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Home My WebLink AboutFS 2012-02-22 Item 2C - Report - 2011 4th Quarter Cash and Investment ReportCity of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Interim Finance Director DATE: February 15, 2012 SUBJECT: Fourth Quarter 2011 Cash Investment Report ISSUE Finance Policy and Procedure 03 -17, Investment Policy, calls for quarterly investment reports to the Council Finance and Safety Committee. The report is to contain an inventory of investments and a summary of performance. The second quarter Investment Report was presented at the August 16 Finance and Safety Committee meeting. 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, 2011, the portfolio totaled $40.6 million comprised of $27.3 million in cash and cash equivalents and $13.2 in longer term investments. The portfolio balance declined by $8 million from the June 30 balance of $48.6 million. Cash and cash equivalents declined by $6.7 million and investments declined by $1.25 million. Two agency notes with par values of $500,000 each were called and one certificate of deposit of $250,000 came due accounting for the $1.25 million decline. The proceeds from these investments, in addition to the $6.7 million of cash and cash equivalents, or $8 million, funded debt service in the amount of $2 million and arterial street projects in the amount of $6 million. Portfolio Performance. The portfolio weighted average yield at year end was .99 Considering the portfolio's weighted average maturity was 1.4 years, and the yield on the one year and two -year treasury notes were .10% and .24% respectively, the portfolio yield of .99% is quite favorable. The yield has been sustained by the 4.05% average yield on the municipal bond investments, 1.65% average yield on the agency notes, the 1.37% yield on the certificate of deposits and the .50% earnings credit on the US Bank depository account. Investment income for 2011 exceeded $430,000 compared with $322,512 in 2010 and with the 2011 budget of $177,377. Part of the increase from 2010, or $67,607, is due to an accounting change. In 2011, the bank fees were recorded as an expense and the earning credit was recorded as investment income. In 2010, neither the fees nor the revenue were recorded as the amounts netted to zero. 31 INFORMATIONAL MEMO Page 2 Market value changes have no realized effect on the portfolio performance because investments are held to maturity consistent with the City's policy. However, it worth noting that, because of the decline in interest rates over the year, the market value of the portfolio increased from a market value loss of $127,822 at December 31, 2010 to a market value gain of $299,416 at December 31, 2011. Policv Compliance and Liauiditv Analvsis. The portfolio profile met all the investment policy parameters at year -end, except for the "Financial Institution Diversification" factor whereby 72.5% of the portfolio was invested in the US Bank depository account exceeding the 50% policy maximum. The overage occurred because additional funds were moved into US Bank in the latter part of the year to take advantage of the .50% earnings credit which yielded $67,607 for the year. Funds totaling $13 million have been transferred to other financial institutions since year -end. Fund Cash Investment Balances. Cash and investment balances of selected funds follow: Fund Fund Description Portfolio Balance in Millions 12 -31 -11 6 -30 -11 12 -31 -10 000 General $2.9 $7.1 $2.7 104 Arterial Street $4.6 $8.9 $9.8 209 Debt Service 2003 $3.1 bonds 301 Land Acquisition, Park $1.7 $4.8 $4.7 Development The General Fund balance declined compared with the June 30 balance due to transfers out to fund debt service and arterial street projects; the 2011 year -end balance is comparable with the 2010 balance. The Arterial Street Fund balance shows a continual decline which was expected as funds have been expended for the Southcenter Access Project and the Southcenter Parkway projects. The increase in the Debt Service fund and the corresponding decrease in the Land Acquisition and Park Development fund reflects a transfer of funds for servicing the golf course bond debt from a governmental