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Home My WebLink AboutFS 2014-03-18 Item 2D - Report - 2013 4th Quarter Cash and Investment ReportTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director DATE: February 26, 2014 SUBJECT: Fourth Quarter 2013 Cash & Investment Report ISSUE The fourth quarter Investment Report is included with this memorandum and is discussed below. BACKGROUND City funds are invested to earn a reasonable return while preserving principal and allowing sufficient liquidity to meet the City's operating needs. To achieve these objectives investments are diversified by type, by financial institution, and by maturities in compliance with the City Investment Policy. DISCUSSION Portfolio Components At December 31, 2013, the portfolio totaled $46.5 million comprised of $39.6 million in cash and cash equivalents and $6.9 in longer term investments. The portfolio balance increased by $9.0 million from December 31, 2012 balance of $37.5 million. A major reason for the significant increase in funds is due to the sale of bonds for Local Improvement District No. 33 (LID), which increased cash balances by $6.7 million in November 2013 and $2.8 million prepayments for the LID assessments. Funds received were not reinvested in long -term investment vehicles but were rolled into cash & cash equivalents for cash flow purposes. Portfolio Performance The portfolio weighted average yield at year end was .62 %. Considering the portfolio's weighted average maturity was 0.8 years, and the yield on the cash & cash equivalent accounts was .21%, the portfolio yield of 0.62% is quite favorable. The yield has been sustained by the 4.21% average yield on the municipal bond investments, the 1.65% yield on the certificate of deposits, and the .45% earnings credit on the US Bank depository account. Investment income through 4th quarter 2013 is $286,913 and has exceeded the 2013 budget of $274,976. However, investment income for 2013 is less than 2012 investment income of $357,643 due to a reduction in long -term investments, which typically have higher interest rates. 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. 73 74 INFORMATIONAL MEMO Page 2 Fund Cash & Investment Balances The General Fund balance shows a decline in year -end balance in cash and investments from December 31, 2013. Prepayments and LID bond revenue was recorded in the Arterial Streets fund and has not been transferred to the General fund yet. Special revenue fund cash and investment balances is up significantly primarily in the Arterial Street fund. Additionally, the 2003 LTGO bonds were paid in full in 2013 which reduced debt service cash and investment balances. Due to the economic situation of the last several years, cash and investment balances for governmental funds, in total, have been trending downward. However, in November 2013, bonds of $6.7 million for the LID were issued and prepayments of $2.8 million were received. This inflow of cash brought governmental fund cash and investment balances back to levels comparable with 2009 -2011. In 2014 the City will actively look for and purchase investment options with maturity dates of 2 to 3 years or less. This will ensure adequate cash flow reserves while taking advantage of slightly higher interest rates than are available with shorter term investments. Investment Environment Interest rates have remained low throughout 2013 and are expected to remain low through 2016. Ms. Yellen's appointment doesn't signal significant policy changes in 2014 or 2015. At this point, the Federal Reserve intends to maintain a zero - interest -rate policy through 2016. The portfolio will 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 W:11 Users \Vicky \Investment Report\Info Memo Investment Report 2013 04.docx Rating Agency / Issuer Moodys CASH & CASH EQUIVALENTS US Bank Washington State Treasurer Columbia Bank Investment Type CITY OF TUKWILA CASH & INVESTMENT REPORT December 31, 2013 Purchase Maturity Date Date Depository LGIP Investment Pool Money