates up right now, this move will be a “revenue generator.”

Peregoy also talked about the city’s relationships with local banks. He said the city won’t “materially alter” its local banking relationships.

“I’ve had preliminary conversations, and they all understand and they realize they can’t match,” Peregoy said about the seven banks the city currently deals with.

Peregoy said the city will continue to keep a “substantial amount of money” in banks in the community in order to maintain its relationships with those banks.

“This will just be part of that ongoing cash management and treasury function that I hope to expand over the next year within the city,” he said.