HomeMy WebLinkAboutFS 2015-03-17 Item 2B - Report - 2014 Fourth Quarter 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: March 11, 2015
SUBJECT: Fourth Quarter 2014 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, 2014, the portfolio totaled $45.4 million comprised of $35.6 million in cash and
cash equivalents and $9.8 in longer term investments. The portfolio balance increased by $4.1
million from September 30, 2014 balance of $41.3 million. A major reason for the increase in
funds is because the City received $3.85 million in long -term funding for the property purchased
earlier in the year. Additionally, Local Improvement District #33 assessments for the first
installment were received during the 4th quarter in anticipation of principal and interest payments
due in January 2015.
In April, the City purchased a Federal Home Loan Mortgage Corp agency investment in the
amount of $2 million. It was purchased on April 10, 2014 and will mature on March 4, 2017. This
investment has a .50% yield to maturity.
In June, the City purchased a second agency investment of $1 million from Fannie Mae with a
maturity date of August 23, 2017 and a yield to maturity of .95 %.
Now that funding has been obtained to reimburse the City for the purchase of the motels in the
Tukwila Redevelopment area (Urban Renewal), the City will seek out investments that will
increase the total portfolio yield.
Both investments mentioned above increase the percentage of the City's longer -term investments
and increase portfolio yield because of the higher interest rates on both agencies. Since these
are both longer -term investments, they were placed in the contingency fund where the likelihood
of accessing the available cash in the next few years is remote. The purchase of agencies also
increases the diversity of the portfolio.
15
INFORMATIONAL MEMO
Page 2
Portfolio Performance
The portfolio weighted average yield at year end was .61 %. Considering the portfolio's weighted
average maturity was 1.0 years, and the yield on the cash & cash equivalent accounts was .32 %,
the portfolio yield of 0.61% is still relatively favorable. The yield has been sustained by the 3.19%
average yield on the municipal bond investments, the 1.05% yield on the certificate of deposits,
the .67% yield on the agencies, and the .45% earnings credit on the US Bank depository account.
Investment income for the fiscal year for cash equivalents and certificates of deposits is $148,192
plus $129,063 of municipal bond and agencies interest for a total of $277,254 against a budget
of $262,126.
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 loan for fiscal year 2014 is $19,906. The capital loan is being repaid semi - annually
and will be paid in full by December 2022. Interest earned through the end of 2014 is $15,341.
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
The general fund balance shows an increase of $4.8 million from September 30. Property tax
revenue is received during the 4th quarter, sales tax for December is higher than other months
and $1 million was transferred in from the Facility Replacement fund (Fund 302). The transfer
from Fund 302 accounts for the total decline in capital projects funds, from $3.3 million to $2.3
million.
Debt service funds show an increase, primarily in Local Improvement District (LID) No. 33 (Fund
233). The first annual installment for the LID was due in October but the bond payment is not
made until January 2015.
Investment Environment
Short term interest rates continue to remain low and are expected to remain low until mid -2015
when interest rates could start rising. Information from the Federal Reserve Board indicates that
economic activity is expanding at a solid pace and the labor market continues to show strong job
gains and lower unemployment rate.
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
Amortization Schedule — MPD Operating Loan
Amortization Schedule — MPD Capital Loan
16
Agency / Issuer
CITY OF TUKWILA
CASH & INVESTMENT REPORT
December 31, 2014
(a) (c) (d)
Rating Purchase Maturity Term Par Book Yield to Annualized
Moodys Investment Type Date Date Yrs Value Balance Maturity Return
CASH & CASH EQUIVALENTS
US Bank Depository Various (b) $17,514,300 $17,514,300 (e) 81,241
0.45%
Washington State Treasurer LGIP Investment Pool Various (b) 3,934,135 3,934,135 (f) 0.11% 6,336
Columbia Bank Money market Various (b) 14,113,891 14,113,891 (f) 26,580
0.20%
Total Cash & Cash Equivalents 35,562,326 35,562,326 0.32% 114,158
INVESTMENTS
Certificates of Deposit
Sound Community Bank Certificate of Deposit 3/4/2014 3/4/2017 3.0 3,000,000 3,147,876 0.85% 30,784
Regal Bank Certificate of Deposit 12/20/2014 12/20/2015 1.0 250,000 250,000 0.50% 3,250
CERTIFICATES OF DEPOSIT -- TOTAL 2.9 3,250,000 3,397,876 1.05% 34,034
Agencies
Federal Home Loan Mtg Corp US agency 4/10/2014 5/13/2016 2.1 2,000,000 2,001,867 0.50% 10,000
(FHLMC)
FNMA US agency 6/6/2014 8/23/2017 3.2 1,000,000 998,775 1.00% 10,008
TOTAL AGENCIES 2.5 3,000,000 3,000,642 0.67% 20,008
Taxable Municipal Bonds
City of Marysville, sinking Al LTGO Refunding 11/23/2010 12/1/2017 5.5 415,000 430,309 3.37% 14,501
2014 -2017, ave 5.5 years
Washington State Convention Aa3 Lodging Tax Bonds 11/30/2010 7/1/2016 5.6 500,000 502,176 3.60% 18,078
Center Facility
UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2017 6.6 500,000 502,655 4.05% 20,358
UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2019 8.6 500,000 503,302 4.70% 23,655
Douglas County, ESD, sinking Aal UTGO 12/23/2010 12/1/2020 8.9 1,135,000 1,147,313 4.55% 52,203
2018 -2020, ave 9 yrs
Port of Anacortes Al LTGO 12/17/2010 9/1/2020 9.7 340,000 332,226 5.00% 16,611
TOTAL MUNICIPAL BONDS
Total Investments
7.7 3,390,000 3,417,982 3.19% 109,055
4.4 9,640,000 9,816,500 1.66% 163,096
TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 1.0 $ 45,202,326 $ 45,378,826 1 0.61% 1 $ 277,254
(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 for bonds.