market Various Various Various (b) (b) (b) (a) Term Yrs Par Value (c) (d) Book Yield to Annualized Balance Maturity Return $19,595,955 $19,595,955 5,927,799 5,927,799 14,087,310 14,087,310 (e) 0.45% (f) 0.13% $ 35,571 15,806 (f) 31,783 0.21% Total Cash & Cash Equivalents 39,611,064 39,611,064 0.21% 83,160 INVESTMENTS Certificates of Deposit US Bank Sound Community Bank Regal Bank CERTIFICATES OF DEPOSIT -- TOTAL Certificate of Deposit 2/15/2010 2/15/2013 3.0 MATURED Certificate of Deposit 3/4/2011 3/4/2014 3.0 3,000,000 3,117,093 1.40% Certificate of Deposit 6/20/2012 12/20/2014 2.5 250,000 250,000 1.30% 3.0 3,250,000 3,367,093 1.65% 7,346 43,003 3,250 53,599 Taxable Municipal Bonds City of Marysville, sinking Al 2014 -2017, ave 5.5 years Washington State Convention Aa3 Center Facility UW Biomedical Center Aal Revenue Bonds LTGO Refunding 11/23/2010 12/1/2017 Lodging Tax Bonds 11/30/2010 7/1/2016 12/14/2010 7/1/2017 12/14/2010 7/1/2019 UTGO 12/23/2010 12/1/2020 UW Biomedical Center Aal Revenue Bonds Douglas County, ESD, sinking Aal 2018 -2020, ave 9 yrs Port of Anacortes Al LTGO 12/17/2010 9/1/2020 5.5 535,000 573,252 3.37% 5.6 500,000 503,625 3.60% 6.6 500,000 503,724 4.05% 8.6 500,000 504,038 4.70% 8.9 1,135,000 1,149,825 4.55% 9.7 340,000 330,855 5.00% 19,312 18,167 20,744 23,336 51,969 16,627 TOTAL MUNICIPAL BONDS 7.6 3,510,000 3,565,320 4.21% 150,154 Total Investments 5.3 6,760,000 6,932,412 2.94% 203,753 TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 0.8 $ 46,371,064 $ 46,543,476 I 0.62% I $ 286,913 Current Portfolio Yield (a) On calleable bonds, term is calculated to final maturity even though call date may occur first; term of liquid investments is one day; on sinking fund bonds, average maturity is used to calculate term. (b) No fixed maturity, funds are available within one day. (c) Yield to Maturity represents average rate for the year for various investment vehicles. (d) Annualized Return represents actual earnings for the fiscal year. (e) Represents earning credit from US Bank. City earns interest up to the amount of fees. (f) Represents rate in effect for period ending this report. 75 CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT December 31, 2013 Liquidity Analysis & Maturity Diversification Funds immediately available Fixed Maturity Investments, maturing in: 0 -90 days after Report Date 91 -180 days after Report Date Investments maturing in 1 year or less Investments maturing in 1 -3 years Investments maturing in 3 -5 years Investments maturing in 5 -7 years Investments maturing in 7 -10 years Investments maturing in more than 1 year and less than 10 years. TOTALS As of Report Date Available Available Available in Portfolio Within 1 Year Within 5 5 - 10 Years Amount Years $ 39,611,064 $ 39,611,064 $ 39,611,064 3,117,093 3,367,093 503,625 1,076,976 1,984,719 3,565,320 $ 46,543,476 3,367,093 3,367,093 503,625 1,076,976 $ 42,978,157 $ 44,558,758 92% 96% 1,984,719 $ 1,984,719 5% Liquidity Requirements and Funds Available for Investing: Funds immediately available $ 39,611,064 Restrictions & designations: Operating liquidity (a) 14,000,000 Liquidity threshold 14,000,000 Funds available for longer term investing $ 25,611,064 (a) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion. Financial Institution Diversification US Bank Washington State Treasurer Columbia Bank Sound Community Bank Other financial institutions Total Portfolio Amount $ 19,595,955 5,927,799 14,087,310 3,117,093 3,815,320 $ 46,543,476 POLICY Policy of Total MAXIMUM Met? 42.1% 50.0% Yes 12.7% 75.0% Yes 30.3% 50.0% Yes 6.7% 50.0% Yes 8.2% 50.0% Yes 100.0% Portfolio POLICY Policy Investment Mix Amount % of Total MAXIMUM Met? Depository 19,595,955 42.1% insured by PDPC Yes State Investment Pool 5,927,799 12.7% 75.0% Yes Money market 14,087,310 30.3% insured by PDPC Yes Certificate of Deposit 3,367,093 7.2% insured by PDPC Yes US Agency - 0.0% 75.0% Yes Municipal Bonds 3,565,320 7.7% no limit specified in policy . Yes Total 46,543,476 100.0% Weighted Average Maturites: Certificates of deposit Municipal bonds Total Investments Total Portfolio POLICY MAXIMUM Policy Met? Years 3.0 7.6 5.3 0.8 3.5 Yes Note: Cash and cash equivalents are available within one day and are factored into the Total Portfolio weighted average maturity. 