fund as resolved by the Council at the November 21, 2011 regular meeting. Investment Environment. Interest rates dropped in the second half of the year and are expected to remain low until 2014. The portfolio will be managed to take advantage of investment opportunities as they arise. RECOMMENDATION Information Only. ATTACHMENTS Cash and Investment Report Policy Compliance Liquidity Analysis Cash and Investment Balances by Fund Treasury Rates and Yield Curves W:12012 Info Memos- CounciftImstmnt Rprt 12- 31- 11.docx 32 CITY OF TUKWILA CASH INVESTMENT REPORT December 31, 2011 (a) Purchase Maturity Term Par Book Yield to Annualized Date Date Yrs Value Balance Maturity Return Various Rating Agency Issuer Moody! Investment Type CASH CASH EQUIVALENTS 67,607 US Bank Depository Washington State Treasurer LGIP Investment Pool Regal Bank Money market Columbia Bank Money market Total Cash Cash Equivalents 250,000 INVESTMENTS 2,475 Certificates of Deposit (b) (a) Purchase Maturity Term Par Book Yield to Annualized Date Date Yrs Value Balance Maturity Return Various (b) 25,997,304 25,997,304 0.50% 67,607 Various (b) 100,893 100,893 0.13% 19,946 Various (b) 250,000 250,000 0.99% 2,475 Various (b) 1,021,734 1,021,734 0.25% 21,562 FNMA Step -up 27,369,931 27,369,931 0.41% 111,590 US Bank Certificate of Deposit 02/15/2010 02/15/2013 3.0 Sound Community Bank Certificate of Deposit 03/04/2011 03/04/2014 3.0 Sound Community Bank Certificate of Deposit 11/15/2010 05/15/2012 1.5 CERTIFICATES OF DEPOSIT TOTAL 1.75% 26,250 2,500,000 2.9 Agencies FNMA Step -up US agency 02/22/2011 02/22/2016 5.0 Federal Home Loan Mortgage Corp US agency 03/23/2011 09/23/2014 3.5 (FHLMC) TOTAL AGENCIES 4.1 Taxable Municipal Bonds City of Marysville, sinking 2014 -2017, Al LTGO Refunding ave 5.5 years Washington State Convention Center Aa3 Lodging Tax Bonds Facility UW Biomedical Center AA1 Revenue Bonds UW Biomedical Center AA1 Revenue Bonds Douglas County, ESD, sinking 2018- Aal UTGO 2020, ave 9 yrs Port of Anacortes Al LTGO Educational Servic District TOTAL MUNICIPAL BONDS Total Investments TOTAL CASH, CASH EQUIVALENTS INVESTMENTS 3,450,000 3,000,000 503,414 6,953,414 1,000,000 1,500,000 2,500,000 11/23/2010 12/01/2017 5.5 535,000 11/30/2010 07/01 /2016 5.6 500,000 12/14/2010 07/01/2017 6.6 500,000 12/14/2010 07/01/2019 8.6 500,000 12/23/2010 12/01/2020 8.9 1,135,000 3,450,000 1.44% 49,680 3,031,564 1.40% 42,000 507,839 0.75% 3,776 6,989,404 1.37% 95,456 1,000,000 1.50% (e) 15,000 1,500,000 1.75% 26,250 2,500,000 1.65% 41,250 592,771 3.37% 19,976 506,521 3.60% 18,235 505,863 4.05% 20,487 505,511 4.70% 23,759 1,154,848 4.55% 52,546 12/17/2010 09/01/2020 9.7 340,000 328,113 5.00% 16,406 03/23/2011 12/01/2012 1.7 185,000 188,356 1.00% 1,884 7.3 3,695,000 3,781,984 4.05% 153,292 4.4 13,148,414 13,271,387 2.19% 289,998 1.4 40,518,345 40,641,319 1 0.99% I 401,588 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) Annualized return based on purchase price and yield to maturity. (d) Estimated market value at 12 -31 -10 was $102,535 less than purchase price. (e) Steps up to 3.25% on 2 -22 -12 if not called. 33 34 CITY OF TUKWILA Policy Compliance Liquidity Analysis CASH INVESTMENT REPORT December 31, 2011 As of Report Date Available Available Available in Portfolio Within 1 Year Within 5 5 10 Years Liquidity Analysis Maturity Diversification Amount Years Funds immediately available 27,369,931 27,369,931 27,369,931 Fixed Maturity Investments, maturing in: First quarter 2012 Second quarter 2012 507,839 Third quarter 2012 Fourth quarter 2012 188,356 Investments maturing in 1 year or less 696,196 696,196 696,196 Investments maturing in 1 -3 years 7,981,564 7,981,564 Investments maturing in 3 -5 years 1,506,521 1,506,521 Investments maturing in 5 -7 years 1,098,634 1,098,634 Investments maturing in 7 -10 years 1,988,472 1,988,472 Investments maturing in more than 1 year 12,575,192 and less than 10 years. TOTALS 40,641,319 28,066,127 37,554,212 3,087,106 69% 92% 11% Investment Policy Parameters POLICY LIMIT PORTFOLIO Policy Met? Funds available within 1 year 30.0% min 69% Yes Funds available within 5 years 80.0% min 92% Yes Funds available in 5- 10 years 20.0% max 11% Yes Liquidity Requirements