FIN 2017-05-02 Item 2B - Report - 2016 4th Quarter Investment Report

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INFORMATIONAL MEMO Page 2 annually and will be paid in full by December 2022. Interest accrued through December 2016 is $19,393. Attached to the investment report are amortization schedules for both loans to the MPD. Policy Compliance and Liquidity Analysis As of the end of the 4th quarter, the portfolio profile is well within the range of all the investment policy parameters. There is currently a healthy mix of investments with a range of maturity dates. Current investments allow for adequate cash flow requirements. Fund Cash & Investment Balances Year over Year Comparison Total fund cash and investments balances are $91.8 million, which is $42.4 million higher than fourth quarter 2015. The general fund total cash and investment balance is $9.3 million, which is $877K higher than December of 2015. Overall, revenues exceeded expenditures for the year. Special revenue funds all show a year-over-year increase. Over $400 thousand was transferred to the contingency fund from the general fund per the City's minimum fund balance policy. Additionally, the drug seizure fund received almost $539 thousand in seizure funds from the federal government related to the motel seizure that occurred in 2013. In November, voters approved a $77 million bond measure to fund public safety facilities and equipment. The first debt issue occurred in December, increasing fund balance in the capital projects funds group by $36.8 million. Throughout 2016, the Land Acquisition, Recreation, and Park Development fund received $1.4 million in real estate excise tax, accounting for most of the $1.6 cash & investment increase. This is considerably higher than most years. Utility funds all have increases in fund balances from the prior year. Investment Environment The Federal Reserve raised interest rates in December 2016 and again in March 2017, signaling rising confidence that the economy is poised for more robust growth. The overnight funds rate is now at 1 % and sets the Feds on a likely path of regular hikes in the future. Locally, the economy in King County remains positive. Employment grew by 3.4% in the fourth quarter of 2016 relative to 2015, with continued growth in information jobs. Unemployment rate for King County declined again, down to 3.4% in December 2016. Home prices continue to rise, with a 10.4% increase since fourth quarter 2015. The portfolio will continue to be managed to take advantage of investment opportunities as they arise. RECOMMENDATION Presentation is for information only. ATTACHMENTS Cash and Investment Report Policy Compliance & Liquidity Analysis Cash and Investment Balances by Fund Treasury Rates and Yield Curves Amortization Schedule — MPD Operating Loan Amortization Schedule — MPD Capital Loan N.