FIN 2017-09-19 COMPLETE AGENDA PACKET

Browse Search

INFORMATIONAL MEMO Page 2 Not included in the portfolio is interest earned from the operating and capital loans to the MPD. The operating loan is being repaid on a monthly basis and will be paid in full by May 2023. Interest earned on the operating loan through June 2017 is $7,085. The capital loan is being repaid semi- annually and will be paid in full by December 2022. Interest accrued through June 2017 is $8,578. 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 2nd 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 $95.055 million, which is $42.123 million higher than second quarter 2016. The significant increase is directly attributable to $36.5 million bond fund received in December 2016 for the public safety plan. The general fund total cash and investment balance is $10.780 million, which is $1.865 million higher than June of 2016. Transfers of $2.2 million from the general fund into capital projects funds for first and second quarters have not been recorded yet. Rather than transferring funds automatically, we will be transferring funds into the capital projects funds as needed. Special revenue funds all show a year -over -year increase. Over $460 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. The funds were received in 2016 and have not been spent. Debt service funds reflect a total net increase in cash and investments of $756 thousand. Excess property tax revenue associated with the voter approved bonds are received each month and placed in fund 213 until debt service is due. Debt service payments occur twice a year with interest paid in June and interest plus principal paid in December. 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 $36.5 million. Fund 306, city facilities, currently shows a negative balance of $79 thousand. Allocation of the project manager fees, SOJ, for the upcoming Public Works Shops facility have been incurred. A funding source for these costs will be identified and included in the budget amendment process later in the year. Utility funds all have increases in fund balances from the prior year. The golf course cash and investment balance is $183 thousand lower than second quarter 2016. The golf course experienced significant rain through the spring, which impacted revenue. Investment Environment The U.S. economy continues to expand with strong growth in employment. However, there is uncertainty with China. Interest rates were hiked in March and again in June with one additional rate hike planned for later in the year. However, economic disruptions caused by back-to-back hurricanes may cause a delay in the next interest rate hike into 2018. 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. 2