and Funds Available for Investing: Funds immediately available 27,369,931 Restrictions designations: Southcenter Parkway Project 4,331.034 Klickitat Project 7,000.000 Operating liquidity (h) 14,000,000 Liquidity threshold 25,331,034 Funds available for longer term investing 2,038,897 (h) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion. Portfolio POLICY Policy Financial Institution Diversification Amount of Total MAXIMUM Met? US Bank 29,447,304 72.5% 50.0% No Washington State Treasurer 100,893 0.2% 75.0% Yes Columbia Bank 1,021,734 2.5% 50.0% Yes Sound Community Bank 3,539,404 8.7% 50.0% Yes Other financial institutions 6,531,984 16.1% 50.0% Yes Total 40,641,319 100.0% Portfolio POLICY Policy Investment Mix Amount of Total MAXIMUM Met? Depository 25,997,304 64.0% insured by PDPC Yes State Investment Pool 100,893 0.2% 75.0% Yes Money market 1,271,734 3.1% insured by PDPC Yes Certificate of Deposit 6,989,404 17.2% insured by PDPC Yes US Agency 2,500,000 6.2% 75.0% Yes Municipal Bonds 3,781,984 9.3% no limit specified in policy Yes Total 40,641, 319 100.0% Weiahted Averaae Maturites: Years Performance Analvsis Certificates of deposit 2.9 Current portfolio yield 0.99% Agency bonds 4.1 Benchmarks: Municipal bonds 7.3 6 month treasury 0.06% Total Investments 4.4 2 year treasury 0.24% Total Portfolio 1.4 Local Govt Invst Pool 0.13% POLICY MAXIMUM 3.5 Policy Met? Yes Note: Cash and cash equivalents are available within one day and are factored into the Total Portfolio weighted average maturity. 34 CITY OF TUKWILA Cash Investment Balances By Fund and Fund Group CASH INVESTMENT REPORT December 31, 2011 General 000 GENERAL 2,920,056 2,920,056 7,190,534 2,772,876 General Total 2,920,056 2,920,056 7,190,534 2,772,876 Special Revenue 101 HOTEL/MOTEL TAX 416,456 416,456 497,927 645,914 103 STREET 861,950 861,950 733,893 607,646 104 ARTERIAL STREET 3,551,345 1,100,611 4,651,955 8,906,680 9,854,278 105 CONTINGENCY 1,457,728 (0) 1 ,457,728 1,457,270 889,470 107 FIRE EQUIP. CUM, RESERVE 949,888 949,888 884,605 803,981 109 DRUG SEIZURE FUND 229,711 0 229,711 (4,554) 316,024 Special Revenue Total 7,467,077 1,100,610 8,567,688 12,475,821 13,117,313 Debt Service 207 LIMITED TAX G.O. BONDS 1999 13,248 3 208 LIMITED TAX G.O. BONDS 2000 70 70 70 70 209 LIMITED TAX G.0 BONDS 2003 1,179,139 2,000,000 3,179,139 153 210 LIMITED TAX G.O. REFUNDING 2003 1,156 1,156 1,457 211 LIMITED TAX G.O. REFUNDING 2008 5,406 5,406 13,345 212 LTGO SCORE BONDS 707 707 213 LTGO SCORE BLD AMER BONDS 616 616 214 LTGO 2010 Series A 37 37 37 215 LTGO 2010 Series B 5,264 5,264 17 216 VALLEY COM Refunding bonds 2010 14,014 14,014 814 814 Debt Service Total 1,206,408 2,000,000 3,206,408 14,132 15,896 Capital Project 301 LAND ACQ, REC PARK DEVLPMNT 1,765,812 21,043 1,786,855 4,845,418 4,771,625 302 FACILITY REPLACEMENT 2,027,395 2,027,395 2,044,018 2,058,699 303 GENERAL GOVERNMNT IMPROVEMENTS 578,814 578,814 742,794 1,470,395 304 FIRE IMPACT FEES 313,819 313,819 168,919 156,018 Capital Project Total 4,685,839 21,043 4,706,882 7,801,149 8,456,737 Enterprise 400 UTILITY ON ACCT (overpayments) 12,522 12,522 13,664 13,700 401 WATER 1,219,631 3,450,000 4,669,631 4,377,038 5,780,823 402 SEWER 1,062,434 0 1,062,435 1,209,792 1,769,275 411 FOSTER GOLF COURSE 35.294 35,294 (169,408) 21,640 412 SURFACE WATER 2,238,277 0 2,238,277 2,575,702 2,276,123 Enterprise Total 4,568,157 3,450,001 8,018,158 8,006,789 9,861,561 Internal Service 501 EQUIPMENT RENTAL 2,062,274 1,688.356 3,750,630 3.803,723 3,852,557 502 INSURANCE 1,132,739 5,011,377 6,144,117 6,048,103 5760,412 503 INSURANCE- LEOFF1 1,822,186 0 1,822,186 1,725,536 1,657,049 Internal Service Total 5,017,199 6,699,734 11,716,933 11,577,363 11,270 Fiduciary 611 FIREMEN'S PENSION 1,422,057 1,422,057 1,477,965 1,429,822 630 METROPOLITAN PARK DISTRICT 73,913 73.913 640 AGENCY FUND 9,224 11.1 9,224 124,837 7,744 Fiduciary Total 1,505,194 1,505,194 1,602,802 1,437,566 Grand Total 27,369,931 $13,271,388 $40,641,319 48,668,590 46,931,967 35 CITY OF TUKWILA Treasury Rates and Yield Curves CASH INVESTMENT REPORT December 31, 2011 Yield Curve at December 31, 2011 Yield Curve at June 30, 2011 5 4.5 4 3.5 3 2.5 2 1.5 1 O5 0' 5 4.5 4 3.5 3 2.5 2 15 1 0.5 0 �O A'l- 36