(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.
the annualized return above the current CD rates.
the annualized return above the current CD rates.
(h) Annualized Return represents actual earnings through current reporting period
Current Portfolio Yield
Percent of Cash & Investment Portfolio
Municipal
Bonds
8%
Money
Market
33%
CDs
8%
LGIP
9%
Cash
42%
17
18
CITY OF TUKWILA
Policy Compliance & Liquidity Analysis
CASH & INVESTMENT REPORT
December 31, 2014
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
Portfolio
Amount
Available
Within 1 Year
$ 35,562,326 $ 35,562,326
250,000
7,583,658
503,302
1,479,540
9,566,500
$ 45,378,826
250,000
$ 35,812,326
79%
As of Report Date
Available Available in
Within 5 5 - 10 Years
Years
$ 35,562,326
250,000
7,583,658
503,302
1,479,540
$ 43,899,286 $ 1,479,540
97% 4%
Liquidity Requirements and Funds Available for Investing:
Funds immediately available $ 35,562,326
Restrictions & designations:
Operating liquidity (a) 14,000,000
Liquidity threshold 14,000,000
Funds available for longer term investing $ 21,562,326
(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
Investment Mix
Depository
State Investment Pool
Money market
Certificate of Deposit
US Agency
Municipal Bonds
Total
Weighted Average Maturites:
Certificates of deposit
Municipal bonds
Total Investments
Total Portfolio
POLICY MAXIMUM
Policy Met?
Portfolio
Amount
$ 17,514,300
3,934,135
14,113,891
3,147,876
6,668,624
$ 45,378,826
Portfolio
Amount
17,514,300
3,934,135
14,113,891
3,397,876
3,000,642
3,417,982
45,378,826
Years
2.9
7.7
4.4
1.0
3.5
Yes
Note: Cash and cash equivalents are available within one day and are factored
into the Total Portfolio weighted average maturity.
% of Total
38.6%
8.7%
31.1%
6.9%
14.7%
100.0%
% of Total
38.6%
8.7%
31.1%
7.5%
6.6%
7.5%
100.0%
POLICY
MAXIMUM
50.0%
75.0%
50.0%
50.0%
50.0%
POLICY
MAXIMUM
insured by PDPC
75.0%
insured by PDPC
insured by PDPC
75.0%
no limit specified in policy
Performance Analysis
Current portfolio yield
Benchmarks:
6 month treasury
2 year treasury
Local Govt Invst Pool
Policy
Met?
Yes
Yes
Yes
Yes
Yes
Policy
Met?
Yes
Yes
Yes
Yes
Yes
Yes
0.61%
0.12%
0.67%
(f) 0.11%
19
CITY OF TUKWILA
Cash & Investment Balances By Fund and Fund Group
CASH & INVESTMENT REPORT
December 31, 2014
Fund Grou.
