City Hall, Solid Waste Agency set to recoup most of what proved lousy 2007 investments

CEDAR RAPIDS - City Hall and the Cedar Rapids/Linn County Solid Waste Agency are getting most of their money back on what proved to be lousy investments totaling nearly $8 million back in 2007.

The good news comes in the form of proposed legal settlements with Wells Fargo Brokerage Services LLC.

Back in 2007, the city invested $1.948 million in short-term “commercial paper,” which provides money to businesses to meet their short-term, cash-flow needs. However, this investment, called Golden Key Ltd., which was supposed to pay the city $2 million after several months, flopped. In June 2008, the city sued Wells Fargo Brokerage Services LLC.

Similarly, the solid waste agency invested almost $6 million in a commercial paper called Rhinebridge LLC, which also tanked. The agency also sued Wells Fargo Brokerage Services LLC.

On Tuesday evening, the City Council is expected to approve a settlement of the lawsuit, which according to city documents, will pay the city all but $250,000 of its original $1.948 million investment. The settlement also will pay the city $110,000 in attorney's fees and court costs, the city documents say.

The solid waste agency managed to recoup more than half of its initial investment in 2008. The current proposed settlement of its lawsuit will return the rest of the initial investment minus $250,000 plus $134,000 in attorney fees and court costs, the agency said.

Both the city and solid waste agency lost additional money by not being able to obtain interest over nearly three years from the investments.