76 Performance Analysis Current portfolio yield 0.59% Benchmarks: 6 month treasury 0.10% 2 year treasury 0.38% Local Govt Invst Pool (f) 0.23% CITY OF TUKWILA Cash & Investment Balances By Fund and Fund Group CASH & INVESTMENT REPORT December 31, 2013 Fund Group Balances 12 -31 -13 General General Total Special Revenue 000 GENERAL Special Revenue Total Debt Service Debt Service Total Capital Project 101 HOTEL/MOTEL TAX 103 STREET 104 ARTERIAL STREET 105 CONTINGENCY 107 FIRE EQUIP. CUM. RESERVE 109 DRUG SEIZURE FUND 206 L.I. GUARANTEE 207 LIMITED TAX G.O. BONDS 1999 208 LIMITED TAX G.O. BONDS 2000 209 LIMITED TAX G.O. BONDS 2003 210 LIMITED TAX G.O. REFUNDING 2003 211 LIMITED TAX G.O. REFUNDING 2008 212 LTGO SCORE BONDS 213 LTGO SCORE BLD AMER BONDS 214 LTGO 2010 Series A 215 LTGO 2010 Series B 216 VALLEY COM Refunding bonds 2010 217 LIMITED TAX GO BONDS REFUNDING 233 LID #33 Capital Project Total Enterprise Enterprise Total Internal Service 301 LAND ACQ, REC & PARK DEVLPMNT 302 FACILITY REPLACEMENT 303 GENERAL GOVERNMNT IMPROVEMENTS 304 FIRE IMPACT FEES 400 UTILITY ON ACCT (overpayments) 401 WATER 402 SEWER 404 WATER /SEWER REVENUE BONDS 405 BOND RESERVE 411 FOSTER GOLF COURSE 412 SURFACE WATER Internal Service Total Fiduciary Fiduciary Total Grand Total 501 EQUIPMENT RENTAL 502 INSURANCE 503 INSURANCE - LEOFF I 611 FIREMEN'S PENSION 640 AGENCY FUND 2,662,742 * 2,662,742 537,492 1,359,905 9,895,599 1,762,932 • 75,609 13,631,536 668,849 Balances Balances 12-31 -12 12 -31 -11 Balances Balances 12 -31 -10 12-31 -09 $ 3,910,343 3,910,343 398,276 1,031,761 29,696 1,460,454 944,770 161,725 4,026,683 $ 3,554,218 3,554,218 416,263 861,950 4,640,647 1,457,728 949,888 229,711 8,556,188 70 3,206,134 3,303,041 497 13,246 1,156 718 26,217 5,408 $ 3,462,672 3,462,672 645,914 607,646 9,820,315 889,470 803,981 316,024 13,083,348 13,244 70 153 1,457 (12,741) $ 4,208,419 4,208,419 941,474 634,793 4,542,765 885,462 802,279 222,824 8,029,596 (55,311) (22,268) (70,737) (51,394) (39,683) 1,453 126 707 - 40,995 616 6,561 37 37 37 4,612 5,264 17 74 14 14,014 814 514 17,681 696,346 3,291,381 3,330,312 3,050 (239,393) 1,189,160 1,073,790 1,662,953 4,771,625 4,343,630 2,005,539 2,105,864 2,027,271 2,058,699 2,076,468 516,461 164,521 561,688 1,470,658 328,904 437,222 348,010 313,819 156,018 13,346 4,148,382 3,692,185 4,565,730 8,457,000 6,762,348 - 13,700 14,551 6,343,482 4,636,192 4,533,184 5,767,311 5,790,806 2,740,298 1,584,312 997,382 1,726,671 1,662,379 209,313 393,547 558,021 309,581 32,012 57,199 181,626 3,035,393 2,344,887 2,097,280 2,273,623 2,045,265 12,677,194 8,874,973 7,659,857 9,838,504 10,297,487 4,161,493 4,167,903 3,515,168 3,324,596 3,321,879 5,868,475 6,390,261 6,435,672 5,678,846 4,548,635 1,111,132 1,921,032 1,822,186 1,657,049 1,347,955 11,141,100 12,479,195 11,773,025 10,660,491 9,218,469 1,408,970 1,415,638 1,422,057 1,429,822 1,436,365 177,206 32,030 9,186 6,403 104,628 1,586,176 1,447,668 1,431,242 1,436,224 1,540,993 46,543,476 37,722,427 40,870,572 46,941,291 39,817,919 Transfers among these funds will be made after all 2013 financial data has been received and recorded. 77 CITY OF TUKWILA Treasury Rates and Yield Curves CASH & INVESTMENT REPORT December 31, 2013 Rates at December 31, 2013 Term Closing Yield 12/31/2013 3mo 6mo 1 Yr 2Yr 3Yr 5Yr 10Yr 30Yr 0.07% 0.10% 0.13% 0.38% 0.78% 1.75% 3.04% 3.96% Source: US Department of the Treasury 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Rate Change Change 0.02% 29% -0.01% -10% - 0.03% -23% 0.13% 34% 0.42% 54% 1.03% 59% 1.26% 41% 1.01% 26% Rates at December 31, 2012 Term Closing Yield 12/31/2012 3mo 6mo 1Yr 2Yr 3Yr 5Yr 10Yr 30Yr 0.05% 0.11% 0.16% 0.25% 0.36% 0.72% 1.78% 2.95% Comparison of Treasury Rates 3 mo 6mo 1 yr 2 yr 3 yr 5 yr 10 yr 30 yr - 4 - 12/31/2013 -U ■12/31/2012 78