Balances
12/31/14
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
218 LTGO 2013
233 LID #33
Capital Project Total
Enterprise
Enterprise Total
Internal Service
301 LAND ACO, REC & PARK DEVLPMNT
302 FACILITY REPLACEMENT
303 GENERAL GOVERNMNT IMPROVEMENTS
304 FIRE IMPACT FEES
Internal Service Total
Grand Total
400 UTILITY ON ACCT (overpayments)
401 WATER
402 SEWER
404 WATER /SEWER REVENUE BONDS
405 BOND RESERVE
411 FOSTER GOLF COURSE 829,633
412 SURFACE WATER 1,695,931
13,053,771
501 EQUIPMENT RENTAL 4,575,448
502 INSURANCE 4,710,763
503 INSURANCE - LEOFF I 526,650
9,812,861
43,639,440
7,824,725
7,824,725
432,607
1,175,916
462,014
5,766,790
92,161
7,929,489
669,147
1
195
416
2
2,710
794
539
Balances Balances Balances Balances
12/31/13 12/31/12
12/31/11
12/31/10
$ 7,737,222
7,737,222
537,454
1,359,905
1,167,156
5,762,932
75,609
8,903,056
668,849
497
718
1,453
6,561
74
514
1,013,693 17,681
1,687,496 696,346 3,012,381
1,292,321 1,159,366 1,068,126
1,103,366 2,005,539 2,105,864
430,911 516,311 164,599
504,500 437,222 348,010
3,331,098 4,118,438 3,686,599
170
5,826,837 6,315,350 4,635,412
4,701,199 2,755,073 1,584,458
$ 3,826,856 $ 3,554,218 $ 3,462,672
3,826,856 3,554,218 3,462,672
398,276 416,263 645,914
1,031,761 861,950 607,646
394,755 4,640,647 9,820,315
1,460,454 1,457,728 889,470
944,770 949,888 803,981
161,355 229,711 316,024
4,391,371 8,556,188 13,083,348
3,006,134
246
217
126
995
37
4,612
14
535,926 309,581
2,612,292 2,344,887
8,874,338
4,167,390
6,390,261
1,921,032
12,478,683
36,270,227
12,218, 641
4,316,337
6,087,219
1,111,132
11,514,688
45,188,392
70
3,303,041
1,156
5,408
707
616
37
5,264
14,014
13,244
70
153
1,457
(12,741)
37
17
814
3,330,312 3,050
1,662,953 4,771,625
2,027,271 2,058,699
561,688 1,470,658
313,819 156,018
4,565,730 8,457,000
13,700
4,533,184 5,767,311
997,382 1,726,671
32,012 57,199
2,097,280 2,273,623
9,838,504
3,324,596
5,678,846
1,657,049
10,660,491
45,505,067
7,659,857
3,515,168
6,435,672
1,822,186
11,773,025
39,439,330
Funds not included in the Grand Total are the fiduciary funds and the MPD. However, these balances ($1,739,386) are included in the investment balances.
21
CITY OF TUKWILA
Treasury Rates and Yield Curves
CASH & INVESTMENT REPORT
December 31, 2014
Rates at December 31, 2014
Term
Closing
Yield
12/31/2014
Rate %
Change Change
3mo 0.04% -0.03% -75%
0.02% 17%
0.25% 0.12% 48% 1 Yr
0.29% 43%
3Yr 1.10% 0.32% 29% 3Yr 0.78%
- 0.10% -6%
10Yr 2.17% -0.87% -40% 10Yr 3.04%
-1.21% -44%
6mo
0.12%
1 Yr
Rates at December 31, 2013
Term
Closing
Yield
12/31/2013
3mo
0.07%
6mo
0.10%
2Yr
0.67%
0.13%
2Yr
0.38%
5Yr
1.65%
5Yr 1.75%
30Yr
2.75%
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%
30Yr
3.96%
Comparison of Treasury Rates
3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 10 yr 30 yr
X12/31/2014
112/31/2013
23
24
Period
(Date) Beg Bal
MPD Operating Loan - through end of 2014 only
Accumulated
Funding Payments Interest End Bal Interest
Principal
Pmt
Interest
Pmt
10/1/2011
11/1/2011
12/1/2011
1/1/2012
2/1/2012
3/1/2012
4/1/2012
5/1/2012
6/1/2012
7/1/2012
8/1/2012
9/1/2012
10/1/2012
11/1/2012
12/1/2012
1/1/2013
2/1/2013
3/1/2013
4/1/2013
5/1/2013
6/1/2013
7/1/2013
8/1/2013
9/1/2013
10/1/2013
11/1/2013
12/1/2013_
1/1/2014
2/1/2014
3/1/2014
4/1/2014
5/1/2014
6/1/2014
7/1/2014
8/1/2014
9/1/2014
10/1/2014
11/1/2014
12/1/2014
191, 612.82
191, 932.18
192,252.07
192,572.49
192,893.44
193,214.93
418,911.95
419, 610.14
420,309.49
421,010.01
421,711.69
422,414.54
857,547.41
858,976.66
860,408.28
1,112,258.96
1,114,112.73
1,115,969.58
1,117,829.53
1,100,000.00
1,091,711.85
1,083,409.89
1,075,094.10
1,066,764.44
1,058,420.90
1,050,063.46 _
1,041,692.08
1,033,306.76
1,024,907.45
1,016,494.15
1,008,066.83
999,625.46
991,170.02
982,700.49
974,216.85
965,719.06
957,207.11
948,680.98
$ 191,294 $ $ 319
319.35
319.89
320.42
320.95
321.49
225,000.00 697.02
698.19
699.35
700.52
701.68
702.85
433,706.00 1,426.87
1,429.25
1,431.63
250,000.00 1,850.68
1,853.76
1,856.85
1,859.95
19, 692.58
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
10,121.48
1,863.05
1,833.33
1,819.52
1,805.68
1,791.82
1,777.94
1,764.03
$ 191,613
191, 932.18
192,252.07
192,572.49
192,893.44
193,214.93
418,911.95
419, 610.14
420,309.49
421,010.01
421,711.69
422,414.54
857,547.41
858,976.66
860,408.28
1,112,258.96
1,114,112.73
1,115,969.58
1,117,829.53
1,100,000.00
1,091,711.85
1,083,409.89
1,075,094.10
1,066,764.44
1,058,420.90
1,050,063.46
1, 750.11 1, 041, 692.08
1,736.15 1,033,306.76
1,722.18
1,708.18
1,694.16
1,680.11
1,666.04
1,651.95
1,637.83
1,623.69
1,609.53
1,595.35
1,581.13
1,024,907.45
1,016,494.15
1,008,066.83
999,625.46
991,170.02
982,700.49
974,216.85
965,719.06
957,207.11
948,680.98
940,140.63
$ 319
638.18
958.07
1,278.49
1,599.44
1,920.93
2,617.95
3,316.14
4,015.49
4,716.01
5,417.69
6,120.54
7,547.41
8,976.66
10,408.28
12,258.96
14,112.73
15,969.58
17,829.53
19,692.58
21,525.91
23,345.43
25,151.12
26,942.94
28,720.88
30,484.92
32,235.02 _
33,971.18
35,693.35
37,401.53
39,095.69
40,775.80
42,441.84
44,093.79
45,731.63
47,355.32
48,964.85
50,560.20
52,141.33
Prior
19,692.58
8,288.15 1,833.33
8,301.96 1,819.52
8,315.80 1,805.68
8,329.66 1,791.82
8,343.54 1,777.94
8,357.45 1,764.03
_8,371.37__1,750.11_
8,385.33 1,736.15
8,399.30 1,722.18
8,413.30 1,708.18
8,427.32 1,694.16
8,441.37 1,680.11 Current
8,455.44 1,666.04
8,469.53 1,651.95
8,483.65
8,497.79
8,511.95
8,526.13
8,540.34
1,637.83
1,623.69
1,609.53
1,595.35
1,581.14
25
MPD Capital Loan
PAYMENT BEGINNING
DUE DATE BALANCE
Capital Loan to MPD Repayment Schedule
PRINCIPAL
PAYMENT
INTEREST INTEREST
RATE PAYMENT
ENDING
2/1/2013
6/1/2013 1,000,000.00
1_ 2/1 /2013 949,268.33
_
6/1 /2014 901,009.43
12/1/2014 852,328.26
6/1/2015 803,221.13
12/1/2015 753,684.31
6/1/2016 703,714.05
12/1/2016
6/1/2017
12/1/2017
6/1/2018
12/1/2018
6/1/2019
12/1/2019
6/1/2020
12/1/2020
6/1/2021
12/1/2021
6/1/2022
12/1/2022
26
657,176.98
609, 976.75
562,103.92
513, 548.90
464,301.97
414,353.27
366,075.34
316,831.85
266, 603.49
215,370.56
163,112.97
109, 810.23
55,441.43
Amount loaned to the MPD
(50,731.67) 0.02
(48,258.90) - - - - 0.02_
(48,681.17) — 0.02
(49,107.13)
(49,536.82)
(49,970.26)
(46,537.07)
(47,200.23)
(47,872.83)
(48,555.02)
(49,246.93)
(49,948.70)
(48,277.93)
(49,243.49)
(50,228.36)
(51,232.93)
(52,257.59)
(53,302.74)
(54,368.80)
(55,441.43)
0.02
0.02
0.02
0.03
0.03
0.03
0.03
0.03
0.03
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
(5,833.33)
(8,306.10)
(7,883.83)
(7,457.87)
(7,028.18)
(6,594.74)
(10,027.93)
(9,364.77)
(8,692.17)
(8,009.98)
(7,318.07)
(6,616.30)
(8,287.07)
(7,321.51)
(6,336.64)
(5,332.07)
(4,307.41)
(3,262.26)
(2,196.20)
(1,108.83)
(131,285.26)
1,000,000.00
949,268.33
____L 901009.43_ _
852,328.26 Current
803,221.13
753,684.31
703,714.05
657,176.98
609,976.75
562,103.92
513,548.90
464,301.97
414,353.27
366,075.34
316,831.85
266,603.49
215,370.56
163,112.97
109,810.23
55,441.43
0.00
Prior